I. Insular Government vs. Frank 13 Phil 236, G.R.No.2935.
2935. March Although generally, capacity of the parties to enter into a contract is
23, 1909.
FACTS: In 1903 in the state of Illinois, Mr. Frank, a US citizen and a
representative of the Insular Government of the Philippines entered into a
contract whereby the former shall serve as stenographer in the Philippines
for a period of 2 years. The contract contained a provision that in case of
violation of its terms, Mr. Frank shall be liable for the amount incurred by
the Philippine Government for his travel from Chicago to Manila and one-
half salary paid during such period. After serving for 6 months, defendant
left the service and refused to make further compliance with the terms of
the contract, therefore the Government sued him to recover the amount of
$269.23 plus damages. The lower court ruled in favor of the plaintiff, hence
the defendant appealed presenting minority as his special defense. By
reason of the fact that under the laws of the Philippines, contracts made by
person who did not reach majority age of 23 are unenforceable. Defendant
claim that he is an adult when he left Chicago but was a minor when he
arrived in Manila and at the time the plaintiff attempted to enforce the
contract.
ISSUE: Whether or not the contract is valid.
RULING: Mr. Frank being fully qualified to enter into a contract at the place
and time the contract was made, he cannot therefore plead infancy as a
defense at the place where the contract is being enforced. Although Mr.
Frank was still a minor under Philippine laws, he was nevertheless
considered an adult under the laws of the state of Illinois,the place where
the contract was made.No rule is better settled in law than that matters
bearing upon the execution, interpretation and validity of a contract are
determined by the law of the place where the contract is made. Matters
connected to its performance are regulated by the law prevailing at the
place of its performance. Matters respecting a remedy, such as bringing of a
suit, admissibility of evidence, and statutes of limitations, depend upon the
law of the place where the suit is brought.
governed by national law. This is one case not involving real property which
was decided by our Supreme Court, where instead of national law, what
should determine capacity to enter into a contract is the lex loci
celebrationis. According to Conflict of Laws writer Edgardo Paras, Franks
capacity should be judged by his national law and not by the law of the
place where the contract was entered into. In the instant case whether it is
the place where the contract was made or Franks nationality, the result
would be the same. However, as suggested by the mentioned author, for
the conflicts rule in capacity in general, national law of the parties is
controlling.
II. CADALIN vs POEA ADMINISTRATOR 238 SCRA 721
Borrowing Statute
Ex: Sec. 48, Rule on Civil Procedure if by the laws of the State or country
where the cause of action arose the action is barred, it is also barred in the
Philippines.
Facts: Cadalin et al. are Filipino workers recruited by Asia Intl Builders Co.
(AIBC), a domestic recruitment corporation, for employment in Bahrain to
work for Brown & Root Intl Inc. (BRII) which is a foreign corporation with
headquarters in Texas. Plaintiff instituted a class suit with the POEA for
money claims arising from the unexpired portion of their employment
contract which was prematurely terminated. They worked in Bahrain for
BRII and they filed the suit after 1 yr. from the termination of their
employment contract.
As provided by Art. 156 of the Amiri Decree aka as the Labor Law of the
Private Sector of Bahrain: a claim arising out of a contract of employment
shall not be actionable after the lapse of 1 year from the date of the expiry
of the contract, it appears that their suit has prescribed.
Plaintiff contends that the prescription period should be 10 years as
provided by Art. 1144 of the Civil Code as their claim arise from a violation
of a contract.
The POEA Administrator holds that the 10 year period of prescription should
be applied but the NLRC provides a different view asserting that Art 291 of
the Labor Code of the Phils with a 3 years prescription period should be
applied. The Solicitor General expressed his personal point of view that the
1 yr period provided by the Amiri Decree should be applied.
Ruling: The Supreme Court held that as a general rule a foreign procedural
law will not be applied in our country as we must adopt our own procedural
laws.
EXCEPTION: Philippines may adopt foreign procedural law under the
Borrowing Statute such as Sec. 48 of the Civil Procedure Rule stating if by
the laws of the State or country where the cause of action arose the action
is barred, it is also barred in the Philippines. Thus, Bahrain law must be
applied. However, the court contends that Bahrains law on prescription
cannot be applied because the court will not enforce any foreign claim that
is obnoxious to the forums public policy and the 1 yr. rule on prescription is
against public policy on labor as enshrined in the Phils. Constitution.
The court ruled that the prescription period applicable to the case should be
Art 291 of the Labor Code of the Phils with a 3 years prescription period
since the claim arose from labor employment.
III. HSBC vs SHERMAN 176 SCRA 331 (1989)
Facts: Eastern Book & Supply Service (Singapore) was granted by HSBC
Singapore an overdraft facility. Sherman, et. al. and directors of Eastern
Book executed a Joint and Several Guarantee in favor of HSBC. Eastern Book
defaulted. Hence, HSBC filed a suit for collection against them before the
Regional Trial Court of Quezon City. Sherman filed a Motion to Dismiss on
the ground of lack of jurisdiction over the complaint and persons of the
defendants. The guarantee provides: This guarantee and all rights,
obligations and liabilities arising hereunder shall be construed and
determined under and may be enforced in accordance with the laws of the
Republic of Singapore.
Held: Philippine courts have jurisdiction over the suit. The stipulation shall
be liberally construed. A stipulation as to venue does not preclude the filing
of suits in the residence of plaintiff or defendant under Sec 2 (b), Rule 4 of
the Rules of Court, in the absence of qualifying or restrictive words in the
agreement which indicate that the place named is the only venue agreed
upon by the parties. The parties did not thereby stipulate that only the
courts of Singapore, to the exclusion of all the rest, have jurisdiction.
Neither did the clause in question operate to divest Philippine courts of
jurisdiction. In International Law, jurisdiction is often defined as the right of
a state to exercise authority over persons and things within its boundaries
subject to certain exceptions. This authority, which finds its source in the
concept of sovereignty, is exclusive within and throughout the domain of
the state. A state is competent to take hold of any judicial matter it sees fit
by making its courts and agencies assume jurisdiction over all kinds of cases
brought before them.
IV. Carnival Cruise Lines, Inc. v. Shute
Brief Fact Summary. Appellees Eulala and Russel Shute, purchased tickets to
take a cruise on a vessel owned by Appellant Carnival Cruise Lines, Inc. The
tickets contained language stating that the tickets were subject to the
conditions of the contract, which contained a forum selection clause. When
Eulala Shute was injured on the cruise ship, Appellees sued, and the forum
selection clause was challenged.
Synopsis of Rule of Law. Forum selection clauses contained in form passage
contracts are subject to judicial scrutiny for fundamental fairness.
Facts. Appellees purchased tickets for a cruise on one of the petitioners
ships from a travel agent in the state of Washington. The agent then
forwarded the payment to the petitioners headquarters in Florida. On the
face of each ticket was a statement indicating that the plaintiffs were
subject to the conditions of the contract, which included a forum selection
clause stating that all disputes shall be litigated in Florida. During the cruise,
Appellee Eulala Shute fell and hurt herself. Appellees filed suit against
Appellant in the Federal court in Washington. Appellants challenged the suit
on the ground that the forum selection clause forbids litigation in any venue
except Florida.
Issue. Is the forum selection clause valid and enforceable?
Held. Yes. A forum selection clause is to be examined for fundamental
fairness. Here, Appellant did not arbitrarily set Florida as a forum to
discourage suits against it. Appellant has its principal place of business in
Florida, and many of its cruises depart from and return to Florida ports.
Further, there is no evidence that Appellant procured Appellees accession
to the forum selection clause by fraud or overreaching. Appellees were
made aware of the clause and accepted the contract. Hence, the forum
selection clause is valid.
Dissent. Appellees could not have read the forum selection clause before
they received the tickets they purchased. However, once they received the
tickets, they were nonrefundable. Hence, Appellees had to agree to the
forum selection clause or not travel. Further, contract provisions that limit
the place or court in which an action may be brought are invalid as against
public policy.
Discussion. Forum selection clauses must be scrutinized for fundamental
fairness but are generally valid.
V. BELLIS v. BELLIS (20 SCRA 358)
FACTS: Mr. Bellis was a citizen and resident of Texas at the time of his death.
He had five (5) legitimate children with his first wife, Mary Mallen, whom he
divorced. He had three (3) legitimate daughters with his second wife, Violet,
who survived him, and another three (3) illegitimate children with another
woman. Before he died, he executed two (2) wills, disposing of his Texas
properties, the other disposing his Philippine properties. In both wills, he
recognized his illegitimate children but they were not given anything. Under
Texas law, there are no compulsory heirs or legitime reserved to illegitimate
children.
Naturally, the illegitimate children, Maria Cristina and Merriam Palma,
opposed the wills on the ground that they were deprived of their legitime as
illegitimate children. Under Philippine law, they are entitled to inherit even
if they are illegitimate children. They claim that Philippine law should be
applied.
ISSUE: What law should be applied, the Philippine law or the Texas law?
May the illegitimate daughters inherit?
HELD: What applies is the Texas law. Mr. Bellis is a national and domicile of
Texas at the time of his death. Hence, both the intrinsic validity of the will
(substance or successional rights) and the extrinsic validity (forms of the
will) are governed by Texas law. Since under Texas law, the decedent may
dispose of his property as he wishes, the Will should be respected. The
illegitimate daughters are not entitled to any legitime.
Assuming that Texas law is in conflict of law rule providing that the
domiciliary system (law of domicile) should govern, the same should not
result in a reference back (renvoi) to the Philippine law since Mr. Bellis was
both a national and domicile of Texas at the time of his death. Nonetheless,
if Texas law has a conflict rule, renvoi would not arise, since the properties
covered by the second will are found in the Philippines. The renvoi doctrine
applied in the case of Aznar v. Garcia cannot be applied since said doctrine
is pertinent where the decedent is a national of one country and domiciliary
of another country. Moreover, it has been pointed out that the decedent
executed two (2) wills- one to govern his Texas properties and the other his
Philippine estate; the latter being the basis of the argument of illegitimate
children that he intended Philippine law to govern. Assuming that such was
the intention of the decedent in executing a separate Philippine will, it
would not alter the law. As rule in Miciano v. Brimo, a provision of
foreigners will to the effect that his properties shall be distributed in
accordance with Philippine law and not with the national law, is illegal and
void, for his national law cannot be ignored.
 VI. AZNAR VS. GARCIA 7 S 95 The California conflict rule, found on Art. 946 of the California Civil code
States that if there is no law to the contrary in the place where personal
Category: Civil Law Jurisprudence property is situated, it is deemed to follow the decree of its owner and is
Facts: Edward S. Christensen, though born in New York, migrated to governed by the law of the domicile.
California where he resided and consequently was considered a California Christensen being domiciled outside California, the law of his domicile, the
Citizen for a period of nine years to 1913. He came to the Philippines where
Philippines is ought to be followed.
he became a domiciliary until the time of his death. However, during the
entire period of his residence in this country, he had always considered Wherefore, the decision appealed is reversed and case is remanded to the
himself as a citizen of California. lower court with instructions that partition be made as that of the Philippine
law provides.
In his will, executed on March 5, 1951, he instituted an acknowledged
natural daughter, Maria Lucy Christensen as his only heir but left a legacy of
some money in favor of Helen Christensen Garcia who, in a decision
rendered by the Supreme Court had been declared as an acknowledged
natural daughter of his. Counsel of Helen claims that under Art. 16 (2) of the
civil code, California law should be applied, the matter is returned back to
the law of domicile, that Philippine law is ultimately applicable, that the
share of Helen must be increased in view of successional rights of
illegitimate children under Philippine laws. On the other hand, counsel for
daughter Maria , in as much that it is clear under Art, 16 (2) of the Mew
Civil Code, the national of the deceased must apply, our courts must apply
internal law of California on the matter. Under California law, there are no
compulsory heirs and consequently a testator should dispose any property
possessed by him in absolute dominion.

Issue: Whether Philippine Law or California Law should apply.

Held: The Supreme Court deciding to grant more successional rights to

Helen Christensen Garcia said in effect that there be two rules in California
on the matter.

1. The conflict rule which should apply to Californians outside the

California, and

2. The internal Law which should apply to California domiciles in

California.