Escolar Documentos
Profissional Documentos
Cultura Documentos
DECISION
PARDO, J.:
The case before the Court is a petition for certiorari[1] to annul the following
orders of the National Labor Relations Commission (hereinafter referred to as
NLRC) for having been issued without or with excess jurisdiction and with
grave abuse of discretion:[2]
(1) Order of May 31, 1993.[3] Reversing and setting aside its earlier
resolution of August 28, 1992.[4] The questioned order declared that the NLRC,
not the Philippine Overseas Employment Administration (hereinafter referred
to as POEA), had jurisdiction over private respondents complaint;
(2) Decision of December 15, 1994.[5] Directing petitioners to jointly and
severally pay private respondent twelve thousand and six hundred dollars
(US$12,600.00) representing salaries for the unexpired portion of his contract;
three thousand six hundred dollars (US$3,600.00) as extra four months salary
for the two (2) year period of his contract, three thousand six hundred dollars
(US$3,600.00) as 14th month pay or a total of nineteen thousand and eight
hundred dollars (US$19,800.00) or its peso equivalent and attorneys fees
amounting to ten percent (10%) of the total award; and
(3) Order of March 30, 1995.[6] Denying the motion for reconsideration of
the petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter referred to
as Santos) was an overseas worker employed as a printer at the Mazoon
Printing Press, Sultanate of Oman.Subsequently, in June 1988, he was
directly hired by the Palace Hotel, Beijing, Peoples Republic of China and
later terminated due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as
MHC) and the Manila Hotel International Company, Limited (hereinafter
referred to as MHICL).
When the case was filed in 1990, MHC was still a government-owned and
controlled corporation duly organized and existing under the laws of the
Philippines.
MHICL is a corporation duly organized and existing under the laws of
Hong Kong.[7] MHC is an incorporator of MHICL, owning 50% of its capital
stock.[8]
By virtue of a management agreement[9] with the Palace Hotel (Wang Fu
Company Limited), MHICL[10] trained the personnel and staff of the Palace
Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of
Oman, respondent Santos received a letter dated May 2, 1988 from Mr.
Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr.
Schmidt informed respondent Santos that he was recommended by one
Nestor Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but
with a higher monthly salary and increased benefits. The position was slated
to open on October 1, 1988.[11]
On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his
acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a
ready to sign employment contract to respondent Santos. Mr. Henk advised
respondent Santos that if the contract was acceptable, to return the same to
Mr. Henk in Manila, together with his passport and two additional pictures for
his visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing
Press, effective June 30, 1988, under the pretext that he was needed at home
to help with the familys piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and
acknowledged Mr. Henks letter. Respondent Santos enclosed four (4) signed
copies of the employment contract (dated June 4, 1988) and notified them that
he was going to arrive in Manila during the first week of July 1988.
The employment contract of June 4, 1988 stated that his employment
would commence September 1, 1988 for a period of two years.[12] It provided
for a monthly salary of nine hundred dollars (US$900.00) net of taxes, payable
fourteen (14) times a year.[13]
On June 30, 1988, respondent Santos was deemed resigned from the
Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He
started to work at the Palace Hotel.[14]
Subsequently, respondent Santos signed an amended employment
agreement with the Palace Hotel, effective November 5, 1988. In the contract,
Mr. Shmidt represented the Palace Hotel. The Vice President (Operations and
Development) of petitioner MHICL Miguel D. Cergueda signed the
employment agreement under the word noted.
From June 8 to 29, 1989, respondent Santos was in the Philippines on
vacation leave. He returned to China and reassumed his post on July 17,
1989.
On July 22, 1989, Mr. Shmidts Executive Secretary, a certain Joanna
suggested in a handwritten note that respondent Santos be given one (1)
month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by
letter signed by Mr. Shmidt that his employment at the Palace Hotel print shop
would be terminated due to business reverses brought about by the political
upheaval in China.[15] We quote the letter:[16]
We sincerely regret that a decision like this has to be made, but rest assured this does
in no way reflect your past performance which we found up to our expectations.
Should a turnaround in the business happen, we will contact you directly and give you
priority on future assignment.
For your information, the Print Shop at the Palace Hotel is still not operational and
with a low business outlook, retrenchment in various departments of the hotel is going
on which is a normal management practice to control costs.
When going through the latest performance ratings, please also be advised that his
performance was below average and a Chinese National who is doing his job now
shows a better approach.
In closing, when Mr. Santos received the letter of notice, he hardly showed up for
work but still enjoyed free accommodation/laundry/meals up to the day of his
departure.
SO ORDERED.
On July 23, 1991, petitioners appealed to the NLRC, arguing that the
POEA, not the NLRC had jurisdiction over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating:[20]
WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void
for want of jurisdiction. Complainant is hereby enjoined to file his complaint with the
POEA.
SO ORDERED.
WHEREFORE, finding that the report and recommendations of Arbiter de Vera are
supported by substantial evidence, judgment is hereby rendered, directing the
respondents to jointly and severally pay complainant the following computed
contractual benefits: (1) US$12,600.00 as salaries for the un-expired portion of the
parties contract; (2) US$3,600.00 as extra four (4) months salary for the two (2) years
period (sic) of the parties contract; (3) US$3,600.00 as 14th month pay for the
aforesaid two (2) years contract stipulated by the parties or a total of US$19,800.00 or
its peso equivalent, plus (4) attorneys fees of 10% of complainants total award.
SO ORDERED.
On February 2, 1995, petitioners filed a motion for reconsideration arguing
that Labor Arbiter de Veras recommendation had no basis in law and in fact.[28]
On March 30, 1995, the NLRC denied the motion for reconsideration.[29]
Hence, this petition.[30]
On October 9, 1995, petitioners filed with this Court an urgent motion for
the issuance of a temporary restraining order and/or writ of preliminary
injunction and a motion for the annulment of the entry of judgment of the
NLRC dated July 31, 1995.[31]
On November 20, 1995, the Court denied petitioners urgent motion. The
Court required respondents to file their respective comments, without giving
due course to the petition.[32]
On March 8, 1996, the Solicitor General filed a manifestation stating that
after going over the petition and its annexes, they can not defend and sustain
the position taken by the NLRC in its assailed decision and orders. The
Solicitor General prayed that he be excused from filing a comment on behalf
of the NLRC[33]
On April 30,1996, private respondent Santos filed his comment.[34]
On June 26, 1996, the Court granted the manifestation of the Solicitor
General and required the NLRC to file its own comment to the petition.[35]
On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
Even if we assume two things: (1) that the NLRC had jurisdiction over the
case, and (2) that MHICL was liable for Santos retrenchment, still MHC, as a
separate and distinct juridical entity cannot be held liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its
capital stock. However, this is not enough to pierce the veil of corporate fiction
between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to
when the corporate fiction is used to defeat public convenience, justify wrong,
protect fraud or defend a crime.[41] It is done only when a corporation is a mere
alter ego or business conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals,[42] we held that the mere
ownership by a single stockholder or by another corporation of all or nearly all
of the capital stock of a corporation is not of itself a sufficient reason for
disregarding the fiction of separate corporate personalities.
The tests in determining whether the corporate veil may be pierced
are: First, the defendant must have control or complete domination of the
other corporations finances, policy and business practices with regard to the
transaction attacked. There must be proof that the other corporation had no
separate mind, will or existence with respect the act complained of.Second,
control must be used by the defendant to commit fraud or wrong. Third, the
aforesaid control or breach of duty must be the proximate cause of the injury
or loss complained of.The absence of any of the elements prevents the
piercing of the corporate veil.[43]
It is basic that a corporation has a personality separate and distinct from
those composing it as well as from that of any other legal entity to which it
may be related.[44] Clear and convincing evidence is needed to pierce the veil
of corporate fiction.[45] In this case, we find no evidence to show that MHICL
and MHC are one and the same entity.
III. MHICL not Liable
MHICL did not have and did not exercise any of the aforementioned
powers. It did not select respondent Santos as an employee for the Palace
Hotel. He was referred to the Palace Hotel by his friend, Nestor
Buenio. MHICL did not engage respondent Santos to work. The terms of
employment were negotiated and finalized through correspondence between
respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and
representatives of the Palace Hotel and not MHICL. Neither did respondent
Santos adduce any proof that MHICL had the power to control his
conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL
that terminated respondent Santos services.
Neither is there evidence to suggest that MHICL was a labor-only
contractor.[52] There is no proof that MHICL supplied respondent Santos or
even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL
are one and the same entity. The fact that the Palace Hotel is a member of
the Manila Hotel Group is notenough to pierce the corporate veil between
MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving legality of strikes and lockouts; and
WHEREFORE, the Court hereby GRANTS the petition for certiorari and
ANNULS the orders and resolutions of the National Labor Relations
Commission dated May 31, 1993, December 15, 1994 and March 30, 1995 in
NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
SO ORDERED.
1. The only link that the Philippines has in this case is the fact that
Santos is a Filipino;
2. However, the Palace Hotel and MHIL are foreign corporations – MHC
cannot be held liable because it merely owns 50% of MHIL, it has no
direct business in the affairs of the Palace Hotel. The veil of corporate
fiction can’t be pierced because it was not shown that MHC is directly
managing the affairs of MHIL. Hence, they are separate entities.
3. Santos’ contract with the Palace Hotel was not entered into in the
Philippines;
4. Santos’ contract was entered into without the intervention of the POEA
(had POEA intervened, NLRC still does not have jurisdiction because
it will be the POEA which will hear the case);
5. MHIL and the Palace Hotel are not doing business in the Philippines;
their agents/officers are not residents of the Philippines;
Due to the foregoing, the NLRC cannot possibly determine all the
relevant facts pertaining to the case. It is not competent to determine
the facts because the acts complained of happened outside our
jurisdiction. It cannot determine which law is applicable. And in case a
judgment is rendered, it cannot be enforced against the Palace Hotel
(in the first place, it was not served any summons).
The Supreme Court emphasized that under the rule of forum non
conveniens, a Philippine court or agency may assume jurisdiction over
the case if it chooses to do so provided:
(1) that the Philippine court is one to which the parties may
conveniently resort to;
(2) that the Philippine court is in a position to make an intelligent
decision as to the law and the facts; and
(3) that the Philippine court has or is likely to have power to enforce its
decision.
None of the above conditions are apparent in the case at bar.
DECISION
TORRES, JR., J.:
engaged ASPAC as its exclusive representative in the Philippines for the sale
of ITECs products, in consideration of which, ASPAC was paid a stipulated
commission. The agreement was signed by G.A. Clark and Francisco S.
Aguirre, presidents of ITEC and ASPAC respectively, for and in behalf of their
companies. The said agreement was initially for a term of twenty-four
[2]
months. After the lapse of the agreed period, the agreement was renewed for
another twenty-four months.
Through a License Agreement entered into by the same parties on
[3]
November 10, 1988, ASPAC was able to incorporate and use the name ITEC
in its own name. Thus, ASPAC Multi-Trade, Inc. became legally and publicly
known as ASPAC-ITEC (Philippines).
By virtue of said contracts, ASPAC sold electronic products, exported by
ITEC, to their sole customer, the Philippine Long Distance Telephone
Company, (PLDT, for brevity).
To facilitate their transactions, ASPAC, dealing under its new appellation,
and PLDT executed a document entitled PLDT-ASPAC/ITEC
PROTOCOL which defined the project details for the supply of ITECs
[4]
with the Regional Trial Court of Makati, Branch 134 by ITEC, INC. Plaintiff
sought to enjoin, first, preliminarily and then, after trial, permanently; (1)
defendants DIGITAL, CMDI, and Francisco Aguirre and their agents and
business associates, to cease and desist from selling or attempting to sell to
PLDT and to any other party, products which have been copied or
manufactured in like manner, similar or identical to the products, wares and
equipment of plaintiff, and (2) defendant ASPAC, to cease and desist from
using in its corporate name, letter heads, envelopes, sign boards and
business dealings, plaintiffs trademark, internationally known as ITEC; and the
recovery from defendants in solidum, damages of at least P500,000.00,
attorneys fees and litigation expenses.
In due time, defendants filed a motion to dismiss the complaint on the
[7]
amendment of the complaint and asked the court to consider in toto their
motion to dismiss and their supplemental motion as their answer to the
amended complaint.
After conducting hearings on the prayer for preliminary injunction, the
court a quo on February 22, 1991, issued its Order: (1) denying the motion to
[10]
dismiss for being devoid of legal merit with a rejection of both grounds relied
upon by the defendants in their motion to dismiss, and (2) directing the
issuance of a writ of preliminary injunction on the same day.
From the foregoing order, petitioners elevated the case to the respondent
Court of Appeals on a Petition for Certiorari and Prohibition under Rule 65 of
[11]
the Revised Rules of Court, assailing and seeking the nullification and the
setting aside of the Order and the Writ of Preliminary Injunction issued by the
Regional Trial Court.
The respondent appellate court stated, thus:
We find no reason whether in law or from the facts of record, to disagree with the
(lower courts) ruling. We therefore are unable to find in respondent Judges issuance of
said writ the grave abuse of discretion ascribed thereto by the petitioners.
In fine, We find that the petition prima facie does not show that Certiorari lies in the
present case and therefore, the petition does not deserve to be given due course.
WHEREFORE, the present petition should be, as it is hereby, denied due course and
accordingly, is hereby dismissed. Costs against the petitioners.
SO ORDERED." [12]
Petitioners filed a motion for reconsideration on June 7, 1991, which was
[13]
SO ORDERED." [14]
Petitioners are now before us via Petition for Review on Certiorari under [15]
2.1 Sale of ITEC products shall be at the purchase price set by ITEC from time to
time. Unless otherwise expressly agreed to in writing by ITEC the purchase price is
net to ITEC and does not include any transportation charges, import charges or taxes
into or within the Territory. All orders from customers are subject to formal
acceptance by ITEC at its Huntsville, Alabama U.S.A. facility.
3.1.1. Not represent or offer for sale within the Territory any product which competes
with an existing ITEC product or any product which ITEC has under active
development.
3.1.2. Actively solicit all potential customers within the Territory in a systematic and
businesslike manner.
3.1.3. Inform ITEC of all request for proposals, requests for bids, invitations to bid
and the like within the Territory.
3.1.4. Attain the Annual Sales Goal for the Territory established by ITEC. The Sales
Goals for the first 24 months is set forth on Attachment two (2) hereto. The Sales
Goal for additional twelve month periods, if any, shall be sent to the Sales Agent by
ITEC at the beginning of each period. These Sales Goals shall be incorporated into
this Agreement and made a part hereof.
a. While petitioner ASPAC was the authorized exclusive representative for three (3)
years, it solicited from and closed several sales for and on behalf of private
respondents as to their products only and no other, to PLDT, worth no less than US
$15 Million (p. 20, tsn, Feb. 18, 1991);
b. Contract No. 1 (Exhibit for Petitioners) which covered these sales and identified by
private respondents sole witness, Mr. Clarence Long, is not in the name of petitioner
ASPAC as such representative, but in the name of private respondent ITEC, INC. (p.
20, tsn, Feb. 18, 1991);
Petitioners contend that the above acts or activities belie the supposed
independence of petitioner ASPAC from private respondents. The unrebutted
evidence on record below for the petitioners likewise reveal the continuous
character of doing business in the Philippines by private respondents based
on the standards laid down by this Court in Wang Laboratories, Inc. vs. Hon.
Rafael T. Mendoza, et al. and again in TOP-WELD. (supra) It thus appears
[19]
that as the respondent Court of Appeals and the trial courts failure to give
credence on the grounds relied upon in support of their Motion to Dismiss that
petitioners ascribe grave abuse of discretion amounting to an excess of
jurisdiction of said courts.
Petitioners likewise argue that since private respondents have no capacity
to bring suit here, the Philippines is not the most convenient forum because
the trial court is devoid of any power to enforce its orders issued or decisions
rendered in a case that could not have been commenced to begin with, such
that in insisting to assume and exercise jurisdiction over the case below, the
trial court had gravely abused its discretion and even actually exceeded its
jurisdiction.
As against petitioners insistence that private respondent is doing business
in the Philippines, the latter maintains that it is not.
We can discern from a reading of Section 1 (f) (1) and 1 (f) (2) of the Rules
and Regulations Implementing the Omnibus Investments Code of 1987, the
following:
(1) A foreign firm is deemed not engaged in business in the Philippines if it transacts
business through middlemen, acting in their own names, such as indebtors,
commercial bookers or commercial merchants.
(2) A foreign corporation is deemed not doing business if its representative domiciled
in the Philippines has an independent status in that it transacts business in its name
and for its account.
[20]
4.1. As complete consideration and payment for acting as representative under this
Agreement, REPRESENTATIVE shall receive a sales commission equivalent to a
percentum of the FOB value of all ITEC equipment sold to customers within the
territory as a direct result of REPRESENTATIVEs sales efforts. [21]
The issues before us now are whether or not private respondent ITEC is
an unlicensed corporation doing business in the Philippines, and if it is,
whether or not this fact bars it from invoking the injunctive authority of our
courts.
Considering the above, it is necessary to state what is meant by doing
business in the Philippines. Section 133 of the Corporation Code, provides
that No foreign corporation, transacting business in the Philippines without a
license, or its successors or assigns, shall be permitted to maintain or
intervene in any action, suit or proceeding in any court or administrative
agency of the Philippines; but such corporation may be sued or proceeded
against before Philippine Courts or administrative tribunals on any valid cause
of action recognized under Philippine laws. [24]
the law is that it was never the purpose of the legislature to exclude a foreign
corporation which happens to obtain an isolated order for business from the
Philippines, and thus, in effect, to permit persons to avoid their contracts
made with such foreign corporations. [29]
soliciting orders, purchases, service contracts, opening offices, whether called liaison
offices or branches; appointing representatives or distributors who are domiciled in
the Philippines or who in any calendar year stay in the Philippines for a period or
periods totaling one hundred eighty (180) days or more; participating in the
management, supervision or control of any domestic business firm, entity or
corporation in the Philippines, and any other act or acts that imply a continuity or
commercial dealings or arrangements and contemplate to that extent the performance
of acts or works, or the exercise of some of the functions normally incident to, and in
progressive prosecution of, commercial gain or of the purpose and object of the
business organization.
In Georg Grotjahn GMBH and Co. vs. Isnani, it was held that the
[35]
chagrin over this commonly used scheme of defaulting local companies which
are being sued by unlicensed foreign companies not engaged in business in
the Philippines to invoke the lack of capacity to sue of such foreign
companies. Obviously, the same ploy is resorted to by ASPAC to prevent the
injunctive action filed by ITEC to enjoin petitioner from using knowledge
possibly acquired in violation of fiduciary arrangements between the parties.
By entering into the Representative Agreement with ITEC, Petitioner is
charged with knowledge that ITEC was not licensed to engage in business
activities in the country, and is thus estopped from raising in defense such
incapacity of ITEC, having chosen to ignore or even presumptively take
advantage of the same.
In Top-Weld, we ruled that a foreign corporation may be exempted from
the license requirement in order to institute an action in our courts if its
representative in the country maintained an independent status during the
existence of the disputed contract. Petitioner is deemed to have acceded to
such independent character when it entered into the Representative
Agreement with ITEC, particularly, provision 6.2 (supra).
Petitioners insistence on the dismissal of this action due to the application,
or non application, of the private international law rule of forum non
conveniens defies well-settled rules of fair play. According to petitioner, the
Philippine Court has no venue to apply its discretion whether to give
cognizance or not to the present action, because it has not acquired
jurisdiction over the person of the plaintiff in the case, the latter allegedly
having no personality to sue before Philippine Courts. This argument is
misplaced because the court has already acquired jurisdiction over the plaintiff
in the suit, by virtue of his filing the original complaint. And as we have already
observed, petitioner are not at liberty to question plaintiffs standing to sue,
having already acceded to the same by virtue of its entry into the
Representative Agreement referred to earlier.
Thus, having acquired jurisdiction, it is now for the Philippine Court, based
on the facts of the case, whether to give due course to the suit or dismiss it,
on the principle of forum non conveniens. Hence, the Philippine Court may
[47]
The aforesaid requirements having been met, and in view of the courts
disposition to give due course to the questioned action, the matter of the
present forum not being the most convenient as a ground for the suits
dismissal, deserves scant consideration.
IN VIEW OF THE FOREGOING PREMISES, the instant Petition is hereby
DISMISSED. The decision of the Court of Appeals dated June 7, 1991,
upholding the RTC Order dated February 22, 1991, denying the petitioners
Motion to Dismiss, and ordering the issuance of the Writ of Preliminary
Injunction is hereby affirmed in toto.
SO ORDERED.
Regalado (Chairman), Romero, Puno, and Mendoza, JJ., concur.
COMMUNICATION
MATERIALS VS. CA
MARCH 28, 2013 ~ VBDIAZ
ISSUE:
1. Did the Philippine court acquire jurisdiction over the person
of the petitioner corp, despite allegations of lack of capacity to
sue because of non-registration?
2. Can the Philippine court give due course to the suit or dismiss
it, on the principle of forum non convenience?
HELD: petition dismissed.
1. YES; We are persuaded to conclude that ITEC had been
“engaged in” or “doing business” in the Philippines for some
time now. This is the inevitable result after a scrutiny of the
different contracts and agreements entered into by ITEC with its
various business contacts in the country. Its arrangements, with
these entities indicate convincingly that ITEC is actively
engaging in business in the country.
DECISION
MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign judgment upon
the rights of the parties under the same cause of action asserted in a case in our local
court.Petitioners brought this case in the Regional Trial Court of Makati, Branch 56,
which, in view of the pendency at the time of the foreign action, dismissed Civil Case
No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On
appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans
from petitioners Ayala International Finance Limited (hereafter called AYALA) [1] and
Philsec Investment Corporation (hereafter called PHILSEC) in the sum of
US$2,500,000.00, secured by shares of stock owned by Ducat with a market value
of P14,088,995.00. In order to facilitate the payment of the loans, private respondent
1488, Inc., through its president, private respondent Drago Daic, assumed Ducats
obligation under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a
Warranty Deed with Vendors Lien by which it sold to petitioner Athona Holdings, N.V.
(hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for
US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in the
amount of US$2,500,000.00 as initial payment of the purchase price. The balance of
US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in
favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488,
Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to
1488, Inc. all the shares of stock in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire
amount covered by the note became due and demandable. Accordingly, on October 17,
1985, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA
in the United States for payment of the balance of US$307,209.02 and for damages for
breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting
the marketability of the shares of stock delivered to 1488, Inc. under the
Agreement. Originally instituted in the United States District Court of Texas, 165th
Judicial District, where it was docketed as Case No. 85-57746, the venue of the action
was later transferred to the United States District Court for the Southern District of
Texas, where 1488, Inc. filed an amended complaint, reiterating its allegations in the
original complaint. ATHONA filed an answer with counterclaim, impleading private
respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly
appraised the property, was later dropped as counterdefendant. ATHONA sought the
recovery of damages and excess payment allegedly made to 1488, Inc. and, in the
alternative, the rescission of sale of the property. For their part, PHILSEC and AYALA
filed a motion to dismiss on the ground of lack of jurisdiction over their person, but, as
their motion was denied, they later filed a joint answer with counterclaim against private
respondents and Edgardo V. Guevarra, PHILSECs own former president, for the
rescission of the sale on the ground that the property had been overvalued. On March
13, 1990, the United States District Court for the Southern District of Texas dismissed
the counterclaim against Edgardo V. Guevarra on the ground that it was frivolous and
[was] brought against him simply to humiliate and embarrass him. For this reason, the
U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered
them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States,
petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary
Attachment against private respondents in the Regional Trial Court of Makati, where it
was docketed as Civil Case No. 16563. The complaint reiterated the allegation of
petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United
States District Court of Southern Texas that private respondents committed fraud by
selling the property at a price 400 percent more than its true value of US$800,000.00.
Petitioners claimed that, as a result of private respondents fraudulent
misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the
Agreement and to purchase the Houston property. Petitioners prayed that private
respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00
and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary
attachment against the real and personal properties of private respondents. [2]
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of
(1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the
U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to
state a cause of action. Ducat contended that the alleged overpricing of the property
prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which
were not parties to the sale and whose only participation was to extend financial
accommodation to ATHONA under a separate loan agreement. On the other hand,
private respondents 1488, Inc. and its president Daic filed a joint Special Appearance
and Qualified Motion to Dismiss, contending that the action being in personam,
extraterritorial service of summons by publication was ineffectual and did not vest the
court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and
Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducats motion to dismiss, stating that
the evidentiary requirements of the controversy may be more suitably tried before the
forum of the litis pendentia in the U.S., under the principle in private international law
of forum non conveniens, even as it noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daics motion to
dismiss. On March 9, 1988, the trial court[3] granted the motion to dismiss filed by 1488,
Inc. and Daic on the ground of litis pendentia considering that
the main factual element of the cause of action in this case which is the validity of
the sale of real property in the United States between defendant 1488 and plaintiff
ATHONA is the subject matter of the pending case in the United States District
Court which, under the doctrine of forum non conveniens, is the better (if not
exclusive) forum to litigate matters needed to determine the assessment and/or
fluctuations of the fair market value of real estate situated in Houston, Texas,
U.S.A. from the date of the transaction in 1983 up to the present and verily, . . .
(emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they
were non-residents and the action was not an action in rem or quasi in rem, so that
extraterritorial service of summons was ineffective. The trial court subsequently lifted
the writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and
Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in
applying the principle of litis pendentia and forum non conveniens and in ruling that it
had no jurisdiction over the defendants, despite the previous attachment of shares of
stocks belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals[4] affirmed the dismissal of Civil Case No.
16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants
are Philsec, the Ayala International Finance Ltd. (BPI-IFLs former name) and the
Athona Holdings, NV. The case at bar involves the same parties. The transaction sued
upon by the parties, in both cases is the Warranty Deed executed by and between
Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the
promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed
by herein appellants, on the marketability of Ducats securities given in exchange for
the Texas property. The recovery of a sum of money and damages, for fraud
purportedly committed by appellees, in overpricing the Texas land, constitute the
action before the Philippine court, which likewise stems from the same Warranty
Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for
the recovery of a sum of money for alleged tortious acts, so that service of summons by
publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago
Daic. The dismissal of Civil Case No. 16563 on the ground of forum non
conveniens was likewise affirmed by the Court of Appeals on the ground that the case
can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve
foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas,
U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the
buyer, Athona Holdings, a foreign corporation which does not claim to be doing
business in the Philippines, is wholly owned by Philsec, a domestic corporation,
Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the
Warranty Deed was executed in Texas, U.S.A.
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the
title to the thing;
On the plaintiffs claim in its Opposition that the causes of action of this case
and the pending case in the United States are not identical, precisely the Order
of January 26, 1988 never found that the causes of action of this case and the
case pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners action is
barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of
the U.S. court over their persons, but their claim was brushed aside by both the trial
court and the Court of Appeals.[13]
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition
for the enforcement of judgment in the Regional Trial Court of Makati, where it was
docketed as Civil Case No. 92-1070 and assigned to Branch 134, although the
proceedings were suspended because of the pendency of this case. To sustain the
appellate courts ruling that the foreign judgment constitutes res judicata and is a bar to
the claim of petitioners would effectively preclude petitioners from repelling the
judgment in the case for enforcement. An absurdity could then arise: a foreign judgment
is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to
resist a claim as in this case, but it may be opposed by the defendant if the foreign
judgment is sought to be enforced against him in a separate proceeding. This is plainly
untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction
where affirmative relief is being sought. Hence, in the interest of justice, the
complaint should be considered as a petition for the recognition of the
Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in order that
the defendant, private respondent herein, may present evidence of lack of jurisdiction,
notice, collusion, fraud or clear mistake of fact and law, if applicable. [14]
Accordingly, to insure the orderly administration of justice, this case and Civil Case
No. 92-1070 should be consolidated.[15] After all, the two have been filed in the Regional
Trial Court of Makati, albeit in different salas, this case being assigned to Branch 56
(Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch 134
of Judge Ignacio Capulong.In such proceedings, petitioners should have the burden of
impeaching the foreign judgment and only in the event they succeed in doing so may
they proceed with their action against private respondents.
Second. Nor is the trial courts refusal to take cognizance of the case justifiable
under the principle of forum non conveniens. First, a motion to dismiss is limited to the
grounds under Rule 16, 1, which does not include forum non conveniens.[16] The
propriety of dismissing a case based on this principle requires a factual determination,
hence, it is more properly considered a matter of defense. Second, while it is within the
discretion of the trial court to abstain from assuming jurisdiction on this ground, it should
do so only after vital facts are established, to determine whether special circumstances
require the courts desistance.[17]
In this case, the trial court abstained from taking jurisdiction solely on the basis of
the pleadings filed by private respondents in connection with the motion to dismiss. It
failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one
of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the
latters debt which was the object of the transaction under litigation. The trial court
arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S.
case.
Third. It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action
in personam and summons were served by extraterritorial service. Rule 14, 17 on
extraterritorial service provides that service of summons on a non-resident defendant
may be effected out of the Philippines by leave of Court where, among others, the
property of the defendant has been attached within the Philippines.[18] It is not disputed
that the properties, real and personal, of the private respondents had been attached
prior to service of summons under the Order of the trial court dated April 20, 1987.[19]
Fourth. As for the temporary restraining order issued by the Court on June 29,
1994, to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V.
Guevarra to enforce so-called Rule 11 sanctions imposed on the petitioners by the U.S.
court, the Court finds that the judgment sought to be enforced is severable from the
main judgment under consideration in Civil Case No. 16563. The separability of
Guevarras claim is not only admitted by petitioners,[20] it appears from the pleadings that
petitioners only belatedly impleaded Guevarra as defendant in Civil Case No.
16563.[21] Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to
proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case
No. 16563 is REMANDED to the Regional Trial Court of Makati for consolidation with
Civil Case No. 92-1070 and for further proceedings in accordance with this
decision. The temporary restraining order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.
MEDIALDEA, J.:
A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by
petitioner Hongkong and Shanghai Banking Corporation (hereinafter
referred to as petitioner BANK) against private respondents Jack Robert
Sherman and Deodato Reloj, docketed as Civil Case No. Q-42850 before
the Regional Trial Court of Quezon City, Branch 84.
It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd.
(hereinafter referred to as COMPANY), a company incorporated in
Singapore applied with, and was granted by, the Singapore branch of
petitioner BANK an overdraft facility in the maximum amount of Singapore
dollars 200,000.00 (which amount was subsequently increased to
Singapore dollars 375,000.00) with interest at 3% over petitioner BANK
prime rate, payable monthly, on amounts due under said overdraft facility;
as a security for the repayment by the COMPANY of sums advanced by
petitioner BANK to it through the aforesaid overdraft facility, on October 7,
1982, both private respondents and a certain Robin de Clive Lowe, all of
whom were directors of the COMPANY at such time, executed a Joint and
Several Guarantee (p. 53, Rollo) in favor of petitioner BANK whereby
private respondents and Lowe agreed to pay, jointly and severally, on
demand all sums owed by the COMPANY to petitioner BANK under the
aforestated overdraft facility.
SO ORDERED.
SO ORDERED.
The motion for reconsideration was denied (p. 38, Rollo), hence, the
present petition.
The main issue is whether or not Philippine courts have jurisdiction over the
suit.
While it is true that "the transaction took place in Singaporean setting" and
that the Joint and Several Guarantee contains a choice-of-forum clause,
the very essence of due process dictates that the stipulation that "[t]his
guarantee and all rights, obligations and liabilities arising hereunder shall
be construed and determined under and may be enforced in accordance
with the laws of the Republic of Singapore. We hereby agree that the
Courts in Singapore shall have jurisdiction over all disputes arising under
this guarantee" be liberally construed. One basic principle underlies all
rules of jurisdiction in International Law: a State does not have jurisdiction
in the absence of some reasonable basis for exercising it, whether the
proceedings are in rem quasi in rem or in personam. To be reasonable, the
jurisdiction must be based on some minimum contacts that will not offend
traditional notions of fair play and substantial justice (J. Salonga, Private
International Law, 1981, p. 46). Indeed, as pointed-out by petitioner BANK
at the outset, the instant case presents a very odd situation. In the ordinary
habits of life, anyone would be disinclined to litigate before a foreign
tribunal, with more reason as a defendant. However, in this case, private
respondents are Philippine residents (a fact which was not disputed by
them) who would rather face a complaint against them before a foreign
court and in the process incur considerable expenses, not to mention
inconvenience, than to have a Philippine court try and resolve the case.
Private respondents' stance is hardly comprehensible, unless their ultimate
intent is to evade, or at least delay, the payment of a just obligation.
The defense of private respondents that the complaint should have been
filed in Singapore is based merely on technicality. They did not even claim,
much less prove, that the filing of the action here will cause them any
unnecessary trouble, damage, or expense. On the other hand, there is no
showing that petitioner BANK filed the action here just to harass private
respondents.
In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October
31, 1969, 30 SCRA 187, it was ruled:
This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v.
Lagamon, etc., et al., G.R. No. 57250, October 30, 1981, 108 SCRA 740,
where the stipulation was "[i]n case of litigation, jurisdiction shall be vested
in the Court of Davao City." We held:
Anent the claim that Davao City had been stipulated as the
venue, suffice it to say that a stipulation as to venue does not
preclude the filing of suits in the residence of plaintiff or
defendant under Section 2 (b), Rule 4, Rules of Court, in the
absence of qualifying or restrictive words in the agreement
which would indicate that the place named is the only venue
agreed upon by the parties.
Applying the foregoing to the case at bar, the parties did not thereby
stipulate that only the courts of Singapore, to the exclusion of all the rest,
has jurisdiction. Neither did the clause in question operate to divest
Philippine courts of jurisdiction. In International Law, jurisdiction is often
defined as the light of a State to exercise authority over persons and things
within its boundaries subject to certain exceptions. Thus, a State does not
assume jurisdiction over travelling sovereigns, ambassadors and diplomatic
representatives of other States, and foreign military units stationed in or
marching through State territory with the permission of the latter's
authorities. This authority, which finds its source in the concept of
sovereignty, is exclusive within and throughout the domain of the State. A
State is competent to take hold of any judicial matter it sees fit by making
its courts and agencies assume jurisdiction over all kinds of cases brought
before them (J. Salonga, Private International Law, 1981, pp. 37-38). lâwphî1.ñèt
As regards the issue on improper venue, petitioner BANK avers that the
objection to improper venue has been waived. However, We agree with the
ruling of the respondent Court that:
At any rate, this issue is now of no moment because We hold that venue
here was properly laid for the same reasons discussed above.
SO ORDERED.
**
NOTES:
The respondent IAC likewise ruled that:
… In a conflict problem, a court will simply refuse to
entertain the case if it is not authorized by law to exercise
jurisdiction. And even if it is so authorized, it may still
refuse to entertain the case by applying the principle of
forum non conveniens. …
However, whether a suit should be entertained or
dismissed on the basis of the principle of forum non
conveniens depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial
court. Thus, the IAC should not have relied on such
principle.
LABRADOR, J.:
3. I declare ... that I have but ONE (1) child, named MARIA LUCY
CHRISTENSEN (now Mrs. Bernard Daney), who was born in the
Philippines about twenty-eight years ago, and who is now residing at
No. 665 Rodger Young Village, Los Angeles, California, U.S.A.
4. I further declare that I now have no living ascendants, and no
descendants except my above named daughter, MARIA LUCY
CHRISTENSEN DANEY.
The court below ruled that as Edward E. Christensen was a citizen of the
United States and of the State of California at the time of his death, the
successional rights and intrinsic validity of the provisions in his will are to
be governed by the law of California, in accordance with which a testator
has the right to dispose of his property in the way he desires, because the
right of absolute dominion over his property is sacred and inviolable (In re
McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re
Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record on
Appeal). Oppositor Maria Helen Christensen, through counsel, filed various
motions for reconsideration, but these were denied. Hence, this appeal.
II
III
THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT
UNDER INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI
DOCTRINE, THE INTRINSIC VALIDITY OF THE TESTAMENTARY
DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE
DECEASED EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY
THE LAWS OF THE PHILIPPINES.
IV
The law that governs the validity of his testamentary dispositions is defined
in Article 16 of the Civil Code of the Philippines, which is as follows:
The application of this article in the case at bar requires the determination
of the meaning of the term "national law"is used therein.
There is no single American law governing the validity of testamentary
provisions in the United States, each state of the Union having its own
private law applicable to its citizens only and in force only within the state.
The "national law" indicated in Article 16 of the Civil Code above quoted
can not, therefore, possibly mean or apply to any general American law. So
it can refer to no other than the private law of the State of California.
The next question is: What is the law in California governing the disposition
of personal property? The decision of the court below, sustains the
contention of the executor-appellee that under the California Probate Code,
a testator may dispose of his property by will in the form and manner he
desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P.
2d 952. But appellant invokes the provisions of Article 946 of the Civil Code
of California, which is as follows:
The theory of doctrine of renvoi has been defined by various authors, thus:
The problem has been stated in this way: "When the Conflict of Laws
rule of the forum refers a jural matter to a foreign law for decision, is
the reference to the purely internal rules of law of the foreign system;
i.e., to the totality of the foreign law minus its Conflict of Laws rules?"
On logic, the solution is not an easy one. The Michigan court chose to
accept the renvoi, that is, applied the Conflict of Laws rule of Illinois
which referred the matter back to Michigan law. But once having
determined the the Conflict of Laws principle is the rule looked to, it is
difficult to see why the reference back should not have been to
Michigan Conflict of Laws. This would have resulted in the "endless
chain of references" which has so often been criticized be legal
writers. The opponents of the renvoi would have looked merely to the
internal law of Illinois, thus rejecting the renvoi or the reference back.
Yet there seems no compelling logical reason why the original
reference should be the internal law rather than to the Conflict of
Laws rule. It is true that such a solution avoids going on a merry-go-
round, but those who have accepted the renvoi theory avoid
this inextricabilis circulas by getting off at the second reference and at
that point applying internal law. Perhaps the opponents of
the renvoi are a bit more consistent for they look always to internal
law as the rule of reference.
The scope of the theory of renvoi has also been defined and the reasons
for its application in a country explained by Prof. Lorenzen in an article in
the Yale Law Journal, Vol. 27, 1917-1918, pp. 529-531. The pertinent parts
of the article are quoted herein below:
The recognition of the renvoi theory implies that the rules of the
conflict of laws are to be understood as incorporating not only the
ordinary or internal law of the foreign state or country, but its rules of
the conflict of laws as well. According to this theory 'the law of a
country' means the whole of its law.
(1) Every court shall observe the law of its country as regards the
application of foreign laws.
(2) Provided that no express provision to the contrary exists, the court
shall respect:
If, for example, the English law directs its judge to distribute the
personal estate of an Englishman who has died domiciled in Belgium
in accordance with the law of his domicile, he must first inquire
whether the law of Belgium would distribute personal property upon
death in accordance with the law of domicile, and if he finds that the
Belgian law would make the distribution in accordance with the law of
nationality — that is the English law — he must accept this reference
back to his own law.
We note that Article 946 of the California Civil Code is its conflict of laws
rule, while the rule applied in In re Kaufman, Supra, its internal law. If the
law on succession and the conflict of laws rules of California are to be
enforced jointly, each in its own intended and appropriate sphere, the
principle cited In re Kaufman should apply to citizens living in the State, but
Article 946 should apply to such of its citizens as are not domiciled in
California but in other jurisdictions. The rule laid down of resorting to the
law of the domicile in the determination of matters with foreign element
involved is in accord with the general principle of American law that the
domiciliary law should govern in most matters or rights which follow the
person of the owner.
Appellees argue that what Article 16 of the Civil Code of the Philippines
pointed out as the national law is the internal law of California. But as
above explained the laws of California have prescribed two sets of laws for
its citizens, one for residents therein and another for those domiciled in
other jurisdictions. Reason demands that We should enforce the California
internal law prescribed for its citizens residing therein, and enforce the
conflict of laws rules for the citizens domiciled abroad. If we must enforce
the law of California as in comity we are bound to go, as so declared in
Article 16 of our Civil Code, then we must enforce the law of California in
accordance with the express mandate thereof and as above explained, i.e.,
apply the internal law for residents therein, and its conflict-of-laws rule for
those domiciled abroad.
It is argued on appellees' behalf that the clause "if there is no law to the
contrary in the place where the property is situated" in Sec. 946 of the
California Civil Code refers to Article 16 of the Civil Code of the Philippines
and that the law to the contrary in the Philippines is the provision in said
Article 16 that the national law of the deceased should govern. This
contention can not be sustained. As explained in the various authorities
cited above the national law mentioned in Article 16 of our Civil Code is the
law on conflict of laws in the California Civil Code, i.e., Article 946, which
authorizes the reference or return of the question to the law of the testator's
domicile. The conflict of laws rule in California, Article 946, Civil Code,
precisely refers back the case, when a decedent is not domiciled in
California, to the law of his domicile, the Philippines in the case at bar. The
court of the domicile can not and should not refer the case back to
California; such action would leave the issue incapable of determination
because the case will then be like a football, tossed back and forth between
the two states, between the country of which the decedent was a citizen
and the country of his domicile. The Philippine court must apply its own law
as directed in the conflict of laws rule of the state of the decedent, if the
question has to be decided, especially as the application of the internal law
of California provides no legitime for children while the Philippine law, Arts.
887(4) and 894, Civil Code of the Philippines, makes natural children
legally acknowledged forced heirs of the parent recognizing them.
The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs.
Palmaroli, 40 Phil. 105; Miciano vs. Brimo, 50 Phil. 867; Babcock
Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs. Government, 59
Phil. 293.) cited by appellees to support the decision can not possibly apply
in the case at bar, for two important reasons, i.e., the subject in each case
does not appear to be a citizen of a state in the United States but with
domicile in the Philippines, and it does not appear in each case that there
exists in the state of which the subject is a citizen, a law similar to or
identical with Art. 946 of the California Civil Code.
FACTS:
Edward E. Christensen, though born in New York, migrated to California, where
he resided and consequently was considered a California citizen. In 1913, he
came to the Philippines where he became a domiciliary until his death. However,
during the entire period of his residence in this country he had always considered
himself a citizen of California. In his will executed on March 5, 1951, he instituted
an acknowledged natural daughter, Maria Lucy Christensen as his only heir, but
left a legacy of sum of money in favor of Helen Christensen Garcia who was
rendered to have been declared acknowledged natural daughter. Counsel for
appellant claims that California law should be applied; that under California law,
the matter is referred back to the law of the domicile; that therefore Philippine law
is ultimately applicable; that finally, the share of Helen must be increased in view
of the success ional rights of illegitimate children under Philippine law. On the
other hand, counsel for the heir of Christensen contends that inasmuch as it is
clear that under Article 16 of our Civil Code, the national law of the deceased
must apply, our courts must immediately apply the internal law of California on
the matter; that under California law there are no compulsory heirs and
consequently a testator could dispose of any property possessed by him in
absolute dominion and that finally, illegitimate children not being entitled to
anything and his will remain undisturbed.
ISSUE:
Whether or not the Philippine law should prevail in administering the estate of
Christensen?
RULING:
The court in deciding to grant more successional rights to Helen said in effect
that there are two rules in California on the matter: the internal law which should
apply to Californians domiciled in California; and the conflict rule which should
apply to Californians domiciled outside of California. The California conflict rule
says: “If there is no law to the contrary in the place where personal property is
situated, is deemed to follow the person of its owner and is governed by the law
of his domicile.” Christensen being domiciled outside California, the law of his
domicile, the Philippines, ought to be followed. Where it is referred back to
California, it will form a circular pattern referring to both country back and forth.
STATEMENT
August 16, 1922, the plaintiff filed a complaint in the Court of First Instance
against the defendant in which after formal pleas, he alleges:
III. That on the 5th day of May, 1922, in the Supreme Court of
Hongkong, the same being a court of competent jurisdiction and
having jurisdiction over both the plaintiff and the defendant in a
certain action wherein the plaintiff herein was plaintiff and the
defendant here was defendant, a final judgment was rendered in
favor of the plaintiff and against defendant a duly certified transcript of
which said judgment is hereto attached, marked Exhibit A.
IV. That the said judgment has not been reversed or modified and still
in full force and effect.
V. That on the 30th day of June, 1922, costs were duly taxed and
allowed in the said Supreme Court of Hongkong in favor of plaintiff
and against the defendant in the sum of twenty-six thousand two
hundred and forty-four and 23/100 dollars ($26,244.23), Hongkong
currency, as appears by the certificate of the registrar of the said
Supreme Court of Hongkong, hereto attached and made a part
hereof.
VI. That demand has been made by plaintiff upon defendant for the
payment of the said sum of twenty-six thousand two hundred and
forty-four and 23/100 dollars ($26,244.23), Hongkong currency, but
the defendant has failed and refused and still fails and refuses to pay
plaintiff the said sum or any part thereof.
VII. That the equivalent of the said sum of twenty-six thousand two
hundred and forty-four and 23/100 dollars ($26,244.23), Hongkong
currency, on the said 30th day of June, 1922, was thirty-one
thousand ninety-nine pesos and forty-one centavos (P31,099.41),
Philippine currency.
Wherefore, he prays judgment for that amount, with legal interest, and for
such other and further relief as may seem just and equitable.
For amended answer, the defendant denies each and every allegation of
the complaint, and, as a separate special defense, alleges that the
judgment in question should be considered in connection with the decision
of the Supreme Court of Hongkong, a copy of which is attached to and
made a part of the answer, marked Exhibit 1. That the decision and
judgment of that court were rendered and entered as a result of a clear
mistake of law and fact.
That at all times said C. Ingenohl mentioned therein was the gestor of the
said Syndicat Oriente and plaintiff in this action.
That based upon the claim of the plaintiff for himself and as gestor and
agent of the Syndicat Oriente, in the year 1921, the plaintiff collected and
received from the Alien Property Custodian of the United States, the
purchase price of the property mentioned and described in this answer and
counterclaim and thereby ratified and confirmed the sale and conveyance
of the property to the defendant to all intents and purposes, the same as if
the sale had originally been made by plaintiff to the defendant.
That by virtue of the fact that the plaintiff took and accepted the purchase
price for the sale of the property, he thereby ratified and confirmed the
peaceable possession and enjoyment and the use of the property,
including said trade-marks and trade names, the same is he had personally
made the sale.
9. That on or about the 28th of May, 1919, the said trade-marks and
trade names known as "La Perla del Oriente" and "El Cometa del
Oriente" were duly registered at Shanghai in the name of the
defendant corporation for all of China with the exception of the colony
of Hongkong, which is British territory and where separate registration
proceedings were and are required; that by virtue of said registration
and by virtue of the sale under said trade-marks and trade names of
the cigars manufactured in said factory by the plaintiff previous to
said conveyance and by the defendant as his successor in interest
thereafter, the latter acquired the sole and exclusive right to the use
of said trade-marks and trade names in all of China.
That at the time the plaintiff accepted the proceeds of the sale, he well
knew that the Property Custodian intended to and did sell and convey to
the defendant, and that the defendant believed that it acquired and did
acquire the exclusive right to the use of said trade-marks and trade names
in said markets, and that the said trade-marks and trade names had been
duly registered at Shanghai for all of China in the name of the corporation,
and that at the time he accepted such proceeds, the plaintiff well knew that
the defendant ever since the purchase of the property was selling the
product of said factory under trade-marks and trade names in all of said
markets. That plaintiff also knew the value of them at the time of the sale
was P1,000,000, and that said trade-marks and trade names evidenced
P1,000,000 of the purchase price of the, property. That after obtaining the
proceeds of the sale, the plaintiff wrongfully instituted the said action in the
Supreme Court of the colony of Hongkong, resulting in the rendition of the
judgment in question. That at the time it was rendered the Hongkong court
had before it and under consideration the deed of conveyance executed by
the Property Custodian to the defendant and facsimiles of the trade-marks
and trade names and the admission of the plaintiff that he had received the
proceeds of the sale from the Property Custodian. That notwithstanding
such facts, the Hongkong court decided in effect that the language
"wheresoever situate in the Philippine Islands" was a limitation upon the
goodwill and right to the use of said trade-marks and trade names to the
Philippine Islands, whereas in truth and in fact, as the plaintiff well knew at
the time of said conveyance, almost the entire output of the factory in the
City of Manila was exported and sold outside of the Philippine Islands, and
that the intention of said conveyance was to convey the right to the use of
said trade-marks and trade names outside of the Philippine Islands, and
that plaintiff willfully concealed and withheld said facts from the Hongkong
court, and induced it to hold in effect that the right to the use of said trade-
marks was limited by the conveyance to the Philippine Islands. The trade-
marks in question are then specifically described.
That at the trial in the Hongkong court it appeared that between the years
1882 and 1905, "El Oriente Fabrica de Tabacos Sociedad Anonima,"
hereinafter referred to as "Sociedad Anonima," carried on a business as
manufacturers of cigars and cigarettes in Manila, Philippine Islands, and in
connection with the cigars manufactured therein, made use of the trade-
marks and trade names, which are in dispute in this action. That on
November 28, 1905, the "Sociedad Anonima," being then in liquidation,
sold all of its business interests and assets in the Philippine Islands with its
goodwill and trade-marks, including those in dispute here, to the plaintiff as
a gestor of a joint association consisting of the plaintiff and others, which
was known as the Syndicat Oriente, and carried on its business in the
Philippine Islands under the style of "EL Oriente Fabrica de Tabacos, C.
Ingenohl, Manila." That in the year 1908 the Syndicat Oriente opened the
Hongkong factory, as a branch or agency, for the manufacture and sale in
Hongkong of cigars which were made of the tobacco supplied by "El
Oriente Fabrica de Tabacos" in the Philippine Islands, and which bore the
trade-marks in dispute in this action. That such trade-marks were
registered in the Philippine Islands in the years 1884 and 1887 as the
property of the said "Sociedad Anonima," and such registration was
renewed in the year 1902. That in the year 1903 they were registered on
the Hongkong register of trade-marks as the property of the "Sociedad
Anonima." That about April, 1906, the assignment of the said trade-marks
to "El Oriente Fabrica de Tabacos" was registered in the Philippine Islands,
and in February, 1910, they were assigned on the Hongkong register with
the knowledge and authority and by direction of the plaintiff, to the name of
said Syndicat Oriente under its name and style of "El Oriente Fabrica de
Tabacos, C. Ingenohl, Manila," as proprietor. That on March 13, 1917, the
plaintiff renewed the registration of such trade-marks on the Hongkong
register for a further period of fourteen years from the 15th of April, 1917, in
the same name, to wit: "El Oriente Fabrica de Tabacos, C. Ingenohl,
Manila," as proprietor. That such trade-marks and trade names were
inseparably connected and identified with the cigars manufactured in the
Manila factory, and that the Hongkong factory had no right to the use of
them, except as a branch of the Manila factory, and that the use of them by
the Hongkong factory after conveyance to the defendant constitutes a false
representation and fraud upon the public purchasing such cigars, and upon
this defendant in particular. That under the laws of Great Britain, United
States and the Philippine Islands, trade-marks and trade names, such as
those in dispute, belong to and follow the product of the factory with which
they are identified, and the use of them upon the products of any other
factory constitutes a fraud upon the public. That under such laws the
acceptance by the former owner of the proceeds of the sale amounts to a
ratification of the sale to all intents and purposes, the same as if the sale
had been made by the owner himself, and that as construed by the laws of
Great Britain, United States and the Philippine Islands, the deed of
conveyance was not reasonably susceptible to the interpretation placed
upon it by the Hongkong court, to the effect that the goodwill and right to
the use of the trade-marks and trade names were limited to the Philippine
Islands.
Upon such issues the parties entered into the following agreed statement of
facts:
3. That the defendant Walter E. Olsen & Co., Inc., appeared and was
represented by counsel in the Supreme Court of Hongkong in the
action in which the said judgment (Exhibit A) was rendered;
4. That the defendant has refused to pay to the plaintiff the amount of
the said judgment, to wit, the sum of twenty-six thousand two
hundred forty-four and 23/100 dollars ($26,244.23), Hongkong
currency, equivalent to thirty-one thousand ninety-nine pesos and
forty-one centavos (P31,099.41), Philippine currency;
5. That Exhibit 1 attached to defendant's amended answer and
counterclaim is a true copy of the decision of the Supreme Court of
Hongkong, upon which the judgment referred to in the third
paragraph of plaintiff's complaint was based;
8. That as a result of the claim made therefor, the said plaintiff for
himself and as "Gerant" and general representative of the said
Syndicat Oriente, on the 13th day of December, 1920, and 28th day
of March, 1921, collected and received from the Alien Property
Custodian of the United States, the sum of $1,511,124.50, United
States currency, being the equivalent with interest of the purchase
price of the property described in said Deed of Transfer and paid to
said Alien Property Custodian by the defendant corporation, and the
said plaintiff then and there issued to the said Alien Property
Custodian of the United States two receipts, copies of which marked
Exhibits C and D are hereto attached and made a part hereof; that
neither the plaintiff nor the Syndicat Oriente has at any time either
orally or in writing ratified, consented to or agreed to the action of the
Alien Property Custodian in selling the property described in the said
Deed of Transfer, other than as may be deducted from the action of
the said plaintiff in making claim for and receiving the proceeds of the
sale of the said property, and the plaintiff reserves the right to
contend and does contend that such action on his part did not and
does not constitute a ratification of said sale;
10. That at the time of rendering the decision and entering the
judgment (Exhibit A), the said Supreme Court of Hongkong had
before it and under consideration said Deed of Transfer executed by
the Alien Property Custodian in favor of the defendant corporation
and facsimiles of the trade-marks and trade names under which the
output of both the Manila cigar factory and the Hongkong factory
hereinafter mentioned had been sold in Hongkong and the other
markets mentioned, and had also before it and under consideration
the admission of the plaintiff that he had received the proceeds of
said sale by the Alien Property Custodian to the defendant
corporation as evidenced by said Deed of Transfer. That said action
in Hongkong was instituted on the 9th day of October, 1919;
15. That if further appeared upon the trial of said action in the said
Supreme Court of Hongkong and it is stipulated to be true, that
between the years 1882 and 1905, "El Oriente Fabrica de Tabacos
Sociedad Anonima" (hereinafter referred to as the "Sociedad
Anonima") carried on business as manufacturers of cigars and
cigarettes at Manila, Philippine Islands, and made use in connection
with the sale of its output through the Far East of Trade the marks
which are in dispute in this action. That the head office of the said
"Sociedad Anonima" was at Antwerp, Belgium;
16. That on or about the 21st day of April, 1906, the said "Soceidad
Anonima," being then in liquidation, transferred all of its business
interests and assets together with the goodwill thereof and trade-
marks and trade names of said "Sociedad Anonima" wherever in use
(including the trade-marks and trade names in dispute in this action),
to the plaintiff. That said transfer was effected by means of an
instrument, in writing, a copy of which is hereto attached marked
Exhibit J. That plaintiff, as "Gerant" of said Syndicat Oriente which
had been organized in the meantime for that purpose, carried on
business in the Philippine Islands and throughout the Far East under
the style of "El Fabrica de Tabacos, C. Ingenohl, Manila" (hereinafter
referred to as "El Oriente Fabrica de Tabacos");
17. That in the year 1908 the plaintiff, as "Gerant" of said Syndicat
Oriente, opened the said Hongkong factory for the manufacture and
sale of cigars which were composed, in part, of tobacco supplied by
"El Oriente Fabrica de Tabacos" in the Philippine Islands, and, in
part, of tobacco wrapper imported from Java. That subsequent to the
establishment of the said Hongkong factory its output was sold
throughout the Far East (except in the Philippine Islands)
concurrently with the output of the Manila factory under the trade-
marks and trade names in question, except that one of the outside
labels of each box or package containing the output of the said
Hongkong factory there appeared the words "El Oriente Fabrica de
Tabacos Hongkong, Sucursal de la Fabrica en Manila." That a
facsimile of one of said covering labels marked Exhibit 1 is hereto
attached and made a part hereof;
18. That the only factory belonging to the said "Sociedad Anonima" of
Antwerp as the Manila factory, and the only factory belonging to the
plaintiff personally or as "Gerant" of the Syndicat Oriente was the said
Manila factory up until the time of the establishment of the said
Hongkong factory, and thereafter the only factories owned by the
plaintiff of the said Syndicat Oriente were the said Manila and
Hongkong factories;
19. That the said trade-marks which are in dispute in this action were
registered in the Philippine Islands in the years 1884-1887 as the
property of the said "Sociedad Anonima" and the registration thereof
in the Philippine Islands of said property was renewed in the year
1902;
20. That the said trade-marks were subsequently in the year 1903
registered on the Hongkong Register of Trade-Marks as the property
of the said "Sociedad Anonima;"
21. That on or about April, 1906, the assignment of the said trade-
marks to "El Oriente Fabrica de Tabacos" was registered in the
Philippine Islands and in February, 1910, said trade-marks were
assigned on the Hongkong register with the knowledge and authority
and by direction of the plaintiff to the name of the said Syndicat under
its said style of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila"
as the proprietor of the said trade-marks;
22. That for many years prior to the sale by the Alien Property
Custodian of the said trade-marks and trade names, the same were
registered in various countries as follows:
There is but one American registration and that is of "El Cometa del
Oriente," "Carl Ingenohl," giving his address at Antwerp and also
conducting business under the trade name of "El Oriente Fabrica de
Tabacos at 124 San Pedro Street, Manila, Philippine Islands;"
The registration for Java and Sumatra reads "El Oriente Fabrica de
Tabacos, C. Ingenohl;"
23. That the said plaintiff on the 13th day of March, 1917, renewed
the registration of the said trade-marks on the Hongkong register for
a further period of fourteen years from the 15th of April, 1917, in the
name of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila,"
Proprietor;
24. That from the time of the establishment of said factory in Manila
by the plaintiff, until the present time, approximately 95 per cent of the
output thereof has been exported;
25. That on or about the 28th day of May, 1919, the said trade-marks
and trade names known as "La Perla del Oriente" and "El Cometa del
Oriente" were registered at Shanghai in the name of the defendant
corporation for all of China, with the exception of the colony of
Hongkong which is British territory and where separate registration
proceedings were and are required. The plaintiff had no knowledge of
the registration of the said trade-marks at Shanghai until requested
by the defendant to enter into this stipulation of facts, and the plaintiff
does not concede the validity of the said registration nor waive his
right to take any action with respect thereto which he may deem
suitable or proper;
The said trade-marks and trade names have been registered in the
name of said Syndicat Oriente under its said style of "El Oriente
Fabrica de Tabacos, C. Ingenohl, Manila" at the Shanghai
Customhouse since January, 1907;
27. That the plaintiff at the time of the acceptance from the Alien
Property Custodian of the proceeds of the sale of said property knew
that the defendant corporation had been, ever since the purchase of
said property, selling the product of said factory under said trade-
marks and trade names in all of said markets hereinbefore
mentioned;
28. The proceeds obtained by the Alien Property Custodian from the
sale made by him as aforesaid were received by the plaintiff after the
commencement of the action resulting in the judgment sued on
herein, but prior to the rendition of the said judgment;
29. That the jurisdiction of the said Supreme Court of Hongkong was
and is limited to the colony of Hongkong;
30. That ever since the rendition of said judgment by the said
Supreme Court of Hongkong, the plaintiff through its solicitors,
agents, and representatives has been and still is causing to be
inserted in the leading newspapers of China, the Federated Malay
States, and the Straits Settlements articles notifying the public of the
rendition of said judgment, asserting the plaintiff's exclusive right to
the use of said trade-marks and trade names in said countries, and
threatening to take legal proceedings against any person, firm, or
corporation having in their possession for sale, cigars bearing the
said trade-marks and trade names which are not manufactured by the
plaintiff in said Hongkong factory, and also causing notices of the
same character to be given to the dealers in said countries in the
cigars manufactured by defendant in said factory at Manila and sold
in said countries under said trade-marks and trade names;
31. That all of the articles published in newspapers of the various
countries mentioned and the notices given to the dealers in
defendant's cigars were in substantially the same form; that Exhibit 3
of defendant's amended answer is a copy of a notice which the
plaintiff caused to be published in the Singapore Free Press on July
11, 1922, and that Exhibit 4 of the same answer is a true copy of a
notice which the plaintiff caused to be published in the North China
Daily News at Shanghai on July 3, 1922, and Exhibit 5 of the same
answer is a true copy of a personal notice which the plaintiff caused
to be given to one of the dealers in defendant's cigars dated August
22, 1922.
The foregoing admissions of fact are made on the part of plaintiff with
the following reservations:
(c) That the facts set forth in the said paragraphs 6 to 31,
inclusive, are incompetent, irrelevant and immaterial as
evidence in this case.
2. That the admission of facts set forth in the said paragraphs 6 to 31,
inclusive, are made for the purposes of this case only, and are not to
be used against the plaintiff or defendant for any other purpose or on
any other occasion.
Based thereon and the other evidence in the case, the lower court
rendered judgment for the plaintiff for the full amount of his claim, with
interest at the rate of 6 per cent per annum from August 16, 1922, and
costs, from which the defendant appeals, making the following assignments
of error:
I. The trial court erred in failing to find that the decision of the
Supreme Court of Hongkong and the judgment which are the basis of
plaintiff's complaint in this action were rendered and entered as a
result of a clear mistake of law and of fact.
II. The trial court erred in rendering judgment in favor of the plaintiff
and against the defendant corporation for the amount claimed in the
complaint.
III. The trial court erred in failing to find and to take into consideration
that the Alien Property Custodian of the United States in selling the
Manila Cigar Factory with its goodwill, trade-marks and trade names,
acted as the trustee of the plaintiff, and that the letter by applying for
and accepting from the said Alien Property Custodian the proceeds of
such sale, ratified the same and thereby estopped himself from
denying the defendant's right to the use of said trade-marks and trade
names on the exported output of said cigar factory.
IV. The trial court erred in failing to find and take into consideration
that the business of the Manila Cigar Factory was almost exclusively
an export business, and that the transfer of the goodwill thereof
necessarily carried with it the transfer of said export business and of
the trade-marks and trade names which could not be disconnected
therefrom.
V. The trial court erred in finding and holding that the intention of the
Alien Property Custodian as evidenced by his deed of transfer to the
defendant corporation of January 25, 1919, was to limit the
conveyance to the property and rights of the Syndicat Oriente in the
Philippine Islands and in concluding from such finding and holding
that the defendant corporation was not entitled to recover under its
counterclaim.
JOHNS, J.:
The important questions on this appeal are, first, the construction which
should be placed upon the conveyance of the United States Alien Property
Custodian to the defendant; second, the legal force and effect of the
judgment which was rendered by the Hongkong court; and, third, whether
or not the defendant has sustained any damages for which it can recover in
this action.
The conveyance in question was made on the 25th of January, 1919, and,
among other things, recites:
All the singular the property, real and personal, rights, claims, titles,
interests, effects and assets of every kind and description whatsoever
(except only as specifically reserved and excepted hereinafter),
whatsoever situate in the Philippine Islands, and all incidents and
appurtenances thereto, including the business as going concern and
the goodwill, trade names and trade-marks thereof, of Syndicat
Oriente, a company formed under the laws of Belgium with its
registered office in Antwerp, Belgium, and heretofore doing business
in the Philippine Islands under the name "El Oriente, Fabrica de
Tabacos, C. Ingenohl; etc." Then follows a long description of certain
lands in the Philippine Islands, after which, the conveyance then
recites:
Neither the United States nor the Alien Property Custodian nor any
representative or agent or agency thereof shall be held or admitted to
make any representation or guaranty, express or implied, concerning,
or in any way respecting the above property or business.
It appears that the property in question was seized and taken over by the
United States under the terms and provisions of the Trading with the
Enemy Act, and that it was sold and conveyed to the defendant under such
provisions at the agreed purchase price of P2,350,000, and that the
Syndicat Oriente was a company organized under the laws of Belgium with
its registered office in Antwerp, and that it was an enemy of the United
States, as defined in said Act, not holding a license granted by the
President under said Trading with the Enemy Act, "which the President
after investigation has determined was so owing, or so belonged, or was so
held."
At the sale the defendant was the highest and best bidder and paid the
amount of its bid, in consideration of which the deed in question was
executed.
For the purpose of this opinion, we must assume that as a war measure,
the Government of the United States had a legal right to seize and sell the
property, and that the conveyance which it made was valid. That fact is not
and cannot be questioned. It follows that the property sold was owned and
held by an alien enemy.
The primary purpose of the proceeding was to seize, sell and convey any
and all of the property owned and held by the company or Ingenohl within
the jurisdiction of the United States, as a war measure, upon the ground
that they were alien enemies of the United States. While ostensibly the
corporation in question was organized under the laws of Belgium, yet in
truth and in fact it was a one-man corporation in which Ingenohl, who was a
citizen of Germany, owned nearly all of the stock, and to all intents and
purposes was the corporation itself. The conveyance to the defendant must
be construed in the light of the existing and surrounding circumstances,
and the purpose and intent for which it was made.
The remaining question then is, what property did the plaintiff or his
company have within the jurisdiction of the United States, and what
property did the United States seize and convey to the defendant.
The deed to the defendant recites that it conveyed all and singular property
of every kind, nature and description wheresoever situate in the Philippine
Islands, and all incidents and appurtenances thereto, including the
business as a going concern and the goodwill, trade-marks and trade
names of the company doing business in the Philippine Islands under the
name of "El Oriente Fabrica de Tabacos, C. Ingenohl."
It will be noted that nothing whatever is said about trade names or trade-
marks in such reservations. If it was not the purpose and intent of the
conveyance to sell and convey any and all of the trade names and trade-
marks of the company and to the use thereof wheresoever situate, it would
have been a very easy thing to have made an express reservation of them
of the same tenor as the reservations, "except the account owing by the
Orient Tobacco Manufactory of Hongkong" and "the above account of the
Orient Tobacco Manufactory of Hongkong owned by said business."
Nothing whatever is said about trade-marks or trade names in either one of
them. Yet, at the time the deed was made a number of trade-marks were
registered in other and different countries outside of Hongkong, and the
products of the Manila factory were sold in those foreign countries under
such registered trade names and trade-marks.
The registration for Java and Sumatra reads: "El Oriente Fabrica de
Tabacos, C. Ingenohl."
That on March 13, 1917, the plaintiff renewed the registration of the trade-
marks on the Hongkong register for a further period of fourteen years from
the 15th of April, 1917, in the name of "El Oriente Fabrica de Tabacos, C.
Ingenohl, Manila," proprietor.
It is further stipulated:
It also appears that the Manila factory was established some time prior to
1884, and that all of the trade-marks in question are typical of some thing,
person or event, and that all of them have some peculiar and distinct
feature typical of the Philippine Islands. But also appears that all of said
trade-marks had their origin and were in use in the factory in the Philippine
Islands long before any factory was established in Hongkong, and that the
products of the Manila factory with such trade-marks on them were sold
throughout the Orient, and even in Hongkong, long before the Hongkong
factory was established. That all of such trade-marks were used in,
connected with, and were a part of, the original business of the company in
the Philippine Islands. That the trade-marks registered in Hongkong were
the identical trade-marks, both in form and substance, which for a number
of years had been previously in use and registered by the Manila factory in
the Philippine Islands. In other words, it clearly appears that all of the trade-
marks in question were created, had their origin, growth and development
in the business of the Manila factory, and were identified, connected with,
and a part of, its business. That any registration of such trade-marks in any
foreign country was based and founded upon original trade-marks which
had their origin and primary use in the Manila factory, and which for many
years had been previously used and registered as such trade-marks in the
Philippine Islands. It must follow that all of the trade-marks in question were
connected with, belonged to, and were a part of, the business of the
company as a going concern in the Philippine Islands.
We hold that the trade-marks and trade names in question were a part of
the company's business in the Philippine Islands, and that the defendant
acquired title to the use and enjoyment of them by its deed of conveyance,
not only in the Philippine Islands, but in all foreign countries in the same
manner and to the same extent that they were used by the company and
Ingenohl prior to the time that their property was seized by the United
states. That the right and title to all of such trade-marks and to their use
passed by the conveyance made to the defendant.
The stipulation of facts shows that from the time the Manila factory was
established by the plaintiff until the present, approximately 95 per cent of
the gross output of the factory has been exported. To now give the plaintiff
the use and benefit of 95 per cent of the trade-marks and trade names
formerly owned by himself and his company, would be a gross fraud and
would defeat the very purpose for which their property was seized and sold.
That would be especially true, as in this case, where the plaintiff has
received and accepted the net proceeds of the sale which the United
States made to the defendant.
The case of Koppel Industrial Car & Equipment co. vs. Orenstein & Koppel
Aktiengesellschaft, vol. 289, Fed., advance sheets No. 3, p. 446, decides
that:
Where the Alien Property Custodian sold the American business and
goodwill of a going concern, including its trade-marks and trade
names, which company was the outgrowth of a German corporation
which was organized as an American subsidiary corporation, and
which was sold under section 12 of the Training with the Enemy Act,
as enemy owned property, to a new corporation;
Held, further, that under section 12 of the Trading with the Enemy Act
there vested in the Alien Property Custodian all the powers of a
common-law trustee in respect of all property, and a conveyance by
him of this German owned property as a going concern, which
included the goodwill, registered and unregistered trade-marks,
carried with it an implied covenant against the former owners entering
the field in interference with the trade names and goodwill so
conveyed.
The legal effect of this very recent decision is to hold that in conveyances
made by him, the Alien Property Custodian has all the powers of a
common-law trustee, and that a conveyance of a business as a going
concern, including the goodwill and trade-marks, carried with it an implied
covenant against the former owner entering the field of the former business
or interfering with the trade-marks and the goodwill conveyed.
In the instant case, the plaintiff, after accepting the proceeds of the sale,
has not only become an active competitor of the purchaser of the business,
but is claiming and exercising the right of an absolute owner to the use and
benefit of 95 per cent of all the business evidenced by the trade-marks and
trade names.
Under the established facts, both plaintiff and his company were alien
enemies, and as a war measure all of their property within its jurisdiction
was seized and held by the United States under the Trading with the
enemy act. As stated, the primary purpose of that proceeding, because
they were alien enemies, was to wipe them out of existence and put them
out of business. As a condition precedent to its purchase, the defendant
had to establish the fact that it was an American citizen and loyal to the
United States.
The reservations made in the deed of conveyance are "except the account
owing by the Orient Tobacco Manufactory of Hongkong" and "the above
account of the Orient Tobacco Manufactory of Hongkong owned by said
business," and they are the only reservations made.
It is very apparent that the purpose and intent of the United States was to
sell and convey all other property of Ingenohl or his company within its
jurisdiction.
The legal force and effect of plaintiff's contention is to claim and assert that
the United States did not seize or take over the most valuable part of his
assets and those of the company within its jurisdiction, and that it did not
sell it to the defendant. In other words, the most valuable part of their
assets was not seized or taken over by the United States. This position is
not tenable. The very fact that the above quoted reservations were made in
the deed of conveyance, and that no other reservations were made, clearly
implies that it was the purpose and intent of the United States to seize and
take over all of the business and assets of the plaintiff and his company,
except "the amount owing by the Orient Tobacco Manufactory of
Hongkong" and "the above account of the Orient Tobacco Manufactory of
Hongkong owned by said business." Any other construction would be
strained and unnatural, and would clearly imply the neglect of official duty
on the part of the United States Government. The trade-marks in question
were the creature of, and had their inception in, the Manila factory, and
were incidental to, connected with, and are a part of, the business of that
factory, and it is very apparent from the nature of the whole proceedings
and the deed itself that it was the purpose and intent of the United States to
convey all of the business of "El Oriente Fabrica de Tabacos, C. Ingenohl,
Manila" as a going concern and that of the plaintiff, together with the right
and title to the trade-marks in question and to their use and enjoyment,
except only as to the reservations which are expressly made in the deed for
"the account owing by the Orient Tobacco Manufactory of Hongkong" and
"the above account of the Orient Tobacco Manufactory of Hongkong owned
by said business."
For such reasons, the first questions should be decided against the plaintiff
and in favor of the defendant. As to the second question, the legal force
and effect of the judgment of the Hongkong court. It is stipulated that it is a
court of general jurisdiction. That the defendant appeared, filed, answered
and contested the action, and that as a result of the trial, that court
rendered the following judgment: First, that the plaintiff is the proprietor of
the trade-marks and trade names, the subject-matter of this action, and is
entitled to the use of them in connection with his business as a cigar
manufacturer. Second, that the defendant be restrained from selling or
exposing for sale in boxes or packages bearing thereon the said trade-
marks and trade names, and from using any labels or stamps or
advertisements in imitation thereof, designed to represent that the cigars
sold by the defendant are the cigars manufactured and sold by the plaintiff
under the trade-marks and trade names in question. Third, that an account
be taken and that based thereon, the defendant should pay to the plaintiff
the amount of damages which he has sustained. Fourth, that the defendant
deliver up upon oath or destroy all articles and things in its possession or
under its control which offend against this injunction, and that plaintiff
recover from the defendant his costs of the action upon the claim or
counterclaim of defendant, including attorney's fees, which are hereby
taxed and allowed in the sum of $26,244.23, as appeared by the registrar's
certificate.
It appears that under the law of the Hongkong court, judgment for
attorney's fees is allowed to the prevailing party against the defendant in
this kind of a case as an incident to the action. In other words, if the
judgment on the merits is sustained, it would carry with it the judgment for
the $26,244.23 as a valid and legal part of it.
In view of all the authorities upon the subject, and of the trend of
judicial opinion in this country and in England following the lead of
Kent and Story, we are satisfied that where there has been
opportunity for a full and fair trial abroad before a court of competent
jurisdiction, conducting the trial upon regular proceedings, after due
citation or voluntary appearance of the defendant, and under a
system of jurisprudence likely to secure an impartial administration of
justice between the citizens of its own country and those of other
countries, and there is nothing to show either prejudice in the court or
in the system of laws under which it was sitting, or fraud in procuring
the judgment, or any other special reason why the comity of this
nation should not allow it full effect, the merits of the case should not,
in an action brought in this country upon the judgment, be tried
afresh, as on a new trial or an appeal, upon the mere assertion of the
party that the judgment was erroneous in law or in fact. . . .
That is a leading case of the highest court in the land, and the opinion is
exhaustive on the question involved, and we have read it with care.
All of which are sustained in the opinion and must be accepted by this court
as the law.
It is conceded that the Hongkong court had jurisdiction and that the
defendant appeared in the action and contested the case on its merits.
Hence, there was no collusion. Neither is it claimed that there was any
fraud, but it is vigorously contended that the Hongkong judgment was a
clear mistake of both law and fact.
We have read and reread with care the exhaustive opinion rendered by the
Hongkong court, which had before it all of the evidence now before this
court, except as to the proof of the defendant in the instant action on its
counterclaim for damages. The Hongkong court was construing the deed of
conveyance made to the defendant founded upon the proceeding which the
United States took as a war measure against the plaintiff and his company,
as alien enemies, under its Trading with the Enemy Act. For the purposes
of this opinion, all of such proceedings must be construed as legal and
valid, the scope and nature of which is very apparent from the record. The
plaintiff and his company were alien enemies of the United States, and it
was for such reason that their property was seized and sold to the
defendant for P2,350,000, which amount was paid as the purchase price.
The record shows that the original business of the company in the
Philippine Islands was established as early as 1883, and that in connection
with and as a part of its business the company had used and adopted the
trade-marks in question and had them registered in the Philippine Islands
as early as 1883. All of those trade-marks appear upon their face to be
confined to and peculiar of persons or things in the Philippine Islands. On
the strength of their use, adoption and registration in the Philippine Islands,
in succeeding years, they were registered in many foreign countries in
which a large amount of business was done by the company in cigars,
cigarettes, and tobacco manufactured in the Philippine Islands, all of which
were evidenced by such trade-marks.
The stipulated facts show that 95 per cent of all of its business was export,
and that all of its products were designated and labeled with the trade-
marks and trade names in question. That in later years a branch factory of
the business was established in Hongkong. At the sale by the United
States of the business, the defendant paid P2,350,000 in good faith, and
took over the property and assets of the company, including its trade-marks
and trade names and its business as a going concern, except "the account
owing by the Orient Tobacco Manufactory of Hongkong" and "the above
account of the Orient Tobacco Manufactory of Hongkong owned by said
business." After the sale, the plaintiff took and accepted the net proceeds
and put them in his pocket and is now using them in connection with the
Hongkong factory not only as a competitor of the defendant, but claiming to
be the absolute owner and to have the exclusive right to the use and
benefit of the trade-marks and trade names in question.
With all due respect to the Hongkong court, its judgment is a clear mistake
of both law and fact. Exclusive of the provisions of section 311 of the Code
of Civil Procedure, it is very doubtful whether it could be sustained upon the
ground of comity or the Law of Nations.
The proceedings were initiated during the world war, and as a war
measure, by the Government of the United States, an ally of Great Britain,
of whose judiciary the Hongkong court is a branch. Under such conditions
and the law of comity and of Nations, there are many and strong reasons
why the Hongkong court should have upheld and sustained the
proceedings of the United States in the seizure and sale of the property of
an alien enemy. It overlooked the fundamental fact of the primary purpose
and intent with which the seizure was made and the property sold, and that
it was all done as a war measure by an ally of Great Britain. The legal force
and effect of that decision is to defeat and destroy the very purpose for
which the United States seized and sold the property, took and accepted
defendant's money.
As between allied nations and under the law of comity, their mutual policy
should be to sustain and enforce the spirit and intention with which the
seizure and sale of any property of an alien enemy was made rather than
to minimize, destroy or defeat them.
If the decision of the Hongkong court is the law, in legal effect the
defendant paid P2,350,000 for the right and privilege of doing 5 per cent of
the business which was formerly done by the company, and the plaintiff
and his company have received and accepted $1,511,124.50, the full
amount of the purchase price of all of the property, and now have and own
the exclusive right to the remaining 95 per cent of all of the business which
the company owned and operated at the time of the seizure and sale. In its
final analysis, that is the logical result of the Hongkong decision.
We frankly concede that the authorities cited in that opinion are good law,
but they are not in point, for the simple reason that they are founded upon
other and different facts. The purpose and intent of the whole transaction is
apparent upon the face of the deed of conveyance, the stipulated facts and
the nature of the proceedings. It was to seize and take over the property of
an alien enemy as a war measure, and to hold it in the nature of a trust or
as a trustee for it or him, and in the event of a sale of the property, as in
this case, to hold the proceeds in trust.
Be that as it may, this court is bound be section 311 of the Code of Civil
Procedure. In so far as we are advised, the question here is one of first
impression, and no other country has a like statute. That law was enacted
by the Legislature of the Philippine Islands, and as to the Philippine Islands,
it is the law of the land. In the absence of that statute, no matter how
wrongful the judgment of the Hongkong court may be, there would be
strong reasons for holding that it should be enforced by this court.
Such is the legal force of the well considered decision in Godard vs. Gray,
English Ruling Cases, volume 5, p. 726, where it is held:
And in the case of Schibsby vs. Westenholz, in the same volume, p. 734, it
is further held:
A judgment of a foreign court, obtained in default of appearance
against a defendant, cannot be enforced in an English Court, where
the defendant, at the time the suit commenced, was not subject of nor
resident in the country in which the judgment was obtained: for there
existed nothing imposing on the defendant any duty to obey the
judgment.
The distinction is very clear. But in the instant case, the defendant not only
appeared in the Hongkong court, but there contested the case on its merits.
But here we have a statute which clearly defines the specific conditions
upon which a foreign judgment can be enforced in the Philippine Islands,
and we have a decision of the United States Supreme Court which holds
that "where there is no written law upon the subject, such as treaty or
statute, questions of international law must be determined by judicial
decisions, the works of jurists, and the acts and usages of civilized
nations." The converse of that proposition is also true that where you do
have a treaty or statute, to enforce a foreign judgment, it must come under
and within the specific provisions of the treaty or statute.
Upon the second question, we do not hesitate to say that the judgment
rendered in the Hongkong court was a clear mistake of both law and fact,
and that it ought not to be enforced in the Philippine Islands.
In Clip Bar Manufacturing Co. vs. Steel Protected Concrete Co. (209 Fed.,
874), the court said:
In United Electric Co. vs. Creamery Package Manufacturing Co. (203 Fed.,
53), the court said:
Applying the law to the facts, the plaintiff did nothing more than to advise
the cigar dealers of the force and effect of the Hongkong judgment, and
that defendant was therein enjoined from selling cigars bearing the trade-
marks in question. That was a statement of an actual fact. It is true that the
defendant may have been damaged as a result of such notices and
publications. If so, it was a damage without injury, for which it has no legal
redress.
After a careful consideration, it is the judgment of this court, first, that the
words "wheresoever situate in the Philippine Islands" are not words of
limitation in the deed of conveyance to the defendant company or the
business as a going concern, the goodwill, the trade names or trade-marks
of the Syndicat Oriente or the plaintiff; second, that the defendant is the
exclusive owner of the business of the plaintiff and his company as a going
concern, and has the absolute title and right to all of the trade-marks in
question and to their exclusive use and enjoyment not only in the Philippine
Islands, but in all other countries where they are duly registered, save and
except as to the reservations only of "the account owing by the Orient
Tobacco Manufactory of Hongkong" and "the above account of the Orient
Tobacco Manufactory of Hongkong owned by said business," which were
mad in its deed of conveyance; third, that the judgment of the Hongkong
court is a clear mistake of both law and fact, and for such reason should
not be enforced in the Philippine Islands; fourth, that the defendant is not
entitled to recover any damages on its counterclaim; and fifth, that the
judgment of the lower court should be reversed, and that neither party to
recover costs in the lower court or on this appeal. So ordered.
Separate Opinions
The decision of his Honor, W. Rees Davies, after stating in a fair and
comprehensive manner the respective views of the parties and the facts,
came to the conclusion that the case was covered by the authority of the
Chartreuse Case, Rey vs. Lecouturier ( [1908] 2 Ch., 715; [1910] A.C.,
362). According to the court "To apply the decision to this case the trade-
marks in question had been registered many years before in Hongkong, the
cigars admittedly had for a long time acquired a reputation in the Hongkong
market, and the assignment by the Custodian of the assets in the Manila
firm cannot have any extraterritorial effect so as to affect the rights of the
party concerned in Hongkong whoever that party may be." The court,
further, reached the conclusion that the articles of the "Syndicat Oriente"
should "be construed according to Belgian Law." It was therefore adjudged
that the plaintiff was the sole proprietor of the trade-marks and trade
names, the subject matter of the action, and was entitled to the exclusive
use of the said trade-marks and trade names in connection with his
business as a cigar manufacturer; that the defendant and others acting
under his direction and instruction, be restrained from selling cigars in
boxes bearing the said trade-marks and trade names; that an accounting
be had, and that the plaintiff recover against the first defendant his costs of
action. No appeal from the judgment of the Hongkong Supreme Court was
taken by defendant.
Costs were taxed in the Supreme Court of Hongkong in favor of the plaintiff
and against the defendant in the sum of $26,224.23, Hongkong currency. It
was to recover the equivalent of this sum, computed at P31,099.41,
Philippine currency, that action was begun in the Court of First Instance by
Ingenohl against Olsen and Company.
The plaintiff filed a demurrer to the special defense and counterclaim of the
defendant on the grounds that the court had no jurisdiction of the subject
matter of the action, and that the defense and counterclaim did not state
facts sufficient to constitute a defense or counterclaim. The parties entered
into an agreed statement of facts. Judge Imperial in his decision speaking
of the Hongkong judgment remarked:
"In the phraseology of said deed there is nothing tending to show that it
was the intention of the Alien Property Custodian to sell other rights or
properties situated outside of the Philippine Islands or within the Hongkong
colony. For this reason the decision and judgment rendered by the
Supreme Court of said city were in accordance with law and the facts
proven. For this same reason the defense set up by the defendant appears
untenable and must be overruled." By the judgment, the defendant was
ordered to pay the plaintiff the sum of P31,099.41, with legal interest and
costs. The counterclaim of the defendant was dismissed.
These facts and others put in issue the question of whether the Hongkong
business was a separate concern, or a branch of the Antwerp business, or
a branch of the Manila business. They also put in issue the question of
whether the sale by the Alien Property Custodian was to have
extraterritorial effect. As to the first general issue, the Hongkong Supreme
Court expressed no definite opinion; as to the second general issue, the
Hongkong Supreme Court held that the assignment "cannot affect any
rights to the trade-marks in question in Hongkong."
We come now to the law, international and local, on which like the facts,
there can be little divergence of opinion. The modern English and American
doctrines are adopted for statement.
In England, as stated, the law is like ours, or, more accurately stated, our
law is like theirs, since greatly influenced in all its history by the
jurisprudence of the mother country. The two English cases occupying the
same relative position as Hilton vs. Guyot, supra, and Ritchie vs. McMullen,
supra, are Godard vs. Gray ([1870], 5 Eng. Ruling Cases, 726), and
Schibsby vs. Westenholz ( [1870], 5 Eng. Ruling Cases, 734). English law
treats as binding, and the English courts will enforce, the judgment of a
foreign court having jurisdiction over the cause of action and over the
person to be bound by the judgment. Such a foreign judgment is as
conclusive upon the parties thereto as a domestic judgment.
It is quite within the realm of possibility, that the majority in the court would
willingly concede the correctness of the altogether too lengthy a statement
of the facts and the law which has here been attempted, in order that it may
serve as a fit background to our opinion. But having conceded that much,
the majority would insist that the case is governed not by general principle
but by specific statutory law. Concurring with the majority for the moment
so as to be just as eminently fair as they are, we come to consider the local
Philippine law and its applicability to the questions which confront the court.
Section 309 of our Code of Civil Procedure relates to the effect of a judicial
record of a court in the United States. Codal section 310 relates to the
effect of a judicial record of a court of admiralty for a foreign country. Codal
section 311 relates to the effect of other foreign judgments. It reads: "The
effect of a judgment of any other tribunal of a foreign country, having
jurisdiction to pronounce the judgment, is as follows:
With the premise that the Hongkong judgment was in personam and under
the further premise that paragraph 2 of section 311 of the Code of Civil
Procedure covers the question at issue, let us analyze the contents of said
paragraph. Admittedly, the judgment of the Hongkong court is presumptive
evidence of a right. That judgment is not sought to be repelled by evidence
of a want of jurisdiction. Nor repelled by evidence of want of notice to the
parties. Nor repelled by evidence of collusion. Nor repelled by evidence of
fraud. On the contrary, all this is admitted. It is simply vigorously asserted
that there was a "clear mistake of law or fact" in the foreign judgment sued
on, and that therefore the Philippine courts should refuse to enforce the
foreign judgment.
Section 311 of the Philippine Code of Civil Procedure was derived from
section 1915 of the California Code of Civil Procedure which, in turn, was
derived from the California Act of March 11, 1872. A careful search has
failed to disclose any other similar statutory provision in the United States
or any interpretative decisions arising in the California courts or elsewhere.
The California provision may, however, have been inspired by the
commentaries of Mr. Justice Story and Chancellor Kent. If so, the word
"mistake" was used "in the stricter sense of misapprehension or oversight,"
and is equivalent to what in Burnham vs. Webster ... Mr. Justice Woodbury
spoke of as "some objection to the judgment's reaching the merits, and
tending to prove that they had not been acted on;" "some accident or
mistake," or "that the court did not decide at all on the merits." These
passages taken from the decision of the United States Supreme Court in
Hilton vs. Guyot, supra, are copied with the suggestion that they are "hardly
consistent with the statement of Chief Justice Marshall" in his decision in
the case of Elmendorf vs. Taylor ( [1825], 10 Wheat., 152). The court then
proceeds to emphasize that the mistake must appear on the face of the
record. Under the conditions named, says the court, "the merits of the case
should not, in an action brought in this court upon the judgment, be tried
afresh, as on a new trial or on appeal, upon the mere assertion of the party
that the judgment was erroneous in law or in fact."
Coordinating more closely the facts and the law, both general and specific,
certain pertinent observations are in order. Possibly, the most apparent
thought with reference to the Hongkong judgment is that no appeal was
attempted to be taken by the losing party. Instead, the defendant indirectly
seeks to appeal to the Philippine courts to reopen and retry the case. In
England at least, it has been irrevocably settled that the home tribunal
cannot act as a court of appeal from the foreign tribunal. In Bank of
Australasia vs. Nias ( [1851], 16 Q.B., 717, 734), Lord Campbell, in
delivering judgment, distinctly put the decision upon the ground that the
defendant might have appealed to the Judicial Committee of the Privy
Council, and thus have procured a review of the colonial judgment. In
Traford vs. Blanc ( [1887], 36 Ch. D., 600), it was said: "... The principle on
which Bank of Australasia vs. Nias was decided appears to be that the
courts of this country do not sit to hear appeals from foreign tribunals, and
that if the judgment of a foreign court is erroneous, the regular mode
provided by every system of jurisprudence of procuring it to be examined
and reversed, ought to be followed. Neither do the courts of this country sit
to rehear causes which have been tried abroad. ..." A trial anew to
reexamine the facts and the law as to a foreign judgment when the losing
party has not exhausted all his remedies abroad and when the judgment is
in reality res adjudicata, should be avoided. This rule is of particular
application where all the evidence is not before us, where the witnesses
were not under observation on the stand, where the effort of the court here
is not concentrated on issues of fact or law, but is given up to a critical
analysis of a foreign judgment, and where all that is in view is a judgment
for costs.
The next thought which comes to mind is that if the Hongkong judgment
had been rendered by a Court of First Instance in the Philippine Islands,
the Supreme Court of the Philippine Islands would proceed to decide the
appeal guided by the well-known principle that in order to reverse the
decision it must be plainly and manifestly against the weight of the
evidence. Here, there is ample evidence to support the findings of Mr.
Justice Davies. It would be doubtful if, sitting as a court of appeal, this
judgment would be modified or reversed.
Indeed, we would go farther and would hold that the judgment of the
Hongkong court is correct in fact and law. The judgment is "presumptive
evidence of a right." The case was "decided on the merits." There was no
"misapprehension or oversight" as to the facts or the law. There is no "clear
mistake of law or fact" appearing on the face of the record.
In the first place, the bill of sale executed by the United States Alien
Property Custodian was only of property "wherever situate in the Philippine
Islands" of a company "heretofore doing business in the Philippine Islands."
It expressly excepted and reserved the "account owing by the Orient
Tobacco Manufactory of Hongkong."
The intent of the parties to the conveyance is made clear by the language
of the instrument. The limited operation of the conveyance is clearly
expressed by its language. The phraseology of the deed was used
advisedly, since the Alien Property Custodian had no desire to do what it
would be futile to attempt — to convey property outside the Philippine
Islands and the United States. There is in the instrument an entire absence
of reference to trade-marks in foreign countries. In a case relied upon by
the majority, where a similar provision of a deed was under observation,
the court emphasized that the purchaser took by conveyance "the
exclusive right to carry on the business in the United States," and was
entitled to protection against unfair competition. (Koppel Industrial Car and
Equipment Co. vs. Orenstein & Koppel Aktiengesellschaft [1923], 289 Fed.,
446. See also Bourjois & Co. vs. Katzel [1923], 260 U.S., 689.)
In the next place, it is apparent that the "Syndicat Oriente" was a Belgian
corporation, with its head office at Antwerp. As such Belgian corporation, it
was permitted to transact business in the Philippine Islands as a foreign
corporation. Although the Hongkong court did not find it necessary to so
decide, this Belgian corporation undoubtedly had two branches, one in
Hongkong, and one in the Philippine Islands, but both with connections with
the home office. All that the United States Government attempted to sell
was the Philippine business of the Belgian corporation. It did not care to do
more for Great Britain and Belgium were allies of the United States in the
Great War. Great Britain could have taken over the "Orient Tobacco
Manufactory" of Hongkong if it had so desired, and the Belgian
Government could have taken over the "Syndicat Oriente" in Belgium if it
had so desired. With the seizure by either Great Britain or Belgium, would
have passed the trade-marks of the respective companies.
But why stop here. Why not go the full length of the majority decision and
admit that there may have been a "mistake of law or fact" in the Hongkong
judgment. Even then, the modifying word "clear" should not be forgotten. It
is only a "clear" mistake which suffices to warrant our courts in interfering
with a foreign judgment. The legislative precaution suggests that this right
of revision should be exercised only for most cogent and conclusive
reasons. A trial judge of long experience and two members of this court, in
effect concurring with the views of the Hongkong magistrate, at least
weaken the argument relative to a "clear" mistake of law or fact.
Let us now suppose that this court had ruled in favor of appellant on its
counterclaim, as indeed one member would have us do. The defendant
would then be forced to have recourse to the Hongkong courts for the
enforcement of any judgment it might recover against the plaintiff. The
Philippine courts having failed in reciprocal regard for a judgment rendered
in Hongkong, the Hongkong court in turn would be justified in reopening
and retrying the case, with the probable result that its former views would
be maintained and the Philippine judgment nullified.
For many years, the fullest reciprocity has prevailed between England and
the United States with respect to allowing full and conclusive effect to the
judgments of each by the other. This reciprocity should be maintained
between integral parts of the British Empire and the United States in such
close proximity as are the ports of Manila and Hongkong. But this
reciprocity will be blotted out entirely if any jurisdiction in either the British
Empire or the United States, with jealous regard for its own dignity, breaks
away from the practice which reason and comity have long sanctioned.
The proportions of this dissent are appalling. Our excuse must be the
gravity of the question at bar and the earnestness of our convictions. This
opinion has been drafted separate and apart in the main from the majority
decision, as the vehicle for the expression of our individual views. We hope
that we have made it clear that under any and every aspect of the case, the
Hongkong judgment should be given force and effect.
Our vote is for the affirmance of the judgment of the lower court.
The CFI rendered judgment for the plaintiff for the full
amount of his claim, with interest, from which the
defendant appeals. Defendant company alleges that when
he purchased the property and business, all trademarks
are included; that the subject of the sale is not only those
trademarks for sales within the Philippines.
Pilapil vs Ibay-Somera
TITLE: Imelda Manalaysay Pilapil v Hon. Corona Ibay-Somera
CITATION: GR No. 80116, June 30, 1989| 174 SCRA 653
FACTS:
HELD:
The law specifically provided that in prosecution for adultery and
concubinage, the person who can legally file the complaint should be the
offended spouse and nobody else. Though in this case, it appeared that
private respondent is the offended spouse, the latter obtained a valid
divorce in his country, the Federal Republic of Germany, and said divorce
and its legal effects may be recognized in the Philippines in so far as he is
concerned. Thus, under the same consideration and rationale, private
respondent is no longer the husband of petitioner and has no legal standing
to commence the adultery case under the imposture that he was the
offended spouse at the time he filed suit.
CONCURRING OPINION
DISSENTING OPINION
KAPUNAN, J.:
On March 2, 2000, the HRET rendered its decision5 dismissing the petition
for quo warranto and declaring Cruz the duly elected Representative of the
Second District of Pangasinan in the May 1998 elections. The HRET
likewise denied petitioner's motion for reconsideration of the decision in its
resolution dated April 27, 2000.6
Petitioner thus filed the present petition for certiorari assailing the HRET's
decision on the following grounds:
(1) Those who are citizens of the Philippines at the time of the
adoption of this Constitution;
(3) Those born before January 17, 1973 of Filipino mother, who elect
Philippine citizenship upon reaching the age of majority, and
There are two ways of acquiring citizenship: (1) by birth, and (2) by
naturalization. These ways of acquiring citizenship correspond to the two
kinds of citizens: the natural-born citizen, and the naturalized citizen. A
person who at the time of his birth is a citizen of a particular country, is a
natural-born citizen thereof.9
On the other hand, naturalized citizens are those who have become Filipino
citizens through naturalization, generally under Commonwealth Act No.
473, otherwise known as the Revised Naturalization Law, which repealed
the former Naturalization Law (Act No. 2927), and by Republic Act No.
530.11 To be naturalized, an applicant has to prove that he possesses all
the qualifications12 and none of the disqualification13 provided by law to
become a Filipino citizen. The decision granting Philippine citizenship
becomes executory only after two (2) years from its promulgation when the
court is satisfied that during the intervening period, the applicant has (1) not
left the Philippines; (2) has dedicated himself to a lawful calling or
profession; (3) has not been convicted of any offense or violation of
Government promulgated rules; or (4) committed any act prejudicial to the
interest of the nation or contrary to any Government announced policies.14
Filipino citizens who have lost their citizenship may however reacquire the
same in the manner provided by law. Commonwealth Act. No. (C.A. No.
63), enumerates the three modes by which Philippine citizenship may be
reacquired by a former citizen: (1) by naturalization, (2) by repatriation, and
(3) by direct act of Congress.15
Having thus taken the required oath of allegiance to the Republic and
having registered the same in the Civil Registry of Magantarem,
Pangasinan in accordance with the aforecited provision, respondent Cruz is
deemed to have recovered his original status as a natural-born citizen, a
status which he acquired at birth as the son of a Filipino father.27 It bears
stressing that the act of repatriation allows him to recover, or return to,
his original status before he lost his Philippine citizenship.
A final point. The HRET has been empowered by the Constitution to be the
"sole judge" of all contests relating to the election, returns, and
qualifications of the members of the House.29 The Court's jurisdiction over
the HRET is merely to check "whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction" on the part of the
latter.30 In the absence thereof, there is no occasion for the Court to
exercise its corrective power and annul the decision of the HRET nor to
substitute the Court's judgement for that of the latter for the simple reason
that it is not the office of a petition for certiorari to inquire into the
correctness of the assailed decision.31 There is no such showing of grave
abuse of discretion in this case.
SO ORDERED.
Footnote
1 1987 Constitution, Article IV, Section 6.
2 Article IV, Section 1 of the 1935 Constitution states:
(a) He must be not less than 21 years of age on the day of the
hearing of the petition;
(d) He must own real estate in the Philippines worth not less
than five thousand pesos, Philippine currency, or must have
some known lucrative trade, profession, or lawful occupation;
EN BANC
CONCURRING OPINION
PANGANIBAN, J.:
It is undisputed that Congressman Cruz was born on April 27, 1960 in San
Clemente, Tarlac, to Filipino parents. He was, therefore, a Filipino citizen,
pursuant to Section 1 (2),1 Article IV of the Constitution. Furthermore, not
having done any act to acquire or perfect the Philippine citizenship he
obtained from birth, he was a natural-born Filipino citizen, in
accordance with Section 22 of the same Article IV.
Upon his discharge from the US Marine Corps, private respondent returned
to the Philippines and decided to regain his Filipino citizenship. Thus, on
March 17, 1994, availing himself of the benefits of Republic Act (RA) No.
2630, entitled "An Act Providing for Reacquisition of Philippine Citizenship
by Persons Who Lost Such by Rendering Service to, or Accepting
Commission in, the Armed Force of the United States,"4 Cruz took his oath
of allegiance to the Republic and registered the same with the Local Civil
Registry of Mangatarem, Pangasinan. On the same day, he also executed
an Affidavit of Reacquisition of Philippine Citizenship.
Main Issue
The main question here is: Did the House of Representatives Electoral
Tribunal (HRET) commit grave abuse of discretion in holding that, by
reason of his repatriation, Congressman Teodoro C. Cruz had reverted to
his original status as a natural-born citizen? I respectfully submit that the
answer is "No." In fact, I believe that the HRET was correct in its ruling.
To "reacquire" simply means "to get back as one's own again."8 Ergo, since
Cruz, prior to his becoming a US citizen, was a natural-born Filipino citizen,
he "reacquired" the same status upon repatriation. To rule otherwise – that
Cruz became a non-natural-born citizen – would not be consistent whit the
legal and ordinary meaning of repatriation. It would be akin to
naturalization, which is the acquisition of a new citizenship. "New."
Because it is not the same as the with which he has previously been
endowed.
There are generally two classes of citizens: (1) natural-born citizens and (2)
naturalized citizens.10 While CA 63 provides that citizenship may also be
acquired by direct act of the Legislature, I believe that those who do
become citizens through such procedure would properly fall under the
second category (naturalized).11
Under the above definition, there are two requisites in order that a Filipino
citizen may be considered "natural-born": (1) one must be a citizen of the
Philippines from birth, and (2) one does not have to do anything to acquire
or perfect one's Philippine citizenship.13 Thus, under the 1973 Constitution,
excluded from the class of "natural-born citizens" were (1) those who were
naturalized and (2) those born before January 17, 1973, of Filipino mothers
who, upon reaching the age of majority, elected Philippine citizenship.14
With respect to repatriates, since the Constitution does not classify them
separately, they naturally reacquire their original classification before the
loss of their Philippine citizenship. In the case of Congressman Teodoro C.
Cruz, upon his repatriation in1994, he reacquired his lost citizenship. In
other words, he regained his original status as a natural-born Filipino
citizen, nothing less.
Third, the HRET did not abuse, much less gravely abuse, its discretion in
holding that Respondent Cruz is a natural-born Filipino citizen who is
qualified to be a member of Congress. I stress that the Court, in this
certiorari proceeding before us, is limited to determining whether the HRET
committed grave abuse of discretion amounting to lack or excess of
jurisdiction in issuing its assailed Decision. The Court has no power to
reverse or modify HRET's rulings, simply because it differs in its perception
of controversies. It cannot substitute its discretion for that of HRET, an
independent, constitutional body with its own specific mandate.
Be it remembered that our Constitution vests upon the HRET the power to
be the sole judge of the qualifications of members of the House of
Representatives, one of which is citizenship. Absent any clear showing of a
manifest violation of the Constitution or the law or nay judicial decision, this
Court cannot impute grave abuse of discretion to the HRET in the latter's
actions on matters over which full discretionary authority is lodged upon it
by our fundamental law.20 Even assuming that we disagree with the
conclusion of public respondent, we cannot ipso facto attribute to it "grave
abuse of discretion." Verily, there is a line between perceived error and
grave abuse.21
That the HRET, after careful deliberation and purposeful study, voted 7 to 2
to issue its Decision upholding the qualifications of Congressman Cruz
could not in any wise be condemned as gravely abusive. Neither can I find
any "patent or gross" arbitrariness or despotism "by reason of passion or
hostility" in such exercise.
4. In Case of Doubt, Popular Will Prevails
Fourth, the court has a solemn duty to uphold the clear and unmistakable
mandate of the people. It cannot supplant the sovereign will of the Second
District of Pangasinan with fractured legalism. The people of the District
have clearly spoken. They overwhelmingly and unequivocally voted for
private respondent to represent them in the House of Representatives. The
votes that Cruz garnered (80, 119) in the last elections were much more
than those of all his opponents combined (66, 182).23 In such instances, all
possible doubts should be resolved in favor of the winning candidate's
eligibility; to rule otherwise would be to defeat the will of the people.24
"Indeed, this Court has repeatedly stressed the importance of giving effect
to the sovereign will in order to ensure the survival of our democracy. In
any action involving the possibility of a reversal of the popular electoral
choice, this Court must exert utmost effort to resolve the issues in a
manner that would give effect to the will of the majority, for it is merely
sound public policy to cause elective offices to be filled by those who are
the choice of the majority. To successfully challenge a winning candidate's
qualifications, the petitioner must clearly demonstrative that the ineligibility
is so patently antagonistic to constitutional and legal principles that
overriding such ineligibility and thereby giving effect to the apparent will of
the people would ultimately create greater prejudice to the very democratic
institutions and juristic traditions that our Constitution and laws so zealously
protect and promote."28
More so should our government open its doors to former Filipinos, like
Congressman Cruz, who want to rejoin the Filipino community as citizens
again. They are not "aliens" in the true sense of the law. They are actually
Filipino by blood, by origin and by culture, who want to reacquire their
former citizenship.
I reiterate, the people have spoken. Let not a restrictive and parochial
interpretation of the law bar the sovereign will. Let not grave abuse be
imputed on the legitimate exercise of HRET's prerogatives.
Cruz was born in the Philippines in 1960, the time when the acquisition of
citizenship rule was still jus soli. However, he enlisted to the US Marine Corps
and he was naturalized as US citizen in connection therewith. He reacquired
Philippine citizenship through repatriation under RA 2630 and ran for and was
elected as a representative. When his nationality was questioned by petitioner,
the HRET decided that Cruz was a natural born citizen of the Philippines.
Held: YES. Natural-born citizens "are those citizens of the Philippines from birth
without having to perform any act to acquire or perfect his Philippine citezenship."
On the other hand, naturalized citizens are those who have become Filipino
citizens through naturalization, generally under Commonwealth Act No. 473,
otherwise known as the Revised Naturalization Law, which repealed the former
Naturalization Law (Act No. 2927), and by Republic Act No. 530.11 To be
naturalized, an applicant has to prove that he possesses all the qualifications12
and none of the disqualification.
Filipino citizens who have lost their citizenship may however reacquire the same
in the manner provided by law. Commonwealth Act. No. (C.A. No. 63),
enumerates the three modes by which Philippine citizenship may be reacquired
by a former citizen: (1) by naturalization, (2) by repatriation, and (3) by direct act
of Congress.
Repatriation, on the other hand, may be had under various statutes by those who
lost their citizenship due to: (1) desertion of the armed forces; services in the
armed forces of the allied forces in World War II; (3) service in the Armed Forces
of the United States at any other time, (4) marriage of a Filipino woman to an
alien; and (5) political economic necessity.
Having thus taken the required oath of allegiance to the Republic and having
registered the same in the Civil Registry of Magantarem, Pangasinan in
accordance with the aforecited provision, respondent Cruz is deemed to have
recovered his original status as a natural-born citizen, a status which he acquired
at birth as the son of a Filipino father. It bears stressing that the act of repatriation
allows him to recover, or return to, his original status before he lost his Philippine
citizenship
MELENCIO-HERRERA, J.:\
In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the Orders, dated September 15, 1983 and
August 3, 1984, in Civil Case No. 1075-P, issued by respondent Judge, which denied her Motion to Dismiss said case, and her Motion for
Reconsideration of the Dismissal Order, respectively.
The basic background facts are that petitioner is a citizen of the Philippines
while private respondent is a citizen of the United States; that they were
married in Hongkong in 1972; that, after the marriage, they established
their residence in the Philippines; that they begot two children born on April
4, 1973 and December 18, 1975, respectively; that the parties were
divorced in Nevada, United States, in 1982; and that petitioner has re-
married also in Nevada, this time to Theodore Van Dorn.
Dated June 8, 1983, private respondent filed suit against petitioner in Civil
Case No. 1075-P of the Regional Trial Court, Branch CXV, in Pasay City,
stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for
short), is conjugal property of the parties, and asking that petitioner be
ordered to render an accounting of that business, and that private
respondent be declared with right to manage the conjugal property.
Petitioner moved to dismiss the case on the ground that the cause of action
is barred by previous judgment in the divorce proceedings before the
Nevada Court wherein respondent had acknowledged that he and
petitioner had "no community property" as of June 11, 1982. The Court
below denied the Motion to Dismiss in the mentioned case on the ground
that the property involved is located in the Philippines so that the Divorce
Decree has no bearing in the case. The denial is now the subject of this
certiorari proceeding.
For resolution is the effect of the foreign divorce on the parties and their
alleged conjugal property in the Philippines.
For his part, respondent avers that the Divorce Decree issued by the
Nevada Court cannot prevail over the prohibitive laws of the Philippines
and its declared national policy; that the acts and declaration of a foreign
Court cannot, especially if the same is contrary to public policy, divest
Philippine Courts of jurisdiction to entertain matters within its jurisdiction.
For the resolution of this case, it is not necessary to determine whether the
property relations between petitioner and private respondent, after their
marriage, were upon absolute or relative community property, upon
complete separation of property, or upon any other regime. The pivotal fact
in this case is the Nevada divorce of the parties.
The Nevada District Court, which decreed the divorce, had obtained
jurisdiction over petitioner who appeared in person before the Court during
the trial of the case. It also obtained jurisdiction over private respondent
who, giving his address as No. 381 Bush Street, San Francisco, California,
authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to
the divorce on the ground of incompatibility in the understanding that there
were neither community property nor community obligations. 3 As explicitly
stated in the Power of Attorney he executed in favor of the law firm of
KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in
the divorce proceedings:
Without costs.
SO ORDERED.
VAN DORN vs. ROMILLO, G.R. No. L-
68470 October 8, 1985
ALICE REYES VAN DORN, petitioner, VS. HON. MANUEL ROMILLO JR., as
Presiding Judge of
Branch CX, Regional Trial Court of the National Capital Region Pasay City and
RICHARD
UPTON, respondents
October 8, 1985
FACTS:
Alice Reyes, the petitioner is a citizen of the Philippines while private respondent
Richard Upton is a citizen of the United States. They were married in Hong Kong
in 1972 and they established residence in the Philippines. They had two children
and they were divorced in Nevada, USA in 1982. The petitioner remarried in
Nevada to Theodore Van Dorn. The private responded filed against petitioner
stating that the petitioner’s business is a conjugal property of the parties and that
respondent is declared with right to manage the conjugal property. Petitioner
moved to dismiss the case on the ground that the cause of action is barred by
previous judgment in the divorce proceedings before the Nevada Court, where
respondent acknowledged that they had no community property as of June 11,
1982.
ISSUE:
Whether or not the private respondent as petitioner’s husband is entitled to
exercise control over conjugal assets?
RULING:
The petition is granted. Complaint is dismissed.
The policy against absolute divorce cover only Philippine nationals. However,
aliens may obtain divorce abroad, which may be recognized in the Philippines
provided they are valid according to their national law.
From the standards of American law, under which divorce dissolves marriage,
the divorce in Nevada released private respondent from the marriage between
them with the petitioner. Thus, pursuant to his national law, private respondent is
no longer the husband of petitioner. He would have no standing to sue in the
case as petitioner’s husband entitled to exercise control over conjugal assets. He
is estopped by his own representation before said court from asserting his right
over the alleged conjugal property.
ISSUE:
1. Did the amendment of the laws altered the tenor of the
contract entered into between Plaintiff and Defendant?
2. Can the defendant allege minority/infancy?
JOHNSON, J.:
Judgment was rendered in the lower court on the 5th day of September,
1905. The defendant appealed. On the 12th day of October, 1905, the
appellant filed his printed bill of exceptions with the clerk of the Supreme
Court. On the 5th day of December, 1905, the appellant filed his brief with
the clerk of the Supreme Court. On the 19th day of January, 1906, the
Attorney-General filed his brief in said cause. Nothing further was done in
said cause until on or about the 30th day of January, 1909, when the
respective parties were requested by this court to prosecute the appeal
under the penalty of having the same dismissed for failure so to do;
whereupon the appellant, by petition, had the caused placed upon the
calendar and the same was heard on the 2d day of February, 1909.
First. That on or about the 17th day of April, 1903, in the city of Chicago, in
the state of Illinois, in the United States, the defendant, through a
respective of the Insular Government of the Philippine Islands, entered into
a contract for a period of two years with the plaintiff, by which the defendant
was to receive a salary of 1,200 dollars per year as a stenographer in the
service of the said plaintiff, and in addition thereto was to be paid in
advance the expenses incurred in traveling from the said city of Chicago to
Manila, and one-half salary during said period of travel.
Second. Said contract contained a provision that in case of a violation of its
terms on the part of the defendant, he should become liable to the plaintiff
for the amount expended by the Government by way of expenses incurred
in traveling from Chicago to Manila and one-half salary paid during such
period.
Third. The defendant entered upon the performance of his contract upon
the 30th day of April, 1903, and was paid half-salary from that date until
June 4, 1903, the date of his arrival in the Philippine Islands.
Fourth. That on the 11th day of February, 1904, the defendant left the
service of the plaintiff and refused to make further compliance with the
terms of the contract.
Sixth. It was expressly agreed between the parties to said contract that
Laws No. 80 and No. 224 should constitute a part of said contract.
To the complaint of the plaintiff the defendant filed a general denial and a
special defense, alleging in his special defense that the Government of the
Philippine Islands had amended Laws No. 80 and No. 224 and had thereby
materially altered the said contract, and also that he was a minor at the
time the contract was entered into and was therefore not responsible under
the law.
To the special defense of the defendant the plaintiff filed a demurrer, which
demurrer the court sustained.
Upon the issue thus presented, and after hearing the evidence adduced
during the trial of the cause, the lower court rendered a judgment against
the defendant and in favor of the plaintiff for the sum of 265.90 dollars. The
lower court found that at the time the defendant quit the service of the
plaintiff there was due him from the said plaintiff the sum of 3.33 dollars,
leaving a balance due the plaintiff in the sum of 265.90 dollars. From this
judgment the defendant appealed and made the following assignments of
error:
1. The court erred in sustaining plaintiff's demurrer to defendant's special
defenses.
With reference to the above assignments of error, it may be said that the
mere fact that the legislative department of the Government of the
Philippine Islands had amended said Acts No. 80 and No. 224 by the Acts
No. 643 and No. 1040 did not have the effect of changing the terms of the
contract made between the plaintiff and the defendant. The legislative
department of the Government is expressly prohibited by section 5 of the
Act of Congress of 1902 from altering or changing the terms of the contract.
The right which the defendant had acquired by virtue of Acts No. 80 and
No. 224 had not been changed in any respect by the fact that said laws had
been amended. These acts, constituting the terms of the contract, still
constituted a part of said contract and were enforceable in favor of the
defendant.
The defendant alleged in his special defense that he was a minor and
therefore the contract could not be enforced against him. The record
discloses that, at the time the contract was entered into in the State of
Illinois, he was an adult under the laws of that State and had full authority
to contract. The plaintiff [the defendant] claims that, by reason of the fact
that, under the laws of the Philippine Islands at the time the contract was
made, male persons in said Islands did not reach their majority until they
had attained the age of 23 years, he was not liable under said contract,
contending that the laws of the Philippine Islands governed. It is not
disputed — upon the contrary the fact is admitted — that at the time and
place of the making of the contract in question the defendant had full
capacity to make the same. No rule is better settled in law than that matters
bearing upon the execution, interpretation and validity of a contract are
determined by the law of the place where the contract is made.
(Scudder vs. Union National Bank, 91 U. S., 406.) Matters connected with
its performance are regulated by the law prevailing at the place of
performance. Matters respecting a remedy, such as the bringing of suit,
admissibility of evidence, and statutes of limitations, depend upon the law
of the place where the suit is brought. (Idem.)
The defendant's claim that he was an adult when he left Chicago but was a
minor when he arrived at Manila; that he was an adult at the time he made
the contract but was a minor at the time the plaintiff attempted to enforce
the contract, more than a year later, is not tenable.
Our conclusions with reference to the first above assignment of error are,
therefore:
First. That the amendments to Acts No. 80 and No. 224 in no way affected
the terms of the contract in question; and
Second. The plaintiff [defendant] being fully qualified to enter into the
contract at the place and time the contract was made, he can not plead
infancy as a defense at the place where the contract is being enforced.
For the reasons above stated, the judgment of the lower court is affirmed,
with costs.