The admission at the trial in a court of a foreign country,

U.S. Supreme Court

according to its law and practice, of testimony not under

oath and without opportunity of cross-examination, and

Hilton v. Guyot, 159 U.S. 113 (1895)

Hilton v. Guyot
Nos. 130, 34

of

documents

with

which

the

defendant

had

no

connection and which by our law would not be admissible

against him, is not of itself a sufficient ground for
impeaching the judgment of that court in an action
brought upon it in this country.

Argued April 10, 1894

When an action is brought in a court of this country by a
Decided June 3, 1895
159 U.S. 113
ERROR TO THE CIRCUIT COURT OF THE UNITED STATES

citizen of a foreign country against one of our own

citizens to recover a sum of money adjudged by a court
of that country to be due from the defendant to the
plaintiff, and the foreign judgment appears to have been
rendered by a competent court, having jurisdiction of the

FOR THE SOUTHERN DISTRICT OF NEW YORK

Syllabus

cause and of the parties, and upon due allegations and

proofs and opportunity to defend against them, and its
proceedings are according to the course of a civilized

A citizen and resident of this country who has his

jurisprudence, and are stated in a clear and formal

principal place of business here but has an agent in a

record, the judgment is prima facie evidence, at least, of

foreign country and is accustomed to purchase and store

the truth of the matter adjudged, and the judgment is

large quantities of goods there, and, in a suit brought

conclusive upon the merits tried in the foreign court

against him by a citizen and in a court of that country,

unless some special ground is shown for impeaching it, as

appears and defends with the sole object of preventing

by showing that it was affected by fraud or prejudice or

his property within the jurisdiction, but not in the custody

that, by the principles of international law and by the

of that court, from being taken in satisfaction of any

comity of our own country, it is not entitled to full credit

judgment that may be recovered against him there

and credit.

cannot, in an action brought against him in this country

upon such a judgment, impeach it for want of jurisdiction
of his person.

A judgment for a sum of money, rendered by a court of a

foreign country, having jurisdiction of the cause and of
the parties, in a suit brought by

Page 159 U. S. 114

maintained a regular store and place of business at Paris;

that during the same time, Charles Fortin & Co. carried on

one

of

its

citizens

against

one

of

ours,

is prima

facie evidence only, and not conclusive of the merits of

the claim in an action brought here upon the judgment if
by the law of the foreign country, as in France, judgments

the manufacture and sale of gloves at Paris, and the two

firms had there large dealings in that business, and
controversies arose

in the

adjustment

of accounts

between them.

of our own courts are not recognized as conclusive.

The complaint further alleged that between March 1,
The first of these two cases was an action at law, brought
December 18, 1885, in the Circuit Court of the United
States for the Southern District of New York, by Gustave
Bertin Guyot, as official liquidator of the firm of Charles
Fortin & Co., and by the surviving members of that firm,
all aliens and citizens of the Republic of France, against
Henry Hilton and William Libbey, citizens of the United
States and of the State of New York and trading as

1879, and December 1, 1882, five suits were brought by

Fortin & Co. against Stewart & Co. for sums alleged to be
due, and three suits by Stewart & Co. against Fortin &
Co., in the Tribunal of Commerce of the Department of
the Seine, a judicial tribunal or court organized and
existing under the laws of France, sitting at Paris and
having jurisdiction of suits and controversies between
merchants or traders growing

copartners in the cities of New York and Paris and

elsewhere under the firm name of A. T. Stewart & Co. The

Page 159 U. S. 115

action was upon a judgment recovered in a French court

at Paris, in the Republic of France, by the firm of Charles
Fortin & Co., all of whose members were French citizens,
against Hilton & Libbey, trading as copartners, as
aforesaid, and citizens of the United States and of the
State of New York.

out of commercial dealings between them; that Stewart &

Co. appeared by their authorized attorneys in all those
suits, and that, after full hearing before an arbitrator
appointed by that court and before the court itself, and
after all the suits had been consolidated by the court,
final judgment was rendered on January 20, 1883, that

The complaint alleged that in 1886 and since, during the

Fortin & Co. recover of Stewart & Co. various sums,

time of all the transactions included in the judgment sued

arising out of the dealings between them, amounting to

on, Hilton and Libbey, as successors to Alexander T.

660,847 francs, with interest, and dismissed part of Fortin

Stewart and Libbey, under the firm name of A. T. Stewart

& Co.'s claim.

& Co., carried on a general business as merchants in the

Cities of New York and Paris and elsewhere, and

The complaint further alleged that appeals were taken by

both parties from that judgment to the Court of Appeal of

Paris,

Third

record

"that the said courts respectively had jurisdiction of the

organized and existing under the laws of the Republic of

subject matter of the controversies so submitted to them,

France and having jurisdiction of appeals from the final

and of the parties, the

judgments

Section,

of

the

an

appellate

Tribunal

of

court

of

Commerce

of

the

Department of the Seine, where the amount in dispute

exceeded the sum of 1,500 francs, and that the said
Court of Appeal, by a final judgment rendered March 19,
1884, and remaining of record in the office of its clerk at
Paris, after hearing the several parties by their counsel,
and upon full consideration of the merits, dismissed the
appeal of the defendants, confirmed the judgment of the
lower court in favor of the plaintiffs, and ordered, upon
the plaintiffs' appeal, that they recover the additional
sum of 152,528 francs, with 182,849 francs for interest

Page 159 U. S. 116

said defendants having intervened, by their attorneys
and counsel, and applied for affirmative relief in both
courts; that the plaintiffs have hitherto been unable to
collect the said judgments or any part thereof, by reason
of the absence of the said defendants, they having given
up their business in Paris prior to the recovery of the said
judgment on appeal, and having left no property within
the jurisdiction of the Republic of France out of which the
said judgments might be made;"

on all the claims allowed, and 12,559 francs for costs and
expenses.

and that there are still justly due and owing from the
defendants to the plaintiffs upon those said judgments

The complaint further alleged that Guyot had been duly

appointed

by

the

Tribunal

of

Commerce

of

the

Department of the Seine official liquidator of the firm of

certain sums, specified in the complaint, and amounting

in all to 1,008,783 francs in the currency of the Republic
of France, equivalent to $195,122.47.

Forth & Co., with full powers, according to law and

commercial usage, for the verification and realization of

The defendants, in their answer, set forth in detail the

its property, both real and personal, and to collect and

original contracts and transactions in France between the

cause to be executed the judgments aforesaid.

parties and the subsequent dealings between them

modifying those contracts, and alleged that the plaintiffs

The complaint further alleged that the judgment of the

Court of Appeals of Paris, and the judgment of the
Tribunal of Commerce, as modified by the judgment of
the appellate court, still remain in full force and effect;

had no just claim against the defendants, but that, on the

contrary, the defendants, upon a just settlement of the
accounts, were entitled to recover large sums from the
plaintiffs.

The answer admitted the proceedings and judgments in

establish counterclaims arising out of the transactions

the French courts and that the defendants gave up their

between the parties, and to compel the production and

business in France before the judgment on appeal, and

inspection of Fortin & Co.'s books, and that they sought

had no property within the jurisdiction of France out of

no other affirmative relief in that tribunal.

which that judgment could be collected.

The answer further alleged that, pending that litigation,
The answer further alleged that the Tribunal of Commerce

the defendants discovered gross frauds in the accounts of

of the Department of the Seine was a tribunal whose

Fourtin & Co., that the arbitrator and the tribunal declined

judges were merchants, ship captains, stockbrokers, and

to compel Fortin & Co. to produce their books and papers

persons engaged in commercial pursuits, and of which

for inspection, and that, if they had been produced, the

Charles Fortin had been a member until shortly before

judgment would not have been obtained against the

the commencement of the litigation.

defendants.

The answer further alleged that in the original suits

The answer further alleged that without any fault or

brought against the defendants by Fortin & Co., the

negligence on the part of the defendants, there was not a

citations were left at their storehouse in Paris; that they

full and fair trial of the controversies before the arbitrator,

were then residents and citizens of the State of New York,

in that no witness was sworn or affirmed; in that Charles

and neither of them at that time, or within four years

Fortin was permitted to make, and did make, statements

before, had been within, or resident or domiciled within,

not under oath containing many falsehoods; in that the

the jurisdiction of that tribunal or owed any allegiance to

privilege of cross-examination of Fortin and other persons

France, but that

who made statements before the arbitrator was denied to

the defendants, and in that extracts from printed

Page 159 U. S. 117

they were the owners of property situated in that country
which would by the law of France have been liable to
seizure if they did not appear in that tribunal, and that
they unwillingly, and solely for the purpose of protecting
that property, authorized and caused an agent to appear
for them in those proceedings, and that the suits brought
by them against Fortin & Co. were brought for the same
purpose, and in order to make a proper defense, and to

newspapers, the knowledge of which was not brought

home

to

the

defendants,

and

letters

and

other

communications in writing between Fortin & Co. and third

persons, to which the defendants were neither privy nor
party, were received by the arbitrator; that without such
improper evidence, the judgment would not have been
obtained, and that the arbitrator was deceived and
misled by the false and fraudulent accounts introduced
by Fortin & Co. and by the hearsay testimony given,

without the solemnity of an oath and without cross-

judgment should be enforced against a citizen of the

examination, and by the fraudulent suppression of the

United States, and that, if there had been a full and fair

books and papers.

trial upon the merits of the controversies so pending

before said tribunals, no judgment would have been

The answer further alleged that Fortin & Co. made up

obtained against said Stewart & Co."

their statements and accounts falsely and fraudulently,

and with

"Defendants, further answering, allege that it is contrary

to

Page 159 U. S. 118

the said courts of France, and those courts were deceived

and misled thereby; that owing to the fraudulent
suppression of the books and papers of Fortin & Co. upon
the trial and the false statements of Fortin regarding
matters involved in the controversy, the arbitrator and
the courts of France

that

the

judgment

hereinbefore

the merits thereof; that by the laws of the Republic of

France, to-wit, article 181 [121] of the Royal Ordinance of
June 15, 1629, it is provided namely:"
"Judgments

rendered,

contracts

or

obligations

recognized, in foreign kingdoms and sovereignties, for

any cause whatever shall give rise to no lien or execution
in our Kingdom. Thus, the contracts shall stand for simple

"were deceived and misled in regard to the merits of the

pending

justice

mentioned should be enforced without an examination of

intent to deceive the defendants and the arbitrator and

controversies

natural

before

them,

and

wrongfully

decided against said Stewart & Co., as hereinbefore

stated; that said judgment, hereinbefore mentioned, is
fraudulent, and based upon false and fraudulent accounts

promises, and, notwithstanding such judgments, our

subjects against whom they have been rendered may
contest their rights anew before our own judges."
"And it is further provided by the laws of France, by
article 546 of the Code de Procedure Civile, as follows:"

and statements, and is erroneous in fact and in law, and

is void; that the trial hereinbefore mentioned was not

" Judgments rendered by foreign tribunals shall be

conducted according to the usages and practice of the

capable of execution

common law, and the allegations and proofs given by

said Fortin & Co., upon which said judgment is founded,
would not be competent or admissible in any court or
tribunal of the United States, in any suit between the
same parties involving the same subject matter, and it is
contrary to natural justice and public policy that the said

Page 159 U. S. 119

in France only in the manner and in the cases set forth by
articles 2123 and 2128 of the Civil Code."

"And it is further provided by the laws of France, by

country, to the duly rendered judgments of courts of

article 2128 [2123] of the Code de Procedure Civile [Civil

competent jurisdiction of the United States against

Code]:"

citizens of France, after proper personal service of the

process of said courts is made thereon in this country."

" A lien cannot, in like manner, arise from judgments

rendered in any foreign country, save only as they have

The answer further set up, by way of counterclaim and in

been declared in force by a French tribunal, without

detail, various matters arising out of the dealings

prejudice,

between the parties, and alleged that none of the

however,

to

provisions

to

the

contrary,

contained in public laws and treaties."

plaintiffs had since 1881 been residents of the State of

New York, or within the jurisdiction of that state, but the

"[And by article 2128 of that Code: 'Contracts entered

into in a foreign country cannot give a lien upon property

defendants were, and always had been, residents of that

state.

in France if there are no provisions contrary to this

principle in public laws or in treaties.']"

The answer concluded by demanding that the plaintiffs'

"That the construction given to said statutes by the

Page 159 U. S. 120

judicial tribunals of France is such that no comity is

displayed towards the judgments of tribunals of foreign
countries against the citizens of France, when sued upon
in

said

courts

of

France,

and

the

merits

of

the

controversies upon which the said judgments are based

are examined anew, unless a treaty to the contrary effect
exists between the said Republic of France and the

complaint be dismissed, and that the defendants have

judgment

against

them

upon

the

counterclaims,

amounting to $102,942.91.
The plaintiffs filed a replication to so much of the answer
as made counterclaims, denying its allegations and
setting up in bar thereof the judgment sued on.

country in which such judgment is obtained. That no

treaty exists between the said Republic of France and the

The defendants, on June 22, 1888, filed a bill in equity

United States, by the terms or effect of which the

against the plaintiffs setting forth the same matters as in

judgments of either country are prevented from being

their answer to the action at law and praying for a

examined anew upon the merits, when sued upon in the

discovery and for an injunction against the prosecution of

courts of the country other than that in which it is

the action. To that bill a plea was filed setting up the

obtained. That the tribunals of the Republic of France give

French judgments, and upon a hearing, the bill was

no force and effect, within the jurisdiction of the said

dismissed. 42 F. 249. From the decree dismissing the bill

an appeal was taken, which is the second case now

Page 159 U. S. 121

before this Court.

of which, would have been relevant and competent if the
The action at law afterwards came on for trial by a jury,

plaintiffs in error are not concluded by the result of those

and the plaintiffs put in the records of the proceedings

litigations, and have now the right to try those issues,

and judgments in the French courts, and evidence that

either on the ground that the French judgments are

the jurisdiction of those courts was as alleged in the

only prima facie evidence of the correctness of those

complaint and that the practice followed and the method

judgments, or on the ground that the case is within the

of examining the witnesses were according to the French

exception of a judgment obtained by fraud."

law, and also proved the title of Guyot as liquidator.

The defendants, in order to show that they should not be
It was admitted by both parties that for several years

concluded by having appeared and litigated in the suits

prior to 1876, the firm of Alexander T. Stewart & Co.,

brought against them by the plaintiffs in the French

composed

their

courts, offered to prove that they were residents and

business as merchants in the City of New York, with

citizens of the State of New York, and neither of them had

branches in other cities of America and Europe; that both

been, within four years prior to the commencement of

partners were citizens and residents of the City and State

those suits, domiciled or resident within the jurisdiction of

of New York during the entire period mentioned in the

those courts; that they had a purchasing agent and a

complaint, and that in April, 1876, Stewart died, and

storehouse in Paris, but only as a means or facility to aid

Hilton and Libbey formed a partnership to continue the

in the transaction of their principal business, which was in

business under the same firm name, and became the

New York, and they were never otherwise engaged in

owners of all the property and rights of the old firm.

business in France; that neither of them owed allegiance

of

Stewart

and

Libbey,

conducted

to France, but they were the owners of property there

The defendants made numerous offers of evidence in
support of all the specific allegations of fact in their
answer, including the allegations as to the law and
comity of France. The plaintiffs, in their brief filed in this
Court, admitted that most of these offers
"were offers to prove matters in support of the defenses
and counterclaims set up by the defendants in the cases
tried before the French courts, and which, or most

which would, according to the laws of France, have been

liable to seizure if they had not appeared to answer in
those suits; that they unwillingly, and solely for the
purpose of protecting their property within the jurisdiction
of the French tribunal, authorized an agent to appear, and
he did appear in the proceedings before it, and that their
motion to compel an inspection of the plaintiffs' books, as
well as the suits brought by the defendants in France,

were necessary by way of defense or counterclaim to the

statements as to admissions by Stewart in a private

suits there brought by the plaintiffs against them.

conversation with him, and that the defendants could not

deny those statements, because Stewart was dead, and

Among the matters which the defendants alleged and

offered to prove in order to show that the French
judgments were procured by fraud were that Fortin & Co.,
with intent to deceive and defraud the defendants, and
the arbitrator and the courts of France, entered in their
books, and presented to the defendants, and to the

they were not protected from the effect of Fortin's

statements by the privilege of cross-examining him under
oath, and that the French judgments were based upon
false and fraudulent accounts presented and statements
made by Fortin & Co. before the Tribunal of Commerce
during the trial before it.

French courts, accounts bearing upon the transactions in

controversy

which

were

false

and

fraudulent,

and

The records of the judgments of the French courts, put in

contained excessive and fraudulent charges against the

evidence by the plaintiffs, showed that all the matters

defendants in various particulars, specified; that the

now relied on to show fraud were contested in and

considered by those courts.

Page 159 U. S. 122

The plaintiffs objected to all the evidence offered by the
defendants made due application to the Tribunal of
Commerce to compel Fortin & Co. to allow their account
books

and

letter

books

to

be

inspected

by

the

defendants, and the application was opposed by Fortin &

Co., and denied by the tribunal; that the discovery and
inspection of those books were necessary to determine

defendants on the grounds that the matters offered to be

proved were irrelevant, immaterial, and incompetent;
that in respect to them the defendants were concluded
by the judgment sued on and given in evidence, and that
none of those matters, if proved, would be a defense to
this action upon that judgment.

the truth of the controversies between the parties; that

before the Tribunal of Commerce, Charles Fortin was

The court declined to admit any of the evidence so

permitted to and did give in evidence statements not

offered by the defendants, and directed a verdict for the

under oath relating to the merits of the controversies

plaintiffs in the sum of $277,775.44, being the amount of

there pending, and falsely represented that a certain

the French judgment and interest. The defendants,

written contract made in 1873 between Stewart & Co.

having duly excepted to the rulings and direction of the

and Fortin & Co. concerning their dealings was not

court, sued out a writ of error.

intended by the parties to be operative according to its

terms, and in support of that false representation made

Page 159 U. S. 123

The writ of error in the action at law and the appeal in the

of acts, private or public, done within the dominions of

suit in equity were argued together in this Court in

another nation -- is part of our law, and must be

January, 1894, and, by direction of the Court, were

ascertained and administered by the courts of justice as

reargued in April, 1894, before a full Bench.

often as such questions are presented in litigation

between

Page 159 U. S. 162

opinion of the Court.

v.

Guyot, and

man,

duly

submitted

to

their

The most certain guide, no doubt, for the decision of such

questions is a treaty or a statute of this country. But

These two cases -- the one at law and the other in equity
of Hilton

and

determination.

MR. JUSTICE GRAY, after stating the case, delivered the

--

man

the

case

of Ritchie

v.

McMullen, which has been under advisement at the same

time, present important questions relating to the force
and effect of foreign judgments not hitherto adjudicated
by this Court, which have been argued

when, as is the case here, there is no written law upon

the subject, the duty still rests upon the judicial tribunals
of ascertaining and declaring what the law is, whenever it
becomes necessary to do so in order to determine the
rights of parties to suits regularly brought before them. In
doing this, the courts must obtain such aid as they can
from judicial decisions, from the works of jurists and

Page 159 U. S. 163

commentators, and from the acts and usages of civilized

nations. Fremont v. United States, 17 How. 542, 58 U. S.

with great learning and ability and which require for their
satisfactory determination a full consideration of the
authorities. To avoid confusion in indicating the parties, it

557; The Scotia, 14 Wall. 170, 81 U. S. 188; Respublica v.

De Longchamps, 1 Dall. 111, 1 U. S. 116; Moultrie v.
Hunt, 23 N.Y. 394, 396.

will be convenient first to take the case at law of Hilton v.

Guyot.

No law has any effect, of its own force, beyond the limits
of the sovereignty from which its authority is derived. The

International law, in its widest and most comprehensive

sense -- including not only questions of right between
nations, governed by what has been appropriately called
the "law of nations," but also questions arising under
what is usually called "private international law," or the
"conflict of laws," and concerning the rights of persons
within the territory and dominion of one nation by reason

extent to which the law of one nation, as put in force

within its territory, whether by executive order, by
legislative act, or by judicial decree shall be allowed to
operate within the dominion of another nation depends
upon what our greatest jurists have been content to call
"the comity of nations." Although the phrase has been

often criticized, no satisfactory substitute has been

or the jus gentium privatum,has been supposed to furnish

suggested.

any general principle, it has been followed out."

"Comity," in the legal sense, is neither a matter of

Story's Conflict of Laws 23, 24.

absolute
Afterwards, speaking of the difficulty of applying the
Page 159 U. S. 164

positive rules laid down by the Continental jurists, he

says that "there is indeed great truth" in these remarks of

obligation, on the one hand, nor of mere courtesy and

goodwill, upon the other. But it is the recognition which

Mr. Justice Porter, speaking for the Supreme Court of

Louisiana:

one nation allows within its territory to the legislative,

executive, or judicial acts of another nation, having due

"They have attempted to go too far to define and fix that

regard both to international duty and convenience and to

which cannot, in the nature of things, be defined and

the rights of its own citizens or of other persons was are

fixed. They seem to have forgotten that they wrote on a

under the protection of its laws.

question which touched the comity of nations, and that

that comity is, and ever must be, uncertain; that it must

MR. JUSTICE Story, in his Commentaries on the Conflict of

Laws, treating of the question in what department of the
government of any state, in the absence of any clear
declaration of the sovereign will, resides the authority to
determine how far the laws of a foreign state shall have
effect, and observing that this differs in different states
according to the organization of the departments of the

necessarily depend on a variety of circumstances which

cannot be reduced to any certain rule; that no nation will
suffer the laws of another to interfere with her own to the
injury of her citizens; that whether they do or not must
depend on the condition of the country in which the
foreign law is sought to be enforced, the particular nature
of her legislation, her policy, and the character

government of each, says:

Page 159 U. S. 165
"In England and America, the courts of justice have
hitherto exercised the same authority in the most ample

of her institutions; that in the conflict of laws it must

manner, and the legislatures have in no instance (it is

often be a matter of doubt which should prevail, and that,

believed) in either country interfered to provide any

whenever a doubt does exist, the court which decides will

positive regulations. The common law of both countries

prefer the laws of its own country to that of the stranger."

has been expanded to meet the exigencies of the times

as they have arisen, and so far as the practice of nations,

Story's Conflict of Laws 28; Saul v. His Creditors (1827),

"It is needless to enumerate here the instances in which,

5 Martin (N.S.) 569, 596.

by the general practice of civilized countries, the laws of

the one will, by the comity of nations, be recognized and

Again, Mr. Justice Story says:

"It

has

been

thought

by

executed in another where the rights of individuals are

some

jurists

that

the

term comity is not sufficiently expressive of the obligation

of nations to give effect to foreign laws when they are not
prejudicial to their own rights and interests. And it has
been suggested that the doctrine rests on a deeper
foundation; that it is not so much a matter of comity or
courtesy as a matter of paramount moral duty. Now,
assuming that such a moral duty does exist, it is clearly
one of imperfect obligation, like that of beneficence,
humanity, and charity. Every nation must be the final
judge for itself not only of the nature and extent of the

concerned. . . . The comity thus extended to other nations

is no impeachment of sovereignty. It is the voluntary act
of the nation by which it is offered, and is inadmissible
when contrary to its policy, or prejudicial to its interests.
But it contributes so largely to promote justice between
individuals,

and

to

produce

friendly

intercourse

between the sovereignties to which they belong, that

courts of justice have continually acted upon it as a part
of the voluntary law of nations. . . . It is not the comity of
the courts, but the comity
Page 159 U. S. 166

duty, but of the occasions on which its exercise may be

justly demanded."

of the nation, which is administered and ascertained in

the same way, and guided by the same reasoning, by

And after further discussion of the matter, be concludes:

"There is, then, not only no impropriety in the use of the
phrase 'comity of nations,' but it is the most appropriate
phrase to express the true foundation and extent of the

which all other principles of municipal law are ascertained

and guided."
Bank v. Earle (1839), 13 Pet. 519, 38 U. S. 589; Story on
Conflict of Laws 38.

obligation of the laws of one nation within the territories

of another."

Mr. Wheaton says:

Story's Conflict of Laws 33-38.

"All the effect which foreign laws can have in the territory
of a state depends absolutely on the express or tacit

Chief Justice Taney, likewise, speaking for this Court,

while Mr. Justice Story was a member of it, and largely
adopting his words, said:

consent of that state. . . . The express consent of a state

to the application of foreign laws within its territory is
given by acts passed by its legislative authority, or by

treaties concluded with other states. Its tacit consent is

In order to appreciate

manifested

and

authorities cited at the bar, it is important to distinguish

administrative authorities, as well as by the writings of its

different kinds of judgments. Every foreign judgment, of

publicists.

whatever nature, in order to be entitled to any effect,

by

the

There

is

decisions
no

of

obligation

its

judicial

recognized

by

legislators, public authorities, and publicists to regard

the

weight of the

various

must have been rendered

foreign laws; but their application is admitted only from

considerations of utility and the mutual convenience of
states, ex commitate, ob reciprocam utilitatem."
Wheaton's International Law (8th ed.) 78, 79.

Page 159 U. S. 167

by a court having jurisdiction of the cause, and upon
regular proceedings, and due notice. In alluding to
different kinds of judgments, therefore, such jurisdiction,

"No sovereign is bound, unless by special compact, to

proceedings, and notice will be assumed. It will also be

execute within his dominions a judgment rendered by the

assumed that they are untainted by fraud, the effect of

tribunals of another state, and if execution be sought by

which will be considered later.

suit upon the judgment or otherwise, the tribunal in

which the suit is brought, or from which execution is
sought, is on principle at liberty to examine into the
merits of such judgment, and to give effect to it or not, as
may be found just and equitable. The general comity,
utility, and convenience of nations have, however,
established a usage among most civilized states by which
the final judgments of foreign courts of competent
jurisdiction are reciprocally carried into execution, under
certain regulations and restrictions, which differ in
different countries."
147.

A judgment in rem, adjudicating the title to a ship or

other movable property within the custody of the court, is
treated as valid everywhere. As said by Chief Justice
Marshall:
"The sentence of a competent court proceeding in rem is
conclusive with respect to the thing itself, and operates
as an absolute change of the property. By such sentence,
the right of the former owner is lost and a complete title
given to the person who claims under the decree. No
court

of

sentence.

coordinate
The

jurisdiction

question,

can

therefore,

examine

the

respecting

its

conformity to general or municipal law can never arise,

Chancellor Kent says: "The effect to be given to foreign

for no coordinate tribunal is capable of making the

judgments is altogether a matter of comity in cases

inquiry."

where it is not regulated by treaty." 2 Kent Com. (6th ed.)

120.

Williams v. Armroyd, 7 Cranch 423, 11 U. S. 432. The

confusion would follow in Christendom if they should

most common illustrations of this are decrees of courts of

serve us so abroad, and give no credit to our sentences."

admiralty and prize, which proceed upon principles of

international

law. Croudson

v.

Leonard, 4

Cranch

434; Williams v. Armroyd, above cited; Ludlow v. Dale, 1

Johns.Cas. 16. But the same rule applies to judgments in
rem under municipal law. Hudson v. Guestier, 4 Cranch
293; Ennis v. Smith, 14 How. 400, 45 U. S. 430; Wisconsin
v. Pelican Ins. Co., 127 U. S. 265, 127 U. S. 291; Scott v.
McNeal, 154 U. S. 34, 154 U. S. 46;Castrique v. Imrie, L.R.
4 H.L. 414; Monroe v. Douglas, 4 Sandf.Ch. 126.

Other judgments, not strictly in rem, under which a

person has been compelled to pay money, are so far
conclusive that the justice of the payment cannot be
impeached in another country, so as to compel him to
pay it again. For instance, a judgment in foreign
attachment is conclusive, as between the parties, of the
right to the property or money attached. Story on Conflict
of Laws (2d ed.) 592a. And if, on the dissolution of a
partnership, one partner promises to indemnify the other

A judgment affecting the status of persons, such as a

against the debts of the partnership, a judgment for such

decree confirming or dissolving a marriage, is recognized

a debt, under which the latter has been compelled to pay

as valid in every country unless contrary to the policy of

it, is conclusive evidence of the debt in a suit by him to

its own law. Cottington's Case, 2 Swanston 326; Roach v.

recover the amount upon the promise of indemnity. It was

Garvan, 1 Ves.Sen. 157; Harvey v. Farnie, 8 App.Cas.

of such a judgment and in such a suit that Lord

43; Cheely v. Clayton, 110 U. S. 701. It was of a foreign

Nottingham said:

sentence of divorce that Lord Chancellor Nottingham, in

the House of Lords, in 1678, in Cottington's Case, above
cited, said:

"Let the plaintiff receive back so much of the money

brought into court as may be adequate to the sum paid
on the sentence for custom, the justice whereof is not

"It is against the law of nations not to give credit to the

examinable here."

judgments and sentences of foreign countries till they be

reversed by the law,

Gold v. Canham (1679), 2 Swanst. 325, 1 Cas. in Ch.

311. See also Tarleton v. Tarleton, 4 M. & S. 20; Konitzky

Page 159 U. S. 168

v. Meyer, 49 N.Y. 571.

and according to the form, of those countries wherein

Other foreign judgments which have been held conclusive

they were given, for what right hath one kingdom to

of the matter adjudged were judgments discharging

reverse the judgment of another? And how can we refuse

obligations contracted in the foreign country between

to let a sentence take place till it be reversed? And what

citizens or residents thereof. Story on Conflict of Laws

330-341; May v. Breed, 7 Cush. 15. Such was the case

as reported in Viner, that "the court at Leghorn had

cited

v.

jurisdiction of the thing and of the persons;" and, as

reported by Mosely, that though

at

the

bar

of Burroughs or Burrows

Jamineau or Jemino, Mosely

1,

Strange

733,

Eq.Cas.Ab. p. 525, pl. 7, 12 Vin.Ab. p. 87, pl. 9 Sel.Cas. in

Ch. 69; 1 Dickens 48.

"the last endorsees had the sole property of the bills, and
were therefore made the only parties to the suit at

In that case, bills of exchange drawn in London were

Leghorn, yet the sentence made the acceptance void

negotiated, endorsed, and accepted at Leghorn, in Italy,

against the now defendants and all others."

by the law of which an acceptance became void if the

drawer failed without leaving effects in the acceptor's
hands. The acceptor accordingly, having received advices
that the drawer had failed

It is doubtful, at the least, whether such a sentence was

entitled to the effect given to it by Lord Chancellor
King. See Novelli v. Rossi, 2 B. & A. 757; Castrique v.
Imrie, L.R. 4 H.L. 414, 435; 2 Smith's Lead.Cas. (2d ed.)

Page 159 U. S. 169

450.

before the acceptances, brought a suit at Leghorn against

The remark of Lord Hardwicke, arguendo, as Chief Justice,

the last endorsees to be discharged of his acceptances,

in Boucher v. Lawson (1734) that

paid the money into court, and obtained a sentence there

by which the acceptances were vacated as against those
endorsees, and all the endorsers and negotiators of the
bills, and the money deposited was returned to him.
Being afterwards sued at law in England by subsequent
holders of the bills, he applied to the Court of Chancery,
and obtained a perpetual injunction. Lord Chancellor
King, as reported by Strange,
"was clearly of opinion that this cause was to be
determined according to the local laws of the place where
the bill was negotiated, and, the plaintiff's acceptance of
the bill having been vacated and declared void by a court
of competent jurisdiction, he thought that sentence was
conclusive, and bound the Court of Chancery here;"

"the reason gone upon by Lord Chancellor King, in the

case of Burroughs v. Jamineau, was certainly right that
where any court, whether foreign or domestic, that has
the

proper

jurisdiction

of

the

cases

makes

determination, it is conclusive to all other courts,"

evidently had reference, as the context shows, to
judgments of a court having jurisdiction of the thing, and
did not touch the effect of an executory judgment for a
debt. Cas.temp.Hardw. 85, 89; Cunningham 144, 148.
In

former

times,

foreign

decrees

in

admiralty in

personam were executed, even by imprisonment of the

defendant, by the court of admiralty in England, upon

letters rogatory from the foreign sovereign, without a new

the mode of enforcing a foreign decree in admiralty is by

suit. Its right to

a new libel. See The City of Mecca, 5 P.D. 28, 6 P.D. 106.

Page 159 U. S. 170

The extraterritorial effect of judgments in personam at

law or in equity may differ according to the parties to the

do so was recognized by the court of King's Bench in

1607 in a case of habeas corpus, cited by the plaintiffs,
and reported as follows:

residents of the country, and thereby subject to the

jurisdiction in which it is rendered,

"If a man of Frizeland sues an Englishman in Frizeland

before the governor there, and there recovers against
him a certain sum, upon which the Englishman, not
having sufficient to satisfy it, comes into England, upon
which the governor sends his letters missive into
England,omnes

cause. A judgment of that kind between two citizens or

magistratus

infra

regnum

Angliae

rogans, to make execution of the said judgment, the

judge of the admiralty may execute this judgment by
imprisonment of the party, and he shall not be delivered
by the common law, for this is by the law of nations that

may be

held

conclusive as between them everywhere. So if a foreigner

invokes the jurisdiction by bringing an action against a
citizen, both may be held bound by a judgment in favor of
either, and if a citizen sues a foreigner and judgment is
rendered in favor of the latter, both may be held equally
bound.Ricardo

v.

Garcias, 12

Cl.

&

Fin.

368; The

Griefswald, Swabey 430, 435; Barber v. Lamb, 8 C.B.

(N.S.) 95; Lea v. Deakin, 11 Bissell 23.
The effect to which a judgment, purely executory,
rendered

the justice of one nation should be aiding to the justice of

another nation, and for one to execute the judgment of

Page 159 U. S. 171

the other, and the law of England takes notice of this law,
and the judge of the admiralty is the proper magistrate
for this purpose, for he only hath the execution of the civil
law

within

the

realm.

Pasch.

Jac.B.R., Weir's

in favor of a citizen or resident of the country, in a suit

there brought by him against a foreigner, may be entitled
in an action thereon against the latter in his own country,
as is the case now before us, presents a more difficult

Case, resolved upon a habeas corpus and remanded."

question, upon which there has been some diversity of

1 Rol.Ab. p. 530, pl. 12; 6 Vin.Ab. p. 512, pl. 12. But the

opinion.

only question there raised or decided was of the power of

the

English

court

of

admiralty,

and

not

of

the

conclusiveness of the foreign sentence, and in later times

Early in the last century, it was settled in England that a

foreign judgment on a debt was considered not like a
judgment of a domestic court of record, as a record or a

specialty,

lawful

consideration

for

which

was

conclusively presumed, but as a simple contract only.

must be considered as a provincial kingdom, part of the

dominions of the crown of England, but no part of the
realm," and an action of debt on a judgment was local. 4

This clearly appears in Dupleix v. De Roven (1705), where

one of two merchants in France recovered a judgment

B. & C. 414-416, note; s.c., 14 Vin.Ab. 569, pl.;, 2 Stra.

1090.

there against the other for a sum of money, which not

being paid, he brought a suit in chancery in England for a

decision

discovery of assets and satisfaction of the debt, and the

mentioned

of

Lord

Hardwicke

as

Chancellor

was

defendant pleaded the statute of limitations of six years,

Page 159 U. S. 172

and prevailed, Lord Keeper Cowper saying:

"Although the plaintiff obtained a judgment or sentence
in France, yet here the debt must be considered as a debt
by simple contract. The plaintiff can maintain no action
here

but

an indebitatus

computassent, so

that

the

assumpsit or
statute

of

an insimul

limitations

is

pleadable in this case."

2 Vernon 540.

in Walker v. Witter (1778), 1 Doug. 1, 6, by Lord

Mansfield, who said:
"He recollected a case of a decree on the chancery side in
one of the courts of great sessions in Wales, from which
there was an appeal to the House of Lords, and the
decree affirmed there. Afterwards, a bill was filed in the
Court of Chancery, on the foundation of the decree so
affirmed, and Lord Hardwicke thought himself entitled to

Several opinions of Lord Hardwicke define and illustrate

examine into the justice of the decision of the House of

the effect of foreign judgments when sued on or pleaded

Lords, because the original decree was in the court of

in England.

Wales,

whose

decisions

were

clearly

liable

to

be

examined."
In Otway v. Ramsay (1736), in the King's Bench, Lord
Hardwicke treated it as worthy of consideration "what

And in Galbraith v. Neville (1789), 1 Doug. 6, note, Mr.

credit is to be given by one court to the courts of another

Justice Buller said:

nation, proceeding both by the same rules of law," and

said: "It is very desirable in such case that the judgment
given in one kingdom should be considered as res
judicata in another." But it was held that debt would not
lie in Ireland upon an English judgment, because "Ireland

"I have often heard Lord Mansfield repeat what was said
by Lord Hardwicke in the case alluded to from Wales, and
the ground of his lordship's opinion was this: when you
call for my assistance to carry into effect the decision of

some other tribunal, you shall not have it if it appears

and have a different sovereign, and are only bound by

that you are in the wrong, and it was on that account that

judicial sentence given under the same sovereign power

he said he would examine into the propriety of the

by which they themselves act. . . . But though a foreign

decree."

sentence cannot be used by way of plea in the courts

here, yet it may be taken advantage of in the way of

The case before Lord Hardwicke mentioned by Lord

Mansfield would appear (notwithstanding the doubt of its
authenticity expressed by Lord Kenyon in Galbraith v.
Neville) to have been a suit to recover a legacy, briefly
reported, with references to Lord Hardwicke's note book,
and to the original record, as Morgan v. Morgan (17371738), West.Ch. 181, 597; s.c., 1 Atk. 53, 408.
In Gage v. Bulkeley (1744), briefly reported in 3 Atk. 215,
cited by the plaintiffs, a plea of a foreign sentence in a
commissary court in France was overruled by Lord

evidence. . . . You cannot in this Kingdom maintain debt

upon

judgment

obtained

for

money

in

foreign

jurisdiction, but you may on assumpsit in nature of debt,

upon a simple contract, and give the judgment in
evidence, and have a verdict, so that the distinction
seems to be, where such foreign sentence is used as a
plea to bind the courts here as a judgment, and when it is
made use of in evidence as binding the justice of the case
only."
And afterwards, in giving his decision, he said:

Hardwicke, saying: "It is the most proper case to stand for

an answer, with liberty to except, that I ever met with."

"The first question is whether the subject matter of the

His reasons are fully stated in two other reports of the

plea is good. The second is whether it is well pleaded.

case. According to one of them, at the opening of the

The first question depends upon this: whether the

argument, he said:

sentence or judgment of a foreign court can be used by

way of plea in a court of justice in England, and no

"Can a sentence or judgment pronounced by a foreign

jurisdiction be pleaded in this Kingdom to a demand for
the same thing in any court of justice here? I always
thought it could not, because every sentence, having its
authority from the sovereign in whose dominions it is
given, cannot bind the jurisdiction of foreign courts, who
own not the same authority,
Page 159 U. S. 173

authority, either at law or in equity, has been produced to

show that it may be pleaded, and therefore I shall be very
cautious how I establish such a precedent. . . . It is true
such sentence is an evidence which may affect the right
of this demand when the cause comes to be heard, but if
it is no plea in a court of law to bind their jurisdiction, I do
not see why it should be so here."

Ridgeway temp. Hardw. 263, 264, 270, 273. A similar

difference between admitting the effect of a foreign

report of his judgment is in 2 Ves.Sen. (Belt's Supp.) 409,

judgment as adjudicating the status of persons and

410.

executing a foreign judgment by enforcing a claim for

money.

In Roach v. Garvan (1748), where an infant ward of the

Court of Chancery had been married in France by her

These decisions of Lord Hardwicke demonstrate that, in

guardian to his son before a French court, and the son

his opinion, whenever the question was of giving effect to

"petitioned for a decree for cohabitation with his wife,

a foreign judgment for money in a suit in England

and to have some money out of the bank," Lord

between the parties, it did not have the weight of a

Hardwicke said, as to the validity of the marriage:

domestic judgment, and could not be considered as a bar

or as conclusive, but only as evidence of the same weight

"It has been argued to be valid, from being established by

the sentence of a court in France having proper

as a simple contract, and the propriety and justice of the

judgment might be examined.

jurisdiction, and it is true that, if so, it is conclusive,

whether in a foreign court or not, from the law of nations

In Sinclair v. Fraser (1771), the appellant, having as

in such cases; otherwise, the rights of mankind would be

attorney

very precarious and uncertain. But the question is

constituent in Scotland and having been superseded in

whether this is a proper sentence, in a proper cause, and

office, brought an action before the Supreme Court of

between proper

Jamaica, and, after appearance, obtained judgment

in

Jamaica

made

large

advances

for

his

against him, and afterwards brought an action against

Page 159 U. S. 174
parties, of which it is impossible to judge without looking
further into the proceedings, this being rather the
execution of the sentence than the sentence itself."

him in Scotland upon that judgment. The Court of Session

determined that the plaintiff was bound to prove before it
the ground, nature, and extent of the demand on which
the judgment in Jamaica was obtained, and therefore
gave judgment against him. But the House of Lords (in

And after observing upon the competency of the French

which, as remarked by one reporter, Lord Mansfield was

tribunal and pointing out that restitution of conjugal

then the presiding spirit, acting in concert with or for the

rights was within the jurisdiction of the ecclesiastical

Lord Chancellor in disposing of the Scotch appeals)

court, and not of the Court of Chancery, he added: "Much

less will I order any money out of the bank to be given
him." 1 Ves.Sen. 157, 159. He thus clearly recognized the

"ordered and declared that the judgment of the Supreme

Court of Jamaica ought to be received as evidence prima

facie of the debt, and that it lies upon the defendant to

defendant pleaded nil debet and nul tiel record. Judgment

impeach the justice thereof or to show the same to have

was given for the plaintiff, Lord Mansfield saying:

been irregularly obtained,"

"The plea of nul tiel record was improper. Though the
and therefore reversed the judgment of the Court of

plaintiffs had called the judgment a record, yet, by the

Session. 2 Paton ix, 253; s.c., 6 Morison Dict.Dec. 4542; 1

additional words in the declaration, it was clear they did

Doug. 5, note.

not mean that sort of record to which implicit faith is

given by the courts of Westminster Hall. They had not

Page 159 U. S. 175

Accordingly, in Crawford v. Witten (1773), a declaration in
assumpsit, in an action in England upon a judgment
recovered in the Mayor's Court of Calcutta, in Bengal,
without showing the cause of action there, was held good
on demurrer. Lord Mansfield considered the case perfectly
clear. Mr. Justice Aston, according to one report, said:
"The declaration is sufficient. We are not to suppose it an
unlawful debt," and, according to another report:

misled the court nor the defendant, for they spoke of it as

a court of record in Jamaica. The question was brought to
a narrow point, for it was admitted on the part of the
defendant that indebitatus assumpsit would have lain,
and on the part of the plaintiff that the judgment was
only prima facie evidence of the debt. That being so, the
judgment was not a specialty, but the debt only a simple
contract debt, for assumpsit will not lie on a specialty.
The difficulty in the case had arisen from not fixing
accurately what a court of record is in the eye of the law.

"They admitted the assumpsit by their demurrer. When

That description is confined properly to certain courts in

an action comes properly before any court, it must be

England, and their judgments cannot be controverted.

determined by the laws which govern the country in

Foreign courts, and courts in England not of record, have

which the action accrued."

not that privilege, nor the courts in Wales, etc. But the
doctrine

And Mr. Justice Ashurst said: "I have often known

in

the

case

of Sinclair

v.

Fraser was

unquestionable. Foreign judgments are

assumpsit brought on judgments in foreign courts. The

judgment is a sufficient consideration to support the

Page 159 U. S. 176

implied promise." Loft, 154; s.c., nom. Crawford v.

Whittal, 1 Doug. 4, note.
In Walker v. Witter (1778), an action of debt was brought
in England upon a judgment recovered in Jamacia. The

a ground of action everywhere, but they are examinable."

Justices Willes, Ashurst, and Buller concurred, the two
latter saying that wherever indebitatus assumpsit will lie,
debt will also lie. 1 Doug. 1, 5, 6.

In Herbert v. Cook (1782), again, in an action of debt

this: that it is prima facie evidence of the justice of the

upon a judgment of an inferior English court, not a court

demand in an action of assumpsit, having no more credit

of record, Lord Mansfield said that it was "like a foreign

than

judgment, and not conclusive evidence of the debt."

agreement, viz., that it shall be considered as good till it

Willes 36, note.

is impeached."

In Galbraith v. Neville (1789), upon a motion for a new

1 Doug. 6, note. And the court afterwards unanimously

trial after verdict for the plaintiff in an action of debt on a

refused the new trial, because,

is

given

to

every

species

of

written

judgment of the Supreme Court of Jamaica, Lord Kenyon

expressed "very serious doubts concerning the doctrine
laid down in Walker v. Witter that foreign judgments are
not binding on the parties here." But Mr. Justice Buller

judgment was impeachable, it was at all events clear that

it was prima facie evidence of the debt, and they were of
opinion

said:
"The

"without entering into the question how far a foreign

doctrine

which

was

laid

down

in Sinclair

v.

Fraser has always been considered as the true line ever

Page 159 U. S. 177

that no evidence had been adduced to impeach this."

since -- namely that the foreign judgment shall be prima

facie evidence of the debt, and conclusive till it be

5 East 475, note.

impeached by the other party. . . . As to actions of this

sort, see how far the court could go if what was said in
Walker v. Witter were departed from. It was there held
that the foreign judgment was only to be taken to be
right prima facie -- that is, we will allow the same force to
a foreign judgment that we do to those of our own courts
not of record. But if the matter were carried further, we
should give them more credit; we should give them equal
force with those of courts of record here. Now a foreign
judgment has never been considered as a record. It
cannot be declared on as such, and a plea of nul tiel
record, in such a case, is a mere nullity. How then can it
have the same obligatory force? In short, the result is

In Messing v. Massareene (1791), the plaintiff, having

obtained a judgment against the defendants in a French
court, brought an action of assumpsit upon it in England,
and, the defendants having suffered a default, moved for
a reference to a master, and for a final judgment on his
report, without executing a writ of inquiry. The motion
was denied, Lord Kenyon saying: "This is an attempt to
carry the rule further than has yet been done, and, as
there is no instance of the kind, I am not disposed to
make a precedent for it," and Mr. Justice Buller saying:
"Though debt will lie here on a foreign judgment, the
defendant may go into the consideration of it." 4 T.R. 493.

In Bayley v. Edwards (1792), the judicial committee of the

"This judgment against the garnishee in the court of

Privy Council, upon appeal from Jamaica, held that a suit

Pennsylvania was recovered properly or improperly. If,

in equity pending in England was not a good plea in bar

notwithstanding the bankruptcy, the debt remained liable

to a subsequent bill in Jamaica for the same matter, and

to an attachment according to the laws of that country,

Lord Camden said:

the judgment was proper; if, according to the laws of that

country, the property in the debt was divested out of the

"In Gage v. Bulkeley [evidently referring to the full report

in Ridgeway, above quoted, which had been cited by
counsel], Lord Hardwicke's reasons go a great way to
show the true effect of foreign sentences in this country,
and all the cases show that foreign sentences are not
conclusive bars here, but only evidence of the demand."

bankrupt debtor and vested in his assignees, the

judgment was improper. But this was a question to be
decided, in the cause instituted in Pennsylvania, by the
courts of that country, and not by us. We cannot examine
their judgment, and if we could, we have not the means
of doing it in this case. It is not stated upon this record,
nor can we take notice, what the law of Pennsylvania is

3 Swanston 703, 708, 710.

upon this subject. If we had the means, we could not

In Phillips v. Hunter (1795), the House of Lords, in

examine a judgment of a court in a foreign state, brought

accordance with the opinion of the majority of the judges

before us in this manner."

consulted and against that of Chief Justice Eyre, decided

that a creditor of an English bankrupt, who had obtained
payment

of

his

debt

by

foreign

attachment

in

Pennsylvania, was liable to an action for the money by

the assignees in bankruptcy in England. But it was agreed
on all hands that the judgment in Pennsylvania and
payment under it were conclusive as between the
garnishee and the plaintiff in that suit, and the distinction
between the effect of a foreign judgment which vests
title, and of one which only declares that a certain sum of
money is due, was clearly stated by Chief Justice Eyre as
follows:

"It is in one way only that the sentence or judgment of a

court of a foreign state is examinable in our courts, and
that is when the party who claims the benefit of it applies
to our courts to enforce it. When it is thus voluntarily
submitted to our jurisdiction, we treat it not as obligatory
to the extent to which it would be obligatory, perhaps, in
the country in which it was pronounced, nor as obligatory
to the extent to which, by our law, sentences and
judgments are obligatory not as conclusive, but as
matter in pais, as consideration prima facie sufficient to
raise a promise. We examine it as we do all other
considerations or promises, and for that purpose we

Page 159 U. S. 178

receive evidence of what the law of the foreign state is,

and whether the judgment is warranted by that law."

2 H.Bl. 402, 409-410.

well as of a judgment obtained in one of the courts of this

country," to which Lord Ellenborough answered:

In Wright v. Simpson (1802), Lord Chancellor Eldon said:

"That may be so if the judgment appears, on the face of
"Natural law requires the courts of this country to give
credit to those of another for the inclination and power to
do justice, but not if that presumption is proved to be ill
founded in that transaction which is the subject of it, and
if it appears in evidence that persons suing under similar
circumstances neither had met, nor could meet, with
justice, that fact cannot be immaterial as an answer to
the presumption."

it, consistent with reason and justice, but it is contrary to

the first principles of reason and justice that, either in
civil

or

criminal

proceedings,

man

should

be

condemned before he is heard. . . . There might be such

glaring injustice on the face of a foreign judgment, or it
might have a vice rendering it so ludicrous, that it could
not raise an assumpsit, and, if submitted to the
jurisdiction of the courts of this country, could not be
enforced."

6 Ves. 714, 730.

1 Camp. 63, 66-67. A motion for a new trial was denied. 9

Page 159 U. S. 179

East 192. And see Sadler v. Robins (1808), 1 Camp. 253,

Under Lord Ellenborough, the distinction between a suit

256.

on a foreign judgment in favor of the plaintiff against the

defendant, and a suit to recover money which the plaintiff
had been compelled to pay under a judgment abroad,

In Hall v. Odber (1809), in assumpsit upon a judgment

obtained in Canada, with other counts on the original
debt, Lord Ellenborough and Justices Grose, Le Blanc, and

was clearly maintained.

Bayley agreed that a foreign judgment was not to be

In Buchanan v. Rucker (1808), in assumpsit upon a

considered as having the same force as a domestic

judgment rendered in the Island of Tobago, the defendant

judgment, but only that of a simple contract between the

pleaded non

it

parties, and did not merge the original cause of action,

appeared that he was not a resident of the island, and

but was only evidence of the debt, and therefore

was neither personally served with process nor came in

assumpsit would lie, either upon the judgment or upon

to defend, and the only notice was, according to the

the original cause of action. 11 East 118.

assumpsit and

prevailed

because

practice of the court, by nailing up a copy of the

declaration at the courthouse door. It was argued that
"the presumption was in favor of a foreign judgment, as

In Tarleton v. Tarleton (1815), on the other hand, the

action was brought upon a covenant of indemnity in an

agreement for dissolution of a partnership to recover a

The English cases above referred to have been stated

sum which the

with the more particularity and detail, because they

directly bear upon the question what was the English law,

Page 159 U. S. 180

being then our own law, before the Declaration of

plaintiff had been compelled to pay under a decision in a

suit between the parties in the Island of Grenada. Such
was the case of which Lord Ellenborough, affirming his

Independence? They demonstrate that, by that law as

generally understood, and as declared by Hardwicke,
Mansfield, Buller, Camden, Eyre, and Ellenborough, and
doubted by Kenyon only, a judgment recovered in a

own ruling at the trial, said:

foreign country for a sum of money, when sued upon in

"I thought that I did not sit at nisi prius to try a writ of

England, was only prima facie evidence of the demand,

error in this case upon the proceedings in the court

and subject to be examined and impeached. The law of

abroad. The defendant had notice of the proceedings,

England since it has become to us a foreign country will

and should have appeared and made his defense. The

be considered afterwards.

plaintiff, by this neglect, has been obliged to pay the

The law upon this subject as understood in the United

money in order to avoid a sequestration."

States at the time of their separation from the mother

The distinction was clearly brought out by Mr. Justice

country was clearly set forth by Chief Justice Parsons,

Bayley, who said: "As between the parties to the suit, the

speaking for the Supreme Judicial Court of Massachusetts

justice of it might be again litigated, but as against a

in 1813, and by Mr. Justice Story in his Commentaries on

stranger it cannot. 4 M. & S. 20, 22-23.

the Constitution of the United States, published in 1833.

Both those

In Harris

v.

Saunders (1825),

Chief

Justice

Abbott

(afterwards Lord Tenterden) and his associates, upon the

Page 159 U. S. 181

authority of Otway v. Ramsay,above cited, held that even

since the Act of Union of 39 & 40 Geo. III. c. 67, assumpsit
would lie in England upon a judgment recovered in
Ireland,

because

such

judgment

could

not

be

considered a specialty debt in England. 4 B. & C. 411, 6

D. & R. 471.

eminent jurists declared that, by the law of England, the

general rule was that foreign judgments were only prima
facie evidence of the matter which they purported to
decide, and that, by the common law before the
American Revolution, all the courts of the several colonies
and states were deemed foreign to each other, and
consequently judgments rendered by any one of them

were considered as foreign judgments, and their merits

prescribe the manner in which such acts, records and

reexaminable in another colony not only as to the

proceedings shall be proved, and the effect thereof."

jurisdiction of the court which pronounced them, but also

as to the merits of the controversy, to the extent to which
they were understood to be reexaminable in England.
And

they

noted

inconvenience,

that

statutes

in

order
had

to
been

remove
passed

that
in

Massachusetts, and in some of the other colonies, by

which judgments rendered by a court of competent
jurisdiction

in

impeached. Bissell

neighboring
v.

Briggs, 9

colony

could

Mass.

462,

not

And the first Congress of the United States under the

Constitution, after prescribing the manner in which the
records and judicial proceedings of the courts of any state
should be authenticated and proved, enacted that
"the said records and judicial proceedings, authenticated
as aforesaid, shall have

be

464-465;

Page 159 U. S. 182

Mass.Stat. 1773-74, c. 16; 5 Prov.Laws, 323, 369; Story

on the Constitution (1st ed.) 1301, 1302; (4th ed.)
1306, 1307.

such faith and credit given to them in every court within

the United States as they have by law or usage in the
courts of the state from whence the said records are or

It was because of that condition of the law as between

shall be taken."

the American colonies and states that the United States,

at the very beginning of their existence as a nation,
ordained that full faith and credit should be given to the
judgments of one of the states of the Union in the courts
of another of those states.
By the articles of confederation of 1777, Art. 4, 3, "full
faith and credit shall be given, in each of these states, to
the records, acts and judicial proceedings of the courts
and magistrates of every other state." 1 Stat. 4. By the
Constitution of the United States, Article IV, 1,

Act May 26, 1790, c. 11, 1 Stat. 122; Rev.Stat. 905.

The effect of these provisions of the Constitution and laws
of the United States was at first a subject of diverse
opinions not only in the courts of the several states, but
also in the circuit courts of the United States; Mr. Justice
Cushing, Mr. Justice Wilson, and Mr. Justice Washington,
holding that judgments of the courts of a state had the
same effect throughout the Union as within that state,
but Chief Justice Marshall (if accurately reported) being of
opinion that they were not entitled to conclusive effect,

"Full faith and credit shall be given in each state to the

and

that

their

consideration

public acts, records and judicial proceedings of every

impeached.Armstrong

other state, and the Congress may by general laws

302; Green v. Sarmiento (1811), 3 Wash. C.C. 17, 21; Pet.

v.

might

Carson (1794),

be
Dall.

C.C. 74, 78; Peck v. Williamson (reported as in November,

Page 159 U. S. 183

1813, apparently a mistake for 1812), 1 Carolina Law

Repository 53.

evidence, in every court within the United States, of the

matter

adjudged,

and

therefore nul

tiel

record, and

The decisions of this Court have clearly recognized that

not nil debet, was a proper plea to an action brought in a

judgments of a foreign state are prima facie evidence

court of the United States in the District of Columbia upon

only, and that, but for these constitutional and legislative

a judgment recovered in a court of the State of New York,

provisions, judgments of a state of the Union, when sued

this Court, speaking by Mr. Justice Story, said:

upon in another state, would have no greater effect.

"The pleadings in an action are governed by the dignity of
In Croudson v. Leonard (1808), in which this Court held

the instrument on which it is founded. If it be a record

that the sentence of a foreign court of admiralty in

conclusive between the parties, it cannot be denied but

rem condemning a vessel for breach of blockade was

by the plea of nul tiel record, and when Congress gave

conclusive evidence of that fact in an action on a policy of

the effect of a record to the judgment it gave all the

insurance, Mr. Justice Washington, after speaking of the

collateral consequences. . . . Were the construction

conclusiveness of domestic judgments generally, said:

contended for by the plaintiff in error to prevail, that

judgments

"The judgment of a foreign court is equally conclusive,

except in the single instance where the party claiming the
benefit of it applies to the courts in England to enforce it,
in which case only the judgment is prima facie evidence.

of

the

state

courts

ought

to

be

considered prima facie evidence only, this clause in the

Constitution would be utterly unimportant and illusory.
The common law would give such judgments precisely
the same effect."

But it is to be remarked that in such a case, the judgment

is no more conclusive as to the right it establishes than

11 U. S. 7 Cranch 481, 11 U. S. 484-485.

as to the fact it decides."

In Hampton
8 U. S. 4 Cranch 434, 8 U. S. 442.

v.

McConnell (1818),

the

point

decided

in Mills v. Duryee was again adjudged, without further

discussion, in an opinion delivered by Chief Justice

In Mills v. Duryee (1813), in which it was established that,

Marshall. 16 U. S. 3 Wheat. 234.

by virtue of the Constitution and laws of the United

States, the judgment of a court of one of the states was

The obiter dictum of Mr. Justice Livingston in Hopkins v.

conclusive

Lee (1821), 6 Wheat. 109, 19 U. S. 114, repeated by Mr.

Justice Daniel inPennington v. Gibson (1853), 16 How.

65, 57 U. S. 78, as to the general effect of foreign

voluntarily made defense. As these judgments, however,

judgments, has no important bearing upon the case

were

before us.

inquired into by plea when sued on in another state,

only prima

facie evidence,

and

subject

to

be

Congress saw proper to remedy the evil and to provide

In McElmoyle

v.

Cohen (1839),

Mr.

Justice

Wayne,

discussing the effect of the act of Congress of 1790, said

that
"the adjudications of the English courts have now

that such inquiry and double defense should not be

allowed. To this extent, it is declared in the case of Mills v.
Duryee, Congress has gone in altering the old rule."
52 U. S. 11 How. 165, 52 U. S. 175-176.

established the rule to be that foreign judgments

are prima facie evidence of the right and matter they

In Christmas v. Russell (1866), in which this Court decided

purport to decide."

that because of the Constitution and laws of the United

States, a judgment of a court of one state of the Union,

38 U. S. 13 Pet. 312, 38 U. S. 325.

In D'Arcy v. Ketchum (1850), in which this Court held that
the provisions of the Constitution and laws of the United
States gave no effect in one state to judgments rendered
in another state by a court having no jurisdiction of the
cause or of the parties, Mr. Justice Catron said:
"In construing the act of 1790, the law as it stood when
the act was passed

when sued upon in a court of another, could not be

shown to have been procured by fraud, Mr. Justice
Clifford, in delivering the opinion, after stating that under
the rules of the common law a domestic judgment
rendered in a court of competent jurisdiction could not be
collaterally impeached or called in question, said:
"Common law rules placed foreign judgments upon a
different footing, and those rules remain, as a general
remark, unchanged to the present time. Under these

Page 159 U. S. 184

rules, a foreign judgment was prima facie evidence of the

debt, and it was open to examination, not only to show

must enter into that construction, so that the existing

defect in the old law may be seen and its remedy by the
act of Congress comprehended. Now it was most

that the court in which it was rendered had no jurisdiction

of the subject matter, but also to show that the judgment
was fraudulently obtained."

reasonable, on general principles of comity and justice,

that among states and their citizens united as ours are,
judgments rendered in one should bind citizens of other
states where defendants had been served with process or

72 U. S. 5 Wall. 290, 72 U. S. 304.

In Bischoff v. Wethered (1869), in an action on an English

In the courts of the several states it was long recognized

judgment rendered without notice to the defendant other

and assumed as undoubted and indisputable that by our

than by service on him in this country, this Court,

law, as by the law of England, foreign judgments for

speaking by Mr. Justice Bradley, held that the proceeding

debts were not conclusive, but only prima facie evidence

in England

of the matter adjudged. Some of the cases are collected

in the margin. *

"was wholly without jurisdiction of the person, and

whatever validity it may have in England, by virtue of

In the leading case of Bissell v. Briggs, above cited, Chief

statute law, against property of the defendant there

Justice Parsons said:

situate, it can have no validity here, even of a prima

"A foreign judgment may be produced here by a party to

facie character."

it either to justify himself by the execution of that

76 U. S. 9 Wall. 812, 76 U. S. 814.

judgment in the country in which it was rendered or to

obtain the execution of it from our courts. . . . If the

Page 159 U. S. 185

foreign court rendering the judgment had jurisdiction of

In Hanley v. Donoghue (1885), 116 U. S. 1, 116 U. S. 4,

and in Wisconsin v. Pelican Ins. Co. (1888), 127 U. S.
265, 127 U. S. 292, it was said that judgments recovered

the cause, yet the courts here will not execute the
judgment, without first
Page 159 U. S. 186

in one state of the Union, when proved in the courts of

another, differed from judgments recovered in a foreign

allowing an inquiry into its merits. The judgment of a

country

foreign court therefore is by our laws considered only as

in

no

other

respect

than

in

not

being

reexaminable on their merits nor impeachable for fraud in

presumptive

evidence

of

debt,

or

as prima

obtaining them if rendered by a court having jurisdiction

facie evidence of a sufficient consideration of a promise,

of the cause and of the parties.

where such court had jurisdiction of the cause, and if an

action of debt be sued on any such judgment, nil debet is

But neither in those cases nor in any other has this Court
hitherto been called upon to determine how far foreign
judgments may be reexamined upon their merits, or be
impeached for fraud in obtaining them.

the general issue, or if it be made the consideration of a

promise, the general issue is non assumpsit. On these
issues the defendant may impeach the justice of the
judgment by evidence relative to that point. On these
issues, the defendant may also, by proper evidence,
prove that the judgment was rendered by a foreign court

which had no jurisdiction, and if his evidence be sufficient

correctly on the law, but it is approbating the law itself.

for this purpose, he has no occasion to impeach the

Wherever, then, the court may have proceeded on

justice of the judgment."

municipal

9 Mass. 463, 464.

Page 159 U. S. 187

In a less known case, decided in 1815 but not published

law, the rule is that the judgments are not conclusive

until 1879, the reasons for this view were forcibly stated

evidence of debt, but prima facie evidence only. The

by Chief Justice Jeremiah Smith,

proceedings have not the conclusive quality which is

speaking for the

Supreme Court of New Hampshire, as follows:

annexed to the records or proceedings of our own courts,

where we approve both of the rule and of the judges who

"The respect which is due to judgments, sentences, and

decrees of courts in a foreign state by the law of nations
seems to be the same which is due to those of our own

interpret and apply it. A foreign judgment may be

impeached. Defendant may show that it is unjust, or that
it was irregularly or unduly obtained. Doug. 5, note."

courts. Hence, the decree of an admiralty court abroad is

equally conclusive with decrees of our admiralty courts.

Bryant v. Ela, Smith (N.H.) 396, 404.

Indeed, both courts proceed by the same rule, are

governed by the same law -- the maritime law of nations,
Coll.Jurid. 100, which is the universal law of nations
except where treaties alter it."

From this review of the authorities, it clearly appears that

at the time of the separation of this country from
England, the general rule was fully established that
foreign

judgments in

personam were prima

"The same comity is not extended to judgments or

facie evidence only, and not conclusive of the merits of

decrees which may be founded on the municipal laws of

the controversy between the parties. But the extent and

the state in which they are pronounced. Independent

limits of the application of that rule do not appear to have

states do not choose to adopt such decisions without

been much discussed or defined with any approach to

examination. These laws and regulations may be unjust,

exactness in England or America until the matter was

partial to citizens, and against foreigners. They may

taken up by Chancellor Kent and by Mr. Justice Story.

operate injustice to our citizens, whom we are bound to

protect. They may be, and the decisions of courts
founded on them, just cause of complaint against the
supreme power of the state where rendered. To adopt
them is not merely saying that the courts have decided

In Taylor v. Bryden (1811), an action of assumpsit brought

in the Supreme Court of the State of New York on a
judgment obtained in the State of Maryland against the
defendant as endorser of a bill of exchange, and which

was treated as a foreign judgment, so far as concerned

But the case was decided upon the ground that the

its effect in New York (the decision of this Court to the

defendant had done no more than raise a doubt of the

contrary in Mills v. Duryee, 7 Cranch 481, not having yet

correctness of the judgment sued on. 8 Johns. 173, 177,

been made), Chief Justice Kent said:

178.

"The judgment in Maryland is presumptive evidence of a

Chancellor Kent afterwards, treating of the same subject

just demand, and it was incumbent upon the defendant, if

in the first edition of his Commentaries (1827), put the

he would obstruct the execution of the judgment here, to

right to impeach a foreign judgment somewhat more

show by positive proof that it was irregularly or unduly

broadly, saying:

obtained. . . . To try over again, as of course, every

matter of fact which had been duly decided by a
competent tribunal would be disregarding the comity
which we justly owe to the courts of other states, and
would be carrying the doctrine of reexamination to an
oppressive extent. It would be the same as granting a
new trial in every case and upon every question of fact.
Suppose a recovery in another state, or in any foreign
court, in an action for a

"No sovereign is obliged to execute within his dominion a

sentence rendered out of it, and if execution be sought by
a suit upon the judgment or otherwise, he is at liberty, in
his courts of justice, to examine into the merits of such
judgment [for the effect to be given to foreign judgments
is altogether a matter of comity in cases where it is not
regulated by treaty]. In the former case [of a suit to
enforce a foreign judgment], the rule is that the foreign
judgment is to be received in the first instance as prima

Page 159 U. S. 188

facie evidence of the debt, and it lies on the defendant to

impeach the justice of it or to show that it was irregularly

tort, as for an assault and battery, false imprisonment,

slander, etc., and the defendant was duly summoned and
appeared, and made his defense, and the trial was
conducted orderly and properly, according to the rules of

and unduly obtained. This was the principle declared and

settled by the House of Lords in 1771 in the case
of Sinclair v. Fraser upon an appeal from the Court of
Cession in Scotland."

a civilized jurisprudence, is every such case to be tried

again here on the merits? I much doubt whether the rule

In the second edition (1832), he inserted the passages

can ever go to this length. The general language of the

above printed in brackets, and in a note to the fourth

books is that the defendant must impeach the judgment

edition (1840), after citing recent conflicting opinions in

by showing affirmatively that it was unjust by being

Great

irregularly or unfairly procured."

reasoning in his Commentaries on the Conflict of Laws,

Britain,

and

referring

to

Mr.

Justice

Story's

607, in favor of the conclusiveness of foreign judgments,

witnesses may be since dead; some of the vouchers may

he added:

be lost or destroyed. The merits of the cause, as formerly

before the court upon the whole evidence, may have

"And that is certainly the more convenient and the safest

rule, and the most consistent with sound principle, except
in cases in which the court which pronounced the
judgment has not due jurisdiction of the case, or of the
Page 159 U. S. 189

been decidedly in favor of the judgment; upon a partial

possession of the original evidence, they may now appear
otherwise. Suppose a case purely sounding in damages,
such as an action for an assault, for slander, for
conversion of property, for a malicious prosecution, or for
a criminal conversation; is the defendant to be at liberty

defendant, or the proceeding was in fraud, or founded in

to retry the whole merits, and to make out, if he can, a

palpable mistake or irregularity, or bad by the law of

new case upon new evidence? Or is the court to review

the rei judicatae, and in all such cases, the justice of the

the former decision, like a Court of Appeal, upon the old

judgment ought to be impeached."

evidence? In a case of covenant, or of debt, or of a

breach of contract, are all the circumstances to be

2 Kent Com. (1st ed.) 102; (later Eds.) 120.

Mr. Justice Story, in his Commentaries on the Conflict of
Laws, first published in 1834, after reviewing many
English authorities, said: "The present inclination of the
English courts seems to be to sustain the conclusiveness
of foreign judgments," to which, in the second edition, in
1841, he added: "Although certainly there yet remains no
inconsiderable diversity of opinion among the learned
judges of the different tribunals." 606.
He then proceeded to state his own view of the subject
on principle, saying:
"It is indeed very difficult to perceive what could be done
if a different doctrine were maintainable to the full extent
of opening all the evidence and merits of the cause anew
on a suit upon the foreign judgment. Some of the

reexamined anew? If they are, by what laws and rules of

evidence and principles of justice is the validity of the
original judgment to be tried? Is the court to open the
judgment, and to proceed ex aequo et bono? Or is it to
administer strict law, and stand to the doctrines of the
local administration of justice? Is it to act upon the rules
of evidence acknowledged in its own jurisprudence, or
upon those of the foreign jurisprudence? These and many
more questions might be put to
Page 159 U. S. 190
show the intrinsic difficulties of the subject. Indeed, the
rule that the judgment is to be prima facie evidence for
the plain tiff would be a mere delusion if the defendant
might still question it by opening all or any of the original
merits on his side, for under such circumstances it would

be equivalent to granting a new trial. It is easy to

jurists, and to the law of France, which allows the merits

understand that the defendant may be at liberty to

of foreign judgments to be examined, Mr. Justice Story

impeach the original justice of the judgment by showing

concluded his treatment of the subject as follows:

that the court had no jurisdiction, or that he never had

any notice of the suit, or that it was procured by fraud, or
that upon its face it is founded in mistake, or that it is
irregular and bad by the local law, fori rei judicatae. To
such an extent, the doctrine is intelligible and practicable.
Beyond this, the right to impugn the judgment is in legal
effect the right to retry the merits of the original cause at
large, and to put the defendant upon proving those
merits."

"It is difficult to ascertain what the prevailing rule is in

regard to foreign judgments in some of the other nations
of continental Europe -- whether they are deemed
conclusive evidence or only prima facie evidence. Holland
seems at all times, upon the general principle of
reciprocity, to have given great weight to foreign
judgments and in many cases, if not in all cases, to have
given to them a weight equal to that given to domestic
judgments, wherever the like rule of reciprocity with

607.

regard to Dutch

He then observed:

Page 159 U. S. 191

"The general doctrine maintained in the American courts

judgments has been adopted by the foreign country

in relation to foreign judgments certainly is that they

whose judgment is brought under review. This is certainly

are prima facie evidence, but that they are impeachable.

a very reasonable rule, and may perhaps hereafter work

But how far and to what extent this doctrine is to be

itself

carried does not seem to be definitely settled. It has been

jurisprudence."

firmly

into

the

structure

of

international

declared that the jurisdiction of the court, and its power

over the parties and the things in controversy, may be
inquired into, and that the judgment may be impeached
for fraud. Beyond this, no definite lines have as yet been
drawn."
608.
After stating the effect of the Constitution of the United
States and referring to the opinions of some foreign

618.
In Bradstreet v. Neptune Ins. Co. (1839), in the Circuit
Court

of

the

United

States

for

the

District

of

Massachusetts, Mr. Justice Story said:

"If a civilized nation seeks to have the sentences of its
own courts held of any validity elsewhere, they ought to
have a just regard to the rights and usages of other

civilized nations and the principles of public and national

At a subsequent trial of that case before a jury, (1846) 1

law in the administration of justice."

Woodb. & Min. 172, the defendant proved the judgment

in New Brunswick. The plaintiff then offered to prove the

3 Sumnner 600, 608-609.

facts stated in his replication, and that any entry on the

In Burnham v. Webster (1845), in an action of assumpsit

upon a promissory note, brought in the Circuit Court of
the United States for the District of Maine, the defendant
pleaded a former judgment in the Province of New

record of the judgment in New Brunswick concerning this

note was therefore by mistake or inadventure. This
evidence was
Page 159 U. S. 192

Brunswick in his favor in an action there brought by the

plaintiff. The plaintiff replied that the note was withdrawn

excluded, and a verdict taken for the plaintiff, subject to

from that suit, by consent of parties and leave of the

the opinion of the court. Mr. Justice Woodbury, in granting

court, before verdict and judgment, and the defendant

a new trial, delivered a thoughtful and discriminating

demurred to the replication. Judge Ware, in overruling the

opinion upon the effect of foreign judgments, from which

demurrer, said:

the following passages are taken:

"Whatever difference of opinion there may be as to the

"They do, like domestic ones, operate conclusively, ex

binding force of foreign judgments, all agree that they are

proprio vigore, within the governments in which they are

not entitled to the same authority as the judgments of

rendered,

domestic courts of general jurisdiction. They are but

considered elsewhere, they are, ex commitate, treated

evidence of what they purport to decide, and liable to be

with respect, according to the nature of the judgment and

controlled by counter evidence, and do not, like domestic

the character of the tribunal which rendered it and the

judgments,

reciprocal mode, if any, in which that government treats

import

absolute

verity

and

remain

incontrovertible and conclusive until reversed."

but

not

elsewhere.

When

offered

and

our judgments, and according to the party offering it,

whether having sought or assented to it voluntarily or

And he added that if the question stood entirely clear

from authority, he should be of opinion that the plaintiff
could not be allowed to deny the validity of the
proceedings of a court whose authority he had invoked. 2
Ware, 236, 239-241.

not, so as to give it in some degree the force of a

contract, and hence to be respected elsewhere by
analogy according to the lex loci contractus. With these
views I would go to the whole extent of the cases decided
by Lords Mansfield and Buller, and where the foreign
judgment is not in rem, as it is in admiralty, having the

subject matter before the court, and acting on that,

"On the other hand, by considering a judgment abroad as

rather than the parties, I would consider it only prima

only prima facie valid, I would not allow the plaintiff

facie evidence as between the parties to it."

abroad, who had sought it there, to avoid it, unless for

accident or mistake, as here, because, in other respects,

P. 175.

having been sought there by him voluntarily, it does not

"By returning to that rule, we are enabled to give parties

at times most needed and most substantial relief, such as
in judgments abroad against them without notice, or
without a hearing on the merits, or by accident or
mistake of facts, as here, or on rules of evidence and
rules of law they never assented to, being foreigners and
their contracts made elsewhere but happening to be
traveling

through

foreign

jurisdiction

and

being

lie in his mouth to complain of it. Nor would I in any case

permit the whole merits of the judgment recovered
abroad to be put in evidence as a matter of course, but,
being prima facie correct, the party impugning it, and
desiring a hearing of its merits, must show first,
specifically, some objection to the judgment's reaching
the merits, and tending to prove they had not been acted
on, or [as?] by showing there was no jurisdiction in the
court, or no notice, or some accident or mistake, or fraud

compelled in invitum to litigate there."

which prevented a full defense, and has entered into the

P. 177.

judgment, or that the court either did not decide at all on

the merits or was a tribunal not acting in conformity to

"Nor would I permit the prima facie force of the foreign

judgment to go far if the court was one of a barbarous or
semi-barbarous

government,

and

acting

on

no

established principles of civilized jurisprudence, and not

resorted to willingly by both parties, or both not
inhabitants and citizens of the country. Nor can much
comity be asked for the judgments of another nation
which, like France, pays no respect to those of other

any set of legal principles, and was not willingly

recognized by the party as suitable for adjudicating on
the merits. After matters like these are proved, I can see
no danger, but rather great safety, in the administration
of justice in permitting to every party before us at least
one fair opportunity to have the merits of his case fully
considered, and one fair adjudication upon them before
he is estopped forever."

countries except, as before remarked, on the principle of

the parties belonging there or assenting to a trial there."

P. 180.

P. 179.

In De Brimont v. Penniman (1873), in the Circuit Court of

the United States for the Southern District of New York,

Page 159 U. S. 193

Judge Woodruff said:

"The principle on which foreign judgments receive any

the stricter sense of misapprehension or oversight, and

recognition from our courts is one of comity. It does not

as equivalent to what, in Burnham v. Webster, before

require, but rather forbids, it where such a recognition

cited, Mr. Justice Woodbury spoke of as "some objection

works a direct violation of the policy of our laws, and does

to the judgment's reaching the merits, and tending to

violence to what we deem the rights of our citizens."

prove that they had not been acted on," "some accident
or mistake," or "that the court did not decide at all on the

And he declined to maintain an action against a citizen of

merits." 1 Woodb. & Min. 180.

the United States, whose daughter had been married in

France to a French citizen, upon a decree of a French

The suggestion that a foreign judgment might be

court requiring the defendant, then resident in France and

impeached for error in law of the country in which it was

duly served with process there, to pay an annuity to his

rendered is hardly consistent with the statement of Chief

son-in-law. 10 Blatchford 436, 441.

Justice Marshall, when, speaking of the disposition of this

Court to adopt the construction given to the laws of a

Mr. Justice Story and Chancellor Kent, as appears by the

passages

above

quoted

from

their

state by its own courts, he said:

Commentaries,

concurred in

"This course is founded on the principle, supposed to be

universally recognized, that the judicial department of

Page 159 U. S. 194

the opinion that, in a suit upon a foreign judgment, the
whole merits of the case could not as matter of course be
reexamined anew, but that the defendant was at liberty
to impeach the judgment not only by showing that the
court had no jurisdiction of the case or of the defendant,
but also by showing that it was procured by fraud, or was
founded on clear mistake or irregularity, or was bad by
the law of the place where it was rendered. Story on
Conflict of Laws 607; 2 Kent Com. (6th ed.) 120.

every government, where such department exists, is the

appropriate organ for construing the legislative acts of
that government. Thus, no court in the universe which
professed

to

be

governed

by

principle

would,

we

presume, undertake to say that the courts of Great

Britain

or

of

France

or

of

any

other

nation

had

misunderstood their own statutes, and therefore erect

itself

into

tribunal

which

should

correct

such

misunderstanding. We receive the construction given by

the courts of the nation as the true sense of the law, and
feel ourselves no more at liberty to depart from that

The word "mistake" was evidently used by Story and Kent

construction than to depart from the words of the

in this connection not in its wider meaning of error in

statute."

judgment, whether upon the law or upon the facts, but in

Elmendorf v. Taylor (1825), 10 Wheat. 152, 23 U. S. 159-

subject) from the conclusions of Chancellor Kent and of

160.

Justices Story and Woodbury.

In recent times, foreign judgments rendered within the

At one time it was held that, in an action brought in

dominions

England upon a judgment obtained by the plaintiff in a

foreign country, the judgment must be assumed to be

Page 159 U. S. 195

according to the law of that country unless the contrary

of the English Crown and under the law of England, after

a trial on the merits, and no want of jurisdiction and no
fraud or mistake being shown or offered to be shown,
have been treated as conclusive by the highest courts of
New York, Maine, and Illinois. Lazier v. Westcott(1862), 26
N.Y. 146, 150; Dunstan v. Higgins (1893), 138 N.Y. 70,
74; Rankin v. Goddard (1866), 54 Me. 28, and (1868) 55
Me. 389; Baker v. Palmer (1876), 83 Ill. 568. In two early
cases in Ohio, it was said that foreign judgments were
conclusive unless shown to have been obtained by
fraud. Lake

Bank

v.

Harding (1832),

Ohio

545,

was clearly proved, manifestly implying that proof on that

point was competent. Becquet v. MacCarthy (1831), 2 B.
& Ad. 951, 957; Alivon v. Furnival (1834), 1 Cr., M. & R.
277, 293, 4 Tyrwh. 751, 768.
Lord Brougham, in the House of Lords, as well as Chief
Justice Tindal and Chief Justice Wilde (afterwards Lord
Chancellor Truro) and their associates, in the Common
Bench, considered it to be well settled that an Irish or
colonial judgment or a foreign judgment was not, like a
judgment of a domestic court of record, conclusive
evidence, but only, like a

547; Anderson v. Anderson (1837), 8 Ohio 108, 110. But

in a later case in that state, it was said that they were
only prima

facie evidence

Platner (1844),

13

Ohio,

of

indebtedness. Pelton

209,

217.

In Jones

Page 159 U. S. 196

v.
v.

Jamison (1860), 15 La.Ann. 35, the decision was only

that, by virtue of the statutes of Louisiana, a foreign
judgment merged the original cause of action as against
the plaintiff.

simple contract, prima facie evidence of a debt. Houlditch

v. Donegal (1834), 8 Bligh N.R. 301, 342, 346, 2 Cl. & Fin.
470, 476-479; Don v. Lippmann (1837), 5 Cl. & Fin. 1, 2022; Smith v. Nicolls (1839), 7 Scott 147, 166-170, 5
Bing.N.C. 208, 220-224, 7 Dowl. 282; Bank of Australasia
v. Harding (1850), 9 C.B. 661, 686-687.

The result of the modern decisions in England, after much

diversity, not to say vacillation, of opinion does not
greatly differ (so far as concerns the aspects in which the
English courts have been called upon to consider the

On the other hand, Vice Chancellor Shadwell, upon an

imperfect review of the early cases, expressed the

opinion that a foreign judgment was conclusive. Martin v.

The English courts, however, have since treated that

Nicolls (1830), 3 Sim. 458.

decision

as

establishing

that

judgment

of

any

competent foreign court could not, in an action upon it,

Like opinions were expressed by Lord Denman, speaking
for the Court of Queen's Bench, and by Vice Chancellor
Wigram, in cases of Irish or colonial judgments, which
were

subject

to

direct

appellate

review

in

be questioned either because that court had mistaken its

own law or because it had come to an erroneous
conclusion

upon

the

facts. De

Cosse

Brissac

v.

Rathbone (1861) 6 H. & N. 301; Scott v. Pilkington

England. Ferguson v. Mahon (1839), 11 Ad. & El. 179,

183,

Per.

&

Dav.

143,

146; Henderson

v.

Page 159 U. S. 197

Henderson (1844), 6 Q.B. 288, 298, 299; Henderson v.

Henderson (1843), 3 Hare 100, 118.

(1862) 2 B. & S. 11, 41-42; Vanquelin v. Bouard (1863),

15 C.B. (N.S.) 341, 368; Castrique v. Imrie (1870), L.R. 4

In Bank v. Nias (1851), in an action upon an Australian

H.L. 414, 429-430;Godard v. Gray (1870), L.R. 6 Q.B. 139,

judgment, pleas that the original promises were not

150; Ochsenbein v. Papelier (1873), 8 Ch.App. 695, 701.

made, and that those promises, if made, were obtained

In Meyer v. Ralli (1876), a judgment in rem, rendered by a

by fraud, were held bad on demurrer. Lord Campbell, in

French court of competent jurisdiction, was held to be

delivering judgment, referred to Story on the Conflict of

reexaminable upon the merits solely because it was

Laws, and adopted substantially his course of reasoning

admitted by the parties, in the special case upon which

in 607, above quoted, with regard to foreign judgments.

the cause was submitted to the English court, to be

But he distinctly put the decision upon the ground that

manifestly erroneous in regard to the law of France. 1

the defendant might have appealed to the Judicial

C.P.D. 358.

Committee of the Privy Council, and thus have procured a

review of the colonial judgment, and he took the
precaution to say:

In view of the recent decisions in England, it is somewhat

remarkable that, by the Indian Code of Civil Procedure of
1877,

"How far it would be permitted to a defendant to impeach

the competency or the integrity of a foreign court from
which there was no appeal it is unnecessary here to
inquire."

"no foreign judgment [which is defined as a judgment of

'a civil tribunal beyond the limits of British India, and not
having authority in British India, nor established by the
governor general in council'] shall operate as a bar to a

16 Q.B. 717, 734-737.

suit in British India, . . . if it appears on the face of the

proceeding to be founded on an incorrect view of

opposite doctrines as to the authority of the lex loci is

international law,"

impossible. While the courts of Louisiana refuse to

recognize a title acquired here, which is valid according to

or "if it is, in the opinion of the court before which it is

produced, contrary to natural justice." Piggott on Foreign
Judgments (2d ed.) 380, 381.
It was formerly understood in England that a foreign
judgment was not conclusive if it appeared upon its face
to be founded on a mistake or disregard of English
law. Arnott v. Redfern (1825-1826) 2 Car. & P. 88, 3 Bing.
353, and 11 J. B. Moore 209; Novelli v. Rossi (1831) 2 B. &
Ad. 757; 3 Burge on Colonial and Foreign Laws 1065; 2
Smith's Lead.Cas. (2d ed.) 448; Reimers v. Druce (1856),
23 Beavan 145.
In Simpson v. Fogo (1860), 1 Johns. & Hem. 18, and
(1862) 1 Hem. & Mil. 195, Vice Chancellor Wood
(afterwards Lord Hatherley) refused to give effect to a
judgment in personam of a court in Louisiana, which had
declined to recognize the title of a mortgagee of an
English ship under the English law. In delivering judgment

our law, and hand over to their own citizens property so

acquired, they cannot at the same time expect us to
defer to a rule of their law which we are no more bound
to respect than a law that any title of foreigners should
be disregarded in favor of citizens of Louisiana. The
answer to such a demand must be that a country which
pays so little regard to our laws as to set aside a
paramount title acquired here must not expect at our
hands any greater regard for the title so acquired by the
citizens of that country."
1 Johns. & Hem. 28, 29. And upon motion for a decree, he
elaborated the same view, beginning by saying:
"Whether this judgment does so err or not against the
recognized principles of what has been commonly called
the comity of nations by refusing to regard the law of the
country where the title to the ship was acquired is one of
the points which I have to consider,"

upon demurrer, he said:

and concluding that it was "so contrary to law, and to
"The State of Louisiana may deal as it pleases with
foreign law; but if it asks courts of this country to respect
its law, it must be on a footing of paying a like respect to
ours. Any comity between the courts of two nations

what is required by the comity of nations" that he must

disregard it. 1 Hem. & Mil. 222-247. See also Liverpool
Co. v. Hunter (1867), L.R. 4 Eq. 62, 68, and (1868) L.R. 3
Ch. 479, 484.

holding such
In Scott
Page 159 U. S. 198

v.

Pilkington (1862),

Chief

Justice

Cockburn

treated it as an open question whether a judgment

recovered in New York for a debt could be impeached on

the ground that the record showed that the foreign court

The result of the English decisions therefore would seem

ought to have decided the case according to English law,

to be that a foreign judgment in personam may be

and had either disregarded the comity of nations by

impeached for a manifest and willful disregard of the law

refusing to apply the English law or erred in its view of

of England.

English law. 2 B. & S. 11, 42. InCastrique v. Imrie (1870),

the French judgment which was adjudged not to be
impeachable for error in law, French or English, was, as
the House of Lords construed it, a judgment in rem, under
which the ship to which the plaintiff in England claimed
title had been sold. L.R. 4 H.L. 414. In Godard v.
Gray (1870), shortly afterwards, in which the court of
Queen's Bench held that a judgment in personam of a
French court could not be impeached because it had put
Page 159 U. S. 199

Lord Abinger, Baron Parke, and Baron Alderson were wont

to say that the judgment of a foreign court of competent
jurisdiction for a sum certain created a duty or legal
obligation to pay that sum; or, in Baron Parke's words,
that the principle on which the judgments of foreign and
colonial courts are supported and enforced was
"that where a court of competent jurisdiction has
adjudicated a certain sum to be due from one person to
another, a legal obligation arises to pay that sum, on
which an action of debt to enforce the judgment may be

a construction erroneous, according to English law, upon

maintained."

an English contract, the decision was put by Justices

Blackburn and Mellor upon the ground that it did not
appear that the foreign court had "knowingly and
perversely disregarded the rights given by the English
law," and by Justice Hannen solely upon the ground that
the defendant did not appear to have brought the English
law to the knowledge of the foreign court. L.R. 6 Q.B. 139,
149, 154. In Messina v. Petrococchino (1872), Sir Robert
Phillimore, delivering judgment in the Privy Council, said:
"A foreign judgment of a competent court may, indeed,
be impeached if it carries on the face of it a manifest
error." L.R. 4 P.C. 144, 157.

Russell

v.

Smyth (1842),

M.

&

W.

810,

818-

819; Williams v. Jones (1845), 13 M. & W. 628, 633, 634.

But this was said in explaining why, by the technical rules
of pleading, an action of assumpsit or of debt would lie
upon a foreign judgment, and had no reference to the
question how far such a judgment was conclusive of the
matter adjudged. At common law, an action of debt
would lie on a debt appearing by a record or by any other
specialty, such as a contract under seal, and would also
lie for a definite sum of money due by simple contract.
Assumpsit would not lie upon a record or other specialty,
but would lie upon any other contract, whether expressed
by the party or implied by law. In an action upon a record,

or upon a contract under seal, a lawful consideration was

Mr. Justice Blackburn, indeed, in determining how far a

conclusively presumed to exist, and could not be denied,

foreign judgment could be impeached either for error in

law or for want of jurisdiction, expressed the opinion that

Page 159 U. S. 200

the effect of such a judgment did not depend upon what

but in an action, whether in debt or in assumpsit, upon a

simple contract, express or implied, the consideration
was open to inquiry. A foreign judgment was not
considered, like a judgment of a domestic court of record,
as a record or specialty. The form of action, therefore,
upon a foreign judgment was not in debt, grounded upon
a record or a specialty, but was either in debt, as for a

he termed "that which is loosely calledcomity,'" but upon

the

saying

of

Baron

Parke,

above

quoted,

and

consequently
"that anything which negatives the existence of that legal
obligation

or

excuses

the

defendant

from

the

performance of it must form a good defense to the

action."

definite sum of money due by simple contract, or in

assumpsit upon such a contract. A foreign judgment,

Godard

being a security of no higher nature than the original

149; Schibsby v. Westenholz, 6 Q.B. 155, 159. And his

cause of action, did not merge that cause of action. The

example has been followed by some other English judges:

plaintiff might sue either on the judgment or on the

Fry, J., in Rousillon v. Rousillon (1880), 14 Ch.D. 351, 370;

original cause of action, and in either form of suit the

North, J., in Nouvion v. Freeman (1887), 35 Ch.D. 704,

foreign

714-715; Cotton

judgment

was

only

evidence

of

liability

equivalent to a simple contract, and was therefore liable

v.

Gray (1870),

and

L.R.

Lindley, L.

Q.B.

JJ.,

139,

148-

in Nouvion

v.

Freeman (1887), 37 Ch.D. 244, 250, 256.

to be controlled by such competent evidence as the

nature of the case admitted. See cases already cited,
especially Walker v. Witter, 1 Doug. 1; Phillips v. Hunter,2
H.Bl. 402, 410; Bissell v. Briggs, 9 Mass. 463, 464; Mills v.
Duryee, 7

Cranch

481, 11

U.

S.

485; D'Arcy

v.

Page 159 U. S. 201

But the theory that a foreign judgment imposes or
creates a duty or obligation is a remnant of the ancient
fiction, assumed by Blackstone, saying that

Ketchum, 11 How. 165, 52 U. S. 176; Hall v. Odber, 11

East 118; Smith v. Nicolls, 7 Scott 147, 5 Bing. N.C.

"upon showing the judgment once obtained still in full

208. See also Grant v. Easton, 13 Q.B.D. 302, 303; Lyman

force and yet unsatisfied, the law immediately implies

v. Brown, 2 Curtis 559.

that, by the original contract of society, the defendant

hath contracted a debt and is bound to pay it."

3 Bl.Com. 160. That fiction which embraced judgments

a legal obligation to pay a foreign judgment as the test in

upon default or for torts cannot convert a transaction

determining

wanting the assent of parties into one which necessarily

impeached. 10 Q.B.D. 295, 300, 305. In Hawksford v.

implies it. Louisiana v. New Orleans, 109 U. S. 285, 109 U.

Giffard (1886), in the Privy Council, on appeal from the

S. 288. While the theory in question may help to explain

Royal Court of Jersey, Lord Herschell said:

how

far

such

judgment

might

be

rules of pleading which originated while the fiction was

believed in, it is hardly a sufficient guide at the present
day in dealing with questions of international law, public
or private, and of the comity of our own country, and of

"This action is brought upon an English judgment which,

until a judgment was obtained in Jersey, was in
Page 159 U. S. 202

foreign nations. It might be safer to adopt the maxim

applied to foreign judgments by Chief Justice Weston,
speaking

for

the

Supreme

Judicial

Court

of

Maine, judicium redditur in invitum, or, as given by Lord

Coke, in

praesumptione

legis

judicium

redditur

that country no more than evidence of a debt."

in

invitum. Jordan v. Robinson (1838), 15 Me. 167, 168;

12 App.Cas. 122, 126. In Nouvion v. Freeman (1889), in

the House of Lords, Lord Herschell, while he referred to
the reliance placed by counsel on the saying of Baron
Parke, did not treat a foreign judgment as creating or

Co.Litt. 248b.

imposing a new obligation, but only as declaring and

In Russell v. Smyth, above cited, Baron Parke took the

establishing that a debt or obligation existed. His words

precaution of adding: "Nor need we say how far the

were:

judgment of a court of competent jurisdiction, in the

absence of fraud, is conclusive upon the parties." 9 M. &
W. 819. He could hardly have contemplated erecting a
rule

of

local

procedure

into

canon

of

private

international law, and a substitute for "the comity of

nations," on which, in an earlier case, he had himself
relied as the ground for enforcing in England a right
created by a law of a foreign country. Alivon v. Furnival, 1
Cr., M. & R. 277, 296, 4 Tyrwh. 751, 771.

"The principle upon which I think our enforcement of

foreign judgments must proceed is this, that in a court of
competent jurisdiction, where according to its established
procedure, the whole merits of the case were open at all
events, to the parties, however much they may have
failed to take advantage of them, or may have waived
any of their rights, a final adjudication has been given
that a debt or obligation exists which cannot thereafter in
that court be disputed, and can only be questioned in an

In Abouloff v. Oppenheimer (1882), Lord Coleridge and

appeal to a higher tribunal. In such a case, it may well be

Lord Justice Brett carefully avoided adopting the theory of

said that, giving credit to the courts of another country,

we are prepared to take the fact that such adjudication

the merits of the case should not, in an action brought in

has been made as establishing the existence of the debt

this country upon the judgment, be tried afresh, as on a

or obligation."

new trial or an appeal, upon the mere assertion of the

party that the judgment was erroneous in law or in fact.

And Lord Bramwell said:

The defendants therefore cannot be permitted upon that

"How can it be said that there is a legal obligation on the

part of a man to pay a debt who has a right to say, 'I owe
none, and no judgment has established against me that I
do?' I cannot see."

for want of finally establishing the existence of a debt. 15

App.Cas. 1, 9-10, 14.

trend of judicial opinion in this country and in England,

following the lead of Kent and Story, we are satisfied that
where there has been opportunity for a full and fair trial
a

But they have sought to impeach that judgment upon

other

grounds

which

require

separate

consideration.
It is objected that the appearance and litigation of the
defendants in the French tribunals were not voluntary,

In view of all the authorities upon the subject and of the

before

judgment sued on.

several

The foreign judgment in that case was allowed no force,

abroad

general ground to contest the validity or the effect of the

court

of

competent

jurisdiction,

conducting the trial upon regular proceedings, after due

citation or voluntary appearance of the defendant and
under a system of jurisprudence likely to secure an

but by legal compulsion, and therefore that the French

courts

never

acquired

such

jurisdiction

over

the

defendants that they should be held bound by the

judgment.
Upon the question what should be considered such a
voluntary appearance as to amount to a submission to
the jurisdiction of a foreign court, there has been some
difference of opinion in England.

impartial administration of justice between the citizens of

its own country and those of other countries, and there is

In General Steam Navigation Co. v. Guillou (1843), in an

nothing to show either prejudice in the court or in the

action at law to recover damages to the plaintiffs' ship by

system of laws under which it was sitting, or fraud in

procuring the judgment, or any other special reason why

negligence of the master and crew of the latter, the

the comity of this nation should not allow it full effect,

defendant pleaded a judgment by which a French court,

collision

with

the

defendant's

ship

through

the

in a suit brought by him and after the plaintiffs had been

Page 159 U. S. 203

cited, had appeared, and had asserted fault on this

defendant's part, had adjudged that it was the ship of

these plaintiffs, and not that of this defendant, which was

protecting other property in that country from seizure is

in fault. It was not shown or suggested that the ship of

considered as a voluntary appearance. De Cosse Brissac

these plaintiffs was in the custody or possession of the

v. Rathbone (1861), 6 H. & N. 301, 20 Law Journal (N.S.)

French court. Yet Baron Parke, delivering a considered

Exch. 238; Schibsby v. Westenholz (1870), L.R. 6 Q.B.

judgment of the Court of Exchequer (Lord Abinger and

155, 162; Voinet v. Barrett (1885), Cab. & El. 554, 54 Law

Barons Alderson and Rolfe concurring), expressed a

Journal (N.S.) Q.B. 521, and 55 Law Journal (N.S.) Q.B. 39.

decided opinion that the pleas were bad in substance, for

The present case is not one of a person traveling through

these reasons:

or casually found in a foreign country. The defendants,

"They do not state that the plaintiffs were French

although they were not citizens or residents of France,

subjects, or resident or even present in France, when the

but were citizens and residents of the State of New York,

suit began, so as to be bound, by reason of allegiance or

and their principal place of business was in the City of

domicile or temporary presence, by a decision of a French

New York, yet had a storehouse and an agent in Paris,

court, and they did not select the tribunal and sue as

and were accustomed to purchase large quantities of

plaintiffs, in any of which cases the determination might

goods there, although they did not make sales in France.

have possibly bound them. They were mere strangers,

Under such circumstances, evidence that their sole object

who put forward the negligence

in appearing and carrying on the litigation in the French

courts was to prevent property in their storehouse at

Page 159 U. S. 204

Paris, belonging to them, and within the jurisdiction, but

of the defendant as an answer, in an adverse suit in a

foreign

country,

whose

laws

they

were

under

no

not in the custody, of those courts from being taken in

satisfaction of any judgment that might be recovered
against them would not, according to our law, show that

obligation to obey."

those courts did not acquire jurisdiction of the persons of

11 M. & W. 877, 894, 13 Law Journal (N.S.) Exch. 168,

the defendants.

176.
It is next objected that in those courts, one of the
But it is now settled in England that while an appearance

plaintiffs was permitted to testify not under oath, and was

by the defendant in a court of a foreign country, for the

not subjected to cross-examination by the opposite party,

purpose

the

and that the defendants were therefore deprived of

possession of that court, may not be deemed a voluntary

safeguards which are by our law considered essential to

appearance, yet an appearance solely for the purpose of

secure honesty and to detect fraud in a witness, and also

of

protecting

his

property

already

in

that documents and papers were admitted in evidence

agreed between them to be or was in fact lower than the

with which the defendants had no connection

actual market value of the goods.

Page 159 U. S. 205

It must however always be kept in mind that it is the

paramount duty of the court before which any suit is

and which would not be admissible under our own system

of jurisprudence. But it having been shown by the
plaintiffs, and hardly denied by the defendants, that the

brought to see to it that the parties have had a fair and

impartial trial before a final decision is rendered against
either party.

practice followed and the method of examining witnesses

were according to the laws of France, we are not prepared

When an action is brought in a court of this country by a

to hold that the fact that the procedure in these respects

citizen of a foreign country against one of our own

differed from that of our own courts is, of itself, a

citizens to recover a sum of money adjudged by a court

sufficient ground for impeaching the foreign judgment.

of that country to be due from the defendant to the

plaintiff, and the foreign judgment appears to have been

It is also contended that a part of the plaintiffs' claim is

affected by one of the contracts between the parties
having been made in violation of the revenue laws of the
United States, requiring goods to be invoiced at their
actual market value. Rev.Stat. 2854. It may be assumed

rendered by a competent court, having jurisdiction of the

cause and of the parties, and upon due allegations and
proofs and opportunity to defend against them, and its
proceedings are according to the course of a civilized
jurisprudence, and are stated in a clear and formal

that, as the courts of a country will not enforce contracts

made abroad in evasion or fraud of its own laws, so they

Page 159 U. S. 206

will not enforce a foreign judgment upon such a

contract. Armstrong v. Toler, 11 Wheat. 258; De Brimont
v. Penniman, 10 Blatchford 436; Lang v. Holbrook, Crabbe
179; Story on Conflict of Laws 244, 246; Wharton's
Conflict of Laws, 656. But as this point does not affect
the whole claim in this case, it is sufficient for present
purposes to say that there does not appear to have been
any distinct offer to prove that the invoice value of any of
the goods sold by the plaintiffs to the defendants was

record, the judgment is prima facie evidence, at least, of

the truth of the matter adjudged, and it should be held
conclusive upon the merits tried in the foreign court
unless some special ground is shown for impeaching the
judgment, as by showing that it was affected by fraud or
prejudice or that, by the principles of international law
and by the comity of our own country, it should not be
given full credit and effect.

There is no doubt that both in this country, as appears by

All the subsequent English authorities concur in holding

the authorities already cited, and in England, a foreign

that

judgment may be impeached for fraud.

personam, may be impeached upon the ground that it

any

foreign

judgment,

whether in

rem or in

was fraudulently obtained. White v. Hall (1806), 12 Ves.

Shortly before the Declaration of Independence, the
House of Lords, upon the trial of the Duchess of Kingston
for bigamy, put to the judges the question whether --

321, 324; Bowles v. Orr (1835), 1 Yo. & Col.Exch. 464,

473; Price v. Dewhurst (1837) 8 Sim. 279, 302-305; Don
v. Lippmann (1837), 5 Cl &

assuming a sentence of the ecclesiastical court against a

marriage, in a suit for jactitation of marriage, to be

Page 159 U. S. 207

conclusive evidence so as to prevent the counsel for the

crown from proving the marriage upon an indictment for
polygame -- "the counsel for the crown may be admitted
to avoid the effect of such sentence by proving the same
to have been obtained by fraud or collusion." Chief Justice
De Grey, delivering the opinion of the judges, which was
adopted by the House of Lords, answering this question in
the affirmative, said:

point, and, as it stands, to be admitted as conclusive

evidence upon the court, and not to be impeached from
within, yet, like all other acts of the highest judicial
authority, it is impeachable from without. Although it is
not permitted to show that the court was mistaken, it
may be shown that they were misled. Fraud is an intrinsic
act,

which

vitiates

the

most

solemn

proceedings of courts of justice. Lord Coke says it avoids

all judicial acts, ecclesiastical or temporal."
20 Howell's State Trials 537, 543, note; 2 Smith's
Lead.Cas. 573.

735; Reimers

v.

Druce (1856),

23

Beav.

145,

150; Castrique v. Imrie (1870), L.R. 4 H.L. 414, 445446; Godard v. Gray (1870), L.R. 6 Q.B. 139, 149; Messina
v. Petrococchino (1872), L.R. 4 P.C. 144, 157;Ochsenbein
v. Papelier (1873), 8 Ch. 695.
Under what circumstances this may be done does not

"But if it was a direct and decisive sentence upon the

collateral

Fin. 1, 20; Bank of Australasia v. Nias (1851), 16 Q.B. 717,

appear to have ever been the subject of judicial

investigation in this country.
It has often, indeed, been declared by this Court that the
fraud which entitles a party to impeach the judgment of
one of our own tribunals must be fraud extrinsic to the
matter tried in the cause, and not merely consist in false
and fraudulent documents or testimony submitted to that
tribunal, and the truth of which was contested before it
and passed upon by it. United States v. Throckmorton, 98
U. S. 61, 98 U. S. 65-66; Vance v. Burbank, 101 U. S.
514, 101 U. S. 519; Steel v. Smelting Co., 106 U. S.
447, 106 U. S. 453; Moffat v. United States, 115 U. S.
24, 115 U. S. 32; United States v. Minor, 114 U. S.

233, 114 U. S. 242. And in one English case, where a ship

fraudulently concealing from those courts the fact that

had been sold under a foreign judgment, the like

those goods, as the fact was and as she well knew, were

restriction upon impeaching that judgment for fraud was

in her actual possession. A demurrer to this plea was

suggested, but the decision was finally put upon the

overruled and judgment entered for the defendants. And

ground that the judicial sale passed the title to the

that judgment was affirmed in the Court of Appeal by

ship. Cammell v. Sewell (1858-60), 3 H. & N. 617, 646, 5

Lord Chief Justice Coleridge, Lord Justice Baggallay, and

H. & N. 728, 729, 742.

Lord Justice Brett, all of whom delivered concurring

opinions, the grounds of which sufficiently appear in the

But it is now established in England by well considered

and strongly reasoned decisions of the Court of Appeal

opinion delivered by Lord Justice Brett (since Lord Esher,

M.R.), who said:

that foreign judgments may be impeached if procured by

false and fraudulent representations and testimony of the

"With regard to an action brought upon a foreign

plaintiff, even if the same question of fraud was

judgment, the whole doctrine as to fraud is English, and is

presented to and decided by the foreign court.

to be applied in an action purely English. I am prepared to

hold, according to the judgment of the House of Lords

In Abouloff v. Oppenheimer (1882), the plaintiff had

recovered a judgment at Tiflis, in Russia, ordering the
defendants to return certain goods, or to pay their value.
The defendants appealed to a higher Russian court, which
confirmed the judgment and ordered the defendants to
pay, besides the sum awarded below, an additional sum
for costs and expenses. In an action in the English High
Court of
Page 159 U. S. 208

adopting the proposition laid down by De Grey, C.J., that

if the judgment upon which the action is brought was
procured from the foreign court by the successful fraud of
the party who is seeking to enforce it, the action in the
English court will not lie. This proposition is absolute and
without any limitation, and as the Lord Chief Justice has
pointed out, is founded on the doctrine that no party in
an English court shall be able to take advantage of his
own wrongful act or, as it may be stated in other
language, that no obligation can be enforced in an

Justice upon those judgments, the defendants pleaded

English court of justice which has been procured by the

that they were obtained by the gross fraud of the plaintiff

fraud of the person relying upon it as an obligation. . . . I

in fraudulently representing to the Russian courts that the

will assume that in the suit in the Russian courts, the

goods in question were not in her possession when the

plaintiff's fraud was alleged by the defendants, and that

suit was commenced, and when the judgment was given,

they gave evidence in support of the charge. I will

and during the whole time the suit was pending, and by

assume even that the defendants gave the very same

evidence which they propose to adduce in this action.

which has been obtained by the fraud of the other party

Nevertheless the defendants will not be debarred at the

to the suit in the foreign court."

trial of this action from making the same charge of fraud

and from adducing the same evidence in support of it,
and if the High Court of Justice is satisfied that the
allegations of the defendants are true and
Page 159 U. S. 209

10 Q.B.D. 295, 305-308.

The same view was affirmed and acted on in the same
court by Lords Justices Lindley and Bowen in Vadala v.
Lawes (1890), 25 Q.B.D. 310, 317-320, and by Lord Esher
and Lord Justice Lopes in Crozat v. Brogden [1894] 2 Q.B.

that the fraud was committed, the defendants will be

30, 34-35.

entitled to succeed in the present action. It has been

contended that the same issue ought not to be tried in an
English court which was tried in the Russian courts, but I
agree that the question whether the Russian courts were
deceived never could be an issue in the action tried
before them. . . . In the present case, we have had to
consider the question fully, and according to the best
opinion which I can form, fraud committed by a party to a
suit for the purpose of deceiving a foreign court is a
defense to an action in this country founded upon the
judgment of that foreign court. It seems to me that if we
were to accede to the argument for the plaintiff, the
result would be that a plausible deceiver would succeed,
whereas a deceiver who is not plausible would fail. I

In the case at bar, the defendants offered to prove in

much detail that the plaintiffs presented to the French
court of first instance and to the arbitrator appointed by
that court, and upon whose report its judgment was
largely based, false and fraudulent statements and
accounts against the defendants by which the arbitrator
and the French courts were deceived and misled, and
their judgments were based upon such false and
fraudulent

statements

and

accounts.

This

offer,

if

satisfactorily proved, would, according to the decisions of

the English Court of Appeal in Abouloff v. Oppenheimer,
Vadala v. Lawes, and Crozat v. Brogden, above cited,
Page 159 U. S. 210

cannot think that plausible fraud ought to be upheld in

any court of justice in England. I accept the whole

be a sufficient ground for impeaching the foreign

doctrine, without any limitation, that whenever a foreign

judgment and examining into the merits of the original

judgment has been obtained by the fraud of the party

claim.

relying upon it, it cannot be maintained in the courts of

this country, and further that nothing ought to persuade
an English court to enforce a judgment against one party

But whether those decisions can be followed in regard to

foreign judgments, consistently with our own decisions as

to impeaching domestic judgments for fraud, it is

"A lien cannot arise from judgments rendered in a foreign

unnecessary in this case to determine, because there is a

country except so far as they have been declared

distinct and independent ground upon which we are

executory by a French tribunal, without prejudice to

satisfied that the comity of our nation does not require us

provisions to the contrary which may exist in public laws

to give conclusive effect to the judgments of the courts of

and treaties."

France, and that ground is the want of reciprocity on the

part of France as to the effect to be given to the
judgments of this and other foreign countries.

"Contracts entered into in a foreign country cannot give a

In France, the royal ordinance of June 15, 1629, art. 121,

rendered,

contracts

or

obligations

recognized, in foreign kingdoms and sovereignties for any

cause whatever shall have no lien or execution in our
kingdom. Thus, the contracts shall stand for simple
promises,

and,

lien upon property in France if there are no provisions

contrary to this principle in public laws or in treaties."

provided as follows:
"Judgments

By article 2128,

notwithstanding

the

judgments,

Touillier, ubi sup., No. 84.

The defendants in their answer cited the above provisions
of the statutes of France, and alleged, and at the trial
offered to prove, that by the construction given to

our

subjects against whom they have been rendered may

Page 159 U. S. 211

contest their rights anew before our judges."

these statutes by the judicial tribunals of France, when
Touillier, Droit Civil, lib. 3, tit. 3, c. 6, sect. 3, No. 77.

the judgments of tribunals of foreign countries against

the citizens of France are sued upon in the courts of

By the French Code of Civil Procedure, art. 546,

France, the merits of the controversies upon which those

"Judgments rendered by foreign tribunals, and acts

acknowledged

before

foreign

officers,

shall

not

be

capable of execution in France except in the manner and

in the cases provided by articles 2123 and 2128 of the
Civil Code,"

judgments are based are examined anew, unless a treaty

to the contrary effect exists between the Republic of
France and the country in which such judgment is
obtained (which is not the case between the Republic of
France and the United States), and that the tribunals of
the Republic of France give no force and effect, within the

which are as follows: by article 2123,

jurisdiction of that country, to the judgments duly

rendered by courts of competent jurisdiction of the United

States against citizens of France after proper personal

And his judgment was affirmed in the Privy Council on

service of the process of those courts has been made

appeal. Case of Odwin v. Forbes, pp. 89, 159-161, 173-

thereon in this country. We are of opinion that this

176; (1817) Buck Bankr.Cas. 57, 64.

evidence should have been admitted.

Page 159 U. S. 212
In Odwin v. Forbes (1817), President Henry, in the Court
of Demerara, which was governed by the Dutch law and
was,

as

he

remarked,

"a

tribunal

foreign

to

and

independent of that of England," sustained a plea of an

English certificate in bankruptcy, upon these grounds:
"It is a principle of their law, and laid down particularly in
the ordinances of Amsterdam, . . . that the same law shall
be exercised towards foreigners in Amsterdam as is
exercised with respect to citizens of that state in other
countries, and upon this principle of reciprocity, which is
not confined to the City of Amsterdam, but pervades the
Dutch laws, they have always given effect to the laws of
that country which has exercised the same comity and
indulgence in admitting theirs; . . . that the Dutch
bankrupt laws proceed on the same principles as those of
the English; that the English tribunals give effect to the
Dutch bankrupt laws, and that, on the principle of
reciprocity and mutual comity, the Dutch tribunals,
according to their own ordinances, are bound to give
effect to the English bankrupt laws when duly proved,
unless there is any express law or ordinance prohibiting
their admission."

President Henry, at page 76 of his Treatise on Foreign

Law, published as a preface to his report of that case,
said:
"This comity in giving effect to the judgments of other
tribunals is generally exercised by states under the same
sovereign, on the ground that he is the fountain of justice
in each, though of independent jurisdiction, and it has
also been exercised in different states of Europe with
respect to foreign judgments, particularly in the Dutch
states, who are accustomed by the principle of reciprocity
to give effect in their territories to the judgments of
foreign states which show the same comity to theirs; but
the tribunals of France and England have never exercised
this comity to the degree that those of Holland have, but
always required a fresh action to be brought, in which the
foreign judgment may be given in evidence. As this is a
matter of positive law and internal policy in each state,
no opinion need be given. Besides, it is a mere question
of comity, and perhaps it might be neither politic nor
prudent, in two such great states, to give indiscriminate
effect to the judgment of each other's tribunals, however
the practice might be proper or convenient in federal
states or those under the same sovereign."

It was that statement which appears to have called forth

country to give credit to those of another for the

the observations of Mr. Justice Story, already cited:

inclination and power to do justice," added that

"Holland seems at all times, upon the general principle of

"if it appears in evidence that persons suing under similar

reciprocity, to have given great weight to foreign

circumstances neither had met nor could meet with

judgments, and in many cases, if not in all cases, to have

justice, that fact cannot be immaterial as an answer to

given to them a weight equal to that given to domestic

the presumption."

judgments wherever the like rule of reciprocity with

regard to Dutch judgments has been adopted by the
foreign country whose judgment is brought under review.
This is certainly a very reasonable rule, and may perhaps
hereafter

work

itself

firmly

into

the

structure

Wright v. Simpson, 6 Ves. 714, 730.

Lord Brougham, presiding as lord Chancellor in the House
of Lords, said:

of

international jurisprudence."

"The law, in the course of procedure abroad, sometimes

differs so mainly from ours in the principles upon which it

Story on Conflict of Laws 618.

This rule, though never either affirmed or denied by
express adjudication in England or America, has been
indicated, more or less distinctly, in several of the
authorities already cited.

is bottomed that it would seem a strong thing to hold that

our courts were bound conclusively to give execution to
the sentence of foreign courts when, for aught we know,
there is not anyone of those things which are reckoned
the

elements

or

the

corner

stones

of

the

due

administration of justice present to the procedure in

Lord Hardwicke threw out a suggestion that the credit to

these foreign courts."

be given by one court to the judgment of a foreign court

Houlditch v. Donegal, 8 Bligh, N.R. 301, 338.
Page 159 U. S. 213
Chief Justice Smith, of New Hampshire, in giving reasons
might well be affected by "their proceeding both by the

why foreign judgments or decrees, founded on the

same rules of law." Otway v. Ramsay, 4 B. & C. 414-416,

municipal laws of the state in which they are pronounced,

note.

are

not

conclusive

evidence

of

debt,

but prima

facie evidence only, said:

Lord Eldon, after saying that "natural law" (evidently
intending the law of nations) "requires the courts of this

"These laws and regulations may be unjust, partial to

citizens, and against foreigners; they may operate

injustice to our citizens, whom we are bound to protect;

Mr. Justice Cooley said: "True comity is equality. We

they may be, and the decisions of courts founded on

should demand nothing more and concede nothing

them, just cause of complaint against the supreme power

less." McEwan v. Zimmer, 38 Mich. 765, 769.

of the state where rendered. To adopt them is not merely

saying that the courts have decided correctly on the law,
but it is approbating the law itself."

Mr. Wheaton said:

"There is no obligation recognized by legislators, public
authorities, and publicists to regard foreign laws, but their

Bryant v. Ela, Smith (N.H.) 396, 404.

application is admitted only from considerations of utility

Mr. Justice Story said:

and the mutual convenience of states -- ex commitate,

ob reciprocam utilitatem."

"If a civilized nation seeks to have the sentences of its

own courts of any validity elsewhere, they ought to have

"The general comity, utility, and convenience of nations

a just regard to the rights and usages of other civilized

have, however, established a usage among most civilized

nations, and the principles of public and national law in

states by which the final judgments of foreign courts of

the administration of justice."

competent

jurisdiction

are

reciprocally

carried

into

execution."
Bradstreet v. Neptune Ins. Co., 3 Sumner 600, 608.
Wheaton's International Law (8th ed.) 79, 147.
Page 159 U. S. 214
Since
Mr.

Justice

Woodbury

said

that

judgments in

personam, rendered under a foreign government,

Story,

Kent,

and

Wheaton

wrote

their

commentaries, many books and essays have been

published upon the subject of the effect to be allowed by

"are, ex commitate, treated with respect according to the

nature of the judgment and the character of the tribunal
which rendered it and the reciprocal mode, if any, in

the courts of one country to the judgments of another,

with references to the statutes and decisions in various
countries. Among the principal ones are Foelix, Droit
International Prive (4th ed., by Demangeat, 1866) lib. 2,

which that government treats our judgments,"

tits. 7, 8; Moreau, Effets Internationaux des Jugements

and added "nor can much comity be asked for the

(1884); Piggott, on Foreign Judgments (2d ed., 1884);

judgments of another nation which, like France, pays no

Constant, De l'Execution des Jugements Etrangers (2d

respect

ed., 1890), giving the text of the articles of most of the

to

those

of

other

countries." Burnham

Webster, 1 Woodb. & Min. 172, 175, 179.

v.

modern codes upon the subject, and of French treaties

with Italian, German, and Swiss states, and numerous

ground that he was a foreigner, not domiciled in France,

papers in Clunet's Journal de Droit International Prive,

and obtained a judgment, affirmed on appeal, remitting

established in 1874 and continued to the present time.

the matter to the American courts -- obtint son renvoi

For the reasons stated at the outset of this opinion, we

devant les tribunaux Americains. Holker then sued Parker

have not thought it important to state the conflicting

in the Circuit Court of the United States for the District of

theories of continental commentators

Massachusetts, and in 1814 obtained a judgment there

ordering Parker to pay him $529,949. One branch of the

Page 159 U. S. 215

controversy had been brought before this Court in

and essayists as to what each may think the law ought to

be, but have referred to their works only for evidence of
authoritative declarations, legislative or judicial, of what

1813.Holker v. Parker, 7 Cranch 436. Holker, not being

able to obtain execution of that judgment in America
because Parker had no property there and continued to
reside in Paris, obtained from a French judge an order

the law is.

declaring

the

judgment

executory.

Upon

Parker's

By the law of France, settled by a series of uniform

application to nullify the proceeding, the Royal Court of

decisions of the Court of Cassation, the highest judicial

Paris, reversing the judgment of a lower court, set aside

tribunal, for more than half a century, no foreign

that order, assigning these reasons:

judgment can be rendered executory in France without a

review of the judgment au fond (to the bottom), including
the whole merits of the cause of action on which the
judgment rests. Pardessus, Droit Commercial 1488;
Bard, Precis de Droit International (1883) nos. 234-239;

"Considering that judgments rendered by foreign courts

have neither effect nor authority in France; that this rule
is doubtless more particularly applicable
Page 159 U. S. 216

Story on Conflict of Laws 615-617; Pigggott 452;

Westllake on Private International Law (3d ed., 1890) 350.

in favor of Frenchmen, to whom the King and his officers

owe a special protection, but that the principle is

A leading case was decided by the Court of Cassation on

April 19, 1819, and was as follows: a contract of
partnership

was

made

between

Holker,

French

merchant, and Parker, a citizen of the United States.

Afterwards, and before the partnership accounts were
settled, Parker came to France, and Holker sued him in
the Tribunal of Commerce of Paris. Parker excepted on the

absolute, and may be invoked by all persons, without

distinction, being founded on the independence of states;
that the ordinance of 1629, in the beginning of its article
121, lays down the principle in its generality when it says
that

judgments

rendered

in

foreign

kingdoms

and

sovereignties for any cause whatever shall have no

execution in the Kingdom of France, and that the Civil

the Code of Civil Procedure that the French tribunals had

Code, art. 2123, gives to this principle the same latitude

been

when it declares that a lien cannot result from judgments

therefore the ordinance of 1629 had no application; that

rendered in a foreign country, except so far as they have

the articles of the Codes

authorized

to

declare

them

executory;

that

been declared executory by a French tribunal -- which is

not a matter of mere form, like the granting in past times
of

a pareatis from

one

department

to

another

for

judgments rendered within the Kingdom, but which

assumes,

on

the

part

of

the

French

tribunals,

cognizance of the cause, and a full examination of the

justice of the judgment presented for execution, as
reason demands, and that this has always been practiced
in France, according to the testimony of our ancient
authorities;

that

there

may

result

from

this

an

inconvenience where the debtor, as is asserted to have

happened in the present case, removes his property and
his person to France, while keeping his domicile in his
native country; that it is for the creditor to be watchful,
but that no consideration can impair a principle on which
rests

the

sovereignty

of

governments,

and

which,

Page 159 U. S. 217

referred to did not authorize the courts to declare
judgments rendered in a foreign country executory in
France without examination; that such an authorization
would be as contrary to the institution of the courts as
would be the award or the refusal of execution arbitrarily
and at will, would impeach the right of sovereignty of the
French government, and was not in the intention of the
legislature, and that the Codes made no distinction
between different judgments rendered in a foreign
country, and permitted the judges to declare them all
executory, and therefore those judgments, whether
against a Frenchman or against a foreigner, were subject
to examination on the merits. Holker v. Parker, Merlin,
Questions do Droit, Jugement, 14, No. 2.

whatever be the case, must preserve its whole force."

The Court of Cassation has ever since constantly affirmed
The court therefore adjudged that, before the tribunal of
first instance, Holker should state the grounds of his
action, to be contested by Parker, and to be determined

the same view. Moreau, No. 106, note, citing many

decisions; Clunet, 1882, p. 166. In Clunet, 1894, p. 913,
note, it is said to be

by the court upon cognizance of the whole cause. That

judgment was confirmed, upon deliberate consideration,

"settled by judicial decisions -- il est de jurisprudence --

by the Court of Cassation, for the reasons that the

that the French courts are bound, in the absence of

ordinance of 1629 enacted, in absolute terms and without

special diplomatic treaties, to proceed to the revision on

exception, that foreign judgments should not have

the whole merits -- au fond -- of foreign judgments,

execution in France; that it was only by the Civil Code and

execution of which is demanded of them,"

citing, among other cases, a decision of the Court of

Constant, 111, 116; Moreau, No. 189; Clunet, 1887, p.

Cassation on February 2, 1892, by which it was expressly

217; 1888, p. 837; Piggott 439. And in a very recent case,

held to result from the articles of the Codes above cited

the Civil Tribunal of Brussels held that,

"that judgments rendered in favor of a foreigner against a

"considering that the right of revision is an emanation of

Frenchman, by a foreign court, are subject, when

the

execution of them is demanded in France, to the revision

the emporium, and that as such it is within the domain of

of the French tribunals which have the right and the duty

public law; that from that principle it manifestly follows

to examine them, both as to the form and as to the

that, if the legislature does not recognize executory force

merits."

in foreign judgments where there exists no treaty upon

right

of

sovereignty;

that

it

proceeds

from

the basis of reciprocity, it cannot belong to the parties to

Sirey, 1892, 1, 201.

substitute their will for that of the legislature by

In Belgium the Code of Civil Procedure of 1876 provides

that if a treaty on the basis of reciprocity be in existence
between Belgium and the country in which the foreign

arrogating to themselves the power of delegating to the

foreign judge a portion of sovereignty."
Clunet, 1894, pp. 164, 165.

judgment has been given, the examination of the

judgment in the Belgian courts shall bear only upon the

In Holland, the effect given to foreign judgments has

questions whether it "contains nothing contrary to public

always depended upon reciprocity, but whether by reason

order, to the principles of the Belgian public order;"

of Dutch ordinances only or of general principles of

whether, by the law of the country in which it was

jurisprudence

rendered, it has the force of res judicata; whether the

Forbes, and Henry on Foreign Law, above cited; Story on

copy is duly authenticated; whether the

Conflict of Laws 618; Foelix, No. 397, note; Clunet,

does

not

clearly

appear. Odwin

v.

1879, p. 369; 1 Ferguson's International Law, 85;

Page 159 U. S. 218
defendant's

rights

Constant, 171; Moreau, No. 213.

have

been

duly

respected,

and

whether the foreign court is not the only competent

court, by reason of the nationality of the plaintiff. Where,
as is the case between Belgium and France, there is no
such treaty, the Belgian Court of Cassation holds that the
foreign judgment may be reexamined upon the merits.

In Denmark, the courts appear to require reciprocity to be

shown before they will execute a foreign judgment.
Foelix, Nos. 328, 345; Clunet, 1891, p. 987; Westlale, ubi
sup. In Norway, the courts reexamine the merits of all
foreign judgments, even of those of Sweden. Foelix, No.
401; Piggott, 504, 505; Clunet, 1892, p. 296. In Sweden,

the principle of reciprocity has prevailed from very

recognition of the legal validity of the judgments of

ancient times. The courts give no effect to foreign

foreign courts," and

judgments unless upon that principle, and it is doubtful

whether they will even then unless reciprocity is secured
by treaty with the country in which the judgment was
rendered. Foelix, No. 400; Olivecrona, in Clunet, 1880, p.
83; Constant, 191; Moreau, No. 222; Piggott, 503;

"it is therefore an essential requirement of reciprocity

that the law of the foreign state should recognize in an
equal degree the legal validity of the judgments of
German courts, which are to be enforced by its courts,
and that an examination of their legality, both as regards

Westlake, ubi sup.

the material justice of the decision as to matters of fact

Page 159 U. S. 219

or law, and with respect to matters of procedure, should

neither be required as a condition of their execution, by

In the empire of Germany, as formerly in the states which

now form part of that empire, the judgments of those

the court ex officio, nor be allowed by the admission of

pleas which might lead to it."

states are mutually executed, and the principle of

reciprocity

prevails

as

to

the

judgments

of

other

countries. Foelix, Nos. 328, 331, 333-341; Moreau, Nos.

Piggott, 470-471. See also Clunet, 1882, p. 35; 1883, p.

246; 1884, p. 600.

178, 179; Vierhaus, in Piggott, 460-474; Westlake, ubi

In

sup. By the German Code of 1877,

Switzerland,

by

the

federal

Constitution,

civil

judgments in one canton are executory throughout the

"compulsory execution of the judgment of a foreign court

republic. As to foreign judgments, there is no federal law,

cannot take place unless its admissibility has been

each canton having its own law upon the subject. But civil

declared by a judgment of exequatur; . . . the judgment of

judgments in one canton are executory other cantons,

exequatur is to be rendered without examining whether

foreign judgments are executed according to the rule of

the decision is conformable to law;"

reciprocity only. Constant, 193-204; Piggott, 505-516;

Clunet, 1887, p. 762; Westlake, ubi sup. The law upon this

but it is not to be granted "if reciprocity is not

guaranteed."

Constant,

79-81;

Piggott,

466.

The

Reichsgericht, or imperial court, in a case reported in full

subject has been clearly stated by Brocher, President of

the Court of Cassation of Geneva and professor of law in
the university there. In his Nouveau

in Piggott, has held that an English judgment cannot be

executed in Germany, because, the court said, the
German courts, by the Code, when they execute foreign
judgments

at

all,

are

"bound

to

the

unqualified

Page 159 U. S. 220

Traite de Droit International Prive (1876) 174, treating of

proper in such matters." Clunet, 1879, pp. 88, 94. And in

the question whether "it might not be convenient that

a later treatise he says:

states should execute, without reviewing their merits,

judgments rendered on the territory of each of them

"We cannot admit that the recognition of a state as

sovereign ought necessarily to have as a consequence

respectively," he says:

the obligation of respecting and executing the judicial

"It would certainly be advantageous for the parties

decisions rendered by its tribunals. In strict right, the

interested

the

authority of such acts does not extend beyond the

differences of opinion, and the expenses resulting from

frontier. Each sovereignty possesses in particular, and

the necessity of obtaining a new judgment in each

more or less in private, the territory subject to its power.

locality where they should seek execution. There might

No other can exercise there an act of its authority. This

thence arise for each sovereignty a juridical or moral

territorial independence finds itself, in principle, directly

obligation to lend a strong hand to foreign judgments. But

included in the very act by which one nation recognizes a

would not such an advantage be counterbalanced, and

foreign state as a sovereign; but there cannot result

often surpassed, by the dangers that might arise from

therefrom a promise to adopt, and to cause to be

that mode of proceeding? There is here, we believe, a

executed upon the national territory, judgments rendered

question of reciprocal appreciation and confidence. One

by

to

avoid

the

delays,

the

conflicts,

must at the outset inquire whether the administration of

the foreign judiciary, whose judgments it is sought to
execute without verifying their merits, presents sufficient
guaranties. If the propriety of such an execution be
admitted, there is ground for making it the object of
diplomatic treaties. That form alone can guaranty the
realization of a proper reciprocity. It furnishes, moreover,
to each state the means of acting upon the judicial
organization and procedure of other states."
In an article in the Journal, after a review of the Swiss
decisions, he recognizes and asserts that "it comes within
the competency of each canton to do what seems to it

Page 159 U. S. 221

the officials of the foreign state, whoever they may be.
That would be an abdication of its own sovereignty, and
would bind it in such sort as to make it an accomplice in
acts often injurious, and in some cases even criminal.
Such obligations suppose a reciprocal confidence. They
are not undertaken, moreover, except upon certain
conditions, and by means of a system of regulations
intended to prevent or to lessen the dangers which might
result from them."
3 Cours de Droit International Prive (1885) 126, 127.

In Russia, by the Code of 1864, "the judgments of foreign

"The execution of a treaty is not the only proof of

tribunals shall be rendered executory according to the

reciprocity.

rules established by reciprocal treaties and conventions,"

ascertainment of the existence of reciprocity to the

and where no rules have been established by such

judicial tribunals, for the same reasons for which there is

treaties, are to be "put in execution in the empire only

conferred upon them the right to settle all questions

after authorization granted by the courts of the empire,"

incident to the cause to be adjudged. The existence of

and

reciprocity between

"in deciding upon demands of this kind the courts do not

Page 159 U. S. 222

It

is

necessary

to

commit

the

examine into the foundation of the dispute adjudged by

the foreign tribunals, but decide only whether the
judgment

does

not

contain

dispositions

which

are

contrary to the public order, or which are not permitted

by the laws of the empire."

two states ought to be proved in the same manner as all

the positive facts of the case. . . . It is true that the
principle of reciprocity is a principle not of right, but of
policy, yet the basis of the principle of all regular and real
policy is also the fundamental principle of right, and the

Constant, 183-185. Yet a chamber of the Senate of St.

point

of departure

of all

legal

order -- the suum

Petersburg, sitting as a Court of Cassation, and the

cuique. This last principle comprehends right, reciprocity,

highest judicial tribunal of the empire in civil matters, has

utility, and reciprocity is the application of right to policy. .

declined to execute a French judgment upon the grounds

. . Let this principle be applied wherever there is the least

that, by the settled law of Russia,

guaranty or even a probability of reciprocity, and the

cognizance of this question be committed to the judicial

"it is a principle in the Russian empire that only the

decisions of the authorities to whom jurisdiction has been
delegated by the sovereign power have legal value by
themselves and of full right,"
and that, "in all questions of international law, reciprocity
must be observed and maintained as a fundamental
principle." Adam v. Schipoff,Clunet, 1884, pp. 45, 46, 134.
And Professor Englemann, of the Russian University of
Dorpat, in an able essay, explaining that and other
Russian decisions, takes the following view of them:

tribunals, and one will arrive at important results, which,

on their side, will touch the desired end -- international
accord. But for this it is indispensable that the application
of this principle should be entrusted to judicial tribunals,
accustomed to decide affairs according to right, and not
to administrative authorities, which look above all to
utility, and are accustomed to be moved by political
reasons, intentions, and even passions."

Clunet, 1884, pp. 120-122. But it would seem that no

Moreau, No. 219; Clunet, 1879, p. 351; 1885, p. 537;

foreign judgment will be executed in Russia unless

1891, p. 452; Piggott, 495.

reciprocity is secured by treaty. Clunet, 1884, pp. 46, 113,

139, 140, 602.
In Poland, the provisions of the Russian Code are in force,
and the Court of Appeal of Warsaw has decided that
where there is no treaty, the judgments of a foreign
country cannot be executed, because

In Bulgaria, by a resolution of the supreme court in 1881,

"the Bulgarian judges should, as a general rule, abstain
from entering upon the merits of the foreign judgment.
They ought only to inquire whether the judgment
submitted to then does not contain dispositions contrary
to the public order and to the Bulgarian laws."

"in admitting a contrary conclusion, there would be

impugned one of the cardinal principles of international
relations, namely the principle of reciprocity, according to
which each state recognizes juridical rights and relations,
originating or established in another country, only in the
measure in which the latter, in its turn, does not
disregard the rights and relations existing in the former."
Clunet, 1884, pp. 494-495.

Constant, 129, 130; Clunet, 1886, p. 570. This resolution

closely follows the terms of the Russian Code, which, as
has been seen, has not precluded applying the principle
of reciprocity.
In Austria, the rule of reciprocity does not rest upon any
treaty or legislative enactment, but has been long
established, by imperial decrees and judicial decisions,
upon general principles of jurisprudence. Foelix, No. 331;

In Roumania, it is provided by Code that

Constant, 100-108; Moreau, No. 185; Weiss, Traite de

Droit International (1886) 950; Clunet, 1891, p. 1003;

"judicial decisions rendered in foreign countries cannot be

executed in Roumania except in the same manner in
which Roumanian judgments are executed in the country
in question, and provided they are declared executory by
competent Roumanian judges,"
and this article seems to be held to require legislative
reciprocity.
Page 159 U. S. 223

1894, p. (1886) 980; Clunet, 1891, p. 1003; 1894, p. 908;

Piggott, 434. In Hungary, the same principles were always
followed as in Austria, and reciprocity has been made a
condition by a law of 1880. Constant, 109; Moreau, No.
186, and note; Piggott, 436; Weiss, ubi sup.
In Italy, before it was united into one kingdom, each state
had its own rules. In Tuscany and in Modena, in the
absence of treaty, the whole merits were reviewed. In
Parma, as by the French ordinance of 1629, the foreign

judgment was subject to fundamental revision if against a

judgment contains dispositions contrary to public order or

subject of Parma. In Naples, the Code and the decisions

to the internal public law of the realm."

followed those of France. In Sardinia, the written laws

required above all the condition of reciprocity, and if that
condition was not fulfilled, the foreign judgment was
reexaminable in all respects. Fiore, Effetti Internazionali
delle Sentenze (1875) 40-44; Moreau, No. 204. In the
papal states, by a decree of the Pope in 1820,
"the exequatur shall not be granted, except so far as the
judgments rendered in the states of his Holiness shall
enjoy the same favor in the foreign countries; this
reciprocity is presumed if there is no particular reason to
doubt it."
Toullier, Droit Civil, lib. 3, tit. 3, c. 6, 3, No. 93. And
see Foelix, No. 343; Westlake, ubi sup. In the Kingdom of
Italy,

Constant, 157. In 1874, the Court of Cassation of Turin,

"considering that in international relations is admitted the
principle of reciprocity, as that which has its foundation in
the natural reason of equality of treatment, and in default
thereof opens the way to the exercise of the right of
retaliation,"
and that the French courts examine the merits of Italian
judgments before allowing their execution in France,
decided that the Italian courts of appeal, when asked to
execute a French judgment, ought not only to inquire into
the competency of the foreign court, but also to review
the merits and the justice of the controversy. Levi v.
Pitre, in Rossi, Execuzione delle Sentenze Straniere (1st
ed. 1875) 70, 284, and in Clunet, 1879, p. 295. Some

Page 159 U. S. 224

commentators, however, while admitting that decision to

be most authoritative, have insisted that it is unsound,

by the Code of Procedure of 1865,

"executory force is given to the judgments of foreign
judicial authorities by the Court of Appeal in whose
jurisdiction they are to be executed, by obtaining a
judgment on an exequatur in which the court examines
(a) if the judgment has been pronounced by a competent
judicial authority; (b) if it has been pronounced, the
parties being regularly cited; (c) if the parties have been
legally represented or legally defaulted; (d) if the

and opposed to other Italian decisions, to which we have

not access. Rossi, ubi sup. (2d ed. 1890) 92; Fiore, 142143; Clunet, 1878, p. 237; Clunet, 1879, pp. 296, 305;
Piggott, 483; Constant, 161.
In the principality of Monaco, foreign judgments are not
executory, except by virtue of a special ordinance of the
prince, upon a report of the Advocate General. Constant,
169; Piggott, 488.

In Spain, formerly, foreign judgments do not appear to

Clunet, 1881, p. 365. In another case, in 1888, the same

have been executed at all. Foelix, No. 398; Moreau, No.

court, after hearing the parties and the public minister,

197; Silvela, in Clunet, 1881, p. 20. But by the Code of

ordered execution of a Mexican judgment. The public

1855, revised in 1881 without change in this respect,

minister, in his demand for its execution, said:

"judgments pronounced in foreign countries shall have in

"Our law of civil procedure, inspired, to a certain point, by

Spain the force that the respective treaties given them; if

the

there are no special treaties with the nation in which they

recognizing among civilized nations a true community of

have been rendered, they shall

right, and considering mankind as a whole, in which

modern

theories

of

international

law

which,

nations occupy a position identical with that of individuals

Page 159 U. S. 225
have the same force that is given by the laws of that
nation to Spanish executory judgments; if the judgment
to be executed proceeds from a nation by whose
jurisprudence effect is not given to the judgments
pronounced by Spanish tribunals, it shall have no force in
Spain,"

towards society, gives authority in Spain to executory

judgments rendered by foreign tribunals, even in the
absence of special treaty, provided that those countries
do not proscribe the execution there of our judgments,
and under certain conditions, which, if they limit the
principle, are inspired by the wish of protecting our
sovereignty and by the supreme exigencies of justice.
When nothing appears either for or against as to the

and

authority of the judgments of our courts in the foreign

country, one should not put an obstacle to the fulfillment,

"application for the execution of judgments pronounced

in foreign countries shall be made to the Supreme
Tribunal of Justice, which, after examining an authorized
translation of the foreign judgment, and after hearing the
party against whom it is directed and the public minister,
shall decide whether it ought or ought not to be
executed."
Constant, 141-142; Piggott, 499-500. A case in which the
Supreme Court of Spain in 1880 ordered execution of a
French judgment after reviewing its merits is reported in

in our country, of judgments emanating from other

nations, especially when the question is of a country
which, by its historic origin, its language, its literature,
and by almost the identity of its customs, its usages, and
its social institutions, has so great a connection with our
own, which obliges us to maintain with it the most
intimate relations of friendship and courtesy."
And he pointed out that Mexico, by its Code, had adopted
reciprocity as a fundamental principle.

Page 159 U. S. 226

French Code. Constant, 153; Moreau, No. 203; Piggott,

460.

Among the reasons assigned by the court for ordering the

Mexican judgment to be executed was that "there exists

In Mexico, the system of reciprocity has been adopted by

in Mexico no precedent of jurisprudence which refuses

the Code of 1884 as the governing principle. Constant,

execution

168; Clunet, 1891, p. 290.

to

judgments

rendered

by

the

Spanish

tribunals." Clunet, 1891, pp. 288-292.

The rule of reciprocity likewise appears to have generally
In

Portugal,

foreign

judgments,

whether

against

prevailed in South America. In Peru, foreign judgments do

Portuguese or against a foreigner, are held to be

not appear to be executed without examining the merits

reviewable upon the merits before granting execution

unless when reciprocity is secured by treaty. Clunet,

thereof. Foelix, No. 399; Clunet, 1875, pp. 54, 448;

1879, pp. 266, 267; Piggott, 548. In Chili, there appears

Moreau, No. 217; Constant, 176-180; Westlake, ubi sup.

to have been no legislation upon the subject, but,

according to a decision of the Supreme Court of Santiago

In Greece, by the provisions of the Code of 1834, foreign

judgments both parties to which are foreigners are
enforced without examination of their merits, but if one of
the parties is a Greek, they are not enforced if found

in 1886, "the Chilian tribunals should not award an

exequatur, except upon decisions in correct form, and
also reserving the general principle of reciprocity." Clunet,
1889, p. 135; Constant, 131-132.

contradictory to the facts proved or if they are contrary to

the prohibitive laws of Greece. Foelix, No. 396; Constant,

Page 159 U. S. 227

151, 152; Moreau, No. 202; Saripolos, in Clunet, 1880, p.

173; Piggott, 475.

In Brazil, foreign judgments are not executed unless

because of the country in which they were rendered

In Egypt, under the influence of European jurisprudence,

admitting the principle of reciprocity or because of a

the Code of Civil Procedure has made reciprocity a

placet of the government of Brazil, which may be

condition upon which foreign judgments are executed.

awarded according to the circumstances of the case.

Constant, 136; Clunet, 1887, pp. 98, 228; 1889, p. 322.

Constant, 124, and note; Moreau, No. 192; Piggott, 543546; Westlake, ubi sup. In the Argentine Republic, the

In Cuba and in Porto Rico, the Codes of Civil Procedure

are based upon the Spanish Code of 1855. Piggott, 435,
503. In Hayti, the Code reenacts the provisions of the

principle of reciprocity was maintained by the courts, and

was affirmed by the Code of 1878 as a condition sine qua
non of the execution of foreign judgments, but has

perhaps been modified by later legislation. Moreau, No.

judgments are reviewable upon the merits are not

218; Palomeque, in Clunet, 1887, pp. 539-558.

entitled to full credit and conclusive effect when sued

upon in this country, but are prima facie evidence only of

It appears, therefore, that there is hardly a civilized

the justice of the plaintiffs' claim.

nation on either continent which by its general law allows

conclusive effect to an executory foreign judgment for the

Page 159 U. S. 228

recovery of money. In France and in a few smaller states

-- Norway, Portugal, Greece, Monaco, and Hayti -- the
merits of the controversy are reviewed as of course,
allowing to the foreign judgment, at the most, no more
effect than of being prima facie evidence of the justice of
the claim. In the great majority of the countries on the
continent of Europe -- in Belgium, Holland, Denmark,
Sweden, Germany, in many cantons of Switzerland, in
Russia and Poland, in Roumania, in Austria and Hungary
(perhaps in Italy), and in Spain -- as well as in Egypt, in
Mexico, and in a great part of South America, the
judgment rendered in a foreign country is allowed the
same effect only as the courts of that country allow to the
judgments of the country in which the judgment in
question is sought to be executed.

Commentaries on the Conflict of Laws, already cited) has

thus been fulfilled, and the rule of reciprocity has worked
firmly

into

the

structure

be conclusive evidence of the merits of the claim, we do

not proceed upon any theory of retaliation upon one
person by reason of injustice done to another, but upon
the broad ground that international law is founded upon
mutuality and reciprocity, and that by the principles of
international law recognized in most civilized nations, and
by the comity of our own country, which it is our judicial
duty to known and to declare, the judgment is not
entitled to be considered conclusive.
By our law at the time of the adoption of the Constitution,
a

foreign

judgment

was

considered

as prima

facie evidence, and not conclusive. There is no statute of

the United States, and no treaty of the United States with

The prediction of Mr. Justice Story (in 618 of his

itself

In holding such a judgment, for want of reciprocity, not to

of

international

jurisprudence.

France or with any other nation, which has changed that

law or has made any provision upon the subject. It is not
to be supposed that if any statute or treaty had been or
should be made, it would recognize as conclusive the
judgments of any country which did not give like effect to
our own judgments. In the absence of statute or treaty, it

The reasonable, if not the necessary, conclusion appears

appears to us equally unwarrantable to assume that the

to us to be that judgments rendered in France, or in any

comity of the United States requires anything more.

other foreign country by the laws of which our own

If we should hold this judgment to be conclusive, we

Decree dismissing the bill is reversed the plea adjudged

should allow it an effect to which, supposing the

bad, and the cause remanded to the circuit court for

defendants' offers to be sustained by actual proof, it

further proceedings not inconsistent with this opinion.

would, in the absence of a special treaty, be entitled in

hardly any other country in Christendom except the
country in which it was rendered. If the judgment had
been rendered in this country, or in any other outside of
the jurisdiction of France, the French courts would not
have executed or enforced it except after examining into
its merits. The very judgment now sued on would be held
inconclusive in almost any other country than France. In
England and in the colonies subject to the law of England,
the fraud alleged in its procurement would be a sufficient
ground for disregarding it. In the courts of nearly every
other nation, it would be subject to reexamination either
merely because it was a foreign judgment or because
judgments of that nation would be reexaminable in the
courts of France.

Bartlet v. Knight (1805), 1 Mass. 401, 405; Buttrick v.

Allen (1811), 8 Mass. 273; Bissell v. Briggs (1813), 9
Mass. 462, 464; Hall v. Williams (1828), 6 Pick. 232,
238; Gleason v. Dodd (1842), 4 Met. 333, 336; Wood v.
Gamble (1853), 11 Cush. 8; McKim v. Odom(1835), 12
Me. 94, 96; Bank v. Butman (1848), 29 Me. 19, 21; Bryant
v.

Ela (1815),

Smith

Blackbourne (1818),

396,

N.H.

404; Thurber

v.

242; Robinson

v.

Prescott (1828), 4 N.H. 450; Taylor v. Barron (1855), 10

Fost.

78,

95; King

v.

Van

Gilder (1791),

D.Chip.

59;Rathbone v. Terry (1837), 1 R.I. 73, 76; Aldrich v.

Kinney (1822),

Conn.

380,

382; Hitchcock

v.

Aicken (1803), 1 Caines 460; Smith v. Lewis (1808), 3

Johns.

157,

159; Taylor

v.

Bryden (1811),

Johns.

173; Andrews v. Montgomery (1821), 19 Johns. 162,

Page 159 U. S. 229

165; Starbuck

v.

Murray (1830),

Wend.

148,

155; Benton v. Burgot (1823), 10 S. & R. 240-242; Barney

For these reasons, in the action at law, the
Judgment is reversed, and the cause remanded to the
circuit court, with directions to set aside the verdict and
to order a new trial.
For the same reasons, in the suit in equity between these
parties, the foreign judgment is not a bar, and therefore
the

v. Patterson (1824), 6 H. & J. 182, 202, 203;Taylor v.

Phelps (1827),

H.

Coleman (1808),

&

Hardin

G.

492,

503; Rogers

413-414; Williams

v.
v.

Preston (1830), 3 J. J. Marsh. 600, 601.

MR. CHIEF JUSTICE FULLER, with whom concurred MR.
JUSTICE HARLAN, MR. JUSTICE BREWER, and MR. JUSTICE
JACKSON, dissenting.

Plaintiffs brought their action on a judgment recovered by

Judgments are executory while unpaid, but in this

them against the defendants in the courts of France,

country, execution is not given upon a foreign judgment

which courts had jurisdiction over person and subject

as such, it being enforced through a new judgment

matter, and in respect of which judgment no fraud was

obtained in an action brought for that purpose.

alleged, except in particulars contested in and considered

by the French courts. The question is whether, under
these circumstances and in the absence of a treaty or act
of Congress, the judgment is reexaminable upon the
merits. This question I regard as one to be determined by
the ordinary and settled rule in respect of allowing a
party who has had an opportunity to prove his case in a
competent court to retry it on the merits, and it seems to
me

that

domestic

the

doctrine

judgments

of res

should

judicata applicable

be

applied

to

to

foreign

judgments as well, and rests on the same general ground

of public policy -- that there should be an end of litigation.
This application of the doctrine is in accordance with our
own jurisprudence, and it is not necessary that we should
hold it to be required by some rule of international law.
The fundamental principle concerning judgments is that
disputes are finally determined by them, and I am unable
to perceive why a judgment in personam, which is not
open to question on the ground of want of jurisdiction,
either intrinsically or over the parties, or of fraud, or on
any other recognized ground of impeachment, should not
be

held, inter

partes, though

conclusive on the merits.

recovered

abroad,

The principle that requires litigation to be treated as

terminated by final judgment, properly rendered, is as
applicable to a judgment proceeded on in such an action
as to any other, and forbids the allowance to the
judgment debtor of a retrial of the original cause of
action, as of right, in disregard of the obligation to pay
arising on the judgment, and of the rights acquired by the
judgment creditor thereby.
That any other conclusion is inadmissible is forcibly
illustrated by the case in hand. Plaintiffs in error were
trading copartners in Paris as well as in New York, and
had a place of business in Paris at the time of these
transactions and of the commencement of the suit
against them in France. The subjects of the suit were
commercial transactions, having their origin, and partly
performed, in France under a contract there made, and
alleged to be modified by the dealings of the parties
there, and one of the claims against them was for goods
sold to them there. They appeared generally in the case,
without protest, and by counterclaims relating to the
same general course of business, a part of them only
connected with the claims against them, became actors
in the suit, and submitted to the courts their own claims

Page 159 U. S. 230

for affirmative relief, as well as the claims against them.

The courts were competent, and they took the chances of

a decision in their favor. As traders in France, they were

arrive at the right conclusion," and a result thus reached

under the protection of its laws, and were bound by its

ought not to be disturbed.

laws, its commercial usages, and its rules of procedure.

The fact that they were Americans and the opposite
parties were citizens of France is immaterial, and there is
no suggestion on the record that those courts proceeded
on any other ground than that all litigants, whatever their
nationality, were entitled to equal justice therein. If
plaintiffs in error had succeeded in their cross-suit and
recovered judgment against defendants in error, and had
sued them here on that judgment, defendants in error
would not have been permitted to say that the judgment
in France was

The following view of the rule in England was expressed

by Lord Herschell in Nouvion v. Freeman, L.R. 15 App.Cas.
1, 9, quoted in the principal opinion:
"The principle upon which I think our enforcement of
foreign judgments must proceed is this, that in a court of
competent

jurisdiction,

where,

according

to

its

established procedure, the whole merits of the case were

open at all events, to the parties, however much they
may have failed to take advantage of them or may have
waived any of their rights, a final adjudication has been
given that a debt or obligation exists, which cannot

Page 159 U. S. 231

thereafter in that court be disputed, and can only be

not conclusive against them. As it was, defendants in

questioned in an appeal to a higher tribunal. In such a

error recovered, and I think plaintiffs in error are not

case, it may well be said that, giving credit to the court of

entitled to try their fortune anew before the courts of this

another country, we are prepared to take the fact that

country on the same matters voluntarily submitted by

such adjudication has been made as establishing the

them to the decision of the foreign tribunal. We are

existence of the debt or obligation."

dealing with the judgment of a court of a civilized

country, whose laws and system of justice recognize the
general rules in respect to property and rights between
man and man prevailing among all civilized peoples.
Obviously the last persons who should be heard to
complain are those who identified themselves with the
business

of

that

country,

knowing

that

all

their

transactions there would be subject to the local laws and

modes of doing business. The French courts appear to
have acted "judicially, honestly, and with the intention to

But in that connection, the observations made by Mr.

Justice Blackburn in Godard v. Gray, L.R. 6 Q.B. 139, 148,
and often referred to with approval, may usefully again
be quoted:
"It is not an admitted principle of the law of nations that a
state is bound to enforce within its territories the
judgments of a foreign tribunal. Several of the continental
nations (including France) do not enforce the judgments
of other countries

Page 159 U. S. 232

perversely disregarded the rights given to an English

subject by English law, that forms a valid excuse for

unless where there are reciprocal treaties to that effect.

But in England and in those states which are governed by
the common law, such judgments are enforced not by
virtue of any treaty nor by virtue of any statute, but upon
a principle very well stated by Parke, B., in Williams v.

disregarding the obligation thus imposed on him; but we

prefer to imitate

the caution of the

present lord

Chancellor in Castrique v. Imrie, L.R. 4 H.L. 445, and to

leave those questions to be decided when they arise, only
observing in the present case, as in that:"

Jones, 13 M. & W. 633:"

"The whole of the facts appear to have been inquired into
"Where a court of competent jurisdiction had adjudicated
a certain sum to be due from one person to another, a
legal obligation arises to pay that sum, on which an
action

of

debt

to

enforce

the

judgment

may

be

maintained. It is in this way that the judgments of foreign

by the French courts judicially, honestly, and with the

intention to arrive at the right conclusion; and, having
heard the facts as stated before them, they came to a
conclusion which justified them in France in deciding as
they did decide. . . ."

and colonial courts are supported and enforced."

"Indeed, it is difficult to understand how the common
"And taking this as the principle, it seems to follow that
anything which negatives the existence of that legal
obligation,

or

excuses

the

defendant

from

the

course of pleading is consistent with any notion that the

judgment was only evidence. If that were so, every count
on a

performance of it, must form a good defense to the

action. It must be open, therefore, to the defendant to

Page 159 U. S. 233

show that the court which pronounced the judgment had

not jurisdiction to pronounce it, either because they
exceeded the jurisdiction given to them by the foreign
law or because he, the defendant, was not subject to that
jurisdiction, and so far the foreign judgment must be
examinable. Probably the defendant may show that the
judgment was obtained by the fraud of the plaintiff, for
that would show that the defendant was excused from
the performance of an obligation thus obtained, and it
may be that where the foreign court has knowingly and

foreign judgment must be demurrable on that ground.

The mode of pleading shows that the judgment was
considered not as merely prima facie evidence of that
cause of action for which the judgment was given, but as
in itself giving rise at least prima facie to a legal
obligation to obey that judgment and pay the sum
adjudged. This may seem a technical mode of dealing
with the question, but in truth it goes to the root of the
matter, for if the judgment were merely considered as
evidence of the original cause of action, it must be open

to meet it by any counter evidence negativing the

It is held by the majority of the court that defendants

existence of that original cause of action. If, on the other

cannot be permitted to contest the validity and effect of

hand, there is a prima facie obligation to obey the

this judgment on the general ground that it was

judgment of a tribunal having jurisdiction over the party

erroneous in law

and the cause, and to pay the sum decreed, the question
would be whether it was open to the unsuccessful party
to try the cause over again in a court not sitting as a
court of appeal from that which gave the judgment. It is
quite clear that this could not be done where the action is
brought on the judgment of an English tribunal, and, on
principle, it seems the same rule should apply where it is
brought on that of a foreign tribunal."
In any aspect, it is difficult to see why rights acquired
under foreign judgments do not belong to the category of
private rights acquired under foreign laws. Now the rule is
universal in this country that private rights acquired
under the laws of foreign states will be respected and
enforced in our courts unless contrary to the policy or
prejudicial to the interests of the state where this is
sought to be done, and, although the source of this rule

Page 159 U. S. 234

or

in

fact

and

the

special

grounds

relied

on

are seriatim rejected. In respect of the last of these -- that

of fraud -- it is said that it is unnecessary in this case to
decide whether certain decisions cited in regard to
impeaching foreign judgments for fraud could be followed
consistently with our own decisions as to impeaching
domestic judgments for that reason,
"because there is a distinct and independent ground upon
which we are satisfied that the comity of our nation does
not require us to give conclusive effect to the judgments
of the courts of France, and that ground is the want of
reciprocity on the part of France as to the effect to be
given to the judgments of this and other foreign
countries."

may have been the comity characterizing the intercourse

between nations, it prevails today by its own strength,

And the conclusion is announced to be

and the right to the application of the law to which the

particular transaction is subject is a juridical right.

"that judgments rendered in France or in any other

foreign country by the laws of which our own judgments

And without going into the refinements of the publicists

are reviewable upon the merits are not entitled to full

on the subject, it appears to me that that law finds

credit and conclusive effect when sued upon in this

authoritative expression in the judgments of courts of

country, but are prima facie evidence only of the justice

competent jurisdiction over parties and subject matter.

of the plaintiff's claim."

In other words, that, although no special ground exists for

impeaching the original justice of a judgment, such as
want of jurisdiction or fraud, the right to retry the merits
of the original cause at large, defendant being put upon
proving those merits, should be accorded in every suit on
judgments

recovered

in

countries

where

our

own

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SUPREME
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judgments are not given full effect, on that ground

merely.
I cannot yield my assent to the proposition that, because
by legislation and judicial decision in France, that effect is
not there given to judgments recovered in this country
which, according to our jurisprudence, we think should be
given to judgments wherever recovered (subject, of
course, to the recognized exceptions), therefore we
should pursue the same line of conduct as respects the

EN BANC
G.R. No. L-11390

March 26, 1918

EL
BANCO
ESPAOL-FILIPINO, plaintiff-appellant,
vs.
VICENTE PALANCA, administrator of the estate of
Engracio Palanca Tanquinyeng, defendant-appellant.
Aitken
and
DeSelms
Hartigan and Welch for appellee.

for

appellant.

STREET, J.:

judgments of French tribunals. The application of the

doctrine of res judicata does not rest in discretion, and it
is for the government, and not for its courts, to adopt the
principle of retorsion, if deemed under any circumstances
desirable or necessary.
As the court expressly abstains from deciding whether
the judgment is impeachable on the ground of fraud, I
refrain from any observations on that branch of the case.
Page 159 U. S. 235
MR. JUSTICE HARLAN, MR. JUSTICE BREWER, and MR.
JUSTICE JACKSON concur in this dissent.
Disclaimer: Official Supreme Court case law is only
found in the print version of the United States Reports.

This action was instituted upon March 31, 1908, by "El

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

the defendant by publication pursuant to section 399 of

the Code of Civil Procedure. An order for publication was
accordingly obtained from the court, and publication was
made in due form in a newspaper of the city of Manila. At
the same time that the order of the court should deposit
in the post office in a stamped envelope a copy of the
summons and complaint directed to the defendant at his
last place of residence, to wit, the city of Amoy, in the
Empire of China. This order was made pursuant to the
following provision contained in section 399 of the Code
of Civil Procedure:
In case of publication, where the residence of a
nonresident or absent defendant is known, the
judge must direct a copy of the summons and
complaint to be forthwith deposited by the clerk in
the post-office, postage prepaid, directed to the
person to be served, at his place of residence
Whether the clerk complied with this order does not
affirmatively appear. There is, however, among the
papers pertaining to this case, an affidavit, dated April 4,
1908, signed by Bernardo Chan y Garcia, an employee of
the attorneys of the bank, showing that upon that date he
had deposited in the Manila post-office a registered letter,
addressed to Engracio Palanca Tanquinyeng, at Manila,
containing copies of the complaint, the plaintiff's
affidavit, the summons, and the order of the court
directing publication as aforesaid. It appears from the
postmaster's receipt that Bernardo probably used an
envelope obtained from the clerk's office, as the receipt
purports to show that the letter emanated from the office.
The cause proceeded in usual course in the Court of First
Instance; and the defendant not having appeared,
judgment was, upon July 2, 1908, taken against him by
default. Upon July 3, 1908, a decision was rendered in
favor of the plaintiff. In this decision it was recited that
publication had been properly made in a periodical, but
nothing was said about this notice having been given
mail. The court, upon this occasion, found that the
indebtedness of the defendant amounted to P249,355.
32, with interest from March 31, 1908. Accordingly it was
ordered that the defendant should, on or before July 6,
1908, deliver said amount to the clerk of the court to be
applied to the satisfaction of the judgment, and it was
declared that in case of the failure of the defendant to

satisfy the judgment within such period, the mortgage

property located in the city of Manila should be exposed
to public sale. The payment contemplated in said order
was never made; and upon July 8, 1908, the court
ordered the sale of the property. The sale took place upon
July 30, 1908, and the property was bought in by the
bank for the sum of P110,200. Upon August 7, 1908, this
sale was confirmed by the court.
About seven years after the confirmation of this sale, or
to the precise, upon June 25, 1915, a motion was made in
this cause by Vicente Palanca, as administrator of the
estate of the original defendant, Engracio Palanca
Tanquinyeng y Limquingco, wherein the applicant
requested the court to set aside the order of default of
July 2, 1908, and the judgment rendered upon July 3,
1908, and to vacate all the proceedings subsequent
thereto. The basis of this application, as set forth in the
motion itself, was that the order of default and the
judgment rendered thereon were void because the court
had never acquired jurisdiction over the defendant or
over the subject of the action.
At the hearing in the court below the application to
vacate the judgment was denied, and from this action of
the court Vicente Planca, as administrator of the estate of
the original defendant, has appealed. No other feature of
the case is here under consideration than such as related
to the action of the court upon said motion.
The case presents several questions of importance, which
will be discussed in what appears to be the sequence of
most convenient development. In the first part of this
opinion we shall, for the purpose of argument, assume
that the clerk of the Court of First Instance did not obey
the order of the court in the matter of mailing the papers
which he was directed to send to the defendant in Amoy;
and in this connection we shall consider, first, whether
the court acquired the necessary jurisdiction to enable it
to proceed with the foreclosure of the mortgage and,
secondly, whether those proceedings were conducted in
such manner as to constitute due process of law.
The word "jurisdiction," as applied to the faculty of
exercising judicial power, is used in several different,
though related, senses since it may have reference (1) to

the authority of the court to entertain a particular kind of

action or to administer a particular kind of relief, or it may
refer to the power of the court over the parties, or (2)
over the property which is the subject to the litigation.
The sovereign authority which organizes a court
determines the nature and extent of its powers in general
and thus fixes its competency or jurisdiction with
reference to the actions which it may entertain and the
relief it may grant.
Jurisdiction over the person is acquired by the voluntary
appearance of a party in court and his submission to its
authority, or it is acquired by the coercive power of legal
process exerted over the person.
Jurisdiction over the property which is the subject of the
litigation may result either from a seizure of the property
under legal process, whereby it is brought into the actual
custody of the law, or it may result from the institution of
legal proceedings wherein, under special provisions of
law, the power of the court over the property is
recognized and made effective. In the latter case the
property, though at all times within the potential power of
the court, may never be taken into actual custody at all.
An illustration of the jurisdiction acquired by actual
seizure is found in attachment proceedings, where the
property is seized at the beginning of the action, or some
subsequent stage of its progress, and held to abide the
final event of the litigation. An illustration of what we
term potential jurisdiction over the res, is found in the
proceeding to register the title of land under our system
for the registration of land. Here the court, without taking
actual physical control over the property assumes, at the
instance of some person claiming to be owner, to
exercise a jurisdiction in rem over the property and to
adjudicate the title in favor of the petitioner against all
the world.
In the terminology of American law the action to foreclose
a mortgage is said to be a proceeding quasi in rem, by
which is expressed the idea that while it is not strictly
speaking an action in rem yet it partakes of that nature
and is substantially such. The expression "action in rem"
is, in its narrow application, used only with reference to
certain proceedings in courts of admiralty wherein the

property alone is treated as responsible for the claim or

obligation upon which the proceedings are based. The
action quasi rem differs from the true action in rem in the
circumstance that in the former an individual is named as
defendant, and the purpose of the proceeding is to
subject his interest therein to the obligation or lien
burdening the property. All proceedings having for their
sole object the sale or other disposition of the property of
the defendant, whether by attachment, foreclosure, or
other form of remedy, are in a general way thus
designated. The judgment entered in these proceedings
is conclusive only between the parties.
In speaking of the proceeding to foreclose a mortgage the
author of a well known treaties, has said:
Though nominally against person, such suits are
to vindicate liens; they proceed upon seizure; they
treat property as primarily indebted; and, with the
qualification
above-mentioned,
they
are
substantially property actions. In the civil law, they
are styled hypothecary actions, and their sole
object is the enforcement of the lien against
the res; in the common law, they would be
different in chancery did not treat the conditional
conveyance as a mere hypothecation, and the
creditor's right ass an equitable lien; so, in both,
the suit is real action so far as it is against
property, and seeks the judicial recognition of a
property debt, and an order for the sale of
the res. (Waples, Proceedings In Rem. sec. 607.)
It is true that in proceedings of this character, if the
defendant for whom publication is made appears, the
action becomes as to him a personal action and is
conducted as such. This, however, does not affect the
proposition that where the defendant fails to appear the
action is quasi in rem; and it should therefore be
considered with reference to the principles governing
actions in rem.
There is an instructive analogy between the foreclosure
proceeding and an action of attachment, concerning
which the Supreme Court of the United States has used
the following language:

If the defendant appears, the cause becomes

mainly a suit in personam, with the added
incident, that the property attached remains
liable, under the control of the court, to answer to
any demand which may be established against the
defendant by the final judgment of the court. But,
if there is no appearance of the defendant, and no
service of process on him, the case becomes, in its
essential nature, a proceeding in rem, the only
effect of which is to subject the property attached
to the payment of the defendant which the court
may find to be due to the plaintiff. (Cooper vs.
Reynolds, 10 Wall., 308.)
In an ordinary attachment proceeding, if the defendant is
not personally served, the preliminary seizure is to, be
considered necessary in order to confer jurisdiction upon
the court. In this case the lien on the property is acquired
by the seizure; and the purpose of the proceedings is to
subject the property to that lien. If a lien already exists,
whether created by mortgage, contract, or statute, the
preliminary seizure is not necessary; and the court
proceeds to enforce such lien in the manner provided by
law precisely as though the property had been seized
upon attachment. (Roller vs. Holly, 176 U. S., 398, 405;
44 L. ed., 520.) It results that the mere circumstance that
in an attachment the property may be seized at the
inception of the proceedings, while in the foreclosure suit
it is not taken into legal custody until the time comes for
the sale, does not materially affect the fundamental
principle involved in both cases, which is that the court is
here exercising a jurisdiction over the property in a
proceeding directed essentially in rem.
Passing now to a consideration of the jurisdiction of the
Court of First Instance in a mortgage foreclosure, it is
evident that the court derives its authority to entertain
the action primarily from the statutes organizing the
court. The jurisdiction of the court, in this most general
sense, over the cause of action is obvious and requires no
comment. Jurisdiction over the person of the defendant, if
acquired at all in such an action, is obtained by the
voluntary submission of the defendant or by the personal
service of process upon him within the territory where the
process is valid. If, however, the defendant is a
nonresident and, remaining beyond the range of the
personal process of the court, refuses to come in

voluntarily, the court never acquires jurisdiction over the

person at all. Here the property itself is in fact the sole
thing which is impleaded and is the responsible object
which is the subject of the exercise of judicial power. It
follows that the jurisdiction of the court in such case is
based exclusively on the power which, under the law, it
possesses over the property; and any discussion relative
to the jurisdiction of the court over the person of the
defendant is entirely apart from the case. The jurisdiction
of the court over the property, considered as the
exclusive object of such action, is evidently based upon
the following conditions and considerations, namely: (1)
that the property is located within the district; (2) that the
purpose of the litigation is to subject the property by sale
to an obligation fixed upon it by the mortgage; and (3)
that the court at a proper stage of the proceedings takes
the property into custody, if necessary, and expose it to
sale for the purpose of satisfying the mortgage debt. An
obvious corollary is that no other relief can be granted in
this proceeding than such as can be enforced against the
property.
We may then, from what has been stated, formulated the
following proposition relative to the foreclosure
proceeding against the property of a nonresident
mortgagor who fails to come in and submit himself
personally to the jurisdiction of the court: (I) That the
jurisdiction of the court is derived from the power which it
possesses over the property; (II) that jurisdiction over the
person is not acquired and is nonessential; (III) that the
relief granted by the court must be limited to such as can
be enforced against the property itself.
It is important that the bearing of these propositions be
clearly apprehended, for there are many expressions in
the American reports from which it might be inferred that
the court acquires personal jurisdiction over the person of
the defendant by publication and notice; but such is not
the case. In truth the proposition that jurisdiction over the
person of a nonresident cannot be acquired by
publication and notice was never clearly understood even
in the American courts until after the decision had been
rendered by the Supreme Court of the United States in
the leading case of Pennoyer vs. Neff (95 U. S. 714; 24 L.
ed., 565). In the light of that decision, and of other
decisions which have subsequently been rendered in that
and other courts, the proposition that jurisdiction over the

person cannot be thus acquired by publication and notice

is no longer open to question; and it is now fully
established that a personal judgment upon constructive
or substituted service against a nonresident who does not
appear is wholly invalid. This doctrine applies to all kinds
of constructive or substituted process, including service
by publication and personal service outside of the
jurisdiction in which the judgment is rendered; and the
only exception seems to be found in the case where the
nonresident defendant has expressly or impliedly
consented to the mode of service. (Note to Raher vs.
Raher, 35 L. R. A. [N. S. ], 292; see also 50 L .R. A., 585;
35 L. R. A. [N. S.], 312
The idea upon which the decision in Pennoyer vs. Neff
(supra) proceeds is that the process from the tribunals of
one State cannot run into other States or countries and
that due process of law requires that the defendant shall
be brought under the power of the court by service of
process within the State, or by his voluntary appearance,
in order to authorize the court to pass upon the question
of his personal liability. The doctrine established by the
Supreme Court of the United States on this point, being
based upon the constitutional conception of due process
of law, is binding upon the courts of the Philippine
Islands. Involved in this decision is the principle that in
proceedings in rem or quasi in rem against a nonresident
who is not served personally within the state, and who
does not appear, the relief must be confined to the res,
and the court cannot lawfully render a personal judgment
against him. (Dewey vs. Des Moines, 173 U. S., 193; 43 L.
ed., 665; Heidritter vs. Elizabeth Oil Cloth Co., 112 U. S.,
294; 28 L. ed., 729.) Therefore in an action to foreclose a
mortgage against a nonresident, upon whom service has
been effected exclusively by publication, no personal
judgment for the deficiency can be entered. (Latta vs.
Tutton, 122 Cal., 279; Blumberg vs. Birch, 99 Cal., 416.)
It is suggested in the brief of the appellant that the
judgment entered in the court below offends against the
principle just stated and that this judgment is void
because the court in fact entered a personal judgment
against the absent debtor for the full amount of the
indebtedness secured by the mortgage. We do not so
interpret the judgment.

In a foreclosure proceeding against a nonresident owner

it is necessary for the court, as in all cases of foreclosure,
to ascertain the amount due, as prescribed in section 256
of the Code of Civil Procedure, and to make an order
requiring the defendant to pay the money into court. This
step is a necessary precursor of the order of sale. In the
present case the judgment which was entered contains
the following words:
Because it is declared that the said defendant
Engracio Palanca Tanquinyeng y Limquingco, is
indebted in the amount of P249,355.32, plus the
interest, to the 'Banco Espanol-Filipino' . . .
therefore said appellant is ordered to deliver the
above amount etc., etc.
This is not the language of a personal judgment. Instead
it is clearly intended merely as a compliance with the
requirement that the amount due shall be ascertained
and that the evidence of this it may be observed that
according to the Code of Civil Procedure a personal
judgment against the debtor for the deficiency is not to
be rendered until after the property has been sold and
the proceeds applied to the mortgage debt. (sec. 260).
The conclusion upon this phase of the case is that
whatever may be the effect in other respects of the
failure of the clerk of the Court of First Instance to mail
the proper papers to the defendant in Amoy, China, such
irregularity could in no wise impair or defeat the
jurisdiction of the court, for in our opinion that jurisdiction
rest upon a basis much more secure than would be
supplied by any form of notice that could be given to a
resident of a foreign country.
Before leaving this branch of the case, we wish to
observe that we are fully aware that many reported cases
can be cited in which it is assumed that the question of
the sufficiency of publication or notice in a case of this
kind is a question affecting the jurisdiction of the court,
and the court is sometimes said to acquire jurisdiction by
virtue of the publication. This phraseology was
undoubtedly originally adopted by the court because of
the analogy between service by the publication and
personal service of process upon the defendant; and, as
has already been suggested, prior to the decision of

Pennoyer vs. Neff (supra) the difference between the

legal effects of the two forms of service was obscure. It is
accordingly not surprising that the modes of expression
which had already been molded into legal tradition before
that case was decided have been brought down to the
present day. But it is clear that the legal principle here
involved is not effected by the peculiar language in which
the courts have expounded their ideas.
We now proceed to a discussion of the question whether
the supposed irregularity in the proceedings was of such
gravity as to amount to a denial of that "due process of
law" which was secured by the Act of Congress in force in
these Islands at the time this mortgage was foreclosed.
(Act of July 1, 1902, sec. 5.) In dealing with questions
involving the application of the constitutional provisions
relating to due process of law the Supreme Court of the
United States has refrained from attempting to define
with precision the meaning of that expression, the reason
being that the idea expressed therein is applicable under
so many diverse conditions as to make any attempt ay
precise definition hazardous and unprofitable. As applied
to a judicial proceeding, however, it may be laid down
with certainty that the requirement of due process is
satisfied if the following conditions are present, namely;
(1) There must be a court or tribunal clothed with judicial
power to hear and determine the matter before it; (2)
jurisdiction must be lawfully acquired over the person of
the defendant or over the property which is the subject of
the proceeding; (3) the defendant must be given an
opportunity to be heard; and (4) judgment must be
rendered upon lawful hearing.
Passing at once to the requisite that the defendant shall
have an opportunity to be heard, we observe that in a
foreclosure case some notification of the proceedings to
the nonresident owner, prescribing the time within which
appearance must be made, is everywhere recognized as
essential. To answer this necessity the statutes generally
provide for publication, and usually in addition thereto,
for the mailing of notice to the defendant, if his residence
is known. Though commonly called constructive, or
substituted service of process in any true sense. It is
merely a means provided by law whereby the owner may
be admonished that his property is the subject of judicial
proceedings and that it is incumbent upon him to take
such steps as he sees fit to protect it. In speaking of

notice of this character a distinguish master

constitutional law has used the following language:

of

. . . if the owners are named in the proceedings,

and personal notice is provided for, it is rather
from tenderness to their interests, and in order to
make sure that the opportunity for a hearing shall
not be lost to them, than from any necessity that
the case shall assume that form. (Cooley on
Taxation [2d. ed.], 527, quoted in Leigh vs. Green,
193 U. S., 79, 80.)
It will be observed that this mode of notification does not
involve any absolute assurance that the absent owner
shall thereby receive actual notice. The periodical
containing the publication may never in fact come to his
hands, and the chances that he should discover the
notice may often be very slight. Even where notice is sent
by mail the probability of his receiving it, though much
increased, is dependent upon the correctness of the
address to which it is forwarded as well as upon the
regularity and security of the mail service. It will be
noted, furthermore, that the provision of our law relative
to the mailing of notice does not absolutely require the
mailing of notice unconditionally and in every event, but
only in the case where the defendant's residence is
known. In the light of all these facts, it is evident that
actual notice to the defendant in cases of this kind is not,
under the law, to be considered absolutely necessary.
The idea upon which the law proceeds in recognizing the
efficacy of a means of notification which may fall short of
actual notice is apparently this: Property is always
assumed to be in the possession of its owner, in person or
by agent; and he may be safely held, under certain
conditions, to be affected with knowledge that
proceedings have been instituted for its condemnation
and sale.
It is the duty of the owner of real estate, who is a
nonresident, to take measures that in some way
he shall be represented when his property is called
into requisition, and if he fails to do this, and fails
to get notice by the ordinary publications which
have usually been required in such cases, it is his

misfortune, and he must abide the consequences.

(6 R. C. L., sec. 445 [p. 450]).
It has been well said by an American court:
If property of a nonresident cannot be reached by
legal process upon the constructive notice, then
our statutes were passed in vain, and are mere
empty legislative declarations, without either
force, or meaning; for if the person is not within
the jurisdiction of the court, no personal judgment
can be rendered, and if the judgment cannot
operate upon the property, then no effective
judgment at all can be rendered, so that the result
would be that the courts would be powerless to
assist a citizen against a nonresident. Such a
result would be a deplorable one. (Quarl vs.
Abbett, 102 Ind., 233; 52 Am. Rep., 662, 667.)
It is, of course universally recognized that the statutory
provisions relative to publication or other form of notice
against a nonresident owner should be complied with;
and in respect to the publication of notice in the
newspaper it may be stated that strict compliance with
the requirements of the law has been held to be
essential. In Guaranty Trust etc. Co. vs. Green Cove etc.,
Railroad Co. (139 U. S., 137, 138), it was held that where
newspaper publication was made for 19 weeks, when the
statute required 20, the publication was insufficient.
With respect to the provisions of our own statute, relative
to the sending of notice by mail, the requirement is that
the judge shall direct that the notice be deposited in the
mail by the clerk of the court, and it is not in terms
declared that the notice must be deposited in the mail.
We consider this to be of some significance; and it seems
to us that, having due regard to the principles upon which
the giving of such notice is required, the absent owner of
the mortgaged property must, so far as the due process
of law is concerned, take the risk incident to the possible
failure of the clerk to perform his duty, somewhat as he
takes the risk that the mail clerk or the mail carrier might
possibly lose or destroy the parcel or envelope containing
the notice before it should reach its destination and be
delivered to him. This idea seems to be strengthened by
the consideration that placing upon the clerk the duty of

sending notice by mail, the performance of that act is put

effectually beyond the control of the plaintiff in the
litigation. At any rate it is obvious that so much of section
399 of the Code of Civil Procedure as relates to the
sending of notice by mail was complied with when the
court made the order. The question as to what may be
the consequences of the failure of the record to show the
proof of compliance with that requirement will be
discussed by us further on.
The observations which have just been made lead to the
conclusion that the failure of the clerk to mail the notice,
if in fact he did so fail in his duty, is not such an
irregularity, as amounts to a denial of due process of law;
and hence in our opinion that irregularity, if proved,
would not avoid the judgment in this case. Notice was
given by publication in a newspaper and this is the only
form of notice which the law unconditionally requires.
This in our opinion is all that was absolutely necessary to
sustain the proceedings.
It will be observed that in considering the effect of this
irregularity, it makes a difference whether it be viewed as
a question involving jurisdiction or as a question involving
due process of law. In the matter of jurisdiction there can
be no distinction between the much and the little. The
court either has jurisdiction or it has not; and if the
requirement as to the mailing of notice should be
considered as a step antecedent to the acquiring of
jurisdiction, there could be no escape from the conclusion
that the failure to take that step was fatal to the validity
of the judgment. In the application of the idea of due
process of law, on the other hand, it is clearly
unnecessary to be so rigorous. The jurisdiction being
once established, all that due process of law thereafter
requires is an opportunity for the defendant to be heard;
and as publication was duly made in the newspaper, it
would seem highly unreasonable to hold that failure to
mail the notice was fatal. We think that in applying the
requirement of due process of law, it is permissible to
reflect upon the purposes of the provision which is
supposed to have been violated and the principle
underlying the exercise of judicial power in these
proceedings. Judge in the light of these conceptions, we
think that the provision of Act of Congress declaring that
no person shall be deprived of his property without due
process of law has not been infringed.

In the progress of this discussion we have stated the two

conclusions; (1) that the failure of the clerk to send the
notice to the defendant by mail did not destroy the
jurisdiction of the court and (2) that such irregularity did
not infringe the requirement of due process of law. As a
consequence of these conclusions the irregularity in
question is in some measure shorn of its potency. It is still
necessary, however, to consider its effect considered as a
simple irregularity of procedure; and it would be idle to
pretend that even in this aspect the irregularity is not
grave enough. From this point of view, however, it is
obvious that any motion to vacate the judgment on the
ground of the irregularity in question must fail unless it
shows that the defendant was prejudiced by that
irregularity. The least, therefore, that can be required of
the proponent of such a motion is to show that he had a
good defense against the action to foreclose the
mortgage. Nothing of the kind is, however, shown either
in the motion or in the affidavit which accompanies the
motion.
An application to open or vacate a judgment because of
an irregularity or defect in the proceedings is usually
required to be supported by an affidavit showing the
grounds on which the relief is sought, and in addition to
this showing also a meritorious defense to the action. It is
held that a general statement that a party has a good
defense to the action is insufficient. The necessary facts
must be averred. Of course if a judgment is void upon its
face a showing of the existence of a meritorious defense
is not necessary. (10 R. C. L., 718.)
The lapse of time is also a circumstance deeply affecting
this aspect of the case. In this connection we quote the
following passage from the encyclopedic treatise now in
course of publication:
Where, however, the judgment is not void on its
face, and may therefore be enforced if permitted
to stand on the record, courts in many instances
refuse to exercise their quasi equitable powers to
vacate a judgement after the lapse of the term ay
which it was entered, except in clear cases, to
promote the ends of justice, and where it appears
that the party making the application is himself
without fault and has acted in good faith and with
ordinary diligence. Laches on the part of the

applicant, if unexplained, is deemed sufficient

ground for refusing the relief to which he might
otherwise be entitled. Something is due to the
finality of judgments, and acquiescence or
unnecessary delay is fatal to motions of this
character, since courts are always reluctant to
interfere with judgments, and especially where
they have been executed or satisfied. The moving
party has the burden of showing diligence, and
unless it is shown affirmatively the court will not
ordinarily exercise its discretion in his favor. (15 R.
C. L., 694, 695.)
It is stated in the affidavit that the defendant, Engracio
Palanca Tanquinyeng y Limquingco, died January 29,
1910. The mortgage under which the property was sold
was executed far back in 1906; and the proceedings in
the foreclosure were closed by the order of court
confirming the sale dated August 7, 1908. It passes the
rational bounds of human credulity to suppose that a
man who had placed a mortgage upon property worth
nearly P300,000 and had then gone away from the scene
of his life activities to end his days in the city of Amoy,
China, should have long remained in ignorance of the fact
that the mortgage had been foreclosed and the property
sold, even supposing that he had no knowledge of those
proceedings while they were being conducted. It is more
in keeping with the ordinary course of things that he
should have acquired information as to what was
transpiring in his affairs at Manila; and upon the basis of
this rational assumption we are authorized, in the
absence of proof to the contrary, to presume that he did
have, or soon acquired, information as to the sale of his
property.
The Code of Civil Procedure, indeed, expressly declares
that there is a presumption that things have happened
according to the ordinary habits of life (sec. 334 [26]);
and we cannot conceive of a situation more appropriate
than this for applying the presumption thus defined by
the lawgiver. In support of this presumption, as applied to
the present case, it is permissible to consider the
probability that the defendant may have received actual
notice of these proceedings from the unofficial notice
addressed to him in Manila which was mailed by an
employee of the bank's attorneys. Adopting almost the
exact words used by the Supreme Court of the United

States in Grannis vs. Ordeans (234 U. S., 385; 58 L. ed.,

1363), we may say that in view of the well-known skill of
postal officials and employees in making proper delivery
of letters defectively addressed, we think the
presumption is clear and strong that this notice reached
the defendant, there being no proof that it was ever
returned by the postal officials as undelivered. And if it
was delivered in Manila, instead of being forwarded to
Amoy, China, there is a probability that the recipient was
a person sufficiently interested in his affairs to send it or
communicate its contents to him.

which was the subject of this foreclosure, as amended by

the notarial document of July 19, 1906, the parties to this
mortgage made a stipulation to the effect that the value
therein placed upon the mortgaged properties should
serve as a basis of sale in case the debt should remain
unpaid and the bank should proceed to a foreclosure. The
upset price stated in that stipulation for all the parcels
involved in this foreclosure was P286,000. It is said in
behalf of the appellant that when the bank bought in the
property for the sum of P110,200 it violated that
stipulation.

Of course if the jurisdiction of the court or the sufficiency

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

It has been held by this court that a clause in a mortgage

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

It is, however, argued that the defendant has suffered

prejudice by reason of the fact that the bank became the
purchaser of the property at the foreclosure sale for a
price greatly below that which had been agreed upon in
the mortgage as the upset price of the property. In this
connection, it appears that in article nine of the mortgage

In connection with the entire failure of the motion to show

either a meritorious defense to the action or that the
defendant had suffered any prejudice of which the law
can take notice, we may be permitted to add that in our
opinion a motion of this kind, which proposes to unsettle
judicial proceedings long ago closed, can not be
considered with favor, unless based upon grounds which
appeal to the conscience of the court. Public policy

requires that judicial proceedings be upheld. The

maximum here applicable is non quieta movere. As was
once said by Judge Brewer, afterwards a member of the
Supreme Court of the United States:
Public policy requires that judicial proceedings be
upheld, and that titles obtained in those
proceedings be safe from the ruthless hand of
collateral attack. If technical defects are adjudged
potent to destroy such titles, a judicial sale will
never realize that value of the property, for no
prudent man will risk his money in bidding for and
buying that title which he has reason to fear may
years thereafter be swept away through some
occult and not readily discoverable defect. (Martin
vs. Pond, 30 Fed., 15.)
In the case where that language was used an attempt
was made to annul certain foreclosure proceedings on the
ground that the affidavit upon which the order of
publication was based erroneously stated that the State
of Kansas, when he was in fact residing in another State.
It was held that this mistake did not affect the validity of
the proceedings.
In the preceding discussion we have assumed that the
clerk failed to send the notice by post as required by the
order of the court. We now proceed to consider whether
this is a proper assumption; and the proposition which we
propose to establish is that there is a legal presumption
that the clerk performed his duty as the ministerial officer
of the court, which presumption is not overcome by any
other facts appearing in the cause.
In subsection 14 of section 334 of the Code of Civil
Procedure it is declared that there is a presumption "that
official duty has been regularly performed;" and in
subsection 18 it is declared that there is a presumption
"that the ordinary course of business has been followed."
These presumptions are of course in no sense novelties,
as they express ideas which have always been
recognized. Omnia presumuntur rite et solemniter esse
acta donec probetur in contrarium. There is therefore
clearly a legal presumption that the clerk performed his
duty about mailing this notice; and we think that strong
considerations of policy require that this presumption

should be allowed to operate with full force under the

circumstances of this case. A party to an action has no
control over the clerk of the court; and has no right to
meddle unduly with the business of the clerk in the
performance of his duties. Having no control over this
officer, the litigant must depend upon the court to see
that the duties imposed on the clerk are performed.
Other considerations no less potent contribute to
strengthen the conclusion just stated. There is no
principle of law better settled than that after jurisdiction
has once been required, every act of a court of general
jurisdiction shall be presumed to have been rightly done.
This rule is applied to every judgment or decree rendered
in the various stages of the proceedings from their
initiation to their completion (Voorhees vs. United States
Bank, 10 Pet., 314; 35 U. S., 449); and if the record is
silent with respect to any fact which must have been
established before the court could have rightly acted, it
will be presumed that such fact was properly brought to
its knowledge. (The Lessee of Grignon vs. Astor, 2 How.,
319; 11 L. ed., 283.)
In making the order of sale [of the real state of a
decedent] the court are presumed to have
adjudged every question necessary to justify such
order or decree, viz: The death of the owners; that
the petitioners were his administrators; that the
personal estate was insufficient to pay the debts
of the deceased; that the private acts of
Assembly, as to the manner of sale, were within
the constitutional power of the Legislature, and
that all the provisions of the law as to notices
which are directory to the administrators have
been complied with. . . . The court is not bound to
enter upon the record the evidence on which any
fact was decided. (Florentine vs. Barton, 2 Wall.,
210; 17 L. ed., 785.) Especially does all this apply
after long lapse of time.
Applegate vs. Lexington and Carter County Mining Co.
(117 U. S., 255) contains an instructive discussion in a
case analogous to that which is now before us. It there
appeared that in order to foreclose a mortgage in the
State of Kentucky against a nonresident debtor it was
necessary that publication should be made in a
newspaper for a specified period of time, also be posted

at the front door of the court house and be published on

some Sunday, immediately after divine service, in such
church as the court should direct. In a certain action
judgment had been entered against a nonresident, after
publication in pursuance of these provisions. Many years
later the validity of the proceedings was called in
question in another action. It was proved from the files of
an ancient periodical that publication had been made in
its columns as required by law; but no proof was offered
to show the publication of the order at the church, or the
posting of it at the front door of the court-house. It was
insisted by one of the parties that the judgment of the
court was void for lack of jurisdiction. But the Supreme
Court of the United States said:
The court which made the decree . . . was a court
of
general
jurisdiction.
Therefore
every
presumption not inconsistent with the record is to
be indulged in favor of its jurisdiction. . . . It is to
be presumed that the court before making its
decree took care of to see that its order for
constructive service, on which its right to make
the decree depended, had been obeyed.
It is true that in this case the former judgment was the
subject of collateral , or indirect attack, while in the case
at bar the motion to vacate the judgment is direct
proceeding for relief against it. The same general
presumption, however, is indulged in favor of the
judgment of a court of general jurisdiction, whether it is
the subject of direct or indirect attack the only difference
being that in case of indirect attack the judgment is
conclusively presumed to be valid unless the record
affirmatively shows it to be void, while in case of direct
attack the presumption in favor of its validity may in
certain cases be overcome by proof extrinsic to the
record.
The presumption that the clerk performed his duty and
that the court made its decree with the knowledge that
the requirements of law had been complied with appear
to be amply sufficient to support the conclusion that the
notice was sent by the clerk as required by the order. It is
true that there ought to be found among the papers on
file in this cause an affidavit, as required by section 400
of the Code of Civil Procedure, showing that the order was
in fact so sent by the clerk; and no such affidavit appears.

The record is therefore silent where it ought to speak. But

the very purpose of the law in recognizing these
presumptions is to enable the court to sustain a prior
judgment in the face of such an omission. If we were to
hold that the judgment in this case is void because the
proper affidavit is not present in the file of papers which
we call the record, the result would be that in the future
every title in the Islands resting upon a judgment like that
now before us would depend, for its continued security,
upon the presence of such affidavit among the papers
and would be liable at any moment to be destroyed by
the disappearance of that piece of paper. We think that
no court, with a proper regard for the security of judicial
proceedings and for the interests which have by law been
confided to the courts, would incline to favor such a
conclusion. In our opinion the proper course in a case of
this kind is to hold that the legal presumption that the
clerk performed his duty still maintains notwithstanding
the absence from the record of the proper proof of that
fact.
In this connection it is important to bear in mind that
under the practice prevailing in the Philippine Islands the
word "record" is used in a loose and broad sense, as
indicating the collective mass of papers which contain the
history of all the successive steps taken in a case and
which are finally deposited in the archives of the clerk's
office as a memorial of the litigation. It is a matter of
general information that no judgment roll, or book of final
record, is commonly kept in our courts for the purpose of
recording the pleadings and principal proceedings in
actions which have been terminated; and in particular, no
such record is kept in the Court of First Instance of the
city of Manila. There is, indeed, a section of the Code of
Civil Procedure which directs that such a book of final
record shall be kept; but this provision has, as a matter of
common knowledge, been generally ignored. The result is
that in the present case we do not have the assistance of
the recitals of such a record to enable us to pass upon the
validity of this judgment and as already stated the
question must be determined by examining the papers
contained in the entire file.
But it is insisted by counsel for this motion that the
affidavit of Bernardo Chan y Garcia showing that upon
April 4, 1908, he sent a notification through the mail
addressed to the defendant at Manila, Philippine Islands,

should be accepted as affirmative proof that the clerk of

the court failed in his duty and that, instead of himself
sending the requisite notice through the mail, he relied
upon Bernardo to send it for him. We do not think that
this is by any means a necessary inference. Of course if it
had affirmatively appeared that the clerk himself had
attempted to comply with this order and had directed the
notification to Manila when he should have directed it to
Amoy, this would be conclusive that he had failed to
comply with the exact terms of the order; but such is not
this case. That the clerk of the attorneys for the plaintiff
erroneously sent a notification to the defendant at a
mistaken address affords in our opinion very slight basis
for supposing that the clerk may not have sent notice to
the right address.
There is undoubtedly good authority to support the
position that when the record states the evidence or
makes an averment with reference to a jurisdictional fact,
it will not be presumed that there was other or different
evidence respecting the fact, or that the fact was
otherwise than stated. If, to give an illustration, it appears
from the return of the officer that the summons was
served at a particular place or in a particular manner, it
will not be presumed that service was also made at
another place or in a different manner; or if it appears
that service was made upon a person other than the
defendant, it will not be presumed, in the silence of the
record, that it was made upon the defendant also (Galpin
vs. Page, 18 Wall., 350, 366; Settlemier vs. Sullivan, 97 U.
S., 444, 449). While we believe that these propositions
are entirely correct as applied to the case where the
person making the return is the officer who is by law
required to make the return, we do not think that it is
properly applicable where, as in the present case, the
affidavit was made by a person who, so far as the
provisions of law are concerned, was a mere
intermeddler.
The last question of importance which we propose to
consider is whether a motion in the cause is admissible
as a proceeding to obtain relief in such a case as this. If
the motion prevails the judgment of July 2, 1908, and all
subsequent proceedings will be set aside, and the
litigation will be renewed, proceeding again from the date
mentioned as if the progress of the action had not been
interrupted. The proponent of the motion does not ask

the favor of being permitted to interpose a defense. His

purpose is merely to annul the effective judgment of the
court, to the end that the litigation may again resume its
regular course.
There is only one section of the Code of Civil Procedure
which expressly recognizes the authority of a Court of
First Instance to set aside a final judgment and permit a
renewal of the litigation in the same cause. This is as
follows:
SEC. 113. Upon such terms as may be just the
court may relieve a party or legal representative
from the judgment, order, or other proceeding
taken
against
him
through
his
mistake,
inadvertence, surprise, or excusable neglect;
Provided, That application thereof be made within
a reasonable time, but in no case exceeding six
months after such judgment, order, or proceeding
was taken.
An additional remedy by petition to the Supreme Court is
supplied by section 513 of the same Code. The first
paragraph of this section, in so far as pertinent to this
discussion, provides as follows:
When a judgment is rendered by a Court of First
Instance upon default, and a party thereto is
unjustly deprived of a hearing by fraud, accident,
mistake or excusable negligence, and the Court of
First Instance which rendered the judgment has
finally adjourned so that no adequate remedy
exists in that court, the party so deprived of a
hearing may present his petition to the Supreme
Court within sixty days after he first learns of the
rendition of such judgment, and not thereafter,
setting forth the facts and praying to have
judgment set aside. . . .
It is evident that the proceeding contemplated in this
section is intended to supplement the remedy provided
by section 113; and we believe the conclusion irresistible
that there is no other means recognized by law whereby
a defeated party can, by a proceeding in the same cause,
procure a judgment to be set aside, with a view to the
renewal of the litigation.

The Code of Civil Procedure purports to be a complete

system of practice in civil causes, and it contains
provisions describing with much fullness the various
steps to be taken in the conduct of such proceedings. To
this end it defines with precision the method of
beginning, conducting, and concluding the civil action of
whatever species; and by section 795 of the same Code it
is declared that the procedure in all civil action shall be in
accordance with the provisions of this Code. We are
therefore of the opinion that the remedies prescribed in
sections 113 and 513 are exclusive of all others, so far as
relates to the opening and continuation of a litigation
which has been once concluded.
The motion in the present case does not conform to the
requirements of either of these provisions; and the
consequence is that in our opinion the action of the Court
of First Instance in dismissing the motion was proper.
If the question were admittedly one relating merely to an
irregularity of procedure, we cannot suppose that this
proceeding would have taken the form of a motion in the
cause, since it is clear that, if based on such an error, the
came to late for relief in the Court of First Instance. But as
we have already seen, the motion attacks the judgment
of the court as void for want of jurisdiction over the
defendant. The idea underlying the motion therefore is
that inasmuch as the judgment is a nullity it can be
attacked in any way and at any time. If the judgment
were in fact void upon its face, that is, if it were shown to
be a nullity by virtue of its own recitals, there might
possibly be something in this. Where a judgment or
judicial order is void in this sense it may be said to be a
lawless thing, which can be treated as an outlaw and
slain at sight, or ignored wherever and whenever it
exhibits its head.
But the judgment in question is not void in any such
sense. It is entirely regular in form, and the alleged defect
is one which is not apparent upon its face. It follows that
even if the judgment could be shown to be void for want
of jurisdiction, or for lack of due process of law, the party
aggrieved thereby is bound to resort to some appropriate
proceeding to obtain relief. Under accepted principles of
law and practice, long recognized in American courts, a
proper remedy in such case, after the time for appeal or
review has passed, is for the aggrieved party to bring an

action to enjoin the judgment, if not already carried into

effect; or if the property has already been disposed of he
may institute suit to recover it. In every situation of this
character an appropriate remedy is at hand; and if
property has been taken without due process, the law
concedes due process to recover it. We accordingly old
that, assuming the judgment to have been void as
alleged by the proponent of this motion, the proper
remedy was by an original proceeding and not by motion
in the cause. As we have already seen our Code of Civil
Procedure defines the conditions under which relief
against a judgment may be productive of conclusion for
this court to recognize such a proceeding as proper under
conditions different from those defined by law. Upon the
point of procedure here involved, we refer to the case of
People vs. Harrison (84 Cal., 607) wherein it was held that
a motion will not lie to vacate a judgment after the lapse
of the time limited by statute if the judgment is not void
on its face; and in all cases, after the lapse of the time
limited by statute if the judgment is not void on its face;
and all cases, after the lapse of such time, when an
attempt is made to vacate the judgment by a proceeding
in court for that purpose an action regularly brought is
preferable, and should be required. It will be noted taken
verbatim from the California Code (sec. 473).
The conclusions stated in this opinion indicate that the
judgment appealed from is without error, and the same is
accordingly affirmed, with costs. So ordered.
Arellano, C.J., Torres, Carson, and Avancea, JJ., concur.

Republic
SUPREME
Manila

of

the

Philippines
COURT

EN BANC
G.R. No. L-1403

October 29, 1948

VICENTE CALUAG and JULIANA GARCIA, petitioners,

vs.
POTENCIANO PECSON and ANGEL H. MOJICA,
Judges of the Court of First Instance of Bulacan,
and LEON ALEJO, respondents.
Marcial
G.
Mendiola
for
petitioners.
Antonio
Gonzalez
for
respondent
L.
Alejo.
The respondent Judge Pecson in his own behalf.
FERIA, J.:
This is a petition for certiorari and prohibition filed by the
petitioners on the ground that the respondent judge
acted without or in excess of the jurisdiction of the court
in rendering the resolution dated April 1, 1947, which
declares the petitioners guilty of contempt of court for
not complying or performing the order of the court of
January 7, 1947, in case No. 5486 of the Court of First
Instance of Bulacan, requiring the petitioners to execute a
deed of sale in favor of plaintiff over one-half of the
land pro indiviso in question, within ten days from the
receipt of copy of said resolution, and which orders that
the petitioners be imprisoned until they perform the said
act.
The first ground on which the petition is based is that the
judgment of the court which the petitioners are ordered
to perform has not yet become final. This ground is
unfounded. From the pleadings and annexes it appears
that the judgment of the lower against the petitioners
was appealed to the Court of Appeals and was affirmed
by the latter in its decision promulgated on May 30, 1944;
that the petition to appeal to the Supreme Court by
certiorari filed by the petitioners was denied on July 24,
1944; that a motion for reconsideration filed by the
petitioners was also denied on August 21, 1944; that the
record of the case, having been destroyed during the

liberation, was reconstituted; that on September 24,

1945, the Deputy Clerk of this Court wrote a letter to and
notified the petitioners of the resolution of the Court
declaring said record reconstituted, together with the
copies of the decision of the Court of Appeals and
resolutions of the Supreme Court during Japanese
occupation of June 24 and August 21, 1944; and that on
October 23, 1946, the clerk of Court of First Instance of
Bulacan notified the attorneys for both parties of the said
decision of the Court of Appeals and resolutions of the
Supreme Court. There can be no question, therefore, that
the judgment of the Court of First Instance abovementioned, as affirmed by the Court of Appeals, has
become final and executory.
The other two grounds alleged by the petitioners in
support of the present petition for certiorari are: that
plaintiff's action abated or was extinguished upon the
death of the plaintiff Fortunato Alejo, because his right of
legal redemption was a personal one, and therefore not
transferable to his successors in interest; and that, even
assuming that it is a personal one and therefore
transferable, his successors in interest have failed to
secure the substitution of said deceased by his legal
representative under section 17, Rule 3. These reasons or
grounds do not deserve any serious consideration, not
only because they are without merits, but because the
Court of First Instance of Bulacan, having jurisdiction to
render that judgment, the latter cannot be disobeyed
however erroneous it may be (Compaia General de
Tabacos vs. Alhambra Cigar & Cigarette Mfg. Co., 33 Phil.,
503; Golding vs. Balatbat, 36 Phil., 941). And this Court
cannot in this proceeding correct any error which may
have been committed by the lower court.
However, although not alleged, we may properly take
judicial notice of the fact that the respondent Judges have
acted without jurisdiction in proceeding against and
declaring the petitioners guilty of contempt of court.
The contempt supposed to have been committed by the
petitioners is not a direct contempt under section 1, Rule
64, for it is not a misbehavior in the presence of or so
near a court or judge as to interrupt the administration of
justice. It is an indirect contempt or disobedience of a
lawful order of the court, under section 3, Rule 64, of the
Rules of Court. According to sections 4 and 5 of said rule,

where a contempt under section 3 has been committed

against a superior court or judge the charge may be filed
with such superior court, and the accused put under
custody; but if the hearing is ordered to be had forthwith,
the accused may be released from custody upon filing a
bond in an amount to be fixed by the court for his
appearance to answer the charge. From the record it
appears that no charge for contempt was filed against
the petitioners nor was a trial held. The only proceeding
had in this case which led to the conviction of the
defendants are: the order of January 7, 1947, issued by
the lower court requiring the defendants to execute the
deed of conveyance as direct in the judgment within ten
days from the receipt of the copy of said order, with the
admonition that upon failure to do so said petitioners will
be dealt with for contempt of court; the motion of March
21, 1947, filed by the attorney for the respondent Leon
Alejo, administrator of the estate of Fortunato Alejo, that
the petitioners be punished for contempt; and the
resolution of the court of April 1, 1947, denying the
second motion for reconsideration of March 17, 1947, of
the order of January 7, 1947, filed by the petitioners, and
ordering the petitioners to be imprisoned in the provincial
jail until they have complied with the order of the court
above mentioned.
It is well settled that jurisdiction of the subject matter of a
particular case is something more than the general power
conferred by law upon a court to take cognizance of
cases of the general class to which the particular case
belongs. It is not enough that a court has power in
abstract to try and decide the class of litigations to which
a case belongs; it is necessary that said power be
properly invoked, or called into activity, by the filing of a
petition, complaint or other appropriate pleading. A Court
of First Instance has an abstract jurisdiction or power to
try and decide criminal cases for homicide committed
within its territorial jurisdiction; but it has no power to try
and decide a criminal case against a person for homicide
committed within its territory, unless a complaint or
information against him be filed with the said court. And
it has also power to try civil cases involving title to real
estate situated within its district; but it has no jurisdiction
to take cognizance of a dispute or controversy between
two persons over title of real property located in his
province, unless a proper complaint be filed with its court.
So, although the Court of First Instance of Bulacan has

power conferred by law to punish as guilty of indirect

contempt a party who disobeys its order or judgment, it
did not have or acquire jurisdiction of the particular case
under consideration to declare the petitioners guilty of
indirect contempt, and order their confinement until they
have executed the deed of conveyance in question,
because neither a charge has been filed against them nor
a hearing thereof held as required by law.
The respondent Judge Angel Mojica acted not only
without jurisdiction in proceeding against and declaring
the petitioners guilty of contempt, but also in excess of
jurisdiction in ordering the confinement of the petitioners,
because it had no power to impose such punishment
upon the latter.
The respondent judge has no power under the law to
order the confinement of the petitioners until they have
compiled with the order of the court. Section 9, Rule 39,
in connection with section 7 of Rule 64, provides that if a
person is required by a judgment or order of the court to
perform any other act than the payment of money or sale
or delivery of real or personal property, and said person
disobeys such judgment or order while it is yet in his
power to perform it, he may be punished for contempt
and imprisoned until he performs said order. This
provision is applicable only to specific acts other than
those provided for or covered by section 10 of the same
Rule, that is, it refers to a specific act which the party or
person must personally do, because his personal
qualification and circumstances have been taken into
consideration in accordance with the provision of article
1161 of the Civil Code. But if a judgment directs a party
to execute a conveyance of land or to deliver deeds or
other documents or to perform any specific act which
may be performed by some other person, or in some
other way provided by law with the same effect, as in the
present case, section 10, and not said section 9 of Rule
39 applies; and under the provision of said section 10, the
court may direct the act to be done at the cost of the
disobedient party, by some other person appointed or
designated by the court, and the act when so done shall
have like effect as if done by the party himself.
It is also well settled by the authorities that a judgment
may be void for want of power to render the particular
judgment, though the court may have had jurisdiction

over the subject matter and the parties. A wrong decision

made within the limits of the court's authority is
erroneous and may be corrected on appeal or other direct
review, but a wrong, or for that matter a correct, decision
is void, and may be set aside either directly or
collaterally, where the court exceeds its jurisdiction and
power in rendering it. Hence though the court has
acquired jurisdiction over the subject matter and the
particular case has been submitted properly to it for
hearing and decision, it will overstep its jurisdiction if it
renders a judgment which it has no power under the law
to render. A sentence which imposes upon the defendant
in a criminal prosecution a penalty different from or in
excess of the maximum which the court is authorized by
law to impose for the offense of which the defendant was
convicted, is void for want or excess of jurisdiction, as to
the excess in the latter case. And a judgment of
imprisonment which the court has no constitutional or
statutory power to impose, as in the present case, may
also be collaterally attacked for want or rather in excess
of jurisdiction.
In Cruz vs. Director of Prisons (17 Phil., 269, 272, 273),
this Court said the following applicable to punishment
imposed for contempt of court:
. . . The courts uniformly hold that where a
sentence imposes a punishment in excess of the
power of the court to impose, such sentence is
void as to the excess, and some of the courts hold
that the sentence is void in toto; but the weight of
authority sustains the proposition that such a
sentence is void only as to the excess imposed in
case the parts are separable, the rule being that
the petitioner is not entitled to his discharge on a
writ of habeas corpus unless he has served out so
much of the sentence as was valid. (Ex
parte Erdmann, 88 Cal., 579; Lowrey vs. Hogue,
85 Cal., 600; Armstrong vs. People, 37 Ill., 459;
State vs. Brannon, 34 La Ann., 942; People vs.
Liscomb, 19 Am. Rep., 211; In re Taylor, 7 S. D.,
382, 45 L. R. A., 136;Ex parte Mooney, 26 W. Va.,
36, 53 Am. Rep., 59; U. S. vs. Pridgeon, 153 U. S.,
48; In re Graham, 138 U. S., 461.)
In the present case, in view of the failure of the
petitioners to execute the deed of conveyance directed in

the judgment of the court, the respondent may, under

section 10, Rule 39, either order its execution by some
other person appointed or designated by the court at the
expense of the petitioners, or enter a judgment divesting
the title of the petitioner over the property in question
and vesting it in Leon Alejo, administrator of estate of the
deceased Fortunato Alejo, and such judgment has the
force and effect of a conveyance executed in due form of
law.
In view of the foregoing, the order of the court of April 7,
1947, ordering the confinement of the petitioners in the
provincial jail until they have complied with the order of
the court, is set aside without costs. So ordered.
Moran, C.J., Pablo, Bengzon, Briones and Tuason, JJ.,
concur.
Paras, J., concurs in the result.

Argued November 14, 1945

Decided December 3, 1945
326 U.S. 310
APPEAL FROM THE SUPREME COURT OF WASHINGTON
Syllabus
Activities within a State of salesmen in the employ of a
foreign corporation, exhibiting samples of merchandise
and soliciting orders from prospective buyers to be
accepted or rejected by the corporation at a point outside
the State, were systematic and continuous, and resulted
in a large volume of interstate business. A statute of the
State

requires

unemployment

employers

to

compensation

pay
fund

into
a

the

state

specified

percentage of the wages paid for the services of

employees within the State.
Held:
In view of 26 U.S.C. 1606(a) , providing that no person
Estate Planning Lawyers
Family Lawyers
International Shoe v. State of Washington, 326 U.S. 310
(1945)
International Shoe v. State of Washington
No. 107

shall be relieved from compliance with a state law

requiring payments to an unemployment fund on the
ground that he is engaged in interstate commerce, the
fact that the corporation is engaged in interstate
commerce does not relieve it from liability for payments
to the state unemployment compensation fund. P. 326 U.
S. 315.

The activities in behalf of the corporation render it

APPEAL from a judgment upholding the constitutionality

amenable to suit in courts of the State to recover

of a state unemployment compensation statute as

payments due to the state unemployment compensation

applied to the appellant corporation.

fund. P. 326 U. S. 320.

MR. CHIEF JUSTICE STONE delivered the opinion of the
The activities in question established between the

Court.

State and the corporation sufficient contacts or

ties to make it reasonable and just, and in

The questions for decision are (1) whether, within the

conformity to the due process requirements of the

limitations of the due process clause of the Fourteenth

Fourteenth Amendment, for the State to enforce

Amendment, appellant, a Delaware corporation, has, by

against the corporation an obligation arising out of

its activities in the State of Washington, rendered itself

such activities. P. 326 U. S. 320.

amenable to proceedings in the courts of that state to

recover unpaid contributions to the state unemployment

In such a suit to recover payments due to the

compensation

unemployment compensation fund, service of

Washington

process upon one of the corporation's salesmen

Washington Revised Statutes, 9998-103a through

within the State, and notice sent by registered

9998-123a, 1941 Supp., and (2) whether the state can

mail to the corporation at its home office, satisfies

exact those contributions consistently with the due

the requirements of due process. P. 326 U. S. 320.

process clause of the Fourteenth Amendment.

Page 326 U. S. 311

fund

exacted

Unemployment

by

state

statutes,

Compensation

Act,

The statutes in question set up a comprehensive scheme

of unemployment compensation, the costs of which are

The

tax

imposed

by

the

state

unemployment

compensation statute -- construed by the state court, in

defrayed by contributions required to be made by

employers to a state unemployment compensation fund.

its application to the corporation, as a tax on the privilege

of employing salesmen within the State -- does not
violate

the

due

process

clause

of

Amendment. P.326 U. S. 321.

the

Page 326 U. S. 312

Fourteenth
The contributions are a specified percentage of the wages
payable annually by each employer for his employees'

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

services in the state. The assessment and collection of

the contributions and the fund are administered by

appellees. Section 14(c) of the Act (Wash.Rev.Stat., 1941

an employer, and does not furnish employment within the

Supp., 9998-114c) authorizes appellee Commissioner to

meaning of the statute.

issue an order and notice of assessment of delinquent

contributions upon prescribed personal service of the

The motion was heard on evidence and a stipulation of

notice upon the employer if found within the state, or, if

facts by the appeal tribunal, which denied the motion

not so found, by mailing the notice to the employer by

registered mail at his last known address. That section
also

authorizes

the

Commissioner

to

collect

the

assessment by distraint if it is not paid within ten days

after service of the notice. By 14e and 6b, the order of
assessment may be administratively reviewed by an
appeal tribunal within the office of unemployment upon
petition of the employer, and this determination is, by
6i, made subject to judicial review on questions of law by
the state Superior Court, with further right of appeal in
the state Supreme Court, as in other civil cases.

question was personally served upon a sales solicitor

employed by appellant in the State of Washington, and a
copy of the notice was mailed by registered mail to
appellant at its address in St. Louis, Missouri. Appellant
appeared specially before the office of unemployment,
and moved to set aside the order and notice of
on

the

ground

that

the

service

and ruled that appellee Commissioner was entitled to

recover

the

unpaid

contributions.

That

action

was

affirmed by the Commissioner; both the Superior Court

and the Supreme Court affirmed. 22 Wash.2d 146, 154
P.2d 801. Appellant in each of these courts assailed the
statute as applied, as a violation of the due process
clause of the Fourteenth Amendment, and as imposing a
constitutionally

prohibited

burden

on

interstate

commerce. The cause comes here on appeal under

In this case, notice of assessment for the years in

assessment

Page 326 U. S. 313

upon

appellant's salesman was not proper service upon

appellant; that appellant was not a corporation of the
State of Washington, and was not doing business within
the state; that it had no agent within the state upon
whom service could be made; and that appellant is not

237(a) of the Judicial Code, 28 U.S.C. 344(a), appellant

assigning as error that the challenged statutes, as
applied, infringe the due process clause of the Fourteenth
Amendment and the commerce clause.
The facts, as found by the appeal tribunal and accepted
by the state Superior Court and Supreme Court, are not in
dispute. Appellant is a Delaware corporation, having its
principal place of business in St. Louis, Missouri, and is
engaged in the manufacture and sale of shoes and other
footwear. It maintains places of business in several states
other than Washington, at which its manufacturing is
carried on and from which its merchandise is distributed

interstate through several sales units or branches located

merchandise for filling the orders is shipped f.o.b. from

outside the State of Washington.

points outside Washington to the purchasers within the

state. All the merchandise shipped into Washington is

Appellant has no office in Washington, and makes no

invoiced at the place of shipment, from which collections

contracts either for sale or purchase of merchandise

are made. No salesman has authority to enter into

there. It maintains no stock of merchandise in that state,

contracts or to make collections.

and makes there no deliveries of goods in intrastate

commerce. During the years from 1937 to 1940, now in

The Supreme Court of Washington was of opinion that the

question,

thirteen

regular and systematic solicitation of orders in the state

salesmen under direct supervision and control of sales

by appellant's salesmen, resulting in a continuous flow of

managers located in St. Louis. These salesmen resided in

appellant's product into the state, was sufficient to

Washington; their principal activities were confined to

constitute doing business in the state so as to make

that state, and they were compensated by commissions

appellant amenable to suit in its courts. But it was also of

based upon the amount of their sales. The commissions

opinion that there were sufficient additional activities

for each year totaled more than $31,000. Appellant

shown to bring the case within the rule, frequently stated,

supplies its salesmen with a line of samples, each

that solicitation within a state by the agents of a foreign

consisting of one shoe of a pair, which

corporation plus some additional activities there are

appellant

employed

eleven

to

sufficient to render the corporation amenable to suit

Page 326 U. S. 314

brought in the courts of the state to enforce an obligation

they display to prospective purchasers. On occasion, they

rent permanent sample rooms, for exhibiting samples, in
business buildings, or rent rooms in hotels or business
buildings temporarily for that purpose. The cost of such
rentals is reimbursed by appellant.

samples and soliciting orders from prospective buyers, at

prices and on terms fixed by appellant. The salesmen
transmit the orders to appellant's office in St. Louis for
or

rejection,

and,

Co. v. Kentucky, 234 U. S. 579, 234 U. S. 587; People's

Tobacco Co. v. American Tobacco Co., 246 U. S. 79, 246
U. S. 87; Frene v. Louisville Cement Co., 77 U.S.App.D.C.
129, 134 F.2d 511, 516. The court found such additional
activities in the salesmen's display of samples sometimes

The authority of the salesmen is limited to exhibiting their

acceptance

arising out of its activities there. International Harvester

when

accepted,

the

in

permanent

display

rooms,

and

the

salesmen's

residence within the state, continued over a period of

years, all resulting in a
Page 326 U. S. 315

substantial volume of merchandise regularly shipped by

Appellant also insists that its activities within the state

appellant to purchasers within the state. The court also

were not sufficient to manifest its "presence" there, and

held that the statute, as applied, did not invade the

that, in its absence, the state courts were without

constitutional power of Congress to regulate interstate

jurisdiction, that, consequently, it was a denial of due

commerce, and did not impose a prohibited burden on

process for the state to subject appellant to suit. It refers

such commerce.

to those cases in which it was said that the mere

solicitation of orders for the purchase of goods within a

Appellant's argument, renewed here, that the statute

state, to be accepted without the state and filled by

imposes

interstate

shipment of the purchased goods interstate, does not

commerce need not detain us. For 53 Stat. 1391, 26

render the corporation seller amenable to suit within the

U.S.C. 1606(a) provides that

state. See Green v. Chicago, B. & Q. R. Co., 205 U. S.

an

unconstitutional

burden

on

"No person required under a State law to make payments

to

an

unemployment

fund

shall

be

relieved

from

compliance therewith on the ground that he is engaged in

530, 205

U.

S.

533; International

Harvester

Co.

v.

Kentucky, supra, 234 U. S. 586-587; Philadelphia

Page 326 U. S. 316

interstate or foreign commerce, or that the State law

does not distinguish between employees engaged in

& Reading R. Co. v. McKibbin, 243 U. S. 264, 243 U. S.

interstate or foreign commerce and those engaged in

268; People's Tobacco Co. v. American Tobacco Co.,

intrastate commerce."

supra, 246 U. S. 87. And appellant further argues that,

since it was not present within the state, it is a denial of

It is no longer debatable that Congress, in the exercise of

due process to subject it to taxation or other money

the commerce power, may authorize the states, in

exaction. It thus denies the power of the state to lay the

specified ways, to regulate interstate commerce or

tax or to subject appellant to a suit for its collection.

impose burdens upon it. Kentucky Whip & Collar Co. v.

Illinois

Central

R.

Co., 299

U.

S.

334; Perkins

v.

Historically,

the

jurisdiction

Pennsylvania, 314 U.S. 586; Standard Dredging Corp. v.

judgment in

Murphy, 319 U. S. 306, 319 U. S. 308; Hooven & Allison

facto power over the defendant's person. Hence, his

Co. v. Evatt, 324 U. S. 652, 324 U. S. 679; Southern

presence within the territorial jurisdiction of a court was

Pacific Co. v. Arizona, 325 U. S. 761, 325 U. S. 769.

prerequisite to its rendition of a judgment personally

personam is

of

courts

grounded

on

to

render
their de

binding him.Pennoyer v. Neff, 95 U. S. 714, 95 U. S. 733.

But now that the capias ad respondendum has given way

to personal service of summons or other form of notice,

deem to be sufficient to satisfy the demands of due

due process requires only that, in order to subject a

process. L. Hand, J., in Hutchinson v. Chase & Gilbert, 45

defendant to a judgment in personam, if he be not

F.2d 139, 141. Those demands may be met by such

present within the territory of the forum, he have certain

contacts of the corporation with the state of the forum as

minimum contacts with it such that the maintenance of

make it reasonable, in the context of our federal system

the suit does not offend "traditional notions of fair play

of government, to require the corporation to defend the

and substantial justice." Milliken v. Meyer, 311 U. S.

particular suit which is brought there. An "estimate of the

457, 311 U. S. 463. See Holmes, J., in McDonald v.

inconveniences" which would result to the corporation

Mabee, 243 U. S. 90,243 U. S. 91. Compare Hoopeston

from a trial away from its "home" or principal place of

Canning Co. v. Cullen, 318 U. S. 313, 318 U. S. 316, 318

business is relevant in this connection. Hutchinson v.

U. S. 319. See Blackmer v. United States,284 U. S.

Chase & Gilbert, supra, 141.

421; Hess v. Pawloski, 274 U. S. 352; Young v. Masci, 289

"Presence" in the state in this sense has never been

U. S. 253. ,

doubted when the activities of the corporation there have

Since the corporate personality is a fiction, although a

not only been continuous and systematic, but also give

fiction intended to be acted upon as though it were a

rise to the liabilities sued on, even though no consent to

fact, Klein v. Board of Supervisors, 282 U. S. 19, 282 U. S.

be sued or authorization to an agent to accept service of

24, it is clear that, unlike an individual, its "presence"

process has been given. St. Clair v. Cox, 106 U. S.

without, as well as within, the state of its origin can be

350, 106

manifested only by activities carried on in its behalf by

Spratley, 172 U. S. 602, 172 U. S. 610-611; Pennsylvania

those who are authorized to act for it. To say that the

Lumbermen's Ins. Co. v. Meyer, 197 U. S. 407, 197 U. S.

corporation is so far "present" there as to satisfy due

414-415; Commercial Mutual Co. v. Davis, 213 U. S.

process requirements, for purposes of taxation or the

245, 213 U. S. 255-256; International Harvester Co. v.

maintenance of suits against it in the courts of the state,

Kentucky, supra; cf. St. Louis S.W. R. Co. v. Alexander, 227

is to beg the question to be decided. For the terms

U. S. 218. Conversely, it has been generally recognized

"present" or "presence" are

that the casual presence of the corporate agent, or even

U.

S.

355; Connecticut

Mutual

Co.

v.

his conduct of single or isolated items of activities in a

Page 326 U. S. 317
used

merely

to

state in the corporation's behalf, are not enough to

symbolize

those

activities

of

the

corporation's agent within the state which courts will

subject it to suit on causes of action unconnected with

the activities there. St. Clair v. Cox, supra, 106 U. S.
359, 106

U.

S.

360; Old

Wayne

Life

Assn.

v.

McDonough, 204 U. S. 8, 204 U. S. 21; Frene v. Louisville

enforce it, Rosenberg Bros. & Co. v. Curtis Brown Co.,260

Cement Co., supra, 515, and cases cited. To require the

U. S. 516, other such acts, because of their nature and

corporation in such circumstances to defend the suit

quality and the circumstances of their commission, may

away from its home or other jurisdiction where it carries

be deemed sufficient to render the corporation liable to

on more substantial activities has been thought to lay too

suit. Cf. Kane v. New Jersey, 242 U. S. 160; Hess v.

great and unreasonable a burden on the corporation to

Pawloski, supra; Young v. Masci, supra. True, some of the

comport with due process.

decisions holding the corporation amenable to suit have

been supported by resort to the legal fiction that it has

Page 326 U. S. 318

While it has been held, in cases on which appellant relies,
that continuous activity of some sorts within a state is not
enough to support the demand that the corporation be
amenable to suits unrelated to that activity, Old Wayne
Life Assn. v. McDonough, supra; Green v. Chicago, B. & Q.
R. Co., supra; Simon v. Southern R. Co., 236 U. S.
115; People's Tobacco Co. v. American Tobacco Co.,
supra; cf. Davis v. Farmers Co-operative Co., 262 U. S.
312, 262 U. S. 317, there have been instances in which

given its consent to service and suit, consent being

implied from its presence in the state through the acts of
its

authorized

agents. Lafayette

Insurance

Co.

v.

French, 18 How. 404, 59 U. S. 407; St. Clair v. Cox,

supra, 106 U. S. 356; Commercial Mutual Co. v. Davis,
supra, 213 U. S. 254;Washington v. Superior Court, 289 U.
S. 361, 289 U. S. 364-365. But, more realistically, it may
be said that those authorized acts were of such a nature
as to justify the fiction. Smolik v. Philadelphia &
Page 326 U. S. 319

the continuous corporate operations within a state were

thought so substantial and of such a nature as to justify

Reading Co., 222 F. 148, 151. Henderson, The Position of

suit against it on causes of action arising from dealings

Foreign Corporations in American Constitutional Law, 94-

entirely distinct from those activities. See Missouri, K. &

95.

T. R. Co. v. Reynolds, 255 U.S. 565; Tauza v. Susquehanna

Coal Co., 220 N.Y. 259, 115 N.E. 915; cf. St. Louis S.W. R.

It is evident that the criteria by which we mark the

Co. v. Alexander, supra.

boundary line between those activities which justify the

subjection of a corporation to suit and those which do not

Finally, although the commission of some single or

cannot be simply mechanical or quantitative. The test is

occasional acts of the corporate agent in a state sufficient

not merely, as has sometimes been suggested, whether

to impose an obligation or liability on the corporation has

the activity, which the corporation has seen fit to procure

not been thought to confer upon the state authority to

through its agents in another state, is a little more or a

little less. St. Louis S.W. R. Co. v. Alexander, supra, 227 U.

Applying these standards, the activities carried on in

S.

Kentucky,

behalf of appellant in the State of Washington were

supra, 234 U. S. 587. Whether due process is satisfied

neither irregular nor casual. They were systematic and

must depend, rather, upon the quality and nature of the

continuous throughout the years in question. They

activity in relation to the fair and orderly administration of

resulted in a large volume of interstate business, in the

the laws which it was the purpose of the due process

course of which appellant received the benefits and

clause to insure. That clause does not contemplate that a

protection of the laws of the state, including the right to

state may make binding a judgment in personam against

resort to the courts for the enforcement of its rights. The

an individual or corporate defendant with which the state

obligation which is here sued upon arose out of those

has no contacts, ties, or relations. Cf. Pennoyer v. Neff,

very activities. It is evident that these operations

supra; Minnesota Commercial Assn. v. Benn, 261 U. S.

establish sufficient contacts or ties with the state of the

140.

forum to make it reasonable and just, according to our

228; International

Harvester

Co.

v.

traditional conception of fair play and substantial justice,

But, to the extent that a corporation exercises the

to permit the state to enforce the obligations which

privilege of conducting activities within a state, it enjoys

appellant has incurred there. Hence, we cannot say that

the benefits and protection of the laws of that state. The

the maintenance of the present suit in the State of

exercise of that privilege may give rise to obligations,

Washington

and, so far as those obligations arise out of or are

procedure.

connected

with

the

activities

within

the

state,

involves

an

unreasonable

or

undue

procedure which requires the corporation to respond to a

We are likewise unable to conclude that the service of the

suit brought to enforce them can, in most instances,

process within the state upon an agent whose activities

hardly be said to be undue. Compare International

establish appellant's "presence" there was not sufficient

Harvester Co. v. Kentucky, supra, with Green v. Chicago,

notice of the suit, or that the suit was so unrelated to

B. & Q. R. Co., supra, and People's Tobacco Co. v.

those activities as to make the agent an inappropriate

American

Connecticut

vehicle for communicating the notice. It is enough that

Mutual Co. v. Spratley, supra, 172 U. S. 619,172 U. S.

appellant has established such contacts with the state

620, and Commercial Mutual Co. v. Davis, supra, with Old

that the particular form of substituted service adopted

Wayne Life Assn. v. McDonough, supra. See 29 Columbia

there gives reasonable assurance that the notice will be

Law Review, 187-195.

actual. Connecticut Mutual Co. v. Spratley, supra, 172 U.

Tobacco

Co.,

supra. Compare

S. 618, 172 U. S. 619; Board of Trade v. Hammond

Page 326 U. S. 320

Elevator

Co., 198

U.

S.

424, 198

U.

S.

437-

438; Commercial Mutual Co. v. Davis, supra, 213 U. S.

constitutional

254-255. Cf.

Southern Coal Co., 301 U. S. 495, 301 U. S. 508, et seq.

Riverside

Mills

v.

Menefee, 237

U.

S.

power

of

the

states. Carmichael

v.

189, 237 U. S. 194, 237 U. S. 195; See Knowles v.

Gaslight & Coke Co., 19 Wall. 58, 86 U. S. 61; McDonald v.

Appellant having rendered itself amenable to suit upon

Mabee, supra; Milliken v. Meyer, supra. Nor can we say

obligations arising out of the activities of its salesmen in

that the mailing of the notice of suit to appellant by

Washington, the state may maintain the present suit in

registered mail at its home office was not reasonably

personam to collect the tax laid upon the exercise of the

calculated to apprise appellant of the suit. Compare Hess

privilege of employing appellant's salesmen within the

v. Pawloski, supra, with McDonald v. Mabee, supra,

state. For Washington has made one of those activities

which, taken together, establish appellant's "presence"

Page 326 U. S. 321

there for purposes of suit the taxable event by which the

state brings appellant within the reach of its taxing

243 U. S. 92, and Wuchter v. Pizzutti, 276 U. S. 13, 276 U.

power. The state thus has constitutional power to lay the

S. 19, 276 U. S. 24; cf. Becquet v. MacCarthy, 2 B. & Ad.

tax and to subject appellant to a suit to recover it. The

951; Maubourquet

activities which establish its "presence" subject it alike to

v.

Wyse, 1

Ir.Rep.C.L.

471. See

Washington v. Superior Court, supra, 289 U. S. 365.

Only a word need be said of appellant's liability for the
demanded contributions to the state unemployment fund.
The Supreme Court of Washington, construing and
applying the statute, has held that it imposes a tax on the
privilege of employing appellant's salesmen within the

taxation by the state and to suit to recover the

tax. Equitable Life Society v. Pennsylvania, 238 U. S.
143, 238 U. S. 146; cf. International Harvester Co. v.
Department of Taxation, 322 U. S. 435, 322 U. S. 442, et
seq.; Hoopeston Canning Co. v. Cullen,
Page 326 U. S. 322

state measured by a percentage of the wages, here, the

commissions payable to the salesmen. This construction

supra, 318 U. S. 316-319; see General Trading Co. v. Tax

we accept for purposes of determining the constitutional

Comm'n, 322 U. S. 335.

validity of the statute. The right to employ labor has been

deemed an appropriate subject of taxation in this country
and England, both before and since the adoption of the
Constitution. Steward Machine Co. v. Davis, 301 U. S.
548, 301 U. S. 579,et seq. And such a tax imposed upon
the employer for unemployment benefits is within the

Affirmed.
MR. JUSTICE JACKSON took no part in the consideration or
decision of this case.
MR. JUSTICE BLACK delivered the following opinion.

Congress, pursuant to its constitutional power to regulate

mail and by personal service on its sales solicitors in

commerce, has expressly provided that a State shall not

Washington did not meet the requirements of procedural

be prohibited from levying the kind of unemployment

due process. And the due process clause is not brought in

compensation tax here challenged. 26 U.S.C. 1600. We

issue any more by appellant's further conceptualistic

have twice decided that this Congressional consent is an

contention that Washington could not levy a tax or bring

adequate answer to a claim that imposition of the tax

suit against the corporation because it did not honor that

violates

v.

State with its mystical "presence." For it is unthinkable

Pa.

that the vague due process clause was ever intended to

529; Standard Dredging Corp. v. Murphy, 319 U. S.

prohibit a State from regulating or taxing a business

306, 319 U. S. 308. Two determinations by this Court of

carried on within its boundaries simply because this is

an

sufficient.

done by agents of a corporation organized and having its

Consequently, that part of this appeal which again seeks

headquarters elsewhere. To read this into the due process

to raise the question seems so patently frivolous as to

clause would, in fact, result in depriving a State's citizens

make the case a fit candidate for dismissal. Fay v.

of due process by taking from the State the power to

Crozer, 217 U. S. 455. Nor is the further ground advanced

protect them in their business dealings within its

on this appeal, that the State of Washington has denied

boundaries with representatives of a foreign corporation.

appellant due process of law, any less devoid of

Nothing could be more irrational, or more designed to

substance. It is my view, therefore, that we should

defeat

dismiss

[Footnote

government. Certainly a State, at the very least, has

1] Seaboard Air Line R. Co. v. Watson, 287 U. S. 86, 287

power to tax and sue those dealing with its citizens within

U. S. 90, 287 U. S. 92, and decline the invitation to

its boundaries, as we have held before. Hoopeston

formulate broad rules as to the meaning of due process,

Canning Co. v. Cullen, 318 U. S. 313. Were the Court to

which here would amount to deciding a constitutional

follow this principle, it would provide a workable standard

question

its

for cases where, as here, no other questions are involved.

decision." Federation of Labor v. McAdory, 325 U. S.

The Court has not chosen to do so, but instead has

450, 325 U. S. 461.

engaged in an unnecessary discussion, in the course of

the

Commerce

Pennsylvania, 314

issue

so

the

"in

U.S.

palpably

appeal

advance

Clause. Perkins
586,affirming 342

without

as

of

merit are

unsubstantial,

the

necessity

for

the

function

of

our

federative

system

of

which it has announced vague Constitutional criteria

Page 326 U. S. 323
Certainly appellant cannot, in the light of our past
decisions, meritoriously claim that notice by registered

applied for the first time to the issue before us. It has
thus introduced uncertain elements confusing the simple

pattern and tending to curtail the exercise of State

common law would have deemed "contrary to natural

powers to an extent not justified by the Constitution.

justice." And previous cases had indicated that the

ancient rule against judgments without notice had

The criteria adopted, insofar as they can be identified,

stemmed from "natural justice" concepts. These cases,

read as follows: Due Process does permit State courts to

while

"enforce the obligations which appellant has incurred" if

particular circumstances is inadequate, did not mean

giving

additional

reasons

why

notice

under

thereby that all legislative enactments which this Court

Page 326 U. S. 324

might deem to be contrary to natural justice ought to be

it be found "reasonable and just according to our

traditional conception of fair play and substantial justice."
And this, in turn, means that we will "permit" the State to

held invalid under the due process clause. None of the

cases purport to support or could support a holding that a
State can tax and sue corporations only if its action
comports with this Court's notions of "natural justice." I

act if, upon

should have thought the Tenth Amendment settled that.

"an 'estimate of the inconveniences' which would result
to the corporation from a trial away from its 'home' or

I believe that the Federal Constitution leaves to each

State, without any "ifs" or "buts," a power to tax and to

principal place of business,"

open the doors of its courts for its citizens to sue

we conclude that it is "reasonable" to subject it to suit in

corporations whose agents do business in those States.

a State where it is doing business.

Believing that the Constitution gave the States that

power, I think it a judicial deprivation to condition its

It is true that this Court did use the terms "fair play" and
"substantial

justice"

in

explaining

the

exercise upon this

philosophy

underlying the holding that it could not be "due process

Page 326 U. S. 325

of law" to render a personal judgment against a

defendant without notice and an opportunity to be
heard. Milliken v. Meyer, 311 U. S. 457. In McDonald v.
Mabee, 243

U.

S.

90, 243

U.

S.

91,

cited

in

the Milliken, case, Mr. Justice Holmes, speaking for the

Court,

warned

opportunity

to

against
be

judicial

heard,

and

curtailment

of

referred

such

to

this
a

curtailment as a denial of "fair play," which even the

Court's notion of "fair play," however appealing that term

may be. Nor can I stretch the meaning of due process so
far as to authorize this Court to deprive a State of the
right to afford judicial protection to its citizens on the
ground that it would be more "convenient" for the
corporation to be sued somewhere else.

There is a strong emotional appeal in the words "fair

arbiters of the country's laws and practices. Polk Co. v.

play," "justice," and "reasonableness." But they were not

Glover, 305 U. S. 5, 305 U. S. 17-18; Federal Power

chosen by those who wrote the original Constitution or

Commission v. Natural Gas Pipeline Co., 315 U. S.

the Fourteenth Amendment as a measuring rod for this

575, 315 U. S. 600, n. 4. This result, I believe, alters the

Court to use in invalidating State or Federal laws passed

form of government our Constitution provides. I cannot

by elected legislative representatives. No one, not even

agree.

those who most feared a democratic government, ever

formally proposed that courts should be given power to

True, the State's power is here upheld. But the rule

invalidate legislation under any such elastic standards.

announced means that tomorrow's judgment may strike

Express prohibitions against certain types of legislation

down a State or Federal enactment on the ground that it

are found in the Constitution, and, under the long-settled

does not conform to this Court's idea of natural justice. I

practice, courts invalidate laws found to conflict with

therefore find myself moved by the same fears that

them. This requires interpretation, and interpretation, it is

caused Mr. Justice Holmes to say in 1930:

true, may result in extension of the Constitution's

purpose. But that is no reason for reading the due
process clause so as to restrict a State's power to tax and
sue those whose activities affect persons and businesses
within the State, provided proper service can be had.
Superimposing

the

natural

justice

concept

on

the

Constitution's specific prohibitions could operate as a

drastic

abridgment

of

democratic

safeguards

they

embody, such as freedom of speech, press and religion,

"I have not yet adequately expressed the more than

anxiety that I feel at the ever-increasing scope given to
the Fourteenth Amendment in cutting down what I
believe to be the constitutional rights of the States. As
the decisions now stand, I see hardly any limit but the sky
to the invalidating of those rights if they happen to strike
a majority of this Court as for any reason undesirable."
Baldwin v. Missouri, 281 U. S. 586, 281 U. S. 595.

[Footnote 2] and the right to counsel. This

[Footnote 1]
Page 326 U. S. 326
This Court has, on several occasions, pointed out the
has

already

happened. Betts

v.

Brady, 316

U.

S.

455. Compare Feldman v. United States, 322 U. S.

487, 322 U. S. 494-503. For application of this natural law
concept, whether under the terms "reasonableness,"
"justice," or "fair play," makes judges the supreme

undesirable consequences of a failure to dismiss frivolous

appeals. Salinger v. United States, 272 U. S. 542, 272 U.
S. 544; United Surety Co. v. American Fruit Product

Co., 238 U. S. 140; De Bearn v. Safe Deposit & Trust

Co., 233 U. S. 24, 233 U. S. 33-34.
[Footnote 2]
These First Amendment liberties -- freedom of speech,
press and religion -- provide a graphic illustration of the
potential restrictive capacity of a rule under which they
are protected at a particular time only because the Court,
as then constituted, believes them to be a requirement of

U.S. Supreme Court

Pennoyer v. Neff, 95 U.S. 714 (1878)

fundamental justice. Consequently, under the same rule,

another Court, with a different belief as to fundamental
justice, could, at least as against State action, completely
or partially withdraw Constitutional protection from these
basic freedoms, just as though the First Amendment had

Pennoyer v. Nef
95 U.S. 714
ERROR TO THE CIRCUIT COURT OF THE UNITED STATES

never been written.

FOR THE DISTRICT OF OREGON
Disclaimer: Official Supreme Court case law is only
found in the print version of the United States Reports.

Syllabus

Justia case law is provided for general informational

purposes

only,

and

may

not

reflect

current

legal

A statute of Oregon, after providing for service of

developments, verdicts or settlements. We make no

summons

warranties

accuracy,

personally or at their residence, declares that, when

completeness, or adequacy of the information contained

service cannot be thus made, and the defendant, after

on this site or information linked to from this site. Please

due diligence, cannot be found within the State, and

or

guarantees

about

the

upon

parties

or

their

representatives,

check official sources.

"that fact appears, by affidavit, to the satisfaction of the
court or judge thereof, and it, in like manner, appears
that a cause of action exists against the defendant, or
that he is a proper party to an action relating to real
property in the State, such court or judge may grant an

order that the service be made by publication of

inquire into his obligations to the extent necessary to

summons . . . when the defendant is not a resident of the

control the disposition of that property. If he has no

State, but has property therein, and the court has

property in the State, there is nothing upon which her

jurisdiction of the subject of the action,"

tribunals can adjudicate.

the order to designate a newspaper of the

Substituted service by publication, or in any other

county where the action is commenced in

authorized form, is sufficient to inform a nonresident of

which the publication shall be made -- and

the object of proceedings taken where

that proof of such publication shall be "the

affidavit of the printer, or his foreman, or
his principal clerk."

Page 95 U. S. 715
property is once brought under the control of the court by

Held, that defects in the affidavit for the order can only

seizure or some equivalent act, but where the suit is

be taken advantage of on appeal, or by some other direct

brought to determine his personal rights and obligations,

proceeding, and cannot be urged to impeach the

that is, where it is merely in personam, such service upon

judgment collaterally, and that the provision as to proof

him is ineffectual for any purpose.

of the publication is satisfied when the affidavit is made

by the editor of the paper.

Process from the tribunals of one State cannot run into

another State and summon a party there domiciled to

A personal judgment is without any validity if it be

respond to proceedings against him, and publication of

rendered by a State court in an action upon a money

process or of notice within the State in which the tribunal

demand against a nonresident of the State who was

sits cannot create any greater obligation upon him to

served by a publication of summons, but upon whom no

appear. Process sent to him out of the State, and process

personal service of process within the State was made,

published within it, are equally unavailing in proceedings

and who did not appear; and no title to property passes

to establish his personal liability.

by a sale under an execution issued upon such a

judgment.

Except in cases affecting the personal status of the

plaintiff, and in those wherein that mode of service may

The State, having within her territory property of a

be considered to have been assented to in advance, the

nonresident, may hold and appropriate it to satisfy the

substituted service of process by publication allowed by

claims of her citizens against him, and her tribunals may

the law of Oregon and by similar laws in other States

where

actions

are

brought

against

nonresidents

is

By consent of parties, and in pursuance of their written

effectual only where, in connection with process against

stipulation filed in the case, the cause was tried by the

the person for commencing the action, property in the

court, and a special verdict given, upon which judgment

State is brought under the control of the court and

was rendered in favor of Neff; whereupon Pennoyer sued

subjected to its disposition by process adapted to that

out this writ of error.

purpose, or where the judgment is sought as a means of

reaching such property or affecting some interest therein;

The parties respectively claimed title as follows: Neff

in other words, where the action is in the nature of a

under a patent issued to him by the United States, March

proceeding in rem.

19,

Whilst the courts of the United States are not foreign

Page 95 U. S. 716

tribunals in their relations to the State courts, they are

tribunals of a different sovereignty, and are bound to give
a judgment of a State court only the same faith and
credit to which it is entitled in the courts of another State.

1866; and Pennoyer by virtue of a sale made by the

sheriff of said county, under an execution sued out upon
a judgment against Neff, rendered Feb. 19, 1866, by the
Circuit Court for said county, in an action wherein he was

The term "due process of law," when applied to judicial

defendant and J. H. Mitchell was plaintiff. Neff was then a

proceedings, means a course of legal

nonresident of Oregon.

proceedings

according to those rules and principles which have been

established by our jurisprudence for the protection and
enforcement of private rights. To give such proceedings
any validity, there must be a competent tribunal to pass
upon their subject matter, and if that involves merely a
determination of the personal liability of the defendant,
he must be brought within its jurisdiction by service of
process within the State, or by his voluntary appearance.

In Mitchell v. Neff, jurisdiction of Neff was obtained by

service of summons by publication. Pennoyer offered in
evidence

duly

certified

copies

of

the

complaint,

summons, order for publication of summons, affidavit of

service by publication, and the judgment in that case, to
the introduction of which papers the plaintiff objected
because, 1, said judgment is in personam, and appears to
have

been

given

without

the

appearance

of

the

This action was brought by Neff against Pennoyer for the

defendant in the action or personal service of the

recovery of a tract of land situated in Multnomah County,

summons upon him, and while he was a nonresident of

Oregon. Pennoyer, in his answer, denied Neff's title and

the State, and is, therefore, void; 2, said judgment is

right to possession, and set up a title in himself.

not in rem, and therefore constitutes no basis of title in

the defendant; 3, said copies of complaint, &c., do not

Page 95 U. S. 717

show jurisdiction to give the judgment alleged, either in

rem or personam; and, 4, it appears from said papers

found in this State, and that he is a nonresident thereof,

that no proof of service by publication was ever made,

that his place of residence is unknown to plaintiff, and

the affidavit thereof being made by the "editor" of the

cannot, with reasonable diligence, be ascertained by him,

"Pacific Christian Advocate," and not by "the printer, or

and that the plaintiff has a cause of action of action

his foreman or principal clerk." The court admitted the

against defendant, and that defendant has property in

evidence subject to the objections.

this county and State, it is ordered and adjudged by the

court that service of the summons in this action be made

The finding of the court in regard to the facts bearing

by publication for six weeks successively in the 'Pacific

upon the asserted jurisdiction of the State court is as

Christian Advocate,' a weekly newspaper published in

follows: --

Multnomah County, Oregon, and this action is continued

for such service."

That, on Nov. 13, 1865, Mitchell applied to said Circuit

Court, upon his own affidavit of that date, for an order

That the affidavit of plaintiff, referred to in said order, is in

allowing the service of the summons in said action to be

the words following:

made upon Neff by publication thereof, whereupon said

court made said order, in the words following:

"I, J. H. Mitchell, being first duly sworn, say that the

defendant, Marcus Neff, is a nonresident of this State;

"Now, at this day, comes the plaintiff in his proper

that he resides somewhere in the State of California, at

person, and by his attorneys, Mitchell and Dolph, and files

what place affiant knows not, and he cannot be found in

affidavit of plaintiff, and motion for an order of publication

this State; that plaintiff has a just cause of action against

of summons, as follows, to wit:"

defendant for a money demand on account; that this

court has jurisdiction of such action; that the defendant

"Now comes the plaintiff, by his attorneys, and upon the

has property in this county and State."

affidavit of plaintiff, herewith filed, moves the court for an

order of publication of summons against defendant, as

That the complaint in said action was verified and filed on

required by law, he being a nonresident;"

Nov. 3, 1865, and contained facts tending to prove that,

at that date, said Mitchell had a cause of action against

"and it appearing to the satisfaction of the court that the

said Neff for services as an attorney, performed "between

defendant cannot, after due diligence, be

Jan. 1, 1862, and May 15, 1863." That the entry of

judgment

in

said

action

contained

the

following

averments:

Mitchell, and could not, with reasonable diligence, be

ascertained by him, and that Neff had notice of the
pendency of said action by the publication of the

"And it appearing to the court that the defendant was, at

summons as aforesaid, was, so far as appears by the said

the time of the commencement of this action, and ever

roll and the records and files of the said court, the said

since has been, a nonresident of this State; and it further

complaint and affidavits of Mitchell and the editor of the

appearing that he has property in this State, and that

"Advocate."

defendant had notice of the pendency of this action by

publication of the summons for six successive weeks in

The statute of Oregon at the time of the commencement

the 'Pacific Christian Advocate,' a weekly newspaper of

of the suit against Neff was as follows: --

general circulation published in Multnomah County, State

of Oregon, the last issue of which was more than twenty

"SECT. 55. When service of the summons cannot be made

days before the first day of this term."

as prescribed in the last preceding section, and the

defendant, after due diligence, cannot be found within

That

the

affidavit

showing

the

publication

of

the

the State, and when that fact appears, by affidavit, to the

summons in the "Advocate" aforesaid was made as

satisfaction of the court or judge thereof, or justice in an

stated therein by the "editor" of that paper. That said

action in a justice's court, and it also appears that a

complaint, summons, affidavit of Mitchell and of the

cause of action exists against the defendant, or that he is

"editor" of the "Advocate" aforesaid, and entry of

a proper party to an action relating to real property in this

judgment, were in the judgment roll, made up by the

State, such court or judge or justice may grant an order

clerk in the case, but the order for publication of the

that the service be made by publication of summons in

summons aforesaid was not placed in said roll

either of the following cases: . . ."

Page 95 U. S. 718

"3. When the defendant is not a resident of the State, but

has property therein, and the court has jurisdiction of the

by said clerk, but remains on the files of said court; and

subject of the action."

that, when said court made said order for publication,

and gave said judgment against Neff, the only evidence it

"SECT. 56. The order shall direct the publication to be

had before it to prove the facts necessary to give it

made in a newspaper published in the county where the

jurisdiction therefor, and particularly to authorize it to

action is commenced, and, if no newspaper be published

find and state that Neff's residence was unknown to

in the county, then in a newspaper to be designated as

most likely to give notice to the person to be served, and

after the entry of such judgment, on such terms as may

for such length of time as may be deemed reasonable,

be just; and, if the defence be successful, and the

not less than once a week for six weeks. In case of

judgment or any part thereof have been collected or

publication, the court or judge shall also direct a copy of

otherwise enforced, such restitution may thereupon be

the summons and complaint to be forthwith deposited in

compelled as the court shall direct. But the title to

the post office, directed to the defendant, at his place of

property sold upon execution issued on such judgment to

residence, unless it shall appear that such residence is

a purchaser in good faith shall not be thereby affected."

neither known to the party making the application, nor

can, with reasonable diligence, be ascertained by him.

"SECT. 60. Proof of the service of summons shall be, in

When publication is ordered, personal service of a copy of

case of publication, the affidavit of the printer, or his

the summons and complaint out of the State shall be

foreman, or his principal clerk, showing the same."

equivalent to publication and deposit in the post office. In

either case, the defendant shall appear and answer by
the first day of the term following the

MR. JUSTICE FIELD delivered the opinion of the court.

This is an action to recover the possession of a tract of
land, of the alleged value of $15,000, situated in the

Page 95 U. S. 719

State of Oregon. The plaintiff asserts title to the premises

expiration of the time prescribed in the order for

by a patent of the United States issued to him in 1866,

publication; and, if he does not, judgment may be taken

under the act of Congress of Sept. 27, 1850, usually

against him for want thereof. In case of personal service

known as the Donation Law of Oregon. The defendant

out of the State, the summons shall specify the time

claims to have acquired the premises under a sheriff's

prescribed in the order for publication."

deed, made upon a sale of the property on execution

issued upon a judgment recovered against the plaintiff in

"SECT. 57. The defendant against whom publication is

one of the circuit courts of the State. The case turns upon

ordered, or his personal representatives, on application

the validity of this judgment.

and sufficient cause shown, at any time before judgment,

shall be allowed to defend the action; and the defendant

It appears from the record that the judgment was

against

his

rendered in February, 1866, in favor of J. H. Mitchell, for

representatives, may in like manner, upon good cause

less than $300, including costs, in an action brought by

shown, and upon such terms as may be proper, be

him upon a demand for services as an attorney; that, at

allowed to defend after judgment, and within one year

the time the action was commenced and the judgment

whom

publication

is

ordered,

or

rendered, the defendant therein, the plaintiff here, was a

in which it is established. Any attempt to exercise

nonresident of the State;

authority beyond those limits would be deemed in every

other forum, as has been said by this Court, an

Page 95 U. S. 720

illegitimate assumption of power, and be resisted as mere

that he was not personally served with process, and did

not appear therein; and that the judgment was entered
upon his default in not answering the complaint, upon a
constructive service of summons by publication.

abuse. D'Arcy v. Ketchum et al., 11 How. 165. In the case

against the plaintiff, the property here in controversy sold
under the judgment rendered was not attached, nor in
any way brought under the jurisdiction of the court. Its
first connection with the case was caused by a levy of the

The Code of Oregon provides for such service when an

action is brought against a nonresident and absent
defendant who has property within the State. It also
provides, where the action is for the recovery of money or
damages, for the attachment of the property of the
nonresident. And it also declares that no natural person is

execution. It was not, therefore, disposed of pursuant to

any adjudication, but only in enforcement of a personal
judgment, having no relation to the property, rendered
against a nonresident without service of process upon
him in the action or his appearance therein. The court
below did not consider that an attachment of the
property was essential to its jurisdiction or to the validity

subject to the jurisdiction of a court of the State

of the sale, but held that the judgment was invalid from
"unless he appear in the court, or be found within the

defects

in

the

affidavit

upon

which

the

order

of

State, or be a resident thereof, or have property therein;

publication was obtained and in the affidavit by which the

and, in the last case, only to the extent of such property

publication was proved.

at the time the jurisdiction attached."

Page 95 U. S. 721
Construing this latter provision to mean that, in an action
for money or damages where a defendant does not
appear in the court, and is not found within the State, and
is not a resident thereof, but has property therein, the
jurisdiction of the court extends only over such property,
the declaration expresses a principle of general, if not
universal,

law.

The

authority

of

every

tribunal

is

necessarily restricted by the territorial limits of the State

There is some difference of opinion among the members

of this Court as to the rulings upon these alleged defects.
The majority are of opinion that, inasmuch as the statute
requires, for an order of publication, that certain facts
shall appear by affidavit to the satisfaction of the court or
judge, defects in such affidavit can only be taken
advantage of on appeal, or by some other direct
proceeding, and cannot be urged to impeach the

judgment collaterally. The majority of the court are also of

contended in that court, and is insisted upon here, that

opinion that the provision of the statute requiring proof of

the judgment in the State court against the plaintiff was

the publication in a newspaper to be made by the

void for want of personal service of process on him, or of

"affidavit of the printer, or his foreman, or his principal

his appearance in the action in which it was rendered and

clerk" is satisfied when the affidavit is made by the editor

that the premises in controversy could not be subjected

of the paper. The term "printer," in their judgment, is

to the payment of the demand

there used not to indicate the person who sets up the

type -- he does not usually have a foreman or clerks -- it
is rather used as synonymous with publisher. The
Supreme Court of New York so held in one case;
observing that, for the purpose of making the required
proof,

publishers

were

"within

the

spirit

of

the

statute." Bunce v. Reed, 16 Barb. (N. Y.) 350. And,

following this ruling, the Supreme Court of California held
that an affidavit made by a "publisher and proprietor"
was sufficient.Sharp v. Daugney, 33 Cal. 512. The term
"editor," as used when the statute of New York was
passed, from which the Oregon law is borrowed, usually
included not only the person who wrote or selected the
articles for publication, but the person who published the
paper and put it into circulation. Webster, in an early
edition of his Dictionary, gives as one of the definitions of
an editor, a person "who superintends the publication of
a newspaper." It is principally since that time that the
business of an editor has been separated from that of a
publisher and printer, and has become an independent
profession.

Page 95 U. S. 722
of a resident creditor except by a proceeding in rem, that
is, by a direct proceeding against the property for that
purpose. If these positions are sound, the ruling of the
Circuit Court as to the invalidity of that judgment must be
sustained notwithstanding our dissent from the reasons
upon which it was made. And that they are sound would
seem to follow from two well established principles of
public law respecting the jurisdiction of an independent
State over persons and property. The several States of
the

Union

are

not,

it

is

true,

in

every

respect

independent, many of the right and powers which

originally belonged to them being now vested in the
government created by the Constitution. But, except as
restrained and limited by that instrument, they possess
and exercise the authority of independent States, and the
principles of public law to which we have referred are
applicable to them. One of these principles is that every
State possesses exclusive jurisdiction and sovereignty
over persons and property within its territory. As a

If, therefore, we were confined to the rulings of the court

consequence, every State has the power to determine for

below upon the defects in the affidavits mentioned, we

itself the civil status and capacities of its inhabitants; to

should be unable to uphold its decision. But it was also

prescribe the subjects upon which they may contract, the

forms and solemnities with which their contracts shall be

within its own territory will often affect persons and

executed, the rights and obligations arising from them,

property without it. To any influence exerted in this way

and the mode in which their validity shall be determined

by a State affecting persons resident or property situated

and their obligations enforced; and also the regulate the

elsewhere, no objection can be justly taken; whilst any

manner and conditions upon which property situated

direct exertion of authority upon them, in an attempt to

within such territory, both personal and real, may be

give ex-territorial operation to its laws, or to enforce an

acquired, enjoyed, and transferred. The other principle of

ex-territorial

public law referred to follows from the one mentioned;

deemed an encroachment upon the independence of the

that is, that no State can exercise direct jurisdiction and

State in which the persons are domiciled or the property

authority over persons or property without its territory.

is situated, and be resisted as usurpation.

jurisdiction

by

its

tribunals,

would

be

Story, Confl. Laws, c. 2; Wheat. Int. Law, pt. 2, c. 2. The

several States are of equal dignity and authority, and the

Thus the State, through its tribunals, may compel persons

independence of one implies the exclusion of power from

domiciled within its limits to execute, in pursuance of

all others. And so it is laid down by jurists as an

their contracts respecting property elsewhere situated,

elementary principle that the laws of one State have no

instruments in such form and with such solemnities as to

operation outside of its territory except so far as is

transfer the title, so far as such formalities can be

allowed by comity, and that no tribunal established by it

complied with; and the exercise of this jurisdiction in no

can extend its process beyond that territory so as to

manner interferes with the supreme control over the

subject either persons or property to its decisions. "Any

property by the State within which it is situated. Penn v.

exertion of authority of this sort beyond this limit," says

Lord Baltimore, 1 Ves. 444; Massie v. Watts, 6 Cranch

Story, "is a mere nullity, and incapable of binding

148; Watkins v. Holman, 16 Pet. 25; Corbett v. Nutt, 10

Wall. 464.

Page 95 U. S. 723
So the State, through its tribunals, may subject property
such persons or property in any other tribunals." Story,

situated within its limits owned by nonresidents to the

Confl.Laws, sect. 539.

payment of the demand of its own citizens against them,

and the exercise of this jurisdiction in no respect infringes

But as contracts made in one State may be enforceable

upon the sovereignty of the State where the owners are

only in another State, and property may be held by

domiciled. Every State owes protection to its own

nonresidents, the exercise of the jurisdiction which every

citizens, and, when nonresidents deal with them, it is a

State is admitted to possess over persons and property

legitimate and just exercise of authority to hold and

appropriate any property owned by such nonresidents to

have the effect of a conclusive judgment in personam, for

satisfy the claims of its citizens. It is in virtue of the

the plain reason, that, except so far as the property is

State's jurisdiction over the property of the nonresident

concerned, it is a judgment coram non judice."

situated within its limits that its tribunals can inquire into
that nonresident's obligations to its own citizens, and the

And in Boswell's Lessee v. Otis, 9 How. 336, where the

inquiry can then be carried only to the extent necessary

title of the plaintiff in ejectment was acquired on a

to

sheriff's sale under a money decree rendered upon

control

the

disposition

of

the

property.

If

the

nonresident

publication of notice against nonresidents, in a suit

brought to enforce a contract relating to land, Mr. Justice

Page 95 U. S. 724

McLean said:--

have no property in the State, there is nothing upon

"Jurisdiction is acquired in one of two modes: first, as

which the tribunals can adjudicate.

against the person of the defendant by the service of

process; or, secondly, by a procedure against the

These views are not new. They have been frequently

property of the defendant within the jurisdiction of the

expressed, with more or less distinctness, in opinions of

court. In the latter case, the defendant is not personally

eminent judges, and have been carried into adjudications

bound by the judgment beyond the property in question.

in numerous cases. Thus, in Picquet v. Swan, 5 Mas. 35,

And it is immaterial whether the proceeding against the

Mr. Justice Story said:--

property be by an attachment or bill in chancery. It must

"Where a party is within a territory, he may justly be

be substantially a proceeding in rem."

subjected to its process, and bound personally by the

These citations are not made as authoritative expositions

judgment pronounced on such process against him.

of the law, for the language was perhaps not essential to

Where he is not within such territory, and is not

the decision of the cases in which it was used, but as

personally subject to its laws, if, on account of his

expressions of the opinion of eminent jurists. But

supposed or actual property being within the territory,

in Cooper v. Reynolds, reported in the 10th of Wallace, it

process by the local laws may, by attachment, go to

was essential to the disposition of the case to declare the

compel his appearance, and, for his default to appear,

effect of a personal action against an absent party,

judgment may be pronounced against him, such a

without the jurisdiction of the court, not served

judgment must, upon general principles, be deemed only

to bind him to the extent of such property, and cannot

Page 95 U. S. 725

with process or voluntarily submitting to the tribunal,

statute has provided a remedy. It says that, upon

when it was sought to subject his property to the

affidavit's being made of that fact, a writ of attachment

payment of a demand of a resident complainant; and, in

may be issued and levied on any of the defendant's

the opinion there delivered, we have a clear statement of

property, and a publication may be made warning him to

the law as to the efficacy of such actions, and the

appear; and that thereafter the court may proceed in the

jurisdiction of the court over them. In that case, the

case, whether he appears or not. If the defendant

action was for damages for alleged false imprisonment of

appears,

the plaintiff; and, upon his affidavit that the defendants

personam, with the added incident that the property

had fled from the State, or had absconded or concealed

attached remains liable, under the control of the court, to

themselves so that the ordinary process of law could not

answer to any demand which may be established against

reach them, a writ of attachment was sued out against

the defendant by the final judgment of the court. But if

their property. Publication was ordered by the court,

there is no appearance of the defendant, and no service

giving notice to them to appear and plead, answer or

of process on him, the case becomes in its essential

demur, or that the action would be taken as confessed

nature a proceeding in rem, the only effect of which is to

and proceeded in ex parte as to them. Publication was

subject the property attached to the payment of the

had, but they made default, and judgment was entered

demand which the court may find to be due to the

against them, and the attached property was sold under

plaintiff. That such is

the

cause

becomes

mainly

suit in

it. The purchaser having been put into possession of the

property, the original owner brought ejectment for its
recovery. In considering the character of the proceeding,
the Court, speaking through Mr. Justice Miller, said:--

Page 95 U. S. 726
the nature of this proceeding in this latter class of cases
is clearly evinced by two well established propositions:

"Its essential purpose or nature is to establish, by the

first, the judgment of the court, though in form a personal

judgment of the court, a demand or claim against the

judgment against the defendant, has no effect beyond

defendant, and subject his property lying within the

the property attached in that suit. No general execution

territorial jurisdiction of the court to the payment of that

can be issued for any balance unpaid after the attached

demand. But the plaintiff is met at the commencement of

property is exhausted. No suit can be maintained on such

his proceedings by the fact that the defendant is not

a judgment in the same court, or in any other; nor can it

within the territorial jurisdiction, and cannot be served

be used as evidence in any other proceeding not

with any process by which he can be brought personally

affecting the attached property; nor could the costs in

within the power of the court. For this difficulty, the

that proceeding be collected of defendant out of any

other property than that attached in the suit. Second, the

fraud and oppression. Judgments for all sorts of claims

court in such a suit cannot proceed unless the officer

upon contracts and for torts, real or pretended, would be

finds some property of defendant on which to levy the

thus obtained, under which property would be seized,

writ of attachment. A return that none can be found is the

when the evidence of the transactions upon

end of the case, and deprives the court of further

jurisdiction, though the publication may have been duly
made and proven in court."

Page 95 U. S. 727
which they were founded, if they ever had any existence,

The fact that the defendants in that case had fled from
the State, or had concealed themselves, so as not to be
reached by the ordinary process of the court, and were
not nonresidents, was not made a point in the decision.
The opinion treated them as being without the territorial
jurisdiction of the court, and the grounds and extent of its
authority over persons and property thus situated were
considered when they were not brought within its
jurisdiction by personal service or voluntary appearance.

had perished.
Substituted service by publication, or in any other
authorized form, may be sufficient to inform parties of the
object of proceedings taken where property is once
brought under the control of the court by seizure or some
equivalent act. The law assumes that property is always
in the possession of its owner, in person or by agent, and
it proceeds upon the theory that its seizure will inform
him not only that it is taken into the custody of the court,

The writer of the present opinion considered that some of

but that he must look to any proceedings authorized by

the objections to the preliminary proceedings in the

law upon such seizure for its condemnation and sale.

attachment suit were well taken, and therefore dissented

Such service may also be sufficient in cases where the

from the judgment of the Court, but, to the doctrine

object of the action is to reach and dispose of property in

declared in the above citation, he agreed, and he may

the State, or of some interest therein, by enforcing a

add that it received the approval of all the judges. It is

contract or a lien respecting the same, or to partition it

the only doctrine consistent with proper protection to

among different owners, or, when the public is a party, to

citizens of other States. If, without personal service,

condemn and appropriate it for a public purpose. In other

judgments in

parte against

words, such service may answer in all actions which are

nonresidents and absent parties, upon mere publication

substantially proceedingsin rem. But where the entire

of process, which, in the great majority of cases, would

object of the action is to determine the personal rights

never be seen by the parties interested, could be upheld

and obligations of the defendants, that is, where the suit

and enforced, they would be the constant instruments of

is merely in personam, constructive service in this form

personam, obtained ex

upon a nonresident is ineffectual for any purpose. Process

upon facts to be ascertained after it has tried the cause

from the tribunals of one State cannot run into another

and rendered the judgment. If the judgment be previously

State, and summon parties there domiciled to leave its

void, it will not become valid by the subsequent discovery

territory and respond to proceedings against them.

of property of the defendant, or by his subsequent

Publication of process or notice within the State where

acquisition of it. The judgment, if void when rendered, will

the tribunal sits cannot create any greater obligation

always remain void; it cannot occupy the doubtful

upon the nonresident to appear. Process sent to him out

position of being valid if property be found, and void if

of the State, and process published within it, are equally

there be none. Even if the position assumed were

unavailing in proceedings to establish his personal

confined to cases where the nonresident defendant

liability.

possessed property in the State at the commencement of

the action, it would still make the validity of the

The want of authority of the tribunals of a State to

proceedings and judgment depend upon the question

adjudicate upon the obligations of nonresidents, where

whether, before the levy of the execution, the defendant

they have no property within its limits, is not denied by

had or had not disposed of the property. If, before the

the court below: but the position is assumed, that, where

levy, the property should be sold, then, according to this

they have property within the State, it is immaterial

position, the judgment would not be binding. This

whether the property is in the first instance brought

doctrine would introduce a new element of uncertainty in

under the control of the court by attachment or some

judicial proceedings. The contrary is the law: the validity

other equivalent act, and afterwards applied by its

of every judgment depends upon the jurisdiction of the

judgment to the satisfaction of demands against its

court before it is rendered, not upon what may occur

owner; or such demands be first established in a personal

subsequently. In Webster v. Reid, reported in 11th of

action, and

Howard, the plaintiff claimed title to land sold under

Page 95 U. S. 728
the property of the nonresident be afterwards seized and
sold on execution. But the answer to this position has
already been given in the statement that the jurisdiction
of the court to inquire into and determine his obligations
at all is only incidental to its jurisdiction over the property.
Its jurisdiction in that respect cannot be made to depend

judgments recovered in suits brought in a territorial court

of Iowa, upon publication of notice under a law of the
territory, without service of process; and the court said:
"These suits were not a proceeding in rem against the
land, but were in personam against the owners of it.
Whether they all resided within the territory or not does
not appear, nor is it a matter of any importance. No
person is required to answer in a suit on whom process

has not been served, or whose property has not been

was afterwards qualified so as to make the act applicable

attached. In this case, there was no personal notice, nor

only when the

an attachment or other proceeding against the land, until

jurisdiction of the parties and of the subject matter, and

after the judgments. The judgments, therefore, are

not to preclude an inquiry into the jurisdiction of the court

nullities, and did not authorize the executions on which

in which the judgment was rendered, or the right of the

the land was sold. "

State itself to exercise authority over the person or the

court rendering

the

judgment had

subject matter. M'Elmoyle v. Cohen, 13 Pet. 312. In the

Page 95 U. S. 729
The force and effect of judgments rendered against
nonresidents without personal service of process upon
them, or their voluntary appearance, have been the
subject of frequent consideration in the courts of the
United States and of the several States, as attempts have
been made to enforce such judgments in States other
than those in which they were rendered, under the
provision of the Constitution requiring that "full faith and
credit shall be given in each State to the public acts,
records, and judicial proceedings of every other State;"
and the act of Congress providing for the mode of
authenticating such acts, records, and proceedings, and
declaring that, when thus authenticated,
"they shall have such faith and credit given to them in
every court within the United States as they have by law
or usage in the courts of the State from which they are or
shall or taken."
In the earlier cases, it was supposed that the act gave to
all judgments the same effect in other States which they
had by law in the State where rendered. But this view

case of D'Arcy v. Ketchum, reported in the 11th of

Howard, this view is stated with great clearness. That was
an action in the Circuit Court of the United States for
Louisiana, brought upon a judgment rendered in New York
under a State statute, against two joint debtors, only one
of whom had been served with process, the other being a
nonresident of the State. The Circuit Court held the
judgment conclusive and binding upon the nonresident
not served with process, but this Court reversed its
decision, observing, that it was a familiar rule that
countries foreign to our own disregarded a judgment
merely against the person, where the defendant had not
been served with process nor had a day in court; that
national comity was never thus extended; that the
proceeding was deemed an illegitimate assumption of
power, and resisted as mere abuse; that no faith and
credit or force and effect had been given to such
judgments by any State of the Union, so far
Page 95 U. S. 730
as known; and that the State courts had uniformly, and in
many instances, held them to be void. "The international
law," said the court,

"as it existed among the States in 1790, was that a

and Federal courts, where attempts have been made

judgment rendered in one State, assuming to bind the

under the act of Congress to give effect in one State to

person of a citizen of another, was void within the foreign

personal judgments rendered in another State against

State, when the defendant had not been served with

nonresidents,

process or voluntarily made defence, because neither the

substituted service by publication, or in some other form,

legislative jurisdiction nor that of courts of justice had

it has been held, without an exception, so far as we are

binding force."

aware, that such judgments were without any binding

without

service

upon

them,

or

upon

force except as to property, or interests in property,

And the Court held that the act of Congress did not intend

within the State, to reach and affect which was the object

to declare a new rule, or to embrace judicial records of

of the action in which the judgment was rendered, and

this description. As was stated in a subsequent case, the

which property was brought under control of the court in

doctrine of this Court is that the act

connection with the process against the person. The

"was not designed to displace that principle of natural

justice which requires a person to have notice of a suit
before he can be conclusively bound by its result, nor
those rules of public law which protect persons and
property within one State from the exercise of jurisdiction

proceeding in such cases, though in the form of a

personal action, has been uniformly treated, where
service was not obtained,

and the

party did not

voluntarily
Page 95 U. S. 731

over them by another."

appear,
The Lafayette Insurance Co. v. French et al., 18 How. 404.
This whole subject has been very fully and learnedly
considered

in

the

recent

case

of Thompson

v.

Whitman, 18 Wall. 457, where all the authorities are

carefully reviewed and distinguished, and the conclusion
above stated is not only reaffirmed, but the doctrine is
asserted that the record of a judgment rendered in
another State may be contradicted as to the facts
necessary to give the court jurisdiction against its recital
of their existence. In all the cases brought in the State

as

effectual

and

binding

merely

as

proceeding in rem, and as having no operation beyond

the disposition of the property, or some interest therein.
And the reason assigned for this conclusion has been that
which we have already stated -- that the tribunals of one
State have no jurisdiction over persons beyond its limits,
and can inquire only into their obligations to its citizens
when exercising its conceded jurisdiction over their
property within its limits. In Bissell v. Briggs, decided by
the Supreme Court of Massachusetts as early as 1813,
the law is stated substantially in conformity with these
views. In that case, the court considered at length the

effect of the constitutional provision, and the act of

to the defendant, accompanied with a summons to

Congress mentioned, and after stating that, in order to

appear, served on his wife after she had left her place in

entitle the judgment rendered in any court of the United

Massachusetts. The court held that

States to the full faith and credit mentioned in the

Constitution, the court must have had jurisdiction not
only of the cause, but of the parties, it proceeded to
illustrate its position by observing, that, where a debtor
living in one State has goods, effects, and credits in
another, his creditor living in the other State may have
the property attached pursuant to its laws, and, on
recovering judgment, have the property applied to its
satisfaction, and that the party in whose hands the
property was would be protected by the judgment in the
State of the debtor against a suit for it, because the court
rendering the judgment had jurisdiction to that extent;
but that, if the property attached were insufficient to
satisfy the judgment, and the creditor should sue on that
judgment in the State of the debtor, he would fail
because the defendant was not amenable to the court
rendering the judgment. In other words, it was held that
over the property within the State the court had
jurisdiction by the attachment, but had none over his
person, and that any determination of his liability, except
so far as was necessary for the disposition of the
property, was invalid.

Page 95 U. S. 732
the attachment bound only the property attached as a
proceeding in rem, and

that

it could not

bind the

defendant, observing, that to bind a defendant personally

when he was never personally summoned or had notice
of the proceeding would be contrary to the first principles
of justice, repeating the language in that respect of Chief
Justice DeGrey, used in the case of Fisher v. Lane, 3 Wils.
297, in 1772. See also Borden v. Fitch, 15 Johns. (N. Y.)
121, and the cases there cited, and Harris v. Hardeman
et al., 14 How. 334. To the same purport, decisions are
found in all the State courts. In several of the cases, the
decision has been accompanied with the observation that
a personal judgment thus recovered has no binding force
without the State in which it is rendered, implying that, in
such State, it may be valid and binding. But if the court
has no jurisdiction over the person of the defendant by
reason

of

authority

his
to

nonresidence,

pass

upon

his

and

consequently

personal

rights

no
and

obligations; if the whole proceeding, without service upon

him or his appearance, is coram non judiceand void; if to

In Kilbourn v. Woodworth, 5 Johns. (N.Y.) 37, an action of

hold a defendant bound by such a judgment is contrary

debt was brought in New York upon a personal judgment

to the first principles of justice -- it is difficult to see how

recovered in Massachusetts. The defendant in that

the judgment can legitimately have any force within the

judgment was not served with process, and the suit was

State. The language used can be justified only on the

commenced by the attachment of a bedstead belonging

ground that there was no mode of directly reviewing such

judgment or impeaching its validity within the State

be directly questioned, and their enforcement in the State

where rendered, and that therefore it could be called in

resisted, on the ground that proceedings in a court of

question only when its enforcement was elsewhere

justice to determine the personal rights and obligations of

attempted. In later cases, this language is repeated with

parties over whom that court has no jurisdiction do not

less

be

constitute due process of law. Whatever difficulty may be

considered, as it always ought to have been, that a

experienced in giving to those terms a definition which

judgment which can be treated in any State of this Union

will

as contrary to the first principles of justice, and as an

affecting private rights, and exclude such as is forbidden,

absolute

any

there can be no doubt of their meaning when applied to

jurisdiction of the tribunal over the party, is not entitled

judicial proceedings. They then mean a course of legal

to any respect in the State where rendered. Smith v.

proceedings according to those rules and principles which

McCutchen, 38 Mo. 415; Darrance v. Preston, 18 Iowa,

have been established in our systems of jurisprudence for

396; Hakes v. Shupe, 27 id. 465;Mitchell's Administrator

the protection and enforcement of private rights. To give

v. Gray, 18 Ind. 123.

such proceedings any validity, there must be a tribunal

frequency

than

nullity,

formerly,

because

it

beginning

rendered

to

without

embrace

every

permissible

exertion

of

power

competent by its constitution -- that is, by the law of its

Be that as it may, the courts of the United States are not

creation -- to pass upon the subject matter of the suit;

required to give effect to judgments of this character

and if that involves merely a determination of the

when any right is claimed under them. Whilst they are

personal liability of the defendant, he must be brought

not foreign tribunals in their relations to the State courts,

within its jurisdiction by service of process within the

they are tribunals

State, or his voluntary appearance.

Page 95 U. S. 733

Except in cases affecting the personal status of the

of a different sovereignty, exercising a distinct and

independent jurisdiction, and are bound to give to the
judgments of the State courts only the same faith and
credit which the courts of another State are bound to give
to them.
Since the adoption of the Fourteenth Amendment to the
Federal Constitution, the validity of such judgments may

plaintiff and cases in which that mode of service may be

considered to have been assented to in advance, as
hereinafter mentioned, the substituted service of process
by publication, allowed by the law of Oregon and by
similar laws in other States, where actions are brought
against

nonresidents,

connection

with

is

process

effectual
against

only
the

where,
person

in
for

commencing the action, property in the State is brought

under the control of the court, and subjected to its

disposition by process adapted to that purpose, or where

instance, and to their jurisdiction, and not to proceedings

the judgment is sought as a means of reaching such

in an appellate tribunal to review the action of such

property or affecting some interest therein; in other

courts. The latter may be taken upon such notice,

words,

personal or constructive, as the State creating the

proceeding in rem. As stated by Cooley in his Treatise on

tribunal may provide. They are considered as rather a

Constitutional Limitations 405, for any other purpose than

continuation

to subject the property of a nonresident to valid claims

commencement of a new action. Nations et al. v. Johnson

against

et al., 24 How. 195.

Page 95 U. S. 734

It follows from the views expressed that the personal

where

the

action

is

in

the

nature

of

of

the

original

litigation

than

the

judgment recovered in the State court of Oregon against

him in the State, "due process of law would require

the plaintiff herein, then a nonresident of the State, was

appearance or personal service before the defendant

without any validity, and did not authorize a sale of the

could be personally bound by any judgment rendered."

property in controversy.

It is true that, in a strict sense, a proceeding in rem is one

To prevent any misapplication of the views expressed in

taken directly against property, and has for its object the

this opinion, it is proper to observe that we do not mean

disposition of the property, without reference to the title

to assert by anything we have said that a State may not

of individual claimants; but, in a larger and more general

authorize proceedings to determine the status of one of

sense, the terms are applied to actions between parties

its citizens towards a nonresident which would be binding

where the direct object is to reach and dispose of

within the State, though made without service of process

property owned by them, or of some interest therein.

or personal notice to the nonresident. The jurisdiction

Such are cases commenced by attachment against the

which every State possesses to determine the civil status

property of debtors, or instituted to partition real estate,

and capacities of all its inhabitants involves authority to

foreclose a mortgage, or enforce a lien. So far as they

prescribe the conditions on which proceedings affecting

affect property in the State, they are substantially

them may be commenced and carried on within its

proceedings in rem in the broader sense which we have

territory. The State, for example, has absolute

mentioned.
Page 95 U. S. 735
It is hardly necessary to observe that, in all we have said,
we have had reference to proceedings in courts of first

right to prescribe the conditions upon which the marriage

"It is not contrary to natural justice that a man who has

relation between its own citizens shall be created, and

agreed to receive a particular mode of notification of

the causes for which it may be dissolved. One of the

legal proceedings should be bound by a judgment in

parties guilty of acts for which, by the law of the State, a

which that particular mode of notification has been

dissolution may be granted may have removed to a State

followed, even though he may not have actual notice of

where no dissolution is permitted. The complaining party

them."

would, therefore, fail if a divorce were sought in the State

of the defendant; and if application could not be made to

See also The Lafayette Insurance Co. v. French et al., 18

the tribunals of the complainant's domicile in such case,

How. 404, and Gillespie v. Commercial Mutual Marine

and proceedings be there instituted without personal

Insurance Co., 12 Gray (Mass.), 201. Nor do we doubt

service of process or personal notice to the offending

that a State, on creating corporations or other institutions

party, the injured citizen would be without redress. Bish.

for pecuniary or charitable purposes, may provide a mode

Marr. and Div., sect. 156.

in which their conduct may be investigated, their

obligations enforced, or their charters revoked, which

Neither do we mean to assert that a State may not

shall require other than personal service upon their

require a nonresident entering into a partnership or

officers or members. Parties becoming members of such

association

corporations or institutions would hold their

within

its

limits,

or

making

contracts

enforceable there, to appoint an agent or representative

in the State to receive service of process and notice in
legal

proceedings

instituted

with

respect

to

such

partnership, association, or contracts, or to designate a

place where such service may be made and notice given,
and

provide,

upon

their

failure,

to

make

such

appointment or to designate such place that service may

be made upon a public officer designated for that
purpose, or in some other prescribed way, and that
judgments rendered upon such service may not be
binding upon the nonresidents both within and without
the State. As was said by the Court of Exchequer in Vallee
v. Dumergue, 4 Exch. 290,

Page 95 U. S. 736
interest subject to the conditions prescribed by law. Copin
v. Adamson, Law Rep. 9 Ex. 345.
In the present case, there is no feature of this kind, and
consequently no consideration of what would be the
effect of such legislation in enforcing the contract of a
nonresident can arise. The question here respects only
the validity of a money judgment rendered in one State in
an action upon a simple contract against the resident of
another without service of process upon him or his
appearance therein.

Judgment affirmed.

was obtained against Neff, the present plaintiff, and the

land in question, situate in Multnomah County, was

MR. JUSTICE HUNT dissenting.

bought by the defendant Pennoyer at a sale upon the

I am compelled to dissent from the opinion and judgment

of the court, and, deeming the question involved to be

judgment in such suit. This court now holds that, by

reason of the absence of a personal service of

important, I take leave to record my views upon it.

Page 95 U. S. 737

The judgment of the court below was placed upon the

the summons on the defendant, the Circuit Court of

ground that the provisions of the statute were not

Oregon had no jurisdiction, its judgment could not

complied with. This is of comparatively little importance,

authorize the sale of land in said county, and, as a

as it affects the present case only. The judgment of this

necessary result, a purchaser of land under it obtained no

Court is based upon the theory that the legislature had no

title; that, as to the former owner, it is a case of depriving

power to pass the law in question; that the principle of

a person of his property without due process of law.

the statute is vicious, and every proceeding under it void.

It, therefore, affects all like cases, past and future, and in

In my opinion, this decision is at variance with the long

every State.

established practice under the statutes of the States of

this Union, is unsound in principle, and, I fear, may be

The precise case is this: a statute of Oregon authorizes

disastrous in its effects. It tends to produce confusion in

suits to be commenced by the service of a summons. In

titles which have been obtained under similar statutes in

the case of a nonresident of the State, it authorizes the

existence for nearly a century; it invites litigation and

service of the summons to be made by publication for not

strife, and overthrows a well settled rule of property.

less than six weeks, in a newspaper published in the

county where the action is commenced. A copy of the

The result of the authorities on the subject, and the

summons must also be sent by mail, directed to the

sound conclusions to be drawn from the principles which

defendant at his place of residence, unless it be shown

should govern the decision, as I shall endeavor to show,

that

are these:--

the

residence

is

not

known

and

cannot

be

ascertained. It authorizes a judgment and execution to be

suit

A sovereign State must necessarily have such control

commenced by one Mitchell in the Circuit Court of

over the real and personal property actually being within

obtained

in

such

proceeding.

Judgment

in

Multnomah County, where the summons was thus served,

its limits, as that it may subject the same to the payment

upon attachment as the commencement of a suit which

of debts justly due to its citizens.

shall be carried into judgment and execution, upon which

it shall then be sold, or whether it shall be sold upon an

This result is not altered by the circumstance that the

execution and judgment without such preliminary seizure,

owner of the property is nonresident, and so absent from

is a matter not of constitutional power, but of municipal

the State that legal process cannot be served upon him

regulation only.

personally.
To say that a sovereign State has the power to ordain that
Personal notice of a proceeding by which title to property

the property of nonresidents within its territory may be

is passed is not indispensable; it is competent to the

subjected to the payment of debts due to its citizens, if

State to authorize substituted service by publication or

the property is levied upon at the commencement of a

otherwise, as the commencement of a suit against

suit, but that it has not such power if the property is

nonresidents, the judgment in which will authorize the

levied upon at the end of the suit, is a refinement and a

sale of property in such State.

depreciation of a great general principle that, in my

It belongs to the legislative power of the State to

judgment, cannot be sustained.

determine what shall be the modes and means proper to

A reference to the statutes of the different States, and to

be adopted to give notice to an absent defendant of the

the statutes of the United States, and to the decided

commencement of a suit; and if they are such as are

cases, and a consideration of the principles on which they

reasonably likely to communicate to him information of

stand, will more clearly exhibit my view of the question.

the proceeding against him, and are in good faith

designed

to

give

him

such

information,

and

an

The statutes are of two classes: first, those which

opportunity to defend is provided for him in the event of

authorize the commencement of actions by publication,

his appearance in the suit, it is not competent to the

accompanied by an attachment which is levied upon

judiciary to declare that such proceeding is void as not

property, more or less, of an absent debtor; second,

being by due process of law.

those giving the like mode of commencing a suit without

an attachment.

Whether the property of such nonresident shall be seized

The
Page 95 U. S. 738

statute

of

Oregon

summons, supra, p. 95 U.

relating
S.

to

publication

of

718, under which the

question arises, is nearly a transcript of a series of

provisions contained in the New York statute, adopted

The statute of New York, before the Code, respecting

thirty

the

proceedings in chancery where absent debtors are

commencement of a suit against a nonresident by the

parties, had long been in use in that State, and was

publication of an order for his appearance, for a time not

adopted in all cases of chancery jurisdiction. Whenever a

less than six weeks, in such newspapers as shall be most

defendant resided out of the State, his appearance might

likely to give notice to him, and the deposit of a copy of

be compelled by publication in the manner pointed out. A

the summons and complaint in the post office, directed to

decree might pass against him, and performance be

him at his residence, if it can be ascertained; and

compelled by sequestration of his real or personal

provides for the allowance to defend the action before

property, or by causing possession of specific property to

judgment, and within seven years after its rendition, upon

be delivered, where that relief is sought. T he relief was

good cause shown, and that, if the defence be successful,

not confined to cases of mortgage foreclosure, or where

restitution shall be ordered. It then declares: "But the title

there was a specific claim upon the property, but

to property sold under such judgment to a purchaser in

included cases requiring the payment of money as well. 2

good faith shall not be thereby affected." Code, sects. 34,

Edm.Rev.Stat. N.Y., pp. 193-195; 186, m.

years

since.

The

latter

authorizes

35; 5 Edm.Rev.Stat. of N.Y., pp. 37-39.

I doubt not that many valuable titles are now held by
Provisions similar in their effect, in authorizing the

virtue of the provisions of these statutes.

commencement of suits by attachment against absent

debtors, in

The statute of California authorizes the service of a

summons on a nonresident defendant by publication,

Page 95 U. S. 739

permitting him to come in and defend upon the merits

within one year after the entry of judgment. Code, sects.

which all of the property of the absent debtor, real and

10,412, 10,473. In its general character, it is like the

personal, not merely that seized upon the attachment, is

statutes of Oregon and New York already referred to.

placed under the control of trustees, who sell it for the

benefit of all the creditors, and make just distribution

The Code of Iowa, sect. 2618, that of Nevada, sect. 1093,

thereof, conveying absolute title to the property sold

and that of Wisconsin, are to the same general effect. The

have been upon the statute book of New York for more

Revised Statutes of Ohio, sects. 70, 75, 2 Swan &

than sixty years. 2 id., p. 2 and following; 1 Rev.Laws,

Critchfield, provide for a similar publication, and that the

1813, p. 157.

defendant may come in to defend within five years after

the entry of the judgment, but that the title to property

held by any purchaser in good faith under the judgment

may be substituted for personal service when the

shall not be affected thereby.

defendant cannot be found in suits for partition, divorce,

by attachment, for the foreclosure of mortgages and

The attachment laws of New Jersey, Nixon Dig. (4th ed.),

deeds of trust, and for the enforcement of mechanics'

p. 55, are like those of New York already quoted, by which

liens and all other liens against real or personal property,

title may be transferred to all the property of a

and in all actions at law or in equity having for their

nonresident

immediate object the enforcement or establishment of

debtor.

And

the

provisions

of

the

Pennsylvania statute regulating

Page 95 U. S. 740
proceedings in equity, Brightly's Purden's Dig., p. 5988,
sects. 51, 52, give the same authority in substance, and

any lawful right, claim, or demand to or against any real

or personal property within the jurisdiction of the court.
A following section points out the mode of proceeding,
and closes in these words:

the same result is produced as under the New York

"The decree, besides subjecting the thing upon which the

statute.

lien has attached to the satisfaction of the plaintiff's

Without going into a wearisome detail of the statutes of

the various States, it is safe to say that nearly every
State in the Union provides a process by which the lands
and other property of a nonresident debtor may be

demand against the defendant, shall adjudge that the

plaintiff recover his demand against the defendant, and
that he may have execution thereof as at law."
Sect. 10.

subjected to the payment of his debts, through a

judgment or decree against the owner, obtained upon a

A formal judgment against the debtor is thus authorized

substituted service of the summons or writ commencing

by means of which any other property of the defendant

the action.

within the jurisdiction of the court, in addition to that

which is the subject of the lien, may be sold, and the title

The principle of substituted service is also a rule of

transferred to the purchaser.

property under the statutes of the United States.

All

these

statutes

are

now

adjudged

to

be

The act of Congress "to amend the law of the District of

unconstitutional and void. The titles obtained under them

Columbia in relation to judicial proceedings therein,"

are not of the value

approved Feb. 23, 1867, 14 Stat. 403, contains the same

general provisions. It enacts (sect. 7) that publication

Page 95 U. S. 741

of the paper on which they are recorded, except where a

against him there; but, beyond this, due process of law

preliminary attachment was issued.

would require appearance or personal service before the

defendant could be personally bound by any judgment

Some of the statutes and several of the authorities I cite

rendered."

go further than the present case requires. In this case,

property lying in the State where the suit was brought,

The learned author does not make it a condition that

owned by the nonresident debtor, was sold upon the

there should be a preliminary seizure of the property by

judgment against him, and it is on the title to that

attachment; he lays down the rule that all a person's

property that the controversy turns.

property in a State may be subjected to all valid claims

there existing against him.

The question whether, in a suit commenced like the

present one, a judgment can be obtained which, if sued

The objection now made that suits commenced by

upon in another State, will be conclusive against the

substituted service, as by publication, and judgments

debtor, is not before us; nor does the question arise as to

obtained without actual notice to the debtor, are in

the faith and credit to be given in one State to a

violation of that constitutional provision that no man shall

judgment recovered in another. The learning on that

be deprived of his property "without due process of law,"

subject is not applicable. The point is simply whether land

has often been presented.

lying in the same State may be subjected to process at

the end of a suit thus commenced.

In Matter of the Empire City Bank, 18 N.Y. 199, which

It is here necessary only to maintain the principle laid

Page 95 U. S. 742

down by Judge Cooley in his work on Constitutional

Limitations, p. 404, and cited by Mr. Justice Field in Galpin
v. Page, 3 Sawyer 93, in these words:

was a statutory proceeding to establish and to enforce

the responsibility of the stockholders of a banking
corporation, and the proceedings in which resulted in a

"The fact that process was not personally served is a

personal judgment against the stockholders for the

conclusive objection to the judgment as a personal claim,

amount found due, the eminent and learned Judge Denio,

unless the defendant caused his appearance to be

speaking as the organ of the Court of Appeals, says:

entered in the attachment proceedings. Where a party

has property in a State, and resides elsewhere, his
property is justly subject to all valid claims that may exist

"The notice of hearing is to be personal, or by service at

the residence of the parties who live in the county, or by
advertisement as to others. It may therefore happen that

some of the persons who are made liable will not have

require personal notice in order to constitute a legal

received actual notice, and the question is whether

proceeding due process of law, it then belongs to the

personal service of process or actual notice to the party is

legislature to determine whether the case calls for this

essential to constitute due process of law. We have not

kind of exceptional legislation, and what manner of

been referred to any adjudication holding that no man's

constructive notice shall be sufficient to reasonably

right of property can be affected by judicial proceedings

apprise the party proceeded against of the legal steps

unless he have personal notice. It may be admitted that a

which are taken against him. "

statute which should authorize any debt or damages to

be

adjudged

against

person

upon

purely ex

parte proceeding, without a pretence of notice or any

provision for defending, would be a violation of the
Constitution, and be void; but where the legislature has
prescribed a kind of notice by which it is reasonably
probable that the party proceeded against will be
apprised of what is going on against him, and an
opportunity is afforded him to defend, I am of the opinion
that the courts have not the power to pronounce the
proceeding illegal. The legislature has uniformly acted
upon that understanding of the Constitution."

commented upon, after which he proceeds:

but

it

may

possibly

"An approved definition of due process of law is 'law in its

regular administration through courts of justice.' 2 Kent
Com. 13. It need not be a legal proceeding according to
the course of the common law, neither must there be
personal notice to the party whose property is in
question. It is sufficient if a kind of notice is provided by
which it is reasonably probable that the party proceeded
and an opportunity afforded him to defend."
The

"Various prudential regulations are made with respect to

remedies;

In Happy v. Mosher, 48 id. 313, the court say:

against will be apprised of what is going on against him,

Numerous provisions of the statutes of the State are

these

Page 95 U. S. 743

happen,

notwithstanding all these precautions, that a citizen who

owes nothing, and has done none of the acts mentioned
in the statute, may be deprived of his estate without any
actual knowledge of the process by which it has been
taken from him. If we hold, as we must in order to sustain
this legislation, that the Constitution does not positively

same

language

Gregg, 12 id. 202,

is
and

used

in Westervelt

in Campbell

v.
v.

Evans, 45 id. 356. Campbell v. Evans and The Empire City

Bank are cases not of proceedings against property to
enforce a lien or claim, but, in each of them, a personal
judgment in damages was rendered against the party
complaining.

It is undoubtedly true, that, in many cases where the

this suggestion, but the judgment is in harmony with

question respecting due process of law has arisen, the

those principles. In the case as reported in this Court, it

case in hand was that of a proceeding in rem. It is true

was held that the title of the purchaser under a decree

also, as is asserted, that the process of a State cannot be

against a nonresident infant was invalid, for two reasons:

supposed to run beyond its own territory. It is equally

1st, that there was no jurisdiction of the proceeding

true, however, that, in every instance where the question

under the statute of California, on account of the entire

has been presented, the validity of substituted service,

absence of an affidavit of nonresidence, and of diligent

which is used to subject property within the State

inquiry for the residence of the debtor; 2d, the absence of

belonging to a nonresident to a judgment obtained by

any order for publication in Eaton's case -- both of which

means thereof has been sustained. I have found no case

are conditions precedent to the jurisdiction of the court to

in which it is adjudged that a statute must require a

take any action on the subject. The title was held void,

preliminary seizure of such property as necessary to the

also, for the reason that the decree under which it was

validity of the proceeding against it, or that there must

obtained had been reversed in the State court, and the

have been a previous specific lien upon it; that is, I have

title was not taken at the sale, nor held then by a

found no case where such has been the judgment of the

purchaser in good faith, the purchase being made by one

court upon facts making necessary the decision of the

of the attorneys in the suit, and the title being transferred

point. On the contrary, in the case of the attachment laws

to his law partner after the reversal of the decree. The

of New York and of New Jersey, which distribute all of the

court held that there was a failure of jurisdiction in the

nonresident's property, not merely that levied on by the

court under which the plaintiff claimed title, and that he

attachment, and in several of the reported cases already

could not recover. The learned justice who delivered the

referred to, where the judgment was sustained, neither of

opinion in the Circuit Court and in this Court expressly

these preliminary facts existed.

affirms the authority of a State over persons not only, but

property as well, within its limits, and this by means of a

The case of Galpin v. Page, reported in 18 Wall. 350 and

substituted service. The judgment so obtained, he insists,

again in 3 Sawyer 93, is cited in hostility to the views I

can properly be used as a means of reaching property

have expressed. There may be general expressions which

within the State, which is thus brought under the control

will justify

of the court and subjected to its judgment. This is the

Page 95 U. S. 744

precise point in controversy in the present action.

The case of Cooper v. Reynolds, 10 Wall. 308, is cited for
the same purpose. There, the judgment of the court

below, refusing to give effect to a judgment obtained

it should not be necessary to name the defendants in the

upon an order of publication against a nonresident, was

suits, but the words "owners of the half-breed lands lying

reversed in this Court. The suit was commenced, or

in Lee County" should be a sufficient designation of the

immediately accompanied (it is not clear which), by an

defendants in such suits; and it provided that the trials

attachment which was levied upon the real estate sold,

should be by the court, and not by a jury. It will be

and for the recovery of which this action was brought.

observed that the lands were not only within the limits of

This Court sustained the title founded upon the suit

the territory of Iowa, but that all the Indians who were

commenced against the nonresident by attachment. In

made defendants under the name mentioned were also

the opinion delivered in that case, there may be remarks,

residents of Iowa, and, for aught that appears to the

by way of argument or illustration, tending to show that a

contrary, of the very county of Lee in which the

judgment obtained in a suit not commenced by the levy

proceeding was taken. Nonresidence was not a fact in the

of an attachment will not give title to land purchased

case. Moreover, they were Indians, and, presumptively,

under it. They are,

not citizens of any State, and the judgments under which

the lands were sold were rendered by the commissioners

Page 95 U. S. 745

for their own services under the act.

however, extrajudicial, the decision itself sustaining the

The court found abundant reasons, six in number, for

judgment

refusing to sustain the title thus obtained. The act was

obtained

under

the

State

statute

by

publication.
Webster v. Reid, 11 How. 437, is also cited. There, the
action involved the title to certain lands in the State of
Iowa, being lands formerly belonging to the half-breeds of

apparently an attempt dishonestly to obtain the Indian

title, and not intended to give a substitution for a
personal service which would be likely, or was reasonably
designed, to reach the persons to be affected.

the Sac and Fox tribes; and title was claimed against the

The case of Voorhees v. Jackson, 10 Pet. 449, affirmed the

Indian right under the statutes of June 2, 1838, and

title levied under the attachment laws of Ohio, and laid

January, 1839. By these statutes, commissioners were

down the principle of assuming that all had been rightly

appointed who were authorized to hear claims for

done by a court having general jurisdiction of the subject

accounts against the Indians, and commence actions for

matter.

the same, giving a notice thereof of eight weeks in the

Iowa "Territorial Gazette," and to enter up judgments

In Cooper v. Smith, 25 Iowa, 269, it is said that where no

which should be a lien on the lands. It was provided that

process is served on the defendant, nor property

attached,

nor

garnishee

charged,

nor

appearance

entered, a judgment based

In Drake on Attachment, the rule is laid down in very

general language; but none of the cases cited by him will
control the present case. They are the following:--

Page 95 U. S. 746
Eaton v. Bridger, 33 N. H. 228, was decided upon the
on a publication of the pendency of the suit will be void,

peculiar terms of the New Hampshire statute, which

and may be impeached, collaterally or otherwise, and

forbids the entry of a judgment unless the debtor was

forms no bar to a recovery in opposition to it, nor any

served with process, or actually appeared and answered

foundation for a title claimed under it. The language is

in the suit. The court say the judgment was "not only

very general, and goes much beyond the requirement of

unauthorized by law, but rendered in violation of its

the case, which was an appeal from a personal judgment

express provisions."

obtained by publication against the defendant, and

where, as the court say, the petition was not properly

Johnson v. Dodge was a proceeding in the same action to

verified. All that the court decided was that this judgment

obtain a reversal on appeal of the general judgment, and

should be reversed. This is quite a different question from

did not arise upon a contest for property sold under the

the one before us. Titles obtained by purchase at a sale

judgment. Carleton

upon

Co., 35 id. 162, and Bruce v. Cloutman, 45 id. 37, are to

an

although

erroneous
the

judgment

judgment

are

itself

generally
be

good,

afterwards

v.

Washington

Insurance

the same effect and upon the same statute.

reversed. McGoon v. Scales, 9 Wall. 311.

Smith v. McCutchen, 38 Mo. 415, was a motion in the
In Darrance v. Preston, 18 Iowa, 396, the distinction is

former suit to set aside the execution by a garnishee, and

pointed out between the validity of a judgment as to the

it was held that the statute was intended to extend to

amount realized from the sale of property within the

that class of cases. Abbott v. Shepard, 44 id. 273, is to

jurisdiction of the court and its validity beyond that

the same effect, and is based upon Smith v. McCutchen,

amount. Picquet v. Swan, 5 Mas. 35; Bissell v. Briggs, 9

supra.

Mass. 462;Ewer v. Coffin, 1 Cush. (Mass.) 23, are cited,

but neither of them in its facts touches the question
before us.

Page 95 U. S. 747
So, in Eastman v. Wadleigh, 65 Me. 251, the question
arose in debt on the judgment, not upon a holding of land
purchased under the judgment. It was decided upon the

express language of the statute of Maine, strongly

"The essential fact on which the publication is made to

implying the power of the legislature to make it

depend is property of the defendant in the State, and not

otherwise, had they so chosen.

whether it has been attached. . . . There is no magic

about the writ [of attachment] which should make it the

It is said that the case where a preliminary seizure has

exclusive remedy. The same legislative power which

been made, and jurisdiction thereby conferred, differs

devised it can devise some other, and declare that it shall

from that where the property is seized at the end of the

have the same force and effect. The particular means to

action, in this: in the first case, the property is supposed

be used are always within the control of the legislature,

to be so near to its owner that, if seizure is made of it, he

so that the end be not beyond the scope of legislative

will be aware of the fact, and have his opportunity to

power."

defend, and jurisdiction of the person is thus obtained.

This, however, is matter of discretion and of judgment

If the legislature shall think that publication and deposit

only. Such seizure is not in itself notice to the defendant,

in the post office are likely to give the notice, there seems

and it is not certain that he will by that means receive

to be

notice. Adopted as a means of communicating it, and

although a very good means, it is not the only one, nor
necessarily better than a publication of the pendency of
the suit, made with an honest intention to reach the
debtor. Who shall assume to say to the legislature that, if
it authorizes a particular mode of giving notice to a
debtor, its action may be sustained, but, if it adopts any
or all others, its action is unconstitutional and void? The
rule is universal that modes, means, questions of
expediency or necessity are exclusively within the
judgment of the legislature, and that the judiciary cannot

Page 95 U. S. 748
nothing in the nature of things to prevent their adoption
in lieu of the attachment. The point of power cannot be
thus controlled.
That a State can subject land within its limits belonging to
nonresident owners to debts due to its own citizens as it
can legislate upon all other local matters -- that it can
prescribe the mode and process by which it is to be
reached -- seems to me very plain.

review them. This has been so held in relation to a bank

of the United States, to the legal tender act, and to cases

I am not willing to declare that a sovereign State cannot

arising under other provisions of the Constitution.

subject the land within its limits to the payment of debts

due to its citizens, or that the power to do so depends

In Jarvis v. Barrett, 14 Wis. 591, such is the holding. The

court say:

upon the fact whether its statute shall authorize the

property to be levied upon at the commencement of the

suit or at its termination. This is a matter of detail, and I
am of opinion that, if reasonable notice be given, with an
opportunity to defend when appearance is made, the
question of power will be fully satisfied.
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[G.R. No. 103493. June 19, 1997]

SECOND DIVISION
PHILSEC
INVESTMENT
CORPORATION,
BPIINTERNATIONAL FINANCE LIMITED, and ATHONA
HOLDINGS, N.V., petitioners, vs. THE HONORABLE
COURT OF APPEALS, 1488, INC., DRAGO DAIC,
VENTURA O. DUCAT, PRECIOSO R. PERLAS, and
WILLIAM H. CRAIG, respondents.
DECISION
MENDOZA, J.:
This case presents for determination the conclusiveness
of a foreign judgment upon the rights of the parties under
the same cause of action asserted in a case in our local
court. Petitioners brought this case in the Regional Trial
Court of Makati, Branch 56, which, in view of the
pendency at the time of the foreign action, dismissed
Civil Case No. 16563 on the ground of litis pendentia, in
addition to forum non conveniens. On appeal, the Court

of Appeals affirmed. Hence this petition for review

on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O.
Ducat obtained separate loans from petitioners Ayala
International Finance Limited (hereafter called AYALA)
[1]
and Philsec Investment Corporation (hereafter called
PHILSEC) in the sum of US$2,500,000.00, secured by
shares of stock owned by Ducat with a market value
of P14,088,995.00. In order to facilitate the payment of
the loans, private respondent 1488, Inc., through its
president, private respondent Drago Daic, assumed
Ducats obligation under an Agreement, dated January 27,
1983, whereby 1488, Inc. executed a Warranty Deed with
Vendors Lien by which it sold to petitioner Athona
Holdings, N.V. (hereafter called ATHONA) a parcel of land
in Harris County, Texas, U.S.A., for US$2,807,209.02,
while PHILSEC and AYALA extended a loan to ATHONA in
the amount of US$2,500,000.00 as initial payment of the
purchase price. The balance of US$307,209.02 was to be
paid by means of a promissory note executed by ATHONA
in favor of 1488, Inc. Subsequently, upon their receipt of
the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA
released Ducat from his indebtedness and delivered to
1488, Inc. all the shares of stock in their possession
belonging to Ducat.
As ATHONA failed to pay the interest on the balance of
US$307,209.02, the entire amount covered by the note
became due and demandable. Accordingly, on October
17, 1985, private respondent 1488, Inc. sued petitioners
PHILSEC, AYALA, and ATHONA in the United States for
payment of the balance of US$307,209.02 and for
damages for breach of contract and for fraud allegedly
perpetrated by petitioners in misrepresenting the
marketability of the shares of stock delivered to 1488,
Inc. under the Agreement. Originally instituted in the
United States District Court of Texas, 165th Judicial
District, where it was docketed as Case No. 85-57746, the
venue of the action was later transferred to the United
States District Court for the Southern District of Texas,

where 1488, Inc. filed an amended complaint, reiterating

its allegations in the original complaint. ATHONA filed an
answer
with
counterclaim,
impleading
private
respondents herein as counterdefendants, for allegedly
conspiring in selling the property at a price over its
market value. Private respondent Perlas, who had
allegedly appraised the property, was later dropped as
counterdefendant. ATHONA sought the recovery of
damages and excess payment allegedly made to 1488,
Inc. and, in the alternative, the rescission of sale of the
property. For their part, PHILSEC and AYALA filed a motion
to dismiss on the ground of lack of jurisdiction over their
person, but, as their motion was denied, they later filed a
joint
answer
with
counterclaim
against
private
respondents and Edgardo V. Guevarra, PHILSECs own
former president, for the rescission of the sale on the
ground that the property had been overvalued. On March
13, 1990, the United States District Court for the
Southern District of Texas dismissed the counterclaim
against Edgardo V. Guevarra on the ground that it was
frivolous and [was] brought against him simply to
humiliate and embarrass him. For this reason, the U.S.
court imposed so-called Rule 11 sanctions on PHILSEC
and AYALA and ordered them to pay damages to
Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was
pending in the United States, petitioners filed a complaint
For Sum of Money with Damages and Writ of Preliminary
Attachment against private respondents in the Regional
Trial Court of Makati, where it was docketed as Civil Case
No. 16563. The complaint reiterated the allegation of
petitioners in their respective counterclaims in Civil
Action No. H-86-440 of the United States District Court of
Southern Texas that private respondents committed fraud
by selling the property at a price 400 percent more than
its true value of US$800,000.00. Petitioners claimed that,
as a result of private respondents fraudulent
misrepresentations, ATHONA, PHILSEC, and AYALA were
induced to enter into the Agreement and to purchase the
Houston property. Petitioners prayed that private
respondents be ordered to return to ATHONA the
excess payment of US$1,700,000.00 and to pay
damages. On April 20, 1987, the trial court issued a writ

of preliminary attachment against the real and personal

properties of private respondents.[2]
Private respondent Ducat moved to dismiss Civil Case No.
16563 on the grounds of (1) litis pendentia, vis-a-vis Civil
Action No. H-86-440 filed by 1488, Inc. and Daic in the
U.S., (2) forum non conveniens, and (3) failure of
petitioners PHILSEC and BPI-IFL to state a cause of action.
Ducat contended that the alleged overpricing of the
property prejudiced only petitioner ATHONA, as buyer,
but not PHILSEC and BPI-IFL which were not parties to the
sale and whose only participation was to extend financial
accommodation to ATHONA under a separate loan
agreement. On the other hand, private respondents 1488,
Inc. and its president Daic filed a joint Special
Appearance and Qualified Motion to Dismiss, contending
that the action being in personam, extraterritorial service
of summons by publication was ineffectual and did not
vest the court with jurisdiction over 1488, Inc., which is a
non-resident foreign corporation, and Daic, who is a nonresident alien.
On January 26, 1988, the trial court granted Ducats
motion to dismiss, stating that the evidentiary
requirements of the controversy may be more suitably
tried before the forum of the litis pendentia in the U.S.,
under the principle in private international law of forum
non conveniens, even as it noted that Ducat was not a
party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and
Daics motion to dismiss. On March 9, 1988, the trial
court[3] granted the motion to dismiss filed by 1488, Inc.
and Daic on the ground of litis pendentia considering that
the main factual element of the cause of action in this
case which is the validity of the sale of real property in
the United States between defendant 1488 and plaintiff
ATHONA is the subject matter of the pending case in the
United States District Court which, under the doctrine
of forum non conveniens, is the better (if not exclusive)
forum to litigate matters needed to determine the
assessment and/or fluctuations of the fair market value of

real estate situated in Houston, Texas, U.S.A. from the

date of the transaction in 1983 up to the present and
verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over
1488, Inc. and Daic because they were non-residents and
the action was not an action in rem or quasi in rem, so
that
extraterritorial
service
of
summons
was
ineffective. The trial court subsequently lifted the writ of
attachment it had earlier issued against the shares of
stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that
the trial court erred in applying the principle of litis
pendentia and forum non conveniens and in ruling that it
had no jurisdiction over the defendants, despite the
previous attachment of shares of stocks belonging to
1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals [4] affirmed the
dismissal of Civil Case No. 16563 against Ducat, 1488,
Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago
Daic, while the defendants are Philsec, the Ayala
International Finance Ltd. (BPI-IFLs former name) and the
Athona Holdings, NV. The case at bar involves the same
parties. The transaction sued upon by the parties, in both
cases is the Warranty Deed executed by and between
Athona Holdings and 1488 Inc. In the U.S. case, breach of
contract and the promissory note are sued upon by 1488
Inc., which likewise alleges fraud employed by herein
appellants, on the marketability of Ducats securities
given in exchange for the Texas property. The recovery of
a sum of money and damages, for fraud purportedly
committed by appellees, in overpricing the Texas land,
constitute the action before the Philippine court, which
likewise stems from the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563
was an action in personam for the recovery of a sum of
money for alleged tortious acts, so that service of
summons by publication did not vest the trial court with

jurisdiction over 1488, Inc. and Drago Daic. The dismissal

of Civil Case No. 16563 on the ground of forum non
conveniens was likewise affirmed by the Court of Appeals
on the ground that the case can be better tried and
decided by the U.S. court:
The U.S. case and the case at bar arose from only one
main transaction, and involve foreign elements, to
wit: 1) the property subject matter of the sale is situated
in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident
foreign corporation; 3) although the buyer, Athona
Holdings, a foreign corporation which does not claim to
be doing business in the Philippines, is wholly owned by
Philsec, a domestic corporation, Athona Holdings is also
owned by BPI-IFL, also a foreign corporation; 4) the
Warranty Deed was executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER
ACTION BETWEEN THE SAME PARTIES FOR THE SAME
CAUSE (LITIS PENDENTIA) RELIED UPON BY THE
COURT OF APPEALS IN AFFIRMING THE TRIAL COURTS
DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO
RELIED UPON BY THE COURT OF APPEALS IN
AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF
THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS,
THE COURT OF APPEALS ERRED IN NOT HOLDING
THAT PHILIPPINE PUBLIC POLICY REQUIRED THE
ASSUMPTION, NOT THE RELINQUISHMENT, BY THE
TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE
CIVIL ACTION FOR THERE IS EVERY REASON TO
PROTECT AND VINDICATE PETITIONERS RIGHTS FOR
TORTIOUS OR WRONGFUL ACTS OR CONDUCT
PRIVATE RESPONDENTS (WHO ARE MOSTLY NONRESIDENT ALIENS) INFLICTED UPON THEM HERE IN
THE PHILIPPINES.

We will deal with these contentions in the order in which

they are made.
First. It is important to note in connection with the first
point that while the present case was pending in the
Court of Appeals, the United States District Court for the
Southern District of Texas rendered judgment [5] in the
case before it. The judgment, which was in favor of
private respondents, was affirmed on appeal by the
Circuit Court of Appeals.[6] Thus, the principal issue to be
resolved in this case is whether Civil Case No. 16536 is
barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment
to be pleaded as res judicata, a judgment admitting the
foreign decision is not necessary. On the other hand,
petitioners argue that the foreign judgment cannot be
given the effect of res judicata without giving them an
opportunity to impeach it on grounds stated in Rule 39,
50 of the Rules of Court, to wit: want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of
law or fact.
Petitioners contention is meritorious. While this Court has
given the effect of res judicata to foreign judgments in
several cases,[7] it was after the parties opposed to the
judgment had been given ample opportunity to repel
them on grounds allowed under the law. [8] It is not
necessary for this purpose to initiate a separate action or
proceeding for enforcement of the foreign judgment.
What is essential is that there is opportunity to challenge
the foreign judgment, in order for the court to properly
determine its efficacy. This is because in this jurisdiction,
with respect to actions in personam, as distinguished
from actions in rem, a foreign judgment merely
constitutes prima facie evidence of the justness of the
claim of a party and, as such, is subject to proof to the
contrary.[9]Rule 39, 50 provides:
SEC. 50. Effect of foreign judgments. - The effect of a
judgment of a tribunal of a foreign country, having
jurisdiction to pronounce the judgment is as follows:

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

judgment is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment
is presumptive evidence of a right as between the parties
and their successors in interest by a subsequent title; but
the judgment may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact.
Thus, in the case of General Corporation of the
Philippines v. Union Insurance Society of Canton, Ltd.,
[10]
which private respondents invoke for claiming
conclusive effect for the foreign judgment in their favor,
the
foreign
judgment
was
considered res
judicata because this Court found from the evidence as
well as from appellants own pleadings [11] that the foreign
court did not make a clear mistake of law or fact or that
its judgment was void for want of jurisdiction or because
of fraud or collusion by the defendants. Trial had been
previously held in the lower court and only afterward was
a decision rendered, declaring the judgment of the
Supreme Court of the State of Washington to have the
effect of res judicata in the case before the lower court. In
the same vein, in Philippine International Shipping Corp.
v. Court of Appeals,[12] this Court held that the foreign
judgment was valid and enforceable in the Philippines
there being no showing that it was vitiated by want of
notice to the party, collusion, fraud or clear mistake of
law or fact. The prima facie presumption under the Rule
had not been rebutted.

In the case at bar, it cannot be said that petitioners were

given the opportunity to challenge the judgment of the
U.S. court as basis for declaring it res judicata or
conclusive of the rights of private respondents. The
proceedings in the trial court were summary. Neither the
trial court nor the appellate court was even furnished
copies of the pleadings in the U.S. court or apprised of
the evidence presented thereat, to assure a proper
determination of whether the issues then being litigated
in the U.S. court were exactly the issues raised in this
case such that the judgment that might be rendered
would constitute res judicata. As the trial court stated in
its disputed order dated March 9, 1988:
On the plaintiffs claim in its Opposition that the
causes of action of this case and the pending case
in the United States are not identical, precisely the
Order of January 26, 1988 never found that the
causes of action of this case and the case pending
before the USA Court, were identical. (emphasis
added)
It was error therefore for the Court of Appeals to
summarily rule that petitioners action is barred by the
principle of res judicata. Petitioners in fact questioned the
jurisdiction of the U.S. court over their persons, but their
claim was brushed aside by both the trial court and the
Court of Appeals.[13]
Moreover, the Court notes that on April 22, 1992, 1488,
Inc. and Daic filed a petition for the enforcement of
judgment in the Regional Trial Court of Makati, where it
was docketed as Civil Case No. 92-1070 and assigned to
Branch 134, although the proceedings were suspended
because of the pendency of this case. To sustain the
appellate courts ruling that the foreign judgment
constitutes res judicata and is a bar to the claim of
petitioners would effectively preclude petitioners from
repelling the judgment in the case for enforcement. An
absurdity could then arise: a foreign judgment is not
subject to challenge by the plaintiff against whom it is
invoked, if it is pleaded to resist a claim as in this case,
but it may be opposed by the defendant if the foreign

judgment is sought to be enforced against him in a

separate proceeding. This is plainly untenable. It has
been held therefore that:
[A] foreign judgment may not be enforced if it is not
recognized in the jurisdiction where affirmative relief is
being sought. Hence, in the interest of justice, the
complaint should be considered as a petition for the
recognition of the Hongkong judgment under Section 50
(b), Rule 39 of the Rules of Court in order that the
defendant, private respondent herein, may present
evidence of lack of jurisdiction, notice, collusion, fraud or
clear mistake of fact and law, if applicable.[14]
Accordingly, to insure the orderly administration of
justice, this case and Civil Case No. 92-1070 should be
consolidated.[15] After all, the two have been filed in the
Regional Trial Court of Makati, albeit in different salas,
this case being assigned to Branch 56 (Judge Fernando V.
Gorospe), while Civil Case No. 92-1070 is pending in
Branch 134 of Judge Ignacio Capulong. In such
proceedings, petitioners should have the burden of
impeaching the foreign judgment and only in the event
they succeed in doing so may they proceed with their
action against private respondents.
Second. Nor is the trial courts refusal to take cognizance
of the case justifiable under the principle of forum non
conveniens. First, a motion to dismiss is limited to the
grounds under Rule 16, 1, which does not include forum
non conveniens.[16] The propriety of dismissing a case
based on this principle requires a factual determination,
hence, it is more properly considered a matter of
defense. Second, while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this
ground, it should do so only after vital facts are
established, to determine whether special circumstances
require the courts desistance.[17]
In this case, the trial court abstained from taking
jurisdiction solely on the basis of the pleadings filed by
private respondents in connection with the motion to
dismiss. It failed to consider that one of the plaintiffs

(PHILSEC) is a domestic corporation and one of the

defendants (Ventura Ducat) is a Filipino, and that it was
the extinguishment of the latters debt which was the
object of the transaction under litigation. The trial court
arbitrarily dismissed the case even after finding that
Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and
the trial court to hold that jurisdiction over 1488, Inc. and
Daic could not be obtained because this is an action
in personam and
summons
were
served
by
extraterritorial service. Rule 14, 17 on extraterritorial
service provides that service of summons on a nonresident defendant may be effected out of the Philippines
by leave of Court where, among others, the property of
the defendant has been attached within the Philippines.
[18]
It is not disputed that the properties, real and
personal, of the private respondents had been attached
prior to service of summons under the Order of the trial
court dated April 20, 1987.[19]
Fourth. As for the temporary restraining order issued by
the Court on June 29, 1994, to suspend the proceedings
in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to
enforce so-called Rule 11 sanctions imposed on the
petitioners by the U.S. court, the Court finds that the
judgment sought to be enforced is severable from the
main judgment under consideration in Civil Case
No.16563. The separability of Guevarras claim is not only
admitted by petitioners,[20] it appears from the pleadings
that petitioners only belatedly impleaded Guevarra as
defendant in Civil Case No. 16563. [21] Hence, the TRO
should be lifted and Civil Case No. 92-1445 allowed to
proceed.
WHEREFORE, the decision of the Court of Appeals is
REVERSED and Civil Case No. 16563 is REMANDED to the
Regional Trial Court of Makati for consolidation with Civil
Case No. 92-1070 and for further proceedings in
accordance with this decision. The temporary restraining
order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.

Personal
Injury
SUPREME
Manila

LRepublic

of

the

Philippines
COURT

FIRST DIVISION
G.R. No. 72494 August 11, 1989
HONGKONG
AND
SHANGHAI
BANKING
CORPORATION, petitioner,
vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE
INTERMEDIATE APPELLATE COURT, respondents.
Quiason, Makalintal, Barot & Torres for petitioner.
Alejandro,
Aranzaso
respondents.

&

Associates

for

private

MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of
the Intermediate Appellate Court (now Court of Appeals)
dated August 2, 1985, which reversed the order of the
Regional Trial Court dated February 28,1985 denying the
Motion to Dismiss filed by private respondents Jack
Robert Sherman and Deodato Reloj.
A complaint for collection of a sum of money (pp. 4952, Rollo) was filed by petitioner Hongkong and Shanghai
Banking Corporation (hereinafter referred to as petitioner
BANK) against private respondents Jack Robert Sherman
and Deodato Reloj, docketed as Civil Case No. Q-42850
before the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply
Service PTE, Ltd. (hereinafter referred to as COMPANY), a
company incorporated in Singapore applied with, and was
granted by, the Singapore branch of petitioner BANK an
overdraft facility in the maximum amount of Singapore
dollars 200,000.00 (which amount was subsequently
increased to Singapore dollars 375,000.00) with interest
at 3% over petitioner BANK prime rate, payable monthly,

on amounts due under said overdraft facility; as a

security for the repayment by the COMPANY of sums
advanced by petitioner BANK to it through the aforesaid
overdraft facility, on October 7, 1982, both private
respondents and a certain Robin de Clive Lowe, all of
whom were directors of the COMPANY at such time,
executed a Joint and Several Guarantee (p. 53, Rollo) in
favor of petitioner BANK whereby private respondents
and Lowe agreed to pay, jointly and severally, on demand
all sums owed by the COMPANY to petitioner BANK under
the aforestated overdraft facility.
The Joint and Several Guarantee provides, inter alia, that:
This guarantee and all rights, obligations
and liabilities arising hereunder shall be
construed and determined under and may
be enforced in accordance with the laws of
the Republic of Singapore. We hereby
agree that the Courts of Singapore shall
have jurisdiction over all disputes arising
under this guarantee. ... (p. 33-A, Rollo).
The COMPANY failed to pay its obligation. Thus, petitioner
BANK demanded payment of the obligation from private
respondents, conformably with the provisions of the Joint
and Several Guarantee. Inasmuch as the private
respondents still failed to pay, petitioner BANK filed the
above-mentioned complaint.
On December 14,1984, private respondents filed a
motion to dismiss (pp 54-56, Rollo) which was opposed by
petitioner BANK (pp. 58-62, Rollo). Acting on the motion,
the trial court issued an order dated February 28, 1985
(pp, 64-65, Rollo), which read as follows:
In a Motion to Dismiss filed on December
14, 1984, the defendants seek the
dismissal of the complaint on two grounds,
namely:
That the court has no jurisdiction over the subject
matter of the complaint; and
That the court has no jurisdiction over the persons
of the defendants.

In the light of the Opposition thereto filed

by plaintiff, the Court finds no merit in the
motion. "On the first ground, defendants
claim that by virtue of the provision in the
Guarantee (the actionable document)
which reads
This guarantee and all rights,
obligations
and
liabilities
arising hereunder shall be
construed and determined
under and may be enforced
in accordance with the laws
of the Republic of Singapore.
We hereby agree that the
courts in Singapore shall
have jurisdiction over all
disputes arising under this
guarantee,
the Court has no jurisdiction over the
subject matter of the case. The Court finds
and concludes otherwise. There is nothing
in the Guarantee which says that the
courts of Singapore shall have jurisdiction
to the exclusion of the courts of other
countries or nations. Also, it has long been
established in law and jurisprudence that
jurisdiction of courts is fixed by law; it
cannot be conferred by the will, submission
or consent of the parties.
On the second ground, it is asserted that
defendant Robert' , Sherman is not a
citizen nor a resident of the Philippines.
This argument holds no water. Jurisdiction
over the persons of defendants is acquired
by service of summons and copy of the
complaint on them. There has been a valid
service of summons on both defendants
and in fact the same is admitted when said
defendants filed a 'Motion for Extension of
Time to File Responsive Pleading on
December 5, 1984.

WHEREFORE, the Motion to Dismiss is

hereby DENIED.
SO ORDERED.
A motion for reconsideration of the said order was filed by
private respondents which was, however, denied (p.
66,Rollo).
Private respondents then filed before the respondent
Intermediate Appellate Court (now Court of Appeals) a
petition for prohibition with preliminary injunction and/or
prayer for a restraining order (pp. 39-48, Rollo). On
August 2, 1985, the respondent Court rendered a decision
(p. 37, Rollo), the dispositive portion of which reads:
WHEREFORE, the petition for prohibition
with preliminary injuction is hereby
GRANTED. The respondent Court is
enjoined from taking further cognizance of
the case and to dismiss the same for filing
with the proper court of Singapore which is
the proper forum. No costs.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo),
hence, the present petition.
The main issue is whether or not Philippine courts have
jurisdiction over the suit.
The controversy stems from the interpretation of a
provision in the Joint and Several Guarantee, to wit:
(14) This guarantee and all rights,
obligations and liabilites arising hereunder
shall be construed and determined under
and may be enforced in accordance with
the laws of the Republic of Singapore. We
hereby agree that the Courts in Singapore
shall have jurisdiction over all disputes
arising under this guarantee. ... (p. 53A, Rollo)

In rendering the decision in favor of private respondents,

the Court of Appeals made, the following observations
(pp. 35-36, Rollo):
There are significant aspects of the case to
which our attention is invited. The loan was
obtained by Eastern Book Service PTE, Ltd.,
a company incorporated in Singapore. The
loan was granted by the Singapore Branch
of Hongkong and Shanghai Banking
Corporation.
The
Joint
and
Several
Guarantee
was
also
concluded
in Singapore. The loan was in Singaporean
dollars and the repayment thereof also in
the same currency. The transaction, to say
the least, took place in Singporean setting
in which the law of that country is the
measure by which that relationship of the
parties will be governed.
xxx xxx xxx
Contrary to the position taken by
respondents, the guarantee agreement
compliance that any litigation will be
before the courts of Singapore and that the
rights and obligations of the parties shall
be
construed
and
determined
in
accordance with the laws of the Republic of
Singapore. A closer examination of
paragraph 14 of the Guarantee Agreement
upon which the motion to dismiss is based,
employs in clear and unmistakeable (sic)
terms the word 'shall' which under
statutory construction is mandatory.
Thus it was ruled that:
... the word 'shall' is imperative, operating
to impose a duty which may be enforced
(Dizon
vs.
Encarnacion,
9
SCRA
714).lwph1.t
There is nothing more imperative and
restrictive than what the agreement
categorically commands that 'all rights,

obligations,
and
liabilities
arising
hereunder shall be
construed
and
determined under and may be enforced in
accordance with the laws of the Republic of
Singapore.'
While it is true that "the transaction took place in
Singaporean setting" and that the Joint and Several
Guarantee contains a choice-of-forum clause, the very
essence of due process dictates that the stipulation that
"[t]his guarantee and all rights, obligations and liabilities
arising hereunder shall be construed and determined
under and may be enforced in accordance with the laws
of the Republic of Singapore. We hereby agree that the
Courts in Singapore shall have jurisdiction over all
disputes arising under this guarantee" be liberally
construed. One basic principle underlies all rules of
jurisdiction in International Law: a State does not have
jurisdiction in the absence of some reasonable basis for
exercising it, whether the proceedings are in rem quasi in
rem or in personam. To be reasonable, the jurisdiction
must be based on some minimum contacts that will not
offend traditional notions of fair play and substantial
justice (J. Salonga, Private International Law, 1981, p. 46).
Indeed, as pointed-out by petitioner BANK at the outset,
the instant case presents a very odd situation. In the
ordinary habits of life, anyone would be disinclined to
litigate before a foreign tribunal, with more reason as a
defendant. However, in this case, private respondents are
Philippine residents (a fact which was not disputed by
them) who would rather face a complaint against them
before a foreign court and in the process incur
considerable expenses, not to mention inconvenience,
than to have a Philippine court try and resolve the case.
Private respondents' stance is hardly comprehensible,
unless their ultimate intent is to evade, or at least delay,
the payment of a just obligation.
The defense of private respondents that the complaint
should have been filed in Singapore is based merely on
technicality. They did not even claim, much less prove,
that the filing of the action here will cause them any
unnecessary trouble, damage, or expense. On the other
hand, there is no showing that petitioner BANK filed the
action here just to harass private respondents.

In the case of Polytrade Corporation vs. Blanco, G.R. No.

L-27033, October 31, 1969, 30 SCRA 187, it was ruled:
... An accurate reading, however, of the
stipulation, 'The parties agree to sue and
be sued in the Courts of Manila,' does not
preclude the filing of suits in the residence
of plaintiff or defendant. The plain meaning
is that the parties merely consented to be
sued in Manila. Qualifying or restrictive
words which would indicate that Manila and
Manila alone is the venue are totally absent
therefrom. We cannot read into that clause
that
plaintiff and
defendant
bound
themselves to file suits with respect to the
last two transactions in question only or
exclusively in Manila. For, that agreement
did not change or transfer venue. It simply
is permissive. The parties solely agreed to
add the courts of Manila as tribunals to
which they may resort. They did not waive
their right to pursue remedy in the courts
specifically mentioned in Section 2(b) of
Rule 4. Renuntiatio non praesumitur.
This ruling was reiterated in the case of Neville Y. Lamis
Ents., et al. v. Lagamon, etc., et al. , G.R. No. 57250,
October 30, 1981, 108 SCRA 740, where the stipulation
was "[i]n case of litigation, jurisdiction shall be vested in
the Court of Davao City." We held:
Anent the claim that Davao City had been
stipulated as the venue, suffice it to say
that a stipulation as to venue does not
preclude the filing of suits in the residence
of plaintiff or defendant under Section 2
(b), Rule 4, Rules of Court, in the absence
of qualifying or restrictive words in the
agreement which would indicate that the
place named is the only venue agreed
upon by the parties.
Applying the foregoing to the case at bar, the parties did
not thereby 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 Philippine courts

of jurisdiction. In International Law, jurisdiction is often

defined as the light of a State to exercise authority over
persons and things within its boundaries subject to
certain exceptions. Thus, a State does not assume
jurisdiction over travelling sovereigns, ambassadors and
diplomatic representatives of other States, and foreign
military units stationed in or marching through State
territory with the permission of the latter's authorities.
This authority, which finds its source in the concept of
sovereignty, is exclusive within and throughout the
domain of the State. A State is competent to take hold of
any judicial matter it sees fit by making its courts and
agencies assume jurisdiction over all kinds of cases
brought before them (J. Salonga, Private International
Law, 1981, pp. 37-38).lwph1.t
As regards the issue on improper venue, petitioner BANK
avers that the objection to improper venue has been
waived. However, We agree with the ruling of the
respondent Court that:
While in the main, the motion to dismiss
fails to categorically use with exactitude
the words 'improper venue' it can be
perceived from the general thrust and
context of the motion that what is meant is
improper venue, The use of the word
'jurisdiction' was merely an attempt to
copy-cat the same word employed in the
guarantee agreement but conveys the
concept of venue. Brushing aside all
technicalities, it would appear that
jurisdiction was used loosely as to be
synonymous with venue. It is in this spirit
that this Court must view the motion to
dismiss. ... (p. 35, Rollo).
At any rate, this issue is now of no moment because We
hold that venue here was properly laid for the same
reasons discussed above.
The respondent Court likewise ruled that (pp. 3637, Rollo):
... In a conflict problem, a court will simply
refuse to entertain the case if it is not

authorized by law to exercise jurisdiction.

And even if it is so authorized, it may still
refuse to entertain the case by applying
the principle of forum non conveniens. ...
However, whether a suit should be entertained or
dismissed on the basis of the principle of forum non
conveniensdepends largely upon the facts of the
particular case and is addressed to the sound discretion
of the trial court (J. Salonga, Private International Law,
1981, p. 49).lwph1.t Thus, the respondent Court
should not have relied on such principle.
Although the Joint and Several Guarantee prepared by
petitioner BANK is a contract of adhesion and that
consequently, it cannot be permitted to take a stand
contrary to the stipulations of the contract, substantial
bases exist for petitioner Bank's choice of forum, as
discussed earlier.
Lastly, private respondents allege that neither the
petitioner based at Hongkong nor its Philippine branch is
involved in the transaction sued upon. This is a vain
attempt on their part to further thwart the proceedings
below inasmuch as well-known is the rule that a
defendant cannot plead any defense that has not been
interposed in the court below.
ACCORDINGLY, the decision of the respondent Court is
hereby REVERSED and the decision of the Regional Trial
Court is REINSTATED, with costs against private
respondents. This decision is immediately executory.
SO ORDERED.
SECOND DIVISION
[G.R. Nos. 121576-78. June 16, 2000]
BANCO DO BRASIL, petitioner, vs. THE COURT OF
APPEALS, HON. ARSENIO M. GONONG, and CESAR
S. URBINO, SR., respondents.
DECISION

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the
Decision1 [Penned by Associate Justice Jainal D. Rasul
and concurred in by Associate Justices Segundino G. Chua
and Consuelo Ynares-Santiago, now Associate Justice of
the Supreme Court, in CA-G.R. S.P. Nos. 24669, 28387 &
29317, Rollo, pp. 33-47.] and the Resolution2 [Id., pp. 4953.] of the Court of Appeals3 [Former Special Eighth
Division.] dated July 19, 1993 and August 15, 1995,
respectively,
which
reinstated
the
entire
Decision4 [Penned by Judge Arsenio M. Gonong, Civil
Case No. 89-51451, Records, Vol. 2, pp. 517-528.] dated
February 18, 1991 of the Regional Trial Court of Manila,
Branch 8, holding, among others, petitioner Banco do
Brasil liable to private respondent Cesar Urbino, Sr. for
damages amounting to $300,000.00.5 [The Appellate
Court erroneously declared in its decision that the
amount of P300,000.00 was awarded by the trial
court, Rollo, p. 36.]
At the outset, let us state that this case should have been
consolidated with the recently decided case of Vlason
Enterprises Corporation v. Court of Appeals and
Duraproof Services, represented by its General Manager,
Cesar Urbino Sr.6 [G.R. Nos. 121662-64, July 6, 1999,
Third Division, penned by Associate Justice Artemio V.
Panganiban and concurred in by Associate Justices Jose C.
Vitug, Fidel P. Purisima, and Minerva P. Gonzaga-Reyes.],
for these two (2) cases involved the same material
antecedents, though the main issue proffered in the
present petition vary with the Vlason case.
The
material
antecedents,
as
quoted
from
the Vlason7 [Decision in G.R. Nos. 121662-64, pp. 313.] case, are:
Poro Point Shipping Services, then acting as the local
agent of Omega Sea Transport Company of Honduras &
Panama, a Panamanian Company (hereafter referred to
as Omega), requested permission for its vessel M/V Star
Ace, which had engine trouble, to unload its cargo and to
store it at the Philippine Ports Authority (PPA) compound
in San Fernando, La Union while awaiting transhipment to
Hongkong. The request was approved by the Bureau of
Customs.8 [Records, Vol. 1, pp. 27-31.] Despite the

approval, the customs personnel boarded the vessel

when it docked on January 7, 1989, on suspicion that it
was the hijacked M/V Silver Med owned by Med Line
Philippines Co., and that its cargo would be smuggled into
the country.9 [Records, Vol. 1, p. 32.] The district customs
collector seized said vessel and its cargo pursuant to
Section 2301, Tariff and Customs Code. A notice of
hearing of SFLU Seizure Identification No. 3-89 was
served on its consignee, Singkong Trading Co. of
Hongkong, and its shipper, Dusit International Co., Ltd. of
Thailand.
While seizure proceedings were ongoing, La Union was hit
by three typhoons, and the vessel ran aground and was
abandoned.
On
June
8,
1989,
its
authorized
representative, Frank Cadacio, entered into salvage
agreement with private respondent to secure and repair
the vessel at the agreed consideration of $1 million and
"fifty percent (50%) [of] the cargo after all expenses, cost
and taxes."10 [Records, Vol. 1, pp. 36-39.]
Finding that no fraud was committed, the District
Collector of Customs, Aurelio M. Quiray, lifted the warrant
of seizure on July 1989.11 [Decision dated July 17, 1989,
in SFLU Seizure Identification No. 3-89; Records, Vol. 1,
pp. 54-68.] However, in a Second Indorsement dated
November 11, 1989, then Customs Commissioner
Salvador M. Mison declined to issue a clearance for
Quirays Decision; instead, he forfeited the vessel and its
cargo in accordance with Section 2530 of the Tariff and
Customs Code.12 [2nd Indorsement dated November
1989; Records, Vol. 1, pp. 70-71.] Accordingly, acting
District Collector of Customs John S. Sy issued a Decision
decreeing the forfeiture and the sale of the cargo in favor
of the government.13 [Decision dated November 17,
1989, Records, Vol. 1, pp. 74-86.]
To enforce its preferred salvors lien, herein Private
Respondent Duraproof Services filed with the Regional
Trial Court of Manila a Petition for Certiorari, Prohibition
and Mandamus14 [Docketed as Civil Case No. 89-51451
and raffled to Branch 8; Records, Vol. 1, pp. 126.] assailing the actions of Commissioner Mison and
District Collector Sy. Also impleaded as respondents were
PPA Representative Silverio Mangaoang and Med Line
Philippines, Inc.

On January 10, 1989, private respondent amended its

Petition15 [Ibid., pp. 122-145.] to include former District
Collector Quiray; PPA Port Manager Adolfo Ll. Amor, Jr.; x
Vlason Enterprises as represented by its president,
Vicente Angliongto; Singkong Trading Company as
represented by Atty. Eddie Tamondong; Banco Du Brasil;
Dusit International Co.; Thai-Nan Enterprises Ltd., and
Thai-United Trading Co., Ltd.16 [Amended Petition, id., pp.
122 & 128-129.] x x x
Summonses for the amended Petition were served on
Atty. Joseph Capuyan for Med Line Philippines: Anglionto
(through his secretary, Betty Bebero), Atty. Tamondong
and Commissioner Mison.17 [Sheriffs Return, id., pp. 160164 & 171.] Upon motion of the private respondent, the
trial court allowed summons by publication to be served
upon defendants who were not residents and had no
direct representative in the country.18 [Id., pp. 153-156.]
On January 29, 1990, private respondent moved to
declare respondents in default, but the trial court denied
the motion in its February 23, 1990 Order 19 [Id., pp. 214215.], because Mangaoang and Amor had jointly filed a
Motion to Dismiss, while Mison and Med Line had moved
separately for an extension to file a similar
motion.20 [Eventually, both separately filed their motions
to dismiss.] Later it rendered an Order dated July 2, 1990,
giving due course to the motions to dismiss filed by
Mangaoang and Amor on the ground of litis pendentia,
and by the commissioner and district collector of customs
on the ground of lack of jurisdiction.21 [Records, Vol. 1,
pp. 325-326.] In another Order, the trial court dismissed
the action against Med Line Philippines on the ground of
litis pendentia.22 [Order dated September 10, 1990;
Records, Vol. 2, p. 359.]
On two other occasions, private respondent again moved
to declare the following in default: [Vlason], Quiray, Sy
and Mison on March 26, 1990;23 [Records, Vol. 1, pp.
237-238.] and Banco [do] Bra[s]il, Dusit International Co.,
Inc., Thai-Nan Enterprises Ltd. and Thai-United Trading
Co., Ltd. on August 24, 1990.24 [Ibid., pp. 351352.] There is no record, however, that the trial court
acted upon the motions. On September 18, 1990, [private
respondent] filed another Motion for leave to amend the
petition,25 [Records, Vol. 2, pp. 370-371.] alleging that its
counsel failed to include "necessary and/or indispensable

parties": Omega represented by Cadacio; and M/V Star

Ace represented by Capt. Nahon Rada, relief captain.
Aside from impleading these additional respondents,
private respondent also alleged in the Second (actually,
third) Amended Petition26 [Motion for Leave to Admit
Second
Amended
Petition
and
Supplemental
Petition, ibid., p. 370; Second Amended Petition with
Supplemental Petition, ibid., pp. 372-398.] that the
owners of the vessel intended to transfer and alienate
their rights and interest over the vessel and its cargo, to
the detriment of the private respondent.
The trial court granted leave to private respondent to
amend its Petition, but only to exclude the customs
commissioner and the district collector.27 [Order dated
September 28, 1990, Records, Vol. 2, p. 407.] Instead,
private respondent filed the "Second Amended Petition
with Supplemental Petition" against Singkong Trading
Company; and Omega and M/V Star Ace, 28 [Records, Vol.
2, pp. 414-415.] to which Cadacio and Rada filed a Joint
Answer.29 [Ibid., pp. 425-288.]
Declared in default in an Order issued by the trial court
on January 23, 1991, were the following: Singkong
Trading Co., Commissioner Mison, M/V Star Ace and
Omega.30 [Id., p. 506.] Private respondent filed, and the
trial court granted, an ex parte Motion to present
evidence against the defaulting respondents. 31 [Order
dated December 10, 1990, id., p. 492.] Only private
respondent, Atty. Tamondong, Commissioner Mison,
Omega and M/V Star Ace appeared in the next pretrial
hearing; thus, the trial court declared the other
respondents in default and allowed private respondent to
present evidence against them.32 [Order dated January
23, 1991, Records, Vol. 2, p. 506. The records (pp. 493495), however, show that only Duraproof Service,
Singkong Trading and M/V Star Ace were served
summons.] Cesar Urbino, general manager of private
respondent, testified and adduced evidence against the
other respondents, x x x.33 [RTC Decision, p. 7; Rollo, p.
92; penned by Judge Arsenio M. Gonong.]
On December 29, 1990, private respondent and Rada,
representing Omega, entered into a Memorandum of
Agreement stipulating that Rada would write and notify
Omega regarding the demand for salvage fees of private
respondent; and that if Rada did not receive any

instruction from his principal, he would assign the vessel

in
favor
of
the
salvor. 34 [Memorandum
of
Agreement, id., pp. 511-512.]
On February 18, 1991, the trial court disposed as follows:
"WHEREFORE, IN VIEW OF THE FOREGOING, based on the
allegations, prayer and evidence adduced, both
testimonial and documentary, the Court is convinced,
that, indeed, defendants/respondents are liable to
[private respondent] in the amount as prayed for in the
petition for which it renders judgment as follows:
1. Respondent M/V Star Ace, represented by Capt. Nahum
Rada, [r]elief [c]aptain of the vessel and Omega Sea
Transport Company, Inc., represented by Frank Cadacio[,]
is ordered to refrain from alienating or [transferring] the
vessel M/V Star Ace to any third parties;
2. Singkong Trading Company to pay the following:
a. Taxes due the government;
b. Salvage fees on the vessel in the amount of
$1,000,000.00 based on xxx Lloyds Standard Form of
Salvage Agreement;
c. Preservation, securing and guarding fees on the vessel
in the amount of $225,000.00;
d. Maintenance fees in the amount of P2,685,000.00;
e. Salaries of the crew from August 16, 1989 to December
1989 in the amount of $43,000.00 and unpaid salaries
from January 1990 up to the present;
f. Attorneys fees in the amount of P656,000.00;
3. [Vlason] Enterprises to pay [private respondent] in the
amount of P3,000,000.00 for damages;
4. Banco [Du] Brasil to pay [private respondent] in the
amount
of
$300,000.00
in
damages;35 [Italics supplied.] and finally,

5. Costs of [s]uit."
Subsequently, upon the motion of Omega, Singkong
Trading Co., and private respondent, the trial court
approved a Compromise Agreement36 [Records, Vol. 2,
pp. 535-538.] among the movants, reducing by 20
percent the amounts adjudged. For their part,
respondents-movants agreed not to appeal the
Decision.37 [Order dated March 6, 1991, ibid., pp. 539541. Private respondent entered into two separate
compromise agreements with Singkong Trading Co. (id.,
pp. 535-536) and another with Omega (id., pp. 537-538).
Both agreements were dated March 4, 1991.] On March 8,
1991, private respondent moved for the execution of
judgment, claiming that the trial court Decision had
already become final and executory. The Motion was
granted and a Writ of Execution was issued. To satisfy the
Decision, Sheriffs Jorge Victorino, Amado Sevilla and
Dionisio Camagon were deputized on March 13, 1991 to
levy and to sell on execution the defendants vessel and
personal property.
xxx
On March 18, 1991, the Bureau of Customs also filed an
ex parte Motion to recall the execution, and to quash the
notice of levy and the sale on execution. Despite this
Motion, the auction sale was conducted on March 21,
1991 by Sheriff Camagon, with private respondent
submitting the winning bid. The trial court ordered the
deputy sheriffs to cease and desist from implementing
the Writ of Execution and from levying on the personal
property of the defendants. Nevertheless, Sheriff
Camagon issued the corresponding Certificate of Sale on
March 27, 1991.
On April 10, 1991, petitioner Banco do Brasil filed, by
special appearance, an Urgent Motion to Vacate
Judgement and to Dismiss Case38 [Rollo, pp. 67-73.] on
the ground that the February 18, 1991 Decision of the
trial court is void with respect to it for having been
rendered without validly acquiring jurisdiction over the
person of Banco do Brasil. Petitioner subsequently
amended its petition39 [Rollo, pp. 74-80.] to specifically
aver that its special appearance is solely for the purpose
of questioning the Courts exercise of personal jurisdiction.

On May 20, 1991, the trial court issued an Order40 [Rollo,

pp. 81-82.] acting favorably on petitioners motion and set
aside as against petitioner the decision dated February
18, 1991 for having been rendered without jurisdiction
over Banco do Brasils person. Private respondent sought
reconsideration41 [Records, Vol. 3, pp. 103-105.] of the
Order dated May 20, 1991. However, the trial court in an
Order42 [Rollo, p. 83.] dated June 21, 1991 denied said
motion.
Meanwhile, a certiorari petition43 [Docketed as CA-G.R.
SP No. 24669.] was filed by private respondent before
public respondent Court of Appeals seeking to nullify the
cease and desist Order dated April 5, 1991 issued by
Judge Arsenio M. Gonong. Two (2) more separate petitions
for certiorari were
subsequently
filed
by
private
respondent. The second petition44 [Docketed as CA-G.R.
SP No. 28387.] sought to nullify the Order45 [Penned by
Judge Bernardo P. Pardo, then Executive Judge, and now
Associate Justice of the Supreme Court.] dated June 26,
1992 setting aside the Deputy Sheriffs return dated April
1, 1991 as well as the certificate of sale issued by Deputy
Sheriff Camagon. The third petition46 [Docketed as CAG.R. SP No. 29317.] sought to nullify the Order dated
October 5, 1992 of the Court of Tax Appeals directing the
Commissioner of Customs to place Bureau of Customs
and PNP officers and guards to secure the M/V Star Ace
and its cargoes, make inventory of the goods stored in
the premises as indicated to belong to the private
respondent. Likewise challenged was the Order dated
August 17, 1992 authorizing the sale of M/V Star Ace and
its cargoes.
These three (3) petitions were consolidated and on July
19,
1993,
the
appellate
court
rendered
its
Decision47 [See
Note
1, supra.] granting
private
respondents petitions, thereby nullifying and setting
aside the disputed orders and effectively " giving way to
the entire [decision dated February 18, 1991 of the x x x
Regional Trial Court of Manila, Branch 8, in Civil Case No.
89-51451 which remains valid, final and executory, if not
yet wholly executed."48 [Rollo, p. 46.]
Private respondent Urbino, Vlason Enterprises and
petitioner Banco do Brasil filed separate motions for
reconsideration. For its part, petitioner Banco do Brasil
sought reconsideration, insofar as its liability for

damages, on the ground that there was no valid service

of summons as service was on the wrong party the
ambassador of Brazil. Hence, it argued, the trial court did
not acquire jurisdiction over petitioner Banco do
Brasil.49 [Rollo, pp. 107.] Nonetheless, the appellate
court denied the motions for reconsideration in its
Resolution50 [See Note 2, supra.] dated August 15, 1995.
Hence, the instant petition.
Petitioner Banco do Brasil takes exception to the
appellate courts declaration that the suit below is in rem,
not in personam,51 [Rollo, pp. 19-21.] thus, service of
summons by publication was sufficient for the court to
acquire jurisdiction over the person of petitioner Banco
do Brasil, and thereby liable to private respondent Cesar
Urbino for damages claimed, amounting to $300,000.00.
Petitioner further challenges the finding that the February
18, 1991 decision of the trial court was already final and
thus, cannot be modified or assailed.52 [Rollo, p. 22-23.]
Petitioner avers that the action filed against it is an action
for damages, as such it is an action in personam which
requires personal service of summons be made upon it
for the court to acquire jurisdiction over it. However,
inasmuch as petitioner Banco do Brasil is a non-resident
foreign corporation, not engaged in business in the
Philippines, unless it has property located in the
Philippines which may be attached to convert the action
into an action in rem, the court cannot acquire
jurisdiction over it in respect of an action in personam.
The petition bears merit, thus the same should be as it is
hereby granted.
First. When the defendant is a nonresident and he is not
found in the country, summons may be served
extraterritorially in accordance with Rule 14, Section
1753 [Section 17. Extraterritorial service When the
defendant does not reside and is not found in the
Philippines and the action affects the personal status of
the plaintiff or relates to, or the subject of which, is
property within the Philippines, in which the defendant
has or claims a lien or interest, actual or contingent, or in
which relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the

property of the defendant has been attached in the

Philippines, service may, by leave of court, be effected
out of the Philippines by personal service as under
section 7; or 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 shall be sent by registered mail to the
last known address of the defendant, or in any other
manner the court may deem sufficient. Any order
granting such leave shall specify a reasonable time,
which shall not be less than sixty (60) days after notice,
within which the defendant must answer.] of the Rules of
Court. Under this provision, there are only four (4)
instances when extraterritorial service of summons is
proper, namely: "(1) when the action affects the personal
status of the plaintiffs; (2) when the action relates to, or
the subject of which is property, within the Philippines, in
which the defendant claims a lien or 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-residents property has
been attached within the Philippines."54 [Ibid., now Sec.
15 of the 1997 Rules of Civil Procedure.] In these
instances, service of summons may be effected by (a)
personal service out of the country, with leave of court;
(b) publication, also with leave of court; or (c) any other
manner the court may deem sufficient.55 [Ibid..]
Clear from the foregoing, extrajudicial service of
summons apply only where the action is in rem, an action
against the thing itself instead of against the person, or in
an action quasi in rem, where an individual is named as
defendant and the purpose of the proceeding is to subject
his interest therein to the obligation or loan burdening the
property. This is so inasmuch as, in in rem and quasi in
rem actions, jurisdiction over the person of the defendant
is not a prerequisite to confer jurisdiction on the court
provided that the court acquires jurisdiction over
the res.56 [Asiavest Limited v. Court of Appeals, 296
SCRA 539, 552-554 [1998]; Valmonte v. Court of Appeals,
252 SCRA 92, 99-102 [1996].]
However, 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.57 [The
Dial
Corporation v. Soriano, 161 SCRA 737, 743 [1988] citing
Boudard v. Tait, 67 Phil 170, 174 [1939].] 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. 58 [Asiavest
Limited v. Court of Appeals, supra. at 554.]
In the instant case, private respondents suit against
petitioner is premised on petitioners being one of the
claimants of the subject vessel M/V Star Ace. 59 [Records,
Vol. 1, pp. 128-129.] Thus, it can be said that private
respondent initially sought only to exclude petitioner from
claiming interest over the subject vessel M/V Star Ace.
However, private respondent testified during the
presentation of evidence that, for being a nuisance
defendant, petitioner caused irreparable damage to
private
respondent
in
the
amount
of
$300,000.00.60 [Records, Vol. 2, p. 567.] Therefore, while
the action is in rem, by claiming damages, the relief
demanded went beyond the res and sought a relief totally
alien to the action.

It must be stressed that any relief granted in

rem or quasi in rem actions must be confined to the res,
and the court cannot lawfully render a personal judgment
against the defendant.61 [Villareal v. Court of Appeals,
295 SCRA 511, 525 [1998].] Clearly, the publication of
summons effected by private respondent is invalid and
ineffective for the trial court to acquire jurisdiction over
the person of petitioner, since by seeking to recover
damages from petitioner for the alleged commission of an
injury
to
his
person
or
property62 [The
Dial
Corporation v. Soriano, supra. at 742 citing Hernandez v.
Development Bank of the Phil., 71 SCRA 290, 292-293
[1976].] caused by petitioners being a nuisance
defendant, private respondents action became in
personam. Bearing in mind the in personam nature of the
action, personal or, if not possible, substituted service of
summons on petitioner, and not extraterritorial service, is
necessary to confer jurisdiction over the person of
petitioner and validly hold it liable to private respondent
for damages. Thus, the trial court had no jurisdiction to
award damages amounting to $300,000.00 in favor of
private respondent and as against herein petitioner.
Second. We settled the issue of finality of the trial courts
decision dated February 18, 1991 in the Vlason case,
wherein we stated that, considering the admiralty case
involved multiple defendants, "each defendant had a
different period within which to appeal, depending on the
date of receipt of decision."63 [Decision in G.R. Nos.
121662-64, p. 27.] Only upon the lapse of the
reglementary period to appeal, with no appeal perfected
within such period, does the decision become final and
executory.64 [Ibid.]
In the case of petitioner, its Motion to Vacate Judgment
and to Dismiss Case was filed on April 10, 1991, only six
(6) days after it learned of the existence of the case upon
being informed by the Embassy of the Federative
Republic of Brazil in the Philippines, on April 4, 1991, of
the February 18, 1991 decision.65 [Rollo, pp. 6780.] Thus, in the absence of any evidence on the date of
receipt of decision, other than the alleged April 4, 1991
date when petitioner learned of the decision, the
February 18, 1991 decision of the trial court cannot be
said to have attained finality as regards the petitioner.

WHEREFORE, the subject petition is hereby GRANTED.

The Decision and the Resolution of the Court of Appeals
dated July 19, 1993 and August 15, 1995, respectively, in
CA-G.R. SP Nos. 24669, 28387 and 29317 are hereby
REVERSED and SET ASIDE insofar
as
they
affect
petitioner Banco do Brasil. The Order dated May 20, 1991
of the Regional Trial Court of Manila, Branch 8 in Civil
Case No. 89-51451 is REINSTATED.

LEPANTO
COMPANY,

CONSOLIDATED

MINING

Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

SO ORDERED.
Republic of the Philippines
Supreme Court

DECISION

Manila

LEONARDO-DE CASTRO, J.:

FIRST DIVISION

This is a Petition for Review on Certiorari assailing the

NM ROTHSCHILD & SONS (AUSTRALIA)
LIMITED,
Petitioner,

Decision[1] of the Court of Appeals dated September 8,

G.R. No.

2006 in CA-G.R. SP No. 94382 and its Resolution[2] dated

December

12,

2006,

denying

the

Motion

for

Reconsideration.

On August 30, 2005, respondent Lepanto Consolidated

Mining Company filed with the Regional Trial Court (RTC)
versus -

of

Makati

City

Complaint[3] against

petitioner

NM

Rothschild & Sons (Australia) Limited praying for a

judgment declaring the loan and hedging contracts
between the parties void for being contrary to Article

2018[4] of the Civil Code of the Philippines and for

through the Department of Foreign Affairs (DFA) on

damages. The Complaint was docketed as Civil Case No.

account of the fact that the defendant has neither applied

05-782, and was raffled to Branch 150. Upon respondents

for a license to do business in the Philippines, nor filed

(plaintiffs) motion, the trial court authorized respondents

with the Securities and Exchange Commission (SEC) a

counsel to personally bring the summons and Complaint

Written Power of Attorney designating some person on

to the Philippine Consulate General in Sydney, Australia

whom

for the latter office to effect service of summons on

served. The trial court also held that the Complaint

petitioner (defendant).

sufficiently stated a cause of action. The other allegations

summons

and

other

legal

processes

maybe

in the Motion to Dismiss were brushed aside as matters of

defense which can best be ventilated during the trial.
On

October

20,

2005,

petitioner

Appearance With Motion to Dismiss

filed
[5]

Special

praying for the

dismissal of the Complaint on the following grounds: (a)

the court has not acquired jurisdiction over the person of
petitioner due to the defective and improper service of
summons; (b) the Complaint failed to state a cause of
action and respondent does not have any against

On December 27, 2005, petitioner filed a Motion for

Reconsideration.[7] On March 6, 2006, the trial court
issued an Order denying the December 27, 2005 Motion
for Reconsideration and disallowed the twin Motions for
Leave

to

take

deposition

and

serve

written

interrogatories.[8]

petitioner; (c) the action is barred by estoppel; and (d)

respondent did not come to court with clean hands.

On April 3, 2006, petitioner sought redress via a Petition

for Certiorari[9] with the Court of Appeals, alleging that the

On November 29, 2005, petitioner filed two Motions: (1) a

Motion for Leave to take the deposition of Mr. Paul Murray
(Director, Risk Management of petitioner) before the

trial court committed grave abuse of discretion in denying

its Motion to Dismiss. The Petition was docketed as CAG.R. SP No. 94382.

Philippine Consul General; and (2) a Motion for Leave to

Serve Interrogatories on respondent.

On September 8, 2006, the Court of Appeals rendered the

assailed

On

December

9,

2005,

the

trial

court

issued

an

Order[6] denying the Motion to Dismiss. According to the

trial court, there was a proper service of summons

Decision

dismissing

the

Petition

for Certiorari. The Court of Appeals ruled that since the

denial of a Motion to Dismiss is an interlocutory order, it
cannot be the subject of a Petition for Certiorari, and may

only be reviewed in the ordinary course of law by an

remedy; and (c) the trial court correctly denied petitioners

appeal from the judgment after trial. On December 12,

motion to dismiss.

2006,

the Court of Appeals rendered the assailed

Resolution

denying

the

petitioners

Motion

for
Our discussion of the issues raised by the parties follows:

Reconsideration.

Meanwhile, on December 28, 2006, the trial court issued

an Order directing respondent to answer some of the
questions in petitioners Interrogatories to Plaintiff dated

Whether
petitioner is
a real party
in interest

September 7, 2006.

Notwithstanding the foregoing, petitioner filed the present

petition assailing the September 8, 2006 Decision and the
December

12,

2006

Resolution

of

the

Court

of

Appeals.Arguing against the ruling of the appellate court,

petitioner insists that (a) an order denying a motion to
dismiss

may

be

the

proper

subject

of

petition

for certiorari; and (b) the trial court committed grave

abuse of discretion in not finding that it had not validly
acquired jurisdiction over petitioner and that the plaintiff
had no cause of action.

Respondent, on the other hand, posits that: (a) the

present Petition should be dismissed for not being filed by
a real party in interest and for lack of a proper verification
and certificate of non-forum shopping; (b) the Court of
Appeals correctly ruled that certiorari was not the proper

Respondent argues that the present Petition should be

dismissed on the ground that petitioner no longer existed
as a corporation at the time said Petition was filed on
February 1, 2007. Respondent points out that as of the
date of the filing of the Petition, there is no such
corporation that goes by the name NM Rothschild and
Sons (Australia) Limited. Thus, according to respondent,
the present Petition was not filed by a real party in
interest, citing our ruling in Philips Export B.V. v. Court of
Appeals,[10] wherein we held:

A name is peculiarly important as necessary to the

very existence of a corporation (American Steel
Foundries vs. Robertson, 269 US 372, 70 L ed 317,
46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30
Pa 42; First National Bank vs. Huntington Distilling
Co., 40 W Va 530, 23 SE 792). Its name is one of
its attributes, an element of its existence, and
essential to its identity (6 Fletcher [Perm Ed], pp.
3-4). The general rule as to corporations is that

each corporation must have a name by which it is

to sue and be sued and do all legal acts. The
name of a corporation in this respect designates
the corporation in the same manner as the name
of an individual designates the person (Cincinnati
Cooperage Co. vs. Bate, 96 Ky 356, 26 SW 538;
Newport Mechanics Mfg. Co. vs. Starbird, 10 NH
123); and the right to use its corporate name is as
much a part of the corporate franchise as any
other privilege granted (Federal Secur. Co. vs.
Federal Secur. Corp., 129 Or 375, 276 P 1100, 66
ALR 934; Paulino vs. Portuguese Beneficial
Association, 18 RI 165, 26 A 36).[11]

very existence of corporations and the significance

thereof in the corporations right to sue, we shall not go so
far as to dismiss a case filed by the proper party using its
former name when adequate identification is presented. A
real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the
party entitled to the avails of the suit. [14]There is no doubt
in our minds that the party who filed the present Petition,
having presented sufficient evidence of its identity and
being represented by the same counsel as that of the
defendant in the case sought to be dismissed, is the
entity that will be benefited if this Court grants the

In its Memorandum[12] before this Court, petitioner started

dismissal prayed for.

to refer to itself as Investec Australia Limited (formerly

NM Rothschild & Sons [Australia] Limited) and captioned
said Memorandum accordingly. Petitioner claims that NM

Since the main objection of respondent to the verification

Rothschild and Sons (Australia) Limited still exists as a

and certification against forum shopping likewise depends

corporation under the laws of Australia under said new

on the supposed inexistence of the corporation named

name. It presented before us documents evidencing the

therein, we give no credit to said objection in light of the

process

foregoing discussion.

in

the

Australian

Securities

&

Investment

Commission on the change of petitioners company name

from NM Rothschild and Sons (Australia) Limited to
Investec Australia Limited.[13]

We find the submissions of petitioner on the change of its

corporate name satisfactory and resolve not to dismiss
the present Petition for Review on the ground of not being
prosecuted

under

the

name

of

the

real

party

in

interest. While we stand by our pronouncement in Philips

Export on the importance of the corporate name to the

Propriety of
the Resort to
a
Petition
for Certiorari
with
the
Court
of
Appeals

We have held time and again that an order denying a

The resolution of the present Petition therefore entails an

Motion to Dismiss is an interlocutory order which neither

inquiry into whether the Court of Appeals correctly ruled

terminates nor finally disposes of a case as it leaves

that the trial court did not commit grave abuse of

something to be done by the court before the case is

discretion in its denial of petitioners Motion to Dismiss. A

finally decided on the merits. The general rule, therefore,

mere error in judgment on the part of the trial court would

is that the denial of a Motion to Dismiss cannot be

undeniably be inadequate for us to reverse the disposition

questioned in a special civil action for Certiorari which is a

by the Court of Appeals.

remedy designed to correct errors of jurisdiction and not

errors of judgment.[15] However, we have likewise held
that when the denial of the Motion to Dismiss is tainted
with

grave

abuse

of

discretion,

the

grant

of

the

extraordinary remedy of Certiorari may be justified. By

grave abuse of discretion is meant:

[S]uch capricious and whimsical exercise of

judgment that is equivalent to lack of
jurisdiction. The abuse of discretion must be grave
as where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal
hostility, and must be so patent and gross as to
amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or
to act all in contemplation of law.[16]

Issues more
properly
ventilated
during
the
trial of the
case

As previously stated, petitioner seeks the dismissal of

Civil Case No. 05-782 on the following grounds: (a) lack of
jurisdiction over the person of petitioner due to the
defective and improper service of summons; (b) failure of
the Complaint to state a cause of action and absence of a
cause of action; (c) the action is barred by estoppel; and
(d) respondent did not come to court with clean hands.

As correctly ruled by both the trial court and the Court of

Appeals, the alleged absence of a cause of action (as
opposed to the failure to state a cause of action), the
alleged estoppel on the part of petitioner, and the
argument

that

respondent

is

in pari

delicto in

the

execution of the challenged contracts, are not grounds in

a Motion to Dismiss as enumerated in Section 1, Rule

Code

of

the

Philippines;

(2)

defendant

has

the

16[17] of the Rules of Court. Rather, such defenses raise

corresponding obligation not to enforce the Hedging

evidentiary issues closely related to the validity and/or

Contracts because they are in the nature of wagering or

existence of respondents alleged cause of action and

gambling agreements and therefore the transactions

should therefore be threshed out during the trial.

implementing those contracts are null and void under

Philippine laws; and (3) defendant ignored the advice and
intends to enforce the Hedging Contracts by demanding

As regards the allegation of failure to state a cause of

financial payments due therefrom.[21]

action, while the same is usually available as a ground in

a Motion to Dismiss, said ground cannot be ruled upon in
the present Petition without going into the very merits of

The rule is that in a Motion to Dismiss, a defendant

the main case.

hypothetically admits the truth of the material allegations

of the ultimate facts contained in the plaintiff's complaint.
[22]

It is basic that [a] cause of action is the act or omission by

which a party violates a right of another.

[18]

Its elements

However,

admits
Appeals,

of
[23]

this

principle

of

exceptions. Thus,

hypothetical
in Tan

v.

admission
Court

we held:

are the following: (1) a right existing in favor of the

plaintiff, (2) a duty on the part of the defendant to respect
the plaintiff's right, and (3) an act or omission of the
defendant in violation of such right.[19] We have held that
to sustain a Motion to Dismiss for lack of cause of action,
the complaint must show that the claim for relief does not
exist and not only that the claim was defectively stated or
is ambiguous, indefinite or uncertain.[20]

The trial court held that the Complaint in the case at bar
contains all the three elements of a cause of action, i.e., it
alleges that: (1) plaintiff has the right to ask for the
declaration of nullity of the Hedging Contracts for being
null and void and contrary to Article 2018 of the Civil

The flaw in this conclusion is that, while

conveniently echoing the general rule that
averments in the complaint are deemed
hypothetically admitted upon the filing of a motion
to dismiss grounded on the failure to state a cause
of action, it did not take into account the equally
established limitations to such rule, i.e., that a
motion to dismiss does not admit the truth of
mere epithets of fraud; nor allegations of legal
conclusions; nor an erroneous statement of law;
nor mere inferences or conclusions from facts not
stated; nor mere conclusions of law; nor
allegations of fact the falsity of which is subject to
judicial notice; nor matters of evidence; nor
surplusage and irrelevant matter; nor scandalous
matter inserted merely to insult the opposing
party; nor to legally impossible facts; nor to facts
which appear unfounded by a record incorporated

of

in the pleading, or by a document referred to; and,

nor to general averments contradicted by more
specific averments. A more judicious resolution of
a motion to dismiss, therefore, necessitates that
the court be not restricted to the consideration of
the facts alleged in the complaint and inferences
fairly deducible therefrom. Courts may consider
other facts within the range of judicial notice as
well as relevant laws and jurisprudence which the
courts are bound to take into account, and they
are
also
fairly
entitled
to
examine
records/documents duly incorporated into
the complaint by the pleader himself in
ruling on the demurrer to the complaint .
[24]
(Emphases supplied.)

Complaint stated a cause of action would therefore

involve an inquiry into whether or not the assailed
contracts are void under Philippine laws. This is, precisely,
the very issue to be determined in Civil Case No. 05782. Indeed, petitioners defense against the charge of
nullity of the Hedging Contracts is the purported intent of
the parties that actual deliveries of gold be made
pursuant

thereto. Such

defense

requires

the

presentation of evidence on the merits of the case. An

issue that requires the contravention of the allegations of
the complaint, as well as the full ventilation, in effect, of
the main merits of the case, should not be within the
province of a mere Motion to Dismiss. [26] The trial court,

In the case at bar, respondent asserts in the Complaint

therefore, correctly denied the Motion to Dismiss on this

that the Hedging Contracts are void for being contrary to

ground.

Article 2018[25] of the Civil Code. Respondent claims that

under

the

Hedging

Contracts,

despite

the

express

stipulation for deliveries of gold, the intention of the

parties was allegedly merely to compel each other to pay
the difference between the value of the gold at the

It is also settled in jurisprudence that allegations of

estoppel and bad faith require proof. Thus, in Paraaque
Kings Enterprises, Inc. v. Court of Appeals,[27] we ruled:

forward price stated in the contract and its market price

at the supposed time of delivery.

Whether such an agreement is void is a mere allegation of

a

conclusion

hypothetically

of

law,

which

admitted. Quite

therefore
properly,

cannot
the

be

relevant

portions of the contracts sought to be nullified, as well as

a copy of the contract itself, are incorporated in the
Complaint. The determination of whether or not the

Having come to the conclusion that the complaint

states a valid cause of action for breach of the
right of first refusal and that the trial court should
thus not have dismissed the complaint, we find no
more need to pass upon the question of whether
the complaint states a cause of action for
damages or whether the complaint is barred
by estoppel or laches. As these matters require
presentation and/or determination of facts ,
they can be best resolved after trial on the
merits.[28] (Emphases supplied.)

On the proposition in the Motion to Dismiss that

respondent has come to court with unclean hands, suffice
it to state that the determination of whether one acted in
bad faith and whether damages may be awarded is
evidentiary in nature. Thus, we have previously held that
[a]s a matter of defense, it can be best passed upon after
a full-blown trial on the merits.[29]

Jurisdiction
over
the
person
of
petitioner

Petitioner

alleges

Sec. 12. Service upon foreign private juridical

entity. When the defendant is a foreign private
juridical entity which has transacted business
in the Philippines, service may be made on its
resident agent designated in accordance with law
for that purpose, or, if there be no such agent, on
the government official designated by law to that
effect, or on any of its officers or agents within the
Philippines. (Emphasis supplied.)

This is a significant amendment of the former Section 14

of said rule which previously provided:

that

the

RTC

has

not

acquired

jurisdiction over its person on account of the improper

service of summons. Summons was served on petitioner
through the DFA, with respondents counsel personally
bringing the summons and Complaint to the Philippine
Consulate General in Sydney, Australia.

Sec. 14. Service upon private foreign corporations.

If the defendant is a foreign corporation, or a
nonresident
joint
stock
company
or
association, doing business in the Philippines ,
service may be made on its resident agent
designated in accordance with law for that
purpose, or if there be no such agent, on the
government official designated by law to that
effect, or on any of its officers or agents within the
Philippines. (Emphasis supplied.)

In the pleadings filed by the parties before this Court, the

parties entered into a lengthy debate as to whether or not
petitioner is doing business in the Philippines. However,
such discussion is completely irrelevant in the case at bar,
for two reasons. Firstly, since the Complaint was filed on
August 30, 2005, the provisions of the 1997 Rules of Civil
Procedure govern the service of summons. Section 12,
Rule 14 of said rules provides:

The coverage of the present rule is thus broader.

[30]

Secondly, the

service

of

summons

to

petitioner

through the DFA by the conveyance of the summons to

the Philippine Consulate General in Sydney, Australia was
clearly made not through the above-quoted Section 12,

but pursuant to Section 15 of the same rule which

provides:

Sec. 15. Extraterritorial service. When the

defendant does not reside and is not found in the
Philippines, and the action affects the personal
status of the plaintiff or relates to, or the subject
of which is property within the Philippines, in
which the defendant has or claims a lien or
interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding
the defendant from any interest therein, or the
property of the defendant has been attached
within the Philippines, service may, by leave of
court, be effected out of the Philippines by
personal service as under section 6; or 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 shall be sent by registered mail
to the last known address of the defendant, or in
any other manner the court may deem
sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the
defendant must answer.

Sec. 6. Means to carry jurisdiction into effect.

When by law jurisdiction is conferred on a court or
judicial officer, all auxiliary writs, processes and
other means necessary to carry it into effect may
be employed by such court or officer; and if the
procedure to be followed in the exercise of such
jurisdiction is not specifically pointed out by law or
by these rules, any suitable process or mode of
proceeding may be adopted which appears
comformable to the spirit of said law or rules.

Section 15, Rule 14, however, is the specific provision

dealing precisely with the service of summons on a
defendant which does not reside and is not found in the
Philippines, while Rule 135 (which is in Part V of the Rules
of Court entitled Legal Ethics) concerns the general
powers and duties of courts and judicial officers.

Breaking down Section 15, Rule 14, it is apparent that

there are only four instances wherein a defendant who is
a non-resident and is not found in the country may be
served with summons by extraterritorial service, to wit:
(1) when the action affects the personal status of the
of

plaintiffs; (2) when the action relates to, or the subject of

summons upon foreign private juridical entities is not

which is property, within the Philippines, in which the

proscribed under the Rules of Court, and is in fact within

defendant

the authority of the trial court to adopt, in accordance

contingent; (3) when the relief demanded in such action

with Section 6, Rule 135:

consists, wholly or in part, in excluding the defendant

Respondent

argues[31] that

extraterritorial

service

claims

lien

or

an

interest,

actual

or

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 these instances,

service of summons may be effected by (a) personal

service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other
manner the court may deem sufficient.[32]

action involved is in personam, Philippine

courts cannot try any case against him
because of the impossibility of acquiring
jurisdiction over his person unless he
voluntarily appears in court.[34] (Emphases
supplied.)

Proceeding from this enumeration, we held in Perkin

Elmer

Singapore

Pte

Ltd.

v.

Dakila

Trading

In Domagas v. Jensen,[35] we held that:

Corporation[33] that:

Undoubtedly, extraterritorial service of

summons applies only where the action is in
rem or quasi in rem, but not if an action is in
personam.

When the case instituted is an action in

rem or quasi in rem, Philippine courts already
have jurisdiction to hear and decide the case
because, in actions in rem and quasi in rem,
jurisdiction over the person of the defendant is not
a prerequisite to confer jurisdiction on the court,
provided that the court acquires jurisdiction over
the res. Thus, in such instance, extraterritorial
service of summons can be made upon the
defendant. The said extraterritorial service of
summons is not for the purpose of vesting the
court with jurisdiction, but for complying with the
requirements of fair play or due process, so that
the defendant will be informed of the pendency of
the action against him and the possibility that
property in the Philippines belonging to him or in
which he has an interest may be subjected to a
judgment in favor of the plaintiff, and he can
thereby take steps to protect his interest if he is so
minded. On the other hand, when the
defendant or respondent does not reside
and is not found in the Philippines, and the

[T]he aim and object of an action determine its

character. Whether a proceeding is in rem, or in
personam, or quasi in rem for that matter, is
determined by its nature and purpose, and by
these only. A proceeding in personam is a
proceeding to enforce personal rights and
obligations brought against the person and is
based on the jurisdiction of the person, although it
may involve his right to, or the exercise of
ownership of, specific property, or seek to compel
him to control or dispose of it in accordance with
the mandate of the court. The purpose of a
proceeding in personam is to impose, through the
judgment of a court, some responsibility or liability
directly upon the person of the defendant. Of this
character are suits to compel a defendant to
specifically perform some act or actions to fasten
a pecuniary liability on him.[36]

It is likewise settled that [a]n action in personam is lodged

against a person based on personal liability; an action in
rem is directed against the thing itself instead of the
person; while an action quasi in rem names a person as
defendant, but its object is to subject that persons

interest in a property to a corresponding lien or obligation.

able to avail of modes of discovery against respondent,

[37]

such as written interrogatories, requests for admission,

deposition, and motions for production of documents.[40]

The Complaint in the case at bar is an action to declare

the

loan

and

Hedging

Contracts

between

the

Petitioner counters that under this Courts ruling in the

parties void with a prayer for damages . It is a suit in

leading case of La Naval Drug Corporation v. Court of

which the plaintiff seeks to be freed from its obligations to

Appeals,[41] a party may file a Motion to Dismiss on the

the defendant under a contract and to hold said

ground of lack of jurisdiction over its person, and at the

defendant pecuniarily liable to the plaintiff for entering

same time raise affirmative defenses and pray for

into such contract. It is therefore an action in personam,

affirmative relief, without waiving its objection to the

unless and until the plaintiff attaches a property within

acquisition of jurisdiction over its person. [42]

the Philippines belonging to the defendant, in which case

the action will be converted to onequasi in rem.
It appears, however, that petitioner misunderstood our
ruling in La Naval. A close reading of La Naval reveals that
Since the action involved in the case at bar is in

the Court intended a distinction between the raising

personam and

ofaffirmative

since

the

defendant,

petitioner

defenses in

an

Answer

(which

Rothschild/Investec, does not reside and is not found in

would not amount to acceptance of the jurisdiction of the

the Philippines, the Philippine courts cannot try any case

court)

against it because of the impossibility of acquiring

reliefs (which would be considered acquiescence to the

jurisdiction over its person unless it voluntarily appears in

jurisdiction of the court):

court.

In

the

prayer

for affirmative

[38]

this

regard,

respondent

vigorously

argues

that

petitioner should be held to have voluntarily appeared

before the trial court when it prayed for, and was actually
afforded,
[39]

and

specific

reliefs

from

the

trial

court.

Respondent points out that while petitioners Motion to

Dismiss was still pending, petitioner prayed for and was

In the same manner that a plaintif may

assert two or more causes of action in a
court suit, a defendant is likewise expressly
allowed, under Section 2, Rule 8, of the
Rules of Court, to put up his own defenses
alternatively or even hypothetically. Indeed,
under Section 2, Rule 9, of the Rules of Court,
defenses and objections not pleaded either in a
motion to dismiss or in an answer, except for the
failure to state a cause of action, are deemed

waived. We take this to mean that a defendant

may, in fact, feel enjoined to set up, along with his
objection to the court's jurisdiction over his
person, all other possible defenses. It thus
appears that it is not the invocation of any of such
defenses, but the failure to so raise them, that can
result in waiver or estoppel. By defenses, of
course, we refer to the grounds provided for
in Rule 16 of the Rules of Court that must be
asserted in a motion to dismiss or by way of
affirmative defenses in an answer.

Mindful of the foregoing, in Signetics

Corporation vs. Court of Appeals and
Freuhauf Electronics Phils., Inc. (225 SCRA
737, 738), we lately ruled:

another matter that would yet have to

await the reception and admission of
evidence. Since these points have
seasonably
been
raised
by
the
petitioner, there should be no real
cause for what may understandably be
its apprehension, i.e., that by its
participation during the trial on the
merits, it may, absent an invocation of
separate or independent reliefs of its
own,
be
considered
to
have
voluntarily submitted itself to the
court's
jurisdiction.[43] (Emphases
supplied.)

In order to conform to the ruling in La Naval, which was

This is not to say, however, that the
petitioner's right to question the
jurisdiction of the court over its
person is now to be deemed a
foreclosed matter. If it is true, as
Signetics claims, that its only involvement
in the Philippines was through a passive
investment in Sigfil, which it even later
disposed of, and that TEAM Pacific is not its
agent, then it cannot really be said to be
doing business in the Philippines. It is a
defense, however, that requires the
contravention of the allegations of the
complaint, as well as a full ventilation, in
effect, of the main merits of the case,
which should not thus be within the
province of a mere motion to dismiss. So,
also, the issue posed by the petitioner as to
whether a foreign corporation which has
done business in the country, but which
has ceased to do business at the time of
the filing of a complaint, can still be made
to answer for a cause of action which
accrued while it was doing business, is

decided by this Court in 1994, the former Section 23, Rule

14[44] concerning voluntary appearance was amended to
include a second sentence in its equivalent provision in
the 1997 Rules of Civil Procedure:

SEC. 20. Voluntary appearance. The defendant's

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

The new second sentence, it can be observed, merely

mentions other grounds in a Motion to Dismiss aside from
lack of jurisdiction over the person of the defendant . This

clearly

refers

to

affirmative

defenses,

rather

than

affirmative reliefs.

court. A party cannot invoke the jurisdiction of a court to

secure affirmative relief against his opponent and after
obtaining or failing to obtain such relief, repudiate or
question that same jurisdiction.[48] Consequently, the trial

Thus, while mindful of our ruling in La Naval and the new

court cannot be considered to have committed grave

Section 20, Rule 20, this Court, in several cases, ruled

abuse of discretion amounting to lack or excess of

that seeking affirmative relief in a court is tantamount to

jurisdiction in the denial of the Motion to Dismiss on

voluntary

appearance

therein.

[45]

Thus,

in Philippine

Commercial International Bank v. Dy Hong Pi,

[46]

wherein

account of failure to acquire jurisdiction over the person

of the defendant.

defendants filed a Motion for Inhibition without submitting

themselves to the jurisdiction of this Honorable Court
subsequent to their filing of a Motion to Dismiss (for Lack

WHEREFORE, the Petition

for

Review

of Jurisdiction), we held:

on Certiorari is DENIED. The Decision of the Court of

Appeals dated September 8, 2006 and its Resolution

Besides, any lingering doubts on the issue of

voluntary
appearance
dissipate
when
the
respondents' motion for inhibition is considered.
This motion seeks a sole relief: inhibition of Judge
Napoleon Inoturan from further hearing the
case. Evidently, by seeking affirmative relief
other
than
dismissal
of
the
case,
respondents manifested their voluntary
submission to the court's jurisdiction. It is
well-settled that the active participation of a party
in the proceedings is tantamount to an invocation
of the court's jurisdiction and a willingness to
abide by the resolution of the case, and will bar
said party from later on impugning the court's
jurisdiction.[47] (Emphasis supplied.)

In view of the above, we therefore rule that petitioner, by

seeking affirmative reliefs from the trial court, is deemed
to have voluntarily submitted to the jurisdiction of said

dated December 12, 2006 in CA-G.R. SP No. 94382 are

hereby AFFIRMED.

awyers
Republic
of
SUPREME COURT

the

Philippines

FIRST DIVISION
G.R. No. 120077

October 13, 2000

THE MANILA HOTEL CORP. AND MANILA HOTEL

INTL.
LTD., petitioners,
vs.
NATIONAL
LABOR
RELATIONS
COMMISSION,
ARBITER CEFERINA J. DIOSANA AND MARCELO G.
SANTOS,respondents.

PARDO, J.:
The case before the Court is a petition for certiorari 1 to
annul the following orders of the National Labor Relations
Commission (hereinafter referred to as "NLRC") for having
been issued without or with excess jurisdiction and with
grave abuse of discretion:2
(1) Order of May 31, 1993.3 Reversing and setting aside
its earlier resolution of August 28, 1992. 4 The questioned
order declared that the NLRC, not the Philippine Overseas
Employment Administration (hereinafter referred to as
"POEA"), had jurisdiction over private respondent's
complaint;
(2) Decision of December 15, 1994.5 Directing petitioners
to jointly and severally pay private respondent twelve
thousand and six hundred dollars (US$ 12,600.00)
representing salaries for the unexpired portion of his
contract;
three
thousand
six
hundred
dollars
(US$3,600.00) as extra four months salary for the two (2)
year period of his contract, three thousand six hundred
dollars (US$3,600.00) as "14th month pay" or a total of
nineteen
thousand
and
eight
hundred
dollars
(US$19,800.00) or its peso equivalent and attorney's fees
amounting to ten percent (10%) of the total award; and
(3) Order of March 30, 1995.6 Denying the motion for
reconsideration of the petitioners.
In May, 1988, private respondent Marcelo Santos
(hereinafter referred to as "Santos") was an overseas
worker employed as a printer at the Mazoon Printing
Press, Sultanate of Oman. Subsequently, in June 1988, he
was directly hired by the Palace Hotel, Beijing, People's
Republic of China and later terminated due to
retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter
referred to as "MHC") and the Manila Hotel International
Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a
government-owned and controlled corporation duly
organized and existing under the laws of the Philippines.

MHICL is a corporation duly organized and existing under

the laws of Hong Kong.7 MHC is an "incorporator" of
MHICL, owning 50% of its capital stock.8
By virtue of a "management agreement" 9 with the Palace
Hotel (Wang Fu Company Limited), MHICL 10 trained the
personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in
the Sultanate of Oman, respondent Santos received a
letter dated May 2, 1988 from Mr. Gerhard R. Shmidt,
General Manager, Palace Hotel, Beijing, China. Mr.
Schmidt informed respondent Santos that he was
recommended by one Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position
as printer, but with a higher monthly salary and increased
benefits. The position was slated to open on October 1,
1988.11
On May 8, 1988, respondent Santos wrote to Mr. Shmidt
and signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J.
Henk mailed a ready to sign employment contract to
respondent Santos. Mr. Henk advised respondent Santos
that if the contract was acceptable, to return the same to
Mr. Henk in Manila, together with his passport and two
additional pictures for his visa to China.
On May 30, 1988, respondent Santos resigned from the
Mazoon Printing Press, effective June 30, 1988, under the
pretext that he was needed at home to help with the
family's piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace
Hotel and acknowledged Mr. Henk's letter. Respondent
Santos enclosed four (4) signed copies of the
employment contract (dated June 4, 1988) and notified
them that he was going to arrive in Manila during the first
week of July 1988.

The employment contract of June 4, 1988 stated that his

employment would commence September 1, 1988 for a
period of two years.12 It provided for a monthly salary of
nine hundred dollars (US$900.00) net of taxes, payable
fourteen (14) times a year.13
On June 30, 1988, respondent Santos was deemed
resigned from the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing,
China. He started to work at the Palace Hotel.14
Subsequently, respondent Santos signed an amended
"employment agreement" with the Palace Hotel, effective
November 5, 1988. In the contract, Mr. Shmidt
represented the Palace Hotel. The Vice President
(Operations and Development) of petitioner MHICL Miguel
D. Cergueda signed the employment agreement under
the word "noted".

"We sincerely regret that a decision like this has to be

made, but rest assured this does in no way reflect your
past performance which we found up to our
expectations."
"Should a turnaround in the business happen, we will
contact you directly and give you priority on future
assignment."
On September 5, 1989, the Palace Hotel terminated the
employment of respondent Santos and paid all benefits
due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated
to the Philippines.
On October 24, 1989, respondent Santos, through his
lawyer, Atty. Ednave wrote Mr. Shmidt, demanding full
compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit: 17

From June 8 to 29, 1989, respondent Santos was in the

Philippines on vacation leave. He returned to China and
reassumed his post on July 17, 1989.

His service with the Palace Hotel, Beijing was not abruptly
terminated but we followed the one-month notice clause
and Mr. Santos received all benefits due him.

On July 22, 1989, Mr. Shmidt's Executive Secretary, a

certain Joanna suggested in a handwritten note that
respondent Santos be given one (1) month notice of his
release from employment.

"For your information the Print Shop at the Palace Hotel is

still not operational and with a low business outlook,
retrenchment in various departments of the hotel is going
on which is a normal management practice to control
costs.

On August 10, 1989, the Palace Hotel informed

respondent Santos by letter signed by Mr. Shmidt that his
employment at the Palace Hotel print shop would be
terminated due to business reverses brought about by
the political upheaval in China.15 We quote the letter:16
"After the unfortunate happenings in China and especially
Beijing (referring to Tiannamen Square incidents), our
business has been severely affected. To reduce expenses,
we will not open/operate printshop for the time being.

"When going through the latest performance ratings,

please also be advised that his performance was below
average and a Chinese National who is doing his job now
shows a better approach.
"In closing, when Mr. Santos received the letter of notice,
he hardly showed up for work but still enjoyed free
accommodation/laundry/meals up to the day of his
departure."
On February 20, 1990, respondent Santos filed a
complaint for illegal dismissal with the Arbitration Branch,
National Capital Region, National Labor Relations

Commission (NLRC). He prayed for an award of nineteen

thousand nine hundred and twenty three dollars
(US$19,923.00) as actual damages, forty thousand pesos
(P40,000.00) as exemplary damages and attorney's fees
equivalent to 20% of the damages prayed for. The
complaint named MHC, MHICL, the Palace Hotel and Mr.
Shmidt as respondents.
The Palace Hotel and Mr. Shmidt were not served with
summons and neither participated in the proceedings
before the Labor Arbiter.18
On June 27, 1991, Labor Arbiter Ceferina J. Diosana,
decided the case against petitioners, thus: 19
"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant
jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine
currency as unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC,
arguing that the POEA, not the NLRC had jurisdiction over
the case.
On August 28, 1992, the NLRC promulgated a resolution,
stating:20
"WHEREFORE, let the appealed Decision be, as it is
hereby, declared null and void for want of jurisdiction.
Complainant is hereby enjoined to file his complaint with
the POEA.
"SO ORDERED."

On September 18, 1992, respondent Santos moved for

reconsideration of the afore-quoted resolution. He argued
that the case was not cognizable by the POEA as he was
not an "overseas contract worker."21
On May 31, 1993, the NLRC granted the motion and
reversed itself. The NLRC directed Labor Arbiter Emerson
Tumanon to hear the case on the question of whether
private respondent was retrenched or dismissed. 22
On January 13, 1994, Labor Arbiter Tumanon completed
the proceedings based on the testimonial and
documentary evidence presented to and heard by him.23
Subsequently, Labor Arbiter Tumanon was re-assigned as
trial Arbiter of the National Capital Region, Arbitration
Branch, and the case was transferred to Labor Arbiter
Jose G. de Vera.24
On November 25, 1994, Labor Arbiter de Vera submitted
his report.25 He found that respondent Santos was
illegally dismissed from employment and recommended
that he be paid actual damages equivalent to his salaries
for the unexpired portion of his contract.26
On December 15, 1994, the NLRC ruled in favor of private
respondent, to wit:27
"WHEREFORE,
finding
that
the
report
and
recommendations of Arbiter de Vera are supported by
substantial evidence, judgment is hereby rendered,
directing the respondents to jointly and severally pay
complainant the following computed contractual benefits:
(1) US$12,600.00 as salaries for the unexpired portion of
the parties' contract; (2) US$3,600.00 as extra four (4)
months salary for the two (2) years period (sic) of the
parties' contract; (3) US$3,600.00 as "14th month pay"
for the aforesaid two (2) years contract stipulated by the
parties or a total of US$19,800.00 or its peso equivalent,
plus (4) attorney's fees of 10% of complainant's total
award.
"SO ORDERED."

On February 2, 1995, petitioners filed a motion for

reconsideration arguing that Labor Arbiter de Vera's
recommendation had no basis in law and in fact.28
On March 30, 1995, the NLRC denied the motion for
reconsideration.29
Hence, this petition.30
On October 9, 1995, petitioners filed with this Court an
urgent motion for the issuance of a temporary restraining
order and/or writ of preliminary injunction and a motion
for the annulment of the entry of judgment of the NLRC
dated July 31, 1995.31
On November 20, 1995, the Court denied petitioner's
urgent motion. The Court required respondents to file
their respective comments, without giving due course to
the petition.32
On March 8, 1996, the Solicitor General filed a
manifestation stating that after going over the petition
and its annexes, they can not defend and sustain the
position taken by the NLRC in its assailed decision and
orders. The Solicitor General prayed that he be excused
from filing a comment on behalf of the NLRC33
On April 30,1996, private respondent Santos filed his
comment.34
On June 26, 1996, the Court granted the manifestation of
the Solicitor General and required the NLRC to file its own
comment to the petition.35
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in
two foreign jurisdictions and the case involves purely
foreign elements. The only link that the Philippines has

with the case is that respondent Santos is a Filipino

citizen. The Palace Hotel and MHICL are foreign
corporations. Not all cases involving our citizens can be
tried here.
The employment contract. Respondent Santos was
hired directly by the Palace Hotel, a foreign employer,
through correspondence sent to the Sultanate of Oman,
where respondent Santos was then employed. He was
hired without the intervention of the POEA or any
authorized recruitment agency of the government.36
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.37 The conditions are unavailing in the
case at bar.
Not Convenient. We fail to see how the NLRC is a
convenient forum given that all the incidents of the case
from the time of recruitment, to employment to
dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper
defendants, the Palace Hotel and MHICL are not nationals
of the Philippines. Neither .are they "doing business in the
Philippines." Likewise, the main witnesses, Mr. Shmidt
and Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. Neither can an
intelligent decision be made as to the law governing the
employment contract as such was perfected in foreign
soil. This calls to fore the application of the principle of
lex loci contractus (the law of the place where the
contract was made).38
The employment contract was not perfected in the
Philippines. Respondent Santos signified his acceptance
by writing a letter while he was in the Republic of Oman.
This letter was sent to the Palace Hotel in the People's
Republic of China.

No power to determine the facts. Neither can the NLRC

determine the facts surrounding the alleged illegal
dismissal as all acts complained of took place in Beijing,
People's Republic of China. The NLRC was not in a
position to determine whether the Tiannamen Square
incident truly adversely affected operations of the Palace
Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision.
Even assuming that a proper decision could be
reached by the NLRC, such would not have any binding
effect against the employer, the Palace Hotel. The Palace
Hotel is a corporation incorporated under the laws of
China and was not even served with summons.
Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have
no power to solve controversies involving foreign
employers. Neither are we saying that we do not have
power over an employment contract executed in a
foreign country. If Santos were an "overseas contract
worker", a Philippine forum, specifically the POEA, not the
NLRC, would protect him.39 He is not an "overseas
contract worker" a fact which he admits with conviction. 40

In Traders Royal Bank v. Court of Appeals,42 we held that

"the mere ownership by a single stockholder or by
another corporation of all or nearly all of the capital stock
of a corporation is not of itself a sufficient reason for
disregarding
the
fiction
of
separate
corporate
personalities."
The tests in determining whether the corporate veil may
be pierced are: First, the defendant must have control or
complete domination of the other corporation's finances,
policy and business practices with regard to the
transaction attacked. There must be proof that the other
corporation had no separate mind, will or existence with
respect the act complained of. Second, control must be
used by the defendant to commit fraud or wrong. Third,
the aforesaid control or breach of duty must be the
proximate cause of the injury or loss complained of. The
absence of any of the elements prevents the piercing of
the corporate veil.43

Even assuming that the NLRC was the proper forum, even
on the merits, the NLRC's decision cannot be sustained.

It is basic that a corporation has a personality separate

and distinct from those composing it as well as from that
of any other legal entity to which it may be
related.44 Clear and convincing evidence is needed to
pierce the veil of corporate fiction. 45 In this case, we find
no evidence to show that MHICL and MHC are one and
the same entity.

II. MHC Not Liable

III. MHICL not Liable

Even if we assume two things: (1) that the NLRC had

jurisdiction over the case, and (2) that MHICL was liable
for Santos' retrenchment, still MHC, as a separate and
distinct juridical entity cannot be held liable.

Respondent Santos predicates MHICL's liability on the fact

that MHICL "signed" his employment contract with the
Palace Hotel. This fact fails to persuade us.

True, MHC is an incorporator of MHICL and owns fifty

percent (50%) of its capital stock. However, this is not
enough to pierce the veil of corporate fiction between
MHICL and MHC.
Piercing the veil of corporate entity is an equitable
remedy. It is resorted to when the corporate fiction is
used to defeat public convenience, justify wrong, protect
fraud or defend a crime. 41 It is done only when a
corporation is a mere alter ego or business conduit of a
person or another corporation.

First, we note that the Vice President (Operations and

Development) of MHICL, Miguel D. Cergueda signed the
employment contract as a mere witness. He merely
signed under the word "noted".
When one "notes" a contract, one is not expressing his
agreement or approval, as a party would. 46 In Sichangco
v. Board of Commissioners of Immigration,47 the Court
recognized that the term "noted" means that the person
so noting has merely taken cognizance of the existence
of an act or declaration, without exercising a judicious
deliberation or rendering a decision on the matter.

Mr. Cergueda merely signed the "witnessing part" of the

document. The "witnessing part" of the document is that
which, "in a deed or other formal instrument is that
part which comes after the recitals, or where there are no
recitals, after the parties (emphasis ours)."48 As opposed
to a party to a contract, a witness is simply one who,
"being present, personally sees or perceives a thing; a
beholder, a spectator, or eyewitness." 49 One who "notes"
something just makes a "brief written statement" 50 a
memorandum or observation.
Second, and more importantly, there was no existing
employer-employee relationship between Santos and
MHICL. In determining the existence of an employeremployee relationship, the following elements are
considered:51
"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the
aforementioned powers. It did not select respondent
Santos as an employee for the Palace Hotel. He was
referred to the Palace Hotel by his friend, Nestor Buenio.
MHICL did not engage respondent Santos to work. The
terms of employment were negotiated and finalized
through correspondence between respondent Santos, Mr.
Schmidt and Mr. Henk, who were officers and
representatives of the Palace Hotel and not MHICL.
Neither did respondent Santos adduce any proof that
MHICL had the power to control his conduct. Finally, it
was the Palace Hotel, through Mr. Schmidt and not MHICL
that terminated respondent Santos' services.
Neither is there evidence to suggest that MHICL was a
"labor-only contractor."52 There is no proof that MHICL
"supplied" respondent Santos or even referred him for
employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace
Hotel and MHICL are one and the same entity. The fact

that the Palace Hotel is a member of the "Manila Hotel

Group" is not enough to pierce the corporate veil
between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering
that
the
NLRC
was forum
nonconveniens and considering further that no employeremployee relationship existed between MHICL, MHC and
respondent Santos, Labor Arbiter Ceferina J. Diosana
clearly had no jurisdiction over respondent's claim in
NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction
only over the following:53
"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
"4. Claims for actual, moral, exemplary and other forms
of damages arising from employer-employee relations;
"5. Cases arising from any violation of Article 264 of this
Code, including questions involving legality of strikes and
lockouts; and
"6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement."
In all these cases, an employer-employee relationship is
an indispensable jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under
Article 217 of the Labor Code is limited to disputes arising

from an employer-employee relationship which can be

resolved by reference to the Labor Code, or other labor
statutes, or their collective bargaining agreements. 54
"To determine which body has jurisdiction over the
present controversy, we rely on the sound judicial
principle that jurisdiction over the subject matter is
conferred by law and is determined by the allegations of
the complaint irrespective of whether the plaintiff is
entitled to all or some of the claims asserted therein."55
The lack of jurisdiction of the Labor Arbiter was obvious
from the allegations of the complaint. His failure to
dismiss the case amounts to grave abuse of discretion.56
V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for
certiorari and ANNULS the orders and resolutions of the
National Labor Relations Commission dated May 31,
1993, December 15, 1994 and March 30, 1995 in NLRC
NCR CA No. 002101-91 (NLRC NCR Case No. 00-0201058-90).
No costs.
SO ORDERED.

Republic
SUPREME
Manila

of

the

Philippines
COURT

THIRD DIVISION
G.R. Nos. 90306-07 July 30, 1990
K.K. SHELL SEKIYU OSAKA HATSUBAISHO and FU HING
OIL
CO.,
LTD., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, ATLANTIC
VENUS
CO.,
S.A.,
and
THE
VESSEL
M/V
"ESTELLA",respondents.

Hernandez, Velicaria Vibar & Santiago for petitioners.

Cesar C. Cruz & Partners for private respondents

CORTES, J:
Ordinarily, the Court will not disturb the factual findings of
the Court of Appeals, these being considered final and
conclusive. However, when its factual conclusions are
manifestly mistaken, the Court will step in to correct the
misapprehension [De la Cruz v. Sosing, 94 Phil. 26 (1953);
Castillo v. Court of Appeals, G.R. No. L-48290, September 29,
1983, 124 SCRA 808.] This case is one such instance calling
for the Court's review of the facts.
On January 7,1987, Kumagai Kaiun Kaisha, Ltd. (hereinafter
referred to as Kumagai), a corporation formed and existing
under the laws of Japan, filed a complaint for the collection of
a sum of money with preliminary attachment against Atlantic
Venus Co., S.A. (hereinafter referred to as "Atlantic"), a
corporation registered in Panama, the vessel MV Estella and
Crestamonte Shipping Corporation (hereinafter referred to as
"Crestamonte"), a Philippine corporation. Atlantic is the
owner of the MV Estella. The complaint, docketed as Civil
Case No. 8738930 of the Regional Trial Court, Branch XIV,
Manila alleged that Crestamonte, as bareboat charterer and
operator of the MV Estella, appointed N.S. Shipping
Corporation (hereinafter referred to as "NSS"), a Japanese
corporation, as its general agent in Japan. The appointment
was formalized in an Agency Agreement. NSS in turn
appointed Kumagai as its local agent in Osaka, Japan.
Kumagai supplied the MV Estella with supplies and services
but despite repeated demands Crestamonte failed to pay the
amounts due.
NSS and Keihin Narasaki Corporation (hereinafter referred to
a Keihin filed complaints-in-intervention.
On May 19,1987, petitioner Fu Hing Oil Co., Ltd. (hereinafter
referred to as Fu Hing"), a corporation organized in Hong
Kong and not doing business in the Philippines, filed a motion
for leave to intervene with an attached complaint-inintervention, alleging that Fu Hing supplied marine diesel
oil/fuel to the MV Estella and incurred barge expenses for the

total sum of One Hundred Fifty-two Thousand Four Hundred

Twelve Dollars and Fifty-Six Cents (US$152,412.56) but such
has remained unpaid despite demand and that the claim
constitutes a maritime lien. The issuance of a writ of
attachment was also prayed for.
On July 16, 1987, petitioner K.K. Shell Sekiyu Osaka
Hatsubaisho (hereinafter referred to as K.K. Shell"), a
corporation organized in Japan and not doing business in the
Philippines, likewise filed a motion to intervene with an
attached complaint-in-intervention, alleging that upon
request of NSS, Crestamonte's general agent in Japan, K.K.
Shell provided and supplied marine diesel oil/fuel to the W
Estella at the ports of Tokyo and Mutsure in Japan and that
despite previous demands Crestamonte has failed to pay the
amounts of Sixteen Thousand Nine Hundred Ninety-Six
Dollars and Ninety- Six Cents (US$16,996.96) and One Million
Yen (Y1,000,000.00) and that K.K. Shell's claim constitutes a
maritime lien on the MV Estella. The complaint-inintervention sought the issuance of a writ of preliminary
attachment.
The trial court allowed the intervention of Fu Hing and K.K.
Shell on June 19,1987 and August 11, 1987, respectively.
Writs of preliminary attachment were issued on August 25,
1987 upon posting of the appropriate bonds. Upon the
posting of counterbonds, the writs of attachment were
discharged on September 3, 1987.
Atlantic and the MV Estella moved to dismiss the complaintsin- intervention filed by Fu Hing and K.K. Shell.
In the meantime, Atlantic and the AWU Estella filed a petition
in the Court of Appeals against the trial court judge,
Kumagai, NSS and Keihin, docketed as CA-G.R. SP No. 12999,
which sought the annulment of the orders of the trial court
dated April 30, 1987 and August 11, 1987. Among others, the
omnibus order dated August 11, 1987 denied the motion to
reconsider the order allowing Fu Hing's intervention and
granted K.K. Shell's motion to intervene. Again Fu Hing and
K.K. Shell intervened, CA-G.R. SP No. 12999 was consolidated
with another case (CA-G.R. SP No. 12341). Fu Hing and K.K.
Shell intervened in CA-G.R. SP No. 12999.

In a decision dated June 14, 1989, the Court of Appeals

annulled the orders of the trial court and directed it to cease
and desist from proceeding with the case.
According to the Court of Appeals, Fu Hing and K.K. Shell
were not suppliers but sub-agents of NSS, hence they were
bound by the Agency Agreement between Crestamonte and
NSS, particularly, the choice of forum clause, which provides:
12.0-That this Agreement shall be governed by
the Laws of Japan. Any matters, disputes,
and/or differences arising between the parties
hereto concerned regarding this Agreement
shall be subject exclusively to the jurisdiction
of the District Courts of Japan.
Thus, concluded the Court of Appeals, the trial court should
have disallowed their motions to intervene.
A motion for reconsideration was filed by Fu Hing and K.K.
Shell but this was denied by the Court of Appeals. Hence this
petition;
In this case, we shall review the decision of the Court of
Appeals only insofar as it relate to the intervention of K.K.
Shell. Fu Hing Oil Co., Ltd. filed a motion to withdraw as copetitioner on March 7, 1990, alleging that an amicable
settlement had been reached with private respondents. The
Court granted the motion on March 19, 1990.
After considering the pleadings filed by the parties and the
arguments raised therein, the Court finds reversible error on
the part of the Court of Appeals in so far; as it disallowed
petitioners' intervention in the case before the trial court and
ordered the latter to cease and desist from proceeding with
the case.
1. A reading of the Agency Agreement fails to support the
conclusion that K.K. Shell is a sub-agent of NSS and is,
therefore, bound by the agreement.
The body of the Agency Agreement entered into by and
between Crestamonte (referred to in the agreement as
"Owner") and NSS ("Agent") provides:

WITNESSETH
That the OWNER has appointed and by these presents
hereby appoints the AGENT as its General Agents for all
Japan in connection with the Owner's vessels and/or
providing suitable vessels for Japan Ports under the following
terms and conditions:
1.0 - In general, the Agent will abide by the
Owner's decisions regarding the mode of
operations of the vessels in Japan and that all
cargo bookings, vessel's fixtures/charters, etc.
by the Agent, shall always be subject to the
prior approval and consent of the Owners.
2.0 - That the Agent shall provide for the
necessary
services
required
for
the
husbanding of the Owner's vessels in all Japan
Ports and issue Bill(s) of Lading to Shippers in
the form prescribed by the Owners.
3.0 - That the Agent shall be responsible for
fixing south-bound cargoes with revenues
sufficient to cover ordinary liner operation
expenses
such
as
bunkers,
additives,
lubricating
oil,
water,
running
repairs,
drydocking expenses, usual port disbursement
accounts, cargo handling charges including
stevedorage, provisions and ship's stores and
cash advance to crew (excluding crew
provisions).

costs on Owner's liner service carried forward

from the present Owner's agent, subject to
approval of Owner's Representative in Japan in
regard to amount and nature thereof.
4.0- That the agent shall furnish office space of
approximately thirty (30) square meters for the
exclusive use of the Owner and its
representatives, within the premises of the
Agent's office, free of charge.
5.0 That the responsibilities of the Agent in
regard to the cargo shall begin, in the case of
imports into the territory of Japan, from the
time such cargo has left the ship's tackles, and
shall cease, in case of export, upon completion
of loading.
6.0 That the remuneration of the Agent from
the Owner shall be as follows:
xxx xxx xxx
7.0 That the Agent shall exert best efforts to
recommend to Owners stevedoring and other
expenses incurred in connection with work on
board the Owner's vessels, as well as customs
house charges, pilotage, harbour dues, cables,
etc. which are for Owner's account, on the
cheapest possible terms. Owners shall decide
and may appoint through the Agent the
services described herein.

The Agent expressly agrees that the Owner's

cash flow in Japan shall be essentially the
Agent's responsibility, and should the revenue
for south-bound cargoes as above-mentioned
be insufficient to cover the aforesaid expenses,
the Agent shall provide credit to the extent of
the vessels' requirements, provided however
that said obligation shall be secured by the
Owner committing at least forty-eight (48)
mailings of Japan/Philippines liner service per
year.

8.0 That the Agent shall be responsible for

the due collection of and due payment to the
Owner of all outward freight prepaid for cargo
without delay upon the sailing of each vessel
from the port. The Agent shall be also
responsible for the due collection of all inward
freight payable at the port against delivery
unless otherwise instructed by the Owner to
the contrary.

The Agent shall settle, in behalf of the Owner,

all outstanding payments for the operation

9.0 The account statements supported by

vouchers in two copies itemized for each
service and/or supply for each vessel, shall be

forwarded by the Agent to the Owner promptly

after the departure of each vessel but in no
case later than 60 days thereafter.
10.0 That the freightage to be collected by
the Agent in Japan shall be paid to the Owner
after
deducting
the
total
amount
of
disbursements incurred in Japan.
11.0 That this Agreement takes effect as of
April 15, 1983 and shall remain in force unless
terminated by either party upon 60 days
notice.
12.0 That this Agreement shall be governed
by the Laws of Japan. Any matters, disputes,
and/or differences arising between the parties
hereto concerned regarding this reement shall
be subject exclusively to the jurisdiction of the
District Courts of Japan. [Annex "G" of the
Petition, Rollo, pp. 100-104.]
No express reference to the contracting of sub-agents or the
applicability of the terms of the agreement, particularly the
choice-of-forum clause, to sub-agents is made in the text of
the agreement. What the contract clearly states are NSS'
principal duties, i.e., that it shall provide for the necessary
services required for the husbanding of Crestamonte's
vessels in Japanese ports (section 2.0) and shall be
responsible for fixing southbound cargoes with revenues
sufficient to cover ordinary expenses (section 3.0).itc-asl
Moreover, the complaint-in-intervention filed by K.K. Shell
merely alleges that it provided and supplied the MV Estella
with marine diesel oil/fuel, upon request of NSS who was
acting for and as duly appointed agent of Crestamonte [Rollo,
pp. 116117.] There is thus no basis for the Court of Appeal's
finding, as regards K.K Shell in relation to its intervention in
Civil Case No. 87-38930, that "the sub-agents admitted in
their pleadings that they were appointed as local agent/subagent or representatives by NSS by virtue of said Agency
Agreement" [Decision, p. 7; Rollo, p. 33.] What the Court of
Appeals could have been referring to was K.K. Shell's Urgent
Motion for Leave to Intervene dated February 24, 1987 in
another case (Civil Case No. 86-38704) in another court and
involving other vessels (NW Ofelia and MV Christina C),

where it was alleged that K.K. Shell is "one of the

representatives of NS Shipping Corporation for the supply of
bunker oil, fuel oil, provisions and other necessaries to
vessels of which NS Shipping Corporation was the general
agent." [Comment, p. 17; Rollo, p. 274.] However, this
allegation does not conclusively establish a sub-agency
between NSS and K.K. Shell. It is therefore surprising how the
Court of Appeals could have come to the conclusion, just on
the basis of the Agency Agreement and the pleadings filed in
the trial court, that "Crestamonte is the principal, NSS is the
agent and ... Fu Hing and K.K Shell are the sub-agents."
[Decision, p. 6; Rollo, p. 32.]
In view of the inconclusiveness of the Agency Agreement and
the pleadings filed in the trial court, additional evidence, if
there be any, would still have to be presented to establish
the allegation that K.K. Shell is a sub-agent of NSS.
In the same vein, as the choice-of-forum clause in the
agreement (paragraph 12.0) has not been conclusively
shown to be binding upon K.K. Shell, additional evidence
would also still have to be presented to establish this
defense, K.K. Shell cannot therefore, as of yet, be barred
from instituting an action in the Philippines.
2. Private respondents have anticipated the possibility that
the courts will not find that K.K. Shell is expressly bound by
the Agency Agreement, and thus they fall back on the
argument that even if this were so, the doctrine of forum non
conveniens would be a valid ground to cause the dismissal of
K.K. Shell's complaint-in-intervention.
K.K. Shell counters this argument by invoking its right as
maritime lienholder. It cites Presidential Decree No. 1521, the
Ship Mortgage Decree of 1978, which provides:
SEC. 21. Maritime Lien for Necessaries; person
entitled to such lien-Any person furnishing
repairs, supplies, to wage, use of dry dock or
marine railway, or other necessaries, to any
vessel, whether foreign or domestic, upon the
order of the owner of such vessel, or of a
person authorized by the owner, shall have a
maritime lien on the vessel, which may be
enforced by suit in rem, and it shall be

necessary to allege or prove that credit was

given to the vessel.
Private respondents on the other hand argue that even if P.D.
No. 1521 is applicable, K.K. Shell cannot rely on the maritime
lien because the fuel was provided not exclusively for the
benefit of the MV Estella, but for the benefit of Crestamonte
in general. Under the law it must be established that the
credit was extended to the vessel itself. Now, this is a
defense that calls precisely for a factual determination by the
trial court of who benefitted from the delivery of the fuel.
Hence, again, the necessity for the reception of evidence
before the trial court.
In other words, considering the dearth of evidence due to the
fact that the private respondents have yet to file their
answer in the proceedings below and trial on the merits is
still to be conducted, whether or not petitioners are indeed
maritime lienholders and as such may enforce the lien
against the MV Estella are matters that still have to be
established.
Neither are we ready to rule on the private respondents'
invocation of the doctrine of forum non conveniens, as the
exact nature of the relationship of the parties is still to be
established. We leave this matter to the sound discretion of
the trial court judge who is in the best position, after some
vital facts are established, to determine whether special
circumstances require that his court desist from assuming
jurisdiction over the suit.

It was clearly reversible error on the. part of the Court of

Appeals to annul the trial court's orders, insofar as K.K. Shell
is concerned, and order the trial court to cease and desist
from proceeding with Civil Case No. 87-38930. There are still
numerous material facts to be established in order to arrive
at a conclusion as to the true nature of the relationship
between Crestamonte and K.K. Shell and between NSS and
K.K. Shell. The best recourse would have been to allow the
trial court to proceed with Civil Case No. 87-38930 and
consider whatever defenses may be raised by private
respondents after they have filed their answer and evidence
to support their conflicting claims has been presented. The
Court of Appeals, however, substituted its judgment for that
of the trial court and decided the merits of the case, even in
the absence of evidence, on the pretext of reviewing an
interlocutory order.
WHEREFORE, the petition is GRANTED and the decision of the
Court of Appeals is REVERSED in CA-G.R. SP No. 12999,
insofar as it annulled the order of the August 11, 1987 and
directed the trial court to cease and desist from proceeding
with Civil Case No. 87-38930.
SO ORDERED.

the Guardian prior to May 1, 1918. As a condition to their

right to do business in Germany, the insurance companies
were required to and did submit to the supervision and
control of the German insurance officials, to invest the
45 F.2d 426 (1930)

reserves arising from German policies in German securities,

and to establish, and they do now maintain, an office in that

HEINE

country with a resident representative or agent upon whom

v.

service of process can be made.

NEW YORK LIFE INS. CO.

The actions now pending are brought and prosecuted in the
No. 10465.
District Court, D. Oregon.
December 1, 1930.

name of, or as assignee of the insured by, certain parties in

the United States and Germany, under an irrevocable power
of attorney, by which they are authorized and empowered to
sue for, collect, receive, and receipt for all sums due or owing
under the policies, or compromise the same in consideration

C. T. Haas and E. B. Seabrook, both of Portland, Or., for

of an assignment and transfer to them of the undivided 25

plaintiff.

per cent. interest in the policies and all rights accruing

thereunder.

Huntington, Wilson & Huntington and Clark & Clark, all of

Portland, Or., for defendant.

None of the parties to the litigation are residents or

inhabitants of this district. The plaintiffs reside in, and are

BEAN, District Judge.

citizens of, the republic of Germany. The defendants are

corporations organized and existing under the laws of New

This is one of a series of cases pending in this court against

the New York Life Insurance Company and the Guardian
Insurance Company, each of which is a New York corporation,
to recover on some two hundred and forty life insurance
policies made and issued by the defendants in Germany, in
favor of German citizens and subjects, and payable in
German marks. The policies of the New York Life Insurance
Company were issued prior to August 1, 1914, and those of

York, with their principal offices in that state, with statutory

agents in Oregon, upon whom service can be made. None of
the causes of action arose here, nor do any of the material
witnesses reside in the district, nor are any of the records of
the defendant companies pertaining to the policies in suit in
the district, but such records are either at the home office in
New York or at their offices in Germany. The courts of
Germany and New York are open and functioning and

competent to take jurisdiction of the controversies, and

I unhesitatingly concur in this view, for, as said by Mr. Justice

service can be made upon the defendants in either of such

Holmes in Cuba Railroad Co. v. Crosby, 222 U.S. 473, 32 S.

jurisdictions. To require the defendants to defend the actions

Ct. 132, 133, 56 L. Ed. 274, 38 L. R. A. (N. S.) 40: "It should

in

and

be remembered that parties do not enter into civil relations

unnecessary inconvenience and expense, and probably

in foreign jurisdictions in reliance upon our courts. They could

compel them to produce here (three thousand miles from

not complain if our courts refused to meddle with their

their home office) numerous records, books, and papers, all

affairs, and remitted them to the place that established and

of which are in daily use by it in taking care of current

would enforce their rights. * * * The only just ground for

business.

complaint would be if their rights and liabilities, when

this

district

would

impose

upon

them

great

enforced by our courts, should be measured by a different

In addition, it would no doubt consume months of the time of

rule from that under which the parties dealt."

this court to try and dispose of these cases, thus necessarily

disarranging the calendar, resulting in delay, inconvenience,

*427 It is apparent that the plaintiffs are seeking by these

and expense to other litigants who are entitled to invoke its

actions to impose on the defendants a liability under a

jurisdiction.

different rule than "that under which the parties dealt."

Under these circumstances, the defendants, while conceding

The courts of Germany have ruled that any person seeking to

that the court has jurisdiction of the person and subject-

recover on a civil contract made in Germany prior to August,

matter, urges that it should refuse, in its discretion, to

1924, and payable in marks, can only recover on the basis

exercise such jurisdiction.

provided in the monetary law of 1924. Manifestly the

plaintiffs are not proceeding on any such theory.
It is argued by the plaintiffs that, because the court has
jurisdiction of the subject-matter and the parties, it has no
discretion, but should proceed with the case, regardless of
where the cause of action arose, or the law by which it is
controlled, or the residence or convenience of the parties and
witnesses, or the difficulty the court would encounter in
attempting to interpret and enforce a foreign contract, or the
interference with the other business of the court. But that is
a matter resting in its discretion. It may retain jurisdiction, or

it may, in the exercise of a sound discretion, decline to do so,

See, also, Charter Shipping Co. v. Bowring, 281 U.S. 515, 50

as the circumstances suggest. The courts have repeatedly

S. Ct. 400, 74 L. Ed. 1008.

refused, in their discretion, to entertain jurisdiction of causes

of action arising in a foreign jurisdiction, where both parties

These, in my judgment, are cases of that kind. They are

are nonresidents of the forum. Gregonis v. Philadelphia & R.

actions brought on causes of action arising in Germany. The

Coal & Iron Co., 235 N.Y. 152, 139 N.E. 223, 32 A. L. R. 1, and

contract of insurance was made and to be paid there and in

note; Pietraroia v. New Jersey & Hudson River Ry. & Ferry Co.,

German currency. It is to be construed and given effect

197 N.Y. 434, 91 N.E. 120; Gregonis v. P. & R. Coal & Iron Co.,

according to the laws of the place where it was made. 22 Am.

235 N.Y. 152, 139 N.E. 223, 32 A. L. R. 1; Stewart v.

& Eng. Ency. of Law (2d Ed.) 1350. The courts of this country

Litchenberg, 148 La. 195, 86 So. 734; Smith v. Mutual Life

are established and maintained primarily to determine

Insurance Co., 14 Allen (96 Mass.) 336-343; National

controversies between its own citizens and those having

Telephone Mfg. Co. v. Du Bois, 165 Mass. 117, 42 N.E. 510,

business there, and manifestly the court may protect itself

30 L. R. A. 628, 52 Am. St. Rep. 503; Collard v. Beach, 81

against a flood of litigation over contracts made and to be

App. Div. 582, 81 N.Y.S. 619; Great Western Railway Co. v.

performed in a foreign country, where the parties and

Miller, 19 Mich. 305; Disconto Gesellschat v. Umbreit, 127

witnesses are nonresidents of the forum, and no reason

Wis. 651, 106 N.W. 821, 15 L. R. A. (N. S.) 1045, 115 Am. St.

exists why the liability, if any, cannot be enforced in the

Rep. 1063.

courts of the country where the cause of action arose, or in

the state where the defendant was organized and has its

As said by Mr. Justice Bradley in The Belgenland, 114 U.S.

principal offices. True, the courts of New York have declined

355, 5 S. Ct. 860, 864, 29 L. Ed. 152: "Circumstances often

to exercise jurisdiction over actions brought on insurance

exist which render it inexpedient for the court to take

policies similar to those in suit. Higgins v. N. Y. Ins. Co., 220

jurisdiction of controversies between foreigners in cases not

App. Div. 760, 222 N.Y.S. 819, and Von Nessen-Stone v. N. Y.

arising in the country of the forum; as, where they are

Life Ins. Co.[1] But that affords no reason why this court

governed by the laws of the country to which the parties

should do so. It is to me unthinkable that residents and

belong, and there is no difficulty in a resort to its courts; or

citizens of Germany may import bodily into this court

where they have agreed to resort to no other tribunals * * *

numerous actions against a nonresident defendant, on

not on the ground that it has not jurisdiction, but that, from

contracts made and payable in Germany, and insist as a

motives of convenience, or international comity, it will use its

matter of right that, because it has obtained jurisdiction of

discretion whether to exercise jurisdiction or not."

the defendant by service of its statutory agent, the

taxpayers, citizens, and residents of the district having
business in the court should stand aside and wait the

conclusion of the case, where, as here, the courts of

Germany and of the home state of the defendant are open
and functioning.
Judge Tucker, in the state court of Multnomah county, in an
able and well-considered opinion in a case brought on one of
the German policies (Kahn v. New York), reached the same
conclusion.

634 F. Supp. 842 (1986)

In re UNION CARBIDE CORPORATION GAS PLANT DISASTER
AT BHOPAL, INDIA IN DECEMBER, 1984.
Misc. No. 21-38 (JFK).
United States District Court, S.D. New York.
May 12, 1986.
As Amended June 10, 1986.

*843 Robins, Zelle, Larson & Kaplan, Minneapolis, Michael V.

chemical plant owned and operated by Union Carbide India

Ciresi, Bruce A. Finzen, Roberta B. Walburn, D.S. Sastri of

Limited ("UCIL"). The plant, situated in the northern sector of

counsel. Barrett, Smith, Schapiro, Simon & Armstrong, New

the city, had numerous hutments adjacent to it on its

York City, Gerald A. Novack, of counsel, for the Union of India.

southern

side

which

were

occupied

by

impoverished

squatters. UCIL manufactured the pesticides Sevin and Temik

Waite, Schneider, Bayless & Chesley Co., L.P.A., Cincinnati,

at the Bhopal plant at the request of, and with the approval

Ohio, Stanley M. Chesley, Phillip B. Allen, Jan Levien, of

of, the Government of India. (Affidavit of John MacDonald

counsel, Bailey & Broder, New York City, F. Lee Bailey,

("MacDonald Aff.") at 2). UCIL was incorporated under Indian

Michael C. Zwal, of counsel, for individual plaintiffs.

law in 1934. 50.9% of its stock is owned by the defendant,

Hoffinger, Friedland, Dobrish, Bernfeld & Hasen, New York

City, Jack S. Hoffinger, of counsel, Liaison Counsel.
Kelley Drye & Warren, New York City, Bud G. Holman, William
A. Krohley, Lisa E. Cleary, of counsel, for defendant.
Christic Institute, Washington, D.C., Rob Hager, Shelley D.
Hayes, of counsel, for Amicus Curiae.

Union

Carbide

Corporation,

New

York

corporation.

(MacDonald Aff. at 1). Methyl isocyanate (MIC), a highly toxic

gas, is an ingredient in the production of both Sevin and
Temik. On the night of the tragedy MIC leaked from the plant
in substantial quantities for reasons not yet determined.
The prevailing winds on the early morning of December 3,
1984 were from Northwest to Southeast. They blew the
deadly gas into the overpopulated hutments adjacent to the
plant and into the most densely occupied parts of the city.
The results were horrendous. Estimates of deaths directly

*844 OPINION and ORDER

KEENAN, District Judge:

attributable to the leak range as high as 2,100. No one is

sure exactly how many perished. Over 200,000 people
suffered injuriessome serious and permanent some mild and
temporary.

Livestock

were

killed

and

crops

damaged.

Businesses were interrupted.

FACTUAL BACKGROUND

On December 7, 1984 the first lawsuit was filed by American

lawyers in the United States on behalf of thousands of

On the night of December 2-3, 1984 the most tragic

Indians. Dawani et al. v. Union Carbide Corp., S.D.W.Va. (84-

industrial disaster in history occurred in the city of Bhopal,

2479).

state of Madhya Pradesh, Union of India. Located there was a

commenced in federal courts in the United States. The

Since

then

144

additional

actions

have

been

actions have all been joined and assigned by the Judicial

487,000 claims have been filed in India pursuant to the

Panel on Multidistrict Litigation to the Southern District of

"scheme."

New York by order of February 6, 1985, 601 F. Supp. 1035.

There presently are 145 actions filed in the United States
The

been

District Court for the Southern District of New York under the

superseded by a consolidated complaint filed on June 28,

Judicial Panel for Multidistrict Litigation's order of February 6,

1985.

1985, involving approximately 200,000 plaintiffs.

The

individual

Indian

federal

Government

court

on

complaints

March

29,

have

1985

enacted

Before this Court is a motion by the defendant Union Carbide

legislation, the Bhopal Gas Leak Disaster (Processing of

Corporation ("Union Carbide") to dismiss the consolidated

Claims) Act (21 of 1985) ("Bhopal Act"), providing that the

action on the grounds of forum non conveniens.

Government of India has the exclusive right to represent

Indian plaintiffs in India and elsewhere in connection with the
tragedy. Pursuant to the Bhopal Act, the Union of India, on
April 8, 1985, filed a complaint with this Court setting forth

DISCUSSION

claims for relief similar to those in the consolidated complaint

The doctrine of forum non conveniens allows a court to

of June 28, 1985.

decline jurisdiction, even when jurisdiction is authorized by a

By order of April 25, 1985 this Court established a Plaintiffs'

general venue statute. In support of its position that the

Executive Committee, comprised of F. Lee Bailey and Stanley

consolidated action before the Court should be transferred to

M. Chesley, Esqs., who represented individual plaintiffs and

a more convenient forum within the Union of India pursuant

Michael V. Ciresi, Esq., whose firm represents the Union of

to this doctrine, Union Carbide relies on the United States

India. Jack S. Hoffinger, Esq., who represents individual

Supreme Court's decisions in Gulf Oil Corp. v. Gilbert, 330

plaintiffs, was appointed liaison counsel for the Plaintiffs'

U.S. 501, 67 S. Ct. 839, 91 L. Ed. 1055 (1947) and Piper

Executive Committee.

[1]

Aircraft Co. v. Reyno, 454 U.S. 235, 102 S. Ct. 252, 70 L. Ed.
2d 419 (1981). The plaintiffs cite numerous other lower

On September 24, 1985, pursuant to the Bhopal Act, the

United States federal court cases in their briefs and seek to

Central Government of India framed a "scheme" for the

distinguish the Supreme Court's decisions from this case. Of

Registration and Processing of Claims arising out of the

course, Gilbert and Piper are the touchstones in sorting out

disaster. According to the Union of India's *845 counsel, over

and examining the contentions of both sides to this motion

on the various factors bearing on convenience.

Piper teaches a straightforward formulation of the doctrine

Piper 454 U.S. at 256, 102 S. Ct. at 266 (footnote omitted).

of forum non conveniens. A district court is advised to

determine first whether the proposed alternative forum is

In the case now before the Court, in which the plaintiffs,

"adequate." This inquiry should proceed in the order followed

including the Union of India, are foreign, and share a home

below.

"sound

forum which is not the instant forum, the assumption that

discretion," Piper at 257, 102 S. Ct. at 266, the district court

this forum is convenient is not completely reasonable. The

should consider relevant public and private interest factors,

foreign plaintiffs' choice of the United States forum "deserves

and reasonably balance those factors, in order to determine

less deference" than would be accorded a United States

whether dismissal is favored. This Court will approach the

citizen's choice. This Court will apply the presumption in

various

favor of plaintiffs' choice of forum with "less than maximum

Then,

as

concerns

in

matter

the

within

same

direct

its

manner

in

force." Piper at 261, 102 S. Ct. at 268. See note 23 at

which Piper and Gilbert set them out.

864, infra.
At this juncture, it would be appropriate to discuss the
presumptions

on

a forum

non

conveniens motion.

In Piper, the Court discussed its earlier finding in Koster v.

Lumbermens Mutual Casualty Co., 330 U.S. 518, 67 S. Ct.

1. Preliminary Considerations.

828, 91 L. Ed. 1067 (1947), which suggested that a plaintiff's

choice of forum was entitled to great deference when the

"At the outset of any forum non conveniens inquiry, the court

forum chosen was the home of the plaintiff. This presumption

must

was based on the fact that the choice of the home forum

forum." Piper at 254, n. 22, 102 S. Ct. at 265, n. 22. The

indicated a reasonable assumption that the choice was

elements of that inquiry are set forth in Piper. First, the Court

convenient. Koster at 524, 67 S. Ct. at 831. Conversely,

said, "[o]rdinarily, this requirement will be satisfied when the

the Piper Court found:

defendant

determine

is

whether

`amenable

there

to

exists

process'

an

in

alternative

the

other

jurisdiction." Piper at 254, n. 22, *846 102 S. Ct. at 265, n.

22, quoting Gilbert 330 U.S. at 506-507, 67 S. Ct. at
When the plaintiff is foreign, however, this assumption is

842. Gilbert states

much less reasonable. Because the central purpose of

conveniens "presupposes at least two forums in which the

any forum non conveniens inquiry is to ensure that the trial is

defendant is amenable to process."

convenient,
deference.

foreign

plaintiff's

choice

deserves

that

the

doctrine

of forum

non

less
Extending

the

limited

inquiry

of Gilbert, the Piper Court

delved into the relevance of the substantive and procedural

differences in law which would be applied in the event a case

Another practical concern relating to the "change in law"

was

transferred

on

the

of forum

non

inquiry was discussed by the Piper court. Based on the

that

was

liberality of United States federal law as compared to much

doctrine

foreign law with respect to availability of strict liability for

of forum non conveniens, as well as grossly impractical, to

tort, malleable and diverse choice of law rules among the 50

consider the impact of the putative transferee forum's law on

states, availability of jury trials, contingent fee arrangements

the

non

and extensive discovery provisions, the Court observed that

conveniens motion: "[I]f conclusive or substantial weight

a change of forum might frequently involve an unfavorable

were given to the possibility of a change in law, the forum

change

non

defendants. Piper at 252, n. 18, 102 S. Ct. at 264, n. 18.

conveniens. The Piper Court

theoretically

inconsistent

plaintiff

in

its

conveniens doctrine

grounds
determined

with

the

decision

would

underlying

on

it

a forum

become

useless." Piper 454 U.S. at 250, 102 S. Ct. at 263.

virtually

[2]

of

law

for

foreign

plaintiffs

suing

American

Consequently, if the unfavorable change in law were a major

factor in the analysis:

The Court listed numerous practical considerations which led

to its conclusion that an unfavorable change in law for
plaintiff was not a relevant factor in the forum analysis. First,

[T]he

the Court observed that if the chance of a change in law

attractive to foreign plaintiffs, would become even more

were given substantial weight, choice of law questions would

attractive. The flow of litigation into the United States would

"become extremely important." Piper at 251, 102 S. Ct. at

increase and further congest already crowded courts.

American

courts,

which

are

already

extremely

263. U.S. courts would "have to compare the rights,

remedies, and procedures available" within the two proposed
alternative forums, to determine whether a disadvantageous
change in law would occur upon transfer. Id. Since "[t]he
doctrine of forum non conveniens, however, is designed in
part to help courts avoid conducting complex exercises in
comparative law," the change in law analysis would subvert

Piper at 252, 102 S. Ct. at 264 (footnotes omitted).

At the point, however, where the possible change in law
would provide "no remedy at all" to plaintiff, a court may
conclude

that

no

adequate

alternative

exists.

As

the Piper Court observed, it did not hold that:

the doctrine itself. Id. Thus, a court engaged in the inquiry

regarding the existence and adequacy of an alternative
forum should not hinge its decision on an unfavorable
change in law.[3]

[T]he

possibility

of

an

unfavorable

change

in

law

should never be a relevant consideration in a forum non

conveniens inquiry. Of course, if the remedy provided by the
alternative forum is so clearly inadequate or unsatisfactory

that it is no remedy at all, the unfavorable change in law may

University of Wisconsin Law School. Professor Galanter's

be given substantial weight; the district court may conclude

credentials are impressive; he was a Fulbright Scholar at the

that dismissal would not be in the interests of justice.

Faculty of Law of Delhi University and specializes in South

Asian Studies at the University of Wisconsin Law School. He

Piper at 254, 102 S. Ct. at 265 (emphasis in original)

(footnote omitted). Thus, while it *847 is not a "major factor"
in the analysis, a court must at least consider the effect on
plaintiffs of a change in law upon transfer.

courts do not offer an adequate forum for this litigation by

virtue of the relative "procedural and discovery deficiencies
would

(Memorandum

thwart
in

the

victims'

Opposition

by

quest

for"

Plaintiffs'

justice.

Executive

Committee ("Memo in Opp.") at 2). The defendant disputes

this contention.
Plaintiffs'

judiciary and bar as far less persuasive than those of N.A.

admitted to practice in India for over 40 years. Both are
Senior Advocates before the Supreme Court of India. Mr.
Palkhivala served as Indian Ambassador to the United States
from 1977 to 1979, and has represented the Indian
government

on

three

occasions

before

international

tribunals.
Although the outcome of this analysis, given the rule

preliminary

concern,

regarding

defendant's

amenability to process in the alternative forum, is more than

sufficiently met in the instant case. Union Carbide has
unequivocally

views his opinions concerning the Indian legal system, its

Palkhivala and J.B. Dadachanji, each of whom has been

To a great extent, the plaintiffs in this case argue that Indian

[which]

is not, however, admitted to practice in India and the Court

acknowledged

that

it is

subject

to

of Piper regarding change in law, seems self-evident, the

Court will review plaintiffs' argument on the inadequacy of
the Indian forum out of deference to the plaintiffs.

the

jurisdiction of the courts of India (Defendant's Memorandum

in Reply filed December 20, 1985 ("Reply Memo") at 8); (oral
argument January 3, 1986, transcript at 29, comment of Bud
Holman, counsel for Union Carbide). Union Carbide is
definitely amenable to process in India.
Beyond this initial test, plaintiffs and amicus curiae[4] argue
that the Indian legal system is inadequate to handle the
Bhopal litigation. In support of this position, plaintiffs have
submitted the affidavit of Professor Marc S. Galanter of the

A. Innovation in the Indian Judicial System.

Professor Galanter describes the Indian common law legal
system, inherited from the British, in terms of its similarity to
that of other common law systems. He compares the system
favorably to that of the United States or Great Britain in
terms of the appellate structure, the rule of stare decisis, the
role of the judiciary as "guardian of [India's] democratic
structure and protector of citizens' rights." (Galanter Aff., at

6-12) before pointing to its ostensible deficiencies. According

States,[6] and that postponements and high caseloads are

to Professor Galanter, India's legal system "was imposed on

widespread. Galanter urges that the backlog is a result of

it" during the period of colonial rule. (Galanter Aff. at 11).

Indian procedural law, which allows for adjournments in mid-

Galanter argues that "Indian legal institutions still reflect

hearing, and for multiple interlocutory and final appeals.

their colonial origins," (Galanter Aff. at 12), in terms of the

Numerous appeals and "[c]onsiderable delay [are] caused by

lack of broadbased legislative activity, inaccessibility of legal

the tendency of courts to avoid the decision of all the

information and legal services, burdensome court filing fees

matters in issue in a suit, on the ground that the suit could

and limited innovativeness with reference to legal practice

be disposed of on a preliminary point." (Galanter Aff. at 17;

and education. (Galanter Aff. at 12).

18-20, 21, quoting Indian Law Commission, 54th Report

(1973) pp. 12-13).

On the question of innovativeness, Mr. Palkhivala responds

with numerous examples of novel treatment of complex legal
issues by the Indian Judiciary.

[5]

This Court acknowledges that delays and backlog exist in

In the words of the former

Indian courts, but United States courts are subject to delays

ambassador of India to the United States, "a legal system is

and backlog, too.See Remarks of Honorable Warren E.

not *848 a structure of fossils but is a living organism which

Burger, Chief Justice, Supreme Court of the United States,

grows

100 F.R.D. 499, 534 (1983).

through

the

judicial

process

and

statutory

enactments." (Palkhavala Aff. at 3). The examples cited by

defendant's experts suggest a developed and independent

However, as Mr. Palkhivala states, while delays in the Indian

judiciary. Plaintiffs present no evidence to bolster their

legal system are a fact of judicial life in the proposed

contention that the Indian legal system has not sufficiently

alternative forum, there is no reason to assume that the

emerged

Bhopal litigation will be treated in ordinary fashion.

from

its

colonial

heritage

to

display

the

innovativeness which the Bhopal litigation would demand.

Their claim in this regard is not compelling.

The Bhopal tragedy has already been approached with

imagination in India. Demonstrating the creativity and
flexibility of the Indian system, the Parliament of India has
passed the Bhopal Act in order to deal with the cases arising

B. Endemic Delays in the Indian Legal System.

from the sad events of December 3, 1984. The Bhopal Act

permits the cases to be treated "speedily, effectively,

Galanter discusses the problems of delay and backlog in

equitably and to the best advantage of the claimants."

Indian courts. Indeed, it appears that India has approximately

(Palkhivala Aff. at 11).

one-tenth the number of judges, per citizen, as the United

Mr. Dadachanji refers to another Indian case which arose

partnerships. These factors, *849 it is argued, limit the

from a gas leak in New Delhi. The Chief Justice and another

Indian bar's ability to handle the Bhopal litigation. As Mr.

Justice of the Supreme Court of India ordered the presiding

Dadachanji indicates, Indian lawyers have competently dealt

court to expedite adjudication of claims. MC Mehta v. Union

with complex technology transfers, suggesting capability

of India. (Dadachanji Aff. at 11 and Annexure A thereto). In

within the technological and scientific areas of legal practice,

another instance, the Indian Supreme Court directed the

if not "specialization." (Dadachanji Aff. at 8). Moreover,

High Court to hear a given matter on a daily basis, and set a

Indian

deadline for delivering judgment (Dadachanji Aff. at 11 and

investigative ability, Mr. Dadachanji persuasively points out

Annexure B thereto). Other means of coping with delay are

that the Central Bureau of Investigation ("CBI") of the Union

appointment of special tribunals by the Government of India

of India is well equipped to handle factual inquiry, as is the

(Dadachanji Aff. at 12 and Annexure C thereto), and

Commission of Enquiry constituted by the state of Madhya

assignment of daily hearing duties to a single special judge,

Pradesh. (Dadachanji Aff. at 8). While Indian attorneys may

otherwise unburdened, to hear a special matter. (Dadachanji

not customarily join into large law firms, and as Mr. Palkhivala

Aff. at 11). This Court is persuaded, by the example of the

states, are limited by present Indian law to partnerships of no

Bhopal Act itself and other cases where special measures to

more than twenty, this alone or even in concert with other

expedite were taken by the Indian judiciary, that the most

factors does not establish the inadequacy of the Indian legal

significant, urgent and extensive litigation ever to arise from

system. (Palkhivala Aff. at 8). There is no reason the Indian

a single event could be handled through special judicial

legislature could not provide for the expansion of lawfirms, if

accommodation in India, if required.

such a choice is required. In any event, this Court is not

attorneys

use

experts,

when

necessary.

As

to

convinced that the size of a law firm has that much to do

with the quality of legal service provided. Many small firms in
this country perform work at least on a par with the largest
C. Procedural and Practical Capacity of Indian Courts.

firms. Bigger is not necessarily better.

Plaintiffs contend that the Indian legal system lacks the

Moreover, since the Union of India purports to represent all

wherewithal to allow it "to deal effectively and expeditiously"

the claimants, it is likely that if the case were transferred to

with the issues raised in this lawsuit. (Memo in Opp. p. 53).

India, the Attorney General or Solicitor General of India and

the Advocate General of Madhya Pradesh, with attendant

Plaintiffs urge that Indian practitioners emphasize oral skills

staffs, would represent the claimants. The Indian bar appears

rather than written briefs. They allegedly lack specialization,

more than capable of shouldering the litigation if it should be

practical investigative techniques and coordination into

transferred to India. (Palkhivala Aff. at 9).

Next, plaintiffs and Professor Galanter argue that the

familiar." (Galanter Aff. at 37). What is different, Galanter

substantive tort law of India is not sufficiently developed to

asserts, is the complete absence of tort law relating to high

accommodate the Bhopal claims. Plaintiffs trace the lack of

technology or complex manufacturing processes. This is of

sophistication in Indian tort law to the presence of court fees

no moment with respect to the adequacy of the Indian

for litigants as inhibiting the filing of civil suits. Though the

courts. With the groundwork of tort doctrine adopted from

filing fees may have had historical significance, they are

the common law and the precedential weight awarded British

irrelevant here. Professor Galanter acknowledges that court

cases, as well as Indian ones, it is obvious that a well-

fees may be waived for "poor parties or for specific classes of

developed base of tort doctrine exists to provide a guide to

litigants." (Galanter Aff. at 28). In fact, filing fees have been

Indian courts presiding over the Bhopal litigation. In any

waived for claimants in India in the Bhopal litigation already

event, much tort law applied in American cases involving

begun there.

complex technology has its source in legal principles first

enunciated

in

Victorian

England. See,

e.g.,

Rylands

v.

Professor Galanter asserts that India lacks codified tort law,

Fletcher, 1868, L.R. 3 H.L. 330. As Mr. Palkhivala stated in his

has little reported case law in the tort field to serve as

affidavit:

precedent, and has no tort law relating to disputes arising

out of complex product or design liability. (Galanter Aff. at
30-36). As an illustration of the paucity of Indian tort law,

*850 The plant itself was the product of highly complex

Professor Galanter states that a search through the All-India

technology, but complexity of the technology cannot be

Reports for the span from 1914 to 1965 revealed only 613

equated with complexity of legal issues. The principles of

tort cases reported. (Galanter Aff. at 32). Mr. Dadachanji

liability and damages involved in the Bhopal cases are all

responds that tort law is sparsely reported in India due to

well established in India. The complexity is not in the nature

frequent settlement of such cases, lack of appeal to higher

or determination of legal issues but in the application of the

courts, and the publication of tort cases in specialized

law to the events which took place in Bhopal. Well settled law

journals other than the All-India Reports. (Dadachanji Aff. at

is to be applied to an unusual occurrence.

16-17; Palkhivala Aff. at 10). In addition, tort law has been

codified in numerous Indian statutes. (Dadachanji Aff. at 1617).

Plaintiffs next assert that India lacks certain procedural

As Professor Galanter himself states, "the major categories of

tort,

(Palkhivala Aff. at 7).

their

elements,

the

[theories]

of

liability,

defenses, respondeat superior,the theories of damagesare all

devices which are essential to the adjudication of complex

cases, the absence of which prevent India from providing an
adequate alternative forum. They urge that Indian pre-trial

discovery is inadequate and that therefore India is an

law of Madhya Pradesh would be applied, this Court is still

inadequate alternative forum. Professor Galanter states that

not moved by plaintiffs' argument regarding impleader or

the only forms of discovery available in India are written

complex litigation.

interrogatories, inspection of documents, and requests for

admissions. Parties alone are subject to discovery. Third-

Although no specific provision in the Indian Code of Civil

party witnesses need not submit to discovery. Discovery may

Procedure permits the impleading of third-parties from whom

be directed to admissible evidence only, not material likely to

contribution is sought, other provisions in the Code do

lead to relevant or admissible material, as in the courts of

provide for impleader. As both parties to this motion state,

the United States. Parties are not compelled to provide what

Order 1, Rule 10(2) of the Indian Code of Civil Procedure

will be actual proof at trial as part of discovery.

"allows the court to add additional parties if the presence of

those parties is `necessary in order to enable the Court

These limits on discovery are adopted from the British

effectively and completely to adjudicate upon and settle all

system. Similar discovery tools are used in Great Britain

questions involved in the suit.'" (Galanter Aff. at 60;

today. This Court finds that their application would perhaps,

Dadachanji Aff. at 18). Professor Galanter posits that a joint

however, limit the victims' access to sources of proof.

tortfeasor would not be considered a necessary party, and

Therefore, pursuant to its equitable powers, the Court directs

would not be joined. Defendant's expert, conversely, asserts

that the defendant consent to submit to the broad discovery

that a party can be added to prevent multiplicity of suits and

afforded by the United States Federal Rules of Civil Procedure

conflicts

if or when an Indian court sits in judgment or presides over

defendants would be able to seek contribution from third-

pretrial proceedings in the Bhopal litigation.[7] Any dismissal

parties if joinder would prevent repetitive litigation or

of the action now before this Court is thus conditioned on

inconsistency. Moreover, the broad provision of inherent

defendant's consent to submit to discovery on the American

powers to aid the ends of justice, as codified at Section 151

model, even after transfer to another jurisdiction.

of the Indian Code of Civil Procedure would prevent an

of

decisions.

Thus,

Mr.

Dadachanji

argues,

ultimate miscarriage of *851 justice in the area of impleader.

The ostensible lack of devices for third-party impleader or for

(Dadachanji Aff. at 19).[8]

organizing complex cases under the law of the state of

Madhya Pradesh are two other procedural deficiencies which

The absence of procedures or mechanisms within the Indian

plaintiffs assert preclude a finding that India offers an

judiciary to handle complex litigation is presented as support

adequate alternative forum. Assuming for the moment that,

for plaintiffs' position regarding the non-existence of an

upon appropriate transfer, the Bhopal litigation would be

adequate alternative forum. Professor Galanter asserts, for

adjudicated by the local district court in Bhopal, and that the

example, that Indian judges do not promote settlements. The

point is wholly irrelevant to the question of whether an

representative classes. The "scheme" for registration and

adequate alternative forum exists. In any event, this Court

processing of claims, see supra, at 4, could perform the task

has labored hard and long to promote settlement between

of evaluating the specific amounts of claims. Moreover, Mr.

the parties for over a year, to no avail. It would appear that

Dadachanji gives at least three examples where Indian courts

settlement, although desirable for many reasons, including

have consolidated suits pursuant to their inherent power

conservation of attorneys' fees and costs of litigation,

under Section 151 of the Indian Code of Civil Procedure. In at

preservation of judicial resources, and speed of resolution, is

least one case, such consolidation allegedly occurred without

unlikely regardless of the level of activism of the presiding

consent of the parties. (Dadachanji Aff. at 9). The absence of

judge.

a rule for class actions which is identical to the American rule

does not lead to the conclusion that India is not an adequate

Plaintiffs' next contention is that since no class action

alternative forum.

procedure exists in India expeditious litigation of the Bhopal

suits would be impossible. As with all of plaintiffs' other

Final points regarding the asserted inadequacies of Indian

arguments, this purported deficiency does not constitute "no

procedure involve unavailability of juries or contingent fee

remedy" at all. Professor Galanter himself acknowledges that

arrangements

Order 1, Rule 8 of the Indian Code of Civil Procedure provides

arguments, but Mr. Palkhivala touches upon them. They are

a mechanism for "representative" suits, "where there are

easily disposed of. The absence of juries in civil cases is a

numerous persons having the same interest in one suit."

feature of many civil law jurisdictions, and of the United

(Galanter Aff. at 54). Even if the current state of Indian law

Kingdom. Piper at 252, n. 18, 102 S. Ct. at 264, n. 18 and

regarding "representative" suits involves application of the

citations therein. Furthermore, contingency fees are not

mechanism to pre-existing groups such as religious sects or

found in most foreign jurisdictions. Piper at 252, n. 18, 102 S.

associations, there is no reason to conclude that the Indian

Ct. at 264, n. 18. In any event, the lack of contingency fees is

legislature, capable of enacting the Bhopal Act, would not

not an insurmountable barrier to filing claims in India, as

see its way to enacting a specific law for class actions. In

demonstrated by the fact that more than 4,000 suits have

addition, it does not appear on the face of Order 1, Rule 8

been filed by victims of the Bhopal gas leak in India, already.

that

to

According to Mr. Palkhivala, moreover, well-known lawyers

preexisting groups. The Indian district court could adopt the

have been known to serve clients without charging any fees.

rule for use in a newly created class of injured, whose

(Palkhivala Aff. at 8).

the

"representative"

suit

is

expressly

limited

in

India.

Plaintiffs

do

not

press

these

members all have "the same interest" in establishing the

liability of the defendant. An Indian court has law available to

Plaintiffs' final contention as to the inadequacy of the Indian

create a representative class, or perhaps a few different

forum is that a judgment rendered by an Indian court cannot

be enforced in the United States without *852 resort to

rendered by the Indian court, and affirmed on appeal in India.

further extensive litigation. Conversely, plaintiffs assert,

Absent such consent to abide by and to "make good" on a

Indian law provides res judicata effect to foreign judgments,

foreign judgment, without challenge except for concerns

and precludes plaintiffs from bringing a suit on the same

relating to minimal due process, the motion to dismiss now

cause of action in India. (Galanter Aff. at 63-65). Mr.

under consideration will not be granted. The preference of

Dadachanji disputes this description of the Indian law of res

both parties to play ball on a distant field will be taken to its

judicata. He asserts that the pendency, or even final

limit, with each party being ordered to be bound by the

disposition, of an action in a foreign court does not prevent

decision of the respective foreign referees.

plaintiffs from suing in India upon the original cause of

action. Plaintiffs would not be limited, Mr. Dadachanji argues,

To sum up the discussion to this point, the Court determines

to an Indian action to enforce the foreign judgment.

that

(Dadachanji Aff. at 19-20). In addition, he states that an

alternative forum for the Bhopal litigation. Far from exhibiting

Indian court, before ordering that a foreign judgment be

a tendency to be so "inadequate or unsatisfactory" as to

given effect, would seek to establish whether the foreign

provide "no remedy at all," the courts of India appear to be

court had failed to apply Indian law, or misapplied Indian law.

well up to the task of handling this case. Any unfavorable

(Dadachanji Aff. at 20).

change in law for plaintiffs which might be suffered upon

the

Indian

legal

system

provides

an

adequate

transfer to the Indian courts, will, by the rule of Piper, not be

The possibility of non-enforcement of a foreign judgment by

given "substantial weight." Differences between the two legal

courts of either country leads this Court to conclude that the

systems, even if they inure to plaintiffs' detriment, do not

issue must be addressed at this time. Since it is defendant

suggest that India is not an adequate alternative forum. As

Union Carbide which, perhaps ironically, argues for the

Mr. Palkhivala asserts with some dignity, "[w]hile it is true to

sophistication of the Indian legal system in seeking a

say that the Indian system today is different in some

dismissal on grounds of forum non conveniens, and plaintiffs,

respects from the American system, it is wholly untrue to say

including the Indian Government, which state a strong

that it is deficient or inadequate. Difference is not to be

preference for the American legal system, it would appear

equated with deficiency." (Palkhivala Aff. at 4). Piper at 254,

that both parties have indicated a willingness to abide by a

102 S. Ct. at 265. The inquiry now turns to a weighing of the

judgment of the foreign nation whose forum each seeks to

public and private interest factors.

visit. Thus, this Court conditions the grant of a dismissal

on forum

non

conveniens grounds

on

Union

Carbide's

agreement to be bound by the judgment of its preferred

tribunal, located in India, and to satisfy any judgment

2. Private Interest Concerns.

The Gilbert Court set forth a list of considerations which

proof." As stated, the analysis of this issue must hinge on the

affect the interests of the specific litigants to an action, and

facts.

which

non

conveniens has taken place, pursuant to the Court's order of

conveniens determination. The so-called private interest

August 14, 1985.[9] The Court can therefore proceed to

factors, along with public interest factors discussed below,

discuss this question.

should

be

weighed

in

making

a forum

Limited

discovery

on

the

issue

of forum

non

were not intended to be rigidly applied. As the Court stated

Union Carbide argues that virtually all of the evidence which

in Piper,

will be relevant at a trial in this case is located in India. Union

Carbide's position is that almost all records relating to
"[E]ach case turns on its facts." If central emphasis were

liability, and without exception, all records relevant to

placed on any one factor, the forum non conveniens doctrine

damages, are to be found in and around Bhopal. On the

would lose much of the flexibility that makes it so valuable.

liability question Union Carbide asserts that the Bhopal plant

was managed and operated entirely by Indian nationals, who

Piper at 249-50, 102 S. Ct. at 263. Recognizing that

were employed by UCIL. (Affidavit of Warren J. Woomer,

"[p]articularly with respect to the question of relative ease of

formerly Works Manager of the Bhopal plant ("Woomer Aff.")

access to sources of proof," "the private interests point in

at 2). Defendant asserts that the Bhopal plant is part of

both directions," the Supreme Court nevertheless upheld a

UCIL's Agricultural Products Division, which has been a

district court's decision to dismiss a case in favor of the

separate division of UCIL for at least 15 years, and that the

relative convenience of a forum in Scotland. Piper at 257,

plant

102 S. Ct. at 267. By contrast, this Court finds that the

headquarters, and almost no contact with the United States.

private interests *853 point strongly one way. As in Piper, it

(Woomer Aff. at 4, 32). Woomer claims to have been the last

appears that the burdensome effect of a trial in this forum

American employed by UCIL. He departed from Bhopal in

supports a finding that the private interest factors in this

1982. (Woomer Aff. at 2).

had

"limited

contact"

with

UCIL's

Bombay

case weigh strongly in favor of dismissal.

Woomer describes the structure and organization of the
Bhopal facility at the time of the accident. The plant had
seven operating units, each headed by a manager or
department head, each an Indian national.[10] The managers

A. Sources of Proof.

or department heads each reported either directly to the

The

first

example

of

private

interest

consideration

plant's General Works Manager, or to one of three Assistant

discussed in Gilbert is "relative ease of access to sources of

Works Managers. (Woomer Aff. at 6). Each of these is also an

Indian national. Three of the operating units which at this

controlled utilities, temperatures and pressures throughout

very early stage of inquiry into liability appear to have been

the plant. (Woomer Aff. at 11-14).

potentially involved in the MIC leak are the Carbon Monoxide,

MIC/Phosgene and Carbamoylation units. (Woomer Aff. at 7-

Moreover, according to Mr. Woomer, these UCIL departments

10). The Carbon Monoxide and MIC/Phosgene units together

also kept daily, weekly and monthly records of plant

employed 63 employees, all Indian nationals. (Woomer Aff. at

operations, many of which were purportedly seized by the

9). The Carbamoylation unit employed 99 Indian nationals.

CBI and selected for copying by CBI immediately after the

(Woomer Aff. at 10). Mr. Woomer states that an inquiry into

accident.[13] The

the cause of the accident would require interviews with at

maintenance units would likely be relevant to the question of

least those employees who were on duty at the Bhopal

liability at trial.

facility "immediately prior or after the accident;" Mr. Woomer

asserts that there are 193 employees, all Indians, who must
be interviewed. (Woomer Aff. at 58).[11]

records

and

reports

of

the

various

Of the additional functional units, it is possible that Quality

Control, with 54 employees, Purchasing, with 53, or Stores
may have been directly involved in the disaster by virtue of

In addition to the seven operating units, the Bhopal plant

their participation in analyzing plant output, procuring raw

contained seven functional departments which serviced

materials for the chemical processes of the plant, and

operations.[12] The seven heads of the units reported within

maintaining spare parts and certain chemicals. (Woomer Aff.

the plant much as the department heads did.

at 14-19). Thus, the records and reports of these three

departments may be necessary to an investigation of liability.

The maintenance unit was apparently subdivided into

While

departments

Mechanical

department and Industrial Relations department would likely

Chemical

be less directly useful, information regarding plant budgets

Maintenance unit, which employed 171 people in total, and

and employee histories might be of relevance. Of great

Plant Engineering and Formulation Maintenance, which

importance are the records and reports of the Safety/Medical

employed

11-12).

department, which was responsible for daily auditing of

In *854 addition, the Utilities and Electrical department

safety performance in all departments, training and testing

employed 195 people. (Woomer Aff. at 13). According to Mr.

on safety rules, maintaining safety statistics and planning

Woomer, the various maintenance organizations performed

and implementing safety drills. (Woomer Aff. at 22-23). The

repairs

support,

31 Indian employees of this department worked with the

fabricated certain equipment, salvaged other portions, and

Central Safety Committee of the plant, whose members were

including

Maintenance,

on

both

46

part

people.

equipment,

Instrumentation,
of

the

Agricultural

(Woomer

provided

Aff.

at

engineering

examination

of

members

of

the

Works

Office

drawn from plant management, and the Departmental Safety

Committees. Operating units were required to monitor plant

remedying problems in the Bhopal plant rested with the plant

safety mechanisms weekly, and to keep monthly checklists.

itself,

(Holman Aff. # 2 at 9). The Central Safety Committee met

recommendations, and was involved only to the extent of

monthly, as did the Departmental Safety Committees.

receiving

(Woomer Aff. at 39). The MIC Unit held monthly safety

involvement in further training. (Woomer Aff. at 41).

and
a

that
copy

Union
of

the

Carbide
report

did

not

which

make

called

for

any
its

committee meetings, for example, and issued monthly

at 41). Quarterly "Measures of

The second accident at Bhopal prior to the disaster of

Performance" reviews also covered safety issues, and were

December, 1984 took place on February 9, 1982, when a

required of each operating unit. (Woomer Aff. at 40).

pump seal, perhaps improperly used, failed. (Memo in Opp.

Certainly, interviews of the plant personnel involved in safety

at 24; Woomer Aff. at 41). Many employees were injured, and

reports and audits would be particularly relevant to the

at least 25 were hospitalized. Plaintiffs discuss the fact that

investigation of the disaster.

Robert Oldford, president of Union Carbide Agricultural

reports.

(Woomer Aff.

Products Company ("UCAPC") a wholly-owned subsidiary of

Plaintiffs refer to three occasions upon which Union Carbide,

Union Carbide headquartered in the United States, was in

not UCIL, employees conducted safety audits at the Bhopal

Bhopal at the time of the February 1982 leak. (Memo in Opp.

plant. As defendant correctly argues, these three events

at 24). Union Carbide asserts that Mr. Oldford was visiting

constitute a very small fraction of the thousands of safety

UCIL's Research and Development Centre, located several

audits conducted at the Bhopal facility. The three audits,

miles from the Bhopal plant for an unrelated purpose, and

moreover, were conducted in 1979, the fall of 1980 and in

was only coincidentally in Bhopal when the leak occurred. To

May of 1982, many years prior to the accident which is the

the extent that this presence in India in 1982 has any

subject of this lawsuit. (Plaintiffs' Memo in Opp. at 25).

[14]

significance, Mr. Oldford, and any other United States

employees of Union Carbide who conducted safety audits in

Two accidents which occurred previously at the Bhopal plant

Bhopal or were present when accidents occurred there, may

might also be of relevance to the liability inquiry in this

be flown to Bhopal for testimony or discovery.

litigation. On December 24, 1981, a phosgene gas leak killed

a UCIL maintenance worker. *855 Reports of the fatality were

In addition to safety data, two other types of proof may be

sent to Union Carbide management in the United States.

relevant to a trial of this case on the merits. Information

(Woomer Deposition, Exs. 30 and 31). Plaintiffs assert that

regarding plant design, commissioning and start-up may

the accident report called for increased training in Bhopal by

bear upon the liability question. Information pertinent to

United States employees of Union Carbide's Institute, West

employee training should also have significance.

Virginia, plant. Defendant states that the responsibility for

Leaving aside the question of whether the Government of

(Memo in Opp. at 20). In effect, plaintiffs seek to establish

India or UCIL chose the site and product of the Bhopal plant,

that Union Carbide was the creator of the design used in the

the Court will evaluate the facts which bear on the issue of

Bhopal plant, and directed UCIL's relatively minor detailing

relevant records. The findings below concern the location of

program. They urge that for the most *856 part relevant

proof

proof on this point is located in the United States.

only,

and

bear

solely

upon

the forum

non

conveniens motion. The Court expressly declines to make

findings as to actual liability at this stage of the litigation.

Defendant seeks to refute this contention, with notable

success. Turning first to the affidavit of Robert C. Brown, who

Plaintiffs and defendant agree that in 1973 Union Carbide

describes himself as "chief negotiator for Union Carbide

entered into two agreements with UCIL which were entitled

Corporation in connection with the two agreements it

"Design

Service

entered into with ... UCIL in November, 1973," the Court is

Agreement." According to plaintiffs, Union Carbide, pursuant

struck by the assertion that the two agreements were

to the Design Transfer Agreement, provided a process design

negotiated at "arms-length" pursuant to Union Carbide

to UCIL, the "detailing [of which] was undertaken in India."

corporate policy, and that the Union of India mandated that

(Memo in Opp. at 17). The process design package consisted

the Government retain "specific control over the terms of any

of the basic plan of the factory, which was to be fleshed out

agreements UCIL made with foreign companies such as

in the detailing phase. Plaintiffs state that at least nine Union

Union Carbide Corporation." (Brown Aff. at 3-4).[16]

Transfer

Agreement"

and

"Technical

Carbide technicians travelled to India to monitor the progress

of the project. Union Carbide also allegedly assigned a "key

Mr. Brown alleges that the Letter of Intent issued by the

engineer," John Couvaras, to serve as UCIL Bhopal project

Union of India in March 1972, pursuant to which construction

manager. Mr. Couvaras allegedly "assumed responsibility for

and design of the plant were allowed to ensue provided, inter

virtually every aspect of the detailing of the process design,"

alia, that:

and approved detail reports of "not only UCIL but also

independent contractors, including Humphreys & Glasgow
Consultants Private Ltd. and Power Gas Limited" of Bombay,
India. (Memo in Opp. at 17-20).[15]
Plaintiffs also claim that "[n]o change of any substance was
made from Union Carbide's design during the detailing
phase." Plaintiffs note that only "one portion" of the process
design work provided to UCIL by Union Carbide was not used.

(2) [F]oreign collaboration and import of equipment be

settled to the satisfaction of the Government.
Mr. Brown claims, on personal information, that UCIL told him
that Union Carbide would not be allowed to be involved in
the Bhopal project beyond the provision of process design
packages. (Brown Aff. at 5). The Design Transfer Agreement

indicates that Union Carbide's duty under the Agreement was

design package. The detail design comprises approximately

to provide process design packages, and that UCIL, not Union

80 percent of the sum of the man hours involved in the

Carbide, would be responsible to "detail design, erect and

design of any project and transposes the general process

commission the plant." (Defendant's Ex. 4, 4.1). Union

design parameters into an actual design which can be used

Carbide, accordingly, issued limiting warranties with respect

for purchasing equipment and actual construction.

to the design packages, detailing of which it would not be

involved with. (Brown Aff. at 7, Ex. 4, 4.1, 12.3).
The nature of UCIL's detail design work is discussed in the
affidavit of Ranjit K. Dutta, who has held various positions at
UCIL and UCAPC. From 1973 through 1976, Mr. Dutta was
employed as General Manager of the Agricultural Products
Division of UCIL. (Dutta Aff. at 2).

(Dutta Aff. at 9-12). (emphasis omitted).

According to Mr. Dutta, during the five years between the
date upon which Union Carbide submitted process designs,
and the date upon which the plant started-up, there were
only four visits to Bhopal by Union Carbide process design
engineers. (Dutta Aff. at 14). In contrast, he asserts that ten
to fifteen UCIL engineers, working primarily out of Bombay,

Mr. Dutta asserts that the Bhopal facility was built by UCIL

were involved in design detailing. (Dutta Aff. at 16). These

over the eight years from 1972 to 1980. (Dutta Aff. at 8). He

UCIL

asserts that Union Carbide's role in the project was "narrow",

engineers *857 employed by the Bombay engineering firm

and limited to providing "certain process design packages for

which

certain parts of the plant." (Dutta Aff. at 9). He continues,

Humphreys and Glasgow, submitted designs and drawings to

stating:

the UCIL engineers for approval. Corrected drawings were

engineers
performed

oversaw
the

detail

the

55

design

to
work.

60
This

Indian
firm,

returned by UCIL to Humphreys and Glasgow for changes,

and sent back to UCIL for final approval. (Dutta Aff. at 19-24).
Once it did that, it had no further design or engineering role,

[17]

Mr. Dutta alleges that "at no time were Union Carbide

Corporation engineering personnel from the United States

and that:

involved in approving the detail design or drawings prepared

upon which construction was based. Nor did they receive
notices of changes made." (Dutta Aff. at 24).

[T]he

process

design

packages

which

Union

Carbide

Corporation provided are nothing more than summary design

Mr. Dutta expressly states that the MIC storage tank and

starting

general

monitoring instrumentation were fabricated or supplied by

parameters.... A plant cannot be constructed from a process

two named Indian sub-contractors. The vent gas scrubber is

points....

They

set

forth

only

the

alleged to have been fabricated in the Bhopal plant shop.

question, which involves credibility concerns, is left for later

(Dutta Aff. at 25).

in the litigation. To the extent that this particular matter

bears upon the relative ease of access to sources of proof,

Of the 12,000 pages of documents purportedly seized by the

Mr. Munoz and Mr. Dutta both may be called to testify at trial

CBI regarding design and construction of the Bhopal plant, an

or discovery. Mr. Dutta's home is in Bhopal. (Dutta Aff. at 1).

asserted 2,000 are design reports of Humphreys and

The Court is not aware of the whereabouts of Mr. Munoz at

Glasgow, UCIL or other contractors. Defendant claims that

this time. Either of the two could travel to either alternative

blueprints and calculations comprise another 1,700 pages of

forum.

documents held by the CBI. Five thousand pages of

contractors' files, including specifications and contracts are

In addition to design and safety records, material regarding

asserted to be in India. In addition, Union Carbide claims that

training of Bhopal personnel is likely to be relevant to the

blueprints and diagrams may not reflect final design changes

question of liability. Plaintiffs state that Warren Woomer

as incorporated into the actual plant, and that the detail

supervised the training of UCIL personnel at Union Carbide's

design engineers' testimony will be needed to determine the

Institute, West Virginia plant. According to plaintiffs, 40 UCIL

configuration of the actual plant.

[18]

(Holman Aff. # 2 at 15-

16).

employees were transported to Institute's MIC facility for

lengthy training. (Memo in Opp. at 22). Mr. Woomer states in
reply that the 40 employees thus trained represented a

One final point bearing on the information regarding liability

fraction of the over 1,000 employees who were trained

is contained in the affidavit of Edward Munoz, at a relevant

exclusively in Bhopal. (Woomer Aff. at 43). In addition, Mr.

time the General Manager of UCIL's Agricultural Products

Woomer asserts that the training at Institute was pursuant to

Division. He later acted as Managing Director of UCIL. Mr.

an arms-length agreement, that UCIL selected the parties to

Munoz has submitted an affidavit in which he states that

be trained, and that UCIL paid Union Carbide for the training.

Union Carbide decided to store MIC in large quantities at the

(Woomer Aff. at 43). Moreover, Mr. Woomer's description of

Bhopal plant, despite Mr. Munoz' warnings that MIC should be

the training provided at Bhopal suggests that each of the

stored only in small amounts because of safety. (Memo in

plant's employees had lengthy cumulative training, of which

Opp. at 15-16; Munoz Aff.). Mr. Dutta, for defendant, asserts

the Institute training was but a very small portion. (Woomer

that there was never any issue of token storage of MIC at

Aff. at 46). Personnel records, in any event, are located in

Bhopal, as Mr. Munoz states, and that there is no truth to Mr.

Bhopal. (Holman Aff. # 2 at 4).

Munoz' assertion that he was involved in the storage issue.

(Dutta Aff. at 30).[19]*858 The Court cannot make any

The briefs and affidavits contain considerable discussion on

determination as to the conflicting affidavits before it. This

the matter of commissioning and start-up of the Bhopal

case.[20] The

plant. The Court need not resolve the question of who was

consolidated

Indian *859 Government

is

responsible for these aspects of plant operation. However,

asserted to have been involved in safety, licensing and other

the Court determines that the manual regarding start-up was

matters relating to liability. Records relating thereto are

prepared by Indian nationals employed by UCIL. (Woomer Aff.

located in India, as are the records seized by the CBI.

at 48).

Although plaintiffs state that all such records could and

would be made available to this Court, it would be easier to

In the aggregate, it appears to the Court that most of the

review them in India. Transmittal and translation problems

documentary evidence concerning design, training, safety

would thereby be avoided.

and start-up, in other words, matters bearing on liability, is to

be found in India. Much of the material may be held by the
Indian CBI. Material located in this country, such as process
design packages and training records of the 40 UCIL

B. Access to Witnesses.

employees trained at Institute, constitutes a smaller portion

of the bulk of the pertinent data than that found in India.

Gilbert teaches a second important consideration under the

Moreover, while records in this country are in English, a

heading of private interests, the "availability of compulsory

language understood in the courts of India, certain of the

process for attendance of willing, and the cost of obtaining

records in India are in Hindi or other Indian languages, as

attendance of unwilling, witnesses." Gilbert, 330 U.S. at 508,

well as in English. (Holman Aff. # 2 at 12). The Indian

67 S. Ct. at 843. As discussed in detail above, most witnesses

language documents would have to be translated to be of

whose testimony would relate to questions of causation and

use in the United States. The reverse is not true. It is evident

liability are in India. Engineers from UCIL and Humphreys and

to the Court that records concerning the design, manufacture

Glasgow and other subcontractors, of whom there are

and operation of the Bhopal plant are relatively more

hundreds, are located in India. Shift employees from the

accessible in India than in the United States, and that fewer

possibly malfunctioning units, safety monitoring personnel,

translation problems would face an Indian court than an

those responsible for training, safety auditing, procurement,

American court. Since Union Carbide has been directed to

compliance with regulations and other operations might be

submit to discovery in India pursuant to the liberal grant of

required to testify. More than likely, many of these potential

the American Federal Rules of Civil Procedure, and this

witnesses

opinion is conditioned upon such submission, any records

translators. Many of the witnesses are not parties to this

sought by plaintiffs must be made available to them in India.

litigation. Therefore, as the Court of Appeals for the Second

The private interest factor of relative ease of access to

Circuit

sources of proof bearing on liability favors dismissal of the

conveniens motion:

do

has

not

stated

speak

in

English,

the

and

context

of

would

require

a forum

non

from suit in the United States by the terms of the Foreign

In fact, the plaintiffs' cases on liability will depend in large

Sovereign Immunities Act, 28 U.S.C. 1602 et seq. State and

measure

such

city officials might also lack sufficient contacts with this

witnesses as the employees of [companies] who are not

district to allow this Court to exercise personal jurisdiction

parties to this litigation, but who directly participated in the

over them.

upon

the

knowledge

and

activities

of

events which gave rise to it. The United States District Court
in New York, however, has no power to subpoena any of

While Union Carbide might be deprived of testimony of

these witnesses. It is unlikely that many would be willing to

witnesses or even potential third-parties if this action were to

travel to New York to testify; and the cost, in any event,

proceed in this forum, no such problem would exist if

would be prohibitively great.

litigation went forward in India.

Cir.

The unavailability of compulsory process for Indian non-party

1975), cert. denied, 423 U.S. 1052, 96 S. Ct. 781, 46 L. Ed.

witnesses, of whom *860 there are many, such as would

2d 641 (1976) (footnote omitted). In contrast, the relatively

ensure their presence at a trial in this country, the high cost

few witnesses who reside in the United States are primarily

of transporting the large number of Indian nationals to the

employed by Union Carbide. As employees of a party they

United States, as well as the need to translate their

would probably be subject to the subpoena power of Indian

testimony should they appear, all support the argument

courts. Transportation costs would also be lower, since fewer

favoring

people would have to make the journey to testify.

conveniens grounds. The private interest concerns regarding

Fitzgerald

v.

Texaco, 521

F.2d

448,

451-52

(2d

dismissal

of

this

action

on forum

non

witnesses emphasize the logic of defendant's position.

The presence of the Indian Government in this action is also

Relatively fewer witnesses reside in the United States than in

of critical importance on this motion. Plaintiffs assert that "all

India. Almost all of the witnesses located in this country are

necessary officials and employees of the Central Government

employees of defendant, and would be subject to compulsory

will voluntarily comply with requests to attend trial." (Memo

process in India as a result. Transportation costs for the

in Opp. at 70; Answer to No. 124 of Defendant's First

relative few would not compare to the alternate costs of

Requests for Admission, Exhibit 55). This statement does not

transporting hundreds of Indian witnesses. Since English is

provide for attendance by officials of Madhya Pradesh or the

widely spoken in India, less translation would be required for

Bhopal municipality, whom Union Carbide indicates might be

foreign witnesses in India than in the converse situation.

impleaded as third-party defendants. As witnesses only,

Should this case be tried in India, fewer obstacles to calling

these officials would not be subject to this Court's subpoena

state and local officials as witnesses or parties would face

power. As third-party defendants, they might be immune

the defendant. The Court determines that this private

conceivably could be called for later in the litigation. An

interest factor weighs in favor of dismissal.

Indian court is in a far better position than this Court to direct

and supervise such a viewing should one ever be required.
This consideration, though minor, also weighs in favor of
dismissal.

C. Possibility of View.
In summary, then, the private interest factors weigh greatly
The third private interest factor articulated in Gilbert is the

in

ease of arranging for a view of the premises around which

conveniens. Since the "balance is strongly in favor of the

the litigation centers. Plaintiffs assert that the notion that a

defendant" and foreign plaintiffs' choice of a foreign forum is

jury view of the plant and environs is necessary is "simply

given less than maximum deference, the Court determines

preposterous." (Memo in Opp. at 71). Plaintiffs note that a

that

viewing of the premises is rarely conducted in products

inquiry. Gilbert 330 U.S. at 508, 67 S. Ct. at 843.

liability

cases,

since

videotapes,

pictures,

favor

of

dismissal

dismissal

is

on

favored

grounds

at

this

of forum

point

in

non

the

diagrams,

schematics and models are more instructive than an actual

view. (Memo in Opp. at 71). A viewing of the plant and
hutments would probably not be of utmost importance in

3. Public Interest Concerns.

determining liability, and this consideration is not afforded

The Gilbert Court articulated certain factors which affected

great weight on this motion.

the interests of non-parties to a litigation to be considered in

However, the instant case is not identical to the product

the context of the doctrine of forum non conveniens. These

design defect case cited by plaintiffs, in which a district court

public interest concerns were held to be relevant to a court's

judge determined that "the present appearance of the

determination of whether to dismiss on these grounds. The

defendants' facilities may or may not be relevant to

Supreme Court expressly identified a few factors:

production which occurred" in the period in which the

allegedly violative manufacture occurred. Hodson v. A.H.
822

Administrative difficulties follow for courts when litigation is

(E.D.Va.1981), aff'd, 715 F.2d 142 (4th Cir. 1983). In the

piled up in congested centers instead of being handled at its

instant case, the site of the accident was sealed after the

origin. Jury duty is a burden that ought not to be imposed

leak, and the present condition of the plant might be relevant

upon the people of a community which has no relation to the

to a finding of liability. A viewing may not be necessary, but

litigation. In cases which touch the affairs of many persons,

Robins

Co.,

Inc., 528

F.

Supp.

809,

there is reason for holding the trial in their view and reach

Reviewing a district judge's ruling for dismissal on the

rather than in remote parts of the country where they can

grounds

learn of it by report only. There is a local interest in having

observed that "were it not for the somewhat unusual fact

localized controversies decided at home. There is an

that it is the forum resident who seeks dismissal, we would

appropriateness, too, in having the trial of a diversity case in

have to say very little regarding the exercise of Judge

a forum that is at home with the state law that must govern

Metzner's discretion in dismissing this case." Schertenlieb at

the case, rather than *861 having a court in some other

1164. In affirming the ruling for dismissal, the Court of

forum untangle problems in conflict of laws, and in law

Appeals asked the rhetorical question:

of forum

non

conveniens, the

Second

Circuit

foreign to itself.
Gilbert at 508-09, 67 S. Ct. at 843. The Court will consider
these various factors in turn, as well as others discussed by
the parties andamicus curiae.

If litigation is in a clearly inconvenient forum, why should

defendant and the court be burdened with its continuing
there, if an alternative forum now exists so that plaintiff will
not be without a remedy?
Schertenlieb at 1163.

A. Administrative Difficulties.
This Court has already determined that because of the
As is evident from the discussion thus far, the mere size of

location of the preponderance of the evidence in India, and

the Bhopal case, with its multitude of witnesses and

the difficulty of transporting documents and witnesses to this

documents to be transported and translated, obviously

forum, this district is clearly an inconvenient forum for the

creates administrative problems.

litigation. An alternative forum is seen to exist in India. This

Court feels that the answer to the Schertenlieb question is

There can be no doubt that the Bhopal litigation will take its

clear.

toll on any court which sits in judgment on it. This Court sits
in one of the busiest districts in the country, and finds, as a

A district judge in this district, in Domingo v. States Marine

matter within its experience, that this is a "congested center"

Lines, 340

of litigation as described in Gilbert at 508. The burden which

administrative concerns of the Southern District of New York,

would be imposed should litigation continue here was aptly

relevant to this Court today, a full fourteen years later.

described by the Court of Appeals for the Second Circuit

The Domingo court stated:

in Schertenlieb v. Traum, 589 F.2d 1156 (2d Cir.1978).

F.

Supp.

811 (S.D.N.Y.1972)

evaluated

the

It is scarcely necessary to dwell on the fact that this Court is

weight of this case should be centered on a court with the

the most heavily burdened Federal District Court in the

most significant contacts with the event. Thus, a court in

country. The Civil Calendar grows more congested all the

Bhopal, rather than New York, should bear the load.

time. The priority now properly given to the disposition of

criminal cases tends to increase this congestion.

*862 In addition to the burden on the court system,

continuation of this litigation in this forum would tax the time

******

and resources of citizens directly. Trial in this case will no

doubt be lengthy. An assigned jury would be compelled to sit
for many months of proof. Because of the large number of

I see no reason why this Court, with its heavy burdens and

Indian language-speaking witnesses, the jurors would be

responsibilities, should be burdened with cases like these

required to endure continual translations which would double

which, from every point of view, should be tried in the courts

the length of trial. The burden on the jurors themselves, and

of the nation where all the relevant events occurred and

on their families, employers and communities would be

whose citizens are primarily involved. Certainly, this district

considerable. The need for translation would be avoided if

and the Metropolitan area in which it is situated have no

trial were to be held in Bhopal.

conceivable relation to this litigation except for the fact that

the defendant happens to be doing business here.

Clearly, the

administrative costs of this litigation are

astounding and significant. Despite its deep concern for the

Domingo at 816.
The defendant in this case, involved as it appears to have
been in the process design phase of the plant's construction,
may have a slightly less tenuous connection to this forum
than a corporation which is merely doing business here.
Certain business conducted in New York, or in corporate
headquarters in Danbury, Connecticut, may have been
directly related to development or operation of the UCIL

victims of the tragedy, this Court is persuaded by a recent

relevant decision of the New York State Court of Appeals. In
the opinion in Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d
474,

478

N.Y.S.2d

597,

467

N.E.2d

245

(1984), cert.

denied, ___ U.S. ___, 105 S. Ct. 783, 83 L. Ed. 2d 778 (1985),
with reference to a decision discussing actions brought in
New York by the Iranian Government against the Shah and
his wife, the Court of Appeals stated that:

facility in Bhopal. However, almost "all the relevant events"

leading to and following from the accident occurred in India.

[T]he taxpayers of this State should not be compelled to

Indian citizens are primarily involved in the case, both as

assume the heavy financial burden attributable to the cost of

witnesses and claimants. The substantial administrative

administering the litigation contemplated when their interest

in the suit and the connection of its subject matter ... is so

industries which would extract concessions on health and

ephemeral.

environmental

standards

as

the

price

of

continuing

operations in the United States." (Amicus Brief at 20). An

Islamic Republic at 483, 478 N.Y.S.2d 597, 467 N.E.2d 245
(citations omitted). Administrative concerns weigh against
retention of this case.

additional American public interest ostensibly to be served

by retention of the litigation in this forum is advanced by
plaintiffs themselves. They assert that the deterrent effect of
this

case

can

in Piper, where
"American
B. The Interests of India and the United States.

American

Plaintiffs, and especially amicus curiae emphasize this point

of argument in opposition to the motion to dismiss.
Concerned with the asserted possibility of developing a
"double-standard" of liability for multinational corporations,
plaintiffs urge that American courts should administer justice

be
the

citizens

distinguished
Court

rejected

have

an

manufacturers

are

from

the

the

interest
deterred

in

situation

argument

that

ensuring

that

from

producing

defective products, and that additional deterrence might be

obtained if Piper and [its co-defendant] were tried in the
United States, where they could be sued on the basis of both
negligence and strict liability." Piper 454 U.S. at 260, 102 S.
Ct. at 268. The Court stated that:

to the victims of the Bhopal disaster as they would to

potential American victims of industrial accidents. The public
interest is served, plaintiffs and amicus argue, when United
States corporations assume responsibility for accidents
occurring

on

foreign

soil.

responsibility," amicus asserts,

"To

"would

abandon
both

injure

[T]he incremental deterrence that would be gained if this

trial were held in an American court is likely to be
insignificant. The American interest in this accident is simply

that

not sufficient to justify the enormous commitment of judicial

our

time and resources that would inevitably be required if the

standing in the world community and betray the spirit of

case were to be tried here.

fairness inherent in the American character." (Amicus Brief at

4). The specific American interests allegedly to be served by

Piper at 260-61, 102 S. Ct. at 268. According to plaintiffs, the

this Court's retention of the case include the opportunity of

potential for greater deterrence in this case is "self-evident."

creating

precedent

which

will

"bind

all

American
20);

*863 The opposing interest of India is argued to be ill-served

promotion of "international cooperation," (Amicus Brief at 22-

by sending this litigation to India. Pointing to the fact that the

23); avoidance of an asserted "double standard" of liability,

Union of India chose this forum, plaintiffs state that there can

and the prevention of "economic blackmail of hazardous

be "no question as to the public interest of India." (Memo in

multinationals

henceforward,"

(Amicus Brief

at

Opp. at 91). Union Carbide's statements regarding the

The Indian Government, through its Ministry of Petroleum

interests of India in this litigation are summarily dismissed by

and Chemicals, allegedly required information from UCIL

the plaintiffs, who state that "Union Carbide, whose actions

regarding

caused the suffering of an entire city, has no standing to

construction in 1972 and 1973, including "information on

assert this belated concern for the welfare of the Indian

toxicity" of chemicals. (Dutta Aff. at 44). The Ministry

populace." (Memo in Opp. at 91).

required progress reports throughout the course of the

all

aspects

of

the

Bhopal

facility

during

construction project. These reports were required by the

Union Carbide, not surprisingly, argues that the public

Secretariat for Industrial Approvals, the Director General of

interest of the United States in this litigation is very slight,

Technical Development and the Director of Industries of

and that India's interest is great. In the main, the Court

Madhya Pradesh. (Dutta Aff. at 45). Moreover, UCIL was

agrees with the defendant.

ultimately required to obtain numerous licenses during

As noted, Robert C. Brown states in his affidavit on behalf of

Union Carbide that the Indian Government preserved the
right

to

approve

foreign

collaboration

and

import

development, construction and operation of the facility.

(Dutta Aff. at 46). The list of licenses obtained fills five pages.
[21]

of

equipment to be used in connection with the plant. See

The Indian Government regulated the Bhopal plant indirectly

supra at 856. In addition, Mr. Brown quoted excerpts from the

under a series of environmental laws, enforced by numerous

1972 Letter of Intent entered into by the Union of India and

agencies, much as the Occupational Safety and Health

UCIL, one term of which required that "the purchase of only

Administration, the Environmental Protection Agency and

such design and consultancy services from abroad as are not

state and local agencies regulate the chemical industry in

available within the country" would be allowed. (Brown Aff. at

the United States. (Dutta Aff. at 53-56). Emissions from the

6). Ranjit K. Dutta states that the Indian Government, in a

facility were monitored by a state water pollution board, for

process of "Indianization," restricted the amount of foreign

example. (Dutta Aff. at 64). In addition, state officials

materials and foreign consultants' time which could be

periodically inspected the fully-constructed plant. [22] (Dutta

contributed to the project, and mandated the use of Indian

Aff. at 56). A detailed inquiry into the plant's operations was

materials and experts whenever possible. (Dutta Aff. at 35).

conducted by the Indian Government in the aftermath of the

In an alleged ongoing attempt to minimize foreign exchange

December, 1981 fatality at the MIC unit and the February,

losses through imports, the Union of India insisted on

1982 incident involving a pump seal. (Dutta Aff. at 58-62).

approving equipment to be purchased abroad, through the

Numerous federal, state and local commissions, obviously,

mechanism of a "capital goods license." (Dutta Aff. at 48-50).

investigated the most tragic incident of all, the MIC leak of

December, 1984.

The recital above demonstrates the immense interest of

regulated and sold abroad by foreign entities, even though

various Indian governmental agencies in the creation,

development or testing occurred in this country.

operation, *864 licensing and regulation, and investigation of

the plant. Thus, regardless of the extent of Union Carbide's
own involvement in the UCIL plant in Bhopal, or even of its
asserted "control" over the plant, the facility was within the

In re Richardson-Merrell, Inc., 545 F. Supp. at 1135 (footnote

omitted). The Sixth Circuit confirmed this view of the public
interests, stating:

sphere of regulation of Indian laws and agencies, at all levels.

The comments of the Court of Appeals for the Sixth Circuit
with respect to its decision to dismiss a products liability
action on forum non conveniens grounds seem particularly
apposite. In In re Richardson-Merrell, Inc., 545 F. Supp.
1130 (S.D.Ohio

1982), modified

sub.

nom.Dowling

v.

Richardson-Merrell Inc., 727 F.2d 608 (6th Cir.1984), the

court reviewed a dismissal involving an action brought by a
number of plaintiffs, all of whom were citizens of Great
Britain.[23] Defendant in the action was a drug company which
had developed and tested a drug in the United States which

The interest of the United Kingdom in this litigation is great.

The drug was manufactured under a British license by British
companies and was marketed and prescribed in the United
Kingdom. The alleged injuries took place in England and
Scotland and the plaintiffs are citizens and residents of those
countries.

When

pharmaceuticals

in

a
this

regulated
case

industry,

and

such

passenger

as

aircraft

operations in Piper Aircraft, is involved, the country where

the injury occurs has a particularly strong interest in product
liability litigation.... Though no single factor should be

was manufactured and marketed in England. The suit was

determinative in ruling on a forum non conveniens motion,

brought against the American parent, not the British

the nature of the product and its status as regulated or not

subsidiary, for injuries allegedly resulting from ingestion of

must be considered.

the offending drug in England and Scotland. The district

court, in dismissing the case, stated that:

Dowling, 727 F.2d at 616.

The Indian government, which regulated the Bhopal facility,

This action involves the safety of drugs manufactured in the

has an extensive and deep interest in ensuring that its

United Kingdom and sold to its citizens pursuant to licenses

standards for safety are complied with. As regulators, the

issued by that government. The interest of the United

Indian government and individual citizens even have an

Kingdom is overwhelmingly apparent. New York, and Ohio

interest in knowing whether extant regulations are adequate.

[the United States forums] for that matter, have a minimal

This Court, sitting in a foreign country, has considered the

interest in the safety of products which are manufactured,

extent of regulation by Indian agencies of the Bhopal plant. It

finds that this is not the appropriate tribunal to determine

whether the Indian regulations were breached, or whether

and amicus

the laws themselves were sufficient to protect Indian citizens

regulated as the chemical industry is in India, the failure to

from harm. It would be sadly paternalistic, if not misguided,

acknowledge inherent differences in the aims and concerns

of this Court to attempt to evaluate the regulations and

of Indian, as compared to American citizens would be naive,

standards imposed in a foreign country. As another district

and

court stated in the context of a drug product liability action

in Harrison considered the hypothetical instance in which a

brought by foreign plaintiffs in this country,

products liability action arising out of an Indian accident

unfair

curiae. However,

to

when

defendant.

an

The

industry

district

is

as

court

would be brought in the United States. The court speculated

as follows:
*865 Each government must weigh the merits of permitting
the drug's use.... Each makes its own determination as to the
standards of degree of safety and duty of care.... This

The impropriety of [applying American standards of product

balancing of the overall benefits to be derived from a

safety and care] would be even more clearly seen if the

product's use with the risk of harm associated with that use

foreign country involved was, for example, India, a country

is peculiarly suited to a forum of the country in which the

with a vastly different standard of living, wealth, resources,

product is to be used.... The United States should not impose

level of health care and services, values, morals and beliefs

its own view of the safety, warning, and duty of care required

than our own. Most significantly, our two societies must deal

of drugs sold in the United States upon a foreign country

with entirely different and highly complex problems of

when those same drugs are sold in that country.

population growth and control. Faced with different needs,

problems and resources in our example India may, in

Harrison

v.

Wyeth

Laboratories, 510

F.

Supp.

1,

balancing the pros and cons ... give different weight to

(E.D.Pa.1980), aff'd mem., 676 F.2d 685 (3d Cir.1982). India

various factors than would our society.... Should we impose

no doubt evaluated its need for a pesticide plant against the

our standards upon them in spite of such differences? We

risks inherent in such development. Its conclusions regarding

think not.

"[q]uestions as to the safety of [products] marketed" or

manufactured in India were "properly the concern of that

Harrison at 4-5. This Court, too, thinks that it should avoid

country." Harrison at

is

imposing

particularly true where, as here, the interests of the

concerns.

(emphasis

omitted).

This

characteristically

American

values

on

Indian

regulators were possibly drastically different from concerns

of American regulators. The Court is well aware of the moral
danger of creating the "double-standard" feared by plaintiffs

The Indian interest in creating standards of care, enforcing

them or even extending them, and of protecting its citizens

from ill-use is significantly stronger than the local interest in

apply foreign law is a significant consideration on this type of

deterring multinationals from exporting allegedly dangerous

motion. Piper at 260, n. 29, 102 S. Ct. at 268, n. 29. A federal

technology. The supposed "blackmail" effect of dismissal by

court is bound to apply the choice of law rules of the state in

which plaintiffs are troubled is not a significant interest of the

which an action was originally brought; even upon transfer to

American population, either. Surely, there will be no relaxing

a different district, "the transferee district court must be

of regulatory standards by the responsible legislators of the

obligated to apply the state law that would have been

United States as a response to lower standards abroad.

applied if there had been no change of venue." Van Dusen v.

[24]

Other concerns than bald fear of potential liability, such as

Barrack, 376 U.S. 612, 639, 84 S. Ct. 805, 821, 11 L. Ed. 2d

convenience or tax benefits, bear on decisions regarding

945 (1964). Thus, this Court, sitting over a multidistrict

where to locate a plant. Moreover, the purported public

litigation, must apply the various choice of law rules of the

interest of seizing this chance to create new law is no real

states in which the actions now consolidated before it were

interest at all. This Court would exceed its authority were it

brought.[26] Rather than undertake the task of evaluating the

to rule otherwise when restraint was in order.

choice of law rules of each state separately, the Court will

treat the choice of law doctrine in toto. The "governmental

The Court concludes that the public interest of India in this

interest" analysis, employed by many jurisdictions, requires a

litigation far outweighs the public interest of the United

court to look to the question of which state has the most

States.

compelling interest in the outcome of the case. India's

This

litigation

offers

developing

nation

the

opportunity to vindicate the suffering of its own people within

interest

the framework of *866 a legitimate legal system. This

America's, see supra at 44-58. The lex loci delicti analysis

interest is of paramount importance.

[25]

in

the

outcome

of

the

litigation

exceeds

used in other jurisdictions indicates that the law of the state

where the tort occurred should be applied. The place in
which the tort occurred was, to a very great extent, India.
Other states apply the "most significant relationship" test, or

C. The Applicable Law.

Gilbert and Piper explicitly acknowledge that the need of an
American court to apply foreign law is an appropriate
concern on a forum non conveniens motion, and can in fact
point toward dismissal. Gilbert, 330 U.S. at 509, 67 S. Ct. at
843; Piper, 454 U.S. at 260, 102 S. Ct. at 268. Especially
when, as here, all other factors favor dismissal, the need to

"weight of contacts" test, which evaluate in which state most

of the events constituting the tort occurred. The contacts
with India with respect to all phases of plant construction,
operation, malfunction and subsequent injuries are greater in
number than those with the United States. Thus, under any
one of these three doctrines, it is likely that Indian law will
emerge as the operative law. An Indian court, therefore,

would be better able to apply the controlling law than would

The public interest factors set forth in Piper and Gilbert also

this United States Court, or a jury working with it. This public

favor dismissal. The administrative burden of this immense

interest factor also weighs in favor of dismissal on the

litigation would unfairly tax this or any American tribunal.

grounds of forum non conveniens.

The cost to American taxpayers of supporting the litigation in

the United States would be excessive. When another,
adequate and more convenient forum so clearly exists, there
is no reason to press the United States judiciary to the limits

CONCLUSION

of its capacity. No American interest in the outcome of this

litigation outweighs the interest of India in applying Indian

It is difficult to imagine how a greater tragedy could occur to

law and Indian values to the task of resolving this case.

a peacetime population than the deadly gas leak in Bhopal

on the night of December 2-3, 1984. The survivors of the

The Bhopal plant was regulated by Indian agencies. The

dead victims, the injured and others who suffered, or may in

Union of India has a very strong interest in the aftermath of

the future suffer due to the disaster, are entitled to

the accident which affected its citizens on its own soil.

compensation. This Court is firmly convinced that the Indian

Perhaps Indian regulations were ignored or contravened.

legal system is in a far better position than the American

India may wish to determine whether the regulations

courts to determine the cause of the tragic event and

imposed on the chemical industry within its boundaries were

thereby fix liability. Further, the Indian courts have greater

sufficiently stringent. The Indian interests far outweigh the

access to all the information needed to arrive at the amount

interests of citizens of the United States in the litigation.

of the compensation to be awarded the victims.

Plaintiffs, including the Union of India, have argued that the
The presence in India of the overwhelming majority of the

courts of India are not up to the task of conducting the

witnesses and evidence, both documentary and real, would

Bhopal litigation. They assert that the Indian judiciary has yet

by itself suggest that India is the most convenient forum for

to reach full maturity due to the restraints placed upon it by

this consolidated case. The additional presence in India of all

British colonial rulers who shaped the Indian legal system to

but the less than handful of claimants underscores the

meet their own ends. Plaintiffs allege that the Indian justice

convenience of holding trial in India. All of the private

system has not yet cast off the burden of colonialism to meet

interest factors described in Piper and Gilbert weigh heavily

the emerging needs of a democratic people.

toward*867 dismissal of this case on the grounds of forum

non conveniens.

The Court thus finds itself faced with a paradox. In the

Court's view, to retain the litigation in this forum, as plaintiffs

request, would be yet another example of imperialism,

2. Union Carbide shall agree to satisfy any judgment

another situation in which an established sovereign inflicted

rendered against it by an Indian court, and if applicable,

its rules, its standards and values on a developing nation.

upheld by an appellate court in that country, where such

This Court declines to play such a role. The Union of India is a

judgment

world power in 1986, and its courts have the proven capacity

requirements of due process;

and

affirmance

comport

with

the

minimal

to mete out fair and equal justice. To deprive the Indian

judiciary of this opportunity to stand tall before the world and
to pass judgment on behalf of its own people would be to
revive a history of subservience and subjugation from which

3. Union Carbide shall be subject to discovery under the

model of the United States Federal Rules of Civil Procedure
after appropriate demand by plaintiffs.

India has emerged. India and its people can and must
vindicate their claims before the independent and legitimate

SO ORDERED.

judiciary created there since the Independence of 1947.

NOTES
This Court defers to the adequacy and ability of the courts of
India. Their interest in the sad events of December 2-3, 1984

[1] All counsel on the Plaintiffs' Executive Committee were

at the UCIL plant in the City of Bhopal, State of Madhya

most professional and helpful to the Court in this case. Mr.

Pradesh, Union of India, is not subject to question or

Hoffinger agreed to proceed pro bono in this case, and

challenge. The availability of the probative, relevant, material

waived any possible fee. The Court has been informed that

and necessary evidence to Indian courts is obvious and has

neither Mr. Hoffinger, nor anyone else on the Plaintiffs'

been demonstrated in this opinion.

Executive Committee, nor anyone in their law firms went to

India on the days immediately following the tragedy to "sign

Therefore, the consolidated case is dismissed on the grounds

up" Indian plaintiffs. The behavior of many American lawyers

of forum non conveniens under the following conditions:

who went to Bhopal, India during December 1984 and

January 1985 is not before this Court on this motion. Suffice
it to say that those members of the American bar who

1. Union Carbide shall consent to submit to the jurisdiction of

travelled the 8,200 miles to Bhopal in those months did little

the courts of India, and shall continue to waive defenses

to better the American image in the Third Worldor anywhere

based upon the statute of limitations;

else. None of them were on the Plaintiffs' Executive

Committee.

[2] The Court found a theoretical flaw in the opposite rule, as

that defendant corporations agree to provide the records

set forth by the Third Circuit. Noting that a plaintiff would

relevant to the plaintiff's claims." Piper at 257, n. 25, 102 S.

choose the forum with the most favorable choice of law rules

Ct. 267, n. 25. While the Court feels that it would be fair to

in the first instance, "if the possibility of an unfavorable

bind the plaintiffs to American discovery rules, too, it has no

change in substantive law is given weight in the forum non

authority to do so.

conveniens inquiry,

dismissal

would

rarely

be
[8] The Court observes that the alleged problem would

proper." Piper at 250, 102 S. Ct. at 263.

appear to act to the detriment of defendant, not plaintiffs. It

[3] Similarly, the Court determined that "the possibility of a

is Union Carbide which urges that third-party defendants are

change in law favorable to defendant should not be

necessary. (Memo in Support at 27-28). Defendant discounts

considered." Piper at 252, n. 19, 102 S. Ct. at 264, n. 19.

the supposed unavailability of third-party impleader, while

the plaintiffs find its lack objectionable. These postures lead

[4] Rob Hager, Esq. for Citizens Commission on Bhopal,

the Court to the conclusion that this argument is not

National Council of Churches, United Church of Christ

compelling in either direction. The lack of specific third-party

Commission for Racial Justice, et al.

practice will not concern the Court if it does not concern

[5] For example, Mr. Palkhivala describes four cases in which

Union Carbide.

the Indian Supreme Court crafted new and "courageous"

[9] Discovery was ably managed by Magistrate Michael H.

remedies

Dolinger, of the Southern District of New York.

in

situations

relating

to

abridgements

of

fundamental rights. (Palkhivala Aff. at 6-7). Mr. Dadachanji

describes similar decisions in which he participated as an

[10] The seven operating units included Carbon Monoxide,

advocate, in his affidavit. (Dadachanji Aff. at 2-3). The Court

MIC/Phosgene, Carbamoylation, Alpha Naphthol, Aldicarb,

recognizes the innovativeness of the Indian Courts, while

Utilities and Formulations.

refraining from an exhaustive survey of Indian case law.

[11] Mr. Woomer states that a post-accident technical team
[6] India allegedly has 10.5 judges per million population, as

sought to interview these 193 employees. According to Mr.

compared to 107 judges per million in the United States

Woomer, the Indian CBI, which had stepped into the plant

(Galanter Aff. at 15).

following the tragedy, advised the technical team that

interviews could be conducted only of the General Works

[7] A federal court has the power to condition transfer under

Manager and MIC Production Manager, neither of whom was

the doctrine of forum non conveniens upon "the condition

present at the time of the leak. (Woomer Aff. at 57-58).

[12] The seven functional units were Maintenance, Quality

of discrete corporate identities [to] blur[]." (Memo in Opp. at

Control,

18-19).

Stores,

Purchasing,

Safety/Medical,

Industrial

Relations and Works Office. (Woomer Aff. at 6).

[16] As support, Mr. Brown points to the Union Carbide
[13] Mr. Bud Holman, counsel for Union Carbide, states in his

Corporate Policy Manual, Section 1.10 which states:

second affidavit that over 36,000 of the 78,000 pages of

documents seized by the CBI represent plant operation

The "arms-length principle" is a central consideration in

records. (Holman Aff. # 2 at 5). He asserts that 1,700 pages

transfer and pricing of all technology transactions with

deal with maintenance work performed in 1983 and 1984.

affiliates.

(Holman Aff. # 2 at 8).

"Arms length" is defined as:

[14] The 1982 "Operational Safety Survey" was apparently

fairly extensive. It was conducted by three United States
employees of Union Carbide, and led to a report which
discussed "major" concerns and possibility of "serious
personnel exposure." (Memo in Opp. at 25). Mr. Woomer
asserts, and plaintiffs do not refute, that this Survey was not
intended to "serve a policing function," but was performed at
the

specific

responsibility

request

of

"rested

UCIL.

In

exclusively

addition,
with

follow-up

UCIL

The principle whereby inter-company transactions between

Union Carbide and its affiliates, or between affiliates, will
reflect the cost to unrelated parties of the same or similar
technology under similar circumstances.
(Plaintiffs' Exhibit 3). Thus, Mr. Brown argues that Union
Carbide related with UCIL much as it would have with an
unaffiliated, or even competing company.

plant

management." (Woomer Aff. at 37-38).

[17] Humphreys and Glasgow was allegedly responsible for

the following:

Moreover, Union Carbide states that the Union of India, itself,

conducted similar safety audits and made recommendations.

Among other things, developing final equipment and unit

(Affidavit of Ranjit K. Dutta, Business Manager of Union

layouts and plot plans, including equipment layout drawings,

Carbide Agricultural Products Company ("Dutta Aff.") at 58-

detailed piping arrangement drawings, layout of electrical

64).

equipment; the steel structure, including detail design and

working

[15] Plaintiffs assert that Mr. Couvaras exemplifies Union

Carbide's

"international

employee"

whose

mobility

throughout the Union Carbide affiliates causes "[a]ny notion

drawings

for

the

buildings

and

foundation;

mechanical equipment design including specification of all

proprietary

and

certification

of

fabricated
vendor's

equipment;
drawings

and

review

and

documents,

preparation of orthographic piping drawings for all portions of

[19] Mr. Dutta asserts that Mr. Munoz was a paid consultant

the

drawings,

to a member of Plaintiffs' Executive Committee at the time

preparation of preliminary and final bills of materials for

the affidavit was made. No documentary proof of this

pipes, valves, gaskets, instrument associated hardware,

assertion has been submitted. (Dutta Aff. at 31; Holman Aff.

electrical conduit; electrical engineering work, instrument

# 2 at 18). Moreover, two affidavits submitted on behalf of

engineering, including drawings on instrument hook ups, lists

defendant state that Mr. Munoz was removed from his

of instruments, review of instrument specification and data

position as Union Carbide Corporation Division President in

sheets; definition of material and make calculation to size

1978, and is "extremely bitter as a result of the removal."

insulation, preparation of insulation lists, preparation of

(Dutta Aff. at 31; Holman Aff. # 2 at 18).

plant,

material

preparation

take

off

and

of

isometric

inquiry

piping

specification

packages,

procurement assistance including assisting in evaluation of

[20]

bids

certain

affidavits that evidence relevant to the question of damages

equipment and materials to ensure proper workmanship and

is located in India, as well. Certainly the victims themselves,

compliance with specifications and codes, and coordinating

and, for the most part, their medical records, are found in or

where Indian law required inspection or certification by

near Bhopal. However, as plaintiffs argue, a "head count" of

governmental inspections; preparation of a project schedule,

witnesses

project reports and costs control reports at least once per

conveniens motion. (Memo in Opp. at 74-79). Not all of the

month, construction supervision including supervision of

victims would need to be transported to the United States to

mechanical testing of installed equipment, assistance in

describe their injuries. The Bhopal "scheme" provides a

commissioning.

mechanism for evaluating each individual's claim. Only

and

selection

of

vendors,

inspection

of

Union

Carbide

is

not

asserts

throughout

dispositive

of

its

briefs

a forum

and

non

representative plaintiffs need testify as to damages. This

(Dutta Aff. at 19-20).

Court would not countenance the impractical and timeconsuming process of calling each of the approximately

[18] Mr. Couvaras, whom plaintiffs assert was a "key

200,000 victims at a trial in this country. Evidence on

engineer" for the project, and enjoyed mobility between

damages, as well as liability, is found in India, but not to the

Union Carbide and UCIL, is described by Mr. Dutta as

overwhelming extent contended by defendant. Moreover, the

primarily a UCIL employee. The "international employee"

Court is concerned with the policy effect of allowing the

status he carried is explained as a pension accounting

number of foreign victims to affect directly the forum non

mechanism. (Dutta Aff. at 27).

conveniens determination. If carried to the extreme, this

"head count" doctrine would mean that the more people
hurt, the less likely a suit in this country would be.

[21] Indian federal and municipal officials also allegedly

[24] In any event, plaintiffs' "deterrence" and "blackmail"

conducted on-site inspections resulting in approvals for

arguments presuppose that Union Carbide would be held

portions of the construction, including approvals for the flare

more accountable by an American than by an Indian tribunal.

tower, MIC layout and storage, unit refrigeration and

Certainly, there is a real possibility of a substantial Indian

MIC/Phosgene structure. (Dutta Aff. at 46-47; Exs. 102-104).

judgment against defendant, which would serve an identical

deterrent function, and prevent a rush of multinationals to

[22] One such regular inspection appears to have taken place

foreign locations.

approximately two weeks before the MIC disaster. (Dutta Aff.

at 56; Ex. 116).

[25] While the accident is more than a "local controversy,"

given the interests of the Indian populace, it is certainly a

[23] Only a small number of plaintiffs in the Bhopal litigation

national

are

plaintiffs,

home." Gilbert at 508-09. No doubt Indian citizens, many of

approximately nine are American. They have filed the

whom barely are acquainted with their American lawyers, will

complaints numbered 85 Civ. 0447, 85 Civ. 1096 and 85 Civ.

find the case more accessible if it is tried "in their view" in

2098. This is of relative insignificance on this motion to

India.

United

States

citizens.

Of

the

200,000

controversy

which

should

be

"decided

at

dismiss. "The federal courts have not felt constrained to

retain jurisdiction over predominantly foreign cases involving

[26] Upon a cursory review of the individual complaints

American

of

comprising this action, the Court notes that suits were

the Gilbert factors demonstrated that the action is more

brought in California, Connecticut, the District of Columbia,

appropriately brought in a foreign forum.... [T]he presence of

Florida, Illinois, Louisiana, Maryland, New Jersey, New York,

a handful of American plaintiffs does not preclude such

Pennsylvania, Tennessee, Texas and West Virginia, at a

dismissal." Nai-Chao v. Boeing Co., 555 F. Supp. 9, 21

minimum.

plaintiffs

where

an

examination

(N.D.Cal. 1982), aff'd sub. nom., Cheng v. Boeing Co., 708

F.2d 1406 (9th Cir.1983).

WING ON COMPANY V. SYYAP

-Wing On Company incorporated in NY
-Syyap Co., Inc. incorporated in RP
-contract entered in NY:
for the purchase of clothing material, w/ verbal agreement
that Syyap would pay Wing On the value of the clothing
material, then after the sale, the profits would be divided
between them

-clothing materials worth $22,246.04 shipped from NY to RP

-only $3,530.04 paid. Syyap failed to settle debt and
account for profits.
-Wing On Company sued Syyap in RP.
TC: for Wing On
Arguments of Syyap:
(1) no jurisdiction: Wing On is not licensed to do
business in RP, no legal capacity to sue
(2) should have declined jurisdiction: forum non conveniens
HELD
Affirm!
On Forum non Conveniens
WHEN COURT WOULD DECLINE JURISDICTION BASED
ON FOUM NON CONVENIENS
-Unless the balance is strongly in favor of the defendant, the
plaintiff's choice of forum should rarely be disturbed
-Consideration of inadequacy to enforce the judgment

HERE: Defendant in the Philippines. So for the court to

assume jurisdiction over the person of the defendant,
RP Court is the convenient forum.
-the present suit is a PERSONAL ACTION, the case may be
commenced and tried where the defendant resides or may
be found, or where the plaintiff resides, at the election of
the plaintif.
Summary: should consider both public and private interests
Private interests:
*relative ease of access to source of proof
*Availability of compulsory process for attendance of
unwilling witnesses
*cost of obtaining and attendance off willing witnesses
*possibility of viewing the premises if appropriate
*all other practical problems that make trial of a
case easy, expeditious, and inexpensive
Public Interest
*administrative difficulties encountered when courts are
congested
*jury duty: burden on community
*appropriateness of having the trial in a court that is
familiar with the applicable state law rather than getting
another forum enmeshed in a complicated conflict-of-laws
problem
WHEN CAN'T REFUSE TO EXERCISE JURISDICTION:
*when the forum is the only state where jurisdiction over
defendant can be obtained

*when the forum provides procedural remedies not

237
available in another state

PUBLIC DOCUMENTS are:

2.
ASSUME JURISDICTION
GR: apply law of the forum
1. A specific law of the forum decrees that
internal law should apply
Civil Code
Article 16: makes real and personal proerty subject to the
law of the country where they are situated
Intestate and testamentary succession: governed by lex
nationale of the person whose succession is under
consideration

a. The written official acts, or records of the

official acts of the sovereign authority,
official bodies and tribunals, and public
officers, whether of the Philippines, or of a
foreign country;
b. Documents acknowledge before a notary public
except last wills and testaments; and
c. Public records, kept in the Philippines,
of private documents required by law
to the entered therein.
All other writings are PRIVATE.
Section 24 - PROOF OF OFFICIAL RECORD

Article 829: makes revocation done outside the

Philippines valid according to the law of the place where
the will was made or lex domicilli

The record of public

paragraph (a) of
Section 19,

documents

Article 819: prohibits Filipinos from making joint wills even

if valid in the country where they were executed

when admissible for any purpose,

referred

to

may be evidenced by an official publication thereof or

2. The proper foreign law was not properly

pleaded and proved
-no Judicial notice of foreign law

by a copy attested by the officer having the legal

custody of the record, or by his deputy, and

Relevant rules of evidence:

accompanied,
Philippines,

To prove written foreign law: follow requirements in

Sec 24-25,
Rule 132
May be subject of judicial admission
Processual presumption - no proof nor admission,
foreign law presumed to be the same as that in
the Philippines
Rule 132
Section 19 - CLASSES OF DOCUMENTS
For the purpose of their presentation evidence,
documents are either public or private.

in

if

the

record

is

not

kept

in

the

with a certificate that such officer has the custody.

If the office in which the record is kept is in foreign
country,
the certificate may be made by a secretary of the
embassy or legation, consul general, consul, vice
consul, or consular agent or by any officer in the
foreign service of the Philippines
stationed in the foreign country in which the record is
kept,
and authenticated by the seal of his office.
Section 25 - WHAT ATTESTATION OF COPY MUST STATE
Whenever a copy of a document or record is attested

for the purpose of evidence,

the attestation must state, in substance,

that the copy is a correct copy of the original,

or a specific part thereof, as the case may be.
238

The attestation must be

under the official seal of the attesting officer, if there
be any, or
if he be the clerk of a court having a seal, under
the seal of such court.

To prove unwritten foreign law Sec 46, Rule 130

Section 46 - LEARNED TREATISES
A published treatise, periodical or pamphlet on a
subject of history, law, science, or art is admissible
as tending to prove the truth of a matter stated
therein if the court takes judicial notice, or a witness
expert in the subject testifies, that the writer of the
statement in the treatise, periodical or pamphlet is
recognized in his profession or calling as expert in
the subject.
Requisites:

The court takes judicial notice thereof

1.
2. The same is testified to by a witness expert in the
subject

Republic of the Philippines

SUPREME
COURT
Manila

STOCKTON W. ROUZIE,
JR., respondent.
DECISION

SECOND DIVISION
TINGA, J.:
G.R. No. 162894
February 26, 2008
RAYTHEON
INTERNATIONAL,
INC., petitioner,
vs.

Before this Court is a

petition for review on
certiorari under Rule 45 of
the 1997 Rules of Civil
Procedure which seeks the
reversal
of
the

Decision1 and
Resolution2 of the Court of
Appeals in CA-G.R. SP No.
67001 and the dismissal
of the civil case filed by
respondent
against
petitioner with the trial
court.
As culled from the records
of the case, the following
antecedents appear:
Sometime in 1990, Brand
Marine
Services,
Inc.
(BMSI), a corporation duly
organized and existing
under the laws of the
State
of
Connecticut,
United States of America,
and respondent Stockton
W. Rouzie, Jr., an American
citizen, entered into a
contract whereby BMSI
hired respondent as its
representative
to
negotiate the sale of
services
in
several
government projects in
the Philippines for an
agreed remuneration of
10% of the gross receipts.
On
11
March
1992,
respondent
secured
a
service contract with the
Republic of the Philippines
on behalf of BMSI for the
dredging of rivers affected
by
the
Mt.
Pinatubo
eruption and mudflows.3
On
16
respondent

July
filed

1994,
before

the Arbitration Branch of

the
National
Labor
Relations
Commission
(NLRC) a suit against BMSI
and Rust International,
Inc. (RUST), Rodney C.
Gilbert and Walter G.
Browning
for
alleged
nonpayment
of
commissions,
illegal
termination and breach of
employment contract.4 On
28
September
1995,
Labor Arbiter Pablo C.
Espiritu,
Jr.
rendered
judgment ordering BMSI
and
RUST
to
pay
respondents
money
claims.5 Upon appeal by
BMSI, the NLRC reversed
the decision of the Labor
Arbiter
and
dismissed
respondents complaint on
the ground of lack of
jurisdiction.6 Respondent
elevated the case to this
Court but was dismissed
in a Resolution dated 26
November
1997.
The
Resolution became final
and executory on 09
November 1998.
On
8
January
1999,
respondent,
then
a
resident of La Union,
instituted an action for
damages
before
the
Regional Trial Court (RTC)
of Bauang, La Union. The
Complaint,7 docketed
as
Civil Case No. 1192-BG,
named
as
defendants
herein
petitioner

Raytheon
International,
Inc. as well as BMSI and
RUST,
the
two
corporations impleaded in
the earlier labor case. The
complaint
essentially
reiterated the allegations
in the labor case that
BMSI verbally employed
respondent to negotiate
the sale of services in
government projects and
that respondent was not
paid the commissions due
him from the Pinatubo
dredging project which he
secured on behalf of BMSI.
The
complaint
also
averred that BMSI and
RUST as well as petitioner
itself had combined and
functioned
as
one
company.
In its Answer,8 petitioner
alleged that contrary to
respondents claim, it was
a foreign corporation duly
licensed to do business in
the Philippines and denied
entering
into
any
arrangement
with
respondent or paying the
latter any sum of money.
Petitioner
also
denied
combining with BMSI and
RUST for the purpose of
assuming
the
alleged
obligation of the said
companies.9 Petitioner
also referred to the NLRC
decision which disclosed
that
per
the
written
agreement
between

respondent and BMSI and

RUST, denominated as
"Special
Sales
Representative
Agreement," the rights
and obligations of the
parties shall be governed
by the laws of the State of
Connecticut.10 Petitioner
sought the dismissal of
the complaint on grounds
of failure to state a cause
of action and forum non
conveniens and prayed for
damages
by
way
of
compulsory
counterclaim.11
On
18
May
1999,
petitioner
filed
an
Omnibus
Motion
for
Preliminary Hearing Based
on Affirmative Defenses
and
for
Summary
12
Judgment seeking
the
dismissal of the complaint
on grounds of forum non
conveniens and failure to
state a cause of action.
Respondent opposed the
same.
Pending
the
resolution of the omnibus
motion, the deposition of
Walter
Browning
was
taken
before
the
Philippine
Consulate
General in Chicago.13
In an Order14 dated 13
September 2000, the RTC
denied
petitioners
omnibus motion. The trial
court held that the factual
allegations
in
the

complaint, assuming the

same to be admitted,
were sufficient for the trial
court to render a valid
judgment thereon. It also
ruled that the principle
of forum
non
conveniens was
inapplicable because the
trial court could enforce
judgment on petitioner, it
being
a
foreign
corporation licensed to do
business
in
the
Philippines.15
Petitioner filed a Motion
for
Reconsideration16 of
the order, which motion
was
opposed
by
respondent.17 In an Order
dated 31 July 2001,18 the
trial
court
denied
petitioners motion. Thus,
it
filed
a
Rule
65
Petition19 with the Court of
Appeals praying for the
issuance of a writ of
certiorari and a writ of
injunction to set aside the
twin orders of the trial
court dated 13 September
2000 and 31 July 2001
and to enjoin the trial
court from conducting
further proceedings.20
On 28 August 2003, the
Court of Appeals rendered
the
assailed
Decision21 denying
the
petition for certiorari for
lack of merit. It also
denied petitioners motion

for reconsideration in the

assailed Resolution issued
on 10 March 2004.22
The appellate court held
that although the trial
court should not have
confined itself to the
allegations
in
the
complaint
and
should
have
also
considered
evidence aliunde in
resolving
petitioners
omnibus motion, it found
the evidence presented
by petitioner, that is, the
deposition
of
Walter
Browning, insufficient for
purposes of determining
whether the complaint
failed to state a cause of
action.
The
appellate
court also stated that it
could not rule one way or
the other on the issue of
whether the corporations,
including
petitioner,
named as defendants in
the case had indeed
merged together based
solely on the evidence
presented by respondent.
Thus, it held that the issue
should be threshed out
during
trial.23 Moreover,
the
appellate
court
deferred to the discretion
of the trial court when the
latter decided not to
desist
from
assuming
jurisdiction on the ground
of the inapplicability of
the principle of forum non
conveniens.

Hence,
raising
issues:

this
the

petition
following

WHETHER OR NOT
THE COURT OF
APPEALS ERRED IN
REFUSING
TO
DISMISS
THE
COMPLAINT
FOR
FAILURE TO STATE
A
CAUSE
OF
ACTION
AGAINST
RAYTHEON
INTERNATIONAL,
INC.
WHETHER OR NOT
THE COURT OF
APPEALS ERRED IN
REFUSING
TO
DISMISS
THE
COMPLAINT
ON
THE
GROUND
OF FORUM
NON
CONVENIENS.24
Incidentally,
respondent
failed to file a comment
despite repeated notices.
The Ceferino Padua Law
Office, counsel on record
for
respondent,
manifested
that
the
lawyer handling the case,
Atty. Rogelio Karagdag,
had severed relations with
the law firm even before
the filing of the instant
petition and that it could
no
longer
find
the
whereabouts
of
Atty.
Karagdag
or
of

respondent
despite
diligent
efforts.
In
a
Resolution25 dated
20
November
2006,
the
Court
resolved
to
dispense with the filing of
a comment.
The instant petition lacks
merit.
Petitioner mainly asserts
that the written contract
between respondent and
BMSI included a valid
choice of law clause, that
is, that the contract shall
be governed by the laws
of
the
State
of
Connecticut.
It
also
mentions the presence of
foreign elements in the
dispute namely, the
parties
and
witnesses
involved are American
corporations and citizens
and the evidence to be
presented
is
located
outside the Philippines
that renders our local
courts
inconvenient
forums.
Petitioner
theorizes that the foreign
elements of the dispute
necessitate the immediate
application of the doctrine
of forum non conveniens.
Recently in Hasegawa v.
Kitamura,26 the
Court
outlined three consecutive
phases involved in judicial
resolution of conflicts-of-

laws problems, namely:

jurisdiction, choice of law,
and
recognition
and
enforcement
of
judgments. Thus, in the
instances27 where
the
Court held that the local
judicial machinery was
adequate
to
resolve
controversies
with
a
foreign
element,
the
following requisites had to
be proved: (1) that the
Philippine Court is one to
which the parties may
conveniently resort; (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 the power to enforce
its decision.28
On
the
matter
of
jurisdiction
over
a
conflicts-of-laws problem
where the case is filed in a
Philippine court and where
the court has jurisdiction
over the subject matter,
the parties and the res, it
may or can proceed to try
the case even if the rules
of conflict-of-laws or the
convenience of the parties
point to a foreign forum.
This is an exercise of
sovereign prerogative of
the country where the
case is filed.29

Jurisdiction
over
the
nature and subject matter
of an action is conferred
by the Constitution and
the law30 and by the
material allegations in the
complaint, irrespective of
whether
or
not
the
plaintiff is entitled to
recover all or some of the
claims or reliefs sought
therein.31 Civil Case No.
1192-BG is an action for
damages arising from an
alleged
breach
of
contract.
Undoubtedly,
the nature of the action
and
the
amount
of
damages
prayed
are
within the jurisdiction of
the RTC.
As regards jurisdiction
over the parties, the trial
court acquired jurisdiction
over herein respondent
(as party plaintiff) upon
the filing of the complaint.
On
the
other
hand,
jurisdiction
over
the
person of petitioner (as
party
defendant)
was
acquired by its voluntary
appearance in court.32
That the subject contract
included a stipulation that
the
same
shall
be
governed by the laws of
the State of Connecticut
does not suggest that the
Philippine courts, or any
other foreign tribunal for
that matter, are precluded

from hearing the civil

action. Jurisdiction and
choice of law are two
distinct
concepts.
Jurisdiction
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.33 The choice of
law
stipulation
will
become
relevant
only
when
the
substantive
issues of the instant case
develop, that is, after
hearing on the merits
proceeds before the trial
court.
Under
the
doctrine
of forum non conveniens,
a court, in conflicts-oflaws 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.34 Petitioners
averments of the foreign
elements in the instant
case are not sufficient to
oust the trial court of its
jurisdiction over Civil Case
No. No. 1192-BG and the
parties involved.
Moreover, the propriety of
dismissing a case based

on the principle of forum

non conveniens requires a
factual
determination;
hence, it is more properly
considered as a matter of
defense. While it is within
the discretion of the trial
court to abstain from
assuming jurisdiction on
this ground, it should do
so only after vital facts are
established, to determine
whether
special
circumstances require the
courts desistance.35
Finding no grave abuse of
discretion on the trial
court,
the
Court
of
Appeals
respected
its
conclusion that it can
assume jurisdiction over
the
dispute
notwithstanding
its
foreign elements. In the
same manner, the Court
defers
to
the
sound
discretion of the lower
courts
because
their
findings are binding on
this Court.
Petitioner also contends
that the complaint in Civil
Case No. 1192-BG failed
to state a cause of action
against petitioner. Failure
to state a cause of action
refers to the insufficiency
of
allegation
in
the
pleading.36 As a general
rule, the elementary test
for failure to state a cause
of action is whether the

complaint alleges facts

which if true would justify
the relief demanded.37
The complaint alleged
that
petitioner
had
combined with BMSI and
RUST to function as one
company.
Petitioner
contends
that
the
deposition
of
Walter
Browning rebutted this
allegation. On this score,
the resolution of the Court
of Appeals is instructive,
thus:
x
x
x
Our
examination of the
deposition of Mr.
Walter Browning as
well
as
other
documents
produced in the
hearing shows that
these
evidence aliunde a
re
not
quite
sufficient for us to
mete a ruling that
the complaint fails
to state a cause of
action.
Annexes "A" to "E"
by themselves are
not
substantial,
convincing
and
conclusive proofs
that
Raytheon
Engineers
and
Constructors, Inc.
(REC) assumed the

warranty
obligations
of
defendant
Rust
International in the
Makar Port Project
in General Santos
City, after Rust
International
ceased to exist
after
being
absorbed by REC.
Other documents
already submitted
in evidence are
likewise meager to
preponderantly
conclude
that
Raytheon
International, Inc.,
Rust
International[,] Inc.
and Brand Marine
Service, Inc. have
combined into one
company, so much
so that Raytheon
International, Inc.,
the
surviving
company (if at all)
may be held liable
for the obligation
of
BMSI
to
respondent Rouzie
for
unpaid
commissions.
Neither
these
documents clearly
speak otherwise.38
As correctly pointed out
by the Court of Appeals,
the question of whether
petitioner, BMSI and RUST
merged together requires

the presentation of further

evidence, which only a
full-blown trial on the
merits can afford.
WHEREFORE, the instant
petition for review on
certiorari is DENIED. The
Decision and Resolution of
the Court of Appeals in
CA-G.R. SP No. 67001 are
hereby AFFIRMED. Costs
against petitioner.
SO ORDERED.

Republic of the Philippines

SUPREME
COURT
Manila
SECOND DIVISION
G.R. No. 162894
February 26, 2008
RAYTHEON
INTERNATIONAL,
INC., petitioner,
vs.
STOCKTON W. ROUZIE,
JR., respondent.
DECISION
TINGA, J.:
Before this Court is a
petition for review on
certiorari under Rule 45 of
the 1997 Rules of Civil

Procedure which seeks the

reversal
of
the
Decision1 and
Resolution2 of the Court of
Appeals in CA-G.R. SP No.
67001 and the dismissal
of the civil case filed by
respondent
against
petitioner with the trial
court.
As culled from the records
of the case, the following
antecedents appear:
Sometime in 1990, Brand
Marine
Services,
Inc.
(BMSI), a corporation duly
organized and existing
under the laws of the
State
of
Connecticut,
United States of America,
and respondent Stockton
W. Rouzie, Jr., an American
citizen, entered into a
contract whereby BMSI
hired respondent as its
representative
to
negotiate the sale of
services
in
several
government projects in
the Philippines for an
agreed remuneration of
10% of the gross receipts.
On
11
March
1992,
respondent
secured
a
service contract with the
Republic of the Philippines
on behalf of BMSI for the
dredging of rivers affected
by
the
Mt.
Pinatubo
eruption and mudflows.3

On
16
July
1994,
respondent filed before
the Arbitration Branch of
the
National
Labor
Relations
Commission
(NLRC) a suit against BMSI
and Rust International,
Inc. (RUST), Rodney C.
Gilbert and Walter G.
Browning
for
alleged
nonpayment
of
commissions,
illegal
termination and breach of
employment contract.4 On
28
September
1995,
Labor Arbiter Pablo C.
Espiritu,
Jr.
rendered
judgment ordering BMSI
and
RUST
to
pay
respondents
money
claims.5 Upon appeal by
BMSI, the NLRC reversed
the decision of the Labor
Arbiter
and
dismissed
respondents complaint on
the ground of lack of
jurisdiction.6 Respondent
elevated the case to this
Court but was dismissed
in a Resolution dated 26
November
1997.
The
Resolution became final
and executory on 09
November 1998.
On
8
January
1999,
respondent,
then
a
resident of La Union,
instituted an action for
damages
before
the
Regional Trial Court (RTC)
of Bauang, La Union. The
Complaint,7 docketed
as
Civil Case No. 1192-BG,

named
as
defendants
herein
petitioner
Raytheon
International,
Inc. as well as BMSI and
RUST,
the
two
corporations impleaded in
the earlier labor case. The
complaint
essentially
reiterated the allegations
in the labor case that
BMSI verbally employed
respondent to negotiate
the sale of services in
government projects and
that respondent was not
paid the commissions due
him from the Pinatubo
dredging project which he
secured on behalf of BMSI.
The
complaint
also
averred that BMSI and
RUST as well as petitioner
itself had combined and
functioned
as
one
company.
In its Answer,8 petitioner
alleged that contrary to
respondents claim, it was
a foreign corporation duly
licensed to do business in
the Philippines and denied
entering
into
any
arrangement
with
respondent or paying the
latter any sum of money.
Petitioner
also
denied
combining with BMSI and
RUST for the purpose of
assuming
the
alleged
obligation of the said
companies.9 Petitioner
also referred to the NLRC
decision which disclosed

that
per
the
written
agreement
between
respondent and BMSI and
RUST, denominated as
"Special
Sales
Representative
Agreement," the rights
and obligations of the
parties shall be governed
by the laws of the State of
Connecticut.10 Petitioner
sought the dismissal of
the complaint on grounds
of failure to state a cause
of action and forum non
conveniens and prayed for
damages
by
way
of
compulsory
counterclaim.11
On
18
May
1999,
petitioner
filed
an
Omnibus
Motion
for
Preliminary Hearing Based
on Affirmative Defenses
and
for
Summary
Judgment12 seeking
the
dismissal of the complaint
on grounds of forum non
conveniens and failure to
state a cause of action.
Respondent opposed the
same.
Pending
the
resolution of the omnibus
motion, the deposition of
Walter
Browning
was
taken
before
the
Philippine
Consulate
General in Chicago.13
In an Order14 dated 13
September 2000, the RTC
denied
petitioners
omnibus motion. The trial

court held that the factual

allegations
in
the
complaint, assuming the
same to be admitted,
were sufficient for the trial
court to render a valid
judgment thereon. It also
ruled that the principle
of forum
non
conveniens was
inapplicable because the
trial court could enforce
judgment on petitioner, it
being
a
foreign
corporation licensed to do
business
in
the
Philippines.15
Petitioner filed a Motion
for
Reconsideration16 of
the order, which motion
was
opposed
by
respondent.17 In an Order
dated 31 July 2001,18 the
trial
court
denied
petitioners motion. Thus,
it
filed
a
Rule
65
Petition19 with the Court of
Appeals praying for the
issuance of a writ of
certiorari and a writ of
injunction to set aside the
twin orders of the trial
court dated 13 September
2000 and 31 July 2001
and to enjoin the trial
court from conducting
further proceedings.20
On 28 August 2003, the
Court of Appeals rendered
the
assailed
Decision21 denying
the
petition for certiorari for

lack of merit. It also

denied petitioners motion
for reconsideration in the
assailed Resolution issued
on 10 March 2004.22
The appellate court held
that although the trial
court should not have
confined itself to the
allegations
in
the
complaint
and
should
have
also
considered
evidence aliunde in
resolving
petitioners
omnibus motion, it found
the evidence presented
by petitioner, that is, the
deposition
of
Walter
Browning, insufficient for
purposes of determining
whether the complaint
failed to state a cause of
action.
The
appellate
court also stated that it
could not rule one way or
the other on the issue of
whether the corporations,
including
petitioner,
named as defendants in
the case had indeed
merged together based
solely on the evidence
presented by respondent.
Thus, it held that the issue
should be threshed out
during
trial.23 Moreover,
the
appellate
court
deferred to the discretion
of the trial court when the
latter decided not to
desist
from
assuming
jurisdiction on the ground
of the inapplicability of

the principle of forum non

conveniens.
Hence,
raising
issues:

this
the

petition
following

WHETHER OR NOT
THE COURT OF
APPEALS ERRED IN
REFUSING
TO
DISMISS
THE
COMPLAINT
FOR
FAILURE TO STATE
A
CAUSE
OF
ACTION
AGAINST
RAYTHEON
INTERNATIONAL,
INC.
WHETHER OR NOT
THE COURT OF
APPEALS ERRED IN
REFUSING
TO
DISMISS
THE
COMPLAINT
ON
THE
GROUND
OF FORUM
NON
CONVENIENS.24
Incidentally,
respondent
failed to file a comment
despite repeated notices.
The Ceferino Padua Law
Office, counsel on record
for
respondent,
manifested
that
the
lawyer handling the case,
Atty. Rogelio Karagdag,
had severed relations with
the law firm even before
the filing of the instant
petition and that it could

no
longer
find
the
whereabouts
of
Atty.
Karagdag
or
of
respondent
despite
diligent
efforts.
In
a
25
Resolution dated
20
November
2006,
the
Court
resolved
to
dispense with the filing of
a comment.
The instant petition lacks
merit.
Petitioner mainly asserts
that the written contract
between respondent and
BMSI included a valid
choice of law clause, that
is, that the contract shall
be governed by the laws
of
the
State
of
Connecticut.
It
also
mentions the presence of
foreign elements in the
dispute namely, the
parties
and
witnesses
involved are American
corporations and citizens
and the evidence to be
presented
is
located
outside the Philippines
that renders our local
courts
inconvenient
forums.
Petitioner
theorizes that the foreign
elements of the dispute
necessitate the immediate
application of the doctrine
of forum non conveniens.
Recently in Hasegawa v.
Kitamura,26 the
Court

outlined three consecutive

phases involved in judicial
resolution of conflicts-oflaws problems, namely:
jurisdiction, choice of law,
and
recognition
and
enforcement
of
judgments. Thus, in the
instances27 where
the
Court held that the local
judicial machinery was
adequate
to
resolve
controversies
with
a
foreign
element,
the
following requisites had to
be proved: (1) that the
Philippine Court is one to
which the parties may
conveniently resort; (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 the power to enforce
its decision.28

On
the
matter
of
jurisdiction
over
a
conflicts-of-laws problem
where the case is filed in a
Philippine court and where
the court has jurisdiction
over the subject matter,
the parties and the res, it
may or can proceed to try
the case even if the rules
of conflict-of-laws or the
convenience of the parties
point to a foreign forum.
This is an exercise of
sovereign prerogative of
the country where the
case is filed.29
Jurisdiction
over
the
nature and subject matter
of an action is conferred
by the Constitution and
the law30 and by the
material allegations in the
complaint, irrespective of
whether
or
not
the
plaintiff is entitled to
recover all or some of the
claims or reliefs sought
therein.31 Civil Case No.
1192-BG is an action for
damages arising from an
alleged
breach
of
contract.
Undoubtedly,
the nature of the action
and
the
amount
of
damages
prayed
are
within the jurisdiction of
the RTC.
As regards jurisdiction
over the parties, the trial
court acquired jurisdiction
over herein respondent

(as party plaintiff) upon

the filing of the complaint.
On
the
other
hand,
jurisdiction
over
the
person of petitioner (as
party
defendant)
was
acquired by its voluntary
appearance in court.32
That the subject contract
included a stipulation that
the
same
shall
be
governed by the laws of
the State of Connecticut
does not suggest that the
Philippine courts, or any
other foreign tribunal for
that matter, are precluded
from hearing the civil
action. Jurisdiction and
choice of law are two
distinct
concepts.
Jurisdiction
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.33 The choice of
law
stipulation
will
become
relevant
only
when
the
substantive
issues of the instant case
develop, that is, after
hearing on the merits
proceeds before the trial
court.
Under
the
doctrine
of forum non conveniens,
a court, in conflicts-of-

laws cases, may refuse

impositions
on
its
jurisdiction where it is not
the most "convenient" or
available forum and the
parties are not precluded
from seeking remedies
elsewhere.34 Petitioners
averments of the foreign
elements in the instant
case are not sufficient to
oust the trial court of its
jurisdiction over Civil Case
No. No. 1192-BG and the
parties involved.
Moreover, the propriety of
dismissing a case based
on the principle of forum
non conveniens requires a
factual
determination;
hence, it is more properly
considered as a matter of
defense. While it is within
the discretion of the trial
court to abstain from
assuming jurisdiction on
this ground, it should do
so only after vital facts are
established, to determine
whether
special
circumstances require the
courts desistance.35
Finding no grave abuse of
discretion on the trial
court,
the
Court
of
Appeals
respected
its
conclusion that it can
assume jurisdiction over
the
dispute
notwithstanding
its
foreign elements. In the
same manner, the Court

defers
to
the
sound
discretion of the lower
courts
because
their
findings are binding on
this Court.
Petitioner also contends
that the complaint in Civil
Case No. 1192-BG failed
to state a cause of action
against petitioner. Failure
to state a cause of action
refers to the insufficiency
of
allegation
in
the
pleading.36 As a general
rule, the elementary test
for failure to state a cause
of action is whether the
complaint alleges facts
which if true would justify
the relief demanded.37
The complaint alleged
that
petitioner
had
combined with BMSI and
RUST to function as one
company.
Petitioner
contends
that
the
deposition
of
Walter
Browning rebutted this
allegation. On this score,
the resolution of the Court
of Appeals is instructive,
thus:
x
x
x
Our
examination of the
deposition of Mr.
Walter Browning as
well
as
other
documents
produced in the
hearing shows that

these
evidence aliunde a
re
not
quite
sufficient for us to
mete a ruling that
the complaint fails
to state a cause of
action.
Annexes "A" to "E"
by themselves are
not
substantial,
convincing
and
conclusive proofs
that
Raytheon
Engineers
and
Constructors, Inc.
(REC) assumed the
warranty
obligations
of
defendant
Rust
International in the
Makar Port Project
in General Santos
City, after Rust
International
ceased to exist
after
being
absorbed by REC.
Other documents
already submitted
in evidence are
likewise meager to
preponderantly
conclude
that
Raytheon
International, Inc.,
Rust
International[,] Inc.
and Brand Marine
Service, Inc. have
combined into one
company, so much
so that Raytheon

International, Inc.,
the
surviving
company (if at all)
may be held liable
for the obligation
of
BMSI
to
respondent Rouzie
for
unpaid
commissions.
Neither
these
documents clearly
speak otherwise.38
As correctly pointed out
by the Court of Appeals,
the question of whether
petitioner, BMSI and RUST
merged together requires
the presentation of further
evidence, which only a
full-blown trial on the
merits can afford.
WHEREFORE, the instant
petition for review on
certiorari is DENIED. The
Decision and Resolution of
the Court of Appeals in
CA-G.R. SP No. 67001 are
hereby AFFIRMED. Costs
against petitioner.
SO ORDERED.
[G.R.
141536. February
2001]
GIL

No.
26,

MIGUEL
T.
PUYAT, petitioner
,
vs. RON
ZABARTE, respo
ndent.

DECISION
PANGANIBAN, J.:
Summary judgment in
a litigation is resorted to if
there is no genuine issue
as to any material fact,
other than the amount of
damages. If this verity is
evident
from
the
pleadings
and
the
supporting
affidavits,
depositions
and
admissions on file with the
court, the moving party is
entitled to such remedy
as a matter of course.
The Case

Before us is a Petition
for
Review
on Certiorari under
Rule
45 of the Rules of Court,
challenging the August
31, 1999 Decision[1] of the
Court of Appeals (CA),
which
affirmed
the
Regional Trial Court (RTC)
of Pasig City, Branch 67 in
Civil Case No. 64107; and
the January 20, 2000 CA
Resolution[2] which denied
reconsideration.
The
Decision
follows:

assailed
disposed

CA
as

WHEREFORE, finding no
error in the judgment

appealed from, the same

is AFFIRMED."[3]
The Facts

The facts of this case,

as narrated by the Court
of
Appeals,
are
as
follows: [4]
It appears that on 24
January
1994,
[Respondent] Ron Zabarte
commenced [an action] to
enforce
the
money
judgment rendered by the
Superior Court for the
State of California, County
of Contra Costa, U.S.A. On
18
March
1994,
[petitioner]
filed
his
Answer with the following
special and affirmative
defenses:

and
without
sufficient
notice
to
him
and
therefore, was rendered in
clear
violation
of
[petitioners] constitutional
rights to substantial and
procedural due process.
10) The
Judgment
on
Stipulation for Entry in
Judgment in Case #C2100265 dated December
12, 1991 was procured by
means
of
fraud
or
collusion
or
undue
influence and/or based on
a clear mistake of fact and
law.

8) The Superior Court for

the State of California,
County of Contra Costa[,]
did not properly acquire
jurisdiction
over
the
subject matter of and over
the persons involved in
[C]ase #C21-00265.

11) The
Judgment
on
Stipulation for Entry in
Judgment in Case #C2100265 dated December
12, 1991 is contrary to the
laws, public policy and
canons
of
morality
obtaining
in
the
Philippines
and
the
enforcement
of
such
judgment
in
the
Philippines would result in
the unjust enrichment of
[respondent]
at
the
expense of [petitioner] in
this case.

9) The
Judgment
on
Stipulations for Entry in
Judgment in Case #C2100265 dated December
12, 1991 was obtained
without the assistance of
counsel for [petitioner]

12) The
Judgment
on
Stipulation for Entry in
Judgment in Case #C2100265 dated December
12, 1991 is null and void
and unenforceable in the
Philippines.

xxxxxxxxx

13) In the transaction,

which is the subject
matter in Case #C2100265, [petitioner] is not
in any way liable, in fact
and
in
law,
to
[respondent] in this case,
as
contained
in
[petitioners] Answer to
Complaint in Case #C2100265 dated April 1,
1991,
Annex
B
of
[respondents] Complaint
dated December 6, 1993.
14) [Respondent] is guilty
of misrepresentation or
falsification in the filing of
his Complaint in this case
dated
December
6,
1993. Worse, [respondent]
has no capacity to sue in
the Philippines.
15) Venue
improperly
case.

has
been
laid in this

(Record, pp. 42-44)

On 1 August 1994,
[respondent] filed a
[M]otion
for
[S]ummary
[J]udgment
under
Rule 34 of the Rules
of Court alleging that
the [A]nswer filed by
[petitioner] failed to
tender any genuine
issue
as
to
the
material facts.In his
[O]pposition
to

[respondents] motion,
[petitioner] demurred
as follows:
2) [Petitioner]
begs
to
disagree[;]
in
support
hereof, [he] wishes to
mention
that
in
his
Answer with Special and
Affirmative
Defenses
dated March 16, 1994
[petitioner] has interposed
that the Judgment on
Stipulations for Entry in
Judgment is null and void,
fraudulent,
illegal
and
unenforceable, the same
having been obtained by
means of fraud, collusion,
undue influence and/or
clear mistake of fact and
law. In addition, [he] has
maintained
that
said
Judgment on Stipulations
for Entry in Judgment was
obtained
without
the
assistance of counsel for
[petitioner] and without
sufficient notice to him
and
therefore,
was
rendered in violation of his
constitutional rights to
substantial and procedural
due process.
The
[M]otion
for
[S]ummary
[J]udgment was set
for hearing on 12
August 1994 during
which
[respondent]
marked
and
submitted
in

evidence
following:
Exhibit A - x x x
J
u
d
g
m
e
n
t
o
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S
ti
p
u
la
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o
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F
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r
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the

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]
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f
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p
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r
C
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rt
.
Exhibit B - x x x
C
e
rt
i
fi
c
a
t
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f
A
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c
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n
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H
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C
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e
p
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P
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p
p
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Exhibit
C
[
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]
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t
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[
W
]
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]
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s
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,
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C
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Exhibit

D - [W]rit
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f
[
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]
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Exhibit 'E' [P]roof

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f
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]
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,
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Exhibit
F
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W
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t
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Exhibit
G
C
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f
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A
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t
i
o
n
.
On 6 April 1995, the court
a quo issued an [O]rder
granting
[respondents]
[M]otion for [S]ummary
[J]udgment [and] likewise
granting [petitioner] ten
(10)
days
to
submit
opposing affidavits, after
which the case would be
deemed submitted for
resolution (Record, pp.
152-153). [Petitioner] filed
a
[M]otion
for
[R]econsideration of the
aforesaid
[O]rder
and
[respondent]
filed
[C]omment. On 30 June
1995, [petitioner] filed a
[M]otion to [D]ismiss on
the ground of lack of
jurisdiction
over
the
subject matter of the case
and forum-nonconveniens (Record,
pp.
166-170). In
his
[O]pposition
to
the
[M]otion (Record, pp. 181182)
[respondent]
contended that [petitioner
could] no longer question
the jurisdiction of the
lower court on the ground
that [the latters] Answer
had failed to raise the
issue
of
jurisdiction. [Petitioner]
countered by asserting in
his Reply that jurisdiction

[could] not be fixed by

agreement
of
the
parties. The lower court
dismissed [his] [M]otion
for [R]econsideration and
[M]otion [to] [D]ismiss
(Record, pp. 196-198), x x
x.
The RTC[5] eventually
rendered its February 21,
1997
Decision,[6] which
disposed as follows:
WHEREFORE, judgment is
hereby rendered, ordering
[petitioner]
to
pay
[respondent] the following
amounts:
1. The amount of U.S.
dollars $241,991.33, with
the interest of legal rate
from October 18, 1991, or
its
peso
equivalent,
pursuant
to
the
[J]udgment of [S]tipulation
for [E]ntry in [J]udgment
dated
December
19,
1991;
2. The
amount
of
P30,000.00 as attorneys
fees;
3. To pay the costs of suit.
The
claim
for
moral
damages, not having been
substantiated, it is hereby
denied.[7]
Ruling of the Court of Appeals

Affirming
the
trial
court,
the
Court
of
Appeals
held
that
petitioner was estopped
from
assailing
the
judgment
that
had
become final and had, in
fact,
been
partially
executed. The CA also
ruled
that
summary
judgment
was
proper,
because petitioner had
failed to tender any
genuine issue of fact and
was merely maneuvering
to delay the full effects of
the judgment.
Citing Ingenohl
v.
Olsen,[8] the
CA
also
rejected
petitioners
argument that the RTC
should have dismissed the
action
for
the
enforcement of a foreign
judgment, on the ground
of forum
non
conveniens. It
reasoned
out that the recognition of
the foreign judgment was
based
on
comity,
reciprocity
and res
judicata.

Whether or not the Court

of Appeals acted in a
manner x x x contrary to
law when it affirmed the
Order of the trial court
granting
respondents
Motion
for
Summary
Judgment and rendering
judgment
against
the
petitioner.[10]
In
his
discussion,
petitioner contends that
the CA erred in ruling in
this wise:
1. That his Answer failed
to tender a genuine issue
of fact regarding the
following:
(a) the
jurisdiction of a
foreign
court
over the subject
matter
(b) the validity of
the
foreign
judgment
(c) the judgments
conformity
to
Philippine laws,
public
policy,
canons
of
morality,
and
norms
against
unjust
enrichment

Hence, this Petition.[9]

Issue

In his Memorandum,
petitioner submits this
lone but all-embracing
issue:

2. That
of forum

the

principle
non

conveniens was
inapplicable to the instant
case.
This Courts Ruling

The Petition has no

merit.
First Question: Summary Judgment

Petitioner vehemently
insists
that
summary
judgment is inappropriate
to resolve the case at bar,
arguing that his Answer
allegedly raised genuine
and
material
factual
matters which he should
have been allowed to
prove during trial.
On the other hand,
respondent argues that
the alleged genuine issues
of fact raised by petitioner
are mere conclusions of
law,
or
propositions
arrived at not by any
process
of
natural
reasoning from a fact or a
combination
of
facts
stated
but
by
the
application of the artificial
rules of law to the facts
pleaded.[11]
The
RTC
granted
respondents Motion for
Summary
Judgment
because petitioner, in his
Answer,
admitted
the
existence of the Judgment

on Stipulation for Entry in

Judgment. Besides,
he
had already paid $5,000
to
respondent,
as
provided in the foreign
judgment sought to be
enforced.[12] Hence,
the
trial court ruled that,
there being no genuine
issue as to any material
fact, the case should
properly
be
resolved
through
summary
judgment. The
CA
affirmed this ruling.
We concur with the
lower
courts. Summary
judgment is a procedural
device for the prompt
disposition of actions in
which the pleadings raise
only a legal issue, and not
a genuine issue as to any
material fact. Bygenuine
issue is meant a question
of fact that calls for the
presentation
of
evidence. It should be
distinguished
from
an
issue
that
is
sham,
contrived, set in bad faith
and
patently
unsubstantial.[13]
Summary judgment is
resorted to in order to
avoid long drawn out
litigations and useless
delays. When
affidavits,
depositions
and
admissions on file show
that there are no genuine
issues of fact to be tried,

the Rules allow a party to

pierce the allegations in
the pleadings and to
obtain immediate relief by
way
of
summary
judgment. In short, since
the facts are not in
dispute, the court is
allowed to decide the case
summarily by applying the
law to the material facts.
Petitioner
contends
that by allowing summary
judgment,
the
two
courts a
quo prevented
him
from
presenting
evidence to substantiate
his claims. We do not
agree. Summary
judgment is based on
facts directly proven by
affidavits, depositions or
admissions.[14] In
this
case, the CA and the RTC
both merely ruled that
trial was not necessary to
resolve
the
case. Additionally
and
correctly,
the
RTC
specifically
ordered
petitioner
to
submit
opposing
affidavits
to
support his contentions
that (1) the Judgment on
Stipulation for Entry in
Judgment was procured
on the basis of fraud,
collusion,
undue
influence, or a clear
mistake of law or fact; and
(2) that it was contrary to
public
policy
or
the
canons of morality.[15]

Again,
in
its
Order[16] dated November
29, 1995, the trial court
clarified that the opposing
affidavits
were
for
[petitioner] to spell out
the facts or circumstances
[that] would constitute
lack of jurisdiction over
the subject matter of and
over the persons involved
in Case No. C21-00265,
and that would render the
judgment therein null and
void. In
this
light,
petitioners
contention
that he was not allowed to
present
evidence
to
substantiate his claims is
clearly untenable.
For
summary
judgment to be valid, Rule
34, Section 3 of the Rules
of Court, requires (a) that
there must be no genuine
issue as to any material
fact,
except
for
the
amount of damages; and
(b)
that
the
party
presenting the motion for
summary judgment must
be entitled to a judgment
as a matter of law.[17] As
mentioned
earlier,
petitioner admitted that a
foreign
judgment
had
been rendered against
him and in favor of
respondent, and that he
had paid $5,000 to the
latter
in
partial
compliance
therewith. Hence,

respondent, as the party

presenting the Motion for
Summary Judgment, was
shown to be entitled to
the judgment.
The CA made short
shrift
of
the
first
requirement. To show that
petitioner had raised no
genuine issue, it relied
instead on the finality of
the
foreign
judgment
which
was,
in
fact,
partially executed. Hence,
we shall show in the
following discussion how
the defenses presented by
petitioner failed to tender
any genuine issue of fact,
and why a full-blown trial
was not necessary for the
resolution of the issues.
Jurisdiction

Petitioner alleges that

jurisdiction over Case No.
C21-00265,
which
involved
partnership
interest, was vested in the
Securities and Exchange
Commission, not in the
Superior
Court
of
California,
County
of
Contra Costa.
We disagree. In the
absence
of
proof
of
California law on the
jurisdiction of courts, we
presume that such law, if
any,
is
similar
to

Philippine law. We base

this conclusion on the
presumption of identity or
similarity, also known as
processual presumption.
[18]
The
Complaint,
[19]
which respondent filed
with the trial court, was
for the enforcement of a
foreign
judgment. He
alleged therein that the
action of the foreign court
was for the collection of a
sum of money, breach of
promissory notes, and
damages.[20]
In our jurisdiction,
such a case falls under
the jurisdiction of civil
courts,
not
of
the
Securities and Exchange
Commission
(SEC). The
jurisdiction of the latter is
exclusively over matters
enumerated in Section 5,
PD 902-A,[21] prior to its
latest amendment. If the
foreign court did not really
have jurisdiction over the
case, as petitioner claims,
it would have been very
easy for him to show
this. Since jurisdiction is
determined
by
the
allegations in a complaint,
he only had to submit a
copy of the complaint filed
with
the
foreign
court. Clearly, this issue
did not warrant trial.
Rights to Counsel and to Due Process

Petitioner
contends
that the foreign judgment,
which was in the form of a
Compromise Agreement,
cannot
be
executed
without the parties being
assisted by their chosen
lawyers. The reason for
this, he points out, is to
eliminate collusion, undue
influence and/or improper
exertion of ascendancy by
one
party
over
the
other. He alleges that he
discharged his counsel
during the proceedings,
because he felt that the
latter was not properly
attending to the case. The
judge, however, did not
allow him to secure the
services
of
another
counsel. Insisting
that
petitioner settle the case
with
respondent,
the
judge practically imposed
the settlement agreement
on him.In his Opposing
Affidavit, petitioner states:
It is true that I was initially
represented by a counsel
in the proceedings in
#C21-00625. I discharged
him because I then felt
that he was not properly
attending to my case or
was
not
competent
enough to represent my
interest. I asked the Judge
for time to secure another
counsel
but
I
was
practically
discouraged
from engaging one as the

Judge was insistent that I

settle the case at once
with
the
[respondent]. Being
a
foreigner and not a lawyer
at that I did not know
what to do. I felt helpless
and
the
Judge
and
[respondents] lawyer were
the ones telling me what
to
do. Under
ordinary
circumstances,
their
directives should have
been taken with a grain of
salt especially so [since
respondents]
counsel,
who was telling me what
to do, had an interest
adverse
to
mine. But
[because]
time
constraints and undue
influence exerted by the
Judge and [respondents]
counsel on me disturbed
and seriously affected my
freedom to act according
to my best judgment and
belief. In point of fact, the
terms of the settlement
were practically imposed
on me by the Judge
seconded all the time by
[respondents]
counsel. I
was then helpless as I had
no counsel to assist me
and the collusion between
the
Judge
and
[respondents]
counsel
was
becoming
more
evident by the way I was
treated in the Superior
Court of [t]he State of
California. I signed the
Judgment on Stipulation

for Entry in Judgment

without
any
lawyer
assisting me at the time
and without being fully
aware of its terms and
stipulations.[22]
The manifestation of
petitioner that the judge
and the counsel for the
opposing
party
had
pressured him would gain
credibility only if he had
not been given sufficient
time
to
engage
the
services
of
a
new
lawyer.Respondents
Affidavit[23] dated May 23,
1994, clarified, however,
that
petitioner
had
sufficient time, but he
failed
to
retain
a
counsel. Having dismissed
his lawyer as early as June
19,
1991,
petitioner
directly handled his own
defense and negotiated a
settlement
with
respondent
and
his
counsel
in
December
1991. Respondent
also
stated
that
petitioner,
ignoring
the
judges
reminder
of
the
importance of having a
lawyer, argued that he
would be the one to settle
the
case
and
pay
anyway. Eventually,
the
Compromise
Agreement
was presented in court
and signed before Judge
Ellen James on January 3,
1992. Hence, petitioners

rights to counsel and to

due process were not
violated.
Unjust Enrichment

Petitioner avers that

the
Compromise
Agreement violated the
norm
against
unjust
enrichment because the
judge made him shoulder
all the liabilities in the
case, even if there were
two other defendants,
G.S.P & Sons, Inc. and the
Genesis Group.
We cannot exonerate
petitioner
from
his
obligation
under
the
foreign judgment, even if
there
are
other
defendants who are not
being held liable together
with him. First, the foreign
judgment itself does not
mention
these
other
defendants,
their
participation
or
their
liability
to
respondent. Second,
petitioners
undated
Opposing Affidavit states:
[A]lthough myself and
these
entities
were
initially represented by
Atty.
Lawrence
L.
Severson of the Law Firm
Kouns,
Quinlivan
&
Severson,
x
x
x
I
discharged x x x said
lawyer. Subsequently,
I

assumed
the
representation for myself
and these firms and this
was
allowed
by
the
Superior Court of the
State of California without
any authorization from
G.G.P. & Sons, Inc. and the
Genesis Group.[24] Clearly,
it was petitioner who
chose to represent the
other defendants; hence,
he cannot now be allowed
to impugn a decision
based on this ground.
In any event, contrary
to petitioners contention,
unjust
enrichment
or solutio indebiti does not
apply to this case. This
doctrine
contemplates
payment when there is no
duty to pay, and the
person who receives the
payment has no right to
receive it.[25] In this case,
petitioner merely argues
that
the
other
two
defendants
whom
he
represented were liable
together with him. This is
not a case of unjust
enrichment.
We do not see, either,
how the foreign judgment
could be contrary to law,
morals, public policy or
the canons of morality
obtaining
in
the
country. Petitioner
owed
money, and the judgment
required him to pay

it. That is the long and the

short of this case.
In
addition,
the
maneuverings
of
petitioner before the trial
court reinforce our belief
that
his
claims
are
unfounded. Instead
of
filing opposing affidavits
to support his affirmative
defenses,
he
filed
a
Motion
for
Reconsideration of the
Order allowing summary
judgment, as well as a
Motion to Dismiss the
action on the ground
of forum
non
conveniens. His opposing
affidavits were filed only
after
the
Order
of
November 29, 1995 had
denied
both
Motions.
[26]
Such actuation was
considered by the trial
court as a dilatory ploy
which
justified
the
resolution of the action by
summary
judgment. According
to
the
CA,
petitioners
allegations
sought
to
delay the full effects of
the
judgment;
hence,
summary judgment was
proper. On this point, we
concur with both courts.
Second
Conveniens

Question:

Forum

Non

Petitioner argues that

the RTC should have
refused to entertain the
Complaint
for
enforcement
of
the
foreign judgment on the
principle of forum non
conveniens. He
claims
that the trial court had no
jurisdiction, because the
case involved partnership
interest, and there was
difficulty in ascertaining
the applicable law in
California. All the aspects
of the transaction took
place in a foreign country,
and respondent is not
even Filipino.
We
disagree. Under
the principle of forum non
conveniens, even if the
exercise of jurisdiction is
authorized by law, courts
may nonetheless refuse to
entertain a case for any of
the following practical
reasons:

known
as forum
shopping[,] merely
to
secure
procedural
advantages or to convey
or harass the defendant;
3) The unwillingness to
extend
local
judicial
facilities to non-residents
or aliens when the docket
may
already
be
overcrowded;
4) The inadequacy of the
local judicial machinery
for effectuating the right
sought to be maintained;
and
The
difficulty
of
ascertaining foreign law.
[27]

1) The belief that the

matter can be better tried
and decided elsewhere,
either because the main
aspects
of
the
case
transpired in a foreign
jurisdiction or the material
witnesses
have
their
residence there;

None
of
the
aforementioned
reasons
barred the RTC from
exercising
its
jurisdiction. In the present
action, there was no more
need
for
material
witnesses,
no
forum
shopping or harassment
of
petitioner,
no
inadequacy in the local
machinery to enforce the
foreign judgment, and no
question raised as to the
application of any foreign
law.

2) The belief that the nonresident plaintiff sought

the forum[,] a practice

Authorities agree that

the issue of whether a suit
should be entertained or

dismissed on the basis of

the
above-mentioned
principle depends largely
upon the facts of each
case and on the sound
discretion of the trial
court.[28] Since the present
action lodged in the RTC
was for the enforcement
of a foreign judgment,
there was no need to
ascertain the rights and
the obligations of the
parties based on foreign
laws or contracts. The
parties needed only to
perform their obligations
under the Compromise
Agreement
they
had
entered into.
Under Section 48,
Rule 39 of the 1997 Rules
of Civil Procedure, a
judgment in an action in
personam rendered by a
foreign tribunal clothed
with
jurisdiction
is
presumptive evidence of a
right as between the
parties
and
their
successors-in-interest by a
subsequent title.[29]
Also, under Section
5(n) of Rule 131, a court -whether in the Philippines
or elsewhere -- enjoys the
presumption that it is
acting
in
the
lawful
exercise of its jurisdiction,
and that it is regularly
performing
its
official
duty.[30] Its judgment may,

however, be assailed if
there is evidence of want
of jurisdiction, want of
notice
to
the
party,
collusion, fraud or clear
mistake of law or fact. But
precisely, this possibility
signals the need for a
local trial court to exercise
jurisdiction. Clearly,
the
application of forum non
coveniens is not called for.
The grounds relied
upon by petitioner are
contradictory. On the one
hand, he insists that the
RTC take jurisdiction over
the enforcement case in
order to invalidate the
foreign judgment; yet, he
avers that the trial court
should
not
exercise
jurisdiction over the same
case on the basis of forum
non conveniens. Not only
do these defenses weaken
each other, but they
bolster the finding of the
lower courts that he was
merely maneuvering to
avoid or delay payment of
his obligation.
WHEREFORE,
the
Petition
is
hereby DENIED and
the
assailed
Decision
and
Resolution AFFIRMED. Dou
ble
costs
against
petitioner.
SO ORDERED.

Republic of the Philippines

SUPREME
COURT
Manila
THIRD DIVISION
G.R. No. 154830
June 8, 2007
PIONEER
CONCRETE
PHILIPPINES,
INC.,
PIONEER PHILIPPINES
HOLDINGS, and PHILIP
J.
KLEPZIG,petitioners,
vs.
ANTONIO
D.
TODARO, respondent.
DECISION
AUSTRIA-MARTINEZ, J.:

Before the Court is a

Petition
for
Review
on Certiorari seeking
to
annul and set aside the
Decision1 of the Court of
Appeals
(CA)
dated
October 31, 2000 in CAG.R. SP No. 54155 and its
Resolution2 of August 21,
2002 denying petitioners
Motion
for
Reconsideration.
The
factual
and
procedural antecedents of
the case are as follows:
On January 16, 1998,
herein respondent Antonio
D. Todaro (Todaro) filed
with the Regional Trial
Court (RTC) of Makati City,
a complaint for Sum of
Money and Damages with
Preliminary
Attachment
against
Pioneer
International Limited (PIL),
Pioneer
Concrete
Philippines, Inc. (PCPI),
Pioneer
Philippines
Holdings, Inc. (PPHI), John
G. McDonald (McDonald)
and
Philip
J.
Klepzig
(Klepzig).3
In his complaint, Todaro
alleged that PIL is a
corporation
duly
organized and existing
under
the
laws
of
Australia and is principally
engaged in the ready-mix
concrete and concrete

aggregates business; PPHI

is
the
company
established by PIL to own
and hold the stocks of its
operating company in the
Philippines; PCPI is the
company established by
PIL
to
undertake
its
business
of
ready-mix
concrete,
concrete
aggregates and quarrying
operations
in
the
Philippines; McDonald is
the Chief Executive of the
Hongkong office of PIL;
and,
Klepzig
is
the
President and Managing
Director of PPHI and PCPI;
Todaro has been the
managing
director
of
Betonval Readyconcrete,
Inc.
(Betonval),
a
company engaged in premixed
concrete
and
concrete
aggregate
production; he resigned
from Betonval in February
1996; in May 1996, PIL
contacted
Todaro
and
asked him if he was
available to join them in
connection
with
their
intention to establish a
ready-mix concrete plant
and
other
related
operations
in
the
Philippines;
Todaro
informed
PIL
of
his
availability and interest to
join them; subsequently,
PIL and Todaro came to an
agreement wherein the
former
consented
to
engage the services of the

latter as a consultant for

two to three months, after
which,
he
would
be
employed as the manager
of
PIL's
ready-mix
concrete
operations
should
the
company
decide to invest in the
Philippines; subsequently,
PIL started its operations
in
the
Philippines;
however, it refused to
comply
with
its
undertaking to employ
Todaro on a permanent
basis.4
Instead
of
filing
an
Answer, PPHI, PCPI and
Klepzig separately moved
to dismiss the complaint
on the grounds that the
complaint states no cause
of action, that the RTC has
no jurisdiction over the
subject matter of the
complaint, as the same is
within the jurisdiction of
the NLRC, and that the
complaint
should
be
dismissed on the basis of
the doctrine of forum non
conveniens.5
In its Order dated January
4, 1999, the RTC of
Makati,
Branch
147,
denied herein petitioners'
respective
motions
to
dismiss.6 Herein
petitioners,
as
defendants,
filed
an
Urgent
Omnibus
Motion7 for
the

reconsideration of the trial

court's Order of January 4,
1999 but the trial court
denied
it
via
its
Order8 dated June 3, 1999.
On August 3, 1999, herein
petitioners filed a Petition
for Certiorari with
the
CA.9 On October 31, 2000,
the
CA
rendered
its
presently
assailed
Decision denying herein
petitioners'
Petition
for Certiorari. Petitioners
filed
a
Motion
for
Reconsideration but the
CA denied it in its
Resolution dated August
21, 2002.
Hence, herein Petition for
Review
on Certiorari based on the
following assignment of
errors:
A.
THE COURT OF
APPEALS'
CONCLUSION THAT
THE
COMPLAINT
STATES A CAUSE
OF
ACTION
AGAINST
PETITIONERS
IS
WITHOUT
ANY
LEGAL BASIS. THE
ANNEXES TO THE
COMPLAINT
CLEARLY BELIE THE
ALLEGATION
OF

EXISTENCE OF AN
EMPLOYMENT
CONTRACT
BETWEEN PRIVATE
RESPONDENT AND
PETITIONERS.
B.
THE COURT OF
APPEALS DECIDED
A QUESTION OF
SUBSTANCE IN A
WAY
NOT
IN
ACCORD WITH LAW
AND
WITH
APPLICABLE
DECISIONS OF THE
SUPREME
COURT
WHEN IT UPHELD
THE JURISDICTION
OF
THE
TRIAL
COURT
DESPITE
THE FACT THAT
THE
COMPLAINT
INDUBITABLY
SHOWS THAT IT IS
AN ACTION FOR AN
ALLEGED BREACH
OF
EMPLOYMENT
CONTRACT,
AND
HENCE,
FALLS
WITHIN
THE
EXLCUSIVE
JURISDICTION
OF
THE
NATIONAL
LABOR RELATIONS
COMMISSION.
C
THE COURT
APPEALS

OF

DISREGARDED
AND FAILED TO
CONSIDER
THE
PRINCIPLE
OF
"FORUM
NON
CONVENIENS" AS A
VALID
GROUND
FOR DISMISSING A
COMPLAINT.10
In their first assigned
error, petitioners contend
that
there
was
no
perfected
employment
contract between PIL and
herein
respondent.
Petitioners assert that the
annexes to respondent's
complaint show that PIL's
offer was for respondent
to be employed as the
manager only of its premixed concrete operations
and not as the company's
managing director or CEO.
Petitioners
argue
that
when
respondent
reiterated his intention to
become the manager of
PIL's
overall
business
venture in the Philippines,
he, in effect did not
accept
PIL's offer of
employment and instead
made
a
counter-offer,
which, however, was not
accepted
by
PIL.
Petitioners also contend
that under Article 1318 of
the Civil Code, one of the
requisites for a contract to
be
perfected
is
the
consent of the contracting
parties; that under Article

1319 of the same Code,

consent is manifested by
the meeting of the offer
and the acceptance upon
the thing and the cause
which are to constitute
the contract; that the
offer must be certain and
the acceptance absolute;
that
a
qualified
acceptance constitutes a
counter-offer. Petitioners
assert that since PIL did
not accept respondent's
counter-offer, there never
was
any
employment
contract
that
was
perfected between them.
Petitioners further argue
that respondent's claim
for damages based on the
provisions of Articles 19
and 21 of the Civil Code is
baseless because it was
shown that there was no
perfected
employment
contract.
Assuming, for the sake of
argument, that PIL may be
held liable for breach of
employment
contract,
petitioners contend that
PCPI and PPHI, may not
also
be
held
liable
because they are juridical
entities with personalities
which are separate and
distinct from PIL, even if
they
are
subsidiary
corporations of the latter.
Petitioners also aver that
the
annexes
to

respondent's
complaint
show
that
the
negotiations
on
the
alleged
employment
contract
took
place
between respondent and
PIL through its office in
Hongkong. In other words,
PCPI and PPHI were not
privy to the negotiations
between
PIL
and
respondent
for
the
possible employment of
the latter; and under
Article 1311 of the Civil
Code, a contract is not
binding upon and cannot
be enforced against one
who was not a party to it
even if he be aware of
such contract and has
acted
with
knowledge
thereof.
Petitioners further assert
that petitioner Klepzig
may not be held liable
because he is simply
acting in his capacity as
president of PCPI and PPHI
and settled is the rule that
an officer of a corporation
is not personally liable for
acts
done
in
the
performance of his duties
and within the bounds of
the authority conferred on
him.
Furthermore,
petitioners
argue
that
even if PCPI and PPHI are
held liable, respondent
still has no cause of action
against Klepzig because
PCPI
and
PPHI
have

personalities which are

separate and distinct from
those acting in their
behalf, such as Klepzig.
As
to
their
second
assigned error, petitioners
contend that since herein
respondent's claims for
actual,
moral
and
exemplary damages are
solely premised on the
alleged
breach
of
employment contract, the
present case should be
considered
as
falling
within
the
exclusive
jurisdiction of the NLRC.
With respect to the third
assigned error, petitioners
assert that the principle
of forum
non
conveniens dictates that
even where exercise of
jurisidiction is authorized
by law, courts may refuse
to
entertain
a
case
involving
a
foreign
element where the matter
can be better tried and
decided elsewhere, either
because the main aspects
of the case transpired in a
foreign jurisdiction or the
material witnesses have
their residence there and
the plaintiff sought the
forum merely to secure
procedural advantage or
to annoy or harass the
defendant.
Petitioners
also argue that one of the
factors in determining the

most convenient forum for

conflicts problem is the
power of the court to
enforce
its
decision.
Petitioners contend that
since the majority of the
defendants in the present
case are not residents of
the Philippines, they are
not subject to compulsory
processes
of
the
Philippine court handling
the case for purposes of
requiring their attendance
during
trial.
Even
assuming that they can be
summoned,
their
appearance would entail
excessive
costs.
Petitioners further assert
that there is no allegation
in the complaint from
which one can conclude
that the evidence to be
presented during the trial
can be better obtained in
the Philippines. Moreover,
the events which led to
the present controversy
occurred
outside
the
Philippines.
Petitioners
conclude that based on
the
foregoing
factual
circumstances, the case
should
be
dismissed
under
the
principle
of forum non conveniens.
In
his
Comment,
respondent
extensively
quoted the assailed CA
Decision maintaining that
the factual allegations in
the complaint determine

whether
or
not
the
complaint states a cause
of action.
As to the question of
jurisdiction,
respondent
contends
that
the
complaint he filed was not
based on a contract of
employment. Rather, it
was based on petitioners'
unwarranted breach of
their
contractual
obligation
to
employ
respondent. This breach,
respondent argues, gave
rise to an action for
damages
which
is
cognizable by the regular
courts.
Even assuming that there
was
an
employment
contract,
respondent
asserts that for the NLRC
to acquire jurisdiction, the
claim for damages must
have a reasonable causal
connection
with
the
employer-employee
relationship of petitioners
and respondent.
Respondent
further
argues that there is a
perfected
contract
between
him
and
petitioners as they both
agreed that the latter
shall employ him to
manage and operate their
ready-mix
concrete
operations
in
the

Philippines.
Even
assuming that there was
no perfected contract,
respondent contends that
his complaint alleges an
alternative cause of action
which is based on the
provisions of Articles 19
and 21 of the Civil Code.
As to the applicability of
the doctrine of forum non
conveniens,
respondent
avers that the question of
whether a suit should be
entertained or dismissed
on the basis of the
principle of forum non
conveniens depends
largely upon the facts of
the particular case and is
addressed to the sound
discretion of the trial
judge, who is in the best
position
to
determine
whether
special
circumstances
require
that the court desist from
assuming jurisdiction over
the suit.
The petition lacks merit.
Section 2, Rule 2 of the
Rules
of
Court,
as
amended, defines a cause
of action as the act or
omission by which a party
violates a right of another.
A cause of action exists if
the following elements are
present: (1) a right in
favor of the plaintiff by

whatever
means
and
under whatever law it
arises or is created; (2) an
obligation on the part of
the named defendant to
respect or not to violate
such right; and, (3) an act
or omission on the part of
such defendant violative
of the right of the plaintiff
or constituting a breach of
the obligation of the
defendant to the plaintiff
for which the latter may
maintain an action for
recovery of damages.11
In Hongkong
and
Shanghai
Banking
Corporation Limited v.
Catalan,12 this Court held:
The
elementary
test for failure to
state a cause of
action is whether
the
complaint
alleges facts which
if true would justify
the
relief
demanded. Stated
otherwise, may the
court
render
a
valid
judgment
upon
the
facts
alleged
therein?
The inquiry is into
the sufficiency, not
the veracity of the
material
allegations. If the
allegations in the
complaint furnish
sufficient basis on

which it can be
maintained,
it
should
not
be
dismissed
regardless of the
defense that may
be presented by
the defendants.13
Moreover, the complaint
does not have to establish
or allege facts proving the
existence of a cause of
action at the outset; this
will have to be done at
the trial on the merits of
the case.14 To sustain a
motion to dismiss for lack
of cause of action, the
complaint must show that
the claim for relief does
not exist, rather than that
a
claim
has
been
defectively stated, or is
ambiguous, indefinite or
uncertain.15
Hence,
in
resolving
whether
or
not
the
Complaint in the present
case states a cause of
action, the trial court
correctly limited itself to
examining the sufficiency
of the allegations in the
Complaint as well as the
annexes thereto. It is
proscribed from inquiring
into the truth of the
allegations
in
the
Complaint
or
the
authenticity of any of the
documents referred or
attached
to
the

Complaint, since these are

deemed
hypothetically
admitted
by
the
respondent.
This Court has reviewed
respondents allegations
in its Complaint. In a
nutshell,
respondent
alleged
that
herein
petitioners reneged on
their
contractual
obligation to employ him
on a permanent basis.
This allegation is sufficient
to constitute a cause of
action for damages.
The issue as to whether or
not there was a perfected
contract
between
petitioners
and
respondent is a matter
which is not ripe for
determination
in
the
present case; rather, this
issue must be taken up
during trial, considering
that its resolution would
necessarily
entail
an
examination
of
the
veracity of the allegations
not
only
of
herein
respondent as plaintiff but
also of petitioners as
defendants.
The Court does not agree
with
petitioners'
contention that they were
not
privy
to
the
negotiations
for
respondent's
possible

employment. It is evident
from paragraphs 24 to 28
of the Complaint16 that, on
various occasions, Klepzig
conducted
negotiations
with respondent regarding
the
latter's
possible
employment.
In
fact,
Annex
"H"17 of
the
complaint shows that it
was Klepzig who informed
respondent
that
his
company was no longer
interested in employing
respondent. Hence, based
on the allegations in the
Complaint
and
the
annexes attached thereto,
respondent has a cause of
action
against
herein
petitioners.
As to the question of
jurisdiction, this Court has
consistently
held
that
where
no
employeremployee
relationship
exists between the parties
and no issue is involved
which may be resolved by
reference to the Labor
Code, other labor statutes
or
any
collective
bargaining agreement, it
is the Regional Trial Court
that has jurisdiction.18 In
the present case, no
employer-employee
relationship
exists
between petitioners and
respondent. In fact, in his
complaint,
private
respondent is not seeking
any relief under the Labor

Code, but seeks payment

of damages on account of
petitioners' alleged breach
of their obligation under
their
agreement
to
employ him. It is settled
that an action for breach
of contractual obligation is
intrinsically
a
civil
dispute.19 In
the
alternative,
respondent
seeks redress on the basis
of
the
provisions
of
Articles 19 and 21 of the
Civil Code. Hence, it is
clear that the present
action is within the realm
of
civil
law,
and
jurisdiction over it belongs
to the regular courts.20
With
respect
to
the
applicability
of
the
principle of forum non
conveniens in the present
case, this Court's ruling
inBank of America NT &
SA v. Court of Appeals 21 is
instructive, to wit:
The
doctrine
of forum
non
conveniens,
literally
meaning
the
forum
is
inconvenient,
emerged in private
international law to
deter the practice
of global forum
shopping, that is to
prevent
nonresident
litigants
from choosing the

forum
or
place
wherein to bring
their
suit
for
malicious reasons,
such as to secure
procedural
advantages,
to
annoy and harass
the defendant, to
avoid overcrowded
dockets,
or
to
select
a
more
friendly
venue.
Under
this
doctrine, 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.

this Court held that

"xxx [a] Philippine
Court may assume
jurisdiction
over
the
case
if
it
chooses to do so;
provided, that the
following requisites
are met: (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."

Whether
a
suit
should
be
entertained
or
dismissed on the
basis
of
said
doctrine depends
largely upon the
facts
of
the
particular case and
is addressed to the
sound discretion of
the trial court. In
the
case
ofCommunication
Materials
and
Design, Inc. vs.
Court of Appeals,

Moreover,
this
Court enunciated
in Philsec.
Investment
Corporation
vs.
Court of Appeals,
that the doctrine
of forum
non
conveniens shoul
d not be used as
a ground for a
motion
to
dismiss because
Sec. 1, Rule 16
of the Rules of
Court does not
include
said

doctrine
as
a
ground.
This
Court
further
ruled that while
it is within the
discretion of the
trial
court
to
abstain
from
assuming
jurisdiction
on
this ground, it
should
do
so
only after vital
facts
are
established,
to
determine
whether special
circumstances
require
the
courts
desistance; and
that
the
propriety
of
dismissing
a
case based on
this
principle
of forum
non
conveniens requi
res
a
factual
determination,
hence it is more

properly
considered
a
matter
of
defense.22 (empha
sis supplied)
In the present case, the
factual
circumstances
cited by petitioners which
would allegedly justify the
application of the doctrine
of forum
non
conveniens are matters of
defense, the merits of
which should properly be
threshed out during trial.
WHEREFORE, the instant
petition
is DENIED and
the assailed Decision and
Resolution of the Court of
Appeals areAFFIRMED.