G.R. No.

103493 June 19, 1997

PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA
HOLDINGS, N.V., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R.
PERLAS, and WILLIAM H. CRAIG, respondents.

MENDOZA, J.:
This case presents for determination the conclusiveness of a foreign judgment upon the rights of the
parties under the same cause of action asserted in a case in our local court. Petitioners brought this case
in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the
foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non
conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners
Ayala International Finance Limited (hereafter called AYALA)
1
and Philsec Investment Corporation
(hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat
with a market value of P14,088,995.00. In order to facilitate the payment of the loans, private
respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducat's obligation
under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with
Vendor's Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of
land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to
ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of
US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor of 1488,
Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA
released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their
possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by
the note became due and demandable. Accordingly, on October 17, 1985, private respondent 1488, Inc.
sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of
US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by
petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the
Agreement. Originally instituted in the United States District Court of Texas, 165th Judicial District,
where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the United
States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint,
reiterating its allegations in the original complaint. ATHONA filed an answer with counterclaim,
impleading private respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly appraised the
property, was later dropped as counterdefendant. ATHONA sought the recovery of damages and excess
payment allegedly made to 1488, Inc. and, in the alternative, the rescission of sale of the property. For
their part, PHILSEC and AYALA filed a motion to dismiss on the ground of lack of jurisdiction over their
person, but, as their motion was denied, they later filed a joint answer with counterclaim against private
respondents and Edgardo V. Guevarra, PHILSEC's own former president, for the rescission of the sale on
the ground that the property had been overvalued. On March 13, 1990, the United States District Court
for the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the
ground that it was "frivolous and [was] brought against him simply to humiliate and embarrass him." For
this reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them
to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners filed a
complaint "For Sum of Money with Damages and Writ of Preliminary Attachment" against private
respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The
complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H-
86-440 of the United States District Court of Southern Texas that private respondents committed fraud
by selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners
claimed that, as a result of private respondents' fraudulent misrepresentations, ATHONA, PHILSEC, and
AYALA were induced to enter into the Agreement and to purchase the Houston property. Petitioners
prayed that private respondents be ordered to return to ATHONA the excess payment of
US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary
attachment against the real and personal properties of private respondents.
2

Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis
pendentia, vis-a-visCivil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non
conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended
that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not
PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend
financial accommodation to ATHONA under a separate loan agreement. On the other hand, private
respondents 1488, Inc. and its president Daic filed a joint "Special Appearance and Qualified Motion to
Dismiss," contending that the action being in personam, extraterritorial service of summons by
publication was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-
resident foreign corporation, and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the evidentiary
requirements of the controversy may be more suitably tried before the forum of the litis pendentia in
the U.S., under the principle in private international law of forum non conveniens," even as it noted that
Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On March 9, 1988,
the trial court
3
granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis
pendentia considering that
the "main factual element" of the cause of action in this case which is the validity of the sale of real
property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter of
the pending case in the United States District Court which, under the doctrine of forum non conveniens,
is the better (if not exclusive) forum to litigate matters needed to determine the assessment and/or
fluctuations of the fair market value of real estate situated in Houston, Texas, U.S.A. from the date of
the transaction in 1983 up to the present and verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-
residents and the action was not an action in rem or quasi in rem, so that extraterritorial service of
summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued
against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the principle
of litis pendentia and forum non conveniens and in ruling that it had no jurisdiction over the defendants,
despite the previous attachment of shares of stocks belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals
4
affirmed the dismissal of Civil Case No. 16563 against Ducat,
1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the
Ayala International Finance Ltd. (BPI-IFL's former name) and the Athona Holdings, NV. The case at bar
involves the same parties. The transaction sued upon by the parties, in both cases is the Warranty Deed
executed by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the
promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed by herein
appellants, on the marketability of Ducat's securities given in exchange for the Texas property. The
recovery of a sum of money and damages, for fraud purportedly committed by appellees, in overpricing
the Texas land, constitute the action before the Philippine court, which likewise stems from the same
Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a
sum of money for alleged tortious acts, so that service of summons by publication did not vest the trial
court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the
ground offorum non conveniens was likewise affirmed by the Court of Appeals on the ground that the
case can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to
wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a
non-resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign corporation which
does not claim to be doing business in the Philippines, is wholly owned by Philsec, a domestic
corporation, Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed
was executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR THE SAME
CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURT'S
DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF APPEALS IN
AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT HOLDING
THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE
TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO
PROTECT AND VINDICATE PETITIONERS' RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT
PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN
THE PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case was pending in
the Court of Appeals, the United States District Court for the Southern District of Texas rendered
judgment
5
in the case before it. The judgment, which was in favor of private respondents, was affirmed
on appeal by the Circuit Court of Appeals.
6
Thus, the principal issue to be resolved in this case is
whether Civil Case No. 16536 is barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment
admitting the foreign decision is not necessary. On the other hand, petitioners argue that the foreign
judgment cannot be given the effect of res judicata without giving them an opportunity to impeach it on
grounds stated in Rule 39, 50 of the Rules of Court, to wit: "want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact."
Petitioners' contention is meritorious. While this Court has given the effect of res judicata to foreign
judgments in several cases,
7
it was after the parties opposed to the judgment had been given ample
opportunity to repel them on grounds allowed under the law.
8
It is not necessary for this purpose to
initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is
that there is opportunity to challenge the foreign judgment, in order for the court to properly determine
its efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from
actions in rem, a foreign judgment merely constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the contrary.
9
Rule 39, 50
provides:
Sec. 50. Effect of foreign judgments. The effect of a judgment of a tribunal of a foreign country,
having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between
the parties and their successors in interest by a subsequent title; but the judgment may be repelled by
evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton,
Ltd.,
10
which private respondents invoke for claiming conclusive effect for the foreign judgment in their
favor, the foreign judgment was considered res judicata because this Court found "from the evidence as
well as from appellant's own pleadings"
11
that the foreign court did not make a "clear mistake of law or
fact" or that its judgment was void for want of jurisdiction or because of fraud or collusion by the
defendants. Trial had been previously held in the lower court and only afterward was a decision
rendered, declaring the judgment of the Supreme Court of the State of Washington to have the effect of
res judicata in the case before the lower court. In the same vein, in Philippines International Shipping
Corp. v. Court of Appeals,
12
this Court held that the foreign judgment was valid and enforceable in the
Philippines there being no showing that it was vitiated by want of notice to the party, collusion, fraud or
clear mistake of law or fact. The prima facie presumption under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the
judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private
respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate
court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented
thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court
were exactly the issues raised in this case such that the judgment that might be rendered would
constitute res judicata. As the trial court stated in its disputed order dated March 9, 1988.
On the plaintiff's claim in its Opposition that the causes of action of this case and the pending case in the
United States are not identical, precisely the Order of January 26, 1988 never found that the causes of
action of this case and the case pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners' action is barred by the
principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their
persons, but their claim was brushed aside by both the trial court and the Court of Appeals.
13

Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the
enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No.
92-1070 and assigned to Branch 134, although the proceedings were suspended because of the
pendency of this case. To sustain the appellate court's ruling that the foreign judgment constitutes res
judicata and is a bar to the claim of petitioners would effectively preclude petitioners from repelling the
judgment in the case for enforcement. An absurdity could then arise: a foreign judgment is not subject
to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in this case,
but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in
a separate proceeding. This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative
relief is being sought. Hence, in the interest of justice, the complaint should be considered as a petition
for the recognition of the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in
order that the defendant, private respondent herein, may present evidence of lack of jurisdiction,
notice, collusion, fraud or clear mistake of fact and law, if applicable.
14

Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should
be consolidated.
15
After all, the two have been filed in the Regional Trial Court of Makati, albeit in
different salas, this case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No.
92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings, petitioners should
have the burden of impeaching the foreign judgment and only in the event they succeed in doing so may
they proceed with their action against private respondents.
Second. Nor is the trial court's refusal to take cognizance of the case justifiable under the principle
of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, 1, which
does not include forum non conveniens.
16
The propriety of dismissing a case based on this principle
requires a factual determination, hence, it is more properly considered a matter of defense. Second,
while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it
should do so only after "vital facts are established, to determine whether special circumstances" require
the court's desistance.
17

In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by
private respondents in connection with the motion to dismiss. It failed to consider that one of the
plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino,
and that it was the extinguishment of the latter's debt which was the object of the transaction under
litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in
the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over
1488, Inc. and Daic could not be obtained because this is an action in personam and summons were
served by extraterritorial service. Rule 14, 17 on extraterritorial service provides that service of
summons on a non-resident defendant may be effected out of the Philippines by leave of Court where,
among others, "the property of the defendant has been attached within the Philippines."
18
It is not
disputed that the properties, real and personal, of the private respondents had been attached prior to
service of summons under the Order of the trial court dated April 20, 1987.
19

Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the
proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11
sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought to be
enforced is severable from the main judgment under consideration in Civil Case No. 16563. The
separability of Guevara's claim is not only admitted by petitioners,
20
it appears from the pleadings that
petitioners only belatedly impleaded Guevarra as defendant in Civil Case No. 16563.
21
Hence, the TRO
should be lifted and Civil Case No. 92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED
to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further
proceedings in accordance with this decision. The temporary restraining order issued on June 29, 1994 is
hereby LIFTED.
SO ORDERED.
Regalado, Romero, Puno and Torres, Jr., JJ., concur.

G.R. No. 139325 April 12, 2005
PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN, SFIC,
and JOEL C. LAMANGAN in their behalf and on behalf of the Class Plaintiffs in Class Action No. MDL
840, United States District Court of Hawaii, Petitioner,
vs.
HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial
Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its court appointed legal
representatives in Class Action MDL 840, United States District Court of Hawaii, namely: Imelda R.
Marcos and Ferdinand Marcos, Jr., Respondents.
D E C I S I O N
TINGA, J.:
Our martial law experience bore strange unwanted fruits, and we have yet to finish weeding out its
bitter crop. While the restoration of freedom and the fundamental structures and processes of
democracy have been much lauded, according to a significant number, the changes, however, have not
sufficiently healed the colossal damage wrought under the oppressive conditions of the martial law
period. The cries of justice for the tortured, the murdered, and the desaparecidos arouse outrage and
sympathy in the hearts of the fair-minded, yet the dispensation of the appropriate relief due them
cannot be extended through the same caprice or whim that characterized the ill-wind of martial rule.
The damage done was not merely personal but institutional, and the proper rebuke to the iniquitous
past has to involve the award of reparations due within the confines of the restored rule of law.
The petitioners in this case are prominent victims of human rights violations
1
who, deprived of the
opportunity to directly confront the man who once held absolute rule over this country, have chosen to
do battle instead with the earthly representative, his estate. The clash has been for now interrupted by
a trial court ruling, seemingly comported to legal logic, that required the petitioners to pay a whopping
filing fee of over Four Hundred Seventy-Two Million Pesos (P472,000,000.00) in order that they be able
to enforce a judgment awarded them by a foreign court. There is an understandable temptation to cast
the struggle within the simplistic confines of a morality tale, and to employ short-cuts to arrive at what
might seem the desirable solution. But easy, reflexive resort to the equity principle all too often leads to
a result that may be morally correct, but legally wrong.
Nonetheless, the application of the legal principles involved in this case will comfort those who maintain
that our substantive and procedural laws, for all their perceived ambiguity and susceptibility to myriad
interpretations, are inherently fair and just. The relief sought by the petitioners is expressly mandated
by our laws and conforms to established legal principles. The granting of this petition for certiorari is
warranted in order to correct the legally infirm and unabashedly unjust ruling of the respondent judge.
The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with the United States
District Court (US District Court), District of Hawaii, against the Estate of former Philippine President
Ferdinand E. Marcos (Marcos Estate). The action was brought forth by ten Filipino citizens
2
who each
alleged having suffered human rights abuses such as arbitrary detention, torture and rape in the hands
of police or military forces during the Marcos regime.
3
The Alien Tort Act was invoked as basis for the US
District Court's jurisdiction over the complaint, as it involved a suit by aliens for tortious violations of
international law.
4
These plaintiffs brought the action on their own behalf and on behalf of a class of
similarly situated individuals, particularly consisting of all current civilian citizens of the Philippines, their
heirs and beneficiaries, who between 1972 and 1987 were tortured, summarily executed or had
disappeared while in the custody of military or paramilitary groups. Plaintiffs alleged that the class
consisted of approximately ten thousand (10,000) members; hence, joinder of all these persons was
impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of the US Federal
Rules of Civil Procedure, the provisions of which were invoked by the plaintiffs. Subsequently, the US
District Court certified the case as a class action and created three (3) sub-classes of torture, summary
execution and disappearance victims.
5
Trial ensued, and subsequently a jury rendered a verdict and an
award of compensatory and exemplary damages in favor of the plaintiff class. Then, on 3 February
1995, the US District Court, presided by Judge Manuel L. Real, rendered a Final Judgment (Final
Judgment) awarding the plaintiff class a total of One Billion Nine Hundred Sixty Four Million Five
Thousand Eight Hundred Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final
Judgment was eventually affirmed by the US Court of Appeals for the Ninth Circuit, in a decision
rendered on 17 December 1996.
6

On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of Makati
(Makati RTC) for the enforcement of the Final Judgment. They alleged that they are members of the
plaintiff class in whose favor the US District Court awarded damages.
7
They argued that since the
Marcos Estate failed to file a petition for certiorari with the US Supreme Court after the Ninth Circuit
Court of Appeals had affirmed the Final Judgment, the decision of the US District Court had become final
and executory, and hence should be recognized and enforced in the Philippines, pursuant to Section 50,
Rule 39 of the Rules of Court then in force.
8

On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among others, the non-
payment of the correct filing fees. It alleged that petitioners had only paid Four Hundred Ten Pesos
(P410.00) as docket and filing fees, notwithstanding the fact that they sought to enforce a monetary
amount of damages in the amount of over Two and a Quarter Billion US Dollars (US$2.25 Billion). The
Marcos Estate cited Supreme Court Circular No. 7, pertaining to the proper computation and payment of
docket fees. In response, the petitioners claimed that an action for the enforcement of a foreign
judgment is not capable of pecuniary estimation; hence, a filing fee of only Four Hundred Ten Pesos
(P410.00) was proper, pursuant to Section 7(c) of Rule 141.
9

On 9 September 1998, respondent Judge Santiago Javier Ranada
10
of the Makati RTC issued the
subject Orderdismissing the complaint without prejudice. Respondent judge opined that contrary to the
petitioners' submission, the subject matter of the complaint was indeed capable of pecuniary
estimation, as it involved a judgment rendered by a foreign court ordering the payment of definite sums
of money, allowing for easy determination of the value of the foreign judgment. On that score, Section
7(a) of Rule 141 of the Rules of Civil Procedure would find application, and the RTC estimated the proper
amount of filing fees was approximately Four Hundred Seventy Two Million Pesos, which obviously had
not been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada denied in
an Order dated 28 July 1999. From this denial, petitioners filed a Petition for Certiorari under Rule 65
assailing the twin orders of respondent judge.
11
They prayed for the annulment of the questioned
orders, and an order directing the reinstatement of Civil Case No. 97-1052 and the conduct of
appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as the subject matter of the suit
is the enforcement of a foreign judgment, and not an action for the collection of a sum of money or
recovery of damages. They also point out that to require the class plaintiffs to pay Four Hundred
Seventy Two Million Pesos (P472,000,000.00) in filing fees would negate and render inutile the liberal
construction ordained by the Rules of Court, as required by Section 6, Rule 1 of the Rules of Civil
Procedure, particularly the inexpensive disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which provides that
"Free access to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to
any person by reason of poverty," a mandate which is essentially defeated by the required exorbitant
filing fee. The adjudicated amount of the filing fee, as arrived at by the RTC, was characterized as
indisputably unfair, inequitable, and unjust.
The Commission on Human Rights (CHR) was permitted to intervene in this case.
12
It urged that the
petition be granted and a judgment rendered, ordering the enforcement and execution of the District
Court judgment in accordance with Section 48, Rule 39 of the 1997 Rules of Civil Procedure. For the
CHR, the Makati RTC erred in interpreting the action for the execution of a foreign judgment as a new
case, in violation of the principle that once a case has been decided between the same parties in one
country on the same issue with finality, it can no longer be relitigated again in another country.
13
The
CHR likewise invokes the principle of comity, and of vested rights.
The Court's disposition on the issue of filing fees will prove a useful jurisprudential guidepost for courts
confronted with actions enforcing foreign judgments, particularly those lodged against an estate. There
is no basis for the issuance a limited pro hac vice ruling based on the special circumstances of the
petitioners as victims of martial law, or on the emotionally-charged allegation of human rights abuses.
An examination of Rule 141 of the Rules of Court readily evinces that the respondent judge ignored the
clear letter of the law when he concluded that the filing fee be computed based on the total sum
claimed or the stated value of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as basis for the
computation of the filing fee of over P472 Million. The provision states:
SEC. 7. Clerk of Regional Trial Court.-
(a) For filing an action or a permissive counterclaim or money claim against an estate not based on
judgment, or for filing with leave of court a third-party, fourth-party, etc., complaint, or a complaint in
intervention, and for all clerical services in the same time, if the total sum claimed, exclusive of interest,
or the started value of the property in litigation, is:
1. Less than P 100,00.00 P 500.00
2. P 100,000.00 or more but less than P 150,000.00 P 800.00
3. P 150,000.00 or more but less than P 200,000.00 P 1,000.00
4. P 200,000.00 or more but less than P 250,000.00 P 1,500.00
5. P 250,000.00 or more but less than P 300,00.00 P 1,750.00
6. P 300,000.00 or more but not more than P 400,000.00 P 2,000.00
7. P 350,000.00 or more but not more than P400,000.00 P 2,250.00
8. For each P 1,000.00 in excess of P 400,000.00 P 10.00
(Emphasis supplied)
Obviously, the above-quoted provision covers, on one hand, ordinary actions, permissive counterclaims,
third-party, etc. complaints and complaints-in-interventions, and on the other, money claims against
estates which are not based on judgment. Thus, the relevant question for purposes of the present
petition is whether the action filed with the lower court is a "money claim against an estate not based
on judgment."
Petitioners' complaint may have been lodged against an estate, but it is clearly based on a judgment,
the Final Judgment of the US District Court. The provision does not make any distinction between a local
judgment and a foreign judgment, and where the law does not distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the filing fee is computed on the
basis of the amount of the relief sought, or on the value of the property in litigation. The filing fee for
requests for extrajudicial foreclosure of mortgage is based on the amount of indebtedness or the
mortgagee's claim.
14
In special proceedings involving properties such as for the allowance of wills, the
filing fee is again based on the value of the property.
15
The aforecited rules evidently have no application
to petitioners' complaint.
Petitioners rely on Section 7(b), particularly the proviso on actions where the value of the subject matter
cannot be estimated. The provision reads in full:
SEC. 7. Clerk of Regional Trial Court.-
(b) For filing
1. Actions where the value
of the subject matter
cannot be estimated --- P 600.00
2. Special civil actions except
judicial foreclosure which
shall be governed by
paragraph (a) above --- P 600.00
3. All other actions not
involving property --- P 600.00
In a real action, the assessed value of the property, or if there is none, the estimated value, thereof shall
be alleged by the claimant and shall be the basis in computing the fees.
It is worth noting that the provision also provides that in real actions, the assessed value or estimated
value of the property shall be alleged by the claimant and shall be the basis in computing the fees. Yet
again, this provision does not apply in the case at bar. A real action is one where the plaintiff seeks the
recovery of real property or an action affecting title to or recovery of possession of real
property.
16
Neither the complaint nor the award of damages adjudicated by the US District Court
involves any real property of the Marcos Estate.
Thus, respondent judge was in clear and serious error when he concluded that the filing fees should be
computed on the basis of the schematic table of Section 7(a), as the action involved pertains to a claim
against an estate based on judgment. What provision, if any, then should apply in determining the filing
fees for an action to enforce a foreign judgment?
To resolve this question, a proper understanding is required on the nature and effects of a foreign
judgment in this jurisdiction.
The rules of comity, utility and convenience of nations have established a usage among civilized states
by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and
rendered efficacious under certain conditions that may vary in different countries.
17
This principle was
prominently affirmed in the leading American case of Hilton v. Guyot
18
and expressly recognized in our
jurisprudence beginning with Ingenholl v. Walter E. Olsen & Co.
19
The conditions required by the
Philippines for recognition and enforcement of a foreign judgment were originally contained in Section
311 of the Code of Civil Procedure, which was taken from the California Code of Civil Procedure which,
in turn, was derived from the California Act of March 11, 1872.
20
Remarkably, the procedural rule now
outlined in Section 48, Rule 39 of the Rules of Civil Procedure has remained unchanged down to the last
word in nearly a century. Section 48 states:
SEC. 48. Effect of foreign judgments. The effect of a judgment of a tribunal of a foreign country,
having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between
the parties and their successors in interest by a subsequent title;
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.
There is an evident distinction between a foreign judgment in an action in rem and one in personam. For
an actionin rem, the foreign judgment is deemed conclusive upon the title to the thing, while in an
action in personam, the foreign judgment is presumptive, and not conclusive, of a right as between the
parties and their successors in interest by a subsequent title.
21
However, in both cases, the foreign
judgment is susceptible to impeachment in our local courts on the grounds of want of jurisdiction or
notice to the party,
22
collusion, fraud,
23
or clear mistake of law or fact.
24
Thus, the party aggrieved by the
foreign judgment is entitled to defend against the enforcement of such decision in the local forum. It is
essential that there should be an opportunity to challenge the foreign judgment, in order for the court in
this jurisdiction to properly determine its efficacy.
25

It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign
judgment
26
, even if such judgment has conclusive effect as in the case of in rem actions, if only for the
purpose of allowing the losing party an opportunity to challenge the foreign judgment, and in order for
the court to properly determine its efficacy.
27
Consequently, the party attacking a foreign judgment has
the burden of overcoming the presumption of its validity.
28

The rules are silent as to what initiatory procedure must be undertaken in order to enforce a foreign
judgment in the Philippines. But there is no question that the filing of a civil complaint is an appropriate
measure for such purpose. A civil action is one by which a party sues another for the enforcement or
protection of a right,
29
and clearly an action to enforce a foreign judgment is in essence a vindication of
a right prescinding either from a "conclusive judgment upon title" or the "presumptive evidence of a
right."
30
Absent perhaps a statutory grant of jurisdiction to a quasi-judicial body, the claim for
enforcement of judgment must be brought before the regular courts.
31

There are distinctions, nuanced but discernible, between the cause of action arising from the
enforcement of a foreign judgment, and that arising from the facts or allegations that occasioned the
foreign judgment. They may pertain to the same set of facts, but there is an essential difference in the
right-duty correlatives that are sought to be vindicated. For example, in a complaint for damages against
a tortfeasor, the cause of action emanates from the violation of the right of the complainant through
the act or omission of the respondent. On the other hand, in a complaint for the enforcement of a
foreign judgment awarding damages from the same tortfeasor, for the violation of the same right
through the same manner of action, the cause of action derives not from the tortious act but from the
foreign judgment itself.
More importantly, the matters for proof are different. Using the above example, the complainant will
have to establish before the court the tortious act or omission committed by the tortfeasor, who in turn
is allowed to rebut these factual allegations or prove extenuating circumstances. Extensive litigation is
thus conducted on the facts, and from there the right to and amount of damages are assessed. On the
other hand, in an action to enforce a foreign judgment, the matter left for proof is the foreign judgment
itself, and not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction
of the foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law. The
limitations on review is in consonance with a strong and pervasive policy in all legal systems to limit
repetitive litigation on claims and issues.
32
Otherwise known as the policy of preclusion, it seeks to
protect party expectations resulting from previous litigation, to safeguard against the harassment of
defendants, to insure that the task of courts not be increased by never-ending litigation of the same
disputes, and in a larger sense to promote what Lord Coke in the Ferrer's Case of 1599 stated to be
the goal of all law: "rest and quietness."
33
If every judgment of a foreign court were reviewable on the
merits, the plaintiff would be forced back on his/her original cause of action, rendering immaterial the
previously concluded litigation.
34

Petitioners appreciate this distinction, and rely upon it to support the proposition that the subject
matter of the complaintthe enforcement of a foreign judgmentis incapable of pecuniary estimation.
Admittedly the proposition, as it applies in this case, is counter-intuitive, and thus deserves strict
scrutiny. For in all practical intents and purposes, the matter at hand is capable of pecuniary estimation,
down to the last cent. In the assailedOrder, the respondent judge pounced upon this point without
equivocation:
The Rules use the term "where the value of the subject matter cannot be estimated." The subject
matter of the present case is the judgment rendered by the foreign court ordering defendant to pay
plaintiffs definite sums of money, as and for compensatory damages. The Court finds that the value of
the foreign judgment can be estimated; indeed, it can even be easily determined. The Court is not
minded to distinguish between the enforcement of a judgment and the amount of said judgment, and
separate the two, for purposes of determining the correct filing fees. Similarly, a plaintiff suing on
promissory note for P1 million cannot be allowed to pay only P400 filing fees (sic), on the reasoning that
the subject matter of his suit is not the P1 million, but the enforcement of the promissory note, and that
the value of such "enforcement" cannot be estimated.
35

The jurisprudential standard in gauging whether the subject matter of an action is capable of pecuniary
estimation is well-entrenched. The Marcos Estate cites Singsong v. Isabela Sawmill and Raymundo v.
Court of Appeals, which ruled:
[I]n determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a consequence of,
the principal relief sought, this Court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first
instance (now Regional Trial Courts).
On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v. Scandia,
36
from which
the rule in Singsong and Raymundo actually derives, but which incorporates this additional nuance
omitted in the latter cases:
xxx However, where the basic issue is something other than the right to recover a sum of money, where
the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to
have the defendant perform his part of the contract (specific performance) and in actions for support,
or for annulment of judgment or to foreclose a mortgage, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and are cognizable
exclusively by courts of first instance.
37

Petitioners go on to add that among the actions the Court has recognized as being incapable of
pecuniary estimation include legality of conveyances and money deposits,
38
validity of a mortgage,
39
the
right to support,
40
validity of documents,
41
rescission of contracts,
42
specific performance,
43
and validity
or annulment of judgments.
44
It is urged that an action for enforcement of a foreign judgment belongs
to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the subject matter of the action
is undoubtedly the enforcement of a foreign judgment, the effect of a providential award would be the
adjudication of a sum of money. Perhaps in theory, such an action is primarily for "the enforcement of
the foreign judgment," but there is a certain obtuseness to that sort of argument since there is no
denying that the enforcement of the foreign judgment will necessarily result in the award of a definite
sum of money.
But before we insist upon this conclusion past beyond the point of reckoning, we must examine its
possible ramifications. Petitioners raise the point that a declaration that an action for enforcement of
foreign judgment may be capable of pecuniary estimation might lead to an instance wherein a first level
court such as the Municipal Trial Court would have jurisdiction to enforce a foreign judgment. But under
the statute defining the jurisdiction of first level courts, B.P. 129, such courts are not vested with
jurisdiction over actions for the enforcement of foreign judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts
in civil cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall
exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate,
including the grant of provisional remedies in proper cases, where the value of the personal property,
estate, or amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in
Metro Manila where such personal property, estate, or amount of the demand does not exceed Two
hundred thousand pesos (P200,000.00) exclusive of interest damages of whatever kind, attorney's fees,
litigation expenses, and costs, the amount of which must be specifically alleged: Provided, That where
there are several claims or causes of action between the same or different parties, embodied in the
same complaint, the amount of the demand shall be the totality of the claims in all the causes of action,
irrespective of whether the causes of action arose out of the same or different transactions;
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when,
in such cases, the defendant raises the question of ownership in his pleadings and the question of
possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be
resolved only to determine the issue of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property,
or any interest therein where the assessed value of the property or interest therein does not exceed
Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value
does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses and costs: Provided, That value of such property shall be determined
by the assessed value of the adjacent lots.
45

Section 33 of B.P. 129 refers to instances wherein the cause of action or subject matter pertains to an
assertion of rights and interests over property or a sum of money. But as earlier pointed out, the subject
matter of an action to enforce a foreign judgment is the foreign judgment itself, and the cause of action
arising from the adjudication of such judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement of a
foreign judgment, even if capable of pecuniary estimation, would fall under the jurisdiction of the
Regional Trial Courts, thus negating the fears of the petitioners. Indeed, an examination of the provision
indicates that it can be relied upon as jurisdictional basis with respect to actions for enforcement of
foreign judgments, provided that no other court or office is vested jurisdiction over such complaint:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising
jurisdiction or any court, tribunal, person or body exercising judicial or quasi-judicial functions.
Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US District Court
judgment is one capable of pecuniary estimation. But at the same time, it is also an action based on
judgment against an estate, thus placing it beyond the ambit of Section 7(a) of Rule 141. What provision
then governs the proper computation of the filing fees over the instant complaint? For this case and
other similarly situated instances, we find that it is covered by Section 7(b)(3), involving as it does,
"other actions not involving property."
Notably, the amount paid as docket fees by the petitioners on the premise that it was an action
incapable of pecuniary estimation corresponds to the same amount required for "other actions not
involving property." The petitioners thus paid the correct amount of filing fees, and it was a grave abuse
of discretion for respondent judge to have applied instead a clearly inapplicable rule and dismissed the
complaint.
There is another consideration of supreme relevance in this case, one which should disabuse the notion
that the doctrine affirmed in this decision is grounded solely on the letter of the procedural rule. We
earlier adverted to the the internationally recognized policy of preclusion,
46
as well as the principles of
comity, utility and convenience of nations
47
as the basis for the evolution of the rule calling for the
recognition and enforcement of foreign judgments. The US Supreme Court in Hilton v. Guyot
48
relied
heavily on the concept of comity, as especially derived from the landmark treatise of Justice Story in his
Commentaries on the Conflict of Laws of 1834.
49
Yet the notion of "comity" has since been criticized as
one "of dim contours"
50
or suffering from a number of fallacies.
51
Other conceptual bases for the
recognition of foreign judgments have evolved such as the vested rights theory or the modern doctrine
of obligation.
52

There have been attempts to codify through treaties or multilateral agreements the standards for the
recognition and enforcement of foreign judgments, but these have not borne fruition. The members of
the European Common Market accede to the Judgments Convention, signed in 1978, which eliminates
as to participating countries all of such obstacles to recognition such as reciprocity and rvision au
fond.
53
The most ambitious of these attempts is the Convention on the Recognition and Enforcement of
Foreign Judgments in Civil and Commercial Matters, prepared in 1966 by the Hague Conference of
International Law.
54
While it has not received the ratifications needed to have it take effect,
55
it is
recognized as representing current scholarly thought on the topic.
56
Neither the Philippines nor the
United States are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the recognition and enforcement of
foreign judgments or a universal treaty rendering it obligatory force, there is consensus that the viability
of such recognition and enforcement is essential. Steiner and Vagts note:
. . . The notion of unconnected bodies of national law on private international law, each following a
quite separate path, is not one conducive to the growth of a transnational community encouraging
travel and commerce among its members. There is a contemporary resurgence of writing stressing the
identity or similarity of the values that systems of public and private international law seek to further a
community interest in common, or at least reasonable, rules on these matters in national legal systems.
And such generic principles as reciprocity play an important role in both fields.
57

Salonga, whose treatise on private international law is of worldwide renown, points out:
Whatever be the theory as to the basis for recognizing foreign judgments, there can be little dispute that
the end is to protect the reasonable expectations and demands of the parties. Where the parties have
submitted a matter for adjudication in the court of one state, and proceedings there are not tainted
with irregularity, they may fairly be expected to submit, within the state or elsewhere, to the
enforcement of the judgment issued by the court.
58

There is also consensus as to the requisites for recognition of a foreign judgment and the defenses
against the enforcement thereof. As earlier discussed, the exceptions enumerated in Section 48, Rule 39
have remain unchanged since the time they were adapted in this jurisdiction from long standing
American rules. The requisites and exceptions as delineated under Section 48 are but a restatement of
generally accepted principles of international law. Section 98 of The Restatement, Second, Conflict of
Laws, states that "a valid judgment rendered in a foreign nation after a fair trial in a contested
proceeding will be recognized in the United States," and on its face, the term "valid" brings into play
requirements such notions as valid jurisdiction over the subject matter and parties.
59
Similarly, the
notion that fraud or collusion may preclude the enforcement of a foreign judgment finds affirmation
with foreign jurisprudence and commentators,
60
as well as the doctrine that the foreign judgment must
not constitute "a clear mistake of law or fact."
61
And finally, it has been recognized that "public policy"
as a defense to the recognition of judgments serves as an umbrella for a variety of concerns in
international practice which may lead to a denial of recognition.
62

The viability of the public policy defense against the enforcement of a foreign judgment has been
recognized in this jurisdiction.
63
This defense allows for the application of local standards in reviewing
the foreign judgment, especially when such judgment creates only a presumptive right, as it does in
cases wherein the judgment is against a person.
64
The defense is also recognized within the international
sphere, as many civil law nations adhere to a broad public policy exception which may result in a denial
of recognition when the foreign court, in the light of the choice-of-law rules of the recognizing court,
applied the wrong law to the case.
65
The public policy defense can safeguard against possible abuses to
the easy resort to offshore litigation if it can be demonstrated that the original claim is noxious to our
constitutional values.
There is no obligatory rule derived from treaties or conventions that requires the Philippines to
recognize foreign judgments, or allow a procedure for the enforcement thereof. However, generally
accepted principles of international law, by virtue of the incorporation clause of the Constitution, form
part of the laws of the land even if they do not derive from treaty obligations.
66
The classical formulation
in international law sees those customary rules accepted as binding result from the combination two
elements: the established, widespread, and consistent practice on the part of States; and a psychological
element known as the opinion juris sive necessitates (opinion as to law or necessity). Implicit in the latter
element is a belief that the practice in question is rendered obligatory by the existence of a rule of law
requiring it.
67

While the definite conceptual parameters of the recognition and enforcement of foreign judgments
have not been authoritatively established, the Court can assert with certainty that such an undertaking
is among those generally accepted principles of international law.
68
As earlier demonstrated, there is a
widespread practice among states accepting in principle the need for such recognition and enforcement,
albeit subject to limitations of varying degrees. The fact that there is no binding universal treaty
governing the practice is not indicative of a widespread rejection of the principle, but only a
disagreement as to the imposable specific rules governing the procedure for recognition and
enforcement.
Aside from the widespread practice, it is indubitable that the procedure for recognition and
enforcement is embodied in the rules of law, whether statutory or jurisprudential, adopted in various
foreign jurisdictions. In the Philippines, this is evidenced primarily by Section 48, Rule 39 of the Rules of
Court which has existed in its current form since the early 1900s. Certainly, the Philippine legal system
has long ago accepted into its jurisprudence and procedural rules the viability of an action for
enforcement of foreign judgment, as well as the requisites for such valid enforcement, as derived from
internationally accepted doctrines. Again, there may be distinctions as to the rules adopted by each
particular state,
69
but they all prescind from the premise that there is a rule of law obliging states to
allow for, however generally, the recognition and enforcement of a foreign judgment. The bare
principle, to our mind, has attained the status of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and requisites outlined in Section
48, Rule 39 derive their efficacy not merely from the procedural rule, but by virtue of the incorporation
clause of the Constitution. Rules of procedure are promulgated by the Supreme Court,
70
and could very
well be abrogated or revised by the high court itself. Yet the Supreme Court is obliged, as are all State
components, to obey the laws of the land, including generally accepted principles of international law
which form part thereof, such as those ensuring the qualified recognition and enforcement of foreign
judgments.
71

Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges that there is a
general right recognized within our body of laws, and affirmed by the Constitution, to seek recognition
and enforcement of foreign judgments, as well as a right to defend against such enforcement on the
grounds of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact.
The preclusion of an action for enforcement of a foreign judgment in this country merely due to an
exhorbitant assessment of docket fees is alien to generally accepted practices and principles in
international law. Indeed, there are grave concerns in conditioning the amount of the filing fee on the
pecuniary award or the value of the property subject of the foreign decision. Such pecuniary award will
almost certainly be in foreign denomination, computed in accordance with the applicable laws and
standards of the forum.
72
The vagaries of inflation, as well as the relative low-income capacity of the
Filipino, to date may very well translate into an award virtually unenforceable in this country, despite its
integral validity, if the docket fees for the enforcement thereof were predicated on the amount of the
award sought to be enforced. The theory adopted by respondent judge and the Marcos Estate may even
lead to absurdities, such as if applied to an award involving real property situated in places such as the
United States or Scandinavia where real property values are inexorably high. We cannot very well
require that the filing fee be computed based on the value of the foreign property as determined by the
standards of the country where it is located.
As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it recognizes that the
subject matter of an action for enforcement of a foreign judgment is the foreign judgment itself, and not
the right-duty correlatives that resulted in the foreign judgment. In this particular circumstance, given
that the complaint is lodged against an estate and is based on the US District Court's Final Judgment, this
foreign judgment may, for purposes of classification under the governing procedural rule, be deemed as
subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of "all other actions not involving
property." Thus, only the blanket filing fee of minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which states that "[F]ree access
to the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person
by reason of poverty." Since the provision is among the guarantees ensured by the Bill of Rights, it
certainly gives rise to a demandable right. However, now is not the occasion to elaborate on the
parameters of this constitutional right. Given our preceding discussion, it is not necessary to utilize this
provision in order to grant the relief sought by the petitioners. It is axiomatic that the constitutionality of
an act will not be resolved by the courts if the controversy can be settled on other grounds
73
or unless
the resolution thereof is indispensable for the determination of the case.
74

One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final Judgment is not
conclusive yet, but presumptive evidence of a right of the petitioners against the Marcos Estate.
Moreover, the Marcos Estate is not precluded to present evidence, if any, of want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact. This ruling, decisive as it is on the
question of filing fees and no other, does not render verdict on the enforceability of the Final
Judgment before the courts under the jurisdiction of the Philippines, or for that matter any other issue
which may legitimately be presented before the trial court. Such issues are to be litigated before the
trial court, but within the confines of the matters for proof as laid down in Section 48, Rule 39. On the
other hand, the speedy resolution of this claim by the trial court is encouraged, and contumacious delay
of the decision on the merits will not be brooked by this Court.
WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and SET ASIDE, and a new
order REINSTATING Civil Case No. 97-1052 is hereby issued. No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

G.R. No. 107314 September 17, 1998
PATRICIA S. VILLAREAL, for herself and as guardian of her minor children, CLAIRE HOPE and TRICIA,
both surnamed VILLAREAL, petitioners,
vs.
THE COURT OF APPEALS, ELISEO SEVILLA, and ERNA SEVILLA, respondents.

MENDOZA, J.:
Petitioners seek a review of the decision,
1
dated December 23, 1991, of the Court of Appeals nullifying
the decision and orders of the Regional Trial Court in Civil Case No. 16194 and remanding the said case
to the court a quo for further proceedings as well as the resolution of the Court of Appeals denying
reconsideration of its decision.
The complaint in this case was filed by petitioner Patricia Villareal to recover damages in the total
amount of P1,944,000.00 from private respondents Eliseo and Erna Sevilla and certain John Does for the
killing on June 6, 1986 of petitioner's husband Jose Villareal. The complaint, docketed as Civil Case No.
16194, was filed with the Regional Trial Court of Makati, Metro Manila. It was found that prior to the
filing of the complaint on March 2, 1987, the Sevillas had abruptly left the country (at least two months
after the murder) and had started disposing of their properties in the Philippines.
2

On March 11, 1987, after a hearing, during which witness Deborah Alamares gave private respondents'
address in the United States as allegedly divulged to her by private respondent Erna Sevilla herself,
3
the
trial court ordered the Sevillas' properties in the Philippines attached,
4
upon the posting of a bond in the
amount of P500,000.00. Pursuant to this, Deputy Sheriff Eulalio C. Juanson attached private
respondents' personal and real properties on March 17, 18, and 19, 1987.
5

On July 21, 1987, petitioners filed a Motion for Leave for Extraterritorial Service pursuant to Rule 14,
17 alleging that private respondents were non-residents. The judge granted the motion
6
and authorized
the service of summons by registered mail at private respondents' address in California, U.S.A. This mail
was received on August 17, 1987 by a certain "D. Pyle," whose signature appears on the registry return
card.
7

Petitioners then moved to declare private respondents in default for failure to answer notwithstanding
service of summons. However, petitioners' motion was denied
8
on October 12, 1987 by the judge for
the reason that "perhaps the address given by the plaintiff (petitioners herein) is not the correct address
of the defendants (private respondents herein) or that they have already moved out.
On October 13, 1987, the trial court motu proprio set aside its order of March 11, 1987
9
on the ground
that the attachment of property was improper because petitioners' claims were unliquidated.
Accordingly, all properties garnished and attached pursuant to the writ of attachment were ordered
released. Petitioners moved for reconsideration of the court's order. On December 21, 1987, the trial
court modified its order
10
by allowing attachment in the amount of P30,000.00 to answer for actual
damages for the death of Jose Villareal. The amount represents the value of human life as then fixed by
this Court.
On August 39, 1988, petitioners filed a Motion for Leave to Serve Summons by Publication which was
granted by the trial court in an order dated August 31, 1988.
11

Accordingly, copies of the order, summons, complaint, and the affidavit of merit were published in
the Manila Times on November 29, December 6, and 13, 1988.
12
In addition, copies of the aforesaid
order, summons, complaint, and affidavit of merit were sent by registered mail to the last known
address of private respondents in the United States.
13
On January 17, 1989, the mail matter were
returned to the Branch Clerk of Court with a notation which said "Moved, left no address."
14

Meanwhile, at the instance of petitioner Patricia Villareal, an Information
15
charging private
respondents with murder was filed on October 10, 1988 with the Regional Trial Court of Makati, where
it was docketed as Criminal Case No. 555.
On March 7, 1989, petitioners filed a Motion to Declare Defendants in Default for failure to file their
Answer within the 60-day period counted from the last day of publication. Private respondents were
declared in default on April 11, 1989, and petitioners were then allowed to present evidence
ex-parte.
16

After presenting their evidence, petitioners amended their complaint to make it conform to the
evidence.
17
On the supposition that they had proven damages in a much bigger amount than that
prayed for in the original complaint, they increased the amount of damages prayed for to
P13,082,888.00 plus 50% of this amount as attorney's fees. In addition, Patricia Villareal's children were
included as plaintiffs.
On August 29, 1989, the trial court admitted the Amended Complaint and granted petitioners' Motion
for Extra-territorial Service of Summons.
18
Accordingly, summons were published once a week
19
for
three consecutive weeks in the newspaper Abante. Copies of the Amended Complaint, the summons,
and the order were sent by registered mail to the last known addresses of private respondents at
Paraaque, Metro Manila and the United States. However, the summons and the accompanying papers
mailed were returned to the court with the notation "MOVED" for the letter addressed to the
Paraaque residence, and "REFUSED TO RECEIVE" for the letter addressed to the United States
residence.
20

On December 27, 1989, Attorney Teresita Marbibi filed a formal request in court seeking photocopies of
all the pleadings and orders pertinent to the case, including the summons and the Amended
Complaint.
21
In her letter, she stated that she was making the request "for the purpose of protecting
the interest of the defendants whose sister contracted our services."
22

On January 24, 1990, upon motion of the petitioners, the trial court declared the private respondents in
default for the second time
23
for having failed to file their Answer to the Amended Complaint within 60
days after publication of the summons. It also declared the case submitted for decision, upon being
informed by the petitioners that the very same evidence earlier presented would be reproduced and
adopted in support of the Amended Complaint.
24

On February 7, 1990, counsel for private respondents. Teresita Marbibi, filed a Notice of
Appearance
25
on their behalf.
On February 14, 1990, again through counsel, private respondents filed a verified Motion to Lift Order of
Default with Motion for Reconsideration
26
claiming that they were totally unaware of the existence of
the case at bar; that their inability to come forth promptly with responsive pleading was due to accident,
mistake, or excusable neglect; and, that the allegation of petitioners that they were the killers of Jose
Villareal was not true. Petitioners filed an Opposition to the Motion, to which private respondents filed a
Reply.
On March 27, 1990, the trial court issued an order
27
denying the Motion to Lift Order of Default with
Motion for Reconsideration, on the ground that private respondents herein failed to comply with the
requirements of Rule 18, 3.
On April 2, 1990, the trial court rendered a decision
28
finding private respondents liable for the killing of
Jose Villareal and ordering them jointly and severally to pay petitioners more than P10 million in
damages. The trial court found that private respondent Erna Sevilla and the victim Jose Villareal were
lovers; that private respondent Eliseo Sevilla, Erna's husband, is a very jealous husband who inflicts
physical injuries upon his wife; that apparently, private respondent Eliseo discovered his wife's infidelity;
and, that in conspiracy with several other persons, including his wife Erna whom he seemed to have
threatened, private respondent Eliseo hatched a plan whereby Erna was to lure Jose Villareal to a
carpark near the latter's office where Eliseo and his companions were to attack and kill Jose. The trial
court found that after the killing, private respondents lost no time in disposing of their properties in the
Philippines, pulling out their children from school, and escaping to the United States.
Copies of the order dated March 27, 1990 denying the Motion to Lift Order of Default with Motion for
Reconsideration and the decision dated April 2, 1990 were received by private respondents on the same
day, April 7, 1990. Private respondents filed a Motion for Reconsideration with Motion to Set Aside
Decision asking the court to reconsider and/or set aside the decision dated April 2, 1990 and the order
of March 27, 1990.
29
On May 17, 1990, they filed a Supplemental Motion for Reconsideration with
Reply of the order dated March 27, 1990 and the decision dated April 2, 1990, asserting for the first time
that the court did not acquire jurisdiction over their persons. On July 16, 1990, they filed a Consolidated
Memorandum
30
in support of their aforesaid Motion for Reconsideration with Reply.
On August 10, 1990, the trial court issued an order
31
denying private respondents' Motion for
Reconsideration with Motion to Set Aside Decision and the Supplemental Motion for Reconsideration
with Reply. The trial court simultaneously granted petitioners' Motion for Execution Pending Appeal.
Consequently, on August 14, 1990, a Writ of Execution Pending Appeal was issued.
23

On August 15, 1990, the Deputy Sheriff of the court served and registered with the Register of Deeds of
Paraaque a Notice of Levy over the properties said to be owned by private respondents and covered by
TCT Nos. 36350 (now 41338) and 36351 (now 41335) in their names.
33
On August 16, 1990, the Deputy
Sheriff served upon private respondents' counsel the Notice of Levy with supporting papers, one of
which was a photocopy of the denial order dated August 10, 1990.
34

On August 21, 1990, private respondents' counsel received by mail a duplicate original copy of the
denial order of August 10, 1990.
35
On the same date, counsel filed a Notice of Appeal of the denial order
dated August 10, 1990 and the decision dated April 2, 1990.
36

Petitioners filed a Motion to Dismiss Notice of Appeal, contending that the Notice was filed out of time,
which private respondents opposed. Petitioners then filed a Supplemental Comment to Motion to
Dismiss dated October 4, 1990.
On October 2, 1990, the trial court issued an order
37
denying due course to the Notice of Appeal on the
ground that private respondents had only a day from August 16, 1990 (the day they received a
photocopy of the order denying their Motion for Reconsideration with Motion to Set Aside Decision and
their Supplemental Motion for Reconsideration with Reply), not from August 21, 1990 (the day on which
they received the duplicate original of the said order) to perfect their appeal. As the Notice of Appeal
was filed only on August 21, 1990, the trial court ruled that it was late. This order was received by
private respondents' counsel on October 18, 1990.
On October 25, 1990, private respondents, through counsel, filed a Motion to Set Aside/Reconsider
Order Dated October 2, 1990.
38

This was denied by the trial court in its order dated December 17,
1990,
39
a copy of which was received by private respondents' counsel on January 16, 1991.
40

On January 16, 1991, private respondents then filed a Notice of
Appeal.
41
from the orders dated December 17, 1990 and October 2, 1990 and again from the order
dated August 10, 1990.
On January 29, 1991, the trial court issued an Entry of Judgment,
42
a copy of which was received by
counsel for private respondents on February 13, 1991. On February 15, 1991, the private respondents
filed a Motion for Reconsideration with Motion to Elevate Records to the Court of Appeals and Motion
to Quash Entry of Judgment,
43
but the motions were denied by the trial court in its order of August 1,
1991.
44

On September 11, 1991, private respondents filed in the Court of Appeals a petition for certiorari,
prohibition, and mandamuswith preliminary injunction,
45
alleging that the trial court had acted without
or in excess of jurisdiction and with grave abuse of discretion in issuing the aforesaid orders and
decisions and that there was neither appeal nor any plain, speedy and adequate remedy open to them
in the ordinary course of law. Private respondents contended (1) that the trial court never acquired
jurisdiction over them since they are non-resident defendants and petitioners' action is purely in
personam and (2) that they were denied due process of law.
46

On December 23, 1991,
47
the Court of Appeals granted the petition, ruling that the trial court was guilty
of grave abuse of discretion. The dispositive portion of its decision reads:
WHEREFORE, the writs prayed for in the petition are GRANTED. The orders of default, the hearingex-
parte, the default judgment, the execution pending appeal, the respective orders denying the motions
for reconsideration, and all subsequent orders related thereto are hereby declared null and void and are
set aside. The attachment on the properties of petitioners [private respondents here] shall remain in
force. The trial court is ordered to require petitioners to file their answer within fifteen (15) days from
notice, and thence to proceed in the disposition of the case in accordance with the ordinary civil
procedure.
Petitioners moved for a reconsideration,
48
but their motion was denied
49
by the appellate court in a
resolution dated September 30, 1992. Hence, this petition for review.
First. The Court of Appeals nullified the several orders and the decision rendered by the trial court
against private respondents on the ground that the trial court did not acquire jurisdiction over them. It
ruled that the extraterritorial service of summons did not confer on the trial court jurisdiction to render
and enforce a money judgment against the private respondents who are non-residents. On the authority
of Banco Espaol-Filipino v. Palanca,
50
it held that the only effect of the conversion of an action
in personam filed against non-resident defendants into one quasi-in rem by virtue of the attachment of
their properties in the country was to subject such properties to the payment of the demand which the
court might find to be due petitioners, the plaintiffs below. Otherwise, the trial court could not render a
personal judgment against the private respondents, as it did in this case, and enforce it against them.
The Court of Appeals concluded that in doing so, the trial court committed grave abuse of discretion.
51

It is true that where the defendant in an action in personam is a non-resident, as in this case, and
refuses to appear and submit to the jurisdiction of the court, the jurisdiction of the latter is limited to
the property within the country which the court may have ordered attached. In such a case, the
property itself is "the sole thing which is impleaded and is the responsible object which is the subject of
the judicial power."
52
Accordingly, "the relief must be confined to the res, and the court cannot lawfully
render a personal judgment against him."
53

But this Court also acknowledged in Banco Espaol-Filipino that if property is attached and later the
defendant appears, "the cause becomes mainly a suit in personam, with the added incident that the
property attached remains liable, under the control of the court, to answer to any demand which may
be established against the defendant by the final judgment of the court."
54
This rule was affirmed
in Mabanag v. Gallemore
55
in which it was held:
The main action in an attachment or garnishment suit is in rem until jurisdiction of the defendant is
secured. Thereafter, it is in personam and also in rem, unless jurisdiction of the res is lost as by
dissolution of the attachment. If jurisdiction of the defendant is acquired but jurisdiction of the res is
lost, it is then purely in personam. . . . a proceeding against property without jurisdiction of the person
of the defendant is in substance a proceeding in rem; and where there is jurisdiction of the defendant,
but the proceeding against the property continues, that proceeding is none the less necessarily in rem,
although in form there is but a single proceeding. (4 Am. Jur., 556-557.)
As the remedy is administered in some states, the theory of an attachment, whether it is by process
against or to subject the property or effects of a resident or non-resident of the state, is that it partakes
essentially of the nature and character of a proceeding in personam and not a proceedingin rem. And if
the defendant appears the action proceeds in accordance with the practice governing proceedings in
personam. But where the defendant fails to appear in the action, the proceeding is to be considered as
one in the nature of a proceeding in rem. And where the court acts directly on the property, the title
thereof being charged by the court without the intervention of the party, the proceeding
unquestionably is one in rem in the fullest meaning of the term.
In attachment proceedings against a non-resident defendant where personal service on him is lacking, it
is elementary that the court must obtain jurisdiction of the property of the defendant. If no steps have
been taken to acquire jurisdiction of the defendant's person, and he has not appeared and answered or
otherwise submitted himself to the jurisdiction of the court, the court is without jurisdiction to render
judgment until there has been a lawful seizure of property owned by him within the jurisdiction of the
court. (2 R.C.L., 800-804.)
56

In this case, not only was property in the Philippines of private respondents attached, but, what is more,
private respondents subsequently appeared in the trial court and submitted to its jurisdiction.
Consequently, the jurisdiction of the trial court to render a judgment in personam against them is
undoubted.
Private respondents contend that the claims for which their property was attached are unliquidated
and, therefore, the attachment is totally invalid. While below they conceded that the attachment was
valid at least to the extent of P30,000.00 (then considered the value of human life), they now contend
that even this amount is unliquidated.
As private respondents thus admit, this point was not raised in the Court of Appeals by them. It is only
now that it is being urged. However, this point is now largely immaterial inasmuch as the jurisdiction of
the trial court to render a personal judgment against private respondents derived not so much from the
validity of the attachment as from the voluntary submission of private respondents to its authority.
There can be no question regarding the trial court's acquisition of jurisdiction over the persons of
respondents when the latter's counsel entered her appearance on their behalf on February 7, 1990.
Through counsel, private respondents voluntarily appeared by filing a Notice of Appearance without
qualification and a Motion to Lift Order of Default with Motion for Reconsideration, in which they
prayed for affirmative reliefs, thus submitting to the jurisdiction of the court. The following instances
have been considered voluntary submission to the jurisdiction of the court: the filing by defendant of a
motion to admit answer;
57
the filing of a motion for reconsideration of the judgment by default;
58
and
the filing of a petition to set aside the judgment of default.
59

Not only did private respondents voluntarily submit themselves to the jurisdiction of the trial court, they
never questioned the validity of the mode of service of summons, that is, by extraterritorial service upon
them. As already stated, private respondents filed a notice of appearance without qualification.
In Flores v. Zurbito, it was held:
60

He may appear by presenting a motion, for example, and unless by such appearance he specifically
objects to the jurisdiction of the court, he thereby gives his assent to the jurisdiction of the court over
his person. When the appearance is by motion objecting to the jurisdiction of the court over his person,
it must be for the sole and separate purpose of objecting to the jurisdiction of the court. If his motion is
for any other purpose than to object to the jurisdiction of the court over his person, he thereby submits
himself to the jurisdiction of the court. (Handy vs. Insurance Co., 37 Ohio St., 366; Elliott vs. Lawhead, 43
Ohio St., 171; New Jersey vs. New York, 6 Peters [U.S.], 323 Livingston vs. Gibbons, 4 Johnson's Chancery
[N.Y.], 94; . . . ). An appearance in court, either in person or by counsel, for any purpose other than to
expressly object to the jurisdiction of the court over the person, waives want of process and service of
notice. Such an appearance gives the court jurisdiction over the person. (Henderson vs. Carbondale etc.,
Co., 140 U.S., 25; Rhode Island vs Massachusetts, 12 Peters, [U.S.], 657.). . . . His appearance without
objecting to the jurisdiction of the court waives all objections to the form and manner of service of
notice. (Provident etc. Association v. Ford, 114 U.S., 635, 639.)
In La Naval Drug Corp. v. court of Appeals,
61
it was held:
Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a motion to dismiss or by
way of an affirmative defense in an answer. Voluntary appearance shall be deemed a waiver of this
defense.
In Boticano v. Chu, Jr.,
62
it was stated:
. . . one of the circumstances considered by the Court as indicative of waiver by the defendant-appellant
of any alleged defect of jurisdiction over his person arising from defective or even want of process, is his
failure to raise the question of jurisdiction in the Court of First Instance and at the first opportunity. It
has been held that upon general principles, defects in jurisdiction arising from irregularities in the
commencement of the proceedings, defective process or even absence of process may be waived by a
failure to make seasonable objections. (Castro v. Cebu Portland Cement Co., 71 Phil. 481
[1941] citing Machan v. De la Trinidad, 3 Phil. 684; Vergara v. Laciapag, 28 Phil. 439; U.S. v. Inductivo, 40
Phil. 84; Soriano v. Ramirez, 44 Phil. 519).
Private respondents thus waived any defect in service of summons or even want of process because for
the court to validly decide their plea, it necessarily had to acquire jurisdiction upon their persons.
63

Second. The Court of Appeals found the trial court to have committed grave abuse of discretion in
denying private respondents' Motion to Lift Order of Default with Motion for Reconsideration for the
following reasons: Private respondents resided in the United States which local newspapers do not
reach and they came to know of the case against them only on January 5, 1990 from well-meaning
friends. These circumstances, it was held, constituted accident, mistake, or excusable neglect excusing
private respondents' failure to answer the complaint and justifying the lifting of the default order under
Rule 18, 3.
In addition, the appellate court maintains that the trial court's observation that the Motion contains no
specific facts or statements showing petitioner's meritorious defense is not accurate. It points out that it
is clearly stated in the said Motion that they did not kill petitioner's husband. Indeed, according to the
Court of Appeals, the defense is meritorious because if proved, such circumstance will defeat
petitioner's claim for damages.
64

Under Rule 18, 3, a motion to lift an order of default must allege with particularity the facts
constituting the fraud, accident, mistake, or excusable neglect which caused his failure to answer.
65
In
this case, the private respondents' motion merely alleged that private respondents were residents of the
United States which local newspapers do not reach and that they did not know about the case filed
against them until January 5, 1990 when well-meaning friends informed them about the matter.
66

There are factual considerations in this case which belie private respondents' allegations of good faith.
In his Special Power of Attorney,
67
which was submitted to the trial court as an annex of private
respondents' Supplemental Motion for Reconsideration with Reply, private respondent Eliseo Sevilla
gave as their residential address in the United States the same address to which summons had been
sent three times before by the trial court.
68
The last summons sent to private respondents by registered
mail was returned to the court with the notation "REFUSED TO RECEIVE." This was long before January
5, 1990 when, according to private respondents, they were informed by friends of the case pending
against them. That private respondents refused to receive the summons is of no moment. As has been
held, the refusal of a defendant (in this case private respondents) to receive summons is a technicality
resorted to by those who attempt to frustrate the service upon them.
69
The trial court was justified in
thinking that private respondents were trying to deceive it by claiming that they did not know about the
case until they were told about it on January 5, 1990 by well-meaning friends.
Indeed, private respondents did not dispute the trial court's finding of deception on their part, nor did
they ever offer any explanation for this in any of their numerous pleadings. For as early as December 27,
1989 and thus prior to the second declaration of default, private respondents' counsel, Atty. Marbibi,
made a formal written request to the trial court for permission to photocopy all pleadings and orders
relating to the case "for the purpose of protecting the interest of the defendants whose sister
contracted our services." Among the papers photocopied were the Amended Complaint and Summons
pursuant thereto.
70
This fact gives the lie to the allegation in the Motion to Set Aside the Order of
Default that private respondents did not know of the case against them until January 5, 1990. Private
respondents could have at least asked for an extension of time to file their answer before they were
declared in default for the second time if it was really their intention in good faith to participate in the
case. They cannot claim that the reason they could not do so was because they had appeared only to
question jurisdiction over their persons because they had already asked for affirmative reliefs prior to
their raising the issue of jurisdiction over their persons.
Private respondents have thus failed to show good faith which is central to the concept of "excusable
neglect" justifying failure to answer.
[W]hat must be shown is that the failure to respond was attributable to mishap and not indifference or
deliberate disregard of the notice. In the case of ordinary individuals, the test is in essence one of good
faith.
71

In our opinion, the trial court correctly slammed the blatant attempt of private respondents to foist a
falsehood upon it.
The motion to lift order of default, aside from the requirements in Rule 18, 3, must show that the
defendant has a meritorious defense or that something would be gained by having the order of default
set aside.
72
Otherwise, and if the motion is not accompanied by affidavits of merits, it may properly be
denied.
73

As regards this requirement, private respondents contented themselves with just one statement that
they "have absolutely no knowledge, much less any hand, in the incident falsely imputed to
them."
74
Such allegation is a conclusion rather than a statement of facts showing a meritorious defense.
The affidavit must controvert the facts alleged by the petitioners.
[The term meritorious defense] may imply that the applicant has the burden of proving such a defense
in order to have the judgment set aside. The cases usually do not require such a strong showing. The
test employed appears to be essentially the same as used in considering summary
judgment, i.e., whether there is enough evidence to present an issue for submission to the trier of fact, or
a showing that on the undisputed facts it is not clear that the judgment is warranted as a matter of
law.
75

. . . The defendant must show that she has a meritorious defense otherwise the grant of her motion will
prove to be a useless exercise. Thus, her motion must be accompanied by a statement of the evidence
which she intends to present if the motion is granted and which is such as to warrant a reasonable belief
that the result of the case would probably be otherwise if a new trial is granted.
76

Since private respondents' failure to file an answer or any other responsive pleading was not due to
fraud, accident, mistake, or excusable neglect and they failed to show they had a valid and meritorious
defense, we think the trial court did not commit an abuse of discretion in refusing to lift its order of
default. "Grave abuse of discretion," it bears repeating, means capricious, arbitrary, despotic, and
whimsical exercise of judgment and is rightly treated as equivalent to lack of jurisdiction.
77
Here, it
cannot justly be said that, in issuing its disputed order denying private respondents' Motion to Lift the
Order of Default and Motion for Reconsideration, the trial court acted in this fashion so as to call for the
annulment of its orders and its decision. The Court of Appeals seriously erred in holding otherwise and
setting aside the order of the trial court.
Third. We agree with the Court of Appeals, however, that the trial court is guilty of grave abuse of
discretion in denying due course to private respondents' appeal. The trial court held that its decision had
become final on the basis of the following facts:
78
that the private respondents received the judgment
by default on April 7, 1990, one day later than the petitioners; that on April 21, 1990, they filed a Motion
for Reconsideration with Motion to Set Aside Decision through registered mail; that on August 10, 1990,
the trial court issued an order denying said Motion; that on August 16, 1990, a photocopy of the said
order was served along with the Writ of Execution Pending Appeal (granted upon Motion for Execution
Pending Appeal) and Notice of Levy of Real Properties by its Sheriff; that on August 21, 1990, the
duplicate original copy of the order of August 10, 1990 sent by registered mail to the private
respondents' counsel was received; and, that on the same day, August 21, 1990, said counsel filed a
Notice of Appeal. On the basis of these findings, the trial court concluded:
79

. . . While it may be true that they received copy of the August 10 order which was sent to their counsel
thru registered mail on August 13, 1990 only on August 21, 1990 as they claimed in the opposition to
motion to dismiss appeal, however defendants forgot the fact that on August 16, 1990, the Sheriff of
this Court served upon them, thru counsel, a copy of said August 10 order, together with the Writ of
Execution Pending Appeal and Notice of Levy. This is certified to by the Sheriff in his "Report."
When the defendants therefore filed their Notice of Appeal on August 21, 1990, they were already late
and the period to appeal had expired as the period started to run again on the 17th day of August and it
is the last day to perfect appeal.
The question is from which date the period for filing an appeal should be counted: from August 16,
1990, when private respondents received a photocopy of the order denying their Motion for
Reconsideration of the decision, or from August 21, 1990, when they received by registered mail
the duplicate original of the same order? It is to be recalled that the photocopy of the order was given
to private respondents by the sheriff in connection with his service of the Writ of Execution and Notice
of Levy on Real Properties. It was one of the supporting documents attached to the Notice of Levy on
Real Properties.
We hold that the period for filing an appeal commenced to run again after it had been interrupted by
the filing of private respondents' Motion for Reconsideration of the decision only on August 21, 1990.
It cannot be from August 16, 1990 when private respondents' counsel was given a mere photocopy of
the court's order. Such copy lacks assurance of its genuineness, considering that photocopies can easily
be tampered with, for the purpose of enabling private respondents to determine whether or not to
appeal and, in the event they choose to do so, what issues to raise on appeal. It was not in fact intended
to be a substitute for the copy of the order which was served only on August 21, 1990. The trial court,
therefore, should have given due course to private respondents' appeal. Denied the right to appeal,
private respondents perforce had to resort to a petition for certiorari, prohibition, andmandamus.
Petitioners contend, however, that private respondents' petition for certiorari in the Court of Appeals
was not filed within a reasonable time and therefore should have been denied. They claim that private
respondents received the trial court's order denying their motion for a reconsideration of the court's
refusal to give due course to the first Notice of Appeal on January 16, 1991 and that from such date until
September 11, 1991 when the petition forcertiorari was filed, almost eight months had already elapsed,
clearly exceeding the benchmark of 90 days considered as "reasonable time" for filing petitions of this
nature.
This contention has no merit. The relevant date for purposes of determining whether the petition
for certiorari was filed within a reasonable time is August 13, 1991, when private respondents received
the trial court's order denying their motion to quash the entry of judgment which the trial court had
issued earlier. It is to be noted that the trial court did not act on the second Notice of Appeal. It simply
entered judgment on January 29, 1991. The private respondent had a right to be notified of the action
on their second Notice of Appeal. They were not guilty of dilatory tactics. Indeed, the moment the trial
court entered judgment, they immediately moved to quash the entry of judgment. When their Motion
to Quash was denied in an order which also commented on their second Notice of Appeal, they filed the
petition for certiorari. From August 13, 1991 to September 11, 1991 is a period of only 29 days.
It is also important to note that petitioners questioned the timeliness of private respondents' action
(their filing of the petition for certiorari, prohibition, and mandamus) only after the Court of Appeals had
rendered a decision. They filed a comment on private respondents' petition, but they did not question
the timeliness of its filing by alleging that the petition was filed more than 90 days then considered to be
a "reasonable time" for filing petitions for certiorari (It is now 60 days under Rule 65, 4 of the Rules of
Civil Procedure). It was only after the Court of Appeals rendered judgment against them that petitioners
raised the question in their Motion for Reconsideration. Petitioners thus waived their objection to the
timeliness of the filing of the petition in the Court of Appeals.
To recapitulate, we hold: (1) that the trial court acquired jurisdiction over the persons of private
respondents; (2) that it validly declared them in default; (3) that consequently, its decision is valid and
private respondents' remedy was to appeal from the decision; (4) that private respondents' appeal was
timely and therefore it was grave abuse of discretion for the trial court to hold that private respondents'
notice of appeal was filed late and for that reason deny due course to it.
WHEREFORE, the decision of the Court of Appeals is REVERSED insofar as it nullified and set aside the
orders of default, the hearing ex-parte the default judgment, the execution pending appeal, and all
other orders related thereto issued prior to the order refusing to give due course to the appeal of
private respondents of the Regional Trial Court of Makati, Branch 132, and AFFIRMED insofar as it set
aside the orders refusing to five due course to private respondents' appeal and ordering the entry of the
judgment by default and insofar as it ordered that the attachment on the properties of private
respondents be maintained. The Regional Trial Court of Makati, Branch 132, is hereby ORDERED to give
due course to the appeal of private respondents.
SO ORDERED.
Regalado, Melo, Puno and Martinez, JJ., concur.

G.R. No. 138104 April 11, 2002
MR HOLDINGS, LTD., petitioner,
vs.
SHERIFF CARLOS P. BAJAR, SHERIFF FERDINAND M. JANDUSAY, SOLIDBANK CORPORATION, AND
MARCOPPER MINING CORPORATION, respondents.
SANDOVAL-GUTIERREZ, J.:
In the present Petition for Review on Certiorari, petitioner MR Holdings, Ltd. assails
the a) Decision
1
dated January 8, 1999 of the Court of Appeals in CA-G.R. SP No. 49226 finding no grave
abuse of discretion on the part of Judge Leonardo P. Ansaldo of the Regional Trial Court (RTC), Branch
94, Boac, Marinduque, in denying petitioners application for a writ of preliminary
injunction;
2
and b) Resolution
3
dated March 29, 1999 denying petitioners motion for reconsideration.
The facts of the case are as follows:
Under a "Principal Loan Agreement"
4
and "Complementary Loan Agreement,"
5
both dated November 4,
1992, Asian Development Bank (ADB), a multilateral development finance institution, agreed to extend
to Marcopper Mining Corporation (Marcopper) a loan in the aggregate amount of US$40,000,000.00 to
finance the latters mining project at Sta. Cruz, Marinduque. The principal loan of US$ 15,000,000.00
was sourced from ADBs ordinary capital resources, while the complementary loan of US$ 25,000,000.00
was funded by the Bank of Nova Scotia, a participating finance institution.
On even date, ADB and Placer Dome, Inc., (Placer Dome), a foreign corporation which owns 40% of
Marcopper, executed a "Support and Standby Credit Agreement" whereby the latter agreed to provide
Marcopper with cash flow support for the payment of its obligations to ADB.
To secure the loan, Marcopper executed in favor of ADB a "Deed of Real Estate and Chattel
Mortgage"
6
dated November 11, 1992, covering substantially all of its (Marcoppers) properties and
assets in Marinduque. It was registered with the Register of Deeds on November 12, 1992.
When Marcopper defaulted in the payment of its loan obligation, Placer Dome, in fulfillment of its
undertaking under the "Support and Standby Credit Agreement," and presumably to preserve its
international credit standing, agreed to have its subsidiary corporation, petitioner MR Holding, Ltd.,
assumed Marcoppers obligation to ADB in the amount of US$ 18,453,450.02. Consequently, in an
"Assignment Agreement"
7
dated March 20, 1997, ADB assigned to petitioner all its rights, interests and
obligations under the principal and complementary loan agreements, ("Deed of Real Estate and Chattel
Mortgage," and "Support and Standby Credit Agreement"). On December 8, 1997, Marcopper likewise
executed a "Deed of Assignment"
8
in favor of petitioner. Under its provisions, Marcopper assigns,
transfers, cedes and conveys to petitioner, its assigns and/or successors-in-interest all of its
(Marcoppers) properties, mining equipment and facilities, to wit:
Land and Mining Rights
Building and Other Structures
Other Land Improvements
Machineries & Equipment, and Warehouse Inventory
Mine/Mobile Equipment
Transportation Equipment and Furniture & Fixtures
Meanwhile, it appeared that on May 7, 1997, Solidbank Corporation (Solidbank) obtained a Partial
Judgment
9
against Marcopper from the RTC, Branch 26, Manila, in Civil Case No. 96-80083 entitled
"Solidbank Corporation vs. Marcopper Mining Corporation, John E. Loney, Jose E. Reyes and Teodulo C.
Gabor, Jr.," the decretal portion of which reads:
"WHEREFORE, PREMISES CONSIDERED, partial judgment is hereby rendered ordering defendant
Marcopper Mining Corporation, as follows:
1. To pay plaintiff Solidbank the sum of Fifty Two Million Nine Hundred Seventy Thousand Pesos Seven
Hundred Fifty Six and 89/100 only (PHP 52,970,756.89), plus interest and charges until fully paid;
2. To pay an amount equivalent to Ten Percent (10%) of above-stated amount as attorneys fees; and
3. To pay the costs of suit.
"SO ORDERED."
Upon Solidbanks motion, the RTC of Manila issued a writ of execution pending appeal directing Carlos
P. Bajar, respondent sheriff, to require Marcopper "to pay the sums of money to satisfy the Partial
Judgment."
10
Thereafter, respondent Bajar issued two notices of levy on Marcoppers personal and real
properties, and over all its stocks of scrap iron and unserviceable mining equipment.
11
Together with
sheriff Ferdinand M. Jandusay (also a respondent) of the RTC, Branch 94, Boac, Marinduque, respondent
Bajar issued two notices setting the public auction sale of the levied properties on August 27, 1998 at
the Marcopper mine site.
12

Having learned of the scheduled auction sale, petitioner served an "Affidavit of Third-Party
Claim"
13
upon respondent sheriffs on August 26, 1998, asserting its ownership over all Marcoppers
mining properties, equipment and facilities by virtue of the "Deed of Assignment."
Upon the denial of its "Affidavit of ThirdParty Claim" by the RTC of Manila,
14
petitioner commenced
with the RTC of Boac, Marinduque, presided by Judge Leonardo P. Ansaldo, a complaint for
reivindication of properties, etc., with prayer for preliminary injunction and temporary restraining order
against respondents Solidbank, Marcopper, and sheriffs Bajar and Jandusay.
15
The case was docketed as
Civil Case No. 98-13.
In an Order
16
dated October 6, 1998, Judge Ansaldo denied petitioners application for a writ of
preliminary injunction on the ground that a) petitioner has no legal capacity to sue, it being a foreign
corporation doing business in the Philippines without license; b) an injunction will amount "to staying
the execution of a final judgment by a court of co-equal and concurrent jurisdiction;" and c) the validity
of the "Assignment Agreement" and the "Deed of Assignment" has been "put into serious question by
the timing of their execution and registration."
Unsatisfied, petitioner elevated the matter to the Court of Appeals on a Petition for Certiorari,
Prohibition and Mandamus, docketed therein as CA-G.R. SP No. 49226. On January 8, 1999, the Court of
Appeals rendered a Decision holding that Judge Ansaldo did not commit grave abuse of discretion in
denying petitioners prayer for a writ of preliminary injunction, ratiocinating as follows:
"Petitioner contends that it has the legal capacity to sue and seek redress from Philippine courts as it is a
non-resident foreign corporation not doing business in the Philippines and suing on isolated
transactions.
x x x x x x
"We agree with the finding of the respondent court that petitioner is not suing on an isolated
transaction as it claims to be, as it is very obvious from the deed of assignment and its relationships with
Marcopper and Placer Dome, Inc. that its unmistakable intention is to continue the operations of
Marcopper and shield its properties/assets from the reach of legitimate creditors, even those holding
valid and executory court judgments against it. There is no other way for petitioner to recover its huge
financial investments which it poured into Marcoppers rehabilitation and the local situs where the
Deeds of Assignment were executed, without petitioner continuing to do business in the country.
x x x x x x
"While petitioner may just be an assignee to the Deeds of Assignment, it may still fall within the
meaning of "doing business" in light of the Supreme Court ruling in the case of Far East International
Import and Export Corporation vs. Nankai Kogyo Co., 6 SCRA 725, that:
Where a single act or transaction however is not merely incidental or casual but indicates the foreign
corporations intention to do other business in the Philippines, said single act or transaction
constitutes doing or engaging in or transacting business in the Philippines.
"Furthermore, the court went further by declaring that even a single act may constitute doing
business if it is intended to be the beginning of a series of transactions. (Far East International Import
and Export Corporation vs. Nankai Kogyo Co. supra).
"On the issue of whether petitioner is the bona fide owner of all the mining facilities and equipment of
Marcopper, petitioner relies heavily on the Assignment Agreement allegedly executed on March 20,
1997 wherein all the rights and interest of Asian Development Bank (ADB) in a purported Loan
Agreement were ceded and transferred in favor of the petitioner as assignee, in addition to a
subsequent Deed of Assignment dated December 28, 1997 conveying absolutely all the properties,
mining equipment and facilities of Marcopper in favor of petitioner.
"The Deeds of Assignment executed in favor of petitioner cannot be binding on the judgment creditor,
private respondent Solidbank, under the general legal principle that contracts can only bind the parties
who had entered into it, and it cannot favor or prejudice a third person (Quano vs. Court of Appeals, 211
SCRA 40). Moreover, by express stipulation, the said deeds shall be governed, interpreted and construed
in accordance with laws of New York.1wphi1.nt
"The Deeds of Assignment executed by Marcopper, through its President, Atty. Teodulo C. Gabor, Jr.,
were clearly made in bad faith and in fraud of creditors, particularly private respondent Solidbank.
The first Assignment Agreement purportedly executed on March 20, 1997 was entered into after
Solidbank had filed on September 19, 1996 a case against Marcopper for collection of sum of money
before Branch 26 of the Regional Trial Court docketed as Civil Case No. 96-80083. The second Deed of
Assignment purportedly executed on December 28, 1997 was entered into by President Gabor after
Solidbank had filed its Motion for Partial Summary Judgment, after the rendition by Branch 26 of the
Regional Trial Court of Manila of a Partial Summary Judgment and after the said trial court had issued
a writ of execution, and which judgment was later affirmed by the Court of Appeals. While the
assignments (which were not registered with the Registry of Property as required by Article 1625 of the
new Civil Code) may be valid between the parties thereof, it produces no effect as against third parties.
The purported execution of the Deeds of Assignment in favor of petitioner was in violation of Article
1387 of the New Civil Code x x x." (Emphasis Supplied)
Hence, the present Petition for Review on Certiorari by MR Holdings, Ltd. moored on the following
grounds:
"A. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN COMPLETELY
DISREGARDING AS A MATERIAL FACT OF THE CASE THE EXISTENCE OF THE PRIOR, REGISTERED 1992
DEED OF REAL ESTATE AND CHATTEL MORTGAGE CREATING A LIEN OVER THE LEVIED PROPERTIES,
SUBJECT OF THE ASSIGNMENT AGREEMENT DATED MARCH 20, 1997, THUS, MATERIALLY
CONTRIBUTING TO THE SAID COURTS MISPERCEPTION AND MISAPPRECIATION OF THE MERITS OF
PETITIONERS CASE.
B. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN MAKING A FACTUAL
FINDING THAT THE SAID ASSIGNMENT AGREEMENT IS NOT REGISTERED, THE SAME BEING CONTRARY
TO THE FACTS ON RECORD, THUS, MATERIALLY CONTRIBUTING TO THE SAID COURTS
MISPERCEPTION AND MISAPPRECIATION OF THE MERITS OF PETITIONERS CASE.
C. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN MAKING A FACTUAL
FINDING ON THE EXISTENCE OF AN ATTACHMENT ON THE PROPERTIES SUBJECT OF INSTANT CASE,
THE SAME BEING CONTRARY TO THE FACTS ON RECORD, THUS, MATERIALLY CONTRIBUTING TO THE
SAID COURTS MISPERCEPTION AND MISAPPRECIATION OF THE MERITS OF PETITIONERS CASE.
D. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING THAT THE SAID
ASSIGNMENT AGREEMENT AND THE DEED OF ASSIGNMENT ARE NOT BINDING ON RESPONDENT
SOLIDBANK WHO IS NOT A PARTY THERETO, THE SAME BEING CONTRARY TO LAW AND ESTABLISHED
JURISPRUDENCE ON PRIOR REGISTERED MORTGAGE LIENS AND ON PREFERENCE OF CREDITS.
E. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN FINDING THAT THE
AFOREMENTIONED ASSIGNMENT AGREEMENT AND DEED OF ASSIGNMENT ARE SHAM, SIMULATED,
OF DUBIOUS CHARACTER, AND WERE MADE IN BAD FAITH AND IN FRAUD OF CREDITORS,
PARTICULARLY RESPONDENT SOLIDBANK, THE SAME BEING IN COMPLETE DISREGARD OF, VIZ: (1) THE
LAW AND ESTABLISHED JURISPRUDENCE ON PRIOR, REGISTERED MORTGAGE LIENS AND ON
PREFERENCE OF CREDITS, BY REASON OF WHICH THERE EXISTS NO CAUSAL CONNECTION BETWEEN
THE SAID CONTRACTS AND THE PROCEEDINGS IN CIVIL CASE NO. 96-80083; (2) THAT THE ASIAN
DEVELOPMENT BANK WILL NOT OR COULD NOT HAVE AGREED TO A SHAM; SIMULATED, DUBIOUS
AND FRAUDULENT TRANSACTION; AND (3) THAT RESPONDENT SOLIDBANKS BIGGEST STOCKHOLDER,
THE BANK OF NOVA SCOTIA, WAS A MAJOR BENEFICIARY OF THE ASSIGNMENT AGREEMENT IN
QUESTION.
F. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING THAT
PETITIONER IS WITHOUT LEGAL CAPACITY TO SUE AND SEEK REDRESS FROM PHILIPPINE COURTS, IT
BEING THE CASE THAT SECTION 133 OF THE CORPORATION CODE IS WITHOUT APPLICATION TO
PETITIONER, AND IT BEING THE CASE THAT THE SAID COURT MERELY RELIED ON SURMISES AND
CONJECTURES IN OPINING THAT PETITIONER INTENDS TO DO BUSINESS IN THE PHILIPPINES.
G. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING THAT
RESPONDENT MARCOPPER, PLACER DOME, INC., AND PETITIONER ARE ONE AND THE SAME ENTITY,
THE SAME BEING WITHOUT FACTUAL OR LEGAL BASIS.
H. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN HOLDING PETITIONER
GUILTY OF FORUM SHOPPING, IT BEING CLEAR THAT NEITHER LITIS PENDENTIA NORRES
JUDICATA MAY BAR THE INSTANT REIVINDICATORY ACTION, AND IT BEING CLEAR THAT AS THIRD-
PARTY CLAIMANT, THE LAW AFFORDS PETITIONER THE RIGHT TO FILE SUCH REIVINDICATORY ACTION.
I. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN RENDERING A DECISION
WHICH IN EFFECT SERVES AS JUDGMENT ON THE MERITS OF THE CASE.
J. THE SHERIFFS LEVY AND SALE, THE SHERIFFS CERTIFICATE OF SALE DATED OCTOBER 12, 1998, THE
RTC-MANILA ORDER DATED FEBRUARY 12, 1999, AND THE RTC-BOAC ORDER DATED NOVEMBER 25,
1998 ARE NULL AND VOID.
K. THE HONORABLE COURT OF APPEALS COMMITS A REVERSIBLE ERROR IN AFFIRMING THE DENIAL
BY THE RTC-BOAC OF PETITIONERS APPLICATION FOR PRELIMINARY INJUNCTION, THE SAME BEING
IN TOTAL DISREGARD OF PETITIONERS RIGHT AS ASSIGNEE OF A PRIOR, REGISTERED MORTGAGE
LIEN, AND IN DISREGARD OF THE LAW AND JURISPRUDENCE ON PREFERENCE OF CREDIT."
In its petition, petitioner alleges that it is not "doing business" in the Philippines and characterizes its
participation in the assignment contracts (whereby Marcoppers assets where transferred to it) as mere
isolated acts that cannot foreclose its right to sue in local courts. Petitioner likewise maintains that the
two assignment contracts, although executed during the pendency of Civil Case No. 96-80083 in the RTC
of Manila, are not fraudulent conveyances as they were supported by valuable considerations.
Moreover, they were executed in connection with prior transactions that took place as early as 1992
which involved ADB, a reputable financial institution. Petitioner further claims that when it paid
Marcoppers obligation to ADB, it stepped into the latters shoes and acquired its (ADBS) rights, titles,
and interests under the "Deed of Real Estate and Chattel Mortgage." Lastly, petitioner asserts its
existence as a corporation, separate and distinct from Placer Dome and Marcopper.
In its comment, Solidbank avers that: a) petitioner is "doing business" in the Philippines and this is
evidenced by the "huge investment" it poured into the assignment contracts; b) granting that petitioner
is not doing business in the Philippines, the nature of its transaction reveals an "intention to do
business" or "to begin a series of transaction" in the country; c) petitioner, Marcopper and Placer Dome
are one and the same entity, petitioner being then a wholly-owned subsidiary of Placer Dome, which, in
turn, owns 40% of Marcopper; d) the timing under which the assignments contracts were executed
shows that petitioners purpose was to defeat any judgment favorable to it (Solidbank);
and e) petitioner violated the rule on forum shopping since the object of Civil Case No. 98-13 (at RTC,
Boac, Marinduque) is similar to the other cases filed by Marcopper in order to forestall the sale of the
levied properties.
Marcopper, in a separate comment, states that it is merely a nominal party to the present case and that
its principal concerns are being ventilated in another case.
The petition is impressed with merit.
Crucial to the outcome of this case is our resolution of the following issues: 1) Does petitioner have the
legal capacity to sue? 2) Was the Deed of Assignment between Marcopper and petitioner executed in
fraud of creditors? 3) Are petitioner MR Holdings, Ltd., Placer Dome, and Marcopper one and the same
entity? and 4) Is petitioner guilty of forum shopping?
We shall resolve the issues in seriatim.
I
The Court of Appeals ruled that petitioner has no legal capacity to sue in the Philippine courts because it
is a foreign corporation doing business here without license. A review of this ruling does not pose much
complexity as the principles governing a foreign corporations right to sue in local courts have long been
settled by our Corporation Law.
17
These principles may be condensed in three statements, to wit: a) if a
foreign corporationdoes business in the Philippines without a license, it cannot sue before the
Philippine courts;
18
b) if a foreign corporation is not doing business in the Philippines, it needs no
license to sue before Philippine courts on an isolated transaction
19
or on a cause of action entirely
independent of any business transaction;
20
and c) if a foreign corporation does business in the
Philippines with the required license, it can sue before Philippine courts on any transaction. Apparently,
it is not the absence of the prescribed license but the "doing (of) business" in the Philippines without
such license which debars the foreign corporation from access to our courts.
21

The task at hand requires us to weigh the facts vis--vis the established principles. The question whether
or not a foreign corporation is doing business is dependent principally upon the facts and circumstances
of each particular case, considered in the light of the purposes and language of the pertinent statute or
statutes involved and of the general principles governing the jurisdictional authority of the state over
such corporations.
22

Batas Pambansa Blg. 68, otherwise known as "The Corporation Code of the Philippines," is silent as to
what constitutes doing" or "transacting" business in the Philippines. Fortunately, jurisprudence has
supplied the deficiency and has held that the term "implies a continuity of commercial dealings and
arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of
some of the functions normally incident to, and in progressive prosecution of, the purpose and object
for which the corporation was organized."
23
In Mentholatum Co. Inc., vs. Mangaliman,
24
this Court laid
down the test to determine whether a foreign company is "doing business," thus:
" x x x The true test, however, seems to be whether the foreign corporation is continuing the body or
substance of the business or enterprise for which it was organized or whether it has substantially
retired from it and turned it over to another. (Traction Cos. vs. Collectors of Int. Revenue [C.C.A., Ohio],
223 F. 984,987.) x x x."
The traditional case law definition has metamorphosed into a statutory definition, having been adopted
with some qualifications in various pieces of legislation in our jurisdiction. For instance, Republic Act No.
7042, otherwise known as the "Foreign Investment Act of 1991," defines "doing business" as follows:
"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
eight(y) (180) days or more; participating in the management, supervision or control of any domestic
business, firm, entity, or corporation in the Philippines; and any other act or acts that imply a continuity
of commercial dealings or arrangements, and contemplate to that extent the performance of acts or
works; or the exercise of some of the functions normally incident to, and in progressive prosecution
of, commercial gain or of the purpose and object of the business organization; 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." (Emphasis supplied)
25

Likewise, Section 1 of Republic Act No. 5455,
26
provides that:
"SECTION. 1. Definition and scope of this Act. - (1) x x x the phrase doing business shall include soliciting
orders, purchases, service contracts, opening offices, whether called liaison offices or branches;
appointing representatives or distributors who are domiciled in the Philippines or who in any calendar
year stay in the Philippines for a period or periods totaling one hundred eighty days or more;
participating in the management, supervision or control of any domestic business firm, entity or
corporation in the Philippines; and any other act or acts that imply a continuity of commercial dealings
or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of
some of the functions normally incident to, and in progressive prosecution of, commercial gain or of
the purpose and object of the business organization."
There are other statutes
27
defining the term "doing business" in the same tenor as those above-quoted,
and as may be observed, one common denominator among them all is the concept of "continuity."
In the case at bar, the Court of Appeals categorized as "doing business" petitioners participation under
the "Assignment Agreement" and the "Deed of Assignment." This is simply untenable. The expression
"doing business" should not be given such a strict and literal construction as to make it apply to any
corporate dealing whatever.
28
At this early stage and with petitioners acts or transactions limited to the
assignment contracts, it cannot be said that it had performed acts intended to continue the business for
which it was organized. It may not be amiss to point out that the purpose or business for which
petitioner was organized is not discernible in the records. No effort was exerted by the Court of
Appeals to establish the nexus between petitioners business and the acts supposed to constitute
"doing business." Thus, whether the assignment contracts were incidental to petitioners business or
were continuation thereof is beyond determination. We cannot apply the case cited by the Court of
Appeals, Far East Intl Import and Export Corp. vs. Nankai Kogyo Co., Ltd.,
29
which held that a single act
may still constitute "doing business" if "it is not merely incidental or casual, but is of such character as
distinctly to indicate a purpose on the part of the foreign corporation to do other business in the state."
In said case, there was an express admission from an official of the foreign corporation that he was sent
to the Philippines to look into the operation of mines, thereby revealing the foreign corporations desire
to continue engaging in business here. But in the case at bar, there is no evidence of similar desire or
intent. Unarguably, petitioner may, as the Court of Appeals suggested, decide to operate Marcoppers
mining business, but, of course, at this stage, that is a mere speculation. Or it may decide to sell the
credit secured by the mining properties to an offshore investor, in which case the acts will still be
isolated transactions. To see through the present facts an intention on the part of petitioner to start a
series of business transaction is to rest on assumptions or probabilities falling short of actual proof.
Courts should never base its judgments on a state of facts so inadequately developed that it cannot be
determined where inference ends and conjecture begins.
Indeed, the Court of Appeals holding that petitioner was determined to be "doing business" in the
Philippines is based mainly on conjectures and speculation. In concluding that the "unmistakable
intention" of petitioner is to continue Marcoppers business, the Court of Appeals hangs on the wobbly
premise that "there is no other way for petitioner to recover its huge financial investments which it
poured into Marcoppers rehabilitation without it (petitioner) continuing Marcoppers business in the
country."
30
This is a mere presumption. Absent overt acts of petitioner from which we may directly infer
its intention to continue Marcoppers business, we cannot give our concurrence. Significantly, a view
subscribed upon by many authorities is that the mere ownership by a foreign corporation of a property
in a certain state, unaccompanied by its active use in furtherance of the business for which it was
formed, is insufficient in itself to constitute doing business.
31
In Chittim vs. Belle Fourche Bentonite
Products Co.,
32
it was held that even if a foreign corporation purchased and took conveyances of a
mining claim, did some assessment work thereon, and endeavored to sell it, its acts will not constitute
the doing of business so as to subject the corporation to the statutory requirements for the
transacting of business. On the same vein, petitioner, a foreign corporation, which becomes the
assignee of mining properties, facilities and equipment cannot be automatically considered as doing
business, nor presumed to have the intention of engaging in mining business.
One important point. Long before petitioner assumed Marcoppers debt to ADB and became their
assignee under the two assignment contracts, there already existed a "Support and Standby Credit
Agreement" between ADB and Placer Dome whereby the latter bound itself to provide cash flow
support for Marcoppers payment of its obligations to ADB. Plainly, petitioners payment of US$
18,453,450.12 to ADB was more of a fulfillment of an obligation under the "Support and Standby Credit
Agreement" rather than an investment. That petitioner had to step into the shoes of ADB as
Marcoppers creditor was just a necessary legal consequence of the transactions that transpired. Also,
we must hasten to add that the "Support and Standby Credit Agreement" was executed four (4) years
prior to Marcoppers insovency, hence, the alleged "intention of petitioner to continue Marcoppers
business" could have no basis for at that time, Marcoppers fate cannot yet be determined.
In the final analysis, we are convinced that petitioner was engaged only in isolated acts or transactions.
Single or isolated acts, contracts, or transactions of foreign corporations are not regarded as a doing or
carrying on of business. Typical examples of these are the making of a single contract, sale, sale with the
taking of a note and mortgage in the state to secure payment therefor, purchase, or note, or the mere
commission of a tort.
33
In these instances, there is no purpose to do any other business within the
country.
II
Solidbank contends that from the chronology and timing of events, it is evident that there existed a pre-
set pattern of response on the part of Marcopper to defeat whatever court ruling that may be rendered
in favor of Solidbank.
We are not convinced.
While it may appear, at initial glance, that the assignment contracts are in the nature of fraudulent
conveyances, however, a closer look at the events that transpired prior to the execution of those
contracts gives rise to a different conclusion. The obvious flaw in the Court of Appeals Decision lies in its
constricted view of the facts obtaining in the case. In its factual narration, the Court of Appeals definitely
left out some events. We shall see later the significance of those events.
Article 1387 of the Civil Code of the Philippines provides:
"Art. 1387. All contracts by virtue of which the debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of creditors, when the donor did not reserve sufficient
property to pay all debts contracted before the donation.
Alienations by onerous title are also presumed fraudulent when made by persons against whom some
judgment has been rendered in any instance or some writ of attachment has been issued. The
decision or attachment need not refer to the property alienated, and need not have been obtained by
the party seeking rescission.
In addition to these presumptions, the design to defraud creditors may be proved in any other manner
recognized by law and of evidence.
This article presumes the existence of fraud made by a debtor. Thus, in the absence of satisfactory
evidence to the contrary, an alienation of a property will be held fraudulent if it is made after a
judgment has been rendered against the debtor making the alienation.
34
This presumption of fraud is
not conclusive and may be rebutted by satisfactory and convincing evidence. All that is necessary is to
establish affirmatively that the conveyance is made in good faith and for a sufficient and valuable
consideration.
35

The "Assignment Agreement" and the "Deed of Assignment" were executed for valuable considerations.
Patent from the "Assignment Agreement" is the fact that petitioner assumed the payment of US$
18,453,450.12 to ADB in satisfaction of Marcoppers remaining debt as of March 20, 1997.
36
Solidbank
cannot deny this fact considering that a substantial portion of the said payment, in the sum of US$
13,886,791.06, was remitted in favor of the Bank of Nova Scotia, its major stockholder.
37

The facts of the case so far show that the assignment contracts were executed in good faith. The
execution of the "Assignment Agreement" on March 20, 1997 and the "Deed of Assignment" on
December 8,1997 is not the alphaof this case. While the execution of these assignment contracts almost
coincided with the rendition on May 7, 1997 of the Partial Judgment in Civil Case No. 96-80083 by the
Manila RTC, however, there was no intention on the part of petitioner to defeat Solidbanks claim. It
bears reiterating that as early as November 4, 1992, Placer Dome had already bound itself under a
"Support and Standby Credit Agreement" to provide Marcopper with cash flow support for the payment
to ADB of its obligations. When Marcopper ceased operations on account of disastrous mine tailings spill
into the Boac River and ADB pressed for payment of the loan, Placer Dome agreed to have its subsidiary,
herein petitioner, paid ADB the amount of US $18,453,450.12. Thereupon, ADB and Marcopper
executed, respectively, in favor of petitioner an "Assignment Agreement" and a "Deed of Assignment."
Obviously, the assignment contracts were connected with transactions that happened long before the
rendition in 1997 of the Partial Judgment in Civil Case No. 96-80083 by the Manila RTC. Those contracts
cannot be viewed in isolation. If we may add, it is highly inconceivable that ADB, a reputable
international financial organization, will connive with Marcopper to feign or simulate a contract in 1992
just to defraud Solidbank for its claim four years thereafter. And it is equally incredible for petitioner to
be paying the huge sum of US $ 18,453,450.12 to ADB only for the purpose of defrauding Solidbank of
the sum of P52,970,756.89.
It is said that the test as to whether or not a conveyance is fraudulent is -- does it prejudice the rights of
creditors?
38
We cannot see how Solidbanks right was prejudiced by the assignment contracts
considering that substantially all of Marcoppers properties were already covered by the registered
"Deed of Real Estate and Chattel Mortgage" executed by Marcopper in favor of ADB as early as
November 11, 1992. As such, Solidbank cannot assert a better right than ADB, the latter being a
preferred creditor. It is basic that mortgaged properties answer primarily for the mortgaged credit, not
for the judgment credit of the mortgagors unsecured creditor. Considering that petitioner assumed
Marcoppers debt to ADB, it follows that Solidbanks right as judgment creditor over the subject
properties must give way to that of the former.1wphi1.nt
III
The record is lacking in circumstances that would suggest that petitioner corporation, Placer Dome and
Marcopper are one and the same entity. While admittedly, petitioner is a wholly-owned subsidiary of
Placer Dome, which in turn, which, in turn, was then a minority stockholder of Marcopper, however, the
mere fact that a corporation owns all of the stocks of another corporation, taken alone is not
sufficient to justify their being treated as one entity. If used to perform legitimate functions, a
subsidiarys separate existence shall be respected, and the liability of the parent corporation as well as
the subsidiary will be confined to those arising in their respective business.
39

The recent case of Philippine National Bank vs. Ritratto Group Inc.,
40
outlines the circumstances which
are useful in the determination of whether a subsidiary is but a mere instrumentality of the parent-
corporation, to wit:
(a) The parent corporation owns all or most of the capital stock of the subsidiary.
(b) The parent and subsidiary corporations have common directors or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock of the subsidiary or otherwise causes its
incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other expenses or losses of the subsidiary.
(g) The subsidiary has substantially no business except with the parent corporation or no assets except
those conveyed to or by the parent corporation.
(h) In the papers of the parent corporation or in the statements of its officers, the subsidiary is described
as a department or division of the parent corporation, or its business or financial responsibility is
referred to as the parent corporations own.
(i) The parent corporation uses the property of the subsidiary as its own.
(j) The directors or executives of the subsidiary do not act independently in the interest of the
subsidiary, but take their orders from the parent corporation.
(k) The formal legal requirements of the subsidiary are not observed.
In this catena of circumstances, what is only extant in the records is the matter of stock ownership.
There are no other factors indicative that petitioner is a mere instrumentality of Marcopper or Placer
Dome. The mere fact that Placer Dome agreed, under the terms of the "Support and Standby Credit
Agreement" to provide Marcopper with cash flow support in paying its obligations to ADB, does not
mean that its personality has merged with that of Marcopper. This singular undertaking, performed by
Placer Dome with its own stockholders in Canada and elsewhere, is not a sufficient ground to merge its
corporate personality with Marcopper which has its own set of shareholders, dominated mostly by
Filipino citizens. The same view applies to petitioners payment of Marcoppers remaining debt to ADB.
With the foregoing considerations and the absence of fraud in the transaction of the three foreign
corporations, we find it improper to pierce the veil of corporate fiction that equitable doctrine
developed to address situations where the corporate personality of a corporation is abused or used for
wrongful purposes.
IV
On the issue of forum shopping, there could have been a violation of the rules thereon if petitioner and
Marcopper were indeed one and the same entity. But since petitioner has a separate personality, it has
the right to pursue its third-party claim by filing the independent reivindicatory action with the RTC of
Boac, Marinduque, pursuant to Rule 39, Section 16 of the 1997 Rules of Civil Procedures. This remedy
has been recognized in a long line of cases decided by this Court.
41
In Rodriguez vs. Court of
Appeals,
42
we held:
". . . It has long been settled in this jurisdiction that the claim of ownership of a third party over
properties levied for execution of a judgment presents no issue for determination by the court issuing
the writ of execution.
. . .Thus, when a property levied upon by the sheriff pursuant to a writ of execution is claimed by third
person in a sworn statement of ownership thereof, as prescribed by the rules, an entirely different
matter calling for a new adjudication arises. And dealing as it does with the all important question of
title, it is reasonable to require the filing of proper pleadings and the holding of a trial on the matter in
view of the requirements of due process.
. . . In other words, construing Section 17 of Rule 39 of the Revised Rules of Court (now Section 16 of the
1997 Rules of Civil Procedure), the rights of third-party claimants over certain properties levied upon by
the sheriff to satisfy the judgment may not be taken up in the case where such claims are presented but
in a separate and independent action instituted by the claimants." (Emphasis supplied)
This "reivindicatory action" has for its object the recovery of ownership or possession of the property
seized by the sheriff, despite the third party claim, as well as damages resulting therefrom, and it may
be brought against the sheriff and such other parties as may be alleged to have connived with him in the
supposedly wrongful execution proceedings, such as the judgment creditor himself. Such action is an
entirely separate and distinct action from that in which execution has been issued. Thus, there being
no identity of parties and cause of action between Civil Case No. 98-13 (RTC, Boac) and those cases filed
by Marcopper, including Civil Case No. 96-80083 (RTC, Manila) as to give rise to res judicata or litis
pendentia, Solidbanks allegation of forum-shopping cannot prosper.
43

All considered, we find petitioner to be entitled to the issuance of a writ of preliminary injunction.
Section 3, Rule 58 of the 1997 Rules of Civil Procedure provides:
"SEC. 3 Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when
it is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in
restraining the commission or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the acts or acts complained of during the
litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is procuring or
suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the
subject of the action or proceeding, and tending to render the judgment ineffectual."
Petitioners right to stop the further execution of the properties covered by the assignment contracts is
clear under the facts so far established. An execution can be issued only against a party and not against
one who did not have his day in court.
44
The duty of the sheriff is to levy the property of the judgment
debtor not that of a third person. For, as the saying goes, one mans goods shall not be sold for another
man's debts.
45
To allow the execution of petitioners properties would surely work injustice to it and
render the judgment on the reivindicatory action, should it be favorable, ineffectual. In Arabay, Inc., vs.
Salvador,
46
this Court held that an injunction is a proper remedy to prevent a sheriff from selling the
property of one person for the purpose of paying the debts of another; and that while the general rule is
that no court has authority to interfere by injunction with the judgments or decrees of another court of
equal or concurrent or coordinate jurisdiction, however, it is not so when a third-party claimant is
involved. We quote the instructive words of Justice Querube C. Makalintal in Abiera vs. Court of
Appeals,
47
thus:
"The rationale of the decision in the Herald Publishing Company case
48
is peculiarly applicable to the one
before Us, and removes it from the general doctrine enunciated in the decisions cited by the
respondents and quoted earlier herein.
1. Under Section 17 of Rule 39 a third person who claims property levied upon on execution may
vindicate such claim by action. Obviously a judgment rendered in his favor, that is, declaring him to be
the owner of the property, would not constitute interference with the powers or processes of the court
which rendered the judgment to enforce which the execution was levied. If that be so and it is so
because the property, being that of a stranger, is not subject to levy then an interlocutory order
such as injunction, upon a claim and prima facie showing of ownership by the claimant, cannot be
considered as such interference either."
WHEREFORE, the petition is GRANTED. The assailed Decision dated January 8, 1999 and the Resolution
dated March 29, 1999 of the Court of Appeals in CA G.R. No. 49226 are set aside. Upon filing of a bond
ofP1,000,000.00, respondent sheriffs are restrained from further implementing the writ of execution
issued in Civil Case No. 96-80083 by the RTC, Branch 26, Manila, until further orders from this Court. The
RTC, Branch 94, Boac, Marinduque, is directed to dispose of Civil Case No. 98-13 with dispatch.
SO ORDERED.
Melo, Vitug, Panganiban, and Carpio, JJ., concur.

G.R. No. 113074 January 22, 1997
ALFRED HAHN, petitioner,
vs.
COURT OF APPEALS and BAYERSCHE MOTOREN WERKE AKTIENGSELLSCHAFT (BMW), respondents.

MENDOZA, J.:
This is a petition for review of the decision
1
of the Court of Appeals dismissing a complaint for specific
performance which petitioner had filed against private respondent on the ground that the Regional Trial
Court of Quezon City did not acquire jurisdiction over private respondent, a nonresident foreign
corporation, and of the appellate court's order denying petitioner's motion for reconsideration.
The following are the facts:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style "Hahn-Manila." On
the other hand, private respondent Bayerische Motoren Werke Aktiengesellschaft (BMW) is a
nonresident foreign corporation existing under the laws of the former Federal Republic of Germany,
with principal office at Munich, Germany.
On March 7, 1967, petitioner executed in favor of private respondent a "Deed of Assignment with
Special Power of Attorney," which reads in full as follows:
WHEREAS, the ASSIGNOR is the present owner and holder of the BMW trademark and device in the
Philippines which ASSIGNOR uses and has been using on the products manufactured by ASSIGNEE, and
for which ASSIGNOR is the authorized exclusive Dealer of the ASSIGNEE in the Philippines, the same
being evidenced by certificate of registration issued by the Director of Patents on 12 December 1963
and is referred to as Trademark No. 10625;
WHEREAS, the ASSIGNOR has agreed to transfer and consequently record said transfer of the said BMW
trademark and device in favor of the ASSIGNEE herein with the Philippines Patent Office;
NOW THEREFORE, in view of the foregoing and in consideration of the stipulations hereunder stated,
the ASSIGNOR hereby affirms the said assignment and transfer in favor of the ASSIGNEE under the
following terms and conditions:
1. The ASSIGNEE shall take appropriate steps against any user other than ASSIGNOR or infringer of the
BMW trademark in the Philippines; for such purpose, the ASSIGNOR shall inform the ASSIGNEE
immediately of any such use or infringement of the said trademark which comes to his knowledge and
upon such information the ASSIGNOR shall automatically act as Attorney-In-Fact of the ASSIGNEE for
such case, with full power, authority and responsibility to prosecute unilaterally or in concert with
ASSIGNEE, any such infringer of the subject mark and for purposes hereof the ASSIGNOR is hereby
named and constituted as ASSIGNEE's Attorney-In-Fact, but any such suit without ASSIGNEE's consent
will exclusively be the responsibility and for the account of the ASSIGNOR,
2. That the ASSIGNOR and the ASSIGNEE shall continue business relations as has been usual in the past
without a formal contract, and for that purpose, the dealership of ASSIGNOR shall cover the ASSIGNEE's
complete production program with the only limitation that, for the present, in view of ASSIGNEE's
limited production, the latter shall not be able to supply automobiles to ASSIGNOR.
Per the agreement, the parties "continue[d] business relations as has been usual in the past without a
formal contract." But on February 16, 1993, in a meeting with a BMW representative and the president
of Columbia Motors Corporation (CMC), Jose Alvarez, petitioner was informed that BMW was arranging
to grant the exclusive dealership of BMW cars and products to CMC, which had expressed interest in
acquiring the same. On February 24, 1993, petitioner received confirmation of the information from
BMW which, in a letter, expressed dissatisfaction with various aspects of petitioner's business,
mentioning among other things, decline in sales, deteriorating services, and inadequate showroom and
warehouse facilities, and petitioner's alleged failure to comply with the standards for an exclusive BMW
dealer.
2
Nonetheless, BMW expressed willingness to continue business relations with the petitioner on
the basis of a "standard BMW importer" contract, otherwise, it said, if this was not acceptable to
petitioner, BMW would have no alternative but to terminate petitioner's exclusive dealership effective
June 30, 1993.
Petitioner protested, claiming that the termination of his exclusive dealership would be a breach of the
Deed of Assignment.
3
Hahn insisted that as long as the assignment of its trademark and device
subsisted, he remained BMW's exclusive dealer in the Philippines because the assignment was made in
consideration of the exclusive dealership. In the same letter petitioner explained that the decline in
sales was due to lower prices offered for BMW cars in the United States and the fact that few customers
returned for repairs and servicing because of the durability of BMW parts and the efficiency of
petitioner's service.
Because of Hahn's insistence on the former business relation, BMW withdrew on March 26, 1993 its
offer of a "standard importer contract" and terminated the exclusive dealer relationship effective June
30, 1993.
4
At a conference of BMW Regional Importers held on April 26, 1993 in Singapore, Hahn was
surprised to find Alvarez among those invited from the Asian region. On April 29, 1993, BMW proposed
that Hahn and CMC jointly import and distribute BMW cars and parts.
Hahn found the proposal unacceptable. On May 14, 1993, he filed a complaint for specific performance
and damages against BMW to compel it to continue the exclusive dealership. Later he filed an amended
complaint to include an application for temporary restraining order and for writs of preliminary,
mandatory and prohibitory injunction to enjoin BMW from terminating his exclusive dealership. Hahn's
amended complaint alleged in pertinent parts:
2. Defendant [BMW] is a foreign corporation doing business in the Philippines with principal offices at
Munich, Germany. It may be served with summons and other court processes through the Secretary of
the Department of Trade and Industry of the Philippines. . . .
xxx xxx xxx
5. On March 7, 1967, Plaintiff executed in favor of defendant BMW a Deed of Assignment with Special
Power of Attorney covering the trademark and in consideration thereof, under its first whereas clause,
Plaintiff was duly acknowledged as the "exclusive Dealer of the Assignee in the Philippines. . . .
xxx xxx xxx
8. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in the Philippines up to
the present, Plaintiff, through its firm name "HAHN MANILA" and without any monetary contribution
from defendant BMW, established BMW's goodwill and market presence in the Philippines. Pursuant
thereto, Plaintiff has invested a lot of money and resources in order to single-handedly compete against
other motorcycle and car companies. . . . Moreover, Plaintiff has built buildings and other infrastructures
such as service centers and showrooms to maintain and promote the car and products of defendant
BMW.
xxx xxx xxx
10. In a letter dated February 24, 1993, defendant BMW advised Plaintiff that it was willing to maintain
with Plaintiff a relationship but only "on the basis of a standard BMW importer contract as adjusted to
reflect the particular situation in the Philippines" subject to certain conditions, otherwise, defendant
BMW would terminate Plaintiffs exclusive dealership and any relationship for cause effective June 30,
1993. . . .
xxx xxx xxx
15. The actuations of defendant BMW are in breach of the assignment agreement between itself and
plaintiff since the consideration for the assignment of the BMW trademark is the continuance of the
exclusive dealership agreement. It thus, follows that the exclusive dealership should continue for so long
as defendant BMW enjoys the use and ownership of the trademark assigned to it by Plaintiff.
The case was docketed as Civil Case No. Q-93-15933 and raffled to Branch 104 of the Quezon City
Regional Trial Court, which on June 14, 1993 issued a temporary restraining order. Summons and copies
of the complaint and amended complaint were thereafter served on the private respondent through the
Department of Trade and Industry, pursuant to Rule 14, 14 of the Rules of Court. The order, summons
and copies of the complaint and amended complaint were later sent by the DTI to BMW via registered
mail on June 15, 1993
5
and received by the latter on June 24, 1993.
On June 17, 1993, without proof of service on BMW, the hearing on the application for the writ of
preliminary injunction proceeded ex parte, with petitioner Hahn testifying. On June 30, 1993, the trial
court issued an order granting the writ of preliminary injunction upon the filing of a bond of
P100,000.00. On July 13, 1993, following the posting of the required bond, a writ of preliminary
injunction was issued.
On July 1, 1993, BMW moved to dismiss the case, contending that the trial court did not acquire
jurisdiction over it through the service of summons on the Department of Trade and Industry, because it
(BMW) was a foreign corporation and it was not doing business in the Philippines. It contended that the
execution of the Deed of Assignment was an isolated transaction; that Hahn was not its agent because
the latter undertook to assemble and sell BMW cars and products without the participation of BMW and
sold other products; and that Hahn was an indentor or middleman transacting business in his own name
and for his own account.
Petitioner Alfred Hahn opposed the motion. He argued that BMW was doing business in the Philippines
through him as its agent, as shown by the fact that BMW invoices and order forms were used to
document his transactions; that he gave warranties as exclusive BMW dealer; that BMW officials
periodically inspected standards of service rendered by him; and that he was described in service
booklets and international publications of BMW as a "BMW Importer" or "BMW Trading Company" in
the Philippines.
The trial court
6
deferred resolution of the motion to dismiss until after trial on the merits for the reason
that the grounds advanced by BMW in its motion did not seem to be indubitable.
Without seeking reconsideration of the aforementioned order, BMW filed a petition for certiorari with
the Court of Appeals alleging that:
I. THE RESPONDENT JUDGE ACTED WITH UNDUE HASTE OR OTHERWISE INJUDICIOUSLY IN
PROCEEDINGS LEADING TOWARD THE ISSUANCE OF THE WRIT OF PRELIMINARY INJUNCTION, AND IN
PRESCRIBING THE TERMS FOR THE ISSUANCE THEREOF.
II. THE RESPONDENT JUDGE PATENTLY ERRED IN DEFERRING RESOLUTION OF THE MOTION TO DISMISS
ON THE GROUND OF LACK OF JURISDICTION, AND THEREBY FAILING TO IMMEDIATELY DISMISS THE
CASE A QUO.
BMW asked for the immediate issuance of a temporary restraining order and, after hearing, for a writ of
preliminary injunction, to enjoin the trial court from proceeding further in Civil Case No. Q-93-15933.
Private respondent pointed out that, unless the trial court's order was set aside, it would be forced to
submit to the jurisdiction of the court by filing its answer or to accept judgment in default, when the
very question was whether the court had jurisdiction over it.
The Court of Appeals enjoined the trial court from hearing petitioner's complaint. On December 20,
1993, it rendered judgment finding the trial court guilty of grave abuse of discretion in deferring
resolution of the motion to dismiss. It stated:
Going by the pleadings already filed with the respondent court before it came out with its questioned
order of July 26, 1993, we rule and so hold that petitioner's (BMW) motion to dismiss could be resolved
then and there, and that the respondent judge's deferment of his action thereon until after trial on the
merit constitutes, to our mind, grave abuse of discretion.
xxx xxx xxx
. . . [T]here is not much appreciable disagreement as regards the factual matters relating to the motion
to dismiss. What truly divide (sic) the parties and to which they greatly differ is the legal conclusions
they respectively draw from such facts, (sic) with Hahn maintaining that on the basis thereof, BMW is
doing business in the Philippines while the latter asserts that it is not.
Then, after stating that any ruling which the trial court might make on the motion to dismiss would
anyway be elevated to it on appeal, the Court of Appeals itself resolved the motion. It ruled that BMW
was not doing business in the country and, therefore, jurisdiction over it could not be acquired through
service of summons on the DTI pursuant to Rule 14, 14. 'The court upheld private respondent's
contention that Hahn acted in his own name and for his own account and independently of BMW, based
on Alfred Hahn's allegations that he had invested his own money and resources in establishing BMW's
goodwill in the Philippines and on BMW's claim that Hahn sold products other than those of BMW. It
held that petitioner was a mere indentor or broker and not an agent through whom private respondent
BMW transacted business in the Philippines. Consequently, the Court of Appeals dismissed petitioner's
complaint against BMW.
Hence, this appeal. Petitioner contends that the Court of Appeals erred (1) in finding that the trial court
gravely abused its discretion in deferring action on the motion to dismiss and (2) in finding that private
respondent BMW is not doing business in the Philippines and, for this reason, dismissing petitioner's
case.
Petitioner's appeal is well taken. Rule 14, 14 provides:
14. Service upon private foreign corporations. If the defendant is a foreign corporation, or a
nonresident joint stock company or association, doing business in the Philippines, service may be made
on its resident agent designated in accordance with law for that purpose, or, if there be no such agent,
on the government official designated by law to that effect, or on any of its officers or agents within the
Philippines. (Emphasis added).
What acts are considered "doing business in the Philippines" are enumerated in 3(d) of the Foreign
Investments Act of 1991 (R.A. No. 7042) as follows:
7

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; and any other act or acts that imply a continuity
of commercial dealings or arrangements, and contemplate to that extent the performance of acts or
works, or the exercise of some of the functions normally incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of the business organization: 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. (Emphasis supplied)
Thus, the phrase includes "appointing representatives or distributors in the Philippines" but not when
the representative or distributor "transacts business in its name and for its own account." In addition,
1(f)(1) of the Rules and Regulations implementing (IRR) the Omnibus Investment Code of 1987 (E.O.
No. 226) provided:
(f) "Doing business" shall be any act or combination of acts, enumerated in Article 44 of the Code. In
particular, "doing business" includes:
(1) . . . A foreign firm which does business through middlemen acting in their own names, such as
indentors, commercial brokers or commission merchants, shall not be deemed doing business in the
Philippines. But such indentors, commercial brokers or commission merchants shall be the ones deemed
to be doing business in the Philippines.
The question is whether petitioner Alfred Hahn is the agent or distributor in the Philippines of private
respondent BMW. If he is, BMW may be considered doing business in the Philippines and the trial court
acquired jurisdiction over it (BMW) by virtue of the service of summons on the Department of Trade and
Industry. Otherwise, if Hahn is not the agent of BMW but an independent dealer, albeit of BMW cars
and products, BMW, a foreign corporation, is not considered doing business in the Philippines within the
meaning of the Foreign Investments Act of 1991 and the IRR, and the trial court did not acquire
jurisdiction over it (BMW).
The Court of Appeals held that petitioner Alfred Hahn acted in his own name and for his own account
and not as agent or distributor in the Philippines of BMW on the ground that "he alone had contacts
with individuals or entities interested in acquiring BMW vehicles. Independence characterizes Hahn's
undertakings, for which reason he is to be considered, under governing statutes, as doing business." (p.
13) In support of this conclusion, the appellate court cited the following allegations in Hahn's amended
complaint:
8. From the time the trademark "BMW & DEVICE" was first used by the Plaintiff in the Philippines up to
the present, Plaintiff, through its firm name "HAHN MANILA" and without any monetary contributions
from defendant BMW, established BMW's goodwill and market presence in the Philippines. Pursuant
thereto, Plaintiff invested a lot of money and resources in order to single-handedly compete against
other motorcycle and car companies. . . . Moreover, Plaintiff has built buildings and other infrastructures
such as service centers and showrooms to maintain and promote the car and products of defendant
BMW.
As the above quoted allegations of the amended complaint show, however, there is nothing to support
the appellate court's finding that Hahn solicited orders alone and for his own account and without
"interference from, let alone direction of, BMW." (p. 13) To the contrary, Hahn claimed he took orders
for BMW cars and transmitted them to BMW. Upon receipt of the orders, BMW fixed the downpayment
and pricing charges, notified Hahn of the scheduled production month for the orders, and reconfirmed
the orders by signing and returning to Hahn the acceptance sheets. Payment was made by the buyer
directly to BMW. Title to cars purchased passed directly to the buyer and Hahn never paid for the
purchase price of BMW cars sold in the Philippines. Hahn was credited with a commission equal to 14%
of the purchase price upon the invoicing of a vehicle order by BMW. Upon confirmation in writing that
the vehicles had been registered in the Philippines and serviced by him, Hahn received an additional 3%
of the full purchase price. Hahn performed after-sale services, including warranty services, for which he
received reimbursement from BMW. All orders were on invoices and forms of BMW.
8

These allegations were substantially admitted by BMW which, in its petition for certiorari before the
Court of Appeals, stated:
9

9.4. As soon as the vehicles are fully manufactured and full payment of the purchase prices are made,
the vehicles are shipped to the Philippines. (The payments may be made by the purchasers or third-
persons or even by Hahn.) The bills of lading are made up in the name of the purchasers, but Hahn-
Manila is therein indicated as the person to be notified.
9.5. It is Hahn who picks up the vehicles from the Philippine ports, for purposes of conducting pre-
delivery inspections. Thereafter, he delivers the vehicles to the purchasers.
9.6. As soon as BMW invoices the vehicle ordered, Hahn is credited with a commission of fourteen
percent (14%) of the full purchase price thereof, and as soon as he confirms in writing that the vehicles
have been registered in the Philippines and have been serviced by him, he will receive an additional
three percent (3%) of the full purchase prices as commission.
Contrary to the appellate court's conclusion, this arrangement shows an agency. An agent receives a
commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely
by bringing the buyer and the seller together, even if no sale is eventually made.
As to the service centers and showrooms which he said he had put up at his own expense, Hahn said
that he had to follow BMW specifications as exclusive dealer of BMW in the Philippines. According to
Hahn, BMW periodically inspected the service centers to see to it that BMW standards were maintained.
Indeed, it would seem from BMW's letter to Hahn that it was for Hahn's alleged failure to maintain
BMW standards that BMW was terminating Hahn's dealership.
The fact that Hahn invested his own money to put up these service centers and showrooms does not
necessarily prove that he is not an agent of BMW. For as already noted, there are facts in the record
which suggest that BMW exercised control over Hahn's activities as a dealer and made regular
inspections of Hahn's premises to enforce compliance with BMW standards and specifications.
10
For
example, in its letter to Hahn dated February 23, 1996, BMW stated:
In the last years we have pointed out to you in several discussions and letters that we have to tackle the
Philippine market more professionally and that we are through your present activities not adequately
prepared to cope with the forthcoming challenges.
11

In effect, BMW was holding Hahn accountable to it under the 1967 Agreement.
This case fits into the mould of Communications Materials, Inc. v. Court of Appeals,
12
in which the
foreign corporation entered into a "Representative Agreement" and a "Licensing Agreement" with a
domestic corporation, by virtue of which the latter was appointed "exclusive representative" in the
Philippines for a stipulated commission. Pursuant to these contracts, the domestic corporation sold
products exported by the foreign corporation and put up a service center for the products sold locally.
This Court held that these acts constituted doing business in the Philippines. The arrangement showed
that the foreign corporation's purpose was to penetrate the Philippine market and establish its presence
in the Philippines.
In addition, BMW held out private respondent Hahn as its exclusive distributor in the Philippines, even
as it announced in the Asian region that Hahn was the "official BMW agent" in the Philippines.
13

The Court of Appeals also found that petitioner Alfred Hahn dealt in other products, and not exclusively
in BMW products, and, on this basis, ruled that Hahn was not an agent of BMW. (p. 14) This finding is
based entirely on allegations of BMW in its motion to dismiss filed in the trial court and in its petition
for certiorari before the Court of Appeals.
14
But this allegation was denied by Hahn
15
and therefore the
Court of Appeals should not have cited it as if it were the fact.
Indeed this is not the only factual issue raised, which should have indicated to the Court of Appeals the
necessity of affirming the trial court's order deferring resolution of BMW's motion to dismiss. Petitioner
alleged that whether or not he is considered an agent of BMW, the fact is that BMW did business in the
Philippines because it sold cars directly to Philippine buyers.
16
This was denied by BMW, which claimed
that Hahn was not its agent and that, while it was true that it had sold cars to Philippine buyers, this was
done without solicitation on its part.
17

It is not true then that the question whether BMW is doing business could have been resolved simply by
considering the parties' pleadings. There are genuine issues of facts which can only be determined on
the basis of evidence duly presented. BMW cannot short circuit the process on the plea that to compel it
to go to trial would be to deny its right not to submit to the jurisdiction of the trial court which precisely
it denies. Rule 16, 3 authorizes courts to defer the resolution of a motion to dismiss until after the trial
if the ground on which the motion is based does not appear to be indubitable. Here the record of the
case bristles with factual issues and it is not at all clear whether some allegations correspond to the
proof.
Anyway, private respondent need not apprehend that by responding to the summons it would be
waiving its objection to the trial court's jurisdiction. It is now settled that, for purposes of having
summons served on a foreign corporation in accordance with Rule 14, 14, it is sufficient that it be
alleged in the complaint that the foreign corporation is doing business in the Philippines. The court need
not go beyond the allegations of the complaint in order to determine whether it has Jurisdiction.
18
A
determination that the foreign corporation is doing business is only tentative and is made only for the
purpose of enabling the local court to acquire jurisdiction over the foreign corporation through service
of summons pursuant to Rule 14, 14. Such determination does not foreclose a contrary finding should
evidence later show that it is not transacting business in the country. As this Court has explained:
This is not to say, however, that the petitioner's right to question the jurisdiction of the court over its
person is now to be deemed a foreclosed matter. If it is true, as Signetics claims, that its only
involvement in the Philippines was through a passive investment in Sigfil, which it even later disposed
of, and that TEAM Pacific is not its agent, then it cannot really be said to be doing business in the
Philippines. It is a defense, however, that requires the contravention of the allegations of the complaint,
as well as a full ventilation, in effect, of the main merits of the case, which should not thus be within the
province of a mere motion to dismiss. So, also, the issue posed by the petitioner as to whether a foreign
corporation which has done business in the country, but which has ceased to do business at the time of
the filing of a complaint, can still be made to answer for a cause of action which accrued while it was
doing business, is another matter that would yet have to await the reception and admission of evidence.
Since these points have seasonably been raised by the petitioner, there should be no real cause for what
may understandably be its apprehension,i.e., that by its participation during the trial on the merits, it
may, absent an invocation of separate or independent reliefs of its own, be considered to have
voluntarily submitted itself to the court's jurisdiction.
19

Far from committing an abuse of discretion, the trial court properly deferred resolution of the motion to
dismiss and thus avoided prematurely deciding a question which requires a factual basis, with the same
result if it had denied the motion and conditionally assumed jurisdiction. It is the Court of Appeals
which, by ruling that BMW is not doing business on the basis merely of uncertain allegations in the
pleadings, disposed of the whole case with finality and thereby deprived petitioner of his right to be
heard on his cause of action. Nor was there justification for nullifying the writ of preliminary injunction
issued by the trial court. Although the injunction was issued ex parte, the fact is that BMW was
subsequently heard on its defense by filing a motion to dismiss.
WHEREFORE, the decision of the Court of Appeals is REVERSED and the case is REMANDED to the trial
court for further proceedings.
SO ORDERED.
Regalado, Romero, Puno and Torres, Jr., JJ., concur.

G.R. Nos. 121576-78 June 16, 2000
BANCO DO BRASIL, petitioner,
vs.
THE COURT OF APPEALS, HON. ARSENIO M. GONONG, and CESAR S. URBINO, SR., respondents.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision
1
and the Resolution
2
of the Court of
Appeals
3
dated July 19, 1993 and August 15, 1995, respectively, which reinstated the entire
Decision
4
dated February 18, 1991 of the Regional Trial Court of Manila, Branch 8, holding, among
others, petitioner Banco do Brasil liable to private respondent Cesar Urbino, Sr. for damages amounting
to $300,000.00.
5

At the outset, let us state that this case should have been consolidated with the recently decided case
of Vlason Enterprises Corporation v. Court of Appeals and Duraproof Services, represented by its General
Manager, Cesar Urbino Sr.
6
, for these two (2) cases involved the same material antecedents, though the
main issue proffered in the present petition vary with the Vlason case.
The material antecedents, as quoted from the Vlason
7
case, are:
Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport Company of
Honduras & Panama, a Panamanian Company (hereafter referred to as Omega), requested permission
for its vessel M/V Star Ace, which had engine trouble, to unload its cargo and to store it at the Philippine
Ports Authority (PPA) compound in San Fernando, La Union while awaiting transhipment to Hongkong.
The request was approved by the Bureau of Customs.
8
Despite the approval, the customs personnel
boarded the vessel when it docked on January 7, 1989, on suspicion that it was the hijacked M/V Silver
Med owned by Med Line Philippines Co., and that its cargo would be smuggled into the country.
9
The
district customs collector seized said vessel and its cargo pursuant to Section 2301, Tariff and Customs
Code. A notice of hearing of SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong
Trading Co. of Hongkong, and its shipper, Dusit International Co., Ltd. of Thailand.
While seizure proceedings were ongoing, La Union was hit by three typhoons, and the vessel ran
aground and was abandoned. On June 8, 1989, its authorized representative, Frank Cadacio, entered
into salvage agreement with private respondent to secure and repair the vessel at the agreed
consideration of $1 million and "fifty percent (50%) [of] the cargo after all expenses, cost and taxes."
10

Finding that no fraud was committed, the District Collector of Customs, Aurelio M. Quiray, lifted the
warrant of seizure on July 1989.
11
However, in a Second Indorsement dated November 11, 1989, then
Customs Commissioner Salvador M. Mison declined to issue a clearance for Quiray's Decision; instead,
he forfeited the vessel and its cargo in accordance with Section 2530 of the Tariff and Customs
Code.
12
Accordingly, acting District Collector of Customs John S. Sy issued a Decision decreeing the
forfeiture and the sale of the cargo in favor of the government.
13

To enforce its preferred salvor's lien, herein Private Respondent Duraproof Services filed with the
Regional Trial Court of Manila a Petition for Certiorari, Prohibition and Mandamus
14
assailing the actions
of Commissioner Mison and District Collector Sy. Also impleaded as respondents were PPA
Representative Silverio Mangaoang and Med Line Philippines, Inc.
On January 10, 1989, private respondent amended its Petition
15
to include former District Collector
Quiray; PPA Port Manager Adolfo Ll. Amor, Jr.; x Vlason Enterprises as represented by its president,
Vicente Angliongto; Singkong Trading Company as represented by Atty. Eddie Tamondong; Banco Du
Brasil; Dusit International Co.; Thai-Nan Enterprises Ltd., and Thai-United Trading Co., Ltd.
16
. . .
Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Line Philippines:
Anglionto (through his secretary, Betty Bebero), Atty. Tamondong and Commissioner Mison.
17
Upon
motion of the private respondent, the trial court allowed summons by publication to be served upon
defendants who were not residents and had no direct representative in the country.
18

On January 29, 1990, private respondent moved to declare respondents in default, but the trial court
denied the motion in its February 23, 1990 Order
19
, because Mangaoang and Amor had jointly filed a
Motion to Dismiss, while Mison and Med Line had moved separately for an extension to file a similar
motion.
20
Later it rendered an Order dated July 2, 1990, giving due course to the motions to dismiss
filed by Mangaoang and Amor on the ground of litis pendentia, and by the commissioner and district
collector of customs on the ground of lack of jurisdiction.
21
In another Order, the trial court dismissed
the action against Med Line Philippines on the ground oflitis pendentia.
22

On two other occasions, private respondent again moved to declare the following in default: [Vlason],
Quiray, Sy and Mison on March 26, 1990;
23
and Banco [do] Bra[s]il, Dusit International Co., Inc., Thai-
Nan Enterprises Ltd. and Thai-United Trading Co., Ltd. on August 24, 1990.
24
There is no record,
however, that the trial court acted upon the motions. On September 18, 1990, [private respondent] filed
another Motion for leave to amend the petition,
25
alleging that its counsel failed to include "necessary
and/or indispensable parties": Omega represented by Cadacio; and M/V Star Ace represented by Capt.
Nahon Rada, relief captain. Aside from impleading these additional respondents, private respondent
also alleged in the Second (actually, third) Amended Petition
26
that the owners of the vessel intended to
transfer and alienate their rights and interest over the vessel and its cargo, to the detriment of the
private respondent.
The trial court granted leave to private respondent to amend its Petition, but only to exclude the
customs commissioner and the district collector.
27
Instead, private respondent filed the "Second
Amended Petition with Supplemental Petition" against Singkong Trading Company; and Omega and M/V
Star Ace,
28
to which Cadacio and Rada filed a Joint Answer.
29

Declared in default in an Order issued by the trial court on January 23, 1991, were the following:
Singkong Trading Co., Commissioner Mison, M/V Star Ace and Omega.
30
Private respondent filed, and
the trial court granted, an ex parte Motion to present evidence against the defaulting
respondents.
31
Only private respondent, Atty. Tamondong, Commissioner Mison, Omega and M/V Star
Ace appeared in the next pretrial hearing; thus, the trial court declared the other respondents in default
and allowed private respondent to present evidence against them.
32
Cesar Urbino, general manager of
private respondent, testified and adduced evidence against the other respondents, . . .
33

On December 29, 1990, private respondent and Rada, representing Omega, entered into a
Memorandum of Agreement stipulating that Rada would write and notify Omega regarding the demand
for salvage fees of private respondent; and that if Rada did not receive any instruction from his principal,
he would assign the vessel in favor of the salvor.
34

On February 18, 1991, the trial court disposed as follows:
WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence adduced,
both testimonial and documentary, the Court is convinced, that, indeed, defendants/respondents are
liable to [private respondent] in the amount as prayed for in the petition for which it renders judgment
as follows:
1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief [c]aptain of the vessel and
Omega Sea Transport Company, Inc., represented by Frank Cadacio[,] is ordered to refrain from
alienating or [transferring] the vessel M/V Star Ace to any third parties;
2. Singkong Trading Company to pay the following:
a. Taxes due the government;
b. Salvage fees on the vessel in the amount of $1,000,000.00 based on . . . Lloyd's Standard Form of
Salvage Agreement;
c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00;
d. Maintenance fees in the amount of P2,685,000.00;
e. Salaries of the crew from August 16, 1989 to December 1989 in the amount of $43,000.00 and unpaid
salaries from January 1990 up to the present;
f. Attorney's fees in the amount of P656,000.00;
3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000.00 for damages;
4. Banco [Du] Brasil to pay [private respondent] in the amount of $300,000.00 in damages;
35
and finally,
5. Costs of [s]uit.
Subsequently, upon the motion of Omega, Singkong Trading Co., and private respondent, the trial court
approved a Compromise Agreement
36
among the movants, reducing by 20 percent the amounts
adjudged. For their part, respondents-movants agreed not to appeal the Decision.
37
On March 8, 1991,
private respondent moved for the execution of judgment, claiming that the trial court Decision had
already become final and executory. The Motion was granted and a Writ of Execution was issued. To
satisfy the Decision, Sheriffs Jorge Victorino, Amado Sevilla and Dionisio Camagon were deputized on
March 13, 1991 to levy and to sell on execution the defendants vessel and personal property.
x x x x x x x x x
On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the execution, and to
quash the notice of levy and the sale on execution. Despite this Motion, the auction sale was conducted
on March 21, 1991 by Sheriff Camagon, with private respondent submitting the winning bid. The trial
court ordered the deputy sheriffs to cease and desist from implementing the Writ of Execution and from
levying on the personal property of the defendants. Nevertheless, Sheriff Camagon issued the
corresponding Certificate of Sale on March 27, 1991.
On April 10, 1991, petitioner Banco do Brasil filed, by special appearance, an Urgent Motion to Vacate
Judgement and to Dismiss Case
38
on the ground that the February 18, 1991 Decision of the trial court is
void with respect to it for having been rendered without validly acquiring jurisdiction over the person of
Banco do Brasil. Petitioner subsequently amended its petition
39
to specifically aver that its special
appearance is solely for the purpose of questioning the Court's exercise of personal jurisdiction.
On May 20, 1991, the trial court issued an Order
40
acting favorably on petitioner's motion and set aside
as against petitioner the decision dated February 18, 1991 for having been rendered without jurisdiction
over Banco do Brasil's person. Private respondent sought reconsideration
41
of the Order dated May 20,
1991. However, the trial court in an Order
42
dated June 21, 1991 denied said motion.
Meanwhile, a certiorari petition
43
was filed by private respondent before public respondent Court of
Appeals seeking to nullify the cease and desist Order dated April 5, 1991 issued by Judge Arsenio M.
Gonong. Two (2) more separate petitions for certiorari were subsequently filed by private respondent.
The second petition
44
sought to nullify the Order
45
dated June 26, 1992 setting aside the Deputy
Sheriff's return dated April 1, 1991 as well as the certificate of sale issued by Deputy Sheriff Camagon.
The third petition
46
sought to nullify the Order dated October 5, 1992 of the Court of Tax Appeals
directing the Commissioner of Customs to place Bureau of Customs and PNP officers and guards to
secure the M/V Star Ace and its cargoes, make inventory of the goods stored in the premises as
indicated to belong to the private respondent. Likewise challenged was the Order dated August 17, 1992
authorizing the sale of M/V Star Ace and its cargoes.
These three (3) petitions were consolidated and on July 19, 1993, the appellate court rendered its
Decision
47
granting private respondent's petitions, thereby nullifying and setting aside the disputed
orders and effectively "giving way to the entire decision dated February 18, 1991 of the . . . Regional Trial
Court of Manila, Branch 8, in Civil Case No. 89-51451 which remains valid, final and executory, if not yet
wholly executed."
48

Private respondent Urbino, Vlason Enterprises and petitioner Banco do Brasil filed separate motions for
reconsideration. For its part, petitioner Banco do Brasil sought reconsideration, insofar as its liability for
damages, on the ground that there was no valid service of summons as service was on the wrong party
the ambassador of Brazil. Hence, it argued, the trial court did not acquire jurisdiction over petitioner
Banco do Brasil.
49
Nonetheless, the appellate court denied the motions for reconsideration in its
Resolution
50
dated August 15, 1995.
Hence, the instant petition.
Petitioner Banco do Brasil takes exception to the appellate court's declaration that the suit below is in
rem, not in personam,
51
thus, service of summons by publication was sufficient for the court to acquire
jurisdiction over the person of petitioner Banco do Brasil, and thereby liable to private respondent Cesar
Urbino for damages claimed, amounting to $300,000.00. Petitioner further challenges the finding that
the February 18, 1991 decision of the trial court was already final and thus, cannot be modified or
assailed.
52

Petitioner avers that the action filed against it is an action for damages, as such it is an action in
personam which requires personal service of summons be made upon it for the court to acquire
jurisdiction over it. However, inasmuch as petitioner Banco do Brasil is a non-resident foreign
corporation, not engaged in business in the Philippines, unless it has property located in the Philippines
which may be attached to convert the action into an action in rem, the court cannot acquire jurisdiction
over it in respect of an action in personam.
The petition bears merit, thus the same should be as it is hereby granted.
First. When the defendant is a nonresident and he is not found in the country, summons may be served
extraterritorially in accordance with Rule 14, Section 17
53
of the Rules of Court. Under this provision,
there are only four (4) instances when extraterritorial service of summons is proper, namely: "(1) when
the action affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of
which is property, within the Philippines, in which the defendant claims a lien or interest, actual or
contingent; (3) when the relief demanded in such action consists, wholly or in part, in excluding the
defendant from any interest in property located in the Philippines; and (4) when the defendant non-
resident's property has been attached within the Philippines."
54
In these instances, service of summons
may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with
leave of court; or (c) any other manner the court may deem sufficient.
55

Clear from the foregoing, extrajudicial service of summons apply only where the action is in rem, an
action against the thing itself instead of against the person, or in an action quasi in rem, where an
individual is named as defendant and the purpose of the proceeding is to subject his interest therein to
the obligation or loan burdening the property. This is so inasmuch as, in in rem and quasi in rem actions,
jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court
provided that the court acquires jurisdiction over the res.
56

However, where the action is in personam, one brought against a person on the basis of his personal
liability, jurisdiction over the person of the defendant is necessary for the court to validly try and decide
the case. When the defendant is a non-resident, personal service of summons within the state is
essential to the acquisition of jurisdiction over the person.
57
This cannot be done, however, if the
defendant is not physically present in the country, and thus, the court cannot acquire jurisdiction over
his person and therefore cannot validly try and decide the case against him.
58

In the instant case, private respondent's suit against petitioner is premised on petitioner's being one of
the claimants of the subject vessel M/V Star Ace.
59
Thus, it can be said that private respondent initially
sought only to exclude petitioner from claiming interest over the subject vessel M/V Star Ace. However,
private respondent testified during the presentation of evidence that, for being a nuisance defendant,
petitioner caused irreparable damage to private respondent in the amount of $300,000.00.
60
Therefore,
while the action is in rem, by claiming damages, the relief demanded went beyond the res and sought a
relief totally alien to the action.
It must be stressed that any relief granted in rem or quasi in rem actions must be confined to the res,
and the court cannot lawfully render a personal judgment against the defendant.
61
Clearly, the
publication of summons effected by private respondent is invalid and ineffective for the trial court to
acquire jurisdiction over the person of petitioner, since by seeking to recover damages from petitioner
for the alleged commission of an injury to his person or property
62
caused by petitioner's being a
nuisance defendant, private respondent's action became in personam. Bearing in mind the in
personam nature of the action, personal or, if not possible, substituted service of summons on
petitioner, and not extraterritorial service, is necessary to confer jurisdiction over the person of
petitioner and validly hold it liable to private respondent for damages. Thus, the trial court had no
jurisdiction to award damages amounting to $300,000.00 in favor of private respondent and as against
herein petitioner.1awphil
Second. We settled the issue of finality of the trial court's decision dated February 18, 1991 in the Vlason
case, wherein we stated that, considering the admiralty case involved multiple defendants, "each
defendant had a different period within which to appeal, depending on the date of receipt of
decision."
63
Only upon the lapse of the reglementary period to appeal, with no appeal perfected within
such period, does the decision become final and executory.
64

In the case of petitioner, its Motion to Vacate Judgment and to Dismiss Case was filed on April 10, 1991,
only six (6) days after it learned of the existence of the case upon being informed by the Embassy of the
Federative Republic of Brazil in the Philippines, on April 4, 1991, of the February 18, 1991
decision.
65
Thus, in the absence of any evidence on the date of receipt of decision, other than the
alleged April 4, 1991 date when petitioner learned of the decision, the February 18, 1991 decision of the
trial court cannot be said to have attained finality as regards the petitioner.
WHEREFORE, the subject petition is hereby GRANTED. The Decision and the Resolution of the Court of
Appeals dated July 19, 1993 and August 15, 1995, respectively, in CA-G.R. SP Nos. 24669, 28387 and
29317 are hereby REVERSED and SET ASIDE insofar as they affect petitioner Banco do Brasil. The Order
dated May 20, 1991 of the Regional Trial Court of Manila, Branch 8 in Civil Case No. 89-51451 is
REINSTATED.
SO ORDERED.1wphi1.nt
Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.

G.R. No. 120077 October 13, 2000
THE MANILA HOTEL CORP. AND MANILA HOTEL INTL. LTD., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ARBITER CEFERINA J. DIOSANA AND MARCELO G.
SANTOS,respondents.
PARDO, J.:
The case before the Court is a petition for certiorari
1
to annul the following orders of the National Labor
Relations Commission (hereinafter referred to as "NLRC") for having been issued without or with excess
jurisdiction and with grave abuse of discretion:
2

(1) Order of May 31, 1993.
3
Reversing and setting aside its earlier resolution of August 28, 1992.
4
The
questioned order declared that the NLRC, not the Philippine Overseas Employment Administration
(hereinafter referred to as "POEA"), had jurisdiction over private respondent's complaint;
(2) Decision of December 15, 1994.
5
Directing petitioners to jointly and severally pay private respondent
twelve thousand and six hundred dollars (US$ 12,600.00) representing salaries for the unexpired portion
of his contract; three thousand six hundred dollars (US$3,600.00) as extra four months salary for the
two (2) year period of his contract, three thousand six hundred dollars (US$3,600.00) as "14th month
pay" or a total of nineteen thousand and eight hundred dollars (US$19,800.00) or its peso equivalent
and attorney's fees amounting to ten percent (10%) of the total award; and
(3) Order of March 30, 1995.
6
Denying the motion for reconsideration of the petitioners.
In May, 1988, private respondent Marcelo Santos (hereinafter referred to as "Santos") was an overseas
worker employed as a printer at the Mazoon Printing Press, Sultanate of Oman. Subsequently, in June
1988, he was directly hired by the Palace Hotel, Beijing, People's Republic of China and later terminated
due to retrenchment.
Petitioners are the Manila Hotel Corporation (hereinafter referred to as "MHC") and the Manila Hotel
International Company, Limited (hereinafter referred to as "MHICL").
When the case was filed in 1990, MHC was still a government-owned and controlled corporation duly
organized and existing under the laws of the Philippines.
MHICL is a corporation duly organized and existing under the laws of Hong Kong.
7
MHC is an
"incorporator" of MHICL, owning 50% of its capital stock.
8

By virtue of a "management agreement"
9
with the Palace Hotel (Wang Fu Company Limited),
MHICL
10
trained the personnel and staff of the Palace Hotel at Beijing, China.
Now the facts.
During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent Santos
received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel,
Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended by one Nestor
Buenio, a friend of his.
Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly salary
and increased benefits. The position was slated to open on October 1, 1988.
11

On May 8, 1988, respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer.
On May 19, 1988, the Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment
contract to respondent Santos. Mr. Henk advised respondent Santos that if the contract was acceptable,
to return the same to Mr. Henk in Manila, together with his passport and two additional pictures for his
visa to China.
On May 30, 1988, respondent Santos resigned from the Mazoon Printing Press, effective June 30, 1988,
under the pretext that he was needed at home to help with the family's piggery and poultry business.
On June 4, 1988, respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's letter.
Respondent Santos enclosed four (4) signed copies of the employment contract (dated June 4, 1988)
and notified them that he was going to arrive in Manila during the first week of July 1988.
The employment contract of June 4, 1988 stated that his employment would commence September 1,
1988 for a period of two years.
12
It provided for a monthly salary of nine hundred dollars (US$900.00)
net of taxes, payable fourteen (14) times a year.
13

On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press.
On July 1, 1988, respondent Santos arrived in Manila.
On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace
Hotel.
14

Subsequently, respondent Santos signed an amended "employment agreement" with the Palace Hotel,
effective November 5, 1988. In the contract, Mr. Shmidt represented the Palace Hotel. The Vice
President (Operations and Development) of petitioner MHICL Miguel D. Cergueda signed the
employment agreement under the word "noted".
From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He returned to
China and reassumed his post on July 17, 1989.
On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten note
that respondent Santos be given one (1) month notice of his release from employment.
On August 10, 1989, the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt that
his employment at the Palace Hotel print shop would be terminated due to business reverses brought
about by the political upheaval in China.
15
We quote the letter:
16

"After the unfortunate happenings in China and especially Beijing (referring to Tiannamen Square
incidents), our business has been severely affected. To reduce expenses, we will not open/operate
printshop for the time being.
"We sincerely regret that a decision like this has to be made, but rest assured this does in no way reflect
your past performance which we found up to our expectations."
"Should a turnaround in the business happen, we will contact you directly and give you priority on
future assignment."
On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and paid all
benefits due him, including his plane fare back to the Philippines.
On October 3, 1989, respondent Santos was repatriated to the Philippines.
On October 24, 1989, respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt,
demanding full compensation pursuant to the employment agreement.
On November 11, 1989, Mr. Shmidt replied, to wit:
17

His service with the Palace Hotel, Beijing was not abruptly terminated but we followed the one-month
notice clause and Mr. Santos received all benefits due him.
"For your information the Print Shop at the Palace Hotel is still not operational and with a low business
outlook, retrenchment in various departments of the hotel is going on which is a normal management
practice to control costs.
"When going through the latest performance ratings, please also be advised that his performance was
below average and a Chinese National who is doing his job now shows a better approach.
"In closing, when Mr. Santos received the letter of notice, he hardly showed up for work but still enjoyed
free accommodation/laundry/meals up to the day of his departure."
On February 20, 1990, respondent Santos filed a complaint for illegal dismissal with the Arbitration
Branch, National Capital Region, National Labor Relations Commission (NLRC). He prayed for an award of
nineteen thousand nine hundred and twenty three dollars (US$19,923.00) as actual damages, forty
thousand pesos (P40,000.00) as exemplary damages and attorney's fees equivalent to 20% of the
damages prayed for. The complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as
respondents.
The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the
proceedings before the Labor Arbiter.
18

On June 27, 1991, Labor Arbiter Ceferina J. Diosana, decided the case against petitioners, thus:
19

"WHEREFORE, judgment is hereby rendered:
"1. directing all the respondents to pay complainant jointly and severally;
"a) $20,820 US dollars or its equivalent in Philippine currency as unearned salaries;
"b) P50,000.00 as moral damages;
"c) P40,000.00 as exemplary damages; and
"d) Ten (10) percent of the total award as attorney's fees.
"SO ORDERED."
On July 23, 1991, petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had jurisdiction
over the case.
On August 28, 1992, the NLRC promulgated a resolution, stating:
20

"WHEREFORE, let the appealed Decision be, as it is hereby, declared null and void for want of
jurisdiction. Complainant is hereby enjoined to file his complaint with the POEA.
"SO ORDERED."
On September 18, 1992, respondent Santos moved for reconsideration of the afore-quoted resolution.
He argued that the case was not cognizable by the POEA as he was not an "overseas contract worker."
21

On May 31, 1993, the NLRC granted the motion and reversed itself. The NLRC directed Labor Arbiter
Emerson Tumanon to hear the case on the question of whether private respondent was retrenched or
dismissed.
22

On January 13, 1994, Labor Arbiter Tumanon completed the proceedings based on the testimonial and
documentary evidence presented to and heard by him.
23

Subsequently, Labor Arbiter Tumanon was re-assigned as trial Arbiter of the National Capital Region,
Arbitration Branch, and the case was transferred to Labor Arbiter Jose G. de Vera.
24

On November 25, 1994, Labor Arbiter de Vera submitted his report.
25
He found that respondent Santos
was illegally dismissed from employment and recommended that he be paid actual damages equivalent
to his salaries for the unexpired portion of his contract.
26

On December 15, 1994, the NLRC ruled in favor of private respondent, to wit:
27

"WHEREFORE, finding that the report and recommendations of Arbiter de Vera are supported by
substantial evidence, judgment is hereby rendered, directing the respondents to jointly and severally
pay complainant the following computed contractual benefits: (1) US$12,600.00 as salaries for the
unexpired portion of the parties' contract; (2) US$3,600.00 as extra four (4) months salary for the two
(2) years period (sic) of the parties' contract; (3) US$3,600.00 as "14th month pay" for the aforesaid two
(2) years contract stipulated by the parties or a total of US$19,800.00 or its peso equivalent, plus (4)
attorney's fees of 10% of complainant's total award.
"SO ORDERED."
On February 2, 1995, petitioners filed a motion for reconsideration arguing that Labor Arbiter de Vera's
recommendation had no basis in law and in fact.
28

On March 30, 1995, the NLRC denied the motion for reconsideration.
29

Hence, this petition.
30

On October 9, 1995, petitioners filed with this Court an urgent motion for the issuance of a temporary
restraining order and/or writ of preliminary injunction and a motion for the annulment of the entry of
judgment of the NLRC dated July 31, 1995.
31

On November 20, 1995, the Court denied petitioner's urgent motion. The Court required respondents to
file their respective comments, without giving due course to the petition.
32

On March 8, 1996, the Solicitor General filed a manifestation stating that after going over the petition
and its annexes, they can not defend and sustain the position taken by the NLRC in its assailed decision
and orders. The Solicitor General prayed that he be excused from filing a comment on behalf of the
NLRC
33

On April 30,1996, private respondent Santos filed his comment.
34

On June 26, 1996, the Court granted the manifestation of the Solicitor General and required the NLRC to
file its own comment to the petition.
35

On January 7, 1997, the NLRC filed its comment.
The petition is meritorious.
I. Forum Non-Conveniens
The NLRC was a seriously inconvenient forum.
We note that the main aspects of the case transpired in two foreign jurisdictions and the case involves
purely foreign elements. The only link that the Philippines has with the case is that respondent Santos is
a Filipino citizen. The Palace Hotel and MHICL are foreign corporations. Not all cases involving our
citizens can be tried here.
The employment contract. Respondent Santos was hired directly by the Palace Hotel, a foreign
employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was then
employed. He was hired without the intervention of the POEA or any authorized recruitment agency of
the government.
36

Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the
case if it chooses to do so provided: (1) that the Philippine court is one to which the parties may
conveniently resort to; (2) that the Philippine court is in a position to make an intelligent decision as to
the law and the facts; and (3) that the Philippine court has or is likely to have power to enforce its
decision.
37
The conditions are unavailing in the case at bar.
Not Convenient. We fail to see how the NLRC is a convenient forum given that all the incidents of the
case from the time of recruitment, to employment to dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL are
not nationals of the Philippines. Neither .are they "doing business in the Philippines." Likewise, the main
witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines.
No power to determine applicable law. Neither can an intelligent decision be made as to the law
governing the employment contract as such was perfected in foreign soil. This calls to fore the
application of the principle of lex loci contractus (the law of the place where the contract was made).
38

The employment contract was not perfected in the Philippines. Respondent Santos signified his
acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the Palace
Hotel in the People's Republic of China.
No power to determine the facts. Neither can the NLRC determine the facts surrounding the alleged
illegal dismissal as all acts complained of took place in Beijing, People's Republic of China. The NLRC was
not in a position to determine whether the Tiannamen Square incident truly adversely affected
operations of the Palace Hotel as to justify respondent Santos' retrenchment.
Principle of effectiveness, no power to execute decision. Even assuming that a proper decision could
be reached by the NLRC, such would not have any binding effect against the employer, the Palace Hotel.
The Palace Hotel is a corporation incorporated under the laws of China and was not even served with
summons. Jurisdiction over its person was not acquired.
This is not to say that Philippine courts and agencies have no power to solve controversies involving
foreign employers. Neither are we saying that we do not have power over an employment contract
executed in a foreign country. If Santos were an "overseas contract worker", a Philippine forum,
specifically the POEA, not the NLRC, would protect him.
39
He is not an "overseas contract worker" a fact
which he admits with conviction.
40

Even assuming that the NLRC was the proper forum, even on the merits, the NLRC's decision cannot be
sustained.
II. MHC Not Liable
Even if we assume two things: (1) that the NLRC had jurisdiction over the case, and (2) that MHICL was
liable for Santos' retrenchment, still MHC, as a separate and distinct juridical entity cannot be held
liable.
True, MHC is an incorporator of MHICL and owns fifty percent (50%) of its capital stock. However, this is
not enough to pierce the veil of corporate fiction between MHICL and MHC.
Piercing the veil of corporate entity is an equitable remedy. It is resorted to when the corporate fiction is
used to defeat public convenience, justify wrong, protect fraud or defend a crime. 41 It is done only
when a corporation is a mere alter ego or business conduit of a person or another corporation.
In Traders Royal Bank v. Court of Appeals,
42
we held that "the mere ownership by a single stockholder or
by another corporation of all or nearly all of the capital stock of a corporation is not of itself a sufficient
reason for disregarding the fiction of separate corporate personalities."
The tests in determining whether the corporate veil may be pierced are: First, the defendant must have
control or complete domination of the other corporation's finances, policy and business practices with
regard to the transaction attacked. There must be proof that the other corporation had no separate
mind, will or existence with respect the act complained of. Second, control must be used by the
defendant to commit fraud or wrong. Third, the aforesaid control or breach of duty must be the
proximate cause of the injury or loss complained of. The absence of any of the elements prevents the
piercing of the corporate veil.
43

It is basic that a corporation has a personality separate and distinct from those composing it as well as
from that of any other legal entity to which it may be related.
44
Clear and convincing evidence is needed
to pierce the veil of corporate fiction.
45
In this case, we find no evidence to show that MHICL and MHC
are one and the same entity.
III. MHICL not Liable
Respondent Santos predicates MHICL's liability on the fact that MHICL "signed" his employment contract
with the Palace Hotel. This fact fails to persuade us.
First, we note that the Vice President (Operations and Development) of MHICL, Miguel D. Cergueda
signed the employment contract as a mere witness. He merely signed under the word "noted".
When one "notes" a contract, one is not expressing his agreement or approval, as a party
would.
46
In Sichangco v. Board of Commissioners of Immigration,
47
the Court recognized that the term
"noted" means that the person so noting has merely taken cognizance of the existence of an act or
declaration, without exercising a judicious deliberation or rendering a decision on the matter.
Mr. Cergueda merely signed the "witnessing part" of the document. The "witnessing part" of the
document is that which, "in a deed or other formal instrument is that part which comes after the
recitals, or where there are no recitals, after the parties (emphasis ours)."
48
As opposed to a party to a
contract, a witness is simply one who, "being present, personally sees or perceives a thing; a beholder, a
spectator, or eyewitness."
49
One who "notes" something just makes a "brief written statement"
50
a
memorandum or observation.
Second, and more importantly, there was no existing employer-employee relationship between Santos
and MHICL. In determining the existence of an employer-employee relationship, the following elements
are considered:
51

"(1) the selection and engagement of the employee;
"(2) the payment of wages;
"(3) the power to dismiss; and
"(4) the power to control employee's conduct."
MHICL did not have and did not exercise any of the aforementioned powers. It did not select respondent
Santos as an employee for the Palace Hotel. He was referred to the Palace Hotel by his friend, Nestor
Buenio. MHICL did not engage respondent Santos to work. The terms of employment were negotiated
and finalized through correspondence between respondent Santos, Mr. Schmidt and Mr. Henk, who
were officers and representatives of the Palace Hotel and not MHICL. Neither did respondent Santos
adduce any proof that MHICL had the power to control his conduct. Finally, it was the Palace Hotel,
through Mr. Schmidt and not MHICL that terminated respondent Santos' services.
Neither is there evidence to suggest that MHICL was a "labor-only contractor."
52
There is no proof that
MHICL "supplied" respondent Santos or even referred him for employment to the Palace Hotel.
Likewise, there is no evidence to show that the Palace Hotel and MHICL are one and the same entity.
The fact that the Palace Hotel is a member of the "Manila Hotel Group" is not enough to pierce the
corporate veil between MHICL and the Palace Hotel.
IV. Grave Abuse of Discretion
Considering that the NLRC was forum non-conveniens and considering further that no employer-
employee relationship existed between MHICL, MHC and respondent Santos, Labor Arbiter Ceferina J.
Diosana clearly had no jurisdiction over respondent's claim in NLRC NCR Case No. 00-02-01058-90.
Labor Arbiters have exclusive and original jurisdiction only over the following:
53

"1. Unfair labor practice cases;
"2. Termination disputes;
"3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
"4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee
relations;
"5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of
strikes and lockouts; and
"6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement."
In all these cases, an employer-employee relationship is an indispensable jurisdictional requirement.
The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship which can be resolved by reference to the Labor Code,
or other labor statutes, or their collective bargaining agreements.
54

"To determine which body has jurisdiction over the present controversy, we rely on the sound judicial
principle that jurisdiction over the subject matter is conferred by law and is determined by the
allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims
asserted therein."
55

The lack of jurisdiction of the Labor Arbiter was obvious from the allegations of the complaint. His failure
to dismiss the case amounts to grave abuse of discretion.
56

V. The Fallo
WHEREFORE, the Court hereby GRANTS the petition for certiorari and ANNULS the orders and
resolutions of the National Labor Relations Commission dated May 31, 1993, December 15, 1994 and
March 30, 1995 in NLRC NCR CA No. 002101-91 (NLRC NCR Case No. 00-02-01058-90).
No costs.
SO ORDERED.
Davide, Jr., C .J ., Puno, Kapunan, Pardo and Ynares-Santiago, JJ ., concur.


G.R. No. 141536. February 26, 2001
GIL MIGUEL T. PUYAT, petitioner,
vs.
RON ZABARTE, respondent.
D E C I S I O N
PANGANIBAN, J.:
Summary judgment in a litigation is resorted to if there is no genuine issue as to any material fact, other
than the amount of damages. If this verity is evident from the pleadings and the supporting affidavits,
depositions and admissions on file with the court, the moving party is entitled to such remedy as a
matter of course.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the
August 31, 1999 Decision
1
of the Court of Appeals (CA), which affirmed the Regional Trial Court (RTC) of
Pasig City, Branch 67 in Civil Case No. 64107; and the January 20, 2000 CA Resolution
2
which denied
reconsideration.
The assailed CA Decision disposed as follows:
WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED."
3

The Facts
The facts of this case, as narrated by the Court of Appeals, are as follows:
4

It appears that on 24 January 1994, *Respondent+ Ron Zabarte commenced *an action+ to enforce the
money judgment rendered by the Superior Court for the State of California, County of Contra Costa,
U.S.A. On 18 March 1994, [petitioner] filed his Answer with the following special and affirmative
defenses:
x x x x x x x x x
8) The Superior Court for the State of California, County of Contra Costa*,+ did not properly acquire
jurisdiction over the subject matter of and over the persons involved in [C]ase #C21-00265.
9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated December 12, 1991
was obtained without the assistance of counsel for [petitioner] and without sufficient notice to him and
therefore, was rendered in clear violation of *petitioners+ constitutional rights to substantial and
procedural due process.
10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991
was procured by means of fraud or collusion or undue influence and/or based on a clear mistake of fact
and law.
11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is
contrary to the laws, public policy and canons of morality obtaining in the Philippines and the
enforcement of such judgment in the Philippines would result in the unjust enrichment of [respondent]
at the expense of [petitioner] in this case.
12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is
null and void and unenforceable in the Philippines.
13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is not in any way
liable, in fact and in law, to [respondent] in this case, as contained in *petitioners+ Answer to
Complaint in Case #C21-00265 dated April 1, 1991, Annex B of *respondents+ Complaint dated
December 6, 1993.
14) *Respondent+ is guilty of misrepresentation or falsification in the filing of his Complaint in this case
dated December 6, 1993. Worse, [respondent] has no capacity to sue in the Philippines.
15) Venue has been improperly laid in this case.
(Record, pp. 42-44)
On 1 August 1994, *respondent+ filed a *M+otion for *S+ummary *J+udgment under Rule 34 of the Rules
of Court alleging that the [A]nswer filed by [petitioner] failed to tender any genuine issue as to the
material facts. In his *O+pposition to *respondents+ motion, *petitioner+ demurred as follows:
2) *Petitioner+ begs to disagree*;+ in support hereof, *he+ wishes to mention that in his Answer with
Special and Affirmative Defenses dated March 16, 1994 *petitioner+ has interposed that the Judgment
on Stipulations for Entry in Judgment is null and void, fraudulent, illegal and unenforceable, the same
having been obtained by means of fraud, collusion, undue influence and/or clear mistake of fact and
law. In addition, *he+ has maintained that said Judgment on Stipulations for Entry in Judgment was
obtained without the assistance of counsel for [petitioner] and without sufficient notice to him and
therefore, was rendered in violation of his constitutional rights to substantial and procedural due
process.
The *M+otion for *S+ummary *J+udgment was set for hearing on 12 August 1994 during which
[respondent] marked and submitted in evidence the following:
Exhibit A - x x x Judgment on Stipulation For Entry In Judgment of the Supreme Court of the State of
California[,] County of Contra Costa[,] signed by Hon. Ellen James, Judge of the Superior Court.
Exhibit B - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen James, issued by
the Consulate General of the Republic of the Philippines.
Exhibit C - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the sheriff/marshall, County
of Santa Clara, State of California.
Exhibit D - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of [L]evy, [M]emorandum of
[G]arnishee, [E]xemptions from [E]nforcement of [J]udgment.
Exhibit F - Certification issued by the Secretary of State, State of California that Stephen Weir is the
duly elected, qualified and acting [c]ounty [c]lerk of the County of Contra Costa of the State of California.
Exhibit G - Certificate of [A]uthentication of the [W]rit of [E]xecution.
On 6 April 1995, the court a quo issued an *O+rder granting *respondents+ *M+otion for *S+ummary
[J]udgment [and] likewise granting [petitioner] ten (10) days to submit opposing affidavits, after which
the case would be deemed submitted for resolution (Record, pp. 152-153). [Petitioner] filed a [M]otion
for [R]econsideration of the aforesaid [O]rder and [respondent] filed [C]omment. On 30 June 1995,
[petitioner] filed a [M]otion to [D]ismiss on the ground of lack of jurisdiction over the subject matter of
the case and forum-non-conveniens (Record, pp. 166-170). In his [O]pposition to the [M]otion (Record,
pp. 181-182) [respondent] contended that [petitioner could] no longer question the jurisdiction of the
lower court on the ground that *the latters+ Answer had failed to raise the issue of jurisdiction.
[Petitioner] countered by asserting in his Reply that jurisdiction [could] not be fixed by agreement of the
parties. The lower court dismissed [his] [M]otion for [R]econsideration and [M]otion [to] [D]ismiss
(Record, pp. 196-198), x x x.
The RTC
5
eventually rendered its February 21, 1997 Decision,
6
which disposed as follows:
WHEREFORE, judgment is hereby rendered, ordering *petitioner+ to pay *respondent+ the following
amounts:
1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18, 1991, or its
peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated December
19, 1991;
2. The amount of P30,000.00 as attorneys fees;
3. To pay the costs of suit.
The claim for moral damages, not having been substantiated, it is hereby denied.
7

Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner was estopped from assailing the
judgment that had become final and had, in fact, been partially executed. The CA also ruled that
summary judgment was proper, because petitioner had failed to tender any genuine issue of fact and
was merely maneuvering to delay the full effects of the judgment.
Citing Ingenohl v. Olsen,
8
the CA also rejected petitioners argument that the RTC should have dismissed
the action for the enforcement of a foreign judgment, on the ground of forum non conveniens. It
reasoned out that the recognition of the foreign judgment was based on comity, reciprocity and res
judicata.
Hence, this Petition.
9

Issue
In his Memorandum, petitioner submits this lone but all-embracing issue:
Whether or not the Court of Appeals acted in a manner x x x contrary to law when it affirmed the Order
of the trial court granting respondents Motion for Summary Judgment and rendering judgment against
the petitioner.
10

In his discussion, petitioner contends that the CA erred in ruling in this wise:
1. That his Answer failed to tender a genuine issue of fact regarding the following:
(a) the jurisdiction of a foreign court over the subject matter
(b) the validity of the foreign judgment
(c) the judgments conformity to Philippine laws, public policy, canons of morality, and norms against
unjust enrichment
2. That the principle of forum non conveniens was inapplicable to the instant case.
This Courts Ruling
The Petition has no merit.
First Question: Summary Judgment
Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at bar, arguing
that his Answer allegedly raised genuine and material factual matters which he should have been
allowed to prove during trial.
On the other hand, respondent argues that the alleged genuine issues of fact raised by petitioner are
mere conclusions of law, or propositions arrived at not by any process of natural reasoning from a fact
or a combination of facts stated but by the application of the artificial rules of law to the facts
pleaded.
11

The RTC granted respondents Motion for Summary Judgment because petitioner, in his Answer,
admitted the existence of the Judgment on Stipulation for Entry in Judgment. Besides, he had already
paid $5,000 to respondent, as provided in the foreign judgment sought to be enforced.
12
Hence, the
trial court ruled that, there being no genuine issue as to any material fact, the case should properly be
resolved through summary judgment. The CA affirmed this ruling.
We concur with the lower courts. Summary judgment is a procedural device for the prompt disposition
of actions in which the pleadings raise only a legal issue, and not a genuine issue as to any material fact.
By genuine issue is meant a question of fact that calls for the presentation of evidence. It should be
distinguished from an issue that is sham, contrived, set in bad faith and patently unsubstantial.
13

Summary judgment is resorted to in order to avoid long drawn out litigations and useless delays. When
affidavits, depositions and admissions on file show that there are no genuine issues of fact to be tried,
the Rules allow a party to pierce the allegations in the pleadings and to obtain immediate relief by way
of summary judgment. In short, since the facts are not in dispute, the court is allowed to decide the case
summarily by applying the law to the material facts.
Petitioner contends that by allowing summary judgment, the two courts a quo prevented him from
presenting evidence to substantiate his claims. We do not agree. Summary judgment is based on facts
directly proven by affidavits, depositions or admissions.
14
In this case, the CA and the RTC both merely
ruled that trial was not necessary to resolve the case. Additionally and correctly, the RTC specifically
ordered petitioner to submit opposing affidavits to support his contentions that (1) the Judgment on
Stipulation for Entry in Judgment was procured on the basis of fraud, collusion, undue influence, or a
clear mistake of law or fact; and (2) that it was contrary to public policy or the canons of morality.
15

Again, in its Order
16
dated November 29, 1995, the trial court clarified that the opposing affidavits were
for *petitioner+ to spell out the facts or circumstances *that+ would constitute lack of jurisdiction over
the subject matter of and over the persons involved in Case No. C21-00265, and that would render the
judgment therein null and void. In this light, petitioners contention that he was not allowed to present
evidence to substantiate his claims is clearly untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that there must
be no genuine issue as to any material fact, except for the amount of damages; and (b) that the party
presenting the motion for summary judgment must be entitled to a judgment as a matter of law.
17
As
mentioned earlier, petitioner admitted that a foreign judgment had been rendered against him and in
favor of respondent, and that he had paid $5,000 to the latter in partial compliance therewith. Hence,
respondent, as the party presenting the Motion for Summary Judgment, was shown to be entitled to the
judgment.
The CA made short shrift of the first requirement. To show that petitioner had raised no genuine issue, it
relied instead on the finality of the foreign judgment which was, in fact, partially executed. Hence, we
shall show in the following discussion how the defenses presented by petitioner failed to tender any
genuine issue of fact, and why a full-blown trial was not necessary for the resolution of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership interest, was
vested in the Securities and Exchange Commission, not in the Superior Court of California, County of
Contra Costa.
We disagree. In the absence of proof of California law on the jurisdiction of courts, we presume that
such law, if any, is similar to Philippine law. We base this conclusion on the presumption of identity or
similarity, also known as processual presumption.
18
The Complaint,
19
which respondent filed with the
trial court, was for the enforcement of a foreign judgment. He alleged therein that the action of the
foreign court was for the collection of a sum of money, breach of promissory notes, and damages.
20

In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities and
Exchange Commission (SEC). The jurisdiction of the latter is exclusively over matters enumerated in
Section 5, PD 902-A,
21
prior to its latest amendment. If the foreign court did not really have jurisdiction
over the case, as petitioner claims, it would have been very easy for him to show this. Since jurisdiction
is determined by the allegations in a complaint, he only had to submit a copy of the complaint filed with
the foreign court. Clearly, this issue did not warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the form of a Compromise Agreement,
cannot be executed without the parties being assisted by their chosen lawyers. The reason for this, he
points out, is to eliminate collusion, undue influence and/or improper exertion of ascendancy by one
party over the other. He alleges that he discharged his counsel during the proceedings, because he felt
that the latter was not properly attending to the case. The judge, however, did not allow him to secure
the services of another counsel. Insisting that petitioner settle the case with respondent, the judge
practically imposed the settlement agreement on him. In his Opposing Affidavit, petitioner states:
It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I discharged
him because I then felt that he was not properly attending to my case or was not competent enough to
represent my interest. I asked the Judge for time to secure another counsel but I was practically
discouraged from engaging one as the Judge was insistent that I settle the case at once with the
[respondent]. Being a foreigner and not a lawyer at that I did not know what to do. I felt helpless and
the Judge and *respondents+ lawyer were the ones telling me what to do. Under ordinary
circumstances, their directives should have been taken with a grain of salt especially so [since
respondents+ counsel, who was telling me what to do, had an interest adverse to mine. But [because]
time constraints and undue influence exerted by the Judge and *respondents+ counsel on me disturbed
and seriously affected my freedom to act according to my best judgment and belief. In point of fact, the
terms of the settlement were practically imposed on me by the Judge seconded all the time by
*respondents+ counsel. I was then helpless as I had no counsel to assist me and the collusion between
the Judge and *respondents+ counsel was becoming more evident by the way I was treated in the
Superior Court of *t+he State of California. I signed the Judgment on Stipulation for Entry in Judgment
without any lawyer assisting me at the time and without being fully aware of its terms and
stipulations.
22

The manifestation of petitioner that the judge and the counsel for the opposing party had pressured him
would gain credibility only if he had not been given sufficient time to engage the services of a new
lawyer. Respondents Affidavit
23
dated May 23, 1994, clarified, however, that petitioner had sufficient
time, but he failed to retain a counsel. Having dismissed his lawyer as early as June 19, 1991, petitioner
directly handled his own defense and negotiated a settlement with respondent and his counsel in
December 1991. Respondent also stated that petitioner, ignoring the judges reminder of the
importance of having a lawyer, argued that he would be the one to settle the case and pay anyway.
Eventually, the Compromise Agreement was presented in court and signed before Judge Ellen James on
January 3, 1992. Hence, petitioners rights to counsel and to due process were not violated.
Unjust Enrichment
Petitioner avers that the Compromise Agreement violated the norm against unjust enrichment because
the judge made him shoulder all the liabilities in the case, even if there were two other defendants,
G.S.P & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the foreign judgment, even if there are other
defendants who are not being held liable together with him. First, the foreign judgment itself does not
mention these other defendants, their participation or their liability to respondent. Second, petitioners
undated Opposing Affidavit states: *A+lthough myself and these entities were initially represented by
Atty. Lawrence L. Severson of the Law Firm Kouns, Quinlivan & Severson, x x x I discharged x x x said
lawyer. Subsequently, I assumed the representation for myself and these firms and this was allowed by
the Superior Court of the State of California without any authorization from G.G.P. & Sons, Inc. and the
Genesis Group.
24
Clearly, it was petitioner who chose to represent the other defendants; hence, he
cannot now be allowed to impugn a decision based on this ground.
In any event, contrary to petitioners contention, unjust enrichment or solutio indebiti does not apply to
this case. This doctrine contemplates payment when there is no duty to pay, and the person who
receives the payment has no right to receive it.
25
In this case, petitioner merely argues that the other
two defendants whom he represented were liable together with him. This is not a case of unjust
enrichment.
We do not see, either, how the foreign judgment could be contrary to law, morals, public policy or the
canons of morality obtaining in the country. Petitioner owed money, and the judgment required him to
pay it. That is the long and the short of this case.
In addition, the maneuverings of petitioner before the trial court reinforce our belief that his claims are
unfounded. Instead of filing opposing affidavits to support his affirmative defenses, he filed a Motion for
Reconsideration of the Order allowing summary judgment, as well as a Motion to Dismiss the action on
the ground of forum non conveniens. His opposing affidavits were filed only after the Order of
November 29, 1995 had denied both Motions.
26
Such actuation was considered by the trial court as a
dilatory ploy which justified the resolution of the action by summary judgment. According to the CA,
petitioners allegations sought to delay the full effects of the judgment; hence, summary judgment was
proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens
Petitioner argues that the RTC should have refused to entertain the Complaint for enforcement of the
foreign judgment on the principle of forum non conveniens. He claims that the trial court had no
jurisdiction, because the case involved partnership interest, and there was difficulty in ascertaining the
applicable law in California. All the aspects of the transaction took place in a foreign country, and
respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction is
authorized by law, courts may nonetheless refuse to entertain a case for any of the following practical
reasons:
1) The belief that the matter can be better tried and decided elsewhere, either because the main
aspects of the case transpired in a foreign jurisdiction or the material witnesses have their residence
there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,]
merely to secure procedural advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may
already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and
The difficulty of ascertaining foreign law.
27

None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the present
action, there was no more need for material witnesses, no forum shopping or harassment of petitioner,
no inadequacy in the local machinery to enforce the foreign judgment, and no question raised as to the
application of any foreign law.
Authorities agree that the issue of whether a suit should be entertained or dismissed on the basis of the
above-mentioned principle depends largely upon the facts of each case and on the sound discretion of
the trial court.
28
Since the present action lodged in the RTC was for the enforcement of a foreign
judgment, there was no need to ascertain the rights and the obligations of the parties based on foreign
laws or contracts. The parties needed only to perform their obligations under the Compromise
Agreement they had entered into. 1wphi1.nt
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in personam
rendered by a foreign tribunal clothed with jurisdiction is presumptive evidence of a right as between
the parties and their successors-in-interest by a subsequent title.
29

Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere -- enjoys the
presumption that it is acting in the lawful exercise of its jurisdiction, and that it is regularly performing
its official duty.
30
Its judgment may, however, be assailed if there is evidence of want of jurisdiction,
want of notice to the party, collusion, fraud or clear mistake of law or fact. But precisely, this possibility
signals the need for a local trial court to exercise jurisdiction. Clearly, the application of forum non
coveniens is not called for.
The grounds relied upon by petitioner are contradictory. On the one hand, he insists that the RTC take
jurisdiction over the enforcement case in order to invalidate the foreign judgment; yet, he avers that the
trial court should not exercise jurisdiction over the same case on the basis of forum non conveniens. Not
only do these defenses weaken each other, but they bolster the finding of the lower courts that he was
merely maneuvering to avoid or delay payment of his obligation.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED. Double
costs against petitioner.
SO ORDERED.
Melo, J. (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

G.R. No. L-23678 June 6, 1967
TESTATE ESTATE OF AMOS G. BELLIS, deceased.
PEOPLE'S BANK and TRUST COMPANY, executor.
MARIA CRISTINA BELLIS and MIRIAM PALMA BELLIS, oppositors-appellants,
vs.
EDWARD A. BELLIS, ET AL., heirs-appellees.
Vicente R. Macasaet and Jose D. Villena for oppositors appellants.
Paredes, Poblador, Cruz and Nazareno for heirs-appellees E. A. Bellis, et al.
Quijano and Arroyo for heirs-appellees W. S. Bellis, et al.
J. R. Balonkita for appellee People's Bank & Trust Company.
Ozaeta, Gibbs and Ozaeta for appellee A. B. Allsman.
BENGZON, J.P., J.:
This is a direct appeal to Us, upon a question purely of law, from an order of the Court of First Instance
of Manila dated April 30, 1964, approving the project of partition filed by the executor in Civil Case No.
37089 therein.1wph1.t
The facts of the case are as follows:
Amos G. Bellis, born in Texas, was "a citizen of the State of Texas and of the United States." By his first
wife, Mary E. Mallen, whom he divorced, he had five legitimate children: Edward A. Bellis, George Bellis
(who pre-deceased him in infancy), Henry A. Bellis, Alexander Bellis and Anna Bellis Allsman; by his
second wife, Violet Kennedy, who survived him, he had three legitimate children: Edwin G. Bellis, Walter
S. Bellis and Dorothy Bellis; and finally, he had three illegitimate children: Amos Bellis, Jr., Maria Cristina
Bellis and Miriam Palma Bellis.
On August 5, 1952, Amos G. Bellis executed a will in the Philippines, in which he directed that after all
taxes, obligations, and expenses of administration are paid for, his distributable estate should be
divided, in trust, in the following order and manner: (a) $240,000.00 to his first wife, Mary E. Mallen; (b)
P120,000.00 to his three illegitimate children, Amos Bellis, Jr., Maria Cristina Bellis, Miriam Palma Bellis,
or P40,000.00 each and (c) after the foregoing two items have been satisfied, the remainder shall go to
his seven surviving children by his first and second wives, namely: Edward A. Bellis, Henry A. Bellis,
Alexander Bellis and Anna Bellis Allsman, Edwin G. Bellis, Walter S. Bellis, and Dorothy E. Bellis, in equal
shares.1wph1.t
Subsequently, or on July 8, 1958, Amos G. Bellis died a resident of San Antonio, Texas, U.S.A. His will was
admitted to probate in the Court of First Instance of Manila on September 15, 1958.
The People's Bank and Trust Company, as executor of the will, paid all the bequests therein including the
amount of $240,000.00 in the form of shares of stock to Mary E. Mallen and to the three (3) illegitimate
children, Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis, various amounts totalling
P40,000.00 each in satisfaction of their respective legacies, or a total of P120,000.00, which it released
from time to time according as the lower court approved and allowed the various motions or petitions
filed by the latter three requesting partial advances on account of their respective legacies.
On January 8, 1964, preparatory to closing its administration, the executor submitted and filed its
"Executor's Final Account, Report of Administration and Project of Partition" wherein it reported, inter
alia, the satisfaction of the legacy of Mary E. Mallen by the delivery to her of shares of stock amounting
to $240,000.00, and the legacies of Amos Bellis, Jr., Maria Cristina Bellis and Miriam Palma Bellis in the
amount of P40,000.00 each or a total of P120,000.00. In the project of partition, the executor
pursuant to the "Twelfth" clause of the testator's Last Will and Testament divided the residuary
estate into seven equal portions for the benefit of the testator's seven legitimate children by his first
and second marriages.
On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed their respective oppositions to
the project of partition on the ground that they were deprived of their legitimes as illegitimate children
and, therefore, compulsory heirs of the deceased.
Amos Bellis, Jr. interposed no opposition despite notice to him, proof of service of which is evidenced by
the registry receipt submitted on April 27, 1964 by the executor.
1

After the parties filed their respective memoranda and other pertinent pleadings, the lower court, on
April 30, 1964, issued an order overruling the oppositions and approving the executor's final account,
report and administration and project of partition. Relying upon Art. 16 of the Civil Code, it applied the
national law of the decedent, which in this case is Texas law, which did not provide for legitimes.
Their respective motions for reconsideration having been denied by the lower court on June 11, 1964,
oppositors-appellants appealed to this Court to raise the issue of which law must apply Texas law or
Philippine law.
In this regard, the parties do not submit the case on, nor even discuss, the doctrine of renvoi, applied by
this Court in Aznar v. Christensen Garcia, L-16749, January 31, 1963. Said doctrine is usually pertinent
where the decedent is a national of one country, and a domicile of another. In the present case, it is not
disputed that the decedent was both a national of Texas and a domicile thereof at the time of his
death.
2
So that even assuming Texas has a conflict of law rule providing that the domiciliary system (law
of the domicile) should govern, the same would not result in a reference back (renvoi) to Philippine law,
but would still refer to Texas law. Nonetheless, if Texas has a conflicts rule adopting the situs theory (lex
rei sitae) calling for the application of the law of the place where the properties are situated, renvoi
would arise, since the properties here involved are found in the Philippines. In the absence, however, of
proof as to the conflict of law rule of Texas, it should not be presumed different from ours.
3
Appellants'
position is therefore not rested on the doctrine of renvoi. As stated, they never invoked nor even
mentioned it in their arguments. Rather, they argue that their case falls under the circumstances
mentioned in the third paragraph of Article 17 in relation to Article 16 of the Civil Code.
Article 16, par. 2, and Art. 1039 of the Civil Code, render applicable the national law of the decedent, in
intestate or testamentary successions, with regard to four items: (a) the order of succession; (b) the
amount of successional rights; (e) the intrinsic validity of the provisions of the will; and (d) the capacity
to succeed. They provide that
ART. 16. Real property as well as personal property is subject to the law of the country where it is
situated.
However, intestate and testamentary successions, both with respect to the order of succession and to
the amount of successional rights and to the intrinsic validity of testamentary provisions, shall be
regulated by the national law of the person whose succession is under consideration, whatever may he
the nature of the property and regardless of the country wherein said property may be found.
ART. 1039. Capacity to succeed is governed by the law of the nation of the decedent.
Appellants would however counter that Art. 17, paragraph three, of the Civil Code, stating that
Prohibitive laws concerning persons, their acts or property, and those which have for their object public
order, public policy and good customs shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions agreed upon in a foreign country.
prevails as the exception to Art. 16, par. 2 of the Civil Code afore-quoted. This is not correct. Precisely,
Congressdeleted the phrase, "notwithstanding the provisions of this and the next preceding article"
when they incorporated Art. 11 of the old Civil Code as Art. 17 of the new Civil Code, while reproducing
without substantial change the second paragraph of Art. 10 of the old Civil Code as Art. 16 in the new. It
must have been their purpose to make the second paragraph of Art. 16 a specific provision in itself
which must be applied in testate and intestate succession. As further indication of this legislative intent,
Congress added a new provision, under Art. 1039, which decrees that capacity to succeed is to be
governed by the national law of the decedent.
It is therefore evident that whatever public policy or good customs may be involved in our System of
legitimes, Congress has not intended to extend the same to the succession of foreign nationals. For it
has specifically chosen to leave, inter alia, the amount of successional rights, to the decedent's national
law. Specific provisions must prevail over general ones.
Appellants would also point out that the decedent executed two wills one to govern his Texas estate
and the other his Philippine estate arguing from this that he intended Philippine law to govern his
Philippine estate. Assuming that such was the decedent's intention in executing a separate Philippine
will, it would not alter the law, for as this Court ruled in Miciano v. Brimo, 50 Phil. 867, 870, a provision
in a foreigner's will to the effect that his properties shall be distributed in accordance with Philippine law
and not with his national law, is illegal and void, for his national law cannot be ignored in regard to those
matters that Article 10 now Article 16 of the Civil Code states said national law should govern.
The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and that
under the laws of Texas, there are no forced heirs or legitimes. Accordingly, since the intrinsic validity of
the provision of the will and the amount of successional rights are to be determined under Texas law,
the Philippine law on legitimes cannot be applied to the testacy of Amos G. Bellis.
Wherefore, the order of the probate court is hereby affirmed in toto, with costs against appellants. So
ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.