CONFLICT OF LAWS CASES

1.5. Sources of Public International Law

1.5.1 ISABELITA C. VINUYA VS. THE HONORABLE EXECUTIVE
SECRETARY ALBERTO G. ROMULO
Action: original Petition for Certiorari under Rule 65 of the Rules of Court with
an application for the issuance of a writ of preliminary mandatory injunction
against the Office of the Executive Secretary, the Secretary of the Department of
Foreign Affairs (DFA), the Secretary of the Department of Justice (DOJ), and the
Office of the Solicitor General (OSG).

FACTS:
Petitioners are all members of the Malaya Lolas, a non-stock, non-profit
organization registered with the Securities and Exchange Commission,
established for the purpose of providing aid to the victims of rape by Japanese
military forces in the Philippines during the Second World War.

Petitioners narrate that during the Second World War, the Japanese army attacked
villages and systematically raped the women as part of the destruction of the
village. Their communities were bombed, houses were looted and burned, and
civilians were publicly tortured, mutilated, and slaughtered. Japanese soldiers
forcibly seized the women and held them in houses or cells, where they were
repeatedly raped, beaten, and abused by Japanese soldiers. As a result of the
actions of their Japanese tormentors, the petitioners have spent their lives in
misery, having endured physical injuries, pain and disability, and mental and
emotional suffering.

Petitioners claim that since 1998, they have approached the Executive
Department through the DOJ, DFA, and OSG, requesting assistance in filing a
claim against the Japanese officials and military officers who ordered the
establishment of the "comfort women" stations in the Philippines. However,
officials of the Executive Department declined to assist the petitioners, and took
the position that the individual claims of the comfort women for compensation
had already been fully satisfied by Japan’s compliance with the Peace Treaty
between the Philippines and Japan.

Petitioners argue that the general waiver of claims made by the Philippine
government in the Treaty of Peace with Japan is void. They claim that the
comfort women system established by Japan, and the brutal rape and enslavement
of petitioners constituted a crime against humanity, sexual slavery, and torture.
They allege that the prohibition against these international crimes is jus
cogens norms from which no derogation is possible; as such, in waiving the
claims of Filipina comfort women and failing to espouse their complaints
against Japan, the Philippine government is in breach of its legal obligation
not to afford impunity for crimes against humanity. Finally, petitioners assert
that the Philippine government’s acceptance of the "apologies" made by Japan as
well as funds from the Asian Women’s Fund (AWF) were contrary to
international law.

ISSUE:
Whether the Executive Department committed grave abuse of discretion in not
espousing petitioners’ claims for official apology and other forms of reparations
against Japan.

HELD: NO
In Tañada v. Cuenco, we held that political questions refer "to those questions
which, under the Constitution, are to be decided by the people in their sovereign
capacity, or in regard to which full discretionary authority has been delegated to
the legislative or executive branch of the government. It is concerned with issues
dependent upon the wisdom, not legality of a particular measure."

Certain types of cases often have been found to present political questions.
One such category involves questions of foreign relations. It is well-
established that "[t]he conduct of the foreign relations of our government is
committed by the Constitution to the executive and legislative--'the
political'--departments of the government, and the propriety of what may be
done in the exercise of this political power is not subject to judicial inquiry
or decision." The US Supreme Court has further cautioned that decisions relating
to foreign policy are delicate, complex, and involve large elements of prophecy.
They are and should be undertaken only by those directly responsible to the
people whose welfare they advance or imperil. They are decisions of a kind for
which the Judiciary has neither aptitude, facilities nor responsibility.

To be sure, not all cases implicating foreign relations present political questions,
and courts certainly possess the authority to construe or invalidate treaties and
executive agreements. However, the question whether the Philippine government
should espouse claims of its nationals against a foreign government is a foreign
relations matter, the authority for which is demonstrably committed by our
Constitution not to the courts but to the political branches. In this case, the
Executive Department has already decided that it is to the best interest of the
country to waive all claims of its nationals for reparations against Japan in
the Treaty of Peace of 1951. The wisdom of such decision is not for the courts to
question. Neither could petitioners herein assail the said determination by the
Executive Department via the instant petition for certiorari. The Philippines is not
under any international obligation to espouse petitioners’ claims.

In the international sphere, traditionally, the only means available for individuals
to bring a claim within the international legal system has been when the
individual is able to persuade a government to bring a claim on the individual’s
behalf.

CONFLICT OF LAWS SPECIFIC RULING (“erga omnes” and “jus

cogens”):

We fully agree that rape, sexual slavery, torture, and sexual violence are morally
reprehensible as well as legally prohibited under contemporary international law.
However, petitioners take quite a theoretical leap in claiming that these
proscriptions automatically imply that that the Philippines is under a non-
derogable obligation to prosecute international crimes, particularly since
petitioners do not demand the imputation of individual criminal liability, but seek
to recover monetary reparations from the state of Japan. Absent the consent of
states, an applicable treaty regime, or a directive by the Security Council,
there is no non-derogable duty to institute proceedings against Japan.
Indeed, precisely because of states’ reluctance to directly prosecute claims
against another state, recent developments support the modern trend to empower
individuals to directly participate in suits against perpetrators of international
crimes. Nonetheless, notwithstanding an array of General Assembly resolutions
calling for the prosecution of crimes against humanity and the strong policy
arguments warranting such a rule, the practice of states does not yet support the
present existence of an obligation to prosecute international crimes. Of course a
customary duty of prosecution is ideal, but we cannot find enough evidence to
reasonably assert its existence. To the extent that any state practice in this area is
widespread, it is in the practice of granting amnesties, immunity, selective
prosecution, or de facto impunity to those who commit crimes against humanity."

Even the invocation of jus cogens norms and erga omnes obligations will not alter
this analysis. Even if we sidestep the question of whether jus cogens norms
existed in 1951, petitioners have not deigned to show that the crimes committed
by the Japanese army violated jus cogens prohibitions at the time the Treaty of
Peace was signed, or that the duty to prosecute perpetrators of international
crimes is an erga omnes obligation or has attained the status of jus cogens.

The term erga omnes (Latin: in relation to everyone) in international law has been
used as a legal term describing obligations owed by States towards the
community of states as a whole. The concept was recognized by the ICJ in
Barcelona Traction:

x x x an essential distinction should be drawn between the obligations of a

State towards the international community as a whole, and those arising vis-à-
vis another State in the field of diplomatic protection. By their very nature, the
former are the concern of all States. In view of the importance of the rights
involved, all States can be held to have a legal interest in their protection; they
are obligations erga omnes.

Such obligations derive, for example, in contemporary international law,

from the outlawing of acts of aggression, and of genocide, as also from the
principles and rules concerning the basic rights of the human person,
including protection from slavery and racial discrimination. Some of the
corresponding rights of protection have entered into the body of general
international law … others are conferred by international instruments of a
universal or quasi-universal character.

The Latin phrase, ‘erga omnes,’ has since become one of the rallying cries of
those sharing a belief in the emergence of a value-based international public
order. However, as is so often the case, the reality is neither so clear nor so
bright. Whatever the relevance of obligations erga omnes as a legal concept, its
full potential remains to be realized in practice.

The term is closely connected with the international law concept of jus
cogens. In international law, the term "jus cogens" (literally, "compelling
 law") refers to norms that command peremptory authority, superseding
conflicting treaties and custom. Jus cogens norms are considered
peremptory in the sense that they are mandatory, do not admit derogation,
and can be modified only by general international norms of equivalent
authority.

Early strains of the jus cogens doctrine have existed since the 1700s, but
peremptory norms began to attract greater scholarly attention with the publication
of Alfred von Verdross's influential 1937 article, Forbidden Treaties in
International Law. The recognition of jus cogens gained even more force in the
1950s and 1960s with the ILC’s preparation of the Vienna Convention on the
Law of Treaties (VCLT).73 Though there was a consensus that certain
international norms had attained the status of jus cogens,74 the ILC was unable to
reach a consensus on the proper criteria for identifying peremptory norms.

After an extended debate over these and other theories of jus cogens, the
ILC concluded ruefully in 1963 that "there is not as yet any generally
accepted criterion by which to identify a general rule of international law as
having the character of jus cogens." In a commentary accompanying the
draft convention, the ILC indicated that "the prudent course seems to be to
x x x leave the full content of this rule to be worked out in State practice and
in the jurisprudence of international tribunals." Thus, while the existence of
jus cogens in international law is undisputed, no consensus exists on its
substance, beyond a tiny core of principles and rules.

2.2. Meaning of Foreign Element

2.2.1. G.R. NO. 122191, OCTOBER 8, 1998 ] SAUDI ARABIAN AIRLINES,

PETITIONER, VS. COURT OF APPEALS, MILAGROS P. MORADA AND
HON. RODOLFO A. ORTIZ, IN HIS CAPACITY AS PRESIDING JUDGE OF
BRANCH 89, REGIONAL TRIAL COURT OF QUEZON CITY,
RESPONDENTS.

FACTS
Private respondent Morada was hired by the petitioner, based in Jeddah, as a flight
attendant. Sometime during her employment, while on a lay-over in Indonesia,
petitioner went out to party with two of her male attendants and back at the hotel, one
of them attempted to rape her but she was rescued by hotel employees who heard her
screams for help. The Indonesian police arrested the two male attendants and private
respondent went back to Jeddah. However, she was asked to go back to Indonesia to
help arrange the release of the 2 male attendants but she did not cooperate upon
arrival.
Afterwards, back in Jeddah, she was faced with interrogations from Saudi Courts
which language she did not understand and to her surprise, she was being convicted
by said court of adultery and violation of Islamic laws and was sentenced to
imprisonment and lashing.
Private respondent sought the help of her employers but to no avail. She then went to
the Philippine Embassy in the pendency of her appeal over said judgment. She
continued her employment as a domestic flight attendant while the two who were
arrested continued to serve in the international flights.
The Prince of Makkah dismissed the case against her as she was wrongfully
convicted. Before she went back to Manila, she was terminated by the petitioner
without being informed of the cause.
She initiated a civil case for damages against the petitioner and its country manager.
Petitioner alleges that the violation of rights occurred in the Kingdom of Saudi
Arabia, further stating the presence of a foreign element and warranting the
application of the laws of Kingdom of Saudi Arabia pursuant to the principle of lex
loci delicti commissi (the law where the delict was committed).
Private respondent alleges that since the civil action is anchored on Articles 19 and 21
of the Civil Code, then domestic law shall be applied.
ISSUE
WON the Philippines have jurisdiction to try and hear the case
HELD
Yes. The court explained that a case has a foreign element if a factual situation cuts
across territorial boundaries and is affected by diverse laws and can come in various
forms.
In the case at bar, the foreign elements were Private respondent is a resident
Philippine national and the petitioner a resident foreign corporation. By virtue of the
nature of work as well of Morada as a flight stewardess flying from the Philippines to
Saudi often, a conflicts situation is inevitable to arise.
The court ruled that the RTC of Quezon City has jurisdiction to try and hear the case
pursuant to RA 7961. Upon presentment as well of claims from both parties, the court
upheld the choice of forum, which is the Philippines.
Jurisdiction over said parties was acquired by the RTC of Quezon City, when the
private respondent filed the claim and when the petitioner prayed for its dismissal.
Considering as well as that the case involves torts, the point of contact could be the
place where the tort was committed. Applying the principles of tort in a conflicts case,
the court ruled that the Philippines could be the situs of the tort. It is in the Philippines
where the petitioner deceived the private respondent, that the petitioner would act
with justice, give her due and observe honesty and good faith, but petitioner failed to
protect her.
Further, applying the state of most significant relationship rule to determine which
state has the most significant relationship, the following were considered:
- Place where the injury occurred;
- Place where the conduct causing injury occurred;
 - Domicile, residence, nationality, place of incorporation, place of business of parties;
and
- Place where the relationship, if any, between the parties is centered.
There is basis that the injury occurred and lodged in the Philippines. The private
respondent is a resident Filipina national, working for the foreign resident corporation
which nature is international air carriage. From the records of the case, the Philippines
as the country with the most significant relationship and contact over the dispute has
been raised and established by the private respondent against the petitioner.
The court dismissed the case.
1.3. Effect of variance of municipal laws across countries/states
- Conflict of laws arises
1.4. Competence of Courts to entertain cases with foreign elements
It should be noted that when a conflicts case, one involving a foreign element, is
brought before a court or administrative agency, there are 3 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. The court’s 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.
In the question on what law should be applied. There are two steps namely
1. To determine if there is an actual conflict of law
2. To apply the law where it has the most significant relationship or connection.
(Doctrine of the State of the most significant relationship rule)

2.6. Foreign Judgments and their Binding Effects

2.6.1 FUJIKI VS. MARINAY

Facts:
Maria Paz Marinay contracted two marriages, both to Japanese nationals. The first
marriage was celebrated on January 23, 2004, to Fujiki, and the second on May 15,
2008, to Maekara. While in Japan, Marinay left Maekara because she was subjected
by the latter to physical abuse. Marinay and Fujiki re-established their relationship
and the latter helped her to secure a judgment from the Japanese family court
declaring her second marriage void on the grounds of bigamy. On January 14, 2011,
Fujiki filed in RTC of Quezon City a petition entitled “Judicial Recognition of
Foreign Judgement (or Decree of Absolute Nullity of Marriage)”, praying that 1. The
Japanese Family Court judgment be recognized; 2. That the bigamous marriage
between Marinay and Maekara be declared void ab initio under Articles 35(4) and 41
of the Family Code of the Philippines; and 3. For the RTC to direct the Local Civil
Registrar of Quezon City to annotate the Japanese Family Court judgment on the
Certificate of Marriage between Marinay and Maekara and to endorse such annotation
to the Office of the Administrator and Civil Registrar General in the National
Statistics Office. The RTC dismissed the petition on the ground that Fujiki has no
personality to sue citing the provisions of A.M. No. 02-11-10-SC.
Issue/s:

(I) Whether the Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.

(II) Whether a husband or wife of a prior marriage can file a petition to recognize a
foreign judgment nullifying the subsequent marriage between his or her spouse and a
foreign citizen on the grounds of bigamy.

(III) Whether the Regional Trial Court can recognize the foreign judgment in a
proceeding for cancellation or correction of entries in the Civil Registry under Rule
108 of the Rules of Court.

Ruling:

I.

The Supreme Court ruled that A.M. No. 02-11-10-SC does not apply in a petition to
recognize a foreign judgment relating to the status of a marriage where one of the
parties is a citizen of a foreign country—citing the case of Juliano-Llave v. Republic,
the Court held that the rule in A.M. No. 02-11-10-SC, only the husband or wife can
file a declaration of nullity or annulment of marriage does not apply if the reason
behind the petition is bigamy.

II.

Since the recognition of a foreign judgment only requires proof of fact of the
judgment, it may be made in a special proceeding for cancellation or correction of
entries in the civil registry under Rule 108 of the ROC. Rule 1, Section 3 of the ROC
provides that “a special proceeding is a remedy by which a party seeks to establish a
status, a right, or a particular fact.” Rule 108 creates a remedy to rectify facts of a
person’s life that are recorded by the State pursuant to the Civil Register Law or Act
No. 3753. These are facts of public consequence such as birth, death, or marriage,
which the State has an interest in recording.

Fujiki has the personality to file a petition to recognize the Japanese Family Court
judgment nullifying the marriage between Marinay and Maekara on the grounds of
bigamy because the judgment concerns his civil status as married to Marinay. For the
same reason, he has the personality to file a petition under Rule 108 to cancel the
entry of marriage between Marinay and Maekara in the civil registry based on the
decree of the Japanese Family Court.

There is no doubt that the prior spouse has a personal and material interest in
maintaining the integrity of the marriage he contracted and the property relations
arising from it. There is also no doubt that he is interested in the cancellation of an
entry of a bigamous marriage in the civil registry, which compromises the public
record of his marriage. The interest derives from the substantive right of the spouse
not only to preserve (or dissolve, in limited instances) his most intimate human
relation but also to protect his property interests in marriage including the right to be
supported “in keeping with the financial capacity of the family” and preserving the
property regime of marriage.

Property rights are already substantive rights protected by the Constitution, but a
spouse’s right in marriage extends further to relational rights recognized under Title
III (Rights and Obligations between Husband and Wife) of the Family Code. A.M.
No. 02-11-10-SC cannot “diminish, increase, or modify” the substantive right of the
spouse to maintain the integrity of his marriage. In any case, Section 2(a) of A.M. No.
02-11-10-SC preserves this substantive right by limiting the personality to sue to the
husband or the wife of the union recognized by law.

Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting
marriage to question the validity of a subsequent marriage on the grounds of bigamy.
On the contrary, when Section 2(a) states that "a petition for declaration of absolute
nullity of void marriage may be filed solely by the husband or the wife"—it refers to
the husband or the wife of the subsisting marriage. Under Article 35(4) of the Family
Code, bigamous marriages are void from the beginning. Thus, the parties in a
bigamous marriage are neither the husband nor the wife under the law. The husband
or the wife of the prior subsisting marriage is the one who has the personality to file a
petition for declaration of absolute nullity of void marriage under Section 2(a) of
A.M. No. 02-11-10-SC.

When the right of the spouse to protect his marriage is violated, the spouse is clearly
an injured party and is therefore interested in the judgment of the suit. Being a real
party in interest, the prior spouse is entitled to sue in order to declare a bigamous
marriage void. For this purpose, he can petition a court to recognize a foreign
judgment nullifying the bigamous marriage and judicially declare as a fact that such
judgment is effective in the Philippines. Once established, there should be no more
impediment to cancel the entry of the bigamous marriage in the civil registry.

III.

A petition for correction or cancellation of an entry in the civil registry cannot

substitute for an action to invalidate a marriage. A direct action is necessary to prevent
circumvention of the substantive and procedural safeguards of marriage under the
Family Code, A.M. No. 02-11-10-SC and other related laws. Among these safeguards
are the requirement of proving the limited grounds for the dissolution of
marriage, support pendente lite of the spouses and children, the liquidation, partition
and distribution of the properties of the spouses, and the investigation of the public
prosecutor to determine collusion. A direct action for declaration of nullity or
annulment of marriage is also necessary to prevent circumvention of the jurisdiction
of the Family Courts under the Family Courts Act of 1997 (Republic Act No. 8369),
as a petition for cancellation or correction of entries in the civil registry may be filed
in the Regional Trial Court "where the corresponding civil registry is located.” In
 other words, a Filipino citizen cannot dissolve his marriage by the mere expedient of
changing his entry of marriage in the civil registry.

However, this does not apply in a petition for correction or cancellation of a civil
registry entry based on the recognition of a foreign judgment annulling a marriage
where one of the parties is a citizen of the foreign country. There is neither
circumvention of the substantive and procedural safeguards of marriage under
Philippine law, nor of the jurisdiction of Family Courts under R.A. No. 8369. A
recognition of a foreign judgment is not an action to nullify a marriage. It is an action
for Philippine courts to recognize the effectivity of a foreign judgment, which
presupposes a case which was already tried and decided under foreign law. The
procedure in A.M. No. 02-11-10-SC does not apply in a petition to recognize a
foreign judgment annulling a bigamous marriage where one of the parties is a citizen
of the foreign country. Neither can R.A. No. 8369 define the jurisdiction of the
foreign court.

Therefore, the petition is GRANTED. The RTC resolution is REVERSED and SET
ASIDE.

2.6.2 Foreign Judgments’ Res Judicata Effect

2.6.2.1. SMALL v. UNITED STATES

2.7 Foreign Arbitral Awards and their Binding or Non-Binding Effect

2.7.1 TUNA PROCESSING INC. VS. KINGFORD INC.

FACTS:
Philippine Kingford (Kingford) is a Corporation duly organized and existing under
the laws of the Philippines. Tuna Processing Inc. (TPI) is a foreign Corporation not
licensed to do business in the Philippines. Due to circumstances not mentioned in the
case, Kingford withdrew from Petitioner TPI. TPI submitted the dispute for
arbitration before the International Centre for Dispute Resolution in the State of
California, USA and won again the Respondent. To enforce the award, petitioner
TPI filed a Petition for Confirmation, Recognition and Enforcement of Foreign
Arbitral Award before the RTC Makati.
ISSUE:
Can a foreign corporation not licensed to do business in the Philippines, but which
collects royalties from entities in the Philippines, sue here to enforce a foreign
arbitral award?

HELD: YES

The petition is impressed with merit.

The Corporation Code of the Philippines expressly provides:

Sec. 133. Doing business without a license. - No foreign corporation transacting

business in the Philippines without a license, or its successors or assigns, shall be
 permitted to maintain or intervene in any action, suit or proceeding in any court or
administrative agency of the Philippines; but such corporation may be sued or
proceeded against before Philippine courts or administrative tribunals on any valid
cause of action recognized under Philippine laws.

The petitioner counters, however, that it is entitled to seek for the recognition and
enforcement of the subject foreign arbitral award in accordance with Republic Act
No. 9285 (Alternative Dispute Resolution Act of 2004),22 the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards drafted during the United
Nations Conference on International Commercial Arbitration in 1958 (New York
Convention), and the UNCITRAL Model Law on International Commercial
Arbitration (Model Law),23 as none of these specifically requires that the party
seeking for the enforcement should have legal capacity to sue. It anchors its
argument on the following:

In the present case, enforcement has been effectively refused on a ground not found
in the [Alternative Dispute Resolution Act of 2004], New York
Convention, or Model Law. It is for this reason that TPI has brought this matter
before this most Honorable Court, as it [i]s imperative to clarify whether the
Philippines’ international obligations and State policy to strengthen arbitration as a
means of dispute resolution may be defeated by misplaced technical considerations
not found in the relevant laws.24

Simply put, how do we reconcile the provisions of the Corporation Code of the
Philippines on one hand, and the Alternative Dispute Resolution Act of 2004,
the New York Convention and the Model Law on the other?

In several cases, this Court had the occasion to discuss the nature and applicability
of the Corporation Code of the Philippines, a general law, viz-a-viz other special
laws. Thus, in Koruga v. Arcenas, Jr.,25 this Court rejected the application of the
Corporation Code and applied the New Central Bank Act. It ratiocinated:

Koruga’s invocation of the provisions of the Corporation Code is misplaced. In an

earlier case with similar antecedents, we ruled that:

"The Corporation Code, however, is a general law applying to all types of

corporations, while the New Central Bank Act regulates specifically banks and other
financial institutions, including the dissolution and liquidation thereof. As between a
general and special law, the latter shall prevail – generalia specialibus non derogant."
(Emphasis supplied)26

Further, in the recent case of Hacienda Luisita, Incorporated v. Presidential Agrarian

Reform Council,27 this Court held:

Without doubt, the Corporation Code is the general law providing for the formation,
organization and regulation of private corporations. On the other hand, RA 6657 is
the special law on agrarian reform. As between a general and special law, the latter
shall prevail—generalia specialibus non derogant.

2.8. Foreign Factual Matters in a Non-Conflicts Case

2.8.1 [ G.R. No. 94723, August 21, 1997 ] KAREN E. SALVACION,
MINOR, THRU FEDERICO N. SALVACION, JR., FATHER AND NATURAL
GUARDIAN, AND SPOUSES FEDERICO N. SALVACION, JR., AND
EVELINA E. SALVACION, PETITIONERS, VS. CENTRAL BANK OF THE
PHILIPPINES, CHINA BANKING CORPORATION AND GREG BARTELLI
Y NORTHCOTT, RESPONDENTS.
FACTS: Greg Bartelli, an American tourist, was arrested for committing four counts
of rape and serious illegal detention against Karen Salvacion. Police recovered from
him several dollar checks and a dollar account in the China Banking Corp. He was,
however, able to escape from prison. In a civil case filed against him, the trial court
awarded Salvacion moral, exemplary and attorney’s fees amounting to almost
P1,000,000.00.
Salvacion tried to execute the judgment on the dollar deposit of Bartelli with the
China Banking Corp. but the latter refused arguing that Section 11 of Central Bank
Circular No. 960 exempts foreign currency deposits from attachment, garnishment, or
any other order or process of any court, legislative body, government agency or any
administrative body whatsoever. Salvacion therefore filed this action for declaratory
relief in the Supreme Court.
ISSUE: Should Section 113 of Central Bank Circular No. 960 and Section 8 of
Republic Act No. 6426, as amended by PD 1246, otherwise known as the Foreign
Currency Deposit Act be made applicable to a foreign transient?
HELD: NO.
The provisions of Section 113 of Central Bank Circular No. 960 and PD No. 1246,
insofar as it amends Section 8 of Republic Act No. 6426, are hereby held to be
INAPPLICABLE to this case because of its peculiar circumstances. Respondents are
hereby required to comply with the writ of execution issued in the civil case and to
release to petitioners the dollar deposit of Bartelli in such amount as would satisfy the
judgment.
Supreme Court ruled that the questioned law makes futile the favorable judgment and
award of damages that Salvacion and her parents fully deserve. It then proceeded to
show that the economic basis for the enactment of RA No. 6426 is not anymore
present; and even if it still exists, the questioned law still denies those entitled to due
process of law for being unreasonable and oppressive. The intention of the law may
be good when enacted. The law failed to anticipate the iniquitous effects producing
outright injustice and inequality such as the case before us.
The SC adopted the comment of the Solicitor General who argued that the Offshore
Banking System and the Foreign Currency Deposit System were designed to draw
deposits from foreign lenders and investors and, subsequently, to give the latter
protection. However, the foreign currency deposit made by a transient or a tourist is
not the kind of deposit encouraged by PD Nos. 1034 and 1035 and given incentives
and protection by said laws because such depositor stays only for a few days in the
country and, therefore, will maintain his deposit in the bank only for a short time.
Considering that Bartelli is just a tourist or a transient, he is not entitled to the
protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court processes.
Further, the SC said: “In fine, the application of the law depends on the extent of its
justice. Eventually, if we rule that the questioned Section 113 of Central Bank
Circular No. 960 which exempts from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body
whatsoever, is applicable to a foreign transient, injustice would result especially to a
citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate
Article 10 of the New Civil Code which provides that “in case of doubt in the
interpretation or application of laws, it is presumed that the lawmaking body intended
right and justice to prevail.”

2.8.2 Merlinda vs. Olaybar [lp];(Lifted from Project Jurisprudence)

4.2. EFFECT OF LACK OF JURISDICTION

4.2.1 Tijam vs. Sibonghanoy, L-21450, April 15, 1968 – Doctrine of

Estoppel by Laches
Facts:
1. On July 19, 1948 — barely one month after the effectivity of Republic Act No.
296 known as the Judiciary Act of 1948 — the spouses Serafin Tijam and
Felicitas Tagalog commenced Civil Case No. R-660 in the Court of First
Instance of Cebu against the spouses Magdaleno Sibonghanoy and Lucia
Baguio to recover from them the sum of P1,908.00, with legal interest thereon
from the date of the filing of the complaint until the whole obligation is paid,
plus costs.
2. After being duly served with summons the defendants filed their answer in
which, after making some admissions and denials of the material averments
 of the complaint, they interposed a counterclaim. This counterclaim was
answered by the plaintiffs.
3. After trial upon the issues thus joined, the Court rendered judgment in favor of
the plaintiffs and, after the same had become final and executory, upon
motion of the latter, the Court issued a writ of execution against the
defendants.
4. The writ having been returned unsatisfied, the plaintiffs moved for the
issuance of a writ of execution against the Surety's bond (Rec. on Appeal, pp.
46-49),
5. Plaintiffs made the necessary demand upon the surety for satisfaction of the
judgment, and upon the latter's failure to pay the amount due, plaintiffs again
filed a motion dated October 31, 1957, for issuance of writ of execution
against the surety, with notice of hearing on November 2, 1957. On October
31, 1957, the surety received copy of said motion and notice of hearing.
6. It appears that when the motion was called on November 2, 1957, the surety's
counsel asked that he be given time within which to answer the motion. Since
the surety's counsel failed to file any answer or objection within the period
given him, the court, on December 7, 1957, issued an order granting plaintiffs'
motion for execution against the surety; and on December 12, 1957, the
corresponding writ of execution was issued.
7. On December 24, 1957, the surety filed a motion to quash the writ of
execution on the ground that the same was "issued without the requirements
of Section 17, Rule 59 of the Rules of Court having been complied with," more
specifically, that the same was issued without the required "summary
hearing". This motion was denied by order of February 10, 1958.
8. On February 25, 1958, the surety filed a motion for reconsideration of the
above-stated order of denial; which motion was likewise denied by order of
March 26, 1958.
9. From the above-stated orders of February 10, 1958 and March 26, 1958 —
denying the surety's motion to quash the writ of execution and motion for
reconsideration, respectively — the surety has interposed the appeal on hand.
Issue:
Whether the action should be estopped by laches on the basis that it was
almost 15 yrs before Surety filed its motion
Held:
A party may be estopped or barred from raising a question in different ways
and for different reasons. Thus we speak of estoppel in pais, or estoppel by
deed or by record, and of estoppel by laches.
Laches, in a general sense is failure or neglect, for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence,
could or should have been done earlier; it is negligence or omission to assert
a right within a reasonable time, warranting a presumption that the party
entitled to assert it either has abandoned it or declined to assert it.

The doctrine of laches or of "stale demands" is based upon grounds of public

policy which requires, for the peace of society, the discouragement of stale
claims and, unlike the statute of limitations, is not a mere question of time but
is principally a question of the inequity or unfairness of permitting a right or
claim to be enforced or asserted.
In the case at bar, the surety had been notified of the plaintiffs' motion for
execution and of the date when the same would be submitted for
consideration. In fact, the surety's counsel was present in court when the
motion was called, and it was upon his request that the court a quo gave him
a period of four days within which to file an answer. Yet he allowed that period
to lapse without filing an answer or objection. The surety cannot now,
therefore, complain that it was deprived of its day in court.
The facts of this case show that from the time the Surety became a quasi-
party on July 31, 1948, it could have raised the question of the lack of
jurisdiction of the Court of First Instance of Cebu to take cognizance of the
present action by reason of the sum of money involved which, according to
the law then in force, was within the original exclusive jurisdiction of inferior
courts. It failed to do so. Instead, at several stages of the proceedings in the
court a quo as well as in the Court of Appeals, it invoked the jurisdiction of
said courts to obtain affirmative relief and submitted its case for a final
adjudication on the merits. It was only after an adverse decision was rendered
by the Court of Appeals that it finally woke up to raise the question of
jurisdiction. Were we to sanction such conduct on its part, We would in effect
be declaring as useless all the proceedings had in the present case since it
was commenced on July 19, 1948 and compel the judgment creditors to go up
their Calvary once more. The inequity and unfairness of this is not only patent
but revolting.

4.2.2 PERKINS v. ROXAS G.R. No. 47517, June 27, 1941

FACTS:
The private respondent Eugene Arthur Perkins, filed a complaint in the Court of First
Instance of Manila against the Benguet Consolidated Mining Company for the
recovery of the sum of P71,379.90, consisting of dividends which have been declared
and made payable 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
plaintiff's right to the disposal and control of the shares was due to certain demands
made with respect to said shares by the petitioner herein. Idonah Slade Perkins (ISP),
and by one George H. Engelhard (GHE). Respondent amended his complaint to
implede ISP and GHE as additional defendants.

ISP filed an answer saying that there was a previous judgment in New York saying
that she is the owner of the shares, and such is res judicata.

∙ Now, ISP files this petition for certiorari saying ―the respondent judge is about to
and will render judgment in the above-mentioned case disregarding the
constitutional rights of this petitioner; contrary to and annulling the final, subsisting,
valid judgment rendered and entered in this petitioner's favor by the courts of the
State of New York, ... which decision is res judicata on all the questions constituting
the subject matter of civil case No. 53317, of the Court of First Instance of Manila;
and which New York judgment the Court of First Instance of Manila is without
jurisdiction to annul, amend, reverse, or modify in any respect whatsoever.‖

ISSUE:
Whether or not the petition for certiorari will prosper? NO

RULING:
By jurisdiction over the subject matter is meant the nature of the cause of action and
of the relief sought, and this is conferred by the sovereign authority which organizes
the court, and is to be sought for in general nature of its powers, or in authority
specially conferred. Idonah Slade Perkins in her cross-complaint brought suit against
Eugene Arthur Perkins and the Benguet Consolidated Mining Company upon the
alleged judgment of the Supreme Court of the State of New York and asked the court
below to render judgment enforcing that New York judgment, and to issue execution
thereon. This is a form of action recognized by section 309 of the Code of Civil
Procedure (now section 47, Rule 39, Rules of Court) and which falls within the
general jurisdiction of the Court of First Instance of Manila, to adjudicate, settled and
determine. The petitioner expresses the fear that the respondent judge may render
judgment "annulling the final, subsisting, valid judgment rendered and entered in
this

SECOND DIGEST: G.R. No. 47517 June 27, 1941

IDONAH SLADE PERKINS, petitioner, vs. MAMERTO ROXAS, ET
AL., respondents.

On July 5, 1938, respondent Eugene Perkins filed a complaint in the CFI- Manila
against the Benguet Consolidated Mining Company for the recovery of a sum
consisting of dividends which have been declared and made payable on 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. The company alleged, by way of defense that the withholding
of plaintiff’s right to the disposal and control of the shares was due to certain demands
made with respect to said shares by the petitioner Idonah Perkins, and by one
Engelhard.

Eugene Perkins included in his modified complaint as parties defendants petitioner,

Idonah Perkins, and Engelhard. Eugene Perkins prayed that petitioner Idonah Perkins
and H. Engelhard be adjudged without interest in the shares of stock in question and
excluded from any claim they assert thereon. Summons by publication were served
upon the nonresident defendants Idonah Perkins and Engelhard. Engelhard filed
his answer. Petitioner filed her answer with a cross-complaint in which she sets up a
judgment allegedly obtained by her against respondent Eugene Perkins, from the SC
of the State of New York, wherein it is declared that she is the sole legal owner and
entitled to the possession and control of the shares of stock in question with all the
cash dividends declared thereon by the Benguet Consolidated Mining Company.
Instead of demurring to the reply on either of the two grounds specified in section 100
of the Code of Civil Procedure, petitioner, Idonah Slade Perkins, on June 5, 1940,
filed a demurrer thereto on the ground that "the court has no jurisdiction of the
subject of the action," because the alleged judgment of the Supreme Court of the
State of New York is res judicata.
ISSUE:
Whether or not in view of the alleged judgment entered in favor of the petitioner by
the SC of New York and which is claimed by her to be res judicata on all questions
raised by the respondent, Eugene Perkins, the local court has jurisdiction over the
subject matter of the action.
RULING:
The local court has jurisdiction over the subject matter of the action.
By jurisdiction over the subject matter is meant the nature of the cause of action and
of the relief sought, and this is conferred by the sovereign authority which organizes
the court, and is to be sought for in general nature of its powers, or in authority
specially conferred. In the present case, the amended complaint filed by the
respondent, Eugene Perkins alleged calls for the adjudication of title to certain shares
of stock of the Benguet Consolidated Mining Company and the granting of
affirmative reliefs, which fall within the general jurisdiction of the CFI- Manila.
Similarly CFI- Manila is empowered to adjudicate the several demands contained in
petitioner’s cross-complaint.

Idonah Perkins in her cross-complaint brought suit against Eugene Perkins and the
Benguet Consolidated Mining Company upon the alleged judgment of the SC of the
State of New York and asked the court below to render judgment enforcing that
New York judgment, and to issue execution thereon. This is a form of action
recognized by section 309 of the Code of Civil Procedure (now section 47, Rule 39,
Rules of Court) and which falls within the general jurisdiction of the CFI- Manila,
to adjudicate, settle and determine.

The petitioner expresses the fear that the respondent judge may render judgment
“annulling the final, subsisting, valid judgment rendered and entered in this
petitioner’s favor by the courts of the State of New York, which decision is res
judicata on all the questions constituting the subject matter of civil case” and argues
on the assumption that the respondent judge is without jurisdiction to take cognizance
of the cause. Whether or not the respondent judge in the course of the proceedings
will give validity and efficacy to the New York judgment set up by the petitioner in
her cross-complaint is a question that goes to the merits of the controversy and relates
to the rights of the parties as between each other, and not to the jurisdiction or power
of the court. The test of jurisdiction is whether or not the tribunal has power to enter
upon the inquiry, not whether its conclusion in the course of it is right or wrong. If its
decision is erroneous, its judgment can be reversed on appeal; but its determination of
the question, which the petitioner here anticipates and seeks to prevent, is the exercise
by that court and the rightful exercise of its jurisdiction. Petition denied.

4.2.3 HASEGAWA v. KITAMURA

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.

The agreement provides that respondent was to extend professional services to

Nippon for a year. Nippon then assigned respondent to work as the project manager
of the Southern Tagalog Access Road (STAR) Project in the Philippines.

When the STAR Project was near completion, the Department of Public Works and
Highways (DPWH) engaged the consultancy services of Nippon.

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.

Nippon insisted that respondent’s contract was for a fixed term that had already
expired, and refused to negotiate for the renewal of the ICA.

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.

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.

the RTC, invoking our ruling in Insular Government v. Frank14 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.

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.

ISSUE:
A. 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.

B. whether the subject matter jurisdiction of Philippine courts in civil cases for specific
performance and damages involving contracts executed outside the country by
foreign nationals may be assailed on the principles of lex loci celebrationis, lex
contractus, the "state of the most significant relationship rule," or forum non
conveniens.

RULING:
The Court finds the invocation of these grounds unsound.
 only the first phase is at issue—jurisdiction. 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

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

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.

4.4.2. JURISDICTION OVER THE PERSON

4.4.2.1. BROWN VS. BROWN, 120 R.I. 340, 387 A.2D 1051 (RI 1978)
FACTS:
On May 24, 1974, petitioner, Gail R. Brown, filed this divorce action and also
filed a petition seeking a number of temporary orders. On June 14 respondent entered
a general appearance on his own behalf and listed an East Providence, Rhode Island
address.
A hearing was held in Family Court at which the parties agreed to a set of temporary
orders which were embodied in a decree entered on June 21, 1974. Among those
orders was one requiring respondent to pay petitioner $300 every 2 weeks for the
support of the three minor children of the parties. The respondent subsequently filed
an answer to the divorce petition through counsel. He sought to have the petition
denied because of alleged misconduct by petitioner.
The respondent's compliance with the child support order, however, left much to be
desired. In January 1975 and January 1976 the court entered decrees adjudging
respondent in contempt for failing to make the ordered payments. (In the former
decree the court also granted a motion by respondent to reduce his biweekly payments
because of changed circumstances.)
In March 1976 the court entered a third contempt decree, this one adjudging
respondent in willful contempt. By that time his arrearages totaled $2,246 and the
court stated that respondent would have been incarcerated if petitioner had requested
that sanction. The court nonetheless continued the case for 3 months to allow
respondent to purge himself of his contempt and reduced his biweekly payments to
compensate for increases in petitioner's income.
The petitioner also filed a new motion, this one alleging that respondent had moved to
Maryland and had filed a petition for divorce there. She sought an order restraining
him from proceeding with that suit because of the pending action in Rhode Island and
because of his outstanding contempt judgments.
After hearing arguments the court granted the motion and entered a decree which
stated that respondent was "enjoined and restrained from proceeding with the Bill of
Complaint for Divorce which he has filed in the Circuit Court for Prince George's
County, Maryland, and from instituting any new proceeding for divorce in any other
jurisdiction until further order of this Court." From this decree respondent filed the
appeal before us now.
The respondent defied the court's order and proceeded with his action in Maryland.
On October 22, 1976, he was granted a final decree of divorce a vinculo matrimonii,
his bill of complaint having been taken decree pro confesso. The petitioner filed an
appeal from that decree through Maryland counsel, but since she did so after the anti-
suit injunction was issued by the Family Court, that fact is not relevant to the present
case, if it ordinarily would be, Compare Stultz v. Stultz, 15 N.J. 315, 104 A.2d 656
(1954), with Wm. Cameron Co. v. Abbott, 258 S.W. 562, 566 (Tex. Ct. App. 1924).
After the present appeal was docketed, the respondent filed a motion in Family Court
to dismiss this case as moot because of the Maryland decree of absolute divorce. We
remanded the case for a hearing on that motion, Brown v. Brown, 117 R.I. 967, 368
A.2d 578 (1977), after which the court denied the motion and returned the papers
here.
As a general rule, a court which has jurisdiction over a cause of action and over the
parties may issue a valid order enjoining a person from beginning or prosecuting an
action in the courts of a sister state.
ISSUE
Whether the Family Court had the power to issue a binding antisuit injunction against
him

RULING:
Yes. On the facts of this case, however, respondent's place of domicile is irrelevant to
the jurisdictional question. The record shows that respondent was served with process
in Rhode Island, entered a general appearance, and filed an answer to contest the case
on its merits, so that even assuming that respondent did establish a Maryland
domicile, the court had already obtained jurisdiction over his person for purposes of
this suit, Restatement, supra, §§ 28 and 33; James, Civil Procedure §§ 12.1 and 12.6
(1965), and that jurisdiction continued (and still continues), regardless of respondent's
place of domicile, Palmer v. Palmer, 268 App. Div. 1010, 52, N.Y.S.2d 383 (1944),
for any proceeding arising out of the original cause of action. Restatement, supra § 26;
see Palmer v. Palmer. Since the injunction here related solely to the prosecution of the
pending action, we consider it a proceeding arising out of the original cause of action
and not a new cause, so that the court had jurisdiction over respondent for the purpose
of issuing this injunction. Restatement, supra § 26.

While courts exercise their power to enjoin foreign suits in a variety of situations, that
power is exercised sparingly and only where the equities of a case clearly warrant
such injunctive relief. This judicial restraint is based on a number of considerations,
including the difficulty of enforcing such injunctions, McClintock, supra, at 300;
Restatement, supra § 53, Comment b, the reluctance to interfere with an individual's
right to seek redress in the forum of his own choice, Bigelow v. Old Dominion
Copper Mining and Smelting Co., 74 N.J. Eq. at 473, 71 A. at 160; McClintock, supra
at 302, and the desire to avoid interference or conflicts with judicial proceedings in
sister states.
In view of these considerations, a court should not, as a general rule, exercise its
conceded power to enjoin a foreign divorce proceeding if the spouse sought to be
enjoined is a bona fide domiciliary of the foreign jurisdiction. Foreign domicile is less
significant, however, where the courts of the injunctive state have acquired
jurisdiction of a matrimonial action between the parties prior to establishment of the
foreign domicile and institution of the foreign action.

Thus, in a situation like this, where respondent was a Rhode Island domiciliary when
petitioner instituted the Rhode Island action for divorce from bed and board, and
where respondent entered a general appearance in the action, his later establishment of
a domicile in Maryland was not a controlling factor in the Family Court's
determination of the propriety of enjoining prosecution of his Maryland divorce
action. Of course, in a particular case other reasons may exist why the Family Court
should yield jurisdiction to a foreign court. Here, there are no such reasons, and, to the
contrary, the circumstances confronting the Family Court clearly supported its
retention of jurisdiction and its effort to protect that jurisdiction.

In the first place, the injunction was warranted in order to prevent a multiplicity of
suits, particularly here where the Rhode Island court had both parties before it and
was better able than the Maryland court to deal with issues like support and alimony
which could arise in either of the suits. McClintock, supra at 296; Re, supra at 155-56.

Second, because of the possibility of conflicting decisions on these issues common to

both suits, the court had an interest in preserving its prior jurisdiction over this
controversy, Trustees of Princeton University v. The Trust Co. of New Jersey, 22 N.J.
587, 598, 127 A.2d 19, 25 (1956); McClintock, supra at 296, and even a duty to do so,
in order to decree complete and final justice between the parties in the matters before
it. Annot., 6 A.L.R.2d 896, § 3 at 902 (1949). That jurisdiction in this case extended
not only to the marital status of the parties but also to alimony and child support, and
the court was warranted in seeking to prevent respondent from confusing and
complicating its determination of those issues (as, in fact, he has since done — see
note 2).

Finally, by the time this injunction was sought, respondent had already been adjudged
in willful contempt of his child support orders and a support order was still
outstanding. The court was warranted in using its equitable powers to enforce its
orders and to prevent the child support issue from being sidetracked by respondent's
actions in another jurisdiction. Cf. Goldstein v. Goldstein, 109 R.I. 428, 286 A.2d 589
(1972) (no abuse of discretion in enjoining entry of final divorce decree to insure
compliance with an interlocutory divorce decree). Even if that foreign action would
have no legal effect on the issues before the Rhode Island court, it would, again,
complicate the resolution of those issues and would place an unfair hurdle in
petitioner's way as she sought to adjudicate her rights arising from the marriage.

In view of these considerations, we conclude that there was no abuse of discretion by

the trial justice in issuing the decree on appeal here. Cf. id.

The respondent's appeal is denied and dismissed, the decree appealed from is
affirmed, and the case is remanded to the Family Court for further proceedings.

4.4.2.2. MULLANE V. CENTRAL HANOVER BANK & TRUST CO., 339 U.S.
306
FACTS

In the 1950 case Mullane v. Central Hanover Bank & Trust Co., the US Supreme
Court dealt with the issue of due process and notice in legal proceedings. The case
involved a bank in New York that created a common trust fund by combining smaller
trusts. When the bank requested a court settlement for this fund, it only notified
beneficiaries via a newspaper ad, as allowed by state law.
However, some beneficiaries lived outside New York, while others were unknown or
hard to find. A special guardian appointed for their interests argued that this form of
notification didn't meet due process requirements under the Fourteenth Amendment.
The Supreme Court agreed, ruling that the newspaper notice wasn't enough to satisfy
due process.
The court used a "reasonableness" test for notification, requiring it to be an adequate
method for informing affected parties about the action and giving them a chance to
object. While the newspaper ad was acceptable for unknown or hard-to-find
beneficiaries, those who were known or easy to locate should have been contacted
through mail or other direct methods.
The court clarified that due process doesn't demand personal service or actual notice,
but rather a reasonable effort to inform affected parties. This case is significant
because it clarified due process requirements and differentiated between different
types of beneficiaries. It remains an authority on this issue today.
A common trust fund informed non-resident beneficiaries of impending settlement via
publication in a newspaper, despite having their contact information

ISSUE
1. Does the form state have jurisdiction to settle accounts for funds in that state even
though members of the fund may not be residents? Yes, Publication comports with
due process for unknown beneficiaries.

2. Is publication through newspaper sufficient notice to residents/nonresidents that

their rights are being adjudicated during this judicial settlement? No. Publication
comports with due process for unknown beneficiaries, but for known beneficiaries,
publication is not sufficient as reasonable notice under due process.
Held

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 court’s 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 particular.