UNITED AIRLINES, INC., vs.
COURT OF APPEALS & business in the Philippines, executed in Manila two (2)
ANICETO FONTANILLA
FACTS: Aniceto Fontanilla purchased from
petitioner United Airlines, through the Philippine Travel
Bureau in Manila, three (3) Visit the U.S.A. tickets. The
cause of the non-boarding of the Fontanillas on United
Airlines Flight No. 1108 makes up the bone of contention
of this controversy.
ISSUE: (1) whether or not there was a breach of contract
in bad faith on the part of the petitioner in not allowing
the Fontanillas to board United Airlines Flight 1108.
(2) What law should apply in the instant case.
Held:
(1) No. private respondents were not able to prove that
they were subjected to coarse and harsh treatment by
the ground crew of United Airlines. Neither were they
able to show that there was bad faith on part of the
carrier airline.
(2) Philippine Law. The appellate court, however,
erred in applying the laws of the United States as, in the
case at bar, Philippine law is the applicable
law. Although, the contract of carriage was to be
performed in the United States, the tickets were
purchased through petitioners agent in Manila. It is true
that the tickets were rewritten in Washington,
D.C. However, such fact did not change the nature of the
original contract of carriage entered into by the parties in
Manila.
In the case of Zalamea vs. Court of Appeals,[30] this
Court applied the doctrine of lex loci
contractus. According to the doctrine, as a general rule,
the law of the place where a contract is made or entered
into governs with respect to its nature and validity,
obligation and interpretation. This has been said to be
the rule even though the place where the contract was
made is different from the place where it is to be
performed, and particularly so, if the place of the making
and the place of performance are the same. Hence, the
court should apply the law of the place where the airline
ticket was issued, when the passengers are residents
and nationals of the forum and the ticket is issued in
such State by the defendant airline.
The law of the forum on the subject matter is Economic
Regulations No. 7 as amended by Boarding Priority and
Denied Boarding Compensation of the Civil Aeronautics
Board, which provides that the check-in requirement be
complied with before a passenger may claim against a
carrier for being denied boarding
PAKISTAN INTERNATIONAL AIRLINES
CORPORATION vs
HON. BLAS F. OPLE, in his capacity as Minister of
Labor; HON. VICENTE LEOGARDO, JR., in his
capacity as Deputy Minister; ETHELYNNE B.
FARRALES and MARIA MOONYEEN MAMASIG.
Facts: petitioner Pakistan International Airlines
Corporation ("PIA"), a foreign corporation licensed to do
separate contracts of employment, one with private
respondent Ethelynne B. Farrales and the other with
private respondent Ma. M.C. Mamasig. 1 The contracts,
which became effective on 9 January 1979, provided in
pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND
PENALTY
This agreement is for a period of three
(3) years, but can be extended by the
mutual consent of the parties.
xxxxxxxxx
6. TERMINATION
xxxxxxxxx
Notwithstanding anything to contrary as
herein provided, PIA reserves the right
to terminate this agreement at any time
by giving the EMPLOYEE notice in
writing in advance one month before the
intended termination or in lieu thereof,
by paying the EMPLOYEE wages
equivalent to one month's salary.
xxxxxxxxx
10. APPLICABLE LAW:
This agreement shall be construed and
governed under and by the laws of
Pakistan, and only the Courts of
Karachi, Pakistan shall have the
jurisdiction to consider any matter
arising out of or under this agreement.
roughly one (1) year and four (4) months prior to the
expiration of the contracts of employment, PIA Farrales
and Mamasig advised both that their services as flight
stewardesses would be terminated "effective 1
September 1980, conformably to clause 6 (b) of the
employment agreement [they had) executed with [PIA].
Issue: (1) WON respondents were illegally dismissed.
(2) WON the laws of the Pakistan is applicable in the
instant case.
Held:
(1) YES. Because the net effect of paragraphs 5 and 6
of the agreement here involved is to render the
employment of private respondents Farrales and
Mamasig basically employment at the pleasure of
petitioner PIA, the Court considers that paragraphs 5
and 6 were intended to prevent any security of tenure
from accruing in favor of private respondents even
during the limited period of three (3) years, 13 and thus to
escape completely the thrust of Articles 280 and 281 of
the Labor Code.
(2) No. Petitioner PIA cannot take refuge in paragraph
10 of its employment agreement which specifies, firstly,
the law of Pakistan as the applicable law of the
agreement and, secondly, lays the venue for settlement
of any dispute arising out of or in connection with the
agreement "only [in] courts of Karachi Pakistan". The
first clause of paragraph 10 cannot be invoked to
prevent the application of Philippine labor laws and
regulations to the subject matter of this case, i.e., the
employer-employee relationship between petitioner PIA
and private respondents. We have already pointed out
that the relationship is much affected with public interest
and that the otherwise applicable Philippine laws and
regulations cannot be rendered illusory by the parties
agreeing upon some other law to govern their
relationship. Neither may petitioner invoke the second
clause of paragraph 10, specifying the Karachi courts as
the sole venue for the settlement of dispute; between the
contracting parties. Even a cursory scrutiny of the
relevant circumstances of this case will show the
multiple and substantive contacts between Philippine law
and Philippine courts, on the one hand, and the
relationship between the parties, upon the other: the
contract was not only executed in the Philippines, it was
also performed here, at least partially; private
respondents are Philippine citizens and respondents,
while petitioner, although a foreign corporation, is
licensed to do business (and actually doing business)
and hence resident in the Philippines; lastly, private
respondents were based in the Philippines in between
their assigned flights to the Middle East and Europe. All
the above contacts point to the Philippine courts and
administrative agencies as a proper forum for the
resolution of contractual disputes between the parties.
Under these circumstances, paragraph 10 of the
employment agreement cannot be given effect so as to
oust Philippine agencies and courts of the jurisdiction
vested upon them by Philippine law. Finally, and in any
event, the petitioner PIA did not undertake to plead and
prove the contents of Pakistan law on the matter; it must
therefore be presumed that the applicable provisions of
the law of Pakistan are the same as the applicable
provisions of Philippine law.
TESTATE ESTATE OF IDONAH SLADE PERKINS,
deceased. RENATO D. TAYAG, vs.
BENGUET CONSOLIDATED, INC
Facts:
WILDVALLEY SHIPPING CO., LTD. petitioner,
vs. COURT OF APPEALS and PHILIPPINE
PRESIDENT LINES INC., respondents.
Facts: Philippine Roxas, a vessel owned by
Philippine President Lines, Inc., private respondent
herein, arrived in Puerto Ordaz, Venezuela, to load iron
ore. Upon the completion of the loading and when the
vessel was ready to leave port. the Philippine Roxas ran
aground in the Orinoco River,[16] thus obstructing the
ingress and egress of vessels.
As a result of the blockage, the Malandrinon, a
vessel owned by herein petitioner Wildvalley Shipping
Company, Ltd., was unable to sail out of Puerto Ordaz
on that day.
Subsequently, Wildvalley Shipping Company, Ltd. filed a
suit with RTC against Philippine President Lines, Inc. for
damages in the form of unearned profits, and interest
thereon.
ISSUE: whether or not Venezuelan law is applicable
to the case at bar.
Held: No. It is well-settled that foreign laws do not prove
themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any other
fact, they must be alleged and proved.
under the rules of private international law, a foreign
law must be properly pleaded and proved as a fact. In
the absence of pleading and proof, the laws of a foreign
country, or state, will be presumed to be the same as our
own local or domestic law and this is known as
processual presumption.[40]
GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-
RECIO, vs. REDERICK A. RECIO
Facts: Rederick A. Recio, a Filipino, was married to
Editha Samson, an Australian citizen, in Malabon, Rizal.
A decree of divorce, purportedly dissolving the marriage,
was issued by an Australian family court.Consequently,
Rederick became a naturalized Australian Citizen.
Petitioner -- a Filipina -- and respondent were married in
Cabanatuan City. about five years after the couples
wedding and while the suit for the declaration of nullity
was pending -- respondent was able to secure a divorce
decree from a family court in Sydney, Australia because
the marriage ha[d] irretrievably broken down.[13]
Issue: (1) whether the divorce between respondent and
Editha Samson was proven.
Held: A divorce obtained abroad by an alien may be
recognized in our jurisdiction, provided such decree is
valid according to the national law of the
foreigner. However, the divorce decree and the
governing personal law of the alien spouse who obtained
the divorce must be proven. Our courts do not take
judicial notice of foreign laws and judgments; hence, like
any other facts, both the divorce decree and the national
law of the alien must be alleged and proven according to
our law on evidence.
Philippine law does not provide for absolute divorce;
hence, our courts cannot grant it.[21] A marriage between
two Filipinos cannot be dissolved even by a divorce
obtained abroad, because of Articles 15[22] and 17[23] of
the Civil Code.[24] In mixed marriages involving a Filipino
and a foreigner, Article 26[25]of the Family Code allows
the former to contract a subsequent marriage in case the
divorce is validly obtained abroad by the alien spouse
capacitating him or her to remarry.[26] A divorce obtained
abroad by a couple, who are both aliens, may be
recognized in the Philippines, provided it is consistent
with their respective national laws.[27]
Aliens may obtain divorces abroad, which may be
recognized in the Philippines, provided they are valid
according to their national law.[28] Therefore, before a
foreign divorce decree can be recognized by our courts,
the party pleading it must prove the divorce as a fact and
demonstrate its conformity to the foreign law allowing it.
[29]
Presentation solely of the divorce
It is well-settled in our jurisdiction that our courts cannot
take judicial notice of foreign laws. [43] Like any other
facts, they must be alleged and proved. Australian
marital laws are not among those matters that judges
are supposed to know by reason of their judicial function.
[44]
The power of judicial notice must be exercised with
caution, and every reasonable doubt upon the subject
should be resolved in the negative.
REPUBLIC OF THE PHILIPPINES v. HON.
CONCEPCION S. ALARCON VERGARA, in her
capacity as Presiding Judge of the Regional Trial Court,
Third Judicial Region, Branch 62, Angeles City and
SPOUSES SAMUEL ROBERT DYE, JR. and
ROSALINA D. DYE.
1. CIVIL LAW; FAMILY CODE; ADOPTION; ALIENS, AS
A GENERAL RULE, CANNOT ADOPT FILIPINO
CITIZENS; EXCEPTION. As a general rule, aliens
cannot adopt Filipino citizens as this is proscribed under
Article 184 of the Family Code which states: "Art. 184.
The following persons may not adopt: . . . (3) An alien,
except: (a) a former Filipino citizen who seek to adopt a
relative by consanguinity; (b) One who seeks to adopt
the legitimate child of his or her Filipino spouse; or (c)
one who is married to a Filipino citizen and seeks to
adopt jointly with his or her spouse a relative by
consanguinity of the latter. Aliens not included in the
foregoing exceptions may adopt Filipino children in
accordance with the rules on inter-country adoption as
may be provided by law."cralaw virtua1aw library
2. ID.; ID.; ID.; ID.; APPLICATION IN CASE AT BAR.
Samuel Robert Dye, Jr. who is an American and,
therefore, an alien is disqualified from adopting the
minors Maricel and Alvin Due because he does not fall
under any of the three aforequoted exceptions laid down
by the law. He is not a former Filipino citizen who seeks
to adopt a relative by consanguinity. Nor does he seek to
adopt his wifes legitimate child. Although he seeks to
adopt with his wife her relatives by consanguinity, he is
not married to a Filipino citizen, for Rosalina was already
a naturalized American at the time the petition was filed,
thus excluding him from the coverage of the exception.
The law here does not provide for an alien who is
married to a former Filipino citizen seeking to adopt
jointly with his or her spouse a relative by consanguinity,
as an exception to the general rule that aliens may not
adopt.
3. ID.; ID.; ID.; JOINT ADOPTION BY HUSBAND AND
WIFE; MANDATORY REQUIREMENT; EXCEPTION
NOT APPLICABLE IN CASE AT BAR. On her own,
Rosalina Dye cannot adopt her brother and sister for the
law mandates joint adoption by husband and wife,
subject to exceptions. Article 29 of Presidential Decree
No. 603 (Child and Youth Welfare Code) retained the
Civil Code provision (Article 336) that husband and wife
may jointly adopt. The Family Code amended this rule
by scrapping the optional character of joint adoption and
making it now mandatory. Article 185 of the Family Code
provides: "Art. 185. Husband and wife must adopt,
except in the following cases: (1) When one spouse
seeks to adopt his own illegitimate child; (2) When one
spouse seeks to adopt the legitimate child of the other."
None of the above exceptions applies to Samuel and
Rosalina Dye, for they did not petition to adopt the
latters child but her brother and sister. The Court has
previously recognized the ineligibility of a similarly
situated alien husband with a former Filipino wife
seeking to adopt the latters nephews and nieces in the
case of Republic v. Court of Appeals, (G.R. No. 100385,
October 26, 1993, 227 SCRA 401). Although the wife in
said case was qualified to adopt under Article 184,
paragraph 3 (a), she being a former Filipino who seeks
to adopt a relative by consanguinity, she could not jointly
adopt with her husband under Article 185 because he
was an alien ineligible to adopt here in the Philippines.
4. ID.; ID.; ID.; LIBERAL CONSTRUCTION OF THE
LAW; MAY NOT BE APPLIED SINCE THE LAW IS
CLEAR AND IT CANNOT BE MODIFIED WITHOUT
VIOLATING THE PROSCRIPTION AGAINST JUDICIAL
LEGISLATION. We are not unmindful of the main
purpose of adoption statutes, which is the promotion of
the welfare of children. Accordingly, the law should be
construed liberally, in a manner that will sustain rather
than defeat said purpose. The law must also be applied
with compassion, understanding and less severity in
view of the fact that it is intended to provide homes, love,
care and education for less fortunate children.
Regrettably, the Court is not in a position to affirm the
trial courts decision favoring adoption in the case at bar,
for the law is clear and it cannot be modified without
violating the proscription against judicial legislation. Until
such time however, that the law on the matter is
amended, we cannot sustain the respondent-spouses
petition for adoption.
PASTOR B. TENCHAVEZ,
vs.
VICENTA F. ESCAO, ET AL
Facts: Tenchavez and Escano were married. But then
Escano obtained a foreign divorce and married another
man (Moran).
Issue: WON private international law rather than
Philippine civil law should decide the instant case
Held: No. The acts of Vicenta (up to and including her
divorce, for grounds not countenanced by our law, which
was hers at the time) constitute a wilful infliction of injury
upon plaintiff's feelings in a manner "contrary to morals,
good customs or public policy" (Civ. Code, Art. 21) for
which Article 2219 (10) authorizes an award of moral
damages.
Intervenor reiterates that recognition of Vicenta's divorce
in Nevada is a more enlightened view. The argument
should be addressed in the legislature. As the case
presently stands, the public policy of this forum is clearly
adverse to such recognition, as was extensively
discussed in the decision. The principle is well-
established, in private international law, that foreign
decrees cannot be enforced or recognized if they
contravene public policy.
foreign law or rights based therein will not be given effect
or enforced if opposed to the settled public policy of the
forum. (15 C.J.S. 853)
 SEC. 6. Limitations. In the recognition and
enforcement of foreign laws the Courts are slow
to overrule the positive law of the forum, and
they will never give effect to a foreign law where
to do so would prejudice the state's own rights or
the rights of its citizens or where the
enforcement of the foreign law would contravene
the positive policy of the law of the forum
whether or not that policy is reflected in statutory
enactments. (11 Am. Jur., 300-301).
A judgment affecting the status of persons, such as a
decree confirming or dissolving a marriage, is
recognized as valid in every country, unless contrary to
the policy of its own law.
EMERALD GARMENT MANUFACTURING
CORPORATION vs.
HON. COURT OF APPEALS, BUREAU OF PATENTS,
TRADEMARKS AND TECHNOLOGY TRANSFER and
H.D. LEE COMPANY, INC.
Facts: Private respondent H.D. Lee Co., Inc., a foreign
corporation organized under the laws of Delaware,
U.S.A., filed with the Bureau of Patents, Trademarks &
Technology Transfer (BPTTT) a Petition for Cancellation
of Registration for the trademark "STYLISTIC MR. LEE"
used on skirts, jeans, blouses, socks, briefs, jackets,
jogging suits, dresses, shorts, shirts and lingerie under
Class 25, in the name of petitioner Emerald Garment
Manufacturing Corporation, a domestic corporation
organized and existing under Philippine laws.
Private respondent, invoking Sec. 37 of R.A. No. 166
(Trademark Law) and Art. VIII of the Paris Convention for
the Protection of Industrial Property, averred that
petitioner's trademark "so closely resembled its own
trademark, 'LEE' as previously registered and used in
the Philippines, and not abandoned, as to be likely, when
applied to or used in connection with petitioner's goods,
to cause confusion, mistake and deception on the part of
the purchasing public as to the origin of the goods." 2
Issue: WHETHER OR NOT PETITIONER'S
TRADEMARK SYTLISTIC MR. LEE, IS CONFUSINGLY
SIMILAR WITH THE PRIVATE RESPONDENT'S
TRADEMARK LEE OR LEE-RIDER, LEE-LEENS AND
LEE-SURES.
Held: No. In determining whether colorable imitation
exists, jurisprudence has developed two kinds of tests
the Dominancy Test applied in Asia Brewery,
Inc. v. Court of Appeals 28 and other cases 29 and the
Holistic Test developed in Del Monte Corporation
v. Court of Appeals 30 and its proponent cases. 31
As its title implies, the test of dominancy focuses on the
similarity of the prevalent features of the competing
trademarks which might cause confusion or deception
and thus constitutes infringement.
Holistic test mandates that the entirety of the marks in
question must be considered in determining confusing
similarity.
we considered the trademarks involved as a whole and
rule that petitioner's "STYLISTIC MR. LEE" is not
confusingly similar to private respondent's "LEE"
trademark.
Petitioner's trademark is the whole "STYLISTIC MR.
LEE." Although on its label the word "LEE" is prominent,
the trademark should be considered as a whole and not
piecemeal.
"LEE" is primarily a surname. Private respondent cannot,
therefore, acquire exclusive ownership over and singular
use of said term.
In addition to the foregoing, we are constrained to agree
with petitioner's contention that private respondent failed
to prove prior actual commercial use of its "LEE"
trademark in the Philippines before filing its application
for registration with the BPTTT and hence, has not
acquired ownership over said mark.
Actual use in commerce in the Philippines is an essential
prerequisite for the acquisition of ownership over a
trademark pursuant to Sec. 2 and 2-A of the Philippine
Trademark Law (R.A. No. 166).
The Trademark Law is very clear. It requires actual
commercial use of the mark prior to its registration.
There is no dispute that respondent corporation was the
first registrant, yet it failed to fully substantiate its claim
that it used in trade or business in the Philippines the
subject mark; it did not present proof to invest it with
exclusive, continuous adoption of the trademark which
should consist among others, of considerable sales
since its first use.
For lack of adequate proof of actual use of its trademark
in the Philippines prior to petitioner's use of its own mark
and for failure to establish confusing similarity between
said trademarks, private respondent's action for
infringement must necessarily fail.
COMMUNICATION MATERIALS AND DESIGN, INC.,
ASPAC MULTI-TRADE, INC., (formerly ASPAC-ITEC
PHILIPPINES, INC.) and FRANCISCO S.AGUIRRE vs.
THE COURT OF APPEALS, ITEC INTERNATIONAL,
INC., and ITEC, INC.
Facts: Petitioners COMMUNICATION MATERIALS AND
DESIGN, INC., (CMDI, for brevity) and ASPAC MULTI-
TRADE INC., (ASPAC, for brevity) are both domestic
corporations, while petitioner Francisco S. Aguirre is
their President and majority stockholder. Private
Respondents ITEC, INC. and/or ITEC,
INTERNATIONAL, INC. (ITEC, for brevity) are
corporations duly organized and existing under the laws
of the State of Alabama, United States of America. There
is no dispute that ITEC is a foreign corporation not
licensed to do business in the Philippines.
 One year into the second term of the parties
Representative Agreement, ITEC decided to terminate
the same, because petitioner ASPAC allegedly violated
its contractual commitment as stipulated in their
agreements.[5]
ITEC charges the petitioners and another Philippine
Corporation, DIGITAL BASE COMMUNICATIONS, INC.
(DIGITAL, for brevity), the President of which is likewise
petitioner Aguirre, of using knowledge and information of
ITECs products specifications to develop their own line
of equipment and product support, which are similar, if
not identical to ITECs own, and offering them to ITECs
former customer.
Issue: whether or not private respondent ITEC is
an unlicensed corporation doing business in the
Philippines, and if it is, whether or not this fact bars
it from invoking the injunctive authority of our
courts.
Section 133 of the Corporation Code, provides
that No foreign corporation, transacting business in
the Philippines without a license, or its successors
or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any
court or administrative agency of the Philippines;
but such corporation may be sued or proceeded
against before Philippine Courts or administrative
tribunals on any valid cause of action recognized
under Philippine laws.[24]
private respondent had been engaged in or
doing business in the Philippines for some time
now. This is the inevitable result after a scrutiny of
the different contracts and agreements entered into
by ITEC with its various business contacts in the
country, particularly ASPAC and Telephone
Equipment Sales and Services, Inc. (TESSI, for
brevity). The latter is a local electronics firm
engaged by ITEC to be its local technical
representative, and to create a service center for
ITEC products sold locally. Its arrangements, with
these entities indicate convincingly ITECs purpose
to bring about the situation among its customers
and the general public that they are dealing directly
with ITEC, and that ITEC is actively engaging in
business in the country.
According to petitioner, the Philippine Court has no
venue to apply its discretion whether to give cognizance
or not to the present action, because it has not acquired
jurisdiction over the person of the plaintiff in the case,
the latter allegedly having no personality to sue before
Philippine Courts. This argument is misplaced because
the court has already acquired jurisdiction over the
plaintiff in the suit, by virtue of his filing the original
complaint. And as we have already observed, petitioner
are not at liberty to question plaintiffs standing to sue,
having already acceded to the same by virtue of its entry
into the Representative Agreement referred to earlier.
Thus, having acquired jurisdiction, it is now for the
Philippine Court, based on the facts of the case, whether
to give due course to the suit or dismiss it, on the
principle of forum non conveniens.[47] Hence, the
Philippine Court may refuse to assume jurisdiction in
spite of its having acquired jurisdiction. Conversely, the
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. [48]
AUGUSTO BENEDICTO SANTOS III, represented by
his father and legal guardian, Augusto Benedicto
Santos
vs.
NORTHWEST ORIENT AIRLINES and COURT OF
APPEALS
Facts:
CHUNG FU INDUSTRIES (PHILIPPINES) INC., its
Directors and Officers namely: HUANG KUO-
CHANG, HUANG AN-CHUNG, JAMES J.R. CHEN,
TRISTAN A. CATINDIG, VICENTE B. AMADOR, ROCK
A.C. HUANG, JEM S.C. HUANG, MARIA TERESA
SOLIVEN and VIRGILIO M. DEL ROSARIO
vs.
COURT OF APPEALS, HON. FRANCISCO X. VELEZ
(Presiding Judge, Regional Trail Court of Makati
[Branch 57]) and ROBLECOR PHILIPPINES, INC.,
Facts: petitioner Chung Fu Industries (Philippines)
(Chung Fu for brevity) and private respondent Roblecor
Philippines, Inc. (Roblecor for short) forged a
construction agreement 1 whereby respondent contractor
committed to construct and finish on December 31,
1989, petitioner corporation's industrial/factory complex
in Tanawan, Tanza, Cavite for and in consideration of
P42,000,000.00. In the event of disputes arising from the
performance of subject contract, it was stipulated therein
that the issue(s) shall be submitted for resolution before
a single arbitrator chosen by both parties.
However, respondent Roblecor failed to complete the
work despite the extension of time allowed it by Chung
Fu. Subsequently, the latter had to take over the
construction when it had become evident that Roblecor
was not in a position to fulfill its obligation.
Subsequent negotiations between the parties eventually
led to the formulation of an arbitration agreement.
Issue: whether subject arbitration award is indeed
beyond the ambit of the court's power of judicial review.
Held: No. Under present law, may the parties who agree
to submit their disputes to arbitration further provide that
the arbitrators' award shall be final, unappealable and
executory?
Article 2044 of the Civil Code recognizes the validity of
such stipulation, thus:
Any stipulation that the arbitrators'
award or decision shall be final is valid,
without prejudice to Articles 2038, 2039
and 2040.
It is stated explicitly under Art. 2044 of the Civil Code
that the finality of the arbitrators' award is not absolute
and without exceptions. Where the conditions described
in Articles 2038, 2039 and 2040 applicable to both
compromises and arbitrations are obtaining, the
arbitrators' award may be annulled or
rescinded. 19 Additionally, under Sections 24 and 25 of
the Arbitration Law, there are grounds for vacating,
modifying or rescinding an arbitrator's award. 20 Thus, if
and when the factual circumstances referred to in the
above-cited provisions are present, judicial review of the
award is properly warranted.
PHILSEC INVESTMENT CORPORATION, BPI-
INTERNATIONAL 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.
Issue: 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.
Held: 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.
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.
Second. Nor is the trial courts refusal to take
cognizance of the case justifiable under the principle
of forum non conveniens. First, a motion to dismiss is
limited to the grounds under Rule 16, 1, which does not
include forum non conveniens.[16] The propriety of
dismissing a case based on this principle requires a
factual determination, hence, it is more properly
considered a matter of defense. Second, while it is within
the discretion of the trial court to abstain from assuming
jurisdiction on this ground, it should do so only after vital
facts are established, to determine whether special
circumstances require the courts desistance.[17]
In this case, the trial court abstained from taking
jurisdiction solely on the basis of the pleadings filed by
private respondents in connection with the motion to
dismiss. It failed to consider that one of the plaintiffs
(PHILSEC) is a domestic corporation and one of the
defendants (Ventura Ducat) is a Filipino, and that it was
the extinguishment of the latters debt which was the
object of the transaction under litigation. The trial court
arbitrarily dismissed the case even after finding that
Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals
and the trial court to hold that jurisdiction over 1488, Inc.
and Daic could not be obtained because this is an action
in personam and summons were served by
extraterritorial service. Rule 14, 17 on extraterritorial
service provides that service of summons on a non-
resident defendant may be effected out of the
Philippines by leave of Court where, among others, the
property of the defendant has been attached within the
Philippines.[18] It is not disputed that the properties, real
and personal, of the private respondents had been
attached prior to service of summons under the Order of
the trial court dated April 20, 1987.[19]
THE HOLY SEE, petitioner,
vs.
THE HON. ERIBERTO U. ROSARIO, JR., as Presiding
Judge of the Regional Trial Court of Makati, Branch
61 and STARBRIGHT SALES ENTERPRISES,
INC., respondents.
Facts:
Petitioner is the Holy See who exercises sovereignty
over the Vatican City in Rome, Italy, and is represented
in the Philippines by the Papal Nuncio.
Private respondent, Starbright Sales Enterprises, Inc., is
a domestic corporation engaged in the real estate
business.
This petition arose from a controversy over a parcel of
land consisting of 6,000 square meters (Lot 5-A,
Transfer Certificate of Title No. 390440) located in the
Municipality of Paraaque, Metro Manila and registered
in the name of petitioner.
Held: In the case at bench, if petitioner has bought and
sold lands in the ordinary course of a real estate
business, surely the said transaction can be categorized
as an act jure gestionis. However, petitioner has denied
that the acquisition and subsequent disposal of Lot 5-A
were made for profit but claimed that it acquired said
property for the site of its mission or the Apostolic
Nunciature in the Philippines. Private respondent failed
to dispute said claim.
Lot 5-A was acquired by petitioner as a donation from
the Archdiocese of Manila. The donation was made not
for commercial purpose, but for the use of petitioner to
construct thereon the official place of residence of the
Papal Nuncio. The right of a foreign sovereign to acquire
property, real or personal, in a receiving state, necessary
for the creation and maintenance of its diplomatic
mission, is recognized in the 1961 Vienna Convention on
Diplomatic Relations (Arts. 20-22). This treaty was
concurred in by the Philippine Senate and entered into
force in the Philippines on November 15, 1965.

In Article 31(a) of the Convention, a diplomatic envoy is

granted immunity from the civil and administrative
jurisdiction of the receiving state over any real action
relating to private immovable property situated in the
territory of the receiving state which the envoy holds on
behalf of the sending state for the purposes of the
mission. If this immunity is provided for a diplomatic
envoy, with all the more reason should immunity be
recognized as regards the sovereign itself, which in this
case is the Holy See.