MINORU FUJIKI, PETITIONER,

vs.
MARIA PAZ GALELA MARINAY, SHINICHI MAEKARA, LOCAL CIVIL REGISTRAR OF
QUEZON CITY, AND THE ADMINISTRATOR AND CIVIL REGISTRAR GENERAL OF THE
NATIONAL STATISTICS OFFICE, RESPONDENTS.

DECISION

CARPIO, J.:

The Case

This is a direct recourse to this Court from the Regional Trial Court (RTC), Branch 107, Quezon
City, through a petition for review on certiorari under Rule 45 of the Rules of Court on a pure
question of law. The petition assails the Order 1 dated 31 January 2011 of the RTC in Civil Case
No. Q-11-68582 and its Resolution dated 2 March 2011 denying petitioner’s Motion for
Reconsideration. The RTC dismissed the petition for "Judicial Recognition of Foreign Judgment
(or Decree of Absolute Nullity of Marriage)" based on improper venue and the lack of personality
of petitioner, Minoru Fujiki, to file the petition.

The Facts

Petitioner Minoru Fujiki (Fujiki) is a Japanese national who married respondent Maria Paz Galela
Marinay (Marinay) in the Philippines 2 on 23 January 2004. The marriage did not sit well with
petitioner’s parents. Thus, Fujiki could not bring his wife to Japan where he resides. Eventually,
they lost contact with each other.

In 2008, Marinay met another Japanese, Shinichi Maekara (Maekara). Without the first marriage
being dissolved, Marinay and Maekara were married on 15 May 2008 in Quezon City,
Philippines. Maekara brought Marinay to Japan. However, Marinay allegedly suffered physical
abuse from Maekara. She left Maekara and started to contact Fujiki. 3

Fujiki and Marinay met in Japan and they were able to reestablish their relationship. In 2010,
Fujiki helped Marinay obtain a judgment from a family court in Japan which declared the
marriage between Marinay and Maekara void on the ground of bigamy.4 On 14 January 2011,
Fujiki filed a petition in the RTC entitled: "Judicial Recognition of Foreign Judgment (or Decree of
Absolute Nullity of Marriage)." Fujiki prayed that (1) the Japanese Family Court judgment be
recognized; (2) that the bigamous marriage between Marinay and Maekara be declared void ab
initio under Articles 35(4) and 41 of the Family Code of the Philippines; 5 and (3) for the RTC to
direct the Local Civil Registrar of Quezon City to annotate the Japanese Family Court judgment
on the Certificate of Marriage between Marinay and Maekara and to endorse such annotation to
the Office of the Administrator and Civil Registrar General in the National Statistics Office
(NSO).6

The Ruling of the Regional Trial Court

A few days after the filing of the petition, the RTC immediately issued an Order dismissing the
petition and withdrawing the case from its active civil docket. 7 The RTC cited the following
provisions of the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC):

Sec. 2. Petition for declaration of absolute nullity of void marriages. –

(a) Who may file. – A petition for declaration of absolute nullity of void marriage may be filed
solely by the husband or the wife.
 xxxx

Sec. 4. Venue. – The petition shall be filed in the Family Court of the province or city where the
petitioner or the respondent has been residing for at least six months prior to the date of filing, or
in the case of a non-resident respondent, where he may be found in the Philippines, at the
election of the petitioner. x x x

The RTC ruled, without further explanation, that the petition was in "gross violation" of the above
provisions. The trial court based its dismissal on Section 5(4) of A.M. No. 02-11-10-SC which
provides that "[f]ailure to comply with any of the preceding requirements may be a ground for
immediate dismissal of the petition."8 Apparently, the RTC took the view that only "the husband
or the wife," in this case either Maekara or Marinay, can file the petition to declare their marriage
void, and not Fujiki.

Fujiki moved that the Order be reconsidered. He argued that A.M. No. 02-11-10-SC
contemplated ordinary civil actions for declaration of nullity and annulment of marriage. Thus,
A.M. No. 02-11-10-SC does not apply. A petition for recognition of foreign judgment is a special
proceeding, which "seeks to establish a status, a right or a particular fact," 9 and not a civil action
which is "for the enforcement or protection of a right, or the prevention or redress of a
wrong."10 In other words, the petition in the RTC sought to establish (1) the status and
concomitant rights of Fujiki and Marinay as husband and wife and (2) the fact of the rendition of
the Japanese Family Court judgment declaring the marriage between Marinay and Maekara as
void on the ground of bigamy. The petitioner contended that the Japanese judgment was
consistent with Article 35(4) of the Family Code of the Philippines 11 on bigamy and was therefore
entitled to recognition by Philippine courts.12

In any case, it was also Fujiki’s view that A.M. No. 02-11-10-SC applied only to void marriages
under Article 36 of the Family Code on the ground of psychological incapacity.13 Thus, Section
2(a) of A.M. No. 02-11-10-SC provides that "a petition for declaration of absolute nullity of void
marriages may be filed solely by the husband or the wife." To apply Section 2(a) in bigamy would
be absurd because only the guilty parties would be permitted to sue. In the words of Fujiki, "[i]t is
not, of course, difficult to realize that the party interested in having a bigamous marriage declared
a nullity would be the husband in the prior, pre-existing marriage."14 Fujiki had material interest
and therefore the personality to nullify a bigamous marriage.

Fujiki argued that Rule 108 (Cancellation or Correction of Entries in the Civil Registry) of the
Rules of Court is applicable. Rule 108 is the "procedural implementation" of the Civil Register
Law (Act No. 3753)15 in relation to Article 413 of the Civil Code. 16 The Civil Register Law imposes
a duty on the "successful petitioner for divorce or annulment of marriage to send a copy of the
final decree of the court to the local registrar of the municipality where the dissolved or annulled
marriage was solemnized."17 Section 2 of Rule 108 provides that entries in the civil registry
relating to "marriages," "judgments of annulments of marriage" and "judgments declaring
marriages void from the beginning" are subject to cancellation or correction.18 The petition in the
RTC sought (among others) to annotate the judgment of the Japanese Family Court on the
certificate of marriage between Marinay and Maekara.

Fujiki’s motion for reconsideration in the RTC also asserted that the trial court "gravely erred"
when, on its own, it dismissed the petition based on improper venue. Fujiki stated that the RTC
may be confusing the concept of venue with the concept of jurisdiction, because it is lack of
jurisdiction which allows a court to dismiss a case on its own. Fujiki cited Dacoycoy v.
Intermediate Appellate Court19 which held that the "trial court cannot pre-empt the defendant’s
prerogative to object to the improper laying of the venue by motu proprio dismissing the
case."20 Moreover, petitioner alleged that the trial court should not have "immediately dismissed"
the petition under Section 5 of A.M. No. 02-11-10-SC because he substantially complied with the
provision.
On 2 March 2011, the RTC resolved to deny petitioner’s motion for reconsideration. In its
Resolution, the RTC stated that A.M. No. 02-11-10-SC applies because the petitioner, in effect,
prays for a decree of absolute nullity of marriage. 21 The trial court reiterated its two grounds for
dismissal, i.e. lack of personality to sue and improper venue under Sections 2(a) and 4 of A.M.
No. 02-11-10-SC. The RTC considered Fujiki as a "third person" 22 in the proceeding because he
"is not the husband in the decree of divorce issued by the Japanese Family Court, which he now
seeks to be judicially recognized, x x x."23 On the other hand, the RTC did not explain its ground
of impropriety of venue. It only said that "[a]lthough the Court cited Sec. 4 (Venue) x x x as a
ground for dismissal of this case[,] it should be taken together with the other ground cited by the
Court x x x which is Sec. 2(a) x x x."24

The RTC further justified its motu proprio dismissal of the petition based on Braza v. The City
Civil Registrar of Himamaylan City, Negros Occidental. 25 The Court in Braza ruled that "[i]n a
special proceeding for correction of entry under Rule 108 (Cancellation or Correction of Entries in
the Original Registry), the trial court has no jurisdiction to nullify marriages x x x." 26 Braza
emphasized that the "validity of marriages as well as legitimacy and filiation can be questioned
only in a direct action seasonably filed by the proper party, and not through a collateral attack
such as [a] petition [for correction of entry] x x x." 27

The RTC considered the petition as a collateral attack on the validity of marriage between
Marinay and Maekara. The trial court held that this is a "jurisdictional ground" to dismiss the
petition.28 Moreover, the verification and certification against forum shopping of the petition was
not authenticated as required under Section 529 of A.M. No. 02-11-10-SC. Hence, this also
warranted the "immediate dismissal" of the petition under the same provision.

The Manifestation and Motion of the Office of the Solicitor General and the Letters of
Marinay and Maekara

On 30 May 2011, the Court required respondents to file their comment on the petition for
review.30 The public respondents, the Local Civil Registrar of Quezon City and the Administrator
and Civil Registrar General of the NSO, participated through the Office of the Solicitor General.
Instead of a comment, the Solicitor General filed a Manifestation and Motion.31

The Solicitor General agreed with the petition. He prayed that the RTC’s "pronouncement that
the petitioner failed to comply with x x x A.M. No. 02-11-10-SC x x x be set aside" and that the
case be reinstated in the trial court for further proceedings. 32 The Solicitor General argued that
Fujiki, as the spouse of the first marriage, is an injured party who can sue to declare the
bigamous marriage between Marinay and Maekara void. The Solicitor General cited Juliano-
Llave v. Republic33 which held that Section 2(a) of A.M. No. 02-11-10-SC does not apply in cases
of bigamy. In Juliano-Llave, this Court explained:

[t]he subsequent spouse may only be expected to take action if he or she had only discovered
during the connubial period that the marriage was bigamous, and especially if the conjugal bliss
had already vanished. Should parties in a subsequent marriage benefit from the bigamous
marriage, it would not be expected that they would file an action to declare the marriage void and
thus, in such circumstance, the "injured spouse" who should be given a legal remedy is the one
in a subsisting previous marriage. The latter is clearly the aggrieved party as the bigamous
marriage not only threatens the financial and the property ownership aspect of the prior marriage
but most of all, it causes an emotional burden to the prior spouse. The subsequent marriage will
always be a reminder of the infidelity of the spouse and the disregard of the prior marriage which
sanctity is protected by the Constitution. 34

The Solicitor General contended that the petition to recognize the Japanese Family Court
judgment may be made in a Rule 108 proceeding. 35 In Corpuz v. Santo Tomas,36 this Court held
that "[t]he 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." 37 While Corpuz concerned a foreign
divorce decree, in the present case the Japanese Family Court judgment also affected the civil
status of the parties, especially Marinay, who is a Filipino citizen.

The Solicitor General asserted that Rule 108 of the Rules of Court is the procedure to record
"[a]cts, events and judicial decrees concerning the civil status of persons" in the civil registry as
required by Article 407 of the Civil Code. In other words, "[t]he law requires the entry in the civil
registry of judicial decrees that produce legal consequences upon a person’s legal capacity and
status x x x."38 The Japanese Family Court judgment directly bears on the civil status of a Filipino
citizen and should therefore be proven as a fact in a Rule 108 proceeding.

Moreover, the Solicitor General argued that there is no jurisdictional infirmity in assailing a void
marriage under Rule 108, citing De Castro v. De Castro39 and Niñal v. Bayadog40 which declared
that "[t]he validity of a void marriage may be collaterally attacked." 41

Marinay and Maekara individually sent letters to the Court to comply with the directive for them to
comment on the petition.42 Maekara wrote that Marinay concealed from him the fact that she was
previously married to Fujiki.43 Maekara also denied that he inflicted any form of violence on
Marinay.44 On the other hand, Marinay wrote that she had no reason to oppose the petition. 45 She
would like to maintain her silence for fear that anything she say might cause misunderstanding
between her and Fujiki.46

The Issues

Petitioner raises the following legal issues:

(1) Whether the Rule on Declaration of Absolute Nullity of Void Marriages and Annulment
of Voidable Marriages (A.M. No. 02-11-10-SC) is applicable.

(2) Whether a husband or wife of a prior marriage can file a petition to recognize a
foreign judgment nullifying the subsequent marriage between his or her spouse and a
foreign citizen on the ground of bigamy.

(3) Whether the Regional Trial Court can recognize the foreign judgment in a proceeding
for cancellation or correction of entries in the Civil Registry under Rule 108 of the Rules
of Court.

The Ruling of the Court

We grant the petition.

The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable
Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign judgment
relating to the status of a marriage where one of the parties is a citizen of a foreign country.
Moreover, in Juliano-Llave v. Republic,47 this Court held that the rule in A.M. No. 02-11-10-SC
that only the husband or wife can file a declaration of nullity or annulment of marriage "does not
apply if the reason behind the petition is bigamy." 48

I.

For Philippine courts to recognize a foreign judgment relating to the status of a marriage where
one of the parties is a citizen of a foreign country, the petitioner only needs to prove the foreign
judgment as a fact under the Rules of Court. To be more specific, a copy of the foreign judgment
may be admitted in evidence and proven as a fact under Rule 132, Sections 24 and 25, in
relation to Rule 39, Section 48(b) of the Rules of Court. 49 Petitioner may prove the Japanese
Family Court judgment through (1) an official publication or (2) a certification or copy attested by
the officer who has custody of the judgment. If the office which has custody is in a foreign country
such as Japan, the certification may be made by the proper diplomatic or consular officer of the
Philippine foreign service in Japan and authenticated by the seal of office. 50

To hold that A.M. No. 02-11-10-SC applies to a petition for recognition of foreign judgment would
mean that the trial court and the parties should follow its provisions, including the form and
contents of the petition,51 the service of summons,52 the investigation of the public
prosecutor,53 the setting of pre-trial,54 the trial55 and the judgment of the trial court.56 This is
absurd because it will litigate the case anew. It will defeat the purpose of recognizing foreign
judgments, which is "to limit repetitive litigation on claims and issues."57 The interpretation of the
RTC is tantamount to relitigating the case on the merits. In Mijares v. Rañada,58 this Court
explained that "[i]f every judgment of a foreign court were reviewable on the merits, the plaintiff
would be forced back on his/her original cause of action, rendering immaterial the previously
concluded litigation."59

A foreign judgment relating to the status of a marriage affects the civil status, condition and legal
capacity of its parties. However, the effect of a foreign judgment is not automatic. To extend the
effect of a foreign judgment in the Philippines, Philippine courts must determine if the foreign
judgment is consistent with domestic public policy and other mandatory laws. 60 Article 15 of the
Civil Code provides that "[l]aws relating to family rights and duties, or to the status, condition and
legal capacity of persons are binding upon citizens of the Philippines, even though living abroad."
This is the rule of lex nationalii in private international law. Thus, the Philippine State may
require, for effectivity in the Philippines, recognition by Philippine courts of a foreign judgment
affecting its citizen, over whom it exercises personal jurisdiction relating to the status, condition
and legal capacity of such citizen.

A petition to recognize a foreign judgment declaring a marriage void does not require relitigation
under a Philippine court of the case as if it were a new petition for declaration of nullity of
marriage. Philippine courts cannot presume to know the foreign laws under which the foreign
judgment was rendered. They cannot substitute their judgment on the status, condition and legal
capacity of the foreign citizen who is under the jurisdiction of another state. Thus, Philippine
courts can only recognize the foreign judgment as a fact according to the rules of evidence.

Section 48(b), Rule 39 of the Rules of Court provides that a foreign judgment or final order
against a person creates a "presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title." Moreover, Section 48 of the Rules of Court states
that "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." Thus, Philippine courts
exercise limited review on foreign judgments. Courts are not allowed to delve into the merits of a
foreign judgment. Once a foreign judgment is admitted and proven in a Philippine court, it can
only be repelled on grounds external to its merits, i.e. , "want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact." The rule on limited review embodies the
policy of efficiency and the protection of party expectations, 61 as well as respecting the
jurisdiction of other states.62

Since 1922 in Adong v. Cheong Seng Gee,63 Philippine courts have recognized foreign divorce
decrees between a Filipino and a foreign citizen if they are successfully proven under the rules of
evidence.64 Divorce involves the dissolution of a marriage, but the recognition of a foreign divorce
decree does not involve the extended procedure under A.M. No. 02-11-10-SC or the rules of
ordinary trial. While the Philippines does not have a divorce law, Philippine courts may, however,
recognize a foreign divorce decree under the second paragraph of Article 26 of the Family Code,
to capacitate a Filipino citizen to remarry when his or her foreign spouse obtained a divorce
decree abroad.65
There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese Family
Court judgment nullifying the marriage between Marinay and Maekara on the ground of bigamy.
While the Philippines has no divorce law, the Japanese Family Court judgment is fully consistent
with Philippine public policy, as bigamous marriages are declared void from the beginning under
Article 35(4) of the Family Code. Bigamy is a crime under Article 349 of the Revised Penal Code.
Thus, Fujiki can prove the existence of the Japanese Family Court judgment in accordance with
Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of the Rules of Court.

II.

Since the recognition of a foreign judgment only requires proof of fact of the judgment, it may be
made in a special proceeding for cancellation or correction of entries in the civil registry under
Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court provides that "[a] special
proceeding is a remedy by which a party seeks to establish a status, a right, or a particular fact."
Rule 108 creates a remedy to rectify facts of a person’s life which are recorded by the State
pursuant to the Civil Register Law or Act No. 3753. These are facts of public consequence such
as birth, death or marriage,66 which the State has an interest in recording. As noted by the
Solicitor General, in Corpuz v. Sto. Tomas this Court declared that "[t]he 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."67

Rule 108, Section 1 of the Rules of Court states:

Sec. 1. Who may file petition. — Any person interested in any act, event, order or
decree concerning the civil status of persons which has been recorded in the civil
register, may file a verified petition for the cancellation or correction of any entry relating thereto,
with the Regional Trial Court of the province where the corresponding civil registry is located.
(Emphasis supplied)

Fujiki has the personality to file a petition to recognize the Japanese Family Court judgment
nullifying the marriage between Marinay and Maekara on the ground of bigamy because the
judgment concerns his civil status as married to Marinay. For the same reason he has the
personality to file a petition under Rule 108 to cancel the entry of marriage between Marinay and
Maekara in the civil registry on the basis of the decree of the Japanese Family Court.

There is no doubt that the prior spouse has a personal and material interest in maintaining the
integrity of the marriage he contracted and the property relations arising from it. There is also no
doubt that he is interested in the cancellation of an entry of a bigamous marriage in the civil
registry, which compromises the public record of his marriage. The interest derives from the
substantive right of the spouse not only to preserve (or dissolve, in limited instances 68) his most
intimate human relation, but also to protect his property interests that arise by operation of law
the moment he contracts marriage.69 These property interests in marriage include the right to be
supported "in keeping with the financial capacity of the family" 70 and preserving the property
regime of the marriage.71

Property rights are already substantive rights protected by the Constitution, 72 but a spouse’s right
in a marriage extends further to relational rights recognized under Title III ("Rights and
Obligations between Husband and Wife") of the Family Code. 73 A.M. No. 02-11-10-SC cannot
"diminish, increase, or modify" the substantive right of the spouse to maintain the integrity of his
marriage.74 In any case, Section 2(a) of A.M. No. 02-11-10-SC preserves this substantive right by
limiting the personality to sue to the husband or the wife of the union recognized by law.

Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to
question the validity of a subsequent marriage on the ground of bigamy. On the contrary, when
Section 2(a) states that "[a] petition for declaration of absolute nullity of void marriage may be
filed solely by the husband or the wife"75—it refers to the husband or the wife of the subsisting
marriage. Under Article 35(4) of the Family Code, bigamous marriages are void from the
beginning. Thus, the parties in a bigamous marriage are neither the husband nor the wife under
the law. The husband or the wife of the prior subsisting marriage is the one who has the
personality to file a petition for declaration of absolute nullity of void marriage under Section 2(a)
of A.M. No. 02-11-10-SC.

Article 35(4) of the Family Code, which declares bigamous marriages void from the beginning, is
the civil aspect of Article 349 of the Revised Penal Code, 76 which penalizes bigamy. Bigamy is a
public crime. Thus, anyone can initiate prosecution for bigamy because any citizen has an
interest in the prosecution and prevention of crimes.77 If anyone can file a criminal action which
leads to the declaration of nullity of a bigamous marriage, 78 there is more reason to confer
personality to sue on the husband or the wife of a subsisting marriage. The prior spouse does not
only share in the public interest of prosecuting and preventing crimes, he is also personally
interested in the purely civil aspect of protecting his marriage.

When the right of the spouse to protect his marriage is violated, the spouse is clearly an injured
party and is therefore interested in the judgment of the suit. 79 Juliano-Llave ruled that the prior
spouse "is clearly the aggrieved party as the bigamous marriage not only threatens the financial
and the property ownership aspect of the prior marriage but most of all, it causes an emotional
burden to the prior spouse."80 Being a real party in interest, the prior spouse is entitled to sue in
order to declare a bigamous marriage void. For this purpose, he can petition a court to recognize
a foreign judgment nullifying the bigamous marriage and judicially declare as a fact that such
judgment is effective in the Philippines. Once established, there should be no more impediment
to cancel the entry of the bigamous marriage in the civil registry.

III.

In Braza v. The City Civil Registrar of Himamaylan City, Negros Occidental, this Court held that a
"trial court has no jurisdiction to nullify marriages" in a special proceeding for cancellation or
correction of entry under Rule 108 of the Rules of Court. 81 Thus, the "validity of marriage[] x x x
can be questioned only in a direct action" to nullify the marriage. 82 The RTC relied on Braza in
dismissing the petition for recognition of foreign judgment as a collateral attack on the marriage
between Marinay and Maekara.

Braza is not applicable because Braza does not involve a recognition of a foreign judgment
nullifying a bigamous marriage where one of the parties is a citizen of the foreign country.

To be sure, a petition for correction or cancellation of an entry in the civil registry cannot
substitute for an action to invalidate a marriage. A direct action is necessary to prevent
circumvention of the substantive and procedural safeguards of marriage under the Family Code,
A.M. No. 02-11-10-SC and other related laws. Among these safeguards are the requirement of
proving the limited grounds for the dissolution of marriage, 83 support pendente lite of the spouses
and children,84 the liquidation, partition and distribution of the properties of the spouses, 85 and the
investigation of the public prosecutor to determine collusion. 86 A direct action for declaration of
nullity or annulment of marriage is also necessary to prevent circumvention of the jurisdiction of
the Family Courts under the Family Courts Act of 1997 (Republic Act No. 8369), as a petition for
cancellation or correction of entries in the civil registry may be filed in the Regional Trial Court
"where the corresponding civil registry is located." 87 In other words, a Filipino citizen cannot
dissolve his marriage by the mere expedient of changing his entry of marriage in the civil registry.

However, this does not apply in a petition for correction or cancellation of a civil registry entry
based on the recognition of a foreign judgment annulling a marriage where one of the parties is a
citizen of the foreign country. There is neither circumvention of the substantive and procedural
safeguards of marriage under Philippine law, nor of the jurisdiction of Family Courts under R.A.
No. 8369. A recognition of a foreign judgment is not an action to nullify a marriage. It is an action
for Philippine courts to recognize the effectivity of a foreign judgment, which presupposes a
case which was already tried and decided under foreign law. The procedure in A.M. No. 02-
11-10-SC does not apply in a petition to recognize a foreign judgment annulling a bigamous
marriage where one of the parties is a citizen of the foreign country. Neither can R.A. No. 8369
define the jurisdiction of the foreign court.

Article 26 of the Family Code confers jurisdiction on Philippine courts 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. The second paragraph of Article 26 of the Family Code provides
that "[w]here 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." In Republic v.
Orbecido,88 this Court recognized the legislative intent of the second paragraph of Article 26
which is "to avoid the absurd situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the Filipino spouse"89 under the
laws of his or her country. The second paragraph of Article 26 of the Family Code only authorizes
Philippine courts to adopt the effects of a foreign divorce decree precisely because the
Philippines does not allow divorce. Philippine courts cannot try the case on the merits because it
is tantamount to trying a case for divorce.

The second paragraph of Article 26 is only a corrective measure to address the anomaly that
results from a marriage between a Filipino, whose laws do not allow divorce, and a foreign
citizen, whose laws allow divorce. The anomaly consists in the Filipino spouse being tied to the
marriage while the foreign spouse is free to marry under the laws of his or her country. The
correction is made by extending in the Philippines the effect of the foreign divorce decree, which
is already effective in the country where it was rendered. The second paragraph of Article 26 of
the Family Code is based on this Court’s decision in Van Dorn v. Romillo90 which declared that
the Filipino spouse "should not be discriminated against in her own country if the ends of justice
are to be served."91

The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a
foreign citizen who obtains a foreign judgment nullifying the marriage on the ground of bigamy.
The Filipino spouse may file a petition abroad to declare the marriage void on the ground of
bigamy. The principle in the second paragraph of Article 26 of the Family Code applies because
the foreign spouse, after the foreign judgment nullifying the marriage, is capacitated to remarry
under the laws of his or her country. If the foreign judgment is not recognized in the Philippines,
the Filipino spouse will be discriminated—the foreign spouse can remarry while the Filipino
spouse cannot remarry.

Under the second paragraph of Article 26 of the Family Code, Philippine courts are empowered
to correct a situation where the Filipino spouse is still tied to the marriage while the foreign
spouse is free to marry. Moreover, notwithstanding Article 26 of the Family Code, Philippine
courts already have jurisdiction to extend the effect of a foreign judgment in the Philippines to the
extent that the foreign judgment does not contravene domestic public policy. A critical difference
between the case of a foreign divorce decree and a foreign judgment nullifying a bigamous
marriage is that bigamy, as a ground for the nullity of marriage, is fully consistent with Philippine
public policy as expressed in Article 35(4) of the Family Code and Article 349 of the Revised
Penal Code. The Filipino spouse has the option to undergo full trial by filing a petition for
declaration of nullity of marriage under A.M. No. 02-11-10-SC, but this is not the only remedy
available to him or her. Philippine courts have jurisdiction to recognize a foreign judgment
nullifying a bigamous marriage, without prejudice to a criminal prosecution for bigamy.

In the recognition of foreign judgments, Philippine courts are incompetent to substitute their
judgment on how a case was decided under foreign law. They cannot decide on the "family rights
and duties, or on the status, condition and legal capacity" of the foreign citizen who is a party to
the foreign judgment. Thus, Philippine courts are limited to the question of whether to extend the
effect of a foreign judgment in the Philippines. In a foreign judgment relating to the status of a
marriage involving a citizen of a foreign country, Philippine courts only decide whether to extend
its effect to the Filipino party, under the rule of lex nationalii expressed in Article 15 of the Civil
Code.

For this purpose, Philippine courts will only determine (1) whether the foreign judgment is
inconsistent with an overriding public policy in the Philippines; and (2) whether any alleging party
is able to prove an extrinsic ground to repel the foreign judgment, i.e. want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of law or fact. If there is neither
inconsistency with public policy nor adequate proof to repel the judgment, Philippine courts
should, by default, recognize the foreign judgment as part of the comity of nations. Section 48(b),
Rule 39 of the Rules of Court states that the foreign judgment is already "presumptive evidence
of a right between the parties." Upon recognition of the foreign judgment, this right becomes
conclusive and the judgment serves as the basis for the correction or cancellation of entry in the
civil registry. The recognition of the foreign judgment nullifying a bigamous marriage is a
subsequent event that establishes a new status, right and fact 92 that needs to be reflected in the
civil registry. Otherwise, there will be an inconsistency between the recognition of the effectivity
of the foreign judgment and the public records in the Philippines. 1âwphi1

However, the recognition of a foreign judgment nullifying a bigamous marriage is without

prejudice to prosecution for bigamy under Article 349 of the Revised Penal Code. 93 The
recognition of a foreign judgment nullifying a bigamous marriage is not a ground for extinction of
criminal liability under Articles 89 and 94 of the Revised Penal Code. Moreover, under Article 91
of the Revised Penal Code, "[t]he term of prescription [of the crime of bigamy] shall not run when
the offender is absent from the Philippine archipelago."

Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer sees the need to address the
questions on venue and the contents and form of the petition under Sections 4 and 5,
respectively, of A.M. No. 02-11-10-SC.

WHEREFORE, we GRANT the petition. The Order dated 31 January 2011 and the Resolution
dated 2 March 2011 of the Regional Trial Court, Branch 107, Quezon City, in Civil Case No. Q-
11-68582 are REVERSED and SET ASIDE. The Regional Trial Court
is ORDERED to REINSTATE the petition for further proceedings in accordance with this
Decision.

SO ORDERED.

WOLFGANG O. ROEHR, petitioner,

vs.
MARIA CARMEN D. RODRIGUEZ, HON. JUDGE JOSEFINA GUEVARA-SALONGA,
Presiding Judge of Makati RTC, Branch 149, respondents.

QUISUMBING, J.:

At the core of the present controversy are issues of (a) grave abuse of discretion allegedly
committed by public respondent and (b) lack of jurisdiction of the regional trial court, in matters
that spring from a divorce decree obtained abroad by petitioner.

In this special civil action for certiorari, petitioner assails (a) the order 1 dated September 30, 1999
of public respondent Judge Josefina Guevara-Salonga, Presiding Judge of Makati Regional Trial
Court,2 Branch 149, in Civil Case No. 96-1389 for declaration of nullity of marriage, and (b) the
order3 dated March 31, 2000 denying his motion for reconsideration. The assailed orders partially
set aside the trial court’s order dismissing Civil Case No. 96-1389, for the purpose of resolving
issues relating to the property settlement of the spouses and the custody of their children.
Petitioner Wolfgang O. Roehr, a German citizen and resident of Germany, married private
respondent Carmen Rodriguez, a Filipina, on December 11, 1980 in Hamburg, Germany. Their
marriage was subsequently ratified on February 14, 1981 in Tayasan, Negros Oriental.4 Out of
their union were born Carolynne and Alexandra Kristine on November 18, 1981 and October 25,
1987, respectively.

On August 28, 1996, private respondent filed a petition5 for declaration of nullity of marriage
before the Regional Trial Court (RTC) of Makati City. On February 6, 1997, petitioner filed a
motion to dismiss,6 but it was denied by the trial court in its order7 dated May 28, 1997.

On June 5, 1997, petitioner filed a motion for reconsideration, but was also denied in an
order8 dated August 13, 1997. On September 5, 1997, petitioner filed a petition for certiorari with
the Court of Appeals. On November 27, 1998, the appellate court denied the petition and
remanded the case to the RTC.

Meanwhile, petitioner obtained a decree of divorce from the Court of First Instance of Hamburg-
Blankenese, promulgated on December 16, 1997.

The decree provides in part:

[T]he Court of First Instance, Hamburg-Blankenese, Branch 513, has ruled through
Judge van Buiren of the Court of First Instance on the basis of the oral proceedings held
on 4 Nov. 1997:

The marriage of the Parties contracted on 11 December 1980 before the Civil Registrar
of Hamburg-Altona is hereby dissolved.

The parental custody for the children

Carolynne Roehr, born 18 November 1981

Alexandra Kristine Roehr, born on 25 October 1987

is granted to the father.

The litigation expenses shall be assumed by the Parties. 9

In view of said decree, petitioner filed a Second Motion to Dismiss on May 20, 1999 on the
ground that the trial court had no jurisdiction over the subject matter of the action or suit as a
decree of divorce had already been promulgated dissolving the marriage of petitioner and private
respondent.

On July 14, 1999, Judge Guevara-Salonga issued an order granting petitioner’s motion to
dismiss. Private respondent filed a Motion for Partial Reconsideration, with a prayer that the case
proceed for the purpose of determining the issues of custody of children and the distribution of
the properties between petitioner and private respondent.

On August 18, 1999, an Opposition to the Motion for Partial Reconsideration was filed by the
petitioner on the ground that there is nothing to be done anymore in the instant case as the
marital tie between petitioner Wolfgang Roehr and respondent Ma. Carmen D. Rodriguez had
already been severed by the decree of divorce promulgated by the Court of First Instance of
Hamburg, Germany on December 16, 1997 and in view of the fact that said decree of divorce
had already been recognized by the RTC in its order of July 14, 1999, through the
implementation of the mandate of Article 26 of the Family Code, 10 endowing the petitioner with
the capacity to remarry under the Philippine law.
On September 30, 1999, respondent judge issued the assailed order partially setting aside her
order dated July 14, 1999 for the purpose of tackling the issues of property relations of the
spouses as well as support and custody of their children. The pertinent portion of said order
provides:

Acting on the Motion for Partial Reconsideration of the Order dated July 14, 1999 filed by
petitioner thru counsel which was opposed by respondent and considering that the
second paragraph of Article 26 of the Family Code was included as an amendment thru
Executive Order 227, to avoid the absurd situation of a Filipino as being still married to
his or her alien spouse though the latter is no longer married to the Filipino spouse
because he/she had obtained a divorce abroad which is recognized by his/her national
law, and considering further the effects of the termination of the marriage under Article 43
in relation to Article 50 and 52 of the same Code, which include the dissolution of the
property relations of the spouses, and the support and custody of their children, the
Order dismissing this case is partially set aside with respect to these matters which may
be ventilated in this Court.

SO ORDERED.11 (Emphasis supplied.)

Petitioner filed a timely motion for reconsideration on October 19, 1999, which was denied by
respondent judge in an order dated March 31, 2000.12

Petitioner ascribes lack of jurisdiction of the trial court and grave abuse of discretion on the part
of respondent judge. He cites as grounds for his petition the following:

1. Partially setting aside the order dated July 14, 1999 dismissing the instant case is not
allowed by 1997 Rules of Civil Procedure. 13

2. Respondent Maria Carmen Rodriguez by her motion for Partial Reconsideration had
recognized and admitted the Divorce Decision obtained by her ex-husband in Hamburg,
Germany.14

3. There is nothing left to be tackled by the Honorable Court as there are no conjugal
assets alleged in the Petition for Annulment of Marriage and in the Divorce petition, and
the custody of the children had already been awarded to Petitioner Wolfgang Roehr. 15

Pertinent in this case before us are the following issues:

1. Whether or not respondent judge gravely abused her discretion in issuing her order
dated September 30, 1999, which partially modified her order dated July 14, 1999; and

2. Whether or not respondent judge gravely abused her discretion when she assumed
and retained jurisdiction over the present case despite the fact that petitioner has already
obtained a divorce decree from a German court.

On the first issue, petitioner asserts that the assailed order of respondent judge is completely
inconsistent with her previous order and is contrary to Section 3, Rule 16, Rules of Civil
Procedure, which provides:

Sec. 3. Resolution of motion - After the hearing, the court may dismiss the action or
claim, deny the motion, or order the amendment of the pleading.

The court shall not defer the resolution of the motion for the reason that the ground relied
upon is not indubitable.
 In every case, the resolution shall state clearly and distinctly the reasons therefor.
(Emphasis supplied.)

Petitioner avers that a court’s action on a motion is limited to dismissing the action or claim,
denying the motion, or ordering the amendment of the pleading.

Private respondent, on her part, argues that the RTC can validly reconsider its order dated July
14, 1999 because it had not yet attained finality, given the timely filing of respondent’s motion for
reconsideration.

Pertinent to this issue is Section 3 in relation to Section 7, Rule 37 of the 1997 Rules of Civil
Procedure, which provides:

Sec. 3. Action upon motion for new trial or reconsideration.—The trial court may set aside
the judgment or final order and grant a new trial, upon such terms as may be just, or may
deny the motion. If the court finds that excessive damages have been awarded or that
the judgment or final order is contrary to the evidence or law, it may amend such
judgment or final order accordingly.

Sec. 7. Partial new trial or reconsideration.—If the grounds for a motion under this Rule
appear to the court to affect the issues as to only a part, or less than all of the matters in
controversy, or only one, or less than all, of the parties to it, the court may order a new
trial or grant reconsideration as to such issues if severable without interfering with the
judgment or final order upon the rest. (Emphasis supplied.)

It is clear from the foregoing rules that a judge can order a partial reconsideration of a case that
has not yet attained finality. Considering that private respondent filed a motion for
reconsideration within the reglementary period, the trial court's decision of July 14, 1999 can still
be modified. Moreover, in Sañado v. Court of Appeals,16 we held that the court could modify or
alter a judgment even after the same has become executory whenever circumstances transpire
rendering its decision unjust and inequitable, as where certain facts and circumstances justifying
or requiring such modification or alteration transpired after the judgment has become final and
executory17 and when it becomes imperative in the higher interest of justice or when supervening
events warrant it.18 In our view, there are even more compelling reasons to do so when, as in this
case, judgment has not yet attained finality.

Anent the second issue, petitioner claims that respondent judge committed grave abuse of
discretion when she partially set aside her order dated July 14, 1999, despite the fact that
petitioner has already obtained a divorce decree from the Court of First Instance of Hamburg,
Germany.

In Garcia v. Recio,19 Van Dorn v. Romillo, Jr.,20 and Llorente v. Court of Appeals,21 we
consistently held that a divorce obtained abroad by an alien may be recognized in our
jurisdiction, provided such decree is valid according to the national law of the foreigner. Relevant
to the present case is Pilapil v. Ibay-Somera,22 where this Court specifically recognized the
validity of a divorce obtained by a German citizen in his country, the Federal Republic of
Germany. We held in Pilapil that a foreign divorce and its legal effects may be recognized in the
Philippines insofar as respondent is concerned in view of the nationality principle in our civil law
on the status of persons.

In this case, the divorce decree issued by the German court dated December 16, 1997 has not
been challenged by either of the parties. In fact, save for the issue of parental custody, even the
trial court recognized said decree to be valid and binding, thereby endowing private respondent
the capacity to remarry. Thus, the present controversy mainly relates to the award of the custody
of their two children, Carolynne and Alexandra Kristine, to petitioner.
As a general rule, divorce decrees obtained by foreigners in other countries are recognizable in
our jurisdiction, but the legal effects thereof, e.g. on custody, care and support of the children,
must still be determined by our courts.23 Before our courts can give the effect of res judicata to a
foreign judgment, such as the award of custody to petitioner by the German court, it must be
shown that the parties opposed to the judgment had been given ample opportunity to do so on
grounds allowed under Rule 39, Section 50 of the Rules of Court (now Rule 39, Section 48, 1997
Rules of Civil Procedure), to wit:

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.

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. In this jurisdiction, our Rules of
Court clearly provide that 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. 24

In the present case, it cannot be said that private respondent was given the opportunity to
challenge the judgment of the German court so that there is basis for declaring that judgment
as res judicata with regard to the rights of petitioner to have parental custody of their two
children. The proceedings in the German court were summary. As to what was the extent of
private respondent’s participation in the proceedings in the German court, the records remain
unclear. The divorce decree itself states that neither has she commented on the
proceedings25 nor has she given her opinion to the Social Services Office.26 Unlike petitioner who
was represented by two lawyers, private respondent had no counsel to assist her in said
proceedings.27 More importantly, the divorce judgment was issued to petitioner by virtue of the
German Civil Code provision to the effect that when a couple lived separately for three years, the
marriage is deemed irrefutably dissolved. The decree did not touch on the issue as to who the
offending spouse was. Absent any finding that private respondent is unfit to obtain custody of the
children, the trial court was correct in setting the issue for hearing to determine the issue of
parental custody, care, support and education mindful of the best interests of the children. This is
in consonance with the provision in the Child and Youth Welfare Code that the child’s welfare is
always the paramount consideration in all questions concerning his care and custody. 28

On the matter of property relations, petitioner asserts that public respondent exceeded the
bounds of her jurisdiction when she claimed cognizance of the issue concerning property
relations between petitioner and private respondent. Private respondent herself has admitted in
Par. 14 of her petition for declaration of nullity of marriage dated August 26, 1996 filed with the
RTC of Makati, subject of this case, that: "[p]etitioner and respondent have not acquired any
conjugal or community property nor have they incurred any debts during their marriage." 29 Herein
petitioner did not contest this averment. Basic is the rule that a court shall grant relief warranted
by the allegations and the proof.30 Given the factual admission by the parties in their pleadings
that there is no property to be accounted for, respondent judge has no basis to assert jurisdiction
in this case to resolve a matter no longer deemed in controversy.

In sum, we find that respondent judge may proceed to determine the issue regarding the custody
of the two children born of the union between petitioner and private respondent. Private
respondent erred, however, in claiming cognizance to settle the matter of property relations of
the parties, which is not at issue.

WHEREFORE, the orders of the Regional Trial Court of Makati, Branch 149, issued on
September 30, 1999 and March 31, 2000 are AFFIRMED with MODIFICATION. We hereby
declare that the trial court has jurisdiction over the issue between the parties as to who has
parental custody, including the care, support and education of the children, namely Carolynne
and Alexandra Kristine Roehr. Let the records of this case be remanded promptly to the trial
court for continuation of appropriate proceedings. No pronouncement as to costs.

SO ORDERED.

PHILIPPINE ALUMINUM WHEELS, INC., Petitioner, v. 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; chanrob1es virtua1 1aw 1ibrary

"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: jgc:chanrobles.com.ph

"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 LCS.

"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:jgc:chanrobles.com.ph

"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. 4 In its telex reply
of 29 April 1980, FASGI insisted that PAWI should meet the terms of the proposed
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 . . . [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: jgc:chanrobles.com.ph

"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: jgc:chanrobles.com.ph

"(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 letter 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 letter of credit." 6

Anent the wheels still in the custody of FASGI, the supplemental settlement
agreement provided that — chanrob1es virtua1 1aw 1ibrary

"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

"(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: jgc:chanrobles.com.ph

"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 PAWl’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.
11 The lower court ruled that the foreign judgment ignored the reciprocal obligations
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. 12 This situation, the trial 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,
13 dated 30 July 1997, the 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; 14
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. 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. 16 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 provides: chanrob1es virtual 1aw library

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:chanrob1es virtual 1aw library

x x x

(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.

In Soorajmull Nagarmull v. Binalbagan-Isabela Sugar Co. Inc., 17 one of the early

Philippine cases on the 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., v.
Court of Appeals, 18 the Court has said that a party attacking a foreign judgment is
tasked with the burden of overcoming its presumptive validity. chanrob1es virtua1 1aw 1ibrary

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 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, 22 or that which would go to the jurisdiction 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:jgc:chanrobles.com.ph

"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, 25 relying on their original agreement (the
"Transaction"). 26 Unfortunately, PAWI defaulted on its covenants thereunder that
thereby occasioned the subsequent execution of the supplemental settlement
agreement. This time the parties agreed, under paragraph 3.4(e) 27 thereof, that
any further default by PAWI would release FASGI from any obligation to maintain,
store or 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 chanrob1es virtua1 1aw 1ibrary
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.

Melo, Panganiban, Purisima and Gonzaga-Reyes, JJ., concur.

Endnotes: