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DEFINITION Hilton v. Guyot, 159 U.S. 113 (1895) CASE SYNOPSIS Defendants appealed an order from the Circuit Court of the United States (SDNY), which directed a verdict for plaintiffs in the amount that a French court had awarded. Defendants alleged fraud on the plaintiff's part. CASE FACTS Plaintiffs sued the defendants in a French court under a contract claim. The defendants alleged fraud on the (Ps) part, and the (Ds) sought an injunction from bringing suit. The court, however, would not admit evidence and entered a directed verdict for plaintiff. A French appeals court affirmed the judgment. Defendants sought review in the United States. DISCUSSION The court stated that comity was reciprocal. Because France did not recognize final judgments of the U.S., and would try such judgments anew, judgements given by France would be given the same treatment. Therefore, the comity of the United States did not require the court to give conclusive effect to the judgments of the courts of France. Defendants could be granted a new trial. CONCLUSION The judgment was reversed and the cause was remanded for a new trial. Comity was not afforded to foreign judgments when the country did not reciprocate comity Hilton vs. Guyot (1895) FACTS: Defendants were sued in France, and the French court rendered judgment against them. Plaintiffs sued defendants on the French judgment in the US. The US court held the French judgment conclusive. HELD: No law has any effect, of its own force, beyond the limits of the sovereignty form which its authority is derived. The extent to which the law of one nation, as put in force within its territory xxx shall be allowed to operate within the dominion of another nation, depends upon xxx “the comity of nations.” Comity of nations is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws. The reasonable, if not necessary conclusion appears to us to be that judgments rendered in France, or in any other foreign country, by the laws of which our own judgments are reviewable upon the merits, are not entitled to full credit and conclusive effect when sued upon in this country, but are prima facie evidence only of the justice of the plaintiff’s claim. Hilton vs. Guyot (1895) FACTS: Guyot, a Frenchman, sued Hilton, an American, in a French court for the recovery of a sum of money. The French court rendered judgment in favor of Guyot. Plaintiff brought the action to a US court to recover the sum of money adjudged by the French court to be due from the defendant to the plaintiff. ISSUE: Whether or not a judgment of a foreign nation’s court entitled to full credit and has a conclusive effect when sued to other nation. HELD: No law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived. The extent to which the law of one nation, as put in force within its territory, whether by executive order, by legislative act, or by judicial decree shall be allowed to operate within the dominion of another nation depends upon the comity of nations. A foreign judgment is not entitled to full faith and credit when sued upon another nation, but is a prima facie evidence only of the claim. JURISDICTION OVER THE SUBJECT MATTER El Banco Espanol-Filipino vs. Palanca

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DEFINITION

Hilton v. Guyot, 159 U.S. 113 (1895)

CASE SYNOPSISDefendants appealed an order from the Circuit Court of the United States (SDNY), which directed a verdict for plaintiffs in the amount that a French court had awarded.Defendants alleged fraud on the plaintiff's part.

CASE FACTSPlaintiffs sued the defendants in a French court under a contract claim. The defendants alleged fraud on the (Ps) part, and the (Ds) sought an injunction from bringing suit. The court, however, would not admit evidence and entered a directed verdict for plaintiff.A French appeals court affirmed the judgment.Defendants sought review in the United States.

DISCUSSION• The court stated that comity was reciprocal. 

• Because France did not recognize final judgments of the U.S., and would try such judgments anew, judgements given by France would be given the same treatment. 

• Therefore, the comity of the United States did not require the court to give conclusive effect to the judgments of the courts of France. 

• Defendants could be granted a new trial.

CONCLUSIONThe judgment was reversed and the cause was remanded for a new trial.Comity was not afforded to foreign judgments when the country did not reciprocate comity

Hilton vs. Guyot

(1895)

FACTS: Defendants were sued in France, and the French court rendered judgment against them. Plaintiffs sued defendants on the French judgment in the US. The US court held the French judgment conclusive.

HELD: No law has any effect, of its own force, beyond the limits of the sovereignty form which its authority is derived. The extent to which the law of one nation, as put in force within its territory xxx shall be allowed to operate within the dominion of another nation, depends upon xxx “the comity of na-tions.”

Comity of nations is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.

The reasonable, if not necessary conclusion appears to us to be that judgments rendered in France, or in any other foreign country, by the laws of which our own judgments are reviewable upon the merits, are not entitled to full credit and conclusive effect when sued upon in this country, but are prima facie evidence only of the justice of the plaintiff’s claim.

 Hilton vs. Guyot(1895)FACTS: Guyot, a Frenchman, sued Hilton, an American, in a French court for the recovery of a sum of money. The French court rendered judgment in favor of Guyot. Plaintiff brought the action to a US court to recover the sum of money adjudged by the French court to be due from the defendant to the plaintiff.

ISSUE: Whether or not a judgment of a foreign nation’s court entitled to full credit and has a conclusive effect when sued to other nation.

HELD: No law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived. The extent to which the law of one nation, as put in force within its territory, whether by executive order, by legislative act, or by judicial decree shall be allowed to operate within the dominion of another nation depends upon the comity of nations.

A foreign judgment is not entitled to full faith and credit when sued upon another nation, but is a prima facie evidence only of the claim.

JURISDICTION OVER THE SUBJECT MATTEREl Banco Espanol-Filipino vs. PalancaG.R. No. L-11390, March 26, 1918

* JURISDICTION, HOW ACQUIRED: Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective.* The action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is expressed the idea that while it is not strictly speaking an ac -tion in rem yet it partakes of that nature and is substantially such.* DUE PROCESS IN FORECLOSURE PROCEEDINGS: Property is always assumed to be in the possession of its owner, in person or by agent; and he may be safely held, under certain conditions, to be affected with knowledge that proceedings have been instituted for its condemnation and sale.

FACTS: Engracio Palanca Tanquinyeng y Limquingco mortgaged various parcels of real property in Manila to El Banco Espanol-Filipino. Afterwards, Engracio returned to China and there he died on January 29, 1810 without returning again to the Philippines. The mortgagor then instituted foreclosure proceeding but since defendant is a non-resident, it was necessary to give notice by publication. The Clerk of Court was also directed to send copy of the summons to the defendant’s last known address, which is in Amoy, China. It is not shown whether the Clerk complied with this requirement. Never-theless, after publication in a newspaper of the City of Manila, the cause proceeded and judgment by default was rendered. The decision was likewise published and afterwards sale by public auction was held with the bank as the highest bidder. On August 7, 1908, this sale was confirmed by the court. However, about seven years after the confirmation of this sale, a motion was made by Vicente Palanca, as administrator of the estate of the original de -fendant, wherein the applicant requested the court to set aside the order of default and the judgment, and to vacate all the proceedings subsequent

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thereto. The basis of this application was that the order of default and the judgment rendered thereon were void because the court had never acquired jurisdiction over the defendant or over the subject of the action.

ISSUE:

* Whether or not the lower court acquired jurisdiction over the defendant and the subject matter of the action* Whether or not due process of law was observed

RULING:

On Jurisdiction

The word “jurisdiction” is used in several different, though related, senses since it may have reference (1) to the authority of the court to entertain a par-ticular kind of action or to administer a particular kind of relief, or it may refer to the power of the court over the parties, or (2) over the property which is the subject to the litigation.

The sovereign authority which organizes a court determines the nature and extent of its powers in general and thus fixes its competency or jurisdiction with reference to the actions which it may entertain and the relief it may grant.

How Jurisdiction is Acquired

Jurisdiction over the person is acquired by the voluntary appearance of a party in court and his submission to its authority, or it is acquired by the coer -cive power of legal process exerted over the person.

Jurisdiction over the property which is the subject of the litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustra -tion of what we term potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the property assumes, at the instance of some person claiming to be owner, to exercise a ju-risdiction in rem over the property and to adjudicate the title in favor of the petitioner against all the world.

In the terminology of American law the action to foreclose a mortgage is said to be a proceeding quasi in rem, by which is expressed the idea that while it is not strictly speaking an action in rem yet it partakes of that nature and is substantially such. The expression "action in rem" is, in its narrow applica -tion, used only with reference to certain proceedings in courts of admiralty wherein the property alone is treated as responsible for the claim or obliga-tion upon which the proceedings are based. The action quasi rem differs from the true action in rem in the circumstance that in the former an individual is named as defendant, and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property. All proceed-ings having for their sole object the sale or other disposition of the property of the defendant, whether by attachment, foreclosure, or other form of rem -edy, are in a general way thus designated. The judgment entered in these proceedings is conclusive only between the parties.

It is true that in proceedings of this character, if the defendant for whom publication is made appears, the action becomes as to him a personal action and is conducted as such. This, however, does not affect the proposition that where the defendant fails to appear the action is quasi in rem; and it should therefore be considered with reference to the principles governing actions in rem.

SON and ANGEL H. MOJICA,Judges of the Court of First Instance of Bulacan, and LEON ALEJO G.R. No. L-1403 October 29, 1948VICENTE

FACTS:On August 10, 1937, Alejo filed a complaint against Caluag and Garcia for the redemption of one-half pro indiviso of a parcel of land in Guiguinto, Bula -can. After trial, the CFI Bulacan rendered judgment ordering petitioners to execute a deed of sale in favor of Fortunato Alejo, upon payment by plaintiff, as purchase price, of the amount of P2,551. Petitioners filed an appeal to theCA but it was denied. Consequently, Alejo filed a Motion for Execu -tion.When the petitioners opposed, Alejo filed before CFI a petition for contempt and it was granted by the respondent. A petition for certiorari was filed against the respondent judge, allegedly acted without or in excess of the jurisdiction of the court in rendering the resolution which declares the petition -ers guilty of contempt of court for not complying or performing its prior order requiring the petitioners to execute a deed of sale in favor of plaintiff over one-half of the land pro indiviso in question. The petitioners in support of the present petition for certiorari, alleged other 2 grounds, to wit: (1) that plain -tiff's action abated or was extinguished upon the death of the plaintiff Fortunato Alejo, because his right of legal redemption was a personal one, and therefore not transferable to his successors in interest; and (2) that, even assuming that it is a personal one and therefore transferable, his successors in interest have failed to secure the substitution of said deceased by his legal representative under section 17, Rule 3.

ISSUE: WON respondent Judge Angel Mojica acted without jurisdiction in proceeding against anddeclaring the petitioners guilty of contempt.

HELD:YesRATIO: It is well settled that jurisdiction of the subject matter of a particular case is something morethan the general power conferred by law upon a court to take cognizance of cases of the generalclass to which the particular case belongs. The respondent Judge Mojica acted not only without juris -diction in proceeding against and declaring the petitioners guilty of contempt, but also in excessof jurisdiction in ordering the confinement of the petition-ers, because it had no power to impose suchpunishment upon the latter. The respondent judge has no power under the law to order theconfinement of the petitioners until they have compiled with the order of the court. A wrong decision made within the limits of the court's authority is erroneous and may be correctedon appeal or other direct review, but a wrong, or for that matter a correct, decision is void, and maybe set aside either directly or collater -ally, where the court exceeds its jurisdiction and power inrendering it. Hence though the court has acquired jurisdiction over the subject matter and theparticular case has been submitted properly to it for hearing and decision, it will overstep its jurisdiction if it renders a judgment which it has no power under the law to render.

International Shoe Co. vs. Washington

FactsInternational Shoe Co. (D, appellant) was a Delaware corporation with its principle place of business in St. Louis, Missouri. It had no offices in the state of Washington and made no contracts for sale there. International Shoe did not keep merchandise in Washington and did not make deliveries of goods in intrastate commerce originating from the state.

International Shoe employed 11-13 salesmen for three years who resided in Washington. Their commissions each year totaled more than $31,000 and International Shoe reimbursed them for expenses. Prices, terms, and acceptance or rejection of footwear orders were established through St. Louis. Salesmen did not have authority to make contracts or collections.

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The state of Washington brought suit against International Shoe in Washington State court to recover unpaid contributions to the unemployment com-pensation fund. Notice was served personally on an agent of the defendant within the state and by registered mail to corporate headquarters. The Supreme Court of Washington held that the state had jurisdiction to hear the case and International Shoe appealed.

IssueDid International Shoe’s activities in Washington make it subject to personal jurisdiction in Washington courts?

Holding and Rule (Stone)Yes. Minimum contacts with the forum state can enable a court in that state to exert personal jurisdiction over a party consistent with the Due Process clause.A casual presence of a corporation or its agent in a state in single or isolated incidents is not enough to establish jurisdiction. Acts of agents of the cor -poration, because of the nature, quality, and circumstances of their commission, may be deemed sufficient. Consent may be implied from the corpora-tion’s presence and activities in the state through the acts of authorized agents.

The activities carried on by defendant corporation in Washington were systematic and continuous rather than irregular or casual. The defendant re-ceived the benefits and protection of the laws of the state and is subject to jurisdiction there.

Relevant factors

International Shoe had conducted “systematic and continuous” business operations in Washington. A large volume of interstate business for the defen-dant was created through it’s agents within the state and the corporation received the benefits and protection of Washington’s laws. International Shoe had established agents in the state permanently.

International Shoe Co. vs. Washington

(1945)

FACTS: The state of Washington sued International Shoe Co. (a Delaware corporation with principal place of business in Missouri) to collect the tax laid upon the exercise of the privilege of employing salesmen within the state. International Shoe ’s defense is that its activities within the state, consist-ing merely of exhibiting samples and soliciting orders and nothing more, were not sufficient to manifest its “presence” there; hence the state courts had no JD over it.

HELD: The SC of Washington has JD over International Shoe. Due process requires only that in order to subject a defendant to a judgment in per-sonam, if he be not present within the territory of the forum, he should have certain minimum contacts with it, such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice”. (Minimum contacts so that the suit will not offend traditional notions of fair play and substantial justice.)

The demands of due process regarding the corporation’s “presence” may be met by such contacts of the corporation with the state of the forum as to make it reasonable xxx to require the corporation with defend the particular suit which is brought there.

Its “presence” can be manifested only by such activities carried on in its behalf by those who are authorized to act for it.

Pennoyer v. Neff, 95 U.S. 714, 24 L. Ed. 565 (1878).

FactsMitchell brought suit against Neff to recover unpaid legal fees. Mitchell published notice of the lawsuit in an Oregon newspaper but did not serve Neff personally. Neff failed to appear and a default judgment was entered against him. To satisfy the judgment Mitchell seized land owned by Neff so that it could be sold at a Sheriff’s auction. When the auction was held Mitchell purchased it and later assigned it to Pennoyer.

Neff sued Pennoyer in federal district court in Oregon to recover possession of the property, claiming that the original judgment against him was invalid for lack of personal jurisdiction over both him and the land. The court found that the judgment in the lawsuit between Mitchell and Pennoyer was invalid and that Neff still owned the land. Pennoyer lost on appeal and the Supreme Court granted certiorari.

IssueCan a state court exercise personal jurisdiction over a non-resident who has not been personally served while within the state and whose property within the state was not attached before the onset of litigation?

Holding and Rule (Field)No. A court may enter a judgment against a non-resident only if the party 1) is personally served with process while within the state, or 2) has property within the state, and that property is attached before litigation begins (i.e. quasi in rem jurisdiction).Since the adoption of the Fourteenth Amendment, the validity of judgments may be directly questioned on the ground that proceedings in a court of jus-tice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process of law. Due process demands that legal proceedings be conducted according to those rules and principles which have been established in our systems of jurispru-dence for the protection and enforcement of private rights.

To give legal proceedings any validity, there must be a tribunal with legal authority to pass judgment, and a defendant must be brought within its juris-diction by service of process within the state, or by his voluntary appearance.

The substituted service of process by publication in actions brought against non-residents is valid only where property in the state is brought under the control of the court, and subjected to its disposition by process adapted to that purpose, or where the judgment is sought as a means of reaching such property or affecting some interest therein; in other words, where the action is in the nature of a proceeding in rem.

The Oregon court did not have personal jurisdiction over Neff because he was not served in Oregon. The court’s judgment would have been valid if Mitchell had attached Neff’s land at the beginning of the suit. Mitchell could not have done this because Neff did not own the land at the time Mitchell initiated the suit. The default judgment was declared invalid. Therefore, the sheriff had no power to auction the real estate and title never passed to Mitchell. Neff was the legal owner.

Pennoyer vs. Neff

(1878)

FACTS: Neff, a California resident, owned land in Oregon which was sold under a Sheriff ’s deed to satisfy a money judgment against him. The service of summons was made by publication. He is suing for recovery of said land, alleging that the sale was invalid for lack of JD of the Oregon court over him.

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HELD: Substituted services by publication, or in any other authorized form, may be sufficient to inform parties of the object of the proceedings taken where property is once brought under the control of the court by seizure or some equivalent act to any proceedings authorized by law upon such seizure for its condemnation and sale.

But where the entire object of the action is to determine the personal rights and obligations of defendants, that is, where the suit is merely in personam, constructive service in this form upon a non-resident is ineffectual for any purpose.

The important thing to prove is what kind of action is involved (to determine sufficiency of form of service to be used)

PHILSEC INVESTMENT et al vs.CA et al G.R. No. 103493 June 19, 1997

FACTS: Private respondent Ducat obtained separate loans from petitioners Ayala International Finance Limited (AYALA) and Philsec Investment Corp (PHILSEC), secured by shares of stock owned by Ducat.

In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president, private respondent Daic, assumed Ducat ’s obligation under an Agreement, whereby 1488, Inc. executed a Warranty Deed with Vendor’s Lien by which it sold to petitioner Athona Holdings, N.V. (ATHONA) a parcel of land in Texas, U.S.A., while PHILSEC and AYALA extended a loan to ATHONA as initial payment of the purchase price. The balance was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the money from 1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat.

As ATHONA failed to pay the interest on the balance, the entire amount covered by the note became due and demandable. Accordingly, private re -spondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the Agreement.

While the Civil Case was pending in the United States, petitioners filed a complaint “For Sum of Money with Damages and Writ of Preliminary Attach-ment” against private respondents in the RTC Makati. The complaint reiterated the allegation of petitioners in their respective counterclaims in the Civil Action in the United States District Court of Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than its true value.

Ducat moved to dismiss the Civil Case in the RTC-Makati on the grounds of (1) litis pendentia, vis-a-vis the Civil Action in the U.S., (2) forum non con -veniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action.

The trial court granted Ducat’s MTD, stating that “the evidentiary requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international law of forum non conveniens,” even as it noted that Ducat was not a party in the U.S. case.

Petitioners appealed to the CA, arguing that the trial court erred in applying the principle of litis pendentia and forum non conveniens.

The CA affirmed the dismissal of Civil Case against Ducat, 1488, Inc., and Daic on the ground of litis pendentia.

ISSUE: is the Civil Case in the RTC-Makati barred by the judgment of the U.S. court?

HELD: CA reversed. Case remanded to RTC-Makati.NO.

While this Court has given the effect of res judicata to foreign judgments in several cases, it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law. This is because in this jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of a party and, as such, is subject to proof to the contrary. Rule 39, §50 provides:

Sec. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a foreign country, having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title; but the judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court were exactly the issues raised in this case such that the judgment that might be rendered would constitute res judicata.

Second. Nor is the trial court’s refusal to take cognizance of the case justifiable under the principle of forum non conveniens:

First, a MTD is limited to the grounds under Rule 16, sec.1, which does not include forum non conveniens. The propriety of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a matter of defense.Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after “vital facts are es-tablished, to determine whether special circumstances” require the court’s desistance.

Davao Light & Power Co. Inc. v CA (204 SCRA 343)

Facts: Davao Light and Power Inc, Co. filed a complaint for recovery of sum of money and damages against Queensland Hotel and Teodorico Adarna. The complaint contained an ex parte application for a writ of preliminary attachment.

Judge Nartatez granted the writ and fixed the attachment bond at around P4Million.   The summons, copy of complaint, writ of attachment, copy of at-tachment bond were served upon Queensland and Adarna. Pursuant to the writ, the Sheriff seized the properties of the latter.

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Queensland and Adarna filed a motion to discharge the attachment for lack of jurisdiction to issue the same because at the time the order of attachment was promulgated (May 3, 1989) and the attachment writ issued (May 11,1989), the Trial Court  had not yet acquired jurisdiction over cause and person of defendants.

Trial Court denied the motion to discharge.

CA annulled the Trial Court’s Order. Davao seeks to reverse CA’s order.

Issue: Whether or not preliminary attachment may issue ex parte against a defendant before acquiring jurisdiction over his person.

Held:Yes. Rule 57 speaks of the grant of the remedy “at the commencement of the action or at any time thereafter” What the rule is saying is that after an action is properly commenced (by filing of the complaint and payment of all requisite docket and other fees), the plaintiff may apply for and obtain a writ of preliminary attachment. This he may do so, before or after, the summons to the defendant.The CA decision is reversed and the writ of attachment issued by Judge Nartatez is reinstated.

**Preliminary Attachment – provisional remedy in virtue of which a plaintiff or other party may, at the commencement of the action or at any time there -after, have the property of the adverse party taken into custody of court as security for satisfaction of judgment to be recovered.

Nature of Attachment: a remedy which is purely statutory in respect of which the law requires a strict of construction of the provisions granting it. No principle, whether statutory or through jurisprudence, prohibits its issuance  by any court before the acquisition of jurisdiction over the person.

HONGKONG AND SHANGHAI BANKING CORPORATION (HSBC) vs. SHERMAN et al G.R. No. 72494 August 11, 1989

FACTS: It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (COMPANY), a company incorporated in Singapore applied with and was granted by HSBC Singapore branch an overdraft facility in the maximum amount of Singapore dollars 200,000 with interest at 3% over HSBC prime rate, payable monthly, on amounts due under said overdraft facility.

As a security for the repayment by the COMPANY of sums advanced by HSBC to it through the aforesaid overdraft facility, in 1982, both private re -spondents and a certain Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee in favor of HSBC whereby private respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated overdraft facility.

The Joint and Several Guarantee provides, inter alia, that:This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this guarantee. …

The COMPANY failed to pay its obligation. Thus, HSBC demanded payment and inasmuch as the private respondents still failed to pay, HSBC filed A complaint for collection of a sum of money against private respondents Sherman and Reloj before RTC of Quezon City.Private respondents filed an MTD on the ground of lack of jurisdiction over the subject matter. The trial court denied the motion. They then filed before the respondent IAC a petition for prohibition with preliminary injunction and/or prayer for a restraining order. The IAC rendered a decision enjoining the RTC Quezon City from taking further cognizance of the case and to dismiss the same for filing with the proper court of Singapore which is the proper fo-rum. MR denied, hence this petition.

ISSUE: Do Philippine courts have jurisdiction over the suit, vis-a-vis the Guarantee stipulation regarding jurisdiction?

HELD: YES

One basic principle underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam. To be reasonable, the jurisdiction must be based on some minimum con-tacts that will not offend traditional notions of fair play and substantial justiceThe defense of private respondents that the complaint should have been filed in Singapore is based merely on technicality. They did not even claim, much less prove, that the filing of the action here will cause them any unnecessary trouble, damage, or expense. On the other hand, there is no show-ing that petitioner BANK filed the action here just to harass private respondents.

**

In the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., where the stipulation was “[i]n case of litigation, jurisdiction shall be vested in the Court of Davao City.” We held:

Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or defendant under Section 2 (b), Rule 4, ROC, in the absence of qualifying or restrictive words in the agreement which would indicate that the place named is the only venue agreed upon by the parties.Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has juris-diction. Neither did the clause in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter’s authorities. This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume juris-diction over all kinds of cases brought before them

NOTES:

The respondent IAC likewise ruled that:… In a conflict problem, a court will simply refuse to entertain the case if it is not authorized by law to exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain the case by applying the principle of forum non conveniens. …However, whether a suit should be entertained or dismissed on the basis of the principle of forum non conveniens depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court. Thus, the IAC should not have relied on such principle.

Banco Do Brasil vs Court of Appeals 333 SCRA 545 – Conflict of Laws – Private International Law – Service of Summons in In Personam Cases

In 1989, Cesar Urbino, Sr. sued Poro Point Shipping Services for damages the former incurred when one of the latter ’s ship ran aground causing losses to Urbino. Urbino impleaded Banco Do Brasil (BDB), a foreign corporation not engaged in business in the Philippines nor does it have any office here or any agent. BDB was impleaded simply because it has a claim over the sunken ship. BDB however failed to appear multiple times. Eventually, a judgment was rendered and BDB was adjudged to pay $300,000.00 in damages in favor of Urbino for BDB being a nuisance defendant.

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BDB assailed the said decision as it argued that there was no valid service of summons because the summons was issued to the ambassador of Brazil. Further, the other summons which were made through publication is not applicable to BDB as it alleged that the action against them is in personam.

ISSUE: Whether or not the court acquired jurisdiction over Banco Do Brasil.

HELD: No. Banco Do Brasil is correct. Although the suit is originally in rem as it was BDB ’s claim on the sunken ship which was used as the basis for it being impleaded, the action nevertheless became an in personam one when Urbino asked for damages in the said amount. As such, only a personal service of summons would have vested the court jurisdiction over BDB. Where the action is in personam, one brought against a person on the basis of his personal liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a non-resident, personal service of summons within the state is essential to the acquisition of jurisdiction over the person. This cannot be done, however, if the defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against him.

NM Rothschild, petitioner, v. LEPANTO CONSOLIDATED MINING COMPANY,Respondent.

FACTS:

Respondent Lepanto Consolidated Mining Company filed with the RTC of Makati City a Complaint against petitioner NM Rothschild & Sons (Australia) Limited praying for a judgment declaring the loan and hedging contracts between the parties void for being contrary to Article 2018 of the Civil Code of the Philippines and for damages. Upon respondents motion, the trial court authorized respondents counsel to personally bring the summons and Com-plaint to the Philippine Consulate General in Sydney, Australia for the latter office to effect service of summons on petitioner.

The petitioner prayed for the dismissal of the Complaint on the following grounds: (a) the court has not acquired jurisdiction over the person of petitioner due to the defective and improper service of summons; (b) the Complaint failed to state a cause of action and respondent does not have any against petitioner; (c) the action is barred by estoppel; and (d) respondent did not come to court with clean hands.

The RTC issued an Order denying the Motion to Dismiss. According to the trial court, there was a proper service of summons through the Department of Foreign Affairs (DFA) on account of the fact that the defendant has neither applied for a license to do business in the Philippines, nor filed with the Securities and Exchange Commission (SEC) a Written Power of Attorney designating some person on whom summons and other legal processes maybe served. The trial court also held that the Complaint sufficiently stated a cause of action. The other allegations in the Motion to Dismiss were brushed aside as matters of defense which can best be ventilated during the trial.

ISSUES:

I. Whether petitioner is a real party in interest

II. Whether or not it was proper for the petitioner to resort to a petition for certiorari with the CA

III. Whether or not the lower courts correctly denied the Motion to Dismiss

HELD:

(1) Respondent points out that as of the date of the filing of the Petition, there is no such corporation that goes by the name NM Rothschild and Sons (Australia) Limited. Petitioner claims that NM Rothschild and Sons (Australia) Limited still exists as a corporation under the laws of Australia under the new name Investec Australia Limited. We find the submissions of petitioner on the change of its corporate name satisfactory and resolve not to dismiss the present Petition for Review on the ground of not being prosecuted under the name of the real party in interest.

(2) We have held time and again that an order denying a Motion to Dismiss is an interlocutory order which neither terminates nor finally disposes of a case as it leaves something to be done by the court before the case is finally decided on the merits. The general rule, therefore, is that the denial of a Motion to Dismiss cannot be questioned in a special civil action for Certiorari which is a remedy designed to correct errors of jurisdiction and not errors of judgment. However, we have likewise held that when the denial of the Motion to Dismiss is tainted with grave abuse of discretion, the grant of the ex-traordinary remedy of Certiorari may be justified

The resolution of the present Petition therefore entails an inquiry into whether the Court of Appeals correctly ruled that the trial court did not commit grave abuse of discretion in its denial of petitioners Motion to Dismiss. A mere error in judgment on the part of the trial court would undeniably be inade -quate for us to reverse the disposition by the Court of Appeals.

(3) As correctly ruled by both the RTC and the CA, the alleged absence of a cause of action, the alleged estoppel on the part of petitioner, and the ar -gument that respondent is in pari delicto in the execution of the challenged contracts, are not grounds in a Motion to Dismiss as enumerated in Section 1, Rule 16[17] of the Rules of Court. Rather, such defenses raise evidentiary issues closely related to the validity and/or existence of respondents al-leged cause of action and should therefore be threshed out during the trial.

As regards the allegation of failure to state a cause of action, while the same is usually available as a ground in a Motion to Dismiss, said ground can-not be ruled upon in the present Petition without going into the very merits of the main case. In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are void for being contrary to Article 2018[25] of the Civil Code. Respondent claims that under the Hedging Contracts, despite the express stipulation for deliveries of gold, the intention of the parties was allegedly merely to compel each other to pay the difference between the value of the gold at the forward price stated in the contract and its market price at the supposed time of delivery. The determination of whether or not the Complaint stated a cause of action would therefore involve an inquiry into whether or not the assailed contracts are void under Philippine laws. This is, precisely, the very issue to be determined. The trial court, therefore, correctly denied the Motion to Dismiss on this ground.

Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the improper service of summons. Summons was served on petitioner through the DFA, with respondents counsel personally bringing the summons and Complaint to the Philippine Consulate General in Sydney, Australia. Moreover, by seeking affirmative reliefs from the trial court, petitioner is deemed to have voluntarily submitted to the jurisdiction of said court. A party cannot invoke the jurisdiction of a court to secure affirmative relief against his opponent and after obtaining or failing to obtain such relief, repu -diate or question that same jurisdiction. Consequently, the trial court cannot be considered to have committed grave abuse of discretion amounting to lack or excess of jurisdiction in the denial of the Motion to Dismiss on account of failure to acquire jurisdiction over the person of the defendant.

DOCTRINE OF NON CONVENIENS

Manila Hotel Corp vs NLRC

G.R. 1200077

13 October 2000

PARDO, J

Facts

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In May, 1988, private respondent Marcelo Santos (hereinafter referred to as “Santos”) was an overseas worker employed as a printer at the Ma-zoon Printing Press, Sultanate of Oman. Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, People’s Republic of China.

MHICL is a corporation duly organized and existing under the laws of Hong Kong. MHC is an “incorporator” of MHICL, owning 50% of its capital stock.

By virtue of a “management agreement” with the Palace Hotel (Wang Fu Company Limited), MHICL trained the personnel and staff of the Palace Hotel at Beijing, China.

On August 10, 1989, the Palace Hotel informed respondent that his employment at the Palace Hotel print shop would be terminated due to busi-ness reverses brought about by the political upheaval in China.

On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the Arbitration Branch, National Capital Region, National La-bor Relations Commission (NLRC). He prayed for an award of nineteen thousand nine hundred and twenty three dollars (US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as exemplary damages and attorney’s fees equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt (General Manager of Palace Hotel) as respondents.

The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the proceedings before the Labor Arbiter.Petitioners appeal to the NLRC, arguing that the POEA, not the NLRC had jurisdiction over the case.

IssueIs the NLRC the proper forum

Held The NLRC was a seriously inconvenient forum.The main aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign elements.  The only link that the Philip-

pines has with the case is that respondent Santos is a Filipino citizen.  The Palace Hotel and MHICL are foreign corporations. Not all cases involving our citizens can be tried here.

Santos was hired directly by the Palace Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was then employed. He was hired without the intervention of the POEA or any authorized recruitment agency of the government.

Under the rule of  forum non conveniens, a Philippine court or agency may assume jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is one to which the parties may conveniently resort to; (2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine court has or is likely to have power to enforce its decision.

K.K. Shell Sekiyu Osaka Hatsubaisho and Fu Hing Oil Co., LTD., vs. Court of Appeals

G.R. Nos. 90306-07

July 30, 1990

Justice Cortes

Facts: On January 7,1987, Kumagai Kaiun Kaisha, Ltd. (hereinafter referred to as Kumagai), a corporation formed and existing under the laws of Japan, filed a complaint for the collection of a sum of money with preliminary attachment against Atlantic Venus Co., S.A. (hereinafter referred to as "At-lantic"), a corporation registered in Panama, the vessel MV Estella and Crestamonte Shipping Corporation (hereinafter referred to as "Crestamonte"), a Philippine corporation. Atlantic is the owner of the MV Estella. The complaint, docketed as Civil Case No. 8738930 of the Regional Trial Court, Branch XIV, Manila alleged that Crestamonte, as bareboat charterer and operator of the MV Estella, appointed N.S. Shipping Corporation (hereinafter referred to as "NSS"), a Japanese corporation, as its general agent in Japan. The appointment was formalized in an Agency Agreement. NSS in turn appointed Kumagai as its local agent in Osaka, Japan. Kumagai supplied the MV Estella with supplies and services but despite repeated demands Crestamonte failed to pay the amounts due.

NSS and Keihin Narasaki Corporation (hereinafter referred to a Keihin filed complaints-in-intervention.

On May 19,1987, petitioner Fu Hing Oil Co., Ltd. (hereinafter referred to as Fu Hing"), a corporation organized in Hong Kong and not doing business in the Philippines, filed a motion for leave to intervene with an attached complaint-in-intervention, alleging that Fu Hing supplied marine diesel oil/fuel to the MV Estella and incurred barge expenses for the total sum of One Hundred Fifty-two Thousand Four Hundred Twelve Dollars and Fifty-Six Cents (US$152,412.56) but such has remained unpaid despite demand and that the claim constitutes a maritime lien. The issuance of a writ of attach -ment was also prayed for.

On July 16, 1987, petitioner K.K. Shell Sekiyu Osaka Hatsubaisho (hereinafter referred to as K.K. Shell"), a corporation organized in Japan and not doing business in the Philippines, likewise filed a motion to intervene with an attached complaint-in-intervention, alleging that upon request of NSS, Crestamonte's general agent in Japan, K.K. Shell provided and supplied marine diesel oil/fuel to the W Estella at the ports of Tokyo and Mutsure in Japan and that despite previous demands Crestamonte has failed to pay the amounts of Sixteen Thousand Nine Hundred Ninety-Six Dollars and Ninety- Six Cents (US$16,996.96) and One Million Yen (Y1,000,000.00) and that K.K. Shell's claim constitutes a maritime lien on the MV Estella. The complaint-in-intervention sought the issuance of a writ of preliminary attachment.

Issue: Whether the court has acquired jurisdiction?

Ruling: Private respondents have anticipated the possibility that the courts will not find that K.K. Shell is expressly bound by the Agency Agreement, and thus they fall back on the argument that even if this were so, the doctrine of forum non conveniens would be a valid ground to cause the dismissal of K.K. Shell's complaint-in-intervention.

Page 8: conflict of laws

K.K. Shell counters this argument by invoking its right as maritime lienholder. It cites Presidential Decree No. 1521, the Ship Mortgage De -cree of 1978, which provides:

SEC. 21. Maritime Lien for Necessaries; person entitled to such lien-Any person furnishing repairs, supplies, to wage, use of dry dock or marine railway, or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given to the vessel.

Private respondents on the other hand argue that even if P.D. No. 1521 is applicable, K.K. Shell cannot rely on the maritime lien because the fuel was provided not exclusively for the benefit of the MV Estella, but for the benefit of Crestamonte in general. Under the law it must be estab -lished that the credit was extended to the vessel itself. Now, this is a defense that calls precisely for a factual determination by the trial court of who benefitted from the delivery of the fuel. Hence, again, the necessity for the reception of evidence before the trial court.

In other words, considering the dearth of evidence due to the fact that the private respondents have yet to file their answer in the proceed-ings below and trial on the merits is still to be conducted, whether or not petitioners are indeed maritime lienholders and as such may enforce the lien against the MV Estella are matters that still have to be established.

Neither are we ready to rule on the private respondents' invocation of the doctrine of forum non conveniens, as the exact nature of the rela-tionship of the parties is still to be established. We leave this matter to the sound discretion of the trial court judge who is in the best position, after some vital facts are established, to determine whether special circumstances require that his court desist from assuming jurisdiction over the suit.

First Philippine International Bank v. Court of Appeals

G.R. No. 115849

January 24, 1996

Justice Panganiban

Facts

Producers Bank (now called First Philippine International Bank), which has been under conservatorship since 1984, is the owner of 6

parcels of land. The Bank had an agreement with Demetrio Demetria and Jose Janolo for the two to purchase the parcels of land for a purchase price

of P5.5 million pesos. The said agreement was made by Demetria and Janolo with the Bank’s manager, Mercurio Rivera. Later however, the Bank,

through its conservator, Leonida Encarnacion, sought the repudiation of the agreement as it alleged that Rivera was not authorized to enter into such

an agreement, hence there was no valid contract of sale. Subsequently, Demetria and Janolo sued Producers Bank. The regional trial court ruled in fa -

vor of Demetria et al. The Bank filed an appeal with the Court of Appeals.

Meanwhile, Henry Co, who holds 80% shares of stocks with the said Bank, filed a motion for intervention with the trial court. The trial court

denied the motion since the trial has been concluded already and the case is now pending appeal. Subsequently, Co, assisted by ACCRA law office,

filed a separate civil case against Carlos Ejercito as successor-in-interest (assignee) of Demetria and Janolo seeking to have the purported contract of

sale be declared unenforceable against the Bank. Ejercito et al argued that the second case constitutes forum shopping.

Issue Was there forum-shopping on the part of petitioner Bank?

Ruling

Yes. We rule for private respondent. To begin with, forum-shopping originated as a concept in private international law, where non-resident

litigants are given the option to choose the forum or place wherein to bring their suit for various reasons or excuses, including to secure procedural ad -

vantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue. To combat these less than honorable

excuses, the principle of forum non convenienswas developed whereby a court, in conflicts of law cases, may refuse impositions on its jurisdiction

where it is not the most “convenient” or available forum and the parties are not precluded from seeking remedies elsewhere.

There is forum shopping because there is identity of interest and parties between the first case and the second case. There is identity of in-

terest because both cases sought to have the agreement, which involves the same property, be declared unenforceable as against the Bank. There is

identity of parties even though the first case is in the name of the bank as defendant, and the second case is in the name of Henry Co as plaintiff. There

is still forum shopping here because Henry Co essentially represents the bank. Both cases aim to have the bank escape liability from the agreement it

entered into with Demetria et al.

Heine vs. New York Insurance Co.

(1940)

FACTS: An action for recovery on life insurance policies made and issued in Germany was filed by German citizens in Oregon against a NY corpora-tion.

Page 9: conflict of laws

HELD: The Oregon court may refuse to exercise JD. The courts of Germany and New York are open and functioning and competent to take JD of the controversies, and service can be made upon the defendants in either of such JDs. To require the defendants to defend the actions in Oregon would impose upon them great and unnecessary inconvenience and expense. The courts of this country are established and maintained primarily to deter -mine controversies between its citizens and those having business there, and manifestly the court may protect itself against a flood of litigation over contracts made and to be performed in a foreign country, where the parties and witnesses are nonresidents of the forum, and no reason exists why the liability, if any, cannot be enforced in the courts of the country where the cause of action arose, or in the state where the defendant was organized and has its principal offices.

HEINE vs NEW YORK LIFE INS. CO. 50 F.2d 382 (1931)

The agency in Germany was established as a distinct entity, a German creation under German law. A reserve fund was made and all premiums re -ceived were placed in that fund and invested in Germany under German official approval. Upon creation of "Kronos," all funds and property of appellee in Germany were delivered to and supervision and execution of power assumed by the German Federal Insurance Board, and additional deposits made by the appellee, as required by the German valorization laws, in accordance with the decisions of the German Federal Insurance Board. The laws in re-lation thereto have been interpreted to apply to like policies, and many similar cases are now pending before the German courts, they being open, able, competent, and efficient, and the German Federal Insurance Board being active and fully functioning.

It is obvious that this litigation is not the normal outgrowth of usual business activity and relation, but that it is the creation of activity to secure represen -tation of some 28,000 insurance policies executed in Germany by American companies, written in the German language, in the relation of collection agent or agencies, and file actions thereon in the state and federal courts of the United States, an indirect appeal from the German judiciary and the German Federal Insurance Board.

Incidentally, it may be said that the courts of the United States have uniformly applied the law of the place to insurance contracts. Orient Insurance Co. v. Daggs, 172 U. S. 557, 19 S. Ct. 281, 43 L. Ed. 552; Mutual Life Ins. Co. of N. Y. v. Cohen, 179 U. S. 262, 21 S. Ct. 106, 45 L. Ed. 181; Mutual Life Ins. Co. v. Hill, 193 U. S. 551, 24 S. Ct. 538, 48 L. Ed. 788; Northwestern Mut. Life Ins. Co. v. McCue, 223 U. S. 234, 32 S. Ct. 220, 56 L. Ed. 419, 38 L. R. A. (N. S.) 57. *386 And, when suit was entertained, the cause of which arose in a foreign country, the courts granted relief according to the laws of the country where the action arose. Slater v. Mexican Nat. Ry. Co., 194 U. S. 120, 24 S. Ct. 581, 48 L. Ed. 900. It has been held that discharge under a foreign obligation in accordance with the foreign law is a complete defense. Zimmerman v. Sutherland, 274 U. S. 253, 47 S. Ct. 625, 71 L. Ed. 1034. It has also been held that the courts of the United States will not inquire into the validity, wisdom or justice of the laws of a foreign country, or the adminis -tration of foreign agencies. League v. De Young, 52 U. S. (11 How.) 185, 13 L. Ed. 657; Canada Southern Ry. Co. v. Gebhard, 109 U. S. 527, 3 S. Ct. 363, 27 L. Ed. 1020; Underhill v. Hernandez, 168 U. S. 250, 18 S. Ct. 83, 42 L. Ed. 456; Hewitt v. Speyer (C. C. A.) 250 F. 367.

Nor does it appear that enlarged rights may be obtained over the German law should a suit by a policyholder be entertained by the courts of the United States. Sutherland v. Mayer, 271 U. S. 272, 46 S. Ct. 538, 70 L. Ed. 943; Deutsche Bank v. Humphrey, 272 U. S. 517, 47 S. Ct. 166, 71 L. Ed. 383; see, also, Zimmerman v. Sutherland, supra. Such holding is in harmony with other courts. See, Chesterman's Trust, (1923) 2 Chancery 466, where the court had before it a debt payable in German marks which had greatly depreciated, and it was held that it might be paid in the depreciated marks or in their exchange value converted into British currency. The same rule was applied in British Bank v. Russian Bank, (1921) 38 Times Law Reports 65, in which Mr. Justice Russell said that he "had great sympathy with the defendants, but it must be remembered that the same causes that caused the fall in the value of roubles had produced great depreciation in the plaintiff's securities." This was approved in Anderson v. Equitable Assurance Society, (1926) 134 Law Times 557.

It is asserted by appellant that, jurisdiction being apparent on the face of the record, it may not be challenged by motion but must be by plea, and that when, as here, jurisdiction is challenged by plea, by the answer, and put in issue by the reply, issue must be submitted to the jury for decision on the merits, and that there is no precedent for the order of the trial court.

As to the last objection, to have a precedent there must be an antecedent case; but the lack thereof does not defeat a right or privilege. No fault can be found with the cases cited by the appellant, the following of which are the more prominent: Farmington v. Pillsbury, 114 U. S. 138, 5 S. Ct. 807, 29 L. Ed. 114; Hartog v. Memory, 116 U. S. 588, 6 S. Ct. 521, 29 L. Ed. 725; Mexican Central Railway Co. v. Pinkney, 149 U. S. 194, 13 S. Ct. 859, 37 L. Ed. 699; City Railway Co. v. Citizen's Street Railroad Co., 166 U. S. 557, 17 S. Ct. 653, 41 L. Ed. 1114; Union Mutual Life Insurance Co. v. Kirchoff, 169 U. S. 103, 18 S. Ct. 260, 42 L. Ed. 677; York County Sav. Bank v. Abbot (C. C.) 131 F. 980. These cases do not point the way. One sustains dismissal when the fact appears to a legal certainty; another, where a party is collusively added; another holds that the evidence considered must be pertinent to the issue, or to the inquiry by the court; another holds that where there is reasonable plausibility of bona fide claim, jurisdiction will be passed to trial on the merits, and another is one where the court holds that claim rightly viewed unfounded must be denied.

Every requirement appears to be met substantially by the record. Process in this case was served upon the statutory agent of the appellee in Oregon, appointed as a condition to do business in that state and for the convenience and protection of residents to whom policies may be issued and afford them access to the courts of the state or district.

The appellant contends that, notwithstanding the agreement that the German courts shall have exclusive jurisdiction, such agreement is not binding on the federal courts, vested with their jurisdiction by the United States Constitution, of which they cannot be deprived by foreign laws or agreement. The appellant also contends that these are not actions upon the policies. But, whatever the designation may be, the basis is the policies.

No alien has a constitutional right to sue in the United States courts. Kline v. Burke Construction Co., 260 U. S. 226, 43 S. Ct. 79, 67 L. Ed. 226, 24 A. L. R. 1077. The United States District Courts have such jurisdiction as the Congress confers. 28 USCA § 41, grants jurisdiction as follows:

"First. Of all suits of a civil nature, at common law or in equity * * * between citizens of a State and foreign States, citizens, or subjects. * * *

"Third. Of all civil causes of admiralty and maritime jurisdiction, saving to suitors in all cases the right of a common-law remedy. * * *"

*387 Civil cases and actions in admiralty and maritime jurisdiction have equal status, and the courts have uniformly, where the question has arisen, de -clined to entertain jurisdiction in admiralty suits by nonresidents when in the discretion of the court it would be inconvenient and inexpedient to do so. And no distinction has been made to civil cases.

Nor is the right to challenge the jurisdiction or to invite the discretion of the court waived or forfeited by removal from the state to the federal court, or the right of the court, after issue joined, to make investigation on notice and, in its discretion, decline jurisdiction after such inquiry. 28 USCA, § 81, provides that in all suits removed the court shall proceed as if the suit had been originally commenced in the district court and the same proceedings had been taken in such suit in said district court as shall have been had therein in said state court prior to its removal.

Page 10: conflict of laws

Upon the face of the record the district court had jurisdiction when the case came to it from the state court. When the issue first came to its attention, and upon inquiry and examination, the court became cognizant of the status and relation and no doubt had inherent power to protect itself from a del -uge of litigation by nonresidents, inspired by contingent retainers to avoid or overcome foreign laws and interpretation and application thereof by foreign courts of the country of the situs of the contract; and it had the power to prefer resident litigants of the district in access to overcrowded calendars, for, as Justice Holmes said in Douglas v. New York, N. H. & H. R. Co., 279 U. S. 377, 387, 49 S. Ct. 355, 356, 73 L. Ed. 747: "There are manifest reasons for preferring residents in access to often overcrowded Courts, both in convenience and in the fact that broadly speaking it is they who pay for maintain -ing the Courts concerned"; and it had the power to prevent imposition upon its jurisdiction and use of the court as a "cover for injustice to the defen -dants" (Cuba R. Co. v. Crosby, 222 U. S. 473, 479, 32 S. Ct. 132, 133, 56 L. Ed. 274, 38 L. R. A. (N. S.) 40) by reason of the enormous expense in -volved in bringing across the continent witnesses from Germany and New York and the records of appellee which plaintiff demands as necessary in an -other case and, if so, must also be necessary in this case, the removal of which would destroy the ability of the appellee, representing more than 2,500,000 policyholders, to function.

Comity between the United States and Germany should also have consideration.

With the foregoing, nothing can be added to the opinion of Judge Robert S. Bean, who at the time of his recent demise was the dean of the American bench, and whose death terminated a creditable judicial career of more than forty-eight years on the state and federal bench. His opinion is reported in (D. C.) 45 F.(2d) 426, and is adopted as a part of the opinion of the court. Affirmed.

In re: Union Carbide

(1986)

FACTS: An industrial disaster in a chemical plant of Union Carbide in Bhopal, India caused deaths and injuries to a number of residents. India enacted the Bhopal Gas Leak Disaster Act, which authorized the government (Union of India) to represent the victims. The UOI filed a complaint in NY in behalf of the victims. Union carbide moved to dismiss on the ground of forum non conveniens.

HELD: Indian courts have JD, not US courts. Even if UCC has domicile in the US, this loses significance because it gave its consent to Indian JD. Moreover, the findings of the court show that the proof bearing on the issues to be tried is almost entirely located in India (principal witnesses and docu -ments, detailed designs, implementation of plans, safety precautions, etc.).

Wing On Company vs. Syyap

(1967)

FACTS: Syyap failed pay Wing On, a NY-based partnership, its obligation for a contract of purchase of clothing material. Wing On filed an action in the Philippines against Syyap, but Syyap contends that the trial court should have declined JD on the ground of forum non conveniens.

held: Forum non conveniens is inapplicable. Unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should be rarely dis-turbed, and furthermore, the consideration of inadequacy to enforce the judgment, which is one of the important factors to be considered in the applica-tion of said principle, would precisely constitute a problem to the plaintiff if the local courts decline to assume JD on the basis of said principle, consider -ing that defendant is a resident of the Philippines.

There is no existing catalogue of circumstances that will justify sustaining a plea of forum non conveniens but, in general, both public and private inter-ests should be weighed.

When the forum is the only state where JD can be obtained over the defendant and, in addition, some relation with the parties exists or when the forum provides procedural remedies not available in another state, the forum court may not resist imposition upon its JD.

RAYTHEON V. ROUZIE (2008) [ G.R. No. 162894, February 26, 2008 ]

FACTS: Sometime in 1990, Brand Marine Services, Inc., a corporation duly organized and existing under the laws of the State of Connecticut, United States of America, and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby BMSI hired respondent as its repre -sentative to negotiate the sale of services in several government projects in the Philippines for an agreed remuneration of 10% of the gross receipts. On 11 March 1992, respondent secured a service contract with the Republic of the Philippines on behalf of BMSI for the dredging of rivers affected by the Mt. Pinatubo eruption and mudflows.

On 16 July 1994, respondent filed before the Arbitration Branch of the National Labor Relations Commission, a suit against BMSI and Rust Inter -national, Inc., Rodney C. Gilbert and Walter G. Browning for alleged nonpayment of commissions, illegal termination and breach of employment con -tract.

On 8 January 1999, respondent, then a resident of La Union, instituted an action for damages before the Regional Trial Court of Bauang, La Union. The Complaint named as defendants herein petitioner Raytheon International, Inc. as well as BMSI and RUST, the two corporations impleaded in the earlier labor case.

Petitioner also referred to the NLRC decision which disclosed that per the written agreement between respondent and BMSI and RUST, denomi -nated as “Special Sales Representative Agreement,” the rights and obligations of the parties shall be governed by the laws of the State of Connecticut. Petitioner sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non conveniens and prayed for damages by way of compulsory counterclaim.

Petitioner asserts that the written contract between respondent and BMSI included a valid choice of law clause, that is, that the contract shall be governed by the laws of the State of Connecticut. It also mentions the presence of foreign elements in the dispute – namely, the parties and witnesses

involved are American corporations and citizens and the evidence to be presented is located outside the Philippines – that renders our local courts in-convenient forums.

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ISSUE: WHETHER OR NOT THE COMPLAINT BE DISMISSED ON THE GROUND OF FORUM NON CONVENIENS?

RULING: On the matter of jurisdiction over a conflicts-of-laws problem where the case is filed in a Philippine court and where the court has jurisdiction over the subject matter, the parties and the res, it may or can proceed to try the case even if the rules of conflict-of-laws or the convenience of the par -ties point to a foreign forum. This is an exercise of sovereign prerogative of the country where the case is filed.

As regards jurisdiction over the parties, the trial court acquired jurisdiction over herein respondent (as party plaintiff) upon the filing of the com -plaint. On the other hand, jurisdiction over the person of petitioner (as party defendant) was acquired by its voluntary appearance in court.

That the subject contract included a stipulation that the same shall be governed by the laws of the State of Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter, are precluded from hearing the civil action. Jurisdiction and choice of law are two distinct concepts. Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the appli -cation of a substantive law which will determine the merits of the case is fair to both parties.The choice of law stipulation will become relevant only when the substantive issues of the instant case develop, that is, after hearing on the merits proceeds before the trial court.

Under the doctrine of forum non conveniens, a court, in conflicts-of-laws cases, may refuse impositions on its jurisdiction where it is not the most “convenient” or available forum and the parties are not precluded from seeking remedies elsewhere. Petitioner’s averments of the foreign elements in the instant case are not sufficient to oust the trial court of its jurisdiction over Civil Case No. No. 1192-BG and the parties involved.

Moreover, the propriety of dismissing a case based on the principle of forum non conveniens requires a factual determination; hence, it is more properly considered as a matter of defense. While it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the court’s desistance.

Kazuhiro Hasegawa vs Minoru Kitamura 538 SCRA 261

In March 1999, Nippon Engineering Consultants Co., Ltd, a Japanese firm, was contracted by the Department of Public Works and Highways (DPWH) to supervise the construction of the Southern Tagalog Access Road. In April 1999, Nippon entered into an independent contractor agreement (ICA) with Minoru Kitamura for the latter to head the said project. The ICA was entered into in Japan and is effective for a period of 1 year (so until April 2000). In January 2000, DPWH awarded the Bongabon-Baler Road project to Nippon. Nippon subsequently assigned Kitamura to head the road project. But in February 2000, Kazuhiro Hasegawa, the general manager of Nippon informed Kitamura that they are pre-terminating his contract. Kitamura sought Nip-pon to reconsider but Nippon refused to negotiate. Kitamura then filed a complaint for specific performance and damages against Nippon in the RTC of Lipa.

Hasegawa filed a motion to dismiss on the ground that the contract was entered in Japan hence, applying the principle of lex loci celebracionis, cases arising from the contract should be cognizable only by Japanese courts. The trial court denied the motion. Eventually, Nippon filed a petition for certio-rari with the Supreme Court.

Hasegawa, on appeal significantly changed its theory, this time invoking forum non conveniens; that the RTC is an inconvenient forum because the par-ties are Japanese nationals who entered into a contract in Japan. Kitamura on the other hand invokes the trial court ’s ruling which states that matters connected with the performance of contracts are regulated by the law prevailing at the place of performance, so since the obligations in the ICA are ex-ecuted in the Philippines, courts here have jurisdiction.

ISSUE: Whether or not the complaint against Nippon should be dismissed.

HELD: No. The trial court did the proper thing in taking cognizance of it. In the first place, the case filed by Kitamura is a complaint for specific perfor-mance and damages. Such case is incapable of pecuniary estimation; such cases are within the jurisdiction of the regional trial court.

Hasegawa filed his motion to dismiss on the ground of forum non conveniens. However, such ground is not one of those provided for by the Rules as a ground for dismissing a civil case.

The Supreme Court also emphasized that the contention that Japanese laws should apply is premature. In conflicts cases, there are three phases and each next phase commences when one is settled, to wit:

Jurisdiction – Where should litigation be initiated? Court must have jurisdiction over the subject matter, the parties, the issues, the property, the res. Also considers, whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a sub -stantive law which will determine the merits of the case is fair to both parties.

Choice of Law – Which law will the court apply? Once a local court takes cognizance, it does not mean that the local laws must automatically apply. The court must determine which substantive law when applied to the merits will be fair to both parties.

Recognition and Enforcement of Judgment – Where can the resulting judgment be enforced?

This case is not yet in the second phase because upon the RTC ’s taking cognizance of the case, Hasegawa immediately filed a motion to dismiss, which was denied. He filed a motion for reconsideration, which was also denied. Then he bypassed the proper procedure by immediately filing a peti -tion for certiorari. The question of which law should be applied should have been settled in the trial court had Hasegawa not improperly appealed the in -terlocutory order denying his MFR.

Civil Law – Conflict of Laws – Processual Presumption – Forum Non ConveniensRemedial Law – Civil Procedure – Rule 34 – Summary JudgmentGil Miguel Puyat, a foreigner, lost a collection suit filed against him by Ron Zabarte in a court in California, USA. The California court ordered Puyat to pay the amount of $241k. Puyat was only able to pay $5k.In January 1994, Zabarte filed an action to enforce the California judgment here in the Philippines against Puyat. Puyat filed an Answer where he al -leged, among others, that the California court had no jurisdiction over the case, hence, the foreign judgment is void. He likewise averred that the trial court had no jurisdiction because the issue involved are partnership matters which are under the jurisdiction of the Securities and Exchange Commis -sion (SEC).

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Zabarte then filed a motion for summary judgment as he argued that Puyat’s Answer tendered no issue. The trial court granted the motion and eventu-ally gave a favorable judgment for Zabarte. The Court of Appeals affirmed the decision of the trial court.On appeal, Puyat now avers that the trial court should have never taken cognizance of the case because it had no jurisdiction over the case pursuant to the forum non conveniens rule. He averred that under this principle, since all the transaction involved in this case occurred in California, he being a for -eigner, and the California law was not properly determined, the trial court had no jurisdiction. He also assailed the validity of the trial court ’s act in grant-ing the motion for summary judgment filed by Zabarte.

ISSUE: Whether or not Puyat is correct.

HELD: No. The allowance of summary judgment is proper. In this case, Puyat’s Answer did not really tender an issue. Summary judgment is resorted to in order to avoid long drawn out litigations and useless delays.  When affidavits, depositions and admissions on file show that there are no genuine issues of fact to be tried, the Rules allow a party to pierce the allegations in the pleadings and to obtain immediate relief by way of summary judgment. In short, since the facts are not in dispute, the court is allowed to decide the case summarily by applying the law to the material facts. In this case, Puyat’s Answer merely alleged that the California court, a civil court, had no jurisdiction because the case involved was a partnership issue. He how-ever admitted that the issue involved is the payment of money upon promissory notes with damages. Puyat also did not attach a copy of the complaint filed by Zabarte with the California court. As such, the trial court properly presumed, applying the principle of processual presumption, that the California law is the same as Philippine law  – that cases involving collection of money is cognizable by civil courts. And by applying the principle of processual presumption, there’s no longer a need to try the facts in this case, hence, a summary judgment was in order.Anent the issue of forum non conveniens, such does not exist in this case. Under the principle of forum non conveniens, even if the exercise of jurisdic-tion is authorized by law, courts may nonetheless refuse to entertain a case for any of the following practical reasons:“1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have their residence there;2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to secure procedural advantages or to con-vey or harass the defendant;3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be overcrowded;4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; andThe difficulty of ascertaining foreign law.”

Puyat vs. Zabarte Digest

Puyat vs zabarte case digest Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, challenging the August 31, 1999 deci -sion of the CA which affirmed the RTC of Pasig City and which denied reconsideration.

It appears that on January 24, 1994 Ron Zabarte commenced to enforce the money judgment rendered by the Superior Court of the State of California, County of Contra Costa. In his discussion, petitioner contends that the CA erred in ruling in this wise: 1. That his answer failed to render genuine issue of fact regarding the following: a. The jurisdiction of a foreign court over the subject matter, b. The validity of the foreign judgment, c. The judgment ’s conformity to Philippine laws, public policy, canons of morality and norms of unjust enrichment, 2. That the principle of forum non conveniens was inap-plicable in this case.

ISSUE: Whether or not the CA acted in a manner contrary to law when it affirmed the order of the trial court granting respondent ’s motion for summary judgment rendering judgment against Puyat.

HELD: Summary judgment in litigation is resorted to if there is no genuine issue as to the material fact, other than the amount of damages. If this verity is evident from the pleadings and the supporting affidavits, depositions and admissions on file with the court, the moving party is entitled to such rem-edy as a matter of course. The grounds relied upon by petitioner are contradictory, on the one hand, he insists that the RTC take jurisdiction over the enforcement case in order to invalidate the foreign judgment, yet, he avers that the trial court should not exercise jurisdiction over the same case on the basis of forum non conveniens. Not only do these defenses weaken each other but they bolster the finding of the lower courts that he was merely ma-neuvering to avoid or delay payment of his obligation. His petition is hereby denied.

In the absence of proof of California law on the jurisdiction of courts, we presume that such law, if any, is similar to Philippine law. The court based this conclusion on the presumption of identity or similarity, also known as processual presumption. Petitioner failed to establish substantial proof that the for-eign court had no jurisdiction over the case. In any event, contrary to petitioner’s contention, unjust enrichment or solutio indebiti does not apply to this case. This doctrine contemplates payment when there is no duty to pay, and the person who receives the payment has no right to receive it. In this case, petitioner merely argues that the other two defendants whom he represented were liable together with him. This is not a case of unjust enrich-ment. The court does not also see this case to be contrary to law, morals, public policy or the canons of morality obtaining in the country. Petitioner owed money, and the judgment required him to pay it. That is the long and the short of this case. The petition is denied.

PIONEER CONCRETE PHILIPPINES, INC., PIONEER PHILIPPINES HOLDINGS, and PHILIP J. KLEPZIG, petitioners, vs.ANTONIO D. TODARO, respondent.

FACTS:

• PIL is a corporation duly organized and existing under the laws of Australia and is principally engaged in the ready-mix concrete and con-crete aggregates business.

• PHI is the company established by PIL to own and hold the stocks of its operating company in the Philippines.

• PCPI is the company established by PIL to undertake its business of ready-mix concrete, concrete aggregates and quarrying operations in the Philippines

• McDonald is the Chief Executive of the Hongkong office of PIL; and, Klepzig is the President and Managing Director of PPHI and PCPI; To-daro has been the managing director of Betonval Readyconcrete, Inc. (Betonval), a company engaged in pre-mixed concrete and concrete aggregate production; he resigned from Betonval in February 1996.

• In May 1996, PIL contacted Todaro and asked him if he was available to join them in connection with their intention to establish a ready-mix concrete plant and other related operations in the Philippines.

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• Todaro informed PIL of his availability and interest to join them; subsequently, PIL and Todaro came to an agreement wherein the former consented to engage the services of the latter as a consultant for two to three months, after which, he would be employed as the manager of PIL's ready-mix concrete operations should the company decide to invest in the Philippines.

• Subsequently, PIL started its operations in the Philippines; however, it refused to comply with its undertaking to employ Todaro on a perma -nent basis.

• Instead of filing an Answer, PPHI, PCPI and Klepzig separately moved to dismiss the complaint on the grounds that the complaint states no cause of action, that the RTC has no jurisdiction over the subject matter of the complaint, as the same is within the jurisdiction of the NLRC, and that the complaint should be dismissed on the basis of the doctrine of forum non conveniens.

• The RTC of Makati, Branch 147, denied herein petitioners' respective motions to dismiss.

• On October 31, 2000, the CA rendered its presently assailed Decision denying herein petitioners' Petition for Certiorari.

ISSUE: Whether or not the Court of Appeals disregarded and failed to consider the principle of "forum non conveniens" as a valid ground for dismissing a complaint.

HELD/RATIO:

• No. The factual circumstances cited by petitioners which would allegedly justify the application of the doctrine of  forum non conveniens are matters of defense, the merits of which should properly be threshed out during trial.

• The doctrine of forum non conveniens, literally meaning ‘the forum is inconvenient’, emerged in private international law to deter the prac-tice of global forum shopping, that is to prevent non-resident litigants from choosing the forum or place wherein to bring their suit for mali-cious reasons, such as to secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue. 

• Under this doctrine, a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most "convenient" or avail -able forum and the parties are not precluded from seeking remedies elsewhere.

• Whether a suit should be entertained or dismissed on the basis of said doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court. In the case of Communication Materials and Design, Inc. vs. Court of Appeals, this Court held that "xxx [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its deci -sion."

• Moreover, this Court enunciated in Philsec. Investment Corporation vs. Court of Appeals, that the doctrine of forum non conve-niens should not be used as a ground for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include said doctrine as a ground. This Court further ruled that while it is within the discretion of the trial court to abstain from assuming juris-diction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the court’s desistance; and that the propriety of dismissing a case based on this principle of forum non conveniens requires a factual determination, hence it is more properly considered a matter of defense.

• As to the question of jurisdiction: The Court has consistently held that where no employer-employee relationship exists between the par-ties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agree-ment, it is the Regional Trial Court that has jurisdiction. In the present case, no employer-employee relationship exists between petitioners and respondent. In fact, in his complaint, private respondent is not seeking any relief under the Labor Code, but seeks payment of damages on account of petitioners' alleged breach of their obligation under their agreement to employ him. It is settled that an action for breach of contractual obligation is intrinsically a civil dispute. In the alternative, respondent seeks redress on the basis of the provisions of Articles 19 and 21 of the Civil Code. Hence, it is clear that the present action is within the realm of civil law, and jurisdiction over it belongs to the regu -lar courts.

• On the issue of cause of action: This Court has reviewed respondent’s allegations in its Complaint. In a nutshell, respondent alleged that herein petitioners reneged on their contractual obligation to employ him on a permanent basis. This allegation is sufficient to constitute a cause of action for damages. The issue as to whether or not there was a perfected contract between petitioners and respondent is a matter which is not ripe for determination in the present case; rather, this issue must be taken up during trial, considering that its resolution would necessarily entail an examination of the veracity of the allegations not only of herein respondent as plaintiff but also of petitioners as defen-dants.

HELD/RATIO: WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of Appeals are AFFIRMED.