G.R. No.

L-22470 May 28, 1970

SOORAJMULL NAGARMULL, plaintiff-appellee,
vs.
BINALBAGAN-ISABELA SUGAR COMPANY, INC., defendant-appellant.

S. Emiliano Calma for plaintiff-appellee.

Salonga, Ordoñez & Associates for defendant-appellant.

DIZON, J.:

Appeal taken by Binalbagan-Isabela Sugar Company, Inc. from the decision of the Court of First Instance of Manila
in Civil Case No. 41103 entitled Soorajmull Nagarmull vs. Binalbagan-Isabela Sugar Company, Inc." of the following
tenor:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered in favor of the plaintiff,
Soorajmull Nagarmull, ordering the defendant, Binalbagan-Isabela Sugar Co., Inc. to pay said
plaintiff the sum of 18,562 rupees and 8 annas, with reservation for the plaintiff to prove its
equivalent in Philippine pesos on the date of the filing of the complaint, plus the costs of suit.

The parties submitted to the trial court the following, stipulation of facts:

1. Under Contract G/14370 dated May 6, 1949, plaintiff, a foreign corporation with offices at No. 8
Dalhousie Square (East) Calcutta, India, agreed to sell to defendant, a domestic corporation with
offices at the Chronicle Building, Aduana Street, Manila, 1,700,000 pieces of Hessian bags at $26.20
per 100 bags, C.I.F. Iloilo. Shipment of these bags was to be made in equal installments of 425,000
pcs. or 425 bales (1,000 pcs. to a bale during each of the months of July, August, September and
October, 1949. A copy of this contract marked Annex 'A' and the Calcutta Jute Fabrics Shippers
Association Form 1935 which was made a part of the contract and marked as Annex 'A-l' are hereto
attached.

2. This agreement was confirmed in a letter by the plaintiff to the defendant on May 7, 1949, copy of
which is attached hereto and made a part hereof as Annex 'B'; .

3. On September 8, 1949, plaintiff advised defendant that of the 850 bales scheduled for shipment in
July and August, the former was able to ship only 310 bales owing to the alleged failure of the
Adamjee Jute Mills to supply the goods in due time. Copy of plaintiff's letter is attached hereto as
Annex 'C' and made an integral part hereof; "4. In a letter dated September 29, 1949, defendant
requested plaintiff to ship 100 bales of the 540 bales defaulted from the July and August shipments.
A copy of this letter marked Annex 'D' is hereto attached. In this connection, it may also be
mentioned that of the 425 bales scheduled for shipment in September, 54 bales were likewise
defaulted resulting in a total of 154 bales which is now the object of the controversy.

5. Defendant requested plaintiff to pay 5% of the value of the 154 bales defaulted as penalty which
plaintiff did.

6. Meanwhile, on October 1, 1949, the Government of India increased the export duty of jute bags
from 80 to 350 rupees per ton, and on October 5, 1949, plaintiff requested defendant to increase its
letter of credit to cover the enhanced rate of export duty imposed upon the goods that were to be
shipped in October, reminding the latter that under their agreement, any alteration in export duty was
to be for the buyer's account. Copy of plaintiff's letter is attached hereto as Annex 'E';

7. On October 25, 1949, defendant, in compliance with plaintiff's request, increased the amount of its
letter of credit by $10,986.25 to cover the increase in export duty on 425 bales scheduled under the
contract for the shipment in October, 1949. A copy of defendants letter marked Annex 'F' is hereto
attached;

8. On October 27, 1949, plaintiff wrote to defendant for a further increase of $4,000.00 in its letter of
credit to cover the shipment of 154 bales which under the contract should have been included in the
July, August and September shipments. A copy of said letter is attached hereto as Annex 'G';

9. On November 17, 1949, plaintiff wrote defendant a letter reiterating its claim for $4,000.00
corresponding to the increased export taxes on the 154 bales delivered to defendant from the
defaulted shipments for the months of July, August and September, 1949. A copy of said letter is
attached hereto as Annex 'H';

10. On February 6, 1951, defendant received notification from the Bengal Chamber of Commerce
Tribunal of Arbitration in Calcutta, India, advising it that on December 28, 1950, Plaintiff applied to
said Tribunal for arbitration regarding their claim. The Tribunal requested the defendant to send
them its version of the case. This, defendant did on March 1, 1951, thru the then Government
Corporate Counsel, former Justice Pompeyo Diaz. A copy of the letter of authority is attached as
Annex 'I';

11. The case was heard by the Tribunal of Arbitration on July 5, 1951. Having previously requested
the Secretary Foreign Affairs for Assistance, defendant was represented at the hearing by the
Philippine Consulate General in Calcutta, India, by Consul Jose Moreno. A copy of the authority,
consisting of the letter of Government Corporate Counsel Pompeyo Diaz, dated March 1, 1951, and
1st Indorsement thereon, dated March 2, 1951, are attached hereto as Annexes 'J' and 'J-1';

12. As presented to the Tribunal of Arbitration, the whole case revolved on the question of whether
or not defendant is liable to the plaintiff for the payment of increased export taxes imposed by the
Indian Government on the shipments of jute sacks. Defendant contended that if the jute sacks in
question were delivered by plaintiff in the months of July, August, and September, 1949, pursuant to
the terms of the contract, then there would have been no increased export taxes to pay because
said increased taxes became effective only on October 1, 1949, while on the other hand, plaintiff
argued that the contract between the parties and all papers and documents made parts thereto
should prevail, including defendant's letter of September 29, 1949;

13. The Bengal Chamber of Commerce, Tribunal of Arbitration, refused to sustain defendant's
contention and decided in favor of the plaintiff, ordering the defendant to pay to the plaintiff the sum
of 18,562 rupees and 8 annas. This award was thereafter referred to the Calcutta High Court which
issued a decree affirming the award;

14. For about two years, the plaintiff attempted to enforce the said award through the Philippine
Charge de'Affaires in Calcutta, the Indian Legation here in the Philippines, and the Department of
Foreign Affairs. On September 22, 1952, plaintiff, thru the Department of Foreign Affairs, sought to
enforce its claim to which letter defendant replied on August 11, 1952, saying that they are not
bound by the decision of the Bengal Chamber of Commerce and consequently are not obligated to
pay the claim in question. Copies of said letters are attached hereto as Annexes 'K' and 'L',
respectively;

15. For more than three years thereafter, no communication was received by defendant from the
plaintiff regarding their claim until January 26, 1956, when Atty. S. Emiliano Calma wrote the
defendant a letter of demand, copy of which is attached hereto as Annex 'M';

16. On February 3, 1956, defendant's counsel replied informing Atty. S. Emiliano Calma that it
refuses to pay plaintiff's claim because the same has no foundation in law and in fact. A copy of this
letter is attached hereto as Annex 'N';

17. Thereafter, no communication was received by defendant from plaintiff or its lawyers regarding
their claim until June, 1959, when the present complaint was filed.
 FINALLY, parties thru their respective counsel, state that much as they have endeavored to agree
on all matters of fact, they have failed to do so on certain points. It is, therefore respectfully prayed of
this Honorable Court that parties be allowed to present evidence on the disputed facts.

Thereafter the parties submitted additional evidence pursuant to the reservation they made in the above stipulation.

The appeal was elevated to the Court of Appeals but the latter, by its resolution of January 27, 1964, elevated it to
this Court because the additional documents and oral evidence presented by the parties did not raise any factual
issue, and said court further found that "the three assigned errors quoted above all pose questions of law."

As may be gathered from the pleadings and the facts stipulated, the action below was for the enforcement of a
foreign judgment: the decision rendered by the Tribunal of Arbitration of the Bengal Chamber of Commerce in
Calcutta, India, as affirmed by the High Court of Judicature of Calcutta. The appealed decision provides for its
enforcement subject to the right reserved to appellee to present evidence on the equivalent in Philippine currency of
the amount adjudged in Indian currency. The record does not disclose any evidence presented for that purpose
subsequent to the rendition of judgment.

To secure a reversal of the appealed decision appellant claims that the lower court committed the following errors:

THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF-APPELLEE, A FOREIGN

CORPORATION NOT LICENSED TO TRANSACT BUSINESS IN THE PHILIPPINES, HAS THE
RIGHT TO SUE IN PHILIPPINE COURTS.

II

THE LOWER COURT ERRED WHEN IT FAILED TO CONSIDER PLAINTIFF-APPELLEE'S

DEFAULT, AND INSTEAD RELIED SOLELY ON THE AWARD OF THE BENGAL CHAMBER OF
COMMERCE TRIBUNAL OF ARBITRATION.

III

THE LOWER COURT ERRED WHEN IT HELD THAT PLAINTIFF-APPELLEE WAS NOT GUILTY
OF LACHES.

The main issue to be resolved is whether or not the decision of the Tribunal of Arbitration of the Bengal Chamber of
Commerce, as affirmed by the High Court of Judicature of Calcutta, is enforceable in the Philippines.

For the purpose of this decision We shall assume that appellee — contrary to appellant's contention — has the right
to sue in Philippine courts and that, as far as the instant case is concerned, it is not guilty of laches. This
notwithstanding, We are constrained to reverse the appealed decision upon the ground that it is based upon a clear
mistake of law and its enforcement will give rise to a patent injustice.

It is true that under the provisions of Section 50 of Rule 39, Rules of Court, a judgment for a sum of money rendered
by a foreign court "is presumptive evidence of a right as between the parties and their successors in interest by a
subsequent title", but when suit for its enforcement is brought in a Philippine court, said judgment "may be repelled
by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact"
(Emphasis supplied.)

Upon the facts of record, We are constrained to hold that the decision sought to be enforced was rendered upon a
"clear mistake of law" and because of that it makes appellant — an innocent party — suffer the consequences of
the default or breach of contract committed by appellee.

There is no question at all that appellee was guilty of a breach of contract when it failed to deliver one-hundred fifty-
four Hessian bales which, according to the contract entered into with appellant, should have been delivered to the
latter in the months of July, August and September, all of the year 1949. It is equally clear beyond doubt that had
these one-hundred fifty-four bales been delivered in accordance with the contract aforesaid, the increase in the
export tax due upon them would not have been imposed because said increased export tax became effective only
on October 1, 1949.

To avoid its liability for the aforesaid increase in the export tax, appellee claims that appellant should be held liable
therefor on the strength of its letter of September 29, 1949 asking appellee to ship the shortage. This argument is
unavailing because it is not only illogical but contrary to known principles of fairness and justice. When appellant
demanded that appellee deliver the shortage of 154 bales it did nothing more than to demand that to which it was
entitled as a matter of right. The breach of contract committed by appellee gave appellant, under the law and even
under general principles of fairness, the right to rescind the contract or to ask for its specific performance, in either
case with right to demand damages. Part of the damages appellant was clearly entitled to recover from appellee
growing out of the latter's breach of the contract consists precisely of the amount of the increase decreed in the
export tax due on the shortage — which, because of appellee's fault, had to be delivered after the effectivity of the
increased export tax.

To the extent, therefore, that the decisions of the Tribunal of Arbitration of the Bengal Chamber of Commerce and of
the High Court of Judicature of Calcutta fail to apply to the facts of this case fundamental principles of contract, the
same may be impeached, as they have been sufficiently impeached by appellant, on the ground of "clear mistake of
law". We agree in this regard with the majority opinion in Ingenohl vs. Walter E. Olsen & Co. (47 Phil. 189), although
its view was reversed by the Supreme Court of the United States (273 U.S. 541, 71 L. ed. 762) which at that time
had jurisdiction to review by certiorari decisions of this Court. We can not sanction a clear mistake of law that would
work an obvious injustice upon appellant.

WHEREFORE, the appealed judgment is reversed and set aside, with costs.

SOORAJMULL NAGARMULL vs. BINALBAGAN-ISABELA SUGAR COMPANY, INC.

G.R. No. L-22470; May 28, 1970

Facts:

Under a Contract dated May 6, 1949, plaintiff, a foreign corporation with offices at Calcutta, India, agreed to sell to
defendant, a domestic corporation with offices at the Manila, 1,700,000 pieces of Hessian bags at $26.20 per 100 bags,
C.I.F. Iloilo. Shipment of these bags was to be made in equal installments of 425,000 pcs. or 425 bales during each of the
months of July, August, September and October, 1949.

On September 8, 1949, plaintiff advised defendant that of the 850 bales scheduled for shipment in July and August, the
former was able to ship only 310 bales owing to the alleged failure of the Adamjee Jute Mills to supply the goods in due
time. In a letter dated September 29, 1949, defendant requested plaintiff to ship 100 bales of the 540 bales defaulted
from the July and August shipments. In this connection, it may also be mentioned that of the 425 bales scheduled for
shipment in September, 54 bales were likewise defaulted resulting in a total of 154 bales which is now the object of the
controversy.

Meanwhile, on October 1, 1949, the Government of India increased the export duty of jute bags from 80 to 350 rupees
per ton. On October 27, 1949, plaintiff wrote to defendant for an increase of $4,000.00 in its letter of credit to cover the
shipment of 154 bales which under the contract should have been included in the July, August and September
shipments.

On February 6, 1951, defendant received notification from the Bengal Chamber of Commerce Tribunal of Arbitration in
Calcutta, India, advising it that on December 28, 1950, Plaintiff applied to said Tribunal for arbitration regarding their
claim. The Tribunal requested the defendant to send them its version of the case. This, defendant did on March 1, 1951,
thru the then Government Corporate Counsel, former Justice Pompeyo Diaz.
The Bengal Chamber of Commerce, Tribunal of Arbitration, refused to sustain defendant’s contention and decided in
favor of the plaintiff, ordering the defendant to pay to the plaintiff the sum of 18,562 rupees and 8 annas. This award
was thereafter referred to the Calcutta High Court which issued a decree affirming the award.

Issue: WON the decision of the Tribunal of Arbitration of the Bengal Chamber of Commerce, as affirmed by the High
Court of Judicature of Calcutta, is enforceable in the Philippines.

Held:

Under the Rules, a judgment for a sum of money rendered by a foreign court “is presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title”, but when suit for its enforcement is brought
in a Philippine court, said judgment “may be repelled by evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact”

There is no question at all that appellee was guilty of a breach of contract when it failed to deliver one-hundred fifty-four
Hessian bales which, according to the contract entered into with appellant, should have been delivered to the latter in
the months of July, August and September, all of the year 1949. It is equally clear beyond doubt that had these one-
hundred fifty-four bales been delivered in accordance with the contract aforesaid, the increase in the export tax due
upon them would not have been imposed because said increased export tax became effective only on October 1, 1949.

To the extent, therefore, that the decisions of the Tribunal of Arbitration of the Bengal Chamber of Commerce and of
the High Court of Judicature of Calcutta fail to apply to the facts of this case fundamental principles of contract, the
same may be impeached, as they have been sufficiently impeached by appellant, on the ground of “clear mistake of
law”. We can not sanction a clear mistake of law that would work an obvious injustice upon appellant.

G.R. No. 112573 February 9, 1995

NORTHWEST ORIENT AIRLINES, INC. petitioner,

vs.
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

PADILLA, JR., J.:

This petition for review on certiorari seeks to set aside the decision of the Court of Appeals affirming the dismissal of
the petitioner's complaint to enforce the judgment of a Japanese court. The principal issue here is whether a
Japanese court can acquire jurisdiction over a Philippine corporation doing business in Japan by serving summons
through diplomatic channels on the Philippine corporation at its principal office in Manila after prior attempts to serve
summons in Japan had failed.

Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized under the laws of the
State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of the Regional Trial Court (RTC), Branch
54, Manila, a judgment rendered in its favor by a Japanese court against private respondent C.F. Sharp &
Company, Inc., (hereinafter SHARP), a corporation incorporated under Philippine laws.

As found by the Court of Appeals in the challenged decision of 10 November 1993,   the following are the factual
1

and procedural antecedents of this controversy:

On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp & Company, through its
Japan branch, entered into an International Passenger Sales Agency Agreement, whereby the
former authorized the latter to sell its air transportation tickets. Unable to remit the proceeds of the
ticket sales made by defendant on behalf of the plaintiff under the said agreement, plaintiff on March
25, 1980 sued defendant in Tokyo, Japan, for collection of the unremitted proceeds of the ticket
sales, with claim for damages.

On April 11, 1980, a writ of summons was issued by the 36th Civil Department, Tokyo District Court
of Japan against defendant at its office at the Taiheiyo Building, 3rd floor, 132, Yamashita-cho,
Naka-ku, Yokohoma, Kanagawa Prefecture. The attempt to serve the summons was unsuccessful
because the bailiff was advised by a person in the office that Mr. Dinozo, the person believed to be
authorized to receive court processes was in Manila and would be back on April 24, 1980.

On April 24, 1980, bailiff returned to the defendant's office to serve the summons. Mr. Dinozo
refused to accept the same claiming that he was no longer an employee of the defendant.

After the two attempts of service were unsuccessful, the judge of the Tokyo District Court decided to
have the complaint and the writs of summons served at the head office of the defendant in Manila.
On July 11, 1980, the Director of the Tokyo District Court requested the Supreme Court of Japan to
serve the summons through diplomatic channels upon the defendant's head office in Manila.

On August 28, 1980, defendant received from Deputy Sheriff Rolando Balingit the writ of summons
(p. 276, Records). Despite receipt of the same, defendant failed to appear at the scheduled hearing.
Thus, the Tokyo Court proceeded to hear the plaintiff's complaint and on [January 29, 1981],
rendered judgment ordering the defendant to pay the plaintiff the sum of 83,158,195 Yen and
damages for delay at the rate of 6% per annum from August 28, 1980 up to and until payment is
completed (pp. 12-14, Records).

On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of the judgment.
Defendant not having appealed the judgment, the same became final and executory.

Plaintiff was unable to execute the decision in Japan, hence, on May 20, 1983, a suit for
enforcement of the judgment was filed by plaintiff before the Regional Trial Court of Manila Branch
54.2

On July 16, 1983, defendant filed its answer averring that the judgment of the Japanese Court
sought to be enforced is null and void and unenforceable in this jurisdiction having been rendered
without due and proper notice to the defendant and/or with collusion or fraud and/or upon a clear
mistake of law and fact (pp. 41-45, Rec.).

Unable to settle the case amicably, the case was tried on the merits. After the plaintiff rested its
case, defendant on April 21, 1989, filed a Motion for Judgment on a Demurrer to Evidence based on
two grounds:
(1) the foreign judgment sought to be enforced is null and void for want of jurisdiction and (2) the
said judgment is contrary to Philippine law and public policy and rendered without due process of
law. Plaintiff filed its opposition after which the court a quo rendered the now assailed decision dated
June 21, 1989 granting the demurrer motion and dismissing the complaint (Decision, pp. 376-378,
Records). In granting the demurrer motion, the trial court held that:

The foreign judgment in the Japanese Court sought in this action is null and void for
want of jurisdiction over the person of the defendant considering that this is an
action in personam; the Japanese Court did not acquire jurisdiction over the person
of the defendant because jurisprudence requires that the defendant be served with
summons in Japan in order for the Japanese Court to acquire jurisdiction over it, the
process of the Court in Japan sent to the Philippines which is outside Japanese
jurisdiction cannot confer jurisdiction over the defendant in the case before the
Japanese Court of the case at bar. Boudard versus Tait 67 Phil. 170. The plaintiff
contends that the Japanese Court acquired jurisdiction because the defendant is a
resident of Japan, having four (4) branches doing business therein and in fact had a
permit from the Japanese government to conduct business in Japan (citing the
exhibits presented by the plaintiff); if this is so then service of summons should have
been made upon the defendant in Japan in any of these alleged four branches; as
 admitted by the plaintiff the service of the summons issued by the Japanese Court
was made in the Philippines thru a Philippine Sheriff. This Court agrees that if the
defendant in a foreign court is a resident in the court of that foreign court such court
could acquire jurisdiction over the person of the defendant but it must be served
upon the defendant in the territorial jurisdiction of the foreign court. Such is not the
case here because the defendant was served with summons in the Philippines and
not in Japan.

Unable to accept the said decision, plaintiff on July 11, 1989 moved for reconsideration of the
decision, filing at the same time a conditional Notice of Appeal, asking the court to treat the said
notice of appeal "as in effect after and upon issuance of the court's denial of the motion for
reconsideration."

Defendant opposed the motion for reconsideration to which a Reply dated August 28, 1989 was filed
by the plaintiff.

On October 16, 1989, the lower court disregarded the Motion for Reconsideration and gave due
course to the plaintiff's Notice of Appeal. 
3

In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its reliance upon Boudard
vs. Tait   wherein it was held that "the process of the court has no extraterritorial effect and no jurisdiction is
4

acquired over the person of the defendant by serving him beyond the boundaries of the state." To support its
position, the Court of Appeals further stated:

In an action strictly in personam, such as the instant case, personal service of summons within the
forum is required for the court to acquire jurisdiction over the defendant (Magdalena Estate Inc. vs.
Nieto, 125 SCRA 230). To confer jurisdiction on the court, personal or substituted service of
summons on the defendant not extraterritorial service is necessary (Dial Corp vs. Soriano, 161
SCRA 739).

But while plaintiff-appellant concedes that the collection suit filed is an action in personam, it is its
theory that a distinction must be made between an action in personam against a resident defendant
and an action in personam against a non-resident defendant. Jurisdiction is acquired over a non-
resident defendant only if he is served personally within the jurisdiction of the court and over a
resident defendant if by personal, substituted or constructive service conformably to statutory
authorization. Plaintiff-appellant argues that since the defendant-appellee maintains branches in
Japan it is considered a resident defendant. Corollarily, personal, substituted or constructive service
of summons when made in compliance with the procedural rules is sufficient to give the court
jurisdiction to render judgment in personam.

Such an argument does not persuade.

It is a general rule that processes of the court cannot lawfully be served outside the territorial limits of
the jurisdiction of the court from which it issues (Carter vs. Carter; 41 S.E. 2d 532, 201) and this
is regardless of the residence or citizenship of the party thus served (Iowa-Rahr vs. Rahr, 129 NW
494, 150 Iowa 511, 35 LRC, NS, 292, Am. Case 1912 D680). There must be actual service within
the proper territorial limits on defendant or someone authorized to accept service for him. Thus, a
defendant, whether a resident or not in the forum where the action is filed, must be served with
summons within that forum.

But even assuming a distinction between a resident defendant and non-resident defendant were to
be adopted, such distinction applies only to natural persons and not in the corporations. This finds
support in the concept that "a corporation has no home or residence in the sense in which those
terms are applied to natural persons" (Claude Neon Lights vs. Phil. Advertising Corp., 57 Phil. 607).
Thus, as cited by the defendant-appellee in its brief:
 Residence is said to be an attribute of a natural person, and can be predicated on an artificial being
only by more or less imperfect analogy. Strictly speaking, therefore, a corporation can have no local
residence or habitation. It has been said that a corporation is a mere ideal existence, subsisting only
in contemplation of law — an invisible being which can have, in fact, no locality and can occupy no
space, and therefore cannot have a dwelling place. (18 Am. Jur. 2d, p. 693 citing Kimmerle v.
Topeka, 88 370, 128 p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202)

Jurisprudence so holds that the foreign or domestic character of a corporation is to be determined by

the place of its origin where its charter was granted and not by the location of its business activities
(Jennings v. Idaho Rail Light & P. Co., 26 Idaho 703, 146 p. 101), A corporation is a "resident" and
an inhabitant of the state in which it is incorporated and no other (36 Am. Jur. 2d, p. 49).

Defendant-appellee is a Philippine Corporation duly organized under the Philippine laws. Clearly, its
residence is the Philippines, the place of its incorporation, and not Japan. While defendant-appellee
maintains branches in Japan, this will not make it a resident of Japan. A corporation does not
become a resident of another by engaging in business there even though licensed by that state and
in terms given all the rights and privileges of a domestic corporation (Galveston H. & S.A.R. Co. vs.
Gonzales, 151 US 496, 38 L ed. 248, 4 S Ct. 401).

On this premise, defendant appellee is a non-resident corporation. As such, court processes must
be served upon it at a place within the state in which the action is brought and not elsewhere (St.
Clair vs. Cox, 106 US 350, 27 L ed. 222, 1 S. Ct. 354). 5

It then concluded that the service of summons effected in Manila or beyond the territorial boundaries of Japan was
null and did not confer jurisdiction upon the Tokyo District Court over the person of SHARP; hence, its decision was
void.

Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court contending that
the respondent court erred in holding that SHARP was not a resident of Japan and that summons on SHARP could
only be validly served within that country.

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. 6

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 has the burden of overcoming the presumption of its
validity.  Being the party challenging the judgment rendered by the Japanese court, SHARP had the duty to
7

demonstrate the invalidity of such judgment. In an attempt to discharge that burden, it contends that the
extraterritorial service of summons effected at its home office in the Philippines was not only ineffectual but also
void, and the Japanese Court did not, therefore acquire jurisdiction over it.

It is settled that matters of remedy and procedure such as those relating to the service of process upon a defendant
are governed by the lex fori or the internal law of the forum.  In this case, it is the procedural law of Japan where the
8

judgment was rendered that determines the validity of the extraterritorial service of process on SHARP. As to what
this law is is a question of fact, not of law. It may not be taken judicial notice of and must be pleaded and proved like
any other fact.  Sections 24 and 25, Rule 132 of the Rules of Court provide that it may be evidenced by an official
9

publication or by a duly attested or authenticated copy thereof. It was then incumbent upon SHARP to present
evidence as to what that Japanese procedural law is and to show that under it, the assailed extraterritorial service is
invalid. It did not. Accordingly, the presumption of validity and regularity of the service of summons and the decision
thereafter rendered by the Japanese court must stand.
Alternatively in the light of the absence of proof regarding Japanese
law, the presumption of identity or similarity or the so-called processual presumption   may be invoked. Applying it,
10

the Japanese law on the matter is presumed to be similar with the Philippine law on service of summons on a
private foreign corporation doing business in the Philippines. Section 14, Rule 14 of the Rules of Court provides that
if the defendant is a foreign corporation doing business in the Philippines, service may be made: (1) on its resident
agent designated in accordance with law for that purpose, or, (2) if there is no such resident agent, on the
government official designated by law to that effect; or (3) on any of its officers or agents within the Philippines.

If the foreign corporation has designated an agent to receive summons, the designation is exclusive, and service of
summons is without force and gives the court no jurisdiction unless made upon him.  11

Where the corporation has no such agent, service shall be made on the government official designated by law, to
wit: (a) the Insurance Commissioner in the case of a foreign insurance company; (b) the Superintendent of Banks, in
the case of a foreign banking corporation; and (c) the Securities and Exchange Commission, in the case of other
foreign corporations duly licensed to do business in the Philippines. Whenever service of process is so made, the
government office or official served shall transmit by mail a copy of the summons or other legal proccess to the
corporation at its home or principal office. The sending of such copy is a necessary part of the service.  12

SHARP contends that the laws authorizing service of process upon the Securities and Exchange Commission, the
Superintendent of Banks, and the Insurance Commissioner, as the case may be, presuppose a situation wherein
the foreign corporation doing business in the country no longer has any branches or offices within the Philippines.
Such contention is belied by the pertinent provisions of the said laws. Thus, Section 128 of the Corporation
Code   and Section 190 of the Insurance Code   clearly contemplate two situations: (1) if the corporation had left the
13 14

Philippines or had ceased to transact business therein, and (2) if the corporation has no designated agent. Section
17 of the General Banking Act   does not even speak a corporation which had ceased to transact business in the
15

Philippines.

Nowhere in its pleadings did SHARP profess to having had a resident agent authorized to receive court processes
in Japan. This silence could only mean, or least create an impression, that it had none. Hence, service on the
designated government official or on any of SHARP's officers or agents in Japan could be availed of. The
respondent, however, insists that only service of any of its officers or employees in its branches in Japan could be
resorted to. We do not agree. As found by the respondent court, two attempts at service were made at SHARP's
Yokohama branch. Both were unsuccessful. On the first attempt, Mr. Dinozo, who was believed to be the person
authorized to accept court process, was in Manila. On the second, Mr. Dinozo was present, but to accept the
summons because, according to him, he was no longer an employee of SHARP. While it may be true that service
could have been made upon any of the officers or agents of SHARP at its three other branches in Japan, the
availability of such a recourse would not preclude service upon the proper government official, as stated above.

As found by the Court of Appeals, it was the Tokyo District Court which ordered that summons for SHARP be
served at its head office in the Philippine's after the two attempts of service had failed.   The Tokyo District Court
16

requested the Supreme Court of Japan to cause the delivery of the summons and other legal documents to the
Philippines. Acting on that request, the Supreme Court of Japan sent the summons together with the other legal
documents to the Ministry of Foreign Affairs of Japan which, in turn, forwarded the same to the Japanese Embassy
in Manila . Thereafter, the court processes were delivered to the Ministry (now Department) of Foreign Affairs of the
Philippines, then to the Executive Judge of the Court of First Instance (now Regional Trial Court) of Manila, who
forthwith ordered Deputy Sheriff Rolando Balingit to serve the same on SHARP at its principal office in Manila. This
service is equivalent to service on the proper government official under Section 14, Rule 14 of the Rules of Court, in
relation to Section 128 of the Corporation Code. Hence, SHARP's contention that such manner of service is not
valid under Philippine laws holds no water.17

In deciding against the petitioner, the respondent court sustained the trial court's reliance on Boudard
vs. Tait   where this Court held:
18

The fundamental rule is that jurisdiction in personam over nonresidents, so as to sustain a money

judgment, must be based upon personal service within the state which renders the judgment.

xxx xxx xxx

 The process of a court, has no extraterritorial effect, and no jurisdiction is acquired over the person
of the defendant by serving him beyond the boundaries of the state. Nor has a judgment of a court of
a foreign country against a resident of this country having no property in such foreign country based
on process served here, any effect here against either the defendant personally or his property
situated here.

Process issuing from the courts of one state or country cannot run into another, and although a
nonresident defendant may have been personally served with such process in the state or country of
his domicile, it will not give such jurisdiction as to authorize a personal judgment against him.

It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto   and Dial Corp. vs. Soriano,   as well as the
19 20

principle laid down by the Iowa Supreme Court in the 1911 case of Raher vs. Raher.  21

The first three cases are, however, inapplicable. Boudard involved the enforcement of a judgment of the civil
division of the Court of First Instance of Hanoi, French Indo-China. The trial court dismissed the case because the
Hanoi court never acquired jurisdiction over the person of the defendant considering that "[t]he, evidence adduced
at the trial conclusively proves that neither the appellee [the defendant] nor his agent or employees were ever in
Hanoi, French Indo-China; and that the deceased Marie Theodore Jerome Boudard had never, at any time, been
his employee." In Magdalena Estate, what was declared invalid resulting in the failure of the court to acquire
jurisdiction over the person of the defendants in an action in personam was the service of summons through
publication against non-appearing resident defendants. It was claimed that the latter concealed themselves to avoid
personal service of summons upon them. In Dial, the defendants were foreign corporations which were not,
domiciled and licensed to engage in business in the Philippines and which did not have officers or agents, places of
business, or properties here. On the other hand, in the instant case, SHARP was doing business in Japan and was
maintaining four branches therein.

Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided Supreme Court of
Iowa declared that the principle that there can be no jurisdiction in a court of a territory to render a personal
judgment against anyone upon service made outside its limits was applicable alike to cases of residents and non-
residents. The principle was put at rest by the United States Supreme Court when it ruled in the 1940 case
of Milliken vs. Meyer   that domicile in the state is alone sufficient to bring an absent defendant within the reach of
22

the state's jurisdiction for purposes of a personal judgment by means of appropriate substituted service or personal
service without the state. This principle is embodied in section 18, Rule 14 of the Rules of Court which allows
service of summons on residents temporarily out of the Philippines to be made out of the country. The rationale for
this rule was explained in Milliken as follows:

[T]he authority of a state over one of its citizens is not terminated by the mere fact of his absence
from the state. The state which accords him privileges and affords protection to him and his property
by virtue of his domicile may also exact reciprocal duties. "Enjoyment of the privileges of residence
within the state, and the attendant right to invoke the protection of its laws, are inseparable" from the
various incidences of state citizenship. The responsibilities of that citizenship arise out of the
relationship to the state which domicile creates. That relationship is not dissolved by mere absence
from the state. The attendant duties, like the rights and privileges incident to domicile, are not
dependent on continuous presence in the state. One such incident of domicile is amenability to suit
within the state even during sojourns without the state, where the state has provided and employed
a reasonable method for apprising such an absent party of the proceedings against him.  23

The domicile of a corporation belongs to the state where it was incorporated.   In a strict technical sense, such
24

domicile as a corporation may have is single in its essence and a corporation can have only one domicile which is
the state of its creation. 25

Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a resident in another state in
which it has offices and transacts business. This is the rule in our jurisdiction and apropos thereto, it may be
necessery to quote what we stated in State Investment House, Inc, vs. Citibank, N.A.,   to wit:
26

The issue is whether these Philippine branches or units may be considered "residents of the
Philippine Islands" as that term is used in Section 20 of the Insolvency Law . . . or residents of the
state under the laws of which they were respectively incorporated. The answer cannot be found in
the Insolvency Law itself, which contains no definition of the term, resident, or any clear indication of
its meaning. There are however other statutes, albeit of subsequent enactment and effectivity, from
which enlightening notions of the term may be derived.

The National Internal Revenue Code declares that the term "'resident foreign corporation' applies to
a foreign corporation engaged in trade or business within the Philippines," as distinguished from a
"'non-resident foreign corporation' . . . (which is one) not engaged in trade or bussiness within the
Philippines." [Sec. 20, pars. (h) and (i)].

The Offshore Banking Law, Presidential Decree No. 1034, states "that branches, subsidiaries,
affiliation, extension offices or any other units of corporation or juridical person organized under the
laws of any foreign country operating in the Philippines shall be considered residents of the
Philippines. [Sec. 1(e)].

The General Banking Act, Republic Act No. 337, places "branches and agencies in the Philippines of
foreign banks . . . (which are) called Philippine branches," in the same category as "commercial
banks, savings associations, mortgage banks, development banks, rural banks, stock savings and
loan associations" (which have been formed and organized under Philippine laws), making no
distinction between the former and the latter in so far as the terms "banking institutions" and "bank"
are used in the Act [Sec. 2], declaring on the contrary that in "all matters not specifically covered by
special provisions applicable only to foreign banks, or their branches and agencies in the
Philippines, said foreign banks or their branches and agencies lawfully doing business in the
Philippines "shall be bound by all laws, rules, and regulations applicable to domestic banking
corporations of the same class, except such laws, rules and regulations as provided for the creation,
formation, organization, or dissolution of corporations or as fix the relation, liabilities, responsibilities,
or duties of members, stockholders or officers of corporation. [Sec. 18].

This court itself has already had occasion to hold [Claude Neon Lights, Fed. Inc. vs. Philippine
Advertising Corp., 57 Phil. 607] that a foreign corporation licitly doing business in the Philippines,
which is a defendant in a civil suit, may not be considered a non-resident within the scope of the
legal provision authorizing attachment against a defendant not residing in the Philippine Islands;
[Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil Procedure; Sec. 1(f), Rule 59 of
the Rules of 1940, Sec. 1(f), Rule 57, Rules of 1964] in other words, a preliminary attachment may
not be applied for and granted solely on the asserted fact that the defendant is a foreign corporation
authorized to do business in the Philippines — and is consequently and necessarily, "a party who
resides out of the Philippines." Parenthetically, if it may not be considered as a party not residing in
the Philippines, or as a party who resides out of the country, then, logically, it must be considered a
party who does reside in the Philippines, who is a resident of the country. Be this as it may, this
Court pointed out that:

. . . Our laws and jurisprudence indicate a purpose to assimilate foreign corporations,

duly licensed to do business here, to the status of domestic corporations. (Cf.
Section 73, Act No. 1459, and Marshall Wells Co. vs. Henry W. Elser & Co., 46 Phil.
70, 76; Yu Cong Eng vs. Trinidad, 47 Phil. 385, 411) We think it would be entirely out
of line with this policy should we make a discrimination against a foreign corporation,
like the petitioner, and subject its property to the harsh writ of seizure by attachment
when it has complied not only with every requirement of law made specially of
foreign corporations, but in addition with every requirement of law made of domestic
corporations. . . .

Obviously, the assimilation of foreign corporations authorized to do business in the Philippines "to
the status of domestic corporations, subsumes their being found and operating as corporations,
hence, residing, in the country.

The same principle is recognized in American law: that the residence of a corporation, if it can be
said to have a residence, is necessarily where it exercises corporate functions . . .;" that it is
considered as dwelling "in the place where its business is done . . .," as being "located where its
franchises are exercised . . .," and as being "present where it is engaged in the prosecution of the
 corporate enterprise;" that a "foreign corporation licensed to do business in a state is a resident of
any country where it maintains an office or agent for transaction of its usual and customary business
for venue purposes;" and that the "necessary element in its signification is locality of existence."
[Words and Phrases, Permanent Ed., vol. 37, pp. 394, 412, 493].

In as much as SHARP was admittedly doing business in Japan through its four duly registered branches at the time
the collection suit against it was filed, then in the light of the processual presumption, SHARP may be deemed a
resident of Japan, and, as such, was amenable to the jurisdiction of the courts therein and may be deemed to have
assented to the said courts' lawful methods of serving process. 27

Accordingly, the extraterritorial service of summons on it by the Japanese Court was valid not only under the
processual presumption but also because of the presumption of regularity of performance of official duty.

We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to be without merit.
We find no evidence that would justify an award for attorney's fees and litigation expenses under Article 2208 of the
Civil Code of the Philippines. Nor is an award for exemplary damages warranted. Under Article 2234 of the Civil
Code, before the court may consider the question of whether or not exemplary damages should be awarded, the
plaintiff must show that he is entitled to moral, temperate, or compensatory damaged. There being no such proof
presented by NORTHWEST, no exemplary damages may be adjudged in its favor.

WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED insofar as it
denied NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary damages but REVERSED
insofar as in sustained the trial court's dismissal of NORTHWEST's complaint in Civil Case No. 83-17637 of Branch
54 of the Regional Trial Court of Manila, and another in its stead is hereby rendered ORDERING private respondent
C.F. SHARP L COMPANY, INC. to pay to NORTHWEST the amounts adjudged in the foreign judgment subject of
said case, with interest thereon at the legal rate from the filing of the complaint therein until the said foreign
judgment is fully satisfied.

Costs against the private respondent.

SO ORDERED.

Northwest Orient Airlines vs. CA

FACTS: Northwest Airlines and private respondent C.F. Sharp & Company entered
into an agreement whereby the former authorized the latter to sell its air
transportation tickets. Unable to remit the proceeds of the ticket sales,
Northwest sued Sharp for collection of the unremitted proceeds plus damages in
Tokyo, Japan. After two attempts of service of summons were unsuccessful, the
Court of Japan served the summons through diplomatic channels upon the
defendant’s head office in Manila. Sharp alleges that the summons must be
served personally, the case being strictlyin personam.

ISSUE: WON a Japanese court can acquire jurisdiction over a Philippine

corporation doing business in Japan by serving summons through diplomatic
channels on the Philippine corporation at its principal office in Manila after
prior attempts to serve summons in Japan had failed.

HELD: YES. Sec. 14, Rule 14 of the Rules of Court provides that if the
defendant is a foreign corporation doing business in the Philippines, service
may be made: (1) on its resident agent designated in accordance with law for
that purpose, or, (2) if there is no such resident agent, on the government
official designated by law to that effect; or (3) on any of its officers or
agents within the Philippines.
If the foreign corporation has designated an agent to receive summons, the
designation is exclusive, and service of summons is without force and gives
the court no jurisdiction unless made upon him. 

Where the corporation has no such agent, service shall be made on the
government official designated by law, to wit: (a) the Insurance Commissioner
in the case of a foreign insurance company; (b) the Superintendent of Banks,
in the case of a foreign banking corporation; and (c) the Securities and
Exchange Commission, in the case of other foreign corporations duly licensed
to do business in the Philippines. Whenever service of process is so made, the
government office or official served shall transmit by mail a copy of the
summons or other legal process to the corporation at its home or principal
office. The sending of such copy is a necessary part of the service. 

Nowhere in its pleadings did SHARP profess to having had a resident agent
authorized to receive court processes in Japan. This silence could only mean,
or least create an impression, that it had none. Hence, service on the
designated government official or on any of SHARP’s officers or agents in
Japan could be availed of.

G.R. No. 103493 June 19, 1997

PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS,

N.V., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R.
PERLAS, and WILLIAM H. CRAIG, respondents.

MENDOZA, J.:

This case presents for determination the conclusiveness of a foreign judgment upon the rights of the parties under
the same cause of action asserted in a case in our local court. Petitioners brought this case in the Regional Trial
Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign action, dismissed Civil Case
No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals
affirmed. Hence this petition for review on certiorari.

The facts are as follows:

On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala
International Finance Limited (hereafter called AYALA)   and Philsec Investment Corporation (hereafter called
1

PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a market value of
P14,088,995.00. In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president,
private respondent Drago Daic, assumed Ducat's obligation under an Agreement, dated January 27, 1983, whereby
1488, Inc. executed a Warranty Deed with Vendor's Lien by which it sold to petitioner Athona Holdings, N.V.
(hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC
and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase
price. The balance of US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor
of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA
released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession
belonging to Ducat.

As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by the note
became due and demandable. Accordingly, on October 17, 1985, private respondent 1488, Inc. sued petitioners
PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of US$307,209.02 and for
damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the
marketability of the shares of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United
States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-57746, the venue of
the action was later transferred to the United States District Court for the Southern District of Texas, where 1488,
Inc. filed an amended complaint, reiterating its allegations in the original complaint. ATHONA filed an answer with
counterclaim, impleading private respondents herein as counterdefendants, for allegedly conspiring in selling the
property at a price over its market value. Private respondent Perlas, who had allegedly appraised the property, was
later dropped as counterdefendant. ATHONA sought the recovery of damages and excess payment allegedly made
to 1488, Inc. and, in the alternative, the rescission of sale of the property. For their part, PHILSEC and AYALA filed
a motion to dismiss on the ground of lack of jurisdiction over their person, but, as their motion was denied, they later
filed a joint answer with counterclaim against private respondents and Edgardo V. Guevarra, PHILSEC's own former
president, for the rescission of the sale on the ground that the property had been overvalued. On March 13, 1990,
the United States District Court for the Southern District of Texas dismissed the counterclaim against Edgardo V.
Guevarra on the ground that it was "frivolous and [was] brought against him simply to humiliate and embarrass him."
For this reason, the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them to
pay damages to Guevarra.

On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners filed a complaint "For
Sum of Money with Damages and Writ of Preliminary Attachment" against private respondents in the Regional Trial
Court of Makati, where it was docketed as Civil Case No. 16563. The complaint reiterated the allegation of
petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United States District Court of
Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than
its true value of US$800,000.00. Petitioners claimed that, as a result of private respondents' fraudulent
misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase
the Houston property. Petitioners prayed that private respondents be ordered to return to ATHONA the excess
payment of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary
attachment against the real and personal properties of private respondents.  2

Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia, vis-a-vis Civil
Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners
PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the property
prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and
whose only participation was to extend financial accommodation to ATHONA under a separate loan agreement. On
the other hand, private respondents 1488, Inc. and its president Daic filed a joint "Special Appearance and Qualified
Motion to Dismiss," contending that the action being in personam, extraterritorial service of summons by publication
was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign
corporation, and Daic, who is a non-resident alien.

On January 26, 1988, the trial court granted Ducat's motion to dismiss, stating that "the evidentiary requirements of
the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in
private international law of forum non conveniens," even as it noted that Ducat was not a party in the U.S. case.

A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On March 9, 1988, the trial
court   granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that
3

the "main factual element" of the cause of action in this case which is the validity of the sale of real
property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter of
the pending case in the United States District Court which, under the doctrine of forum non
conveniens, is the better (if not exclusive) forum to litigate matters needed to determine the
assessment and/or fluctuations of the fair market value of real estate situated in Houston, Texas,
U.S.A. from the date of the transaction in 1983 up to the present and verily, . . . (emphasis by trial
court)

The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-residents
and the action was not an action in rem or quasi in rem, so that extraterritorial service of summons was
ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued against the shares
of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the principle of litis
pendentia and forum non conveniens and in ruling that it had no jurisdiction over the defendants, despite the
previous attachment of shares of stocks belonging to 1488, Inc. and Daic.

On January 6, 1992, the Court of Appeals   affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488, Inc.,
4

and Daic on the ground of litis pendentia, thus:

The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the
Ayala International Finance Ltd. (BPI-IFL's former name) and the Athona Holdings, NV. The case at
bar involves the same parties. The transaction sued upon by the parties, in both cases is the
Warranty Deed executed by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of
contract and the promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed
by herein appellants, on the marketability of Ducat's securities given in exchange for the Texas
property. The recovery of a sum of money and damages, for fraud purportedly committed by
appellees, in overpricing the Texas land, constitute the action before the Philippine court, which
likewise stems from the same Warranty Deed.

The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a
sum of money for alleged tortious acts, so that service of summons by publication did not vest the trial court
with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the ground
of forum non conveniens was likewise affirmed by the Court of Appeals on the ground that the case can be
better tried and decided by the U.S. court:

The U.S. case and the case at bar arose from only one main transaction, and involve foreign
elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller,
1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign
corporation which does not claim to be doing business in the Philippines, is wholly owned by Philsec,
a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the
Warranty Deed was executed in Texas, U.S.A.

In their present appeal, petitioners contend that:

1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR
THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN
AFFIRMING THE TRIAL COURT'S DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.

2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF

APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS
LIKEWISE NOT APPLICABLE.

3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN

NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE
RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL
ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS'
RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS
(WHO ARE MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE
PHILIPPINES.

We will deal with these contentions in the order in which they are made.

First. It is important to note in connection with the first point that while the present case was pending in the Court of
Appeals, the United States District Court for the Southern District of Texas rendered judgment   in the case before it.
5

The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of
Appeals.   Thus, the principal issue to be resolved in this case is whether Civil Case No. 16536 is barred by the
6

judgment of the U.S. court.

Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment admitting the
foreign decision is not necessary. On the other hand, petitioners argue that the foreign judgment cannot be given
the effect of res judicata without giving them an opportunity to impeach it on grounds stated in Rule 39, §50 of the
Rules of Court, to wit: "want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or
fact."

Petitioners' contention is meritorious. While this Court has given the effect of res judicata to foreign judgments in
several cases,   it was after the parties opposed to the judgment had been given ample opportunity to repel them on
7

grounds allowed under the law.   It is not necessary for this purpose to initiate a separate action or proceeding for
8

enforcement of the foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment,
in order for the court to properly determine its efficacy. This is because in this jurisdiction, with respect to actions in
personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the contrary.   Rule 39, §50 provides:
9

Sec. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a foreign country,
having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title; but the judgment may be
repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact.

Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd.,   which
10

private respondents invoke for claiming conclusive effect for the foreign judgment in their favor, the foreign judgment
was considered res judicata because this Court found "from the evidence as well as from appellant's own
pleadings"   that the foreign court did not make a "clear mistake of law or fact" or that its judgment was void for want
11

of jurisdiction or because of fraud or collusion by the defendants. Trial had been previously held in the lower court
and only afterward was a decision rendered, declaring the judgment of the Supreme Court of the State of
Washington to have the effect of res judicata in the case before the lower court. In the same vein, in Philippines
International Shipping Corp. v. Court of Appeals,   this Court held that the foreign judgment was valid and
12

enforceable in the Philippines there being no showing that it was vitiated by want of notice to the party, collusion,
fraud or clear mistake of law or fact. The prima facie presumption under the Rule had not been rebutted.

In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S.
court as basis for declaring it res judicata or conclusive of the rights of private respondents. The proceedings in the
trial court were summary. Neither the trial court nor the appellate court was even furnished copies of the pleadings
in the U.S. court or apprised of the evidence presented thereat, to assure a proper determination of whether the
issues then being litigated in the U.S. court were exactly the issues raised in this case such that the judgment that
might be rendered would constitute res judicata. As the trial court stated in its disputed order dated March 9, 1988.

On the plaintiff's claim in its Opposition that the causes of action of this case and the pending case in
the United States are not identical, precisely the Order of January 26, 1988 never found that the
causes of action of this case and the case pending before the USA Court, were identical. (emphasis
added)

It was error therefore for the Court of Appeals to summarily rule that petitioners' action is barred by the
principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons,
but their claim was brushed aside by both the trial court and the Court of Appeals.  13

Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of
judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to
Branch 134, although the proceedings were suspended because of the pendency of this case. To sustain the
appellate court's ruling that the foreign judgment constitutes res judicata and is a bar to the claim of petitioners
would effectively preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could
then arise: a foreign judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to
resist a claim as in this case, but it may be opposed by the defendant if the foreign judgment is sought to be
enforced against him in a separate proceeding. This is plainly untenable. It has been held therefore that:

[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative
relief is being sought. Hence, in the interest of justice, the complaint should be considered as a
petition for the recognition of the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of
Court in order that the defendant, private respondent herein, may present evidence of lack of
jurisdiction, notice, collusion, fraud or clear mistake of fact and law, if applicable. 
14

Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should be
consolidated.   After all, the two have been filed in the Regional Trial Court of Makati, albeit in different salas, this
15

case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch
134 of Judge Ignacio Capulong. In such proceedings, petitioners should have the burden of impeaching the foreign
judgment and only in the event they succeed in doing so may they proceed with their action against private
respondents.

Second. Nor is the trial court's refusal to take cognizance of the case justifiable under the principle of forum non
conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, §1, which does not include forum non
conveniens.   The propriety of dismissing a case based on this principle requires a factual determination, hence, it is
16

more properly considered a matter of defense. Second, while it is within the discretion of the trial court to abstain
from assuming jurisdiction on this ground, it should do so only after "vital facts are established, to determine whether
special circumstances" require the court's desistance.  17

In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private
respondents in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a
domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of
the latter's debt which was the object of the transaction under litigation. The trial court arbitrarily dismissed the case
even after finding that Ducat was not a party in the U.S. case.

Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and
Daic could not be obtained because this is an action in personam and summons were served by extraterritorial
service. Rule 14, §17 on extraterritorial service provides that service of summons on a non-resident defendant may
be effected out of the Philippines by leave of Court where, among others, "the property of the defendant has been
attached within the Philippines."   It is not disputed that the properties, real and personal, of the private respondents
18

had been attached prior to service of summons under the Order of the trial court dated April 20, 1987.  19

Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the proceedings in
Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the
petitioners by the U.S. court, the Court finds that the judgment sought to be enforced is severable from the main
judgment under consideration in Civil Case No. 16563. The separability of Guevara's claim is not only admitted by
petitioners,   it appears from the pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil
20

Case No. 16563.   Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed.
21

WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED to the
Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further proceedings in
accordance with this decision. The temporary restraining order issued on June 29, 1994 is hereby LIFTED.

SO ORDERED.

PHILSEC INVESMENT CORP. vs. CA

G.R. No. 103493; June 19, 1997

Facts:

Ventura Ducat obtained separate loans in the sum of 2.5m dollars from AYALA and PHILSEC secured
by shares of stocks of Ducat with a market value of P14m . To pay the loan, another respondent, 1488, INC.
thru its president Daic assumed Ducats obligation whereby it sold to ATHONA, Inc. a parcel of land in Harris
County, Texas for 2.8m dollars while PHILSEC and AYALA extended a loan to ATHONA worth 2.5m dollars
as initial payment of the purchase price. ATHONA executed a promissory note in favor of 1488, Inc. for the
balance of 300K dollars (2.8-2.5= 300k). So now, 1488, Inc. has 2.5M to pay PHILSEC and AYALA (t/n: gi-
assume ni 1488, Inc. ang liability ni Ducat.). Thereafter, Ducat was released from his indebtedness to
PHILSEC and AYALA and the SHARES of Ducat (security) was delivered into the possession of 1488, Inc.
Libog no? KBYE.

ATHONA failed to pay the interest on the balance which made the entire amount due and demandable.
1488 Inc. sued PHILSEC, AYALA and ATHONA in the US for the payment of the balance of U$ 307, 209.20
and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the
marketability of the shares delivered to it. ATHONA filed an answer with counterclaim, impleading private
respondents herein as counter defendants, for allegedly conspiring in selling the property at a price over its
market value.

While the Civil Case was pending in the United States, petitioners filed a complaint “For Sum of
Money with Damages and Writ of Preliminary Attachment” against private respondents in the RTC
Makati. The complaint reiterated the allegation of petitioners in their respective counterclaims in the Civil
Action in the United States District Court of Southern Texas that private respondents committed fraud by
selling the property at a price 400 percent more than its true value of US$800,000.00. (Ang land ang gipertain
diri na overpriced). Petitioners claimed that, as a result of private respondents (1488, Ducat,etc.) fraudulent
misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to
purchase the Houston property (land). Petitioners prayed that private respondents be ordered to return to
ATHONA the excess payment of US$1,700,000.00 and to pay damages.

Private respondent Ducat moved to dismiss on the grounds of (1) litis pendentia, vis-a-vis Civil Action
No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2)forum non conveniens,  and (3) failure of
petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the
property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties
to the sale and whose only participation was to extend financial accommodation to ATHONA under a separate
loan agreement. The trial court granted Ducats motion to dismiss, stating that the evidentiary requirements of
the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the
principle in private international law of forum non conveniens, even as it noted that Ducat was not a party in the
U.S. case. CA also dismissed the case on same grounds.

Issue: WON the dismissal of the case was proper on the grounds of LITIS PENDENTIA and FORUM NON
CONVENIENS.

Held: No.

(1) On Litis Pendentia

While this Court has given the effect of res judicata to foreign judgments in several cases, it was after the
parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the
law. This is because in this jurisdiction, with respect to actions in personam, as distinguished from actions in
rem, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of a party
and, as such, is subject to proof to the contrary. Rule 39, §50 provides:

Sec. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a foreign country, having
jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the
parties and their successors in interest by a subsequent title; but the judgment may be repelled by evidence of a
want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the
judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private
respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate court
was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to
assure a proper determination of whether the issues then being litigated in the U.S. court were exactly the issues
raised in this case such that the judgment that might be rendered would constitute res judicata.

(2) On Forum Non Conveniens

The Lower Courts refusal to take cognizance of the case on the said ground is unjustifiable.
First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does not include forum non
conveniens.The propriety of dismissing a case based on this principle requires a factual determination,
hence, it is more properly considered a matter of defense. Second, while it is within the discretion of the
trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are
established, to determine whether special circumstances require the courts desistance.

In this case, the trial court abstained from taking jurisdiction solely on the basis of the
pleadings filed by private respondents in connection with the motion to dismiss. It failed to consider
that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura
Ducat) is a Filipino, and that it was the extinguishment of the latters debt which was the object of the
transaction under litigation. The trial court arbitrarily dismissed the case even after finding that Ducat
was not a party in the U.S. case.

G.R. No. 128803 September 25, 1998

ASIAVEST LIMITED, petitioner,
vs.
THE COURT OF APPEALS and ANTONIO HERAS, respondents.

DAVIDE, JR., J.:
In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are summarized in the 24
August 1990 Decision  of Branch 107 of the Regional Trial Court of Quezon City in Civil Case No. Q-52452; thus:
1

The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant Antonio
Heras praying that said defendant be ordered to pay to the plaintiff the amounts awarded by the
Hong Kong Court Judgment dated December 28, 1984 and amended on April 13, 1987, to wit:

1) US$1,810,265.40 or its equivalent in Hong Kong currency at the

time of payment with legal interest from December 28, 1984 until fully
paid;

2) interest on the sum of US$1,500.00 at 9.875% per annum from

October 31, 1984 to December 28, 1984; and

3) HK$905.00 at fixed cost in the action; and

4) at least $80,000.00 representing attorney's fees, litigation

expenses and cost, with interest thereon from the date of the
judgment until fully paid.

On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court could resolve
the said motion, a fire which partially razed the Quezon City Hall Building on June 11, 1988 totally
destroyed the office of this Court, together with all its records, equipment and properties. On July 26,
1988, the plaintiff, through counsel filed a Motion for Reconstitution of Case Records. The Court,
after allowing the defendant to react thereto, granted the said Motion and admitted the annexes
attached thereto as the reconstituted records of this case per Order dated September 6, 1988.
Thereafter, the Motion to Dismiss, the resolution of which had been deferred; was denied by the
Court in its Order of October 4, 1988.

On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial conference. At
the conference, the parties could not arrive at any settlement. However, they agreed on the following
stipulations of facts:

1. The defendant admits the existence of the judgment dated

December 28, 1984 as well as its amendment dated April 13, 1987,
but not necessarily the authenticity or validity thereof;

2. The plaintiff is not doing business and is not licensed to do

business in the Philippines;

3. The residence of defendant, Antonio Heras, is New Manila,

Quezon City.

The only issue for this Court to determine is, whether or not the judgment of the Hong Kong Court
has been repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud or
clear mistake of law or fact, such as to overcome the presumption established in Section 50, Rule 39
of the Rules of Court in favor of foreign judgments.

In view of the admission by the defendant of the existence of the aforementioned judgment (Pls. See
Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order of January 18,
1989), as well as the legal presumption in favor of the plaintiff as provided for in paragraph (b); Sec.
50, (Ibid.), the plaintiff presented only documentary evidence to show rendition, existence, and
authentication of such judgment by the proper officials concerned (Pls. See Exhibits "A" thru "B",
with their submarkings). In addition, the plaintiff presented testimonial and documentary evidence to
show its entitlement to attorney's fees and other expenses of litigation. . . . .
On the other hand, the defendant presented two witnesses, namely. Fortunata dela Vega and
Russel Warren Lousich.

The gist of Ms. dela Vega's testimony is to the effect that no writ of summons or copy of a statement
of claim of Asiavest Limited was ever served in the office of the Navegante Shipping Agency Limited
and/or for Mr. Antonio Heras, and that no service of the writ of summons was either served on the
defendant at his residence in New Manila, Quezon City. Her knowledge is based on the fact that she
was the personal secretary of Mr. Heras during his JD Transit days up to the latter part of 1972 when
he shifted or diversified to shipping business in Hong Kong; that she was in-charge of all his letters
and correspondence, business commitments, undertakings, conferences and appointments, until
October 1984 when Mr. Heras left Hong Kong for good; that she was also the Officer-in-Charge or
Office Manager of Navegante Shipping Agency LTD, a Hong Kong registered and based company
acting as ships agent, up to and until the company closed shop sometime in the first quarter of 1985,
when shipping business collapsed worldwide; that the said company held office at 34-35 Connaught
Road, Central Hong Kong and later transferred to Carton House at Duddel Street, Hong Kong, until
the company closed shop in 1985; and that she was certain of such facts because she held office at
Caxton House up to the first quarter of 1985.

Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative of the
law office of the defendant's counsel who made a verification of the record of the case filed by the
plaintiff in Hong Kong against the defendant, as well as the procedure in serving Court processes in
Hong Kong.

In his affidavit (Exh. "2") which constitutes his direct testimony, the said witness stated that:

The defendant was sued on the basis of his personal guarantee of the obligations of
Compania Hermanos de Navegacion S.A. There is no record that a writ of summons
was served on the person of the defendant in Hong Kong, or that any such attempt at
service was made. Likewise, there is no record that a copy of the judgment of the
High Court was furnished or served on the defendant; anyway, it is not a legal
requirement to do so under Hong Kong laws;

a) The writ of summons or claim can be served by the solicitor

(lawyer) of the claimant or plaintiff. In Hong Kong there are no Court
personnel who serve writs of summons and/or most other processes.

b) If the writ of summons or claim (or complaint) is not contested, the

claimant or the plaintiff is not required to present proof of his claim or
complaint nor present evidence under oath of the claim in order to
obtain a Judgment.

c) There is no legal requirement that such a Judgment or decision

rendered by the Court in Hong Kong [to] make a recitation of the facts
or the law upon which the claim is based.

d) There is no necessity to furnish the defendant with a copy of the

Judgment or decision rendered against him.

e) In an action based on a guarantee, there is no established legal

requirement or obligation under Hong Kong laws that the creditor
must first bring proceedings against the principal debtor. The creditor
can immediately go against the guarantor.

On cross examination, Mr. Lousich stated that before he was commissioned by the law firm of the
defendant's counsel as an expert witness and to verify the records of the Hong Kong case, he had
been acting as counsel for the defendant in a number of commercial matters; that there was an
application for service of summons upon the defendant outside the jurisdiction of Hong Kong; that
 there was an order of the Court authorizing service upon Heras outside of Hong Kong, particularly in
Manila or any other place in the Philippines (p. 9, TSN, 2/14/90); that there must be adequate proof
of service of summons, otherwise the Hong Kong Court will refuse to render judgment (p. 10, ibid);
that the mere fact that the Hong Kong Court rendered judgment, it can be presumed that there was
service of summons; that in this case, it is not just a presumption because there was an affidavit
stating that service was effected in [sic] a particular man here in Manila; that such affidavit was filed
by one Jose R. Fernandez of the firm Sycip Salazar on the 21st of December 1984, and stated in
essence that "on Friday, the 23rd of November 1984 he served the 4th defendant at No. 6 First
Street, Quezon City by leaving it at that address with Mr. Dionisio Lopez, the son-in-law of the 4th
defendant the copy of the writ and Mr. Lopez informed me and I barely believed that he would bring
the said writ to the attention of the 4th defendant" (pp. 11-12, ibid.); that upon filing of that affidavit,
the Court was asked and granted judgment against the 4th defendant; and that if the summons or
claim is not contested, the claimant of the plaintiff is not required to present proof of his claim or
complaint or present evidence under oath of the claim in order to obtain judgment; and that such
judgment can be enforced in the same manner as a judgment rendered after full hearing.

The trial court held that since the Hong Kong court judgment had been duly proved, it is a presumptive evidence of
a right as between the parties; hence, the party impugning it had the burden to prove want of jurisdiction over his
person. HERAS failed to discharge that burden. He did not testify to state categorically and under oath that he never
received summons. Even his own witness Lousich admitted that HERAS was served with summons in his Quezon
City residence. As to De la Vega's testimony regarding non-service of summons, the same was hearsay and had no
probative value.

As to HERAS' contention that the Hong Kong court judgment violated the Constitution and the procedural laws of
the Philippines because it contained no statements of the facts and the law on which it was based, the trial court
ruled that since the issue relate to procedural matters, the law of the forum, i.e., Hong Kong laws, should govern. As
testified by the expert witness Lousich, such legalities were not required under Hong Kong laws. The trial Court also
debunked HERAS' contention that the principle of excussion under Article 2058 of the Civil Code of the Philippines
was violated. It declared that matters of substance are subject to the law of the place where the transaction
occurred; in this case, Hong Kong laws must govern.

The trial court concluded that the Hong Kong court judgment should be recognized and given effect in this
jurisdiction for failure of HERAS to overcome the legal presumption in favor of the foreign judgment. It then decreed;
thus:

WHEREFORE, judgment is hereby rendered ordering defendant to pay to the plaintiff the following
sums or their equivalents in Philippine currency at the time of payment: US$1,810,265.40 plus
interest on the sum of US$1,500,000.00 at 9.875% per annum from October 31, 1984 to December
28, 1984, and HK$905 as fixed cost, with legal interests on the aggregate amount from December
28, 1984, and to pay attorney's fees in the sum of P80,000.00.

ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs and an increase in
attorney's fees in the amount of US$19,346.45 with interest until full payment of the said obligations. On the other
hand, HERAS no longer opposed the motion and instead appealed the decision to the Court of Appeals, which
docketed the appeal as CA-G.R. CV No. 29513.

In its order  of 2 November 1990, the trial court granted ASIAVEST's motion for reconsideration by increasing the
2

award of attorney's fees to "US$19,345.65 OR ITS EQUIVALENT IN PHILIPPINE CURRENCY, AND TO PAY THE
COSTS OF THIS SUIT," provided that ASIAVEST would pay the corresponding filing fees for the increase.
ASIAVEST appealed the order requiring prior payment of filing fees. However, it later withdrew its appeal and paid
the additional filing fees.

On 3 April 1997, the Court of Appeals rendered its decision  reversing the decision of the trial court and dismissing
3

ASIAVEST's complaint without prejudice. It underscored the fact that a foreign judgment does not of itself have any
extraterritorial application. For it to be given effect, the foreign tribunal should have acquired jurisdiction over the
person and the subject matter. If such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure, such as those relating to
service of summons upon the defendant are governed by the lex fori, which was, in this case, the law of Hong Kong.
Relative thereto, it gave weight to Lousich's testimony that under the Hong Kong law, the substituted service of
summons upon HERAS effected in the Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would
be valid provided that it was done in accordance with Philippine laws. It then stressed that where the action is in
personam and the defendant is in the Philippines, the summons should be personally served on the defendant
pursuant to Section 7, Rule 14 of the Rules of Court.  Substituted service may only be availed of where the
4

defendant cannot be promptly served in person, the fact of impossibility of personal service should be explained in
the proof of service. It also found as persuasive HERAS' argument that instead of directly using the clerk of the
Sycip Salazar Hernandez & Gatmaitan law office, who was not authorized by the judge of the court issuing the
summons, ASIAVEST should have asked for leave of the local courts to have the foreign summons served by the
sheriff or other court officer of the place where service was to be made, or for special reasons by any person
authorized by the judge.

The Court of Appeals agreed with HERAS that "notice sent outside the state to a non-resident is unavailing to give
jurisdiction in an action against him personally for money recovery." Summons should have been personally served
on HERAS in Hong Kong, for, as claimed by ASIAVEST, HERAS was physically present in Hong Kong for nearly 14
years. Since there was not even an attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme
Court did not acquire jurisdiction over HERAS. Nonetheless it did not totally foreclose the claim of ASIAVEST; thus:

While We are not fully convinced that [HERAS] has a meritorious defense against [ASIAVEST's]
claims or that [HERAS] ought to be absolved of any liability, nevertheless, in view of the foregoing
discussion, there is a need to deviate front the findings of the lower court in the interest of justice and
fair play. This, however, is without prejudice to whatever action [ASIAVEST] might deem proper in
order to enforce its claims against [HERAS].

Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence supporting the validity of
the foreign judgment be submitted, and that our courts are not bound to give effect to foreign judgments which
contravene our laws and the principle of sound morality and public policy.

ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in ruling that

I.

. . . IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE "SUPPORTING THE

VALIDITY OF THE JUDGMENT";

II.

. . . THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINES LAW;

III.

. . . SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG KONG;

IV.

. . . THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF PHILIPPINE
COURTS;

V.

. . . THE FOREIGN JUDGMENT "CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES OF

SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.

Being interrelated, we shall take up together the assigned errors.

Under paragraph (b) of Section 50, Rule 39 of the Rules of Court,  which was the governing law at the time this case
5

was decided by the trial court and respondent Court of Appeals, a foreign judgment against a person rendered by a
court having jurisdiction to pronounce the judgment is presumptive evidence of a right as between the parties and
their successors in interest by the subsequent title. However, the judgment may be repelled by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof to the contrary, a
court, or judge acting as such, whether in the Philippines or elsewhere, is presumed to have acted in the lawful
exercise of jurisdiction.

Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on grounds provided for in
paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the party challenging the foreign judgment —
HERAS in this case.

At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On the other hand,
ASIAVEST presented evidence to prove rendition, existence, and authentication of the judgment by the proper
officials. The judgment is thus presumed to be valid and binding in the country from which it comes, until the
contrary is shown.   Consequently, the first ground relied upon by ASIAVEST has merit. The presumption of validity
6

accorded foreign judgment would be rendered meaningless were the party seeking to enforce it be required to first
establish its validity.

The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme Court did not acquire
jurisdiction over the person of HERAS. This involves the issue of whether summons was properly and validly served
on HERAS. It is settled that matters of remedy and procedure such as those relating to the service of process upon
the defendant are governed by the lex fori or the law of the forum,   i.e., the law of Hong Kong in this case. HERAS
7

insisted that according to his witness Mr. Lousich, who was presented as an expert on Hong Kong laws, there was
no valid service of summons on him.

In his counter-affidavit,  which served as his direct testimony per agreement of the parties,  Lousich declared that the
8 9

record of the Hong Kong case failed to show that a writ of summons was served upon HERAS in Hong Kong or that
any such attempt was made. Neither did the record show that a copy of the judgment of the court was served on
HERAS. He stated further that under Hong Kong laws (a) a writ of summons could be served by the solicitor of the
claimant or plaintiff; and (b) where the said writ or claim was not contested, the claimant or plaintiff was not required
to present proof under oath in order to obtain judgment.

On cross-examination by counsel for ASIAVEST, Lousich' testified that the Hong Kong court authorized service of
summons on HERAS outside of its jurisdiction, particularly in the Philippines. He admitted also the existence of an
affidavit of one Jose R. Fernandez of the Sycip Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez)
served summons on HERAS on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERAS's
son-in-law Dionisio Lopez.   On redirect examination, Lousich declared that such service of summons would be
10

valid under Hong Kong laws provided that it was in accordance with Philippine laws.  11

We note that there was no objection on the part of ASIAVEST on the qualification of Mr. Lousich as an expert on the
Hong Kong law. Under Sections 24 and 25, Rule 132 of the New Rules of Evidence, the record of public documents
of a sovereign authority, tribunal, official body, or public officer may be proved by (1) an official publication thereof or
(2) a copy attested by the officer having the legal custody thereof, which must be accompanied, if the record is not
kept in the Philippines, with a certificate that such officer has the custody. The certificate may be issued by a
secretary of the embassy or legation, consul general, consul, vice consul, or consular agent, or any officer in the
foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by
the seal of his office. The attestation must state, in substance, that the copy is a correct copy of the original, or a
specific part thereof, as the case may be, and must be under the official seal of the attesting officer.

Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An authority   on private
12

international law thus noted:

Although it is desirable that foreign law be proved in accordance with the above rule, however, the
Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal,   that Section 41,
13

Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does not exclude the presentation of
 other competent evidence to prove the existence of a foreign law. In that case, the Supreme Court
considered the testimony under oath of an attorney-at-law of San Francisco, California, who quoted
verbatim a section of California Civil Code and who stated that the same was in force at the time the
obligations were contracted, as sufficient evidence to establish the existence of said law.
Accordingly, in line with this view, the Supreme Court in the Collector of Internal Revenue v. Fisher
et al.,   upheld the Tax Court in considering the pertinent law of California as proved by the
14

respondents' witness. In that case, the counsel for respondent "testified that as an active member of
the California Bar since 1951, he is familiar with the revenue and taxation laws of the State of
California. When asked by the lower court to state the pertinent California law as regards exemption
of intangible personal properties, the witness cited Article 4, Sec. 13851 (a) & (b) of the California
Internal and Revenue Code as published in Derring's California Code, a publication of Bancroft-
Whitney Co., Inc. And as part of his testimony, a full quotation of the cited section was offered in
evidence by respondents." Likewise, in several naturalization cases, it was held by the Court that
evidence of the law of a foreign country on reciprocity regarding the acquisition of citizenship,
although not meeting the prescribed rule of practice, may be allowed and used as basis for favorable
action, if, in the light of all the circumstances, the Court is "satisfied of the authenticity of the written
proof offered."   Thus, in, a number of decisions, mere authentication of the Chinese Naturalization
15

Law by the Chinese Consulate General of Manila was held to be competent proof of that law.  16

There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law of Hong Kong in respect
of service of summons either in actions in rem or in personam, and where the defendant is either a resident or
nonresident of Hong Kong. In view of the absence of proof of the Hong Kong law on this particular issue, the
presumption of identity or similarity or the so-called processual presumption shall come into play. It will thus be
presumed that the Hong Kong law on the matter is similar to the Philippine law.  17

As stated in Valmonte vs. Court of Appeals,   it will be helpful to determine first whether the action is in
18

personam, in rem, or quasi in rem because the rules on service of summons under Rule 14 of the Rules of Court of
the Philippines apply according to the nature of the action.

An action in personam is an action against a person on the basis of his personal liability. An action in rem is an
action against the thing itself instead of against the person.   An action quasi in rem is one wherein an individual is
19

named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien
burdening the property.  20

In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and
decide the case. Jurisdiction over the person of a resident defendant who does not voluntarily appear in court can
be acquired by personal service of summons as provided under Section 7, Rule 14 of the Rules of Court. If he
cannot be personally served with summons within a reasonable time, substituted service may be made in
accordance with Section 8 of said Rule. If he is temporarily out of the country, any of the following modes of service
may be resorted to: (1) substituted service set forth in Section 8;   (2) personal service outside the country, with
21

leave of court; (3) service by publication, also with leave of court;   or (4) any other manner the court may deem
22

sufficient. 
23

However, in an action in personam wherein the defendant is a non-resident who does not voluntarily submit himself
to the authority of the court, personal service of summons within the state is essential to the acquisition of
jurisdiction over her person.   This method of service is possible if such defendant is physically present in the
24

country. If he is not found therein, the court cannot acquire jurisdiction over his person and therefore cannot validly
try and decide the case against him.   An exception was laid down in Gemperle v. Schenker   wherein a non-
25 26

resident was served with summons through his wife, who was a resident of the Philippines and who was his
representatives and attorney-in-fact in a prior civil case filed by him; moreover, the second case was a mere
offshoot of the first case.

On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res. Nonetheless
summons must be served upon the defendant not for the purpose of vesting the court with jurisdiction but merely for
satisfying the due process requirements.   Thus, where the defendant is a non-resident who is not found in the
27

Philippines and (1) the action affects the personal status of the plaintiff; (2) the action relates to, or the subject
matter of which is property in the Philippines in which the defendant has or claims a lien or interest; (3) the action
seeks the exclusion of the defendant from any interest in the property located in the Philippines; or (4) the property
of the defendant has been attached in the Philippines — service of summons may be effected by (a) personal
service out of the country, with leave of court; (b) publication, also with leave of court, or (c) any other manner the
court may deem sufficient.  28

In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it was based on his
personal guarantee of the obligation of the principal debtor. Before we can apply the foregoing rules, we must
determine first whether HERAS was a resident of Hong Kong.

Fortunata de la Vega, HERAS's personal secretary in Hong Kong since 1972 until 1985,   testified that HERAS was
29

the President and part owner of a shipping company in Hong Kong during all those times that she served as his
secretary. He had in his employ a staff of twelve.   He had "business commitments, undertakings, conferences, and
30

appointments until October 1984 when [he] left Hong Kong for good,"   HERAS's other witness, Russel Warren
31

Lousich, testified that he had acted as counsel for HERAS "for a number of commercial matters."   ASIAVEST then
32

infers that HERAS was a resident of Hong Kong because he maintained a business there.

It must be noted that in his Motion to Dismiss,   as well as in his

33

Answer   to ASIAVEST's complaint for the enforcement of the Hong Kong court judgment, HERAS maintained that
34

the Hong Kong court did not have jurisdiction over him because the fundamental rule is that jurisdiction in
personam over non-resident defendants, so as to sustain a money judgment, must be based upon personal service
of summons within the state which renders the judgment.  35

For its part, ASIAVEST, in its Opposition to the Motion to Dismiss   contended: "The question of Hong Kong court's
36

'want of jurisdiction' is therefore a triable issue if it is to be pleaded by the defendant to 'repel' the foreign judgment.
Facts showing jurisdictional lack (e.g. that the Hong Kong suit was in personam, that defendant was not a resident
of Hong Kong when the suit was filed or that he did not voluntarily submit to the Hong Kong court's jurisdiction)
should be alleged and proved by the defendant."  37

In his Reply (to the Opposition to Motion to Dismiss),   HERAS argued that the lack of jurisdiction over his person
38

was corroborated by ASIAVEST's allegation in the complaint that he "has his residence at No. 6, 1st St., New
Manila, Quezon City, Philippines." He then concluded that such judicial admission amounted to evidence that he
was and is not a resident of Hong Kong.

Significantly, in the pre-trial conference, the parties came up with stipulations of facts, among which was that "the
residence of defendant, Antonio Heras, is New Manila, Quezon City."  39

We note that the residence of HERAS insofar as the action for the enforcement of the Hong Kong court judgment is
concerned, was never in issue. He never challenged the service of summons on him through a security guard in his
Quezon City residence and through a lawyer in his office in that city. In his Motion to Dismiss, he did not question
the jurisdiction of the Philippine court over his person on the ground of invalid service of summons. What was in
issue was his residence as far as the Hong Kong suit was concerned. We therefore conclude that the stipulated fact
that HERAS "is a resident of New Manila, Quezon City, Philippines" refers to his residence at the time jurisdiction
over his person was being sought by the Hong Kong court. With that stipulation of fact, ASIAVEST cannot now claim
that HERAS was a resident of Hong Kong at the time.

Accordingly, since HERAS was not a resident of Hong Kong and the action against him was, indisputably, one in
personam, summons should have been personally served on him in Hong Kong. The extraterritorial service in the
Philippines was therefore invalid and did not confer on the Hong Kong court jurisdiction over his person. It follows
that the Hong Kong court judgment cannot be given force and effect here in the Philippines for having been
rendered without jurisdiction.

Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in November 1984 when
the extraterritorial service of summons was attempted to be made on him. As declared by his secretary, which
statement was not disputed by ASIAVEST, HERAS left Hong Kong in October 1984 "for good."   His absence in
40

Hong Kong must have been the reason why summons was not served on him therein; thus, ASIAVEST was
constrained to apply for leave to effect service in the Philippines, and upon obtaining a favorable action on the
matter, it commissioned the Sycip Salazar Hernandez & Gatmaitan law firm to serve the summons here in the
Philippines.
In Brown v. Brown,   the defendant was previously a resident of the Philippines. Several days after a criminal action
41

for concubinage was filed against him, he abandoned the Philippines. Later, a proceeding quasi in rem was
instituted against him. Summons in the latter case was served on the defendant's attorney-in-fact at the latter's
address. The Court held that under the facts of the case, it could not be said that the defendant was "still a resident
of the Philippines because he ha[d] escaped to his country and [was] therefore an absentee in the Philippines." As
such, he should have been "summoned in the same manner as one who does not reside and is not found in the
Philippines."

Similarly, HERAS, who was also an absentee, should have been served with summons in the same manner as a
non-resident not found in Hong Kong. Section 17, Rule 14 of the Rules of Court providing for extraterritorial service
will not apply because the suit against him was in personam. Neither can we apply Section 18, which allows
extraterritorial service on a resident defendant who is temporarily absent from the country, because even if HERAS
be considered as a resident of Hong Kong, the undisputed fact remains that he left Hong Kong not only
"temporarily" but "for good."

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the petition in this case and
AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R. CV No. 29513.

No costs.

SO ORDERED.

Asiavest v. CA

FACTS

AsiaVest Limited filed a complaint on against Antonio Heras praying that he be ordered to pay Asiavest
the amounts awarded by the Hong Kong court judgment.

Antonio filed a motion to dismiss but before the court could resolved the motion, a fire burnt all the
records of the court. A reconstitution of case records was granted.

Motion to dismiss was denied and the case was set for pre-trial conference. At the pre-trial the parties
could not arrive at any settlement. But they agreen on “:the Antonio admits the existence of the
judgment as well as its amendment but not necessariliy the authenticity or validity thereof.”

The trial court concluded that the Hongkong judgment should be recognized and be given effect in this
jurisdiction for failure of Antonio to overcome the legal presumption in favor of the foreign judgment.

Asiavest moved for the reconsideration and sought for judicial cost and increase in attorney’s fees with
interest until full payment of the obligation of Antono. Antotnio instead appealed the decistion to CA
 CA agreed with Antonio that notice outside the state to a ‘non-resident is unavailing to give
jurisdiction’ in an action against him personally for money recovery. Summons should have been
served to him in Hongkong

ISSUE :Was the foreign judgment has been repelled by evidence of want of jurisdiction due to improper notice
to the party?

RULING - YES

Paragraph (b) of section 50, Rule 39 of the rules of court - a foregin judgment against a person
rendered by a court having jurisdiction to pronounce the judgment is presumptive evidence of a right
as between the parties and their successors in interest by the subsequent title. But, The judgment may
be repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear
mistake of law or fact.

Section 3 (n) of Rule 131 of the New Rules of Evidence - in absence of proof to the contrary, a court, or
judge acting as such, whether in the Philippines or elsewhere, is presumed to have acted in the lawful
exercise of jurisdiction.

Once the authenticity of the foreign judgment is proved, the burden to repel it as provided in
paragraph (b) of section 50, rule 39 of the rules of court is on the party challenging the foreign
judgment.
o Since Antonio was not a resident of Hong Kong and the action against him was one in
personam, summons should have been personally served on him in Hongkong. Extraterritorial
service in the Philippines was invalid and do not confer on the Hongkong court jurisdiction over
his person. The judgment of HongKong court cannot be given force and effect here int eh
Philippines for having been rendered without jurisdiction.
Section 17, Rule 14 of the Rules of Court providing extraterritorial service will not apply because the
suit against him was in personam. Neither can we apply section 18, which allows extraterritorial serice
on a resident defendant who is temporarily absent from the country, because even if Antontio be
considered as a resident of hongkong, the undisputed fact remains that he left Hongkong not only
“temporarily” but “for good”.

G.R. No. 137378               October 12, 2000

PHILIPPINE ALUMINUM WHEELS, INC., petitioner,

vs.
FASGI ENTERPRISES, INC., respondent.

DECISION
VITUG, J.:

On 01 June 1978, FASGI Enterprises Incorporated ("FASGI"), a corporation organized and existing under and by
virtue of the laws of the State of California, United States of America, entered into a distributorship arrangement with
Philippine Aluminum Wheels, Incorporated ("PAWI"), a Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A.
("FPS"), an Italian corporation. The agreement provided for the purchase, importation and distributorship in the
United States of aluminum wheels manufactured by PAWI. Pursuant to the contract, PAWI shipped to FASGI a total
of eight thousand five hundred ninety four (8,594) wheels, with an FOB value of US$216,444.30 at the time of
shipment, the first batch arriving in two containers and the second in three containers. Thereabouts, FASGI paid
PAWI the FOB value of the wheels. Unfortunately, FASGI later found the shipment to be defective and in non-
compliance with stated requirements, viz;

"A. contrary to the terms of the Distributorship Agreement and in violation of U.S. law, the country of origin
(the Philippines) was not stamped on the wheels;

"B. the wheels did not have weight load limits stamped on them as required to avoid mounting on
excessively heavy vehicles, resulting in risk of damage or bodily injury to consumers arising from possible
shattering of the wheels;

"C. many of the wheels did not have an indication as to which models of automobile they would fit;

"D. many of the wheels did not fit the model automobiles for which they were purportedly designed;

"E. some of the wheels did not fit any model automobile in use in the United States;

"F. most of the boxes in which the wheels were packed indicated that the wheels were approved by the
Specialty Equipment Manufacturer's Association (hereafter, `SEMA'); in fact no SEMA approval has been
obtained and this indication was therefore false and could result in fraud upon retail customers purchasing
the wheels."1

On 21 September 1979, FASGI instituted an action against PAWI and FPS for breach of contract and recovery of
damages in the amount of US$2,316,591.00 before the United States District Court for the Central District of
California. In January 1980, during the pendency of the case, the parties entered into a settlement, entitled
"Transaction" with the corresponding Italian translation "Convenzione Transsativa," where it was stipulated that FPS
and PAWI would accept the return of not less than 8,100 wheels after restoring to FASGI the purchase price of
US$268,750.00 via four (4) irrevocable letters of credit ("LC"). The rescission of the contract of distributorship was to
be effected within the period starting January up until April 1980.2

In a telex message, dated 02 March 1980, PAWI president Romeo Rojas expressed the company's inability to
comply with the foregoing agreement and proposed a revised schedule of payment. The message, in part, read:

"We are most anxious in fulfilling all our obligations under compromise agreement executed by our Mr. Giancarlo
Dallera and your Van Curen. We have tried our best to comply with our commitments, however, because of the
situation as mentioned in the foregoing and currency regulations and restrictions imposed by our government on the
outflow, of foreign currency from our country, we are constrained to request for a revised schedule of shipment and
opening of L/Cs.

"After consulting with our bank and government monetary agencies and on the assumption that we submit the
required pro-forma invoices we can open the letters of credit in your favor under the following schedule:

"A) First L/C - it will be issued in April 1980 payable 90 days thereafter

"B) Second L/C - it will be issued in June 1980 payable 90 days thereafter

"C) Third L/C - it will be issued in August 1980 payable 90 days thereafter

"D) Fourth L/C - it will be issued in November 1980 payable 90 days thereafter
"We understand your situation regarding the lease of your warehouse. For this reason, we are willing to defray the
extra storage charges resulting from this new schedule. If you cannot renew the lease [of] your present warehouse,
perhaps you can arrange to transfer to another warehouse and storage charges transfer thereon will be for our
account. We hope you understand our position. The delay and the revised schedules were caused by
circumstances totally beyond our control." 3

On 21 April 1980, again through a telex message, PAWI informed FASGI that it was impossible to open a letter of
credit on or before April 1980 but assured that it would do its best to comply with the suggested schedule of
payments. In its telex reply of 29 April 1980, FASGI insisted that PAWI should meet the terms of the proposed
4 

schedule of payments, specifically its undertaking to open the first LC within April of 1980, and that "If the letter of
credit is not opened by April 30, 1980, then x x x [it would] immediately take all necessary legal action to protect [its]
position."
5

Despite its assurances, and FASGI's insistence, PAWI failed to open the first LC in April 1980 allegedly due to
Central Bank "inquiries and restrictions," prompting FASGI to pursue its complaint for damages against PAWI before
the California district court. Pre-trial conference was held on 24 November 1980. In the interim, the parties, realizing
the protracted process of litigation, resolved to enter into another arrangement, this time entitled "Supplemental
Settlement Agreement," on 26 November 1980. In substance, the covenant provided that FASGI would deliver to
PAWI a container of wheels for every LC opened and paid by PAWI:

"3. Agreement

"3.1 Sellers agree to pay FASGI Two Hundred Sixty-Eight Thousand, Seven Hundred Fifty and 00/100 Dollars
($268,750.00), plus interest and storage costs as described below. Sellers shall pay such amount by delivering to
FASGI the following four (4) irrevocable letters of credit, confirmed by Crocker Bank, Main Branch, Fresno,
California, as set forth below:

"(i) on or before June 30, 1980, a documentary letter of credit in the amount of (a) Sixty-Five Thousand, Three
Hundred Sixty-nine and 00/100 Dollars ($65,369.00), (b) plus interest on that amount at the annual rate of 16.25%
from January 1, 1980 until July 31, 1980, (c) plus Two Thousand Nine Hundred Forty Dollars and 00/100
($2,940.00) and (d) with interest on that sum at the annual rate of 16.25% from May 1, 1980 to July 31, 1980,
payable on or after August 31, 1980;

"(ii) on or before September 1, 1980, a documentary letter of credit in the amount of (a) Sixty-Seven Thousand,
Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67) plus (b) Two Thousand, Nine Hundred
Forty and 00/100 Dollars ($2,940.00), plus (c) interest at an annual rate equal to the prime rate of Crocker Bank,
San Francisco, in effect from time to time, plus two percent on the amount in (a) from January 1, 1980 until
December 21, 1980, and on the amount set forth in (b) from May 1, 1980 until December 21, 1980, payable ninety
days after the date of the bill of lading under the letter of credit;

"(iii) on or before November 1, 1980, a documentary letter of credit in the amount of (a) Sixty-Seven Thousand,
Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67) plus (b) Two Thousand, Nine Hundred
Forty and 00/100 Dollars ($2,490.00), plus (c) interest at an annual rate equal to the prime rate of Crocker Bank,
San Francisco, in effect from time to time, plus two percent on the amount in (a) from January 1, 1980 until February
21, 1981, and on the amount set forth in (b) from May 1, 1980 until February 21, 1981, payable ninety days after the
date of the bill of lading under the latter of credit;

"(iv) on or before January 1, 1981, a documentary letter of credit in the amount of (a) Sixty-Seven Thousand, Seven
Hundred Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67) plus (b) Five Thousand, Eight Hundred Eighty
and 00/100 Dollars ($5,880.00), plus (c) interest at an annual rate equal to the prime rate of Crocker Bank, San
Francisco, in effect from time to time, plus two percent on the amount in (a) from January 1, 1980 until April 21,
1981, and on the amount set forth in (b) from May 1, 1980 until April 21, 1981, payable ninety days after the date of
the bill of lading under the latter of credit."
6

Anent the wheels still in the custody of FASGI, the supplemental settlement agreement provided that -
"3.4 (a) Upon execution of this Supplemental Settlement Agreement, the obligations of FASGI to store or maintain
the Containers and Wheels shall be limited to (i) storing the Wheels and Containers in their present warehouse
location and (ii) maintaining in effect FASGI's current insurance in favor of FASGI, insuring against usual
commercial risks for such storage in the principal amount of the Letters of Credit described in Paragraph 3.1. FASGI
shall bear no liability, responsibility or risk for uninsurable risks or casualties to the Containers or Wheels.

"x x x           x x x          x x x

"(e) From and after February 28, 1981, unless delivery of the Letters of Credit are delayed past such date pursuant
to the penultimate Paragraph 3.1, in which case from and after such later date, FASGI shall have no obligation to
maintain, store or deliver any of the Containers or Wheels." 7

The deal allowed FASGI to enter before the California court the foregoing stipulations in the event of the failure of
PAWI to make good the scheduled payments; thus -

"3.5 Concurrently with execution and delivery hereof, the parties have executed and delivered a Mutual Release
(the `Mutual Release'), and a Stipulation for Judgment (the `Stipulation for Judgment') with respect to the Action. In
the event of breach of this Supplemental Settlement Agreement by Sellers, FASGI shall have the right to apply
immediately to the Court for entry of Judgment pursuant to the Stipulation for Judgment in the full amount thereof,
less credit for any payments made by Sellers pursuant to this Supplemental Settlement Agreement. FASGI shall
have the right thereafter to enforce the Judgment against PAWI and FPS in the United States and in any other
country where assets of FPS or PAWI may be located, and FPS and PAWI hereby waive all defenses in any such
country to execution or enforcement of the Judgment by FASGI. Specifically, FPS and PAWI each consent to the
jurisdiction of the Italian and Philippine courts in any action brought by FASGI to seek a judgment in those countries
based upon a judgment against FPS or PAWI in the Action." 8

In accordance with the aforementioned paragraph 3.5 of the agreement, the parties made the following stipulation
before the California court:

"The undersigned parties hereto, having entered into a Supplemental Settlement Agreement in this action,

"IT IS HEREBY STIPULATED by and between plaintiff FASGI Enterprises, Inc. (`FASGI') and defendants Philippine
Aluminum Wheels, Inc., (`PAWI'), and each of them, that judgment may be entered in favor of plaintiff FASGI and
against PAWI, in the amount of Two Hundred Eighty Three Thousand Four Hundred Eighty And 01/100ths Dollars
($283,480.01).

"Plaintiff FASGI shall also be entitled to its costs of suit, and to reasonable attorneys' fees as determined by the
Court added to the above judgment amount." 9

The foregoing supplemental settlement agreement, as well as the motion for the entry of judgment, was executed by
FASGI president Elena Buholzer and PAWI counsel Mr. Thomas Ready.

PAWI, again, proved to be remiss in its obligation under the supplemental settlement agreement. While it opened
the first LC on 19 June 1980, it, however, only paid on it nine (9) months after, or on 20 March 1981, when the
letters of credit by then were supposed to have all been already posted. This lapse, notwithstanding, FASGI
promptly shipped to PAWI the first container of wheels. Again, despite the delay incurred by PAWI on the second
LC, FASGI readily delivered the second container. Later, PAWI totally defaulted in opening and paying the third and
the fourth LCs, scheduled to be opened on or before, respectively, 01 September 1980 and 01 November 1980, and
each to be paid ninety (90) days after the date of the bill of lading under the LC. As so expressed in their affidavits,
FASGI counsel Frank Ker and FASGI president Elena Buholzer were more inclined to believe that PAWI's failure to
pay was due not to any restriction by the Central Bank or any other cause than its inability to pay. These doubts
were based on the telex message of PAWI president Romeo Rojas who attached a copy of a communication from
the Central Bank notifying PAWI of the bank's approval of PAWI's request to open LCs to cover payment for the re-
importation of the wheels. The communication having been sent to FASGI before the supplemental settlement
agreement was executed, FASGI speculated that at the time PAWI subsequently entered into the supplemental
settlement agreement, its request to open LCs had already been approved by the Central Bank. Irked by PAWI's
persistent default, FASGI filed with the US District Court of the Central District of California the following stipulation
for judgment against PAWI.

"PLEASE TAKE NOTICE that on May 17, 1982 at 10:00 A.M. in the Courtroom of the Honorable Laughlin E. Waters
of the above Court, plaintiff FASGI ENTERPRISES, INC. (hereinafter `FASGI') will move the Court for entry of
Judgment against defendant PHILIPPINE ALUMINUM WHEELS, INC. (hereinafter `PAWI'), pursuant to the
Stipulation for Judgment filed concurrently herewith, executed on behalf of FASGI and PAWI by their respective
attorneys, acting as their authorized agents.

"Judgment will be sought in the total amount of P252,850.60, including principal and interest accrued through May
17, 1982, plus the sum of $17,500.00 as reasonable attorneys' fees for plaintiff in prosecuting this action.

"The Motion will be made under Rule 54 of the Federal Rules of Civil Procedure, pursuant to and based upon the
Stipulation for Judgment, the Supplemental Settlement Agreement filed herein on or about November 21, 1980, the
Memorandum of Points and Authorities and Affidavits of Elena Buholzer, Franck G. Ker and Stan Cornwell all filed
herewith, and upon all the records, files and pleadings in this action.

"The Motion is made on the grounds that defendant PAWI has breached its obligations as set forth in the
Supplemental Settlement Agreement, and that the Supplemental Settlement Agreement expressly permits FASGI to
enter the Stipulation for Judgment in the event that PAWI has not performed under the Supplemental Settlement
Agreement." 10

On 24 August 1982, FASGI filed a notice of entry of judgment. A certificate of finality of judgment was issued, on 07
September 1982, by the US District Judge of the District Court for the Central District of California. PAWI, by this
time, was approximately twenty (20) months in arrears in its obligation under the supplemental settlement
agreement.

Unable to obtain satisfaction of the final judgment within the United States, FASGI filed a complaint for "enforcement
of foreign judgment" in February 1983, before the Regional Trial Court, Branch 61, of Makati, Philippines. The
Makati court, however, in an order of 11 September 1990, dismissed the case, thereby denying the enforcement of
the foreign judgment within Philippine jurisdiction, on the ground that the decree was tainted with collusion, fraud,
and clear mistake of law and fact. The lower court ruled that the foreign judgment ignored the reciprocal obligations
11 

of the parties. While the assailed foreign judgment ordered the return by PAWI of the purchase amount, no similar
order was made requiring FASGI to return to PAWI the third and fourth containers of wheels. This situation, the trial
12 

court maintained, amounted to an unjust enrichment on the part of FASGI. Furthermore, the trial court said, the
supplemental settlement agreement and the subsequent motion for entry of judgment upon which the California
court had based its judgment were a nullity for having been entered into by Mr. Thomas Ready, counsel for PAWI,
without the latter's authorization.

FASGI appealed the decision of the trial court to the Court of Appeals. In a decision, dated 30 July 1997, the
13 

appellate court reversed the decision of the trial court and ordered the full enforcement of the California judgment.

Hence this appeal.

Generally, in the absence of a special compact, no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country; however, the rules of comity, utility and convenience of nations
14 

have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction
are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries. 15

In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate
parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an
opportunity for a full and fair hearing before a court of competent jurisdiction; that trial upon regular proceedings has
been conducted, following due citation or voluntary appearance of the defendant and under a system of
jurisprudence likely to secure an impartial administration of justice; and that there is nothing to indicate either a
prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment. A foreign
16 

judgment is presumed to be valid and binding in the country from which it comes, until a contrary showing, on the
basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum. Rule 39,
section 48 of the Rules of Court of the Philippines provides:

Sec. 48. Effect of foreign judgments or final orders - The effect of a judgment or final order of a tribunal of a foreign
country, having jurisdiction to render the judgment or final order is as follows:

xxxx

(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of a
right as between the parties and their successors-in-interest by a subsequent title.

In either case, the judgment or final order may be repelled by evidence a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.

In Soorajmull Nagarmull vs. Binalbagan-Isabela Sugar Co. Inc., one of the early Philippine cases on the
17 

enforcement of foreign judgments, this Court has ruled that a judgment for a sum of money rendered in a foreign
court is presumptive evidence of a right between the parties and their successors-in-interest by subsequent title, but
when suit for its enforcement is brought in a Philippine court, such judgment may be repelled by evidence of want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact. In Northwest Orient Airlines,
Inc., vs. Court of Appeals, the Court has said that a party attacking a foreign judgment is tasked with the burden of
18 

overcoming its presumptive validity.

PAWI claims that its counsel, Mr. Ready, has acted without its authority. Verily, in this jurisdiction, it is clear that an
attorney cannot, without a client's authorization, settle the action or subject matter of the litigation even when he
honestly believes that such a settlement will best serve his client's interest. 19

In the instant case, the supplemental settlement agreement was signed by the parties, including Mr. Thomas Ready,
on 06 October 1980. The agreement was lodged in the California case on 26 November 1980 or two (2) days after
the pre-trial conference held on 24 November 1980.  If Mr. Ready was indeed not authorized by PAWI to enter into
1âwphi1

the supplemental settlement agreement, PAWI could have forthwith signified to FASGI a disclaimer of the
settlement. Instead, more than a year after the execution of the supplemental settlement agreement, particularly on
09 October 1981, PAWI President Romeo S. Rojas sent a communication to Elena Buholzer of FASGI that failed to
mention Mr. Ready's supposed lack of authority. On the contrary, the letter confirmed the terms of the agreement
when Mr. Rojas sought forbearance for the impending delay in the opening of the first letter of credit under the
schedule stipulated in the agreement.

It is an accepted rule that when a client, upon becoming aware of the compromise and the judgment thereon, fails to
promptly repudiate the action of his attorney, he will not afterwards be heard to complain about it. 20

Nor could PAWI claim any prejudice by the settlement. PAWI was spared from possibly paying FASGI substantial
amounts of damages and incurring heavy litigation expenses normally generated in a full-blown trial. PAWI, under
the agreement was afforded time to reimburse FASGI the price it had paid for the defective wheels. PAWI, should
not, after its opportunity to enjoy the benefits of the agreement, be allowed to later disown the arrangement when
the terms thereof ultimately would prove to operate against its hopeful expectations.

PAWI assailed not only Mr. Ready's authority to sign on its behalf the Supplemental Settlement Agreement but
denounced likewise his authority to enter into a stipulation for judgment before the California court on 06 August
1982 on the ground that it had by then already terminated the former's services. For his part, Mr. Ready admitted
that while he did receive a request from Manuel Singson of PAWI to withdraw from the motion of judgment, the
request unfortunately came too late. In an explanatory telex, Mr. Ready told Mr. Singson that under American
Judicial Procedures when a motion for judgment had already been filed a counsel would not be permitted to
withdraw unilaterally without a court order. From the time the stipulation for judgment was entered into on 26 April
1982 until the certificate of finality of judgment was issued by the California court on 07 September 1982, no
notification was issued by PAWI to FASGI regarding its termination of Mr. Ready's services. If PAWI were indeed
hoodwinked by Mr. Ready who purportedly acted in collusion with FASGI, it should have aptly raised the issue
before the forum which issued the judgment in line with the principle of international comity that a court of another
jurisdiction should refrain, as a matter of propriety and fairness, from so assuming the power of passing judgment on
the correctness of the application of law and the evaluation of the facts of the judgment issued by another tribunal. 21

Fraud, to hinder the enforcement within this jurisdiction of a foreign judgment, must be extrinsic, i.e., fraud based on
facts not controverted or resolved in the case where judgment is rendered, or that which would go to the jurisdiction
22 

of the court or would deprive the party against whom judgment is rendered a chance to defend the action to which
he has a meritorious case or defense. In fine, intrinsic fraud, that is, fraud which goes to the very existence of the
cause of action - such as fraud in obtaining the consent to a contract - is deemed already adjudged, and it,
therefore, cannot militate against the recognition or enforcement of the foreign judgment. 23

Even while the US judgment was against both FPS and PAWI, FASGI had every right to seek enforcement of the
judgment solely against PAWI or, for that matter, only against FPS. FASGI, in its complaint, explained:

"17. There exists, and at all times relevant herein there existed, a unity of interest and ownership between defendant
PAWI and defendant FPS, in that they are owned and controlled by the same shareholders and managers, such
that any individuality and separateness between these defendants has ceased, if it ever existed, and defendant FPS
is the alter ego of defendant PAWI. The two entities are used interchangeably by their shareholders and managers,
and plaintiff has found it impossible to ascertain with which entity it is dealing at any one time. Adherence to the
fiction of separate existence of these defendant corporations would permit an abuse of the corporate privilege and
would promote injustice against this plaintiff because assets can easily be shifted between the two companies
thereby frustrating plaintiff's attempts to collect on any judgment rendered by this Court."
24

Paragraph 14 of the Supplemental Settlement Agreement fixed the liability of PAWI and FPS to be "joint and
several" or solidary. The enforcement of the judgment against PAWI alone would not, of course, preclude it from
pursuing and recovering whatever contributory liability FPS might have pursuant to their own agreement.

PAWI would argue that it was incumbent upon FASGI to first return the second and the third containers of defective
wheels before it could be required to return to FASGI the purchase price therefor, relying on their original
25 

agreement (the "Transaction"). Unfortunately, PAWI defaulted on its covenants thereunder that thereby occasioned
26 

the subsequent execution of the supplemental settlement agreement. This time the parties agreed, under paragraph
3.4(e) thereof, that any further default by PAWI would release FASGI from any obligation to maintain, store or
27 

deliver the rejected wheels. The supplemental settlement agreement evidently superseded, at the very least on this
point, the previous arrangements made by the parties.

PAWI cannot, by this petition for review, seek refuge over a business dealing and decision gone awry. Neither do
the courts function to relieve a party from the effects of an unwise or unfavorable contract freely entered into. As has
so aptly been explained by the appellate court, the over-all picture might, indeed, appear to be onerous to PAWI but
it should bear emphasis that the settlement which has become the basis for the foreign judgment has not been the
start of a business venture but the end of a failed one, and each party, naturally, has had to negotiate from either
position of strength or weakness depending on its own perception of who might have to bear the blame for the
failure and the consequence of loss. 28

Altogether, the Court finds no reversible error on the part of the appellate court in its appealed judgment.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED. No costs.

SO ORDERED.

Phil. Aluminum Wheels v. FASGI Enterprise

GR No. 137378. October 12, 2000, De Leon, J.

Q: FASGI Enterprises Incorporated ("FASGI"), a corporation organized and existing under and by virtue of the laws of the
State of California, USA, entered into a distributorship arrangement with Philippine Aluminum Wheels, Incorporated
("PAWI"), a Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A. ("FPS"), an Italian corporation. The agreement
provided for the purchase in the US of aluminum wheels manufactured by PAWI. PAWI then shipped to FASGI wheels,
which the latter paid consequently. Unfortunately, FASGI later found the shipment to be defective and in non-
compliance with agreed requirements. FASGI then instituted an action against PAWI and FPS for breach of contract and
recovery of damages in the before the California court. During the pendency of the case, the parties entered into a
settlement, wherein FPS and PAWI would accept the return of the wheels after restoring to FASGI the purchase price
through Letters of Credit (LC). PAWI failed to open the LC prompting FASGI to pursue its complaint for damages against
PAWI before the California district court. FASGI sought the enforcement of the agreement and it received a favorable
judgment from the California court. Unable to obtain satisfaction of the final judgment within the US, FASGI filed a
complaint for "enforcement of foreign judgment" before he RTC of Makati, Philippines. The court however dismissed the
case on the ground that the decree was tainted with collusion, fraud, and clear mistake of law and fact. It ruled that the
foreign judgment ignored the reciprocal obligations of the parties.

Is the ruling of the lower court declaring that the foreign judgments are not enforceable in the Philippines with merit?

A: NO. Generally, in the absence of a special compact, no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country; however, the rules of comity, utility and convenience of nations
have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are
reciprocally respected and rendered efficacious under certain conditions that may vary in different countries. In the
Philippines, a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the
underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full
and fair hearing before a court of competent jurisdiction. A foreign judgment is presumed to be valid and binding in the
country from which it comes, until a contrary showing, on the basis of a presumption of regularity of proceedings and
the giving of due notice in the foreign forum. Rule 39, section 48 of the Rules of Court of the Philippines.

G.R. No. 140288             October 23, 2006

ST. AVIATION SERVICES CO., PTE., LTD., petitioner,

vs.
GRAND INTERNATIONAL AIRWAYS, INC., respondent.

DECISION

SANDOVAL-GUTIERREZ, J.:
Challenged in the instant Petition for Review on Certiorari are the Decision of the Court of Appeals dated July 30,
1999 and its Resolution dated September 29, 1999 in CA-G.R. SP No. 51134 setting aside the Orders dated
October 30, 1998 and December 16, 1998 of the Regional Trial Court (RTC), Branch 117, Pasay City in Civil Case
No. 98-1389.

St. Aviation Services Co., Pte., Ltd., petitioner, is a foreign corporation based in Singapore. It is engaged in the
manufacture, repair, and maintenance of airplanes and aircrafts. Grand International Airways, Inc., respondent, is a
domestic corporation engaged in airline operations.

Sometime in January 1996, petitioner and respondent executed an "Agreement for the Maintenance and
Modification of Airbus A 300 B4-103 Aircraft Registration No. RP-C8882" (First Agreement). Under this stipulation,
petitioner agreed to undertake maintenance and modification works on respondent's aircraft. The parties agreed on
the mode and manner of payment by respondent of the contract price, including interest in case of default. They
also agreed that the "construction, validity and performance thereof" shall be governed by the laws of Singapore.
They further agreed to submit any suit arising from their agreement to the non-exclusive jurisdiction of the Singapore
courts.

At about the same time, or on January 12, 1996, the parties verbally agreed that petitioner will repair and undertake
maintenance works on respondent's other aircraft, Aircraft No. RP-C8881; and that the works shall be based on a
General Terms of Agreement (GTA). The GTA terms are similar to those of their First Agreement.

Petitioner undertook the contracted works and thereafter promptly delivered the aircrafts to respondent. During the
period from March 1996 to October 1997, petitioner billed respondent in the total amount of US$303,731.67 or
S$452,560.18. But despite petitioner's repeated demands, respondent failed to pay, in violation of the terms agreed
upon.

On December 12, 1997, petitioner filed with the High Court of the Republic of Singapore an action for the sum of
S$452,560.18, including interest and costs, against respondent, docketed as Suit No. 2101. Upon petitioner's
motion, the court issued a Writ of Summons to be served extraterritorially or outside Singapore upon respondent.
The court sought the assistance of the sheriff of Pasay City to effect service of the summons upon respondent.
However, despite receipt of summons, respondent failed to answer the claim.

On February 17, 1998, on motion of petitioner, the Singapore High Court rendered a judgment by default against
respondent.

On August 4, 1998, petitioner filed with the RTC, Branch 117, Pasay City, a Petition for Enforcement of Judgment,
docketed as Civil Case No. 98-1389.

Respondent filed a Motion to Dismiss the Petition on two grounds: (1) the Singapore High Court did not acquire
jurisdiction over its person; and (2) the foreign judgment sought to be enforced is void for having been rendered in
violation of its right to due process.

On October 30, 1998, the RTC denied respondent's motion to dismiss, holding that "neither one of the two grounds
(of Grand) is among the grounds for a motion to dismiss under Rule 16 of the 1997 Rules of Civil Procedure."

Respondent filed a motion for reconsideration but was denied by the RTC in its Order dated December 16, 1998.

On February 15, 1999, respondent filed with the Court of Appeals a Petition for Certiorari assailing the RTC Order
denying its motion to dismiss. Respondent alleged that the extraterritorial service of summons on its office in the
Philippines is defective and that the Singapore court did not acquire jurisdiction over its person. Thus, its judgment
sought to be enforced is void. Petitioner, in its comment, moved to dismiss the petition for being unmeritorious.

On July 30, 1999, the Court of Appeals issued its Decision granting the petition and setting aside the Orders dated
October 30, 1998 and December 16, 1998 of the RTC "without prejudice to the right of private respondent to initiate
another proceeding before the proper court to enforce its claim." It found:
 In the case at bar, the complaint does not involve the personal status of plaintiff, nor any property in which
the defendant has a claim or interest, or which the private respondent has attached but purely an action for
collection of debt. It is a personal action as well as an action in personam, not an action in rem or quasi in
rem. As a personal action, the service of summons should be personal or substituted, not extraterritorial, in
order to confer jurisdiction on the court.

Petitioner seasonably filed a motion for reconsideration but it was denied on September 29, 1999.

Hence, the instant Petition for Review on Certiorari.

The issues to be resolved are: (1) whether the Singapore High Court has acquired jurisdiction over the person of
respondent by the service of summons upon its office in the Philippines; and (2) whether the judgment by default in
Suit No. 2101 by the Singapore High Court is enforceable in the Philippines.

Generally, in the absence of a special contract, no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country; however, under the rules of comity, utility and convenience,
nations have established a usage among civilized states by which final judgments of foreign courts of competent
jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different
countries.1 Certainly, the Philippine legal system has long ago accepted into its jurisprudence and procedural rules
the viability of an action for enforcement of foreign judgment, as well as the requisites for such valid enforcement, as
derived from internationally accepted doctrines.2

The conditions for the recognition and enforcement of a foreign judgment in our legal system are contained in
Section 48, Rule 39 of the 1997 Rules of Civil Procedure, as amended, thus:

SEC. 48. Effect of foreign judgments. – The effect of a judgment or final order of a tribunal of a foreign
country, having jurisdiction to render the judgment or final order is as follows:

(a) In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive
upon the title to the thing; and

(b) In case of a judgment or final order against a person, the judgment or final order is presumptive
evidence of a right as between the parties and their successors in interest by a subsequent title;

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact.

Under the above Rule, a foreign judgment or order against a person is merely presumptive evidence of a right as
between the parties. It may be repelled, among others, by want of jurisdiction of the issuing authority or by want of
notice to the party against whom it is enforced. The party attacking a foreign judgment has the burden of
overcoming the presumption of its validity.3

Respondent, in assailing the validity of the judgment sought to be enforced, contends that the service of summons
is void and that the Singapore court did not acquire jurisdiction over it.

Generally, matters of remedy and procedure such as those relating to the service of process upon a defendant are
governed by the lex fori or the internal law of the forum,4 which in this case is the law of Singapore. Here, petitioner
moved for leave of court to serve a copy of the Writ of Summons outside Singapore. In an Order dated December
24, 1997, the Singapore High Court granted "leave to serve a copy of the Writ of Summons on the Defendant by a
method of service authorized by the law of the Philippines for service of any originating process issued by the
Philippines at ground floor, APMC Building, 136 Amorsolo corner Gamboa Street, 1229 Makati City, or elsewhere in
the Philippines."5 This service of summons outside Singapore is in accordance with Order 11, r. 4(2) of the Rules of
Court 19966 of Singapore, which provides.

(2) Where in accordance with these Rules, an originating process is to be served on a defendant in any
country with respect to which there does not subsist a Civil Procedure Convention providing for service in
that country of process of the High Court, the originating process may be served –
 a) through the government of that country, where that government is willing to effect service;

b) through a Singapore Consular authority in that country, except where service through such an authority is
contrary to the law of the country; or

c) by a method of service authorized by the law of that country for service of any originating process
issued by that country.

In the Philippines, jurisdiction over a party is acquired by service of summons by the sheriff,7 his deputy or other
proper court officer either personally by handing a copy thereof to the defendant8 or by substituted service.9 In this
case, the Writ of Summons issued by the Singapore High Court was served upon respondent at its office located at
Mercure Hotel (formerly Village Hotel), MIA Road, Pasay City. The Sheriff's Return shows that it was received on
May 2, 1998 by Joyce T. Austria, Secretary of the General Manager of respondent company.10 But respondent
completely ignored the summons, hence, it was declared in default.

Considering that the Writ of Summons was served upon respondent in accordance with our Rules, jurisdiction was
acquired by the Singapore High Court over its person. Clearly, the judgment of default rendered by that court
against respondent is valid.

WHEREFORE, we GRANT the petition. The challenged Decision and Resolution of the Court of Appeals in CA-G.R.
SP No. 51134 are set aside.

The RTC, Branch 117, Pasay City is hereby DIRECTED to hear Civil Case No. 98-1389 with dispatch.

SO ORDERED.

Antecedent Facts:
1. Petitioner is a foreign corporation based in Singapore, engaged in repair and maintenance of airplanes and aircrafts.
2. Respondent is a domestic corporation engaged in airline operations.
3. They had an agreement wherein the petitioner agreed to undertake the maintenance and modification works on
respondent’s aircrafts.
4. They also agreed that the construction, validity and performance of such undertaking shall be governed by the laws of
Singapore, and that any suit arising from the contract shall be submitted to the non-exclusive jurisdiction of the Singapore
Courts.
5. Petitioner undertook the contracted works and promptly delivered the aircrafts to the respondent.
6. However, respondent failed to pay despite repeated demands.
High Court of Singapore
1. Petitioner filed complaint for collection of sum of money before the High Court of Singapore.
2. Upon petitioner’s motion, the court issued a Writ Summons to be served extra-territorially upon respondent.
3. The Singapore court sought the assistance of the sheriff of Pasay City but respondent failed to answer despite receipt of the
summons.
4. On petitioner’s motion, the Singapore court rendered a judgment by default in favor of the petitioner.
RTC
1. Petitioner filed a Petition for Enforcement of Judgment with the RTC Pasay.
2. Respondent filed a MTD alleging that (1) the Singapore court did not acquire jurisdiction over its person and (2) the foreign
judgment is void for having been rendered in violation of its right to due process.
3. RTC dismissed the MTD holding that the 2 grounds for MTD cited are not provided under Rule 16, ROC.
4. MR was also denied.
CA
1. Respondent filed a Petition for Certiorari with the CA.
2. CA granted the petition and set aside the orders of RTC without prejudice to the re-filing of the case. CA held that since the
action before the Singapore High Court was a personal action, service of summons should be personal or substituted, not
extraterritorial, in order to confer jurisdiction on the court.
 3. MR was denied.

Issues:
1. WON the judgment by default in enforceable in the Philippines. (YES)
Ratio:
Yes – the judgment by default is enforceable in the Philippines.
In the absence of a special contract, no sovereign is bound to give effect, within its dominion, to a judgment rendered by
a tribunal of another country.

However, under the rules of comity, utility and convenience, nations have established a usage among civilized states by
which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious
under certain conditions that may vary in different countries.

The conditions for the recognition and enforcement of a foreign judgment in our legal system are contained in Section
481, Rule 39 of the 1997 Rules of Civil Procedure, as amended:
“SEC. 48. Effect of foreign judgments.—The effect of a judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive upon the title to the
thing; and
(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title;
In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.”

Under the said rule, a foreign judgment against a person is merely presumptive evidence of a right as between the
parties. It may be repelled, among others, by want of jurisdiction of the issuing authority or by want of notice to the
party against whom it is enforced.

The party attacking a foreign judgment has the burden of overcoming the presumption of its validity.

WON the Singapore High Court acquired jurisdiction over the person of the respondent. (YES)
o The international law of the forum is the law of Singapore.
o The Singapore High Court ordered the service of the Writ of Summons on the Defendant by a method of service
authorized by the law of the Philippines. Said service of summons outside Singapore is in accordance with Order
11, r. 4(2)2 of the Rules of Court 19966 of Singapore.
o According to Philippine Rules of Court, jurisdiction over a party is acquired by service of summons by the sheriff,
his deputy or other proper court officer either personally by handing a copy thereof to the defendant or by
substituted service.

G.R. No. 143581             January 7, 2008

KOREA TECHNOLOGIES CO., LTD., petitioner,

vs.

2
(2) Where in accordance with these Rules, an originating process is to be served on a defendant in any country with respect to which there does not subsist a Civil
Procedure Convention providing for service in that country of process of the High Court, the originating process may be served—
a) through the government of that country, where that government is willing to effect service;
b) through a Singapore Consular authority in that country, except where service through such an authority is contrary to the law of the country; or
c) by a method of service authorized by the law of that country for service of any originating process issued by that country.
HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional Trial Court of
Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING CORPORATION, respondents.

DECISION

VELASCO, JR., J.:

In our jurisdiction, the policy is to favor alternative methods of resolving disputes, particularly in civil and commercial
disputes. Arbitration along with mediation, conciliation, and negotiation, being inexpensive, speedy and less hostile
methods have long been favored by this Court. The petition before us puts at issue an arbitration clause in a
contract mutually agreed upon by the parties stipulating that they would submit themselves to arbitration in a foreign
country. Regrettably, instead of hastening the resolution of their dispute, the parties wittingly or unwittingly
prolonged the controversy.

Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the supply and
installation of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants, while private respondent Pacific
General Steel Manufacturing Corp. (PGSMC) is a domestic corporation.

On March 5, 1997, PGSMC and KOGIES executed a Contract1 whereby KOGIES would set up an LPG Cylinder
Manufacturing Plant in Carmona, Cavite. The contract was executed in the Philippines. On April 7, 1997, the parties
executed, in Korea, an Amendment for Contract No. KLP-970301 dated March 5, 19972 amending the terms of
payment. The contract and its amendment stipulated that KOGIES will ship the machinery and facilities necessary
for manufacturing LPG cylinders for which PGSMC would pay USD 1,224,000. KOGIES would install and initiate the
operation of the plant for which PGSMC bound itself to pay USD 306,000 upon the plant’s production of the 11-kg.
LPG cylinder samples. Thus, the total contract price amounted to USD 1,530,000.

On October 14, 1997, PGSMC entered into a Contract of Lease3 with Worth Properties, Inc. (Worth) for use of
Worth’s 5,079-square meter property with a 4,032-square meter warehouse building to house the LPG
manufacturing plant. The monthly rental was PhP 322,560 commencing on January 1, 1998 with a 10% annual
increment clause. Subsequently, the machineries, equipment, and facilities for the manufacture of LPG cylinders
were shipped, delivered, and installed in the Carmona plant. PGSMC paid KOGIES USD 1,224,000.

However, gleaned from the Certificate4 executed by the parties on January 22, 1998, after the installation of the
plant, the initial operation could not be conducted as PGSMC encountered financial difficulties affecting the supply
of materials, thus forcing the parties to agree that KOGIES would be deemed to have completely complied with the
terms and conditions of the March 5, 1997 contract.

For the remaining balance of USD306,000 for the installation and initial operation of the plant, PGSMC issued two
postdated checks: (1) BPI Check No. 0316412 dated January 30, 1998 for PhP 4,500,000; and (2) BPI Check No.
0316413 dated March 30, 1998 for PhP 4,500,000.5

When KOGIES deposited the checks, these were dishonored for the reason "PAYMENT STOPPED." Thus, on May
8, 1998, KOGIES sent a demand letter6 to PGSMC threatening criminal action for violation of Batas Pambansa
Blg. 22 in case of nonpayment. On the same date, the wife of PGSMC’s President faxed a letter dated May 7, 1998
to KOGIES’ President who was then staying at a Makati City hotel. She complained that not only did KOGIES
deliver a different brand of hydraulic press from that agreed upon but it had not delivered several equipment parts
already paid for.

On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully funded but the payments were
stopped for reasons previously made known to KOGIES.7

On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract dated March 5, 1997 on the
ground that KOGIES had altered the quantity and lowered the quality of the machineries and equipment it delivered
to PGSMC, and that PGSMC would dismantle and transfer the machineries, equipment, and facilities installed in the
Carmona plant. Five days later, PGSMC filed before the Office of the Public Prosecutor an Affidavit-Complaint
for Estafa docketed as I.S. No. 98-03813 against Mr. Dae Hyun Kang, President of KOGIES.
On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not unilaterally rescind their
contract nor dismantle and transfer the machineries and equipment on mere imagined violations by KOGIES. It also
insisted that their disputes should be settled by arbitration as agreed upon in Article 15, the arbitration clause of their
contract.

On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1, 1998 letter threatening that
the machineries, equipment, and facilities installed in the plant would be dismantled and transferred on July 4, 1998.
Thus, on July 1, 1998, KOGIES instituted an Application for Arbitration before the Korean Commercial Arbitration
Board (KCAB) in Seoul, Korea pursuant to Art. 15 of the Contract as amended.

On July 3, 1998, KOGIES filed a Complaint for Specific Performance, docketed as Civil Case No. 98-1178 against
PGSMC before the Muntinlupa City Regional Trial Court (RTC). The RTC granted a temporary restraining order
(TRO) on July 4, 1998, which was subsequently extended until July 22, 1998. In its complaint, KOGIES alleged that
PGSMC had initially admitted that the checks that were stopped were not funded but later on claimed that it stopped
payment of the checks for the reason that "their value was not received" as the former allegedly breached their
contract by "altering the quantity and lowering the quality of the machinery and equipment" installed in the plant and
failed to make the plant operational although it earlier certified to the contrary as shown in a January 22, 1998
Certificate. Likewise, KOGIES averred that PGSMC violated Art. 15 of their Contract, as amended, by unilaterally
rescinding the contract without resorting to arbitration. KOGIES also asked that PGSMC be restrained from
dismantling and transferring the machinery and equipment installed in the plant which the latter threatened to do on
July 4, 1998.

On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled to the TRO since Art.
15, the arbitration clause, was null and void for being against public policy as it ousts the local courts of jurisdiction
over the instant controversy.

On July 17, 1998, PGSMC filed its Answer with Compulsory Counterclaim9 asserting that it had the full right to
dismantle and transfer the machineries and equipment because it had paid for them in full as stipulated in the
contract; that KOGIES was not entitled to the PhP 9,000,000 covered by the checks for failing to completely install
and make the plant operational; and that KOGIES was liable for damages amounting to PhP 4,500,000 for altering
the quantity and lowering the quality of the machineries and equipment. Moreover, PGSMC averred that it has
already paid PhP 2,257,920 in rent (covering January to July 1998) to Worth and it was not willing to further
shoulder the cost of renting the premises of the plant considering that the LPG cylinder manufacturing plant never
became operational.

After the parties submitted their Memoranda, on July 23, 1998, the RTC issued an Order denying the application for
a writ of preliminary injunction, reasoning that PGSMC had paid KOGIES USD 1,224,000, the value of the
machineries and equipment as shown in the contract such that KOGIES no longer had proprietary rights over them.
And finally, the RTC held that Art. 15 of the Contract as amended was invalid as it tended to oust the trial court or
any other court jurisdiction over any dispute that may arise between the parties. KOGIES’ prayer for an injunctive
writ was denied.10 The dispositive portion of the Order stated:

WHEREFORE, in view of the foregoing consideration, this Court believes and so holds that no cogent
reason exists for this Court to grant the writ of preliminary injunction to restrain and refrain defendant from
dismantling the machineries and facilities at the lot and building of Worth Properties, Incorporated at
Carmona, Cavite and transfer the same to another site: and therefore denies plaintiff’s application for a writ
of preliminary injunction.

On July 29, 1998, KOGIES filed its Reply to Answer and Answer to Counterclaim.11 KOGIES denied it had altered
the quantity and lowered the quality of the machinery, equipment, and facilities it delivered to the plant. It claimed
that it had performed all the undertakings under the contract and had already produced certified samples of LPG
cylinders. It averred that whatever was unfinished was PGSMC’s fault since it failed to procure raw materials due to
lack of funds. KOGIES, relying on Chung Fu Industries (Phils.), Inc. v. Court of Appeals,12 insisted that the arbitration
clause was without question valid.

After KOGIES filed a Supplemental Memorandum with Motion to Dismiss13 answering PGSMC’s memorandum of
July 22, 1998 and seeking dismissal of PGSMC’s counterclaims, KOGIES, on August 4, 1998, filed its Motion for
Reconsideration14 of the July 23, 1998 Order denying its application for an injunctive writ claiming that the contract
was not merely for machinery and facilities worth USD 1,224,000 but was for the sale of an "LPG manufacturing
plant" consisting of "supply of all the machinery and facilities" and "transfer of technology" for a total contract price of
USD 1,530,000 such that the dismantling and transfer of the machinery and facilities would result in the dismantling
and transfer of the very plant itself to the great prejudice of KOGIES as the still unpaid owner/seller of the plant.
Moreover, KOGIES points out that the arbitration clause under Art. 15 of the Contract as amended was a valid
arbitration stipulation under Art. 2044 of the Civil Code and as held by this Court in Chung Fu Industries (Phils.),
Inc.15

In the meantime, PGSMC filed a Motion for Inspection of Things16 to determine whether there was indeed alteration
of the quantity and lowering of quality of the machineries and equipment, and whether these were properly installed.
KOGIES opposed the motion positing that the queries and issues raised in the motion for inspection fell under the
coverage of the arbitration clause in their contract.

On September 21, 1998, the trial court issued an Order (1) granting PGSMC’s motion for inspection; (2) denying
KOGIES’ motion for reconsideration of the July 23, 1998 RTC Order; and (3) denying KOGIES’ motion to dismiss
PGSMC’s compulsory counterclaims as these counterclaims fell within the requisites of compulsory counterclaims.

On October 2, 1998, KOGIES filed an Urgent Motion for Reconsideration17 of the September 21, 1998 RTC Order
granting inspection of the plant and denying dismissal of PGSMC’s compulsory counterclaims.

Ten days after, on October 12, 1998, without waiting for the resolution of its October 2, 1998 urgent motion for
reconsideration, KOGIES filed before the Court of Appeals (CA) a petition for certiorari18 docketed as CA-G.R. SP
No. 49249, seeking annulment of the July 23, 1998 and September 21, 1998 RTC Orders and praying for the
issuance of writs of prohibition, mandamus, and preliminary injunction to enjoin the RTC and PGSMC from
inspecting, dismantling, and transferring the machineries and equipment in the Carmona plant, and to direct the
RTC to enforce the specific agreement on arbitration to resolve the dispute.

In the meantime, on October 19, 1998, the RTC denied KOGIES’ urgent motion for reconsideration and directed the
Branch Sheriff to proceed with the inspection of the machineries and equipment in the plant on October 28, 1998.19

Thereafter, KOGIES filed a Supplement to the Petition20 in CA-G.R. SP No. 49249 informing the CA about the
October 19, 1998 RTC Order. It also reiterated its prayer for the issuance of the writs of prohibition, mandamus and
preliminary injunction which was not acted upon by the CA. KOGIES asserted that the Branch Sheriff did not have
the technical expertise to ascertain whether or not the machineries and equipment conformed to the specifications
in the contract and were properly installed.

On November 11, 1998, the Branch Sheriff filed his Sheriff’s Report21 finding that the enumerated machineries and
equipment were not fully and properly installed.

The Court of Appeals affirmed the trial court and declared

the arbitration clause against public policy

On May 30, 2000, the CA rendered the assailed Decision22 affirming the RTC Orders and dismissing the petition for
certiorari filed by KOGIES. The CA found that the RTC did not gravely abuse its discretion in issuing the assailed
July 23, 1998 and September 21, 1998 Orders. Moreover, the CA reasoned that KOGIES’ contention that the total
contract price for USD 1,530,000 was for the whole plant and had not been fully paid was contrary to the finding of
the RTC that PGSMC fully paid the price of USD 1,224,000, which was for all the machineries and equipment.
According to the CA, this determination by the RTC was a factual finding beyond the ambit of a petition for certiorari.

On the issue of the validity of the arbitration clause, the CA agreed with the lower court that an arbitration clause
which provided for a final determination of the legal rights of the parties to the contract by arbitration was against
public policy.

On the issue of nonpayment of docket fees and non-attachment of a certificate of non-forum shopping by PGSMC,
the CA held that the counterclaims of PGSMC were compulsory ones and payment of docket fees was not required
since the Answer with counterclaim was not an initiatory pleading. For the same reason, the CA said a certificate of
non-forum shopping was also not required.
Furthermore, the CA held that the petition for certiorari had been filed prematurely since KOGIES did not wait for the
resolution of its urgent motion for reconsideration of the September 21, 1998 RTC Order which was the plain,
speedy, and adequate remedy available. According to the CA, the RTC must be given the opportunity to correct any
alleged error it has committed, and that since the assailed orders were interlocutory, these cannot be the subject of
a petition for certiorari.

Hence, we have this Petition for Review on Certiorari under Rule 45.

The Issues

Petitioner posits that the appellate court committed the following errors:

a. PRONOUNCING THE QUESTION OF OWNERSHIP OVER THE MACHINERY AND FACILITIES AS "A
QUESTION OF FACT" "BEYOND THE AMBIT OF A PETITION FOR CERTIORARI" INTENDED ONLY
FOR CORRECTION OF ERRORS OF JURISDICTION OR GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF (SIC) EXCESS OF JURISDICTION, AND CONCLUDING THAT THE TRIAL COURT’S
FINDING ON THE SAME QUESTION WAS IMPROPERLY RAISED IN THE PETITION BELOW;

b. DECLARING AS NULL AND VOID THE ARBITRATION CLAUSE IN ARTICLE 15 OF THE CONTRACT
BETWEEN THE PARTIES FOR BEING "CONTRARY TO PUBLIC POLICY" AND FOR OUSTING THE
COURTS OF JURISDICTION;

c. DECREEING PRIVATE RESPONDENT’S COUNTERCLAIMS TO BE ALL COMPULSORY NOT

NECESSITATING PAYMENT OF DOCKET FEES AND CERTIFICATION OF NON-FORUM SHOPPING;

d. RULING THAT THE PETITION WAS FILED PREMATURELY WITHOUT WAITING FOR THE
RESOLUTION OF THE MOTION FOR RECONSIDERATION OF THE ORDER DATED SEPTEMBER 21,
1998 OR WITHOUT GIVING THE TRIAL COURT AN OPPORTUNITY TO CORRECT ITSELF;

e. PROCLAIMING THE TWO ORDERS DATED JULY 23 AND SEPTEMBER 21, 1998 NOT TO BE
PROPER SUBJECTS OF CERTIORARI AND PROHIBITION FOR BEING "INTERLOCUTORY IN
NATURE;"

f. NOT GRANTING THE RELIEFS AND REMEDIES PRAYED FOR IN HE (SIC) PETITION AND, INSTEAD,
DISMISSING THE SAME FOR ALLEGEDLY "WITHOUT MERIT."23

The Court’s Ruling

The petition is partly meritorious.

Before we delve into the substantive issues, we shall first tackle the procedural issues.

The rules on the payment of docket fees for counterclaims

and cross claims were amended effective August 16, 2004

KOGIES strongly argues that when PGSMC filed the counterclaims, it should have paid docket fees and filed a
certificate of non-forum shopping, and that its failure to do so was a fatal defect.

We disagree with KOGIES.

As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in its Answer with Compulsory
Counterclaim dated July 17, 1998 in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure,
the rule that was effective at the time the Answer with Counterclaim was filed. Sec. 8 on existing counterclaim or
cross-claim states, "A compulsory counterclaim or a cross-claim that a defending party has at the time he files his
answer shall be contained therein."
On July 17, 1998, at the time PGSMC filed its Answer incorporating its counterclaims against KOGIES, it was not
liable to pay filing fees for said counterclaims being compulsory in nature. We stress, however, that effective August
16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC, docket fees are now required to be paid in
compulsory counterclaim or cross-claims.

As to the failure to submit a certificate of forum shopping, PGSMC’s Answer is not an initiatory pleading which
requires a certification against forum shopping under Sec. 524 of Rule 7, 1997 Revised Rules of Civil Procedure. It is
a responsive pleading, hence, the courts a quo did not commit reversible error in denying KOGIES’ motion to
dismiss PGSMC’s compulsory counterclaims.

Interlocutory orders proper subject of certiorari

Citing Gamboa v. Cruz,25 the CA also pronounced that "certiorari and Prohibition are neither the remedies to
question the propriety of an interlocutory order of the trial court."26 The CA erred on its reliance
on Gamboa. Gamboa involved the denial of a motion to acquit in a criminal case which was not assailable in an
action for certiorari since the denial of a motion to quash required the accused to plead and to continue with the trial,
and whatever objections the accused had in his motion to quash can then be used as part of his defense and
subsequently can be raised as errors on his appeal if the judgment of the trial court is adverse to him. The general
rule is that interlocutory orders cannot be challenged by an appeal.27 Thus, in Yamaoka v. Pescarich Manufacturing
Corporation, we held:

The proper remedy in such cases is an ordinary appeal from an adverse judgment on the merits,
incorporating in said appeal the grounds for assailing the interlocutory orders. Allowing appeals from
interlocutory orders would result in the ‘sorry spectacle’ of a case being subject of a counterproductive ping-
pong to and from the appellate court as often as a trial court is perceived to have made an error in any of its
interlocutory rulings. However, where the assailed interlocutory order was issued with grave abuse of
discretion or patently erroneous and the remedy of appeal would not afford adequate and expeditious relief,
the Court allows certiorari as a mode of redress.28

Also, appeals from interlocutory orders would open the floodgates to endless occasions for dilatory motions. Thus,
where the interlocutory order was issued without or in excess of jurisdiction or with grave abuse of discretion, the
remedy is certiorari.29

The alleged grave abuse of discretion of the respondent court equivalent to lack of jurisdiction in the issuance of the
two assailed orders coupled with the fact that there is no plain, speedy, and adequate remedy in the ordinary course
of law amply provides the basis for allowing the resort to a petition for certiorari under Rule 65.

Prematurity of the petition before the CA

Neither do we think that KOGIES was guilty of forum shopping in filing the petition for certiorari. Note that KOGIES’
motion for reconsideration of the July 23, 1998 RTC Order which denied the issuance of the injunctive writ had
already been denied. Thus, KOGIES’ only remedy was to assail the RTC’s interlocutory order via a petition for
certiorari under Rule 65.

While the October 2, 1998 motion for reconsideration of KOGIES of the September 21, 1998 RTC Order relating to
the inspection of things, and the allowance of the compulsory counterclaims has not yet been resolved, the
circumstances in this case would allow an exception to the rule that before certiorari may be availed of, the
petitioner must have filed a motion for reconsideration and said motion should have been first resolved by the court
a quo. The reason behind the rule is "to enable the lower court, in the first instance, to pass upon and correct its
mistakes without the intervention of the higher court."30

The September 21, 1998 RTC Order directing the branch sheriff to inspect the plant, equipment, and facilities when
he is not competent and knowledgeable on said matters is evidently flawed and devoid of any legal support.
Moreover, there is an urgent necessity to resolve the issue on the dismantling of the facilities and any further delay
would prejudice the interests of KOGIES. Indeed, there is real and imminent threat of irreparable destruction or
substantial damage to KOGIES’ equipment and machineries. We find the resort to certiorari based on the gravely
abusive orders of the trial court sans the ruling on the October 2, 1998 motion for reconsideration to be proper.
 The Core Issue: Article 15 of the Contract

We now go to the core issue of the validity of Art. 15 of the Contract, the arbitration clause. It provides:

Article 15. Arbitration.—All disputes, controversies, or differences which may arise between the parties, out
of or in relation to or in connection with this Contract or for the breach thereof, shall finally be settled by
arbitration in Seoul, Korea in accordance with the Commercial Arbitration Rules of the Korean Commercial
Arbitration Board. The award rendered by the arbitration(s) shall be final and binding upon both
parties concerned. (Emphasis supplied.)

Petitioner claims the RTC and the CA erred in ruling that the arbitration clause is null and void.

Petitioner is correct.

Established in this jurisdiction is the rule that the law of the place where the contract is made governs. Lex loci
contractus. The contract in this case was perfected here in the Philippines. Therefore, our laws ought to govern.
Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually agreed arbitral clause or the finality and
binding effect of an arbitral award. Art. 2044 provides, "Any stipulation that the arbitrators’ award or decision
shall be final, is valid, without prejudice to Articles 2038, 2039 and 2040." (Emphasis supplied.)

Arts. 2038,31 2039,32 and 204033 abovecited refer to instances where a compromise or an arbitral award, as applied
to Art. 2044 pursuant to Art. 2043,34 may be voided, rescinded, or annulled, but these would not denigrate the finality
of the arbitral award.

The arbitration clause was mutually and voluntarily agreed upon by the parties. It has not been shown to be contrary
to any law, or against morals, good customs, public order, or public policy. There has been no showing that the
parties have not dealt with each other on equal footing. We find no reason why the arbitration clause should not be
respected and complied with by both parties. In Gonzales v. Climax Mining Ltd.,35 we held that submission to
arbitration is a contract and that a clause in a contract providing that all matters in dispute between the parties shall
be referred to arbitration is a contract.36 Again in Del Monte Corporation-USA v. Court of Appeals, we likewise ruled
that "[t]he provision to submit to arbitration any dispute arising therefrom and the relationship of the parties is part of
that contract and is itself a contract."37

Arbitration clause not contrary to public policy

The arbitration clause which stipulates that the arbitration must be done in Seoul, Korea in accordance with the
Commercial Arbitration Rules of the KCAB, and that the arbitral award is final and binding, is not contrary to public
policy. This Court has sanctioned the validity of arbitration clauses in a catena of cases. In the 1957 case
of Eastboard Navigation Ltd. v. Juan Ysmael and Co., Inc.,38 this Court had occasion to rule that an arbitration
clause to resolve differences and breaches of mutually agreed contractual terms is valid. In BF Corporation v. Court
of Appeals, we held that "[i]n this jurisdiction, arbitration has been held valid and constitutional. Even before the
approval on June 19, 1953 of Republic Act No. 876, this Court has countenanced the settlement of disputes through
arbitration. Republic Act No. 876 was adopted to supplement the New Civil Code’s provisions on arbitration."39 And
in LM Power Engineering Corporation v. Capitol Industrial Construction Groups, Inc., we declared that:

Being an inexpensive, speedy and amicable method of settling disputes, arbitration––along with mediation,
conciliation and negotiation––is encouraged by the Supreme Court. Aside from unclogging judicial dockets,
arbitration also hastens the resolution of disputes, especially of the commercial kind. It is thus regarded as
the "wave of the future" in international civil and commercial disputes. Brushing aside a contractual
agreement calling for arbitration between the parties would be a step backward.

Consistent with the above-mentioned policy of encouraging alternative dispute resolution methods, courts
should liberally construe arbitration clauses. Provided such clause is susceptible of an interpretation that
covers the asserted dispute, an order to arbitrate should be granted. Any doubt should be resolved in favor
of arbitration.40
Having said that the instant arbitration clause is not against public policy, we come to the question on what governs
an arbitration clause specifying that in case of any dispute arising from the contract, an arbitral panel will be
constituted in a foreign country and the arbitration rules of the foreign country would govern and its award shall be
final and binding.

RA 9285 incorporated the UNCITRAL Model law

to which we are a signatory

For domestic arbitration proceedings, we have particular agencies to arbitrate disputes arising from contractual
relations. In case a foreign arbitral body is chosen by the parties, the arbitration rules of our domestic arbitration
bodies would not be applied. As signatory to the Arbitration Rules of the UNCITRAL Model Law on International
Commercial Arbitration41 of the United Nations Commission on International Trade Law (UNCITRAL) in the New
York Convention on June 21, 1985, the Philippines committed itself to be bound by the Model Law. We have even
incorporated the Model Law in Republic Act No. (RA) 9285, otherwise known as the Alternative Dispute Resolution
Act of 2004 entitled An Act to Institutionalize the Use of an Alternative Dispute Resolution System in the Philippines
and to Establish the Office for Alternative Dispute Resolution, and for Other Purposes, promulgated on April 2, 2004.
Secs. 19 and 20 of Chapter 4 of the Model Law are the pertinent provisions:

CHAPTER 4 - INTERNATIONAL COMMERCIAL ARBITRATION

SEC. 19. Adoption of the Model Law on International Commercial Arbitration.––International commercial

arbitration shall be governed by the Model Law on International Commercial Arbitration (the "Model Law")
adopted by the United Nations Commission on International Trade Law on June 21, 1985 (United Nations
Document A/40/17) and recommended for enactment by the General Assembly in Resolution No. 40/72
approved on December 11, 1985, copy of which is hereto attached as Appendix "A".

SEC. 20. Interpretation of Model Law.––In interpreting the Model Law, regard shall be had to its international
origin and to the need for uniformity in its interpretation and resort may be made to the travaux
preparatories and the report of the Secretary General of the United Nations Commission on International
Trade Law dated March 25, 1985 entitled, "International Commercial Arbitration: Analytical Commentary on
Draft Trade identified by reference number A/CN. 9/264."

While RA 9285 was passed only in 2004, it nonetheless applies in the instant case since it is a procedural law which
has a retroactive effect. Likewise, KOGIES filed its application for arbitration before the KCAB on July 1, 1998 and it
is still pending because no arbitral award has yet been rendered. Thus, RA 9285 is applicable to the instant case.
Well-settled is the rule that procedural laws are construed to be applicable to actions pending and undetermined at
the time of their passage, and are deemed retroactive in that sense and to that extent. As a general rule, the
retroactive application of procedural laws does not violate any personal rights because no vested right has yet
attached nor arisen from them.42

Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Model Law are the following:

(1) The RTC must refer to arbitration in proper cases

Under Sec. 24, the RTC does not have jurisdiction over disputes that are properly the subject of arbitration pursuant
to an arbitration clause, and mandates the referral to arbitration in such cases, thus:

SEC. 24. Referral to Arbitration.––A court before which an action is brought in a matter which is the subject
matter of an arbitration agreement shall, if at least one party so requests not later than the pre-trial
conference, or upon the request of both parties thereafter, refer the parties to arbitration unless it finds that
the arbitration agreement is null and void, inoperative or incapable of being performed.

(2) Foreign arbitral awards must be confirmed by the RTC

Foreign arbitral awards while mutually stipulated by the parties in the arbitration clause to be final and binding are
not immediately enforceable or cannot be implemented immediately. Sec. 3543 of the UNCITRAL Model Law
stipulates the requirement for the arbitral award to be recognized by a competent court for enforcement, which court
under Sec. 36 of the UNCITRAL Model Law may refuse recognition or enforcement on the grounds provided for. RA
9285 incorporated these provisos to Secs. 42, 43, and 44 relative to Secs. 47 and 48, thus:

SEC. 42. Application of the New York Convention.––The New York Convention shall govern the recognition
and enforcement of arbitral awards covered by said Convention.

The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court in
accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall
provide that the party relying on the award or applying for its enforcement shall file with the court the original
or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in
any of the official languages, the party shall supply a duly certified translation thereof into any of such
languages.

The applicant shall establish that the country in which foreign arbitration award was made in party to the
New York Convention.

xxxx

SEC. 43. Recognition and Enforcement of Foreign Arbitral Awards Not Covered by the New York
Convention.––The recognition and enforcement of foreign arbitral awards not covered by the New York
Convention shall be done in accordance with procedural rules to be promulgated by the Supreme Court. The
Court may, on grounds of comity and reciprocity, recognize and enforce a non-convention award as a
convention award.

SEC. 44. Foreign Arbitral Award Not Foreign Judgment.––A foreign arbitral award when confirmed by a
court of a foreign country, shall be recognized and enforced as a foreign arbitral award and not as a
judgment of a foreign court.

A foreign arbitral award, when confirmed by the Regional Trial Court, shall be enforced in the same manner
as final and executory decisions of courts of law of the Philippines

xxxx

SEC. 47. Venue and Jurisdiction.––Proceedings for recognition and enforcement of an arbitration

agreement or for vacations, setting aside, correction or modification of an arbitral award, and any application
with a court for arbitration assistance and supervision shall be deemed as special proceedings and shall be
filed with the Regional Trial Court (i) where arbitration proceedings are conducted; (ii) where the asset to be
attached or levied upon, or the act to be enjoined is located; (iii) where any of the parties to the dispute
resides or has his place of business; or (iv) in the National Judicial Capital Region, at the option of the
applicant.

SEC. 48. Notice of Proceeding to Parties.––In a special proceeding for recognition and enforcement of an
arbitral award, the Court shall send notice to the parties at their address of record in the arbitration, or if any
part cannot be served notice at such address, at such party’s last known address. The notice shall be sent al
least fifteen (15) days before the date set for the initial hearing of the application.

It is now clear that foreign arbitral awards when confirmed by the RTC are deemed not as a judgment of a foreign
court but as a foreign arbitral award, and when confirmed, are enforced as final and executory decisions of our
courts of law.

Thus, it can be gleaned that the concept of a final and binding arbitral award is similar to judgments or awards given
by some of our quasi-judicial bodies, like the National Labor Relations Commission and Mines Adjudication Board,
whose final judgments are stipulated to be final and binding, but not immediately executory in the sense that they
may still be judicially reviewed, upon the instance of any party. Therefore, the final foreign arbitral awards are
similarly situated in that they need first to be confirmed by the RTC.

(3) The RTC has jurisdiction to review foreign arbitral awards

Sec. 42 in relation to Sec. 45 of RA 9285 designated and vested the RTC with specific authority and jurisdiction to
set aside, reject, or vacate a foreign arbitral award on grounds provided under Art. 34(2) of the UNCITRAL Model
Law. Secs. 42 and 45 provide:

SEC. 42. Application of the New York Convention.––The New York Convention shall govern the recognition
and enforcement of arbitral awards covered by said Convention.

The recognition and enforcement of such arbitral awards shall be filed with the Regional Trial Court in
accordance with the rules of procedure to be promulgated by the Supreme Court. Said procedural rules shall
provide that the party relying on the award or applying for its enforcement shall file with the court the original
or authenticated copy of the award and the arbitration agreement. If the award or agreement is not made in
any of the official languages, the party shall supply a duly certified translation thereof into any of such
languages.

The applicant shall establish that the country in which foreign arbitration award was made is party to the
New York Convention.

If the application for rejection or suspension of enforcement of an award has been made, the Regional Trial
Court may, if it considers it proper, vacate its decision and may also, on the application of the party claiming
recognition or enforcement of the award, order the party to provide appropriate security.

xxxx

SEC. 45. Rejection of a Foreign Arbitral Award.––A party to a foreign arbitration proceeding may oppose an
application for recognition and enforcement of the arbitral award in accordance with the procedures and
rules to be promulgated by the Supreme Court only on those grounds enumerated under Article V of the
New York Convention. Any other ground raised shall be disregarded by the Regional Trial Court.

Thus, while the RTC does not have jurisdiction over disputes governed by arbitration mutually agreed upon by the
parties, still the foreign arbitral award is subject to judicial review by the RTC which can set aside, reject, or vacate
it. In this sense, what this Court held in Chung Fu Industries (Phils.), Inc. relied upon by KOGIES is applicable
insofar as the foreign arbitral awards, while final and binding, do not oust courts of jurisdiction since these arbitral
awards are not absolute and without exceptions as they are still judicially reviewable. Chapter 7 of RA 9285 has
made it clear that all arbitral awards, whether domestic or foreign, are subject to judicial review on specific grounds
provided for.

(4) Grounds for judicial review different in domestic and foreign arbitral awards

The differences between a final arbitral award from an international or foreign arbitral tribunal and an award given by
a local arbitral tribunal are the specific grounds or conditions that vest jurisdiction over our courts to review the
awards.

For foreign or international arbitral awards which must first be confirmed by the RTC, the grounds for setting aside,
rejecting or vacating the award by the RTC are provided under Art. 34(2) of the UNCITRAL Model Law.

For final domestic arbitral awards, which also need confirmation by the RTC pursuant to Sec. 23 of RA 87644 and
shall be recognized as final and executory decisions of the RTC,45 they may only be assailed before the RTC and
vacated on the grounds provided under Sec. 25 of RA 876.46

(5) RTC decision of assailed foreign arbitral award appealable

Sec. 46 of RA 9285 provides for an appeal before the CA as the remedy of an aggrieved party in cases where the
RTC sets aside, rejects, vacates, modifies, or corrects an arbitral award, thus:

SEC. 46. Appeal from Court Decision or Arbitral Awards.—A decision of the Regional Trial Court confirming,
vacating, setting aside, modifying or correcting an arbitral award may be appealed to the Court of Appeals in
accordance with the rules and procedure to be promulgated by the Supreme Court.
 The losing party who appeals from the judgment of the court confirming an arbitral award shall be required
by the appellate court to post a counterbond executed in favor of the prevailing party equal to the amount of
the award in accordance with the rules to be promulgated by the Supreme Court.

Thereafter, the CA decision may further be appealed or reviewed before this Court through a petition for review
under Rule 45 of the Rules of Court.

PGSMC has remedies to protect its interests

Thus, based on the foregoing features of RA 9285, PGSMC must submit to the foreign arbitration as it bound itself
through the subject contract. While it may have misgivings on the foreign arbitration done in Korea by the KCAB, it
has available remedies under RA 9285. Its interests are duly protected by the law which requires that the arbitral
award that may be rendered by KCAB must be confirmed here by the RTC before it can be enforced.

With our disquisition above, petitioner is correct in its contention that an arbitration clause, stipulating that the arbitral
award is final and binding, does not oust our courts of jurisdiction as the international arbitral award, the award of
which is not absolute and without exceptions, is still judicially reviewable under certain conditions provided for by the
UNCITRAL Model Law on ICA as applied and incorporated in RA 9285.

Finally, it must be noted that there is nothing in the subject Contract which provides that the parties may dispense
with the arbitration clause.

Unilateral rescission improper and illegal

Having ruled that the arbitration clause of the subject contract is valid and binding on the parties, and not contrary to
public policy; consequently, being bound to the contract of arbitration, a party may not unilaterally rescind or
terminate the contract for whatever cause without first resorting to arbitration.

What this Court held in University of the Philippines v. De Los Angeles 47 and reiterated in succeeding cases,48 that
the act of treating a contract as rescinded on account of infractions by the other contracting party is valid albeit
provisional as it can be judicially assailed, is not applicable to the instant case on account of a valid stipulation on
arbitration. Where an arbitration clause in a contract is availing, neither of the parties can unilaterally treat the
contract as rescinded since whatever infractions or breaches by a party or differences arising from the contract must
be brought first and resolved by arbitration, and not through an extrajudicial rescission or judicial action.

The issues arising from the contract between PGSMC and KOGIES on whether the equipment and machineries
delivered and installed were properly installed and operational in the plant in Carmona, Cavite; the ownership of
equipment and payment of the contract price; and whether there was substantial compliance by KOGIES in the
production of the samples, given the alleged fact that PGSMC could not supply the raw materials required to
produce the sample LPG cylinders, are matters proper for arbitration. Indeed, we note that on July 1, 1998, KOGIES
instituted an Application for Arbitration before the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as
amended. Thus, it is incumbent upon PGSMC to abide by its commitment to arbitrate.

Corollarily, the trial court gravely abused its discretion in granting PGSMC’s Motion for Inspection of Things on
September 21, 1998, as the subject matter of the motion is under the primary jurisdiction of the mutually agreed
arbitral body, the KCAB in Korea.

In addition, whatever findings and conclusions made by the RTC Branch Sheriff from the inspection made on
October 28, 1998, as ordered by the trial court on October 19, 1998, is of no worth as said Sheriff is not technically
competent to ascertain the actual status of the equipment and machineries as installed in the plant.

For these reasons, the September 21, 1998 and October 19, 1998 RTC Orders pertaining to the grant of the
inspection of the equipment and machineries have to be recalled and nullified.

Issue on ownership of plant proper for arbitration

Petitioner assails the CA ruling that the issue petitioner raised on whether the total contract price of USD 1,530,000
was for the whole plant and its installation is beyond the ambit of a Petition for Certiorari.

Petitioner’s position is untenable.

It is settled that questions of fact cannot be raised in an original action for certiorari.49 Whether or not there was full
payment for the machineries and equipment and installation is indeed a factual issue prohibited by Rule 65.

However, what appears to constitute a grave abuse of discretion is the order of the RTC in resolving the issue on
the ownership of the plant when it is the arbitral body (KCAB) and not the RTC which has jurisdiction and authority
over the said issue. The RTC’s determination of such factual issue constitutes grave abuse of discretion and must
be reversed and set aside.

RTC has interim jurisdiction to protect the rights of the parties

Anent the July 23, 1998 Order denying the issuance of the injunctive writ paving the way for PGSMC to dismantle
and transfer the equipment and machineries, we find it to be in order considering the factual milieu of the instant
case.

Firstly, while the issue of the proper installation of the equipment and machineries might well be under the primary
jurisdiction of the arbitral body to decide, yet the RTC under Sec. 28 of RA 9285 has jurisdiction to hear and grant
interim measures to protect vested rights of the parties. Sec. 28 pertinently provides:

SEC. 28. Grant of interim Measure of Protection.—(a) It is not incompatible with an arbitration

agreement for a party to request, before constitution of the tribunal, from a Court to grant such
measure. After constitution of the arbitral tribunal and during arbitral proceedings, a request for an interim
measure of protection, or modification thereof, may be made with the arbitral or to the extent that the
arbitral tribunal has no power to act or is unable to act effectivity, the request may be made with the
Court. The arbitral tribunal is deemed constituted when the sole arbitrator or the third arbitrator, who has
been nominated, has accepted the nomination and written communication of said nomination and
acceptance has been received by the party making the request.

(b) The following rules on interim or provisional relief shall be observed:

Any party may request that provisional relief be granted against the adverse party.

Such relief may be granted:

(i) to prevent irreparable loss or injury;

(ii) to provide security for the performance of any obligation;

(iii) to produce or preserve any evidence; or

(iv) to compel any other appropriate act or omission.

(c) The order granting provisional relief may be conditioned upon the provision of security or any act or
omission specified in the order.

(d) Interim or provisional relief is requested by written application transmitted by reasonable means to the
Court or arbitral tribunal as the case may be and the party against whom the relief is sought, describing in
appropriate detail the precise relief, the party against whom the relief is requested, the grounds for the relief,
and the evidence supporting the request.

(e) The order shall be binding upon the parties.

 (f) Either party may apply with the Court for assistance in implementing or enforcing an interim measure
ordered by an arbitral tribunal.

(g) A party who does not comply with the order shall be liable for all damages resulting from noncompliance,
including all expenses, and reasonable attorney's fees, paid in obtaining the order’s judicial enforcement.
(Emphasis ours.)

Art. 17(2) of the UNCITRAL Model Law on ICA defines an "interim measure" of protection as:

Article 17. Power of arbitral tribunal to order interim measures

xxx xxx xxx

(2) An interim measure is any temporary measure, whether in the form of an award or in another form, by
which, at any time prior to the issuance of the award by which the dispute is finally decided, the arbitral
tribunal orders a party to:

(a) Maintain or restore the status quo pending determination of the dispute;

(b) Take action that would prevent, or refrain from taking action that is likely to cause, current or imminent
harm or prejudice to the arbitral process itself;

(c) Provide a means of preserving assets out of which a subsequent award may be satisfied; or

(d) Preserve evidence that may be relevant and material to the resolution of the dispute.

Art. 17 J of UNCITRAL Model Law on ICA also grants courts power and jurisdiction to issue interim measures:

Article 17 J. Court-ordered interim measures

A court shall have the same power of issuing an interim measure in relation to arbitration proceedings,
irrespective of whether their place is in the territory of this State, as it has in relation to proceedings in courts.
The court shall exercise such power in accordance with its own procedures in consideration of the specific
features of international arbitration.

In the recent 2006 case of Transfield Philippines, Inc. v. Luzon Hydro Corporation, we were explicit that even "the
pendency of an arbitral proceeding does not foreclose resort to the courts for provisional reliefs." We explicated this
way:

As a fundamental point, the pendency of arbitral proceedings does not foreclose resort to the courts for
provisional reliefs. The Rules of the ICC, which governs the parties’ arbitral dispute, allows the application of
a party to a judicial authority for interim or conservatory measures. Likewise, Section 14 of Republic Act
(R.A.) No. 876 (The Arbitration Law) recognizes the rights of any party to petition the court to take measures
to safeguard and/or conserve any matter which is the subject of the dispute in arbitration. In addition, R.A.
9285, otherwise known as the "Alternative Dispute Resolution Act of 2004," allows the filing of provisional or
interim measures with the regular courts whenever the arbitral tribunal has no power to act or to act
effectively.50

It is thus beyond cavil that the RTC has authority and jurisdiction to grant interim measures of protection.

Secondly, considering that the equipment and machineries are in the possession of PGSMC, it has the right to
protect and preserve the equipment and machineries in the best way it can. Considering that the LPG plant was
non-operational, PGSMC has the right to dismantle and transfer the equipment and machineries either for their
protection and preservation or for the better way to make good use of them which is ineluctably within the
management discretion of PGSMC.
Thirdly, and of greater import is the reason that maintaining the equipment and machineries in Worth’s property is
not to the best interest of PGSMC due to the prohibitive rent while the LPG plant as set-up is not operational.
PGSMC was losing PhP322,560 as monthly rentals or PhP3.87M for 1998 alone without considering the 10%
annual rent increment in maintaining the plant.

Fourthly, and corollarily, while the KCAB can rule on motions or petitions relating to the preservation or transfer of
the equipment and machineries as an interim measure, yet on hindsight, the July 23, 1998 Order of the RTC
allowing the transfer of the equipment and machineries given the non-recognition by the lower courts of the arbitral
clause, has accorded an interim measure of protection to PGSMC which would otherwise been irreparably
damaged.

Fifth, KOGIES is not unjustly prejudiced as it has already been paid a substantial amount based on the contract.
Moreover, KOGIES is amply protected by the arbitral action it has instituted before the KCAB, the award of which
can be enforced in our jurisdiction through the RTC. Besides, by our decision, PGSMC is compelled to submit to
arbitration pursuant to the valid arbitration clause of its contract with KOGIES.

PGSMC to preserve the subject equipment and machineries

Finally, while PGSMC may have been granted the right to dismantle and transfer the subject equipment and
machineries, it does not have the right to convey or dispose of the same considering the pending arbitral
proceedings to settle the differences of the parties. PGSMC therefore must preserve and maintain the subject
equipment and machineries with the diligence of a good father of a family51 until final resolution of the arbitral
proceedings and enforcement of the award, if any.

WHEREFORE, this petition is PARTLY GRANTED, in that:

(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED and SET ASIDE;

(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case No. 98-117 are REVERSED and SET
ASIDE;

(3) The parties are hereby ORDERED to submit themselves to the arbitration of their dispute and differences arising
from the subject Contract before the KCAB; and

(4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment and machineries, if it had not done so,
and ORDERED to preserve and maintain them until the finality of whatever arbitral award is given in the arbitration
proceedings.

No pronouncement as to costs.

SO ORDERED.

KOREA TECHNOLOGIES vs. LERMA

FACTS
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation which is engaged in the supply and installation
of Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants, while private respondent Pacific General Steel
Manufacturing Corp. (PGSMC) is a domestic corporation.
On March 5, 1997, PGSMC and KOGIES executed a contract in the Philippines whereby KOGIES would set up an LPG
Cylinder Manufacturing Plant in Carmona, Cavite.   On April 7, 1997, in Korea, the parties executed Contract No. KLP-
970301 dated March 5, 1997 amending the terms of payment.   On October 14, 1997, PGSMC entered into a Contract of
Lease with Worth Properties, Inc. (Worth) for use of Worth’s 5,079-square meter property with a 4,032-square meter
warehouse building to house the LPG manufacturing plant.

On January 22, 1998, it was shown in the Certificate that, after the installation of the plant, the initial operation could
not be conducted as PGSMC encountered financial difficulties affecting the supply of materials, thus forcing the parties
to agree that KOGIES would be deemed to have completely complied with the terms and conditions of the March 5,
1997 contract.

For the remaining balance of USD306,000 for the installation and initial operation of the plant, PGSMC issued two post
dated checks.  When KOGIES deposited the checks, these were dishonored for the reason "PAYMENT STOPPED." Thus,
on May 8, 1998, KOGIES sent a demand letter to PGSMC threatening criminal action for violation of  Batas Pambansa
Blg. 22 in case of non payment. On the same date, the wife of PGSMC’s President faxed a letter dated May 7, 1998 to
KOGIES’ President who was then staying at a Makati City hotel. She complained that not only did KOGIES deliver a
different brand of hydraulic press from that agreed upon but it had not delivered several equipment parts already paid
for.

On May 14, 1998, PGSMC replied that the two checks it issued KOGIES were fully funded but the payments were
stopped for reasons previously made known to KOGIES.

On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling their Contract dated March 5, 1997 on the ground
that KOGIES had altered the quantity and lowered the quality of the machineries and equipment it delivered to PGSMC,
and that PGSMC would dismantle and transfer the machineries, equipment, and facilities installed in the Carmona plant.
Five days later, PGSMC filed before the Office of the Public Prosecutor an Affidavit-Complaint for  Estafa  docketed as I.S.
No. 98-03813 against Mr. Dae Hyun Kang, President of KOGIES.

On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC could not unilaterally rescind their contract
nor dismantle and transfer the machineries and equipment on mere imagined violations by KOGIES. It also insisted that
their disputes should be settled by arbitration as agreed upon in Article 15, the arbitration clause of their contract.

On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of its June 1, 1998 letter threatening that the
machineries, equipment, and facilities installed in the plant would be dismantled and transferred on July 4, 1998. Thus,
on July 1, 1998, KOGIES instituted an Application for Arbitration before the Korean Commercial Arbitration Board (KCAB)
in Seoul, Korea pursuant to Art. 15 of the Contract as amended.

On July 3, 1998, KOGIES filed a Complaint for Specific Performance, against PGSMC before the Muntinlupa City Regional
Trial Court (RTC). The RTC granted a temporary restraining order. In its complaint, KOGIES alleged that PGSMC had
initially admitted that the checks that were stopped were not funded but later on claimed that it stopped payment of
the checks for the reason that "their value was not received" as the former allegedly breached their contract by "altering
the quantity and lowering the quality of the machinery and equipment" installed in the plant and failed to make the
plant operational although it earlier certified to the contrary as shown in a January 22, 1998 Certificate. Likewise, KOGIES
averred that PGSMC violated Art. 15 of their Contract, as amended, by unilaterally rescinding the contract without
resorting to arbitration. KOGIES also asked that PGSMC be restrained from dismantling and transferring the machinery
and equipment installed in the plant which the latter threatened to do on July 4, 1998.

On July 9, 1998, PGSMC filed an opposition to the TRO arguing that KOGIES was not entitled to the TRO since Art. 15, the
arbitration clause, was null and void for being against public policy as it ousts the local courts of jurisdiction over the
instant controversy.

On July 23, 1998, the RTC issued an Order denying the application for a writ of preliminary injunction, reasoning that
PGSMC had paid KOGIES USD 1,224,000, the value of the machineries and equipment as shown in the contract such that
KOGIES no longer had proprietary rights over them. And finally, the RTC held that Art. 15 of the Contract as amended
was invalid as it tended to oust the trial court or any other court jurisdiction over any dispute that may arise between
the parties. KOGIES’ prayer for an injunctive writ was denied.

PGSMC filed a Motion for Inspection of Things to determine whether there was indeed alteration of the quantity and
lowering of quality of the machineries and equipment, and whether these were properly installed. KOGIES opposed the
motion positing that the queries and issues raised in the motion for inspection fell under the coverage of the arbitration
clause in their contract. KOGIES asserted that the Branch Sheriff did not have the technical expertise to ascertain
whether or not the machineries and equipment conformed to the specifications in the contract and were properly
installed. The trial court granted the motion.  On November 11, 1998, the Branch Sheriff filed his Sheriff’s Report  finding
that the enumerated machineries and equipment were not fully and properly installed.

Court of Appeals affirmed the trial court and declared the arbitration clause against public policy.

ISSUE
W/N the arbitration clause is against public policy – NO.

RULING
Established in this jurisdiction is the rule that the law of the place where the contract is made governs.  Lex loci
contractus. The contract in this case was perfected here in the Philippines. Therefore, our laws ought to govern.
Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually agreed arbitral clause or the finality and
binding effect of an arbitral award. Art. 2044 provides, "Any stipulation that the arbitrators’ award or decision shall be
final, is valid, without prejudice to Articles 2038, 2039 and 2040." (Emphasis supplied.)

Arbitration clause not contrary to public policy:  The arbitration clause which stipulates that the arbitration must be
done in Seoul, Korea in accordance with the Commercial Arbitration Rules of the KCAB, and that the arbitral award is
final and binding, is not contrary to public policy.

Having said that the instant arbitration clause is not against public policy, we come to the question on what governs an
arbitration clause specifying that in case of any dispute arising from the contract, an arbitral panel will be constituted in
a foreign country and the arbitration rules of the foreign country would govern and its award shall be final and binding.

RA 9285 incorporated the UNCITRAL Model law to which we are a signatory:   For domestic arbitration proceedings, we
have particular agencies to arbitrate disputes arising from contractual relations. In case a foreign arbitral body is chosen
by the parties, the arbitration rules of our domestic arbitration bodies would not be applied. As signatory to the
Arbitration Rules of the UNCITRAL Model Law on International Commercial Arbitration of the United Nations
Commission on International Trade Law (UNCITRAL) in the New York Convention on June 21, 1985, the Philippines
committed itself to be bound by the Model Law. We have even incorporated the Model Law in Republic Act No. (RA)
9285, otherwise known as the Alternative Dispute Resolution Act of 2004 entitled An Act to Institutionalize the Use of an
Alternative Dispute Resolution System in the Philippines and to Establish the Office for Alternative Dispute Resolution,
and for Other Purposes, promulgated on April 2, 2004.  And while RA 9285 was passed only in 2004, it nonetheless
applies in the instant case since it is a procedural law which has a retroactive effect.

Among the pertinent features of RA 9285 applying and incorporating the UNCITRAL Model Law are the following:
(1) The RTC must refer to arbitration in proper cases
(2) Foreign arbitral awards must be confirmed by the RTC
 (3) The RTC has jurisdiction to review foreign arbitral awards
 (4) Grounds for judicial review different in domestic and foreign arbitral awards
 (5) RTC decision of assailed foreign arbitral award appealable

PGSMC has remedies to protect its interests:  Thus, based on the foregoing features of RA 9285, PGSMC must submit to
the foreign arbitration as it bound itself through the subject contract. While it may have misgivings on the foreign
arbitration done in Korea by the KCAB, it has available remedies under RA 9285. Its interests are duly protected by the
law which requires that the arbitral award that may be rendered by KCAB must be confirmed here by the RTC before it
can be enforced.
With our disquisition above, petitioner is correct in its contention that an arbitration clause, stipulating that the arbitral
award is final and binding, does not oust our courts of jurisdiction as the international arbitral award, the award of which
is not absolute and without exceptions, is still judicially reviewable under certain conditions provided for by the
UNCITRAL Model Law on ICA as applied and incorporated in RA 9285.

Finally, it must be noted that there is nothing in the subject Contract which provides that the parties may dispense with
the arbitration clause.
Unilateral rescission improper and illegal:  Having ruled that the arbitration clause of the subject contract is valid and
binding on the parties, and not contrary to public policy; consequently, being bound to the contract of arbitration, a
party may not unilaterally rescind or terminate the contract for whatever cause without first resorting to arbitration.

In addition, whatever findings and conclusions made by the RTC Branch Sheriff from the inspection made on October 28,
1998, as ordered by the trial court on October 19, 1998, is of no worth as said Sheriff is not technically competent to
ascertain the actual status of the equipment and machineries as installed in the plant.

RTC has interim jurisdiction to protect the rights of the parties: While the issue of the proper installation of the
equipment and machineries might well be under the primary jurisdiction of the arbitral body to decide, yet the RTC
under Sec. 28 of RA 9285 has jurisdiction to hear and grant interim measures to protect vested rights of the parties

While the KCAB can rule on motions or petitions relating to the preservation or transfer of the equipment and
machineries as an interim measure, yet on hindsight, the July 23, 1998 Order of the RTC allowing the transfer of the
equipment and machineries given the non-recognition by the lower courts of the arbitral clause, has accorded an
interim measure of protection to PGSMC which would otherwise been irreparably damaged. KOGIES is not unjustly
prejudiced as it has already been paid a substantial amount based on the contract. Moreover, KOGIES is amply protected
by the arbitral action it has instituted before the KCAB, the award of which can be enforced in our jurisdiction through
the RTC. Besides, by our decision, PGSMC is compelled to submit to arbitration pursuant to the valid arbitration clause of
its contract with KOGIES.

PGSMC to preserve the subject equipment and machineries:  While PGSMC may have been granted the right to dismantle and
transfer the subject equipment and machineries, it does not have the right to convey or dispose of the same considering the pending
arbitral proceedings to settle the differences of the parties. PGSMC therefore must preserve and maintain the subject equipment
and machineries with the diligence of a good father of a family until final resolution of the arbitral proceedings and enforcement of
the award, if any.

G.R. No. 186571               August 11, 2010

GERBERT R. CORPUZ, Petitioner,
vs.
DAISYLYN TIROL STO. TOMAS and The SOLICITOR GENERAL, Respondents.

DECISION

BRION, J.:

Before the Court is a direct appeal from the decision1 of the Regional Trial Court (RTC) of Laoag City, Branch 11,
elevated via a petition for review on certiorari2 under Rule 45 of the Rules of Court (present petition).

Petitioner Gerbert R. Corpuz was a former Filipino citizen who acquired Canadian citizenship through naturalization
on November 29, 2000.3 On January 18, 2005, Gerbert married respondent Daisylyn T. Sto. Tomas, a Filipina, in
Pasig City.4 Due to work and other professional commitments, Gerbert left for Canada soon after the wedding. He
returned to the Philippines sometime in April 2005 to surprise Daisylyn, but was shocked to discover that his wife
was having an affair with another man. Hurt and disappointed, Gerbert returned to Canada and filed a petition for
divorce. The Superior Court of Justice, Windsor, Ontario, Canada granted Gerbert’s petition for divorce on
December 8, 2005. The divorce decree took effect a month later, on January 8, 2006.5

Two years after the divorce, Gerbert has moved on and has found another Filipina to love. Desirous of marrying his
new Filipina fiancée in the Philippines, Gerbert went to the Pasig City Civil Registry Office and registered the
Canadian divorce decree on his and Daisylyn’s marriage certificate. Despite the registration of the divorce decree,
an official of the National Statistics Office (NSO) informed Gerbert that the marriage between him and Daisylyn still
subsists under Philippine law; to be enforceable, the foreign divorce decree must first be judicially recognized by a
competent Philippine court, pursuant to NSO Circular No. 4, series of 1982.6
Accordingly, Gerbert filed a petition for judicial recognition of foreign divorce and/or declaration of marriage as
dissolved (petition) with the RTC. Although summoned, Daisylyn did not file any responsive pleading but submitted
instead a notarized letter/manifestation to the trial court. She offered no opposition to Gerbert’s petition and, in fact,
alleged her desire to file a similar case herself but was prevented by financial and personal circumstances. She,
thus, requested that she be considered as a party-in-interest with a similar prayer to Gerbert’s.

In its October 30, 2008 decision,7 the RTC denied Gerbert’s petition. The RTC concluded that Gerbert was not the
proper party to institute the action for judicial recognition of the foreign divorce decree as he is a naturalized
Canadian citizen. It ruled that only the Filipino spouse can avail of the remedy, under the second paragraph of
Article 26 of the Family Code,8 in order for him or her to be able to remarry under Philippine law.9 Article 26 of the
Family Code reads:

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 likewise have
capacity to remarry under Philippine law.

This conclusion, the RTC stated, is consistent with the legislative intent behind the enactment of the second
paragraph of Article 26 of the Family Code, as determined by the Court in Republic v. Orbecido III;10 the provision
was enacted 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."11

THE PETITION

From the RTC’s ruling,12 Gerbert filed the present petition.13

Gerbert asserts that his petition before the RTC is essentially for declaratory relief, similar to that filed in Orbecido;
he, thus, similarly asks for a determination of his rights under the second paragraph of Article 26 of the Family Code.
Taking into account the rationale behind the second paragraph of Article 26 of the Family Code, he contends that
the provision applies as well to the benefit of the alien spouse. He claims that the RTC ruling unduly stretched the
doctrine in Orbecido by limiting the standing to file the petition only to the Filipino spouse – an interpretation he
claims to be contrary to the essence of the second paragraph of Article 26 of the Family Code. He considers himself
as a proper party, vested with sufficient legal interest, to institute the case, as there is a possibility that he might be
prosecuted for bigamy if he marries his Filipina fiancée in the Philippines since two marriage certificates, involving
him, would be on file with the Civil Registry Office. The Office of the Solicitor General and Daisylyn, in their
respective Comments,14 both support Gerbert’s position.

Essentially, the petition raises the issue of whether the second paragraph of Article 26 of the Family Code extends
to aliens the right to petition a court of this jurisdiction for the recognition of a foreign divorce decree.

THE COURT’S RULING

The alien spouse can claim no right under the second paragraph of Article 26 of the Family Code as the substantive
right it establishes is in favor of the Filipino spouse

The resolution of the issue requires a review of the legislative history and intent behind the second paragraph of
Article 26 of the Family Code.

The Family Code recognizes only two types of defective marriages – void15 and voidable16 marriages. In both cases,
the basis for the judicial declaration of absolute nullity or annulment of the marriage exists before or at the time of
the marriage. Divorce, on the other hand, contemplates the dissolution of the lawful union for cause arising after the
marriage.17 Our family laws do not recognize absolute divorce between Filipino citizens.18
Recognizing the reality that divorce is a possibility in marriages between a Filipino and an alien, President Corazon
C. Aquino, in the exercise of her legislative powers under the Freedom Constitution,19 enacted Executive Order No.
(EO) 227, amending Article 26 of the Family Code to its present wording, as follows:

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 likewise have
capacity to remarry under Philippine law.

Through the second paragraph of Article 26 of the Family Code, EO 227 effectively incorporated into the law this
Court’s holding in Van Dorn v. Romillo, Jr.20 and Pilapil v. Ibay-Somera.21 In both cases, the Court refused to
acknowledge the alien spouse’s assertion of marital rights after a foreign court’s divorce decree between the alien
and the Filipino. The Court, thus, recognized that the foreign divorce had already severed the marital bond between
the spouses. The Court reasoned in Van Dorn v. Romillo that:

To maintain x x x that, under our laws, [the Filipino spouse] has to be considered still married to [the alien spouse]
and still subject to a wife's obligations x x x cannot be just. [The Filipino spouse] should not be obliged to live
together with, observe respect and fidelity, and render support to [the alien spouse]. The latter should not continue
to be one of her heirs with possible rights to conjugal property. She should not be discriminated against in her own
country if the ends of justice are to be served.22

As the RTC correctly stated, the provision was included in the law "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."23 The legislative intent is for the benefit of the Filipino spouse, by clarifying his or her marital status, settling
the doubts created by the divorce decree. Essentially, the second paragraph of Article 26 of the Family Code
provided the Filipino spouse a substantive right to have his or her marriage to the alien spouse considered as
dissolved, capacitating him or her to remarry.24 Without the second paragraph of Article 26 of the Family Code, the
judicial recognition of the foreign decree of divorce, whether in a proceeding instituted precisely for that purpose or
as a related issue in another proceeding, would be of no significance to the Filipino spouse since our laws do not
recognize divorce as a mode of severing the marital bond;25 Article 17 of the Civil Code provides that the policy
against absolute divorces cannot be subverted by judgments promulgated in a foreign country. The inclusion of the
second paragraph in Article 26 of the Family Code provides the direct exception to this rule and serves as basis for
recognizing the dissolution of the marriage between the Filipino spouse and his or her alien spouse.

Additionally, an action based on the second paragraph of Article 26 of the Family Code is not limited to the
recognition of the foreign divorce decree. If the court finds that the decree capacitated the alien spouse to remarry,
the courts can declare that the Filipino spouse is likewise capacitated to contract another marriage. No court in this
jurisdiction, however, can make a similar declaration for the alien spouse (other than that already established by the
decree), whose status and legal capacity are generally governed by his national law.26

Given the rationale and intent behind the enactment, and the purpose of the second paragraph of Article 26 of the
Family Code, the RTC was correct in limiting the applicability of the provision for the benefit of the Filipino spouse. In
other words, only the Filipino spouse can invoke the second paragraph of Article 26 of the Family Code; the alien
spouse can claim no right under this provision.

The foreign divorce decree is presumptive evidence of a right that clothes the party with legal interest to petition for
its recognition in this jurisdiction

We qualify our above conclusion – i.e., that the second paragraph of Article 26 of the Family Code bestows no rights
in favor of aliens – with the complementary statement that this conclusion is not sufficient basis to dismiss Gerbert’s
petition before the RTC. In other words, the unavailability of the second paragraph of Article 26 of the Family Code
to aliens does not necessarily strip Gerbert of legal interest to petition the RTC for the recognition of his foreign
divorce decree. The foreign divorce decree itself, after its authenticity and conformity with the alien’s national law
have been duly proven according to our rules of evidence, serves as a presumptive evidence of right in favor of
Gerbert, pursuant to Section 48, Rule 39 of the Rules of Court which provides for the effect of foreign judgments.
This Section states:

SEC. 48. Effect of foreign judgments or final orders.—The effect of a judgment or final order of a tribunal of a foreign
country, having jurisdiction to render the judgment or final order is as follows:

(a) In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive upon
the title of the thing; and

(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence
of a right as between the parties and their successors in interest by a subsequent title.

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.

To our mind, direct involvement or being the subject of the foreign judgment is sufficient to clothe a party with the
requisite interest to institute an action before our courts for the recognition of the foreign judgment. In a divorce
situation, we have declared, no less, that the divorce obtained by an alien abroad may be recognized in the
Philippines, provided the divorce is valid according to his or her national law.27

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our courts do not take
judicial notice of foreign judgments and laws. Justice Herrera explained that, as a rule, "no sovereign is bound to
give effect within its dominion to a judgment rendered by a tribunal of another country."28 This means that the foreign
judgment and its authenticity must be proven as facts under our rules on evidence, together with the alien’s
applicable national law to show the effect of the judgment on the alien himself or herself.29 The recognition may be
made in an action instituted specifically for the purpose or in another action where a party invokes the foreign
decree as an integral aspect of his claim or defense.

In Gerbert’s case, since both the foreign divorce decree and the national law of the alien, recognizing his or her
capacity to obtain a divorce, purport to be official acts of a sovereign authority, Section 24, Rule 132 of the Rules of
Court comes into play. This Section requires proof, either by (1) official publications or (2) copies attested by the
officer having legal custody of the documents. If the copies of official records are not kept in the Philippines, these
must be (a) accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine foreign
service stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his office.

The records show that Gerbert attached to his petition a copy of the divorce decree, as well as the required
certificates proving its authenticity,30 but failed to include a copy of the Canadian law on divorce.31 Under this
situation, we can, at this point, simply dismiss the petition for insufficiency of supporting evidence, unless we deem it
more appropriate to remand the case to the RTC to determine whether the divorce decree is consistent with the
Canadian divorce law.

We deem it more appropriate to take this latter course of action, given the Article 26 interests that will be served and
the Filipina wife’s (Daisylyn’s) obvious conformity with the petition. A remand, at the same time, will allow other
interested parties to oppose the foreign judgment and overcome a petitioner’s presumptive evidence of a right by
proving want of jurisdiction, want of notice to a party, collusion, fraud, or clear mistake of law or fact. Needless to
state, every precaution must be taken to ensure conformity with our laws before a recognition is made, as the
foreign judgment, once recognized, shall have the effect of res judicata32 between the parties, as provided in Section
48, Rule 39 of the Rules of Court.33

In fact, more than the principle of comity that is served by the practice of reciprocal recognition of foreign judgments
between nations, the res judicata effect of the foreign judgments of divorce serves as the deeper basis for extending
judicial recognition and for considering the alien spouse bound by its terms. This same effect, as discussed above,
will not obtain for the Filipino spouse were it not for the substantive rule that the second paragraph of Article 26 of
the Family Code provides.

Considerations beyond the recognition of the foreign divorce decree

As a matter of "housekeeping" concern, we note that the Pasig City Civil Registry Office has already recorded the
divorce decree on Gerbert and Daisylyn’s marriage certificate based on the mere presentation of the decree.34 We
consider the recording to be legally improper; hence, the need to draw attention of the bench and the bar to what
had been done.

Article 407 of the Civil Code states that "[a]cts, events and judicial decrees concerning the civil status of persons
shall be recorded in the civil register." The law requires the entry in the civil registry of judicial decrees that produce
legal consequences touching upon a person’s legal capacity and status, i.e., those affecting "all his personal
qualities and relations, more or less permanent in nature, not ordinarily terminable at his own will, such as his being
legitimate or illegitimate, or his being married or not."35

A judgment of divorce is a judicial decree, although a foreign one, affecting a person’s legal capacity and status that
must be recorded. In fact, Act No. 3753 or the Law on Registry of Civil Status specifically requires the registration of
divorce decrees in the civil registry:

Sec. 1. Civil Register. – A civil register is established for recording the civil status of persons, in which shall be
entered:

(a) births;

(b) deaths;

(c) marriages;

(d) annulments of marriages;

(e) divorces;

(f) legitimations;

(g) adoptions;

(h) acknowledgment of natural children;

(i) naturalization; and

(j) changes of name.

xxxx

Sec. 4. Civil Register Books. — The local registrars shall keep and preserve in their offices the following books, in
which they shall, respectively make the proper entries concerning the civil status of persons:

(1) Birth and death register;

(2) Marriage register, in which shall be entered not only the marriages solemnized but also divorces and
dissolved marriages.

(3) Legitimation, acknowledgment, adoption, change of name and naturalization register.

But while the law requires the entry of the divorce decree in the civil registry, the law and the submission of the
decree by themselves do not ipso facto authorize the decree’s registration. The law should be read in relation with
the requirement of a judicial recognition of the foreign judgment before it can be given res judicata effect. In the
context of the present case, no judicial order as yet exists recognizing the foreign divorce decree. Thus, the Pasig
City Civil Registry Office acted totally out of turn and without authority of law when it annotated the Canadian divorce
decree on Gerbert and Daisylyn’s marriage certificate, on the strength alone of the foreign decree presented by
Gerbert.

Evidently, the Pasig City Civil Registry Office was aware of the requirement of a court recognition, as it cited NSO
Circular No. 4, series of 1982,36 and Department of Justice Opinion No. 181, series of 198237 – both of which
required a final order from a competent Philippine court before a foreign judgment, dissolving a marriage, can be
registered in the civil registry, but it, nonetheless, allowed the registration of the decree. For being contrary to law,
the registration of the foreign divorce decree without the requisite judicial recognition is patently void and cannot
produce any legal effect. 1avvphi1

Another point we wish to draw attention to is that the recognition that the RTC may extend to the Canadian divorce
decree does not, by itself, authorize the cancellation of the entry in the civil registry. A petition for recognition of a
foreign judgment is not the proper proceeding, contemplated under the Rules of Court, for the cancellation of entries
in the civil registry.

Article 412 of the Civil Code declares that "no entry in a civil register shall be changed or corrected, without judicial
order." The Rules of Court supplements Article 412 of the Civil Code by specifically providing for a special remedial
proceeding by which entries in the civil registry may be judicially cancelled or corrected. Rule 108 of the Rules of
Court sets in detail the jurisdictional and procedural requirements that must be complied with before a judgment,
authorizing the cancellation or correction, may be annotated in the civil registry. It also requires, among others, that
the verified petition must be filed with the RTC of the province where the corresponding civil registry is located;38 that
the civil registrar and all persons who have or claim any interest must be made parties to the proceedings;39 and that
the time and place for hearing must be published in a newspaper of general circulation.40 As these basic
jurisdictional requirements have not been met in the present case, we cannot consider the petition Gerbert filed with
the RTC as one filed under Rule 108 of the Rules of Court.

We hasten to point out, however, that this ruling should not be construed as requiring two separate proceedings for
the registration of a foreign divorce decree in the civil registry – one for recognition of the foreign decree and
another specifically for cancellation of the entry under Rule 108 of the Rules of Court. The recognition of the foreign
divorce decree may be made in a Rule 108 proceeding itself, as the object of special proceedings (such as that in
Rule 108 of the Rules of Court) is precisely to establish the status or right of a party or a particular fact. Moreover,
Rule 108 of the Rules of Court can serve as the appropriate adversarial proceeding41 by which the applicability of the
foreign judgment can be measured and tested in terms of jurisdictional infirmities, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.

WHEREFORE, we GRANT the petition for review on certiorari, and REVERSE the October 30, 2008 decision of the
Regional Trial Court of Laoag City, Branch 11, as well as its February 17, 2009 order. We order the REMAND of the
case to the trial court for further proceedings in accordance with our ruling above. Let a copy of this Decision be
furnished the Civil Registrar General. No costs.

SO ORDERED.

Corpus vs Sto Tomas G.R. No. 186571, August 11, 2010

Facts:

Gerbert, a former Filipino, acquired Canadian citizenship through naturalization on Nov 29, 2000. On January 18, 2005, Gerbert
Married Daisylyn, a Filipina, in Pasig. Gerbert left for Canada soon after the wedding. He returned in April 2005 to surprise Daisylyn, but
was shocked to discover that his wife was having an affair. Gerbert returned to Canada and filed a petition for divorce. The Canadian
Court granted Gerbert’s petition in 2005.
Two years later, Gerbert found another Filipino. Desirous of marrying his fiancee in the Philippines, Gerbert filed a petition for judicial
recognition of foreign divorce with the RTC. The RTC denied Gerbert’s petition. It ruled that only the Filipino spouse can avail of the
remedy, under Art 26(2), in order for him or her to be able to remarry under Philippine Law.

Issue: 1st Issue: W/N Art 26(2) of the Family Code extends to alients the right to petition for the recognition of a foreign divorce
decree? (No)

2nd Issue: Does the unavailability of Art 26 (2) to aliens strip Gerbert of legal interest to petition the RTC for the recognition of
his foreign divorce decree? (No)

Held: 1st issue: Art 26 (2) was included in the law “to avoid the absurd situation where the Filipino remains married to the alien who,
after obtaining a divorce, is no longer married to the Filipino.” The legislative intent is for the benefit of the Filipino spouse, by clarifying
her marital status.

Without Art 26 (2), the judicial recognition of the foreign decree of divorce, whether in a proceeding instituted precisely for that purpose,
or as a related issue in another proceeding, would be of no significance to the Filipino spouse since our laws do not recognize divorce
as a mode of severing marital bond. Hence, only the Filipino can invoke Art 26 (2) of the Family Code; the alien can claim no right
under this provision.

2nd Issue: The foreign divorce decree intself, after its authenticity and conformity with the alien’s national law have been duly proven
according to our rules ofo evidence, serves as a presumptive evidence of right in favor of Gerbert, pursuant to Sec 48 Rule 39, which
provides for the effect of foreign judgments.

Hence, direct involvement or being the subject of the foreign judgment is sufficient to clothe a party with the requisite interest
to institute an action before our courts for the recognition of the foreign judgment.

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our courts do not take judicial notice of
foreign judgments and laws because as a rule, “no sovereign is bound to give effect within its dominion to a judgment rendered by a
tribunal of another country.”

This means that the foreign judgment and its authenticity must be proven as facts under our rules on evidence, together with the
alien’s applicable national law to show the effect of the judgment on the alient himself or herself.

The recognition may be made in:

1. An action instituted specifically for that purpose, or

2. Another action where a party invokes the foreign decree as an integral aspect of his claim or defense.
G.R. No. 174720               September 7, 2011

LANDOIL RESOURCES CORPORATION, Petitioner,

vs.
AL RABIAH LIGHTING COMPANY, Respondent.

DECISION

PERALTA, J.:

Assailed in the instant petition for review on certiorari filed by petitioner are the Decision1 dated August 14, 2003 and
the Resolution2 dated August 29, 2006 of the Court of Appeals issued in CA-G.R. CV No. 52003.

The facts, as borne by the records, are as follows:

Respondent Al Rabiah Lighting Company (Al Rabiah) is a foreign corporation existing under the laws of Kuwait.
Defendant Construction Consortium, Inc. (CCI) and petitioner Landoil Resources Corporation (Landoil) are both
domestic corporations organized under the Philippines Laws.

On December 20, 1981, CCI and respondent Al Rabiah entered into a Sub-Contract Agreement3 wherein
respondent was assigned to carry out the electrical works of Kuwait Oil Company's New Industrial Training Centre
project in Ahmadi, Kuwait in the total amount of Three Hundred Forty- Three Thousand Five Hundred Kuwaiti Dinar.
Respondent started carrying out its work as agreed upon. Later, the project owner had withdrawn the principal
contract which led to the termination of petitioner’s and CCI’s services.4 Consequently, respondent's works were
stopped before being completed.

On September 12, 1982, petitioner, through its Regional Managing Director for Operations Robert J. Brown, sent a
letter5 to respondent through Mr. Said Y. Al Imam, confirming that based on the July progress billing, petitioner owed
respondent the sum of KD 21,930,317 which was already due and proposed the payment of 12% interest on the
overdue account until payment has been made.

In a letter dated June 4, 1983, petitioner informed respondent that the Prime Contractor Al Fahd Company had
already terminated its contract; that petitioner agreed to pay respondent 12% interest per year on the unpaid bills of
completed works. The letter was signed by both Robert Brown and Gerald Love.6

On June 9, 1983, petitioner acknowledged its indebtedness to respondent in the amount of KD 91,580.059, plus
general overtime pay of KD 8,126 and promised to pay it in installments.7

As petitioner failed to pay respondent any part of the amount due, together with the contractual interest of 12%, the
latter referred their dispute to the Commercial Kully Court of Kuwait for arbitration as provided under the Sub-
Contract Agreement. The parties were duly notified of the scheduled sessions of arbitration, but only respondent
and its counsel appeared thereat.8

On April 14, 1984, the Arbitrator rendered its award as follows:

The court decides that Land Oil Resources Company (Construction Consortium Incorporation) is indebted to [Al]
Rabiah Lighting Company by KD 108,368.860 and that it is compelled to pay this sum in settlement of the account
of the contract concluded between them on 20th December, 1981. The said sum includes also the contractual
interest until the date of issue of this Award.9

Respondent then filed with the Regional Trial Court (RTC) of Makati, an action10 for Enforcement of Foreign
Judgment Plus Damages against defendant CCI and petitioner. The case was raffled off to Branch 64 and was
docketed as Civil Case No. 11578.

In its Answer,11 petitioner admitted the existence of the Sub-Contract Agreement, but claimed to have no knowledge
as to its genuineness and due execution. By way of Special and Affirmative Defenses, petitioner argued among
others that respondent had no cause of action; respondent's claims had been paid, set-off or extinguished; the
Commercial Kully Court of Kuwait did not acquire jurisdiction over petitioner; and the arbitral award was contrary to
public policy, hence, illegal. Petitioner also alleged that since it had not been paid by its principal contractor the
value of the corresponding accomplishments done by respondent, respondent’s cause of action had not yet
accrued; and that the termination of the contract by the primary contractor occurred without the fault or negligence
of petitioner and defendant CCI, nor were they responsible for force majeure under the contract.

On the other hand, defendant CCI, in its Answer,12 specifically denied the Sub-Contract Agreement for lack of
knowledge, claiming that it was not a party to the contract and that G.W. Love was not an employee nor authorized
to act for and in behalf of CCI; and that the Commercial Kully Court of Kuwait did not acquire jurisdiction over it and
the arbitral award was contrary to public policy.

After trial, the RTC rendered its Decision13 dated July 31, 1995, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, this Court finds the petition of plaintiff AL RABIAH Company to be well-
taken, and judgment is hereby rendered finding defendants Landoil Resources Corporation and Construction
Consortium solidarily liable to plaintiff Al Rabiah Lighting Company in the sum indicated in Arbitral Award with legal
interest thereon from July 1984 (Certification of Non-occurrence of Appeal) until payment is made. Defendants are
likewise ordered to pay to plaintiff the sum of ₱250,000.00 as attorney’s fees and ₱100,000.00 as exemplary
damages.

SO ORDERED.14

In resolving the main issue of whether the RTC can validly set aside the foreign arbitral award rendered against
petitioner and defendant CCI on the bases of the defenses raised in the parties’ respective Answers, the RTC ruled
in the negative. The RTC found that petitioner and CCI were estopped from claiming that they were not parties to
the Sub-Contract Agreement. Petitioner's Answer alleged that it admitted the existence of the sub-contract
agreement, although claimed that "it has no knowledge as to its genuineness and due execution"; that such lack of
knowledge was belied or negated by petitioner's own allegations in its Answer acknowledging indebtedness to
respondent. The RTC found that petitioner's letter dated September 12, 1982 to respondent confirmed that it owed
respondent the sum of KD 21,930,317 and anticipated that payment would be made in early October 1982, together
with the other due accounts. This letter was submitted as respondent's Exhibit "C" and the RTC noted that this letter
was among the documents submitted by respondent to the foreign arbitrator in support of its claim against petitioner
and CCI.

The RTC said that while it appeared in the Sub-Contract Agreement that the contracting parties were CCI and
respondent, however, in paragraph VIII thereof, petitioner Landoil appeared together with CCI as the First Party to
whom notices shall be sent. The RTC then concluded that the inclusion of petitioner as first party to whom the
notices shall be sent and the conduct exhibited by petitioner led to the inevitable conclusion that the two defendants,
petitioner and CCI, were the parties with whom respondent entered into the sub-contract agreement; and that this
conclusion was even strengthened by the fact that as between the two defendants, petitioner and CCI, there existed
a "pooling agreement" for undertaking projects abroad pursuant to Presidential Decree (PD) 929. Since petitioner
and CCI were the parties with whom respondent contracted, they were bound by the terms of the agreement,
including the referral of their dispute to arbitration in accordance with the Rules and Regulations of the State of
Kuwait.

Dissatisfied, petitioner appealed the RTC Decision to the CA. After the submission of the parties' respective briefs,
the case was submitted for resolution.

On August 14, 2003, the CA issued its assailed Decision which dismissed the appeal and affirmed the RTC
decision.

The CA ruled, among others, that petitioner was already estopped from claiming that it was not a party to the Sub-
Contract Agreement as the agreement itself mentioned petitioner Landoil as one of the contracting parties and that
petitioner had made representations in the past, binding itself for the overdue accounts in favor of respondent.

Petitioner's motion for reconsideration was denied in a Resolution dated August 29, 2006.
Hence, this petition wherein petitioner raises the following issues:

(a) whether a Philippine Court, in enforcing a foreign judgment that has become final and executory, has the
jurisdiction to alter, amend or expand such final foreign judgment;

(b) Whether a foreign judgment may be enforced against a party other than the party decreed and held liable
therein; and

(c) Whether Estoppel was properly appreciated in this case.15

Petitioner contends that as appearing in the dispositive portion of the foreign arbitral award, there is only one
defendant adjudged liable to respondent, i.e., Land Oil Resources Company (Construction Consortium
Incorporation); thus, the party against whom the Writ of Execution may be directed. Petitioner claims that it is not the
same as Land Oil Resources Company (Construction Consortium Incorporation) as its Articles of Incorporation does
not indicate any such appellation; that it was not a party to the proceedings before the foreign arbitrator as it is a
different entity. Thus, enforcing an award against a non-party such as petitioner would be executing on properties
owned by a third person other than the judgment debtor; and that to allow the same would amount to a deprivation
of property without due process of law. Petitioner avers that the RTC and the CA erred and committed grave abuse
of discretion in amending and modifying the foreign arbitral award so as to include petitioner which is a corporation
different from the entity adjudged liable in the foreign arbitral award.

We are not convinced.

As correctly found by the CA, petitioner’s argument that the party adjudged liable under the foreign arbitral award
was a different entity from it was only raised for the first time in petitioner's motion for reconsideration filed with it;
thus, could not be entertained. We quote with approval what the CA said when it denied petitioner’s motion for
reconsideration in this wise:

The defendant mainly argues that it was never a party to the subcontract agreement. We find its argument meritless,
because it is now too late for the defendant to claim that the party adjudged liable under the foreign arbitral award
was a different entity. Moreover, we note that this is the first time that the defendant raises such defense. It is settled
in jurisprudence that an issue cannot be raised for the first time on appeal. With more reason should we disallow
and disregard the issue if it is initially raised in a motion for reconsideration of the decision of the appellate court.

From the outset of the case, the defendant's stance has always been to deny any participation in the sub-contract
agreement between Construction Consortium Inc. and the plaintiff and, in the alternative, to bewail the failure of the
arbitral award to spell out the factual distinctions between its liability and that of the Construction Consortium Inc. for
they were separate and distinct entities. Thus, this is the first time that it asserts that it was not the defendant in the
case before the Commercial Kully Court of the State of Kuwait. The defendant thus asserts the existence of a third
corporation against whom the arbitral award was supposedly rendered, Landoil Resources Company (Construction
Consortium Incorporated). Not only is the Court precluded from entertaining such first-time issue but we also frown
upon the apparent self-contradiction. We note that the defendant had, in the course of this case, repeatedly affirmed
that it was the same party as the defendant against whom the foreign judgment had been rendered. In its Answer to
the Complaint, it stated that:

12. The award directs the Landoil to pay and makes Construction Consortium Incorporated liable. x x x

Likewise, in its appeal brief, it also acknowledged being the defendant against whom the arbitral award was being
enforced, thuswise:

x x x the foreign judgment subject of the case before the court a quo is an arbitral award rendered by the
Commercial Kully Court of the State of Kuwait on April 14, 1984, compelling defendant CCI and defendant appellant
to pay the sum of KD 108,368.860 in settlement of the contract allegedly concluded between them and plaintiff-
appellee, which included a 10% contractual interest until the time of said award.16

Indeed, petitioner had never claimed in the RTC that it was not the party referred to in the foreign arbitral award. On
the contrary, petitioner's Answer with Counterclaim filed in the RTC even established its knowledge and participation
in the Sub-Contract Agreement. Under the heading of Special and Affirmative Defenses, petitioner alleged, among
others that:

6. plaintiff's claims have been paid, set-off, or extinguished.

xxxx

14. That under the Sub-Contract, Annex "A" of the complaint, it is provided as follows:

14.1 FIRST PARTY agrees to pay SECOND PARTY at monthly intervals based on actual monthly progress
accomplishment, plus 50% on material on Site less 5% retention and less advance payments, to be paid within 15
days of FIRST PARTY'S receipt from Client subject to any changes imposed by the Client in approving the monthly
Valuation Certificate. Details of any such modifications will be available to the Sub-Contractor insofar as they affect
his previously agreed valuation amount.

Defendant has not been paid by its principal contractor the payment/value of the corresponding accomplishments
done by plaintiff and that, therefore, plaintiff's cause of action against answering defendant has not accrued;

15. That in any event, the alleged claim was discharged on September 12, 1983 by assignment to plaintiff in the full
amount of the true and actual measure and valuation calculated upon termination of the contract by the Primary
Contractor;

16. In any event, the termination of the contract of the primary contractor occurred without the fault or negligence of
the defendants; neither was it responsible for the force majeure under the terms of the contract."17

Moreover, in petitioner's Memorandum of Authorities on the Invalidity and Unenforceability of the Foreign
Judgment18 filed with the RTC, it again made admission that it was the party referred to in the foreign arbitral award,
thus:

xxxx

Likewise, the foreign arbitral award rendered judgment against both defendants by placing the name of defendant
LANDOIL RESOURCES COMPANY (sic corporation) and thereafter enclosed in parenthesis the name of the other
defendant Construction Consortium, Inc. without however specifying the specific liabilities of either of the
defendants. Being corporations, defendants have legal personalities separate and distinct from each other and as
such must be taken distinctly and separately from one another x x x19

Section 4, Rule 129 of the Rules of Court provides:

Sec. 4. Judicial admissions. – An admission, verbal or written, made by a party in the course of the proceedings in
the same case, does not require proof. The admission may be contradicted only by showing that it was made
through palpable mistake or that no such admission was made.

A party may make judicial admissions in (a) the pleadings; (b) during the trial, either by verbal or written
manifestations or stipulations; or (c) in other stages of the judicial proceeding.20 It is well-settled that judicial
admissions cannot be contradicted by the admitter who is the party himself21 and binds the person who makes the
same, and absent any showing that this was made thru palpable mistake, no amount of rationalization can offset it.22

Finally, we find no reversible error committed by the CA in affirming the RTC decision finding petitioner estopped
from denying its participation and liability under the Sub-Contract Agreement and the enforcement of the foreign
arbitral award against it. We find apropos what the CA said in this wise:

Defendant-appellant cannot deny its participation in the Subcontract. The agreement itself mentioned Landoil as
one of the contracting parties. Specifically, a perusal of the Subcontract Agreement reveals in Article 8, Section 1
thereof that:
8.1 All notices to a party hereto shall be sent as follows:
lawphil

FIRST PARTY: LANDOIL RESOURCES CORPORATION

CONSTRUCTION CONSORTIUM INCORPORATED
P.O. Box 49393
Omariyah,
Kuwait
For the attention
of Or delivered
To: K.O.C. Project Manager
Project Office of Ahmadi
SECONDARY PARTY: AL RABIAH LIGHTING COMPANY W.L.I.
P.O. Box 22015
Sarat
Kuwait
For the attention
of Or delivered
To: Mr. Said Y. Al Imam

Further, it is of record that on September 12, 1982, Landoil, thru its Regional Marketing Director Robert J. Brown,
wrote to plaintiff Al Rabiah confirming that Landoil owes Al Rabiah the sum of KD21,930.317 and that said sum was
due on August 22, 1982. It was further acknowledged in said letter that inasmuch as the sum cannot be paid
immediately, an interest at the rate of 12% on the overdue amount shall be paid until the principal amount can be
satisfied. Landoil signified that it expected to pay such amount by October 1982 together with other due accounts.
This letter is part of the evidence on record and was not refuted by defendant-appellant Landoil.

The foregoing persuades this Court of Landoil’s participation in the Subcontract Agreement. It is apparent that
Landoil is named as a first party to the subject Agreement and it represented itself as an obligor in the September
12, 1982 letter acknowledging overdue accounts in favor of Al Rabiah.

Moreover, notwithstanding its denial, defendant-appellant did allege in Paragraph 14 of its Answer to the Complaint
a quo that:

14. x x x x

Defendant had not been paid by its principal contractor the payment/value of the corresponding accomplishments
done by plaintiff and that therefore, plaintiff’s cause of action against answering defendant has not accrued. (RTC
Records, p. 43)

Such statement impliedly admits defendant-appellant’s liability under the Subcontract Agreement, but raises as a
special defense that plaintiff-appellee’s action is allegedly premature, as Landoil itself had not received any payment
from its principal contractor.

Thus, Landoil’s argument, that it is a distinct corporation from CCI and cannot be accountable for breaches made by
such other corporation, must fail. We find that Landoil itself is a party to the Subcontract Agreement and has made
representations in the past binding itself to Al Rabiah for overdue accounts in favor of the latter. Under the doctrine
of estoppels, an admission or representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereof. (Ayala Corporation v. Ray Burton Development
Corporation, 294 SCRA 48).23

Petitioner is indeed barred from adopting an inconsistent position, attitude, or course of conduct that would cause
loss or injury to respondent.24
WHEREFORE, the petition for review is DENIED. The Decision dated August 14, 2003 and the Resolution dated
August 29, 2006 of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.

LANDOIL RESOURCES CORPORATION vs AL RABIAH LIGHTING COMPANY

G.R. No. 174720

Respondent Al Rabiah Lighting Company (Al Rabiah) is a foreign corporation existing under the laws of Kuwait. Defendant Construction
Consortium, Inc. (CCI) and petitioner Landoil Resources Corporation (Landoil) are both domestic corporations organized under the
Philippines Laws.

CCI and respondent Al Rabiah entered into a Sub-Contract Agreement [3]wherein respondent was assigned to carry out the electrical works of
Kuwait Oil Company's New Industrial Training Centre project in Ahmadi.

As petitioner failed to pay respondent any part of the amount due, together with the contractual interest of 12%, the latter referred their
dispute to the Commercial Kully Court of Kuwait for arbitration as provided under the Sub-Contract Agreement. The parties were duly
notified of the scheduled sessions of arbitration, but only respondent and its counsel appeared there

Arbitrator rendered its award as follows:

 
The court decides that Land Oil Resources Company (Construction Consortium Incorporation) is indebted to [Al] Rabiah
Lighting Company by KD 108,368.860 and that it is compelled to pay this sum in settlement of the account of the contract
concluded between them on 20th December, 1981. The said sum includes also the contractual interest until the date of
issue of this Award

Respondent then filed with the Regional Trial Court (RTC) of Makati, an action [10] for Enforcement of Foreign Judgment Plus Damages against
defendant CCI and petitioner

RTC rendered its Decision[13] dated July 31, 1995, the dispositive portion of which reads:
 
WHEREFORE, in view of the foregoing, this Court finds the petition of plaintiff AL RABIAH Company to be well-taken, and judgment
is hereby rendered finding defendants Landoil Resources Corporation and Construction Consortium solidarily liable to
plaintiff Al Rabiah Lighting Company in the sum indicated in Arbitral Award with legal interest 

Petitioner contends that as appearing in the dispositive portion of the foreign arbitral award, there is only one defendant adjudged liable to
respondent, i.e., Land Oil Resources Company (Construction Consortium Incorporation); thus, the party against whom the Writ of Execution
may be directed. Petitioner claims that it is not the same as Land Oil Resources Company (Construction Consortium Incorporation) as its
Articles of Incorporation does not indicate any such appellation; that it was not a party to the proceedings before the foreign arbitrator as it
is a different entity. Thus, enforcing an award against a non-party such as petitioner would be executing on properties owned by a third
person other than the judgment debtor; and that to allow the same would amount to a deprivation of property without due process of
law. Petitioner avers that the RTC and the CA erred and committed grave abuse of discretion in amending and modifying the foreign arbitral
award so as to include petitioner which is a corporation different from the entity adjudged liable in the foreign arbitral award.
 
ISSUE: Whether a foreign judgment may be enforced against a party other than the party decreed and held liable therein? YES
HELD: As correctly found by the CA, petitioners argument that the party adjudged liable under the foreign arbitral award was a different
entity from it was only raised for the first time in petitioner's motion for reconsideration filed with it; thus, could not be entertained. We
quote with approval what the CA said when it denied petitioners motion for reconsideration in this wise:

 
The defendant mainly argues that it was never a party to the subcontract agreement. We find its argument meritless,
because it is now too late for the defendant to claim that the party adjudged liable under the foreign arbitral award was a
 different entity. Moreover, we note that this is the first time that the defendant raises such defense. It is settled in
jurisprudence that an issue cannot be raised for the first time on appeal. With more reason should we disallow and
disregard the issue if it is initially raised in a motion for reconsideration of the decision of the appellate court.
 
From the outset of the case, the defendant's stance has always been to deny any participation in the sub-contract
agreement between Construction Consortium Inc. and the plaintiff and, in the alternative, to bewail the failure of the
arbitral award to spell out the factual distinctions between its liability and that of the Construction Consortium Inc. for
they were separate and distinct entities. Thus, this is the first time that it asserts that it was not the defendant in the case
before the Commercial Kully Court of the State of Kuwait. The defendant thus asserts the existence of a third corporation
against whom the arbitral award was supposedly rendered, Landoil Resources Company (Construction Consortium
Incorporated). Not only is the Court precluded from entertaining such first-time issue but we also frown upon the
apparent self-contradiction. We note that the defendant had, in the course of this case, repeatedly affirmed that it was the
same party as the defendant against whom the foreign judgment had been rendered. In its Answer to the Complaint, it
stated that:
 
12. The award directs the Landoil to pay and makes Construction Consortium Incorporated liable. x x x
 
Likewise, in its appeal brief, it also acknowledged being the defendant against whom the arbitral award was being
enforced, thuswise:
 
x x x the foreign judgment subject of the case before the court a quo is an arbitral award rendered by
the Commercial Kully Court of the State of Kuwait on April 14, 1984, compelling defendant CCI and
defendant appellant to pay the sum of KD 108,368.860 in settlement of the contract allegedly
concluded between them and plaintiff-appellee, which included a 10% contractual interest until the
time of said award.[16]
Indeed, petitioner had never claimed in the RTC that it was not the  party referred to in the foreign arbitral award. On the contrary,
petitioner's Answer with Counterclaim filed in the RTC even established its knowledge and participation in the Sub-Contract
Agreement

Moreover, in petitioner's Memorandum of Authorities on the Invalidity and Unenforceability of the Foreign Judgment filed with the RTC, it
again made admission that it was the party referred to in the foreign arbitral award. Under the heading of Special and Affirmative Defenses.

A party may make judicial admissions in (a) the pleadings; (b) during the trial, either by verbal or written manifestations or stipulations; or
(c) in other stages of the judicial proceeding. [20] It is well-settled that judicial admissions cannot be contradicted by the admitter who is the
party himself[21] and binds the person who makes the same, and absent any showing that this was made thru palpable mistake, no amount of
rationalization can offset it

G.R. No. 114323 July 23, 1998

OIL AND NATURAL GAS COMMISSION, petitioner,

vs.

COURT OF APPEALS and PACIFIC CEMENT COMPANY, INC., respondents.

MARTINEZ, J.:

This proceeding involves the enforcement of a foreign judgment rendered by the Civil Judge of Dehra Dun, India in
favor of the petitioner, OIL AND NATURAL GAS COMMISSION and against the private respondent, PACIFIC
CEMENT COMPANY, INCORPORATED.
The petitioner is a foreign corporation owned and controlled by the Government of India while the private
respondent is a private corporation duly organized and existing under the laws of the Philippines. The present
conflict between the petitioner and the private respondent has its roots in a contract entered into by and between
both parties on February 26, 1983 whereby the private respondent undertook to supply the petitioner FOUR
THOUSAND THREE HUNDRED (4,300) metric tons of oil well cement. In consideration therefor, the petitioner
bound itself to pay the private respondent the amount of FOUR HUNDRED SEVENTY-SEVEN THOUSAND THREE
HUNDRED U.S. DOLLARS ($477,300.00) by opening an irrevocable, divisible, and confirmed letter of credit in favor
of the latter. The oil well cement was loaded on board the ship MV SURUTANA NAVA at the port of Surigao City,
Philippines for delivery at Bombay and Calcutta, India. However, due to a dispute between the shipowner and the
private respondent, the cargo was held up in Bangkok and did not reach its point destination. Notwithstanding the
fact that the private respondent had already received payment and despite several demands made by the petitioner,
the private respondent failed to deliver the oil well cement. Thereafter, negotiations ensued between the parties and
they agreed that the private respondent will replace the entire 4,300 metric tons of oil well cement with Class "G"
cement cost free at the petitioner's designated port. However, upon inspection, the Class "G" cement did not
conform to the petitioner's specifications. The petitioner then informed the private respondent that it was referring its
claim to an arbitrator pursuant to Clause 16 of their contract which stipulates:

Except where otherwise provided in the supply order/contract all questions and disputes, relating to
the meaning of the specification designs, drawings and instructions herein before mentioned and as
to quality of workmanship of the items ordered or as to any other question, claim, right or thing
whatsoever, in any way arising out of or relating to the supply order/contract design, drawing,
specification, instruction or these conditions or otherwise concerning the materials or the execution
or failure to execute the same during stipulated/extended period or after the
completion/abandonment thereof shall be referred to the sole arbitration of the persons appointed by
Member of the Commission at the time of dispute. It will be no objection to any such appointment
that the arbitrator so appointed is a Commission employer (sic) that he had to deal with the matter to
which the supply or contract relates and that in the course of his duties as Commission's employee
he had expressed views on all or any of the matter in dispute or difference.

The arbitrator to whom the matter is originally referred being transferred or vacating his office or
being unable to act for any reason the Member of the Commission shall appoint another person to
act as arbitrator in accordance with the terms of the contract/supply order. Such person shall be
entitled to proceed with reference from the stage at which it was left by his predecessor. Subject as
aforesaid the provisions of the Arbitration Act, 1940, or any Statutory modification or re-enactment
there of and the rules made there under and for the time being in force shall apply to the arbitration
proceedings under this clause.

The arbitrator may with the consent of parties enlarge the time, from time to time, to make and
publish the award.

The venue for arbitration shall be at Dehra dun.  *

1

On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in petitioner's favor setting
forth the arbitral award as follows:

NOW THEREFORE after considering all facts of the case, the evidence, oral and documentarys
adduced by the claimant and carefully examining the various written statements, submissions,
letters, telexes, etc. sent by the respondent, and the oral arguments addressed by the counsel for
the claimants, I, N.N. Malhotra, Sole Arbitrator, appointed under clause 16 of the supply order dated
26.2.1983, according to which the parties, i.e. M/S Oil and Natural Gas Commission and the Pacific
Cement Co., Inc. can refer the dispute to the sole arbitration under the provision of the Arbitration
Act. 1940, do hereby award and direct as follows: —

The Respondent will pay the following to the claimant: —

1. Amount received by the Respondent

against the letter of credit No. 11/19

 dated 28.2.1983 US $ 477,300.00

2. Re-imbursement of expenditure incurred

by the claimant on the inspection team's

visit to Philippines in August 1985 US $ 3,881.00

3. L.C. Establishment charges incurred

by the claimant US $ 1,252.82

4. Loss of interest suffered by claimant

from 21.6.83 to 23.7.88 US $ 417,169.95

Total amount of award US $ 899,603.77

In addition to the above, the respondent would also be liable to pay to the claimant the interest at the
rate of 6% on the above amount, with effect from 24.7.1988 up to the actual date of payment by the
Respondent in full settlement of the claim as awarded or the date of the decree, whichever is earlier.

I determine the cost at Rs. 70,000/- equivalent to US $5,000 towards the expenses on Arbitration,
legal expenses, stamps duly incurred by the claimant. The cost will be shared by the parties in equal
proportion.

Pronounced at Dehra Dun to-day, the 23rd of July 1988.  2

To enable the petitioner to execute the above award in its favor, it filed a Petition before the Court of the Civil
Judge in Dehra Dun. India (hereinafter referred to as the foreign court for brevity), praying that the decision
of the arbitrator be made "the Rule of Court" in India. The foreign court issued notices to the private
respondent for filing objections to the petition. The private respondent complied and sent its objections dated
January 16, 1989. Subsequently, the said court directed the private respondent to pay the filing fees in order
that the latter's objections could be given consideration. Instead of paying the required filing fees, the private
respondent sent the following communication addressed to the Civil judge of Dehra Dun:

The Civil Judge

Dehra Dun (U.P.) India

Re: Misc. Case No. 5 of 1989

M/S Pacific Cement Co.,

Inc. vs. ONGC Case

Sir:

1. We received your letter dated 28 April 1989 only last 18 May 1989.

2. Please inform us how much is the court fee to be paid. Your letter
did not mention the amount to be paid.

3. Kindly give us 15 days from receipt of your letter advising us how

much to pay to comply with the same.
 Thank you for your kind consideration.

Pacific Cement Co., Inc.

By:

Jose Cortes, Jr.

President 3

Without responding to the above communication, the foreign court refused to admit the private respondent's
objections for failure to pay the required filing fees, and thereafter issued an Order on February 7, 1990, to wit:

ORDER

Since objections filed by defendant have been rejected through Misc. Suit No. 5 on 7.2.90, therefore,
award should be made Rule of the Court.

ORDER

Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis of conditions of
award decree is passed. Award Paper No. 3/B-1 shall be a part of the decree. The plaintiff shall also
be entitled to get from defendant (US$ 899,603.77 (US$ Eight Lakhs ninety nine thousand six
hundred and three point seventy seven only) along with 9% interest per annum till the last date of
realisation.  4

Despite notice sent to the private respondent of the foregoing order and several demands by the petitioner for
compliance therewith, the private respondent refused to pay the amount adjudged by the foreign court as owing to
the petitioner. Accordingly, the petitioner filed a complaint with Branch 30 of the Regional Trial Court (RTC) of
Surigao City for the enforcement of the aforementioned judgment of the foreign court. The private respondent
moved to dismiss the complaint on the following grounds: (1) plaintiffs lack of legal capacity to sue; (2) lack of cause
of action; and (3) plaintiffs claim or demand has been waived, abandoned, or otherwise extinguished. The petitioner
filed its opposition to the said motion to dismiss, and the private respondent, its rejoinder thereto. On January 3,
1992, the RTC issued an order upholding the petitioner's legal capacity to sue, albeit dismissing the complaint for
lack of a valid cause of action. The RTC held that the rule prohibiting foreign corporations transacting business in
the Philippines without a license from maintaining a suit in Philippine courts admits of an exception, that is, when the
foreign corporation is suing on an isolated transaction as in this case.   Anent the issue of the sufficiency of the
5

petitioner's cause of action, however, the RTC found the referral of the dispute between the parties to the arbitrator
under Clause 16 of their contract erroneous. According to the RTC,

[a] perusal of the shove-quoted clause (Clause 16) readily shows that the matter covered by its
terms is limited to "ALL QUESTIONS AND DISPUTES, RELATING TO THE MEANING OF THE
SPECIFICATION, DESIGNS, DRAWINGS AND INSTRUCTIONS HEREIN BEFORE MENTIONED
and as to the QUALITY OF WORKMANSHIP OF THE ITEMS ORDERED or as to any other
questions, claim, right or thing whatsoever, but qualified to "IN ANY WAY ARISING OR RELATING
TO THE SUPPLY ORDER/CONTRACT, DESIGN, DRAWING, SPECIFICATION, etc.," repeating the
enumeration in the opening sentence of the clause.

The court is inclined to go along with the observation of the defendant that the breach, consisting of
the non-delivery of the purchased materials, should have been properly litigated before a court of
law, pursuant to Clause No. 15 of the Contract/Supply Order, herein quoted, to wit:

"JURISDICTION

All questions, disputes and differences, arising under out of or in connection with this
supply order, shall be subject to the EXCLUSIVE JURISDICTION OF THE COURT,
 within the local limits of whose jurisdiction and the place from which this supply order
is situated."6

The RTC characterized the erroneous submission of the dispute to the arbitrator as a "mistake of law or fact
amounting to want of jurisdiction". 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. 7

The petitioner then appealed to the respondent Court of Appeals which affirmed the dismissal of the complaint. In its
decision, the appellate court concurred with the RTC's ruling that the arbitrator did not have jurisdiction over the
dispute between the parties, thus, the foreign court could not validly adopt the arbitrator's award. In addition, the
appellate court observed 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.   The appellate court ruled
8

further that the dismissal of the private respondent's objections for non-payment of the required legal fees, without
the foreign court first replying to the private respondent's query as to the amount of legal fees to be paid, constituted
want of notice or violation of due process. Lastly, it pointed out that the arbitration proceeding was defective
because the arbitrator was appointed solely by the petitioner, and the fact that the arbitrator was a former employee
of the latter gives rise to a presumed bias on his part in favor of the petitioner. 
9

A subsequent motion for reconsideration by the petitioner of the appellate court's decision was denied, thus, this
petition for review on certiorari citing the following as grounds in support thereof:

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE LOWER COURT'S

ORDER OF DISMISSAL SINCE:

A. THE NON-DELIVERY OF THE CARGO WAS A MATTER PROPERLY COGNIZABLE BY THE

PROVISIONS OF CLAUSE 16 OF THE CONTRACT;

B. THE JUDGMENT OF THE CIVIL COURT OF DEHRADUN, INDIA WAS AN AFFIRMATION OF

THE FACTUAL AND LEGAL FINDINGS OF THE ARBITRATOR AND THEREFORE
ENFORCEABLE IN THIS JURISDICTION;

C. EVIDENCE MUST BE RECEIVED TO REPEL THE EFFECT OF A PRESUMPTIVE RIGHT

UNDER A FOREIGN JUDGMENT.  10

The threshold issue is whether or not the arbitrator had jurisdiction over the dispute between the petitioner and the
private respondent under Clause 16 of the contract. To reiterate, Clause 16 provides as follows:

Except where otherwise provided in the supply order/contract all questions and disputes, relating to
the meaning of the specification designs, drawings and instructions herein before mentioned and as
to quality of workmanship of the items ordered or as to any other question, claim, right or thing
whatsoever, in any way arising out of or relating to the supply order/contract design, drawing,
specification, instruction or these conditions or otherwise concerning the materials or the execution
or failure to execute the same during stipulated/extended period or after the
completion/abandonment thereof shall be referred to the sole arbitration of the persons appointed by
Member of the Commission at the time of dispute. It will be no objection to any such appointment
that the arbitrator so appointed is a Commission employer (sic) that he had to deal with the matter to
which the supply or contract relates and that in the course of his duties as Commission's employee
he had expressed views on all or any of the matter in dispute or difference.  11

The dispute between the parties had its origin in the non-delivery of the 4,300 metric tons of oil well cement to the
petitioner. The primary question that may be posed, therefore, is whether or not the non-delivery of the said cargo is
a proper subject for arbitration under the above-quoted Clause 16. The petitioner contends that the same was a
matter within the purview of Clause 16, particularly the phrase, ". . . or as to any other questions, claim, right or thing
whatsoever, in any way arising or relating to the supply order/contract, design, drawing, specification,
instruction . . .".   It is argued that the foregoing phrase allows considerable latitude so as to include non-delivery of
12

the cargo which was a "claim, right or thing relating to the supply order/contract". The contention is bereft of merit.
First of all, the petitioner has misquoted the said phrase, shrewdly inserting a comma between the words "supply
order/contract" and "design" where none actually exists. An accurate reproduction of the phrase reads, ". . . or as to
any other question, claim, right or thing whatsoever, in any way arising out of or relating to the supply order/contract
design, drawing, specification, instruction or these conditions . . .". The absence of a comma between the words
"supply order/contract" and "design" indicates that the former cannot be taken separately but should be viewed in
conjunction with the words "design, drawing, specification, instruction or these conditions". It is thus clear that to fall
within the purview of this phrase, the "claim, right or thing whatsoever" must arise out of or relate to the design,
drawing, specification, or instruction of the supply order/contract. The petitioner also insists that the non-delivery of
the cargo is not only covered by the foregoing phrase but also by the phrase, ". . . or otherwise concerning the
materials or the execution or failure to execute the same during the stipulated/extended period or after
completion/abandonment thereof . . .".

The doctrine of noscitur a sociis, although a rule in the construction of statutes, is equally applicable in the
ascertainment of the meaning and scope of vague contractual stipulations, such as the aforementioned phrase.
According to the maxim noscitur a sociis, where a particular word or phrase is ambiguous in itself or is equally
susceptible of various meanings, its correct construction may be made clear and specific by considering the
company of the words in which it is found or with which it is associated, or stated differently, its obscurity or doubt
may be reviewed by reference to associated words.   A close examination of Clause 16 reveals that it covers three
13

matters which may be submitted to arbitration namely,

(1) all questions and disputes, relating to the meaning of the specification designs, drawings and instructions herein
before mentioned and as to quality of workmanship of the items ordered; or

(2) any other question, claim, right or thing whatsoever, in any way arising out of or relating to the supply
order/contract design, drawing, specification, instruction or these conditions; or

(3) otherwise concerning the materials or the execution or failure to execute the same during stipulated/extended
period or after the completion/abandonment thereof.

The first and second categories unmistakably refer to questions and disputes relating to the design, drawing,
instructions, specifications or quality of the materials of the supply/order contract. In the third category, the clause,
"execution or failure to execute the same", may be read as "execution or failure to execute the supply
order/contract". But in accordance with the doctrine of noscitur a sociis, this reference to the supply order/contract
must be construed in the light of the preceding words with which it is associated, meaning to say, as being limited
only to the design, drawing, instructions, specifications or quality of the materials of the supply order/contract. The
non-delivery of the oil well cement is definitely not in the nature of a dispute arising from the failure to execute the
supply order/contract design, drawing, instructions, specifications or quality of the materials. That Clause 16 should
pertain only to matters involving the technical aspects of the contract is but a logical inference considering that the
underlying purpose of a referral to arbitration is for such technical matters to be deliberated upon by a person
possessed with the required skill and expertise which may be otherwise absent in the regular courts.

This Court agrees with the appellate court in its ruling that the non-delivery of the oil well cement is a matter properly
cognizable by the regular courts as stipulated by the parties in Clause 15 of their contract:

All questions, disputes and differences, arising under out of or in connection with this supply order,
shall be subject to the exclusive jurisdiction of the court, within the local limits of whose jurisdiction
and the place from which this supply order is situated.  14

The following fundamental principles in the interpretation of contracts and other instruments served as our
guide in arriving at the foregoing conclusion:

Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be
understood as bearing that import which is most adequate to render it effectual.  15
 Art. 1374. The various stipulations of a contract shall be interpreted together, attributing the doubtful
ones that sense which may result from all of them taken jointly.  16

Sec. 11. Instrument construed so as to give effect to all provisions. In the construction of an

instrument, where there are several provisions or particulars, such a construction is, if possible, to be
adopted as will give effect to all. 
17

Thus, this Court has held that as in statutes, the provisions of a contract should not be read in isolation from the rest
of the instrument but, on the contrary, interpreted in the light of the other related provisions.   The whole and every
18

part of a contract must be considered in fixing the meaning of any of its harmonious whole. Equally applicable is the
canon of construction that in interpreting a statute (or a contract as in this case), care should be taken that every
part thereof be given effect, on the theory that it was enacted as an integrated measure and not as a hodge-podge
of conflicting provisions. The rule is that a construction that would render a provision inoperative should be avoided;
instead, apparently inconsistent provisions should be reconciled whenever possible as parts of a coordinated and
harmonious whole.  19

The petitioner's interpretation that Clause 16 is of such latitude as to contemplate even the non-delivery of the oil
well cement would in effect render Clause 15 a mere superfluity. A perusal of Clause 16 shows that the parties did
not intend arbitration to be the sole means of settling disputes. This is manifest from Clause 16 itself which is
prefixed with the proviso, "Except where otherwise provided in the supply order/contract . . .", thus indicating that the
jurisdiction of the arbitrator is not all encompassing, and admits of exceptions as may be provided elsewhere in the
supply order/contract. We believe that the correct interpretation to give effect to both stipulations in the contract is
for Clause 16 to be confined to all claims or disputes arising from or relating to the design, drawing, instructions,
specifications or quality of the materials of the supply order/contract, and for Clause 15 to cover all other claims or
disputes.

The petitioner then asseverates that granting, for the sake of argument, that the non-delivery of the oil well cement
is not a proper subject for arbitration, the failure of the replacement cement to conform to the specifications of the
contract is a matter clearly falling within the ambit of Clause 16. In this contention, we find merit. When the 4,300
metric tons of oil well cement were not delivered to the petitioner, an agreement was forged between the latter and
the private respondent that Class "G" cement would be delivered to the petitioner as replacement. Upon inspection,
however, the replacement cement was rejected as it did not conform to the specifications of the contract. Only after
this latter circumstance was the matter brought before the arbitrator. Undoubtedly, what was referred to arbitration
was no longer the mere non-delivery of the cargo at the first instance but also the failure of the replacement cargo to
conform to the specifications of the contract, a matter clearly within the coverage of Clause 16.

The private respondent posits that it was under no legal obligation to make replacement and that it undertook the
latter only "in the spirit of liberality and to foster good business relationship".   Hence, the undertaking to deliver the
20

replacement cement and its subsequent failure to conform to specifications are not anymore subject of the supply
order/contract or any of the provisions thereof. We disagree.

As per Clause 7 of the supply order/contract, the private respondent undertook to deliver the 4,300 metric tons of oil
well cement at "BOMBAY (INDIA) 2181 MT and CALCUTTA 2119 MT".   The failure of the private respondent to
21

deliver the cargo to the designated places remains undisputed. Likewise, the fact that the petitioner had already
paid for the cost of the cement is not contested by the private respondent. The private respondent claims, however,
that it never benefited from the transaction as it was not able to recover the cargo that was unloaded at the port of
Bangkok.   First of all, whether or not the private respondent was able to recover the cargo is immaterial to its
22

subsisting duty to make good its promise to deliver the cargo at the stipulated place of delivery. Secondly, we find it
difficult to believe this representation. In its Memorandum filed before this Court, the private respondent asserted
that the Civil Court of Bangkok had already ruled that the non-delivery of the cargo was due solely to the fault of the
carrier.   It is, therefore, but logical to assume that the necessary consequence of this finding is the eventual
23

recovery by the private respondent of the cargo or the value thereof. What inspires credulity is not that the
replacement was done in the spirit of liberality but that it was undertaken precisely because of the private
respondent's recognition of its duty to do so under the supply order/contract, Clause 16 of which remains in force
and effect until the full execution thereof.
We now go to the issue of 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. The pertinent portion of the judgment of the foreign court reads:

ORDER

Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis of conditions of
award decree is passed. Award Paper No. 3/B-1 shall be a part of the decree. The plaintiff shall also
be entitled to get from defendant (US$ 899,603.77 (US$ Eight Lakhs ninety nine thousand six
hundred and three point seventy seven only) along with 9% interest per annum till the last date of
realisation.  24

As specified in the order of the Civil Judge of Dehra Dun, "Award Paper No. 3/B-1 shall be a part of the decree".
This is a categorical declaration that the foreign court adopted the findings of facts and law of the arbitrator as
contained in the latter's Award Paper. Award Paper No. 3/B-1, contains an exhaustive discussion of the respective
claims and defenses of the parties, and the arbitrator's evaluation of the same. Inasmuch as the foregoing is
deemed to have been incorporated into the foreign court's judgment the appellate court was in error when it
described the latter to be a "simplistic decision containing literally, only the dispositive portion". 
25

The constitutional mandate that no decision shall be rendered by any court without expressing therein dearly and
distinctly the facts and the law on which it is based does not preclude the validity of "memorandum decisions" which
adopt by reference the findings of fact and conclusions of law contained in the decisions of inferior tribunals.
In Francisco v. Permskul,   this Court held that the following memorandum decision of the Regional Trial Court of
26

Makati did not transgress the requirements of Section 14, Article VIII of the Constitution:

MEMORANDUM DECISION

After a careful perusal, evaluation and study of the records of this case, this Court hereby adopts by
reference the findings of fact and conclusions of law contained in the decision of the Metropolitan
Trial Court of Makati, Metro Manila, Branch 63 and finds that there is no cogent reason to disturb the
same.

WHEREFORE, judgment appealed from is hereby affirmed in toto.   (Emphasis supplied.)

27

This Court had occasion to make a similar pronouncement in the earlier case of Romero v. Court of
Appeals,   where the assailed decision of the Court of Appeals adopted the findings and disposition of the
28

Court of Agrarian Relations in this wise:

We have, therefore, carefully reviewed the evidence and made a re-assessment of the same, and
We are persuaded, nay compelled, to affirm the correctness of the trial court's factual findings and
the soundness of its conclusion. For judicial convenience and expediency, therefore, We hereby
adopt by way of reference, the findings of facts and conclusions of the court a quo spread in its
decision, as integral part of this Our decision.   (Emphasis supplied)
29

Hence, 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
30

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.

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
31

governed by the lex fori or the internal law of the forum.   Thus, if under the procedural rules of the Civil Court of
32

Dehra Dun, India, a valid judgment may be rendered by adopting the arbitrator's 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.

The private respondent claims that its right to due process had been blatantly violated, first by reason of the fact that
the foreign court never answered its queries as to the amount of docket fees to be paid then refused to admit its
objections for failure to pay the same, and second, because of the presumed bias on the part of the arbitrator who
was a former employee of the petitioner.

Time and again this Court has held that the essence of due process is to be found in the reasonable opportunity to
be heard and submit any evidence one may have in support of one's defense   or stated otherwise, what is
33

repugnant to due process is the denial of opportunity to be heard.   Thus, there is no violation of due process even if
34

no hearing was conducted, where the party was given a chance to explain his side of the controversy and he waived
his right to do so. 
35

In the instant case, the private respondent does not deny the fact that it was notified by the foreign court to file its
objections to the petition, and subsequently, to pay legal fees in order for its objections to be given consideration.
Instead of paying the legal fees, however, the private respondent sent a communication to the foreign court inquiring
about the correct amount of fees to be paid. On the pretext that it was yet awaiting the foreign court's reply, almost a
year passed without the private respondent paying the legal fees. Thus, on February 2, 1990, the foreign court
rejected the objections of the private respondent and proceeded to adjudicate upon the petitioner's claims. We
cannot subscribe to the private respondent's claim that the foreign court violated its right to due process when it
failed to reply to its queries nor when the latter rejected its objections for a clearly meritorious ground. The private
respondent was afforded sufficient opportunity to be heard. It was not incumbent upon the foreign court to reply to
the private respondent's written communication. On the contrary, a genuine concern for its cause should have
prompted the private respondent to ascertain with all due diligence the correct amount of legal fees to be paid. The
private respondent did not act with prudence and diligence thus its plea that they were not accorded the right to
procedural due process cannot elicit either approval or sympathy from this Court.  36

The private respondent bewails the presumed bias on the part of the arbitrator who was a former employee of the
petitioner. This point deserves scant consideration in view of the following stipulation in the contract:

. . . . It will be no objection any such appointment that the arbitrator so appointed is a Commission
employer (sic) that he had to deal with the matter to which the supply or contract relates and that in
the course of his duties as Commission's employee he had expressed views on all or any of the
matter in dispute or difference.   (Emphasis supplied.)
37

Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines, Inc. v. Court of
Appeals   that:
38

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. 
39

Consequently, the party attacking a foreign judgment, the private respondent herein, 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 the petitioner 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.

WHEREFORE, the instant petition is GRANTED, and the assailed decision of the Court of Appeals sustaining the
trial court's dismissal of the OIL AND NATURAL GAS COMMISSION's complaint in Civil Case No. 4006 before
Branch 30 of the RTC of Surigao City is REVERSED, and another in its stead is hereby rendered ORDERING
private respondent PACIFIC CEMENT COMPANY, INC. to pay to petitioner the amounts adjudged in the foreign
judgment subject of said case.

SO ORDERED.

G.R. No.114323 July 23,1998

Oil and Natural Gas Commission vs CA

Basis of Judgement

Facts:

Petitioner is a foreign corporation owned and controlled by the government of Indi. While the respondent is a private
corporation duly organized and existing under Philippine law.

Both parties entered into a contract obligating Pacific Company to supply Oil and Natural Gas with $,300 metric tons of
oil well cement. Pacific failed to deliver the cargo to Oil and Natural Gas Commission after he receive payment and
several demands . Oil and Natural Gas won in the Arbitral case him US $899,603.77

Pacific refuse to pay the amount adjudged by the foreign court

Oil and Natural Gas then filed a complaint with the RTC of Surigao City.

The private respondent moved to dismiss the complaint on the following grounds:
o plaintiffs lack of legal capacity to sue;
o lack of cause of action; and
o plaintiffs claim or demand has been waived, abandoned, or otherwise extinguished.
RTC ruled in favor of Pacific for jurisdiction over the case

CA affirmed the RTC/s decision saying that the foreign court could not validly adopt the arbitrator’s award

Issue:

Whether or not the arbitrator has jurisdiction over the dispute between the petitioner and the private respondent under
Clause 16 under the contract.
Held:

No

Ratio:

The constitutional mandate that no decision shall be rendered by any court without expressing therein dearly and
distinctly the facts and the law on which it is based does not preclude the validity of "memorandum decisions" which
adopt by reference the findings of fact and conclusions of law contained in the decisions of inferior tribunals.

In Francisco v. Permskul, this Court held that the following memorandum decision of the Regional Trial Court of Makati
did not transgress the requirements of Section 14, Article VIII of the Constitution.

G.R. No. 141536. February 26, 2001

GIL MIGUEL T. PUYAT, petitioner,

vs.
RON ZABARTE, respondent.

DECISION

PANGANIBAN, J.:

Summary judgment in a litigation is resorted to if there is no genuine issue as to any material fact, other than the
amount of damages. If this verity is evident from the pleadings and the supporting affidavits, depositions and
admissions on file with the court, the moving party is entitled to such remedy as a matter of course.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the August 31, 1999
Decision 1 of the Court of Appeals (CA), which affirmed the Regional Trial Court (RTC) of Pasig City, Branch 67 in
Civil Case No. 64107; and the January 20, 2000 CA Resolution 2 which denied reconsideration.

The assailed CA Decision disposed as follows:

“WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED." 3

The Facts

The facts of this case, as narrated by the Court of Appeals, are as follows: 4

“It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to enforce the money
judgment rendered by the Superior Court for the State of California, County of Contra Costa, U.S.A. On 18 March
1994, [petitioner] filed his Answer with the following special and affirmative defenses:

x x x             x x x             x x x
‘8) The Superior Court for the State of California, County of Contra Costa[,] did not properly acquire
jurisdiction over the subject matter of and over the persons involved in [C]ase #C21-00265.

‘9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated December 12, 1991 was
obtained without the assistance of counsel for [petitioner] and without sufficient notice to him and therefore,
was rendered in clear violation of [petitioner’s] constitutional rights to substantial and procedural due
process.

‘10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 was
procured by means of fraud or collusion or undue influence and/or based on a clear mistake of fact and law.

‘11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is
contrary to the laws, public policy and canons of morality obtaining in the Philippines and the enforcement of
such judgment in the Philippines would result in the unjust enrichment of [respondent] at the expense of
[petitioner] in this case.

‘12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated December 12, 1991 is
null and void and unenforceable in the Philippines.

‘13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is not in any way liable,
in fact and in law, to [respondent] in this case, as contained in [petitioner’s] ‘Answer to Complaint’ in Case
#C21-00265 dated April 1, 1991, Annex ‘B’ of [respondent’s] ‘Complaint’ dated December 6, 1993.

’14) [Respondent] is guilty of misrepresentation or falsification in the filing of his ‘Complaint’ in this case
dated December 6, 1993. Worse, [respondent] has no capacity to sue in the Philippines.

’15) Venue has been improperly laid in this case.’

(Record, pp. 42-44)

“On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment under Rule 34 of the Rules of
Court alleging that the [A]nswer filed by [petitioner] failed to tender any genuine issue as to the material
facts. In his [O]pposition to [respondent’s] motion, [petitioner] demurred as follows:

‘2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that in his ‘Answer with Special
and Affirmative Defenses’ dated March 16, 1994 [petitioner] has interposed that the ‘Judgment on
Stipulations for Entry in Judgment’ is null and void, fraudulent, illegal and unenforceable, the same having
been obtained by means of fraud, collusion, undue influence and/or clear mistake of fact and law. In
addition, [he] has maintained that said ‘Judgment on Stipulations for Entry in Judgment’ was obtained
without the assistance of counsel for [petitioner] and without sufficient notice to him and therefore, was
rendered in violation of his constitutional rights to substantial and procedural due process.’

“The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994 during which [respondent]
marked and submitted in evidence the following:

Exhibit ‘A’ - x x x Judgment on Stipulation For Entry In Judgment of the Supreme Court of the State of
California[,] County of Contra Costa[,] signed by Hon. Ellen James, Judge of the Superior Court.

Exhibit ‘B’ - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen James, issued by the
Consulate General of the Republic of the Philippines.

Exhibit ‘C’ - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the sheriff/marshall, County of
Santa Clara, State of California.

Exhibit ‘D’ - [W]rit of [E]xecution

 Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of [L]evy, [M]emorandum of
[G]arnishee, [E]xemptions from [E]nforcement of [J]udgment.

Exhibit ‘F’ - Certification issued by the Secretary of State, State of California that Stephen Weir is the duly
elected, qualified and acting [c]ounty [c]lerk of the County of Contra Costa of the State of California.

Exhibit ‘G’ - Certificate of [A]uthentication of the [W]rit of [E]xecution.

“On 6 April 1995, the court a quo issued an [O]rder granting [respondent’s] [M]otion for [S]ummary [J]udgment [and]
likewise granting [petitioner] ten (10) days to submit opposing affidavits, after which the case would be deemed
submitted for resolution (Record, pp. 152-153). [Petitioner] filed a [M]otion for [R]econsideration of the aforesaid
[O]rder and [respondent] filed [C]omment. On 30 June 1995, [petitioner] filed a [M]otion to [D]ismiss on the ground of
lack of jurisdiction over the subject matter of the case and forum-non-conveniens (Record, pp. 166-170). In his
[O]pposition to the [M]otion (Record, pp. 181-182) [respondent] contended that [petitioner could] no longer question
the jurisdiction of the lower court on the ground that [the latter’s] Answer had failed to raise the issue of jurisdiction.
[Petitioner] countered by asserting in his Reply that jurisdiction [could] not be fixed by agreement of the parties. The
lower court dismissed [his] [M]otion for [R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198), x x x.”

The RTC 5 eventually rendered its February 21, 1997 Decision, 6 which disposed as follows:

“WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent] the following amounts:

“1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18, 1991, or its peso
equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated December 19, 1991;

“2. The amount of P30,000.00 as attorney’s fees;

“3. To pay the costs of suit.

“The claim for moral damages, not having been substantiated, it is hereby denied.” 7

Ruling of the Court of Appeals

Affirming the trial court, the Court of Appeals held that petitioner was estopped from assailing the judgment that had
become final and had, in fact, been partially executed. The CA also ruled that summary judgment was proper,
because petitioner had failed to tender any genuine issue of fact and was merely maneuvering to delay the full
effects of the judgment.

Citing Ingenohl v. Olsen, 8 the CA also rejected petitioner’s argument that the RTC should have dismissed the action
for the enforcement of a foreign judgment, on the ground of forum non conveniens. It reasoned out that the
recognition of the foreign judgment was based on comity, reciprocity and res judicata.

Hence, this Petition. 9

Issue

In his Memorandum, petitioner submits this lone but all-embracing issue:

“Whether or not the Court of Appeals acted in a manner x x x contrary to law when it affirmed the Order of the trial
court granting respondent’s Motion for Summary Judgment and rendering judgment against the petitioner.” 10

In his discussion, petitioner contends that the CA erred in ruling in this wise:

1. That his Answer failed to tender a genuine issue of fact regarding the following:

(a) the jurisdiction of a foreign court over the subject matter

(b) the validity of the foreign judgment

(c) the judgment’s conformity to Philippine laws, public policy, canons of morality, and norms against unjust
enrichment

2. That the principle of forum non conveniens was inapplicable to the instant case.

This Court’s Ruling

The Petition has no merit.

First Question: Summary Judgment

Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at bar, arguing that his
Answer allegedly raised genuine and material factual matters which he should have been allowed to prove during
trial.

On the other hand, respondent argues that the alleged “genuine issues of fact” raised by petitioner are mere
conclusions of law, or “propositions arrived at not by any process of natural reasoning from a fact or a combination
of facts stated but by the application of the artificial rules of law to the facts pleaded.” 11

The RTC granted respondent’s Motion for Summary Judgment because petitioner, in his Answer, admitted the
existence of the Judgment on Stipulation for Entry in Judgment. Besides, he had already paid $5,000 to respondent,
as provided in the foreign judgment sought to be enforced. 12 Hence, the trial court ruled that, there being no genuine
issue as to any material fact, the case should properly be resolved through summary judgment. The CA affirmed this
ruling.

We concur with the lower courts. Summary judgment is a procedural device for the prompt disposition of actions in
which the pleadings raise only a legal issue, and not a genuine issue as to any material fact. By genuine issue is
meant a question of fact that calls for the presentation of evidence. It should be distinguished from an issue that is
sham, contrived, set in bad faith and patently unsubstantial. 13

Summary judgment is resorted to in order to avoid long drawn out litigations and useless delays. When affidavits,
depositions and admissions on file show that there are no genuine issues of fact to be tried, the Rules allow a party
to pierce the allegations in the pleadings and to obtain immediate relief by way of summary judgment. In short, since
the facts are not in dispute, the court is allowed to decide the case summarily by applying the law to the material
facts.

Petitioner contends that by allowing summary judgment, the two courts a quo prevented him from presenting
evidence to substantiate his claims. We do not agree. Summary judgment is based on facts directly proven by
affidavits, depositions or admissions. 14 In this case, the CA and the RTC both merely ruled that trial was not
necessary to resolve the case. Additionally and correctly, the RTC specifically ordered petitioner to submit opposing
affidavits to support his contentions that (1) the Judgment on Stipulation for Entry in Judgment was procured on the
basis of fraud, collusion, undue influence, or a clear mistake of law or fact; and (2) that it was contrary to public
policy or the canons of morality. 15

Again, in its Order 16 dated November 29, 1995, the trial court clarified that the opposing affidavits were “for
[petitioner] to spell out the facts or circumstances [that] would constitute lack of jurisdiction over the subject matter of
and over the persons involved in Case No. C21-00265,” and that would render the judgment therein null and void. In
this light, petitioner’s contention that he was not allowed to present evidence to substantiate his claims is clearly
untenable.

For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that there must be no
genuine issue as to any material fact, except for the amount of damages; and (b) that the party presenting the
motion for summary judgment must be entitled to a judgment as a matter of law. 17 As mentioned earlier, petitioner
admitted that a foreign judgment had been rendered against him and in favor of respondent, and that he had paid
$5,000 to the latter in partial compliance therewith. Hence, respondent, as the party presenting the Motion for
Summary Judgment, was shown to be entitled to the judgment.

The CA made short shrift of the first requirement. To show that petitioner had raised no genuine issue, it relied
instead on the finality of the foreign judgment which was, in fact, partially executed. Hence, we shall show in the
following discussion how the defenses presented by petitioner failed to tender any genuine issue of fact, and why a
full-blown trial was not necessary for the resolution of the issues.

Jurisdiction

Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership interest, was vested in the
Securities and Exchange Commission, not in the Superior Court of California, County of Contra Costa.

We disagree. In the absence of proof of California law on the jurisdiction of courts, we presume that such law, if any,
is similar to Philippine law. We base this conclusion on the presumption of identity or similarity, also known as
processual presumption. 18 The Complaint, 19 which respondent filed with the trial court, was for the enforcement of a
foreign judgment. He alleged therein that the action of the foreign court was for the collection of a sum of money,
breach of promissory notes, and damages. 20

In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities and Exchange
Commission (SEC). The jurisdiction of the latter is exclusively over matters enumerated in Section 5, PD 902-
A, 21 prior to its latest amendment. If the foreign court did not really have jurisdiction over the case, as petitioner
claims, it would have been very easy for him to show this. Since jurisdiction is determined by the allegations in a
complaint, he only had to submit a copy of the complaint filed with the foreign court. Clearly, this issue did not
warrant trial.

Rights to Counsel and to Due Process

Petitioner contends that the foreign judgment, which was in the form of a Compromise Agreement, cannot be
executed without the parties being assisted by their chosen lawyers. The reason for this, he points out, is to
eliminate collusion, undue influence and/or improper exertion of ascendancy by one party over the other. He alleges
that he discharged his counsel during the proceedings, because he felt that the latter was not properly attending to
the case. The judge, however, did not allow him to secure the services of another counsel. Insisting that petitioner
settle the case with respondent, the judge practically imposed the settlement agreement on him. In his Opposing
Affidavit, petitioner states:

“It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I discharged him because I
then felt that he was not properly attending to my case or was not competent enough to represent my interest. I
asked the Judge for time to secure another counsel but I was practically discouraged from engaging one as the
Judge was insistent that I settle the case at once with the [respondent]. Being a foreigner and not a lawyer at that I
did not know what to do. I felt helpless and the Judge and [respondent’s] lawyer were the ones telling me what to
do. Under ordinary circumstances, their directives should have been taken with a grain of salt especially so [since
respondent’s] counsel, who was telling me what to do, had an interest adverse to mine. But [because] time
constraints and undue influence exerted by the Judge and [respondent’s] counsel on me disturbed and seriously
affected my freedom to act according to my best judgment and belief. In point of fact, the terms of the settlement
were practically imposed on me by the Judge seconded all the time by [respondent’s] counsel. I was then helpless
as I had no counsel to assist me and the collusion between the Judge and [respondent’s] counsel was becoming
more evident by the way I was treated in the Superior Court of [t]he State of California. I signed the ‘Judgment on
Stipulation for Entry in Judgment’ without any lawyer assisting me at the time and without being fully aware of its
terms and stipulations.” 22

The manifestation of petitioner that the judge and the counsel for the opposing party had pressured him would gain
credibility only if he had not been given sufficient time to engage the services of a new lawyer. Respondent’s
Affidavit 23 dated May 23, 1994, clarified, however, that petitioner had sufficient time, but he failed to retain a counsel.
Having dismissed his lawyer as early as June 19, 1991, petitioner directly handled his own defense and negotiated
a settlement with respondent and his counsel in December 1991. Respondent also stated that petitioner, ignoring
the judge’s reminder of the importance of having a lawyer, argued that “he would be the one to settle the case and
pay” anyway. Eventually, the Compromise Agreement was presented in court and signed before Judge Ellen James
on January 3, 1992. Hence, petitioner’s rights to counsel and to due process were not violated.

Unjust Enrichment

Petitioner avers that the Compromise Agreement violated the norm against unjust enrichment because the judge
made him shoulder all the liabilities in the case, even if there were two other defendants, G.S.P & Sons, Inc. and the
Genesis Group.

We cannot exonerate petitioner from his obligation under the foreign judgment, even if there are other defendants
who are not being held liable together with him. First, the foreign judgment itself does not mention these other
defendants, their participation or their liability to respondent. Second, petitioner’s undated Opposing Affidavit states:
“[A]lthough myself and these entities were initially represented by Atty. Lawrence L. Severson of the Law Firm
Kouns, Quinlivan & Severson, x x x I discharged x x x said lawyer. Subsequently, I assumed the representation for
myself and these firms and this was allowed by the Superior Court of the State of California without any
authorization from G.G.P. & Sons, Inc. and the Genesis Group.” 24 Clearly, it was petitioner who chose to represent
the other defendants; hence, he cannot now be allowed to impugn a decision based on this ground.

In any event, contrary to petitioner’s contention, unjust enrichment or solutio indebiti does not apply to this case.
This doctrine contemplates payment when there is no duty to pay, and the person who receives the payment has no
right to receive it. 25 In this case, petitioner merely argues that the other two defendants whom he represented were
liable together with him. This is not a case of unjust enrichment.

We do not see, either, how the foreign judgment could be contrary to law, morals, public policy or the canons of
morality obtaining in the country. Petitioner owed money, and the judgment required him to pay it. That is the long
and the short of this case.

In addition, the maneuverings of petitioner before the trial court reinforce our belief that his claims are unfounded.
Instead of filing opposing affidavits to support his affirmative defenses, he filed a Motion for Reconsideration of the
Order allowing summary judgment, as well as a Motion to Dismiss the action on the ground of forum non
conveniens. His opposing affidavits were filed only after the Order of November 29, 1995 had denied both
Motions. 26 Such actuation was considered by the trial court as a dilatory ploy which justified the resolution of the
action by summary judgment. According to the CA, petitioner’s allegations sought to delay the full effects of the
judgment; hence, summary judgment was proper. On this point, we concur with both courts.

Second Question: Forum Non Conveniens

Petitioner argues that the RTC should have refused to entertain the Complaint for enforcement of the foreign
judgment on the principle of forum non conveniens. He claims that the trial court had no jurisdiction, because the
case involved partnership interest, and there was difficulty in ascertaining the applicable law in California. All the
aspects of the transaction took place in a foreign country, and respondent is not even Filipino.

We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction is authorized by law,
courts may nonetheless refuse to entertain a case for any of the following practical reasons:

“1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the
case transpired in a foreign jurisdiction or the material witnesses have their residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to
secure procedural advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be
overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and

The difficulty of ascertaining foreign law.” 27

None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the present action, there was
no more need for material witnesses, no forum shopping or harassment of petitioner, no inadequacy in the local
machinery to enforce the foreign judgment, and no question raised as to the application of any foreign law.

Authorities agree that the issue of whether a suit should be entertained or dismissed on the basis of the above-
mentioned principle depends largely upon the facts of each case and on the sound discretion of the trial
court. 28 Since the present action lodged in the RTC was for the enforcement of a foreign judgment, there was no
need to ascertain the rights and the obligations of the parties based on foreign laws or contracts. The parties
needed only to perform their obligations under the Compromise Agreement they had entered into.  1âwphi1.nêt

Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in personam rendered by a
foreign tribunal clothed with jurisdiction is presumptive evidence of a right as between the parties and their
successors-in-interest by a subsequent title. 29

Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere -- enjoys the presumption
that it is acting in the lawful exercise of its jurisdiction, and that it is regularly performing its official duty. 30 Its
judgment may, however, be assailed if there is evidence of want of jurisdiction, want of notice to the party, collusion,
fraud or clear mistake of law or fact. But precisely, this possibility signals the need for a local trial court to exercise
jurisdiction. Clearly, the application of forum non coveniens is not called for.

The grounds relied upon by petitioner are contradictory. On the one hand, he insists that the RTC take jurisdiction
over the enforcement case in order to invalidate the foreign judgment; yet, he avers that the trial court should not
exercise jurisdiction over the same case on the basis of forum non conveniens. Not only do these defenses weaken
each other, but they bolster the finding of the lower courts that he was merely maneuvering to avoid or delay
payment of his obligation.

WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED. Double costs
against petitioner.

SO ORDERED.

Puyat vs Ron Zabarte

Civil Law – Conflict of Laws – Processual Presumption – Forum Non Conveniens

Remedial Law – Civil Procedure – Rule 34 – Summary Judgment

Gil Miguel Puyat, a foreigner, lost a collection suit filed against him by Ron Zabarte in a court in California, USA. The
California court ordered Puyat to pay the amount of $241k. Puyat was only able to pay $5k.

In January 1994, Zabarte filed an action to enforce the California judgment here in the Philippines against Puyat. Puyat
filed an Answer where he alleged, among others, that the California court had no jurisdiction over the case, hence, the
foreign judgment is void. He likewise averred that the trial court had no jurisdiction because the issue involved are
partnership matters which are under the jurisdiction of the Securities and Exchange Commission (SEC).

Zabarte then filed a motion for summary judgment as he argued that Puyat’s Answer tendered no issue. The trial court
granted the motion and eventually gave a favorable judgment for Zabarte. The Court of Appeals affirmed the decision of
the trial court.

On appeal, Puyat now avers that the trial court should have never taken cognizance of the case because it had no
jurisdiction over the case pursuant to the forum non conveniens rule. He averred that under this principle, since all the
transaction involved in this case occurred in California, he being a foreigner, and the California law was not properly
determined, the trial court had no jurisdiction. He also assailed the validity of the trial court’s act in granting the motion
for summary judgment filed by Zabarte.
ISSUE: Whether or not Puyat is correct.

HELD: No. The allowance of summary judgment is proper. In this case, Puyat’s Answer did not really tender an issue.
Summary judgment is resorted to in order to avoid long drawn out litigations and useless delays. When affidavits,
depositions and admissions on file show that there are no genuine issues of fact to be tried, the Rules allow a party to
pierce the allegations in the pleadings and to obtain immediate relief by way of summary judgment. In short, since the
facts are not in dispute, the court is allowed to decide the case summarily by applying the law to the material facts. In
this case, Puyat’s Answer merely alleged that the California court, a civil court, had no jurisdiction because the case
involved was a partnership issue. He however admitted that the issue involved is the payment of money upon
promissory notes with damages. Puyat also did not attach a copy of the complaint filed by Zabarte with the California
court. As such, the trial court properly presumed, applying the principle of processual presumption, that the California
law is the same as Philippine law – that cases involving collection of money is cognizable by civil courts. And by applying
the principle of processual presumption, there’s no longer a need to try the facts in this case, hence, a summary
judgment was in order.

Anent the issue of forum non conveniens, such does not exist in this case. Under the principle of forum non conveniens,
even if the exercise of jurisdiction is authorized by law, courts may nonetheless refuse to entertain a case for any of the
following practical reasons:

1. The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case
transpired in a foreign jurisdiction or the material witnesses have their residence there;

2. The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to
secure procedural advantages or to convey or harass the defendant;

3. The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be
overcrowded;

4. The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and The difficulty
of ascertaining foreign law.”

None of the above existed in this case, hence, the trial court properly took cognizance of the case.

G.R. No. 139325             April 12, 2005

PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN,
SFIC, and JOEL C. LAMANGAN in their behalf and on behalf of the Class Plaintiffs in Class Action No. MDL
840, United States District Court of Hawaii, Petitioner,
vs.
HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial Court,
Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its court appointed legal representatives
in Class Action MDL 840, United States District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand
Marcos, Jr., Respondents.

DECISION

TINGA, J.:
Our martial law experience bore strange unwanted fruits, and we have yet to finish weeding out its bitter crop. While
the restoration of freedom and the fundamental structures and processes of democracy have been much lauded,
according to a significant number, the changes, however, have not sufficiently healed the colossal damage wrought
under the oppressive conditions of the martial law period. The cries of justice for the tortured, the murdered, and
the desaparecidos arouse outrage and sympathy in the hearts of the fair-minded, yet the dispensation of the
appropriate relief due them cannot be extended through the same caprice or whim that characterized the ill-wind of
martial rule. The damage done was not merely personal but institutional, and the proper rebuke to the iniquitous
past has to involve the award of reparations due within the confines of the restored rule of law.

The petitioners in this case are prominent victims of human rights violations who, deprived of the opportunity to
1 

directly confront the man who once held absolute rule over this country, have chosen to do battle instead with the
earthly representative, his estate. The clash has been for now interrupted by a trial court ruling, seemingly
comported to legal logic, that required the petitioners to pay a whopping filing fee of over Four Hundred Seventy-
Two Million Pesos (P472,000,000.00) in order that they be able to enforce a judgment awarded them by a foreign
court.  There is an understandable temptation to cast the struggle within the simplistic confines of a morality tale,
and to employ short-cuts to arrive at what might seem the desirable solution. But easy, reflexive resort to the equity
principle all too often leads to a result that may be morally correct, but legally wrong.

Nonetheless, the application of the legal principles involved in this case will comfort those who maintain that our
substantive and procedural laws, for all their perceived ambiguity and susceptibility to myriad interpretations, are
inherently fair and just. The relief sought by the petitioners is expressly mandated by our laws and conforms to
established legal principles. The granting of this petition for certiorari is warranted in order to correct the legally
infirm and unabashedly unjust ruling of the respondent judge.

The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with the United States District Court
(US District Court), District of Hawaii, against the Estate of former Philippine President Ferdinand E. Marcos
(Marcos Estate). The action was brought forth by ten Filipino citizens who each alleged having suffered human
2 

rights abuses such as arbitrary detention, torture and rape in the hands of police or military forces during the Marcos
regime. The Alien Tort Act was invoked as basis for the US District Court's jurisdiction over the complaint, as it
3 

involved a suit by aliens for tortious violations of international law. These plaintiffs brought the action on their own
4 

behalf and on behalf of a class of similarly situated individuals, particularly consisting of all current civilian citizens of
the Philippines, their heirs and beneficiaries, who between 1972 and 1987 were tortured, summarily executed or
had disappeared while in the custody of military or paramilitary groups. Plaintiffs alleged that the class consisted of
approximately ten thousand (10,000) members; hence, joinder of all these persons was impracticable.

The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of the US Federal Rules of Civil
Procedure, the provisions of which were invoked by the plaintiffs. Subsequently, the US District Court certified the
case as a class action and created three (3) sub-classes of torture, summary execution and disappearance
victims. Trial ensued, and subsequently a jury rendered a verdict and an award of compensatory and exemplary
5 

damages in favor of the plaintiff class.  Then, on 3 February 1995, the US District Court, presided by Judge Manuel
L. Real, rendered a Final Judgment (Final Judgment) awarding the plaintiff class a total of One Billion Nine Hundred
Sixty Four Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final
Judgment was eventually affirmed by the US Court of Appeals for the Ninth Circuit, in a decision rendered on 17
December 1996. 6

On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of Makati (Makati RTC)
for the enforcement of the Final Judgment.  They alleged that they are members of the plaintiff class in whose favor
the US District Court awarded damages. They argued that since the Marcos Estate failed to file a petition for
7 

certiorari with the US Supreme Court after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the
decision of the US District Court had become final and executory, and hence should be recognized and enforced in
the Philippines, pursuant to Section 50, Rule 39 of the Rules of Court then in force. 8

On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among others, the non-payment of the
correct filing fees.  It alleged that petitioners had only paid Four Hundred Ten Pesos (P410.00) as docket and filing
fees, notwithstanding the fact that they sought to enforce a monetary amount of damages in the amount of over Two
and a Quarter Billion US Dollars (US$2.25 Billion).  The Marcos Estate cited Supreme Court Circular No. 7,
pertaining to the proper computation and payment of docket fees.  In response, the petitioners claimed that an
action for the enforcement of a foreign judgment is not capable of pecuniary estimation; hence, a filing fee of only
Four Hundred Ten Pesos (P410.00) was proper, pursuant to Section 7(c) of Rule 141. 9

On 9 September 1998, respondent Judge Santiago Javier Ranada of the Makati RTC issued the
10 

subject Order dismissing the complaint without prejudice. Respondent judge opined that contrary to the petitioners'
submission, the subject matter of the complaint was indeed capable of pecuniary estimation, as it involved a
judgment rendered by a foreign court ordering the payment of definite sums of money, allowing for easy
determination of the value of the foreign judgment. On that score, Section 7(a) of Rule 141 of the Rules of Civil
Procedure would find application, and the RTC estimated the proper amount of filing fees was approximately Four
Hundred Seventy Two Million Pesos, which obviously had not been paid.

Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada denied in an Order dated 28
July 1999. From this denial, petitioners filed a Petition for Certiorari under Rule 65 assailing the twin orders of
respondent judge. They prayed for the annulment of the questioned orders, and an order directing the
11 

reinstatement of Civil Case No. 97-1052 and the conduct of appropriate proceedings thereon.

Petitioners submit that their action is incapable of pecuniary estimation as the subject matter of the suit is the
enforcement of a foreign judgment, and not an action for the collection of a sum of money or recovery of damages. 
They also point out that to require the class plaintiffs to pay Four Hundred Seventy Two Million Pesos
(P472,000,000.00) in filing fees would negate and render inutile the liberal construction ordained by the Rules of
Court, as required by Section 6, Rule 1 of the Rules of Civil Procedure, particularly the inexpensive disposition of
every action.

Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which provides that "Free access to
the courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of
poverty," a mandate which is essentially defeated by the required exorbitant filing fee. The adjudicated amount of
the filing fee, as arrived at by the RTC, was characterized as indisputably unfair, inequitable, and unjust.

The Commission on Human Rights (CHR) was permitted to intervene in this case. It urged that the petition be
12 

granted and a judgment rendered, ordering the enforcement and execution of the District Court judgment in
accordance with Section 48, Rule 39 of the 1997 Rules of Civil Procedure. For the CHR, the Makati RTC erred in
interpreting the action for the execution of a foreign judgment as a new case, in violation of the principle that once a
case has been decided between the same parties in one country on the same issue with finality, it can no longer be
relitigated again in another country. The CHR likewise invokes the principle of comity, and of vested rights.
13 

The Court's disposition on the issue of filing fees will prove a useful jurisprudential guidepost for courts confronted
with actions enforcing foreign judgments, particularly those lodged against an estate. There is no basis for the
issuance a limited pro hac vice ruling based on the special circumstances of the petitioners as victims of martial law,
or on the emotionally-charged allegation of human rights abuses.

An examination of Rule 141 of the Rules of Court readily evinces that the respondent judge ignored the clear letter
of the law when he concluded that the filing fee be computed based on the total sum claimed or the stated value of
the property in litigation.

In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as basis for the computation of
the filing fee of over P472 Million.  The provision states:

SEC. 7. Clerk of Regional Trial Court.-

(a) For filing an action or a permissive counterclaim or money claim against an estate not based
on judgment, or for filing with leave of court a third-party, fourth-party, etc., complaint, or a
complaint in intervention, and for all clerical services in the same time, if the total sum claimed,
exclusive of interest, or the started value of the property in litigation, is:

1. Less than P 100,00.00 – P 500.00

2. P 100,000.00 or more but less than P 150,000.00 – P 800.00

 3. P 150,000.00 or more but less than P 200,000.00 – P 1,000.00

4. P 200,000.00 or more but less than P 250,000.00 – P 1,500.00

5. P 250,000.00 or more but less than P 300,00.00 – P 1,750.00

6. P 300,000.00 or more but not more than P 400,000.00 – P 2,000.00

7. P 350,000.00 or more but not more than P400,000.00 – P 2,250.00

8. For each P 1,000.00 in excess of P 400,000.00 – P 10.00

(Emphasis supplied)

Obviously, the above-quoted provision covers, on one hand, ordinary actions, permissive counterclaims, third-party,
etc. complaints and complaints-in-interventions, and on the other, money claims against estates which are not
based on judgment.  Thus, the relevant question for purposes of the present petition is whether the action filed with
the lower court is a "money claim against an estate not based on judgment."

Petitioners' complaint may have been lodged against an estate, but it is clearly based on a judgment, the Final
Judgment of the US District Court. The provision does not make any distinction between a local judgment and a
foreign judgment, and where the law does not distinguish, we shall not distinguish.

A reading of Section 7 in its entirety reveals several instances wherein the filing fee is computed on the basis of the
amount of the relief sought, or on the value of the property in litigation. The filing fee for requests for extrajudicial
foreclosure of mortgage is based on the amount of indebtedness or the mortgagee's claim. In special proceedings
14 

involving properties such as for the allowance of wills, the filing fee is again based on the value of the property. The
15 

aforecited rules evidently have no application to petitioners' complaint.

Petitioners rely on Section 7(b), particularly the proviso on actions where the value of the subject matter cannot be
estimated. The provision reads in full:

SEC. 7. Clerk of Regional Trial Court.-

(b) For filing

1.          Actions where the value

of the subject matter

cannot be estimated             ---           P 600.00

2.          Special civil actions except

judicial foreclosure which

shall be governed by

paragraph (a) above          ---           P 600.00

3.          All other actions not

involving property           ---           P 600.00

In a real action, the assessed value of the property, or if there is none, the estimated value, thereof shall be alleged
by the claimant and shall be the basis in computing the fees.
It is worth noting that the provision also provides that in real actions, the assessed value or estimated value of the
property shall be alleged by the claimant and shall be the basis in computing the fees. Yet again, this provision does
not apply in the case at bar. A real action is one where the plaintiff seeks the recovery of real property or an action
affecting title to or recovery of possession of real property. Neither the complaint nor the award of damages
16 

adjudicated by the US District Court involves any real property of the Marcos Estate.

Thus, respondent judge was in clear and serious error when he concluded that the filing fees should be computed
on the basis of the schematic table of Section 7(a), as the action involved pertains to a claim against an estate
based on judgment. What provision, if any, then should apply in determining the filing fees for an action to enforce a
foreign judgment?

To resolve this question, a proper understanding is required on the nature and effects of a foreign judgment in this
jurisdiction.

The rules of comity, utility and convenience of nations have established a usage among civilized states by which
final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under
certain conditions that may vary in different countries. This principle was prominently affirmed in the leading
17 

American case of Hilton v. Guyot and expressly recognized in our jurisprudence beginning with Ingenholl v. Walter
18 

E. Olsen & Co. The conditions required by the Philippines for recognition and enforcement of a foreign judgment
19 

were originally contained in Section 311 of the Code of Civil Procedure, which was taken from the California Code of
Civil Procedure which, in turn, was derived from the California Act of March 11, 1872. Remarkably, the procedural
20 

rule now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has remained unchanged down to the last
word in nearly a century. Section 48 states:

SEC. 48.          Effect of foreign judgments. — The effect of a judgment of a tribunal of a foreign country,
having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as
between the parties and their successors in interest by a subsequent title;

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact.

There is an evident distinction between a foreign judgment in an action in rem and one in personam. For an
action in rem, the foreign judgment is deemed conclusive upon the title to the thing, while in an
action in personam, the foreign judgment is presumptive, and not conclusive, of a right as between the parties and
their successors in interest by a subsequent title. However, in both cases, the foreign judgment is susceptible to
21 

impeachment in our local courts on the grounds of want of jurisdiction or notice to the party, collusion, fraud, or
22  23 

clear mistake of law or fact. Thus, the party aggrieved by the foreign judgment is entitled to defend against the
24 

enforcement of such decision in the local forum. It is essential that there should be an opportunity to challenge the
foreign judgment, in order for the court in this jurisdiction to properly determine its efficacy.
25

It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign judgment , even if
26 

such judgment has conclusive effect as in the case of in rem actions, if only for the purpose of allowing the losing
party an opportunity to challenge the foreign judgment, and in order for the court to properly determine its
efficacy. Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of its
27 

validity.
28

The rules are silent as to what initiatory procedure must be undertaken in order to enforce a foreign judgment in the
Philippines. But there is no question that the filing of a civil complaint is an appropriate measure for such purpose. A
civil action is one by which a party sues another for the enforcement or protection of a right, and clearly an action to
29 

enforce a foreign judgment is in essence a vindication of a right prescinding either from a "conclusive judgment
upon title" or the "presumptive evidence of a right." Absent perhaps a statutory grant of jurisdiction to a quasi-
30 

judicial body, the claim for enforcement of judgment must be brought before the regular courts. 31
There are distinctions, nuanced but discernible, between the cause of action arising from the enforcement of a
foreign judgment, and that arising from the facts or allegations that occasioned the foreign judgment.  They may
pertain to the same set of facts, but there is an essential difference in the right-duty correlatives that are sought to
be vindicated. For example, in a complaint for damages against a tortfeasor, the cause of action emanates from the
violation of the right of the complainant through the act or omission of the respondent. On the other hand, in a
complaint for the enforcement of a foreign judgment awarding damages from the same tortfeasor, for the violation of
the same right through the same manner of action, the cause of action derives not from the tortious act but from the
foreign judgment itself.

More importantly, the matters for proof are different. Using the above example, the complainant will have to
establish before the court the tortious act or omission committed by the tortfeasor, who in turn is allowed to rebut
these factual allegations or prove extenuating circumstances.  Extensive litigation is thus conducted on the facts,
and from there the right to and amount of damages are assessed. On the other hand, in an action to enforce a
foreign judgment, the matter left for proof is the foreign judgment itself, and not the facts from which it prescinds.

As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of the
foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law.  The limitations on review is in
consonance with a strong and pervasive policy in all legal systems to limit repetitive litigation on claims and
issues. Otherwise known as the policy of preclusion, it seeks to protect party expectations resulting from previous
32 

litigation, to safeguard against the harassment of defendants, to insure that the task of courts not be increased by
never-ending litigation of the same disputes, and – in a larger sense – to promote what Lord Coke in the Ferrer's
Case of 1599 stated to be the goal of all law: "rest and quietness." If every judgment of a foreign court were
33 

reviewable on the merits, the plaintiff would be forced back on his/her original cause of action, rendering immaterial
the previously concluded litigation.34

Petitioners appreciate this distinction, and rely upon it to support the proposition that the subject matter of the
complaintthe enforcement of a foreign judgmentis incapable of pecuniary estimation. Admittedly the proposition,
as it applies in this case, is counter-intuitive, and thus deserves strict scrutiny. For in all practical intents and
purposes, the matter at hand is capable of pecuniary estimation, down to the last cent. In the assailed Order, the
respondent judge pounced upon this point without equivocation:

The Rules use the term "where the value of the subject matter cannot be estimated." The subject matter of
the present case is the judgment rendered by the foreign court ordering defendant to pay plaintiffs definite
sums of money, as and for compensatory damages. The Court finds that the value of the foreign judgment
can be estimated; indeed, it can even be easily determined. The Court is not minded to distinguish between
the enforcement of a judgment and the amount of said judgment, and separate the two, for purposes of
determining the correct filing fees. Similarly, a plaintiff suing on promissory note for P1 million cannot be
allowed to pay only P400 filing fees (sic), on the reasoning that the subject matter of his suit is not the P1
million, but the enforcement of the promissory note, and that the value of such "enforcement" cannot be
estimated. 35

The jurisprudential standard in gauging whether the subject matter of an action is capable of pecuniary estimation is
well-entrenched. The Marcos Estate cites Singsong v. Isabela Sawmill and Raymundo v. Court of Appeals, which
ruled:

[I]n determining whether an action is one the subject matter of which is not capable of pecuniary estimation
this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. 
If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation,
and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the
amount of the claim.  However, where the basic issue is something other than the right to recover a sum of
money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this
Court has considered such actions as cases where the subject of the litigation may not be estimated in
terms of money, and are cognizable exclusively by courts of first instance (now Regional Trial Courts).

On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v. Scandia, from which the rule
36 

in Singsong and Raymundo actually derives, but which incorporates this additional nuance omitted in the latter
cases:
 xxx However, where the basic issue is something other than the right to recover a sum of money, where the
money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have
the defendant perform his part of the contract (specific performance) and in actions for support, or
for annulment of judgment or to foreclose a mortgage, this Court has considered such actions as cases
where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively
by courts of first instance.
37

Petitioners go on to add that among the actions the Court has recognized as being incapable of pecuniary
estimation include legality of conveyances and money deposits, validity of a mortgage, the right to support, validity
38  39  40 

of documents, rescission of contracts, specific performance, and validity or annulment of judgments. It is urged
41  42  43  44 

that an action for enforcement of a foreign judgment belongs to the same class.

This is an intriguing argument, but ultimately it is self-evident that while the subject matter of the action is
undoubtedly the enforcement of a foreign judgment, the effect of a providential award would be the adjudication of a
sum of money. Perhaps in theory, such an action is primarily for "the enforcement of the foreign judgment," but there
is a certain obtuseness to that sort of argument since there is no denying that the enforcement of the foreign
judgment will necessarily result in the award of a definite sum of money.

But before we insist upon this conclusion past beyond the point of reckoning, we must examine its possible
ramifications. Petitioners raise the point that a declaration that an action for enforcement of foreign judgment may be
capable of pecuniary estimation might lead to an instance wherein a first level court such as the Municipal Trial
Court would have jurisdiction to enforce a foreign judgment. But under the statute defining the jurisdiction of first
level courts, B.P. 129, such courts are not vested with jurisdiction over actions for the enforcement of foreign
judgments.

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in
civil cases. — Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall
exercise:

(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including
the grant of provisional remedies in proper cases, where the value of the personal property, estate, or
amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila
where such personal property, estate, or amount of the demand does not exceed Two hundred thousand
pesos (P200,000.00) exclusive of interest damages of whatever kind, attorney's fees, litigation expenses,
and costs, the amount of which must be specifically alleged: Provided, That  where there are several claims
or causes of action between the same or different parties, embodied in the same complaint, the amount of
the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes
of action arose out of the same or different transactions;

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in
such cases, the defendant raises the question of ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to
determine the issue of possession.

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or
any interest therein where the assessed value of the property or interest therein does not exceed Twenty
thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not
exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees,
litigation expenses and costs: Provided, That value of such property shall be determined by the assessed
value of the adjacent lots.45

Section 33 of B.P. 129 refers to instances wherein the cause of action or subject matter pertains to an assertion of
rights and interests over property or a sum of money. But as earlier pointed out, the subject matter of an action to
enforce a foreign judgment is the foreign judgment itself, and the cause of action arising from the adjudication of
such judgment.

An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement of a foreign judgment,
even if capable of pecuniary estimation, would fall under the jurisdiction of the Regional Trial Courts, thus negating
the fears of the petitioners. Indeed, an examination of the provision indicates that it can be relied upon as
jurisdictional basis with respect to actions for enforcement of foreign judgments, provided that no other court or
office is vested jurisdiction over such complaint:

Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive original jurisdiction:

xxx

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising
jurisdiction or any court, tribunal, person or body exercising judicial or quasi-judicial functions.

Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US District Court judgment is
one capable of pecuniary estimation. But at the same time, it is also an action based on judgment against an estate,
thus placing it beyond the ambit of Section 7(a) of Rule 141. What provision then governs the proper computation of
the filing fees over the instant complaint? For this case and other similarly situated instances, we find that it is
covered by Section 7(b)(3), involving as it does, "other actions not involving property."

Notably, the amount paid as docket fees by the petitioners on the premise that it was an action incapable of
pecuniary estimation corresponds to the same amount required for "other actions not involving property." The
petitioners thus paid the correct amount of filing fees, and it was a grave abuse of discretion for respondent judge to
have applied instead a clearly inapplicable rule and dismissed the complaint.

There is another consideration of supreme relevance in this case, one which should disabuse the notion that the
doctrine affirmed in this decision is grounded solely on the letter of the procedural rule.  We earlier adverted to the
the internationally recognized policy of preclusion, as well as the principles of comity, utility and convenience of
46 

nations as the basis for the evolution of the rule calling for the recognition and enforcement of foreign judgments.
47 

The US Supreme Court in Hilton v. Guyot relied heavily on the concept of comity, as especially derived from the
48 

landmark treatise of Justice Story in his Commentaries on the Conflict of Laws of 1834. Yet the notion of "comity"
49 

has since been criticized as one "of dim contours" or suffering from a number of fallacies. Other conceptual bases
50  51 

for the recognition of foreign judgments have evolved such as the vested rights theory or the modern doctrine of
obligation. 52

There have been attempts to codify through treaties or multilateral agreements the standards for the recognition and
enforcement of foreign judgments, but these have not borne fruition. The members of the European Common
Market accede to the Judgments Convention, signed in 1978, which eliminates as to participating countries all of
such obstacles to recognition such as reciprocity and révision au fond. The most ambitious of these attempts is
53 

the Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters,
prepared in 1966 by the Hague Conference of International Law. While it has not received the ratifications needed
54 

to have it take effect, it is recognized as representing current scholarly thought on the topic. Neither the Philippines
55  56 

nor the United States are signatories to the Convention.

Yet even if there is no unanimity as to the applicable theory behind the recognition and enforcement of foreign
judgments or a universal treaty rendering it obligatory force, there is consensus that the viability of such recognition
and enforcement is essential. Steiner and Vagts note:

.  .  . The notion of unconnected bodies of national law on private international law, each following a quite
separate path, is not one conducive to the growth of a transnational community encouraging travel and
commerce among its members. There is a contemporary resurgence of writing stressing the identity or
similarity of the values that systems of public and private international law seek to further – a community
interest in common, or at least reasonable, rules on these matters in national legal systems. And such
generic principles as reciprocity play an important role in both fields.57

Salonga, whose treatise on private international law is of worldwide renown, points out:

Whatever be the theory as to the basis for recognizing foreign judgments, there can be little dispute that the
end is to protect the reasonable expectations and demands of the parties. Where the parties have submitted
a matter for adjudication in the court of one state, and proceedings there are not tainted with irregularity,
 they may fairly be expected to submit, within the state or elsewhere, to the enforcement of the judgment
issued by the court. 58

There is also consensus as to the requisites for recognition of a foreign judgment and the defenses against the
enforcement thereof. As earlier discussed, the exceptions enumerated in Section 48, Rule 39 have remain
unchanged since the time they were adapted in this jurisdiction from long standing American rules. The requisites
and exceptions as delineated under Section 48 are but a restatement of generally accepted principles of
international law. Section 98 of The Restatement, Second, Conflict of Laws, states that "a valid judgment rendered
in a foreign nation after a fair trial in a contested proceeding will be recognized in the United States," and on its face,
the term "valid" brings into play requirements such notions as valid jurisdiction over the subject matter and
parties. Similarly, the notion that fraud or collusion may preclude the enforcement of a foreign judgment finds
59 

affirmation with foreign jurisprudence and commentators, as well as the doctrine that the foreign judgment must not
60 

constitute "a clear mistake of law or fact." And finally, it has been recognized that "public policy" as a defense to the
61 

recognition of judgments serves as an umbrella for a variety of concerns in international practice which may lead to
a denial of recognition.62

The viability of the public policy defense against the enforcement of a foreign judgment has been recognized in this
jurisdiction. This defense allows for the application of local standards in reviewing the foreign judgment, especially
63 

when such judgment creates only a presumptive right, as it does in cases wherein the judgment is against a
person. The defense is also recognized within the international sphere, as many civil law nations adhere to a broad
64 

public policy exception which may result in a denial of recognition when the foreign court, in the light of the choice-
of-law rules of the recognizing court, applied the wrong law to the case. The public policy defense can safeguard
65 

against possible abuses to the easy resort to offshore litigation if it can be demonstrated that the original claim is
noxious to our constitutional values.

There is no obligatory rule derived from treaties or conventions that requires the Philippines to recognize foreign
judgments, or allow a procedure for the enforcement thereof.  However, generally accepted principles of
international law, by virtue of the incorporation clause of the Constitution, form part of the laws of the land even if
they do not derive from treaty obligations. The classical formulation in international law sees those customary rules
66 

accepted as binding result from the combination two elements: the established, widespread, and consistent practice
on the part of States; and a psychological element known as the opinion juris sive necessitates (opinion as to law or
necessity). Implicit in the latter element is a belief that the practice in question is rendered obligatory by the
existence of a rule of law requiring it.67

While the definite conceptual parameters of the recognition and enforcement of foreign judgments have not been
authoritatively established, the Court can assert with certainty that such an undertaking is among those generally
accepted principles of international law. As earlier demonstrated, there is a widespread practice among states
68 

accepting in principle the need for such recognition and enforcement, albeit subject to limitations of varying degrees.
The fact that there is no binding universal treaty governing the practice is not indicative of a widespread rejection of
the principle, but only a disagreement as to the imposable specific rules governing the procedure for recognition and
enforcement.

Aside from the widespread practice, it is indubitable that the procedure for recognition and enforcement is embodied
in the rules of law, whether statutory or jurisprudential, adopted in various foreign jurisdictions. In the Philippines,
this is evidenced primarily by Section 48, Rule 39 of the Rules of Court which has existed in its current form since
the early 1900s. Certainly, the Philippine legal system has long ago accepted into its jurisprudence and procedural
rules the viability of an action for enforcement of foreign judgment, as well as the requisites for such valid
enforcement, as derived from internationally accepted doctrines.  Again, there may be distinctions as to the rules
adopted by each particular state, but they all prescind from the premise that there is a rule of law obliging states to
69 

allow for, however generally, the recognition and enforcement of a foreign judgment. The bare principle, to our mind,
has attained the status of opinio juris in international practice.

This is a significant proposition, as it acknowledges that the procedure and requisites outlined in Section 48, Rule 39
derive their efficacy not merely from the procedural rule, but by virtue of the incorporation clause of the Constitution. 
Rules of procedure are promulgated by the Supreme Court, and could very well be abrogated or revised by the high
70 

court itself. Yet the Supreme Court is obliged, as are all State components, to obey the laws of the land, including
generally accepted principles of international law which form part thereof, such as those ensuring the qualified
recognition and enforcement of foreign judgments. 71
Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges that there is a general right
recognized within our body of laws, and affirmed by the Constitution, to seek recognition and enforcement of foreign
judgments, as well as a right to defend against such enforcement on the grounds of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact.

The preclusion of an action for enforcement of a foreign judgment in this country merely due to an exhorbitant
assessment of docket fees is alien to generally accepted practices and principles in international law. Indeed, there
are grave concerns in conditioning the amount of the filing fee on the pecuniary award or the value of the property
subject of the foreign decision. Such pecuniary award will almost certainly be in foreign denomination, computed in
accordance with the applicable laws and standards of the forum. The vagaries of inflation, as well as the relative
72 

low-income capacity of the Filipino, to date may very well translate into an award virtually unenforceable in this
country, despite its integral validity, if the docket fees for the enforcement thereof were predicated on the amount of
the award sought to be enforced. The theory adopted by respondent judge and the Marcos Estate may even lead to
absurdities, such as if applied to an award involving real property situated in places such as the United States or
Scandinavia where real property values are inexorably high. We cannot very well require that the filing fee be
computed based on the value of the foreign property as determined by the standards of the country where it is
located.

As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it recognizes that the subject
matter of an action for enforcement of a foreign judgment is the foreign judgment itself, and not the right-duty
correlatives that resulted in the foreign judgment.  In this particular circumstance, given that the complaint is lodged
against an estate and is based on the US District Court's Final Judgment, this foreign judgment may, for purposes of
classification under the governing procedural rule, be deemed as subsumed under Section 7(b)(3) of Rule 141, i.e.,
within the class of "all other actions not involving property." Thus, only the blanket filing fee of minimal amount is
required.

Finally, petitioners also invoke Section 11, Article III of the Constitution, which states that "[F]ree access to the
courts and quasi-judicial bodies and adequate legal assistance shall not be denied to any person by reason of
poverty." Since the provision is among the guarantees ensured by the Bill of Rights, it certainly gives rise to a
demandable right. However, now is not the occasion to elaborate on the parameters of this constitutional right.
Given our preceding discussion, it is not necessary to utilize this provision in order to grant the relief sought by the
petitioners. It is axiomatic that the constitutionality of an act will not be resolved by the courts if the controversy can
be settled on other grounds or unless the resolution thereof is indispensable for the determination of the case.
73  74

One more word.  It bears noting that Section 48, Rule 39 acknowledges that the Final Judgment is not conclusive
yet, but presumptive evidence of a right of the petitioners against the Marcos Estate. Moreover, the Marcos Estate is
not precluded to present evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact. This ruling, decisive as it is on the question of filing fees and no other, does not render verdict
on the enforceability of the Final Judgment before the courts under the jurisdiction of the Philippines, or for that
matter any other issue which may legitimately be presented before the trial court.  Such issues are to be litigated
before the trial court, but within the confines of the matters for proof as laid down in Section 48, Rule 39. On the
other hand, the speedy resolution of this claim by the trial court is encouraged, and contumacious delay of the
decision on the merits will not be brooked by this Court.

WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and SET ASIDE, and a new order
REINSTATING Civil Case No. 97-1052 is hereby issued. No costs.

SO ORDERED.

100. MIJARES V. RANADA

(Recognition of Foreign Judgments)

Facts:

Invoking the Alien Tort Act, petitioners Mijares, et al.*, all of whom suffered human rights violations during the Marcos
era, obtained a Final Judgment in their favor against the Estate of the late Ferdinand Marcos amounting to roughly $1.9B
in compensatory and exemplary damages for tortuous violations of international law in the US District Court of Hawaii.
This Final Judgment was affirmed by the US Court of Appeals.

On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of Makati (Makati RTC) for
the enforcement of the Final Judgment.

They argued that since the Marcos Estate failed to file a petition for certiorari with the US Supreme Court after the Ninth
Circuit Court of Appeals had affirmed the Final Judgment, the decision of the US District Court had become final and
executory, and hence should be recognized and enforced in the Philippines, pursuant to Section 50, Rule 39 of the Rules
of Court then in force.

The Estate of Marcos however, filed a MTD alleging the non-payment of the correct filing fees. To resolve the question
of correct filing fee, the Court found it proper to understand the nature and effects of a foreign judgment in this
jurisdiction.

Issue: WON the preclusion (avoidance) of an action for enforcement of a foreign judgment in this country merely due to
an exorbitant (excessive) assessment of docket fees is generally accepted in international law.

Held:

No. As a general rule, there is no obligatory rule derived from treaties or conventions that requires the Philippines to
recognize foreign judgments, or allow a procedure for the enforcement thereof. However, generally accepted principles
of international law, by virtue of the incorporation clause of the Constitution, form part of the laws of the land even if
they do not derive from treaty obligations.

While the definite conceptual parameters of the recognition and enforcement of foreign judgments have not been
authoritatively established, the Court can assert with certainty that such an undertaking is among those generally
accepted principles of international law. As earlier demonstrated, there is a widespread practice among states accepting
in principle the need for such recognition and enforcement, albeit subject to limitations of varying degrees. The fact that
there is no binding universal treaty governing the practice is not indicative of a widespread rejection of the principle, but
only a disagreement as to the imposable specific rules governing the procedure for recognition and enforcement.

The preclusion of an action for enforcement of a foreign judgment in this country merely due to an exorbitant
assessment of docket fees is alien to generally accepted practices and principles in international law. Thus, only the
blanket filing fee of minimal amount is required.

G.R. No. 168785               February 5, 2010

HERALD BLACK DACASIN, Petitioner,

vs.
SHARON DEL MUNDO DACASIN, Respondent.

DECISION

CARPIO, J.:

The Case

For review1 is a dismissal2 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 (Agreement4 ) 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
court’s 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 respondent’s 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
court’s 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 Code6 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 court’s 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 petitioner’s 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 petitioner’s suit but not to enforce the Agreement which is void. However,
factual and equity considerations militate against the dismissal of petitioner’s suit and call for the remand of the case
to settle the question of Stephanie’s 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 petitioner’s 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 court’s refusal to entertain petitioner’s suit was grounded not on its lack of power to do so but on its
thinking that the Illinois court’s 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 Petitioner’s 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
court’s so-called "retained jurisdiction."

Petitioner’s 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
Agreement’s 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 law15 (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 custody17 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 Agreement’s 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 preclude the 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 provision’s 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 213’s 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 law’s
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 rule’s 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. 1avvphi1

Further, the imposed custodial regime under the second paragraph of Article 213 is limited in duration, lasting only
until the child’s seventh year. From the eighth year until the child’s 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.
Respondent’s 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 decree’s 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 spouse26 - to
support the Agreement’s enforceability. The argument that foreigners in this jurisdiction are not bound by foreign
divorce decrees is hardly novel. Van Dorn v. Romillo27 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 divorcee’s 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 petitioner’s husband entitled to exercise control over conjugal assets. As he is
bound by the Decision of his own country’s 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-Somera29 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 alien’s nationality, irrespective of who obtained the divorce.

The Facts of the Case and Nature of Proceeding

Justify Remand

Instead of ordering the dismissal of petitioner’s suit, the logical end to its lack of cause of action, we remand the
case for the trial court to settle the question of Stephanie’s 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 child’s 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 court’s jurisdiction, submit evidence on the custodial arrangement best serving Stephanie’s
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 child’s 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.

Facts:
Herald, American, and Sharon, Filipino, were married in Manila in April 1994.
They have one daughter, Stephanie, born on September 21, 1995.
In June 1999, Sharon sought and obtained a divorce decree from the Circuit
Court, 19th Judicial Circuit, Lake County, Illinois (Illinois court). 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 January 28, 2002, both executed in Manila a contract for joint custody over
Stephanie.
In 2004, Herald filed a case against Sharon alleging that Sharon had exercised sole
custody over Stephanie contrary to their agreement.
o The trial court held that (1) it is precluded from taking cognizance over the
suit considering the Illinois court’s 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; and (3) the Agreement is void
for contravening Article 2035, paragraph 5 of the Civil Code prohibiting
compromise agreements on jurisdiction and dismissed the case.
Issue: WON the trial court has jurisdiction to take cognizance of petitioner’s suit and
enforce the Agreement on the joint custody of the parties child
Held/ Rationale: The trial court’s refusal to entertain petitioner’s suit was grounded not on
its lack of power to do so but on its thinking that the Illinois court’s 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.” Petitioner’s 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 court’s so-called “retained jurisdiction.”

G.R. No. 224015, July 23, 2018

STEPHEN I. JUEGO-SAKAI, Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Amended Decision1 dated March 3, 2016 of the Court of Appeals (CA) in
CA-G.R. CV No. 104253 that set aside its former Decision dated November 25, 2015, which in turn,
affirmed the Decision of the Regional Trial Court (RTC), Branch 40, Daet, Camarines Norte, granting
petitioner's Petition for Judicial Recognition of Foreign Judgment.

The antecedent facts are as follows:

Petitioner Stephen I. Juego-Sakai and Toshiharu Sakai got married on August 11, 2000 in Japan
pursuant to the wedding rites therein. After two (2) years, the parties, by agreement, obtained a
divorce decree in said country dissolving their marriage.2 Thereafter, on April 5, 2013, petitioner filed
a Petition for Judicial Recognition of Foreign Judgment before the Regional Trial Court (RTC), Branch
40, Camarines Norte. In its Decision dated October 9, 2014, the RTC granted the petition and
recognized the divorce between the parties as valid and effective under Philippine Laws.3 On
November 25, 2015, the CA affirmed the decision of the RTC.
In an Amended Decision4 dated March 3, 2016, however, the CA revisited its findings and recalled
and set aside its previous decision. According to the appellate court, the second of the following
requisites under Article 26 of the Family Code is missing: (a) there is a valid marriage that has been
celebrated between a Filipino citizen and a foreigner; and (b) a divorce is obtained abroad by the
alien spouse capacitating him or her to remarry.5 This is because the divorce herein was consensual
in nature, obtained by agreement of the parties, and not by Sakai alone. Thus, since petitioner, a
Filipino citizen, also obtained the divorce herein, said divorce cannot be recognized in the Philippines.
In addition, the CA ruled that petitioner's failure to present authenticated copies of the Civil Code of
Japan was fatal to her cause.6

On May 2, 2016, petitioner filed the instant petition invoking the following arguments:

I.

WHETHER OR NOT THE HONORABLE [COURT OF APPEALS] GRAVELY ERRED UNDER LAW WHEN IT
HELD THAT THE SECOND REQUISITE FOR THE APPLICATION OF THE SECOND PARAGRAPH OF
ARTICLE 26 OF THE FAMILY CODE IS NOT PRESENT BECAUSE THE PETITIONER GAVE CONSENT TO
THE DIVORCE OBTAINED BY HER JAPANESE HUSBAND.

II.

WHETHER OR NOT THE HONORABLE [COURT OF APPEALS] GRAVELY ERRED UNDER LAW WHEN IT
HELD THAT THERE IS NO SUBSTANTIAL COMPLIANCE WITH REQUIREMENT ON THE SUBMISSION OF
AUTHENTICATED COPIES OF [THE] CIVIL CODE OF JAPAN RELATIVE TO DIVORCE AS REQUIRED BY
THE RULES.7
Petitioner posits that the divorce she obtained with her husband, designated as Divorce by
Agreement in Japan, as opposed to Judicial Divorce, is the more practical and common type of
divorce in Japan. She insists that it is to her great disadvantage if said divorce is not recognized and
instead, Judicial Divorce is required in order for her to avail of the benefit under the second
paragraph of Article 26 of the Family Code, since their divorce had already been granted
abroad.8 Moreover, petitioner asserts that the mere fact that she consented to the divorce does not
prevent the application of Article 26 for said provision does not state that where the consent of the
Filipino spouse was obtained in the divorce, the same no longer finds application. In support of her
contentions, petitioner cites the ruling in Republic of the Philippines v. Orbecido III wherein the Court
held that a Filipino spouse is allowed to remarry in the event that he or she is divorced by a Filipino
spouse who had acquired foreign citizenship.9 As to the issue of evidence presented, petitioner
explains that the reason why she was unable to present authenticated copies of the provisions of the
Civil Code of Japan relative to divorce is because she was unable to go to Japan due to the fact that
she was pregnant. Also, none of her friends could obtain a copy of the same for her. Instead, she
went to the library of the Japanese Embassy to photocopy the Civil Code. There, she was issued a
document which states that diplomatic missions of Japan overseas do not issue certified true copies
of Japanese Law nor process translation certificates of Japanese Law due to the potential problem in
the legal interpretation thereof. Thus, petitioner maintains that this constitutes substantial
compliance with the Rules on Evidence.10

We grant the petition.

The issue before Us has already been resolved in the landmark ruling of Republic v. Manalo,11 the
facts of which fall squarely on point with the facts herein. In Manalo, respondent Marelyn Manalo, a
Filipino, was married to a Japanese national named Yoshino Minoro. She, however, filed a case for
divorce before a Japanese Court, which granted the same and consequently issued a divorce decree
dissolving their marriage. Thereafter, she sought to have said decree recognized in the Philippines
and to have the entry of her marriage to Minoro in the Civil Registry in San Juan, Metro Manila,
cancelled, so that said entry shall not become a hindrance if and when she decides to remarry. The
trial court, however, denied Manalo's petition and ruled that Philippine law does not afford Filipinos
the right to file for a divorce, whether they are in the country or abroad, if they are married to
Filipinos or to foreigners, or if they celebrated their marriage in the Philippines or in another country.

On appeal, however, the Court therein rejected the trial court's view and affirmed, instead, the ruling
of the CA. There, the Court held that the fact that it was the Filipino spouse who initiated the
proceeding wherein the divorce decree was granted should not affect the application nor remove him
from the coverage of Paragraph 2 of Article 26 of the Family Code which states that "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 likewise have capacity to remarry under Philippine law." We observed that to interpret the word
"obtained" to mean that the divorce proceeding must actually be initiated by the alien spouse would
depart from the true intent of the legislature and would otherwise yield conclusions inconsistent with
the general purpose of Paragraph 2 of Article 26, which is, specifically, to avoid the absurd situation
where the Filipino spouse remains married to the alien spouse who, after a foreign divorce decree
that is effective in the country where it was rendered, is no longer married to the Filipino spouse. The
subject provision, therefore, should not make a distinction for a Filipino who initiated a foreign
divorce proceeding is in the same place and in like circumstance as a Filipino who is at the receiving
end of an alien initiated proceeding.12

Applying the foregoing pronouncement to the case at hand, the Court similarly rules that despite the
fact that petitioner participated in the divorce proceedings in Japan, and even if it is assumed that
she initiated the same, she must still be allowed to benefit from the exception provided under
Paragraph 2 of Article 26. Consequently, since her marriage to Toshiharu Sakai had already been
dissolved by virtue of the divorce decree they obtained in Japan, thereby capacitating Toshiharu to
remarry, petitioner shall likewise have capacity to remarry under Philippine law.

Nevertheless, as similarly held in Manalo, We cannot yet grant petitioner's Petition for Judicial
Recognition of Foreign Judgment for she has yet to comply with certain guidelines before our courts
may recognize the subject divorce decree and the effects thereof. Time and again, the Court has held
that the starting point in any recognition of a foreign divorce judgment is the acknowledgment that
our courts do not take judicial notice of foreign judgments and laws.13 This means that the foreign
judgment and its authenticity must be proven as facts under our rules on evidence, together with the
alien's applicable national law to show the effect of the judgment on the alien himself or
herself.14 Since both the foreign divorce decree and the national law of the alien, recognizing his or
her capacity to obtain a divorce, purport to be official acts of a sovereign authority, Section 2415 of
Rule 132 of the Rules of Court applies.16 Thus, what is required is proof, either by (1) official
publications or (2) copies attested by the officer having legal custody of the documents. If the copies
of official records are not kept in the Philippines, these must be (a) accompanied by a certificate
issued by the proper diplomatic or consular officer in the Philippine foreign service stationed in the
foreign country in which the record is kept and (b) authenticated by the seal of his office.17

In the instant case, the Office of the Solicitor General does not dispute the existence of the divorce
decree, rendering the same admissible. What remains to be proven, therefore, is the pertinent
Japanese Law on divorce considering that Japanese laws on persons and family relations are not
among those matters that Filipino judges are supposed to know by reason of their judicial function.18

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Amended
Decision dated March 3, 2016 of the Court of Appeals in CA-G.R. CV No. 104253
is REVERSED and SET ASIDE. The case is REMANDED to the court of origin for further proceedings
and reception of evidence as to the relevant Japanese law on divorce.

SO ORDERED.
FACTS: Petitioner Stephen I. Juego-Sakai and Toshiharu Sakai got married on August 11, 2000 in Japan
pursuant to the wedding rites therein. After two (2) years, the parties, by agreement, obtained a divorce decree
in said country dissolving their marriage. Thereafter, on April 5, 2013, petitioner filed a Petition for Judicial
Recognition of Foreign Judgment before the Regional Trial Court (RTC), Branch 40, Camarines Norte. In its
Decision dated October 9, 2014, the RTC granted the petition and recognized the divorce between the parties
as valid and effective under Philippine Laws.

On November 25, 2015, the CA affirmed the decision of the RTC.

In an Amended Decision dated March 3, 2016, however, the CA revisited its findings and recalled and set
aside its previous decision.

ISSUES:

 WoN the CA gravely erred when it held that the second requisite for the application of the second
paragraph of Article 26 of the Family Code is not present because the petitioner gave consent to the
divorce obtained by her Japanese husband

YES. The issue before Us has already been resolved in the landmark ruling of Republic v. Manalo, the facts of
which fall squarely on point with the facts herein.

Despite the fact that petitioner participated in the divorce proceedings in Japan, and even if it is assumed that
she initiated the same, she must still be allowed to benefit from the exception provided under Paragraph 2 of
Article 26. Consequently, since her marriage to Toshiharu Sakai had already been dissolved by virtue of the
divorce decree they obtained in Japan, thereby capacitating Toshiharu to remarry, petitioner shall likewise
have capacity to remarry under Philippine law.

Nevertheless, as similarly held in Manalo, We cannot yet grant petitioner's Petition for Judicial Recognition of
Foreign Judgment for she has yet to comply with certain guidelines before our courts may recognize the
subject divorce decree and the effects thereof.

The Office of the Solicitor General does not dispute the existence of the divorce decree, rendering the same
admissible. What remains to be proven, therefore, is the pertinent Japanese Law on divorce considering that
Japanese laws on persons and family relations are not among those matters that Filipino judges are supposed
to know by reason of their judicial function.

G.R. No. 234501, March 18, 2019

MERCANTILE INSURANCE CO., INC. PETITIONER, v. SARA YI, ALSO KNOWN AS SARAH YI,
RESPONDENT.

DECISION

J. REYES, JR., J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the
Decision1 dated May 19, 2017 and the Resolution2 dated August 25, 2017 of the Court of Appeals
(CA) in CA-G.R. CV No. 102408, reversing the ruling of the Regional Trial Court (RTC) of Manila,
Branch 36 which dismissed the case of revival of judgment filed by respondent Sara Yi (Yi).

Relevant Antecedents
FAM MART Co., Inc. (FAM MART), owned and operated by Young C. Chun and Young H. Chun, (the
Chuns) was secured by an insurance policy issued by petitioner Mercantile Insurance Company, Inc.
(MIC), through its California surplus lines broker, Great Republic Insurance Agency (GRI), under
policy number MIC 001007.3

On February 14, 1991,4 Yi was involved in an accident while within the premises of FAM MART, a
business establishment located at El Cajon, California, United States of America.5 As a result of
which, her right little finger was severed.6

FAM MART notified MIC of the accident in November 1991. A memorandum from the latter,
acknowledging that there is a valid policy in favor of FAM MART and that a contract existed between
FAM MART and MIC, was issued.7

On March 16, 1992, Yi filed a personal injury action (Civil Case No. 649705)8 against the Chuns.
Upon service of summons, FAM MART tendered the claim to its insurer, MIC.9

Initially, MIC, through counsel, defended FAM MART in said personal injury action without any
reservation of rights.10 However, sometime in August 1992, it withdrew its representation.11

On October 14, 1993, the Superior Court of the State of California for the County of San Diego
(Superior Court of California) issued a judgment in favor of Yi. The dispositive portion of which reads:

WHEREFORE, IT IS ORDERED, ADJUDGED AND DECREED that judgment be entered for Plaintiff
against Defendants, Fam Mart Co., Inc., Young C. Chun and Young H. Chun, in the amount of
$350,000.00.12

On November 2, 1993, Yi, together with the Chuns, filed a complaint for breach of insurance
contract, breach of covenant of good faith and fair dealing, fraud and negligent misrepresentation
and negligence (Civil Case No. 670417) against MIC. However, despite service of summons, MIC did
not file any pleading. Hence, a Judgment by Default13 was issued by the Superior Court of California
on September 22, 1995, thus:

IT IS HEREBY ORDERED, ADJUDGED AND DECREED:

That Plaintiffs shall have judgment in their favor and against Defendants MIC and GRI, and each of
them, jointly and severally, for compensatory damages in the sum of THREE HUNDRED FIFTY
THOUSAND DOLLARS ($350,000.00), with interest thereon at the rate of 10 percent per annum from
October 14, 1993 to September 8, 1995 in the amount of SIXTY[-]SIX THOUSAND FIVE HUNDRED
FORTY[-]SEVEN DOLLARS and SIXTY[-]SIX CENTS ($66,547.66).

That, in addition, Plaintiff YOUNG C. CHUN shall have judgment in his favor and against Defendants
MIC and GRI, and each of them, jointly and severally, for general damages for emotional distress
arising out of Defendant MIC and GRI's breach of the covenant of good faith and fair dealing for
failure to defend and indemnify Plaintiff YOUNG C. CHUN in the underlying action in the amount of
ONE HUNDRED THOUSAND DOLLARS ($100,000[.00]).

That, in addition, Plaintiff YOUNG H. CHUN shall have judgment in his favor and against Defendants
MIC and GRI, and each of them, jointly and severally, for general damages for emotional distress
arising out of Defendants] MIC and GRI's breach of the covenant of good faith and fair dealing for
failure to defend and indemnify Plaintiff YOUNG H. CHUN in the underlying action in the amount of
ONE HUNDRED THOUSAND DOLLARS ($100,000[.00]).

That, in addition, Plaintiffs shall recover from Defendant, MIC the sum of ONE HUNDRED FIFTY
THOUSAND DOLLARS ($150,000[.00]) as punitive damages.
That, in addition, Plaintiffs shall recover from Defendants, MIC and GRI, and each of them, jointly
and severally, reasonable attorney's fees as damages in the amount of EIGHT THOUSAND DOLLARS
($8,000[.00]).

That, in addition, Plaintiffs shall recover from Defendants, MIC and GRI, and each of them, jointly
and severally, premiums paid in the amount of TWO THOUSAND ONE DOLLARS and THIRTY[-]FIVE
CENTS ($2,001.35).14

Said Judgment became final and executory as no appeal was filed by any of the parties. On
September 21, 2005, a Notice of Renewal of Judgment15 was issued by the Superior Court of
California allowing Yi to enforce the Judgment for an additional period of 10 years from the date of
Application for Renewal of Judgment was filed.16 Per Attachment to the Renewal of Judgment,17 the
adjusted amount inclusive of interest owed by MIC to Yi and the Chuns amounted to $1,552,664.67.

As Yi was not able to enforce the Judgment in California, she filed an action for enforcement of
judgment before the RTC.

MIC filed an Answer, denying the claims of Yi and its alleged liability. It averred that it has no privity
of contract with Yi and FAM MART as it was not aware of any case of such nature considering that its
operations are within the Philippines.18

The RTC, in a Decision19 dated September 30, 2013, dismissed the case for lack of merit. In sum, the
RTC maintained that Yi was not able to prove her claim because the insurance policy was not
presented in evidence and that it has no jurisdiction over MIC as the latter was not properly served
with summons. The dispositive portion reads:

Based on the foregoing, the Court in:

1. Case No. 649705, the execution with respect to said judgment is denied because Sara
Yi had compromised with the defendant the award in said judgment, thus[,] making it
appear that there was satisfaction of judgment with respect to foreign judgment in Case
No. 649705. Likewise, the defendant is not within the jurisdiction of the Philippines and
was not served with Summons as the court has no jurisdiction over foreign entity with
no resident agent in the Philippines.

2. With respect to Civil Case No. 670417, the plaintiff was not able to prove with sufficient
evidence that she is entitled to her claim. She was not able to show even the existence
of the insurer policy which can be the basis of the liability/ies of the defendant and how
defendant had been related to its sub-agent or insurance companies abroad in relation
to the company and officers involved in such transaction. Failure to show such chain of
transaction among the parties alleged [sic] insurance companies; its relationship with
defendant company and her entitlement to the claims allegedly covered by a policy
emanating from the defendant and/or its officers agents is fatal to her claims. (Failure
of the plaintiff to show her insurable interest and how is the defendant liable to her).
She was not even able to identify the policy that covers her insurable interests.

Judgment by default in foreign country was rendered because allegedly defendant Mercantile
Insurance Company did not appear in the United States. The defendant appeared before this Court
and denies any participation with respect to the claim of Ms. Sara Yi. Moreover, the defendant denied
doing business in foreign land. The plaintiff was not able to controvert such negative assertion of the
defendant with evidence. The plaintiff was not able to prove with sufficient evidence that can be said
to sustain preponderance of evidence where she claims to be entitled to the relief prayed for or that
she is entitled to what she is claiming for in Civil Case No. 670417 because the policy that covers the
liability was not [shown,] hence the case is dismissed for lack of merit.
Furnish parties and counsel copies of this decision at their last known addresses.

SO ORDERED.20

Yi filed an appeal via Rule 44 of the Rules of Court before the CA.

In a Decision21 dated May 19, 2017, the CA reversed and set aside the ruling of the RTC and ordered
MIC to pay the amount adjudged in the judgment rendered by the Superior Court of California. The
CA maintained that in an action to enforce a foreign judgment, the matter left for proof is the foreign
judgment itself. Thus, it is not imperative on the part of Yi to provide proof of the insurance policy
and her insurable interest. The  fallo thereof reads:

WHEREFORE, the instant petition for review is GRANTED. The Decision of the Regional Trial Court
of Manila, Branch 36 ("RTC") dismissing the case for lack of merit in Civil Case No. 06-116386 is
hereby REVERSED and SET ASIDE. MERCANTILE INSURANCE COMPANY, INC. is ORDERED to
pay SARA YI, also known as SARAH YI, the amounts adjudged in the judgment rendered by the
Superior Court of the State of California in Case No. 670417.

SO ORDERED.22

A Motion for Reconsideration filed by MCI was denied in a Resolution23 dated August 25, 2017, viz.:

IN VIEW WHEREOF, the instant motion for reconsideration is hereby DENIED for lack of merit.

SO ORDERED.24

The Issue

Summarily, the issue in this case is whether or not the judgment issued by the Superior Court of
California may be enforced in our jurisdiction.

The Court's Ruling

Generally, in the absence of a special compact, no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of another country; however, the rules of comity,
utility and convenience of nations have established a usage among civilized states by which final
judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in different countries.25

Certainly, the Philippine legal system has long ago accepted into its jurisprudence and procedural
rules the viability of an action for enforcement of foreign judgment, as well as the requisites for such
valid enforcement, as derived from internationally accepted doctrines.26

In our jurisdiction, a judgment or final order of a foreign tribunal creates a right of action, and its
non-satisfaction is the cause of action by which a suit can be brought upon for its enforcement.27

Section 48, Rule 39 of the Rules of Court explicitly provides for the conditions for the recognition and
enforcement of a foreign judgment, to wit:

SEC. 48. Effect of foreign judgments or final orders. — The effect of a judgment or final order of a
tribunal of a foreign country, having jurisdiction to render the judgment or final order is as follows:

(a) In case of a judgment or final order upon a specific thing, the judgment or final order is
conclusive upon the title to the thing; and
(b) In case of a judgment or final order against a person, the judgment or final order is presumptive
evidence of a right as between the parties and their successors in interest by a subsequent title.

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact.

The causes of action arising from the enforcement of foreign judgment and that arising from the
allegations that gave rise to said foreign judgment differs, such that the former stems from the
foreign judgment itself, whereas the latter stems from the right in favor of the plaintiff and its
violation by the defendant's act or omission. The evidence to be presented likewise differs. The case
of Mijares v. Rañada28 illustrates in this wise:

There are distinctions, nuanced but discernible, between the cause of action arising from the
enforcement of a foreign judgment, and that arising from the facts or allegations that occasioned the
foreign judgment. They may pertain to the same set of facts, but there is an essential difference in
the right-duty correlatives that are sought to be vindicated. For example, in a complaint for damages
against a tortfeasor, the cause of action emanates from the violation of the right of the complainant
through the act or omission of the respondent. On the other hand, in a complaint for the enforcement
of a foreign judgment awarding damages from the same tortfeasor, for the violation of the same
right through the same manner of action, the cause of action derives not from the tortious act but
from the foreign judgment itself.

More importantly, the matters for proof are different. Using the above example, the complainant will
have to establish before the court the tortious act or omission committed by the tortfeasor, who in
turn is allowed to rebut these factual allegations or prove extenuating circumstances. Extensive
litigation is thus conducted on the facts, and from there the right to and amount of damages are
assessed. On the other hand, in an action to enforce a foreign judgment, the matter left for
proof is the foreign judgment itself, and not the facts from which it prescinds.

Guided by the foregoing, what is indispensable in an action for the enforcement of a foreign
judgment is the presentation of the foreign judgment itself as it comprises both the evidence and the
derivation of the cause of action. Further, the above-cited rule provides that a foreign judgment
against a person, i.e., an action in personam, as in this case, is merely a presumptive evidence of
rights between the parties. Such judgment may be attacked by proving lack of jurisdiction, lack of
notice to the party, collusion, fraud, or clear mistake of fact or law.29 Thus, contrary to MIC's position,
the burden is upon MIC to prove its allegations against the validity of the foreign judgment sought to
be enforced.

In disputing the foreign judgment, MIC argues that there was want of notice to it as there was no
proper service of summons in the trial before the California court.

On this note, we highlight that matters of remedy and procedure such as those relating to the service
of process upon a defendant are governed by the lex fori or the internal law of the forum,30 which is
the State of California in this case. This Court is well aware that foreign laws are not a matter of
judicial notice. Like any other fact, they must be alleged and proven.31

Section 24, Rule 132 of the Rules of Court provides that the records of the official acts of a sovereign
authority may be evidenced by an official publication thereof or by a copy attested by its legal
custodian, his deputy, and accompanied with a certificate that such officer has a custody, in case the
record is not kept in the Philippines. If the office in which the record is kept is in a foreign country,
the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice-
consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the
foreign country in which the record is kept, and authenticated by the seal of his office.
An exception to this rule, however, is recognized in the cases of Willamette Iron & Steel Works v.
Muzzal,32 and Manufacturers Hanover Trust Co. v. Guerrero,33 wherein we emphatically ruled that the
testimony under oath of an attorney-at-law of a foreign state, who quoted verbatim the applicable
law and who stated that the same was in force at the time the obligations were contracted, was
sufficient evidence to establish the existence of said law. In Manufacturers Hanover Trust, we stated
that it is necessary to state the specific law on which the claim was based.

In this case, Atty. Robert G. Dyer (Atty. Dyer), member of the bar of the State of California for more
than 30 years, testified as to the applicable law related to summons. In detail, he stated the exact
pertinent provision under the California Code of Civil Procedure, to wit:

Section 415.40 A summons may be served on a person outside this state in any manner provided by
this article or by sending a copy of the summons and of the complaint to the person to be served by
first-class mail, postage prepaid, requiring a return receipt. Service of a summons by this form of
mail is deemed complete on the 10th day after such mailing.

Indeed, pursuant to the above-proven law in the State of California, the service of summons by mail
to MIC, an entity outside its state, was valid. As such law was sufficiently alleged and proven, it is
beyond the province of this Court's authority to pass upon the issue as to the factual circumstances
relating to the proper service of summons upon MIC in the case before the State of California.

It is also significant to note that MIC impeaches the credibility of Atty. Dyer as an expert witness for
the first time on appeal. Before the RTC and the CA, MIC merely raised the argument that Atty. Dyer
failed to specifically cite the law of the State of California with respect to service of summons.

MIC also contends that failure of Yi to implead the Chuns, who are indispensable parties, renders all
actions of the court null and void.

We find that Yi need not implead her co-plaintiffs so as to be afforded the relief prayed for.

As aforementioned, the main consideration in an action for enforcement of a foreign judgment is to

put such judgment into force. Verily, direct involvement or being the subject of the foreign judgment
is sufficient to clothe a party with the requisite interest to institute an action before our courts for the
recognition of the foreign judgment.34

Our rules provide that an indispensable party is a party-in-interest without whom no final
determination can be had of an action.35 The party's interest in the subject matter of the suit and in
the relief sought are so inextricably intertwined with the other parties' that his legal presence as a
party to the proceeding is an absolute necessity. In his absence, there cannot be a resolution of the
dispute of the parties before the court which is effective, complete, or equitable.36 Alternatively put, it
is necessary that an indispensable party must be impleaded so that a full resolution of the case can
be obtained.

Here, it is apparent that the Chuns are not indispensable parties, whose inclusion is determinative of
the final outcome of the case. Their legal presence will not render the resolution of the action
incomplete and ineffective for there was a final judgment already rendered by the foreign court. As
previously mentioned, what our courts will do is to recognize the foreign judgment as a fact37 and
enforce the same as such foreign judgment creates a right of action in favor of Yi. Relevantly, MIC's
failure to satisfy the terms of the foreign judgment engenders a cause of action as to Yi, who
becomes clothed with requisite interest to institute an action for enforcement.

WHEREFORE, premises considered, the instant petition is hereby DENIED. Accordingly, the

Decision dated May 19, 2017 and the Resolution dated August 25, 2017 of the Court of Appeals in
CA-G.R. CV No. 102408 are AFFIRMED.
SO ORDERED.

G.R. No. 213198

GENEVIEVE ROSAL ARREZA, A.K.A. "GENEVIEVE ARREZA TOYO," Petitioner

vs.
TETSUSHI TOYO, LOCAL CIVIL REGISTRAR OF QUEZON CITY, AND THE ADMINISTRATOR AND CIVIL
REGISTRAR GENERAL OF THE NATIONAL STATISTICS OFFICE, Respondents

DECISION

LEONEN, J.:

Philippine courts do not take judicial notice of foreign judgments and laws. They must be proven as fact under our
rules on evidence. A divorce decree obtained abroad is deemed a foreign judgment, hence the indispensable need
to have it pleaded and proved before its legal effects may be extended to the Filipino spouse. 1

This Court resolves a Petition for Review on Certiorari  under Rule 45 of the Rules of Court, praying that the
2

Regional Trial Court's February 14, 2014 Judgment  and June 11, 2014 Resolution  in SP. PROC. No. Q-12-71339
3 4

be reversed and set aside. The Regional Trial Court denied Genevieve Rosal Arreza a.k.a. Genevieve Arreza
Toyo's (Genevieve) Petition for judicial recognition of foreign divorce and declaration of capacity to remarry.5

On April 1, 1991, Genevieve, a Filipino citizen, and Tetsushi Toyo (Tetsushi), a Japanese citizen, were married in
Quezon City. They bore a child whom they named Keiichi Toyo. 6

After 19 years of marriage, the two filed a Notification of Divorce by Agreement, which the Mayor of Konohana-ku,
Osaka City, Japan received on February 4, 2011. It was later recorded in Tetsushi's family register as certified by
the Mayor of Toyonaka City, Osaka Fu. 7

On May 24, 2012, Genevieve filed before the Regional Trial Court a Petition for judicial recognition of foreign
divorce and declaration of capacity to remarry. 8

In support of her Petition, Genevieve submitted a copy of their Divorce Certificate,  Tetsushi's Family Register,[10]
9

the Certificate of Acceptance of the Notification of Divorce,  and an English translation of the Civil Code of
11

Japan,  among others.

12 13

After finding the Petition sufficient in form and substance, the Regional Trial Court set the case for hearing on
October 16, 2012. 14

On the day of the hearing, no one appeared to oppose the Petition. After the jurisdictional requirements were
established and marked, trial on the merits ensued. 15

On February 14, 2014, the Regional Trial Court rendered a Judgment  denying Genevieve's Petition. It decreed that
16

while the pieces of evidence presented by Genevieve proved that their divorce agreement was accepted by the
local government of Japan,  she nevertheless failed to prove the copy of Japan's law.
17 18

The Regional Trial Court noted that the copy of the Civil Code of Japan and its English translation submitted by
Genevieve were not duly authenticated by the Philippine Consul in Japan, the Japanese Consul in Manila, or the
Department of Foreign Affairs. 19

Aggrieved, Genevieve filed a Motion for Reconsideration, but it was denied in the Regional Trial Court's June 11,
2014 Resolution. 20

Thus, Genevieve filed before this Court the present Petition for Review on Certiorari. 21
Petitioner argues that the trial court erred in not treating the English translation of the Civil Code of Japan as an
official publication in accordance with Rule 131, Section 3(gg) of the Rules of Court. That it is an official publication,
she points out, makes it a self-authenticating evidence of Japan's law under Rule 132, Section 25 of the Rules of
Court.22

Petitioner further contends that the trial court erred in not considering the English translation of the Japan Civil Code
as a learned treatise and in refusing to take judicial notice of its authors' credentials.23

In its August 13, 2014 Resolution,  this Court required respondents to file their comment.
24

In their Comment,  respondents, through the Office of the Solicitor General, maintain that the Regional Trial Court
25

was correct in denying the petition for petitioner's failure to prove respondent Tetsushi's national law.  They stress
26

that in proving a foreign country's law, one must comply with the requirements under Rule 132, Sections 24 and 25
of the Rules of Court. 27

Respondents similarly claim that what Rule 131, Section 3(gg) of the Rules of Court presumes is "the fact of printing
and publication[,]"  not that it was an official publication by the government of Japan.
28 29

Finally, respondents insist that before the English translation of the Japan Civil Code may be considered as a
learned treatise, the trial court must first take judicial notice that the writer is recognized in his or her profession as
an expert in the subject. 30

In its March 25, 2015 Resolution,  this Court directed petitioner to file her reply.
31

In her Reply,  petitioner asserts that she submitted in evidence the Civil Code of Japan as an official publication
32

printed "under authorization of the Ministry of Justice[.]"  She contends that because it was printed by a public
33

authority, the Civil Code of Japan is deemed to be an official publication under Rule 131, Section 3(gg) of the Rules
of Court and, therefore, is a self-authenticating document that need not be certified under Rule 132, Section 24. 34

In its August 3, 2016 Resolution,  this Court resolved to dispense with the filing of respondent Tetsushi's Comment.
35

In addition, the parties were required to file their respective memoranda.

In her Memorandum,  petitioner reiterates that the Regional Trial Court erred in not considering the Civil Code of
36

Japan as an official publication and its English translation as a learned treatise. 37

On September 23, 2016, respondents manifested that they are adopting their Comment as their memorandum. 38

The issue for this Court's resolution is whether or not the Regional Trial Court erred in denying the petition for
judicial recognition of foreign divorce and declaration of capacity to remarry filed by petitioner Genevieve Rosal
Arreza a.k.a. Genevieve Arreza Toyo.

When a Filipino and an alien get married, and the alien spouse later acquires a valid divorce abroad, the Filipino
spouse shall have the capacity to remarry provided that the divorce obtained by the foreign spouse enables him or
her to remarry. Article 26 of the Family Code, as amended,  provides:
39

ARTICLE 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)

The second paragraph was introduced as a corrective measure to resolve an absurd situation where the Filipino
spouse remains married to the alien spouse even after their marital bond had been severed by the divorce decree
obtained abroad.  Through this provision, Philippine courts are given the authority "to extend the effect of a foreign
40

divorce decree to a Filipino spouse without undergoing trial to determine the validity of the dissolution of the
marriage."  It bestowed upon the Filipino spouse a substantive right to have his or her marriage considered
41

dissolved, granting him or her the capacity to remarry. 42

Nonetheless, settled is the rule that in actions involving the recognition of a foreign divorce judgment, it is
indispensable that the petitioner prove not only the foreign judgment granting the divorce, but also the alien
spouse's national law. This rule is rooted in the fundamental theory that Philippine courts do not take judicial notice
of foreign judgments and laws. As explained in Corpuz v. Sto. Tomas: 43

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our courts do not take
judicial notice of foreign judgments and laws. Justice Herrera explained that, as a rule, "no sovereign is bound to
give effect within its dominion to a judgment rendered by a tribunal of another country." This means that the foreign
judgment and its authenticity must be proven as facts under our rules on evidence, together with the alien's
applicable national law to show the effect of the judgment on the alien himself or herself. The recognition may be
made in an action instituted specifically for the purpose or in another action where a party invokes the foreign
decree as an integral aspect of his [or her] claim or defense.  (Citations omitted)
44

Both the foreign divorce decree and the foreign spouse's national law, purported to be official acts of a sovereign
authority, can be established by complying with the mandate of Rule 132, Sections 24  and 25  of the Rules of
45 46

Court:

Under Sections 24 and 25 of Rule 132, on the other hand, a writing or document may be proven as a public or
official record of a foreign country by either (1) an official publication or (2) a copy thereof attested by the officer
having legal custody of the document. If the record is not kept in the Philippines, such copy must be (a)
accompanied by a certificate issued by the proper diplomatic or consular officer in the Philippine foreign service
stationed in the foreign country in which the record is kept and (b) authenticated by the seal of his office.  (Citations
47

omitted)

Here, the Regional Trial Court ruled that the documents petitioner submitted to prove the divorce decree have
complied with the demands of Rule 132, Sections 24 and 25.  However, it found the copy of the Japan Civil Code
48

and its English translation insufficient to prove Japan's law on divorce. It noted that these documents were not duly
authenticated by the Philippine Consul in Japan, the Japanese Consul in Manila, or the Department of Foreign
Affairs.
49

Notwithstanding, petitioner argues that the English translation of the Japan Civil Code is an official publication
having been published under the authorization of the Ministry of Justice  and, therefore, is considered a self-
50

authenticating document. 51

Petitioner is mistaken.

In Patula v. People,  this Court explained the nature of a self-authenticating document:

52

The nature of documents as either public or private determines how the documents may be presented as evidence
in court. A public document, by virtue of its official or sovereign character, or because it has been acknowledged
before a notary public (except a notarial will) or a competent public official with the formalities required by law, or
because it is a public record of a private writing authorized by law, is self authenticating and requires no further
authentication in order to be presented as evidence in court. In contrast, a private document is any other writing,
deed, or instrument executed by a private person without the intervention of a notary or other person legally
authorized by which some disposition or agreement is proved or set forth. Lacking the official or sovereign character
of a public document, or the solemnities prescribed by law, a private document requires authentication in the
manner allowed by law or the Rules of Court before its acceptance as evidence in court. The requirement of
authentication of a private document is excused only in four instances, specifically: (a) when the document is an
ancient one within the context of Section 21, Rule 132 of the Rules of Court; (b) when the genuineness and
authenticity of an actionable document have not been specifically denied under oath by the adverse party; (c) when
the genuineness and authenticity of the document have been admitted; or (d) when the document is not being
offered as genuine.  (Emphasis supplied, citations omitted)
53
The English translation submitted by petitioner was published by Eibun-Horei-Sha, Inc.,  a private company in
54

Japan engaged in publishing English translation of Japanese laws, which came to be known as the EHS Law
Bulletin Series.  However, these translations are "not advertised as a source of official translations of Japanese
55

laws;"  rather, it is in the KANPO or the Official Gazette where all official laws and regulations are published, albeit
56

in Japanese. 57

Accordingly, the English translation submitted by petitioner is not an official publication exempted from the
requirement of authentication.

Neither can the English translation be considered as a learned treatise. Under the Rules of Court, "[a] witness can
testify only to those facts which he knows of his [or her] personal knowledge[.]"  The evidence is hearsay when it is
58

"not . . . what the witness knows himself [or herself] but of what he [or she] has heard from others."  The rule
59

excluding hearsay evidence is not limited to oral testimony or statements, but also covers written statements. 60

The rule is that hearsay evidence "is devoid of probative value[.]"  However, a published treatise may be admitted
61

as tending to prove the truth of its content if: (1) the court takes judicial notice; or (2) an expert witness testifies that
the writer is recognized in his or her profession as an expert in the subject. 62

Here, the Regional Trial Court did not take judicial notice of the translator's and advisors' qualifications.  Nor was an
1âшphi1

expert witness presented to testify on this matter. The only evidence of the translator's and advisors' credentials is
the inside cover page of the English translation of the Civil Code of Japan.  Hence, the Regional Trial Court was
63

correct in not considering the English translation as a learned treatise.

Finally, settled is the rule that, generally, this Court only entertains questions of law in a Rule 45 petition.  Questions 64

of fact, like the existence of Japan's law on divorce,  are not within this Court's ambit to resolve.
65 66

Nonetheless, in Medina v. Koike,  this Court ruled that while the Petition raised questions of fact, "substantial ends
67

of justice warrant that the case be referred to the [Court of Appeals] for further appropriate proceedings":

Considering that the validity of the divorce decree between Doreen and Michiyuki, as well as the existence of
pertinent laws of Japan on the matter are essentially factual that calls for a re-evaluation of the evidence presented
before the RTC, the issue raised in the instant appeal is obviously a question of fact that is beyond the ambit of a
Rule 45 petition for review.

....

Nonetheless, despite the procedural restrictions on Rule 45 appeals as above-adverted, the Court may refer the
case to the [Court of Appeals] under paragraph 2, Section 6 of Rule 56 of the Rules of Court, which provides:

SEC. 6. Disposition of improper appeal. — ...

An appeal by certiorari taken to the Supreme Court from the Regional Trial Court submitting issues of fact may be
referred to the Court of Appeals for decision or appropriate action. The determination of the Supreme Court on
whether or not issues of fact are involved shall be final.

This, notwithstanding the express provision under Section 5 (f) thereof that an appeal likewise "may" be dismissed
when there is error in the choice or mode of appeal.

Since the said Rules denote discretion on the part of the Court to either dismiss the appeal or refer the case to the
[Court of Appeals], the question of fact involved in the instant appeal and substantial ends of justice warrant that the
case be referred to the [Court of Appeals] for further appropriate proceedings. It bears to stress that procedural rules
were intended to ensure proper administration of law and justice. The rules of procedure ought not to be applied in a
very rigid, technical sense, for they are adopted to help secure, not override, substantial justice. A deviation from its
rigid enforcement may thus be allowed to attain its prime objective, for after all, the dispensation of justice is the
core reason for the existence of the courts.  (Citations omitted)
68
WHEREFORE, in the interest of orderly procedure and substantial justice, the case is hereby REFERRED to the
Court of Appeals for appropriate action, including the reception of evidence, to DETERMINE and RESOLVE the
pertinent factual issues in accordance with this Decision.

SO ORDERED.

Facts:

1. On April 1, 1991, Genevieve, a Filipino citizen, and Tetsushi Toyo (Tetsushi), a Japanese citizen, were married in
Quezon City. They bore a child whom they named Keiichi Toyo.
2. After 19 years of marriage, the two Fled a Notification of Divorce by Agreement, which the Mayor of Konohana-ku,
Osaka City, Japan received on February 4, 2011. It was later recorded in Tetsushi's family register as certified by
the Mayor of Toyonaka City, Osaka Fu.
3. On May 24, 2012, Genevieve Fled before the Regional Trial Court a Petition for judicial recognition of foreign
divorce and declaration of capacity to remarry.

She submitted the following evidences:

I. Copy of Divorce Certificate
II. Tetsushi’s Family Register
III. Certificate of Acceptance of the Notification of Divorce
IV. English Translation of the Civil Code of Japan

4. RTC: denied Genevieve’s Petition. It decreed that while the pieces of evidence presented by Genevieve proved
that their divorce agreement was accepted by the local government of Japan, she nevertheless failed to prove the
copy of Japan's law (it was not duly authenticated by the Philippine Consul in Japan, the Japanese Consul in
Manila or the Department of Foreign Affairs).

Issue:

1. Whether or not the Regional Trial Court erred in denying the petition for judicial recognition of foreign divorce and
declaration of capacity to remarry filed by petitioner Genevieve Rosal Arreza a.k.a. Genevieve Arreza Toyo. [NO]

Ruling:

1. When a Filipino and an alien get married, and the alien spouse later acquires a valid divorce abroad, the Filipino
spouse shall have the capacity to remarry provided that the divorce obtained by the foreign spouse enables him
or her to remarry. Article 26 of the Family Code, as amended, provides:

ARTICLE 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)
2. Philippine courts are given the authority "to extend the effect of a foreign divorce decree to a Filipino spouse
without undergoing trial to determine the validity of the dissolution of the marriage.
3. It bestowed upon the Filipino spouse a substantive right to have his or her marriage considered dissolved,
granting him or her the capacity to remarry.
4. Nonetheless, settled is the rule that in actions involving the recognition of a foreign divorce judgment, it is
indispensable that the petitioner prove not only the foreign judgment granting the divorce, but also the alien
spouse's national law. This rule is rooted in the fundamental theory that Philippine courts do not take judicial
notice of foreign judgments and laws.
5. In this case, The English translation submitted by petitioner was published by Eibun-HoreiSha, Inc., 54 a private
company in Japan engaged in publishing English translation of Japanese laws, which came to be known as the
EHS Law Bulletin Series. 55 However, these translations are "not advertised as a source of official translations of
Japanese laws;" rather, it is in the KANPŌ or the Official Gazette where all official laws and regulations are
 published, albeit in Japanese. Accordingly, the English translation submitted by petitioner is not an official
publication exempted from the requirement of authentication.

Dispositive Portion:

WHEREFORE, in the interest of orderly procedure and substantial justice, the case is hereby REFERRED to the
Court of Appeals for appropriate action, including the reception of evidence, to DETERMINE and RESOLVE the pertinent
factual issues in accordance with this Decision.