Chapter II: Jurisdiction

In the study of conflicts law, jurisdiction may mean either judicial jurisdiction or legislative jurisdiction.

Judicial jurisdiction is the power or authority of a court to try a case, render judgment and execute it in accordance with law.
This should not be confused with legislative jurisdiction which is the ability of the state to promulgate laws and enforce them on all persons and property within its territory.

In analyzing a conflict of laws problem, four major questions should be considered:

Has the court jurisdiction over the person of the defendant or over his property?
Has the court jurisdiction over the subject matter, usually referred to as "competency"?
Has the suit been brought in the proper venue in cases where a foreign element is involved? and
Is there a statute or doctrine under which a court otherwise qualified to try the case may or may not refuse to entertain it?

A. Basis of Exercise of Judicial Jurisdiction

The bases on which courts may exercise judicial jurisdiction fall into three groups:

jurisdiction over the person which is based on forum-defendant contacts;
jurisdiction over the res based on forum-property contacts; and
jurisdiction over the subject-matter.

In the absence of a jurisdictional basis, a court should not try the case.
In the event that it does, its judgment will not be considered valid.

1. Jurisdiction over the Person

Jurisdiction over the person is acquired by the voluntary appearance of a party and his submission to authority.

The court acquires jurisdiction over the person of the plaintiff the moment he invokes the aid of the court by filing a suit.
On the other hand, law authorizes jurisdiction over the person of the defendant when he enters his appearance or is served with the legal process within the state.
When the defendant or his lawyer appears in court, he gives consent to the forum's exercise of jurisdiction over him except if he appears for the purpose of protesting the jurisdiction of the court.

Likewise, a non-resident plaintiff who files a suit is deemed to consent to the court's exercise of jurisdiction over subsequent proceedings arising out of his original cause of action including counterclaims filed by the defendant.
Jurisdiction over the defendant may be had by personal or substituted service of summons.
Under Rule 14 of Revised Rules of Court:

Sec. 6. Service in person on defendant.—

Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, if he refuses to receive and sign for it, by tendering it to him.

Sec. 7. Substituted Service.—

If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's dwelling house or residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at de- fendant's office or regular place of business with some compe- tent person in charge thereof.

Case:

WILLIAM GEMPERLE v. HELEN SCHENKER

19 SCRA 45 (1967)

Paul Schenker acting through his wife and attorney-in-fact, Helen Schenker, filed with CFI of Rizal a complaint against William Gemperle for enforcement of Paul's initial subscription to shares of stock of the Philippine-Swiss Trading Co., Inc.
Gemperle commenced this proceeding by reason of Paul's causing to be published allegations which were irrelevant and immaterial to said case "'with the only purpose of attacking his honesty, integrity and reputation' and of bringing him 'into public hatred, discredit ... as a business- man.'
Schenker, a Swiss Citizen residing in Switzerland, was served with summons through his legal representative, his wife, who was residing here in the Philippines.
Held:

It is urged by plaintiff that jurisdiction over the person of Schenker has been secured through voluntary appearance on his part, he not having made a special appearance to assail the jurisdiction over his person, and an answer having been filed in this case, stating that "the defendants, by counsel, answering the plaintiff's complaint, respectfully aver," which is allegedly a general appearance amounting to a submission to the jurisdiction of the court, confirmed, according to plaintiff by a P225,000 counterclaim for damages set up in said answer; but, this counterclaim was set up by Mrs. Schenker alone, not including her husband.
Moreover, said answer contained several affirmative defenses one of which was lack of jurisdiction over the person of Schenker, thus negating the alleged waiver of this defense.
Nevertheless, We hold that the lower court had acquired jurisdiction over said defendant, through service of the summons addressed to him upon Mrs. Schenker, it appearing from said answer that she is the representative and attorney-in-fact of her husband in the aforementioned civil case No. Q-2796, which apparently was filed at her behest, in her aforementioned representative capacity.
In other words, Mrs. Schenker had authority to sue, and had actually sued, on behalf of her husband, so that she was, also, empowered to represent him in suits filed against him, particularly in a case, like the one at bar, which is a consequence of the action brought by her on his behalf.
Inasmuch as the alleged absence of a cause of action against Mrs. Schenker is premised upon the alleged lack of jurisdiction over the person of Schenker, which cannot be sustained, it follows that the conclusion drawn therefrom is, likewise, untenable.
Wherefore, the decision appealed from should be, as it is hereby, reversed, and the case remanded to the lower court for further proceedings, with the costs of this instance against defendants-appellees ... "

2. Jurisdiction over the Property

Jurisdiction over the property which is the subject matter of litigation results either from the seizure of the property under a legal process or from the institution of legal proceedings wherein the court's power over the property is recognized and made effective.

This kind of jurisdiction is referred to as in rem jurisdiction in contrast to in personam jurisdiction.
Where the action is in rem, the situs could "bind the world" and not just the interest of specific persons.
The basis for the exercise of jurisdiction is the presence of the property within the territorial jurisdiction of the forum.

Examples:

forfeiture of tangible property
registration of land title.

Another form of jurisdiction based on the state's physical power over property found within its territory is quasi in rem jurisdiction, but affects only interests of particular persons in that thing.

Example:

a proceeding to quiet title to property wherein the forum may adjudicate that one claimant's title to the property in question is superior to others.

In proceedings in rem and quasi in rem, all that due process requires is that the defendant be given adequate notice and opportunity to be heard.
Both requirements are met in service of summons by publication.

Case:

PENNOYER v. NEFF 95 US 714 (1878)

Mitchell, an Oregon lawyer, had won an Oregon default judgment against Neff for $300 in attorney's fees.
Neff, who lived in California, had been served by publication in an Oregon newspaper.
Neff owned land in Oregon, which Pennoyer acquired under a Sheriff's deed in satisfaction of the judgment.
Neff then sued Pennoyer in a federal court in Oregon to recover the land, contending that the sale was invalid because the state court had not acquired jurisdiction over him.
Held:

If, without personal service, judgments in personam obtained ex parte against non-residents and absent parties, upon mere publication of process which, in the great majority of cases, would never be seen by the parties interested, could be upheld and enforced, they would be the constant instruments of fraud and oppression. Judgments for all sorts of claims upon contracts and for torts, real or pretended, would be thus obtained, under which property would be seized, when the evidence of the transactions upon which they were founded, if they ever had any existence, had perished.
Substituted services by publication, or in any other authorized form, may be sufficient to inform parties of the object of proceedings taken where property is once brought under the control of the court by seizure or some equivalent act to any proceedings authorized by law upon such seizure for its condemnation and sale. Such service may also be sufficient in cases where the object of the action is to reach and dispose of property in the State or of some interest therein, by enforcing a contract or a lien respecting the same, or to partition it among different owners; or, when the public is a party, to condemn and appropriate it for a public purpose. In other words, such service may answer in all actions which are substantially proceedings in rem. But where the entire object of the action is to determine the personal rights and obligations of the defendants, that is, where the suit is merely in personam, constructive service in this form upon a non-resident is ineffectual for any purpose.
Process from the tribunals of one State cannot run into another State, and summon parties there domiciled to leave its territory and respond to proceedings against them. Publication of process or notice within the State where the tribunal sits cannot create any greater obligation upon the non-resident to appear. Process sent to him out of the State, and process published within it, are equally unavailing in proceedings to establish his personal liability. The want of authority of the tribunals of a State to adjudicate upon the obligations of non-residents, where they have no property within its limits, is not denied by the court below; but the position is assumed that, where they have property within the State, it is immaterial whether the property is in the first instance brought under the control of the court by attachment or some other equivalent act, and afterwards applied by its judgment to the satisfaction of demands against its owner; or such demands be first established in a personal action, and the property of the non-resident be afterwards seized and sold on execution.
The jurisdiction of the court to inquire into and determine his obligations at all is only incidental to its jurisdiction over the property. Its jurisdiction in that respect cannot be made to depend upon facts to be ascertained after it has tried the cause and rendered the judgment. If the judgment be previously void, it will not become valid by the subsequent discovery of property of the defendant, or by his subsequent acquisition of it. The judgment, if void when rendered, will always remain void; it cannot occupy the doubtful position of being valid if property be found, and void if there be none.
Even if the position assumed were confined to cases where the non-resident defendant possessed property in the State at the commencement of the action, it would still make the validity of the proceedings and judgment depend upon the question of whether, before the levy of the execution, the defendant had or had not disposed of the property. If, before the levy, the property should be sold, then, according to this position, the judgment would not be binding. This doctrine would introduce a new element of uncertainty in judicial proceedings.

Summary:

Personal judgments obtained without personal service, especially against non-residents served only by publication, are prone to fraud and should not be upheld. Such judgments could result in unjust seizure of property.
Substituted services, like publication, can be valid if the case is a proceeding in rem (against property). This applies where the goal is to control or dispose of property within the state's jurisdiction.
Courts of one state cannot compel non-residents from another state to appear before them; process served outside the state or published within it does not create personal liability for non-residents.
A state court's jurisdiction to decide a non-resident's obligations is only incidental to its jurisdiction over the property in question. If no property is controlled by the court at the outset, any judgment concerning the non-resident's obligations is void.
A judgment that is void when rendered (due to lack of jurisdiction) cannot become valid through the later discovery of property or subsequent acquisition by the defendant. Relying on such circumstances creates uncertainty in judicial proceedings.

Co-pilot:

Pennoyer v. Neff is a landmark case in U.S. legal history, decided by the Supreme Court in 1878. The case primarily addresses the issue of personal jurisdiction—the court’s authority to make decisions affecting a person who is not physically present within its territory.
Background

The case began when Marcus Neff, a settler in Oregon, received legal assistance from attorney John H. Mitchell to secure a parcel of land. Mitchell later sued Neff for unpaid legal fees, but Neff had moved to California by then. Mitchell won the case by default, as Neff was not present to defend himself. Neff’s land was subsequently sold to Sylvester Pennoyer to satisfy the judgment.

Legal Issues
The Supreme Court’s decision in Pennoyer v. Neff established two key principles regarding personal jurisdiction:

Physical Presence: A state court can only exert personal jurisdiction over a party if that party is served with process while physically present within the state.
Due Process: The court emphasized that personal jurisdiction must comply with the Due Process Clause of the Fourteenth Amendment.

Impact

This case set a precedent for how courts handle jurisdiction over non-residents, influencing future cases and the development of jurisdictional rules in the United States

INTERNATIONAL SHOE CO. v. WASHINGTON 326 U.S. 310 (1945)

Appellant is a Delaware corporation, having its principal place of business in St. Louis, Missouri, and is engaged in the manufacture and sale of shoes and other footwear. It maintains places of business in several states, other than Washington, at which its manufacturing is carried on and from which its merchandise is distributed interstate through several sales units or branches located outside the State of Washington. Appellant has no office in Washington and makes no contracts either for sale or purchase of merchandise there. It maintains no stock of merchandise in that state and makes no deliveries of goods in intrastate commerce.
During the years from 1937 to 1940, now in question, appellant employed eleven to thirteen salesmen under the direct supervision and control of sales managers located in St. Louis. These salesmen resided in Washington; their principal activities were confined to that state; and they were compensated by commissions based on the amount of their sales.
The authority of the salesmen is limited to exhibiting their samples and soliciting orders from prospective buyers, at prices and on terms fixed by the appellant. The salesmen transmit the orders to appellant's office in St. Louis for acceptance or rejection, and when accepted, the merchandise for filling the orders is shipped from points outside Washington to the purchasers within Washington state. All the merchandise shipped is invoiced at the place of shipment from which collections are made. No salesman has authority to enter into contracts or to make collections.
The Supreme Court of Washington was of the opinion that the regular and systematic solicitation of orders in the state by appellant's salesmen, resulting in a continuous flow of appellant's product into the state, was sufficient to constitute doing business in the state so as to make the appellant amenable to suit in its courts. But it was also of the opinion that there were sufficient additional activities shown to bring the case within the rule frequently stated, that solicitation within a state by the agents of a foreign corporation plus some additional activities there are sufficient to render the corporation amenable to suit brought in the courts of the state to enforce an obligation arising out of its activities there. International Harvester Co. v. Kentucky, 234 U.S. 579, 587.
The court found such additional activities in the salesmen's display of samples, sometimes in permanent display rooms, and the salesmen's residence within the state, continued over a period of years, all resulting in a substantial volume of merchandise regularly shipped by appellant to purchasers within the state.

Appellant also insists that its activities within the state were not sufficient to manifest its "presence" there and that, in its absence, the state courts were without jurisdiction; that consequently, it was a denial of due process for the state to subject appellant to suit.
Appellant further argues that since it was not present within the state, it is a denial of due process to subject it to taxation or other monetary exaction. Historically, the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant's person. Hence, his presence within the territorial jurisdiction of a court was a prerequisite to its rendition of a judgment personally binding him. Pennoyer v. Neff, 95 U.S. 714, 733.

But now that the capias ad respondendum has given way to personal service of summons or other forms of notice, due process requires only that, in order to subject a defendant to a judgment in personam, if he is not present within the territory of the forum, he should have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." MSince the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, it is clear that unlike an individual, its "presence" without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it. To say that the corporation is so far "present" there as to satisfy due process requirements, for purposes of taxation or the maintenance of suits against it in the courts of the state, is to beg the question to be decided. For the terms "present" or "presence" are used merely to symbolize those activities of the corporation's agent within the state which courts will deem to be sufficient to satisfy the demands of due process.
Those demands may be met by such contacts of the corporation with the state of the forum as to make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.

An "estimate of the inconveniences" which would result to the corporation from a trial away from its home or principal place of business is relevant in this connection.
"Presence" in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given.
Conversely, it has been generally recognized that the casual presence of the corporate agent or even his conduct of isolated items of activities in a state on the corporation's behalf are not enough to subject it to suit on causes of action unconnected with the activities there.
To require the corporation in such circumstances to defend the suit away from its home or other jurisdiction where it carries on more substantial activities has been thought to lay too great and unreasonable a burden on the corporation to comport with due process.

There have been instances in which the continuous corporate operations within a state were thought so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.

We are likewise unable to conclude that the service of the process within the state upon an agent whose activities establish appellant's "presence" there was not sufficient notice of the suit, or that the suit was so unrelated to those activities as to make the agent an inappropriate vehicle for communicating the notice.

It is enough that appellant has established such contacts with the state that the particular form of substituted service adopted there gives reasonable assurance that the notice will be actual. Nor can we say that the mailing of the notice of suit to appellant by registered mail at its home office was not reasonably calculated to apprise appellant of the suit.
Appellant having rendered itself amenable to suit upon obligations arising out of the activities of its salesmen in Washington, the state may maintain the present suit in personam to collect the tax laid upon the exercise of the privilege of employing appellant's salesmen within the state. For Washington has made one of those activities, which taken together establish appellant's "presence" there for purposes of suit, the taxable event by which the state brings appellant within the reach of its taxing power. The state thus has constitutional power to lay the tax and to subject appellant to a suit to recover it. The activities which establish its "presence" subject it alike to taxation by the state and to suit to recover the tax.
Affirmed.
Summary:

The appellant is a Delaware corporation with its principal place of business in St. Louis, Missouri, engaged in the manufacture and sale of footwear.
The corporation operates in several states, but not in Washington, and does not have an office or make contracts for sale or purchase there.
It does not maintain any stock of merchandise or make deliveries within Washington state.
From 1937 to 1940, the appellant employed 11 to 13 salesmen in Washington, who were under the direct supervision of sales managers in St. Louis. These salesmen were compensated by commissions and confined their activities to Washington.
The salesmen were authorized only to exhibit samples and solicit orders at prices and terms set by the appellant, transmitting these orders to St. Louis for acceptance or rejection.
Accepted orders were shipped from outside Washington, and all invoicing and collections were handled at the place of shipment.
The salesmen were not authorized to enter into contracts or make collections.
The Supreme Court of Washington ruled that the appellant's systematic solicitation of orders in the state constituted doing business there, making the appellant subject to suit in Washington courts.
The court also found that additional activities, such as the salesmen's residence and display of samples in Washington, established a continuous business presence, which justified the state court's jurisdiction.
The appellant argued that its activities were insufficient to establish its "presence" in Washington, challenging the state's jurisdiction and citing a denial of due process.
The legal principle of "minimum contacts" was discussed, which allows a state to assert jurisdiction over an entity if the entity has sufficient contacts with the state, even if not physically present.
The court concluded that the appellant's business activities in Washington were substantial enough to constitute "presence" for purposes of jurisdiction and taxation.
The ruling affirmed that the appellant was subject to taxation and legal action in Washington due to the ongoing business operations conducted by its salesmen within the state.

Background

The case involved the International Shoe Company, a Delaware corporation with its principal place of business in Missouri.
The company employed salesmen in Washington State who solicited orders, which were then shipped from out of state.
Washington State sought to collect unemployment taxes from International Shoe, arguing that the company’s activities within the state made it subject to state jurisdiction.

Legal Issues

The central question was whether Washington State could assert personal jurisdiction over International Shoe, given that the company did not have a physical presence in the state.
The Supreme Court introduced the “minimum contacts” standard, which requires that a defendant must have certain minimum contacts with the forum state such that maintaining the lawsuit does not offend traditional notions of fair play and substantial justice.

Decision

The Court held that International Shoe’s activities in Washington were sufficient to establish personal jurisdiction.
The company’s systematic and continuous activities in the state, including the presence of salesmen and the volume of business conducted, created enough of a connection to justify the state’s jurisdiction.

Impact

This decision established the minimum contacts test, which remains a fundamental principle in determining personal jurisdiction. It allows courts to exercise jurisdiction over out-of-state defendants if their activities have a substantial connection to the forum state.

MULLANE v. CENTRAL HANOVER BANK & TRUST CO., TRUSTEE, ET AL. 399 US 306 (1950)

Central Hanover Bank, a trust company in New York, had exclusive management and control of a common trust fund established under §100-c of the New York Banking Law. The bank petitioned under that section for a judicial settlement of accounts, which would be binding and conclusive regarding any matter set forth therein upon everyone having any interest in the common fund or in any participating trust.

The trust company invested assets of numerous small trusts for which it was trustee.
Some of the beneficiaries were non-residents of the State.
The only notice of this petition given to the beneficiaries was by publication in a local newspaper pursuant to said law.

"Distinctions between actions in rem and those in personam are ancient and were originally expressed in procedural terms that seemed to be distinctions in the substantive law of property under a system quite unlike our own.
Personal service of written notice within the jurisdiction is the classic form of notice and is always adequate in any type of proceeding. However, the vital interest of the State in bringing any issues concerning its fiduciaries to a final settlement can only be served if the interests or claims of individuals outside the State can somehow be determined.
A construction of the Due Process Clause that would place impossible or impractical obstacles in the way could not be justified. When notice is due, a mere gesture is not sufficient; due process requires that the means employed should be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.
The reasonableness, and hence the constitutional validity, of any chosen method may be defended on the grounds that it is reasonably certain to inform those affected.

Alternatively, where conditions do not reasonably permit such notice, the chosen form must not be substantially less likely to bring notice than other feasible and customary substitutes.

It would be idle to pretend that publication alone, as prescribed here, is a reliable means of acquainting interested parties with the fact that their rights are before the courts. It is no accident that most cases reaching this Court on the question of the adequacy of notice have concerned actions founded on process constructively served through local newspapers.
For known present beneficiaries whose places of residence are known, however, notice by publication stands on a different footing. Exceptions made out of necessity do not sweep away the rule that, within the limits of practicability, notice must be reasonably calculated to reach interested parties.
Where the names and post office addresses of those affected by a proceeding are at hand, the reasons for resorting to means less likely than the mails to apprise them of its pendency disappear.
The trustee has on its books the names and addresses of the income beneficiaries represented by the appellant, and there is no tenable ground for dispensing with a serious effort to inform them personally of the accounting, at least by ordinary mail to the record addresses.
We hold that the notice of judicial settlements of accounts required by the New York Banking Law §100-c (12) is incompatible with the requirements of the Fourteenth Amendment as a basis for adjudication depriving known persons, whose whereabouts are also known, of substantial property rights."
Summary:

Central Hanover Bank, a New York trust company, managed a common trust fund under §100-c of the New York Banking Law and sought a judicial settlement of accounts that would be binding on all parties with an interest in the fund.
The bank invested assets from several small trusts it managed, some of which had beneficiaries who were non-residents of New York.
The only notice given to beneficiaries regarding the petition for settlement was through publication in a local newspaper, as allowed by the law.
The court discussed the distinction between actions in rem (affecting property) and in personam (affecting individuals) and emphasized that due process requires adequate notice.
The court held that personal service of notice is the most reliable method, but if individuals are outside the state, alternative methods must reasonably ensure notice.
Publication alone is insufficient for known beneficiaries whose addresses are known; notice by mail is more appropriate in such cases.
The court ruled that the notice requirement in §100-c (12) of the New York Banking Law did not meet the Fourteenth Amendment's due process standards for depriving known persons of substantial property rights without proper notice.

Mullane v. Central Hanover Bank & Trust Co. (1950) is a significant Supreme Court case that established important principles regarding the constitutional requirements for notice in judicial proceedings.
Background

The case involved the Central Hanover Bank & Trust Company, which had established a common trust fund pooling multiple small trusts for easier administration.
The bank sought judicial settlement of its accounts, providing notice to beneficiaries primarily through publication in a local newspaper.

Legal Issues

The main issue was whether the notice by publication was sufficient to satisfy the Due Process Clause of the Fourteenth Amendment. The Court had to determine if this method of notification was adequate for informing beneficiaries, especially those whose names and addresses were known.

Decision

The Supreme Court held that notice by publication was insufficient for beneficiaries whose names and addresses were known.
The Court emphasized that notice must be "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections". For known beneficiaries, the Court suggested that direct mail would be a more appropriate method.

Impact

This decision set a precedent for the requirements of due process in providing notice. It underscored the necessity of using methods that are likely to inform interested parties, thereby ensuring fairness in judicial proceedings

SHAFFER v. HEITNER 433 U.S. 186 (1977)

Arnold Heitner, a non-resident of Delaware and owner of one share of stock in the Greyhound Corporation, filed a suit against Greyhound and 28 of its officers. Heitner alleged that the defendants had violated their duties to Greyhound by causing it to engage in activities in Oregon that resulted in substantial civil and criminal antitrust liabilities.

Heitner filed a motion for an order of sequestration of approximately 82,000 shares of Greyhound stock belonging to the defendants. This seizure was accomplished by placing "stop transfer" orders on the books of Greyhound.
None of the certificates representing the seized property were physically present in Delaware, but they were considered to be in Delaware because it was the state of incorporation.
Defendants were notified by certified mail to their last known address and by publication in a newspaper.
They contended that the ex parte sequestration procedure deprived them of due process of law and that they did not have sufficient contacts with Delaware to justify its exercise of adjudicatory jurisdiction.

The Delaware courts based their assertion of jurisdiction in this case solely on the statutory presence of appellants' property in Delaware. Yet, that property is not the subject matter of this litigation, nor is the underlying cause of action related to the property. Appellants' holdings in Greyhound do not, therefore, provide contacts with Delaware sufficient to support the jurisdiction of that State's courts over appellants. If it exists, that jurisdiction must have some other foundation.
Appellee Heitner did not allege and does not now claim that appellants have ever set foot in Delaware. Nor does he identify any act related to his cause of action as having taken place in Delaware. Nevertheless, he contends that appellants' positions as directors and officers of a corporation chartered in Delaware provide sufficient 'contacts, ties, or relations,' with that State to give its courts jurisdiction over appellants in this stockholder's derivative action. This argument is based primarily on what Heitner asserts to be the strong interest of Delaware in supervising the management of a Delaware corporation. That interest is said to derive from the role of Delaware law in establishing the corporation and defining the obligations owed to it by its officers and directors. In order to protect this interest, appellee concludes, Delaware's courts must have jurisdiction over corporate fiduciaries such as appellants.
This argument is undercut by the failure of the Delaware Legislature to assert the state interest appellee finds so compelling. Delaware law bases jurisdiction not on appellants' status as corporate fiduciaries, but rather on the presence of their property in the State. Although the sequestration procedure used here may be most frequently used in derivative suits against officers and directors, the authorizing statute evinces no specific concern with such actions. Sequestration can be used in any suit against a nonresident, and reaches corporate fiduciaries only if they happen to own interests in a Delaware corporation, or other property in the State. But as Heitner's failure to secure jurisdiction over seven of the defendants named in his complaint demonstrates, there is no necessary relationship between holding a position as a corporate fiduciary and owning stock or other interests in the corporation. If Delaware perceived its interest in securing jurisdiction over corporate fiduciaries to be as great as Heitner suggests, we would expect it to have enacted a statute more clearly designed to protect that interest.
Appellee suggests that by accepting positions as officers or directors of a Delaware corporation, appellants performed the acts required by Hanson v. Denckla. He notes that Delaware law provides substantial benefits to corporate officers and directors, and that these benefits were at least in part the incentive for appellants to assume their positions. It is, he says, 'only fair and just' to require appellants, in return for these benefits, to respond in the State of Delaware when they are accused of misusing their powers. But like Heitner's first argument, this line of reasoning establishes only that it is appropriate for Delaware law to govern the obligations of appellants to Greyhound and its stockholders. It does not demonstrate that appellants have purposefully availed themselves of the privilege of conducting activities within the forum State, Hanson v. Denckla, in a way that would justify bringing them before a Delaware tribunal.
Appellants have simply had nothing to do with the state of Delaware. Moreover, appellants had no reason to expect to be haled before a Delaware court. Appellants, who were not required to acquire interest in Greyhound in order to hold their position, did not, by acquiring those interests, surrender their rights to be brought to judgment only in states with which they had 'minimum contacts.'
The judgments of the Delaware Supreme Court must therefore be reversed."
Summary:

Heitner, a non-resident of Delaware and a shareholder of Greyhound Corporation, sued Greyhound and 28 of its officers, claiming they violated their duties by causing Greyhound to engage in antitrust activities in Oregon.
Heitner sought to sequester about 82,000 shares of Greyhound stock owned by the defendants by placing "stop transfer" orders on Greyhound's books.
The shares, although not physically in Delaware, were considered to be there as it was Greyhound's state of incorporation.
Defendants, notified by mail and newspaper publication, argued that the seizure deprived them of due process and that they lacked sufficient ties to Delaware for the state to assert jurisdiction.
Justice Marshall noted that Delaware's jurisdiction was based solely on the statutory presence of the defendants' property (stock) in Delaware, but this was insufficient because the property was unrelated to the litigation.
Heitner did not show that the defendants had any substantial contacts with Delaware.
The court found that holding positions in a Delaware-chartered corporation did not establish the necessary "minimum contacts" required for jurisdiction.

Background

The case began when Heitner, a shareholder of Greyhound Corporation, filed a derivative suit in Delaware against the corporation and its officers, alleging mismanagement. Heitner sought to sequester the defendants’ stock in Greyhound, which was incorporated in Delaware, to establish jurisdiction.

Legal Issues

The central issue was whether Delaware courts could assert jurisdiction over the defendants based solely on their ownership of stock in a Delaware corporation. The defendants argued that they did not have sufficient contacts with Delaware to justify the state’s jurisdiction under the minimum contacts standard established in International Shoe Co. v. Washington.

Decision

The Supreme Court ruled that ownership of stock in a corporation incorporated in a state, without more, is insufficient to establish personal jurisdiction. The Court emphasized that all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe, which require that the defendant have certain minimum contacts with the forum state.

From the cases, we see that the traditional basis for the exercise of judicial jurisdiction is the state's physical power over persons and property within its territory.

This explains why the state can exercise in personam jurisdiction over a person who was served with a summons while physically present in the state and why, in in rem proceedings, it can exercise jurisdiction over property situated in the state regardless of whether it could otherwise exercise jurisdiction over the persons whose interests would be affected by the decision.
The Philippines continues to recognize these distinctions between in personam and in rem proceedings, and as a result, Philippine courts still sustain the rationale in Pennoyer v. Neff.

In the United States, the conceptual basis for the exercise of judicial jurisdiction has shifted from the theory of territorial power to considerations of minimum contacts and fundamental fairness.
The U.S. Supreme Court in International Shoe Co. v. Washington stated: "Due process requires that a defendant ... have certain minimum contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."

This approach demands that there be forum-transaction contacts that will make it fundamentally fair to require the defendant to defend a suit in the forum regardless of their non-residence.
Likewise, where an individual or corporation is conducting business in the state, it may be sued in the forum even on a claim not arising from its business activities. A corporation is deemed to have consented to "service and suit" as implied by "its presence in the state through acts of authorized agents."
In this situation, there are sufficient contacts between the forum and the defendant that justify the forum's exercise of jurisdiction.

In Mullane, the court emphasized the importance of and set the standard for adequate notice (reasonable).

The Court pronounced that the manner in which notice was given should reasonably result in informing the affected party.
Moreover, when conditions do not allow such notice, the form chosen should not be substantially "less likely to bring home notice than other feasible and customary substitutes."
Only when the defendant is adequately notified is he given the opportunity to defend himself and the due process requirement met.

In the landmark case of Shaffer v. Heitner, the U.S. Supreme Court defined the outer reaches of permissible exercise of judicial jurisdiction when it held that the minimum contacts and fundamental fairness test should be satisfied regardless of whether the proceedings are in rem, quasi in rem, or in personam.

We note, however, that although Shaffer supposedly imposes the same standard for in personam and in rem jurisdictions and cites International Shoe as its progenitor, they refer to two different areas where minimum contacts should be present.

While International Shoe requires minimum contacts between the defendant and the forum.
Shaffer demands that minimum contacts exist among the forum, defendant, and the cause of action.

Shaffer casts doubt on the exercise of jurisdiction based solely on domicile or place of incorporation in cases that arise out of business activities unrelated to the forum.

It should be pointed out that the change in the conceptual foundation of jurisdiction from power to fairness does not significantly affect proceedings in rem, which are suits where the property itself is the object of the controversy.

The physical presence of the property within the state establishes the state's paramount interest in adjudicating a claim over it and provides the necessary minimum contacts.
Furthermore, the state's court would generally be a fair forum because parties could foresee that the court would exercise jurisdiction based on the situs of the property.

Long-Arm Statutes

The requirement that a state must show that there are minimum contacts between the non-resident defendant and the forum to justify its exercise of jurisdiction has led many states to legislate long-arm statutes.

These statutes specify the kinds of contacts upon which jurisdiction will be asserted, such as the commission of a tortious act within the state, the celebration of a contract there or presence of property owned by the defendant.
Moreover, if these or other minimum contacts exist, then the court can exercise jurisdiction because it has a justified interest in providing the plaintiff with a forum, and no fundamental unfairness results in subjecting the defendant to a suit there.

Some long-arm statutes broadly authorize courts to assert jurisdiction in any case not inconsistent with the Constitution, leaving it to the court to define its limitations on a case-by-case basis.

3. Jurisdiction Over the Subject Matter

Constitutional and statutory laws allocate cases among the courts according to the nature of the controversy, thereby determining the competence of the court to try a case and render a judgment.
Subject matter jurisdiction or competence is more than the general power conferred by law to take cognizance of cases of a general class to which the case belongs.

It is not enough that a court has a power in abstract to try and decide the class of litigation to which a case belongs; it is necessary that said power be properly invoked by filing a petition.

Subject matter jurisdiction cannot be conferred by consent of the parties and a decision is void and may be set aside either directly or collaterally, where the court exceeds its jurisdiction and power in rendering it.

IDONAH PERKINS v. ROXAS 72 Phil. 514 (1941)

Eugene Arthur Perkins filed a case in CFI Manila against Benguet Consolidated Mining Co. for recovery of P71,379 consisting of dividends payable in shares of stocks registered in his name, payment of which was withheld by the company.
BCMC alleged that it withheld Eugene Perkins' right to the disposal and control of the shares because of the adverse claims made by Idonah Slade Perkins and George Engelhard.
Eugene Perkins amended his complaint to include Idonah Perkins and asked that they be adjudged without interest in said shares of stocks. Summons by publication was served upon Idonah Perkins and George Engelhard, both non- residents.
Idonah Perkins filed her answer with a cross complaint in which she set up a judgment she obtained from the Supreme Court of New York which adjudged her the sole owner.
She filed this petition alleging respondent judge is about to render judgment "disregarding her constitutional rights . . . contrary to and annulling ... the valid judgment rendered by the courts of the State of New York which decision is res judicata on all questions constituting the subject matter" of the civil case.
LAUREL, J.:

The only question here to be determined, therefore, is whether or not, in view of the alleged judgment entered in favor of the petitioner by the Supreme Court of New York, and which is claimed by her to be res judicata on all questions raised by the respondent, Eugene Arthur Perkins, in civil case No. 53317 of the Court of First Instace of Manila, the local court has jurisdiction over the subject matter of the action in the said case.

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 Arthur Perkins, in the court below alleged the ownership in himself of the conjugal partnership between him and his wife, Idonah Slade Perkins; that the petitioner, Idonah Slade Perkins, and George H. Engelhard assert claims to and interests in the said stock adverse to Eugene Arthur Perkins; that such claims are invalid, unfounded, and made only for the purpose of vexing, hindering and delaying Eugene Arthur Perkins in the exercise of the lawful control over and use of said shares and dividends accorded to him and by law and by previous orders and decrees of this court; and the said amended complaint prays, inter alia, "that defendant Benguet Consolidated Mining Company be required and ordered to recognize the right of the plaintiff to the control and disposal of said shares so standing in his name to the exclusion of all others; that the additional defendants, Idonah Slade Perkins and George H. Engelhard, be each held to have no interest or claim in the subject matter of the controversy between plaintiff and defendant Benguet Consolidated Mining Company, or in or under the judgment to be rendered herein and that by said judgment they, and each of them be excluded therefrom; and that the plaintiff be awarded the costs of this suit and general relief."
The respondent's action, therefore, 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 Court of First Instance of Manila.
In other words, 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 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," 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 case 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.
The petition is, therefore, hereby denied, with costs against the petitioner. So ordered.
Avanceña, C.J., Diaz, Moran and Horrilleno, JJ., concur.

B. Ways of Dealing With a Conflicts Problem

When the court is faced with a conflict of laws problem, it may either:

dismiss the case for lack of jurisdiction or on the ground of forum non conveniens, or
assume jurisdiction and apply either forum or foreign law.

1. Dismiss the Case

Doctrine of Forum Non Conveniens

Even if a court assumes jurisdiction over the parties and the subject matter, it may decline to try the case on the grounds that the controversy would be more suitably tried elsewhere. This is the doctrine of forum non conveniens, which literally means that "the forum is inconvenient."
The origin of this doctrine is vague, as it is not traceable to Roman Law or Continental practice.

It appears to have first been used in the 1800s to describe a practice of Scottish trial courts that refused to hear cases when "the ends of justice would best be served by trial in another forum."

American courts have applied this doctrine to prevent abuse of the court's process.

For instance, it prevents a plaintiff from choosing a forum primarily to harass the defendant by imposing unnecessary expenses and hardships, or when a non-resident plaintiff selects a forum because of the potential for larger jury verdicts.
Courts have also resisted jurisdiction when it burdens the court or taxpayers, such as in cases with severe backlogs or when compulsory jury duty is imposed on a community with no link to or interest in the litigation.
Furthermore, a court may be deemed inappropriate if its local facilities are inadequate to secure evidence or witness attendance.

In the celebrated Union Carbide case in Bhopal, India, the United States Court of Appeals sustained a ruling by the Southern District Court of New York, which dismissed the suit on the ground of forum non conveniens.

In this case, thousands of Bhopal residents sued for damages in New York following a large-scale chemical accident.
The U.S. Court of Appeals ruled that the court below did not abuse its discretion in dismissing the case, applying the doctrine based on a U.S. Supreme Court case.

English and Scottish courts have applied forum non conveniens when "another available and more appropriate forum" would better serve the interests of all parties by eliminating the vexatious or oppressive character of the proceedings and removing any unfairness from the trial.

This doctrine also helps avoid global forum shopping—where litigants file repetitive suits in different jurisdictions to find the most favorable court, leading to conflicting decisions and undermining the orderly administration of justice.

The Supreme Court addressed this in First Philippine International Bank vs. Court of Appeals, underscoring that forum shopping originated in Private International Law.

It allows non-resident litigants to choose a forum for various reasons, including procedural advantages, harassment of the defendant, or selecting a more favorable venue.
To combat such practices, the principle of forum non conveniens allows a court to refuse jurisdiction if it is not the most "convenient" forum, leaving the parties free to seek remedies elsewhere.

The Philippine Supreme Court, in Wing On Company v. Syyap, held that a plaintiff's choice of forum should not be disturbed "unless the balance is strongly in favor of the defendant."

HEINE v. NEW YORK INSURANCE COMPANY 45 F2d 426 (1940)

This is one of several cases brought against New York Life Insurance Company and the Guardian Insurance Company to recover on some two hundred and forty life insurance policies made and issued by the defendants in Germany, in favor of German citizens and payable in German marks. The defendants were incorporated in New York with statutory agents in Oregon, upon whom service of summons can be made.
As a condition to the insurance companies' right to do business in Germany, they were compelled to accede to the supervision and control of German insurance officials, to invest the proceeds arising from German policies in German securities, and to establish an office there with an agent upon whom service can be made.
The actions are brought in the name of the insured parties in the United States and Germany for amounts due or owing under the policies.
BEAN, District Judge:

"The courts of Germany and New York are open, functioning, and competent to take jurisdiction of the controversies, and service can be made upon the defendants in either of such jurisdictions. To require the defendants to defend the actions in this district would impose upon them great and unnecessary inconvenience and expense, and probably compel them to produce here (three thousand miles from their home office) numerous records, books, and papers, all of which are in daily use by them in taking care of current business.
In addition, it would no doubt consume months of the time of this court to try and dispose of these cases, thus necessarily disarranging the calendar, resulting in delay, inconvenience, and expense to other litigants who are entitled to invoke its jurisdiction.
It is argued by the plaintiffs that, because the court has jurisdiction of the subject matter and the parties, it has no discretion but should proceed with the case, regardless of where the cause of action arose, or the law by which it is controlled, or the residence or convenience of the parties and witnesses, or the difficulty the court would encounter in attempting to interpret and enforce a foreign contract, or the interference with the other business of the court. But that is a matter resting in its discretion. It may retain jurisdiction, or it may, in the exercise of sound discretion, decline to do so, as the circumstances suggest. The courts have repeatedly refused, in their discretion, to entertain jurisdiction of causes of action arising in a foreign jurisdiction where both parties are nonresidents of the forum.
The courts of this country are established and maintained primarily to determine controversies between its own citizens and those having business there, and manifestly the court may protect itself against a flood of litigation over contracts made and to be performed in a foreign country, where the parties and witnesses are nonresidents of the forum, and no reason exists why the liability, if any, cannot be enforced in the courts of the country where the cause of action arose, or in the state where the defendant was organized and has its principal offices. True, the courts of New York have declined to exercise jurisdiction over actions brought on insurance policies similar to those in suit..."]

Summary:

The case involves multiple lawsuits against New York Life Insurance Company and Guardian Insurance Company to recover payments on approximately 240 life insurance policies issued in Germany, payable in German marks, to German citizens.
The defendants, both New York-based companies with statutory agents in Oregon, were required by German law to operate under the supervision of German insurance officials, invest policy proceeds in German securities, and maintain an office in Germany.
The lawsuits were brought in the United States and Germany on behalf of the insured parties for amounts due under the policies.
The German and New York courts are competent to handle the cases, and service can be made in either jurisdiction.
Requiring the defendants to defend the case in this district would be burdensome due to the need to transport documents and witnesses from their home offices.
The court expressed concern that the litigation would disrupt its schedule, cause delays for other cases, and create unnecessary inconvenience and expense.
The court retains discretion to refuse jurisdiction over cases involving foreign contracts, foreign parties, and foreign laws, especially where the causes of action arose abroad, and both parties are nonresidents of the forum.
The court concluded that the case should be tried either in Germany or New York, where the contracts were made and can be enforced.

Facts

The plaintiffs were German citizens who held life insurance policies issued by New York Life Insurance Company and Guardian Insurance Company, both New York corporations.
The policies were issued in Germany and were payable in German marks.
They were subject to German regulations, which required the insurance companies to invest reserves from these policies in German securities and maintain an office in Germany.
The plaintiffs sought to recover the cash surrender value of their policies in U.S. courts.

Whether the U.S. District Court for the District of Oregon had jurisdiction to hear the case, given that the policies were issued in Germany, the plaintiffs were German citizens, and the insurance companies were New York corporations.
DISMISSED

Jurisdiction: The court found that it lacked jurisdiction because none of the parties were residents of the district, and none of the causes of action arose there.
Convenience: The court noted that defending the actions in Oregon would impose unnecessary inconvenience and expense on the defendants, as the relevant records and witnesses were located in New York and Germany.
Alternative Forums: The court determined that the courts in Germany and New York were competent to handle the disputes, and service could be made on the defendants in those jurisdictions.

IN RE: UNION CARBIDE 634 F. Supp. 842 (S.D.N.Y. 1986)

A devastating industrial disaster occurred on the night of December 23, 1984, resulting in the death of over 2,000 persons and injuries to over 200,000, caused by the lethal gas known as methyl isocyanate, which was released from a chemical plant operated by Union Carbide India Limited (UCIL) in Bhopal, India. Four days after the Bhopal accident, the first of some 145 purported class actions in federal district courts in the United States was commenced on behalf of the victims of the disaster. The Judicial Panel on Multidistrict Litigation assigned the actions to the Southern District of New York, where they became the subject of a consolidated complaint filed on June 28, 1985.
In the meantime, on March 29, 1985, India enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, granting the Indian government, the Union of India (UOI), the exclusive right to represent the victims in India or elsewhere. Acting in the capacity of parens patriae, the UOI filed a complaint in the Southern District of New York on behalf of all the victims, similar to the class action complaints already filed.
On July 31, 1985, Union Carbide Corporation (UCC) moved to dismiss the complaints on the grounds of forum non conveniens and the plaintiffs' lack of standing to bring actions to represent the victims. The district court granted the motion to dismiss (MTD), on the condition that UCC:

Consent to the jurisdiction of the Indian courts and waive defenses based on the statute of limitations;
Agree to satisfy any Indian court judgment, provided it comports with the minimal requirements of due process; and
Be subject to discovery under the Federal Rules of Civil Procedure of the U.S.

In September 1986, the UOI brought suit on behalf of all claimants against UCIL and UCC in the district court of Bhopal.

MANSFIELD, C.J.:

[2] Little or no deference can be paid to the plaintiffs' choice of a United States forum when all but a few of the 200,000 plaintiffs are Indian citizens located in India, who, according to the UOI, have revoked the authorizations of American counsel to represent them here and have substituted the UOI, which now prefers Indian courts. The finding of our district court, after exhaustive analysis of the evidence, that the Indian courts provide a reasonably adequate alternative forum cannot be labeled clearly erroneous or an abuse of discretion.
[3] The emphasis placed by plaintiffs on UCC's domicile in the U.S., where personal jurisdiction over it exists, is rendered insignificant by UCC’s consent to Indian jurisdiction. Plaintiffs' contention that the most crucial and probative evidence is located in the United States is simply not consistent with the record or the district court's findings. Although basic design programs were prepared in the U.S. and some assistance was furnished to UCIL at the outset of the 10-year period during which the Bhopal plant was constructed, the proof bearing on the issues to be tried is almost entirely located in India. This includes the principal witnesses and documents bearing on the development and construction of the plant, the detailed designs, the implementation of plans, the operation and regulation of the plant, its safety precautions, the facts with respect to the accident itself, and the deaths and injuries attributable to the accident.
[5, 6] The conditions imposed by the district court upon its forum non conveniens dismissal stand on a different footing. Plaintiffs and the UOI, however, contend that UCC, having been granted the forum non conveniens dismissal it sought, and having consented to the district court's order, has waived its right to appellate review of these conditions. We disagree. UCC expressly reserved its right to appeal Judge Keenan's order. Moreover, it has made a sufficient showing of prejudice from the second and third conditions of the court's order to entitle it to seek appellate review. UCC's position is comparable to that of a prevailing party which, upon being granted injunctive relief, is permitted to challenge by appeal conditions attaching to the injunction that are found to be objectionable. United States v. Bedford Assocs., 618 F.2d 904, 913-16 (2d Cir. 1980). Similarly, conditions imposed by the court upon dismissals without prejudice under Fed. R. Civ. P. 41(a)(2) may be appealed by the plaintiff when they prejudice the plaintiff. Le Compte v. Mr. Chip, Inc., 528 F.2d 601 (5th Cir. 1976).
The first condition, that UCC consent to the Indian court's personal jurisdiction over it and waive the statute of limitations as a defense, is not unusual and has been imposed in numerous cases where the foreign court would not provide an adequate alternative in the absence of such a condition. The remaining two conditions, however, pose problems.
[7] In requiring that UCC consent to the enforceability of an Indian judgment against it, the district court proceeded at least in part on the erroneous assumption that, absent such a requirement, the plaintiffs, if they should succeed in obtaining an Indian judgment against UCC, might not be able to enforce it in the United States. The law, however, is to the contrary. Under New York law, which governs actions brought in New York to enforce foreign judgments, see Island Territory of Curaçao v. Solitron Devices, Inc., 489 F.2d 1313, 1318 (2d Cir. 1973), cert. denied, 416 U.S. 986, 94 S. Ct. 2389, 40 L.Ed. 2d 763 (1974), a foreign-country judgment that is final, conclusive, and enforceable where rendered must be recognized and will be enforced as "conclusive between the parties to the extent that it grants or denies recovery of a sum of money" except that it is not deemed to be conclusive if:

The judgment was rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law; or
The foreign court did not have personal jurisdiction over the defendant.

Art. 53. Recognition of Foreign Country Money Judgments, 7B N.Y. Civ. Prac. L. & R. §§ 5301-09 (McKinney 1978). Although § 5304 further provides that under certain specified conditions a foreign country judgment need not be recognized, none of these conditions would apply to the present cases except for the possibility of failure to provide UCC with sufficient notice of proceedings or the existence of fraud in obtaining the judgment, which do not presently exist but conceivably could occur in the future.
[8] UCC contends that Indian courts, while providing an adequate alternative forum, do not observe due process standards that would be required as a matter of course in this country. As evidence of this apprehension, it points to the haste with which the Indian court in Bhopal issued a temporary order freezing its assets throughout the world and the possibility of serious prejudice to it if the UOI is permitted to have the double and conflicting status of both plaintiff and co-defendant in the Indian court proceedings. It argues that we should protect it against such denial of due process by authorizing Judge Keenan to retain the authority, after forum non conveniens dismissal of the cases here, to monitor the Indian court proceedings and be available on call to rectify in some undefined way any abuses of UCC's right to due process as they might occur in India.
UCC's proposed remedy is not only impractical but evidences an abysmal ignorance of basic jurisdictional principles, so much so that it borders on the frivolous. The district court's jurisdiction is limited to proceedings before it in this country. Once it dismisses those proceedings on grounds of forum non conveniens, it ceases to have any further jurisdiction over the matter unless and until a proceeding may someday be brought to enforce a final and conclusive Indian money judgment. Nor could we, even if we attempted to retain some sort of supervisory jurisdiction, impose our due process requirements upon Indian courts, which are governed by their laws, not ours. The concept of shared jurisdictions is both illusory and unrealistic. The parties cannot simultaneously submit to both jurisdictions the resolution of the pre-trial and trial issues when there is only one consolidated case pending in one court. Any denial by the Indian courts of due process can be raised by UCC as a defense to the plaintiffs' later attempt to enforce a resulting judgment against UCC in this country.
[9] We are concerned, however, that as it is written, the district court's requirement that UCC consent to the enforcement of a final Indian judgment, which was imposed on the erroneous assumption that such a judgment might not otherwise be enforceable in the United States, may create misunderstandings and problems of interpretation. Although the order's provision that the judgment "comport with the minimal requirements of due process" (emphasis supplied) is probably intended to refer to "due process" as used in the New York Foreign Country Money Judgments Law and others like it, there is a risk that it may also be interpreted as providing for a lesser standard than we would otherwise require. Since the court's condition with respect to the enforceability of any final Indian judgment is predicated on an erroneous legal assumption and its "due process" language is ambiguous, and since the district court's purpose is fully served by New York's statute providing for recognition of foreign-country money judgments, it was an error to impose this condition upon the parties.
We also believe that the district court erred in requiring UCC to consent (which UCC did under protest and subject to its right of appeal) to broad discovery by the plaintiffs under the Federal Rules of Civil Procedure when UCC is confined to the more limited discovery authorized under Indian law. We recognize that under some circumstances, such as when a moving defendant unconditionally consents thereto or when no undiscovered evidence of consequence is believed to be under the control of a plaintiff or co-defendant, it may be appropriate to condition a forum non conveniens dismissal on the moving defendant's submission to discovery under the Federal Rules without requiring reciprocal discovery by the plaintiff. See, e.g., Piper Aircraft v. Reyno, 454 U.S. at 257 n.25, 102 S. Ct. at 267 n.25 (suggesting that district courts can condition dismissal upon a defendant's agreement to provide all relevant records); Ali v. Offshore Co., 753 F.2d 1327, 1334 n.16 (5th Cir. 1985) (same); Boskoff v. Transportes Aereos Portugueses, 17 Av. Cas. (CCH) 18,613, at 18,616 (N.D. Ill. 1983) (accepting defendant's voluntary commitment to provide discovery in a foreign forum according to Federal Rules). Basic justice dictates that both sides be treated equally, with each having equal access to the evidence in the possession or under the control of the other. Application of this fundamental principle in the present case is especially appropriate since the UOI, as the sovereign government of India, is expected to be a party to the Indian litigation, possibly on both sides.
For these reasons, we direct that the condition with respect to the discovery of UCC under the Federal Rules of Civil Procedure be deleted without prejudice to the right of the parties to have reciprocal discovery of each other on equal terms under the Federal Rules, subject to such approval as may be required of the Indian court in which the case will be pending. If, for instance, Indian authorities permit mutual discovery pursuant to the Federal Rules, the district court's order, as modified in accordance with this opinion, should not be construed to bar such procedure. In the absence of such a court-sanctioned agreement, however, the parties will be limited by the applicable discovery rules of the Indian court in which the claims will be pending.

Summarize:

The case concerns the 1984 Bhopal industrial disaster, in which over 2,000 people died and 200,000 were injured due to the release of methyl isocyanate gas from Union Carbide India Limited’s (UCIL) chemical plant.
Following the disaster, lawsuits were filed in U.S. federal courts on behalf of the victims. India’s government (Union of India or UOI), granted exclusive rights to represent the victims, also filed a lawsuit in the Southern District of New York.
Union Carbide Corporation (UCC) moved to dismiss the case on the grounds of forum non conveniens (arguing the case should be heard in India, not the U.S.) and questioned the plaintiffs’ standing.
The district court granted the dismissal on the condition that UCC:

Consent to Indian court jurisdiction and waive statute of limitations defenses.
Agree to satisfy any judgment from Indian courts, provided due process is observed.
Be subject to U.S. discovery rules.

Judge Mansfield upheld the dismissal, noting that since most plaintiffs were Indian, the case should be tried in India, where the evidence and witnesses were located. The U.S. court’s decision was not seen as erroneous, as Indian courts provided an adequate alternative forum. UCC’s U.S. connections did not outweigh its agreement to submit to Indian jurisdiction.
However, Mansfield found problems with the conditions imposed by the district court. He ruled that:

The requirement for UCC to agree to enforce Indian judgments was unnecessary, as New York law already recognized foreign judgments if due process standards and jurisdictional requirements were met.
The condition subjecting UCC to broad U.S. discovery rules while limiting UOI to Indian discovery rules was unfair. The court directed that discovery should be reciprocal under either U.S. or Indian rules, depending on the Indian court’s decision.

On the night of December 2-3, 1984, a catastrophic gas leak occurred at a chemical plant in Bhopal, India, owned by Union Carbide India Limited (UCIL), a subsidiary of Union Carbide Corporation (UCC), a New York corporation.
The leak released methyl isocyanate (MIC), a highly toxic gas, into the surrounding area, resulting in thousands of deaths and injuries.
Estimates of deaths directly attributable to the leak range as high as 2,000, with over 200,000 people suffering various degrees of injury.
Following the disaster, numerous lawsuits were filed in the United States on behalf of the victims, seeking compensation from UCC.
Whether the U.S. District Court for the Southern District of New York was the appropriate forum to hear the case, given the international nature of the incident and the location of the evidence and witnesses.

The court ruled in favor of UCC’s motion to dismiss the case on the grounds of forum non conveniens,
Location of Evidence and Witnesses: The majority of the evidence and witnesses were located in India, making it more practical for the case to be heard there.
Indian Legal System: The court recognized that the Indian legal system was capable of handling the case and providing justice to the victims..
Conditions for Dismissal: The dismissal was conditional upon UCC submitting to the jurisdiction of Indian courts and waiving any statute of limitations defense that might have arisen since the filing of the lawsuits in the U.S.

WING ON COMPANY v. SYYAP 64 O.G. 8311 (1967)

In 1948, Wing On Company, a foreign partnership based in New York, contracted with Syyap Co., Inc. through its agent, Murray Kein, in New York.
They negotiated for the purchase of clothing material under a verbal agreement that Syyap would pay Wing On the value thereof after the sale of goods by Syyap, and that the profits would be divided between them.
Wing On shipped to Syyap clothing materials worth $22,246.04. Syyap was able to pay Wing On only $3,530.04, leaving a balance of $18,716. Syyap failed to settle the debt or account for and divide the profits.
The court rendered judgment in favor of Wing On and ordered the defendant to pay the balance and attorney's fees and to make an accounting of the profits realized.
Syyap contends that:

The court a quo had no jurisdiction to try the case because Wing On is not licensed to do business in the Philippines and therefore has no legal capacity to sue; and
The trial court should have declined jurisdiction pursuant to the principle of forum non conveniens.

NOLASCO, J.:

"We believe that the facts surrounding the present case do not warrant the application of any recognized rules of Private International Law. It is a well-established practice in the application of the principle of forum non conveniens that unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.
Furthermore, the consideration of inadequacy to enforce the judgment, which is one of the important factors in the application of said principle, would precisely constitute a problem for the plaintiff if the local courts decline to assume jurisdiction based on said principle, considering that the defendant is a resident of the Philippines.
It is true that the agreement in question, involving the purchase of clothing materials, was entered into in New York, U.S.A.

The goods, however, were delivered to and received and sold by the defendant in this jurisdiction.
Considering that, as above-stated, the Wing On Company of New York may sue in Philippine courts in connection with the transaction in question, and further considering that the present suit arising from said transaction is in the nature of a personal action, the case may be commenced and tried where the defendant resides or may be found, or where the plaintiff resides, at the election of the plaintiff. (Section 2b, Rule 4 of the Rules of Court). Consequently, venue in the instant case was not improperly laid and the court a quo did not err in taking cognizance of the case. (Marshall-Wells Co. vs. Henry W. Elser Co., supra; Kelsen's Principles of International Law, 52 Ed. pp. 254-256).

There is no existing catalogue of circumstances that will justify sustaining a plea of forum non conveniens, but in general, both public and private interests should be weighed."
The private interest of the litigants can be gauged by factors such as: ECCPP

The relative ease of access to sources of proof,
The availability of compulsory process for attendance of unwilling witnesses,
The cost of obtaining and attendance of willing witnesses,
The possibility of viewing the premises, if such is appropriate,
And all other practical problems that make the trial of a case easy, expeditious, and inexpensive.

On the other hand, some factors relevant to public interest include: ABA

The administrative difficulties encountered when courts are congested,
Jury duty as a burden imposed upon the community,
And the appropriateness of having the trial in a court that is familiar with the applicable state law, rather than getting another forum enmeshed in a complicated conflict-of-laws problem.

When the forum is the only state where jurisdiction can be obtained over the defendant and, in addition, some relation with the parties exists, or when the forum provides procedural remedies not available in another state, the forum court may not resist imposition upon its jurisdiction.

2. Assume Jurisdiction

A court may choose to assume jurisdiction over a conflicts problem and apply forum or foreign law.
However, since the basic law is the law of the forum, it should be applied whenever there is a good reason to do so.
The presence of any one of the following factors would justify the application of internal law:

A specific law of the forum decrees that internal law should apply;
The proper foreign law was not properly pleaded and proved; or
The case falls under any of the exceptions to the application of foreign law.

Forum law decrees application of internal law.

Our Civil Code specifies when our court has to apply forum law.
Examples of these are:

Article 16, which makes real and personal property subject to the law of the country where they are situated while intestate and testamentary succession is governed by lex nationale of the person whose succession is under consideration;
Article 829, which makes revocation done outside the Philippines valid according to the law of the place where the will was made or lex domicilii; and
Article 819, which prohibits Filipinos from making joint wills even if valid in the country where they were executed.

Foreign law was not properly pleaded and proved.

Forum law should be applied when there is failure to plead and prove the pertinent foreign law.

Our courts may not take judicial cognizance of any foreign law; hence, failure to plead and prove foreign law leads to the presumption that it is the same as forum law.

Rule 132, Sec. 25 and Rule 130, Sec. 45 of the Revised Rules of Court prescribe the rules of evidence for written and unwritten law.

FLEUMER v. HIX 54 Phil. 610 (1930)

Fleumer, the special administrator of the Estate of Edward R. Hix, appealed from the decision of the lower court denying probate of a document alleged to be the will of Hix. ‘
Fleumer alleged that the will was executed in West Virginia on November 3, 1925, by Hix, who was residing there, and therefore the laws of West Virginia should govern.
He submitted a copy of Section 3868 of Act 1882 as found in the West Virginia Code and certified by the Director of the National Library.
MALCOLM, J.:

"... The laws of a foreign jurisdiction do not prove themselves in our courts. The courts of the Philippine Islands are not authorized to take judicial notice of the laws of the various States of the American Union. Such laws must be proved as facts. (In re Estate of Johnson [1918], 39 Phil. 156)
Here, the requirements of the law were not met.

There was no showing that the book from which an extract was taken was printed or published under the authority of the State of West Virginia, as provided in Section 300 of the Code of Civil Procedure.
Nor was the extract from the law attested by the certificate of the officer having charge of the original, under the seal of the State of West Virginia, as provided in Section 301 of the Code of Civil Procedure. No evidence was introduced to show that the extract from the laws of West Virginia was in force at the time the alleged will was executed.

In addition, the due execution of the will was not established.

The only evidence on this point is to be found in the testimony of the petitioner.
Aside from this, there was nothing to indicate that the will was acknowledged by the testator in the presence of two competent witnesses, or that these witnesses subscribed to the will in the presence of the testator and of each other, as the law of West Virginia seems to require.
On the supposition that the witnesses to the will reside outside the Philippine Islands, it would then be the duty of the petitioner to prove execution by some other means (Code of Civil Procedure, Sec. 633)."

PHILIPPINE TRUST CO. v. BOHANAN 106 Phil. 997 (1960)

[In the order admitting to probate the will made by C.O. Bohanan, the CFI of Manila declared him to be a citizen of Nevada, U.S.A. The Philippine Trust Co., named as executor of the will, was ordered by the CFI of Manila in its order granting probate to "enter upon the execution and performance of its trust."
In a subsequent hearing of the proposed project of partition of the estate, Nevada law was not introduced. Magdalena Bohanan, widow, and her two children questioned the validity of the will, which gave to a grandson P90,819.67 of the P211,639, and one-half of all shares of stock in several mining companies. He gave the same number of shares and the same amount in cash to his brother and sister. Only P6,000 was left to each of his children.
LABRADOR, J.:

"The old Civil Code, which is applicable to this case because the testator died in 1944, expressly provides that successional rights to personal property are to be governed by the national law of the person whose succession is in question. Says the law on this point:

"Nevertheless, legal and testamentary successions, in respect to the order of succession as well as to the extent of the successional rights and the intrinsic validity of their provisions, shall be regulated by the national law of the person whose succession is in question, whatever may be the nature of the property and the country in which it is found." (par. 2, Art. 10, old Civil Code, which is the same as par. 2, Art. 16, new Civil Code)

In the proceedings for the probate of the will, it was found out and it was decided that the testator was a citizen of the State of Nevada because he had selected this as his domicile and his permanent residence. So the question at issue is whether the testamentary dispositions, especially those for the children, which are short of the legitime given them by the Civil Code of the Philippines, are valid. It is not disputed that the laws of Nevada allow a testator to dispose of all his properties by will... It does not appear that at the time of the hearing of the project of partition, the above-quoted provision was introduced in evidence, as it was the executor's duty to do. The law of Nevada, being a foreign law, can only be proved in our courts in the form and manner provided for by our Rules, which are as follows:

"Sec. 41. Proof of public or official record. - An official record or an entry therein, when admissible for any purpose, may be evidenced by an official publication thereof, or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody." *** (Rule 123)

We have, however, consulted the records of the case in the court below, and we have found that during the hearing on October 4, 1954, of the motion of Magdalena C. Bohanan for the withdrawal of P20,000 as her share, the foreign law, especially Section 9905, Compiled Nevada Laws, was introduced in evidence by appellants' (herein) counsel as Exhibit "2" (See pp. 77-79, Vol. II, and t.s.n. pp. 24-44, Records, Court of First Instance). Again, said law was presented by the counsel for the executor and admitted by the Court as Exhibit "B" during the hearing of the case on January 23, 1950, before Judge Rafael Amparo (see Records, Court of First Instance, Vol. 1).
In addition, the other appellants, children of the testator, do not dispute the above-quoted provision of the laws of the State of Nevada. Under all the above circumstances, we are constrained to hold that the pertinent law of Nevada, especially Section 9905 of the Compiled Nevada Laws of 1925, can be taken judicial notice of by us, without proof of such law having been offered at the hearing of the project of partition.
As in accordance with Article 10 of the old Civil Code, the validity of testamentary dispositions are to be governed by the national law of the testator, and as it has been decided and it is not disputed that the national law of the testator is that of the State of Nevada, which allows a testator to dispose of all his property according to his will, as in the case at bar, the order of the court approving the project of partition made in accordance with the testamentary provisions must be, as it is hereby affirmed, with costs against appellants."

Foreign law cannot be applied.

Forum law should be applied if the case falls under the exceptions to the application of the foreign law.
These exceptions are:

when the foreign law is contrary to an important public policy of the forum;
when the foreign law is penal in nature;
when the foreign law is procedural in nature;
when the foreign law is purely fiscal or administrative in nature;
when the application of the foreign law will work undeniable injustice to the citizens of the forum;
when the case involves real or personal property situated in the forum;
when the application of the foreign law might endanger the vital interest of the state;
when the foreign law is contrary to good morals.

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Private International Law: Jurisdiction