Conflict Digest- Real Properties-partial

CHAPTER XIX- REAL AND PERSONAL PROPERTIES1. Laurel v Garcia

LAUREL v GARCIA; OJEDA v MACARAIG (Consolidated Case)

NOTE: Issue on constitutionality of sale and bidding were not included; only those relevant to topic on real property

FACTS: The subject property (Roponggi Property) in this case is one of the 4 properties in Japan acquired by the Philippine government under the Reparations Agreement, intended to be used for national development projects and are part of the indemnification to the Filipino people for their losses in life and property and their suffering during WWII.

As intended, the Roponggi Property became the site of the Philippine Embassy until the latter was transferred to Nampeidai when the Roppongi building needed major repairs. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.

A proposal was presented to President Corazon C. Aquino to make the property the subject of a lease agreement with a Japanese firm - Kajima Corporation — which shall construct two (2) buildings in Roppongi. At the end of the lease period, all the leased buildings shall be occupied and used by the Philippine government. No change of ownership or title shall occur. However, the government has not acted favorably on this proposal.

Amidst opposition by various sectors, the Executive branch of the government has been pushing its decision to sell the reparations properties starting with the Roppongi lot. The property has twice been set for bidding but all failed. The third scheduled bidding was restrained by this Court

PETITIONER AND RESPONDENT'S ARGUMENTS IN G.R. 92013

Petitioner VP Laurel asserts that the Roppongi property is classified as one of public dominion, and not of private ownership under Article 420 of the Civil Code; that the Roppongi property comes under "property intended for public service" in paragraph 2 of the above provision. Hence, it cannot be appropriated. Noting the non-use of the Roppongi property at the moment, the petitioner avers that the same remains property of public dominion so long as the government has not used it for other purposes nor adopted any measure constituting a removal of its original purpose or use.

!!! FACTS RELATED TO CONFLICT OF LAWS !!!

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

the inapplicability of Philippine law regarding a property situated in Japan.

The respondents add that even assuming for the sake of argument that the Civil Code is applicable, the Roppongi property has ceased to become property of public dominion. It has become patrimonial property because it has not been used for public service or for diplomatic purposes for over thirteen (13) years now and because the intention by the Executive Department and the Congress to convert it to private use has been manifested by overt acts (See Full text for list of overt acts).

ISSUES

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

(2) WON there is a conflict of law situation to call for the application of conflict rule?

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

HELD:

(1) ANSWER TO ISSUE NO. 1

As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated.

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

The fact that the Roppongi site has not been used for a long time for actual Embassy service does not automatically convert it to patrimonial property. Any such conversion happens only if the property is withdrawn from public. A property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such.

Abandonment of the intention to use the Roppongi property for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite. Abandonment cannot be inferred from the non-use alone specially if the non-use was attributable not to the government's own deliberate and indubitable will but to a lack of financial support to repair and improve the property


We see no reason why a conflict of law rule should apply when no conflict of law situation exists. A conflict of law situation arises only when:

(1) There is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be determined; and

R e a l a n d p e r s o n a l p r o p e r ti e s ; w i l l s , s u c c e s s i o n a n d a d m i n i s t r a ti o n ; o b l i c o n P a g e 1 | 30

CONFLICT OF LAWS CASE DIGEST- 3RD EXAM BY 4-MANRESA 2015-2016

(2) A foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need to determine which law should apply.

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

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

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


There is no law authorizing its conveyance.

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

Resolution No. 55 of the Senate asking for the deferment of the sale of the Roppongi property does not withdraw the property from public domain much less authorize its sale. It is a mere resolution; it is not a formal declaration abandoning the public character of the Roppongi property

2. Lim v CA

Manuel Lim v CAFacts: Manuel Lim and Rosita Lim are the officers of the Rigi Bilt Industries, Inc. (RIGI). RIGI had been transacting business with Linton Commercial Company, Inc. The Lims ordered 100 pieces of mild steel plates from Linton and were delivered to the Lim’s place of business which was in Caloocan. To pay Linton, the Lims issued a postdated check for P51,800.00. On a different date, the Lims also ordered another 65 pcs of mild steel plates and were delivered in the place of business. They again issued another postdated check. On that same day, they also ordered purlins worth P241,800 which were delivered to them on various dates. The Lims issued 7 checks for this.

When the 7 checks were presented to the drawee bank (Solidbank), it was dishonored because payment for the checks had been stopped and/or insufficiency of funds. So the Lims were charged with 7 counts of violation of Bouncing Checks Law.The Malabon trial court held that the Lims were guilty of estafa and violation of BP 22. They went to CA on appeal.The CA acquitted the Lims of estafa, on the ground that the checks were not made in payment of an obligation contracted at the time of their issuance. However, the CA affirmed the finding that they were guilty of violation for BP 22. Motion for Reconsideration to SC.

Issue: Whether or not the issue was within the jurisdiction of the Malabon Trial Court

Held: Yes. The venue of jurisdiction lies either in the RTC Caloocan or Malabon Trial Court.BP 22 is a continuing crime. A person charged with a transitory crime may be validly tried in any municipality or territory where the offense was partly committed. In determining the proper venue, the ff. must be considered. 1) 7 checks were issued to Linton in its place of business in Navotas. 2) The checks were delivered Linton in the same place. 3) The checks were dishonored in Caloocan 4) The Lims had knowledge of their insufficiency of funds.

Under sec 191 of the Negotiable Instruments Law:ISSUE = 1ST delivery of the instrument complete in form to a person who takes it as a holderHOLDER = payee or indorsee of a bill/note who is in possession of it or the bearer

The place where the bills were written, signed or dated does not necessarily fix or determine the place where they were executed. It is the delivery that is important. It is the final act essential to its consummation of an obligation. An undelivered bill is unoperative. The issuance and delivery of the check must be to a person who takes it as a holder.Although Linton sent a collector who received the checks fr. The Lims at their place of business, the checks were actually issued and delivered to Linton in Navotas. The collector is not a holder or an agent, he was just an employee.

*SC affirms conviction of the Lims for violation of BP 22 and the decision of CA

3. King Mau Wu v Sycip



KING MAU WU, plaintiff-appellee, vs. FRANCISCO SYCIP, defendant-appellant. G.R. No. L-5897 April 23, 1954 PADILLA, J.:FACTS: This is an action to collect filed by King Maw Wu against Francisco Sycip for the amount of P59,082.92, together with lawful interests from 14 October 1947, the date of the written demand for payment, and costs.

King Mau Wuu, agent of Francisco Sycip, sold and delivered 1,000 tons of coconut oil emulsion to Jas Maxwell Fasset. Fasset in turn assigned it to Fortrade Corporation. Under an agency agreement executed in New York, which was addressed and accepted by Francisco Sycip on November 22, 1945, King Mau Wu was made the exclusive agent of Sycip in the sale of coconut oil and its derivaties outside the Philippines and was to be paid 2 ½ percent on the actual sale price of sales obtained thru his efforts, in addition to 50 percent of the difference between the authorized sale price and the actual sale price.

King Mau Wu claims that for the sale to Fasset, he is entitled under the agency contract to a commission of 2 ½ percent on the total actual sale price of 1,000 tons of coconut oil emulsion and 50 per cent of the difference between the authorized sale price of $350 per ton and the actual selling price of $400 per ton. As Sycip already made previous payments, King Mau Wu is just collecting on balance payments due to him.

Sycip, on the other hand, contends that the sales transaction was not covered by the agency contract dated November 22, 1946 as the sales was agreed upon on October 16, 1946 and that it was an independent and separate transaction for which King Mau Wu had been duly compensated.

Lower Court Ruling: Rendered judgment in favor of King Mau Wu and denied both the motion for reconsideration and new trial filed by Sycip. Sycip filed an appeal, contending that the Court of First Instance of Manila has no jurisdiction over the case as the agency contract was executed in New York.

ISSUE: Whether or not the Court of First Instance of Manila has jurisdiction.

RATIO: CFI has jurisdiction. A non-resident may sue a resident in the courts of this country where the defendant may be summoned and his property leviable upon execution in the case of a favorable, final, and executory judgment. It is a personal action for the collection of a sum of money which the Courts of First Instance have jurisdiction to try and decide. There is no conflict of laws involved in the case, because it is only a question of enforcing an obligation created by or arising from contract; and unless the enforcement of the contract be against public policy of the forum, it must be enforced.

The plaintiff is entitled to collect P7,589.88 for commission and P50,000 for one-half of the overprice, or a total of P57,589.88, lawful interests thereon from the date of the filing of the complaint, and costs in both instances.

4. La Chemise Lacoste v FernandezLA CHEMISE vs. FERNANDEZ, G.R. No. L-63796-97, May 2, 1984, GUTIERREZ, JR., J.:

FACTS: La Chemise Lacoste, the petitioner is a foreign corporation, organized and existing under the laws of France and not doing business in the Philippines, It is undeniable from the records that it is the actual owner of the abovementioned trademarks used on clothings and other goods specifically sporting apparels sold in many parts of the world and which have been marketed in the Philippines since 1964, The main basis of the private respondent's case is its claim of alleged prior registration.

In 1975, Hemandas & Co., a duly licensed domestic firm applied for and was issued Reg. No. SR-2225 (SR stands for Supplemental Register) for the trademark "CHEMISE LACOSTE & CROCODILE DEVICE" by the Philippine Patent Office for use on T-shirts, sportswear and other garment products of the company.

Two years later, it applied for the registration of the same trademark under the Principal Register. The Patent Office eventually issued an order dated March 3, 1977 which states that:

xxx xxx xxx

... Considering that the mark was already registered in the Supplemental Register in favor of herein applicant, the Office has no other recourse but to allow the application, however, Reg. No. SR-2225 is now being contested in a Petition for Cancellation docketed as IPC No. 1046, still registrant is presumed to be the owner of the mark until after the registration is declared cancelled.

Thereafter, Hemandas & Co. assigned to respondent Gobindram Hemandas all rights, title, and interest in the trademark "CHEMISE LACOSTE & DEVICE".

On November 21, 1980, the petitioner filed its application for registration of the trademark "Crocodile Device" (Application Serial No. 43242) and "Lacoste" (Application Serial No. 43241).The former was approved for publication while the latter was opposed by Games and Garments in Inter Partes Case No. 1658. In 1982, the petitioner filed a Petition for the Cancellation of Reg. No. SR-2225 docketed as Inter Partes Case No. 1689. Both cases have now been considered by this Court in Hemandas v. Hon. Roberto Ongpin (G.R. No. 65659).



Respondent Hemandas argues in his comment on the petition for certiorari that the petitioner being a foreign corporation failed to allege essential facts bearing upon its capacity to sue before Philippine courts. He states that not only is the petitioner not doing business in the Philippines but it also is not licensed to do business in the Philippines.

The argument has no merit. In the present case, the petitioner is a foreign corporation not doing business in the Philippines. The marketing of its products in the Philippines is done through an exclusive distributor, Rustan Commercial Corporation The latter is an independent entity which buys and then markets not only products of the petitioner but also many other products bearing equally well-known and established trademarks and tradenames. in other words, Rustan is not a mere agent or conduit of the petitioner.

The rules and regulations promulgated by the Board of Investments pursuant to its rule-making power under Presidential Decree No. 1789, otherwise known as the Omnibus Investment Code, support a finding that the petitioner is not doing business in the Philippines. Rule I, Sec. 1 (g) of said rules and regulations defines "doing business" as one" which includes, inter alia:

(1) ... A foreign firm which does business through middlemen acting on their own names, such as indentors, commercial brokers or commission merchants, shall not be deemed doing business in the Philippines. But such indentors, commercial brokers or commission merchants shall be the ones deemed to be doing business in the Philippines.

(2) Appointing a representative or distributor who is domiciled in the Philippines, unless said representative or distributor has an independent status, i.e., it transacts business in its name and for its account, and not in the name or for the account of a principal Thus, where a foreign firm is represented by a person or local company which does not act in its name but in the name of the foreign firm the latter is doing business in the Philippines.

xxx xxx xxx

Applying the above provisions to the facts of this case, we find and conclude that the petitioner is not doing business in the Philippines. Rustan is actually a middleman acting and transacting business in its own name and or its own account and not in the name or for the account of the petitioner.

But even assuming the truth of the private respondent's allegation that the petitioner failed to allege material facts in its petition relative to capacity to sue, the petitioner may still

maintain the present suit against respondent Hemandas. As early as 1927, this Court was, and it still is, of the view that a foreign corporation not doing business in the Philippines needs no license to sue before Philippine courts for infringement of trademark and unfair competition. Thus, in Western Equipment and Supply Co. v. Reyes (51 Phil. 115), this Court held that a foreign corporation which has never done any business in the Philippines and which is unlicensed and unregistered to do business here, but is widely and favorably known in the Philippines through the use therein of its products bearing its corporate and tradename, has a legal right to maintain an action in the Philippines to restrain the residents and inhabitants thereof from organizing a corporation therein bearing the same name as the foreign corporation, when it appears that they have personal knowledge of the existence of such a foreign corporation, and it is apparent that the purpose of the proposed domestic corporation is to deal and trade in the same goods as those of the foreign corporation.

We further held:

xxx xxx xxx

... That company is not here seeking to enforce any legal or control rights arising from, or growing out of, any business which it has transacted in the Philippine Islands. The sole purpose of the action:

Is to protect its reputation, its corporate name, its goodwill, whenever that reputation, corporate name or goodwill have, through the natural development of its trade, established themselves.' And it contends that its rights to the use of its corporate and trade name:

Is a property right, a right in rem, which it may assert and protect against all the world, in any of the courts of the world-even in jurisdictions where it does not transact business-just the same as it may protect its tangible property, real or personal, against trespass, or conversion. Citing sec. 10, Nims on Unfair Competition and TradeMarks and cases cited; secs. 21-22, Hopkins on TradeMarks, Trade Names and Unfair Competition and cases cited.' That point is sustained by the authorities, and is well stated in Hanover Star Mining Co. v. Allen and Wheeler Co. (208 Fed., 513). in which the syllabus says:

Since it is the trade and not the mark that is to be protected, a trade-mark acknowledges no territorial boundaries of municipalities or states or nations, but extends to every market where the trader's goods have become known and Identified by the use of the mark.



Our recognizing the capacity of the petitioner to sue is not by any means novel or precedent setting. Our jurisprudence is replete with cases illustrating instances when foreign corporations not doing business in the Philippines may nonetheless sue in our courts. In East Board Navigation Ltd, v. Ysmael and Co., Inc. (102 Phil. 1), we recognized a right of foreign corporation to sue on isolated transactions. In General Garments Corp. v. Director of Patents (41 SCRA 50), we sustained the right of Puritan Sportswear Corp., a foreign corporation not licensed to do and not doing business in the Philippines, to file a petition for cancellation of a trademark before the Patent Office.

More important is the nature of the case which led to this petition. What preceded this petition for certiorari was a letter complaint filed before the NBI charging Hemandas with a criminal offense, i.e., violation of Article 189 of the Revised Penal Code. If prosecution follows after the completion of the preliminary investigation being conducted by the Special Prosecutor the information shall be in the name of the People of the Philippines and no longer the petitioner which is only an aggrieved party since a criminal offense is essentially an act against the State. It is the latter which is principally the injured party although there is a private right violated. Petitioner's capacity to sue would become, therefore, of not much significance in the main case. We cannot snow a possible violator of our criminal statutes to escape prosecution upon a far-fetched contention that the aggrieved party or victim of a crime has no standing to sue.

In upholding the right of the petitioner to maintain the present suit before our courts for unfair competition or infringement of trademarks of a foreign corporation, we are moreover recognizing our duties and the rights of foreign states under the Paris Convention for the Protection of Industrial Property to which the Philippines and France are parties. We are simply interpreting and enforcing a solemn international commitment of the Philippines embodied in a multilateral treaty to which we are a party and which we entered into because it is in our national interest to do so.

5. General Garments v Director of Patents

GENERAL GARMENTS vs. DIR. OF PATENTS

FACTS: The General Garments Corporation, organized and existing under the laws of the Philippines, is the owner of the trademark "Puritan" issued by the Philippine Patent Office (PPO), for assorted men's wear, such as sweaters, shirts, jackets, undershirts and briefs.- The Puritan Sportswear Corporation, organized and existing in and under the laws of the state of Pennsylvania, U.S.A., filed a petition with the PPO for the cancellation of the trademark "Puritan" registered in the name of General Garments Corporation, alleging ownership and prior use in the Philippines of the said trademark on the same kinds of goods, which use it

had not abandoned; and alleging further that the registration thereof by General Garments Corporation had been obtained fraudulently and in violation of Sec 17(c) of RA 166, as amended, in relation to Sec 4(d) thereof.- General Garments Corporation moved to dismiss the petition on several grounds, all of which may be synthesized in one single issue -

ISSUE: WON Puritan Sportswear Corporation, which is a foreign corporation not licensed to do business and not doing business in the Philippines, has legal capacity to maintain a suit in the Philippine Patent Office for cancellation of a trademark registered therein. YES.

RULING: Section 17 (c) and Section 4 (d) of the Trademark Law provide respectively as follows:

SEC. 17. Grounds for cancellation. — Any person, who believes that he is or will be damaged by the registration of a mark or trade-name, may, upon the payment of the prescribed fee, apply to cancel said registration upon any of the following grounds:xxx xxx xxx(c) That the registration was obtained fraudulently or contrary to the provisions of section four, Chapter II thereof: ...

(d) SEC. 4. Registration of trademarks, tradenames and service-marks which shall be known as the principal register. The owner of a trade-mark, trade-name or service-mark used to distinguish his goods, business or services from the goods, business or services of others shall have the right to register the same on the principal register, unless it:xxx xxx xxx(d) Consists of or comprises a mark or trade-name which so resembles a mark or trade-name registered in the Philippines or a mark or tradename previously used in the Philippines by another and not abandoned, as to be likely, when applied to or used in connection with goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers; or ...

A.) Petitioner contends that respondent, being a foreign corporation which is not licensed to do and is not doing business in the Philippines, is not considered as a person under Philippine laws and consequently is not comprehended within the term "any person" who may apply for cancellation of a mark or trade-name under Section 17(c) of the Trademark Law aforequoted.

That respondent is a juridical person should be beyond serious dispute. The fact that it may not transact business in the Philippines unless it has obtained a license for that purpose, nor maintain a suit in Philippine courts for the recovery of any debt, claim or demand without such license (Secs. 68 and 69, Corporation Law) does not make respondent any less a juridical person. Indeed an exception to the license requirement has been recognized in this jurisdiction, namely, where a foreign corporation sues on an isolated transaction.



As first enunciated in Marshall-Wells Co. v. Elser & Co. "the object of the statute (Secs. 68 and 69, Corporation Law) was not to prevent the foreign corporation from performing single acts, but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts ... the implication of the law (being) that it was never the purpose of the legislature to exclude a foreign corporation which happens to obtain an isolated order for business from the Philippines, from securing redress in the Philippine Courts. ..." The principle has since then been applied in a number of other cases.

B.) To recognize respondent as a juridical person, however, does not resolve the issue in this case. It should be postulated at this point that respondent is not suing in our courts "for the recovery of any debt, claim or demand," for which a license to transact business in the Philippines is required by Section 69 of the Corporation Law, subject only to the exception already noted. Respondent went to the Philippine Patent Office on a petition for cancellation of a trademark registered by petitioner, invoking Section 17(c) in relations to Section 4(d) of the Trademark Law. A more or less analogous question arose in Western Equipment & Supply Co. v. Reyes, 51 Phil. 115. The syllabus of the report, which is a correct statement of the doctrine laid down in the decision, reads as follows:

A foreign corporation which has never done ... business in the Philippine Islands and which is unlicensed and unregistered to do business here, but is widely and favorably known in the Islands through the use therein of its products bearing its corporate and trade name has a legal right to maintain an action in the Islands.

xxx xxx xxx

The purpose of such a suit is to protect its reputation, corporate name and goodwill which has been established, through the natural development of its trade for a long period of years, in the doing of which it does not seek to enforce any legal or contract rights arising from, or growing out of any business which it has transacted in the Philippine Islands.

The right to the use of the corporate or trade name is a property right, a right in rem, which it may assert and protect in any of the courts of the world — even in jurisdictions where it does not transact business — just the same as it may protect its tangible property, real or personal against trespass or conversion.

In Asari Yoko Co., Ltd. v. Kee Boc (Jan. 20, 1961) 1 SCRA 1, this Court said: "The lawful entry into the Philippines of goods bearing the trademark since 1949 should entitle the owner of the trademark to the right to use the same to the exclusion of others. Modern trade and commerce demands that depredations on legitimate trademarks of non-nationals should not be countenanced." It may be added here that the law against such depredations is not only for the protection of the owner of the trademark who has acquired prior use thereof but also, and more importantly, for the protection of purchasers

from confusion, mistake or deception as to the goods they are buying. This is clear from a reading of Section 4(d) of the Trademark Law.

C.) Petitioner argues that the ruling in Western Equipment has been superseded by the later decision of this Court in Mentholatum Co., Inc. v. Mangaliman (1941), 72 Phil. 524, where it was held that inasmuch as Mentholatum Co., Inc. was a foreign corporation doing business in the Philippines without the license required by Section 68 of the Corporation Law it could not prosecute an action for infringement of its trademark which was the subject of local registration. The court itself, however, recognized a distinction between the two cases, in that in Western Equipment the foreign corporation was not engaged in business in the Philippines, and observed that if it had been so engaged without first obtaining a license "another and a very different question would be presented."

Parenthetically, it may be stated that the ruling in the Mentholatum case was subsequently derogated when Congress, purposely to "counteract the effects" of said case, enacted Republic Act No. 638, inserting Section 21-A in the Trademark Law, which allows a foreign corporation or juristic person to bring an action in Philippine courts for infringement of a mark or trade-name, for unfair competition, or false designation of origin and false description, "whether or not it has been licensed to do business in the Philippines under Act 459, as amended, otherwise known as the Corporation Law, at the time it brings complaint."

Petitioner argues that Section 21-A militates against respondent's capacity to maintain a suit for cancellation, since it requires, before a foreign corporation may bring an action, that its trademark or tradename has been registered under the Trademark Law. The argument misses the essential point in the said provision, which is that the foreign corporation is allowed there under to sue "whether or not it has been licensed to do business in the Philippines" pursuant to the Corporation Law (precisely to counteract the effects of the decision in the Mentholatum case).

In any event, respondent in the present case is not suing for infringement or unfair competition under Section 21-A, but for cancellation under Section 17, on one of the grounds enumerated in Section 4. The first kind of action, it maybe stated, is cognizable by the Courts of First Instance (Sec. 27); the second partakes of an administrative proceeding before the Patent Office (Sec. 18, in relation to Sec. 8). And while a suit under Section 21-A requires that the mark or tradename alleged to have been infringed has been "registered or assigned" to the suing foreign corporation, a suit for cancellation of the registration of a mark or tradename under Section 17 has no such requirement. For such mark or tradename should not have been registered in the first place (and consequently may be cancelled if so registered) if it "consists of or comprises a mark or tradename which so resembles a mark or tradename ... previously used in the Philippines by another and not abandoned, as to be likely, when



applied to or used in connection with goods, business or services of the applicant, to cause confusion or mistake or to deceive purchasers; ..."(Sec. 4d).

6. Sterling Products v BayerSterling Products Vs. Farbenfabriken BayerGR L-19906, 30 April 1969

Facts: In this, a case for trademark infringement and unfair competition, each of the principal suitors, namely, plaintiff Sterling Products International, Inc. (SPI) and defendant Farbenfabriken Bayer Aktiengesellschaft (FBA), seeks to exclude the other from use in the Philippines of the trademarks BAYER and BAYER CROSS IN CIRCLE. SPI asks this Court to strike down FBA's registration of BAYER CROSS IN CIRCLE covering industrial and agricultural products — insecticides and other chemicals, not medicines — from the supplemental register. FBA, for its part, prays for the cancellation from the principal register of SPI's certificates of registration of the trademarks aforesaid for medicines.

Contending parties are doing business in the Philippines. SPI markets Bayer Aspirin, Aspirin for Children and Cafiaspirina. The BAYER and BAYER CROSS IN CIRCLE are being used by SPI in the Philippines only for said products — Bayer Aspirin, Cafiaspirina and Bayer Aspirin for Children. On the containers (bottles or printed celophane strips, which, in turn, are placed in cardboard boxes) of Bayer Aspirin, Aspirin for Children and Cafiaspirina, SPI features the trademarks BAYER and BAYER CROSS IN CIRCLE. FBA thru Allied Manufacturing & Trading Co., Inc.3 distributes "Folidol" and other industrial and agricultural chemicals. FBA's "Folidol" (in steel or fiber drums or aluminum containers) displays a replica of SPI's trademark BAYER CROSS IN CIRCLE; on the tin cap and label of the container.

The Bayer Cross in circle “trademark was registered in Germany in 1904 to Farbenfabriken vorm. Friedr. Bayer (FFB), successor to the original Friedr. Bauyer et. Comp., and predecessor to Farbenfabriken Bayer aktiengessel craft (FBA). The “Bayer, and “Bayer Cross in circle” trademarks were acquired by Sterling Drug Inc. when it acquired FFB’s subsidiary Bayer Co. of New York as a result of the sequestration of its assets by the US Alien Property Custodian during World War I.

Bayer products have been known in Philippines by the close of the 19th century. Sterling Drugs, Inc., however, owns the trademarks “Bayer” in relation to medicine. FBA attempted to register its chemical products with the “Bayer Cross in circle” trademarks. Sterling Products International and FBA seek to exclude each other from use of the trademarks in the Philippines. The trial court sustained SPI’s right to use the Bayer trademark for medicines and directed FBA to add distinctive word(s) in their mark to indicate their products come from Germany.” Both appealed.

Issue: Whether SPI’s ownership of the trademarks extends to products not related to medicine.

Held: No. SPI’s certificates of registration as to the Bayer trademarks registered in the Philippines cover medicines only. Nothing in the certificates include chemicals or insecticides. SPI thus may not claim “first use” of the trademarks prior to the registrations thereof on any product other than medicines. For if otherwise held, a situation may arise whereby an applicant may be tempte3d to register a trademark on any and all goods which his mind may conceive even if he had never intended to use the trademark for the said goods.

Omnibus registration is not contemplated by the Trademark Law. The net result of the decision is that SPI may hold on its Bayer trademark for medicines and FBA may continue using the same trademarks for insecticide and other chemicals, not medicine.The formula fashioned by the lower court avoids the mischief of confusion of origin, and does not visit FBA with reprobation and condemnation. A statement that its product came from Germany anyhow is but a statement of fact.

Neither will the 1927 registration in the United States of the BAYER trademark for insecticides serve plaintiff any. The United States is not the Philippines. Registration in the United States is not registration in the Philippines. At the time of the United States registration in 1927, we had our own Trademark Law, Act No. 666 aforesaid of the Philippine Commission, which provided for registration here of trademarks owned by persons domiciled in the United States.

What is to be secured from unfair competition in a given territory is the trade which one has in that particular territory. There is where his business is carried on; where the goodwill symbolized by the trademark has immediate value; where the infringer may profit by infringement.

There is nothing new in what we now say. Plaintiff itself concedes that the principle of territoriality of the Trademark Law has been recognized in the Philippines, citing Ingenohl vs. Walter E. Olsen, 71 L. ed. 762. As Callmann puts it, the law of trademarks "rests upon the doctrine of nationality or territoriality."

Accordingly, the 1927 registration in the United States of the BAYER trademark would not of itself afford plaintiff protection for the use by defendants in the Philippines of the same trademark for the same or different products.

7. American President Lines v Klepper

American Lines vs Klepper

Facts: Klepper shipped on board the S.S. President Cleveland at Yokohama, Japan one life van containing personal and household effects. The ship arrived in the port of Manila and



while the lift van was being unloaded by the Gantry crane operated by Delgado Brothers, Inc., it fell on the pier and its contents were spilled and scattered. A survey was made and the result was that Klepper suffered damages totalling P6,729.50 arising out of the breakage, denting and smashing of the goods.

Klepper brought this action before the Court of First Instance of Manila to recover the said sum as damages when the goods were being unloaded from a ship owned and operated by the American President Lines plus the sum of P2,000.00 as sentimental value attorney’s fees.

The trial court ordered the shipping company to pay plaintiff the sum of P6,729.50, value of the goods damaged. The court ordered that co-defendant Delgado Brothers, Inc. should pay the shipping company the same amounts by way of reimbursement.

But, while petitioner does not dispute its liability as common carrier, it however contends that the same cannot exceed $500.00 invoking in its favor the bill of lading Exhibit A and Section 4(5) of the Carriage of Goods by Sea Act (Commonwealth Act No. 65).

Issue: Whether or not Carriage of Goods by Sea Act should control in this case. NO

Ruling: With regard to the contention that the Carriage of Goods by Sea Act should also control this case, the same is of no moment. Article 1753 1 provides that the law of the country to which the goods are to be transported shall govern the liability of the common carrier in case of loss, destruction or deterioration. This means the law of the Philippines, or our new Civil Code. Under Article 1766, "In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws," and here we have provisions that govern said rights and obligations (Articles 1736, 1737, and 1738). Therefore, although Section 4(5) of the Carriage of Goods by Sea Act states that the carrier shall not be liable in an amount exceeding $500.00 per package unless the value of the goods had been declared by the shipper and inserted in the bill of lading, said section is merely suppletory to the provisions of the Civil Code. In this respect, we agree to the opinion of the Court of Appeals.

In accepting the bill of lading, the shipper, consignee and owner of the goods agree to be bound by all its stipulations, exceptions and conditions, whether written, printed or stamped on the front or back. The liability of the carrier with regard to the damage of the goods should only be limited to $500.00 contrary to the conclusion reached by the Court of Appeals.

Just in case other matters shall be asked:

The party primarily liable to plaintiff is appellant American President Lines, Ltd.,being a common carrier. Its responsibility is extraordinary and lasts from the time the goods are placed in its possession until they are delivered, actually or constructively, to the consignee or to the person who has a right to receive them.

It can only be exempt therefrom for causes enumerated in Article 1734.

The pertinent provision of the bill of lading provides:jgc:chanr

"17. In case of any loss or damage to or in connection with goods exceeding in actual value $500 lawful money of the United States, per package, . . . the value of the goods shall be deemed to be $500 per package . . . on which basis the freight is adjusted and the Carrier’s liability, if any, shall be determined on the basis of a value of $500 per package . . . or pro rata in case of partial loss or damage, unless the nature of the goods and a valuation higher than $500 shall have been declared in writing by the shipper upon delivery to the Carrier and inserted in this bill of lading and extra freight paid if required and in such case if the actual value of the goods per package . . . shall exceed such declared value, the value shall nevertheless be deemed to be the declared value and the Carrier’s liability, if any, shall not exceed the declared value and any partial loss or damage shall be adjusted pro rata on the basis of such declared value."cralaw virtua1aw libra

While it is apparent from the above that the carrier has expressly agreed that in case of any loss or damage to the goods in question exceeding the sum of $500.00 per package the extent of its liability shall be deemed to be merely $500.00 per package, and not more, the Court of Appeals ruled out the above stipulation, holding that the same is not binding upon the shipper. Its reasoning follows: "Neither plaintiff nor any agent of his signed the bill of lading; neither has agreed to the two clauses just recited. In fact, plaintiff received the bill of lading only after he had arrived at Manila. In this posture and lifting from the decision of the Supreme Court in Mirasol v. Robert Dollar Co., 53 Phil., 124, 128, we hold that plaintiff ‘was not legally bound by the clause which purports to limit defendants’ liability’." Petitioner now assigns this finding as an error. However there appears on the very face of the bill of lading: "IN ACCEPTING THIS BILL OF LADING the shipper, consignee and owner of the goods agree to be bound by all its stipulations, exceptions, and conditions whether written, printed, or stamped on the front or back hereof, any local customs or privileges to the contrary notwithstanding. Respondent cannot elude its provisions simply because they prejudice him and take advantage of those that are beneficial. Secondly, the fact that respondent shipped his goods on board the ship of petitioner and paid the corresponding freight thereon shows that he impliedly accepted the bill of lading which was issued in connection with the shipment in question. These circumstances take this case out of our ruling in the Mirasol case (invoked by the Court of Appeals)

8. CIR v Anglo-California BankCIR vs ANGLO CALIFORNIA BANKNo. L-12476 January 29, 1960

FACTS: Respondent (Calamba Sugar Estate, Inc.) herein represented by its trustee, the Anglo California National Bank, a foreign corporation organized and existing under the laws of



the State of California, U.S.A., duly licensed (on May 8, 1946) to do business in the Philippines.

It has consistently filed its income tax returns here through its resident attorney-in-fact.

On May 14, 1956, the petitioners Collector of Internal Revenue the corporation of an assessment for alleged deficiency income taxes for the years 1953, 1954 and 1955, supposedly based upon capital again derived from the respondent's sale to the Pasumil Planters, Inc., of P250,000 shares of the capital stock of the Pampanga Sugar Mills (a domestic corporation) and of a promissory note, dated January 1, 1950, executed by the Pampanga Sugar Mills in the sum of $500,000.00.

In an appeal by the respondent from the ruling of the Collector, the Court of Tax Appeals reversed said ruling and absolved the respondent form liability.

On appeal, parties stipulated that: the negotiations leading to the execution and conclusion of the agreement of sale, dated January 16, 1953, between the respondent corporation and the Pasumil Planters, Inc., took place in San Francico, California; the payment on account of the sale were made by the Pasumil Planters, Inc., at the same foreign city; and the sale was made under and in accordance with the laws of that State. From the evidence presented, it also appears that on December 16, 1955, the Securities and Exchange Commission cancelled respondent's license to transact business in the Philippines, and on December 30, 1955, the corporation was dissolved in accordance with the California law.

ISSUE: whether the capital gains obtained from the sale constituted income from sources within or without the Philippines.

HELD: It was the opinion of the Tax Court that they were income derived from abroad, and not subject to income tax.

It is hardly disputable that although shares of stock of a corporation represent equities may consist of real as well as personal properties therein, they are considered under applicable law and jurisprudence as intangible personal properties (see Art. 417 [2], Civil Code of the Philippines; Sec. 35, Act No. 1459).

Section 24 of the National Internal Revenue Codes levies income taxes on foreign corporations only on income derived from sources within the Philippines; and with respect to capital gains on the sale of personal properties, section 37 (e) of the same Tax Code deems the place of sale as also that place or source of the capital gain:

... Gains, profit, and income derived from the purchase of personal within and its sale without the Philippines or from the purchase or personal property without and its sale within the Philippines, shall be treated as derived entirely from sources within the country in which sold. (Emphasis supplied)

Construing the same provision of law (which is section 119 (e) of the 1934 Act, U.S.I.R.C.), Unites States courts are in accord in disallowing the imposition of income taxes by its government on capital gains where the sale takes place outside its territorial jurisdiction. It is likewise the prevailing view that in ascertaining the place of sale, the determination of when and where title to the goods passes from the seller to the buyer is decisive (East Coast Oil Co. vs. Comm., 31 B.T.A. 588, aff'd 85 F. [2d] 322, cer. den-299 U.S. 608, 81 L. Ed. 449, 57 S. Ct. 234; also Disconto-Gaesellcraft vs. U.S. Steel Corporation, 267 U.S. 22; Compania General de Tabacos de Filipinas vs. Collector, 279 U.S. 306, 73 L. Ed. 704, 49 S. Ct. 304).

In this case, it is admitted that the negotiation, perfection and consummation of the contract of sale were all done in California, U.S.A. It follows that title to the shares of stock passed from the vendor to the vendee at said place, from which time the incidents of ownership vested on the buyer.

The Collector argues that the situs of shares of stock of a corporation is considered to be at the domicile of the latter, as held in some cases cited by him; but in the instant problem, we are not concerned with the imposition of taxes upon the shares themselves, but on a sale effected abroad that resulted in capital gains, for which there is a specific provision of law (Sec. 37 [e] N.I.R.C.). As stated by the Tax Court, there is a distinction between the situs of personal properties and the situs of the income derived from the sale or exchange of such properties.

As to the contention that section 35 of the Corporation Law (Act No. 1459) requires the transfer to be noted and entered not invalidate the transfer between the parties nor is it essential to vest title upon the vendee. The capital gains, now sought to be taxed, arose from the severance of gain, from the investment occasioned by the transfer of title abroad and not on account of any registration that might be effected later.

CHAPTER XX- Wills, Succession and Administration 9. Vda. De Perez v Tolete

VDA. DE PEREZ v. TOLETE , GR No. 76714 JUNE 2, 1994

FACTS: Dr. Jose Cunanan and his wife, Dr. Evelyn Perez-Cunanan, who became American citizens and residents of New York, each executed a will in New York, containing provisions on presumption of survivorship (in the event that it is not known which one of the spouses died first, the husband shall be presumed to have predeceased his wife).

Later, the entire family perished in a fire. Thus, Rafael Cunanan, who was named trustee in Jose’s will, filed for separate probate proceedings of the wills.

Later, Evelyn’s mother, Salud Perez, filed a petition for reprobate in Bulacan. Rafael opposed, arguing that Salud was not an heir according to New York law. He contended that since the wills were executed in New York, New York law should govern. He further argued that, by New York law, he and his siblings were Jose’s



heirs and as such entitled to notice of the reprobate proceedings, which Salud failed to give.

For her part, Salud said she was the sole heir of her daughter, Evelyn, and that the two wills were in accordance with New York law. But before she could present evidence to prove the law of New York, the reprobate court already issued an order, disallowing the wills.

ISSUE: WON the reprobate of the wills should be allowed? –

NO, for lack proof of foreign laws upon which the probate is based.

WON notice to the heirs of Jose was required? – YES, as required by Rule 76 Sec 3 and 4.

HELD:

Extrinsic Validity of Wills of Non-Resident Aliens

The two wills of the Cunanan spouses, who were American citizens, will only be effective in the Philippines upon compliance with the following provision of the Civil Code of the Philippines:

Art. 816. The will of an alien who is abroad produces effect in the Philippines if made with the formalities prescribed by the law of the place in which he resides, or according to the formalities observed in his country, or in conformity with those which this Code prescribes.

Thus, proof that both wills conform with the formalities prescribed by New York laws or by Philippine laws is imperative.

Evidence for Reprobate of Wills Probated Outside the Philippines

The evidence necessary for the reprobate or allowance of wills which have been probated outside of the Philippines are as follows: (1) the due execution of the will in accordance with the foreign laws; (2) the testator has his domicile in the foreign country and not in the Philippines; (3) the will has been admitted to probate in such country; (4) the fact that the foreign tribunal is a probate court, and (5) the laws of a foreign country on procedure and allowance of wills

Except for the first and last requirements, the petitioner Salud submitted all the needed evidence.

The necessity of presenting evidence on the foreign laws upon which the probate in the foreign country is based is impelled by the fact that our courts cannot take judicial notice of them.

On Lack of Notice to Jose’s Heirs

Salud has always considered herself the sole heir of Dr. Evelyn Perez-Cunanan, and because she does not consider herself an heir of Dr. Jose F. Cunanan, she noticeably failed to notify his heirs of the filing of the proceedings. Thus, even in the instant petition, she only impleaded respondent Judge, forgetting that a judge whose order is being assailed is merely a nominal or formal party.

The rule that the court having jurisdiction over the reprobate of a will shall "cause notice thereof to be given as in case of an original will presented for allowance, means that with regard to notices, the will probated abroad should be treated as if it were an "original will" or a will that is presented for probate for the first time.

Accordingly, compliance with Sections 3 and 4 of Rule 76, which require publication and notice by mail or personally to the "known heirs, legatees, and devisees of the testator resident in the Philippines" and to the executor, if he is not the petitioner, are required.

The brothers and sisters of Dr. Jose F. Cunanan, contrary to petitioner's claim, are entitled to notices of the time and place for proving the wills. Under Section 4 of Rule 76 of the Revised Rules of Court, the "court shall also cause copies of the notice of the time and place fixed for proving the will to be addressed to the designated or other known heirs, legatees, and devisees of the testator, . . . "

WHEREFORE, the questioned Order is SET ASIDE. Respondent Judge shall allow petitioner reasonable time to submit evidence needed for the joint probate of the wills of the Cunanan spouses and see to it that the brothers and sisters of Dr. Jose F. Cunanan are given all notices and copies of all pleadings pertinent to the probate proceedings.

10. Llorente v CA

LLORENTE vs. COURT OF APPEALS

FACTS: Lorenzo (an enlisted serviceman of US Navy) and petitioner Paula were married before a parish priest in Nabua, Camarines Sur

Before the outbreak of the Pacific War, Lorenzo departed for the US and Paula stayed in the conjugal home in Camarines Sur

On November 30, 1943, Lorenzo was admitted to United States citizenship and Certificate of Naturalization was issued in his favor.



Upon the liberation of the Philippines by the American Forces in 1945, Lorenzo visited the Philippines and discovered that his wife Paula was pregnant and was "living in" and having an adulterous relationship with his brother.

Paula gave birth to a boy registered in the Office of the Registrar of Nabua as "Crisologo Llorente," with the certificate stating that the child was not legitimate.

Lorenzo returned to US and on filed for divorce with the Superior Court of the State of California in and for the County of San Diego which was granted. Paula was represented by counsel, John Riley, and actively participated in the proceedings.

Lorenzo returned to the Philippine and married Alicia F. Llorente in Manila. Alicia had no knowledge of the first marriage. From 1958 to 1985, Lorenzo and Alicia lived together as husband and wife and produced three children, Raul, Luz and Beverly, all surnamed Llorente

On March 13, 1981, Lorenzo executed a Last Will and Testament and had it notarized. In the will, Lorenzo bequeathed all his property to Alicia and their three children. (See Full Text for the dispositions)

On December 14, 1983, Lorenzo filed with the RTC a petition for the probate and allowance of his last will and testament wherein Lorenzo moved that Alicia be appointed Special Administratrix of his estate. RTC admitted the will to probate. But before the proceedings could be terminated, Lorenzo died.

Paula filed with the same court a petition for letters of administration over Lorenzo’s estate in her favor. Paula contended (1) that she was Lorenzo’s surviving spouse, (2) that the various property were acquired during their marriage, (3) that Lorenzo’s will disposed of all his property in favor of Alicia and her children, encroaching on her legitime and 1/2 share in the conjugal property

Alicia also filed in the testate proceeding a petition for the issuance of letters testamentary.

RTC gave due course to Paula’s petition. RTC pronounced that the divorce decree granted to the late Lorenzo Llorente is void and inapplicable in the Philippines, therefore the marriage he contracted with Alicia Fortunato is likewise void. This being so the petition of Alicia F. Llorente for the issuance of letters testamentary is denied. Likewise, she is not entitled to receive any share from the estate even if the will especially said so her relationship with Lorenzo having gained the status of paramour which is under Art. 739 (1).

RTC also declared the intrinsic disposition of the will as void and Paula as conjugal partner is entitled to one-half of their conjugal properties, and as primary compulsory heir, she is also entitled to one-third of the estate. (Amending its earlier decision) RTC declared Beverly Llorente as the only illegitimate child of Lorenzo, entitling her to one-third (1/3) of the estate and one-third (1/3) of the free portion of the estate

CA affirmed with modification: that Alicia is declared as co-owner of whatever properties she and the deceased may have acquired during the twenty-five (25) years of cohabitation.

ISSUE # 1: WHAT IS THE APPLICABLE LAW? FOREIGN LAW

The fact that the late Lorenzo N. Llorente became an American citizen long before and at the time of: (1) his divorce from Paula; (2) marriage to Alicia; (3) execution of his will; and (4) death, is duly established, admitted and undisputed.

Thus, as a rule, issues arising from these incidents are necessarily governed by foreign law. (READ ARTICLES 15 AND 16 OF CIVIL CODE)

True, foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them. Like any other fact, they must be alleged and proved.

While the substance of the foreign law was pleaded, the Court of Appeals did not admit the foreign law. The Court of Appeals and the trial court called to the fore the renvoi doctrine, where the case was "referred back" to the law of the decedent’s domicile, in this case, Philippine law

First, there is no such thing as one American law. The "national law" indicated in Article 16 of the Civil Code cannot possibly apply to general American law. There is no such law governing the validity of testamentary provisions in the United States. Each State of the union has its own law applicable to its citizens and in force only within the State. It can therefore refer to no other than the law of the State of which the decedent was a resident. Second, there is no showing that the application of the renvoi doctrine is called for or required by New York State law.

ISSUE # 2: WON THE WILL IS VALID (INTRINSIC AND EXTRINSIC)

HELD: Court remanded the case to the court of origin for determination of the intrinsic validity of Lorenzo N. Llorente’s will and determination of the parties’ successional rights allowing proof of foreign law with instructions that the trial court shall proceed with all deliberate dispatch to settle the estate of the deceased within the framework of the Rules of Court.

The Civil Code provides:

"Art. 17. The forms and solemnities of contracts, wills, and other public instruments shall be governed by the laws of the country in which they are executed."

Whether the will is intrinsically valid and who shall inherit from Lorenzo are issues best proved by foreign law which must be pleaded and proved.

Whether the will was executed in accordance with the formalities required is answered by referring to Philippine law. In fact, the will was duly probated.

As a guide however, the trial court should note that whatever public policy or good customs may be involved in our system of legitimes, Congress did not intend to extend the same to the



succession of foreign nationals. Congress specifically left the amount of successional rights to the decedent's national law.

/////

OTHER ISSUE: WON then Foreign Divorce is valid; YES

In Van Dorn v. Romillo, Jr.40 we held that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces, the same being considered contrary to our concept of public policy and morality. In the same case, the Court ruled that aliens may obtain divorces abroad, provided they are valid according to their national law.

Citing this landmark case, the Court held in Quita v. Court of Appeals, that once proven that respondent was no longer a Filipino citizen when he obtained the divorce from petitioner, the ruling in Van Dorn would become applicable and petitioner could "very well lose her right to inherit" from him.

In Pilapil v. Ibay-Somera, we recognized the divorce obtained by the respondent in his country, the Federal Republic of Germany. There, we stated that divorce and its legal effects may be recognized in the Philippines insofar as respondent is concerned in view of the nationality principle in our civil law on the status of persons.

For failing to apply these doctrines (on divorce), the decision of the Court of Appeals must be reversed. We hold that the divorce obtained by Lorenzo H. Llorente from his first wife Paula was valid and recognized in this jurisdiction as a matter of comity. Now, the effects of this divorce (as to the succession to the estate of the decedent) are matters best left to the determination of the trial court

11. Quita v CAQuita vs Court of Appeals and Blandina Dandan December 22, 1998Facts: Fe D. Quita, the petitioner, and Arturo T. Padlan, both Filipinos, were married in the Philippines on May 18, 1941. They got divorced in San Francisco on July 23, 1954. Both of them remarried another person. Arturo remarried Bladina Dandan, the respondent herewith. They were blessed with six children. On April 16, 1972, when Arturo died, the trial court was set to declare as to who will be the intestate heirs. The trial court invoking Tenchavez vs Escano case held that the divorce acquired by the petitioner is not recognized in our country. Private respondent Blandina stressed that the citizenship of petitioner was relevant in the light of the ruling in Van Dorn v. Rommillo Jr that aliens who obtain divorce abroad are recognized in the Philippines provided they are valid according to their national law. The petitioner herself answered that she was an American citizen since 1954. Through the hearing she also stated that Arturo was a Filipino at the time she obtained the divorce. Implying the she was no longer a Filipino citizen. The Trial court disregarded the respondent’s statement. The net hereditary

estate was ordered in favor the Fe D. Quita and Ruperto, the brother of Arturo. Blandina and the Padlan children moved for reconsideration. On February 15, 1988 partial reconsideration was granted declaring the Padlan children, with the exception of Alexis, entitled to one- half of the estate to the exclusion of Ruperto Padlan, and the other half to Fe Quita. Private respondent (Blandina) was not declared an heir because her marriage (in 1947) to Arturo was declared void since it was celebrated during the existence of his previous marriage to petitioner. Blandina and her children appeal to the Court of Appeals that the case was decided without a hearing in violation of the Rules of Court.ISSUES: WON THE DIVORCE WAS VALID

WHO WAS THE SURVIVING SPOUSE? (FOR PURPOSES OF SUCCESSION)HELD: Case was REMANDED in order to determine Fe Quita’s citizenship at the time of divorce. Blandina's side implied that Fe was no longer a Filipino citizen when she acquired a divorce decree.(hence valid) However, this was not threshed out during the trial so the court ordered the remand of the case. However, It was already settled that as to the marriage between Blandina and Arturo (in 1947) was contracted when the 1st marriage between Arturo and Fe was still subsisting, it is considered bigamous and thus void. Blandina is clearly not the surviving spouse.-but as the children of Blandina were all recognized by Arturo as his children, (one child, alexis was an acknowledged illegitimate child) these children are assured of shares in the intestate estate.

12. Estate of Bohanan v BohananTESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., executor-appellee, vs.MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA BOHANAN, oppositors-appellants. G.R. No. L-12105 January 30, 1960

FACTS: On April 24, 1950, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding, admitted to probate a last will and testament of C. O. Bohanan. Testator was born in Nebraska and therefore a citizen of that state, or at least a citizen of California where some of his properties are located. His children opposed on the ground that the dispositions on his will impairs their legitime as provided for the laws of succession in the Philippines.

RTC: Ruled against the oppositors.

It will be seen from the will, that out of the total estate (after deducting administration expenses) of P211,639.33 in cash, the testator gave his grandson P90,819.67 and one-half of all shares of stock of several mining companies and to his brother and sister the same amount. To his children he gave a legacy of only P6,000 each, or a total of P12,000.



The wife Magadalena C. Bohanan and her two children question the validity of the testamentary provisions disposing of the estate in the manner above indicated, claiming that they have been deprived of the legitime that the laws of the form concede to them.

The most important issue is the claim of the testator's children, Edward and Mary Lydia, who had received legacies in the amount of P6,000 each only, and, therefore, have not been given their shares in the estate which, in accordance with the laws of the forum, should be two-thirds of the estate left by the testator. Is the failure of the testator to give his children two-thirds of the estate left by him at the time of his death, in accordance with the laws of the forum valid?

The old Civil Code, which is applicable to this case because the testator died in 1944, expressly provides that successional rights to personal property are to be earned by the national law of the person whose succession is in question. Says the law on this point:

Nevertheless, legal and testamentary successions, in respect to the order of succession as well as to the extent of the successional rights and the intrinsic validity of their provisions, shall be regulated by the national law of the person whose succession is in question, whatever may be the nature of the property and the country in which it is found. (par. 2, Art. 10, old Civil Code, which is the same as par. 2 Art. 16, new Civil Code.)

In the proceedings for the probate of the will, it was found out and it was decided that the testator was a citizen of the State of Nevada because he had selected this as his domicile and his permanent residence. (See Decision dated April 24, 1950, supra).

ISSUE: WON the testamentary dispositions, especially those for the children which are short of the legitime given them by the Civil Code of the Philippines, are valid. YES

What law is applicable? STATE OF NEVADA

HELD: It is not disputed that the laws of Nevada allow a testator to dispose of all his properties by will (Sec. 9905, Complied Nevada Laws of 1925, supra). It does not appear that at time of the hearing of the project of partition, the above-quoted provision was introduced in evidence, as it was the executor's duly to do. The law of Nevada, being a foreign law can only be proved in our courts in the form and manner provided for by our Rules, which are as follows:

SEC. 41. Proof of public or official record. — An official record or an entry therein, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy tested by the officer having the legal custody of he record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. . . . (Rule 123).

We have, however, consulted the records of the case in the court below and we have found that during the hearing on

October 4, 1954 of the motion of Magdalena C. Bohanan for withdrawal of P20,000 as her share, the foreign law, especially Section 9905, Compiled Nevada Laws. was introduced in evidence by appellant's (herein) counsel as Exhibits "2" (See pp. 77-79, VOL. II, and t.s.n. pp. 24-44, Records, Court of First Instance).

In addition, the other appellants, children of the testator, do not dispute the above-quoted provision of the laws of the State of Nevada. Under all the above circumstances, we are constrained to hold that the pertinent law of Nevada, especially Section 9905 of the Compiled Nevada Laws of 1925, can be taken judicial notice of by us, without proof of such law having been offered at the hearing of the project of partition.

As in accordance with Article 10 of the old Civil Code, the validity of testamentary dispositions are to be governed by the national law of the testator, and as it has been decided and it is not disputed that the national law of the testator is that of the State of Nevada, already indicated above, which allows a testator to dispose of all his property according to his will, as in the case at bar, the order of the court approving the project of partition made in accordance with the testamentary provisions, must be, as it is hereby affirmed, with costs against appellants.

13. Cayetano v Leonidas

CAYETANO VS LEONIDAS

FACTS: On January 31, 1977, Adoracion C. Campos died, leaving her father, petitioner Hermogenes Campos and her sisters, private respondent Nenita C. Paguia, Remedios C. Lopez and Marieta C. Medina as the surviving heirs. As Hermogenes Campos was the only compulsory heir, he executed an Affidavit of Adjudication under Rule 74, Section I of the Rules of Court whereby he adjudicated unto himself the ownership of the entire estate of the deceased Adoracion Campos.

Eleven months after, on November 25, 1977, Nenita C. Paguia filed a petition for the reprobate of a will of the deceased, Adoracion Campos, which was allegedly executed in the United States and for her appointment as administratrix of the estate of the deceased testatrix.

In her petition, Nenita alleged that the testatrix was an American citizen at the time of her death and was a permanent resident of 4633 Ditman Street, Philadelphia, Pennsylvania, U.S.A.; that the testatrix died in Manila on January 31, 1977 while temporarily residing with her sister at 2167 Leveriza, Malate, Manila; that during her lifetime, the testatrix made her last wig and testament on July 10, 1975, according to the laws of Pennsylvania, U.S.A., nominating Wilfredo Barzaga of New Jersey as executor; that after the testatrix death, her last will and testament was presented, probated, allowed, and registered with the Registry of Wins at the County of Philadelphia, U.S.A., that Clement L. McLaughlin, the



administrator who was appointed after Dr. Barzaga had declined and waived his appointment as executor in favor of the former, is also a resident of Philadelphia, U.S.A., and that therefore, there is an urgent need for the appointment of an administratrix to administer and eventually distribute the properties of the estate located in the Philippines.

On January 11, 1978, an opposition to the reprobate of the will was filed by herein petitioner alleging among other things, that he has every reason to believe that the will in question is a forgery; that the intrinsic provisions of the will are null and void; and that even if pertinent American laws on intrinsic provisions are invoked, the same could not apply inasmuch as they would work injustice and injury to him.

Meanwhile, on June 6, 1982, petitioner Hermogenes Campos died and was substituted by Polly Cayetano, who was appointed as executrix of the last will and testament of Hermogenes. Cayetano now alleged that Respondent Judge acted without or in excess of jurisdiction when it ruled that the right of a forced heir to his legitime can be divested by a decree admitting a will to probate in which no provision is made for the forced heir in complete disregard of Law of Succession.

RULING: As a general rule, the probate court's authority is limited only to the extrinsic validity of the will, the due execution thereof, the testatrix's testamentary capacity and the compliance with the requisites or solemnities prescribed by law. The intrinsic validity of the will normally comes only after the court has declared that the will has been duly authenticated. However, where practical considerations demand that the intrinsic validity of the will be passed upon, even before it is probated, the court should meet the issue.

In the case at bar, the petitioner maintains that since the respondent judge allowed the reprobate of Adoracion's will, Hermogenes C. Campos was divested of his legitime which was reserved by the law for him. This contention is without merit.

Although on its face, the will appeared to have preterited the petitioner and thus, the respondent judge should have denied its reprobate outright, the private respondents have sufficiently established that Adoracion was, at the time of her death, an American citizen and a permanent resident of Philadelphia, Pennsylvania, U.S.A. Therefore, under Article 16 par. (2) and 1039 of the Civil Code which respectively provide:Art. 16 par. (2).xxx xxx xxxHowever, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the

nature of the property and regardless of the country wherein said property may be found.

Art. 1039. Capacity to succeed is governed by the law of the nation of the decedent. the law which governs Adoracion Campo's will is the law of Pennsylvania, U.S.A., which is the national law of the decedent. Although the parties admit that the Pennsylvania law does not provide for legitimes and that all the estate may be given away by the testatrix to a complete stranger, the petitioner argues that such law should not apply because it would be contrary to the sound and established public policy and would run counter to the specific provisions of Philippine Law.

It is a settled rule that as regards the intrinsic validity of the provisions of the will, as provided for by Article 16(2) and 1039 of the Civil Code, the national law of the decedent must apply. This was squarely applied in the case of Bellis v. Bellis (20 SCRA 358) wherein we ruled:

It is therefore evident that whatever public policy or good customs may be involved in our system of legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national law. Specific provisions must prevail over general ones. xxx xxx xxx

The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and under the law of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic validity of the provision of the will and the amount of successional rights are to be determined under Texas law, the Philippine Law on legitimes cannot be applied to the testacy of Amos G. Bellis.

14. Aznar v GarciaIN THE MATTER OF THE TESTATE ESTATE OF EDWARD E. CHRISTENSEN, DECEASED. ADOLFO C. AZNAR, Executor and LUCY CHRISTENSEN, Heir of the deceased, Executor and Heir-appellees, vs. HELEN CHRISTENSEN GARCIA, oppositor-appellant. G.R. No. L-16749, January 31, 1963

FACTS: This is an appeal from a decision of the CFI Davao in SP No. 622 dated September 14, 1949, approving among things the final accounts of the executor, directing the executor to reimburse Maria Lucy Christensen the amount of P3,600 paid by her to Helen Christensen Garcia as her legacy, and declaring Maria Lucy entitled to the residue of the property to be enjoyed during her lifetime, and in case of death without issue, one-half of said residue to be payable to Mrs. Carrie Louise C. Borton, etc., in accordance with the provisions of the will of the testator



Edward E. Christensen. The will was executed in Manila on March 5, 1951.

Opposition to the approval of the project of partition was filed by Helen, insofar as it deprives her of her legitime as an acknowledged natural child, she having been declared Us in G.R. Nos. L-11483-84 an acknowledged natural child of the deceased Edward E. Christensen.

The legal grounds of opposition are (a) that the distribution should be governed by the laws of the Philippines, and (b) that said order of distribution is contrary thereto insofar as it denies to Helen Christensen, one of two acknowledged natural children, one-half of the estate in full ownership. In amplification of the above grounds it was alleged that the law that should govern the estate of the deceased Christensen should not be the internal law of California alone, but the entire law thereof because several foreign elements are involved, that the forum is the Philippines and even if the case were decided in California, Section 946 of the California Civil Code, which requires that the domicile of the decedent should apply, should be applicable. It was also alleged that Maria Helen Christensen having been declared an acknowledged natural child of the decedent, she is deemed for all purposes legitimate from the time of her birth.

The court below ruled that as Edward E. Christensen was a citizen of the United States and of the State of California at the time of his death, the successional rights and intrinsic validity of the provisions in his will are to be governed by the law of California, in accordance with which a testator has the right to dispose of his property in the way he desires, because the right of absolute dominion over his property is sacred and inviolable.

Oppositor Maria Helen Christensen filed various motions for reconsideration but these were denied. Hence, this appeal.

ISSUE:Whether the Philippine law or the California law should apply.

HELD:There is no question that Edward E. Christensen was a

citizen of the United States and of the State of California at the time of his death. But there is also no question that at the time of his death he was domiciled in the Philippines.

DOMICILEIn arriving at the conclusion that the domicile of the

deceased is the Philippines, we are persuaded by the fact that he was born in New York, migrated to California and resided there for nine years, and since he came to the Philippines in 1913 he returned to California very rarely and only for short visits (perhaps to relatives), and considering that he appears never to have owned or acquired a home or properties in that state which would indicate that he would ultimately abandon the Philippines and make home in the State of California.

CITIZENSHIPAs to his citizenship, however, We find that the

citizenship that he acquired in California when he resided in Sacramento, California from 1904 to 1913, was never lost by his stay in the Philippines, for the latter was a territory of the United States (not a state) until 1946 and the deceased appears to have considered himself as a citizen of California by the fact that when he executed his will in 1951 he declared that he was a citizen of that State; so that he appears never to have intended to abandon his California citizenship by acquiring another. This conclusion is in accordance with the following principle expounded by Goodrich in his Conflict of Laws.

WILLS AND SUCCESSIONThe law that governs the validity of his testamentary

dispositions is defined in Article 16 of the Civil Code of the Philippines, which is as follows:

ART. 16. Real property as well as personal property is subject to the law of the country where it is situated.However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may be the nature of the property and regardless of the country where said property may be found.

The application of this article in the case at bar requires the determination of the meaning of the term "national law" is used therein.

There is no single American law governing the validity of testamentary provisions in the United States, each state of the Union having its own private law applicable to its citizens only and in force only within the state. The "national law" indicated in Article 16 of the Civil Code above quoted can not, therefore, possibly mean or apply to any general American law. So it can refer to no other than the private law of the State of California.

The next question is: What is the law in California governing the disposition of personal property? The decision of the court below, sustains the contention of the executor-appellee that under the California Probate Code, a testator may dispose of his property by will in the form and manner he desires, citing the case of Estate of McDaniel, 77 Cal. Appl. 2d 877, 176 P. 2d 952. But appellant invokes the provisions of Article 946 of the Civil Code of California, which is as follows:

If there is no law to the contrary, in the place where personal property is situated, it is



deemed to follow the person of its owner, and is governed by the law of his domicile.

The existence of this provision is alleged in appellant's opposition and is not denied. We have checked it in the California Civil Code and it is there. Appellee, on the other hand, relies on the case cited in the decision and testified to by a witness. (Only the case of Kaufman is correctly cited.) It is argued on executor's behalf that as the deceased Christensen was a citizen of the State of California, the internal law thereof, which is that given in the above cited case, should govern the determination of the validity of the testamentary provisions of Christensen's will, such law being in force in the State of California of which Christensen was a citizen. Appellant, on the other hand, insists that Article 946 should be applicable, and in accordance therewith and following the doctrine of the renvoi, the question of the validity of the testamentary provision in question should be referred back to the law of the decedent's domicile, which is the Philippines.

We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied in In re Kaufman, Supra, its internal law. If the law on succession and the conflict of laws rules of California are to be enforced jointly, each in its own intended and appropriate sphere, the principle cited In re Kaufman should apply to citizens living in the State, but Article 946 should apply to such of its citizens as are not domiciled in California but in other jurisdictions. The rule laid down of resorting to the law of the domicile in the determination of matters with foreign element involved is in accord with the general principle of American law that the domiciliary law should govern in most matters or rights which follow the person of the owner.

Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national law is the internal law of California. But as above explained the laws of California have prescribed two sets of laws for its citizens, one for residents therein and another for those domiciled in other jurisdictions. Reason demands that we should enforce the California internal law prescribed for its citizens residing therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If we must enforce the law of California as in comity we are bound to go, as so declared in Article 16 of our Civil Code, then we must enforce the law of California in accordance with the express mandate thereof and as above explained, i.e., apply the internal law for residents therein, and its conflict-of-laws rule for those domiciled abroad.

It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place where the property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of the Civil Code of the Philippines and that the law to the contrary in the Philippines is the provision in said Article 16 that the national law of the deceased should govern. This

contention cannot be sustained. As explained in the various authorities cited above the national law mentioned in Article 16 of our Civil Code is the law on conflict of laws in the California Civil Code, i.e., Article 946, which authorizes the reference or return of the question to the law of the testator's domicile. The conflict of laws rule in California, Article 946, Civil Code, precisely refers back the case, when a decedent is not domiciled in California, to the law of his domicile, the Philippines in the case at bar. The court of the domicile cannot and should not refer the case back to California; such action would leave the issue incapable of determination because the case will then be like a football, tossed back and forth between the two states, between the country of which the decedent was a citizen and the country of his domicile. The Philippine court must apply its own law as directed in the conflict of laws rule of the state of the decedent, if the question has to be decided, especially as the application of the internal law of California provides no legitime for children while the Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children legally acknowledged forced heirs of the parent recognizing them.

The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105; Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support the decision cannot possibly apply in the case at bar, for two important reasons, i.e., the subject in each case does not appear to be a citizen of a state in the United States but with domicile in the Philippines, and it does not appear in each case that there exists in the state of which the subject is a citizen, a law similar to or identical with Art. 946 of the California Civil Code.

We therefore find that as the domicile of the deceased Christensen, a citizen of California, is the Philippines, the validity of the provisions of his will depriving his acknowledged natural child, the appellant, should be governed by the Philippine Law, the domicile, pursuant to Art. 946 of the Civil Code of California, not by the internal law of California.

WHEREFORE, the decision appealed from is hereby reversed and the case returned to the lower court with instructions that the partition be made as the Philippine law on succession provides. Judgment reversed, with costs against appellees.

15. Bellis v Bellis

TESTATE ESTATE OF AMOS G. BELLIS, deceased. PEOPLE'S BANK and TRUST COMPANY, executor. MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants, vs.EDWARD A. BELLIS, ET AL., heirs-appellees G.R. No. L-23678 June 6, 1967



Facts:Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his first wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis, George Bellis (who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman; by his second wife, Violet Kennedy, who survived him, he had three legitimate children: Edwin G. Bellis, Walter S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis.

On August 5, 1952, Amos G. Bellis executed a will in the Philippines.

Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His will was admitted to probate in the Court of First Instance of Manila on September 15, 1958.

The People's Bank and Trust Company, as executor of the will, paid all the bequests therein.

On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its "Executor's Final Account, Report of Administration and Project of Partition". In the project of partition, the executor — pursuant to the "Twelfth" clause of the testator's Last Will and Testament — divided the residuary estate into seven equal portions for the benefit of the testator's seven legitimate children by his first and second marriages.

On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions to the project of partition on the ground that they were deprived of their legitimes as illegitimate children and, therefore, compulsory heirs of the deceased.

ISSUE: Which law must apply — Texas law or Philippine law.

HELD: The decedent was both a national of Texas and a domicile thereof at the time of death.

Appellants argue that their case falls under the circumstances mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil Code.

ART. 16. Real property as well as personal property is subject to the law of the country where it is situated.

However, intestate and testamentary successions, both with respect to the order of succession and to the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be regulated by the national law of the person whose succession is under consideration, whatever may he the nature of

the property and regardless of the country wherein said property may be found.

ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.

Art. 17, paragraph three, of the Civil Code, stating that —

Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

Precisely, Congress deleted the phrase, "notwithstanding the provisions of this and the next preceding article" when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing without substantial change the second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It must have been their purpose to make the second paragraph of Art. 16 a specific provision in itself which must be applied in testate and intestate succession. As further indication of this legislative intent, Congress added a new provision, under Art. 1039, which decrees that capacity to succeed is to be governed by the national law of the decedent.

It is therefore evident that whatever public policy or good customs may be involved in our System of legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national law. Specific provisions must prevail over general ones.

Appellants would also point out that the decedent executed two wills — one to govern his Texas estate and the other his Philippine estate — arguing from this that he intended Philippine law to govern his Philippine estate. Assuming that such was the decedent's intention in executing a separate Philippine will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision in a foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law and not with his national law, is illegal and void, for his national law cannot be ignored in regard to those matters that Article 10 — now Article 16 — of the Civil Code states said national law should govern.

The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and that under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic validity of the provision of the will and the amount of successional rights are to be determined under Texas law,



the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.

16. Johannes v Harvey17. Tayag v Benguet

TESTATE ESTATE OF IDONAH SLADE PERKINS, deceased. RENATO D. TAYAG, ancillary administrator-appellee, vs. BENGUET CONSOLIDATED, INC., oppositor-appellant. EN BANC [G.R. No. L-23145. November 29, 1968.]

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 Benguet Consolidated Inc., the certificates being in the possession of the County Trust Company of New York, which is the domiciliary administrator of the estate of the deceased

On August 12, 1960, Prospero Sanidad instituted ancillary administration proceedings in the Court of First Instance of Manila. Lazaro A. Marquez was appointed ancillary administrator [in the Philippines] and on January 22, 1963, he was substituted by the 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. 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.

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." Benguet Consolidated Inc. opposed the petition of the ancillary administrator because the said stock certificates are in existence and in the possession of the domiciliary administrator, the County Trust Company, in New York, U.S.A

[1] Between the domiciliary administrator [in NY] and the ancillary administrator [in the PH], who has a better right to the administration and possession of the shares? The ancillary administrator – Tayag.

Held: Justice Tuason said that 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."

Justice Malcolm explains the scope of the power of the ancillary administrator: "It is often necessary to have more than one administration of an estate. When a person dies intestate owning property in the country of his domicile as well as in a foreign country, administration is had in both countries. That which is granted in the jurisdiction of decedent's last domicile is termed the principal administration, while any other

administration is termed the ancillary administration. The reason for the latter is because a grant of administration does not ex proprio vigore 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."

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 [Benguet Consolidated Inc.] Benguet Consolidated, Inc.." be respected is equally beyond question. For Benguet Consolidated Inc. 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.

In Wells Fargo Bank and Union v. Collector of Internal Revenue, the court held: "In the instant case, the actual situs of the shares of stock is in the Philippines, the corporation being domiciled [here]."’

Therefore, since Benguet is a Philippine Corporation, the situs of the shares is considered to be within the Philippines and Tayag’s extent of powers as administrator extends to such shares.

[2] WON the petition to declare the shares as lost should prosper? Yes, it should.

Since there is a refusal, persistently adhered to by the domiciliary administrator in New York, to deliver the shares of stocks of Benguet Consolidated Inc. 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 Benguet Consolidated Inc. 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 the party or entity, in this case domiciled abroad, which thus far has shown the utmost persistence in refusing to yield obedience.

18. Estate of Suntay v SuntayEstate of Suntay v. Suntay G.R. Nos. L-3087 and L-3088 ,July 31, 1954

FACTS: On 14 May 1934 Jose B. Suntay, a Filipino citizen and resident of the Philippines, died in the city of Amoy, Fookien province, Republic of China, leaving real and personal properties in the Philippines and a house in Amoy, Fookien province, China, and children by the first marriage had with the late Manuela T. Cruz namely, Apolonio, Concepcion, Angel,



Manuel, Federico, Ana, Aurora, Emiliano, and Jose, Jr. and a child named Silvino by the second marriage had with Maria Natividad Lim Billian who survived him. Intestate proceedings were instituted in the CFI and after hearing letters of administration were issued to Apolonio Suntay. After the latter's death Federico C. Suntay was appointed administrator. On 15 October 1934 the surviving widow filed a petition in the Court of First Instance of Bulacan for the probate of a last will and testament claimed to have been executed and signed in the Philippines on November 1929 by the late Jose B. Suntay. This petition was denied because of the loss of said will after the filing of the petition and before the hearing thereof and of the insufficiency of the evidence to establish the loss of the said will. An appeal was taken from said order denying the probate of the will and this Court held the evidence before the probate court sufficient to prove the loss of the will and remanded the case to the Court of First Instance of Bulacan for the further proceedings. In spite of the fact that a commission from the probate court was issued on 24 April 1937 for the taking of the deposition of Go Toh, an attesting witness to the will, on 7 February 1938 the probate court denied a motion for continuance of the hearing sent by cablegram from China by the surviving widow and dismissed the petition. Years after, Silvino Suntay filed a petition in the intestate proceedings praying for the probate of the will executed in the Philippines on November 1929 (Exhibit B) or of the will executed in Amoy, Fookien, China, on 4 January 1931 (he claims that he had found among the files, records and documents of his late father a will and testament in Chinese characters executed and signed by the deceased on 4 January 1931 and that the same was filed, recorded and probated in the Amoy district court, Province of Fookien, China).ISSUE: W/N the foreign will should be allowed here in the Philippines NO (since certain facts as to due execution of the will were not established)HELD: As to the will claimed to have been executed on 4 January 1931 in Amoy, China, the law on the point in Rule 78. Section 1 of the rule provides: Wills proved and allowed in a foreign country, according to the laws of such country, may be allowed, filed, and recorded by the proper Court of First Instance in the Philippines.Section 2 provides: When a copy of such will and the allowance thereof, duly authenticated, is filed with a petition for allowance in the Philippines, by the executor or other person interested, in the court having jurisdiction, such court shall fix a time and place for the hearing, and cause notice thereof to be given as in case of an original will presented for allowance.Section 3 provides: If it appears at the hearing that the will should be allowed in the Philippines, the court shall so allow it, and a certificate of its allowance, signed by the Judge, and attested by the seal of the courts, to which shall be attached a copy of the will, shall be filed and recorded by the clerk, and the

will shall have the same effect as if originally proved and allowed in such court.The fact that the municipal district court of Amoy, China, is a probate court must be proved. The law of China on procedure in the probate or allowance of wills must also be proved. The legal requirements for the execution of a valid will in China in 1931 should also be established by competent evidence. There is no proof on these points. The unverified answers to the questions propounded by counsel for the appellant to the Consul General of the Republic of China set forth in Exhibits R-1 and R-2, objected to by counsel for the appellee, are inadmissible, because apart from the fact that the office of Consul General does not qualify and make the person who holds it an expert on the Chinese law on procedure in probate matters, if the same be admitted, the adverse party would be deprived of his right to confront and cross-examine the witness. Consuls are appointed to attend to trade matters. Moreover, it appears that all the proceedings had in the municipal district court of Amoy were for the purpose of taking the testimony of two attesting witnesses to the will and that the order of the municipal district court of Amoy does not purport to probate the will. In the absence of proof that the municipal district court of Amoy is a probate court and on the Chinese law of procedure in probate matters, it may be presumed that the proceedings in the matter of probating or allowing a will in the Chinese courts are the a deposition or to a perpetuation of testimony, and even if it were so it does not measure same as those provided for in our laws on the subject. It is a proceedings in rem and for the validity of such proceedings personal notice or by publication or both to all interested parties must be made. The interested parties in the case were known to reside in the Philippines. The evidence shows that no such notice was received by the interested parties residing in the Philippines (pp. 474, 476, 481, 503-4, t. s. n., hearing of 24 February 1948). The proceedings had in the municipal district court of Amoy, China, may be likened toe or come up to the standard of such proceedings in the Philippines for lack of notice to all interested parties and the proceedings were held at the back of such interested parties.The order of the municipal district court of Amoy, China, which reads as follows:“The above minutes were satisfactorily confirmed by the interrogated parties, who declare that there are no errors, after said minutes were loudly read and announced actually in the court.Done and subscribed on the Nineteenth day of the English month of the 35th year of the Republic of China in the Civil Section of the Municipal District Court of Amoy, China.”--does not purport to probate or allow the will which was the subject of the proceedings. In view thereof, the will and the alleged probate thereof cannot be said to have been done in accordance with the accepted basic and fundamental concepts and principles followed in the probate and allowance of wills. Consequently, the authenticated transcript of proceedings held in the municipal district court of Amoy, China, cannot be



deemed and accepted as proceedings leading to the probate or allowance of a will and, therefore, the will referred to therein cannot be allowed, filed and recorded by a competent court of this country.

19. Ancheta v Dalaygon

CHAPTER XXI- Obligations and Contracts

20. Insular Government v FrankTHE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. GEORGE I. FRANK, defendant-appellant. EN BANC G.R. No. L-2935, March 23, 1909JOHNSON, J.:

FACTS: Subject matter of Contract: Service (Stenographer = Frank)Parties: Phil-Gov’t and George Frank (from Chicago USA)Place where the contract was executed: City of Chicago, State of Illinois, USAPlace of Performance: Philippines

The gov’t sued Frank for breached of contract, in CFI-City of Manila, and asked that he should be liable for the amount expended by the Government by way of expenses incurred in traveling from Chicago to Manila and one-half salary paid during such period, as stipulated in their contract.

Frank alleged in his special defense that he was a minor and therefore the contract could not be enforced against him. He claims that, by reason of the fact that, under the laws of the Philippine Islands at the time the contract was made, male persons in said Islands did not reach their majority until they had attained the age of 23, he was not liable under said contract, contending that the laws of the Philippine Islands governed. Issue: W/N he could be liable under their contract.

Held: Yes he could be held liable.

a. Matters bearing upon the execution, interpretation and validity of a contract are determined by the law of the place where the contract is made.

b. Matters connected with its performance are regulated by the law prevailing at the place of performance.

c. Matters respecting a remedy, such as the bringing of suit, admissibility of evidence, and statutes of limitations, depend upon the law of the place where the suit is brought.

The defendant's claim that he was an adult when he left Chicago but was a minor when he arrived at Manila; that he was an adult at the time he made the contract but was a minor at

the time the plaintiff attempted to enforce the contract, more than a year later, is not tenable.

The plaintiff [defendant] being fully qualified to enter into the contract at the place and time the contract was made, he cannot plead infancy as a defense at the place where the contract is being enforced.

21. Cadalin v POEACADALIN vs POEA, December 5, 1994

FACTS: Cadalin et al were allegedly recruited by Asia International Builders Corp. (AIBC) for its accredited foreign principal, Brown & Root(BRII) on various dates from 1975 to 1983. BRII is a foreign corporation engaged in construction; while AIBC is a domestic corporation licensed as a service contractor to recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its foreign principals.

Cadalin et al were all deployed at various projects undertaken by Brown & Root in several countries in the Middle East and Asia.

They instituted a class suit by filing an "Amended Complaint" with the Philippine Overseas Employment Administration (POEA) for money claims arising from their recruitment by AIBC and employment by BRII. They principally sought the payment of the unexpired portion of the employment contracts, which was terminated prematurely, and secondarily, the payment of the interests and refund of other benefits.

The case was appealed to the NLRC by AIBC & BRII.NLRC applied the Amiri Decree No. 23 of 1976, which provides for greater benefits than those stipulated in the overseas-employment contracts of the claimants. It was of the belief that "where the laws of the host country are more favorable and beneficial to the workers, then the laws of the host country shall form part of the overseas employment contract." It quoted with approval the observation of the POEA Administrator that ". . . in labor proceedings, all doubts in the implementation of the provisions of the Labor Code and its implementing regulations shall be resolved in favor of labor".

The overseas-employment contracts, which were prepared by AIBC and BRII themselves, provided that the laws of the host country became applicable to said contracts if they offer terms and conditions more favorable that those stipulated therein. It was stipulated in said contracts that:

xxx that the benefits provided to Employee hereunder are substituted for and in lieu of all other benefits provided by any applicable law, provided of course, that total remuneration and benefits do not fall below that of the host country regulation or custom, it being understood that should applicable laws establish that fringe benefits, or other such benefits additional to the compensation herein agreed cannot be waived,



Employee agrees that such compensation will be adjusted d o w n w a r d s o t h a t t h e t o t a l compensation hereunder, plus the non-waivable benefits shall be equivalent to the compensation herein agreed.

AIBC and BRII now claim that NLRC acted capriciously and whimsically when it refused to enforce the overseas-employment contracts, which became the law of the parties. They contend that the principle that a law is deemed to be a part of a contract applies only to provisions of Philippine law in relation to contracts executed in the Philippines.

ISSUE: WON Amiri Decree No. 23 of Bahrain should be applied in the overseas-employment contracts. YES

HELD: The overseas-employment contracts could have been drafted more felicitously. While a part thereof provides that the compensation to the employee may be "adjusted downward so that the total computation (thereunder) plus the non-waivable benefits shall be equivalent to the compensation" therein agreed, another part of the same provision categorically states "that total remuneration and benefits do not fall below that of the host country regulation and custom."

Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and BRII, the parties that drafted it (Eastern Shipping Lines, Inc. v. Margarine-Verkaufs-Union, 93 SCRA 257 [1979]).

Article 1377 of the Civil Code of the Philippines provides:

The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.

Said rule of interpretation is applicable to contracts of adhesion where there is already a prepared form containing the stipulations of the employment contract and the employees merely "take it or leave it." The presumption is that there was an imposition by one party against the other and that the employees signed the contracts out of necessity that reduced their bargaining power (Fieldmen's Insurance Co., Inc. v. Songco, 25 SCRA 70 [1968]).

Applying the said legal precepts, we read the overseas-employment contracts in question as adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel thereof.

The parties to a contract may select the law by which it is to be governed (Cheshire, Private International Law, 187 [7th ed.]). In such a case, the foreign law is adopted as a "system" to regulate the relations of the parties, including questions of their capacity to enter into the contract, the formalities to be observed by them, matters of performance, and so forth (16 Am Jur 2d, 150-161).

Instead of adopting the entire mass of the foreign law, the parties may just agree that specific provisions of a foreign statute shall be deemed incorporated into their contract "as a set of terms." By such reference to the provisions of the foreign law, the contract does not become a foreign contract to be governed by the foreign law. The said law does not operate as a statute but as a set of contractual terms deemed written in the contract (Anton, Private International Law, 197 [1967]; Dicey and Morris, The Conflict of Laws, 702-703, [8th ed.]).

A basic policy of contract is to protect the expectation of the parties (Reese, Choice of Law in Torts and Contracts, 16 Columbia Journal of Transnational Law 1, 21 [1977]). Such party expectation is protected by giving effect to the parties' own choice of the applicable law (Fricke v. Isbrandtsen Co., Inc., 151 F. Supp. 465, 467 [1957]). The choice of law must, however, bear some relationship to the parties or their transaction (Scoles and Hayes, Conflict of Law 644-647 [1982]). There is no question that the contracts sought to be enforced by claimants have a direct connection with the Bahrain law because the services were rendered in that country.

In Norse Management Co. (PTE) v. National Seamen Board, 117 SCRA 486 (1982), the "Employment Agreement," between Norse Management Co. and the late husband of the private respondent, expressly provided that in the event of illness or injury to the employee arising out of and in the course of his employment and not due to his own misconduct, "compensation shall be paid to employee in accordance with and subject to the limitation of the Workmen's Compensation Act of the Republic of the Philippines or the Worker's Insurance Act of registry of the vessel, whichever is greater." Since the laws of Singapore, the place of registry of the vessel in which the late husband of private respondent served at the time of his death, granted a better compensation package, we applied said foreign law in preference to the terms of the contract.

The case of Bagong Filipinas Overseas Corporation v. National Labor Relations Commission, 135 SCRA 278 (1985), relied upon by AIBC and BRII is inapposite to the facts of the cases at bench. The issue in that case was whether the amount of the death compensation of a Filipino seaman should be determined under the shipboard employment contract executed in the Philippines or the Hongkong law. Holding that the shipboard employment contract was controlling, the court differentiated said case from Norse Management Co. in that in the latter case there was an express stipulation in the employment contract that the foreign law would be applicable if it afforded greater compensation.

22. Pakistani Airlines v Ople

Pakistani Airlines v Ople FACTS: On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign corporation licensed to do business in the Philippines, executed in Manila two (2)



separate contracts of employment, one with private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig. The contracts, which became effective on 9 January 1979, provided in pertinent portion as follows:

5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of three (3) years, but can be extended by the mutual consent of the parties.

xxx xxx xxx

6. TERMINATION

xxx xxx xxx

Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this agreement at any time by giving the EMPLOYEE notice in writing in advance one month before the intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month's salary.

xxx xxx xxx

10. APPLICABLE LAW:

This agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of or under this agreement.

Respondents then commenced training in Pakistan. After their training period, they began discharging their job functions as flight attendants, with base station in Manila and flying assignments to different parts of the Middle East and Europe.

On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the contracts of employment, PIA through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent separate letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both that their services as flight stewardesses would be terminated "effective 1 September 1980, conformably to clause 6 (b) of the employment agreement [they had) executed with [PIA]."

On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint, for illegal dismissal and non-payment of company benefits and bonuses, against PIA with the then Ministry of Labor and Employment ("MOLE"). After several unfruitful attempts at conciliation, the MOLE hearing officer Atty. Jose M. Pascual ordered the parties to submit their position papers and evidence supporting their respective positions. The PIA submitted its position paper, but no evidence, and there claimed that both private respondents

were habitual absentees; that both were in the habit of bringing in from abroad sizeable quantities of "personal effects"; and that PIA personnel at the Manila International Airport had been discreetly warned by customs officials to advise private respondents to discontinue that practice. PIA further claimed that the services of both private respondents were terminated pursuant to the provisions of the employment contract.

In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the reinstatement of private respondents with full backwages or, in the alternative, the payment to them of the amounts equivalent to their salaries for the remainder of the fixed three-year period of their employment contracts; the payment to private respondent Mamasig of an amount equivalent to the value of a round trip ticket Manila-USA Manila; and payment of a bonus to each of the private respondents equivalent to their one-month salary. The Order stated that private respondents had attained the status of regular employees after they had rendered more than a year of continued service; that the stipulation limiting the period of the employment contract to three (3) years was null and void as violative of the provisions of the Labor Code and its implementing rules and regulations on regular and casual employment; and that the dismissal, having been carried out without the requisite clearance from the MOLE, was illegal and entitled private respondents to reinstatement with full backwages.

On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister, MOLE, adopted the findings of fact and conclusions of the Regional Director and affirmed the latter's award save for the portion thereof giving PIA the option, in lieu of reinstatement, "to pay each of the complainants [private respondents] their salaries corresponding to the unexpired portion of the contract[s] [of employment] . . .".

In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director and the Order of the Deputy Minister as having been rendered without jurisdiction; for having been rendered without support in the evidence of record since, allegedly, no hearing was conducted by the hearing officer, Atty. Jose M. Pascual; and for having been issued in disregard and in violation of petitioner's rights under the employment contracts with private respondents.

ISSUE: W/N PIA’s rights were violated because the suit was commenced in the Philippines, under Philippine laws, as opposed to the stipulation in paragraph 10 of its employment contracts with private respondents

HELD: NO. Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement of any dispute arising out of or in connection with the agreement "only [in] courts of Karachi



Pakistan". The first clause of paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and regulations to the subject matter of this case, i.e., the employer-employee relationship between petitioner PIA and private respondents. We have already pointed out that the relationship is much affected with public interest and that the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship. Neither may petitioner invoke the second clause of paragraph 10, specifying the Karachi courts as the sole venue for the settlement of dispute; between the contracting parties. Even a cursory scrutiny of the relevant circumstances of this case will show the multiple and substantive contacts between Philippine law and Philippine courts, on the one hand, and the relationship between the parties, upon the other: the contract was not only executed in the Philippines, it was also performed here, at least partially; private respondents are Philippine citizens and respondents, while petitioner, although a foreign corporation, is licensed to do business (and actually doing business) and hence resident in the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the Middle East and Europe. All the above contacts point to the Philippine courts and administrative agencies as a proper forum for the resolution of contractual disputes between the parties. Under these circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law.

23. Zalamea v CA

SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners, vs.HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, INC., respondents.Facts: Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea, purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on June 6, 1984;While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their reservations for said flight. On the appointed date, however, petitioners checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00 a.m. but were placed on the wait-list because the number of passengers who had checked in before them had already taken all the seats available on the flight.;

Out of the 42 names on the wait list, the first 22 names were eventually allowed to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two others, on the other hand, at No. 34, being ranked lower than 22, were not able to fly. As it

were, those holding full-fare tickets were given first priority among the wait-listed passengers. Mr. Zalamea, who was holding the full-fare ticket of his daughter, was allowed to board the plane; while his wife and daughter, who presented the discounted tickets were denied boarding. According to Mr. Zalamea, it was only later when he discovered the he was holding his daughter's full-fare ticket.

Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated because it was also fully booked. Thus, they were constrained to book in another flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars.Upon their arrival in the Philippines, petitioners filed an action for damages based on breach of contract of air carriage before the Regional Trial Court of Makati, Metro Manila, Branch 145;The RTC favoured the petitioners, however, the CA MODIFIED the Lower Court’s decision, it elimanted the award of moral and exemplary damages;Hence, this petition.Issue: W/N the CA erred in holding that there was neither fraud nor bad faith on the part of TWA because it has the right to overbook flights under the Code of Federal Regulations by the Civil Aeronautics Board of the United States of America.Holding: Yes. The CA erred in holding that there was neither fraud nor bad faith on the part of TWA because it has the right to overbook flights under the Code of Federal Regulations by the Civil Aeronautics Board of the United States of America.Reason: The U.S. law or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged and proved- Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in her deposition dated January 27, 1986 that the Code of Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside from said statement, no official publication of said code was presented as evidence. Thus, respondent court's finding that overbooking is specifically allowed by the US Code of Federal Regulations has no basis in fact;

Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at bar in accordance with the principle of lex loci contractus which require that the law of the place where the airline ticket was issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant airline. 8 Since the tickets were sold and issued in the Philippines, the applicable law in this case would be Philippine law;

Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, 9 where passengers with confirmed bookings were



refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case all of them would show up for the check in. For the indignity and inconvenience of being refused a confirmed seat on the last minute, said passenger is entitled to an award of moral damages;

Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to properly inform its passengers about these policies so that the latter would be prepared for such eventuality or would have the choice to ride with another airline.

Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before departure time because the full-fare ticket he was holding was given priority over discounted tickets. The other two petitioners were left behind.

It is respondent TWA's position that the practice of overbooking and the airline system of boarding priorities are reasonable policies, which when implemented do not amount to bad faith.

24. Eastern Shipping Lines v IACEastern Shipping Lines, Inc. v. The Nisshin Fire and Marine Insurance Co., and Dowa Fire & Marine Insurance Co., Ltd. G.R. No. L-69044 May 29, 1987Melencio-Herrera, J.

FACTS: These two cases, both for the recovery of the value of cargo insurance, arose from the same incident, the sinking of the M/S ASIATICA when it caught fire, resulting in the total loss of ship and cargo.

(G.R. No. L-69044): a vessel operated by petitioner Eastern Shipping Lines, Inc., loaded at Kobe, Japan for transportation to Manila, 5000 pieces of calorized lance pipes in 28 packages consigned to Philippine Blooming Mills Co., Inc., and 7 cases of spare parts consigned to Central Textile Mills, Inc.; both sets of goods were insured with Development Insurance and Surety Corp.(G.R. No. 71478): the same vessel took on board 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation, and two cases of surveying instruments consigned to Aman Enterprises and General

Merchandisethe vessel caught fire and sank, resulting in the total loss of ship and cargo

The respective respondent Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured.

The insurers, having been subrogated unto the rights of the two insured companies, filed suit against petitioner Carrier for the recovery of the amounts it had paid to the insured before the then Court of First instance of Manila. Petitioner-Carrier denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event, hence, it is not liable under the law.

ISSUES: 1. which law should govern — the Civil Code provisions on Common carriers or the Carriage of Goods by Sea Act?

2. who has the burden of proof to show negligence of the carrier?

3. what is the extent of the carrier’s liability?

HELD:

1. 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, destruction or deterioration. As the cargoes were transported from Japan to the Philippines, the liability of Petitioner Carrier is governed primarily by the Civil Code. 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. Thus, the Carriage of Goods by Sea Act, a special law, is suppletory to the provisions of the Civil Code.

2. 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:

(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;xxx xxx xxx 9

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

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 diligence 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.

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.

3. 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.

Here, no stipulation in the Bills of Lading limiting the carrier’s liability for the loss or destruction of the goods; no declaration of a higher value of the goods. Hence, Eastern Shipping Lines’ liability should not exceed US $500 per package (as provided in 4(5) of the COGSA), 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

25. United Airlines v CAUNITED AIRLINES, INC., Petitioner vs.COURT OF APPEALS, ANICETO FONTANILLA, in his personal capacity and in behalf of his minor son MYCHAL ANDREW FONTANILLA, Respondents. (G.R. No. 124110, April 20, 2001)FACTS: Aniceto Fontanilla ( Fontanilla) purchased 3 Visit USA tickets for 3 different routes from United Airlines through Philippine Travel Bureau in Manila. When they arrived in the US , they purchased another ticket (rewriting) from United Airlines in its Washington office . They were issued a new tickets for United Airlines Flight NO. 1108 (LA to San Francisco) with the boarding pass bearing the words CHECK IN REQUIRED.

On the day of the flight, Fontanilla et.al were denied boarding. The reason for the non-boarding is the contentious fact in this case.Plaintiff’s version: According to Fontanilla , upon their arrival at the los Angeles Airport for their flight, they proceeded to United Airlines counter where they were attended by an employee wearing a nameplate bearing the name "LINDA." Linda

examined their tickets, punched something into her computer and then told them that boarding would be in fifteen minutes.

When the flight was called, the Fontanillas proceeded to the plane. To their surprise, the stewardess at the gate did not allow them to board the plane, as they had no assigned seat numbers. They were then directed to go back to the "check-in" counter where Linda subsequently informed them that the flight had been overbooked and asked them to wait.

The Fontanillas tried to explain to Linda the special circumstances of their visit. However, Linda told them in arrogant manner, "So what, I can not do anything about it."

Subsequently, three other passengers with Caucasian features were graciously allowed to baord, after the Fontanillas were told that the flight had been overbooked.

The plane then took off with the Fontanillas’ baggage in tow, leaving them behind.

Defendant’s version: The main contention of the Defense is that the Fontanilla’s did not follow the check-in procedure in that they should have first proceeded to the check-in counter to get their seat numbers . Since they failed to do so , they were denied boarding.

As to the allegation regarding the rudeness of their employee, they denied that the same actually transpired.

RTC AND CA ruled in favor of plaintiff, hence the present petition.

ISSUE: WON there was a breach of contract in bad faith on the part of United Airlines. NO

HELD: Preliminary Matter: Law Applicable is Philippine Law In Ruling for the plainitiff , the CA relied on the Code of Federal Regulation Part on Oversales which states:250.6 Exceptions to eligibility for denied boarding compensation.A passenger denied board involuntarily from an oversold flight shall not be eligible for denied board compensation if:

a. The passenger does not comply with the carrier’s contract of carriage or tariff provisions regarding ticketing, reconfirmation, check-in, and acceptability for transformation.

The appellate court, however, erred in applying the laws of the United States as, in the case at bar, Philippine law is the applicable law. Although, the contract of carriage was to be performed in the United States, the tickets were purchased through petitioner’s agent in Manila. It is true that the tickets were "rewritten" in Washington, D.C. however, such fact did



not change the nature of the original contract of carriage entered into by the parties in Manila.

In the case of Zalanea vs. Court of Appeals, this Court applied the doctrine of lex loci contractus. According to the doctrine, as a general rule, the law of the place where a contract is made or entered into governs with respect to its nature and validity, obligation and interpretation. This has been said to be the rule even though the place where the contract was made is different from the place where it is to be performed, and particularly so, if the place of the making and the place of performance are the same. Hence, the court should apply the law of the place where the airline ticket was issued, when the passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant airline.

The law of the forum on the subject matter is Economic Regulations No. 7 as amended by Boarding Priority and Denied Board Compensation of the Civil Aeronautics Board which provides that the check-in requirement be complied with before a passenger may claim against a carrier for being denied boarding:Sec. 5. Amount of Denied Boarding Compensation Subject to the exceptions provided hereinafter under Section 6, carriers shall pay to passengers holding confirmed reserved space and who have presented themselves at the proper place and time and fully complied with the carrier’s check-in and reconfirmation procedures and who are acceptable for carriage under the Carrier’s tariff but who have been denied boarding for lack of space, a compensation at the rate of: xxx

No Breach of Countract Since Plaintiff’s Failure to Check in is the Reason They were Denied Boarding

Fontanilla’s assertion that upon arrival at the airport at 9:45 a.m., he immediately proceeded to the check-in counter, and that Linda Allen punched in something into the computer is specious and not supported by the evidence on record. In support of their allegations, Fontanilla submitted a copy of the boarding pass. Explicitly printed on the boarding pass are the words "Check-In Required." Curiously, the said pass did not indicate any seat number. If indeed the Fontanillas checked in at the designated time as they claimed, why then were they not assigned seat numbers?

Absent any showing that Linda was so motivated, the Court is not persuaded by private respondents’ claim that Linda intentionally deceived him, and made him the laughing stock among the passengers.

Hence, as correctly observed by the trial court:Plaintiffs fail to realize that their failure to check in, as expressly required in their boarding passes, is they very reason why they were not given their respective seat numbers, which resulted in their being denied boarding

26. Philippine export v Eusebio27. Atienza v Philimar Shipping

ATIENZA vs PHILIMARE SHIPPING

FACTS:

Atienza was engaged by Philimare Shipping and Equipment Supply, as agent for Trans Ocean Liner Pte. Ltd. of Germany, based on Singapore, to work as Third Mate on board the MV Tibati for US$850.00 a month from January 20, 1981 to January 20, 1982. The, Crew Agreement provided for insurance benefits "as per NSB Standard Format" and was validated and approved by the National Seamen Board.

On May 12, 1981, Atienza died as a result of an accident which befell him while working on the vessel in Bombay, India. His father filed a claim for death benefits computed at the rate of 36 months times the seaman's monthly salary plus 10% thereof in accordance with the Workmen's Compensation Law of Singapore, for a total of $30,600.00. The, private respondents, while admitting liability, contended that this was limited to only P40,000.00 under Section D(1) of the NSB Standard Format.

POEA sustained the private respondent and held that the applicable law was Philippine law. NLRC affirmed except that it increased the award to P75,000.00 pursuant to NSB Memorandum Circular No. 71, Series of 1981

Petitioner contends that Singaporean law should have been applied in line with Norse Management Co. v. National Seamen Board, where the foreign law was held controlling because it provided for greater benefits for the claimant.

PHILIMARE and Trans Ocean Liner question the application of NSB Memorandum Circular No. 71, Series of 1981, which they say became effective after the seaman's death.

ISSUE: WON Norse ruling is applicable; NO

On the first issue, our ruling is that Norse is not applicable to the present petition. The, reason is that in that case, it was specifically stipulated by the parties in the Crew Agreement that "compensation shall be paid to employee in accordance with and subject to the limitations of the Workmen's Compensation Act of the Philippines or the Workmen's Insurance Law of the registry of the vessel, whichever is greater. That was why the higher benefits prescribed by the foreign law were awarded.

By contrast, no such stipulation appears in the Crew Agreement now under consideration. Instead, it is clearly stated therein that the insurance benefits shall be "as per NSB Standard Format," in the event "of death of the seaman during the term of his contract, over and above the benefits for which the Philippine Government is liable under Philippine law.

The petitioner argues that the Standard Format prescribed only the minimum benefits and does not preclude the parties from stipulating for higher compensation. That may be true enough. But the point is that the parties in this case did not provide for such higher benefits as the parties did in the Norse case. There was no stipulation in the Crew Agreement of January 3, 1981,



that the employee would be entitled to whichever greater insurance benefits were offered by either Philippine law or the foreign law; on the contrary, it was plainly provided that insurance benefits would be determined according to the NSB Standard Format then in force. The consequence is that the petitioner cannot now claim a higher award than the compensation prescribed in the said format.

ISSUE # 2: WON the circular can be given retroactive effect; NO

The amended award was based by the POEA on NSB Memorandum Circular No. 46, which became effective in 1979. The NLRC, apparently laboring under the belief that Memorandum Circular No. 71 was already effective at the time of the seaman's death on May 12, 1981, increased the death benefits to P75,000.00 as provided thereunder. The fact, though, is that the new rule became effective only in December 1981, as certified by the POEA itself,or seven months after Atienza's fatal accident.

The decision of the NLRC was SET ASIDE and that of the POEA is REINSTATED.

28. Norse Management v National Seaman29. Bank of America v American Realty

Bank of America vs American Realty Corporation; GR 133876

December 29, 1999

Facts: The Bank of America granted a loan to a corporation secured by a real estate mortgage by the respondent (ACR) . Upon the loan maturity, the corporation debtor failed to pay and the petitioner bank filed 4 collection cases in the foreign courts (England and Hong Kong) against the corporation debtors. At the same time it also filed an extrajudicial foreclosure in the office of the Provincial Sheriff of Bulacan, Philippines on the real estate mortgage and said was sold in a public auction.

The respondent files action for damages against petitioner due to the act of foreclosing the real estate mortgage extrajudicially despite the pending civil suits before the foreign courts to collect the principal loan. Petitioner contends that the respondent is not made a party on the collection case before the foreign courts for being a third party mortgagor and such actions were filed in foreign courts and thus decisions rendered on such courts are not enforceable in the Philippines unless a separate action is filed in the Phils to enforce such judgment and that under the English law which is the law governing in the principal agreement, the mortgagee does not lose its security interest by filing a civil action for sum of money. The court rendered judgment in favor of defendants declaring that the filing of civil suit on collection of a sum of money in foreign courts constitutes a waiver on the security of the mortgages.

ISSUE: WON the petitioner’s act of filing a collection suit against

the principal debtors before foreign courts constitutes a waiver

of the remedy of foreclosure.

RULING: Yes. The court held that Section 4 Rule 2 of the 1997

Rules on Civil Procedure provides that “if two or more suits are

instituted on the basis of the same cause of action, the filing of

one or a judgment upon the merits in any one is available as a

ground for the dismissal of the others.” A mortgagor creditor

may pursue two remedies either to institute against the

mortgage debtor a personal action for collection of money or

foreclosure of a mortgage but cannot avail of both remedies. In

Phil. jurisdiction these remedies are alternative and not

cumulative. Thus, choosing one remedy is a bar to avail of the

other remedy. Plaintiff cannot split up a single cause of

action by filing both remedies as expressly prohibited by the

rules on civil procedure.

On the contention of the petitioner that the English law should

apply to the principal agreements that states that the

mortgagee does not lose its security interest by simply filing

civil actions for sums of money, the court held that a foreign

law must be properly pleaded and proved as fact. If not

pleaded, the court will presume that the foreign law is the

same as our local or domestic or internal law. This is

the DOCTRINE OF PROCESSUAL PRESUMPTION.

Granting however that the English law is applicable in the Phil.

court, such law is contrary to sound and established public

policy of the forum which proscribes the splitting of

a single cause of action, thus still cannot be applied by the

court in the case.

It is proper that Philippine law should be upheld since it is the

country upon which the case is filed. Therefore the filing of a

collection case by the petitioner in foreign courts is a waiver for

the remedy of foreclosure of real estate mortgage.

30. PAL v CAPAL vs. CA, G.R. No. 119641, May 17, 1996, REGALADO, J.:p



FACTS: sometime in May, 1988, Dr. Josefino Miranda and his wife, Luisa, who were residents of Surigao City, went to the United States of America on a regular flight of Philippine Airlines, Inc. (PAL). On June 19, 1988, after a stay of over a month there, they obtained confirmed bookings from PAL's San Francisco Office for PAL Flight PR 101 from San Francisco to Manila via Honolulu on June 21, 1988; PAL flight PR 851 from Manila to Cebu on June 24, 1988; and PAL Flight PR 905 from Cebu to Surigao also on June 24, 1988.

Accordingly, on June 21, 1988, private respondents boarded PAL Flight PR 101 in San Francisco with five (5) pieces of baggage. After a stopover at Honolulu, and upon arrival in Manila on June 23, 1988, they were told by the PAL personnel that their baggage consisting of two balikbayan boxes, two pieces of luggage and one fishing rod case were off-loaded at Honolulu, Hawaii due to weight limitations. Consequently, private respondents missed their connecting flight from Manila to Cebu City, as originally scheduled, since they had to wait for their baggage which arrived the following day, June 24, 1988, after their pre-scheduled connecting flight had left. They consequently also missed their other scheduled connecting flight from Cebu City to Surigao City.

On June 25, 1988, they departed for Cebu City and therefrom private respondents had to transfer to PAL Flight 471 for Surigao City. On the way to Surigao City, the pilot announced that they had to return to Mactan Airport due to some mechanical problem. While at Mactan Airport, the passengers were provided by PAL with lunch and were booked for the afternoon flight to Surigao City. However, said flight was also canceled.

Since there were no more lights for Surigao City that day, private respondents asked to be billeted at the Cebu Plaza Hotel where they usually stay whenever they happen to be in Cebu City. They were, however, told by the PAL employees that they could not be accommodated at said hotel supposedly because it was fully booked. Contrarily, when Dr. Miranda called the hotel, he was informed that he and his wife could be accommodated there. Although reluctant at first, PAL eventually agreed to private respondents' overnight stay at said hotel. Oscar Jereza, PAL duty manager, approved the corresponding hotel authority with standard meals. It was only after private respondents' insistence that their meals be ordered a la carte that they were allowed to do so by PAL provided that they sign for their orders.

Inasmuch as the shuttle bus had already left by the time private respondents were ready to go to the hotel, PAL offered them P150.00 to include the fare for the return trip to the airport. Dr. Miranda asked for P150.00 more as he and his wife, along with all of their baggage, could not be accommodated in just one taxi, aside from the need for tipping money for hotel boys. Upon refusal of this simple request, Dr. Miranda then declared that he would forego the amenities offered by PAL. Thus, the

voucher for P150.00 and the authority for the hotel accommodations prepared by PAL were voided due to private respondents' decision not to avail themselves thereof.

To aggravate the muddled situation, when private respondents tried to retrieve their baggage, they were told this time that the same were loaded on another earlier PAL flight to Surigao City. Thus, private respondents proceeded to the hotel sans their baggage and of which they were deprived for the remainder of their trip. Private respondents were finally able to leave on board the first PAL flight to Surigao City only on June 26, 1988. Thereafter, they instituted an action for damages.

Now, petitioner PAL avers that the express provisions on private respondents' tickets stipulating that liability for delay in delivery of baggage shall be limited to US$20.00 per kilo of baggage delayed, unless the passenger declares a higher valuation, constitutes the contract of carriage between PAL and private respondents.

It further contends that these express provisions are in compliance with the provisions of the Warsaw Convention for the Unification of Rules Relating to International Carrier by Air, to which the Philippines is a signatory. Thereunder, it is asserted that PAL flight PR 101 from San Francisco, U.S.A., to Manila, Philippines is an "international transportation" well within the coverage of the Warsaw Convention.

Petitioner obstinately insists on the applicability of the provisions of the Warsaw Convention regarding the carrier's limited liability since the off-loading was supposedly justified and not attended by bad faith. Neither was there any claim for loss of baggage as in fact private respondents' baggage were, albeit delayed, received by them in good condition. 22

The court a quo debunked petitioner's arguments by this holding:

The defense raised by defendant airlines that it can be held liable only under the terms of the Warsaw Convention (Answer, Special and Affirmative Defenses, dated October 26, 1988) is of no moment. For it has also been held that Articles 17, 18 and 19 of the Warsaw Convention of 1929 merely declare the air carriers liable for damages in the cases enumerated therein, if the conditions specified are present. Neither the provisions of said articles nor others regulate or exclude liability for other breaches of contract by air carriers (Northwest Airlines, Inc. vs. Nicolas Cuenca, et al., 14 SCRA 1063). 23

This ruling of the trial court was affirmed by respondent Court of Appeals, thus:



We are not persuaded. Appellees do not seek payment for loss of any baggage. They are claiming damages arising from the discriminatory off-loading of their baggag(e). That cannot be limited by the printed conditions in the tickets and baggage checks. Neither can the Warsaw Convention exclude nor regulate the liability for other breaches of contract by air carriers. A recognition of the Warsaw Convention does not preclude the operation of our Civil Code and related laws in determining the extent of liability of common carriers in breach of contract of carriage, particularly for willful misconduct of their employees. 24

The congruent finding of both the trial court and respondent court that there was discriminatory off-loading being a factual question is, as stated earlier, binding upon and can no longer be passed upon by this Court, especially in view of and in deference to the affirmance of the same by respondent appellate court.

There was no error on the part of the Court of Appeals when it refused to apply the provisions of the Warsaw Convention, for in the words of this Court in the aforequoted Cathay Pacific case:

. . . although the Warsaw Convention has the force and effect of law in this country, being a treaty commitment assumed by the Philippine government, said convention does not operate as an exclusive enumeration of the instances for declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Warsaw Convention declares the carrier liable in the enumerated cases and under certain limitations. However, it must not be construed to preclude the operation of the Civil Code and pertinent laws. It does not regulate, much less exempt, the carrier from liability for damages for violating the rights of its passengers under the contract of carriage, especially if willful misconduct on the part of the carrier's employees is found or established, which is the case before Us. . . .

31. PCL Shipping v NLRCPCL Shipping Philippines, Inc vs. NLRC

FACTS:- Rusel was employed as seaman by PCL Shipping Philippines for and in behalf of its foreign principal, U-Ming Marine. Rusel thereby joined the vessel MV Cemtex for 12 month.- While Rusel was cleaning the vessel's kitchen, he slipped, and as a consequence thereof, he suffered a broken/sprained ankle on his left foot. A request for medical examination was flatly denied by the captain of the vessel.

- Feeling an unbearable pain in his ankle, Rusel jumped off the vessel using a life jacket and swam to shore. - He was brought to a hospital where he was confined for 8 days. On August 22, 1996, a vessel's agent fetched Rusel from the hospital and was required to board a plane bound for the Philippines.- Rusel filed a complaint for illegal dismissal, non-payment of wages, overtime pay, claim for medical benefits, sick leave pay and damages against PCL Shipping and U-Ming Marine before the arbitration branch of the NLRC.- In their answer, the latter alleged that Rusel deserted his employment by jumping off the vessel.- Labor Arbiter held that respondent is liable for the unjust repatriation of the complainant. NLRC affirmed the finding of the Labor Arbiter.

ISSUE: WON respondent was guilty of desertion to justify his dismissal. NO.

For a seaman to be considered as guilty of desertion, it is essential that there be evidence to prove that if he leaves the ship or vessel in which he had engaged to perform a voyage, he has the clear intention of abandoning his duty and of not returning to the ship or vessel. In the present case, however, petitioners failed to present clear and convincing proof to show that when private respondent jumped ship, he no longer had the intention of returning. The fact alone that he jumped off the ship where he was stationed, swam to shore and sought medical assistance for the injury he sustained is not a sufficient basis for petitioners to conclude that he had the intention of deserting his post.

ISSUE: WON the provisions of the Constitution as well as the Labor Code which afford protection to labor apply to Filipino employees working abroad. YES.

Petitioners admit that they did not inform private respondent in writing of the charges against him and that they failed to conduct a formal investigation to give him opportunity to air his side. However, petitioners contend that the twin requirements of notice and hearing applies strictly only when the employment is within the Philippines and that these need not be strictly observed in cases of international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford protection to labor apply to Filipino employees whether working within the Philippines or abroad. Moreover, the principle of lex loci contractus (the law



of the place where the contract is made) governs in this jurisdiction.

In the present case, it is not disputed that the Contract of Employment entered into by and between petitioners and private respondent was executed here in the Philippines with the approval of the Philippine Overseas Employment Administration (POEA). Hence, the Labor Code together with its implementing rules and regulations and other laws affecting labor apply in this case. Accordingly, as to the requirement of notice and hearing in the case of a seafarer, the Court has already ruled in a number of cases that before a seaman can be dismissed and discharged from the vessel, it is required that he be given a written notice regarding the charges against him and that he be afforded a formal investigation where he could defend himself personally or through a representative. Hence, the employer should strictly comply with the twin requirements of notice and hearing without regard to the nature and situs of employment or the nationality of the employer. Petitioners failed to comply with these twin requirements.

CHAPTER XXII & XXIII- Torts and Crimes32. Saudi Arabian v CA33. Asaalu v Commissioner of Customs34. Time v Reyes35. US v Look Chaw36. Pp v Wong Cheng37. Perkins v Dizon



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Conflict Digest- Real Properties-partial