G.R. No.

110263       July 20, 2001 2. Construction & Development Corporation of the

Philippines
ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner,
vs. JUDGMENT
COURT OF APPEALS and PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, respondents.
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
DELEON, JR., J.: 2nd Defendant.

Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals dated IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of $5,
May 19,1993 in CA-G.R. CY No. 35871 affirming the Decision 2 dated October 14,1991 of the 108,290.23 (Ringgit Five million one hundred and eight thousand two hundred and ninety and
Regional Trial Court of Pasig, Metro Manila, Branch 168 in Civil Case No. 56368 which Sen twenty-three) together with interest at the rate of 12% per annum on
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.1âwphi1.nêt (i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of
payment; and
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 (ii) the sum of $2,521,423.32 from the 11 th day of March 1983 to the date of
corporation duly incorporated and existing under Philippine laws. payment; and $350.00 (Ringgit Three Hundred and Fifty) costs.

It appears that sometime in 1983, petitioner initiated a suit for collection against private Dated the 13th day of September, 1985.
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) Senior Assistant Registrar, High Court, Kuala Lumpur
Berhad v. Asiavest CDCP Sdn. Bhd. and Construction and Development Corporation of the
Philippines."3 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.
Petitioner sought to recover the indemnity of the performance bond it had put up in favor of (VP/Ong/81194.7/83)4
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 On the same day, September 13, 1985, the High Court of Malaya issued an Order directing
Kuantan By Pass; Project. the private respondent (also designated therein as the "2nd Defendant") to pay petitioner
interest on the sums covered by the said Judgment, thus:
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 SUIT NO. C638 of 1983
as the "2nd Defendant. "
Between
The judgment reads in full: Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
SUIT NO. C638 of 1983 1. Asiavest -CDCP Sdn. Bhd. Defendants
Between 2. Construction & Development Corporation of the
Asiavest Merchant Bankers (M) Berhad Plaintiffs Philippines
And BEFORE THE SENIOR ASSISTANT REGISTRAR
1. Asiavest -CDCP Sdn. Bhd. Defendant CIK SUSILA S. PARAM THIS 13th DAY OF SEPTEMBER IN
1985 CHAMBERS
ORDER 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
Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs in this appointed counsel, Mr. Khay Chay Tee. Furthermore, private respondent's counsel waived
action AND UPON READING the Summons in Chambers dated the 16th day of August, 1984 any and all objections to the High Court's jurisdiction in a pleading filed before the court.
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 In due time, the trial court rendered its Decision dated October 14, 1991 dismissing
Tee of Counsel for the 2nd Defendant abovenamed on the 26th day of December 1984  IT petitioner's complaint. Petitioner interposed an appeal with the Court of Appeals, but the
WAS ORDERED that the Plaintiffs be at liberty to sign final judgment against the 2nd appellate court dismissed the same and affirmed the decision of the trial court in a Decision
Defendant for the sum of $5,108,290.23 AND IT WAS ORDERED that the 2nd Defendant do dated May 19, 1993.
pay the Plaintiffs the costs of suit at $350.00 AND IT WAS FURTHER ORDERED that the
plaintiffs be at liberty to apply for payment of interest AND upon the application of the Hence, the instant Petition which is anchored on two (2) assigned errors, 12 to wit:
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 I
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 THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN COURT
presence of Mr. Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee DID NOT ACQUIRE PERSONAL JURISDICTION OVER PNCC,
of Counsel for the 2nd Defendant AND UPON HEARING Counsel as aforesaid BY NOTWITHSTANDING THAT (a) THE FOREIGN COURT HAD SERVED SUMMONS
CONSENT IT IS ORDERED that the 2nd Defendant do pay the Plaintiffs interest at the rate ON PNCC AT ITS MALAYSlA OFFICE, AND (b) PNCC ITSELF APPEARED BY
of 12% per annum on: COUNSEL IN THE CASE BEFORE THAT COURT.

(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of payment; II
and
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND
(ii) the sum Of $2,521,423.32 from the 11th day of March 1983 to the date of ENFORCEMENT TO (SIC) THE MALAYSIAN COURT JUDGMENT.
Payment.
WON Malaysian Court acquired person juris over PNNC. Yes
Dated the 13th day of September,1985.
Generally, in the absence of a special compact, no sovereign is bound to give effect within its
Senior Assistant Registrar, High Court, Kuala Lumpur. 5 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
Following unsuccessful attempts6 to secure payment from private respondent under the and rendered efficacious under certain conditions that may vary in different countries. 14
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
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
Private respondent sought the dismissal  of the case via a Motion to Dismiss filed on October convincingly shown that there has been an opportunity for a full and fair hearing before a
5, 1988, contending that the alleged judgment of the High Court of Malaya should  be denied court of competent jurisdiction; that the trial upon regular proceedings has been conducted,
recognition or enforcement since on in face, it is tainted with want of jurisdiction, want of following due citation or voluntary appearance of the defendant and under a system of
notice to private respondent, collusion and/or fraud, and there is a clear mistake of law or jurisprudence likely to secure an impartial administration of justice; and that there is nothing
fact.8 Dismissal was, however, denied by the trial court considering that the grounds relied to indicate either a prejudice in court and in the system of laws under which it is sitting or
upon are not the proper grounds in a motion to dismiss under Rule 16 of the Revised Rules fraud in procuring the judgment.15
of Court. 9
A foreign judgment is presumed to be valid and binding in the country from which it comes,
On May 22, 1989, private respondent filed its Answer with Compulsory  Counter claim's10 and until a contrary showing, on the basis of a presumption of regularity of proceedings and the
therein raised the grounds it brought up in its motion to dismiss.  In its Reply filed11 on June 8,
giving of due notice in the foreign forum Under Section 50(b), 16 Rule 39 of the Revised Rules (d) Letter and Statement of Account of petitioner's counsel in Malaysia indicating the
of Court, which was the governing law at the time the instant case was decided by the trial costs for prosecuting and implementing the Malaysian High Court's Judgment; 27
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 (e) Letters between petitioner's Malaysian counsel, Skrine and Co., and its local
between the parties and their successors in interest by a subsequent title. The judgment may, counsel, Sycip Salazar Law Offices, relative to institution of the action in the
however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, Philippines;28
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 (f) Billing Memorandum of Sycip Salazar Law Offices dated January 2, 1990 showing
it was acting in the lawful exercise of its jurisdiction. Hence, once the authenticity of the attorney's fees paid by and due from petitioner; 29
foreign judgment is proved, the party attacking a foreign judgment, is tasked with the burden
of overcoming its presumptive validity.
(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
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 (h) Memorandum of Conditional Appearance dated March 28, 1983 filed by counsel
profession in Malaysia;17 that he was connected with Skrine and Company as Legal Assistant for private respondent with the Malaysian High Court; 31
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) (i) Summons in Chambers and Affidavit of Khaw Chay Tee, cotmsel for private
Berhad, in Kuala Lumpur;19 that the writ of summons were served on March 17, 1983 at the respondent, submitted during the proceedings before the Malaysian High Court; 32
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 (j) Record of the Court's Proceedings in Civil Case No. C638 of 1983. 33
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 (k) Petitioner 's verified Application for Summary Judgment dated August 14,
private respondent questioning the regularity of the service of the writ of summons but 1984;34 and
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,
(l) Letter dated November 6, 1985 from petitioner's Malaysian Counsel to private
petitioner filed an application for summary judgment and submitted affidavits and
respondent's counsel in Malaysia.35
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 Having thus proven, through the foregoing evidence, the existence and authenticity of the
enforced. 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.
In addition to the said testimonial evidence, petitioner offered the following documentary
evidence: 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
(a) A certified and authenticated copy of the Judgment promulgated by the Malaysian
Malaysian Court over the person of private respondent due to alleged improper service of
High Court dated September 13, 1985 directing private respondent to pay petitioner
summons upon private respondent and the alleged lack of authority of its counsel to appear
the sum of $5,108,290.23 Malaysian Ringgit plus interests from March 1983 until fully
and represent private respondent in the suit; (b) the foreign judgment is allegedly tainted by
paid;24
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
(b) A certified and authenticated copy of the Order dated September 13,1985 issued judgment is allegedly contrary to the Constitutional prescription that the "every decision must
by the Malaysian High Court in Civil Suit No. C638 of 1983; 25 state the facts and law on which it is based."36

(c) Computation of principal and interest due as of January 31, 1990 on the amount Private respondent relied solely on the testimony of its two (2) witnesses, namely, Mr.
adjudged payable to petitioner by private respondent; 26 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 High Court has full authority to compromise the suit, and (c) that counsel appearing before
Legal Division, of private respondent, both of whom failed to shed light and amplify its the Malaysian High Court need not comply with certain pre-requisites as required under
defense or claim for non-enforcement of the foreign judgment against it. Philippine law to appear and compromise judgments on behalf of their clients before said
court.47
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 Furthermore, there is no basis for or truth to the appellate court's conclusion that the
road construction under the joint venture of private respondent and Asiavest Holdings; 37 that conditional appearance of private respondent's counsel who was allegedly not authorized to
under the joint venture, Asiavest Holdings would handle the financial aspect of the project, appear and represent, cannot be considered as voluntary submission to the jurisdiction of the
which is fifty-one percent (51 %) while private respondent would handle the technical aspect High Court of Malaya, inasmuch as said conditional appearance was not premised on the
of the project, or forty-nine percent (49%); 38 and, that Cora Deala was not authorized to alleged lack of authority of said counsel but the conditional appearance was entered to
receive summons for and in behalf of the private respondent. 39 Ms. Abelardo's testimony, on question the regularity of the service of the writ of summons. Such conditional appearance
the other hand, focused on the following: that there was no board resolution authorizing Allen was in fact subsequently withdrawn when counsel realized that the writ was properly served. 48
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 On the ground that collusion, fraud and, clear mistake of fact and law tainted the judgment of
lawyers of private respondent in Malaysia. 41 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
The foregoing reasons or grounds relied upon by private respondent in preventing observations. The trial court's finding on the absence of judgment against Asiavest-CDCP
enforcement and recognition of the Malaysian judgment primarily refer to matters of remedy Sdn. Bhd. is contradicted by evidence on record that recovery was also sought against
and procedure taken by the Malaysian High Court relative to the suit for collection initiated by Asiavest-CDCP Sdn. Bhd. but the same was found insolvent. 49 Furthermore, even when the
petitioner. Needless to stress, the recognition to be accorded a foreign judgment is not foreign judgment is based on the drafts prepared by counsel for the successful party, such is
necessarily affected by the fact that the procedure in the courts of the country in which such not per se  indicative of collusion or fraud. Fraud to hinder the enforcement within the
judgment was rendered differs from that of the courts of the country in which the judgment is jurisdiction of a foreign judgment must be extrinsic, i.e., fraud based on facts not controverted
relied on.42 Ultimately, matters of remedy and procedure such as those relating to the service or resolved in the case where judgment is rendered, 50 or that which would go to the
of summons or court process upon the defendant, the authority of counsel to appear and jurisdiction of the court or would deprive the party against whom judgment is rendered a
represent a defendant and the formal requirements in a decision are governed by the lex chance to defend the action to which he has a meritorious defense. 51 Intrinsic fraud is one
fori or the internal law of the forum,43 i.e., the law of Malaysia in this case. 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
In this case, it is the procedural law of Malaysia where the judgment was rendered that judgment.52 Evidence is wanting on the alleged extrinsic fraud. Hence, such unsubstantiated
determines the validity of the service of court process on private respondent as well as other allegation cannot give rise to liability therein.
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 Lastly, there is no merit to the argument that the foreign judgment is not enforceable in view
other fact. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that it may of the absence of any statement of facts and law upon which the award in favor of the
be evidenced by an official publication or by a duly attested or authenticated copy thereof. It petitioner was based. As aforestated, the lex fori  or the internal law of the forum governs
was then incumbent upon private respondent to present evidence as to what that Malaysian matters of remedy and procedure.53 Considering that under the procedural rules of the High
procedural law is and to show that under it, the assailed service of summons upon a financial Court of Malaya, a valid judgment may be rendered even without stating in the judgment
officer of a corporation, as alleged by it, is invalid. It did not. Accordingly, the presumption of every fact and law upon which the judgment is based, then the same must be accorded
validity and regularity of service of summons and the decision thereafter rendered by the High respect and the courts in the jurisdiction cannot invalidate the judgment of the foreign court
Court of Malaya must stand.44 simply because our rules provide otherwise.

On the matter of alleged lack of authority of the law firm of Allen and Gledhill to represent All in all, private respondent had the ultimate duty to demonstrate the alleged invalidity of
private respondent, not only did the private respondent's witnesses admit that the said law such foreign judgment, being the party challenging the judgment rendered by the High Court
firm of Allen and Gledhill were its counsels in its transactions in Malaysia, 45 but of greater of Malaya. But instead of doing so, private respondent merely argued, to which the trial court
significance is the fact that petitioner offered in evidence relevant Malaysian agreed, that the burden lay upon petitioner to prove the validity of the money judgment. Such
jurisprudence46 to the effect that (a) it is not necessary under Malaysian law for counsel is clearly erroneous and would render meaningless the presumption of validity accorded a
appearing before the Malaysian High Court to submit a special power of attorney authorizing foreign judgment were the party seeking to enforce it be required to first establish its validity. 54
him to represent a client before said court, (b) that counsel appearing before the Malaysian
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the
May 19,1993 in CA-G.R CY No. 35871 sustaining the Decision dated October 14, 1991 in US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his
Civil Case No. 56368 of the Regional Trial Court of Pasig, Branch 168 denying the indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging
enforcement of the Judgment dated September 13, 1985 of the High Court of Malaya in to Ducat.
Kuala Lumpur is REVERSED and SET ASIDE, and another in its stead is hereby
rendered ORDERING private respondent Philippine National Construction Corporation to pay As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount
petitioner Asiavest Merchant Bankers (M) Berhad the amounts adjudged in the said foreign covered by the note became due and demandable. Accordingly, on October 17, 1985, private
Judgment, subject of the said case. 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
Costs against the private respondent. 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,
[G.R. No. 103493. June 19, 1997.]
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
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and
allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading
ATHONA HOLDINGS, N.V., Petitioners, v. THE HONORABLE COURT OF APPEALS,
private respondents herein as counterdefendants, for allegedly conspiring in selling the
1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS and WILLIAM
property at a price over its market value. Private respondent Perlas, who had allegedly
H. CRAIG, Respondents.
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
DECISION 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, PHILSEC’s own former president, for the rescission of the sale on the
ground that the property had been over-valued. On March 13, 1990, the United States District
MENDOZA, J.:
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
This case presents for determination the conclusiveness of a foreign judgment upon the sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra.
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 On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States,
of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the petitioners filed a complaint "For Sum of Money with Damages and Writ of Preliminary
ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Attachment" against private respondents in the Regional Trial Court of Makati, where it was
Appeals affirmed. Hence this petition for review on certiorari. 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
The facts are as follows:chanrob1es virtual 1aw library 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
On January 15, 1983, private respondent Ventura O Ducat obtained separate loans from of private respondents’ fraudulent misrepresentations, ATHONA, PHILSEC and AYALA were
petitioners Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec induced to enter into the Agreement and to purchase the Houston property. Petitioners
Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00 secured prayed that private respondents be ordered to return to ATHONA the excess payment of
by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of
facilitate the payment of the loans, private respondent 1488, Inc., through its president, preliminary attachment against the real and personal properties of private respondents. 2
private respondent Drago Daic, assumed Ducat’s obligation under an Agreement, dated
January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendor’s Lien by Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis
which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2)
in Harris County, Texas, U.S.A. for US$2,807,209.02, while PHILSEC and AYALA extended forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of
a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase action. Ducat contended that the alleged overpricing of the property prejudiced only petitioner
price. The balance of US$307,209.02 was to be paid by means of a promissory note
ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and and damages, for fraud purportedly committed by appellees, in overpricing the Texas land,
whose only participation was to extend financial accommodation to ATHONA under a constitute the action before the Philippine court, which likewise stems from the same
separate loan agreement. On the other hand, private respondents 1488, Inc. and its president Warranty Deed.
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 The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the
and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign recovery of a sum of money for alleged tortious acts, so that service of summons by
corporation, and Daic, who is a non-resident alien. 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
On January 26, 1988, the trial court granted Ducat’s motion to dismiss, stating that "the affirmed by the Court of Appeals on the ground that the case can be better tried and decided
evidentiary requirements of the controversy may be more suitably tried before the forum of by the U.S. court:chanrob1es virtual 1aw library
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. 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
A separate hearing was held with regard to 1488, Inc. and Daic’s motion to dismiss. On seller, 1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona
March 9, 1988, the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic on Holdings, a foreign corporation which does not claim to be doing business in the Philippines,
the ground of litis pendentia considering that 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.
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 In their present appeal, petitioners contend that:chanrob1es virtual 1aw library
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 1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME
needed to determine the assessment and/or fluctuations of the fair market value of real estate PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT
situated in Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the present OF APPEALS IN AFFIRMING THE TRIAL COURT’S DISMISSAL OF THE CIVIL ACTION IS
and verily, . . . (emphasis by trial court) NOT APPLICABLE.

The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were 2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT
non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL
service of summons was ineffective. The trial court subsequently lifted the writ of attachment ACTION IS LIKEWISE NOT APPLICABLE.
it had earlier issued against the shares of stocks of 1488, Inc. and Daic.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE
principle of litis pendentia and forum non conveniens and in ruling that it had no jurisdiction ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL
over the defendants, despite the previous attachment of shares of stocks belonging to 1488, JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO PROTECT
Inc. and Daic. AND VINDICATE PETITIONERS’ RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR
CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT ALIENS)
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563 INFLICTED UPON THEM HERE IN THE PHILIPPINES.
against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:chanrob1es virtual
1aw library We will deal with these contentions in the order in which they are made.

The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are First. It is important to note in connection with the first point that while the present case was
Philsec, the Ayala International Finance Ltd. (BPI-IFL’s former name) and the Athona pending in the Court of Appeals, the United States District Court for the Southern District of
Holdings, NV. The case at bar involves the same parties. The transaction sued upon by the Texas rendered judgment 5 in the case before it. The judgment, which was in favor of private
parties, in both cases is the Warranty Deed executed by and between Athona Holdings and respondents, was affirmed on appeal by the Circuit Court of Appeals. 6 Thus, the principal
1488 Inc. In the U.S. case, breach of contract and the promissory notes are sued upon by issue to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of
1488 Inc., which likewise alleges fraud employed by herein appellants, on the marketability of the U.S. court.
Ducat’s securities given in exchange for the Texas property. The recovery of a sum of money
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a of private respondents. The proceedings in the trial court were summary. Neither the trial
judgment admitting the foreign decision is not necessary. On the other hand, petitioners court nor the appellate court was even furnished copies of the pleadings in the U.S. court or
argue that the foreign judgment cannot be given the effect of res judicata without giving them apprised of the evidence presented thereat, to assure a proper determination of whether the
an opportunity to impeach it on grounds stated in Rule 39, §50 of the Rules of Court, to wit: issues then being litigated in the U.S. court were exactly the issues raised in this case such
"want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or that the judgment that might be rendered would constitute res judicata. As the trial court
fact."cralaw virtua1aw library stated in its disputed order dated March 9, 1988.

Petitioners’ contention is meritorious. While this court has given the effect of res judicata to On the plaintiff’s claim in its Opposition that the causes of action of this case and the pending
foreign judgments in several cases, 7 it was after the parties opposed to the judgment had case in the United States are not identical, precisely the Order of January 26, 1988 never
been given ample opportunity to repel them on grounds allowed under the law. 8 It is not found that the causes of action of this case and the case pending before the USA Court, were
necessary for this purpose to initiate a separate action or proceeding for enforcement of the identical. (emphasis added)
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 It was error therefore for the Court of Appeals to summarily rule that petitioners’ action is
jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the
foreign judgment merely constitutes prima facie evidence of the justness of the claim of a U.S. court over their persons, but their claim was brushed aside by both the trial court and the
party and, as such, is subject to proof to the contrary. 9 Rule 39, §50 provides:chanrob1es Court of Appeals. 13
virtual 1aw library
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the
SEC. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a foreign enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil
country, having jurisdiction to pronounce the judgment is as follows:chanrob1es virtual 1aw Case No. 92-1070 and assigned to Branch 134, although the proceedings were suspended
library because of the pendency of this case. To sustain the appellate court’s ruling that the foreign
judgment constitutes res judicata and is a bar to the claim of petitioners would effectively
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to preclude petitioners from repelling the judgment in the case for enforcement. An absurdity
the thing; 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
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right defendant if the foreign judgment is sought to be enforced against him in a separate
as between the parties and their successors in interest by a subsequent title; but the proceeding. This is plainly untenable. It has been held therefore that:chanrob1es virtual 1aw
judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party, library
collusion, fraud, or clear mistake of law or fact.
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of affirmative relief is being sought. Hence, in the interest of justice, the complaint should be
Canton, Ltd., 10 which private respondents invoke for claiming conclusive effect for the considered as a petition for the recognition of the Hongkong judgment under Section 50 (b),
foreign judgment in their favor, the foreign judgment was considered res judicata because this Rule 39 of the Rules of Court in order that the defendant, private respondent herein, may
Court found "from the evidence as well as from appellant’s own pleadings" 11 that the foreign present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and
court did not make a "clear mistake of law or fact" or that its judgment was void for want of law, if applicable. 14
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 Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-
Supreme Court of the State of Washington to have the effect of res judicata in the case 1070 should be consolidated. 15 After all, the two have been filed in the Regional Trial Court
before the lower court. In the same vein, in Philippine International Shipping Corp. v. Court of of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V.
Appeals, 12 this court held that the foreign judgment was valid and enforceable in the Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong.
Philippines there being no showing that it was vitiated by want of notice to the party, In such proceedings, petitioners should have the burden of impeaching the foreign judgment
collusion, fraud or clear mistake of law or fact. The prima facie presumption under the Rule and only in the event they succeed in doing so may they proceed with their action against
had not been rebutted. private respondents.

In the case at bar, it cannot be said that petitioners were given the opportunity to challenge Second. Nor is the trial court’s refusal to take cognizance of the case justifiable under the
the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights 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 DECISION
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 VITUG, J.:
abstain from assuming jurisdiction on this ground, it should do so only after "vital facts are
established, to determine whether special circumstances" require the court’s desistance. 17 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,
In this case, the trial court abstained from taking jurisdiction solely on the basis of the entered into a distributorship arrangement with Philippine Aluminum Wheels, Incorporated
pleadings filed by private respondents in connection with the motion to dismiss. It failed to ("PAWI"), a Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A. ("FPS"), an Italian
consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the corporation. The agreement provided for the purchase, importation and distributorship in the
defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latter’s United States of aluminum wheels manufactured by PAWI. Pursuant to the contract, PAWI
debt which was the object of the transaction under litigation. The trial court arbitrarily shipped to FASGI a total of eight thousand five hundred ninety four (8,594) wheels, with an
dismissed the case even after finding that Ducat was not a party in the U.S. case. 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
Third. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction wheels. Unfortunately, FASGI later found the shipment to be defective and in non-compliance
over 1488, Inc. and Daic could not be obtained because this is an action in personam and with stated requirements, viz;
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 "A. contrary to the terms of the Distributorship Agreement and in violation of U.S. law,
attached within the Philippines." 18 It is not disputed that the properties, real and personal, of the country of origin (the Philippines) was not stamped on the wheels;
the private respondents had been attached prior to service of summons under the Order of
the trial court dated April 20, 1987. 19 "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
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to consumers arising from possible shattering of the wheels;
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 "C. many of the wheels did not have an indication as to which models of automobile
the judgment sought to be enforced is severable from the main judgment under consideration they would fit;
in Civil Case No. 16563. The separability of Guevarra’s claim is not only admitted by
petitioners, 20 it appears from the pleadings that petitioners only belatedly impleaded "D. many of the wheels did not fit the model automobiles for which they were
Guevarra as defendant in Civil Case No. 16563. 21 Hence, the TRO should be lifted and Civil purportedly designed;
Case No. 92-1445 allowed to proceed.chanroblesvirtuallawlibrary
"E. some of the wheels did not fit any model automobile in use in the United States;
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 "F. most of the boxes in which the wheels were packed indicated that the wheels
order issued on June 29, 1994 is hereby LIFTED. were approved by the Specialty Equipment Manufacturer's Association (hereafter,
`SEMA'); in fact no SEMA approval has been obtained and this indication was
SO ORDERED. 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
G.R. No. 137378               October 12, 2000
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
PHILIPPINE ALUMINUM WHEELS, INC., petitioner, corresponding Italian translation "Convenzione Transsativa," where it was stipulated that FPS
vs. and PAWI would accept the return of not less than 8,100 wheels after restoring to FASGI the
FASGI ENTERPRISES, INC., respondent. 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 was held on 24 November 1980. In the interim, the parties, realizing the protracted process of
January up until April 1980.2 litigation, resolved to enter into another arrangement, this time entitled "Supplemental
Settlement Agreement," on 26 November 1980. In substance, the covenant provided that
In a telex message, dated 02 March 1980, PAWI president Romeo Rojas expressed the FASGI would deliver to PAWI a container of wheels for every LC opened and paid by PAWI:
company's inability to comply with the foregoing agreement and proposed a revised schedule
of payment. The message, in part, read: "3. Agreement

"We are most anxious in fulfilling all our obligations under compromise agreement executed "3.1 Sellers agree to pay FASGI Two Hundred Sixty-Eight Thousand, Seven Hundred Fifty
by our Mr. Giancarlo Dallera and your Van Curen. We have tried our best to comply with our and 00/100 Dollars ($268,750.00), plus interest and storage costs as described below.
commitments, however, because of the situation as mentioned in the foregoing and currency Sellers shall pay such amount by delivering to FASGI the following four (4) irrevocable letters
regulations and restrictions imposed by our government on the outflow, of foreign currency of credit, confirmed by Crocker Bank, Main Branch, Fresno, California, as set forth below:
from our country, we are constrained to request for a revised schedule of shipment and
opening of L/Cs. "(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
"After consulting with our bank and government monetary agencies and on the assumption that amount at the annual rate of 16.25% from January 1, 1980 until July 31, 1980, (c) plus
that we submit the required pro-forma invoices we can open the letters of credit in your favor Two Thousand Nine Hundred Forty Dollars and 00/100 ($2,940.00) and (d) with interest on
under the following schedule: that sum at the annual rate of 16.25% from May 1, 1980 to July 31, 1980, payable on or after
August 31, 1980;
"A) First L/C - it will be issued in April 1980 payable 90 days thereafter
"(ii) on or before September 1, 1980, a documentary letter of credit in the amount of (a) Sixty-
"B) Second L/C - it will be issued in June 1980 payable 90 days thereafter 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
"C) Third L/C - it will be issued in August 1980 payable 90 days thereafter
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
"D) Fourth L/C - it will be issued in November 1980 payable 90 days thereafter days after the date of the bill of lading under the letter of credit;

"We understand your situation regarding the lease of your warehouse. For this reason, we "(iii) on or before November 1, 1980, a documentary letter of credit in the amount of (a) Sixty-
are willing to defray the extra storage charges resulting from this new schedule. If you cannot Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67)
renew the lease [of] your present warehouse, perhaps you can arrange to transfer to another plus (b) Two Thousand, Nine Hundred Forty and 00/100 Dollars ($2,490.00), plus (c) interest
warehouse and storage charges transfer thereon will be for our account. We hope you at an annual rate equal to the prime rate of Crocker Bank, San Francisco, in effect from time
understand our position. The delay and the revised schedules were caused by circumstances to time, plus two percent on the amount in (a) from January 1, 1980 until February 21, 1981,
totally beyond our control."3 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;
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 "(iv) on or before January 1, 1981, a documentary letter of credit in the amount of (a) Sixty-
best to comply with the suggested schedule of payments.4 In its telex reply of 29 April 1980, Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67)
FASGI insisted that PAWI should meet the terms of the proposed schedule of payments, plus (b) Five Thousand, Eight Hundred Eighty and 00/100 Dollars ($5,880.00), plus (c)
specifically its undertaking to open the first LC within April of 1980, and that "If the letter of interest at an annual rate equal to the prime rate of Crocker Bank, San Francisco, in effect
credit is not opened by April 30, 1980, then x x x [it would] immediately take all necessary from time to time, plus two percent on the amount in (a) from January 1, 1980 until April 21,
legal action to protect [its] position."5 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
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 Anent the wheels still in the custody of FASGI, the supplemental settlement agreement
complaint for damages against PAWI before the California district court. Pre-trial conference provided that -
"3.4 (a) Upon execution of this Supplemental Settlement Agreement, the obligations of FASGI The foregoing supplemental settlement agreement, as well as the motion for the entry of
to store or maintain the Containers and Wheels shall be limited to (i) storing the Wheels and judgment, was executed by FASGI president Elena Buholzer and PAWI counsel Mr. Thomas
Containers in their present warehouse location and (ii) maintaining in effect FASGI's current Ready.
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 PAWI, again, proved to be remiss in its obligation under the supplemental settlement
liability, responsibility or risk for uninsurable risks or casualties to the Containers or Wheels. 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
"x x x           x x x          x x x 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,
"(e) From and after February 28, 1981, unless delivery of the Letters of Credit are delayed FASGI readily delivered the second container. Later, PAWI totally defaulted in opening and
past such date pursuant to the penultimate Paragraph 3.1, in which case from and after such paying the third and the fourth LCs, scheduled to be opened on or before, respectively, 01
later date, FASGI shall have no obligation to maintain, store or deliver any of the Containers September 1980 and 01 November 1980, and each to be paid ninety (90) days after the date
or Wheels."7 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
The deal allowed FASGI to enter before the California court the foregoing stipulations in the
pay. These doubts were based on the telex message of PAWI president Romeo Rojas who
event of the failure of PAWI to make good the scheduled payments; thus -
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
"3.5 Concurrently with execution and delivery hereof, the parties have executed and delivered wheels. The communication having been sent to FASGI before the supplemental settlement
a Mutual Release (the `Mutual Release'), and a Stipulation for Judgment (the `Stipulation for agreement was executed, FASGI speculated that at the time PAWI subsequently entered into
Judgment') with respect to the Action. In the event of breach of this Supplemental Settlement the supplemental settlement agreement, its request to open LCs had already been approved
Agreement by Sellers, FASGI shall have the right to apply immediately to the Court for entry by the Central Bank. Irked by PAWI's persistent default, FASGI filed with the US District Court
of Judgment pursuant to the Stipulation for Judgment in the full amount thereof, less credit for of the Central District of California the following stipulation for judgment against PAWI.
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
"PLEASE TAKE NOTICE that on May 17, 1982 at 10:00 A.M. in the Courtroom of the
States and in any other country where assets of FPS or PAWI may be located, and FPS and
Honorable Laughlin E. Waters of the above Court, plaintiff FASGI ENTERPRISES, INC.
PAWI hereby waive all defenses in any such country to execution or enforcement of the
(hereinafter `FASGI') will move the Court for entry of Judgment against defendant
Judgment by FASGI. Specifically, FPS and PAWI each consent to the jurisdiction of the
PHILIPPINE ALUMINUM WHEELS, INC. (hereinafter `PAWI'), pursuant to the Stipulation for
Italian and Philippine courts in any action brought by FASGI to seek a judgment in those
Judgment filed concurrently herewith, executed on behalf of FASGI and PAWI by their
countries based upon a judgment against FPS or PAWI in the Action." 8
respective attorneys, acting as their authorized agents.
In accordance with the aforementioned paragraph 3.5 of the agreement, the parties made the
"Judgment will be sought in the total amount of P252,850.60, including principal and interest
following stipulation before the California court:
accrued through May 17, 1982, plus the sum of $17,500.00 as reasonable attorneys' fees for
plaintiff in prosecuting this action.
"The undersigned parties hereto, having entered into a Supplemental Settlement Agreement
in 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
"IT IS HEREBY STIPULATED by and between plaintiff FASGI Enterprises, Inc. (`FASGI') and herein on or about November 21, 1980, the Memorandum of Points and Authorities and
defendants Philippine Aluminum Wheels, Inc., (`PAWI'), and each of them, that judgment may Affidavits of Elena Buholzer, Franck G. Ker and Stan Cornwell all filed herewith, and upon all
be entered in favor of plaintiff FASGI and against PAWI, in the amount of Two Hundred the records, files and pleadings in this action.
Eighty Three Thousand Four Hundred Eighty And 01/100ths Dollars ($283,480.01).
"The Motion is made on the grounds that defendant PAWI has breached its obligations as set
"Plaintiff FASGI shall also be entitled to its costs of suit, and to reasonable attorneys' fees as forth in the Supplemental Settlement Agreement, and that the Supplemental Settlement
determined by the Court added to the above judgment amount." 9 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 Sec. 48. Effect of foreign judgments or final orders - The effect of a judgment or final order of
judgment was issued, on 07 September 1982, by the US District Judge of the District Court a tribunal of a foreign country, having jurisdiction to render the judgment or final order is as
for the Central District of California. PAWI, by this time, was approximately twenty (20) follows:
months in arrears in its obligation under the supplemental settlement agreement.
xxxx
Unable to obtain satisfaction of the final judgment within the United States, FASGI filed a
complaint for "enforcement of foreign judgment" in February 1983, before the Regional Trial (b) In case of a judgment or final order against a person, the judgment or final order is
Court, Branch 61, of Makati, Philippines. The Makati court, however, in an order of 11 presumptive evidence of a right as between the parties and their successors-in-interest by a
September 1990, dismissed the case, thereby denying the enforcement of the foreign subsequent title.
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 In either case, the judgment or final order may be repelled by evidence a want of jurisdiction,
judgment ignored the reciprocal obligations of the parties. While the assailed foreign want of notice to the party, collusion, fraud, or clear mistake of law or fact.
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. In Soorajmull Nagarmull vs. Binalbagan-Isabela Sugar Co. Inc., 17 one of the early Philippine
Furthermore, the trial court said, the supplemental settlement agreement and the subsequent cases on the enforcement of foreign judgments, this Court has ruled that a judgment for a
motion for entry of judgment upon which the California court had based its judgment were a sum of money rendered in a foreign court is presumptive evidence of a right between the
nullity for having been entered into by Mr. Thomas Ready, counsel for PAWI, without the parties and their successors-in-interest by subsequent title, but when suit for its enforcement
latter's authorization. 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
FASGI appealed the decision of the trial court to the Court of Appeals. In a decision, 13 dated attacking a foreign judgment is tasked with the burden of overcoming its presumptive validity.
30 July 1997, the appellate court reversed the decision of the trial court and ordered the full
enforcement of the California judgment.
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
WON the foreign court judgment may be enforced in the PH court. YES or subject matter of the litigation even when he honestly believes that such a settlement will
best serve his client's interest.19
Hence this appeal.
In the instant case, the supplemental settlement agreement was signed by the parties,
Generally, in the absence of a special compact, no sovereign is bound to give effect within its including Mr. Thomas Ready, on 06 October 1980. The agreement was lodged in the
dominion to a judgment rendered by a tribunal of another country; 14 however, the rules of California case on 26 November 1980 or two (2) days after the pre-trial conference held on
comity, utility and convenience of nations have established a usage among civilized states by 24 November 1980.1âwphi1 If Mr. Ready was indeed not authorized by PAWI to enter into
which final judgments of foreign courts of competent jurisdiction are reciprocally respected the supplemental settlement agreement, PAWI could have forthwith signified to FASGI a
and rendered efficacious under certain conditions that may vary in different countries. 15 disclaimer of the settlement. Instead, more than a year after the execution of the
supplemental settlement agreement, particularly on 09 October 1981, PAWI President
In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar Romeo S. Rojas sent a communication to Elena Buholzer of FASGI that failed to mention Mr.
as the immediate parties and the underlying cause of action are concerned so long as it is Ready's supposed lack of authority. On the contrary, the letter confirmed the terms of the
convincingly shown that there has been an opportunity for a full and fair hearing before a agreement when Mr. Rojas sought forbearance for the impending delay in the opening of the
court of competent jurisdiction; that trial upon regular proceedings has been conducted, first letter of credit under the schedule stipulated in the agreement.
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 It is an accepted rule that when a client, upon becoming aware of the compromise and the
to indicate either a prejudice in court and in the system of laws under which it is sitting or judgment thereon, fails to promptly repudiate the action of his attorney, he will not afterwards
fraud in procuring the judgment.16 A foreign judgment is presumed to be valid and binding in be heard to complain about it.20
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 Nor could PAWI claim any prejudice by the settlement. PAWI was spared from possibly
48 of the Rules of Court of the Philippines provides: 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 companies thereby frustrating plaintiff's attempts to collect on any judgment rendered by this
reimburse FASGI the price it had paid for the defective wheels. PAWI, should not, after its Court."24
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 Paragraph 14 of the Supplemental Settlement Agreement fixed the liability of PAWI and FPS
expectations. 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
PAWI assailed not only Mr. Ready's authority to sign on its behalf the Supplemental FPS might have pursuant to their own agreement.
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 PAWI would argue that it was incumbent upon FASGI to first return the second and the third
already terminated the former's services. For his part, Mr. Ready admitted that while he did containers of defective wheels before it could be required to return to FASGI the purchase
receive a request from Manuel Singson of PAWI to withdraw from the motion of judgment, the price therefor,25 relying on their original agreement (the "Transaction"). 26 Unfortunately, PAWI
request unfortunately came too late. In an explanatory telex, Mr. Ready told Mr. Singson that defaulted on its covenants thereunder that thereby occasioned the subsequent execution of
under American Judicial Procedures when a motion for judgment had already been filed a the supplemental settlement agreement. This time the parties agreed, under paragraph
counsel would not be permitted to withdraw unilaterally without a court order. From the time 3.4(e)27 thereof, that any further default by PAWI would release FASGI from any obligation to
the stipulation for judgment was entered into on 26 April 1982 until the certificate of finality of maintain, store or deliver the rejected wheels. The supplemental settlement agreement
judgment was issued by the California court on 07 September 1982, no notification was evidently superseded, at the very least on this point, the previous arrangements made by the
issued by PAWI to FASGI regarding its termination of Mr. Ready's services. If PAWI were parties.
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 PAWI cannot, by this petition for review, seek refuge over a business dealing and decision
principle of international comity that a court of another jurisdiction should refrain, as a matter gone awry. Neither do the courts function to relieve a party from the effects of an unwise or
of propriety and fairness, from so assuming the power of passing judgment on the unfavorable contract freely entered into. As has so aptly been explained by the appellate
correctness of the application of law and the evaluation of the facts of the judgment issued by court, the over-all picture might, indeed, appear to be onerous to PAWI but it should bear
another tribunal.21 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
Fraud, to hinder the enforcement within this jurisdiction of a foreign judgment, must be had to negotiate from either position of strength or weakness depending on its own
extrinsic, i.e., fraud based on facts not controverted or resolved in the case where judgment is perception of who might have to bear the blame for the failure and the consequence of loss. 28
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 Altogether, the Court finds no reversible error on the part of the appellate court in its appealed
meritorious case or defense. In fine, intrinsic fraud, that is, fraud which goes to the very judgment.
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 WHEREFORE, the decision of the Court of Appeals is AFFIRMED. No costs.

Even while the US judgment was against both FPS and PAWI, FASGI had every right to seek SO ORDERED.
enforcement of the judgment solely against PAWI or, for that matter, only against FPS.
FASGI, in its complaint, explained: G.R. No. 141536. February 26, 2001

"17. There exists, and at all times relevant herein there existed, a unity of interest and GIL MIGUEL T. PUYAT, petitioner,
ownership between defendant PAWI and defendant FPS, in that they are owned and vs.
controlled by the same shareholders and managers, such that any individuality and RON ZABARTE, respondent.
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 DECISION
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 PANGANIBAN, J.:
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
Summary judgment in a litigation is resorted to if there is no genuine issue as to any material would result in the unjust enrichment of [respondent] at the expense of [petitioner] in
fact, other than the amount of damages. If this verity is evident from the pleadings and the this case.
supporting affidavits, depositions and admissions on file with the court, the moving party is
entitled to such remedy as a matter of course. ‘12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated
December 12, 1991 is null and void and unenforceable in the Philippines.
The Case
‘13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, not in any way liable, in fact and in law, to [respondent] in this case, as contained in
challenging the August 31, 1999 Decision 1 of the Court of Appeals (CA), which affirmed the [petitioner’s] ‘Answer to Complaint’ in Case #C21-00265 dated April 1, 1991, Annex
Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the January ‘B’ of [respondent’s] ‘Complaint’ dated December 6, 1993.
20, 2000 CA Resolution 2 which denied reconsideration.
’14) [Respondent] is guilty of misrepresentation or falsification in the filing of his
The assailed CA Decision disposed as follows: ‘Complaint’ in this case dated December 6, 1993. Worse, [respondent] has no
capacity to sue in the Philippines.
“WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED."  3
’15) Venue has been improperly laid in this case.’
The Facts
(Record, pp. 42-44)
The facts of this case, as narrated by the Court of Appeals, are as follows: 4
“On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment under
“It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to Rule 34 of the Rules of Court alleging that the [A]nswer filed by [petitioner] failed to
enforce the money judgment rendered by the Superior Court for the State of California, tender any genuine issue as to the material facts. In his [O]pposition to [respondent’s]
County of Contra Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with the motion, [petitioner] demurred as follows:
following special and affirmative defenses:
‘2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that in his
x x x             x x x             x x x ‘Answer with Special and Affirmative Defenses’ dated March 16, 1994 [petitioner] has
interposed that the ‘Judgment on Stipulations for Entry in Judgment’ is null and void,
fraudulent, illegal and unenforceable, the same having been obtained by means of
‘8) The Superior Court for the State of California, County of Contra Costa[,] did not
fraud, collusion, undue influence and/or clear mistake of fact and law. In addition, [he]
properly acquire jurisdiction over the subject matter of and over the persons involved
has maintained that said ‘Judgment on Stipulations for Entry in Judgment’ was
in [C]ase #C21-00265.
obtained without the assistance of counsel for [petitioner] and without sufficient notice
to him and therefore, was rendered in violation of his constitutional rights to
‘9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated substantial and procedural due process.’
December 12, 1991 was obtained without the assistance of counsel for [petitioner]
and without sufficient notice to him and therefore, was rendered in clear violation of
“The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994
[petitioner’s] constitutional rights to substantial and procedural due process.
during which [respondent] marked and submitted in evidence the following:
‘10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated
Exhibit ‘A’ - x x x Judgment on Stipulation For Entry In Judgment of the Supreme
December 12, 1991 was procured by means of fraud or collusion or undue influence
Court of the State of California[,] County of Contra Costa[,] signed by Hon. Ellen
and/or based on a clear mistake of fact and law.
James, Judge of the Superior Court.
‘11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated
Exhibit ‘B’ - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen
December 12, 1991 is contrary to the laws, public policy and canons of morality
James, issued by the Consulate General of the Republic of the Philippines.
obtaining in the Philippines and the enforcement of such judgment in the Philippines
 Exhibit ‘C’ - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the Affirming the trial court, the Court of Appeals held that petitioner was estopped from assailing
sheriff/marshall, County of Santa Clara, State of California. the judgment that had become final and had, in fact, been partially executed. The CA also
ruled that summary judgment was proper, because petitioner had failed to tender any
Exhibit ‘D’ - [W]rit of [E]xecution genuine issue of fact and was merely maneuvering to delay the full effects of the judgment.

Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of [L]evy, Citing Ingenohl v. Olsen, 8 the CA also rejected petitioner’s argument that the RTC should
[M]emorandum of [G]arnishee, [E]xemptions from [E]nforcement of [J]udgment. have dismissed the action for the enforcement of a foreign judgment, on the ground of forum
non conveniens. It reasoned out that the recognition of the foreign judgment was based on
comity, reciprocity and res judicata.
Exhibit ‘F’ - Certification issued by the Secretary of State, State of California that
Stephen Weir is the duly elected, qualified and acting [c]ounty [c]lerk of the County of
Contra Costa of the State of California. Hence, this Petition. 9

Exhibit ‘G’ - Certificate of [A]uthentication of the [W]rit of [E]xecution. Issue

“On 6 April 1995, the court a quo issued an [O]rder granting [respondent’s] [M]otion for In his Memorandum, petitioner submits this lone but all-embracing issue:
[S]ummary [J]udgment [and] likewise granting [petitioner] ten (10) days to submit opposing
affidavits, after which the case would be deemed submitted for resolution (Record, pp. 152- “Whether or not the Court of Appeals acted in a manner x x x contrary to law when it affirmed
153). [Petitioner] filed a [M]otion for [R]econsideration of the aforesaid [O]rder and the Order of the trial court granting respondent’s Motion for Summary Judgment and
[respondent] filed [C]omment. On 30 June 1995, [petitioner] filed a [M]otion to [D]ismiss on rendering judgment against the petitioner.”  10
the ground of lack of jurisdiction over the subject matter of the case and forum-non-
conveniens (Record, pp. 166-170). In his [O]pposition to the [M]otion (Record, pp. 181-182) In his discussion, petitioner contends that the CA erred in ruling in this wise:
[respondent] contended that [petitioner could] no longer question the jurisdiction of the lower
court on the ground that [the latter’s] Answer had failed to raise the issue of jurisdiction. 1. That his Answer failed to tender a genuine issue of fact regarding the following:
[Petitioner] countered by asserting in his Reply that jurisdiction [could] not be fixed by
agreement of the parties. The lower court dismissed [his] [M]otion for [R]econsideration and
[M]otion [to] [D]ismiss (Record, pp. 196-198), x x x.” (a) the jurisdiction of a foreign court over the subject matter

The RTC 5 eventually rendered its February 21, 1997 Decision, 6 which disposed as follows: (b) the validity of the foreign judgment

“WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent] the (c) the judgment’s conformity to Philippine laws, public policy, canons of morality, and norms
following amounts: against unjust enrichment

“1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18, 2. That the principle of forum non conveniens was inapplicable to the instant case.
1991, or its peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in
[J]udgment dated December 19, 1991; This Court’s Ruling

“2. The amount of P30,000.00 as attorney’s fees; The Petition has no merit.

“3. To pay the costs of suit. First Question: Summary Judgment

“The claim for moral damages, not having been substantiated, it is hereby denied.”  7 Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at
bar, arguing that his Answer allegedly raised genuine and material factual matters which he
Ruling of the Court of Appeals should have been allowed to prove during trial.
On the other hand, respondent argues that the alleged “genuine issues of fact” raised by judgment had been rendered against him and in favor of respondent, and that he had paid
petitioner are mere conclusions of law, or “propositions arrived at not by any process of $5,000 to the latter in partial compliance therewith. Hence, respondent, as the party
natural reasoning from a fact or a combination of facts stated but by the application of the presenting the Motion for Summary Judgment, was shown to be entitled to the judgment.
artificial rules of law to the facts pleaded.” 11
The CA made short shrift of the first requirement. To show that petitioner had raised no
The RTC granted respondent’s Motion for Summary Judgment because petitioner, in his genuine issue, it relied instead on the finality of the foreign judgment which was, in fact,
Answer, admitted the existence of the Judgment on Stipulation for Entry in Judgment. partially executed. Hence, we shall show in the following discussion how the defenses
Besides, he had already paid $5,000 to respondent, as provided in the foreign judgment presented by petitioner failed to tender any genuine issue of fact, and why a full-blown trial
sought to be enforced. 12 Hence, the trial court ruled that, there being no genuine issue as to was not necessary for the resolution of the issues.
any material fact, the case should properly be resolved through summary judgment. The CA
affirmed this ruling. Jurisdiction

We concur with the lower courts. Summary judgment is a procedural device for the prompt Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership
disposition of actions in which the pleadings raise only a legal issue, and not a genuine interest, was vested in the Securities and Exchange Commission, not in the Superior Court of
issue as to any material fact. By genuine issue is meant a question of fact that calls for the California, County of Contra Costa.
presentation of evidence. It should be distinguished from an issue that is sham, contrived, set
in bad faith and patently unsubstantial. 13 We disagree. In the absence of proof of California law on the jurisdiction of courts, we
presume that such law, if any, is similar to Philippine law. We base this conclusion on the
Summary judgment is resorted to in order to avoid long drawn out litigations and useless presumption of identity or similarity, also known as processual presumption.  18 The
delays. When affidavits, depositions and admissions on file show that there are no genuine Complaint, 19 which respondent filed with the trial court, was for the enforcement of a foreign
issues of fact to be tried, the Rules allow a party to pierce the allegations in the pleadings and judgment. He alleged therein that the action of the foreign court was for the collection of a
to obtain immediate relief by way of summary judgment. In short, since the facts are not in sum of money, breach of promissory notes, and damages.  20
dispute, the court is allowed to decide the case summarily by applying the law to the material
facts. In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities
and Exchange Commission (SEC). The jurisdiction of the latter is exclusively over matters
Petitioner contends that by allowing summary judgment, the two courts a quo prevented him enumerated in Section 5, PD 902-A,  21 prior to its latest amendment. If the foreign court did
from presenting evidence to substantiate his claims. We do not agree. Summary judgment is not really have jurisdiction over the case, as petitioner claims, it would have been very easy
based on facts directly proven by affidavits, depositions or admissions.  14 In this case, the CA for him to show this. Since jurisdiction is determined by the allegations in a complaint, he only
and the RTC both merely ruled that trial was not necessary to resolve the case. Additionally had to submit a copy of the complaint filed with the foreign court. Clearly, this issue did not
and correctly, the RTC specifically ordered petitioner to submit opposing affidavits to support warrant trial.
his contentions that (1) the Judgment on Stipulation for Entry in Judgment was procured on
the basis of fraud, collusion, undue influence, or a clear mistake of law or fact; and (2) that it Rights to Counsel and to Due Process
was contrary to public policy or the canons of morality.  15
Petitioner contends that the foreign judgment, which was in the form of a Compromise
Again, in its Order 16 dated November 29, 1995, the trial court clarified that the opposing Agreement, cannot be executed without the parties being assisted by their chosen lawyers.
affidavits were “for [petitioner] to spell out the facts or circumstances [that] would constitute The reason for this, he points out, is to eliminate collusion, undue influence and/or improper
lack of jurisdiction over the subject matter of and over the persons involved in Case No. C21- exertion of ascendancy by one party over the other. He alleges that he discharged his
00265,” and that would render the judgment therein null and void. In this light, petitioner’s counsel during the proceedings, because he felt that the latter was not properly attending to
contention that he was not allowed to present evidence to substantiate his claims is clearly the case. The judge, however, did not allow him to secure the services of another counsel.
untenable. Insisting that petitioner settle the case with respondent, the judge practically imposed the
settlement agreement on him. In his Opposing Affidavit, petitioner states:
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that
there must be no genuine issue as to any material fact, except for the amount of damages; “It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I
and (b) that the party presenting the motion for summary judgment must be entitled to a discharged him because I then felt that he was not properly attending to my case or was not
judgment as a matter of law. 17 As mentioned earlier, petitioner admitted that a foreign competent enough to represent my interest. I asked the Judge for time to secure another
counsel but I was practically discouraged from engaging one as the Judge was insistent that I person who receives the payment has no right to receive it.  25 In this case, petitioner merely
settle the case at once with the [respondent]. Being a foreigner and not a lawyer at that I did argues that the other two defendants whom he represented were liable together with him.
not know what to do. I felt helpless and the Judge and [respondent’s] lawyer were the ones This is not a case of unjust enrichment.
telling me what to do. Under ordinary circumstances, their directives should have been taken
with a grain of salt especially so [since respondent’s] counsel, who was telling me what to do, We do not see, either, how the foreign judgment could be contrary to law, morals, public
had an interest adverse to mine. But [because] time constraints and undue influence exerted policy or the canons of morality obtaining in the country. Petitioner owed money, and the
by the Judge and [respondent’s] counsel on me disturbed and seriously affected my freedom judgment required him to pay it. That is the long and the short of this case.
to act according to my best judgment and belief. In point of fact, the terms of the settlement
were practically imposed on me by the Judge seconded all the time by [respondent’s] In addition, the maneuverings of petitioner before the trial court reinforce our belief that his
counsel. I was then helpless as I had no counsel to assist me and the collusion between the claims are unfounded. Instead of filing opposing affidavits to support his affirmative defenses,
Judge and [respondent’s] counsel was becoming more evident by the way I was treated in he filed a Motion for Reconsideration of the Order allowing summary judgment, as well as a
the Superior Court of [t]he State of California. I signed the ‘Judgment on Stipulation for Entry Motion to Dismiss the action on the ground of forum non conveniens. His opposing affidavits
in Judgment’ without any lawyer assisting me at the time and without being fully aware of its were filed only after the Order of November 29, 1995 had denied both Motions.  26 Such
terms and stipulations.” 22 actuation was considered by the trial court as a dilatory ploy which justified the resolution of
the action by summary judgment. According to the CA, petitioner’s allegations sought to delay
The manifestation of petitioner that the judge and the counsel for the opposing party had the full effects of the judgment; hence, summary judgment was proper. On this point, we
pressured him would gain credibility only if he had not been given sufficient time to engage concur with both courts.
the services of a new lawyer. Respondent’s Affidavit  23 dated May 23, 1994, clarified,
however, that petitioner had sufficient time, but he failed to retain a counsel. Having
dismissed his lawyer as early as June 19, 1991, petitioner directly handled his own defense
and negotiated a settlement with respondent and his counsel in December 1991. Respondent
also stated that petitioner, ignoring the judge’s reminder of the importance of having a lawyer, Second Question: Forum Non Conveniens
argued that “he would be the one to settle the case and pay” anyway. Eventually, the
Compromise Agreement was presented in court and signed before Judge Ellen James on Petitioner argues that the RTC should have refused to entertain the Complaint for
January 3, 1992. Hence, petitioner’s rights to counsel and to due process were not violated. enforcement of the foreign judgment on the principle of forum non conveniens. He claims that
the trial court had no jurisdiction, because the case involved partnership interest, and there
Unjust Enrichment was difficulty in ascertaining the applicable law in California. All the aspects of the transaction
took place in a foreign country, and respondent is not even Filipino.
Petitioner avers that the Compromise Agreement violated the norm against unjust enrichment
because the judge made him shoulder all the liabilities in the case, even if there were two WON the PH court should dismiss the case based on forum non conveniens. NO
other defendants, G.S.P & Sons, Inc. and the Genesis Group.
We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction
We cannot exonerate petitioner from his obligation under the foreign judgment, even if there is authorized by law, courts may nonetheless refuse to entertain a case for any of the
are other defendants who are not being held liable together with him. First, the foreign following practical reasons:
judgment itself does not mention these other defendants, their participation or their liability to
respondent. Second, petitioner’s undated Opposing Affidavit states: “[A]lthough myself and “1) The belief that the matter can be better tried and decided elsewhere, either because the
these entities were initially represented by Atty. Lawrence L. Severson of the Law Firm main aspects of the case transpired in a foreign jurisdiction or the material witnesses have
Kouns, Quinlivan & Severson, x x x I discharged x x x said lawyer. Subsequently, I assumed their residence there;
the representation for myself and these firms and this was allowed by the Superior Court of
the State of California without any authorization from G.G.P. & Sons, Inc. and the Genesis 2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum
Group.” 24 Clearly, it was petitioner who chose to represent the other defendants; hence, he shopping[,] merely to secure procedural advantages or to convey or harass the defendant;
cannot now be allowed to impugn a decision based on this ground.
3) The unwillingness to extend local judicial facilities to non-residents or aliens when the
In any event, contrary to petitioner’s contention, unjust enrichment or solutio indebiti does not docket may already be overcrowded;
apply to this case. This doctrine contemplates payment when there is no duty to pay, and the
4) The inadequacy of the local judicial machinery for effectuating the right sought to be vs.
maintained; and
COURT OF APPEALS and PACIFIC CEMENT COMPANY, INC., respondents.
The difficulty of ascertaining foreign law.” 27

None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the
present action, there was no more need for material witnesses, no forum shopping or MARTINEZ, J.:
harassment of petitioner, no inadequacy in the local machinery to enforce the foreign
judgment, and no question raised as to the application of any foreign law. 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
Authorities agree that the issue of whether a suit should be entertained or dismissed on the against the private respondent, PACIFIC CEMENT COMPANY, INCORPORATED.
basis of the above-mentioned principle depends largely upon the facts of each case and on
the sound discretion of the trial court.  28 Since the present action lodged in the RTC was for The petitioner is a foreign corporation owned and controlled by the Government of India while
the enforcement of a foreign judgment, there was no need to ascertain the rights and the the private respondent is a private corporation duly organized and existing under the laws of
obligations of the parties based on foreign laws or contracts. The parties needed only to the Philippines. The present conflict between the petitioner and the private respondent has its
perform their obligations under the Compromise Agreement they had entered roots in a contract entered into by and between both parties on February 26, 1983 whereby
into. 1âwphi1.nêt 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
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in bound itself to pay the private respondent the amount of FOUR HUNDRED SEVENTY-
personam rendered by a foreign tribunal clothed with jurisdiction is presumptive evidence of a SEVEN THOUSAND THREE HUNDRED U.S. DOLLARS ($477,300.00) by opening an
right as between the parties and their successors-in-interest by a subsequent title.  29 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
Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere -- for delivery at Bombay and Calcutta, India. However, due to a dispute between the shipowner
enjoys the presumption that it is acting in the lawful exercise of its jurisdiction, and that it is and the private respondent, the cargo was held up in Bangkok and did not reach its point
regularly performing its official duty.  30 Its judgment may, however, be assailed if there is destination. Notwithstanding the fact that the private respondent had already received
evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of payment and despite several demands made by the petitioner, the private respondent failed
law or fact. But precisely, this possibility signals the need for a local trial court to exercise to deliver the oil well cement. Thereafter, negotiations ensued between the parties and they
jurisdiction. Clearly, the application of forum non coveniens is not called for. 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 grounds relied upon by petitioner are contradictory. On the one hand, he insists that the the Class "G" cement did not conform to the petitioner's specifications. The petitioner then
RTC take jurisdiction over the enforcement case in order to invalidate the foreign judgment; informed the private respondent that it was referring its claim to an arbitrator pursuant to
yet, he avers that the trial court should not exercise jurisdiction over the same case on the Clause 16 of their contract which stipulates:
basis of forum non conveniens. Not only do these defenses weaken each other, but they
bolster the finding of the lower courts that he was merely maneuvering to avoid or delay Except where otherwise provided in the supply order/contract all questions
payment of his obligation. and disputes, relating to the meaning of the specification designs, drawings
and instructions herein before mentioned and as to quality of workmanship of
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and the items ordered or as to any other question, claim, right or thing
Resolution AFFIRMED. Double costs against petitioner. 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
SO ORDERED.
during stipulated/extended period or after the completion/abandonment
thereof shall be referred to the sole arbitration of the persons appointed by
G.R. No. 114323 July 23, 1998 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
OIL AND NATURAL GAS COMMISSION, petitioner, 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 visit to Philippines in August 1985 US $ 3,881.00
employee he had expressed views on all or any of the matter in dispute or
difference. 3. L.C. Establishment charges incurred

The arbitrator to whom the matter is originally referred being transferred or by the claimant US $ 1,252.82
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 4. Loss of interest suffered by claimant
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 from 21.6.83 to 23.7.88 US $ 417,169.95
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 Total amount of award US $ 899,603.77
proceedings under this clause.
In addition to the above, the respondent would also be liable to pay to the
The arbitrator may with the consent of parties enlarge the time, from time to claimant the interest at the rate of 6% on the above amount, with effect from
time, to make and publish the award. 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
The venue for arbitration shall be at Dehra dun. 1* earlier.

On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in I determine the cost at Rs. 70,000/- equivalent to US $5,000 towards the
petitioner's favor setting forth the arbitral award as follows: expenses on Arbitration, legal expenses, stamps duly incurred by the
claimant. The cost will be shared by the parties in equal proportion.
NOW THEREFORE after considering all facts of the case, the evidence, oral
and documentarys adduced by the claimant and carefully examining the Pronounced at Dehra Dun to-day, the 23rd of July 1988. 2
various written statements, submissions, letters, telexes, etc. sent by the
respondent, and the oral arguments addressed by the counsel for the To enable the petitioner to execute the above award in its favor, it filed a Petition
claimants, I, N.N. Malhotra, Sole Arbitrator, appointed under clause 16 of the before the Court of the Civil Judge in Dehra Dun. India (hereinafter referred to as the
supply order dated 26.2.1983, according to which the parties, i.e. M/S Oil and foreign court for brevity), praying that the decision of the arbitrator be made "the Rule
Natural Gas Commission and the Pacific Cement Co., Inc. can refer the of Court" in India. The foreign court issued notices to the private respondent for filing
dispute to the sole arbitration under the provision of the Arbitration Act. 1940, objections to the petition. The private respondent complied and sent its objections
do hereby award and direct as follows: — 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.
The Respondent will pay the following to the claimant: — Instead of paying the required filing fees, the private respondent sent the following
communication addressed to the Civil judge of Dehra Dun:
1. Amount received by the Respondent
The Civil Judge
against the letter of credit No. 11/19
Dehra Dun (U.P.) India
dated 28.2.1983 US $ 477,300.00
Re: Misc. Case No. 5 of 1989
2. Re-imbursement of expenditure incurred
M/S Pacific Cement Co.,
by the claimant on the inspection team's
Inc. vs. ONGC Case
 Sir: 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
1. We received your letter dated 28 April enforcement of the aforementioned judgment of the foreign court. The private respondent
1989 only last 18 May 1989. 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
2. Please inform us how much is the court
dismiss, and the private respondent, its rejoinder thereto. On January 3, 1992, the RTC
fee to be paid. Your letter did not mention
issued an order upholding the petitioner's legal capacity to sue, albeit dismissing the
the amount to be paid.
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
3. Kindly give us 15 days from receipt of in Philippine courts admits of an exception, that is, when the foreign corporation is suing on
your letter advising us how much to pay to an isolated transaction as in this case. 5 Anent the issue of the sufficiency of the petitioner's
comply with the same. 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,
Thank you for your kind consideration.
[a] perusal of the shove-quoted clause (Clause 16) readily shows that the
Pacific Cement Co., Inc. matter covered by its terms is limited to "ALL QUESTIONS AND DISPUTES,
RELATING TO THE MEANING OF THE SPECIFICATION, DESIGNS,
By: DRAWINGS AND INSTRUCTIONS HEREIN BEFORE MENTIONED and as
to the QUALITY OF WORKMANSHIP OF THE ITEMS ORDERED or as to
Jose Cortes, Jr. 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
President 3
the opening sentence of the clause.

Without responding to the above communication, the foreign court refused to admit the
The court is inclined to go along with the observation of the defendant that
private respondent's objections for failure to pay the required filing fees, and thereafter issued
the breach, consisting of the non-delivery of the purchased materials, should
an Order on February 7, 1990, to wit:
have been properly litigated before a court of law, pursuant to Clause No. 15
of the Contract/Supply Order, herein quoted, to wit:
ORDER
"JURISDICTION
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.
All questions, disputes and differences, arising under out of
or in connection with this supply order, shall be subject to the
ORDER EXCLUSIVE JURISDICTION OF THE COURT, within the
local limits of whose jurisdiction and the place from which
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the this supply order is situated."6
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 The RTC characterized the erroneous submission of the dispute to the arbitrator as a
defendant (US$ 899,603.77 (US$ Eight Lakhs ninety nine thousand six "mistake of law or fact amounting to want of jurisdiction". Consequently, the
hundred and three point seventy seven only) along with 9% interest per proceedings had before the arbitrator were null and void and the foreign court had
annum till the last date of realisation. 4 therefore, adopted no legal award which could be the source of an enforceable
right. 7
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
The petitioner then appealed to the respondent Court of Appeals which affirmed the dismissal during stipulated/extended period or after the completion/abandonment
of the complaint. In its decision, the appellate court concurred with the RTC's ruling that the thereof shall be referred to the sole arbitration of the persons appointed by
arbitrator did not have jurisdiction over the dispute between the parties, thus, the foreign court Member of the Commission at the time of dispute. It will be no objection to
could not validly adopt the arbitrator's award. In addition, the appellate court observed that any such appointment that the arbitrator so appointed is a Commission
the full text of the judgment of the foreign court contains the dispositive portion only and employer (sic) that he had to deal with the matter to which the supply or
indicates no findings of fact and law as basis for the award. Hence, the said judgment cannot contract relates and that in the course of his duties as Commission's
be enforced by any Philippine court as it would violate the constitutional provision that no employee he had expressed views on all or any of the matter in dispute or
decision shall be rendered by any court without expressing therein clearly and distinctly the difference. 11
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 The dispute between the parties had its origin in the non-delivery of the 4,300 metric tons of
foreign court first replying to the private respondent's query as to the amount of legal fees to oil well cement to the petitioner. The primary question that may be posed, therefore, is
be paid, constituted want of notice or violation of due process. Lastly, it pointed out that the whether or not the non-delivery of the said cargo is a proper subject for arbitration under the
arbitration proceeding was defective because the arbitrator was appointed solely by the above-quoted Clause 16. The petitioner contends that the same was a matter within the
petitioner, and the fact that the arbitrator was a former employee of the latter gives rise to a purview of Clause 16, particularly the phrase, ". . . or as to any other questions, claim, right or
presumed bias on his part in favor of the petitioner. 9 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
A subsequent motion for reconsideration by the petitioner of the appellate court's decision latitude so as to include non-delivery of the cargo which was a "claim, right or thing relating to
was denied, thus, this petition for review on certiorari citing the following as grounds in the supply order/contract". The contention is bereft of merit. First of all, the petitioner has
support thereof: 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
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING phrase reads, ". . . or as to any other question, claim, right or thing whatsoever, in any way
THE LOWER COURT'S ORDER OF DISMISSAL SINCE: 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
A. THE NON-DELIVERY OF THE CARGO WAS A MATTER PROPERLY
conjunction with the words "design, drawing, specification, instruction or these conditions". It
COGNIZABLE BY THE PROVISIONS OF CLAUSE 16 OF THE CONTRACT;
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
B. THE JUDGMENT OF THE CIVIL COURT OF DEHRADUN, INDIA WAS order/contract. The petitioner also insists that the non-delivery of the cargo is not only
AN AFFIRMATION OF THE FACTUAL AND LEGAL FINDINGS OF THE covered by the foregoing phrase but also by the phrase, ". . . or otherwise concerning the
ARBITRATOR AND THEREFORE ENFORCEABLE IN THIS materials or the execution or failure to execute the same during the stipulated/extended
JURISDICTION; period or after completion/abandonment thereof . . .".

C. EVIDENCE MUST BE RECEIVED TO REPEL THE EFFECT OF A The doctrine of noscitur a sociis, although a rule in the construction of statutes, is equally
PRESUMPTIVE RIGHT UNDER A FOREIGN JUDGMENT. 10 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
The threshold issue is whether or not the arbitrator had jurisdiction over the dispute between particular word or phrase is ambiguous in itself or is equally susceptible of various meanings,
the petitioner and the private respondent under Clause 16 of the contract. To reiterate, its correct construction may be made clear and specific by considering the company of the
Clause 16 provides as follows: 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
Except where otherwise provided in the supply order/contract all questions 16 reveals that it covers three matters which may be submitted to arbitration namely,
and disputes, relating to the meaning of the specification designs, drawings
and instructions herein before mentioned and as to quality of workmanship of (1) all questions and disputes, relating to the meaning of the specification designs, drawings
the items ordered or as to any other question, claim, right or thing and instructions herein before mentioned and as to quality of workmanship of the items
whatsoever, in any way arising out of or relating to the supply order/contract ordered; or
design, drawing, specification, instruction or these conditions or otherwise
concerning the materials or the execution or failure to execute the same
(2) any other question, claim, right or thing whatsoever, in any way arising out of or relating to particulars, such a construction is, if possible, to be adopted as will give
the supply order/contract design, drawing, specification, instruction or these conditions; or effect to all. 17

(3) otherwise concerning the materials or the execution or failure to execute the same during Thus, this Court has held that as in statutes, the provisions of a contract should not be read in
stipulated/extended period or after the completion/abandonment thereof. 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
The first and second categories unmistakably refer to questions and disputes relating to the fixing the meaning of any of its harmonious whole. Equally applicable is the canon of
design, drawing, instructions, specifications or quality of the materials of the supply/order construction that in interpreting a statute (or a contract as in this case), care should be taken
contract. In the third category, the clause, "execution or failure to execute the same", may be that every part thereof be given effect, on the theory that it was enacted as an integrated
read as "execution or failure to execute the supply order/contract". But in accordance with the measure and not as a hodge-podge of conflicting provisions. The rule is that a construction
doctrine of noscitur a sociis, this reference to the supply order/contract must be construed in that would render a provision inoperative should be avoided; instead, apparently inconsistent
the light of the preceding words with which it is associated, meaning to say, as being limited provisions should be reconciled whenever possible as parts of a coordinated and harmonious
only to the design, drawing, instructions, specifications or quality of the materials of the whole. 19
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, The petitioner's interpretation that Clause 16 is of such latitude as to contemplate even the
instructions, specifications or quality of the materials. That Clause 16 should pertain only to non-delivery of the oil well cement would in effect render Clause 15 a mere superfluity. A
matters involving the technical aspects of the contract is but a logical inference considering perusal of Clause 16 shows that the parties did not intend arbitration to be the sole means of
that the underlying purpose of a referral to arbitration is for such technical matters to be settling disputes. This is manifest from Clause 16 itself which is prefixed with the proviso,
deliberated upon by a person possessed with the required skill and expertise which may be "Except where otherwise provided in the supply order/contract . . .", thus indicating that the
otherwise absent in the regular courts. 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
This Court agrees with the appellate court in its ruling that the non-delivery of the oil well
disputes.
cement is a matter properly cognizable by the regular courts as stipulated by the parties in
Clause 15 of their contract:
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
All questions, disputes and differences, arising under out of or in connection
cement to conform to the specifications of the contract is a matter clearly falling within the
with this supply order, shall be subject to the exclusive jurisdiction of the
ambit of Clause 16. In this contention, we find merit. When the 4,300 metric tons of oil well
court, within the local limits of whose jurisdiction and the place from which
cement were not delivered to the petitioner, an agreement was forged between the latter and
this supply order is situated. 14
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
The following fundamental principles in the interpretation of contracts and other conform to the specifications of the contract. Only after this latter circumstance was the
instruments served as our guide in arriving at the foregoing conclusion: 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
Art. 1373. If some stipulation of any contract should admit of several replacement cargo to conform to the specifications of the contract, a matter clearly within the
meanings, it shall be understood as bearing that import which is most coverage of Clause 16.
adequate to render it effectual. 15
The private respondent posits that it was under no legal obligation to make replacement and
Art. 1374. The various stipulations of a contract shall be interpreted together, that it undertook the latter only "in the spirit of liberality and to foster good business
attributing the doubtful ones that sense which may result from all of them relationship". 20 Hence, the undertaking to deliver the replacement cement and its subsequent
taken jointly. 16 failure to conform to specifications are not anymore subject of the supply order/contract or
any of the provisions thereof. We disagree.
Sec. 11. Instrument construed so as to give effect to all provisions. In the
construction of an instrument, where there are several provisions or
As per Clause 7 of the supply order/contract, the private respondent undertook to deliver the preclude the validity of "memorandum decisions" which adopt by reference the findings of fact
4,300 metric tons of oil well cement at "BOMBAY (INDIA) 2181 MT and CALCUTTA 2119 and conclusions of law contained in the decisions of inferior tribunals. In Francisco v.
MT". 21 The failure of the private respondent to deliver the cargo to the designated places Permskul, 26 this Court held that the following memorandum decision of the Regional Trial
remains undisputed. Likewise, the fact that the petitioner had already paid for the cost of the Court of Makati did not transgress the requirements of Section 14, Article VIII of the
cement is not contested by the private respondent. The private respondent claims, however, Constitution:
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 MEMORANDUM DECISION
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 After a careful perusal, evaluation and study of the records of this case, this
representation. In its Memorandum filed before this Court, the private respondent asserted Court hereby adopts by reference the findings of fact and conclusions of law
that the Civil Court of Bangkok had already ruled that the non-delivery of the cargo was due contained in the decision of the Metropolitan Trial Court of Makati, Metro
solely to the fault of the carrier. 23 It is, therefore, but logical to assume that the necessary Manila, Branch 63 and finds that there is no cogent reason to disturb the
consequence of this finding is the eventual recovery by the private respondent of the cargo or same.
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 WHEREFORE, judgment appealed from is hereby affirmed in
effect until the full execution thereof. toto. 27 (Emphasis supplied.)

We now go to the issue of whether or not the judgment of the foreign court is enforceable in This Court had occasion to make a similar pronouncement in the earlier case
this jurisdiction YES 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:
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 We have, therefore, carefully reviewed the evidence and made a re-
judgment of the foreign court reads: 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
ORDER 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
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the decision. 29 (Emphasis supplied)
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 Hence, even in this jurisdiction, incorporation by reference is allowed if only to avoid
defendant (US$ 899,603.77 (US$ Eight Lakhs ninety nine thousand six the cumbersome reproduction of the decision of the lower courts, or portions thereof,
hundred and three point seventy seven only) along with 9% interest per in the decision of the higher court. 30 This is particularly true when the decision sought
annum till the last date of realisation. 24 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)
As specified in the order of the Civil Judge of Dehra Dun, "Award Paper No. 3/B-1 shall be a single spaced pages.
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 Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected by
Paper No. 3/B-1, contains an exhaustive discussion of the respective claims and defenses of the fact that the procedure in the courts of the country in which such judgment was rendered
the parties, and the arbitrator's evaluation of the same. Inasmuch as the foregoing is deemed differs from that of the courts of the country in which the judgment is relied on. 31 This Court
to have been incorporated into the foreign court's judgment the appellate court was in error has held that matters of remedy and procedure are governed by the lex fori or the internal law
when it described the latter to be a "simplistic decision containing literally, only the dispositive of the forum. 32 Thus, if under the procedural rules of the Civil Court of Dehra Dun, India, a
portion". 25 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
The constitutional mandate that no decision shall be rendered by any court without Order of the Court becomes final and executory upon failure to pay the necessary docket
expressing therein dearly and distinctly the facts and the law on which it is based does not
fees, then the courts in this jurisdiction cannot invalidate the order of the foreign court simply A foreign judgment is presumed to be valid and binding in the country from
because our rules provide otherwise. 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.
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 Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in
docket fees to be paid then refused to admit its objections for failure to pay the same, and personam of a tribunal of a foreign country having jurisdiction to pronounce
second, because of the presumed bias on the part of the arbitrator who was a former the same is presumptive evidence of a right as between the parties and their
employee of the petitioner. 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,
Time and again this Court has held that the essence of due process is to be found in the collusion, fraud, or clear mistake of law or fact. Also, under Section 3 of Rule
reasonable opportunity to be heard and submit any evidence one may have in support of 131, a court, whether of the Philippines or elsewhere, enjoys the presumption
one's defense 33 or stated otherwise, what is repugnant to due process is the denial of that it was acting in the lawful exercise of jurisdiction and has regularly
opportunity to be heard. 34 Thus, there is no violation of due process even if no hearing was performed its official duty. 39
conducted, where the party was given a chance to explain his side of the controversy and he
waived his right to do so. 35 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
In the instant case, the private respondent does not deny the fact that it was notified by the the instant case.
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 The foreign judgment being valid, there is nothing else left to be done than to order its
private respondent sent a communication to the foreign court inquiring about the correct enforcement, despite the fact that the petitioner merely prays for the remand of the case to
amount of fees to be paid. On the pretext that it was yet awaiting the foreign court's reply, the RTC for further proceedings. As this Court has ruled on the validity and enforceability of
almost a year passed without the private respondent paying the legal fees. Thus, on February the said foreign judgment in this jurisdiction, further proceedings in the RTC for the reception
2, 1990, the foreign court rejected the objections of the private respondent and proceeded to of evidence to prove otherwise are no longer necessary.
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 WHEREFORE, the instant petition is GRANTED, and the assailed decision of the Court of
queries nor when the latter rejected its objections for a clearly meritorious ground. The private Appeals sustaining the trial court's dismissal of the OIL AND NATURAL GAS
respondent was afforded sufficient opportunity to be heard. It was not incumbent upon the COMMISSION's complaint in Civil Case No. 4006 before Branch 30 of the RTC of Surigao
foreign court to reply to the private respondent's written communication. On the contrary, a City is REVERSED, and another in its stead is hereby rendered ORDERING private
genuine concern for its cause should have prompted the private respondent to ascertain with respondent PACIFIC CEMENT COMPANY, INC. to pay to petitioner the amounts adjudged in
all due diligence the correct amount of legal fees to be paid. The private respondent did not the foreign judgment subject of said case.
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 SO ORDERED.

The private respondent bewails the presumed bias on the part of the arbitrator who was a G.R. No. 139325             April 12, 2005
former employee of the petitioner. This point deserves scant consideration in view of the
following stipulation in the contract:
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
. . . . It will be no objection any such appointment that the arbitrator so the Class Plaintiffs in Class Action No. MDL 840, United States District Court of
appointed is a Commission employer (sic) that he had to deal with the matter Hawaii, Petitioner,
to which the supply or contract relates and that in the course of his duties as vs.
Commission's employee he had expressed views on all or any of the matter HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137,
in dispute or difference. 37 (Emphasis supplied.) Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS,
through its court appointed legal representatives in Class Action MDL 840, United
Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines, States District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand Marcos,
Inc. v. Court of Appeals 38 that: Jr., Respondents.
DECISION class consisted of approximately ten thousand (10,000) members; hence, joinder of all these
persons was impracticable.
TINGA, J.:
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of the US
Our martial law experience bore strange unwanted fruits, and we have yet to finish weeding Federal Rules of Civil Procedure, the provisions of which were invoked by the plaintiffs.
out its bitter crop. While the restoration of freedom and the fundamental structures and Subsequently, the US District Court certified the case as a class action and created three (3)
processes of democracy have been much lauded, according to a significant number, the sub-classes of torture, summary execution and disappearance victims.5 Trial ensued, and
changes, however, have not sufficiently healed the colossal damage wrought under the subsequently a jury rendered a verdict and an award of compensatory and exemplary
oppressive conditions of the martial law period. The cries of justice for the tortured, the damages in favor of the plaintiff class.  Then, on 3 February 1995, the US District Court,
murdered, and the desaparecidos arouse outrage and sympathy in the hearts of the fair- presided by Judge Manuel L. Real, rendered a Final Judgment (Final Judgment) awarding
minded, yet the dispensation of the appropriate relief due them cannot be extended through the plaintiff class a total of One Billion Nine Hundred Sixty Four Million Five Thousand Eight
the same caprice or whim that characterized the ill-wind of martial rule. The damage done Hundred Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final Judgment was
was not merely personal but institutional, and the proper rebuke to the iniquitous past has to eventually affirmed by the US Court of Appeals for the Ninth Circuit, in a decision rendered on
involve the award of reparations due within the confines of the restored rule of law. 17 December 1996.6

The petitioners in this case are prominent victims of human rights violations 1 who, deprived of On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of
the opportunity to directly confront the man who once held absolute rule over this country, Makati (Makati RTC) for the enforcement of the Final Judgment.  They alleged that they are
have chosen to do battle instead with the earthly representative, his estate. The clash has members of the plaintiff class in whose favor the US District Court awarded damages.7 They
been for now interrupted by a trial court ruling, seemingly comported to legal logic, that argued that since the Marcos Estate failed to file a petition for certiorari with the US Supreme
required the petitioners to pay a whopping filing fee of over Four Hundred Seventy-Two Court after the Ninth Circuit Court of Appeals had affirmed the Final Judgment, the decision
Million Pesos (P472,000,000.00) in order that they be able to enforce a judgment awarded of the US District Court had become final and executory, and hence should be recognized
them by a foreign court.  There is an understandable temptation to cast the struggle within the and enforced in the Philippines, pursuant to Section 50, Rule 39 of the Rules of Court then in
simplistic confines of a morality tale, and to employ short-cuts to arrive at what might seem force.8
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. 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
Nonetheless, the application of the legal principles involved in this case will comfort those Ten Pesos (P410.00) as docket and filing fees, notwithstanding the fact that they sought to
who maintain that our substantive and procedural laws, for all their perceived ambiguity and enforce a monetary amount of damages in the amount of over Two and a Quarter Billion US
susceptibility to myriad interpretations, are inherently fair and just. The relief sought by the Dollars (US$2.25 Billion).  The Marcos Estate cited Supreme Court Circular No. 7, pertaining
petitioners is expressly mandated by our laws and conforms to established legal principles. to the proper computation and payment of docket fees.  In response, the petitioners claimed
The granting of this petition for certiorari is warranted in order to correct the legally infirm and that an action for the enforcement of a foreign judgment is not capable of pecuniary
unabashedly unjust ruling of the respondent judge. estimation; hence, a filing fee of only Four Hundred Ten Pesos (P410.00) was proper,
pursuant to Section 7(c) of Rule 141.9
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 On 9 September 1998, respondent Judge Santiago Javier Ranada10 of the Makati RTC issued
Philippine President Ferdinand E. Marcos (Marcos Estate). The action was brought forth by the subject Order dismissing the complaint without prejudice. Respondent judge opined that
ten Filipino citizens2 who each alleged having suffered human rights abuses such as arbitrary contrary to the petitioners' submission, the subject matter of the complaint was indeed
detention, torture and rape in the hands of police or military forces during the Marcos capable of pecuniary estimation, as it involved a judgment rendered by a foreign court
regime.3 The Alien Tort Act was invoked as basis for the US District Court's jurisdiction over ordering the payment of definite sums of money, allowing for easy determination of the value
the complaint, as it involved a suit by aliens for tortious violations of international law.4 These of the foreign judgment. On that score, Section 7(a) of Rule 141 of the Rules of Civil
plaintiffs brought the action on their own behalf and on behalf of a class of similarly situated Procedure would find application, and the RTC estimated the proper amount of filing fees was
individuals, particularly consisting of all current civilian citizens of the Philippines, their heirs approximately Four Hundred Seventy Two Million Pesos, which obviously had not been paid.
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 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 party, fourth-party, etc., complaint, or a complaint in intervention, and for all
annulment of the questioned orders, and an order directing the reinstatement of Civil Case clerical services in the same time, if the total sum claimed, exclusive of
No. 97-1052 and the conduct of appropriate proceedings thereon. interest, or the started value of the property in litigation, is:

Petitioners submit that their action is incapable of pecuniary estimation as the subject matter
1. Less than P 100,00.00 – P 500.0
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 2. P 100,000.00 or more but less than P 150,000.00 – P 800.0
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 3. P 150,000.00 or more but less than P 200,000.00 – P 1,000
by Section 6, Rule 1 of the Rules of Civil Procedure, particularly the inexpensive disposition
of every action. 4. P 200,000.00 or more but less than P 250,000.00 – P 1,500

Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which 5. P 250,000.00 or more but less than P 300,00.00 – P 1,750
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 6. P 300,000.00 or more but not more than P 400,000.00 – P 2,000
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 7. P 350,000.00 or more but not more than P400,000.00 – P 2,250
unjust.
8. For each P 1,000.00 in excess of P 400,000.00 – P 10.00
12 
The Commission on Human Rights (CHR) was permitted to intervene in this case. It urged
that the petition be granted and a judgment rendered, ordering the enforcement and (Emphasis supplied)
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 Obviously, the above-quoted provision covers, on one hand, ordinary actions, permissive
execution of a foreign judgment as a new case, in violation of the principle that once a case counterclaims, third-party, etc. complaints and complaints-in-interventions, and on the other,
has been decided between the same parties in one country on the same issue with finality, it money claims against estates which are not based on judgment.  Thus, the relevant question
can no longer be relitigated again in another country. 13 The CHR likewise invokes the principle for purposes of the present petition is whether the action filed with the lower court is a "money
of comity, and of vested rights. claim against an estate not based on judgment."

The Court's disposition on the issue of filing fees will prove a useful jurisprudential guidepost Petitioners' complaint may have been lodged against an estate, but it is clearly based on a
for courts confronted with actions enforcing foreign judgments, particularly those lodged judgment, the Final Judgment of the US District Court. The provision does not make any
against an estate. There is no basis for the issuance a limited pro hac vice ruling based on distinction between a local judgment and a foreign judgment, and where the law does not
the special circumstances of the petitioners as victims of martial law, or on the emotionally- distinguish, we shall not distinguish.
charged allegation of human rights abuses.
A reading of Section 7 in its entirety reveals several instances wherein the filing fee is
An examination of Rule 141 of the Rules of Court readily evinces that the respondent judge computed on the basis of the amount of the relief sought, or on the value of the property in
ignored the clear letter of the law when he concluded that the filing fee be computed based litigation. The filing fee for requests for extrajudicial foreclosure of mortgage is based on the
on the total sum claimed or the stated value of the property in litigation. 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
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as basis property.15 The aforecited rules evidently have no application to petitioners' complaint.
for the computation of the filing fee of over P472 Million.  The provision states:
Petitioners rely on Section 7(b), particularly the proviso on actions where the value of the
SEC. 7. Clerk of Regional Trial Court.- subject matter cannot be estimated. The provision reads in full:

(a) For filing an action or a permissive counterclaim or money claim against SEC. 7. Clerk of Regional Trial Court.-
an estate not based on judgment, or for filing with leave of court a third-
 (b) For filing 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
1.          Actions where the value 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
of the subject matter
down to the last word in nearly a century. Section 48 states:
cannot be estimated             ---           P 600.00
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:
2.          Special civil actions except
(a) In case of a judgment upon a specific thing, the judgment is conclusive
judicial foreclosure which upon the title to the thing;

shall be governed by (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
paragraph (a) above          ---           P 600.00 a subsequent title;

3.          All other actions not 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
involving property           ---           P 600.00 fact.

In a real action, the assessed value of the property, or if there is none, the estimated value, There is an evident distinction between a foreign judgment in an action in rem and one in
thereof shall be alleged by the claimant and shall be the basis in computing the fees. personam. For an action in 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
It is worth noting that the provision also provides that in real actions, the assessed value or conclusive, of a right as between the parties and their successors in interest by a subsequent
estimated value of the property shall be alleged by the claimant and shall be the basis in title.21 However, in both cases, the foreign judgment is susceptible to impeachment in our
computing the fees. Yet again, this provision does not apply in the case at bar. A real action local courts on the grounds of want of jurisdiction or notice to the party,22 collusion, fraud,23 or
is one where the plaintiff seeks the recovery of real property or an action affecting title to or clear mistake of law or fact.24 Thus, the party aggrieved by the foreign judgment is entitled to
recovery of possession of real property. 16 Neither the complaint nor the award of damages defend against the enforcement of such decision in the local forum. It is essential that there
adjudicated by the US District Court involves any real property of the Marcos Estate. should be an opportunity to challenge the foreign judgment, in order for the court in this
jurisdiction to properly determine its efficacy.25
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 It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign
involved pertains to a claim against an estate based on judgment. What provision, if any, then judgment26 , even if such judgment has conclusive effect as in the case of in rem actions, if
should apply in determining the filing fees for an action to enforce a foreign judgment? 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
To resolve this question, a proper understanding is required on the nature and effects of a
validity.28
foreign judgment in this jurisdiction.
The rules are silent as to what initiatory procedure must be undertaken in order to enforce a
The rules of comity, utility and convenience of nations have established a usage among
foreign judgment in the Philippines. But there is no question that the filing of a civil complaint
civilized states by which final judgments of foreign courts of competent jurisdiction are
is an appropriate measure for such purpose. A civil action is one by which a party sues
reciprocally respected and rendered efficacious under certain conditions that may vary in
another for the enforcement or protection of a right, 29 and clearly an action to enforce a
different countries.17 This principle was prominently affirmed in the leading American case
foreign judgment is in essence a vindication of a right prescinding either from a "conclusive
of Hilton v. Guyot18 and expressly recognized in our jurisprudence beginning with Ingenholl v.
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 indeed, it can even be easily determined. The Court is not minded to distinguish
brought before the regular courts.31 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
There are distinctions, nuanced but discernible, between the cause of action arising from the plaintiff suing on promissory note for P1 million cannot be allowed to pay only P400
enforcement of a foreign judgment, and that arising from the facts or allegations that filing fees (sic), on the reasoning that the subject matter of his suit is not the P1
occasioned the foreign judgment.  They may pertain to the same set of facts, but there is an million, but the enforcement of the promissory note, and that the value of such
essential difference in the right-duty correlatives that are sought to be vindicated. For "enforcement" cannot be estimated.35
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 jurisprudential standard in gauging whether the subject matter of an action is capable of
the other hand, in a complaint for the enforcement of a foreign judgment awarding damages pecuniary estimation is well-entrenched. The Marcos Estate cites Singsong v. Isabela
from the same tortfeasor, for the violation of the same right through the same manner of Sawmill and Raymundo v. Court of Appeals, which ruled:
action, the cause of action derives not from the tortious act but from the foreign judgment
itself. [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
More importantly, the matters for proof are different. Using the above example, the nature of the principal action or remedy sought.  If it is primarily for the recovery of a
complainant will have to establish before the court the tortious act or omission committed by sum of money, the claim is considered capable of pecuniary estimation, and whether
the tortfeasor, who in turn is allowed to rebut these factual allegations or prove extenuating jurisdiction is in the municipal courts or in the courts of first instance would depend on
circumstances.  Extensive litigation is thus conducted on the facts, and from there the right to the amount of the claim.  However, where the basic issue is something other than the
and amount of damages are assessed. On the other hand, in an action to enforce a foreign right to recover a sum of money, where the money claim is purely incidental to, or a
judgment, the matter left for proof is the foreign judgment itself, and not the facts from which it consequence of, the principal relief sought, this Court has considered such actions as
prescinds. 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).
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 On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v.
fact or law.  The limitations on review is in consonance with a strong and pervasive policy in Scandia,36 from which the rule in Singsong and Raymundo actually derives, but which
all legal systems to limit repetitive litigation on claims and issues. 32 Otherwise known as the incorporates this additional nuance omitted in the latter cases:
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 xxx However, where the basic issue is something other than the right to recover a
increased by never-ending litigation of the same disputes, and – in a larger sense – to sum of money, where the money claim is purely incidental to, or a consequence of,
promote what Lord Coke in the Ferrer's Case of 1599 stated to be the goal of all law: "rest the principal relief sought, like in suits to have the defendant perform his part of
and quietness."33 If every judgment of a foreign court were reviewable on the merits, the the contract (specific performance) and in actions for support, or for annulment
plaintiff would be forced back on his/her original cause of action, rendering immaterial the of judgment or to foreclose a mortgage, this Court has considered such actions as
previously concluded litigation.34 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 appreciate this distinction, and rely upon it to support the proposition that the
subject matter of the complaintthe enforcement of a foreign judgmentis incapable of Petitioners go on to add that among the actions the Court has recognized as being incapable
pecuniary estimation. Admittedly the proposition, as it applies in this case, is counter-intuitive, of pecuniary estimation include legality of conveyances and money deposits, 38 validity of a
and thus deserves strict scrutiny. For in all practical intents and purposes, the matter at hand mortgage,39 the right to support,40 validity of documents,41 rescission of contracts,42 specific
is capable of pecuniary estimation, down to the last cent. In the assailed Order,  the performance,43 and validity or annulment of judgments. 44 It is urged that an action for
respondent judge pounced upon this point without equivocation: enforcement of a foreign judgment belongs to the same class.

The Rules use the term "where the value of the subject matter cannot be estimated." This is an intriguing argument, but ultimately it is self-evident that while the subject matter of
The subject matter of the present case is the judgment rendered by the foreign court the action is undoubtedly the enforcement of a foreign judgment, the effect of a providential
ordering defendant to pay plaintiffs definite sums of money, as and for compensatory award would be the adjudication of a sum of money. Perhaps in theory, such an action is
damages. The Court finds that the value of the foreign judgment can be estimated; 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 pointed out, the subject matter of an action to enforce a foreign judgment is the foreign
will necessarily result in the award of a definite sum of money. judgment itself, and the cause of action arising from the adjudication of such judgment.

But before we insist upon this conclusion past beyond the point of reckoning, we must An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement
examine its possible ramifications. Petitioners raise the point that a declaration that an action of a foreign judgment, even if capable of pecuniary estimation, would fall under the
for enforcement of foreign judgment may be capable of pecuniary estimation might lead to an jurisdiction of the Regional Trial Courts, thus negating the fears of the petitioners. Indeed, an
instance wherein a first level court such as the Municipal Trial Court would have jurisdiction to examination of the provision indicates that it can be relied upon as jurisdictional basis with
enforce a foreign judgment. But under the statute defining the jurisdiction of first level courts, respect to actions for enforcement of foreign judgments, provided that no other court or office
B.P. 129, such courts are not vested with jurisdiction over actions for the enforcement of is vested jurisdiction over such complaint:
foreign judgments.
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and original jurisdiction:
Municipal Circuit Trial Courts in civil cases. — Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall exercise: xxx

(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate (6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or
and intestate, including the grant of provisional remedies in proper cases, where the body exercising jurisdiction or any court, tribunal, person or body exercising judicial
value of the personal property, estate, or amount of the demand does not exceed or quasi-judicial functions.
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 Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US
thousand pesos (P200,000.00) exclusive of interest damages of whatever kind, District Court judgment is one capable of pecuniary estimation. But at the same time, it is also
attorney's fees, litigation expenses, and costs, the amount of which must be an action based on judgment against an estate, thus placing it beyond the ambit of Section
specifically alleged: Provided, That  where there are several claims or causes of 7(a) of Rule 141. What provision then governs the proper computation of the filing fees over
action between the same or different parties, embodied in the same complaint, the the instant complaint? For this case and other similarly situated instances, we find that it is
amount of the demand shall be the totality of the claims in all the causes of action, covered by Section 7(b)(3), involving as it does, "other actions not involving property."
irrespective of whether the causes of action arose out of the same or different
transactions;
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
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful actions not involving property." The petitioners thus paid the correct amount of filing fees, and
detainer: Provided, That when, in such cases, the defendant raises the question of it was a grave abuse of discretion for respondent judge to have applied instead a clearly
ownership in his pleadings and the question of possession cannot be resolved inapplicable rule and dismissed the complaint.
without deciding the issue of ownership, the issue of ownership shall be resolved only
to determine the issue of possession.
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
(3) Exclusive original jurisdiction in all civil actions which involve title to, or procedural rule.  We earlier adverted to the the internationally recognized policy of
possession of, real property, or any interest therein where the assessed value of the preclusion,46 as well as the principles of comity, utility and convenience of nations 47 as the
property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, basis for the evolution of the rule calling for the recognition and enforcement of foreign
in civil actions in Metro Manila, where such assessed value does not exceed Fifty judgments. The US Supreme Court in Hilton v. Guyot48 relied heavily on the concept of
thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, comity, as especially derived from the landmark treatise of Justice Story in his Commentaries
attorney's fees, litigation expenses and costs: Provided, That value of such property on the Conflict of Laws of 1834. 49 Yet the notion of "comity" has since been criticized as one
shall be determined by the assessed value of the adjacent lots. 45 "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
Section 33 of B.P. 129 refers to instances wherein the cause of action or subject matter doctrine of obligation.52
pertains to an assertion of rights and interests over property or a sum of money. But as earlier
There have been attempts to codify through treaties or multilateral agreements the standards constitute "a clear mistake of law or fact."61 And finally, it has been recognized that "public
for the recognition and enforcement of foreign judgments, but these have not borne fruition. policy" as a defense to the recognition of judgments serves as an umbrella for a variety of
The members of the European Common Market accede to the Judgments concerns in international practice which may lead to a denial of recognition.62
Convention, signed in 1978, which eliminates as to participating countries all of such
obstacles to recognition such as reciprocity and révision au fond.53 The most ambitious of The viability of the public policy defense against the enforcement of a foreign judgment has
these attempts is the Convention on the Recognition and Enforcement of Foreign Judgments been recognized in this jurisdiction.63 This defense allows for the application of local
in Civil and Commercial Matters, prepared in 1966 by the Hague Conference of International standards in reviewing the foreign judgment, especially when such judgment creates only a
Law.54 While it has not received the ratifications needed to have it take effect, 55 it is recognized presumptive right, as it does in cases wherein the judgment is against a person.64 The
as representing current scholarly thought on the topic. 56 Neither the Philippines nor the United defense is also recognized within the international sphere, as many civil law nations adhere
States are signatories to the Convention. 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
Yet even if there is no unanimity as to the applicable theory behind the recognition and the case.65 The public policy defense can safeguard against possible abuses to the easy
enforcement of foreign judgments or a universal treaty rendering it obligatory force, there is resort to offshore litigation if it can be demonstrated that the original claim is noxious to our
consensus that the viability of such recognition and enforcement is essential. Steiner and constitutional values.
Vagts note:
There is no obligatory rule derived from treaties or conventions that requires the Philippines
.  .  . The notion of unconnected bodies of national law on private international law, to recognize foreign judgments, or allow a procedure for the enforcement thereof.  However,
each following a quite separate path, is not one conducive to the growth of a generally accepted principles of international law, by virtue of the incorporation clause of the
transnational community encouraging travel and commerce among its members. Constitution, form part of the laws of the land even if they do not derive from treaty
There is a contemporary resurgence of writing stressing the identity or similarity of obligations.66 The classical formulation in international law sees those customary rules
the values that systems of public and private international law seek to further – a accepted as binding result from the combination two elements: the established, widespread,
community interest in common, or at least reasonable, rules on these matters in and consistent practice on the part of States; and a psychological element known as
national legal systems. And such generic principles as reciprocity play an important the opinion juris sive necessitates (opinion as to law or necessity). Implicit in the latter
role in both fields.57 element is a belief that the practice in question is rendered obligatory by the existence of a
rule of law requiring it.67
Salonga, whose treatise on private international law is of worldwide renown, points out:
While the definite conceptual parameters of the recognition and enforcement of foreign
Whatever be the theory as to the basis for recognizing foreign judgments, there can judgments have not been authoritatively established, the Court can assert with certainty that
be little dispute that the end is to protect the reasonable expectations and demands such an undertaking is among those generally accepted principles of international law.68 As
of the parties. Where the parties have submitted a matter for adjudication in the court earlier demonstrated, there is a widespread practice among states accepting in principle the
of one state, and proceedings there are not tainted with irregularity, they may fairly be need for such recognition and enforcement, albeit subject to limitations of varying degrees.
expected to submit, within the state or elsewhere, to the enforcement of the judgment The fact that there is no binding universal treaty governing the practice is not indicative of a
issued by the court.58 widespread rejection of the principle, but only a disagreement as to the imposable specific
rules governing the procedure for recognition and enforcement.
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 Aside from the widespread practice, it is indubitable that the procedure for recognition and
in Section 48, Rule 39 have remain unchanged since the time they were adapted in this enforcement is embodied in the rules of law, whether statutory or jurisprudential, adopted in
jurisdiction from long standing American rules. The requisites and exceptions as delineated various foreign jurisdictions. In the Philippines, this is evidenced primarily by Section 48, Rule
under Section 48 are but a restatement of generally accepted principles of international law. 39 of the Rules of Court which has existed in its current form since the early 1900s. Certainly,
Section 98 of The Restatement, Second, Conflict of Laws, states that "a valid judgment the Philippine legal system has long ago accepted into its jurisprudence and procedural rules
rendered in a foreign nation after a fair trial in a contested proceeding will be recognized in the viability of an action for enforcement of foreign judgment, as well as the requisites for
the United States," and on its face, the term "valid" brings into play requirements such notions such valid enforcement, as derived from internationally accepted doctrines.  Again, there may
as valid jurisdiction over the subject matter and parties.59 Similarly, the notion that fraud or be distinctions as to the rules adopted by each particular state, 69 but they all prescind from the
collusion may preclude the enforcement of a foreign judgment finds affirmation with foreign premise that there is a rule of law obliging states to allow for, however generally, the
jurisprudence and commentators,60 as well as the doctrine that the foreign judgment must not 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 by the courts if the controversy can be settled on other grounds 73 or unless the resolution
in Section 48, Rule 39 derive their efficacy not merely from the procedural rule, but by virtue thereof is indispensable for the determination of the case. 74
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 One more word.  It bears noting that Section 48, Rule 39 acknowledges that the Final
Supreme Court is obliged, as are all State components, to obey the laws of the land, Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners against
including generally accepted principles of international law which form part thereof, such as the Marcos Estate. Moreover, the Marcos Estate is not precluded to present evidence, if any,
those ensuring the qualified recognition and enforcement of foreign judgments. 71 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
Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges that verdict on the enforceability of the Final Judgment before the courts under the jurisdiction of
there is a general right recognized within our body of laws, and affirmed by the Constitution, the Philippines, or for that matter any other issue which may legitimately be presented before
to seek recognition and enforcement of foreign judgments, as well as a right to defend the trial court.  Such issues are to be litigated before the trial court, but within the confines of
against such enforcement on the grounds of want of jurisdiction, want of notice to the party, the matters for proof as laid down in Section 48, Rule 39. On the other hand, the speedy
collusion, fraud, or clear mistake of law or fact. 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.
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 WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and SET
principles in international law. Indeed, there are grave concerns in conditioning the amount of ASIDE, and a new order REINSTATING Civil Case No. 97-1052 is hereby issued. No costs.
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 SO ORDERED.
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 G.R. No. 182013               December 4, 2009
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 QUASHA ANCHETA PEÑA & NOLASCO LAW OFFICE and LEGEND INTERNATIONAL
absurdities, such as if applied to an award involving real property situated in places such as RESORTS, LIMITED, petitioners,
the United States or Scandinavia where real property values are inexorably high. We cannot vs.
very well require that the filing fee be computed based on the value of the foreign property as THE SPECIAL SIXTH DIVISION of the COURT OF APPEALS, KHOO BOO BOON and the
determined by the standards of the country where it is located. Law Firm of PICAZO BUYCO TAN FIDER & SANTOS, Respondents.

As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it DECISION
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 CHICO-NAZARIO, J.:
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 This is a special civil action for Certiorari under Rule 65 of the 1997 Revised Rules of Civil
purposes of classification under the governing procedural rule, be deemed as subsumed Procedure filed by petitioners Quasha Ancheta Peña and Nolasco Law Office (Quasha Law
under Section 7(b)(3) of Rule 141, i.e., within the class of "all other actions not involving Office) and Legend International Resorts, Limited (LIRL), seeking to reverse and set aside,
property." Thus, only the blanket filing fee of minimal amount is required. on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction, the
Resolution1 dated 22 January 2008 of the Special Sixth Division of the Court of Appeals in
Finally, petitioners also invoke Section 11, Article III of the Constitution, which states that CA-G.R. CV No. 87281, which refused to recognize the Entry of Appearance of petitioner
"[F]ree access to the courts and quasi-judicial bodies and adequate legal assistance shall not Quasha Law Office as the duly authorized counsel of petitioner LIRL in CA-G.R. CV No.
be denied to any person by reason of poverty." Since the provision is among the guarantees 87281.
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 Petitioner Quasha Law Office is the duly authorized counsel of petitioner LIRL in the
preceding discussion, it is not necessary to utilize this provision in order to grant the relief Philippines. Petitioner LIRL is a foreign corporation organized under the laws of Hong Kong
sought by the petitioners. It is axiomatic that the constitutionality of an act will not be resolved and licensed to operate a resort casino hotel in Subic Bay, Philippines, on the basis of the 19
March 1993 Agreement it entered into with Philippine Amusement and Gaming Corporation
(PAGCOR) and Subic Bay Metropolitan Authority (SBMA), which was later amended in July, thereto a copy of the letter dated 10 July 2006 terminating the services of Picazo Law Office
2000. It is doing business in the Philippines through its branch, LIRL-Subic. and engaging the services of petitioner Quasha Law Office.

Private respondent Khoo Boo Boon was the former Chief Executive Officer of LIRL-Subic. In a Resolution6 dated 19 October 2007, the Special Sixth Division of the Court of Appeals
Private respondent Picazo Buyco Tan Fider and Santos Law Office (Picazo Law Office) was refused to recognize the Entry of Appearance of petitioner Quasha Law Office as the new
the former counsel of petitioner LIRL in the Philippines. counsel of petitioner LIRL. The appellate court ratiocinated that a mere photocopy of a letter
dated 10 July 2006, which was sent by one of the appointed liquidators of petitioner LIRL,
The controversy in this case arose from the following facts: informing private respondent Picazo Law Office that its legal services as counsel of LIRL had
been terminated, had no probative value. Further the appointment of petitioner LIRL’s joint
and several liquidators were made pursuant to an Order of the Hong Kong Court. Because it
Petitioner LIRL filed a Complaint for Annulment of Contract, Specific Performance with
was a foreign judgment, our courts could not take judicial notice thereof, as the final orders of
Damages and Application for Preliminary Injunction and Temporary Restraining Order before
foreign tribunals could only be enforced in Philippine courts after appropriate proceedings
the Regional Trial Court (RTC) of Olongapo City, Branch 72, docketed as Civil Case No. 219-
filed therein. Thus, the appellate court concluded that until the alleged Order of the Hong
0-2004, against PAGCOR and SBMA for amending the 19 March 1993 Agreement,
Kong Court had been validated and recognized in an appropriate proceeding before our local
notwithstanding the total absence of any consideration supporting petitioner LIRL’s additional
courts, private respondent Picazo Law Office was recognized as the only counsel entitled to
obligations imposed under the amended Agreement.
represent and file pleadings for and on behalf of petitioner LIRL. 7
On 28 December 2004, the trial court rendered a Decision2 annulling the amendment to the
Petitioners moved for the reconsideration of the aforesaid Resolution, but their Motion was
19 March 1993 Agreement executed between petitioner LIRL, PAGCOR and SBMA, as well
denied in a Resolution8 dated 9 January 2008.
as all the agreements that may have been entered into by PAGCOR pursuant thereto. The
trial court also restrained PAGCOR from enforcing the amendment. It further enjoined
PAGCOR from terminating the Agreement dated 19 March 1993 or from otherwise Petitioners filed a Manifestation with the Special Sixth Division of the Court of Appeals that in
suspending, limiting, reducing or modifying petitioner LIRL’s license to operate the Subic Bay a related case filed before the Special Tenth Division of the appellate court, docketed as CA-
Casinos and from entering into or continuing with any agreement with other entities for the G.R. SP No. 96717, the said Division issued a Decision 9 dated 14 December 2007
operation of other casinos in the Subic Freeport Zone or from any such acts, which would in recognizing petitioner Quasha Law Office as the duly authorized counsel of petitioner LIRL. In
any way reduce or mitigate petitioner LIRL’s right under the aforesaid Agreement. 31awphi1 such Manifestation, petitioner Quasha Law Office attached a copy of the aforesaid 14
December 2007 Decision of the Special Tenth Division of the Court of Appeals.
Resultantly, PAGCOR filed its Notice of Appeal Ad Cautelam before the Special Sixth
Division of the Court of Appeals, and the case was docketed as CA-G.R. CV No. 87281. On 22 January 2008, the Special Sixth Division of the Court of Appeals issued the assailed
Resolution wherein it simply noted petitioners’ aforesaid Manifestation. The appellate court
then pointed out that decisions of a division of the Court of Appeals is not binding on the other
Meanwhile, in relation to petitioner LIRL Companies’ Winding-Up No. 1139 of 2004 filed
divisions, for only decisions of the Supreme Court form part of the legal system from which all
before the Hong Kong Court of First Instance (Hong Kong Court), the said foreign court
other inferior courts must take its bearing. The appellate court even directed the petitioners to
issued Orders dated 9 June 2006 appointing Kelvin Edward Flynn (Flynn) and Cosimo
elevate the matter to this Court to settle who between petitioner Quasha Law Office and
Borrelli (Borrelli) as the joint and several liquidators of petitioner LIRL and granting them the
private respondent Picazo Law Office can legally represent petitioner LIRL in the instant
power to carry on and manage the business of petitioner LIRL, including its business in
case.
Subic, Philippines. Pursuant to the said Orders, Flynn sent a letter4 dated 10 July 2006 to
private respondent Khoo Boo Boon informing him that he had already been terminated from
his position as Chief Executive Officer of LIRL-Subic. On the same date, Flynn also sent a Hence, this Petition.
letter5 to private respondent Picazo Law Office notifying it that its legal services as counsel of
petitioner LIRL had also been terminated. Petitioner LIRL later engaged the legal services of The grounds relied upon by the petitioners for the allowance of this Petition are as follows:
petitioner Quasha Law Office as its new counsel to represent it in all proceedings in the
Philippines. I.

Accordingly, petitioner Quasha Law Office filed its Entry of Appearance as counsel for WHETHER OR NOT THE SPECIAL SIXTH DIVISION OF THE COURT OF APPEALS
petitioner LIRL in CA-G.R. CV No. 87281 pending before the Special Sixth Division of the COMMITTED PATENT GRAVE ABUSE OF DISCRETION, AMOUNTING TO EXCESS OF
Court of Appeals, through a Manifestation and Motion Ex Abudante Cautelam attaching
JURISDICTION, WHEN IT REFUSED TO GIVE DUE DEFERENCE TO A DECISION OF A [PRIVATE RESPONDENT] PICAZO LAW OFFICE AS COUNSEL DERIVES ITS
CO-DIVISION OF THE SAME COURT. AUTHORITY FROM [PRIVATE RESPONDENT] MR. KHOO BOO BOON, THE FORMER
CHIEF [EXECUTIVE] OFFICER OF [PETITIONER] LIRL.
i.
i
THE DECISION OF THE COURT OF APPEALS IN CA-G.R. SP NO. 96717 HAS BECOME
FINAL AND EXECUTORY CONSIDERING THAT THE PETITION FOR REVIEW ON [PRIVATE RESPONDENT] MR. KHOO BOO BOON IS NO LONGER THE CHIEF
CERTIORARI FILED BY [PRIVATE RESPONDENT PICAZO LAW OFFICE] WAS EXECUTIVE OFFICER, HAVING RECOGNIZED THE APPOINTED LIQUIDATORS OF
DISMISSED OUTRIGHT BY THE SECOND DIVISION OF THIS HOROBALE COURT FOR [PETITIONER] LIRL BY VOLUNTARILY YIELDING CONTROL AND MANAGEMENT OF
BEING FILED OUT OF TIME. LIRL-SUBIC BRANCH.

II ii

IN A RELATED CASE WHERE THE ISSUE OF [PETITIONER QUASHA LAW OFFICE’S] COROLLARY TO THE ABOVE, THE AUTHORITY OF [PRIVATE REPSONDENT] PICAZO
AUTHORITY WAS RAISED, THE SEVENTH DIVISION OF THE COURT OF APPEALS LAW [OFFICE] TO REPRESENT [PETITIONER] LIRL HAS BEEN TERMINATED BY THE
SUSTAINED [PETITIONER QUASHA LAW OFFICE’S] STANDING AS THE DULY APPOINTED LIQUIDATORS.10
AUTHORIZED COUNSEL OF [PETITIONER] LIRL.
WON the Orders of the Hong Kong Court appointing liquidators for petitioner LIRL involved
III the enforcement of a foreign judgment. NO

WHETHER OR NOT SECTION 48, RULE 39 OF THE 1997 REVISED RULES OF CIVIL On 16 June 2009, petitioner Quasha Law Office already filed its withdrawal of appearance as
PROCEDURE ON RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENT counsel for petitioner LIRL. Thus, the issue of petitioner Quasha Law Office’s authority or
APPLIES IN THIS CASE. standing as the duly authorized counsel of petitioner LIRL has already become moot and
academic.
i
Even if we are to resolve the issues in the case at bar on their merits, we will nevertheless
SECTION 48, RULE 39 PRESUPPOSES THAT A FOREIGN JUDGMENT, REPRESENTING arrive at the same conclusion.
A CLAIM, IS SOUGHT TO BE ENFORCED AGAINST A SPECIFIC THING OR AGAINST A
PERSON. Basically, the aforesaid grounds are the very arguments of the petitioners. Thus, the issues in
this case may be summed up into: (1) whether the Special Sixth Division of the Court of
ii Appeals acted with grave abuse of discretion in not giving due deference to a Decision of its
co-division, which similarly resolved the issue of proper legal representation of petitioner
LIRL; and (2) whether the Special Sixth Division of the Court of Appeals gravely abused its
COROLLARY TO THE ABOVE, THE ORDERS OF THE HONG KONG COURT DO NOT
discretion in considering that the Orders of the Hong Kong Court appointing liquidators for
ASSERT A CLAIM AGAINST LIRL-SUBIC BRANCH, THE APPOINTMENT OF
petitioner LIRL involved enforcement and recognition of a foreign judgment.
LIQUIDATORS IS A PURELY INTERNAL MATTER BETWEEN A CORPORATION AND A
MERE BRANCH THEREOF.
In CA-G.R. SP No. 96717 entitled "In the Matter of Corporate Rehabilitation of Legend
International Resorts Limited," which was raffled to the Special Tenth Division of the Court of
iii
Appeals, petitioner LIRL’s proper legal representation was raised as one of the issues. In the
said case, petitioner Quasha Law Office’s authority to represent petitioner LIRL was
[PETITIONER] LIRL-SUBIC BRANCH, WHICH [PRIVATE RESPONDENT] MR. KHOO BOO questioned by private respondent Picazo Law Office, petitioner LIRL’s former counsel whose
BOON PURPORTEDLY REPRESENTS, CANNOT ASSAIL THE ORDERS OF THE HONG legal services had been terminated by petitioner LIRL’s appointed liquidators. Private
KONG COURT BY INVOKING A RIGHT INDEPENDENT OF ITS MOTHER OFFICE. respondent Picazo Law Office argued that the Orders of the Hong Kong Court from which the
authority of the liquidators, who engaged the legal services of petitioner Quasha Law Office to
IV
be the counsel of petitioner LIRL, was derived, could not be enforced in this jurisdiction, since Therefore, the Special Sixth Division of the Court of Appeals cannot be faulted for not giving
these foreign orders have not been recognized by Philippine courts. due deference to the said Decision of its co-division, and its actuation cannot be considered
grave abuse of discretion amounting to lack or excess of its jurisdiction.
On 14 December 2007, the said division of the appellate court rendered its Decision resolving
the issue of petitioner LIRL’s proper legal representation in favor of petitioner Quasha Law However, as regards the second issue of whether the Special Sixth Division of the Court of
Office. The said division of the appellate court ratiocinated that private respondent Picazo Appeals gravely abused its discretion in considering that the Orders of the Hong Kong Court
Law Office ceased to be the counsel of petitioner LIRL when it received the 10 July 2006 appointing liquidators for petitioner LIRL involved enforcement and recognition of a foreign
letter of one of the appointed liquidators of LIRL, notifying it that its legal services had been judgment, we hold that the same is already barred by the principle of res judicata—
terminated and that petitioner Quasha Law Office’s legal services were engaged in its stead. conclusiveness of judgment.
Moreover, there is actually no foreign judgment or order that is being enforced in this
jurisdiction because what is involved is the prerogative of petitioner LIRL, through its duly The doctrine of res judicata actually embraces two different concepts: (1) bar by former
authorized representative, which in this case is its appointed liquidators, to terminate and judgment and (b) conclusiveness of judgment.1avvphi1
engage the services of a counsel, which is an internal affair that requires no prior recognition
in a separate action. The right of petitioner LIRL to terminate the authority of its counsel The second concept – conclusiveness of judgment – states that a fact or question, which was
includes the right to cause a change or substitution of counsel at any stage of the in issue in a former suit and was there judicially passed upon and determined by a court of
proceedings. competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to
that action and persons in privity with them are concerned and cannot be again litigated in
The said Decision of the Special Tenth Division of the Court of Appeals was immediately any future action between such parties or their privies in the same court or any other court of
brought by the petitioners to the attention of the Special Sixth Division of the said appellate concurrent jurisdiction on either the same or a different cause of action, while the judgment
court where CA-G.R. CV No. 87281 (the subject of this Petition) was pending. However, the remains unreversed by proper authority. It has been held that in order that a judgment in one
Special Sixth Division of the Court of Appeals merely noted the same and still refused to action can be conclusive as to a particular matter in another action between the same parties
recognize petitioner Quasha Law Office’s entry of appearance. It even advised petitioner or their privies, it is essential that the issue be identical. If a particular point or question is
Quasha Law Office to elevate to this Court the issue of who between petitioner Quasha Law in issue in the second action, and the judgment will depend on the determination of that
Office and private respondent Picazo Law Office can legally represent petitioner LIRL in the particular point or question, a former judgment between the same parties or their privies will
instant case. be final and conclusive in the second if that same point or question was in issue and
adjudicated in the first suit. Identity of cause of action is not required, but merely identity
Thus, petitioners ascribe grave abuse of discretion on the part of the Special Sixth Division of of issues.13
the Court of Appeals in not giving due deference to the decision of its co-division.
Legarda v. Savellano14 elucidates the rationale for respecting the conclusiveness of
Grave abuse of discretion means a capricious and whimsical exercise of judgment as is judgment, thus –
equivalent to lack of jurisdiction. Mere abuse of discretion is not enough; it must be so grave
as when the power is exercised in an arbitrary or despotic manner by reason of passion or As we have repeatedly enunciated, public policy and sound practice enshrine the
personal hostility, and must be so patent and so gross as to amount to an evasion of a fundamental principle upon which the doctrine of res judicata rests that parties ought not to
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in be permitted to litigate the same issues more than once. It is a general rule common to all
contemplation of law.11 civilized system of jurisprudence, that the solemn and deliberate sentence of the law,
pronounced by its appointed organs, upon a disputed fact or a state of facts, should be
In the case at bar, this Court holds that there was no grave abuse of discretion amounting to regarded as a final and conclusive determination of the question litigated, and should forever
lack or excess of jurisdiction committed by the Special Sixth Division of the Court of Appeals set the controversy at rest. Indeed, it has been well said that this maxim is more than a mere
in not giving due deference to the decision of its co-division. As correctly pointed out by the rule of law; more even than an important principle of public policy; and that it is not too much
Special Sixth Division of the Court of Appeals, the decision of its co-division is not binding on to say that it is a fundamental concept in the organization of every jural sytem. Public policy
its other division. Further, it must be stressed that judicial decisions that form part of our legal and sound practice demand that, at the risk of occasional errors, judgments of courts should
system are only the decisions of the Supreme Court. 12 Moreover, at the time petitioners made become final at some definite date fixed by law. The very object for which courts were
the aforesaid Manifestation, the Decision dated 14 December 2007 in CA-G.R. SP No. 96717 constituted was to put an end to controversies.
of the Special Tenth Division was still on appeal before this Court.
It must be stressed that the Decision dated 14 December 2007 in CA-G.R. SP No. 96717 LIRL’s prerogative, through its appointed liquidators, which was an internal affair that required
of the Special Tenth Division of the Court of Appeals was appealed to this Court via a no prior recognition in a separate action. Therefore, this Court can no longer pass upon the
Petition for Review on Certiorari under Rule 45 and was docketed as G.R No. 184463. said issue.
The said Decision resolved the issue of petitioner LIRL’s proper legal representation in favor
of petitioner Quasha Law Office. It also ruled that there was no enforcement of a foreign WHEREFORE, premises considered, the instant Petition for Certiorari, is hereby
judgment when one of the appointed liquidators terminated the legal services of private DISMISSED. No costs.
respondent Picazo Law Office and engaged in its stead petitioner Quasha Law Office to be
the duly authorized counsel of petitioner LIRL. What is involved is the prerogative of petitioner SO ORDERED.
LIRL, through its duly authorized representative -- which, in this case, is its appointed
liquidators -- to terminate and engage the services of a counsel, which is an internal affair that
requires no prior recognition in a separate action. 15 On 20 October 2008, this Court issued G.R. No. L-57338               July 23, 1987
a Resolution denying the said Petition for Review for being filed out of time and for
failure to sufficiently show any reversible error. Thus, the 14 December 2007 Decision of WILLIAM B. BORTHWICK, petitioner,
the Special Tenth Division of the Court of Appeals in CA-G.R. SP No. 96717 became final vs.
and executory. HON. FLORELIANA CASTRO-BARTOLOME, Presiding Judge, Br. XV, Makati, of the
Court of First Instance of Rizal; JOSEPH E. SCALLON, and JEWELL C.
In a related case filed before the Seventh Division of the Court of Appeals docketed as SCALLON, respondents.
CA-G.R. SP No. 98893,16 petitioner LIRL’s proper legal representation and Quasha Law
Office’s entry of appearance as tantamount to an enforcement of a foreign judgment, were NARVASA, J.:
also raised. On 26 February 2009, the said division of the Court of Appeals rendered a
Decision stating that no enforcement of a foreign judgment was involved in the said case. It By action commenced in the Circuit Court of the First Circuit, State of Hawaii, U.S.A.,1 Joseph
further decreed that petitioner LIRL’s appointed liquidators had been duly authorized to E. Scallon sought to Compel payment by William B. Borthwick on four (4) promissory
manage petitioner LIRL. The authority of the said liquidators extended to all of petitioner notes2 in the amounts of $32,408.95, $29,584.94, $2,832.59 and $40,000.00, plus stipulated
LIRL’s branches, wherever situated, the branch in the Philippines included. Pursuant to 9 interest. Scallon's complaint alleged, inter alia, that Borthwick, an American citizen living in
June 2006 Orders of the Hong Kong Court, the appointed liquidators were given the power to, the Philippines, owned real property interests in Hawaii where he last resided and transacted
among other powers, "bring or defend any action or other legal proceeding in the name and business therein; that business dealings which transpired in Honolulu, Hawaii had given rise
on behalf of the company or themselves in Hong Kong, the Republic of the Philippines or to the promissory notes sued upon, and Borthwick had failed to pay the sums thereunder
attorneys in the Republic of the Philippines or elsewhere and appoint a solicitor in Hong Kong owing upon maturity and despite demand.3 Attached to the complaint were the promissory
and lawyers or assist the Liquidators in the performance of their duties generally." No cogent notes, which although uniformly specifying the city of Palos Verdes, Los Angeles, California
reason existed to prevent petitioner LIRL from exercising its prerogative in terminating the as the place of payment, also provided that —
services of one counsel and in engaging the services of another. Such act was purely an
internal affair of the corporation, which did not require prior recognition in a separate action. 17 in the event that payment *** shall not have been made in full on or before the
maturity date *** at *** (such) place ***, payee may select, at his option, Manila,
The aforesaid Decision of the Seventh Division of the Court of Appeals was appealed to Philippines, or Honolulu, Hawaii as additional places for payment *** and *** any
this Court via a Petition for Review on Certiorari under Rule 45 of the 1997 Revised court in any of said places having jurisdiction over the subject matter shall be a
Rules of Civil Procedure, docketed as G.R. No. 189265. On 12 October 2009, this Court proper Court for the trial of any action brought to enforce payment of this note and
rendered a Resolution denying the Petition for late filing, for failure to serve a copy of the law of the place in which said action is brought shall apply. 4
the Petition to the Court of Appeals, for lack of the required number of plain copies of
the Petition, and for failure to sufficiently show any reversible error. Thus, the Decision Borthwick being then in Monterey, California, summons5 was served upon him personally in
dated 26 February 2009 of the Seventh Division of the Court of Appeals in CA-G.R. SP No. that place, pursuant to Hawaiian law allowing service of process on a person outside the
98893 became final and executory. territorial confines of the State, if he had otherwise submitted himself to the jurisdiction of its
courts as to causes of action arising from, among others, the act of transacting any business
It has already been settled in the aforesaid two Decisions that the Orders of the Hong Kong within Hawaii6 — alleged to consist as to Borthwick in the negotiation and dealings regarding
Court appointing liquidators for petitioner LIRL did not involve the enforcement of a foreign the promissory notes. Borthwick ignored the summons.1avvphi1 Default was entered against
judgment. The act of terminating the legal services of private respondent Picazo Law Office him, and in due course a default judgment was rendered as follows:
and engaging in its place petitioner Quasha Law Office was a mere exercise of petitioner
DEFAULT JUDGMENT However, Scallon's attempts to have the judgment executed in Hawaii and California failed,
because no assets of Borthwick could be found in those states. 8 Scallon and his wife, Jewell,
That Defendant WILLIAM B. BORTHWICK having fatted to plead or otherwise defend in the then came to the Philippines and on March 15, 1980 brought suit against Borthwick in the
above-entitled action and his default having been duly entered herein; Court of First Instance of Makati,9 seeking enforcement of the default judgment of the Hawaii
Court and asserting two other alternative causes of action. 10
Now, upon the application of the Plaintiff JOSEPH E. SCALLON and upon the affidavit that
the Defendant WILLIAM B. BORTHWICK is indebted to said Plaintiff in the sum of The sheriff's initial efforts to serve summons on Borthwick personally at his address at 861
$104,817.48. Richmond St., Greenhills, Mandaluyong, Metro Manila having been unsuccessful —
Borthwick was "always out on official business" — the sheriff effected substituted service by
leaving a copy of the summons and the complaint with Borthwick's "house caretaker," a man
IT IS HEREBY ORDERED, ADJUDGED, and decreed that Plaintiff JOSEPH E. SCALLON
named Fred Daniel.11
recover from Defendant WILLIAM B. BORTHWICK the sum of $104,817.48 together with

Borthwick filed no answer to the Scallons' complaint. He was declared in default. After due
(1) The transaction of any business within the State;
proceedings judgment by default was rendered against him, the dispositive portion of which
reads:
x x x           x x x          x x x
WHEREFORE, judgment is hereby rendered as follows:
(3) The ownership, use or possession of any real estate situated in this State;
1. The decision of the Court of Hawaii in Civil Case No. 56660 reading:
x x x           x x x          x x x
IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Plaintiff
(b) Service of process upon any person who is subject to the jurisprudence of the JOSEPH E. SCALLON recover from Defendant WILLIAM B. BORTHWICK
courts of this State, as provided in this section, may be made as provided by sections the sum of $104,817.48 together with interest in the sum of $41,807.93, costs
634-36, if he cannot be found in the State, with the same force and effect as though of Court in the sum of $37.00 and attorney's fees in the sum of $4,290.64 for
summons had been personally served within this State. a total sum of $150,53.05.

[ 634-36] Manner of service under sections 634-33 to 35. may be, as it is hereby ordered, enforced in the Philippines.

When service of summons is provided for by sections 634-33, 634-34, or 634-35, 2. The second alternative cause of action in the event that the satisfaction of the said
service shall be made by leaving a certified copy thereof with the director of judgment becomes impossible, the rescission of the agreement (Exh. L) of the parties
regulatory agencies or his deputy, *** provided that notice of the service and a is hereby granted. Defendant Borthwick is hereby ordered:
certified copy of the summons are served upon the defendant personally by any
person authorized to serve process in the place which he may be found or appointed
(a) To return and deliver to plaintiffs Joseph and Jewell Scallon their 800
by the court for that purpose, or sent by certified or registered mail ***. The service
shares of stock of Manila Memorial Park Cemetery, Inc. and 180 shares of
shall be deemed complete upon delivery of the required papers to the defendant
stock of Trans-Pacific Development Management Corporation, together with
outside the State, personally or by mail as provided; Rollo, pp. 143-144 interest in the
any and/or all stock dividends, cash dividends and similar corporate
sum of $41,807.93, costs of Court in the sum of $37.00 and attorney's fees in the
distributions accruing to said shares of stock from and after December 3,
sum of $4,290.64 for a total sum of $150,953.05.
1973 (the date of the Agreement, Exh. L);
DATED: Honolulu, Hawaii, APR. 30, 1987.
(b) In the event that such shares cannot be returned and delivered, to pay to
plaintiff Scallon the value of the same from the execution of the agreement,
(Sgd.) Exh. L, together with any increase in value from the said date to the finality of
V. CHING this judgment.

Clerk of the above-entitled Court 7

 SO ORDERED. 12 a want of jurisdiction" of the issuing authority, under Rule 39 of the Rules of Court. 22 In the
case at bar, the jurisdiction of the Circuit Court of Hawaii hinged entirely on the existence of
Again, it was with Fred Daniel, Identifying himself as Borthwick's "houseboy," that a copy of either of two facts in accordance with its State laws, i.e., either Borthwick owned real property
the decision was left.13 in Hawaii, or the promissory notes sued upon resulted from his business transactions therein.
Scallon's complaint clearly alleged both facts. Borthwick was accorded opportunity to answer
the complaint and impugn those facts, but he failed to appear and was in consequence
No response from Borthwick was forthcoming until after the Court subsequently amended its
declared in default. There thus exists no evidence in the record of the Hawaii case upon
judgment so as to make the sums due under the Hawaii Court decision payable in their
which to lay a conclusion of lack of jurisdiction, as Borthwick now urges.
equivalent in Philippine currency. 14 Notice of this amendatory order was somehow personally
accepted by Borthwick at this time. Borthwick then moved for a new trial, claiming that it was
by accident, mistake and excusable negligence that his "off and on itinerant gardener," The opportunity to negate the foreign court's competence by proving the non-existence of
Daniel, failed to transmit the summons to him, which omission consequently prevented said jurisdictional facts established in the original action, was again afforded to Borthwick in
Borthwick from knowing of the judicial proceedings against him. Alleging too that "the the Court of First Instance of Makati, where enforcement of the Hawaii judgment was sought.
promissory notes did not arise from business dealings in Hawaii," nor "did (he) own real This time it was the summons of the domestic court which Borthwick chose to ignore, but with
estate" therein,15 Borthwick contended that the judgment sought to be enforced was invalid for the same result: he was declared in default. And in the default judgment subsequently
want of jurisdiction of the Hawaii Court over the cause of action and over his person. promulgated, the Court a quo decreed enforcement of the judgment affirming among others
the jurisdictional facts, that Borthwick owned real property in Hawaii and transacted business
therein.
The motion for new trial was denied by the Trial Court upon the factual finding that "Fred
Daniel is a responsible person" "of suitable age and discretion" "resident of the address *** (of
the) defendant" on whom substituted service of summons had been duly made. 16 As to In the light of these antecedents, it is plain that what Borthwick seeks in essence is one more
Borthwick's attack on the validity of the foreign judgment, the Trial Court ruled that "under the opportunity, a third, to challenge the jurisdiction of the Hawaii Court and the merits of the
** (Hawaii Revised Statute) cited by the defendant the Hawaii Court has jurisdiction" because cause of action which that Court had adjudged to have been established against him. This he
the factual premises upon which the exercise of such jurisdiction was based "had not been may obtain only if he succeed in showing that the declaration of his default was incorrect. He
refuted by the defendant" although he "appears to be a lawyer, and the summons in the has unfortunately not been able to do that; hence, the verdict must go against him.
Hawaii case was served personally on him." 17 Finally, the Trial Court disposed of Borthwick's
other defenses18 saying that the present action "is (for) the enforcement of a foreign It is not for this Court to disturb the express finding of the Court of First Instance that Daniel
judgment" where the validity of his defenses to the original action is immaterial. 19 Borthwick was Borthwick's resident domestic houseboy, and of sufficient age and discretion to accept
proceeded directly to this Court and filed a petition for review, 20 raising issues of law, framed substituted service of summons for Borthwick. Under Rule 42 of the Rules of Court, a party
as follows: appealling from the Courts of First Instance (now the Regional Trial Courts) to the Supreme
Court may "raise only questions of law (and) no other question **," 23 and is thus precluded
1. Is a foreign judgment against a person rendered without jurisdiction over the cause from impugning the factual findings of the trial court, being deemed to have admitted the
of action and without proper summons to the defendant enforceable in the correctness of such findings24 and waived his right to open them to question.25
Philippines?
In any case, a review of the records shows that the Trial Court was correct in refusing to
2. Has the respondent Judge acquired jurisdiction over the person of defendant when believe Borthwick's representation that "Daniel gardens at the residence of Borthwick, then
summons was served on an itinerant gardener who did not reside in defendant's goes home to La Union after gardening itinerantly." As said Court observed, that situation is
house? "ridiculous," it being I "queer and hardly coincidental why on all papers served on the
defendant, it was Fred Daniel who signed and acknowledged receipt. " 26
3. Where a motion for new trial was filed on time, duly supported with affidavits to
prove the grounds relied upon, should not the Court grant the same? 21 There was therefore no error committed by the Trial Court when it denied Borthwick's motion
to lift the order of default (which is what the motion for new trial actually is) because Borthwick
had failed to establish any proper ground therefor.
WON the Hawaiian court judgment may be enforced in PH court. YES
WHEREFORE, the petition for review is denied, with costs against petitioner.
It is true that a foreign judgment against a person is merely "presumptive evidence of a right
SO ORDERED.
as between the parties," and rejection thereof may be justified, among others, by "evidence of
85 L.Ed. 1477 question whether section 480 of the New York Civil Practice Act is applicable to an action in
the federal court in Delaware. 312 U.S. 674, 61 S.Ct. 734, 85 L.Ed. —-.
KLAXON CO.
v. 3
STENTOR ELECTRIC MFG. CO., Inc. The Circuit Court of Appeals was of the view that under New York law the right to interest
before verdict under section 480 went to the substance of the obligation, and that proper
No. 741. construction of the contract in suit fixed New York as the place of performance. It then
Argued May 1, 2, 1941. concluded that section 480 was applicable to the case because 'it is clear by what we think is
undoubtedly the better view of the law that the rules for ascertaining the measure of damages
Decided June 2, 1941. are not a matter of procedure at all, but are matters of substance which should be settled by
reference to the law of the appropriate state according to the type of case being tried in the
Messrs. John Thomas Smith, of New York City, and James D. Carpenter, Jr., of Jersey City, forum. The measure of damages for breach of a contract is determined by the law of the
N.J., for petitioner. place of performance; Restatement, Conflict of Laws § 413.' The court referred also to section
[Argument of Counsel from pages 488-489 intentionally omitted] 418 of the Restatement, which makes interest part of the damages to be determined by the
law of the place of performance. Application of the New York statute apparently followed from
Mr. Murray C. Bernays, of New York City, for respondent. the court's independent determination of the 'better view' without regard to Delaware law, for
no Delaware decision or statute was cited or discussed.
[Argument of Counsel from Pages 490-493 intentionally omitted]
4
Mr. Justice REED delivered the opinion of the Court. We are of opinion that the prohibition declared in Erie Railroad v. T mpkins, 304 U.S.
1 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, against such independent determinations
The principal question in this case is whether in diversity cases the federal courts must follow by the federal courts extends to the field of conflict of laws. The conflict of laws rules to be
conflict of laws rules prevailing in the states in which they sit. We left this open in Ruhlin v. applied by the federal court in Delaware must conform to those prevailing in Delaware's state
New York Life Insurance Company, 304 U.S. 202, 208, note 2, 58 S.Ct. 860, 862, 82 L.Ed. courts.2 Otherwise the accident of diversity of citizenship would constantly disturb equal
1290. The frequent recurrence of the problem, as well as the conflict of approach to the administration of justice in coordinate state and federal courts sitting side by side. See Erie
problem between the Third Circuit's opinion here and that of the First Circuit in Sampson v. Railroad v. Tompkins, supra, 304 U.S. at 74—77, 58 S.Ct. at 820—822, 82 L.Ed. 1188, 114
Channell, 110 F.2d 754, 759—762, 128 A.L.R. 394, led us to grant certiorari. A.L.R. 1487. Any other ruling would do violence to the principle of uniformity within a state
upon which the Tompkins decision is based. Whatever lack of uniformity this may produce
2 between federal courts in different states is attributable to our federal system, which leaves to
In 1918 respondent, a New York corporation, transferred its entire business to petitioner, a a state, within the limits permitted by the Constitution, the right to pursue local policies
Delaware corporation. Petitioner contracted to use its best efforts to further the manufacture diverging from those of its neighbors. It is not for the federal courts to thwart such local
and sale of certain patented devices covered by the agreement, and respondent was to have policies by enforcing an independent 'general law' of conflict of laws. Subject only to review
a share of petitioner's profits. The agreement was executed in New York, the assets were by this Court on any federal question that may arise, Delaware is free to determine whether a
transferred there, and petitioner began performance there although later it moved its given matter is to be governed by the law of the forum or some other law . Cf. Milwaukee
operations to other states. Respondent was voluntarily dissolved under New York law in County v. White Co., 296 U.S. 268, 272, 56 S.Ct. 229, 231, 80 L.Ed. 220. This Court's views
1919. Ten years later it instituted this action in the United States District Court for the District are not the decisive factor in determining the applicable conflicts rule. Cf. Funkhouser v. J. B.
of Delaware, alleging that petitioner had failed to perform its agreement to use its best efforts. Preston Co., 290 U.S. 163, 54 S.Ct. 134, 78 L.Ed. 243. And the proper function of the
Jurisdiction rested on diversity of citizenship. In 1939 respondent recovered a jury verdict of Delaware federal court is to ascertain what the state law is, not what it ought to be.
$100,000, upon which judgment was entered. Respondent then moved to correct the
judgment by adding interest at the rate of six percent from June 1, 1929, the date the action 5
had been brought. The basis of the motion was the provision in section 480 of the New York Besides these general considerations, the traditional treatment of interest in diversity cases
Civil Practice Act directing that in contract actions interest be added to the principal sum brought in the federal courts points to the same conclusion. Section 966 of the Revised
'whether theretofore liquidated or unliquidated.'1 The District Court granted the motion, taking Statutes, 28 U.S.C. § 811, 28 U.S.C.A. § 811, relating to interest on judgments, provides that
the view that the rights of the parties were governed by New York law and that under New it be calculated from the date of judgment at such rate as is allowed by law on judgments
York law the addition of such interest was mandatory. 30 F.Supp. 425, 431. The Circuit Court recovered in the courts of the state in which the court is held. In Massachusetts Benefit
of Appeals affirmed, 3 Cir., 115 F.2d 268, 275, and we granted certiorari, limited to the Association v. Miles, 137 U.S. 689, page 691, 11 S.Ct. 234, page 235, 34 L.Ed. 834, this
Court held that section 966 did not exclude the allowance of interest on verdicts as well as
judgments, and the opinion observed that 'the courts of the state and the federal courts sitting case at bar, Waggaman v. General Finance Co., 116 F.2d 254, 257. See, also, Goodrich,
within the state should be in harmony upon this point'. Conflict of Laws, § 12.
6 CC∅ | Transformed by Public.Resource.Org
Looking then to the Delaware cases, petitioner relies on one group to support his contention
that the Delaware state courts would refuse to apply section 480 of the New York Civil
Practice Act, and respondent on another to prove the contrary. We make no analysis of these
Delaware decisions, but leave this for the Circuit Court of Appeals when the case is United States Court of Appeals,Second Circuit.
remanded.
BRIDGEWAY CORPORATION, Plaintiff-Appellant, v. CITIBANK, doing business as
7
Citicorp N.A., Defendant-Appellee.
Respondent makes the further argument that the judgment must be affirmed because, under
the full faith and credit clause of the Constitution, Art. 4, § 1, the state courts of Delaware
would be obliged to give effect to the New York statute. The argument rests mainly on the Docket No. 99-7504.
decision of this Court in John Hancock Mutual Life Insurance Company v. Yates, 299 U.S.
178, 57 S.Ct. 129, 81 L.Ed. 106, where a New York statute was held such an integral part of Decided: January 03, 2000
a contract of insurance that Georgia was compelled to sustain the contract under the full faith
and credit clause. Here, however, section 480 of the New York Civil Practice Act is in no way Before:  LEVAL, CALABRESI, and KATZMANN, Circuit Judges. Michael J. Calvey, New York
related to the validity of the contract in suit, but merely to an incidental item of damages, City (Thomas G. Amon and Mark J. Lawless, of counsel, on the brief), for Plaintiff-Appellant.
interest, with respect to which courts at the forum have commonly been free to apply their J. Kelley Nevling, Jr., New York City (Petra T. Tasheff, of counsel, on the brief), for
own or some other law as they see fit. Nothi g in the Constitution ensures unlimited Defendant-Appellee.
extraterritorial recognition of all statutes or of any statute under all circumstances. Pacific
Employers Insurance Co. v. Industrial Accident Comm., 306 U.S. 493, 59 S.Ct. 629, 83 L.Ed. Bridgeway Corp. (“Bridgeway”), a Liberian corporation seeking to enforce a final judgment
940; Kryger v. Wilson, 242 U.S. 171, 37 S.Ct. 34, 61 L.Ed. 229. The full faith and credit rendered by the Supreme Court of Liberia, appeals from the district court's decision denying
clause does not go so far as to compel Delaware to apply section 480 if such application Bridgeway's motion for summary judgment and granting, sua sponte, summary judgment in
would interfere with its local policy. favor of the nonmoving party, Citibank.   The district court held, first, that Citibank was not
8 judicially estopped from challenging the fairness of the Liberian judicial system simply
Accordingly, the judgment is reversed and the case remanded to the Circuit Court of Appeals because it had participated voluntarily in litigation in Liberia and, second, that the evidence in
for decision in conformity with the law of Delaware. the record established, as a matter of law, that the Liberian judicial system was not “a system
that ․ provide[s] impartial tribunals or procedures compatible with the requirements of due
9 process.”   Bridgeway Corp. v. Citibank, 45 F.Supp.2d 276, 288 (S.D.N.Y.1999).   We affirm.
Reversed and remanded.
1 I. BACKGROUND
Section 480, New York Civil Practice Act: 'Interest to be included in recovery. Where in any
action, except as provided in section four hundred eighty-a, final judgment is rendered for a A. Overview of Liberian History
sum of money awarded by a verdict, report or decision, interest upon the total amount
awarded, from the time when the verdict was rendered or the report or decision was made to This appeal derives from an action by Bridgeway to enforce a money judgment against
the time of entering judgment, must be computed by the clerk, added to the total amount Citibank entered by the Supreme Court of Liberia on July 28, 1995.   Because the merits of
awarded, and included in the amount of the judgment. In every action wherein any sum of this case turn on the events surrounding the Liberian civil war during the first half of the
money shall be awarded by verdict, report or decision upon a cause of action for the 1990s, it is helpful to provide a brief overview of those circumstances before proceeding to
enforcement of or based upon breach of performance of a contract, express or implied, discuss the case.   The following facts are drawn from the district court's thoughtful opinion
interest shall be recovered upon the principal sum whether theretofore liquidated or and are not traversed in the record before us.
unliquidated and shall be added to and be a part of the total sum awarded.'
2 Liberia was founded in 1817 to resettle freed American slaves, and in 1847 it became an
An opinion in Sampson v. Channell, 1 Cir., 110 F.2d 754, 759—762, 128 A.L.R. 394, reaches independent republic.   The original 1847 Constitution, amended in 1976 and again in 1986,
the same conclusion, as does an opinion of the Third Circuit handed down subsequent to the established a government modeled on that of the United States.   Under the 1986
Constitution, for example, the judicial powers of the Liberian government are vested in a Bridgeway had an account at Citibank's Liberian branch with a balance of $189,376.66.   In
Supreme Court and such subordinate courts as the Legislature may establish.   The November 1992, Bridgeway brought suit in Liberia against Citibank, seeking a declaration
Supreme Court is composed of one chief justice and four associate justices.   Justices and that Citibank was obligated to pay Bridgeway its balance in U.S. (rather than Liberian) dollars.
judges are nominated by the President and confirmed by the Senate and have life tenure   In August 1993, the trial court ruled in favor of Citibank.   The court found that, under
unless impeached. Liberian law, a person may not refuse to accept Liberian dollars for the discharge of an
obligation unless there is an express agreement to the contrary and that Liberian law gives
From 1980 to 1989, Samuel Kanyon Doe headed a Liberian government marked by the Liberian dollar a par value equal to the value of the U.S. dollar.   The trial court also found
corruption and human rights abuses, as well as by rampant inflation.   In 1989, a group of that under Bridgeway's contract with Citibank, the latter had the right to decide the currency in
dissidents seized power and, in 1990, executed Doe. Doe's death marked the beginning of a which a withdrawal would be paid.   Bridgeway appealed to the Liberian Supreme Court,
violent seven-year civil war.   By 1991, Liberia was in effect ruled by two governments:  one which reversed the lower court's decision and entered judgment for Bridgeway.
controlled Monrovia, the capital, while the other controlled the remainder of the country.  
Following several short-lived cease fires, a formal peace accord was signed in August 1995. Bridgeway filed suit in New York state court to enforce the Liberian Supreme Court judgment,
  After another outbreak of violence in 1996, elections were held in July 1997.   In August and Citibank removed the case to the federal district court.   When it became apparent that
1997, Charles Taylor was inaugurated and the 1986 Constitution was reinstated. Citibank was going to defend itself by challenging the legitimacy of the Liberian judicial
system, Bridgeway moved for summary judgment-arguing that Citibank was estopped from
Throughout the period of civil war, Liberia's judicial system was in a state of disarray and the questioning the fairness of the Liberian judiciary.   But the district court denied that motion
provisions of the Constitution concerning the judiciary were no longer followed.   Instead, and, sua sponte, granted summary judgment for Citibank.   Specifically, the court found that,
under an agreement worked out among the warring parties in 1992, the Supreme Court was as a matter of law, Liberia's courts did not constitute “a system of jurisprudence likely to
reorganized, with various factions each unilaterally appointing a specified number of justices. secure an impartial administration of justice” and that, as a result, the Liberian judgment was
  The U.S. State Department Country Reports for Libiera during this period paint a bleak unenforceable in the United States.   See Bridgeway, 45 F.Supp.2d at 287.   Bridgeway now
picture of the Liberian judiciary.   The 1994 Report observed that “corruption and appeals.
incompetent handling of cases remained a recurrent problem.”   The 1996 Report stated that,
“the judicial system, already hampered by inefficiency and corruption, collapsed for six II. DISCUSSION
months following the outbreak of fighting in April.”
A. Sua Sponte Summary Judgment Against the Moving Party
In 1997, before elections were held, the leaders of the various factions acknowledged that the
integrity of the Supreme Court had been compromised by factional loyalties since 1992 and Bridgeway argues that the district court erred in granting summary judgment against it sua
agreed that the Court would have to be reconstituted so that it might gain the legitimacy that sponte without prior notice.   In so acting, Bridgeway alleges, the district court deprived
would enable it to resolve successfully disputes that might arise concerning the elections.   Bridgeway of an adequate opportunity to develop and present its case.
The members of the Court were therefore dismissed and new members were appointed
based on the recommendations of the Liberian National Bar Association.  While it is not necessarily reversible error in our Circuit for a district court to grant summary
judgment against the moving party without notice or opportunity to defend, see Coach
B. This Case Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 167 (2d Cir.1991) (“[The] court need not
give notice of its intention to enter summary judgment against the moving party.”), we have
Plaintiff-appellant Bridgeway is a Liberian corporation with its principal place of business in firmly discouraged the practice.   In Coach Leatherware Co., we made clear that grants of
Monrovia, Liberia.   Defendant-appellee, Citibank, is a U.S. banking corporation with its summary judgment without notice will be tolerated only in the absence of “some indication
principal place of business in New York. For many years Citibank maintained a branch in that the moving party might otherwise bring forward evidence that would affect the ․
Monrovia, but it closed that branch in January 1992 and completely withdrew from Liberia by determination,” id., when “the facts before the district court were fully developed so that the
1995.   As required by Liberian law, Citibank, before withdrawing, formulated a plan of moving party suffered no procedural prejudice.”  (Now Chief) Judge Winter stressed in his
liquidation, which was approved by the National Bank of Liberia.   According to this plan, concurrence that such “grants of summary judgment are rare and should be employed only
funds were to be remitted by Citibank to Meridian Bank Liberia Ltd., in order to meet when a court is absolutely sure that no issue of material fact exists.”  Id. at 172 (Winter, J.,
Citibank's obligations to depositors.   Citibank alerted its customers to its plans so that they concurring in part and dissenting in part);  see also Ramsey v. Coughlin, 94 F.3d 71, 74 (2d
could withrdraw their funds.   On April 21, 1995, the National Bank of Liberia indicated by Cir.1996) (“Before granting summary judgment sua sponte [without notice], the district court
letter that Citibank had satisfactorily completed the liquidation plan and was no longer must assure itself that following the procedures set out in Rule 56 [for notice and opportunity
licensed to do business in Liberia. to defend] would not alter the outcome.”).   District courts are well advised to give clear and
express notice before granting summary judgment sua sponte, even against parties who by the defendants in response to Bridgeway's motion.   Moreover, Bridgeway repeatedly
have themselves moved for summary judgment.   The provision of such notice requires claimed to the district court that it had introduced sufficient evidence concerning that very
relatively little time or effort, and it permits appellate courts much more readily to determine- issue.   Under these circumstances, the likelihood that it was surprised by the district court's
as they are required to do-whether “the absence of a cross motion affected the result.”   reliance on that issue-and therefore prejudiced by the court's failure to provide notice before
Coach Leatherware Co., 933 F.2d at 167;  see also Snider v. Melindez, 199 F.3d 108, 113 granting summary judgement sua sponte to Citibank-was virtually nil.
(2d Cir.1999) (“[P]roviding the adversely affected party with notice and an opportunity to be
heard plays an important role in establishing the fairness and reliability of the order.”). Bridgeway did not, before the district court, raise any objections based on lack of notice.  
Nor did it subsequently seek to introduce additional evidence that might have convinced the
 If the district court fails to give notice before sua sponte granting summary judgment and district court to change its position.   Contrast First Financial, 193 F.3d at 116 (“[T]he lack of
the moving party was, as a result, procedurally prejudiced, we must reverse.   See id. A party opportunity for [the appellant] to present evidence ․ before judgment was entered against it
is procedurally prejudiced if it is surprised by the district court's action and that surprise was highly prejudicial.   Considerable evidence supporting [the appellant's] position had
results in the party's failure to present evidence in support of its position.   See id.   If, come to light during the [time] between submission of [the] motion to dismiss and the district
however, the party either cannot claim to have been surprised by the district court's action or court's decision.   Much of that evidence was eventually placed before the Court when the
if, notwithstanding its surprise, the party had no additional evidence to bring, it cannot motions for reconsideration were made.”).   Indeed, at no point since the district court's
plausibly argue that it was prejudiced by the lack of notice. decision has Bridgeway identified any piece of evidence respecting the Liberian judicial
system that it would have introduced had it been given notice.   We therefore conclude that
 “[T]he threat of procedural prejudice is greatly diminished if the court's sua sponte Bridgeway was not procedurally prejudiced by the district court's decision to grant summary
determination is based on issues identical to those raised by the moving party.”  Id. In judgment sua sponte to Citibank, albeit without prior notice to Bridgeway, though we
addition, the likelihood of prejudice is greatly reduced, even when summary judgment is reemphasize that giving such notice is certainly the preferable practice.
based upon issues raised by the nonmoving party, if the moving party speaks to those issues
in the course of the district court proceedings. B. Judicial Estoppel

Moreover, regardless of the basis for summary judgment, [w]here it appears clearly upon the  Bridgeway next argues that because Citibank voluntarily participated in litigation in Liberian
record that all of the evidentiary materials that a party might submit in response to a motion courts, it was judicially estopped from raising any question as to the impartiality of those
for summary judgment are before the court, a sua sponte grant of summary judgment against courts in the instant case.   Bridgeway observes that Citibank has taken part in at least a
that party may be appropriate if those materials show that no material dispute of fact exists dozen civil cases in Liberia since 1992.   And in several of those cases, Citibank appeared as
and that the other party is entitled to judgment as a matter of law.  Ramsey, 94 F.3d at 74.   a plaintiff.   Having availed itself of Liberia's courts without there raising any objections to the
In other words, when the moving party cannot plausibly claim that, had it been given notice of fairness of Liberian justice, Citibank should now be estopped, Bridgeway argues, from calling
the district court's consideration of summary judgment against it, it would have brought forth into question the validity of Liberian judgments.   Citibank responds by arguing that its
additional evidence, the district court's failure to give notice is harmless and a remand is participation in Liberian litigation did not amount to an admission of the fairness of Liberian
futile.   See First Financial Ins. Co. v. Allstate Interior Demolition Corp., 193 F.3d 109, 115-16 courts.   Moreover, it argues that it could not have raised its objections to Liberia's judicial
(2d Cir.1999);  Ramsey, 94 F.3d at 74 (“The record must, therefore, reflect the losing party's system in Liberia, because Liberian courts routinely sanction lawyers who question the
inability to enhance the evidence supporting its position and the winning party's entitlement to Liberian judicial system.   The district court agreed with Citibank.   See Bridgeway Corp., 45
judgment.”);  Coach Leatherware Co., 933 F.2d at 167 (“Absent some indication that the F.Supp.2d at 284.
moving party might otherwise bring forward evidence that would affect the court's summary
judgment determination, failure to provide an opportunity to respond is not reversible error.”).  Judicial estoppel “prevents a party from asserting a factual position in a legal proceeding
that is contrary to a position previously taken by [the party] in a prior legal proceeding.”  
 In this case, there is nothing in the record to indicate that Bridgeway was procedurally Bates v. Long Island R.R., 997 F.2d 1028, 1037 (2d Cir.1993).   In this Circuit, “[a] party
prejudiced by the district court's failure to give notice that it was considering a sua sponte invoking judicial estoppel must show that (1) the party against whom the estoppel is asserted
grant of summary judgment in favor of Citibank.   First, the district court's decision was based took an inconsistent position in a prior proceeding and (2) that position was adopted by the
upon an issue clearly raised by the defendant below in its memorandum of law in opposition first tribunal in some manner.”  Mitchell v. Washingtonville Cent. Sch. Dist., 190 F.3d 1, 6 (2d
to Bridgeway's motion for summary judgment.   Second, Bridgeway argued in its reply to the Cir.1999).   We have described the type of inconsistency required as a “clear inconsistency
defendant's memorandum that the evidence it submitted was sufficient to establish that between [the party's] present and former positions.”  Maharaj v. Bankamerica Corp., 128
Liberian courts constituted a “system of jurisprudence likely to secure an impartial F.3d 94, 98 (2d Cir.1997).
administration of justice.”   Suppl.  App. at 576.   That is, the issue on which the district court
based its grant of summary judgment did not arise out of the blue but was clearly put into play
In order for Bridgeway to prevail, we must conclude that voluntarily participating in litigation in whether Citibank adduced admissible evidence in sufficient amount to make the district
a foreign tribunal is fundamentally inconsistent with the belief that the tribunal is unlikely to court's decision regarding the performance of the Liberian judiciary during the civil war be
provide an impartial forum or one that comports with notions of due process .   Such a supportable as well as uncontroverted.   In fact, all of the district court's conclusions
position is without merit.   Defending a suit where one has been haled into court, and suing concerning this issue can be derived from just two sources:  the affidavits of H. Varney G.
where jurisdiction and venue readily exist do not constitute assertions that the relevant courts Sherman (“Sherman affidavits”) and the U.S. State Department Country Reports for Liberia
are fair and impartial.   Accordingly, we do not view Citibank's voluntary participation in for the years 1994-1997 (“Country Reports” or “Reports”).
Liberian litigation, even as a plaintiff, as clearly contradictory to its present position.
Bridgeway does not object to the admissibility of the Sherman affidavits (except on the
C. Fairness of Liberian Courts1 ground that they support an argument that Bridgeway alleges Citibank is estopped from
making).   Indeed, in its brief, Bridgeway cites statements derived from these very affidavits
i. Burden in support of its own position.   We will therefore assume that the Sherman material was
properly relied upon by the district court.3
 The parties strenuously dispute who bears the ultimate burden of proof with respect to the
fairness of the Liberian judicial system.   Although there are cases in which the question of  The district court also relied quite heavily on the Country Reports.   Bridgeway argues that
the burden might be significant, it does not ultimately matter here.   Accordingly, we express these Reports constitute excludable hearsay.   Citibank replies that the Reports are
no opinion on it.   Even if Citibank were to bear both the burden of production and that of admissible under Federal Rule of Evidence 803(8)(C), which allows the admission of “factual
persuasion, it has come forward with sufficiently powerful and uncontradicted documentary findings resulting from an investigation made pursuant to authority granted by law, unless the
evidence describing the chaos within the Liberian judicial system during the period of interest sources of information or other circumstances indicate lack of trustworthiness.”   See
to this case to have met those burdens and to be entitled to judgment as a matter of law.   Fed.R.Evid. 803(8)(C).
Thus, the U.S. State Department Country Reports presented by Citibank indicate that the
Liberian judicial system was in a state of disarray, as do, more subtly, the affidavits by  Rule 803(8) “is based upon the assumption that public officers will perform their duties, that
Citibank's Liberian counsel, H. Varney G. Sherman. they lack motive to falsify, and that public inspection to which many such records are subject
will disclose inaccuracies.”   31 Michael H. Graham, Federal Practice and Procedure § 6759,
 The only evidence Bridgeway has introduced in support of its position are three statements at 663-64 (Interim ed.1992).  “ ‘Factual finding’ includes not only what happened, but how it
by Liberian attorneys:  (1) an affidavit of James E. Pierre, Esq., a member of the Liberian Bar, happened, why it happened, and who caused it to happen.”  Id. at 689.   The rule therefore
stating that the procedural rules of Liberia are modeled on those of New York State courts;   renders presumptively admissible “not merely ․ factual determinations in the narrow sense,
(2) an affidavit introduced by Citibank, in which H. Varney G. Sherman, Citibank's Liberian but also ․ conclusions or opinions that are based upon a factual investigation.”  Gentile v.
counsel, states that “the Liberian Government is patterned after the state governments of the County of Suffolk, 926 F.2d 142, 148 (2d Cir.1991).
United States of America;” and (3) an affidavit of N. Oswald Tweh, former Vice President of
the Liberian National Bar Association, that “Liberia's judicial system was and is structured and  In order to fit within the purview of Rule 803(8)(C), the evidence must (1) contain factual
administered to afford party-litigants therein impartial justice.”   The first statement concerns findings, and (2) be based upon an investigation made pursuant to legal authority.   Once a
the design of the Liberian judicial system, but says nothing about its practice during the party has shown that a set of factual findings satisfies the minimum requirements of Rule
period in question.2  The second, in addition to suffering from the same defect as the first, 803(8)(C), the admissibility of such factual findings is presumed.   The burden to show “a
does not even discuss the Liberian judicial system directly.   And the third is purely lack of trustworthiness” then shifts to the party opposing admission.   See Ariza v. City of
conclusory.   See Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir.1996) (“[C]onclusory New York, 139 F.3d 132, 134 (2d Cir.1998).
statements, conjecture, or speculation by the party resisting the motion will not defeat
summary judgment.”). In this case, there is little doubt that the Country Reports constitute “factual findings.”  
Moreover, the Reports are certainly gathered pursuant to legal authority:  federal law requires
ii. Evidence that the State Department submit the Reports annually to Congress, see 22 U.S.C. §§ 
2151n(d), 2304(b) (1994 & Supp.1999).   They are therefore presumptively admissible.
 Summary judgment cannot be granted on the basis of inadmissible evidence.   See
Fed.R.Civ.P. 56(e).   And Bridgeway raises many objections to the evidence relied upon by Bridgeway attempts to rebut this presumption by arguing that the Reports are untrustworthy,
the district court in determining that Liberia's courts were, as a matter of law, unlikely to and it points to language in the State Department's description of their preparation.   The
render impartial justice.   Although the parties argue over a variety of different pieces of State Department says that “[w]e have given particular attention to attaining a high standard
evidence, in the absence of any proof supporting Bridgeway's position, we need only consider of consistency despite the multiplicity of sources and the obvious problems related to varying
degrees of access to information, structural differences in political and social systems, and 2.   Evidence concerning the design of a judicial system might be sufficient, in the absence
trends in world opinion regarding human rights practices in specific countries.”   Although this of countervailing evidence.   But where a party presents evidence concerning the actual
constitutes a frank recognition of the shortcomings intrinsic in any historical investigation, it practice of a judicial system, evidence about design is not likely to create a genuine issue of
does not amount (as Bridgeway argues) to an admission of the lack of trustworthiness material fact.
required to reject the admissibility of these documents.
3.   Sherman's affidavits contain much of the information on the basis of which the district
 When evaluating the trustworthiness of a factual report, we look to (a) the timeliness of the court made its decision and wrote its opinion:  the history of the Liberian governmental
investigation, (b) the special skills or experience of the official, (c) whether a hearing was held system, the history of the civil war, and some of the effects of the civil war on the Liberian
and the level at which it was conducted, and (d) possible motivation problems.   See judicial system.   Although Sherman was somewhat restrained in his description, he did
Fed.R.Evid. 803(8)(C) advisory committee's note.   With the exception of (c), which is not indicate that during the civil war the constitutional provisions governing the appointment of
determinative by itself, cf. id.  ([T]he rule ․ assumes admissibility in the first instance but with Supreme Court justices were not followed, members of the Supreme Court served at the “will
ample provision for escape if sufficient negative factors are present. (emphasis added)), and pleasure of the appointing powers,” and, when elections were finally called, the parties
nothing about the Reports calls into question their reliability with respect to these factors.   acknowledged that “membership on the Supreme Court had been based on factional
The Reports are submitted annually, and are therefore investigated in a timely manner.   appointment and with factional loyalties.”   Cf. Restatement (Third) of Foreign Relations § 
They are prepared by area specialists at the State Department.   And nothing in the record or 482 cmt. b (1987) (“Evidence that the judiciary was dominated by the political branches of
in Bridgeway's briefs indicates any motive for misrepresenting the facts concerning Liberia's government ․ would support a conclusion that the legal system was one whose judgments are
civil war or its effect on the judicial system there. 4  See Bank Melli Iran v. Pahlavi, 58 F.3d not entitled to recognition.”).   He concluded that “between July, 1990 and August, 1997, the
1406, 1411 (9th Cir.1995) (relying on Country Reports in granting summary judgment on the Supreme Court was not organized in keeping with the 1986 Constitution.”
issue of the fairness of Iranian courts).
4.   One could certainly imagine situations in which motivational problems might plausibly be
 In addition to its reliance on the Sherman affidavits and the Country Reports, the district present (e.g., a country report on an avowed enemy or a significant ally of the United States),
court took judicial notice of historical facts drawn from a variety of sources.   See Bridgeway, but Bridgeway has raised no such doubts here.   Accordingly, we express no views on the
45 F.Supp.2d at 278 n. 2. Bridgeway objects to this.   Even if we agreed with Bridgeway's admissibility of country reports in those circumstances.
objection, we would affirm the district court's decision because the facts of which the district
court took judicial notice were merely background history and of no moment to the ultimate CALABRESI, Circuit Judge:
determination of the fairness of Liberia's courts during the period of the civil war.   The
information in the district court's opinion concerning the functioning of the Liberian courts
during the war is drawn (or could easily be drawn) entirely from the Sherman affidavits and
the Country Reports, both of which were clearly admissible.

 *   *   *   *   *   *

Having found all of Bridgeway's contentions to be without merit, we AFFIRM the judgment of
the district court.

FOOTNOTES

1.   In granting summary judgment, the district court reflexively applied New York law.  
Citibank argues that federal law should apply.   Because of the similarity of the New York and
federal standards concerning the enforcement of foreign judgments, however, the district
court's application of New York law did not affect the outcome.   Cf. Ackermann v. Levine,
788 F.2d 830, 842 n. 12 (2d Cir.1986) (observing that under both New York statute and under
the common law standard, judgments rendered by a judicial system that fails to be impartial
or to conform its procedures to due process are not enforceable).   We therefore express no
view on whether the district court was correct.