G.R. No. 114323. July 23, 1998.
* Same; Same; Court agrees with the appellate court in its ruling that the
OIL AND NATURAL GAS COMMISSION, petitioner, vs. COURT OF APPEALS
and PACIFIC CEMENT COMPANY, INC., respondents.
Statutory Construction; Doctrine of Noscitur a Sociis; 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.—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.
Same; Same; 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.—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. The whole and
every part of a contract must be considered in fixing the meaning of any
of its parts and in order to produce a 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.
Same; Same; 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.—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.
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.—
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.”
Remedial Law; Constitutional Law; Judgment; The constitutional mandate
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 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.—The constitutional mandate 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 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, 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.”
(Italics supplied.)
Same; Same; Same; 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.—
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. 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.
Same; Same; The Court has held that matters of remedy and procedure
are governed by the lex fori or the internal law of the forum.—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. This Court has held that matters of
remedy and procedure are governed by the lex fori or the internal law of
the forum. 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.
Same; Due Process; 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 or, stated otherwise, what is repugnant
to due process is the denial of opportunity to be heard.—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 or stated otherwise, what is repugnant
to due process is the denial of opportunity to be heard. 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.
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*

MARTINEZ, J.:

On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved
This proceeding involves the enforcement of a foreign judgment rendered
the dispute in petitioner's favor setting forth the arbitral award as follows:
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. 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,
The petitioner is a foreign corporation owned and controlled by the
letters, telexes, etc. sent by the respondent, and the oral
Government of India while the private respondent is a private corporation
arguments addressed by the counsel for the claimants, I, N.N.
duly organized and existing under the laws of the Philippines. The present
Malhotra, Sole Arbitrator, appointed under clause 16 of the
conflict between the petitioner and the private respondent has its roots
supply order dated 26.2.1983, according to which the parties, i.e.
in a contract entered into by and between both parties on February 26,
M/S Oil and Natural Gas Commission and the Pacific Cement Co.,
1983 whereby the private respondent undertook to supply the petitioner
Inc. can refer the dispute to the sole arbitration under the
FOUR THOUSAND THREE HUNDRED (4,300) metric tons of oil well cement.
provision of the Arbitration Act. 1940, do hereby award and direct
In consideration therefor, the petitioner bound itself to pay the private
as follows: —
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 The Respondent will pay the following to the claimant: —
cement was loaded on board the ship MV SURUTANA NAVA at the port of
Surigao City, Philippines for delivery at Bombay and Calcutta, India. 1. Amount received by the Respondent
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
against the letter of credit No. 11/19
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. dated 28.2.1983 US $ 477,300.00
Thereafter, negotiations ensued between the parties and they agreed
that the private respondent will replace the entire 4,300 metric tons of oil 2. Re-imbursement of expenditure incurred
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
by the claimant on the inspection team's
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: visit to Philippines in August 1985 US $ 3,881.00

Except where otherwise provided in the supply order/contract all 3. L.C. Establishment charges incurred
questions and disputes, relating to the meaning of the
specification designs, drawings and instructions herein before by the claimant US $ 1,252.82
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 4. Loss of interest suffered by claimant
design, drawing, specification, instruction or these conditions or
otherwise concerning the materials or the execution or failure to from 21.6.83 to 23.7.88 US $ 417,169.95
execute the same during stipulated/extended period or after the
completion/abandonment thereof shall be referred to the sole Total amount of award US $ 899,603.77
arbitration of the persons appointed by Member of the
 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. 18The
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.