Col Cases.docx

CONFLICT OF LAWS CASES

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MHC and MHCL vs. NLRC GR# 120077 Oct 13, 2000 Communications Materials and Designs, Inc. vs CA, et al. GR# 102223 Aug 22, 1996 Philsec Investment, et al vs CA GR# 103493 HSBC vs Sherman, et al GR# 72494 Aug 11, 1989 Aznar vs Garcia GR# L-16749 Jan 31, 1963 Ingenohl vs Olsen and Co. Inc. GR# L-22288 Jan 12, 1925 Pilapil vs Hin Ibay-Somera et al GR# 80116 June 30, 1989 Bengson III vs HRET and Cruz GR# 142840, May 7 2001 Van Dorn Vs Ronillo, et al. GR# L-68470 Oct 8, 1985 Govt. of the Phil vs Frank GR# 2935 Mar 23, 1909

Manila Hotel Corporation vs National Labor Relations Commission

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In May 1988, Marcelo Santos was an overseas worker in Oman. In June 1988, he was recruited by Palace Hotel in Beijing, China. Due to higher pay and benefits, Santos agreed to the hotel’s job offer and so he started working there in November 1988. The employment contract between him and Palace Hotel was however without the intervention of the Philippine Overseas Employment Administration (POEA). In August 1989, Palace Hotel notified Santos that he will be laid off due to business reverses. In September 1989, he was officially terminated. In February 1990, Santos filed a complaint for illegal dismissal against Manila Hotel Corporation (MHC) and Manila Hotel International, Ltd. (MHIL). The Palace Hotel was impleaded but no summons were served upon it. MHC is a government owned and controlled corporation. It owns 50% of MHIL, a foreign corporation (Hong Kong). MHIL manages the affair of the Palace Hotel. The labor arbiter who handled the case ruled in favor of Santos. The National Labor Relations Commission (NLRC) affirmed the labor arbiter. ISSUE: Whether or not the NLRC has jurisdiction over the case. HELD: No. The NLRC is a very inconvenient forum for the following reasons: The only link that the Philippines has in this case is the fact that Santos is a Filipino; However, the Palace Hotel and MHIL are foreign corporations – MHC cannot be held liable because it merely owns 50% of MHIL, it has no direct business in the affairs of the Palace Hotel. The veil of corporate fiction can’t be pierced because it was not shown that MHC is directly managing the affairs of MHIL. Hence, they are separate entities. Santos’ contract with the Palace Hotel was not entered into in the Philippines; Santos’ contract was entered into without the intervention of the POEA (had POEA intervened, NLRC still does not have jurisdiction because it will be the POEA which will hear the case); MHIL and the Palace Hotel are not doing business in the Philippines; their agents/officers are not residents of the Philippines; Due to the foregoing, the NLRC cannot possibly determine all the relevant facts pertaining to the case. It is not competent to determine the facts because the acts complained of happened outside our jurisdiction. It cannot determine which law is applicable. And in case a judgment is rendered, it cannot be enforced against the Palace Hotel (in the first place, it was not served any summons). The Supreme Court emphasized that under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is one to which the parties may conveniently resort to; (2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine court has or is likely to have power to enforce its decision. None of the above conditions are apparent in the case at bar. [G. R. No. 120077. October 13, 2000] THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD. petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO G. SANTOS, respondents. The case before the Court is a petition for certiorari[1] to annul the following orders of the National Labor Relations Commission (hereinafter referred to as NLRC) for having been issued without or with excess jurisdiction and with grave abuse of discretion:[2] (1) Order of May 31, 1993.[3] Reversing and setting aside its earlier resolution of August 28, 1992. [4] The questioned order declared that the NLRC, not the Philippine Overseas Employment Administration (hereinafter referred to as POEA), had jurisdiction over private respondents complaint; (2) Decision of December 15, 1994.[5] Directing petitioners to jointly and severally pay private respondent twelve thousand and six hundred dollars (US$12,600.00) representing salaries for the unexpired portion of his contract; three thousand six hundred dollars (US$3,600.00) as extra four months salary for the two (2) year period of his contract, three thousand six hundred dollars (US$3,600.00) as 14th month pay or a total of nineteen thousand and eight hundred dollars (US$19,800.00) or its peso equivalent and attorneys fees amounting to ten percent (10%) of the total award; and (3) Order of March 30, 1995.[6] Denying the motion for reconsideration of the petitioners. In May, 1988, private respondent Marcelo Santos (hereinafter referred to as Santos) was an overseas worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman.Subsequently, in June 1988, he was directly hired by the Palace Hotel, Beijing, Peoples Republic of China and later terminated due to retrenchment.

Petitioners are the Manila Hotel Corporation (hereinafter referred to as MHC) and the Manila Hotel International Company, Limited (hereinafter referred to as MHICL). When the case was filed in 1990, MHC was still a government-owned and controlled corporation duly organized and existing under the laws of the Philippines. MHICL is a corporation duly organized and existing under the laws of Hong Kong. [7] MHC is an incorporator of MHICL, owning 50% of its capital stock.[8] By virtue of a management agreement[9] with the Palace Hotel (Wang Fu Company Limited), MHICL [10] trained the personnel and staff of the Palace Hotel at Beijing, China. Now the facts. During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended by one Nestor Buenio, a friend of his. Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly salary and increased benefits. The position was slated to open on October 1, 1988.[11] On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer. On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment contract to respondent Santos. Mr. Henk advised respondent Santos that if the contract was acceptable, to return the same to Mr. Henk in Manila, together with his passport and two additional pictures for his visa to China. On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective June 30, 1988, under the pretext that he was needed at home to help with the familys piggery and poultry business. On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henks letter. Respondent Santos enclosed four (4) signed copies of the employment contract (dated June 4, 1988) and notified them that he was going to arrive in Manila during the first week of July 1988. The employment contract of June 4, 1988 stated that his employment would commence September 1, 1988 for a period of two years.[12] It provided for a monthly salary of nine hundred dollars (US$900.00) net of taxes, payable fourteen (14) times a year.[13] On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press. On July 1, 1988, respondent Santos arrived in Manila. On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace Hotel.[14] Subsequently, respondent Santos signed an amended employment agreement with the Palace Hotel, effective November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel.The Vice President (Operations and Development) of petitioner MHICL Miguel D. Cergueda signed the employment agreement under the word noted. From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He returned to China and reassumed his post on July 17, 1989. On July 22, 1989, Mr. Shmidts Executive Secretary, a certain Joanna suggested in a handwritten note that respondent Santos be given one (1) month notice of his release from employment. On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt that his employment at the Palace Hotel print shop would be terminated due to business reverses brought about by the political upheaval in China. [15] We quote the letter:[16] After the unfortunate happenings in China and especially Beijing (referring to Tiannamen Square incidents), our business has been severely affected. To reduce expenses, we will not open/operate printshop for the time being. We sincerely regret that a decision like this has to be made, but rest assured this does in no way reflect your past performance which we found up to our expectations. Should a turnaround in the business happen, we will contact you directly and give you priority on future assignment. On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and paid all benefits due him, including his plane fare back to the Philippines. On October 3, 1989, respondent Santos was repatriated to the Philippines. On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt, demanding full compensation pursuant to the employment agreement. On November 11, 1989, Mr. Shmidt replied, to wit:[17] His service with the Palace Hotel, Beijing was not abruptly terminated but we followed the one-month notice clause and Mr. Santos received all benefits due him.

For your information, the Print Shop at the Palace Hotel is still not operational and with a low business outlook, retrenchment in various departments of the hotel is going on which is a normal management practice to control costs. When going through the latest performance ratings, please also be advised that his performance was below average and a Chinese National who is doing his job now shows a better approach. In closing, when Mr. Santos received the letter of notice, he hardly showed up for work but still enjoyed free accommodation/laundry/meals up to the day of his departure. On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the Arbitration Branch, National Capital Region, National Labor 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 attorneys fees equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents. The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the proceedings before the Labor Arbiter.[18] On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners, thus: [19] WHEREFORE, judgment is hereby rendered: 1. directing all the respondents to pay complainant jointly and severally; a) $20,820 US dollars or its equivalent in Philippine currency as unearned salaries; b) P50,000.00 as moral damages; c) P40,000.00 as exemplary damages; and d) Ten (10) percent of the total award as attorneys fees. SO ORDERED. On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had jurisdiction over the case. On August 28, 1992, the NLRC promulgated a resolution, stating:[20] WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void for want of jurisdiction. Complainant is hereby enjoined to file his complaint with the POEA. SO ORDERED. On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted resolution. He argued that the case was not cognizable by the POEA as he was not an overseas contract worker. [21] On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor Arbiter Emerson Tumanon to hear the case on the question of whether private respondent was retrenched or dismissed. [22] On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the testimonial and documentary evidence presented to and heard by him.[23] Subsequently, Labor Arbiter Tumanon was re-assigned as trial arbiter of the National Capital Region, Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera.[24] On November 25, 1994, Labor Arbiter de Vera submitted his report. [25] He found that respondent Santos was illegally dismissed from employment and recommended that he be paid actual damages equivalent to his salaries for the unexpired portion of his contract.[26] On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:[27] WHEREFORE, finding that the report and recommendations of Arbiter de Vera are supported by substantial evidence, judgment is hereby rendered, directing the respondents to jointly and severally pay complainant the following computed contractual benefits: (1) US$12,600.00 as salaries for the un-expired portion of the parties contract; (2) US$3,600.00 as extra four (4) months salary for the two (2) years period (sic) of the parties contract; (3) US$3,600.00 as 14th month pay for the aforesaid two (2) years contract stipulated by the parties or a total of US$19,800.00 or its peso equivalent, plus (4) attorneys fees of 10% of complainants total award. SO ORDERED. On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter de Veras recommendation had no basis in law and in fact.[28] On March 30, 1995, the NLRC denied the motion for reconsideration.[29] Hence, this petition.[30] On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a temporary restraining order and/or writ of preliminary injunction and a motion for the annulment of the entry of judgment of the NLRC dated July 31, 1995. [31] On November 20, 1995, the Court denied petitioners urgent motion. The Court required respondents to file their respective comments, without giving due course to the petition.[32] On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the petition and its annexes, they can not defend and sustain the position taken by the NLRC in its assailed decision and orders. The Solicitor General prayed that he be excused from filing a comment on behalf of the NLRC[33] On April 30,1996, private respondent Santos filed his comment. [34] On June 26, 1996, the Court granted the manifestation of the Solicitor General and required the NLRC to file its own comment to the petition.[35] On January 7, 1997, the NLRC filed its comment. The petition is meritorious. I. Forum Non-Conveniens The NLRC was a seriously inconvenient forum.

We note that the main aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link that the Philippines 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. The employment contract.-- Respondent 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.[36] 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.[37] The conditions are unavailing in the case at bar. Not Convenient.-- We fail to see how the NLRC is a convenient forum given that all the incidents of the case - from the time of recruitment, to employment to dismissal occurred outside the Philippines. The inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither are they doing business in the Philippines. Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines. No power to determine applicable law.-- Neither can an intelligent decision be made as to the law governing the employment contract as such was perfected in foreign soil. This calls to fore the application of the principle of lex loci contractus (the law of the place where the contract was made).[38] The employment contract was not perfected in the Philippines. Respondent Santos signified his acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the Palace Hotel in the Peoples Republic of China. No power to determine the facts.-- Neither can the NLRC determine the facts surrounding the alleged illegal dismissal as all acts complained of took place in Beijing, Peoples Republic of China. The NLRC was not in a position to determine whether the Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to justify respondent Santos retrenchment. Principle of effectiveness, no power to execute decision.-- Even assuming that a proper decision could be reached by the NLRC, such would not have any binding effect against the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the laws of China and was not even served with summons. Jurisdiction over its person was not acquired. This is not to say that Philippine courts and agencies have no power to solve controversies involving foreign employers. Neither are we saying that we do not have power over an employment contract executed in a foreign country. If Santos were an overseas contract worker, a Philippine forum, specifically the POEA, not the NLRC, would protect him. [39] He is not an overseas contract worker a fact which he admits with conviction.[40] Even assuming that the NLRC was the proper forum, even on the merits, the NLRCs decision cannot be sustained. II. MHC Not Liable Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that MHICL was liable for Santos retrenchment, still MHC, as a separate and distinct juridical entity cannot be held liable. True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However, this is not enough to pierce the veil of corporate fiction between MHICL and MHC. Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend a crime. [41]It is done only when a corporation is a mere alter ego or business conduit of a person or another corporation. In Traders Royal Bank v. Court of Appeals,[42] we held that the mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient reason for disregarding the fiction of separate corporate personalities. The tests in determining whether the corporate veil may be pierced are: First, the defendant must have control or complete domination of the other corporations finances, policy and business practices with regard to the transaction attacked. There must be proof that the other corporation had no separate mind, will or existence with respect the act complained of. Second, control must be used by the defendant to commit fraud or wrong. Third, the aforesaid control or breach of duty must be the proximate cause of the injury or loss complained of. The absence of any of the elements prevents the piercing of the corporate veil.[43] It is basic that a corporation has a personality separate and distinct from those composing it as well as from that of any other legal entity to which it may be related.[44] Clear and convincing evidence is needed to pierce the veil of corporate fiction. [45] In this case, we find no evidence to show that MHICL and MHC are one and the same entity. III. MHICL not Liable Respondent Santos predicates MHICLs liability on the fact that MHICL signed his employment contract with the Palace Hotel. This fact fails to persuade us. First, we note that the Vice President (Operations and Development) of MHICL, Miguel D. Cergueda signed the employment contract as a mere witness. He merely signed under the word noted. When one notes a contract, one is not expressing his agreement or approval, as a party would. [46] In Sichangco v. Board of Commissioners of Immigration,[47] the Court recognized that the term noted means that the person so noting has merely taken cognizance of the existence of an act or declaration, without exercising a judicious deliberation or rendering a decision on the matter.

Mr. Cergueda merely signed the witnessing part of the document. The witnessing part of the document is that which, in a deed or other formal instrument is that part which comes after the recitals, or where there are no recitals, after the parties (emphasis ours).[48] As opposed to a party to a contract, a witness is simply one who, being present, personally sees or perceives a thing; a beholder, a spectator, or eyewitness. [49] One who notes something just makes a brief written statement[50] a memorandum or observation. Second, and more importantly, there was no existing employer-employee relationship between Santos and MHICL. In determining the existence of an employer-employee relationship, the following elements are considered:[51] (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control employees conduct. MHICL did not have and did not exercise any of the aforementioned powers. It did not select respondent Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor Buenio. MHICL did not engage respondent Santos to work. The terms of employment were negotiated and finalized through correspondence between respondent Santos, Mr. Schmidt and Mr. Henk, who were officers and representatives of the Palace Hotel and not MHICL. Neither did respondent Santos adduce any proof that MHICL had the power to control his conduct. Finally, it was the Palace Hotel, through Mr. Schmidt and not MHICL that terminated respondent Santos services. Neither is there evidence to suggest that MHICL was a labor-only contractor.[52] There is no proof that MHICL supplied respondent Santos or even referred him for employment to the Palace Hotel. Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same entity. The fact that the Palace Hotel is a member of the Manila Hotel Group is not enough to pierce the corporate veil between MHICL and the Palace Hotel. IV. Grave Abuse of Discretion Considering that the NLRC was forum non-conveniens and considering further that no employer-employee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter Ceferina J. Diosana clearly had no jurisdiction over respondents claim in NLRC NCR Case No. 00-02-01058-90. Labor Arbiters have exclusive and original jurisdiction only over the following:[53] 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. In all these cases, an employer-employee relationship is an indispensable jurisdictional requirement. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can be resolved by reference to the Labor Code, or other labor statutes, or their collective bargaining agreements.[54] To determine which body has jurisdiction over the present controversy, we rely on the sound judicial principle that jurisdiction over the subject matter is conferred by law and is determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. [55] The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His failure to dismiss the case amounts to grave abuse of discretion.[56] V. The Fallo WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and resolutions of the National Labor Relations Commission dated May 31, 1993, December 15, 1994 and March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).No costs.SO ORDERED. COMMUNICATIONS MATERLS AND DESIGN, INC., v. THE COURT OF APPEALS, ITEC INTERNATIONAL, G.R. No. 102223. August 22, 1996 

WON private respondent ITEC is an unlicensed corporation doing business in the Philippines.

 Yes, private respondent had been "engaged in" or "doing business" in the Philippines for some time now. This is the inevitable result after a scrutiny of the different contracts and agreements entered into by ITEC with its various business contacts in the country, particularly ASPAC and Telephone Equipment Sales and Services, Inc. (TESSI , for brevity). The latter is a local electronics firm engaged by I TEC to be its local technical representative, and to create a service center for I TEC products sold locally. Its arrangements, with these entities indicate convincingly I TEC's purpose to bring about the situation among its customers and the general public that they are dealing directly with I TEC, and that I TEC is actively engaging in business in the country.  A perusal of the agreements between petitioner ASPAC and the respondents shows that there are provisions which are highly restrictive in nature, such as to reduce petitioner ASPAC to a mere extension or instrument of the private respondent.  When I TEC entered into the disputed contracts with ASPAC and TESSI, they were carrying out the purposes for which it was created, i.e., to market electronics and communications products. The terms and conditions of the contracts as well as ITEC's conduct indicate that they established within our country a continuous business, and not merely one of a temporary character.

 WON the fact that ITEC is an unlicensed corporation doing business in the Philippines bars it from invoking the injunctive authority of our courts.  Notwithstanding such finding that ITEC is doing business in the country, petitioner is nonetheless estopped from raising this fact to bar ITEC from instituting this injunction case against it.  A foreign corporation doing business in the Philippines may sue in Philippine Courts although not authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation. To put it in another way, a party is estopped to challenge the personality of a corporation after having acknowledged the same, by entering into a contract with it. And the doctrine of estoppel to deny corporate existence applies to a foreign as well as to domestic corporations. One who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity. The principle will be applied to prevent a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the benefits of the contract.  The rule is deeply rooted in the time-honored axiom of Commodum ex injuria sua non habere debet — no person ought to derive any advantage of his own wrong. This is as it should be for as mandated by law, "every person must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.  The doctrine of lack of capacity to sue based on the failure to acquire a local license is based on considerations of sound public policy. The license requirement was imposed to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. It was never intended to favor domestic corporations who enter into solitary transactions with unwary foreign firms and then repudiate their obligations simply because the latter are not licensed to do business in this country. 

WON forum conveniens is applicable.

 Petitioner's insistence on the dismissal of this action due to the application, or non application, of the private international law rule of forum non conveniens defies well-settled rules of fair play. According to petitioner, the Philippine Court has no venue to apply its discretion whether to give cognizance or not to the present action, because it has not acquired jurisdiction over the person of the plaintiff in the case, the latter allegedly having no personality to sue before Philippine Courts. This argument is misplaced because the court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the original complaint. And as we have already observed, petitioner is not at liberty to question plaintiff's standing to sue, having already acceded to the same by virtue of its entry into the Representative Agreement referred to earlier.  Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts of the case, whether to give due course to the suit or dismiss it, on the principle of forum non conveniens.  The Philippine Court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the 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 decision. [G.R. No. 102223. August 22, 1996] COMMUNICATION MATERIALS AND DESIGN, INC., ASPAC MULTI-TRADE, INC., (formerly ASPAC-ITEC PHILIPPINES, INC.) and FRANCISCO S. AGUIRRE, petitioners, vs. THE COURT OF APPEALS, ITEC INTERNATIONAL, INC., and ITEC, INC., respondents. Business Corporations, according to Lord Coke, have no souls. They do business peddling goods, wares or even services across national boundaries in soulless forms in quest for profits albeit at times, unwelcomed in these strange lands venturing into uncertain markets and, the risk of dealing with wily competitors. This is one of the issues in the case at bar. Contested in this petition for review on Certiorari is the Decision of the Court of Appeals on June 7, 1991, sustaining the RTC Order dated February 22, 1991, denying the petitioners Motion to Dismiss, and directing the issuance of a writ of preliminary injunction, and its companion Resolution of October 9, 1991, denying the petitioners Motion for Reconsideration. Petitioners COMMUNICATION MATERIALS AND DESIGN, INC., (CMDI, for brevity) and ASPAC MULTI-TRADE INC., (ASPAC, for brevity) are both domestic corporations, while petitioner Francisco S. Aguirre is their President and majority stockholder. Private Respondents ITEC, INC. and/or ITEC, INTERNATIONAL, INC. (ITEC, for brevity) are corporations duly organized and existing under the laws of the State of Alabama, United States of America. There is no dispute that ITEC is a foreign corporation not licensed to do business in the Philippines. On August 14, 1987, ITEC entered into a contract with petitioner ASPAC referred to as Representative Agreement. [1] Pursuant to the contract, ITEC engaged ASPAC as its exclusive representative in the Philippines for the sale of ITECs products, in consideration of which, ASPAC was paid a stipulated commission. The agreement was signed by G.A. Clark and Francisco S. Aguirre, presidents of ITEC and ASPAC respectively, for and in behalf of their companies. [2] The said agreement was initially for a term of twenty-four months. After the lapse of the agreed period, the agreement was renewed for another twenty-four months. Through a License Agreement[3] entered into by the same parties on November 10, 1988, ASPAC was able to incorporate and use the name ITEC in its own name. Thus, ASPAC Multi-Trade, Inc. became legally and publicly known as ASPAC-ITEC (Philippines). By virtue of said contracts, ASPAC sold electronic products, exported by ITEC, to their sole customer, the Philippine Long Distance Telephone Company, (PLDT, for brevity). To facilitate their transactions, ASPAC, dealing under its new appellation, and PLDT executed a document entitled PLDTASPAC/ITEC PROTOCOL[4] which defined the project details for the supply of ITECs Interface Equipment in connection with the Fifth Expansion Program of PLDT. One year into the second term of the parties Representative Agreement, ITEC decided to terminate the same, because petitioner ASPAC allegedly violated its contractual commitment as stipulated in their agreements.[5]

ITEC charges the petitioners and another Philippine Corporation, DIGITAL BASE COMMUNICATIONS, INC. (DIGITAL, for brevity), the President of which is likewise petitioner Aguirre, of using knowledge and information of ITECs products specifications to develop their own line of equipment and product support, which are similar, if not identical to ITECs own, and offering them to ITECs former customer. On January 31, 1991, the complaint[6] in Civil Case No. 91-294, was filed with the Regional Trial Court of Makati, Branch 134 by ITEC, INC. Plaintiff sought to enjoin, first, preliminarily and then, after trial, permanently; (1) defendants DIGITAL, CMDI, and Francisco Aguirre and their agents and business associates, to cease and desist from selling or attempting to sell to PLDT and to any other party, products which have been copied or manufactured in like manner, similar or identical to the products, wares and equipment of plaintiff, and (2) defendant ASPAC, to cease and desist from using in its corporate name, letter heads, envelopes, sign boards and business dealings, plaintiffs trademark, internationally known as ITEC; and the recovery from defendants in solidum, damages of at least P500,000.00, attorneys fees and litigation expenses. In due time, defendants filed a motion to dismiss[7] the complaint on the following grounds: (1) That plaintiff has no legal capacity to sue as it is a foreign corporation doing business in the Philippines without the required BOI authority and SEC license, and (2) that plaintiff is simply engaged in forum shopping which justifies the application against it of the principle of forum non conveniens. On February 8, 1991, the complaint was amended by virtue of which ITEC INTERNATIONAL, INC. was substituted as plaintiff instead of ITEC, INC.[8] In their Supplemental Motion to Dismiss,[9] defendants took note of the amendment of the complaint and asked the court to consider in toto their motion to dismiss and their supplemental motion as their answer to the amended complaint. After conducting hearings on the prayer for preliminary injunction, the court a quo on February 22, 1991, issued its Order:[10] (1) denying the motion to dismiss for being devoid of legal merit with a rejection of both grounds relied upon by the defendants in their motion to dismiss, and (2) directing the issuance of a writ of preliminary injunction on the same day. From the foregoing order, petitioners elevated the case to the respondent Court of Appeals on a Petition for Certiorari and Prohibition[11] under Rule 65 of the Revised Rules of Court, assailing and seeking the nullification and the setting aside of the Order and the Writ of Preliminary Injunction issued by the Regional Trial Court. The respondent appellate court stated, thus: We find no reason whether in law or from the facts of record, to disagree with the (lower courts) ruling. We therefore are unable to find in respondent Judges issuance of said writ the grave abuse of discretion ascribed thereto by the petitioners. In fine, We find that the petition prima facie does not show that Certiorari lies in the present case and therefore, the petition does not deserve to be given due course. WHEREFORE, the present petition should be, as it is hereby, denied due course and accordingly, is hereby dismissed. Costs against the petitioners. SO ORDERED."[12] Petitioners filed a motion for reconsideration[13] on June 7, 1991, which was likewise denied by the respondent court. WHEREFORE, the present motion for reconsideration should be, as it is hereby, denied for lack of merit. For the same reason, the motion to have the motion for reconsideration set for oral argument likewise should be and is hereby denied.SO ORDERED."[14] Petitioners are now before us via Petition for Review on Certiorari[15] under Rule 45 of the Revised Rules of Court. It is the petitioners submission that private respondents are foreign corporations actually doing business in the Philippines without the requisite authority and license from the Board of Investments and the Securities and Exchange Commission, and thus, disqualified from instituting the present action in our courts. It is their contention that the provisions of the Representative Agreement, petitioner ASPAC executed with private respondent ITEC, are similarly highly restrictive in nature as those found in the agreements which confronted the Court in the case of Top-Weld Manufacturing, Inc. vs. ECED S.A. et al.,[16] as to reduce petitioner ASPAC to a mere conduit or extension of private respondents in the Philippines. In that case, we ruled that respondent foreign corporations are doing business in the Philippines because when the respondents entered into the disputed contracts with the petitioner, they were carrying out the purposes for which they were created, i.e., to manufacture and market welding products and equipment. The terms and conditions of the contracts as well as the respondents conduct indicate that they established within our country a continuous business, and not merely one of a temporary character. The respondents could be exempted from the requirements of Republic Act 5455 if the petitioner is an independent entity which buys and distributes products not only of the petitioner, but also of other manufacturers or transacts business in its name and for its account and not in the name or for the account of the foreign principal. A reading of the agreements between the petitioner and the respondents shows that they are highly restrictive in nature, thus making the petitioner a mere conduit or extension of the respondents. It is alleged that certain provisions of the Representative Agreement executed by the parties are similar to those found in the License Agreement of the parties in the Top-Weld case which were considered as highly restrictive by this Court. The provisions in point are: 2.0 Terms and Conditions of Sales. 2.1 Sale of ITEC products shall be at the purchase price set by ITEC from time to time. Unless otherwise expressly agreed to in writing by ITEC the purchase price is net to ITEC and does not include any transportation charges, import charges or taxes into or within the Territory. All orders from customers are subject to formal acceptance by ITEC at its Huntsville, Alabama U.S.A. facility. 3.0 Duties of Representative 3.1. REPRESENTATIVE SHALL:

3.1.1. Not represent or offer for sale within the Territory any product which competes with an existing ITEC product or any product which ITEC has under active development. 3.1.2. Actively solicit all potential customers within the Territory in a systematic and businesslike manner. 3.1.3. Inform ITEC of all request for proposals, requests for bids, invitations to bid and the like within the Territory. 3.1.4. Attain the Annual Sales Goal for the Territory established by ITEC. The Sales Goals for the first 24 months is set forth on Attachment two (2) hereto. The Sales Goal for additional twelve month periods, if any, shall be sent to the Sales Agent by ITEC at the beginning of each period. These Sales Goals shall be incorporated into this Agreement and made a part hereof. 6.0. Representative as Independent Contractor 6.2. When acting under this Agreement REPRESENTATIVE is authorized to solicit sales within the Territory on ITECs behalf but is authorized to bind ITEC only in its capacity as Representative and no other, and then only to specific customers and on terms and conditions expressly authorized by ITEC in writing.[17] Aside from the abovestated provisions, petitioners point out the following matters of record, which allegedly witness to the respondents' activities within the Philippines in pursuit of their business dealings: a. While petitioner ASPAC was the authorized exclusive representative for three (3) years, it solicited from and closed several sales for and on behalf of private respondents as to their products only and no other, to PLDT, worth no less than US $15 Million (p. 20, tsn, Feb. 18, 1991); b. Contract No. 1 (Exhibit for Petitioners) which covered these sales and identified by private respondents sole witness, Mr. Clarence Long, is not in the name of petitioner ASPAC as such representative, but in the name of private respondent ITEC, INC. (p. 20, tsn, Feb. 18, 1991); c. The document denominated as PLDT-ASPAC/ITEC PROTOCOL (Annex C of the original and amended complaints) which defined the responsibilities of the parties thereto as to the supply, installation and maintenance of the ITEC equipment sold under said Contract No. 1 is, as its very title indicates, in the names jointly of the petitioner ASPAC and private respondents; d. To evidence receipt of the purchase price of US $15 Million, private respondent ITEC, Inc. issued in its letter head, a Confirmation of payment dated November 13, 1989 and its Invoice dated November 22, 1989 (Annexes 1 and 2 of the Motion to Dismiss and marked as Exhibits 2 and 3 for the petitioners), both of which were identified by private respondents sole witness, Mr. Clarence Long (pp. 25-27, tsn, Feb. 18, 1991).[18] Petitioners contend that the above acts or activities belie the supposed independence of petitioner ASPAC from private respondents. The unrebutted evidence on record below for the petitioners likewise reveal the continuous character of doing business in the Philippines by private respondents based on the standards laid down by this Court in Wang Laboratories, Inc. vs. Hon. Rafael T. Mendoza, et al.[19] and again in TOP-WELD. (supra) It thus appears that as the respondent Court of Appeals and the trial courts failure to give credence on the grounds relied upon in support of their Motion to Dismiss that petitioners ascribe grave abuse of discretion amounting to an excess of jurisdiction of said courts. Petitioners likewise argue that since private respondents have no capacity to bring suit here, the Philippines is not the most convenient forum because the trial court is devoid of any power to enforce its orders issued or decisions rendered in a case that could not have been commenced to begin with, such that in insisting to assume and exercise jurisdiction over the case below, the trial court had gravely abused its discretion and even actually exceeded its jurisdiction. As against petitioners insistence that private respondent is doing business in the Philippines, the latter maintains that it is not. We can discern from a reading of Section 1 (f) (1) and 1 (f) (2) of the Rules and Regulations Implementing the Omnibus Investments Code of 1987, the following: (1) A foreign firm is deemed not engaged in business in the Philippines if it transacts business through middlemen, acting in their own names, such as indebtors, commercial bookers or commercial merchants. (2) A foreign corporation is deemed not doing business if its representative domiciled in the Philippines has an independent status in that it transacts business in its name and for its account.[20] Private respondent argues that a scrutiny of its Representative Agreement with the Petitioners will show that although ASPAC was named as representative of ITEC., ASPAC actually acted in its own name and for its own account. The following provisions are particularly mentioned: 3.1.7.1. In the event that REPRESENTATIVE imports directly from ITEC, REPRESENTATIVE will pay for its own account; all customs duties and import fees imposed on any ITEC products; all import expediting or handling charges and expenses imposed on ITEC products; and any stamp tax fees imposed on ITEC. 4.1. As complete consideration and payment for acting as representative under this Agreement, REPRESENTATIVE shall receive a sales commission equivalent to a percentum of the FOB value of all ITEC equipment sold to customers within the territory as a direct result of REPRESENTATIVEs sales efforts.[21] More importantly, private respondents charge ASPAC of admitting its independence from ITEC by entering and ascribing to provision No. 6 of the Representative Agreement. 6.0. Representative as Independent Contractor

6.1. When performing any of its duties under this Agreement, REPRESENTATIVE shall act as an independent contractor and not as an employee, worker, laborer, partner, joint venturer of ITEC as these terms are defined by the laws, regulations, decrees or the like of any jurisdiction, including the jurisdiction of the United States, the state of Alabama and the Territory. [22] Although it admits that the Representative Agreement contains provisions which both support and belie the independence of ASPAC, private respondents echoes the respondent courts finding that the lower court did not commit grave abuse of discretion nor acted in excess of jurisdiction when it found that the ground relied upon by the petitioners in their motion to dismiss does not appear to be indubitable.[23] The issues before us now are whether or not private respondent ITEC is an unlicensed corporation doing business in the Philippines, and if it is, whether or not this fact bars it from invoking the injunctive authority of our courts. Considering the above, it is necessary to state what is meant by doing business in the Philippines. Section 133 of the Corporation Code, provides that No foreign corporation, transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine Courts or administrative tribunals on any valid cause of action recognized under Philippine laws.[24] Generally, a foreign corporation has no legal existence within the state in which it is foreign. This proceeds from the principle that juridical existence of a corporation is confined within the territory of the state under whose laws it was incorporated and organized, and it has no legal status beyond such territory. Such foreign corporation may be excluded by any other state from doing business within its limits, or conditions may be imposed on the exercise of such privileges. [25] Before a foreign corporation can transact business in this country, it must first obtain a license to transact business in the Philippines, and a certificate from the appropriate government agency. If it transacts business in the Philippines without such a license, it shall not be permitted to maintain or intervene in any action, suit, or proceeding in any court or administrative agency of the Philippines, but it may be sued on any valid cause of action recognized under Philippine laws.[26] In a long line of decisions, this Court has not altogether prohibited a foreign corporation not licensed to do business in the Philippines from suing or maintaining an action in Philippine Courts. What it seeks to prevent is a foreign corporation doing business in the Philippines without a license from gaining access to Philippine Courts. [27] The purpose of the law in requiring that foreign corporations doing business in the Philippines be licensed to do so and that they appoint an agent for service of process is to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. The object is 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 steps necessary to render it amenable to suit in the local courts.[28] The implication of the law is that it was never the purpose of the legislature to exclude a foreign corporation which happens to obtain an isolated order for business from the Philippines, and thus, in effect, to permit persons to avoid their contracts made with such foreign corporations.[29] There is no exact rule or governing principle as to what constitutes doing or engaging or transacting business. Indeed, such case must be judged in the light of its peculiar circumstances, upon its peculiar facts and upon the language of the statute applicable. The true test, however, seems to be whether the foreign corporation is continuing the body or substance of the business or enterprise for which it was organized.[30] Article 44 of the Omnibus Investments Code of 1987 defines the phrase to include: soliciting orders, purchases, service contracts, opening offices, whether called liaison offices or branches; appointing representatives or distributors who are domiciled in the Philippines or who in any calendar year stay in the Philippines for a period or periods totaling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business firm, entity or corporation in the Philippines, and any other act or acts that imply a continuity or commercial dealings or arrangements and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization. Thus, a foreign corporation with a settling agent in the Philippines which issued twelve marine policies covering different shipments to the Philippines[31]and a foreign corporation which had been collecting premiums on outstanding policies [32] were regarded as doing business here. The same rule was observed relating to a foreign corporation with an exclusive distributing agent in the Philippines, and which has been selling its products here since 1929,[33] and a foreign corporation engaged in the business of manufacturing and selling computers worldwide, and had installed at least 26 different products in several corporations in the Philippines, and allowed its registered logo and trademark to be used and made it known that there exists a designated distributor in the Philippines. [34] In Georg Grotjahn GMBH and Co. vs. Isnani,[35] it was held that the uninterrupted performance by a foreign corporation of acts pursuant to its primary purposes and functions as a regional area headquarters for its home office, qualifies such corporation as one doing business in the country. These foregoing instances should be distinguished from a single or isolated transaction or occasional, incidental, or casual transactions, which do not come within the meaning of the law,[36]for in such case, the foreign corporation is deemed not engaged in business in the Philippines. Where a single act or transaction, however, is not merely incidental or casual but indicates the foreign corporations intention to do other business in the Philippines, said single act or transaction constitutes doing or engaging in or transacting business in the Philippines.[37]

In determining whether a corporation does business in the Philippines or not, aside from their activities within the forum, reference may be made to the contractual agreements entered into by it with other entities in the country. Thus, in the Top-Weld case (supra), the foreign corporations LICENSE AND TECHNICAL AGREEMENT and DISTRIBUTOR AGREEMENT with their local contacts were made the basis of their being regarded by this Tribunal as corporations doing business in the country. Likewise, in Merill Lynch Futures, Inc. vs. Court of Appeals, etc.[38] the FUTURES CONTRACT entered into by the petitioner foreign corporation weighed heavily in the courts ruling. With the abovestated precedents in mind, we are persuaded to conclude that private respondent had been engaged in or doing business in the Philippines for some time now. This is the inevitable result after a scrutiny of the different contracts and agreements entered into by ITEC with its various business contacts in the country, particularly ASPAC and Telephone Equipment Sales and Services, Inc. (TESSI, for brevity). The latter is a local electronics firm engaged by ITEC to be its local technical representative, and to create a service center for ITEC products sold locally. Its arrangements, with these entities indicate convincingly ITECs purpose to bring about the situation among its customers and the general public that they are dealing directly with ITEC, and that ITEC is actively engaging in business in the country. In its Master Service Agreement[39] with TESSI, private respondents required its local technical representative to provide the employees of the technical and service center with ITEC identification cards and business cards, and to correspond only on ITEC, Inc., letterhead. TESSI personnel are instructed to answer the telephone with ITEC Technical Assistance Center., such telephone being listed in the telephone book under the heading of ITEC Technical Assistance Center, and all calls being recorded and forwarded to ITEC on a weekly basis. What is more, TESSI was obliged to provide ITEC with a monthly report detailing the failure and repair of ITEC products, and to requisition monthly the materials and components needed to replace stock consumed in the warranty repairs of the prior month. A perusal of the agreements between petitioner ASPAC and the respondents shows that there are provisions which are highly restrictive in nature, such as to reduce petitioner ASPAC to a mere extension or instrument of the private respondent. The No Competing Product provision of the Representative Agreement between ITEC and ASPAC provides: The Representative shall not represent or offer for sale within the Territory any product which competes with an existing ITEC product or any product which ITEC has under active development. Likewise pertinent is the following provision: When acting under this Agreement, REPRESENTATIVE is authorized to solicit sales within the Territory on ITECs behalf but is authorized to bind ITEC only in its capacity as Representative and no other, and then only to specific customers and on terms and conditions expressly authorized by ITEC in writing. When ITEC entered into the disputed contracts with ASPAC and TESSI, they were carrying out the purposes for which it was created, i.e., to market electronics and communications products. The terms and conditions of the contracts as well as ITECs conduct indicate that they established within our country a continuous business, and not merely one of a temporary character.[40] Notwithstanding such finding that ITEC is doing business in the country, petitioner is nonetheless estopped from raising this fact to bar ITEC from instituting this injunction case against it. A foreign corporation doing business in the Philippines may sue in Philippine Courts although not authorized to do business here against a Philippine citizen or entity who had contracted with and benefited by said corporation.[41] To put it in another way, a party is estopped to challenge the personality of a corporation after having acknowledged the same by entering into a contract with it. And the doctrine of estoppel to deny corporate existence applies to a foreign as well as to domestic corporations. [42] One who has dealt with a corporation of foreign origin as a corporate entity is estopped to deny its corporate existence and capacity. The principle will be applied to prevent a person contracting with a foreign corporation from later taking advantage of its noncompliance with the statutes chiefly in cases where such person has received the benefits of the contract. [43] The rule is deeply rooted in the time-honored axiom of Commodum ex injuria sua non habere debet - no person ought to derive any advantage of his own wrong. This is as it should be for as mandated by law, every person must in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.[44] Concededly, corporations act through agents like directors and officers. Corporate dealings must be characterized by utmost good faith and fairness. Corporations cannot just feign ignorance of the legal rules as in most cases, they are manned by sophisticated officers with tried management skills and legal experts with practiced eye on legal problems. Each party to a corporate transaction is expected to act with utmost candor and fairness and, thereby allow a reasonable proportion between benefits and expected burdens. This is a norm which should be observed where one or the other is a foreign entity venturing in a global market. As observed by this Court in TOP-WELD (supra), viz: The parties are charged with knowledge of the existing law at the time they enter into a contract and at the time it is to become operative. (Twiehaus v. Rosner, 245 SW 2d 107; Hall v. Bucher, 227 SW 2d 98). Moreover, a person is presumed to be more knowledgeable about his own state law than his alien or foreign contemporary. In this case, the record shows that, at least, petitioner had actual knowledge of the applicability of R.A. No. 5455 at the time the contract was executed and at all times thereafter. This conclusion is compelled by the fact that the same statute is now being propounded by the petitioner to bolster its claim. We, therefore sustain the appellate courts view that it was incumbent upon TOP-WELD to know whether or not IRTI and ECED were properly authorized to engage in business in the Philippines when they entered into the licensing and distributorship agreements. The very purpose of the law was circumvented and evaded when the petitioner entered into said agreements despite the prohibition of R.A. No. 5455. The parties in this case being equally guilty of violating R.A. No. 5455, they are in pari delicto, in which case it follows as a consequence that petitioner is not entitled to the relief prayed for in this case. The doctrine of lack of capacity to sue based on the failure to acquire a local license is based on considerations of sound public policy. The license requirement was imposed to subject the foreign corporation doing business in the Philippines to the jurisdiction

of its courts. It was never intended to favor domestic corporations who enter into solitary transactions with unwary foreign firms and then repudiate their obligations simply because the latter are not licensed to do business in this country.[45] In Antam Consolidated Inc. vs. Court of Appeals, et al.[46] we expressed our chagrin over this commonly used scheme of defaulting local companies which are being sued by unlicensed foreign companies not engaged in business in the Philippines to invoke the lack of capacity to sue of such foreign companies. Obviously, the same ploy is resorted to by ASPAC to prevent the injunctive action filed by ITEC to enjoin petitioner from using knowledge possibly acquired in violation of fiduciary arrangements between the parties. By entering into the Representative Agreement with ITEC, Petitioner is charged with knowledge that ITEC was not licensed to engage in business activities in the country, and is thus estopped from raising in defense such incapacity of ITEC, having chosen to ignore or even presumptively take advantage of the same. In Top-Weld, we ruled that a foreign corporation may be exempted from the license requirement in order to institute an action in our courts if its representative in the country maintained an independent status during the existence of the disputed contract. Petitioner is deemed to have acceded to such independent character when it entered into the Representative Agreement with ITEC, particularly, provision 6.2 (supra). Petitioners insistence on the dismissal of this action due to the application, or non application, of the private international law rule of forum non conveniens defies well-settled rules of fair play. According to petitioner, the Philippine Court has no venue to apply its discretion whether to give cognizance or not to the present action, because it has not acquired jurisdiction over the person of the plaintiff in the case, the latter allegedly having no personality to sue before Philippine Courts. This argument is misplaced because the court has already acquired jurisdiction over the plaintiff in the suit, by virtue of his filing the original complaint. And as we have already observed, petitioner are not at liberty to question plaintiffs standing to sue, having already acceded to the same by virtue of its entry into the Representative Agreement referred to earlier. Thus, having acquired jurisdiction, it is now for the Philippine Court, based on the facts of the case, whether to give due course to the suit or dismiss it, on the principle of forum non conveniens.[47] Hence, the Philippine Court may refuse to assume jurisdiction in spite of its having acquired jurisdiction. Conversely, the 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 decision. [48] The aforesaid requirements having been met, and in view of the courts disposition to give due course to the questioned action, the matter of the present forum not being the most convenient as a ground for the suits dismissal, deserves scant consideration. IN VIEW OF THE FOREGOING PREMISES, the instant Petition is hereby DISMISSED. The decision of the Court of Appeals dated June 7, 1991, upholding the RTC Order dated February 22, 1991, denying the petitioners Motion to Dismiss, and ordering the issuance of the Writ of Preliminary Injunction is hereby affirmed in toto. SO ORDERED. 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 respondent 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 Attachment” 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 conveniens, 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: 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 established, to determine whether special circumstances” require the court’s desistance. G.R. No. 103493. June 19, 1997] PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners, vs. THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents. This case presents for determination the conclusiveness of a foreign judgment upon the rights of the parties under the same cause of action asserted in a case in our local court. Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari. The facts are as follows: On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala International Finance Limited (hereafter called AYALA)[1] and Philsec Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducats obligation under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat. As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by the note became due and demandable. Accordingly, on October 17, 1985, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the United States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading private respondents herein as counterdefendants, for allegedly conspiring in selling the property at a price over its market value. Private respondent Perlas, who had allegedly appraised the property, was later dropped as counterdefendant. ATHONA sought the recovery of damages and excess payment allegedly made to 1488, Inc. and, in the alternative, the rescission of sale of the property. For their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction over their person, but, as their motion was denied, they later filed a joint answer with counterclaim against private respondents and Edgardo V. Guevarra, PHILSECs own former president, for the rescission of the sale on the ground that the property had been overvalued. On March 13, 1990, the United States District Court for the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the ground that it was frivolous and [was] brought against him simply to humiliate and embarrass him. For this reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra. On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary Attachment against private respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United States District Court of Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners claimed that, as a result of private respondents fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase the Houston property. Petitioners prayed that private respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary attachment against the real and personal properties of private respondents.[2]

Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend financial accommodation to ATHONA under a separate loan agreement.On the other hand, private respondents 1488, Inc. and its president Daic filed a joint Special Appearance and Qualified Motion to Dismiss, contending that the action being in personam, extraterritorial service of summons by publication was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a nonresident foreign corporation, and Daic, who is a non-resident alien. On January 26, 1988, the trial court granted Ducats motion to dismiss, stating that the evidentiary requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international law of forum non conveniens, even as it noted that Ducat was not a party in the U.S. case. A separate hearing was held with regard to 1488, Inc. and Daics motion to dismiss. On March 9, 1988, the trial court[3] granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that the main factual element of the cause of action in this case which is the validity of the sale of real property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter of the pending case in the United States District Court which, under the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate matters needed to determine the assessment and/or fluctuations of the fair market value of real estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the present and verily, . . . (emphasis by trial court) The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial service of summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic. Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the principle of litis pendentia and forum non conveniens and in ruling that it had no jurisdiction over the defendants, despite the previous attachment of shares of stocks belonging to 1488, Inc. and Daic. On January 6, 1992, the Court of Appeals[4] affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus: The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFLs former name) and the Athona Holdings, NV. The case at bar involves the same parties. The transaction sued upon by the parties, in both cases is the Warranty Deed executed by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed by herein appellants, on the marketability of Ducats securities given in exchange for the Texas property. The recovery of a sum of money and damages, for fraud purportedly committed by appellees, in overpricing the Texas land, constitute the action before the Philippine court, which likewise stems from the same Warranty Deed. The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a sum of money for alleged tortious acts, so that service of summons by publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the ground of forum non conveniens was likewise affirmed by the Court of Appeals on the ground that the case can be better tried and decided by the U.S. court: The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign corporation which does not claim to be doing business in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A. In their present appeal, petitioners contend that: 1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURTS DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE. 2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE. 3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE PHILIPPINES. We will deal with these contentions in the order in which they are made. First. It is important to note in connection with the first point that while the present case was pending in the Court of Appeals, the United States District Court for the Southern District of Texas rendered judgment [5] in the case before it. The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of Appeals. [6] Thus, the principal issue to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of the U.S. court.

Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment admitting the foreign decision is not necessary. On the other hand, petitioners argue that the foreign judgment cannot be given the effect of res judicata without giving them an opportunity to impeach it on grounds stated in Rule 39, 50 of the Rules of Court, to wit: want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Petitioners contention is meritorious. While this Court has given the effect of res judicata to foreign judgments in several cases,[7] it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law.[8] It is not necessary for this purpose to initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment, in order for the court to properly determine its efficacy. 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.[9] 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. Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd.,[10] which private respondents invoke for claiming conclusive effect for the foreign judgment in their favor, the foreign judgment was considered res judicata because this Court found from the evidence as well as from appellants own pleadings [11] that the foreign court did not make a clear mistake of law or fact or that its judgment was void for want of jurisdiction or because of fraud or collusion by the defendants. Trial had been previously held in the lower court and only afterward was a decision rendered, declaring the judgment of the Supreme Court of the State of Washington to have the effect of res judicata in the case before the lower court. In the same vein, in Philippine International Shipping Corp. v. Court of Appeals,[12] this Court held that the foreign judgment was valid and enforceable in the Philippines there being no showing that it was vitiated by want of notice to the party, collusion, fraud or clear mistake of law or fact. The prima facie presumption under the Rule had not been rebutted. 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. As the trial court stated in its disputed order dated March 9, 1988: On the plaintiffs claim in its Opposition that the causes of action of this case and the pending case in the United States are not identical, precisely the Order of January 26, 1988 never found that the causes of action of this case and the case pending before the USA Court, were identical. (emphasis added) It was error therefore for the Court of Appeals to summarily rule that petitioners action is barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons, but their claim was brushed aside by both the trial court and the Court of Appeals.[13] Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were suspended because of the pendency of this case. To sustain the appellate courts ruling that the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would effectively preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could then arise: a foreign judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in this case, but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in a separate proceeding. This is plainly untenable. It has been held therefore that: [A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative relief is being sought. Hence, in the interest of justice, the complaint should be considered as a petition for the recognition of the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in order that the defendant, private respondent herein, may present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law, if applicable. [14] Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should be consolidated.[15] After all, the two have been filed in the Regional Trial Court of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings, petitioners should have the burden of impeaching the foreign judgment and only in the event they succeed in doing so may they proceed with their action against private respondents. Second. Nor is the trial courts refusal to take cognizance of the case justifiable under the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does not include forum non conveniens.[16] The propriety of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a matter of defense. Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on

this ground, it should do so only after vital facts are established, to determine whether special circumstances require the courts desistance.[17] In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latters debt which was the object of the transaction under litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case. Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in personam and summons were served by extraterritorial service. Rule 14, 17 on extraterritorial service provides that service of summons on a non-resident defendant may be effected out of the Philippines by leave of Court where, among others, the property of the defendant has been attached within the Philippines. [18] It is not disputed that the properties, real and personal, of the private respondents had been attached prior to service of summons under the Order of the trial court dated April 20, 1987.[19] Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought to be enforced is severable from the main judgment under consideration in Civil Case No. 16563. The separability of Guevarras claim is not only admitted by petitioners, [20] it appears from the pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil Case No. 16563. [21] Hence, the TRO should be lifted and Civil Case No. 921445 allowed to proceed. WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further proceedings in accordance with this decision. The temporary restraining order issued on June 29, 1994 is hereby LIFTED.SO ORDERED. HSBC VS. SHERMAN MARCH 28, 2013 HONGKONG AND SHANGHAI BANKING CORPORATION (HSBC) vs. SHERMAN et al 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 respondents 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 forum. 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 contacts that will not offend traditional notions of fair play and substantial justice. The defense of private respondents that the complaint should have been filed in Singapore is based merely on technicality. They did not even claim, much less prove, that the filing of the action here will cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing that petitioner BANK filed the action here just to harass private respondents. ** In the case of 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 jurisdiction. Neither did the clause in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter’s authorities. This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them 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. G.R. No. 72494 August 11, 1989 HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner, vs. JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE COURT, respondents. This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals) dated August 2, 1985, which reversed the order of the Regional Trial Court dated February 28,1985 denying the Motion to Dismiss filed by private respondents Jack Robert Sherman and Deodato Reloj. A complaint for collection of a sum of money (pp. 49-52, Rollo) was filed by petitioner Hongkong and Shanghai Banking Corporation (hereinafter referred to as petitioner BANK) against private respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil Case No. Q-42850 before the Regional Trial Court of Quezon City, Branch 84. It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on amounts due under said overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and a certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee (p. 53, Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated overdraft facility. 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. ... (p. 33-A, Rollo). The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation from private respondents, conformably with the provisions of the Joint and Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK filed the above-mentioned complaint. On December 14,1984, private respondents filed a motion to dismiss (pp 54-56, Rollo) which was opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order dated February 28, 1985 (pp, 64-65, Rollo), which read as follows: In a Motion to Dismiss filed on December 14, 1984, the defendants seek the dismissal of the complaint on two grounds, namely: 1. That the court has no jurisdiction over the subject matter of the complaint; and 2. That the court has no jurisdiction over the persons of the defendants. In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the motion. "On the first ground, defendants claim that by virtue of the provision in the Guarantee (the actionable document) which reads — 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 in Singapore shall have jurisdiction over all disputes arising under this guarantee, the Court has no jurisdiction over the subject matter of the case. The Court finds and concludes otherwise. There is nothing in the Guarantee which says that the courts of Singapore shall have jurisdiction to the exclusion of the courts of other countries or nations. Also, it has long been established in law and jurisprudence that jurisdiction of courts is fixed by law; it cannot be conferred by the will, submission or consent of the parties. On the second ground, it is asserted that defendant Robert' , Sherman is not a citizen nor a resident of the Philippines. This argument holds no water. Jurisdiction over the persons of defendants is acquired by service of summons and copy of the complaint on them. There has been a valid service of summons on both defendants and in fact the same is admitted when said defendants filed a 'Motion for Extension of Time to File Responsive Pleading on December 5, 1984. WHEREFORE, the Motion to Dismiss is hereby DENIED.SO ORDERED. A motion for reconsideration of the said order was filed by private respondents which was, however, denied (p. 66,Rollo). Private respondents then filed before the respondent Intermediate Appellate Court (now Court of Appeals) a petition for prohibition with preliminary injunction and/or prayer for a restraining order (pp. 39-48, Rollo). On August 2, 1985, the respondent Court rendered a decision (p. 37, Rollo), the dispositive portion of which reads:

WHEREFORE, the petition for prohibition with preliminary injuction is hereby GRANTED. The respondent Court is enjoined from taking further cognizance of the case and to dismiss the same for filing with the proper court of Singapore which is the proper forum. No costs. SO ORDERED. The motion for reconsideration was denied (p. 38, Rollo), hence, the present petition. The main issue is whether or not Philippine courts have jurisdiction over the suit. The controversy stems from the interpretation of a provision in the Joint and Several Guarantee, to wit: (14) This guarantee and all rights, obligations and liabilites arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee. ... (p. 53-A, Rollo) In rendering the decision in favor of private respondents, the Court of Appeals made, the following observations (pp. 35-36, Rollo): There are significant aspects of the case to which our attention is invited. The loan was obtained by Eastern Book Service PTE, Ltd., a company incorporated in Singapore. The loan was granted by the Singapore Branch of Hongkong and Shanghai Banking Corporation. The Joint and Several Guarantee was also concluded in Singapore. The loan was in Singaporean dollars and the repayment thereof also in the same currency. The transaction, to say the least, took place in Singporean setting in which the law of that country is the measure by which that relationship of the parties will be governed. xxx xxx xxx Contrary to the position taken by respondents, the guarantee agreement compliance that any litigation will be before the courts of Singapore and that the rights and obligations of the parties shall be construed and determined in accordance with the laws of the Republic of Singapore. A closer examination of paragraph 14 of the Guarantee Agreement upon which the motion to dismiss is based, employs in clear and unmistakeable (sic) terms the word 'shall' which under statutory construction is mandatory. Thus it was ruled that: ... the word 'shall' is imperative, operating to impose a duty which may be enforced (Dizon vs. Encarnacion, 9 SCRA 714).lâwphî1.ñèt There is nothing more imperative and restrictive than what the agreement categorically commands that '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.' While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several Guarantee contains a choiceof-forum clause, the very essence of due process dictates that the stipulation that "[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee" be liberally construed. One basic principle underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam. To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice (J. Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-out by petitioner BANK at the outset, the instant case presents a very odd situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with more reason as a defendant. However, in this case, private respondents are Philippine residents (a fact which was not disputed by them) who would rather face a complaint against them before a foreign court and in the process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve the case. Private respondents' stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a just obligation. The defense of private respondents that the complaint should have been filed in Singapore is based merely on technicality. They did not even claim, much less prove, that the filing of the action here will cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing that petitioner BANK filed the action here just to harass private respondents. In the case of Polytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187, it was ruled: ... An accurate reading, however, of the stipulation, 'The parties agree to sue and be sued in the Courts of Manila,' does not preclude the filing of suits in the residence of plaintiff or defendant. The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two transactions in question only or exclusively in Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4. Renuntiatio non praesumitur. This ruling was reiterated in the case of Neville Y. Lamis Ents., et al. v. Lagamon, etc., et al., G.R. No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case of litigation, jurisdiction shall be vested in the Court of Davao City." We held:

Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of qualifying or restrictive words in the agreement which would indicate that the place named is the only venue agreed upon by the parties. Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter's authorities. This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-38).lâwphî1.ñèt As regards the issue on improper venue, petitioner BANK avers that the objection to improper venue has been waived. However, We agree with the ruling of the respondent Court that: While in the main, the motion to dismiss fails to categorically use with exactitude the words 'improper venue' it can be perceived from the general thrust and context of the motion that what is meant is improper venue, The use of the word 'jurisdiction' was merely an attempt to copy-cat the same word employed in the guarantee agreement but conveys the concept of venue. Brushing aside all technicalities, it would appear that jurisdiction was used loosely as to be synonymous with venue. It is in this spirit that this Court must view the motion to dismiss. ... (p. 35, Rollo). At any rate, this issue is now of no moment because We hold that venue here was properly laid for the same reasons discussed above. The respondent Court likewise ruled that (pp. 36-37, Rollo): ... 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 conveniensdepends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court (J. Salonga, Private International Law, 1981, p. 49).lâwphî1.ñèt Thus, the respondent Court should not have relied on such principle. Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion and that consequently, it cannot be permitted to take a stand contrary to the stipulations of the contract, substantial bases exist for petitioner Bank's choice of forum, as discussed earlier. Lastly, private respondents allege that neither the petitioner based at Hongkong nor its Philippine branch is involved in the transaction sued upon. This is a vain attempt on their part to further thwart the proceedings below inasmuch as well-known is the rule that a defendant cannot plead any defense that has not been interposed in the court below. ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the Regional Trial Court is REINSTATED, with costs against private respondents. This decision is immediately executory. SO ORDERED. TESTATE ESTATE OF EDWARD E. CHRISTENSEN vs. HELEN CHRISTENSEN GARCIA, G.R. No. L-16749 January 31, 1963 IN 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 FACTS: Edward E. Christensen, though born in New York, migrated to California, where he resided and consequently was considered a California citizen. In 1913, he came to the Philippines where he became a domiciliary until his death. However, during the entire period of his residence in this country he had always considered himself a citizen of California. In his will executed on March 5, 1951, he instituted an acknowledged natural daughter, Maria Lucy Christensen as his only heir, but left a legacy of sum of money in favor of Helen Christensen Garcia who was rendered to have been declared acknowledged natural daughter. Counsel for appellant claims that California law should be applied; that under California law, the matter is referred back to the law of the domicile; that therefore Philippine law is ultimately applicable; that finally, the share of Helen must be increased in view of the success ional rights of illegitimate children under Philippine law. On the other hand, counsel for the heir of Christensen contends that inasmuch as it is clear that under Article 16 of our Civil Code, the national law of the deceased must apply, our courts must immediately apply the internal law of California on the matter; that under California law there are no compulsory heirs and consequently a testator could dispose of any property possessed by him in absolute dominion and that finally, illegitimate children not being entitled to anything and his will remain undisturbed. ISSUE: Whether or not the Philippine law should prevail in administering the estate of Christensen? RULING: The court in deciding to grant more successional rights to Helen said in effect that there are two rules in California on the matter: the internal law which should apply to Californians domiciled in California; and the conflict rule which should apply to

Californians domiciled outside of California. The California conflict rule says: “If there is no law to the contrary in the place where personal property is situated, is deemed to follow the person of its owner and is governed by the law of his domicile.” Christensen being domiciled outside California, the law of his domicile, the Philippines, ought to be followed. Where it is referred back to California, it will form a circular pattern referring to both country back and forth. G.R. No. L-16749 January 31, 1963 IN 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. This is an appeal from a decision of the Court of First Instance of Davao, Hon. Vicente N. Cusi, Jr., presiding, in Special Proceeding No. 622 of said court, 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 Christensen 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 and contains the following provisions: 3. I declare ... that I have but ONE (1) child, named MARIA LUCY CHRISTENSEN (now Mrs. Bernard Daney), who was born in the Philippines about twenty-eight years ago, and who is now residing at No. 665 Rodger Young Village, Los Angeles, California, U.S.A. 4. I further declare that I now have no living ascendants, and no descendants except my above named daughter, MARIA LUCY CHRISTENSEN DANEY. xxx xxx xxx 7. I give, devise and bequeath unto MARIA HELEN CHRISTENSEN, now married to Eduardo Garcia, about eighteen years of age and who, notwithstanding the fact that she was baptized Christensen, is not in any way related to me, nor has she been at any time adopted by me, and who, from all information I have now resides in Egpit, Digos, Davao, Philippines, the sum of THREE THOUSAND SIX HUNDRED PESOS (P3,600.00), Philippine Currency the same to be deposited in trust for the said Maria Helen Christensen with the Davao Branch of the Philippine National Bank, and paid to her at the rate of One Hundred Pesos (P100.00), Philippine Currency per month until the principal thereof as well as any interest which may have accrued thereon, is exhausted.. xxx xxx xxx 12. I hereby give, devise and bequeath, unto my well-beloved daughter, the said MARIA LUCY CHRISTENSEN DANEY (Mrs. Bernard Daney), now residing as aforesaid at No. 665 Rodger Young Village, Los Angeles, California, U.S.A., all the income from the rest, remainder, and residue of my property and estate, real, personal and/or mixed, of whatsoever kind or character, and wheresoever situated, of which I may be possessed at my death and which may have come to me from any source whatsoever, during her lifetime: .... It is in accordance with the above-quoted provisions that the executor in his final account and project of partition ratified the payment of only P3,600 to Helen Christensen Garcia and proposed that the residue of the estate be transferred to his daughter, Maria Lucy Christensen. Opposition to the approval of the project of partition was filed by Helen Christensen Garcia, insofar as it deprives her (Helen) of her legitime as an acknowledged natural child, she having been declared by 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 (In re McDaniel's Estate, 77 Cal. Appl. 2d 877, 176 P. 2d 952, and In re Kaufman, 117 Cal. 286, 49 Pac. 192, cited in page 179, Record on Appeal). Oppositor Maria Helen Christensen, through counsel, filed various motions for reconsideration, but these were denied. Hence, this appeal. The most important assignments of error are as follows: I THE LOWER COURT ERRED IN IGNORING THE DECISION OF THE HONORABLE SUPREME COURT THAT HELEN IS THE ACKNOWLEDGED NATURAL CHILD OF EDWARD E. CHRISTENSEN AND, CONSEQUENTLY, IN DEPRIVING HER OF HER JUST SHARE IN THE INHERITANCE. II THE LOWER COURT ERRED IN ENTIRELY IGNORING AND/OR FAILING TO RECOGNIZE THE EXISTENCE OF SEVERAL FACTORS, ELEMENTS AND CIRCUMSTANCES CALLING FOR THE APPLICATION OF INTERNAL LAW. III

THE LOWER COURT ERRED IN FAILING TO RECOGNIZE THAT UNDER INTERNATIONAL LAW, PARTICULARLY UNDER THE RENVOI DOCTRINE, THE INTRINSIC VALIDITY OF THE TESTAMENTARY DISPOSITION OF THE DISTRIBUTION OF THE ESTATE OF THE DECEASED EDWARD E. CHRISTENSEN SHOULD BE GOVERNED BY THE LAWS OF THE PHILIPPINES. IV THE LOWER COURT ERRED IN NOT DECLARING THAT THE SCHEDULE OF DISTRIBUTION SUBMITTED BY THE EXECUTOR IS CONTRARY TO THE PHILIPPINE LAWS. V THE LOWER COURT ERRED IN NOT DECLARING THAT UNDER THE PHILIPPINE LAWS HELEN CHRISTENSEN GARCIA IS ENTITLED TO ONE-HALF (1/2) OF THE ESTATE IN FULL OWNERSHIP. 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, as witness the following facts admitted by the executor himself in appellee's brief: In the proceedings for admission of the will to probate, the facts of record show that the deceased Edward E. Christensen was born on November 29, 1875 in New York City, N.Y., U.S.A.; his first arrival in the Philippines, as an appointed school teacher, was on July 1, 1901, on board the U.S. Army Transport "Sheridan" with Port of Embarkation as the City of San Francisco, in the State of California, U.S.A. He stayed in the Philippines until 1904. In December, 1904, Mr. Christensen returned to the United States and stayed there for the following nine years until 1913, during which time he resided in, and was teaching school in Sacramento, California. Mr. Christensen's next arrival in the Philippines was in July of the year 1913. However, in 1928, he again departed the Philippines for the United States and came back here the following year, 1929. Some nine years later, in 1938, he again returned to his own country, and came back to the Philippines the following year, 1939. Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1äwphï1.ñët Being an American citizen, Mr. Christensen was interned by the Japanese Military Forces in the Philippines during World War II. Upon liberation, in April 1945, he left for the United States but returned to the Philippines in December, 1945. Appellees Collective Exhibits "6", CFI Davao, Sp. Proc. 622, as Exhibits "AA", "BB" and "CC-Daney"; Exhs. "MM", "MM-l", "MM-2-Daney" and p. 473, t.s.n., July 21, 1953.) In April, 1951, Edward E. Christensen returned once more to California shortly after the making of his last will and testament (now in question herein) which he executed at his lawyers' offices in Manila on March 5, 1951. He died at the St. Luke's Hospital in the City of Manila on April 30, 1953. (pp. 2-3) In 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. Sec. 16. Residence is a term used with many shades of meaning from mere temporary presence to the most permanent abode. Generally, however, it is used to denote something more than mere physical presence. (Goodrich on Conflict of Laws, p. 29) As 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. The terms "'residence" and "domicile" might well be taken to mean the same thing, a place of permanent abode. But domicile, as has been shown, has acquired a technical meaning. Thus one may be domiciled in a place where he has never been. And he may reside in a place where he has no domicile. The man with two homes, between which he divides his time, certainly resides in each one, while living in it. But if he went on business which would require his presence for several weeks or months, he might properly be said to have sufficient connection with the place to be called a resident. It is clear, however, that, if he treated his settlement as continuing only for the particular business in hand, not giving up his former "home," he could not be a domiciled New Yorker. Acquisition of a domicile of choice requires the exercise of intention as well as physical presence. "Residence simply requires bodily presence of an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile." Residence, however, is a term used with many shades of meaning, from the merest temporary presence to the most permanent abode, and it is not safe to insist that any one use et the only proper one. (Goodrich, p. 29) The law that governs the validity of his testamentary dispositions is defined in Article 16 of the Civil Code of the Philippines, which is as follows:

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 abovecited 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. The theory of doctrine of renvoi has been defined by various authors, thus: The problem has been stated in this way: "When the Conflict of Laws rule of the forum refers a jural matter to a foreign law for decision, is the reference to the purely internal rules of law of the foreign system; i.e., to the totality of the foreign law minus its Conflict of Laws rules?" On logic, the solution is not an easy one. The Michigan court chose to accept the renvoi, that is, applied the Conflict of Laws rule of Illinois which referred the matter back to Michigan law. But once having determined the the Conflict of Laws principle is the rule looked to, it is difficult to see why the reference back should not have been to Michigan Conflict of Laws. This would have resulted in the "endless chain of references" which has so often been criticized be legal writers. The opponents of the renvoi would have looked merely to the internal law of Illinois, thus rejecting the renvoi or the reference back. Yet there seems no compelling logical reason why the original reference should be the internal law rather than to the Conflict of Laws rule. It is true that such a solution avoids going on a merry-go-round, but those who have accepted the renvoi theory avoid this inextricabilis circulas by getting off at the second reference and at that point applying internal law. Perhaps the opponents of the renvoi are a bit more consistent for they look always to internal law as the rule of reference. Strangely enough, both the advocates for and the objectors to the renvoi plead that greater uniformity will result from adoption of their respective views. And still more strange is the fact that the only way to achieve uniformity in this choiceof-law problem is if in the dispute the two states whose laws form the legal basis of the litigation disagree as to whether the renvoi should be accepted. If both reject, or both accept the doctrine, the result of the litigation will vary with the choice of the forum. In the case stated above, had the Michigan court rejected the renvoi, judgment would have been against the woman; if the suit had been brought in the Illinois courts, and they too rejected the renvoi, judgment would be for the woman. The same result would happen, though the courts would switch with respect to which would hold liability, if both courts accepted the renvoi. The Restatement accepts the renvoi theory in two instances: where the title to land is in question, and where the validity of a decree of divorce is challenged. In these cases the Conflict of Laws rule of the situs of the land, or the domicile of the parties in the divorce case, is applied by the forum, but any further reference goes only to the internal law. Thus, a person's title to land, recognized by the situs, will be recognized by every court; and every divorce, valid by the domicile of the parties, will be valid everywhere. (Goodrich, Conflict of Laws, Sec. 7, pp. 13-14.) X, a citizen of Massachusetts, dies intestate, domiciled in France, leaving movable property in Massachusetts, England, and France. The question arises as to how this property is to be distributed among X's next of kin. Assume (1) that this question arises in a Massachusetts court. There the rule of the conflict of laws as to intestate succession to movables calls for an application of the law of the deceased's last domicile. Since by hypothesis X's last

domicile was France, the natural thing for the Massachusetts court to do would be to turn to French statute of distributions, or whatever corresponds thereto in French law, and decree a distribution accordingly. An examination of French law, however, would show that if a French court were called upon to determine how this property should be distributed, it would refer the distribution to the national law of the deceased, thus applying the Massachusetts statute of distributions. So on the surface of things the Massachusetts court has open to it alternative course of action: (a) either to apply the French law is to intestate succession, or (b) to resolve itself into a French court and apply the Massachusetts statute of distributions, on the assumption that this is what a French court would do. If it accepts the socalled renvoidoctrine, it will follow the latter course, thus applying its own law. This is one type of renvoi. A jural matter is presented which the conflict-of-laws rule of the forum refers to a foreign law, the conflict-of-laws rule of which, in turn, refers the matter back again to the law of the forum. This is renvoi in the narrower sense. The German term for this judicial process is 'Ruckverweisung.'" (Harvard Law Review, Vol. 31, pp. 523571.) After a decision has been arrived at that a foreign law is to be resorted to as governing a particular case, the further question may arise: Are the rules as to the conflict of laws contained in such foreign law also to be resorted to? This is a question which, while it has been considered by the courts in but a few instances, has been the subject of frequent discussion by textwriters and essayists; and the doctrine involved has been descriptively designated by them as the "Renvoyer" to send back, or the "Ruchversweisung", or the "Weiterverweisung", since an affirmative answer to the question postulated and the operation of the adoption of the foreign law in toto would in many cases result in returning the main controversy to be decided according to the law of the forum. ... (16 C.J.S. 872.) Another theory, known as the "doctrine of renvoi", has been advanced. The theory of the doctrine of renvoi is that the court of the forum, in determining the question before it, must take into account the whole law of the other jurisdiction, but also its rules as to conflict of laws, and then apply the law to the actual question which the rules of the other jurisdiction prescribe. This may be the law of the forum. The doctrine of the renvoi has generally been repudiated by the American authorities. (2 Am. Jur. 296) The scope of the theory of renvoi has also been defined and the reasons for its application in a country explained by Prof. Lorenzen in an article in the Yale Law Journal, Vol. 27, 1917-1918, pp. 529-531. The pertinent parts of the article are quoted herein below: The recognition of the renvoi theory implies that the rules of the conflict of laws are to be understood as incorporating not only the ordinary or internal law of the foreign state or country, but its rules of the conflict of laws as well. According to this theory 'the law of a country' means the whole of its law. xxx xxx xxx Von Bar presented his views at the meeting of the Institute of International Law, at Neuchatel, in 1900, in the form of the following theses: (1) Every court shall observe the law of its country as regards the application of foreign laws. (2) Provided that no express provision to the contrary exists, the court shall respect: (a) The provisions of a foreign law which disclaims the right to bind its nationals abroad as regards their personal statute, and desires that said personal statute shall be determined by the law of the domicile, or even by the law of the place where the act in question occurred. (b) The decision of two or more foreign systems of law, provided it be certain that one of them is necessarily competent, which agree in attributing the determination of a question to the same system of law. xxx xxx xxx If, for example, the English law directs its judge to distribute the personal estate of an Englishman who has died domiciled in Belgium in accordance with the law of his domicile, he must first inquire whether the law of Belgium would distribute personal property upon death in accordance with the law of domicile, and if he finds that the Belgian law would make the distribution in accordance with the law of nationality — that is the English law — he must accept this reference back to his own law. We note that Article 946 of the California Civil Code is its conflict of laws rule, while the rule applied in In re Kaufman, Supra, its internal law. If the law on succession and the conflict of laws rules of California are to be enforced jointly, each in its own intended and appropriate sphere, the principle cited In re Kaufman should apply to citizens living in the State, but Article 946 should apply to such of its citizens as are not domiciled in California but in other jurisdictions. The rule laid down of resorting to the law of the domicile in the determination of matters with foreign element involved is in accord with the general principle of American law that the domiciliary law should govern in most matters or rights which follow the person of the owner. When a man dies leaving personal property in one or more states, and leaves a will directing the manner of distribution of the property, the law of the state where he was domiciled at the time of his death will be looked to in deciding legal questions about the will, almost as completely as the law of situs is consulted in questions about the devise of land. It is logical that, since the domiciliary rules control devolution of the personal estate in case of intestate succession, the same rules should determine the validity of an attempted testamentary dispostion of the property. Here, also, it is not that the domiciliary has effect beyond the borders of the domiciliary state. The rules of the domicile are recognized as controlling by the Conflict of Laws rules at the situs property, and the reason for the recognition as in the case of intestate succession, is the general convenience of the doctrine. The New York court has said on the point: 'The general principle that a dispostiton of a personal property, valid at the domicile of the owner, is valid anywhere, is one of the universal application. It had its origin in that international comity which was one of the first fruits of civilization, and it this age, when business intercourse and the process of accumulating property take but little notice of boundary lines, the practical wisdom and justice of the rule is more apparent than ever. (Goodrich, Conflict of Laws, Sec. 164, pp. 442-443.)

Appellees argue that what Article 16 of the Civil Code of the Philippines pointed out as the national law is the internal law of California. But as above explained the laws of California have prescribed two sets of laws for its citizens, one for residents therein and another for those domiciled in other jurisdictions. Reason demands that We should enforce the California internal law prescribed for its citizens residing therein, and enforce the conflict of laws rules for the citizens domiciled abroad. If we must enforce the law of California as in comity we are bound to go, as so declared in Article 16 of our Civil Code, then we must enforce the law of California in accordance with the express mandate thereof and as above explained, i.e., apply the internal law for residents therein, and its conflict-of-laws rule for those domiciled abroad. It is argued on appellees' behalf that the clause "if there is no law to the contrary in the place where the property is situated" in Sec. 946 of the California Civil Code refers to Article 16 of the Civil Code of the Philippines and that the law to the contrary in the Philippines is the provision in said Article 16 that the national law of the deceased should govern. This contention can not be sustained. As explained in the various authorities cited above the national law mentioned in Article 16 of our Civil Code is the law on conflict of laws in the California Civil Code, i.e., Article 946, which authorizes the reference or return of the question to the law of the testator's domicile. The conflict of laws rule in California, Article 946, Civil Code, precisely refers back the case, when a decedent is not domiciled in California, to the law of his domicile, the Philippines in the case at bar. The court of the domicile can not and should not refer the case back to California; such action would leave the issue incapable of determination because the case will then be like a football, tossed back and forth between the two states, between the country of which the decedent was a citizen and the country of his domicile. The Philippine court must apply its own law as directed in the conflict of laws rule of the state of the decedent, if the question has to be decided, especially as the application of the internal law of California provides no legitime for children while the Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children legally acknowledged forced heirs of the parent recognizing them. The Philippine cases (In re Estate of Johnson, 39 Phil. 156; Riera vs. Palmaroli, 40 Phil. 105; Miciano vs. Brimo, 50 Phil. 867; Babcock Templeton vs. Rider Babcock, 52 Phil. 130; and Gibbs vs. Government, 59 Phil. 293.) cited by appellees to support the decision can not possibly apply in the case at bar, for two important reasons, i.e., the subject in each case does not appear to be a citizen of a state in the United States but with domicile in the Philippines, and it does not appear in each case that there exists in the state of which the subject is a citizen, a law similar to or identical with Art. 946 of the California Civil Code. 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. INGENOHL vs. OLSEN AND COMPANY, INC G.R. No. L-22288 January 12, 1925 FACTS: In 1919, the acting Alien Property Custodian of the United States, by virtue of the Trading with the Enemy Act as amended, required and caused to be conveyed to him the property and business then belonging to the company known as Syndicat Oriente, formed under the laws of Belgium, of which the plaintiff was the “gestor,” and an enemy as defined in said Act. The primary purpose of the proceeding was to seize, sell and convey any and all of the property owned and held by the company within the jurisdiction of the United States, as a war measure, upon the ground that they were alien enemies of the United States. During the public sale, defendant corporation was the highest bidder. The said Alien Property Custodian of the United States having thereafter accepted said bid and received from the defendant corporation in cash the amount of said bid, did execute in favor of the defendant corporation a deed of conveyance. The defendant paid in good faith, and took over the property and assets of the company, including its trade-marks and trade names and its business as a going concern After obtaining the proceeds from the sale, the plaintiff in violation of the conveyance, wrongfully instituted an action in the Supreme Court of Hongkong against the defendant in which the plaintiff claimed to be the sole owner of the trade-marks for the exports of the business. The Supreme Court of Hongkong ruled in favor of the plaintiff, allegedly through misrepresentation, ordering defendant to pay the former for costs and AF. The Court ruled that the deed of conveyance limited the sale of the business to the trademarks within the Philippines, implying that the plaintiff is still entitled to the sell the cigars under the same trademarks through exporting, which accounts to 95% of the total sales of the company. (This means that the plaintiff paid the cash equivalent of the whole of the business but only entitled to 5% of the such, the sales within the Philippines)- UNFAIR TALAGA! The CFI rendered judgment for the plaintiff for the full amount of his claim, with interest, from which the defendant appeals. Defendant company alleges that when he purchased the property and business, all trademarks are included; that the subject of the sale is not only those trademarks for sales within the Philippines. ISSUE: Should the judgment rendered by the Hongkong court be enforced by Philippine courts? HELD: NO; we do not hesitate to say that the judgment rendered in the Hongkong court was a clear mistake of both law and fact, and that it ought not to be enforced in the Philippine Islands. The business of the plaintiff is almost exclusively an export business, and that the transfer of the goodwill thereof necessarily carried with it the transfer of said export business and of the trade-marks and trade names which could not be disconnected therefrom —- It is conceded that the Hongkong court had jurisdiction and that the defendant appeared in the action and contested the case on its merits. Hence, there was no collusion. Neither is it claimed that there was any fraud, but it is vigorously contended that the Hongkong judgment was a clear mistake of both law and fact. Exclusive of the provisions of section 311 of the Code of Civil Procedure, it is very doubtful whether it could be sustained upon the ground of comity or the Law of Nations. As between allied nations and under the law of comity, their mutual policy should be to sustain and enforce the spirit and intention with which the seizure and sale of any property of an alien enemy was made rather than to minimize, destroy or defeat them.

We are construing a deed of conveyance from the United States to the defendant. The primary purpose of the whole proceeding was to seize and convey all of the property of the plaintiff or his company within the jurisdiction of the United States, including trade names and trade-marks as those of an alien enemy. To now give the defendant the use and benefit of only 5 per cent of such trade names and trade-marks, and to permit the plaintiff to have and retain the other 95 per cent to his own use and benefit after he has ratified and confirmed the sale, would impugn the honor and good name of the United States in the whole proceeding and defeat the very purpose for which it seized and sold the property of an alien enemy, to wipe Ingenohl and his company out of existence and put them out of business in so far as the United States had the power to do so Be that as it may, this court is bound be section 311 of the Code of Civil Procedure. That law was enacted by the Legislature of the Philippine Islands, and as to the Philippine Islands, it is the law of the land. In the absence of that statute, no matter how wrongful the judgment of the Hongkong court may be, there would be strong reasons for holding that it should be enforced by this court. G.R. No. L-22288 January 12, 1925 CARL FRANZ ADOLPH OTTO INGENOHL, plaintiff-appellee, vs.WALTER E. OLSEN AND COMPANY, INC., defendant-appellant.Gibbs and McDonough for appellant. Ross, Lawrence and Selph for appellee. August 16, 1922, the plaintiff filed a complaint in the Court of First Instance against the defendant in which after formal pleas, he alleges: III. That on the 5th day of May, 1922, in the Supreme Court of Hongkong, the same being a court of competent jurisdiction and having jurisdiction over both the plaintiff and the defendant in a certain action wherein the plaintiff herein was plaintiff and the defendant here was defendant, a final judgment was rendered in favor of the plaintiff and against defendant a duly certified transcript of which said judgment is hereto attached, marked Exhibit A. IV. That the said judgment has not been reversed or modified and still in full force and effect. V. That on the 30th day of June, 1922, costs were duly taxed and allowed in the said Supreme Court of Hongkong in favor of plaintiff and against the defendant in the sum of twenty-six thousand two hundred and forty-four and 23/100 dollars ($26,244.23), Hongkong currency, as appears by the certificate of the registrar of the said Supreme Court of Hongkong, hereto attached and made a part hereof. VI. That demand has been made by plaintiff upon defendant for the payment of the said sum of twenty-six thousand two hundred and forty-four and 23/100 dollars ($26,244.23), Hongkong currency, but the defendant has failed and refused and still fails and refuses to pay plaintiff the said sum or any part thereof. VII. That the equivalent of the said sum of twenty-six thousand two hundred and forty-four and 23/100 dollars ($26,244.23), Hongkong currency, on the said 30th day of June, 1922, was thirty-one thousand ninety-nine pesos and forty-one centavos (P31,099.41), Philippine currency. Wherefore, he prays judgment for that amount, with legal interest, and for such other and further relief as may seem just and equitable. A duly certified transcript of the judgment of the Hongkong court was attached to the complaint, marked Exhibit A. For amended answer, the defendant denies each and every allegation of the complaint, and, as a separate special defense, alleges that the judgment in question should be considered in connection with the decision of the Supreme Court of Hongkong, a copy of which is attached to and made a part of the answer, marked Exhibit 1. That the decision and judgment of that court were rendered and entered as a result of a clear mistake of law and fact. 3. That previous to the 25th day of January, 1919, A. Mitchell Palmer, the duly appointed, qualified and acting Alien Property Custodian of the United States, under and by virtue of the Act of Congress of the United States approved October 6, 1917, known as the Trading with the Enemy Act as amended, and in accordance with executive orders issued in pursuance thereof, required and caused to be conveyed, transferred and assigned, delivered and paid over to him the property and business then owing and belonging to, or held for, by, or on account of, or on behalf, or for the benefit of the company known as Syndicat Oriente, a joint account association (sociedad de cuentas en participacion), of which the plaintiff was the "gestor," and which association formed under the laws of Belgium with its registered office in the City of Antwerp, Belgium, and an enemy as defined in said Act, not holding a license granted by the President under said Trading with the Enemy Act, and which the President of the United States, after investigation had determined was so owing, or so belonged, or was so held, and thereafter the said Alien Property Custodian in pursuance of said Act and proclamations and executive orders, advertised that he would sell through his managing director of the Philippine Islands to the highest bidder at public sale, subject to the terms and conditions set forth in the advertisement of sale, the said property and business of the Syndicat Oriente and of the said plaintiff as its "gestor" on the 27th day of December, 1918, at Manila in the Philippine Islands, and pursuant to said advertisement of sale, and in compliance with all the terms and conditions therein set forth, and after due and public notice given thereof, on the 27th day of December, 1918, duly sold at public sale at Manila, Philippines Islands, the said property and business, with certain exceptions immaterial to this case, mentioned in the deed of conveyance hereinafter referred to, in consideration of the bid therefor by the said defendant corporation of the sum of P2,350,000, Philippine currency, which was the highest bid of any bidder qualified to bid for and purchase said property and business at said sale, and the said Alien Property Custodian of the United States having thereafter accepted said bid and received from the defendant corporation in cash the amount of said bid, did on the 25th day of January, 1919, under and by virtue of said Act of Congress and said proclamations and executive orders, execute in favor of the defendant corporation a deed of conveyance of said property and business of the said Syndicat Oriente and of

the said plaintiff as its "gestor," a copy of which deed marked Exhibit 2 for identification is hereto attached and made a part of this amended answer and counterclaim. 4. That among the property conveyed and described in said deed so executed by the Alien Property Custodian of the United States in favor of the defendant corporation was the cigar and cigarette factory situated in the City of Manila, Philippine Islands, known as "El Oriente Fabrica de Tabacos, C. Ingenohl," and all incidents and appurtenances thereto including the business as a going concern and the goodwill, trade names and trade-marks thereof, and of the said Syndicat Oriente. That at all times said C. Ingenohl mentioned therein was the gestor of the said Syndicat Oriente and plaintiff in this action. That based upon the claim of the plaintiff for himself and as gestor and agent of the Syndicat Oriente, in the year 1921, the plaintiff collected and received from the Alien Property Custodian of the United States, the purchase price of the property mentioned and described in this answer and counterclaim and thereby ratified and confirmed the sale and conveyance of the property to the defendant to all intents and purposes, the same as if the sale had originally been made by plaintiff to the defendant. 7. That at the time of the conveyance of said property to the defendant corporation and for many years previous and subsequent thereto, and up to the time of the wrongful acts of the plaintiff as hereinafter set forth, China, the colony of Hongkong, the Federated Malay States, and the Straits Settlements were the principal markets for the output of the cigars manufactured in the said cigar factory, and the only trade-marks and the trade names under which said cigars were sold in those markets by the plaintiff previous to said conveyance, and by the defendant subsequent thereto were "La Perla del Oriente," El Cometa del Oriente" and "Imperio del Mundo;" that by the sale of large quantities of the output of said cigar factory in said markets by the plaintiff previous to said conveyance, and by the defendant thereafter under said trademarks and trade names and by the appropriate registration of said trade-marks and trade names in said countries, the plaintiff previous to said conveyance, and the defendant thereafter as his successor in interest appropriated, acquired and became entitled to the exclusive use of said trade-marks and trade names in said markets to designate the cigar products of said factory. That by virtue of the fact that the plaintiff took and accepted the purchase price for the sale of the property, he thereby ratified and confirmed the peaceable possession and enjoyment and the use of the property, including said trade-marks and trade names, the same is he had personally made the sale. 9. That on or about the 28th of May, 1919, the said trade-marks and trade names known as "La Perla del Oriente" and "El Cometa del Oriente" were duly registered at Shanghai in the name of the defendant corporation for all of China with the exception of the colony of Hongkong, which is British territory and where separate registration proceedings were and are required; that by virtue of said registration and by virtue of the sale under said trade-marks and trade names of the cigars manufactured in said factory by the plaintiff previous to said conveyance and by the defendant as his successor in interest thereafter, the latter acquired the sole and exclusive right to the use of said trade-marks and trade names in all of China. That at the time the plaintiff accepted the proceeds of the sale, he well knew that the Property Custodian intended to and did sell and convey to the defendant, and that the defendant believed that it acquired and did acquire the exclusive right to the use of said trade-marks and trade names in said markets, and that the said trade-marks and trade names had been duly registered at Shanghai for all of China in the name of the corporation, and that at the time he accepted such proceeds, the plaintiff well knew that the defendant ever since the purchase of the property was selling the product of said factory under trade-marks and trade names in all of said markets. That plaintiff also knew the value of them at the time of the sale was P1,000,000, and that said trade-marks and trade names evidenced P1,000,000 of the purchase price of the, property. That after obtaining the proceeds of the sale, the plaintiff wrongfully instituted the said action in the Supreme Court of the colony of Hongkong, resulting in the rendition of the judgment in question. That at the time it was rendered the Hongkong court had before it and under consideration the deed of conveyance executed by the Property Custodian to the defendant and facsimiles of the trade-marks and trade names and the admission of the plaintiff that he had received the proceeds of the sale from the Property Custodian. That notwithstanding such facts, the Hongkong court decided in effect that the language "wheresoever situate in the Philippine Islands" was a limitation upon the goodwill and right to the use of said trade-marks and trade names to the Philippine Islands, whereas in truth and in fact, as the plaintiff well knew at the time of said conveyance, almost the entire output of the factory in the City of Manila was exported and sold outside of the Philippine Islands, and that the intention of said conveyance was to convey the right to the use of said trademarks and trade names outside of the Philippine Islands, and that plaintiff willfully concealed and withheld said facts from the Hongkong court, and induced it to hold in effect that the right to the use of said trade-marks was limited by the conveyance to the Philippine Islands. The trade-marks in question are then specifically described. That the plaintiff in Hongkong court claimed to be the proprietor of the trade-marks and trade names known as "La Perla del Oriente," "El Cometa del Oriente" and "Imperio del Mundo," in connection with cigars manufactured by him in the factory at Mongkok, Hongkong, known as the Hongkong factory, and which at the time of the conveyance, was a mere branch of the Manila cigar factory. That at the trial in the Hongkong court it appeared that between the years 1882 and 1905, "El Oriente Fabrica de Tabacos Sociedad Anonima," hereinafter referred to as "Sociedad Anonima," carried on a business as manufacturers of cigars and cigarettes in Manila, Philippine Islands, and in connection with the cigars manufactured therein, made use of the trade-marks and trade names, which are in dispute in this action. That on November 28, 1905, the "Sociedad Anonima," being then in liquidation, sold all of its business interests and assets in the Philippine Islands with its goodwill and trade-marks, including those in dispute here, to the plaintiff as a gestor of a joint association consisting of the plaintiff and others, which was known as the Syndicat Oriente, and

carried on its business in the Philippine Islands under the style of "EL Oriente Fabrica de Tabacos, C. Ingenohl, Manila." That in the year 1908 the Syndicat Oriente opened the Hongkong factory, as a branch or agency, for the manufacture and sale in Hongkong of cigars which were made of the tobacco supplied by "El Oriente Fabrica de Tabacos" in the Philippine Islands, and which bore the trade-marks in dispute in this action. That such trade-marks were registered in the Philippine Islands in the years 1884 and 1887 as the property of the said "Sociedad Anonima," and such registration was renewed in the year 1902. That in the year 1903 they were registered on the Hongkong register of trade-marks as the property of the "Sociedad Anonima." That about April, 1906, the assignment of the said trade-marks to "El Oriente Fabrica de Tabacos" was registered in the Philippine Islands, and in February, 1910, they were assigned on the Hongkong register with the knowledge and authority and by direction of the plaintiff, to the name of said Syndicat Oriente under its name and style of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," as proprietor. That on March 13, 1917, the plaintiff renewed the registration of such trade-marks on the Hongkong register for a further period of fourteen years from the 15th of April, 1917, in the same name, to wit: "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," as proprietor. That such trade-marks and trade names were inseparably connected and identified with the cigars manufactured in the Manila factory, and that the Hongkong factory had no right to the use of them, except as a branch of the Manila factory, and that the use of them by the Hongkong factory after conveyance to the defendant constitutes a false representation and fraud upon the public purchasing such cigars, and upon this defendant in particular. That under the laws of Great Britain, United States and the Philippine Islands, trade-marks and trade names, such as those in dispute, belong to and follow the product of the factory with which they are identified, and the use of them upon the products of any other factory constitutes a fraud upon the public. That under such laws the acceptance by the former owner of the proceeds of the sale amounts to a ratification of the sale to all intents and purposes, the same as if the sale had been made by the owner himself, and that as construed by the laws of Great Britain, United States and the Philippine Islands, the deed of conveyance was not reasonably susceptible to the interpretation placed upon it by the Hongkong court, to the effect that the goodwill and right to the use of the trade-marks and trade names were limited to the Philippine Islands. By way of counterclaim, the defendant alleges all of such material facts, and that the action in Hongkong court was wrongfully instituted by the plaintiff against the defendant. That after the rendition of such judgment and in violation of the terms of the sale and conveyance, the plaintiff, through his solicitors, agents, and representatives, has been and is still wrongfully and unlawfully causing to be inserted in the leading newspapers in China, the Federated Malay States, Straits Settlements, and elsewhere, newspaper articles notifying the public of the rendition of the judgment in which he claims and asserts his exclusive right to the use of the trade-marks and trade names in all of said countries, and threatens to take legal proceedings against any person, firm, or corporation which has its possession for sale cigars bearing the said trade-marks and trade names, which are not manufactured by the branch factory at Hongkong, and also by giving notices to the tobacco dealers. That by reason of said notices and the threats, the cigar dealers have cancelled all pending orders and have refused to make any further purchases of cigars without guaranties, protecting them against the threatened legal proceedings of plaintiff. That the goodwill of the cigar business of the defendant and the value of such trade-marks and trade names have been totally destroyed by the plaintiff, and that he has wrongfully and unlawfully deprived the defendant of the use and enjoyment of them, to the defendant's damage in the sum of P1,000,000 for which it prays judgment with costs. Upon such issues the parties entered into the following agreed statement of facts: Agreed statement of facts Without prejudice to the introduction of such oral and documentary evidence as either party may present at the time fixed by the Court for the trial of this case, and saving all just objections and exceptions to the admissibility of such facts, or any of them, as evidence in this case, it is hereby mutually stipulated and agreed by and between the parties, their counsel and attorneys, as follows: 1. That the defendant, Walter E. Olsen & Co., Inc., is a corporation duly organized, existing, and doing business under the laws of the Philippine Islands, having its principal place of business at the City of Manila, and that the said Walter E. Olsen & Co., Inc., is the same Walter E. Olsen & Co., Inc., referred to in the judgment of the Supreme Court of Hongkong sued on herein, a duly certified copy of which said judgment is hereto attached marked Exhibit A, and made a part hereof; 2. That the Supreme Court of Hongkong is a court of record of general jurisdiction, and at the time of the rendition of the judgment sued on herein (Exhibit A) had jurisdiction over the parties to the action in which the said judgment was rendered, and of the subject-matter of the said action; 3. That the defendant Walter E. Olsen & Co., Inc., appeared and was represented by counsel in the Supreme Court of Hongkong in the action in which the said judgment (Exhibit A) was rendered; 4. That the defendant has refused to pay to the plaintiff the amount of the said judgment, to wit, the sum of twenty-six thousand two hundred forty-four and 23/100 dollars ($26,244.23), Hongkong currency, equivalent to thirty-one thousand ninety-nine pesos and forty-one centavos (P31,099.41), Philippine currency; 5. That Exhibit 1 attached to defendant's amended answer and counterclaim is a true copy of the decision of the Supreme Court of Hongkong, upon which the judgment referred to in the third paragraph of plaintiff's complaint was based; 6. That Exhibit 2 attached to defendant's amended answer and counterclaim is a true copy of the Deed of Transfer executed on the 25th day of January, 1919, by A. Mitchell Palmer, the duly appointed, qualified and acting Alien Property Custodian of the United States in favor of the defendant corporation, and that the recitals contained in said Deed of Transfer were and are true, except that the Syndicat Oriente mentioned therein was formed under the laws of Belgium with its head office at Antwerp, by Articles of Agreement dated November 28, a copy of which marked Exhibit B is hereto

attached and made a part hereof. Under the said agreement the plaintiff was the "Gerant" of the said Syndicat Oriente, and his rights and liabilities as well as those of the other parties to the said agreement to outsiders and inter se are governed by said articles and by the laws of Belgium which are agreed to be substantially the same as the laws of the Philippines with respect to joint accounts (cuentas en participacion) as provided by articles 239-243 of the Philippine Code of Commerce. It is understood however that the defendant will raise no question in this case as to the authority of the plaintiff to maintain said action before the Hongkong court; 7. That the Ingenohl mentioned in said Deed of Transfer as C. Ingenohl, and as Francis Adolfo Ingenohl, is the plaintiff in this action, and was at the time of the seizure and sale of the property mentioned in said Deed of Transfer, and from that time up to and including the time of the receipt by him from the Alien Property Custodian of the proceeds of said sale, continue to be the "Gerant" of the Syndicat Oriente mentioned in said Deed of Transfer, with full power and the authority to claim and receive the proceeds of said sale from the said Alien Property Custodian of the United States; 8. That as a result of the claim made therefor, the said plaintiff for himself and as "Gerant" and general representative of the said Syndicat Oriente, on the 13th day of December, 1920, and 28th day of March, 1921, collected and received from the Alien Property Custodian of the United States, the sum of $1,511,124.50, United States currency, being the equivalent with interest of the purchase price of the property described in said Deed of Transfer and paid to said Alien Property Custodian by the defendant corporation, and the said plaintiff then and there issued to the said Alien Property Custodian of the United States two receipts, copies of which marked Exhibits C and D are hereto attached and made a part hereof; that neither the plaintiff nor the Syndicat Oriente has at any time either orally or in writing ratified, consented to or agreed to the action of the Alien Property Custodian in selling the property described in the said Deed of Transfer, other than as may be deducted from the action of the said plaintiff in making claim for and receiving the proceeds of the sale of the said property, and the plaintiff reserves the right to contend and does contend that such action on his part did not and does not constitute a ratification of said sale; 9. That at the time of the conveyance of said property by the Alien Property Custodian of the United States to the defendant corporation and for many years previous and subsequent thereto, and up to the time of the rendition by said Supreme Court of Hongkong of the judgment (Exhibit A), China, the colony of Hongkong, the Federated Malay States, and the Straits Settlements, were among the markets in which the output of the cigars manufactured in the cigar factory known previous to its conveyance to the defendant corporations as "El Oriente Fabrica de Tabacos," and that among the trade-marks and trade names under which such cigars were sold in those markets by the plaintiff previous to said conveyance and by the defendant subsequent thereto were "La Perla del Oriente," "El Cometa del Oriente" and "Imperio del Mundo." 10. That at the time of rendering the decision and entering the judgment (Exhibit A), the said Supreme Court of Hongkong had before it and under consideration said Deed of Transfer executed by the Alien Property Custodian in favor of the defendant corporation and facsimiles of the trade-marks and trade names under which the output of both the Manila cigar factory and the Hongkong factory hereinafter mentioned had been sold in Hongkong and the other markets mentioned, and had also before it and under consideration the admission of the plaintiff that he had received the proceeds of said sale by the Alien Property Custodian to the defendant corporation as evidenced by said Deed of Transfer. That said action in Hongkong was instituted on the 9th day of October, 1919; 11. That the facsimile of one of the trade-marks or labels presented as evidence to the said Supreme Court of Hongkong depicted among other things the head and shoulders of a Filipina woman in a yellow camisa. The picture is surrounded with green leaves and pink flowers. Above is a scroll with the words "La Perla del Oriente" printed on it and underneath is another scroll with the words "El Oriente Fabrica de Tabacos, Sociedad Anonima, Manila." That a facsimile of said trademark of label marked Exhibit E is hereto attached and made a part hereof; 12. That subsequent to the transfer of said trade-marks and trade names by the said "Sociedad Anonima" to the said plaintiff Ingenohl as hereinafter set forth, the words on the scroll at the foot of said label mentioned in the preceding paragraph were changed to "El Oriente Fabrica de Tabacos, Manila," as shown by the facsimile hereto attached, marked Exhibit E and made a part hereof; 13. That the facsimile of another trade-mark or label likewise presented as evidence to the said Supreme Court of Hongkong in part depicted a Filipina woman dressed in a red skirt and loose yellow camisa, holding in the left hand by its cover an open cigar box full of cigars, her right hand resting on a Spanish coat of arms. Above are printed the words "La Perla del Oriente." The Spanish coat of arms is the Royal Coat of Arms of Spain. Underneath the said arms are the obverse and reverse of three medals. On one of the medals it is stated on the reverse to have been awarded to "El Oriente Fabrica de Tabacos, Manila." The buildings and the back ground are the towers of the Dominican Church (Walled City, Manila) and the high column is the Magallanes Monument, Manila. That a facsimile of said trade-mark or label marked Exhibit G is hereto attached and made a part hereof; 14. Another facsimile of a trade-mark and trade name also presented as evidence to the said Supreme Court of Hongkong depicts the old Bridge of Spain across the Pasig River at Manila, showing in the back ground the Old Stone Wall of the Walled City, Manila, and the Dominican Church, Magallanes Monument, and Intendencia Building and the church towers of the Walled City of Manila and above several stars and a comet, on the tail of which appear the words "El Cometa del Oriente." That a copy of said trade-mark or label marked Exhibit H is hereto attached and made a part hereof;

15. That if further appeared upon the trial of said action in the said Supreme Court of Hongkong and it is stipulated to be true, that between the years 1882 and 1905, "El Oriente Fabrica de Tabacos Sociedad Anonima" (hereinafter referred to as the "Sociedad Anonima") carried on business as manufacturers of cigars and cigarettes at Manila, Philippine Islands, and made use in connection with the sale of its output through the Far East of Trade the marks which are in dispute in this action. That the head office of the said "Sociedad Anonima" was at Antwerp, Belgium; 16. That on or about the 21st day of April, 1906, the said "Soceidad Anonima," being then in liquidation, transferred all of its business interests and assets together with the goodwill thereof and trade-marks and trade names of said "Sociedad Anonima" wherever in use (including the trade-marks and trade names in dispute in this action), to the plaintiff. That said transfer was effected by means of an instrument, in writing, a copy of which is hereto attached marked Exhibit J. That plaintiff, as "Gerant" of said Syndicat Oriente which had been organized in the meantime for that purpose, carried on business in the Philippine Islands and throughout the Far East under the style of "El Fabrica de Tabacos, C. Ingenohl, Manila" (hereinafter referred to as "El Oriente Fabrica de Tabacos"); 17. That in the year 1908 the plaintiff, as "Gerant" of said Syndicat Oriente, opened the said Hongkong factory for the manufacture and sale of cigars which were composed, in part, of tobacco supplied by "El Oriente Fabrica de Tabacos" in the Philippine Islands, and, in part, of tobacco wrapper imported from Java. That subsequent to the establishment of the said Hongkong factory its output was sold throughout the Far East (except in the Philippine Islands) concurrently with the output of the Manila factory under the trade-marks and trade names in question, except that one of the outside labels of each box or package containing the output of the said Hongkong factory there appeared the words "El Oriente Fabrica de Tabacos Hongkong, Sucursal de la Fabrica en Manila." That a facsimile of one of said covering labels marked Exhibit 1 is hereto attached and made a part hereof; 18. That the only factory belonging to the said "Sociedad Anonima" of Antwerp as the Manila factory, and the only factory belonging to the plaintiff personally or as "Gerant" of the Syndicat Oriente was the said Manila factory up until the time of the establishment of the said Hongkong factory, and thereafter the only factories owned by the plaintiff of the said Syndicat Oriente were the said Manila and Hongkong factories; 19. That the said trade-marks which are in dispute in this action were registered in the Philippine Islands in the years 18841887 as the property of the said "Sociedad Anonima" and the registration thereof in the Philippine Islands of said property was renewed in the year 1902; 20. That the said trade-marks were subsequently in the year 1903 registered on the Hongkong Register of Trade-Marks as the property of the said "Sociedad Anonima;" 21. That on or about April, 1906, the assignment of the said trade-marks to "El Oriente Fabrica de Tabacos" was registered in the Philippine Islands and in February, 1910, said trade-marks were assigned on the Hongkong register with the knowledge and authority and by direction of the plaintiff to the name of the said Syndicat under its said style of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila" as the proprietor of the said trade-marks; 22. That for many years prior to the sale by the Alien Property Custodian of the said trade-marks and trade names, the same were registered in various countries as follows: In France, Australia, New Zealand, Shanghai, and Hongkong in the name of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," seven registrations in Belgium, six of which are in the names of "El Oriente Fabrica de Tabacos, Antwerp," represented by its manager C. Ingenohl. The seventh registration is of "Imperio del Mundo, C. Ingenohl, Manila;" In the English registrations the name is "Carl Ingenohl, Managing Director of and on behalf of El Oriente Fabrica de Tabacos, Sociedad Anonima, Antwerp, Belgium and Manila, Philippine Islands;" There is but one American registration and that is of "El Cometa del Oriente," "Carl Ingenohl," giving his address at Antwerp and also conducting business under the trade name of "El Oriente Fabrica de Tabacos at 124 San Pedro Street, Manila, Philippine Islands;" The registration for Java and Sumatra reads "El Oriente Fabrica de Tabacos, C. Ingenohl;" The German registration is "El Oriente Fabrica de Tabacos, Sociedad Anonima, Emil Schoett," and one subsequent registration with the name of C. Ingenohl substituted for Schoett. But counsel for the defendant objects to the consideration of such registration as wholly immaterial and for the further reason that the defendant as purchaser of the factory and business known as "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," succeeded to all of the latter's rights under said registration; 23. That the said plaintiff on the 13th day of March, 1917, renewed the registration of the said trade-marks on the Hongkong register for a further period of fourteen years from the 15th of April, 1917, in the name of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," Proprietor; 24. That from the time of the establishment of said factory in Manila by the plaintiff, until the present time, approximately 95 per cent of the output thereof has been exported;

25. That on or about the 28th day of May, 1919, the said trade-marks and trade names known as "La Perla del Oriente" and "El Cometa del Oriente" were registered at Shanghai in the name of the defendant corporation for all of China, with the exception of the colony of Hongkong which is British territory and where separate registration proceedings were and are required. The plaintiff had no knowledge of the registration of the said trade-marks at Shanghai until requested by the defendant to enter into this stipulation of facts, and the plaintiff does not concede the validity of the said registration nor waive his right to take any action with respect thereto which he may deem suitable or proper; The said trade-marks and trade names have been registered in the name of said Syndicat Oriente under its said style of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila" at the Shanghai Customhouse since January, 1907; 26. That the registrations referred to in the last preceding paragraph by both the plaintiff and defendant were made in the same manner; 27. That the plaintiff at the time of the acceptance from the Alien Property Custodian of the proceeds of the sale of said property knew that the defendant corporation had been, ever since the purchase of said property, selling the product of said factory under said trade-marks and trade names in all of said markets hereinbefore mentioned; 28. The proceeds obtained by the Alien Property Custodian from the sale made by him as aforesaid were received by the plaintiff after the commencement of the action resulting in the judgment sued on herein, but prior to the rendition of the said judgment; 29. That the jurisdiction of the said Supreme Court of Hongkong was and is limited to the colony of Hongkong; 30. That ever since the rendition of said judgment by the said Supreme Court of Hongkong, the plaintiff through its solicitors, agents, and representatives has been and still is causing to be inserted in the leading newspapers of China, the Federated Malay States, and the Straits Settlements articles notifying the public of the rendition of said judgment, asserting the plaintiff's exclusive right to the use of said trade-marks and trade names in said countries, and threatening to take legal proceedings against any person, firm, or corporation having in their possession for sale, cigars bearing the said trade-marks and trade names which are not manufactured by the plaintiff in said Hongkong factory, and also causing notices of the same character to be given to the dealers in said countries in the cigars manufactured by defendant in said factory at Manila and sold in said countries under said trade-marks and trade names; 31. That all of the articles published in newspapers of the various countries mentioned and the notices given to the dealers in defendant's cigars were in substantially the same form; that Exhibit 3 of defendant's amended answer is a copy of a notice which the plaintiff caused to be published in the Singapore Free Press on July 11, 1922, and that Exhibit 4 of the same answer is a true copy of a notice which the plaintiff caused to be published in the North China Daily News at Shanghai on July 3, 1922, and Exhibit 5 of the same answer is a true copy of a personal notice which the plaintiff caused to be given to one of the dealers in defendant's cigars dated August 22, 1922. The foregoing admissions of fact are made on the part of plaintiff with the following reservations: 1. That the plaintiff objects to the admission in evidence and consideration by the court of the facts set forth in paragraphs 6 to 31, inclusive, on the following grounds: (a) That this Honorable Court has no jurisdiction to revise or review the judgment (Exhibit A) of the Supreme Court of Hongkong; (b) That no evidence should be received in support of the defendant's answer and counterclaim, for the reason that the same do not state facts sufficient to constitute counterclaim or defense; (c) That the facts set forth in the said paragraphs 6 to 31, inclusive, are incompetent, irrelevant and immaterial as evidence in this case. 2. That the admission of facts set forth in the said paragraphs 6 to 31, inclusive, are made for the purposes of this case only, and are not to be used against the plaintiff or defendant for any other purpose or on any other occasion. Based thereon and the other evidence in the case, the lower court rendered judgment for the plaintiff for the full amount of his claim, with interest at the rate of 6 per cent per annum from August 16, 1922, and costs, from which the defendant appeals, making the following assignments of error: I. The trial court erred in failing to find that the decision of the Supreme Court of Hongkong and the judgment which are the basis of plaintiff's complaint in this action were rendered and entered as a result of a clear mistake of law and of fact. II. The trial court erred in rendering judgment in favor of the plaintiff and against the defendant corporation for the amount claimed in the complaint. III. The trial court erred in failing to find and to take into consideration that the Alien Property Custodian of the United States in selling the Manila Cigar Factory with its goodwill, trade-marks and trade names, acted as the trustee of the plaintiff, and that the letter by applying for and accepting from the said Alien Property Custodian the proceeds of such sale, ratified the same and thereby estopped himself from denying the defendant's right to the use of said trade-marks and trade names on the exported output of said cigar factory.

IV. The trial court erred in failing to find and take into consideration that the business of the Manila Cigar Factory was almost exclusively an export business, and that the transfer of the goodwill thereof necessarily carried with it the transfer of said export business and of the trade-marks and trade names which could not be disconnected therefrom. V. The trial court erred in finding and holding that the intention of the Alien Property Custodian as evidenced by his deed of transfer to the defendant corporation of January 25, 1919, was to limit the conveyance to the property and rights of the Syndicat Oriente in the Philippine Islands and in concluding from such finding and holding that the defendant corporation was not entitled to recover under its counterclaim. VI. The trial court erred in denying defendant's counterclaim. JOHNS, J.: The important questions on this appeal are, first, the construction which should be placed upon the conveyance of the United States Alien Property Custodian to the defendant; second, the legal force and effect of the judgment which was rendered by the Hongkong court; and, third, whether or not the defendant has sustained any damages for which it can recover in this action. The conveyance in question was made on the 25th of January, 1919, and, among other things, recites: Alien Property Custodian of the United States, acting under authority of the Trading with the Enemy Act, as amended, and the proclamations and executive orders issued in pursuance thereof, does hereby grant, bargain, sell and convey to the said Walter E. Olsen & Company, its successors and assigns, all the following described property and business: All the singular the property, real and personal, rights, claims, titles, interests, effects and assets of every kind and description whatsoever (except only as specifically reserved and excepted hereinafter), whatsoever situate in the Philippine Islands, and all incidents and appurtenances thereto, including the business as going concern and the goodwill, trade names and trade-marks thereof, of Syndicat Oriente, a company formed under the laws of Belgium with its registered office in Antwerp, Belgium, and heretofore doing business in the Philippine Islands under the name "El Oriente, Fabrica de Tabacos, C. Ingenohl; etc." Then follows a long description of certain lands in the Philippine Islands, after which, the conveyance then recites: 2. The factories and other buildings located upon the above described real estate and all furniture, fixtures, machines, tools, equipment, launches and barges, materials, supplies, labels, brands, tobacco, cigars, raw stock, stock party or wholly manufactured, therein or belonging to said business. 3. All accounts receivable or other credits and all contract rights belonging to said business, except the account owing by the Orient Tobacco Manufactory of Hongkong. 4. Any interest in the foregoing which may belong to Carlos Francisco Adolfo Otto Ingenohl. The undersigned Alien Property Custodian expressly excepts and reserves from this sale all Liberty Bonds of the United States and the above account of the Orient Tobacco Manufactory of Hongkong owned by said business. Neither the United States nor the Alien Property Custodian nor any representative or agent or agency thereof shall be held or admitted to make any representation or guaranty, express or implied, concerning, or in any way respecting the above property or business. It is contended by the plaintiff that the words "wheresoever situate in the Philippine Islands" are words of limitation, and that the future use of the trade-marks and trade names by the defendant should be confined and limited to the Philippine Islands. It appears that the property in question was seized and taken over by the United States under the terms and provisions of the Trading with the Enemy Act, and that it was sold and conveyed to the defendant under such provisions at the agreed purchase price of P2,350,000, and that the Syndicat Oriente was a company organized under the laws of Belgium with its registered office in Antwerp, and that it was an enemy of the United States, as defined in said Act, not holding a license granted by the President under said Trading with the Enemy Act, "which the President after investigation has determined was so owing, or so belonged, or was so held." At the sale the defendant was the highest and best bidder and paid the amount of its bid, in consideration of which the deed in question was executed. For the purpose of this opinion, we must assume that as a war measure, the Government of the United States had a legal right to seize and sell the property, and that the conveyance which it made was valid. That fact is not and cannot be questioned. It follows that the property sold was owned and held by an alien enemy. The primary purpose of the proceeding was to seize, sell and convey any and all of the property owned and held by the company or Ingenohl within the jurisdiction of the United States, as a war measure, upon the ground that they were alien enemies of the United States. While ostensibly the corporation in question was organized under the laws of Belgium, yet in truth and in fact it was a one-man corporation in which Ingenohl, who was a citizen of Germany, owned nearly all of the stock, and to all intents and

purposes was the corporation itself. The conveyance to the defendant must be construed in the light of the existing and surrounding circumstances, and the purpose and intent for which it was made. Although there are no covenants or warranties in the conveyance, the primary purpose of the whole proceedings on which it was founded was to wipe Ingenohl and his company out of existence and put them out of business in so far as the United States had the power to do so. For such reasons, it should be the policy of the law to sustain rather than defeat the primary purpose of the proceedings. In other words, the conveyance should be construed so as to give full force and effect to the nature and purpose of the proceedings upon which it is founded. It was not the purpose of the United states to seize and take hold of a portion of plaintiff's property or that of his company within its jurisdiction. It was the purpose of the United states to seize all of their property, real, personal, or mixed within its jurisdiction. The conveyance in question must be construed as intended to convey to the defendant all property which either Ingenohl or his company had within the jurisdiction of the United States. Any other construction would be strained and unnatural and defeat the very purpose for which the proceedings were initiated. The remaining question then is, what property did the plaintiff or his company have within the jurisdiction of the United States, and what property did the United States seize and convey to the defendant. The deed to the defendant recites that it conveyed all and singular property of every kind, nature and description wheresoever situate in the Philippine Islands, and all incidents and appurtenances thereto, including the business as a going concern and the goodwill, trade-marks and trade names of the company doing business in the Philippine Islands under the name of "El Oriente Fabrica de Tabacos, C. Ingenohl." It is vigorously contended that the words "trade-marks and trade names," as used therein, should be confined and limited to their use in the Philippine Islands. That when the defendant bought the property, it did not purchase the right to the use of the trade names or trade-marks of the company outside of the Philippine Islands. The meaning of such words should be construed in connection with what follows: All accounts receivable or other credits and all contract rights belonging to said business, except the account owing by the Orient Tobacco Manufactory of Hongkong. The deed further conveys an express reservation: The above account of the Orient tobacco Manufactory of Hongkong owned by said business. It will be noted that nothing whatever is said about trade names or trade-marks in such reservations. If it was not the purpose and intent of the conveyance to sell and convey any and all of the trade names and trade-marks of the company and to the use thereof wheresoever situate, it would have been a very easy thing to have made an express reservation of them of the same tenor as the reservations, "except the account owing by the Orient Tobacco Manufactory of Hongkong" and "the above account of the Orient Tobacco Manufactory of Hongkong owned by said business." Nothing whatever is said about trade-marks or trade names in either one of them. Yet, at the time the deed was made a number of trade-marks were registered in other and different countries outside of Hongkong, and the products of the Manila factory were sold in those foreign countries under such registered trade names and trade-marks. Again, it is stipulated that the trade-marks which are in dispute were registered in the Philippine Islands in the years 1884 and 1887, as the property of the "Sociedad Anonima," and that such registration was renewed in the year 1902. That in the year 1903, said trade-marks were also registered on the Hongkong register of trade-marks as the property of the said "Sociedad Anonima ." That in April, 1906, the assignment of said trade-marks to "El Oriente Fabrica de Tabacos" was registered in the Philippine Islands, and in February, 1910, the same trade-marks were assigned on the Hongkong register with the knowledge and authority and by direction of the plaintiff in the name of said Syndicat under the style of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," as proprietor of said trade-marks. That for many years prior to the sale of the property, the trade-marks and trade names in question were registered in France, Australia, New Zealand, Shanghai and Hongkong in the name of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," seven registrations in Belgium, six of which are in the names of "El Oriente Fabrica de Tabacos, Antwerp," represented by its manager C. Ingenohl, the seventh registration of which is of "Imperio del Mundo, C. Ingenohl, Manila." In the English registrations, the name is "Carl Ingenohl, Managing Director of and on behalf of El Oriente Fabrica de Tabacos, Sociedad Anonima, Antwerp, Belgium and Manila, Philippine Islands." The registration for Java and Sumatra reads: "El Oriente Fabrica de Tabacos, C. Ingenohl." The German registration is "El Oriente Fabrica de Tabacos, Sociedad Anonima, Emil Schoett," and a later one was the name of C. Ingenohl substituted. That on March 13, 1917, the plaintiff renewed the registration of the trade-marks on the Hongkong register for a further period of fourteen years from the 15th of April, 1917, in the name of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila," proprietor. It is further stipulated: That from the time of the establishment of said factory in Manila by the plaintiff, until the present time, approximately 95 per cent of the output thereof has been exported. It also appears that the Manila factory was established some time prior to 1884, and that all of the trade-marks in question are typical of some thing, person or event, and that all of them have some peculiar and distinct feature typical of the Philippine Islands.

But also appears that all of said trade-marks had their origin and were in use in the factory in the Philippine Islands long before any factory was established in Hongkong, and that the products of the Manila factory with such trade-marks on them were sold throughout the Orient, and even in Hongkong, long before the Hongkong factory was established. That all of such trade-marks were used in, connected with, and were a part of, the original business of the company in the Philippine Islands. That the trade-marks registered in Hongkong were the identical trade-marks, both in form and substance, which for a number of years had been previously in use and registered by the Manila factory in the Philippine Islands. In other words, it clearly appears that all of the trade-marks in question were created, had their origin, growth and development in the business of the Manila factory, and were identified, connected with, and a part of, its business. That any registration of such trade-marks in any foreign country was based and founded upon original trade-marks which had their origin and primary use in the Manila factory, and which for many years had been previously used and registered as such trade-marks in the Philippine Islands. It must follow that all of the trade-marks in question were connected with, belonged to, and were a part of, the business of the company as a going concern in the Philippine Islands. Upon the question of the territorial limitation of a trade-mark, Ruling Case Law, volume 26, pages 839-840, says: 12. Territorial limitation. — The right of property in a trade-mark is not limited in its enjoyment by territorial bounds, but may be asserted and maintained wherever the common law affords remedies for wrongs, subject only to such statutory regulations as may be properly made concerning the use and enjoyment of other property. It is a general rule that a trademark granted in a foreign country to an alien friend will be protected against infringement. But the doctrine that property in a trade-mark is not limited in its enjoyment by territorial bounds, but may be asserted and protected wherever the law affords a remedy for wrongs, is true only in a limited sense. Into whatever markets the use of a trade-mark has extended, or its meaning has become known, there the manufacturer or trader whose trade is pirated by an infringing use will be entitled to protection and redress. This does not mean that the proprietor of a trade-mark, good in the markets where it has been employed, can monopolize markets that his trade has never reached. The mark, of itself, cannot travel to markets where there is no article to wear the badge and no trader to offer the article. . . . We hold that the trade-marks and trade names in question were a part of the company's business in the Philippine Islands, and that the defendant acquired title to the use and enjoyment of them by its deed of conveyance, not only in the Philippine Islands, but in all foreign countries in the same manner and to the same extent that they were used by the company and Ingenohl prior to the time that their property was seized by the United states. That the right and title to all of such trade-marks and to their use passed by the conveyance made to the defendant. The stipulation of facts shows that from the time the Manila factory was established by the plaintiff until the present, approximately 95 per cent of the gross output of the factory has been exported. To now give the plaintiff the use and benefit of 95 per cent of the trade-marks and trade names formerly owned by himself and his company, would be a gross fraud and would defeat the very purpose for which their property was seized and sold. That would be especially true, as in this case, where the plaintiff has received and accepted the net proceeds of the sale which the United States made to the defendant. The case of Koppel Industrial Car & Equipment co. vs. Orenstein & Koppel Aktiengesellschaft, vol. 289, Fed., advance sheets No. 3, p. 446, decides that: Where the Alien Property Custodian sold the American business and goodwill of a going concern, including its trade-marks and trade names, which company was the outgrowth of a German corporation which was organized as an American subsidiary corporation, and which was sold under section 12 of the Training with the Enemy Act, as enemy owned property, to a new corporation; Held, that the new corporation was entitled to injunctive relief restraining the German corporation or its agents from endeavoring to recapture the business so sold by entering the field after the war, using the same or similar trade names and representing themselves to be the successors to the first American concern. Held, further, that under section 12 of the Trading with the Enemy Act there vested in the Alien Property Custodian all the powers of a common-law trustee in respect of all property, and a conveyance by him of this German owned property as a going concern, which included the goodwill, registered and unregistered trade-marks, carried with it an implied covenant against the former owners entering the field in interference with the trade names and goodwill so conveyed. The legal effect of this very recent decision is to hold that in conveyances made by him, the Alien Property Custodian has all the powers of a common-law trustee, and that a conveyance of a business as a going concern, including the goodwill and trade-marks, carried with it an implied covenant against the former owner entering the field of the former business or interfering with the trademarks and the goodwill conveyed. In the instant case, the plaintiff, after accepting the proceeds of the sale, has not only become an active competitor of the purchaser of the business, but is claiming and exercising the right of an absolute owner to the use and benefit of 95 per cent of all the business evidenced by the trade-marks and trade names. It is a matter of common knowledge that trade-marks and trade names are very often the most valuable assets of any business. We are construing a deed of conveyance from the United States to the defendant. The primary purpose of the whole proceeding was to seize and convey all of the property of the plaintiff or his company within the jurisdiction of the United States, including trade names and trade-marks as those of an alien enemy. To now give the defendant the use and benefit of only 5 per cent of such

trade names and trade-marks, and to permit the plaintiff to have and retain the other 95 per cent to his own use and benefit after he has ratified and confirmed the sale, would impugn the honor and good name of the United States in the whole proceeding and defeat the very purpose for which it seized and sold the property of an alien enemy. Under the established facts, both plaintiff and his company were alien enemies, and as a war measure all of their property within its jurisdiction was seized and held by the United States under the Trading with the enemy act. As stated, the primary purpose of that proceeding, because they were alien enemies, was to wipe them out of existence and put them out of business. As a condition precedent to its purchase, the defendant had to establish the fact that it was an American citizen and loyal to the United States. The reservations made in the deed of conveyance are "except the account owing by the Orient Tobacco Manufactory of Hongkong" and "the above account of the Orient Tobacco Manufactory of Hongkong owned by said business," and they are the only reservations made. It is very apparent that the purpose and intent of the United States was to sell and convey all other property of Ingenohl or his company within its jurisdiction. The legal force and effect of plaintiff's contention is to claim and assert that the United States did not seize or take over the most valuable part of his assets and those of the company within its jurisdiction, and that it did not sell it to the defendant. In other words, the most valuable part of their assets was not seized or taken over by the United States. This position is not tenable. The very fact that the above quoted reservations were made in the deed of conveyance, and that no other reservations were made, clearly implies that it was the purpose and intent of the United States to seize and take over all of the business and assets of the plaintiff and his company, except "the amount owing by the Orient Tobacco Manufactory of Hongkong" and "the above account of the Orient Tobacco Manufactory of Hongkong owned by said business." Any other construction would be strained and unnatural, and would clearly imply the neglect of official duty on the part of the United States Government. The trade-marks in question were the creature of, and had their inception in, the Manila factory, and were incidental to, connected with, and are a part of, the business of that factory, and it is very apparent from the nature of the whole proceedings and the deed itself that it was the purpose and intent of the United States to convey all of the business of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila" as a going concern and that of the plaintiff, together with the right and title to the trade-marks in question and to their use and enjoyment, except only as to the reservations which are expressly made in the deed for "the account owing by the Orient Tobacco Manufactory of Hongkong" and "the above account of the Orient Tobacco Manufactory of Hongkong owned by said business." For such reasons, the first questions should be decided against the plaintiff and in favor of the defendant. As to the second question, the legal force and effect of the judgment of the Hongkong court. It is stipulated that it is a court of general jurisdiction. That the defendant appeared, filed, answered and contested the action, and that as a result of the trial, that court rendered the following judgment: First, that the plaintiff is the proprietor of the trade-marks and trade names, the subject-matter of this action, and is entitled to the use of them in connection with his business as a cigar manufacturer. Second, that the defendant be restrained from selling or exposing for sale in boxes or packages bearing thereon the said trade-marks and trade names, and from using any labels or stamps or advertisements in imitation thereof, designed to represent that the cigars sold by the defendant are the cigars manufactured and sold by the plaintiff under the trade-marks and trade names in question. Third, that an account be taken and that based thereon, the defendant should pay to the plaintiff the amount of damages which he has sustained. Fourth, that the defendant deliver up upon oath or destroy all articles and things in its possession or under its control which offend against this injunction, and that plaintiff recover from the defendant his costs of the action upon the claim or counterclaim of defendant, including attorney's fees, which are hereby taxed and allowed in the sum of $26,244.23, as appeared by the registrar's certificate. It appears that under the law of the Hongkong court, judgment for attorney's fees is allowed to the prevailing party against the defendant in this kind of a case as an incident to the action. In other words, if the judgment on the merits is sustained, it would carry with it the judgment for the $26,244.23 as a valid and legal part of it. The instant case is an action to procure and enforce a judgment in the Philippine Islands for a like amount founded upon the judgment and proceedings in the Hongkong court. That judgment having been rendered by a court of competent jurisdiction which had jurisdiction of the parties and the subject-matter of the action, it is vigorously contended by the appellee that he is entitled as a matter of right and of comity under the Law of Nations, to enforce it in the Philippine Islands, citing and relying upon the case of Hilton vs. Guyot (159 U.S., 113; 40 Law. ed., 95), in which, among other things, the court says: In view of all the authorities upon the subject, and of the trend of judicial opinion in this country and in England following the lead of Kent and Story, we are satisfied that where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect, the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new trial or an appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact. . . . That is a leading case of the highest court in the land, and the opinion is exhaustive on the question involved, and we have read it with care. Among other things, the syllabus says:

1. International law, including questions concerning the rights of persons within the dominion of one nation by reason of acts done within the dominion of another, is part of our law, and should be ascertained and administered by the courts as often as such questions are duly submitted to their determination. 2. Where there is no written law upon the subject, such as treaty or statute, questions of international law must be determined by judicial decisions, the works of jurists, and the acts and usages of civilized nations. 3. 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 to international duty and convenience, and to the rights of its own citizens or others who are under the protection of its laws. xxx xxx xxx 6. A foreign judgment for money in favor of a citizen of the foreign country against a citizen of this country, rendered by a competent court having jurisdiction of the cause and of the parties, upon due allegations and proofs and opportunity to defend according to the course of a civilized jurisprudence, whose record is clear and formal, is prima facie evidence, at least, in a suit upon it in this country, and is conclusive on the merits, unless impeached on special ground, or shown by international law or the comity of this country not entitled to full faith and credit. All of which are sustained in the opinion and must be accepted by this court as the law. It will be noted that in section 2, (syllabus) it is said: Where there is no written law upon the subject, such as treaty or statute. It is not claimed that there is any treaty, but section 311 of the Code of Civil Procedure is as follows: Effect of other foreign judgment. — The effect of a judgment of any other tribunal of a foreign country, having jurisdiction to pronounce the judgment, is as follows: 1. In case of a judgment against a specific thing, the judgment is conclusive upon the title to the thing; 2. 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. It is conceded that the Hongkong court had jurisdiction and that the defendant appeared in the action and contested the case on its merits. Hence, there was no collusion. Neither is it claimed that there was any fraud, but it is vigorously contended that the Hongkong judgment was a clear mistake of both law and fact. We have read and reread with care the exhaustive opinion rendered by the Hongkong court, which had before it all of the evidence now before this court, except as to the proof of the defendant in the instant action on its counterclaim for damages. The Hongkong court was construing the deed of conveyance made to the defendant founded upon the proceeding which the United States took as a war measure against the plaintiff and his company, as alien enemies, under its Trading with the Enemy Act. For the purposes of this opinion, all of such proceedings must be construed as legal and valid, the scope and nature of which is very apparent from the record. The plaintiff and his company were alien enemies of the United States, and it was for such reason that their property was seized and sold to the defendant for P2,350,000, which amount was paid as the purchase price. The record shows that the original business of the company in the Philippine Islands was established as early as 1883, and that in connection with and as a part of its business the company had used and adopted the trade-marks in question and had them registered in the Philippine Islands as early as 1883. All of those trade-marks appear upon their face to be confined to and peculiar of persons or things in the Philippine Islands. On the strength of their use, adoption and registration in the Philippine Islands, in succeeding years, they were registered in many foreign countries in which a large amount of business was done by the company in cigars, cigarettes, and tobacco manufactured in the Philippine Islands, all of which were evidenced by such trade-marks. The stipulated facts show that 95 per cent of all of its business was export, and that all of its products were designated and labeled with the trade-marks and trade names in question. That in later years a branch factory of the business was established in Hongkong. At the sale by the United States of the business, the defendant paid P2,350,000 in good faith, and took over the property and assets of the company, including its trade-marks and trade names and its business as a going concern, except "the account owing by the Orient Tobacco Manufactory of Hongkong" and "the above account of the Orient Tobacco Manufactory of Hongkong owned by said business." After the sale, the plaintiff took and accepted the net proceeds and put them in his pocket and is now using them in connection with the Hongkong factory not only as a competitor of the defendant, but claiming to be the absolute owner and to have the exclusive right to the use and benefit of the trade-marks and trade names in question. With all due respect to the Hongkong court, its judgment is a clear mistake of both law and fact. Exclusive of the provisions of section 311 of the Code of Civil Procedure, it is very doubtful whether it could be sustained upon the ground of comity or the Law of Nations. The proceedings were initiated during the world war, and as a war measure, by the Government of the United States, an ally of Great Britain, of whose judiciary the Hongkong court is a branch. Under such conditions and the law of comity and of Nations, there are many and strong reasons why the Hongkong court should have upheld and sustained the proceedings of the United States in the seizure and sale of the property of an alien enemy. It overlooked the fundamental fact of the primary purpose and intent with which the seizure was made and the property sold, and that it was all done as a war measure by an ally of Great Britain. The legal force and effect of that decision is to defeat and destroy the very purpose for which the United States seized and sold the property, took and accepted defendant's money. As between allied nations and under the law of comity, their mutual policy should be to sustain and enforce the spirit and intention with which the seizure and sale of any property of an alien enemy was made rather than to minimize, destroy or defeat them.

If the decision of the Hongkong court is the law, in legal effect the defendant paid P2,350,000 for the right and privilege of doing 5 per cent of the business which was formerly done by the company, and the plaintiff and his company have received and accepted $1,511,124.50, the full amount of the purchase price of all of the property, and now have and own the exclusive right to the remaining 95 per cent of all of the business which the company owned and operated at the time of the seizure and sale. In its final analysis, that is the logical result of the Hongkong decision. We frankly concede that the authorities cited in that opinion are good law, but they are not in point, for the simple reason that they are founded upon other and different facts. The purpose and intent of the whole transaction is apparent upon the face of the deed of conveyance, the stipulated facts and the nature of the proceedings. It was to seize and take over the property of an alien enemy as a war measure, and to hold it in the nature of a trust or as a trustee for it or him, and in the event of a sale of the property, as in this case, to hold the proceeds in trust. Be that as it may, this court is bound be section 311 of the Code of Civil Procedure. In so far as we are advised, the question here is one of first impression, and no other country has a like statute. That law was enacted by the Legislature of the Philippine Islands, and as to the Philippine Islands, it is the law of the land. In the absence of that statute, no matter how wrongful the judgment of the Hongkong court may be, there would be strong reasons for holding that it should be enforced by this court. Such is the legal force of the well considered decision in Godard vs. Gray, English Ruling Cases, volume 5, p. 726, where it is held: It is no bar to an action, on a judgment in personam of a foreign court having jurisdiction over the parties and cause, that the foreign tribunal has put a construction erroneous, according to English law, on an English contract. And in the case of Schibsby vs. Westenholz, in the same volume, p. 734, it is further held: A judgment of a foreign court, obtained in default of appearance against a defendant, cannot be enforced in an English Court, where the defendant, at the time the suit commenced, was not subject of nor resident in the country in which the judgment was obtained: for there existed nothing imposing on the defendant any duty to obey the judgment. The distinction is very clear. But in the instant case, the defendant not only appeared in the Hongkong court, but there contested the case on its merits. But here we have a statute which clearly defines the specific conditions upon which a foreign judgment can be enforced in the Philippine Islands, and we have a decision of the United States Supreme Court which holds that "where there is no written law upon the subject, such as treaty or statute, questions of international law must be determined by judicial decisions, the works of jurists, and the acts and usages of civilized nations." The converse of that proposition is also true that where you do have a treaty or statute, to enforce a foreign judgment, it must come under and within the specific provisions of the treaty or statute. The judgment which is here sought to be enforced is clearly a mistake of both law and fact, and was rendered in direct conflict with that comity between nations, which should exist among those which were allies in the world war. Upon the second question, we do not hesitate to say that the judgment rendered in the Hongkong court was a clear mistake of both law and fact, and that it ought not to be enforced in the Philippine Islands. Upon the third question, as to the damages claimed by the defendant, it is alleged that after obtaining the proceeds from the sale, the plaintiff in violation of the conveyance to the defendant, which he had ratified, wrongfully instituted an action in the Supreme Court of the colony of Hongkong against the defendant in which he claimed to be the sole owner of the trade-marks in question, which up to that time had been a mere branch of the Manila factory, and that he secured from that court the decision in question. That although the judgment of the Hongkong court has no extraterritorial effect, the plaintiff in violation of the terms of such sale and conveyance, ever since the rendition of said judgment, through his agents and solicitors, has been and is still wrongfully causing to be inserted in the leading newspapers of China, the Federated Malay States, the Straits Settlements and elsewhere, "articles notifying the public of the rendition of said judgment, asserting the plaintiff's exclusive right to the use of said trade-marks and trade names in said countries and threatening to take legal proceedings against any person, firm, or corporation having in their possession for sale cigars bearing the said trade-marks or trade names, which are not manufactured by the said branch factory at Hongkong, and also causing notices of the same character to be given to the dealers in said countries in the cigars manufactured by the defendant in said cigar factory at Manila and sold in said countries under said trade-marks and trade names." That by reason of the threats made and the articles published, all the dealers in the cigars of the defendant labeled with the trade-marks in question were intimidated and deterred from further dealing in defendant's cigars and that they cancelled all pending orders, have refused to make further purchases of defendant's cigars without guaranties for their protection, and that the goodwill of the business and the value of the trade-marks in question had been totally destroyed, and the defendant has been wrongfully deprived of the use and enjoyment and the goodwill of its business to its damages in the sum of P1,000,000. It is not claimed or alleged that the plaintiff in any manner injured or interfered with defendant's business prior to the rendition of the Hongkong judgment. The articles published in the newspapers are attached to and made a part of defendant's counterclaim for damages. When analyzed they are nothing more than a statement to the effect that the judgment had been rendered by the Hongkong court and the nature and extent of the judgment, and that it was the purpose and intent of the plaintiff to claim the use and benefit of it and to enforce it. After the judgment was rendered, he had a legal right to do that. The law is well stated in Hopkins, on trade-marks, page 374:

It is the general rule that a notice warning the public or specific dealers or users of a suit for patent infringement is not actionable unless it appears that the notices were not given in good faith, or that they were entirely without foundation in the scope of the defendant's patent. The determination of the question of bona fides in the making of such threats is obviously of great difficulty at times. "The question whether the patent owner is acting in good faith in advertising his claims to the manufacturer's customers by circulars or letters can seldom be determined from the contents of the communication alone, and, like all questions of intent, must generally be determined by the extrinsic facts.". . . In Clip Bar Manufacturing Co. vs. Steel Protected Concrete Co. (209 Fed., 874), the court said: Notices of claims of infringement given by the owner of a patent to customers of a manufacturer of a similar article, or even threats of suit, if in good faith, are within its rights and not actionable as acts of unfair competition. Facts: The plaintiff moves for a preliminary injunction to restrain the defendant from making representations to the plaintiff's customers that defendant's patent No. 727, 233 declared invalid in a suit brought by the defendant against the Central Improvement & Contracting Company in the Circuit Court for the Eastern District of Louisiana (155 Fed., 279), affirmed by the Circuit Court of Appeals in 158 Fed., 1021; 85, C.C.A., 7, is valid, or being infringed by the plaintiff or its customers, and from threatening orally or in writing the plaintiff's customers with threats of litigation for infringement of its patent. xxx xxx xxx It nowhere appears on the record that the notices given to the plaintiff's customers were not in good faith or that they were false or malicious or for the purpose of destroying the business of the plaintiff. To the contrary, the defendant, so far as appears, believing its claims to be valid, has proceeded to bring suit in this district to establish infringement. Under these circumstances, it must be held for the purposes of the present motion that the defendant is acting within its rights. (209 Fed., 874.) In United Electric Co. vs. Creamery Package Manufacturing Co. (203 Fed., 53), the court said: It is within the right of the owner of a patent, notwithstanding the pendency of suits against the manufacturers of alleged infringing articles, to notify users of such articles of its claims, and its intention to protect its rights by suits against users, provided such notices contain no misstatements of fact and are sent in good faith, and not for the purpose of unnecessarily injuring defendant's business . . . As a second basis for the recovery of damage, the plaintiff contends that the defendant circulated among the agents, users, purchasers and prospective purchaser of the churns of the plaintiffs, located in different states, reports and statements that the combined churns and butter workers sold by plaintiff were infringements of the Desbrow patents owned and controlled by the defendant and that they threatened to bring suits against the users of the plaintiff's churn. That the owner of a patent may notify infringers of his claims and warn them that unless they desist, suits will be brought to protect him in his legal rights, is sustained by numerous decisions. The only limitation on the right to issue such warning is the requirement of good faith. There is nothing in the warnings given in this case to show that the letters or notices were false, malicious, offensive, or opprobrious, or that they were used for the willful purpose of inflicting injury. Applying the law to the facts, the plaintiff did nothing more than to advise the cigar dealers of the force and effect of the Hongkong judgment, and that defendant was therein enjoined from selling cigars bearing the trade-marks in question. That was a statement of an actual fact. It is true that the defendant may have been damaged as a result of such notices and publications. If so, it was a damage without injury, for which it has no legal redress. After a careful consideration, it is the judgment of this court, first, that the words "wheresoever situate in the Philippine Islands" are not words of limitation in the deed of conveyance to the defendant company or the business as a going concern, the goodwill, the trade names or trade-marks of the Syndicat Oriente or the plaintiff; second, that the defendant is the exclusive owner of the business of the plaintiff and his company as a going concern, and has the absolute title and right to all of the trade-marks in question and to their exclusive use and enjoyment not only in the Philippine Islands, but in all other countries where they are duly registered, save and except as to the reservations only of "the account owing by the Orient Tobacco Manufactory of Hongkong" and "the above account of the Orient Tobacco Manufactory of Hongkong owned by said business," which were mad in its deed of conveyance; third, that the judgment of the Hongkong court is a clear mistake of both law and fact, and for such reason should not be enforced in the Philippine Islands; fourth, that the defendant is not entitled to recover any damages on its counterclaim; and fifth, that the judgment of the lower court should be reversed, and that neither party to recover costs in the lower court or on this appeal. So ordered. Villamor, Ostrand, and Romualdez, JJ., concur. Johnson, J., took no part in the consideration of this case. Separate Opinions STREET, J., concurring and dissenting: I concur except in the disposition made of the cross-complaint, in respect to which I am of the opinion that the defendant is entitled to damages. MALCOLM and AVANCEÑA, JJ., dissenting: The plaintiff was successful in the Court of First Instance of Manila in enforcing so much of a judgment rendered by the Supreme Court of Hongkong as allowed him costs, in a case in which the plaintiff herein was plaintiff and the defendant herein was defendant. On appeal, the prevailing view in the court denies to the defendant-appellant the right to recover on its counterclaim, but sets aside the judgment of the trial court for the principal reason that the judgment of the Supreme Court of Hongkong, which is the basis of plaintiff's complaint, was entered as a result of a clear mistake of both law and fact. We agree with the disposition of the appeal as it affects the counterclaim but disagree as it affects the judgment secured by the plaintiff in the lower court.

We shall stoutly maintain in this dissent that the Supreme Court of Hongkong was right in its judgment, but that, even if that judgment be conceded to be wrong, no such clear mistake of law or fact was committed as justifies the Supreme Court of the Philippine Islands in, in effect, retrying the case and reversing the Supreme Court of Hongkong. If for no other reason than judicial courtesy and international comity, we should, as far as feasible, try to put ourselves in the position of the distinguished Judge who handed down the decision in Hongkong and should try, as we think is proper, to interpret his viewpoint. That will be our purpose. We begin with a statement of the case. Carl Franz Adolf Otto Ingenohl, the present plaintiff, is a resident of Hongkong. In the Supreme Court of Hongkong, he instituted suit to enjoin the use by Walter E. Olsen and Company, Inc., within the colony of Hongkong, of certain trade-marks which the defendant claimed to have acquired by purchase from the United States Alien Property Custodian, and to secure damages. The defendant, by counterclaim, asked for an injunction and damages. A trial extending over a considerable period of time was had, evidence was produced by the parties, and learned counsel were heard. On May 5, 1922, the Supreme Court of Hongkong, having acquired jurisdiction over both the plaintiff and the defendant, rendered judgment in favor of plaintiff and against defendant. The decision of his Honor, W. Rees Davies, after stating in a fair and comprehensive manner the respective views of the parties and the facts, came to the conclusion that the case was covered by the authority of the Chartreuse Case, Rey vs. Lecouturier ( [1908] 2 Ch., 715; [1910] A.C., 362). According to the court "To apply the decision to this case the trade-marks in question had been registered many years before in Hongkong, the cigars admittedly had for a long time acquired a reputation in the Hongkong market, and the assignment by the Custodian of the assets in the Manila firm cannot have any extraterritorial effect so as to affect the rights of the party concerned in Hongkong whoever that party may be." The court, further, reached the conclusion that the articles of the "Syndicat Oriente" should "be construed according to Belgian Law." It was therefore adjudged that the plaintiff was the sole proprietor of the trade-marks and trade names, the subject matter of the action, and was entitled to the exclusive use of the said trade-marks and trade names in connection with his business as a cigar manufacturer; that the defendant and others acting under his direction and instruction, be restrained from selling cigars in boxes bearing the said trade-marks and trade names; that an accounting be had, and that the plaintiff recover against the first defendant his costs of action. No appeal from the judgment of the Hongkong Supreme Court was taken by defendant. Costs were taxed in the Supreme Court of Hongkong in favor of the plaintiff and against the defendant in the sum of $26,224.23, Hongkong currency. It was to recover the equivalent of this sum, computed at P31,099.41, Philippine currency, that action was begun in the Court of First Instance by Ingenohl against Olsen and Company. Walter E. Olsen & Company, Inc., is a Philippine corporation, having its principal place of business in the City of Manila, Philippine Islands. It was the defendant as above indicated in Hongkong. It again became defendant when this suit was instituted in the Philippine courts. Defendant then presented an answer and a counterclaim. It alleged that the decision of the Supreme Court of Hongkong was the result of a clear mistake of law and fact. It relied upon the sale to the defendant at public auction, by the United States Alien Property Custodian of property belonging to the plaintiff, in consideration of the sum of P2,350,000, including the cigar and cigarette factory, situated in the City of Manila, Philippine Islands, known as "El Oriente Fabrica de Tabacos, C. Ingenohl;" following the sale, the plaintiff for himself and as gestor and representative of the "Syndicat Oriente" collected the purchase price of the property from the Alien Property Custodian. Allegations were also made intended to prove damages in the amount of P1,000,000. The plaintiff filed a demurrer to the special defense and counterclaim of the defendant on the grounds that the court had no jurisdiction of the subject matter of the action, and that the defense and counterclaim did not state facts sufficient to constitute a defense or counterclaim. The parties entered into an agreed statement of facts. Judge Imperial in his decision speaking of the Hongkong judgment remarked: "From a careful examination of the decision rendered by the Chief Justice of the Supreme Court of the Hongkong colony, it will be observed that in adjudicating the case and rendering judgment in favor of the then and now plaintiff, a minute examination was made not only of the laws applicable to the case, but also of the evidence and the facts supporting the complaint. It will likewise be noted that the principal ground of the judgment consisted in the interpretation that was given to the contract of sale executed by the Alien Property Custodian in favor of the defendant Walter E. Olsen and Co., Inc., it having been established that judging from the very terms of the deed of transfer, the aforesaid defendant had not acquired any title to, nor the right to use, the trade-marks and trade names that were being used by the plaintiff in the City of Hongkong, that the rights acquired by the defendant had to do with the properties situated in the Philippine Islands and not in the colony of Hongkong, and that, lastly, the contract of sale was not to be given an extraterritorial effect." Then after examining the bill of sale, the trial judge continued: "In the phraseology of said deed there is nothing tending to show that it was the intention of the Alien Property Custodian to sell other rights or properties situated outside of the Philippine Islands or within the Hongkong colony. For this reason the decision and judgment rendered by the Supreme Court of said city were in accordance with law and the facts proven. For this same reason the defense set up by the defendant appears untenable and must be overruled." By the judgment, the defendant was ordered to pay the plaintiff the sum of P31,099.41, with legal interest and costs. The counterclaim of the defendant was dismissed. On appeal, the major issue is as framed in appellant's first assignment of error. To quote: "The trial court erred in failing to find that the decision of the Supreme Court of Hongkong and the judgment which are the basis of plaintiff's complaint in this action were rendered and entered as a result of a clear mistake of law and of fact." We turn first to the facts mostly stipulated and concerning which there is little dispute. Plaintiff Ingenohl was born in Germany but is a naturalized Belgian subject. In 1882, he, in conjunction with others, founded in Antwerp, Belgium, a company under the style of "El Oriente Fabrica de Tabacos Societe Anonyme." Ingenohl was the

"Administrator Directuer" of the society. This company continued until 1905 when it went into voluntary liquidation. On November 28 of that year, an "Association in participation governed by the laws of Belgium under the denomination of Syndicat Oriente" was formed. The head office of the association was to be at Antwerp, Belgium. In 1906, the "Societe Anonyme" transferred all of its business interests and assets, together with the goodwill and the trade-marks and trade names, to Ingenohl. The "Societe Anonyme," in 1882, opened a branch factory in Manila under the same name. It continued until 1905-1906 when, as above stated, it was taken over by Ingenohl, and called "El Oriente Fabrica de Tabacos, C. Ingenohl." In 1908 and 1909, Ingenohl, as "Gerant" of the "Syndicat Oriente," opened a cigar factory in Hongkong under the name of "The Orient Tobacco Manufactory." The output of the factory was composed in part of tabacco supplied by "El Oriente Fabrica de Tabacos" in the Philippines, and in part of tobacco wrapper imported from Java. This business was carried on in Hongkong until the present. The trade-marks which are in dispute were registered in the Philippine Islands in the years 1884-1887 as the property of the "Societe Anonyme." Registration was renewed in the Philippines in 1902. The trade-marks were likewise registered in the Hongkong Registry of Trade-Marks as the property of the "Societe Anonyme." In 1906, the assignment of the trade-marks to "El Oriente Fabrica de Tabacos" was registered in the Philippine Islands. In 1910, the assignment of the trade-marks was registered in Hongkong under the style of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila." As to this, the Registrar of Trade-Marks at Hongkong testified, during the hearing in Hongkong, that the description was regarded as the name under which Ingenohl was trading, and the Ingenohl had registered other marks in the name "Orient Tobacco Manufactory, C. Ingenohl, Mong Kok in the Colony of Hongkong." In 1917, Ingenohl renewed registration of the trade-marks in Hongkong for a period of fourteen years for "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila." The trade-marks and trade names were registered in France, Australia, New Zealand, Shanghai, and Hongkong in the name of "El Oriente Fabrica de Tabacos, C. Ingenohl, Manila." Six registrations in Belgium were in the name of "El Oriente Fabrica de Tabacos, Antwerp" and the seventh registration was in the name of "Imperio del Mundo, C. Ingenohl, Manila." In England, the registrations were in the name of "Carl Ingenohl, Managing Director of and on behalf of El Oriente Fabrica de Tabacos, Sociedad Anonima, Antwerp, Belgium, and Manila, Philippine Islands." The registration for Java and Sumatra was in the name of "El Oriente Fabrica de Tabacos, C. Ingenohl." The registration for Germany was in the name of "El Oriente Fabrica de Tabacos, Sociedad Anonima, Emil Schoett." The sole American registration was that of "El Cometa del Oriente," "Carl Ingenohl" giving his address as Antwerp and also as conducting business under the trade name of "El Oriente Fabrica de Tabacos at 125 San Pedro Street, Manila, Philippine Islands." Subsequent to the establishment of the Hongkong factory, its output was sold throughout the Far East, except in the Philippine Islands, concurrently with the output of the Manila factory under the trade-marks and trade names in question. Approximately 95 per cent of the output of the Manila factory was exported. Such in general was the situation until the time of the Great War. Then in 1919, the United States Alien Property Custodian accomplished a sale to Walter E. Olsen and Co., Inc., "for the benefit of the company known as Syndicat Oriente, a company formed under the laws of Belgium with its registered office at Antwerp, Belgium." The sale was of "all ... the property ... of every kind and description whatsoever (except only as specifically reserved and excepted hereinafter), wheresoever situate in the Philippine Islands, and all incidents and appurtenances thereto, including the business as a going concern, and the goodwill, trade names and trade-marks thereof of Syndicat Oriente, a company formed under the laws of Belgium, with its registered office in Antwerp, Belgium, and heretofore doing business in the Philippine Islands under the name of "El Oriente Fabrica de Tabacos, C. Ingenohl." Also of "all accounts receivable or other credits and all contract rights belonging to said business, except the account owing by the Orient Tobacco Manufactory of Hongkong." But "The undersigned Alien Property Custodian expressly excepts and reserves from this sale all Liberty Bonds of the United States and the above account of the Orient Tobacco Manufactory of Hongkong owned by said business." These facts and others put in issue the question of whether the Hongkong business was a separate concern, or a branch of the Antwerp business, or a branch of the Manila business. They also put in issue the question of whether the sale by the Alien Property Custodian was to have extraterritorial effect. As to the first general issue, the Hongkong Supreme Court expressed no definite opinion; as to the second general issue, the Hongkong Supreme Court held that the assignment "cannot affect any rights to the trade-marks in question in Hongkong." We come now to the law, international and local, on which like the facts, there can be little divergence of opinion. The modern English and American doctrines are adopted for statement. Effect is given to foreign judgments as a matter of comity and reciprocity. But aside from international courtesy, a better and more practical reason giving greater force and dignity to the records of foreign courts is that, where parties have once litigated fairly a dispute in the courts of a foreign country which gives effect to like judgments of the domestic courts, the same question ought not to be tried anew by the local courts. Parties are bound by the judgment of the foreign tribunal of competent jurisdiction, and questions of fact or law settled by the foreign tribunal should not be reexamined, unless it can be shown that the proceedings were tainted with fraud. The source of comity as a basis of recognition of foreign judgments is identity of position and similarity of institutions. In those countries where the civil law prevails, much less of international comity has been exhibited. In the United States and Great Britain, the law as to enforcing foreign judgments is practically the same. The point last made is of some importance since the judgment sought to be enforced comes from a court within the British Empire, and is offered for the plaintiff in a suit in courts under the jurisdiction of the United States.

A foreign judgment upon a matter within the jurisdiction of the court rendering it, and in which the court had jurisdiction of the parties, will be regarded as conclusive between the parties in the courts of the United States, where there has been a trial upon the merits in the foreign court, under a system of jurisprudence likely to secure an impartial administration of justice, and there is no showing of prejudice on the part of the court or fraud in procuring the judgment, and no special reason why the comity of this nation should not allow it full credit. Such in effect were the decisions of the United States Supreme Court in the related cases of Hilton vs. Guyot ( [1895], 159 U.S., 113), and Ritchie vs. McMullen ( [1895], 159 U.S., 235). In the first cited case, it was held that a judgment for a sum of money rendered by a court of a foreign country, having jurisdiction of the cause and of the parties, in a suit brought by one of its citizens against one of ours, is prima facie only, and not conclusive of the merits of the claim, in an action brought here upon the judgment, if by the law of the foreign country, as in France, judgments of our own courts are not recognized as conclusive. In the second case, it was held that a judgment rendered by a court having jurisdiction of the cause and of the parties, upon regular proceedings and due notice or appearance, and not procured by fraud, in a foreign country, by the law of which, as in England and Canada, a judgment of one of our own courts, under like circumstances, is held conclusive of the merits, is conclusive, as between the parties, in an action brought upon it in this country, as to all matters pleaded and which might have been tried in the foreign country. (See further Warren vs. Warren [1917], 73 Fla., 764; Dunstan vs. Higgins [1893], 20 L.R.A., 668.) In England, as stated, the law is like ours, or, more accurately stated, our law is like theirs, since greatly influenced in all its history by the jurisprudence of the mother country. The two English cases occupying the same relative position as Hilton vs. Guyot, supra, and Ritchie vs. McMullen, supra, are Godard vs. Gray ([1870], 5 Eng. Ruling Cases, 726), and Schibsby vs. Westenholz ( [1870], 5 Eng. Ruling Cases, 734). English law treats as binding, and the English courts will enforce, the judgment of a foreign court having jurisdiction over the cause of action and over the person to be bound by the judgment. Such a foreign judgment is as conclusive upon the parties thereto as a domestic judgment. The grounds of impeachment of a foreign judgment are want of jurisdiction, fraud, abuse of process, want of finality, and statute of limitations. As to errors of law and fact as a ground of impeachment, in England at least, the defendant in a suit on the judgment of a foreign tribunal having jurisdiction over him and the cause, is not permitted to set up as a defense that the judgment proceeded on a mistake as to English law or had come to an erroneous conclusion as to the facts. Thus in Godard vs. Gray, supra, the plaintiffs, who were Frenchmen, brought suit in France against the defendants, who were Englishmen, on a charter party made in England which contained a clause providing as a penalty for its nonperformance, the estimated amount of the freight. The French court awarded as damages the estimated amount of the freight. It was not brought to the notice of the French court that, according to the interpretation of the English law, a penal clause of this sort was idle and inoperative, and the court made a mistake as to the construction of the English contract, and, in consequence, judgment was given for an amount different from that for which it would have given if the court had been correctly informed of the English construction. The question raised was whether this was a bar to the action brought in England to enforce the judgment, and the court was of the opinion that it was not. The rule announced was that it is no bar to an action in personam in a foreign court having jurisdiction over the parties and cause that the foreign tribunal has put a construction erroneous according to English law on an English contract. (See also 23 Cyc., 1610, citing Godard vs. Gray, supra; Scott vs. Pilkington, 2 Best and S., 11; Newton vs. Hunt [1908], 112 N.Y.S., 573.) Digressing at this point, before proceeding with a further description of the law, it is incontestable that should the Hongkong judgment be tested by the prevailing rules relative to the effect of judgments of foreign courts, it would be found to be conclusive. Putting the thought in another way, should the Hongkong judgment be weighed in the balance as the United States Supreme Court would weigh it, following its own precedents, the Hongkong judgment would undoubtedly be given full effect. For the Hongkong judgment comes from a court having jurisdiction of the subject matter and the parties. For there has been a trial upon the merits in the Hongkong court under a system of jurisprudence likely to secure an impartial administration of justice. For there is no showing of prejudice on the part of the Hongkong court or fraud in procuring the judgment. For there is no special reason why American courts should not allow that judgment full credit. And if the highest court in England was to consider a like judgment of some foreign court, as the United States, it would give the judgment effect even though it was erroneous in a matter of law or fact, and even though the foreign court proceeded upon a mistaken application of the English law to an English contract. It is quite within the realm of possibility, that the majority in the court would willingly concede the correctness of the altogether too lengthy a statement of the facts and the law which has here been attempted, in order that it may serve as a fit background to our opinion. But having conceded that much, the majority would insist that the case is governed not by general principle but by specific statutory law. Concurring with the majority for the moment so as to be just as eminently fair as they are, we come to consider the local Philippine law and its applicability to the questions which confront the court. Section 309 of our Code of Civil Procedure relates to the effect of a judicial record of a court in the United States. Codal section 310 relates to the effect of a judicial record of a court of admiralty for a foreign country. Codal section 311 relates to the effect of other foreign judgments. It reads: "The effect of a judgment of any other tribunal of a foreign country, having jurisdiction to pronounce the judgment, is as follows: 1. In case of a judgment against a specific thing, the judgment is conclusive upon the title to the thing." The appellee argues with some plausibility that the case comes within the purview of the above quoted paragraph, and that the paragraph applies to a judgment rendered in connection with a controversy over any "specific thing," to wit, certain trademarks. Not stopping to discuss this debatable point, we go forward to the second paragraph of section 311 relied upon by the appellant and the majority, reading as follows: 2. 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. With the premise that the Hongkong judgment was in personam and under the further premise that paragraph 2 of section 311 of the Code of Civil Procedure covers the question at issue, let us analyze the contents of said paragraph. Admittedly, the judgment of the Hongkong court is presumptive evidence of a right. That judgment is not sought to be repelled by evidence of a want of

jurisdiction. Nor repelled by evidence of want of notice to the parties. Nor repelled by evidence of collusion. Nor repelled by evidence of fraud. On the contrary, all this is admitted. It is simply vigorously asserted that there was a "clear mistake of law or fact" in the foreign judgment sued on, and that therefore the Philippine courts should refuse to enforce the foreign judgment. Section 311 of the Philippine Code of Civil Procedure was derived from section 1915 of the California Code of Civil Procedure which, in turn, was derived from the California Act of March 11, 1872. A careful search has failed to disclose any other similar statutory provision in the United States or any interpretative decisions arising in the California courts or elsewhere. The California provision may, however, have been inspired by the commentaries of Mr. Justice Story and Chancellor Kent. If so, the word "mistake" was used "in the stricter sense of misapprehension or oversight," and is equivalent to what in Burnham vs. Webster ... Mr. Justice Woodbury spoke of as "some objection to the judgment's reaching the merits, and tending to prove that they had not been acted on;" "some accident or mistake," or "that the court did not decide at all on the merits." These passages taken from the decision of the United States Supreme Court in Hilton vs. Guyot, supra, are copied with the suggestion that they are "hardly consistent with the statement of Chief Justice Marshall" in his decision in the case of Elmendorf vs. Taylor ( [1825], 10 Wheat., 152). The court then proceeds to emphasize that the mistake must appear on the face of the record. Under the conditions named, says the court, "the merits of the case should not, in an action brought in this court upon the judgment, be tried afresh, as on a new trial or on appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact." Coordinating more closely the facts and the law, both general and specific, certain pertinent observations are in order. Possibly, the most apparent thought with reference to the Hongkong judgment is that no appeal was attempted to be taken by the losing party. Instead, the defendant indirectly seeks to appeal to the Philippine courts to reopen and retry the case. In England at least, it has been irrevocably settled that the home tribunal cannot act as a court of appeal from the foreign tribunal. In Bank of Australasia vs. Nias ( [1851], 16 Q.B., 717, 734), Lord Campbell, in delivering judgment, distinctly put the decision upon the ground that the defendant might have appealed to the Judicial Committee of the Privy Council, and thus have procured a review of the colonial judgment. In Traford vs. Blanc ( [1887], 36 Ch. D., 600), it was said: "... The principle on which Bank of Australasia vs. Nias was decided appears to be that the courts of this country do not sit to hear appeals from foreign tribunals, and that if the judgment of a foreign court is erroneous, the regular mode provided by every system of jurisprudence of procuring it to be examined and reversed, ought to be followed. Neither do the courts of this country sit to rehear causes which have been tried abroad. ..." A trial anew to reexamine the facts and the law as to a foreign judgment when the losing party has not exhausted all his remedies abroad and when the judgment is in reality res adjudicata, should be avoided. This rule is of particular application where all the evidence is not before us, where the witnesses were not under observation on the stand, where the effort of the court here is not concentrated on issues of fact or law, but is given up to a critical analysis of a foreign judgment, and where all that is in view is a judgment for costs. The next thought which comes to mind is that if the Hongkong judgment had been rendered by a Court of First Instance in the Philippine Islands, the Supreme Court of the Philippine Islands would proceed to decide the appeal guided by the well-known principle that in order to reverse the decision it must be plainly and manifestly against the weight of the evidence. Here, there is ample evidence to support the findings of Mr. Justice Davies. It would be doubtful if, sitting as a court of appeal, this judgment would be modified or reversed. Indeed, we would go farther and would hold that the judgment of the Hongkong court is correct in fact and law. The judgment is "presumptive evidence of a right." The case was "decided on the merits." There was no "misapprehension or oversight" as to the facts or the law. There is no "clear mistake of law or fact" appearing on the face of the record. In the first place, the bill of sale executed by the United States Alien Property Custodian was only of property "wherever situate in the Philippine Islands" of a company "heretofore doing business in the Philippine Islands." It expressly excepted and reserved the "account owing by the Orient Tobacco Manufactory of Hongkong." The intent of the parties to the conveyance is made clear by the language of the instrument. The limited operation of the conveyance is clearly expressed by its language. The phraseology of the deed was used advisedly, since the Alien Property Custodian had no desire to do what it would be futile to attempt — to convey property outside the Philippine Islands and the United States. There is in the instrument an entire absence of reference to trade-marks in foreign countries. In a case relied upon by the majority, where a similar provision of a deed was under observation, the court emphasized that the purchaser took by conveyance "the exclusive right to carry on the business in the United States," and was entitled to protection against unfair competition. (Koppel Industrial Car and Equipment Co. vs. Orenstein & Koppel Aktiengesellschaft [1923], 289 Fed., 446. See also Bourjois & Co. vs. Katzel [1923], 260 U.S., 689.) In the next place, it is apparent that the "Syndicat Oriente" was a Belgian corporation, with its head office at Antwerp. As such Belgian corporation, it was permitted to transact business in the Philippine Islands as a foreign corporation. Although the Hongkong court did not find it necessary to so decide, this Belgian corporation undoubtedly had two branches, one in Hongkong, and one in the Philippine Islands, but both with connections with the home office. All that the United States Government attempted to sell was the Philippine business of the Belgian corporation. It did not care to do more for Great Britain and Belgium were allies of the United States in the Great War. Great Britain could have taken over the "Orient Tobacco Manufactory" of Hongkong if it had so desired, and the Belgian Government could have taken over the "Syndicat Oriente" in Belgium if it had so desired. With the seizure by either Great Britain or Belgium, would have passed the trade-marks of the respective companies. As to the alleged mistake of law committed by the Hongkong court, it will be recalled that the Chartreuse case was given application. Now, this may have been error and again it may not. Lord Macnaghten in that case reached the conclusion "that the sale by the liquidator of the property bought by the appellant company has not carried with it the English trade-marks." And the United States Supreme Court in the case of Baglin vs. Cusenier Co. ( [1911], 221 U.S., 580), likewise quoting approvingly from the

Chartreuse case, among other things, decided: "...The French law cannot be conceded to have any extraterritorial effect to detach the trade-marks in this country from the product of the Monks, which they are still manufacturing." But why stop here. Why not go the full length of the majority decision and admit that there may have been a "mistake of law or fact" in the Hongkong judgment. Even then, the modifying word "clear" should not be forgotten. It is only a "clear" mistake which suffices to warrant our courts in interfering with a foreign judgment. The legislative precaution suggests that this right of revision should be exercised only for most cogent and conclusive reasons. A trial judge of long experience and two members of this court, in effect concurring with the views of the Hongkong magistrate, at least weaken the argument relative to a "clear" mistake of law or fact. Let us now suppose that this court had ruled in favor of appellant on its counterclaim, as indeed one member would have us do. The defendant would then be forced to have recourse to the Hongkong courts for the enforcement of any judgment it might recover against the plaintiff. The Philippine courts having failed in reciprocal regard for a judgment rendered in Hongkong, the Hongkong court in turn would be justified in reopening and retrying the case, with the probable result that its former views would be maintained and the Philippine judgment nullified. For many years, the fullest reciprocity has prevailed between England and the United States with respect to allowing full and conclusive effect to the judgments of each by the other. This reciprocity should be maintained between integral parts of the British Empire and the United States in such close proximity as are the ports of Manila and Hongkong. But this reciprocity will be blotted out entirely if any jurisdiction in either the British Empire or the United States, with jealous regard for its own dignity, breaks away from the practice which reason and comity have long sanctioned. It may well be doubted if the Government of the United States ever intended that the Philippine Commission, acting under war powers, should enact legislation at variance with the foreign policies and relations of the United States. It is questionable, if it is not beyond the power of the local legislature, to provide peculiar legislation so entirely out of harmony with international comity. If forced to take the stand, we would debate long before holding that this provision in Philippine law is valid and constitutional. It is a most serious responsibility which this court assumes when it ventures to set at naught the full effect of reciprocity between two great states of the world, gravely acknowledged in both, and fulfilled everywhere else in the two countries with the most scrupulous regard for the rights of the other. The proportions of this dissent are appalling. Our excuse must be the gravity of the question at bar and the earnestness of our convictions. This opinion has been drafted separate and apart in the main from the majority decision, as the vehicle for the expression of our individual views. We hope that we have made it clear that under any and every aspect of the case, the Hongkong judgment should be given force and effect. Our vote is for the affirmance of the judgment of the lower court. PILAPIL vs. HON IBAY-SOMERA, VICTOR AND GEILING et al G.R. No. 80116 June 30, 1989 FACTS: Petitioner Imelda Pilapil, a Filipino citizen, and private respondent Erich Geiling, a German national, were married in Germany. After about three and a half years of marriage, such connubial disharmony eventuated in Geiling initiating a divorce proceeding against Pilapil in Germany. The Local Court, Federal Republic of Germany, promulgated a decree of divorce on the ground of failure of marriage of the spouses. More than five months after the issuance of the divorce decree, Geiling filed two complaints for adultery before the City Fiscal of Manila alleging in one that, while still married to said Geiling, Pilapil “had an affair with a certain William Chia.” The Assistant Fiscal, after the corresponding investigation, recommended the dismissal of the cases on the ground of insufficiency of evidence. However, upon review, the respondent city fiscal Victor approved a resolution directing the filing of 2 complaint for adultery against the petitioner. The case entitled “PP Philippines vs. Pilapil and Chia” was assigned to the court presided by the respondent judge Ibay-Somera. A motion to quash was filed in the same case which was denied by the respondent. Pilapil filed this special civil action for certiorari and prohibition, with a prayer for a TRO, seeking the annulment of the order of the lower court denying her motion to quash. As cogently argued by Pilapil, Article 344 of the RPC thus presupposes that the marital relationship is still subsisting at the time of the institution of the criminal action for adultery. ISSUE: Did Geiling have legal capacity at the time of the filing of the complaint for adultery, considering that it was done after obtaining a divorce decree? HELD: WHEREFORE, the questioned order denying petitioner’s MTQ is SET ASIDE and another one entered DISMISSING the complaint … for lack of jurisdiction. The TRO issued in this case … is hereby made permanent. NO Under Article 344 of the RPC, the crime of adultery cannot be prosecuted except upon a sworn written complaint filed by the offended spouse. It has long since been established, with unwavering consistency, that compliance with this rule is a jurisdictional, and not merely a formal, requirement. Corollary to such exclusive grant of power to the offended spouse to institute the action, it necessarily follows that such initiator must have the status, capacity or legal representation to do so at the time of the filing of the criminal action. This is a logical consequence since the raison d’etre of said provision of law would be absent where the supposed offended party had ceased to be the spouse of the alleged offender at the time of the filing of the criminal case.

Stated differently, the inquiry would be whether it is necessary in the commencement of a criminal action for adultery that the marital bonds between the complainant and the accused be unsevered and existing at the time of the institution of the action by the former against the latter. In the present case, the fact that private respondent obtained a valid divorce in his country, the Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in the Philippines insofar as private respondent is concerned in view of the nationality principle in our civil law on the matter of status of persons Under the same considerations and rationale, private respondent, being no longer the husband of petitioner, had no legal standing to commence the adultery case under the imposture that he was the offended spouse at the time he filed suit. G.R. No. 80116 June 30, 1989 IMELDA MANALAYSAY PILAPIL, petitioner, vs. HON. CORONA IBAY-SOMERA, in her capacity as Presiding Judge of the Regional Trial Court of Manila, Branch XXVI; HON. LUIS C. VICTOR, in his capacity as the City Fiscal of Manila; and ERICH EKKEHARD GEILING, respondents. An ill-starred marriage of a Filipina and a foreigner which ended in a foreign absolute divorce, only to be followed by a criminal infidelity suit of the latter against the former, provides Us the opportunity to lay down a decisional rule on what hitherto appears to be an unresolved jurisdictional question. On September 7, 1979, petitioner Imelda Manalaysay Pilapil, a Filipino citizen, and private respondent Erich Ekkehard Geiling, a German national, were married before the Registrar of Births, Marriages and Deaths at Friedensweiler in the Federal Republic of Germany. The marriage started auspiciously enough, and the couple lived together for some time in Malate, Manila where their only child, Isabella Pilapil Geiling, was born on April 20, 1980. 1 Thereafter, marital discord set in, with mutual recriminations between the spouses, followed by a separation de facto between them. After about three and a half years of marriage, such connubial disharmony eventuated in private respondent initiating a divorce proceeding against petitioner in Germany before the Schoneberg Local Court in January, 1983. He claimed that there was failure of their marriage and that they had been living apart since April, 1982. 2 Petitioner, on the other hand, filed an action for legal separation, support and separation of property before the Regional Trial Court of Manila, Branch XXXII, on January 23, 1983 where the same is still pending as Civil Case No. 83-15866. 3 On January 15, 1986, Division 20 of the Schoneberg Local Court, Federal Republic of Germany, promulgated a decree of divorce on the ground of failure of marriage of the spouses. The custody of the child was granted to petitioner. The records show that under German law said court was locally and internationally competent for the divorce proceeding and that the dissolution of said marriage was legally founded on and authorized by the applicable law of that foreign jurisdiction. 4 On June 27, 1986, or more than five months after the issuance of the divorce decree, private respondent filed two complaints for adultery before the City Fiscal of Manila alleging that, while still married to said respondent, petitioner "had an affair with a certain William Chia as early as 1982 and with yet another man named Jesus Chua sometime in 1983". Assistant Fiscal Jacinto A. de los Reyes, Jr., after the corresponding investigation, recommended the dismissal of the cases on the ground of insufficiency of evidence. 5 However, upon review, the respondent city fiscal approved a resolution, dated January 8, 1986, directing the filing of two complaints for adultery against the petitioner. 6 The complaints were accordingly filed and were eventually raffled to two branches of the Regional Trial Court of Manila. The case entitled "People of the Philippines vs. Imelda Pilapil and William Chia", docketed as Criminal Case No. 87-52435, was assigned to Branch XXVI presided by the respondent judge; while the other case, "People of the Philippines vs. Imelda Pilapil and James Chua", docketed as Criminal Case No. 87-52434 went to the sala of Judge Leonardo Cruz, Branch XXV, of the same court. 7 On March 14, 1987, petitioner filed a petition with the Secretary of Justice asking that the aforesaid resolution of respondent fiscal be set aside and the cases against her be dismissed. 8 A similar petition was filed by James Chua, her co-accused in Criminal Case No. 87-52434. The Secretary of Justice, through the Chief State Prosecutor, gave due course to both petitions and directed the respondent city fiscal to inform the Department of Justice "if the accused have already been arraigned and if not yet arraigned, to move to defer further proceedings" and to elevate the entire records of both cases to his office for review. 9 Petitioner thereafter filed a motion in both criminal cases to defer her arraignment and to suspend further proceedings thereon. 10 As a consequence, Judge Leonardo Cruz suspended proceedings in Criminal Case No. 87-52434. On the other hand, respondent judge merely reset the date of the arraignment in Criminal Case No. 87-52435 to April 6, 1987. Before such scheduled date, petitioner moved for the cancellation of the arraignment and for the suspension of proceedings in said Criminal Case No. 8752435 until after the resolution of the petition for review then pending before the Secretary of Justice. 11 A motion to quash was also filed in the same case on the ground of lack of jurisdiction, 12 which motion was denied by the respondent judge in an order dated September 8, 1987. The same order also directed the arraignment of both accused therein, that is, petitioner and William Chia. The latter entered a plea of not guilty while the petitioner refused to be arraigned. Such refusal of the petitioner being considered by respondent judge as direct contempt, she and her counsel were fined and the former was ordered detained until she submitted herself for arraignment. 13 Later, private respondent entered a plea of not guilty. 14 On October 27, 1987, petitioner filed this special civil action for certiorari and prohibition, with a prayer for a temporary restraining order, seeking the annulment of the order of the lower court denying her motion to quash. The petition is anchored on the main ground that the court is without jurisdiction "to try and decide the charge of adultery, which is a private offense that cannot be prosecuted de officio (sic), since the purported complainant, a foreigner, does not qualify as an offended spouse having obtained a final divorce decree under his national law prior to his filing the criminal complaint." 15

On October 21, 1987, this Court issued a temporary restraining order enjoining the respondents from implementing the aforesaid order of September 8, 1987 and from further proceeding with Criminal Case No. 87-52435. Subsequently, on March 23, 1988 Secretary of Justice Sedfrey A. Ordoñez acted on the aforesaid petitions for review and, upholding petitioner's ratiocinations, issued a resolution directing the respondent city fiscal to move for the dismissal of the complaints against the petitioner. 16 We find this petition meritorious. The writs prayed for shall accordingly issue. Under Article 344 of the Revised Penal Code, 17 the crime of adultery, as well as four other crimes against chastity, cannot be prosecuted except upon a sworn written complaint filed by the offended spouse. It has long since been established, with unwavering consistency, that compliance with this rule is a jurisdictional, and not merely a formal, requirement. 18 While in point of strict law the jurisdiction of the court over the offense is vested in it by the Judiciary Law, the requirement for a sworn written complaint is just as jurisdictional a mandate since it is that complaint which starts the prosecutory proceeding 19 and without which the court cannot exercise its jurisdiction to try the case. Now, the law specifically provides that in prosecutions for adultery and concubinage the person who can legally file the complaint should be the offended spouse, and nobody else. Unlike the offenses of seduction, abduction, rape and acts of lasciviousness, no provision is made for the prosecution of the crimes of adultery and concubinage by the parents, grandparents or guardian of the offended party. The so-called exclusive and successive rule in the prosecution of the first four offenses above mentioned do not apply to adultery and concubinage. It is significant that while the State, as parens patriae, was added and vested by the 1985 Rules of Criminal Procedure with the power to initiate the criminal action for a deceased or incapacitated victim in the aforesaid offenses of seduction, abduction, rape and acts of lasciviousness, in default of her parents, grandparents or guardian, such amendment did not include the crimes of adultery and concubinage. In other words, only the offended spouse, and no other, is authorized by law to initiate the action therefor. Corollary to such exclusive grant of power to the offended spouse to institute the action, it necessarily follows that such initiator must have the status, capacity or legal representation to do so at the time of the filing of the criminal action. This is a familiar and express rule in civil actions; in fact, lack of legal capacity to sue, as a ground for a motion to dismiss in civil cases, is determined as of the filing of the complaint or petition. The absence of an equivalent explicit rule in the prosecution of criminal cases does not mean that the same requirement and rationale would not apply. Understandably, it may not have been found necessary since criminal actions are generally and fundamentally commenced by the State, through the People of the Philippines, the offended party being merely the complaining witness therein. However, in the so-called "private crimes" or those which cannot be prosecuted de oficio, and the present prosecution for adultery is of such genre, the offended spouse assumes a more predominant role since the right to commence the action, or to refrain therefrom, is a matter exclusively within his power and option. This policy was adopted out of consideration for the aggrieved party who might prefer to suffer the outrage in silence rather than go through the scandal of a public trial. 20 Hence, as cogently argued by petitioner, Article 344 of the Revised Penal Code thus presupposes that the marital relationship is still subsisting at the time of the institution of the criminal action for, adultery. This is a logical consequence since the raison d'etre of said provision of law would be absent where the supposed offended party had ceased to be the spouse of the alleged offender at the time of the filing of the criminal case. 21 In these cases, therefore, it is indispensable that the status and capacity of the complainant to commence the action be definitely established and, as already demonstrated, such status or capacity must indubitably exist as of the time he initiates the action. It would be absurd if his capacity to bring the action would be determined by his status beforeor subsequent to the commencement thereof, where such capacity or status existed prior to but ceased before, or was acquired subsequent to but did not exist at the time of, the institution of the case. We would thereby have the anomalous spectacle of a party bringing suit at the very time when he is without the legal capacity to do so. To repeat, there does not appear to be any local precedential jurisprudence on the specific issue as to when precisely the status of a complainant as an offended spouse must exist where a criminal prosecution can be commenced only by one who in law can be categorized as possessed of such status. Stated differently and with reference to the present case, the inquiry ;would be whether it is necessary in the commencement of a criminal action for adultery that the marital bonds between the complainant and the accused be unsevered and existing at the time of the institution of the action by the former against the latter. American jurisprudence, on cases involving statutes in that jurisdiction which are in pari materia with ours, yields the rule that after a divorce has been decreed, the innocent spouse no longer has the right to institute proceedings against the offenders where the statute provides that the innocent spouse shall have the exclusive right to institute a prosecution for adultery. Where, however, proceedings have been properly commenced, a divorce subsequently granted can have no legal effect on the prosecution of the criminal proceedings to a conclusion. 22 In the cited Loftus case, the Supreme Court of Iowa held that — 'No prosecution for adultery can be commenced except on the complaint of the husband or wife.' Section 4932, Code. Though Loftus was husband of defendant when the offense is said to have been committed, he had ceased to be such when the prosecution was begun; and appellant insists that his status was not such as to entitle him to make the complaint. We have repeatedly said that the offense is against the unoffending spouse, as well as the state, in explaining the reason for this provision in the statute; and we are of the opinion that the unoffending spouse must be such when the prosecution is commenced. (Emphasis supplied.)

We see no reason why the same doctrinal rule should not apply in this case and in our jurisdiction, considering our statutory law and jural policy on the matter. We are convinced that in cases of such nature, the status of the complainant vis-a-vis the accused must be determined as of the time the complaint was filed. Thus, the person who initiates the adultery case must be an offended spouse, and by this is meant that he is still married to the accused spouse, at the time of the filing of the complaint. In the present case, the fact that private respondent obtained a valid divorce in his country, the Federal Republic of Germany, is admitted. Said divorce and its legal effects may be recognized in the Philippines insofar as private respondent is concerned 23 in view of the nationality principle in our civil law on the matter of status of persons. Thus, in the recent case of Van Dorn vs. Romillo, Jr., et al., 24 after a divorce was granted by a United States court between Alice Van Dornja Filipina, and her American husband, the latter filed a civil case in a trial court here alleging that her business concern was conjugal property and praying that she be ordered to render an accounting and that the plaintiff be granted the right to manage the business. Rejecting his pretensions, this Court perspicuously demonstrated the error of such stance, thus: There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. ... It is true 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. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. ... Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. ... 25 Under the same considerations and rationale, private respondent, being no longer the husband of petitioner, had no legal standing to commence the adultery case under the imposture that he was the offended spouse at the time he filed suit. The allegation of private respondent that he could not have brought this case before the decree of divorce for lack of knowledge, even if true, is of no legal significance or consequence in this case. When said respondent initiated the divorce proceeding, he obviously knew that there would no longer be a family nor marriage vows to protect once a dissolution of the marriage is decreed. Neither would there be a danger of introducing spurious heirs into the family, which is said to be one of the reasons for the particular formulation of our law on adultery, 26 since there would thenceforth be no spousal relationship to speak of. The severance of the marital bond had the effect of dissociating the former spouses from each other, hence the actuations of one would not affect or cast obloquy on the other. The aforecited case of United States vs. Mata cannot be successfully relied upon by private respondent. In applying Article 433 of the old Penal Code, substantially the same as Article 333 of the Revised Penal Code, which punished adultery "although the marriage be afterwards declared void", the Court merely stated that "the lawmakers intended to declare adulterous the infidelity of a married woman to her marital vows, even though it should be made to appear that she is entitled to have her marriage contract declared null and void, until and unless she actually secures a formal judicial declaration to that effect". Definitely, it cannot be logically inferred therefrom that the complaint can still be filed after the declaration of nullity because such declaration that the marriage is void ab initio is equivalent to stating that it never existed. There being no marriage from the beginning, any complaint for adultery filed after said declaration of nullity would no longer have a leg to stand on. Moreover, what was consequently contemplated and within the purview of the decision in said case is the situation where the criminal action for adultery was filed beforethe termination of the marriage by a judicial declaration of its nullity ab initio. The same rule and requisite would necessarily apply where the termination of the marriage was effected, as in this case, by a valid foreign divorce. Private respondent's invocation of Donio-Teves, et al. vs. Vamenta, hereinbefore cited, 27 must suffer the same fate of inapplicability. A cursory reading of said case reveals that the offended spouse therein had duly and seasonably filed a complaint for adultery, although an issue was raised as to its sufficiency but which was resolved in favor of the complainant. Said case did not involve a factual situation akin to the one at bar or any issue determinative of the controversy herein. WHEREFORE, the questioned order denying petitioner's motion to quash is SET ASIDE and another one entered DISMISSING the complaint in Criminal Case No. 87-52435 for lack of jurisdiction. The temporary restraining order issued in this case on October 21, 1987 is hereby made permanent.SO ORDERED. Melencio-Herrera, Padilla and Sarmiento, JJ., concur. Separate Opinions PARAS, J., concurring: It is my considered opinion that regardless of whether We consider the German absolute divorce as valid also in the Philippines, the fact is that the husband in the instant case, by the very act of his obtaining an absolute divorce in Germany can no longer be considered as the offended party in case his former wife actually has carnal knowledge with another, because in divorcing her, he already implicitly authorized the woman to have sexual relations with others. A contrary ruling would be less than fair for a man, who is free to have sex will be allowed to deprive the woman of the same privilege. In the case of Recto v. Harden (100 Phil. 427 [1956]), the Supreme Court considered the absolute divorce between the American husband and his American wife as valid and binding in the Philippines on the theory that their status and capacity are governed by

their National law, namely, American law. There is no decision yet of the Supreme Court regarding the validity of such a divorce if one of the parties, say an American, is married to a Filipino wife, for then two (2) different nationalities would be involved. In the book of Senate President Jovito Salonga entitled Private International Law and precisely because of the National law doctrine, he considers the absolute divorce as valid insofar as the American husband is concerned but void insofar as the Filipino wife is involved. This results in what he calls a "socially grotesque situation," where a Filipino woman is still married to a man who is no longer her husband. It is the opinion however, of the undersigned that very likely the opposite expresses the correct view. While under the national law of the husband the absolute divorce will be valid, still one of the exceptions to the application of the proper foreign law (one of the exceptions to comity) is when the foreign law will work an injustice or injury to the people or residents of the forum. Consequently since to recognize the absolute divorce as valid on the part of the husband would be injurious or prejudicial to the Filipino wife whose marriage would be still valid under her national law, it would seem that under our law existing before the new Family Code (which took effect on August 3, 1988) the divorce should be considered void both with respect to the American husband and the Filipino wife. The recent case of Van Dorn v. Romillo, Jr. (139 SCRA [1985]) cannot apply despite the fact that the husband was an American can with a Filipino wife because in said case the validity of the divorce insofar as the Filipino wife is concerned was NEVER put in issue.

BENGSON vs. HRET and CRUZ G.R. No. 142840 May 7, 2001 FACTS: The citizenship of respondent Cruz is at issue in this case, in view of the constitutional requirement that “no person shall be a Member of the House of Representatives unless he is a natural-born citizen.” Cruz was a natural-born citizen of the Philippines. He was born in Tarlac in 1960 of Filipino parents. In 1985, however, Cruz enlisted in the US Marine Corps and without the consent of the Republic of the Philippines, took an oath of allegiance to the USA. As a Consequence, he lost his Filipino citizenship for under CA No. 63 [(An Act Providing for the Ways in Which Philippine Citizenship May Be Lost or Reacquired (1936)] section 1(4), a Filipino citizen may lose his citizenship by, among other, “rendering service to or accepting commission in the armed forces of a foreign country.” Whatever doubt that remained regarding his loss of Philippine citizenship was erased by his naturalization as a U.S. citizen in 1990, in connection with his service in the U.S. Marine Corps. In 1994, Cruz reacquired his Philippine citizenship through repatriation under RA 2630 [(An Act Providing for Reacquisition of Philippine Citizenship by Persons Who Lost Such Citizenship by Rendering Service To, or Accepting Commission In, the Armed Forces of the United States (1960)]. He ran for and was elected as the Representative of the 2nd District of Pangasinan in the 1998 elections. He won over petitioner Bengson who was then running for reelection. Subsequently, petitioner filed a case for Quo Warranto Ad Cautelam with respondent HRET claiming that Cruz was not qualified to become a member of the HOR since he is not a natural-born citizen as required under Article VI, section 6 of the Constitution. HRET rendered its decision dismissing the petition for quo warranto and declaring Cruz the duly elected Representative in the said election. ISSUE: WON Cruz, a natural-born Filipino who became an American citizen, can still be considered a natural-born Filipino upon his reacquisition of Philippine citizenship. HELD: petition dismissed YES. Filipino citizens who have lost their citizenship may however reacquire the same in the manner provided by law. C.A. No. 63 enumerates the 3 modes by which Philippine citizenship may be reacquired by a former citizen: 1. by naturalization, 2. by repatriation, and 3. by direct act of Congress. ** Repatriation may be had under various statutes by those who lost their citizenship due to: 1. desertion of the armed forces; 2. services in the armed forces of the allied forces in World War II; 3. service in the Armed Forces of the United States at any other time, 4. marriage of a Filipino woman to an alien; and 5. political economic necessity Repatriation results in the recovery of the original nationality This means that a naturalized Filipino who lost his citizenship will be restored to his prior status as a naturalized Filipino citizen. On the other hand, if he was originally a natural-born citizen before he lost his Philippine citizenship, he will be restored to his former status as a natural-born Filipino. R.A. No. 2630 provides: Sec 1. Any person who had lost his Philippine citizenship by rendering service to, or accepting commission in, the Armed Forces of the United States, or after separation from the Armed Forces of the United States, acquired United States citizenship, may reacquire Philippine citizenship by taking an oath of allegiance to the Republic of the Philippines and registering the same with Local Civil Registry in the place where he resides or last resided in the Philippines. The said oath of allegiance shall contain a renunciation of any other citizenship. Having thus taken the required oath of allegiance to the Republic and having registered the same in the Civil Registry of Magantarem, Pangasinan in accordance with the aforecited provision, Cruz is deemed to have recovered his original status as a natural-born citizen, a status which he acquired at birth as the son of a Filipino father. It bears stressing that the act of repatriation allows him to recover, or return to, his original status before he lost his Philippine citizenship. G.R. No. 142840 May 7, 2001 ANTONIO BENGSON III, petitioner, vs.HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and TEODORO C. CRUZ, respondents.

The citizenship of respondent Teodoro C. Cruz is at issue in this case, in view of the constitutional requirement that "no person shall be a Member of the House of Representative unless he is a natural-born citizen."1 Respondent Cruz was a natural-born citizen of the Philippines. He was born in San Clemente, Tarlac, on April 27, 1960, of Filipino parents. The fundamental law then applicable was the 1935 Constitution. 2 On November 5, 1985, however, respondent Cruz enlisted in the United States Marine Corps and without the consent of the Republic of the Philippines, took an oath of allegiance to the United States. As a Consequence, he lost his Filipino citizenship for under Commonwealth Act No. 63, section 1(4), a Filipino citizen may lose his citizenship by, among other, "rendering service to or accepting commission in the armed forces of a foreign country." Said provision of law reads: SECTION 1. How citizenship may be lost. – A Filipino citizen may lose his citizenship in any of the following ways and/or events: xxx (4) By rendering services to, or accepting commission in, the armed of a foreign country: Provided, That the rendering of service to, or the acceptance of such commission in, the armed forces of a foreign country, and the taking of an oath of allegiance incident thereto, with the consent of the Republic of the Philippines, shall not divest a Filipino of his Philippine citizenship if either of the following circumstances is present: (a) The Republic of the Philippines has a defensive and/or offensive pact of alliance with said foreign country; or (b) The said foreign country maintains armed forces on Philippine territory with the consent of the Republic of the Philippines: Provided, That the Filipino citizen concerned, at the time of rendering said service, or acceptance of said commission, and taking the oath of allegiance incident thereto, states that he does so only in connection with his service to said foreign country; And provided, finally, That any Filipino citizen who is rendering service to, or is commissioned in, the armed forces of a foreign country under any of the circumstances mentioned in paragraph (a) or (b), shall not be Republic of the Philippines during the period of his service to, or commission in, the armed forces of said country. Upon his discharge from the service of the said foreign country, he shall be automatically entitled to the full enjoyment of his civil and politically entitled to the full enjoyment of his civil political rights as a Filipino citizen x x x. Whatever doubt that remained regarding his loss of Philippine citizenship was erased by his naturalization as a U.S. citizen on June 5, 1990, in connection with his service in the U.S. Marine Corps. On March 17, 1994, respondent Cruz reacquired his Philippine citizenship through repatriation under Republic Act No. 2630. 3 He ran for and was elected as the Representative of the Second District of Pangasinan in the May 11, 1998 elections. He won by a convincing margin of 26,671 votes over petitioner Antonio Bengson III, who was then running for reelection.1âwphi1.nêt Subsequently, petitioner filed a case for Quo Warranto Ad Cautelam with respondent House of Representatives Electoral Tribunal (HRET) claiming that respondent Cruz was not qualified to become a member of the House of Representatives since he is not a natural-born citizen as required under Article VI, section 6 of the Constitution. 4 On March 2, 2000, the HRET rendered its decision 5 dismissing the petition for quo warranto and declaring Cruz the duly elected Representative of the Second District of Pangasinan in the May 1998 elections. The HRET likewise denied petitioner's motion for reconsideration of the decision in its resolution dated April 27, 2000. 6 Petitioner thus filed the present petition for certiorari assailing the HRET's decision on the following grounds: 1. The HRET committed serious errors and grave abuse of discretion, amounting to excess of jurisdiction, when it ruled that private respondent is a natural-born citizen of the Philippines despite the fact that he had ceased being such in view of the loss and renunciation of such citizenship on his part. 2. The HRET committed serious errors and grave abuse of discretion, amounting to excess of jurisdiction, when it considered private respondent as a citizen of the Philippines despite the fact he did not validly acquire his Philippine citizenship. 3. Assuming that private respondent's acquisition of Philippine citizenship was invalid, the HRET committed serious errors and grave abuse of discretion, amounting to excess of jurisdiction, when it dismissed the petition despite the fact that such reacquisition could not legally and constitutionally restore his natural-born status.7 The issue now before us is whether respondent Cruz, a natural-born Filipino who became an American citizen, can still be considered a natural-born Filipino upon his reacquisition of Philippine citizenship. Petitioner asserts that respondent Cruz may no longer be considered a natural-born Filipino since he lost h is Philippine citizenship when he swore allegiance to the United States in 1995, and had to reacquire the same by repatriation. He insists that Article citizens are those who are from birth with out having to perform any act to acquire or perfect such citizenship. Respondent on the other hand contends that he reacquired his status as natural-born citizen when he was repatriated since the phrase "from birth" in Article IV, Section 2 refers to the innate, inherent and inborn characteristic of being a natural-born citizen. The petition is without merit. The 1987 Constitution enumerates who are Filipino citizens as follow: (1) Those who are citizens of the Philippines at the time of the adoption of this Constitution; (2) Those whose fathers or mothers are citizens of the Philippines; (3) Those born before January 17, 1973 of Filipino mother, who elect Philippine citizenship upon reaching the age of majority, and (4) Those who are naturalized in accordance with law.8 There are two ways of acquiring citizenship: (1) by birth, and (2) by naturalization. These ways of acquiring citizenship correspond to the two kinds of citizens: the natural-born citizen, and the naturalized citizen. A person who at the time of his birth is a citizen of a particular country, is a natural-born citizen thereof.9 As defined in the same Constitution, natural-born citizens "are those citizens of the Philippines from birth without having to perform any act to acquire or perfect his Philippine citezenship."10 On the other hand, naturalized citizens are those who have become Filipino citizens through naturalization, generally under Commonwealth Act No. 473, otherwise known as the Revised Naturalization Law, which repealed the former Naturalization Law (Act No. 2927), and by Republic Act No. 530.11 To be naturalized, an applicant has to prove that he possesses all the qualifications12 and none of the disqualification13 provided by law to become a Filipino citizen. The decision granting Philippine citizenship becomes executory only after two (2) years from its promulgation when the court is satisfied that during the intervening period, the applicant has (1) not left the Philippines; (2) has dedicated himself to a lawful calling or profession; (3) has not been

convicted of any offense or violation of Government promulgated rules; or (4) committed any act prejudicial to the interest of the nation or contrary to any Government announced policies. 14 Filipino citizens who have lost their citizenship may however reacquire the same in the manner provided by law. Commonwealth Act. No. (C.A. No. 63), enumerates the three modes by which Philippine citizenship may be reacquired by a former citizen: (1) by naturalization, (2) by repatriation, and (3) by direct act of Congress. 15 Naturalization is mode for both acquisition and reacquisition of Philippine citizenship. As a mode of initially acquiring Philippine citizenship, naturalization is governed by Commonwealth Act No. 473, as amended. On the other hand, naturalization as a mode for reacquiring Philippine citizenship is governed by Commonwealth Act No. 63.16 Under this law, a former Filipino citizen who wishes to reacquire Philippine citizenship must possess certain qualifications 17and none of the disqualification mentioned in Section 4 of C.A. 473.18 Repatriation, on the other hand, may be had under various statutes by those who lost their citizenship due to: (1) desertion of the armed forces;19 services in the armed forces of the allied forces in World War II; 20 (3) service in the Armed Forces of the United States at any other time,21 (4) marriage of a Filipino woman to an alien;22 and (5) political economic necessity.23 As distinguished from the lengthy process of naturalization, repatriation simply consists of the taking of an oath of allegiance to the Republic of the Philippine and registering said oath in the Local Civil Registry of the place where the person concerned resides or last resided. In Angat v. Republic,24 we held: xxx. Parenthetically, under these statutes [referring to RA Nos. 965 and 2630], the person desiring to reacquire Philippine citizenship would not even be required to file a petition in court, and all that he had to do was to take an oath of allegiance to the Republic of the Philippines and to register that fact with the civil registry in the place of his residence or where he had last resided in the Philippines. [Italics in the original. 25 Moreover, repatriation results in the recovery of the original nationality. 26 This means that a naturalized Filipino who lost his citizenship will be restored to his prior status as a naturalized Filipino citizen. On the other hand, if he was originally a natural-born citizen before he lost his Philippine citizenship, he will be restored to his former status as a natural-born Filipino. In respondent Cruz's case, he lost his Filipino citizenship when he rendered service in the Armed Forces of the United States. However, he subsequently reacquired Philippine citizenship under R.A. No. 2630, which provides: Section 1. Any person who had lost his Philippine citizenship by rendering service to, or accepting commission in, the Armed Forces of the United States, or after separation from the Armed Forces of the United States, acquired United States citizenship, may reacquire Philippine citizenship by taking an oath of allegiance to the Republic of the Philippines and registering the same with Local Civil Registry in the place where he resides or last resided in the Philippines. The said oath of allegiance shall contain a renunciation of any other citizenship. Having thus taken the required oath of allegiance to the Republic and having registered the same in the Civil Registry of Magantarem, Pangasinan in accordance with the aforecited provision, respondent Cruz is deemed to have recovered his original status as a natural-born citizen, a status which he acquired at birth as the son of a Filipino father. 27 It bears stressing that the act of repatriation allows him to recover, or return to, his original status before he lost his Philippine citizenship. Petitioner's contention that respondent Cruz is no longer a natural-born citizen since he had to perform an act to regain his citizenship is untenable. As correctly explained by the HRET in its decision, the term "natural-born citizen" was first defined in Article III, Section 4 of the 1973 Constitution as follows: Sec. 4. A natural-born citizen is one who is a citizen of the Philippines from birth without having to perform any act to acquire or perfect his Philippine citizenship. Two requisites must concur for a person to be considered as such: (1) a person must be a Filipino citizen birth and (2) he does not have to perform any act to obtain or perfect his Philippine citizenship. Under the 1973 Constitution definition, there were two categories of Filipino citizens which were not considered natural-born: (1) those who were naturalized and (2) those born before January 17, 1973, 38 of Filipino mothers who, upon reaching the age of majority, elected Philippine citizenship. Those "naturalized citizens" were not considered natural-born obviously because they were not Filipino at birth and had to perform an act to acquire Philippine citizenship. Those born of Filipino mothers before the effectively of the 1973 Constitution were likewise not considered natural-born because they also had to perform an act to perfect their Philippines citizenship. The present Constitution, however, now consider those born of Filipino mothers before the effectivity of the 1973 Constitution and who elected Philippine citizenship upon reaching the majority age as natural-born. After defining who re natural-born citizens, Section 2 of Article IV adds a sentence: "Those who elect Philippine citizenship in accordance with paragraph (3), Section 1 hereof shall be deemed natural-born citizens." Consequently, only naturalized Filipinos are considered not natural-born citizens. It is apparent from the enumeration of who are citizens under the present Constitution that there are only two classes of citizens: (1) those who are natural-born and (2) those who are naturalized in accordance with law. A citizen who is not a naturalized Filipino, i.e., did not have to undergo the process of naturalization to obtain Philippine citizenship, necessarily is natural-born Filipino. Noteworthy is the absence in said enumeration of a separate category for persons who, after losing Philippine citizenship, subsequently reacquire it. The reason therefor is clear: as to such persons, they would either be natural-born or naturalized depending on the reasons for the loss of their citizenship and the mode prescribed by the applicable law for the reacquisition thereof. As respondent Cruz was not required by law to go through naturalization proceeding in order to reacquire his citizenship, he is perforce a natural-born Filipino. As such, he possessed all the necessary qualifications to be elected as member of the House of Representatives. A final point. The HRET has been empowered by the Constitution to be the "sole judge" of all contests relating to the election, returns, and qualifications of the members of the House.29 The Court's jurisdiction over the HRET is merely to check "whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction" on the part of the latter. 30 In the absence thereof, there is no occasion for the Court to exercise its corrective power and annul the decision of the HRET nor to substitute the Court's judgement for that of the latter for the simple reason that it is not the office of a petition for certiorari to inquire into the correctness of the assailed decision.31 There is no such showing of grave abuse of discretion in this case. WHEREFORE, the petition is hereby DISMISSED. SO ORDERED.

G.R. No. 142840 May 7, 2001 ANTONIO BENGSON III, petitioner, vs. HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL and TEODORO C. CRUZ, respondents. CONCURRING OPINION I concur in the ponencia of Mr. Justice Santiago M. Kapunan, holding that the House Electoral Tribunal did not gravely abuse its discretion in ruling that Private Respondent Teodoro C. Cruz remains a natural-born Filipino citizen and is eligible to continue being a member of Congress. Let me just add a few points. The Facts in Brief It is undisputed that Congressman Cruz was born on April 27, 1960 in San Clemente, Tarlac, to Filipino parents. He was, therefore, a Filipino citizen, pursuant to Section 1 (2),1 Article IV of the Constitution. Furthermore, not having done any act to acquire or perfect the Philippine citizenship he obtained from birth, he was a natural-born Filipino citizen, in accordance with Section 22 of the same Article IV. It is not disputed either that private respondent rendered military service to the United States Marine Corps from November 1958 to October 1993. On June 5, 1990, he was naturalized as an American citizen, in connection with his US military service. Consequently, under Section 1 (4)3 of CA No. 63, he lost his Philippine citizenship. Upon his discharge from the US Marine Corps, private respondent returned to the Philippines and decided to regain his Filipino citizenship. Thus, on March 17, 1994, availing himself of the benefits of Republic Act (RA) No. 2630, entitled "An Act Providing for Reacquisition of Philippine Citizenship by Persons Who Lost Such by Rendering Service to, or Accepting Commission in, the Armed Force of the United States,"4 Cruz took his oath of allegiance to the Republic and registered the same with the Local Civil Registry of Mangatarem, Pangasinan. On the same day, he also executed an Affidavit of Reacquisition of Philippine Citizenship. Main Issue The main question here is: Did the House of Representatives Electoral Tribunal (HRET) commit grave abuse of discretion in holding that, by reason of his repatriation, Congressman Teodoro C. Cruz had reverted to his original status as a natural-born citizen? I respectfully submit that the answer is "No." In fact, I believe that the HRET was correct in its ruling. 1. Repatriation Is Recovery of Original Citizenship First, repatriation is simply the recovery of original citizenship. Under Section 1 of RA 2630, a person "who ha[s] lost his citizenship" may "reacquire" it by " taking an oath of allegiance to the Republic of the Philippines." Former Senate President Jovito R. Salonga, a noted authority on the subject, explains this method more precisely in his treatise, Private International Law.5 He defines repatriation as "the recovery of the original nationality upon fulfillment of certain condition."6 Webster buttresses this definition by describing the ordinary or common usage of repatriate, as "to restore or return to one's country of origin, allegiance, or citizenship; x x x."7 In relation to our subject matter, repatriation, then, means restoration of citizenship. It is not a grant of a new citizenship, but a recovery of one's former or original citizenship. To "reacquire" simply means "to get back as one's own again."8 Ergo, since Cruz, prior to his becoming a US citizen, was a naturalborn Filipino citizen, he "reacquired" the same status upon repatriation. To rule otherwise – that Cruz became a non-natural-born citizen – would not be consistent whit the legal and ordinary meaning of repatriation. It would be akin to naturalization, which is the acquisition of a new citizenship. "New." Because it is not the same as the with which he has previously been endowed. In any case, "the leaning, in questions of citizenship, should always be in favor of [its] claimant x x x." 9 Accordingly, the same should be construed in favor of private respondent, who claims to be a natural-born citizen. 2. Not Being Naturalized, Respondent Is Natural Born Second, under the present Constitution, private respondent should be deemed natural-born, because was not naturalized. Let me explain. There are generally two classes of citizens: (1) natural-born citizens and (2) naturalized citizens.10 While CA 63 provides that citizenship may also be acquired by direct act of the Legislature, I believe that those who do become citizens through such procedure would properly fall under the second category (naturalized). 11 Naturalized citizens are former aliens or foreigners who had to undergo a rigid procedure, in which they had to adduce sufficient evidence to prove that they possessed all the qualifications and none of the disqualifications provided by law in order to become Filipino citizens. In contrast, as stated in the early case Roa v. Collector of Customs,12 a natural-born citizen is a citizen "who has become such at the moment of his birth." The assailed HRET Decision, penned by Mr. Justice Vicente V. Mendoza, explains clearly who are considered natural-born Filipino citizens. He traces the concept as first defined in Article III of the 1973 Constitution, which simply provided as follows: "Sec 4. A natural-born citizen is one who is a citizen of the Philippines from birth without having to perform any act to acquire or perfect his Philippine citizenship." Under the above definition, there are two requisites in order that a Filipino citizen may be considered "natural-born": (1) one must be a citizen of the Philippines from birth, and (2) one does not have to do anything to acquire or perfect one's Philippine citizenship.13 Thus, under the 1973 Constitution, excluded from the class of "natural-born citizens" were (1) those who were naturalized and (2) those born before January 17, 1973, of Filipino mothers who, upon reaching the age of majority, elected Philippine citizenship.14 The present Constitution, however, has expanded the scope of natural-born citizens to include "[t]hose who elect Philippine citizenship in accordance with paragraph (3), Section 1 hereof," meaning those covered under class (2) above. Consequently, only naturalized Filipino citizens are not considered natural-born citizens. Premising therefrom, respondent – being clearly and concededly not naturalized – is, therefore, a natural-born citizen of the Philippines.15 With respect to repatriates, since the Constitution does not classify them separately, they naturally reacquire their original classification before the loss of their Philippine citizenship. In the case of Congressman Teodoro C. Cruz, upon his repatriation in1994, he reacquired his lost citizenship. In other words, he regained his original status as a natural-born Filipino citizen, nothing less. 3. No Grave Abuse of Discretion on the Part of HRET Third, the HRET did not abuse, much less gravely abuse, its discretion in holding that Respondent Cruz is a natural-born Filipino citizen who is qualified to be a member of Congress. I stress that the Court, in this certiorari proceeding before us, is limited to determining whether the HRET committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing its assailed Decision. The Court has no power to reverse or modify HRET's rulings, simply because it differs in its perception of controversies. It cannot substitute its discretion for that of HRET, an independent, constitutional body with its own specific mandate.

The Constitution explicitly states that the respective Electoral Tribunals of the chambers of Congress "shall be the sole judges of all contests relating to the election, returns, and qualifications their respective members."16 In several cases,17 this Court has held that the power and the jurisdiction of the Electoral Tribunals are original and exclusive, as if they remained in the legislature, a coequal branch of government. Their judgment are beyond judicial interference, unless rendered without or in excess of their jurisdiction or with grave abuse of discretion.18 In the elegant words of Mr. Justice Hugo E. Gutierrez Jr.:19 "The Court does not venture into the perilous area of trying to correct perceived errors of independent branches of the Government. It comes in only when it has to vindicate a denial of due process or correct an abuse of discretion so grave or glaring that no less than the Constitution calls for remedial action." True, there is no settled judicial doctrine on the exact effect of repatriation. But, as earlier explained, the legal and common definition of repatriation is the reacquisition of the former citizenship. How then can the HRET be rebuked with grave abuse of discretion? At best, I can concede that the legal definition is not judicially settled or is even doubtful. But an interpretation made in good faith and grounded o reason one way or the other cannot be the source of grave abuse amounting to lack or excess of jurisdiction. The HRET did not violate the Constitution or the law or any settled judicial doctrine. It was definitely acting within its exclusive domain. Be it remembered that our Constitution vests upon the HRET the power to be the sole judge of the qualifications of members of the House of Representatives, one of which is citizenship. Absent any clear showing of a manifest violation of the Constitution or the law or nay judicial decision, this Court cannot impute grave abuse of discretion to the HRET in the latter's actions on matters over which full discretionary authority is lodged upon it by our fundamental law. 20 Even assuming that we disagree with the conclusion of public respondent, we cannot ipso facto attribute to it "grave abuse of discretion." Verily, there is a line between perceived error and grave abuse.21 By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough. "It must be grave abuse of discretion as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law." 22 That the HRET, after careful deliberation and purposeful study, voted 7 to 2 to issue its Decision upholding the qualifications of Congressman Cruz could not in any wise be condemned as gravely abusive. Neither can I find any "patent or gross" arbitrariness or despotism "by reason of passion or hostility" in such exercise. 4. In Case of Doubt, Popular Will Prevails Fourth, the court has a solemn duty to uphold the clear and unmistakable mandate of the people. It cannot supplant the sovereign will of the Second District of Pangasinan with fractured legalism. The people of the District have clearly spoken. They overwhelmingly and unequivocally voted for private respondent to represent them in the House of Representatives. The votes that Cruz garnered (80, 119) in the last elections were much more than those of all his opponents combined (66, 182). 23 In such instances, all possible doubts should be resolved in favor of the winning candidate's eligibility; to rule otherwise would be to defeat the will of the people.24 Well-entrenched in our jurisprudence is the doctrine that in case of doubt, political laws must be so constructed as to give life and spirit to the popular mandate freely expressed through the ballot. 25 Public interest and the sovereign will should, at all times, be the paramount considerations in election controversies.26 For it would be better to err in favor of the people's choice than to be right in complex but little understood legalisms.27 "Indeed, this Court has repeatedly stressed the importance of giving effect to the sovereign will in order to ensure the survival of our democracy. In any action involving the possibility of a reversal of the popular electoral choice, this Court must exert utmost effort to resolve the issues in a manner that would give effect to the will of the majority, for it is merely sound public policy to cause elective offices to be filled by those who are the choice of the majority. To successfully challenge a winning candidate's qualifications, the petitioner must clearly demonstrative that the ineligibility is so patently antagonistic to constitutional and legal principles that overriding such ineligibility and thereby giving effect to the apparent will of the people would ultimately create greater prejudice to the very democratic institutions and juristic traditions that our Constitution and laws so zealously protect and promote."28 5. Current Trend Towards Globalization Fifth, the current trend, economically as well as politically, is towards globalization. 29 Protectionist barriers dismantled. Whereas, in the past, governments frowned upon the opening of their doors to aliens who wanted to enjoy the same privileges as their citizens, the current era is adopting a more liberal perspective. No longer are applicants for citizenship eyed with the suspicion that they merely want to exploit local resources for themselves. They are now being considered potential sources of developmental skills, know-how and capital.1âwphi1.nêt More so should our government open its doors to former Filipinos, like Congressman Cruz, who want to rejoin the Filipino community as citizens again. They are not "aliens" in the true sense of the law. They are actually Filipino by blood, by origin and by culture, who want to reacquire their former citizenship. It cannot be denied that most Filipinos go abroad and apply for naturalization in foreign countries, because of the great economic or social opportunities there. Hence, we should welcome former Filipino citizens desirous of not simply returning to the country or regaining Philippine citizenship, but of serving the Filipino people as well. One of these admirable Filipino is private respondent who, in only a year after being absent from the Philippines for about eight (8) years, was already voted municipal mayor of Mangatarem, Pangasinan. And after serving as such for just one term, he was overwhelmingly chosen by the people to be their representative in Congress. I reiterate, the people have spoken. Let not a restrictive and parochial interpretation of the law bar the sovereign will. Let not grave abuse be imputed on the legitimate exercise of HRET's prerogatives. WHEREFORE, I vote to DISMISS the petition. VAN DORN vs. HON. ROMILLO and RICHARD UPTON G.R. No. L-68470 October 8, 1985 FACTS: Petitioner Alice Van Dorn is a citizen of the Philippines while private respondent Richard Upton is a citizen of the USA. They were married in Hongkong in 1972 and begot two children. The parties were divorced in Nevada, USA in 1982. Alice has then remarried also in Nevada, this time to Theodore Van Dorn.

In 1983, Richard filed suit against Alice in the RTC-Pasay, stating that Alice’s business in Ermita, Manila is conjugal property of the parties, and asking that Alice be ordered to render an accounting of that business, and that Richard be declared with right to manage the conjugal property. Alice moved to dismiss the case on the ground that the cause of action is barred by previous judgment in the divorce proceedings before the Nevada Court wherein respondent had acknowledged that he and petitioner had “no community property” as of June 11, 1982. The Court below (presiding judge: Judge Romillo) denied the MTD in the mentioned case on the ground that the property involved is located in the Philippines so that the Divorce Decree has no bearing in the case. The denial is now the subject of this certiorari proceeding. ISSUE: What is the effect of the foreign divorce on the parties and their alleged conjugal property in the Philippines? HELD: Petition is granted, and respondent Judge is hereby ordered to dismiss the Complaint… For the resolution of this case, it is not necessary to determine whether the property relations between Alice and Richard, after their marriage, were upon absolute or relative community property, upon complete separation of property, or upon any other regime. The pivotal fact in this case is the Nevada divorce of the parties. The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who appeared in person before the Court during the trial of the case. It also obtained jurisdiction over private respondent who authorized his attorneys in the divorce case to agree to the divorce on the ground of incompatibility in the understanding that there were neither community property nor community obligations. As explicitly stated in the Power of Attorney he executed in favor of the law firm of KARP & GRAD LTD. to represent him in the divorce proceedings: You are hereby authorized to accept service of Summons, to file an Answer, appear on my behalf and do all things necessary and proper to represent me, without further contesting, subject to the following: 1. That my spouse seeks a divorce on the ground of incompatibility. 2. That there is no community of property to be adjudicated by the Court. 3. That there are no community obligations to be adjudicated by the court. There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. What he is contending in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to local law and public policy. It is true 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 police and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner’s husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own country’s Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property. G.R. No. L-68470 October 8, 1985 ALICE REYES VAN DORN, petitioner, vs. HON. MANUEL V. ROMILLO, JR., as Presiding Judge of Branch CX, Regional Trial Court of the National Capital Region Pasay City and RICHARD UPTON respondents. In this Petition for certiorari and Prohibition, petitioner Alice Reyes Van Dorn seeks to set aside the Orders, dated September 15, 1983 and August 3, 1984, in Civil Case No. 1075-P, issued by respondent Judge, which denied her Motion to Dismiss said case, and her Motion for Reconsideration of the Dismissal Order, respectively. The basic background facts are that petitioner is a citizen of the Philippines while private respondent is a citizen of the United States; that they were married in Hongkong in 1972; that, after the marriage, they established their residence in the Philippines; that they begot two children born on April 4, 1973 and December 18, 1975, respectively; that the parties were divorced in Nevada, United States, in 1982; and that petitioner has re-married also in Nevada, this time to Theodore Van Dorn. Dated June 8, 1983, private respondent filed suit against petitioner in Civil Case No. 1075-P of the Regional Trial Court, Branch CXV, in Pasay City, stating that petitioner's business in Ermita, Manila, (the Galleon Shop, for short), is conjugal property of the parties, and asking that petitioner be ordered to render an accounting of that business, and that private respondent be declared with right to manage the conjugal property. Petitioner moved to dismiss the case on the ground that the cause of action is barred by previous judgment in the divorce proceedings before the Nevada Court wherein respondent had acknowledged that he and petitioner had "no community property" as of June 11, 1982. The Court below denied the Motion to Dismiss in the mentioned case on the ground that the property involved is located in the Philippines so that the Divorce Decree has no bearing in the case. The denial is now the subject of this certiorari proceeding. Generally, the denial of a Motion to Dismiss in a civil case is interlocutory and is not subject to appeal. certiorari and Prohibition are neither the remedies to question the propriety of an interlocutory order of the trial Court. However, when a grave abuse of discretion was patently committed, or the lower Court acted capriciously and whimsically, then it devolves upon this Court in a certiorari proceeding to exercise its supervisory authority and to correct the error committed which, in such a case, is equivalent to lack of jurisdiction. 1 Prohibition would then lie since it would be useless and a waste of time to go ahead with the proceedings. 2 Weconsider the petition filed in this case within the exception, and we have given it due course.

For resolution is the effect of the foreign divorce on the parties and their alleged conjugal property in the Philippines. Petitioner contends that respondent is estopped from laying claim on the alleged conjugal property because of the representation he made in the divorce proceedings before the American Court that they had no community of property; that the Galleon Shop was not established through conjugal funds, and that respondent's claim is barred by prior judgment. For his part, respondent avers that the Divorce Decree issued by the Nevada Court cannot prevail over the prohibitive laws of the Philippines and its declared national policy; that the acts and declaration of a foreign Court cannot, especially if the same is contrary to public policy, divest Philippine Courts of jurisdiction to entertain matters within its jurisdiction. For the resolution of this case, it is not necessary to determine whether the property relations between petitioner and private respondent, after their marriage, were upon absolute or relative community property, upon complete separation of property, or upon any other regime. The pivotal fact in this case is the Nevada divorce of the parties. The Nevada District Court, which decreed the divorce, had obtained jurisdiction over petitioner who appeared in person before the Court during the trial of the case. It also obtained jurisdiction over private respondent who, giving his address as No. 381 Bush Street, San Francisco, California, authorized his attorneys in the divorce case, Karp & Gradt Ltd., to agree to the divorce on the ground of incompatibility in the understanding that there were neither community property nor community obligations. 3 As explicitly stated in the Power of Attorney he executed in favor of the law firm of KARP & GRAD LTD., 336 W. Liberty, Reno, Nevada, to represent him in the divorce proceedings: You are hereby authorized to accept service of Summons, to file an Answer, appear on my behalf and do an things necessary and proper to represent me, without further contesting, subject to the following: 1. That my spouse seeks a divorce on the ground of incompatibility. 2. That there is no community of property to be adjudicated by the Court. 3. 'I'hat there are no community obligations to be adjudicated by the court. There can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. For instance, private respondent cannot sue petitioner, as her husband, in any State of the Union. What he is contending in this case is that the divorce is not valid and binding in this jurisdiction, the same being contrary to local law and public policy. It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, 5 only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public police and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. 6 In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. As stated by the Federal Supreme Court of the United States in Atherton vs. Atherton, 45 L. Ed. 794, 799: The purpose and effect of a decree of divorce from the bond of matrimony by a court of competent jurisdiction are to change the existing status or domestic relation of husband and wife, and to free them both from the bond. The marriage tie when thus severed as to one party, ceases to bind either. A husband without a wife, or a wife without a husband, is unknown to the law. When the law provides, in the nature of a penalty. that the guilty party shall not marry again, that party, as well as the other, is still absolutely freed from the bond of the former marriage. Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioner's husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own country's Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property. To maintain, as private respondent does, that, under our laws, petitioner has to be considered still married to private respondent and still subject to a wife's obligations under Article 109, et. seq. of the Civil Code cannot be just. Petitioner should not be obliged to live together with, observe respect and fidelity, and render support to private respondent. The latter should not continue to be one of her heirs with possible rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are to be served. WHEREFORE, the Petition is granted, and respondent Judge is hereby ordered to dismiss the Complaint filed in Civil Case No. 1075P of his Court. Without costs. SO ORDERED. THE GOVT OF THE PHILIPPINE ISLANDS vs. FRANK G. R. No. 2935 March 23, 1909 FACTS: In 1903, in the city of Chicago, Illinois, Frank entered into a contract for a period of 2 years with the Plaintiff, by which Frank was to receive a salary as a stenographer in the service of the said Plaintiff, and in addition thereto was to be paid in advance the expenses incurred in traveling from the said city of Chicago to Manila, and one-half salary during said period of travel. Said contract contained a provision that in case of a violation of its terms on the part of Frank, he should become liable to the Plaintiff for the amount expended by the Government by way of expenses incurred in traveling from Chicago to Manila and the one-half salary paid during such period. Frank entered upon the performance of his contract and was paid half-salary from the date until the date of his arrival in the Philippine Islands.

Thereafter, Frank left the service of the Plaintiff and refused to make a further compliance with the terms of the contract. The Plaintiff commenced an action in the CFI-Manila to recover from Frank the sum of money, which amount the Plaintiff claimed had been paid to Frank as expenses incurred in traveling from Chicago to Manila, and as half-salary for the period consumed in travel. It was expressly agreed between the parties to said contract that Laws No. 80 and No. 224 should constitute a part of said contract. The Defendant filed a general denial and a special defense, alleging in his special defense that (1) the Government of the Philippine Islands had amended Laws No. 80 and No. 224 and had thereby materially altered the said contract, and also that (2) he was a minor at the time the contract was entered into and was therefore not responsible under the law. the lower court rendered a judgment against Frank and in favor of the Plaintiff for the sum of 265. 90 dollars ISSUE: 1. Did the amendment of the laws altered the tenor of the contract entered into between Plaintiff and Defendant? 2. Can the defendant allege minority/infancy? HELD: the judgment of the lower court is affirmed 1. NO; It may be said that the mere fact that the legislative department of the Government of the Philippine Islands had amended said Acts No. 80 and No. 224 by Acts No. 643 and No. 1040 did not have the effect of changing the terms of the contract made between the Plaintiff and the Defendant. The legislative department of the Government is expressly prohibited by section 5 of the Act of Congress of 1902 from altering or changing the terms of a contract. The right which the Defendant had acquired by virtue of Acts No. 80 and No. 224 had not been changed in any respect by the fact that said laws had been amended. These acts, constituting the terms of the contract, still constituted a part of said contract and were enforceable in favor of the Defendant. 2. NO; The Defendant alleged in his special defense that he was a minor and therefore the contract could not be enforced against him. The record discloses that, at the time the contract was entered into in the State of Illinois, he was an adult under the laws of that State and had full authority to contract. Frank claims that, by reason of the fact that, under that laws of the Philippine Islands at the time the contract was made, made persons in said Islands did not reach their majority until they had attained the age of 23 years, he was not liable under said contract, contending that the laws of the Philippine Islands governed. It is not disputed — upon the contrary the fact is admitted — that at the time and place of the making of the contract in question the Defendant had full capacity to make the same. No rule is better settled in law than that matters bearing upon the execution, interpretation and validity of a contract are determined b the law of the place where the contract is made. Matters connected with its performance are regulated by the law prevailing at the place of performance. Matters respecting a remedy, such as the bringing of suit, admissibility of evidence, and statutes of limitations, depend upon the law of the place where the suit is brought. G.R. No. L-2935 March 23, 1909 THE GOVERNMENT OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. GEORGE I. FRANK, defendant-appellant. Bishop and O'Brien for appellant. Attorney-General Wilfley for appellee. Judgment was rendered in the lower court on the 5th day of September, 1905. The defendant appealed. On the 12th day of October, 1905, the appellant filed his printed bill of exceptions with the clerk of the Supreme Court. On the 5th day of December, 1905, the appellant filed his brief with the clerk of the Supreme Court. On the 19th day of January, 1906, the Attorney-General filed his brief in said cause. Nothing further was done in said cause until on or about the 30th day of January, 1909, when the respective parties were requested by this court to prosecute the appeal under the penalty of having the same dismissed for failure so to do; whereupon the appellant, by petition, had the caused placed upon the calendar and the same was heard on the 2d day of February, 1909. The facts from the record appear to be as follows: First. That on or about the 17th day of April, 1903, in the city of Chicago, in the state of Illinois, in the United States, the defendant, through a respective of the Insular Government of the Philippine Islands, entered into a contract for a period of two years with the plaintiff, by which the defendant was to receive a salary of 1,200 dollars per year as a stenographer in the service of the said plaintiff, and in addition thereto was to be paid in advance the expenses incurred in traveling from the said city of Chicago to Manila, and one-half salary during said period of travel. Second. Said contract contained a provision that in case of a violation of its terms on the part of the defendant, he should become liable to the plaintiff for the amount expended by the Government by way of expenses incurred in traveling from Chicago to Manila and one-half salary paid during such period. Third. The defendant entered upon the performance of his contract upon the 30th day of April, 1903, and was paid half-salary from that date until June 4, 1903, the date of his arrival in the Philippine Islands. Fourth. That on the 11th day of February, 1904, the defendant left the service of the plaintiff and refused to make further compliance with the terms of the contract. Fifth. On the 3d day of December, 1904, the plaintiff commenced an action in the Court of First Instance of the city of Manila to recover from the defendant the sum of 269.23 dollars, which amount the plaintiff claimed had been paid to the defendant as expenses incurred in traveling from Chicago to Manila, and as half salary for the period consumed in travel.

Sixth. It was expressly agreed between the parties to said contract that Laws No. 80 and No. 224 should constitute a part of said contract. To the complaint of the plaintiff the defendant filed a general denial and a special defense, alleging in his special defense that the Government of the Philippine Islands had amended Laws No. 80 and No. 224 and had thereby materially altered the said contract, and also that he was a minor at the time the contract was entered into and was therefore not responsible under the law. To the special defense of the defendant the plaintiff filed a demurrer, which demurrer the court sustained. Upon the issue thus presented, and after hearing the evidence adduced during the trial of the cause, the lower court rendered a judgment against the defendant and in favor of the plaintiff for the sum of 265.90 dollars. The lower court found that at the time the defendant quit the service of the plaintiff there was due him from the said plaintiff the sum of 3.33 dollars, leaving a balance due the plaintiff in the sum of 265.90 dollars. From this judgment the defendant appealed and made the following assignments of error: 1. The court erred in sustaining plaintiff's demurrer to defendant's special defenses. 2. The court erred in rendering judgment against the defendant on the facts. With reference to the above assignments of error, it may be said that the mere fact that the legislative department of the Government of the Philippine Islands had amended said Acts No. 80 and No. 224 by the Acts No. 643 and No. 1040 did not have the effect of changing the terms of the contract made between the plaintiff and the defendant. The legislative department of the Government is expressly prohibited by section 5 of the Act of Congress of 1902 from altering or changing the terms of the contract. The right which the defendant had acquired by virtue of Acts No. 80 and No. 224 had not been changed in any respect by the fact that said laws had been amended. These acts, constituting the terms of the contract, still constituted a part of said contract and were enforceable in favor of the defendant. The defendant alleged in his special defense that he was a minor and therefore the contract could not be enforced against him. The record discloses that, at the time the contract was entered into in the State of Illinois, he was an adult under the laws of that State and had full authority to contract. The plaintiff [the defendant] claims that, by reason of the fact that, under the laws of the Philippine Islands at the time the contract was made, male persons in said Islands did not reach their majority until they had attained the age of 23 years, he was not liable under said contract, contending that the laws of the Philippine Islands governed. It is not disputed — upon the contrary the fact is admitted — that at the time and place of the making of the contract in question the defendant had full capacity to make the same. No rule is better settled in law than that matters bearing upon the execution, interpretation and validity of a contract are determined by the law of the place where the contract is made. (Scudder vs. Union National Bank, 91 U. S., 406.) Matters connected with its performance are regulated by the law prevailing at the place of performance. Matters respecting a remedy, such as the bringing of suit, admissibility of evidence, and statutes of limitations, depend upon the law of the place where the suit is brought. (Idem.) The defendant's claim that he was an adult when he left Chicago but was a minor when he arrived at Manila; that he was an adult at the time he made the contract but was a minor at the time the plaintiff attempted to enforce the contract, more than a year later, is not tenable. Our conclusions with reference to the first above assignment of error are, therefore: First. That the amendments to Acts No. 80 and No. 224 in no way affected the terms of the contract in question; and Second. The plaintiff [defendant] being fully qualified to enter into the contract at the place and time the contract was made, he cannot plead infancy as a defense at the place where the contract is being enforced. We believe that the above conclusions also dispose of the second assignment of error. For the reasons above stated, the judgment of the lower court is affirmed, with costs.