Foreign element - a factual situation that cuts across territorial lines and is thus affected by the diverse laws of two or more states
Comity - the recognition which one state allows within its territory to the legislative, executive, or judicial acts of another state, having due regard both to international duty and convenience and to the rights of its own citizens or of other persons who are under the protection of its laws
Lex situs - the applicable law regarding the acquisition, transfer and devolution of the title to property is the law where the property is located
Lex fori - the law of the forum, where the case if filed
Lex loci actus - the law of the place where the act is done
Lex loci celebrationis - the law of the place where the contract is entered into
Lex loci contractus - the proper law applicable in deciding the rights and liabilities of the contracting parties
Lex loci delictus - the law of the place where the offense or wrong took place
Lex loci domicilii - the law of the place of the domicile of the person
Lex loci rei sitae (lex situs) - the law of the place where a thing is situated
Kilberg doctrine - a rule to the effect that the forum is not bound by the law of the place of injury or death as to the limitation on damages for wrongful act because such rule is procedural and hence the law of the forum governs the issue
Center of gravity doctrine (most significant relationship theory; grouping of contacts) - choice of law problems in conflict of laws are resolved by the application of the law of the jurisdiction which has the most significant relationship to or contact with event and parties to litigation and the issue therein
- GENERAL RULE: Law of one country has no application and force in another country. Philippine laws have no extraterritorial effect.
- EXCEPTION: Consent: when our laws provide extraterritorial effect to our laws with respect to citizens and nationals (e.g. extraterritoriality principle of RPC)
**But now in PRIL, foreign laws and foreign judgments may be given force and effect in our country, because of the growing inter-dependence of states and on basis of the principle of comity.
2 REMEDIES INVOLVED:
- Enforcement of rights
- Recognition and enforcement of foreign judgment
**Conflict of laws presupposes two or more conflicting laws, between a local law and a foreign law involving a foreign element or elements, which requires a determination of which law should apply.
Is there a ‘conflicts’ case?
A factual situation that cuts across territorial lines and is affected by the diverse laws of two or more states is said to contain a “foreign element.” The presence of a foreign element is inevitable since social and economic affairs of individuals and associations are rarely confined to the geographic limits of their birth or conception. (Saudi Arabia Airlines vs. CA, G.R. No. 122191, Oct. 8, 1998)
The forms in which this foreign element may appear are many. The foreign element may simply consist in the fact that one of the parties to a contract is an alien or has a foreign domicile, or that a contract between nationals of one State involves properties situated in another State. In other cases, the foreign element may assume a complex form. (Saudi Arabia Airlines vs. CA, supra)
In the instant case, the foreign element consisted in the fact that private respondent Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign corporation. Also, by virtue of the employment of Morada with the petitioner SAUDIA as a flight stewardess, events did transpire during her many occasions of travel across national borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that caused a “conflicts” situation to arise.(Saudi Arabia Airlines vs. CA, supra)
3 WAYS OF SOLVING CONFLICT OF LAWS PROBLEM:
- Court might refuse to hear the case and dismiss it on ground of lack of jurisdiction or forum non conveniens
- Court might decide the case by its own local law
- Court might decide the case by special rules formulated to address the problem
A. Choice of Law Principles
- GENERAL RULE: Foreign laws and judgments have no effect in the Philippines
- EXCEPTION: Consent, express (there is a law) or implied (comity)
B. Characterization and Points of Contact
Characterization (Doctrine of Qualification) - process of deciding whether or not the facts relate (refer to the connecting factors) to the kind of question specified in a conflicts rule; to enable the forum to select the proper law
ELEMENTS OF CHARACTERIZATION:
- Foreign element
- Points of contact
- Proper law applicable
TEST FACTORS / POINTS OF CONTACT / CONNECTING FACTORS:
- Nationality of a person, his domicile, his residence, his place of sojourn, or his origin
- The seat of a legal or juridical person, such as a corporation
- The situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lex situs is decisive when real rights are involved
- The place where an act has been done, the locus actus, such as the place where a contract has been made, a marriage celebrated, a will signed or a tort committd. The lex loci actus is particularly important in contracts and torts
- The place where an act is intended to come into effect, e.g. the place of performance of contractual duties, or the pace where a power of attorney is to be exercised
- The intention of the contracting parties as to the law that should govern their agreement, the lex loci intentionis
- The place where judicial or administrative proceedings are instituted or done. The lex fori - the law of the forum - is particularly important because, as we have seen earlier, matters of ‘procedure’ not going to the substance of the claim involved are governed by it; and because the lex fori applies whenever the content of the otherwise applicable foreign law is excluded from application in a given case for the reason that it fails under one of the exceptions to the application of foreign law
- The flag of the ship, which in many cases, is decisive of practically all legal relationships of the ship and of its master or owner as such. It also covers contractual relationships particularly contracts of affreightment.
CONFLICTS PROBLEM; JURISDICTION; CHARACTERIZATION; POINTS OF CONTACT; STATE OF THE MOST SIGNIFICANT RELATIONSHIP
FACTS:
Morada, a Filipina flight stewardess for SAUDIA, was a attempted raped by Saudia Arabian national crewmembers in Indonesia. She returned to Manila and while there, she was convinced by SAUDIA manager to go to Jeddah and sign some papers, purporting to be release forms in favor of her fellow crewmembers. It turned out that the documents were court summons and orders, trying and finding her guilty of adultery and other violations of Islamic tradition. Upon her release and return to Manila, she filed a case for damages based on Art. 19 and 21 of the Civil Code.
HELD:
There is a conflicts problem as there is a foreign element involved -- Morada is employed by a resident foreign corporation, an international carrier, and some of the acts complained of occurred in Jeddah.
The trial court has jurisdiction over the subject matter -- damage suit based on Art. 19 and 21 -- and over the persons of Morada (plaintiff) and SAUDIA (voluntary submission by filing answer).
For characterization, the point of contact considered is the lex loci actus or the place where the tortuous act causing the injury occurred -- Manila, Philippines since this is where SAUDIA deceived Morada. The State of the Most Significant Relationship rule was also applied, SC holding that the Philippines is where the over-all harm of the injury to the person, reputation, social standing and human rights of Morada had lodged.
IN SUM: Morada is entitled to recovery for damages.
C. Choice of Applicable Law
2 IMPORTANT QUESTIONS IN A CHOICE-OF-LAW PROBLEM:
- What legal system should control a given situation where some of the significant factors occurred in two or more states - solved by characterization
- To what extent should the chosen legal system regulate the situation
PHILIPPINE STATUTORY DIRECTIVES ON CHOICE OF LAW:
1. Personal law - nationality rule
- Family rights and duties - those which arise from family relations, and include those between husband and wife, and between parent and child, among other ascendants and their descendants and among brothers and sisters
- Status - birth, marriage death, legal separation, annulment of marriage, judgment declaring the nullity of marriage, legitimation, adoption, acknowledgment of natural children, naturalization, loss or recovery of citizenship, civil interdiction, judicial determination of filiation, voluntary emancipation of a minor and change of name
- Condition
- Legal capacity
PERSONAL LAW: NATIONALITY RULE; RENVOI DOCTRINE; DOCTRINE OF PROCESSUAL PRESUMPTION
FACTS:
Amos Bellis, a US citizen, died a resident of Texas. He left two wills -- one devising a certain amount of money to his first wife and three illegitimate children and another, leaving the rest of his estate to his seven legitimate children. Before partition, the illegitimate children who are Filipinos opposed on the ground that they are deprived of their legitimes.
ISSUE: Whether the applicable law is Texas law or Philippine laws
HELD:
Applying the nationality rule, the law of Texas should govern the intrinsic validity of the will and therefore answer the question on entitlement to legitimes. But since the law of Texas was never proven, the doctrine of processual presumption was applied. Hence, SC assumed that Texas law is the same as Philippine laws, which upholds the nationality rule.
Renvoi doctrine is not applicable because there is no conflict as to the nationality and domicile of Bellis. He is both a citizen and a resident of Texas. So even if assuming the law of Texas applies the domiciliary rule, it is still Texas law that governs because his domicile is Texas.
LEGAL CAPACITY: LAW OF THE PLACE WHERE CONTRACT WAS ENTERED INTO
FACTS:
In Chicago, Ill., USA, Frank entered into an employment contract as stenographer with the Government. The contract is to be performed in the Philippines. However, upon arrival in the Philippines, Frank left the service. Government thus sued him for the breach. Frank raised the defense of minority, contending that by Philippine laws, he does not have legal capacity to enter into contracts.
ISSUE: Whether or not Frank has legal capacity to enter into contracts
HELD:
It is not disputed that at the time and place of the making of the contract in question, the defendant had full capacity to make the same. 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 with its performance are regulated by the law prevailing at the place of performance. Matters respecting a remedy, such as the bringing of suit, admissibility of evidence, and statutes of limitations, depend upon the law of the place where the suit is brought.
The plaintiff (defendant) being fully qualified to enter into the contract at the place and time the contract is made, he cannot implead infancy as a defense at the place where the contract is being enforced.
- GENERAL RULE: No foreign law may or should interfere with the operation and application of Philippine laws.
- When the Philippine Legislature has, by law, given its consent to the extension of a specific foreign law to the Philippines (e.g. COGSA)
- When Congress enacts a law adopting or copying a specific foreign statute
- When State enters into a treaty or convention
- When parties themselves stipulate that foreign law governs their relationship
- Borrowing Statute - a statute which directs the court of the forum to apply the foreign statute to the pending claims based on a foreign law
- When Philippine conflict of laws rule refer to foreign law as applicable law (e.g. nationality principle)
EXCEPTION TO THE BORROWING STATUTE
FACTS:
Cadalin et al. are OCWs deployed to various Middle Eastern countries, including Bahrain. Under the contracts, the choice of applicable law is Bahrain law in case of contractual disputes. The contracts were later pre-terminated so Cadalin et al. filed with RTC a case for recovery of unpaid wages, etc. Under Bahrain law, the action has already prescribed.
ISSUE: Whether or not Bahrain law should be applied on the question of prescription of action
HELD:
Statute of limitations is sui generis -- it may be procedural or substantive, depending on the characterization given such a law. This distinction, however, becomes irrelevant when there is a borrowing statute, as in the case of our Rules of Court, which provides that any action barred under the law of the country where the cause of action arose is also barred in the Philippines. But, in this case, SC did not apply our Rules of Court on the ground that doing so would contravene the constitutional provision on protecting the rights of labor. The courts of the forum will not enforce an foreign claims obnoxious to the forum’s public policy.
D. Agreement on Applicable Law
- GENERAL RULE: Parties are free to stipulate as to the applicable foreign law to govern their dispute arising from the contract.
- Where there is some basis for applying law of the forum (minimum contact)
- Where plaintiff and defendant are both residents of the forum
- Where a reasonable reading of the choice of law and forum agreement does not preclude the filing of the action in the residence of the plaintiff or the defendant
BUT if there is no agreement as to applicable law governing contract --
Apply the law of the State of the Most Significant Relationship, taking into account the following CONTACTS:
- Place of contracting
- Place of negotiation of the contract
- Place of performance
- Location of the subject matter of the contract
- Domicile, residence, nationality, place of incorporation and place of business of the contracting parties
CHOICE OF LAW ON JURISDICTION TREATED AS CHOICE OF VENUE
FACTS:
A Singaporean company applied with and was granted by the Singapore branch of HSBC an overdraft facility, secured by a Joint and Several Guarantee executed by the former’s directors (Filipino residents). In the Guarantee, there is a clause stipulating that jurisdiction over any dispute arising from the transaction is vested with the Singaporean courts. When the Singaporean company defaulted, HSBC filed suit against the directors in the Philippines.
ISSUE: Whether or not the choice of law clause should be upheld
HELD:
Jurisdiction, which finds its source in sovereignty, cannot be bargained away by the parties. The State can assume jurisdiction when there is a reasonable basis of exercising it. To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions on fair play and substantial justice.
In the present case, the minimum contact considered is the Philippine residence of the private respondents. In assuming jurisdiction, SC held that the parties did not stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction.
(Because jurisdiction cannot be stipulated upon, the choice of jurisdiction was treated as a choice of venue. And applying thus, the choice of venue is only permissive, in the absence of restrictive words to lend exclusivity to the chosen forum.)
NOTA BENE:
When faced with a case that potentially involves the application of Conflict of Laws principles:
1. First, determine jurisdiction of the forum
- No jurisdiction - dismiss
- Has jurisdiction but refuse to exercise it (forum non conveniens)
- Has jurisdiction and exercises it - move to second step
- No foreign element - apply local law
- Has foreign element - move to third step
- No conflict - apply foreign or local law, as case may be
- Has conflict - move to fourth step
- Local law
- Foreign law
