EN BANC

[G.R. No. 42538. May 21, 1935.]

WILLAMETTE IRON & STEEL WORKS, plaintiff-appellee, vs. A. H. MUZZAL,
defendant-appellant.

CASE DOCTRINES:
1. CORPORATIONS; CALIFORNIA CORPORATION; LIABILITY OF
STOCKHOLDER FOR OBLIGATIONS CONTRACTED BY HIS CORPORATION. —
Upon the facts stated in the opinion of the court, Held: That the defendant, a former resident
of the State of California, now residing in the Philippine Islands, is liable for obligations
contracted by a California corporation of which he was a stockholder at the time said
obligations were contracted with the plaintiff-appellee in this case.

2. ID.; ID.; ID. — The herein defendant is chargeable with notice of the law of
California as to the liability of stockholders for debts of a corporation proportionate to their
stock holdings, in view of the fact that he was one of the incorporators of the Meyer-Muzzal
Company in the year 1924 and was still a stockholder in that company in the year 1928. The
defendant cannot now escape liability by alleging that the California law is unjust and
different from the inconsistent with the Philippine Corporation Law.

3. ID.; ID.; ID.; FOREIGN LAWS; EVIDENCE SUFFICIENT TO ESTABLISH

THE EXISTENCE OF A FOREIGN LAW. — The testimony of an attorney-at-law of San
Francisco, California, under oath, who quotes verbatim a section of the California Civil
Code and states that said section was in force at the time the obligations of defendant to
plaintiff were incurred is sufficient to establish the fact that the section in question was the
law of the State of California on the dates referred to. A reading of sections 300 and 301 of
our Code of Civil Procedure will convince one that these sections do not exclude the
presentation of other competent evidence to prove the existence of a foreign law.
(Willamette Iron & Steel Works v. Muzzal, G.R. No. 42538, [May 21, 1935], 61 PHIL 471-
476)

This case involves the liability of the defendant, a former resident of the State of
California, now residing in the Philippine Islands, for obligations contracted by a California
corporation of which he was a stockholder at the time said obligations were contracted with
the plaintiff-appellee in this case.

The section of the Civil Code of California under which the plaintiff seeks to
recover reads:

"SEC. 322. Each stockholder of a corporation is individually and

personally liable for such proportion of all its debts and liabilities
contracted or incurred during the time he was a stockholder as the amount
of stock or shares owned by him bears to the whole of the subscribed
capital stock or shares of the corporation. Any creditor of the corporation
may institute joint or several actions against any of its stockholders, for
 the proportion of his claim payable by each, and in such action the court
must (1) ascertain the proportion of the claim or debt for which each
defendant is liable, and (2) a several judgment must be rendered against
each, in conformity therewith. If any stockholder pays his proportion of
any debt due from the corporation, incurred while he was such
stockholder, he is relieved from any further personal liability for such
debt, and if an action has been brought against him upon such debt, it must
be dismissed, as to him, upon his paying the costs, or such proportion
thereof as may be properly chargeable against him. The liability of each
stockholder is determined by the amount of stock or shares owned by him
at the time the debt or liability was incurred; and such liability is not
released by any subsequent transfer of stock."

ISSUE: WON the Philippine courts can enforce the law of California and WON it can
render a judgment against the defendant.

HELD: In the third and fourth assignments of error the appellant argues that since the
law of California, as to the liability of stockholders of a corporation, is different from
and inconsistent with the Philippine Corporation Law the courts here should not
impose liability provided in that law upon a resident of these Islands who is a
stockholder of a California corporation.

The herein defendant is chargeable with notice of the law of California as to the
liability of stockholders for debts of a corporation proportionate to their stock holdings,
in view of the fact that he was one of the incorporators of the Meyer-Muzzal Company
in the year 1924 and was still a stockholder in that company in the year 1928. Exhibit
10 of the plaintiff is a certified copy of the articles of incorporation of Meyer-Muzzal
Company in which it appears that that company was incorporated on August 22, 1924,
and that the incorporators were A. H. Muzzal, Leo W. Meyer and James Rolph, Jr., "all
of whom are residents and citizens of the State of California." The defendant cannot
now escape liability by alleging that the California law is unjust and different from and
inconsistent with the Philippine Corporation Law.
 EN BANC
[G.R. No. L-11622 . January 28, 1961.]

THE COLLECTOR OF INTERNAL REVENUE, petitioner, vs. DOUGLAS FISHER and

BETTINA FISHER, and THE COURT OF TAX APPEALS, respondents.
[G.R. No. L-11668 . January 28, 1961.]

DOUGLAS FISHER and BETTINA FISHER, petitioners, vs. THE COLLECTOR OF

INTERNAL REVENUE and THE COURT OF TAX APPEALS, respondents.

1.SUCCESSION; FOREIGNERS WHO MARRIED IN THE PHILIPPINES; LAW

DETERMINATIVE OF PROPERTY RELATIONS OF SPOUSES. — The decedent was born in
the Philippines in 1874 of British parents. In 1909, he married another British subject in Manila.
In 1951, he died in San Francisco, California, U.S.A., where he and his wife established their
permanent residence. The spouses acquired real and personal properties in the Philippines.
Query: What law governs the property relation of the spouses? Held: Since the marriage took
place in 1909, the applicable law is Article 1325 of the old Civil Code and not Article 124 of the
new Civil Code which became effective only in 1950. It is true that both articles adhere to the
nationality theory of determining the property relation of spouses where one of them is a
foreigner and they have made no prior agreement as to the administration, disposition, and
ownership of their properties. In such a case, the national law of the husband becomes the
dominant law in determining the property relation of the spouses. There is, however, a difference
between the two articles in that Art. 124 expressly provides that it shall be applicable regardless
of whether the marriage was celebrated in the Philippines or abroad, while Art. 1325 is limited to
marriages contracted in a foreign land. What has been said, however refers to mixed marriages
between a Filipino citizen and a foreigner. In the instant case both spouses are foreigners who
married in the Philippines. In such a case, the law determinative of the property relation of the
spouses would be the English law even if the marriage was celebrated in the Philippines, both of
them being foreigners. (See IX Manresa, Comentarios al Codigo Civil Español, p. 202).

2.ID.; ID.; ID.; FAILURE TO PROVE FOREIGN LAW; EFFECT OF. — In the present case,
however, the pertinent English law that allegedly vests in the decedent husband full ownership of
the properties acquired during the marriage has not been proven. In the absence of proof, the
court is, therefore, justified in presuming that the law of England on this matter is the same as the
Philippine law, viz: in the absence of any ante-nuptial agreement, the contracting parties are
presumed to have adopted the system of conjugal partnership as to the properties acquired during
their marriage. Hence, the lower court correctly deducted the half of the conjugal property in
determining the hereditary estate by the decedent.

3.ID.; ID.; APPLICABILITY OF ART. 16 NEW CIVIL CODE. — Article 16 of the new Civil
Code (art. 10, old Civil Code) which provides that in testate and intestate proceedings, the
amount of successional rights, among others, is to be determined by the national law of the
decedent, is not applicable to the present case. A reading of Article 10 of the old Civil
Code,which incidentally is the one applicable, shows that it does not encompass or contemplate
to govern the question of property relation between spouses. Said article distinctly speaks of
amount of successional rights and this term properly refers to the extent or amount of property
that each heir is legally entitled to inherit from the estate available for distribution.
4.TAXATION; ESTATE AND INHERITANCE TAXES; EXEMPTION OF INTANGIBLE
PERSONAL PROPERTIES; PROOF OF FOREIGN LAW GRANTING EXEMPTION. —
Petitioner disputes the action of the Tax Court in exempting the respondents from paying
inheritance tax on the personal intangible property belonging to the estate in virtue of the
reciprocity proviso of Section 122 of the national Internal Revenue Code, in relation to Section
13851 of the California Revenue and Taxation Code. To prove the pertinent California Law,
counsel for respondents testified that as an active member of the California bar since 1931, he is
familiar with the revenue and taxation laws of the State of California. When asked by the lower
court to state the pertinent California law as regards exemption of intangible personal properties,
the witnesses cited 4, section 13851 (a) and (b) of the California Internal Revenue Code as
published in the Deering's California Code. And as part of his testimony, a full quotation of the
cited section was offered in evidence by the respondents. Held: Section 41, Rule 123 of the Rules
of Court prescribes the manner of proving foreign laws before Philippine courts. Although it is
desirable that foreign laws be proved in accordance with said rule, this Court held in the case
Willamete Iron and Steel Works vs. Muzzal, 61 Phil., 471, that "a reading of sections 300 and
301 of our Code of Civil Procedure (now section 41, Rule 123) will convince one that these
sections do not exclude the presentation of other competent evidence to prove the existence of a
foreign law." In that case, this Court considered the testimony of an attorney-at-law of San
Francisco, California, who quoted verbatim a section of the California Civil Code and who stated
that the same was in force at the time the obligations were contracted, as sufficient evidence to
establish the existence of said law. In line with this view, the Tax Court, therefore, did not err in
considering the pertinent California law as proved by respondents' witness.

5.ID.; ID.; ID.; RECIPROCITY EXEMPTION BETWEEN STATE OF CALIFORNIA AND

PHILIPPINES. — Section 122 of the National Internal Revenue Code exempts payment of both
estate and inheritance taxes on intangible personal properties if the laws of the foreign country of
which the decedent was a resident at the time of his death allow a similar exemption from
transfer taxes or death taxes of every character in respect of intangible personal property owned
by citizens of the Philippines not resident of that foreign country. On the other hand , Section
13851 of the California Law exempts the payments of inheritance tax if the laws of the country
in which the decedent resided allow a similar exemption from legacy, succession, or death taxes
of every character. It is clear from these provisions that the reciprocity must be total, that is, with
respect to transfer or death taxes of any and every character, in the case of the Philippines law,
and to legacy, succession, or death tax of any and every character, in the case of the California
law. Therefore, if any of the two states collects or imposes and does not exempt any transfer,
death, legacy, or succession tax of any character, the reciprocity does not work. This is the
underlying principle of the reciprocity clauses in both laws. Since in the Philippines two taxes
are collectible from the decedent's estate (inheritance and estate taxes) and in California, only
inheritance tax, reciprocal exemption of the inheritance tax in both countries, leaving payable the
estate tax in the Philippines, will not work as that would violate the California law that
authorizes exemption only when there is in the other country an exemption from legacy,
succession or death taxes of every character. Held: There could not be partial reciprocity. It
would have to be total or none at all.

(Collector of Internal Revenue v. Fisher, G.R. No. L-11622, L-11668, [January 28, 1961], 110
PHIL 686-711)
 EN BANC
[G.R. No. L-2248. January 23, 1950.]
In the matter of the petition of Vicente Rosal Pardo to be admitted a citizen of the
Philippines. VICENTE ROSAL PARDO, petitioner-appellee, vs. THE REPUBLIC OF THE
PHILIPPINES, oppositor-appellant.

EVIDENCE; JUDICIAL NOTICE; CERTIFICATION OF SPANISH CONSUL

ABOUT SPANISH LAWS. — That Filipinos are eligible to Spanish citizenship in Spain, is
a matter within judicial notice. Moreover, authentication or certification of the nationality
laws of Spain by the Consul General of Spain in the Philippines is competent proof of
Spanish laws to that effect.

3. CITIZENSHIP; NATURALIZATION; WHEN STRICT OBSERVANCE OF

RULES OF COURT NOT OBLIGATORY. — By reason of the provisions of Rule 132 of
the Rules of Court, literal adherence to the latter which include rules of evidence, is not
obligatory in a proceeding in naturalization. While said proceeding under the Philippine law
is judicial in character, and strict compliance with the process prescribed by statute, if there
were one, would be essential, yet when, as here, no specific procedure is indicated in the
premises, it is only necessary that the merits of the petition be passed on and a decision
reached on a fair consideration of the evidence on satisfactory proof.

4. ID.; ID.; EVIDENCE OF FOREIGN LAW ON RECIPROCITY. — Evidence

of the law of a foreign country an reciprocity regarding the acquisition of citizenship,
although not meeting the prescribed rule of practice by section 41 of rule 123, may be
allowed and used as basis for a favorable action if, in the light of all the circumstances, the
court is satisfied of the authenticity if the written proof offered.

||| (Pardo v. Republic, G.R. No. L-2248, [January 23, 1950], 85 PHIL 323-330)