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PERSONAL STATUS AND

CAPACITY
BASIC PRINCIPLES

PERSONAL STATUS is the general term that includes


both condition and capacity and embraces such
matters as the beginning and end of human
personality, capacity to have rights, capacity to
engage in legal transactions, protection of personal
interests, family relations and succession.
o In Roman Law: Status is comprised of status
libertates
(freedom),
status
civitates
(citizenship) and status familiae (family
relations)

ART 37 NCC
Juridical capacity, which is the fitness to be the subject of
legal relations, is inherent in every natural person and is lost
only through death. Capacity to act, which is the power to
do acts with legal effect, is acquired and may be lost.
RECTO v. HARDEN
FACTS: H engaged the services of R, as counsel in her suit
against her husband for support and for preservation of her
rights in the conjugal partnership in contemplation of a
divorce suit. However, the spouses entered into a
compromise agreement to defeat the claim of R in
attorneys fees. H moved to dismiss on the ground of
invalidity of the contract of service because divorce is
contrary to Phil law.
HELD: R should be paid his fees. H spouses are US citizens
and their status and the dissolution thereof are governed by
the laws of the United States, which sanction divorce.
Therefore, contract is not contrary to public policy.

Status once established by once personal law is


given universal recognition. Aliens can sue and be
sued in our courts subject to our procedural rules but
the law to be applied is their personal law.

CONCEPT OF PERSONALITY

German law: begins with the completion of a person's


birth
Spanish Civil Code: requires that the infant be alive
for 24 hours to acquire personality

ART 40 NCC
Birth determines personality; but the conceived child shall
be considered born for all purposes that are favorable to it,
provided it be born later with the conditions specified in the
following Art
ART 41 NCC
For civil purposes, the fetus is considered born if it is alive at
the time it is completely delivered from the mother's womb.
However, if the fetus had an intra-uterine life of less than
seven months, it is not deemed born if it dies within twentyfour hours after its complete delivery from the maternal
womb.
ART 42 NCC
Civil personality is extinguished by death.
The effect of death upon the rights and obligations of the
deceased is determined by law, by contract and by will.
GELUZ v. CA
SC did not allow for recovery of damages for the injury and
death of a conceived child which is still in the mothers
womb. Art 40 cannot be invoked since it expressly limits the
provisional personality by imposing the condition that the
child should be subsequently born alive.

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Civil personality is commenced at birth and is extinguished


by death. A declaration of death issued by a competent
court is considered valid for all purposes.
LIMJOCO v. INTESTATE ESTATE OF FRAGANTE
SC ruled that the estate of a deceased applicant can be
granted a CPC to avoid injustice or prejudice resulting from
the impossibility of exercising such legal rights & fulfilling
such legal obligations of the decedent as survived after his
death unless the legal fiction, that the estate is considered a
person, is indulged.

ABSENCE
PRESUMPTIVE DEATH UNDER THE CIVIL CODE
Art 390. After an absence of seven years, it being unknown
whether or not the absentee still lives, he shall be presumed
dead for all purposes, except for those of succession.

ART 41 OF THE FAMILY CODE


A marriage contracted by any person during subsistence of
a previous marriage shall be null and void, unless before the
celebration of the subsequent marriage, the prior spouse
had been absent for four consecutive years and the spouse
present has a well-founded belief that the absent spouse
was already dead. In case of disappearance where there is
danger of death under the circumstances set forth in the
provisions of Art 391 NCC, an absence of only two years
shall be sufficient.
For the purpose of contracting the subsequent marriage
under the preceding paragraph the spouse present must
institute a summary proceeding as provided in this Code for
the declaration of presumptive death of the absentee,
without prejudice to the effect of reappearance of the
absent spouse.

NAME

The absentee shall not be presumed dead for the purpose of


opening his succession till after an absence of ten years. If
he disappeared after the age of seventy-five years, an
absence of five years shall be sufficient in order that his
succession may be opened.

Art 391. The following shall be presumed dead for all


purposes, including the division of the estate among the
heirs:
(1) A person on board a vessel lost during a sea voyage,
or an aeroplane which is missing, who has not been
heard of for four years since the loss of the vessel or
aeroplane;
(2) A person in the armed forces who has taken part in
war, and has been missing for four years;
(3) A person who has been in danger of death under
other circumstances and his existence has not been
known for four years.

Prof. Beale believed that determination of one's


name is not a problem of status since a person is free
to assume a name and change it at will.
The prevalent view in our jurisdiction is that a
persons name is determined by law and can only be
changed through court intervention.
Arts 364-366 NCC govern use of surnames of
children; married women; separated or widowed
women.
Case law: Change of name has been allowed (a) if
the name is ridiculous or tainted with dishonor or
difficult to pronounce; (b) to avoid confusion; (c) as a
consequence of a new status; (d) pursuant to a
desire to adopt a Filipino name and erase a former
alien nationality.

AGE OF MAJORITY

Determines termination of parental authority


In order to determine:
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CAPACITY to contract and exercise civil rights

INSULAR GOVERNMENT v. FRANK


FACTS: Insular Govt entered into an employment contract
with Frank in Illinois when he was still a minor under Phil law
but not under Illinois law. Frank breached the contract so IG
sued him.
HELD: Illinois law should apply. Matters bearing upon the
execution, interpretation and validity of a contract are
determined by the law of the place where the contract is
made.

CHOICE OF LAW IN FAMILY


RELATIONS
PHILIPPINE POLICY ON MARRIAGE AND FAMILY
Art XV, Section 2 of the Constitution
Marriage, as an inviolable social institution, is the foundation
of the family and shall be protected by the State.
Art 220 NCC
In case of doubt, all presumptions favor the solidarity of the
family. Thus, every intendment of law or facts leans toward
the validity of marriage, the indissolubility of the marriage
bonds, the legitimacy of children, the community of property
during marriage, the authority of parents over their children,
and the validity of defense for any member of the family in
case of unlawful aggression.

EXTRINSIC VALIDITY OF MARRIAGE

Law of the place of celebration


Art 2 of the Hague Convention on Celebration and
Recognition of the Validity of Marriage

APT v. APT
FACTS: The marriage of the Apts (both Germans) was
celebrated in Argentina by proxy. The wife, a domiciliary of
England, filed a petition for the nullification of their marriage
on the ground that proxy marriages are not valid in England.
It is, however, valid in Argentina.
HELD: The marriage is valid. The English law on marriage is
locus regis actum. If a marriage is good by the laws of the
country where it is effected, it is good all the world over, no
matter whether the proceeding or ceremony which
constituted marriage according to the law of the place would
or would not constitute marriage in the country of domicile
of one or other of the spouses. Since the marriage was
performed in Buenos Aires and in accordance with its laws,
and since proxy marriage is only a form of the ceremony
and not an essential requisite, the marriage should be
upheld.
Art 26. of the Family Code: All marriages solemnized outside
the Philippines, in accordance with the laws in force in the
country where they were solemnized, and valid there as
such, shall also be valid in this country, except those
prohibited under:
(1) Art 35 (1) marriage between minors even with
consent of parents
(2) Art 35(4) bigamous or polygamous marriages
(except those under Art 41)
(3) Art 35 (5) contracted with mistake as to the identity
of the contracting party
(4) Art 35 (6) subsequent marriage without registering
decree of nullity of former marriage with the civil
registry
(5) Art 36 psychological incapacity
(6) Art 37 and Art 38 - incestuous marriages
Art 3. The formal requisites of marriage are:
(1) Authority of the solemnizing officer;
(2) A valid marriage license except in the cases provided
for by law; and
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(3) A marriage ceremony


ADONG V. CHEONG SENG GEE
SC ruled that to establish a valid foreign marriage pursuant
to this comity provision, it is first necessary to prove before
the Philippine courts the existence of the foreign law as a
question of fact, and it is then necessary to prove the
alleged foreign marriage by convincing evidence.
Statutes intended to validate what otherwise void or invalid
marriages, being curative, will be given retroactive effect.
PEOPLE V. MORA DUMPO
The Court formulated that there is no general statement
regarding the requisites necessary for the validity of a
marriage between Moros according to Mohammedan rites.
This is a fact which must be subject to proof in every
particular case.
It is an essential element in bigamy that the 2 nd marriage
have all the essential requisites of a valid marriage. It
appearing that the 2nd marriage cannot be considered as
such, there is no justification to hold her guilty of bigamy.
WONG WOO YU V. VIVO
Art 15 NCC also provides that laws relating to family rights
or to the status of persons are binding upon citizens of the
Philippines, even though living abroad, and it is well-known
that in 1929 in order that a marriage celebrated in the
Philippines may be valid it must be solemnized either by a
judge of any court inferior to the Supreme Court, a justice of
the peace, or a priest or minister of the gospel of any
denomination duly registered in the Philippine Library and
Museum (Public Act 3412, Section 2). Even if we assume,
therefore, that the marriage of petitioner to Perfecto Blas
before a village leader is valid in China, the same is not one
of those authorized in our country.

INTRINSIC VALIDITY OF MARRIAGE

Capacity to marry
Consent
Public policy of the State

Incestuous marriages
o Marriage between 1st cousins = against public
policy
o In other countries = acceptable
o Canon law allows 1st cousins to marry upon
securing dispensation to marry
Hague Convention on the Validity of Marriages allows
a contracting State to refuse recognition of a
marriage if:
o One spouse was already married
o Spouses are related to one another by blood or
adoption
o Had not obtained the minimum age or acquired
the necessary dispensation
o Lack of mental capacity
o Did not freely consent to the marriage

SOTTOMAYOR V. DE BARROS
FACTS: Sottomayor and de Barros are both Portuguese and
first cousins. Under Portuguese law they are incapable of
contracting marriage. They were married in London.
Sottomayor filed a petition to have the marriage declared
invalid.
HELD: The marriage is invalid. The law of a country where
marriage is solemnized must decide all questions relating to
the validity of the ceremony by which the marriage is
alleged to have been constituted; but as regards questions
on personal capacity, it must depend on the law of the
domicile, and if the laws of any country prohibit its subjects
within certain degrees of consanguinity from contracting
marriage and treats such as incestuous, this imposes on the
subjects a personal incapacity which continues to affect
them so long as they are domiciled in said country and

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renders such marriage invalid wherever it may have been


solemnized.

state where both spouses fix their 1st habitual


residence

IN RE MAYS ESTATE
FACTS: Fannie is Sams niece by half-blood; they are both
Jewish and NY residents. NY prohibits marriage between
uncle and niece, so they went to Rhode Island, where such
marriage is also prohibited except where the parties are
Jewish (the Jewish faith allow such marriages). After the
ceremony they went back to NY to live there.

Art 80 FC
In the absence of a contrary stipulation in a marriage
settlement, the property relations of the spouses shall be
governed by Philippine laws, regardless of the place of the
celebration of the marriage and their residence.
This rule shall not apply:
(1) Where both spouses are aliens;
(2) With respect to the extrinsic validity of contracts
affecting property not situated in the Philippines and
executed in the country where the property is
located; and
(3) With respect to the extrinsic validity of contracts
entered into in the Philippines but affecting property
situated in a foreign country whose laws require
different formalities for its extrinsic validity.

HELD: The marriage is valid. The legality of a marriage


between persons sui juris is to be determined by the law of
the place where it is celebrated. The general principle is that
the rights dependent upon nuptial contracts are to be
determined by the lex loci, subject to 2 exceptions: 1) cases
within the prohibition of positive law, and 2) cases involving
polygamy or incest in a degree regarded generally as within
the prohibition of natural law. As to the first exception, there
is no positive law in New York which serves to interdict the
marriage in Rhode Island of Sam and Fannie, and as to the
second exception, their marriage was not offensive to the
public sense of morality, it being allowed by the Jewish faith.

EFFECTS OF MARRIAGE

Personal Relations of the Spouses


Art 69, FC joint right to fix the domicile

DJUMANTAN v. DOMINGO
Right of an alien spouse of a Filipino to permanently reside
in the Philippines lies not in the fact of marriage but in
compliance with immigration laws

Property Relations of Spouses


o Hague Convention on the Law Applicable to
Matrimonial Property Regimes
o Internal law designated by the spouses before
the marriage or in the absence thereof in the

DIVORCE AND SEPARATION

Divorce may be absolute or limited


Court granting a divorce must have personal
jurisdiction over the spouses and over the property
that it seeks to affect by its decree.
Hague Convention Relating to Divorce and
Separation of 1902 grant of divorce or separation
must comply with the national law of the spouses
and the law of the place where the application for
divorce is made.

DIVORCE DECREES OBTAINED BY FILIPINOS


ABROAD
TENCHAVEZ v. ESCANO
FACTS: Vicenta and Pastor were married without the
knowledge of her parents. Vicenta went to the US to obtain
a divorce, which was granted by the Nevada Court; she
married an American and subsequently acquired American
citizenship. Pastor sued Vicenta for legal separation and
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damages. Vicentas defense is that there was a valid divorce


issued by the Nevada court.
HELD: The divorce decree obtained in the US is not valid,
because at the time it was issued, Vicenta, like Pastor, was
still a Filipino citizen. She was then subject to Philippine law.
Philippine law cannot recognize a foreign decree of absolute
divorce between Filipino citizens, for this would violate
declared public policy.
VAN DORN v. ROMILLO
FACTS: Van Dorn, a Filipina, married American Upton. Ten
years later they were divorced in the US; subsequently, van
Dorn remarried. Upton filed an action against Van Dorn in
the Philippines, asking for an accounting of certain alleged
conjugal properties.
HELD: The divorce decree is valid and binding upon Upton.
Even if divorce is not valid in the Philippines for being
contrary to public policy, only Philippine nationals are
covered by the policy against absolute divorces. Aliens may
obtain divorces abroad, which may be recognized in the
Philippines provided valid according to their national law.
PILAPIL v. IBAY-SOMERA
FACTS: Pilapil and Geiling were married in Germany, but
were later divorced. A few months later, Geiling filed a
complaint for adultery which was dismissed; it was refiled by
the fiscal.
HELD: Geiling has no legal standing to commence the
adultery case because the person who initiates the adultery
case must be an offended spouse, meaning he must still be
married to the accused spouse at the time of the filing of the
complaint. Because of the divorce decree, Geiling is no
longer the husband of Pilapil; hence he had no more legal
standing to commence the adultery case (no longer an
offended spouse).
QUITA V. COURT OF APPEALS

FACTS: Quita and Padlan were married in the Philippines, but


Quita filed for divorce in California which was granted. She
remarried twice after the divorce. Upon Padlans death,
Quita made claims upon his estate as the surviving spouse
and heir of Padlan, alleging that since Padlan was a Filipino
citizen, he remained married to her in spite of the divorce
decree.
HELD: Quitas right to inherit from Padlan depends on her
citizenship at the time the divorce was decreed. If she was
no longer a Filipino citizen at the time of their divorce, the
divorce would be valid as to her and will be recognized in
the Philippines, and she would lose her right to inherit.
OTHER CASES OF NOTE:
REPUBLIC v. IYOY
Basingfrom the facts, Fely only became a citizen in 1988 and
acquired the divorce in 1984, marryingMicklus a year after.
This means that paragraph two of Art 26 cannot be applied
in such away that, Fely is not yet considered an alien at the
time the divorce was acquired and thereforeshe does not
have the capacity to remarry and the marriage is still
considered as subsisting. TheCivil Code also provides that
Filipino Citizen, with regard to family laws and status are
governed by Philippine laws regardless of where they are.
Fely, being a Filipino Citizen then, is not permitted by our
laws to acquire a divorce decree since such is
not recognized in the Philippines.
REPUBLIC v. ORBECIDO
A Filipino (whose Filipina wife obtained a divorce in the US
after acquiring US citizenship) was allowed to have the
divorce decree recognized in the Philippines
SAN LUIS V. SAGALONGOS
SC said that the issue of whether a Filipino who is divorced
by his alien spouse abroad may validly remarry in the
Philippines considering that Felicidads marriage to
Felicisimo was solemnized on June 20, 1974, or before the
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Family Code took effect on August 3, 1988. In resolving this


issue, the SC said that it need not retroactively apply the
provisions of the Family Code, particularly Art 26, par. (2)
considering that there is sufficient jurisprudential basis
allowing the retroactivity of the Family Code.
CORPUZ v. STO. TOMAS (2010)
Standing of foreign spouse
recognized in the Philippines

VALIDITY OF
FOREIGNERS

FOREIGN

to

have

divorce

decree

by a foreigner against his former Filipina spouse. It held that


the foreigner cannot seek reimbursement on the ground of
equity where it is clear that he willingly and knowingly
bought the property despite the prohibition against foreign
ownership of Philippine land enshrined under Section 7, Art
XII of the 1987 Philippine Constitution.

PARENTAL RELATIONS

DIVORCE

BETWEEN

Hague Convention on the Recognition of Divorce and


Legal Separation
o Foreign divorce will be recognized in all
contracting states if at the date of the institution
of the proceedings:
o Respondent or petitioner is a habitual resident or
o Both spouses were nationals of that state or
o If only the petitioner is a national, he should have
his habitual residence there
No law requires Philippine courts to recognize a
foreign divorce between foreigners but it would be
recognized under the principle of comity if not against
public policy.

ANNULMENT AND DECLARATION OF NULLITY

ANNULMENT / NULLITY grounds already exist at the


time of the celebration of the marriage
Two approaches on the grounds that may be invoked:
o Follow law of the place of celebration of the
marriage
o Follow the law of marital domicile

BEUMER v. AMORES
The Court had already denied a claim for reimbursement of
the value of purchased parcels of Philippine land instituted

Legitimacy
o Depends on the personal law of the father
Family Code Arts 163 to 165
Restatement Second:
Section 287
o Local law of the state where either (a) the parent
was domiciled when the childs status of
legitimacy is claimed to have been created or (b)
where the child was domiciled when the parent
acknowledge the child
Section 288 incidents of legitimacy created under
foreign law will be determined under same principles
as Section 287
Parental Authority
o Patria potestas personal law of the father
controls the rights and duties of parents and their
children
o Includes care and rearing of children, custody,
discipline and chastisement

ADOPTION

Legal/Judicial act that creates a relationship similar to


legitimate paternity and filiation
Governed by the personal law of the child
RA 8552 Domestic Adoption Act of 1998
o Applied to adoption by foreigners who have
resided at least 3 consecutive years in the PHL
o Certification of legal capacity to adopt and
allowance of entry of adoptee into the adopters
country
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RA 8043 Inter-Country Adoption Act in compliance


with the Hague Convention on the Protection of
Children and Cooperation in Respect of Inter-Country
Adoption
o Governs adoptions by foreigners ad Filipinos
permanently residing abroad

REPUBLIC v. COURT OF APPEALS


FACTS: Hughes is married to Lenita, a Filipina who was later
naturalized as an American citizen. They filed a petition to
adopt the 3 nephews and niece of Lenita, which was
granted.
HELD: Hughes is not qualified to adopt since he does not fall
under the exceptions in Art. 184 of the Family Code. While
Lenita, as a former Filipino, is qualified to adopt under that
provision, the adoption decree still cannot be granted
because of the requirement in Art. 185 that spouses must
jointly adopt. They cannot do this in CAB because Hughes is
not qualified under the law.
EFFECTS OF ADOPTION
UGGI LINDAMAND THERKELSEN v. REPUBLIC
FACTS: Therkelsen (a German) and his wife Erlinda (a
Filipino), filed a petition to adopt Erlindas natural child. The
application was denied on the ground that an alien cannot
adopt a Filipino unless the adoption would make the Filipino
minor a citizen of the aliens country.
HELD: The application should be granted. Being a
permanent resident here, Therkelsen is not disqualified to
adopt under our laws; to deny the application on the above
stated ground would be to impose a further requisite on
adoptions by aliens beyond those required by law. The
citizenship of the adopter is a matter political, not civil in
nature, and the ways in which it should be conferred lay
outside the ambit of the Civil Code.
NG HIAN v. COLLECTOR OF CUSTOMS

FACTS: Marcosa married Ng Chion Te. She adopted his 2


children by a previous marriage and brought one of them to
the Philippines to study. The child, Ng Hian, was refused
entry into the Philippines.
HELD: Ng Hian may enter the Philippines by virtue of being
adopted by one who has a right to do so. In the case of Ex
Parte Fong Yim, it was held that a Chinese merchant
domiciled in the US has the right to bring into this country
with his wife minor children legally adopted by him in China,
where it is shown that the adoption was bona fide, and that
the children have lived as members of his family and have
been supported by him for several years.

CHOICE OF LAW IN PROPERTY


CONTROLLING LAW

Immovable property lex situs


Movable property variable
o Lex domicilii
o Lex situs
o ex loci actus where the transaction was
completed

CAPACITY TO TRANSFER
LLANTINO V. CO LIONG CHONG
FACTS: The Llantinos leased real property to Chong, a
Chinese national (but subsequently naturalized as a Filipino),
for 60 years. The Llantinos filed an action to quiet title,
claiming that the lease contract was invalid for
circumventing the constitutional prohibition on the
acquisition of land by aliens.
HELD: The lease contract was valid, and Chong had the right
to hold by lease the property involved although at the time

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of execution of the contract, he was still a Chinese national.


In CAB there was no option to buy the leased property in
favor of Chong. There is nothing in the record to indicate
any scheme to circumvent the constitutional prohibition.
Aliens are not completely excluded by the Constitution from
use of lands for residential purposes. Since their residence in
the Philippines is temporary, they may be granted
temporary rights, such as a lease contract which is not
forbidden in the Constitution. The only instance where a
lease contract may be considered invalid is where there are
circumstances attendant to its execution which are used as
a scheme to circumvent the constitutional prohibition.
CHEESMAN v. IAC
FACTS: Thomas Cheesman (an American) was married to a
Filipina, Criselda. The spouses later separated; but Thomas
brought this action to annul the sale of real property made
by Criselda in favor of Padilla. He alleged that the sale is
void for lack of his consent. The property sold was bought by
Criselda using her personal funds, and was registered in her
name only.
HELD: The sale was valid. He has no capacity to question
the sale of the property by his wife on the theory that in
doing so he is merely exercising the prerogative of a
husband in respect of conjugal property. This would permit
indirect controversion of the constitutional prohibition. If the
property were to be declared conjugal, this would accord to
the alien husband an interest and right over the land, which
is not granted to him under the Constitution.

EXCEPTIONS TO THE LEX SITUS RULE

Where the transaction does not affect transfer of title


or ownership of the land (lex intentionis or lex
voluntatis)

LILJEDAHL v. GLASSGOW

FACTS: Bailey secured a debt payable in Iowa to Liljedahl; as


security, he mortgaged his land in Colorado. Bailey sold this
land to Glassgow, with the provision in the deed of sale that
the grantee agrees to pay the mortgagee. Glassgow sold the
land to a third party. Under Iowa law, Glassgow became
bound to pay the mortgage, but not under Colorado law.
HELD: Iowa law should apply, and Glassgow should pay
Liljedahl. Instruments of conveyance, as they relate
primarily to title, are to be construed according to the law of
the situs. But personal covenants or agreements in
instruments of conveyance will be given effect according to
the law of the place where the same is executed and to be
performed.

Where real property is offered by way of security for


the performance of an obligation mortgage would
be governed by lex situs but the loan may be
governed by another legal regime
Testate or intestate succession national law of the
decedent

SITUS OF PROPERTIES

For tax purposes:

ASIATIC PETROLEUM v. CO QUICO


It is well to emphasize in this connection the general
proposition that all property within a State is subject to the
jurisdiction of its courts, and they have the right to
adjudicate title thereto, to enforce liens thereupon, and to
subject it to the payment of the debts of its owners, whether
resident or not. The sovereign power may lay hands on any
and all persons and property within its borders, and where,
as in our case, the functions of government are
departmentalized, what is within the reach of executive and
legislative action, must also be within the reach of the
judiciary. The modern tendency in this regard is to make no
distinction between mobility and immobility of property
established by the time-honored principles of lex rei

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sitae and mobilia personam sequuntur. We find it neither


necessary nor fruitful to indulge in any characterization as
to whether the present proceedings should be described as
those in rem or quasi in rem. Such characterization is of no
legal significance in this connection. The situs of the res is
clear no less than the garnishment of the res at the
commencement of the action, and reasonable notice and
opportunity to be heard presumptively had by virtue of the
publication of the summons in accordance with the
provisions of section 398 of the Code of Civil Procedure.
.

Situs of Money where the money was to be found or


paid
Situs of Debts

HARRIS v. BALK
FACTS: Harris and Balk are both North Carolina domiciliaries.
Harris owed Balk a sum of money. When he was in Baltimore
he was served a writ of garnishment, it appearing that Balk
has a debtor there. He paid pursuant to the writ, but when
he returned to N. Carolina, Balk sued him for recovery of his
indebtedness. Harris pleaded the recovery of the Maryland
judgment.
HELD: The attachment of Harris debt is valid, and the North
Carolina court should give credit to the Maryland judgment.
The obligation of the debtor to pay his debt clings to and
accompanies him wherever he goes. He is as much bound to
pay his debt in a foreign state when therein sued upon his
obligation by his creditor, as he was in the state where the
debt was contracted.
Prof. Beale: this decision did injustice to the creditor, as he
has no power to fix the personal presence of his debtor at
one place or another. It is unjust to submit the creditors
claim to the accident of the debtors presence in one state
or another.

What of the original creditors consent?

Situs of Shares of Stock

CIR v. ANGLO CALIFORNIA NATIONAL BANK


FACTS: The Collector of Internal Revenue assessed
deficiency income taxes against Calamba Sugar Estates for
the capital gains on the sale of Pampanga Sugar Mills shares
of stock. The sales were conducted in SF, California, and
payments were made there.
HELD: CSE not liable for income tax on the capital gains. The
government cannot impose income taxes on capital gains
where the sale took place outside its territorial JD. Foreign
corporations may be levied income taxes only on income
derived from sources within the Philippines. With respect to
capital gains, the place of the sale (which in CAB is
California) is also the place or source of the capital gain.
PATENTS, TRADEMARKS, TRADE NAME AND COPYRIGHT
PHILIPS EXPORT BV v. COURT OF APPEALS
A corporations right to use its corporate and trade name is
a property right, a right in rem, which it may assert and
protect against the world in the same manner as it may
protect its tangible property, real or personal, against
trespass or conversion. It is regarded, to a certain extent, as
a property right and one which cannot be impaired or
defeated by subsequent appropriation by another
corporation in the same field.
EMERALD GARMENT MANUFACTURING v. COURT OF APPEALS
FACTS: H. D. Lee Co., a foreign corporation, filed a petition
for cancellation of registration of the trademark Stylistic Mr.
Lee used on items of clothing by Emerald Garments,
alleging that it so closely resembled H. D. Lees trademark
as to cause confusion, mistake and deception on the public
as to the origin of the goods.
HELD: A foreign corporation may have the capacity to sue
for infringement irrespective of lack of business activity in
the Philippines on account of Section 21-A of the Trademark
Law but the question of whether they have an exclusive
Page | 10

right over their symbol as to justify issuance of the xxx writ


will depend on actual use of their trademarks in the
Philippines.

CHOICE OF LAW CONTRACTS

Acceptance made by letter or telegram does not bind the


offerer except from the time it came to his knowledge. The
contract, in such a case, is presumed to have been entered
into in the place where the offer was made. (Art 1319, Civil
Code)

INTRINSIC VALIDITY OF CONTRACTS


CONTRACTS WITH A FOREIGN ELEMENT

Contract law aims to protect the reasonable


expectations of the parties and to secure the stability
of commercial transactions.
PRIL involves contracts that have one or more foreign
elements:
o the parties are of different nationalities/domiciles
o the prestations are to be fulfilled in different
states
o the place of its execution is different from parties
domiciles and/or the place of its fulfillment and/or
situs of the property subject of the contract

EXTRINSIC VALIDITY OF CONTRACTS


Lex loci celebrationis
Section 9 of the Restatement Second refers to the
formalities which meet the requirements of the place
where the parties executed the contracts.
Art 17, paragraph 1 of the Philippine Civil Code:
The forms and solemnities of contracts, wills, and other
public instruments shall be governed by the laws of the
country in which they are executed.
Art 17, paragraph 2
When the acts referred to are executed before the
diplomatic or consular officials of the Republic of the
Philippines in a foreign country, the solemnities established
by Philippine laws shall be observed in their execution.

Refers to the nature, content and effects of the


agreement
3 choices when resolving conflict of laws issue:
o Law of the place of making (lex loci contractus)
o Law of the place of performance (lex loci
solutionis)
o Law intended by the parties (lex loci intentionis)
Art 1306 of the Civil Code

MACMILLAN AND BLOEDEL v. TH VALDERAMA & SONS


FACTS: Valderama & Sons, thru an n agent, entered into a
contract for purchase of railroad equipment with Macmillan
in Canada. Valderama failed to get an import license
because the Import Control Comm failed to act on his
application. Macmillan suffered damages because it had to
cancel the freight engagement.
HELD: Lex loci solutionis applies. The general rule governing
the validity & construction of a contract & the rights and
liabilities thereunder is that the law of the place of
performance applies.
In case of conflict in determining validity, nature and
obligation and effect of contract, lex loci solutionis prevails
over lex loci contractus.
The laws of Canada, which is the place of performance,
should apply. The failure of the Import Control Comm. to act
on the application of import license cannot constitute a legal
excuse for his failure to perform his obligations under the
contract.

Contracts entered into by letter or telegram


Page | 11

OTHER COL ISSUES IN CONTRACTS


CHOICE OF FORUM/VENUE CLAUSES

COMPAGNIE DE COMMERCE v. HAMBURG AMERIKA


FACTS: Compagnie (french) and Hamburg (Germany)
entered into a charter party to transport Cs goods from
Saigon- Europe. Because of the impending war between
France & Germany, the ship went to Manila because Saigon
is a French port. C filed for breach of contract. H contested
the jurisdiction of Phil courts to try the case because the
contract had a clause directing the settlement of disputes
first to a Board of Arbitration in England.
HELD: Phil. courts have jurisdiction. The parties are free to
waive the stipulation if they so desired.
Phil courts cannot be ousted of their jurisdiction by the
contractual stipulation in the absence of averment and proof
that under the law of England (place of contracting),
compliance with, or an offer to comply with such a
stipulation constitutes a condition precedent to the
institution of judicial proceeding for the enforcement of the
contract.
Besides, Hamburg appeared and answered without objecting
to the courts jurisdiction; it also sought affirmative relief.
KING MAU v. SYCIP
FACTS: King Mau entered into an agency agreement with the
Sycip in New York. King mau was able to sell 1,000 tons of
coconut oil. KM brought an action to collect commission
from the sale. Sycip claimed that the Phil court has no
jurisdiction as the contract was entered in New York.
HELD: Phil court has jurisdiction. A non-resident may sue a
resident in the courts of this country where the defendant

may be summoned and his property leviable upon execution


in case of a favorable, if final and executory judgment.
It is a personal action for the collection of a sum of money
which the CFIs have jurisdiction to try and decide.

HSBC v. SHERMAN
FACTS: HSBC granted Eastern Book Supply an overdraft
secured by the directors of the latter. Eastern failed to pay.
HSBC filed suit in RTC. The defense of the directors is that
Phil courts have no jurisdiction because in the Guarantee
Agreement, it was provided that Singapore shall have
jurisdiction over all disputes arising therein.
HELD: Phil courts have jurisdiction. The parties did not
stipulate that only the courts of Singapore, to the exclusion
of all the rest, has jurisdiction. Neither did the clause in
question operate to divest Phil. courts of jurisdiction.
Jurisdiction is defined as the right of a State to exercise
authority over persons and things within its boundaries
subject to certain exceptions. This authority is exclusive
within and throughout the domain of the State.

Stipulation on venue valid unless:


o Court is required by statute to entertain
o Plaintiff cannot secure relief in the other state
o Other state is substantially more inconvenient
place for trial
o Stipulation was secured through
misrepresentation, duress, abuse of economic
power or other unconscionable means
o Other reason that makes the enforcement of such
stipulation unfair or unreasonable

Page | 12

ARBITRATION CLAUSES
PUROMINES, INC. v. CA
FACTS: Puromines and Philip Bros. entered into a contract of
sale with an arbitration clause. Puromines filed for complaint
in RTC, Manila. Philip Bros. filed a MTD on the basis of an
arbitration clause.
HELD: Arbitration clause is valid. Puromines derives its right
from the bill of lading together with the sales contract & it is
bound by the provisions and terms of the bill of lading and
of the arbitration clause incorporated in the sales contract.
The courts will look with favor upon such amicable
settlements (arbitration) and will only interfere with great
reluctance to anticipate or nullify the action of the arbitrator.
THE BREMEN ET AL v. ZAPATA OFF SHORE COMPANY
FACTS: Zapata, a Houston company, entered into a contract
of towage with Unterweser, a German corp. Contract
contained a forum selection clause which provides that any
dispute arising must be treated before London courts.
Zapata filed a suit in admiralty against Unterweser for
breach of contract and damages in Florida District Court.
Unterweser filed motion to dismiss for lack of jurisdiction
citing the forum-selection clause.
HELD: Florida court has no jurisdiction. As a rule, a forum
clause should control absent a strong showing that it should
be set aside. Court should enforce the forum clause
specifically unless Zapata could clearly show that
a. enforcement would be unreasonable and unjust or
b. that the clause was invalid for such reasons as fraud
or overreaching or
c. if enforcement would contravene a strong public
policy of the forum in which suit is brought, whether
declared by a statute or by judicial decision or

d. if the chosen forum is seriously inconvenient for the


trial of the action. But if the parties contemplated the
claimed inconvenience, it should not be heard to
render the forum clause unenforceable.
The CAB involves a freely negotiated international
commercial contract between the parties. As noted,
selection of a London forum was clearly a reasonable effort
to bring vital certainty to this intl transaction and to provide
a neutral forum experienced and capable in the resolution of
admiralty litigation.
ADHESION CONTRACTS
PAN AM WORLD AIRWAYS v. RAPADAS
The liability is limited by the Notice of Baggage liability.
Although the ticket is a contract of adhesion, it does not
offend against the policy of the law forbidding one from
contracting against his own negligence. The one who
adheres to the contract is in reality free to reject it entirely.
Court finds the provisions in the plane ticket sufficient to
govern the limitations of liabilities of the airline for loss of
luggage. The passenger, upon receiving his plane ticket,
was expected to be vigilant insofar as his luggage is
concerned.
PAL v. CA
Although the airway bill is binding between the parties, the
liability of Pal is not limited on the provisions of the airway
bill. While the Warsaw Convention is law in the Philippines,
the Philippines being a signatory thereto, it does not operate
as an exclusive enumeration of the instances when a carrier
shall be liable for breach of contract or as an absolute limit
of the extent of liability nor does it preclude the operation of
the Civil Code or other pertinent laws.
Also, the willful misconduct and insensitivity of the officers
of PAL in not attempting to explain the damage despite due
demand and the unexplained delay in acting on her claim,

Page | 13

amounted to bad faith and renders unquestionable its


liability for damages.
SPECIAL CONTRACTS
Carriage of Goods by Sea (COGSA)
AMERICAN PRESIDENT LINES LTD. v. KLEPPER
FACTS: K shipped on board APLs vessel personal effects.
Because of damage to the effects, K sued APL. CA affirmed
CFIs finding of liability but awarded damages on the basis
of the COGSA.
HELD: COGSA does not apply but the Civil Code. Art 1753 of
the Civil Code provides that the law of the country to which
the goods are to be transported shall govern the liability of
the common carrier in case of loss, destruction or
deterioration. Under Art 1766, "In all matters not regulated
by this Code, the rights and obligations of common carriers
shall be governed by the Code of Commerce and by special
laws," and in the Civil Code there are provisions that govern
said rights and obligations. Although Section 4 (5) of the
Carriage of Goods by Sea Act states that the carrier shall not
be liable in an amount exceeding $500 per package unless
the value of the goods had been declared by the shipper
and inserted in the bill of lading, this is merely suppletory to
the provisions of the Civil Code.

CONTRACTS FOR INTERNATIONAL AIR


TRANSPORTATION

Warsaw Convention
In most cases decided by the Philippine SC involving
a carriers employees negligence, bad faith or
improper conduct, the Court refused to apply the
Warsaw Convention.

LOPEZ v. PAN AM
FACTS: Despite several confirmations, Sen. Lopez and his
family failed to get 1st class seats and were constrained to
board as tourist passengers of PanAm. CFI, Rizal awarded

damages in their favor. Pan Am admitted the breach of contract


but not the finding of bad faith
HELD: Pan Am acted in bad faith. Pan Am misled the Lopezes
into believing the reservations were valid and was prompted by
self-interests in dong the same (precluding the Lopezes to
secure other tickets). Also, there was negligence by its
employees that were so gross and reckless as to amount to
malice and bad faith, e.g. erroneous cancellation of reservation,
not confirming reinstatement of reservation, confirming
reservation even if EE had knowledge that they were merely
waitlisted and not notifying Lopezes of the cancellation.

KLM v. CA
FACTS: Mendozas went on a world tour. KLM issued the tickets
for the whole trip. Their coupon for Aer Lingus was marked RQ.
Thru KLMs help, reservations were made in the Aer Lingus
flight. Upon arrival, only the minors were allowed to board.
Mendoza sued for breach of contract and for damages bec. of
the humiliation they suffered. KLM denied liability on the basis
of Art. 30 of the Warsaw Convention (successive carriers
liability)
HELD: Art. 30 does not apply and KLM should be accountable
for the tortious act of Aer Lingus.Art. 30 presupposes either an
accident or delay and not the situation in CAB. Although the
tickets provide that KLMs liability for damages is limited to
occurrences in its own airlines, this provision was printed in
very small letters such that a magnifying glass is needed to
read it. It would be unfair to charge Mendozas of automatic
knowledge and it is the duty of KLM to inform them of the
conditions prescribed in the tickets or at least make sure that
they read them before they accepted the tickets. This it failed
to do.

JURISDICTION UNDER THE WARSAW CONVENTION


SANTOS III v. NORTHWEST
Action for damages must be filed in the:
o Domicile of the carrier
o Place of the carriers principal business
o Place of business where the contract was made

Page | 14

Place of destination

AMERICAN AIRLINES v. COURT OF APPEALS


FACTS: Mendoza bought conjunction tickets from Singapore
Airlines. Although it was not a participating airline, AA
exchanged the unused portion of the ticket for a one-way
ticket to New York. However, Mendoza was prevented by
AAs security officers from boarding until all the other
passengers have boarded. He sued action for damages
against AA in RTC. AA claimed that the issuance of a new
ticket created a separate contract of carriage from the one
with SA and therefore, under Art. 28, RTC had no jurisdiction
over the case against AA.
HELD: RTC had jurisdiction; the new ticket is not considered
as separate from the one issued by SA but the contract of
carriage constitutes a single operation. SA & AA are
members of the IATA and under the general pool partnership
agreement they act as agents of each other in the issuance
of tickets to contracted passengers. When AA exchanged
the ticket, it entered it in the IATA clearing house and
undertook to transport M. It thereby assumed the obligation
to take the place of the principal carrier originally
designated and constituted itself as an agent of SA. The
number of tickets issued does not detract from the oneness
of the contract of carriage as long as the parties regard the
contract as a single operation.

OTHER ISSUES

ABSENCE OF AN EFFECTIVE CHOICE OF LAW BY THE


PARTIES court should determine the state of most
significant relationship
LIMITATIONS TO CHOICE OF LAW IN CONTRACTS
o Cannot select a law that has no connection to the
transaction or the parties
o Must apply the amended law unless the change is
so drastic or revolutionary that it could not have
been contemplated by the parties

o
o

May not contract away application of laws


impressed with public interest
Cognovit clauses are generally disallowed in most
US states, unless parties are of equal power and
the debtor agreed to it voluntarily

CHOICE OF LAW IN WILLS,


SUCCESSION AND
ADMINISTRATION OF ESTATES
EXTRINSIC VALIDITY OF WILLS

General rule law of the place where executed


o Foreigner may choose to follow formalities
under his national law, law of his domicile (if
domiciled in RP) or law of the place of execution
of his will
o Filipinos may choose his national law or the law
of the country where his will is executed

IN RE ESTATE OF JOHNSON
This interpretation is erroneous because the full phrase
another state or country, means that the section refers to
either a State in the US or another country. The admission of
the will to probate by the CFI of Manila under Section 636
was therefore correct. Although the CFI Of Manila most likely
erred in taking judicial notice of Illinois law when it
promulgated that the will was executed in conformity with
the laws of Illinois, Ebba is now precluded to raise this issue
because the petition to annul the probate did not allege the
difference between Philippine Law and Illinois law

Joint wills of Filipinos are void even if executed in a


country where joint wills are allowed. In the case of
foreigners whose national laws do not prohibit joint

Page | 15

wills, should their joint will be allowed probate by a


Philippine court?
RULES FOR EXTRINSIC VALIDITY OF WILLS APPLY TO
HOLOGRAPHIC WILLS
BABCOCK TEMPLETON v. RIDER BABCOCK
FACTS: The will of Jennie Rider Babcock was executed in
California. Babcock Templeton, being the mother of the
three beneficiaries of the will, stressed that the laws of
California should govern the probate since Jennie Rider
Babcock acquired domicile in California. William Rider
Babcock opposes this by stressing that her sister never
acquired domicile in California as her latest domicile was
New York.
HELD: Her domicile was California, because even though she
later left California for New York, she never intended to be a
New York domiciliary. The trial court was also correct in
admitting the will for probate under Section 636 of the Code
Of Civil Procedure, because the length of time of her
residence in and eventual death in the Philippines did not
result into a loss of her US citizenship. She never intended
to become a Philippine domiciliary, thus making Section 618
inapplicable to the will she executed abroad.

HELD: Since the governing law with respect to the amount


of successional rights is the national law of the decedent,
the governing law of Adoracions will is Pennsylvania law.
And since Pennsylvania law does not have a system of
legitimes, Hermogenes is therefore not preterited. Although
the Philippines adopt a system of legitimes as a matter of
public policy, such policy does not extend to the
successional rights of foreigners.
WHAT ISSUES ARE USUALLY INVOLVED IN A PROBATE?
General Rule: the probate court can only rule on:
1) extrinsic validity
2) due execution
3) testamentary capacity
4) compliance with requisites or solemnities prescribed
by law

INTERPRETATION OF WILLS

INTRINSIC VALIDITY OF WILLS

Roman Law national law of the decedent

CAYETANO v. LEONIDAS
FACTS: Upon the death of Adoracion Campos, her father
Hermogenes sought to be declared as owner of the entire
estate as the only compulsory heir. On the other hand,
Nenita Paguia (one of Adoracions sisters) sought the
reprobate of the will executed by Adoracion in the US. When
the trial court allowed probate of the will in the Philippines,
Hermogenes raised in issue that the allowance of the will to
probate divested him of his legitime, because the will
preterited him.

Rules of interpretation are to be governed also by


decedents national law.
Where terms of the will are unambiguous, the clear
intention of the testator must be upheld.
In case of ambiguity, intent may be inferred from the
other provisions or the testators contemporaneous
and subsequent acts, in light of laws and customs of
the state the testator is presumed to be most
familiar.
Interpretation that will make the disposition
operative or that will carry out the purpose intended
by the testator will prevail.

REVOCATION
Article 829 of the Civil Code
A revocation done outside the Philippines, by a person who
does not have his domicile in this country, is valid when it is
done according to the law of the place where the will was
made, or according to the law of the place in which the
testator had his domicile at the time; and if the revocation

Page | 16

takes place in this country, when it is in accordance with the


provisions of this Code.

If done by one with domicile in the Philippines


Philippine law or the law of the place of revocation.
Wills are revoked:
o By implication of law
o By some will, codicil or other writing
o By burning, tearing, cancelling or obliterating the
will

PROBATE

Judicial authentication of a will


Rule 70, Section 9 grounds for disallowance of a will

SUNTAY v. SUNTAY
FACTS: Natividad Billian sought to have the will (executed in
the Philippines) of his husband Jose Suntay probated. The
trial court denied probate because during the course of the
proceedings, the will was lost. Later, her son Silvino filed a
petition for the probate of a will allegedly executed by
Suntay in China. The trial court again denied probate, and
was correct in deciding that way, because there was no
proof that:
1. the municipal district court of Amoy, China, is a
probate court
2. there was a law of China on procedure in the probate
or allowance of wills
3. the legal requirements for the execution of a valid
will in China in 1931 were satisfied
4. the order of the municipal district court of Amoy
purports to probate the will
HELD: In the absence of proof that the municipal district
court of Amoy is a probate court and on the Chinese law of
procedure in probate matters, it may be presumed that the
proceedings in the matter of probating or allowing a will in
the Chinese courts are the same as those provided for in our
laws on the subject. Because of this, rules on notice must be

followed. Since Silvino did not cause the notification of the


other heirs, this petition must fall.
VDA. DE PEREZ v. TOLETE
FACTS: Each of the Cunanan spouses (Jose and Evelyn)
executed a will in New York containing similar provisions on
the presumption of survivorship. When the entire family
perished in a fire that gutted their home in New York, Rafael
as the named trustee in the will of Jose filed separate
proceedings in New York for the probate of the wills of his
brother and sister-in-law. Later, Salud Perez (mother of
Evelyn) filed a petition for reprobate in Bulacan. Rafael
opposed by arguing that Salud was not an heir as per New
York law which must be the law that should govern the wills
as they were executed in New York. In deciding the matter,
the necessary evidence that should be submitted are:
(1) the due execution of the will in accordance with the
foreign laws
(2) the testator has his domicile in the foreign country
and not in the Philippines
(3) the will has been admitted to probate in such country
(4) the fact that the foreign tribunal is a probate court
(5) the laws of a foreign country on procedure and
allowance of wills.
Except for the first and last requirements, the petitioner
submitted all the needed evidence. Salud failed to submit
the 1st and 5th requirement. While the probate of a will is a
special proceeding wherein courts should relax the rules on
evidence, the goal is to receive the best evidence of which
the matter is susceptible before a purported will is probated
or denied probate. Not only that, Salud also failed to notify
the heirs of Jose of the proceedings.
HELD: The rule that the court having jurisdiction over the
reprobate of a will shall "cause notice thereof to be given as
in case of an original will presented for allowance" means
that with regard to notices, the will probated abroad should
be treated as if it were an "original will" or a will that is
presented for probate for the first time. Accordingly,
compliance with Sections 3 and 4 of Rule 76, which require
Page | 17

publication and notice by mail or personally to the "known


heirs, legatees, and devisees of the testator resident in the
Philippines" and to the executor are required.

ADMINISTRATION OF ESTATES

Duties to manage properties, settle debts and


distribute the residuum to the heirs

TAYAG v. BENGUET CONSOLIDATED INC.


FACTS: BCI stocks owned by the decedent Idonah Slade
Perkins were in the possession of the domiciliary
administrator County Trust Company of New York. Later, the
CFI Of Manila named Renato Tayag as the ancillary
administrator. When Tayag obtained a court order for the
County Trust Company to deposit the stocks to him, BCI
appealed.
HELD: The appeal must fail. BCI is a Philippine corporation
owing full allegiance and subject to the unrestricted
jurisdiction of local courts. Its shares of stock cannot
therefore be considered in any wise as immune from lawful
court orders. The situs of shares of stock is the place of
domicile of the corporation. And since the power of the
ancillary administrator over shares located here is beyond
question, it follows that the stocks should be in the
possession of Tayag.
Succession and administration of estates are governed by
different laws:

succession national law

administration situs of property


(territorial/JDal)

TRUSTS

A right of property, real or personal, held by one


party for the benefit of another
May be created by deed during the lifetime of the
settler/creator of the trust or by will

Primary consideration of courts is to carry out the


intent of the creator of the trust
Rules governing wills will apply to testamentary
trusts

CHOICE OF LAW IN TORTS AND


CRIMES
TRADITIONAL THEORY

Lex loci delicti commissi


Common Law place where the last event necessary
to make the actor liable occurs
Civil Law place were the tortious conduct is
committed

LOUCKS v. STANDARDS OIL CO.


Where the tort law of the foreign state (Massachusetts) is
more favorable and does not contravene policy of the forum
(New York); foreign law will be used

MODERN THEORIES

Place of Most Significant Relationship

SAUDI ARABIAN AIRLINES v. CA


FACTS: Morada was a flight stewardess of Saudi Airlines. She
was involved in an attempted rape case, which led to her
conviction of violation of Islamic laws in Saudi. The Prince of
Makkah ruled that she was wrongfully convicted. However,
she was terminated from her employment by Saudia.
HELD: The RTC of Manila has JD to try the case, applying the
state of most significant relationship rule. The following
contacts should be considered in using this rule: place
where the injury occurred, place where the conduct causing
injury occurred, domicile or residence or nationality or place

Page | 18

of business of the corporation, and place where the


relationship between the parties is centered.
In CAB, the Philippines had the most significant contacts.
The overall injury occurred in the Philippines, Morada is a
resident and a Filipina national, Saudia is a foreign
corporation engaged in business here, and the relationship
of the parties is centered here.
NAVIDA v. DIZON JR.
It is an error on the part of the court when it dismissed the
cases on the ground of lack of jurisdiction on the mistaken
assumption that the cause of action narrated by Navida and
Abella took place abroad and have occurred outside and
beyond the territorial boundaries of the Philippines, i.e. the
manufacture of pesticides, their packaging in the containers,
their distribution through sale other disposition, resulting in
their becoming part of the stream of commerce, and hence,
outside the jurisdiction of the RTCs.
CAB: The cases involved are not criminal cases where
territoriality, or the situs of the act complained of, would be
determinative of jurisdiction and venue for trial of cases. In
personal civil actions, such as claims for payment of
damages, the ROC allow the action to be commenced and
tried in the appropriate court, where any of the plaintiffs or
defendants resides, or in the case of a non-resident
defendant, where he may be found, at the election of the
plaintiff.

Interest Analysis consider the relevant concerns of


the state in the case and its interest in having its law
applied to the issue
Cavers Principle of Preference extends the benefit
of a law in one state even if there is no such law in
the state where the injury occurs

FOREIGN TORT CLAIMS

Tortious liability is personal to the tortfeasor and


follows him where he may be found.
Conditions for enforcement
o Tort is based on civil liability and not on crime
o Enforcement of the foreign tort is not against the
public policy of the forum
o Judicial machinery of forum is adequate to satisfy
the claim

PRODUCT LIABILITY

General rule: May be brought by the victim in his


home state against an out-of-state manufacturer
Exception: ASAHI METAL INDUSTRY CO. v. SUPERIOR
CT OF CALIFORNIA

ASAHI METAL v. SUPERIOR COURT OF CALIFORNIA


FACTS: Asahi Metal manufactures tire valve assemblies in
Japan and exports them, including to a Taiwanese company
which, in turn, incorporates them into finished tires sold in
the US. The driver of a motorcycle, who had an accident
resulting in injuries to him and death to his passenger, sued
the Taiwanese company. The Taiwanese company filed a
cross-complaint against Asahi.
HELD: The California court has no JD over Asahi Metal. The
constitutional touchstone/test of due process is whether the
defendant purposefully established minimum contacts in
the forum state. And minimum contacts must have a basis
in some act by which the defendant purposefully avails itself
of the privilege of conducting activities within the forum
state, thus invoking the benefits and protections of its laws.
In the CAB, no purposeful availment of the California market
on the part of Asahi. It does not do business in California;
has no office, agents, employees, or property in Cal.; does
not advertise or otherwise solicit business there; and did not
create, control, or employ the distribution system that
brought its valves to California.
Page | 19

Action also cannot be maintained in a state that has


no connection to the transaction but was chosen as
the forum simply to avail of favorable laws.

THE ALIEN TORT ACT

Grants US district courts original jurisdiction over civil


actions of aliens for a tort committed in violation of
the law of nations or a treaty of the United States
even if committed outside US territory.
Based on the theory of vested rights and on the
internalization of international laws on human rights.
Marcos human rights violations cases in the US
Exception: Guinto v. Marcos

GUINTO v. MARCOS
FACTS: Guinto and Suarez filed an action for damages
against Marcos in California under the Alien Tort Claims Act.
According to Guinto, Marcos act of seizing their film 100
Days in September violated their freedom of speech.
HELD: Test to determine when a violation of the law of
nations has occurred there has been a violation by one or
more individuals of those standards, rules or customs a)
affecting the relationship between states or between an
individual and a foreign state, and b) used by those states
for their common good and/or dealings inter se. A violation
of the First Amendment right of free speech does not rise to
the level of such universally recognized rights as to
constitute a violation of the law of nations.
The Alien Tort Statute justifies exercise of court JD over
completely foreign tort cases because of the universal evil
exemplified by human rights violations. This is so even
though there are no significant contacts between the courts
and the parties and events nor substantial state interest in
the case other than a general desire for compliance with
customary international law. That is why in order for the
Alien Tort Act to apply, there is a need to establish that the

tortious conduct violated an internationally protected human


right.

PHILIPPINE RULE ON FOREIGN TORTS

No statute governing enforcement of claims for


foreign torts

TIME v. REYES
FACTS: Villegas and Enrile filed a complaint for damages
against Time, Inc. upon an alleged libel arising from a
publication of Time Magazine. Plaintiffs filed their action in
CFI Rizal. But according to the applicable law, they may file
the action only in the place of first publication or in the City
of Manila (since they are public officers).
HELD: The case should be dismissed for improper venue.
The only alternative allowed to the public official is to
prosecute in the place where the offending article was
printed and first published; but in the CAB the alternative
was not open to plaintiffs since the offending publication
was not printed in the Philippines.
In Time, Inc., if the court had not characterized the issue as
jurisdictional, and decided the case from a conflicts tort
perspective, it could have taken cognizance of the case
following the most significant relations approach because of
the significant links between the forum and the parties.
DIFFERENCE BETWEEN LIABILITY FOR A TORT AND FOR A
CRIME
TORT
CRIME
Liability is
transitory
and
personal
and may
be
prosecute
d where
the
offender

Liability is
territorial

Page | 20

may be
found

CHOICE OF LAW CORPORATIONS


Injury is
to an
individual

Injury is
to the
State

Purpose
of an
action is
to
indemnify
victim

Purpose
of the
action is
to punish
and
reform

EXCEPTIONS TO THE TERRITORIAL PRINCIPLE IN


CRIMINAL LIABILITY

Immunity of State officials, diplomatic


representatives, etc,

LIANG HUEFENG v. PEOPLE


FACTS: Liang, a Chinese working at the ADB, was charged by
a fellow worker with grave oral defamation. The lower court
dismissed the complaint on the ground that Liang is covered
by the immunity provision under the Agreement between
ADB and the Phil. Government.
HELD: Liang is not immune from suit. The immunity under
the Agreement is not absolute, and it only extends to acts
done in official capacity. Slandering a person could not
possibly be covered by the immunity agreement because
our laws do not allow the commission of a crime, such as
defamation, in the name of official duty.

Crimes committed on foreign vessels even if within


territorial waters of the coastal state
Certain crimes which by law are punished even if
committed abroad

PERSONAL LAW OF A CORPORATION

Place of incorporation
ME GRAY v. INSULAR LUMBER COMPANY
FACTS: Gray, a stockholder of Insular (incorporated in NY)
filed an action in CFI to compel Insular to allow him to
examine its books. Sec. 77 of NY Stock Corp Law only gives
the right to stockholders owning 3% of the capital stock of
the company. Gray does not own the required shares.
HELD: Gray is not entitled to the right to examine the books
of Insular. Gray is bound by the NY law which only gives him
the right to receive from the treasurer of the corporation a
statement of affairs covering a particular account of all its
assets and liabilities. Neither can his rights be granted under
common law absent a showing that:
a. he seeks information for an honest purpose or to
protect his interest as stockholder
b. he exercises right in good faith and for a specific and
honest purpose not merely to satisfy curiosity or for
speculative or vexatious purposes.
Right of shareholder to inspect books of a foreign
corporation licensed to do business in the Philippines is
governed by foreign law
BANK OF AUGUSTA v. EARLE
FACTS: Bank of A (incorporated in Georgia), thru MGran
bought bills from Earle in Alabama. Bills were unpaid so
Bank sued Earle. TC ruled that the Georgian Bank could not

Page | 21

exercise power in Alabama thereby making the contracts


void.
HELD: Bank can exercise its powers in Alabama and the
contracts are therefore valid. It is well-settled that by the
law of the comity of nations, a corp. created by 1
sovereignty is permitted to make contracts in another and
sue in its courts and that the same law of comity prevails in
several States of US including Alabama. Alabama courts
have held that a foreign corp may sue in its courts based on
the comity of nations.
FOUR BASIC (IMPORTANT) THEORIES FROM THE CASE:
(1) A corporation has no legal status beyond the bounds
of state where it was created.
(2) It cannot exercise powers beyond its corporate
charter or its personal law.
(3) No state is under any obligation to adhere to the
principle of comity.
(4) No state is obliged to grant a foreign corporation
rights and privileges granted to its own citizens.

EXCEPTIONS TO THE INCORPORATION TEST

Constitutional and Statutory Restrictions

PALTING v. SAN JOSE


FACTS: Palting opposes the tie-up between San Jose
Petroleum (a Panamanian corp.) and San Jose Oil (domestic
corp.) as being violative of the Constitution and the
Petroleum Act. SJP claimed that it is entitled to the Parity
Amendment which grants to US citizens the right to use &
exploit natural resources in the Phils because its
stockholders are US citizens.

HELD: SJP is not covered by the Parity Agreement. It is not


owned or controlled directly by US citizens. It is owned by
another Panamanian corp., Oil Investments. Oil Investments
on the other hand is owned by 2 Venezuelan corps. Even
assuming that the stocks of the 2 Venezuelan corps are
owned by US citizens, to hold that the set-up in CAB falls
within the Parity Amendment is to unduly stretch and strain
the language and intent of the law. There would be practical
impossibility to determine at any given time the citizenship
of the controlling stock.
Control Test During War
FILIPINAS COMPANIA DE SEGUROS v. CHRISTERN
HUENEFELD & CO.
FACTS: Christern (German Co.) filed a claim against Filipinas
(US Co.) for recovery on fire insurance policies issued by the
latter. F refused to pay claiming that the policies ceased to
be in effect on the date the US declared was against
Germany. Dir. Of Bureau of Financing directed F to pay C.
HELD: The policy ceased to be valid and binding because of
the fact that majority of the stockholders of C are Germans
and it became an enemy corporation when war was
declared. Under Phil Insurance Code, anyone except a public
enemy may be insured. C is a public enemy at the time the
insurable risk occurred. But C is entitled to a return of the
premiums paid.

DOMICILE
OR
CORPORATIONS

RESIDENCE

OF

FOREIGN

May acquire a residence other than its place of


incorporation (domicile)
Article 51 of Civil Code if the law creating them
does not fix the domicile of juridical persons the
same shall be where their legal representation is
established or where they exercise their principal
functions

Page | 22

STATE INVESTMENT HOUSE v. CITIBANK


FACTS: CMI obtained loans from Citibank. CMI defaulted.
Citibank filed petition for involuntary insolvency against CMI
with CFI, Rizal. State Investment, a creditor of CMI, opposed
claiming that Citibank had no jurisdiction because the banks
are not resident creditors of CMI.
HELD: The Phil branches of the bank are residents of the
Phils being resident foreign corporations as defined in the
Tax Code and other Banking Laws. What effectively makes a
foreign corp a resident corp in the Phils is its actually being
in the Phils and licitly doing business here (locality of
existence) The grant of license merely gives legitimacy to its
doing business here but it does not make the corp a
resident. Also, the failure of the bank to aver categorically
that they are residents are not fatal to the cause of action
where it alleged that it is a foreign bank licensed to do
business here.

sued Cebu Stevedoring. CS filed a MTD bec. AMI had no


capacity to sue. TC ruled that it must allege that it has a
license to be able to sue.
HELD: Such allegation is unnecessary. However, AMIs mere
allegation that it is a foreign corp is not sufficient. It must
state WON it is doing business in the Phils bec different rules
attach to the same. If it is engaged in business, it must be
licensed to be able to sue. If not so engaged, the license is
not required and it may sue esp. if it is a single/isolated
transaction.
Facts showing the capacity to sue or be sued of a
corporation must be averred

EXCEPTIONS TO THE LICENSE REQUIREMENT

RIGHT OF FOREIGN CORPORATION TO BRING SUIT


HOME INSURANCE CO. v. EASTERN SHIPPING
FACTS: Home Insurance was subrogated to the rights of
shippers against eastern Shipping for damages on cargo.
Eastern refused to pay. HI filed action to recover sum of
money. TC dismissed because HI failed to prove capacity to
sue.
HELD: HI has capacity to sue because at the time the
complaints were filed, it already had a license to conduct
insurance business in the Phils. Insurance contracts are not
null and void for lack of license at the time it was entered
into. The Corp. Code is silent on the status of the said
contracts. Also, the object of the law in requiring registration
is to subject the foreign corp. to the JD of our courts.
ATLANTIC MUTUAL INSURANCE v. CEBU STEVEDORING
FACTS: Cebu Stevedoring carried copra for Procter &
Gamble. Copra were insured with AMI. Bec. of damages, AMI

ISOLATED TRANSACTIONS
ACTION TO PROTECT INTELECTUAL PROPERTY
AGREEMENTS FULLY TRANSACTED OUTSIDE THE
PHILIPPINES (e.g. marine insurance policies issued by
foreign insurer on cargo shipped by Philippine carrier)
ACTION IS ONLY A COROLLARY DEFENSE TO A SUIT
AGAINST IT

WHAT CONSTITUTES DOING BUSINESS

Installation of products, registration of trade name,


conduct of training programs, designation of a
distributor (Wang Laboratories Inc v. Mendoza)
Appointment of a local airlines as its sales agent (CIR
v. JAL)

CIR v. JAL
FACTS: JAL was assessed deficiency income tax by CIR for
the sales of its ticketing agent (PAL) in the Phils. JAL opposed
and claimed that as a non-resident foreign corp. it can only
be taxed on income from Phil sources.
HELD: JAL is a resident foreign corporation under the Tax
Code. For a foreign corporation to be regarded as doing
Page | 23

business, there must be a continuity of conduct and


intention to establish a continuous business (i.e.
appointment of a local agent) and not a temporary one. JAL
constituted PAL as a local agent to sell tickets which is the
lifeblood of airline tickets, the generation of sales being its
paramount objective.

Series of transactions involving futures trading


(Merrill Lynch case) or licensing of a sales agent that
may also be granted loans (Granger Associates case)

GRANGER v. MICROWAVE SYSTEMS


FACTS: Granger (US) sued MSI (Phil) for recovery of a sum of
money. MSI did not pay and claimed that G had no capacity
to sue bec. it was unlicensed.
HELD: G had no capacity to sue because of its being an
unlicensed foreign corp doing business in the Phils. Neither
does it fall under the established exceptions. Granger had
the burden of showing that the finding fell under an
exception. The purpose of requiring license is to enable Phil
courts to exercise jurisdiction over them. If the foreign corp
operates here without submitting to our laws by securing a
license, they may not be allowed to invoke our laws for their
protection.
STEELCASE INC. v. DESIGN INTERNATIONAL SELECTIONS
According to the Supreme Court, the following acts shall not
be deemed "doing business" in the Philippines: (a) mere
investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the
exercise of rights as such investor; (b) having a nominee
director or officer to represent its interest in such
corporation; (c) appointing a representative or distributor
domiciled in the Philippines which transacts business in the
representative's or distributor's own name and account; (d)
the publication of a general advertisement through any print
or broadcast media; (e) maintaining a stock of goods in the
Philippines solely for the purpose of having the same
processed by another entity in the Philippines; (f)

consignment by a foreign entity of equipment with a local


company to be used in the processing of products for
export; (g) collecting information in the Philippines; and (h)
performing services auxiliary to an existing isolated contract
of sale which are not on a continuing basis, such as
installing in the Philippines machinery it has manufactured
or exported to the Philippines, servicing the same, training
domestic workers to operate it, and similar incidental
services.
Based on this list, the appointment of a distributor in the
Philippines is not sufficient to constitute "doing business"
unless it is under the full control of the foreign corporation. If
the distributor is an independent entity which buys and
distributes products, other than those of the foreign
corporation, for its own name and its own account, the latter
cannot be considered to be doing business in the
Philippines.
Applying these rules, DISI was founded in 1979 and is
independently owned and managed. In addition to Steelcase
products, DISI also distributed products of other companies
including carpet tiles, relocatable walls and theater settings.
The dealership agreement between Steelcase and DISI had
been described by the owner himself as a buy and sell
arrangement. This clearly belies DISIs assertion that it was
a mere conduit through which Steelcase conducted its
business in the country. From the preceding facts, the only
reasonable conclusion that can be reached is that DISI was
an independent contractor, distributing various products of
Steelcase and of other companies, acting in its own name
and for its own account. As a result, Steelcase cannot be
considered to be doing business in the Philippines by its act
of appointing a distributor as it falls under one of the
exceptions under R.A. No. 7042.
Although the foreign corporation in this case was declared to
be not doing business in the Philippines, this case,
nonetheless, explicitly declares another exception to the

Page | 24

rule provided in Section 133 of the Corporation Code of the


Philippines that [n]o foreign corporation transacting
business in the Philippines without a license, or its
successors or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any court or
administrative agency of the Philippines Following the
ruling in this case, a foreign corporation doing business in
the Philippines without a license may maintain suit in the
Philippines against a domestic corporation or person who is
party to a contract as the domestic corporation or person is
deemed estopped from challenging the personality of the
foreign corporation.

BRANCHES OF FOREIGN CORPORATIONS


CITIBANK v. SABENIANO
Respondent cannot be deemed to have authorized the use
of her dollar deposits with Citibank-Geneva to liquidate her
loans with petitioner Citibank when she signed the PNs for
her loans. As has been established in the preceding
discussion, "Citibank, N.A." can only refer to the local
branches of petitioner Citibank together with its head office.
Unless there is any showing that respondent understood and
expressly agreed to a more far-reaching interpretation, the
reference to Citibank, N.A. cannot be extended to all other
branches of petitioner Citibank all over the world. Although
theoretically, books of the branches form part of the books
of the head office, operationally and practically, each branch
maintains its own books which shall only be later integrated
and balanced with the books of the head office. Thus, it is
very possible to identify and segregate the books of the
Philippine branches of petitioner Citibank from those of
Citibank-Geneva, and to limit the authority granted for
application as payment of the PNs to respondent's deposits
in the books of the former.
PDIC v. CITIBANK NA AND BANK OF AMERICA
A branch has no separate legal personality. This Court is of
the opinion that the key to the resolution of this controversy
is the relationship of the Philippine branches of Citibank and

BA to their respective head offices and their other foreign


branches.
CAB: Citibank and Bank of America did not incorporate a
separate domestic corporation to represent its business
interests in the Philippines. Their Philippine branches are
merely branches without a separate legal entity from their
parent company.
As held in the case of Sokolott v. National City Bank of New
York: Where a bank maintains branches, each branch
becomes a separate entity with separate books of account.
When considered, with the relation to the parent bank they
are not independent agencies; they are, what their name
imports, merely branches, and are subject to the supervision
and control of the parent bank.

SPECIAL CORPORATIONS

Religious Societies and the Corporation Sole


Transnational Corporations
o Issue whether separate existence of parent
company and the subsidiary has been maintained

PARTNERSHIPS

Personal law law of its creation or it not identified


by the law creating it where its legal representation
is established or where it exercises its principal
functions
Conflict may arise if personal law of partnership does
not recognize it as a separate legal entity and
transacts in a jurisdiction where it is given a separate
personality or vice versa

REMEDIAL LAW

Page | 25

ARCILLA v. TEODORO
The certification of non-forum shopping executed in
a foreign country is not covered by Section 24, Rule 132
Rules of Court. The required certification of an officer in the
Foreign Service under Section 24 refers only to the
documents enumerated in Section 19(a). Had the Court
intended to include notarial documents, it should not have
specified only the documents referred to under paragraph
(a) of Section 19.
To be admissible for any purpose in Philippine courts, foreign
public documents must be certified by any officer of the

Philippine legation stationed in the country where the


documents could be found or had been executed. However,
the Rule basically pertains to written official acts, or records
of the official of the sovereign authority, official bodies and
tribunals, and public officers, whether of the Philippines, or
of a foreign country. It explicitly refers only to paragraph (a)
of Sec. 19. If the rule comprehends to cover notarial
documents, the rule could have included so. What is
important is that the applicant certified before a
commissioned officer clothed with powers to administer
oath that she has not and will not commit forum shopping.

Page | 26