Nagarmull vs.

Binalbagan-Isabela
FACTS:
RTC in favor of Nagarmull
1. NAGARMULL has a contract to sell
1,700,000 pieces of Hessian bags at $26.20
per 100 bags to BINALBANGAN, C.I.F. Iloilo.
Shipment of these bags was to be made in
equal installments of 425,000 pcs. or 425 bales
(1,000 pcs. to a bale) during each of the
months of July, August, September and
October, 1949.
"3. On September 8, 1949, plaintiff advised
defendant that of the 850 bales scheduled for
shipment in July and August, NARGAMULL
was able to ship only 310 bales owing to
the alleged failure of the Adamjee Jute Mills
to supply the goods in due time.
"4. In a letter dated September 29, 1949,
BINALBAGAN requested NARGAMULL to
ship 100 bales of the 540 bales defaulted
(425+425 = 850-310=540) from the July and
August shipments. In this connection, it may
also be mentioned that of the 425 bales
scheduled for shipment in September, 54
bales were likewise defaulted resulting in a
total of 154 bales which is now the object of
the controversy.
Request (July and Aug)
September Default
Total Default per Demand

100
54
154

"5. BINALBAGAN requested plaintiff to pay 5%

of the value of the 154 bales defaulted as
penalty which plaintiff did.
"6. Meanwhile, on October 1, 1949, the
Government of India increased the export
duty of jute bags from 80 to 350 rupees per
ton, and on October 5, 1949, NARGAMULL
requested BINALBAGAN to increase its letter
of credit to cover the enhanced rate of export
duty imposed upon the goods that were still to
be shipped in October, reminding the latter that
under their agreement, any alteration in export
duty was to be for the buyer's account.
"7. On October 25, 1949, BINALBAGAN
complied and increased the amount of its
letter of credit by $10,986.25 to cover the
increase in export duty on 425 bales
scheduled under the contract for the
OCTOBER SHIPMENT ONLY, 1949.
"8. On October 27, 1949, NARGAMULL wrote
to defendant for a further increase of
$4,000.00 in its letter of credit to cover the
shipment of 154 bales which under the
contract should have been included in the July,
August and September shipments.
"10. On February 6, 1951, defendant received
notification from the Bengal Chamber of
Commerce, Tribunal of Arbitration in Calcutta,
India, advising it that on December 28, 1950,
plaintiff applied to said Tribunal for arbitration
regarding their claim. The Tribunal requested
the defendant to send them its version of the
case. This, defendant did.
"12. As presented to the Tribunal of Arbitration,
the whole case revolved on the question of
whether or not defendant is liable to the

R. Servacio (use this digest at your own risk)

plaintiff for the payment of increased export

taxes imposed by the Indian Government
on the shipments of jute sacks. Defendant
contended that if the jute sacks in question
were delivered by plaintiff in the months of
July, August, and September, 1949,
pursuant to the terms of the contract, then
there would have been no increased export
taxes to pay because said increased taxes
became effective only on October 1, 1949,
while on the other hand, plaintiff argued that
the contract between the parties and all papers
and documents made parts thereto should
prevail, including defendant's letter of
September 29, 1949;
"13. The Bengal Chamber of Commerce,
Tribunal of Arbitration = in favor of the
NARGAMULL
"14. For about two years, the NARGAMULL
attempted to enforce the said award
through the Philippine Charge de Affaires in
Calcutta, the Indian Legation here in the
Philippines, and the Department of Foreign
Affairs. On September 22, 1952, plaintiff,
thru the Department of Foreign Affairs,
sought to enforce its claim to which letter
BINALBAGAN replied on August 11, 1952,
saying that they are not bound by the
decision of the Bengal Chamber of
Commerce and consequently are not
obligated to pay the claim in question.
Copies of said letters are attached hereto as
Annexes 'K' and 'L', respectively;
As may be gathered from the pleadings and
the facts stipulated, the action below was
for the enforcement of a foreign judgment:
the decision rendered by the Tribunal of
Arbitration of the Bengal Chamber of
Commerce in Calcutta, India, as affirmed by
the High Court of Judicature of Calcutta.
RTC = IN FAVOR OF NARGAMULL
CA = DIRECT REFERRAL TO SC BEING
ONLY QUESTIONS OF FACT
To secure a reversal of the appealed decision
appellant claims that the lower court committed
the following errors:

ISSUE
The main issue to be resolved is whether or
not the decision of the Tribunal of Arbitration of
the Bengal Chamber of Commerce, as affirmed
by the High Court of Judicature of Calcutta, is
enforceable in the Philippines.
HELD:
IN FAVOR OF BINALBAGAN. There is clear
mistake of law in this case.
It is true that under the provisions of Section 50
of Rule 39, Rules of Court, a judgment for a
sum of money rendered by a foreign court "is
presumptive evidence of a right as between the
parties and their successors in interest by a
subsequent title", but when suit for its
enforcement is brought in a Philippine court,
said judgment "may be repelled by evidence of
a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of
law or fact" (Emphasis supplied.).

Upon the facts of record, We are constrained

to hold that the decision sought to be enforced
was rendered upon a "clear mistake of law"
and because of that it makes appellant an
innocent party suffer the consequences of
the default or breach of contract committed by
appellee.
There is no question at all that appellee was
guilty .of a breach of contract when it failed
to deliver one-hundred fifty-four Hessian
bales which, according to the contract
entered into with appellant, should have
been delivered to the latter in the months of
July, August and September, all of the year
1949. It is equally clear beyond doubt that
had these one-hundred fifty-four bales been
delivered in accordance with the contract
aforesaid, the increase in the export tax due
upon them would not have been imposed
because said increased export tax became
effective only on October 1, 1949.
To avoid its liability for the aforesaid increase
in the export tax, appellee claims that appellant
should be held liable therefor on the strength of
its letter of September 29, 1949 asking
appellee to ship the shortage. This argument is
unavailing because it is not only illogical but
contrary to known principles of fairness and
justice. When appellant demanded that
appellee deliver the shortage of 154 bales, it
did nothing more than to demand that to
which it was entitled as a matter of right.
The breach of contract committed by
appellee gave appellant, under the law and
even under general principles of fairness,
the right to rescind the contract or to ask
for its specific performance, in either case
with right to demand damages. Part of the
damages appellant was clearly entitled to
recover from appellee growing out of the
latter's breach of the contract consists precisely
of the amount of the increase decreed in the
export tax due on the shortage which,
because of appellee's fault, had to be delivered
after the effectivity of the increased export tax.
To the extent, therefore, that the decisions
of the Tribunal of Arbitration of the Bengal
Chamber of Commerce and of the High
Court of Judicature of Calcutta fail to apply
to the facts of this case fundamental
principles of contract, the same may be
impeached, as they have been sufficiently
impeached by appellant, on the ground of
"clear mistake of law". We agree in this
regard with the majority opinion in Ingenohl vs.
Walter E. Olsen & Co. (47 Phil. 189), although
its view was reversed by the Supreme Court of
the United States (273 U.S. 541, 71 L. ed. 762)
which at that time had jurisdiction to review by
certiorari decisions of this Court. We can not
sanction a clear mistake of law that, would
work an obvious injustice upon appellant.

Phil Aluminum Wheels, Inc. vs. PASGI

Enterprises

SYNOPSIS
On 01 June 1978, FASGI Enterprises, Inc., an
American corporation, entered into a
distributorship arrangement with Philippine
Aluminum Wheels, Inc. (PAWI), a Philippine
corporation, and FratelliPedriniSarezzo S.P.A.,
(FPS), an Italian corporation: the purchase,
importation and distributorship in the United
States of aluminum wheels manufactured by
PAWI.
Pursuant to their contract, PAWI shipped to
FASGI a total of eight thousand five hundred
ninety four (8,594) wheels, with an FOB value
of US$216,444.30 at the time of shipment.
FASGI paid PAWI the FOB value of the
wheels. Unfortunately, FASGI found the
shipment to be defective and in noncompliance with stated requirements. On 21
September 1979, FASGI instituted an action
against PAWI and FPS for breach of contract
and recovery of damages before the United
States District Court for the Central District
of California.
During the pendency of the case, the
parties entered into a settlement, entitled
"Transaction".
PAWI should open four
irrevocable letters of credit to return the
purchase price FASGI had already paid for the
defective
wheels.
Despite
PAWI's
assurances, and FASGI's insistence, PAWI
failed to open the first Letter of Credit (LC)
in April 1980 as agreed upon in the said
"Transaction," prompting FASGI to pursue
its complaint for damages against PAWI
before the California District Court.
In the interim, the parties resolved to enter
into another arrangement, "Supplemental
Settlement Agreement," which provided
that FASGI would deliver to PAWI a
container of wheels for every LC opened
and paid by PAWI, and in the event of
failure to comply therewith, FASGI is
allowed to apply before the California court
for the entry of judgment based on that
Supplemental
Settlement
Agreement.
Again, PAWI proved to be remiss in its
obligation
under
the
Supplemental
Settlement Agreement.
Thus, on 24 August 1982, FASGI filed a notice
of entry of judgment with the US District Court
of the Central District of California. On 07
September 1982, a certificate of finality of
judgment was issued. Unable to obtain
satisfaction of the final judgment within the
United States, FASGI filed a complaint for
enforcement of foreign judgment before the
Regional Trial Court, Branch 61, Makati.
RTC Makati court = dismissed the case.
CA = reversed the decision of the trial court
and ordered the full enforcement of the
California judgment.
ISSUE: can the judgment of the California
Court be enforced here in our jurisdiction?
HELD: Yes, it can be.

R. Servacio (use this digest at your own risk)

The Court ruled that in this jurisdiction, a valid

judgment rendered by a foreign tribunal may
be recognized insofar as the immediate parties
and the underlying cause of action are
concerned so long as it is convincingly shown
that there has been an opportunity for a full
and fair hearing before a court of competent
jurisdiction; that trial upon regular proceedings
has bees conducted, following due citation or
voluntary appearance of the defendant and
under a system of jurisprudence likely to
secure an impartial administration of justice;
and that there is nothing to indicate either a
prejudice in court and in the system of laws
under which it is sitting or fraud in procuring the
judgment.
4. ID.; ID.; ID.; TO HINDER ENFORCEMENT
THEREOF, THERE MUST BE EXTRINSIC
FRAUD;
EXTRINSIC
FRAUD
DIFFERENTIATED
FROM
INTRINSIC
FRAUD. Fraud, to hinder the enforcement
within this jurisdiction of a foreign judgment,
must be extrinsic, i.e., fraud based on facts not
controverted or resolved in the case where
judgment is rendered, or that which would go
to the jurisdiction of the court or would deprive
the party against whom judgment is rendered a
chance to defend the action to which he has a
meritorious case or defense. In line, intrinsic
fraud, that is, fraud which goes to the very
existence of the cause of action such as
fraud in obtaining the consent to a contract
is deemed already adjudged, and it,
therefore, cannot militate against the
recognition or enforcement of the foreign
judgment.
In this case, PAWI bewails fraud in the
Settlement Agreements alleging that Mr.
Ready was not authorized to sign on its behalf
AND also that he was not authorized to enter
into a stipulation for judgment before the
California court.
While it is true that there was a request from
Manuel Singson of PAWI to withdraw from the
motion of judgment, the request was too late.
Under American Judicial Procedures, when a
motion for judgment had already been filed, a
counsel cannot be permitted to withdraw
unilaterally without a court order. Further,
there was never any notification made by
PAWI to FASGI about the termination of Mr.
Readys Services. Lastly, if it were indeed
aggrieved by the alleged fraud, it should have
raised the issue early before the California
Court which issued the judgment.
A foreign judgment is presumed to be valid and
binding in the country from which it comes,
until a contrary showing, on the basis of a
presumption of regularity of proceedings and
the giving of due notice in the foreign forum.
PAWI cannot, by this petition, seek refuge over
a business dealing and decision gone awry.
Neither do the courts function to relieve a party
from the effects of an unwise or unfavorable
contract freely entered into. As has so aptly
been explained by the appellate court, the
over-all picture might, indeed, appear to be
onerous to PAWI, but it should bear emphasis
that the settlement which has become the
basis for the foreign judgment has not been the
start of a business venture but the end of a
failed one, and each party, naturally, has had
to negotiate from either position of strength or
weakness depending on its own perception of

who might have to bear the blame for the

failure and the consequence of loss.
The decision of the Court of Appeals was
AFFIRMED.

Tayag vs. Benguet Consolidated

SYLLABUS
1.REMEDIAL
LAW;
SPECIAL
PROCEEDINGS; SETTLEMENT OF ESTATE;
WHEN ANCILLARY ADMINISTRATION IS
PROPER. The ancillary administration is
proper, whenever a person dies, leaving in a
country other than that of his last domicile,
property to be administered in the nature of
assets of the deceased liable for his individual
debts or to be distributed among his heirs
(Johannes v. Harvey, 43 Phil. 175). Ancillary
administration is necessary or the reason for
such administration is because a grant of
administration does not ex propriovigore have
any effect beyond the limits of the country in
which it is granted. Hence, an administrator
appointed in a foreign state has no authority in
the Philippines.
2.ID.; ID.; ID.; SCOPE OF POWER AND
AUTHORITY
OF
AN
ANCILLARY
ADMINISTRATOR. No one could dispute
the power of an ancillary administrator to gain
control and possession of all assets of the
decedent within the jurisdiction of the
Philippines. Such a power is inherent in his
duty to settle her estate and satisfy the claims
of local creditors (Rule 84, Sec. 3, Rules of
Court. Cf Pavia v. De la Rosa, 8 Phil. 70;
Liwanag v. Reyes, L-19159, Sept. 29, 1964;
Ignacio v. Elchico, L-18937, May 16, 1967;
etc.). It is a general rule universally recognized
that administration, whether principal or
ancillary, certainly extends to the assets of a
decedent found within the state or country
where it was granted, the corollary being "that
an administrator appointed in one state or
country has no power over property in another
state or country" (Leon and Ghezzi v.
Manufacturers Life Ins. Co., 90 Phil. 459).
3.ID.; ID.; ID.; ID.; CASE AT BAR. Since, in
the case at bar, there is a refusal, persistently
adhered to by the domiciliary administrator in
New York, to deliver the shares of stocks of
appellant corporation owned by the decedent
to the ancillary administrator in the Philippines,
there was nothing unreasonable or arbitrary in
considering them as lost and requiring the
appellant to issue new certificates in lieu
thereof. Thereby, the task incumbent under the
law on the ancillary administrator could be
discharged and his responsibility fulfilled. Any
other view would result in the compliance to a
valid judicial order being made to depend on
the uncontrolled discretion of a party or entity.

FACTS:
Idonah Slade Perkins, who died on March
27, 1960 in New York City, left among
others, two stock certificates covering
33,002 shares of appellant, the certificates
being in the possession of the County Trust
Company of New York, which as noted, is
the domiciliary administrator of the estate
of the deceased 2
Then came this portion of the appellant's brief:
"On August 12, 1960, Prospero Sanidad
instituted ancillary administration proceedings
in the Court of First Instance of Manila; Lazaro

R. Servacio (use this digest at your own risk)

A. Marquez was appointed ancillary

administrator; and on January 22, 1963, he
was substituted by the appellee Renato
D. Tayag.
A dispute arose between the domiciliary
administrator in New York and the ancillary
administrator in the Philippines as to which
of them was entitled to the possession of
the stock certificates in question. Facts:
The domiciliary administrator, the County Trust
Company of New York, United States of
America, of the estate of the deceased Idonah
Slade Perkins, who died in New York City on
March 27, 1960, REFUSED to surrender to the
ancillary administrator in the Philippines the
stock certificates owned by her in a Philippine
corporation, Benguet Consolidated, Inc., to
satisfy the legitimate claims of local creditors.
On January 27, 1964, the Court of First
Instance of Manila ordered the domiciliary
administrator, County Trust Company, to
`produce and deposit' them with the
ancillary administrator or with the Clerk of
Court. The domiciliary administrator did not
comply with the order, and on February 11,
1964, the ancillary administrator petitioned
the court to "issue an order declaring the
certificate or certificates of stocks covering
the 33,002 shares issued in the name of
Idonah
Slade
Perkins
by Benguet Consolidated, Inc. be declared
[or] considered as lost." 3
Appellant opposed the petition of the ancillary
administrator because the said stock
certificates are in existence, they are today in
the possession of the domiciliary administrator,
the County Trust Company, in New York,
U.S.A.. . . ."

HELD:
As was made clear at the outset of this opinion,
the appeal lacks merit.
1.Appellant Benguet Consolidated, Inc. did not
dispute the power of the appellee ancillary
administrator to gain control and possession of
all assets of the decedent within the jurisdiction
of the Philippines. Nor could it. Such a power is
inherent in his duty to settle her estate and
satisfy the claims of local creditors. 5 As
Justice Tuason speaking for this Court
made clear, it is a "general rule universally
recognized" that administration, whether
principal or ancillary, certainly "extends to
the assets of a decedent found within the
state or country where it was granted," the
corollary being "that an administrator
appointed in one state or country has no
power over property in another state or
country." 6

The reason for the latter is because a grant of

administration does not ex propriovigore have
any effect beyond the limits of the country in
which it is granted. Hence, an administrator
appointed in a foreign state has no authority in
the [Philippines]. The ancillary administration is
proper, whenever a person dies, leaving in a
country other than that of his last domicile,
property to be administered in the nature of

assets of the deceased liable for his individual

debts or to be distributed among his heirs." 7
It would follow then that the authority of the
probate court to require that ancillary
administrator's
right
to
"the
stock
certificates covering the 33,002 shares
..standing in her name in the books of
[appellant] Benguet Consolidated, Inc.." be
respected is equally beyond question. For
appellant is a Philippine corporation owing
full allegiance and subject to the
unrestricted jurisdiction of local courts. Its
shares of stock cannot therefore be
considered in any wise as immune from
lawful court orders.
2.In the face of such incontrovertible doctrines
that argue in a rather conclusive fashion for the
legality of the challenged order, how does
appellant BenguetConsolidated, Inc. propose
to carry the extremely heavy burden of
persuasion of precisely demonstrating the
contrary? It would assign as the basic error
allegedly committed by the lower court its
"considering as lost the stock certificates
covering 33,002 shares of Benguet belonging
to the deceased Idonah Slade Perkins, . .
." 9More specifically, appellant would stress
that the "lower court could not `consider as lost'
the stock certificates in question when, as a
matter of fact, his Honor the trial Judge knew,
and does know, and it is admitted by the
appellee, that the said stock certificates are in
existence and are today in the possession of
the domiciliary administrator in New York." 10
There may be an element of fiction in the
above view of the lower court. That certainly
does not suffice to call for the reversal of the
appealed order. Since there is a refusal,
persistently adhered to by the domiciliary
administrator in New York, to deliver the
shares of stocks of appellant corporation
owned by the decedent to the ancillary
administrator in the Philippines, there was
nothing
unreasonable
or
arbitrary
in
considering them as lost and requiring the
appellant to issue new certificates in lieu
thereof. Thereby, the task incumbent under the
law on the ancillary administrator could be
discharged and his responsibility fulfilled.

Oil Natural Gas Commission vs. CA

FACTS:
This
proceeding
involves
the
enforcement of a
foreign
judgment
rendered by the Civil Judge of Dehra Dun,
India
in
favor of the
petitioner, OIL AND NATURAL GASCOMMIS
SION and against the private respondent,
PACIFIC
CEMENT
COMPANY,
INCORPORATED.
GAS COMMISSION is a foreign corporation
owned
and
controlled
by
the
Government of India while PACIFIC CEMENT
is a private corporation duly organized and
existing under the laws of the Philippines.
GAS COM and PACIFIC entered into a
contract whereby the PACIFIC undertook to
supply the former 4,300 metric tons of oil well
cement in consideration of$477,300.00.
The oil well cement was loaded on board a
ship at the port of Surigao City, Philippines for
delivery in India. But the cargo was held up
in Bangkok and did not reach its
point of destination because of a dispute
between the shipowner and PACIFIC
CEMENT. Despite the fact that the private
respondent had already received payment and
several demands made by the petitioner, the
private respondent failed to deliver the oil well
cement.
PACIFIC CEMENT agreed to replace the entire
4,300 metric tons of oil well cement with Class
"G" cement cost free at the petitioner's
designated port. The cement, however, did not
conform to the petitioner's specifications. The
petitioner then referred its claim to an arbitrator
pursuant to Clause 16 of their contract.
Clause 16 of their contract which stipulates:
"Except where otherwise provided in the supply
order/contract all questions and disputes, relating
to the meaning of the specification designs,
drawings and instructions herein before mentioned
and as to quality of workmanship of the items
ordered or as to any other question, claim, right or
thing whatsoever, in any way arising out of or
relating to the supply order/contract design,
drawing, specification, instruction or these
conditions or otherwise concerning the materials or
the execution or failure to execute the same during
stipulated/extended period
"The venue for arbitration shall be at Dehra Dun."
The chosen arbitrator resolved the dispute
in GAS COMS favor.
To execute the award in its favor, petitioner
filed a petition before the Court of the Civil
Judge in Dehra Dun, India, praying that the
decision of the arbitrator be made "the
Rule of Court" in India.
Because of the refusal of PACIFIC CEMENT to
pay
the
amount
adjudged
by
the
foreign court as owing to GAS COM, GAS
COM filed a complaint with the RTC of Surigao
City for the enforcement of the judgment of the
foreign court.
The RTC upheld the petitioner's legal capacity
to sue, but dismissed the complaint for
lack of a valid cause of action. The RTC

R. Servacio (use this digest at your own risk)

characterized the erroneous submission of the

dispute to the arbitrator as a "mistake of law or
fact amounting to want of jurisdiction." It should
have been Clause 15 that was applied and not
Clause 16.
Clause 15 reads:
'JURISDICTION
All questions, disputes and differences, arising
under out of or in connection with this supply
order, shall be subject to the EXCLUSIVE
JURISDICTION OF THE COURT, within the
local limits of whose jurisdiction and the place
from which this supply order is situated.'" 6
Thus, the proceedings had before the arbitrator
were null and void and the foreign court had
therefore adopted no legal award which could
be the source of an enforceable right.
CA LEVEL: The petitioner appealed to the
respondent Court of Appeals which
affirmed
the dismissal of the complaint. It ruled that
since the arbitrator did not have jurisdiction
over the dispute between the parties, the
foreign court could not validly adopt the
arbitrator's
award.
A
motion
for
reconsideration of the
appellate court's
decision was denied. Thus, this petition.
Argument of Gas Com:
The petitioner asseverates that granting that
the non-delivery of the oil well cement is not a
proper subject for arbitration, the failure of the
replacement cement to conform to the
specifications of the contract is a matter clearly
falling within the ambit of Clause 16.

ISSUES: 1. whether or not the arbitrator had

jurisdiction over the dispute between the
petitioner and the private respondent under
Clause 16 of the contract.
2. whether or not the judgment of the
foreign court is enforceable in this jurisdiction
in view of the private respondent's allegation
that it is bereft of any statement of facts and
law upon which the award in favor of the
petitioner was based.
HELD: Petition is granted on the part that the
cement did not conform to the specifications of
the contract.
A close examination of Clause 16 reveals that
it covers three matters which may be submitted
to arbitration namely,
(1) all questions and disputes, relating to the
meaning of the specification designs, drawings
and instructions herein before mentioned and
as to quality ofworkmanship of the items
ordered; or
(2) any other question, claim, right or thing
whatsoever, in any way arising out of or
relating to the supply order/contract design,
drawing, specification, instruction or these
conditions; or
(3) otherwise concerning the materials or the
execution or failure to execute the same during
stipulated/extended period or after the
completion/abandonment thereof.

But the 3rd clause should be read in

accordance
with
the
doctrine of noscitur a sociis, this reference to
the supply order/contract must be construed in
the light of the preceding words with which it is
associated, meaning to say, as being limited
only to the design, drawing, instructions,
specifications or quality of the materials of the
supply
order/contract.
The
nondelivery of the oil well cement is definitely not
in the nature of a dispute arising from the
failure to execute the supply order/contract
design, drawing, instructions, specifications or
quality of the materials. That Clause 16 should
pertain only to matters involving the technical
aspects of the contract is but a logical
inference considering that the underlying
purpose of a referral to arbitration is for such
technical matters to be deliberated upon by a
person possessed with the required skill and
expertise which may be otherwise absent in
the regular courts.
The Court found merit in this contention. The
replacement cement, upon inspection, was
rejected as it did not conform to the
specifications of the contract. What was then
referred to arbitration was no longer the
mere non-delivery of the cargo but also the
failure of the replacement cargo to conform
to the specifications of the contract, a
matter clearly within the coverage of Clause
16.
Issue 2: REMEDIAL LAW; FOREIGN
JUDGMENT;
JUDGMENT OF A
FOREIGN COURT IS ENFORCEABLE IN
THIS JURISDICTION.
As specified in the order of the Civil
Judge of Dehra Dun, "Award Paper No. 3/B-1
shall be a part of the decree." This is a
categorical
declaration
that
the
foreign court adopted the findings of facts and
law of the arbitrator as contained in the latter's
Award Paper. Award Paper No. 3/B-1,
contains an exhaustive discussion of the
respective claims and defenses of the
parties,
and
the
arbitrator's
evaluation of the same. Inasmuch as the
foregoing is deemed to have been
incorporated
into
the
foreign court's
judgment the appellate court was in error
when it described the latter to be a
"simplistic decision containing literally,
only the dispositive portion."
Furthermore, the recognition to be
accorded a foreign judgment is not
necessarily affected by the fact that the
procedure in the courts of the country in
which such judgment was rendered differs
from that of the courts of the country in
which the judgment is relied on.
This Court has held that matters of remedy and
procedure are governed by the lex fori or the
internal law of the forum. Thus, if under the
procedural rules of the Civil Court of Dehra
Dun, India, a valid judgment may be rendered
by adopting the arbitrator's findings, then the
same must be accorded respect. In the same
vein, if the procedure in the foreign court
mandates that an Order of the Court becomes
final and executory upon failure to pay the
necessary docket fees, then the courts in this
jurisdiction cannot invalidate the order of the
foreign court simply because our rules provide
otherwise.

Asiawest Merchant Bankers vs. CA, 361

SCRA 489 (2001)

Issues:
1.

The petitioner AsiaVest Merchant Bankers (M)

Berhad is a corporation organized under the
laws of Malaysia while private respondent
Philippine National Construction Corporation
(PNCC) is a corporation duly incorporated and
existing under Philippine laws.
It appears that sometime in 1983, ASIAVEST
initiated a suit for collection against PNCC,
before the High Court of Malaya in Kuala
Lumpur
ASIAVEST sought to recover the indemnity of
1.) the performance bond it had put up in favor
of PNCC to guarantee the completion of the
Felda Project and 2.) the nonpayment of the
loan it extended to Asiavest-CDCP Sdn. Bhd.
for the completion of Paloh Hanai and Kuantan
By Pass; Project.
On September 13, 1985, the High Court of
Malaya (Commercial Division) rendered
judgment in favor of the ASIAVEST.
On the same day, September 13, 1985, the
High Court of Malaya issued an Order directing
the private respondent (also designated therein
as the "2nd Defendant") to pay petitioner
interest on the sums covered by the said
Judgment.
PHILIPPINE LITIGATION
Following unsuccessful attempts6 to secure
payment from private respondent under the
judgment, petitioner initiated on September 5,
1988 the complaint before Regional Trial
Court of Pasig, Metro Manila, to enforce the
judgment of the High Court of Malaya.7
Private respondent sought the dismissal of the
case via a Motion to Dismiss filed on October
5, 1988, GROUND: 8
PNCC
filed its
Answer
with
Compulsory Counter
claim's10 and
therein
raised that the judgment of the Malaysian
Court is tainted with want of jurisdiction, want
of notice to private respondent, collusion
and/or fraud, and there is a clear mistake of
law or fact..
11

In its Reply filed on June 8, 1989, the

petitioner contended that the High Court of
Malaya acquired jurisdiction over the Person of
private
respondent
by
its
voluntary
submission the court's jurisdiction through
its appointed counsel, Mr. Khay Chay Tee.
Furthermore, private respondent's counsel
waived any and all objections to the High
Court's jurisdiction in a pleading filed before the
court.
RTC: Dismissed Petitioners complaint
CA: sustained RTC.

R. Servacio (use this digest at your own risk)

2.

THE COURT OF APPEALS ERRED

IN
HOLDING
THAT
THE
MALAYSIAN COURT DID NOT
ACQUIRE
PERSONAL
JURISDICTION
OVER
PNCC,
NOTWITHSTANDING THAT (a) THE
FOREIGN COURT HAD SERVED
SUMMONS ON PNCC AT ITS
MALAYSlA OFFICE, AND (b) PNCC
ITSELF APPEARED BY COUNSEL
IN THE CASE BEFORE THAT
COURT.
THE COURT OF APPEALS ERRED
IN DENYING RECOGNITION AND
ENFORCEMENT TO (SIC) THE
MALAYSIAN COURT JUDGMENT.

In this jurisdiction, a valid judgment rendered

by a foreign tribunal may be recognized insofar
as the immediate parties and the underlying
cause of action are concerned so long as it is
convincingly shown that there has been an 1.)
opportunity for a full and fair hearing before a
2.) court of competent jurisdiction; that 3.) the
trial upon regular proceedings has been
conducted, following due citation or voluntary
appearance of the defendant and under a
system of jurisprudence likely to secure an
impartial administration of justice; and that 4.)
there is nothing to indicate either a prejudice in
court and in the system of laws under which it
is sitting or fraud in procuring the judgment.15
Once the authenticity of the foreign
judgment is proved, the party attacking a
foreign judgment, is tasked with the burden
of overcoming its presumptive validity [in
this case, it is PNCC who must prove that there
was lack of jurisdiction over its person per
Malaysian laws of procedure; yet it failed. The
presumption of validity stands].
In the instant case, ASIAVEST was able to
prove the existence and authenticity of the
foreign judgment, said foreign judgment enjoys
presumptive validity and the burden then fell
upon the party who disputes its validity, herein
private respondent, to prove otherwise.
The testimony of PNCCs accountant and
secretary should not be given weight.
Accountants testimony centered on the
following: that from January to December 1982
he was assigned in Malaysia as Project
Comptroller of the Pahang Project Package A
and B for road construction under the joint
venture of private respondent and Asiavest
Holdings;37 that under the joint venture,
Asiavest Holdings would handle the financial
aspect of the project, which is fifty-one percent
(51 %) while private respondent would handle
the technical aspect of the project, or forty-nine
percent (49%);38 and, that Cora Deala was not
authorized to receive summons for and in
behalf of PNCC.39
Secretarys testimony, on the other hand,
focused on the following: that there was no
board resolution authorizing Allen and Gledhill
to admit all the claims of petitioner in the suit
brought
before
the
High
Court
of
Malaya,40 though on cross-examination she

admitted that Allen and Gledhill were the

retained lawyers of private respondent in
Malaysia. 41
The foregoing reasons or grounds relied
upon by private respondent in preventing
enforcement and recognition of the
Malaysian judgment primarily refer to
MATTERS OF REMEDY AND PROCEDURE
taken by the Malaysian High Court relative
to the suit for collection initiated by
petitioner. Needless to stress, the recognition
to be accorded a foreign judgment is not
necessarily affected by the fact that the
procedure in the courts of the country in which
such judgment was rendered differs from that
of the courts of the country in which the
judgment is relied on.42 Ultimately, matters of
remedy and procedure such as those
relating to the service of summons or court
process upon the defendant, the authority
of counsel to appear and represent a
defendant and the formal requirements in a
decision are governed by the lex fori or the
internal law of the forum,43 i.e., the law of
Malaysia in this case.
As to what the Malaysian procedural law is,
remains a question of fact, not of law. It may
not be taken judicial notice of and must be
pleaded and proved like any other fact.
Sections 24 and 25 of Rule 132 of the Revised
Rules of Court provide that it may be
evidenced by an official publication or by a duly
attested or authenticated copy thereof. It was
then incumbent upon private respondent to
present evidence as to what that Malaysian
procedural law is and to show that under it, the
assailed service of summons upon a financial
officer of a corporation, as alleged by it, is
invalid.
It did
not. Accordingly,
the
presumption of validity and regularity of
service of summons and the decision
thereafter rendered by the High Court of
Malaya must stand.44
On the matter of alleged lack of authority of the
law firm of Allen and Gledhill to represent
private respondent, not only did the private
respondent's witnesses admit that the said law
firm of Allen and Gledhill were its counsels in
its transactions in Malaysia,45 but of greater
significance is the fact that petitioner offered in
evidence relevant Malaysian jurisprudence46 to
the effect that (a) it is not necessary under
Malaysian law for counsel appearing before the
Malaysian High Court to submit a special
power of attorney authorizing him to represent
a client before said court, (b) that counsel
appearing before the Malaysian High Court has
full authority to compromise the suit, and (c)
that counsel appearing before the Malaysian
High Court need not comply with certain prerequisites as required under Philippine law to
appear and compromise judgments on behalf
of their clients before said court.47
On the ground that collusion, fraud and, clear
mistake of fact and law tainted the judgment of
the High Court of Malaya, no clear evidence of
the same was adduced or shown. Even when
the foreign judgment is based on the drafts
prepared by counsel for the successful
party, such is not per se indicative of
collusion or fraud. Fraud to hinder the
enforcement within the jurisdiction of a foreign

judgment must be extrinsic, i.e., fraud based

on facts not controverted or resolved in the
case where judgment is rendered,50 or that
which would go to the jurisdiction of the court
or would deprive the party against whom
judgment is rendered a chance to defend the
action to which he has a meritorious
defense.51 Intrinsic fraud is one which goes
to the very existence of the cause of action
is deemed already adjudged, and it,
therefore, cannot militate against the
recognition or enforcement of the foreign
judgment.52 Evidence is wanting on the
alleged extrinsic fraud. Hence, such
unsubstantiated allegation cannot give rise to
liability therein.
Lastly, there is no merit to the argument that
the foreign judgment is not enforceable in view
of the absence of any statement of facts and
law upon which the award in favor of the
petitioner was based. As aforestated, the lex
fori or the internal law of the forum governs
matters
of
remedy
and
procedure.53 Considering that under the
procedural rules of the High Court of
Malaya, a valid judgment may be rendered
even without stating in the judgment every
fact and law upon which the judgment is
based, then the same must be accorded
respect and the courts in the jurisdiction
cannot invalidate the judgment of the foreign
court simply because our rules provide
otherwise.
WHEREFORE,
is GRANTED.

the

instant

petition

R. Servacio (use this digest at your own risk)

WANG LABORATORIES, INC. VS.

MENDOZA
156 SCRA 44

FACTS:
1. Petitioner Wang Laboratories, Inc. is a
corporation duly organized under the laws of
the U.S.
2. It is engaged in the business of
manufacturing and selling computers
worldwide.
3. In the Philippines, Wang Lab sells its
products to Exxbyte Technologies Corporation,
is exclusive distributor.
4. Exxbyte is a domestic corporation engaged
in the business of selling computer products to
the public in its own name for its own account.
6. Respondent Accralaw entered into a
contract with Exxbyte for acquisition and
installation of an Integrated Information
System.
7. Accralaw thereafter opened a letter or credit
in favor of petitioner.
8. The hardware was delivered and installed by
Exxbyte in Accralaws office.
2nd Contract:
9. Accralaw and Wang Laboratories, thru
Exxbyte, entered into another contract for the
development of a date processing software
program needed to computerize the Accralaw
office.
10. Subsequent thereto and for one reason or
the other, the contract for the development of a
data processing software program was not
implemented.
11. Accralaw filed a complaint for breach of
contract with damages, replevin and
attachment against herein petitioner.
12. Petitioner filed a Motion to Dismiss the
complaint on the ground that there was
improper service of summons.
13. Petitioner filed a Motion for Deposition by
Oral Examination for the purpose of presenting
testimonial evidence in support of its motion to
dismiss.
14. Respondent court ordered the taking of the
deposition by way of oral examination.
15. Petitioner filed its reply to the opposition to
motion to dismiss.
16. Accralaw filed an Ex-Abundante Cautela
Motion for leave to effect Extraterritorial service
of Summons on Petitioner.
17. Respondent Judge Rafael Mendoza,
among others, granted the Ex-Abundante
Cautela Motion to effect Extraterritorial Service
of Summons. Denied the petitioners motion to
dismiss on the ground that its had voluntarily
submitted itself to the jurisdiction of the court,
and thus declined to consider the legal and
factual issues raised in the Motion to Dismiss.
18. Hence this petition contending that extrajudicial summons or any kind thereof cannot
bind the petitioner inasmuch as it is not doing
business in the Philippines nor is it licensed to
do business in the country.
ISSUE:
Is petitioner doing business in the Philippines?
HELD:
Yes, thru Exxbyte.

R. Servacio (use this digest at your own risk)

No General rule or governing principle can be

laid down as to what constitutes doing or
engaging or trading in business. Indeed
each case must be judged in the light of its
peculiar environmental circumstances: upon
peculiar facts and upon the language of the
statute
applicable.
Under the circumstances, petitioner cannot
unilaterally declare that it is not doing business
in the Philippines. In fact, it has installed at
least 26 different products in several
corporations in the Philippines since 1976.
It has registered its trade name with the
Philippine Patents Office and Mr. Yeoh who is
petitioners controller in Asia have visited the
office of its distributor for at least four times
where he conducted training programs in the
Philippines. Wang has allowed its registered
logo and trademark to be used by Exxbyte
and made it known that there exists a
designated distributor in the Philippines as
published in its advertisements.
The
various public advertisements of WANG and
EXXBYTE clearly show that Wang has
appointed EXXBYTE, which is domiciled in the
Philippines, as its authorized exclusive
representative in this country. In fact, WANG
represents that its office in the Philippines is
EXXBYTE, while the letterhead of EXXBYTE
and its invoices show that it is WANG's
representative. (Rollo, p. 65). Moreover, in its
Reply to Opposition to Motion to Dismiss,
WANG itself admitted that it deals exclusively
with EXXBYTE in the sale of its products in the
Philippines
Indeed its has been held that where a single
act or transaction of a foreign corporation is not
merely incidental or casual but is of such
character as distinctly to indicate a purpose to
do other business in the State, such act
constitutes doing business within the meaning
of statutes prescribing the conditions under
which a foreign corporation may be served with
summons.
Be that as it may, the issue on the suability
of foreign corporation whether or not doing
business in the Philippines has already
been laid to rest. The Court has categorically
stated that although a foreign corporation is not
doing business in the Philippines, it may be
sued for acts done against persons in the
Philippines. The Court has ruled as follows:
Indeed if a foreign corporation, not engaged
in business in the Philippines, is not barred
from seeking redress from courts in the
Philippines, a fortiori, that same corporation
cannot claim exemption from being sued in
Philippine courts for acts done against a
person or persons in the Philippines.

IN ANY EVENT, Wang has waived lack of

jurisdiction of the court.
As noted by the trial court, defendant Wang
(petitioner herein) in its Motion to Dismiss
sought affirmative reliefs requiring the exercise
of jurisdiction, by praying: (1) for authority to
take testimony by way of deposition upon oral
examination; (2) for extension of time to file
opposition to plaintiffs' motion to effect
Extraterritorial Service of Summons; (3) to hold
in abeyance any and all proceedings relative to

plaintiffs' foregoing motion and (4) to consider

as a mere scrap of paper plaintiff's motion to
strike out Deposition (Rollo, p. 111).
In addition, the records show that petitioner
also prayed for: (1) authority to reset date of
taking of deposition; (2) admission of the
formal stenographic notes and (3) suspension
of time to file responsive pleadings, not to
mention its various participation in the
proceedings in the court other than for the
purpose of objecting to lack of jurisdiction
(Rollo, p. 169).

Lingner & Fisher GMBH vs. CA

Facts: DEUTCHE MILCHWERKE DR. A.
SAUER (DMW for brevity) was a firm in West
Germany
manufacturing
PRODUCTS
(probably chemicals) under the trademarks
FISSAN, etc. Private respondent Philippine
Chemical Laboratories, Inc. (PHILCHEM, for
brevity) is a local company which apparently
also manufactures and sells chemicals.
On February 28, 1963, DMW and PHILCHEM
executed a so-called Agency AGREEMENT
the basic provision of which was that
PHILCHEM would be the exclusive importer
of the PRODUCTS into the Philippines. The
benefit to PHILCHEM would be the profits
realized from re-sale in this country of imported
PRODUCTS. Other relevant provisions,
generally stated, were that:
(a) The term of the AGREEMENT was five
years renewable automatically for five years
each time unless one party gives due notice of
termination to the other.
(b) PHILCHEM could manufacture the
PRODUCTS locally with raw materials from
sources other than LINGNER, but in such case
DMW will have to be paid 5% of 80% of
PHILCHEM's wholesale prices.
(c) After termination of the AGREEMENT,
PHILCHEM will be entitled, for five years, to
10% royalty on sales of PRODUCTS in the
Philippines (hereinafter to be referred to as the
ROYALTY CLAUSE).

(d) "All legal settlements within the

compass of this AGREEMENT
shall fall under the jurisdiction of
Philippine courts."
It appears that, subsequently, the DMW
interests were acquired by LINGNER &
FISHER GMBH LINGNER for brevity). On
other hand, LINGNER was a subsidiary of
BEECHAM GROUP LTD. which, through
BEECHAM PRODUCTS INTERNATIONAL
(BEECHAM, for brevity), had opened an office
in this country at Unit A, Padilla Building,
Emerald Avenue, Pasig, Metro Manila, under
the supervision or managership of one named
TANNER. LINGNER and BEECHAM can be
deemed to constitute a single personality.
Subsequent reference to LINGNER will
include reference to DMW and BEECHAM.
The AGREEMENT was automatically renewed
once, or up to February 28, 1973, and finally
terminated on August 31, 1977. The events
relative to the termination were as follows:
Before February 28, 1973, the parties agreed
to extend the AGREEMENT up to February 28,
1975. If it is not terminated by prior notice six
months before February 28, 1975, as it was
not, it would be extended for a further two
years up to February 28, 1977.

R. Servacio (use this digest at your own risk)

By letter dated February 25, 1977, through the

law firm of Ozaeta Romulo, De Leon, Mabanta,
Buenaventura, Sayoc and De los Angeles (the
Law Firm, for brevity) PHILCHEM was
advised that LINGNER was interested in
continuing business relationship with
PHILCHEM and will be interested in
negotiating a new contract and that, prior to
the signing of a new contract, LINGNER
was proposing that the old contract be
extended by mutual agreement for a period
of six (6) calendar months beginning March
1, 1977 to expire automatically on August
31, 1977 if no contract is entered into.
The proposal was accepted by PHILCHEM,
and no new contract having been signed by
August 31, 1977, the AGREEMENT terminated
on that date,
On July 20, 1979, PHILCHEM presented a
claim to LINGNER for P1,055,000.00 under
the ROYALTY CLAUSE. The claim was
discussed between PHILCHEM and TANNER
of BEECHAM with the intervention of the Law
Firm. No settlement having been arrived at,
PHILCHEM, on August 6, 1980, filed a
complaint against BEECHAM alone in Civil
Case No. 38086 of the then Court of First
Instance of Rizal. The summons issued
could not be served on BEECHAM, the
Sheriff having reported that BEECHAM was
neither a company registered in the
Philippines, nor resident at the given
address of Unit A, Padilla Building, Emerald
Avenue, Pasig, Metro Manila.
PHILCHEM
then
filed
an amended
complaint, this time making LINGNER and
BEECHAM as the defendants, and pleading
that summons could be served on the Law
Firm as an agent of the defendants.
The Law Firm submitted a special appearance
in the case on behalf of LINGNER, and,
also on behalf of LINGNER, moved for
dismissal on the grounds (a) that LINGNER
was not a foreign corporation doing business in
the Philippines and hence could not be sued
locally, and, (b) that LINGNER could not be
served with summons through the Law Firm.
ISSUES:
(1) The first was whether or not LINGNER was
doing business in the Philippines; and
(2) whether or not LINGNER could be validly
summoned through the Law Firm as its agent.
RTC: Denied the Motion to Dismiss, assuming
that LINGNER could be sued in this
jurisdiction, and holding that LINGNER can be
served with summons through the Law Firm.
CA: The Appellate Court held that summons
served through the Law Firm was valid on the
strength of Johnlo Trading Co. vs. Flores (88
Phil. 741 [1951]); and it further ruled that
receiving evidence on whether or not
LINGNER was doing business in the

Philippines could not be justified under the

cited Batas Pambansa Blg. 129.
HELD:
It is our view that evidence as to whether
LINGNER was doing business in the
Philippines, even before the Trial Court, is no
longer necessary in view of the fact that
PHILCHEM and LINGNER were contractees
in the AGREEMENT and the claim of
PHILCHEM is based on the ROYALTY
CLAUSE of that AGREEMENT. Whether
LINGNER is or is not doing business in the
Philippines will not matter because the
parties had expressly stipulated in the
AGREEMENT that all controversies based
on the AGREEMENT "shall fall under the
jurisdiction of Philippine courts". In other
words, there was a covenant on venue to
the effect that LINGNER can be sued by
PHILCHEM before Philippine Courts in regards
to a controversy related to the AGREEMENT.
For the expeditious determination of this
controversy, therefore, in view of the
insufficiency of evidence that LINGNER is
doing business in the Philippines, which is
a sine qua non requirement under the provision
of Section 14, Rule 14 1 of the Rules before
service of process can be effected upon a
foreign corporation and jurisdiction over the
same may be acquired, it is best that alias
summons on LINGNER be issued, in this case
under the provisions of Section 17, Rule
14, 2 in relation to Rule 4 of the Rules of Court,
which recognizes the principle that venue can
be agreed upon by the parties. If a local
plaintiff and a foreign corporation have
agreed on Philippine venue, summons by
publication can be made on the foreign
corporation under the principle of liberal
construction of the rules to promote just
determination of actions.

CORPUZ V. TIROL
FACTS:
Petitioner Gerbert R. Corpuz was a former
Filipino citizen who acquired Canadian
citizenship through naturalization on
November 29, 2000.3
On January 18, 2005, Gerbert married
respondent Daisylyn T. Sto. Tomas, a
Filipina, in Pasig City.4 Due to work and other
professional commitments, Gerbert left for
Canada soon after the wedding.
He returned to the Philippines sometime in
April 2005 to surprise Daisylyn, but was
shocked to discover that his wife was having
an affair with another man. Hurt and
disappointed, Gerbert returned to Canada
and filed a petition for divorce. The
Superior Court of Justice, Windsor, Ontario,
Canada granted Gerberts petition for
divorce on December 8, 2005. The divorce
decree took effect a month later, on
January 8, 2006.5
Two years after the divorce, Gerbert has
moved on and has found another Filipina to
love. Desirous of marrying his new Filipina
fiance in the Philippines, Gerbert went to
the Pasig City Civil Registry Office and
registered the Canadian divorce decree on
his and Daisylyns marriage certificate.
Despite the registration of the divorce
decree, an official of the National Statistics
Office (NSO) informed Gerbert that the
marriage between him and Daisylyn still
subsists under Philippine law; to be
enforceable, the foreign divorce decree
must first be judicially recognized by a
competent Philippine court, pursuant to
NSO Circular No. 4, series of 1982.6
Accordingly, Gerbert filed a petition for judicial
recognition
of
foreign
divorce
and/or
declaration of marriage as dissolved (petition)
with the RTC. Although summoned, Daisylyn
did not file any responsive pleading but
submitted
instead
a
notarized
letter/manifestation to the trial court. She
offered no opposition to Gerberts petition and,
in fact, alleged her desire to file a similar case
herself but was prevented by financial and
personal circumstances. She, thus, requested
that she be considered as a party-in-interest
with a similar prayer to Gerberts.
In its October 30, 2008 decision,7 the
RTC denied Gerberts petition. The RTC
concluded that Gerbert was not the proper
party to institute the action for judicial
recognition of the foreign divorce decree as
he is a naturalized Canadian citizen. It ruled
that only the Filipino spouse can avail of
the remedy, under the second paragraph of
Article 26 of the Family Code,8 in order for
him or her to be able to remarry under

R. Servacio (use this digest at your own risk)

Philippine law.9 Article 26 of the Family Code

reads:
Art. 26. All marriages solemnized
outside the Philippines, in accordance with the
laws in force in the country where they were
solemnized, and valid there as such, shall also
be valid in this country, except those prohibited
under Articles 35(1), (4), (5) and (6), 36, 37
and 38.
Where a marriage between a Filipino
citizen and a foreigner is validly celebrated and
a divorce is thereafter validly obtained abroad
by the alien spouse capacitating him or her to
remarry, the Filipino spouse shall likewise have
capacity to remarry under Philippine law.
ISSUE
Essentially, the petition raises the issue of
whether the second paragraph of Article 26 of
the Family Code extends to aliens the right to
petition a court of this jurisdiction for the
recognition of a foreign divorce decree.
THE COURTS RULING
The alien spouse can claim NO
right under the second paragraph of Article
26 of the Family Code as the substantive
right it establishes is in favor of the Filipino
spouse
The resolution of the issue requires a
review of the legislative history and intent
behind the second paragraph of Article 26 of
the Family Code.
The legislative intent is for the
benefit of the Filipino spouse, by clarifying his
or her marital status, settling the doubts
created by the divorce decree. Essentially, the
second paragraph of Article 26 of the Family
Code provided the Filipino spouse a
substantive right to have his or her marriage to
the alien spouse considered as dissolved,
capacitating him or her to remarry.
[WHILE] If the court finds that the
decree capacitated the alien spouse to
remarry, the courts can declare that the
Filipino spouse is likewise capacitated to
contract another marriage. No court in this
jurisdiction, however, can make a similar
declaration for the alien spouse (other than
that already established by the decree),
whose status and legal capacity are
generally governed by his national law.26
The foreign divorce decree is
presumptive evidence of a right that clothes the
party with legal interest to petition for its
recognition in this jurisdiction
NOTE THOUGH. We qualify our
above conclusion i.e., that the second
paragraph of Article 26 of the Family Code
bestows no rights in favor of aliens with the
complementary
statement
that
this
conclusion is not sufficient basis to
dismiss Gerberts petition before the RTC.
In other words, the unavailability of the
second paragraph of Article 26 of the
Family Code to aliens does not necessarily

strip Gerbert of legal interest to petition the

RTC for the recognition of his foreign
divorce decree. The foreign divorce decree
itself, after its authenticity and conformity
with the aliens national law have been duly
proven according to our rules of evidence,
serves as a presumptive evidence of right
in favor of Gerbert, pursuant to Section 48,
Rule 39 of the Rules of Court which
provides for the effect of foreign
judgments. This Section states:
SEC. 48. Effect of foreign judgments
or final orders.The effect of a judgment or
final order of a tribunal of a foreign country,
having jurisdiction to render the judgment or
final order is as follows:
(a) In case of a judgment or final
order upon a specific thing, the judgment or
final order is conclusive upon the title of the
thing; and
(b) In case of a judgment or final
order against a person, the judgment or final
order is presumptive evidence of a right as
between the parties and their successors in
interest by a subsequent title.
In either case, the judgment or final
order may be repelled by evidence of a want of
jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
To our mind, direct involvement or
being the subject of the foreign judgment is
sufficient to clothe a party with the requisite
[legal] interest to institute an action before
our courts for the recognition of the foreign
judgment. In a divorce situation, we have
declared, no less, that the divorce obtained by
an alien abroad may be recognized in the
Philippines, provided the divorce is valid
according to his or her national law.27
The starting point in any recognition
of a foreign divorce judgment is the
acknowledgment that our courts do not take
judicial notice of foreign judgments and laws.
Justice Herrera explained that, as a rule,
"no sovereign is bound to give effect within
its dominion to a judgment rendered by a
tribunal of another country."28 This means
that the foreign judgment and its
authenticity must be proven as facts under
our rules on evidence, together with the
aliens applicable national law to show the
effect of the judgment on the alien himself
or herself.29 The recognition may be made
in an action instituted specifically for the
purpose or in another action where a party
invokes the foreign decree as an integral
aspect of his claim or defense. (as a
foundation of his claim under Rule 108,
no?)
In Gerberts case, since both the
foreign divorce decree and the national law
of the alien, recognizing his or her capacity
to obtain a divorce, purport to be official
acts of a sovereign authority, Section 24,
Rule 132 of the Rules of Court comes into
play. This Section requires proof, either by
(1) official publications or (2) copies
attested by the officer having legal custody

of the documents. If the copies of official

records are not kept in the Philippines,
these must be (a) accompanied by a
certificate issued by the proper diplomatic
or consular officer in the Philippine foreign
service stationed in the foreign country in
which the record is kept and (b)
authenticated by the seal of his office.
The records show that Gerbert
attached to his petition a copy of the divorce
decree, as well as the required certificates
proving its authenticity,30 but failed to include
a copy of the Canadian law on
divorce.31 Under this situation, we can, at this
point, simply dismiss the petition for
insufficiency of supporting evidence, unless we
deem it more appropriate to remand the case
to the RTC to determine whether the divorce
decree is consistent with the Canadian divorce
law.
We deem it more appropriate to
take this latter course of action, given the
Article 26 interests that will be served and
the Filipina wifes (Daisylyns) obvious
conformity with the petition.
As a matter of "housekeeping"
concern, we note that the Pasig City Civil
Registry Office has already recorded the
divorce decree on Gerbert and Daisylyns
marriage certificate based on the mere
presentation of the decree.34We consider the
recording to be legally improper; hence, the
need to draw attention of the bench and the
bar to what had been done.
Article 407 of the Civil Code states
that "[a]cts, events and judicial decrees
concerning the civil status of persons shall be
recorded in the civil register." The law requires
the entry in the civil registry of judicial decrees
that produce legal consequences touching
upon a persons legal capacity and status, i.e.,
those affecting "all his personal qualities and
relations, more or less permanent in nature,
not ordinarily terminable at his own will, such
as his being legitimate or illegitimate, or his
being married or not."35
A judgment of divorce is a judicial
decree, although a foreign one, affecting a
persons legal capacity and status that
must be recorded. In fact, Act No. 3753 or the
Law on Registry of Civil Status specifically
requires the registration of divorce decrees in
the civil registry:
Sec. 1. Civil Register. A civil
register is established for recording the civil
status of persons, in which shall be entered:
XXXX
(d) annulments of marriages;
(e) divorces;
XXXX
Sec. 4. Civil Register Books. The
local registrars shall keep and preserve in their
offices the following books, in which they shall,
respectively make the
proper entries
concerning the civil status of persons:
(1) Birth and death register;

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(2) Marriage register, in which shall

be entered not only the marriages solemnized
but also divorces and dissolved marriages.
(3) Legitimation, acknowledgment,
adoption, change of name and naturalization
register.
But while the law requires the entry
of the divorce decree in the civil registry, the
law and the submission of the decree by
themselves do not ipso facto authorize the
decrees registration. The law should be read
in relation with the requirement of a judicial
recognition of the foreign judgment before
it can be given res judicata effect. In the
context of the present case, no judicial
order as yet exists recognizing the foreign
divorce decree. Thus, the Pasig City Civil
Registry Office acted totally out of turn and
without authority of law when it annotated
the Canadian divorce decree on Gerbert
and Daisylyns marriage certificate, on the
strength alone of the foreign decree
presented by Gerbert.
For being contrary to law, the
registration of the foreign divorce decree
without the requisite judicial recognition is
patently void and cannot produce any legal
effect.1avvphi1
Another point we wish to draw
attention to is that the recognition that the RTC
may extend to the Canadian divorce decree
does not, by itself, authorize the cancellation of
the entry in the civil registry. A petition for
recognition of a foreign judgment is not the
proper proceeding, contemplated under the
Rules of Court, for the cancellation of
entries in the civil registry.
Article 412 of the Civil Code
declares that "no entry in a civil register
shall be changed or corrected, without
judicial order." The Rules of Court
supplements Article 412 of the Civil Code by
specifically providing for a special remedial
proceeding by which entries in the civil registry
may be judicially cancelled or corrected. Rule
108 of the Rules of Court sets in detail the
jurisdictional and procedural requirements
that must be complied with before a
judgment, authorizing the cancellation or
correction, may be annotated in the civil
registry. It also requires, among others, that
the verified petition must be filed with the RTC
of the province where the corresponding civil
registry is located;38that the civil registrar and
all persons who have or claim any interest
must be made parties to the proceedings;39and
that the time and place for hearing must be
published in a newspaper of general
circulation.40 As these basic jurisdictional
requirements have not been met in the present
case, we cannot consider the petition Gerbert
filed with the RTC as one filed under Rule 108
of the Rules of Court.
We hasten to point out, however,
that this ruling should not be construed as
requiring two separate proceedings for the
registration of a foreign divorce decree in the
civil registry one for recognition of the foreign

decree and another specifically for cancellation

of the entry under Rule 108 of the Rules of
Court. The recognition of the foreign divorce
decree may be made in a Rule 108 proceeding
itself, as the object of special proceedings
(such as that in Rule 108 of the Rules of Court)
is precisely to establish the status or right of a
party or a particular fact. Moreover, Rule 108 of
the Rules of Court can serve as the
appropriate adversarial proceeding41 by which
the applicability of the foreign judgment can be
measured and tested in terms of jurisdictional
infirmities, want of notice to the party, collusion,
fraud, or clear mistake of law or fact.
WHEREFORE, we GRANT the petition for
review on certiorari,

FUJIKI V. MARINAY
The Facts
Petitioner Minoru Fujiki (Fujiki) is a Japanese
national who married respondent Maria Paz
Galela Marinay (Marinay) in the Philippines2 on
23 January 2004. The marriage did not sit well
with petitioners parents. Thus, Fujiki could not
bring his wife to Japan where he resides.
Eventually, they lost contact with each other.
In 2008, Marinay met another Japanese,
Shinichi Maekara (Maekara). Without the first
marriage being dissolved, Marinay and
Maekara were married on 15 May 2008 in
Quezon City, Philippines. Maekara brought
Marinay to Japan. However, Marinay
allegedly suffered physical abuse from
Maekara. She left Maekara and started to
contact Fujiki.3
Fujiki and Marinay met in Japan and they were
able to reestablish their relationship. In 2010,
Fujiki helped Marinay obtain a judgment
from a family court in Japan which declared
the marriage between Marinay and Maekara
void on the ground of bigamy.4 On 14
January 2011, Fujiki filed a petition in the
RTC entitled: "Judicial Recognition of
Foreign Judgment (or Decree of Absolute
Nullity of Marriage) and prayed to the RTC to
direct the Local Civil Registrar of Quezon City
to annotate the Japanese Family Court
judgment on the Certificate of Marriage
between Marinay and Maekara and to endorse
such annotation to the Office of the
Administrator and Civil Registrar General in the
NSO.

Register Law (Act No. 3753)15 in relation to

Article 413 of the Civil Code.16 The Civil
Register Law imposes a duty on the
"successful petitioner for divorce or annulment
of marriage to send a copy of the final decree
of the court to the local registrar of the
municipality where the dissolved or annulled
marriage was solemnized."17 Section 2 of Rule
108 provides that entries in the civil registry
relating to "marriages," "judgments of
annulments of marriage" and "judgments
declaring marriages void from the beginning"
are subject to cancellation or correction.18 The
petition in the RTC sought (among others) to
annotate the judgment of the Japanese Family
Court on the certificate of marriage between
Marinay and Maekara.
RTC resolved to DENY petitioners motion for
reconsideration.
The Issues
Petitioner raises the following legal issues:
(1) Whether the Rule on Declaration
of Absolute Nullity of Void Marriages
and
Annulment
of
Voidable
Marriages (A.M. No. 02-11-10-SC) is
applicable.
(2) Whether a husband or wife of a
prior marriage can file a petition to
recognize a foreign judgment
nullifying the subsequent marriage
between his or her spouse and a
foreign citizen on the ground of
bigamy.
(3) Whether the Regional Trial Court
can recognize the foreign judgment
in a proceeding for cancellation or
correction of entries in the Civil
Registry under Rule 108 of the Rules
of Court.

The Ruling of the Regional Trial Court

Dismissed. RTC took the view that only "the
husband or the wife," in this case either
Maekara or Marinay, can file the petition to
declare their marriage void, and not Fujiki.

The Ruling of the Court

Fujiki moved that the Order be reconsidered.
He argued that A.M. No. 02-11-10-SC
contemplated ordinary civil actions for
declaration of nullity and annulment of
marriage. Thus, A.M. No. 02-11-10-SC does
not apply. A petition for recognition of foreign
judgment is a special proceeding, which "seeks
to establish a status, a right or a particular
fact,"9 and not an ordinary civil action. The
petitioner contended that the Japanese
judgment was consistent with Article 35(4) of
the Family Code of the Philippines11on bigamy
and was therefore entitled to recognition by
Philippine courts.12
Also, in the words of Fujiki, "[i]t is not, of
course, difficult to realize that the party
interested in having a bigamous marriage
declared a nullity would be the husband in
the prior, pre-existing marriage."14 Fujiki
had material interest and therefore the
personality to nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or
Correction of Entries in the Civil Registry) of
the Rules of Court is applicable. Rule 108 is
the "procedural implementation" of the Civil

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We grant the petition.

The Rule on Declaration of Absolute Nullity of
Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) does not
apply in a petition to recognize a foreign
judgment relating to the status of a marriage
where one of the parties is a citizen of a foreign
country.
Moreover,
in Juliano-Llave
v.
Republic,47 this Court held that the rule in A.M.
No. 02-11-10-SC that only the husband or wife
can file a declaration of nullity or annulment of
marriage "does not apply if the reason behind
the petition is bigamy."48
I.
For Philippine courts to recognize a foreign
judgment relating to the status of a marriage
where one of the parties is a citizen of a foreign
country, the petitioner only needs to prove
the foreign judgment as a fact under the
Rules of Court. To be more specific, a copy of
the foreign judgment may be admitted in
evidence and proven as a fact under Rule

132, Sections 24 and 25, in relation to Rule 39,

Section 48(b) of the Rules of Court.49 Petitioner
may prove the Japanese Family Court
judgment through (1) an official publication or
(2) a certification or copy attested by the officer
who has custody of the judgment. If the office
which has custody is in a foreign country such
as Japan, the certification may be made by the
proper diplomatic or consular officer of the
Philippine foreign service in Japan and
authenticated by the seal of office.50
To hold that A.M. No. 02-11-10-SC applies to a
petition for recognition of foreign judgment
would mean that the trial court and the parties
should follow its provisions, including the form
and contents of the petition,51 the service of
summons,52 the investigation of the public
prosecutor,53 the setting of pre-trial,54 the
trial55 and the judgment of the trial court.56 This
is absurd because it will litigate the case anew.
It will defeat the purpose of recognizing foreign
judgments, which is "to limit repetitive litigation
on claims and issues."57 The interpretation of
the RTC is tantamount to relitigating the case
on the merits.
A foreign judgment relating to the status of a
marriage affects the civil status, condition and
legal capacity of its parties. However, the effect
of a foreign judgment is not automatic. To
extend the effect of a foreign judgment in the
Philippines, Philippine courts must determine if
the foreign judgment is consistent with
domestic public policy and other mandatory
laws.60 Article 15 of the Civil Code provides
that "[l]aws relating to family rights and duties,
or to the status, condition and legal capacity of
persons are binding upon citizens of the
Philippines, even though living abroad." This is
the rule of lex nationalii in private international
law. Thus, the Philippine State may require, for
effectivity in the Philippines, recognition by
Philippine courts of a foreign judgment
affecting its citizen, over whom it exercises
personal jurisdiction relating to the status,
condition and legal capacity of such citizen.
A petition to recognize a foreign judgment
declaring a marriage void does not require
relitigation under a Philippine court of the case
as if it were a new petition for declaration of
nullity of marriage. Philippine courts cannot
presume to know the foreign laws under which
the foreign judgment was rendered. They
cannot substitute their judgment on the status,
condition and legal capacity of the foreign
citizen who is under the jurisdiction of another
state. Thus, Philippine courts can only
recognize
the
foreign
judgment as
a
fact according to the rules of evidence.
Section 48(b), Rule 39 of the Rules of Court
provides that a foreign judgment or final order
against a person creates a "presumptive
evidence of a right as between the parties and
their successors in interest by a subsequent
title." Moreover, Section 48 of the Rules of
Court states that "the judgment or final order
may be repelled by evidence of a want of
jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact."
Thus, Philippine courts exercise limited review
on foreign judgments. Courts are not allowed
to delve into the merits of a foreign
judgment. Once a foreign judgment is

admitted and proven in a Philippine court, it

can only be repelled on grounds external to
its merits, i.e. , "want of jurisdiction, want of
notice to the party, collusion, fraud, or clear
mistake of law or fact." The rule on limited
review embodies the policy of efficiency and
the protection of party expectations,61 as well
as respecting the jurisdiction of other states.62

capacity of the family"70 and preserving the

property regime of the marriage.71
Property rights are already substantive rights
protected by the Constitution,72 but a spouses
right in a marriage extends further to relational
rights recognized under Title III ("Rights and
Obligations between Husband and Wife") of
the Family Code.73

II.
Since the recognition of a foreign judgment
only requires proof of fact of the judgment, it
may be made in a special proceeding for
cancellation or correction of entries in the civil
registry under Rule 108 of the Rules of Court.
Rule 1, Section 3 of the Rules of Court
provides that "[a] special proceeding is a
remedy by which a party seeks to establish a
status, a right, or a particular fact." Rule 108
creates a remedy to rectify facts of a persons
life which are recorded by the State pursuant to
the Civil Register Law or Act No. 3753. These
are facts of public consequence such as birth,
death or marriage,66 which the State has an
interest in recording. As noted by the Solicitor
General, in Corpuz v. Sto. Tomas this Court
declared that "[t]he recognition of the foreign
divorce decree may be made in a Rule 108
proceeding itself, as the object of special
proceedings (such as that in Rule 108 of the
Rules of Court) is precisely to establish the
status or right of a party or a particular fact."67
Rule 108, Section 1 of the Rules of Court
states:
Sec. 1. Who may file petition. Any
person interested in any act, event, order or
decree concerning the civil status of persons
which has been recorded in the civil
register, may file a verified petition for the
cancellation or correction of any entry relating
thereto, with the Regional Trial Court of the
province where the corresponding civil registry
is located. (Emphasis supplied)
Fujiki has the personality to file a petition to
recognize the Japanese Family Court judgment
nullifying the marriage between Marinay and
Maekara on the ground of bigamy because the
judgment concerns his civil status as married
to Marinay. For the same reason he has the
personality to file a petition under Rule 108 to
cancel the entry of marriage between Marinay
and Maekara in the civil registry on the basis of
the decree of the Japanese Family Court.
There is no doubt that the prior spouse has
a personal and material interest in
maintaining the integrity of the marriage he
contracted and the property relations
arising from it. There is also no doubt that he
is interested in the cancellation of an entry of a
bigamous marriage in the civil registry, which
compromises the public record of his marriage.
The interest derives from the substantive right
of the spouse not only to preserve (or dissolve,
in limited instances68) his most intimate human
relation, but also to protect his property
interests that arise by operation of law the
moment he contracts marriage.69 These
property interests in marriage include the right
to be supported "in keeping with the financial

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when Section 2(a) states that "[a] petition

for declaration of absolute nullity of void
marriage may be filed solely by the
husband or the wife"75it refers to the
husband or the wife of the subsisting
marriage. Under Article 35(4) of the Family
Code, bigamous marriages are void from
the beginning. Thus, the parties in a
bigamous marriage are neither the husband
nor the wife under the law. The husband or

the wife of the prior subsisting

marriage is the one who has the
personality to file a petition for
declaration of absolute nullity of void marriage
under Section 2(a) of A.M. No. 02-11-10-SC..
However, this does not apply in a petition for
correction or cancellation of a civil registry
entry based on the recognition of a foreign
judgment annulling a marriage where one of
the parties is a citizen of the foreign country.
There is neither circumvention of the
substantive and procedural safeguards of
marriage under Philippine law, nor of the
jurisdiction of Family Courts under R.A. No.
8369. A recognition of a foreign judgment is not
an action to nullify a marriage. It is an action for
Philippine courts to recognize the effectivity of
a foreign judgment, which presupposes a
case which was already tried and decided
under foreign law. The procedure in A.M. No.
02-11-10-SC does not apply in a petition to
recognize a foreign judgment annulling a
bigamous marriage where one of the parties is
a citizen of the foreign country. Neither can
R.A. No. 8369 define the jurisdiction of the
foreign court.
WHEREFORE, we GRANT the petition.

Eastern
Shipping
Lines
Intermediate Appellate Court
(150 SCRA 463)

Inc.

VS.

Facts: Sometime in or prior to June 1977, the

M/S Asiatica, a vessel operated by petitioner
Eastern Shipping Lines Inc., loaded at Kobe,
Japan for transportation to Manila loaded 5,000
pieces of calorized pipes valued at
P256,039.00 which was consigned to
Philippine Blooming Mills Co, Inc. and 7 cases
of spare parts valued at P92, 361.75 consigned
to Central Textile Mills. Both sets of goods
were insured against marine risk for their
stated value with respondent Development
Insurance and Surety Corp.

The law of the country to which the goods are

to be transported governs the liability of the
common carrier in case of their loss,
4
destruction or deterioration. As the cargoes in
question were transported from Japan to the
Philippines, the liability of Petitioner Carrier is
governed
primarily
by
the
Civil
Code. 5 However, in all matters not regulated
by said Code, the rights and obligations of
common carrier shall be governed by the Code
of Commerce and by special laws. 6 Thus, the
Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code. 7
On the Burden of Proof

In the same vessel, 2 containers of garment

fabrics were also loaded which was consigned
to Mariveles Apparel Corp worth $46,583. The
said cargoes were consigned to Nisshin
Fire and Marine Insurance. Another cargo
loaded to the vessel was the surveying
instruments consigned to Aman Enterprises
and General Merchandise and insured against
respondent Dowa Fire & Marine Insurance for
$1,385.00.

Under the Civil Code, common carriers, from

the nature of their business and for reasons of
public policy, are bound to observe
extraordinary diligence in the vigilance over
goods, according to all the circumstances of
each case. 8 Common carriers are responsible
for the loss, destruction, or deterioration of the
goods unless the same is due to any of the
following causes only:

On the way to Manila, M/S Asiatica caught

fire and sank. This resulted to the loss of
the ship and its cargoes. The respective
Insurers paid the corresponding marine
insurance values and were thus subrogated to
the rights of the insured.

(1) Flood, storm, earthquake, lightning or other

natural disaster or calamity;

The insurers filed a suit against the petitioner

carrier for recovery of the amounts paid to the
insured.
However, petitioner contends that it is not liable
on the ground that the loss was due to an
extraordinary fortuitous event.

On June 16, 1978, respondents Nisshin Fire &

Marine Insurance Co. NISSHIN for short), and
Dowa Fire & Marine Insurance Co., Ltd.
(DOWA, for brevity), as subrogees of the
insured, filed suit against Petitioner Carrier for
the recovery of the insured value of the cargo
lost with the then Court of First Instance of
Manila, Branch 11 (Civil Case No. 116151),
imputing unseaworthiness of the ship and nonobservance of extraordinary diligence by
petitioner Carrier.
Petitioner Carrier denied liability on the
principal grounds that the fire which caused the
sinking of the ship is an exempting
circumstance under Section 4(2) (b) of the
Carriage of Goods by Sea Act (COGSA); and
that when the loss of fire is established, the
burden of proving negligence of the vessel is
shifted to the cargo shipper.
Issues: (1) which law should govern the
Civil Code provisions on Common carriers or
the Carriage of Goods by Sea Act? and (2)
who has the burden of proof to show
negligence of the carrier?
Held:
On the Law Applicable: Civil Code of the Phil.

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xxx xxx xxx

Petitioner Carrier claims that the loss of the

vessel by fire exempts it from liability under the
phrase "natural disaster or calamity. "
However, we are of the opinion that fire may
not be considered a natural disaster or
calamity. This must be so as it arises
almost invariably from some act of man or
by human means. 10 It does not fall within
the category of an act of God unless
caused by lightning 11 or by other natural
disaster or calamity. 12 It may even be
caused by the actual fault or privity of the
carrier. 13
Article 1680 of the Civil Code, which considers
fire as an extraordinary fortuitous event refers
to leases of rural lands where a reduction of
the rent is allowed when more than one-half of
the fruits have been lost due to such event,
considering that the law adopts a protection
policy towards agriculture. 14
As the peril of the fire is not comprehended
within
the
exception
in
Article
1734, supra, Article 1735 of the Civil Code
provides that all cases than those mention
in Article 1734, the common carrier shall be
presumed to have been at fault or to have
acted negligently, unless it proves that it
has observed the extraordinary deligence
required by law.
In this case, the respective Insurers. as
subrogees of the cargo shippers, have proven
that the transported goods have been lost.
Petitioner Carrier has also proved that the loss
was caused by fire. The burden then is upon
Petitioner Carrier to proved that it has
exercised the extraordinary diligence required
by law. In this regard, the Trial Court,
concurred in by the Appellate Court, made the
following Finding of fact:

Pursuant to Article 1733, common carriers are

bound to extraordinary diligence in the
vigilance over the goods. The evidence of the
defendant did not show that extraordinary
vigilance was observed by the vessel to
prevent the occurrence of fire at hatches
numbers 2 and 3. Defendant's evidence did
not likewise show he amount of diligence
made by the crew, on orders, in the care of
the cargoes. What appears is that after the
cargoes were stored in the hatches, no
regular inspection was made as to their
condition during the voyage. Consequently,
the crew could not have even explain what
could have caused the fire. The defendant,
in the Court's mind, failed to satisfactorily
show that extraordinary vigilance and care
had been made by the crew to prevent the
occurrence of the fire. The defendant, as a
common carrier, is liable to the consignees for
said lack of diligence required of it under Article
1733 of the Civil Code. 15
Having failed to discharge the burden of
proving that it had exercised the extraordinary
diligence required by law, Petitioner Carrier
cannot escape liability for the loss of the cargo.
And even if fire were to be considered a
"natural disaster" within the meaning of Article
1734 of the Civil Code, it is required under
Article 1739 of the same Code that the "natural
disaster" must have been the "proximate and
only cause of the loss," and that the carrier has
"exercised due diligence to prevent or minimize
the loss before, during or after the occurrence
of the disaster. " This Petitioner Carrier has
also failed to establish satisfactorily.
Nor may Petitioner Carrier seek refuge from
liability under the Carriage of Goods by Sea
Act, It is provided therein that:
Sec. 4(2). Neither the carrier nor the ship shall
be responsible for loss or damage arising or
resulting from
(b) Fire, unless caused by the actual fault or
privity of the carrier.
xxx xxx xxx
In this case, both the Trial Court and the
Appellate Court, in effect, found, as a fact, that
there was "actual fault" of the carrier shown by
"lack of diligence" in that "when the smoke was
noticed, the fire was already big; that the fire
must have started twenty-four (24) hours
before the same was noticed; " and that "after
the cargoes were stored in the hatches, no
regular inspection was made as to their
condition during the voyage." The foregoing
suffices to show that the circumstances under
which the fire originated and spread are such
as to show that Petitioner Carrier or its
servants were negligent in connection
therewith. Consequently, the complete defense
afforded by the COGSA when loss results from
fire is unavailing to Petitioner Carrier.
On the US $500 Per Package Limitation:
Petitioner Carrier avers that its liability if any,
should not exceed US $500 per package as

provided in section 4(5) of the COGSA, which

reads:
(5) Neither the carrier nor the ship shall in any
event be or become liable for any loss or
damage to or in connection with the
transportation of goods in an amount
exceeding $500 per package lawful money of
the United States, or in case of goods not
shipped in packages, per customary freight
unit, or the equivalent of that sum in other
currency, unless the nature and value of such
goods have been declared by the shipper
before shipment and inserted in bill of lading.
This declaration if embodied in the bill of lading
shall be prima facie evidence, but all be
conclusive on the carrier.
By agreement between the carrier, master or
agent of the carrier, and the shipper another
maximum amount than that mentioned in this
paragraph may be fixed: Provided, That such
maximum shall not be less than the figure
above named. In no event shall the carrier be
Liable for more than the amount of damage
actually sustained.
xxx xxx xxx
Article 1749 of the New Civil Code also allows
the limitations of liability in this wise:
Art. 1749. A stipulation that the common
carrier's liability as limited to the value of the
goods appearing in the bill of lading, unless the
shipper or owner declares a greater value, is
binding.
It is to be noted that the Civil Code does not of
itself limit the liability of the common carrier to
a fixed amount per package although the Code
expressly permits a stipulation limiting such
liability. Thus, the COGSA which is suppletory
to the provisions of the Civil Code, steps in and
supplements the Code by establishing a
statutory provision limiting the carrier's liability
in the absence of a declaration of a higher
value of the goods by the shipper in the bill of
lading. The provisions of the Carriage of Goods
by.Sea Act on limited liability are as much a
part of a bill of lading as though physically in it
and as much a part thereof as though placed
therein by agreement of the parties. 16
In G.R. No. 69044, there is no stipulation in the
respective Bills of Lading (Exhibits "C-2" and "I3") 1 7 limiting the carrier's liability for the loss
or destruction of the goods. Nor is there a
declaration of a higher value of the goods.
Hence, Petitioner Carrier's liability should not
exceed US $500 per package, or its peso
equivalent, at the time of payment of the value
of the goods lost, but in no case "more than the
amount of damage actually sustained."
The actual total loss for the 5,000 pieces of
calorized lance pipes was P256,039 (Exhibit
"C"), which was exactly the amount of the
insurance coverage by Development Insurance
(Exhibit "A"), and the amount affirmed to be
paid by respondent Court. The goods were
shipped in 28 packages (Exhibit "C-2")
Multiplying 28 packages by $500 would result
in a product of $14,000 which, at the current

R. Servacio (use this digest at your own risk)

exchange rate of P20.44 to US $1, would be

P286,160, or "more than the amount of
damage actually sustained." Consequently, the
aforestated amount of P256,039 should be
upheld.
With respect to the seven (7) cases of spare
parts (Exhibit "I-3"), their actual value was
P92,361.75 (Exhibit "I"), which is likewise the
insured value of the cargo (Exhibit "H") and
amount was affirmed to be paid by respondent
Court. however, multiplying seven (7) cases by
$500 per package at the present prevailing rate
of P20.44 to US $1 (US $3,500 x P20.44)
would yield P71,540 only, which is the amount
that should be paid by Petitioner Carrier for
those spare parts, and not P92,361.75.
In G.R. No. 71478, in so far as the two (2)
cases of surveying instruments are concerned,
the amount awarded to DOWA which was
already reduced to $1,000 by the Appellate
Court following the statutory $500 liability per
package, is in order.
In respect of the shipment of 128 cartons of
garment fabrics in two (2) containers and
insured with NISSHIN, the Appellate Court also
limited Petitioner Carrier's liability to $500 per
package and affirmed the award of $46,583 to
NISSHIN. it multiplied 128 cartons (considered
as COGSA packages) by $500 to arrive at the
figure of $64,000, and explained that "since
this amount is more than the insured value of
the goods, that is $46,583, the Trial Court was
correct in awarding said amount only for the
128 cartons, which amount is less than the
maximum limitation of the carrier's liability."
We find no reversible error. The 128 cartons
and not the two (2) containers should be
considered as the shipping unit.
In Mitsui & Co., Ltd. vs. American Export Lines,
Inc. 636 F 2d 807 (1981), the consignees of tin
ingots and the shipper of floor covering brought
action against the vessel owner and operator
to recover for loss of ingots and floor covering,
which had been shipped in vessel supplied
containers. The U.S. District Court for the
Southern District of New York rendered
judgment for the plaintiffs, and the defendant
appealed. The United States Court of Appeals,
Second Division, modified and affirmed holding
that:

... After quoting the statement in Leather's

Best, supra, 451 F 2d at 815, that treating a
container as a package is inconsistent with the
congressional purpose of establishing a
reasonable minimum level of liability, Judge
Beeks wrote, 414 F. Supp. at 907 (footnotes
omitted):
Although this approach has not completely
escaped criticism, there is, nonetheless, much
to commend it. It gives needed recognition to
the responsibility of the courts to construe and
apply the statute as enacted, however great
might be the temptation to "modernize" or
reconstitute it by artful judicial gloss. If
COGSA's package limitation scheme suffers
from internal illness, Congress alone must
undertake the surgery. There is, in this regard,
obvious wisdom in the Ninth Circuit's
conclusion in Hartford that technological
advancements, whether or not forseeable by
the COGSA promulgators, do not warrant a
distortion or artificial construction of the
statutory term "package." A ruling that these
large reusable metal pieces of transport
equipment qualify as COGSA packages at
least where, as here, they were carrier owned
and supplied would amount to just such a
distortion.
Certainly, if the individual crates or cartons
prepared by the shipper and containing his
goods can rightly be considered "packages"
standing by themselves, they do not suddenly
lose that character upon being stowed in a
carrier's container. I would liken these
containers
to
detachable
stowage
compartments of the ship. They simply serve to
divide the ship's overall cargo stowage space
into smaller, more serviceable loci. Shippers'
packages are quite literally "stowed" in the
containers utilizing stevedoring practices and
materials analogous to those employed in
traditional on board stowage.
In Yeramex International v. S.S. Tando,, 1977
A.M.C. 1807 (E.D. Va.) rev'd on other grounds,
595 F 2nd 943 (4 Cir. 1979), another district
with many maritime cases followed Judge
Beeks' reasoning in Matsushita and similarly
rejected the functional economics test. Judge
Kellam held that when rolls of polyester goods
are packed into cardboard cartons which are
then placed in containers, the cartons and not
the containers are the packages.
xxx xxx xxx

When what would ordinarily be considered

packages are shipped in a container supplied
by the carrier and the number of such units is
disclosed in the shipping documents, each of
those units and not the container constitutes
the "package" referred to in liability limitation
provision of Carriage of Goods by Sea Act.
Carriage of Goods by Sea Act, 4(5), 46
U.S.C.A.& 1304(5).
Even if language and purposes of Carriage of
Goods by Sea Act left doubt as to whether
carrier-furnished containers whose contents
are disclosed should be treated as packages,
the interest in securing international uniformity
would suggest that they should not be so
treated. Carriage of Goods by Sea Act, 4(5), 46
U.S.C.A. 1304(5).

The
case
of Smithgreyhound
v.
Eurygenes, 18 followed the Mitsui test:

M/V

Eurygenes concerned a shipment of stereo

equipment packaged by the shipper into
cartons which were then placed by the shipper
into a carrier- furnished container. The number
of cartons was disclosed to the carrier in the
bill of lading. Eurygenes followed the Mitsui
test and treated the cartons, not the container,
as
the
COGSA
packages. However,
Eurygenes indicated that a carrier could limit its
liability to $500 per container if the bill of lading
failed to disclose the number of cartons or units
within the container, or if the parties indicated,
in clear and unambiguous language, an

agreement to treat the container as the

package.
(Admiralty Litigation in Perpetuum: The
Continuing Saga of Package Limitations and
Third World Delivery Problems by Chester D.
Hooper & Keith L. Flicker, published in
Fordham International Law Journal, Vol. 6,
1982-83, Number 1) (Emphasis supplied)
In this case, the Bill of Lading (Exhibit "A")
disclosed the following data:
2 Containers
(128) Cartons)
Men's Garments Fabrics and Accessories
Freight Prepaid
Say: Two (2) Containers Only.
Considering, therefore, that the Bill of Lading
clearly disclosed the contents of the
containers, the number of cartons or units, as
well as the nature of the goods, and applying
the ruling in the Mitsui and Eurygenes cases it
is clear that the 128 cartons, not the two (2)
containers should be considered as the
shipping unit subject to the $500 limitation of
liability.
True, the evidence does not disclose whether
the containers involved herein were carrierfurnished or not. Usually, however, containers
are provided by the carrier. 19 In this case, the
probability is that they were so furnished for
Petitioner Carrier was at liberty to pack and
carry the goods in containers if they were not
so packed. Thus, at the dorsal side of the Bill
of Lading (Exhibit "A") appears the following
stipulation in fine print:
11. (Use of Container) Where the goods
receipt of which is acknowledged on the face of
this Bill of Lading are not already packed into
container(s) at the time of receipt, the Carrier
shall be at liberty to pack and carry them in any
type of container(s).
The foregoing would explain the use of the
estimate "Say: Two (2) Containers Only" in the
Bill of Lading, meaning that the goods could
probably fit in two (2) containers only. It cannot
mean that the shipper had furnished the
containers for if so, "Two (2) Containers"
appearing as the first entry would have
sufficed. and if there is any ambiguity in the Bill
of Lading, it is a cardinal principle in the
construction of contracts that the interpretation
of obscure words or stipulations in a contract
shall not favor the party who caused the
obscurity. 20 This applies with even greater
force in a contract of adhesion where a
contract is already prepared and the other
party merely adheres to it, like the Bill of
Lading in this case, which is draw. up by the
carrier. 21

R. Servacio (use this digest at your own risk)

US V. BULL
Facts: The information alleged the following: That
on and for many months to December 2, 1908, H.
N. Bull was the master of a steam sailing known as
the steamship Standard, the said vessel is engaged
in carrying and transporting cattle, carabaos, and
other animals from a foreign port and city of
Manila, Philippines.
That the accused Bull while being the master of the
said vessel on or about the 2nd day of December
1908, wilfully, and wrongfully carry, transport and
bring into the port and city of Manila 677 head of
cattle and carabaos from the port of Ampieng,
Formosa, without providing suitable means for
securing said animals while in transit, so as to
avoid cruelty and unnecessary suffering to the
said animals.
In this, to wit, the accused as the master of the
vessel, did then and there fail to provide stalls for
said animals so in transit and suitable means for
trying and securing said animals in a proper
manner, and did then and there cause some of said
animals to be tied by means of rings passed
through their noses, and allow and permit others
to be transported loose in the hold and on the deck
of said vessel without being tied or secured in
stalls, and all without bedding; that by reason of
the aforesaid neglect and failure of the accused to
provide suitable means for securing said animals
while so in transit, the noses of some of said
animals were cruelly torn, and many of said
animals were tossed about upon the decks and
hold of said vessel, and cruelly wounded, bruised,
and killed.

by the Court of First Instance in any province into

which such ship or water upon which the offense
or crime was committed shall come after the
commission thereof.
Had this offense been committed upon a ship
carrying a Philippine registry, there could have
been no doubt of the Jurisdiction of the court,
because it is expressly conferred, and the Act is in
accordance with well recognized and established
public law. But the Standard was a Norwegian
vessel, and it is conceded that it was not
registered or licensed in the Philippine Islands
under the laws thereof. We have then the question
whether the court had jurisdiction over an offense
of this character, committed on board a foreign
ship by the master thereof, when the neglect and
omission which constitutes the offense continued
during the time the ship was within the territorial
waters of the United States.
[As a rule], no court of the Philippine Islands had
jurisdiction over an offenses or crime committed
on the high seas or within the territorial waters of
any other country, but when she came within 3
miles of a line drawn from the headlines which
embrace the entrance to Manila Bay, she was
within territorial waters, and a new set of
principles became applicable.

Ruling:

The ship and her crew were then subject to the

jurisdiction of the territorial sovereign subject
through the proper political agency. This offense
was committed within territorial waters. From the
line which determines these waters the Standard
must have traveled at least 25 miles before she
came to anchor. During that part of her voyage
the violation of the statue continued, and as far as
the jurisdiction of the court is concerned, it is
immaterial that the same conditions may have
existed while the vessel was on the high seas. The
offense, assuming that it originated at the port of
departure in Formosa, was a continuing one, and
every element necessary to constitute it existed
during the voyage across the territorial waters. The
completed forbidden act was done within
American waters, and the court therefore had
jurisdiction over the subject-matter of the offense
and the person of the offender.

1. Act No. 55 confers jurisdiction over the offense

created thereby on Courts of First Instance or any
provost court organized in the province or port in
which such animals are disembarked, and there is
nothing inconsistent therewith in Act No. 136,
which provides generally for the organization of
the courts of the Philippine Islands. Act No. 400
merely extends the general jurisdiction of the
courts over certain offenses committed on the high
seas, or beyond the jurisdiction of any country, or
within any of the waters of the Philippine Islands
on board a ship or water craft of any kind
registered or licensed in the Philippine Islands, in
accordance with the laws thereof. (U.S. vs. Fowler,
1 Phil. Rep., 614.) This jurisdiction may be exercised

The offense then was thus committed within the

territorial jurisdiction of the court, but the
objection to the jurisdiction raises the further
question whether that jurisdiction is restricted by
the fact of the nationality of the ship. Every state
has complete control and jurisdiction over its
territorial waters. According to strict legal right,
even public vessels may not enter the ports of a
friendly power without permission, but it is now
conceded that in the absence of a prohibition such
ports are considered as open to the public ship of
all friendly powers. The exemption of such vessels
from local jurisdiction while within such waters was
not established until within comparatively recent
times.

All contrary to the provisions of Acts No. 55 and

No. 275 of the Philippine Commission.
Issue:
1. The complaint does not state facts sufficient to
confer jurisdiction upon the court.
2. That under the evidence the trial court was
without jurisdiction to hear and determine the
case.

R. Servacio (use this digest at your own risk)

Such vessels are therefore permitted during times

of peace to come and go freely. Local official
exercise but little control over their actions, and
offenses committed by their crew are justiciable by
their own officers acting under the laws to which
they primarily owe allegiance. This limitation upon
the general principle of territorial sovereignty is
based entirely upon comity and convenience, and
finds its justification in the fact that experience
shows that such vessels are generally careful to
respect local laws and regulation which are
essential to the health, order, and well-being of the
port. But comity and convenience does not
require the extension of the same degree of
exemption to merchant vessels. There are two
well-defined theories as to extent of the
immunities ordinarily granted to them, According
to the French theory and practice, matters
happening on board a merchant ship which do not
concern the tranquillity of the port or persons
foreign to the crew, are justiciable only by the
court of the country to which the vessel belongs.
The French courts therefore claim exclusive
jurisdiction over crimes committed on board
French merchant vessels in foreign ports by one
member of the crew against another.
Moreover, the Supreme Court of the United
States has recently said that the merchant vessels
of one country visiting the ports of another for the
purpose of trade, subject themselves to the laws
which govern the ports they visit, so long as they
remain; and this as well in war as in peace, unless
otherwise provided by treaty. (U. S. vs.
Diekelman, 92 U. S., 520-525.)
The treaty does not therefore deprive the local
courts of jurisdiction over offenses committed on
board a merchant vessel by one member of the
crew against another which amount to a
disturbance of the order or tranquility of the
country, and a fair and reasonable construction of
the language requires us to hold that any
violation of criminal laws disturbs the order or
tranquility of the country. The offense with which
the appellant is charged had nothing to so with any
difference between the captain and the crew. It
was a violation by the master of the criminal law of
the country into whose port he came. We thus find
that neither by reason of the nationality of the
vessel, the place of the commission of the offense,
or the prohibitions of any treaty or general
principle of public law, are the court of the
Philippine Islands deprived of jurisdiction over the
offense charged in the information in this case.
It is further contended that the complaint is
defective because it does not allege that the
animals were disembarked at the port of Manila,
an allegation which it is claimed is essential to the
jurisdiction of the court sitting at that port. To hold
with the appellant upon this issue would be to
construe the language of the complaint very strictly
against the Government. The disembarkation of
the animals is not necessary in order to constitute

the completed offense, and a reasonable

construction of the language of the statute confers
jurisdiction upon the court sitting at the port into
which the animals are bought. They are then within
the territorial jurisdiction of the court, and the
mere fact of their disembarkation is immaterial so
far as jurisdiction is concerned. This might be
different if the disembarkation of the animals
constituted a constitutional element in the offense,
but it does not.
The evidence shows not only that the defendants
acts were knowingly done, but his defense rests
upon the assertion that according to his
experience, the system of carrying cattle loose
upon the decks and in the hold is preferable and
more secure to the life and comfort of the
animals. It was conclusively proven that what was
done was done knowingly and intentionally.
2. Whether a certain method of handling cattle is
suitable within the meaning of the Act cannot be
left to the judgment of the master of the ship. It is
a question which must be determined by the court
from the evidence. On December 2, 1908, the
defendant Bull brought into and disembarked in
the port and city of Manila certain cattle, which
came from the port of Ampieng, Formosa, without
providing suitable means for securing said animals
while in transit, so as to avoid cruelty and
unnecessary suffering to said animals, contrary to
the provisions of section 1 of Act No. 55, as
amended by section 1 of Act No. 275. The trial
court found the abovementioned facts true and all
of which are fully sustained by the evidence.

The owners or masters of steam, sailing, or other

vessels, carrying or transporting cattle, sheep,
swine, or other animals from one port in the
Philippine Islands to another, or from any foreign
port to any port within the Philippine Islands, shall
provide suitable means for securing such animals
while in transit so as to avoid all cruelty and
unnecessary suffering to the animals, and suitable
and proper facilities for loading and unloading
cattle or other animals upon or from vessels upon
which they are transported, without cruelty or
unnecessary suffering. It is hereby made unlawful
to load or unload cattle upon or from vessels by
swinging them over the side by means of ropes or
chains attached to the thorns.
Section 3 of Act No. 55 provides that
Any owner or master of a vessel, or custodian of
such animals, who knowingly and willfully fails to
comply with the provisions of section one, shall, for
every such failure, be liable to pay a penalty of not
less that one hundred dollars nor more that five
hundred dollars, United States money, for each
offense.
Prosecution under this Act may be instituted in any
Court of First Instance or any provost court
organized in the province or port in which such
animals are disembarked.

The defendant was found guilty, and sentenced to

pay a fine of two hundred and fifty pesos, with
subsidiary imprisonment in case of insolvency, and
to pay the costs. The sentence and judgment is
affirmed. So ordered.
Notes:
Section 1 of Act No. 55, which went into effect
January 1, 1901, provides that
The owners or masters of steam, sailing, or other
vessels, carrying or transporting cattle, sheep,
swine, or other animals, from one port in the
Philippine Islands to another, or from any foreign
port to any port within the Philippine Islands, shall
carry with them, upon the vessels carrying such
animals, sufficient forage and fresh water to
provide for the suitable sustenance of such animals
during the ordinary period occupied by the vessel
in passage from the port of shipment to the port of
debarkation, and shall cause such animals to be
provided with adequate forage and fresh water at
least once in every twenty-four hours from the
time that the animals are embarked to the time of
their final debarkation.
By Act No. 275, enacted October 23, 1901, Act No.
55 was amended by adding to section 1 thereof the
following:

R. Servacio (use this digest at your own risk)

PEOPLE vs.WONG CHENG (alias WONG CHUN)

G.R. No. L-18924, October 19, 1922

FACTS: Appellee is accused of having illegally

smoked opium, aboard the merchant vessel
Changsa of English nationality while said vessel was
anchored in Manila Bay two and a half miles from
the shores of the city. The demurrer filed by said
appellee alleged lack of jurisdiction on the part of
the lower court, which so held and dismissed the
case.
ISSUE: Whether the courts of the Philippines have
jurisdiction over crime, like the one herein
involved, committed aboard merchant vessels
anchored in our jurisdiction waters.
HELD: There are two fundamental rules on this
particular matter in connection with International
Law; to wit, the French rule, according to which
crimes committed aboard a foreign merchant
vessels should not be prosecuted in the courts of
the country within whose territorial jurisdiction
they were committed, unless their commission
affects the peace and security of the territory; and
the English rule, based on the territorial principle
and followed in the United States, according to
which, crimes perpetrated under such
circumstances are in general triable in the courts of
the country within territory they were committed.
Of this two rules, it is the last one that obtains in
this jurisdiction, because at present the theories
and jurisprudence prevailing in the United States
on this matter are authority in the Philippines
which is now a territory of the United States (we
were still a US territory when this was decided in
1922).
We have seen that the mere possession of opium
aboard a foreign vessel in transit was held by this
court not triable by or courts, because it being the
primary object of our Opium Law to protect the
inhabitants of the Philippines against the disastrous
effects entailed by the use of this drug, its mere
possession in such a ship, without being used in our
territory, does not being about in the said territory
those effects that our statute contemplates
avoiding. Hence such a mere possession is not
considered a disturbance of the public order.
But to smoke opium within our territorial limits,
even though aboard a foreign merchant ship, is
certainly a breach of the public order here
established, because it causes such drug to
produce its pernicious effects within our territory.
It seriously contravenes the purpose that our
Legislature has in mind in enacting the aforesaid
repressive statute.
Remanded to the lower court for further
proceedings in accordance with law.

PEOPLE V. ROGER TULIN MT

Tabangao is a cargo vessel owned by PNOC.
It was sailing near the coast of Mindoro loaded

R. Servacio (use this digest at your own risk)

with barrels of kerosene, gasoline, and diesel

oil with a total value of 40.4M.
The vessel was suddenly boarded by 7 fully
armed pirates (accused in the case Emilio
Changco, Cecilio Changco, Tulin, Loyola,
Infante, etc.). they detained and took control of
the vessel.
The name MT Tabangao and the PNOC logo
were painted over with black. Then it was
painted with the name Galilee.
The ship crew was forced to sail to Singapore.
In Singapore, the ship was awaiting another
vessel that did not arrive. Instead, the ship
went back to Batangas Philippines and
remained at sea.
Days later, it went back to Singapore. This
time, another vessel called the Navi Pride
anchored beside it. Another accused, Cheong
San Hiong, supervised the Navis crew and
received the cargo on board MT
Tabangao/Galilee.
After the transfer of goods were completed, MT
Tabangao/Galilee went back to the Philippines
and the original crew members were released
by the pirates in batches. The crew was
ordered not to tell authorities of what
happened. The chief engineer of the crew,
however, reported the incident to the coast
guard.
Afterwards, a series of arrests were effected in
different places. An information charging the
accused with qualified piracy or violation of the
PD 532 Piracy in the Philippine Waters was
filed against the accused. As it turns out, Navi
Pride captain, Hiong, was employed with Navi
Marine Services ( a Singaporean firm, I think).
Before the seizure of the MT Tabangon,
Navi Marine was dealing for the first time
with Paul Gan, a Singaporean broker who
offered to sell bunker oil to the former.
When the transaction pushed through,
Hiong was assigned to supervise a ship to
ship transfer. He was told that the Galilee
would be making the transfer, so Navi Pride
ship-sided with Galilee and the transfer was
effected. Paul Gan received the payment.
An entrapment was made by the Philippine
police. Upon arrival in Singapore, Hiong was
asked again to transact another transfer of oil.
The same procedure was followed. Hiong then
went to the Philippines to arrange another
transfer with Changco the pirates head. This
was how Hiong was arrested by the NBI
agents.

committed in Philippine waters. Hiong also

contends that the court never acquired
jurisdiction over him since the crime was
committed outside Philippine waters.
Art. 122 of the RPC (piracy in general and
mutiny in the high seas) provided that piracy
must be committed in the high seas by any
person not a member of its complement nor a
passenger thereof. It was amended by RA
7659, which broadened the law to include
offenses committed in Philippine waters. PD
532 on the other hand, embraces any
person, including a passenger or member
of the complement of said vessel in the
Philippine waters. Passenger or not,
member of the complement or not, any
person is covered by the law.
No conflict exists among the mentioned laws,
they exist harmoniously as separate laws.
The attack on and the seizure of MT Tabangao
and its cargo were committed in Philippine
waters, although the captive vessel was later
brought by the pirates to Singapore, where its
cargo was off-loaded, transferred and sold.
Such transfer was done under Hiongs
supervision.
1.

2.

(Italics ours)
On the other hand, Section 2 of Presidential
Decree No. 532 provides:
SECTION 2. Definition of Terms. The
following shall mean and be understood, as
follows:
d. Piracy. Any attack upon or seizure of any
vessel or the taking away of the whole or part
thereof or its cargo, equipment, or the personal
belongings of its complement or passengers,
irrespective of the value thereof, by means of
violence against or intimidation of persons or
force upon things, committed by any person,
including a passenger or member of the
complement of said vessel in Philippine waters,
shall be considered as piracy. The offenders
shall be considered as pirates and punished as
hereinafter provided (Italics supplied).

Although the disposition by the

pirates of the vessel and its cargo
was not done in Philippine waters,
it is still deemed part of the same
act. It need not be committed in the
Philippine waters.
Piracy falls under Title 1 of Book 2 of
the RPC. It is an exception to the
rule on territoriality in criminal law.
The same principle applies to the
case, even if Hiong is charged with
violation of a special penal law,
instead of the RPC. Regardless of
the law penalizing piracy, it remains
to be a reprehensible crime
against the whole world.

Article 122 of the Revised Penal Code, used to

provide:
ARTICLE 122. Piracy in general and mutiny on
the high seas. The penalty of reclusion
temporal shall be inflicted upon any person
who, on the high seas, shall attack or seize a
vessel or, not being a member of its
complement nor a passenger, shall seize the
whole or part of the cargo of said vessel, its
equipment, or personal belongings of its
complement or passengers.
(Italics supplied.)

ISSUE: w/n the accused are guilty of qualified

piracy YES!

Article 122, as amended by Republic Act No.

7659 (January 1, 1994), reads:

RULING: [only the important part for crim]

Hiong argues that he can not be convicted
under PD 534 or Art 122 of the RPC as
amended, since both laws punish piracy

ARTICLE 122. Piracy in general and mutiny on

the high seas or in Philippine waters. The
penalty ofreclusion perpetua shall be inflicted
upon any person who, on the high seas, or in

R. Servacio (use this digest at your own risk)

Philippine waters, shall attack or seize a vessel

or, not being a member of its complement nor
a passenger, shall seize the whole or part of
the cargo of said vessel, its equipment, or
personal belongings of its complement or
passengers.

US v Fowler

FACTS:

August 12, 1901, the defendants were accused

of the theft of 16 champagne bottles worth 20
dollars while on board the vessel Lawton. The
counsel for defendants alleged to the Court of
First Instance that they were without
jurisdiction over the crime charged . Since it
happened in the high seas and not in the city of
Manila or in the territory in which the
jurisdiction of the court extends, they asked
that the case be dismissed.

ISSUE:

Whether or not the Court of First Instance has

jurisdiction over crimes committed on the high
seas on board of transport not registered in the
Philippines.

HELD:

No. The Philippine court has no jurisdiction

over the crime of theft committed on high seas
on board a vessel not registered or licensed in
teh Philippines. The transport Lawton not
being a vessel of this class, our courts are
without jurisdiction to take a cognizance of a
crime committed on board the same.

Liang v. people

R. Servacio (use this digest at your own risk)

Petitioner is an economist working with the

Asian Development Bank (ADB). Sometime in
1994, for allegedly uttering defamatory
words against fellow ADB worker Joyce
Cabal, he was charged with two counts of
grave oral defamation docketed as
Criminal Cases Nos. 53170 and 53171.
Petitioner was arrested by virtue of a warrant
issued by the MeTC. After fixing petitioner's
bail at P2,400.00 per criminal charge, the
MeTC released him to the custody of the
Security Officer of ADB.
The next day, the MeTC judge received an
"office of protocol" from the Department of
Foreign Affairs (DFA) stating that petitioner
is covered by immunity from legal process
under Section 45 of the Agreement between
the ADB and the Philippine Government
regarding the Headquarters of the ADB
(hereinafter Agreement) in the country.
Based on the said protocol communication that
petitioner is immune from suit, the MeTC
judge without notice to the prosecution
dismissed the two criminal cases. The latter
filed a motion for reconsideration which was
opposed by the DFA.
When its motion was denied, the prosecution
filed
a
petition
for certiorari and mandamus with the Regional
Trial Court (RTC) of Pasig City.

defamation, in the name of

duty.3 The imputation of theft
vires and cannot be part of
functions.

official
is ultra
official

It is well-settled principle of law that a

public official may be liable in his personal
private capacity for whatever damage he
may have caused by his act done with
malice or in bad faith or beyond the scope
of his authority or jurisdiction.4 It appears
that even the government's chief legal counsel,
the Solicitor General, does not support the
stand taken by petitioner and that of the DFA.
Fourth, under the Vienna Convention on
Diplomatic Relations, a diplomatic agent,
assuming petitioner is such, enjoys immunity
from criminal jurisdiction of the receiving state
except in the case of an action relating to
any professional or commercial activity
exercised by the diplomatic agent in the
receiving
state
outside
his
official
functions.5
As
already
mentioned
above,
the
commission of a crime is not part of official
duty.
WHEREFORE, the petition is DENIED.

RTC: ordered MTC to enforce the warrant of

arrest it earlier issued. After the motion for
reconsideration was denied, petitioner elevated
the case to this Court via a petition for review
arguing that he is covered by immunity under
the Agreement and that no preliminary
investigation was held before the criminal
cases were filed in court.
The petition is not impressed with merit.
Second, under Section 45 of the Agreement
which provides:
Officers and staff of the Bank including for the
purpose of this Article experts and consultants
performing missions for the Bank shall enjoy
the following privileges and immunities:
a.) immunity from legal process with respect to
acts performed by them in their official capacity
except when the Bank waives the immunity.
the immunity mentioned therein is not
absolute, but subject to the exception that
the acts was done in "official capacity."
It is therefore necessary to determine if
petitioner's case falls within the ambit of
Section 45(a). Thus, the prosecution should
have been given the chance to rebut the DFA
protocol and it must be accorded the
opportunity to present its controverting
evidence, should it so desire.
Third, slandering a person could not
possibly be covered by the immunity
agreement because our laws do not allow
the commission of a crime, such as

R. Servacio (use this digest at your own risk)

Royal Crown International vs. NLRC

CORTES, J.:

Petitioner Royal Crown Internationale seeks

the nullification of a resolution of the National
Labor Relations Commission (NLRC) which
affirmed a decision of the Philippine Overseas
Employment Administration (POEA) holding it
liable to pay, jointly and severally with ZamelTurbag
Engineering
and
Architectural
Consultant (ZAMEL), private respondent
Virgilio P. Nacionales' salary and vacation pay
corresponding to the unexpired portion of his
employment contract with ZAMEL.
In 1983, ROYAL, a duly licensed private
employment agency, recruited and deployed
VIRGILIO for employment with ZAMEL as an
architectural draftsman in Saudi Arabia. On
May 25, 1983, a service agreement was
executed by private respondent and ZAMEL
whereby the former was to receive per month a
salary of US$500.00 plus US$100.00 as
allowance for a period of one (1) year
commencing from the date of his arrival in
Saudi Arabia. Private respondent departed for
Saudi Arabia on June 28,1983.
On February 13, 1984, ZAMEL terminated the
employment of VIRGILIO on the ground that
his performance was below par. For three
(3) successive days thereafter, he was
detained at his quarters and was not allowed to
report to work until his exit papers were ready.
On February 16, 1984, he was made to board
a plane bound for the Philippines.
Private respondent then filed on April 23, 1984
a complaint for illegal termination against
petitioner and ZAMEL with the POEA,
docketed as POEA Case No. (L) 84-04-401.
POEA decided in favor of VIRGILIO, holding
ZAMEL AND ROYAL solidarliy liable.
On July 18, 1986, petitioner filed thru its new
counsel a motion for reconsideration which
was treated as an appeal to the NLRC by the
POEA. Petitioner alleged that the POEA erred
in holding it solidarity liable for ZAMEL's
violation of private respondent's service
agreement even if it was not a party to the
agreement.
In a resolution promulgated on December 11,
1986, the NLRC affirmed the POEA decision,
holding that, as a duly licensed private
employment agency, petitioner is jointly and
severally liable with its foreign principal ZAMEL
for all claims and liabilities which may arise in
connection with the implementation of the
employment contract or service agreement
On March 30, 1987, the NLRC denied for lack
of merit petitioner's motion for reconsideration.
Hence, petitioner filed the present petition
captioned as "Petition for Review".
The case at bar involves two principal issues,
to wit:
I. Whether or not petitioner as a private
employment agency may be held jointly and
severally liable with the foreign-based
employer for any claim which may arise in

R. Servacio (use this digest at your own risk)

connection with the implementation of the

employment contracts of the employees
recruited and deployed abroad;
II. Whether or not sufficient evidence was
presented by petitioner to establish the
termination
of
private
respondent's
employment for just and valid cause.
I.
Petitioner contends that there is no provision in
the Labor Code, or the omnibus rules
implementing the same, which either provides
for the "third-party liability" of an employment
agency or recruiting entity for violations of an
employment agreement performed abroad, or
designates it as the agent of the foreign-based
employer for purposes of enforcing against the
latter claims arising out of an employment
agreement. Therefore, petitioner concludes, it
cannot be held jointly and severally liable with
ZAMEL for violations, if any, of private
respondent's service agreement.
Petitioner's conclusion is erroneous. Petitioner
conveniently overlooks the fact that it had
voluntarily assumed solidary liability under
the various contractual undertakings it
submitted to the Bureau of Employment
Services.

public respondent had not acquired

jurisdiction over ZAMEL through extraterritorial service of summons as mandated
by Section 17, Rule 14 of the Rules of
Court.
This argument is untenable. It is well-settled

that service upon any agent of a

foreign corporation, whether or not
engaged
in
business
in
the
Philippines,
constitutes
personal
service upon that corporation, and
accordingly,
judgment
may
be
rendered
against
said
foreign
corporation
[Facilities
Management
Corporation v. De la Osa, G.R. No. L-38649,
March 26, 1979, 89 SCRA 131]. In the case at
bar, it cannot be denied that petitioner is an
agent of ZAMEL. The service agreement was
executed in the Philippines between VIRGILIO
and the petitioner, for and in behalf of
ZAMEL.
Moreover, one of the documents presented by
petitioner as evidence, i.e., the counter-affidavit
of its General Manager Ms. Fausto, contains
an admission that it is the representative
and agent of ZAMEL
Petition is dismissed.

In applying for its license to operate a private

employment agency for overseas recruitment
and placement, petitioner was required to
submit, among others, a document or
verified undertaking whereby it assumed all
responsibilities for the proper use of its
license and the implementation of the
contracts of employment with the workers it
recruited
and
deployed
for
overseas
employment [Section 2(e), Rule V, Book 1,
Rules to Implement the Labor Code (1976)]. It
was also required to file with the Bureau a
formal appointment or agency contract
executed by the foreign-based employer in
its favor to recruit and hire personnel for
the former, which contained a provision
empowering it to sue and be sued jointly
and solidarily with the foreign principal for
any of the violations of the recruitment
agreement
and
the
contracts
of
employment [Section 10 (a) (2), Rule V, Book I
of the Rules to Implement the Labor Code
(1976)]. Petitioner was required as well to post
such cash and surety bonds as determined by
the Secretary of Labor to guarantee
compliance with prescribed recruitment
procedures, rules and regulations, and terms
and conditions of employment as appropriate
[Section 1 of Pres. Dec. 1412 (1978) amending
Article 31 of the Labor Code].
These contractual undertakings constitute
the legal basis for holding petitioner, and
other private employment or recruitment
agencies, liable jointly and severally with its
principal, the foreign-based employer, for all
claims filed by recruited workers which may
arise in connection with the implementation of
the service agreements or employment
contracts
Petitioner further argues that it cannot be
held solidarily liable with ZAMEL since

Mijares v. Ranada
Facts:

Invoking the Alien Tort Act, petitioners

Mijares, et al.*, all of whom suffered human
rights violations during the Marcos era,
obtained a Final Judgment in their favor
against the Estate of the late Ferdinand
Marcos amounting to roughly $1.9B in
compensatory and exemplary damages for
tortuous violations of international law in the
US District Court of Hawaii. This Final
Judgment was affirmed by the US Court of
Appeals.

an action based on judgment against an

estate, thus placing it beyond the ambit of
7(a) of Rule 141.
THEREFORE, What governs the proper
computation of the filing fees over
Complaints for the enforcement of foreign
judgments is 7(b)(3), involving other
actions not involving property.

As a consequence, Petitioners filed a

Complaint with the RTC Makati for the
enforcement of the Final Judgment, paying
P410 as docket and filing fees based on Rule
141, 7(b) where the value of the subject
matter is incapable of pecuniary estimation.
The Estate of Marcos however, filed a Motion
to Dismiss alleging the non-payment of the
correct filing fees. RTC Makati dismissed the
Complaint stating that the subject matter was
capable of pecuniary estimation as it involved a
judgment rendered by a foreign court ordering
the payment of a definite sum of money
allowing for the easy determination of the value
of the foreign judgment. As such, the proper
filing fee was P472M, which Petitioners had not
paid.
Issue: Whether or not the amount paid by the
Petitioners is the proper filing fee.
Held:
Yes, but on a different basisamount merely
corresponds to the same amount required
for other actions not involving property.
RTC Makati erred in concluding that the filing
fee should be computed on the basis of the
total sum claimed or the stated value of the
property in litigation. The Petitioners
Complaint was lodged against the Estate of
Marcos but it is clearly based on a
judgment, the Final Judgment of the US
District Court.
However, the Petitioners err in stating that the
Final Judgment is incapable of pecuniary
estimation because it is so capable. On this
point, Petitioners state that this might lead to
an instance wherein a first level court (MTC,
MeTC, etc.) would have jurisdiction to enforce
a foreign judgment. Under the B.P.129, such
courts are not vested with such jurisdiction.
33 of B.P.129 refers to instances wherein the
cause of action or subject matter pertains to an
assertion of rights over property or a sum of
money. But here, the subject matter is the
foreign judgment itself.
16 of B.P.129 reveals that the complaint
for enforcement of judgment even if
capable of pecuniary estimation would fall
under the jurisdiction of the RTCs. Thus,
the Complaint to enforce the US District
Court judgment is one capable of pecuniary
estimations but at the same time, it is also

R. Servacio (use this digest at your own risk)

SAUDIA VS. CA AND MORADA

FACTS: Petitioner SAUDIA hired private
respondent MORADA as a flight attendant in

1988, based in Jeddah. On 1990, while on a

lay-over in Jakarta, Indonesia, she went to
party with 2 male attendants, and on the
following morning in their hotel, one of the male
attendants attempted to rape her. She was
rescued by hotel attendants who heard her cry
for help. The Indonesian police arrested the 2.
MORADA returned to Jeddah, but was asked
by the company to go back to Jakarta and help
arrange the release of the 2 male attendants.
MORADA did not cooperate when she got to
Jakarta.
What followed was a series of interrogations
from the Saudi Courts which she did not
understand as this was in their language. In
1993, she was surprised, upon being ordered
by SAUDIA to go to the Saudi court, that she
was being convicted of (1) adultery; (2) going
to a disco, dancing and listening to the music in
violation of Islamic laws; and (3) socializing
with the male crew, in contravention of Islamic
tradition, sentencing her to five months
imprisonment and to 286 lashes. Only then did
she realize that the Saudi court had tried her,
together with the 2, for what happened in
Jakarta.
SAUDIA denied her the assistance she
requested, But because she was wrongfully
convicted, Prince of Makkah dismissed the
case against her and allowed her to leave
Saudi Arabia. Shortly before her return to
Manila, she was terminated from the service by
SAUDIA, without her being informed of the
cause.
On November 23, 1993, Morada filed a
Complaint for damages against SAUDIA, and
Khaled Al-Balawi (Al-Balawi), its country
manager.
SAUDIA ALLEGES: Private respondents claim
for alleged abuse of rights occurred in the
Kingdom of Saudi Arabia. It alleges that the
existence of a foreign element qualifies the
instant case for the application of the law of the
Kingdom of Saudi Arabia, by virtue of the lex
loci delicti commissi rule.
MORADA ALLEGES: Since her Amended
Complaint is based on Articles 19 and 21 of the
Civil Code, then the instant case is properly a
matter of domestic law.
ISSUE: WON the Philippine courts have
jurisdiction to try the case
HELD: YES.
On the presence of a Foreign Element in the
case: A factual situation that cuts across
territorial lines and is affected by the diverse
laws of two or more states is said to contain a
foreign element. The presence of a foreign
element is inevitable since social and
economic affairs of individuals and
associations are rarely confined to the
geographic limits of their birth or conception.

R. Servacio (use this digest at your own risk)

The forms in which this foreign element may

appear are many. The foreign element may
simply consist in the fact that one of the parties
to a contract is an alien or has a foreign
domicile, or that a contract between nationals
of one State involves properties situated in
another State. In other cases, the foreign
element may assume a complex form.

the parties. The choice of forum of the plaintiff

(now private respondent) should be upheld.

In the instant case, the foreign element

consisted in the fact that private respondent
Morada is a resident Philippine national, and
that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment
of Morada with the petitioner Saudia as a flight
stewardess, events did transpire during her
many occasions of travel across national
borders, particularly from Manila, Philippines to
Jeddah, Saudi Arabia, and vice versa, that
caused a conflicts situation to arise.

As to the choice of applicable law, we note that

choice-of-law problems seek to answer two
important questions:
(1) What legal system should control a given
situation where some of the significant facts
occurred in two or more states; and
(2) to what extent should the chosen legal
system regulate the situation.

COURT disagrees with MORADA that his is

purely a domestic case. However, the court
finds that the RTC of Quezon City possesses
jurisdiction over the subject matter of the suit.
Its authority to try and hear the case is
provided for under Section 1 of Republic Act
No. 7691, to wit:
BP129 Sec. 19. Jurisdiction in Civil Cases.
Regional Trial Courts shall exercise exclusive
jurisdiction:
xxx xxx xxx
(8) In all other cases in which demand,
exclusive of interest, damages of whatever
kind, attorney`ys fees, litigation expenses, and
cots or the value of the property in controversy
exceeds One hundred thousand pesos
(P100,000.00) or, in such other cases in Metro
Manila, where the demand, exclusive of the
above-mentioned items exceeds Two hundred
Thousand pesos (P200,000.00). (Emphasis
ours)
xxx xxx xxx
Section 2 (b), Rule 4 of the Revised Rules of
Court the venue, Quezon City, is
appropriate:
Sec. 2 Venue in Courts of First Instance.
[Now Regional Trial Court]
(a) xxx xxx xxx
(b) Personal actions. All other actions may
be commenced and tried where the defendant
or any of the defendants resides or may be
found, or where the plaintiff or any of the
plaintiff resides, at the election of the plaintiff.
Weighing the relative claims of the parties, the
court a quo found it best to hear the case in the
Philippines. Had it refused to take cognizance
of the case, it would be forcing plaintiff (private
respondent now) to seek remedial action
elsewhere, i.e. in the Kingdom of Saudi Arabia
where she no longer maintains substantial
connections. That would have caused a
fundamental unfairness to her.
Moreover, by hearing the case in the
Philippines no unnecessary difficulties and
inconvenience have been shown by either of

The trial court also acquired jurisdiction over

the parties. MORADA through her act of filing,
and SAUDIA by praying for the dismissal of the
Amended Complaint on grounds other than
lack of jurisdiction.

Considering that the complaint in the court a

quo is one involving torts, the connecting
factor or point of contact could be the place
or places where the tortious conduct or lex loci
actus occurred. And applying the torts principle
in a conflicts case, we find that the Philippines
could be said as a situs of the tort (the place
where the alleged tortious conduct took place).
This is because it is in the Philippines where
petitioner allegedly deceived private
respondent, a Filipina residing and working
here. According to her, she had honestly
believed that petitioner would, in the exercise
of its rights and in the performance of its
duties, act with justice, give her due and
observe honesty and good faith. Instead,
petitioner failed to protect her, she claimed.
That certain acts or parts of the injury allegedly
occurred in another country is of no moment.
For in our view what is important here is the
place where the over-all harm or the totality of
the alleged injury to the person, reputation,
social standing and human rights of
complainant, had lodged, according to the
plaintiff below (herein private respondent). All
told, it is not without basis to identify the
Philippines as the situs of the alleged tort.
In applying State of the most significant
relationship rule, to determine the State which
has the most significant relationship, the
following contacts are to be taken into account
and evaluated according to their relative
importance with respect to the particular issue:
(a) the place where the injury occurred; (b) the
place where the conduct causing the injury
occurred; (c) the domicile, residence,
nationality, place of incorporation and place of
business of the parties, and (d) the place
where the relationship, if any, between the
parties is centered.
As already discussed, there is basis for the
claim that over-all injury occurred and lodged in
the Philippines. There is likewise no question
that private respondent is a resident Filipina
national, working with petitioner, a resident
foreign corporation engaged here in the
business of international air carriage. Thus, the
relationship between the parties was
centered here, although it should be stressed

that this suit is not based on mere labor law

violations. From the record, the claim that the
Philippines has the most significant contact
with the matter in this dispute, raised by private
respondent as plaintiff below against defendant
(herein petitioner), in our view, has been
properly established.
NOTE:
These test factors or points of contact or
connecting factors could be any of the
following:
(1) The nationality of a person, his domicile, his
residence, his place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such
as a corporation;
(3) the situs of a thing, that is, the place where
a thing is, or is deemed to be situated. In
particular, the lex situs is decisive when real
rights are involved;
(4) the place where an act has been done, the
locus actus, such as the place where a
contract has been made, a marriage
celebrated, a will signed or a tort committed.
The lex loci actus is particularly important in
contracts and torts;
(5) the place where an act is intended to come
into effect, e.g., the place of performance of
contractual duties, or the place where a power
of attorney is to be exercised;
(6) the intention of the contracting parties as to
the law that should govern their agreement, the
lex loci intentionis;
(7) the place where judicial or administrative
proceedings are instituted or done. The lex fori
the law of the forum is particularly
important because, as we have seen earlier,
matters of procedure not going to the
substance of the claim involved are governed
by it; and because the lex fori applies
whenever the content of the otherwise
applicable foreign law is excluded from
application in a given case for the reason that it
falls under one of the exceptions to the
applications of foreign law; and
(8) the flag of a ship, which in many cases is
decisive of practically all legal relationships of
the ship and of its master or owner as such. It
also covers contractual relationships
particularly contracts of affreightment.

R. Servacio (use this digest at your own risk)