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Republic of the PhilippinesSUPREME COURTManilaTHIRD DIVISIONG.R. No. 149177 November 23, 2007KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD.,Petitioners,vs.MINORU KITAMURA,Respondent.D E C I S I O NNACHURA,J.:Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the April 18, 2001 Decision1of the Court of Appeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution2denying the motion for reconsideration thereof.On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd. (Nippon), a Japanese consultancy firm providing technical and management support in the infrastructure projects of foreign governments,3entered into an Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a Japanese national permanently residing in the Philippines.4The agreement provides that respondent was to extend professional services to Nippon for a year starting on April 1, 1999.5Nippon then assigned respondent to work as the project manager of the Southern Tagalog Access Road (STAR) Project in the Philippines, following the company's consultancy contract with the Philippine Government.6When the STAR Project was near completion, the Department of Public Works and Highways (DPWH) engaged the consultancy services of Nippon, on January 28, 2000, this time for the detailed engineering and construction supervision of the Bongabon-Baler Road Improvement (BBRI) Project.7Respondent was named as the project manager in the contract's Appendix 3.1.8On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general manager for its International Division, informed respondent that the company had no more intention of automatically renewing his ICA. His services would be engaged by the company only up to the substantial completion of the STAR Project on March 31, 2000, just in time for the ICA's expiry.9Threatened with impending unemployment, respondent, through his lawyer, requested a negotiation conference and demanded that he be assigned to the BBRI project. Nippon insisted that respondents contract was for a fixed term that had already expired, and refused to negotiate for the renewal of the ICA.10As he was not able to generate a positive response from the petitioners, respondent consequently initiated on June 1, 2000 Civil Case No. 00-0264 for specific performance and damages with the Regional Trial Court of Lipa City.11For their part, petitioners, contending that the ICA had been perfected in Japan and executed by and between Japanese nationals, moved to dismiss the complaint for lack of jurisdiction. They asserted that the claim for improper pre-termination of respondent's ICA could only be heard and ventilated in the proper courts of Japan following the principles oflex loci celebrationisandlex contractus.12In the meantime, on June 20, 2000, the DPWH approved Nippon's request for the replacement of Kitamura by a certain Y. Kotake as project manager of the BBRI Project.13On June 29, 2000, the RTC, invoking our ruling inInsular Government v. Frank14that matters connected with the performance of contracts are regulated by the law prevailing at the place of performance,15denied the motion to dismiss.16The trial court subsequently denied petitioners' motion for reconsideration,17prompting them to file with the appellate court, on August 14, 2000, theirfirstPetition forCertiorariunder Rule 65 [docketed as CA-G.R. SP No. 60205].18On August 23, 2000, the CA resolved to dismiss the petition on procedural groundsfor lack of statement of material dates and for insufficient verification and certification against forum shopping.19An Entry of Judgment was later issued by the appellate court on September 20, 2000.20Aggrieved by this development, petitioners filed with the CA, on September 19, 2000, still within the reglementary period, asecondPetition forCertiorariunder Rule 65 already stating therein the material dates and attaching thereto the proper verification and certification. This second petition, which substantially raised the same issues as those in the first, was docketed as CA-G.R. SP No.60827.21Ruling on the merits of the second petition, the appellate court rendered the assailed April 18, 2001 Decision22finding no grave abuse of discretion in the trial court's denial of the motion to dismiss. The CA ruled, among others, that the principle oflex loci celebrationiswas not applicable to the case, because nowhere in the pleadings was the validity of the written agreement put in issue. The CA thus declared that the trial court was correct in applying instead the principle oflex loci solutionis.23Petitioners' motion for reconsideration was subsequently denied by the CA in the assailed July 25, 2001 Resolution.24Remaining steadfast in their stance despite the series of denials, petitioners instituted the instant Petition for Review onCertiorari25imputing the following errors to the appellate court:A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE TRIAL COURT VALIDLY EXERCISED JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE THE FACT THAT THE CONTRACT SUBJECT MATTER OF THE PROCEEDINGSA QUOWAS ENTERED INTO BY AND BETWEEN TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN OVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THE PRINCIPLE OFLEX LOCI SOLUTIONISIN THE LIGHT OF RECENT DEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.26The pivotal question that this Court is called upon to resolve is whether the subject matter jurisdiction of Philippine courts in civil cases for specific performance and damages involving contracts executed outside the country by foreign nationals may be assailed on the principles oflex loci celebrationis,lex contractus, the "state of the most significant relationship rule," orforum non conveniens.However, before ruling on this issue, we must first dispose of the procedural matters raised by the respondent.Kitamura contends that the finality of the appellate court's decision in CA-G.R. SP No. 60205 has already barred the filing of the second petition docketed as CA-G.R. SP No. 60827 (fundamentally raising the same issues as those in the first one) and the instant petition for review thereof.We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account of the petition's defective certification of non-forum shopping, it was a dismissal without prejudice.27The same holds true in the CA's dismissal of the said case due to defects in the formal requirement of verification28and in the other requirement in Rule 46 of the Rules of Court on the statement of the material dates.29The dismissal being without prejudice, petitioners can re-file the petition, or file a second petition attaching thereto the appropriate verification and certificationas they, in fact didand stating therein the material dates, within the prescribed period30in Section 4, Rule 65 of the said Rules.31The dismissal of a case without prejudice signifies the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced. In other words, the termination of a case not on the merits does not bar another action involving the same parties, on the same subject matter and theory.32Necessarily, because the said dismissal is without prejudice and has nores judicataeffect, and even if petitioners still indicated in the verification and certification of the secondcertioraripetition that the first had already been dismissed on procedural grounds,33petitioners are no longer required by the Rules to indicate in their certification of non-forum shoppingin the instant petition for review of the second certiorari petition, the status of the aforesaid first petition before the CA. In any case, an omission in the certificate of non-forum shopping about any event that will not constitute res judicata and litis pendentia, as in the present case, is not a fatal defect. It will not warrant the dismissal and nullification of the entire proceedings, considering that the evils sought to be prevented by the said certificate are no longer present.34The Court also finds no merit in respondent's contention that petitioner Hasegawa is only authorized to verify and certify, on behalf of Nippon, thecertioraripetition filed with the CA and not the instant petition. True, the Authorization35dated September 4, 2000, which is attached to the secondcertioraripetition and which is also attached to the instant petition for review, is limited in scopeits wordings indicate that Hasegawa is given the authority to sign for and act on behalf of the company only in the petition filed with the appellate court, and that authority cannot extend to the instant petition for review.36In a plethora of cases, however, this Court has liberally applied the Rules or even suspended its application whenever a satisfactory explanation and a subsequent fulfillment of the requirements have been made.37Given that petitioners herein sufficiently explained their misgivings on this point and appended to their Reply38an updated Authorization39for Hasegawa to act on behalf of the company in the instant petition, the Court finds the same as sufficient compliance with the Rules.However, the Court cannot extend the same liberal treatment to the defect in the verification and certification. As respondent pointed out, and to which we agree, Hasegawa is truly not authorized to act on behalf of Nippon in this case. The aforesaid September 4, 2000 Authorization and even the subsequent August 17, 2001 Authorization were issued only by Nippon's president and chief executive officer, not by the company's board of directors. In not a few cases, we have ruled that corporate powers are exercised by the board of directors; thus, no person, not even its officers, can bind the corporation, in the absence of authority from the board.40Considering that Hasegawa verified and certified the petition only on his behalf and not on behalf of the other petitioner, the petition has to be denied pursuant toLoquias v. Office of the Ombudsman.41Substantial compliance will not suffice in a matter that demands strict observance of the Rules.42While technical rules of procedure are designed not to frustrate the ends of justice, nonetheless, they are intended to effect the proper and orderly disposition of cases and effectively prevent the clogging of court dockets.43Further, the Court has observed that petitioners incorrectly filed a Rule 65 petitionto question the trial court's denial of their motion to dismiss. It is a well-established rule that an order denying a motion to dismiss is interlocutory, and cannot be the subject of the extraordinary petition forcertiorariormandamus. The appropriate recourse is to file an answer and to interpose as defenses the objections raised in the motion, to proceed to trial, and, in case of an adverse decision, to elevate the entire case by appeal in due course.44While there are recognized exceptions to this rule,45petitioners' case does not fall among them.This brings us to the discussion of the substantive issue of the case.Asserting that the RTC of Lipa City is an inconvenient forum, petitioners question its jurisdiction to hear and resolve the civil case for specific performance and damages filed by the respondent. The ICA subject of the litigation was entered into and perfected in Tokyo, Japan, by Japanese nationals, and written wholly in the Japanese language. Thus, petitioners posit that local courts have no substantial relationship to the parties46following the [state of the] most significant relationship rule in Private International Law.47The Court notes that petitioners adopted an additional but different theory when they elevated the case to the appellate court. In the Motion to Dismiss48filed with the trial court, petitioners never contended that the RTC is an inconvenient forum. They merely argued that the applicable law which will determine the validity or invalidity of respondent's claim is that of Japan, following the principles oflex loci celebrationisandlex contractus.49While not abandoning this stance in their petition before the appellate court, petitioners oncertiorarisignificantly invoked the defense offorum non conveniens.50On petition for review before this Court, petitioners dropped their other arguments, maintained theforum non conveniensdefense, and introduced their new argument that the applicable principle is the [state of the] most significant relationship rule.51Be that as it may, this Court is not inclined to deny this petition merely on the basis of the change in theory, as explained inPhilippine Ports Authority v. City of Iloilo.52We only pointed out petitioners' inconstancy in their arguments to emphasize their incorrect assertion of conflict of laws principles.To elucidate, in the judicial resolution of conflicts problems, three consecutive phases are involved: jurisdiction, choice of law, and recognition and enforcement of judgments. Corresponding to these phases are the following questions: (1) Where can or should litigation be initiated? (2) Which law will the court apply? and (3) Where can the resulting judgment be enforced?53Analytically, jurisdiction and choice of law are two distinct concepts.54Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a substantive law which will determine the merits of the case is fair to both parties. The power to exercise jurisdiction does not automatically give a state constitutional authority to apply forum law. While jurisdiction and the choice of thelex foriwill often coincide, the "minimum contacts" for one do not always provide the necessary "significant contacts" for the other.55The question of whether the law of a state can be applied to a transaction is different from the question of whether the courts of that state have jurisdiction to enter a judgment.56In this case, only the first phase is at issuejurisdiction.1wphi1Jurisdiction, however, has various aspects. For a court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff or the petitioner, over the defendant or the respondent, over the subject matter, over the issues of the case and, in cases involving property, over theresor the thing which is the subject of the litigation.57In assailing the trial court's jurisdiction herein, petitioners are actually referring to subject matter jurisdiction.Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority which establishes and organizes the court. It is given only by law and in the manner prescribed by law.58It is further determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein.59To succeed in its motion for the dismissal of an action for lack of jurisdiction over the subject matter of the claim,60the movant must show that the court or tribunal cannot act on the matter submitted to it because no law grants it the power to adjudicate the claims.61In the instant case, petitioners, in their motion to dismiss, do not claim that the trial court is not properly vested by law with jurisdiction to hear the subject controversy for, indeed, Civil Case No. 00-0264 for specific performance and damages is one not capable of pecuniary estimation and is properly cognizable by the RTC of Lipa City.62What they rather raise as grounds to question subject matter jurisdiction are the principles oflex loci celebrationisandlex contractus,and the "state of the most significant relationship rule."The Court finds the invocation of these grounds unsound.Lex loci celebrationisrelates to the "law of the place of the ceremony"63or the law of the place where a contract is made.64The doctrine of lex contractus orlex loci contractusmeans the "law of the place where a contract is executed or to be performed."65It controls the nature, construction, and validity of the contract66and it may pertain to the law voluntarily agreed upon by the parties or the law intended by them either expressly or implicitly.67Under the "state of the most significant relationship rule," to ascertain what state law to apply to a dispute, the court should determine which state has the most substantial connection to the occurrence and the parties. In a case involving a contract, the court should consider where the contract was made, was negotiated, was to be performed, and the domicile, place of business, or place of incorporation of the parties.68This rule takes into account several contacts and evaluates them according to their relative importance with respect to the particular issue to be resolved.69Since these three principles in conflict of laws make reference to the law applicable to a dispute, they are rules proper for the second phase, the choice of law.70They determine which state's law is to be applied in resolving the substantive issues of a conflicts problem.71Necessarily, as the only issue in this case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet called for.Further, petitioners' premature invocation of choice-of-law rules is exposed by the fact that they have not yet pointed out any conflict between the laws of Japan and ours. Before determining which law should apply, first there should exist a conflict of laws situation requiring the application of the conflict of laws rules.72Also, when the law of a foreign country is invoked to provide the proper rules for the solution of a case, the existence of such law must be pleaded and proved.73It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or administrative agency, there are three alternatives open to the latter in disposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction over the case and apply the internal law of the forum; or (3) assume jurisdiction over the case and take into account or apply the law of some other State or States.74The courts power to hear cases and controversies is derived from the Constitution and the laws. While it may choose to recognize laws of foreign nations, the court is not limited by foreign sovereign law short of treaties or other formal agreements, even in matters regarding rights provided by foreign sovereigns.75Neither can the other ground raised,forum non conveniens,76be used to deprive the trial court of its jurisdiction herein. First, it is not a proper basis for a motion to dismiss because Section 1, Rule 16 of the Rules of Court does not include it as a ground.77Second, whether a suit should be entertained or dismissed on the basis of the said doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court.78In this case, the RTC decided to assume jurisdiction. Third, the propriety of dismissing a case based on this principle requires a factual determination; hence, this conflicts principle is more properly considered a matter of defense.79Accordingly, since the RTC is vested by law with the power to entertain and hear the civil case filed by respondent and the grounds raised by petitioners to assail that jurisdiction are inappropriate, the trial and appellate courts correctly denied the petitioners motion to dismiss.WHEREFORE, premises considered, the petition for review oncertiorariis DENIED.SO ORDERED.

Republic of the PhilippinesSUPREME COURTManilaFIRST DIVISIONG.R. No. 72494 August 11, 1989HONGKONG AND SHANGHAI BANKING CORPORATION,petitioner,vs.JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE COURT,respondents.Quiason, Makalintal, Barot & Torres for petitioner.Alejandro, Aranzaso & Associates for private respondents.

MEDIALDEA,J.:This is a petition for review oncertiorariof the decision of the Intermediate Appellate Court (now Court of Appeals) dated August 2, 1985, which reversed the order of the Regional Trial Court dated February 28,1985 denying the Motion to Dismiss filed by private respondents Jack Robert Sherman and Deodato Reloj.A complaint for collection of a sum of money (pp. 49-52,Rollo) was filed by petitioner Hongkong and Shanghai Banking Corporation (hereinafter referred to as petitioner BANK) against private respondents Jack Robert Sherman and Deodato Reloj, docketed as Civil Case No. Q-42850 before the Regional Trial Court of Quezon City, Branch 84.It appears that sometime in 1981, Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on amounts due under said overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and a certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee (p. 53,Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated overdraft facility.The Joint and Several Guarantee provides,inter alia, that:This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this guarantee. ... (p. 33-A,Rollo).The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation from private respondents, conformably with the provisions of the Joint and Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK filed the above-mentioned complaint.On December 14,1984, private respondents filed a motion to dismiss (pp 54-56,Rollo) which was opposed by petitioner BANK (pp. 58-62,Rollo). Acting on the motion, the trial court issued an order dated February 28, 1985 (pp, 64-65,Rollo), which read as follows:In a Motion to Dismiss filed on December 14, 1984, the defendants seek the dismissal of the complaint on two grounds, namely:1. That the court has no jurisdiction over the subject matter of the complaint; and2. That the court has no jurisdiction over the persons of the defendants.In the light of the Opposition thereto filed by plaintiff, the Court finds no merit in the motion. "On the first ground, defendants claim that by virtue of the provision in the Guarantee (the actionable document) which reads This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the courts in Singapore shall have jurisdiction over all disputes arising under this guarantee,the Court has no jurisdiction over the subject matter of the case. The Court finds and concludes otherwise. There is nothing in the Guarantee which says that the courts of Singapore shall have jurisdiction to the exclusion of the courts of other countries or nations. Also, it has long been established in law and jurisprudence that jurisdiction of courts is fixed by law; it cannot be conferred by the will, submission or consent of the parties.On the second ground, it is asserted that defendant Robert' , Sherman is not a citizen nor a resident of the Philippines. This argument holds no water. Jurisdiction over the persons of defendants is acquired by service of summons and copy of the complaint on them. There has been a valid service of summons on both defendants and in fact the same is admitted when said defendants filed a 'Motion for Extension of Time to File Responsive Pleading on December 5, 1984.WHEREFORE, the Motion to Dismiss is hereby DENIED.SO ORDERED.A motion for reconsideration of the said order was filed by private respondents which was, however, denied (p. 66,Rollo).Private respondents then filed before the respondent Intermediate Appellate Court (now Court of Appeals) a petition for prohibition with preliminary injunction and/or prayer for a restraining order (pp. 39-48,Rollo). On August 2, 1985, the respondent Court rendered a decision (p. 37,Rollo), the dispositive portion of which reads:WHEREFORE, the petition for prohibition with preliminary injuction is hereby GRANTED. The respondent Court is enjoined from taking further cognizance of the case and to dismiss the same for filing with the proper court of Singapore which is the proper forum. No costs.SO ORDERED.The motion for reconsideration was denied (p. 38,Rollo), hence, the present petition.The main issue is whether or not Philippine courts have jurisdiction over the suit.The controversy stems from the interpretation of a provision in the Joint and Several Guarantee, to wit:(14) This guarantee and all rights, obligations and liabilites arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee. ... (p. 53-A,Rollo)In rendering the decision in favor of private respondents, the Court of Appeals made, the following observations (pp. 35-36,Rollo):There are significant aspects of the case to which our attention is invited. The loan was obtained by Eastern Book Service PTE, Ltd., a company incorporated inSingapore. The loan was granted by theSingaporeBranch of Hongkong and Shanghai Banking Corporation. The Joint and Several Guarantee was also concluded inSingapore. The loan was in Singaporean dollars and the repayment thereof also in the same currency. The transaction, to say the least, took place in Singporean setting in which the law of that country is the measure by which that relationship of the parties will be governed.xxx xxx xxxContrary to the position taken by respondents, the guarantee agreement compliance that any litigation will be before the courts of Singapore and that the rights and obligations of the parties shall be construed and determined in accordance with the laws of the Republic of Singapore. A closer examination of paragraph 14 of the Guarantee Agreement upon which the motion to dismiss is based, employs in clear and unmistakeable (sic) terms the word 'shall' which under statutory construction is mandatory.Thus it was ruled that:... the word 'shall' is imperative, operating to impose a duty which may be enforced (Dizon vs. Encarnacion, 9 SCRA 714).lwph1.tThere is nothing more imperative and restrictive than what the agreement categorically commands that 'all rights, obligations, and liabilities arising hereundershallbe construed and determined under and may be enforced in accordance with thelaws of the Republic of Singapore.'While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that "[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee" be liberally construed. One basic principle underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in remquasi in remorin personam. To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice (J. Salonga, Private International Law, 1981, p. 46). Indeed, as pointed-out by petitioner BANK at the outset, the instant case presents a very odd situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with more reason as a defendant. However, in this case, private respondents are Philippine residents (a fact which was not disputed by them) who would rather face a complaint against them before a foreign court and in the process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve the case. Private respondents' stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a just obligation.The defense of private respondents that the complaint should have been filed in Singapore is based merely on technicality. They did not even claim, much less prove, that the filing of the action here will cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing that petitioner BANK filed the action here just to harass private respondents.In the case ofPolytrade Corporation vs. Blanco, G.R. No. L-27033, October 31, 1969, 30 SCRA 187, it was ruled:... An accurate reading, however, of the stipulation, 'The parties agree to sue and be sued in the Courts of Manila,' does not preclude the filing of suits in the residence of plaintiff or defendant. The plain meaning is that the parties merely consented to be sued in Manila. Qualifying or restrictive words which would indicate that Manila and Manila alone is the venue are totally absent therefrom. We cannot read into that clause that plaintiff and defendant bound themselves to file suits with respect to the last two transactions in question only or exclusively in Manila. For, that agreement did not change or transfer venue. It simply is permissive. The parties solely agreed to add the courts of Manila as tribunals to which they may resort. They did not waive their right to pursue remedy in the courts specifically mentioned in Section 2(b) of Rule 4.Renuntiatio non praesumitur.This ruling was reiterated in the case ofNeville Y. Lamis Ents., et al. v. Lagamon, etc., et al., G.R. No. 57250, October 30, 1981, 108 SCRA 740, where the stipulation was "[i]n case of litigation, jurisdiction shall be vested in the Court of Davao City." We held:Anent the claim that Davao City had been stipulated as the venue, suffice it to say that a stipulation as to venue does not preclude the filing of suits in the residence of plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of qualifying or restrictive words in the agreement which would indicate that the place named is the only venue agreed upon by the parties.Applying the foregoing to the case at bar, the parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things within its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter's authorities. This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State. A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them (J. Salonga, Private International Law, 1981, pp. 37-38).lwph1.tAs regards the issue on improper venue, petitioner BANK avers that the objection to improper venue has been waived. However, We agree with the ruling of the respondent Court that:While in the main, the motion to dismiss fails to categorically use with exactitude the words 'improper venue' it can be perceived from the general thrust and context of the motion that what is meant is improper venue, The use of the word 'jurisdiction' was merely an attempt to copy-cat the same word employed in the guarantee agreement but conveys the concept of venue. Brushing aside all technicalities, it would appear that jurisdiction was used loosely as to be synonymous with venue. It is in this spirit that this Court must view the motion to dismiss. ... (p. 35,Rollo).At any rate, this issue is now of no moment because We hold that venue here was properly laid for the same reasons discussed above.The respondent Court likewise ruled that (pp. 36-37,Rollo):... In a conflict problem, a court will simply refuse to entertain the case if it is not authorized by law to exercise jurisdiction. And even if it is so authorized, it may still refuse to entertain the case by applying the principle offorum non conveniens. ...However, whether a suit should be entertained or dismissed on the basis of the principle offorum non conveniensdepends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court (J. Salonga, Private International Law, 1981, p. 49).lwph1.tThus, the respondent Court should not have relied on such principle.Although the Joint and Several Guarantee prepared by petitioner BANK is a contract of adhesion and that consequently, it cannot be permitted to take a stand contrary to the stipulations of the contract, substantial bases exist for petitioner Bank's choice of forum, as discussed earlier.Lastly, private respondents allege that neither the petitioner based at Hongkong nor its Philippine branch is involved in the transaction sued upon. This is a vain attempt on their part to further thwart the proceedings below inasmuch as well-known is the rule that a defendant cannot plead any defense that has not been interposed in the court below.ACCORDINGLY, the decision of the respondent Court is hereby REVERSED and the decision of the Regional Trial Court is REINSTATED, with costs against private respondents. This decision is immediately executory.SO ORDERED.

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-26379December 27, 1969WILLIAM C. REAGAN, ETC.,petitioner,vs.COMMISSIONER OF INTERNAL REVENUE,respondent.Quasha, Asperilla, Blanco, Zafra and Tayag for petitioner.Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete, Solicitor Lolita O. Gal-lang and Special Attorney Gamaliel H. Mantolino for respondent.FERNANDO,J.:A question novel in character, the answer to which has far-reaching implications, is raised by petitioner William C. Reagan, at one time a civilian employee of an American corporation providing technical assistance to the United States Air Force in the Philippines. He would dispute the payment of the income tax assessed on him by respondent Commissioner of Internal Revenue on an amount realized by him on a sale of his automobile to a member of the United States Marine Corps, the transaction having taken place at the Clark Field Air Base at Pampanga. It is his contention, seriously and earnestly expressed, that in legal contemplation the sale was made outside Philippine territory and therefore beyond our jurisdictional power to tax.Such a plea, far-fetched and implausible, on its face betraying no kinship with reality, he would justify by invoking, mistakenly as will hereafter be more fully shown an observation to that effect in a 1951 opinion,1petitioner ignoring that such utterance was made purely as a flourish of rhetoric and by way of emphasizing the decision reached, that the trading firm as purchaser of army goods must respond for the sales taxes due from an importer, as the American armed forces being exempt could not be taxed as such under the National Internal Revenue Code.2Such an assumption, inspired by the commendable aim to render unavailing any attempt at tax evasion on the part of such vendee, found expression anew in a 1962 decision,3coupled with the reminder however, to render the truth unmistakable, that "the areas covered by the United States Military Bases are not foreign territories both in the political and geographical sense."As thus clarified, it is manifest that such a view amounts at most to a legal fiction and is moreoverobiter. It certainly cannot control the resolution of the specific question that confronts us. We declare our stand in an unequivocal manner. The sale having taken place on what indisputably is Philippine territory, petitioner's liability for the income tax due as a result thereof was unavoidable. As the Court of Tax Appeals reached a similar conclusion, we sustain its decision now before us on appeal.In the decision appealed from, the Court of Tax Appeals, after stating the nature of the case, started the recital of facts thus: "It appears that petitioner, a citizen of the United States and an employee of Bendix Radio, Division of Bendix Aviation Corporation, which provides technical assistance to the United States Air Force, was assigned at Clark Air Base, Philippines, on or about July 7, 1959 ... . Nine (9) months thereafter and before his tour of duty expired, petitioner imported on April 22, 1960 a tax-free 1960 Cadillac car with accessories valued at $6,443.83, including freight, insurance and other charges."4Then came the following: "On July 11, 1960, more than two (2) months after the 1960 Cadillac car was imported into the Philippines, petitioner requested the Base Commander, Clark Air Base, for a permit to sell the car, which was granted provided that the sale was made to a member of the United States Armed Forces or a citizen of the United States employed in the U.S. military bases in the Philippines. On the same date, July 11, 1960, petitioner sold his car for $6,600.00 to a certain Willie Johnson, Jr. (Private first class), United States Marine Corps, Sangley Point, Cavite, Philippines, as shown by a Bill of Sale . . . executed at Clark Air Base. On the same date, Pfc. Willie (William) Johnson, Jr. sold the car to Fred Meneses for P32,000.00 as evidenced by a deed of sale executed in Manila."5As a result of the transaction thus made, respondent Commissioner of Internal Revenue, after deducting the landed cost of the car as well as the personal exemption to which petitioner was entitled, fixed as his net taxable income arising from such transaction the amount of P17,912.34, rendering him liable for income tax in the sum of P2,979.00. After paying the sum, he sought a refund from respondent claiming that he was exempt, but pending action on his request for refund, he filed the case with the Court of Tax Appeals seeking recovery of the sum of P2,979.00 plus the legal rate of interest.As noted in the appealed decision: "The only issue submitted for our resolution is whether or not the said income tax of P2,979.00 was legally collected by respondent for petitioner."6After discussing the legal issues raised, primarily the contention that the Clark Air Base "in legal contemplation, is a base outside the Philippines" the sale therefore having taken place on "foreign soil", the Court of Tax Appeals found nothing objectionable in the assessment and thereafter the payment of P2,979.00 as income tax and denied the refund on the same. Hence, this appeal predicated on a legal theory we cannot accept. Petitioner cannot make out a case for reversal.1. Resort to fundamentals is unavoidable to place things in their proper perspective, petitioner apparently feeling justified in his refusal to defer to basic postulates of constitutional and international law, induced no doubt by the weight he would accord to the observation made by this Court in the two opinions earlier referred to. To repeat, scant comfort, if at all is to be derived from such anobiter dictum, one which is likewise far from reflecting the fact as it is.Nothing is better settled than that the Philippines being independent and sovereign, its authority may be exercised over its entire domain. There is no portion thereof that is beyond its power. Within its limits, its decrees are supreme, its commands paramount. Its laws govern therein, and everyone to whom it applies must submit to its terms. That is the extent of its jurisdiction, both territorial and personal. Necessarily, likewise, it has to be exclusive. If it were not thus, there is a diminution of its sovereignty.It is to be admitted that any state may, by its consent, express or implied, submit to a restriction of its sovereign rights. There may thus be a curtailment of what otherwise is a power plenary in character. That is the concept of sovereignty as auto-limitation, which, in the succinct language of Jellinek, "is the property of a state-force due to which it has the exclusive capacity of legal self-determination and self-restriction."7A state then, if it chooses to, may refrain from the exercise of what otherwise is illimitable competence.Its laws may as to some persons found within its territory no longer control. Nor does the matter end there. It is not precluded from allowing another power to participate in the exercise of jurisdictional right over certain portions of its territory. If it does so, it by no means follows that such areas become impressed with an alien character. They retain their status as native soil. They are still subject to its authority. Its jurisdiction may be diminished, but it does not disappear. So it is with the bases under lease to the American armed forces by virtue of the military bases agreement of 1947. They are not and cannot be foreign territory.Decisions coming from petitioner's native land, penned by jurists of repute, speak to that effect with impressive unanimity. We start with the citation from Chief Justice Marshall, announced in the leading case ofSchooner Exchange v. M'Faddon,8an 1812 decision: "The jurisdiction of the nation within its own territory is necessarily exclusive and absolute. It is susceptible of no limitation not imposed by itself. Any restriction upon it, deriving validity from an external source, would imply a diminution of its sovereignty to the extent of the restriction, and an investment of that sovereignty to the same extent in that power which could impose such restriction." After which came this paragraph: "All exceptions, therefore, to the full and complete power of a nation within its own territories, must be traced up to the consent of the nation itself. They can flow from no other legitimate source."Chief Justice Taney, in an 1857 decision,9affirmed the fundamental principle of everyone within the territorial domain of a state being subject to its commands: "For undoubtedly every person who is found within the limits of a government, whether the temporary purposes or as a resident, is bound by its laws." It is no exaggeration then for Justice Brewer to stress that the United States government "is one having jurisdiction over every foot of soil within its territory, and acting directly upon each [individual found therein]; . . ."10Not too long ago, there was a reiteration of such a view, this time from the pen of Justice Van Devanter. Thus: "It now is settled in the United States and recognized elsewhere that the territory subject to its jurisdiction includes the land areas under its dominion and control the ports, harbors, bays, and other in closed arms of the sea along its coast, and a marginal belt of the sea extending from the coast line outward a marine league, or 3 geographic miles."11He could cite moreover, in addition to many American decisions, such eminent treatise-writers as Kent, Moore, Hyde, Wilson, Westlake, Wheaton and Oppenheim.As a matter of fact, the eminent commentator Hyde in his three-volume work on International Law, as interpreted and applied by the United States, made clear that not even the embassy premises of a foreign power are to be considered outside the territorial domain of the host state. Thus: "The ground occupied by an embassy is not in fact the territory of the foreign State to which the premises belong through possession or ownership. The lawfulness or unlawfulness of acts there committed is determined by the territorial sovereign. If an attache commits an offense within the precincts of an embassy, his immunity from prosecution is not because he has not violated the local law, but rather for the reason that the individual is exempt from prosecution. If a person not so exempt, or whose immunity is waived, similarly commits a crime therein, the territorial sovereign, if it secures custody of the offender, may subject him to prosecution, even though its criminal code normally does not contemplate the punishment of one who commits an offense outside of the national domain. It is not believed, therefore, that an ambassador himself possesses the right to exercise jurisdiction, contrary to the will of the State of his sojourn, even within his embassy with respect to acts there committed. Nor is there apparent at the present time any tendency on the part of States to acquiesce in his exercise of it."122. In the light of the above, the first and crucial error imputed to the Court of Tax Appeals to the effect that it should have held that the Clark Air Force is foreign soil or territory for purposes of income tax legislation is clearly without support in law. As thus correctly viewed, petitioner's hope for the reversal of the decision completely fades away. There is nothing in the Military Bases Agreement that lends support to such an assertion. It has not become foreign soil or territory. This country's jurisdictional rights therein, certainly not excluding the power to tax, have been preserved. As to certain tax matters, an appropriate exemption was provided for.Petitioner could not have been unaware that to maintain the contrary would be to defy reality and would be an affront to the law. While his first assigned error is thus worded, he would seek to impart plausibility to his claim by the ostensible invocation of the exemption clause in the Agreement by virtue of which a "national of the United States serving in or employed in the Philippines in connection with the construction, maintenance, operation or defense of the bases and residing in the Philippines only by reason of such employment" is not to be taxed on his income unless "derived from Philippine source or sources other than the United States sources."13The reliance, to repeat, is more apparent than real for as noted at the outset of this opinion, petitioner places more faith not on the language of the provision on exemption but on a sentiment given expression in a 1951 opinion of this Court, which would be made to yield such an unwarranted interpretation at war with the controlling constitutional and international law principles. At any rate, even if such a contention were more adequately pressed and insisted upon, it is on its face devoid of merit as the source clearly was Philippine.InSaura Import and Export Co. v. Meer,14the case above referred to, this Court affirmed a decision rendered about seven months previously,15holding liable as an importer, within the contemplation of the National Internal Revenue Code provision, the trading firm that purchased army goods from a United States government agency in the Philippines. It is easily understandable why. If it were not thus, tax evasion would have been facilitated. The United States forces that brought in such equipment later disposed of as surplus, when no longer needed for military purposes, was beyond the reach of our tax statutes.Justice Tuason, who spoke for the Court, adhered to such a rationale, quoting extensively from the earlier opinion. He could have stopped there. He chose not to do so. The transaction having occurred in 1946, not so long after the liberation of the Philippines, he proceeded to discuss the role of the American military contingent in the Philippines as a belligerent occupant. In the course of such a dissertion, drawing on his well-known gift for rhetoric and cognizant that he was making anas ifstatement, he did say: "While in army bases or installations within the Philippines those goods were in contemplation of law on foreign soil."It is thus evident that the first, and thereafter the controlling, decision as to the liability for sales taxes as an importer by the purchaser, could have been reached without any need for such expression as that given utterance by Justice Tuason. Its value then as an authoritative doctrine cannot be as much as petitioner would mistakenly attach to it. It was clearlyobiternot being necessary for the resolution of the issue before this Court.16It was an opinion "uttered by the way."17It could not then be controlling on the question before us now, the liability of the petitioner for income tax which, as announced at the opening of this opinion, is squarely raised for the first time.18On this point, Chief Justice Marshall could again be listened to with profit. Thus: "It is a maxim, not to be disregarded, that general expressions, in every opinion, are to be taken in connection with the case in which those expressions are used. If they go beyond the case, they may be respected, but ought not to control the judgment in a subsequent suit when the very point is presented for decision."19Nor did the fact that such utterance of Justice Tuason was cited inCo Po v. Collector of Internal Revenue,20a 1962 decision relied upon by petitioner, put a different complexion on the matter. Again, it was by way of pure embellishment, there being no need to repeat it, to reach the conclusion that it was the purchaser of army goods, this time from military bases, that must respond for the advance sales taxes as importer. Again, the purpose that animated the reiteration of such a view was clearly to emphasize that through the employment of such a fiction, tax evasion is precluded. What is more, how far divorced from the truth was such statement was emphasized by Justice Barrera, who penned the Co Po opinion, thus: "It is true that the areas covered by the United States Military Bases are not foreign territories both in the political and geographical sense."21Justice Tuason moreover made explicit that rather than corresponding with reality, what was said by him was in the way of a legal fiction. Note his stress on "in contemplation of law." To lend further support to a conclusion already announced, being at that a confirmation of what had been arrived at in the earlier case, distinguished by its sound appreciation of the issue then before this Court and to preclude any tax evasion, an observation certainly not to be taken literally was thus given utterance.This is not to say that it should have been ignored altogether afterwards. It could be utilized again, as it undoubtedly was, especially so for the purpose intended, namely to stigmatize as without support in law any attempt on the part of a taxpayer to escape an obligation incumbent upon him. So it was quoted with that end in view in the Co Po case. It certainly does not justify any effort to render futile the collection of a tax legally due, as here. That was farthest from the thought of Justice Tuason.What is more, the statement on its face is, to repeat, a legal fiction. This is not to discount the uses of afictio jurisin the science of the law. It was Cardozo who pointed out its value as a device "to advance the ends of justice" although at times it could be "clumsy" and even "offensive".22Certainly, then, while far from objectionable as thus enunciated, this observation of Justice Tuason could be misused or misconstrued in a clumsy manner to reach an offensive result. To repeat, properly used, a legal fiction could be relied upon by the law, as Frankfurter noted, in the pursuit of legitimate ends.23Petitioner then would be well-advised to take to heart such counsel of care and circumspection before invoking not a legal fiction that would avoid a mockery of the law by avoiding tax evasion but what clearly is a misinterpretation thereof, leading to results that would have shocked its originator.The conclusion is thus irresistible that the crucial error assigned, the only one that calls for discussion to the effect that for income tax purposes the Clark Air Force Base is outside Philippine territory, is utterly without merit. So we have said earlier.3. To impute then to the statement of Justice Tuason the meaning that petitioner would fasten on it is, to paraphrase Frankfurter, to be guilty of succumbing to the vice of literalness. To so conclude is, whether by design or inadvertence, to misread it. It certainly is not susceptible of the mischievous consequences now sought to be fastened on it by petitioner.That it would be fraught with such peril to the enforcement of our tax statutes on the military bases under lease to the American armed forces could not have been within the contemplation of Justice Tuason. To so attribute such a bizarre consequence is to be guilty of a grave disservice to the memory of a great jurist. For his real and genuine sentiment on the matter in consonance with the imperative mandate of controlling constitutional and international law concepts was categorically set forth by him, not as anobiterbut as the rationale of the decision, inPeople v. Acierto24thus: "By the [Military Bases] Agreement, it should be noted, the Philippine Government merely consents that the United States exercise jurisdiction in certain cases. The consent was given purely as a matter of comity, courtesy, or expediency over the bases as part of the Philippine territory or divested itself completely of jurisdiction over offenses committed therein."Nor did he stop there. He did stress further the full extent of our territorial jurisdiction in words that do not admit of doubt. Thus: "This provision is not and can not on principle or authority be construed as a limitation upon the rights of the Philippine Government. If anything, it is an emphatic recognition and reaffirmation of Philippine sovereignty over the bases and of the truth that all jurisdictional rights granted to the United States and not exercised by the latter are reserved by the Philippines for itself."25It is in the same spirit that we approach the specific question confronting us in this litigation. We hold, as announced at the outset, that petitioner was liable for the income tax arising from a sale of his automobile in the Clark Field Air Base, which clearly is and cannot otherwise be other than, within our territorial jurisdiction to tax.4. With the mist thus lifted from the situation as it truly presents itself, there is nothing that stands in the way of an affirmance of the Court of Tax Appeals decision. No useful purpose would be served by discussing the other assigned errors, petitioner himself being fully aware that if the Clark Air Force Base is to be considered, as it ought to be and as it is, Philippine soil or territory, his claim for exemption from the income tax due was distinguished only by its futility.There is further satisfaction in finding ourselves unable to indulge petitioner in his plea for reversal. We thus manifest fealty to a pronouncement made time and time again that the law does not look with favor on tax exemptions and that he who would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted.26Petitioner had not done so. Petitioner cannot do so.WHEREFORE, the decision of the Court of Tax Appeals of May 12, 1966 denying the refund of P2,979.00 as the income tax paid by petitioner is affirmed. With costs against petitioner.

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. 46631 November 16, 1939IDONAH SLADE PERKINS,petitioner,vs.ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS, and BENGUET CONSOLIDATED MINING COMPANY,respondents.Alva J. Hill for petitioner.Ross, Lawrence, Selph & Carrascoso for respondent Judge and Benguet Consolidated Mining Company.DeWitt, Perkins & Ponce Enrile for respondent Perkins.MORAN,J.:On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of First Instance of Manila against the Benguet Consolidated Mining Company for dividends amounting to P71,379.90 on 52,874 shares of stock registered in his name, payment of which was being withheld by the company; and, for the recognition of his right to the control and disposal of said shares, to the exclusion of all others. To the complaint, the company filed its answer alleging, by way of defense, that the withholding of such dividends and the non-recognition of plaintiff's right to the disposal and control of the shares were due to certain demands made with respect to said shares by the petitioner herein, Idonah Slade Perkins, and by one George H. Engelhard. The answer prays that the adverse claimants be made parties to the action and served with notice thereof by publication, and that thereafter all such parties be required to interplead and settle the rights among themselves. On September 5, 1938, the trial court ordered respondent Eugene Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in addition to the relief prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade Perkins and George Engelhard be adjudged without interest in the shares of stock in question and excluded from any claim they assert thereon. Thereafter, summons by publication were served upon the non-resident defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the trial court. On December 9, 1938, Engelhard filed his answer to the amended complaint, and on December 10, 1938, petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled "objection to venue, motion to quash, and demurrer to jurisdiction" wherein she challenged the jurisdiction of the lower court over her person. Petitioner's objection, motion and demurrer having been overruled as well as her motion for reconsideration of the order of denial, she now brought the present petition forcertiorari, praying that the summons by publication issued against her be declared null and void, and that, with respect to her, respondent Judge be permanently prohibited from taking any action on the case.The controlling issue here involved is whether or not the Court of First Instance of Manila has acquired jurisdiction over the person of the present petitioner as a non-resident defendant, or, notwithstanding the want of such jurisdiction, whether or not said court may validly try the case. The parties have filed lengthy memorandums relying on numerous authorities, but the principles governing the question are well settled in this jurisdiction.Section 398 of our Code of Civil Procedure provides that when a non-resident defendant is sued in the Philippine courts and it appears, by the complaint or by affidavits, that the action relates to real or personal property within the Philippines in which said defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding such person from any interest therein, service of summons maybe made by publication.We have fully explained the meaning of this provision inEl Banco Espaol Filipino vs. Palanca, 37 Phil., 921, wherein we laid down the following rules:(1) In order that the court may validly try a case, it must have jurisdiction over the subject-matter and over the persons of the parties. Jurisdiction over the subject-matter is acquired by concession of the sovereign authority which organizes a court and determines the nature and extent of its powers in general and thus fixes its jurisdiction with reference to actions which it may entertain and the relief it may grant. Jurisdiction over the persons of the parties is acquired by their voluntary appearance in court and their submission to its authority, or by the coercive power of legal process exerted over their persons.(2) When the defendant is a non-resident and refuses to appear voluntary, the court cannot acquire jurisdiction over his person even if the summons be served by publication, for he is beyond the reach of judicial process. No tribunal established by one State can extend its process beyond its territory so as to subject to its decisions either persons or property located in another State. "There are many expressions in the American reports from which it might be inferred that the court acquires personal jurisdiction over the person of the defendant by publication and notice; but such is not the case. In truth, the proposition that jurisdiction over the person of a non-resident cannot be acquired by publication and notice was never clearly understood even in the American courts until after the decision had been rendered by the Supreme Court of the United States in the leading case ofPennoyer v. Neff(95 U.S., 714; 24 Law. ed., 565). In the light of that decisions which have subsequently been rendered in that and other courts, the proposition that jurisdiction over the person cannot be thus acquired by publication and notice is no longer open to question; and it is now fully established that a personal judgment upon constructive or substituted service against a non-resident who does not appear is wholly invalid. This doctrine applies to all kinds of constructive or substituted process, including service by publication and personal service outside of the jurisdiction in which the judgment is rendered; and the only exception seems to be found in the case where the non-resident defendant has expressly or impliedly consented to the mode of service. (Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292; see also L.R.A. 585; 35 L.R.A. [N.S.], 312.)(3) The general rule, therefore, is that a suit against a non-resident cannot be entertained by a Philippine court. Where, however, the action isin rem or quasi in remin connection with property located in the Philippines, the court acquires jurisdiction over theres, and its jurisdiction over the person of the non-resident is non-essential. In order that the court may exercise power over theres, it is not necessary that the court should take actual custody of the property, potential custody thereof being sufficient. There is potential custody when, from the nature of the action brought, the power of the court over the property is impliedly recognized by law. "An illustration of what we term potential jurisdiction over theres, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the property , assumes, at the instance of some person claiming to be owner, to exercise a jurisdictionin remover the property and to adjudicate the title in favor of the petitioner against all the world."(4) As before stated, in an actionin rem or quasi in remagainst a non-resident defendant, jurisdiction over his person is non-essential, and if the law requires in such case that the summons upon the defendant be served by publication, it is merely to satisfy the constitutional requirement of due process. If any be said, in this connection, that "may reported cases can be cited in which it is assumed that the question of the sufficiency of publication or notice in the case of this kind is a question affecting the jurisdiction of the court, and the court is sometimes said to acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly originally adopted by the court because of the analogy between service by publication and personal service of process upon the defendant; and, as has already been suggested, prior to the decision ofPennoyer v. Neff(supra), the difference between the legal effects of the two forms of service was obscure. It is accordingly not surprising that the modes of expression which had already been moulded into legal tradition before that case was decided have been brought down to the present day. But it is clear that the legal principle here involved is not affected by the peculiar languages in which the courts have expounded their ideas."lawphi1.netThe reason for the rule that Philippine courts cannot acquire jurisdiction over the person of a non-resident, as laid down by the Supreme Court of the United States inPennoyer v. Neff, supra, may be found in a recognized principle of public law to the effect that "no State can exercise direct jurisdiction and authority over persons or property without its territory. Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The several States are of equal dignity and authority, and the independence of one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal established by it can extend its process beyond that territory so as to subject either persons or property to its decisions. "Any exertion of authority of this sort beyond this limit," says Story, "is a mere nullity, and incapable of binding such persons or property in any other tribunals." Story, Confl. L., sec. 539." (Pennoyer v. Neff, 95 U.S., 714; 24 Law. ed., 565, 568-569.).When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case, upon the principle that a "State, through its tribunals, may subject property situated within its limits owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where the owners are domiciled. Every State owes protection to its citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold and appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control the disposition of the property. If the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate." (Pennoyer v. Neff,supra.)In the instant case, there can be no question that the action brought by Eugene Arthur Perkins in his amended complaint against the petitioner, Idonah Slade Perkins, seeks to exclude her from any interest in a property located in the Philippines. That property consists in certain shares of stocks of the Benguet Consolidated Mining Company, asociedad anonima, organized in the Philippines under the provisions of the Spanish Code of Commerce, with its principal office in the City of Manila and which conducts its mining activities therein. The situs of the shares is in the jurisdiction where the corporation is created, whether the certificated evidencing the ownership of those shares are within or without that jurisdiction. (Fletcher Cyclopedia Corporations, Permanent ed. Vol. 11, p. 95). Under these circumstances, we hold that the action thus brought isquasi in rem, for while the judgement that may be rendered therein is not strictly a judgmentin rem, "it fixes and settles the title to the property in controversy and to that extent partakes of the nature of the judgmentin rem." (50 C.J., p 503). As held by the Supreme Court of the United States inPennoyer v. Neff(supra);It is true that, in a strict sense, a proceedingin remis one taken directly against property, and has for its object the disposition of the property, without reference to the title of individual claimants; but , in a large and more general sense, the terms are applied to actions between parties, where the direct object is to reach and dispose of property owned by them, or of some interest therein.The action beingin quasi in rem, The Court of First Instance of Manila has jurisdiction over the person of the non-resident. In order to satisfy the constitutional requirement of due process, summons has been served upon her by publication. There is no question as to the adequacy of publication made nor as to the mailing of the order of publication to the petitioner's last known place of residence in the United States. But, of course, the action beingquasi in remand notice having be made by publication, the relief that may be granted by the Philippine court must be confined to theres, it having no jurisdiction to render a personal judgment against the non-resident. In the amended complaint filed by Eugene Arthur Perkins, no money judgment or other reliefin personamis prayed for against the petitioner. The only relief sought therein is that she be declared to be without any interest in the shares in controversy and that she be excluded from any claim thereto.Petitioner contends that the proceeding instituted against her is one of interpleading and is therefore an actionin personam. Section 120 of our Code of Civil Procedure provides that whenever conflicting claims are or may be made upon a person for or relating to personal property, or the performance of an obligation or any portion thereof, so that he may be made subject to several actions by different persons, such person may bring an action against the conflicting claimants, disclaiming personal interest in the controversy, and the court may order them to interplead with one another and litigate their several claims among themselves, there upon proceed to determine their several claims. Here, The Benguet Consolidated Mining Company, in its answer to the complaint filed by Eugene Arthur Perkins, averred that in connection with the shares of stock in question, conflicting claims were being made upon it by said plaintiff, Eugene Arthur Perkins, his wife Idonah Slade Perkins, and one named George H. Engelhard, and prayed that these last two be made parties to the action and served with summons by publication, so that the three claimants may litigate their conflicting claims and settle their rights among themselves. The court has not issued an order compelling the conflicting claimants to interplead with one another and litigate their several claims among themselves, but instead ordered the plaintiff to amend his complaint including the other two claimants as parties defendant. The plaintiff did so, praying that the new defendants thus joined be excluded fro any interest in the shares in question, and it is upon this amended complaint that the court ordered the service of the summons by publication. It is therefore, clear that the publication of the summons was ordered not in virtue of an interpleading, but upon the filing of the amended complaint wherein an actionquasi in remis alleged.Had not the complaint been amended, including the herein petitioner as an additional defendant, and had the court, upon the filing of the answer of the Benguet Consolidated Mining Company, issued an order under section 120 of the Code of Civil Procedure, calling the conflicting claimants into court and compelling them to interplead with one another, such order could not perhaps have validly been served by publication or otherwise, upon the non-resident Idonah Slade Perkins, for then the proceeding would be purely one of interpleading. Such proceeding is a personal action, for it merely seeks to call conflicting claimants into court so that they may interplead and litigate their several claims among themselves, and no specific relief is prayed for against them, as the interpleader have appeared in court, one of them pleads ownership of the personal property located in the Philippines and seeks to exclude a non-resident claimant from any interest therein, is a question which we do not decide not. Suffice it to say that here the service of the summons by publication was ordered by the lower court by virtue of an actionquasi in remagainst the non-resident defendant.Respondents contend that, as the petitioner in the lower court has pleaded over the subject-matter, she has submitted herself to its jurisdiction. We have noticed, however, that these pleas have been made not as independent grounds for relief, but merely as additional arguments in support of her contention that the lower court had no jurisdiction over the person. In other words, she claimed that the lower court had no jurisdiction over her person not only because she is a non-resident, but also because the court had no jurisdiction over the subject-matter of the action and that the issues therein involved have already been decided by the New York court and are being relitigated in the California court. Although this argument is obviously erroneous, as neither jurisdiction over the subject-matter norres adjudicatanorlis pendenshas anything to do with the question of jurisdiction over her person, we believe and so hold that the petitioner has not, by such erroneous argument, submitted herself to the jurisdiction of the court. Voluntary appearance cannot be implied from either a mistaken or superflous reasoning but from the nature of the relief prayed for.For all the foregoing, petition is hereby denied, with costs against petitioner.

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-825 July 20, 1948ROMAN MABANAG,plaintiff-appellant,vs.JOSEPH M. GALLEMORE,defendant-appellee.Santiago Catane for appellant.No appearance for appellee.TUASON,J.:This case, here on appeal from an order dismissal by the Court of First Instance of Occidental Misamis, raises the question of the court's jurisdiction. More specifically, the question is whether the action isin personamor onein rem. The trial court opined that it is the first and that it "has no authority nor jurisdiction to render judgment against the herein defendant, Joseph M. Gallemore for being a non-resident.The purpose of the action is to recover P735.18, an amount said to have been paid by the plaintiff to the defendant for two parcels of land whose sale was afterward annulled. The defendant is said to be residing in Los Angeles, California, U. S. A. He has no property in the Philippine except an alleged debt owing him by a resident of the municipality of Occidental Misamis. This debt, upon petition of the plaintiff, after the filing of the complaint and before the suit was dismissed, was attached to the extent of plaintiff's claim for the payment of which the action was brought. But the attachment was dissolved in the same order dismissing the case.It was Atty. Valeriano S. Kaamino who hasamicus curifiled the motion to dismiss and to set aside the attachment. There is no appearance before this Court to oppose the appeal.Section 2, Rule 5, of the Rules of Court provides:If any of the defendants does not reside and is not found in the Philippines, and the action effects the personal status of the plaintiff, or any property of the defendant located in the Philippines, the action may be commenced and tried in the province where the plaintiff resides or the property, or any portion thereof, is situated or found.The Philippine leading cases in which this Rule, or its counterpart in the former Code of Civil Procedure, section 377 and 395, were cited and applied, areBanco Espaol-Filipino vs. Palanca, 37 Phil. 921, andSlade Perkins vs. Dizon, 40 Off. Gaz., [3d Suppl.], No. 7, p. 216. The gist of this Court's ruling in these cases, in so far as it is relevant to the present issues, is given in I Moran's Comments on the Rules of Court, 2d Ed., 105:As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person, unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant, located in the Philippines, it may be validly tried by the Philippine courts, for then, they have jurisdiction over the res, i.e., the personal status of the plaintiff or the property of the defendant, and their jurisdiction over the person of the non-resident defendant is not essential. Venue in such cases may be laid in the province where the plaintiff whose personal status is in question resides, or where the property of the defendant or a part thereof involved in the litigation is located.Literally this Court said:Jurisdiction over the property which is the subject of litigation may result either from a seizure of the property under legal process, whereby it is brought into the actual custody of the law, or it may result from the institution of legal proceedings wherein, under special provisions of law, the power of the court over the property is recognized and made effective. In the latter case the property, though at all times within the potential power of the court, may never be taken into actual custody at all. An illustration of the jurisdiction acquired by actual seizure is found in attachment proceedings, where the property is seized at the beginning of the action, or some subsequent stage of its progress, and held to abide the final event of the litigation. An illustration of what we term potential jurisdiction over the res, is found in the proceeding to register the title of land under our system for the registration of land. Here the court, without taking actual physical control over the property assumes, at the instance of some person claiming to be owner, to exercise a jurisdictionin remover the property and to adjudicate the title in favor of the petitioner against all the world. (Banco Espaol-Filipino vs. Palanca,supra, 927-928.).In an ordinary attachment proceeding, if the defendant is not personally served, the preliminary seizure is to be considered necessary in order to confer jurisdiction upon the court. In this case the lien on the property is acquired by the seizure; and the purpose of the proceeding is to subject the property to that lien. If a lien already exists, whether created by mortgage, contract, or statute, the preliminary seizure is not necessary; and the court proceeds to enforce such lien in the manner provided by law precisely as though the property had been seized upon attachment. (Roller vs. Holly, 176 U.S., 398, 405; 44 Law. ed., 520.) It results that the mere circumstance that in an attachment the property may be seized at the inception of the proceedings, while in the foreclosure suit it is not taken into legal custody until the time comes for the sale, does not materially affect the fundamental principle involved in both cases, which is that the court is here exercising a jurisdiction over the property in a proceeding directed essentiallyin rem. (Id., 929-930.).When, however, the action relates to property located in the Philippines, the Philippine courts may validly try the case, upon the principles that a "State, through its tribunals, may subject property situated within its limit owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State were the owners are domiciled. Every State owes protection to its own citizens; and, when non-residents deal with them, it is a legitimate and just exercise of authority to hold any appropriate any property owned by such non-residents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over the property of the non-resident situated within its limits that its tribunals can inquire into the non-resident's obligations to its own citizens, and the inquiry can then be carried only to the extent necessary to control disposition of the property. If the non-resident has no property in the State, there is nothing upon which the tribunals can adjudicate. (Slade Perkins vs. Dizon, 40 Off. Gaz. [3d Supplement], No. 7, p. 216.).A fuller statement of the principle whereunder attachment or garnishment of property of a non-resident defendant confers jurisdiction on the court in an otherwise personal action, appears in two well known and authoritative works:The main action in an attachment or garnishment suit isin remuntil jurisdiction of the defendant is secured. Thereafter, it isin personamand alsoin rem, unless jurisdiction of the res is lost as by dissolution of the attachment. If jurisdiction of the defendant is acquired but jurisdiction of the res is lost, it is then purelyin personam. . . a proceeding against property without jurisdiction of the person of the defendant is in substance a proceedingin rem; and where there is jurisdiction of the defendant, but the proceedings against the property continues, that proceedings is none the less necessarilyin rem, although in form there is but a single proceeding. (4 Am. Jur., 556-557.)As the remedy is administered in some states, the theory of an attachment, whether it is by process against or to subject the property or effects of a resident or non-resident of the state, is that it partakes essentially of the nature and character of the proceedingin personamand not of a proceedingin rem. And if the defendant appears the action proceeds in accordance with the practice governing proceedingsin personam. But were the defendant fails to appear in the action, the proceeding is to be considered as one in the nature of a proceedingin rem. And where the court acts directly on the property, the title thereof being charged by the court without the intervention of the party, the proceeding unquestionably is onein remin the fullest meaning of the term.In attachment proceedings against a non-resident defendant where personal service on him is lacking, it is elementary that the court must obtain jurisdiction of the property of the defendant. If no steps have been taken to acquire jurisdiction of the defendant's person, and he has not appeared and answered or otherwise submitted himself to the jurisdiction of the court, the court is without jurisdiction to render judgment until there has been a lawful seizure of property owned by him within the jurisdiction of the court. (2 R. C. L., 800-804.).Tested by the foregoing decisions and authorities, the Court has acquired jurisdiction of the case at bar by virtue of the attachment of the defendant's credit. Those authorities and decisions, so plain and comprehensive as to make any discussion unnecessary, are in agreement that though no jurisdiction is obtained over the debtor's person, the case may proceed to judgment if there is property in the custody of the court that can be applied to its satisfaction.It is our judgment that the court below erred in dismissing the case and dissolving the attachment; and it is ordered that, upon petition of the plaintiff, it issue a new writ of attachment and then proceed to trial. The costs of this appeal will be charged to defendant and appellee.

Republic of the PhilippinesSUPREME COURTManilaEN BANCG.R. No. L-11390 March 26, 1918EL BANCO ESPAOL-FILIPINO,plaintiff-appellant,vs.VICENTE PALANCA, administrator of the estate of Engracio Palanca Tanquinyeng,defendant-appellant.Aitken and DeSelms for appellant.Hartigan and Welch for appellee.STREET,J.:This action was instituted upon March 31, 1908, by "El Banco Espanol-Filipino" to foreclose a mortgage upon various parcels of real property situated in the city of Manila. The mortgage in question is dated June 16, 1906, and was executed by the original defendant herein, Engracio Palanca Tanquinyeng y Limquingco, as security for a debt owing by him to the bank. Upon March 31, 1906, the debt amounted to P218,294.10 and was drawing interest at the rate of 8 per centum per annum, payable at the end of each quarter. It appears that the parties to this mortgage at that time estimated the value of the property in question at P292,558, which was about P75,000 in excess of the indebtedness. After the execution of this instrument by the mortgagor, he returned to China which appears to have been his native country; and he there died, upon January 29, 1810, without again returning to the Philippine Islands.As the defendant was a nonresident at the time of the institution of the present action, it was necessary for the plaintiff in the foreclosure proceeding to give notice to the defendant by publication pursuant to section 399 of the Code of Civil Procedure. An order for publication was accordingly obtained from the court, and publication was made in due form in a newspaper of the city of Manila. At the same time that the order of the court should deposit in the post office in a stamped envelope a copy of the summons and complaint directed to the defendant at his last place of residence, to wit, the city of Amoy, in the Empire of China. This order was made pursuant to the following provision contained in section 399 of the Code of Civil Procedure:In case of publication, where the residence of a nonresident or absent defendant is known, the judge must direct a copy of the summons and complaint to be forthwith deposited by the clerk in the post-office, postage prepaid, directed to the person to be served, at his place of residenceWhether the clerk complied with this order does not affirmatively appear. There is, however, among the papers pertaining to this case, an affidavit, dated April 4, 1908, signed by Bernardo Chan y Garcia, an employee of the attorneys of the bank, showing that upon that date he had deposited in the Manila post-office a registered letter, addressed to Engracio Palanca Tanquinyeng, at Manila, containing copies of the complaint, the plaintiff's affidavit, the summons, and the order of the court directing publication as aforesaid. It appears from the postmaster's receipt that Bernardo probably used an envelope obtained from the clerk's office, as the receipt purports to show that the letter emanated from the office.The cause proceeded in usual course in the Court of First Instance; and the defendant not having appeared, judgment was, upon July 2, 1908, taken against him by default. Upon July 3, 1908, a decision was rendered in favor of the plaintiff. In this decision it was recited that publication had been properly made in a periodical, but nothing was said about this notice having been given mail. The court, upon this occasion, found that the indebtedness of the defendant amounted to P249,355. 32, with interest from March 31, 1908. Accordingly it was ordered that the defendant should, on or before July 6, 1908, deliver said amount to the clerk of the court to be applied to the satisfaction of the judgment, and it was declared that in case of the failure of the defendant to satisfy the judgment within such period, the mortgage property located in the city of Manila should be exposed to public sale. The payment contemplated in said order was never made; and upon July 8, 1908, the court ordered the sale of the property. The sale took place upon July 30, 1908, and the property was bought in by the bank for the sum of P110,200. Upon August 7, 1908, this sale was confirmed by the court.About seven years after the confirmation of this sale, or to the precise, upon June 25, 1915, a motion was made in this cause by Vicente Palanca, as administrator of the estate of the original defendant, Engracio Palanca Tanquinyeng y Limquingco, wherein the applicant requested the court to set aside the order of default of July 2, 1908, and the judgment rendered upon July 3, 1908, and to vacate all the proceedings subsequent thereto. The basis of this application, as set forth in the motion itself, was that the order of default and the judgment rendered thereon were void because the court had never acquired jurisdiction over the defendant or over the subject of the action.At the hearing in the court below the application to vacate the judgment was denied, and from this action of the court Vicente Planca, as administrator of the estate of the original defendant, has appealed. No other feature of the case is here under consideration than such as related to the action of the court upon said motion.The case presents several questions of importance, which will be discussed in what appears to be the sequence of most convenient development. In the first part of this opinion we shall, for the purpose of argument, assume that the clerk of the Court of First Instance did not obey the order of the court in the matter of mailing the papers which he was directed to send to the defendant in Amoy; and in this connection we shall consider, first, whether the court acquired the necessary jurisdiction to enable it to proceed with the foreclosure of the mortgage and, secondly, whether those proceedings were conducted in such manner as to constitute due process of law.The word "jurisdiction," as applied to the faculty of exercising judicial power, is used in several different, though related, senses since it may have reference (1) to the authority of the court to entertain a particular kind of action or to admi