Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 128845 June 1, 2000

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,

vs.
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of
Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of
International School-Manila; and INTERNATIONAL SCHOOL, INC., respondents.

KAPUNAN, J.:

Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent
School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their
colleagues in other schools is, of course, beside the point. The point is that employees should be
given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a
principle that rests on fundamental notions of justice. That is the principle we uphold today. 1wphi1.nt

Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree
732, is a domestic educational institution established primarily for dependents of foreign diplomatic
personnel and other temporary residents.1 To enable the School to continue carrying out its
educational program and improve its standard of instruction, Section 2(c) of the same decree
authorizes the School to employ its own teaching and management personnel selected by it either
locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise
applicable laws and regulations attending their employment, except laws that have been or will be
enacted for the protection of employees.

Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying
the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine
whether a faculty member should be classified as a foreign-hire or a local hire:

a. What is one's domicile?

b. Where is one's home economy?

c. To which country does one owe economic allegiance?

d. Was the individual hired abroad specifically to work in the School and was the School
responsible for bringing that individual to the Philippines?2
Should the answer to any of these queries point to the Philippines, the faculty member is classified
as a local hire; otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-hires. These include housing,
1avvphi1

transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on
two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation
factor" and (b) limited tenure. The School explains:

A foreign-hire would necessarily have to uproot himself from his home country, leave his
family and friends, and take the risk of deviating from a promising career path all for the
purpose of pursuing his profession as an educator, but this time in a foreign land. The new
foreign hire is faced with economic realities: decent abode for oneself and/or for one's family,
effective means of transportation, allowance for the education of one's children, adequate
insurance against illness and death, and of course the primary benefit of a basic
salary/retirement compensation.

Because of a limited tenure, the foreign hire is confronted again with the same economic
reality after his term: that he will eventually and inevitably return to his home country where
he will have to confront the uncertainty of obtaining suitable employment after along period in
a foreign land.

The compensation scheme is simply the School's adaptive measure to remain competitive
on an international level in terms of attracting competent professionals in the field of
international education.3

When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members"4 of the School, contested the difference in salary rates
between foreign and local-hires. This issue, as well as the question of whether foreign-hires should
be included in the appropriate bargaining unit, eventually caused a deadlock between the parties.

On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and
Mediation Board to bring the parties to a compromise prompted the Department of Labor and
Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting
Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues
in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied
petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief
in this Court.

Petitioner claims that the point-of-hire classification employed by the School is discriminatory to
Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.

The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in
all, with nationalities other than Filipino, who have been hired locally and classified as local
hires.5 The Acting Secretary of Labor found that these non-Filipino local-hires received the same
benefits as the Filipino local-hires.

The compensation package given to local-hires has been shown to apply to all, regardless of
race. Truth to tell, there are foreigners who have been hired locally and who are paid equally
as Filipino local hires.6

The Acting secretary upheld the point-of-hire classification for the distinction in salary rates:

The Principle "equal pay for equal work" does not find applications in the present case. The
international character of the School requires the hiring of foreign personnel to deal with
different nationalities and different cultures, among the student population.

We also take cognizance of the existence of a system of salaries and benefits accorded to
foreign hired personnel which system is universally recognized. We agree that certain
amenities have to be provided to these people in order to entice them to render their
services in the Philippines and in the process remain competitive in the international market.

Furthermore, we took note of the fact that foreign hires have limited contract of employment
unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and
other benefits would also require parity in other terms and conditions of employment which
include the employment which include the employment contract.

A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary
and professional compensation wherein the parties agree as follows:

All members of the bargaining unit shall be compensated only in accordance with
Appendix C hereof provided that the Superintendent of the School has the discretion
to recruit and hire expatriate teachers from abroad, under terms and conditions that
are consistent with accepted international practice.

Appendix C of said CBA further provides:

The new salary schedule is deemed at equity with the Overseas Recruited Staff
(OSRS) salary schedule. The 25% differential is reflective of the agreed value of
system displacement and contracted status of the OSRS as differentiated from the
tenured status of Locally Recruited Staff (LRS).

To our mind, these provisions demonstrate the parties' recognition of the difference in the
status of two types of employees, hence, the difference in their salaries.

The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an
established principle of constitutional law that the guarantee of equal protection of the laws is
not violated by legislation or private covenants based on reasonable classification. A
classification is reasonable if it is based on substantial distinctions and apply to all members
of the same class. Verily, there is a substantial distinction between foreign hires and local
 hires, the former enjoying only a limited tenure, having no amenities of their own in the
Philippines and have to be given a good compensation package in order to attract them to
join the teaching faculty of the School.7

We cannot agree.

That public policy abhors inequality and discrimination is beyond contention. Our Constitution and
laws reflect the policy against these evils. The Constitution8 in the Article on Social Justice and
Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect
and enhance the right of all people to human dignity, reduce social, economic, and political
inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of
his rights and in the performance of his duties, [to] act with justice, give everyone his due, and
observe honesty and good faith.

International law, which springs from general principles of law,9 likewise proscribes discrimination.
General principles of law include principles of equity, 10 i.e., the general principles of fairness and
justice, based on the test of what is reasonable. 11 The Universal Declaration of Human Rights, 12 the
International Covenant on Economic, Social, and Cultural Rights, 13 the International Convention on
the Elimination of All Forms of Racial Discrimination, 14 the Convention against Discrimination in
Education, 15 the Convention (No. 111) Concerning Discrimination in Respect of Employment and
Occupation 16 all embody the general principle against discrimination, the very antithesis of
fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part
of its national laws.

In the workplace, where the relations between capital and labor are often skewed in favor of capital,
inequality and discrimination by the employer are all the more reprehensible.

The Constitution 17 specifically provides that labor is entitled to "humane conditions of work." These
conditions are not restricted to the physical workplace the factory, the office or the field but
include as well the manner by which employers treat their employees.

The Constitution 18 also directs the State to promote "equality of employment opportunities for all."
Similarly, the Labor Code 19 provides that the State shall "ensure equal work opportunities regardless
of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the
State, in spite of its primordial obligation to promote and ensure equal employment opportunities,
closes its eyes to unequal and discriminatory terms and conditions of employment. 20

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for
example, prohibits and penalizes 21 the payment of lesser compensation to a female employee as
against a male employee for work of equal value. Article 248 declares it an unfair labor practice for
an employer to discriminate in regard to wages in order to encourage or discourage membership in
any labor organization.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7
thereof, provides:
 The States Parties to the present Covenant recognize the right of everyone to the enjoyment
of just and favourable conditions of work, which ensure, in particular:

a. Remuneration which provides all workers, as a minimum, with:

(i) Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of
work not inferior to those enjoyed by men, with equal pay for equal work;

xxx xxx xxx

The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism
of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort
and responsibility, under similar conditions, should be paid similar salaries. 22 This rule applies to the
School, its "international character" notwithstanding.

The School contends that petitioner has not adduced evidence that local-hires perform work equal to
that of foreign-hires. 23 The Court finds this argument a little cavalier. If an employer accords
employees the same position and rank, the presumption is that these employees perform equal
work. This presumption is borne by logic and human experience. If the employer pays one employee
less than the rest, it is not for that employee to explain why he receives less or why the others
receive more. That would be adding insult to injury. The employer has discriminated against that
employee; it is for the employer to explain why the employee is treated unfairly.

The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under similar working conditions.

The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the
distinction in salary rates without violating the principle of equal work for equal pay.

"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration
paid at regular intervals for the rendering of services." In Songco v. National Labor Relations
Commission, 24 we said that:

"salary" means a recompense or consideration made to a person for his pains or industry in
another man's business. Whether it be derived from "salarium," or more fancifully from "sal,"
the pay of the Roman soldier, it carries with it the fundamental idea of compensation for
services rendered. (Emphasis supplied.)

While we recognize the need of the School to attract foreign-hires, salaries should not be used as an
enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires
and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation
factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in
salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately
compensated by certain benefits accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave travel allowances.

The Constitution enjoins the State to "protect the rights of workers and promote their welfare," 25 "to
afford labor full protection." 26 The State, therefore, has the right and duty to regulate the relations
between labor and capital.27 These relations are not merely contractual but are so impressed with
public interest that labor contracts, collective bargaining agreements included, must yield to the
common good. 28 Should such contracts contain stipulations that are contrary to public policy, courts
will not hesitate to strike down these stipulations.

In this case, we find the point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is
no reasonable distinction between the services rendered by foreign-hires and local-hires. The
practice of the School of according higher salaries to foreign-hires contravenes public policy and,
certainly, does not deserve the sympathy of this Court. 1avvphi1

We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires.

A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of
the entire body of employees, consistent with equity to the employer, indicate to be the best suited to
serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the
law." 29 The factors in determining the appropriate collective bargaining unit are (1) the will of the
employees (Globe Doctrine); (2) affinity and unity of the employees' interest, such as substantial
similarity of work and duties, or similarity of compensation and working conditions (Substantial
Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment
status. 30 The basic test of an asserted bargaining unit's acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of their collective
bargaining rights. 31

It does not appear that foreign-hires have indicated their intention to be grouped together with local-
hires for purposes of collective bargaining. The collective bargaining history in the School also
shows that these groups were always treated separately. Foreign-hires have limited tenure; local-
hires enjoy security of tenure. Although foreign-hires perform similar functions under the same
working conditions as the local-hires, foreign-hires are accorded certain benefits not granted to local-
hires. These benefits, such as housing, transportation, shipping costs, taxes, and home leave travel
allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of the
former from the latter. To include foreign-hires in a bargaining unit with local-hires would not assure
either group the exercise of their respective collective bargaining rights.

WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART.
The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997,
are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of
according foreign-hires higher salaries than local-hires.

SO ORDERED.
===============================================

GUTIERREZ, JR., J.:

These are two petitions for prohibition seeking to enjoin respondents, their representatives
and agents from proceeding with the bidding for the sale of the 3,179 square meters of land
at 306 Roppongi, 5-Chome Minato-ku Tokyo, Japan scheduled on February 21, 1990. We
granted the prayer for a temporary restraining order effective February 20, 1990. One of the
petitioners (in G.R. No. 92047) likewise prayes for a writ of mandamus to compel the
respondents to fully disclose to the public the basis of their decision to push through with
the sale of the Roppongi property inspire of strong public opposition and to explain the
proceedings which effectively prevent the participation of Filipino citizens and entities in the
bidding process.

The oral arguments in G.R. No. 92013, Laurel v. Garcia, et al. were heard by the Court on
March 13, 1990. After G.R. No. 92047, Ojeda v. Secretary Macaraig, et al. was filed, the
respondents were required to file a comment by the Court's resolution dated February 22,
1990. The two petitions were consolidated on March 27, 1990 when the memoranda of the
parties in the Laurel case were deliberated upon.

The Court could not act on these cases immediately because the respondents filed a motion
for an extension of thirty (30) days to file comment in G.R. No. 92047, followed by a second
motion for an extension of another thirty (30) days which we granted on May 8, 1990, a third
motion for extension of time granted on May 24, 1990 and a fourth motion for extension of
time which we granted on June 5, 1990 but calling the attention of the respondents to the
length of time the petitions have been pending. After the comment was filed, the petitioner in
G.R. No. 92047 asked for thirty (30) days to file a reply. We noted his motion and resolved to
decide the two (2) cases.

The subject property in this case is one of the four (4) properties in Japan acquired by the
Philippine government under the Reparations Agreement entered into with Japan on May 9,
1956, the other lots being:

(1) The Nampeidai Property at 11-24 Nampeidai-machi, Shibuya-ku, Tokyo which has an area
of approximately 2,489.96 square meters, and is at present the site of the Philippine Embassy
Chancery;

(2) The Kobe Commercial Property at 63 Naniwa-cho, Kobe, with an area of around 764.72
square meters and categorized as a commercial lot now being used as a warehouse and
parking lot for the consulate staff; and
(3) The Kobe Residential Property at 1-980-2 Obanoyama-cho, Shinohara, Nada-ku, Kobe, a
residential lot which is now vacant.

The properties and the capital goods and services procured from the Japanese government
for national development projects are part of the indemnification to the Filipino people for
their losses in life and property and their suffering during World War II.

The Reparations Agreement provides that reparations valued at $550 million would be
payable in twenty (20) years in accordance with annual schedules of procurements to be
fixed by the Philippine and Japanese governments (Article 2, Reparations Agreement). Rep.
Act No. 1789, the Reparations Law, prescribes the national policy on procurement and
utilization of reparations and development loans. The procurements are divided into those for
use by the government sector and those for private parties in projects as the then National
Economic Council shall determine. Those intended for the private sector shall be made
available by sale to Filipino citizens or to one hundred (100%) percent Filipino-owned entities
in national development projects.

The Roppongi property was acquired from the Japanese government under the Second Year
Schedule and listed under the heading "Government Sector", through Reparations Contract
No. 300 dated June 27, 1958. The Roppongi property consists of the land and building "for
the Chancery of the Philippine Embassy" (Annex M-D to Memorandum for Petitioner, p. 503).
As intended, it became the site of the Philippine Embassy until the latter was transferred to
Nampeidai on July 22, 1976 when the Roppongi building needed major repairs. Due to the
failure of our government to provide necessary funds, the Roppongi property has remained
undeveloped since that time.

A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador

to Japan, Carlos J. Valdez, to make the property the subject of a lease agreement with a
Japanese firm - Kajima Corporation which shall construct two (2) buildings in Roppongi
and one (1) building in Nampeidai and renovate the present Philippine Chancery in
Nampeidai. The consideration of the construction would be the lease to the foreign
corporation of one (1) of the buildings to be constructed in Roppongi and the two (2)
buildings in Nampeidai. The other building in Roppongi shall then be used as the Philippine
Embassy Chancery. At the end of the lease period, all the three leased buildings shall be
occupied and used by the Philippine government. No change of ownership or title shall
occur. (See Annex "B" to Reply to Comment) The Philippine government retains the title all
throughout the lease period and thereafter. However, the government has not acted favorably
on this proposal which is pending approval and ratification between the parties. Instead, on
August 11, 1986, President Aquino created a committee to study the disposition/utilization of
Philippine government properties in Tokyo and Kobe, Japan through Administrative Order
No. 3, followed by Administrative Orders Numbered 3-A, B, C and D.

On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens
or entities to avail of separations' capital goods and services in the event of sale, lease or
disposition. The four properties in Japan including the Roppongi were specifically mentioned
in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been
pushing, with great vigor, its decision to sell the reparations properties starting with the
Roppongi lot. The property has twice been set for bidding at a minimum floor price of $225
million. The first bidding was a failure since only one bidder qualified. The second one, after
postponements, has not yet materialized. The last scheduled bidding on February 21, 1990
was restrained by his Court. Later, the rules on bidding were changed such that the $225
million floor price became merely a suggested floor price.

The Court finds that each of the herein petitions raises distinct issues. The petitioner in G.R.
No. 92013 objects to the alienation of the Roppongi property to anyone while the petitioner in
G.R. No. 92047 adds as a principal objection the alleged unjustified bias of the Philippine
government in favor of selling the property to non-Filipino citizens and entities. These
petitions have been consolidated and are resolved at the same time for the objective is the
same - to stop the sale of the Roppongi property.

The petitioner in G.R. No. 92013 raises the following issues:

(1) Can the Roppongi property and others of its kind be alienated by the Philippine
Government?; and

(2) Does the Chief Executive, her officers and agents, have the authority and jurisdiction, to
sell the Roppongi property?

Petitioner Dionisio Ojeda in G.R. No. 92047, apart from questioning the authority of the
government to alienate the Roppongi property assails the constitutionality of Executive
Order No. 296 in making the property available for sale to non-Filipino citizens and entities.
He also questions the bidding procedures of the Committee on the Utilization or Disposition
of Philippine Government Properties in Japan for being discriminatory against Filipino
citizens and Filipino-owned entities by denying them the right to be informed about the
bidding requirements.

II

In G.R. No. 92013, petitioner Laurel asserts that the Roppongi property and the related lots
were acquired as part of the reparations from the Japanese government for diplomatic and
consular use by the Philippine government. Vice-President Laurel states that the Roppongi
property is classified as one of public dominion, and not of private ownership under Article
420 of the Civil Code (See infra).

The petitioner submits that the Roppongi property comes under "property intended for public
service" in paragraph 2 of the above provision. He states that being one of public dominion,
no ownership by any one can attach to it, not even by the State. The Roppongi and related
properties were acquired for "sites for chancery, diplomatic, and consular quarters, buildings
and other improvements" (Second Year Reparations Schedule). The petitioner states that
they continue to be intended for a necessary service. They are held by the State in
anticipation of an opportune use. (Citing 3 Manresa 65-66). Hence, it cannot be appropriated,
is outside the commerce of man, or to put it in more simple terms, it cannot be alienated nor
be the subject matter of contracts (Citing Municipality of Cavite v. Rojas, 30 Phil. 20 [1915]).
Noting the non-use of the Roppongi property at the moment, the petitioner avers that the
same remains property of public dominion so long as the government has not used it for
other purposes nor adopted any measure constituting a removal of its original purpose or
use.

The respondents, for their part, refute the petitioner's contention by saying that the subject
property is not governed by our Civil Code but by the laws of Japan where the property is
located. They rely upon the rule of lex situs which is used in determining the applicable law
regarding the acquisition, transfer and devolution of the title to a property. They also invoke
Opinion No. 21, Series of 1988, dated January 27, 1988 of the Secretary of Justice which used
the lex situs in explaining the inapplicability of Philippine law regarding a property situated in
Japan.

The respondents add that even assuming for the sake of argument that the Civil Code is
applicable, the Roppongi property has ceased to become property of public dominion. It has
become patrimonial property because it has not been used for public service or for
diplomatic purposes for over thirteen (13) years now (Citing Article 422, Civil Code) and
because the intention by the Executive Department and the Congress to convert it to private
use has been manifested by overt acts, such as, among others: (1) the transfer of the
Philippine Embassy to Nampeidai (2) the issuance of administrative orders for the possibility
of alienating the four government properties in Japan; (3) the issuance of Executive Order
No. 296; (4) the enactment by the Congress of Rep. Act No. 6657 [the Comprehensive
Agrarian Reform Law] on June 10, 1988 which contains a provision stating that funds may be
taken from the sale of Philippine properties in foreign countries; (5) the holding of the public
bidding of the Roppongi property but which failed; (6) the deferment by the Senate in
Resolution No. 55 of the bidding to a future date; thus an acknowledgment by the Senate of
the government's intention to remove the Roppongi property from the public service
purpose; and (7) the resolution of this Court dismissing the petition in Ojeda v. Bidding
Committee, et al., G.R. No. 87478 which sought to enjoin the second bidding of the Roppongi
property scheduled on March 30, 1989.

III

In G.R. No. 94047, petitioner Ojeda once more asks this Court to rule on the constitutionality
of Executive Order No. 296. He had earlier filed a petition in G.R. No. 87478 which the Court
dismissed on August 1, 1989. He now avers that the executive order contravenes the
constitutional mandate to conserve and develop the national patrimony stated in the
Preamble of the 1987 Constitution. It also allegedly violates:

(1) The reservation of the ownership and acquisition of alienable lands of the public domain
to Filipino citizens. (Sections 2 and 3, Article XII, Constitution; Sections 22 and 23 of
Commonwealth Act 141). itc-asl
(2) The preference for Filipino citizens in the grant of rights, privileges and concessions
covering the national economy and patrimony (Section 10, Article VI, Constitution);

(3) The protection given to Filipino enterprises against unfair competition and trade
practices;

(4) The guarantee of the right of the people to information on all matters of public concern
(Section 7, Article III, Constitution);

(5) The prohibition against the sale to non-Filipino citizens or entities not wholly owned by
Filipino citizens of capital goods received by the Philippines under the Reparations Act
(Sections 2 and 12 of Rep. Act No. 1789); and

(6) The declaration of the state policy of full public disclosure of all transactions involving
public interest (Section 28, Article III, Constitution).

Petitioner Ojeda warns that the use of public funds in the execution of an unconstitutional
executive order is a misapplication of public funds He states that since the details of the
bidding for the Roppongi property were never publicly disclosed until February 15, 1990 (or a
few days before the scheduled bidding), the bidding guidelines are available only in Tokyo,
and the accomplishment of requirements and the selection of qualified bidders should be
done in Tokyo, interested Filipino citizens or entities owned by them did not have the chance
to comply with Purchase Offer Requirements on the Roppongi. Worse, the Roppongi shall be
sold for a minimum price of $225 million from which price capital gains tax under Japanese
law of about 50 to 70% of the floor price would still be deducted.

IV

The petitioners and respondents in both cases do not dispute the fact that the Roppongi site
and the three related properties were through reparations agreements, that these were
assigned to the government sector and that the Roppongi property itself was specifically
designated under the Reparations Agreement to house the Philippine Embassy.

The nature of the Roppongi lot as property for public service is expressly spelled out. It is
dictated by the terms of the Reparations Agreement and the corresponding contract of
procurement which bind both the Philippine government and the Japanese government.

There can be no doubt that it is of public dominion unless it is convincingly shown that the
property has become patrimonial. This, the respondents have failed to do.

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot
be alienated. Its ownership is a special collective ownership for general use and enjoyment,
an application to the satisfaction of collective needs, and resides in the social group. The
purpose is not to serve the State as a juridical person, but the citizens; it is intended for the
common and public welfare and cannot be the object of appropration. (Taken from 3 Manresa,
66-69; cited in Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition,
Vol. II, p. 26).

The applicable provisions of the Civil Code are:

ART. 419. Property is either of public dominion or of private ownership.

ART. 420. The following things are property of public dominion

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks shores roadsteads, and others of
similar character;

(2) Those which belong to the State, without being for public use, and are
intended for some public service or for the development of the national wealth.

ART. 421. All other property of the State, which is not of the character stated in
the preceding article, is patrimonial property.

The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil
Code as property belonging to the State and intended for some public service.

Has the intention of the government regarding the use of the property been changed because
the lot has been Idle for some years? Has it become patrimonial?

The fact that the Roppongi site has not been used for a long time for actual Embassy service
does not automatically convert it to patrimonial property. Any such conversion happens only
if the property is withdrawn from public use (Cebu Oxygen and Acetylene Co. v. Bercilles, 66
SCRA 481 [1975]). A property continues to be part of the public domain, not available for
private appropriation or ownership until there is a formal declaration on the part of the
government to withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).

The respondents enumerate various pronouncements by concerned public officials

insinuating a change of intention. We emphasize, however, that an abandonment of the
intention to use the Roppongi property for public service and to make it patrimonial property
under Article 422 of the Civil Code must be definite Abandonment cannot be inferred from the
non-use alone specially if the non-use was attributable not to the government's own
deliberate and indubitable will but to a lack of financial support to repair and improve the
property (See Heirs of Felino Santiago v. Lazaro, 166 SCRA 368 [1988]). Abandonment must
be a certain and positive act based on correct legal premises.

A mere transfer of the Philippine Embassy to Nampeidai in 1976 is not relinquishment of the
Roppongi property's original purpose. Even the failure by the government to repair the
building in Roppongi is not abandonment since as earlier stated, there simply was a shortage
of government funds. The recent Administrative Orders authorizing a study of the status and
conditions of government properties in Japan were merely directives for investigation but did
not in any way signify a clear intention to dispose of the properties.

Executive Order No. 296, though its title declares an "authority to sell", does not have a
provision in its text expressly authorizing the sale of the four properties procured from Japan
for the government sector. The executive order does not declare that the properties lost their
public character. It merely intends to make the properties available to foreigners and not to
Filipinos alone in case of a sale, lease or other disposition. It merely eliminates the restriction
under Rep. Act No. 1789 that reparations goods may be sold only to Filipino citizens and one
hundred (100%) percent Filipino-owned entities. The text of Executive Order No. 296
provides:

Section 1. The provisions of Republic Act No. 1789, as amended, and of other
laws to the contrary notwithstanding, the above-mentioned properties can be
made available for sale, lease or any other manner of disposition to non-
Filipino citizens or to entities owned by non-Filipino citizens.

Executive Order No. 296 is based on the wrong premise or assumption that the Roppongi and
the three other properties were earlier converted into alienable real properties. As earlier
stated, Rep. Act No. 1789 differentiates the procurements for the government sector and the
private sector (Sections 2 and 12, Rep. Act No. 1789). Only the private sector properties can
be sold to end-users who must be Filipinos or entities owned by Filipinos. It is this nationality
provision which was amended by Executive Order No. 296.

Section 63 (c) of Rep. Act No. 6657 (the CARP Law) which provides as one of the sources of
funds for its implementation, the proceeds of the disposition of the properties of the
Government in foreign countries, did not withdraw the Roppongi property from being
classified as one of public dominion when it mentions Philippine properties abroad. Section
63 (c) refers to properties which are alienable and not to those reserved for public use or
service. Rep Act No. 6657, therefore, does not authorize the Executive Department to sell the
Roppongi property. It merely enumerates possible sources of future funding to augment (as
and when needed) the Agrarian Reform Fund created under Executive Order No. 299.
Obviously any property outside of the commerce of man cannot be tapped as a source of
funds.

The respondents try to get around the public dominion character of the Roppongi property by
insisting that Japanese law and not our Civil Code should apply.

It is exceedingly strange why our top government officials, of all people, should be the ones
to insist that in the sale of extremely valuable government property, Japanese law and not
Philippine law should prevail. The Japanese law - its coverage and effects, when enacted,
and exceptions to its provision is not presented to the Court It is simply asserted that
the lex loci rei sitae or Japanese law should apply without stating what that law provides. It is
a ed on faith that Japanese law would allow the sale.
We see no reason why a conflict of law rule should apply when no conflict of law situation
exists. A conflict of law situation arises only when: (1) There is a dispute over the title or
ownership of an immovable, such that the capacity to take and transfer immovables, the
formalities of conveyance, the essential validity and effect of the transfer, or the
interpretation and effect of a conveyance, are to be determined (See Salonga, Private
International Law, 1981 ed., pp. 377-383); and (2) A foreign law on land ownership and its
conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need
to determine which law should apply.

In the instant case, none of the above elements exists.

The issues are not concerned with validity of ownership or title. There is no question that the
property belongs to the Philippines. The issue is the authority of the respondent officials to
validly dispose of property belonging to the State. And the validity of the procedures adopted
to effect its sale. This is governed by Philippine Law. The rule of lex situs does not apply.

The assertion that the opinion of the Secretary of Justice sheds light on the relevance of
the lex situsrule is misplaced. The opinion does not tackle the alienability of the real
properties procured through reparations nor the existence in what body of the authority to
sell them. In discussing who are capableof acquiring the lots, the Secretary merely explains
that it is the foreign law which should determinewho can acquire the properties so that the
constitutional limitation on acquisition of lands of the public domain to Filipino citizens and
entities wholly owned by Filipinos is inapplicable. We see no point in belaboring whether or
not this opinion is correct. Why should we discuss who can acquire the Roppongi lot when
there is no showing that it can be sold?

The subsequent approval on October 4, 1988 by President Aquino of the recommendation by

the investigating committee to sell the Roppongi property was premature or, at the very least,
conditioned on a valid change in the public character of the Roppongi property. Moreover, the
approval does not have the force and effect of law since the President already lost her
legislative powers. The Congress had already convened for more than a year.

Assuming for the sake of argument, however, that the Roppongi property is no longer of
public dominion, there is another obstacle to its sale by the respondents.

There is no law authorizing its conveyance.

Section 79 (f) of the Revised Administrative Code of 1917 provides

Section 79 (f ) Conveyances and contracts to which the Government is a party.

In cases in which the Government of the Republic of the Philippines is a
party to any deed or other instrument conveying the title to real estate or to
any other property the value of which is in excess of one hundred thousand
pesos, the respective Department Secretary shall prepare the necessary
papers which, together with the proper recommendations, shall be submitted
to the Congress of the Philippines for approval by the same. Such deed,
 instrument, or contract shall be executed and signed by the President of the
Philippines on behalf of the Government of the Philippines unless the
Government of the Philippines unless the authority therefor be expressly
vested by law in another officer. (Emphasis supplied)

The requirement has been retained in Section 48, Book I of the Administrative Code of 1987
(Executive Order No. 292).

SEC. 48. Official Authorized to Convey Real Property. Whenever real

property of the Government is authorized by law to be conveyed, the deed of
conveyance shall be executed in behalf of the government by the following:

(1) For property belonging to and titled in the name of the Republic of the
Philippines, by the President, unless the authority therefor is expressly vested
by law in another officer.

(2) For property belonging to the Republic of the Philippines but titled in the
name of any political subdivision or of any corporate agency or
instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)

It is not for the President to convey valuable real property of the government on his or her
own sole will. Any such conveyance must be authorized and approved by a law enacted by
the Congress. It requires executive and legislative concurrence.

Resolution No. 55 of the Senate dated June 8, 1989, asking for the deferment of the sale of
the Roppongi property does not withdraw the property from public domain much less
authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the public
character of the Roppongi property. In fact, the Senate Committee on Foreign Relations is
conducting hearings on Senate Resolution No. 734 which raises serious policy
considerations and calls for a fact-finding investigation of the circumstances behind the
decision to sell the Philippine government properties in Japan.

The resolution of this Court in Ojeda v. Bidding Committee, et al., supra, did not pass upon
the constitutionality of Executive Order No. 296. Contrary to respondents' assertion, we did
not uphold the authority of the President to sell the Roppongi property. The Court stated that
the constitutionality of the executive order was not the real issue and that resolving the
constitutional question was "neither necessary nor finally determinative of the case." The
Court noted that "[W]hat petitioner ultimately questions is the use of the proceeds of the
disposition of the Roppongi property." In emphasizing that "the decision of the Executive to
dispose of the Roppongi property to finance the CARP ... cannot be questioned" in view of
Section 63 (c) of Rep. Act No. 6657, the Court did not acknowledge the fact that the property
became alienable nor did it indicate that the President was authorized to dispose of the
Roppongi property. The resolution should be read to mean that in case the Roppongi
property is re-classified to be patrimonial and alienable by authority of law, the proceeds of a
sale may be used for national economic development projects including the CARP.
Moreover, the sale in 1989 did not materialize. The petitions before us question the proposed
1990 sale of the Roppongi property. We are resolving the issues raised in these petitions, not
the issues raised in 1989.

Having declared a need for a law or formal declaration to withdraw the Roppongi property
from public domain to make it alienable and a need for legislative authority to allow the sale
of the property, we see no compelling reason to tackle the constitutional issues raised by
petitioner Ojeda.

The Court does not ordinarily pass upon constitutional questions unless these questions are
properly raised in appropriate cases and their resolution is necessary for the determination
of the case (People v. Vera, 65 Phil. 56 [1937]). The Court will not pass upon a constitutional
question although properly presented by the record if the case can be disposed of on some
other ground such as the application of a statute or general law (Siler v. Louisville and
Nashville R. Co., 213 U.S. 175, [1909], Railroad Commission v. Pullman Co., 312 U.S. 496
[1941]).

The petitioner in G.R. No. 92013 states why the Roppongi property should not be sold:

The Roppongi property is not just like any piece of property. It was given to the
Filipino people in reparation for the lives and blood of Filipinos who died and
suffered during the Japanese military occupation, for the suffering of widows
and orphans who lost their loved ones and kindred, for the homes and other
properties lost by countless Filipinos during the war. The Tokyo properties are
a monument to the bravery and sacrifice of the Filipino people in the face of an
invader; like the monuments of Rizal, Quezon, and other Filipino heroes, we do
not expect economic or financial benefits from them. But who would think of
selling these monuments? Filipino honor and national dignity dictate that we
keep our properties in Japan as memorials to the countless Filipinos who died
and suffered. Even if we should become paupers we should not think of selling
them. For it would be as if we sold the lives and blood and tears of our
countrymen. (Rollo- G.R. No. 92013, p.147)

The petitioner in G.R. No. 92047 also states:

Roppongi is no ordinary property. It is one ceded by the Japanese government

in atonement for its past belligerence for the valiant sacrifice of life and limb
and for deaths, physical dislocation and economic devastation the whole
Filipino people endured in World War II.

It is for what it stands for, and for what it could never bring back to life, that its
significance today remains undimmed, inspire of the lapse of 45 years since
the war ended, inspire of the passage of 32 years since the property passed on
to the Philippine government.
 Roppongi is a reminder that cannot should not be dissipated ... (Rollo-
92047, p. 9)

It is indeed true that the Roppongi property is valuable not so much because of the inflated
prices fetched by real property in Tokyo but more so because of its symbolic value to all
Filipinos veterans and civilians alike. Whether or not the Roppongi and related properties
will eventually be sold is a policy determination where both the President and Congress must
concur. Considering the properties' importance and value, the laws on conversion and
disposition of property of public dominion must be faithfully followed.

WHEREFORE, IN VIEW OF THE FOREGOING, the petitions are GRANTED. A writ of

prohibition is issued enjoining the respondents from proceeding with the sale of the
Roppongi property in Tokyo, Japan. The February 20, 1990 Temporary Restraining Order is
made PERMANENT.

SO ORDERED.

Melencio-Herrera, Paras, Bidin, Grio-Aquino and Regalado, JJ., concur.

===============================================

Syllabus

A citizen and resident of this country who has his principal place of business here but
has an agent in a foreign country and is accustomed to purchase and store large
quantities of goods there, and, in a suit brought against him by a citizen and in a court
of that country, appears and defends with the sole object of preventing his property
within the jurisdiction, but not in the custody of that court, from being taken in
satisfaction of any judgment that may be recovered against him there cannot, in an
action brought against him in this country upon such a judgment, impeach it for want
of jurisdiction of his person.

The admission at the trial in a court of a foreign country, according to its law and
practice, of testimony not under oath and without opportunity of cross-examination,
and 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.

When an action is brought in a court of this country by a 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 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 record, the judgment is prima facie evidence, at least,
of the truth of the matter adjudged, and the judgment is conclusive upon the merits
tried in the foreign court unless some special ground is shown for impeaching it, 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 is not entitled to full credit
and credit.

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

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 of our own courts are not recognized as
conclusive.

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 copartners in the cities of New York and Paris and
elsewhere under the firm name of A. T. Stewart & Co. The 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.

The complaint alleged that in 1886 and since, during the time of all the transactions
included in the judgment sued on, Hilton and Libbey, as successors to Alexander T.
Stewart and Libbey, under the firm name of A. T. Stewart & Co., carried on a general
business as merchants in the Cities of New York and Paris and elsewhere, and
maintained a regular store and place of business at Paris; that during the same time,
Charles Fortin & Co. carried on 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.

The complaint further alleged that between March 1, 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

Page 159 U. S. 115

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
Fortin & Co. recover of Stewart & Co. various sums, arising out of the dealings
between them, amounting to 660,847 francs, with interest, and dismissed part of
Fortin & Co.'s claim.

The complaint further alleged that appeals were taken by both parties from that
judgment to the Court of Appeal of Paris, Third Section, an appellate court of record
organized and existing under the laws of the Republic of France and having
jurisdiction of appeals from the final judgments of the Tribunal 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 on all the claims allowed, and
12,559 francs for costs and expenses.

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 Forth &
Co., with full powers, according to law and commercial usage, for the verification and
realization of its property, both real and personal, and to collect and cause to be
executed the judgments aforesaid.

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;

"that the said courts respectively had jurisdiction of the subject matter of the
controversies so submitted to them, and of the parties, the

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;"

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

The defendants, in their answer, set forth in detail the original contracts and
transactions in France between the parties and the subsequent dealings between them
modifying those contracts, and alleged that the plaintiffs 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 the French courts and that the
defendants gave up their business in France before the judgment on appeal, and had
no property within the jurisdiction of France out of which that judgment could be
collected.

The answer further alleged that the Tribunal of Commerce of the Department of the
Seine was a tribunal whose judges were merchants, ship captains, stockbrokers, and
persons engaged in commercial pursuits, and of which Charles Fortin had been a
member until shortly before the commencement of the litigation.
The answer further alleged that in the original suits brought against the defendants by
Fortin & Co., the citations were left at their storehouse in Paris; that they were then
residents and citizens of the State of New York, and neither of them at that time, or
within four years before, had been within, or resident or domiciled within, the
jurisdiction of that tribunal or owed any allegiance to France, but that

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 establish counterclaims arising out of the transactions between
the parties, and to compel the production and inspection of Fortin & Co.'s books, and
that they sought no other affirmative relief in that tribunal.

The answer further alleged that, pending that litigation, the defendants discovered
gross frauds in the accounts of Fourtin & Co., that the arbitrator and the tribunal
declined to compel Fortin & Co. to produce their books and papers for inspection, and
that, if they had been produced, the judgment would not have been obtained against
the defendants.

The answer further alleged that without any fault or negligence on the part of the
defendants, there was not a full and fair trial of the controversies before the arbitrator,
in that no witness was sworn or affirmed; in that Charles Fortin was permitted to
make, and did make, statements not under oath containing many falsehoods; in that
the privilege of cross-examination of Fortin and other persons who made statements
before the arbitrator was denied to the defendants, and in that extracts from printed
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-examination, and by the fraudulent suppression of the
books and papers.
The answer further alleged that Fortin & Co. made up their statements and accounts
falsely and fraudulently, and with

Page 159 U. S. 118

intent to deceive the defendants and the arbitrator and 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

"were deceived and misled in regard to the merits of the controversies pending 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 and statements, and is erroneous in fact and in law, and is void;
that the trial hereinbefore mentioned was not conducted according to the usages and
practice of the 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 judgment should be enforced against a citizen of the United States,
and that, if there had been a full and fair trial upon the merits of the controversies so
pending before said tribunals, no judgment would have been obtained against said
Stewart & Co."

"Defendants, further answering, allege that it is contrary to natural justice that the
judgment hereinbefore mentioned should be enforced without an examination of 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 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:"

" Judgments rendered by foreign tribunals shall be capable of execution

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

" A lien cannot, in like manner, arise from judgments rendered in any foreign country,
save only as they have been declared in force by a French tribunal, without prejudice,
however, to provisions to the contrary, contained in public laws and treaties."

"[And by article 2128 of that Code: 'Contracts entered into in a foreign country cannot
give a lien upon property in France if there are no provisions contrary to this principle
in public laws or in treaties.']"

"That the construction given to said statutes by the 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 country in which such judgment is obtained. That no treaty exists between the said
Republic of France and the United States, by the terms or effect of which the
judgments of either country are prevented from being examined anew upon the merits,
when sued upon in the courts of the country other than that in which it is obtained.
That the tribunals of the Republic of France give no force and effect, within the
jurisdiction of the said country, to the duly rendered judgments of courts of competent
jurisdiction of the United States against citizens of France, after proper personal
service of the process of said courts is made thereon in this country."

The answer further set up, by way of counterclaim and in detail, various matters
arising out of the dealings between the parties, and alleged that none of the plaintiffs
had since 1881 been residents of the State of New York, or within the jurisdiction of
that state, but the defendants were, and always had been, residents of that state.

The answer concluded by demanding that the plaintiffs'

Page 159 U. S. 120

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.

The defendants, on June 22, 1888, filed a bill in equity against the plaintiffs setting
forth the same matters as in their answer to the action at law and praying for a
discovery and for an injunction against the prosecution of the action. To that bill a
plea was filed setting up the French judgments, and upon a hearing, the bill was
dismissed. 42 F. 249. From the decree dismissing the bill an appeal was taken, which
is the second case now before this Court.

The action at law afterwards came on for trial by a jury, and the plaintiffs put in the
records of the proceedings and judgments in the French courts, and evidence that the
jurisdiction of those courts was as alleged in the complaint and that the practice
followed and the method of examining the witnesses were according to the French
law, and also proved the title of Guyot as liquidator.

It was admitted by both parties that for several years prior to 1876, the firm of
Alexander T. Stewart & Co., composed of Stewart and Libbey, conducted their
business as merchants in the City of New York, with branches in other cities of
America and Europe; that both partners were citizens and residents of the City and
State of New York during the entire period mentioned in the complaint, and that in
April, 1876, Stewart died, and Hilton and Libbey formed a partnership to continue the
business under the same firm name, and became the owners of all the property and
rights of the old firm.

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

Page 159 U. S. 121

of which, would have been relevant and competent if the plaintiffs in error are not
concluded by the result of those litigations, and have now the right to try those issues,
either on the ground that the French judgments are only prima facie evidence of the
correctness of those judgments, or on the ground that the case is within the exception
of a judgment obtained by fraud."

The defendants, in order to show that they should not be concluded by having
appeared and litigated in the suits brought against them by the plaintiffs in the French
courts, offered to prove that they were residents and citizens of the State of New York,
and neither of them had been, within four years prior to the commencement of those
suits, domiciled or resident within the jurisdiction of those courts; that they had a
purchasing agent and a storehouse in Paris, but only as a means or facility to aid in the
transaction of their principal business, which was in New York, and they were never
otherwise engaged in business in France; that neither of them owed allegiance to
France, but they were the owners of property there 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 suits there brought by the
plaintiffs against them.

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 French
courts, accounts bearing upon the transactions in controversy which were false and
fraudulent, and contained excessive and fraudulent charges against the defendants in
various particulars, specified; that the

Page 159 U. S. 122

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 the truth of the
controversies between the parties; that before the Tribunal of Commerce, Charles
Fortin was permitted to and did give in evidence statements not under oath relating to
the merits of the controversies there pending, and falsely represented that a certain
written contract made in 1873 between Stewart & Co. and Fortin & Co. concerning
their dealings was not intended by the parties to be operative according to its terms,
and in support of that false representation made statements as to admissions by
Stewart in a private conversation with him, and that the defendants could not deny
those statements, because Stewart was dead, and 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.

The records of the judgments of the French courts, put in evidence by the plaintiffs,
showed that all the matters now relied on to show fraud were contested in and
considered by those courts.

The plaintiffs objected to all the evidence offered by the 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 court declined to admit any of the evidence so offered by the defendants, and
directed a verdict for the plaintiffs in the sum of $277,775.44, being the amount of the
French judgment and interest. The defendants, having duly excepted to the rulings and
direction of the court, sued out a writ of error.
Page 159 U. S. 123

The writ of error in the action at law and the appeal in the suit in equity were argued
together in this Court in January, 1894, and, by direction of the Court, were reargued
in April, 1894, before a full Bench.

Page 159 U. S. 162

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