presumption against extraterritoriality.
Therefore, unless there is "the affirmative
B. JURISDICTION
#1
EEOC v. ARABIAN AMERICAN OIL CO.
FACTS: Petitioner Boureslan is a naturalized United States citizen who was born in
Lebanon. The respondents are two Delaware corporations, Arabian American Oil
Company (Aramco), and its subsidiary, Aramco Service Company (ASC). Aramco's
principal place of business is Dhahran, Saudi Arabia, and it is licensed to do business
in Texas. ASC's principal place of business is Houston, Texas.
In 1979, Boureslan was hired by ASC as a cost engineer in Houston. A year
later he was transferred, at his request, to work for Aramco in Saudi Arabia.
Boureslan remained with Aramco in Saudi Arabia until he was discharged in 1984.
After filing a charge of discrimination with the Equal Employment Opportunity
Commission (EEOC), he instituted this suit in the United Stated District Court for the
Southern District of Texas against Aramco and ASC. He sought relief under both state
law and Title VII of the Civil Rights Act of 1964, on the ground that he was harassed
and ultimately discharged by respondents on account of his race, religion, and
national origin.
Respondents filed a motion for summary judgment on the ground that the
District Court lacked subject matter jurisdiction over Boureslan's claim because the
protections of Title VII do not extend to United States citizens employed abroad by
American employers. The District Court agreed, and dismissed Boureslan's Title VII
claim; it also dismissed his state-law claims for lack of pendent jurisdiction, and
entered final judgment in favor of respondents. A panel for the Fifth Circuit affirmed.
After vacating the panel's decision and rehearing the case en banc, the court affirmed
the District Court's dismissal of Boureslan's complaint. Both Boureslan and the EEOC
petitioned for certiorari. We granted both petitions for certiorari to resolve this
important issue of statutory interpretation.
ISSUE:
WON Title VII applies extraterritorially to regulate the employment practices
of United States employers who employ United States citizens abroad.
RULING: No.
It is a long-standing principle of American law "that legislation of Congress,
unless a contrary intent appears, is meant to apply only within the territorial
jurisdiction of the United States." This "canon of construction . . . is a valid approach
whereby unexpressed congressional intent may be ascertained." It serves to protect
against unintended clashes between our laws and those of other nations which could
result in international discord.
In applying this rule of construction, we look to see whether "language in the
act gives any indication of a congressional purpose to extend its coverage beyond
places over which the United States has sovereignty or has some measure of
legislative control." We assume that Congress legislates against the backdrop of the
intention of the Congress clearly expressed," we must presume it "is primarily
concerned with domestic conditions."
Boureslan and the EEOC contend that the language of Title VII evinces a
clearly expressed intent on behalf of Congress to legislate extraterritorially. They rely
principally on two provisions of the statute.
First, petitioners argue that the statute's definitions of the jurisdictional
terms "employer" and "commerce" are sufficiently broad to include U. S. firms that
employ American citizens overseas. Second, they maintain that the statute's "alien
exemption" clause, necessarily implies that Congress intended to protect American
citizens from employment discrimination abroad.
Petitioners also contend that we should defer to the EEOC's consistently held
position that Title VII applies abroad. We conclude that petitioners' evidence, while
not totally lacking in probative value, falls short of demonstrating the affirmative
congressional intent required to extend the protections of the Title VII beyond our
territorial borders.
Petitioners argue that by its plain language, Title VII's "broad jurisdictional
language" reveals Congress's intent to extend the statute's protections to
employment discrimination anywhere in the world by a U. S. employer who affects
trade "between a State and any place outside thereof." More precisely, they assert
that since Title VII defines "States" to include States, the District of Columbia, and
specified territories, the clause "between a State and any place outside thereof" must
be referring to areas beyond the territorial limit of the United States.
Petitioners' reliance on Title VII's jurisdictional provisions also finds no
support in our case law; we have repeatedly held that even statutes that contain
broad language in their definitions of "commerce" that expressly refer to "foreign
commerce," do not apply abroad. For example, in New York Central R. Co. v.
Chisholm, we addressed the extraterritorial application of the Federal Employers
Liability Act (FELA), FELA provides that common carriers by railroad while engaging in
"interstate or foreign commerce" or commerce between "any of the States or
territories and any foreign nation or nations" shall be liable in damages to its
employees who suffer injuries resulting from their employment. Despite this broad
jurisdictional language, we found that the Act "contains no words which definitely
disclose an intention to give it extraterritorial effect," and therefore there was no
jurisdiction under FELA for a damages action by a U. S. citizen employed on a U. S.
railroad who suffered fatal injuries at a point 30 miles north of the U. S. border into
Canada.
Similarly, in McCulloch v. Sociedad Nacional de Marine ros de Honduras, we
addressed whether Congress intended the National Labor Relations Act (NLRA), to
apply overseas. Even though the NLRA contained broad language that referred by its
terms to foreign commerce, this Court refused to find a congressional intent to apply
the statute abroad because there was not "any specific language" in the Act reflecting
congressional intent to do so. McCulloch,
The EEOC places great weight on an assertedly similar "broad jurisdictional
grant in the Lanham Act" that this Court held applied extraterritorially in Steele v.
Bulova Watch Co. In Steele, we addressed whether the Lanham Act, designed to
prevent deceptive and misleading use of trademarks, applied to acts of a U. S. citizen
consummated in Mexico. The Act defined commerce as "all commerce which may
lawfully be regulated by Congress." The stated intent of the statute was "to regulate
commerce within the control of Congress by making actionable the deceptive and
misleading use of marks in such commerce." Ibid. While recognizing that "the
legislation of Congress will not extend beyond the boundaries of the United States
unless a contrary legislative intent appears," the Court concluded that in light of the
fact that the allegedly unlawful conduct had some effects within the United States,
coupled with the Act's "broad jurisdictional grant" and its "sweeping reach into `all
commerce which may lawfully be regulated by Congress,' " the statute was properly
interpreted as applying abroad.
The EEOC's attempt to analogize this case to Steele is unpersuasive. The
Lanham Act by terms applies to "all commerce which may lawfully be regulated by
Congress." The Constitution gives Congress the power "[t]o regulate Commerce with
foreign Nations, and among the several States, and with the Indian Tribes." Since the
Act expressly stated that it applied to the extent of Congress's power over commerce,
the Court in Steele concluded that Congress intended that the statute apply abroad.
By contrast, Title VII's more limited, boilerplate "commerce" language does not
support such an expansive construction of congressional intent. Moreover, unlike the
language in the Lanham Act, Title VII's definition of "commerce" was derived
expressly from the LMRDA, a statute that this Court had held, prior to the enactment
of Title VII, did not apply abroad.
It is also reasonable to conclude that had Congress intended Title VII to apply
overseas, it would have addressed the subject of conflicts with foreign laws and
procedures. In amending the Age Discrimination in Employment Act of 1967 (ADEA),
to apply abroad, Congress specifically addressed potential conflicts with foreign law
by providing that it is not unlawful for an employer to take any action prohibited by
the ADEA "where such practices involve an employee in a workplace in a foreign
country, and compliance with [the ADEA] would cause such employer . . . to violate
the laws of the country in which such workplace is located." Title VII, by contrast, fails
to address conflicts with the laws of other nations.
Finally, the EEOC, as one of the two federal agencies with primary
responsibility for enforcing Title VII, argues that we should defer to its "consistent"
construction of Title VII, first formally expressed in a statement issued after oral
argument but before the Fifth Circuit's initial decision in this case, "to apply to
discrimination against American citizens outside the United States." Citing a 1975
letter from the EEOC's General Counsel, 1983 testimony by its Chairman, and a 1985
decision by the Commission, it argues that its consistent administrative
interpretations "reinforce" the conclusion that Congress intended Title VII to apply
abroad.
In General Electric Co. v. Gilbert, we addressed the proper deference to be
afforded the EEOC's guidelines. Recognizing that "Congress, in enacting Title VII, did
not confer upon the EEOC authority to promulgate rules or regulations," we held that
the level of deference afforded " `will depend upon the thoroughness evident in its
consideration, the validity of its reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power to persuade, if lacking
power to control.
The EEOC's interpretation does not fare well under these standards. As an
initial matter, the position taken by the Commission "contradicts the position which
[it] had enunciated at an earlier date, closer to the enactment of the governing
statute." General Electric Co. The Commission's early pronouncements on the issue
supported the conclusion that the statute was limited to domestic application. While
the Commission later intimated that the statute applied abroad, this position was not
expressly reflected in its policy guidelines until some 24 years after the passage of the
statute. The EEOC offers no basis in its experience for the change. The EEOC's
interpretation of the statute here thus has been neither contemporaneous with its
enactment nor consistent since the statute came into law. As discussed above, it also
lacks support in the plain language of the statute. While we do not wholly discount
the weight to be given to the 1988 guideline, its persuasive value is limited when
judged by the standards set forth in Skidmore.
We are of the view that, even when considered in combination with
petitioners' other arguments, the EEOC's interpretation is insufficiently weighty to
overcome the presumption against extraterritorial application.
Our conclusion today is buttressed by the fact that "[w]hen it desires to do
so, Congress knows how to place the high seas within the jurisdictional reach of a
statute." Argentine Republic v. Amerada Hess Shipping Corp. Congress's awareness of
the need to make a clear statement that a statute applies overseas is amply
demonstrated by the numerous occasions on which it has expressly legislated the
extraterritorial application of a statute. Indeed, after several courts had held that the
ADEA did not apply overseas, Congress amended 11(f) to provide, "[t]he term
`employee' includes any individual who is a citizen of the United States employed by
an employer in a workplace in a foreign country." Congress also amended 4(g)(1),
which states, "[i]f an employer controls a corporation whose place of incorporation is
in a foreign country, any practice by such corporation prohibited under this section
shall be presumed to be such practice by such employer." The expressed purpose of
these changes was to "mak[e] provisions of the Act apply to citizens of the United
States employed in foreign countries by United States corporations or their
subsidiaries. Congress, should it wish to do so, may similarly amend Title VII and in
doing so will be able to calibrate its provisions in a way that we cannot.
#2
GARY SHERWOOD SMALL v. US
Facts: In 1994 petitioner, Gary Small, was convicted in a Japanese court of having
tried to smuggle several pistols, a rifle, and ammunition into Japan. Small was
sentenced to five years’ imprisonment. After his release, Small returned to the US,
where he bought a gun from a Pennsylvania gun dealer. Federal authorities
subsequently charged Small under the “unlawful gun possession” statute here at
issue. Small pleaded guilty while reserving the right to challenge his conviction on the
ground that his earlier conviction, being a foreign conviction, fell outside the scope of
the illegal gun possession statute. The Federal District Court rejected Small’s
argument, as did the Court of Appeals for the Third Circuit. Because the Circuits
disagree about the matter, The SC granted certiorari.
Issue:
WON the words “convicted in any court” apply only to convictions entered in
any domestic court or to foreign convictions as well.
Held:
The phrase encompasses only domestic, not foreign, convictions.
The word “any” considered alone cannot answer this question. In law, a legislature
that uses the statutory phrase “ ‘any person’ ” may or may not mean to include
“ ‘persons’ ” outside “the jurisdiction of the state.”
In determining the scope of the statutory phrase we find help in the
“commonsense notion that Congress generally legislates with domestic concerns in
mind.” This notion has led the Court to adopt the legal presumption that Congress
ordinarily intends its statutes to have domestic, not extraterritorial, application. That
presumption would apply, for example, were we to consider whether this statute
prohibits unlawful gun possession abroad as well as domestically. And, although the
presumption against extraterritorial application does not apply directly to this case,
we believe a similar assumption is appropriate when we consider the scope of the
phrase “convicted in any court” here.
For one thing, the phrase describes one necessary portion of the “gun
possession” activity that is prohibited as a matter of domestic law. For another,
considered as a group, foreign convictions differ from domestic convictions in
important ways. Past foreign convictions for crimes punishable by more than one
year’s imprisonment may include a conviction for conduct that domestic laws would
permit, for example, for engaging in economic conduct that our society might
encourage. They would include a conviction from a legal system that is inconsistent
with an American understanding of fairness. And they would include a conviction for
conduct that domestic law punishes far less severely. Thus, the key statutory phrase
“convicted in any court of, a crime punishable by imprisonment for a term exceeding
one year” somewhat less reliably identifies dangerous individuals for the purposes of
U.S. law where foreign convictions, rather than domestic convictions, are at issue.
In addition, it is difficult to read the statute as asking judges or prosecutors to refine
its definitional distinctions where foreign convictions are at issue. To somehow weed
out inappropriate foreign convictions that meet the statutory definition is not
consistent with the statute’s language; it is not easy for those not versed in foreign
laws to accomplish; and it would leave those previously convicted in a foreign court
(say of economic crimes) uncertain about their legal obligations.
These considerations, suggesting significant differences between foreign and
domestic convictions, do not dictate our ultimate conclusion. Nor do they create a
“clear statement” rule, imposing upon Congress a special burden of specificity. They
simply convince us that we should apply an ordinary assumption about the reach of
domestically oriented statutes here–an assumption that helps us determine
Congress’ intent where Congress likely did not consider the matter and where other
indicia of intent are in approximate balance. We consequently assume a
congressional intent that the phrase “convicted in any court” applies domestically,
not extraterritorially. But, at the same time, we stand ready to revise this assumption
should statutory language, context, history, or purpose show the contrary.
The statute’s language does not suggest any intent to reach beyond domestic
convictions. Neither does it mention foreign convictions nor is its subject matter
special, say, immigration or terrorism, where one could argue that foreign convictions
would seem especially relevant. To the contrary, if read to include foreign
convictions, the statute’s language creates anomalies.
The statute’s lengthy legislative history confirms the fact that Congress did
not consider whether foreign convictions should or should not serve as a predicate to
liability under the provision here at issue. Congress did consider a Senate bill
containing language that would have restricted predicate offenses to domestic
offenses. And the Conference Committee ultimately rejected this version in favor of
language that speaks of those “convicted in any court, of a crime punishable by a
term of imprisonment exceeding one year.” But the history does not suggest that this
language change reflected a congressional view on the matter before us. Rather, the
enacted version is simpler and it avoids potential difficulties arising out of the fact
that States may define the term “felony” differently. And as far as the legislative
history is concerned, these latter virtues of the new language fully explain the change.
Thus, those who use legislative history to help discern congressional intent will see
the history here as silent, hence a neutral factor, that simply confirms the obvious,
namely, that Congress did not consider the issue. Others will not be tempted to use
or to discuss the history at all.
The statute’s purpose does offer some support for a reading of the phrase
that includes foreign convictions. As the Government points out, Congress sought to
“ ‘keep guns out of the hands of those who have demonstrated that they may not be
trusted to possess a firearm without becoming a threat to society.’ ” And, as the
dissent properly notes, one convicted of a serious crime abroad may well be as
dangerous as one convicted of a similar crime in the United States.
The force of this argument is weakened significantly, however, by the empirical fact
that, according to the Government, since 1968, there have probably been no more
than “10 to a dozen” instances in which such a foreign conviction has served as a
predicate for a felon-in-possession prosecution. This empirical fact reinforces the
likelihood that Congress, at best, paid no attention to the matter.
In sum, we have no reason to believe that Congress considered the added
enforcement advantages flowing from inclusion of foreign crimes, weighing them
against, say, the potential unfairness of preventing those with inapt foreign
convictions from possessing guns. The statute itself and its history offer only
congressional silence. Given the reasons for disfavoring an inference of
extraterritorial coverage from a statute’s total silence and our initial assumption
against such coverage, we conclude that the phrase “convicted in any court” refers
only to domestic courts, not to foreign courts. Congress, of course, remains free to
change this conclusion through statutory amendment.
 For these reasons, the judgment of the Third Circuit is reversed, and the case
is remanded for further proceedings consistent with this opinion.
#3
CORAZON C. SIM vs. NATIONAL LABOR RELATIONS COMMISSION and EQUITABLE
PCI-BANK
FACTS: Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor
Arbiter, alleging that she was initially employed by Equitable PCI-Bank (respondent) in
1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative
Office. Eventually, she was promoted to Manager position, until September 1999,
when she received a letter from Remegio David -- the Senior Officer, European Head
of PCIBank, and Managing Director of PCIB- Europe -- informing her that she was
being dismissed due to loss of trust and confidence based on alleged mismanagement
and misappropriation of funds. The Labor Arbiter dismissed the case for want of
jurisdiction and/or lack of merit stressing that the labor relations system in the
Philippines has no extra-territorial jurisdiction. The National Labor Relations
Commission (NLRC) affirmed the Labor Arbiter's Decision and dismissed petitioner's
appeal for lack of merit.
ISSUE:
WON the LA has extra-territorial jurisdiction
RULING:
Article 217 of the Labor Code provides for the jurisdiction of the Labor
Arbiter and the National Labor Relations Commission x x x Moreover, Section 10 of
Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipinos Act of
1995,18 provides:
SECTION 10. Money Claims. — Notwithstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days
after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of
damages.
Also, Section 62 of the Omnibus Rules and Regulations Implementing R.A.
No. 804219 provides that the Labor Arbiters of the NLRC shall have the original and
exclusive jurisdiction to hear and decide all claims arising out of employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of
damages, subject to the rules and procedures of the NLRC.
Under these provisions, it is clear that labor arbiters have original and
exclusive jurisdiction over claims arising from employer-employee relations, including
termination disputes involving all workers, among whom are overseas Filipino
workers.
#4
AAA V. BBB, 851 SCRA 33 (2018)
#5
KIRTSAENG VS JOHN WILEY & SONS
FACTS: Respondent, John Wiley & Sons, Inc., an academic textbook pub- lisher, often
assigns to its wholly owned foreign subsidiary (Wiley Asia) rights to publish, print, and
sell foreign editions of Wiley’s Eng- lish language textbooks abroad. Wiley Asia’s
books state that they are not to be taken (without permission) into the United States.
When petitioner Kirtsaeng moved from Thailand to the United States to study
mathematics, he asked friends and family to buy foreign edi- tion English-language
textbooks in Thai book shops, where they sold at low prices, and to mail them to him
in the United States. He then sold the books, reimbursed his family and friends, and
kept the profit. Wiley filed suit, claiming that Kirtsaeng’s unauthorized importation
and resale of its books was an infringement of Wiley’s §106(3) 1. Naturally, Wiley sued
Mr. Kirtsaeng for copyright infringement after discovering the nature (and volume) of
his activities, and won a $600,000 statutory judgment from a district court. The
judgment was later affirmed by the Second Circuit. Kirtsaeng replied that because his
books were “lawfully made” and acquired le- gitimately, §109(a)2’s “first sale”
doctrine permitted importation and resale without Wiley’s further permission.
The District Court held that Kirtsaeng could not assert this defense because
the doctrine does not apply to goods manufactured abroad. The jury then found that
Kirtsaeng had willfully infringed Wiley’s American copyrights and assessed damages.
The Second Circuit affirmed, concluding that §109(a)’s “lawfully made under this
title” language indicated that the “first sale” doctrine does not apply to copies of
American copyrighted works manufactured abroad.
HELD: The “first sale” doctrine applies to copies of a copyrighted work lawfully made
abroad. Pp. 7–33. (a) Wiley reads “lawfully made under this title” to impose a geo-
graphical limitation that prevents §109(a)’s doctrine from applying to Wiley Asia’s
books. Kirtsaeng, however, reads the phrase as imposing the non-geographical
limitation made “in accordance with” or “in compliance with” the Copyright Act,
which would permit the doctrine to apply to copies manufactured abroad with the
copyright owner’s permission. Pp. 7–8. (b) Section 109(a)’s language, its context, and
1
Section 106 of the Copyright Act grants “the owner of copyright under this title” certain “exclusive
rights,” including the right “to distribute copies . . . of the copy­ righted work to the public by sale or
other transfer of ownership.”
2
Section 109(a) sets forth the “first sale” doctrine as follows: “Notwithstanding the provisions of
section 106(3) [the section that grants the owner exclusive distribution rights], the owner of a
particular copy or phonorecord lawfully made under this title . . . is entitled, without the authority of
the copyright owner, to sell or other- wise dispose of the possession of that copy or phonorecord.”
the “first sale” doctrine’s common-law history favor Kirtsaeng’s reading. Pp. 8–24. (1)
Section 109(a) says nothing about geography. “Under” can logically mean “in
accordance with.” And a nongeographical interpretation provides each word in the
phrase “lawfully made under this title” with a distinct purpose: “lawfully made”
suggests an effort to distinguish copies that were made lawfully from those that were
not, and “under this title” sets forth the standard of “lawful[ness]” (i.e., the U. S.
Copyright Act). This simple reading promotes the traditional copyright objective of
combatting piracy and makes word-by-word linguistic sense. In contrast, the
geographical interpretation bristles with linguistic difficulties. Wiley first reads
“under” to mean “in conformance with the Copyright Act where the Copyright Act is
applicable.” Wiley then argues that the Act “is applicable” only in the United States.
However, neither “under” nor any other word in “lawfully made under this title”
means “where.” Nor can a geographical limitation be read into the word
“applicable.”
Both historical and contemporary statutory context indicate that Congress
did not have geography in mind when writing the present version of §109(a). A
comparison of the language in §109(a)’s predecessor and the present provision
supports this conclusion. The former version referred to those who are not owners of
a copy, but mere possessors who “lawfully obtained” a copy, while the present
version covers only owners of a “lawfully made” copy. This new language, including
the five words at issue, makes clear that a lessee of a copy will not receive “first sale”
protection but one who owns a copy will be protected, provided that the copy was
“lawfully made.”
A nongeographical interpretation is also supported by other provisions of the
present statute. For example, the “manufacturing clause,” which limited importation
of many copies printed outside the United States, was phased out in an effort to
equalize treatment of copies made in America and copies made abroad. But that
“equal treatment” principle is difficult to square with a geographical interpretation
that would grant an American copyright holder permanent control over the American
distribution chain in respect to copies printed abroad but not those printed in
America. Finally, the Court normally presumes that the words “lawfully made under
this title” carry the same meaning when they appear in different but related sections,
and it is unlikely that Congress would have intended the consequences produced by a
geographical interpretation.
A nongeographical reading is also supported by the canon of statutory
interpretation that “when a statute covers an issue previously governed by the
common law,” it is presumed that “Congress intended to retain the substance of the
common law.” The common law “first sale” doctrine, which has an impeccable
historic pedigree, makes no geographical distinctions. Nor can such distinctions be
found in Bobbs-Merrill Co. v. Straus, 210 U. S. 339, where this Court first applied the
“first sale” doctrine, or in §109(a)’s predecessor provision, which Congress enacted a
year later. Library associations, used-book dealers, technology companies, consumer-
goods retailers, and museums point to various ways in which a geographical
interpretation would fail to further basic constitutional copyright objectives, in
particular “promot[ing] the Progress of Science and useful Arts,” For example, a
geographical interpretation of the first-sale doctrine would likely require libraries to
obtain permission before circulating the many books in their collections that were
printed overseas. Wiley counters that such problems have not occurred in the 30
years since a federal court first adopted a geographical interpretation. But the law
has not been settled for so long in Wiley’s favor. And the fact that harm has proved
limited so far may simply reflect the reluctance of copyright holders to assert
geographically based resale rights. Thus, the practical problems described by
petitioner and his amici are too serious, extensive, and likely to come about to be
dismissed as insignificant— particularly in light of the ever-growing importance of
foreign trade to America. Several additional arguments that Wiley and the dissent
make in support of a geographical interpretation are unpersuasive.
#6
BMW OF NORTH AMERICA, INC. v. GORE 517 US 559 (1996)
JUSTICE STEVENS
FACTS: Respondent Gore purchased a new BMW automobile from an authorized
Alabama dealer, he discovered that the car had been repainted. He brought this suit
for compensatory and punitive damages against petitioner, the American distributor
of BMW's, alleging, inter alia, that the failure to disclose the repainting constituted
fraud under Alabama law. At trial, BMW acknowledged that it followed a nationwide
policy of not advising its dealers, and hence their customers, of pre delivery damage
to new cars when the cost of repair did not exceed 3 percent of the car's suggested
retail price. Gore's vehicle fell into that category. The jury returned a verdict finding
BMW liable for compensatory damages of $4,000, and assessing $4 million in punitive
damages. The trial judge denied BMW's post- trial motion to set aside the punitive
damages award, holding, among other things, that the award was not "grossly
excessive" and thus did not violate the Due Process Clause of the Fourteenth
Amendment. The Alabama Supreme Court agreed, but reduced the award to $2
million on the ground that, in computing the amount, the jury had improperly
multiplied Gore's compensatory damages by the number of similar sales in all States,
not just those in Alabama.
ISSUE:
Whether the $2 M punitive damages award to Gore exceed the
constitutional limit.
RULING:
The $2 million punitive damages award is grossly excessive and therefore
exceeds the constitutional limit.
Because such an award violates due process only when it can fairly be
categorized as "grossly excessive" in relation to the State's legitimate interests in
punishing unlawful conduct and deterring its repetition, the federal excessiveness
inquiry appropriately begins with an identification of the state interests that such an
award is designed to serve. Principles of state sovereignty and comity forbid a State
to enact policies for the entire Nation, or to impose its own policy choice on
neighboring States. Accordingly, the economic penalties that a State inflicts on those
who transgress its laws, whether the penalties are legislatively authorized fines or
judicially imposed punitive damages, must be supported by the State's interest in
protecting its own consumers and economy, rather than those of other States or the
entire Nation. Gore's award must therefore be analyzed in the light of conduct that
occurred solely within Alabama, with consideration being given only to the interests
of Alabama consumers.
Three guideposts, each of which indicates that BMW did not receive
adequate notice of the magnitude of the sanction that Alabama might impose, lead to
the conclusion that the $2 million award is grossly excessive:
1. The harm BMW inflicted on Gore was purely economic ;the presale repainting
had no effect on the car's performance, safety features, or appearance; and
BMW's conduct evinced no indifference to or reckless disregard for the health
and safety of others. Gore's contention that BMW's nondisclosure was
particularly reprehensible because it formed part of a nationwide pattern of
tortious conduct is rejected, because a corporate executive could reasonably
have interpreted the relevant state statutes as establishing safe harbors for
nondisclosure of presumptively minor repairs, and because there is no evidence
either that BMW acted in bad faith when it sought to establish the appropriate
line between minor damage and damage requiring disclosure to purchasers, or
that it persisted in its course of conduct after it had been adjudged unlawful.
Finally, there is no evidence that BMW engaged in deliberate false statements,
acts of affirmative misconduct, or concealment of evidence of improper motive.
2. Gore‘s $2millionaward is 500 times the amount of his actual harm as determined
by the jury, and there is no suggestion that he or any other BMW purchaser was
threatened with any additional potential harm by BMW's nondisclosure policy.
Although it is not possible to draw a mathematical bright line between the
constitutionally acceptable and the constitutionally unacceptable that would fit
every case, the ratio here is clearly outside the acceptable range.
3. $2million is substantially greater than Alabama's applicable $2,000 fine and the
penalties imposed in other States for similar malfeasance, and because none of
the pertinent statutes or interpretive decisions would have put an out-of-state
distributor on notice that it might be subject to a multimillion dollar sanction.
Moreover, in the absence of a BMW history of noncompliance with known
statutory requirements, there is no basis for assuming that a more modest
sanction would not have been sufficient.
#7
SPECTOR v. NORWEGIAN CRUISE LINE LTD. 545 U.S. 119 (2005)
Synopsis: Plaintiff disabled passengers filed a class action against defendant foreign
cruise line under Title III of the Americans with Disabilities Act of 1990 (ADA). Though
holding Title III generally applicable, the district court dismissed some claims but left
others in place. The United States Court of Appeals for the Fifth Circuit held that the
ADA was inapplicable to foreign vessels. The passengers sought review.
Facts: Plaintiffs in this case include individuals with mobility impairments requiring
them to use either a wheelchair or an electric scooter (the “mobility-impaired
plaintiffs”) and individuals without disabilities who traveled on cruises with two of the
mobility-impaired plaintiffs (the “companion plaintiffs”). The defendant Norwegian
Cruise Line Limited (“NCL”) is a corporation organized under the laws of the Bahamas,
with its principal place of business in Miami, Florida. NCL primarily advertises for its
business in the U.S., and the majority of its passengers are U.S. citizens.
Plaintiffs, who alleged that they took cruises on two of NCL’s ships during
1998 and 1999, filed suit against NCL on August 1, 2000, alleging that NCL
discriminated against the mobility-impaired plaintiffs on the basis of their disabilities
and against the companion plaintiffs because of their association with disabled
persons. The complaint alleged that NCL violated Title III of the ADA by imposing a
surcharge on passengers who request an accessible cabin, failing to remove
architectural barriers to access in existing facilities or to offer services in alternative
settings when it was readily achievable to do so, and failing to make reasonable
modifications to its policies, practices, and procedures. Plaintiffs sought declaratory
and injunctive relief, as well as reasonable attorneys’ fees and costs.
Defendant NCL moved to dismiss the complaint for “failure to state a claim upon
which relief may be granted.” It argued that requiring foreign-flag cruise ships to
comply with the ADA is an impermissible extraterritorial application of the statute. It
also argued that NCL is not required to remove barriers to access by persons with
disabilities from its ships because the administrative agencies charged with
enforcement of Title III have failed to promulgate regulations governing new
construction and alterations of cruise ships.
On September 10, 2002, the district court issued an order granting in part
and denying in part defendant’s motion to dismiss. The court held that Title III applies
to foreign-flagged cruise ships, but dismissed plaintiffs’ barrier removal claims. On
November 26, 2002, the district court entered an order denying plaintiffs’ motion for
entry of final judgment pursuant to Fed. R. Civ. P. 54(b), with respect to their barrier
removal claim, but granted the defendant’s motion to certify its September 10 order
for appeal pursuant to 28 U.S.C. 1292(b).
District Court: it correctly held that Title III of the ADA applies to foreign-flagged
cruise ships when those ships voluntarily enter the ports and internal waters of the
United States. The Department of Justice and the Department of Transportation have
reasonably determined that foreign-flagged cruise ships are subject to the ADA when
they voluntarily enter United States ports or other internal waters.
Issue:
Does Title III of the Americans with Disabilities Act apply to foreign-flagged
cruise ships in U.S. waters?
Ruling: Yes. Title III of the ADA applies to foreign-flagged cruise ships doing business
in the United States.
Unless Specifically Exempted by the Statute in Question, Foreign-Flag Cruise
Ships Doing Business Within the Internal Waters and Ports of the United States Must
Comply with All Generally Applicable Laws
It is axiomatic that activities taking place on United States waters are
generally governed by United States law. Pennoyer v. Neff, 95 U.S.714, 720 (1877)
(the first principle of the public law that regulates the relationships among
independent nations is "that every State possesses exclusive jurisdiction and
sovereignty over persons and property within its territory.") It is also well settled that
a given statute need not expressly contemplate or predict the specific circumstances
of all potential violations of that statute. Pennsylvania Dep't of Corrections v. Yeskey,
524 U.S. 206, 212 (1998) (the fact that a statute can be applied in situations not
expressly anticipated by Congress does not demonstrate ambiguity; it demonstrates
its breadth). Thus, Plaintiffs ask this Court to apply the ADA to alleged discriminatory
activity occurring on a foreign-flag cruise ship operating in United States waters and
ports. Since the ADA does not expressly exempt from coverage foreign-flag ships
operating on United States territory, the ADA clearly applies to NCL in the instant
case.
Virtually all cruise ships serving United States ports are foreign-flag vessels.
56 Fed. Reg. 45,584, 45,600 (1991). The fact that a cruise ship sails under a foreign
flag or is registered in a foreign country does not exempt it from generally applicable
laws of the countries in which it does business. As this Court has recognized, “[i]t is
well settled that when a foreign-flag shipping line chooses to engage in foreign
commerce and use American ports it is amenable to the jurisdiction of the United
States and subject to the laws thereof.” Armement Deppe, S.A. v. United States, 399
F.2d 794, 797 (5th Cir. 1968), cert. denied, 393 U.S. 1094 (1969). See also Benz v.
Compania Naviera Hidalgo, S.A., 353 U.S. 138, 142 (1957); accord Cunard S.S. Co. v.
Mellon, 262 U.S. 100, 124 (1923); Mali v. Keeper of the Common Jail, 120 U.S. 1, 12
(1887).
As the Supreme Court explained in Cunard, 62 U.S. at 124, the jurisdiction of
the country whose territorial limits a ship voluntarily enters attaches in virtue of her
presence, just as with other objects within those limits. During her stay she is entitled
to the protection of the laws of that place and correlatively is bound to yield
obedience to them. Of course, the local sovereign may out of considerations of public
policy choose to forego the exertion of its jurisdiction or to exert the same in only a
limited way, but this is a matter resting solely in its discretion.
The ADA does not exempt from coverage public accommodations or
transportation operated by foreign corporations. See 42 U.S.C. 12182, 12184. Both
the Department of Justice and the Department of Transportation have determined
that foreign-flagged cruise ships are subject to the requirements of the ADA when
they voluntarily enter the ports or internal waters of the United States. The
Department of Justice Technical Assistance Manual provides that foreign flag ships
“that operate in United States ports may be subject to domestic laws, such as the
ADA, unless there are specific treaty prohibitions that preclude enforcement.” Title III
Technical Assistance Manual III-1.2000(D) (1994 Supp.). The Department of
Transportation has similarly determined that the United States “appears to have
jurisdiction to apply ADA requirements to foreign-flag cruise ships that call in U.S.
ports” except to the extent that enforcing ADA requirements would conflict with a
treaty. 56 Fed. Reg. 45,584, 45,600 (1991).
#8
Pennoyer v. Neff, 95 U.S. 714 (1878)
Facts: Mitchell brought suit against Neff to recover unpaid legal fees. Mitchell
published notice of the lawsuit in an Oregon newspaper but did not serve Neff
personally. Neff failed to appear and a default judgment was entered against him. To
satisfy the judgment Mitchell seized land owned by Neff so that it could be sold at a
Sheriff‘s auction. When the auction was held Mitchell purchased it and later assigned
it to Pennoyer.
Neff sued Pennoyer in federal district court in Oregon to recover possession
of the property, claiming that the original judgment against him was invalid for lack of
personal jurisdiction over both him and the land. The court found that the judgment
in the lawsuit between Mitchell and Pennoyer was invalid and that Neff still owned
the land. Pennoyer lost on appeal and the Supreme Court granted certiorari.
Issue:
Can a state court exercise personal jurisdiction over a non-resident who has
not been personally served while within the state and whose property within the
state was not attached before the onset of litigation?
Ruling:
No. A court may enter a judgment against a non-resident only if the party: 1)
is personally served with process while within the state, or 2) has property within the
state, and that property is attached before litigation begins (i.e. quasi in rem
jurisdiction).
“If, without personal service, judgments in personam, obtained ex parte
against non-residents and absent parties, upon mere publication of process, which, in
the great majority of cases, would never be seen by the parties interested, could be
upheld and enforced, they would be the constant instruments of fraud and
oppression.”
In this case the property was moved against to satisfy a personal judgment
against a non-resident. Pre-trial seizure of the land would have satisfied notification
of a property judgment (in rem), because it is assumed that property is attached to
the person. However, to satisfy a personal judgment (which was case between
Mitchell and Neff), seizure is not a sufficient method of notification, nor is public
notification. Neff was not personally notified nor was his land attached at the time
of adjudication. Judgments in rem for non-residents must be given due process,
which involves a personal appearance by the Defendant or personal service of
notification or attachment of land.
Since the adoption of the Fourteenth Amendment, the validity of judgments
may be directly questioned on the ground that proceedings in a court of justice to
determine the personal rights and obligations of parties over whom that court has no
jurisdiction do not constitute due process of law. Due process demands that legal
proceedings be conducted according to those rules and principles which have been
established in our systems of jurisprudence for the protection and enforcement of
private rights.
To give legal proceedings any validity, there must be a tribunal with legal
authority to pass judgment, and a defendant must be brought within its jurisdiction by
service of process within the state, or by his voluntary appearance.
The substituted service of process by publication in actions brought against
non-residents is valid only where property in the state is brought under the control of
the court, and subjected to its disposition by process adapted to that purpose, or where
the judgment is sought as a means of reaching such property or affecting some interest
therein; in other words, where the action is in the nature of a proceeding in rem.
The Oregon court did not have personal jurisdiction over Neff because he was
not served in Oregon. The court‘s judgment would have been valid if Mitchell had
attached Neff‘s land at the beginning of the suit. Mitchell could not have done this
because Neff did not own the land at the time Mitchell initiated the suit. The default
judgment was declared invalid. Therefore, the sheriff had no power to auction the real
estate and title never passed to Mitchell. Neff was the legal owner.
#9
G.R. No. 128803 September 25, 1998
ASIAVEST LIMITED vs. THE COURT OF APPEALS and ANTONIO HERAS
FACTS: In 1984, a Hong Kong court ordered Antonio Heras to pay US$1.8 million or its
equivalent, with interest, to Asiavest Ltd. Apparently, Heras guaranteed a
certain loan in Hong Kong and the debtor in said loandefaulted hence, the creditor,
Asiavest, ran after Heras. But before said judgment was issued and even during trial,
Heras already left for good Hong Kong and he returned to the Philippines. So when in
1987, when Asiavest filed a complaint in court seeking to enforce the foreign
judgment against Heras, the latter claim that he never received any summons, not in
Hong Kong and not in the Philippines. He also claimed that he never received a copy
of the foreign judgment. Asiavest however contends that Heras was actually given
service of summons when a messenger from the Sycip Salazar Law Firm served said
summons by leaving a copy to one Dionisio Lopez who was Heras’ son in law.
ISSUE:
Whether or not the foreign judgment can be enforced against Heras in the
Philippines.
HELD: No. Although the foreign judgment was duly authenticated (Asiavest was able
to adduce evidence in support thereto) and Heras was never able to overcome the
validity of it, it cannot be enforced against Heras here in the Philippines because
Heras was not properly served summons. Hence, as far as Philippine law is concerned,
the Hong Kong court has never acquired jurisdiction over Heras. This means then that
Philippine courts cannot act to enforce the said foreign judgment.
The action against Heras is an action in personam and as far as Hong Kong is
concerned, Heras is a non resident. He is a non resident because prior to the
judgment, he already abandoned Hong Kong. The Hong Kong law on service of
summons in in personam cases against non residents was never presented in court
hence processual presumption is applied where it is now presumed that Hong Kong
law in as far as this case is concerned is the same as Philippine laws. And under our
laws, in an action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons
within the state is essential to the acquisition of jurisdiction over her
person. This method of service is possible if such defendant is physically present in
the country. If he is not found therein, the court cannot acquire jurisdiction over his
person and therefore cannot validly try and decide the case against him. Without a
personal service of summons, the Hong Kong court never acquired jurisdiction.
Needless to say, the summons tendered to Lopez was an invalid service because the
same does not satisfy the requirement of personal service.
#10
BANCO DO BRASIL v. THE COURT OF APPEALS, HON. ARSENIO M. GONONG, and
CESAR S. URBINO, SR.
G.R. Nos. 121576-78 June 16, 2000, SECOND DIVISION, (DE LEON, JR., J.)
Doctrine: It must be stressed that any relief granted in rem or quasi in rem actions
must be confined to the res, and the court cannot lawfully render a personal
judgment against the defendant.
FACTS: Poro Point Shipping Services, then acting as the local agent of Omega Sea
Transport Company of Honduras & Panama, a Panamanian Company (hereafter
referred to as Omega), requested permission for its vessel M/V Star Ace, which had
engine trouble, to unload its cargo and to store it at the Philippine Ports Authority
(PPA) compound in San Fernando, La Union while awaiting transhipment to
Hongkong. The request was approved by the Bureau of Customs. Despite the
approval, the customs personnel boarded the vessel when it docked on January 7,
1989, on suspicion that it was the hijacked M/V Silver Med owned by Med Line
Philippines Co., and that its cargo would be smuggled into the country. The district
customs collector seized said vessel and its cargo pursuant to Section 2301, Tariff and
Customs Code. A notice of hearing of SFLU Seizure Identification No. 3-89 was served
on its consignee, Singkong Trading Co. of Hongkong, and its shipper, Dusit
International Co., Ltd. of Thailand.
While seizure proceedings were ongoing, La Union was hit by three
typhoons, and the vessel ran aground and was abandoned. On June 8, 1989, its
authorized representative, Frank Cadacio, entered into salvage agreement with
private respondent to secure and repair the vessel at the agreed consideration of $1
million and "fifty percent (50%) of the cargo after all expenses, cost and taxes."
Finding that no fraud was committed, the District Collector of Customs,
Aurelio M. Quiray, lifted the warrant of seizure on July 1989. However, in a Second
Indorsement dated November 11, 1989, then Customs Commissioner Salvador M.
Mison declined to issue a clearance for Quiray's Decision; instead, he forfeited the
vessel and its cargo in accordance with Section 2530 of the Tariff and Customs Code
To enforce its preferred salvor's lien, herein Private Respondent Urbino, the
general manager of Duraproof Services, filed with the Regional Trial Court of Manila a
Petition for Certiorari, Prohibition and Mandamus assailing the actions of
Commissioner Mison and District Collector Sy. Also impleaded as respondents were
PPA Representative Silverio Mangaoang and Med Line Philippines, Inc.
Private respondent Urbino also impleaded petitioner Banco Do Brasil (BDB),
a foreign corporation not engaged in business in the Philippines nor does it have any
office here or any agent. BDB was impleaded simply because it has a claim over the
sunken ship. BDB however failed to appear multiple times. Eventually, a judgment
was rendered and BDB was adjudged to pay $300,000.00 in damages in favor of
Urbino for BDB being a nuisance defendant.
But petitioner Banco do Brasil filed, by special appearance, an Urgent Motion
to Vacate Judgement and to Dismiss Case on the ground that the decision of the trial
court is void with respect to it for having been rendered without validly acquiring
jurisdiction over the person of Banco do Brasil. Petitioner subsequently amended its
petition to specifically aver that its special appearance is solely for the purpose of
questioning the Court's exercise of personal jurisdiction.
The trial court issued an Order acting favorably on petitioner's motion and
set aside as against petitioner the decision dated February 18, 1991 for having been
rendered without jurisdiction over Banco do Brasil's person.
A petition for certiorari was filed by private respondent before public
respondent Court of Appeals seeking to nullify the decision of the trial court. The
appellate court rendered its decision granting private respondent's petitions, thereby
nullifying and setting aside the disputed orders and effectively "giving way to the
entire decision of the Regional Trial Court of Manila, which remains valid, final and
executory, if not yet wholly executed."
ISSUE: Whether or not the trial court acquired jurisdiction over Banco Do Brasil.
RULING: NO.
Petitioner avers that the action filed against it is an action for damages, as
such it is an action in personam which requires personal service of summons be made
upon it for the court to acquire jurisdiction over it. However, inasmuch as petitioner
Banco do Brasil is a non-resident foreign corporation, not engaged in business in the
Philippines, unless it has property located in the Philippines which may be attached to
convert the action into an action in rem, the court cannot acquire jurisdiction over it
in respect of an action in personam.
The petition bears merit, thus the same should be as it is hereby granted.
First. When the defendant is a nonresident and he is not found in the
country, summons may be served extraterritorially in accordance with Rule 14,
Section 17 of the Rules of Court. Under this provision, there are only four (4)
instances when extraterritorial service of summons is proper, namely: "(1) when the
action affects the personal status of the plaintiffs; (2) when the action relates to, or
the subject of which is property, within the Philippines, in which the defendant claims
a lien or interest, actual or contingent; (3) when the relief demanded in such action
consists, wholly or in part, in excluding the defendant from any interest in property
located in the Philippines; and (4) when the defendant non-resident's property has
been attached within the Philippines." In these instances, service of summons may be
effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem
sufficient.
Clear from the foregoing, extrajudicial service of summons apply only where
the action is in rem, an action against the thing itself instead of against the person, or
in an action quasi in rem, where an individual is named as defendant and the purpose
of the proceeding is to subject his interest therein to the obligation or loan burdening
the property. This is so inasmuch as, in in rem and quasi in rem actions, jurisdiction
over the person of the defendant is not a prerequisite to confer jurisdiction on the
court provided that the court acquires jurisdiction over the res.
However, where the action is in personam, one brought against a person on
the basis of his personal liability, jurisdiction over the person of the defendant is
necessary for the court to validly try and decide the case. When the defendant is a
non-resident, personal service of summons within the state is essential to the
acquisition of jurisdiction over the person. This cannot be done, however, if the
defendant is not physically present in the country, and thus, the court cannot acquire
jurisdiction over his person and therefore cannot validly try and decide the case
against him.
In the instant case, private respondent's suit against petitioner is premised
on petitioner's being one of the claimants of the subject vessel M/V Star Ace. Thus, it
can be said that private respondent initially sought only to exclude petitioner from
claiming interest over the subject vessel M/V Star Ace. However, private respondent
testified during the presentation of evidence that, for being a nuisance defendant,
petitioner caused irreparable damage to private respondent in the amount of
$300,000.00. Therefore, while the action is in rem, by claiming damages, the relief
demanded went beyond the res and sought a relief totally alien to the action.
It must be stressed that any relief granted in rem or quasi in rem actions
must be confined to the res, and the court cannot lawfully render a personal
judgment against the defendant. Clearly, the publication of summons effected by
private respondent is invalid and ineffective for the trial court to acquire jurisdiction
over the person of petitioner, since by seeking to recover damages from petitioner
for the alleged commission of an injury to his person or property caused by
petitioner's being a nuisance defendant, private respondent's action became in
personam. Bearing in mind the in personam nature of the action, personal or, if not
possible, substituted service of summons on petitioner, and not extraterritorial
service, is necessary to confer jurisdiction over the person of petitioner and validly
hold it liable to private respondent for damages. Thus, the trial court had no
jurisdiction to award damages amounting to $300,000.00 in favor of private
respondent and as against herein petitioner.
#11
Regner vs Logarta
FACTS: Luis Regner (Luis) had three daughters with his first wife, Anicita C. Regner,
namely, Cynthia Logarta (Cynthia) and Teresa Tormis (Teresa), the respondents
herein, and Melinda Regner-Borja (Melinda). Herein petitioner Victoria Regner
(Victoria) is the second wife of Luis.
During the lifetime of Luis, he acquired several properties, among which is a
share at Cebu Country Club Inc. On 15 May 1998, Luis executed a Deed of Donation in
favor of respondents Cynthia and Teresa covering Proprietary Ownership Certificate
No. 0272 of the Cebu Country Club, Inc.
Luis passed away on 11 February 1999.
On 15 June 1999, Victoria filed a Complaint for Declaration of Nullity of the
Deed of Donation with Prayer for Issuance of a Writ of Preliminary Injunction and
Temporary Restraining Order against Cynthia and Teresa with the RTC. Victoria
alleged in her complaint that: on 17 March 1997, Luis made a written declaration
wherein he stated that due to his illness and forgetfulness, he would not sign any
document without the knowledge of his lawyer, Atty. Francis Zosa; on 15 May 1998,
when Luis was already very ill and no longer of sound and disposing mind, Cynthia
and Teresa , conspiring and confederating with each other, fraudulently made or
caused to be fraudulently made a Deed of Donation whereby they made it appear
that Luis donated to them; since Luis no longer had the ability to write or affix his
signature, Melinda, acting under the influence of her sisters, Cynthia and Teresa,
fraudulently manipulated the hand of Luis so that he could affix his thumbmark on
the assailed Deed of Donation; on 8 February 1998, or three days before the death of
Luis, and when he was already in comatose condition at the Cebu Doctors’ Hospital,
Melinda, Teresa, and Cynthia caused the preparation of an affidavit to the effect that
Luis affirmed the Deed of Donation he allegedly executed earlier by lifting his hand to
affix his thumbmark on the said affidavit.
Sheriff Melchor A. Solon served the summonses on Cynthia and Teresa at the
Borja Family Clinic in Tagbilaran City wherein Melinda worked as a doctor, but
Melinda refused to receive the summonses for her sisters and informed the sheriff
that their lawyer, Atty. Francis Zosa, would be the one to receive the same.
Upon her arrival in the Philippines, on 1 June 2000, Teresa was personally served the
summons at Room 304, Regency Crest Condominium, Banilad, Cebu City.
Subsequently, on 12 September 2002, Teresa filed a motion to dismiss Civil
Case No. CEB 23927 because of petitioner’s failure to prosecute her action for an
unreasonable length of time.
Petitioner opposed the motion and filed her own motion to set the case for
pre-trial, to which Teresa filed her rejoinder on the ground that their sister, Cynthia,
an indispensable party, had not yet been served a summons. Thus, Teresa prayed for
the dismissal of petitioner’s complaint, as the case would not proceed without
Cynthia’s presence.
ISSUE
Whether or not a co-donee is an indispensable party in an action to declare
the nullity of the deed of donation, and whether or not delay in the service of
summons upon one of the defendants constitutes failure to prosecute that would
warrant dismissal of the complaint?
RULING
A Court must acquire jurisdiction over the persons of indispensable parties
before it can validly pronounce judgments personal to the parties. Courts acquire
jurisdiction over a party plaintiff upon the filing of the complaint. On the other hand,
jurisdiction over the person of a party defendant is assured upon the service of
summons in the manner required by law or otherwise by his voluntary appearance.
As a rule, if a defendant has not been summoned, the court acquires no jurisdiction
over his person, and a personal judgment rendered against such defendant is null and
void. A decision that is null and void for want of jurisdiction on the part of the trial
court is not a decision in the contemplation of law and, hence, it can never become
final and executory.
Rule 3, Section 7 of the Rules of Court, defines indispensable parties as
parties-in-interest without whom there can be no final determination of an action. As
such, they must be joined either as plaintiffs or as defendants. The general rule with
reference to the making of parties in a civil action requires, of course, the joinder of
all necessary parties where possible, and the joinder of all indispensable parties under
any and all conditions, their presence being a sine qua non for the exercise of judicial
power. It is precisely "when an indispensable party is not before the court [that] the
action should be dismissed." The absence of an indispensable party renders all
subsequent actions of the court null and void for want of authority to act, not only as
to the absent parties but even as to those present.
Applying the foregoing definitions and principles to the present case, this
Court finds that any decision cannot bind Cynthia, and the Court cannot nullify the
donation of the property she now co-owns with Teresa, even if limited only to the
portion belonging to Teresa, to whom summons was properly served, since
ownership of the property is still pro indiviso. Obviously, Cynthia is an indispensable
party without whom the lower court is barred from making a final adjudication as to
the validity of the entire donation. Without the presence of indispensable parties to a
suit or proceeding, a judgment therein cannot attain finality.
Being an indispensable party, the trial court must also acquire jurisdiction
over Cynthia’s person through the proper service of summons.
As to determine whether Cynthia was properly served a summons, it will be
helpful to determine first the nature of the action filed against Cynthia and Teresa by
petitioner Victoria, whether it is an action in personam, in rem or quasi in rem. This is
because the rules on service of summons embodied in Rule 14 apply according to
whether an action is one or the other of these actions.
In a personal action, the plaintiff seeks the recovery of personal property,
the enforcement of a contract or the recovery of damages. 20 In contrast, in a real
action, the plaintiff seeks the recovery of real property; or, as indicated in Section
2(a), Rule 4 of the then Rules of Court, a real action is an action affecting title to real
property or for the recovery of possession, or for partition or condemnation of, or
foreclosure of mortgage on, real property. An action in personam is an action against
a person on the basis of his personal liability, while an action in rem is an action
against the thing itself, instead of against the person.
In an action in personam, personal service of summons or, if this is not
possible and he cannot be personally served, substituted service, as provided in
Section 7, Rule 14 of the Rules of Court,22 is essential for the acquisition by the court
of jurisdiction over the person of a defendant who does not voluntarily submit
himself to the authority of the court.23 If defendant cannot be served a summons
because he is temporarily abroad, but is otherwise a Philippine resident, service of
summons may, by leave of court, be made by publication. 24 Otherwise stated, a
resident defendant in an action in personam, who cannot be personally served a
summons, may be summoned either by means of substituted service in accordance
with Section 7, Rule 14 of the Rules of Court, or by publication as provided in Sections
15 and 16 of the same Rule.
In all of these cases, it should be noted, defendant must be a resident of the
Philippines; otherwise an action in personam cannot be brought because jurisdiction
over his person is essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over
the person of the defendant is not essential for giving the court jurisdiction so long as
the court acquires jurisdiction over the res. If the defendant is a nonresident and he is
not found in the country, summons may be served extraterritorially in accordance
with Section 15, Rule 14 of the Rules of Court, which provides:
Section 15. Extraterritorial service. - When the defendant does not reside and is not
found in the Philippines, and the action affects the personal status of the plaintiff or
relates to, or the subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest
therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service
as under Section 6; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last known address of
the defendant, or in any other manner the court may deem sufficient. Any order
granting such leave shall specify a reasonable time, which shall not be less than sixty
(60) days after notice, within which the defendant must answer.
As stated above, there are only four instances wherein a defendant who is a
non-resident and is not found in the country may be served a summons by
extraterritorial service, to wit: (1) when the action affects the personal status of the
plaintiff; (2) when the action relates to, or the subject of which is property within the
Philippines, on which the defendant claims a lien or an interest, actual or contingent;
(3) when the relief demanded in such action consists, wholly or in part, in excluding
the defendant from any interest in property located in the Philippines; and (4) when
the defendant non-resident’s property has been attached within the Philippines. In
these instances, service of summons may be effected by (a) personal service out of
the country, with leave of court; (b) publication, also with leave of court; or (c) any
other manner the court may deem sufficient.
In such cases, what gives the court jurisdiction in an action in rem or quasi in
rem is that it has jurisdiction over the res, i.e., the personal status of the plaintiff who
is domiciled in the Philippines or the property litigated or attached. Service of
summons in the manner provided in Section 15, Rule 14 of the Rules of Court is not
for the purpose of vesting the court with jurisdiction, but for complying with the
requirements of fair play or due process, so that the defendant will be informed of
the pendency of the action against him; and the possibility that property in the
Philippines belonging to him, or in which he has an interest, might be subjected to a
judgment in favor of the plaintiff and he can thereby take steps to protect his interest
if he is so minded.
Being an action in personam, the general rule requires the personal service
of summons on Cynthia within the Philippines, but this is not possible in the present
case because Cynthia is a non-resident and is not found within the Philippines.
As Cynthia is a nonresident who is not found in the Philippines, service of summons
on her must be in accordance with Section 15, Rule 14 of the Rules of Court. Such
service, to be effective outside the Philippines, must be made either (1) by personal
service; (2) by publication in a newspaper of general circulation in such places and for
such time as the court may order, in which case a copy of the summons and order of
the court should be sent by registered mail to the last known address of the
defendant; or (3) in any other manner which the court may deem sufficient. The third
mode, like the first two, must be made outside the Philippines, such as through the
Philippine Embassy in the foreign country where Cynthia resides.
Since in the case at bar, the service of summons upon Cynthia was not done
by any of the authorized modes, the trial court was correct in dismissing petitioner’s
complaint.
Section 3, Rule 17 of the 1997 Rules of Civil Procedure, states –
SEC. 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails
to appear on the date of the presentation of his evidence in chief on the complaint, or
to prosecute his action for an unreasonable length of time, or to comply with these
Rules or any order of the court, the complaint may be dismissed upon motion of the
defendant or upon the court's own motion, without prejudice to the right of the
defendant to prosecute his counterclaim in the same or in a separate action. This
dismissal shall have the effect of an adjudication upon the merits, unless otherwise
declared by the court.
As can be gleaned from the rule, there are three instances when the
complaint may be dismissed due to the plaintiff's fault: (1) if he fails to appear during
a scheduled trial, especially on the date for the presentation of his evidence in chief;
(2) if he fails to prosecute his action for an unreasonable length of time; and (3) if he
fails to comply with the rules or any order of the court.
Considering the circumstances of the case, it can be concluded that the
petitioner failed to prosecute the case for an unreasonable length of time. There is
failure to prosecute when the plaintiff, being present, is not ready or is unwilling to
proceed with the scheduled trial or when postponements in the past were due to the
plaintiff's own making, intended to be dilatory or caused substantial prejudice on the
part of the defendant.
#12
NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED v. LEPANTO CONSOLIDATED
MINING COMPANY
G.R. No. 175799, 28 November 2011, FIRST DIVISION, (Leonard-De Castro, J.)
FACTS: Lepanto Consolidated Mining Company (Lepanto) filed w/ the Regional Trial
Court (RTC) of Makati City a complaint against NM Rothschild & Sons (Australia)
Limited (NM), praying for a judgment declaring the loan and hedging contract b/w the
parties void for being contrary to Art. 20183 of the Civil Code and for damages. RTC
authorized Lepanto’s counsel to personally bring the summons and complaint to the
Philippine Consulate General (PCG) in Sydney, Australia for the latter to effect service
of summons on NM.
NM filed a special appearance with motion to dismiss (MD) before RTC,
praying for the complaint’s dismissal on the ff. grounds:
1) RTC has no jurisdiction over the person of NM due to the defective and
improper service of summons;
2) The complaint failed to state a cause of action;
3) The action is barred by estoppel; and
4) Lepanto did not come to court w/ clean hands
RTC denied MD, ratiocinating that there was a proper service of summons
through the Department of Foreign Affairs (DFA) on account that NM has neither
applied for a license to do business in the Philippines nor filed w/ the Securities and
Exchange Commission a written power of attorney designating some person on
whom summons and other legal processes maybe served. It also held that the
complaint sufficiently stated a cause of action. NM’s Motion for Reconsideration (MR)
was denied and disallowed the twin motions for leave to take deposition and serve
written interrogatories.
Via a petition for certiorari w/ the Court of Appeals (CA), NM alleged therein
that RTC committed grave abuse of discretion in denying its MR. CA dismissed as well,
opining that an interlocutory order such as an MR, cannot be a subject of a petition
3 If a contract which purports to be for the delivery of goods, securities or shares of stock
is entered into with the intention that the differences between the price stipulated and the
exchange or market price at the time of the pretended delivery shall be aid by the loser to
the winner, the transaction is null and void. The loser may recover what he has paid.
for certiorari and may only be reviewed in the ordinary course of law by an appeal.
NM’s MR was also denied. Despite RTC’s issuance of order directing NM to answer
some questions of Lepanto, it filed a petition for review on certiorari against CA.
Lepanto posited that the present petition should be dismissed for not being filed by a
real party in interest and for lack of a proper verification and certificate of non-forum
shopping, among others.
ISSUE: Does RTC have jurisdiction over the person of NM?
RULING: YES.
In the pleadings filed by the parties before the Supreme Court (SC), the
parties entered into a lengthy debate as to whether or not petitioner is doing
business in the Philippines. However, such discussion is completely irrelevant in the
case at bar, for 2 reasons:
Firstly, since the Complaint was filed on August 30, 2005, the provisions
of the 1997 Rules of Civil Procedure govern the service of summons. Sec. 12, Rule
14 provides: “Service upon foreign private juridical entity. – When the defendant
is a foreign private juridical entity which has transacted business in the
Philippines, service may be made on its resident agent designated in accordance
with law for that purpose, or, if there be no such agent, on the government
official designated by law to that effect, or on any of its officers or agents within
the Philippines.” This is a significant amendment of the former Sec. 14 of said
rule which previously provided: “Service upon private foreign corporations. — If
the defendant is a foreign corporation, or a nonresident joint stock company or
association, doing business in the Philippines, service may be made on its
resident agent designated in accordance with law for that purpose, or if there be
no such agent, on the government official designated by law to that effect, or on
any of its officers or agents within the Philippines.” The coverage of the present
rule is broader.”
Secondly, the service of summons to petitioner through the DFA by the
conveyance of the summons to the PCG in Sydney, Australia was clearly made
not through the above-quoted Sec. 12, but pursuant to Sec.15 of the same rule:
“Extraterritorial service. – When the defendant does not reside and is not found
in the Philippines, and the action affects the personal status of the plaintiff or
relates to, or the subject of which is property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the
relief demanded consists, wholly or in part, in excluding the defendant from any
interest therein, or the property of the defendant has been attached within the
Philippines, service may, by leave of court, be effected out of the Philippines by
personal service as under Sec. 6; or by publication in a newspaper of general
circulation in such places and for such time as the court may order, in which case
a copy of the summons and order of the court shall be sent by registered mail to
the last known address of the defendant, or in any other manner the court may
deem sufficient. Any order granting such leave shall specify a reasonable time,
 which shall not be less than 60 days after notice, within which the defendant
must answer.”
Respondent argues that extraterritorial service of summons upon foreign
private juridical entities is not proscribed under the Rules of Court (ROC), and is in
fact within the authority of the trial court to adopt, in accordance with Sec. 6, Rule
135: “Means to carry jurisdiction into effect. – When by law jurisdiction is conferred
on a court or judicial officer, all auxiliary writs, processes and other means necessary
to carry it into effect may be employed by such court or officer; and if the procedure
to be followed in the exercise of such jurisdiction is not specifically pointed out by law
or by these rules, any suitable process or mode of proceeding may be adopted which
appears comformable to the spirit of said law or rules.”
Sec. 15, Rule 14, however, is the specific provision dealing precisely with the
service of summons on a defendant which does not reside and is not found in the
Philippines, while Rule 135 (w/c is in Part V of the Rules of Court entitled “Legal
Ethics”) concerns the general powers and duties of courts and judicial officers.
Breaking down the provision, it is apparent that there are only 4 instances wherein a
defendant who is a non-resident and is not found in the country may be served with
summons by extraterritorial service, to wit:
(1) when the action affects the personal status of the plaintiffs;
(2) when the action relates to, or the subject of which is property, within the
Philippines, in which the defendant claims a lien or an interest, actual or
contingent;
(3) when the relief demanded in such action consists, wholly or in part, in
excluding the defendant from any interest in property located in the Philippines;
and
(4) when the defendant non-resident's property has been attached within the
Philippines. In these instances, service of summons may be effected by (a)
personal service out of the country, with leave of court; (b) publication, also with
leave of court; or (c) any other manner the court may deem sufficient.
Perkin Elmer Singapore Pte Ltd. V. Dakila Trading Corporation: Undoubtedly,
extraterritorial service of summons applies only where the action is in rem or quasi in
rem, but not if an action is in personam. When the case instituted is an action in rem
or quasi in rem, Philippine courts already have jurisdiction to hear and decide the
case because, in actions in rem and quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court, provided that the
court acquires jurisdiction over the res. Thus, in such instance, extraterritorial service
of summons can be made upon the defendant. The said extraterritorial service of
summons is not for the purpose of vesting the court with jurisdiction, but for
complying with the requirements of fair play or due process, so that the defendant
will be informed of the pendency of the action against him and the possibility that
property in the Philippines belonging to him or in which he has an interest may be
subjected to a judgment in favor of the plaintiff, and he can thereby take steps to
protect his interest if he is so minded. On the other hand, when the defendant or
respondent does not reside and is not found in the Philippines, and the action
involved is in personam, Philippine courts cannot try any case against him because of
the impossibility of acquiring jurisdiction over his person unless he voluntarily
appears in court.
Domagas v. Jensen: The aim and object of an action determine its character.
Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is
determined by its nature and purpose, and by these only. A proceeding in personam
is a proceeding to enforce personal rights and obligations brought against the person
and is based on the jurisdiction of the person, although it may involve his right to, or
the exercise of ownership of, specific property, or seek to compel him to control or
dispose of it in accordance with the mandate of the court. The purpose of a
proceeding in personam is to impose, through the judgment of a court, some
responsibility or liability directly upon the person of the defendant. Of this character
are suits to compel a defendant to specifically perform some act or actions to fasten a
pecuniary liability on him. It is likewise settled that “an action in personam is lodged
against a person based on personal liability; an action in rem is directed against the
thing itself instead of the person; while an action quasi in rem names a person as
defendant, but its object is to subject that person’s interest in a property to a
corresponding lien or obligation."
The Complaint in the case at bar is an action to declare the loan and Hedging
Contracts between the parties void with a prayer for damages. It is a suit in which the
plaintiff seeks to be freed from its obligations to the defendant under a contract and
to hold said defendant pecuniarily liable to the plaintiff for entering into such
contract. It is therefore an action in personam, unless and until the plaintiff attaches a
property within the Philippines belonging to the defendant, in which case the action
will be converted to one quasi in rem.
Since the action involved in the case at bar is in personam and since the
defendant, NM, does not reside and is not found in the Philippines, the Philippine
courts cannot try any case against it because of the impossibility of acquiring
jurisdiction over its person unless it voluntarily appears in court. In this regard,
Lepanto vigorously argues that NM should be held to have voluntarily appeared
before RTC when it prayed for, and was actually afforded, specific reliefs from it.
Lepanto points out that while NM’s MD was still pending, Lepanto prayed for and was
able to avail of modes of discovery against NM, such as written interrogatories,
requests for admission, deposition, and motions for production of documents. NM
counters that under SC’s ruling in the leading case of La Naval Drug Corporation v.
Court of Appeals, a party may file a MD on the ground of lack of jurisdiction over its
person, and at the same time raise affirmative defenses and pray for affirmative
relief, without waiving its objection to the acquisition of jurisdiction over its person. It
appears, however, that NM misunderstood the ruling. A close reading of La Naval
reveals that SC intended a distinction between the raising of affirmative defenses in
an Answer (which would not amount to acceptance of the jurisdiction of the court)
and the prayer for affirmative reliefs (which would be considered acquiescence to the
jurisdiction of the court):
In the same manner that a plaintiff may assert 2 or more causes of action in
a court suit, a defendant is likewise expressly allowed, under Sec. 2, Rule 8, of ROC, to
put up his own defenses alternatively or even hypothetically. Indeed, under Sec. 2,
Rule 9, of the same, defenses and objections not pleaded either in a MD or in an
answer, except for the failure to state a cause of action, are deemed waived. We take
this to mean that a defendant may, in fact, feel enjoined to set up, along with his
objection to the court's jurisdiction over his person, all other possible defenses. It
thus appears that it is not the invocation of any of such defenses, but the failure to so
raise them, that can result in waiver or estoppel. By defenses, of course, SC refers to
the grounds provided for in Rule 16 of the ROC that must be asserted in a MD or by
way of affirmative defenses in an answer.
Signetics Corporation v. CA, et al: "This is not to say, however, that the
petitioner's right to question the jurisdiction of the court over its person is now to be
deemed a foreclosed matter. If it is true, as Signetics claims, that its only involvement
in the Philippines was through a passive investment in Sigfil, which it even later
disposed of, and that TEAM Pacific is not its agent, then it cannot really be said to be
doing business in the Philippines. It is a defense, however, that requires the
contravention of the allegations of the complaint, as well as a full ventilation, in
effect, of the main merits of the case, which should not thus be within the province of
a mere MD. So, also, the issue posed by the petitioner as to whether a foreign
corporation which has done business in the country, but which has ceased to do
business at the time of the filing of a complaint, can still be made to answer for a
cause of action which accrued while it was doing business, is another matter that
would yet have to await the reception and admission of evidence. Since these points
have seasonably been raised by the petitioner, there should be no real cause for what
may understandably be its apprehension, i.e., that by its participation during the trial
on the merits, it may, absent an invocation of separate or independent reliefs of its
own, be considered to have voluntarily submitted itself to the court's jurisdiction."
In order to conform to the ruling in La Naval, which was decided by SC in
1994, the former Se. 23, Rule 14 concerning voluntary appearance was amended to
include a 2nd sentence in its equivalent provision in the 1997 Rules of Civil Procedure:
“SEC. 20. Voluntary appearance. – The defendant's voluntary appearance in the
action shall be equivalent to service of summons. The inclusion in a motion to dismiss
of other grounds aside from lack of jurisdiction over the person of the defendant shall
not be deemed a voluntary appearance.” The new 2nd sentence, it can be observed,
merely mentions other grounds in a MD aside from lack of jurisdiction over the
person of the defendant. This clearly refers to affirmative defenses, rather than
affirmative reliefs. Thus, while mindful of our ruling in La Naval and the new Sec.20,
Rule 20, this Court, in several cases, ruled that seeking affirmative relief in a court is
tantamount to voluntary appearance therein.Thus, in Philippine Commercial
International Bank v. Dy Hong Pi, wherein defendants filed a "Motion for Inhibition
(MI) without submitting themselves to the jurisdiction of this Honorable Court"
subsequent to their filing of a "MD (for Lack of Jurisdiction)," SC held: “Besides, any
lingering doubts on the issue of voluntary appearance dissipate when the
respondents' MI is considered. This motion seeks a sole relief: inhibition of Judge
Napoleon Inoturan from further hearing the case. Evidently, by seeking affirmative
relief other than dismissal of the case, respondents manifested their voluntary
submission to the court's jurisdiction. It is well-settled that the active participation of
a party in the proceedings is tantamount to an invocation of the court's jurisdiction
and a willingness to abide by the resolution of the case, and will bar said party from
later on impugning the court's jurisdiction.”
- In view of the above, SC therefore rule that petitioner, by seeking affirmative
reliefs from RTC, is deemed to have voluntarily submitted to the jurisdiction of
said court. A party cannot invoke the jurisdiction of a court to secure affirmative
relief against his opponent and after obtaining or failing to obtain such relief,
repudiate or question that same jurisdiction. Consequently, RTC cannot be
considered to have committed grave abuse of discretion amounting to lack or
excess of jurisdiction in the denial of MD on account of failure to acquire
jurisdiction over the person of the defendant.
#13
International Shoe Co. v. Washington 326 U.S. 310 (1945)
Facts: Appellant International Shoe Co. is a Delaware corporation, having its principal
place of business in St. Louis, Missouri, and is engaged in the manufacture and sale of
shoes and other footwear. It maintains places of business in several states other than
Washington, at which its manufacturing is carried on and from which its merchandise
is distributed interstate through several sales units or branches located outside the
State of Washington.
Appellant has no office in Washington, and makes no contracts either for
sale or purchase of merchandise there. It maintains no stock of merchandise in that
state, and makes there no deliveries of goods in intrastate commerce. During the
years from 1937 to 1940, appellant employed eleven to thirteen salesmen under
direct supervision and control of sales managers located in St. Louis. These salesmen
resided in Washington; their principal activities were confined to that state, and they
were compensated by commissions based upon the amount of their sales.
The authority of the salesmen is limited to exhibiting their samples and soliciting
orders from prospective buyers, at prices and on terms fixed by appellant. The
salesmen transmit the orders to appellant's office in St. Louis for acceptance or
rejection, and, when accepted, the merchandise for filling the orders is shipped f.o.b.
from points outside Washington to the purchasers within the state. All the
merchandise shipped into Washington is invoiced at the place of shipment, from
which collections are made. No salesman has authority to enter into contracts or to
make collections.
The Supreme Court of Washington was of opinion that the regular and
systematic solicitation of orders in the state by appellant's salesmen, resulting in a
continuous flow of appellant's product into the state, was sufficient to constitute
doing business in the state so as to make appellant amenable to suit in its courts. But
it was also of opinion that there were sufficient additional activities shown to bring
the case within the rule, frequently stated, that solicitation within a state by the
agents of a foreign corporation plus some additional activities there are sufficient to
render the corporation amenable to suit brought in the courts of the state to enforce
an obligation arising out of its activities there. The court found such additional
activities in the salesmen's display of samples sometimes in permanent display
rooms, and the salesmen's residence within the state, continued over a period of
years, all resulting in a substantial volume of merchandise regularly shipped by
appellant to purchasers within the state. The court also held that the statute, as
applied, did not invade the constitutional power of Congress to regulate interstate
commerce, and did not impose a prohibited burden on such commerce.
Appellant insists that its activities within the state were not sufficient to manifest its
"presence" there, and that, in its absence, the state courts were without jurisdiction,
that, consequently, it was a denial of due process for the state to subject appellant to
suit. Appellant further argues that, since it was not present within the state, it is a
denial of due process to subject it to taxation or other money exaction. It thus denies
the power of the state to lay the tax or to subject appellant to a suit for its collection.
Issues:
(1) Whether, within the limitations of the due process clause of the Fourteenth
Amendment, appellant, a Delaware corporation, has, by its activities in the State of
Washington, rendered itself amenable to proceedings in the courts of that state to
recover unpaid contributions to the state unemployment compensation fund exacted
by state statutes, Washington Unemployment Compensation Act, and Washington
Revised Statutes.
(2) Whether the state can exact those contributions consistently with the due process
clause of the Fourteenth Amendment.
Held:
(1) YES. The activities in behalf of the corporation render it amenable to suit in
courts of the State to recover payments due to the state unemployment
compensation fund. The activities in question established between the State
and the corporation sufficient contacts or ties to make it reasonable and just,
and in conformity to the due process requirements of the Fourteenth
Amendment, for the State to enforce against the corporation an obligation
arising out of such activities.
(2) YES. In such a suit to recover payments due to the unemployment
compensation fund, service of process upon one of the corporation's
salesmen within the State, and notice sent by registered mail to the
corporation at its home office, satisfies the requirements of due process. The
tax imposed by the state unemployment compensation statute -- construed
by the state court, in its application to the corporation, as a tax on the
privilege of employing salesmen within the State -- does not violate the due
process clause of the Fourteenth Amendment.
Ratio:
Historically, the jurisdiction of courts to render judgment in personam is
grounded on their de facto power over the defendant's person. Hence, his presence
within the territorial jurisdiction of a court was prerequisite to its rendition of a
judgment personally binding him. But now that the capias ad respondendum has
given way to personal service of summons or other form of notice, due process
requires only that, in order to subject a defendant to a judgment in personam, if he
be not present within the territory of the forum, he have certain minimum contacts
with it such that the maintenance of the suit does not offend "traditional notions of
fair play and substantial justice."
Since the corporate personality is a fiction, although a fiction intended to be
acted upon as though it were a fact, it is clear that, unlike an individual, its "presence"
without, as well as within, the state of its origin can be manifested only by activities
carried on in its behalf by those who are authorized to act for it. To say that the
corporation is so far "present" there as to satisfy due process requirements, for
purposes of taxation or the maintenance of suits against it in the courts of the state,
is to beg the question to be decided. For the terms "present" or "presence" are used
merely to symbolize those activities of the corporation's agent within the state which
courts will deem to be sufficient to satisfy the demands of due process. Those
demands may be met by such contacts of the corporation with the state of the forum
as make it reasonable, in the context of our federal system of government, to require
the corporation to defend the particular suit which is brought there. An "estimate of
the inconveniences" which would result to the corporation from a trial away from its
"home" or principal place of business is relevant in this connection.
"Presence" in the state in this sense has never been doubted when the
activities of the corporation there have not only been continuous and systematic, but
also give rise to the liabilities sued on, even though no consent to be sued or
authorization to an agent to accept service of process has been given. Conversely, it
has been generally recognized that the casual presence of the corporate agent, or
even his conduct of single or isolated items of activities in a state in the corporation's
behalf, are not enough to subject it to suit on causes of action unconnected with the
activities there. To require the corporation in such circumstances to defend the suit
away from its home or other jurisdiction where it carries on more substantial
activities has been thought to lay too great and unreasonable a burden on the
corporation to comport with due process.
Appellant having rendered itself amenable to suit upon obligations arising
out of the activities of its salesmen in Washington, the state may maintain the
present suit in personam to collect the tax laid upon the exercise of the privilege of
employing appellant's salesmen within the state. For Washington has made one of
those activities which, taken together, establish appellant's "presence" there for
purposes of suit the taxable event by which the state brings appellant within the
reach of its taxing power. The state thus has constitutional power to lay the tax and
to subject appellant to a suit to recover it. The activities which establish its
"presence" subject it alike to taxation by the state and to suit to recover the tax.
(The judgment upholding the constitutionality of a state unemployment
compensation statute as applied to the appellant corporation is affirmed.)
#14
Kulko v. California Superior Court
436 U.S. 84 (1978), May 15, 1978
Ponente: Marshall, J.:
FACTS: Appellant Ezra Kulko and appellee Sharon Horn (remarried and took the name
Horn) both domiciled and residents of New York were married in California in 1959
during appellant’s three-day stopover while en route to his overseas military duty.
Immediately following the marriage appellee returned to New York, as did appellant
after his duty. They had two children and had lived together in New York until March
1972, when the appellant and appellee separated.
Appellee then moved to San Francisco, California while appellant remained
in New York with their children. She briefly returned to sign a separation agreement
providing the children would live in New York during the school year but would spent
their Christmas, Easter and summer vacations in California. Immediately afterward
appellee flew to Haiti and procured a divorce incorporating the terms of the
agreement. In 1973 appellant’s daughter, Ilsa, told her father that she wanted to
remain in California after her Christmas vacation. Appellant then bought her a one-
way ticket. In 1976 appellant’s other child, Darwin, called his mother and told her he
wanted to live with her in California. Appellee sent him a plane ticket unknown to his
father, and he flew to California and took up residence with his mother and sister.
Less than a month later, appellee commenced this action against appellant in the
California Superior Court seeking to establish the Haitian divorce decree as a
California judgment; to modify the judgment to award her full custody of the
children; and to increase appellant’s child-support obligations. Appellant appeared
specially and moved to quash service of the summons on the ground that he was not
a California resident and lacked sufficient “minimum contacts” with the State to
warrant assertion of personal jurisdiction over him. The trial court summarily denied
the motion to quash, and appellee sought review. The California Supreme Court
sustained the lower court rulings.
Issue:
Did appellant have sufficient minimum contacts with California to allow
California to assert personal jurisdiction over him in this matter?
Ruling: NO.
The Controversy between the parties arises from a separation that occurred
in the State of New York; appellee Horn seeks modification of a contract that was
negotiated in New York and that she flew to New York to sign. As in Hanson vs.
Denekla, the instant action involves an agreement that was entered into with virtually
no connection with the forum state.
Finally, Basic considerations of fairness point decisively in Favor of
appellant’s state of Domicile as the proper forum for adjudication of this case,
whatever the merits of appellee’s underlying claim. It is appellant who remained in
the state of Marital Domicile, whereas it is the appellee who has moved across the
continent. Appellant has at all times resided in New York State, and until the
separation and appellee’s move to California, his entire family resided there as well.
Appellant did no more than acquiesce in the stated preference of one of his children
to live with her mother in California. This single act is surely not one that a reasonable
parent would expect to result in the substantial financial burden and personal strain
of litigating a child-support suit in a forum 3,000 miles away.
The mere act of sending child to California to live with her mother is not a
commercial act and connotes no intent to obtain or expectancy of receiving a
corresponding benefit in the State that would make fair the assertion of that State’s
judicial jurisdiction.
#15
BURNHAM v. SUPERIOR COURT OF CAL., MARIN COUNTY, (1990) No. 89-44 Argued:
February 28, 1990 Decided: May 29, 1990
Facts: Petitioner Dennis Burnham married Francie Burnham in 1976 in West Virginia.
In 1977 the couple moved to New Jersey, where their two children were born. In July
1987 the Burnhams decided to separate. They agreed that Mrs. Burnham, who
intended to move to California, would take custody of the children. Shortly before
Mrs. Burnham departed for California that same month, she and petitioner agreed
that she would file for divorce on grounds of "irreconcilable differences." In October
1987, petitioner filed for divorce in New Jersey state court on grounds of "desertion."
Petitioner did not, however, obtain an issuance of summons against his wife and did
not attempt to serve her with process. Mrs. Burnham, after unsuccessfully
demanding that petitioner adhere to their prior agreement to submit to an
"irreconcilable differences" divorce, brought suit for divorce in California state court
in early January 1988.
In late January, petitioner visited southern California on business, after
which he went north to visit his children in the San Francisco Bay area, where his wife
resided. He took the older child to San Francisco for the weekend. Upon returning the
child to Mrs. Burnham's home on January 24, 1988, petitioner was served with a
California court summons and a copy of Mrs. Burnham's divorce petition. Later that
year, after he returned to New Jersey, petitioner made a special appearance in the
California Superior Court, moving to quash the service of process on the ground that
the court lacked personal jurisdiction over him because his only contacts with
California were a few short visits to the State for the purposes of conducting business
and visiting his children. The Superior Court denied the motion, and the California
Court of Appeal denied mandamus relief, rejecting petitioner's contention that the
Due Process Clause prohibited California courts from asserting jurisdiction over him
because he lacked "minimum contacts" with the State. The court held it to be "a valid
jurisdictional requirement for in personam jurisdiction" that the "defendant [was]
present in the forum state and personally served with process." We granted
certiorari.
Issue:
WON the Due Process Clause of the Fourteenth Amendment denies
California courts jurisdiction over a nonresident, who was personally served with
process while temporarily in that State, in a suit unrelated to his activities in the State

Held: NO.
The Supreme Court upheld the ruling of the California Superior Court.
Among the most firmly established principles of personal jurisdiction in American
tradition is that the courts of a State have jurisdiction over nonresidents who are
physically present in the State. The view developed early that each State had the
power to hale before its courts any individual who could be found within its borders,
and that once having acquired jurisdiction over such a person by properly serving him
with process, the State could retain jurisdiction to enter judgment against him, no
matter how fleeting his visit. A state court's assertion of personal jurisdiction satisfies
the Due Process Clause if it does not violate “traditional notions of fair play and
substantial justice”. This American jurisdictional practice is, moreover, not merely old;
it is continuing. It remains the practice of, not only a substantial number of the States,
but as far as we are aware all the States and the Federal Government. We do not
know of a single state or federal statute, or a single judicial decision resting upon
state law, that has abandoned in-state service as a basis of jurisdiction. Many recent
cases reaffirm it.
As we observed over a century ago in Hurtado v. California, “A process of
law, which is not otherwise forbidden, must be taken to be due process of law, if it
can show the sanction of settled usage both in England and in this country; but it by
no means follows that nothing else can be due process of law that which, in
substance, has been immemorially the actual law of the land; therefore is due
process of law”. The short of the matter is that jurisdiction based on physical
presence alone constitutes due process because it is one of the continuing traditions
of our legal system that define the due process standard of "traditional notions of fair
play and substantial justice." That standard was developed by analogy to "physical
presence," and it would be perverse to say it could now be turned against that
touchstone of jurisdiction.
#16
WORLD-WIDE VOLKSWAGEN CORPORATION et al., v. Charles S. WOODSON, District
Judge of Creek County, Oklahoma, et al. Jan. 21, 1980
Facts: Respondents Harry and Kay Robinson purchased a new Audi automobile from
petitioner Seaway Volkswagen, Inc. (Seaway), in Massena, N. Y., in 1976. The
following year the Robinson family, who resided in New York, left that State for a new
home in Arizona. As they passed through the State of Oklahoma, another car struck
their Audi in the rear, causing a fire which severely burned Kay Robinson and her two
children.
The Robinsons subsequently brought a products-liability action in the District
Court for Creek County, Okla., claiming that their injuries resulted from defective
design and placement of the Audi's gas tank and fuel system. They joined as
defendants the automobile's manufacturer, Audi NSU Auto Union Aktiengesellschaft
(Audi); its importer Volkswagen of America, Inc. (Volkswagen); its regional distributor,
petitioner World-Wide Volkswagen Corp. (World-Wide); and its retail dealer,
petitioner Seaway. Seaway and World-Wide entered special appearances, claiming
that Oklahoma's exercise of jurisdiction over them would offend the limitations on
the State's jurisdiction imposed by the Due Process Clause of the Fourteenth
Amendment.
The trial court rejected petitioners' claims and they then sought, but were
denied a writ of prohibition in the Oklahoma Supreme Court to restrain respondent
trial judge from exercising in personam jurisdiction over them. They elevated the case
to the U.S. Supreme Court by way of certiorari.
Issue:
WON an Oklahoma court may exercise in personam jurisdiction over a
nonresident automobile retailer and its wholesale distributor in a products-liability
action, when the defendants' only connection with Oklahoma is the fact that an
automobile sold in New York to New York residents became involved in an accident in
Oklahoma.
Held: The Supreme Court held that Oklahoma cannot exercise in personam
jurisdiction over petitioners.
The facts presented to the District Court showed that World-Wide is
incorporated and has its business office in New York. It distributes vehicles, parts, and
accessories, under contract with Volkswagen, to retail dealers in New York, New
Jersey, and Connecticut. Seaway, one of these retail dealers, is incorporated and has
its place of business in New York. Insofar as the record reveals, Seaway and World-
Wide are fully independent corporations whose relations with each other and with
Volkswagen and Audi are contractual only. Respondents adduced no evidence that
either World-Wide or Seaway does any business in Oklahoma, ships or sells any
products to or in that State, has an agent to receive process there, or purchases
advertisements in any media calculated to reach Oklahoma. In fact, as respondents'
counsel conceded at oral argument, Tr. of Oral Arg. 32, there was no showing that
any automobile sold by World-Wide or Seaway has ever entered Oklahoma with the
single exception of the vehicle involved in the present case.
The Due Process Clause of the Fourteenth Amendment limits the power of a
state court to render a valid personal judgment against a nonresident defendant. A
judgment rendered in violation of due process is void in the rendering State and is not
entitled to full faith and credit elsewhere.
A state court may exercise personal jurisdiction over a nonresident
defendant only so long as there exist "minimum contacts" between the defendant
and the forum State. International Shoe Co. v. Washington, supra, at 316, 66 S.Ct., at
158. The concept of minimum contacts, in turn, can be seen to perform two related,
but distinguishable, functions. It protects the defendant against the burdens of
litigating in a distant or inconvenient forum. And it acts to ensure that the States
through their courts, do not reach out beyond the limits imposed on them by their
status as coequal sovereigns in a federal system.
The economic interdependence of the States was foreseen and desired by
the Framers. In the Commerce Clause, they provided that the Nation was to be a
common market, a "free trade unit" in which the States are debarred from acting as
separable economic entities. But the Framers also intended that the States retain
many essential attributes of sovereignty, including, in particular, the sovereign power
to try causes in their courts. The sovereignty of each State, in turn, implied a
limitation on the sovereignty of all of its sister States—a limitation express or implicit
in both the original scheme of the Constitution and the Fourteenth Amendment.
Thus, the Due Process Clause "does not contemplate that a state may make
binding a judgment in personam against an individual or corporate defendant with
which the state has no contacts, ties, or relations." International Shoe Co. v.
Washington, 326 U.S., at 319, 66 S.Ct., at 159. Even if the defendant would suffer
minimal or no inconvenience from being forced to litigate before the tribunals of
another State; even if the forum State has a strong interest in applying its law to the
controversy; even if the forum State is the most convenient location for litigation, the
Due Process Clause, acting as an instrument of interstate federalism, may sometimes
act to divest the State of its power to render a valid judgment. Hanson v. Denckla,
supra, 357 U.S., at 251, 254, 78 S.Ct., at 1238, 1240.
A state court may exercise personal jurisdiction over a nonresident
defendant only so long as there exist "minimum contacts" between the defendant
and the forum State. The defendant's contacts with the forum State must be such
that maintenance of the suit does not offend traditional notions of fair play and
substantial justice, and the relationship between the defendant and the forum must
be such that it is "reasonable . . . to require the corporation to defend the particular
suit which is brought there."
Here, there is a total absence in the record of those affiliating circumstances
that are a necessary predicate to any exercise of state-court jurisdiction. Petitioners
carry on no activity whatsoever in Oklahoma; they close no sales and perform no
services there, avail themselves of none of the benefits of Oklahoma law, and solicit
no business there either through salespersons or through advertising reasonably
calculated to reach that State. Nor does the record show that they regularly sell cars
to Oklahoma residents or that they indirectly, through others, serve or seek to serve
the Oklahoma market.
Although it is foreseeable that automobiles sold by petitioners would travel
to Oklahoma and that the automobile here might cause injury in Oklahoma,
"foreseeability" alone is not a sufficient benchmark for personal jurisdiction under the
Due Process Clause. The foreseeability that is critical to due process analysis is not the
mere likelihood that a product will find its way into the forum State, but rather is that
the defendant's conduct and connection with the forum are such that he should
reasonably anticipate being haled into court there. Nor can jurisdiction be supported
on the theory that petitioners earn substantial revenue from goods used in
Oklahoma. In our view, whatever marginal revenues petitioners may receive by virtue
of the fact that their products are capable of use in Oklahoma is far too attenuated a
contact to justify that State's exercise of in personam jurisdiction over them.
Dissent (Brennan)
States may exercise jurisdiction over a defendant even if that party has not
deliberately or purposefully sought contact with the state. It would be difficult to
believe that the defendants truly believed that none of the cars they sold would ever
leave the New York area. Their contacts with Oklahoma were not extensive but it was
reasonable for them to be subjected to jurisdiction. Fairness dictates that the sale of
a mobile item such as a car should satisfy the minimum contacts necessary for
jurisdiction.
Dissent (Marshall)
Jurisdiction here is based on the deliberate and purposeful acts of the
defendants in choosing to become part of a global network for marketing and
servicing cars. They must have anticipated that a substantial portion of the cars sold
would travel to remote states. The probability that some of the cars would eventually
get to all contiguous states is a virtual certainty. This knowledge would alert a
reasonable businessman to the likelihood that a defect might manifest itself in the
forum state.
Dissent (Blackmun)
It is the nature of the instrumentality that is critical. With our network of
interstate highways, the defendants could not have believed that their cars would
remain in the vicinity of their retail sale. It is not unreasonable, unconstitutional, or
beyond International Shoe to uphold jurisdiction in this instance.
#17
Asahi Metal Industry Co. Vs Superior Court
Facts: Petitioner manufactures tire valve assemblies in Japan and sells them to several
tire manufacturers, including Cheng Shin Rubber Industrial Co. (Cheng Shin). The sales
to Cheng Shin, which amounted to at least 100,000 assemblies annually from 1978 to
1982, took place in Taiwan, to which the assemblies were shipped from Japan. Cheng
Shin incorporates the assemblies into its finished tires, which it sells throughout the
world, including the United States, where 20 percent of its sales take place in
California. Affidavits indicated that petitioner was aware that tires incorporating its
assemblies would end up in California, but, on the other hand, that it never
contemplated that its sales to Cheng Shin in Taiwan would subject it to lawsuits in
California. Nevertheless, in 1979, a product liability suit was brought in California
Superior Court arising from a motorcycle accident allegedly caused by defects in a tire
manufactured by Cheng Shin, which in turn filed a cross-complaint seeking
indemnification from petitioner. Although the main case was able to settle, the claim
of Cheng against the petitioner remain unresolved.
On September 23, 1978, on Interstate Highway 80 in Solano County,
California, Gary Zurcher lost control of his Honda motorcycle and collided with a
tractor. Zurcher was severely injured, and his passenger and wife, Ruth Ann Moreno,
was killed. In September 1979, Zurcher filed a product liability action in the Superior
Court of the State of California in and for the County of Solano. Zurcher alleged that
the 1978 accident was caused by a sudden loss of air and an explosion in the rear tire
of the motorcycle, and alleged that the motorcycle tire, tube, and sealant were
defective. Zurcher's complaint named, inter alia, Cheng Shin Rubber Industrial Co.,
Ltd. (Cheng Shin), the Taiwanese manufacturer of the tube. Cheng Shin in turn filed a
cross-complaint seeking indemnification from its codefendants and from petitioner,
Asahi Metal Industry Co., Ltd. (Asahi), the manufacturer of the tube's valve assembly.
Zurcher's claims against Cheng Shin and the other defendants were eventually settled
and dismissed, leaving only Cheng Shin's indemnity action against Asahi
Asahi moved to quash Cheng Shin’s service of Summons, arguing the state could not
exert jurisdiction over it consistent with the due process clause of the 14 th
amendment.
The Superior Court denied the motion to quash summons, stating:
"Asahi obviously does business on an international scale. It is not unreasonable that
they defend claims of defect in their product on an international scale."
Order Denying Motion to Quash Summons
The Court of Appeal of the State of California issued a peremptory writ of
mandate commanding the Superior Court to quash service of summons. The court
concluded that "it would be unreasonable to require Asahi to respond in California
solely on the basis of ultimately realized foreseeability that the product into which its
component was embodied would be sold all over the world, including California."
The Supreme Court of the State of California reversed and discharged the
writ issued by the Court of Appeal.). The court observed: "Asahi has no offices,
property or agents in California. It solicits no business in California, and has made no
direct sales [in California]."
Moreover, "Asahi did not design or control the system of distribution that
carried its valve assemblies into California." Nevertheless, the court found the
exercise of jurisdiction over Asahi to be consistent with the Due Process Clause. It
concluded that Asahi knew that some of the valve assemblies sold to Cheng Shin
would be incorporated into tire tubes sold in California, and that Asahi benefited
indirectly from the sale in California of products incorporating its components. The
court considered Asahi's intentional act of placing its components into the stream of
commerce -- that is, by delivering the components to Cheng Shin in Taiwan -- coupled
with Asahi's awareness that some of the components would eventually find their way
into California, sufficient to form the basis for state court jurisdiction under the Due
Process Clause.
Issue:
Whether or not the state of california can exercise personal jurisdiction over
Asahi Metal Industry Co.
Ruling: no
Reasons
1. The Due Process Clause of the Fourteenth Amendment limits the power of a state
court to exert personal jurisdiction over a nonresident defendant. "[T]he
constitutional touchstone" of the determination whether an exercise of personal
jurisdiction comports with due process "remains whether the defendant purposefully
established minimum contacts' in the forum State." Most recently, we have
reaffirmed the oft-quoted reasoning that minimum contacts must have a basis in
"some act by which the defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus invoking the benefits and
protections of its laws."Jurisdiction is proper . . . where the contacts proximately
result from actions by the defendant himself that create a 'substantial connection'
with the forum State."
The reasoning of the Supreme Court of California in the present case
illustrates the former interpretation of World-Wide Volkswagen case (this case had
been interpreted by several courts in two different ways 1) . to allow an exercise of
personal jurisdiction to be based on no more than the defendant's act of placing the
product in the stream of commerce 2)to have jurisdiction it is required that the action
of the defendant to be more purposefully directed at the forum State than the mere
act of placing a product in the stream of commerce) The Supreme Court of California
held that, because the stream of commerce eventually brought some valves Asahi
sold Cheng Shin into California, Asahi's awareness that its valves would be sold in
California was sufficient to permit California to exercise jurisdiction over Asahi
consistent with the requirements of the Due Process Clause. The Supreme Court of
California's position was consistent with those courts that have held that mere
foreseeability or awareness was a constitutionally sufficient basis for personal
jurisdiction if the defendant's product made its way into the forum State while still in
the stream of commerce.
Other courts, however, have understood the Due Process Clause to require
something more than that the defendant was aware of its product's entry into the
forum State through the stream of commerce in order for the State to exert
jurisdiction over the defendant
We agree more on the latter position. The substantial connection between
the defendant and the forum State necessary for a finding of minimum contacts must
come about by an action of the defendant purposefully directed toward the forum
State to acquire jurisdiction. The placement of a product into the stream of
commerce, without more, is not an act of the defendant purposefully directed toward
the forum State. Additional conduct of the defendant may indicate an intent or
purpose to serve the market in the forum State, for example, designing the product
for the market in the forum State, advertising in the forum State, establishing
channels for providing regular advice to customers in the forum State, or marketing
the product through a distributor who has agreed to serve as the sales agent in the
forum State. But a defendant's awareness that the stream of commerce may or will
sweep the product into the forum State does not convert the mere act of placing the
product into the stream into an act purposefully directed toward the forum State.
Assuming, arguendo, that respondents have established Asahi's awareness that some
of the valves sold to Cheng Shin would be incorporated into tire tubes sold in
California, respondents have not demonstrated any action by Asahi to purposefully
avail itself of the California market. Asahi does not do business in California. It has no
office, agents, employees, or property in California. It does not advertise or otherwise
solicit business in California. It did not create, control, or employ the distribution
system that brought its valves to California
2. The strictures of the Due Process Clause forbid a state court to exercise personal
jurisdiction over Asahi under circumstances that would offend "traditional notions of
fair play and substantial justice.'
We have previously explained that the determination of the reasonableness of the
exercise of jurisdiction in each case will depend on an evaluation of several factors. A
court must consider the burden on the defendant, the interests of the forum State,
and the plaintiff's interest in obtaining relief.
A consideration of these factors in the present case clearly reveals the
unreasonableness of the assertion of jurisdiction over Asahi, even apart from the
question of the placement of goods in the stream of commerce
Certainly the burden on the defendant in this case is severe. Asahi has been
commanded by the Supreme Court of California not only to traverse the distance
between Asahi's headquarters in Japan and the Superior Court of California in and for
the County of Solano, but also to submit its dispute with Cheng Shin to a foreign
nation's judicial system. The unique burdens placed upon one who must defend
oneself in a foreign legal system should have significant weight in assessing the
reasonableness of stretching the long arm of personal jurisdiction over national
borders.
When minimum contacts have been established, often the interests of the
plaintiff and the forum in the exercise of jurisdiction will justify even the serious
burdens placed on the alien defendant. In the present case, however, the interests of
the plaintiff and the forum in California's assertion of jurisdiction over Asahi are
slight. All that remains is a claim for indemnification asserted by Cheng Shin, a
Tawainese corporation, against Asahi. The transaction on which the indemnification
claim is based took place in Taiwan; Asahi's components were shipped from Japan to
Taiwan. Cheng Shin has not demonstrated that it is more convenient for it to litigate
its indemnification claim against Asahi in California, rather than in Taiwan or Japan.
Because the plaintiff is not a California resident, California's legitimate interests in the
dispute have considerably diminished
Considering the international context, the heavy burden on the alien
defendant, and the slight interests of the plaintiff and the forum State, the exercise of
personal jurisdiction by a California court over Asahi in this instance would be
unreasonable and unfair
#18
SOCIETE NATIONALE INDUSTRIELLE AREOSPATIALE V. U.S. DISTRICT COURT
FACTS: Synopsis of Rule of Law: The United States, France, and 15 other countries
have agreed to The Hague Evidence Convention, which provides procedures by which
a judicial authority in one contracting state may request evidence located in another.
The petitioner is a corporation owned by the Republic of France. It is
engaged in the business of designing, manufacturing, and marketing aircraft. One of
their planes, Rallye crashed in Iowa, injuring the pilot and a passenger.
Dennis Jones, John George, and Rosa George brought separate suits based
upon this accident in the United States District Court for the Southern District of
Iowa, alleging that petitioners had manufactured and sold a defective plane, and that
they were guilty of negligence and breach of warranty. Petitioners answered the
complaints, apparently without questioning the jurisdiction of the District Court. With
the parties' consent, the cases were consolidated and referred to a Magistrate
However, when the complainants served successive discovery requests
under the Federal Rules of Civil Procedure, the manufacturer filed a motion for a
protective order, claiming that the Hague Convention dictated the exclusive
procedures that must be adhered to since petitioners are French and the discovery
sought must be conducted in France.
A Magistrate denied the motion, and the Court of Appeals denied
petitioners' mandamus holding that, when a district court has jurisdiction over a
foreign litigant, the Convention does not apply even though the information sought
may be physically located within the territory of a foreign signatory to the
Convention.
ISSUE:
Whether Hague Evidence Convention provides exclusive and mandatory
procedures for obtaining documents and information located in a foreign signatory’s
territory
RULING: No.
The Supreme Court, Justice Stevens, held that: (1) Hague Evidence
Convention applied to request for information from foreign national which was a
party to the litigation; (2) Hague Evidence Convention did not provide exclusive and
mandatory procedure for obtaining documents and information located within
territorial foreign signatory; (3) first resort to Hague Convention was not required;
and (4) Hague Convention did not deprive district court of jurisdiction it otherwise
possessed to order foreign national party before it to produce evidence physically
located within a foreign signatory nation.
The Convention does not provide exclusive or mandatory procedures for
obtaining documents and information located in a foreign signatory's territory. The
Convention's plain language, as well as the history of its proposal and ratification by
the United States, unambiguously supports the conclusion that it was intended to
establish optional procedures for obtaining evidence abroad. Its preamble speaks in
non mandatory terms, specifying its purpose to "facilitate" discovery and to "improve
mutual judicial cooperation." Similarly, its text uses permissive language, and does
not expressly modify the law of contracting states or require them to use the
specified procedures or change their own procedures. The Convention does not
deprive the District Court of its jurisdiction to order, under the Federal Rules, a
foreign national party to produce evidence physically located within a signatory
nation.
The Court of Appeals erred in concluding that the Convention "does not
apply" to discovery sought from a foreign litigant that is subject to an American
court's jurisdiction. Although they are not mandatory, the Convention's procedures
are available whenever they will facilitate the gathering of evidence, and "apply" in
the sense that they are one method of seeking evidence that a court may elect to
employ.
International comity does not require in all instances that American litigants
first resort to Convention procedures before initiating discovery under the Federal
Rules. In many situations, Convention procedures would be unduly time-consuming
and expensive, and less likely to produce needed evidence than direct use of the
Federal Rules. The concept of comity requires, in this context, a more particularized
analysis of the respective interests of the foreign and requesting nations than a
blanket "first resort" rule would generate. Thus, the determination whether to resort
to the Convention requires prior scrutiny in each case of the particular facts,
sovereign interests, and likelihood that such resort will prove effective.
#19
DULAY v. DULAY
G.R. No. 158857, November 11, 2005, TINGA, J.
FACTS: Respondent Rodrigo, a naturalized American citizen, alleged that in 1996,
petitioner Godofredo (his brother) and Pfeger (his nephew) immigrated to USA. The
two stayed with him in his house at Claremont, Massachusetts. Having nurtured
affection, love and trust for his nephew Pfeger, Rodrigo opened a trust account with
the Bank of Boston with a deposit of ($230,000.00), naming Pfeger as trustee
thereof. Thereafter, Pfeger returned to the Philippines where he went on a spending
binge and emptying the said account.
Respondent filed a petition for the issuance of letters rogatory in order to
get the depositions of several witnesses residing abroad. Petitioners, on the other
hand, moved to be allowed to file cross-examination questions to respondent's
written interrogatories, (praying that the lower court order the Clerk of Court to issue
any order requiring the Clerk of Court in Boston, USA to conduct the examination of
Rodrigo and the manager of the Bank of Boston) which the trial court granted.
Meanwhile, petitioners filed a motion to dismiss the complaint on the
ground of failure to prosecute. This was however denied by the trial court. As it
turned out, however, the depositions could not be taken before the Clerk of Court of
Massachusetts, but were taken instead before a notary public in New York. The trial
court directed respondent to have the written and cross interrogatories taken by the
notary public authenticated by a Philippine consul in the United States.
Petitioners then filed an Omnibus Motion, praying that the written
interrogatories be declared inadmissible and reiterating their prayer for the dismissal
of the complaint. The lower court denied the motion in ruling that the respondent
had already commenced presenting his evidence. Anent the objection to the
admission of the answers to the written interrogatories, the trial court stated that the
deposition taken before the Notary Public from New York, duly certified by the
Philippine Consul in New York, substantially complied with the Rules of Court.
Likewise, the CA dismissed the petition for certiorari filed by the petitioners.
ISSUE: Whether the case at the trial court level should be dismissed for failure to
prosecute the case with reasonable diligence.
RULING: NO. Deposition is chiefly a mode of discovery, the primary function of which
is to supplement the pleadings for the purpose of disclosing the real points of dispute
between the parties and affording an adequate factual basis during the preparation
for trial. A party's right to avail itself of this procedure is "well-nigh unrestricted" if the
matters inquired into are otherwise relevant and not privileged, and the inquiry is
made in good faith and within the bounds of the law.
While the letters rogatory issued by the trial court specifically directed the
Clerk of Court of Boston to take the depositions needed in the case, it became
impossible to follow the directive since the Clerk of Court of Boston merely brushed it
aside and refused to cooperate. Respondent cannot be faulted for the resultant delay
brought about by this circumstance. Neither can the trial court be faulted for allowing
the admission of the depositions taken not in strict adherence to its original directive,
nor for directing the petitioner to have the depositions authenticated. Obviously, it
was not within the trial court's power, much less the respondent's to force the Clerk
of Court of Boston to have the deposition taken before it. After all, while a court had
the authority to entertain a discovery request, it is not required to provide judicial
assistance thereto. This reality was recognized by the trial court when it ordered
respondent to have the questioned depositions authenticated by the Philippine
consulate.
More importantly, the Court finds that respondent substantially complied
with the requirements for depositions taken in foreign countries. In our jurisdiction,
depositions in foreign countries may be taken: (a) on notice before a secretary of
embassy or legation, consul general, consul, vice consul, or consular agent of the
Republic of the Philippines; (b) before such person or officer as may be appointed by
commission or under letters rogatory; or (c) before any person authorized to
administer oaths as stipulated in writing by the parties. While letters rogatory are
requests to foreign tribunals, commissions are directives to officials of the issuing
jurisdiction.
In the instant case, the authentication made by the consul was a ratification
of the authority of the notary public who took the questioned depositions. The
deposition was, in effect, obtained through a commission, and no longer through
letters rogatory.
Besides, the allowance of the deposition cannot be said to have caused any
prejudice to the adverse party. They were given the opportunity to cross-examine the
witnesses through their cross-interrogatories, which were in turn answered by the
deponents. Save for the complaint of delay in the proceedings, petitioners were
unable to point out any injury they suffered as a result of the trial court's action.
#20
NAVIDA V. DIZON, 649 SCRA 33 (2011)
#21
Del Monte Fresh Produce vs. DOW Chemical Company, etc. The CA correctly held that there is basis for allowing the cross-claims of the Dole, Del
Facts: Monte and Chiquita defendants against the Dow/Occidental defendants as they
August 11, 1995, a joint complaint for damages based on quasi-delict was filed before complied with the rules. It is undisputed that the Dole, Del Monte and Chiquita
the RTC of Panabo City, Davao by 1,185 individuals against Del Monte, Dow Chemical defendants sought to amend their answers to include their cross-claims before
Corporations and other companies alleging that the companies were negligent in the judgment. More importantly, justice requires that they be allowed to do so in
manufacture, distribution and sale or in not informing the users of the hazardous consonance with the policy against multiplicity of suits.
effects of the chemical they used. They said that they were exposed to the chemicals We also uphold the appellate court’s ruling that the RTC gravely abused its discretion
since 1970s that they suffered serious and permanent injuries to their health. when it admitted the cross-claims against the Dow/Occidental defendants without
Del Monte filed motions/oppositions saying that the complaint must be dismissed any qualification. The Del Monte and Chiquita defendants’ cross-claims against the
because the claimants had been paid, waived, abandoned and extinguish their rights Dow/Occidental defendants cannot extend to the plaintiffs with whom they had
in effect of their compromise agreement with the claimants. settled.
Court rendered that all other motions filed by the parties in relation to or in
connection to the issues hereinabove resolved but which have been wittingly or
unwittingly left unresolved are hereby considered moot and academic; likewise, all
previous orders contrary to or not in accordance with the foregoing resolutions are
hereby reconsidered, set aside and vacated.
The Dow/Occidental defendants argue, among others, that the RTC gravely
abused its discretion when it did not dismiss the cross-claims filed by the Dole, Del
Monte and Chiquita defendants despite the following: (1) the cross-claims were
already filed beyond the reglementary period; and (2) the complaint against them
and the Del Monte and Chiquita defendants, including their respective counterclaims,
were already dismissed on the basis of the compromise agreements they each had
with the plaintiffs.
The CA, however, ruled that the RTC gravely abused its discretion when it
admitted the cross-claims against the Dow/Occidental defendants without any
qualification. It held that only the cross-claims filed by the Dole defendants, the
Chiquita defendants (with respect to the claims of James Bagas and Dante Bautista)
and the Del Monte defendants (with respect to the 16 non-compromising plaintiffs)
against the Dow/Occidental defendants can be rightly admitted by the RTC.
Unsatisfied, the Dow/Occidental defendants, as petitioners in G.R. No.
179290, come to this Court arguing that the CA committed reversible error in not
finding that the cross-claims of the Dole, Del Monte and Chiquita defendants should
all be dismissed and the Request for Admission was timely filed and proper.

Issues:
(1) Does the dismissal of the civil case against the Dow/Occidental defendants carry
with it the dismissal of cross-claims against them?
(2) Is the Request for Admission by the Dow/Occidental defendants proper?

Held:
Deny the petitions.
There are two requisites for a court to allow an omitted counterclaim or cross-claim
by amendment: (1) there was oversight, inadvertence, or excusable neglect, or when
justice requires; and (2) the amendment is made before judgment.