CONFLICT OF LAWS

12 September 2008

Definition

Part of the law of each State which

determines whether in dealing with a

factual situation involving a foreign

element, the law or the judgment of

some other State will be recognized or

applied in the forum.

Nature:

-merely part of municipal law

- directive to courts [& preliminarily, to

administrative agencies: DFA, BI, SEC, etc.]

Subject:

any factual situation/legal problem containing

any foreign element

Primary function:

determine whether the rules of law or the

judgment of some other State(s), and if so, to

what extent, should be recognized or applied

in the forum.

Elements

Scope & Functions

1. Determine which country has jurisdiction:

-prescribe conditions under which the forum court/agency is

competent to entertain a suit or proceeding involving facts containing

a foreign element;

2. Choice of Law:

-determine for each class of cases the particular system of law by

reference to which the rights of the parties must be ascertained

3. Recognition & Enforcement of Foreign Judgments

-specify circumstances in which foreign judgment will be recognized

as valid and binding in the forum; determination of its force, validity &

effectiveness

Hasegawa v. Kitamura (2007): three consecutive phases involved in

judicial resolution of conflicts-of-laws problems. Raytheon International v.

Rouzie (2008, by J. Tinga)

COL v. PIL

Nature:

municipal

Who:

private persons

Transactions involved

Private transactions

Remedies or Sanctions

Resort to municipal tribunals

international

Sovereign States & int’l orgs.

those with public interest

Peaceful (e.g., diplomatic

negotiation, good offices,

mediation, ICJ)

Forcible (e.g., severance of

diplomatic relations, retortions,

reprisals, embargo, etc.)

Sources of COL

Codifications [Civil Code, Code of Commerce, Insurance Code]

Special Legislation [FIA, Corporation Code, Banking Law,

COGSA, IP Law]

Multilateral treaties & international conventions [Warsaw

Convention, UNCITRAL, Convention relation to Stateless

Persons]

Bilateral treaties

Case law

International customs [lex situs for immovables; lex loci

celebrationis re formalities; lex loci delicti commissi re torts.

PIL [state & diplomatic immunities, territorial jurisdiction,

prohibition against denial of justice]

Constitution

Indirect sources [natural law and the work of jurists]

Ways of Disposing a COL case

DISMISS

a. Lack of jurisdiction (SM, person, res)

b. Possess jurisdiction, but refuse to assume

(forum non conveniens)

ASSUME JURISDICTION

a. Apply internal law of the forum (lex fori)

b. Apply the proper foreign law (lex causae)

Forum non conveniens

Refusal based on inconvenience to the

forum: Evidence & witnesses not readily available

Clogged dockets

Forum shopping

Forum has no particular interest in the case (does not involve its

citizens or residents)

Other foreign courts are open and case would be better tried

there

Apply Internal/Domestic Law

1. The forum expressly so provides in its

conflicts rules;

2. Processual presumption: when the proper

foreign law has not been properly pleaded

and proved;

3. Exceptions to Comity: when the case

involves any of the exceptions to the

application of the proper foreign law

Apply Internal/Domestic Law

1. The forum expressly so provides in its

conflicts rules: Art. 16, par. 2: intestate & testamentary successions (order &

amount of successional rights), and intrinsic validity of

testamentary provisions governed by national law

Art. 829 CC: will executed by alien abroad but revoked here, the

revocation must comply with formalities of Phil. Law

Art. 80, Family Code: in the absence of contrary stipulation, property

relations of Filipino spouses governed by Phil. Law, regardless

of place of celebration and residence. Also applies to marriages

where husband is Filipino.

[n.b. matrimonial property regime follows the husband]

Apply Internal/Domestic Law

3. Exceptions to Comity: (when the case involves any of the

exceptions to the application of the proper foreign law) a. Contrary to sound & established public policy of the forum (Art. 17,

par.3), e.g., joint wills, bigamous, polygamous & incestuous marriages; splitting of single cause of action (BA case)

b. Contrary to almost universally conceded principles of morality (contra bonos mores), e.g., slavery, human trafficking, piracy

c. Procedural matters (lex fori determines which are substantial and which are procedural)

d. Penal laws, judgments & contracts (see: purpose of penalty), based on principle of territoriality

e. Purely fiscal/revenue-producing or administrative matters

f. Lead to undeniable injustice to citizens/residents

g. Against the vital interests & national security of the forum (BA case)

h. Involves real & personal property in the forum (lex situs)

Nature of Conflict Rules

Kinds of legal rules:

I. Rules of PIL

II. Rules of Municipal/National Law

a. domestic internal rules

-authorize, command or prohibit

b. rules of private international law or

COL (aka conflict rules/choice-of-law

rules)

-decide only which law or jurisdiction will

give final solution to the question

Characterization

Aka doctrine of qualification or classification

Process of assigning a disputed question to

its correct legal category, the purpose of

which is to enable the forum to select the

proper law

Stages: [lex fori prevails]

1. Classification of factual situation

2. Determination & characterization of “point of

contact” or the “connecting factor”

3. Extent of application of the chosen law, I.e.,

characterization of problem as procedural or

substantive

Nature of Conflict Rules Art. 16. [1]Real property as well as personal property

[2] is subject to the law of the country where it is

situated.

Parts of a conflicts rule:

1. Defines object: factual situation/event

2. Determines the legal consequences by

prescribing the municipal law to which the

question should be referred or connected:

the test/connecting factor/point of contact:

e.g., nationality, domicile, residence, place of sojourn, origin,

seat of legal or juridicial person, situs of the thing (lex situs),

place where the act was done (locus actus), place of

performance, intention of the parties (lex loci intentionis),

place of the forum (lex forum), flag ship

Escape Devices [from the traditional rules]

Renvoi [double & transmission theory]

Aznar v. Garcia: conflict rules of forum refer to foreign law & latter refers it

back to the internal law, the latter (law of the forum) shall apply; person is national of 1 state [adopting situs theory] & domiciled in another [nationality theory].

Characterization [substance v. procedural distinction] Cadalin v. POEA: if forum state has borrowing law (prescription),

this makes it of substance, but may still not be applied as contrary to public policy

Exceptions to application of foreign laws

Salvacion v. Central Bank: attachment of foreign deposits to prevent injustice to citizen

The center of gravity doctrine [aka most significant

relationship or grouping of contacts] Saudi Arabian Airlines v. CA: acts occur in more than 2 countries,

not 1 of which is of sufficient significance to determine the law applicable.

System of Personal Law (as distinguished from laws that concern property)

Concerns persons, their legal condition & civil status

Limited in scope in common law countries, while most civil law countries

have extensive scope/coverage, e.g., beginning & end of personality,

capacity to have rights in general, engage in legal transactions, persons

& family relations, succession (e.g. Arts. 15 & 16, CC)

Theories:

1. Nationality:

Phils. (generally) e.g., arts. 15, 16 par.2 CC; Art. 21 FC (certificate of

legal capacity); Art. 1039 CC (capacity to succeed)

2. Domiciliary:

domicile of: origin (birth), constructive (operation of law) & choice

3. Situs (eclectic):

law of the place of important element of the problem: (a) active

participation: actual situs; (b) passive participation: legal status (domicile)

Jurisprudence [by J. Tinga, 2008]

Raytheon International v. Rouzie (issue of FNC,

review of COL principles in Phil. jurisprudence)

three consecutive phases involved in judicial resolution

of conflicts-of-laws problems: jurisdiction, choice of

law, R&E of FJ (Hasegawa v. Kitamura, Nov. 2007)

If local forum could assume jurisdiction, prove that

Phil. Court:

(1) one to which the parties may conveniently resort;

(2) in a position to make an intelligent decision as to

the law and the facts; and

(3) likely to have the power to enforce its decision.

[Bank of America v. CA, 2003]

Jurisprudence [by J. Tinga, 2008]

Raytheon International v. Rouzie:

Exercise of sovereign prerogative: If forum has jurisdiction (SM, parties,

res), can try the case even if the conflicts rules or the convenience of the

parties point to a foreign forum.

Contractual stipulation as to choice-of-law cannot oust forum court of

jurisdiction. 2 distinct concepts: jurisdiction looks at fairness to cause a

defendant to travel to this state; choice of law is whether the application of a

substantive law is fair to both parties. [Hasegawa v. Kitamura].

The choice of law stipulation relevant only when the substantive issues of the

case develop, I.e., after hearing on the merits.

Invocation by a party of FNC will not oust forum court of jurisdiction.

Dismissal on FNC requires factual determination, & is more a defense. Trial

court has discretion to abstain from assuming jurisdiction on FNC, but only

after vital facts are established, to determine whether special circumstances

require the court's desistance. FNC not a ground to dismiss. [Bank of

America]

Jurisprudence [by J. Tinga]

A foreign judgment on the mere strength of its promulgation is

not yet conclusive, as it can be annulled on the grounds of want

of jurisdiction, want of notice to the party, collusion, fraud, or

clear mistake of law or fact (Sec. 48, R39, RoC). It is likewise

recognized in Philippine jurisprudence and international law that

a foreign judgment may be barred from recognition if it runs

counter to public policy. (Republic v. Gingoyon, 2006)

Jurisprudence [by J. Tinga]

Mijares v. Ranada (2005): meant to be jurisprudential

guidepost for enforcement of foreign judgments, particularly

against an estate.

action to enforce foreign judgment is one capable of pecuniary

estimation

Effect of foreign judgment: (a) thing (in rem): conclusive as to

title; (b) person (in personam): presumptive evidence of a right

as between the parties/ successors in interest.

---But same grounds to repel.

Usually necessary to file action to enforce foreign judgment, but

party attacking has burden to overcome presumption of validity.

Distinctions, between COA from (a) the enforcement of a

foreign judgment, and (b) the facts or allegations that

occasioned the foreign judgment.

Jurisprudence [by J. Tinga]

Mijares v. Ranada (2005):

Policy of preclusion: strong and pervasive policy in all legal

systems to limit repetitive litigation on claims and

issues, & provide for final resolution of all disputes. Is

embodied in Sec. 48, R30, RoC.

Complaint to enforce the US District Court judgment is

one capable of pecuniary estimation, but also an action

based on judgment against an estate. So what applies is

Sec. 7(b)(3) on "other actions not involving property"

(not 7(a) of Rule 141).

Jurisprudence [by J. Tinga]

Mijares v. Ranada (2005):

Basis for ruling not only based on procedural rule, but on

consensus in the international plane that the viability of

recognition & enforcement of foreign judgments is essential,

& a consensus as to its requisites & defenses:

The procedure and requisites in Section 48, Rule 39 derive their

efficacy not merely from the procedural rule, but by virtue of the

incorporation clause of the Constitution…there is a general

right recognized within our body of laws, and affirmed by the

Constitution, to seek recognition and enforcement of foreign

judgments, as well as a right to defend against such enforcement

on the grounds of want of jurisdiction, want of notice to the

party, collusion, fraud, or clear mistake of law or fact.

Jurisprudence

Hasegawa v. Kitamura, Nov. 2007 [Re: specific

performance of contracts executed outside by foreign nationals,

filed here]

If COL problem is on 1st phase (jurisdiction),

arguments under choice of law (lex loci

celebrationis, lex contractus, “state of the most

significant relationship” rule) are inapplicable,

unsound, premature.

Review of forum court’s alternatives to COL

suit

FNC not a valid ground for MD, & requires

factual determination.

Jurisprudence

Parties may stipulate in their agreement as to

applicable law & venue of action, but not as to

jurisdiction of court over the subject matter. As

long as there are minimum contacts, Phil. Courts

may assume jurisdiction. (Hongkong & Shanghai

Banking v. Sheman)

No judicial notice of foreign law, must be properly

pleaded & proved or else processual presumption.

(Bank of America v. American Realty; EDI-Staff

Builders v. NLRC (2007))

Do not apply foreign law, judgment contract when

contrary to sound & established public policy, I.e.,

splitting of cause of action. (Bank of America v.

American Realty Corp.)

Jurisprudence

The bare fact that respondent is a Canadian

citizen & a repatriate does not warrant dismissal

based on FNC. Labor Code (re: illegal dismissal)

does not include FNC as ground to dismiss;

merely a defense as it involves factual

determination; Phil. Courts may exercise

jurisdiction if requisites in BA case are met. [Pacific

Consultants v. Schonfeld, 2007]

Forum shopping originated as concept in COL. To

combat the evils, FNC principle was developed.

[Cruz v. Caraos, 2007]

Jurisprudence

Not all cases involving Filipino citizens can be tried in the Phils. If main

aspect of case transpired in 2 foreign jurisdictions, and only link to

Phils. Is citizenship, NLRC should have refused jurisdiction based on

FNC (BA requisites not complied with) [Manila Hotel v. NLRC,2000]

Forum shopping originated as concept in COL. To combat the evils,

FNC principle was developed. [Cruz v. Caraos, 2007]

In an action to declare nullity of marriage based on bigamy: the divorce

obtained abroad by an alien may be recognized here, if valid in national

law of alien. But divorce decree & governing personal law of alien

spouse must be proved. Australian divorce decree did not absolutely

establish legal capacity to remarry under his national law. Remand

case to receive evidence of capacity, otherwise, declare marriage as

void (bigamous) [Garcia v. Garcia-Recio, 2001]

Legal capacity is determined by national law of party concerned, not by

absence of certificate of legal capacity. [Garcia v. Garcia-Recio, 2001]

Jurisprudence

Situs for real and personal actions are fixed by

rules to attain greatest convenience possible to

parties-litigants (maximum accessibility).

Domicile is not synonymous to residence, as

established in COL. [Saludo v. Amex Int’l (2006):

suit for damages]

Phil. Laws will not apply when only connecting

factor is as a forum [no significant relationship].

Party whose COA or defense depends on foreign

law has burden of proving. [Crescent Petroleum

v. M/V “Lok Maheshwari,” 2005]

Jurisprudence No conflicts rule on essential validity of contracts is express in

our laws, but most legal systems follow lex contractus (law of

the contract), which may be lex loci voluntatis or lex loci

intentionis.

Phil. Courts should allow parties to choose, if not contrary to

law, morals & public policy of the forum & bears substantive

relationship to transaction.

If no express choice of law in contract, follow most significant

relationship to the transaction & parties. Place of performance

(lex loci solutionis) in all matters relating to time, place, manner

of performance & valid excused for non-performance. [Phil-

Export & Foreign Loan Guarantee v. V.P. Eusebio Construction

(2004)]

Contra: lex loci contractus governs. Phil. Law applies to

contract of employment perfected here. [Triple Eight v. NLRC,

1998]

Jurisprudence

Lower courts in error in ruling that

“American law” follows domiciliary

theory. Renvoi inapplicable when

national law of decedent (State of which

he is resident) does not require it, so

Phil. Law n/a to foreigner’s succession,

including instrinsi validity of will. Divorce

valid if obtained by alien spouse based

on comity. [Llorente v. CA, 2000]

Jurisprudence

Saudi Arabian Air v. CA, 1998: illustration of

escape device:

Jurisdiction: characterization of action,

whether tort under SA or Art. 21 of CC [but

implicitly, making a choice of law].

Choice-of-law: traditional notion of lex loci

delicti commissi gives way to most significant

relationship theory, and establishing points of

contact.

Jurisprudence

Northwest v. CA, 1995

Foreign judgment is presumed valid & binding in the

country from which it comes, until the contrary is shown.

Presume regularity of proceedings & due notice. So

party attacking foreign judgment has burden to

overcome presumption.

Matter of remedy & procedure (I.e. service of summons)

are governed by lex fori.

Party attacking must plead & prove foreign law as to

service of summons, then show invalidity or service.

Otherwise, presumption prevails.

Alternatively, failure to prove will lead to processual

presumption.

Jurisprudence

Foreign law may be proved by testimony in open

court of an active law practitioner familiar with the

foreign law, and quoting the specific foreign law

involved, as an exception to Sec. 24 of Rule 132,

RoC (official publication or authenticated copy).

(Manufacturer Hanover Trust v. Guerrero)

Jurisprudence

Marriage is not a cause for loss of domicile. Domicile

of origin is not replaced by operation of law unless

there is actual change, a clear intention of abandoning

& establishing a new one, and acts which corresponds

to the purpose. Residence in political law is not the

same in Civil Law (latter is only actual residence)

[Romualdez-Marcos v. Comelec, 1995]

Phil. Law follows lex loci celebrationis in formal validity

of marriages (Art. 26, FC); and in case of doubt, all

presumptions favor validity of marriage [Board of

Commissions (of BI) v. Dela Rosa, 1991]

God Bless!