CASES FROM THE BOOK TO BE

DIGESTED
U.S. Supreme Court
Bank of Augusta v. Earle, 38 U.S. 13 Pet. 519 519 (1839)

Bank of Augusta v. Earle

38 U.S. (13 Pet.) 519

ERROR TO THE CIRCUIT COURT OF THE UNITED

STATES FOR THE SOUTHERN DISTRICT OF ALABAMA

Syllabus

An action was instituted in the Circuit Court of the United States for the District of
Alabama by the Bank of Augusta, Georgia, against the defendant, a citizen of Alabama,
on bills of exchange drawn at Mobile, Alabama, on New York, which had been protested
for nonpayment and returned to Mobile. The bill was made and endorsed for the
purpose of being discounted by the agent of the bank, who had funds in his hands
belonging to the plaintiffs for the purpose of purchasing bills of exchange, which funds
were derived from bills and notes discounted by the bank in Georgia. The bills were
discounted by the agent of the bank in Mobile for the benefit of the bank, with their
funds, to remit the said funds to the bank. The defendant defended the suit on the facts
that the bank of Augusta is a corporation incorporated by an act of the Legislature of
Georgia, and have power such as is usually conferred on banking institutions, such as
to purchase bills of exchange, &c. The circuit court held that the plaintiffs could not
recover on the bills of exchange, and that the purchase of the bills by the agent of the
plaintiffs were prohibited by the laws of Alabama, and gave judgment for the defendant.
In the case of Bank of the United States of Pennsylvania v. Primrose, the plaintiffs, a
corporation by virtue of a law of the State of Pennsylvania, authorized by its charter to
sue and be sued in the name of the corporation, and to deal in bills of exchange, and
composed of citizens of Pennsylvania and of states of the United States other than the
State of Alabama, the agent of the bank resident in Mobile, and in possession of funds
belonging to the bank and entrusted with them for the sole purpose of purchasing bills
of exchange, purchased a bill of exchange, and paid for the same in notes of the branch
of the Bank of Alabama at Mobile. The bill was protested for nonpayment, and a suit
was instituted in the circuit court against the payee, the endorser of the bill. The
question for the opinion of the circuit court was whether the purchase of the bill of
exchange by the Bank of the United States was a valid contract, under the laws of
Alabama. The circuit court decided that the contract was void and gave judgment for the
defendant. The case of New Orleans & Carrollton Railroad Company v. Earle was
similar to that of Bank of Augusta v. Earle. The Supreme Court reversed the judgment of
the circuit court in the three cases and held the contracts for the purchase of the bills
valid and that the plaintiffs acquired a legal title to the bills by the purchase.
In the case of Bank of the United States v. Deveaux, the Supreme Court decided that in
a question of jurisdiction, it might look to the character of the persons composing a
corporation, and if it appeared that they were citizens of another state and the fact was
set forth by proper averments, the corporation might sue in its corporate name in the
courts of the United States. But in that case the Court confined its decision in express
terms to a question of jurisdiction, to a right to sue, and evidently went even so far with
some hesitation. The propriety of that decision is fully assented to, and it has ever since
been recognized as authority in this Court. But the principle has never been extended
any farther than it was carried in that case, and has never been supposed to extend to
contracts made by a corporation, especially in another sovereignty.

The nature and character of a corporation created by statute, and the extent of the
powers which it may lawfully exercise, have upon several occasions been under
consideration in this Court. The cases of Head and Amory v. Providence Insurance
Company, 2 Cranch 167, and Dartmouth College v. Woodward, 4 Wheat. 636, cited.

Whenever a corporation makes a contract, it is the contract of the legal entity, of the
artificial being created by the charter, and not the contract of the individual members.
The only rights it can claim are the rights which are given to it in that character, and not
the rights which belong to its members as citizens of a state.

Page 38 U. S. 520

It may be safely assumed that a corporation can make no contracts and do no acts,
either within or without the state which creates it, except such as are authorized by its
charter, and those acts must also be done by such officers or agents and in such
manner as the charter authorizes. And if the law creating a corporation does not, by the
true construction of the words used in the charter, give it the right to exercise its powers
beyond the limits of the state, all contracts made by it in other states would be void.

It is very true that a corporation can have no legal existence out of the boundaries of the
sovereignty by which it is created. It exists only in contemplation of law and by force of
the law, and where that law ceases to operate and is no longer obligatory, the
corporation can have no existence. It must dwell in the place of its creation, and cannot
migrate to another sovereignty. But although it must live and have its being in that state
only, yet it does not by any means follow that its existence there will not be recognized
in other places, and its residence in one state creates no insuperable objection to its
power of contracting in another. It is indeed a mere artificial being, invisible and
intangible, yet it is a person for certain purposes in contemplation of law, and has been
recognized as such by the decisions of this Court. It is sufficient that its existence as an
artificial person in the state of its creation is acknowledged and recognized by the law of
the nation where the dealing takes place, and that it is permitted by the laws of that
place to exercise there the powers with which it is endowed.

Courts of justice have always expounded and executed contracts made in a foreign
country according to the laws of the place in which they were made, provided that law
was not repugnant to the laws or policy of their own country. The comity thus extended
to other nations is no impeachment of sovereignty. It is the voluntary act of the nation by
which it is offered, and is inadmissible when contrary to its policy, or prejudicial to its
interests. But it contributes so largely to promote justice between individuals and to
produce a friendly intercourse between the sovereignties to which they belong that
courts of justice have continually acted upon it as a part of the voluntary law of nations.

The court can perceive no sufficient reason for excluding from the protection of the law
the contracts of foreign corporations when they are not contrary to the known policy of
the state or injurious to its interests. It is nothing more than the admission of the
existence of an artificial person created by the law of another state and clothed with the
power of making certain contracts. It is but the usual comity of recognizing the law of
another state.

The states of the Union are sovereign states, and the history of the past and the events
which are daily occurring furnish the strongest evidence that they have adopted towards
each other the laws of comity in their fullest extent.

In the legislation of Congress, where the states and the people of the several states are
all represented, we shall find proof of the general understanding in the United States
that by the law of comity among the states, the corporations chartered by one were
permitted to make contracts in the others.

It is well settled that by the law of comity among nations, a corporation created by one
sovereignty is permitted to make contracts in another and to sue in its courts, and that
the same law of comity prevails among the several sovereignties of this Union. The
public and well known and long continued usages of trade, the general acquiescence of
the states, the particular legislation of some of them, as well as the legislation of
Congress, all concur in proving the truth of this proposition.

Franchises are special privileges conferred by government upon individuals, and which
do not belong to the citizens of the country generally of common right. It is essential to
the character of a franchise that it should be a grant from the sovereign authority, and in
this country no franchise can be held which is not derived from a law of the state.

The comity of suit brings with it the comity of contract, and where the one is expressly
adopted by the courts, the other must also be presumed, according to the usages of
nations, unless the contrary can be shown.

The State of Alabama has not merely acquiesced by silence, but her judicial tribunals
have declared the adoption of the law of international comity in the case of a suit.

The State of Alabama never intended by its Constitution to interfere with the right of
selling or purchasing bills of exchange.
When the policy of a state is manifest, the courts of the United States would be bound
to notice it as a part of its code of laws and to declare all contracts in the state
repugnant to it to be illegal and void.

Page 38 U. S. 521

These cases were brought from the Circuit Court of the Southern District of Alabama by
the plaintiffs in each case by writs of error. The cases of the Bank of Augusta v.
Earle and of the Bank of the United States v. Primrose were argued by counsel. The
case of New Orleans & Carrollton Railroad Company was submitted by Mr. Ogden on
the argument in the other causes.

In the case of Bank of Augusta v. Earle, the facts were the following:

The Bank of Augusta, incorporated by the Legislature of the State of Georgia, instituted
in the Circuit Court for the Southern District of Alabama in March, 1837, an action
against Joseph B. Earle, a citizen of the State of Alabama, on a bill of exchange, dated
at Mobile, November 3, 1836, drawn at sixty days sight by Fuller, Gardner & Co. on C.
B. Burland & Co. of New York in favor of Joseph B. Earle and by him endorsed, for six
thousand dollars. The bill was accepted by the drawees, but was afterwards protested
for nonpayment and was returned with protest to the plaintiffs.

The following facts were agreed upon by the counsel for the plaintiffs and the
defendant, and were submitted to the circuit court:

"The defendant defends this action upon the following facts that are admitted by the
plaintiffs; that plaintiffs are a corporation, incorporated by an act of the Legislature of the
State of Georgia, and have power usually conferred upon banking institutions, such as
to purchase bills of exchange, &c. That the bill sued on was made and endorsed for the
purpose of being discounted by Thomas McGran, the agent of said bank, who had
funds of the plaintiffs in his hands for the purpose of purchasing bills, which funds were
derived from bills and notes, discounted in Georgia by said plaintiffs and payable in
Mobile, and the said McGran, agent as aforesaid, did so discount and purchase the said
bill sued on, in the City of Mobile, state aforesaid, for the benefit of said bank, and with
their funds; and to remit said funds to the said plaintiffs."

"If the court shall say that the facts constitute a defense to this action, judgment will be
given for the defendant, otherwise for plaintiffs, for the amount of the bill, damages,
interest and costs, either party to have the right of appeal or writ of error to the Supreme
Court, upon the statement of facts, and the judgment thereon."

The circuit court gave judgment for the defendant.

The Bank of the United States, incorporated by the Legislature of the State of
Pennsylvania, as the holders of a bill of exchange protested for nonpayment, for five
thousand three hundred and fifty dollars, drawn by Charles Gascoine, at Mobile, on 14
January, 1837, at four months, on J. and C. Gascoine, of New York, in favor of W. D.
Primrose, and by him endorsed, instituted in October, 1837, an action against the
endorser of the bill, in the Circuit Court for

Page 38 U. S. 522

the Southern District of Alabama. The agreed facts of the case, which were submitted to
the circuit court, were as follow:

"The plaintiffs are a body corporate, existing under and by virtue of a law of the State of
Pennsylvania, authorized by its charter to sue and be sued by the name of the
President, Directors, and Company of the Bank of the United States, and to deal in bills
of exchange, and is composed of citizens of Pennsylvania and of states of the United
States other than the State of Alabama. The defendant is a citizen of the State of
Alabama. George Poe, Jr., was the agent of the plaintiffs, resident in Mobile and in the
possession of funds belonging to the plaintiffs, entrusted to him for the sold purpose of
purchasing bills of exchange. The said George Poe, Jr., as such agent, on 14 January,
A.D. 1837, purchased at Mobile the bill declared upon and paid for the same in notes of
the branch of the Bank of the State of Alabama at Mobile. The defendant is the payee of
the bill, and endorsed it to plaintiffs, the present holders. The bill was presented at
maturity to the acceptors, and duly protested for nonpayment, and due and legal notice
given to the defendant."

"The question for the opinion of the court on the foregoing statement of facts is whether
the purchase of the said bill of exchange by the plaintiffs, as aforesaid, was a valid
contract under the laws of Alabama. If the court be of opinion that the said contract was
valid and that the said plaintiffs, as holders of the said bill, acquired the legal title thereto
by the said purchase, then judgment to be rendered for the plaintiffs for the sum of
5,350 dollars, with interest at eight percent since 30 May, 1837, and ten percent
damages on it. But if the court be of opinion that the said purchase was prohibited by
the laws of Alabama, and the contract was therefore invalid and void, judgment to be
rendered for the defendant."

The circuit court gave judgment for the defendant.

The action of New Orleans & Carrollton Railroad Company, incorporated by an act of
the Legislature of Louisiana, was upon a bill of exchange drawn by Fuller, Gardner &
Co., of Mobile, in favor of Joseph B. Earle upon Fuller & Yost of New Orleans for five
thousand two hundred and ten dollars, protested for nonpayment. The action was
against the endorser of the bill, which had been purchased at Mobile by an agent of the
plaintiffs, who had funds in his hands belonging to the plaintiffs for the purpose of
purchasing bills exchange as a means of remittance to New Orleans.

Page 38 U. S. 584

MR. CHIEF JUSTICE TANEY delivered the opinion of the Court.

These three cases involve the same principles, and have been

Page 38 U. S. 585

brought before us by writs of error directed to the Circuit Court and Southern District of
Alabama. The two first have been fully argued by counsel, and the last submitted to the
Court upon the arguments offered in the other two. There are some shades of difference
in the facts as stated in the different records, but none that can affect the decision. We
proceed therefore to express our opinion on the first case argued, which was Bank of
Augusta v. Earle. The judgment in this case must decide the others.

The questions presented to the Court arise upon a case stated in the circuit court in the
following words:

"The defendant defends this action upon the following facts that are admitted by the
plaintiffs:"

"That plaintiffs are a corporation, incorporated by an act of the Legislature of the State
of Georgia, and have power usually conferred upon banking institutions, such as to
purchase bills of exchange, &c. That the bill sued on was made and endorsed for the
purpose of being discounted by Thomas McGran, the agent of said bank, who had
funds of the plaintiffs in his hands for the purpose of purchasing bills, which funds were
derived from bills and notes discounted in Georgia by said plaintiffs and payable in
Mobile, and the said McGran, agent as aforesaid, did so discount and purchase the said
bill sued on in the City of Mobile, state aforesaid, for the benefit of said bank and with
their funds, and to remit said funds to the said plaintiffs."

"If the court shall say that the facts constitute a defense to this action, judgment will be
given for the defendant, otherwise for plaintiffs, for the amount of the bill, damages,
interest, and cost, either party to have the right of appeal or writ of error to the Supreme
Court upon this statement of facts, and the judgment thereon."

Upon this statement of facts the court gave judgment for the defendant, being of opinion
that a bank incorporated by the laws of Georgia, with a power among other things to
purchase bills of exchange, could not lawfully exercise that power in the State of
Alabama, and that the contract for this bill was therefore void and did not bind the
parties to the payment of the money.

It will at once be seen that the questions brought here for decision are of a very grave
character, and they have received from the Court an attentive examination. A multitude
of corporations for various purposes have been chartered by the several states; a large
portion of certain branches of business has been transacted by incorporated companies
or through their agency, and contracts to a very great amount have undoubtedly been
made by different corporations out of the jurisdiction of the particular state by which they
were created. In deciding the case before us, we in effect determine whether these
numerous contracts are valid or not. And if, as has been argued at the bar, a
corporation, from its nature and character, if incapable of making such contracts, or if
they are inconsistent with the rights and sovereignty of the states in which they are
made, they cannot be enforced in the courts of justice.

Page 38 U. S. 586

Much of the argument has turned on the nature and extent of the powers which belong
to the artificial being called a corporation and the rules of law by which they are to be
measured. On the part of the plaintiff in error it has been contended that a corporation
composed of citizens of other states are entitled to the benefit of that provision in the
Constitution of the United States which declares that "The citizens of each state shall be
entitled to all privileges and immunities of citizens in the several states;" that the court
should look behind the act of incorporation and see who are the members of it, and if in
this case it should appear that the corporation of the Bank of Augusta consists
altogether of citizens of the State of Georgia, that such citizens are entitled to the
privileges and immunities of citizens in the State of Alabama, and as the citizens of
Alabama may unquestionably purchase bills of exchange in that state, it is insisted that
the members of this corporation are entitled to the same privilege, and cannot be
deprived of it even by express provisions in the Constitution or laws of the state. The
case of Bank of the United States v. Deveaux, 5 Cranch 61, is relied on to support this
position.

It is true that in the case referred to, this Court decided that in a question of jurisdiction
they might look to the character of the persons composing a corporation, and if it
appeared that they were citizens of another state and the fact was set forth by proper
averments, the corporation might sue in its corporate name in the courts of the United
States. But in this case the Court confined its decision in express terms to a question of
jurisdiction; to a right to sue; and evidently went even so far with some hesitation. We
fully assent to the propriety of that decision, and it has ever since been recognized as
authority in this Court. But the principle has never been extended any farther than it was
carried in that case, and has never been supposed to extent to contracts made by a
corporation, especially in another sovereignty. If it were held to embrace contracts, and
that the members of a corporation were to be regarded as individuals carrying on
business in their corporate name, and therefore entitled to the privileges of citizens in
matters of contract, it is very clear that they must at the same time take upon
themselves the liabilities of citizens and be bound by their contracts in like manner. The
result of this would be to make a corporation a mere partnership in business, in which
each stockholder would be liable to the whole extent of his property for the debts of the
corporation, and he might be sued for them in any state in which he might happen to be
found. The clause of the Constitution referred to certainly never intended to give to the
citizens of each state the privileges of citizens in the several states and at the same
time to exempt them from the liabilities which the exercise of such privileges would bring
upon individuals who were citizens of the state. This would be to give the citizens of
other states far higher and greater privileges than are enjoyed by the citizens of the
state itself. Besides, it would deprive every state of all control over the extent
Page 38 U. S. 587

of corporate franchises proper to be granted in the state, and corporations would be

chartered in one to carry on their operations in another. It is impossible upon any sound
principle to give such a construction to the article in question. Whenever a corporation
makes a contract, it is the contract of the legal entity -- of the artificial being created by
the charter -- and not the contract of the individual members. The only rights it can claim
are the rights which are given to it in that character, and not the rights which belong to
its members as citizens of a state, and we now proceed to inquire what rights the
plaintiffs in error, a corporation created by Georgia, could lawfully exercise in another
state, and whether the purchase of the bill of exchange on which this suit is brought was
a valid contract and obligatory on the parties.

The nature and character of a corporation created by a statute, and the extent of the
powers which it may lawfully exercise, have upon several occasions been under
consideration in this Court.

In the case of Head and Amory v. Providence Insurance Company, 2 Cranch 127, Chief
Justice Marshall, in delivering the opinion of the Court, said

"Without ascribing to this body, which in its corporate capacity is the mere creature of
the act to which it owes its existence, all the qualities and disabilities annexed by the
common law to ancient institutions of this sort, it may correctly be said to be precisely
what the incorporating act has made it; to derive all its powers from that act, and to be
capable of exerting its faculties only in the manner which that act authorizes."

"To this source of its being, then, we must recur to ascertain its powers and to determine
whether it can complete a contract by such communications as are in this record."

In the case of Dartmouth College v. Woodward, 4 Wheat. 636, the same principle was
again decided by the Court. "A corporation," said the Court,

"is an artificial being, invisible, intangible, and existing only in contemplation of law.
Being a mere creature of the law, it possesses only those properties which the charter
of its creation confers upon it either expressly, or as incidental to its very existence."

And in the case of Bank of the United States v. Dandridge, 12 Wheat. 64, where the
questions in relation to the powers of corporations and their mode of action were very
carefully considered, the Court said

"But whatever may be the implied powers of aggregate corporations by the common law
and the modes by which those powers are to be carried into operation, corporations
created by statute must depend both for their powers and the mode of exercising them
upon the true construction of the statute itself."
It cannot be necessary to add to these authorities. And it may be safely assumed that a
corporation can make no contracts and do no acts either within or without the state
which creates it except such as are authorized by its charter, and those acts must also
be done by such officers or agents and in such manner as the charter authorizes. And if
the law creating a corporation does not, by

Page 38 U. S. 588

the true construction of the words used in the charter, give it the right to exercise its
powers beyond the limits of the state, all contracts made by it in other states would be
void.

The charter of the Bank of Augusta authorizes it, in general terms, to deal in bills of
exchange, and consequently gives it the power to purchase foreign bills as well as
inland -- in other words, to purchase bills payable in another state. The power thus
given clothed the corporation with the right to make contracts out of the state insofar as
Georgia could confer it. For whenever it purchased a foreign bill and forwarded it to an
agent to present for acceptance, if it was honored by the drawee, the contract of
acceptance was necessarily made in another state, and the general power to purchase
bills without any restriction as to place, by its fair and natural import, authorized the
bank to make such purchases wherever it was found most convenient and profitable to
the institution, and also to employ suitable agents for that purpose. The purchase of the
bill in question was therefore the exercise of one of the powers which the bank
possessed under its charter, and was sanctioned by the law of Georgia creating the
corporation so far as that state could authorize a corporation to exercise its powers
beyond the limits of its own jurisdiction.

But it has been urged in the argument that notwithstanding the powers thus conferred
by the terms of the charter, a corporation, from the very nature of its being, can have no
authority to contract out of the limits of the state, that the laws of a state can have no
extraterritorial operation, and that as a corporation is the mere creature of a law of the
state, it can have no existence beyond the limits in which that law operates, and that it
must necessarily be incapable of making a contract in another place.

It is very true that a corporation can have no legal existence out of the boundaries of the
sovereignty by which it is created. It exists only in contemplation of law and by force of
the law, and where that law ceases to operate and is no longer obligatory, the
corporation can have no existence. It must dwell in the place of its creation, and cannot
migrate to another sovereignty. But although it must live and have its being in that state
only, yet it does not by any means follow that its existence there will not be recognized
in other places, and its residence in one state creates no insuperable objection to its
power of contracting in another. It is indeed a mere artificial being, invisible and
intangible; yet it is a person for certain purposes in contemplation of law, and has been
recognized as such by the decisions of this Court. It was so held in the case of United
States v. Amedy, 11 Wheat. 412, and in Beaston v. Farmer's Bank of Delaware, 12 Pet.
135. Now natural persons, through the intervention of agents, are continually making
contracts in countries in which they do not reside and where they are not personally
present when the contract is made, and nobody has ever doubted the validity of these
agreements. And what greater objection can there be to the capacity of an artificial
person

Page 38 U. S. 589

by its agents to make a contract within the scope of its limited powers in a sovereignty in
which it does not reside, provided such contracts are permitted to be made by them by
the laws of the place?

The corporation must no doubt show that the law of its creation gave it authority to
make such contracts through such agents. Yet as in the case of a natural person, it is
not necessary that it should actually exist in the sovereignty in which the contract is
made. It is sufficient that its existence as an artificial person in the state of its creation is
acknowledged and recognized by the law of the nation where the dealing takes place
and that it is permitted by the laws of that place to exercise there the powers with which
it is endowed.

Every power, however, of the description of which we are speaking which a corporation
exercises in another state depends for its validity upon the laws of the sovereignty in
which it is exercised, and a corporation can make no valid contract without their
sanction, express or implied. And this brings us to the question which has been so
elaborately discussed -- whether, by the comity of nations and between these states,
the corporations of one state are permitted to make contracts in another. It is needless
to enumerate here the instances in which, by the general practice of civilized countries,
the laws of the one will, by the comity of nations, be recognized and executed in another
where the right of individuals are concerned. The cases of contracts made in a foreign
country are familiar examples, and courts of justice have always expounded and
executed them according to the laws of the place in which they were made, provided
that law was not repugnant to the laws or policy of their own country. The comity thus
extended to other nations is no impeachment of sovereignty. It is the voluntary act of the
nation by which it is offered, and is inadmissible when contrary to its policy or prejudicial
to its interests. But it contributes so largely to promote justice between individuals and to
produce a friendly intercourse between the sovereignties to which they belong that
courts of justice have continually acted upon it, as a part of the voluntary law of nations.
It is truly said in Story's Conflict of Laws 37 that

"In the silence of any positive rule affirming or denying or restraining the operation of
foreign laws, courts of justice presume the tacit adoption of them by their own
government unless they are repugnant to its policy or prejudicial to its interests. It is not
the comity of the courts, but the comity of the nation which is administered, and
ascertained in the same way, and guided by the same reasoning by which all other
principles of municipal law are ascertained and guided."
Adopting as we do the principle here stated, we proceed to inquire whether, by the
comity of nations, foreign corporations are permitted to make contracts within their
jurisdiction, and we can perceive no sufficient reason for excluding them when they are
not contrary to the known policy of the state or injurious to its interests.

Page 38 U. S. 590

It is nothing more than the admission of the existence of an artificial person created by
the law of another state and clothed with the power of making certain contracts. It is but
the usual comity of recognizing the law of another state. In England, from which we
have received our general principles of jurisprudence, no doubt appears to have been
entertained of the right of a foreign corporation to sue in its courts since the case
of Henriquez v. Dutch West India Company, decided in 1729, 2 L.Raymond 1532. And it
is a matter of history which this Court is bound to notice that corporations created in this
country have been in the open practice for many years past of making contracts in
England of various kinds and to very large amounts, and we have never seen a doubt
suggested there of the validity of these contracts by any court or any jurist. It is
impossible to imagine that any court in the United States would refuse to execute a
contract by which an American corporation had borrowed money in England, yet if the
contracts of corporations made out of the state by which they were created are void,
even contracts of that description could not be enforced.

It has, however, been supposed that the rules of comity between foreign nations do not
apply to the states of this Union, that they extend to one another no other rights than
those which are given by the Constitution of the United States, and that the courts of the
general government are not at liberty to presume, in the absence of all legislation on the
subject, that a state has adopted the comity of nations towards the other states as a
part of its jurisprudence or that it acknowledges any rights but those which are secured
by the Constitution of the United States. The Court thinks otherwise. The intimate union
of these states as members of the same great political family, the deep and vital
interests which bind them so closely together, should lead us, in the absence of proof to
the contrary, to presume a greater degree of comity and friendship and kindness
towards one another than we should be authorized to presume between foreign nations.
And when (as without doubt must occasionally happen) the interest or policy of any
state requires it to restrict the rule, it has but to declare its will, and the legal
presumption is at once at an end. But until this is done, upon what grounds could this
Court refuse to administer the law of international comity between these states? They
are sovereign states, and the history of the past and the events which are daily
occurring furnish the strongest evidence that they have adopted towards each other the
laws of comity in their fullest extent. Money is frequently borrowed in one state by a
corporation created in another. The numerous banks established by different states are
in the constant habit of contracting and dealing with one another. Agencies for
corporations engaged in the business of insurance and of banking have been
established in other states and suffered to make contracts without any objection on the
part of the state authorities. These usages of commerce and trade have been so
general and public and have been practiced for so long a period of time and so
generally acquiesced

Page 38 U. S. 591

in by the states that the Court cannot overlook them when a question like the one before
us is under consideration. The silence of the state authorities while these events are
passing before them shows their assent to the ordinary laws of comity which permit a
corporation to make contracts in another state. But we are not left to infer it merely from
the general usages of trade and the silent acquiescence of the states. It appears from
the cases cited in the argument, which it is unnecessary to recapitulate in this opinion,
that it has been decided in many of the state courts -- we believe in all of them where
the question has arisen -- that a corporation of one state may sue in the courts of
another. If it may sue, why may it not make a contract? The right to sue is one of the
powers which it derives from its charter. If the courts of another country take notice of its
existence as a corporation so far as to allow it to maintain a suit and permit it to exercise
that power, why should not its existence be recognized for other purposes, and the
corporation permitted to exercise another power which is given to it by the same law
and the same sovereignty, where the last mentioned power does not come in conflict
with the interest or policy of the state? There is certainly nothing in the nature and
character of a corporation which could justly lead to such a distinction and which should
extent to it the comity of suit and refuse to it the comity of contract. If it is allowed to sue,
it would of course be permitted to compromise, if it thought proper, with its debtor; to
give him time; to accept something else in satisfaction; to give him a release; and to
employ an attorney for itself to conduct its suit. These are all matters of contract, and
yet are so intimately connected with the right to sue that the latter could not be
effectually exercised if the former were denied.

We turn in the next place to the legislation of the states.

So far as any of them have acted on this subject, it is evident that they have regarded
the comity of contract, as well as the comity of suit, to be a part of the law of the state
unless restricted by statute. Thus, a law was passed by the State of Pennsylvania,
March 10, 1810, which prohibited foreigners and foreign corporations from making
contracts of insurance against fire and other losses mentioned in the law. In New York
also a law was passed March 18, 1814, which prohibited foreigners and foreign
corporations from making in that state insurances against fire, and by another law
passed April 21, 1818, corporations chartered by other states are prohibited from
keeping any office of deposit for the purpose of discounting promissory notes or
carrying on any kind of business which incorporated banks are authorized by law to
carry on. The prohibition of certain specified contracts by corporations in these laws is
by necessary implication an admission that other contracts may be made by foreign
corporations in Pennsylvania and New York, and that no legislative permission is
necessary to give them validity. And the language of these prohibitory acts most

Page 38 U. S. 592
clearly indicates that the contracts forbidden by them might lawfully have been made
before these laws were passed.

Maryland has gone still farther in recognizing this right. By a law passed in 1834, that
state has prescribed the manner in which corporations not chartered by the state,
"which shall transact or shall have transacted business" in the state, may be sued in its
courts upon contracts made in the state. The law assumes in the clearest manner that
such contracts were valid, and provides a remedy by which to enforce them.

In the legislation of Congress also, where the states and the people of the several
states are all represented, we shall find proof of the general understanding in the United
States that by the law of comity among the states, the corporations chartered by one
were permitted to make contracts in the others. By the Act of Congress of June 23,
1836, 4 Story's Laws 2445, regulating the deposits of public money, the Secretary of the
Treasury was authorized to make arrangements with some bank or banks to establish
an agency in the states and territories where there was no bank or none that could be
employed as a public depository to receive and disburse the public money which might
be directed to be there deposited. Now if the proposition be true that a corporation
created by one state cannot make a valid contract in another, the contracts made
through this agency in behalf of the bank, out of the state where the bank itself was
chartered, would all be void both as respected the contracts with the government and
the individuals who dealt with it. How could such an agency, upon the principles now
contended for, have performed any of the duties for which it was established?

But it cannot be necessary to pursue the argument further. We think it is well settled that
by the law of comity among nations, a corporation created by one sovereignty is
permitted to make contracts in another and to sue in its courts, and that the same law of
comity prevails among the several sovereignties of this Union. The public and well
known and long continued usages of trade, the general acquiescence of the states, the
particular legislation of some of them, as well as the legislation of Congress all concur in
proving the truth of this proposition.

But we have already said that this comity is presumed from the silent acquiescence of
the state. Whenever a state sufficiently indicates that contracts which derive their
validity from its comity are repugnant to its policy or are considered as injurious to its
interests, the presumption in favor of its adoption can no longer be made. And it remains
to inquire whether there is anything in the Constitution or laws of Alabama from which
this Court would be justified in concluding that the purchase of the bill in question was
contrary to its policy.

The Constitution of Alabama contains the following provisions in relation to banks:

"One state bank may be established with such number of

Page 38 U. S. 593
branches as the general assembly may from time to time deem expedient, provided that
no branch bank shall be established nor bank charter renewed under the authority of
this state without the concurrence of two-thirds of both houses of the general assembly,
and provided also that not more than one bank or branch bank shall be established nor
bank charter renewed but in conformity to the following rules:"

"1. At least two-fifths of the capital stock shall be reserved for the state."

"2. A proportion of power, in the direction of the bank, shall be reserved to the state,
equal at least to its proportion of stock therein."

"3. The state and individual stockholders shall be liable respectively for the debts of the
bank, in proportion to their stock holden therein."

"4. The remedy for collecting debts shall be reciprocal, for and against the bank."

"5. No bank shall commence operations until half of the capital stock subscribed for be
actually paid in gold and silver, which amount shall in no case be less than one hundred
thousand dollars."

Now from these provisions in the Constitution it is evidently the policy of Alabama to
restrict the power of the legislature in relation to bank charters and to secure to the state
a large portion of the profits of banking in order to provide a public revenue, and also to
make safe the debts which should be contracted by the banks. The meaning, too, in
which that state used the word "bank" in her Constitution is sufficiently plain from its
subsequent legislation. All of the banks chartered by it are authorized to receive
deposits of money, to discount notes, to purchase bills of exchange, and to issue their
own notes payable on demand to bearer. These are the usual powers conferred on the
banking corporations in the different states of the Union, and when we are dealing with
the business of banking in Alabama, we must undoubtedly attach to it the meaning in
which it is used in the constitution and laws of the state. Upon so much of the policy of
Alabama, therefore, in relation to banks as is disclosed by its constitution, and upon the
meaning which that state attaches to the word bank, we can have no reasonable doubt.
But before this Court can undertake to say that the discount of the bill in question was
illegal, many other inquiries must be made and many other difficulties must be solved.
Was it the policy of Alabama to exclude all competition with its own banks by the
corporations of other states? Did the state intend by these provisions in its Constitution
and these charters to its banks to inhibit the circulation of the notes of other banks, the
discount of notes, the loan of money, and the purchase of bills of exchange? Or did it
design to go still further and forbid the banking corporations of other states from making
a contract of any kind within its territory? Did it mean to prohibit its own banks from
keeping mutual accounts with the banks of other states and from entering into any
contract with

Page 38 U. S. 594
them, express or implied? Or did she mean to give to her banks the power of
contracting within the limits of the state with foreign corporations, and deny it to
individual citizens? She may believe it to be the interest of her citizens to permit the
competition of other banks in the circulation of notes in the purchase and sale of bills of
exchange and in the loan of money. Or she may think it to be her interest to prevent the
circulation of the notes of other banks and to prohibit them from sending money there to
be employed in the purchase of exchange or making contracts of any other description.

The state has not made known its policy upon any of these points. And how can this
Court, with no other lights before it, undertake to mark out by a definite and distinct line
the policy which Alabama has adopted in relation to this complex and intricate question
of political economy? It is true that the state is the principal stockholder in her own
banks. She has created seven, and in five of them the state owns the whole stock, and
in the others two-fifths. This proves that the state is deeply interested in the successful
operation of her banks, and it may be her policy to shut out all interference with them. In
another view of the subject, however, she may believe it to be her policy to extend the
utmost liberality to the banks of other states in the expectation that it would produce a
corresponding comity in other states towards the banks in which she is so much
interested. In this respect it is a question chiefly of revenue and of fiscal policy. How can
this Court, with no other aid than the general principles asserted in her constitution, and
her investments in the stocks of her own banks, undertake to carry out the policy of the
state upon such a subject in all of its details and decide how far it extends and what
qualifications and limitations are imposed upon it? These questions must be determined
by the state itself, and not by the courts of the United States. Every sovereignty would
without doubt choose to designate its own line of policy, and would never consent to
leave it as a problem to be worked out by the courts of the United States from a few
general principles which might very naturally be misunderstood or misapplied by the
court. It would hardly be respectful to a state for this Court to forestall its decision and to
say, in advance of her legislation, what her interest or policy demands. Such a course
would savor more of legislation than of judicial interpretation.

If we proceed from the Constitution and bank charters to other acts of legislation by the
state, we find nothing that should lead us to a contrary conclusion. By an act of
assembly of the state passed January 12, 1827, it was declared unlawful for any
person, body corporate, company, or association to issue any note for circulation as a
bank note without the authority of law, and a fine was imposed upon anyone offending
against this statute. Now this act protected the privileges of her own banks in relation to
bank notes only, and contains no prohibition against the purchase of bills of exchange
or against any other business by foreign banks which

Page 38 U. S. 595

might interfere with her own banking corporations. And if we were to form our opinion of
the policy of Alabama from the provisions of this law, we should be bound to say that the
legislature deemed it to be the interest and policy of the state not to protect its own
banks from competition in the purchase of exchange or in anything but the issuing of
notes for circulation. But this law was repealed by a subsequent law, passed in 1833,
repealing all acts of assembly not comprised in a digest then prepared and adopted by
the legislature. The law of 1827 above mentioned was not contained in this digest, and
was consequently repealed. It has been said at the bar in the argument that it was
omitted from the digest by mistake, and was not intended to be repealed. But this Court
cannot act judicially upon such an assumption. We must take their laws and policy to be
such as we find them in their statutes. And the only inference that we can draw from
these two laws is that after having prohibited under a penalty any competition with their
banks by the issue of notes for circulation, they changed their policy and determined to
leave the whole business of banking open to the rivalry of others. The other laws of the
state therefore, in addition to the constitution and charters, certainly would not authorize
this Court to say that the purchase of bills by the corporations of another state was a
violation of its policy.

The decisions of its judicial tribunals lead to the same result. It is true that in the case
of State v. Stebbins, 1 Stewart 312, the court said that since the adoption of their
constitution, banking in that state was to be regarded as a franchise. And this case has
been much relied on by the defendant in error.

Now we are satisfied from a careful examination of the case that the word "franchise"
was not used and could not have been used by the court in the broad sense imputed to
it in the argument. For if banking includes the purchase of bills of exchange and all
banking is to be regarded as the exercise of a franchise, the decision of the court would
amount to this -- that no individual citizen of Alabama could purchase such a bill. For
franchises are special privileges conferred by government upon individuals and which
do not belong to the citizens of the country generally, of common right. It is essential to
the character of a franchise that it should be a grant from the sovereign authority, and in
this country no franchise can be held which is not derived from a law of the state.

But it cannot be supposed that the Constitution of Alabama intended to prohibit its
merchants and traders from purchasing or selling bills of exchange and to make it a
monopoly in the hands of their banks. And it is evident that the court of Alabama, in the
case of State v. Stebbins, did not mean to assert such a principle. In the passage relied
on they are speaking of a paper circulating currency, and asserting the right of the state
to regulate and to limit it.

The institutions of Alabama, like those of the other states, are founded upon the great
principles of the common law, and it is

Page 38 U. S. 596

very clear that at common law the right of banking in all of its ramifications belonged to
individual citizens, and might be exercised by them at their pleasure. And the
correctness of this principle is not questioned in the case of State v.
Stebbins.Undoubtedly the sovereign authority may regulate and restrain this right, but
the Constitution of Alabama purports to be nothing more than a restriction upon the
power of the legislature in relation to banking corporations, and does not appear to have
been intended as a restriction upon the rights of individuals. That part of the subject
appears to have been left, as is usually done, for the action of the legislature, to be
modified according to circumstances, and the prosecution against Stebbins was not
founded on the provisions contained in the constitution, but was under the law of 1827
above mentioned, prohibiting the issuing of bank notes. We are fully satisfied that the
state never intended by its constitution to interfere with the right of purchasing or selling
bills of exchange, and that the opinion of the court does not refer to transactions of that
description when it speaks of banking as a franchise.

The question then recurs does the policy of Alabama deny to the corporations of other
states the ordinary comity between nations, or does it permit such a corporation to
make those contracts which from their nature and subject matter, are consistent with its
policy, and are allowed to individuals? In making such contracts, a corporation no doubt
exercises its corporate franchise. But it must do this whenever it acts as a corporation,
for its existence is a franchise. Now it has been held in the court of Alabama itself, in 2
Stewart 147, that the corporation of another state may sue in its courts, and the decision
is put directly on the ground of national comity. The state therefore has not merely
acquiesced by silence, but her judicial tribunals have declared the adoption of the law of
international comity in the case of a suit. We have already shown that the comity of suit
brings with it the comity of contract, and where the one is expressly adopted by its
courts, the other must also be presumed according to the usages of nations unless the
contrary can be shown.

The cases cited from 7 Wend. 276 and from 2 Rand. 465 cannot influence the decision
in the case before us. The decisions of these two state courts were founded upon the
legislation of their respective states, which was sufficiently explicit to enable their judicial
tribunals to pronounce judgment on their line of policy. But because two states have
adopted a particular policy in relation to the banking corporations of other states, we
cannot infer that the same rule prevails in all of the other states.

Each state must decide for itself. And it will be remembered that it is not the State of
Alabama which appears here to complain of an infraction of its policy. Neither the state
nor any of its constituted authorities has interfered in this controversy. The objection is
taken by persons who were parties to those contracts and

Page 38 U. S. 597

who participated in the transactions which are now alleged to have been in violation of
the laws of the state.

It is but justice to all the parties concerned to suppose that these contracts were made
in good faith and that no suspicion was entertained by either of them that these
engagements could not be enforced. Money was paid on them by one party and
received by the other. And when we see men dealing with one another openly in this
manner, and making contracts to a large amount, we can hardly doubt as to what was
the generally received opinion in Alabama at that time in relation to the right of the
plaintiffs to make such contracts. Everything now urged as proof of her policy was
equally public and well known when these bills were negotiated. And when a court is
called on to declare contracts thus made to be void upon the ground that they conflict
with the policy of the state, the line of that policy should be very clear and distinct to
justify the court in sustaining the defense. Nothing can be more vague and indefinite
than that now insisted on as the policy of Alabama. It rests altogether on speculative
reasoning as to her supposed interests, and is not supported by any positive legislation.
There is no law of the state which attempts to define the rights of foreign corporations.

We, however, do not mean to say that there are not many subjects upon which the
policy of the several states is abundantly evident from the nature of their institutions and
the general scope of their legislation, and which do not need the aid of a positive and
special law to guide the decisions of the courts. When the policy of a state is thus
manifest, the courts of the United States would be bound to notice it as a part of its code
of laws and to declare all contracts in the state repugnant to it to be illegal and void. Nor
do we mean to say whether there may not be some rights under the Constitution of the
United States which a corporation might claim under peculiar circumstances in a state
other than that in which it was chartered. The reasoning as well as the judgment of the
Court is applied to the matter before us, and we think the contracts in question were
valid, and that the defense relied on by the defendants cannot be sustained.

The judgment of the circuit court in these cases must therefore be

Reversed with costs.

MR. JUSTICE BALDWIN delivered an opinion assenting to the judgment of the court on
principles which were stated at large in the opinion. This opinion was not delivered to
the reporter.

MR. JUSTICE McKINLEY delivered an opinion dissenting from the judgment of the
Court.

I dissent from so much of the opinion of the majority of the Court as decides that the law
of nations furnishes a rule by which validity can be given to the contracts in these cases
and from so much as

Page 38 U. S. 598

decides that the contracts which were the subjects of the suits were not against the
policy of the laws of Alabama.

This is the first time since the adoption of the Constitution of the United States that any
federal court has, directly or indirectly, imputed national power to any of the states of the
Union, and it is the first time that validity has been given to such contracts, which, it is
acknowledged, would otherwise have been void by the application of a principle of the
necessary law of nations. This principle has been adopted and administered by the
Court as part of the municipal law of the State of Alabama, although no such principle
has been adopted or admitted by that state. And whether the law of nations still prevails
among the states notwithstanding the Constitution of the United States, or the right and
authority to administer it in these cases are derived from that instrument, are questions
not distinctly decided by the majority of the Court. But whether attempted to be derived
from one source or the other, I deny the existence of it anywhere for any such purpose.

Because the municipal laws of nations cannot operate beyond their respective territorial
limits, and because one nation has no right to legislate for another, certain rules
founded in the law of nature and the immutable principles of justice have, for the
promotion of harmony and commercial intercourse, been adopted by the consent of
civilized nations. But no necessity exists for such a law among the several states. In
their character of states they are governed by written constitutions and municipal laws.
It has been admitted by the counsel and decided by the majority of the Court that
without the authority of the statutes of the states chartering these banks, they would
have no power whatever to purchase a bill of exchange, even in the state where they
are established. If it requires the exertion of the legislative power of Pennsylvania, for
instance, to enable the United States Bank to purchase a bill of exchange in that state,
why should it not require the same legislative authority to enable it to do the same act in
Alabama? It has been contended in argument that the power granted to the bank to
purchase a bill of exchange at Philadelphia, in Pennsylvania, payable at Mobile, in
Alabama, would be nugatory unless the power existed also to make contracts at both
ends of the line of exchange. The authority to deal in exchange may very well be
exercised by having command of one end of the line of exchange only. To buy and sell
the same bill at the bank is dealing in exchange, and may be exercised with profit to the
bank, but not perhaps as conveniently as if it could make contracts in Alabama as well
as at the bank.

But if it has obtained authority to command but one end of the line of exchange, it
certainly has no right to complain that it cannot control the other when that other is
within the jurisdiction of another state whose authority or consent it has not even asked
for. The bill of exchange which is the subject of controversy between the Bank of
Augusta and Earle and that which is the subject of controversy between the United
States Bank and Primrose

Page 38 U. S. 599

were both drawn at Mobile and made payable at New York. Neither of the banks had
authority from any state to make a contract at either end of the line of exchange here
established. Here, then, they claim and have exercised all the rights and privileges of
natural persons, independent of their charters, and claim the right, by the comity of
nations, to make original contracts everywhere because they have a right, by their
charters, to make like contracts in the states where they were created, and have "a local
habitation and a name."
It is difficult to conceive of the exercise of national comity by a state having no national
power. Whatever national power the old thirteen states possessed previous to the
adoption of the Constitution of the United States they conferred by that instrument upon
the federal government. And to remove all doubt upon the question whether the power
thus conferred was exclusive or concurrent, the states are by the tenth section of the
First Article of the Constitution expressly prohibited from entering into any treaty,
alliance, or confederation, and without the consent of Congress from entering into any
agreement or compact with another state or with a foreign power. By these provisions,
the states have, by their own voluntary act and for wise purposes, deprived themselves
of all national power and of all the means of international communication, and cannot
even enter into an agreement or compact with a sister state for any purpose whatever
without the consent of Congress. The comity of nations is defined by Judge Story in his
Conflict of Laws to be the obligations of the laws of one nation in the territories of
another, derived altogether from the voluntary consent of the latter. And in the absence
of any positive rule affirming or denying or restraining the operation of foreign laws,
courts of justice presume the tacit adoption of them by their own government unless
they are repugnant to its policy or prejudicial to its interests. Conflict of Laws 37.

Now I ask again what is the necessity for such a rule of law as this? Have not the states
full power to adopt or reject what laws of their sister states they please? And why should
the courts interfere in this case when the states have full power to legislate for
themselves and to adopt or reject such laws of their sister states as they think proper? If
Alabama had adopted these laws, no difficulty could have arisen in deciding between
these parties. This Court would not then have been under the necessity of resorting to a
doubtful presumption for a rule to guide its decision. But when the Court has determined
that they have the power to presume that Alabama has adopted the laws of the states
chartering these banks, other difficult questions arise. How much of the charter of each
bank has been adopted? This is a question of legislative discretion which, if submitted
to the legislature of the state, would be decided upon reasons of policy and public
convenience. And the question of power to pass such a law under the Constitution of
Alabama would have to be considered and decided. These are

Page 38 U. S. 600

very inconvenient questions for a judicial tribunal to determine. As the majority of the
Court has not expressly stated whether Alabama has adopted the whole charters of the
banks or what parts they have adopted, there is now no certainty what the law of
Alabama is on the subject of these charters.

But these are not all the difficulties that arise in the exercise of this power by the
judiciary. Many questions very naturally present themselves in the investigation of this
subject, and the first is to what government does this power belong? Secondly, has it
been conferred upon the United States, or has it been reserved to the states by the
Tenth Amendment of the Constitution? If it be determined that the power belongs to the
United States, in what provision of the Constitution is it to be found? And how is it to be
exercised? By the judiciary, or by Congress? The counsel for the banks contended that
the power of Congress to regulate commerce among the several states deprives
Alabama of the power to pass any law restraining the sale and purchase of a bill of
exchange, and by consequence the whole power belongs to Congress. The Court, by
the opinion of the majority, does not recognize this doctrine in terms. But if the power
which the Court exercised is not derived from that provision of the Constitution, in my
opinion it does not exist.

If ever Congress shall exercise this power to the broad extent contended for, the power
of the states over commerce and contracts relating to commerce will be reduced to very
narrow limits. The creation of banks, the making and endorsing of bills of exchange and
promissory notes, and the damages on bills of exchange all relate more or less to the
commerce among the several states. Whether the exercise of these powers amounts to
regulating the commerce among the several states is not a question for my
determination on this occasion. The majority of the Court has decided that the comity of
nations gives validity to these contracts.

And what are the reasons upon which this doctrine is now established? Why, the
counsel for the banks say we are obliged to concede that these banks had no authority
to make these contracts in the State of Alabama in virtue of the laws of the states
creating them or by the laws of Alabama. Therefore, unless this Court will extend to
them the benefit of the comity of nations, they must lose all the money now in
controversy, they will be deprived hereafter of the benefit of a very profitable branch of
their business as bankers, and great public inconvenience will result to the commerce of
the country. And besides all this, there are many corporations in the north which were
created for the purpose of carrying on various branches of manufactures, and
particularly that of cotton. Those engaged in the manufacture of cotton will be unable to
send their agents to the south to sell their manufactured articles and to purchase cotton
to carry on their business, and may lose debts already created. This is the whole
amount of the argument upon which the benefit of this doctrine is claimed. Because
banks cannot make money in places and by means not authorized by their charters,

Page 38 U. S. 601

because they may lose by contracts made in unauthorized places, because the
commerce of the country may be subjected to temporary inconvenience, and because
corporations in the north, created for manufacturing purposes only, cannot, by the
authority of their charters, engage in commerce also, this doctrine, which has not
heretofore found a place in our civil code, is to be established. Notwithstanding it is
conceded that the states hold ample legislative power over the same subject, it is
deemed necessary on this occasion, to settle this doctrine by the supreme tribunal. The
majority of the Court having in its opinion conceded that Alabama might make laws to
prohibit foreign banks to make contracts, thereby admitted by implication that she could
make laws to permit such contracts, I think it would have been proper to have left the
power there, to be exercised or not as Alabama in her sovereign discretion, might judge
best for her interest or her comity. The majority of the Court thought and decided
otherwise. And here arises the radical and essential difference between them and me.
They maintain a power in the federal government, and in the judicial department of it, to
do that which in my judgment belongs exclusively to the state governments, and to be
exercised by the legislative and not the judicial departments thereof. A difference so
radical and important growing out of the fundamental law of the land has imposed on
me the unpleasant necessity of maintaining, single-handed, my opinion against the
opinion of all the other members of the Court. However unequal the conflict, duty impels
me to maintain it firmly, and although I stand alone here, I have the good fortune to be
sustained to the whole extent of my opinion by the very able opinion of the Court of
Appeals of Virginia in the case of Marietta Bank v. Pendell, 2 Ran. 465. If Congress has
the power to pass laws on this subject, it is an exclusive power, and the states would
then have no power to prohibit contracts of any kind within their jurisdictions. If the
government of the United States has power to restrain the states under the power to
regulate commerce, whether it be exerted by the legislative or the judicial department of
the government is not material; it being the paramount law, it paralyzes all state power
on the same subject. And this brings me to the consideration of the second ground on
which I dissent.

It was contended by the counsel for the banks that all the restraints imposed by the
Constitution of Alabama in relation to banking were designed to operate upon the
legislature of the state, and not upon the citizens of that or any other state. To
comprehend the whole scope and intention of that instrument, it will be necessary to
ascertain from the language used what was within the contemplation and design of the
convention. The provision in the Constitution on the subject of banking is this:

"One state bank may be established, with such number of branches as the general
assembly may from time to time deem expedient, provided that no branch bank shall be
established nor bank charter renewed under

Page 38 U. S. 602

the authority of this state without the concurrence of two-thirds of both houses of the
general assembly, and provided also that not more than one bank nor branch bank shall
be established nor bank charter renewed at anyone session of the general assembly,
nor shall any bank or branch bank be established or bank charter renewed but in
conformity with the following rules: "

"1. At least two-fifths of the capital stock shall be reserved for the state."

"2. A proportion of power in the direction of the bank shall be reserved to the state equal
at least to its proportion of stock therein."

"3. The state and the individual stockholders shall be liable, respectively, for the debts of
the bank in proportion to their stock holden therein."

"4. The remedy for collecting debts shall be reciprocal for and against the bank."
"5. No bank shall commence operations until half of the capital stock subscribed for
shall be actually paid in gold or silver, which amount shall in no case be less than one
hundred thousand dollars."

There are a few other unimportant rules laid down, but they are not material to the
present inquiry. The inquiry naturally suggests itself to the mind why did Alabama
introduce into her constitution these very unusual and specific rules? If they had not
been deemed of great importance, they would not have been found there. Can anyone
say, therefore, that this regularly organized system, to which all banks within the State
of Alabama were to conform, did not establish for the state, her legislature, or other
authorities a clear and unequivocal policy on the subject of banking? It has been
conceded in the argument and by the opinion of the majority of the Court that these
constitutional provisions do restrict and limit the power of the legislature of the state.
Then the legislature cannot establish a bank in Alabama, but in conformity with the rules
here laid down. They have established seven banks, five of them belonging exclusively
to the state, and two-fifths of the stock of the other two, with a proportionate power in
the direction, reserved to the state. Each of these banks is authorized to deal in
exchange.

It is proper to stop here and inquire whether the subject of exchange is proper to enter
into the policy of the legislation of a state, and whether it is a part of the customary and
legitimate business of banking. All the authorities on the subject show that in modern
times it is a part of the business of banking. See Postlethwaite's Commercial Dictionary,
title Bank; Tomlin's Law Dictionary, title Bank; Rees' Cyclopaedia, title Bank; Vatt. 105.
This last author quoted, after showing that it is the duty of the sovereign of a nation to
furnish for his subjects a sufficiency of money for the purposes of commerce, to
preserve it from adulteration, and to punish those who counterfeit it, proceeds to say,

"There is another custom more modern and of no less use to commerce than the
establishment of money -- namely, exchange, or the business of the bankers, by means
of whom a merchant remits immense sums from

Page 38 U. S. 603

one end of the world to the other with very little expense, and if he pleases, without
danger. For the same reasons that sovereigns are obliged to protect commerce, they
are obliged to protect this custom by good laws in which every merchant foreigner or
citizen may find security."

From these authorities it appears that exchange is a part of modern banking, or at least
to intimately connected with it that all modern banks have authority to deal in it. And it
also appears that it is as much the duty of a state to provide for exchange as for money
or a circulating medium for its subjects or citizens.

When the State of Alabama reserved to herself, by her fundamental law, at least two-
fifths of the capital and control of all banks to be created in the state, and by her laws
has actually appropriated to herself the whole of the capital, management, and profits of
five out of seven banks and two-fifths of the other two, had she not the same right to
appropriate the banking right to deal in exchange to herself to the same extent? While
performing her duty under the Constitution by providing a circulating medium for the
citizens, she was not unmindful of her duty in relation to exchange, and that is also
provided for. Has she not provided increased security and safety to the merchant by
making herself liable for the payment of every bill of exchange sold by the five banks
belonging to her and for two-fifths of all sold by the other two? And has she not also
provided by law that all the profits derived from thus dealing in bills of exchange shall go
into the public treasury for the common benefit of the people of the state? And has she
not, by the profits arising from her banking, including the profits on exchange, been
enabled to pay the whole expenses of the government, and thereby to abolish all direct
or other taxation? See Aikin's Digest 651.

It was not the intention of the legislature, by conferring the power upon these banks to
purchase and sell bills of exchange, to deprive the citizens of the state or any other
natural person of the right to do the same thing. But it was the intention to exclude all
accumulated bank capital which did not belong to the state, in whole or in part,
according to the Constitution, from dealing in exchange, and such is the inevitable and
legal effect of those laws. Let us test this principle. It is admitted by the majority of the
Court in its opinion that these constitutional provisions were intended as a restraint upon
the legislature of the state. If so intended, the legislature can pass no law contrary to the
spirit and intention of the Constitution or contrary to the spirit and intention of the
charters of the banks created in pursuance of its provisions. Now were the laws
chartering the banks which are parties to this suit contrary to the spirit and intention of
the Constitution and laws of Alabama? That is the precise question.

It must be borne in mind that these were banks, and nothing but banks, that made the
contracts in Alabama, and in that character and that only have they been considered in
the opinion of the majority of the Court. Were those banks chartered by the Legislature
of Alabama, two-thirds of both houses concurring? Was at least two-fifths of the capital
stock and of the management of these

Page 38 U. S. 604

banks reserved to the state? Did the profits arising from the purchase of these bills of
exchange go into the Treasury of Alabama? All these questions must be answered in
the negative. Then these are not constitutional banks in Alabama, and cannot contract
there? The majority of the Court has decided these causes upon the presumption that
Alabama had adopted the laws of Georgia, Louisiana, and Pennsylvania chartering
these banks. And this presumption rests for its support upon the fact that there is
nothing in the laws or the policy of the laws of Alabama to resist this presumption. I
suppose it will not be contended that the power of this Court to presume that Alabama
had adopted these laws is greater than the power of Alabama to adopt the laws for
herself. Suppose these banks had made a direct application to the Legislature of
Alabama to pass a law to authorize them to deal in bills of exchange in that state, could
the legislature have passed such a law without violating the constitution of the state?

An incorporated bank in Alabama is not only the mere creature of the law creating it, as
banks are in other states, but it is the creature of a peculiar fundamental law, and if its
charter is not in conformity to the provisions of the fundamental law, it is void. It must be
recollected that the banks, which are the plaintiffs in these suits, when they present
themselves to the legislature, asking permission to use their corporate privileges there,
are not demanding a right, but asking a favor, which the legislature may grant or refuse
as it pleases. If it should refuse, it would violate no duty, incur no responsibility. If,
however, the Court exercise the power, it is upon the positive obligation of Alabama that
the presumption must arise, or the right does not exist. A positive rule of law cannot
arise out of an imperfect obligation by presumption or implication. But to put it on the
foot of bare repugnance of the law presumed to be adopted to the laws of the country
adopting, if there be any repugnance, the Court ought not to presume the adoption.
Story's Conflict of Laws 37. The charter of every bank not created in conformity with the
Constitution of Alabama must at least be repugnant to it. The presumption is that the
charters of all these banks were repugnant, there being no reason or inducement to
make them conform in the states where they were created. The power of the Court to
adopt the laws creating these banks as they actually existed, and the power of the
Legislature of Alabama to adopt them in a modified form or to grant the banks a mere
permission to do a specified act, present very different questions, and involve very
different powers. If, therefore, the legislature could not adopt the charters in the least
objectionable form nor authorize the banks to deal in exchange without violating the
Constitution of Alabama, how can it be said that the contracts in controversy are not
against the policy of the laws of Alabama? And by what authority does the majority of
this Court presume that Alabama has adopted those laws? The general rule is that
slight evidence and circumstances shall defeat a mere legal presumption of law. This
case will be a signal exception to that rule.

Page 38 U. S. 605

In the case of Pennington v. Townsend, 7 Wend. 278, the Protection and Lombard
Bank, chartered by New Jersey, by agents undertook to do banking business in New
York, and there discounted the check which was the subject of the suit in violation of the
restraining acts of 1813 and 1818, the first of which enacts that no person unauthorized
by law shall become a member of any association for the purpose of issuing notes or
transacting any other business which incorporated banks may or do transact. The act of
1818 enacts that it shall not be lawful for any person, association, or body corporate to
keep any office of deposit for discounting, or for carrying on any kind of banking
business, and affixes a penalty of $1,000, to be recovered, &c. Under these laws, the
contract between the parties was held to be void, and the court says

"The protection against the evil intended to be remedied, to-wit, preventing banking
without the authority of the legislature of the state, is universal in its application within
the state, and without exception unless qualified by the same power which enacted it or
by some other paramount law. Such is not the law incorporating this bank."

Is there anything in these laws which more positively prohibits banking in New York
without the authority of the legislature of that state than there is in the Constitution of
Alabama, prohibiting all banking except in the manner prescribed by the constitution?
Can it be believed that she intended to protect herself against the encroachments of her
own legislature only, and to leave herself exposed to the encroachments of all her sister
states? Does the language employed in these provisions of the constitution justify any
such construction? It is general, comprehensive, and not only restrictive but expressly
prohibitory. Whatever is forbidden by the Constitution of Alabama can be done by no
one within her jurisdiction, and it was sufficient for her to know that no bank could do
any valid banking act there without violating her Constitution. It was contended by the
counsel for the banks that no law could be regarded as declaring the policy of the state
unless it was penal and inflicted some punishment for its violation. This doctrine is as
novel as it is unfounded in principle. I know of no such exclusive rule by which to reach
the mind and intention of the legislature. If the language used shows clearly that
particular acts were intended to be prohibited, and the act is afterwards done, it is
against the policy of the law and void. Suppose the Legislature of Alabama were to
establish a bank, disregarding all the conditions and restrictions imposed by the
Constitution; would it not violate that instrument, and therefore the act be void? And can
Georgia, Louisiana, or Pennsylvania, by their respective legislatures, do in Alabama
what her own legislature cannot do? The relations which these states hold towards each
other in their individual capacity of states under the Constitution of the United States is
that of perfect independence. In the case of Buckner v. Finley, 2 Pet. 590, Chief Justice
Marshall said

"For all national purposes embraced by the federal Constitution, the states and the
citizens thereof are one

Page 38 U. S. 606

united under the same sovereign authority and governed by the same laws. In all other
respects, the states are necessarily foreign to and independent of each other."

It is in this foreign and independent relation that these four states stand before this
Court in these cases. The condition of Alabama, taken with a view to this relation,
cannot be worse than that of an independent nation in like circumstances. What that
would be we will see from authority.

"Nations being free and independent of each other in the same manner as men are
naturally free and independent, the second general law of their society is that each
nation ought to be left in the peaceable enjoyment of that liberty it has derived from
nature. The natural society of nations cannot subsist if the rights which each has
received from nature are not respected. None would willingly renounce its liberty; it
would rather break off all commerce with those that should attempt to violate it. From
this liberty and independence it follows that every nation is to judge of what its
conscience demands, of what it can or cannot do, of what is proper or improper to be
done, and consequently to examine and determine whether it can perform any office for
another without being wanting in what it owes to itself. In all cases, then, where a nation
has the liberty of judging what its duty requires, another cannot oblige it to act in such or
such a manner. For the attempting this would be doing an injury to the liberty of nations.
A right to offer constraint to a free person can only be invested in us in such cases
where that person is bound to perform some particular thing for us or from a particular
reason that does not depend on his judgment -- or, in a word, where we have a
complete authority over him."

Vatt. 53- 54.

Now apply these just and reasonable principles to Alabama in her relation of a foreign
and independent state, reposing upon the rights reserved to her by the Tenth
Amendment of the Constitution of the United States, and then show the power that can
compel her to pass penal laws to guard and protect those perfect, ascertained,
constitutional rights from the illegal invasion of a bank created by any other state. If this
power exists at all, it can be shown, and the authority by which it acts. But not even a
reasonable pretense for any such power or authority has been shown. The conclusion
must therefore be that Alabama, as an independent foreign state, owing no duty, nor
being under any obligation to either of the states by whose corporations she was
invaded, was the sole and exclusive judge of what was proper or improper to be done,
and consequently had a right to examine and determine whether she could grant a favor
to either of those states without injury to herself, unless indeed there be a controlling
power in this Court derived from some provision of the Constitution of the United States.
As none such has been set up or relied upon in the opinion of the majority of the Court,
for the present I have a right to conclude that none such exists. And without considering
any of the minor points discussed in the argument or noticed in the opinion, I dismiss
the subject.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 88831 November 8, 1990

MATEO CAASI, petitioner,

vs.
THE HON. COURT OF APPEALS and MERITO C. MIGUEL, respondents.

G.R. No. 84508 November 13, 1990

ANECITO CASCANTE petitioner,

vs.
THE COMMISSION ON ELECTIONS and MERITO C. MIGUEL, respondents.

Ireneo B. Orlino for petitioner in G.R. Nos. 88831 & 84508.

Montemayor & Montemayor Law Office for private respondent.

GRIO-AQUINO, J.:

These two cases were consolidated because they have the same objective; the disqualification
under Section 68 of the Omnibus Election Code of the private respondent, Merito Miguel for the
position of municipal mayor of Bolinao, Pangasinan, to which he was elected in the local elections of
January 18, 1988, on the ground that he is a green card holder, hence, a permanent resident of the
United States of America, not of Bolinao.

G.R. No. 84508 is a petition for review on certiorari of the decision dated January 13, 1988 of the
COMELEC First Division, dismissing the three (3) petitions of Anecito Cascante (SPC No. 87-551),
Cederico Catabay (SPC No. 87-595) and Josefino C. Celeste (SPC No. 87-604), for the
disqualification of Merito C. Miguel filed prior to the local elections on January 18, 1988.

G.R. No. 88831, Mateo Caasi vs. Court of Appeals, et al., is a petition for review of the decision
dated June 21, 1989, of the Court of Appeals in CA-G.R. SP No. 14531 dismissing the petition
for quo warranto filed by Mateo Caasi, a rival candidate for the position of municipal mayor of
Bolinao, Pangasinan, also to disqualify Merito Miguel on account of his being a green card holder.

In his answer to both petitions, Miguel admitted that he holds a green card issued to him by the US
Immigration Service, but he denied that he is a permanent resident of the United States. He
allegedly obtained the green card for convenience in order that he may freely enter the United States
for his periodic medical examination and to visit his children there. He alleged that he is a permanent
resident of Bolinao, Pangasinan, that he voted in all previous elections, including the plebiscite on
February 2,1987 for the ratification of the 1987 Constitution, and the congressional elections on May
18,1987.
After hearing the consolidated petitions before it, the COMELEC with the exception of Commissioner
Anacleto Badoy, Jr., dismissed the petitions on the ground that:

The possession of a green card by the respondent (Miguel) does not sufficiently
establish that he has abandoned his residence in the Philippines. On the contrary,
inspite (sic) of his green card, Respondent has sufficiently indicated his intention to
continuously reside in Bolinao as shown by his having voted in successive elections
in said municipality. As the respondent meets the basic requirements of citizenship
and residence for candidates to elective local officials (sic) as provided for in Section
42 of the Local Government Code, there is no legal obstacle to his candidacy for
mayor of Bolinao, Pangasinan. (p. 12, Rollo, G.R. No. 84508).

In his dissenting opinion, Commissioner Badoy, Jr. opined that:

A green card holder being a permanent resident of or an immigrant of a foreign

country and respondent having admitted that he is a green card holder, it is
incumbent upon him, under Section 68 of the Omnibus Election Code, to prove that
he "has waived his status as a permanent resident or immigrant" to be qualified to
run for elected office. This respondent has not done. (p. 13, Rollo, G.R. No. 84508.)

In G.R. No. 88831, "Mateo Caasi, petitioner vs. Court of Appeals and Merito Miguel, respondents,"
the petitioner prays for a review of the decision dated June 21, 1989 of the Court of Appeals in CA-
G.R. SP No. 14531 "Merito C. Miguel, petitioner vs. Hon. Artemio R. Corpus, etc., respondents,"
reversing the decision of the Regional Trial Court which denied Miguel's motion to dismiss the
petition for quo warranto filed by Caasi. The Court of Appeals ordered the regional trial court to
dismiss and desist from further proceeding in the quo warranto case. The Court of Appeals held:

... it is pointless for the Regional Trial Court to hear the case questioning the
qualification of the petitioner as resident of the Philippines, after the COMELEC has
ruled that the petitioner meets the very basic requirements of citizenship and
residence for candidates to elective local officials (sic) and that there is no legal
obstacles (sic) for the candidacy of the petitioner, considering that decisions of the
Regional Trial Courts on quo warranto cases under the Election Code are appealable
to the COMELEC. (p. 22, Rollo, G.R. No. 88831.)

These two cases pose the twin issues of: (1) whether or not a green card is proof that the holder is a
permanent resident of the United States, and (2) whether respondent Miguel had waived his status
as a permanent resident of or immigrant to the U.S.A. prior to the local elections on January 18,
1988.

Section 18, Article XI of the 1987 Constitution provides:

Sec. 18. Public officers and employees owe the State and this Constitution
allegiance at all times, and any public officer or employee who seeks to change his
citizenship or acquire the status of an immigrant of another country during his
tenure shall be dealt with by law.

In the same vein, but not quite, Section 68 of the Omnibus Election Code of the Philippines (B.P. Blg.
881) provides:
 SEC. 68. Disqualifications ... Any person who is a permanent resident of or an
immigrant to a foreign country shall not be qualified to run for any elective office
under this Code, unless said person has waived his status as permanent resident or
immigrant of a foreign country in accordance with the residence requirement
provided for in the election laws. (Sec. 25, 1971, EC).

In view of current rumor that a good number of elective and appointive public officials in the present
administration of President Corazon C. Aquino are holders of green cards in foreign countries, their
effect on the holders' right to hold elective public office in the Philippines is a question that excites
much interest in the outcome of this case.

In the case of Merito Miguel, the Court deems it significant that in the "Application for Immigrant Visa
and Alien Registration" (Optional Form No. 230, Department of State) which Miguel filled up in his
own handwriting and submitted to the US Embassy in Manila before his departure for the United
States in 1984, Miguel's answer to Question No. 21 therein regarding his "Length of intended stay (if
permanently, so state)," Miguel's answer was, "Permanently."

On its face, the green card that was subsequently issued by the United States Department of Justice
and Immigration and Registration Service to the respondent Merito C. Miguel identifies him in clear
bold letters as a RESIDENT ALIEN. On the back of the card, the upper portion, the following
information is printed:

Alien Registration Receipt Card.

Person identified by this card is entitled to reside permanently and

work in the United States." (Annex A pp. 189-190, Rollo of G.R. No.
84508.)

Despite his vigorous disclaimer, Miguel's immigration to the United States in 1984 constituted an
abandonment of his domicile and residence in the Philippines. For he did not go to the United States
merely to visit his children or his doctor there; he entered the limited States with the intention to have
there permanently as evidenced by his application for an immigrant's (not a visitor's or tourist's) visa.
Based on that application of his, he was issued by the U.S. Government the requisite green card or
authority to reside there permanently.

Immigration is the removing into one place from another; the act of immigrating the
entering into a country with the intention of residing in it.

An immigrant is a person who removes into a country for the purpose of permanent
residence. As shown infra 84, however, statutes sometimes give a broader meaning
to the term "immigrant." (3 CJS 674.)

As a resident alien in the U.S., Miguel owes temporary and local allegiance to the U.S., the country
in which he resides (3 CJS 527). This is in return for the protection given to him during the period of
his residence therein.

Aliens reading in the limited States, while they are permitted to remain, are in general
entitled to the protection of the laws with regard to their rights of person and property
and to their civil and criminal responsibility.
 In general, aliens residing in the United States, while they are permitted to remain
are entitled to the safeguards of the constitution with regard to their rights of person
and property and to their civil and criminal responsibility. Thus resident alien friends
are entitled to the benefit of the provision of the Fourteenth Amendment to the federal
constitution that no state shall deprive "any person" of life liberty, or property without
due process of law, or deny to any person the equal protection of the law, and the
protection of this amendment extends to the right to earn a livelihood by following the
ordinary occupations of life. So an alien is entitled to the protection of the provision of
the Fifth Amendment to the federal constitution that no person shall be deprived of
life, liberty, or property without due process of law. (3 CJS 529-530.)

Section 18, Article XI of the 1987 Constitution which provides that "any public officer or employee
who seeks to change his citizenship or acquire the status of an immigrant of another country during
his tenure shall be dealt with by law" is not applicable to Merito Miguel for he acquired the status of
an immigrant of the United States before he was elected to public office, not "during his tenure" as
mayor of Bolinao, Pangasinan.

The law applicable to him is Section 68 of the Omnibus Election Code (B.P. Blg. 881), which
provides:

xxx xxx xxx

Any person who is a permanent resident of or an immigrant to a foreign country shall

not be qualified to run for any elective office under this Code, unless such person has
waived his status as permanent resident or immigrant of a foreign country in
accordance with the residence requirement provided for in the election laws.'

Did Miguel, by returning to the Philippines in November 1987 and presenting himself as a candidate
for mayor of Bolinao in the January 18,1988 local elections, waive his status as a permanent
resident or immigrant of the United States?

To be "qualified to run for elective office" in the Philippines, the law requires that the candidate who is
a green card holder must have "waived his status as a permanent resident or immigrant of a foreign
country." Therefore, his act of filing a certificate of candidacy for elective office in the Philippines, did
not of itself constitute a waiver of his status as a permanent resident or immigrant of the United
States. The waiver of his green card should be manifested by some act or acts independent of and
done prior to filing his candidacy for elective office in this country. Without such prior waiver, he was
"disqualified to run for any elective office" (Sec. 68, Omnibus Election Code).

Respondent Merito Miguel admits that he holds a green card, which proves that he is a permanent
resident or immigrant it of the United States, but the records of this case are starkly bare of proof
that he had waived his status as such before he ran for election as municipal mayor of Bolinao on
January 18, 1988. We, therefore, hold that he was disqualified to become a candidate for that office.

The reason for Section 68 of the Omnibus Election Code is not hard to find. Residence in the
municipality where he intends to run for elective office for at least one (1) year at the time of filing his
certificate of candidacy, is one of the qualifications that a candidate for elective public office must
possess (Sec. 42, Chap. 1, Title 2, Local Government Code). Miguel did not possess that
qualification because he was a permanent resident of the United States and he resided in Bolinao
for a period of only three (3) months (not one year) after his return to the Philippines in November
1987 and before he ran for mayor of that municipality on January 18, 1988.

In banning from elective public office Philippine citizens who are permanent residents or immigrants
of a foreign country, the Omnibus Election Code has laid down a clear policy of excluding from the
right to hold elective public office those Philippine citizens who possess dual loyalties and allegiance.
The law has reserved that privilege for its citizens who have cast their lot with our country "without
mental reservations or purpose of evasion." The assumption is that those who are resident aliens of
a foreign country are incapable of such entire devotion to the interest and welfare of their homeland
for with one eye on their public duties here, they must keep another eye on their duties under the
laws of the foreign country of their choice in order to preserve their status as permanent residents
thereof.

Miguel insists that even though he applied for immigration and permanent residence in the United
States, he never really intended to live there permanently, for all that he wanted was a green card to
enable him to come and go to the U.S. with ease. In other words, he would have this Court believe
that he applied for immigration to the U.S. under false pretenses; that all this time he only had one
foot in the United States but kept his other foot in the Philippines. Even if that were true, this Court
will not allow itself to be a party to his duplicity by permitting him to benefit from it, and giving him the
best of both worlds so to speak.

Miguel's application for immigrant status and permanent residence in the U.S. and his possession of
a green card attesting to such status are conclusive proof that he is a permanent resident of the U.S.
despite his occasional visits to the Philippines. The waiver of such immigrant status should be as
indubitable as his application for it. Absent clear evidence that he made an irrevocable waiver of that
status or that he surrendered his green card to the appropriate U.S. authorities before he ran for
mayor of Bolinao in the local elections on January 18, 1988, our conclusion is that he was
disqualified to run for said public office, hence, his election thereto was null and void.

WHEREFORE, the appealed orders of the COMELEC and the Court of Appeals in SPC Nos. 87-
551, 87-595 and 87-604, and CA-G.R. SP No. 14531 respectively, are hereby set aside. The election
of respondent Merito C. Miguel as municipal mayor of Bolinao, Pangasinan is hereby annulled.
Costs against the said respondent.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-496 December 31, 1902

THE UNITED STATES, complainant-appellant,

vs.
WILLIAM FOWLER, ET AL., defendants-appellees.

Assistant Attorney-General Constantino, for appellant.

William Lane O'Neill, for appellees.

TORRES, J.:

The two defendants have been accused of the theft of sixteen bottles of champagne of the value of
$20, on the 12th August, 1901, while on board the transport Lawton, then navigating the high seas,
which said bottles of champagne formed part of the cargo of the said vessel and were the property
of Julian Lindsay, and which were taken lucri causa, and with the intent to appropriate the same,
without violence or intimidation, and without the consent of the owner, against the statute in the case
made and provided.

The accused having been brought before the court, the prosecuting attorney being present on behalf
of the Government, counsel for the defendants presented a demurrer, alleging that the Court of First
Instance was without jurisdiction to try the crime charged, inasmuch as it appeared from the
information that the crime was committed on the high seas, and not in the city of Manila, or within the
territory comprising the Bay of Manila, or upon the seas within the 3-mile limit to which the
jurisdiction of the court extends, and asked, upon these grounds, that the case be dismissed.

This contention was opposed by the prosecuting attorney, who alleged that the court has original
jurisdiction in all criminal cases in which the penalty exceeds six month's imprisonment, or a fine of
over $100; that, in accordance with the orders of the Military Governor and the Civil Commission
admiralty jurisdiction over all crimes committed on board vessel flying the flag of the United States
has been vested in the Court of First Instance of the city of Manila. Among other laws and orders he
cited the order of August 14, 1898, and Acts Nos. 76 and 186 of the United States Civil Commission.
He argued that the President of the United States had unquestionable authority to authorize the
commanding general and the Civil Commission to establish a judicial system with authority to take
cognizance of maritime and admiralty causes, citing a decision of the Supreme Court of the United
States in support of this doctrine, which was applicable to this Archipelago, which is now analogous
to the status of some of the States of the Union during the Mexican war and the war of secession.

The judge, however, by an order of the 14th of September, 1901, held that the court was without
jurisdiction to try the accused for the theft alleged to have been committed on the high seas,
sustained the demurrer, and ordered the discharge of the defendants, with the costs to the
Government. Against this order the prosecuting attorney appealed, and the case was brought before
this court.

This case deals with a theft committed on board a transport while navigating the high seas. Act No.
136 of the organic law, as well as Act No. 186 passed by the Civil Commission, and which repealed
the former law, Act No. 76, do not expressly confer jurisdiction or authority upon this court to take
cognizance of all crimes committed on board vessels on the high seas. While the provisions of the
law are clear and precise with respect to civil admiralty or maritime cases, this is not true with
respect to criminal cases. If any doubt could arise concerning the true meaning of the law applicable
to the case, Act No. 400 effectively dissipates such doubts.

This law, which is an addition to Act No. 136, by which the courts of justice of the Philippine Islands
were organized, in article 1 adds to article 56, consisting of seven paragraphs, another paragraph
numbered 8, which reads as follows: "Of all crimes and offenses committed on the high seas or
beyond the jurisdiction of any country, or within any of the navigable waters of the Philippine
Archipelago, on board a ship or water craft of any kind registered or licensed in the Philippine
Islands in accordance with the laws thereof." The purpose of this law was to define the jurisdiction of
the courts of First Instance in criminal cases for crimes committed on board vessels registered or
licensed in the Philippine Islands. The transport Lawton not being a vessel of this class, our courts
are without jurisdiction to take cognizance of a crime committed on board the same.

Upon these grounds we consider that the order appealed should be affirmed, with the costs de
oficio. So ordered.
 United States Court of Appeals,Ninth Circuit.
Maximo HILAO, Class Plaintiffs, Plaintiff-Appellee, v. ESTATE OF Ferdinand
MARCOS, Defendant, Imelda R. Marcos; Ferdinand R. Marcos,
Representatives of the Estate of Ferdinand Marcos, Defendants-Appellants.

Nos.95-16487, 95-16145.
Decided: December 17, 1996
Before: FLETCHER, PREGERSON and RYMER, Circuit Judges.B.J. Rothbaum, Jr.,Linn & Helms,
Oklahoma City, Oklahoma, for defendants-appellants. Robert A. Swift, Kohn, Swift & Graf, P.C.,
Philadelphia, Pennsylvania, for plaintiff-appellee.
Imelda R. Marcos and Ferdinand R. Marcos, substituted under Rule 25 as representatives of the
Defendant Estate of Ferdinand E. Marcos (the Appellants), appeal from orders of the district court
holding them in contempt. We affirm.

FACTUAL BACKGROUND & PROCEDURAL HISTORY

This appeal arises out of post-judgment orders in a case involving nearly 10,000 class plaintiffs (referred
to hereinafter collectively as Hilao) who suffered (or are family members of those who suffered) torture,
disappearance, and summary execution during Ferdinand E. Marcos' tenure as president of the
Philippines. In 1991, anticipating that Hilao would succeed on the merits, the district court entered a
preliminary injunction prohibiting the Defendant Estate, and its agents, representatives, aiders and
abettors from disposing of any assets of the Estate.1 Hilao subsequently obtained a verdict of liability and
an award of nearly $2 billion in damages. The district court's final judgment of February 3, 1995 made
the preliminary injunction permanent.2

In January of 1995, Hilao moved for contempt, claiming that agreements made in 1992 between the
Republic of the Philippines and Imelda Marcos and Ferdinand R. Marcos, on behalf of the Estate of
Ferdinand E. Marcos and themselves as heirs, violated the preliminary injunction by (1) agreeing to
transfer artworks beneficially owned by the Defendant Estate from the United States to the Philippines;
and (2) agreeing to divide all assets owned by the Estate between the Republic and the Appellants. 3

The district court ordered Hilao to conduct discovery regarding the allegations in the contempt motion.
Depositions of Imelda Marcos and Ferdinand R. Marcos were scheduled for March 16 and 17, 1995.
Deponents were instructed to produce all agreements with the Republic (including but not limited to the
1992 agreements) at their deposition, but they failed to appear and to produce the documents, and Hilao
moved for sanctions.

In April 1995, additional agreements between Appellants and the Republic were publicly revealed. These
agreements had been signed in 1993 and provided more specifically for the division of the Marcos Estate:
75 percent would go to the Republic, and 25 percent to Appellants, with Appellants receiving their share
free of Philippine taxes.

Hilao filed a Supplemental Motion for Contempt identifying the 1993 agreements as additional violations.
Hearings were held in April and May 1995. As a sanction for Appellants' failure to appear, testify, and
produce documents at their depositions, the Court deemed established Plaintiffs' factual allegations in
their contempt motions, and further found that those facts were substantiated by evidence produced by
Plaintiffs.

With the facts in Hilao's motions deemed established, the Court concluded that those facts constituted a
violation of the injunction. The Order Granting Plaintiffs' Motion for Contempt was filed May 26, 1995.

A hearing on additional sanctions was held in June of 1995 resulting in an order granting additional relief
for the contempt. The additional relief consisted of requiring Appellants to execute an assignment to the
Plaintiffs of enumerated Swiss bank accounts containing Estate assets.
Appellants appeal from the orders of contempt, denying that Imelda Marcos and Ferdinand R. Marcos are
appropriate subjects of a contempt motion and denying that any violation of the Injunction occurred.

JURISDICTION

The district court in Hawaii had jurisdiction over the class action that resulted in the nearly $2 billion
judgment under 28 U.S.C. 1350. See Trajano v. Marcos (In re Estate of Ferdinand E. Marcos Human
Rights Litigation), 978 F.2d 493, 501-03 (9th Cir.1992) (Estate I), cert. denied, 508 U.S. 972, 113 S.Ct.
2960, 125 L.Ed.2d 661 (1993); Estate II, 25 F.3d at 1472-74. In its final judgment, the district court
expressly retained continuing jurisdiction over the motion for contempt, the permanent injunction and
other matters. The post-judgment orders of contempt appealed here are within this court's jurisdiction
under 28 U.S.C. 1291 as final and appealable orders. Shuffler v. Heritage Bank, 720 F.2d 1141, 1145
(9th Cir.1983) (a post-judgment civil contempt order imposing sanctions acquires the operativeness and
consequence necessary to finality under 1291).

STANDARD OF REVIEW

A district court's civil contempt order is reviewed for an abuse of discretion. Reebok Int'l Ltd. v.
McLaughlin, 49 F.3d 1387, 1390 (9th Cir.1995). The imposition of discovery sanctions pursuant to Rule
37 of the Federal Rules of Civil Procedure is also reviewed for an abuse of discretion. Commodity Futures
Trading Comm'n v. Noble Metals Int'l, Inc., 67 F.3d 766, 771 (9th Cir.1995).

DISCUSSION

I.Discovery Sanctions

Following Appellants' failure to appear for their depositions and to produce documents, Hilao moved
for sanctions under Rule 37 of the Federal Rules of Civil Procedure. Failure to appear for a deposition
may be sanctioned by [a]n order that designated facts shall be taken to be established . Fed.R.Civ.P.
37(b)(2)(A), (d). In the Order Granting Plaintiffs' Motion for Contempt, the district court sanctioned the
Appellants' failure to appear by deeming the factual allegations in Hilao's motion for contempt to be
established.4

In arguing against the motion for contempt, Appellants basically ignore the effect of this sanction. They
repeatedly claim that no evidence supports the allegations in Hilao's motion, as if the sanction had not
occurred and the facts had not been deemed established.

Even if we assume, without deciding, that Appellants have appealed the discovery sanction, 5 the district
court did not abuse its discretion. The sanction imposed is one explicitly authorized by Rule 37 for
failure to appear at a deposition, and Appellants do not contest their failure to appear. For a sanction
this severe, we have required that the party's failure must have been willful or in bad faith. Commodity
Futures Trading Comm'n, 67 F.3d at 771. The fact that Appellants have made no attempt to explain or
excuse their failure to appear suggests that the failure was deliberate. We conclude that the district court
did not err in deeming the allegations of Hilao's motions for contempt to be established.

II.Facts Established

Appellants argue that Hilao has shown no evidence that Ferdinand E. Marcos had an estate; no
evidence of any assets belonging to any such estate; no evidence that Appellants have any control over
any such assets; and no evidence of an agreement between the Republic of the Philippines and Imelda
Marcos and Ferdinand R. Marcos on behalf of either such an estate or themselves. Appellants deny that
any such facts have been established and argue that without evidence of such facts, there can be no
finding of contempt.

All of those facts, however, are established either through the findings of the district court contained in
the final judgment granting the permanent injunction or through the Rule 37 sanction imposed by the
district court in the contempt proceedings. In its final judgment, the district court made the following
finding of fact:

There is a probability that the Estate has assets other than the foreign bank accounts identified by the
Estate's legal representatives.

Although the Estate has appealed from this final judgment, in that appeal it has not challenged the
findings of fact made by the district court in granting the permanent injunction.

By operation of the discovery sanctions in the contempt proceedings, the following additional facts were
established:

Even after entry of the Injunction Imelda Marcos and Ferdinand R. Marcos, on behalf of themselves and
the Estate, continued a course of conduct aimed at preventing Plaintiffs and the Class from recovering on
an ultimate judgment.

Imelda Marcos and Ferdinand R. Marcos, on behalf of the defendant Estate and themselves as heirs, and
the Republic of the Philippines entered into two agreements on June 26, 1992 which []:

a.agree[d] to transfer art works beneficially owned by the defendant Estate from the United States to
the Philippines; and

b.agree[d] to divide all assets owned by the defendant Estate between the Republic and the heirs of the
Estate.

The division of assets will effectively divest the Estate of any assets upon which Plaintiffs and the Class
can execute, while giving hundreds of million of dollars of assets to Imelda Marcos and Ferdinand R.
Marcos tax free.

In late January 1995 Ferdinand R. Marcos publicly admitted that he had travelled to Switzerland in July
1994 as part of a deal with the Republic to transfer and split the Estate assets.

On April 5, 1995 Philippine counsel for the contemnors filed with a court in the Philippines a Petition
seeking dismissal of all legal proceedings against them, their family members and the Estate as a result of
two agreements entered into on December 28, 1993 between the contemnors and the Republic

The December 28, 1993 agreements provide, inter alia:

a.the Republic and the Estate will divide all assets of the estate 75/25 with the Marcos heirs receiving
their 25% tax free.

b.all legal proceedings against the Estate and Marcos heirs would be dismissed.

c.the Marcos heirs agree to cooperate with the Republic to effect the transfer of all monies held in
accounts in Switzerland.

The establishment of these facts through the imposition of the discovery sanction was proper, and they
support the district court's grant of the motion for contempt.
III.Violation of Injunction

The injunction (in both its preliminary and permanent forms) states:

The defendant Estate, and its agents, representatives, aiders and abettors are, until satisfaction of the
judgment herein, permanently enjoined and restrained from directly or indirectly:

(1)transferring, conveying, encumbering, dissipating, converting, concealing, or otherwise disposing of in

any manner any funds, assets, claims or other property or assets owned actually, equitably or beneficially
by, or in the possession or custody of or held by or in any way on behalf of or for the benefit of the Estate
of Ferdinand E. Marcos

A.Appellants Subject to Injunction

Appellants argue that they are non-parties to this litigation and have not been appointed as personal
representatives of the Estate. They argue that their status leaves them powerless to transfer or alienate
assets of the Estate, and therefore incapable of being in contempt of an injunction forbidding transfer and
alienation. Appellants acknowledge their voluntary substitution as legal representatives of the
Defendant Estate for the purposes of defending this action, but argue that in spite of the substitution, they
remain non-parties.

Appellants' arguments regarding their status as non-parties are without merit. Rule 25(a)(1) of the
Federal Rules of Civil Procedure provides that [i]f a party dies and the claim is not thereby extinguished,
the court may order substitution of the proper parties. The substituted party steps into the same
position as original party. Ransom v. Brennan, 437 F.2d 513, 516 (5th Cir.), cert. denied, 403 U.S. 904, 91
S.Ct. 2205, 29 L.Ed.2d 680 (1971). As properly substituted parties in this case, Appellants obviously are
not non-parties.6 Appellants clearly had notice of, and were subject to, the terms of the injunction.

B.1992 and 1993 Agreements

Appellants argue that there is no evidence of the authenticity of the agreements and that mere negotiation
and signing of the agreements (without implementation) cannot violate the injunction.

The authenticity of the agreements is an established and unchallenged fact found by the district court.
The district court has made an unchallenged finding of fact that the Appellants entered into those
agreements on behalf of the defendant Estate and themselves as heirs. It is true that the injunction did
not explicitly forbid attempts to transfer assets of the Estate. The district court, however, found that
the Appellants made a deal with the Republic to transfer and split the Estate assets. The district court
was thus well within its discretion in finding that the 1992 and 1993 agreements violated the injunction.

C.Sale of Art Works

Appellants argue that the sale of the art works did not violate the injunction because the artworks were
the personal property of Imelda Marcos and did not belong to the Estate. However, an allegation of the
Estate's ownership of the art works was included in Hilao's motion for contempt and is consequently
deemed established by operation of the discovery sanctions.

Appellants also contend that the sale cannot violate the injunction because the art works were sold and
the proceeds distributed as part of a consent order entered by Judge Connor to settle an interpleader
action in New York in which Imelda Marcos had intervened. Imelda Marcos voluntarily agreed to the
consent orders, which provided for the sale of the art works and for distribution of the proceeds according
to a settlement agreed upon by the parties in the New York action. Since Imelda Marcos negotiated a
settlement and consented to an order that directly violated the injunction without informing Judge
Connor of the injunction, she cannot now claim that the consent order was an act of the court which
excuses the violation.

CONCLUSION
Because the factual findings of the district court in its permanent injunction and in its sanctions for
discovery violations establish the factual predicate for the district court's finding of contempt, we affirm.

FOOTNOTES

1. The preliminary injunction was appealed and was affirmed by this court in Hilao v. Estate of
Ferdinand Marcos (In re Estate of Ferdinand Marcos, Human Rights Litigation), 25 F.3d 1467, 1476-1480
(9th Cir.1994) ( Estate II), cert. denied, 513 U.S. 1126, 115 S.Ct. 934, 130 L.Ed.2d 879 (1995).

2. We decide the Estate's appeal from the final judgment, No. 95-15779, 103 F.3d 767, in a separate
opinion filed contemporaneously with this opinion.

3. Some of the artworks included in the 1992 agreements were subsequently sold in the United States
as the result of a consent order concluding a federal suit in New York in which Imelda Marcos had
intervened. The proceeds of the sale, after payment of certain creditors, were distributed according to
the consent order to Imelda Marcos and the Republic of the Philippines.

4. The court further found that those facts were substantiated by evidence produced by Hilao.

5. Nowhere in Appellants' brief do they challenge the sanction as improperly imposed, so they appear
to have waived their appeal of the sanction. All Pacific Trading, Inc. v. Vessel M/V Hanjin Yosu, 7 F.3d
1427, 1434 (9th Cir.1993), cert. denied, 510 U.S. 1194, 114 S.Ct. 1301, 127 L.Ed.2d 653 (1994).

6. Even if Appellants were considered non-parties, they could be held in contempt for violation of the
injunction because they had notice of it. Rule 65(d) of the Federal Rules of Civil Procedure provides that
an injunction is binding upon the parties to the action [] and upon those persons in active concert or
participation with them who receive actual notice of the order by personal service or otherwise.

FLETCHER, Circuit Judge:

8 N.J. 260 (1951)

84 A.2d 725

THOMAS A. LEARY, PLAINTIFF-RESPONDENT, v. WILLIAM L. GLEDHILL,

DEFENDANT-APPELLANT.

The Supreme Court of New Jersey.

Argued October 22, 1951.

Decided November 26, 1951.

*262 Mr. Charles L. Bertini argued the cause for the appellant.

Mr. Charles H. Roemer appeared for the respondent.

The opinion of the court was delivered by VANDERBILT, C.J.

From a judgment of the Law Division of the Superior Court entered on a jury verdict in
favor of the plaintiff the defendant appealed to the Appellate Division of the Superior
Court. We have certified the appeal on our own motion.

The plaintiff and the defendant were friends who had become acquainted while in the
military service. They first *263 met in 1943 and occasionally thereafter through 1945.
They corresponded but did not meet again until Christmas, 1948, when the defendant
visited the plaintiff in Germany where he was stationed. At that time the defendant was
no longer in the military service but was in Europe attempting to sell tractors for the
Franam Corporation. Prior to the defendant's trip to Europe he had corresponded with
the plaintiff with reference to an investment in the Franam Corporation as one which
would be very profitable. Their correspondence resulted in the plaintiff purchasing
$1,000 worth of stock when the defendant went to see him in Germany, the defendant
delivering to the plaintiff certificates of stock which he had brought with him to Europe in
exchange for the plaintiff's check for $1,000.

In April, 1949, the plaintiff at the defendant's invitation visited him in Paris. The
defendant had left the United States with $500 in his possession and after arriving in
Europe had been in constant need of money to meet his expenses. In a conversation in
a hotel in Paris the defendant told the plaintiff that he needed about $4,000 and that he
could raise about $2,000 by selling his Cadillac car. In the plaintiff's presence the
defendant made a telephone call to his wife in the United States and instructed her to
sell the automobile. The defendant asked the plaintiff to help him, but did not mention
anything about selling the plaintiff any shares of stock. The plaintiff said he would think it
over for a few days and see what he could do. After returning to his base in Germany
the plaintiff mailed the defendant a check payable to the defendant's order for $1,500
without indicating on the check or in the accompanying letter what the money was for.
The defendant endorsed the check and converted it into traveller's checks. The parties
did not see each other again until the day of the trial, although the plaintiff had made
many attempts to see the defendant after they both had returned to the United States,
seeking him at his home and calling him on the telephone at various times, but always
without success.

*264 The plaintiff instituted this suit against the defendant on two counts, the first for
$1,000 and the second for $1,500, but at the outset of the trial the plaintiff moved for a
voluntary dismissal of the first count and the pretrial order was amended accordingly.
The issue as stated in the amended pretrial order was limited to whether the money
given by the plaintiff to the defendant was a loan or an investment in a business
venture. At the trial the plaintiff testified that the check for $1,500 was a personal loan to
the defendant but this the defendant denied, contending that he had never borrowed
any money from the plaintiff. At the end of the plaintiff's case and again at the end of the
entire case the defendant moved for an involuntary dismissal on the ground that the
plaintiff's proofs were insufficient, there being no promise to repay, no demand for
repayment, and no pleading or proof of the law of France where the transaction
occurred. These motions were denied, the trial court holding that while it would not take
judicial notice of the law of France it would proceed, first, on the presumption that the
law involving loans is the same there as in other civilized countries, and, secondly, on
the ground that the issue with respect to the law of France had not been set forth in the
pretrial order. When the case was submitted to the jury, the defendant objected to the
charge on the ground that it did not instruct the jury to find as a fact what the law of
France was. The jury returned a verdict in favor of the plaintiff in the sum of $1,500, and
from the judgment entered thereon the defendant took this appeal. It is significant that
the defendant never proved or even attempted to prove either the delivery of any stock
to the plaintiff or a tender thereof. Neither did the defendant attempt to prove or even
suggest that the law of France was such as to preclude recovery in the circumstances.

The defendant argues five points on this appeal, none of which has merit:

1. "The motion to dismiss should have been granted where the complaint alleges an
express contract of loan and *265 there is a failure to prove a promise to repay." A loan
may be established by a contract implied in fact as well as by an express promise; the
only difference between the two is the kind of evidence used to prove the undertaking.
At the oral argument the defendant relied on Allen v. Bunting, 18 N.J.L. 299 (Sup. Ct.
1841) holding that a note or a check in the hands of the maker or drawer after payment
at the bank, instead of being prima facie evidence of so much money lent, is only prima
facie evidence that the maker or drawer was indebted to the payee at the time he gave
the note or check and that it was given in satisfaction of that specific debt. It is difficult to
see how this ruling as to the prima facie effect of a cancelled check in the plaintiff's
hands aids the defendant in view of the testimony given at the trial concerning
defendant's need of $4,000 to pay his expenses, his instructions to his wife by trans-
Atlantic telephone to sell his Cadillac car for $2,000, and his request to the plaintiff for a
loan, followed by the plaintiff's mailing him a check for $1,500. The issue presented by
the pretrial order as to whether or not the plaintiff had given the $1,500 to the defendant
as a loan was properly presented to the jury which reached a conclusion supported by
the evidence before it.

2. "The trial court erred in failing to dismiss the complaint where the plaintiff failed to
prove a demand for repayment of the money." This defense comes with bad grace from
a defendant who had so assiduously avoided the efforts of the plaintiff to communicate
with him, and no authorities to support it are cited by the defendant in his brief nor did
he come forward with any at the oral argument. In the circumstances here the starting of
suit is all the demand the defendant is entitled to. We consider that the answer to the
defendant's contention is well stated in section 264 of the Restatement of Contracts:

"Where a contractual promise to pay money is in terms performable on demand by the

promisee, but the duty of performance is otherwise unconditional, and neither more
specific words nor usage requires a different result, a right of action by the promisee is
not conditional on a demand being made."

*266 3. "The rules of law for a foreign country must be pleaded and proved as facts
along with the other elements of a cause of action to enable a plaintiff to recover against
the defendant." A court will in general take judicial notice of and apply the law of its own
jurisdiction without pleading or proof thereof, the judges being deemed to know the law
or at least where it is to be found, 9 Wigmore on Evidence (3d ed., 1940), 551. Under
the common law of England as adopted in this country, however, the law of other
countries, including sister states, would not be so noticed and applied by a court, but it
was deemed an issue of fact to be pleaded and proved as other material facts had to
be, Title Guarantee and Trust Co. v. Trenton Potteries Co., 56 N.J. Eq. 441, 444 (E. & A.
1897); Coryell v. Buffalo Union Furnace Co., 88 N.J.L. 291, 294 (E. & A. 1915); Fithian
v. Pennsylvania Railroad Co., 91 N.J.L. 275, 279 (E. & A. 1918); Giardini v. McAdoo, 93
N.J.L. 138, 141 (E. & A. 1919); Robins v. Mack International Motor Truck Corp., 113
N.J.L. 377, 387 (E. & A. 1934); Coral Gables, Inc., v. Kretschmer, 116 N.J.L. 580, 582
(E. & A. 1936); Franzen v. Equitable Life Assur. Soc., 130 N.J.L. 457, 459 (Sup. Ct.
1943); 9 Wigmore on Evidence (3d ed. 1940), 554. This common law rule had two great
disadvantages; it made every jury pass on questions of law quite beyond its
competence and the decision of the jury as to the foreign law was unappealable at
common law as were its findings on all questions of fact.

The courts, however, were reluctant to dismiss an action for a failure to plead and prove
the applicable foreign law as they would have dismissed it for a failure to prove other
material facts necessary to establish a cause of action or a defense. Accordingly the
courts frequently indulged in one or another of several presumptions: that the common
law prevails in the foreign jurisdiction; that the law of the foreign jurisdiction is the same
as the law of the forum, be it common law or statute; or that certain fundamental
principles of the law exist in all civilized countries. As a fourth alternative, instead of
indulging in any presumption as to the law of the *267 foreign jurisdiction, the courts
would merely apply the law of the forum as the only law before the court on the
assumption that by failing to prove the foreign law the parties acquiesce in having their
controversy determined by reference to the law of the forum, be it statutory or common
law. By the application of these various presumptions the courts have in effect treated
the common law rule that foreign law could not be noticed but must be pleaded and
proved as if it were a matter of fact merely as a permissive rule whereby either party
could, if it were to his advantage, plead and prove the foreign law. Thus the failure to
plead and prove the foreign law has not generally been considered as fatal. For a
thorough discussion of the presumptions applied in the absence of proof of the foreign
law see the notes: "How case determined when proper foreign law not proved," 67
L.R.A. 33-61; and "Determination of case properly governed by law of foreign country
which is not proved," 34 L.R.A. (N.S.) 261-274.

In New Jersey, in the absence of proof as to the applicable foreign law, the courts have
frequently applied the presumption that the common law exists in the foreign
jurisdiction. This presumption had long been recognized in this State when Chief Justice
Beasley said in Waln v. Waln, 53 N.J.L. 429, 432 (E. & A. 1891):

"There was no offer made at the trial to show what the law of Pennsylvania was; and
consequently, according to the general rule of law, and which rule has been repeatedly
recognized and applied by our own courts, the inference, juris et de jure, is that the
system there prevalent was that of the common law."

For more recent New Jersey cases in which this presumption has been applied or
recognized see Bodine v. Berg, 82 N.J.L. 662 (E. & A. 1911); Thayer Mercantile Co. v.
First National Bank of Milltown, 98 N.J.L. 29, 32 (Sup. Ct. 1922); Reingold v. Reingold,
115 N.J.L. 532, 534 (E. & A. 1935); Coral Gables, Inc., v. Kretschmer, 116 N.J.L. 580,
583 (E. & A. 1936); Redmond v. N.J. Historical Society, *268 132 N.J. Eq. 464, 469 (E.
& A. 1942); Kelly v. Kelly, 134 N.J. Eq. 316, 319 (Prerog. 1944); and Shepherd v. Ward,
5 N.J. 92, 106 (1950). This presumption, insofar as the law of the states, territories and
other jurisdictions of the United States is concerned, is reenforced by the first section of
the Uniform Judicial Notice of Foreign Law Act, L. 1941, c. 81, 1, as amended by L.
1942, c. 104, 1 (N.J.S.A. 2:98-28).

While our attention has not been directed to any New Jersey cases on the point, this
presumption as to the existence of the common law in a foreign jurisdiction is equally
applicable in cases involving other common law countries such as England in the
absence of proof to the contrary, see note 34 L.R.A. (N.S.) 261, 270, cited supra; 20
Am. Jur., Evidence, 181; 31 C.J.S., Evidence, 133, p. 767. That the presumption as
to the existence of the common law applies to all common law jurisdictions is further
borne out by the fact that by virtue of R.S. 2:98-18, originally enacted by L. 1860, c. 92,
1:

"The reports of judicial decisions of other states of the United States and foreign
countries may be judicially noticed by the courts of this state as evidence of the
common law of such states or countries, * * *."

While the application of the presumption that the common law exists in the foreign
jurisdiction works well in many cases, it does not produce sound results in a case where
the common law on the subject involved has been substantially changed by statute here
and in the foreign state. For example, if a case involved the capacity of a married
woman to contract or to hold and convey property, resort to the common law to decide
the case might well result in a decision contrary to long established statutory
enactments here and in the foreign jurisdiction altering the common law rule. While the
presumption as to the existence of the common law in the foreign jurisdiction has the
advantages of having been long indulged in by the courts of this and other states and of
being incorporated *269 in the Uniform Judicial Notice of Foreign Law Act, in a proper
case consideration might well be given to rejecting it in favor of the presumption that the
foreign law is the same as the law of the forum, be it statutory or common law, or even
more preferable, in favor of the presumption that the parties by their failure to plead and
prove the foreign law acquiesce in the application of the law of the forum as the only law
before the court.

In the instant case the transaction occurred in France. Our courts may properly take
judicial knowledge that France is not a common law, but rather a civil jurisdiction. It
would, therefore, be inappropriate and indeed contrary to elementary knowledge to
presume that the principles of the common law prevail there. This does not mean,
however, that the plaintiff must fail in his cause of action because of the absence of any
proof at the trial as to the applicable law of France. In these circumstances any one of
the other three presumptions may be indulged in, i.e., that the law of France is the same
as the law of the forum; that the law of France, like all civilized countries, recognizes
certain fundamental principles, as, e.g., that the taking of a loan creates an obligation
upon the borrower to make repayment; that the parties by failing to prove the law of
France have acquiesced in having their dispute determined by the law of the forum.

The court below based its decision upon the presumption that the law of France in
common with that of other civilized countries recognizes a liability to make repayment
under the facts here present, and its decision is not without substantial merit in reason
and support in the authorities, see, for example, Cuba Railroad Co. v. Crosby, 222 U.S.
473 (1912), and Parrot v. Mexican Central Railway Co., 207 Mass. 184, 93 N.E. 590
(1911). The utilization of this presumption has decided limitations, however, for in many
cases it would be difficult to determine whether or not the question presented was of
such a fundamental nature as reasonably to warrant the assumption that it would be
similarly treated by the laws of all civilized countries. The presumption *270 that in the
absence of proof the parties acquiesce in the application of the law of the forum, be it
statutory law or common law, does not present any such difficulties for it may be
universally applied regardless of the nature of the controversy. This view, moreover, is
favored by the authorities, see the notes in 67 L.R.A. 33 and 34 L.R.A. (N.S.) 261, cited
supra, and appears to have been followed in at least one instance in this State, Sturm v.
Sturm, 111 N.J. Eq. 579, 587 (Ch. 1932), a case in which the law of Austria was
involved. We are of the opinion, therefore, that in the instant case the rights of the
parties are to be determined by the law of New Jersey which unquestionably permits
recovery on the facts proven.

We recognize, of course, that in certain cases there might be present factors which
would make it unreasonable for the court to indulge in any presumption and where the
court in the exercise of its sound discretion might require proof of applicable foreign law
to be laid before the court, but such is certainly not the situation here. The defendant is
in no way prejudiced by the application of the law of this State. If he had desired to raise
an issue as to the foreign law, he might have done so in his answer or at the pretrial
conference or, with permission of the court, at the trial itself, and himself have
introduced proof as to the law of France. It is against the letter and the spirit of our
practice to permit him to make the failure of the plaintiff to plead and prove foreign law
the basis of a surprise motion addressed to the court either in the course of or at the
conclusion of the case.

4. "The rules of law of a foreign country are a question of fact to be determined by the
jury, along with the other elements of a cause, to enable a plaintiff to recover against a
defendant." This contention is without merit here, for in all cases in which the court in
the absence of proof indulges in a presumption as to the applicable foreign law the
question is perforce one for the court rather than for the jury; see sections 3 and 5 of the
Uniform Judicial Notice of Foreign Law Act (N.J.S.A. 2:98-30 and 32) and *271 Franzen
v. Equitable Life Assur. Soc., 130 N.J.L. 457, 459-461 (Sup. Ct. 1943).

5. "The verdict is against the weight of the evidence." The testimony of the plaintiff and
of the defendant was in sharp conflict. The inferences to be drawn were more
compatible with the view of the $1,500 being a loan than with its being payment for
stock in a business venture. The defendant's need for $4,000, the selling of his
automobile to raise $2,000, his requesting the plaintiff for a loan, his failure to deliver
any stock to the plaintiff or to tender any, and his evasion of the plaintiff, all conspire to
make his story unbelievable. Under our Constitution and the rules of court the verdict of
a jury is not to be set aside as against the weight of the evidence unless it clearly and
convincingly appears that the verdict was the result of mistake, partiality, prejudice or
passion. Rule 1:2-20(a).

The judgment below is affirmed.

For affirmance Chief Justice VANDERBILT, and Justices CASE, OLIPHANT,
WACHENFELD, BURLING and ACKERSON 6.

For reversal None.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-11467 March 15, 1916

NG HIAN, petitioner-appellee,
vs.
THE INSULAR COLLECTOR OF CUSTOMS, respondent-appellant.

Attorney-General Avancea for appellant.

Williams, Ferrier and SyCip for appellee.

JOHNSON, J.:

This action was commenced in the Court of First Instance of the city of Manila on the 26th of
November, 1915, by the presentation of a petition for the writ of habeas corpus.

From an examination of the record the following facts appear to be proved beyond question:

First. That on or about the 30th of October, 1915 on the steamship Tian there arrived at the port of
Manila, a woman, Marcosa S. Dy Jiongco, together with two children, Ng Tio a female of the age of 9
years, and Ng Hian a boy of 16 years of age (the petitioner herein);

Second. That Marcosa S. Dy Jiongco had been born in the Philippine Islands, of a Filipina mother
and a Chinese father;

Third. That Marcosa S. Dy Jiongco was married to a Chinaman by the name of (Filipino name) Juan
Uy Tue, (Chinese name) Ng Chion Tue:

Fourth. That Juan Uy Tue (Ng Chion Tue), before his marriage with Marcosa S. Dy Jiongco, had
been married to a Chinese woman with whom he had some children, the petitioner herein and also
one called Ng Guan. It appears that Ng Guan was residing in the Philippine Islands at the time of the
presentation of the present petition;

Fifth. That the Chinese wife of Juan Uy Tue died while the petitioner herein, Ng Hian, was a very
small child;

Sixth. That the said Juan Uy Tue, after the death of his Chinese wife, was legally married to the said
Marcosa S. Dy Jiongco;

Seventh. That the said little girl, Ng Tio, of 9 years of age was the daughter of the brother of the said
Juan Uy Tue, born of a Chinese father and mother; that the father of the little girl had given her to the
said Marcosa S. Dy Jiongco;

Eight. That Marcosa S. Dy Jiongco, being the stepmother of the said Ng Hian, adopted him and was
bringing him to the Philippine Islands to study.
After the close of the investigation before the board of special inquiry, during which examination the
foregoing facts were presented, the said board refused the right of each of said children to enter the
Philippine Islands.

Later, on the 17th of November, 1915, a rehearing was granted for the purpose of examining other
witnesses upon the question of the right of said two children, Ng Tio and Ng Hian, to enter the
Philippine Islands. At the close of the second hearing the board of special inquiry admitted Ng Tio,
but denied the right of Ng Hian to enter the Philippine Islands. From that decision an appeal was
taken to the Collector of Customs and by him affirmed on the 23d of November, 1915. The petition
for the writ of habeas corpus in the present case was presented on the 26th of November, 1915.

The petition and answer and the record made in the department of customs were presented to the
Court of First Instance. The court, after an examination of the record, reached the conclusion that the
petition (Ng Hian) was entitled to enter the Philippine Islands. From that decision the Collector of
Customs appealed to this court. The question which the Attorney-General presents is whether or not
the minor children of a deceased resident Chinese merchant have a right to enter the territory of the
Philippine Islands. That question has been answered by this court in numerous decisions in the
negative. (Lee Jua vs. Collector of Customs, 32 Phil. Rep., 24; Tan Lin Jo vs. Collector of Customs,
32 Phil. Rep., 78; Cang Kai Guan vs. Collector of Customs, 32 Phil. Rep., 102; Yat Tian Un (Sun) vs.
Collector of Customs, 32 Phil. Rep., 487; De Eng Hoa vs. Collector of Customs, 32 Phil. Rep.,
490; Ex parte Chan Fooi, 217 Fed. Rep., 308.)

It is true that the petitioner, Ng Hian, had never been in the Philippine Islands before. It is also true
that the said Marcosa S. Dy Jingco was his stepmother. She swore positively that she had adopted
him. That fact is not denied of record. Until the fact is denied we must accept it. There is nothing in
the record which shows or tends to show that she had not adopted him in good faith. The question
whether or not Marcosa S. Dy Jiongco could bring Ng Hian into the territory of the Philippine Islands
as her adopted son has been discussed by the Federal Courts of the United States. In the case
of Ex parte Fong Yim (134 Fed. Rep., 938), the court held that:

A Chinese merchant domiciled in the United States has the right to bring into this country
with his wife minor children legally adopted by him in China, where it is shown that the
adoption was bona fide, and that the children have lived as members of his family and have
been supported by him for several years.

The court further said:

Of course, the question whether the adoption is a genuine one is a question of fact, open to
investigation . . . . The evidence shows that the practice of adopting children in China is very
common, that it takes place substantially without legal formalities, but that the rights and
obligations of children adopted and recognized as such are similar to those of natural children.
Under these circumstances I can see no difference between the legal status of adopted children
and of natural children. The Supreme Court (of the United States) having decided that a Chinese
merchant domiciled in this country has the right to bring into it his natural children, I think that the
same decision is authority for the proposition that he has the right to introduce his adopted
children.

Upon the theory, therefore, that Ng Hian had been adopted by his stepmother, and upon the theory that
she has a right to enter territory of the United States, without objection, we are of the opinion and so hold
that Ng Hian has a right to enter the territory of the Philippine Islands as her adopted son. Therefore the
judgment of the lower court is hereby affirmed, with costs. So ordered.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-12105 January 30, 1960

TESTATE ESTATE OF C. O. BOHANAN, deceased. PHILIPPINE TRUST CO., executor-appellee,

vs.
MAGDALENA C. BOHANAN, EDWARD C. BOHANAN, and MARY LYDIA BOHANAN, oppositors-
appellants.

Jose D. Cortes for appellants.

Ohnick, Velilla and Balonkita for appellee.

LABRADOR, J.:

Appeal against an order of the Court of First Instance of Manila, Hon. Ramon San Jose, presiding,
dismissing the objections filed by Magdalena C. Bohanan, Mary Bohanan and Edward Bohanan to
the project of partition submitted by the executor and approving the said project.

On April 24, 195 0, the Court of First Instance of Manila, Hon. Rafael Amparo, presiding, admitted to
probate a last will and testament of C. O. Bohanan, executed by him on April 23, 1944 in Manila. In
the said order, the court made the following findings:

According to the evidence of the opponents the testator was born in Nebraska and therefore
a citizen of that state, or at least a citizen of California where some of his properties are
located. This contention in untenable. Notwithstanding the long residence of the decedent in
the Philippines, his stay here was merely temporary, and he continued and remained to be a
citizen of the United States and of the state of his pertinent residence to spend the rest of his
days in that state. His permanent residence or domicile in the United States depended upon
his personal intent or desire, and he selected Nevada as his homicide and therefore at the
time of his death, he was a citizen of that state. Nobody can choose his domicile or
permanent residence for him. That is his exclusive personal right.

Wherefore, the court finds that the testator C. O. Bohanan was at the time of his death a
citizen of the United States and of the State of Nevada and declares that his will and
testament, Exhibit A, is fully in accordance with the laws of the state of Nevada and admits
the same to probate. Accordingly, the Philippine Trust Company, named as the executor of
the will, is hereby appointed to such executor and upon the filing of a bond in the sum of
P10,000.00, let letters testamentary be issued and after taking the prescribed oath, it may
enter upon the execution and performance of its trust. (pp. 26-27, R.O.A.).

It does not appear that the order granting probate was ever questions on appeal. The executor filed
a project of partition dated January 24, 1956, making, in accordance with the provisions of the will,
the following adjudications: (1) one-half of the residuary estate, to the Farmers and Merchants
National Bank of Los Angeles, California, U.S.A. in trust only for the benefit of testator's grandson
Edward George Bohanan, which consists of several mining companies; (2) the other half of the
residuary estate to the testator's brother, F.L. Bohanan, and his sister, Mrs. M. B. Galbraith, share
and share alike. This consist in the same amount of cash and of shares of mining stock similar to
those given to testator's grandson; (3) legacies of P6,000 each to his (testator) son, Edward Gilbert
Bohana, and his daughter, Mary Lydia Bohanan, to be paid in three yearly installments; (4) legacies
to Clara Daen, in the amount of P10,000.00; Katherine Woodward, P2,000; Beulah Fox, P4,000; and
Elizabeth Hastings, P2,000;

It will be seen from the above that out of the total estate (after deducting administration expenses) of
P211,639.33 in cash, the testator gave his grandson P90,819.67 and one-half of all shares of stock
of several mining companies and to his brother and sister the same amount. To his children he gave
a legacy of only P6,000 each, or a total of P12,000.

The wife Magadalena C. Bohanan and her two children question the validity of the testamentary
provisions disposing of the estate in the manner above indicated, claiming that they have been
deprived of the legitimate that the laws of the form concede to them.

The first question refers to the share that the wife of the testator, Magdalena C. Bohanan, should be
entitled to received. The will has not given her any share in the estate left by the testator. It is argued
that it was error for the trial court to have recognized the Reno divorce secured by the testator from
his Filipino wife Magdalena C. Bohanan, and that said divorce should be declared a nullity in this
jurisdiction, citing the case of Querubin vs. Querubin, 87 Phil., 124, 47 Off. Gaz., (Sup, 12) 315,
Cousins Hiz vs. Fluemer, 55 Phil., 852, Ramirez vs. Gmur, 42 Phil., 855 and Gorayeb vs. Hashim, 50
Phil., 22. The court below refused to recognize the claim of the widow on the ground that the laws of
Nevada, of which the deceased was a citizen, allow him to dispose of all of his properties without
requiring him to leave any portion of his estate to his wife. Section 9905 of Nevada Compiled Laws
of 1925 provides:

Every person over the age of eighteen years, of sound mind, may, by last will, dispose of all
his or her estate, real and personal, the same being chargeable with the payment of the
testator's debts.

Besides, the right of the former wife of the testator, Magdalena C. Bohanan, to a share in the
testator's estafa had already been passed upon adversely against her in an order dated June 19,
1955, (pp. 155-159, Vol II Records, Court of First Instance), which had become final, as Magdalena
C. Bohanan does not appear to have appealed therefrom to question its validity. On December 16,
1953, the said former wife filed a motion to withdraw the sum of P20,000 from the funds of the
estate, chargeable against her share in the conjugal property, (See pp. 294-297, Vol. I, Record,
Court of First Instance), and the court in its said error found that there exists no community property
owned by the decedent and his former wife at the time the decree of divorce was issued. As already
and Magdalena C. Bohanan may no longer question the fact contained therein, i.e. that there was no
community property acquired by the testator and Magdalena C. Bohanan during their converture.

Moreover, the court below had found that the testator and Magdalena C. Bohanan were married on
January 30, 1909, and that divorce was granted to him on May 20, 1922; that sometime in 1925,
Magdalena C. Bohanan married Carl Aaron and this marriage was subsisting at the time of the death
of the testator. Since no right to share in the inheritance in favor of a divorced wife exists in the State
of Nevada and since the court below had already found that there was no conjugal property between
the testator and Magdalena C. Bohanan, the latter can now have no longer claim to pay portion of
the estate left by the testator.
The most important issue is the claim of the testator's children, Edward and Mary Lydia, who had
received legacies in the amount of P6,000 each only, and, therefore, have not been given their
shares in the estate which, in accordance with the laws of the forum, should be two-thirds of the
estate left by the testator. Is the failure old the testator to give his children two-thirds of the estate left
by him at the time of his death, in accordance with the laws of the forum valid?

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 earned 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. (See Decision dated April 24, 1950, supra). So the question at issue is
whether the estementary dispositions, especially hose 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 (Sec. 9905, Complied Nevada Laws of
1925, supra). It does not appear that at time of the hearing of the project of partition, the above-
quoted provision was introduced in evidence, as it was the executor's duly 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
tested by the officer having the legal custody of he 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 withdrawal of
P20,000 as her share, the foreign law, especially Section 9905, Compiled Nevada Laws. was
introduced in evidence by appellant's (herein) counsel as Exhibits "2" (See pp. 77-79, VOL. II, and
t.s.n. pp. 24-44, Records, Court of First Instance). Again said laws 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 (se 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, already indicated above, 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.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 119976 September 18, 1995

IMELDA ROMUALDEZ-MARCOS, petitioner,

vs.
COMMISSION ON ELECTIONS and CIRILO ROY MONTEJO, respondents.

KAPUNAN, J.:

A constitutional provision should be construed as to give it effective operation and suppress the
mischief at which it is aimed. 1 The 1987 Constitution mandates that an aspirant for election to the House
of Representatives be "a registered voter in the district in which he shall be elected, and a resident
thereof for a period of not less than one year immediately preceding the election." 2 The mischief which
this provision reproduced verbatim from the 1973 Constitution seeks to prevent is the possibility of a
"stranger or newcomer unacquainted with the conditions and needs of a community and not identified
with the latter, from an elective office to serve that community." 3

Petitioner Imelda Romualdez-Marcos filed her Certificate of Candidacy for the position of
Representative of the First District of Leyte with the Provincial Election Supervisor on March 8, 1995,
providing the following information in item no. 8: 4

RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO BE ELECTED

IMMEDIATELY PRECEDING THE ELECTION: __________ Years
and seven Months.

On March 23, 1995, private respondent Cirilo Roy Montejo, the incumbent Representative of the
First District of Leyte and a candidate for the same position, filed a "Petition for Cancellation and
Disqualification" 5 with the Commission on Elections alleging that petitioner did not meet the constitutional
requirement for residency. In his petition, private respondent contended that Mrs. Marcos lacked the
Constitution's one year residency requirement for candidates for the House of Representatives on the
evidence of declarations made by her in Voter Registration Record 94-No. 3349772 6and in her Certificate
of Candidacy. He prayed that "an order be issued declaring (petitioner) disqualified and canceling the
certificate of candidacy." 7

On March 29, 1995, petitioner filed an Amended/Corrected Certificate of Candidacy, changing the
entry "seven" months to "since childhood" in item no. 8 of the amended certificate. 8 On the same day,
the Provincial Election Supervisor of Leyte informed petitioner that:

[T]his office cannot receive or accept the aforementioned Certificate of Candidacy on

the ground that it is filed out of time, the deadline for the filing of the same having
 already lapsed on March 20, 1995. The Corrected/Amended Certificate of Candidacy
should have been filed on or before the March 20, 1995 deadline. 9

Consequently, petitioner filed the Amended/Corrected Certificate of Candidacy with the COMELEC's
Head Office in Intramuros, Manila on
March 31, 1995. Her Answer to private respondent's petition in SPA No. 95-009 was likewise filed
with the head office on the same day. In said Answer, petitioner averred that the entry of the word
"seven" in her original Certificate of Candidacy was the result of an "honest
misinterpretation" 10 which she sought to rectify by adding the words "since childhood" in her
Amended/Corrected Certificate of Candidacy and that "she has always maintained Tacloban City as her
domicile or residence. 11 Impugning respondent's motive in filing the petition seeking her disqualification,
she noted that:

When respondent (petitioner herein) announced that she was intending to register as
a voter in Tacloban City and run for Congress in the First District of Leyte, petitioner
immediately opposed her intended registration by writing a letter stating that "she is
not a resident of said city but of Barangay Olot, Tolosa, Leyte. After respondent had
registered as a voter in Tolosa following completion of her six month actual residence
therein, petitioner filed a petition with the COMELEC to transfer the town of Tolosa
from the First District to the Second District and pursued such a move up to the
Supreme Court, his purpose being to remove respondent as petitioner's opponent in
the congressional election in the First District. He also filed a bill, along with other
Leyte Congressmen, seeking the creation of another legislative district to remove the
town of Tolosa out of the First District, to achieve his purpose. However, such bill did
not pass the Senate. Having failed on such moves, petitioner now filed the instant
petition for the same objective, as it is obvious that he is afraid to submit along with
respondent for the judgment and verdict of the electorate of the First District of Leyte
in an honest, orderly, peaceful, free and clean elections on May 8, 1995. 12

On April 24, 1995, the Second Division of the Commission on Elections (COMELEC), by a vote of 2
to 1, 13 came up with a Resolution 1) finding private respondent's Petition for Disqualification in SPA 95-
009 meritorious; 2) striking off petitioner's Corrected/Amended Certificate of Candidacy of March 31,
1995; and 3) canceling her original Certificate of Candidacy. 14 Dealing with two primary issues, namely,
the validity of amending the original Certificate of Candidacy after the lapse of the deadline for filing
certificates of candidacy, and petitioner's compliance with the one year residency requirement, the
Second Division held:

Respondent raised the affirmative defense in her Answer that the printed word
"Seven" (months) was a result of an "honest misinterpretation or honest mistake" on
her part and, therefore, an amendment should subsequently be allowed. She averred
that she thought that what was asked was her "actual and physical" presence in
Tolosa and not residence of origin or domicile in the First Legislative District, to which
she could have responded "since childhood." In an accompanying affidavit, she
stated that her domicile is Tacloban City, a component of the First District, to which
she always intended to return whenever absent and which she has never
abandoned. Furthermore, in her memorandum, she tried to discredit petitioner's
theory of disqualification by alleging that she has been a resident of the First
Legislative District of Leyte since childhood, although she only became a resident of
the Municipality of Tolosa for seven months. She asserts that she has always been a
resident of Tacloban City, a component of the First District, before coming to the
Municipality of Tolosa.

Along this point, it is interesting to note that prior to her registration in Tolosa,
respondent announced that she would be registering in Tacloban City so that she can
be a candidate for the District. However, this intention was rebuffed when petitioner
wrote the Election Officer of Tacloban not to allow respondent since she is a resident
of Tolosa and not Tacloban. She never disputed this claim and instead implicitly
acceded to it by registering in Tolosa.

This incident belies respondent's claim of "honest misinterpretation or honest

mistake." Besides, the Certificate of Candidacy only asks for RESIDENCE. Since on
the basis of her Answer, she was quite aware of "residence of origin" which she
interprets to be Tacloban City, it is curious why she did not cite Tacloban City in her
Certificate of Candidacy. Her explanation that she thought what was asked was her
actual and physical presence in Tolosa is not easy to believe because there is none
in the question that insinuates about Tolosa. In fact, item no. 8 in the Certificate of
Candidacy speaks clearly of "Residency in the CONSTITUENCY where I seek to be
elected immediately preceding the election." Thus, the explanation of respondent
fails to be persuasive.

From the foregoing, respondent's defense of an honest mistake or misinterpretation,

therefore, is devoid of merit.

To further buttress respondent's contention that an amendment may be made, she

cited the case of Alialy v. COMELEC (2 SCRA 957). The reliance of respondent on
the case of Alialy is misplaced. The case only applies to the "inconsequential
deviations which cannot affect the result of the election, or deviations from provisions
intended primarily to secure timely and orderly conduct of elections." The Supreme
Court in that case considered the amendment only as a matter of form. But in the
instant case, the amendment cannot be considered as a matter of form or an
inconsequential deviation. The change in the number of years of residence in the
place where respondent seeks to be elected is a substantial matter which determines
her qualification as a candidacy, specially those intended to suppress, accurate
material representation in the original certificate which adversely affects the filer. To
admit the amended certificate is to condone the evils brought by the shifting minds of
manipulating candidate, of the detriment of the integrity of the election.

Moreover, to allow respondent to change the seven (7) month period of her residency
in order to prolong it by claiming it was "since childhood" is to allow an untruthfulness
to be committed before this Commission. The arithmetical accuracy of the 7 months
residency the respondent indicated in her certificate of candidacy can be gleaned
from her entry in her Voter's Registration Record accomplished on January 28, 1995
which reflects that she is a resident of Brgy. Olot, Tolosa, Leyte for 6 months at the
time of the said registration (Annex A, Petition). Said accuracy is further buttressed
by her letter to the election officer of San Juan, Metro Manila, dated August 24, 1994,
requesting for the cancellation of her registration in the Permanent List of Voters
thereat so that she can be re-registered or transferred to Brgy. Olot, Tolosa, Leyte.
The dates of these three (3) different documents show the respondent's consistent
conviction that she has transferred her residence to Olot, Tolosa, Leyte from Metro
Manila only for such limited period of time, starting in the last week of August 1994
which on March 8, 1995 will only sum up to 7 months. The Commission, therefore,
cannot be persuaded to believe in the respondent's contention that it was an error.

xxx xxx xxx

Based on these reasons the Amended/Corrected Certificate of Candidacy cannot be

admitted by this Commission.

xxx xxx xxx

Anent the second issue, and based on the foregoing discussion, it is clear that
respondent has not complied with the one year residency requirement of the
Constitution.

In election cases, the term "residence" has always been considered as synonymous
with "domicile" which imports not only the intention to reside in a fixed place but also
personal presence in-that place, coupled with conduct indicative of such intention.
Domicile denotes a fixed permanent residence to which when absent for business or
pleasure, or for like reasons, one intends to return. (Perfecto Faypon vs. Eliseo
Quirino, 96 Phil 294; Romualdez vs. RTC-Tacloban, 226 SCRA 408). In respondent's
case, when she returned to the Philippines in 1991, the residence she chose was not
Tacloban but San Juan, Metro Manila. Thus, her animus revertendi is pointed to
Metro Manila and not Tacloban.

This Division is aware that her claim that she has been a resident of the First District
since childhood is nothing more than to give her a color of qualification where she is
otherwise constitutionally disqualified. It cannot hold ground in the face of the facts
admitted by the respondent in her affidavit. Except for the time that she studied and
worked for some years after graduation in Tacloban City, she continuously lived in
Manila. In 1959, after her husband was elected Senator, she lived and resided in San
Juan, Metro Manila where she was a registered voter. In 1965, she lived in San
Miguel, Manila where she was again a registered voter. In 1978, she served as
member of the Batasang Pambansa as the representative of the City of Manila and
later on served as the Governor of Metro Manila. She could not have served these
positions if she had not been a resident of the City of Manila. Furthermore, when she
filed her certificate of candidacy for the office of the President in 1992, she claimed to
be a resident of San Juan, Metro Manila. As a matter of fact on August 24, 1994,
respondent wrote a letter with the election officer of San Juan, Metro Manila
requesting for the cancellation of her registration in the permanent list of voters that
she may be re-registered or transferred to Barangay Olot, Tolosa, Leyte. These facts
manifest that she could not have been a resident of Tacloban City since childhood up
to the time she filed her certificate of candidacy because she became a resident of
many places, including Metro Manila. This debunks her claim that prior to her
residence in Tolosa, Leyte, she was a resident of the First Legislative District of Leyte
since childhood.
 In this case, respondent's conduct reveals her lack of intention to make Tacloban her
domicile. She registered as a voter in different places and on several occasions
declared that she was a resident of Manila. Although she spent her school days in
Tacloban, she is considered to have abandoned such place when she chose to stay
and reside in other different places. In the case of Romualdez vs. RTC (226 SCRA
408) the Court explained how one acquires a new domicile by choice. There must
concur: (1) residence or bodily presence in the new locality; (2) intention to remain
there; and (3) intention to abandon the old domicile. In other words there must
basically be animus manendi with animus non revertendi. When respondent chose to
stay in Ilocos and later on in Manila, coupled with her intention to stay there by
registering as a voter there and expressly declaring that she is a resident of that
place, she is deemed to have abandoned Tacloban City, where she spent her
childhood and school days, as her place of domicile.

Pure intention to reside in that place is not sufficient, there must likewise be conduct
indicative of such intention. Respondent's statements to the effect that she has
always intended to return to Tacloban, without the accompanying conduct to prove
that intention, is not conclusive of her choice of residence. Respondent has not
presented any evidence to show that her conduct, one year prior the election,
showed intention to reside in Tacloban. Worse, what was evident was that prior to her
residence in Tolosa, she had been a resident of Manila.

It is evident from these circumstances that she was not a resident of the First District
of Leyte "since childhood."

To further support the assertion that she could have not been a resident of the First
District of Leyte for more than one year, petitioner correctly pointed out that on
January 28, 1995 respondent registered as a voter at precinct No. 18-A of Olot,
Tolosa, Leyte. In doing so, she placed in her Voter Registration Record that she
resided in the municipality of Tolosa for a period of six months. This may be
inconsequential as argued by the respondent since it refers only to her residence in
Tolosa, Leyte. But her failure to prove that she was a resident of the First District of
Leyte prior to her residence in Tolosa leaves nothing but a convincing proof that she
had been a resident of the district for six months only. 15

In a Resolution promulgated a day before the May 8, 1995 elections, the COMELEC en banc denied
petitioner's Motion for Reconsideration 16 of the April 24, 1995 Resolution declaring her not qualified to
run for the position of Member of the House of Representatives for the First Legislative District of
Leyte. 17 The Resolution tersely stated:

After deliberating on the Motion for Reconsideration, the Commission RESOLVED to

DENY it, no new substantial matters having been raised therein to warrant re-
examination of the resolution granting the petition for disqualification. 18

On May 11, 1995, the COMELEC issued a Resolution allowing petitioner's proclamation should the
results of the canvass show that she obtained the highest number of votes in the congressional
elections in the First District of Leyte. On the same day, however, the COMELEC reversed itself and
issued a second Resolution directing that the proclamation of petitioner be suspended in the event
that she obtains the highest number of votes. 19
In a Supplemental Petition dated 25 May 1995, petitioner averred that she was the overwhelming
winner of the elections for the congressional seat in the First District of Leyte held May 8, 1995
based on the canvass completed by the Provincial Board of Canvassers on May 14, 1995. Petitioner
alleged that the canvass showed that she obtained a total of 70,471 votes compared to the 36,833
votes received by Respondent Montejo. A copy of said Certificate of Canvass was annexed to the
Supplemental Petition.

On account of the Resolutions disqualifying petitioner from running for the congressional seat of the
First District of Leyte and the public respondent's Resolution suspending her proclamation, petitioner
comes to this court for relief.

Petitioner raises several issues in her Original and Supplemental Petitions. The principal issues may
be classified into two general areas:

I. The issue of Petitioner's qualifications

Whether or not petitioner was a resident, for election purposes, of the First District of
Leyte for a period of one year at the time of the May 9, 1995 elections.

II. The Jurisdictional Issue

a) Prior to the elections

Whether or not the COMELEC properly exercised its jurisdiction in disqualifying

petitioner outside the period mandated by the Omnibus Election Code for
disqualification cases under Article 78 of the said Code.

b) After the Elections

Whether or not the House of Representatives Electoral Tribunal assumed exclusive

jurisdiction over the question of petitioner's qualifications after the May 8, 1995
elections.

I. Petitioner's qualification

A perusal of the Resolution of the COMELEC's Second Division reveals a startling confusion in the
application of settled concepts of "Domicile" and "Residence" in election law. While the COMELEC
seems to be in agreement with the general proposition that for the purposes of election law,
residence is synonymous with domicile, the Resolution reveals a tendency to substitute or mistake
the concept of domicile for actual residence, a conception not intended for the purpose of
determining a candidate's qualifications for election to the House of Representatives as required by
the 1987 Constitution. As it were, residence, for the purpose of meeting the qualification for an
elective position, has a settled meaning in our jurisdiction.

Article 50 of the Civil Code decrees that "[f]or the exercise of civil rights and the fulfillment of civil
obligations, the domicile of natural persons is their place of habitual residence." In Ong
vs. Republic 20 this court took the concept of domicile to mean an individual's "permanent home", "a place
to which, whenever absent for business or for pleasure, one intends to return, and depends on facts and
circumstances in the sense that they disclose intent." 21 Based on the foregoing, domicile includes the twin
elements of "the fact of residing or physical presence in a fixed place" and animus manendi, or the
intention of returning there permanently.

Residence, in its ordinary conception, implies the factual relationship of an individual to a certain
place. It is the physical presence of a person in a given area, community or country. The essential
distinction between residence and domicile in law is that residence involves the intent to leave when
the purpose for which the resident has taken up his abode ends. One may seek a place for purposes
such as pleasure, business, or health. If a person's intent be to remain, it becomes his domicile; if his
intent is to leave as soon as his purpose is established it is residence. 22 It is thus, quite perfectly
normal for an individual to have different residences in various places. However, a person can only have a
single domicile, unless, for various reasons, he successfully abandons his domicile in favor of another
domicile of choice. In Uytengsu vs. Republic, 23 we laid this distinction quite clearly:

There is a difference between domicile and residence. "Residence" is used to

indicate a place of abode, whether permanent or temporary; "domicile" denotes a
fixed permanent residence to which, when absent, one has the intention of returning.
A man may have a residence in one place and a domicile in another. Residence is
not domicile, but domicile is residence coupled with the intention to remain for an
unlimited time. A man can have but one domicile for the same purpose at any time,
but he may have numerous places of residence. His place of residence is generally
his place of domicile, but it is not by any means necessarily so since no length of
residence without intention of remaining will constitute domicile.

For political purposes the concepts of residence and domicile are dictated by the peculiar criteria of
political laws. As these concepts have evolved in our election law, what has clearly and
unequivocally emerged is the fact that residence for election purposes is used synonymously with
domicile.

In Nuval vs. Guray, 24 the Court held that "the term residence. . . is synonymous with domicile which
imports not only intention to reside in a fixed place, but also personal presence in that place, coupled with
conduct indicative of such intention." 25 Larena vs. Teves 26 reiterated the same doctrine in a case
involving the qualifications of the respondent therein to the post of Municipal President of Dumaguete,
Negros Oriental. Faypon vs. Quirino, 27 held that the absence from residence to pursue studies or practice
a profession or registration as a voter other than in the place where one is elected does not constitute
loss of residence. 28 So settled is the concept (of domicile) in our election law that in these and other
election law cases, this Court has stated that the mere absence of an individual from his permanent
residence without the intention to abandon it does not result in a loss or change of domicile.

The deliberations of the 1987 Constitution on the residence qualification for certain elective positions
have placed beyond doubt the principle that when the Constitution speaks of "residence" in election
law, it actually means only "domicile" to wit:

Mr. Nolledo: With respect to Section 5, I remember that in the 1971 Constitutional
Convention, there was an attempt to require residence in the place not less than one
year immediately preceding the day of the elections. So my question is: What is the
Committee's concept of residence of a candidate for the legislature? Is it actual
residence or is it the concept of domicile or constructive residence?

Mr. Davide: Madame President, insofar as the regular members of the National
Assembly are concerned, the proposed section merely provides, among others, "and
 a resident thereof", that is, in the district for a period of not less than one year
preceding the day of the election. This was in effect lifted from the 1973 Constitution,
the interpretation given to it was domicile. 29

xxx xxx xxx

Mrs. Rosario Braid: The next question is on Section 7, page 2. I think Commissioner
Nolledo has raised the same point that "resident" has been interpreted at times as a
matter of intention rather than actual residence.

Mr. De los Reyes: Domicile.

Ms. Rosario Braid: Yes, So, would the gentleman consider at the proper time to go
back to actual residence rather than mere intention to reside?

Mr. De los Reyes: But we might encounter some difficulty especially considering that
a provision in the Constitution in the Article on Suffrage says that Filipinos living
abroad may vote as enacted by law. So, we have to stick to the original concept that
it should be by domicile and not physical residence. 30

In Co vs. Electoral Tribunal of the House of Representatives, 31 this Court concluded that the framers of
the 1987 Constitution obviously adhered to the definition given to the term residence in election law,
regarding it as having the same meaning as domicile. 32

In the light of the principles just discussed, has petitioner Imelda Romualdez Marcos satisfied the
residency requirement mandated by Article VI, Sec. 6 of the 1987 Constitution? Of what significance
is the questioned entry in petitioner's Certificate of Candidacy stating her residence in the First
Legislative District of Leyte as seven (7) months?

It is the fact of residence, not a statement in a certificate of candidacy which ought to be decisive in
determining whether or not and individual has satisfied the constitution's residency qualification
requirement. The said statement becomes material only when there is or appears to be a deliberate
attempt to mislead, misinform, or hide a fact which would otherwise render a candidate ineligible. It
would be plainly ridiculous for a candidate to deliberately and knowingly make a statement in a
certificate of candidacy which would lead to his or her disqualification.

It stands to reason therefore, that petitioner merely committed an honest mistake in jotting the word
"seven" in the space provided for the residency qualification requirement. The circumstances leading
to her filing the questioned entry obviously resulted in the subsequent confusion which prompted
petitioner to write down the period of her actual stay in Tolosa, Leyte instead of her period of
residence in the First district, which was "since childhood" in the space provided. These
circumstances and events are amply detailed in the COMELEC's Second Division's questioned
resolution, albeit with a different interpretation. For instance, when herein petitioner announced that
she would be registering in Tacloban City to make her eligible to run in the First District, private
respondent Montejo opposed the same, claiming that petitioner was a resident of Tolosa, not
Tacloban City. Petitioner then registered in her place of actual residence in the First District, which is
Tolosa, Leyte, a fact which she subsequently noted down in her Certificate of Candidacy. A close
look at said certificate would reveal the possible source of the confusion: the entry for residence
(Item No. 7) is followed immediately by the entry for residence in the constituency where a candidate
seeks election thus:

7. RESIDENCE (complete Address): Brgy. Olot, Tolosa, Leyte

POST OFFICE ADDRESS FOR ELECTION PURPOSES: Brgy. Olot, Tolosa, Leyte

8. RESIDENCE IN THE CONSTITUENCY WHERE I SEEK TO

BE ELECTED IMMEDIATELY PRECEDING THE ELECTION:_________ Years
and Seven Months.

Having been forced by private respondent to register in her place of actual residence in Leyte
instead of petitioner's claimed domicile, it appears that petitioner had jotted down her period of stay
in her legal residence or domicile. The juxtaposition of entries in Item 7 and Item 8 the first
requiring actual residence and the second requiring domicile coupled with the circumstances
surrounding petitioner's registration as a voter in Tolosa obviously led to her writing down an
unintended entry for which she could be disqualified. This honest mistake should not, however, be
allowed to negate the fact of residence in the First District if such fact were established by means
more convincing than a mere entry on a piece of paper.

We now proceed to the matter of petitioner's domicile.

In support of its asseveration that petitioner's domicile could not possibly be in the First District of
Leyte, the Second Division of the COMELEC, in its assailed Resolution of April 24,1995 maintains
that "except for the time when (petitioner) studied and worked for some years after graduation in
Tacloban City, she continuously lived in Manila." The Resolution additionally cites certain facts as
indicative of the fact that petitioner's domicile ought to be any place where she lived in the last few
decades except Tacloban, Leyte. First, according to the Resolution, petitioner, in 1959, resided in
San Juan, Metro Manila where she was also registered voter. Then, in 1965, following the election of
her husband to the Philippine presidency, she lived in San Miguel, Manila where she as a voter. In
1978 and thereafter, she served as a member of the Batasang Pambansa and Governor of Metro
Manila. "She could not, have served these positions if she had not been a resident of Metro Manila,"
the COMELEC stressed. Here is where the confusion lies.

We have stated, many times in the past, that an individual does not lose his domicile even if he has
lived and maintained residences in different places. Residence, it bears repeating, implies a factual
relationship to a given place for various purposes. The absence from legal residence or domicile to
pursue a profession, to study or to do other things of a temporary or semi-permanent nature does
not constitute loss of residence. Thus, the assertion by the COMELEC that "she could not have been
a resident of Tacloban City since childhood up to the time she filed her certificate of candidacy
because she became a resident of many places" flies in the face of settled jurisprudence in which
this Court carefully made distinctions between (actual) residence and domicile for election law
purposes. In Larena vs. Teves, 33 supra, we stressed:

[T]his court is of the opinion and so holds that a person who has his own house
wherein he lives with his family in a municipality without having ever had the intention
of abandoning it, and without having lived either alone or with his family in another
municipality, has his residence in the former municipality, notwithstanding his having
registered as an elector in the other municipality in question and having been a
 candidate for various insular and provincial positions, stating every time that he is a
resident of the latter municipality.

More significantly, in Faypon vs. Quirino, 34 We explained that:

A citizen may leave the place of his birth to look for "greener pastures," as the saying
goes, to improve his lot, and that, of course includes study in other places, practice of
his avocation, or engaging in business. When an election is to be held, the citizen
who left his birthplace to improve his lot may desire to return to his native town to
cast his ballot but for professional or business reasons, or for any other reason, he
may not absent himself from his professional or business activities; so there he
registers himself as voter as he has the qualifications to be one and is not willing to
give up or lose the opportunity to choose the officials who are to run the government
especially in national elections. Despite such registration, the animus revertendi to
his home, to his domicile or residence of origin has not forsaken him. This may be
the explanation why the registration of a voter in a place other than his residence of
origin has not been deemed sufficient to constitute abandonment or loss of such
residence. It finds justification in the natural desire and longing of every person to
return to his place of birth. This strong feeling of attachment to the place of one's
birth must be overcome by positive proof of abandonment for another.

From the foregoing, it can be concluded that in its above-cited statements supporting its proposition
that petitioner was ineligible to run for the position of Representative of the First District of Leyte, the
COMELEC was obviously referring to petitioner's various places of (actual) residence, not her
domicile. In doing so, it not only ignored settled jurisprudence on residence in election law and the
deliberations of the constitutional commission but also the provisions of the Omnibus Election Code
(B.P. 881). 35

What is undeniable, however, are the following set of facts which establish the fact of petitioner's
domicile, which we lift verbatim from the COMELEC's Second Division's assailed Resolution: 36

In or about 1938 when respondent was a little over 8 years old, she established her
domicile in Tacloban, Leyte (Tacloban City). She studied in the Holy Infant Academy
in Tacloban from 1938 to 1949 when she graduated from high school. She pursued
her college studies in St. Paul's College, now Divine Word University in Tacloban,
where she earned her degree in Education. Thereafter, she taught in the Leyte
Chinese School, still in Tacloban City. In 1952 she went to Manila to work with her
cousin, the late speaker Daniel Z. Romualdez in his office in the House of
Representatives. In 1954, she married ex-President Ferdinand E. Marcos when he
was still a congressman of Ilocos Norte and registered there as a voter. When her
husband was elected Senator of the Republic in 1959, she and her husband lived
together in San Juan, Rizal where she registered as a voter. In 1965, when her
husband was elected President of the Republic of the Philippines, she lived with him
in Malacanang Palace and registered as a voter in San Miguel, Manila.

[I]n February 1986 (she claimed that) she and her family were abducted and
kidnapped to Honolulu, Hawaii. In November 1991, she came home to Manila. In
1992, respondent ran for election as President of the Philippines and filed her
 Certificate of Candidacy wherein she indicated that she is a resident and registered
voter of San Juan, Metro Manila.

Applying the principles discussed to the facts found by COMELEC, what is inescapable is that
petitioner held various residences for different purposes during the last four decades. None of these
purposes unequivocally point to an intention to abandon her domicile of origin in Tacloban, Leyte.
Moreover, while petitioner was born in Manila, as a minor she naturally followed the domicile of her
parents. She grew up in Tacloban, reached her adulthood there and eventually established
residence in different parts of the country for various reasons. Even during her husband's
presidency, at the height of the Marcos Regime's powers, petitioner kept her close ties to her
domicile of origin by establishing residences in Tacloban, celebrating her birthdays and other
important personal milestones in her home province, instituting well-publicized projects for the
benefit of her province and hometown, and establishing a political power base where her siblings
and close relatives held positions of power either through the ballot or by appointment, always with
either her influence or consent. These well-publicized ties to her domicile of origin are part of the
history and lore of the quarter century of Marcos power in our country. Either they were entirely
ignored in the COMELEC'S Resolutions, or the majority of the COMELEC did not know what the rest
of the country always knew: the fact of petitioner's domicile in Tacloban, Leyte.

Private respondent in his Comment, contends that Tacloban was not petitioner's domicile of origin
because she did not live there until she was eight years old. He avers that after leaving the place in
1952, she "abandoned her residency (sic) therein for many years and . . . (could not) re-establish her
domicile in said place by merely expressing her intention to live there again." We do not agree.

First, minor follows the domicile of his parents. As domicile, once acquired is retained until a new
one is gained, it follows that in spite of the fact of petitioner's being born in Manila, Tacloban, Leyte
was her domicile of origin by operation of law. This domicile was not established only when her
father brought his family back to Leyte contrary to private respondent's averments.

Second, domicile of origin is not easily lost. To successfully effect a change of domicile, one must
demonstrate: 37

1. An actual removal or an actual change of domicile;

2. A bona fide intention of abandoning the former place of residence and establishing
a new one; and

3. Acts which correspond with the purpose.

In the absence of clear and positive proof based on these criteria, the residence of origin should be
deemed to continue. Only with evidence showing concurrence of all three requirements can the
presumption of continuity or residence be rebutted, for a change of residence requires an actual and
deliberate abandonment, and one cannot have two legal residences at the same time. 38 In the case
at bench, the evidence adduced by private respondent plainly lacks the degree of persuasiveness
required to convince this court that an abandonment of domicile of origin in favor of a domicile of choice
indeed occurred. To effect an abandonment requires the voluntary act of relinquishing petitioner's former
domicile with an intent to supplant the former domicile with one of her own choosing (domicilium
voluntarium).
In this connection, it cannot be correctly argued that petitioner lost her domicile of origin by operation
of law as a result of her marriage to the late President Ferdinand E. Marcos in 1952. For there is a
clearly established distinction between the Civil Code concepts of "domicile" and "residence." 39 The
presumption that the wife automatically gains the husband's domicile by operation of law upon marriage
cannot be inferred from the use of the term "residence" in Article 110 of the Civil Code because the Civil
Code is one area where the two concepts are well delineated. Dr. Arturo Tolentino, writing on this specific
area explains:

In the Civil Code, there is an obvious difference between domicile and residence.
Both terms imply relations between a person and a place; but in residence, the
relation is one of fact while in domicile it is legal or juridical, independent of the
necessity of physical presence. 40

Article 110 of the Civil Code provides:

Art. 110. The husband shall fix the residence of the family. But the court may
exempt the wife from living with the husband if he should live abroad unless in the
service of the Republic.

A survey of jurisprudence relating to Article 110 or to the concepts of domicile or residence as they
affect the female spouse upon marriage yields nothing which would suggest that the female spouse
automatically loses her domicile of origin in favor of the husband's choice of residence upon
marriage.

Article 110 is a virtual restatement of Article 58 of the Spanish Civil Code of 1889 which states:

La mujer esta obligada a seguir a su marido donde quiera que fije su residencia. Los
Tribunales, sin embargo, podran con justa causa eximirla de esta obligacion cuando
el marido transende su residencia a ultramar o' a pais extranjero .

Note the use of the phrase "donde quiera su fije de residencia" in the aforequoted article, which
means wherever (the husband) wishes to establish residence. This part of the article clearly
contemplates only actual residence because it refers to a positive act of fixing a family home or
residence. Moreover, this interpretation is further strengthened by the phrase "cuando el marido
translade su residencia" in the same provision which means, "when the husband shall transfer his
residence," referring to another positive act of relocating the family to another home or place of
actual residence. The article obviously cannot be understood to refer to domicile which is a fixed,
fairly-permanent concept when it plainly connotes the possibility of transferring from one place to
another not only once, but as often as the husband may deem fit to move his family, a circumstance
more consistent with the concept of actual residence.

The right of the husband to fix the actual residence is in harmony with the intention of the law to
strengthen and unify the family, recognizing the fact that the husband and the wife bring into the
marriage different domiciles (of origin). This difference could, for the sake of family unity, be
reconciled only by allowing the husband to fix a single place of actual residence.

Very significantly, Article 110 of the Civil Code is found under Title V under the heading: RIGHTS
AND OBLIGATIONS BETWEEN HUSBAND AND WIFE. Immediately preceding Article 110 is Article
109 which obliges the husband and wife to live together, thus:
 Art. 109. The husband and wife are obligated to live together, observe mutual
respect and fidelity and render mutual help and support.

The duty to live together can only be fulfilled if the husband and wife are physically together. This
takes into account the situations where the couple has many residences (as in the case of the
petitioner). If the husband has to stay in or transfer to any one of their residences, the wife should
necessarily be with him in order that they may "live together." Hence, it is illogical to conclude that
Art. 110 refers to "domicile" and not to "residence." Otherwise, we shall be faced with a situation
where the wife is left in the domicile while the husband, for professional or other reasons, stays in
one of their (various) residences. As Dr. Tolentino further explains:

Residence and Domicile Whether the word "residence" as used with reference to
particular matters is synonymous with "domicile" is a question of some difficulty, and
the ultimate decision must be made from a consideration of the purpose and intent
with which the word is used. Sometimes they are used synonymously, at other times
they are distinguished from one another.

xxx xxx xxx

Residence in the civil law is a material fact, referring to the physical presence of a
person in a place. A person can have two or more residences, such as a country
residence and a city residence. Residence is acquired by living in place; on the other
hand, domicile can exist without actually living in the place. The important thing for
domicile is that, once residence has been established in one place, there be an
intention to stay there permanently, even if residence is also established in some
other
place. 41

In fact, even the matter of a common residence between the husband and the wife during the
marriage is not an iron-clad principle; In cases applying the Civil Code on the question of a common
matrimonial residence, our jurisprudence has recognized certain situations 42 where the spouses could
not be compelled to live with each other such that the wife is either allowed to maintain a residence
different from that of her husband or, for obviously practical reasons, revert to her original domicile (apart
from being allowed to opt for a new one). In De la Vina vs. Villareal 43 this Court held that "[a] married
woman may acquire a residence or domicile separate from that of her husband during the existence of
the marriage where the husband has given cause for divorce." 44 Note that the Court allowed the wife
either to obtain new residence or to choose a new domicile in such an event. In instances where the wife
actually opts, .under the Civil Code, to live separately from her husband either by taking new residence or
reverting to her domicile of origin, the Court has held that the wife could not be compelled to live with her
husband on pain of contempt. In Arroyo vs. Vasques de Arroyo 45 the Court held that:

Upon examination of the authorities, we are convinced that it is not within the
province of the courts of this country to attempt to compel one of the spouses to
cohabit with, and render conjugal rights to, the other. Of course where the property
rights of one of the pair are invaded, an action for restitution of such rights can be
maintained. But we are disinclined to sanction the doctrine that an order, enforcible
(sic) by process of contempt, may be entered to compel the restitution of the purely
personal right of consortium. At best such an order can be effective for no other
purpose than to compel the spouses to live under the same roof; and he experience
of those countries where the courts of justice have assumed to compel the
 cohabitation of married people shows that the policy of the practice is extremely
questionable. Thus in England, formerly the Ecclesiastical Court entertained suits for
the restitution of conjugal rights at the instance of either husband or wife; and if the
facts were found to warrant it, that court would make a mandatory decree,
enforceable by process of contempt in case of disobedience, requiring the delinquent
party to live with the other and render conjugal rights. Yet this practice was
sometimes criticized even by the judges who felt bound to enforce such orders, and
in Weldon v. Weldon (9 P.D. 52), decided in 1883, Sir James Hannen, President in
the Probate, Divorce and Admiralty Division of the High Court of Justice, expressed
his regret that the English law on the subject was not the same as that which
prevailed in Scotland, where a decree of adherence, equivalent to the decree for the
restitution of conjugal rights in England, could be obtained by the injured spouse, but
could not be enforced by imprisonment. Accordingly, in obedience to the growing
sentiment against the practice, the Matrimonial Causes Act (1884) abolished the
remedy of imprisonment; though a decree for the restitution of conjugal rights can still
be procured, and in case of disobedience may serve in appropriate cases as the
basis of an order for the periodical payment of a stipend in the character of alimony.

In the voluminous jurisprudence of the United States, only one court, so far as we
can discover, has ever attempted to make a preemptory order requiring one of the
spouses to live with the other; and that was in a case where a wife was ordered to
follow and live with her husband, who had changed his domicile to the City of New
Orleans. The decision referred to (Bahn v. Darby, 36 La. Ann., 70) was based on a
provision of the Civil Code of Louisiana similar to article 56 of the Spanish Civil Code.
It was decided many years ago, and the doctrine evidently has not been fruitful even
in the State of Louisiana. In other states of the American Union the idea of enforcing
cohabitation by process of contempt is rejected. (21 Cyc., 1148).

In a decision of January 2, 1909, the Supreme Court of Spain appears to have

affirmed an order of the Audiencia Territorial de Valladolid requiring a wife to return to
the marital domicile, and in the alternative, upon her failure to do so, to make a
particular disposition of certain money and effects then in her possession and to
deliver to her husband, as administrator of the ganancial property, all income, rents,
and interest which might accrue to her from the property which she had brought to
the marriage. (113 Jur. Civ., pp. 1, 11) But it does not appear that this order for the
return of the wife to the marital domicile was sanctioned by any other penalty than
the consequences that would be visited upon her in respect to the use and control of
her property; and it does not appear that her disobedience to that order would
necessarily have been followed by imprisonment for contempt.

Parenthetically when Petitioner was married to then Congressman Marcos, in 1954, petitioner was
obliged by virtue of Article 110 of the Civil Code to follow her husband's actual place of
residence fixed by him. The problem here is that at that time, Mr. Marcos had several places of
residence, among which were San Juan, Rizal and Batac, Ilocos Norte. There is no showing which
of these places Mr. Marcos did fix as his family's residence. But assuming that Mr. Marcos had fixed
any of these places as the conjugal residence, what petitioner gained upon marriage was actual
residence. She did not lose her domicile of origin.
On the other hand, the common law concept of "matrimonial domicile" appears to have been
incorporated, as a result of our jurisprudential experiences after the drafting of the Civil Code of
1950, into the New Family Code. To underscore the difference between the intentions of the Civil
Code and the Family Code drafters, the term residence has been supplanted by the term domicile in
an entirely new provision (Art. 69) distinctly different in meaning and spirit from that found in Article
110. The provision recognizes revolutionary changes in the concept of women's rights in the
intervening years by making the choice of domicile a product of mutual agreement between the
spouses. 46

Without as much belaboring the point, the term residence may mean one thing in civil law (or under
the Civil Code) and quite another thing in political law. What stands clear is that insofar as the Civil
Code is concerned-affecting the rights and obligations of husband and wife the term residence
should only be interpreted to mean "actual residence." The inescapable conclusion derived from this
unambiguous civil law delineation therefore, is that when petitioner married the former President in
1954, she kept her domicile of origin and merely gained a new home, not a domicilium necessarium.

Even assuming for the sake of argument that petitioner gained a new "domicile" after her marriage
and only acquired a right to choose a new one after her husband died, petitioner's acts following her
return to the country clearly indicate that she not only impliedly but expressly chose her domicile of
origin (assuming this was lost by operation of law) as her domicile. This "choice" was unequivocally
expressed in her letters to the Chairman of the PCGG when petitioner sought the PCGG's
permission to "rehabilitate (our) ancestral house in Tacloban and Farm in Olot, Leyte. . . to make
them livable for the Marcos family to have a home in our homeland." 47 Furthermore, petitioner
obtained her residence certificate in 1992 in Tacloban, Leyte, while living in her brother's house, an act
which supports the domiciliary intention clearly manifested in her letters to the PCGG Chairman. She
could not have gone straight to her home in San Juan, as it was in a state of disrepair, having been
previously looted by vandals. Her "homes" and "residences" following her arrival in various parts of Metro
Manila merely qualified as temporary or "actual residences," not domicile. Moreover, and proceeding from
our discussion pointing out specific situations where the female spouse either reverts to her domicile of
origin or chooses a new one during the subsistence of the marriage, it would be highly illogical for us to
assume that she cannot regain her original domicile upon the death of her husband absent a positive act
of selecting a new one where situations exist within the subsistence of the marriage itself where the wife
gains a domicile different from her husband.

In the light of all the principles relating to residence and domicile enunciated by this court up to this
point, we are persuaded that the facts established by the parties weigh heavily in favor of a
conclusion supporting petitioner's claim of legal residence or domicile in the First District of Leyte.

II. The jurisdictional issue

Petitioner alleges that the jurisdiction of the COMELEC had already lapsed considering that the
assailed resolutions were rendered on April 24, 1995, fourteen (14) days before the election in
violation of Section 78 of the Omnibus Election Code. 48 Moreover, petitioner contends that it is the
House of Representatives Electoral Tribunal and not the COMELEC which has jurisdiction over the
election of members of the House of Representatives in accordance with Article VI Sec. 17 of the
Constitution. This is untenable.

It is a settled doctrine that a statute requiring rendition of judgment within a specified time is
generally construed to be merely directory, 49 "so that non-compliance with them does not invalidate the
judgment on the theory that if the statute had intended such result it would have clearly indicated
it." 50 The difference between a mandatory and a directory provision is often made on grounds of
necessity. Adopting the same view held by several American authorities, this court in Marcelino
vs. Cruz held that: 51

The difference between a mandatory and directory provision is often determined on

grounds of expediency, the reason being that less injury results to the general public
by disregarding than enforcing the letter of the law.

In Trapp v. Mc Cormick, a case calling for the interpretation of a statute containing a

limitation of thirty (30) days within which a decree may be entered without the
consent of counsel, it was held that "the statutory provisions which may be thus
departed from with impunity, without affecting the validity of statutory proceedings,
are usually those which relate to the mode or time of doing that which is essential to
effect the aim and purpose of the Legislature or some incident of the essential act."
Thus, in said case, the statute under examination was construed merely to be
directory.

The mischief in petitioner's contending that the COMELEC should have abstained from rendering a
decision after the period stated in the Omnibus Election Code because it lacked jurisdiction, lies in
the fact that our courts and other quasi-judicial bodies would then refuse to render judgments merely
on the ground of having failed to reach a decision within a given or prescribed period.

In any event, with the enactment of Sections 6 and 7 of R.A. 6646 in relation to Section 78 of B.P.
881, 52 it is evident that the respondent Commission does not lose jurisdiction to hear and decide a
pending disqualification case under Section 78 of B.P. 881 even after the elections.

As to the House of Representatives Electoral Tribunal's supposed assumption of jurisdiction over the
issue of petitioner's qualifications after the May 8, 1995 elections, suffice it to say that HRET's
jurisdiction as the sole judge of all contests relating to the elections, returns and qualifications of
members of Congress begins only after a candidate has become a member of the House of
Representatives. 53 Petitioner not being a member of the House of Representatives, it is obvious that the
HRET at this point has no jurisdiction over the question.

It would be an abdication of many of the ideals enshrined in the 1987 Constitution for us to either to
ignore or deliberately make distinctions in law solely on the basis of the personality of a petitioner in
a case. Obviously a distinction was made on such a ground here. Surely, many established
principles of law, even of election laws were flouted for the sake perpetuating power during the pre-
EDSA regime. We renege on these sacred ideals, including the meaning and spirit of EDSA
ourselves bending established principles of principles of law to deny an individual what he or she
justly deserves in law. Moreover, in doing so, we condemn ourselves to repeat the mistakes of the
past.

WHEREFORE, having determined that petitioner possesses the necessary residence qualifications
to run for a seat in the House of Representatives in the First District of Leyte, the COMELEC's
questioned Resolutions dated April 24, May 7, May 11, and May 25, 1995 are hereby SET ASIDE.
Respondent COMELEC is hereby directed to order the Provincial Board of Canvassers to proclaim
petitioner as the duly elected Representative of the First District of Leyte.

SO ORDERED.
ASSIGNED CASES
GIVEN BY: ATTY. COMIA
SECOND DIVISION

HERALD BLACK DACASIN, G.R. No. 168785

Petitioner,
Present:
CARPIO, J., Chairperson,
BRION,
- versus - DEL CASTILLO,
ABAD, and
PEREZ, JJ.

SHARON DEL MUNDO DACASIN, Promulgated:

Respondent. February 5, 2010
x----------------------------------------------------------------------------------------x

DECISION

CARPIO, J.:

The Case

For review[1]is a dismissal[2]of a suit to enforce a post-foreign divorce child

custody agreement for lack of jurisdiction.

The Facts

Petitioner Herald Dacasin (petitioner), American, and respondent Sharon Del

Mundo Dacasin (respondent), Filipino, were married in Manila in April 1994. They
have one daughter, Stephanie, born on 21 September 1995. In June 1999,
respondent sought and obtained from the Circuit Court, 19th Judicial Circuit, Lake
County, Illinois (Illinois court) a divorce decree against petitioner.[3] In its ruling,
the Illinois court dissolved the marriage of petitioner and respondent, awarded to
respondent sole custody of Stephanie and retained jurisdiction over the case for
enforcement purposes.

On 28 January 2002, petitioner and respondent executed in Manila a contract

(Agreement[4]) for the joint custody of Stephanie. The parties chose Philippine
courts as exclusive forum to adjudicate disputes arising from the
Agreement. Respondent undertook to obtain from the Illinois court an order
relinquishing jurisdiction to Philippine courts.

In 2004, petitioner sued respondent in the Regional Trial Court of Makati City,
Branch 60 (trial court) to enforce the Agreement. Petitioner alleged that in
violation of the Agreement, respondent exercised sole custody over Stephanie.

Respondent sought the dismissal of the complaint for, among others, lack of
jurisdiction because of the Illinois courts retention of jurisdiction to enforce the
divorce decree.

The Ruling of the Trial Court

In its Order dated 1 March 2005, the trial court sustained respondents motion and
dismissed the case for lack of jurisdiction. The trial court held that: (1) it is
precluded from taking cognizance over the suit considering the Illinois courts
retention of jurisdiction to enforce its divorce decree, including its order awarding
sole custody of Stephanie to respondent; (2) the divorce decree is binding on
petitioner following the nationality rule prevailing in this jurisdiction; [5]and (3) the
Agreement is void for contravening Article 2035, paragraph 5 of the Civil
Code[6]prohibiting compromise agreements on jurisdiction.[7]

Petitioner sought reconsideration, raising the new argument that the divorce decree
obtained by respondent is void. Thus, the divorce decree is no bar to the trial courts
exercise of jurisdiction over the case.

In its Order dated 23 June 2005, the trial court denied reconsideration, holding that
unlike in the case of respondent, the divorce decree is binding on petitioner under
the laws of his nationality.
Hence, this petition.

Petitioner submits the following alternative theories for the validity of the
Agreement to justify its enforcement by the trial court: (1) the Agreement novated
the valid divorce decree, modifying the terms of child custody from sole (maternal)
to joint;[8]or (2) the Agreement is independent of the divorce decree obtained by
respondent.

The Issue

The question is whether the trial court has jurisdiction to take cognizance of
petitioners suit and enforce the Agreement on the joint custody of the parties child.

The Ruling of the Court

The trial court has jurisdiction to entertain petitioners suit but not to enforce the
Agreement which is void. However, factual and equity considerations militate
against the dismissal of petitioners suit and call for the remand of the case to settle
the question of Stephanies custody.

Regional Trial Courts Vested With Jurisdiction

to Enforce Contracts
Subject matter jurisdiction is conferred by law. At the time petitioner filed
his suit in the trial court, statutory law vests on Regional Trial Courts exclusive
original jurisdiction over civil actions incapable of pecuniary estimation. [9]An
action for specific performance, such as petitioners suit to enforce the Agreement
on joint child custody, belongs to this species of actions.[10]Thus, jurisdiction-wise,
petitioner went to the right court.

Indeed, the trial courts refusal to entertain petitioners suit was grounded not
on its lack of power to do so but on its thinking that the Illinois courts divorce
decree stripped it of jurisdiction. This conclusion is unfounded. What the Illinois
court retained was jurisdiction x x x for the purpose of enforcing all and
sundry the various provisions of [its] Judgment for Dissolution.[11]Petitioners suit
seeks the enforcement not of the various provisions of the divorce decree but of the
post-divorce Agreement on joint child custody. Thus, the action lies beyond the
zone of the Illinois courts so-called retained jurisdiction.

Petitioners Suit Lacks Cause of Action

The foregoing notwithstanding, the trial court cannot enforce the Agreement which
is contrary to law.

In this jurisdiction, parties to a contract are free to stipulate the terms of

agreement subject to the minimum ban on stipulations contrary to law, morals,
good customs, public order, or public policy.[12]Otherwise, the contract is denied
legal existence, deemed inexistent and void from the beginning. [13]For lack of
relevant stipulation in the Agreement, these and other ancillary Philippine
substantive law serve as default parameters to test the validity of the Agreements
joint child custody stipulations.[14]
At the time the parties executed the Agreement on 28 January 2002, two facts are
undisputed: (1) Stephanie was under seven years old (having been born on 21
September 1995); and (2) petitioner and respondent were no longer married under
the laws of the United States because of the divorce decree. The relevant Philippine
law on child custody for spouses separated in fact or in law[15] (under the second
paragraph of Article 213 of the Family Code) is also undisputed: no child under
seven years of age shall be separated from the mother x x x.[16] (This statutory
awarding of sole parental custody[17]to the mother is mandatory,[18]grounded on
sound policy consideration,[19]subject only to a narrow exception not alleged to
obtain here.[20]) Clearly then, the Agreements object to establish a post-divorce joint
custody regime between respondent and petitioner over their child under seven
years old contravenes Philippine law.

The Agreement is not only void ab initio for being contrary to law, it has also
been repudiated by the mother when she refused to allow joint custody by the
father. The Agreement would be valid if the spouses have not divorced or separated
because the law provides for joint parental authority when spouses live together.
[21]
However, upon separation of the spouses, the mother takes sole custody under
the law if the child is below seven years old and any agreement to the contrary is
void. Thus, the law suspends the joint custody regime for (1) children under seven
of (2) separated or divorced spouses. Simply put, for a child within this age bracket
(and for commonsensical reasons), the law decides for the separated or
divorced parents how best to take care of the child and that is to give custody to the
separated mother. Indeed, the separated parents cannot contract away the provision
in the Family Code on the maternal custody of children below seven years
anymore than they can privately agree that a mother who is unemployed, immoral,
habitually drunk, drug addict, insane or afflicted with a communicable disease will
have sole custody of a child under seven as these are reasons deemed compelling
to precludethe application of the exclusive maternal custody regime under the
second paragraph of Article 213.[22]

It will not do to argue that the second paragraph of Article 213 of the Family
Code applies only to judicial custodial agreements based on its text that No child
under seven years of age shall be separated from the mother, unless the court finds
compelling reasons to order otherwise. To limit this provisions enforceability to
court sanctioned agreements while placing private agreements beyond its reach is
to sanction a double standard in custody regulation of children under seven years
old of separated parents. This effectively empowers separated parents, by the
simple expedient of avoiding the courts, to subvert a legislative policy vesting to
the separated mother sole custody of her children under seven years of age to avoid
a tragedy where a mother has seen her baby torn away from her.[23]This ignores the
legislative basis that [n]o man can sound the deep sorrows of a mother who is
deprived of her child of tender age.[24]

It could very well be that Article 213s bias favoring one separated parent
(mother) over the other (father) encourages paternal neglect, presumes incapacity
for joint parental custody, robs the parents of custodial options, or hijacks decision-
making between the separated parents.[25]However, these are objections which
question the laws wisdom not its validity or uniform enforceability. The forum to
air and remedy these grievances is the legislature, not this Court. At any rate, the
rules seeming harshness or undesirability is tempered by ancillary agreements the
separated parents may wish to enter such as granting the father visitation and other
privileges. These arrangements are not inconsistent with the regime of sole
maternal custody under the second paragraph of Article 213 which merely grants to
the mother final authority on the care and custody of the minor under seven years
of age, in case of disagreements.
Further, the imposed custodial regime under the second paragraph of Article 213 is
limited in duration, lasting only until the childs seventh year. From the eighth year
until the childs emancipation, the law gives the separated parents freedom, subject
to the usual contractual limitations, to agree on custody regimes they see fit to
adopt. Lastly, even supposing that petitioner and respondent are not barred from
entering into the Agreement for the joint custody of Stephanie, respondent
repudiated the Agreement by asserting sole custody over Stephanie. Respondents
act effectively brought the parties back to ambit of the default custodial regime in
the second paragraph of Article 213 of the Family Code vesting on respondent sole
custody of Stephanie.

Nor can petitioner rely on the divorce decrees alleged invalidity - not
because the Illinois court lacked jurisdiction or that the divorce decree violated
Illinois law, but because the divorce was obtained by his Filipino spouse [26]- to
support the Agreements enforceability. The argument that foreigners in this
jurisdiction are not bound by foreign divorce decrees is hardly novel. Van Dorn v.
Romillo[27]settled the matter by holding that an alien spouse of a Filipino is bound
by a divorce decree obtained abroad.[28]There, we dismissed the alien divorcees
Philippine suit for accounting of alleged post-divorce conjugal property and
rejected his submission that the foreign divorce (obtained by the Filipino spouse) is
not valid in this jurisdiction in this wise:

There can be no question as to the validity of that Nevada

divorce in any of the States of the United States. The decree is
binding on private respondent as an American citizen. For instance,
private respondent cannot sue petitioner, as her husband, in any State of
the Union. What he is contending in this case is that the divorce is
not valid and binding in this jurisdiction, the same being contrary to
local law and public policy.

It is true that owing to the nationality principle embodied in Article 15 of the Civil
Code, only Philippine nationals are covered by the policy against absolute divorces
the same being considered contrary to our concept of public policy and
morality. However, aliens may obtain divorces abroad, which may be recognized
in the Philippines, provided they are valid according to their national law. In this
case, the divorce in Nevada released private respondent from the marriage from
the standards of American law, under which divorce dissolves the marriage.

xxxx
Thus, pursuant to his national law, private respondent is no longer the husband of
petitioner. He would have no standing to sue in the case below as petitioners husband
entitled to exercise control over conjugal assets. As he is bound by the Decision of his
own countrys Court, which validly exercised jurisdiction over him, and whose
decision he does not repudiate, he is estopped by his own representation before said
Court from asserting his right over the alleged conjugal property. (Emphasis supplied)

We reiterated Van Dorn in Pilapil v. Ibay-Somera[29]to dismiss criminal complaints

for adultery filed by the alien divorcee (who obtained the foreign divorce decree)
against his former Filipino spouse because he no longer qualified as offended
spouse entitled to file the complaints under Philippine procedural rules. Thus, it
should be clear by now that a foreign divorce decree carries as much
validity against the alien divorcee in this jurisdiction as it does in the
jurisdiction of the aliens nationality, irrespective of who obtained
the divorce.

The Facts of the Case and Nature of Proceeding

Justify Remand

Instead of ordering the dismissal of petitioners suit, the logical end to its lack of
cause of action, we remand the case for the trial court to settle the question of
Stephanies custody. Stephanie is now nearly 15 years old, thus removing the case
outside of the ambit of the mandatory maternal custody regime under Article 213
and bringing it within coverage of the default standard on child custody
proceedings the best interest of the child.[30]As the question of custody is
already before the trial court and the childs parents, by executing
the Agreement, initially showed inclination to share custody, it is
in the interest of swift and efficient rendition of justice to allow the
parties to take advantage of the courts jurisdiction, submit
evidence on the custodial arrangement best serving Stephanies
interest, and let the trial court render judgment. This disposition is
consistent with the settled doctrine that in child custody
proceedings, equity may be invoked to serve the childs best
interest.[31]
WHEREFORE, we REVERSE the Orders dated 1 March 2005 and 23 June 2005
of the Regional Trial Court of Makati City, Branch 60. The case
is REMANDED for further proceedings consistent with this ruling.

SO ORDERED.
FIRST DIVISION

REPUBLIC OF THE
PHILIPPINES, G.R. No. 154380

Petitioner,

Present:

Davide, Jr., C.J.,

- versus - (Chairman),
Quisumbing,
Ynares-Santiago,

Carpio, and

Azcuna, JJ.
CIPRIANO ORBECIDO III,
Respondent. Promulgated:

October 5, 2005

x------------------------------------------
--------x
 DECISION

QUISUMBING, J.:

Given a valid marriage between two Filipino citizens, where

one party is later naturalized as a foreign citizen and obtains a

valid divorce decree capacitating him or her to remarry, can the

Filipino spouse likewise remarry under Philippine law?

Before us is a case of first impression that behooves the

Court to make a definite ruling on this apparently novel question,

presented as a pure question of law.

In this petition for review, the Solicitor General assails

the Decision[1] dated May 15, 2002, of the Regional Trial Court of

Molave, Zamboanga del Sur, Branch 23 and

its Resolution[2] dated July 4, 2002 denying the motion for

reconsideration. The court a quo had declared that herein

respondent Cipriano Orbecido III is capacitated to remarry.

The fallo of the impugned Decision reads:

WHEREFORE, by virtue of the provision of the second paragraph of Art.
26 of the Family Code and by reason of the divorce decree obtained
against him by his American wife, the petitioner is given the capacity
to remarry under the Philippine Law.

IT IS SO ORDERED.[3]
The factual antecedents, as narrated by the trial court, are as

follows.

On May 24, 1981, Cipriano Orbecido III married Lady Myros M.

Villanueva at the United Church of Christ in the Philippines in Lam-

an, Ozamis City. Their marriage was blessed with a son and a

daughter, Kristoffer Simbortriz V. Orbecido and Lady Kimberly V.

Orbecido.

In 1986, Ciprianos wife left for the United States bringing

along their son Kristoffer. A few years later, Cipriano discovered

that his wife had been naturalized as an American citizen.

Sometime in 2000, Cipriano learned from his son that his

wife had obtained a divorce decree and then married a certain

Innocent Stanley. She, Stanley and her child by him currently live

at 5566 A. Walnut Grove Avenue, San Gabriel, California.

Cipriano thereafter filed with the trial court a petition for authority

to remarry invoking Paragraph 2 of Article 26 of the Family Code.

No opposition was filed. Finding merit in the petition, the court

granted the same. The Republic, herein petitioner, through the

Office of the Solicitor General (OSG), sought reconsideration but it

was denied.

In this petition, the OSG raises a pure question of law:

 WHETHER OR NOT RESPONDENT CAN REMARRY UNDER ARTICLE 26 OF
THE FAMILY CODE[4]

The OSG contends that Paragraph 2 of Article 26 of the Family

Code is not applicable to the instant case because it only applies

to a valid mixed marriage; that is, a marriage celebrated between

a Filipino citizen and an alien. The proper remedy, according to

the OSG, is to file a petition for annulment or for legal separation.

[5]
Furthermore, the OSG argues there is no law that governs

respondents situation. The OSG posits that this is a matter of

legislation and not of judicial determination. [6]

For his part, respondent admits that Article 26 is not directly

applicable to his case but insists that when his naturalized alien

wife obtained a divorce decree which capacitated her to remarry,

he is likewise capacitated by operation of law pursuant to Section

12, Article II of the Constitution.[7]

At the outset, we note that the petition for authority to remarry

filed before the trial court actually constituted a petition for

declaratory relief. In this connection, Section 1, Rule 63 of the

Rules of Court provides:

RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES
 Section 1. Who may file petitionAny person interested under a deed,
will, contract or other written instrument, or whose rights are affected
by a statute, executive order or regulation, ordinance, or other
governmental regulation may, before breach or violation thereof, bring
an action in the appropriate Regional Trial Court to determine any
question of construction or validity arising, and for a declaration of his
rights or duties, thereunder.
...

The requisites of a petition for declaratory relief are: (1) there

must be a justiciable controversy; (2) the controversy must be

between persons whose interests are adverse; (3) that the party

seeking the relief has a legal interest in the controversy; and (4)

that the issue is ripe for judicial determination. [8]

This case concerns the applicability of Paragraph 2 of Article

26 to a marriage between two Filipino citizens where one later

acquired alien citizenship, obtained a divorce decree, and

remarried while in the U.S.A. The interests of the parties are also

adverse, as petitioner representing the State asserts its duty to

protect the institution of marriage while respondent, a private

citizen, insists on a declaration of his capacity to remarry.

Respondent, praying for relief, has legal interest in the

controversy. The issue raised is also ripe for judicial determination

inasmuch as when respondent remarries, litigation ensues and

puts into question the validity of his second marriage.

Coming now to the substantive issue, does Paragraph 2 of Article

26 of the Family Code apply to the case of respondent?

Necessarily, we must dwell on how this provision had come about

in the first place, and what was the intent of the legislators in its

enactment?

Brief Historical Background

On July 6, 1987, then President Corazon Aquino signed into

law Executive Order No. 209, otherwise known as the Family

Code, which took effect on August 3, 1988. Article 26 thereof

states:
All marriages solemnized outside the Philippines in accordance
with the laws in force in the country where they were solemnized, and
valid there as such, shall also be valid in this country, except those
prohibited under Articles 35, 37, and 38.

On July 17, 1987, shortly after the signing of the original

Family Code, Executive Order No. 227 was likewise signed into

law, amending Articles 26, 36, and 39 of the Family Code. A

second paragraph was added to Article 26. As so amended, it now

provides:
ART. 26. All marriages solemnized outside the Philippines in
accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this country,
except those prohibited under Articles 35(1), (4), (5) and (6), 36, 37
and 38.
 Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained abroad
by the alien spouse capacitating him or her to remarry, the Filipino
spouse shall have capacity to remarry under Philippine law. (Emphasis
supplied)

On its face, the foregoing provision does not appear to

govern the situation presented by the case at hand. It seems to

apply only to cases where at the time of the celebration of the

marriage, the parties are a Filipino citizen and a foreigner. The

instant case is one where at the time the marriage was

solemnized, the parties were two Filipino citizens, but later on, the

wife was naturalized as an American citizen and subsequently

obtained a divorce granting her capacity to remarry, and indeed

she remarried an American citizen while residing in the U.S.A.

Noteworthy, in the Report of the Public Hearings [9] on the

Family Code, the Catholic Bishops Conference of the Philippines

(CBCP) registered the following objections to Paragraph 2 of

Article 26:
1. The rule is discriminatory. It discriminates against those
whose spouses are Filipinos who divorce them abroad. These
spouses who are divorced will not be able to re-marry, while the
spouses of foreigners who validly divorce them abroad can.
2. This is the beginning of the recognition of the validity of
divorce even for Filipino citizens. For those whose foreign
spouses validly divorce them abroad will also be considered to
be validly divorced here and can re-marry. We propose that this
be deleted and made into law only after more widespread
consultation. (Emphasis supplied.)
 Legislative Intent

Records of the proceedings of the Family Code deliberations

showed that the intent of Paragraph 2 of Article 26, according to

Judge Alicia Sempio-Diy, a member of the Civil Code Revision

Committee, is to avoid the absurd situation where the Filipino

spouse remains married to the alien spouse who, after obtaining a

divorce, is no longer married to the Filipino spouse.

Interestingly, Paragraph 2 of Article 26 traces its origin to the

1985 case of Van Dorn v. Romillo, Jr.[10] The Van Dorn case

involved a marriage between a Filipino citizen and a foreigner. The

Court held therein that a divorce decree validly obtained by the

alien spouse is valid in the Philippines, and consequently, the

Filipino spouse is capacitated to remarry under Philippine law.

Does the same principle apply to a case where at the time of

the celebration of the marriage, the parties were Filipino citizens,

but later on, one of them obtains a foreign citizenship by

naturalization?

The jurisprudential answer lies latent in the 1998 case

of Quita v. Court of Appeals.[11] In Quita, the parties were, as in

this case, Filipino citizens when they got married. The wife

became a naturalized American citizen in 1954 and obtained a

divorce in the same year. The Court therein hinted, by way

of obiter dictum, that a Filipino divorced by his naturalized foreign

spouse is no longer married under Philippine law and can thus

remarry.

Thus, taking into consideration the legislative intent and

applying the rule of reason, we hold that Paragraph 2 of Article 26

should be interpreted to include cases involving parties who, at

the time of the celebration of the marriage were Filipino citizens,

but later on, one of them becomes naturalized as a foreign citizen

and obtains a divorce decree. The Filipino spouse should likewise

be allowed to remarry as if the other party were a foreigner at the

time of the solemnization of the marriage. To rule otherwise would

be to sanction absurdity and injustice. Where the interpretation of

a statute according to its exact and literal import would lead to

mischievous results or contravene the clear purpose of the

legislature, it should be construed according to its spirit and

reason, disregarding as far as necessary the letter of the law. A

statute may therefore be extended to cases not within the literal

meaning of its terms, so long as they come within its spirit or

intent.[12]

If we are to give meaning to the legislative intent to avoid

the absurd situation where the Filipino spouse remains married to

the alien spouse who, after obtaining a divorce is no longer

married to the Filipino spouse, then the instant case must be

deemed as coming within the contemplation of Paragraph 2 of

Article 26.

In view of the foregoing, we state the twin elements for the

application of Paragraph 2 of Article 26 as follows:

1. There is a valid marriage that has been celebrated between a
Filipino citizen and a foreigner; and

2. A valid divorce is obtained abroad by the alien spouse

capacitating him or her to remarry.

The reckoning point is not the citizenship of the parties at the

time of the celebration of the marriage, but their citizenship at the

time a valid divorce is obtained abroad by the alien spouse

capacitating the latter to remarry.

In this case, when Ciprianos wife was naturalized as an

American citizen, there was still a valid marriage that has been

celebrated between her and Cipriano. As fate would have it, the

naturalized alien wife subsequently obtained a valid divorce

capacitating her to remarry. Clearly, the twin requisites for the

application of Paragraph 2 of Article 26 are both present in this

case. Thus Cipriano, the divorced Filipino spouse, should be

allowed to remarry.
 We are also unable to sustain the OSGs theory that the

proper remedy of the Filipino spouse is to file either a petition for

annulment or a petition for legal separation. Annulment would be

a long and tedious process, and in this particular case, not even

feasible, considering that the marriage of the parties appears to

have all the badges of validity. On the other hand, legal

separation would not be a sufficient remedy for it would not sever

the marriage tie; hence, the legally separated Filipino spouse

would still remain married to the naturalized alien spouse.

However, we note that the records are bereft of competent

evidence duly submitted by respondent concerning the divorce

decree and the naturalization of respondents wife. It is settled

rule that one who alleges a fact has the burden of proving it and

mere allegation is not evidence.[13]

Accordingly, for his plea to prosper, respondent herein must prove

his allegation that his wife was naturalized as an American citizen.

Likewise, before a foreign divorce decree can be recognized by

our own courts, the party pleading it must prove the divorce as a

fact and demonstrate its conformity to the foreign law allowing it.
[14]
Such foreign law must also be proved as our courts cannot

take judicial notice of foreign laws. Like any other fact, such laws

must be alleged and proved.[15] Furthermore, respondent must

also show that the divorce decree allows his former wife to

remarry as specifically required in Article 26. Otherwise, there

would be no evidence sufficient to declare that he is capacitated

to enter into another marriage.

Nevertheless, we are unanimous in our holding that Paragraph 2

of Article 26 of the Family Code (E.O. No. 209, as amended by E.O.

No. 227), should be interpreted to allow a Filipino citizen, who has

been divorced by a spouse who had acquired foreign citizenship

and remarried, also to remarry. However, considering that in the

present petition there is no sufficient evidence submitted and on

record, we are unable to declare, based on respondents bare

allegations that his wife, who was naturalized as an American

citizen, had obtained a divorce decree and had remarried an

American, that respondent is now capacitated to remarry. Such

declaration could only be made properly upon respondents

submission of the aforecited evidence in his favor.

ACCORDINGLY, the petition by the Republic of the Philippines

is GRANTED. The assailed Decision dated May 15, 2002, and

Resolution dated July 4, 2002, of the Regional Trial Court of

Molave, Zamboanga del Sur, Branch 23, are hereby SET ASIDE.

No pronouncement as to costs.
SO ORDERED.