SECOND DIVISION

CRESCENT PETROLEUM, LTD., G.R. No. 155014

Petitioner,
Present:

Puno, J .,
- versus - Chairman,
Austria-Martinez,
Callejo, Sr.,
Tinga, and

*
Chico-Nazario, J J .
M/V LOK MAHESHWARI,
THE SHIPPING CORPORATION
OF INDIA, and PORTSERV LIMITED Promulgated:
and/or TRANSMAR SHIPPING, INC.,
Respondents. November 11, 2005
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- x

DECISION

PUNO, J .:
This petition for review on certiorari under Rule 45 seeks the (a)
reversal of the November 28, 2001 Decision of the Court of Appeals in
CA-G.R. No. CV-54920,
[1]
which dismissed for want of jurisdiction
the instant case, and the September 3, 2002 Resolution of the same
appellate court,
[2]
which denied petitioners motion for reconsideration,
and (b) reinstatement of the July 25, 1996 Decision
[3]
of the Regional
Trial Court (RTC) in Civil Case No. CEB-18679, which held that
respondents were solidarily liable to pay petitioner the sum prayed for in
the complaint.
The facts are as follows: Respondent M/V Lok Maheshwari
(Vessel) is an oceangoing vessel of Indian registry that is owned by
respondent Shipping Corporation of India (SCI), a corporation organized
and existing under the laws of India and principally owned by the
Government of India. It was time-chartered by respondent SCI to Halla
Merchant Marine Co. Ltd. (Halla), a South Korean company. Halla, in
turn, sub-chartered the Vessel through a time charter to Transmar
Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to
Portserv Limited (Portserv). Both Transmar and Portserv are
corporations organized and existing under the laws of Canada.
On or about November 1, 1995, Portserv requested petitioner
Crescent Petroleum, Ltd. (Crescent), a corporation organized and
existing under the laws of Canada that is engaged in the business of
selling petroleum and oil products for the use and operation of
oceangoing vessels, to deliver marine fuel oils (bunker fuels) to the
Vessel. Petitioner Crescent granted and confirmed the request through
an advice via facsimile dated November 2, 1995. As security for the
payment of the bunker fuels and related services, petitioner Crescent
received two (2) checks in the amounts of US$100,000.00 and
US$200,000.00. Thus, petitioner Crescent contracted with its supplier,
Marine Petrobulk Limited (Marine Petrobulk), another Canadian
corporation, for the physical delivery of the bunker fuels to the Vessel.
On or about November 4, 1995, Marine Petrobulk delivered the
bunker fuels amounting to US$103,544 inclusive of barging and
demurrage charges to the Vessel at the port of Pioneer Grain,
Vancouver, Canada. The Chief Engineer Officer of the Vessel duly
acknowledged and received the delivery receipt. Marine Petrobulk
issued an invoice to petitioner Crescent for the US$101,400.00 worth of
the bunker fuels. Petitioner Crescent issued a check for the same
amount in favor of Marine Petrobulk, which check was duly encashed.
Having paid Marine Petrobulk, petitioner Crescent issued a revised
invoice dated November 21, 1995 to Portserv Limited, and/or the
Master, and/or Owners, and/or Operators, and/or Charterers of M/V
Lok Maheshwari in the amount of US$103,544.00 with instruction to
remit the amount on or before December 1, 1995. The period lapsed and
several demands were made but no payment was received. Also, the
checks issued to petitioner Crescent as security for the payment of the
bunker fuels were dishonored for insufficiency of funds. As a
consequence, petitioner Crescent incurred additional expenses of
US$8,572.61 for interest, tracking fees, and legal fees.

On May 2, 1996, while the Vessel was docked at the port of Cebu
City, petitioner Crescent instituted before the RTC of Cebu City an
action for a sum of money with prayer for temporary restraining order
and writ of preliminary attachment against respondents Vessel and SCI,
Portserv and/or Transmar. The case was raffled to Branch 10 and
docketed as Civil Case No. CEB-18679.

On May 3, 1996, the trial court issued a writ of attachment against
the Vessel with bond at P2,710,000.00. Petitioner Crescent withdrew its
prayer for a temporary restraining order and posted the required bond.
On May 18, 1996, summonses were served to respondents Vessel
and SCI, and Portserv and/or Transmar through the Master of the
Vessel. On May 28, 1996, respondents Vessel and SCI, through Pioneer
Insurance and Surety Corporation (Pioneer), filed an urgent ex-parte
motion to approve Pioneers letter of undertaking, to consider it as
counter-bond and to discharge the attachment. On May 29, 1996, the
trial court granted the motion; thus, the letter of undertaking was
approved as counter-bond to discharge the attachment.
For failing to file their respective answers and upon motion of
petitioner Crescent, the trial court declared respondents Vessel and SCI,
Portserv and/or Transmar in default. Petitioner Crescent was allowed to
present its evidence ex-parte.
On July 25, 1996, the trial court rendered its decision in favor of
petitioner Crescent, thus:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of plaintiff [Crescent] and against
the defendants [Vessel, SCI, Portserv and/or Transmar].

Consequently, the latter are hereby ordered to pay
plaintiff jointly and solidarily, the following:

(a) the sum of US$103,544.00, representing the
outstanding obligation;
(b) interest of US$10,978.50 as of July 3, 1996,
plus additional interest at 18% per annum for
the period thereafter, until the principal account
is fully paid;
(c) attorneys fees of P300,000.00; and
(d) P200,000.00 as litigation expenses.

SO ORDERED.

On August 19, 1996, respondents Vessel and SCI appealed to the
Court of Appeals. They attached copies of the charter parties between
respondent SCI and Halla, between Halla and Transmar, and between
Transmar and Portserv. They pointed out that Portserv was a time
charterer and that there is a clause in the time charters between
respondent SCI and Halla, and between Halla and Transmar, which
states that the Charterers shall provide and pay for all the fuel except as
otherwise agreed. They submitted a copy of Part II of the Bunker Fuel
Agreement between petitioner Crescent and Portserv containing a
stipulation that New York law governs the construction, validity and
performance of the contract. They likewise submitted certified copies
of the Commercial Instruments and Maritime Lien Act of the United
States (U.S.), some U.S. cases, and some Canadian cases to support
their defense.
On November 28, 2001, the Court of Appeals issued its assailed
Decision, which reversed that of the trial court, viz:
WHEREFORE, premises considered, the Decision
dated July 25, 1996, issued by the Regional Trial Court of
Cebu City, Branch 10, is hereby REVERSED and SET
ASIDE, and a new one is entered DISMISSING the instant
case for want of jurisdiction.

The appellate court denied petitioner Crescents motion for
reconsideration explaining that it dismissed the instant action primarily
on the ground of forum non conveniens considering that the parties are
foreign corporations which are not doing business in the Philippines.
Hence, this petition submitting the following issues for
resolution, viz:
1. Philippine courts have jurisdiction over a
foreign vessel found inside Philippine waters for the
enforcement of a maritime lien against said vessel
and/or its owners and operators;

2. The principle of forum non conveniens is
inapplicable to the instant case;

3. The trial court acquired jurisdiction over the
subject matter of the instant case, as well as over
the res and over the persons of the parties;

4. The enforcement of a maritime lien on the
subject vessel is expressly granted by law. The Ship
Mortgage Acts as well as the Code of Commerce
provides for relief to petitioner for its unpaid claim;

5. The arbitration clause in the contract was not
rigid or inflexible but expressly allowed petitioner to
enforce its maritime lien in Philippine courts provided
the vessel was in the Philippines;

6. The law of the state of New York is
inapplicable to the present controversy as the same has
not been properly pleaded and proved;

7. Petitioner has legal capacity to sue before
Philippine courts as it is suing upon an isolated
business transaction;

8. Respondents were duly served summons
although service of summons upon respondents is not
a jurisdictional requirement, the action being a
suit quasi in rem;

9. The trial courts decision has factual and legal
bases; and,

10. The respondents should be held jointly and
solidarily liable.

In a nutshell, this case is for the satisfaction of unpaid supplies
furnished by a foreign supplier in a foreign port to a vessel of foreign
registry that is owned, chartered and sub-chartered by foreign entities.
Under Batas Pambansa Bilang 129, as amended by Republic Act
No. 7691, RTCs exercise exclusive original jurisdiction (i)n all actions
in admiralty and maritime where the demand or claim exceeds two
hundred thousand pesos (P200,000) or in Metro Manila, where such
demand or claim exceeds four hundred thousand pesos (P400,000).
Two (2) tests have been used to determine whether a case involving a
contract comes within the admiralty and maritime jurisdiction of a court
- the locational test and the subject matter test. The English rule
follows the locational test wherein maritime and admiralty jurisdiction,
with a few exceptions, is exercised only on contracts made upon the sea
and to be executed thereon. This is totally rejected under the American
rule where the criterion in determining whether a contract is maritime
depends on the nature and subject matter of the contract, having
reference to maritime service and transactions.
[4]
In International
Harvester Company of the Philippines v. Aragon,
[5]
we adopted the
American rule and held that (w)hether or not a contract is maritime
depends not on the place where the contract is made and is to be
executed, making the locality the test, but on the subject matter of the
contract, making the true criterion a maritime service or a maritime
transaction.
A contract for furnishing supplies like the one involved in this case
is maritime and within the jurisdiction of admiralty.
[6]
It may be invoked
before our courts through an action in rem or quasi in rem or an action in
personam. Thus:
[7]

x x x
Articles 579 and 584 [of the Code of Commerce]
provide a method of collecting or enforcing not only the
liens created under Section 580 but also for the collection of
any kind of lien whatsoever.
[8]
In the Philippines, we have
a complete legislation, both substantive and adjective, under
which to bring an action in rem against a vessel for the
purpose of enforcing liens. The substantive law is found in
Article 580 of the Code of Commerce. The procedural law
is to be found in Article 584 of the same Code. The result is,
therefore, that in the Philippines any vessel even though it
be a foreign vessel found in any port of this Archipelago
may be attached and sold under the substantive law which
defines the right, and the procedural law contained in the
Code of Commerce by which this right is to be enforced.
[9]
x
x x. But where neither the law nor the contract between the
parties creates any lien or charge upon the vessel, the only
way in which it can be seized before judgment is by pursuing
the remedy relating to attachment under Rule 59 [now Rule
57] of the Rules of Court.
[10]


But, is petitioner Crescent entitled to a maritime lien under our
laws? Petitioner Crescent bases its claim of a maritime lien onSections
21, 22 and 23 of Presidential Decree No. 1521 (P.D. No. 1521), also
known as the Ship Mortgage Decree of 1978,viz:
Sec. 21. Maritime Lien for Necessaries; persons
entitled to such lien. - Any person furnishing repairs,
supplies, towage, use of dry dock or maritime railway, or
other necessaries, to any vessel, whether foreign or
domestic, upon the order of the owner of such vessel, or of a
person authorized by the owner, shall have a maritime lien
on the vessel, which may be enforced by suit in rem, and it
shall be necessary to allege or prove that credit was given to
the vessel.

Sec. 22. Persons Authorized to Procure Repairs,
Supplies and Necessaries. - The following persons shall be
presumed to have authority from the owner to procure
repairs, supplies, towage, use of dry dock or marine railway,
and other necessaries for the vessel: The managing owner,
ships husband, master or any person to whom the
management of the vessel at the port of supply is entrusted.
No person tortuously or unlawfully in possession or charge
of a vessel shall have authority to bind the vessel.

Sec. 23. Notice to Person Furnishing Repairs,
Supplies and Necessaries. - The officers and agents of a
vessel specified in Section 22 of this Decree shall be taken
to include such officers and agents when appointed by a
charterer, by an owner pro hac vice, or by an agreed
purchaser in possession of the vessel; but nothing in this
Decree shall be construed to confer a lien when the furnisher
knew, or by exercise of reasonable diligence could have
ascertained, that because of the terms of a charter party,
agreement for sale of the vessel, or for any other reason, the
person ordering the repairs, supplies, or other necessaries
was without authority to bind the vessel therefor.

Petitioner Crescent submits that these provisions apply to both
domestic and foreign vessels, as well as domestic and foreign suppliers
of necessaries. It contends that the use of the term any person in
Section 21 implies that the law is not restricted to domestic suppliers but
also includes all persons who supply provisions and necessaries to a
vessel, whether foreign or domestic. It points out further that the law
does not indicate that the supplies or necessaries must be furnished in
the Philippines in order to give petitioner the right to seek enforcement
of the lien with a Philippine court.
[11]

Respondents Vessel and SCI, on the other hand, maintain that
Section 21 of the P.D. No. 1521 or the Ship Mortgage Decree of 1978
does not apply to a foreign supplier like petitioner Crescent as the
provision refers only to a situation where the person furnishing the
supplies is situated inside the territory of the Philippines and not where
the necessaries were furnished in a foreign jurisdiction like Canada.
[12]

We find against petitioner Crescent.
I.
P.D. No. 1521 or the Ship Mortgage Decree of 1978 was enacted
to accelerate the growth and development of the shipping industry and
to extend the benefits accorded to overseas shipping under Presidential
Decree No. 214 to domestic shipping.
[13]
It is patterned closely from the
U.S. Ship Mortgage Act of 1920 and the Liberian Maritime Law relating
to preferred mortgages.
[14]
Notably, Sections 21, 22 and 23 of P.D. No.
1521 or the Ship Mortgage Decree of 1978 are identical to Subsections
P, Q, and R, respectively, of the U.S. Ship Mortgage Act of 1920, which
is part of the Federal Maritime Lien Act. Hence, U.S. jurisprudence
finds relevance to determining whether P.D. No. 1521 or the Ship
Mortgage Decree of 1978 applies in the present case.
The various tests used in the U.S. to determine whether a maritime
lien exists are the following:
One. In a suit to establish and enforce a maritime lien for
supplies furnished to a vessel in a foreign port, whether such lien exists,
or whether the court has or will exercise jurisdiction, depends on the law
of the country where the supplies were furnished, which must be
pleaded and proved.
[15]
This principle was laid down in the 1888 case
of The Scotia,
[16]
reiterated inThe Kaiser Wilhelm II
[17]
(1916), in The
Woudrichem
[18]
(1921) and in The City of Atlanta
[19]
(1924).
Two. The Lauritzen-Romero-Rhoditis trilogy of cases, which
replaced such single-factor methodologies as the law of the place of
supply.
[20]

In Lauritzen v. Larsen,
[21]
a Danish seaman, while temporarily in
New York, joined the crew of a ship of Danish flag and registry that is
owned by a Danish citizen. He signed the ships articles providing that
the rights of the crew members would be governed by Danish law and
by the employers contract with the Danish Seamens Union, of which
he was a member. While in Havana and in the course of his
employment, he was negligently injured. He sued the shipowner in a
federal district court in New York for damages under the Jones Act. In
holding that Danish law and not the Jones Act was applicable, the
Supreme Court adopted a multiple-contact test to determine, in the
absence of a specific Congressional directive as to the statutes reach,
which jurisdictions law should be applied. The following factors were
considered: (1) place of the wrongful act; (2) law of the flag; (3)
allegiance or domicile of the injured; (4) allegiance of the defendant
shipowner; (5) place of contract; (6) inaccessibility of foreign forum;
and (7) law of the forum.
Several years after Lauritzen, the U.S. Supreme Court in the case
of Romero v. International Terminal Operating Co.
[22]
again
considered a foreign seamans personal injury claim under both the
Jones Act and the general maritime law. The Court held that the factors
first announced in the case of Lauritzen were applicable not only to
personal injury claims arising under the Jones Act but to all matters
arising under maritime law in general.
[23]

Hellenic Lines, Ltd. v. Rhoditis
[24]
was also a suit under the Jones
Act by a Greek seaman injured aboard a ship of Greek registry while in
American waters. The ship was operated by a Greek corporation which
has its largest office in New York and another office in New Orleans and
whose stock is more than 95% owned by a U.S. domiciliary who is also
a Greek citizen. The ship was engaged in regularly scheduled runs
between various ports of the U.S. and the Middle East, Pakistan, and
India, with its entire income coming from either originating or
terminating in the U.S. The contract of employment provided that Greek
law and a Greek collective bargaining agreement would apply between
the employer and the seaman and that all claims arising out of the
employment contract were to be adjudicated by a Greek court. The U.S.
Supreme Court observed that of the seven factors listed in the
Lauritzen test, four were in favor of the shipowner and against
jurisdiction. In arriving at the conclusion that the Jones Act applies, it
ruled that the application of the Lauritzen test is not a mechanical one. It
stated thus: [t]he significance of one or more factors must be
considered in light of the national interest served by the assertion of
Jones Act jurisdiction. (footnote omitted) Moreover, the list of seven
factors in Lauritzen was not intended to be exhaustive. x x x [T]he
shipowners base of operations is another factor of importance in
determining whether the Jones Act is applicable; and there well may be
others.
The principles enunciated in these maritime tort cases have been
extended to cases involving unpaid supplies and necessaries such as the
cases of Forsythe International U.K., Ltd. v. M/V Ruth
Venture,
[25]
and Comoco Marine Services v. M/V El
Centroamericano.
[26]

Three. The factors provided in Restatement (Second) of
Conflicts of Law have also been applied, especially in resolving cases
brought under the Federal Maritime Lien Act. Their application
suggests that in the absence of an effective choice of law by the parties,
the forum contacts to be considered include: (a) the place of contracting;
(b) the place of negotiation of the contract; (c) the place of performance;
(d) the location of the subject matter of the contract; and (e) the
domicile, residence, nationality, place of incorporation and place of
business of the parties.
[27]

In Gulf Trading and Transportation Co. v. The Vessel Hoegh
Shield,
[28]
an admiralty action in rem was brought by an American
supplier against a vessel of Norwegian flag owned by a Norwegian
Company and chartered by a London time charterer for unpaid fuel oil
and marine diesel oil delivered while the vessel was in U.S. territory.
The contract was executed in London. It was held that because the
bunker fuel was delivered to a foreign flag vessel within the jurisdiction
of the U.S., and because the invoice specified payment in the U.S., the
admiralty and maritime law of the U.S. applied. The U.S. Court of
Appeals recognized the modern approach to maritime conflict of law
problems introduced in the Lauritzen case. However, it observed that
Lauritzen involved a torts claim under the Jones Act while the present
claim involves an alleged maritime lien arising from unpaid supplies. It
made a disclaimer that its conclusion is limited to the unique
circumstances surrounding a maritime lien as well as the statutory
directives found in the Maritime Lien Statute and that the initial choice
of law determination is significantly affected by the statutory
policies surrounding a maritime lien. It ruled that the facts in the case
call for the application of the Restatement (Second) of Conflicts of Law.
The U.S. Court gave much significance to the congressional intent in
enacting the Maritime Lien Statute to protect the interests of American
supplier of goods, services or necessaries by making maritime liens
available where traditional services are routinely rendered. It concluded
that the Maritime Lien Statute represents a relevant policy of the forum
that serves the needs of the international legal system as well as the basic
policies underlying maritime law. The court also gave equal importance
to the predictability of result and protection of justified expectations in a
particular field of law. In the maritime realm, it is expected that when
necessaries are furnished to a vessel in an American port by an
American supplier, the American Lien Statute will apply to protect that
supplier regardless of the place where the contract was formed or the
nationality of the vessel.
The same principle was applied in the case of Swedish Telecom
Radio v. M/V Discovery I
[29]
where the American court refused to
apply the Federal Maritime Lien Act to create a maritime lien for goods
and services supplied by foreign companies in foreign ports. In this
case, a Swedish company supplied radio equipment in a Spanish port to
refurbish a Panamanian vessel damaged by fire. Some of the contract
negotiations occurred in Spain and the agreement for supplies between
the parties indicated Swedish companys willingness to submit to
Swedish law. The ship was later sold under a contract of purchase
providing for the application of New York law and was arrested in the
U.S. The U.S. Court of Appeals also held that while the contacts-based
framework set forth in Lauritzen was useful in the analysis of all
maritime choice of law situations, the factors were geared towards a
seamans injury claim. As in Gulf Trading, the lien arose by operation
of law because the ships owner was not a party to the contract under
which the goods were supplied. As a result, the court found it more
appropriate to consider the factors contained in Section 6 of the
Restatement (Second) of Conflicts of Law. The U.S. Court held that the
primary concern of the Federal Maritime Lien Act is the protection of
American suppliers of goods and services.
The same factors were applied in the case of Ocean Ship Supply,
Ltd. v. M/V Leah.
[30]

II.
Finding guidance from the foregoing decisions, the Court cannot
sustain petitioner Crescents insistence on the application of P.D. No.
1521 or the Ship Mortgage Decree of 1978 and hold that a maritime lien
exists.
First. Out of the seven basic factors listed in the case
of Lauritzen, Philippine law only falls under one the law of the
forum. All other elements are foreign Canada is the place of the
wrongful act, of the allegiance or domicile of the injured and the place
of contract; India is the law of the flag and the allegiance of the
defendant shipowner. Balancing these basic interests, it is inconceivable
that the Philippine court has any interest in the case that outweighs the
interests of Canada or India for that matter.
Second. P.D. No. 1521 or the Ship Mortgage Decree of 1978 is
inapplicable following the factors under Restatement (Second) of
Conflict of Laws. Like the Federal Maritime Lien Act of the U.S., P.D.
No. 1521 or the Ship Mortgage Decree of 1978 was enacted primarily to
protect Filipino suppliers and was not intended to create a lien from a
contract for supplies between foreign entities delivered in a foreign port.
Third. Applying P.D. No. 1521 or the Ship Mortgage Decree of
1978 and rule that a maritime lien exists would not promote the public
policy behind the enactment of the law to develop the domestic shipping
industry. Opening up our courts to foreign suppliers by granting them a
maritime lien under our laws even if they are not entitled to a maritime
lien under their laws will encourage forum shopping.
Finally. The submission of petitioner is not in keeping with the
reasonable expectation of the parties to the contract. Indeed, when the
parties entered into a contract for supplies in Canada, they could not
have intended the laws of a remote country like the Philippines to
determine the creation of a lien by the mere accident of the Vessels
being in Philippine territory.
III.
But under which law should petitioner Crescent prove the
existence of its maritime lien?
In light of the interests of the various foreign elements involved, it
is clear that Canada has the most significant interest in this dispute. The
injured party is a Canadian corporation, the sub-charterer which placed
the orders for the supplies is also Canadian, the entity which physically
delivered the bunker fuels is in Canada, the place of contracting and
negotiation is in Canada, and the supplies were delivered in Canada.
The arbitration clause contained in the Bunker Fuel Agreement
which states that New York law governs the construction, validity and
performance of the contract is only a factor that may be considered in
the choice-of-law analysis but is not conclusive. As in the cases of Gulf
Trading and Swedish Telecom, the lien that is the subject matter of this
case arose by operation of law and not by contract because the
shipowner was not a party to the contract under which the goods were
supplied.
It is worthy to note that petitioner Crescent never alleged and
proved Canadian law as basis for the existence of a maritime lien. To
the end, it insisted on its theory that Philippine law applies. Petitioner
contends that even if foreign law applies, since the same was not
properly pleaded and proved, such foreign law must be presumed to be
the same as Philippine law pursuant to the doctrine of processual
presumption.
Thus, we are left with two choices: (1) dismiss the case for
petitioners failure to establish a cause of action
[31]
or (2) presume that
Canadian law is the same as Philippine law. In either case, the case has
to be dismissed.
It is well-settled that a party whose cause of action or defense
depends upon a foreign law has the burden of proving the foreign law.
Such foreign law is treated as a question of fact to be properly pleaded
and proved.
[32]
Petitioner Crescents insistence on enforcing a maritime
lien before our courts depended on the existence of a maritime lien
under the proper law. By erroneously claiming a maritime lien under
Philippine law instead of proving that a maritime lien exists under
Canadian law, petitioner Crescent failed to establish a cause of action.
[33]

Even if we apply the doctrine of processual presumption, the result
will still be the same. Under P.D. No. 1521 or the Ship Mortgage
Decree of 1978, the following are the requisites for maritime liens on
necessaries to exist: (1) the necessaries must have been furnished to
and for the benefit of the vessel; (2) the necessaries must have been
necessary for the continuation of the voyage of the vessel; (3) the credit
must have been extended to the vessel; (4) there must be necessity for
the extension of the credit; and (5) the necessaries must be ordered by
persons authorized to contract on behalf of the vessel.
[34]
These do not
avail in the instant case.
First. It was not established that benefit was extended to the
vessel. While this is presumed when the master of the ship is the one
who placed the order, it is not disputed that in this case it was the sub-
charterer Portserv which placed the orders to petitioner Crescent.
[35]

Hence, the presumption does not arise and it is incumbent upon
petitioner Crescent to prove that benefit was extended to the vessel.
Petitioner did not.
Second. Petitioner Crescent did not show any proof that the
marine products were necessary for the continuation of the vessel.
Third. It was not established that credit was extended to the
vessel. It is presumed that in the absence of fraud or collusion, where
advances are made to a captain in a foreign port, upon his request, to
pay for necessary repairs or supplies to enable his vessel to prosecute
her voyage, or to pay harbor dues, or for pilotage, towage and like
services rendered to the vessel, that they are made upon the credit of the
vessel as well as upon that of her owners.
[36]
In this case, it was the
sub-charterer Portserv which requested for the delivery of the bunker
fuels. The issuance of two checks amounting to US$300,000 in favor of
petitioner Crescent prior to the delivery of the bunkers as security for
the payment of the obligation weakens petitioner Crescents contention
that credit was extended to the Vessel.
We also note that when copies of the charter parties were
submitted by respondents in the Court of Appeals, the time charters
between respondent SCI and Halla and between Halla and Transmar
were shown to contain a clause which states that the Charterers shall
provide and pay for all the fuel except as otherwise agreed. This
militates against petitioner Crescents position that Portserv is
authorized by the shipowner to contract for supplies upon the credit of
the vessel.
Fourth. There was no proof of necessity of credit. A necessity of
credit will be presumed where it appears that the repairs and supplies
were necessary for the ship and that they were ordered by the master.
This presumption does not arise in this case since the fuels were not
ordered by the master and there was no proof of necessity for the
supplies.
Finally. The necessaries were not ordered by persons authorized
to contract in behalf of the vessel as provided under Section 22 of P.D.
No. 1521 or the Ship Mortgage Decree of 1978 - the managing owner,
the ships husband, master or any person with whom the management of
the vessel at the port of supply is entrusted. Clearly, Portserv, a sub-
charterer under a time charter, is not someone to whom the management
of the vessel has been entrusted. A time charter is a contract for the use
of a vessel for a specified period of time or for the duration of one or
more specified voyages wherein the owner of the time-chartered vessel
retains possession and control through the master and crew who remain
his employees.
[37]
Not enjoying the presumption of authority, petitioner
Crescent should have proved that Portserv was authorized by the
shipowner to contract for supplies. Petitioner failed.
A discussion on the principle of forum non conveniens is
unnecessary.
IN VIEW WHEREOF, the Decision of the Court of Appeals in
CA-G.R. No. CV 54920, dated November 28, 2001, and its subsequent
Resolution of September 3, 2002 are AFFIRMED. The instant petition
for review on certiorari is DENIED for lack of merit. Cost against
petitioner.
SO ORDERED.



Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 114776 February 2, 2000
MENANDRO B. LAUREANO, petitioner,
vs.
COURT OF APPEALS AND SINGAPORE AIRLINES
LIMITED, respondents.
QUISUMBING, J .:
This petition for review on certiorari under Rule 45 of the Rules of
Court seeks to reverse the Decision of the Court of Appeals,
dated October 29, 1993, in C.A. G.R. No. CV 34476, as well as its
Resolution dated February 28, 1994, which denied the motion for
reconsideration.
The facts of the case as summarized by the respondent appellate
court are as follows:
Sometime in 1978, plaintiff [Menandro B. Laureano, herein
petitioner], then Director of Flight Operations and Chief Pilot
of Air Manila, applied for employment with defendant
company [herein private respondent] through its Area
Manager in Manila.
On September 30, 1978, after the usual personal interview,
defendant wrote to plaintiff, offering a contract of
employment as an expatriate B-707 captain for an original
period of two (2) years commencing on January 21, 1978.
Plaintiff accepted the offer and commenced working on
January 20, 1979. After passing the six-month probation
period, plaintiffs appointment was confirmed effective July
21, 1979. (Annex "B", p. 30, Rollo).
On July 21, 1979, defendant offered plaintiff an extension of
his two-year contract to five (5) years effective January 21,
1979 to January 20, 1984 subject to the terms and
conditions set forth in the contract of employment, which the
latter accepted (Annex "C" p. 31, Rec.).
During his service as B-707 captain, plaintiff on August 24,
1980, while in command of a flight, committed a noise
violation offense at the Zurich Airport, for which plaintiff
apologized.(Exh. "3", p. 307, Rec.).
Sometime in 1980, plaintiff featured in a tail scraping incident
wherein the tail of the aircraft scraped or touched the runway
during landing. He was suspended for a few days until he
was investigated by board headed by Capt. Choy. He was
reprimanded.
On September 25, 1981, plaintiff was invited to take a
course of A-300 conversion training at Aeroformacion,
Toulouse, France at dependant's expense. Having
successfully completed and passed the training course,
plaintiff was cleared on April 7, 1981, for solo duty as captain
of the Airbus A-300 and subsequently appointed as captain
of the A-300 fleet commanding an Airbus A-300 in flights
over Southeast Asia. (Annexes "D", "E" and "F", pp. 34-38,
Rec.).
Sometime in 1982, defendant, hit by a recession, initiated
cost-cutting measures. Seventeen (17) expatriate captains in
the Airbus fleet were found in excess of the defendant's
requirement (t.s.n., July 6, 1988. p. 11). Consequently,
defendant informed its expatriate pilots including plaintiff of
the situation and advised them to take advance leaves. (Exh.
"15", p. 466, Rec.)
Realizing that the recession would not be for a short time,
defendant decided to terminate its excess personnel (t.s.n.,
July 6, 1988, p. 17). It did not, however, immediately
terminate it's A-300 pilots. It reviewed their qualifications for
possible promotion to the B-747 fleet. Among the 17 excess
Airbus pilots reviewed, twelve were found qualified.
Unfortunately, plaintiff was not one of the twelve.
On October 5, 1982, defendant informed plaintiff of his
termination effective November 1, 1982 and that he will be
paid three (3) months salary in lieu of three months notice
(Annex "I", pp. 41-42, Rec.). Because he could not uproot
his family on such short notice, plaintiff requested a three-
month notice to afford him time to exhaust all possible
avenues for reconsideration and retention. Defendant gave
only two (2) months notice and one (1) month salary. (t.s.n.,
Nov. 12, 1987. p. 25).
Aggrieved, plaintiff on June 29, 1983, instituted a case for
illegal dismissal before the Labor Arbiter. Defendant moved
to dismiss on jurisdiction grounds. Before said motion was
resolved, the complaint was withdrawn. Thereafter, plaintiff
filed the instant case for damages due to illegal termination
of contract of services before the court a quo (Complaint, pp.
1-10, Rec.).
Again, defendant on February 11, 1987 filed a motion to
dismiss alleging inter alia: (1) that the court has no
jurisdiction over the subject matter of the case, and (2) that
Philippine courts have no jurisdiction over the instant case.
Defendant contends that the complaint is for illegal dismissal
together with a money claim arising out of and in the course
of plaintiffs employment "thus it is the Labor Arbiter and the
NLRC who have the jurisdiction pursuant to Article 217 of
the Labor Code" and that, since plaintiff was employed in
Singapore, all other aspects of his employment contract
and/or documents executed in Singapore. Thus, defendant
postulates that Singapore laws should apply and courts
thereat shall have jurisdiction. (pp. 50-69, Rec.).
In traversing defendant's arguments, plaintiff claimed that:
(1) where the items demanded in a complaint are the natural
consequences flowing from a breach of an obligation and not
labor benefits, the case is intrinsically a civil dispute; (2) the
case involves a question that is beyond the field of
specialization of labor arbiters; and (3) if the complaint is
grounded not on the employee's dismissal per se but on the
manner of said dismissal and the consequence thereof, the
case falls under the jurisdiction of the civil courts. (pp. 70-73,
Rec.)
On March 23, 1987, the court a quo denied defendant's
motion to dismiss (pp. 82-84, Ibid). The motion for
reconsideration was likewise denied. (p. 95 ibid.)
On September 16, 1987, defendant filed its answer
reiterating the grounds relied upon in its motion to dismiss
and further arguing that plaintiff is barred by laches, waiver,
and estoppel from instituting the complaint and that he has
no cause of action . (pp. 102-115)
1

On April 10, 1991, the trial court handed down its decision in favor
of plaintiff. The dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of
plaintiff Menandro Laureano and against defendant
Singapore Airlines Limited, ordering defendant to pay
plaintiff the amounts of
SIN$396,104.00, or its equivalent in Philippine currency at
the current rate of exchange at the time of payment, as and
for unearned compensation with legal interest from the filing
of the complaint until fully paid;
SIN$154,742.00, or its equivalent in Philippine currency at
the current rate of exchange at the time of payment; and the
further amounts of P67,500.00 as consequential damages
with legal interest from the filing of the complaint until fully
paid;
P1,000,000.00 as and for moral damages; P1,000,000.00 as
and for exemplary damages; and P100,000.00 as and for
attorney's fees.
Costs against defendant.
SO ORDERED.
2

Singapore Airlines timely appealed before the respondent court
and raised the issues of jurisdiction, validity of termination,
estoppel, and damages.
On October 29, 1993, the appellate court set aside the decision of
the trial court, thus,
. . . In the instant case, the action for damages due to illegal
termination was filed by plaintiff-appellee only on January 8,
1987 or more than four (4) years after the effectivity date of
his dismissal on November 1, 1982. Clearly, plaintiff-
appellee's action has already prescribed.
WHEREFORE, the appealed decision is hereby REVERSED
and SET ASIDE. The complaint is hereby dismissed.
SO ORDERED.
3

Petitioner's and Singapore Airlines' respective motions for
reconsideration were denied.
Now, before the Court, petitioner poses the following queries:
1. IS THE PRESENT ACTION ONE BASED ON CONTRACT
WHICH PRESCRIBES IN TEN YEARS UNDER ARTICLE 1144
OF THE NEW CIVIL CODE OR ONE FOR DAMAGES ARISING
FROM AN INJURY TO THE RIGHTS OF THE PLAINTIFF
WHICH PRESCRIBES IN FOUR YEARS UNDER ARTICLE 1146
OF THE NEW CIVIL CODE?
2. CAN AN EMPLOYEE WITH A FIXED PERIOD OF
EMPLOYMENT BE RETRENCHED BY HIS EMPLOYER?
3. CAN THERE BE VALID RETRENCHMENT IF AN EMPLOYER
MERELY FAILS TO REALIZE THE EXPECTED PROFITS EVEN
IF IT WERE NOT, IN FACT, INCURRING LOSSES?
At the outset, we find it necessary to state our concurrence on the
assumption of jurisdiction by the Regional Trial Court of Manila,
Branch 9. The trial court rightly ruled on the application of
Philippine law, thus:
Neither can the Court determine whether the termination of
the plaintiff is legal under the Singapore Laws because of
the defendant's failure to show which specific laws of
Singapore Laws apply to this case. As substantially
discussed in the preceding paragraphs, the Philippine Courts
do not take judicial notice of the laws of Singapore. The
defendant that claims the applicability of the Singapore Laws
to this case has the burden of proof. The defendant has
failed to do so. Therefore, the Philippine law should be
applied.
4

Respondent Court of Appeals acquired jurisdiction when
defendant filed its appeal before said court.
5
On this matter,
respondent court was correct when it barred defendant-appellant
below from raising further the issue of jurisdiction.
6

Petitioner now raises the issue of whether his action is one based
on Article 1144 or on Article 1146 of the Civil Code. According to
him, his termination of employment effective November 1, 1982,
was based on an employment contract which is under Article
1144, so his action should prescribe in 10 years as provided for in
said article. Thus he claims the ruling of the appellate court based
on Article 1146 where prescription is only four (4) years, is an
error. The appellate court concluded that the action for illegal
dismissal originally filed before the Labor Arbiter on June 29,
1983, but which was withdrawn, then filed again in 1987 before
the Regional Trial Court, had already prescribed.
In our view, neither Article 1144
7
nor Article 1146
8
of the Civil
Code is here pertinent. What is applicable is Article 291 of the
Labor Code, viz:
Art. 291. Money claims. All money claims arising from
employee-employer relations accruing during the effectivity
of this Code shall be filed within three (3) years from the time
the cause of action accrued; otherwise they shall be forever
barred.
x x x x x x x x x
What rules on prescription should apply in cases like this one has
long been decided by this Court. In illegal dismissal, it is settled,
that the ten-year prescriptive period fixed in Article 1144 of the
Civil Code may not be invoked by petitioners, for the Civil Code is
a law of general application, while the prescriptive period fixed in
Article 292 of the Labor Code [now Article 291] is a SPECIAL
LAW applicable to claims arising from employee-employer
relations.
9

More recently in De Guzman vs. Court of Appeals,
10
where the
money claim was based on a written contract, the Collective
Bargaining Agreement, the Court held:
. . . The language of Art. 291 of the Labor Code does not
limit its application only to "money claims specifically
recoverable under said Code" but covers all money claims
arising from an employee-employer relations" (Citing Cadalin
v. POEA Administrator, 238 SCRA 721, 764 [1994]; and Uy
v. National Labor Relations Commission, 261 SCRA 505,
515 [1996]). . . .
It should be noted further that Article 291 of the Labor Code
is a special law applicable to money claims arising from
employer-employee relations; thus, it necessarily prevails
over Article 1144 of the Civil Code, a general law. Basic is
the rule in statutory construction that "where two statutes are
of equal theoretical application to a particular case, the one
designed therefore should prevail." (Citing Leveriza v.
Intermediate Appellate Court, 157 SCRA 282,
294.) Generalia specialibus non derogant.
11

In the light of Article 291, aforecited, we agree with the appellate
court's conclusion that petitioner's action fordamages due to
illegal termination filed again on January 8, 1987 or more than
four (4) years after the effective date of his dismissal on
November 1, 1982 has already prescribed.
In the instant case, the action for damages due to illegal
termination was filed by plaintiff-appelle only on January 8,
1987 or more than four (4) years after the effectivity date of
his dismissal on November 1, 1982. Clearly, plaintiff-
appellee's action has already prescribed.
We base our conclusion not on Article 1144 of the Civil Code but
on which sets the prescription period at three (3) years and which
governs under this jurisdiction.
Petitioner claims that the running of the prescriptive period was
tolled when he filed his complaint for illegal dismissal before the
Labor Arbiter of the National Labor Relations Commission.
However, this claim deserves scant consideration; it has no legal
leg to stand on. In Olympia International, Inc., vs., Court of
Appeals, we held that "although the commencement of a civil
action stops the running of the statute of prescription or
limitations, its dismissal or voluntary abandonment by the plaintiff
leaves in exactly the same position as though no action had been
commenced at all."
12

Now, as to whether petitioner's separation from the company due
to retrenchment was valid, the appellate court found that the
employment contract of petitioner allowed for pre-termination of
employment. We agree with the Court of Appeals when it said,
It is a settled rule that contracts have the force of law
between the parties. From the moment the same is
perfected, the parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all
consequences which, according to their nature, may be in
keeping with good faith, usage and law. Thus, when plaintiff-
appellee accepted the offer of employment, he was bound
by the terms and conditions set forth in the contract, among
others, the right of mutual termination by giving three months
written notice or by payment of three months salary. Such
provision is clear and readily understandable, hence, there is
no room for interpretation.
x x x x x x x x x
Further, plaintiff-appellee's contention that he is not bound
by the provisions of the Agreement, as he is not a signatory
thereto, deserves no merit. It must be noted that when
plaintiff-appellee's employment was confirmed, he applied
for membership with the Singapore Airlines Limited (Pilots)
Association, the signatory to the aforementioned Agreement.
As such, plaintiff-appellee is estopped from questioning the
legality of the said agreement or any proviso contained
therein.
13

Moreover, the records of the present case clearly show that
respondent court's decision is amply supported by evidence and it
did not err in its findings, including the reason for the
retrenchment:
When defendant-appellant was faced with the world-wide
recession of the airline industry resulting in a slow down in
the company's growth particularly in the regional operation
(Asian Area) where the Airbus 300 operates. It had no
choice but to adopt cost cutting measures, such as cutting
down services, number of frequencies of flights, and
reduction of the number of flying points for the A-300 fleet
(t.s.n., July 6, 1988, pp. 17-18). As a result, defendant-
appellant had to lay off A-300 pilots, including plaintiff-
appellee, which it found to be in excess of what is
reasonably needed.
14

All these considered, we find sufficient factual and legal basis to
conclude that petitioner's termination from employment was for an
authorized cause, for which he was given ample notice and
opportunity to be heard, by respondent company. No error nor
grave abuse of discretion, therefore, could be attributed to
respondent appellate court.1wphi1.nt
ACCORDINGLY, the instant petition is DISMISSED. The decision
of the Court of Appeals in C.A. CV No. 34476 is AFFIRMED.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-55960 November 24, 1988
YAO KEE, SZE SOOK WAH, SZE LAI CHO, and SY CHUN
YEN, petitioners,
vs.
AIDA SY-GONZALES, MANUEL SY, TERESITA SY-BERNABE,
RODOLFO SY, and HONORABLE COURT OF
APPEALS, respondents.
Montesa, Albon, & Associates for petitioners.
De Lapa, Salonga, Fulgencio & De Lunas for respondents.

CORTES, J .:
Sy Kiat, a Chinese national. died on January 17, 1977 in
Caloocan City where he was then residing, leaving behind real
and personal properties here in the Philippines worth
P300,000.00 more or less.
Thereafter, Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe
and Rodolfo Sy filed a petition for the grant of letters of
administration docketed as Special Proceedings Case No. C-699
of the then Court of First Instance of Rizal Branch XXXIII,
Caloocan City. In said petition they alleged among others that (a)
they are the children of the deceased with Asuncion Gillego; (b) to
their knowledge Sy Mat died intestate; (c) they do not recognize
Sy Kiat's marriage to Yao Kee nor the filiation of her children to
him; and, (d) they nominate Aida Sy-Gonzales for appointment as
administratrix of the intestate estate of the deceased [Record on
Appeal, pp. 4-9; Rollo, p. 107.]
The petition was opposed by Yao Kee, Sze Sook Wah, Sze Lai
Cho and Sy Yun Chen who alleged that: (a) Yao Kee is the lawful
wife of Sy Kiat whom he married on January 19, 1931 in China;
(b) the other oppositors are the legitimate children of the
deceased with Yao Kee; and, (c) Sze Sook Wah is the eldest
among them and is competent, willing and desirous to become
the administratrix of the estate of Sy Kiat [Record on Appeal, pp.
12-13; Rollo, p. 107.] After hearing, the probate court, finding
among others that:
(1) Sy Kiat was legally married to Yao Kee [CFI
decision, pp. 12-27; Rollo, pp. 49-64;]
(2) Sze Sook Wah, Sze Lai Cho and Sze Chun Yen are
the legitimate children of Yao Kee with Sy Mat [CFI
decision, pp. 28-31; Rollo. pp. 65-68;] and,
(3) Aida Sy-Gonzales, Manuel Sy, Teresita Sy-Bernabe
and Rodolfo Sy are the acknowledged illegitimate
offsprings of Sy Kiat with Asuncion Gillego [CFI
decision, pp. 27-28; Rollo, pp. 64- 65.]
held if favor of the oppositors (petitioners herein) and appointed
Sze Sook Wah as the administratrix of the intestate estate of the
deceased [CFI decision, pp. 68-69; Rollo, pp. 105-106.]
On appeal the Court of Appeals rendered a decision modifying
that of the probate court, the dispositive portion of which reads:
IN VIEW OF THE FOREGOING, the decision of the
lower Court is hereby MODIFIED and SET ASIDE and
a new judgment rendered as follows:
(1) Declaring petitioners Aida Sy-Gonzales, Manuel Sy,
Teresita Sy- Bernabe and Rodolfo Sy acknowledged
natural children of the deceased Sy Kiat with Asuncion
Gillego, an unmarried woman with whom he lived as
husband and wife without benefit of marriage for many
years:
(2) Declaring oppositors Sze Sook Wah, Sze Lai Chu
and Sze Chun Yen, the acknowledged natural children
of the deceased Sy Kiat with his Chinese wife Yao Kee,
also known as Yui Yip, since the legality of the alleged
marriage of Sy Mat to Yao Kee in China had not been
proven to be valid to the laws of the Chinese People's
Republic of China (sic);
(3) Declaring the deed of sale executed by Sy Kiat on
December 7, 1976 in favor of Tomas Sy (Exhibit "G-1",
English translation of Exhibit "G") of the Avenue Tractor
and Diesel Parts Supply to be valid and accordingly,
said property should be excluded from the estate of the
deceased Sy Kiat; and
(4) Affirming the appointment by the lower court of Sze
Sook Wah as judicial administratrix of the estate of the
deceased. [CA decision, pp. 11-12; Rollo, pp. 36- 37.]
From said decision both parties moved for partial reconsideration,
which was however denied by respondent court. They thus
interposed their respective appeals to this Court.
Private respondents filed a petition with this Court docketed as
G.R. No. 56045 entitled "Aida Sy-Gonzales, Manuel Sy, Teresita
Sy-Bernabe and Rodolfo Sy v. Court of Appeals, Yao Kee, Sze
Sook Wah, Sze Lai Cho and Sy Chun Yen" questioning
paragraphs (3) and (4) of the dispositive portion of the Court of
Appeals' decision. The Supreme Court however resolved to deny
the petition and the motion for reconsideration. Thus on March 8,
1982 entry of judgment was made in G.R. No. 56045. **
The instant petition, on the other hand, questions paragraphs (1)
and (2) of the dispositive portion of the decision of the Court of
Appeals. This petition was initially denied by the Supreme Court
on June 22, 1981. Upon motion of the petitioners the Court in a
resolution dated September 16, 1981 reconsidered the denial and
decided to give due course to this petition. Herein petitioners
assign the following as errors:
I. RESPONDENT COURT OF APPEALS SERIOUSLY
ERRED IN DECLARING THE MARRIAGE OF SY KIAT
TO YAO YEE AS NOT HAVE (sic) BEEN PROVEN
VALID IN ACCORDANCE WITH LAWS OF THE
PEOPLE'S REPUBLIC OF CHINA.
II. RESPONDENT COURT OF APPEALS GRAVELY
ERRED IN DECLARING AIDA SY-GONZALES,
MANUEL SY, TERESITA SY-BERNABE AND
RODOLFO SY AS NATURAL CHILDREN OF SY KIAT
WITH ASUNCION GILLEGO. [Petition, p. 2; Rollo, p.
6.]
I. Petitioners argue that the marriage of Sy Kiat to Yao Kee in
accordance with Chinese law and custom was conclusively
proven. To buttress this argument they rely on the following
testimonial and documentary evidence.
First, the testimony of Yao Kee summarized by the trial court as
follows:
Yao Kee testified that she was married to Sy Kiat on
January 19, 1931 in Fookien, China; that she does not
have a marriage certificate because the practice during
that time was for elders to agree upon the betrothal of
their children, and in her case, her elder brother was
the one who contracted or entered into [an] agreement
with the parents of her husband; that the agreement
was that she and Sy Mat would be married, the
wedding date was set, and invitations were sent out;
that the said agreement was complied with; that she
has five children with Sy Kiat, but two of them died; that
those who are alive are Sze Sook Wah, Sze Lai Cho,
and Sze Chun Yen, the eldest being Sze Sook Wah
who is already 38 years old; that Sze Sook Wah was
born on November 7, 1939; that she and her husband,
Sy Mat, have been living in FooKien, China before he
went to the Philippines on several occasions; that the
practice during the time of her marriage was a written
document [is exchanged] just between the parents of
the bride and the parents of the groom, or any elder for
that matter; that in China, the custom is that there is a
go- between, a sort of marriage broker who is known to
both parties who would talk to the parents of the bride-
to-be; that if the parents of the bride-to-be agree to
have the groom-to-be their son in-law, then they agree
on a date as an engagement day; that on engagement
day, the parents of the groom would bring some pieces
of jewelry to the parents of the bride-to-be, and then
one month after that, a date would be set for the
wedding, which in her case, the wedding date to Sy Kiat
was set on January 19, 1931; that during the wedding
the bridegroom brings with him a couch (sic) where the
bride would ride and on that same day, the parents of
the bride would give the dowry for her daughter and
then the document would be signed by the parties but
there is no solemnizing officer as is known in the
Philippines; that during the wedding day, the document
is signed only by the parents of the bridegroom as well
as by the parents of the bride; that the parties
themselves do not sign the document; that the bride
would then be placed in a carriage where she would be
brought to the town of the bridegroom and before
departure the bride would be covered with a sort of a
veil; that upon reaching the town of the bridegroom, the
bridegroom takes away the veil; that during her
wedding to Sy Kiat (according to said Chinese custom),
there were many persons present; that after Sy Kiat
opened the door of the carriage, two old ladies helped
her go down the carriage and brought her inside the
house of Sy Mat; that during her wedding, Sy Chick, the
eldest brother of Sy Kiat, signed the document with her
mother; that as to the whereabouts of that document,
she and Sy Mat were married for 46 years already and
the document was left in China and she doubt if that
document can still be found now; that it was left in the
possession of Sy Kiat's family; that right now, she does
not know the whereabouts of that document because of
the lapse of many years and because they left it in a
certain place and it was already eaten by the termites;
that after her wedding with Sy Kiat, they lived
immediately together as husband and wife, and from
then on, they lived together; that Sy Kiat went to the
Philippines sometime in March or April in the same year
they were married; that she went to the Philippines in
1970, and then came back to China; that again she
went back to the Philippines and lived with Sy Mat as
husband and wife; that she begot her children with Sy
Kiat during the several trips by Sy Kiat made back to
China. [CFI decision, pp. 13-15; Rollo, pp. 50-52.]
Second, the testimony of Gan Ching, a younger brother of Yao
Kee who stated that he was among the many people who
attended the wedding of his sister with Sy Kiat and that no
marriage certificate is issued by the Chinese government, a
document signed by the parents or elders of the parties being
sufficient [CFI decision, pp. 15-16; Rollo, pp.
52-53.]
Third, the statements made by Asuncion Gillego when she
testified before the trial court to the effect that (a) Sy Mat was
married to Yao Kee according to Chinese custom; and, (b) Sy
Kiat's admission to her that he has a Chinese wife whom he
married according to Chinese custom [CFI decision, p. 17; Rollo,
p. 54.]
Fourth, Sy Kiat's Master Card of Registered Alien issued in
Caloocan City on October 3, 1972 where the following entries are
found: "Marital statusMarried"; "If married give name of
spousesYao Kee"; "Address-China; "Date of marriage1931";
and "Place of marriageChina" [Exhibit "SS-1".]
Fifth, Sy Kiat's Alien Certificate of Registration issued in Manila on
January 12, 1968 where the following entries are likewise found:
"Civil statusMarried"; and, 'If married, state name and address
of spouseYao Kee Chingkang, China" [Exhibit "4".]
And lastly, the certification issued in Manila on October 28, 1977
by the Embassy of the People's Republic of China to the effect
that "according to the information available at the Embassy Mr. Sy
Kiat a Chinese national and Mrs. Yao Kee alias Yui Yip also
Chinese were married on January 19, 1931 in Fukien, the
People's Republic of China" [Exhibit "5".]
These evidence may very well prove the fact of marriage between
Yao Kee and Sy Kiat. However, the same do not suffice to
establish the validity of said marriage in accordance with Chinese
law or custom.
Custom is defined as "a rule of conduct formed by repetition of
acts, uniformly observed (practiced) as a social rule, legally
binding and obligatory" [In the Matter of the Petition for Authority
to Continue Use of the Firm Name "Ozaeta, Romulo, de Leon,
Mabanta and Reyes", July 30, 1979, SCRA 3, 12 citing JBL
Reyes & RC Puno, Outline of Phil. Civil Law, Fourth Ed., Vol. 1, p.
7.] The law requires that "a custom must be proved as a fact,
according to the rules of evidence" [Article 12, Civil Code.] On this
score the Court had occasion to state that "a local custom as a
source of right can not be considered by a court of justice unless
such custom is properly established by competent evidence like
any other fact" [Patriarca v. Orate, 7 Phil. 390, 395 (1907).] The
same evidence, if not one of a higher degree, should be required
of a foreign custom.
The law on foreign marriages is provided by Article 71 of the Civil
Code which states that:
Art. 71. All marriages performed outside the Philippines
in accordance with the laws in force in the country
where they were performed and valid there as such,
shall also be valid in this country, except bigamous,
Polygamous, or incestuous marriages, as determined
by Philippine law. (Emphasis supplied.) ***
Construing this provision of law the Court has held that to
establish a valid foreign marriage two things must be proven,
namely: (1) the existence of the foreign law as a question of fact;
and (2) the alleged foreign marriage by convincing evidence
[Adong v. Cheong Seng Gee, 43 Phil. 43, 49 (1922).]
In proving a foreign law the procedure is provided in the Rules of
Court. With respect to an unwritten foreign law, Rule 130 section
45 states that:
SEC. 45. Unwritten law.The oral testimony of
witnesses, skilled therein, is admissible as evidence of
the unwritten law of a foreign country, as are also
printed and published books of reports of decisions of
the courts of the foreign country, if proved to be
commonly admitted in such courts.
Proof of a written foreign law, on the other hand, is provided for
under Rule 132 section 25, thus:
SEC. 25. Proof of public or official record.An official
record or an entry therein, when admissible for any
purpose, may be evidenced by an official publication
thereof or by a copy attested by the officer having the
legal custody of the record, or by his deputy, and
accompanied, if the record is not kept in the Philippines,
with a certificate that such officer has the custody. If the
office in which the record is kept is in a foreign country,
the certificate may be made by a secretary of 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.
The Court has interpreted section 25 to include competent
evidence like the testimony of a witness to prove the existence of
a written foreign law [Collector of Internal Revenue v. Fisher 110
Phil. 686, 700-701 (1961) citing Willamette Iron and Steel Works
v. Muzzal, 61 Phil. 471 (1935).]
In the case at bar petitioners did not present any competent
evidence relative to the law and custom of China on marriage.
The testimonies of Yao and Gan Ching cannot be considered as
proof of China's law or custom on marriage not only because they
are
self-serving evidence, but more importantly, there is no showing
that they are competent to testify on the subject matter. For failure
to prove the foreign law or custom, and consequently, the validity
of the marriage in accordance with said law or custom, the
marriage between Yao Kee and Sy Kiat cannot be recognized in
this jurisdiction.
Petitioners contend that contrary to the Court of Appeals' ruling
they are not duty bound to prove the Chinese law on marriage as
judicial notice thereof had been taken by this Court in the case
of Sy Joc Lieng v. Sy Quia [16 Phil. 137 (1910).]
This contention is erroneous. Well-established in this jurisdiction
is the principle that Philippine courts cannot take judicial notice of
foreign laws. They must be alleged and proved as any other fact
[Yam Ka Lim v. Collector of Customs, 30 Phil. 46, 48 (1915);
Fluemer v. Hix, 54 Phil. 610 (1930).]
Moreover a reading of said case would show that the party
alleging the foreign marriage presented a witness, one Li Ung
Bieng, to prove that matrimonial letters mutually exchanged by
the contracting parties constitute the essential requisite for a
marriage to be considered duly solemnized in China. Based on
his testimony, which as found by the Court is uniformly
corroborated by authors on the subject of Chinese marriage, what
was left to be decided was the issue of whether or not the fact of
marriage in accordance with Chinese law was duly proven [Sy
Joc Lieng v. Sy Quia, supra., at p. 160.]
Further, even assuming for the sake of argument that the Court
has indeed taken judicial notice of the law of China on marriage in
the aforecited case, petitioners however have not shown any
proof that the Chinese law or custom obtaining at the time the Sy
Joc Lieng marriage was celebrated in 1847 was still the law when
the alleged marriage of Sy Kiat to Yao Kee took place in 1931 or
eighty-four (84) years later.
Petitioners moreover cite the case of U.S. v. Memoracion [34 Phil.
633 (1916)] as being applicable to the instant case. They aver
that the judicial pronouncement in the Memoracion case, that the
testimony of one of the contracting parties is competent evidence
to show the fact of marriage, holds true in this case.
The Memoracion case however is not applicable to the case at
bar as said case did not concern a foreign marriage and the issue
posed was whether or not the oral testimony of a spouse is
competent evidence to prove the fact of marriage in a complaint
for adultery.
Accordingly, in the absence of proof of the Chinese law on
marriage, it should be presumed that it is the same as
ours *** [Wong Woo Yiu v. Vivo, G.R. No. L-21076, March 31,
1965, 13 SCRA 552, 555.] Since Yao Kee admitted in her
testimony that there was no solemnizing officer as is known here
in the Philippines [See Article 56, Civil Code] when her alleged
marriage to Sy Mat was celebrated [CFI decision, p. 14; Rollo, p.
51], it therefore follows that her marriage to Sy Kiat, even if true,
cannot be recognized in this jurisdiction [Wong Woo Yiu v.
Vivo, supra., pp. 555-556.]
II. The second issue raised by petitioners concerns the status of
private respondents.
Respondent court found the following evidence of petitioners'
filiation:
(1) Sy Kiat's Master Card of Registered Alien where the
following are entered: "Children if any: give number of
childrenFour"; and, "NameAll living in China"
[Exhibit "SS-1";]
(2) the testimony of their mother Yao Kee who stated
that she had five children with Sy Kiat, only three of
whom are alive namely, Sze Sook Wah, Sze Lai Chu
and Sze Chin Yan [TSN, December 12, 1977, pp. 9-11;]
and,
(3) an affidavit executed on March 22,1961 by Sy Kiat
for presentation to the Local Civil Registrar of Manila to
support Sze Sook Wah's application for a marriage
license, wherein Sy Kiat expressly stated that she is his
daughter [Exhibit "3".]
Likewise on the record is the testimony of Asuncion Gillego that
Sy Kiat told her he has three daughters with his Chinese wife, two
of whomSook Wah and Sze Kai Choshe knows, and one
adopted son [TSN, December 6,1977, pp. 87-88.]
However, as petitioners failed to establish the marriage of Yao
Kee with Sy Mat according to the laws of China, they cannot be
accorded the status of legitimate children but only that of
acknowledged natural children. Petitioners are natural children, it
appearing that at the time of their conception Yao Kee and Sy
Kiat were not disqualified by any impediment to marry one
another [See Art. 269, Civil Code.] And they are acknowledged
children of the deceased because of Sy Kiat's recognition of Sze
Sook Wah [Exhibit "3"] and its extension to Sze Lai Cho and Sy
Chun Yen who are her sisters of the full blood [See Art. 271, Civil
Code.]
Private respondents on the other hand are also the deceased's
acknowledged natural children with Asuncion Gillego, a Filipina
with whom he lived for twenty-five (25) years without the benefit of
marriage. They have in their favor their father's acknowledgment,
evidenced by a compromise agreement entered into by and
between their parents and approved by the Court of First Instance
on February 12, 1974 wherein Sy Kiat not only acknowleged them
as his children by Asuncion Gillego but likewise made provisions
for their support and future inheritance, thus:
xxx xxx xxx
2. The parties also acknowledge that they are common-
law husband and wife and that out of such relationship,
which they have likewise decided to definitely and
finally terminate effective immediately, they begot five
children, namely: Aida Sy, born on May 30, 1950;
Manuel Sy, born on July 1, 1953; Teresita Sy, born on
January 28, 1955; Ricardo Sy now deceased, born on
December 14, 1956; and Rodolfo Sy, born on May 7,
1958.
3. With respect to the AVENUE TRACTOR AND
DIESEL PARTS SUPPLY ... , the parties mutually
agree and covenant that
(a) The stocks and merchandize and the
furniture and equipments ..., shall be divided
into two equal shares between, and
distributed to, Sy Kiat who shall own
one-half of the total and the other half to
Asuncion Gillego who shall transfer the same
to their children, namely, Aida Sy, Manuel Sy,
Teresita Sy, and Rodolfo Sy.
(b) the business name and premises ... shall
be retained by Sy Kiat. However, it shall be
his obligation to give to the aforenamed
children an amount of One Thousand Pesos (
Pl,000.00 ) monthly out of the rental of the
two doors of the same building now occupied
by Everett Construction.
xxx xxx xxx
(5) With respect to the acquisition, during the existence
of the
common-law husband-and-wife relationship between
the parties, of the real estates and properties registered
and/or appearing in the name of Asuncion Gillego ... ,
the parties mutually agree and covenant that the said
real estates and properties shall be transferred in equal
shares to their children, namely, Aida Sy, Manuel Sy,
Teresita Sy, and Rodolfo Sy, but to be administered by
Asuncion Gillego during her lifetime ... [Exhibit "D".]
(Emphasis supplied.)
xxx xxx xxx
This compromise agreement constitutes a statement before a
court of record by which a child may be voluntarily acknowledged
[See Art. 278, Civil Code.]
Petitioners further argue that the questions on the validity of Sy
Mat's marriage to Yao Kee and the paternity and filiation of the
parties should have been ventilated in the Juvenile and Domestic
Relations Court.
Specifically, petitioners rely on the following provision of Republic
Act No. 5502, entitled "An Act Revising Rep. Act No. 3278,
otherwise known as the Charter of the City of Caloocan', with
regard to the Juvenile and Domestic Relations Court:
SEC. 91-A. Creation and Jurisdiction of the Court.
xxx xxx xxx
The provisions of the Judiciary Act to the contrary
notwithstanding, the court shall have exclusive original
jurisdiction to hear and decide the following cases:
xxx xxx xxx
(2) Cases involving custody, guardianship, adoption,
revocation of adoption, paternity and acknowledgment;
(3) Annulment of marriages, relief from marital
obligations, legal separation of spouses, and actions for
support;
(4) Proceedings brought under the provisions of title six
and title seven, chapters one to three of the civil code;
xxx xxx xxx
and the ruling in the case of Bartolome v. Bartolome [G.R. No. L-
23661, 21 SCRA 1324] reiterated in Divinagracia v. Rovira [G.R.
No. L-42615, 72 SCRA 307.]
With the enactment of Batas Pambansa Blg. 129, otherwise
known as the Judiciary Reorganization Act of 1980, the Juvenile
and Domestic Relations Courts were abolished. Their functions
and jurisdiction are now vested with the Regional Trial Courts
[See Section 19 (7), B.P. Blg. 129 and Divinagracia v. Belosillo,
G.R. No. L-47407, August 12, 1986, 143 SCRA 356, 360] hence it
is no longer necessary to pass upon the issue of jurisdiction
raised by petitioners.
Moreover, even without the exactment of Batas Pambansa Blg.
129 we find in Rep. Act No. 5502 sec. 91-A last paragraph that:
xxx xxx xxx
If any question involving any of the above matters
should arise as an incident in any case pending in the
ordinary court, said incident shall be determined in the
main case.
xxx xxx xxx
As held in the case of Divinagracia v. Rovira [G.R. No. L42615.
August 10, 1976, 72 SCRA 307]:
xxx xxx xxx
It is true that under the aforequoted section 1 of
Republic Act No. 4834 **** a case involving paternity
and acknowledgment may be ventilated as an incident
in the intestate or testate proceeding (See Baluyot vs.
Ines Luciano, L-42215, July 13, 1976). But that legal
provision presupposes that such an administration
proceeding is pending or existing and has not been
terminated. [at pp. 313-314.] (Emphasis supplied.)
xxx xxx xxx
The reason for ths rule is not only "to obviate the rendition of
conflicting rulings on the same issue by the Court of First Instance
and the Juvenile and Domestic Relations Court" [Vda. de Baluyut
v. Luciano, G.R. No. L-42215, July 13, 1976, 72 SCRA 52, 63] but
more importantly to prevent multiplicity of suits. Accordingly, this
Court finds no reversible error committed by respondent court.
WHEREFORE, the decision of the Court of Appeals is hereby
AFFIRMED.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.

SECOND DIVISION
[G.R. No. 119602. October 6, 2000]
WILDVALLEY SHIPPING CO., LTD. petitioner, vs. COURT OF
APPEALS and PHILIPPINE PRESIDENT LINES
INC., respondents.
D E C I S I O N
BUENA, J .:
This is a petition for review on certiorari seeking to set aside
the decision of the Court of Appeals which reversed the decision
of the lower court in CA-G.R. CV No. 36821, entitled "Wildvalley
Shipping Co., Ltd., plaintiff-appellant, versus Philippine President
Lines, Inc., defendant-appellant."
The antecedent facts of the case are as follows:
Sometime in February 1988, the Philippine Roxas, a vessel
owned by Philippine President Lines, Inc., private respondent
herein, arrived in Puerto Ordaz, Venezuela, to load iron ore. Upon
the completion of the loading and when the vessel was ready to
leave port, Mr. Ezzar del Valle Solarzano Vasquez, an official pilot
of Venezuela, was designated by the harbour authorities in Puerto
Ordaz to navigate the Philippine Roxas through the Orinoco
River.
[1]
He was asked to pilot the said vessel on February 11,
1988
[2]
boarding it that night at 11:00 p.m.
[3]

The master (captain) of the Philippine Roxas, Captain
Nicandro Colon, was at the bridge together with the pilot
(Vasquez), the vessel's third mate (then the officer on watch), and
a helmsman when the vessel left the port
[4]
at 1:40 a.m. on
February 12, 1988.
[5]
Captain Colon left the bridge when the
vessel was under way.
[6]

The Philippine Roxas experienced some vibrations when it
entered the San Roque Channel at mile 172.
[7]
The vessel
proceeded on its way, with the pilot assuring the watch officer that
the vibration was a result of the shallowness of the channel.
[8]

Between mile 158 and 157, the vessel again experienced
some vibrations.
[9]
These occurred at 4:12 a.m.
[10]
It was then that
the watch officer called the master to the bridge.
[11]

The master (captain) checked the position of the vessel
[12]
and
verified that it was in the centre of the channel.
[13]
He then went to
confirm, or set down, the position of the vessel on the chart.
[14]
He
ordered Simplicio A. Monis, Chief Officer of the President Roxas,
to check all the double bottom tanks.
[15]

At around 4:35 a.m., the Philippine Roxas ran aground in the
Orinoco River,
[16]
thus obstructing the ingress and egress of
vessels.
As a result of the blockage, the Malandrinon, a vessel owned
by herein petitioner Wildvalley Shipping Company, Ltd., was
unable to sail out of Puerto Ordaz on that day.
Subsequently, Wildvalley Shipping Company, Ltd. filed a suit
with the Regional Trial Court of Manila, Branch III against
Philippine President Lines, Inc. and Pioneer Insurance Company
(the underwriter/insurer of Philippine Roxas) for damages in the
form of unearned profits, and interest thereon amounting to US
$400,000.00 plus attorney's fees, costs, and expenses of
litigation. The complaint against Pioneer Insurance Company was
dismissed in an Order dated November 7, 1988.
[17]

At the pre-trial conference, the parties agreed on the following
facts:
"1. The jurisdictional facts, as specified in their respective pleadings;
"2. That defendant PPL was the owner of the vessel Philippine Roxas at
the time of the incident;
"3. That defendant Pioneer Insurance was the insurance underwriter for
defendant PPL;
"4. That plaintiff Wildvalley Shipping Co., Inc. is the owner of the
vessel Malandrinon, whose passage was obstructed by the vessel
Philippine Roxas at Puerto Ordaz, Venezuela, as specified in par. 4, page
2 of the complaint;
"5. That on February 12, 1988, while the Philippine Roxas was
navigating the channel at Puerto Ordaz, the said vessel grounded and as
a result, obstructed navigation at the channel;
"6. That the Orinoco River in Puerto Ordaz is a compulsory pilotage
channel;
"7. That at the time of the incident, the vessel, Philippine Roxas, was
under the command of the pilot Ezzar Solarzano, assigned by the
government thereat, but plaintiff claims that it is under the command of
the master;
"8. The plaintiff filed a case in Middleburg, Holland which is related to
the present case;
"9. The plaintiff caused the arrest of the Philippine Collier, a vessel
owned by the defendant PPL;
"10. The Orinoco River is 150 miles long and it takes approximately 12
hours to navigate out of the said river;
"11. That no security for the plaintiff's claim was given until after the
Philippine Collier was arrested; and
"12. That a letter of guarantee, dated 12-May-88 was issued by the
Steamship Mutual Underwriters Ltd."
[18]

The trial court rendered its decision on October 16, 1991 in
favor of the petitioner, Wildvalley Shipping Co., Ltd. The
dispositive portion thereof reads as follows:
"WHEREFORE, judgment is rendered for the plaintiff, ordering
defendant Philippine President Lines, Inc. to pay to the plaintiff the sum
of U.S. $259,243.43, as actual and compensatory damages, and U.S.
$162,031.53, as expenses incurred abroad for its foreign lawyers, plus
additional sum of U.S. $22,000.00, as and for attorney's fees of
plaintiff's local lawyer, and to pay the cost of this suit.
"Defendant's counterclaim is dismissed for lack of merit.
"SO ORDERED."
[19]

Both parties appealed: the petitioner appealing the non-award
of interest with the private respondent questioning the decision on
the merits of the case.
After the requisite pleadings had been filed, the Court of
Appeals came out with its questioned decision dated June 14,
1994,
[20]
the dispositive portion of which reads as follows:
"WHEREFORE, finding defendant-appellant's appeal to be meritorious,
judgment is hereby rendered reversing the Decision of the lower
court. Plaintiff-appellant's Complaint is dismissed and it is ordered to
pay defendant-appellant the amount of Three Hundred Twenty-three
Thousand, Forty-two Pesos and Fifty-three Centavos (P323,042.53) as
and for attorney's fees plus cost of suit. Plaintiff-appellant's appeal is
DISMISSED.
"SO ORDERED."
[21]

Petitioner filed a motion for reconsideration
[22]
but the same
was denied for lack of merit in the resolution dated March 29,
1995.
[23]

Hence, this petition.
The petitioner assigns the following errors to the court a quo:
1. RESPONDENT COURT OF APPEALS SERIOUSLY
ERRED IN FINDING THAT UNDER PHILIPPINE LAW
NO FAULT OR NEGLIGENCE CAN BE ATTRIBUTED
TO THE MASTER NOR THE OWNER OF THE
"PHILIPPINE ROXAS" FOR THE GROUNDING OF SAID
VESSEL RESULTING IN THE BLOCKAGE OF THE RIO
ORINOCO;
2. RESPONDENT COURT OF APPEALS SERIOUSLY
ERRED IN REVERSING THE FINDINGS OF FACTS OF
THE TRIAL COURT CONTRARY TO EVIDENCE;
3. RESPONDENT COURT OF APPEALS SERIOUSLY
ERRED IN FINDING THAT THE "PHILIPPINE ROXAS"
IS SEAWORTHY;
4. RESPONDENT COURT OF APPEALS SERIOUSLY
ERRED IN DISREGARDING VENEZUELAN LAW
DESPITE THE FACT THAT THE SAME HAS BEEN
SUBSTANTIALLY PROVED IN THE TRIAL COURT
WITHOUT ANY OBJECTION FROM PRIVATE
RESPONDENT, AND WHOSE OBJECTION WAS
INTERPOSED BELATEDLY ON APPEAL;
5. RESPONDENT COURT OF APPEALS SERIOUSLY
ERRED IN AWARDING ATTORNEY'S FEES AND
COSTS TO PRIVATE RESPONDENT WITHOUT ANY
FAIR OR REASONABLE BASIS WHATSOEVER;
6. RESPONDENT COURT OF APPEALS SERIOUSLY
ERRED IN NOT FINDING THAT PETITIONER'S CAUSE
IS MERITORIOUS HENCE, PETITIONER SHOULD BE
ENTITLED TO ATTORNEY'S FEES, COSTS AND
INTEREST.
The petition is without merit.
The primary issue to be determined is whether or not
Venezuelan law is applicable to the case at bar.
It is well-settled that foreign laws do not prove themselves in
our jurisdiction and our courts are not authorized to take judicial
notice of them.Like any other fact, they must be alleged and
proved.
[24]

A distinction is to be made as to the manner of proving a
written and an unwritten law. The former falls under Section 24,
Rule 132 of the Rules of Court, as amended, the entire provision
of which is quoted hereunder. Where the foreign law sought to be
proved is "unwritten," the oral testimony of expert witnesses is
admissible, as are printed and published books of reports of
decisions of the courts of the country concerned if proved to be
commonly admitted in such courts.
[25]

Section 24 of Rule 132 of the Rules of Court, as amended,
provides:
"Sec. 24. Proof of official record. -- The record of public documents
referred to in paragraph (a) of Section 19, when admissible for any
purpose, may be evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody of the record, or by
his deputy, and accompanied, if the record is not kept in the
Philippines, with a certificate that such officer has the custody. 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."
(Underscoring supplied)
The court has interpreted Section 25 (now Section 24) to
include competent evidence like the testimony of a witness to
prove the existence of a written foreign law.
[26]

In the noted case of Willamette Iron & Steel Works vs.
Muzzal,
[27]
it was held that:
" Mr. Arthur W. Bolton, an attorney-at-law of San Francisco,
California, since the year 1918 under oath, quoted verbatim section 322
of the California Civil Code and stated that said section was in force at
the time the obligations of defendant to the plaintiff were incurred, i.e.
on November 5, 1928 and December 22, 1928. This evidence
sufficiently established the fact that the section in question was the law
of the State of California on the above dates. A reading of sections 300
and 301 of our Code of Civil Procedure will convince one that these
sections do not exclude the presentation of other competent evidence to
prove the existence of a foreign law.
"`The foreign law is a matter of fact You ask the witness what the law
is; he may, from his recollection, or on producing and referring to books,
say what it is.' (Lord Campbell concurring in an opinion of Lord Chief
Justice Denman in a well-known English case where a witness was
called upon to prove the Roman laws of marriage and was permitted to
testify, though he referred to a book containing the decrees of the
Council of Trent as controlling, Jones on Evidence, Second Edition,
Volume 4, pages 3148-3152.) x x x.
We do not dispute the competency of Capt. Oscar Leon
Monzon, the Assistant Harbor Master and Chief of Pilots at Puerto
Ordaz, Venezuela,
[28]
to testify on the existence of
the Reglamento General de la Ley de Pilotaje (pilotage law of
Venezuela)
[29]
and the Reglamento Para la Zona de Pilotaje N
o
1
del Orinoco (rules governing the navigation of the Orinoco
River). Captain Monzon has held the aforementioned posts for
eight years.
[30]
As such he is in charge of designating the pilots for
maneuvering and navigating the Orinoco River. He is also in
charge of the documents that come into the office of the harbour
masters.
[31]

Nevertheless, we take note that these written laws were not
proven in the manner provided by Section 24 of Rule 132 of the
Rules of Court.
The Reglamento General de la Ley de Pilotaje was published
in the Gaceta Oficial
[32]
of the Republic of Venezuela. A photocopy
of theGaceta Oficial was presented in evidence as an official
publication of the Republic of Venezuela.
The Reglamento Para la Zona de Pilotaje N
o
1 del Orinoco is
published in a book issued by the Ministerio de
Comunicaciones of Venezuela.
[33]
Only a photocopy of the said
rules was likewise presented as evidence.
Both of these documents are considered in Philippine
jurisprudence to be public documents for they are the written
official acts, or records of the official acts of the sovereign
authority, official bodies and tribunals, and public officers of
Venezuela.
[34]

For a copy of a foreign public document to be admissible, the
following requisites are mandatory: (1) It must be attested by the
officer having legal custody of the records or by his deputy; and
(2) It must be accompanied by a certificate by a secretary of the
embassy or legation, consul general, consul, vice consular or
consular agent or foreign service officer, and with the seal of his
office.
[35]
The latter requirement is not a mere technicality but is
intended to justify the giving of full faith and credit to the
genuineness of a document in a foreign country.
[36]

It is not enough that the Gaceta Oficial, or a book published by
the Ministerio de Comunicaciones of Venezuela, was presented
as evidence with Captain Monzon attesting it. It is also required
by Section 24 of Rule 132 of the Rules of Court that a certificate
that Captain Monzon, who attested the documents, is the officer
who had legal custody of those records 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 Venezuela, and authenticated by the seal
of his office accompanying the copy of the public document. No
such certificate could be found in the records of the case.
With respect to proof of written laws, parol proof is
objectionable, for the written law itself is the best
evidence. According to the weight of authority, when a foreign
statute is involved, the best evidence rule requires that it be
proved by a duly authenticated copy of the statute.
[37]

At this juncture, we have to point out that the Venezuelan law
was not pleaded before the lower court.
A foreign law is considered to be pleaded if there is an
allegation in the pleading about the existence of the foreign law,
its import and legal consequence on the event or transaction in
issue.
[38]

A review of the Complaint
[39]
revealed that it was never alleged
or invoked despite the fact that the grounding of the M/V
Philippine Roxas occurred within the territorial jurisdiction of
Venezuela.
We reiterate that under the rules of private international law, a
foreign law must be properly pleaded and proved as a fact. In the
absence of pleading and proof, the laws of a foreign country, or
state, will be presumed to be the same as our own local or
domestic law and this is known as processual presumption.
[40]

Having cleared this point, we now proceed to a thorough study
of the errors assigned by the petitioner.
Petitioner alleges that there was negligence on the part of the
private respondent that would warrant the award of damages.
There being no contractual obligation, the private respondent
is obliged to give only the diligence required of a good father of a
family in accordance with the provisions of Article 1173 of the
New Civil Code, thus:
Art. 1173. The fault or negligence of the obligor consists in the
omission of that diligence which is required by the nature of the
obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions
of articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to be
observed in the performance, that which is expected of a good father of a
family shall be required.
The diligence of a good father of a family requires only that
diligence which an ordinary prudent man would exercise with
regard to his own property. This we have found private
respondent to have exercised when the vessel sailed only after
the "main engine, machineries, and other auxiliaries" were
checked and found to be in good running condition;
[41]
when the
master left a competent officer, the officer on watch on the bridge
with a pilot who is experienced in navigating the Orinoco River;
when the master ordered the inspection of the vessel's double
bottom tanks when the vibrations occurred anew.
[42]

The Philippine rules on pilotage, embodied in Philippine Ports
Authority Administrative Order No. 03-85, otherwise known as the
Rules and Regulations Governing Pilotage Services, the Conduct
of Pilots and Pilotage Fees in Philippine Ports enunciate the
duties and responsibilities of a master of a vessel and its pilot,
among other things.
The pertinent provisions of the said administrative order
governing these persons are quoted hereunder:
Sec. 11. Control of Vessels and Liability for Damage. -- On
compulsory pilotage grounds, the Harbor Pilot providing the service to a
vessel shall be responsible for the damage caused to a vessel or to life
and property at ports due to his negligence or fault. He can be absolved
from liability if the accident is caused by force majeure or natural
calamities provided he has exercised prudence and extra diligence to
prevent or minimize the damage.
The Master shall retain overall command of the vessel even on pilotage
grounds whereby he can countermand or overrule the order or command
of the Harbor Pilot on board. In such event, any damage caused to a
vessel or to life and property at ports by reason of the fault or negligence
of the Master shall be the responsibility and liability of the registered
owner of the vessel concerned without prejudice to recourse against said
Master.
Such liability of the owner or Master of the vessel or its pilots shall be
determined by competent authority in appropriate proceedings in the
light of the facts and circumstances of each particular case.
x x x
Sec. 32. Duties and Responsibilities of the Pilots or Pilots
Association. -- The duties and responsibilities of the Harbor Pilot shall
be as follows:
x x x
f) A pilot shall be held responsible for the direction of a vessel from the
time he assumes his work as a pilot thereof until he leaves it anchored or
berthed safely; Provided, however, that his responsibility shall cease at
the moment the Master neglects or refuses to carry out his order."
The Code of Commerce likewise provides for the obligations
expected of a captain of a vessel, to wit:
Art. 612. The following obligations shall be inherent in the office of
captain:
x x x
"7. To be on deck on reaching land and to take command on entering
and leaving ports, canals, roadsteads, and rivers, unless there is a pilot
on board discharging his duties. x x x.
The law is very explicit. The master remains the overall
commander of the vessel even when there is a pilot on board. He
remains in control of the ship as he can still perform the duties
conferred upon him by law
[43]
despite the presence of a pilot who
is temporarily in charge of the vessel. It is not required of him to
be on the bridge while the vessel is being navigated by a pilot.
However, Section 8 of PPA Administrative Order No. 03-85,
provides:
Sec. 8. Compulsory Pilotage Service - For entering a harbor and
anchoring thereat, or passing through rivers or straits within a pilotage
district, as well as docking and undocking at any pier/wharf, or shifting
from one berth or another, every vessel engaged in coastwise and
foreign trade shall be under compulsory pilotage.
xxx.
The Orinoco River being a compulsory pilotage channel
necessitated the engaging of a pilot who was presumed to be
knowledgeable of every shoal, bank, deep and shallow ends of
the river. In his deposition, pilot Ezzar Solarzano Vasquez
testified that he is an official pilot in the Harbour at Port Ordaz,
Venezuela,
[44]
and that he had been a pilot for twelve (12)
years.
[45]
He also had experience in navigating the waters of the
Orinoco River.
[46]

The law does provide that the master can countermand or
overrule the order or command of the harbor pilot on board. The
master of the Philippine Roxas deemed it best not to order him
(the pilot) to stop the vessel,
[47]
mayhap, because the latter had
assured him that they were navigating normally before the
grounding of the vessel.
[48]
Moreover, the pilot had admitted that
on account of his experience he was very familiar with the
configuration of the river as well as the course headings, and that
he does not even refer to river charts when navigating the
Orinoco River.
[49]

Based on these declarations, it comes as no surprise to us that
the master chose not to regain control of the ship. Admitting his
limited knowledge of the Orinoco River, Captain Colon relied on
the knowledge and experience of pilot Vasquez to guide the
vessel safely.
Licensed pilots, enjoying the emoluments of compulsory pilotage, are
in a different class from ordinary employees, for they assume to have a
skill and a knowledge of navigation in the particular waters over which
their licenses extend superior to that of the master; pilots are bound to
use due diligence and reasonable care and skill. A pilot's ordinary skill is
in proportion to the pilot's responsibilities, and implies a knowledge and
observance of the usual rules of navigation, acquaintance with the waters
piloted in their ordinary condition, and nautical skill in avoiding all
known obstructions. The character of the skill and knowledge required
of a pilot in charge of a vessel on the rivers of a country is very different
from that which enables a navigator to carry a vessel safely in the
ocean. On the ocean, a knowledge of the rules of navigation, with charts
that disclose the places of hidden rocks, dangerous shores, or other
dangers of the way, are the main elements of a pilot's knowledge and
skill. But the pilot of a river vessel, like the harbor pilot, is selected for
the individual's personal knowledge of the topography through which
the vessel is steered."
[50]

We find that the grounding of the vessel is attributable to the
pilot. When the vibrations were first felt the watch officer asked
him what was going on, and pilot Vasquez replied that "(they)
were in the middle of the channel and that the vibration was as
(sic) a result of the shallowness of the channel."
[51]

Pilot Ezzar Solarzano Vasquez was assigned to pilot the
vessel Philippine Roxas as well as other vessels on the Orinoco
River due to his knowledge of the same. In his experience as a
pilot, he should have been aware of the portions which are
shallow and which are not. His failure to determine the depth of
the said river and his decision to plod on his set course, in all
probability, caused damage to the vessel. Thus, we hold him as
negligent and liable for its grounding.
In the case of Homer Ramsdell Transportation Company
vs. La Compagnie Generale Transatlantique, 182 U.S. 406, it
was held that:
x x x The master of a ship, and the owner also, is liable for any injury
done by the negligence of the crew employed in the ship. The same
doctrine will apply to the case of a pilot employed by the master or
owner, by whose negligence any injury happens to a third person or his
property: as, for example, by a collision with another ship, occasioned
by his negligence. And it will make no difference in the case that the
pilot, if any is employed, is required to be a licensed pilot; provided the
master is at liberty to take a pilot, or not, at his pleasure, for in such a
case the master acts voluntarily, although he is necessarily required to
select from a particular class. On the other hand, if it is compulsive
upon the master to take a pilot, and, a fortiori, if he is bound to do so
under penalty, then, and in such case, neither he nor the owner will
be liable for injuries occasioned by the negligence of the pilot; for in
such a case the pilot cannot be deemed properly the servant of the master
or the owner, but is forced upon them, and the maxim Qui facit per
alium facit per se does not apply." (Underscoring supplied)
Anent the river passage plan, we find that, while there was
none,
[52]
the voyage has been sufficiently planned and monitored
as shown by the following actions undertaken by the pilot, Ezzar
Solarzano Vasquez, to wit: contacting the radio marina via VHF
for information regarding the channel, river traffic,
[53]
soundings of
the river, depth of the river, bulletin on the buoys.
[54]
The officer on
watch also monitored the voyage.
[55]

We, therefore, do not find the absence of a river passage plan
to be the cause for the grounding of the vessel.
The doctrine of res ipsa loquitur does not apply to the case at
bar because the circumstances surrounding the injury do not
clearly indicate negligence on the part of the private
respondent. For the said doctrine to apply, the following
conditions must be met: (1) the accident was of such character as
to warrant an inference that it would not have happened except
for defendant's negligence; (2) the accident must have been
caused by an agency or instrumentality within the exclusive
management or control of the person charged with the negligence
complained of; and (3) the accident must not have been due to
any voluntary action or contribution on the part of the person
injured.
[56]

As has already been held above, there was a temporary shift
of control over the ship from the master of the vessel to the pilot
on a compulsory pilotage channel. Thus, two of the requisites
necessary for the doctrine to apply, i.e., negligence and control, to
render the respondent liable, are absent.
As to the claim that the ship was unseaworthy, we hold that it
is not.
The Lloyds Register of Shipping confirmed the vessels
seaworthiness in a Confirmation of Class issued on February 16,
1988 by finding that "the above named ship (Philippine Roxas)
maintained the class "+100A1 Strengthened for Ore Cargoes,
Nos. 2 and 8 Holds may be empty (CC) and +LMC" from 31/12/87
up until the time of casualty on or about 12/2/88."
[57]
The same
would not have been issued had not the vessel been built
according to the standards set by Lloyd's.
Samuel Lim, a marine surveyor, at Lloyd's Register of Shipping
testified thus:
"Q Now, in your opinion, as a surveyor, did top side tank have
any bearing at all to the seaworthiness of the vessel?
"A Well, judging on this particular vessel, and also basing on
the class record of the vessel, wherein recommendations
were made on the top side tank, and it was given sufficient
time to be repaired, it means that the vessel is fit to travel
even with those defects on the ship.
"COURT
What do you mean by that? You explain. The vessel is fit to
travel even with defects? Is that what you mean? Explain.
"WITNESS
"A Yes, your Honor. Because the class society which register
(sic) is the third party looking into the condition of the vessel
and as far as their record states, the vessel was class or
maintained, and she is fit to travel during that voyage."
x x x
"ATTY. MISA
Before we proceed to other matter, will you kindly tell us what is
(sic) the 'class +100A1 Strengthened for Ore Cargoes',
mean?
"WITNESS
"A Plus 100A1 means that the vessel was built according to
Lloyd's rules and she is capable of carrying ore bulk
cargoes, but she is particularly capable of carrying Ore
Cargoes with No. 2 and No. 8 holds empty.
x x x
"COURT
The vessel is classed, meaning?
"A Meaning she is fit to travel, your Honor, or seaworthy."
[58]

It is not required that the vessel must be perfect. To be
seaworthy, a ship must be reasonably fit to perform the services,
and to encounter the ordinary perils of the voyage, contemplated
by the parties to the policy.
[59]

As further evidence that the vessel was seaworthy, we quote
the deposition of pilot Vasquez:
"Q Was there any instance when your orders or directions were
not complied with because of the inability of the vessel to do
so?
"A No.
"Q. Was the vessel able to respond to all your commands and
orders?
"A. The vessel was navigating normally.
[60]

Eduardo P. Mata, Second Engineer of the Philippine Roxas
submitted an accident report wherein he stated that on February
11, 1988, he checked and prepared the main engine, machineries
and all other auxiliaries and found them all to be in good running
condition and ready for maneuvering. That same day the main
engine, bridge and engine telegraph and steering gear motor
were also tested.
[61]
Engineer Mata also prepared the fuel for
consumption for maneuvering and checked the engine
generators.
[62]

Finally, we find the award of attorneys fee justified.
Article 2208 of the New Civil Code provides that:
"Art. 2208. In the absence of stipulation, attorney's fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
x x x
"(11) In any other case where the court deems it just and equitable that
attorney's fees and expenses of litigation should be recovered.
x x x
Due to the unfounded filing of this case, the private respondent
was unjustifiably forced to litigate, thus the award of attorneys
fees was proper.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is
DENIED and the decision of the Court of Appeals in CA G.R. CV
No. 36821 is AFFIRMED.
SO ORDERED.


SECOND DIVISION
[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.
D E C I S I O N
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)
[1]
and Philsec
Investment Corporation (hereafter called 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 Ducats
obligation under an Agreement, dated January 27, 1983, whereby
1488, Inc. executed a Warranty Deed with Vendors 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, PHILSECs 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 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.
A separate hearing was held with regard to 1488, Inc. and
Daics motion to dismiss. On March 9, 1988, the trial
court
[3]
granted the motion to dismiss filed by 1488, Inc. and Daic
on the ground of litis pendentia considering that
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
[4]
affirmed the
dismissal of Civil Case No. 16563 against Ducat, 1488, Inc., 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-
IFLs 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 Ducats
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
COURTS 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
[5]
in the case before it. The judgment, which
was in favor of private respondents, was affirmed on appeal by
the Circuit Court of Appeals.
[6]
Thus, the principal issue to be
resolved in this case is whether Civil Case No. 16536 is barred
by the 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,
[7]
it was after the parties opposed to the judgment had
been given ample opportunity to repel them on grounds allowed
under the law.
[8]
It is not necessary for this purpose to initiate a
separate action or proceeding for 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.
[9]
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.
Thus, in the case of General Corporation of the Philippines v.
Union Insurance Society of Canton, Ltd.,
[10]
which 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 appellants own pleadings
[11]
that the foreign court did not
make a clear mistake of law or fact or that its judgment was void
for want 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 Philippine International Shipping Corp. v. Court of
Appeals,
[12]
this Court held that the foreign judgment was valid
and 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 plaintiffs 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 courts 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.
[15]
After
all, the two have been filed in the Regional Trial Court of Makati,
albeit in different salas, this 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 courts 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.
[16]
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.
[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 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.
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.
[18]
It is not disputed that the
properties, real and personal, of the private respondents 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 Guevarras claim is not only
admitted by petitioners,
[20]
it appears from the pleadings that
petitioners only belatedly impleaded Guevarra as defendant in
Civil Case No. 16563.
[21]
Hence, the TRO should be lifted and
Civil Case No. 92-1445 allowed to proceed.
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.

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 77085 April 26, 1989
PHILIPPINE INTERNATIONAL SHIPPING CORPORATION
(PISC), GEORGE LIM, MARCOS BAUTISTA, CARLOS LAUDE,
TAN SING LIM, ANTONIO LIU LAO, ONG TEH, PHILIPPINE
CONSORTIUM CONSTRUCTION CORPORATION, PACIFIC
MILLS, INC., and UNIVERSAL STEEL SMELTING CO.,
INC., petitioners,
vs.
THE HON. COURT OF APPEALS, HON. JOSE C. DE GUZMAN,
as Judge presiding Branch 93 of the Regional Trial Court of
Quezon City, INTERPOOL, LTD. and SHERIFF NORBERTO V.
DOBLADA JR.,respondents.
R E S O L U T I O N

FELICIANO, J .:
The subject of the present Petition is the Decision of the Court of
Appeals dated 12 December 1986, in CA-G.R. SP No. 10614.
The appellate court upheld the Order of Branch 93 of the
Regional Trial Court of Quezon City granting the issuance of a
writ of execution, in Civil Case No. Q-39927.
The undisputed facts are stated in the appealed decision:
Plaintiff [respondent Interpool, Ltd.] is a foreign
corporation, duly organized and existing under the laws
of Bahamas Islands with office and business address at
630, 3rd Avenue, New York, New York, and not
licensed to do, and not doing business, in the
Philippines.
Defendants Philippine International Shipping
Corporation, Philippine Construction Consortium
Corporation, Pacific Mills Inc., and Universal Steel
Smelting Company, Inc., are corporations duly
organized and existing under and by virtue of the laws
of the Philippines. The other defendants, George Lim
Marcos Bautista, Carlos Laude, Tan Sing Lim, Antonio
Liu Lao and Ong Teh are Philippine residents.
In 1979 to 1981, the defendant, Philippine International
Shipping Corporation (PISC) leased from the plaintiff
and its wholly owned subsidiary, the Container Trading
Corporation, several containers pursuant to the
Membership Agreement and Hiring Conditions (Exhibit
B) 1 and the Master Equipment Leasing Agreement
(Exhibit C ), 2 both dated June 8, 1979.
Defendants Philippine Construction Consortium
Corporation, Pacific Mills Inc. and Universal Steel
Smelting Company, guaranteed to pay (sic) all monies
due, or to become due, to the plaintiff from (PISC) and
any liability of the latter arising out of the leasing or
purchasing of equipment from the plaintiff or any of its
subsidiaries, affiliates and/or agents of I.S.C. dry cargo
containers and/or chassis, including but not limited, to
per diem leasing charges, damages protection plan
charges, damages charge and/or replacement costs of
constructively and/or totally lost containers as well as
handling and drop-off charges (Exhibit J). 3
The other defendants, namely: 1) George Lim; 2)
Marcos Bautista; 3) Carlos Laude 4) Tan Sing Lim; 5)
Antonio Liu Lao and 6) Ong Teh, unconditionally and
irrevocably guaranteed to pay (sic) plaintiff all payments
due to it under the Master Equipment Leasing
Agreement (Exhibit C) and Membership Agreement and
Hiring Conditions (Exhibit B) dated June 8, 1979, in the
amounts at the time and in the manner set out in the
said agreements and to indemnify plaintiff against all
claims, liabilities, costs, damages and expenses
(including legal fees) suffered or incurred by plaintiff,
arising out of or in connection with any failure by
defendant Philippine International Shipping Corporation
to perform any of its obligations under the aforesaid
Agreements (Exhibit D, E, F, G, H, and I). 4
In 1979 to 1981, defendant Philippine International
Shipping Corporation incurred outstanding and unpaid
obligations with the plaintiff, in the amount of
$94,456.28, representing unpaid per diems, drop-off
charges, interest and other agreed charges.
The plaintiff sent letters to the defendants (Exhibit K, L,
M, N 0, P, Q, R, S and T ), 5 demanding payment of
their outstanding and unpaid obligations, but to no avail,
so plaintiff was constrained to file a case against the
principal defendant, (PISC) before the United States
District Court, Southern District of New York, which was
docketed as 83 Civil 290 (EW) Plaintiff obtained a
Default Judgment on July 3, 1983 against (PISC)
ordering it to pay the plaintiff the sum of $80,779.33, as
liquidated damages, together with interest in the
amount of $13,676.95 and costs in the amount of
$80.00. or for a total judgment of $94,456.28 (Exhibit
A). 6
Because of the unjustifiable failure and refusal of PISC
and its guarantors to jointly and severally pay their
obligations to the plaintiff, the latter filed on November
16, 1983 a complaint [docketed as Civil Case No. Q-
39927, Branch 93, Regional Trial Court of Quezon City]
(Annex A) 7 to enforce the default judgment of the U.S.
District Court against the defendant PISC and also to
enforce the individually executed Continuing Guaranties
of the other defendants (Annexes D, E, F, G, H, I, and J
of the Complaint).
The defendants (herein petitioners) were duly
summoned, but they failed to answer the complaint. On
motion of the plaintiff, they were declared in
default 8 and the plaintiff (herein private respondent)
was allowed to present its evidence ex parte.
On April 11, 1985 the court rendered judgment for the
plaintiff, 9 the dispositive part reading as follows:
WHEREFORE, judgment is hereby rendered in favor of
the plaintiff and against the defendants, ordering:
1) The defendant, Philippine International Shipping
Corporation, and the defendants-Guarantors, to jointly
and severally pay plaintiff the liquidated amount of
$80,779.33, together with interest in the amount of
$13,676.95 and costs in the amount of $80.00 or a total
of $94,456.28, pursuant to the Default Judgment
rendered by the United States District Court, Southern
District of New York, or in the Philippine currency
equivalent of the aforesaid amount of $94,456.28,
computed at the time of payment, with interest for late
payment at the rate of 18% per annum from July 4,
1983, until fully paid;
2) The defendant, Philippine International Shipping
Corporation, and the defendants-Guarantors, to jointly
and severally pay plaintiff the sum equivalent to twenty
(20%) percent of the total amount due from the
defendants by way of attorney's fees; and
3) To pay the costs.
On May 17, 1985, the defendants appealed the
decision to this Appellate Court (AC-G.R. UDK No.
7383) which dismissed the appeal on November 13,
1985 for failure of the appellants to pay the docketing
fee despite their receipt of the notice to do so on August
26, 1985. 10 Entry of that final resolution was made on
December 6,1985.
In view of the finality of the decision, the plaintiff filed on
July 23, 1986 a motion for execution and for
appointment of a special sheriff to enforce it. 11
Over the defendants' opposition, the trial court issued
an order of execution on October 15, 1986 and
appointed Norberto V. Doblado, Jr., of the office of the
Makati Sheriff, as special sheriff for the purpose (Annex
D). 12
On 20 November 1986, petitioners (defendants below) filed with
the Court of Appeals a Petition to Annul Judgment (docketed as
C.A.-GR SP No. 10614) 13 directed at the 15 October 1986 Order
of the Regional Trial Court. On 12 December 1986, the appellate
court rendered a Decision 14 denying that petition for lack of
merit. A Motion for Reconsideration was likewise denied for lack
of merit.15
In the instant Petition for Review, filed with this Court on 27
February 1987, petitioners allege that both the Default Judgment
rendered by the U.S. District Court, Southern District of New York,
in 83 Civil 290 (EW), and the Decision of the Regional Trial Court
of Quezon City, in Civil Case No. Q-39927, are null and void
essentially on jurisdictional grounds. In the first instance,
petitioners contend that the U.S. District Court never acquired
jurisdiction over their persons as they had not been served with
summons and a copy of the Complaint in 83 Civil 290 (EW). In the
second instance, petitioners contend that such jurisdictional ty
effectively prevented the Regional Trial Court of Quezon City from
taking cognizance of the Complaint in Civil Case No. Q-39927
and from enforcing the U.S. District Court's Default Judgment
against them. Petitioners contend, finally, that assuming the
validity of the disputed Default Judgment, the same may be
enforced only against petitioner Philippine International Shipping
Corporation (PISC) the other nine (9) petitioners not having been
impleaded originally in the case filed in New York, U.S.A.
The Petition must fail.
1. To begin with, the evidence of record clearly shows
that the U.S. District Court had validly acquired
jurisdiction over petitioner (PISC) under the procedural
law applicable in that forum i.e., the U.S. Federal Rules
on Civil Procedure. Copies of the Summons and
Complaint 16 in 83 Civil 290 (EW) which were in fact
attached to the Petition for Review filed with this Court,
were stamped "Received, 18 Jan 1983, PISC
Manila." indicating that service thereof had been made
upon and acknowledged by the (PISC) office in Manila
on, 18 January 1983, and that (PISC) had actual
notice of such Complaint and Summons. Moreover,
copies of said Summons and Complaint had likewise
been served upon Prentice-Hall Corporation System,
Inc. (New York), petitioner PISCs agent, expressly
designated by it in the Master Equipment Leasing
Agreement with respondent Interpool. "for the purpose
of accepting service of any process within the State of
New York, USA with respect to any claim or
controversy arising out of or relating to directly or
indirectly, this Lease." 17 The record also shows that
petitioner PISC, without, however, assailing the
jurisdiction of the U.S. District Court over the person of
petitioner, had filed a Motion to Dismiss 18 the
Complaint in 83 Civil 290 (EW) which Motion was
denied. All of the foregoing matters, which were stated
specifically in the U.S. District Court's disputed Default
Judgement, 19 have not been disproven or otherwise
overcome by petitioners, whose bare and
unsubstantiated allegations cannot prevail over clear
and convincing evidence of record to the contrary.
That foreign judgment-which had become final and executory, no
appeal having been taken therefrom and perfected by petitioner
PISC-is thus "presumptive evidence of a right as between the
parties [i.e., PISC and Interpool] and their successors in interest
by a subsequent title." 20 We note, further that there has been in
this case no showing by petitioners that the Default Judgment
rendered by the U.S. District Court in 83 Civil 290 (EW) was
vitiated by "want of notice to the party, collusion, fraud, or clear
mistake of law or fact. " 21 In other words, the Default Judgment
imposing upon petitioner PISC a liability of U.S.$94,456.28 in
favor of respondent Interpool, is valid and may be enforced in this
jurisdiction.
2. The existence of liability (i.e., in the amount of
U.S.$94,456.28) on the part of petitioner PISC having
been duly established in the U.S. case, it was not
improper for respondent Interpool, in seeking
enforcement in this jurisdiction of the foreign judgment
imposing such liability, to have included the other nine
(9) petitioners herein (i.e., George Lim, Marcos
Bautista, Carlos Laude,Tan Sing Lim, Antonio Liu Lao,
Ong Teh Philippine Consortium Construction
Corporation, Pacific Mills, Inc. and Universal Steel
Smelting Co., Inc.) as defendants in Civil Case No. Q-
39927, filed with Branch 93 of the Regional Trial Court
of Quezon City. With respect to the latter, Section 6,
Rule 3 of the Revised Rules of Court expressly
provides:
Sec. 6. Permissive joinder of parties. All persons in
whom or against whom any right to relief in respect to
or arising out of the same transaction or series of
transactions is alleged to exist, whether jointly,
severally, or in the alternative, may, except as
otherwise provided in these rules, join as plaintiffs or be
joined as defendants in one complaint, where any
question of law or fact common to all such plaintiffs or
to all such defendants may arise in the action; but the
court may make such orders as may be just to prevent
any plaintiff or defendant from being embarrassed or
put to expense in connection with any proceedings in
which he may have no interest. (Emphasis supplied)
The record shows that said nine (9) petitioners had executed
continuing guarantees" to secure performance by petitioner PISC
of its contractual obligations, under the Membership Agreement
and Hiring Conditions and Master Equipment Leasing Agreement
with respondent Interpool. As guarantors, they had held
themselves out as liable. "whether jointly, severally, or in the
alternative," to respondent Interpool under their separate
"continuing guarantees" executed in the Philippines, for any
breach of those Agreements on the part of (PISC) The liability of
the nine (9) other petitioners was, in other words, not based upon
the Membership Agreement and the Master Equipment Leasing
Agreement to which they were not parties. The New York award
of U.S.$94,456.28 is precisely premised upon a breach by PISC
of its own obligations under those Agreements. We, therefore,
consider the nine (9) other petitioners as persons 44 against
whom [a] right to relief in respect to or arising out of the same
transaction or series of transactions [has been] alleged to exist."
as contemplated in the Rule quoted above and, consequently,
properly impleaded as defendants in Civil Case No. Q-39927.
There was, in other words, no need at all, in order that Civil Case
No. Q-39927 would prosper, for respondent Interpool to have first
impleaded the nine (9) other petitioners in the New York case and
there obtain judgment against all ten (10) petitioners.
3. Petitioners' argument of lack or absence of
jurisdiction on the part of the Quezon City Regional
Trial Court, on the alleged ground of non-service of
notice or summons in Civil Case No. Q-39927, does not
persuade. But we do not need to address this specific
argument. For even assuming (though
merely arguendo) that none of the ten (10) petitioner
herein had been served with notice or summons below,
the record shows, however, that they did in fact file with
the Regional Trial Court a Motion for Extension of Time
to file Answer 22 (dated 9 December 1983) as well as
Motion for Bill of Particulars 23 (dated 15 December
1983), both addressing respondent Interpool's
.Complaint in Civil Case No. Q-39927. In those
pleadings, petitioners not only manifested their intention
to controvert the allegations in the Complaint, but they
neither questioned nor assailed the jurisdiction of the
trial court, either over the case filed against them or
over their individual persons, as defendants therein.
There was here, in effect, voluntary submission to the
jurisdiction of the Quezon City trial court by petitioners,
who are thereby estopped from asserting otherwise
before this Court. 24
ACCORDINGLY, the Petition for Review is DENIED and the
Decision dated 12 December 1986 of the Court of Appeals in
C.A.-G.R. SP No. 10614, is hereby AFFIRMED. This Resolution
is immediately executory. Costs against petitioners.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concu

THIRD DIVISION
[G.R. No. 137378. October 12, 2000]
PHILIPPINE ALUMINUM WHEELS, INC., petitioner, vs. FASGI
ENTERPRISES, INC., respondent.
D E C I S I O N
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.
[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 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" inFebruary 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:
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:
x 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 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.,
[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., vs.
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.
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
on09 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:
"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]

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, (Chairman), Panganiban, Purisima, and Gonzaga-
Reyes, JJ., concur.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

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.
5
Anent the issue of the sufficiency of
the 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.
8
The appellate court ruled 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 . . .".
12
It is argued that the foregoing phrase allows
considerable latitude so as to include non-delivery of 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.
13
A close examination of Clause
16 reveals that it covers three 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.
18
The whole and every 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".
20
Hence, the undertaking to deliver the 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".
21
The failure of the private respondent to 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.
22
First of all, whether or not the private respondent was
able to recover the cargo is immaterial to its 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.
23
It is, therefore, but logical to assume that
the necessary consequence of this finding is the eventual
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,
26
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:
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.
27
(Emphasis supplied.)
This Court had occasion to make a similar pronouncement in
the earlier case of Romero v. Court of Appeals,
28
where the
assailed decision of the Court of Appeals adopted the
findings and disposition of the 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.
29
(Emphasis supplied)
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.
30
This is particularly true when
the decision sought to be incorporated is a lengthy and
thorough discussion of the facts and conclusions arrived at,
as in this case, where Award Paper No. 3/B-1 consists of
eighteen (18) single spaced pages.
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.
31
This Court has held that matters of remedy and
procedure are governed by the lex fori or the internal law of the
forum.
32
Thus, if under the procedural rules of the Civil Court of
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
33
or stated otherwise, what is repugnant to due process
is the denial of opportunity to be heard.
34
Thus, there is no
violation of due process even if 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.
37
(Emphasis supplied.)
Finally, we reiterate hereunder our pronouncement in the case
of Northwest Orient Airlines, Inc. v. Court of Appeals
38
that:
A foreign judgment is presumed to be valid and binding
in the country from which it comes, until the contrary is
shown. It is also proper to presume the regularity of the
proceedings and the giving of due notice therein.
Under Section 50, Rule 39 of the Rules of Court, a
judgment in an action in personam of a tribunal of a
foreign country having jurisdiction to pronounce the
same is presumptive evidence of a right as between the
parties and their successors-in-interest by a
subsequent title. The judgment may, however, be
assailed by evidence of want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact. Also, under Section 3 of Rule 131, a court,
whether of the Philippines or elsewhere, enjoys the
presumption that it was acting in the lawful exercise of
jurisdiction and has regularly performed its official
duty.
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.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 110263 July 20, 2001
ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner,
vs.
COURT OF APPEALS and PHILIPPINE NATIONAL
CONSTRUCTION CORPORATION, respondents.
DELEON, JR., J .:
Before us is a petition for review on certiorari of the Decision
1
of
the Court of Appeals dated May 19,1993 in CA-G.R. CY No.
35871 affirming the Decision
2
dated October 14,1991 of the
Regional Trial Court of Pasig, Metro Manila, Branch 168 in Civil
Case No. 56368 which dismissed the complaint of petitioner
Asiavest Merchant Bankers (M) Berhad for the enforcement of the
money of the judgment of the High Court of Malaysia in Kuala
Lumpur against private respondent Philippine National
Construction Corporation.1wphi1.nt
The petitioner Asiavest Merchant Bankers (M) Berhad is a
corporation organized under the laws of Malaysia while private
respondent Philippine National Construction Corporation is a
corporation duly incorporated and existing under Philippine laws.
It appears that sometime in 1983, petitioner initiated a suit for
collection against private respondent, then known as Construction
and Development Corporation of the Philippines, before the High
Court of Malaya in Kuala Lumpur entitled "Asiavest Merchant
Bankers (M) Berhad v. Asiavest CDCP Sdn. Bhd. and
Construction and Development Corporation of the Philippines."
3

Petitioner sought to recover the indemnity of the performance
bond it had put up in favor of private respondent to guarantee the
completion of the Felda Project and the nonpayment of the loan it
extended to Asiavest-CDCP Sdn. Bhd. for the completion of
Paloh Hanai and Kuantan By Pass; Project.
On September 13, 1985, the High Court of Malaya (Commercial
Division) rendered judgment in favor of the petitioner and against
the private respondent which is also designated therein as the
"2nd Defendant. "
The judgment reads in full:
SUIT NO. C638 of 1983
Between
Asiavest Merchant Bankers (M)
Berhad
Plaintiffs
And
1. Asiavest -CDCP Sdn. Bhd. Defendant
2. Construction & Development
Corporation of the Philippines

JUDGMENT
The 2nd Defendant having entered appearance herein and the
Court having under Order 14, rule 3 ordered that judgment as
hereinafter provided be entered for the Plaintiffs against the 2nd
Defendant.
IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the
Plaintiffs the sum of $5, 108,290.23 (Ringgit Five million one
hundred and eight thousand two hundred and ninety and Sen
twenty-three) together with interest at the rate of 12% per annum
on
(i) the sum of $2,586,866.91 from the 2nd day of March
1983 to the date of payment; and
(ii) the sum of $2,521,423.32 from the 11
th
day of March
1983 to the date of payment; and $350.00 (Ringgit
Three Hundred and Fifty) costs.
Dated the 13th day of September, 1985.
Senior Assistant Registrar, High Court, Kuala Lumpur
This Judgment is filed by Messrs. Skrine & Co., 3
rd
Floor, Straits
Trading Building, No.4, Leboh Pasar, Besar, Kuala Lumpur,
Solicitors for the Plaintiffs abovenamed. (VP/Ong/81194.7/83)
4

On the same day, September 13, 1985, the High Court of Malaya
issued an Order directing the private respondent (also designated
therein as the "2nd Defendant") to pay petitioner interest on the
sums covered by the said Judgment, thus:
SUIT NO. C638 of 1983
Between
Asiavest Merchant Bankers (M)
Berhad
Plaintiffs
And
1. Asiavest -CDCP Sdn. Bhd. Defendants
2. Construction & Development
Corporation of the Philippines

BEFORE THE SENIOR
ASSISTANT REGISTRAR
CIK SUSILA S. PARAM THIS
13th DAY OF SEPTEMBER
1985
IN
CHAMBERS
ORDER
Upon the application of Asiavest Merchant Bankers (M) Berhad,
the Plaintiffs in this action AND UPON READINGthe Summons in
Chambers dated the 16th day of August, 1984 and the Affidavit of
Lee Foong Mee affirmed on the 14th day of August 1984 both
filed herein AND UPON HEARING Mr. T. Thomas of Counsel for
the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd
Defendant abovenamed on the 26th day of December 1984 IT
WAS ORDERED that the Plaintiffs be at liberty to sign final
judgment against the 2nd Defendant for the sum of
$5,108,290.23 AND IT WAS ORDERED that the 2nd Defendant
do pay the Plaintiffs the costs of suit at $350.00AND IT WAS
FURTHER ORDERED that the plaintiffs be at liberty to apply for
payment of interest AND upon the application of the Plaintiffs for
payment of interest coming on for hearing on the 1st day of
August in the presence of Mr. Palpanaban Devarajoo of Counsel
for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd
Defendant above-named AND UPON HEARING Counsel as
aforesaid BY CONSENT IT WAS ORDERED that the 2nd
Defendant do pay the Plaintiffs interest at a rate to be
assessed AND the same coming on for assessment this day in
the presence of Mr. Palpanaban Devarajoo of Counsel for the
Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd
Defendant AND UPON HEARING Counsel as aforesaid BY
CONSENT IT IS ORDERED that the 2nd Defendant do pay the
Plaintiffs interest at the rate of 12% per annum on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983
to the date of payment; and
(ii) the sum Of $2,521,423.32 from the 11th day of March
1983 to the date of Payment.
Dated the 13th day of September,1985.
Senior Assistant Registrar, High Court, Kuala Lumpur.
5

Following unsuccessful attempts
6
to secure payment from private
respondent under the judgment, petitioner initiated on September
5, 1988 the complaint before Regional Trial Court of Pasig, Metro
Manila, to enforce the judgment of the High Court of Malaya.
7

Private respondent sought the dismissal of the case via a Motion
to Dismiss filed on October 5, 1988, contending that the alleged
judgment of the High Court of Malaya should be denied
recognition or enforcement since on in face, it is tainted with want
of jurisdiction, want of notice to private respondent, collusion
and/or fraud, and there is a clear mistake of law or
fact.
8
Dismissal was, however, denied by the trial court
considering that the grounds relied upon are not the proper
grounds in a motion to dismiss under Rule 16 of the Revised
Rules of Court.
9

On May 22, 1989, private respondent filed its Answer with
Compulsory Counter claim's
10
and therein raised the grounds it
brought up in its motion to dismiss. In its Reply filed
11
on June 8,
1989, the petitioner contended that the High Court of Malaya
acquired jurisdiction over the Person of private respondent by its
voluntary submission the court's jurisdiction through its appointed
counsel, Mr. Khay Chay Tee. Furthermore, private respondent's
counsel waived any and all objections to the High Court's
jurisdiction in a pleading filed before the court.
In due time, the trial court rendered its Decision dated October 14,
1991 dismissing petitioner's complaint.Petitioner interposed an
appeal with the Court of Appeals, but the appellate court
dismissed the same and affirmed the decision of the trial court in
a Decision dated May 19, 1993.
Hence, the instant Petition which is anchored on two (2) assigned
errors,
12
to wit:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT
THE MALAYSIAN COURT DID NOT ACQUIRE PERSONAL
JURISDICTION OVER PNCC, NOTWITHSTANDING THAT
(a) THE FOREIGN COURT HAD SERVED SUMMONS ON
PNCC AT ITS MALAYSlA OFFICE, AND (b) PNCC ITSELF
APPEARED BY COUNSEL IN THE CASE BEFORE THAT
COURT.
II
THE COURT OF APPEALS ERRED IN DENYING
RECOGNITION AND ENFORCEMENT TO (SIC) THE
MALAYSIAN COURT JUDGMENT.
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;
13
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.
14

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 the
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.
15

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 Under Section 50(b),
16
Rule 39
of the Revised Rules of Court, which was the governing law at the
time the instant case was decided by the trial court and
respondent appellate court, a judgment, against a person, 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. In addition, under Section 3(n), Rule 131 of
the Revised Rules of Court, a court, whether in the Philippines or
elsewhere, enjoys the presumption that it was acting in the lawful
exercise of its jurisdiction. Hence, once the authenticity of the
foreign judgment is proved, the party attacking a foreign
judgment, is tasked with the burden of overcoming its
presumptive validity.
In the instant case, petitioner sufficiently established the existence
of the money judgment of the High Court of Malaya by the
evidence it offered. Vinayak Prabhakar Pradhan, presented as
petitioner's sole witness, testified to the effect that he is in active
practice of the law profession in Malaysia;
17
that he was
connected with Skrine and Company as Legal Assistant up to
1981;
18
that private respondent, then known as Construction and
Development Corporation of the Philippines, was sued by his
client, Asiavest Merchant Bankers (M) Berhad, in Kuala
Lumpur;
19
that the writ of summons were served on March 17,
1983 at the registered office of private respondent and on March
21, 1983 on Cora S. Deala, a financial planning officer of private
respondent for Southeast Asia operations;
20
that upon the filing of
the case, Messrs. Allen and Gledhill, Advocates and Solicitors,
with address at 24th Floor, UMBC Building, Jalan Sulaiman,
Kuala Lumpur, entered their conditional appearance for private
respondent questioning the regularity of the service of the writ of
summons but subsequently withdrew the same when it realized
that the writ was properly served;
21
that because private
respondent failed to file a statement of defense within two (2)
weeks, petitioner filed an application for summary judgment and
submitted affidavits and documentary evidence in support of its
claim;
22
that the matter was then heard before the High Court of
Kuala Lumpur in a series of dates where private respondent was
represented by counsel;
23
and that the end result of all these
proceedings is the judgment sought to be enforced.
In addition to the said testimonial evidence, petitioner offered the
following documentary evidence:
(a) A certified and authenticated copy of the Judgment
promulgated by the Malaysian High Court dated September
13, 1985 directing private respondent to pay petitioner the
sum of $5,108,290.23 Malaysian Ringgit plus interests from
March 1983 until fully paid;
24

(b) A certified and authenticated copy of the Order dated
September 13,1985 issued by the Malaysian High Court in
Civil Suit No. C638 of 1983;
25

(c) Computation of principal and interest due as of January
31, 1990 on the amount adjudged payable to petitioner by
private respondent;
26

(d) Letter and Statement of Account of petitioner's counsel in
Malaysia indicating the costs for prosecuting and
implementing the Malaysian High Court's Judgment;
27

(e) Letters between petitioner's Malaysian counsel, Skrine
and Co., and its local counsel, Sycip Salazar Law Offices,
relative to institution of the action in the Philippines;
28

(f) Billing Memorandum of Sycip Salazar Law Offices dated
January 2, 1990 showing attorney's fees paid by and due
from petitioner;
29

(g) Statement of Claim, Writ of Summons and Affidavit of
Service of such writ in petitioner's suit against private
respondent before the Malaysian High Court;
30

(h) Memorandum of Conditional Appearance dated March
28, 1983 filed by counsel for private respondent with the
Malaysian High Court;
31

(i) Summons in Chambers and Affidavit of Khaw Chay Tee,
cotmsel for private respondent, submitted during the
proceedings before the Malaysian High Court;
32

(j) Record of the Court's Proceedings in Civil Case No. C638
of 1983.
33

(k) Petitioner 's verified Application for Summary Judgment
dated August 14, 1984;
34
and
(l) Letter dated November 6, 1985 from petitioner's
Malaysian Counsel to private respondent's counsel in
Malaysia.
35

Having thus proven, through the foregoing evidence, the
existence and authenticity of the foreign judgment, said foreign
judgment enjoys presumptive validity and the burden then fell
upon the party who disputes its validity, herein private
respondent, to prove otherwise.
Private respondent failed to sufficiently discharge the burden that
fell upon it - to prove by clear and convincing evidence the
grounds which it relied upon to prevent enforcement of the
Malaysian High Court judgment, namely, (a) that jurisdiction was
not acquired by the Malaysian Court over the person of private
respondent due to alleged improper service of summons upon
private respondent and the alleged lack of authority of its counsel
to appear and represent private respondent in the suit; (b) the
foreign judgment is allegedly tainted by evident collusion, fraud
and clear mistake of fact or law; and (c) not only were the
requisites for enforcement or recognition allegedly not complied
with but also that the Malaysian judgment is allegedly contrary to
the Constitutional prescription that the "every decision must state
the facts and law on which it is based."
36

Private respondent relied solely on the testimony of its two (2)
witnesses, namely, Mr. Alfredo. Calupitan, an accountant of
private respondent, and Virginia Abelardo, Executive Secretary
and a member of the staff of the Corporate Secretariat Section of
the Corporate Legal Division, of private respondent, both of whom
failed to shed light and amplify its defense or claim for non-
enforcement of the foreign judgment against it.
Mr. Calupitan's testimony centered on the following: that from
January to December 1982 he was assigned in Malaysia as
Project Comptroller of the Pahang Project Package A and B for
road construction under the joint venture of private respondent
and Asiavest Holdings;
37
that under the joint venture, Asiavest
Holdings would handle the financial aspect of the project, which is
fifty-one percent (51 %) while private respondent would handle
the technical aspect of the project, or forty-nine percent
(49%);
38
and, that Cora Deala was not authorized to receive
summons for and in behalf of the private respondent.
39
Ms.
Abelardo's testimony, on the other hand, focused on the following:
that there was no board resolution authorizing Allen and Gledhill
to admit all the claims of petitioner in the suit brought before the
High Court of Malaya,
40
though on cross-examination she
admitted that Allen and Gledhill were the retained lawyers of
private respondent in Malaysia.
41

The foregoing reasons or grounds relied upon by private
respondent in preventing enforcement and recognition of the
Malaysian judgment primarily refer to matters of remedy and
procedure taken by the Malaysian High Court relative to the suit
for collection initiated by petitioner. Needless to stress, 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.
42
Ultimately, matters of remedy and procedure such as those
relating to the service of summons or court process upon the
defendant, the authority of counsel to appear and represent a
defendant and the formal requirements in a decision are governed
by the lex fori or the internal law of the forum,
43
i.e., the law of
Malaysia in this case.
In this case, it is the procedural law of Malaysia where the
judgment was rendered that determines the validity of the service
of court process on private respondent as well as other matters
raised by it. As to what the Malaysian procedural law is, remains 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 of Rule 132 of the Revised Rules of Court provide that it
may be evidenced by an official publication or by a duly attested
or authenticated copy thereof. It was then incumbent upon private
respondent to present evidence as to what that Malaysian
procedural law is and to show that under it, the assailed service of
summons upon a financial officer of a corporation, as alleged by
it, is invalid. It did not. Accordingly, the presumption of validity and
regularity of service of summons and the decision thereafter
rendered by the High Court of Malaya must stand.
44

On the matter of alleged lack of authority of the law firm of Allen
and Gledhill to represent private respondent, not only did the
private respondent's witnesses admit that the said law firm of
Allen and Gledhill were its counsels in its transactions in
Malaysia,
45
but of greater significance is the fact that petitioner
offered in evidence relevant Malaysian jurisprudence
46
to the
effect that (a) it is not necessary under Malaysian law for counsel
appearing before the Malaysian High Court to submit a special
power of attorney authorizing him to represent a client before said
court, (b) that counsel appearing before the Malaysian High Court
has full authority to compromise the suit, and (c) that counsel
appearing before the Malaysian High Court need not comply with
certain pre-requisites as required under Philippine law to appear
and compromise judgments on behalf of their clients before said
court.
47

Furthermore, there is no basis for or truth to the appellate court's
conclusion that the conditional appearance of private
respondent's counsel who was allegedly not authorized to appear
and represent, cannot be considered as voluntary submission to
the jurisdiction of the High Court of Malaya, inasmuch as said
conditional appearance was not premised on the alleged lack of
authority of said counsel but the conditional appearance was
entered to question the regularity of the service of the writ of
summons. Such conditional appearance was in fact subsequently
withdrawn when counsel realized that the writ was properly
served.
48

On the ground that collusion, fraud and, clear mistake of fact and
law tainted the judgment of the High Court of Malaya, no clear
evidence of the same was adduced or shown. The facts which the
trial court found "intriguing" amounted to mere conjectures and
specious observations. The trial court's finding on the absence of
judgment against Asiavest-CDCP Sdn. Bhd. is contradicted by
evidence on record that recovery was also sought against
Asiavest-CDCP Sdn. Bhd. but the same was found
insolvent.
49
Furthermore, even when the foreign judgment is
based on the drafts prepared by counsel for the successful party,
such is not per se indicative of collusion or fraud. Fraud to hinder
the enforcement within the 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,
50
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 defense.
51
Intrinsic fraud is one
which goes to the very existence of the cause of action is deemed
already adjudged, and it, therefore, cannot militate against the
recognition or enforcement of the foreign judgment.
52
Evidence is
wanting on the alleged extrinsic fraud. Hence, such
unsubstantiated allegation cannot give rise to liability therein.
Lastly, there is no merit to the argument that the foreign judgment
is not enforceable in view of the absence of any statement of facts
and law upon which the award in favor of the petitioner was
based. As aforestated, the lex fori or the internal law of the forum
governs matters of remedy and procedure.
53
Considering that
under the procedural rules of the High Court of Malaya, a valid
judgment may be rendered even without stating in the judgment
every fact and law upon which the judgment is based, then the
same must be accorded respect and the courts in the jurisdiction
cannot invalidate the judgment of the foreign court simply
because our rules provide otherwise.
All in all, private respondent had the ultimate duty to demonstrate
the alleged invalidity of such foreign judgment, being the party
challenging the judgment rendered by the High Court of Malaya.
But instead of doing so, private respondent merely argued, to
which the trial court agreed, that the burden lay upon petitioner to
prove the validity of the money judgment. Such is clearly
erroneous and would render meaningless the presumption of
validity accorded a foreign judgment were the party seeking to
enforce it be required to first establish its validity.
54

WHEREFORE, the instant petition is GRANTED. The Decision of
the Court of Appeals dated May 19,1993 in CA-G.R CY No.
35871 sustaining the Decision dated October 14, 1991 in Civil
Case No. 56368 of the Regional Trial Court of Pasig, Branch 168
denying the enforcement of the Judgment dated September 13,
1985 of the High Court of Malaya in Kuala Lumpur
is REVERSED and SET ASIDE, and another in its stead is
hereby renderedORDERING private respondent Philippine
National Construction Corporation to pay petitioner Asiavest
Merchant Bankers (M) Berhad the amounts adjudged in the said
foreign Judgment, subject of the said case.
Costs against the private respondent.
SO ORDERED.
Bellosillo, Mendoza, and Buena, JJ. , concur.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
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.
D E C I S I O N
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
1
who, deprived of the opportunity to 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
2
who each alleged
having suffered human rights abuses such as arbitrary detention,
torture and rape in the hands of police or military forces during the
Marcos regime.
3
The Alien Tort Act was invoked as basis for the
US District Court's jurisdiction over the complaint, as it involved a
suit by aliens for tortious violations of international law.
4
These
plaintiffs brought the action on their own 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.
5
Trial ensued, and
subsequently a jury rendered a verdict and an award of
compensatory and exemplary 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.
7
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.
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
10
of the Makati RTC issued the subject Orderdismissing
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.
11
They
prayed for the annulment of the questioned orders, and an order
directing the 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.
12
It urged that the petition be 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.
13
The CHR likewise invokes the
principle of comity, and of vested rights.
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.
14
In special proceedings involving properties such as for
the allowance of wills, the filing fee is again based on the value of
the property.
15
The 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.
16
Neither the complaint nor the
award of damages 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.
17
This principle
was prominently affirmed in the leading American case of Hilton v.
Guyot
18
and expressly recognized in our jurisprudence beginning
with Ingenholl v. Walter E. Olsen & Co.
19
The conditions required
by the Philippines for recognition and enforcement of a foreign
judgment 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.
20
Remarkably, the procedural 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 actionin 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.
21
However,
in both cases, the foreign judgment is susceptible to impeachment
in our local courts on the grounds of want of jurisdiction or notice
to the party,
22
collusion, fraud,
23
or clear mistake of law or
fact.
24
Thus, the party aggrieved by the foreign judgment is
entitled to defend against the 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
26
, even if 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.
27
Consequently, the party
attacking a foreign judgment has the burden of overcoming the
presumption of its 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,
29
and clearly an action to 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."
30
Absent perhaps a statutory grant of
jurisdiction to a quasi-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.
32
Otherwise known as the policy of
preclusion, it seeks to protect party expectations resulting from
previous 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."
33
If 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.
34

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 assailedthe enforcement of a foreign
judgmentPetitioners appreciate this distinction, and rely upon it
to support the proposition that the subject matter of the
complaintOrder, 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,
36
from which the rule
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,
38
validity of a
mortgage,
39
the right to support,
40
validity of
documents,
41
rescission of contracts,
42
specific
performance,
43
and validity or annulment of judgments.
44
It is
urged 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,
46
as well as the principles of comity, utility
and convenience of nations
47
as the basis for the evolution of the
rule calling for the recognition and enforcement of foreign
judgments. The US Supreme Court in Hilton v. Guyot
48
relied
heavily on the concept of comity, as especially derived from the
landmark treatise of Justice Story in his Commentaries on the
Conflict of Laws of 1834.
49
Yet the notion of "comity" has since
been criticized as one "of dim contours"
50
or suffering from a
number of fallacies.
51
Other conceptual bases 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 rvision au fond.
53
The most ambitious of these
attempts is 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.
54
While it
has not received the ratifications needed to have it take effect,
55
it
is recognized as representing current scholarly thought on the
topic.
56
Neither the Philippines 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.
59
Similarly, the notion that
fraud or collusion may preclude the enforcement of a foreign
judgment finds affirmation with foreign jurisprudence and
commentators,
60
as well as the doctrine that the foreign judgment
must not constitute "a clear mistake of law or fact."
61
And finally, it
has been recognized that "public policy" as a defense to the
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.
63
This defense allows for the application of local
standards in reviewing the foreign judgment, especially when
such judgment creates only a presumptive right, as it does in
cases wherein the judgment is against a person.
64
The defense is
also recognized within the international sphere, as many civil law
nations adhere to a broad 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.
65
The public policy defense can safeguard
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.
66
The
classical formulation in international law sees those customary
rules 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.
68
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.
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,
69
but they all prescind from the
premise that there is a rule of law obliging states to 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,
70
and could very well be
abrogated or revised by the high 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.
72
The vagaries of inflation, as well as the relative 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
73
or unless the resolution thereof is indispensable for the
determination of the case.
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.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-
Nazario, JJ., concur.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC

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, Ordoez & Associates for defendant-appellant.
(Report)
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:
I
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.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Fernando,
Teehankee, Barredo and Villamor, JJ., concur.
Castro, J., is on leave.