Asaali v.

Commissioner of Customs
GR No. L-24170 December 16, 1978

Facts: On September 10, 1950, at about noon time, a customs patrol team on board Patrol Boat ST-23 intercepted the five
(5) sailing vessels in question on the high seas, between British North Borneo and Sulu while they were heading towards
Tawi-tawi, Sulu. After ordering the vessels to stop, the customs officers boarded and found on board, 181 cases of ‘Herald’
cigarettes, 9 cases of ‘Camel’ cigarettes, and some pieces of rattan chairs. The sailing vessels are all of Philippine registry,
owned and manned by Filipino residents of Sulu, and of less than thirty (30) tons burden. They came from Sandakan, British
North Borneo, but did not possess any permit from the Commissioner of Customs to engage in the importation of
merchandise into any port of the Sulu sea, as required by Section 1363(a) of the Revised Administrative Code. Their cargoes
were not covered by the required import license under Republic Act No. 426, otherwise known as the Import Control Law.
Respondent Commissioner of Customs, as noted at the outset, affirmed the decision rendered by the Collector of Customs
of Jolo, who found cause for forfeiture under the law of the vessels and the cargo contained therein. He was, as also already
made known, sustained by the Court of Tax Appeals. Hence this petition for review.

Issue: Whether or not the forfeiture and seizure made by the collector at the high seas is proper.

Held: Yes. It is unquestioned that all vessels seized are of Philippine registry. The Revised Penal Code leaves no doubt as
to its applicability and enforceability not only within the Philippines, its interior waters and maritime zone, but also outside
of its jurisdiction against those committing offense while on a Philippine ship. The principle of law that sustains the validity
of such a provision equally supplies a firm foundation for the seizure of the five sailing vessels found thereafter to have
violated the applicable provisions of the Revised Administrative Code.

Moreover, it is a well settled doctrine of International Law that goes back to Chief Justice Marshall’s opinion in Church v.
Hubbart, an 1804 decision, that a state has the right to protect itself and its revenues, a right not limited to its own territory
but extending to the high seas. In the language of Chief Justice Marshall: “The authority of a nation within its own territory
is absolute and exclusive. The seizure of a vessel within the range of its cannon by a foreign force is an invasion of that
territory, and is a hostile act which it is its duty to repel. But its power to secure itself from injury may certainly be exercised
beyond the limits of its territory.”

The question asked in the brief of petitioners-appellants as to whether the seizure of the vessels in question and the cargoes
on the high seas and thus beyond the territorial waters of the Philippines was legal must be answered in the affirmative.
Such expiration of the period of effectivity of Republic Act No. 650 did not have the effect of depriving the Commissioner
of Customs of the jurisdiction, acquired by him prior thereto, to act on cases of forfeiture pending before him, which are in
the nature of proceeding in rem.

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Insular Government v. Frank

13 Phil 236, G.R.No.b2935; March 23, 1909.

FACTS: In 1903 in the state of Illinois, Mr. Frank, a US citizen and a representative of the Insular Government of the
Philippines entered into a contract whereby the former shall serve as stenographer in the Philippines for a period of 2 years.
The contract contained a provision that in case of violation of its terms, Mr. Frank shall be liable for the amount incurred
by the Philippine Government for his travel from Chicago to Manila and one-half salary paid during such period. After
serving for 6 months, defendant left the service and refused to make further compliance with the terms of the contract,
therefore the Government sued him to recover the amount of $269.23 plus damages. The lower court ruled in favor of the
plaintiff, hence the defendant appealed presenting minority as his special defense. By reason of the fact that under the laws
of the Philippines, contracts made by person who have not reach majority age of 23 are unenforceable. Defendant claims
that he is an adult when he left Chicago but was a minor when he arrived in Manila and at the time the plaintiff attempted
to enforce the contract.

ISSUE: Whether or not the contract is valid.

RULING: Mr. Frank being fully qualified to enter into a contract at the place and time the contract was made, he cannot
therefore plead infancy as a defense at the place where the contract is being enforced. Although Mr. Frank was still a minor
under Philippine laws, he was nevertheless considered an adult under the laws of the state of Illinois, the place where the
contract was made. No rule is better settled in law than that matters bearing upon the execution, interpretation and validity
of a contract are determined by the law of the place where the contract is made. Matters connected to its performance are
regulated by the law prevailing at the place of its performance. Matters respecting a remedy, such as bringing of asuit,
admissibility of evidence, and statutes of limitations, depend upon the law of the place where the suit is brought. Although
generally, capacity of the parties to enter into a contract is governed by national law. This is one case not involving real
property which was decided by our Supreme Court, where instead of national law, what should determine capacity to enter
into a contract is the lex loci celebrationis. According to Conflict of Laws writer Edgardo Paras, Frank’s capacity should be
judged by his national law and not by the law of the place where the contract was entered into. In the instant case whether
it is the place where the contract was made or Frank’s nationality, the result would be the same. However, as suggested by
the mentioned author, for the conflicts rule in capacity in general, national law of the parties is controlling

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ANCHETA v. GUERSEY-DALAYGON

Binding Effect of Judgments

490 SCRA 140
June 8, 2006

Facts: Spouses Audrey O’Neill (Audrey) and W. Richard Guersey (Richard) were American citizens who have resided in
the Philippines for 30 years. They have an adopted daughter, Kyle Guersey Hill (Kyle). Audrey died in 1979. She left a will
wherein she bequeathed her entire estate to Richard consisting of Audrey’s conjugal share in real estate improvements at
Forbes Park, current account with cash balance and shares of stock in A/G Interiors. Two years after her death, Richard
married Candelaria Guersey-Dalaygon. Four years thereafter, Richard died and left a will wherein he bequeathed his entire
estate to respondent, except for his shares in A/G, which he left to his adopted daughter.

Petitioner, as ancillary administrator in the court where Audrey’s will was admitted to probate, filed a motion to declare
Richard and Kyle as heirs of Audrey and a project of partition of Audrey’s estate. The motion and project of partition were
granted. Meanwhile, the ancillary administrator with regards to Richard’s will also filed a project of partition, leaving 2/5
of Richard’s undivided interest in the Forbes property was allocated to respondent Candelaria, while 3/5 thereof was
allocated to their three children. Respondent opposed on the ground that under the law of the State of Maryland, where
Richard was a native of, a legacy passes to the legatee the entire interest of the testator in the property subject to the legacy.

Issue: Whether or not the decree of distribution may still be annulled under the circumstances.

Held: A decree of distribution of the estate of a deceased person vests the title to the land of the estate in the distributees,
which, if erroneous may be corrected by a timely appeal. Once it becomes final, its binding effect is like any other judgment
in rem.

However, in exceptional cases, a final decree of distribution of the estate may be set aside for lack of jurisdiction or fraud.
Further, in Ramon vs. Ortuzar, the Court ruled that a party interested in a probate proceeding may have a final liquidation
set aside when he is left out by reason of circumstances beyond his control or through mistake or inadvertence not imputable
to negligence.

Petitioner’s failure to proficiently manage the distribution of Audrey’s estate according to the terms of her will and as
dictated by the applicable law amounted to extrinsic fraud. Hence the CA Decision annulling the RTC Orders dated February
12, 1988 and April 7, 1988, must be upheld.

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Bellis v. Bellis

Facts: Amos G. Bellis, born in Texas and was a citizen of the State of Texas and of the United States. He had two wives,
Mary E. Mallen, whom he divorced and had five legitimate children namely Edward, George, Henry, Alexander and Anna,
and Violet Kennedy who survived him and had three legitimate children namely Edwin, Walter and Dorothy, and finally he
had three illegitimate children: Amos Jr., Maria and Miriam. On August 5,1952, Amos executed a will in the Philippines,
in which he directed that after all taxes, obligations, and expenses of administration are paid for, his distributable estate
should be divided, in trust, in the following order and manner: (a)$240,000 to his first wife, Mary E. Mallen; (b)P120,000
to his three illegitimate children or P40,000 each and (c) after the foregoing two items have been satisfied the remainder
shall go to his seven surviving children by his first and second wives inequal shares. On July 8, 1958, Amos died. His will
was admitted to probate in the Court of First Instance of Manila on September 15, 1958. The People’s Bank and Trust
Company, as the executor of the will, paid all the bequests therein released from time to time according as the lower court
approved and allowed the various motions or petitions filed by the latter three requesting partial advances on account of
their respective legacies. On January 17, 1964, Maria Cristina Bellis and Miriam Palma Bellis filed the irrespective
oppositions to the project of partition on the ground that they were deprived of their legitimes as illegitimate children and
therefore, compulsory heirs of the deceased. On the other hand, Amos Bellis Jr. interposed no opposition despite notice to
him.

Issue: Which law will apply in executing the deceased’s will? Philippine Law or Texas Law?

Held: The parties admit that the decedent, Amos G. Bellis, was a citizen of the State of Texas, U.S.A., and that there are no
forced heirs or legitimes under the laws of the state of Texas. 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.

Ratio: 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. 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 be the nature of the property and regardless of the country wherein said property maybe found.

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FE D. QUITA v. CA and BLANDINA DANDAN

GR NO. 124862; DEC. 22, 1998

FACTS: On May 18, 1941, Fe Quita (petitioner) and Arturo Padlan, both Filipinos, married in the Philippines. Later on, Fe
sued Antonio for divorce in San Francisco, California, USA. Fe submitted in the divorce proceedings a private writing
evidencing their agreement to live separately and to settle their conjugal properties.
On July 23, 1954, Fe obtained a final judgment of divorce. Three weeks later, she married Felix Tupaz. The marriage also
ended in divorce. Fe married a third time to Wernimont in the USA.

In 1972, Arturo died, leaving no will. Lino Javier Inciong filed a petition for issuance of letters of administration of Arturo’s
estate in favor of the Philippine Trust Company.

Blandina Dandan (respondent), claiming to be the surviving spouse of Arturo, and six allegedly Padlan children, opposed
the petition. Ruperto Padlan, claiming to be the sole surviving brother of Arturo also intervened.

The trial court disregarded the divorce between Fe and Arturo and invoked Tenchavez v. Escaño, which held that "a
foreign divorce between Filipino citizens sought and decreed after the effectivity of the present Civil Code (Rep. Act 386)
was not entitled to recognition as valid in this jurisdiction.”

ISSUE: WON Blandina was entitled to inherit from the decedent, by alleging that Arturo and Fe were already divorced at
the time of the deceased’s death? – NO.

HELD: NO. Blandina and Arturo were married in 1947 while the prior marriage of Fe and Arturo was still subsisting,
resulting in a bigamous marriage considered void from the beginning under Arts. 80 and 83 of the Civil Code. Consequently,
Blandina is not a surviving spouse that can inherit from him as this status presupposes a legitimate relationship.

Blandina stressed that the citizenship of Fe was relevant in the light of the ruling in Van Dorn v. Romillo Jr. that aliens may
obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law.
Once proved that Fe was no longer a Filipino citizen at the time of their divorce, Van Dorn would become applicable and
Fe could very well lose her right to inherit from Arturo.

However, Fe answered that she was an American citizen since 1954. Significantly, the decree of divorce of Fe and Arturo
was obtained in the same year.

SC denied the petition and affirmed that 1/2 of the net hereditary estate should be granted to the Padlan children, considering
that they were acknowledged by both Arturo and Fe. As for Fe, the case was remanded to the trial court to determine the
facts regarding her citizenship during the divorce filing.

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254 MIGUEL R. UNSON III, petitioner, AUTHOR:

v. NOTES: (if applicable)
HON. PEDRO C. NAVARRO AND EDITA N.
ARANETA, respondents.
[G.R. No. L-52242; November 17, 1980]
TOPIC: Who exercises PA, FC 211-213 cf. FC 49, 102(6).
129 (9) and 63(2), Art. 176
PONENTE: BARREDO, J.

FACTS: (chronological order)

Petition for certiorari to have the order of respondent judge of December 28, 1979 ordering petitioner to produce the
child, Maria Teresa Unson, his daughter barely eight years of age, with private respondent Edita N. Araneta and return
her to the custody of the later, further obliging petitioner to "continue his support of said daughter by providing for her
education and medical needs," allegedly issued without a "hearing" and the reception of testimony in violation of Section
6 of Rule 99.
Petitioner and private respondent were married on April 19, 1971 1 and out of that marriage the child in question, Teresa,
was born. However, they executed an agreement for the separation of their properties and to live separately, as they have
in fact been living separately since June 1972. The agreement was approved by the Court. The parties are agreed that no
specific provision was contained in said agreement about the custody of the child because the husband and wife would
have their own private arrangement in that respect. Thus petitioner affirms, among others, that:

That during the early part of 1978 petitioner personally acquired knowledge that his wife Edita Araneta has been living
with her brother-in-law Agustin F. Reyes, in an apartment at C. Palma St., Makati, Metro Mla. and so petitioner tightened
his custody over his daughter, especially after:
a. he found out that Agustin F. Reyes was confined at the Makati Medical Center from October 13 up to December 3,
1977 for "Manic Depressive" disorder, under the care of Dr. Baltazar Reyes;
b. he found out that his wife Edita Araneta delivered a child fathered by Agustin F. Reyes on September 24, 1978.
c. he found out that Agustin F. Reyes had been confined again for the same ailment at the Makati Medical Center from
June 27 up to August 29, 1978 under the care of the same doctor .
That on May 21, 1980 Edita Araneta delivered another child fathered by Agustin F. Reyes.
That aside from the foregoing circumstances, the following militate against custody of Maria Teresa in favor of Edita
Araneta:
a. Agustin F. Reyes is the child's godfather/baptismal sponsor;
b. Agustin F. Reyes and Edita Araneta have left the Roman Catholic Church and have embraced a protestant sect.
That Maria Teresa is almost nine (9) years old, born and reared under the Roman Catholic faith, impressionable, and
should not be exposed to an environment alien to the Catholic way of life, which is the upbringing and training petitioner,
as her father is committed to:

Upon the other hand, private respondent affirms, among others, that:

From 1972 to September, 1979, affiant and petitioner have always had a cordial and amicable relationship. Even from
1973 when affiant started living with her brother-in-law, Agustin F. Reyes at San Lorenzo, Makati, affiant and petitioner
retained a cordial relationship. Petitioner, since 1973, always knew about affiant's relationship with Agustin F. Reyes.
In fact, petitioner would visit Maria Teresa at affiant's home. Petitioner was always welcome to pick up Maria Teresa at
any time.
Petitioner, his family, affiants family (Mr. and Mrs. Teodoro Araneta), affiant's relatives and friends, since 1973, have
long known of and accepted the circumstances involving private respondent and Agustin F. Reyes;
Affiant admits that her present circumstances at first impression might seem socially if not morally unacceptable; but in
reality this is not so. Maria Teresa has been reared and brought up in an atmosphere of Christian love, affection and
honesty to the import of the situation. Further, the quality and capacity of affiant of being a good mother has always
remained.
The respondent judge ordered the petitioner to produce the child, Maria Teresa Unson, his daughter barely eight years
of age, with private respondent Edita N. Araneta and return her to the custody of the later.

ISSUE(S): Whether or not minor Maria Teresa should be under the custody of her mother.

HELD: NO.

RATIO:

It is axiomatic in Our jurisprudence that in controversies regarding the custody of minors the sole and foremost
consideration is the physical, education, social and moral welfare of the child concerned, taking into account the
 respective resources and social and moral situations of the contending parents. Never has this Court diverted from that
criterion.

With this premise in view, the Court finds no difficulty in this case in seeing that it is in the best interest of the child
Teresa to be freed from the obviously unwholesome, not to say immoral influence, that the situation in which private
respondent has placed herself, as admitted by her, might create in the moral and social outlook of Teresa who is now in
her formative and most impressionable stage in her life. The fact, that petitioner might have been tolerant about her stay
with her mother in the past when she was still too young to distinguish between right and wrong and have her own
correct impressions or notions about the unusual and peculiar relationship of her mother with her own uncle-in-law, the
husband of her sister's mother, is hardly of any consequence now that she has reached a perilous stage in her life. No
respectable father, properly concerned with the moral well-being of his child, specially a girl, can be expected to have a
different attitude than petitioner's in this case. Under the circumstances thus shown in the record, the Court finds no
alternative than to grant private respondent no more than visitorial rights over the child in question.

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Collector of Internal Revenue v. Fisher

GR. No. L-11622 January 28, 1961

DOCTRINE: “Reciprocity must be total. If any of the two states collects or imposes or does not exempt any transfer, death,
legacy or succession tax of any character, the reciprocity does not work.”

FACTS: Walter G. Stevenson was born in the Philippines of British parents, married in Manila to another British subject,
Beatrice. He died in 1951 in California where he and his wife moved to.

In his will, he instituted Beatrice as his sole heiress to certain real and personal properties, among which are 210,000 shares
of stocks in Mindanao Mother Lode Mines (Mines).

Ian Murray Statt (Statt), the appointed ancillary administrator of his estate filed an estate and inheritance tax return. He
made a preliminary return to secure the waiver of the CIR on the inheritance of the Mines shares of stock.

In 1952, Beatrice assigned all her rights and interests in the estate to the spouses Fisher. Statt filed an amended estate and
inheritance tax return claiming ADDITIOANL EXEMPTIONS, one of which is the estate and inheritance tax on the Mines’
shares of stock pursuant to a reciprocity proviso in the NIRC, hence, warranting a refund from what he initially paid. The
collector denied the claim. He then filed in the CFI of Manila for the said amount.

CFI ruled that (a) the ½ share of Beatrice should be deducted from the net estate of Walter, (b) the intangible personal
property belonging to the estate of Walter is exempt from inheritance tax pursuant to the reciprocity proviso in NIRC.

ISSUE/S: Whether or not the estate can avail itself of the reciprocity proviso in the NIRC granting exemption from the
payment of taxes for the Mines shares of stock.

RULING: NO. Reciprocity must be total. If any of the two states collects or imposes or does not exempt any transfer, death,
legacy or succession tax of any character, the reciprocity does not work.

In the Philippines, upon the death of any citizen or resident, or non-resident with properties, there are imposed upon his
estate, both an estate and an inheritance tax.
But, under the laws of California, only inheritance tax is imposed. Also, although the Federal Internal Revenue Code
imposes an estate tax, it does not grant exemption on the basis of reciprocity. Thus, a Filipino citizen shall always be at a
disadvantage. This is not what the legislators intended.

SPECIFICALLY: Section122 of the NIRC provides that “No tax shall be collected under this Title in respect of intangible
personal property

(a) if the decedent at the time of his death was a resident of a foreign country which at the time of his death did not
impose a transfer of tax or death tax of any character in respect of intangible personal property of citizens of the Philippines
not residing in that foreign country, or
(b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow a similar
exemption from transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens
of the Philippines not residing in that foreign country."

On the other hand, Section 13851 of the California Inheritance Tax Law provides that intangible personal property is exempt
from tax if the decedent at the time of his death was a resident of a territory or another State of the United States or of a
foreign state or country which then imposed a legacy, succession, or death tax in respect to intangible personal property of
its own residents, but either:.

Did not impose a legacy, succession, or death tax of any character in respect to intangible personal property of residents of
this State, or Had in its laws a reciprocal provision under which intangible personal property of a non-resident was exempt
from legacy, succession, or death taxes of every character if the Territory or other State of the United States or foreign state
or country in which the nonresident resided allowed a similar exemption in respect to intangible personal property of
residents of the Territory or State of the United States or foreign state or country of residence of the decedent."

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AZNAR v. GARCIA, G.R. No. L-16749, January 31, 1963

FACTS: The deceased Edward Christensen was a citizen of the U.S. and of the State of California at the time of his death,
but was domiciled in the Philippines. He left a will leaving all his properties to Maria Lucy Christensen, his only child
residing in California; and devise and bequeath unto Maria Helen Christensen Garcia the sum of three thousand six hundred
pesos, the latter allegedly being the testator’s acknowledged natural child in the Philippines. Opposition to the partition was
filed by Helen, insofar as it deprives her of her legitime as an acknowledged natural child. Under the Philippine law, intestate
and testamentary successions shall be regulated by the national law of the person whose succession is under consideration.

However, under California internal law, it is provided that the testator may dispose of his property by will in the form and
manner he desires. Herein appellee Lucy, argues that since deceased Christensen was a citizen of the State of California,
the internal law thereof, should govern the validity of the testamentary provisions of Christensen's will. Appellant, on the
other hand, insists that in accordance therewith and following the doctrine of the renvoi, the question of the validity of the
testamentary provision in question should be referred back to the law of the decedent's domicile, the Philippines.

ISSUE: Whether or not, by recognizing the renvoi doctrine, the Laws of the Philippines should govern the distribution of
the estate of the deceased Christensen.

RULING: Yes. The laws of California prescribed two sets of laws for its citizens, one for residents therein and another for
those domiciled in other jurisdictions. Reason demands that We should enforce the California internal law prescribed for its
citizens residing therein, and enforce the conflict of laws rules for the citizens domiciled abroad. The conflict of laws rule
in California, Article 946, Civil Code, precisely refers back the case, when a decedent is not domiciled in California, to the
law of his domicile, the Philippines in the case at bar. The court of the domicile cannot and should not refer the case back
to California; such action would leave the issue incapable of determination because the case will then be like a football,
tossed back and forth between the two states, between the country of which the decedent was a citizen and the country of
his domicile. The Philippine court must apply its own law as directed in the conflict of laws rule of the state of the decedent,
if the question has to be decided, especially as the application of the internal law of California provides no legitime for
children while the Philippine law, Arts. 887(4) and 894, Civil Code of the Philippines, makes natural children legally
acknowledged forced heirs of the parent recognizing them.

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Hasegawa v. Kitamura
GR No. 149177 11/23/2007

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”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 per-
formed.”65 It controls the nature, construction, and validity of the contract66 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. 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.

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Raytheon International v. Rouzie

Facts: Brand Marine Services, Inc. (BMSI), a foreign corporation duly organized and existing under the laws of the State
of Connecticut, and respondent Stockton W. Rouzie, Jr., an American citizen, entered into a contract whereby BMSI hired
respondent 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. Then, respondent secured a service contract with the Republic of the
Philippines on behalf of BMSI. After 4 years, respondent filed before the Arbitration branch of the 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. Respondent elevated the case to the SC but was dismissed. After that, respondent, then a resident of
La Union, instituted an action for damages before the RTC of La Union. The Complaint named as defendants herein
petitioner as well as BMSI and RUST, the two corporations impleaded in the earlier labor case. The complaint essentially
reiterated the allegations in the labor case that respondent was not paid for his services. The complaint also averred that
BMSI and RUST as well as petitioner itself had combined and functioned as one company. In its Answer, petitioner 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. Petitioner sought the dismissal of the complaint on grounds of failure to state a cause of action and forum non
conveniens. It was denied.

Issue: Whether or not the Philippine court can acquire jurisdiction over the case notwithstanding the stipulation that the
same shall be governed by a foreign law

Held: Yes. That the subject contract included a stipulation that the same shall be governed by the laws of the State of
Connecticut does not suggest that the Philippine courts, or any other foreign tribunal for that matter, are precluded from
hearing the civil action. 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 choice of law stipulation will become relevant only
when the substantive issues of the instant case develop, that is, after hearing on the merits proceeds before the trial court.
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 averred foreign elements present in this case which include 1. BRII and RUST are foreign corporations and
respondent Rouzie is an American citizen, and 2. The evidence to be presented is located outside the Philippines. The Court
held that these are not sufficient to oust the trial court of its jurisdiction over the case 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.
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Romualdez-Marcos v. Comelec
G.R. No. 119976

Facts: Petitioner Imelda Romualdez-Marcos filed her Certificate of Candidacy for the position of Representative of the First
District of Leyte. Private respondent Cirilo Roy Montejo, a candidate for the same position, filed a petition for cancellation
and disqualification with the COMELEC alleging that petitioner did not meet the constitutional requirement for residency.
Private respondent contended that petitioner lacked the Constitution's one-year residency requirement for candidates for the
House of Representatives.

In the case at Bar, Imelda Marcos claimed honest misinterpretation by stating in her Certificate of Candidacy that her
residency in the District of Leyte has only been for seven months, which she sought to rectify by adding the words "since
childhood" in her Amended/Corrected Certificate of Candidacy and that "she has always maintained Tacloban City as her
domicile or residence.

Imelda moved to Tacloban, Leyte with her father when she was around 8 years old and established domicile therein. It was
further provided in the case that although she has moved from one house to another given her marriage with then former
President Marcos and the duties that bounded her to be where her husband is, she nevertheless showed any sign of
abandoning her domicile and even showed that she has been constantly returning and celebrating her birthday in her
hometown.

Issue: Is Imelda eligible to run for public office given the discrepancy in her residency?

Ruling: Yes. For election purposes, residence is used synonymously with domicile. The Court upheld the qualification of
petitioner, despite her own declaration in her certificate of candidacy that she had resided in the district for only 7 months,
because of the following: (a) a minor follows the domicile of her parents; Tacloban became petitioner’s domicile of origin
by operation of law when her father brought the family to Leyte; (b) domicile of origin is lost only when there is actual
removal or change of domicile, a bona fide intention of abandoning the former residence and establishing a new one, and
acts which correspond with the purpose; in the absence of clear and positive proof of the concurrence of all these, the
domicile of origin should be deemed to continue; (c) the wife does not automatically gain the husband’s domicile because
the term “residence” in Civil Law does not mean the same thing in Political Law; when petitioner married President Marcos
in 1954, she kept her domicile of origin and merely gained a new home, not a domicilium necessarium; (d) even assuming
that she gained a new domicile after her marriage and acquired the right to choose a new one only after her husband died,
her acts following her return to the country clearly indicate that she chose Tacloban, her domicile of origin, as her domicile
of choice.

Seperate Opinions: Justices Regalado, Davide Jr. and Padilla were of the other opinion and believed that she did not meet
the qualifications for the position she is running for.

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Korea Technologies Co., Ltd. v. Lerma

Doctrine: Established in this jurisdiction is the rule that the law of the place where the contract is made governs. Lex loci
contractus. A contract perfected in the Philippines will be governed by Philippine laws. Nonetheless, Art. 2044 of the Civil
Code sanctions the validity of mutually agreed arbitral clause or the finality and binding effect of an arbitral award without
prejudice to Articles 2038, 2039 and 2040, which refer to instances where a compromise or an arbitral award, as applied to
Art. 2044 pursuant to Art. 2043, may be voided, rescinded, or annulled, but these would not denigrate the finality of the
arbitral award.

While the RTC does not have jurisdiction over disputes governed by arbitration mutually agreed upon by the parties, still
the foreign arbitral award is subject to judicial review by the RTC which can set aside, reject, or vacate it.
Summary: Korea Tech and Pacific General entered into a contract where Korea Tech would set up an LPG Cylinder
Manufacturing Plant in Carmona, Cavite for Pacific General. The contract was executed in the Philippines and it contained
an Arbitration Clause which provided that disputes must be referred to a tribunal body in Korea. During the performance of
the contract, issues arose regarding the non-delivery of certain equipment and the delivery of equipment of lesser quality
than that agreed upon. Pacific General wanted to unilaterally rescind the contract, while Korea Tech opposed, arguing that
the dispute should be referred to arbitration. Pacific General argued that the arbitration clause was void for being violative
of public policy as it oust jurisdiction from the Courts. RTC and CA ruled for Pacific General. SC reversed upholding the
validity of the arbitration clause. It explained that by the principle of lex loci contractus, contract executed in the Philippines
should be governed by Philippine law, however, the law also provides that where parties mutually agree on an arbitration
clause, the courts must refer such case to arbitration. The arbitral award is however subject to judicial confirmation to be
final, binding and enforceable, thus, it is wrong to argue that the courts are oust from jurisdiction. Hence, the parties must
submit to arbitration.

Facts: Korea Technologies Co., Ltd. (Korea Tech), a Korean corporation, entered into a contract with Pacific General Steel
Manufacturing Corporation (Pacific General), a domestic corporation. The contract was executed in the Philippines. It also
contains an Arbitration Clause (Art. 15 of the Contract) which provided that disputes must be referred to a tribunal body in
Korea.

“Article 15. Arbitration.All disputes, controversies, or differences which may arise between the parties, out of or in relation
to or in connection with this Contract or for the breach thereof, shall finally be settled by arbitration in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the Korean Commercial Arbitration Board. The award rendered by
the arbitration(s) shall be final and binding upon both parties concerned.”

Under the contract, Korea Tech would set up an LPG Cylinder Manufacturing Plant in Carmona, Cavite. The contract was
later amended, which then provided that Korea Tech undertook to ship and install in Pacific General’s site in Carmona,
Cavite the machinery and facilities necessary for manufacturing LPG cylinders, and to initially operate the plant after it is
installed.

The last payments made by Pacific General to Korea Tech consisted of postdated checks which were dishonored upon
presentment by reason of “stopped payment”. Pacific General stopped payment because it was alleged that Korea Tech had
delivered a hydraulic press which was different in kind and of lower quality than that agreed upon and that Korea Tech also
failed to deliver equipment parts already paid for by Pacific General.

Pacific General later informed Korea Tech that it was was canceling their Contract on the ground that Korea Tech had
altered the quantity and lowered the quality of the machineries and equipment it delivered to Pacific General, and that
Pacific General would dismantle and transfer the machineries, equipment, and facilities installed in the Carmona plant. Five
days later, Pacific General filed before the Office of the Public Prosecutor an Affidavit-Complaint for Estafa.

Korea Tech wrote to Pacific General, informing the latter that Pacific General could not unilaterally rescind their contract
nor dismantle and transfer the machineries and equipment on mere imagined violations by Korea Tech. It also insisted that
their disputes should be settled by arbitration as agreed upon in Article 15, the arbitration clause of their contract.

Korea Tech initiated arbitration before the Korea Commercial Arbitration Board [KCAB] in Seoul, Korea pursuant to Art.
15 of the Contract as amended..
Korea Tech filed a Complaint for Specific Performance against Pacific General before the RTC. In its complaint, Korea
Tech alleged that Pacific General had initially admitted that the checks that were stopped were not funded but later on
claimed that it stopped payment of the checks for the reason that their value was not received as the former allegedly
breached their contract by altering the quantity and lowering the quality of the machinery and equipment installed in the
plant and failed to make the plant operational. Likewise, Korea Tech averred that Pacific General violated Art. 15 of their
Contract, as amended, by unilaterally rescinding the contract without resorting to arbitration. The Court granted a TRO
which restrained Pacific General from dismantling and transferring the machinery and equipment installed in the plant.

Pacific General opposed the application and argued that the arbitration clause was null and void, being contrary to public
policy as it ousts the local court of jurisdiction.

The trial court denied the application for a writ of preliminary injunction, reasoning that Pacific General had paid Korea
Tech the value of the machineries and equipment as shown in the contract such that Korea Tech no longer had proprietary
rights over them. It also ruled that arbitration clause of the Contract as amended was invalid as it tended to oust the trial
court or any other court jurisdiction over any dispute that may arise between the parties.

The Court of Appeals affirmed the trial court and found that Pacific General had paid the value of the machineries and
declared the arbitration clause against public policy.

Issue: W/N the arbitration clause stated in Article 15 of the contract is to be deemed null and void for being against public
policy - NO, hence parties must submit to arbitration
W/N the RTC is oust of its jurisdiction on a foreign arbitral award. - NO, although the court is mandated to refer cases to
arbitration in proper cases, foreign arbitral awards must still be confirmed by the RTC

HELD: The arbitration clause not contrary to public policy. The arbitration clause which stipulates that the arbitration must
be done in Seoul, Korea in accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is
final and binding, is not contrary to public policy. This Court has sanctioned the validity of arbitration clauses in a catena
of cases.

Established in this jurisdiction is the rule that the law of the place where the contract is made governs. Lex loci contractus.
The contract in this case was perfected here in the Philippines. Therefore, our laws ought to govern. Nonetheless, Art. 2044
of the Civil Code sanctions the validity of mutually agreed arbitral clause or the finality and binding effect of an arbitral
award. Art. 2044 provides, “Any stipulation that the arbitrators’ award or decision shall be final, is valid, without prejudice
to Articles 2038, 2039 and 2040.” Arts. 2038, 2039, and 2040 abovecited refer to instances where a compromise or an
arbitral award, as applied to Art. 2044 pursuant to Art. 2043, may be voided, rescinded, or annulled, but these would not
denigrate the finality of the arbitral award.

The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been shown to be contrary to any
law, or against morals, good customs, public order, or public policy. There has been no showing that the parties have not
dealt with each other on equal footing. We find no reason why the arbitration clause should not be respected and complied
with by both parties.

Having said that the instant arbitration clause is not against public policy, we come to the question on what governs an
arbitration clause specifying that in case of any dispute arising from the contract, an arbitral panel will be constituted in a
foreign country and the arbitration rules of the foreign country would govern and its award shall be final and binding.

For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from contractual relations. In
case a foreign arbitral body is chosen by the parties, the arbitration rules of our domestic arbitration bodies would not be
applied. As signatory to the Arbitration Rules of the UNCITRAL Model Law on International Commercial Arbitration of
the United Nations Commission on International Trade Law (UNCITRAL) in the New York Convention on June 21, 1985,
the Philippines committed itself to be bound by the Model Law. We have even incorporated the Model Law in Republic
Act No. (RA) 9285, otherwise known as the Alternative Dispute Resolution Act of 2004 entitled An Act to Institutionalize
the Use of an Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute
Resolution, and for Other Purposes, promulgated on April 2, 2004. Secs. 19 and 20 of Chapter 4 of the Model Law are the
pertinent provisions.

Under Sec. 24 of RA 9285, the RTC does not have jurisdiction over disputes that are properly the subject of arbitration
pursuant to an arbitration clause, and mandates the referral to arbitration in such cases, thus:
SEC. 24. Referral to Arbitration.—A court before which an action is brought in a matter which is the subject matter of an
arbitration agreement shall, if at least one party so requests not later than the pre-trial conference, or upon the request of
both parties thereafter, refer the parties to arbitration unless it finds that the arbitration agreement is null and void,
inoperative or incapable of being performed.

Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to be final and binding are not
immediately enforceable or cannot be implemented immediately. Sec. 35[43] of the UNCITRAL Model Law stipulates the
requirement for the arbitral award to be recognized by a competent court for enforcement, which court under Sec. 36 of the
UNCITRAL Model Law may refuse recognition or enforcement on the grounds provided for. RA 9285 incorporated these
provisos to Secs. 42, 43, and 44 relative to Secs. 47 and 48

While the RTC does not have jurisdiction over disputes governed by arbitration mutually agreed upon by the parties, still
the foreign arbitral award is subject to judicial review by the RTC which can set aside, reject, or vacate it. In this sense,
what this Court held in Chung Fu Industries (Phils.), Inc., 206 SCRA 545 (1992), relied upon by Korea Tech is applicable
insofar as the foreign arbitral awards, while final and binding, do not oust courts of jurisdiction since these arbitral awards
are not absolute and without exceptions as they are still judicially reviewable. Chapter 7 of RA 9285 has made it clear that
all arbitral awards, whether domestic or foreign, are subject to judicial review on specific grounds provided for.

Thus, foreign arbitral awards when confirmed by the RTC are deemed not as a judgment of a foreign court but as a foreign
arbitral award, and when confirmed, are enforced as final and executory decisions of our courts of law.

Having ruled that the arbitration clause of the subject contract is valid and binding on the parties, and not contrary to public
policy; consequently, being bound to the contract of arbitration, a party may not unilaterally rescind or terminate the contract
for whatever cause without first resorting to arbitration.

The issues arising from the contract between Pacific General and Korea Tech on whether the equipment and machineries
delivered and installed were properly installed and operational in the plant in Carmona, Cavite; the ownership of equipment
and payment of the contract price; and whether there was substantial compliance by Korea Tech in the production of the
samples, given the alleged fact that Pacific General could not supply the raw materials required to produce the sample LPG
cylinders, are matters proper for arbitration. Indeed, we note that on July 1, 1998, Korea Tech instituted an Application for
Arbitration before the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as amended. Thus, it is incumbent upon
Pacific General to abide by its commitment to arbitrate.