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OIL AND NATURAL GAS COMMISSION, petitioner, vs. COURT OF APPEALS and PACIFIC CEMENT COMPANY, INC.

,
respondents. GR. No. 114323 July 23, 1998.

For those who did not take up arbitration: Big commercial contracts, particularly international commercial
contracts now usually have a provision to submit all disputes to arbitration. In arbitration, the parties are free to
choose who the arbitrators who will render the award. An award in an arbitration proceeding is equivalent to a
ruling or decision of a court. After parties present their arguments and evidence, the arbitrators render the award.
The winning party goes to court to have the award confirmed by a judge or magistrate. Once confirmed by the
court, the party can have it enforced. In this case, the parties agreed on an arbitrator and the arbitration
proceedings were held in India. The award of the arbitrator was then confirmed or adopted by a court in India. It
was the Indian courts ruling which was being sought to be enforced here in the Philippines. They did this by filing
a complaint for the enforcement of a foreign judgment in the RTC of Pasig.

FACTS:

Oil and Natural Gas Commission is a foreign corporation, owned and controlled by the Government of
India.
Pacific Cement Co is a Philippine corporation.
Pacific was supposed to deliver more than 4,000 metric tons of oil well cement to Bombay and Calcutta
but because of a dispute with the carrier, the shipment never reached the destination. Despite payment
by Oil and Natural, as well as repeated demands, Pacific does not deliver the oil well cement.
During negotiations, the parties agreed that the Pacific will replace the oil well cement with Class G
cement. Pacific did deliver the Class G cement but they were not according to specifications. Oil and
Natural informed Pacific that they will submit the dispute to arbitration as provided for in their contract.
The dispute was therefore submitted to arbitration, the arbitrator was Shri Malhotra, an employee of Oil
and Natural Gas. The decision of the arbitrator was in favour of Oil and Natural Gas. The arbitral decision
was confirmed by an Indian court.
Oil and Natural Gas filed a complaint in Pasig RTC for the enforcement of the foreign judgment. This was
opposed by Pacific for being bereft of any statement of facts and law upon which the award in favor of
the petitioner was based. The judgment of the Indian court apparently simply adopted the award of the
arbitrator without stating anything by way of support for its judgment.
The Pasig RTC dismissed the complaint. The RTC said that the contract provided for some disputes to be
settled by the regular court and some to be submitted to arbitration. This type, the RTC said, was for the
courts. Consequently, the proceedings had before the arbitrator were null and void and the foreign
court had therefore, adopted no legal award which could be the source of an enforceable right.
The CA affirmed the dismissal by the RTC. Aside from agreeing with the RTC that the arbitral award was
void, the CA also said that the full text of the judgment of the foreign court contains the dispositive
portion only and indicates no findings of fact and law as basis for the award. Hence, the said judgment
cannot be enforced by any Philippine court as it would violate the constitutional provision that no
decision shall be rendered by any court without expressing therein clearly and distinctly the facts and
the law on which it is based.

ISSUE: Whether or not the judgment of the foreign court is enforceable in this jurisdiction in view of the private
respondent's allegation that it is bereft of any statement of facts and law upon which the award in favor of the
petitioner was based.
HELD: Yes, it is enforceable in this jurisdiction. The SC said that even in this jurisdiction, incorporation by
reference is allowed if only to avoid the cumbersome reproduction of the decision of the lower courts, or
portions thereof, in the decision of the higher court. This is particularly true when the decision sought to be
incorporated is a lengthy and thorough discussion of the facts and conclusions arrived at, as in this case, where
Award Paper No. 3/B-1 consists of eighteen (18) single spaced pages.. In effect, the SC was saying that we also do
in this country what the Indian court did and it was okay for as long as the award or decision adopted was
complete in terms of the discussion of the facts and conclusions. The 18 pages of single spaced award by the
arbitrator was, according to the SC, complete enough. The short decision of the Indian court which merely adopted
the award was acceptable in our jurisdiction.

Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected by the fact that the
procedure in the courts of the country in which such judgment was rendered differs from that of the courts of
the country in which the judgment is relied on. This Court has held that matters of remedy and procedure are
governed by the lex fori or the internal law of the forum. Thus, if under the procedural rules of the Civil Court of
Dehra Dun, India, a valid judgment may be rendered by adopting the arbitrators findings, then the same must be
accorded respect. In the same vein, if the procedure in the foreign court mandates that an Order of the Court
becomes final and executory upon failure to pay the necessary docket fees, then the courts in this jurisdiction
cannot invalidate the order of the foreign court simply because our rules provide otherwise.

Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines, Inc. v. Court of
Appeals that:

"A foreign judgment is presumed to be valid and binding in the country from which it comes, until the contrary is
shown. It is also proper to presume the regularity of the proceedings and the giving of due notice therein.

"Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal of a foreign
country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and
their successors-in-interest by a subsequent title. The judgment may, however, be assailed by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of
Rule 131, a court, whether of the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of jurisdiction and has regularly performed its official duty."

Consequently, the party attacking a foreign judgment (Pacific Cement) had the burden of overcoming the
presumption of its validity which it failed to do in the instant case.

The foreign judgment being valid, there is nothing else left to be done than to order its enforcement, despite the
fact that Oil and Natural Gas merely prays for, the remand of the case to the RTC for further proceedings. As this
Court has ruled on the validity and enforceability of the said foreign judgment in this jurisdiction, further
proceedings in the RTC for the reception of evidence to prove otherwise are no longer necessary.