PERSONAL STATUS AND CAPACITY
BASIC PRINCIPLES PERSONAL STATUS is the general term that
includes both condition and capacity and embraces such matters as
the beginning and end of human personality, capacity to have
rights, capacity to engage in legal transactions, protection of
personal interests, family relations and succession. In Roman Law:
Status is comprised of status libertates (freedom), status
civitates (citizenship) and status familiae (family relations)
ART 37 NCC Juridical capacity, which is the fitness to be the
subject of legal relations, is inherent in every natural person and
is lost only through death. Capacity to act, which is the power to
do acts with legal effect, is acquired and may be lost.
RECTO v. HARDENFacts: H engaged the services of R, as counsel in
her suit against her husband for support and for preservation of
her rights in the conjugal partnership in contemplation of a
divorce suit. However, the spouses entered into a compromise
agreement to defeat the claim of R in attorneys fees. H moved to
dismiss on the ground of invalidity of the contract of service
because divorce is contrary to Phil law.
HELD: R should be paid his fees. H spouses are US citizens and
their status and the dissolution thereof are governed by the laws
of the United States, which sanction divorce. Therefore, contract
is not contrary to public policy.
Status once established by once personal law is given universal
recognition. Aliens can sue and be sued in our courts subject to
our procedural rules but the law to be applied is their personal
law.
CONCEPT OF PERSONALITY German law: begins with the completion of
a person's birth Spanish Civil Code: requires that the infant be
alive for 24 hours to acquire personality
ART 40 NCC Birth determines personality; but the conceived child
shall be considered born for all purposes that are favorable to it,
provided it be born later with the conditions specified in the
following Art
ART 41 NCC For civil purposes, the fetus is considered born if
it is alive at the time it is completely delivered from the
mother's womb. However, if the fetus had an intra-uterine life of
less than seven months, it is not deemed born if it dies within
twenty-four hours after its complete delivery from the maternal
womb.
ART 42 NCC Civil personality is extinguished by death.
The effect of death upon the rights and obligations of the
deceased is determined by law, by contract and by will.
GELUZ v. CA SC did not allow for recovery of damages for the
injury and death of a conceived child which is still in the mothers
womb. Art 40 cannot be invoked since it expressly limits the
provisional personality by imposing the condition that the child
should be subsequently born alive.
Civil personality is commenced at birth and is extinguished by
death. A declaration of death issued by a competent court is
considered valid for all purposes.
LIMJOCO v. INTESTATE ESTATE OF FRAGANTE SC ruled that the estate
of a deceased applicant can be granted a CPC to avoid injustice or
prejudice resulting from the impossibility of exercising such legal
rights & fulfilling such legal obligations of the decedent as
survived after his death unless the legal fiction, that the estate
is considered a person, is indulged.
ABSENCE PRESUMPTIVE DEATH UNDER THE CIVIL CODE
Art 390. After an absence of seven years, it being unknown
whether or not the absentee still lives, he shall be presumed dead
for all purposes, except for those of succession.
The absentee shall not be presumed dead for the purpose of
opening his succession till after an absence of ten years. If he
disappeared after the age of seventy-five years, an absence of five
years shall be sufficient in order that his succession may be
opened.
Art 391. The following shall be presumed dead for all purposes,
including the division of the estate among the heirs: (1) A person
on board a vessel lost during a sea voyage, or an aeroplane which
is missing, who has not been heard of for four years since the loss
of the vessel or aeroplane;(2) A person in the armed forces who has
taken part in war, and has been missing for four years; (3) A
person who has been in danger of death under other circumstances
and his existence has not been known for four years.
ART 41 OF THE FAMILY CODE A marriage contracted by any person
during subsistence of a previous marriage shall be null and void,
unless before the celebration of the subsequent marriage, the prior
spouse had been absent for four consecutive years and the spouse
present has a well-founded belief that the absent spouse was
already dead. In case of disappearance where there is danger of
death under the circumstances set forth in the provisions of Art
391 NCC, an absence of only two years shall be sufficient.
For the purpose of contracting the subsequent marriage under the
preceding paragraph the spouse present must institute a summary
proceeding as provided in this Code for the declaration of
presumptive death of the absentee, without prejudice to the effect
of reappearance of the absent spouse.
NAME Prof. Beale believed that determination of one's name is
not a problem of status since a person is free to assume a name and
change it at will. The prevalent view in our jurisdiction is that a
persons name is determined by law and can only be changed through
court intervention. Arts 364-366 NCC govern use of surnames of
children; married women; separated or widowed women. Case law:
Change of name has been allowed (a) if the name is ridiculous or
tainted with dishonor or difficult to pronounce; (b) to avoid
confusion; (c) as a consequence of a new status; (d) pursuant to a
desire to adopt a Filipino name and erase a former alien
nationality.
AGE OF MAJORITY Determines termination of parental authority In
order to determine: CAPACITY to contract and exercise civil
rights
INSULAR GOVERNMENT v. FRANK Facts: Insular Govt entered into an
employment contract with Frank in Illinois when he was still a
minor under Phil law but not under Illinois law. Frank breached the
contract so IG sued him.
Held: Illinois law should apply. Matters bearing upon the
execution, interpretation and validity of a contract are determined
by the law of the place where the contract is made.
CHOICE OF LAW IN FAMILY RELATIONS
PHILIPPINE POLICY ON MARRIAGE AND FAMILY
Art XV, Section 2 of the ConstitutionMarriage, as an inviolable
social institution, is the foundation of the family and shall be
protected by the State.
Art 220 NCC In case of doubt, all presumptions favor the
solidarity of the family. Thus, every intendment of law or facts
leans toward the validity of marriage, the indissolubility of the
marriage bonds, the legitimacy of children, the community of
property during marriage, the authority of parents over their
children, and the validity of defense for any member of the family
in case of unlawful aggression.
EXTRINSIC VALIDITY OF MARRIAGE Law of the place of celebration
Art 2 of the Hague Convention on Celebration and Recognition of the
Validity of Marriage
APT v. APT FACTS: The marriage of the Apts (both Germans) was
celebrated in Argentina by proxy. The wife, a domiciliary of
England, filed a petition for the nullification of their marriage
on the ground that proxy marriages are not valid in England. It is,
however, valid in Argentina.
HELD: The marriage is valid. The English law on marriage is
locus regis actum. If a marriage is good by the laws of the country
where it is effected, it is good all the world over, no matter
whether the proceeding or ceremony which constituted marriage
according to the law of the place would or would not constitute
marriage in the country of domicile of one or other of the spouses.
Since the marriage was performed in Buenos Aires and in accordance
with its laws, and since proxy marriage is only a form of the
ceremony and not an essential requisite, the marriage should be
upheld.
Art 26. of the Family Code: All marriages solemnized outside the
Philippines, in accordance with the laws in force in the country
where they were solemnized, and valid there as such, shall also be
valid in this country, except those prohibited under: (1) Art 35
(1) marriage between minors even with consent of parents (2) Art
35(4) bigamous or polygamous marriages (except those under Art 41)
(3) Art 35 (5) contracted with mistake as to the identity of the
contracting party (4) Art 35 (6) subsequent marriage without
registering decree of nullity of former marriage with the civil
registry (5) Art 36 psychological incapacity (6) Art 37 and Art 38
- incestuous marriages
Art 3. The formal requisites of marriage are: (1) Authority of
the solemnizing officer; (2) A valid marriage license except in the
cases provided for by law; and (3) A marriage ceremony
ADONG V. CHEONG SENG GEESC ruled that to establish a valid
foreign marriage pursuant to this comity provision, it is first
necessary to prove before the Philippine courts the existence of
the foreign law as a question of fact, and it is then necessary to
prove the alleged foreign marriage by convincing evidence.
Statutes intended to validate what otherwise void or invalid
marriages, being curative, will be given retroactive effect.
PEOPLE V. MORA DUMPO The Court formulated that there is no
general statement regarding the requisites necessary for the
validity of a marriage between Moros according to Mohammedan rites.
This is a fact which must be subject to proof in every particular
case.
It is an essential element in bigamy that the 2nd marriage have
all the essential requisites of a valid marriage. It appearing that
the 2nd marriage cannot be considered as such, there is no
justification to hold her guilty of bigamy.
WONG WOO YU V. VIVO Art 15 NCC also provides that laws relating
to family rights or to the status of persons are binding upon
citizens of the Philippines, even though living abroad, and it is
well-known that in 1929 in order that a marriage celebrated in the
Philippines may be valid it must be solemnized either by a judge of
any court inferior to the Supreme Court, a justice of the peace, or
a priest or minister of the gospel of any denomination duly
registered in the Philippine Library and Museum (Public Act 3412,
Section 2). Even if we assume, therefore, that the marriage of
petitioner to Perfecto Blas before a village leader is valid in
China, the same is not one of those authorized in our country.
INTRINSIC VALIDITY OF MARRIAGE Capacity to marry Consent Public
policy of the State
Incestuous marriages Marriage between 1st cousins = against
public policy In other countries = acceptable Canon law allows 1st
cousins to marry upon securing dispensation to marry Hague
Convention on the Validity of Marriages allows a contracting State
to refuse recognition of a marriage if: One spouse was already
married Spouses are related to one another by blood or adoption Had
not obtained the minimum age or acquired the necessary dispensation
Lack of mental capacity Did not freely consent to the marriage
SOTTOMAYOR V. DE BARROS FACTS: Sottomayor and de Barros are both
Portuguese and first cousins. Under Portuguese law they are
incapable of contracting marriage. They were married in London.
Sottomayor filed a petition to have the marriage declared
invalid.
HELD: The marriage is invalid. The law of a country where
marriage is solemnized must decide all questions relating to the
validity of the ceremony by which the marriage is alleged to have
been constituted; but as regards questions on personal capacity, it
must depend on the law of the domicile, and if the laws of any
country prohibit its subjects within certain degrees of
consanguinity from contracting marriage and treats such as
incestuous, this imposes on the subjects a personal incapacity
which continues to affect them so long as they are domiciled in
said country and renders such marriage invalid wherever it may have
been solemnized.
IN RE MAYS ESTATE FACTS: Fannie is Sams niece by half-blood;
they are both Jewish and NY residents. NY prohibits marriage
between uncle and niece, so they went to Rhode Island, where such
marriage is also prohibited except where the parties are Jewish
(the Jewish faith allow such marriages). After the ceremony they
went back to NY to live there.
HELD: The marriage is valid. The legality of a marriage between
persons sui juris is to be determined by the law of the place where
it is celebrated. The general principle is that the rights
dependent upon nuptial contracts are to be determined by the lex
loci, subject to 2 exceptions: 1) cases within the prohibition of
positive law, and 2) cases involving polygamy or incest in a degree
regarded generally as within the prohibition of natural law. As to
the first exception, there is no positive law in New York which
serves to interdict the marriage in Rhode Island of Sam and Fannie,
and as to the second exception, their marriage was not offensive to
the public sense of morality, it being allowed by the Jewish
faith.
EFFECTS OF MARRIAGE Personal Relations of the Spouses Art 69, FC
joint right to fix the domicile
DJUMANTAN v. DOMINGO Right of an alien spouse of a Filipino to
permanently reside in the Philippines lies not in the fact of
marriage but in compliance with immigration laws
Property Relations of Spouses Hague Convention on the Law
Applicable to Matrimonial Property Regimes Internal law designated
by the spouses before the marriage or in the absence thereof in the
state where both spouses fix their 1st habitual residence
Art 80 FCIn the absence of a contrary stipulation in a marriage
settlement, the property relations of the spouses shall be governed
by Philippine laws, regardless of the place of the celebration of
the marriage and their residence. This rule shall not apply: (1)
Where both spouses are aliens; (2) With respect to the extrinsic
validity of contracts affecting property not situated in the
Philippines and executed in the country where the property is
located; and (3) With respect to the extrinsic validity of
contracts entered into in the Philippines but affecting property
situated in a foreign country whose laws require different
formalities for its extrinsic validity.
DIVORCE AND SEPARATION Divorce may be absolute or limited Court
granting a divorce must have personal jurisdiction over the spouses
and over the property that it seeks to affect by its decree. Hague
Convention Relating to Divorce and Separation of 1902 grant of
divorce or separation must comply with the national law of the
spouses and the law of the place where the application for divorce
is made.
DIVORCE DECREES OBTAINED BY FILIPINOS ABROAD
TENCHAVEZ v. ESCANO FACTS: Vicenta and Pastor were married
without the knowledge of her parents. Vicenta went to the US to
obtain a divorce, which was granted by the Nevada Court; she
married an American and subsequently acquired American citizenship.
Pastor sued Vicenta for legal separation and damages. Vicentas
defense is that there was a valid divorce issued by the Nevada
court.
HELD: The divorce decree obtained in the US is not valid,
because at the time it was issued, Vicenta, like Pastor, was still
a Filipino citizen. She was then subject to Philippine law.
Philippine law cannot recognize a foreign decree of absolute
divorce between Filipino citizens, for this would violate declared
public policy.
VAN DORN v. ROMILLO FACTS: Van Dorn, a Filipina, married
American Upton. Ten years later they were divorced in the US;
subsequently, van Dorn remarried. Upton filed an action against Van
Dorn in the Philippines, asking for an accounting of certain
alleged conjugal properties.
HELD: The divorce decree is valid and binding upon Upton. Even
if divorce is not valid in the Philippines for being contrary to
public policy, only Philippine nationals are covered by the policy
against absolute divorces. Aliens may obtain divorces abroad, which
may be recognized in the Philippines provided valid according to
their national law.
PILAPIL v. IBAY-SOMERA FACTS: Pilapil and Geiling were married
in Germany, but were later divorced. A few months later, Geiling
filed a complaint for adultery which was dismissed; it was refiled
by the fiscal.
HELD: Geiling has no legal standing to commence the adultery
case because the person who initiates the adultery case must be an
offended spouse, meaning he must still be married to the accused
spouse at the time of the filing of the complaint. Because of the
divorce decree, Geiling is no longer the husband of Pilapil; hence
he had no more legal standing to commence the adultery case (no
longer an offended spouse).
QUITA V. COURT OF APPEALS FACTS: Quita and Padlan were married
in the Philippines, but Quita filed for divorce in California which
was granted. She remarried twice after the divorce. Upon Padlans
death, Quita made claims upon his estate as the surviving spouse
and heir of Padlan, alleging that since Padlan was a Filipino
citizen, he remained married to her in spite of the divorce
decree.
HELD: Quitas right to inherit from Padlan depends on her
citizenship at the time the divorce was decreed. If she was no
longer a Filipino citizen at the time of their divorce, the divorce
would be valid as to her and will be recognized in the Philippines,
and she would lose her right to inherit.
OTHER CASES OF NOTE:
REPUBLIC v. IYOY Basingfrom the facts, Fely only became a
citizen in 1988 and acquired the divorce in 1984, marryingMicklus a
year after. This means that paragraph two of Art 26 cannot be
applied in such away that, Fely is not yet considered an alien at
the time the divorce was acquired and thereforeshe does not have
the capacity to remarry and the marriage is still considered as
subsisting. TheCivil Code also provides that Filipino Citizen, with
regard tofamily laws and status are governedby Philippine laws
regardless of where they are. Fely, being a Filipino Citizen then,
is notpermitted by our laws to acquire a divorce decree since such
is notrecognized in the Philippines.
REPUBLIC v. ORBECIDO A Filipino (whose Filipina wife obtained a
divorce in the US after acquiring US citizenship) was allowed to
have the divorce decree recognized in the Philippines
SAN LUIS V. SAGALONGOS SC said that the issue of whether a
Filipino who is divorced by his alien spouse abroad may validly
remarry in the Philippines considering that Felicidads marriage to
Felicisimo was solemnized on June 20, 1974, or before the Family
Code took effect on August 3, 1988. In resolving this issue, the SC
said that it need not retroactively apply the provisions of the
Family Code, particularly Art 26, par. (2) considering that there
is sufficient jurisprudential basis allowing the retroactivity of
the Family Code.
CORPUZ v. STO. TOMAS (2010) Standing of foreign spouse to have
divorce decree recognized in the Philippines
VALIDITY OF FOREIGN DIVORCE BETWEEN FOREIGNERS Hague Convention
on the Recognition of Divorce and Legal Separation Foreign divorce
will be recognized in all contracting states if at the date of the
institution of the proceedings: Respondent or petitioner is a
habitual resident or Both spouses were nationals of that state or
If only the petitioner is a national, he should have his habitual
residence there
No law requires Philippine courts to recognize a foreign divorce
between foreigners but it would be recognized under the principle
of comity if not against public policy.
ANNULMENT AND DECLARATION OF NULLITY ANNULMENT / NULLITY grounds
already exist at the time of the celebration of the marriage Two
approaches on the grounds that may be invoked: Follow law of the
place of celebration of the marriage Follow the law of marital
domicile
BEUMER v. AMORESThe Court had already denied a claim for
reimbursement of the value of purchased parcels of Philippine land
instituted by a foreigner against his former Filipina spouse. It
held that the foreigner cannot seek reimbursement on the ground of
equity where it is clear that he willingly and knowingly bought the
property despite the prohibition against foreign ownership of
Philippine land enshrined under Section 7, Art XII of the 1987
Philippine Constitution.
PARENTAL RELATIONS Legitimacy Depends on the personal law of the
father Family Code Arts 163 to 165 Restatement Second: Section 287
Local law of the state where either (a) the parent was domiciled
when the childs status of legitimacy is claimed to have been
created or (b) where the child was domiciled when the parent
acknowledge the child Section 288 incidents of legitimacy created
under foreign law will be determined under same principles as
Section 287 Parental Authority Patria potestas personal law of the
father controls the rights and duties of parents and their children
Includes care and rearing of children, custody, discipline and
chastisement
ADOPTION Legal/Judicial act that creates a relationship similar
to legitimate paternity and filiation Governed by the personal law
of the child RA 8552 Domestic Adoption Act of 1998 Applied to
adoption by foreigners who have resided at least 3 consecutive
years in the PHL Certification of legal capacity to adopt and
allowance of entry of adoptee into the adopters country RA 8043
Inter-Country Adoption Act in compliance with the Hague Convention
on the Protection of Children and Cooperation in Respect of
Inter-Country Adoption Governs adoptions by foreigners ad Filipinos
permanently residing abroad
REPUBLIC v. COURT OF APPEALS FACTS: Hughes is married to Lenita,
a Filipina who was later naturalized as an American citizen. They
filed a petition to adopt the 3 nephews and niece of Lenita, which
was granted.
HELD: Hughes is not qualified to adopt since he does not fall
under the exceptions in Art. 184 of the Family Code. While Lenita,
as a former Filipino, is qualified to adopt under that provision,
the adoption decree still cannot be granted because of the
requirement in Art. 185 that spouses must jointly adopt. They
cannot do this in CAB because Hughes is not qualified under the
law.
EFFECTS OF ADOPTION UGGI LINDAMAND THERKELSEN v. REPUBLIC FACTS:
Therkelsen (a German) and his wife Erlinda (a Filipino), filed a
petition to adopt Erlindas natural child. The application was
denied on the ground that an alien cannot adopt a Filipino unless
the adoption would make the Filipino minor a citizen of the aliens
country.
HELD: The application should be granted. Being a permanent
resident here, Therkelsen is not disqualified to adopt under our
laws; to deny the application on the above stated ground would be
to impose a further requisite on adoptions by aliens beyond those
required by law. The citizenship of the adopter is a matter
political, not civil in nature, and the ways in which it should be
conferred lay outside the ambit of the Civil Code.
NG HIAN v. COLLECTOR OF CUSTOMS FACTS: Marcosa married Ng Chion
Te. She adopted his 2 children by a previous marriage and brought
one of them to the Philippines to study. The child, Ng Hian, was
refused entry into the Philippines.
HELD: Ng Hian may enter the Philippines by virtue of being
adopted by one who has a right to do so. In the case of Ex Parte
Fong Yim, it was held that a Chinese merchant domiciled in the US
has the right to bring into this country with his wife minor
children legally adopted by him in China, where it is shown that
the adoption was bona fide, and that the children have lived as
members of his family and have been supported by him for several
years.
CHOICE OF LAW IN PROPERTY
CONTROLLING LAW Immovable property lex situs Movable property
variable Lex domicilii Lex situs ex loci actus where the
transaction was completed
CAPACITY TO TRANSFER LLANTINO V. CO LIONG CHONG FACTS: The
Llantinos leased real property to Chong, a Chinese national (but
subsequently naturalized as a Filipino), for 60 years. The
Llantinos filed an action to quiet title, claiming that the lease
contract was invalid for circumventing the constitutional
prohibition on the acquisition of land by aliens.
HELD: The lease contract was valid, and Chong had the right to
hold by lease the property involved although at the time of
execution of the contract, he was still a Chinese national. In CAB
there was no option to buy the leased property in favor of Chong.
There is nothing in the record to indicate any scheme to circumvent
the constitutional prohibition.
Aliens are not completely excluded by the Constitution from use
of lands for residential purposes. Since their residence in the
Philippines is temporary, they may be granted temporary rights,
such as a lease contract which is not forbidden in the
Constitution. The only instance where a lease contract may be
considered invalid is where there are circumstances attendant to
its execution which are used as a scheme to circumvent the
constitutional prohibition.
CHEESMAN v. IAC FACTS: Thomas Cheesman (an American) was married
to a Filipina, Criselda. The spouses later separated; but Thomas
brought this action to annul the sale of real property made by
Criselda in favor of Padilla. He alleged that the sale is void for
lack of his consent. The property sold was bought by Criselda using
her personal funds, and was registered in her name only.
HELD: The sale was valid. He has no capacity to question the
sale of the property by his wife on the theory that in doing so he
is merely exercising the prerogative of a husband in respect of
conjugal property. This would permit indirect controversion of the
constitutional prohibition. If the property were to be declared
conjugal, this would accord to the alien husband an interest and
right over the land, which is not granted to him under the
Constitution.
EXCEPTIONS TO THE LEX SITUS RULE Where the transaction does not
affect transfer of title or ownership of the land (lex intentionis
or lex voluntatis)
LILJEDAHL v. GLASSGOW FACTS: Bailey secured a debt payable in
Iowa to Liljedahl; as security, he mortgaged his land in Colorado.
Bailey sold this land to Glassgow, with the provision in the deed
of sale that the grantee agrees to pay the mortgagee. Glassgow sold
the land to a third party. Under Iowa law, Glassgow became bound to
pay the mortgage, but not under Colorado law.
HELD: Iowa law should apply, and Glassgow should pay Liljedahl.
Instruments of conveyance, as they relate primarily to title, are
to be construed according to the law of the situs. But personal
covenants or agreements in instruments of conveyance will be given
effect according to the law of the place where the same is executed
and to be performed.
Where real property is offered by way of security for the
performance of an obligation mortgage would be governed by lex
situs but the loan may be governed by another legal regime Testate
or intestate succession national law of the decedent
SITUS OF PROPERTIES For tax purposes:
ASIATIC PETROLEUM v. CO QUICO It is well to emphasize in this
connection the general proposition that all property within a State
is subject to the jurisdiction of its courts, and they have the
right to adjudicate title thereto, to enforce liens thereupon, and
to subject it to the payment of the debts of its owners, whether
resident or not. The sovereign power may lay hands on any and all
persons and property within its borders, and where, as in our case,
the functions of government are departmentalized, what is within
the reach of executive and legislative action, must also be within
the reach of the judiciary. The modern tendency in this regard is
to make no distinction between mobility and immobility of property
established by the time-honored principles oflex rei
sitaeandmobilia personam sequuntur. We find it neither necessary
nor fruitful to indulge in any characterization as to whether the
present proceedings should be described as thosein remorquasi in
rem. Such characterization is of no legal significance in this
connection. Thesitusof theresis clear no less than the garnishment
of theresat the commencement of the action, and reasonable notice
and opportunity to be heard presumptively had by virtue of the
publication of the summons in accordance with the provisions of
section 398 of the Code of Civil Procedure..
Situs of Money where the money was to be found or paid Situs of
Debts
HARRIS v. BALK FACTS: Harris and Balk are both North Carolina
domiciliaries. Harris owed Balk a sum of money. When he was in
Baltimore he was served a writ of garnishment, it appearing that
Balk has a debtor there. He paid pursuant to the writ, but when he
returned to N. Carolina, Balk sued him for recovery of his
indebtedness. Harris pleaded the recovery of the Maryland
judgment.
HELD: The attachment of Harris debt is valid, and the North
Carolina court should give credit to the Maryland judgment. The
obligation of the debtor to pay his debt clings to and accompanies
him wherever he goes. He is as much bound to pay his debt in a
foreign state when therein sued upon his obligation by his
creditor, as he was in the state where the debt was contracted.
Prof. Beale: this decision did injustice to the creditor, as he
has no power to fix the personal presence of his debtor at one
place or another. It is unjust to submit the creditors claim to the
accident of the debtors presence in one state or another.
What of the original creditors consent? Situs of Shares of
Stock
CIR v. ANGLO CALIFORNIA NATIONAL BANK FACTS: The Collector of
Internal Revenue assessed deficiency income taxes against Calamba
Sugar Estates for the capital gains on the sale of Pampanga Sugar
Mills shares of stock. The sales were conducted in SF, California,
and payments were made there.
HELD: CSE not liable for income tax on the capital gains. The
government cannot impose income taxes on capital gains where the
sale took place outside its territorial JD. Foreign corporations
may be levied income taxes only on income derived from sources
within the Philippines. With respect to capital gains, the place of
the sale (which in CAB is California) is also the place or source
of the capital gain.
PATENTS, TRADEMARKS, TRADE NAME AND COPYRIGHT PHILIPS EXPORT BV
v. COURT OF APPEALS A corporations right to use its corporate and
trade name is a property right, a right in rem, which it may assert
and protect against the world in the same manner as it may protect
its tangible property, real or personal, against trespass or
conversion. It is regarded, to a certain extent, as a property
right and one which cannot be impaired or defeated by subsequent
appropriation by another corporation in the same field.
EMERALD GARMENT MANUFACTURING v. COURT OF APPEALS FACTS: H. D.
Lee Co., a foreign corporation, filed a petition for cancellation
of registration of the trademark Stylistic Mr. Lee used on items of
clothing by Emerald Garments, alleging that it so closely resembled
H. D. Lees trademark as to cause confusion, mistake and deception
on the public as to the origin of the goods.
HELD: A foreign corporation may have the capacity to sue for
infringement irrespective of lack of business activity in the
Philippines on account of Section 21-A of the Trademark Law but the
question of whether they have an exclusive right over their symbol
as to justify issuance of the xxx writ will depend on actual use of
their trademarks in the Philippines.
CHOICE OF LAW CONTRACTS
CONTRACTS WITH A FOREIGN ELEMENT Contract law aims to protect
the reasonable expectations of the parties and to secure the
stability of commercial transactions. PRIL involves contracts that
have one or more foreign elements: the parties are of different
nationalities/domiciles the prestations are to be fulfilled in
different states the place of its execution is different from
parties domiciles and/or the place of its fulfillment and/or situs
of the property subject of the contract
EXTRINSIC VALIDITY OF CONTRACTS Lex loci celebrationis Section 9
of the Restatement Second refers to the formalities which meet the
requirements of the place where the parties executed the
contracts.
Art 17, paragraph 1 of the Philippine Civil Code: The forms and
solemnities of contracts, wills, and other public instruments shall
be governed by the laws of the country in which they are
executed.
Art 17, paragraph 2 When the acts referred to are executed
before the diplomatic or consular officials of the Republic of the
Philippines in a foreign country, the solemnities established by
Philippine laws shall be observed in their execution.
Contracts entered into by letter or telegram Acceptance made by
letter or telegram does not bind the offerer except from the time
it came to his knowledge. The contract, in such a case, is presumed
to have been entered into in the place where the offer was made.
(Art 1319, Civil Code)
INTRINSIC VALIDITY OF CONTRACTS Refers to the nature, content
and effects of the agreement 3 choices when resolving conflict of
laws issue: Law of the place of making (lex loci contractus) Law of
the place of performance (lex loci solutionis) Law intended by the
parties (lex loci intentionis) Art 1306 of the Civil Code
MACMILLAN AND BLOEDEL v. TH VALDERAMA & SONS Facts:
Valderama & Sons, thru an n agent, entered into a contract for
purchase of railroad equipment with Macmillan in Canada. Valderama
failed to get an import license because the Import Control Comm
failed to act on his application. Macmillan suffered damages
because it had to cancel the freight engagement.Held: Lex loci
solutionis applies. The general rule governing the validity &
construction of a contract & the rights and liabilities
thereunder is that the law of the place of performance applies.
In case of conflict in determining validity, nature and
obligation and effect of contract, lex loci solutionis prevails
over lex loci contractus.
The laws of Canada, which is the place of performance, should
apply. The failure of the Import Control Comm. to act on the
application of import license cannot constitute a legal excuse for
his failure to perform his obligations under the contract.
OTHER COL ISSUES IN CONTRACTS CHOICE OF FORUM/VENUE CLAUSES
COMPAGNIE DE COMMERCE v. HAMBURG AMERIKA Facts: Compagnie
(french) and Hamburg (Germany) entered into a charter party to
transport Cs goods from Saigon- Europe. Because of the impending
war between France & Germany, the ship went to Manila because
Saigon is a French port. C filed for breach of contract. H
contested the jurisdiction of Phil courts to try the case because
the contract had a clause directing the settlement of disputes
first to a Board of Arbitration in England.
Held: Phil. courts have jurisdiction. The parties are free to
waive the stipulation if they so desired.Phil courts cannot be
ousted of their jurisdiction by the contractual stipulation in the
absence of averment and proof that under the law of England (place
of contracting), compliance with, or an offer to comply with such a
stipulation constitutes a condition precedent to the institution of
judicial proceeding for the enforcement of the contract.
Besides, Hamburg appeared and answered without objecting to the
courts jurisdiction; it also sought affirmative relief.
KING MAU v. SYCIP Facts: King Mau entered into an agency
agreement with the Sycip in New York. King mau was able to sell
1,000 tons of coconut oil. KM brought an action to collect
commission from the sale. Sycip claimed that the Phil court has no
jurisdiction as the contract was entered in New York.
Held: Phil court has jurisdiction. A non-resident may sue a
resident in the courts of this country where the defendant may be
summoned and his property leviable upon execution in case of a
favorable, if final and executory judgment.
It is a personal action for the collection of a sum of money
which the CFIs have jurisdiction to try and decide.
HSBC v. SHERMAN Facts: HSBC granted Eastern Book Supply an
overdraft secured by the directors of the latter. Eastern failed to
pay. HSBC filed suit in RTC. The defense of the directors is that
Phil courts have no jurisdiction because in the Guarantee
Agreement, it was provided that Singapore shall have jurisdiction
over all disputes arising therein.
Held: Phil courts have jurisdiction. The parties did not
stipulate that only the courts of Singapore, to the exclusion of
all the rest, has jurisdiction. Neither did the clause in question
operate to divest Phil. courts of jurisdiction.
Jurisdiction is defined as the right of a State to exercise
authority over persons and things within its boundaries subject to
certain exceptions. This authority is exclusive within and
throughout the domain of the State.
Stipulation on venue valid unless: Court is required by statute
to entertain Plaintiff cannot secure relief in the other state
Other state is substantially more inconvenient place for trial
Stipulation was secured through misrepresentation, duress, abuse of
economic power or other unconscionable means Other reason that
makes the enforcement of such stipulation unfair or
unreasonable
ARBITRATION CLAUSES PUROMINES, INC. v. CA Facts: Puromines and
Philip Bros. entered into a contract of sale with an arbitration
clause. Puromines filed for complaint in RTC, Manila. Philip Bros.
filed a MTD on the basis of an arbitration clause.
Held: Arbitration clause is valid. Puromines derives its right
from the bill of lading together with the sales contract & it
is bound by the provisions and terms of the bill of lading and of
the arbitration clause incorporated in the sales contract.
The courts will look with favor upon such amicable settlements
(arbitration) and will only interfere with great reluctance to
anticipate or nullify the action of the arbitrator.
THE BREMEN ET AL v. ZAPATA OFF SHORE COMPANY Facts: Zapata, a
Houston company, entered into a contract of towage with Unterweser,
a German corp. Contract contained a forum selection clause which
provides that any dispute arising must be treated before London
courts.
Zapata filed a suit in admiralty against Unterweser for breach
of contract and damages in Florida District Court. Unterweser filed
motion to dismiss for lack of jurisdiction citing the
forum-selection clause.
Held: Florida court has no jurisdiction. As a rule, a forum
clause should control absent a strong showing that it should be set
aside. Court should enforce the forum clause specifically unless
Zapata could clearly show that
a. enforcement would be unreasonable and unjust or b. that the
clause was invalid for such reasons as fraud or overreaching orc.
if enforcement would contravene a strong public policy of the forum
in which suit is brought, whether declared by a statute or by
judicial decision or d. if the chosen forum is seriously
inconvenient for the trial of the action. But if the parties
contemplated the claimed inconvenience, it should not be heard to
render the forum clause unenforceable.
The CAB involves a freely negotiated international commercial
contract between the parties. As noted, selection of a London forum
was clearly a reasonable effort to bring vital certainty to this
intl transaction and to provide a neutral forum experienced and
capable in the resolution of admiralty litigation.
ADHESION CONTRACTS PAN AM WORLD AIRWAYS v. RAPADAS The liability
is limited by the Notice of Baggage liability. Although the ticket
is a contract of adhesion, it does not offend against the policy of
the law forbidding one from contracting against his own negligence.
The one who adheres to the contract is in reality free to reject it
entirely. Court finds the provisions in the plane ticket sufficient
to govern the limitations of liabilities of the airline for loss of
luggage. The passenger, upon receiving his plane ticket, was
expected to be vigilant insofar as his luggage is concerned.
PAL v. CA Although the airway bill is binding between the
parties, the liability of Pal is not limited on the provisions of
the airway bill. While the Warsaw Convention is law in the
Philippines, the Philippines being a signatory thereto, it does not
operate as an exclusive enumeration of the instances when a carrier
shall be liable for breach of contract or as an absolute limit of
the extent of liability nor does it preclude the operation of the
Civil Code or other pertinent laws.
Also, the willful misconduct and insensitivity of the officers
of PAL in not attempting to explain the damage despite due demand
and the unexplained delay in acting on her claim, amounted to bad
faith and renders unquestionable its liability for damages.
SPECIAL CONTRACTS Carriage of Goods by Sea (COGSA)
AMERICAN PRESIDENT LINES LTD. v. KLEPPER Facts: K shipped on
board APLs vessel personal effects. Because of damage to the
effects, K sued APL. CA affirmed CFIs finding of liability but
awarded damages on the basis of the COGSA.
Held: COGSA does not apply but the Civil Code. Art 1753 of the
Civil Code provides that the law of the country to which the goods
are to be transported shall govern the liability of the common
carrier in case of loss, destruction or deterioration. Under Art
1766, "In all matters not regulated by this Code, the rights and
obligations of common carriers shall be governed by the Code of
Commerce and by special laws," and in the Civil Code there are
provisions that govern said rights and obligations. Although
Section 4 (5) of the Carriage of Goods by Sea Act states that the
carrier shall not be liable in an amount exceeding $500 per package
unless the value of the goods had been declared by the shipper and
inserted in the bill of lading, this is merely suppletory to the
provisions of the Civil Code.
CONTRACTS FOR INTERNATIONAL AIR TRANSPORTATION Warsaw Convention
In most cases decided by the Philippine SC involving a carriers
employees negligence, bad faith or improper conduct, the Court
refused to apply the Warsaw Convention.
LOPEZ v. PAN AM Facts: Despite several confirmations, Sen. Lopez
and his family failed to get 1st class seats and were constrained
to board as tourist passengers of PanAm. CFI, Rizal awarded damages
in their favor. Pan Am admitted the breach of contract but not the
finding of bad faith
Held: Pan Am acted in bad faith. Pan Am misled the Lopezes into
believing the reservations were valid and was prompted by
self-interests in dong the same (precluding the Lopezes to secure
other tickets). Also, there was negligence by its employees that
were so gross and reckless as to amount to malice and bad faith,
e.g. erroneous cancellation of reservation, not confirming
reinstatement of reservation, confirming reservation even if EE had
knowledge that they were merely waitlisted and not notifying
Lopezes of the cancellation.
KLM v. CA Facts: Mendozas went on a world tour. KLM issued the
tickets for the whole trip. Their coupon for Aer Lingus was marked
RQ. Thru KLMs help, reservations were made in the Aer Lingus
flight. Upon arrival, only the minors were allowed to board.
Mendoza sued for breach of contract and for damages bec. of the
humiliation they suffered. KLM denied liability on the basis of
Art. 30 of the Warsaw Convention (successive carriers
liability)
HELD: Art. 30 does not apply and KLM should be accountable for
the tortious act of Aer Lingus.Art. 30 presupposes either an
accident or delay and not the situation in CAB. Although the
tickets provide that KLMs liability for damages is limited to
occurrences in its own airlines, this provision was printed in very
small letters such that a magnifying glass is needed to read it. It
would be unfair to charge Mendozas of automatic knowledge and it is
the duty of KLM to inform them of the conditions prescribed in the
tickets or at least make sure that they read them before they
accepted the tickets. This it failed to do.
JURISDICTION UNDER THE WARSAW CONVENTION SANTOS III v. NORTHWEST
Action for damages must be filed in the: Domicile of the carrier
Place of the carriers principal business Place of business where
the contract was made Place of destination
AMERICAN AIRLINES v. COURT OF APPEALS Facts: Mendoza bought
conjunction tickets from Singapore Airlines. Although it was not a
participating airline, AA exchanged the unused portion of the
ticket for a one-way ticket to New York. However, Mendoza was
prevented by AAs security officers from boarding until all the
other passengers have boarded. He sued action for damages against
AA in RTC. AA claimed that the issuance of a new ticket created a
separate contract of carriage from the one with SA and therefore,
under Art. 28, RTC had no jurisdiction over the case against
AA.
Held: RTC had jurisdiction; the new ticket is not considered as
separate from the one issued by SA but the contract of carriage
constitutes a single operation. SA & AA are members of the IATA
and under the general pool partnership agreement they act as agents
of each other in the issuance of tickets to contracted passengers.
When AA exchanged the ticket, it entered it in the IATA clearing
house and undertook to transport M. It thereby assumed the
obligation to take the place of the principal carrier originally
designated and constituted itself as an agent of SA. The number of
tickets issued does not detract from the oneness of the contract of
carriage as long as the parties regard the contract as a single
operation.
OTHER ISSUES ABSENCE OF AN EFFECTIVE CHOICE OF LAW BY THE
PARTIES court should determine the state of most significant
relationship LIMITATIONS TO CHOICE OF LAW IN CONTRACTS Cannot
select a law that has no connection to the transaction or the
parties Must apply the amended law unless the change is so drastic
or revolutionary that it could not have been contemplated by the
parties May not contract away application of laws impressed with
public interest Cognovit clauses are generally disallowed in most
US states, unless parties are of equal power and the debtor agreed
to it voluntarily
CHOICE OF LAW IN WILLS, SUCCESSION AND ADMINISTRATION OF
ESTATES
EXTRINSIC VALIDITY OF WILLS General rule law of the place where
executed Foreigner may choose to follow formalities under his
national law, law of his domicile (if domiciled in RP) or law of
the place of execution of his will Filipinos may choose his
national law or the law of the country where his will is
executed
IN RE ESTATE OF JOHNSON This interpretation is erroneous because
the full phrase another state or country, means that the section
refers to either a State in the US or another country. The
admission of the will to probate by the CFI of Manila under Section
636 was therefore correct. Although the CFI Of Manila most likely
erred in taking judicial notice of Illinois law when it promulgated
that the will was executed in conformity with the laws of Illinois,
Ebba is now precluded to raise this issue because the petition to
annul the probate did not allege the difference between Philippine
Law and Illinois law
Joint wills of Filipinos are void even if executed in a country
where joint wills are allowed. In the case of foreigners whose
national laws do not prohibit joint wills, should their joint will
be allowed probate by a Philippine court?
RULES FOR EXTRINSIC VALIDITY OF WILLS APPLY TO HOLOGRAPHIC WILLS
BABCOCK TEMPLETON v. RIDER BABCOCK FACTS: The will of Jennie Rider
Babcock was executed in California. Babcock Templeton, being the
mother of the three beneficiaries of the will, stressed that the
laws of California should govern the probate since Jennie Rider
Babcock acquired domicile in California. William Rider Babcock
opposes this by stressing that her sister never acquired domicile
in California as her latest domicile was New York.
HELD: Her domicile was California, because even though she later
left California for New York, she never intended to be a New York
domiciliary. The trial court was also correct in admitting the will
for probate under Section 636 of the Code Of Civil Procedure,
because the length of time of her residence in and eventual death
in the Philippines did not result into a loss of her US
citizenship. She never intended to become a Philippine domiciliary,
thus making Section 618 inapplicable to the will she executed
abroad.
INTRINSIC VALIDITY OF WILLS Roman Law national law of the
decedent
CAYETANO v. LEONIDAS FACTS: Upon the death of Adoracion Campos,
her father Hermogenes sought to be declared as owner of the entire
estate as the only compulsory heir. On the other hand, Nenita
Paguia (one of Adoracions sisters) sought the reprobate of the will
executed by Adoracion in the US. When the trial court allowed
probate of the will in the Philippines, Hermogenes raised in issue
that the allowance of the will to probate divested him of his
legitime, because the will preterited him.
HELD: Since the governing law with respect to the amount of
successional rights is the national law of the decedent, the
governing law of Adoracions will is Pennsylvania law. And since
Pennsylvania law does not have a system of legitimes, Hermogenes is
therefore not preterited. Although the Philippines adopt a system
of legitimes as a matter of public policy, such policy does not
extend to the successional rights of foreigners.
WHAT ISSUES ARE USUALLY INVOLVED IN A PROBATE? General Rule: the
probate court can only rule on:1) extrinsic validity2) due
execution3) testamentary capacity4) compliance with requisites or
solemnities prescribed by law
INTERPRETATION OF WILLS Rules of interpretation are to be
governed also by decedents national law. Where terms of the will
are unambiguous, the clear intention of the testator must be
upheld. In case of ambiguity, intent may be inferred from the other
provisions or the testators contemporaneous and subsequent acts, in
light of laws and customs of the state the testator is presumed to
be most familiar. Interpretation that will make the disposition
operative or that will carry out the purpose intended by the
testator will prevail.
REVOCATION Article 829 of the Civil Code A revocation done
outside the Philippines, by a person who does not have his domicile
in this country, is valid when it is done according to the law of
the place where the will was made, or according to the law of the
place in which the testator had his domicile at the time; and if
the revocation takes place in this country, when it is in
accordance with the provisions of this Code.
If done by one with domicile in the Philippines Philippine law
or the law of the place of revocation. Wills are revoked: By
implication of law By some will, codicil or other writing By
burning, tearing, cancelling or obliterating the will
PROBATE Judicial authentication of a will Rule 70, Section 9
grounds for disallowance of a will
SUNTAY v. SUNTAY FACTS: Natividad Billian sought to have the
will (executed in the Philippines) of his husband Jose Suntay
probated. The trial court denied probate because during the course
of the proceedings, the will was lost. Later, her son Silvino filed
a petition for the probate of a will allegedly executed by Suntay
in China. The trial court again denied probate, and was correct in
deciding that way, because there was no proof that:1. the municipal
district court of Amoy, China, is a probate court2. there was a law
of China on procedure in the probate or allowance of wills 3. the
legal requirements for the execution of a valid will in China in
1931 were satisfied4. the order of the municipal district court of
Amoy purports to probate the will
HELD: In the absence of proof that the municipal district court
of Amoy is a probate court and on the Chinese law of procedure in
probate matters, it may be presumed that the proceedings in the
matter of probating or allowing a will in the Chinese courts are
the same as those provided for in our laws on the subject. Because
of this, rules on notice must be followed. Since Silvino did not
cause the notification of the other heirs, this petition must
fall.
VDA. DE PEREZ v. TOLETE FACTS: Each of the Cunanan spouses (Jose
and Evelyn) executed a will in New York containing similar
provisions on the presumption of survivorship. When the entire
family perished in a fire that gutted their home in New York,
Rafael as the named trustee in the will of Jose filed separate
proceedings in New York for the probate of the wills of his brother
and sister-in-law. Later, Salud Perez (mother of Evelyn) filed a
petition for reprobate in Bulacan. Rafael opposed by arguing that
Salud was not an heir as per New York law which must be the law
that should govern the wills as they were executed in New York. In
deciding the matter, the necessary evidence that should be
submitted are: (1) the due execution of the will in accordance with
the foreign laws(2) the testator has his domicile in the foreign
country and not in the Philippines(3) the will has been admitted to
probate in such country(4) the fact that the foreign tribunal is a
probate court(5) the laws of a foreign country on procedure and
allowance of wills.Except for the first and last requirements, the
petitioner submitted all the needed evidence. Salud failed to
submit the 1st and 5th requirement. While the probate of a will is
a special proceeding wherein courts should relax the rules on
evidence, the goal is to receive the best evidence of which the
matter is susceptible before a purported will is probated or denied
probate. Not only that, Salud also failed to notify the heirs of
Jose of the proceedings.
HELD: The rule that the court having jurisdiction over the
reprobate of a will shall "cause notice thereof to be given as in
case of an original will presented for allowance" means that with
regard to notices, the will probated abroad should be treated as if
it were an "original will" or a will that is presented for probate
for the first time. Accordingly, compliance with Sections 3 and 4
of Rule 76, which require publication and notice by mail or
personally to the "known heirs, legatees, and devisees of the
testator resident in the Philippines" and to the executor are
required.
ADMINISTRATION OF ESTATES Duties to manage properties, settle
debts and distribute the residuum to the heirs
TAYAG v. BENGUET CONSOLIDATED INC. FACTS: BCI stocks owned by
the decedent Idonah Slade Perkins were in the possession of the
domiciliary administrator County Trust Company of New York. Later,
the CFI Of Manila named Renato Tayag as the ancillary
administrator. When Tayag obtained a court order for the County
Trust Company to deposit the stocks to him, BCI appealed.
HELD: The appeal must fail. BCI is a Philippine corporation
owing full allegiance and subject to the unrestricted jurisdiction
of local courts. Its shares of stock cannot therefore be considered
in any wise as immune from lawful court orders. The situs of shares
of stock is the place of domicile of the corporation. And since the
power of the ancillary administrator over shares located here is
beyond question, it follows that the stocks should be in the
possession of Tayag.
Succession and administration of estates are governed by
different laws: succession national law administration situs of
property (territorial/JDal)
TRUSTS A right of property, real or personal, held by one party
for the benefit of another May be created by deed during the
lifetime of the settler/creator of the trust or by will Primary
consideration of courts is to carry out the intent of the creator
of the trust Rules governing wills will apply to testamentary
trusts
CHOICE OF LAW IN TORTS AND CRIMES
TRADITIONAL THEORY Lex loci delicti commissi Common Law place
where the last event necessary to make the actor liable occurs
Civil Law place were the tortious conduct is committed
LOUCKS v. STANDARDS OIL CO. Where the tort law of the foreign
state (Massachusetts) is more favorable and does not contravene
policy of the forum (New York); foreign law will be used
MODERN THEORIES Place of Most Significant Relationship
SAUDI ARABIAN AIRLINES v. CA FACTS: Morada was a flight
stewardess of Saudi Airlines. She was involved in an attempted rape
case, which led to her conviction of violation of Islamic laws in
Saudi. The Prince of Makkah ruled that she was wrongfully
convicted. However, she was terminated from her employment by
Saudia.
HELD: The RTC of Manila has JD to try the case, applying the
state of most significant relationship rule. The following contacts
should be considered in using this rule: place where the injury
occurred, place where the conduct causing injury occurred, domicile
or residence or nationality or place of business of the
corporation, and place where the relationship between the parties
is centered.
In CAB, the Philippines had the most significant contacts. The
overall injury occurred in the Philippines, Morada is a resident
and a Filipina national, Saudia is a foreign corporation engaged in
business here, and the relationship of the parties is centered
here.
NAVIDA v. DIZON JR. It is an error on the part of the court when
it dismissed the cases on the ground of lack of jurisdiction on the
mistaken assumption that the cause of action narrated by Navida and
Abella took place abroad and have occurred outside and beyond the
territorial boundaries of the Philippines, i.e. the manufacture of
pesticides, their packaging in the containers, their distribution
through sale other disposition, resulting in their becoming part of
the stream of commerce, and hence, outside the jurisdiction of the
RTCs.
CAB: The cases involved are not criminal cases where
territoriality, or the situs of the act complained of, would be
determinative of jurisdiction and venue for trial of cases. In
personal civil actions, such as claims for payment of damages, the
ROC allow the action to be commenced and tried in the appropriate
court, where any of the plaintiffs or defendants resides, or in the
case of a non-resident defendant, where he may be found, at the
election of the plaintiff.
Interest Analysis consider the relevant concerns of the state in
the case and its interest in having its law applied to the issue
Cavers Principle of Preference extends the benefit of a law in one
state even if there is no such law in the state where the injury
occurs
FOREIGN TORT CLAIMS Tortious liability is personal to the
tortfeasor and follows him where he may be found. Conditions for
enforcement Tort is based on civil liability and not on crime
Enforcement of the foreign tort is not against the public policy of
the forum Judicial machinery of forum is adequate to satisfy the
claim
PRODUCT LIABILITY General rule: May be brought by the victim in
his home state against an out-of-state manufacturer Exception:
ASAHI METAL INDUSTRY CO. v. SUPERIOR CT OF CALIFORNIA
ASAHI METAL v. SUPERIOR COURT OF CALIFORNIAFACTS: Asahi Metal
manufactures tire valve assemblies in Japan and exports them,
including to a Taiwanese company which, in turn, incorporates them
into finished tires sold in the US. The driver of a motorcycle, who
had an accident resulting in injuries to him and death to his
passenger, sued the Taiwanese company. The Taiwanese company filed
a cross-complaint against Asahi.
HELD: The California court has no JD over Asahi Metal. The
constitutional touchstone/test of due process is whether the
defendant purposefully established minimum contacts in the forum
state. And minimum contacts must have a basis in some act by which
the defendant purposefully avails itself of the privilege of
conducting activities within the forum state, thus invoking the
benefits and protections of its laws.
In the CAB, no purposeful availment of the California market on
the part of Asahi. It does not do business in California; has no
office, agents, employees, or property in Cal.; does not advertise
or otherwise solicit business there; and did not create, control,
or employ the distribution system that brought its valves to
California. Action also cannot be maintained in a state that has no
connection to the transaction but was chosen as the forum simply to
avail of favorable laws.
THE ALIEN TORT ACT Grants US district courts original
jurisdiction over civil actions of aliens for a tort committed in
violation of the law of nations or a treaty of the United States
even if committed outside US territory. Based on the theory of
vested rights and on the internalization of international laws on
human rights. Marcos human rights violations cases in the US
Exception: Guinto v. Marcos
GUINTO v. MARCOSFACTS: Guinto and Suarez filed an action for
damages against Marcos in California under the Alien Tort Claims
Act. According to Guinto, Marcos act of seizing their film 100 Days
in September violated their freedom of speech.
HELD: Test to determine when a violation of the law of nations
has occurred there has been a violation by one or more individuals
of those standards, rules or customs a) affecting the relationship
between states or between an individual and a foreign state, and b)
used by those states for their common good and/or dealings inter
se. A violation of the First Amendment right of free speech does
not rise to the level of such universally recognized rights as to
constitute a violation of the law of nations.
The Alien Tort Statute justifies exercise of court JD over
completely foreign tort cases because of the universal evil
exemplified by human rights violations. This is so even though
there are no significant contacts between the courts and the
parties and events nor substantial state interest in the case other
than a general desire for compliance with customary international
law. That is why in order for the Alien Tort Act to apply, there is
a need to establish that the tortious conduct violated an
internationally protected human right.
PHILIPPINE RULE ON FOREIGN TORTS No statute governing
enforcement of claims for foreign torts
TIME v. REYES FACTS: Villegas and Enrile filed a complaint for
damages against Time, Inc. upon an alleged libel arising from a
publication of Time Magazine. Plaintiffs filed their action in CFI
Rizal. But according to the applicable law, they may file the
action only in the place of first publication or in the City of
Manila (since they are public officers).
HELD: The case should be dismissed for improper venue. The only
alternative allowed to the public official is to prosecute in the
place where the offending article was printed and first published;
but in the CAB the alternative was not open to plaintiffs since the
offending publication was not printed in the Philippines.In Time,
Inc., if the court had not characterized the issue as
jurisdictional, and decided the case from a conflicts tort
perspective, it could have taken cognizance of the case following
the most significant relations approach because of the significant
links between the forum and the parties.
DIFFERENCE BETWEEN LIABILITY FOR A TORT AND FOR A
CRIMETORTCRIME
Liability is transitory and personal and may be prosecuted where
the offender may be found
Liability is territorial
Injury is to an individual
Injury is to the State
Purpose of an action is to indemnify victim
Purpose of the action is to punish and reform
EXCEPTIONS TO THE TERRITORIAL PRINCIPLE IN CRIMINAL LIABILITY
Immunity of State officials, diplomatic representatives, etc,
LIANG HUEFENG v. PEOPLE FACTS: Liang, a Chinese working at the
ADB, was charged by a fellow worker with grave oral defamation. The
lower court dismissed the complaint on the ground that Liang is
covered by the immunity provision under the Agreement between ADB
and the Phil. Government.HELD: Liang is not immune from suit. The
immunity under the Agreement is not absolute, and it only extends
to acts done in official capacity. Slandering a person could not
possibly be covered by the immunity agreement because our laws do
not allow the commission of a crime, such as defamation, in the
name of official duty.
Crimes committed on foreign vessels even if within territorial
waters of the coastal state Certain crimes which by law are
punished even if committed abroad
CHOICE OF LAW CORPORATIONS
PERSONAL LAW OF A CORPORATION Place of incorporation ME GRAY v.
INSULAR LUMBER COMPANY Facts: Gray, a stockholder of Insular
(incorporated in NY) filed an action in CFI to compel Insular to
allow him to examine its books. Sec. 77 of NY Stock Corp Law only
gives the right to stockholders owning 3% of the capital stock of
the company. Gray does not own the required shares.
Held: Gray is not entitled to the right to examine the books of
Insular. Gray is bound by the NY law which only gives him the right
to receive from the treasurer of the corporation a statement of
affairs covering a particular account of all its assets and
liabilities. Neither can his rights be granted under common law
absent a showing that: a. he seeks information for an honest
purpose or to protect his interest as stockholderb. he exercises
right in good faith and for a specific and honest purpose not
merely to satisfy curiosity or for speculative or vexatious
purposes.
Right of shareholder to inspect books of a foreign corporation
licensed to do business in the Philippines is governed by foreign
law
BANK OF AUGUSTA v. EARLE FACTS: Bank of A (incorporated in
Georgia), thru MGran bought bills from Earle in Alabama. Bills were
unpaid so Bank sued Earle. TC ruled that the Georgian Bank could
not exercise power in Alabama thereby making the contracts
void.
Held: Bank can exercise its powers in Alabama and the contracts
are therefore valid. It is well-settled that by the law of the
comity of nations, a corp. created by 1 sovereignty is permitted to
make contracts in another and sue in its courts and that the same
law of comity prevails in several States of US including Alabama.
Alabama courts have held that a foreign corp may sue in its courts
based on the comity of nations.
FOUR BASIC (IMPORTANT) THEORIES FROM THE CASE:(1) A corporation
has no legal status beyond the bounds of state where it was
created. (2) It cannot exercise powers beyond its corporate charter
or its personal law. (3) No state is under any obligation to adhere
to the principle of comity. (4) No state is obliged to grant a
foreign corporation rights and privileges granted to its own
citizens.
EXCEPTIONS TO THE INCORPORATION TEST Constitutional and
Statutory Restrictions
PALTING v. SAN JOSE Facts: Palting opposes the tie-up between
San Jose Petroleum (a Panamanian corp.) and San Jose Oil (domestic
corp.) as being violative of the Constitution and the Petroleum
Act. SJP claimed that it is entitled to the Parity Amendment which
grants to US citizens the right to use & exploit natural
resources in the Phils because its stockholders are US
citizens.
Held: SJP is not covered by the Parity Agreement. It is not
owned or controlled directly by US citizens. It is owned by another
Panamanian corp., Oil Investments. Oil Investments on the other
hand is owned by 2 Venezuelan corps. Even assuming that the stocks
of the 2 Venezuelan corps are owned by US citizens, to hold that
the set-up in CAB falls within the Parity Amendment is to unduly
stretch and strain the language and intent of the law. There would
be practical impossibility to determine at any given time the
citizenship of the controlling stock.
Control Test During War FILIPINAS COMPANIA DE SEGUROS v.
CHRISTERN HUENEFELD & CO. Facts: Christern (German Co.) filed a
claim against Filipinas (US Co.) for recovery on fire insurance
policies issued by the latter. F refused to pay claiming that the
policies ceased to be in effect on the date the US declared was
against Germany. Dir. Of Bureau of Financing directed F to pay
C.
Held: The policy ceased to be valid and binding because of the
fact that majority of the stockholders of C are Germans and it
became an enemy corporation when war was declared. Under Phil
Insurance Code, anyone except a public enemy may be insured. C is a
public enemy at the time the insurable risk occurred. But C is
entitled to a return of the premiums paid.
DOMICILE OR RESIDENCE OF FOREIGN CORPORATIONS May acquire a
residence other than its place of incorporation (domicile) Article
51 of Civil Code if the law creating them does not fix the domicile
of juridical persons the same shall be where their legal
representation is established or where they exercise their
principal functions
STATE INVESTMENT HOUSE v. CITIBANK Facts: CMI obtained loans
from Citibank. CMI defaulted. Citibank filed petition for
involuntary insolvency against CMI with CFI, Rizal. State
Investment, a creditor of CMI, opposed claiming that Citibank had
no jurisdiction because the banks are not resident creditors of
CMI.
Held: The Phil branches of the bank are residents of the Phils
being resident foreign corporations as defined in the Tax Code and
other Banking Laws. What effectively makes a foreign corp a
resident corp in the Phils is its actually being in the Phils and
licitly doing business here (locality of existence) The grant of
license merely gives legitimacy to its doing business here but it
does not make the corp a resident. Also, the failure of the bank to
aver categorically that they are residents are not fatal to the
cause of action where it alleged that it is a foreign bank licensed
to do business here.
RIGHT OF FOREIGN CORPORATION TO BRING SUIT HOME INSURANCE CO. v.
EASTERN SHIPPING Facts: Home Insurance was subrogated to the rights
of shippers against eastern Shipping for damages on cargo. Eastern
refused to pay. HI filed action to recover sum of money. TC
dismissed because HI failed to prove capacity to sue.
Held: HI has capacity to sue because at the time the complaints
were filed, it already had a license to conduct insurance business
in the Phils. Insurance contracts are not null and void for lack of
license at the time it was entered into. The Corp. Code is silent
on the status of the said contracts. Also, the object of the law in
requiring registration is to subject the foreign corp. to the JD of
our courts.
ATLANTIC MUTUAL INSURANCE v. CEBU STEVEDORING Facts: Cebu
Stevedoring carried copra for Procter & Gamble. Copra were
insured with AMI. Bec. of damages, AMI sued Cebu Stevedoring. CS
filed a MTD bec. AMI had no capacity to sue. TC ruled that it must
allege that it has a license to be able to sue.
Held: Such allegation is unnecessary. However, AMIs mere
allegation that it is a foreign corp is not sufficient. It must
state WON it is doing business in the Phils bec different rules
attach to the same. If it is engaged in business, it must be
licensed to be able to sue. If not so engaged, the license is not
required and it may sue esp. if it is a single/isolated
transaction.
Facts showing the capacity to sue or be sued of a corporation
must be averred
EXCEPTIONS TO THE LICENSE REQUIREMENT ISOLATED TRANSACTIONS
ACTION TO PROTECT INTELECTUAL PROPERTY AGREEMENTS FULLY TRANSACTED
OUTSIDE THE PHILIPPINES (e.g. marine insurance policies issued by
foreign insurer on cargo shipped by Philippine carrier) ACTION IS
ONLY A COROLLARY DEFENSE TO A SUIT AGAINST IT
WHAT CONSTITUTES DOING BUSINESS Installation of products,
registration of trade name, conduct of training programs,
designation of a distributor (Wang Laboratories Inc v. Mendoza)
Appointment of a local airlines as its sales agent (CIR v. JAL)
CIR v. JALFACTS: JAL was assessed deficiency income tax by CIR
for the sales of its ticketing agent (PAL) in the Phils. JAL
opposed and claimed that as a non-resident foreign corp. it can
only be taxed on income from Phil sources.
HELD: JAL is a resident foreign corporation under the Tax Code.
For a foreign corporation to be regarded as doing business, there
must be a continuity of conduct and intention to establish a
continuous business (i.e. appointment of a local agent) and not a
temporary one. JAL constituted PAL as a local agent to sell tickets
which is the lifeblood of airline tickets, the generation of sales
being its paramount objective.
Series of transactions involving futures trading (Merrill Lynch
case) or licensing of a sales agent that may also be granted loans
(Granger Associates case)
GRANGER v. MICROWAVE SYSTEMSFACTS: Granger (US) sued MSI (Phil)
for recovery of a sum of money. MSI did not pay and claimed that G
had no capacity to sue bec. it was unlicensed.HELD: G had no
capacity to sue because of its being an unlicensed foreign corp
doing business in the Phils. Neither does it fall under the
established exceptions. Granger had the burden of showing that the
finding fell under an exception. The purpose of requiring license
is to enable Phil courts to exercise jurisdiction over them. If the
foreign corp operates here without submitting to our laws by
securing a license, they may not be allowed to invoke our laws for
their protection.
STEELCASE INC. v. DESIGN INTERNATIONAL SELECTIONS According to
the Supreme Court, the following acts shall not be deemed "doing
business" in the Philippines: (a) mere investment as a shareholder
by a foreign entity in domestic corporations duly registered to do
business, and/or the exercise of rights as such investor; (b)
having a nominee director or officer to represent its interest in
such corporation; (c) appointing a representative or distributor
domiciled in the Philippines which transacts business in the
representative's or distributor's own name and account; (d) the
publication of a general advertisement through any print or
broadcast media; (e) maintaining a stock of goods in the
Philippines solely for the purpose of having the same processed by
another entity in the Philippines; (f) consignment by a foreign
entity of equipment with a local company to be used in the
processing of products for export; (g) collecting information in
the Philippines; and (h) performing services auxiliary to an
existing isolated contract of sale which are not on a continuing
basis, such as installing in the Philippines machinery it has
manufactured or exported to the Philippines, servicing the same,
training domestic workers to operate it, and similar incidental
services.Based on this list, the appointment of a distributor in
the Philippines is not sufficient to constitute "doing business"
unless it is under the full control of the foreign corporation. If
the distributor is an independent entity which buys and distributes
products, other than those of the foreign corporation, for its own
name and its own account, the latter cannot be considered to be
doing business in the Philippines.Applying these rules, DISI was
founded in 1979 and is independently owned and managed. In addition
to Steelcase products, DISI also distributed products of other
companies including carpet tiles, relocatable walls and theater
settings. The dealership agreement between Steelcase and DISI had
been described by the owner himself as a buy and sell arrangement.
This clearly belies DISIs assertion that it was a mere conduit
through which Steelcase conducted its business in the country. From
the preceding facts, the only reasonable conclusion that can be
reached is that DISI was an independent contractor, distributing
various products of Steelcase and of other companies, acting in its
own name and for its own account. As a result, Steelcase cannot be
considered to be doing business in the Philippines by its act of
appointing a distributor as it falls under one of the exceptions
under R.A. No. 7042.Although the foreign corporation in this case
was declared to be not doing business in the Philippines, this
case, nonetheless, explicitly declares another exception to the
rule provided in Section 133 of the Corporation Code of the
Philippines that [n]o foreign corporation transacting business in
the Philippines without a license, or its successors or assigns,
shall be permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the Philippines
Following the ruling in this case, a foreign corporation doing
business in the Philippines without a license may maintain suit in
the Philippines against a domestic corporation or person who is
party to a contract as the domestic corporation or person is deemed
estopped from challenging the personality of the foreign
corporation.
BRANCHES OF FOREIGN CORPORATIONS CITIBANK v. SABENIANO
Respondent cannot be deemed to have authorized the use of her
dollar deposits with Citibank-Geneva to liquidate her loans with
petitioner Citibank when she signed the PNs for her loans. As has
been established in the preceding discussion, "Citibank, N.A." can
only refer to the local branches of petitioner Citibank together
with its head office. Unless there is any showing that respondent
understood and expressly agreed to a more far-reaching
interpretation, the reference to Citibank, N.A. cannot be extended
to all other branches of petitioner Citibank all over the world.
Although theoretically, books of the branches form part of the
books of the head office, operationally and practically, each
branch maintains its own books which shall only be later integrated
and balanced with the books of the head office. Thus, it is very
possible to identify and segregate the books of the Philippine
branches of petitioner Citibank from those of Citibank-Geneva, and
to limit the authority granted for application as payment of the
PNs to respondent's deposits in the books of the former.
PDIC v. CITIBANK NA AND BANK OF AMERICA A branch has no separate
legal personality. This Court is of the opinion that the key to the
resolution of this controversy is the relationship of the
Philippine branches ofCitibank and BA to their respectivehead
offices and their otherforeign branches.CAB: Citibank and Bank of
America did not incorporate a separate domestic corporation to
represent its business interests in the Philippines. Their
Philippine branches are merely branches without a separate legal
entity from their parent company.
As held in the case of Sokolott v. National City Bank of New
York: Where a bank maintains branches, each branch becomes a
separate entity with separate books of account. When considered,
with the relation to the parent bank they are not independent
agencies; they are, what their name imports, merely branches, and
are subject to the supervision and control of the parent bank.
SPECIAL CORPORATIONS Religious Societies and the Corporation
Sole Transnational Corporations Issue whether separate existence of
parent company and the subsidiary has been maintained
PARTNERSHIPS Personal law law of its creation or it not
identified by the law creating it where its legal representation is
established or where it exercises its principal functions Conflict
may arise if personal law of partnership does not recognize it as a
separate legal entity and transacts in a jurisdiction where it is
given a separate personality or vice versa
REMEDIAL LAW
ARCILLA v. TEODOROThe certification of non-forum shopping
executed in aforeign country is not covered by Section 24, Rule 132
Rules of Court.The required certification of an officer in the
Foreign Service under Section24 refersonly tothe
documentsenumerated inSection 19(a).Had theCourt intended to
include notarial documents, it should not have specified only the
documents referred to under paragraph (a) of Section
19.Tobeadmissibleforanypurposein Philippine courts, foreign public
documents must be certified by any officer of the Philippine
legation stationed in the country where the documents could be
found or had been executed. However, the Rule basically pertains to
written official acts, or records of the official of the sovereign
authority, official bodies and tribunals, and public officers,
whether of the Philippines, or of a foreign country. It explicitly
refers only to paragraph (a) of Sec. 19. If the rule comprehends to
cover notarial documents, the rule could have included so. What is
important is that the applicant certified before a commissioned
officer clothed with powers to administer oath that she has not and
will not commit forum shopping.Page | 5