EASTBOARD NAVIGATION v. JUAN YSMAEL CO., INC.

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

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

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

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

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

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

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

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