EASTBOARD NAVIGATION v. JUAN YSMAEL CO., INC.

G.R. No. L-9090 | September 1, 1957

Doctrine: The law of the forum governs procedural matters (such as notice requirements). The law
of the state where a foreign judgment is sought to be enforced cannot be invoked to impugn the
validity of the proceedings where the foreign judgment was made. Also, a foreign corporation has
capacity to sue even without a license to transact business if it is not engaged in business in the
Philippines.

Facts: Juan Ysmael Co., Inc (Philippine corporation), through K. H. Hemady (its president and
general manager), chartered Eastboard Navigation’s (Canadian corporation) vessel to load a cargo
of scrap iron in the Philippines for Buenos Aires. The charter party agreement contained a
typewritten clause providing for compulsory arbitration in the state of New York, in case of any
disputes that may arise based on their agreement.

A dispute arose regarding the liability of Ysmael Co., Inc. for the payment of freight and
demurrage. An arbitration agreement was eventually executed in New York between the 2 parties.
The arbitration agreement was then presented by Eastboard = to the U.S. District Court in New
York for confirmation where said Court confirmed and issued an Order and Final Decree.

Eastboard then brought this action in the Philippines to enforce the “Order and Final Decree”.
Ysmael Co. however argues that since Eastboard Navigation is a foreign corporation without a
license to do business in the Philippines, it has no capacity to sue in this jurisdiction. Note that the
stipulation of facts of the parties stated that this transaction was the first business undertaken by
Eastboard Navigation in the Philippines.

Issues: (1) Whether Eastboard has capacity to sue in the Philippines? - YES
(2) Whether the court may enforce the Decree issued by the New York District Court. - YES

Held: (1) While Eastboard is a foreign corporation without license to transact business in the
Philippines, it does not follow that it has no capacity to bring the present action. Such license is not
necessary because it is not engaged in business in the Philippines. In fact, the transaction herein
involved is the first business undertaken by Eastboard in the Philippines, although on a previous
occasion Eastboard's vessel was chartered by the National Rice and Corn Corporation to carry rice
cargo from abroad to the Philippines. These 2 isolated transactions do not constitute engaging in
business in the Philippines within the purview of Sections 68 and 69 of the Corporation Law so as
to bar Eastboard from seeking redress in our courts.

(2) The defense of Ysmael Co. that the Decree may not be enforced in the Philippines is predicated
on the alleged fact that it was never served with notice, summons, or process relative to the
submission of the award of the arbitrators to New York court, invoking the U.S. Arbitration Act.
The law invoked, however, does not sustain Ysmael Co. pretense since the Arbitration Act does not
necessarily require that service of notice of the application for confirmation be made on the adverse
party himself (in case of a non-resident), it being sufficient that it be made upon his attorney. In this
case, a copy of notice of submission of the award to the District Court of New York was served
upon Ysmael Co.’s counsel who in due time made of record their appearance and actually appeared
when the case was heard. It is also significant that Ysmael Co.’s counsel never impugned the
jurisdiction of the court over defendant nor did they ever plead before it that they were bereft of
authority to represent Ysmael Co. It cannot therefore defeat the effect of this decision by alleging
want of jurisdiction, or want of notice.