Conflicts - January 5 - Set B

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CIR v FISHER G.R. No. L-11622 | January 28, 1961 FACTS: Walter G. Stevenson, born in the Philippines of British parents and married in Manila to Beatrice Mauricia Stevenson, another British subject, died in 1951 in San Francisco, California, USA, where he and his wife established their permanent residence since 1945. In his probated will (executed in SF, probated in Superior Court of California), Stevenson instituted his wife Beatrice as his sole heiress to several real and personal properties (2 parcels of land in Baguio, shares of stock, credit, and cash) acquired by the spouses while residing in the Philippines. In 1951, ancillary administration proceedings were instituted in CFI Manila for the settlement of the estate in the Philippines. The will was admitted to probate and Ian Murray Statt was appointed ancillary administrator. Statt filed a preliminary estate and inheritance tax return with the reservation of having the properties declared finally appraised at their values 6 months after the death of Stevenson. The preliminary return was made in order to secure the waiver of the CIR on the inheritance tax due on 210k shares of stock in the Mindanao Mother Lode Mines Inc. (MMLMI) which the estate desired to dispose in the US. The CIR accepted the valuation of the personal properties declared in the return, but increased the appraisal of the 2 parcels of land in Baguio City. Ultimately, the estate was assessed an estate tax of 5.15k and inheritance tax of 10.9k, both of which paid by the estate in 1952. The ancillary administrator filed an amended estate and inheritance tax return in pursuance of the reservation he made and Sec. 91 of the NIRC. The amended return reduced the value of the shares of stock in MMLMI from 0.38 per share to 0.20, based on the market notation of the stock obtaining at the SF California Stock Exchange 6 months after the death of Stevenson. Statt likewise made claim for several deductions in the form of funeral and judicial expenses, real estate tax, and claims against the estate. Beatrice assigned all her rights and interests in the estate to spouses Douglas and Bettina Fisher. In 1953, the ancillary administrator filed a 2 nd amended return containing new claims for additional exemption and deduction to wit:

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Transcript of Conflicts - January 5 - Set B

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CIR v FISHERG.R. No. L-11622 | January 28, 1961

FACTS:Walter G. Stevenson, born in the Philippines of British parents and married in Manila to Beatrice Mauricia Stevenson, another British subject, died in 1951 in San Francisco, California, USA, where he and his wife established their permanent residence since 1945. In his probated will (executed in SF, probated in Superior Court of California), Stevenson instituted his wife Beatrice as his sole heiress to several real and personal properties (2 parcels of land in Baguio, shares of stock, credit, and cash) acquired by the spouses while residing in the Philippines.

In 1951, ancillary administration proceedings were instituted in CFI Manila for the settlement of the estate in the Philippines. The will was admitted to probate and Ian Murray Statt was appointed ancillary administrator. Statt filed a preliminary estate and inheritance tax return with the reservation of having the properties declared finally appraised at their values 6 months after the death of Stevenson. The preliminary return was made in order to secure the waiver of the CIR on the inheritance tax due on 210k shares of stock in the Mindanao Mother Lode Mines Inc. (MMLMI) which the estate desired to dispose in the US. The CIR accepted the valuation of the personal properties declared in the return, but increased the appraisal of the 2 parcels of land in Baguio City. Ultimately, the estate was assessed an estate tax of 5.15k and inheritance tax of 10.9k, both of which paid by the estate in 1952.

The ancillary administrator filed an amended estate and inheritance tax return in pursuance of the reservation he made and Sec. 91 of the NIRC. The amended return reduced the value of the shares of stock in MMLMI from 0.38 per share to 0.20, based on the market notation of the stock obtaining at the SF California Stock Exchange 6 months after the death of Stevenson. Statt likewise made claim for several deductions in the form of funeral and judicial expenses, real estate tax, and claims against the estate.

Beatrice assigned all her rights and interests in the estate to spouses Douglas and Bettina Fisher.

In 1953, the ancillary administrator filed a 2nd amended return containing new claims for additional exemption and deduction to wit: (1) deduction in the amount of P4,000.00 from the gross estate of the decedent as provided for in Section 861 (4) of the U.S. Federal Internal Revenue Code which the ancillary administrator averred was allowable by way of the reciprocity granted by Section 122 of the NIRC, as then held by the Board of Tax Appeals in a previous; and (2) exemption from the imposition of estate and inheritance taxes on the shares of stock in the MMLMI also pursuant to the said reciprocity proviso. In this last return, the estate claimed that it was liable only for the amount of P525.34 for estate tax and P238.06 for inheritance tax. A refund of 15,259 was requested by the estate but was denied by the CIR.

The Fishers, as assignees of Beatrice, commenced action in CFI Manila for the recovery of the said amount. The case was forwarded to the CTA, which set the allowable exemptions and deductions in dispute. Both parties appealed.

ISSUES:(3 out of 6. The rest of the issues are tax-related, re: deductions and exemptions from estate and inheritance tax)

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(1) Whether in determining the taxable net estate of the decedent, ½ of the net estate should be deducted therefrom as the share of the surviving spouse in accordance with our law on conjugal partnership and in relation to Section 89 (c) of the NIRC;

(2) Whether the estate can avail itself of the reciprocity proviso embodied in Section 122 of the NIRC granting exemption from the payment of estate and inheritance taxes on the 210k shares of stock in MMLMI;

(3) Whether the estate is entitled to the deduction of P4,000.00 allowed by Section 861, U.S. Internal Revenue Code in relation to the aforementioned reciprocity proviso

*(4) Whether the real estate properties of the decedent located in Baguio City and the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc., were correctly appraised by the lower court; NB: There’s a pronouncement as to which market should be followed in the valuation of the shares of stock. Included this just in case.

HELD:1. YES. Since the marriage of the Stevensons in the Philippines took place in 1909, the applicable law is Art. 1325 of the old Civil Code, not Art. 124 of the NCC, as posited by the CIR. It is true that both articles adhere to the so-called nationality theory of determining the property relation of spouses where one of them is a foreigner and they have made no prior agreement as to the administration disposition, and ownership of their conjugal properties. In such a case, the national law of the husband becomes the dominant law in determining the property relation of the spouses. There is, however, a difference between the two articles in that Article 124 of the new Civil Code expressly provides that it shall be applicable regardless of whether the marriage was celebrated in the Philippines or abroad while Article 1325 of the old Civil Code is limited to marriages contracted in a foreign land.

It must be noted, however, that what has just been said refers to mixed marriages between a Filipino citizen and a foreigner. In the instant case, both spouses are foreigners who married in the Philippines. (NB: Insert Spanish commentary by Manresa here). If we adopt the view of Manresa, the law determinative of the property relation of the Stevensons, married in 1909, would be the English law even if the marriage was celebrated in the Philippines, both of them being foreigners. But, as correctly observed by the Tax Court, the pertinent English law that allegedly vests in the decedent husband full ownership of the properties acquired during the marriage has not been proven by the CIR. Except for a mere allegation in his answer, which is not sufficient, the record is bereft of any evidence as to what English law says on the matter. In the absence of proof, the Court is justified, therefore, in indulging in what Wharton calls "processual presumption," in presuming that the law of England on this matter is the same as our law.

CIR can neither make use of Art. 16 of the NCC (art. 10 of the old code) to bolster his stand. A reading of Art. 10, which is applicable in this case, shows that it does not encompass or contemplate to govern the question of property relation between spouses. Said article distinctly speaks of amount of successional rights and this term, in speaks in our opinion, properly refers to the extent or amount of property that each heir is legally entitled to inherit from the estate available for distribution. It needs to be pointed out that the property relation of spouses, as distinguished from their successional rights, is governed differently by the specific and express provisions of Title VI, Chapter I of our new Civil Code (Title III, Chapter I of the old Civil Code.) Thus, the lower court correctly deducted the half of the conjugal property in determining the hereditary estate left by the deceased Stevenson.

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2. NO. CIR disputes the action of the Tax Court in the payment of inheritance tax on the MMLMI shares of stock in virtue of the reciprocity proviso of Section 122 of the NIRC, in relation to Section 13851 of the California Revenue and Taxation Code, on the ground that:

(a) the said proviso of the California Revenue and Taxation Code has not been duly proven by the respondents;(b) the reciprocity exemptions granted by the NIRC can only be availed of by residents of foreign countries and not of residents of a state in the United States; and(c) there is no "total" reciprocity between the Philippines and the state of California in that while the former exempts payment of both estate and inheritance taxes on intangible personal properties, the latter only exempts the payment of inheritance tax.

(a) It is well-settled that foreign laws do not prove themselves in our jurisdiction and our courts are not authorized to take judicial notice of them. Like any other fact, they must be alleged and proved. Section 41, Rule 123 of our Rules of Court prescribes the manner of proving foreign laws before our tribunals. However, as held in the case of Willamette Iron and Steel Works v. Muzzal, a reading of the Code of Civil Procedure will convince one that these sections do not exclude the presentation of other competent evidence to prove the existence of a foreign law. In that case, we considered the testimony of an attorney-at-law of San Francisco, California who quoted verbatim a section of California Civil Code and who stated that the same was in force at the time the obligations were contracted, as sufficient evidence to establish the existence of said law. In the case at bar, to prove the pertinent California law, Attorney Allison Gibbs, counsel for Fisher, testified that as an active member of the California Bar since 1931, he is familiar with the revenue and taxation laws of the State of California. When asked by the lower court to state the pertinent California law as regards exemption of intangible personal properties, the witness cited article 4, section 13851 (a) and (b) of the California Internal and Revenue Code as published in Derring's California Code, a publication of the Bancroft-Whitney Company inc. And as part of his testimony, a full quotation of the cited section was offered in evidence. This was held to be sufficient proof.

(b) As to the question of reciprocity:

Sec. 122 of the NIRC, in pertinent part, provides: ... And, provided, further, That no tax shall be collected under this Title in respect of intangible personal property (a) if the decedent at the time of his death was a resident of a foreign country which at the time of his death did not impose a transfer of tax or death tax of any character in respect of intangible personal property of citizens of the Philippines not residing in that foreign country, or (b) if the laws of the foreign country of which the decedent was a resident at the time of his death allow a similar exemption from transfer taxes or death taxes of every character in respect of intangible personal property owned by citizens of the Philippines not residing in that foreign country.

On the other hand, Section 13851 of the California Inheritance Tax Law provides:

"SEC. 13851, Intangibles of nonresident: Conditions. Intangible personal property is exempt from the tax imposed by this part if the decedent at the time of his death was a resident of a territory or another State of the United States or of a foreign state or country which then imposed a legacy, succession, or death tax in respect to intangible personal property of its own residents, but either:

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(a) Did not impose a legacy, succession, or death tax of any character in respect to intangible personal property of residents of this State, or

(b) Had in its laws a reciprocal provision under which intangible personal property of a non-resident was exempt from legacy, succession, or death taxes of every character if the Territory or other State of the United States or foreign state or country in which the nonresident resided allowed a similar exemption in respect to intangible personal property of residents of the Territory or State of the United States or foreign state or country of residence of the decedent."

It is clear from both these quoted provisions that the reciprocity must be total, that is, with respect to transfer or death taxes of any and every character, in the case of the Philippine law, and to legacy, succession, or death taxes of any and every character, in the case of the California law. Therefore, if any of the two states collects or imposes and does not exempt any transfer, death, legacy, or succession tax of any character, the reciprocity does not work. This is the underlying principle of the reciprocity clauses in both laws.

In the Philippines, upon the death of any citizen or resident, or non-resident with properties therein, there are imposed upon his estate and its settlement, both an estate and an inheritance tax. Under the laws of California, only inheritance tax is imposed. On the other hand, the Federal Internal Revenue Code imposes an estate tax on non-residents not citizens of the United States, but does not provide for any exemption on the basis of reciprocity. Applying these laws in the manner the Court of Tax Appeals did in the instant case, we will have a situation where a Californian, who is non-resident in the Philippines but has intangible personal properties here, will the subject to the payment of an estate tax, although exempt from the payment of the inheritance tax. This being the case, will a Filipino, non-resident of California, but with intangible personal properties there, be entitled to the exemption clause of the California law, since the Californian has not been exempted from every character of legacy, succession, or death tax because he is, under our law, under obligation to pay an estate tax? Upon the other hand, if we exempt the Californian from paying the estate tax, we do not thereby entitle a Filipino to be exempt from a similar estate tax in California because under the Federal Law, which is equally enforceable in California he is bound to pay the same, there being no reciprocity recognized in respect thereto. In both instances, the Filipino citizen is always at a disadvantage. We do not believe that our legislature has intended such an unfair situation to the detriment of our own government and people.

Thus, the lower court erred in exempting the estate in question from payment of the inheritance tax.

(c) We are not unaware of our ruling in the case of Collector of Internal Revenue vs. Lara exempting the estate of the deceased Hugo H. Miller from payment of the inheritance tax imposed by the Collector of Internal Revenue. It will be noted, however, that the issue of reciprocity between the pertinent provisions of our tax law and that of the State of California was not there squarely raised, and the ruling therein cannot control the determination of the case at bar. Be that as it may, we now declare that in view of the express provisions of both the Philippine and California laws that the exemption would apply only if the law of the other grants an exemption from legacy, succession, or death taxes of every character, there could not be partial reciprocity. It would have to be total or none at all.

3. NO. With respect to the question of deduction or reduction in the amount of P4,000.00 based on the U.S. Federal Estate Tax Law which is also being claimed by respondents, we uphold and adhere to our ruling in the Lara case that the amount of $2,000.00 allowed under the Federal Estate Tax Law is in the nature of a deduction and not of an exemption regarding which reciprocity cannot be claimed under the

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provision of Section 122 of our National Internal Revenue Code. Nor is reciprocity authorized under the Federal Law.

*4. The situs of the shares of stock in MMLMI, for purposes of taxation, being located here in the Philippines, as respondents themselves concede and considering that they are sought to be taxed in this jurisdiction, consistent with the exercise of our government's taxing authority, their fair market value should be taxed on the basis of the price prevailing in our country.

Upon the other hand, we find merit in respondents' other contention that the said shares of stock commanded a lesser value at the Manila Stock Exchange six months after the death of Stevenson. Through Atty. Allison Gibbs, respondents have shown that at that time a share of said stock was bid for at only P.325. Significantly, the testimony of Atty. Gibbs in this respect has never been questioned nor refuted by petitioner either before this court or in the court below. It should be noted that the petitioner and the Tax Court valued each share of stock of P.38 on the basis of the declaration made by the estate in its preliminary return. Patently, this should not have been the case, in view of the fact that the ancillary administrator had reserved and availed of his legal right to have the properties of the estate declared at their fair market value as of six months from the time the decedent died.

DISPOSITIVE PORTION:

(a) only the one-half (1/2) share of the decedent Stevenson in the conjugal partnership property constitutes his hereditary estate subject to the estate and inheritance taxes;

(b) the intangible personal property is not exempt from inheritance tax, there existing no complete total reciprocity as required in section 122 of the National Internal Revenue Code, nor is the decedent's estate entitled to an exemption of P4,000.00 in the computation of the estate tax;

(c) for the purpose of the estate and inheritance taxes, the 210,000 shares of stock in the Mindanao Mother Lode Mines, Inc. are to be appraised at P0.325 per share; and

(d) the P2,000.00 for funeral expenses should be deducted in the determination of the net asset of the deceased Stevenson.

In all other respects, the decision of the Court of Tax Appeals is affirmed.

PARDO v REPUBLIC OF THE PHILIPPINESGR No. L-2248 | January 23, 1950(In the matter of the petition of Vicente Rosal Pardo to be admitted a citizen of the Philippines)

(NB: Sorry for the weird format. The ruling and the facts were kind of merged in the original. It’s easier if I put it this way.)

ISSUE:1. Whether Vicente is eligible for Philippine citizenship2. Whether the laws of Spain grant Filipinos the right to become naturalized citizens of that country

FACTS and HELD:

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1. YES. Vicente Rosal Pardo, a Spanish citizen born in Spain in 1895 and residing in the Philippines since 1905, where he married a Filipino woman and where he is at present employed in Manila, has been adjudged by the CFI of Manila entitled to become a Filipino citizen. The government appealed said decision, contending that Vicente is unable to speak and write any of the principal Filipino languages. The trial judge, strengthened by the testimony of Lino Guttierez, a respectable citizen who has known the applicant for 27 years, granted the application, considering the fact that applicant arrived in the Philippines when he was only 10 years old and has lived here for 44 years continuously except for a few months of visit in Spain. His mingling and dealing by reason of his work with people who use Tagalog in their daily intercourse, lends credence in his testimony that he has acquired a good working knowledge of the language. He also owned 2 stores on the Escolta and has been a foreman and warehouseman at Soriano & Co.

2. YES. The applicant introduced a certificate signed by the Consul General of Spain in the Philippines, stating that in accordance with articles 17 and 225 of the Spanish Civil Code, among other Spanish legislation, Filipinos are eligible to Spanish citizenship in Spain. Article 17 provides that foreigners who have obtained a certificate of naturalization and those who have not obtained such certificate but have acquired domicile in any town of the Monarchy are Spaniards. No discrimination being made in these provisions, they apply to persons of any nationality.

As the Spanish Civil Code has been and still is "the basic code in force of the Philippines," articles 17 et seq. thereof may be regarded as matters known to judges of the Philippines by reason of their judicial functions and nay be judicially recognized by them without the introduction of proof. Moreover, in a number of decisions mere authentication of the Chinese Naturalization Law by the Chinese Consulate General of Manila has been held to be competent proof of that law.

MOTION FOR RECONSIDERATION: In a number of decisions, mere authentication of the Chinese naturalization law by the Chinese Consulate general in Manila has been taken as competent proof of that law. The Solicitor General takes exception to this passage – in several jurisprudence, the Court “ did not rule that the mere authentication of the Chinese Naturalization Law by the Chinese Consulate General of manila constitute competent proof of that law, but that the question as to whether or not the copy of the Chinese Nationality Law presented in said cases were properly authenticated and admissible in evidence to prove reciprocity, as required in section 4 (h) of the Revised Naturalization Law, has become academic because of the admission made by counsel for the oppositor (Republic of the Philippines) to the effect that in another case, there has been presented a copy of the Naturalization Laws of China duly authenticated in accordance with the Rules of the Court.”

The SC corrected said argument, stating that in Yap vs. Solicitor General, the document admitted purported to be "a copy of the Chinese law of citizenship, where it appears that Filipinos can acquire Chinese Citizenship by naturalization." There was nothing in that decision which would show that the certificate or authentication was made by a Philippine diplomatic or consular representative in China. In Jose Leelin vs. Republic of the Philippines, we said that "in previous cases, a translation of the Chinese Naturalization Law, made and certified to be correct by the Chinese Consulate General in Manila, was admitted and considered efficient evidence to establish that the laws of China permit Filipinos to become citizens of that country." In Yee Boo Mann vs. Republic of the Philippines, the petitioner introduced in evidence a translation of the Chinese Naturalization Law, certified to be correct by the Chinese Consul General in Manila. The court held in that case that the objection to the evidence "is of no moment, since this court has already accepted it as fact in previous naturalization cases that the laws of China permit Filipinos to naturalize in that country."

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If it be true, as the Solicitor General notes, that in the Yap case the ratio decidendi was that "there has been presented a copy of the Naturalization Laws of China duly authenticated in accordance with the Rules of the Court," then the decision recognized as a fact the existence of a law of China under which Filipinos may be naturalized. Of this fact the court properly assumed judicial knowledge in the cases that came up before it soon after.

We realize that a copy of a foreign law certified only by the local consul of the applicant's country does not conform to the requirement concerning the certification and authentication of such law (sec. 41, Rule 123). But the case at bar and the cases cited therein as precedents are not governed by the Rules of the Court. Rule 1342, entitled "Applicability of the Rules," provides that "These rules shall not apply to land registration, cadastral and election cases, naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever practicable and convenience. By reason of this provision, literal adherence to the Rules of Court, which include rules of evidence, is not obligatory in a proceeding like that under the Philippine law is judicial in character, and strict compliance with the process prescribed by statute, if there were one, would be essential, yet when, as here, no specific procedure is indicated in the premises, it is only necessary that the merits of the petition be passed on and a decision reached on a far consideration of the evidence on satisfactory proof. Accordingly, evidence of the law of a foreign country or reciprocity regarding the acquisition of citizenship, although not meeting the prescribed rule of practice by section 41 of Rule 123, may be allowed and used as basis for a favorable action if, in the light of all circumstances, the court is satisfied of the authenticity of the written proof offered.

PCIB v ESCOLINGR Nos. L-27860 and L-27896 | March 29, 1974

Zalamea vs. Court of Appeals and Transworld Airlines Supra

MANUFACTURERS HANOVER TRUST CO v GUERRERO GR No. 135804 | February 19, 2003

FACTS:In 1994, respondent Rafael Ma. Guerror filed a complaint for damages against petitioner Manufacturers Hanover Trust Co. and/or Chemical Bank with the RTC of Manila for payment of damages allegedly for illegally withheld taxes charged against interests on his checking account with the Bank, a returned check worth $18k due to signature verification problems, and unauthorized conversion of his account. The Bank in it Answer, alleged that by stipulation, Guerrero’s account is governed by New York law and such law does not permit any of Guerrero’s claims except actual damages. The Bank then filed a Motion for Partial Summary Judgment seeking for the dismissal of Guerrero’s claims except for actual damages. The affidavit of Alyssa Walden, a NY attorney, supported the Bank’s motion, stating that Guerrero’s NY bank account stipulated that the governing law is NY law which reiterates what the Bank alleged. The Philippine Consular Office in NY authenticated the Walden affidavit.

RTC denied Bank’s Motion and MR. Bank filed a petition for certiorari with the CA assailing the RTC Orders. The CA dismissed petition. It held that the Walden affidavit does not serve as proof of the NY law and jurisprudence relied on by the Bank. The CA considered NY law and jurisprudence as public documents defined in Sec. 19, Rule 132: “Public documents are: (a) the written official acts, or records of

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the official acts of the sovereign authority, official bodies and tribunals, an public officers, whether of the Philippines, or of a foreign country.” Thus, the procedure outlined in Sec. 24, Rule 132 should be followed.

CA likewise rejected the Bank’s argument that Sec. 2, Rule 34 of the old RoC allows the Bank to move with the supporting Walden affidavit for partial summary judgment in its favor. CA clarified that the Walden affidavit is not the supporting affidavit referred to in the provision that would prove the lack of genuine issue between the parties. CA concluded that even if the Walden affidavit is used for purposes of summary judgment, the Bank must still comply with the procedure prescribed by the Rules to prove the foreign law.

ISSUES:Whether the Bank’s proof of facts to support its motion may be given by affidavitWhether the Bank’s affidavit may serve as proof for the NY law

HELD:1. NO. The Bank filed its motion for partial summary judgment pursuant to Section 2, Rule 34 of the old Rules of Court which reads: "Section 2. Summary judgment for defending party. – A party against whom a claim, counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits for a summary judgment in his favor as to all or any part thereof." In a motion for summary judgment, the crucial question is: are the issues raised in the pleadings genuine, sham or fictitious, as shown by affidavits, depositions or admissions accompanying the motion?

A perusal of the parties’ respective pleadings would show that there are genuine issues of fact that necessitate formal trial. Guerrero’s complaint before the RTC contains a statement of the ultimate facts on which he relies for his claim for damages. True, the court can determine whether there are genuine issues in a case based merely on the affidavits or counter-affidavits submitted by the parties to the court. However, as correctly ruled by the CA, the Bank’s motion for partial summary judgment as supported by the Walden affidavit does not demonstrate that Guerrero’s claims are sham, fictitious or contrived. On the contrary, the Walden affidavit shows that the facts and material allegations as pleaded by the parties are disputed and there are substantial triable issues necessitating a formal trial.

There can be no summary judgment where questions of fact are in issue or where material allegations of the pleadings are in dispute. The resolution of whether a foreign law allows only the recovery of actual damages is a question of fact as far as the trial court is concerned since foreign laws do not prove themselves in our courts. Foreign laws are not a matter of judicial notice. Like any other fact, they must be alleged and proven. Certainly, the conflicting allegations as to whether New York law or Philippine law applies to Guerrero’s claims present a clear dispute on material allegations which can be resolved only by a trial on the merits.

Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal may be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal custody thereof. Such official publication or copy must be accompanied, if the record is not kept in the Philippines, with a certificate that the attesting officer has the legal custody thereof. The certificate may be issued by any of the authorized Philippine embassy or consular officials stationed in the foreign country in which the record is kept, and authenticated by the seal of his office. The attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be, and must be under the official seal of the attesting officer.

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Certain exceptions to this rule were recognized in Asiavest Limited v. Court of Appeals. In that case, the Supreme Court considered the testimony under oath of an attorney-at-law of San Francisco, California, who quoted verbatim a section of California Civil Code and who stated that the same was in force at the time the obligations were contracted, as sufficient evidence to establish the existence of said law. Likewise, in several naturalization cases, it was held by the Court that evidence of the law of a foreign country on reciprocity regarding the acquisition of citizenship, although not meeting the prescribed rule of practice, may be allowed and used as basis for favorable action, if, in the light of all the circumstances, the Court is "satisfied of the authenticity of the written proof offered."

In the case at bar, the Bank cannot rely on such rulings to support its cause. These cases involved attorneys testifying in open court during the trial in the Philippines and quoting the particular foreign laws sought to be established. On the other hand, the Walden affidavit was taken abroad ex parte and the affiant never testified in open court. The Walden affidavit cannot be considered as proof of New York law on damages not only because it is self-serving but also because it does not state the specific New York law on damages. The Walden affidavit states conclusions from the affiant’s personal interpretation and opinion of the facts of the case vis a vis the alleged laws and jurisprudence without citing any law in particular. The citations in the Walden affidavit of various U.S. court decisions do not constitute proof of the official records or decisions of the U.S. courts. While the Bank attached copies of some of the U.S. court decisions cited in the Walden affidavit, these copies do not comply with Section 24 of Rule 132 on proof of official records or decisions of foreign courts.

Next, the Bank makes much of Guerrero’s failure to submit an opposing affidavit to the Walden affidavit. The Bank still had the burden of proving New York law and jurisprudence even if Guerrero did not present an opposing affidavit. As the party moving for summary judgment, the Bank has the burden of clearly demonstrating the absence of any genuine issue of fact and that any doubt as to the existence of such issue is resolved against the movant. Petition denied.

CRESCENT PETROLEUM v M/V “LOK MAHESHWARI”, THE SHIPPING CORPORATION OF INDIAGR No. 155014 | November 11, 2005

FACTS:M/V “Lok Maheshwari” is an oceangoing vessel of Indian registry, owned by Shipping Corporation of India, principally owned by the Government of India. It was time-chartered by SCI to Halla Merchant Co., a South Korean company. Halla sub-chartered the vessel through a time charter to Transmar Shipping, Inc. who further subchartered to vessel to Portserv Limited. Both Transmar and Portserv are Canadian corporations. In 1995, Portserv requested petitioner Crescent Petroleum, a Canadian corporation engaged in selling petroleum and oil products for the use and operation of oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the vessel, which Crescent granted through an advice via facsimile. As security for the payment and related services, Crescent received 2 checks of $100k and $200k. Thus, Crescent contracted with its supplier, Marine Petrobulk, another Canadian corporation, for the physical delivery of the bunker fuels to the Vessel.

Marine Petrobulk delivered the bunker fuels inclusive of barging and demurrage charges at the port of Pioneer Grain, Vancouver, Canada. The Chief Engineer Officer of the Vessel duly acknowledged and received the delivery receipt. Marine Petrobulk issued an invoice to Crescent, which issued a check for the same invoice amount in favor of Marine Petrobulk. The check was then encashed. Crescent issued a revised invoice to Portserv and/or charterers of the vessel with instruction to remit the amount on or

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before December 1, 1995. The period lapsed and several demands were made but no payment was received. The checks issued to Crescent as security were dishonored as well.

While the Vessel was docked at the port of Cebu City, Crescent instituted before the RTC of Cebu an action for sum of money with TRO and writ of preliminary attachment against respondents Vessel, SCI, Portserv, and Transmar. The attachment was granted. Summonses were then served to respondents through the Master of the Vessel. A letter of undertaking issued by Pioneer Insurance and Surety Corporation was approved by the trial court as counter-bond, thus, the attachment was lifted. Respondents were declared in default. RTC ruled in favor of Crescent, holding defendants solidarily liable.

Respondents, on appeal, alleged that as per Part II of the Bunker Fuel Agreement between Crescent and Portserv, NY law governs the construction, validity, and performance of the contract. They also submitted certified copies of the Commercial Instruments and Maritime Lien Act of the US, some US cases, and some Canadian cases to support their defense. CA reversed, dismissing the action primarily on the ground of forum non conveniens.

ISSUES:1. Whether Philippine courts have jurisdiction over a foreign vessel found inside the Philippine waters for the enforcement of a maritime lien against said vessel2. Whether the enforcement of a maritime lien is expressly granted by law

HELD:1. YES. Under BP 129, RTCs exercise exclusive original jurisdiction “in all actions in admiralty and maritime where demand or claim exceeds 200k or in Metro Manila, 400k.” Two (2) tests have been used to determine whether a case involving a contract comes within the admiralty and maritime jurisdiction of a court - the locational test and the subject matter test. As per the subject matter test, the American rule, which the SC adheres to, whether or not a contract is maritime depends not on the place where the contract is made and is to be executed, making the locality the test, but on the subject matter of the contract, making the true criterion a maritime service or a maritime transaction. A contract for furnishing supplies like the one involved in this case is maritime and within the jurisdiction of admiral. It may be invoked before our courts through an action in rem or quasi in rem or an action in personam.”

As per the Code of Commerce, in the Philippines, any vessel – even though it be a foreign vessel – found in any port of this Archipelago may be attached and sold under the substantive law which defines the right, and the procedural law contained in the Code of Commerce by which this right is to be enforced. But where neither the law nor the contract between the parties creates any lien or charge upon the vessel, the only way in which it can be seized before judgment is by pursuing the remedy relating to attachment under Rule 59 [now Rule 57] of the Rules of Court.

2. NO. Crescent bases its claim of a maritime lien on Sections 21, 22 and 23 of PD No. 1521, also known as the Ship Mortgage Decree of 1978, viz:

Sec. 21. Maritime Lien for Necessaries; persons entitled to such lien. - Any person furnishing repairs, supplies, towage, use of dry dock or maritime railway, or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall be necessary to allege or prove that credit was given to the vessel.

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Sec. 22. Persons Authorized to Procure Repairs, Supplies and Necessaries. - The following persons shall be presumed to have authority from the owner to procure repairs, supplies, towage, use of dry dock or marine railway, and other necessaries for the vessel: The managing owner, ship’s husband, master or any person to whom the management of the vessel at the port of supply is entrusted. No person tortuously or unlawfully in possession or charge of a vessel shall have authority to bind the vessel.

Sec. 23. Notice to Person Furnishing Repairs, Supplies and Necessaries. - The officers and agents of a vessel specified in Section 22 of this Decree shall be taken to include such officers and agents when appointed by a charterer, by an owner pro hac vice, or by an agreed purchaser in possession of the vessel; but nothing in this Decree shall be construed to confer a lien when the furnisher knew, or by exercise of reasonable diligence could have ascertained, that because of the terms of a charter party, agreement for sale of the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor.

Petitioner Crescent submits that these provisions apply to both domestic and foreign vessels, as well as domestic and foreign suppliers of necessaries. The SC does not agree. Mortgage Decree of 1978 was enacted "to accelerate the growth and development of the shipping industry" and "to extend the benefits accorded to overseas shipping under PD No. 214 to domestic shipping.” It is patterned closely from the U.S. Ship Mortgage Act of 1920 and the Liberian Maritime Law relating to preferred mortgage. The various tests used in the U.S. to determine whether a maritime lien exists are the following:

One. "In a suit to establish and enforce a maritime lien for supplies furnished to a vessel in a foreign port, whether such lien exists, or whether the court has or will exercise jurisdiction, depends on the law of the country where the supplies were furnished, which must be pleaded and proved."

Two. The Lauritzen-Romero-Rhoditis trilogy of cases, which replaced such single-factor methodologies as the law of the place of supply. In Lauritzen v. Larsen, a Danish seaman, while in Havana and in the course of his employment, was negligently injured. He sued the shipowner in a federal district court in New York for damages under the Jones Act. In holding that Danish law and not the Jones Act was applicable, the Supreme Court adopted a multiple-contact test to determine, in the absence of a specific Congressional directive as to the statute’s reach, which jurisdiction’s law should be applied. The following factors were considered: (1) place of the wrongful act; (2) law of the flag; (3) allegiance or domicile of the injured; (4) allegiance of the defendant shipowner; (5) place of contract; (6) inaccessibility of foreign forum; and (7) law of the forum.

In Romero v. International Terminal Operating Co, SC again considered a foreign seaman’s personal injury claim under both the Jones Act and the general maritime law. The Court held that the factors first announced in the case of Lauritzen were applicable not only to personal injury claims arising under the Jones Act but to all matters arising under maritime law in general.

Hellenic Lines, Ltd. v. Rhoditis was also a suit under the Jones Act by a Greek seaman injured aboard a ship of Greek registry while in American waters. The U.S. Supreme Court observed that of the seven factors listed in the Lauritzen test, four were in favor of the shipowner and against jurisdiction. In arriving at the conclusion that the Jones Act applies, it ruled that the application of the Lauritzen test is not a mechanical one. It stated thus: "[t]he significance of one or more factors must be considered in light of the national interest served by the assertion of Jones Act jurisdiction. Moreover, the list of seven

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factors in Lauritzen was not intended to be exhaustive. The shipowner’s base of operations is another factor of importance in determining whether the Jones Act is applicable; and there well may be others."

The principles enunciated in these maritime tort cases have been extended to cases involving unpaid supplies and necessaries.

Three. The factors provided in Restatement (Second) of Conflicts of Law have also been applied, especially in resolving cases brought under the Federal Maritime Lien Act. Their application suggests that in the absence of an effective choice of law by the parties, the forum contacts to be considered include: (a) the place of contracting; (b) the place of negotiation of the contract; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties.

In the case at bar, the Court cannot sustain petitioner Crescent’s insistence on the application of P.D. No. 1521 or the Ship Mortgage Decree of 1978 and hold that a maritime lien exists.

First. Out of the seven basic factors listed in the case of Lauritzen, Philippine law only falls under one – the law of the forum. All other elements are foreign – Canada is the place of the wrongful act, of the allegiance or domicile of the injured and the place of contract; India is the law of the flag and the allegiance of the defendant shipowner. Balancing these basic interests, it is inconceivable that the Philippine court has any interest in the case that outweighs the interests of Canada or India for that matter.

Second. P.D. No. 1521 or the Ship Mortgage Decree of 1978 is inapplicable following the factors under Restatement (Second) of Conflict of Laws. Like the Federal Maritime Lien Act of the U.S., P.D. No. 1521 or the Ship Mortgage Decree of 1978 was enacted primarily to protect Filipino suppliers and was not intended to create a lien from a contract for supplies between foreign entities delivered in a foreign port.

Third. Applying P.D. No. 1521 or the Ship Mortgage Decree of 1978 and rule that a maritime lien exists would not promote the public policy behind the enactment of the law to develop the domestic shipping industry. Opening up our courts to foreign suppliers by granting them a maritime lien under our laws even if they are not entitled to a maritime lien under their laws will encourage forum shopping.

Finally. The submission of petitioner is not in keeping with the reasonable expectation of the parties to the contract. Indeed, when the parties entered into a contract for supplies in Canada, they could not have intended the laws of a remote country like the Philippines to determine the creation of a lien by the mere accident of the Vessel’s being in Philippine territory.

But under which law should petitioner Crescent prove the existence of its maritime lien? It is clear that Canada has the most significant interest in this dispute. The injured party is a Canadian corporation, the sub-charterer which placed the orders for the supplies is also Canadian, the entity which physically delivered the bunker fuels is in Canada, the place of contracting and negotiation is in Canada, and the supplies were delivered in Canada.

The arbitration clause contained in the Bunker Fuel Agreement which states that New York law governs the "construction, validity and performance" of the contract is only a factor that may be considered in the choice-of-law analysis but is not conclusive. As in the cases of Gulf Trading and Swedish Telecom,

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the lien that is the subject matter of this case arose by operation of law and not by contract because the shipowner was not a party to the contract under which the goods were supplied.

It is worthy to note that petitioner Crescent never alleged and proved Canadian law as basis for the existence of a maritime lien. To the end, it insisted on its theory that Philippine law applies. Petitioner contends that even if foreign law applies, since the same was not properly pleaded and proved, such foreign law must be presumed to be the same as Philippine law pursuant to the doctrine of processual presumption. Thus, we are left with two choices: (1) dismiss the case for petitioner’s failure to establish a cause of action or (2) presume that Canadian law is the same as Philippine law. In either case, the case has to be dismissed.

It is well-settled that a party whose cause of action or defense depends upon a foreign law has the burden of proving the foreign law. Such foreign law is treated as a question of fact to be properly pleaded and proved. Petitioner Crescent’s insistence on enforcing a maritime lien before our courts depended on the existence of a maritime lien under the proper law. By erroneously claiming a maritime lien under Philippine law instead of proving that a maritime lien exists under Canadian law, petitioner Crescent failed to establish a cause of action.

Even if we apply the doctrine of processual presumption, the result will still be the same. Under P.D. No. 1521 or the Ship Mortgage Decree of 1978, the following are the requisites for maritime liens on necessaries to exist: (1) the "necessaries" must have been furnished to and for the benefit of the vessel; (2) the "necessaries" must have been necessary for the continuation of the voyage of the vessel; (3) the credit must have been extended to the vessel; (4) there must be necessity for the extension of the credit; and (5) the necessaries must be ordered by persons authorized to contract on behalf of the vessel. These do not avail in the instant case.

First. It was not established that benefit was extended to the vessel. While this is presumed when the master of the ship is the one who placed the order, it is not disputed that in this case it was the sub-charterer Portserv which placed the orders to petitioner Crescent. Hence, the presumption does not arise and it is incumbent upon petitioner Crescent to prove that benefit was extended to the vessel. Petitioner did not.

Second. Petitioner Crescent did not show any proof that the marine products were necessary for the continuation of the vessel.

Third. It was not established that credit was extended to the vessel. It is presumed that "in the absence of fraud or collusion, where advances are made to a captain in a foreign port, upon his request, to pay for necessary repairs or supplies to enable his vessel to prosecute her voyage, or to pay harbor dues, or for pilotage, towage and like services rendered to the vessel, that they are made upon the credit of the vessel as well as upon that of her owners." In this case, it was the sub-charterer Portserv which requested for the delivery of the bunker fuels. The issuance of two checks amounting to US$300,000 in favor of petitioner Crescent prior to the delivery of the bunkers as security for the payment of the obligation weakens petitioner Crescent’s contention that credit was extended to the Vessel.

We also note that when copies of the charter parties were submitted by respondents in the Court of Appeals, the time charters between respondent SCI and Halla and between Halla and Transmar were shown to contain a clause which states that "the Charterers shall provide and pay for all the fuel except

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as otherwise agreed." This militates against petitioner Crescent’s position that Portserv is authorized by the shipowner to contract for supplies upon the credit of the vessel.

Fourth. There was no proof of necessity of credit. A necessity of credit will be presumed where it appears that the repairs and supplies were necessary for the ship and that they were ordered by the master. This presumption does not arise in this case since the fuels were not ordered by the master and there was no proof of necessity for the supplies.

Finally. The necessaries were not ordered by persons authorized to contract in behalf of the vessel as provided under Section 22 of P.D. No. 1521 or the Ship Mortgage Decree of 1978 - the managing owner, the ship’s husband, master or any person with whom the management of the vessel at the port of supply is entrusted. Clearly, Portserv, a sub-charterer under a time charter, is not someone to whom the management of the vessel has been entrusted. A time charter is a contract for the use of a vessel for a specified period of time or for the duration of one or more specified voyages wherein the owner of the time-chartered vessel retains possession and control through the master and crew who remain his employees. Not enjoying the presumption of authority, petitioner Crescent should have proved that Portserv was authorized by the shipowner to contract for supplies. Petitioner failed.