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G.R. No. 137378

October 12, 2000

PHILIPPINE ALUMINUM WHEELS, INC., petitioner,

vs.
FASGI ENTERPRISES, INC., respondent
In 1978, FASGI Enterprises Inc. (FASGI), a foreign corporation organized under the laws of
California, USA, entered into a contract with Philippine Aluminum Wheels, Inc. (PAWI), a
Philippine corporation, whereby the latter agrees to deliver 8,594 wheels to FASGI. FASGI
received the wheels and so it paid PAWI $216,444.30. Later however, FASGI found out that the
wheels are defective and did not comply with certain US standards. So in 1979, FASGI sued
PAWI in a California court. In 1980, a settlement was reached but PAWI failed to comply with the
terms of the agreement. A second agreement was made but PAWI was again remiss in its
obligation. The agreement basically provides that PAWI shall return the purchase price in
installment and conversely, FASGI shall return the wheel in installment. PAWI was only able to
make two installments (which were actually made beyond the scheduled date). FASGI also
returned the corresponding number of wheels. Eventually in 1982, FASGI sought the
enforcement of the agreement and it received a favorable judgment from the California court.
PAWI is then ordered to pay an equivalent of P252k plus damages but FASGI was not ordered
to return the remaining wheels. PAWI was not able to comply with the court order in the US. So
in 1983, FASGI filed a complaint for the enforcement of a foreign judgment with RTC-Makati.
Hearings were made and in 1990, the trial judge ruled against FASGI on the ground that the
foreign judgment is tainted with fraud because FASGI was not ordered to return the remaining
wheels (unjust enrichment) and that PAWIs American lawyer entered into the agreements
without the consent of PAWI. On appeal, the Court of Appeals reversed the trial court.
ISSUE: Whether or not the foreign judgment may be enforced here in the Philippines.
HELD: Yes. The judgment is valid. A valid judgment rendered by a foreign tribunal may be
recognized insofar as the immediate parties and the underlying cause of action are concerned
so long as it is convincingly shown that there has been an opportunity for a full and
fair hearing before a court of competent jurisdiction; that trial upon regular proceedings has
been conducted, following due citation or voluntary appearance of the defendant and under a
system of jurisprudence likely to secure an impartial administration of justice; and that there is
nothing to indicate either a prejudice in court and in the system of laws under which it is sitting
or fraud in procuring the judgment. A foreign 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.
In this case, PAWI was very well represented in the California court. PAWIs insistence that its
American lawyer colluded with FASGI; that he entered into the compromise agreement without
PAWIs authority is belied by the fact that PAWI initially complied with the agreement. It did not
disclaim the agreement. It sent two installments (though belatedly) but failed to comply on the

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rest. It cannot now aver that the agreement is without its authority. Further, it is just but fair for
the California court not to order FASGI to return the remaining wheels because of PAWIs
arrears.