Conflict of Laws
compensation payable to the employee
2nd Exam- Case Compilation
1. Bagong Filipinas Overseas Corporation
vs. NLRC
Facts:
Bagong Filipinas Overseas
Corporation, the local agent of a
Hongkong based firm Golden Star Shipping,
entered into the shipboard employment
contract with Pancho.
The contract provided that Pancho was hired
as an oiler in the M/V Olivine for 12 months
with a monthly wage of $195.00. It also
provided that the beneficiaries of seamen are
entitled to P 20,000.00 over and above the
benefits under the Philippine Law.
During the course of Pancho's employment,
he suffered stroke. He was repatriated to the
Philippines and confined therein and later on
died.
The National Seamen Board awarded his
widow, Proserfina, P20,000 as disability
compensation benefit pursuant to the
employment contract.
Proserfina appealed to the NLRC which
awarded her $621 times 36 months or
equivalent in Philippine currency.
Golden Star Shipping assailed the NLRC's
decision by certiorari.
ISSUE:
WoN the shipboard employment
contract or Hongkong law should govern
the amount of death compensation due
to the wife of Guillermo Pancho.
HELD:
The shipboard employment contract
is controlling in this case. The contract
provides that the beneficiaries of the
seaman are entitled to P20,000 "over
and above the benefits" for which the
Philippine Government is liable under
Philippine law.
Hongkong law on workmen's compensation
is not the applicable law. The case of
Norse Management Co. vs. National
Seamen Board, G. R. No. 54204,
September 30, 1982, 117 SCRA 486
cannot be a precedent because it was
expressly stipulated in the employment
contract in that case that the workmen's
should be in accordance with Philippine
Law or the Workmen's Insurance Law of
the country where the vessel is
registered "whichever is greater".
2. Atienza v. Philimare Shipping and
Equipment Supply
Facts:
Joseph B. Atienza was engaged by
Philimare Shipping and Equipment Supply, as
agent for Trans Ocean Liner based on
Singapore with a compensation of US$850.00
a month from January 20, 1981 to January
20, 1982.
The Crew Agreement signed on
January 3, 1981, provided for insurance
benefits “as per NSB Standard Format”
was validated and approved by the
National Seamen Board on January 14,
1981.
On May 12, 1981, Atienza died as a
result of an accident which befell him while
working on the vessel. Thus, his father, the
petitioner, Jose Atienza filed a claim for
Death Benefits computed at the rate of 36
months times the seaman’s monthly salary
plus ten per cent thereof in accordance with
the Workmen’s Compensation Law of
Singapore, for a total of $30,600.00.
Respondent, Philimare Shipping, while
admitting the liability, contended that such
benefit is limited only to P40,000 under
section D(1) of the NSB Standard Format.
The POEA sustained the respondent
and held that the applicable law was the
Philippine Law. Upon appeal, the NLRC
affirmed the decision and increased the
award to P75,000 pursuant to the NSB
Circular No. 71.
Petitioner contended that Singaporean
Law should have been applied in line with the
ruling in case of Norse Management Co. vs
NSB, where the foreign law was held
controlling because it provided for greater
benefits for the claimant.
Issue:
1. Whether or not Singaporean Law
should apply
2. Whether or not NSB Circular No. 71
should apply
Ruling:
1. No. the contention of Atienza is
incorrect. The ruling in Norse case is not
applicable in the present case because in
Norse, it was stipulated in the Crew
Agreement that “compensation shall be paid
to employee in accordance with and subject
to the limitations of the Workmen’s
Compensation Act of the Philippines or the
Workmen’s Insurance Law of the registry of
the vessel, whichever is greater.” That was
why the higher benefits prescribed by the
foreign law were awarded.
However, it is clearly stated therein
that the insurance benefits shall be “as per
NSB Standard Format,” in the event “of death
of the seaman during the term of his
contract, over and above the benefits for
which the Philippine Government is liable
under Philippine law.”
There was no stipulation in the Crew
Agreement of January 3, 1981, that the
employee would be entitled to whichever
greater insurance benefits were offered by
either Philippine law or the foreign law; on
the contrary, it was plainly provided that
insurance benefits would be determined
according to the NSB Standard Format then
in force.
2. No. NSB Memorandum Circular No. 71,
increasing the compensation from P40,000
became effective only in December 1981, as
certified by the POEA itself or seven months
after Atienza’s fatal accident.
As stated in the case of Sta. Rita and
Well Run Maritime SA Ltd. v. NLRC, the
liability of manning agents or shipping
corporations for death, total disability and
sickness of officers and ratings on board
foreign going vessels is based on the
applicable law at that time. It would be
unjust to compel them to pay benefits based
on law not yet in effect at the time the
contingency occurs.
3. Triple Eight Integrated Services vs
NLRC
Facts:
Triple Eight Integrated Services, Inc
was an employment agency under the
Philippine laws and its principal was Gulf
Catering Company, a firm based in the
Kingdom of Saudi Arabia. It recruited Erlinda
Osdana as “Food Server” for a period of 36
months with a salary of 550 Saudi Rials.
However, it asked Osdana to sign another
“Contractor-Employee Agreement” which
provided that she would be employed as a
waitress for 12 months with a salary of
USD280.00, of which contract was approved
by the Philippine Overseas Employment
Administration (POEA).
On working for GCC, Osdana
performed janitorial work and other tasks
contrary to the terms and conditions of her
employment contract. Worse, she was made
to work beyond eight hours without overtime
pay, thereby causing her to develop Bilateral
Carpal Tunnel Syndrome, a condition
precipitated by activities requiring “repeated
flexion, pronation, and supination of the wrist
and characterized by excruciating pain and
numbness in the arms.” She had to be
hospitalized and underwent two surgical
operations. Between these operations, she
was not given any work assignments even if
she was willing and able to do light work in
accordance with her doctor’s advice. Again,
Osdana was not paid any compensation for
those periods.
Later, Osdana was dismissed from
work, allegedly on the ground of illness. She
was not given any separation pay nor was
she paid her salaries for the periods when
she was not allowed to work. Hence, file a
complaint before the POEA against Triple
Eight. The LA and NLRC shared the same
judgment in favor of Osdana.
On petition for certiorari, Triple Eight
argued that since Osdana was working in
Saudi Arabia, her employment was subject to
the laws of the host country, which was Saudi
Arabia, and not to the Philippine Labor Laws.
Issue:
WON the labor laws of Saudi Arabia
shall prevail over the case
Ruling:
No, argument is without merit.
First, established is the rule that lex
loci contractus (the law of the place where
the contract is made) governs in this
jurisdiction. There is no question that the
contract of employment in this case was
perfected here in the Philippines. Therefore,
the Labor Code, its implementing rules and
regulations, and other laws affecting labor
apply in this case. Furthermore, settled is the
rule that the courts of the forum will not
enforce any foreign claim obnoxious to the
forum’s public policy. Here in the Philippines,
employment agreements are more than
contractual in nature. The Constitution itself,
in Article XIII, Section 3, guarantees the
special protection of workers, to wit:
“The State shall afford full protection
to labor, local and overseas, organized and
unorganized, and promote full employment
and equality of employment opportunities for
all. xxx”
This public policy should be borne in
mind in this case because to allow foreign
employers to determine for and by
themselves whether an overseas contract
worker may be dismissed on the ground of
illness would encourage illegal or arbitrary
pre-termination of employment contracts.
Thus, the Supreme Court dismissed
the petition and affirmed the NLRC’s decision
with modification.
4. Hasegawa v. Kitamura
Facts:
Petitioner Nippon Engineering
Consultants Co., Ltd. (Nippon), a Japanese
consultancy firm providing technical and
management support in the infrastructure
projects of foreign governments, entered into
an Independent Contractor Agreement (ICA)
with respondent Minoru Kitamura, a Japanese
national permanently residing in the
Philippines. The agreement provides that
respondent was to extend professional
services to Nippon for a year.
Nippon then assigned respondent
Kitamura to work as the project manager of
the Southern Tagalog Access Road (STAR)
Project in the Philippines, following the
company’s consultancy contract with the
Philippine Government. When the STAR
Project was near completion, the Department
of Public Works and Highways (DPWH)
engaged the consultancy services of Nippon,
for the Bongabon-Baler Road Improvement
BBRI project.
Petitioner Kazuhiro Hasegawa,
Nippon’s general manager for its
International Division, informed respondent
Kitamura that the company had no more
intention of automatically renewing his ICA.
His services would be engaged by the
company only up to the substantial
completion of the STAR Project, just in time
for the ICA’s expiry.
Threatened with impending
unemployment, respondent, through his
lawyer, requested a negotiation conference
and demanded that he be assigned to the
Bongabon-Baler Road Improvement BBRI
project. Nippon insisted that respondent’s
contract was for a fixed term that had
already expired, and refused to negotiate for
the renewal of the ICA.
As he was not being able to generate a
positive response, respondent Kitamura
initiated a civil case for specific performance
and damages.
Petitioners contended that the ICA had
been perfected in Japan and executed by and
between Japanese nationals and moved to
dismiss the complaint for lack of jurisdiction.
They asserted that the claim for improper
pre-termination of respondent’s ICA could
only be heard and ventilated in the proper
courts of Japan following the principles of lex
loci celebrationis and lex contractus.
The RTC denied the motion to dismiss.
The CA ruled that the principle of lex loci
celebrationis was not applicable to the case,
because nowhere in the pleadings was the
validity of the written agreement put in issue.
Hence, this petition.
Issue:
Whether the subject matter
jurisdiction of Philippine courts in civil cases
for specific performance and damages
involving contracts executed outside the
country by foreign nationals may be assailed
on the principles of lex loci celebrationis, lex
contractus, the “state of the most significant
relationship rule,” or forum non conveniens.
Ruling:
No, in the judicial resolution of
conflicts problems, three consecutive phases
are involved: jurisdiction, choice of law, and
recognition and enforcement of judgments.
Corresponding to these phases are the
following questions: (1) Where can or should
litigation be initiated? (2) Which law will the
court apply? and (3) Where can the resulting
judgment be enforced?
Jurisdiction and choice of law are two
distinct concepts. Jurisdiction considers
whether it is fair to cause a defendant to
travel to this state; choice of law asks the
further question whether the application of a
substantive law which will determine the
merits of the case is fair to both parties. The
power to exercise jurisdiction does not
automatically give a state constitutional
authority to apply forum law. While
jurisdiction and the choice of the lex fori will
often coincide, the “minimum contacts” for
one do not always provide the necessary
“significant contacts” for the other. The
question of whether the law of a state can be
applied to a transaction is different from the
question of whether the courts of that state
have jurisdiction to enter a judgment.
Lex loci celebrationis relates to the
“law of the place of the ceremony” or the law
of the place where a contract is made. The
doctrine of lex contractus or lex loci
contractus means the “law of the place where
a contract is executed or to be per-formed.”
It controls the nature, construction, and
validity of the contract and it may pertain to
the law voluntarily agreed upon by the
parties or the law intended by them either
expressly or implicitly.
Under the “state of the most
significant relationship rule,” to ascertain
what state law to apply to a dispute, the
court should determine which state has the
most substantial connection to the
occurrence and the parties. In a case
involving a contract, the court should
consider where the contract was made, was
negotiated, was to be performed, and the
domicile, place of business, or place of
incorporation of the parties. This rule takes
into account several contacts and evaluates
them according to their relative importance
with respect to the particular issue to be
resolved.
Since these three principles in conflict
of laws make reference to the law applicable
to a dispute, they are rules proper for the
second phase, the choice of law. They
determine which state’s law is to be applied
in resolving the substantive issues of a
conflicts problem. Necessarily, as the only
issue in this case is that of jurisdiction,
choice-of-law rules are not only inapplicable
but also not yet called for.
It should be noted that when a
conflicts case, one involving a foreign
element, is brought before a court or
administrative agency, there are three
alternatives open to the latter in disposing of
it: (1) dismiss the case, either because of
lack of jurisdiction or refusal to assume
jurisdiction over the case; (2) assume
jurisdiction over the case and apply the
internal law of the forum; or (3) assume
jurisdiction over the case and take into
account or apply the law of some other State
or States. The court’s power to hear cases
and controversies is derived from the
Constitution and the laws. While it may
choose to recognize laws of foreign nations,
the court is not limited by foreign sovereign
law short of treaties or other formal
agreements, even in matters regarding rights
provided by foreign sovereigns. Neither can
the other ground raised, forum non
conveniens, be used to deprive the trial court
of its jurisdiction herein.
5. LAUREL vs. RAMON GARCIA
Facts:
These are two petitions for prohibition
seeking to enjoin respondents, their
representatives and agents from proceeding
with the bidding for the sale of the 3,179
square meters of land at 306 Ropponggi, 5-
Chome Minato-ku, Tokyo, Japan
The subject property in this case is
one of the four (4) properties in Japan
acquired by the Philippine government under
the Reparations Agreement entered into with
Japan on May 9, 1956 and listed under the
heading "Government Sector", through
Reparations Contract No. 300 dated June 27,
1958. It consists of the land and building "for
the Chancery of the Philippine Embassy" and
became the site of the Philippine Embassy
until the latter was transferred to Nampeidai
on July 22, 1976 when the Roppongi building
needed major repairs. Due to the failure of
our government to provide necessary funds,
the Roppongi property has remained
undeveloped since that time.
A proposal was presented to President
Corazon C. Aquino by former Philippine
Ambassador to Japan, Carlos J. Valdez, to
make the property the subject of a lease
agreement with a Japanese firm — Kajima
Corporation — which shall construct two (2)
buildings in Roppongi and one (1) building in
Nampeidai and renovate the present
Philippine Chancery in Nampeidai. The
consideration of the construction would be
the lease to the foreign corporation of one (1)
of the buildings to be constructed in Roppongi
and the two (2) buildings in Nampeidai. The
other building in Roppongi shall then be used
as the Philippine Embassy Chancery. At the
end of the lease period, all the three leased
buildings shall be occupied and used by the
Philippine government. No change of
ownership or title shall occur.
However, the government has not
acted favorably on this proposal which is
pending approval and rati􏰀cation between
the parties. Indeed, on August 11, 1986,
President Aquino created a committee to
study the disposition/utilization of Philippine
government properties in Tokyo and Kobe,
Japan through Administrative Order No. 3,
followed by Administrative Orders Numbered
3-A, B, C and D. On July 25, 1987, the
President issued Executive Order No. 296
entitling non- Filipino citizens or entities to
avail of reparations' capital goods and
services in the event of sale, lease or
disposition. The four properties in Japan
including the Roppongi were specifically
mentioned in the first "Whereas" clause.
The petitioner in G.R. No. 92013
objects to the alienation of the Roppongi
property to anyone while the petitioner in
G.R. No. 92047 adds as a principal objection
the alleged unjustified bias of the Philippine
government in favor of selling the property to
non-Filipino citizens and entities.
The respondents, for their part, refute
the petitioner's contention by saying that the
subject property is not governed by our Civil
Code but by the laws of Japan where the
property is located. They rely upon the rule of
lex situs which is used in determining the
applicable law regarding the acquisition,
transfer and devolution of the title to a
property.
The respondents add that even
assuming for the sake of argument that the
Civil Code is applicable, the Roppongi
property has ceased to become property of
public dominion. It has become patrimonial
property because it has not been used for
public service or for diplomatic purposes for
over thirteen (13) years now (Citing Article
422, Civil Code) and because the intention by
the Executive Department and the Congress
to convert it to private use has been
manifested by overt acts.
Issue:
WON the subject property shall be
governed by the laws of Japan where the
property is located, or the rule of lex situs, or
by our Civil Code.
Ruling:
We see no reason why a conflict of law
rule should apply when no conflict of law
situation exists. A conflict of law situation
arises only when:
(1) There is a dispute over the title or
ownership of an immovable, such that the
capacity to take and transfer immovables,
the formalities of conveyance, the essential
validity and effect of the transfer, or the
interpretation and effect of a conveyance, are
to be determined (See Salonga, Private
International Law, 1981 ed., pp. 377-383);
and
(2) A foreign law on land ownership
and its conveyance is asserted to con􏰁ict
with a domestic law on the same matters.
Hence, the need to determine which law
should apply.
In the instant case, none of the above
elements exists.
The issues are not concerned with
validity of ownership or title. There is no
question that the property belongs to the
Philippines. The issue is the authority of the
respondent officials to validly dispose of
property belonging to the State. And the
validity of the procedures adopted to effect
its sale. This is governed by Philippine Law.
The rule of lex situs does not apply.
The applicable provisions of the Civil Code
are:
"ART. 419. Property is either of public
dominion or of private ownership.”
"ART. 420. The following things are property
of public dominion:
(1) Those intended for public use,
such as roads, canals, rivers, torrents, ports
and bridges constructed by the State, banks,
shores, roadsteads, and others of similar
character;
(2) Those which belong to the State,
without being for public use, and are
intended for some public service or for the
development of the national wealth.”
"ART. 421. All other property of the State,
which is not of the character stated in the
preceding article, is patrimonial property."
The Roppongi property is correctly
classified under paragraph 2 of Article 420 of
the Civil Code as property belonging to the
State and intended for some public service.
The fact that the Roppongi site has not
been used for a long time for actual Embassy
service does not automatically convert it to
patrimonial property. A property continues to
be part of the public domain, not available for
private appropriation or ownership "until
there is a formal declaration on the part of
the government to withdraw it from being
such (Ignacio v. Director of Lands, 108 Phil.
335 [1960]).
Assuming for the sale of argument,
however, that the Roppongi property is no
longer of public dominion, there is another
obstacle to its sale by the respondents. There
is no law authorizing its conveyance.
Section 79 (f) of the Revised
Administrative Code of 1917 provides:
"Section 79 (f). Conveyances and contracts
to which the Government is a party. — In
cases in which the Government of the
Republic of the Philippines is a party to any
deed or other instrument conveying the title
to real estate or to any other property the
value of which is in excess of one hundred
thousand pesos, the respective Department
Secretary shall prepare the necessary papers
which, together with the proper
recommendations, shall be submitted to the
Congress of the Philippines for approval by
the same. Such deed, instrument, or contract
shall be executed and signed by the
President of the Philippines on behalf of the
Government of the Philippines unless the
Government of the Philippines unless the
authority therefor be expressly vested by law
in another officer."
The requirement has been retained in
Section 48, Book I of the Administrative Code
of 1987 (Executive Order No. 292).
It is not for the President to convey
valuable real property of the government on
his or her own sole will. Any such conveyance
must be authorized and approved by a law
enacted by the Congress. It requires
executive and legislative concurrence.
6. Tayag v. Benguet Consolidated
Facts:
Idonah Perkins who died sometime on
1960 in New York City, left among others, 2
stock certificates covering about 33,000
shares owned by her in a Philippine
Corporation, Benguet Consolidated. Said
certificates were in possession of the County
Trust Company of New York, which was the
domiciliary administrator of the estate of the
deceased. On the other hand, an ancillary
administration proceedings were filed here in
the Philippines wherein Tayag, after several
substitutions, became the ancillary
administrator of the estate of the deceased. A
dispute then arose between the domiciliary
administrator in NT and the ancillary
administrator as to who among them was
entitled to the possession of the stock
certificates in question.
CFI ordered the domiciliary
administrator to produce and deposit them
with the ancillary administrator or with Clerk
of Court but the former did not comply with
such order so the latter petition the court to
issue an order declaring certificates of stocks
covering the shares issued in the name of
Perkins by Benguet, be declared or
considered lost. However, Benguet
Consolidated opposed the petition of the
ancillary administrator because the said stock
certificates are in existence, which were in
the possession of the domiciliary
administrator.
Issue:
WON the certificates can be
declared lost by the ancillary
administrator
Held:
Yes. Benguet Consolidated did not
dispute the power of Tayag, the ancillary
administrator to gain control and possession
of all assets of the decedent within
jurisdiction of PH. Such power is inherent in
his duty to settle her estate and satisfy the
claims of local creditors. Administration,
whether principal or ancillary, certainly
extends to the assets of a decedent found
within the state or country where it was
granted. It is often necessary to have more
than one administration of an estate. When a
person dies intestate owning a property in
the country of his domicile as well as in a
foreign country, administration is had in both
countries.
Principal administration is that which
granted in the jurisdiction of decedent’s last
domicile. Any other administration is termed
the ancillary administration. The reason for
the latter is because a grant of administration
does not ex proprio vigore have any effect
beyond the limits of the country in which it is
granted. Hence, an administration appointed
in a foreign state has no authority.
Further, for Benguet Consolidated is a
Philippine corporation owing full allegiance
and subject to the unrestricted jurisdiction of
local courts. Its shares of stock cannot
therefore be considered in any wise as
immune from lawful court orders. Since there
is a refusal, persistently adhered to by the
domiciliary administrator in New York, to
deliver the shares of stocks of appellant
corporation owned by the decedent to the
ancillary administrator in the Philippines,
there was nothing unreasonable or arbitrary
in considering them as lost and requiring the
appellant to issue new certificates in lieu
thereof.
7. Ramirez vs. Vda De Ramirez
Keyword: usufruct land in favor of a foreigner
as stated in the Filipino’s will
Facts:
Jose Eugenio Ramirez, a Filipino
national, died in Spain on December 11,
1964, with only his widow (a French national
living in Paris) as compulsory heir. His will
was admitted to probate by the Court of First
Instance of Manila, Branch X, on July 27,
1965 by Maria Luisa Palacios who was
appointed administratrix of the estate. The
principal beneficiaries are as follows: his
widow Marcelle Demoron de Ramirez; his two
grandnephews Roberto and Jorge Ramirez;
and his companion Wanda de Wrobleski.
On June 23, 1966, the administratrix
submitted a project of partition as follows:
the property of the deceased is to be divided
into two parts. One part shall go to the widow
'en pleno dominio" in satisfaction of her
legitime; the other part or "free portion" shall
go to Jorge and Roberto Ramirez "en nuda
propriedad." Furthermore, one third (1/3) of
the free portion is charged with the widow's
usufruct and the remaining two-thirds (2/3)
with a usufruct in favor of Wanda (An
Austrian living in Spain).
Issue:
Whether or not the grant of a usufruct over
real property in the Philippines in favor of
Wanda Wrobleski, who is an alien, violates
Section 5, Article III of the Philippine
Constitution
Held:
No. It is not violative of the
Constitution.
Ratio:
The appellants claim that the usufruct
over real properties of the estate in favor of
Wanda is void because it violates the
constitutional prohibition against the
acquisition of lands by aliens.
The 1935 Constitution which is
controlling provides as follows:
SEC. 5. Save in cases of hereditary
succession, no private agricultural land shall
be transferred or assigned except to
individuals, corporations, or associations
qualified to acquire or hold lands of the public
domain in the Philippines. (Art. XIII.)
The court a quo upheld the validity of
the usufruct given to Wanda on the ground
that the Constitution covers not only
succession by operation of law but also
testamentary succession. We are of the
opinion that the Constitutional provision
which enables aliens to acquire private lands
does not extend to testamentary succession
for otherwise the prohibition will be for
naught and meaningless. Any alien would be
able to circumvent the prohibition by paying
money to a Philippine landowner in exchange
for a devise of a piece of land.
This opinion notwithstanding, We
uphold the usufruct in favor of Wanda
because a usufruct, albeit a real right, does
not vest title to the land in the usufructuary
and it is the vesting of title to land in favor of
aliens which is proscribed by the Constitution.
Ruling: IN VIEW OF THE FOREGOING, the
estate of Jose Eugenio Ramirez is hereby
ordered distributed as follows:
One-half (1/2) thereof to his widow as
her legitime;
One-half (1/2) thereof which is the
free portion to Roberto and Jorge
Ramirez in naked ownership and the
usufruct to Wanda de Wrobleski with a
simple substitution in favor of Juan
Pablo Jankowski and Horace V.
Ramirez.
The distribution herein ordered supersedes
that of the court a quo. No special
pronouncement as to costs. SO ORDERED
8. Llantino v. Co Liong Chong
FACTS:
Petitioners are the owners of a
commercial-residential land situated in
Catanduanes. In 1954 they leased this land
for a period of 13 years to Co Liong Chong
(the private respondent in this case) who was
then a Chinese national. Mr. Chong was then
in possession of the property. Knowing that
the period of the lease would end in the year
1967, petitioners requested Chong for a
conference but the latter did not honor the
request and instead he informed the
petitioners that he had already constructed a
commercial building on the land; that the
lease contract was for a period of sixty (60)
years, counted from 1954; and that he is
already a Filipino citizen. Petitioners were
surprised because they did not remember
having agreed to a sixty-year lease
agreement. In order to avoid a court
litigation the Llantinos once more invited
Chong to a conference about the matter but
again Chong ignored the invitation. Hence,
Petitioner Llantinos filed a complaint to quiet
title with damages before the CFI.
At the pre-trial, Chong's counsel
presented the carbon original of the contract
of lease entered into between Chong and the
Llantinos. And the existence of the lease
contract as a public instrument was admitted.
It was also admitted that Chong has become
a naturalized Filipino citizen in 1961 and that
his name is no longer Co Liong Chong but
Juan Molina. In 1968, the trial court
dismissed the complaint and rendered the
contract of lease between Llantino ang Chong
valid.
ISSUE:
Whether or not the lease contract
between Llantino and Chong was valid?
HELD:
YES. The Supreme Court held that the
trial court correctly ruled that the defendant
Chong had the right to enter into a contract
of lease although at the time of the execution
of the contract, he was still a Chinese
national; hence, the contract was valid.
In the present case, it has been
established that there is only one contract
and there is no option to buy the leased
property. There is nothing in the record and
in the contract to indicate any scheme to
circumvent the constitutional prohibition. And
also, the Llantinos themselves admitted that
right from the start, before entering into the
contract, Chong had merely asked them for a
lease of the premises to which they agreed.
And there is nothin in the contract which
indicates that the ownership of the leased
property has been virtually transferred to the
lessee.
Thus, under the circumstances, a lease
to an alien for a reasonable period is valid. So
is an option giving an alien the right to buy
real property on condition that he is granted
Philippine citizenship. Aliens are not
completely excluded by the Constitution from
use of lands. Since their residence in the
Philippines is temporary, they may be
granted temporary rights such as a lease
contract which is not prohibited by the
Constitution. The only instance where a
contract of lease may be considered invalid
is, if there are circumstances which are used
as a scheme to circumvent the constitutional
prohibition.
And even assuming, arguendo, that
the subject contract is prohibited, the same
can no longer be questioned upon the
acquisition of Filipino citizenship by the
private respondent. Therefore, the sale of a
residential land to an alien which is now in
the hands of a naturalized Filipino citizen is
valid.
9. Tenchavez vs Escano
Vicenta Escano, a scion of a well-to-do
and prominent family, exchanged marriage
vows with Pastor Tenchavez an engineer and
ex army officer, before a Catholic Chaplain
without the knowledge of Escano’s parents.
The marriage was registered with the local
civil registrar in Cebu City.
The couple planned an elopement the
midnight following the marriage. This did not
materialize since Escano’s mother got wind of
the intended nuptials. The following morning,
the Escaño spouses sought priestly advice. A
priest suggested a recelebration to validate
what he believed to be an invalid marriage,
from the standpoint of the Church, due to the
lack of authority from the Archbishop or the
parish priest for the officiating chaplain to
celebrate the marriage. The recelebration did
not take place since it was found out Pastor
and Pacita Noel, the matchmaker, had an
amorous relationship.
 Distance soon estranged the couple as
Pastor went back to Manila for his work and
the letters became less frequent.Without
informing her husband, she applied for a
passport, indicating in her application that
she was single, that her purpose was to
study, that she was domiciled) in Cebu City,
and that she intended to return after two
years. The application was approved, and she
left for the United States. She filed a verified
complaint for divorce against the herein
plaintiff in the Second Judicial District Court
of the State of Nevada in and for the County
of Washoe, on the ground of "extreme
cruelty, entirely mental in character". A
decree of divorce, "final and absolute", was
issued in open court by the said tribunal. On
13 September 1954, Vicenta married an
American, Russell Leo Moran, in Nevada. She
acquired American citizenship. Pastor
initiated a legal separation proceeding and
claiming one million in damages against
Vicenta and her parents for whom he charged
with having dissuaded and discouraged
Vicenta from joining her husband, and
alienating her affections.
Issues
1.) Whether or not the divorce obtained
by Vicenta abroad was valid and
binding in the Philippines;
2.) Whether or not Tenchavez is entitled
to legal separation and to moral
damages.
Rulings
1.) No, the Court held that under Philippine
law, the valid marriage between Tenchavez
and Escaño remained subsisting and
undissolved notwithstanding the decree of
absolute divorce that the wife sought and
obtained in Nevada.
Article 15 of the Civil Code of the Philippines
which was already in force at the time
expressly provided that “Laws relating to
family rights and duties or to the status,
condition and legal capacity of persons are
binding upon the citizens of the Philippines,
even though living abroad.”
At the time the divorce decree was issued,
Vicenta was still a Filipino citizen. She was
then still subject to Philippine law, which does
not admit absolute divorce. Thus, under
Philippine law, the divorce was invalid.
2.) Yes, Tenchavez is enititeld to legal
separation. The Court ruled that it can be
gleaned from the facts and considerations
that Tenchavez is entitled to a decree of legal
separation on the basis of adultery as
provided under Art. 333 of the Revised Penal
Code. Since our jurisdiction does not
recognize Vicenta’s divorce and second
marriage as valid, her marriage and
cohabitation with the American is technically
“intercourse with a person not her husband”
from the standpoint of Philippine Law. Her
refusal to perform her wifely duties, and her
denial of consortium and her desertion of her
husband also constitute in law a wrong for
which the husband is entitled to the
corresponding indemnity. Thus, the latter is
entitled to a decree of legal separation
conformably to Philippine law.
10. VAN DORN vs. HON. ROMILLO and
RICHARD UPTON G.R. No. L-68470
FACTS:
Petitioner Alice Van Dorn is a citizen of
the Philippines while private respondent
Richard Upton is a citizen of the USA. They
were married in Hongkong in 1972 and begot
two children. The parties were divorced in
Nevada, USA in 1982. Alice has then re-
married also in Nevada, this time to Theodore
Van Dorn.
In 1983, Richard filed suit against Alice
in the RTC-Pasay, stating that Alice’s
business in Ermita, Manila is conjugal
property of the parties, and asking that Alice
be ordered to render an accounting of that
business, and that Richard be declared with
right to manage the conjugal property. Alice
moved to dismiss the case on the ground that
the cause of action is barred by previous
judgment in the divorce proceedings before
the Nevada Court wherein respondent had
acknowledged that he and petitioner had “no
community property” as of June 11, 1982.
The Court below (presiding judge:
Judge Romillo) denied the MTD in the
mentioned case on the ground that the
property involved is located in the Philippines
so that the Divorce Decree has no bearing in
the case. The denial is now the subject of this
certiorari proceeding.
ISSUE:
Whether or not the foreign divorce
between the petitioner and private
respondent in Nevada is binding in the
Philippines where petitioner is a Filipino
citizen
RULING:
YES. The foreign divorce between the
petitioner and private respondent in Nevada
is binding.
For the resolution of this case, it is not
necessary to determine whether the property
relations between Alice and Richard, after
their marriage, were upon absolute or
relative community property, upon complete
separation of property, or upon any other
regime. The pivotal fact in this case is the
Nevada divorce of the parties.
The Nevada District Court, which
decreed the divorce, had obtained jurisdiction
over petitioner who appeared in person
before the Court during the trial of the case.
It also obtained jurisdiction over private
respondent who authorized his attorneys in
the divorce case to agree to the divorce on
the ground of incompatibility in the
understanding that there were neither
community property nor community
obligations.
As explicitly stated in the Power of
Attorney he executed in favor of the law firm
of KARP & GRAD LTD. to represent him in the
divorce proceedings:
You are hereby authorized to accept
service of Summons, to file an Answer,
appear on my behalf and do all things
necessary and proper to represent me,
without further contesting, subject to the
following:
1. That my spouse seeks a divorce on
the ground of incompatibility.
2. That there is no community of
property to be adjudicated by the
Court.
3. That there are no community
obligations to be adjudicated by the
court.
There can be no question as to the
validity of that Nevada divorce in any of the
States of the United States. The decree is
binding on private respondent as an
American citizen. What he is contending in
this case is that the divorce is not valid and
binding in this jurisdiction, the same being
contrary to local law and public policy.
It is true that owing to the nationality
principle embodied in Article 15 of the Civil
Code, only Philippine nationals are covered
by the policy against absolute divorces the
same being considered contrary to our
concept of public police and morality.
However, aliens may obtain divorces abroad,
which may be recognized in the Philippines,
provided they are valid according to their
national law. In this case, the divorce in
Nevada released private respondent from the
marriage from the standards of American
law, under which divorce dissolves the
marriage.
Thus, pursuant to his national law,
private respondent is no longer the husband
of petitioner. He would have no standing to
sue in the case below as petitioner’s husband
entitled to exercise control over conjugal
assets. As he is bound by the Decision of his
own country’s Court, which validly exercised
jurisdiction over him, and whose decision he
does not repudiate, he is estopped by his own
representation before said Court from
asserting his right over the alleged conjugal
property.
11. EDGAR SAN LUIS vs. FELICIDAD SAN
LUIS
Facts:
The instant case involves the
settlement of the estate of Felicisimo T. San
Luis (Felicisimo), who was the former
governor of the Province of Laguna. During
his lifetime, Felicisimo contracted three
marriages. The first marriage was with
Virginia Sulit on March 17, 1942 out of which
were born six children, namely: Rodolfo, Mila,
Edgar, Linda, Emilita and Manuel. On August
11, 1963, Virginia predeceased Felicisimo.
The second was Merry Lee Corwin, with
whom he had a son, Tobias; and Felicidad
San Luis, then surnamed Sagalongos, with
whom he had no children with respondent but
lived with her for 18 years from the time of
their marriage up to his death.
Respondent sought the dissolution of
their conjugal partnership assets and the
settlement of Felicisimo’s estate. On
December 17, 1993, she filed a petition for
letters of administration before the Regional
Trial Court of Makati City, Branch 146.
Thereater, the heirs of Virginia Sulit
filed a motion to dismiss on the grounds of
improper venue and failure to state a cause
of action. But the trial court issued an order
denying the two motions to dismiss. On
September 12, 1995, the trial court
dismissed the petition for letters of
administration. It held that, at the time of his
death, Felicisimo was the duly elected
governor and a resident of the Province of
Laguna. Hence, the petition should have been
filed in Sta. Cruz, Laguna and not in Makati
City. It also ruled that respondent was
without legal capacity to file the petition for
letters of administration because her
marriage with Felicisimo was bigamous, thus,
void ab initio. The Court of Appeals reversed
and set aside the orders of the trial court,
and, hence, the case before the Supreme
Court.
Issue:
Whether respondent has legal capacity
to file the subject petition for letters of
administration
Held:
Respondent would qualify as an
interested person who has a direct interest in
the estate of Felicisimo by virtue of their
cohabitation, the existence of which was not
denied by petitioners. If she proves the
validity of the divorce and Felicisimo’s
capacity to remarry, but fails to prove that
her marriage with him was validly performed
under the laws of the U.S.A., then she may
be considered as a co-owner under Article
144 of the Civil Code. This provision governs
the property relations between parties who
live together as husband and wife without the
benefit of marriage, or their marriage is void
from the beginning. It provides that the
property acquired by either or both of them
through their work or industry or their wages
and salaries shall be governed by the rules on
co-ownership. In a co- ownership, it is not
necessary that the property be acquired
through their joint labor, efforts and industry.
Any property acquired during the union is
prima facie presumed to have been obtained
through their joint efforts. Hence, the
portions belonging to the co-owners shall be
presumed equal, unless the contrary is
proven.
Morover, the Supreme Court founnd
that respondent’s legal capacity to file the
subject petition for letters of administration
may arise from her status as the surviving
wife of Felicisimo or as his co- owner under
Article 144 of the Civil Code or Article 148 of
the Family Code.
The order of the Regional Trial Court
which denied petitioners’ motion to dismiss
and its October 24, 1994 Order which
dismissed petitioners’ motion for
reconsideration is affirmed. It was also
REMANDED to the trial court for further
proceedings.
12. IMELDA MANALAYSAY PILAPIL vs.
HON. CORONA IBAY-SOMERA,
Facts:
Petitioner Imelda Manalaysay Pilapil, a
Filipino citizen married private respondent
Erich Ekkehard Geiling, a German national on
Sept. 7, 1979 at Federal Republic of
Germany. They lived together in Malate,
Manila and had a child named Isabella Pilapil
Geiling.
Unfortunately, after about three and a
half years of marriage such connubial
disharmony eventuated in Erich initiating
divorce proceeding against Imelda in
Germany. He claimed that there was failure
of their marriage and that they had been
living apart since April 1982.
On the other hand, petitioner filed an
action for legal separation before a trial court
in Manila on January 23, 1983.
The decree of divorce was
promulgated on January 15, 1986 on the
ground of failure of marriage of the spouses.
The custody of the child was granted to the
petitioner.
More than five months after the
issuance of the divorce decree, Geiling filed
two complaints for adultery before the City
Fiscal of Manila alleging that while still
married to to Imelda, the latter had an affair
with a certain William Chia as early as 1982
and another man named Jesus Chua
sometime in 1983.
Petitioner filed a petition asking to set
aside the cases filed against her and be
dismissed. Thereafter, petitioner moved to
defer her arraignment and to suspend further
proceedings. Justice Secretary Ordoñez
issued a resolution directing to move for the
dismissal of the complaints against petitioner
Issue:
Whether or not private respondent
Geiling can prosecute petitioner Pilapil on the
ground of adultery even though they are no
longer husband and wife as decree of divorce
was already issued.
Held:
The law provides that in prosecution
for adultery and concubinage, the person who
can legally file the complaint should be the
offended spouse and nobody else. In this
case, it appeared that private respondent is
the offended spouse, the latter obtained a
valid divorce in his country, the Federal
Republic of Germany, and said divorce and its
legal effects may be recognized in the
Philippines in so far as he is concerned. Thus,
under the same consideration and rationale,
private respondent is no longer the husband
of the petitioner and has no legal standing to
commence the adultery case under the
imposture that he was the offended spouse at
the time he filed suit.
13. Republic v. Orbecido
Facts:
On May 24, 1981, Cipriano Orbecido
III married Lady Myros M. Villanueva at the
United Church of Christ in the Philippines in
Lam-an, Ozamis City. Their marriage was
blessed with a son and a daughter
In 1986, Cipriano’s wife left for the
United States bringing along their son.
Sometime in 2000, Cipriano learned from his
son that his wife had obtained a divorce
decree and then married a certain Innocent
Stanley.
This prompted Cipriano to file a
petition for authority to remarry invoking
Paragraph 2 of Article 26 of the Family Code.
No opposition was filed. Finding merit in the
petition, the court granted the same. The
Republic, herein petitioner, through the Office
of the Solicitor General (OSG), sought
reconsideration but it was denied.
Issue:
Whether Cipriano can remarry under
Article 26 of the Family Code.
Held:
The Supreme Court held that taking
into consideration the legislative intent and
applying the rule of reason, we hold that
Paragraph 2 of Article 26 should be
interpreted to include cases involving parties
who, at the time of the celebration of the
marriage were Filipino citizens, but later on,
one of them becomes naturalized as a foreign
citizen and obtains a divorce decree. The
Filipino spouse should likewise be allowed to
remarry as if the other party were a foreigner
at the time of the solemnization of the
marriage. To rule otherwise would be to its
exact and literal import would lead to
mischievous results or contravene the clear
purpose of the legislature, it should be
construed according to its spirit and reason,
disregarding as far as necessary the letter of
the law. A statute may therefore be extended
to cases not within the literal meaning of its
terms, so long as they come within its spirit
or intent.
The reckoning point is not the
citizenship of the parties at the time of the
celebration of the marriage, but their
citizenship at the time a valid divorce is
obtained abroad by the alien spouse
capacitating the latter to remarry.
In this case, when Cipriano’s wife was
naturalized as an American citizen, there was
still a valid marriage that has been celebrated
between her and Cipriano. As fate would
have it, the naturalized alien wife
subsequently obtained a valid divorce
capacitating her to remarry.
However, we note that the records are
bereft of competent evidence duly submitted
by respondent concerning the divorce decree
and the naturalization of respondent’s wife. It
is settled rule that one who alleges a fact has
the burden of proving it and mere allegation
is not evidence. 13 Accordingly, for his plea
to prosper, respondent herein must prove his
allegation that his wife was naturalized as an
American citizen. Likewise, before a foreign
divorce decree can be recognized by our own
courts, the party pleading it must prove the
divorce as a fact and demonstrate its
conformity to the foreign law allowing it
14. GERBERT R. CORPUZ vs. DAISYLYN
TIROL STO. TOMAS
Facts:
Petitioner Gerbert Corpuz is a former
Filipino citizen who became a Canadian
citizen through naturalization. Subsequently,
the petitioner married the respondent
Daisylyn Sto. Tomas, a Filipina, in Pasig City.
After the wedding, petitioner went back to
Canada due to work commitments; however,
when he came back he was shocked to
discover that the respondent is having an
affair with another man. Thus, petitioner
went back to Canada and filed a petition for
divorce. The Superior Court of Justice,
Windsor, Ontario, Canada granted the
petitioner’s petition for divorce. The divorce
decree took effect a month later, January 8,
2006.
Two years later, the petitioner has
already moved on and found another woman
that he wants to marry. Thus, for his love to
his fiancée; the petitioner went to the Pasig
Civil Registry Office and registered the
Canadian divorce decree on his and the
respondent’s marriage certificate. Despite the
registration of the divorce decree, an official
of the National Statistic’s Office (NSO)
informed the petitioner that the marriage
between him and the respondent still subsists
under the Philippine Law and to be
enforceable, the foreign divorce decree must
first be judicially recognized by a competent
Philippine court, pursuant to NSO Circular No.
4, Series of 1982.
Accordingly, the petitioner filed a
petition for judicial recognition of foreign
divorce and/or declaration of marriage
dissolved with the RTC. The RTC denied his
petition, hence this recourse by the
petitioner.
Issue:
Whether or not the second paragraph
of Article 26 of the Family Code extends to
aliens the right to petition a court of this
jurisdiction for the recognition of a foreign
divorce decree.
Ruling:
No.
Even though the trial court is correct in
its conclusion that the alien spouse can claim
no right under the second paragraph of
Article 26 of the Family Code as the
substantive right it establishes is in favor of
the Filipino spouse due to the given the
rationale and intent behind the enactment,
and as such the second paragraph of Article
26 of the Family Code limits its applicability
for the benefit of the Filipino spouse.
However, we qualify the above
conclusion made by the trial court because in
our jurisdiction, the foreign divorce decree is
presumptive evidence of a right that clothes
the party with legal interest to petitions for
its recognition. Even though, the second
paragraph of Article 26 of the Family Code
bestows no rights in favor of aliens- with the
complementary statement that his conclusion
is not a sufficient basis to dismiss the petition
filed by Corpuz before the RTC. the
unavailability of the second paragraph of
Article 26 of the Family Code to aliens does
not necessarily strip Gerbert of legal interest
to petition the RTC for the recognition of his
foreign divorce decree. The foreign divorce
decree itself, after its authenticity and
conformity with the alien’s national law have
been duly proven according to our rules of
evidence, serves as a presumptive evidence
of right in favor of Gerbert, pursuant to
Section 48, Rule 39 of the Rules of Court
which provides for the effect of foreign
judgments. This Section states:
SEC. 48. Effect of foreign
judgments or final orders. —The
effect of a judgment or final
order of a tribunal of a foreign
country, having jurisdiction to
render the judgment or final
order is as follows:
(a) In case of a judgment or
final order upon a specific thing,
the judgment or final order is
conclusive upon the title of the
thing; and
(b) In case of a judgment or
final order against a person,
the judgment or final order is
presumptive evidence of a
right as between the parties
and their successors in
interest by a subsequent
title.
In either case, the judgment or final
order may be repelled by evidence of a want
of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or
fact.
The direct involvement or being the
subject of the foreign judgment is sufficient
to clothe a party with the requisite interest to
institute an action before our courts for the
recognition of the foreign judgment.
In a divorce situation, we have declared, no
less, that the divorce obtained by an alien
abroad may be recognized in the Philippines,
provided the divorce is valid according to his
or her national law.
The starting point in any recognition of
a foreign divorce judgment is the
acknowledgment that our courts do not take
judicial notice of foreign judgments and laws.
Justice Herrera explained that, as a rule, “no
sovereign is bound to give effect within its
dominion to a judgment rendered by a
tribunal of another country.” This means that
the foreign judgment and its authenticity
must be proven as facts under our rules on
evidence, together with the alien’s applicable
national law to show the effect of the
judgment on the alien himself or herself. The
recognition may be made in an action
instituted specifically for the purpose or in
another action where a party invokes the
foreign decree as an integral aspect of his
claim or defense.
In Gerbert’s case, since both the
foreign divorce decree and the national law of
the alien, recognizing his or her capacity to
obtain a divorce, purport to be official acts of
a sovereign authority, Section 24, Rule 132
of the Rules of Court comes into play. This
Section requires proof, either by (1) official
publications or (2) copies attested by the
officer having legal custody of the
documents. If the copies of official records
are not kept in the Philippines, these must be
(a) accompanied by a certificate issued by
the proper diplomatic or consular officer in
the Philippine foreign service stationed in the
foreign country in which the record is kept
and (b) authenticated by the seal of his
office.
The records show that Gerbert
attached to his petition a copy of the divorce
decree, as well as the required certificates
proving its authenticity, but failed to include
a copy of the Canadian law on divorce. Under
this situation, we can, at this point, simply
dismiss the petition for insufficiency of
supporting evidence, unless we deem it more
appropriate to remand the case to the RTC to
determine whether the divorce decree is
consistent with the Canadian divorce law.
The Court deems it appropriate to take
this latter course of action, given the Article
26 interests that will be served and the
Filipina wife’s obvious conformity with the
petition. A remand, at the same time, will
allow other interested parties to oppose the
foreign judgment and overcome a petitioner’s
presumptive evidence of a right by proving
want of jurisdiction, want of notice to a party,
collusion, fraud, or clear mistake of law or
fact. Needless to state, every precaution
must be taken to ensure conformity with our
laws before a recognition is made, as the
foreign judgment, once recognized, shall
have the effect of res judicata between the
parties, as provided in Section 48, Rule 39 of
the Rules of Court.
15. FUJIKI VS MARINAY
FACTS:
Petitioner Minoru Fujiki (Fujiki) is a
Japanese national who married respondent
Maria Paz Marinay (Marinay) in the
Philippines. The marriage did not sit well with
petitioner’s parents. Thus, Fujiki could not
bring his wife to Japan where he resides.
Eventually, they lost contact with each other.
Marinay met another Japanese,
Shinichi Maekara (Maekara). Without the first
marriage being dissolved, Marinay and
Maekara were married in Quezon City,
Philippines. Maekara brought Marinay to
Japan. However, Marinay allegedly suffered
physical abuse from Maekara. She left
Maekara and started to contact Fujiki.
Fujiki and Marinay met in Japan and
they were able to reestablish their
relationship. Fujiki helped Marinay obtain a
judgment from a family court in Japan which
declared the marriage between Marinay and
Maekara void on the ground of bigamy.
Fujiki filed a petition in the RTC
entitled: “Judicial Recognition of Foreign
Judgment (or Decree of Absolute Nullity of
Marriage).” Fujiki prayed that (1) the
Japanese Family Court judgment be
recognized; (2) that the bigamous marriage
between Marinay and Maekara be declared
void ab initio under Articles 35(4) and 41 of
the Family Code of the Philippines and (3) for
the RTC to direct the Local Civil Registrar of
Quezon City to annotate the Japanese Family
Court judgment on the Certificate of Marriage
between Marinay and Maekara and to
endorse such annotation to the Office of the
Administrator and Civil Registrar General in
the National Statistics Office (NSO).
ISSUES:
I. Whether the Rule on Declaration of
Absolute Nullity of Void Marriages
and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC)
is applicable.
 II. Whether a husband or wife of a
prior marriage can file a petition to
recognize a foreign judgment
nullifying the subsequent marriage
between his or her spouse and a
foreign citizen on the ground of
bigamy.
III. Whether the Regional Trial Court
can recognize the foreign judgment
in a proceeding for cancellation or
correction of entries in the Civil
Registry under Rule 108 of the
Rules of Court.
RULING:
I. NO
The Rule on Declaration of Absolute
Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC)
does not apply in a petition to recognize a
foreign judgment relating to the status of a
marriage where one of the parties is a citizen
of a foreign country.
For Philippine courts to recognize a
foreign judgment relating to the status of a
marriage where one of the parties is a citizen
of a foreign country, the petitioner only needs
to prove the foreign judgment as a fact under
the Rules of Court. A foreign judgment
relating to the status of a marriage affects
the civil status, condition and legal capacity
of its parties. However, the effect of a foreign
judgment is not automatic. To extend the
effect of a foreign judgment in the
Philippines, Philippine courts must determine
if the foreign judgment is consistent with
domestic public policy and other mandatory
laws. Article 15 of the Civil Code provides
that “[l]aws relating to family rights and
duties, or to the status, condition and legal
capacity of persons are binding upon citizens
of the Philippines, even though living
abroad.” This is the rule of lex nationalii in
private international law. Thus, the Philippine
State may require, for effectivity in the
Philippines, recognition by Philippine courts of
a foreign judgment affecting its citizen, over
whom it exercises personal jurisdiction
relating to the status, condition and legal
capacity of such citizen.
Since 1922 in Adong v. Cheong Seng Gee,
Philippine courts have recognized foreign
divorce decrees between a Filipino and a
foreign citizen if they are successfully proven
under the rules of evidence. Divorce involves
the dissolution of a marriage, but the
recognition of a foreign divorce decree does
not involve the extended procedure under
A.M. No. 02- 11-10-SC or the rules of
ordinary trial. While the Philippines does not
have a divorce law, Philippine courts may,
however, recognize a foreign divorce decree
under the second paragraph of Article 26 of
the Family Code, to capacitate a Filipino
citizen to remarry when his or her foreign
spouse obtained a divorce decree abroad.
There is therefore no reason to disallow
Fujiki to simply prove as a fact the Japanese
Family Court judgment nullifying the
marriage between Marinay and Maekara on
the ground of bigamy. While the Philippines
has no divorce law, the Japanese Family
Court judgment is fully consistent with
Philippine public policy. Thus, Fujiki can prove
the existence of the Japanese Family Court
judgment in accordance with the Rules of
Court.
II. YES
Fujiki has the personality to file a petition
to recognize the Japanese Family Court
judgment nullifying the marriage between
Marinay and Maekara on the ground of
bigamy because the judgment concerns his
civil status as married to Marinay. For the
same reason he has the personality to file a
petition under Rule 108 to cancel the entry of
marriage between Marinay and Maekara in
the civil registry on the basis of the decree of
the Japanese Family Court. There is no doubt
that the prior spouse has a personal and
material interest in maintaining the integrity
of the marriage he contracted and the
property relations arising from it. There is
also no doubt that he is interested in the
cancellation of an entry of a bigamous
marriage in the civil registry, which
compromises the public record of his
marriage.
III. YES
A recognition of a foreign judgment is not
an action to nullify a marriage. It is an action
for Philippine courts to recognize the
effectivity of a foreign judgment, which
presupposes a case which was already tried
and decided under foreign law.
Article 26 of the Family Code confers
jurisdiction on Philippine courts to extend the
effect of a foreign divorce decree to a Filipino
spouse without undergoing trial to determine
the validity of the dissolution of the marriage.
The second paragraph of Article 26 of the
Family Code only authorizes Philippine courts
to adopt the effects of a foreign divorce
decree precisely because the Philippines does
not allow divorce. Philippine courts cannot try
the case on the merits because it is
tantamount to trying a case for divorce.
Thus, Philippine courts are limited to the
question of whether to extend the effect of a
foreign judgment in the Philippines. In a
foreign judgment relating to the status of a
marriage involving a citizen of a foreign
country, Philippine courts only decide
whether to extend its effect to the Filipino
party, under the rule of lex nationalii
expressed in Article 15 of the Civil Code.
16. Miciano vs Brimo – G.R. No. L-22595,
November 1, 1927 (50 Phil 867)
Facts:
The judicial administrator of the estate
of the deceased, Joseph Brimo, filed a
scheme of partition. However, Andre Brimo,
one of the brothers of the deceased opposed
the said partition. The court however
approved it.
According to the scheme and its
provision, that the deceased, in his last will
and testament, requests that all his relatives
respect his wishes, otherwise those who
opposed the same shall be cancelled in said
disposition in favor of the oppositor.
The appellant in the case, who
opposed the same, based his opposition on
the fact that the deceased was a Turkish
citizen, that his disposition should be in
accordance with the laws of his nationality.
Issues:
WON the disposition shall be made in
accordance with Philippine Laws
Held:
No, although the disposition provides
an express provision that it shall be governed
by Philippine Laws and those who opposed
the condition of the provisions given shall be
cancelled from the disposition, the fact is that
the condition itself is void for being contrary
to law. Article 792 of the Civil Code provides:
“Impossible conditions and those
contrary to law or good morals shall be
considered as not imposed and shall not
prejudice the heir or legatee in any manner
whatsoever, even should the testator
otherwise provide.”
It is contrary to law because it
expressly ignores the decedent’s national
law, according to Article 10 of the Civil Code,
such national law shall govern his
testamentary dispositions.
Therefore, the institution of the
legatees is unconditional and valid, as well as
those favorable to herein appellant-oppositor.
17. Bohanan v. Bohanan
Facts:
The testator was a citizen of Nevada,
USA. In his will, out of the total estate of
P211,639.33 in cash, he gave his grandson
P90,819.67 and one-half of all shares of
stock of several mining companies and to his
brother and sister the same amount. He gave
his two children a legacy of only P6,000 each,
or a total of P12,000. He did not give any
share to his wife.
The testator’s wife and two children
claim that they have been deprived of their
legitime and now question the validity of the
testamentary provisions.
Under the laws of Nevada, the testator
is allowed to dispose of all of his properties
without requiring him to leave any portion of
his estate to his wife and children.
Under the Old Civil Code, the law in
force during that time, two-thirds of the
estate left by the testator shall pertain to his
children.
Issue:
Whether the successional rights of the
heirs of the testator should be governed by
the national law of the decedent, the laws of
Nevada, or the law of the forum, the
Philippine laws.
Ruling:
National law of the decedent.
Under Art. 10 of the old Civil Code, now
Article 16, par. 2 of the Civil Code, legal and
testamentary successions, in respect to the
order of succession as well as to the extent of
the successional rights and the intrinsic
validity of their provisions, shall be regulated
by the national law of the person whose
succession is in question, whatever may be
the nature of the property and the country in
which it is found.
In this case, the testator was a citizen
of the State of Nevada. Since the
laws of said state allow the testator to
dispose of all his property according to his
will, his testamentary dispositions depriving
his wife and children of what should be their
legitimes under the laws of the Philippines,
should be respected.
18. JOSEFINA JUANA DE DIOS RAMIREZ
MARCAIDA vs. LEONCIO V. AGLUBAT
FACTS:
This case rooted from the refusal of
the Local Civil Registrar of Manila to record
an Escritura de Adopcion executed in Madrid,
Spain by by Maria Garnier Garreau, then 84
years of age, adopting Josefina Juana de Dios
Ramirez Marcaida, 55 years, a citizen of the
Philippines. Both were residents of Madrid,
Spain. On that date, October 21, 1958, the
court granted the application for adoption
and gave the necessary judicial authority,
once the judgment becomes final, to execute
the corresponding adoption document.
The document of adoption was filed in
the Office of the Local Civil Registrar of
Manila on January 15, 1959. The Registrar,
however, refused to register that document
upon the ground that under Philippine law,
adoption can only be had through judicial
proceeding. And since the notarial document
of adoption is not a judicial proceeding, it is
not entitled to registration.
Petitioner went to CFI- Manila on
mandamus. The lower court dismissed said
petition and decided that what is registrable
is only adoption obtained through a judgment
rendered by a Philippine court.
Solicitor General argues that petitioner’s case
does not come within the purview of Article
409 of the Civil Code, which states that: “In
cases of legal separation, adoption,
naturalization and other judicial orders
mentioned in the preceding article it shall be
the duty of the clerk of the court which issued
the decree to ascertain whether the same has
been registered, and if this has not been
done, to send a copy of said decree to the
civil registry of the city or municipality where
the court is functioning”, and Section 11 of
Act 3753, which reads: “Duties of clerks of
court to register certain decisions. — In cases
of legitimation, acknowledgment, adoption,
naturalization, and change of given or family
name, or both, upon the decree of the court
becoming final, it shall be the duty of the
clerk of the court which issued the decree to
ascertain whether the same has been
registered, and if this has not been done, to
have said decree recorded in the office of the
civil registrar of the municipality where the
court is functioning.:”
ISSUE:
WON the order of adoption issued by
the CFI- Madrid can be registered in the
Philippines.
RULING:
Yes. The cited provisions refer to
adoptions effected in the Philippines. Article
409 of the Civil Code and Section 10 of the
Registry Law speak of adoption which shall be
registered in the municipality or city where
the court issuing the adoption decree is
functioning. Limitation of registration of
adoptions to those granted by Philippine
courts is a misconception .For, if registration
is to be narrowed down to local adoptions, it
is the function of Congress, not of the Court,
to spell out such limitation. The court cannot
carve out a prohibition where the law does
not so state. And, by Articles 407 and 408 of
our Civil Code, the disputed document of
adoption is registrable.
No suggestion there is in the record
that prejudice to State and adoptee, or any
other person for that matter, would ensue
from the adoption here involved. The validity
thereof is not under attack. At any rate,
whatever may be the effect of adoption, the
rights of the State and adoptee and other
persons interested are fully safeguarded by
Article 15 of our Civil Code which, in terms
explicit, provides that: “Laws relating to
family rights and duties, or to the status,
condition and legal capacity of persons are
binding upon citizens of the Philippines even
though living abroad.” Private international
law offers no obstacle to recognition of
foreign adoption. This rests on the principle
that the status of adoption, created by the
law of a State having jurisdiction to create it,
will be given the same effect in another state
as is given by the latter state to the status of
adoption when created by its own law. It is
quite obvious then that the status of
adoption, once created under the proper
foreign law, will be recognized in this country,
except where public policy or the interests of
its inhabitants forbid its enforcement and
demand the substitution of the lex fori.
Indeed, implicit in Article 15 of our Civil Code
just quoted, is that the exercise of incidents
to foreign adoption “remains subject to local
law.”The court held that an adoption created
under the law of a foreign country is entitled
to registration in the corresponding civil
register of the Philippines. It is to be
understood, however, that the effects of such
adoption shall be governed by the laws of this
country. The lower court’s decision is hereby
reversed; and the Local Civil Registrar of
Manila is hereby directed to register the deed
of adoption (Escritura de Adopcion) by Maria
Garnier Garreau in favor of petitioner Josefina
de Dios Ramirez Marcaida.
19. Cargill Inc. vs. Intra Strata
Assurance Corporation.
Facts:
Cargill,Inc. (petitioner) is a capacity to sue before Philippine courts.
corporation organized and existing under
the laws of the State of Delaware,
United States of America entered into a
contract with Northern Mindanao Corporation
whereby the latter agreed to sell to Cargill
20,000 to 24,000 metric tons of molasses at
the price of $44 per metric ton.
The contract was amended three
times. The first amendment reduced the
quantity of molasses to 10,500 metric tons
and increasing the price to $55 per metric
ton. The third amendment required NMC to
put up bonds to guarantee NMC's delivery of
10,500 metric tons of molasses and to
guarantee the repayment of down payment.
In compliance with the third
amendment, Intra Strata Assurance
Corporation (respondent) issued bonds as
provided in the contract.
Thereafter, NMC was only able tog
deliver 219.551 metric tons of molasses out
of the agreed 10,500 metric tons. The
petitioner sent demand letter to respondent
claiming payment under the said bonds but
respondent refused to pay.
Thus, petitioner sued NMC and
respondent. Later, petitioner and NMC and
respondent entered into a compromise
agreement. The compromise agreement
provides that respondent would pay P
3,000,000 upon signing and would deliver
6,991 metric tons of molasses from Dec. 16-
31, 1991.
However, NMC still failed to comply
with its obligation under the compromise
agreement. Thus, the trial court rendered a
decision ordering the respondent to pay
Cargill P16, 993, 200.00.
On appeal, the CA reversed the trial
court’s decision holding that Cargill does not
have the capacity to file the suit since it is a
foreign corporation doing business in the
Philippines without the requisite license, that
purchases of molasses were in pursuance of
its business and not just mere isolated and
incidental transaction.
On appeal before SC, respondent
argued that petitioner is bar from maintaining
action in the Philippines under Sec. 133 of
the Corporation Code of the Philippines.
ISSUE:
Whether or Not petitioner, an
unlicensed foreign corporation has legal
HELD:
YES, The determination of whether a
foreign corporation is doing business in the
Philippines must be based on the facts of
each case. In the case of Antam
Consolidated, Inc. v. CA, 16 in which a
foreign corporation filed an action for
collection of sum of money against
petitioners therein for damages and loss
sustained for the latter's failure to deliver
coconut crude oil, the Court emphasized
the importance of the element of
continuity of commercial activities to
constitute doing business in the
Philippines.
Similarly, in this case, petitioner and
NMC amended their contract three times to
give a chance to NMC to deliver to petitioner
the molasses, considering that NMC already
received the minimum price of the contract.
There is no showing that the transactions
between petitioner and NMC signify the intent
of petitioner to establish a continuous
business or extend its operations in the
Philippines.
In this case, the contract between
petitioner and NMC involved the purchase of
molasses by petitioner from NMC. It was
NMC, the domestic corporation, which
derived income from the transaction and not
petitioner. To constitute "doing business,"
the activity undertaken in the Philippines
should involve profit-making.
Other factors which support the
Anding that petitioner is not doing business in
the Philippines are: (1) petitioner does not
have an oKce in the Philippines; (2) petitioner
imports products from the Philippines through
its non-exclusive local broker, whose
authority to act on behalf of petitioner is
limited to soliciting purchases of products
from suppliers engaged in the sugar trade in
the Philippines; and (3) the local broker is an
independent contractor and not an agent of
petitioner.
To be doing or "transacting business in
the Philippines" for purposes of Section 133
of the Corporation Code, the foreign
corporation must actually transact business in
the Philippines, that is, to perform specific
business transactions within the
Philippine territory on a continuing basis
in its own name and for its own account.
Actual transaction of business within
the Philippine territory is an essential
requisite for the Philippines to acquire
jurisdiction over a foreign corporation and
thus require the foreign corporation to secure
a Philippine business license.
In the present case, petitioner is a
foreign company merely importing molasses
from a Philippine exporter. A foreign
company that merely imports goods from a
Philippine exporter, without opening an office
or appointing an agent in the Philippines, is
not doing business in the Philippines.
20. Steelcase, Inc. vs. International
Selections, Inc.
Facts:
Petitioner Steelcase, Inc. (Steelcase) is
a foreign corporation existing under the laws
of Michigan, USA engaged in manufacturing
office furniture.
Sometime in 1986 or 1987, Steelcase
and DISI, Design International Selections,
Inc. a domestic corporation, orally entered
into a dealership agreement whereby DISI
was granted the right to distribute or sell
Steelcase’s products within the Philippines.
On January 18, 1999, Steelcase filed a
complaint for sum of money against DISI
alleging, among others, that DISI had an
unpaid account of US$600,000.00.
In its answer, DISI prayed that the
complaint should be dismissed because of
Steelcase’s lack of legal capacity to sue in
Philippine courts.
On November 15, 1999, Acting
Presiding Judge Maceda dismissed the
complaint. The motion for reconsideration
was denied. Thus, the case was elevated to
the Court of Appeals.
The CA also affirmed the RTC’s
decision, ruling that Steelcase acts of sending
letters with regards to the distribution rights,
cancelling orders from DISI’s customer,
continuing to send its products to the
Philippines and making several impositions on
management and operations of DISI showed
its intention to pursue and continue the
conduct of its business in the Philippines.
Thus, the CA ruled that Steelcase was barred
from access to our courts for being a foreign
corporation doing business here without the
requisite license to do so.
Issue:
1. Whether or not Steelcase is doing
business in the Philippines without a license
2. Whether or not DISI is estopped from
challenging the Steelcase’s legal capacity to
sue
Ruling:
1. No. Steelcase is an unlicensed
foreign corporation not doing business in
the Philippines. The rule that an unlicensed
foreign corporation doing business in the
Philippine do not have the capacity to sue
before the local courts is well-established.
The phrase “doing business” is clearly
defined in Section 3(d) of R.A. No. 7042
(Foreign Investments Act of 1991), to wit: d)
The phrase “doing business” shall include
soliciting orders, service contracts, opening
offices, whether called “liaison” offices or
branches; appointing representatives or
distributors domiciled in the Philippines or
who in any calendar year stay in the country
for a period or periods totalling one hundred
eighty (180) days or more; participating in
the management, supervision or control of
any domestic business, firm, entity or
corporation in the Philippines… Provided,
however, That the phrase “doing
business” shall not be deemed to include
mere investment as a shareholder by a
foreign entity in domestic corporations duly
registered to do business, and/or the exercise
of rights as such investor; nor having a
nominee director or officer to represent its
interests in such corporation; nor appointing
a representative or distributor domiciled
in the Philippines which transacts
business in its own name and for its own
account.
The appointment of a distributor in the
Philippines is not sufficient to constitute
“doing business” unless it is under the full
control of the foreign corporation. On the
other hand, if the distributor is an
independent entity which buys and
distributes products, other than those of the
foreign corporation, for its own name and its
own account, the latter cannot be considered
to be doing business in the Philippines.
In this case, DISI is a corporation
managed and owned independently, and in
addition to Steelcase products, DISI also
distributed products of other companies.
As a result, Steelcase cannot be
considered to be doing business in the
Philippines by its act of appointing a
distributor as it falls under one of the
exceptions under R.A. No. 7042.
2. Yes, DISI is estopped from challenging
Steelcase’s legal capacity to sue. By
acknowledging the corporate entity of
Steelcase and entering into a dealership
agreement with it and even benefiting from
it, DISI is estopped from questioning
Steelcase’s existence and capacity to sue.
A foreign corporation doing business in
the Philippines may sue in Philippine Courts
although not authorized to do business here
against a Philippine citizen or entity who had
contracted with and benefited by said
corporation. To put it in another way, a party
is estopped to challenge the personality of a
corporation after having acknowledged the
same by entering into a contract with it.
21.State-Investment-House-Inc.-v.
Citibank
Facts:
The foreign banks involved in the
controversy are Bank of America NT and SA,
Citibank N.A. and Hongkong and Shanghai
Banking Corporation. They petitioned for
involuntary insolvency of Consolidated Mines,
Inc. (CMI) with several allegations, among
which was that it generally defaulted in the
payment of its current obligations for a period
of thirty days, so that they could collect the
loan obligation of CMI. However, its
properties were already attached to the State
Investment House, Inc. (SIHI) and State
Financing Center, Inc. (SFCI).
Now, the petition of the said banks
was opposed by SIHI and SFCI, claiming that
the Court had no jurisdiction to take
cognizance of the petition for insolvency
because petitioners are not resident creditors
of CMI in contemplation of the Insolvency
Law.
The RTC rendered “summary judgment
dismissing the petition for lack of jurisdiction
over the subject matter, with costs against
petitioners.” The three foreign banks sought
to take an appeal from the Order. SIHI and
SFCI moved to dismiss their appeal, but was
denied by the trial court. The latter filed a
petition for certiorari and prohibition,
impugning that denial. The Supreme Court
dismissed the petition and instead required
the three banks to file a petition for review in
accordance with Rule 45 of the Rules of
Court. Later, their court petition for review
was referred to the Intermediate Appellate
Court, which reversed the Trial Court’s Order.
SIHI and SFCI countered that the
three banks are not Philippine residents in
fact and in law because the non-resident
status of the banks within the context of the
Insolvency Law is confirmed by other laws
and that the license granted to them to do
business in the Philippines does not make
them residents so that under the domiciliary
laws of the foreign banks, a Philippine
corporation is NOT allowed the reciprocal
right to petition for a debtor’s involuntary
insolvency.
Issue:
WON foreign banks licensed to do
business in the Philippines, may be
considered “residents of the Philippine
Islands” within the meaning of Section 20 of
the Insolvency Law.
Ruling:
No, while it cannot be found in the
Insolvency Law itself, there are however
other statutes from which enlightening
notions of the term may be derived as
follows:
a. The National Internal Revenue Code
declares that the term “ ‘resident
foreign corporation’ applies to a
foreign corporation engaged in trade
or business within the Philippines,” as
distinguished from a “ ‘non-resident
foreign corporation’ xx (which is one)
not engaged in trade or business
within the Philippines.”
 b. The Offshore Banking Law, Presidential
Decree No. 1034, states “that
branches, subsidiaries, affiliation,
extension offices or any other units of
corporation or juridical person
organized under the laws of any
foreign country operating in the
Philippines shall be considered
residents of the Philippines.”
c. The General Banking Act, Republic Act
No. 337, places “branches and
agencies in the Philippines of foreign
banks xx (which are) called Philippine
branches,” in the same category as
“commercial banks, savings
associations, mortgage banks,
development banks, rural banks, stock
savings and loan associations”
This Court itself has already had
occasion to hold that a foreign corporation
licitly doing business in the Philippines, which
is a defendant in a civil suit, may not be
considered a non-resident within the scope of
the legal provision authorizing attachment
against a defendant not residing in the
Philippine Islands;” in other words, a
preliminary attachment may not be applied
for and granted solely on the asserted fact
that the defendant is a foreign corporation
authorized to do business in the Philippines—
and is consequently and necessarily, “a party
who resides out of the Philippines.”
Parenthetically, if it may not be considered as
a party not residing in the Philippines, or as a
party who resides out of the country, then,
logically, it must be considered a party who
does reside in the Philippines, who is a
resident of the country. Be this as it may, this
Court pointed out that Our laws and
jurisprudence indicate a purpose to assimilate
foreign corporations, duly licensed to do
business here, to the status of domestic
corporations.
Thus, the petition is DENIED and the
challenged decision is affirmed.
22. Rogers vs Guaranty Trust Co. of New
York
Facts:
Petitioner owns 200 shares of the
common stock of the American Tobacco
Company which he acquired prior to the
passage of Chapter 175, p. 354, New Jersey
Laws, 1920, that is here involved. He also
owns 400 shares of common stock B. He
brought two suits in the Supreme Court of
New York: One against the tobacco company
and some of its directors, the other against
the trust company to enjoin the issuing and
selling of stock to the officers, directors and
certain employees of the corporation, and to
annul the shares issued. Only a few of the
company's directors were residents of New
York; and only a few of the stock-allottees
were before the court, though the conditions
entitling all to receive the stock had been
complied with and presumably some of it had
been delivered. The corporation had its
principal business office in New York and had
its registered office in New Jersey, where
stockholders' meetings were held, and had
property in New Jersey and did business
there and in other States and countries. The
controversy depended on a construction of
statutes of New Jersey which had not been
passed upon by New Jersey courts and
involved grave doubts. The New Jersey law
afforded a ready and complete remedy
through an action in rem and service by
publication.
Issue:
Whether or not a federal district court
should decline jurisdiction of a case involving
the internal affairs of a foreign corporation.
Ruling:
Yes, a stockholder, by becoming such,
impliedly agrees that in respect of its internal
affairs the corporation is governed by the
laws of the State of its organization. It is
settled doctrine that a court — state or
federal — sitting in one State will as a
general rule decline to interfere with or
control by injunction or otherwise the
management of the internal affairs of a
corporation organized under the laws of
another State, but will leave controversies as
to such matters to the courts of the State of
the domicile. Courts will exercise this
discretion whenever considerations of
convenience, efficiency and justice point to
the courts of the State of the domicile as
appropriate tribunals for the determination of
the particular case.
The doctrine of forum non
conveniens is an instrument of justice. Courts
must be slow to apply it at the instance of
directors charged as personal wrongdoers,
when justice will be delayed, even though not
thwarted altogether, if jurisdiction is refused.
At least that must be so when the wrong is
clearly proved. The overmastering necessity
of rebuking fraud or breach of trust will
outweigh competing policies and shift the
balance of convenience. Equity, it is said, will
not be over-nice in balancing the efficacy of
one remedy against the efficacy of another
when action will baffle, and inaction may
confirm, the purpose of the wrongdoer.
23. Western Air Lines, Inc. v. Sobieski
Facts:
Western Airlines Inc. is a Delaware
corporation with its principal place of
business in California. Western's original
predecessor was incorporated in California in
1925; thereafter, in 1928, a Delaware
incorporation was effected. This Delaware
corporation, under a permit applied for and
granted by the California Corporations
Commissioner, exchanged its shares for all of
the outstanding shares of the California
corporation in 1929, and the California
corporation then became a wholly owned
subsidiary of the Delaware corporation. This
wholly owned subsidiary was dissolved in
1934. The certificates of incorporation of both
of these corporations contain provisions for
cumulative voting.
On July 12 and 13, 1956 the board resolved
to eliminate cumulative voting for directors
and began proceedings in compliance with
the relevant Delaware laws to amend the
certificate of incorporation with a view of the
elimination of cumulative voting rights.
The commissioner, by letter on August 28,
1956, advised counsel for Western that in his
opinion the proposed amendment of the
articles of incorporation would constitute a
‘sale’ of securities within the provisions of
section 25009(a) of the Corporations Code,1
and, further, that pursuant to section 255002
of the same code Western should not engage
in the solicitation of proxies or hold a
shareholders meeting for the purpose of
amending the articles until Western had
applied for and received a permit authorizing
such action from the commissioner.
Western applied for such a permit, reserving,
however, the right to question the jurisdiction
of the commissioner to require such a permit.
The commissioner granted a negotiating
permit, but expressly reserved the issue of
‘fairness' under Corporations Code, § 255103
and conditioned the issuance of the permit
upon non-filing of the proposed amendment
with the Secretary of State of Delaware until
a further permit had been obtained from the
commissioner.
The California corporate securities law
contains a provision that the "sale" of a
security includes any change in its rights and
privileges' and that the Corporations
Commissioner is authorized to refuse a
permit for a "sale" unless, in his
opinion, the proposed change is fair and
equitable to all security holders 
concerned.
In an action by the corporation against the
Commissioner, the trial court held that
because the amendment of the articles of
incorpora- tion was an "internal affair"
between the foreign corporation and its
shareholders, the Commissioner had
exceeded his jurisdiction. The District Court
of Appeal reversed, however, reasoning that
a state could regulate such a change to
protect its residents. Although the corpora-
tion emphatically contended that the
California legislature had*repealed a
provision requiring foreign corporations to
have cumulative voting, the court held that
the legislature had granted the Commissioner
the power to appraise the fairness of changes
in the corporate structures of foreign as well
as domestic corporations. Finally, the court
concluded that the Commissioner's action
was not unconstitutional because the foreign
corporation did a substantial amount of
business within Cali- fornia.
Issue:
WON California Corporate Securities Law can
be applied to Western Airlines Inc., a
Delaware corporation or a foreign
corporation.
Ruling: Yes. 
Insofar as the findings of the commissioner
and the court pertain to the question of
commissioner's jurisdiction to hold a hearing
in circumstances such as those here
disclosed, it would appear that the plain
language of section 25009 of the
Corporations Code providing that “sale' or
‘sell’ includes every disposition, or attempt to
dispose, of a security or interest in a
security. ‘Sale’ or ‘sell’ includes all of the
following * * * an exchange; any change in
the rights, preferences, privileges, or
restrictions on outstanding securities'
persuades us that the court below erred in
finding that the commission had no
jurisdiction to act in this matter.
Many cases hold that where the Corporate
Securities Act is violated by solicitation of
sales of stock in California, the Corporate
Securities Act applies even though issuance
of the stock and the transfer of title are to
take place in a foreign state.(People v. Sears,
138 Cal.App.2d 773, 791, 292 P.2d 663).
Furthermore, even criminal sanctions may
properly be imposed under the above stated
rule where the main effectuation of a sale or
transfer of stock takes place in California
although the ultimate act may take place
extra-territorially. (People v. Alison, 189
Cal.App.2d 201, 10 Cal.Rptr. 859.)
People v. Rankin, 169 Cal.App.2d 150, 337
P.2d 182, specifically holds that even though
the last act necessary to the issuance of a
security such as the signing of documents
occurs outside of California, the corporations
commissioner is not thereby deprived of
jurisdiction over the subject matter.
B. C. Turf & Country Club v. Daugherty dealt
with a state of facts which the court felt did
not amount to the solicitation or the type of
preliminary negotiation requiring a permit
under California law. 94 Cal.App.2d on page
332, 210 P.2d on page 767 of the opinion
contains the following language relative to
the Corporate Securities Act (p. 329): ‘From
a standpoint of interpretation, there can be
no reasonable doubt but that these
provisions of the statute require a foreign
corporation to secure a permit to solicit a
sale of its stock in this state, or to engage in
preliminary negotiations looking towards
such sale, even though the issuance of the
securities and the transfer of their title will, in
good faith, be completed in a foreign state.
The sections quoted clearly prohibit a foreign
corporation from soliciting in this state a sale
of stock of its own issue without first securing
a permit, even though in good faith the
issuance of the stock and transfer of title are
to take place in the foreign state. We also
have no doubt that, although such a
regulation may impose some restraint on
interstate commerce and place some
restriction on free speech, it is a valid
exercise of the state's police power, and is
not unconstitutional.  Apparently, Delaware imposes no
24. Mansfield Hardwood v Johnson
268 F.2d (5th Cir 1959)
Facts:
The case involves a breach of fiduciary
relationship owed by appellant’s officers and
directors ang majority stockholders to the
appellees as minority stockholders. Appellant
insists, among others, that the fiduciary
relationship must be determined by the law
of the state of incorporation, viz., Delaware,
which imposes no fiduciary relationship.
Issue:
WON the law of the state of
incorporation, that is Delaware, and not
the law of forum, that is Louisiana, that
should determine the fiduciary
relationship inuring from the officers or
directors or majority stockholders to the
individual or minority stockholders,
particularly concerning the purchase of
stock from a stockholder
Held:
No. The law that should govern is
the law of the forum (lex fori) and not
the law of incorporation.
A growing minority of jurisdictions
recognize a fiduciary relationship or a
position of confidence existing between the
directors and officers of a corporation and the
individual stockholders, especially when the
former purchase shares of stock from the
latter. It is well settled that a federal court in
a diversity case must apply the conflict-of-
laws rule of the state in which it sits. While
Louisiana conflict-of-laws is silent on which
law determines whether such a fiduciary
relationship exists in a foreign corporation, its
various conflict-of-laws rules are generally
the same as in other states. Therefore, we
must look to the general law.
A number of cases have held that the
conflict-of-laws rules of the forum require
that court to refer to the "law of the State of
incorporation to determine the extent and
nature of relationship between corporation
and stockholder, corporate officer or director
and stockholder and between stockholders
inter sese," while the law of the place of the
wrong determines the quantum of the breach
of duty
fiduciary duty on the part of officers or
directors or majority stockholders in buying
stock from the minority or individual
stockholders. Where neither the charter nor
the statutory laws of the incorporating state
are applicable, and all contact points are in
the forum, we believe that the laws of the
forum should govern.
25. HYATT ELEVATORS v. GOLDSTAR
ELEVATORS
Fact:
In this case, the petitioner is Goldstar
Elevator Philippines Inc. and on the other
hand the private respondent, Hyatt Elevators
and Escalators Company. Both engaged in
installing, maintaining/servicing of elavators
and escalators
Hyatt (herein petitioner) filed an unfair
trade practices and damages against LG
industrial systems Co. Ltd, and LG
International Corporation alleging that it was
appointed as the exclusive distributor of LG
elevators and escalators in the Philippines
under Distributorship Agreement
LG filed a motion to dismiss alleging
that lack of jurisdiction over the persons of
defendant, improper venue and failure to
state a cause of action.
Hyatt filed a motion for leave of court to
amend the complaint, alleging that LG
transferred all assets to a joint venue
agreement with Otis elevator Company
of the USA to LG Otis Elevator Company
Goldstar filed a Motion to dismiss the
amended complaint alleging that venue
was improperly laid as neither the Hyatt,
LG or Goldstar itself resided in
Mandaluyong city where the case was
originally filed.
The RTC denied the motion
The CA dismissed the case and held that
Makati was the principal place of
business of both respondent and
petitioner, as stated in the latter’s
Articles of Incorporation, that place was
controlling for purposes of determining
the proper venue.
Issue:
Whether or not the “residence” of the
corporation is the same one as stated in the
Articles of Incorporation.
Held:
Yes, although the Rules of Court do
not provide that when the plaintiff is a
corporation, the complaint should be filed in
the location of its principal office as indicated
in its articles of incorporation. Jurisprudence
has, however, settled that the place where
the principal office of a corporation is located,
as stated in the articles, indeed establishes
its residence. This ruling is important in
determining the venue of an action by or
against a corporation, as in the present case.
26. Clavecilla Radio System v. Antillon
FACTS:
New Cagayan Grocery (NECAGRO)
filed a complaint against Clavecilla Radio
System, alleging that Clavecilla omitted the
word “NOT” in the letter addressed to
NECAGRO for transmittal at Clavecilla
Cagayan de Oro Branch, as quoted below:
“NECAGRO CAGAYAN DE ORO
(CLAVECILLA)
REURTEL WASHED NOT AVAILABLE
REFINED TWENTY FIFTY IF
AGREEABLE SHALL SHIP LATER REPLY
POHANG”
NECAGRO further alleged that the omission of
the word “NOT” between the word WASHED
and AVAILABLE altered the contents of the
same causing them to suffer from damages.
Clavecilla filed a motion to dismiss the case
on the ground of failure to state a cause of
action and improper venue. City Judge of
CDO denied the motion to dismiss. Clavecilla
filed a petition for prohibition with preliminary
injunction with the CFI praying that the City
Judge be enjoined from further proceeding
with the case because of improper venue.
ISSUE:
Whether or not the case filed by
NECAGRO against Clavecilla should be filed in
Manila where it holds its principal office?
HELD:
YES. Settled is the principle in
corporation law that the residence of a
corporation is the place where its principal
office is established. Since it is not disputed
that the Clavecilla Radio System has its
principal office in Manila, it follows that the
suit against it may properly be filed in the
City of Manila.
 Section 1 of Rule 4 of the New Rules of
Court, governing venue of actions in inferior
courts, provides in its paragraph (b) (3) that
when "the action is not upon a written
contract, then in the municipality where the
defendant or any of the defendants resides or
may be served with summons."
The fact that it maintains branch
offices in some parts of the country does not
mean that it can be sued in any of these
places. To allow an action to be instituted in
any place where a corporate entity has its
branch offices would create confusion and
work untold inconvenience to the corporation.
It is important to remember, as was
stated by this Court in Evangelista vs.
Santos, et al., supra, that the laying of the
venue of an action is not left to plaintiff's
caprice because the matter is regulated by
the Rules of Court. Applying the provision of
the Rules of Court, the venue in this case was
improperly laid. The order appealed from is
therefore reversed, but without prejudice to
the filing of the action in which the venue
shall be laid properly.
27. Tayag v. Benguet Consolidated
same case with # 6
28. NARRA NICKEL MINING AND DEV’T
CORP., ET AL. V. REDMONT
CONSOLIDATED MINES CORP., G.R. NO.
195580, 21 APRIL 2014
FACTS
Redmont Consolidated Mines, Inc. (Redmont)
filed before the Panel of Arbitrators (POA) of
the DENR separate petitions for denial of
McArthur Mining, Inc. (McArthur), Tesoro and
Mining and Development, Inc. (Tesoro), and
Narra Nickel Mining and Development
Corporation (Narra) applications Mineral
Production Sharing Agreement (MPSA) on the
ground that they are not “qualified persons”
and thus disqualified from engaging in mining
activities through MPSAs reserved only for
Filipino citizens.
McArthur Mining, Inc., is composed, among
others, by Madridejos Mining Corporation
(Filipino) owning 5,997 out of 10,000 shares,
and MBMI Resources, Inc. (Canadian) owning
3,998 out of 10,000 shares; MBMI also owns
3,331 out of 10,000 shares of Madridejos
Mining Corporation;
Tesoro and Mining and Development, Inc., is
composed, among others, by Sara Marie
Mining, Inc. (Filipino) owning 5,997 out of
10,000 shares, and MBMI Resources, Inc.
(Canadian) owning 3,998 out of 10,000
shares; MBMI also owns 3,331 out of 10,000
shares of Sara Marie Mining, Inc.;
Narra Nickel Mining and Development
Corporation, is composed, among others, by
Patricia Louise Mining & Development
Corporation (Filipino) owning 5,997 out of
10,000 shares, and MBMI Resources, Inc.
(Canadian) owning 3,998 out of 10,000
shares; MBMI also owns 3,396 out of 10,000
shares of Patricia Louise Mining &
Development Corporation;
ISSUES:
(1) Is the Grandfather Rule applicable?
(2) Whether McArthur, Tesoro and Narra are
Filipino nationals.
RULINGS
(1) YES. The instant case presents a situation
which exhibits a scheme employed by
stockholders to circumvent the law, creating
a cloud of doubt in the Court’s mind. To
determine, therefore, the actual participation,
direct or indirect, of MBMI, the grandfather
rule must be used.
The Strict Rule or the Grandfather Rule
pertains to the portion in Paragraph 7 of the
1967 SEC Rules which states, “but if the
percentage of Filipino ownership in the
corporation or partnership is less than 60%,
only the number of shares corresponding to
such percentage shall be counted as of
Philippine nationality.” Under the Strict Rule
or Grandfather Rule Proper, the combined
totals in the Investing Corporation and the
Investee Corporation must be traced (i.e.,
“grandfathered”) to determine the total
percentage of Filipino ownership.
(2) NO. Petitioners McArthur, Tesoro and
Narra are not Filipino since MBMI, a 100%
Canadian corporation, owns 60% or more of
their equity interests. Such conclusion is
derived from grandfathering petitioners’
corporate owners. xxx Noticeably, the
ownership of the “layered” corporations boils
down to xxx group wherein MBMI has joint
venture agreements with, practically
exercising majority control over the
corporations mentioned. In effect, whether
looking at the capital structure or the
underlying relationships between and among
the corporations, petitioners are NOT Filipino
nationals and must be considered foreign
since 60% or more of their capital stocks or
equity interests are owned by MBMI.
29. Gamboa v. Teves etal., GR No.
176579, October 9, 2012
Facts:
The issue started when petitioner
Gamboa questioned the indirect sale of
shares involving almost 12 million shares of
the Philippine Long Distance Telephone
Company (PLDT) owned by PTIC to First
Pacific. Thus, First Pacific’s common
shareholdings in PLDT increased from 30.7
percent to 37 percent, thereby increasing the
total common shareholdings of foreigners in
PLDT to about 81.47%. The petitioner
contends that it violates the Constitutional
provision on filipinazation of public utility,
stated in Section 11, Article XII of the 1987
Philippine Constitution, which limits foreign
ownership of the capital of a public utility to
not more than 40%. Then, in 2011, the court
ruled the case in favor of the petitioner,
hence this new case, resolving the motion for
reconsideration for the 2011 decision filed by
the respondents.
Issue:
Whether or not the Court made an
erroneous interpretation of the term ‘capital’
in its 2011 decision?
Held/Reason:
The Court said that the Constitution is
clear in expressing its State policy of
developing an economy ‘effectively
controlled’ by Filipinos. Asserting the ideals
that our Constitution’s Preamble want to
achieve, that is – to conserve and develop
our patrimony , hence, the State should
fortify a Filipino-controlled economy. In the
2011 decision, the Court finds no wrong in
the construction of the term ‘capital’ which
refers to the ‘shares with voting rights, as
well as with full beneficial ownership’ (Art.
12, sec. 10) which implies that the right to
vote in the election of directors, coupled with
benefits, is tantamount to an effective
control. Therefore, the Court’s interpretation
of the term ‘capital’ was not erroneous. Thus,
the motion for reconsideration is denied.
30. Bridgeman Art Library, Ltd. v. Corel
Corp.
Facts:
Plaintiff The Bridgeman Art Library,
Ltd. ("Bridgeman") claims to have exclusive
rights in photographic transparencies of a
substantial number of well known works of
art located in museums around the world and
to have transformed those transparencies
into digital images in which it also claims
exclusive rights. It contends that defendant
Corel Corporation ("Corel") is marketing in
the United States and abroad compact disks
containing digital images of a significant
number of the same works of art which,
Bridgeman claims, must have been copied
from its transparencies and that Corel thus is
infringing its copyrights in the United States,
the United Kingdom and Canada. It claims as
well that Corel's actions violated Sections
32(1) and 43(a) of the Lanham Act and are
actionable at common law.[1] The matter
now is before the Court on Corel's motion for
summary judgment dismissing the complaint
and Bridgeman's cross-motion for partial
summary judgment.
Issues:
1. WN Corel committed infringement on the
copyrights claim of plaintiff
2. WN United States District Court has
jurisdiction to the alleged infringements done
in Canada and United Kingdom
Held:
1. On merits (The district judge ruled in
the negative)
To establish copyright infringement
under the Copyright Act of 1976, a plaintiff
must establish ownership of a valid copyright
and copying. Corel contests both elements,
alleging that Bridgeman has no valid
copyright in its images and, in the
alternative, that there is no evidence of
copying. The Court therefore addresses each
element in turn. A threshold matter,
however, is the applicable choice of law for
these questions.
 In consequence, the applicable law is
not necessarily the same for each element of
the copyright claim. The Court therefore must
determine which law governs copyrightability
and the alleged infringements.
Bridgeman claims to own any literary
property in all the photographs although the
record arguably supports the view that
Bridgeman in some instances is merely an
exclusive licensing and sales agent for
reproductions owned by the museums that
own the original works of art. In any case,
however, the photographs first were
published in the United Kingdom. In these
circumstances, the Court concludes that the
United Kingdom has the most significant
relationship to the issue of copyrightability.
The applicable law for the second
element of the copyright claim is simply that
of the infringement situs. Thus, whether an
infringement has occurred in the United
States is a matter of United States law.
As to the Copyright:
For the reasons discussed above,
whether copyright subsists in Bridgeman's
transparencies is a question of United
Kingdom law. The result depends upon the
Copyright, Designs and Patents Act 1988 (the
"UK Act") which renders "original literary,
dramatic, musical or artistic works"
copyrightable. To be original, a work "need
not be original or novel in form, but it must
originate with the author and not be copied
from another work." That is not to say that
the author, in all circumstances, must create
the entire work from scratch to be accorded
copyright protection. "Protection of a copyrights and trademarks, it does so only
derivative work turns on whether the
[author's] skill, judgment and labour
transforms the underlying work in a relevant
way.” That is, the originality requirement is
not met where the work in question "is wholly
copied from an existing work, without any
significant addition, alteration,
transformation, or combination with other
material."
In light of the originality requirement,
Bridgeman's images are not copyrightable
under the UK Act. It is uncontested that
Bridgeman's images are substantially exact
reproductions of public domain works, albeit
in a different medium. The images were
copied from the underlying works without any
avoidable addition, alteration or
transformation. Indeed, Bridgeman strives to
reproduce precisely those works of art.
As to Infringement:
Even if its images were copyrightable,
Bridgeman could not make out its claim
because it has raised no genuine issue of fact
as to infringement. To prove infringement,
Bridgeman must prove that Corel actually
copied its images and that "the copying is
illegal because a substantial similarity exits
between the defendant's work and the
protectible elements of the plaintiff's work."
The Court finds no probative
similarities between the parties' images.
Plaintiff readily concedes the only similarity
between the two sets of reproductions is that
"both are exact reproductions of public
domain works of art." Because, by definition,
public domain works are not subjects of
copyright, this cannot serve as the requisite
similarity for copyright infringement. Even if
Bridgeman had a copyright in the one
element distinguishable from the underlying
works (i.e., the color bars plaintiff attaches to
its images), there would be no similarity
because Corel's images do not include this
feature.
2. On Jurisdiction (The district judge
ruled in the negative)
There is no independent basis of
federal subject matter jurisdiction over
plaintiff's claims of copyright infringement in
Canada and the United Kingdom. While
Section 1338(a) of the Judicial Code confers
jurisdiction over matters relating to
with respect to claims that arise "under any
Act of Congress.” Obviously, then, Section
1338(a) does not create jurisdiction for
Bridgeman's claim under the laws of Canada
and the United Kingdom. Nor can Bridgeman
rely on the Berne Convention and its
implementation vehicle, the BCIA. The Berne
Convention is a treaty, not an act of
Congress. Moreover, the Convention is not
self-executing.
 Section 1331 similarly is unavailing as
a source of jurisdiction for these claims.
Although federal question jurisdiction
includes claims arising under treaties, the
Berne Convention is not self-executing. In
consequence, Bridgeman has no claim arising
under the Convention within the meaning of
Section 1331.
Absent as well is jurisdiction based on
diversity of citizenship under Section 1332.
Corel is a citizen of Canada; Bridgeman a
subject of the United Kingdom. "As the
pleadings clearly show, all parties are aliens,
and neither the constitutional nor statutory
*431 grants of jurisdiction include such a
suit." That each company does business in
New York is immaterial for citizenship and
therefore jurisdictional purposes.
31. Subafilms, Ltd. v. Mgm-Pathe
Communs. Co.
Facts:
In 1966, the musical group The Beatles,
through Subafilms, Ltd., entered into a joint
venture with the Hearst Corporation to
produce the animated motion picture entitled
"Yellow Submarine" (the "Picture"). Over the
next year, Hearst, acting on behalf of the
joint venture (the "Producer"), negotiated an
agreement with United Artists Corporation
("UA") to distribute and finance the film. In
pursuance to said agreement, UA distributed
the Picture in theaters beginning in 1968 and
later on television.
With the advent of the home video market,
UA entered into several licensing agreements
to distribute a number of its films on
videocassette. Subsequently, in 1987, UA's
successor company, MGM/UA
Communications Co. ("MGM/UA"), over the
Producer's objections, authorized its
subsidiary MGM/UA Home Video, Inc. to
distribute the Picture for the domestic home
video market, and, pursuant to an earlier
licensing agreement, notified Warner Bros.,
Inc. ("Warner") that the Picture had been
cleared for international videocassette
distribution. Warner, through its wholly
owned subsidiary, Warner Home Video, Inc.,
in turn entered into agreements with third
parties for distribution of the Picture on
videocassette around the world.
In 1988, Subafilms and Hearst ("Appellees")
brought suit against MGM/UA, Warner, and
their respective subsidiaries (collectively the
"Distributors" or "Appellants"), contending
that the videocassette distribution of the
Picture, both foreign and domestic,
constituted copyright infringement and a
breach of the 1967 agreements.
Issue:
Whether United States copyright laws do
extend to extraterritorial acts of infringement
when such acts "result in adverse effects
within the United States.
Held:
The American Court held that courts must
"assume that Congress legislates against the
backdrop of the presumption against
extraterritoriality," unless "there is `the
affirmative intention of the Congress clearly
expressed'" congressional enactments must
be presumed to be "`primarily concerned
with domestic conditions.'"
The undisputed axiom is that the United
States copyright law have no application to
extraterritorial infringement predates the
1909 Act which the principle of territoriality
consistently has been reaffirmed. In Ferris v.
Frohman held that the copyright laws of one
country have no extraterritorial operation,
unless otherwise provided.
Furthermore, we note that Congress chose in
1976 to expand one specific "extraterritorial"
application of the Act by declaring that the
unauthorized importation of copyrighted
works constitutes infringement even when
the copies lawfully were made abroad. Had
Congress been inclined to overturn the
preexisting doctrine that infringing acts that
take place wholly outside the United States
are not actionable under the Copyright Act, it
knew how to do so.
32. Allarcon Pay Television v. General
Industry Corp
Facts:
 In July 1992, Allarcom filed a
complaint in federal district court against
Showtime, General Instrument, and another
defendant not party to this appeal.
Allarcom is authorized by the Canadian
government to be the exclusive provider of
English-language subscription television
(STV) programming in Western Canada.
Allarcom has obtained the exclusive right
from producers such as MCA, Paramount,
Touchstone, etc. to exhibit their motion
pictures on STV in Allarcom's territory.
Allarcom transmits its signal to local cable
television companies and other authorized
receivers who pay for the service.
Showtime has the right to exhibit
many of the same pictures on its STV service
in the United States, but has no such license
to exhibit those pictures in Canada.  
Showtime transmits its programming by
means of satellite to authorized receivers.   concluded that the complaint did not state a
The “footprint” of that satellite signal allows it
to be received in Allarcom's territory.
General Instrument manufactures and
sells the “VideoCipher II” system (VC II),
which scrambles and descrambles satellite
television signals, thereby allowing the
broadcaster to protect those signals from
unauthorized reception.   Many programmers,
including Showtime, use the VC II to transmit
their signal to customers in the United
States.   Various programmers, such as CNN,
who are so authorized under Canadian law,
use the VC II to transmit their signal to
customers in Canada.   Accordingly, the VC II
has a legitimate use in Canada.
One of the elements of the VC II is a
decoder device that enables its holder to
receive and descramble STV programs.   A
person can alter that decoder so that it will
unscramble signals that the holder is not
authorized to receive.
According to the complaint, General
Instrument and Showtime knew that
compromised VC II decoders were being sold
and used extensively in Allarcom's territory to
receive unauthorized STV signals, including
Showtime's signal.   This practice nullified
Allarcom's exclusive rights in that territory
and deprived Allarcom of potential customers
and income.   Despite such knowledge,
General Instrument and Showtime continued
to use and promote the VC II system.  
Furthermore, General Instrument, through its
dealers and with Showtime's knowledge,
continued to sell VC II decoders in the US
and Canada in numbers far in excess of any
authorized users and to people whom it knew
or had reason to know were using the
decoders for the purpose of receiving
American STV programming in Allarcom's
territory.
Allarcom's complaint alleged that by
this conduct, General Instrument and
Showtime had assisted persons in receiving
communications to which they were not
entitled.
The complaint also alleged that
General Instrument had manufactured and
distributed devices knowing or having reason
to know that the devices were primarily of
assistance in the unauthorized decryption of
satellite cable programming. The complaint
also alleged a copyright infringement claim
and various California state law claims.
In December 1992, the district court
claim under upon which relief could be
granted. The court also dismissed Allarcom's
copyright infringement claim and most of its
state law claims with leave to amend.
Issue:
Whether or not there is a claim for
relief on copyright infringement under the
Federal Communications Act
Held:
No. There is no claim for relief on
copyright infringement under the Federal
Communications Act.
Allarcom claims that Showtime
“assisted” the piracy of satellite programming
by people in Western Canada by helping
those people steal its own STV broadcasts.
The court concludes that this allegation does
not state a claim under the Federal
Communications Act in which “No person not
being entitled thereto shall receive or assist
in receiving any interstate or foreign
communication by radio and use such
communication (or any information therein
contained) for his own benefit or for the
benefit of another not entitled thereto.”
In other words, the Federal
Communications Act prohibits a person not
entitled to a signal from assisting another's
piracy of that signal.   Showtime owns its
own signal, and is therefore entitled to that
signal and does not fall within the
subsection's prohibition.
Nor can Allarcom rely upon the same
to support its Federal Communications Act
claim which states that “Any person who
manufactures, assembles, modifies, imports,
exports, sells, or distributes any electronic,
mechanical, or other device or equipment,
knowing or having reason to know that the
device or equipment is primarily of assistance
in the unauthorized decryption of satellite
cable programming, or is intended for any
other activity prohibited by subsection (a) of
this section, shall be fined․”
Even if we assume that the VC II
decoder is a device described in this section,
Allarcom has not alleged that Showtime
“manufactures, assembles, modifies, imports,
exports, sells, or distributes” that device.
Therefore, Allarcom has not stated a
claim against Showtime under the FCA.   adhering to the convention. The plaintiffs
While some other source of law, such as the
Canadian law governing Allarcom's exclusive
license, may proscribe Showtime's use of its
own signal, the FCA does not.
The court establishes that the VC II
decoder distributed by General Instrument is
not capable of pirating satellite broadcasts.   Whether or not Russian Law or U.S.
That decoder is capable of piracy only if it has
been modified.   Allarcom has not alleged
that General Instrument has ever sold any
modified VC II decoders.
The court rejects Allarcom's claim that
the anti-piracy device adopted by the STV
industry, which has the most acute interest in
protecting its broadcasts, is also “primarily of
assistance” in piracy, simply because some
modify it to accomplish piracy.   Indeed, the
VC II is useful for piracy only because so
much of the STV industry employs it to
prevent piracy.   Therefore, sale of that
product in Canada and the United States,
where many people indisputably use it
legitimately, does not violate the FCA, and
the district court properly dismissed the FCA
claim against General Instrument.
33. Itar-Tass Russian News Agency v.
Russian Kurier, Inc.
FACTS:
Defendants Russian Kurier, Inc. and
Oleg Pogrebnoy produced, sold, and
distributed the news articles appearing in the
newspaper Kurier, that the defendants have
introduced as portions of exhibits 3-67. These
articles are either identical or substantially
similar to articles previously published in the
plaintiffs' newspapers and reports.  Their
intention was to profit from the fruits of the
plaintiffs' labors. They did not compensate
the plaintiffs for the use of the articles nor did
they disclose the origin of the articles in
Kurier, though many of the articles contained
the same byline as the originals. 
The plaintiffs sued Kurier and
Pogrebnoy for copyright infringement in a
United States district court. The plaintiffs
seek to prove their entitlement to the
protection of the copyright laws by reliance
on the Berne Convention rather than
copyright registrations pursuant to the
Copyright Act. The Berne Convention
provides that works copyrighted in signatory
foreign countries and written by nationals of
those countries or the United States are to be
given copyright protection under United
States law if first published in a nation
have demonstrated that the allegedly
infringed works were first published in the
United States or Russia and it appears likely
that the authors of a significant number, if
not all, of the works are Russian nationals. 
ISSUE:
Law governs ownership and infringement
issues?
RULING:
Copyright is a form of property, and
the usual rule is that the interests of the
parties in property are determined by the law
of the state with "the most significant
relationship" to the property and the parties.
The Restatement recognizes the applicability
of this principle to intangibles such as "a
literary idea." Since the works at issue were
created by Russian nationals and first
published in Russia, Russian law is the
appropriate source of law to determine issues
of ownership of rights.  In terms of the
United States Copyrights Act and its
reference to the Berne Convention, Russia is
the "country of origin" of these works.
On infringement issues, the governing
conflicts principle is usually lex loci delicti, the
doctrine generally applicable to torts. In the
pending case, the place of the tort is plainly
the United States. United States law would
still apply to infringement issues, since not
only is this country the place of the tort, but
also the defendant is a United States
corporation.
Since United States law permits suit
only by owners of "an exclusive right under a
copyright," it must first determine whether
any of the plaintiffs own an exclusive right.
That issue of ownership is to be determined
by Russian law. Under Article 14 of the
Russian Copyright Law, Itar-Tass is the
owner of the copyright interests in the
articles written by its employees. Russian
law, which explicitly excludes newspapers
from a work-for-hire doctrine, vests exclusive
ownership interests in newspaper articles in
the journalists who wrote the articles, not in
the newspaper employers who compile their
writings.  Recognition Act.
 Itar-Tass is therefore entitled to
injunctive relief to prevent unauthorized
copying of its articles and to damages for
such copying.
34. Sarl Louis Feraud International v.
Viewfinder
Facts:
Plaintiff Sarl Louis Feraud is a French
corporation that design high fashion clothing
for women. Defendant Viewfinder is a
Delaware corporation with principal place of
business in New York and it operates a
website called firstView.com on which it posts
photographs of fashion shows held by
designers around the world. Viewfinder
contends to be an Internet fashion magazine
akin to the online version of Vogue and users
pay a fee to view photographs of collections.
Viewfinder displayed photographs of the
designer’s fashion shows which revealed
designs from their upcoming collection.
Procedural: First, the plaintiff filed suit
against the defendant in the Tribunal de
grande instance de Paris for alleged
unauthorized use of their intellectual
property. The French court found the
plaintiff’s collections from 1996-2001 posted
on Viewfinder’s website were posted without
the necessary authorization and that
Viewfinder had committed Economic
parasitism: The French Supreme Court
considers that the parasitic act is the
fact, for a trader, to place himself in the
wake of another, unduly taking
advantage of the latter's reputation or
investment, regardless of any risk of
confusion under French law because it had
taken advantage of plaintiff’ reputation and
commercial efforts.
Viewfinder appealed these judgments to the
Court of Appeals of Paris, but withdrew its
appeal without opposition after plaintiff filed
their brief, then the French appellate court
accordingly dismissed the appeal.
Next the plaintiff filed separate
complaints in the United States District Court
for the Southern District of New York to
enforce the French judgments under New
York’s Uniform Foreign Money Judgment
The District Court found that the
fashion shows at issue were public events
and Viewfinder had a first amendment right
to publish the photographs and as far as the
designs were covered by copyright
protection, these fell under the First
Amendment fair use exception for the
publication of newsworthy matters. The
District Court found that enforcing the
judgment would encroach upon Viewfinder’s
free speech rights.
Issue:
Whether or not the French judgments
were unenforceable under New York law.
Holding:
No, this Court rejects Viewfinder’s
contention that the French judgments violate
public policy because they failed to analyze
any fair use defense. Even in the US, fair use
is an affirmative defense that a defendant
bears the burden of proving and Viewfinder
didn’t present it.
Also the record is too unclear to
determine whether Viewfinder’s conduct
would fall within the protection of the fair use
doctrine so the judgment of the district court
is vacated and remanded for further
proceedings.
Reasoning:
The Court begins with the statute and
points out there are two steps in analyzing
whether a judgment is unenforceable. The
first is to identify the cause of action on
which the judgment is based. This Court
reasons that it cannot agree with Viewfinder’s
contention that it is impossible to discern the
causes of action on which the French
judgments were based because the default
judgments issued by the French court
explicitly stated the statutes that Viewfinder
violated and it is clear the French judgments
were based on a finding of copyright
infringement.
 This Court then states the only issue
left to consider in the two step analysis is
whether a law that sanctions such conduct is
repugnant to the public policy of New York.
This Court recognizes that laws that are
antithetical to the First Amendment will
create such a situation and foreign judgments
that encroach on First Amendment rights will
be found to be repugnant to public policy.

This Court finds that the District Court

was wrong in concluding that the French
judgments were unenforceable because they
encroach on Viewfinder’s First Amendment
rights because it did not conduct the full
analysis. The Court reasoned that intellectual
property laws co-exist with the First
Amendment in this country and the fact that
an entity is a news publication engaging in
speech activity does not, standing alone
relieve such entities of their obligation to
obey intellectual property laws.

In deciding whether the French

judgments are repugnant to the public policy
of New York the District Court should first
determine the level of First Amendment
protection required by New York public policy
when a news entity engages in the
unauthorized use of intellectual property then
it should determine whether the French
intellectual property regime provides
comparable protections.

Because the fair use doctrine balances

the competing interests of the copyright laws
and the First Amendment, some analysis of
that doctrine is generally needed before a
court can conclude that foreign copyright
judgment is repugnant to public policy.
Factors that need be considered in
determining fair use are: 1) the purpose and
character of the use, including whether such
use is of a commercial nature or is for non-
profit educational purposes, 2) the nature of
the copyrighted work, 3) the amount and
substantiality of the portion used in relation
to the copyrighted work as a whole, and 4)
the effect of the use upon the potential
market for or value of the copyrighted work.