Tañada v.

Tuvera 136 SCRA 27

FACTS: The petitioner filed a a writ of mandamus, invoking the right of the people to
be informed on matters of public concern, to compel the respondent public officials
to cause the publication of various presidential decrees, letters of instructions,
general orders, proclamations, executive orders, letters of implementations, and
administrative order. Respondent further contend that the publication in Official
Gazette is not a sine qua non requirement for the effectivity of the law because law
themselves provides their own effectivity dates.

ISSUE: W/N the publication in Official Gazette is required before any law or statute
takes effect

HELD: Yes. The publication of all presidential issuances of public nature or of general
applicability is mandated by law. Presidential issuances which apply only to particular
persons or class of persons such as administrative or executive orders need not be
published on the assumption that they have been circularized to all concern. On the
other hand, presidential issuances of general applicability which have not been
published shall have no force & effect.

Kasilag v. Rodriguez, 69 PHIL 217

FACTS: Marcial Kasilag and Emiliana Ambrosio entered a contract of mortgage of
improvements of land acquired as homestead to secure the payment of the indebtedness of
P1,000 plus interest. The parties stipulated that Emilina Ambrosio was to pay the debt with
interest within 4 ½ years., and in such case, mortgage would not have any effect. They also
agreed that Emiliana Ambrosio would execute a deed of sale if it would not be paid within 4
½ years and that she would pay the tax on the land. After a year, it turned out that she was not
able to pay the tax. Hence, they entered a verbal agreement whereby she conveyed to the latter
the possession of the land on the condition that they would not collect the interest of the loan,
would attend to the payment of the land tax, would benefit by the fruits of the land, & would
introduce improvement thereof.

These pacts made by the parties independently were calculated to alter the mortgage a contract
clearly entered into, converting the latter into a contract of antichresis. The contract of
antichresis, being a real encumbrance burdening the land, is illegal and void because it is legal
and valid.

ISSUE: W/N the petitioner should be deemed the possessor of the land in good faith because
he was unaware of any flaw in his title or in the manner of its acquisition by which it is
invalidated

RULING: Yes. From the facts found established by the Court of Appeals we can neither
deduce nor presume that the petitioner was aware of a flaw in his title or in the manner of its
acquisition, aside from the prohibition contained in section 116. This being the case, the
question is whether good faith may be premised upon ignorance of the laws.
Gross and inexcusable ignorance of law may not be the basis of good faith, but possible,
excusable ignorance may be such basis. It is a fact that the petitioner is not conversant with
the laws because he is not a lawyer. In accepting the mortgage of the improvements he
proceeded on the well-grounded belief that he was not violating the prohibition regarding the
alienation of the land. In taking possession thereof and in consenting to receive its fruits, he
did not know, as clearly as a jurist does, that the possession and enjoyment of the fruits are
attributes of the contract of antichresis and that the latter, as a lien, was prohibited by section
116. These considerations again bring us to the conclusion that, as to the petitioner, his
ignorance of the provisions of section 116 is excusable and may, therefore, be the basis of his
good faith.

DM Consunji v. CA, G.R. No. 137873, April 20,

2001
FACTS: A construction worker died when he fell 14 floors when the platform which
he was on board fell from the Renaissance Tower in Pasig City. He works for DM
Consunji Inc. It was noted that this happened because the pin inserted to the platform
loosened and there was no safety lock. His widow filed with RTC of Pasig a complaint
for damages against DM Consunji Inc. The employer averred that the widow already
availed benefits from the State Insurance Fund and that she cannot recover civil
damages from the company anymore.

ISSUE: W/N the widow is already barred from availing death benefits under the Civil
Code because she already availed damages under the Labor Code

HELD: Although SC ruled that recovery of damages under the Worker’s

Compensation Act is a bar to recover under a civil action, the CA ruled that in this
case, the widow had a right to file an ordinary action for civil actions because she
was not aware and ignorant of her rights and courses of action. She was not aware
of her rights and remedies. Thus, her election to claim from the Insurance Fund does
not waive her claim from the petitioner company. The argument that ignorance of the
law excuses no one is not applicable in this case because it is only applicable to
mandatory and prohibitory laws.

DELA CRUZ VS. DELA CRUZ

FACTS: Petitioner Isabelo C. Dela Cruz claimed that in 1975 he and

his sister, respondent Lucila and Cornelia bought on installment a
240-square meter land in Las Piñas from Gatchalian Realty, Inc.
Isabelo and Cornelia paid the down payment and the monthly
amortizations. Upon Lucia’s plea to help their financially distress
cousin, Corazon, the siblings agreed to make use of the lot as
collateral for the loan. Lucila paid the P8, 000.00 that they still owed
to Gatchalian Realty, Inc. and had the deed of title registered in her
name. The title was mortgaged for Corazon’s benefit. However,
Corazon failed to pay her loan so the bank foreclosed the property.
After three years, Lucila redeemed the property. In 2002, Lucila
executed an affidavit of waiver, relinquishing all her share, interest,
and participation to half of the lot to Isabelo and the other half to her
niece, Emelinda. Isabelo then filed an action for partition seeking the
segregation of his portion of the land and the issuance of the
corresponding title in his name. But Lucila claim that the waiver she
executed ceding ownership of her share to Isabelo was subject to a
condition that their family problems would be resolved. She claims
that the said condition did not happen and that she had every right to
revoke the waiver. It was made evident by the revocation she made
through an affidavit dated September 24, 2004.The RTC ruled in
favor of Lucia and was affirmed by the CA.

ISSUE: Whether or not the CA erred in ruling that Lucila’s cession of

the property to Isabelo through waiver did not have the effect of making
him part owner of the property with a right to demand partition.

RULING: Lucila’s waiver was absolute and contained no precondition.

The court noted that the phrase “That to put everything in proper order,
I hereby waive all my share, interest and participation” means that the
intention of Lucila was to waive her right to the property, irreversibly
divesting herself of her existing right to it. The Supreme Court
disagreed with the lower court’s interpretation that such wordings
intends a precondition of waiver for if such was the intent, the phrase
containing words such as “ subject to the condition that everything is
put in order” would have been used. After he and his co-owner
Emelinda accepted the donation, Isabelo became the owner of half of
the subject property having the right to demand its partition.
G.R. No. 201931 - Dona Adela Export International Inc. vs. Tidcorp & BPI
(February 11, 2015)

Doctrine: It is basic in law that a compromise agreement, as a contract, is

binding only upon the parties to the compromise, and not upon non-
parties. This is the doctrine of relativity of contracts. The rule is based on
Article 1311 of the Civil Code, which provides that "contracts take effect
only between the parties, their assigns and heirs.

Facts: Petitioner Doña Adela Export International, Inc., filed a Petition for
Voluntary Insolvency. The case was docketed and raffled off to the RTC of
Mandaluyong City, Branch 211. The RTC, after finding the petition sufficient
in form and substance, issued an order declaring petitioner as insolvent and
staying all civil proceedings against petitioner.

Thereafter, Atty. Gonzales was appointed as receiver. After taking her oath,
Atty. Gonzales proceeded to make the necessary report, engaged appraisers
and required the creditors to submit proof of their respective claims. Atty.
Gonzales filed a Motion for Parties to Enter Into Compromise Agreement
incorporating therein her proposed terms of compromise.

Petitioner through its President Epifanio C. Ramos, Jr., and Technology

Resource Center (TRC) entered into a Dacion En Pago by Compromise
Agreement wherein petitioner agreed to transfer a parcel of land with
existing improvements situated in the Barrio of Hulo, Mandaluyong City, in
favor of TRC in full payment of petitioner’s obligation. The agreement bears
the conformity of Atty. Gonzales as receiver. TRC filed on May 26, 2011 a
Compliance, Manifestation and Motion to Approve Dacion En Pago by
Compromise Agreement.

The creditors TIDCORP and BPI also filed a Joint Motion to Approve
Agreement which contained some terms and conditions for their benefit. The
RTC rendered the assailed Decision approving the Dacion En Pago by
Compromise Agreement and the Joint Motion to Approve Agreement.

Petitioner filed a motion for partial reconsideration and claimed that

TIDCORP and BPI’s agreement imposes on it several obligations such as
payment of expenses and taxes and waiver of confidentiality of its bank
deposits but it is not a party and signatory to the said agreement.
In its Order, the RTC denied the motion and held that petitioner’s silence and
acquiescence to the joint motion to approve compromise agreement while
creditors BPI and TIDCORP set it for hearing was tantamount to admission
and acquiescence thereto. Hence, this petition.

Issue: Whether or not the petitioner is bound by the provision in the BPI-
TIDCORP Joint Motion to Approve Agreement that petitioner shall waive its
rights to confidentiality of its bank deposits under R.A. No. 1405, as
amended, otherwise known as the Law on Secrecy of Bank Deposits and R.A.
No. 8791, otherwise known as The General Banking Law of 2000?

Held & Ruling: No. A judgment rendered on the basis of a compromise

agreement between the parties in a civil case is final, unappealable, and
immediately executory. However, if one of the parties claims that his consent
was obtained through fraud, mistake, or duress, he must file a motion with
the trial court that approved the compromise agreement to reconsider the
judgment and nullify or set aside said contract on any of the said grounds for
annulment of contract within 15 days from notice of judgment. In this case,
petitioner sought partial reconsideration of the decision based on
compromise agreement assailing the waiver of confidentiality provision in
the Agreement between its two creditors, TIDCORP and BPI, in which
petitioner was not a party.

In this case, the Joint Motion to Approve Agreement was executed by BPI
and TIDCORP only. There was no written consent given by petitioner or its
representative, Epifanio Ramos, Jr., that petitioner was waiving the
confidentiality of its bank deposits. The provision on the waiver of the
confidentiality of petitioner’s bank deposits was merely inserted in the
agreement. It is clear therefore that petitioner is not bound by the said
provision since it was without the express consent of petitioner who was not
a party and signatory to the said agreement.

Neither can petitioner be deemed to have given its permission by failure to

interpose its objection during the proceedings. It is an elementary rule that
the existence of a waiver must be positively demonstrated since a waiver by
implication is not normally countenanced. The norm is that a waiver must
not only be voluntary, but must have been made knowingly, intelligently, and
with sufficient awareness of the relevant circumstances and likely
consequences. There must be persuasive evidence to show an actual
intention to relinquish the right. Mere silence on the part of the holder of the
right should not be construed as surrender thereof; the courts must indulge
every reasonable presumption against the existence and validity of such
waiver.

Thornton v. Thornton, G.R. No. 154598, Aug. 16,

2004
FACTS: Petitioner was an American, respondent was a Filipino. They were married
and had one daughter. After 3 years, the woman grew restless and bored as a plain
housewife and wanted to return to her old job as GRO in a nightclub. One day, the
woman left the family home together with their daughter and told her servants that
she was going to Basilan. The husband filed a petition for habeas corpus in the
designated Family Court in Makati City but was dismissed because the child was in
Basilan. When he went to Basilan, he didn’t find them and the barangay office issued
a certification that respondent was no longer residing there. Petitioner filed another
petition for habeas corpus in CA which could issue a writ of habeas corpus
enforceable in the entire country. The petition was denied by CA on the ground that
it did not have jurisdiction over the case since RA 8369 (Family Courts Act of 1997)
gave family courts exclusive jurisdiction over petitions for habeas corpus, it impliedly
repealed RA 7902 (An Act Expanding the Jurisdiction of CA) and B.P 129 (The
judiciary Reorganization Act of 1980.)

ISSUE: W/N CA has jurisdiction to issue writs of habeas corpus in cases involving
custody of minors in light of the provision in RA 8369 giving family courts exclusive
jurisdiction over such petitions.

HELD: Petition granted. CA should take cognizance of the case because nothing in
RA 8369 revoked its jurisdiction to issue writs of habeas corpus involving custody of
minors. The reasoning of CA cant be affirmed because it will result to iniquitous,
leaving petitioners without legal course in obtaining custody. The minor could be
transferred from one place to another and habeas corpus case will be left without
legal remedy since family courts take cognizance only cases within their jurisdiction.
Literal interpretation would render it meaningless, lead to absurdity, injustice, and
contradiction. The literal interpretation of “exclusive” will result in grave injustice and
negate the policy to protect the rights and promote welfare of children.
Pesca vs Pesca

FACTS: Petitioner and private respondent married in 1975, a union

that begot four children. She contends that respondent surprisingly
showed signs of “psychological incapacity” to perform his marital
obligations starting 1988. His “true color” of being an emotionally
immature and irresponsible husband became apparent. He was cruel
and violent. He was a habitual drinker, staying with friends daily from
4:00 o’clock in the afternoon until 1:00 o’clock in the morning. When
cautioned to stop or, to at least, minimize his drinking, respondent
would beat, slap and kick her. At one time, he chased petitioner with a
loaded shotgun and threatened to kill her in the presence of
the children. The children themselves were not spared from physical
violence. Petitioner and her children left the conjugal abode to live in
the house of her sister in Quezon City as they could no longer bear his
violent ways. Two months later, she returned home to give him a
chance to change. But, to her dismay, things did not so turn out as
expected. On the morning of 22 March 1994, respondent assaulted
petitioner for about half an hour in the presence of the children. She
was battered black and blue. He was imprisoned for 11 days for slight
physical injuries. Petitioner sued respondent before the Regional
Trial Court for the declaration of nullity of their marriage invoking
psychological incapacity. The trial court declared their marriage to be
null and void ab initio on the basis of psychological incapacity on the
part of respondent and ordered the liquidation of
the conjugal partnership.
Respondent appealed the decision of the trial court to the Court of
Appeals, which in turn reversed the decision of the trial court. Thus,
the marriage of respondent and petitioner still subsists.

ISSUE: Whether or not the guidelines in the case of Republic

vs. Court of Appeals and Molina should be taken to be merely advisory
and not mandatory in nature.

HELD: The “doctrine of stare decisis,” ordained in Article 8 of the Civil

Code, expresses that judicial decisions applying or interpreting the law
shall form part of the legal system of the Philippines. The rule follows
the settled legal maxim – “legis interpretado legis vim obtinet” – that
the interpretation placed upon the written law by a
competent court has the force of law. The interpretation
or construction placed by the courts establishes the contemporaneous
legislative intent of the law. The latter as so interpreted and construed
would thus constitute a part of that law as of the date the statute is
enacted. It is only when a prior ruling of this Court finds itself later
overruled, and a different view is adopted, that the new doctrine may
have to be applied prospectively in favor of parties who have relied on
the old doctrine and have acted in good faith in accordance therewith
under the familiar rule of “lex prospicit, non respicit.”

Thus the term psychological incapacity, borrowed from

the Canon Law, was given legal life by the Court in the case of Santos;
in the case of Molina, additional procedural guidelines to assist the
courts and the parties in trying cases for annulment of marriages
grounded on psychological incapacity was added. Both judicial
decisions in Santos and Molina have the force and effect of law. Thus,
the guidelines in the case of Molina are mandatory in nature. The
petition was denied.

UCPB VS UY

THE FACTS: Prime Town Property Group, Inc. (PPGI) and E. Ganzon Inc.
were the joint developers of the Kiener Hills Mactan Condominium
Project (Kiener Hills). In 1997, spouses Walter and Lily
Uy (respondents) entered into a Contract to Sell with PPGI for a unit in Kiener
Hills. The total contract price amounted to ₱1, 151,718. 7 5 payable according
to the following terms: (a) ₱l00,000.00 as down payment; and (b) the balance
paid in 40 monthly installments at ₱26,297.97 from 16 January 1997 to 16 April
2000.4

On 23 April 1998, PPGI and petitioner United Coconut Planters

Bank (UCPB) executed the following: Memorandum of Agreement (MOA),5 and
Sale of Receivables and Assignment of Rights and Interests.6 By virtue of the
said agreements, PPGI transferred the right to collect the receivables of the
buyers, which included respondents, of units in Kiener Hills. The parties entered
into the said agreement as PPGI's partial settlement of its ₱l,814,500,000.00
loan with UCPB.7

On 17 April 2006, the Housing and Land Use Regulatory Board Regional
Office (HLURB Regional Office) received respondents' complaint for sum of
money and damages against PPGI and UCPB. They claimed that in spite of
their full payment of the purchase price, PPGI failed to complete the
construction of their units in Kiener Hills.8

HLURB Regional Office found that respondents were entitled to a refund in

view of PPGI' s failure to complete the construction of their units. Nonetheless,
it found that UCPB cannot be solidarily liable with PPGI because only the
accounts receivables were conveyed to UCPB and not the entire condominium
project. The HLURB Regional Office suspended the proceedings as to PPGI on
account of its being in corporate rehabilitation. HLURB Board reversed and set
aside the HL URB Regional Office decision. It agreed that the proceedings
against PPGI should be suspended on account of its corporate rehabilitation.
Nevertheless, the HLURB Board found UCPB solidarily liable with PPGI
because it stepped into the latter's shoes insofar as Kiener Hills is concerned
pursuant to the MOA between them. It noted that UCPB was PPGI's successor-
in-interest, such that the delay in the completion of the condominium project
could be attributable to it and subject it to liability. The HLURB Board ruled that
as PPGI's assignee, UCPB was bound to refund the payments made, without
prejudice to its right of action against PPGI. UCPB appealed before the OP. In
its 24 March 2010 decision, the OP affirmed the decision of the HLURB Board.
It explained that the agreement between PPGI and UCPB clearly transferred all
rights, titles, interests, and participations over Kiener Hills to the latter. It
concluded that as successor-in-interest, UCPB now had the obligations relating
to Kiener Hills, including the reimbursement of payments to respondents. The
OP added that benefit of suspension of actions only attached to PPGI and not
to UCPB. Thus:

In its assailed 23 May 2012 decision, the CA affirmed with modification the OP
decision. While the appellate court agreed that respondents are entitled to a full
refund of the payments they may have made, it ruled that UCPB is not solidarily
liable with PPGI, and as such cannot be held liable for the full satisfaction of
respondents' payments. It limited UCPB's liability to the amount respondents
have paid upon the former's assumption as the party entitled to receive
payments or on 23 April 1998 when the MOA and AIR Agreement were made
between UCPB and PPGI.

In addition, the appellate court noted the pronouncements of the CA in United

Coconut Planters Bank v. O'Halloran (O'Halloran). 14 It explained that it involved
similar facts and issues where the CA ruled that the assignment of the
receivables did not make UCPB the developer of Kiener Hills it being merely
the assignee of the receivables under the contract to sell and, as such, UCPB
cannot be deemed as the debtor with respect to the construction, development,
and delivery of the subject condominium units. Thus, the CA ruled:

WHEREFORE, in view of all the foregoing, the instant Petition for Review is
PARTIALLY GRANTED. The promulgated Decision dated 24 March 2010 and
Resolution dated 16 February 2011 are hereby AFFIRMED with
MODIFICATION, as follows:

1) UCPB is ordered to pay Spouses Uy the amount of ₱552,152.34, with legal

interest at 6% per annum from the filing of the complaint until fully paid without
prejudice to whatever claims U CPB may have against Primetown; and

2) Without prejudice to a separate action Spouses Uy may file against

Primetown, Primetown is liable to pay Spouses Uy the amount of ₱599,566.41
with legal interest at 6% per annum from the filing of the complaint until fully
paid.15

UCPB moved for reconsideration but it was denied by the CA in its assailed 18
October 2012 resolution.

Hence, this appeal raising the following:

Issue: WHETHER THE HONORABLE COURT OF APPEALS GRIEVOUSLY

ERRED WHEN IT MISCONSTRUED THE APPLICABILITY TO THE INSTANT
CASE OF THE FINAL AND EXECUTORY DECISION IN UNITED COCONUT
PLANTERS BANK V. JOHN P. O'HALLORAN AND JOSEFINA O'HALLORAN
(CA-G.R. SP NO. 101699, 23 JULY 1999) UNDER THE PRINCIPLE OF
STARE DECISIS; AND

Ruling: Respondents assailed that the CA erred in applying O'Halloran because

the circumstances were different, notably the issue that estoppel did not arise in
the said case. In addition, they argued that 0 'Halloran and the other cases cited
by UCPB are not binding pursuant to the doctrine of stare decisisbecause they
were decided by the CA and not by this Court. As such, respondents posited
that only decisions of the Court, excluding all other courts such as the CA, form
part of the legal system.

On the other hand, UCPB countered that the only issue to be resolved in the
present petition is the actual amount of its liability. It explained that the assailed
CA decision had become final and executory after respondents failed to appeal
the same. UCPB pointed out that the issues respondents raised were already
ventilated before the appellate court. It believed that respondents should have
filed their own appeal to assail the issues they found questionable.

It must be remembered that when a case is appealed, the appellate court has
the power to review the case in its entirety.17 In Heirs of Alcaraz v. Republic of
the Phils., 18 the Court explained that an appellate court is empowered to make
its own judgment as it deems to be a just determination of the case, to wit:

In any event, when petitioners interposed an appeal to the Court of Appeals,

the appealed case was thereby thrown wide open for review by that court,
which is thus necessarily empowered to come out with a judgment as it thinks
would be a just determination of the controversy. Given this power, the
appellate court has the authority to either affirm, reverse or modify the appealed
decision of the trial court. To withhold from the appellate court its power to
render an entirely new decision would violate its power of review and would, in
effect, render it incapable of correcting patent errors committed by the lower
courts.19

Thus, when UCPB appealed the present controversy before the Court, it was
not merely limited to determine whether the CA accurately set UCPB's liability
against respondents. It is also empowered to determine whether the appellate
court's determination of liability was correct in the first place. This is especially
true considering that the issue of the nature of UCPB's liability is closely
intertwined and inseparable from the determination of the amount of its actual
liability.

Stare Decisis applies only to cases decided by the Supreme Court: As above-
mentioned, respondents bewail the reliance of the CA on 0 'Halloran arguing
that it was not a binding precedent since it was not issued by this Court. In De
Mesa v. Pepsi-Cola Products Phils. Inc.,20 the Court explained that the doctrine
of stare decisis deems decisions of this Court binding on the lower courts. The
principle of stare decisis et non quieta movere is entrenched in Article 8 of the
Civil Code, to wit: It enjoins adherence to judicial precedents. It requires our
courts to follow a rule already established in a final decision of the Supreme
Court. That decision becomes a judicial precedent to be followed in subsequent
cases by all courts in the land. The doctrine of stare decisis is based on the
principle that once a question of law has been examined and decided, it should
be deemed settled and closed to further argument. In other words, the doctrine
of stare decisis becomes operative only when judicial precedents are set by
pronouncements of this Court to the exclusion of lower courts. It is true
regardless whether the decisions of the lower courts are logically or legally
sound as only decisions issued by this Court become part of the legal system.
At the most, decisions of lower courts only have a persuasive effect. Thus,
respondents are correct in contesting the application of the doctrine of stare
decisis when the CA relied on decisions it had issued.

Martinez v Van Buskirk Digest

Facts: On the 11th day of September, 1908, Carmen Ong de Martinez,
was riding a carromata in Ermita, Manila when a delivery wagon owned
by the defendant (used for the transportation of fodder and to which
two horses are attached), came from the opposite direction, while
their carromata went close to the sidewalk in order to let the delivery
wagon pass by. However, instead of merely passing by, the horses ran
into the carromata occupied by the plaintiff with her child and
overturned it, causing a serious cut upon the plaintiff’s head. The
defendant contends that the cochero, who was driving his delivery
wagon at the time of the accident, was actually a good servant and
was considered a safe and reliable cochero. He also claims that the
cochero was tasked to deliver some forage at Calle Herran, and for
that purpose the defendant’s employee tied the driving lines of the
horses to the front end of the delivery wagon for the purpose of
unloading the forage to be delivered. However, a vehicle passed by the
driver and made noises that frightened the horses causing them to run.
The employee failed to stop the horses since he was thrown upon the
ground. From the stated facts, the court ruled that the defendant was
guilty of negligence. The court specifically cited a paragraph of Article
1903 of the Civil Code. Hence, this is appeal to reverse such decision.

Issue: Whether or not the employer, who has furnished a gentle and
tractable team (of horses) and a trusty and capable driver, is liable for the
negligence of such driver.

Ruling: NO. The cochero of the defendant was not negligent in leaving
the horses in the manner described by the evidence in this case. It is
believed that acts or performances which, in a long time, have not been
destructive and which are approved by the society are considered as
custom. Hence, they cannot be considered as unreasonable or
imprudent. The reason why they have been permitted by the society is
that they are beneficial rather that prejudicial. One could not easily
hold someone negligent because of some act that led to an injury or
accident. It would be unfair therefore to render the cochero negligent
because of such circumstances. The court further held that it is a
universal practice of merchants during that time to deliver products
through horse-drawn vehicles; and it is also considered universal
practice to leave the horses in the manner in which they were left during
the accident. It has been practiced for a long time and generally has not
been the cause of accidents or injuries the judgment is therefore
reversed.

CIR VS AICHI FORGING

Doctrine:
– The CIR has 120 days, from the date of the submission of the complete documents within
which to grant or deny the claim for refund/credit of input vat. In case of full or partial denial by
the CIR, the taxpayer’s recourse is to file an appeal before the CTA within 30 days from receipt
of the decision of the CIR. However, if after the 120-day period the CIR fails to act on the
application for tax refund/credit, the remedy of the taxpayer is to appeal the inaction of the CIR
to CTA within 30 days. As between the Civil Code and the Administrative Code of 1987, it is
the latter that must prevail being the more recent law, following the legal maxim, Lex posteriori
derogat priori.

Facts:
Petitioner filed a claim of refund/credit of input vat in relation to its zero-rated sales from July
1, 2002 to September 30, 2002. The CTA 2nd Division partially granted respondent’s claim for
refund/credit. Petitioner filed a Motion for Partial Reconsideration, insisting that the
administrative and the judicial claims were filed beyond the two-year period to claim a tax
refund/credit provided for under Sections 112(A) and 229 of the NIRC. He reasoned that since
the year 2004 was a leap year, the filing of the claim for tax refund/credit on September 30,
2004 was beyond the two-year period, which expired on September 29, 2004. He cited as
basis Article 13 of the Civil Code, which provides that when the law speaks of a year, it is
equivalent to 365 days. In addition, petitioner argued that the simultaneous filing of the
administrative and the judicial claims contravenes Sections 112 and 229 of the NIRC.
According to the petitioner, a prior filing of an administrative claim is a “condition precedent”
before a judicial claim can be filed. The CTA denied the MPR thus the case was elevated to
the CTA En Banc for review. The decision was affirmed. Thus the case was elevated to the
Supreme Court. Respondent contends that the non-observance of the 120-day period given
to the CIR to act on the claim for tax refund/credit in Section 112(D) is not fatal because what
is important is that both claims are filed within the two-year prescriptive period. In support
thereof, respondent cited Commissioner of Internal Revenue v. Victorias Milling Co., Inc. [130
Phil 12 (1968)] where it was ruled that “if the CIR takes time in deciding the claim, and the
period of two years is about to end, the suit or proceeding must be started in the CTA before
the end of the two-year period without awaiting the decision of the CIR.”

Issue: Whether or not the claim for refund was filed within the prescribed period

Held: Yes. As ruled in the case of Commissioner of Internal Revenue v. Mirant Pagbilao

Corporation (G.R. No. 172129, September 12, 2008), the two-year period should be

reckoned from the close of the taxable quarter when the sales were made. In Commissioner

of Internal Revenue v. Primetown Property Group, Inc (G.R. No. 162155, August 28, 2007,

531 SCRA 436), we said that as between the Civil Code, which provides that a year is

equivalent to 365 days, and the Administrative Code of 1987, which states that a year is

composed of 12 calendar months, it is the latter that must prevail being the more recent law,
following the legal maxim, Lex posteriori derogat priori. Thus, applying this to the present

case, the two-year period to file a claim for tax refund/credit for the period July 1, 2002 to

September 30, 2002 expired on September 30, 2004. Hence, respondent’s administrative
claim was timely filed.

Tenchavez v. Escano
Facts:
 February 24, 1948, Vicente Escano, 2nd yr student of commerce, from a well-
to-do and prominent family in Cebu, married petitioner Pastor Tenchavez, an
engineer, without the knowledge of her parents.
o Their marriage was the culmination of a love affair, and was duly
registered with the local civil register.
 Their plan to elope was disrupted by her mother who took her home, where
she admitted the marriage. Her parents were surprised and disgusted.
 A letter was handed to Mamerto Escano which discloses an amorous
relationship between Tenchavez and Pacita Noel, their friend. Thereafter, the
couple became estranged.
 June 24, 1950, without informing her husband, Escano applied for a passport
for which she indicated that she was single, and after approval, she left for
the US.
 In the District Court of Nevada, she filed for divorce, which was eventually
granted, on the ground of extreme cruelty, entirely mental in character.
  Sep.13, 1954, Escano married an American, Russel Leo Moran, in Nevada,
with whom she had children. She acquired US citizenship.
 July 30 1955, Tenchavez initiated the proceedings at bar by a complaint on
the annulment of the marriage, and asked for legal separation and damages.
 But Escano claimed that her divorce was valid, and so is her marriage to her
present husband.

Issue: Whether or not the divorce was valid

Held: No. It is not valid.

Ratio:
 Tenchavez and Escano were validly married to each other, under the civil law.
o age of majority, valid consent, Catholic priest
 The valid marriage between Tenchavez and Escano remained subsisting and
undissolved under Philippine law, notwithstanding the divorce obtained from
the Court of Nevada.
 At the time the divorce was issued, Escano, like her husband, was still a
Filipino citizen.
o Thus, she was then subject to Philippine law.
 Art. 15 of the Civil Code (Nationality rule):
Laws relating to family rights and duties or to the status, condition
and legal capacity of persons are binding upon the citizens of the
Philppines, even though living abroad.
 The Civil code of the Philippines does not allow absolute divorce. It only
allows legal separation.
 The Philippine courts cannot recognize a foreign decree of absolute divorce.
Art. 17 of Civil Code:
Prohibitive laws concerning persons, their acts or property, and those
which have for their object public order, 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.
 The policy of our law cannot be nullified by acts of private parties, hence
Escano’s divorce and second marriage are not entitled to recognition as valid.
 Her marriage and cohabitation with Russell Leo Moran is technically
“intercourse with a person not her husband” from the standpoint of
Philippine law, and entitles plaintiff Tenchavez to a decree of legal separation
under our law, on the basis of adultery.”

Board of Commissioners vs DelaRosa

Facts: On July 6, 1960, Santiago Gatchalian, grandfather of William Gatchalian, was

recognized by the BOI as a native born Filipino citizen. Santiago Gatchalian testified
that he has 5 children.
On June 27, 1961, William Gatchalian then a twelve year old minor arrived in Manila
and sought admission as Filipino citizen which was eventually granted by the board
of special inquiry. However, the Secretary of Justice issued a memorandum setting
aside all decisions and directed the Board of Commissions to review all cases where
entry was allowed among which was that of William Gatchalian.

ISSUE: Whether or not the marriage of Gatchalian in China is valid in accordance

with Philippine law.

HELD: The Supreme Court held that in the absence of the evidence to the contrary
foreign laws on a particular subject are presumed to be the same as those of the
Philippines. This is known as Processual Presumption. In this case, there being no
proof of Chinese law relating to marriage, there arises a presumption that it is the
same of that of Philippine law the said marriage then is declared valid. Therefore,
William Gatchalian following the citizenship of his father is a Filipino citizen.

Where it held that, considering that in case of doubt, all presumptions favor the
solidarity of the family and every intendment of the law or facts leans toward the
validity of marriage, “he who asserts that the marriage is not valid under our law bears
the burden of proof to present the foreign law.” This case, therefore, shifted the
burden of proof from the one who asserts the validity of a marriage to the one
assailing the validity of the marriage. Pertinently, the Supreme Court stated, to wit: In
Miciano v. Brimo (50 Phil. 867 [1924]; Lim and Lim v. Collector of Customs, 36 Phil.
472; Yam Ka Lim v. Collector of Customs, 30 Phil. 46 [1915]), this Court held that in
the absence of evidence to the contrary, foreign laws on a particular subject are
presumed to be the same as those of the Philippines. In the case at bar, there being
no proof of Chinese law relating to marriage, there arises a presumption that it is the
same as Philippine law.

The lack of proof of Chinese law on the matter cannot be blamed on Santiago
Gatchalian, much more on respondent William Gatchalian who was then a twelve
year-old minor. That fact is, as records indicate, Santiago was not pressed by the
Citizenship Investigation Board to prove the laws of China relating to marriage,
having been content with the testimony of Santiago that the Marriage Certificate was
lost or destroyed during the Japanese occupation of China. Neither was Francisco
Gatchalian’s testimony subjected to the same scrutiny by the Board of Special
Inquiry. Nevertheless, the testimonies of Santiago Gatchalian and Francisco
Gatchalian before the Philippine consular and immigration authorities regarding their
marriages, birth and relationship to each other are not self-serving but are admissible
in evidence as statements or declarations regarding family relation, reputation or
tradition in matters of pedigree (Sec. 34, Rule 130). Furthermore, this salutary rule of
evidence finds support in substantive law. Thus, Art. 267 of the Civil Code provides:
“Art. 267. In the absence of a record of birth, authentic document, final judgment or
possession of status, legitimate filiation may be proved by any other means allowed
by the Rules of Court and special laws” (See also Art. 172 of the Family Code).

Consequently, the testimonies/affidavits of Santiago Gatchalian and Francisco

Gatchalian aforementioned are not self-serving but are competent proofs of filiation
(Art. 172[2], Family Code).
Philippine law, following the lex loci celebrationis, adheres to the rule that a marriage
formally valid where celebrated is valid everywhere. Referring to marriages
contracted abroad, Art. 71 of the Civil Code (now Art. 26 of the Family Code) provides
that “all marriages performed outside of the Philippines in accordance with the laws
in force in the country where they were performed and valid there as such, shall also
be valid in this country …” And any doubt as to the validity of the matrimonial unity
and the extent as to how far the validity of such marriage may be extended to the
consequences of the coverture is answered by Art. 220 of the Civil Code in this
manner: “In case of doubt, all presumptions favor the solidarity of the family. Thus,
every intendment of law or facts leans toward the validity of marriage, the
indissolubility of marriage bonds, the legitimacy of children, the community of
property during the marriage, the authority of parents over their children, and the
validity of defense for any member of the family in case of unlawful aggression.”
Bearing in mind the “processual presumption” enunciated in Miciano and other cases,
he who asserts that the marriage is not valid under our law bears the burden of proof
to present the foreign law.

Interestingly and with reasons, Justice Florentino Feliciano strongly registered his
dissent in the aforequoted ruling by stating that “the rule that a foreign marriage valid
in accordance with the law of the place where it was performed shall be valid also in
the Philippines, cannot begin to operate until after the marriage performed abroad
and its compliance with the requirements for validity under the marriage law of the
place where performed, are first shown as factual matters” (Ibid., pages 913-914).

YAO KEE VS. GONZALES

167 SCRA 736
FACTS:
1. Sy Kiat, a Chinese national, died in Calooocan City where he was then residing leaving
behind real and personal properties here in the Philippines.
2. Private respondents (Aida Sy-Gonzales et al.,) filed a petition for the grant of letters or
administration alleging that they were the children of the deceased with Asuncion Gillego.
3. Petition was opposed by herein petitioners (Yao Kee et al.,) alleging that they were the
legitimate family.
4. The probate court found that Sy Kiat was legally married to Yao Kee and that their 3
offsprings were the legitimate children.
5. The court likewise ruled that respondents are the acknowledged illegitimate offspring of Sy
Kiat with Asuncion Gillego.
6. On appeal, the lower court’s decision was set aside declaring petitioners as the
acknowledge natural children of Sy Kiat and Asuncion Gillego.
7. Oppostiors were declared the acknowelged natural children of the deceased since the
legality of the alleged marriage of Sy Kiat and Yao Kee in China had not been proven to be
valid to the laws of China.

ISSUE: Was the fact of marriage of Sy Kiat and Yao Kee in China proven as a custom?

HELD: Custom is defined as “a rule of conduct formed by repetition of acts, uniformly

observed (practiced) as a social rule, legally binding and obligatory.” The law requires that “a
custom must be proved as a fact, according to the rules of evidence. [Article 12, Civil Code]
On this score the Court had occasion to state that “ a local custom as a source of right
cannot be considered by a court of justice unless such custom is properly established by
competent evidence like any other fact. The same evidence, if not one of a higher degree,
should be required of a foreign custom.

Construing this provision of law the Court has held that to establish a valid foreign marriage
two things must be proven, namely 1) the existence of the foreign law as a question of fact;
and 2) the alleged foreign marriage by convincing evidence.

In the case at bar petitioners did not present any competent evidence relative to the law and
custom of China on marriage. The testimonies of Yao and Gan Ching (brother) cannot be
considered as proof of China’s law or custom on marriage not only because they are self
serving evidence, but more importantly, there is no showing that they are competent to testify
on the subject matter. For failure to prove the foreign law or custom, and consequently, the
validity of the marriage in accordance with said law or custom, the marriage between Yao
Kee and Sy Kiat cannot be recognized in this jurisdiction.

However, as petitioners failed to establish the marriage of Yao Kee with Sy Kiat according to
the laws of China, they cannot be accorded the status of legitimate children but only that of
acknowledged natural children. petitioners are natural children, it appearing that at the time
of their conception Yao Kee and Sy Kiat were not disqualified by any impediment to marry
one another. [See Art. 269, Civil Code] And they are acknowledged children of the deceased
because of Sy Kiat’s recognition of Sze Sook Wah and its extension to Sze Lai Cho and Sy
Chun Yen who are her sisters of the full blood.

Private respondents on the other hand are also the deceased’s acknowledged natural
children with Asuncion Gillego , a Filipina with whom he lived for 25 years without the benefit
of marriage. They have in their favor their father’s acknowledgment, evidence by a
compromise agreement entered into by and between their parents and approved by the CFI
wherein Sy Kiat not only acknowledged them as his children by Asuncion Gillego but likewise
made provisions for their support and future inheritance.

Aznar vs Garcia

Facts: Helen Christensen Garcia filed a petition for review to the Supreme Court the
decision of the lower court in Davao declaring that Maria Lucy Christensen is the
sole heir of testator Edward Christensen. Facts of the case are as follows:

1. Edward Christensen was born in New York but he migrated to California

where he resided for a period of 9 years.
2. He came to the Philippines where he became a domiciliary until his death.
3. In his will, he declared to have only one child (natural daughter) Maria Lucy
Christensen as his only heir
4. However, he left a sum of money in favor of Helen Christensen Garcia, an
acknowledged natural child, though not in any way related to the deceased.
5. Helen claims that under Article 16, paragraph 2 of the Civil Code, California
law should be applied; that under California law, the matter is referred back
to the law of the domicile.

ISSUE: Whether or not the national law of the deceased should be applied in
determining the successional rights of his heirs.
 HELD: Yes. Article 16 of the Civil Code states that succesional rights are determined
by the national law of the country where the deceased is a citizen hence the internal
law of California since it was ruled that Edward Christensen is a citizen of California.
Said internal law distinguishes the rule to be applied to Californians domiciled in
California and for Californians domiciled outside of California. For Californians
residing in other jurisdiction, the law of said country must apply. Edward Christensen
being domiciled in the Philippines, the law of his domicile must be followed. The case
was remanded to the lower court for further proceedings – the determination of the
successional rights under Philippine law only.

Article 16 of the Civil Code provides that the intrinsic validity of testamentary
dispositions are governed by the national law of the decedent, in this case, California
law. The provision in the laws of California giving a testator absolute freedom in
disposing of his estate is the internal law which applies only to persons domiciled
within the said estate. On the other hand, the provision in the laws of California stating
that personal property is governed by the laws of the domicile of its owner is the
conflict of laws rule that applies to persons not domicile in the said state. Accordingly,
the laws of the Philippines, in which the testator is domiciled governs the succession
and the regime of legitimes must be respected.

Amos vs Bellis
FACTS:
 Amos G. Bellis, a citizen of the State of Texas and of the United States.
 By his first wife, Mary E. Mallen, whom he divorced, he had 5 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 3
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
 August 5, 1952: Amos G. Bellis executed a will in the Philippines
dividing his estate as follows:
1. $240,000.00 to his first wife, Mary E. Mallen
2. P40,000.00 each to his 3 illegitimate children, Amos Bellis, Jr., Maria Cristina
Bellis, Miriam Palma Bellis
3. remainder shall go to his seven surviving children by his first and second wives
 July 8, 1958: Amos G. Bellis died a resident of Texas, U.S.A
 September 15, 1958: his will was admitted to probate in the CFI of
Manila on
 People's Bank and Trust Company as executor of the will did as the will
directed
 Maria Cristina Bellis and Miriam Palma Bellis filed their respective
oppositions on the ground that they were deprived of their legitimes as
illegitimate children
 Probate Court: 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.
 ISSUE: W/N Texas laws or national law of Amos should govern the intrinsic
validity of the will
HELD: YES. Order of the probate court is hereby affirmed
 Doctrine of Processual Presumption:
 The foreign law, whenever applicable, should be proved by the
proponent thereof, otherwise, such law shall be presumed to be exactly
the same as the law of the forum.
 In the absence of proof as to the conflict of law rule of Texas, it should
not be presumed different from ours. Apply Philippine laws.
 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.
 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.

Tayag vs Benguet Consolidated

o PRIVATE INTERNATIONAL LAW: Situs of Shares of Stock: domicile of

the corporation
o SUCCESSION: Ancillary Administration: The ancillary administration
is proper, whenever a person dies, leaving in a country other than that
of his last domicile, property to be administered in the nature of assets
of the deceased liable for his individual debts or to be distributed among
his heirs.
o SUCCESSION: Probate: Probate court has authority to issue the order
enforcing the ancillary administrator’s right to the stock certificates
when the actual situs of the shares of stocks is in the Philippines.
FACTS: Idonah Slade Perkins, an American citizen who died in New York
City, left among others, two stock certificates issued by Benguet
Consolidated, a corporation domiciled in the Philippines. As ancillary
administrator of Perkins’ estate in the Philippines, Tayag now wants to take
possession of these stock certificates but County Trust Company of New
York, the domiciliary administrator, refused to part with them. Thus, the
probate court of the Philippines was forced to issue an order declaring the
stock certificates as lost and ordering Benguet Consolidated to issue new
stock certificates representing Perkins’ shares. Benguet Consolidated
appealed the order, arguing that the stock certificates are not lost as they are
in existence and currently in the possession of County Trust Company of
New York.

ISSUE: Whether or not the order of the lower court is proper

HELD: The appeal lacks merit. Tayag, as ancillary administrator, has the
power to gain control and possession of all assets of the decedent within the
jurisdiction of the Philippines

It is to be noted that the scope of the power of the ancillary administrator

was, in an earlier case, set forth by Justice Malcolm. Thus: "It is often
necessary to have more than one administration of an estate. When a person
dies intestate owning property in the country of his domicile as well as in a
foreign country, administration is had in both countries. That which is
granted in the jurisdiction of decedent's last domicile is termed the principal
administration, while any other administration is termed the ancillary
administration. Hence, an administrator appointed in a foreign state has no
authority in the [Philippines]. The ancillary administration is proper,
whenever a person dies, leaving in a country other than that of his last
domicile, property to be administered in the nature of assets of the deceased
liable for his individual debts or to be distributed among his heirs."

Del Soccorro vs Van Wilsem

Facts: Norma A. Del Socorro and Ernst Van Wilsem contracted marriage in
Holland. They were blessed with a son named Roderigo Norjo Van Wilsem.
Unfortunately, their marriage bond ended by virtue of a Divorce Decree
issued by the appropriate Court of Holland. Thereafter, Norma and her son
came home to the Philippines. According to Norma, Ernst made a promise
to provide monthly support to their son. However, since the arrival of
petitioner and her son in the Philippines, Ernst never gave support to
Roderigo. Norma filed a complaint against Ernst for violation of R.A. No.
9262 for the latter’s unjust refusal to support his minor child with
petitioner. The trial court dismissed the complaint since the facts charged in
the information do not constitute an offense with respect to the accused,
he being an alien.

ISSUE: Does a foreign national have an obligation to support his minor child
under Philippine law?

RULING: Yes, since Ernst is a citizen of Holland or the Netherlands, we agree

with the RTC that he is subject to the laws of his country, not to Philippine
law, as to whether he is obliged to give support to his child, as well as the
consequences of his failure to do so. This does not, however, mean that
Ernst is not obliged to support Norma’s son altogether. In international law,
the party who wants to have a foreign law applied to a dispute or case has
the burden of proving the foreign law. In the present case, Ernst hastily
concludes that being a national of the Netherlands, he is governed by such
laws on the matter of provision of and capacity to support. While Ernst
pleaded the laws of the Netherlands in advancing his position that he is not
obliged to support his son, he never proved the same. It is incumbent upon
Ernst to plead and prove that the national law of the Netherlands does not
impose upon the parents the obligation to support their child. Foreign laws
do not prove themselves in our jurisdiction and our courts are not
authorized to take judicial notice of them. Like any other fact, they must be
alleged and proved. Moreover, foreign law should not be applied when its
application would work undeniable injustice to the citizens or residents of
the forum. To give justice is the most important function of law; hence, a
law, or judgment or contract that is obviously unjust negates the
fundamental principles of Conflict of Laws. Applying the foregoing, even if
the laws of the Netherlands neither enforce a parent’s obligation to support
his child nor penalize the non-compliance therewith, such obligation is still
duly enforceable in the Philippines because it would be of great injustice to
the child to be denied of financial support when the latter is entitled
thereto.

Hasegawa vs. Kitamura

Facts: Nippon, a Japanese consultancy firm entered into an Independent

Contractor Agreement (ICA) in Japan with respondent Minoru Kitamura, a
Japanese national permanently residing in the Philippines. Nippon then
assigned respondent to work as the project manager of the Southern Tagalog
Access Road (STAR) Project in the Philippines On 2000, petitioner Kazuhiro
Hasegawa, Nippon’s general manager for its International Division, informed
respondent that the company had no more intention of automatically
renewing his ICA. His services would be engaged by the company only up to
the substantial completion of the STAR Project on March 31, 2000, just in
time for the ICA’s expiry.
Threatened with impending unemployment, respondent, through his
lawyer, requested a negotiation conference and demanded that he be
assigned to the BBRI project. Nippon insisted that respondent’s contract was
for a fixed term. As he was not able to generate a positive response from the
petitioners, respondent consequently initiated an action for specific
performance and damages with the Regional Trial Court.
Petitioners contended that the ICA had been perfected in Japan and
executed by and between Japanese nationals, moved to dismiss the
complaint for lack of jurisdiction. They asserted that the claim for improper
pre-termination of respondent’s ICA could only be heard and ventilated in
the proper courts of Japan following the principles of lex loci celebrationis
and lex contractus. The RTC, denied the motion to dismiss.

Petitioners on certiorari invoked the defense of forum non conveniens. On

petition for review before this Court, petitioners dropped their other
arguments, maintained the forum non conveniens defense, and introduced
their new argument that the applicable principle is the [state of the] most
significant relationship rule

Issue: Whether the case is dismissible on the ground of principles of lex loci
celebrationis and lex contractus, forum non conveniens and state of the most
significant relationship rule.

Ruling: In the judicial resolution of conflicts problems, three consecutive

phases are involved: jurisdiction, choice of law, and recognition and
enforcement of judgments. Corresponding to these phases are the following
questions: (1) Where can or should litigation be initiated? (2) Which law will
the court apply? and (3) Where can the resulting judgment be enforced?

Jurisdiction and choice of law are two distinct concepts. Jurisdiction

considers whether it is fair to cause a defendant to travel to this state; choice
of law asks the further question whether the application of a substantive law
which will determine the merits of the case is fair to both parties. The power
to exercise jurisdiction does not automatically give a state constitutional
authority to apply forum law. In this case, only the first phase is at issue—
jurisdiction and not choice of law. Lex loci celebrationis relates to the “law of
the place of the ceremony” or the law of the place where a contract is made.
The doctrine of lex contractus or lex loci contractus means the “law of the
place where a contract is executed or to be per-formed.” It controls the
nature, construction, and validity of the contract and it may pertain to the
law voluntarily agreed upon by the parties or the law intended by them either
expressly or implicitly. Under the “state of the most significant relationship
rule,” to ascertain what state law to apply to a dispute, the court should
determine which state has the most substantial connection to the
occurrence and the parties. In a case involving a contract, the court should
consider where the contract was made, was negotiated, was to be
performed, and the domicile, place of business, or place of incorporation of
the parties. Since these three principles in conflict of laws make reference to
the law applicable to a dispute, they are rules proper for the second phase,
the choice of law. Clearly the RTC has jurisdiction over the action is it one of
those incapable of pecuniary estimation. There was a premature invocation
of the choice of law rule since before determining which law should apply,
first there should exist a conflict of laws situation requiring the application of
the conflict of laws rules.

RAYTHEON INTERNATIONAL, INC. vs. STOCKTON W. ROUZIE, JR.

Facts: Brand Marine Services, Inc. (BMSI), a corporation duly organized and existing
under the laws of the State of Connecticut, United States of America, and respondent
Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby BMSI
hired Rouzie as its representative to negotiate the sale of services in several
government projects in the Philippines for an agreed remuneration of 10% of the
gross receipts. Rouzie filed before the Arbitration Branch of the National Labor
Relations Commission (NLRC) a suit against BMSI and Rust International, Inc.
(RUST), for alleged nonpayment of commissions, illegal termination and breach of
employment contract. Labor Arbiter rendered judgment ordering BMSI and RUST to
pay respondent’s money claims. Upon appeal by BMSI, the NLRC reversed the
decision of the Labor Arbiter and dismissed respondent’s complaint on the ground of
lack of jurisdiction. Rouzie, then a resident of La Union, instituted an action for
damages before the Regional Trial Court (RTC) of Bauang, La Union against
Raytheon. Rouzie essentially reiterated the allegations in the labor case, and Rouzie
also averred that BMSI and RUST as well as petitioner itself had combined and
functioned as one company. In its Answer, Raytheon alleged that contrary to
respondent’s claim, it was a foreign corporation duly licensed to do business in the
Philippines and denied entering into any arrangement with respondent or paying the
latter any sum of money. Petitioner also referred to the NLRC decision which
disclosed that per the written agreement between respondent and BMSI and RUST,
denominated as "Special Sales Representative Agreement," the rights and
obligations of the parties shall be governed by the laws of the State of Connecticut.

Raytheon sought the dismissal of the complaint on grounds of failure to state a

cause of action and forum non conveniens and prayed for damages by way of
compulsory counterclaim. The RTC denied Raytheon’s omnibus motion. The trial
court held that the factual allegations in the complaint, assuming the same to be
admitted, were sufficient for the trial court to render a valid judgment thereon. It also
ruled that the principle of forum non conveniens was inapplicable because the trial
court could enforce judgment on petitioner, it being a foreign corporation licensed to
do business in the Philippines.Raytheon sought the dismissal of the complaint on the
grounds of failure to state acause of action & forum non conveniens & prayed for
damages by way of compulsory counterclaim. The RTC denied Raytheon’s motion.
The CA affirmed.

Raytheon’s contention:

(a.)The written contract between Rouzie & BMSI included a valid choice of law
clause, that is, that the contract shall be governed by the laws of the State of
Connecticut.

(b) It also mentions the presence of foreign elements in the dispute, namely that
the parties & witnesses involved are American corporations & citizens & the evidence
to be presented is located outside the Philippines, that renders our local courts
inconvenient forums. The foreign elements of the dispute necessitate the immediate
application of the doctrine of forum non conveniens.

Issue:

(a.) Whether the RTC had jurisdiction over the case.

(b.) Whether the complaint should be dismissed on the ground of forum

non conveniens.

Ruling:

(A) Yes. On the matter of jurisdiction over a conflicts-of-laws

problem where the case is filed in a Philippine court and where
the court has jurisdiction over the subject matter, the parties and
the res, it may or can proceed to try the case even if the rules of
conflict-of-laws or the convenience of the parties point to a
foreign forum. This is an exercise of sovereign prerogative of
the country where the case is filed.
 Jurisdiction over the nature and subject matter of an action is conferred by the
Constitution and the law and by the material allegations in the complaint, irrespective
of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs
sought therein. Civil Case No. 1192-BG is an action for damages arising from an
alleged breach of contract. Undoubtedly, the nature of the action and the amount of
damages prayed are within the jurisdiction of the RTC.

As regards jurisdiction over the parties, the trial court acquired jurisdiction over
herein respondent (as party plaintiff) upon the filing of the complaint. On the other
hand, jurisdiction over the person of petitioner (as party defendant) was acquired by
its voluntary appearance in court.A

(B) No. Under the doctrine of forum non conveniens, a court, in

conflicts-of-laws cases, may refuse impositions on its
jurisdiction where it is not the most "convenient" or available
forum and the parties are not precluded from seeking remedies
elsewhere. Petitioner’s averments of the foreign elements in the
instant case are not sufficient to oust the trial court of its
jurisdiction over Civil Case No. No. 1192-BG and the parties
involved.

Moreover, the propriety of dismissing a case based on the principle of forum non
conveniens requires a factual determination; hence, it is more properly considered
as a matter of defense. 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.