PRIL

Kazuhiro Hasegawa and Nippon Engineering Consultants Co., Ltd. v. Minoru Kitamura, G.R. No. 149177, November
23, 2007

FACTS:
On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese consultancy firm
providing technical and management support in the infrastructure projects of foreign governments,[3] entered into
an Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national permanently
residing in the Philippines.[4] The agreement provides that respondent was to extend professional services to
Nippon for a year starting on April 1, 1999.[5] Nippon then assigned respondent to work as the project manager of
the Southern Tagalog Access Road (STAR) Project in the Philippines, following the company's consultancy contract
with the Philippine Government.[6]

When the STAR Project was near completion, the Department of Public Works and Highways (DPWH)
engaged the consultancy services of Nippon, on January 28, 2000, this time for the detailed engineering and
construction supervision of the Bongabon-Baler Road Improvement (BBRI) Project.[7] Respondent was named as
the project manager in the contract's Appendix 3.1.[8]

On February 28, 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.[9]

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 respondents contract was
for a fixed term that had already expired, and refused to negotiate for the renewal of the ICA.[10]
 As he was not able to generate a positive response from the petitioners, respondent consequently initiated
on June 1, 2000 Civil Case No. 00-0264 for specific performance and damages with the Regional Trial Court of Lipa
City.[11]

For their part, petitioners, contending 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.[12]

In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of Kitamura by
a certain Y. Kotake as project manager of the BBRI Project.[13]

On June 29, 2000, the RTC, invoking our ruling in Insular Government v. Frank[14] that matters connected
with the performance of contracts are regulated by the law prevailing at the place of performance,[15] denied the
motion to dismiss.[16] The trial court subsequently denied petitioners' motion for reconsideration,[17] prompting
them to file with the appellate court, on August 14, 2000, their first Petition for Certiorari under Rule 65 [docketed
as CA-G.R. SP No. 60205].[18] On August 23, 2000, the CA resolved to dismiss the petition on procedural grounds
for lack of statement of material dates and for insufficient verification and certification against forum shopping.[19]
An Entry of Judgment was later issued by the appellate court on September 20, 2000.[20]

Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the
reglementary period, a second Petition for Certiorari under Rule 65 already stating therein the material dates and
attaching thereto the proper verification and certification. This second petition, which substantially raised the same
issues as those in the first, was docketed as CA-G.R. SP No. 60827.[21]

Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001
Decision[22] finding no grave abuse of discretion in the trial court's denial of the motion to dismiss. The CA ruled,
among others, that the principle of lex loci celebrationis was not applicable to the case, because nowhere in the
pleadings was the validity of the written agreement put in issue. The CA thus declared that the trial court was
correct in applying instead the principle of lex loci solutionis.[23]

Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25,
2001Resolution.[24]

ISSUE:
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT MATTER OF
THE PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN
THE JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.

RULING:
To elucidate, 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?[53]

Analytically, jurisdiction and choice of law are two distinct concepts.[54] Jurisdiction considers whether it is
fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a
substantive law which will determine the merits of the case is fair to both parties. The power to exercise jurisdiction
does not automatically give a state constitutional authority to apply forum law. While jurisdiction and the choice of
the lex fori will often coincide, the minimum contacts for one do not always provide the necessary significant
contacts for the other.[55] The question of whether the law of a state can be applied to a transaction is different
from the question of whether the courts of that state have jurisdiction to enter a judgment.[56]

In this case, only the first phase is at issuejurisdiction. Jurisdiction, however, has various aspects. For a
court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff or the
petitioner, over the defendant or the respondent, over the subject matter, over the issues of the case and, in cases
involving property, over the res or the thing which is the subject of the litigation.[57] In assailing the trial court's
jurisdiction herein, petitioners are actually referring to subject matter jurisdiction.

Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which
establishes and organizes the court. It is given only by law and in the manner prescribed by law.[58] It is further
determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the
claims asserted therein.[59] To succeed in its motion for the dismissal of an action for lack of jurisdiction over the
subject matter of the claim,[60] the movant must show that the court or tribunal cannot act on the matter
submitted to it because no law grants it the power to adjudicate the claims.[61]

In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not properly
vested by law with jurisdiction to hear the subject controversy for, indeed, Civil Case No. 00-0264 for specific
performance and damages is one not capable of pecuniary estimation and is properly cognizable by the RTC of Lipa
City.[62] What they rather raise as grounds to question subject matter jurisdiction are the principles of lex loci
celebrationis and lex contractus, and the state of the most significant relationship rule.

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the law of the place of the ceremony[63] or the law of the place where a
contract is made.[64] The doctrine of lex contractus or lex loci contractus means the law of the place where a
contract is executed or to be performed.[65] It controls the nature, construction, and validity of the contract[66]
and it may pertain to the law voluntarily agreed upon by the parties or the law intended by them either expressly
or implicitly.[67] 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.[68] This rule
takes into account several contacts and evaluates them according to their relative importance with respect to the
particular issue to be resolved.[69]

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.[70] They determine which state's law is to be applied in
resolving the substantive issues of a conflicts problem.[71] Necessarily, as the only issue in this case is that of
jurisdiction, choice-of-law rules are not only inapplicable but also not yet called for.

Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have not yet
pointed out any conflict between the laws of Japan and ours. Before determining which law should apply, first there
should exist a conflict of laws situation requiring the application of the conflict of laws rules.[72] Also, when the law
of a foreign country is invoked to provide the proper rules for the solution of a case, the existence of such law must
be pleaded and proved.[73]

It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or
administrative agency, there are three alternatives open to the latter in disposing of it: (1) dismiss the case, either
because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction over the case
and apply the internal law of the forum; or (3) assume jurisdiction over the case and take into account or apply the
law of some other State or States.[74] The courts power to hear cases and controversies is derived from the
Constitution and the laws. While it may choose to recognize laws of foreign nations, the court is not limited by
foreign sovereign law short of treaties or other formal agreements, even in matters regarding rights provided by
foreign sovereigns.[75]

Neither can the other ground raised, forum non conveniens,[76] be used to deprive the trial court of its jurisdiction
herein. First, it is not a proper basis for a motion to dismiss because Section 1, Rule 16 of the Rules of Court does
not include it as a ground.[77] Second, whether a suit should be entertained or dismissed on the basis of the said
doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial
court.[78] In this case, the RTC decided to assume jurisdiction. Third, the propriety of dismissing a case based on
this principle requires a factual determination; hence, this conflicts principle is more properly considered a matter
of defense.[79]

Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed by
respondent and the grounds raised by petitioners to assail that jurisdiction are inappropriate, the trial and
appellate courts correctly denied the petitioners motion to dismiss.

2.
Lavern R. Dilweg, vs. Robert O. Phillips, Inocentes Dineros and Isaac S. Eceta, G.R. No. L-19596, October 30, 1964

FACTS:
Lavern R. Dilweg a nonresident American, through counsel, instituted the complaint at bar consisting of six causes
of action against defendants. Robert O. Phillips, Inocentes G. Dineros, and Isaac S. Esceta, claiming civil damages
arising out of alleged libelous and defamatory statements uttered and published in the Philippines by the latter.

Lower court dismissed the case stating that the in order that the court may validly try a case, it must have
jurisdiction not only over the persons of the parties and over the subject matter and that plaintiff must be a
resident within the territorial jurisdiction of this Court in order that jurisdiction over his person can be acquired,
otherwise the Court will not be able to render a valid judgment against him.

ISSUE:
whether or not our Philippine courts can rightfully refuse to assume jurisdiction over a personal action instituted by
a nonresident alien who is not within the territorial jurisdiction of our courts.

RULING:
t is not indispensable for a foreigner to establish residence, nor need he be physically present in a state of which
he is not a resident or citizen in order that he may initiate or maintain a personal action against a resident or
citizen of that other state for rights of action arising in, or for violations of laws committed within, the territorial
jurisdiction of that other state. In this jurisdiction, no general law has come to our knowledge or notice which
restricts the right of non-resident aliens to sue in our courts. It is not disputed that plaintiff's causes of action arose
in, and that the defendants are within, our territorial jurisdiction. It is conceded by both parties that the law under
which the instant case falls is silent on the matter of the right of an alien to sue in our courts. On the other hand,
the particular law evidently availed of by the plaintiff in filing his complaint is article 33 of the Civil Code of the
Philippines, which provides:

In cases of defamation, fraud, and physical injuries, a civil action for damages entirely separate and distinct from
the criminal action may be brought by the injured party. Such civil action shall proceed independently of the
criminal prosecution and shall require only preponderance of evidence.

The above-quoted provision of law does not make any distinction as to whether the "injured party", who may
maintain an action for damages based on defamation, is a Filipino citizen or a resident or an alien.

The American decisions cited in the order of 11 May 1961 are not applicable to the case at bar because there the
defendants invoked the issue of lack of jurisdiction over their own persons and not against the person of the
plaintiff.
The fact that there are counterclaims against the non-resident plaintiff does not alter the case. The Rules of Court
provide for remedies against nonresident defendants.

3.
Northwest Orient Airlines, Inc. vs. Court of Appeals and C.F. Sharp & Company Inc., G.R. No. 112573, February 9,
1995.

FACTS:

4.
PENNOYER V NEFF

FACTS:
Mitchell, a lawyer, sued Defendant, his client, in Oregon state court for unpaid legal fees. At the time Defendant
was a non-resident of the state who was not personally served with process. Constructive service was issued upon
Defendant by publication. Defendant did not come to court or otherwise resist the lawsuit, and default judgment
was entered against him. After the default judgment, Defendant acquired 300 acres of land in Oregon. To satisfy his
judgment against Defendant, Mitchell had the sheriff seize and sell Defendants land. The land was purchased by
Plaintiff, who received a sheriffs deed as evidence of title. The sheriff then turned the sale proceeds over to
Mitchell. Shortly after the sheriffs sale, Defendant discovered what had happened to his land and brought suit
against Plaintiff to recover the land. This appeal followed after Defendant lost his suit against Plaintiff.

Issue. Can judgments obtained against non-residents who fail to appear in court be sustained by default
judgments where service of process is accomplished solely through publication (i.e. constructive service)?
Is constructive service sufficient notice to attach property within the forum state owned by a non-resident?
 RULING:

Held. No. The personal judgment recovered in the state court of Oregon against Plaintiff was without validity, and the
decision of the Court of Appeals overturning that judgment was affirmed.

When a suit is merely in personam (i.e. against a person), constructive service through publication upon a non-
resident is ineffective.

No state can exercise direct jurisdiction and authority over persons or property without its territory. However, a state
may subject property within its boundaries to the payments of its citizens, even when the land is owned by a non-
resident, without infringing upon the sovereignty of the state of residency of the landowner.

****Held, that defects in the affidavit for the order can only be taken advantage of on appeal, or by some other direct
proceeding, and cannot be urged to impeach the judgment collaterally, and that the provision as to proof of the
publication is satisfied when the affidavit is made by the editor of the paper.

2. A personal judgment is without any validity if it be rendered by a State court in an action upon a money demand
against a nonresident of the State who was served by a publication of summons, but upon whom no personal
service of process within the State was made, and who did not appear; and no title to property passes by a sale
under an execution issued upon such a judgment.

3. The State, having within her territory property of a nonresident, may hold and appropriate it to satisfy the claims
of her citizens against him, and her tribunals may inquire into his obligations to the extent necessary to control the
 disposition of that property. If he has no property in the State, there is nothing upon which her tribunals can
adjudicate.

4. Substituted service by publication, or in any other authorized form, is sufficient to inform a nonresident of the
object of proceedings taken where [p715] property is once brought under the control of the court by seizure or
some equivalent act, but where the suit is brought to determine his personal rights and obligations, that is, where
it is merelyin personam, such service upon him is ineffectual for any purpose.

5.

PERKINS V DIZON

FACTS:

On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of Manila
against the Benguet Consolidated Mining Company for dividends amounting to P71,379.90 on 52,874 shares of stock
registered in his name, payment of which was being withheld by the company; and, for the recognition of his right to
the control and disposal of said shares, to the exclusion of all others. To the complaint, the company filed its answer
alleging, by way of defense, that the withholding of such dividends and the non-recognition of plaintiff's right to the
disposal and control of the shares were due to certain demands made with respect to said shares by the petitioner
herein, Idonah Slade Perkins, and by one George H. Engelhard. The answer prays that the adverse claimants be made
parties to the action and served with notice thereof by publication, and that thereafter all such parties be required to
interplead and settle the rights among themselves; in which later on the TC ordered the respondent to include in his
complaint as parties defendant Idonah Pekins and Engelhard.
respondent Perkins prayed that petitioner Idonah Slade Perkins and George Engelhard be adjudged without interest in
the shares of stock in question and excluded from any claim they assert thereon. Thereafter, summons by publication
were served upon the non-resident defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the order
of the trial court. Perkins she challenged the jurisdiction of the lower court over her person---which was oeverruled,
the filed pet for cert praying that the summons by publication issued against her be declared null and void, and that,
with respect to her, respondent Judge be permanently prohibited from taking any action on the case.

ISSUE:

whether or not the Court of First Instance of Manila has acquired jurisdiction over the person of the present petitioner
as a non-resident defendant, or, notwithstanding the want of such jurisdiction, whether or not said court may validly
try the case.

RULING

In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his amended
complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest in a property located
in the Philippines. That property consists in certain shares of stocks of the Benguet Consolidated Mining Company,
a sociedad anonima, organized in the Philippines under the provisions of the Spanish Code of Commerce, with its
principal office in the City of Manila and which conducts its mining activities therein. The situs of the shares is in
the jurisdiction where the corporation is created, whether the certificated evidencing the ownership of those shares
are within or without that jurisdiction. (Fletcher Cyclopedia Corporations, Permanent ed. Vol. 11, p. 95). Under
these circumstances, we hold that the action thus brought is quasi in rem, for while the judgement that may be
rendered therein is not strictly a judgment in rem, "it fixes and settles the title to the property in controversy and to
that extent partakes of the nature of the judgment in rem." (50 C.J., p 503). As held by the Supreme Court of the
United States in Pennoyer v. Neff (supra);

It is true that, in a strict sense, a proceeding in rem is one taken directly against property, and has for its object the
disposition of the property, without reference to the title of individual claimants; but , in a large and more general
sense, the terms are applied to actions between parties, where the direct object is to reach and dispose of property
owned by them, or of some interest therein.

The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction over the person of the non-
resident. In order to satisfy the constitutional requirement of due process, summons has been served upon her by
publication. There is no question as to the adequacy of publication made nor as to the mailing of the order of
publication to the petitioner's last known place of residence in the United States. But, of course, the action being
quasi in rem and notice having be made by publication, the relief that may be granted by the Philippine court must
be confined to the res, it having no jurisdiction to render a personal judgment against the non-resident. In the
amended complaint filed by Eugene Arthur Perkins, no money judgment or other relief in personam is prayed for
against the petitioner. The only relief sought therein is that she be declared to be without any interest in the shares
in controversy and that she be excluded from any claim thereto.

Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore an action in
personam. Section 120 of our Code of Civil Procedure provides that whenever conflicting claims are or may be
made upon a person for or relating to personal property, or the performance of an obligation or any portion
thereof, so that he may be made subject to several actions by different persons, such person may bring an action
against the conflicting claimants, disclaiming personal interest in the controversy, and the court may order them to
interplead with one another and litigate their several claims among themselves, there upon proceed to determine
their several claims. Here, The Benguet Consolidated Mining Company, in its answer to the complaint filed by
Eugene Arthur Perkins, averred that in connection with the shares of stock in question, conflicting claims were
being made upon it by said plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George
H. Engelhard, and prayed that these last two be made parties to the action and served with summons by
publication, so that the three claimants may litigate their conflicting claims and settle their rights among
themselves. The court has not issued an order compelling the conflicting claimants to interplead with one another
and litigate their several claims among themselves, but instead ordered the plaintiff to amend his complaint
 including the other two claimants as parties defendant. The plaintiff did so, praying that the new defendants thus
joined be excluded fro any interest in the shares in question, and it is upon this amended complaint that the court
ordered the service of the summons by publication. It is therefore, clear that the publication of the summons was
ordered not in virtue of an interpleading, but upon the filing of the amended complaint wherein an action quasi in
rem is alleged.

6.

RAYRAY V LEE
FACTS:

Plaintiff Lazaro Rayray seeks the annulment of his marriage to defendant Chae Kyung Lee.

Inasmuch as, the latter's whereabouts is unknown, and she was formerly a resident of Pusan, Korea, summons was
served by publication, as provided in the Rules of Court. Thereafter, plaintiff moved that defendant be declared in
default, she not having filed an answer, and that a date be set for the reception of his evidence. Before acting on this
motion, the lower court referred the case to the City Fiscal of Manila pursuant to Articles 88 and 101 of the Civil Code
of the Philippines, for the purpose of determining whether or not a collusion between the parties exists. Said officer
having found no such collusion, the case was heard on the merits. In due course, thereafter, decision was rendered
dismissing plaintiff's complaint, without costs, upon the ground: (1) that the court could not nullify a marriage
contracted abroad; and (2) that the facts proven do not warrant the relief prayed for. A reconsideration of this
decision having been denied, plaintiff appealed to the Court of Appeals, which certified the case to the Supreme
Court, the jurisdiction of the lower court being in issue in the appeal.
In relation thereto, the court a quo found that it had no jurisdiction to pass upon the validity of plaintiff's marriage to
the defendant, it having been solemnized in Seoul, Korea.

SC( tc in dismissing the case is erroneous)The subject-matter of the present case is the annulment of plaintiff's
marriage to the defendant, which is within the jurisdiction of our courts of first instance,2 and, in Manila, of its Court
of Juvenile and Domestic Relations.3

ISSUE:

Did the lower court acquire jurisdiction?

RULING:

The subject-matter of the present case is the annulment of plaintiff's marriage to the defendant, which is within
the jurisdiction of our courts of first instance,2 and, in Manila, of its Court of Juvenile and Domestic Relations.3

The same acquired jurisdiction over plaintiff herein by his submission thereto in consequence of the filing of the
complaint herein.4 Defendant was placed under the jurisdiction of said court, upon the service of summons by
publication.5
 Indeed, marriage is one of the cases of double status, in that the status therein involves and affects two persons.
One is married, never in abstract or a vacuum, but, always to somebody else. Hence, a judicial decree on the
marriage status of a person necessarily reflects upon the status of another and the relation between them. The
prevailing rule is, accordingly, that a court has jurisdiction over the res, in an action for annulment of marriage,
provided, at least, one of the parties is domiciled in, or a national of, the forum.8 Since plaintiff is a Filipino,
domiciled in the Philippines, it follows that the lower court had jurisdiction over the res, in addition to its
jurisdiction over the subject-matter and the parties. In other words, it could validly inquire into the legality of the
marriage between the parties herein.

7.

VALMONTE V CA

FACTS:

Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both residents of 90222
Carkeek Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of the Philippine
bar, however, practices his profession in the Philippines, commuting for this purpose between his residence in the
state of Washington and Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini, Ermita, Manila.
On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A. Valmonte, filed a
complaint for partition of real property and accounting of rentals against petitioners Lourdes A. Valmonte and Alfredo
D. Valmonte before the Regional Trial Court of Manila, Branch 48. The subject of the action is a three-door apartment
located in Paco, Manila

averments were made on the basis of a letter previously sent by petitioner Lourdes A. Valmonte to private
respondents counsel

in which, in regard to the partition of the property in question, she referred private respondents counsel to her
husband as the party to whom all communications intended for her should be sent.

Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at his office in Manila.
Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was concerned, but refused to accept the
summons for his wife, Lourdes A. Valmonte, on the ground that he was not authorized to accept the process on her
behalf. Accordingly the process server left without leaving a copy of the summons and complaint for petitioner
Lourdes A. Valmonte.

Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes A. Valmonte,
however, did not file her Answer. For this reason private respondent moved to declare her in default. Petitioner
Alfredo D. Valmonte entered a special appearance in behalf of his wife and opposed the private respondents
motion.

ISSUE:
whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was validly served with summons.

RULING:

there was no valid service of process on Lourdes A. Valmonte.

To provide perspective, it will be helpful to determine first the nature of the action filed against petitioners Lourdes
A. Valmonte and Alfredo D. Valmonte by private respondent, whether it is an action in personam, in rem or quasi in
rem. This is because the rules on service of summons embodied in Rule 14 apply according to whether an action is
one or the other of these actions.

Applying the foregoing rules to the case at bar, private respondents action, which is for partition and accounting
under Rule 69, is in the nature of an action quasi in rem. Such an action is essentially for the purpose of affecting the
defendants interest in a specific property and not to render a judgment against him.

As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of summons on her
must be in accordance with Rule 14, 17. Such service, to be effective outside the Philippines, must be made either
(1) by personal service; (2) by publication in a newspaper of general circulation in such places and for such time as
the court may order, in which case a copy of the summons and order of the court should be sent by registered mail
to the last known address of the defendant; or (3) in any other manner which the court may deem sufficient.

Strict compliance with these requirements alone can assure observance of due process. That is why in one case,[9]
although the Court considered publication in the Philippines of the summons (against the contention that it should be
made in the foreign state where defendant was residing) sufficient, nonetheless the service was considered
insufficient because no copy of the summons was sent to the last known correct address in the Philippines.

The same acquired jurisdiction over plaintiff herein by his submission thereto in consequence of the filing of the
complaint herein.4 Defendant was placed under the jurisdiction of said court, upon the service of summons by
publication.5

8.

Mullane v. Central Hanover Bank & Trust Co.

FACTS:

Appellee, Central Hanover Bank & Trust, set up common fund pursuant to a New York statute allowing the creation of
common funds for distribution of judicial settlement trusts. There were 113 participating trusts. Appellee petitioned
for settlement of its first account as common trustee. The only notice given beneficiaries of this specific application
was by publication in a local newspaper in strict compliance with the minimum requirements of N.Y. Banking Law.
Some of the beneficiaries were not residents of New York. Notice was by publication for four weeks in a local
newspaper. Appellee had notified those people by mail that were of full age and sound mind who would be entitled to
share in the principal if the interest they held became distributable. Appellant was appointed as special guardian and
attorney for all persons known or unknown not otherwise appearing who had or might thereafter have any interest in
the income of the common trust fund. Appellee was appointed to represent those interested in the principal.
Appellant appeared specially, objecting that notice by publication, permitted under the applicable statute was
inadequate to afford t

he beneficiaries due process under the Fourteenth Amendment and that therefore jurisdiction was lacking.

Issue. Is notice by publication of a judicial settlement to unknown beneficiaries of a common trust reasonable notice
under the due process requirements of the Fourteenth Amendment?

Is notice by publication to all of the beneficiaries of a common trust whose residences are known reasonable notice
under the due process requirements of the Fourteenth Amendment?

Held. First issue: Yyes. Second issue: Nno.

Whether or not the action is in personam or in rem, the court can determine the interests of all claimants as long
as there is a procedure allowing for notice and an opportunity to be heard.

There has to be notice and opportunity for a hearing appropriate to the nature of the case. The claimants at issue
could potentially be deprived of property here, as the proposed disposition cuts off their rights to sue for negligent
or illegal impairments of their interests. In addition, the courts decision appoints someone who, without their
knowledge, could use the trust to obtain the fees and expenses necessary for a sham proceeding.
There need not be personal service because the state has an interest in settling trusts. Notice has to be
reasonably calculated, under all the circumstances, to apprise interested parties of the pending action and afford
them an opportunity to present their objections. You do not have to notify all the beneficiaries when the trust
concerns many small interests. Sending notice to most of them will protect their interests sufficiently.

The New York Banking Law, however, that does not require notice to all persons whose whereabouts are known,
violates the due process clause of the Fourteenth Amendment because contacting beneficiaries by mail at their
last known address is not particularly burdensome.

****The statutory notice to known beneficiaries is inadequate, not because in fact it fails to reach everyone, but
because under the circumstances it is not reasonably calculated to reach those who could easily be informed by
other means at hand. However it may have been in former times, the mails today are recognized as an efficient
and inexpensive means of communication. Moreover, the fact that the trust company has been able to give mailed
notice to known beneficiaries at the time the common trust fund was established is persuasive that postal
notification at the time of accounting would not seriously burden the plan.

In some situations the law requires greater precautions in its proceedings than the business world accepts for its
own purposes. In few, if any, will it be satisfied with less. Certainly it is instructive, in determining the
reasonableness of the impersonal broadcast notification here used, to ask whether it would satisfy a prudent man
of business, counting his pennies but finding it in his interest to convey information to many persons whose names
and addresses are in his files. We are not satisfied that it would. Publication may theoretically be available for all
the world to see, but it is too much in our day to suppose that each or any individual beneficiary does or could
examine all that is published to see if something may be tucked away in it that affects his property interests. We
have before indicated in reference to notice by publication that, 'Great caution should be used not to let fiction
deny the fair play that can be secured only by a pretty close adhesion to fact.' McDonald v. Mabee, 243 U.S. 90,
91, 37 S.Ct. 343, 61 L.Ed. 608, L.R.A.1917F, 458.

We hold the notice of judicial settlement of accounts required by the New York Banking Law 100-c(12) is
incompatible with the requirements of the Fourteenth Amendment as a basis for adjudication depriving known
persons whose whereabouts are also known of substantial property rights. Accordingly the judgment is reversed
and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed.

***Issue

Is notice given to out of state parties by publication in a newspaper, when the parties addresses were known, constitutional in light of
the Due Process Clause of the Fourteenth Amendment?

Holding and Rule

No. Notice given to out of state parties by publication in a newspaper, when the parties addresses were known, is unconstitutional in
light of the Due Process Clause of the Fourteenth Amendment.

Notice must be reasonably calculated to inform known parties affected by the proceedings. However, constructive notice by publication was acceptable with
regard to missing or unknown parties or for those whose whereabouts could not be ascertained by due diligence or for whom future interests were too
conjectural to be known with certainty.
9.

INTERNATIONAL SHOE CO> V WASHINGTON

Facts. Appellant did not maintain an office within the State of Washington. The corporation employed between
eleven and thirteen salespersons in the state, under the direct supervision and control of managers located in St.
Louis. The salespeople resided in Washington and their principal activities were confined to that state. The
salespeople received commissions from their sales with Washington. Appellant filed a Motion to Set Aside the
Order and Notice of Assessment of Unemployment because service on Appellants salesman was not proper. It also
contended that it was not a corporation in Washington, it was not doing business in that state, and it had no agent
in that state to accept service, nor did it furnish employment within the meaning of the statute. The motion was
denied, and both the Superior Court and the Supreme Court of Washington affirmed the decision.

Issue. Whether a foreign actor or corporation has, by its merely conducting business within a forum state, availed
itself to suit within that forum state?

Held. Yes. Solicitation within a state by the agents of a foreign corporation plus some additional activities render a
foreign corporation amenable to suit within the forum state to enforce an obligation arising out of its activities
within the forum state. In this case, Appellants activities within Washington were systematic and continuous within
the years in question. These activities resulted in a large volume of business. Further, Appellant received the
benefits and protections of the laws of Washington. As a result, the suit against Appellant within the state does not
involve an unreasonable or undue procedure.
***Appellant having rendered itself amenable to suit upon obligations arising out of the activities of its salesmen in
Washington, the state may maintain the present suit in personam to collect the tax laid upon the exercise of the
privilege of employing appellant's salesmen within the state. For Washington has made one of those activities
which, taken together, establish appellant's "presence" there for purposes of suit the taxable event by which the
state brings appellant within the reach of its taxing power. The state thus has constitutional power to lay the tax
and to subject appellant to a suit to recover it. The activities which establish its "presence" subject it alike to
taxation by the state and to suit to recover the tax. Equitable Life Society v. Pennsylvania, 238 U.S. 143, 146; cf.
International Harvester Co. v. Department of Taxation, 322 U.S. 435, 442, et seq.; Hoopeston Canning Co. v. Cullen,
[p322] supra, 316-319; see General Trading Co. v. Tax Comm'n, 322 U.S. 335.

Affirmed.

10. SHAFFER V HEITNER

Facts. Plaintiff, a stockholder for Greyhound Corp., a company incorporated in Delaware with its principal place of
business in Arizona, sued Greyhound Corp., Greyhound Lines, Inc., (a subsidiary of Greyhound Corp.) and present
and former officers of the two companies for violating duties to Greyhound Corp. by causing it to be liable for
damages in an antitrust suit and a fine in a criminal contempt action in Oregon. Plaintiff filed a motion for
sequestration of the officers stock. Under a Delaware statute, Delaware is the situs of all stock in Delaware
corporations. The stock was seized. Defendants were notified by certified mail of the sequestration and notice was
published in a Delaware newspaper. Defendants entered a special appearance so they could move to quash
service of process and vacate the sequestration order. Defendant argued that the order violated due process and
therefore the property could not be attached in Delaware. In addition, Defendants argued that they did not have
the minimum contacts with Delaware required to establish jurisdiction under International Shoe Co. v. Washington,
326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In addition, Defendants argued that the sequestration procedures
were inconsistent with the Sniadach cases (see Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23
L.Ed.2d 349 (1969)). The Court of Chancery found for Plaintiff and the Supreme Court of Delaware affirmed the
Court of Chancery. The Supreme Court of Delaware reasoned that the Sniadach cases involved default judgments
and not compelling a party to appear. This court furthered reasoned that sequestration procedures help to
adjudicate claims of mismanagement against Delaware companies, and do not cause permanent deprivation of
property to their shareholders. Defendants appealed.

Issue. In order for the forum state to exercise in rem jurisdiction on a nonresident, must the nonresident have
minimum contacts with the forum state such that the defendant has purposefully availed itself of the benefits of
that states laws? If so, must the cause of action be sufficiently related to the contacts the nonresident has with
the forum state?

Held. Yes to both. Judgment reversed. In rem is not a proceeding against the property, it is a proceeding against a
persons interest in the property. You need to give an owner of property reasonable and appropriate notice of an in
rem proceeding so that he or she recognizes that such a proceeding directly affects his or her interests. Having
property in a state does not give the state jurisdiction over causes of action unrelated to the property unless the
person also passes the minimum contacts test articulated in the International Shoe decision. If it is unconstitutional
to exercise jurisdiction over the person directly then it should be unconstitutional to assert jurisdiction indirectly.
Plaintiffs argument that Delaware has an interest in asserting jurisdiction over corporate fiduciaries is not
established by Delaware law. Delaware law determines that it has jurisdiction over Defendants because
Defendants property is in Delaware; and not due to their status as corporate fiduciaries. First, the statute
authorizing jurisdiction does not specifically apply to stockholder derivative actions. Moreover, Plaintiffs inability to
secure jurisdiction over seven of the defendants because they didnt have property in Delaware shows that there is
no necessary relationship between corporate fiduciaries and stockholders. In addition, Plaintiff has not
demonstrated that Delaware is a fair forum. Plaintiff must demonstrate more than the applicability of Delawares
laws to the controversy to establish a basis for jurisdiction. Plaintiffs argument that Defendants have received
benefits from Delaware laws only demonstrates that it would be appropriate for Delaware law to govern
obligations between Defendant and stockholders. This argument does not require that Delaware be permitted to
exercise jurisdiction, especially considering its lack of a long-arm statute. Concurrence. Justice Stevens: The
majority should not broadly eliminate in rem jurisdiction by stating that there is no personal jurisdiction if the only
contact the defendant has with the forum state is property located in the state. There are other means of acquiring
jurisdiction over local actions that may be unintentionally limited by this broad language. Justice Brennan
(concurring in part and dissenting in part): The Delaware sequestration statute embodies quasi in rem jurisdiction
that is no longer valid. The parties did not make the minimum contacts test an issue so the court should not have
decided this issue. There is no proper factual record for determining the level of contacts in this case. This is also a
constitutional question, and this decision will reach to all the state statutes that permit quasi in rem action through
sequestration of property. The general rule is that the forum state has jurisdiction over the directors and officers of
a corporation chartered by the state in a shareholder derivative action. A states valid substantive interests are
considerations in assessing the constitutionality of exercising jurisdiction. Delaware has interests in preventing
local corporations from being victims of foreign stockholders and in regulating its own corporations. In addition,
jurisdiction can be based on out-of-state activities that have foreseeable effects in the forum state. Delawares
failure to express an interest in corporate fiduciaries does not pertain to the minimum contacts analysis. In
addition, there was purposeful availment of the forums laws because the corporate officers entered business
relationships with Greyhounds stockholders pursuant to the laws of Delaware.