Foreign Judgment

CONFLICT OF LAWS FOREIGN JUDGMENT
OF LAWS ATTY. ABAD
A.M.+D.G.
OIL AND NATURAL GAS vs. CA

For those who did not take up arbitration: Big commercial contracts,
particularly international commercial contracts now usually have a
provision to submit all disputes to arbitration. In arbitration, the parties
are free to choose who the arbitrators who will render the award. An
award in an arbitration proceeding is equivalent to a ruling or decision of a
court. After parties present their arguments and evidence, the arbitrators
render the award. The winning party goes to court to have the award
confirmed by a judge or magistrate. Once confirmed by the court, the
party can have it enforced. In this case, the parties agreed on an arbitrator
and the arbitration proceedings were held in India. The award of the
arbitrator was then confirmed or adopted by a court in India. It was the
Indian courts ruling which was being sought to be enforced here in the
Philippines. They did this by filing a complaint for the enforcement of a
foreign judgment in the RTC of Pasig.
FACTS
Oil and Natural Gas Commission is a foreign corporation, owned

and controlled by the Government of India.
Pacific Cement Co is a Philippine corporation.
Pacific was supposed to deliver more than 4,000 metric tons of oil
well cement to Bombay and Calcutta but because of a dispute with
the carrier, the shipment never reached the destination. Despite
payment by Oil and Natural, as well as repeated demands, Pacific
does not deliver the oil well cement.
During negotiations, the parties agreed that the Pacific will replace
the oil well cement with Class G cement. Pacific did deliver the
Class G cement but they were not according to specifications. Oil
and Natural informed Pacific that they will submit the dispute to
arbitration as provided for in their contract.
The dispute was therefore submitted to arbitration, the arbitrator

was Shri Malhotra, an employee of Oil and Natural Gas. The
decision of the arbitrator was in favour of Oil and Natural Gas. The
arbitral decision was confirmed by an Indian court.
Oil and Natural Gas filed a complaint in Pasig RTC for the
enforcement of the foreign judgment. This was opposed by
Pacific for being bereft of any statement of facts and law upon
which the award in favor of the petitioner was based. The
3B DIGEST GROUP 2009-2010

Ad Deum Per Excellentia
CONFLICT
judgment of the Indian court apparently simply adopted the award

of the arbitrator without stating anything by way of support for its
judgment.
The Pasig RTC dismissed the complaint. The RTC said that the
contract provided for some disputes to be settled by the
regular court and some to be submitted to arbitration. This
type, the RTC said, was for the courts. Consequently, the
proceedings had before the arbitrator were null and void
and the foreign court had therefore, adopted no legal award
which could be the source of an enforceable right.
The CA affirmed the dismissal by the RTC. Aside from agreeing
with the RTC that the arbitral award was void, the CA also said
that the full text of the judgment of the foreign court
contains the dispositive portion only and indicates no
findings of fact and law as basis for the award. Hence, the
said judgment cannot be enforced by any Philippine court as it
would violate the constitutional provision that no decision
shall be rendered by any court without expressing therein
clearly and distinctly the facts and the law on which it is
based.
ISSUE
Whether or not the judgment of the foreign court is enforceable in
this jurisdiction in view of the private respondent's allegation that it is
bereft of any statement of facts and law upon which the award in
favor of the petitioner was based.
RULING
Yes, it is enforceable in this jurisdiction. The SC said that even in this
jurisdiction, incorporation by reference is allowed if only to avoid
the cumbersome reproduction of the decision of the lower courts,
or portions thereof, in the decision of the higher court.
This is
particularly true when the decision sought to be incorporated is a
lengthy and thorough discussion of the facts and conclusions
arrived at, as in this case, where Award Paper No. 3/B-1 consists of
eighteen (18) single spaced pages.. In effect, the SC was saying that we
also do in this country what the Indian court did and it was okay for as
long as the award or decision adopted was complete in terms of the
discussion of the facts and conclusions. The 18 pages of single spaced

OF LAWS ATTY. ABAD
award by the arbitrator was, according to the SC, complete enough. The
short decision of the Indian court which merely adopted the award was
acceptable in our jurisdiction.
Furthermore, the recognition to be accorded a foreign judgment is not
necessarily affected by the fact that the procedure in the courts of
the country in which such judgment was rendered differs from that
of the courts of the country in which the judgment is relied on.
This Court has held that matters of remedy and procedure are governed
by the lex fori or the internal law of the forum. Thus, if under the
procedural rules of the Civil Court of Dehra Dun, India, a valid judgment
may be rendered by adopting the arbitrators findings, then the same must
be accorded respect. In the same vein, if the procedure in the foreign
court mandates that an Order of the Court becomes final and executory
upon failure to pay the necessary docket fees, then the courts in this
jurisdiction cannot invalidate the order of the foreign court simply because
our rules provide otherwise.
Finally, we reiterate hereunder our pronouncement in the case of
Northwest Orient Airlines, Inc. v. Court of Appeals that:
"A foreign judgment is presumed to be valid and binding in the
country from which it comes, until the contrary is shown. It is also
proper to presume the regularity of the proceedings and the giving
of due notice therein.
"Under Section 50, Rule 39 of the Rules of Court, a judgment in an
action in personam of a tribunal of a foreign country having jurisdiction to
pronounce the same is presumptive evidence of a right as between the
parties and their successors-in-interest by a subsequent title. The
judgment may, however, be assailed by evidence of want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or fact.
Also, under Section 3 of Rule 131, a court, whether of the Philippines or
elsewhere, enjoys the presumption that it was acting in the lawful exercise
of jurisdiction and has regularly performed its official duty."
Consequently, the party attacking a foreign judgment (Pacific
Cement) had the burden of overcoming the presumption of its
validity which it failed to do in the instant case.

A.M.+D.G.
CONFLICT
The foreign judgment being valid, there is nothing else left to be done than
to order its enforcement, despite the fact that Oil and Natural Gas merely
prays for, the remand of the case to the RTC for further proceedings. As
this Court has ruled on the validity and enforceability of the said foreign
judgment in this jurisdiction, further proceedings in the RTC for the
reception of evidence to prove otherwise are no longer necessary.
ASIAVEST vs. CA
*DIGEST FOUND AT THE PREVIOUS COMPILATION
MIJARES vs. RANADA
KOREA TECHNOLOGIES vs. LERMA
FACTS
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation
which is engaged in the supply and installation of Liquefied Petroleum Gas
(LPG) Cylinder manufacturing plants, while private respondent Pacific
General Steel Manufacturing Corp. (PGSMC) is a domestic corporation.
On March 5, 1997, PGSMC and KOGIES executed a contract in the
Philippines whereby KOGIES would set up an LPG Cylinder Manufacturing
Plant in Carmona, Cavite.
On April 7, 1997, in Korea, the parties
executed Contract No. KLP-970301 dated March 5, 1997 amending the
terms of payment. On October 14, 1997, PGSMC entered into a Contract
of Lease with Worth Properties, Inc. (Worth) for use of Worths 5,079square meter property with a 4,032-square meter warehouse building to
house the LPG manufacturing plant.
On January 22, 1998, it was shown in the Certificate that, after the
installation of the plant, the initial operation could not be conducted as
PGSMC encountered financial difficulties affecting the supply of materials,
thus forcing the parties to agree that KOGIES would be deemed to have
completely complied with the terms and conditions of the March 5, 1997
contract.
For the remaining balance of USD306,000 for the installation and initial
operation of the plant, PGSMC issued two postdated checks.
When
KOGIES deposited the checks, these were dishonored for the reason

OF LAWS ATTY. ABAD
"PAYMENT STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter

to PGSMC threatening criminal action for violation of Batas Pambansa Blg.
22 in case of nonpayment. On the same date, the wife of PGSMCs
President faxed a letter dated May 7, 1998 to KOGIES President who was
then staying at a Makati City hotel. She complained that not only did
KOGIES deliver a different brand of hydraulic press from that agreed upon
but it had not delivered several equipment parts already paid for.
On May 14, 1998, PGSMC replied that the two checks it issued KOGIES
were fully funded but the payments were stopped for reasons previously
made known to KOGIES.
On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling
their Contract dated March 5, 1997 on the ground that KOGIES had altered
the quantity and lowered the quality of the machineries and equipment it
delivered to PGSMC, and that PGSMC would dismantle and transfer the
machineries, equipment, and facilities installed in the Carmona plant. Five
days later, PGSMC filed before the Office of the Public Prosecutor an
Affidavit-Complaint for Estafa docketed as I.S. No. 98-03813 against Mr.
Dae Hyun Kang, President of KOGIES.
On June 15, 1998, KOGIES wrote PGSMC informing the latter that PGSMC
could not unilaterally rescind their contract nor dismantle and transfer the
machineries and equipment on mere imagined violations by KOGIES. It
also insisted that their disputes should be settled by arbitration as agreed
upon in Article 15, the arbitration clause of their contract.
On June 23, 1998, PGSMC again wrote KOGIES reiterating the contents of
its June 1, 1998 letter threatening that the machineries, equipment, and
facilities installed in the plant would be dismantled and transferred on July
4, 1998. Thus, on July 1, 1998, KOGIES instituted an Application for
Arbitration before the Korean Commercial Arbitration Board (KCAB) in
Seoul, Korea pursuant to Art. 15 of the Contract as amended.
On July 3, 1998, KOGIES filed a Complaint for Specific Performance,
against PGSMC before the Muntinlupa City Regional Trial Court (RTC). The
RTC granted a temporary restraining order. In its complaint, KOGIES
alleged that PGSMC had initially admitted that the checks that were
stopped were not funded but later on claimed that it stopped payment of

A.M.+D.G.
CONFLICT
the checks for the reason that "their value was not received" as the former
allegedly breached their contract by "altering the quantity and lowering the
quality of the machinery and equipment" installed in the plant and failed to
make the plant operational although it earlier certified to the contrary as
shown in a January 22, 1998 Certificate. Likewise, KOGIES averred that
PGSMC violated Art. 15 of their Contract, as amended, by unilaterally
rescinding the contract without resorting to arbitration. KOGIES also asked
that PGSMC be restrained from dismantling and transferring the machinery
and equipment installed in the plant which the latter threatened to do on
July 4, 1998.
On July 9, 1998, PGSMC filed an opposition to the TRO arguing that
KOGIES was not entitled to the TRO since Art. 15, the arbitration clause,
was null and void for being against public policy as it ousts the local courts
of jurisdiction over the instant controversy.
On July 23, 1998, the RTC issued an Order denying the application for a
writ of preliminary injunction, reasoning that PGSMC had paid KOGIES
USD 1,224,000, the value of the machineries and equipment as shown in
the contract such that KOGIES no longer had proprietary rights over them.
And finally, the RTC held that Art. 15 of the Contract as amended was
invalid as it tended to oust the trial court or any other court jurisdiction
over any dispute that may arise between the parties. KOGIES prayer for
an injunctive writ was denied.
PGSMC filed a Motion for Inspection of Things to determine whether there
was indeed alteration of the quantity and lowering of quality of the
machineries and equipment, and whether these were properly installed.
KOGIES opposed the motion positing that the queries and issues raised in
the motion for inspection fell under the coverage of the arbitration clause
in their contract. KOGIES asserted that the Branch Sheriff did not have the
technical expertise to ascertain whether or not the machineries and
equipment conformed to the specifications in the contract and were
properly installed. The trial court granted the motion. On November 11,
1998, the Branch Sheriff filed his Sheriffs Report
finding that the
enumerated machineries and equipment were not fully and properly
installed.

OF LAWS ATTY. ABAD
Court of Appeals affirmed the trial court and declared the arbitration clause
against public policy.
ISSUE
W/N the arbitration clause is against public policy NO.
RULING
Established in this jurisdiction is the rule that the law of the place where
the contract is made governs. Lex loci contractus. The contract in this case
was perfected here in the Philippines. Therefore, our laws ought to govern.
Nonetheless, Art. 2044 of the Civil Code sanctions the validity of mutually
agreed arbitral clause or the finality and binding effect of an arbitral
award. Art. 2044 provides, "Any stipulation that the arbitrators
award or decision shall be final, is valid, without prejudice to Articles
2038, 2039 and 2040." (Emphasis supplied.)
Arbitration clause not contrary to public policy: The arbitration
clause which stipulates that the arbitration must be done in Seoul, Korea
in accordance with the Commercial Arbitration Rules of the KCAB, and that
the arbitral award is final and binding, is not contrary to public policy.
Having said that the instant arbitration clause is not against public policy,
we come to the question on what governs an arbitration clause specifying
that in case of any dispute arising from the contract, an arbitral panel will
be constituted in a foreign country and the arbitration rules of the foreign
country would govern and its award shall be final and binding.
RA 9285 incorporated the UNCITRAL Model law to which we are a
signatory: For domestic arbitration proceedings, we have particular
agencies to arbitrate disputes arising from contractual relations. In case a
foreign arbitral body is chosen by the parties, the arbitration rules of our
domestic arbitration bodies would not be applied. As signatory to the
Arbitration Rules of the UNCITRAL Model Law on International Commercial
Arbitration of the United Nations Commission on International Trade Law
(UNCITRAL) in the New York Convention on June 21, 1985, the Philippines
committed itself to be bound by the Model Law. We have even
incorporated the Model Law in Republic Act No. (RA) 9285, otherwise
known as the Alternative Dispute Resolution Act of 2004 entitled An Act to
Institutionalize the Use of an Alternative Dispute Resolution System in the

A.M.+D.G.
CONFLICT
Philippines and to Establish the Office for Alternative Dispute Resolution,

and for Other Purposes, promulgated on April 2, 2004. And while RA 9285
was passed only in 2004, it nonetheless applies in the instant case since it
is a procedural law which has a retroactive effect.
Among the pertinent features of RA 9285 applying and incorporating the
UNCITRAL Model Law are the following:
(1) The RTC must refer to arbitration in proper cases
(2) Foreign arbitral awards must be confirmed by the RTC
(3) The RTC has jurisdiction to review foreign arbitral awards
(4) Grounds for judicial review different in domestic and foreign
arbitral awards
(5) RTC decision of assailed foreign arbitral award appealable
PGSMC has remedies to protect its interests: Thus, based on the
foregoing features of RA 9285, PGSMC must submit to the foreign
arbitration as it bound itself through the subject contract. While it may
have misgivings on the foreign arbitration done in Korea by the KCAB, it
has available remedies under RA 9285. Its interests are duly protected by
the law which requires that the arbitral award that may be rendered by
KCAB must be confirmed here by the RTC before it can be enforced.
With our disquisition above, petitioner is correct in its contention that an
arbitration clause, stipulating that the arbitral award is final and binding,
does not oust our courts of jurisdiction as the international arbitral award,
the award of which is not absolute and without exceptions, is still judicially
reviewable under certain conditions provided for by the UNCITRAL Model
Law on ICA as applied and incorporated in RA 9285.
Finally, it must be noted that there is nothing in the subject Contract which
provides that the parties may dispense with the arbitration clause.
Unilateral rescission improper and illegal: Having ruled that the
arbitration clause of the subject contract is valid and binding on the
parties, and not contrary to public policy; consequently, being bound to
the contract of arbitration, a party may not unilaterally rescind or
terminate the contract for whatever cause without first resorting to
arbitration.

OF LAWS ATTY. ABAD
In addition, whatever findings and conclusions made by the RTC Branch

Sheriff from the inspection made on October 28, 1998, as ordered by the
trial court on October 19, 1998, is of no worth as said Sheriff is not
technically competent to ascertain the actual status of the equipment and
machineries as installed in the plant.
RTC has interim jurisdiction to protect the rights of the parties:
While the issue of the proper installation of the equipment and machineries
might well be under the primary jurisdiction of the arbitral body to decide,
yet the RTC under Sec. 28 of RA 9285 has jurisdiction to hear and grant
interim measures to protect vested rights of the parties
While the KCAB can rule on motions or petitions relating to the
preservation or transfer of the equipment and machineries as an interim
measure, yet on hindsight, the July 23, 1998 Order of the RTC allowing the
transfer of the equipment and machineries given the non-recognition by
the lower courts of the arbitral clause, has accorded an interim measure of
protection to PGSMC which would otherwise been irreparably damaged.
KOGIES is not unjustly prejudiced as it has already been paid a substantial
amount based on the contract. Moreover, KOGIES is amply protected by
the arbitral action it has instituted before the KCAB, the award of which
can be enforced in our jurisdiction through the RTC. Besides, by our
decision, PGSMC is compelled to submit to arbitration pursuant to the valid
arbitration clause of its contract with KOGIES.
PGSMC to preserve the subject equipment and machineries: While
PGSMC may have been granted the right to dismantle and transfer the
subject equipment and machineries, it does not have the right to convey
or dispose of the same considering the pending arbitral proceedings to
settle the differences of the parties. PGSMC therefore must preserve and
maintain the subject equipment and machineries with the diligence of a
good father of a family until final resolution of the arbitral proceedings and
enforcement of the award, if any.
LOUCKS vs. STANDARD OIL COMPANY NEW YORK
*TO FOLLOW
GODARD vs. GRAY

A.M.+D.G.
CONFLICT
RULING
"... The plaintiffs, who are Frenchmen, sued the defendants, who are
Englishmen, on a charterparty made at Sunderland, which charterparty
contained the following clause: "Penalty forr non-performance of this
agreement, estimated amount of freight." The French Court below,
treating this clause as fixing the amount of liquidated damages, gave
judgment against the defendants for the amount of freight on two
voyages. On appeal, the superior Court reduced the amount to the
estimated freight of one voyage, giving as their reason that the
charterparty itself "t'txait'indemnitd a laquelle chacune des parties aurait
droit pour inex4cution de la convention par la faute de 1'autre; que
moyennant paiement de cette indemnity chacune des parties avait le droit
de rompre la convention," and the tribunal proceeds to observe that the
amount thus decreed was after all more than sufficient to cover all the
plaintiffs' loss.
All parties in France seem to have taken it for granted that the words
in the charterparty were to be understood in their natural sense; but the
English law is accurately expressed in Abbott on Shipping, Pt. 3, c. 1, a. 6,
5th ed., p. 170, and had that passage been brought to the notice of the
French tribunal, it would have known that in an English charterparty, as is
there stated, "Such a clause is not the absolute limit of damages on either
side; the party may, if he thinks fit, ground his action upon the other
clauses or covenants, and may, in such action, recover damages beyond
the amount of the penalty, if in justice they shall be found to exceed it. On
the other hand, if the party sue on such a penal clause, he cannot, in
effect, recover more than the damage actually sustained." But it was not
brought to the notice of the French tribunal that according to the
interpretation put by the English law on such a contract, a penal clause of
this sort was in fact idle and inoperative. If it had been, they would,
probably, have interpreted the English contract made in England according
to the English construction.
The question raised by the plea is, whether this is a bar to the action
brought in England to enforce that judgment.
xxx

OF LAWS ATTY. ABAD
"It is not an admitted principle of the law of nations that a State is bound
to enforce within its territories the judgment of a foreign tribunal. Several
of the continental nations (including France) do not enforce the judgments
of other countries, unless where there are reciprocal treaties to that effect.
But in England and in those States which are governed by the common
Iaw, such judgments are enforced, not by virtue of any treaty, nor by
virtue of any statute, but upon a principle very well stated by Parke, B., in
Williams v. Jones (13 M. & W. 628; 14 L.J. Exch. 145): "Where a Court of
competent jurisdiction has adjudicated a certain sum to be due from one
person to another, a legal obligation aribes to pay the sum, on which an
action of debt to enforce the judgment may be maintained. It is in this way
that the judgments of foreign and colonial Courts are supported and
enforced." And taking this as the principle, it seems to follow that
anything which negatives the existence of that legal obligation, or excuses
the defendant from the performance of it, must form a good defense to
the action. It must be open, therefore, to the defendant to show that the
Court which pronounced the judgment had no jurisdiction to pronounce it,
either because they exceeded the jurisdiction given to them by the foreign
law, or because he, the defendant, was not subject to that jurisdiction;
and so far the foreign judgment must be examinable. Probably the
defendant may show that the judgment was obtained by the fraud of the
plaintiff, for that would show that the defendant was excused from the
performance of an obligation thus obtained; and it may be that where the
foreign Cc urt has knowingly and perversely disregarded the rights given
to an English subject by English law, that forms a valid excuse for
disregarding the obligation thus imposed on him; but we prefer to imitate
the caution of the present Lord Chancellor, in Castrique v. Imrie [L.ft. 4
H.L., at p. 445 (above)] and to leave those questions to be decided when
they arise, only observing that in the present case, as in that, "the whole
of the facts appear to have been inquired into by the French Courts,
judicially, honestly, and with the intention to arrive at the right conclusion,
and having heard the facts as stated before them they came to a
conclusion which justified them in France in deciding as they did decide."
If, indeed, foreign judgments were enforced by our Courts out of
politeness and courtesy to the tribunals of other countries, one could
understand its being said that though our Courts would not be so rude as
to inquire whether the foreign Court had made a mistake, or to allow the
defendant to assert that it had, yet that if the foreign Court itself admitted

A.M.+D.G.
CONFLICT
its blunder they would not then act: but it is quite contrary to every
analogy to suppose that an English Court of law exercises any discretion of
this sort. We enforce a legal obligation, and we admit any defense which
shows that there is no legal obligation or a legal excuse for not fulfilling it;
but in no case that we know of is it ever said that a defence shall be
admitted if it is easily proved, and rejected If it would give the Court much
trouble to investigate it. Yet on what other principle can we admit as a
defence that there is a mistake of English law apparent an the face of the
proceedings, and reject a defence that there is a mistake of Spanish or
even Scotch law apparent in the proceedings, or that there was a mistake
of English law not apparent on the proceedings, but which the defendant
avers that he can show did exist."
HILTON vs. GUYOT
*TO FOLLOW
PHILIPPINE ALUMINUM WHEELS INC. vs. FASGI ENTERPRISES
FACTS
On 01 June 1978, FASGI Enterprises Incorporated ("FASGI"), a corporation
organized and existing under and by virtue of the laws of the State of
California, United States of America, entered into a distributorship
arrangement with Philippine Aluminum Wheels, Incorporated ("PAWI"), a
Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A. ("FPS"), an
Italian corporation. The agreement provided for the purchase, importation
and distributorship in the United States of aluminum wheels manufactured
by PAWI. FASGI then paid PAWI the FOB value of the wheels.
Unfortunately, FASGI later found the shipment to be defective and in noncompliance with the contract.
On 21 September 1979, FASGI instituted an action against PAWI and FPS
for breach of contract and recovery of damages in the amount of
US$2,316,591.00 before the United States District Court for the Central
District of California. In the interim, two agreements were entered by the
parties but PAWI kept on failing to discharge its obligations therein. Irked
by PAWI's persistent default, FASGI filed with the US District Court of the
Central District of California the agreements for judgment against PAWI.
On 24 August 1982, FASGI filed a notice of entry of judgment. Unable to
obtain satisfaction of the final judgment within the United States, FASGI

OF LAWS ATTY. ABAD
filed a complaint for "enforcement of foreign judgment", before RTC

Makati. The Makati court, however, dismissed the case, on the ground that
the decree was tainted with collusion, fraud, and clear mistake of law and
fact. The lower court ruled that the foreign judgment ignored the
reciprocal obligations of the parties. While the assailed foreign judgment
ordered the return by PAWI of the purchase amount, no similar order was
made requiring FASGI to return to PAWI the third and fourth containers of
wheels. This situation, amounted to an unjust enrichment on the part of
FASGI. Furthermore, the RTC said, agreements which the California court
had based its judgment were a nullity for having been entered into by Mr.
Thomas Ready, counsel for PAWI, without the latter's authorization.
However, the Court of Appeals reversed this decision.
ISSUE
Should the Philippine Court enforce the foreign judgment? YES
RULING
In this jurisdiction, a valid judgment rendered by a foreign tribunal may be
recognized insofar as the immediate parties and the underlying cause of
action are concerned so long as it is convincingly shown that there has
been an opportunity for a full and fair hearing before a court of competent
jurisdiction; that trial upon regular proceedings has been conducted,
following due citation or voluntary appearance of the defendant and under
a system of jurisprudence likely to secure an impartial administration of
justice; and that there is nothing to indicate either a prejudice in court and
in the system of laws under which it is sitting or fraud in procuring the
judgment. PAWI claims that its counsel, Mr. Ready, has acted without its
authority. Verily, in this jurisdiction, it is clear that an attorney cannot,
without a client's authorization, settle the action or subject matter of the
litigation even when he honestly believes that such a settlement will best
serve his client's interest. However, PAWI failed to substantiate this
complain with sufficient evidence. Hence, the foreign judgment must be
enforced.
Even if PAWI assailed that fraud tainted the agreements which the US
Court based its judgment, this cannot prevent the enforcement of said
judgment. PAWI claimed that there was collusion and fraud in the signing
of the agreements. Although the US Court already adjudicated on this
matter, PAWI insisted on raising it again in this Court. Fraud, to hinder the

A.M.+D.G.
CONFLICT
enforcement within this jurisdiction of a foreign judgment, must be

extrinsic, i.e., fraud based on facts not controverted or resolved in the case
where judgment is rendered, or that which would go to the jurisdiction of
the court or would deprive the party against whom judgment is rendered a
chance to defend the action to which he has a meritorious case or defense.
In fine, intrinsic fraud, that is, fraud which goes to the very existence of
the cause of action - such as fraud in obtaining the consent to a contract is deemed already adjudged, and it, therefore, cannot militate against the
recognition or enforcement of the foreign judgment.
KLAXON CO. vs. STENTOR ELECTRIC MANUFACTURING CO.
FACTS
In 1918 respondent, a New York corporation, transferred its entire
business to petitioner, a Delaware corporation. Petitioner contracted to use
its best efforts to further the manufacture and sale of certain patented
devices covered by the agreement, and respondent was to have a share of
petitioner's profits. The agreement was executed in New York, the assets
were transferred there, and petitioner began performance there although
later it moved its operations to other states. Respondent was voluntarily
dissolved under New York law in 1919. Ten years later it instituted this
action in the United States District Court for the District of Delaware,
alleging that petitioner had failed to perform its agreement to use its best
efforts. Jurisdiction rested on diversity of citizenship. In 1939 respondent
recovered a jury verdict of $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 had been
brought. The basis of the motion was the provision in section 480 of the
New York Civil Practice Act directing that in contract actions interest be
added to the principal sum 'whether theretofore liquidated or unliquidated.
The CA said that the New York Law is applicable because the contracts
substance of obligation, and that proper construction of the contract in suit
was fixed in New York and is the place of performance.
ISSUE
Whether or not the federal courts must follow conflict of laws rules
prevailing in the states in which they sit? Yes, therefore follow the
Delaware Law and not New York

OF LAWS ATTY. ABAD
RULING
We are of opinion that the prohibition declared in Erie Railroad v.
Tompkins, against such independent determinations by the federal courts
extends to the field of conflict of laws. The conflict of laws rules to be
applied by the federal court in Delaware must conform to those prevailing
in Delaware's state courts.2 Otherwise the accident of diversity of
citizenship would constantly disturb equal administration of justice in
coordinate state and federal courts sitting side by side. 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 between federal courts in different states is attributable to our
federal system, which leaves to a state, within the limits permitted by the
Constitution, the right to pursue local policies diverging from those of its
neighbors. It is not for the federal courts to thwart such local policies by
enforcing an independent 'general law' of conflict of laws. Subject only to
review by this Court on any federal question that may arise, Delaware is
free to determine whether a given matter is to be governed by the law of
the forum or some other lawThis Court's views are not the decisive factor
in determining the applicable conflicts rule. And the proper function of the
Delaware federal court is to ascertain what the state law is, not what it
ought to be.
Besides these general considerations, the traditional treatment of interest
in diversity cases brought in the federal courts points to the same
conclusion. Section 966 of the Revised Statutes, relating to interest on
judgments, provides that it be calculated from the date of judgment at
such rate as is allowed by law on judgments recovered in the courts of the
state in which the court is held. In Massachusetts Benefit Association v.
Mile, 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 within the state
should be in harmony upon this point'.
Here, however, section 480 of the New York Civil Practice Act is in no way
related to the validity of the contract in suit, but merely to an incidental
item of damages, interest, with respect to which courts at the forum have
commonly been free to apply their own or some other law as they see fit.
Nothing in the Constitution ensures unlimited extraterritorial recognition of
all statutes or of any statute under all circumstances. The full faith and

A.M.+D.G.
CONFLICT
credit clause does not go so far as to compel Delaware to apply section

480 if such application would interfere with its local policy.
Accordingly, the judgment is reversed and the case remanded to the
Circuit Court of Appeals for decision in conformity with the law of
Delaware.
Reversed and remanded.
1
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 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 the time of entering judgment, must be computed by the clerk,
added to the total amount awarded, and included in the amount of the
judgment. In every action wherein any sum of money shall be awarded by
verdict, report or decision upon a cause of action for the enforcement of or
based upon breach of performance of a contract, express or implied,
interest shall be recovered upon the principal sum whether theretofore
liquidated or unliquidated and shall be added to and be a part of the total
sum awarded.'
2
An opinion in Sampson v. Channell, 1 Cir., 110 F.2d 754, 759762, 128

A.L.R. 394, reaches the same conclusion, as does an opinion of the Third
Circuit handed down subsequent to the case at bar, Waggaman v. General
Finance Co., 116 F.2d 254, 257. See, also, Goodrich, Conflict of Laws,
12.
BORTHWICK vs. CASTRO BARTOLOME
FACTS
[Petitioner William Borthwick, an American citizen living in the Philippines,
owned real property interests in Hawaii. In his business dealings with
private respondent, Joseph Scallon, Borthwick issued the promissory notes
now sued upon, but failed to pay the sums owing upon maturity and

OF LAWS ATTY. ABAD
despite demands. The promissory notes provided that upon default, action
may be brought for collection in Los Angeles, California, or at Scallon's
option, in Manila or Honolulu.
Borthwick was served with summons when he was in California, pursuant
to Hawaiian law allowing service of process on a person outside the
territorial confines of the State. Because Borthwick ignored the summons,
a judgment by default was entered against him.
However, Scallon's attempt to have the judgment executed in Hawaii and
California failed because Borthwick had no assets in those states. Scallon
then came to the Philippines and brought suit against Borthwick seeking
enforcement of the default judgment of the Hawaii court. Again, after due
proceedings, judgment by default was rendered against him, ordering
Borthwick to pay Scallon the amount prayed for.
The court issued an amendatory order and upon receipt by Borthwick, he
moved for a new trial, alleging that the promissory notes did not arise
from business dealings in Hawaii, nor did he own real estate therein. He
contended that the judgment of the court of Hawaii is unenforceable in the
Philippines because it was invalid for want of jurisdiction over the cause of
action and over his person. The motion was denied, hence this petition.]
RULING
"It is true that a foreign judgment against a person is merely "presumptive
evidence of a right as between the parties," and rejection thereof may be
justified, among others, by "evidence of a want of jurisdiction" of the
issuing authority, under Rule 39 of the Rules of Court. In the case at bar,
the jurisdiction of the Circuit Court of Hawaii hinged entirely on the
existence of either of two facts in accordance with its State laws, i.e.,
either Borthwick owned real property 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 declared in default. There thus exists no evidence
in the record of the Hawaii case upon which to lay a conclusion of lack of
jurisdiction, as Borthwick now urges.

A.M.+D.G.
CONFLICT
The opportunity to negate the foreign court's competence by proving the

non-existence of said jurisdictional facts established in the original action,
was again afforded to Borthwick in the Court of First Instance of MF kati,
where enforcement of the Hawaii judgment was sought. This time it was
the summons of the domestic court which Borthwick chose to ignore, but
with the same result: he was declared in default. And in the default judgment subsequently promulgated, the Court a quo decreed enforcement of
die judgment affirming among others the jurisdictional facts, that
Borthwick owned real property in Hawaii and transacted business therein.
In the light of these antecedents, it is plain that what Borthwick seeks in
essence is one more opportunity, a third, to challenge the jurisdiction of
the Hawaii Court and the merits of the cause of action which that Court
had adjudged to have been established against him. This he may obtain
only if he succeeds in showing that the declaration of his default was
incorrect. He has unfortunately not been able to do that; hence, the
verdict must go against him."
KOSTER vs. AUTOMARK INDUSTRIES INC.
FACTS
Automark executed a contract to purchase up to 600,000 units of Koster's
valve cap gauges in Milan, Italy. They tried to negotiate through mail.
Automark, however, never ordered Koster's gauges, and Koster never
shipped any gauges. Koster sued Automark in an Amsterdam court for
breach of contract. The district court of Illinois recognized the Amsterdam
decision and granted enforcement of the default judgment obtained by
Koster against Automark.
ISSUE
Does Automark have sufficient contact with the Netherlands to vest that
country's courts with personal jurisdiction over Automark so as to permit
enforcement of the default judgment in United States courts? NO
RULING
Automark did not have the minimum contacts necessary to show that it
purposefully utilized the privilege to conduct business activities in the
Netherlands sufficient to confer on that country's courts personal
jurisdiction over Automark.

OF LAWS ATTY. ABAD
Automark's only contacts with the Netherlands were eight letters, and
possibly a telegram and a transatlantic telephone call all preliminary to the
meeting in Italy. In Lakeside Bridge & Steel Co. v. Mountain State
Construction, the court notes that such contacts cannot be held to satisfy
jurisdictional requirements, otherwise "(u)se of the interstate telephone
and mail service to communicate with (an out-of-state) plaintiff, if
constituting contacts supporting jurisdiction, would give jurisdiction to any
state into which communications were directed." Such a result would make
virtually every business subject to suit in any state with which it happened
to communicate in some manner. That clearly would not satisfy the
demands of due process.
QUERUBIN vs. QUERUBIN
FACTS
(In 1934, Silvestre Querubin, a Filipino, married petitioner Margaret
Querubin, in Albuquerque, New Mexico. 'They had a daughter, Querubina.
Margaret filed for divorce in 1948 alleging "mental cruelty." Silvestre filed
a countersuit for divorce alleging Margaret's infidelity. In 1949, the
Superior Court of Los Angeles granted the divorce and awarded "joint
custody" of the child. Querubina was to be kept in a neutral home subject
to reasonable visits by both parties. Both parents were restrained from
taking Querubina out of California without the permission of the Court.
On March that year, custody was granted to Silvestre under an
interlocutory decree (although the child was still kept in the neutral home)
because at the time of the trial, Margaret was living w th another man.
Upon Margaret's petition, the interlocutory decree was modified. Since
she had then married the man she was living with and had a stable home,
the Court granted custody to Margaret with reasonable limitations on the
part of the father.
Silvestre, together with Querubina, left San Francisco on November of the
same year, went to the Philippines and stayed in Cagayan, Ilocos Sur, with
the intent of protecting the child from the effects of her mother's

A.M.+D.G.
CONFLICT
scandalous conduct. He wanted the child tc be raised in a better

environment.
In 1950, Margaret, through counsel, presented to the CFI a petition for
habeas corpus for the custody of Querubina urlder the interlocutory
decree of the California Court. She claims that under Art. 48 of Rule 39,
the decree of the Los Angeles Court, granting her the child's custody,
must be complied within the Philippines.]
RULING
"The decree is by no means final. It is subject to change with the
circumstances. The first decree awarded the custody of the child to the
father, prohibiting the mother from taking the child to her (Margaret's)
home because of her adulterous relationship with another man. The
decree was amended when Margaret was not in Los Angeles.
Because the decree is interlocutory, it cannot be implemented in the
Philippines. Where the judgment is merely interlocutory, the
determination of the question by the Court which rendered it did not
settle and adjudge finally the rights of the parties.
In general, a decree of divorce awarding custody of the child to one of the
spouses is respected by the Courts of other states "at the time and under
the circumstances of its rendition" but such a decree has no controlling
effects in another state as to facts and conditions occurring subsequently
to the date of the decree; and the Court of another state may, in proper
proceedings, award custody otherwise upon proof of matters subsequent
to the decree which justify the decree to the interest of the child.
In the case at bar, the circumstances have changed. Querubina is not in
Los Angeles, she is in Cagayan, Ilocos Sur, under her father's care. It is a
long way from one place to the other. Neither can Margaret prove that she
can pay the cost of passage for the minor. She is not a packet of
cigarettes one can send by mail.
Neither can she answer for Querubina's support, care and education. In
comparison, the father has shown both interest in the child and capacity to
provide for the needs of the child."

OF LAWS ATTY. ABAD
A.M.+D.G.
CONFLICT
W/N the US District Court default judgment can be enforced and against
the 9 other petitioners? Yes.
PHILIPPINE INTERNATIONAL SHIPPING vs. CA
FACTS
In 1979 to 1981, Philippine International Shipping Corporation (PISC)
leased from Interpool Ltd. and its wholly owned subsidiary, the Container
Trading Corporation, several containers pursuant to the Membership
Agreement and Hiring Conditions and the Master Equipment Leasing
Agreement both dated June 8, 1979. The other petitioners Philippine
Construction Consortium Corporation, Pacific Mills Inc. and Universal Steel
Smelting Company, guaranteed to pay the obligation due and any liability
of the PISC arising out of the leasing or purchasing of equipment.
In 1979 to 1981, PISC incurred outstanding and unpaid obligations with
Interpool, in the amount of $94,456.28, representing unpaid per diems,
drop-off charges, interest and other agreed charges, resulting in a case
before the US District Court, Southern District of New York wherein a
default judgment against petitioners was rendered ordering the corp. to
pay in the amount of $80,779.33, as liquidated damages, together with
interest in the amount of $13,676.95 and costs in the amount of $80.00.
or for a total judgment of $94,456.28. To enforce the default judgment of
the US District Court, a complaint was instituted against PISC and other
guarantors before the QC RTC. PISC failed to answer the complaint and
they were declared in default. The RTC ruled in favor of Interpool and
which was affirmed by the CA.
In the first instance, petitioners contend that the U.S. District Court never
acquired jurisdiction over their persons as they had not been served with
summons and a copy of the Complaint in 83 Civil 290 (EW). In the second
instance, petitioners contend that such jurisdictional infirmity effectively
prevented the Regional Trial Court of Quezon City from taking cognizance
of the Complaint in Civil Case No. Q-39927 and from enforcing the U.S.
District Court's Default Judgment against them. Petitioners contend,
finally, that assuming the validity of the disputed Default Judgment, the
same may be enforced only against petitioner PISC the 9 petitioners not
having been impleaded originally in the case filed in New York, U.S.A.
ISSUE

RULING
To begin with, the evidence of record clearly shows that the U.S. District
Court had validly acquired jurisdiction over PISC under the procedural law
applicable in that forum i.e., the U.S. Federal Rules on Civil Procedure.
Copies of the Summons and Complaint which were in fact attached to the
Petition for Review filed with the SC, were stamped "Received, 18 Jan
1983, PISC Manila." indicating that service thereof had been made upon
and acknowledged by the PISC office in Manila on, 18 January 1983 That
foreign judgment-which had become final and executory, no appeal having
been taken therefrom and perfected by petitioner PISC-is thus
"presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title." The SC note, further that
there has been in this case no showing by petitioners that the Default
Judgment rendered by the U.S. District Court was vitiated by "want of
notice to the party, collusion, fraud, or clear mistake of law or fact. " In
other words, the Default Judgment imposing upon petitioner PISC a
liability of U.S.$94,456.28 in favor of respondent Interpool, is valid and
may be enforced in this jurisdiction.
The existence of liability on the part of petitioner PISC having been duly
established in the U.S. case, it was not improper for respondent Interpool,
in seeking enforcement in this jurisdiction of the foreign judgment
imposing such liability, to have included the other 9 petitioners herein (i.e.,
George Lim, Marcos Bautista, Carlos Laude,Tan Sing Lim, Antonio Liu Lao,
Ong Teh Philippine Consortium Construction Corporation, Pacific Mills, Inc.
and Universal Steel Smelting Co., Inc.) as defendants in Civil Case No. Q39927, filed with Branch 93 of the Regional Trial Court of Quezon City. The
record shows that said 9 petitioners had executed continuing guarantees"
to secure performance by petitioner PISC of its contractual obligations. As
guarantors, they had held themselves out as liable. "whether jointly,
severally, or in the alternative," to respondent Interpool under their
separate "continuing guarantees" executed in the Philippines. The New
York award of U.S.$94,456.28 is precisely premised upon a breach by PISC
of its own obligations under those Agreements. The SC consider the 9
other petitioners as persons against whom [a] right to relief in respect to
or arising out of the same transaction or series of transactions [has been]

OF LAWS ATTY. ABAD
alleged to exist" and, consequently, properly impleaded as defendants in

Civil Case No. Q-39927. There was, in other words, no need at all, in order
that Civil Case No. Q-39927 would prosper, for respondent Interpool to
have first impleaded the 9 other petitioners in the New York case and there
obtain judgment against all 10 petitioners.
SCHERK vs. ALBERTO-CULVER CO.
FACTS
Respondent, an American manufacturer based in Illinois, in order to
expand its overseas operations, purchased from petitioner a German
citizen, three enterprises owned by him and organized under the laws of
Germany and Liechtenstein, together with all trademark rights of these
enterprises. The sales contract, which was negotiated in the United States,
England, and Germany, signed in Austria, and closed in Switzerland,
contained express warranties by petitioner that the trademarks were
unencumbered and a clause providing that "any controversy or claim
[that] shall arise out of this agreement or the breach thereof" would be
referred to arbitration before the International Chamber of Commerce in
Paris, France, and that Illinois laws would govern the agreement and its
interpretation and performance. Subsequently, after allegedly discovering
that the trademarks were subject to substantial encumbrances,
respondent offered to rescind the contract, but when petitioner refused,
respondent brought suit in District Court for damages and other relief,
contending that petitioner's fraudulent representations concerning the
trademark rights violated 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder. Petitioner moved to dismiss the
action or alternatively to stay the action pending arbitration, but the
District Court denied the motion to dismiss and, as sought by respondent,
preliminarily enjoined petitioner from proceeding with arbitration, holding
that an agreement to arbitrate could not preclude a buyer of a security
from seeking a judicial remedy under the securities Act of 1933, in reliance
on Wilko v. Swan. The Court of Appeals affirmed.
ISSUE
Whether or not the court should continue hearing the case or dismiss it
and refer it to arbitration?
RULING

A.M.+D.G.
CONFLICT
The arbitration clause is to be respected and enforced by federal courts in

accord with the explicit provisions of the United States Arbitration Act that
an arbitration agreement, such as is here involved, "shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract." 9 U.S.C. 1, 2. Wilko v. Swan,
supra, distinguished.
(a) Since uncertainty will almost inevitably exist with respect to any
contract, such as the one in question here, with substantial contacts in two
or more countries, each with its own substantive laws and conflict of laws
rules, a contractual provision specifying in advance the forum for litigating
disputes and the law to be applied is an almost indispensable precondition
to achieving the orderliness and predictability essential to any international
business transaction. Such a provision obviates the danger that a contract
dispute might be submitted to a forum hostile to the interests of one of the
parties or unfamiliar with the problem area involved.
(b) In the context of an international contract, the advantages that a
security buyer might possess in having a wide choice of American courts
and venue in which to litigate his claims of violations of the securities laws,
become chimerical, since an opposing party may by speedy resort to
foreign court block or hinder access to the American court of the buyer's
choice.
(c) An agreement to arbitrate before a specified tribunal is, in effect, a
specialized kind of forum selection clause that posits not only the situs of
suit, but also the procedure to be used in resolving the dispute, and the
invalidation of the arbitration clause in this case would not only allow
respondent to repudiate its solemn promise but would, as well, reflect a
"parochial concept that all disputes must be resolved under our laws and in
our courts."
Reversed and Remanded.
ASIAVEST MERCHANT BANKERS vs. CA
NORTHWEST ORIENT AIRLINES INC. vs. CA

OF LAWS ATTY. ABAD
FACTS
[In 1974, an International Passenger Sales Agency Agreement was
entered into by plaintiff Northwest Orient Airlines (Northwest) and
defendant C.F. Sharp & Co. (Sharp), through its Japan branch, whereby
Northwest authorized Sharp to sell the former's airlines tickets. Sharp
failed to remit the proceeds of the ticket sales it made on behalf of
Northwest under the agreement which led the latter to sue in Tokyo for
collection of the unremitted amount, with claim for damages.
The Tokyo District Court of Japan issued a writ of summons against Sharp
at its office in Yokohama, Japan but the bailiff failed twice to serve the
writs. Finally, the Tokyo District Court decided to have the writs of
summons served at Sharp's head office in Manila. Sharp accepted the writs
but despite such receipt, it failed to appear at the hearings. The District
Court proceeded to hear the complaint and rendered judgment ordering
Sharp to pay Northwest the sum of 83,158,195 Yen plus damages. Sharp
failed to appeal and the judgment became final and executory.
Northwest failed to execute the decision in Japan, hence, it filed a suit for
enforcement of the judgment before the Regional Trial Court of Manila.
Sharp filed its answer averring that the judgment of the Japanese court is
null and void and unenforceable in this jurisdiction having been rendered
without due and proper notice to Sharp.
The case for enforcement of judgment was tried on the merits. Sharp filed
a Motion for Judgment on a Demurrer to Evidence. The trial court granted
the demurrer motion, holding that the foreign judgment in the Japanese
court sought to be enforced is null and void for want of jurisdiction over
the person of the defendant. Northwest appealed but the Court of Appeals
sustained the trial court, holding that the process of the court has no
extraterritorial effect and no jurisdiction was acquired over the person of
the defendant by serving him beyond the boundaries of the state. Hence,
this appeal by Northwest.]
RULING
"A foreign judgment is presumed to be valid and binding in the country
from which it comes, until the contrary is shown. It is also proper to
presume the regularity of the proceedings and the giving of due notice
therein.

A.M.+D.G.
CONFLICT
Under Section 50, Rule 39 of the Rules of Court, a judgment in an action

in personam of a tribunal of a foreign country having jurisdiction to
pronounce the same is presumptive evidence of a right as between the
parties and their successors-in-interest by a subsequent title. The
judgment may, however, be assailed by evidence of want of jurisdiction,
want of notice to the party, collusion, fraud, or clear mistake of law or
fact. Also, under Section 3 of Rule 131, a court, whether of the Philippines
or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of
overcoming the presumption of its validity. Being the party challenging the
judgment rendered by the Japanese court, SHARP had the duty to
demonstrate the invalidity of such judgment. In an attempt to discharge
that burden, it contends that the extraterritorial service of summons
effected as its home office in the Philippines was not only ineffectual but
also void, and the Japanese Court did not, therefore, acquire jurisdiction
over it.
It is settled that matters of remedy and procedure such as those relating
to the service of process upon a defendant are governed by the lex fori or
the internal law of the forum. In this case, it is the procedural law of Japan
where the judgment was rendered that determines the validity of the
extraterritorial service'of process on SHARP. As to what this law is is a
question of fact, not of law. It may not be taken judicial notice of and must
be pleaded and proved like any other fact. Sections 24 and 25, Rule 132 of
the Rules of Court provide that it may be evidenced by an official
publication or by a duly attested or authenticated copy thereof. It was then
incumbent upon SHARP to present evidence as to what that Japanese
procedural law is and to show taat under it, the assailed extraterritorial
service is invalid. It did not. Accordingly, the presumption of validity and
regularity of the service of summons and the decision thereafter rendered
by the Japanese court must stand.
Alternatively, in the light of the absence of proof regarding Japanese law,
the presumption of identity or similarity or the so-called processual
presumpcion may be invoked. Applying it, the Japanese law on the matter
is presumed to be similar with the Philippine law on service of summons on
a private foreign corporation doing business ir, the Philippines. Section 14
of the Rules of Court provides that if the defendant is a foreign corporation

OF LAWS ATTY. ABAD
doing business in the Philippines, service may be made: 1) on its resident

agent designated in accordance with law for that purpose, or 2) if there is
no such resident agent, on the government official designated by law to
that effect, or 3) on any of its officers or agents within the Philippines.
If the foreign corporation has designated an agent to receive summons,
the designation is exclusive, and service of summons is without force and
gives the court no jurisdiction unless made upon him.
Where the corporation has no such great agent, service shall be made on
the government official designated by law, to wit: (a) the Insurance
Commissioner, in the case of a foreign insurance company; (b) the
Superintendent of Banks, in the case of a foreign banking corporation; and
(c) the Securities and Exchange Commission, in the case of other foreign
corporations duly licensed to do business in the Philippines. Whenever
service of process is so made, the government office or official served shall
transmit by mail a copy of the summons or other legal process to the
corporation at its home or principal office. The sending of such copy is a
necessary part of the service.
xxx
Nowhere in its pleadings did SHARP profess to having had a resident agent
authorized to receive court processes in Japan. This silence could only
mean, or at least create an impression, that it had none. Hence, service on
the designated government official or any of its officers or agents in Japan
could be availed of.
xxx
As found by the Court of Appeals, it was the Tokyo District Court which
ordered that summons for SHARP be served at its head office in the
Philippines after the two attempts of service had failed. The Tokyo District
Court requested the Supreme Court of Japan to cause the delivery of the
summons and other legal documents to the Philippines. Acting on that
request, the Supreme Court of Japan sent the summons together with the
other legal documents to the Ministry of Foreign Affairs of Japan, which in
turn, forwarded the same to the Japanese Embassy in Manila. Thereafter,
the court processes were delivered to the Ministry (now Department) of
Foreign Affairs of the Philippines then to the Executive Judge of the Court

A.M.+D.G.
CONFLICT
of First Instance (now Regional Trial Court) of Manila, who forthwith

ordered Deputy Sheriff Rolando Balingit to serve the same on SHARP at its
principal office in Manila. This service is equivalent to service on the proper
government official under Section 14, Rule 14 of the Rules of Court, in
relation to Section 128 of the Corporation Code. Hence, SHARP's
contention that such manner of service is not valid under Philippine law
holds no water.
xxx
Inasmuch as SHARP was admittedly doing business in Japan through its
four registered branches at the time the collection suit against it was filed,
then in the light of the processual presumption, SHARP may be deemed a
resident of JAPAN, and, as such, was amenable to the jurisdiction of the
courts therein and may be deemed to have assented to the said courts'
lawful methods of serving process.
Accordingly, the extraterritorial service of summons on it by the Japanese
Court was valid not only under the processual presumption but also
because of the presumption of regularity of performance of official duty.
xxx
Wherefore, the instant petition is partly GRANTED, and the challenged
decision is AFFIRMED insofar as it denied NORTHWEST's claims for
attorney's fees, litigation expenses, and exemplary damages but
REVERSED insofar as it sustained the trial court's dismissal of
NORTHWEST's complaint in Civil Case No. 83-17637 of Branch 54 of the
Regional Trial Court of Manila, and another in its stead is hereby rendered
ORDERING private respondent C.F. SHARP & COMPANY, INC. to pay
NORTHWEST the amounts adjudged in the foreign judgment subject of
said case, with interest thereon at the legal rate from the filing of the
complaint therein until the said foreign judgment is fully satisfied."
BACHCHAN vs. INDIA ABROAD PUBLICATIONS INC.
*TO FOLLOW
BRIDGEWAY CORP. vs. CITIBANK
*TO FOLLOW

OF LAWS ATTY. ABAD
SIEDLER vs. JACOBSON

FACTS
While on a week's holiday in Vienna, defendant and his companion
purchased an antique porcelain figure from plaintiff dealer, but
subsequently refused to honor payment on the ground that plaintiff had
misrepresented the article's age and value. Two years later, defendant was
served in New York with process (in German) issued out of the Austrian
Superior Court, based upon that Nation's counterpart to New York's "longarm" statute (CPLR 302). Upon defendant's default, plaintiff instituted this
action pursuant to CPLR article 53 to enforce the foreign judgment.
The trial court granted the purchaser's motion for summary judgment and
dismissed the complaint. On appeal, the court held that the foreign
judgment should not be enforceable in New York for lack of jurisdiction
over the purchaser because the foreign long arm statute was overly broad
and created an entirely too liberal base of jurisdiction. The order of the
trial court that granted the purchaser's motion for summary judgment in a
suit by the seller to recover payment was affirmed.
RULING
We agree with Special Term's conclusion that the judgment should not be
enforceable in New York for lack of jurisdiction over the defendant.
Analysis of the legislative history of article 53 makes clear that it was not
within the intendment of that statute to adopt the broad definition of
"transacting any business" applicable under CPLR 302 as the criterion for
extending recognition to foreign country judgments themselves bottomed
upon correspondingly liberal bases of jurisdiction. While we are cognizant
of the desirability of affording recognition to foreign country judgments so
that judgments obtained in our own courts will receive reciprocally
favorable treatment abroad, the nature of defendant's solitary act in this
case was so casual and incidental to the foreign forum that it could not
possibly serve as a jurisdictional predicate sufficient to grant conclusive
effect to the default judgment sued upon.
BOUDARD vs. TAIT
FACTS

A.M.+D.G.
CONFLICT
[Emilie Renee Boudard, as widow of Marie Theodore Jerome Boudard and

as guardian of their children, obtained a favorable judgment from the
Court of First Instance of Hanoi, French Indo-China, for the sum of 40,000
piastras, against Stewart Eddie Tait who had been declared in default for
his failure to appear at the trial. Said judgment was based on the fact that
Mr. Boudard, who was an employee of Tait, was killed in Hanoi by coemployees although outside the fulfillment of a duty.
Emilie Bouderd filed a petition with the CFI of Manila for the execution of
the Hanoi judgment but the court dismissed the complaint on the ground
of lack of jurisdiction of the Hanoi Court, Tait not being a resident of that
country.
RULING
". ..It is said that the French law regarding summons, according to its
English translation presented by the appellants, is of the following tenor:
"SEC. 69 (par. 8). Those who have no known residence in France, in the
place of their present residence; if the place is unknown, the writ shall be
posted at the main door of the hall of the court where the Complaint has
been filed; a second copy shall be given to the Attorney-General of the
Republic who shall visae the origilLal." But then, Exhibits E, E-1, F and F-1
show that the summons alleged to have been addressed to the appellee,
was delivered in Manila on September 18, 1933, to J.M. Shotwell, a
representative or agent of Churchill & Tait, Inc., which is an entity entirely
different from the appellee.
Moreover, the evidence of record shows that the appellee was not in Hanoi
during the time mentioned in the complaint of the appellants, nor were his
employees or representatives. The rule in matters of this nature is that
judicial proceedings in a foreign country, regarding payment of money, are
only effective against a party if summons is duly served on him within
such foreign country before the proceedings.
"The fundamental rule is that jurisdiction in personam, over nonresidents,
so as to sustain a money judgment, must be based upon personal service
within the state which renders the judgment.
Xxx

OF LAWS ATTY. ABAD
It can not be said that the decision rendered by the Court of Hanoi should
be conclusive to such an extent that it cannot be contested, for it merely
constitutes, from the viewpoint of our laws, prima facie evidence of the
justness of appellants' claim, and, as such, naturally admits proof to the
contrary...
In view of the foregoing considerations, our conclusion is that we find no
merit in the errors assigned to the lower court and the appealed judgment
is in accordance with the law."
RAMIREZ vs. GMUR
FACTS
[Samuel Bischoff Werthmuller, a native of Switzerland, and for many
years a resident of the Philippines, died in Iloilo on June 29, 1913, leaving
a valuable estate which he disposed by will. The first clause of the will
contains a statement to the effect that inasmuch as the testator had no
children from his marriage, he had no forced heirs. In making this
statement, the testator ignored the possible claims of two sets of
children, born to his natural daughter Leona Castro.
It was shown that in 1895, Castro was married to Frederick Von
Kauffman, a British subject. Three children were born of this marriage,
namely, Elena, Federico and Ernesto. In 1904, Kauffman went to Paris,
France for the purpose of obtaining a divorce from Castro under French
law. On January 5, 1905, a decree of divorce was issued. On May 5, 1905,
Castro married Dr. Ernest Emil Mory, in Westminster, England. Two
children were born of that marriage, namely Carmen and Esther, and
Leontina who was born before they were married.
On October 6, 1910, Castro died. Both sets of children
claim that Leona Castro was the recognized natural daughter of Bischoff
and as such would have been his forced heir had she been alive at the
time of her father's death.]
RULING
xxx
"With reference to the rights of the von Kauffman children, it is enough to
say that they are legitimate children, born to their parents in lawful

A.M.+D.G.
CONFLICT
wedlock; and they are therefore entitled to participate in the inheritance

which would have devolved upon their mother, if she had survived the
testator.
As regards the Mor,+ claimants, it is evident that their rights principally
depend upon the effect to be given by this court to the decree of divorce
granted to Von Kauffman by the Court of First Instance of the City of
Paris...
xxx
We are of the opiniop that the decree of divorce upon which reliance is
placed by the representation of the Mory children cannot be recognized as
valid in the courts of the Philippine Islands. The French tribunal has no
jurisdiction to entertain ail action for the dissolution of a marriage contracted in these Islands by persons domiciled here, such marriage being
indissoluble under the laws then prevailing in this country.
xxx
It is established by the great weight of authority that the court of a
country in which neither of the spouses is domiciled and to which one or
both of them may resort merely for the purpose of obtaining a divorce has
no jurisdiction to determine their matrimonial status; and a divorce
granted by such a court is not entitled to recognition elsewhere. (See Note
to Succession of Benton, 59 L.R.A. 143.) The voluntary appearance of the
defendant before such a tribunal does not invest the court with
jurisdiction.
xxx
As the divorce granted by the French court must be ignored, it results that
the marriage of Doctor Mory and Leona Castro, celebrated in London in
1905, could not legalize their relations; and the circumstance that they
afterwards passed for husband and wife in Switzerland until her death is
wholly without legal significance. The claims of the Mory children to
participate in the estate of Samuel Bischoff must therefore be rejected.
The right to inherit is limited to legitimate, legitimated, and acknowledged
natural children. The children of adulterous relations are wholly excluded.

OF LAWS ATTY. ABAD
The word "descendants" as used in Article 941 of the Civil Code cannot be
interpreted to include illegitim4tes born of adulterous relations."
For as long as the foreign court acquired jurisdiction, its decisions will not
be disturbed whether it was reached through an adversary proceeding or
by default. In one case, Somportex v. Philadelphia Chewing Gum Corp.,"
the court rejected Philadelphia's contention that a default judgment
rendered by the English courts should not be extended hospitality by
American courts. It ruled that "(i)n the absence of fraud or collusion, a
default judgment is as conclusive as adjudication between the parties as
when rendered after answer and complete contest in open court.... The
polestar is whether a reasonable method of notification is employed and
reasonable opportunity to be heard is afforded to the person affected."
NOUVION vs. FREEMAN
FACTS
[Henderson, during his lifetime, purchased certain properties in the district
of Seville, Spain from Nouvion. The deeds by which those properties were
conveyed contained an obligation to make certain payments, and they
were registered in the registry off the district of San Roman. According to
the law of Spain, the person who is entitled to payment under such deeds
can obtain what is called an "executive" judgment.
Nouvion brought this action for the administration of the estate of the
deceased Henderson. In order to secure to the administration of said
estate, it was necessary for him to show that he was a creditor of the
deceased.
In the presentation of his case, Nouvion alleged that he obtained a
judgment of' , a foreign court upon which he was entitled to sue in that
country, and which in that country established the existence of a debt. The
question now is whether such judgment or decree can be sustained under
the English jurisdiction.]
RULING
"Now, there can be no doubt that in the Courts of this country effect will
be given to a foreign judgment. It is unnecessary to inquire upon what
principle the Courts proceed in giving effect to such a judgment and in
treating it as sufficient to establish the debt. Reliance was placed upon a

A.M.+D.G.
CONFLICT
dictum by Mr. Baron Parke and Mr. Baron Alderson in the case of Williams
v. Jones (13 M. & W. 628; 14 L.J. Exch. 145) where the law is thus stated:
"Where a Court of competent jurisdiction has adjudicated a certain sum to
be due from one person to another, a legal obligation arises to pay that
sum, on which an action of debt to enforce the judgment may be
maintained." But it was conceded, and necessarily conceded, by the
learned counsel for the appellant, that a judgment, to come within the
terms of the law as properly laid down, muct be a judgment which results
from an adjudication of a Court of competent jurisdiction, such judgment
being final and conclusive.
XXX
It is obvious, therefore, that the mere fact that the judgment puts an
end to and finally sett'.es the controversy which was in question in the
particular proceeding, is not of itself sufficient to make it a final and
conclusive judgment upon which an action in the Courts of this country
may be maintained, when such judgment has been pronounced by a
foreign Court.
I think that in order to establish that such a judgment has been
pronounced, it must be shown that in the Court by which it was
pronounced it conclusively and finally and forever settles the existence of
the debt of Whicl-h it is sought to be made conclusive evidence in this
country, so as to become res judicata between the parties. If in the same
Court which pronounced it it is not conclusive, so that notwithstanding
such a judgment the existence of the debt may between the same parties
be afterwards contested in the same Court, and upon proper proceedings
being taken and such contest being adjudicated upon it may be declared
that there existed no obligation to pay the debt at all, then I do not think
that a judgment which is of that character can be regarded as finally and
conclusively evidencing the debt, and so entitling the person who has
obtained the judgment to claim a decree from our Courts for the payment
of that debt. The principle upon which I think our enforcement of foreign
judgments must proceed is this: that in a Court of competent jurisdiction,
where according to its established procedure the whole merits of the case
were open at all events to the parties, however much they may have failed
to take advantage of them or may have waived any of their rights, a final
adjudication has been given that a debt or obligation exists which cannot

OF LAWS ATTY. ABAD
thereafter in that Court be disputed, and can only be questioned in an

appeal to a higher tribunal. In such a case it may well be said that, giving
credit to the Courts of another country, we are prepared to take the fact
that such adjudication has be ,en made as establishing the existence of
the debt or obligation. But where, as in the present case, the adjudication
is consistent with the nonexistence of the debt or obligation which it is
sought to enforce, and it may thereafter be declared by that tribunal that
there is no obligation and no debt, it appears to be that the very
foundation upon which the Courts of this country would proceed in
enforcing a foreign judgment altogether fails."
COWANS et. Al. vs. TECONDEROGA PULP & PAPER CO.
RULING
"(1] The action is brought to recover on a money judgment which thes ~
plaintiffs recovered in the province of Quebec, Canada. The Quebec court
had jurisdiction of the action and of the defendant. The case was there
tried on the merits, and the judgment is not tainted with fraud, nor with
an offense against our public policy. The presumption is that a judgment
so rendered determined the rights and liabilities of the defendant
according to the law and procedure of the court where it was rendered.
The question presented here is whether this Quebec judgment is in our
court merely prima facie proof of liability, against which any defense
which could have been used at the trial in the Quebec court is available to
defeat recovery here, or is it conclusive, subject only to the recognized
exceptions. The respondent's proposition is that the judgment is only
prima facie evidence, because, under the Quebec law (Code of Civil
Procedure of Quebec, 210), "any defense which was or might have been
set up in the original action may be pleaded to an action brought upon a
judgment rendered out of Canada"; in other words, that the courts of
New York state should not recognize the judgments of the province of
Quebec as adjudications of the issues, because the courts of Quebec do
not reciprocate as to judgments of the state of New York,
xxx
[3] The general rule in this state as follows: A judgment recovered in a
foreign country, when sued upon in the courts of this state, is conclusive,

A.M.+D.G.
CONFLICT
so far as to preclude a retrial of the merits of the case, subject, however,

to certain wellrecognized exceptions, namely, where the judgment is
tainted with fraud, or with an offense against the public policy of the
state, or the foreign court had not jurisdiction. ..
[4] The respondent does not question the general rule as above stated,
but urges that the denial of reciprocity in the province of Quebec furnishes
a further exception to the general rule. It rests its contention confidently
on the decision in Hilton v. Guyot... The prevailing opinion recognized the
general rule as above stated, but held that the courts of this country
should recognize the judgment of the French court as prima facie evidence
only, and not as conclusive on the merits, because such only is the effect
which France gives to a judgment of our courto; that is, because of lack of
reciprocity between the two countries. In the prevailing opinion, page 228
(16 S.Ct. 168), it is said:
"In holding such a judgment, for want of reciprocity, not to be
conclusive evidence of the merits of the claim, we do not proceed
upon any theory of retaliation upon one person by reason of injustice
done to another; but upon the broad ground that international law is
founded upon mutuality and reciprocity, and that by the principles of
international law, recognized is most civilized nations, and by the
comity of our own country, which it is our duty to know and to
declare, the judgment is not entitled to be considered conclusive."
These quotations express the prevailing and dissenting conclusions in the
Hilton Case on the one. question here. The Court of Appeals in its latest
utterance has not accepted the decision in the Hilton Case as controlling
authority in this state upon this question. In Johnston v. Compagnie
GeneraM Transatlantique, 242 N.Y. 381, 152 N.E. 121, the answer set up
as a defense a judgment rendered in favor of the defendant in an action in
a court of France by this plaintiff to recover for the same cause of action
be sued upon here. The trial court and the Appellate Division (214 App.
Div. 775, 210 N.Y.S. 868), upon the authority of the Hilton Case, refused
to recognize the effect of the foreign judgment, except as prima facie
evidence, because of lack of reciprocity on the part of France, and
judgment went accordingly. The Court of Appeals reversed this judgment
and Judge Pound writing does not follow the prevailing opinion in the
Hilton Case, saying that the question is still "an open one in this court."

OF LAWS ATTY. ABAD
Part of the discussion in the opinion is a quotation from the dissenting

opinion in the Hilton Case which is approved. The rule controlling in this
state is held to be the rule as stated in Dunstan v. Higgins, supra. From
this specific enunciation there is no later departure; nowhere is any
exception to the rule, other than the well-recognized exceptions
mentioned.
Among other things it is said that private rights are acquired under the
foreign judgment, that "the question here is one private rights rather than
public relations," and "our courts will recognize private rights acquired
under foreign laws and the sufficiency of the evidence establishing such
rights"; the rule, though it had its source in comity, "prevails today by its
own strength"; it "rests, not on the basis of reciprocity, but rather upon
the persuasiveness of the foreign judgment." It is true Judge Pound
suggests that the rule in New York state could upheld in this case without
disregarding the prevailing opinion; that much in that opinion is dictum,
and that that which was necessarily decided was not in conflict with the
general rule in this state; that in any event this plaintiff, who had invoked
the powers of a foreign court, could not now be heard to question who t
his own choice had brought upon him. But these comments are not the
basis of the decision; they are but assurances that the application of the
rule is in this case particularly just. The last sentence of the opinion is:
"The law of the state of New York remains unchanged and the
French judgment should be given full faith and credit."
Of course comity adds nothing to the strength, worth, or, as Judge Pound
calls it, "persuasiveness" of -the foreign judgment. The same
persuasiveness is present with or without comity, or with or without
reciprocity, and, without reciprocity the United States Supreme Court still
gives the foreign judgment recognition. It is to be received in evidence as
prima facie proof of the cause of action. If no defense on the merits is
made, it is sufficient proof on which to render judgment. Still, if there is
want of reciprocity between the two countries, that court would deny to
the foreign judgment the persuasiveness it really possesses. Our Court of
Appeals has, we think, definitely refused to accept that holding as the
policy of this state, and, without reciprocity, would give to the foreign
judgment the full effect to which its persuasiveness entitles it. The decision
in the Hilton Case would deprive a party of the private rights he has

A.M.+D.G.
CONFLICT
acquired by reason of a foreign judgment because the country in whose

courts that judgment was rendered has a different rule of evidence than
we have and does not give the same effect as this state gives to a foreign
judgment.
We think the general rule as above stated must be applied to this case,
and that the proposition which the respondent would maintain is in conflict
with the policy and law of this state. The order appealed from should be
reversed, with costs, and the motion for judgmert on the pleadings
granted, with costs.
Order reversed, with $10 costs and disbursements, and motion for
judgment on the pleadings granted, with $10 costs. All concur."
INGENOHL vs. OLSEN & CO.
FACTS
[Petitioner Ingenohl brought a suit against defendant Walter Olsen and Co.
in Hongkong for infringement of trademark. The court ruled in the plaintiffs
favor declaring him to be the owner of certain trademarks and trade
names and entitled to their exclusive use in conn<~ction with his business
as a cigar manufacturer. The court also restrained Olsen and Co. from
using and selling cigars under these trademarks and ordered it to pay the
costs.
Petitioner brought this present suit to recover the costs adjudged against
Olsen and Co. by the Hongkong court, which the CFI of Manila granted.
On appeal, the Supreme Court reversed the decision on ground that by
the provision of the Code of Civil Procedure, a judgment against a person
may be repelled by evidence of want of jurisdiction, want of notice to the
party, collusion, fraud, clear mistake of law or fact, and that the judgment
of the Supreme Court of Hongkong showed such a clear mistake.
The supposed mistake consisted in denying effect in Hongkong to the sale
to Olsen and Co. of business and trademarks seized by the Alien Property
Custodian from Ingenohl in 1918. The Supreme Court of the Philippines
held that it was plain error by the Supreme Court of Hongkong to hold that
this sale did not carry the exclusive right to use the trademarks in
Hongkong.

OF LAWS ATTY. ABAD
RULING
"A trademark started elsewhere would depend for its protection in
Hongkong upon the law prevailing in Hongkong and would confer no rights
except by the consent of that law. Hanouer Star Milling Co. v. Metcalf, 240
U.S. 403; United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90. When,
then, the judge who, in the absence of an appeal to the Privy Council, is
the final exponent of that law, authoritatively declares that the assignment
by the Custodian of the assets of the Manila firm cannot and will not be
allowed to affect the rights of the party concerned in Hongkong, we do not
see how it is possible for a foreign Court to pronounce his decision wrong.
It will be acted on and settles the rights of the parties in Hongkong; and in
view of the fact it seems somewhat paradoxical to say that it is not the
law. If the Alien Property Custodian purported to convey rights in English
territory valid as against those whom the English law protects he exceeded
the powers that were or could be given to him by the United States.
It is not necessary to consider whether the section of the Code of Civil
Procedure relied upon was within the power of the Philippine Commission
to pass. In any event as interpreted it involved delicate considerations of
international relations and therefore we should not hold ourselves bound
to that deference that we show to the judgment of the local Court upon
matters of only local concern. We are of opinion that whatever scope may
be given to the section it is far from warranting the refusal to enforce this
English judgment for costs, obtained after a fair trial before a court having
jurisdiction of the parties, when the judgment is unquestionably valid and
in other respects will be enforced. Of course a foreign state might accept
the Custodian's transfer as good within its jurisdiction, if there were no
opposing local interest or right, and that may be the fact for China outside
of Hongkong as seems to have been held in another case not yet finally
disposed of, but no principle requires the transfer to be given effect
outside of the United States and when as here it has been decided to have
been ineffectual it is unnecessary to inquire whether in the other event the
Alien Property Custodian was authorized by the statute to use or did use in
fact words purporting to have that effect, or what the effect, if any, would
be."
REPUBLIC vs. GUINGOYAN

A.M.+D.G.
CONFLICT
FACTS
This case is a motion for reconsideration for a previous decision of the SC.
In the assailed decision of the SC, it ruled that PIATCO should be justly
compensated before the Government can take over the NAIA Terminal 3.
Now, the Government is arguing that PIATCO should not be paid because it
has
pending
obligations
with
Takenaka Corporation (Takenaka)
and Asahikosan (Asahikosan) Corporation for services rendered by the
said corporations in building the Terminal. It argues that the said
corporations still has pending liens on the Terminal. The situation the
Republic now faces is that if any part of its Php3,002,125,000 deposit is
released directly to PIATCO, and PIATCO, as in the past, does not wish to
settle its obligations directly to Takenaka, Asahikosan and Fraport, the
Republic may end up having expropriated a terminal with liens and claims
far in excess of its actual value, the liens remain unextinguished, and
PIATCO on the other hand, ends up with the Php3,0002,125,000 in its
pockets gratuitously.
ISSUE
Should the Government pay PIATCO just compensation before taking over
the Terminal? YES
RULING
The Court is wont to reverse its previous rulings based on factual premises
that are not yet conclusive or judicially established. Certainly, whatever
claims or purported liens Takenaka and Asahikosan against PIATCO or over
the NAIA 3 have not been judicially established.
Neither Takenaka norAsahikosan are parties to the present action, and
thus have not presented any claim which could be acted upon by this
Court. The earlier adjudications in Aganv. PIATCO made no mention of
either Takenaka or Asahikosan, and certainly made no declaration as to
their rights to any form of compensation. If there is indeed any right to
remuneration due to these two entities arising from NAIA 3, they have not
yet been established by the courts of the land.
It must be emphasized that the conclusive ruling in the Resolution
dated 21 January 2004 in Agan v. PIATCO (Agan 2004) is that PIATCO, as
builder of the facilities, must first be justly compensated in accordance
with law and equity for the Government to take over the facilities. It is on

OF LAWS ATTY. ABAD
that premise that the Court adjudicated this case in its 19 December
2005 Decision.
While the Government refers to a judgment rendered by a London court in
favor of Takenaka and Asahikosan against PIATCO in the amount of US$82
Million, it should be noted that this foreign judgment is not yet binding on
Philippine courts. It is entrenched in Section 48, Rule 39 of the Rules of
Civil Procedure that a foreign judgment on the mere strength of its
promulgation is not yet conclusive, as it can be annulled on the grounds of
want of jurisdiction, want of notice to the party, collusion, fraud, or clear
mistake of law or fact. It is likewise recognized in Philippine jurisprudence
and international law that a foreign judgment may be barred from
recognition if it runs counter to public policy.
Assuming that PIATCO indeed has corresponding obligations to other
parties relating to NAIA 3, the Court does not see how such obligations,
yet unproven, could serve to overturn the Decision mandating that the
Government first pay PIATCO the amount of 3.02 Billion Pesos before it
may acquire physical possession over the facilities. This directive enjoining
payment is in accordance with Republic Act No. 8974, and under the
mechanism established by the law the amount to be initially paid is that
which is provisionally determined as just compensation. The provisional
character of this payment means that it is not yet final, yet sufficient under
the law to entitle the Government to the writ of possession over the
expropriated property.
There are other judicial avenues outside of this Motion for Reconsideration
wherein all other claims relating to the airport facilities may be ventilated,
proved and determined. Since such claims involve factual issues, they
must first be established by the appropriate trier of facts before they can
be accorded any respect by or binding force on this Court.
VELEZ vs. DE VERA
*TO FOLLOW

A.M.+D.G.
CONFLICT
GONZALES vs. CLIMAX MININGLTD

FACTS
While a complaint for the nullification of the Addendum Contract was
pending before the DENR Panel of Arbitrators, respondent Climax-Arimco
filed a petition to compel arbitration before the RTC of Makati City. ClimaxArimco had sent Gonzales a Demand for Arbitration pursuant to Clause
19.1 of the Addendum Contract and also in accordance with Sec. 5 of R.A.
No. 876. The petition for arbitration was subsequently filed and ClimaxArimco sought an order to compel the parties to arbitrate pursuant to the
said arbitration clause.
Gonzales seeks to dismiss because according to him, Sec. 6 of R.A. No.
876 and the Alternative Dispute Resolution Act or R. A. No. 9285 mandate
that any issue as to the nullity, inoperativeness, or incapability of
performance of the arbitration clause/agreement raised by one of the
parties to the alleged arbitration agreement must be determined by the
court prior to referring them to arbitration. They require that the trial court
first determine or resolve the issue of nullity, and there is no other venue
for this determination other than a pre-trial and hearing on the issue by
the trial court which has jurisdiction over the case. Gonzales adds that the
assailed Trial Court Order also violated his right to procedural due process
when the trial court erroneously ruled on the existence of the arbitration
agreement despite the absence of a hearing for the presentation of
evidence on the nullity of the Addendum Contract.
Respondent Climax-Arimco, on the other hand, contends that an
application to compel arbitration under Sec. 6 of R.A. No. 876 confers on
the trial court only a limited and special jurisdiction, i.e., a jurisdiction
solely to determine (a) whether or not the parties have a written contract
to arbitrate, and (b) if the defendant has failed to comply with that
contract. Climax-Arimco argues that R.A. No. 876 gives no room for any
other issue to be dealt with in such a proceeding, and that the court
presented with an application to compel arbitration may order arbitration
or dismiss the same, depending solely on its finding as to those two
limited issues. If either of these matters is disputed, the court is required
to conduct a summary hearing on it. Climax-Arimco further notes that
Gonzaless attack on or repudiation of the Addendum Contract also is not a
ground to deny effect to the arbitration clause in the Contract. The

OF LAWS ATTY. ABAD
arbitration agreement is separate and severable from the contract

evidencing the parties commercial or economic transaction, it stresses.
Hence, the alleged defect or failure of the main contract is not a ground to
deny enforcement of the parties arbitration agreement. TC and SC for
Climax.
ISSUE
Whether it was proper for the RTC, in the proceeding to compel arbitration
under R.A. No. 876, to order the parties to arbitrate even though the
defendant therein has raised the twin issues of validity and nullity of the
Addendum Contract and, consequently, of the arbitration clause therein as
well. YES
Whether the question of validity of the Addendum Contract bears upon the
applicability or enforceability of the arbitration clause contained therein.
NO.
RULING
Arbitration, as an alternative mode of settling disputes, has long been
recognized and accepted in our jurisdiction. The Civil Code is explicit on
the matter. R.A. No. 876 also expressly authorizes arbitration of domestic
disputes. Foreign arbitration, as a system of settling commercial disputes
of an international character, was likewise recognized when the Philippines
adhered to the United Nations "Convention on the Recognition and the
Enforcement of Foreign Arbitral Awards of 1958," under the 10 May 1965
Resolution No. 71 of the Philippine Senate, giving reciprocal recognition
and allowing enforcement of international arbitration agreements between
parties of different nationalities within a contracting state.The enactment
of R.A. No. 9285 on 2 April 2004 further institutionalized the use of
alternative dispute resolution systems, including arbitration, in the
settlement of disputes.
Disputes do not go to arbitration unless and until the parties have agreed
to abide by the arbitrators decision. Necessarily, a contract is required for
arbitration to take place and to be binding. R.A. No. 876 recognizes the
contractual nature of the arbitration agreement, thus: Sec. 2. Persons and
matters subject to arbitration.Two or more persons or parties may
submit to the arbitration of one or more arbitrators any controversy
existing, between them at the time of the submission and which may be

A.M.+D.G.
CONFLICT
the subject of an action, or the parties to any contract may in such

contract agree to settle by arbitration a controversy thereafter arising
between them. Such submission or contract shall be valid, enforceable and
irrevocable, save upon such grounds as exist at law for the revocation of
any contract.Such submission or contract may include question arising out
of valuations, appraisals or other controversies which may be collateral,
incidental, precedent or subsequent to any issue between the parties.A
controversy cannot be arbitrated where one of the parties to the
controversy is an infant, or a person judicially declared to be incompetent,
unless the appropriate court having jurisdiction approve a petition for
permission to submit such controversy to arbitration made by the general
guardian or guardian ad litem of the infant or of the incompetent.
The special proceeding under Sec. 6 of R.A. No. 876 recognizes the
contractual nature of arbitration clauses or agreements. It provides:Sec.
6. Hearing by court.A party aggrieved by the failure, neglect or refusal
of another to perform under an agreement in writing providing for
arbitration may petition the court for an order directing that such
arbitration proceed in the manner provided for in such agreement. Five
days notice in writing of the hearing of such application shall be served
either personally or by registered mail upon the party in default. The court
shall hear the parties, and upon being satisfied that the making of the
agreement or such failure to comply therewith is not in issue, shall make
an order directing the parties to proceed to arbitration in accordance with
the terms of the agreement. If the making of the agreement or default be
in issue the court shall proceed to summarily hear such issue. If the
finding be that no agreement in writing providing for arbitration was
made, or that there is no default in the proceeding thereunder, the
proceeding shall be dismissed. If the finding be that a written provision for
arbitration was made and there is a default in proceeding thereunder, an
order shall be made summarily directing the parties to proceed
with the arbitration in accordance with the terms thereof.
This special proceeding is the procedural mechanism for the enforcement
of the contract to arbitrate. Implicit in the summary nature of the judicial
proceedings is the separable or independent character of the arbitration
clause or agreement. The doctrine of separability, or severability as other
writers call it, enunciates that an arbitration agreement is independent of
the main contract. The arbitration agreement is to be treated as a separate

OF LAWS ATTY. ABAD
agreement and the arbitration agreement does not automatically terminate

when the contract of which it is part comes to an end.The separability of
the arbitration agreement is especially significant to the determination of
whether the invalidity of the main contract also nullifies the arbitration
clause. Indeed, the doctrine denotes that the invalidity of the main
contract, also referred to as the "container" contract,
does not affect the validity of the arbitration agreement.
Irrespective of the fact that the main contract is invalid, the
arbitration clause/agreement still remains valid and enforceable.
The separability of the arbitration clause is confirmed in Art. 16(1) of the
UNCITRAL Model Law and Art. 21(2) of the UNCITRAL Arbitration Rules.
The separability doctrine was dwelt upon at length in the U.S. case of
Prima Paint Corp. v. Flood & Conklin Manufacturing Co.
There is reason, therefore, to rule against Gonzales when he alleges that
Judge Pimentel of the Trial Court acted with grave abuse of discretion in
ordering the parties to proceed with arbitration. Gonzaless argument that
the Addendum Contract is null and void and, therefore the arbitration
clause therein is void as well, is not tenable. First, the proceeding in a
petition for arbitration under R.A. No. 876 is limited only to the resolution
of the question of whether the arbitration agreement exists. Second, the
separability of the arbitration clause from the Addendum Contract means
that validity or invalidity of the Addendum Contract will not affect the
enforceability of the agreement to arbitrate. Thus, Gonzaless petition for
certiorari should be dismissed.
EDI-STAFFBUILDERS INTERNATIONAL INC. vs. NATIONAL LABOR
COMMISSION
*TO FOLLOW
VALENZUELA vs. PEOPLE
*TO FOLLOW
PHILIPPINE EXPORT AND FOREIGN
V.P. EUSEBIO CONSTRUCTION INC.
*TO FOLLOW

LOAN GUARANTEE CORP. vs.
A.M.+D.G.
CONFLICT

Foreign Judgment

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Foreign Judgment

Uploaded by

Copyright:

Available Formats

CONFLICT OF LAWS FOREIGN JUDGMENT

OF LAWS ATTY. ABAD

OIL AND NATURAL GAS vs. CA

Oil and Natural Gas Commission is a foreign corporation, owned

Pacific Cement Co is a Philippine corporation.

The dispute was therefore submitted to arbitration, the arbitrator

3B DIGEST GROUP 2009-2010

judgment of the Indian court apparently simply adopted the award

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

CONFLICT OF LAWS FOREIGN JUDGMENT

"PAYMENT STOPPED." Thus, on May 8, 1998, KOGIES sent a demand letter

3B DIGEST GROUP 2009-2010

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

Philippines and to Establish the Office for Alternative Dispute Resolution,

CONFLICT OF LAWS FOREIGN JUDGMENT

In addition, whatever findings and conclusions made by the RTC Branch

3B DIGEST GROUP 2009-2010

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

CONFLICT OF LAWS FOREIGN JUDGMENT

filed a complaint for "enforcement of foreign judgment", before RTC

3B DIGEST GROUP 2009-2010

enforcement within this jurisdiction of a foreign judgment, must be

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

credit clause does not go so far as to compel Delaware to apply section

Section 480, New York Civil Practice Act: 'Interest to be included in

An opinion in Sampson v. Channell, 1 Cir., 110 F.2d 754, 759762, 128

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

The opportunity to negate the foreign court's competence by proving the

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

scandalous conduct. He wanted the child tc be raised in a better

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

CONFLICT OF LAWS FOREIGN JUDGMENT

alleged to exist" and, consequently, properly impleaded as defendants in

3B DIGEST GROUP 2009-2010

The arbitration clause is to be respected and enforced by federal courts in

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

Under Section 50, Rule 39 of the Rules of Court, a judgment in an action

CONFLICT OF LAWS FOREIGN JUDGMENT

doing business in the Philippines, service may be made: 1) on its resident

3B DIGEST GROUP 2009-2010

of First Instance (now Regional Trial Court) of Manila, who forthwith

CONFLICT OF LAWS FOREIGN JUDGMENT

SIEDLER vs. JACOBSON

3B DIGEST GROUP 2009-2010

[Emilie Renee Boudard, as widow of Marie Theodore Jerome Boudard and

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

wedlock; and they are therefore entitled to participate in the inheritance

CONFLICT OF LAWS FOREIGN JUDGMENT

3B DIGEST GROUP 2009-2010

CONFLICT OF LAWS FOREIGN JUDGMENT

thereafter in that Court be disputed, and can only be questioned in an

3B DIGEST GROUP 2009-2010

so far as to preclude a retrial of the merits of the case, subject, however,

CONFLICT OF LAWS FOREIGN JUDGMENT