Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 112573 February 9, 1995

NORTHWEST ORIENT AIRLINES, INC. petitioner,

vs.
COURT OF APPEALS and C.F. SHARP & COMPANY INC., respondents.

PADILLA, JR., J.:

This petition for review on certiorari seeks to set aside the decision of the Court of Appeals affirming
the dismissal of the petitioner's complaint to enforce the judgment of a Japanese court. The principal
issue here is whether a Japanese court can acquire jurisdiction over a Philippine corporation doing
business in Japan by serving summons through diplomatic channels on the Philippine corporation at
its principal office in Manila after prior attempts to serve summons in Japan had failed.

Petitioner Northwest Orient Airlines, Inc. (hereinafter NORTHWEST), a corporation organized under
the laws of the State of Minnesota, U.S.A., sought to enforce in Civil Case No. 83-17637 of the
Regional Trial Court (RTC), Branch 54, Manila, a judgment rendered in its favor by a Japanese court
against private respondent C.F. Sharp & Company, Inc., (hereinafter SHARP), a corporation
incorporated under Philippine laws.

As found by the Court of Appeals in the challenged decision of 10 November 1993, 1 the following
are the factual and procedural antecedents of this controversy:

On May 9, 1974, plaintiff Northwest Airlines and defendant C.F. Sharp &
Company, through its Japan branch, entered into an International Passenger
Sales Agency Agreement, whereby the former authorized the latter to sell its
air transportation tickets. Unable to remit the proceeds of the ticket sales
made by defendant on behalf of the plaintiff under the said agreement,
plaintiff on March 25, 1980 sued defendant in Tokyo, Japan, for collection of
the unremitted proceeds of the ticket sales, with claim for damages.

On April 11, 1980, a writ of summons was issued by the 36th Civil
Department, Tokyo District Court of Japan against defendant at its office at
the Taiheiyo Building, 3rd floor, 132, Yamashita-cho, Naka-ku, Yokohoma,
Kanagawa Prefecture. The attempt to serve the summons was unsuccessful
because the bailiff was advised by a person in the office that Mr. Dinozo, the
person believed to be authorized to receive court processes was in Manila
and would be back on April 24, 1980.

On April 24, 1980, bailiff returned to the defendant's office to serve the
summons. Mr. Dinozo refused to accept the same claiming that he was no
longer an employee of the defendant.
After the two attempts of service were unsuccessful, the judge of the Tokyo
District Court decided to have the complaint and the writs of summons
served at the head office of the defendant in Manila. On July 11, 1980, the
Director of the Tokyo District Court requested the Supreme Court of Japan to
serve the summons through diplomatic channels upon the defendant's head
office in Manila.

On August 28, 1980, defendant received from Deputy Sheriff Rolando

Balingit the writ of summons (p. 276, Records). Despite receipt of the same,
defendant failed to appear at the scheduled hearing. Thus, the Tokyo Court
proceeded to hear the plaintiff's complaint and on [January 29, 1981],
rendered judgment ordering the defendant to pay the plaintiff the sum of
83,158,195 Yen and damages for delay at the rate of 6% per annum from
August 28, 1980 up to and until payment is completed (pp. 12-14, Records).

On March 24, 1981, defendant received from Deputy Sheriff Balingit copy of
the judgment. Defendant not having appealed the judgment, the same
became final and executory.

Plaintiff was unable to execute the decision in Japan, hence, on May 20,
1983, a suit for enforcement of the judgment was filed by plaintiff before the
Regional Trial Court of Manila Branch 54.2

On July 16, 1983, defendant filed its answer averring that the judgment of the
Japanese Court sought to be enforced is null and void and unenforceable in
this jurisdiction having been rendered without due and proper notice to the
defendant and/or with collusion or fraud and/or upon a clear mistake of law
and fact (pp. 41-45, Rec.).

Unable to settle the case amicably, the case was tried on the merits. After the
plaintiff rested its case, defendant on April 21, 1989, filed a Motion for
Judgment on a Demurrer to Evidence based on two grounds:
(1) the foreign judgment sought to be enforced is null and void for want of
jurisdiction and (2) the said judgment is contrary to Philippine law and public
policy and rendered without due process of law. Plaintiff filed its opposition
after which the court a quo rendered the now assailed decision dated June
21, 1989 granting the demurrer motion and dismissing the complaint
(Decision, pp. 376-378, Records). In granting the demurrer motion, the trial
court held that:

The foreign judgment in the Japanese Court sought in this

action is null and void for want of jurisdiction over the person
of the defendant considering that this is an action in
personam; the Japanese Court did not acquire jurisdiction
over the person of the defendant because jurisprudence
requires that the defendant be served with summons in Japan
in order for the Japanese Court to acquire jurisdiction over it,
the process of the Court in Japan sent to the Philippines
which is outside Japanese jurisdiction cannot confer
jurisdiction over the defendant in the case before the
Japanese Court of the case at bar. Boudard versus Tait 67
Phil. 170. The plaintiff contends that the Japanese Court
 acquired jurisdiction because the defendant is a resident of
Japan, having four (4) branches doing business therein and in
fact had a permit from the Japanese government to conduct
business in Japan (citing the exhibits presented by the
plaintiff); if this is so then service of summons should have
been made upon the defendant in Japan in any of these
alleged four branches; as admitted by the plaintiff the service
of the summons issued by the Japanese Court was made in
the Philippines thru a Philippine Sheriff. This Court agrees
that if the defendant in a foreign court is a resident in the
court of that foreign court such court could acquire jurisdiction
over the person of the defendant but it must be served upon
the defendant in the territorial jurisdiction of the foreign court.
Such is not the case here because the defendant was served
with summons in the Philippines and not in Japan.

Unable to accept the said decision, plaintiff on July 11, 1989 moved for
reconsideration of the decision, filing at the same time a conditional Notice of
Appeal, asking the court to treat the said notice of appeal "as in effect after
and upon issuance of the court's denial of the motion for reconsideration."

Defendant opposed the motion for reconsideration to which a Reply dated

August 28, 1989 was filed by the plaintiff.

On October 16, 1989, the lower court disregarded the Motion for
Reconsideration and gave due course to the plaintiff's Notice of Appeal. 3

In its decision, the Court of Appeals sustained the trial court. It agreed with the latter in its reliance
upon Boudard vs. Tait 4 wherein it was held that "the process of the court has no extraterritorial effect
and no jurisdiction is acquired over the person of the defendant by serving him beyond the
boundaries of the state." To support its position, the Court of Appeals further stated:

In an action strictly in personam, such as the instant case, personal service

of summons within the forum is required for the court to acquire jurisdiction
over the defendant (Magdalena Estate Inc. vs. Nieto, 125 SCRA 230). To
confer jurisdiction on the court, personal or substituted service of summons
on the defendant not extraterritorial service is necessary (Dial Corp vs.
Soriano, 161 SCRA 739).

But while plaintiff-appellant concedes that the collection suit filed is an action
in personam, it is its theory that a distinction must be made between an
action in personam against a resident defendant and an action in personam
against a non-resident defendant. Jurisdiction is acquired over a non-resident
defendant only if he is served personally within the jurisdiction of the court
and over a resident defendant if by personal, substituted or constructive
service conformably to statutory authorization. Plaintiff-appellant argues that
since the defendant-appellee maintains branches in Japan it is considered a
resident defendant. Corollarily, personal, substituted or constructive service
of summons when made in compliance with the procedural rules is sufficient
to give the court jurisdiction to render judgment in personam.

Such an argument does not persuade.

 It is a general rule that processes of the court cannot lawfully be served
outside the territorial limits of the jurisdiction of the court from which it issues
(Carter vs. Carter; 41 S.E. 2d 532, 201) and this is regardless of the
residence or citizenship of the party thus served (Iowa-Rahr vs. Rahr, 129
NW 494, 150 Iowa 511, 35 LRC, NS, 292, Am. Case 1912 D680). There
must be actual service within the proper territorial limits on defendant or
someone authorized to accept service for him. Thus, a defendant, whether a
resident or not in the forum where the action is filed, must be served with
summons within that forum.

But even assuming a distinction between a resident defendant and non-

resident defendant were to be adopted, such distinction applies only to
natural persons and not in the corporations. This finds support in the concept
that "a corporation has no home or residence in the sense in which those
terms are applied to natural persons" (Claude Neon Lights vs. Phil.
Advertising Corp., 57 Phil. 607). Thus, as cited by the defendant-appellee in
its brief:

Residence is said to be an attribute of a natural person, and can be

predicated on an artificial being only by more or less imperfect analogy.
Strictly speaking, therefore, a corporation can have no local residence or
habitation. It has been said that a corporation is a mere ideal existence,
subsisting only in contemplation of law an invisible being which can have,
in fact, no locality and can occupy no space, and therefore cannot have a
dwelling place. (18 Am. Jur. 2d, p. 693 citing Kimmerle v. Topeka, 88 370,
128 p. 367; Wood v. Hartfold F. Ins. Co., 13 Conn 202)

Jurisprudence so holds that the foreign or domestic character of a

corporation is to be determined by the place of its origin where its charter
was granted and not by the location of its business activities (Jennings v.
Idaho Rail Light & P. Co., 26 Idaho 703, 146 p. 101), A corporation is a
"resident" and an inhabitant of the state in which it is incorporated and no
other (36 Am. Jur. 2d, p. 49).

Defendant-appellee is a Philippine Corporation duly organized under the

Philippine laws. Clearly, its residence is the Philippines, the place of its
incorporation, and not Japan. While defendant-appellee maintains branches
in Japan, this will not make it a resident of Japan. A corporation does not
become a resident of another by engaging in business there even though
licensed by that state and in terms given all the rights and privileges of a
domestic corporation (Galveston H. & S.A.R. Co. vs. Gonzales, 151 US 496,
38 L ed. 248, 4 S Ct. 401).

On this premise, defendant appellee is a non-resident corporation. As such,

court processes must be served upon it at a place within the state in which
the action is brought and not elsewhere (St. Clair vs. Cox, 106 US 350, 27 L
ed. 222, 1 S. Ct. 354).5

It then concluded that the service of summons effected in Manila or beyond the territorial boundaries
of Japan was null and did not confer jurisdiction upon the Tokyo District Court over the person of
SHARP; hence, its decision was void.
Unable to obtain a reconsideration of the decision, NORTHWEST elevated the case to this Court
contending that the respondent court erred in holding that SHARP was not a resident of Japan and
that summons on SHARP could only be validly served within that country.

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.6

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.7 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 at 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.8 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.9 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 that 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 presumption 10 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 in the Philippines.
Section 14, Rule 14 of the Rules of Court provides that if the defendant is a foreign corporation 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. 11

Where the corporation has no such 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 proccess to the
corporation at its home or principal office. The sending of such copy is a necessary part of the
service. 12

SHARP contends that the laws authorizing service of process upon the Securities and Exchange
Commission, the Superintendent of Banks, and the Insurance Commissioner, as the case may be,
presuppose a situation wherein the foreign corporation doing business in the country no longer has
any branches or offices within the Philippines. Such contention is belied by the pertinent provisions
of the said laws. Thus, Section 128 of the Corporation Code 13 and Section 190 of the Insurance
Code 14 clearly contemplate two situations: (1) if the corporation had left the Philippines or had
ceased to transact business therein, and (2) if the corporation has no designated agent. Section 17
of the General Banking Act 15 does not even speak a corporation which had ceased to transact
business in the Philippines.

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 least create an impression, that it had
none. Hence, service on the designated government official or on any of SHARP's officers or agents
in Japan could be availed of. The respondent, however, insists that only service of any of its officers
or employees in its branches in Japan could be resorted to. We do not agree. As found by the
respondent court, two attempts at service were made at SHARP's Yokohama branch. Both were
unsuccessful. On the first attempt, Mr. Dinozo, who was believed to be the person authorized to
accept court process, was in Manila. On the second, Mr. Dinozo was present, but to accept the
summons because, according to him, he was no longer an employee of SHARP. While it may be
true that service could have been made upon any of the officers or agents of SHARP at its three
other branches in Japan, the availability of such a recourse would not preclude service upon the
proper government official, as stated above.

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 Philippine's after the two attempts of service had failed. 16
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 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 laws holds no
water.17

In deciding against the petitioner, the respondent court sustained the trial court's reliance on
Boudard vs. Tait 18 where this Court held:

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 xxx xxx

The process of a court, has no extraterritorial effect, and no jurisdiction is

acquired over the person of the defendant by serving him beyond the
boundaries of the state. Nor has a judgment of a court of a foreign country
 against a resident of this country having no property in such foreign country
based on process served here, any effect here against either the defendant
personally or his property situated here.

Process issuing from the courts of one state or country cannot run into
another, and although a nonresident defendant may have been personally
served with such process in the state or country of his domicile, it will not give
such jurisdiction as to authorize a personal judgment against him.

It further availed of the ruling in Magdalena Estate, Inc. vs. Nieto 19 and Dial Corp. vs. Soriano, 20 as
well as the principle laid down by the Iowa Supreme Court in the 1911 case of Raher vs. Raher. 21

The first three cases are, however, inapplicable. Boudard involved the enforcement of a judgment of
the civil division of the Court of First Instance of Hanoi, French Indo-China. The trial court dismissed
the case because the Hanoi court never acquired jurisdiction over the person of the defendant
considering that "[t]he, evidence adduced at the trial conclusively proves that neither the appellee
[the defendant] nor his agent or employees were ever in Hanoi, French Indo-China; and that the
deceased Marie Theodore Jerome Boudard had never, at any time, been his employee." In
Magdalena Estate, what was declared invalid resulting in the failure of the court to acquire
jurisdiction over the person of the defendants in an action in personam was the service of summons
through publication against non-appearing resident defendants. It was claimed that the latter
concealed themselves to avoid personal service of summons upon them. In Dial, the defendants
were foreign corporations which were not, domiciled and licensed to engage in business in the
Philippines and which did not have officers or agents, places of business, or properties here. On the
other hand, in the instant case, SHARP was doing business in Japan and was maintaining four
branches therein.

Insofar as to the Philippines is concerned, Raher is a thing of the past. In that case, a divided
Supreme Court of Iowa declared that the principle that there can be no jurisdiction in a court of a
territory to render a personal judgment against anyone upon service made outside its limits was
applicable alike to cases of residents and non-residents. The principle was put at rest by the United
States Supreme Court when it ruled in the 1940 case of Milliken vs. Meyer 22 that domicile in the
state is alone sufficient to bring an absent defendant within the reach of the state's jurisdiction for
purposes of a personal judgment by means of appropriate substituted service or personal service
without the state. This principle is embodied in section 18, Rule 14 of the Rules of Court which
allows service of summons on residents temporarily out of the Philippines to be made out of the
country. The rationale for this rule was explained in Milliken as follows:

[T]he authority of a state over one of its citizens is not terminated by the mere
fact of his absence from the state. The state which accords him privileges
and affords protection to him and his property by virtue of his domicile may
also exact reciprocal duties. "Enjoyment of the privileges of residence within
the state, and the attendant right to invoke the protection of its laws, are
inseparable" from the various incidences of state citizenship. The
responsibilities of that citizenship arise out of the relationship to the state
which domicile creates. That relationship is not dissolved by mere absence
from the state. The attendant duties, like the rights and privileges incident to
domicile, are not dependent on continuous presence in the state. One such
incident of domicile is amenability to suit within the state even during
sojourns without the state, where the state has provided and employed a
reasonable method for apprising such an absent party of the proceedings
against him. 23
The domicile of a corporation belongs to the state where it was incorporated. 24 In a strict technical
sense, such domicile as a corporation may have is single in its essence and a corporation can have
only one domicile which is the state of its creation. 25

Nonetheless, a corporation formed in one-state may, for certain purposes, be regarded a resident in
another state in which it has offices and transacts business. This is the rule in our jurisdiction and
apropos thereto, it may be necessery to quote what we stated in State Investment House, Inc, vs.
Citibank, N.A., 26 to wit:

The issue is whether these Philippine branches or units may be considered

"residents of the Philippine Islands" as that term is used in Section 20 of the
Insolvency Law . . . or residents of the state under the laws of which they
were respectively incorporated. The answer cannot be found in the
Insolvency Law itself, which contains no definition of the term, resident, or
any clear indication of its meaning. There are however other statutes, albeit
of subsequent enactment and effectivity, from which enlightening notions of
the term may be derived.

The National Internal Revenue Code declares that the term "'resident foreign
corporation' applies to a foreign corporation engaged in trade or business
within the Philippines," as distinguished from a "'non-resident foreign
corporation' . . . (which is one) not engaged in trade or bussiness within the
Philippines." [Sec. 20, pars. (h) and (i)].

The Offshore Banking Law, Presidential Decree No. 1034, states "that
branches, subsidiaries, affiliation, extension offices or any other units of
corporation or juridical person organized under the laws of any foreign
country operating in the Philippines shall be considered residents of the
Philippines. [Sec. 1(e)].

The General Banking Act, Republic Act No. 337, places "branches and
agencies in the Philippines of foreign banks . . . (which are) called Philippine
branches," in the same category as "commercial banks, savings
associations, mortgage banks, development banks, rural banks, stock
savings and loan associations" (which have been formed and organized
under Philippine laws), making no distinction between the former and the
latter in so far as the terms "banking institutions" and "bank" are used in the
Act [Sec. 2], declaring on the contrary that in "all matters not specifically
covered by special provisions applicable only to foreign banks, or their
branches and agencies in the Philippines, said foreign banks or their
branches and agencies lawfully doing business in the Philippines "shall be
bound by all laws, rules, and regulations applicable to domestic banking
corporations of the same class, except such laws, rules and regulations as
provided for the creation, formation, organization, or dissolution of
corporations or as fix the relation, liabilities, responsibilities, or duties of
members, stockholders or officers of corporation. [Sec. 18].

This court itself has already had occasion to hold [Claude Neon Lights, Fed.
Inc. vs. Philippine Advertising Corp., 57 Phil. 607] that a foreign corporation
licitly doing business in the Philippines, which is a defendant in a civil suit,
may not be considered a non-resident within the scope of the legal provision
authorizing attachment against a defendant not residing in the Philippine
 Islands; [Sec. 424, in relation to Sec. 412 of Act No. 190, the Code of Civil
Procedure; Sec. 1(f), Rule 59 of the Rules of 1940, Sec. 1(f), Rule 57, Rules
of 1964] in other words, a preliminary attachment may not be applied for and
granted solely on the asserted fact that the defendant is a foreign corporation
authorized to do business in the Philippines and is consequently and
necessarily, "a party who resides out of the Philippines." Parenthetically, if it
may not be considered as a party not residing in the Philippines, or as a party
who resides out of the country, then, logically, it must be considered a party
who does reside in the Philippines, who is a resident of the country. Be this
as it may, this Court pointed out that:

. . . Our laws and jurisprudence indicate a purpose to

assimilate foreign corporations, duly licensed to do business
here, to the status of domestic corporations. (Cf. Section 73,
Act No. 1459, and Marshall Wells Co. vs. Henry W. Elser &
Co., 46 Phil. 70, 76; Yu Cong Eng vs. Trinidad, 47 Phil. 385,
411) We think it would be entirely out of line with this policy
should we make a discrimination against a foreign
corporation, like the petitioner, and subject its property to the
harsh writ of seizure by attachment when it has complied not
only with every requirement of law made specially of foreign
corporations, but in addition with every requirement of law
made of domestic corporations. . . .

Obviously, the assimilation of foreign corporations authorized to do business

in the Philippines "to the status of domestic corporations, subsumes their
being found and operating as corporations, hence, residing, in the country.

The same principle is recognized in American law: that the residence of a

corporation, if it can be said to have a residence, is necessarily where it
exercises corporate functions . . .;" that it is considered as dwelling "in the
place where its business is done . . .," as being "located where its franchises
are exercised . . .," and as being "present where it is engaged in the
prosecution of the corporate enterprise;" that a "foreign corporation licensed
to do business in a state is a resident of any country where it maintains an
office or agent for transaction of its usual and customary business for venue
purposes;" and that the "necessary element in its signification is locality of
existence." [Words and Phrases, Permanent Ed., vol. 37, pp. 394, 412, 493].

In as much as SHARP was admittedly doing business in Japan through its four duly 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. 27

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.

We find NORTHWEST's claim for attorney's fees, litigation expenses, and exemplary damages to be
without merit. We find no evidence that would justify an award for attorney's fees and litigation
expenses under Article 2208 of the Civil Code of the Philippines. Nor is an award for exemplary
damages warranted. Under Article 2234 of the Civil Code, before the court may consider the
question of whether or not exemplary damages should be awarded, the plaintiff must show that he is
entitled to moral, temperate, or compensatory damaged. There being no such proof presented by
NORTHWEST, no exemplary damages may be adjudged in its favor.

WHEREFORE, the instant petition is partly GRANTED, and the challenged decision is AFFIRMED
insofar as it denied NORTHWEST's claims for attorneys fees, litigation expenses, and exemplary
damages but REVERSED insofar as in 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 L COMPANY,
INC. to pay to 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.

Costs against the private respondent.

SO ORDERED.

Padilla, Bellosillo, Quaison and Kapunan, JJ., concur.

Footnotes

1 Annex "A" of Petition. Per Associate Justice Antonio M. Martinez;

concurred in by Associate Justices Cancio C. Garcia and Ramon Mabutas,
Jr.

2 This is Civil Case No. 83-17637.

3 Rollo, 28-31.

4 67 Phil. 170 [1939].

5 Rollo, 32-34.

6 47 Am Jur 2d Judgments 1237 (1969).

7 47 Am Jur 2d Judgments 1237 (1969).

8 JOVITO R. SALONGA, Private International Law, 100, 1967 3rd ed.; 16 Am

Jur 2d Conflict of laws 125 (1979).

9 FLORENZ D. REGALADO, Remedial Law Compedium, vol. 2, 1989 ed.,

526, citing In re Estate of Johnson, 39 Phil. 156 [1918] and Fluemer vs. Hix,
54 Phil. 610 [1930]; EDGARDO L. PARAS, Philippine Conflict of Laws, 1984
ed., 45, citing Adong vs. Cheong Seng Gee, 43 Phil. 43 [1922] and Sy Joc
Lieng vs. Syquia, 16 Phil. 137 [1910].

10 Lim vs. Collector of Customs, 36 Phil. 472 [1917]; International Harvester

Co. vs. Hamburg-American Line, 42 Phil. 845 [1918]; Suntay vs. Suntay, 95
Phil. 500 [1954]; Beam vs. Yatco, 82 Phil. 30 [1948]; Collector of Internal
Revenue vs. Fisher, 1 SCRA 93 [1961].

11 Poizat vs. Morgan, 28 Phil. 597 [1914]; H.B. Zachry Co. vs. Court of
Appeals, G.R. No. 106989, 10 May 1994.

12 Section 190, Insurance Code; Section 17, General Banking Act; Section
128, Corporation Code.

13 It reads:

Sec. 128. Resident Agent; service of process. . . . Any such foreign

corporation shall likewise execute and file with the Securities end Exchange
Commission an agreement or stipulation, executed by the proper authorities
of said corporation, in form and substance as follows:

. . . if at any time said corporation shall cease to transact

business in the Philippines, or shall be without any resident
agent in the Philippines on whom any summons or other legal
processes may be served, then in any action or proceeding
arising out of any business or transaction which occurred in
the Philippines, service of any summons or other legal
process may be made upon the Securities and Exchange
Commission and that such service shall have the same force
and effect as if made upon the duly-authorized officers of .the
corporation at its home office. (Emphasis supplied).

14 It reads:

Sec. 190. . . . Any such foreign corporation shall, as further condition

precedent to the transaction of insurance business in the Philippines, make
and file with the Commissioner an agreement or stipulation, executed by the
proper authorities of said company in form and substance as follows:

. . . if at any time said company shall leave the Philippines, or

cease to transact business therein, or shall be without any
agent in the Philippines on whom any notice, proof of loss,
summons, or legal process may be served, then in any action
or proceeding out of any business or transaction which
occurred in the Philippines, service of any notice provided by
law, or insurance policy, proof of loss, summons or other legal
process may be made upon the Insurance Commissioner,
and that such service upon the Insurance Commissioner shall
have the same force and effect as if made upon the company.
(Emphasis supplied).

15 It provides:

Sec. 17. . . .

xxx xxx xxx

 Should there be no person authorized by the corporation upon whom service
of summons, processes, and all legal notices may be made, service of
summons, processes, and legal notices may be made upon the
Superintendent of Banks and such service shall be as effective as if made
upon the corporation or upon its duly authorized agent. (Emphasis supplied).

16 Decision of the Court of Appeals, 2; Rollo, 29.

17 Appellee's Brief, 18.

18 Supra note 4 at 174-175 (citations omitted).

19 125 SCRA 758 [1983].

20 161 SCRA 737 [1988].

21 150 Iowa 511, 129 NW 494.

22 311 U.S. 457.

23 Id., at 463-464 (citations omitted).

24 18 A Jur. 2d Corporations 159 (1965).

25 36 48 Jur 2d Foreign Corporations 32 (1968).

26 203 SCRA 9, 18-20 [1991].

27 36 Am Jur 2d Foreign Corporations 516 (968).v

 THIRD DIVISION

[G.R. No. 137378. October 12, 2000]

PHILIPPINE ALUMINUM WHEELS, INC., petitioner, vs. FASGI

ENTERPRISES, INC., respondent.

DECISION
VITUG, J.:

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. Pursuant to the contract, PAWI shipped to FASGI a total of eight thousand five
hundred ninety four (8,594) wheels, with an FOB value of US$216,444.30 at the time of
shipment, the first batch arriving in two containers and the second in three containers.
Thereabouts, FASGI paid PAWI the FOB value of the wheels. Unfortunately, FASGI later
found the shipment to be defective and in non-compliance with stated requirements, viz;
"A.contrary to the terms of the Distributorship Agreement and in violation of U.S. law, the
country of origin (the Philippines) was not stamped on the wheels;
"B.the wheels did not have weight load limits stamped on them as required to avoid mounting
on excessively heavy vehicles, resulting in risk of damage or bodily injury to consumers arising
from possible shattering of the wheels;
"C. many of the wheels did not have an indication as to which models of automobile
they would fit;
"D. many of the wheels did not fit the model automobiles for which they were
purportedly designed;
"E. some of the wheels did not fit any model automobile in use in the United States;
"F. most of the boxes in which the wheels were packed indicated that the wheels were
approved by the Specialty Equipment Manufacturer's Association (hereafter, `SEMA'); in fact no
SEMA approval has been obtained and this indication was therefore false and could result in fraud
upon retail customers purchasing the wheels."1

1
Complaint for Damages filed by FASGI before the US District Court for the Central District of California,
Case No. 79-03661-HP, entitled "FASGI Enterprises vs. PAWI and FPS, filed on 21 September 1979."
(Rollo, p. 68)
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 January 1980, during the
pendency of the case, the parties entered into a settlement, entitled "Transaction" with
the corresponding Italian translation "Convenzione Transsativa," where it was stipulated
that FPS and PAWI would accept the return of not less than 8,100 wheels after restoring
to FASGI the purchase price of US$268,750.00 via four (4) irrevocable letters of credit
("LC"). The rescission of the contract of distributorship was to be effected within the period
starting January up until April 1980.2

2
Pertinent provisions of the "Transaction" executed between the parties include:

"2) FPS and PAWI accept the return to them of the products supplied to FASGI, at the forfeitglobal
price of USA$268,750 and more precisely $13,273 for the wheels and bolts supplied by FPS and to be
returned to them, and $253,477 for wheels and caps supplied by PAWI and to be returned to them.

"3) FASGI therefore agrees to return to PAWI not less than 8,100 wheels plus relative caps, still in
their original packing; agrees to return to FPS the 120 wheels and bolts received;

"4) PAWI reserves the right, recognized by FASGI, to take back the materials supplied - four
containers - either in one lot or in four separate lots, respectively by January, February, March and April
1980. In case PAWI should opt for the second alternative, it must pay to FASGI the sum of US$6,000 for
storage and custody, provided the withdrawal takes place not later than the 30th of April, 1980.

"x x x xxx xxx

"6) In case all the goods are returned in one lot by January 1980, in payment of the same and before
their shipment from Fresno, PAWI will issue four Letters of Credit, irrevocable, each one of the same
amount, payable at 90-120-150-180 days from the date of the invoice that FASGI will issue for the goods
returned.

"If on the other hand the goods are returned in four lots, the four Letters of Credit, increased each one
by $1,500 covering the amount referred to point 4), will be issued at 90 days from the date of each
shipment, which must be in January, February, March, April 1980.

"However, in both cases, each Letter of Credit must include also the USA current interests retroactive
from the first January 1980 to the each Letter of Credit maturity, in addition to the fixed amount. Above
interests will be calculated on the base of USA current `prime rate', increased by two points.

"The Letters of Credit must be accepted and confirmed by Crocker Bank of Fresno, California.

"7) The same method of payment will apply to FPS goods, and precisely Letter of Credit as above
confirmed with expiry 60 days from shipment date and relative interests from the first January 1980.

"8) FASGI will issue the appropriate invoices for goods returning with interests calculated from the
first January 1980 on the base of USA current rate and precisely the `prime rate' increased by two
points.
 In a telex message, dated 02 March 1980, PAWI president Romeo Rojas expressed
the company's inability to comply with the foregoing agreement and proposed a revised
schedule of payment. The message, in part, read:
"We are most anxious in fulfilling all our obligations under compromise agreement executed by
our Mr. Giancarlo Dallera and your Van Curen. We have tried our best to comply with our
commitments, however, because of the situation as mentioned in the foregoing and currency
regulations and restrictions imposed by our government on the outflow, of foreign currency from
our country, we are constrained to request for a revised schedule of shipment and opening of
L/Cs.
"After consulting with our bank and government monetary agencies and on the assumption that
we submit the required pro-forma invoices we can open the letters of credit in your favor under
the following schedule:
"A) First L/C - it will be issued in April 1980 payable 90 days thereafter
"B) Second L/C - it will be issued in June 1980 payable 90 days thereafter
"C) Third L/C - it will be issued in August 1980 payable 90 days thereafter
"D) Fourth L/C - it will be issued in November 1980 payable 90 days thereafter
"We understand your situation regarding the lease of your warehouse. For this reason,
we are willing to defray the extra storage charges resulting from this new schedule. If you
cannot renew the lease [of] your present warehouse, perhaps you can arrange to transfer
to another warehouse and storage charges transfer thereon will be for our account. We
hope you understand our position. The delay and the revised schedules were caused by
circumstances totally beyond our control."3
On 21 April 1980, again through a telex message, PAWI informed FASGI that it was
impossible to open a letter of credit on or before April 1980 but assured that it would do
its best to comply with the suggested schedule of payments.4 In its telex reply of 29 April
1980, FASGI insisted that PAWI should meet the terms of the proposed schedule of
payments, specifically its undertaking to open the first LC within April of 1980, and that "If
the letter of credit is not opened by April 30, 1980, then x x x [it would] immediately take

"9) The judicial proceedings initiated by FASGI ENTERPRISES before the Los Angeles Court will be
abandoned with compensatory costs. The Parties undertake to sign any documents necessary to
formalize the renunciation of any legal action.

"x x x xxx xxx

"11) With the issue of the aforesaid Letters of Credit accepted as above and of the payments having
taken place and the return of the wheels as stated above having been carried out, any and every reason
or claim between the Parties, relative to the agreement of exclusive sale as given in point 1) of the
PREMISE, the summons brought before the Los Angeles Court will be resolved, settled and concluded."
(Rollo, pp. 100-101)
3
Rollo, pp. 106.
4
Rollo, p. 107.
all necessary legal action to protect [its] position."5
Despite its assurances, and FASGI's insistence, PAWI failed to open the first LC in
April 1980 allegedly due to Central Bank "inquiries and restrictions," prompting FASGI to
pursue its complaint for damages against PAWI before the California district court. Pre-
trial conference was held on 24 November 1980. In the interim, the parties, realizing the
protracted process of litigation, resolved to enter into another arrangement, this time
entitled "Supplemental Settlement Agreement," on 26 November 1980. In substance, the
covenant provided that FASGI would deliver to PAWI a container of wheels for every LC
opened and paid by PAWI:
"3. Agreement
"3.1 Sellers agree to pay FASGI Two Hundred Sixty-Eight Thousand, Seven Hundred
Fifty and 00/100 Dollars ($268,750.00), plus interest and storage costs as described below.
Sellers shall pay such amount by delivering to FASGI the following four (4) irrevocable letters of
credit, confirmed by Crocker Bank, Main Branch, Fresno, California, as set forth below:
"(i) on or before June 30, 1980, a documentary letter of credit in the amount of (a) Sixty-Five
Thousand, Three Hundred Sixty-nine and 00/100 Dollars ($65,369.00), (b) plus interest on that
amount at the annual rate of 16.25% from January 1, 1980 until July 31, 1980, (c) plus Two
Thousand Nine Hundred Forty Dollars and 00/100 ($2,940.00) and (d) with interest on that sum
at the annual rate of 16.25% from May 1, 1980 to July 31, 1980, payable on or after August 31,
1980;
"(ii) on or before September 1, 1980, a documentary letter of credit in the amount of
(a) Sixty-Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents
($67,793.67) plus (b) Two Thousand, Nine Hundred Forty and 00/100 Dollars ($2,940.00), plus
(c) interest at an annual rate equal to the prime rate of Crocker Bank, San Francisco, in effect
from time to time, plus two percent on the amount in (a) from January 1, 1980 until December 21,
1980, and on the amount set forth in (b) from May 1, 1980 until December 21, 1980, payable
ninety days after the date of the bill of lading under the letter of credit;
"(iii) on or before November 1, 1980, a documentary letter of credit in the amount of (a)
Sixty-Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents
($67,793.67) plus (b) Two Thousand, Nine Hundred Forty and 00/100 Dollars ($2,490.00), plus
(c) interest at an annual rate equal to the prime rate of Crocker Bank, San Francisco, in effect
from time to time, plus two percent on the amount in (a) from January 1, 1980 until February 21,
1981, and on the amount set forth in (b) from May 1, 1980 until February 21, 1981, payable ninety
days after the date of the bill of lading under the latter of credit;
"(iv) on or before January 1, 1981, a documentary letter of credit in the amount
of (a) Sixty-Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven
Cents ($67,793.67) plus (b) Five Thousand, Eight Hundred Eighty and 00/100 Dollars
($5,880.00), plus (c) interest at an annual rate equal to the prime rate of Crocker Bank,
San Francisco, in effect from time to time, plus two percent on the amount in (a) from
January 1, 1980 until April 21, 1981, and on the amount set forth in (b) from May 1, 1980
until April 21, 1981, payable ninety days after the date of the bill of lading under the latter

5
Rollo, p. 109.
of credit."6
Anent the wheels still in the custody of FASGI, the supplemental settlement agreement
provided that -
"3.4 (a) Upon execution of this Supplemental Settlement Agreement, the
obligations of FASGI to store or maintain the Containers and Wheels shall be limited to (i) storing
the Wheels and Containers in their present warehouse location and (ii) maintaining in effect
FASGI's current insurance in favor of FASGI, insuring against usual commercial risks for such
storage in the principal amount of the Letters of Credit described in Paragraph 3.1. FASGI shall
bear no liability, responsibility or risk for uninsurable risks or casualties to the Containers or
Wheels.
"x x x xxx xxx
"(e) From and after February 28, 1981, unless delivery of the Letters of Credit are
delayed past such date pursuant to the penultimate Paragraph 3.1, in which case from and after
such later date, FASGI shall have no obligation to maintain, store or deliver any of the Containers
or Wheels."7
The deal allowed FASGI to enter before the California court the foregoing stipulations in
the event of the failure of PAWI to make good the scheduled payments; thus -
"3.5 Concurrently with execution and delivery hereof, the parties have executed and
delivered a Mutual Release (the `Mutual Release'), and a Stipulation for Judgment (the
`Stipulation for Judgment') with respect to the Action. In the event of breach of this Supplemental
Settlement Agreement by Sellers, FASGI shall have the right to apply immediately to the Court
for entry of Judgment pursuant to the Stipulation for Judgment in the full amount thereof, less
credit for any payments made by Sellers pursuant to this Supplemental Settlement Agreement.
FASGI shall have the right thereafter to enforce the Judgment against PAWI and FPS in the
United States and in any other country where assets of FPS or PAWI may be located, and FPS
and PAWI hereby waive all defenses in any such country to execution or enforcement of the
Judgment by FASGI. Specifically, FPS and PAWI each consent to the jurisdiction of the Italian
and Philippine courts in any action brought by FASGI to seek a judgment in those countries based
upon a judgment against FPS or PAWI in the Action."8
In accordance with the aforementioned paragraph 3.5 of the agreement, the parties
made the following stipulation before the California court:
"The undersigned parties hereto, having entered into a Supplemental Settlement Agreement
in this action,
"IT IS HEREBY STIPULATED by and between plaintiff FASGI Enterprises, Inc. (`FASGI')
and defendants Philippine Aluminum Wheels, Inc., (`PAWI'), and each of them, that judgment
may be entered in favor of plaintiff FASGI and against PAWI, in the amount of Two Hundred
Eighty Three Thousand Four Hundred Eighty And 01/100ths Dollars ($283,480.01).
"Plaintiff FASGI shall also be entitled to its costs of suit, and to reasonable attorneys' fees as

6
Rollo, pp. 88-90.
7
Rollo, pp. 91-92.
8
Rollo, p. 93.
determined by the Court added to the above judgment amount."9
The foregoing supplemental settlement agreement, as well as the motion for the entry of
judgment, was executed by FASGI president Elena Buholzer and PAWI counsel Mr.
Thomas Ready.
PAWI, again, proved to be remiss in its obligation under the supplemental settlement
agreement. While it opened the first LC on 19 June 1980, it, however, only paid on it nine
(9) months after, or on 20 March 1981, when the letters of credit by then were supposed
to have all been already posted. This lapse, notwithstanding, FASGI promptly shipped to
PAWI the first container of wheels. Again, despite the delay incurred by PAWI on the
second LC, FASGI readily delivered the second container. Later, PAWI totally defaulted
in opening and paying the third and the fourth LCs, scheduled to be opened on or before,
respectively, 01 September 1980 and 01 November 1980, and each to be paid ninety (90)
days after the date of the bill of lading under the LC. As so expressed in their affidavits,
FASGI counsel Frank Ker and FASGI president Elena Buholzer were more inclined to
believe that PAWI's failure to pay was due not to any restriction by the Central Bank or
any other cause than its inability to pay. These doubts were based on the telex message
of PAWI president Romeo Rojas who attached a copy of a communication from the
Central Bank notifying PAWI of the bank's approval of PAWI's request to open LCs to
cover payment for the re-importation of the wheels. The communication having been sent
to FASGI before the supplemental settlement agreement was executed, FASGI
speculated that at the time PAWI subsequently entered into the supplemental settlement
agreement, its request to open LCs had already been approved by the Central Bank.
Irked by PAWI's persistent default, FASGI filed with the US District Court of the Central
District of California the following stipulation for judgment against PAWI.
"PLEASE TAKE NOTICE that on May 17, 1982 at 10:00 A.M. in the Courtroom of the
Honorable Laughlin E. Waters of the above Court, plaintiff FASGI ENTERPRISES, INC.
(hereinafter `FASGI') will move the Court for entry of Judgment against defendant PHILIPPINE
ALUMINUM WHEELS, INC. (hereinafter `PAWI'), pursuant to the Stipulation for Judgment filed
concurrently herewith, executed on behalf of FASGI and PAWI by their respective attorneys,
acting as their authorized agents.
"Judgment will be sought in the total amount of P252,850.60, including principal and interest
accrued through May 17, 1982, plus the sum of $17,500.00 as reasonable attorneys' fees for
plaintiff in prosecuting this action.
"The Motion will be made under Rule 54 of the Federal Rules of Civil Procedure, pursuant to
and based upon the Stipulation for Judgment, the Supplemental Settlement Agreement filed
herein on or about November 21, 1980, the Memorandum of Points and Authorities and Affidavits
of Elena Buholzer, Franck G. Ker and Stan Cornwell all filed herewith, and upon all the records,
files and pleadings in this action.
"The Motion is made on the grounds that defendant PAWI has breached its obligations as
set forth in the Supplemental Settlement Agreement, and that the Supplemental Settlement
Agreement expressly permits FASGI to enter the Stipulation for Judgment in the event that PAWI

9
Rollo, pp. 113-114.
has not performed under the Supplemental Settlement Agreement."10
On 24 August 1982, FASGI filed a notice of entry of judgment. A certificate of finality
of judgment was issued, on 07 September 1982, by the US District Judge of the District
Court for the Central District of California. PAWI, by this time, was approximately twenty
(20) months in arrears in its obligation under the supplemental settlement agreement.
Unable to obtain satisfaction of the final judgment within the United States, FASGI
filed a complaint for "enforcement of foreign judgment" in February 1983, before the
Regional Trial Court, Branch 61, of Makati, Philippines. The Makati court, however, in an
order of 11 September 1990, dismissed the case, thereby denying the enforcement of the
foreign judgment within Philippine jurisdiction, on the ground that the decree was tainted
with collusion, fraud, and clear mistake of law and fact.11 The lower court ruled that the
foreign 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. 12
This situation, the trial court maintained, amounted to an unjust enrichment on the part of
FASGI. Furthermore, the trial court said, the supplemental settlement agreement and the
subsequent motion for entry of judgment upon 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.
FASGI appealed the decision of the trial court to the Court of Appeals. In a decision,13
dated 30 July 1997, the appellate court reversed the decision of the trial court and ordered
the full enforcement of the California judgment.
Hence this appeal.
Generally, in the absence of a special compact, no sovereign is bound to give effect
within its dominion to a judgment rendered by a tribunal of another country;14 however,
the rules of comity, utility and convenience of nations have established a usage among
civilized states by which final judgments of foreign courts of competent jurisdiction are
reciprocally respected and rendered efficacious under certain conditions that may vary in
different countries.15
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

10
Rollo, pp. 117-118.
11
Rollo, pp. 237-244.
12
Ibid.
13
Penned by Justice Emeterio C. Cui, concurred by Justice Corona Ibay Somera and Justice Salvador J.
Valdez, Jr.
14
Cuculu vs. Louisiana Ins. Co. (La) Mart NS 464
15
Ibid.
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.16 A foreign judgment is presumed to
be valid and binding in the country from which it comes, until a contrary showing, on the
basis of a presumption of regularity of proceedings and the giving of due notice in the
foreign forum. Rule 39, section 48 of the Rules of Court of the Philippines provides:
Sec. 48. Effect of foreign judgments or final orders - The effect of a judgment or final order of a
tribunal of a foreign country, having jurisdiction to render the judgment or final order is as follows:
xxxx
(b) In case of a judgment or final order against a person, the judgment or final order is presumptive
evidence of a right as between the parties and their successors-in-interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence a want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact.
In Soorajmull Nagarmull vs. Binalbagan-Isabela Sugar Co. Inc.,17 one of the early
Philippine cases on the enforcement of foreign judgments, this Court has ruled that a
judgment for a sum of money rendered in a foreign court is presumptive evidence of a
right between the parties and their successors-in-interest by subsequent title, but when
suit for its enforcement is brought in a Philippine court, such judgment may be repelled
by evidence of want of jurisdiction, want of notice to the party, collusion, fraud or clear
mistake of law or fact. In Northwest Orient Airlines, Inc., vs. Court of Appeals,18 the Court
has said that a party attacking a foreign judgment is tasked with the burden of overcoming
its presumptive validity.
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.19
In the instant case, the supplemental settlement agreement was signed by the
parties, including Mr. Thomas Ready, on 06 October 1980. The agreement was lodged
in the California case on 26 November 1980 or two (2) days after the pre-trial conference
held on 24 November 1980. If Mr. Ready was indeed not authorized by PAWI to enter
into the supplemental settlement agreement, PAWI could have forthwith signified to
FASGI a disclaimer of the settlement. Instead, more than a year after the execution of the
supplemental settlement agreement, particularly on 09 October 1981, PAWI President
Romeo S. Rojas sent a communication to Elena Buholzer of FASGI that failed to mention

16
Private International Law, Jovito R. Salonga, Rex Bookstore, Manila, Philippines, 1995 Edition, p. 543.
17
33 SCRA 46.
18
241 SCRA 192.
19
Caballero vs. Deiparine, 60 SCRA 136; Acenas vs. Sison, 8 SCRA 711.
Mr. Ready's supposed lack of authority. On the contrary, the letter confirmed the terms of
the agreement when Mr. Rojas sought forbearance for the impending delay in the opening
of the first letter of credit under the schedule stipulated in the agreement.
It is an accepted rule that when a client, upon becoming aware of the compromise
and the judgment thereon, fails to promptly repudiate the action of his attorney, he will not
afterwards be heard to complain about it.20
Nor could PAWI claim any prejudice by the settlement. PAWI was spared from
possibly paying FASGI substantial amounts of damages and incurring heavy litigation
expenses normally generated in a full-blown trial. PAWI, under the agreement was
afforded time to reimburse FASGI the price it had paid for the defective wheels. PAWI,
should not, after its opportunity to enjoy the benefits of the agreement, be allowed to later
disown the arrangement when the terms thereof ultimately would prove to operate against
its hopeful expectations.
PAWI assailed not only Mr. Ready's authority to sign on its behalf the Supplemental
Settlement Agreement but denounced likewise his authority to enter into a stipulation for
judgment before the California court on 06 August 1982 on the ground that it had by then
already terminated the former's services. For his part, Mr. Ready admitted that while he
did receive a request from Manuel Singson of PAWI to withdraw from the motion of
judgment, the request unfortunately came too late. In an explanatory telex, Mr. Ready
told Mr. Singson that under American Judicial Procedures when a motion for judgment
had already been filed a counsel would not be permitted to withdraw unilaterally without
a court order. From the time the stipulation for judgment was entered into on 26 April 1982
until the certificate of finality of judgment was issued by the California court on 07
September 1982, no notification was issued by PAWI to FASGI regarding its termination
of Mr. Ready's services. If PAWI were indeed hoodwinked by Mr. Ready who purportedly
acted in collusion with FASGI, it should have aptly raised the issue before the forum which
issued the judgment in line with the principle of international comity that a court of another
jurisdiction should refrain, as a matter of propriety and fairness, from so assuming the
power of passing judgment on the correctness of the application of law and the evaluation
of the facts of the judgment issued by another tribunal.21
Fraud, to hinder the 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,22 or that which would go to the jurisdiction of the court or would
deprive the party against whom judgment is rendered a chance to defend the action to
which he has a 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

20
Dungo vs. Lopena, 116 Phil. 1305.
21
Salonga, supra., at 558.
22
Labayen vs. Talisay-Silay Milling Co., 40 O.G., 2nd Supp. No. 3, p. 109.
recognition or enforcement of the foreign judgment.23
Even while the US judgment was against both FPS and PAWI, FASGI had every right
to seek enforcement of the judgment solely against PAWI or, for that matter, only against
FPS. FASGI, in its complaint, explained:
"17. There exists, and at all times relevant herein there existed, a unity of interest and
ownership between defendant PAWI and defendant FPS, in that they are owned and controlled
by the same shareholders and managers, such that any individuality and separateness between
these defendants has ceased, if it ever existed, and defendant FPS is the alter ego of defendant
PAWI. The two entities are used interchangeably by their shareholders and managers, and
plaintiff has found it impossible to ascertain with which entity it is dealing at any one time.
Adherence to the fiction of separate existence of these defendant corporations would permit an
abuse of the corporate privilege and would promote injustice against this plaintiff because assets
can easily be shifted between the two companies thereby frustrating plaintiff's attempts to collect
on any judgment rendered by this Court."24
Paragraph 14 of the Supplemental Settlement Agreement fixed the liability of PAWI and
FPS to be "joint and several" or solidary. The enforcement of the judgment against PAWI
alone would not, of course, preclude it from pursuing and recovering whatever
contributory liability FPS might have pursuant to their own agreement.
PAWI would argue that it was incumbent upon FASGI to first return the second and
the third containers of defective wheels before it could be required to return to FASGI the
purchase price therefor,25 relying on their original agreement (the "Transaction").26
Unfortunately, PAWI defaulted on its covenants thereunder that thereby occasioned the
subsequent execution of the supplemental settlement agreement. This time the parties
agreed, under paragraph 3.4(e)27 thereof, that any further default by PAWI would release
FASGI from any obligation to maintain, store or deliver the rejected wheels. The
supplemental settlement agreement evidently superseded, at the very least on this point,
the previous arrangements made by the parties.
PAWI cannot, by this petition for review, seek refuge over a business dealing and
decision gone awry. Neither do the courts function to relieve a party from the effects of
an unwise or unfavorable contract freely entered into. As has so aptly been explained by
the appellate court, the over-all picture might, indeed, appear to be onerous to PAWI but
it should bear emphasis that the settlement which has become the basis for the foreign
judgment has not been the start of a business venture but the end of a failed one, and

23
Salonga, supra.
24
Rollo, p. 71.
25
See Petition for Review on Certiorari, G.R. No. 137378, pp. 14-15.
26
"Transaction," supra.
27
(e) From and after February 28, 1981, unless delivery of the Letters of Credit are delayed past such
date pursuant to the penultimate paragraph of Paragraph 3.1, in which case from and after such later
date, FASGI shall have no obligation to maintain, store or deliver any of the containers or wheels.
each party, naturally, has had to negotiate from either position of strength or weakness
depending on its own perception of who might have to bear the blame for the failure and
the consequence of loss.28
Altogether, the Court finds no reversible error on the part of the appellate court in its
appealed judgment.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED. No costs.
SO ORDERED.

Melo, (Chairman), Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.

28
Decision, Court of Appeals, 30 July 1997, Rollo, p. 53.
 SECOND DIVISION

[G.R. No. 139325. April 12, 2005]

PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B.

NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C.
LAMANGAN in their behalf and on behalf of the Class Plaintiffs in
Class Action No. MDL 840, United States District Court of Hawaii,
petitioners, vs. HON. SANTIAGO JAVIER RANADA, in his capacity
as Presiding Judge of Branch 137, Regional Trial Court, Makati
City, and the ESTATE OF FERDINAND E. MARCOS, through its
court appointed legal representatives in Class Action MDL 840,
United States District Court of Hawaii, namely: Imelda R. Marcos
and Ferdinand Marcos, Jr., respondents.

DECISION
TINGA, J.:

Our martial law experience bore strange unwanted fruits, and we have yet to finish
weeding out its bitter crop. While the restoration of freedom and the fundamental
structures and processes of democracy have been much lauded, according to a
significant number, the changes, however, have not sufficiently healed the colossal
damage wrought under the oppressive conditions of the martial law period. The cries of
justice for the tortured, the murdered, and the desaparecidos arouse outrage and
sympathy in the hearts of the fair-minded, yet the dispensation of the appropriate relief
due them cannot be extended through the same caprice or whim that characterized the
ill-wind of martial rule. The damage done was not merely personal but institutional, and
the proper rebuke to the iniquitous past has to involve the award of reparations due within
the confines of the restored rule of law.
The petitioners in this case are prominent victims of human rights violations [1] who,
deprived of the opportunity to directly confront the man who once held absolute rule over
this country, have chosen to do battle instead with the earthly representative, his estate.
The clash has been for now interrupted by a trial court ruling, seemingly comported to
legal logic, that required the petitioners to pay a whopping filing fee of over Four Hundred
Seventy-Two Million Pesos (P472,000,000.00) in order that they be able to enforce a
judgment awarded them by a foreign court. There is an understandable temptation to cast
the struggle within the simplistic confines of a morality tale, and to employ short-cuts to
arrive at what might seem the desirable solution. But easy, reflexive resort to the equity
principle all too often leads to a result that may be morally correct, but legally wrong.
 Nonetheless, the application of the legal principles involved in this case will comfort
those who maintain that our substantive and procedural laws, for all their perceived
ambiguity and susceptibility to myriad interpretations, are inherently fair and just. The
relief sought by the petitioners is expressly mandated by our laws and conforms to
established legal principles. The granting of this petition for certiorari is warranted in order
to correct the legally infirm and unabashedly unjust ruling of the respondent judge.
The essential facts bear little elaboration. On 9 May 1991, a complaint was filed with
the United States District Court (US District Court), District of Hawaii, against the Estate
of former Philippine President Ferdinand E. Marcos (Marcos Estate). The action was
brought forth by ten Filipino citizens[2] who each alleged having suffered human rights
abuses such as arbitrary detention, torture and rape in the hands of police or military
forces during the Marcos regime.[3] The Alien Tort Act was invoked as basis for the US
District Courts jurisdiction over the complaint, as it involved a suit by aliens for tortious
violations of international law.[4] These plaintiffs brought the action on their own behalf and
on behalf of a class of similarly situated individuals, particularly consisting of all current
civilian citizens of the Philippines, their heirs and beneficiaries, who between 1972 and
1987 were tortured, summarily executed or had disappeared while in the custody of
military or paramilitary groups. Plaintiffs alleged that the class consisted of approximately
ten thousand (10,000) members; hence, joinder of all these persons was impracticable.
The institution of a class action suit was warranted under Rule 23(a) and (b)(1)(B) of
the US Federal Rules of Civil Procedure, the provisions of which were invoked by the
plaintiffs. Subsequently, the US District Court certified the case as a class action and
created three (3) sub-classes of torture, summary execution and disappearance victims.[5]
Trial ensued, and subsequently a jury rendered a verdict and an award of compensatory
and exemplary damages in favor of the plaintiff class. Then, on 3 February 1995, the US
District Court, presided by Judge Manuel L. Real, rendered a Final Judgment (Final
Judgment) awarding the plaintiff class a total of One Billion Nine Hundred Sixty Four
Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety Cents
($1,964,005,859.90). The Final Judgment was eventually affirmed by the US Court of
Appeals for the Ninth Circuit, in a decision rendered on 17 December 1996.[6]
On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court,
City of Makati (Makati RTC) for the enforcement of the Final Judgment. They alleged that
they are members of the plaintiff class in whose favor the US District Court awarded
damages.[7] They argued that since the Marcos Estate failed to file a petition for certiorari
with the US Supreme Court after the Ninth Circuit Court of Appeals had affirmed the Final
Judgment, the decision of the US District Court had become final and executory, and
hence should be recognized and enforced in the Philippines, pursuant to Section 50, Rule
39 of the Rules of Court then in force.[8]
On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among
others, the non-payment of the correct filing fees. It alleged that petitioners had only paid
Four Hundred Ten Pesos (P410.00) as docket and filing fees, notwithstanding the fact
that they sought to enforce a monetary amount of damages in the amount of over Two
and a Quarter Billion US Dollars (US$2.25 Billion). The Marcos Estate cited Supreme
Court Circular No. 7, pertaining to the proper computation and payment of docket fees.
In response, the petitioners claimed that an action for the enforcement of a foreign
judgment is not capable of pecuniary estimation; hence, a filing fee of only Four Hundred
Ten Pesos (P410.00) was proper, pursuant to Section 7(c) of Rule 141.[9]
On 9 September 1998, respondent Judge Santiago Javier Ranada [10] of the Makati
RTC issued the subject Order dismissing the complaint without prejudice. Respondent
judge opined that contrary to the petitioners submission, the subject matter of the
complaint was indeed capable of pecuniary estimation, as it involved a judgment rendered
by a foreign court ordering the payment of definite sums of money, allowing for easy
determination of the value of the foreign judgment. On that score, Section 7(a) of Rule
141 of the Rules of Civil Procedure would find application, and the RTC estimated the
proper amount of filing fees was approximately Four Hundred Seventy Two Million Pesos,
which obviously had not been paid.
Not surprisingly, petitioners filed a Motion for Reconsideration, which Judge Ranada
denied in an Order dated 28 July 1999. From this denial, petitioners filed a Petition for
Certiorari under Rule 65 assailing the twin orders of respondent judge.[11] They prayed for
the annulment of the questioned orders, and an order directing the reinstatement of Civil
Case No. 97-1052 and the conduct of appropriate proceedings thereon.
Petitioners submit that their action is incapable of pecuniary estimation as the subject
matter of the suit is the enforcement of a foreign judgment, and not an action for the
collection of a sum of money or recovery of damages. They also point out that to require
the class plaintiffs to pay Four Hundred Seventy Two Million Pesos (P472,000,000.00) in
filing fees would negate and render inutile the liberal construction ordained by the Rules
of Court, as required by Section 6, Rule 1 of the Rules of Civil Procedure, particularly the
inexpensive disposition of every action.
Petitioners invoke Section 11, Article III of the Bill of Rights of the Constitution, which
provides that Free access to the courts and quasi-judicial bodies and adequate legal
assistance shall not be denied to any person by reason of poverty, a mandate which is
essentially defeated by the required exorbitant filing fee. The adjudicated amount of the
filing fee, as arrived at by the RTC, was characterized as indisputably unfair, inequitable,
and unjust.
The Commission on Human Rights (CHR) was permitted to intervene in this case.[12]
It urged that the petition be granted and a judgment rendered, ordering the enforcement
and execution of the District Court judgment in accordance with Section 48, Rule 39 of
the 1997 Rules of Civil Procedure. For the CHR, the Makati RTC erred in interpreting the
action for the execution of a foreign judgment as a new case, in violation of the principle
that once a case has been decided between the same parties in one country on the same
issue with finality, it can no longer be relitigated again in another country. [13] The CHR
likewise invokes the principle of comity, and of vested rights.
The Courts disposition on the issue of filing fees will prove a useful jurisprudential
guidepost for courts confronted with actions enforcing foreign judgments, particularly
those lodged against an estate. There is no basis for the issuance a limited pro hac vice
ruling based on the special circumstances of the petitioners as victims of martial law, or
on the emotionally-charged allegation of human rights abuses.
 An examination of Rule 141 of the Rules of Court readily evinces that the respondent
judge ignored the clear letter of the law when he concluded that the filing fee be computed
based on the total sum claimed or the stated value of the property in litigation.
In dismissing the complaint, the respondent judge relied on Section 7(a), Rule 141 as
basis for the computation of the filing fee of over P472 Million. The provision states:
SEC. 7. Clerk of Regional Trial Court.-
(a) For filing an action or a permissive counterclaim or money claim against
an estate not based on judgment, or for filing with leave of court a third-party, fourth-
party, etc., complaint, or a complaint in intervention, and for all clerical services in the
same time, if the total sum claimed, exclusive of interest, or the started value of the
property in litigation, is:
1. Less than P 100,00.00 P 500.00
2. P 100,000.00 or more - P 800.00
but less than P 150,000.00
3. P 150,000.00 or more but - P 1,000.00
less than P 200,000.00
4. P 200,000.00 or more but
less than P 250,000.00 - P 1,500.00
5. P 250,000.00 or more but
less than P 300,00.00 - P 1,750.00
6. P 300,000.00 or more but
not more than P 400,000.00 - P 2,000.00
7. P 350,000.00 or more but not
more than P400,000.00 - P 2,250.00
8. For each P 1,000.00 in excess of
P 400,000.00 - P 10.00
...
(Emphasis supplied)
Obviously, the above-quoted provision covers, on one hand, ordinary actions,
permissive counterclaims, third-party, etc. complaints and complaints-in-interventions,
and on the other, money claims against estates which are not based on judgment. Thus,
the relevant question for purposes of the present petition is whether the action filed with
the lower court is a money claim against an estate not based on judgment.
Petitioners complaint may have been lodged against an estate, but it is clearly based
on a judgment, the Final Judgment of the US District Court. The provision does not make
any distinction between a local judgment and a foreign judgment, and where the law does
not distinguish, we shall not distinguish.
A reading of Section 7 in its entirety reveals several instances wherein the filing fee
is computed on the basis of the amount of the relief sought, or on the value of the property
in litigation. The filing fee for requests for extrajudicial foreclosure of mortgage is based
on the amount of indebtedness or the mortgagees claim.[14] In special proceedings
involving properties such as for the allowance of wills, the filing fee is again based on the
value of the property.[15] The aforecited rules evidently have no application to petitioners
complaint.
 Petitioners rely on Section 7(b), particularly the proviso on actions where the value of
the subject matter cannot be estimated. The provision reads in full:
SEC. 7. Clerk of Regional Trial Court.-
(b) For filing
1. Actions where the value
of the subject matter
cannot be estimated --- P 600.00
2. Special civil actions except
judicial foreclosure which
shall be governed by
paragraph (a) above --- P 600.00
3. All other actions not
involving property --- P 600.00
In a real action, the assessed value of the property, or if there is none, the estimated
value, thereof shall be alleged by the claimant and shall be the basis in computing the
fees.
It is worth noting that the provision also provides that in real actions, the assessed
value or estimated value of the property shall be alleged by the claimant and shall be the
basis in computing the fees. Yet again, this provision does not apply in the case at bar. A
real action is one where the plaintiff seeks the recovery of real property or an action
affecting title to or recovery of possession of real property.[16] Neither the complaint nor the
award of damages adjudicated by the US District Court involves any real property of the
Marcos Estate.
Thus, respondent judge was in clear and serious error when he concluded that the
filing fees should be computed on the basis of the schematic table of Section 7(a), as the
action involved pertains to a claim against an estate based on judgment. What provision,
if any, then should apply in determining the filing fees for an action to enforce a foreign
judgment?
To resolve this question, a proper understanding is required on the nature and effects
of a foreign judgment in this jurisdiction.
The rules of comity, utility and convenience of nations have established a usage
among civilized states by which final judgments of foreign courts of competent jurisdiction
are reciprocally respected and rendered efficacious under certain conditions that may
vary in different countries.[17] This principle was prominently affirmed in the leading
American case of Hilton v. Guyot[18] and expressly recognized in our jurisprudence
beginning with Ingenholl v. Walter E. Olsen& Co.[19] The conditions required by the
Philippines for recognition and enforcement of a foreign judgment were originally
contained in Section 311 of the Code of Civil Procedure, which was taken from the
California Code of Civil Procedure which, in turn, was derived from the California Act of
March 11, 1872.[20] Remarkably, the procedural rule now outlined in Section 48, Rule 39
of the Rules of Civil Procedure has remained unchanged down to the last word in nearly
a century. Section 48 states:
 SEC. 48. Effect of foreign judgments. The effect of a judgment of a tribunal of a
foreign country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive
upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive
evidence of a right as between the parties and their successors in interest by a
subsequent title;
In either case, the judgment or final order may be repelled by evidence of a want of
jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
There is an evident distinction between a foreign judgment in an action in rem and
one in personam. For an action in rem, the foreign judgment is deemed conclusive upon
the title to the thing, while in an action in personam, the foreign judgment is presumptive,
and not conclusive, of a right as between the parties and their successors in interest by
a subsequent title.[21] However, in both cases, the foreign judgment is susceptible to
impeachment in our local courts on the grounds of want of jurisdiction or notice to the
party,[22] collusion, fraud,[23] or clear mistake of law or fact.[24] Thus, the party aggrieved by
the foreign judgment is entitled to defend against the enforcement of such decision in the
local forum. It is essential that there should be an opportunity to challenge the foreign
judgment, in order for the court in this jurisdiction to properly determine its efficacy. [25]
It is clear then that it is usually necessary for an action to be filed in order to enforce
a foreign judgment[26], even if such judgment has conclusive effect as in the case of in rem
actions, if only for the purpose of allowing the losing party an opportunity to challenge the
foreign judgment, and in order for the court to properly determine its efficacy. [27]
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity.[28]
The rules are silent as to what initiatory procedure must be undertaken in order to
enforce a foreign judgment in the Philippines. But there is no question that the filing of a
civil complaint is an appropriate measure for such purpose. A civil action is one by which
a party sues another for the enforcement or protection of a right, [29] and clearly an action
to enforce a foreign judgment is in essence a vindication of a right prescinding either from
a conclusive judgment upon title or the presumptive evidence of a right. [30] Absent perhaps
a statutory grant of jurisdiction to a quasi-judicial body, the claim for enforcement of
judgment must be brought before the regular courts.[31]
There are distinctions, nuanced but discernible, between the cause of action arising
from the enforcement of a foreign judgment, and that arising from the facts or allegations
that occasioned the foreign judgment. They may pertain to the same set of facts, but there
is an essential difference in the right-duty correlatives that are sought to be vindicated.
For example, in a complaint for damages against a tortfeasor, the cause of action
emanates from the violation of the right of the complainant through the act or omission of
the respondent. On the other hand, in a complaint for the enforcement of a foreign
judgment awarding damages from the same tortfeasor, for the violation of the same right
through the same manner of action, the cause of action derives not from the tortious act
but from the foreign judgment itself.
 More importantly, the matters for proof are different. Using the above example, the
complainant will have to establish before the court the tortious act or omission committed
by the tortfeasor, who in turn is allowed to rebut these factual allegations or prove
extenuating circumstances. Extensive litigation is thus conducted on the facts, and from
there the right to and amount of damages are assessed. On the other hand, in an action
to enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and
not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are generally restricted to a
review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud,
or mistake of fact or law. The limitations on review is in consonance with a strong and
pervasive policy in all legal systems to limit repetitive litigation on claims and issues. [32]
Otherwise known as the policy of preclusion, it seeks to protect party expectations
resulting from previous litigation, to safeguard against the harassment of defendants, to
insure that the task of courts not be increased by never-ending litigation of the same
disputes, and in a larger sense to promote what Lord Coke in the Ferrers Case of 1599
stated to be the goal of all law: rest and quietness.[33] If every judgment of a foreign court
were reviewable on the merits, the plaintiff would be forced back on his/her original cause
of action, rendering immaterial the previously concluded litigation.[34]
Petitioners appreciate this distinction, and rely upon it to support the proposition that
the subject matter of the complaintthe enforcement of a foreign judgmentis incapable of
pecuniary estimation. Admittedly the proposition, as it applies in this case, is counter-
intuitive, and thus deserves strict scrutiny. For in all practical intents and purposes, the
matter at hand is capable of pecuniary estimation, down to the last cent. In the assailed
Order, the respondent judge pounced upon this point without equivocation:
The Rules use the term where the value of the subject matter cannot be estimated.
The subject matter of the present case is the judgment rendered by the foreign court
ordering defendant to pay plaintiffs definite sums of money, as and for compensatory
damages. The Court finds that the value of the foreign judgment can be estimated;
indeed, it can even be easily determined. The Court is not minded to distinguish between
the enforcement of a judgment and the amount of said judgment, and separate the two,
for purposes of determining the correct filing fees. Similarly, a plaintiff suing on
promissory note for P1 million cannot be allowed to pay only P400 filing fees (sic), on
the reasoning that the subject matter of his suit is not the P1 million, but the enforcement
of the promissory note, and that the value of such enforcement cannot be estimated.[35]
The jurisprudential standard in gauging whether the subject matter of an action is
capable of pecuniary estimation is well-entrenched. The Marcos Estate cites Singsong v.
Isabela Sawmill and Raymundo v. Court of Appeals, which ruled:
[I]n determining whether an action is one the subject matter of which is not capable
of pecuniary estimation this Court has adopted the criterion of first ascertaining the
nature of the principal action or remedy sought. If it is primarily for the recovery of a sum
of money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the courts of first instance would depend on
the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such actions as
 cases where the subject of the litigation may not be estimated in terms of money, and
are cognizable exclusively by courts of first instance (now Regional Trial Courts).
On the other hand, petitioners cite the ponencia of Justice JBL Reyes in Lapitan v.
Scandia,[36] from which the rule in Singsong and Raymundo actually derives, but which
incorporates this additional nuance omitted in the latter cases:
xxx However, where the basic issue is something other than the right to recover a
sum of money, where the money claim is purely incidental to, or a consequence of, the
principal relief sought, like in suits to have the defendant perform his part of the
contract (specific performance) and in actions for support, or for annulment of
judgment or to foreclose a mortgage, this Court has considered such actions as cases
where the subject of the litigation may not be estimated in terms of money, and are
cognizable exclusively by courts of first instance.[37]
Petitioners go on to add that among the actions the Court has recognized as being
incapable of pecuniary estimation include legality of conveyances and money deposits,[38]
validity of a mortgage,[39] the right to support,[40] validity of documents,[41] rescission of
contracts,[42] specific performance,[43] and validity or annulment of judgments.[44] It is urged
that an action for enforcement of a foreign judgment belongs to the same class.
This is an intriguing argument, but ultimately it is self-evident that while the subject
matter of the action is undoubtedly the enforcement of a foreign judgment, the effect of a
providential award would be the adjudication of a sum of money. Perhaps in theory, such
an action is primarily for the enforcement of the foreign judgment, but there is a certain
obtuseness to that sort of argument since there is no denying that the enforcement of the
foreign judgment will necessarily result in the award of a definite sum of money.
But before we insist upon this conclusion past beyond the point of reckoning, we must
examine its possible ramifications. Petitioners raise the point that a declaration that an
action for enforcement of foreign judgment may be capable of pecuniary estimation might
lead to an instance wherein a first level court such as the Municipal Trial Court would
have jurisdiction to enforce a foreign judgment. But under the statute defining the
jurisdiction of first level courts, B.P. 129, such courts are not vested with jurisdiction over
actions for the enforcement of foreign judgments.
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in civil cases. Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts shall exercise:
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and
intestate, including the grant of provisional remedies in proper cases, where the value of
the personal property, estate, or amount of the demand does not exceed One hundred
thousand pesos (P100,000.00) or, in Metro Manila where such personal property, estate,
or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00)
exclusive of interest damages of whatever kind, attorney's fees, litigation expenses, and
costs, the amount of which must be specifically alleged: Provided, That where there are
several claims or causes of action between the same or different parties, embodied in
the same complaint, the amount of the demand shall be the totality of the claims in all
the causes of action, irrespective of whether the causes of action arose out of the same
or different transactions;
 (2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer:
Provided, That when, in such cases, the defendant raises the question of ownership in
his pleadings and the question of possession cannot be resolved without deciding the
issue of ownership, the issue of ownership shall be resolved only to determine the issue
of possession.
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession
of, real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions
in Metro Manila, where such assessed value does not exceed Fifty thousand pesos
(P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation
expenses and costs: Provided, That value of such property shall be determined by the
assessed value of the adjacent lots.[45]
Section 33 of B.P. 129 refers to instances wherein the cause of action or subject
matter pertains to an assertion of rights and interests over property or a sum of money.
But as earlier pointed out, the subject matter of an action to enforce a foreign judgment
is the foreign judgment itself, and the cause of action arising from the adjudication of such
judgment.
An examination of Section 19(6), B.P. 129 reveals that the instant complaint for
enforcement of a foreign judgment, even if capable of pecuniary estimation, would fall
under the jurisdiction of the Regional Trial Courts, thus negating the fears of the
petitioners. Indeed, an examination of the provision indicates that it can be relied upon as
jurisdictional basis with respect to actions for enforcement of foreign judgments, provided
that no other court or office is vested jurisdiction over such complaint:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising jurisdiction or any court, tribunal, person or body exercising judicial or quasi-
judicial functions.
Thus, we are comfortable in asserting the obvious, that the complaint to enforce the
US District Court judgment is one capable of pecuniary estimation. But at the same time,
it is also an action based on judgment against an estate, thus placing it beyond the ambit
of Section 7(a) of Rule 141. What provision then governs the proper computation of the
filing fees over the instant complaint? For this case and other similarly situated instances,
we find that it is covered by Section 7(b)(3), involving as it does, other actions not involving
property.
Notably, the amount paid as docket fees by the petitioners on the premise that it was
an action incapable of pecuniary estimation corresponds to the same amount required for
other actions not involving property. The petitioners thus paid the correct amount of filing
fees, and it was a grave abuse of discretion for respondent judge to have applied instead
a clearly inapplicable rule and dismissed the complaint.
There is another consideration of supreme relevance in this case, one which should
disabuse the notion that the doctrine affirmed in this decision is grounded solely on the
letter of the procedural rule. We earlier adverted to the the internationally recognized
policy of preclusion,[46] as well as the principles of comity, utility and convenience of
nations[47] as the basis for the evolution of the rule calling for the recognition and
enforcement of foreign judgments. The US Supreme Court in Hilton v. Guyot[48] relied
heavily on the concept of comity, as especially derived from the landmark treatise of
Justice Story in his Commentaries on the Conflict of Laws of 1834. [49] Yet the notion of
comity has since been criticized as one of dim contours[50] or suffering from a number of
fallacies.[51] Other conceptual bases for the recognition of foreign judgments have evolved
such as the vested rights theory or the modern doctrine of obligation.[52]
There have been attempts to codify through treaties or multilateral agreements the
standards for the recognition and enforcement of foreign judgments, but these have not
borne fruition. The members of the European Common Market accede to the Judgments
Convention, signed in 1978, which eliminates as to participating countries all of such
obstacles to recognition such as reciprocity and rvision au fond.[53] The most ambitious of
these attempts is the Convention on the Recognition and Enforcement of Foreign
Judgments in Civil and Commercial Matters, prepared in 1966 by the Hague Conference
of International Law.[54] While it has not received the ratifications needed to have it take
effect,[55] it is recognized as representing current scholarly thought on the topic. [56] Neither
the Philippines nor the United States are signatories to the Convention.
Yet even if there is no unanimity as to the applicable theory behind the recognition
and enforcement of foreign judgments or a universal treaty rendering it obligatory force,
there is consensus that the viability of such recognition and enforcement is essential.
Steiner and Vagts note:
. . . The notion of unconnected bodies of national law on private international law,
each following a quite separate path, is not one conducive to the growth of a
transnational community encouraging travel and commerce among its members. There
is a contemporary resurgence of writing stressing the identity or similarity of the values
that systems of public and private international law seek to further a community interest
in common, or at least reasonable, rules on these matters in national legal systems. And
such generic principles as reciprocity play an important role in both fields.[57]
Salonga, whose treatise on private international law is of worldwide renown, points
out:
Whatever be the theory as to the basis for recognizing foreign judgments, there can
be little dispute that the end is to protect the reasonable expectations and demands of
the parties. Where the parties have submitted a matter for adjudication in the court of
one state, and proceedings there are not tainted with irregularity, they may fairly be
expected to submit, within the state or elsewhere, to the enforcement of the judgment
issued by the court.[58]
There is also consensus as to the requisites for recognition of a foreign judgment and
the defenses against the enforcement thereof. As earlier discussed, the exceptions
enumerated in Section 48, Rule 39 have remain unchanged since the time they were
adapted in this jurisdiction from long standing American rules. The requisites and
exceptions as delineated under Section 48 are but a restatement of generally accepted
principles of international law. Section 98 of The Restatement, Second, Conflict of Laws,
states that a valid judgment rendered in a foreign nation after a fair trial in a contested
proceeding will be recognized in the United States, and on its face, the term valid brings
into play requirements such notions as valid jurisdiction over the subject matter and
parties.[59] Similarly, the notion that fraud or collusion may preclude the enforcement of a
foreign judgment finds affirmation with foreign jurisprudence and commentators,[60] as well
as the doctrine that the foreign judgment must not constitute a clear mistake of law or
fact.[61] And finally, it has been recognized that public policy as a defense to the recognition
of judgments serves as an umbrella for a variety of concerns in international practice
which may lead to a denial of recognition.[62]
The viability of the public policy defense against the enforcement of a foreign
judgment has been recognized in this jurisdiction.[63] This defense allows for the application
of local standards in reviewing the foreign judgment, especially when such judgment
creates only a presumptive right, as it does in cases wherein the judgment is against a
person.[64] The defense is also recognized within the international sphere, as many civil
law nations adhere to a broad public policy exception which may result in a denial of
recognition when the foreign court, in the light of the choice-of-law rules of the recognizing
court, applied the wrong law to the case.[65] The public policy defense can safeguard
against possible abuses to the easy resort to offshore litigation if it can be demonstrated
that the original claim is noxious to our constitutional values.
There is no obligatory rule derived from treaties or conventions that requires the
Philippines to recognize foreign judgments, or allow a procedure for the enforcement
thereof. However, generally accepted principles of international law, by virtue of the
incorporation clause of the Constitution, form part of the laws of the land even if they do
not derive from treaty obligations.[66] The classical formulation in international law sees
those customary rules accepted as binding result from the combination two elements: the
established, widespread, and consistent practice on the part of States; and a
psychological element known as the opinion juris sive necessitates (opinion as to law or
necessity). Implicit in the latter element is a belief that the practice in question is rendered
obligatory by the existence of a rule of law requiring it.[67]
While the definite conceptual parameters of the recognition and enforcement of
foreign judgments have not been authoritatively established, the Court can assert with
certainty that such an undertaking is among those generally accepted principles of
international law.[68] As earlier demonstrated, there is a widespread practice among states
accepting in principle the need for such recognition and enforcement, albeit subject to
limitations of varying degrees. The fact that there is no binding universal treaty governing
the practice is not indicative of a widespread rejection of the principle, but only a
disagreement as to the imposable specific rules governing the procedure for recognition
and enforcement.
Aside from the widespread practice, it is indubitable that the procedure for recognition
and enforcement is embodied in the rules of law, whether statutory or jurisprudential,
adopted in various foreign jurisdictions. In the Philippines, this is evidenced primarily by
Section 48, Rule 39 of the Rules of Court which has existed in its current form since the
early 1900s. Certainly, the Philippine legal system has long ago accepted into its
jurisprudence and procedural rules the viability of an action for enforcement of foreign
judgment, as well as the requisites for such valid enforcement, as derived from
internationally accepted doctrines. Again, there may be distinctions as to the rules
adopted by each particular state,[69] but they all prescind from the premise that there is a
rule of law obliging states to allow for, however generally, the recognition and
enforcement of a foreign judgment. The bare principle, to our mind, has attained the status
of opinio juris in international practice.
This is a significant proposition, as it acknowledges that the procedure and requisites
outlined in Section 48, Rule 39 derive their efficacy not merely from the procedural rule,
but by virtue of the incorporation clause of the Constitution. Rules of procedure are
promulgated by the Supreme Court,[70] and could very well be abrogated or revised by the
high court itself. Yet the Supreme Court is obliged, as are all State components, to obey
the laws of the land, including generally accepted principles of international law which
form part thereof, such as those ensuring the qualified recognition and enforcement of
foreign judgments.[71]
Thus, relative to the enforcement of foreign judgments in the Philippines, it emerges
that there is a general right recognized within our body of laws, and affirmed by the
Constitution, to seek recognition and enforcement of foreign judgments, as well as a right
to defend against such enforcement on the grounds of want of jurisdiction, want of notice
to the party, collusion, fraud, or clear mistake of law or fact.
The preclusion of an action for enforcement of a foreign judgment in this country
merely due to an exhorbitant assessment of docket fees is alien to generally accepted
practices and principles in international law. Indeed, there are grave concerns in
conditioning the amount of the filing fee on the pecuniary award or the value of the
property subject of the foreign decision. Such pecuniary award will almost certainly be in
foreign denomination, computed in accordance with the applicable laws and standards of
the forum.[72] The vagaries of inflation, as well as the relative low-income capacity of the
Filipino, to date may very well translate into an award virtually unenforceable in this
country, despite its integral validity, if the docket fees for the enforcement thereof were
predicated on the amount of the award sought to be enforced. The theory adopted by
respondent judge and the Marcos Estate may even lead to absurdities, such as if applied
to an award involving real property situated in places such as the United States or
Scandinavia where real property values are inexorably high. We cannot very well require
that the filing fee be computed based on the value of the foreign property as determined
by the standards of the country where it is located.
As crafted, Rule 141 of the Rules of Civil Procedure avoids unreasonableness, as it
recognizes that the subject matter of an action for enforcement of a foreign judgment is
the foreign judgment itself, and not the right-duty correlatives that resulted in the foreign
judgment. In this particular circumstance, given that the complaint is lodged against an
estate and is based on the US District Courts Final Judgment, this foreign judgment may,
for purposes of classification under the governing procedural rule, be deemed as
subsumed under Section 7(b)(3) of Rule 141, i.e., within the class of all other actions not
involving property. Thus, only the blanket filing fee of minimal amount is required.
Finally, petitioners also invoke Section 11, Article III of the Constitution, which states
that [F]ree access to the courts and quasi-judicial bodies and adequate legal assistance
shall not be denied to any person by reason of poverty. Since the provision is among the
guarantees ensured by the Bill of Rights, it certainly gives rise to a demandable right.
However, now is not the occasion to elaborate on the parameters of this constitutional
right. Given our preceding discussion, it is not necessary to utilize this provision in order
to grant the relief sought by the petitioners. It is axiomatic that the constitutionality of an
act will not be resolved by the courts if the controversy can be settled on other grounds[73]
or unless the resolution thereof is indispensable for the determination of the case.[74]
One more word. It bears noting that Section 48, Rule 39 acknowledges that the Final
Judgment is not conclusive yet, but presumptive evidence of a right of the petitioners
against the Marcos Estate. Moreover, the Marcos Estate is not precluded to present
evidence, if any, of want of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact. This ruling, decisive as it is on the question of filing fees and
no other, does not render verdict on the enforceability of the Final Judgment before the
courts under the jurisdiction of the Philippines, or for that matter any other issue which
may legitimately be presented before the trial court. Such issues are to be litigated before
the trial court, but within the confines of the matters for proof as laid down in Section 48,
Rule 39. On the other hand, the speedy resolution of this claim by the trial court is
encouraged, and contumacious delay of the decision on the merits will not be brooked by
this Court.
WHEREFORE, the petition is GRANTED. The assailed orders are NULLIFIED and
SET ASIDE, and a new order REINSTATING Civil Case No. 97-1052 is hereby issued.
No costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

[1]
Priscilla Mijares is a judge of the Regional Trial Court of Pasay, Loretta Ann P. Rosales an incumbent
member of the House of Representatives, and Joel Lamangan a noted film director.
[2]
Namely Celsa Hilao, Josefina Hilao Forcadilla, Arturo P. Revilla, Jr., Rodolfo G. Benosa, Danila M.
Fuente, Renato Pineda, Domiciano Amparo, Chistopher Sorio, Jose Duran, and Adora Faye De
Vera. Rollo, pp. 42-47.
[3]
Except for Celsa Hilao, who instead alleged that her daughter, Liliosa Hilao, had been tortured then
executed by military personnel during martial law. Id. at 42-43.
[4]
Id. at 42.
[5]
Id. at 35.
[6]
The Opinion was authored by Circuit Judge Betty B. Fletcher and concurred in by Circuit Judge Harry
Pragerson. Circuit Judge Pamela Ann Rymer filed an opinion concurring and dissenting in part, her
dissent centering on the methodology used for computing compensatory damages. Rollo, pp. 84-
132.
[7]
Under Section 58 of the US Federal Rules of Civil Procedure, the judgment for compensatory damages
in a class suit is awarded to a randomly selected. Petitioner Joel Lamangan was among the
 randomly selected claimants of the Torture subclass awarded damages by the US District Court.
See Rollo, p. 71.
[8]
Now Section 48, Rule 39, 1997 Rules of Civil Procedure.
[9]
Since increased to P600.00.
[10]
Now an Associate Justice of the Court of Appeals.
[11]
Petitioners correctly note that they are precluded from filing an appeal on certiorari under Section 1, Rule
41 of the Rules of Civil Procedure, which bars an appeal taken from an order dismissing an action
without prejudice and dictates the aggrieved party to file an appropriate civil action under Rule 65
instead. See Rollo, p. 9
[12]
In a Resolution dated 4 December 2000. Rollo, p. 282.
[13]
Id. at 205.
[14]
See Section 7(c), Rule 141.
[15]
See Section 7(d), id.
[16]
Gochan v. Gochan, 423 Phil. 491, 502 (2001).
[17]
Philippine Aluminum Wheels v. Fasgi Enterprises, Inc., G.R. No. 137378, 12 October 2000, 342
SCRA 722, 734; citing Jovito R Salonga, Rex Bookstore, Manila, Philippines, 1995 Edition, p. 543.
[18]
159 U.S. 113 (1895)
[19]
47 Phil. 189 (1925). While the Philippine Supreme Court in this case refused to enforce the judgment of
the Hongkong Court on the ground of mistake of law or fact, it was reversed on appeal to the US
Supreme Court.
[20]
Id. JJ. Malcolm and Avancea, dissenting.
[21]
See also Borthwick v. Hon. Castro-Bartolome, G.R. No. L-57338, 23 July 1987, 152 SCRA 129, 235;
Philippine International Shipping Corp. v. Court of Appeals, G.R. No. 77085, 26 April 1989, 172
SCRA 810, 819.
[22]
Ultimately, matters of remedy and procedure such as those relating to the service of summons or court
process upon the defendant, the authority of counsel to appear and represent a defendant and the
formal requirements in a decision are governed by the lex fori or the internal law of the forum.
Asiavest Merchant Bankers (M) Berhad v. Court of Appeals, 414 Phil. 13, 29 (1991).
[23]
Fraud, to hinder the 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. Philippine Aluminum Wheels v.
Fasgi Enterprises, Inc., supra note 17.
[24]
See, e.g., Nagarmull v. Binalbagan-Isabela Sugar Co., 144 Phil. 72, 77 (1970); Ingenholl v. Walter E.
Olsen and Company, Inc., supra note 20.
[25]
Roeher v. Rodriguez, G.R. No. 142820, 20 June 2003, 404 SCRA 495, 503.
[26]
An action must be brought in the second state upon the judgment recovered in the first. J. Salonga,
Private International Law (3rd ed., 1967), at 500; citing Goodrich, 600, 601; Chesire, 628; II Beale,
1377. But see E. Scoles and P. Hay, Conflict of Laws (2nd ed., 1982), at 969, which recognizes
that civil law countries provide a procedure to give executory force to the foreign judgment, as
 distinguished from the Anglo-American common law (but not statutory) practice of requiring an
action on the judgment.
[27]
See Philsec Investment Corp. v. Court of Appeals, G.R. No. 103493, 19 June 1997, 274 SCRA 102,
110.
[28]
Northwest Orient Airlines v. Court of Appeals, G.R. No. 112573, 9 February 1995, 241 SCRA 192, 199.
[29]
See Section 3(a), Rule 1, Rules of Civil Procedure.
[30]
Every ordinary civil action must be based on a cause of action. Section 1, Rule 2, Rules of Civil
Procedure. A cause of action is the act or omission by which a party violates a right of another.
Section 2, Rule 2, Rules of Civil Procedure.
[31]
See Pacific Asia Overseas Shipping Corp. v. NLRC, G.R. No. 76595. 6 May 1988, 161 SCRA 122, 133.
[32]
Soles & Hay, supra note 27, at 916.
[33]
Ibid.
[34]
Salonga, supra note 27, at 514; citing Cheshire, 803.
[35]
Rollo, p. 30. Emphasis omitted.
[36]
133 Phil. 526 (1968).
[37]
Id. at 528.
[38]
Rollo, at 326, citing Arroz v. Alojado, 19 SCRA 711 (1967).
[39]
Ibid citing Bunayog v. Tunas, 106 Phil. 715 (1959)
[40]
Id. citing Baito v. Sarmiento, 109 Phil. 148 (1960).
[41]
Id. citing De Rivera v. Halili, 9 SCRA 59 (1963).
[42]
Id. citing Bautista v. Lim, 88 SCRA 479 (1979) and De Leon v. Court of Appeals, 287 SCRA 94 (1998).
[43]
Id. citing Amorganda v. Court of Appeals, 166 SCRA 203 (1988); Ortigas & Company v. Herrera, 120
SCRA 89 (1983).
[44]
Id. citing Mercado v. Ubay, 187 SCRA 719 (1990) and Filipino Pipe Workers Union v. Batario, Jr., 163
SCRA 789 (1988).
[45]
As amended by Rep. Act No. 7691.
[46]
Supra note 32.
[47]
Supra note 17.
[48]
Supra note 18.
[49]
H. Steiner & D. Vagts, Transnational Legal Problems: Materials and Text (2nd ed., 1976), at 775.
[50]
Ibid.
[51]
See Salonga, supra note 27, at 66.
[52]
Id. at 502-503.
[53]
Scoles & Hays, supra note 27, at 970.
[54]
Steiner & Vagts, supra note 51, at 808. A decision rendered in one of the Contracting States shall be
entitled to recognition and enforcement in another Contracting State under the terms of this
Convention (1) if the decision was given by a court considered to have jurisdiction within the
meaning of this Convention, and (2) if it is no longer subject to ordinary forms of review in the State
 of origin. Convention on the Recognition and Enforcement of Foreign Judgments in Civil and
Commercial Matters, Chapter II, Article 4.
[55]
To date, only Cyprus, the Netherlands, Portugal and Kuwait have either ratified or acceded to the
Convention.
[56]
Steiner & Vagts, supra note 51.
[57]
Steiner & Vagts, supra note 51,at 776.
[58]
Salonga, supra note 51, at 502.
[59]
Steiner & Vagts, supra note 27, at 779. A policy common to all legal systems is to provide for the final
resolution of disputes. The policy is furthered by each nations adoption of a view of jurisdiction in
the international sense which recognizes the foreign courts assertion of jurisdiction as satisfying its
own notions of due process in circumstances in which it itself would have asserted jurisdiction.
Soles & Hay, supra note 27, at 976; citing Hay, International versus Interstate Conflicts Law in the
United States, 35 Rabels Zeitschrift 429,450 n. 101 (1971) and Cherun v. Frishman, 236 F. Supp.
292 (D.D.C. 1964). Salonga, in affirming the rule of want of jurisdiction, cites the commentaries of
Cheshire, Wolff, Goodrich and Nussbaum.
[60]
See, e.g., Salonga, supra note 27 at 513.
[61]
Ibid; citing Henderson v. Henderson, 6 Q.B. (1844) 288; Vanquelin v. Bouard, 15 C.B. (N.S. 1863) 341;
Godard v. Gray, L.R. 6 Q.B. 139 (1870); Vadala v. Lawes 25 Q.B.D. (1890) 319, 316; cf. Chandler
v. Peketz, 297 U.S. 609, 56 S.Ct., 80 L.Ed. 881 (1936); Cheshire, 661-664; Wolff, 268; Goodrich,
603.
[62]
Soles & Hay, supra note 27, at 978.
[63]
Thus, when the foreign law, judgment or contract is contrary to a sound and established public policy of
the forum, the said foreign law, judgment or order shall not be applied. Bank of America v. American
Realty Corp., 378 Phil. 1279, 1296 (1999); citing Philippine Conflict of Laws, Eight Edition, 1996,
Paras, page 46. Las sentencias de tribunals extranjeros no pueden ponerse en vigor en Filipinas
si son contrarias a las leyes, costumbres y orden pblico. Si dichas decisiones, por la simple teora
de reciprocidad, cortesa judicial y urbanidad internacional son base suficiente para que nuestros
tribunales decidan a tenor de las mismas, entonces nuestros juzgados estaran en la pobre tessitura
de tener que dictar sentencias contrarias a nuestras leyes, costumbres y orden pblico. Esto es
absurdo. Querubin v. Querubin, 87 Phil. 124, 133. (1950).
[64]
See Section 48, Rule 39, Rules of Civil Procedure.
[65]
Soles & Hays, supra note 27, at 979.
[66]
[It] is generally recognized that, subject to [exceptions], a rule of general customary international law is
binding on all States, whether or not they have participated in the practice from which it sprang. H.
Thirlway, The Sources of International Law, International Law (ed. by M.Evans, 1st ed., 2003), at
124.
[67]
Not only must the acts concerned amount to a settled practice, but they must also be such, or be carried
out in such a way, as to be evidence of a belief that this practice is rendered obligatory by the
existence of a rule of law requiring it. The need for such a belief, i.e., the existence of a subjective
element, is implicit in the very notion of the opinion juris sive necessitatis. North Sea Continental
Shelf, Judgment, ICJ Reports 1969, p. 3, para. 77; cited in H. Thirlway, ibid.
[68]
The problems that arise in the enforcement of foreign judgments are generally to be solved by the
principles of international law. The Philippines by its Constitution, adopts the generally accepted
principles of international law. F. Gupit, Enforcement of Foreign Judgments and Arbitral Awards,
XXIII J. Integ. Bar. Phil. 3, at 69.
[69]
Divergent practices do not necessarily preclude recognition of a customary norm. In reviewing the
question of the existence of customary rules forbidding the use of force or intervention, the
International Court of Justice pertinently held: It is not to be expected that in the practice of States
the application of the rules in question should have been perfect, in the sense that States should
have refrained, with complete consistency, from the use of force or from intervention in each others
internal affairs. The Court does not consider that, for a rule to be established as customary,
the corresponding practice must be in absolutely rigorous conformity with the rule. In order
to deduce the existence of customary rules, the Court deems it sufficient that the conduct of States,
should, in general, be consistent with such rules, and that instances of State conduct inconsistent
with a given rule should generally have been treated as breaches of that rule, not as indications of
recognition of a new rule. (emphasis supplied) Military and Paramilitary Activities in and against
Nicaragua (Nicaragua v. United States of America), Merits, Judgment, ICJ Reports 1986, p. 14,
para. 186; citing in H. Thirlway, supra note 66.
[70]
And other inferior courts, relative to their jurisdictions.
[71]
Sec. 2, Art. II, 1987 Const., which states The Philippines renounces war as an instrument of national
policy, adopts the generally accepted principles of international law as part of the law of the land
and adheres to the policy of peace, equality, justice, freedom, cooperation and amity with all
nations.
[72]
Indeed, the valuation of foreign money judgments remains a matter of debate in international law. In the
United States, Section 144 of the Restatement, Second, Conflicts of Laws (1971) adopts the rule
that the forum would convert the currency into local currency as of the date of the award. However,
this rule has been criticized. In England, the judgment debtor may now effect payment either in the
foreign currency in the amount due or in local currency equivalent to the foreign currency on the
date of payment. French and German law similarly permit the expression of a judgment in foreign
currency. Soles& Hays, supra note 27, at 973.
[73]
Ty v. Trampe, 321 Phil. 81 (1995).
[74]
Tarrosa v. Singson, G.R. No. 111243, 25 May 1994, 232 SCRA 553, 557.
Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-57338 July 23, 1987

WILLIAM B. BORTHWICK, petitioner,

vs.
HON. FLORELIANA CASTRO-BARTOLOME, Presiding Judge, Br. XV, Makati, of the Court of
First Instance of Rizal; JOSEPH E. SCALLON, and JEWELL C. SCALLON, respondents.

NARVASA, J.:

By action commenced in the Circuit Court of the First Circuit, State of Hawaii, U.S.A.,1 Joseph E.
Scallon sought to Compel payment by William B. Borthwick on four (4) promissory notes2 in the
amounts of $32,408.95, $29,584.94, $2,832.59 and $40,000.00, plus stipulated interest. Scallon's
complaint alleged, inter alia, that Borthwick, an American citizen living in the Philippines, owned real
property interests in Hawaii where he last resided and transacted business therein; that business
dealings which transpired in Honolulu, Hawaii had given rise to the promissory notes sued upon, and
Borthwick had failed to pay the sums thereunder owing upon maturity and despite demand.3 Attached
to the complaint were the promissory notes, which although uniformly specifying the city of Palos
Verdes, Los Angeles, California as the place of payment, also provided that

in the event that payment *** shall not have been made in full on or before the
maturity date *** at *** (such) place ***, payee may select, at his option, Manila,
Philippines, or Honolulu, Hawaii as additional places for payment *** and *** any
court in any of said places having jurisdiction over the subject matter shall be a
proper Court for the trial of any action brought to enforce payment of this note and
the law of the place in which said action is brought shall apply. 4

Borthwick being then in Monterey, California, summons5 was served upon him personally in that
place, pursuant to Hawaiian law allowing service of process on a person outside the territorial
confines of the State, if he had otherwise submitted himself to the jurisdiction of its courts as to
causes of action arising from, among others, the act of transacting any business within Hawaii6
alleged to consist as to Borthwick in the negotiation and dealings regarding the promissory notes.
Borthwick ignored the summons. Default was entered against him, and in due course a default
1avvphi 1

judgment was rendered as follows:

DEFAULT JUDGMENT

That Defendant WILLIAM B. BORTHWICK having fatted to plead or otherwise defend in the above-
entitled action and his default having been duly entered herein;

Now, upon the application of the Plaintiff JOSEPH E. SCALLON and upon the affidavit that the
Defendant WILLIAM B. BORTHWICK is indebted to said Plaintiff in the sum of $104,817.48.

IT IS HEREBY ORDERED, ADJUDGED, and decreed that Plaintiff JOSEPH E. SCALLON recover
from Defendant WILLIAM B. BORTHWICK the sum of $104,817.48 together with
 (1) The transaction of any business within the State;

xxx xxx xxx

(3) The ownership, use or possession of any real estate situated in this State;

xxx xxx xxx

(b) Service of process upon any person who is subject to the jurisprudence of
the courts of this State, as provided in this section, may be made as provided
by sections 634-36, if he cannot be found in the State, with the same force
and effect as though summons had been personally served within this State.

[ 634-36] Manner of service under sections 634-33 to 35.

When service of summons is provided for by sections 634-33, 634-34, or

634-35, service shall be made by leaving a certified copy thereof with the
director of regulatory agencies or his deputy, *** provided that notice of the
service and a certified copy of the summons are served upon the defendant
personally by any person authorized to serve process in the place which he
may be found or appointed by the court for that purpose, or sent by certified
or registered mail ***. The service shall be deemed complete upon delivery of
the required papers to the defendant outside the State, personally or by mail
as provided; Rollo, pp. 143-144 interest in the sum of $41,807.93, costs of
Court in the sum of $37.00 and attorney's fees in the sum of $4,290.64 for a
total sum of $150,953.05.

DATED: Honolulu, Hawaii, APR. 30, 1987.

(Sgd.)
V. CHING

Clerk of the above-entitled Court 7

However, Scallon's attempts to have the judgment executed in Hawaii and California failed, because
no assets of Borthwick could be found in those states.8 Scallon and his wife, Jewell, then came to the
Philippines and on March 15, 1980 brought suit against Borthwick in the Court of First Instance of
Makati,9 seeking enforcement of the default judgment of the Hawaii Court and asserting two other
alternative causes of action.10

The sheriff's initial efforts to serve summons on Borthwick personally at his address at 861
Richmond St., Greenhills, Mandaluyong, Metro Manila having been unsuccessful Borthwick was
"always out on official business" the sheriff effected substituted service by leaving a copy of the
summons and the complaint with Borthwick's "house caretaker," a man named Fred Daniel.11

Borthwick filed no answer to the Scallons' complaint. He was declared in default. After due
proceedings judgment by default was rendered against him, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered as follows:

1. The decision of the Court of Hawaii in Civil Case No. 56660 reading:
 IT IS HEREBY ORDERED, ADJUDGED AND DECREED that Plaintiff
JOSEPH E. SCALLON recover from Defendant WILLIAM B. BORTHWICK
the sum of $104,817.48 together with interest in the sum of $41,807.93, costs
of Court in the sum of $37.00 and attorney's fees in the sum of $4,290.64 for
a total sum of $150,53.05.

may be, as it is hereby ordered, enforced in the Philippines.

2. The second alternative cause of action in the event that the satisfaction of the said
judgment becomes impossible, the rescission of the agreement (Exh. L) of the
parties is hereby granted. Defendant Borthwick is hereby ordered:

(a) To return and deliver to plaintiffs Joseph and Jewell Scallon their 800
shares of stock of Manila Memorial Park Cemetery, Inc. and 180 shares of
stock of Trans-Pacific Development Management Corporation, together with
any and/or all stock dividends, cash dividends and similar corporate
distributions accruing to said shares of stock from and after December 3,
1973 (the date of the Agreement, Exh. L);

(b) In the event that such shares cannot be returned and delivered, to pay to
plaintiff Scallon the value of the same from the execution of the agreement,
Exh. L, together with any increase in value from the said date to the finality of
this judgment.

SO ORDERED. 12

Again, it was with Fred Daniel, Identifying himself as Borthwick's "houseboy," that a copy of the
decision was left.13

No response from Borthwick was forthcoming until after the Court subsequently amended its
judgment so as to make the sums due under the Hawaii Court decision payable in their equivalent in
Philippine currency.14 Notice of this amendatory order was somehow personally accepted by
Borthwick at this time. Borthwick then moved for a new trial, claiming that it was by accident, mistake
and excusable negligence that his "off and on itinerant gardener," Daniel, failed to transmit the
summons to him, which omission consequently prevented Borthwick from knowing of the judicial
proceedings against him. Alleging too that "the promissory notes did not arise from business
dealings in Hawaii," nor "did (he) own real estate" therein,15 Borthwick contended that the judgment
sought to be enforced was invalid for want of jurisdiction of the Hawaii Court over the cause of action
and over his person.

The motion for new trial was denied by the Trial Court upon the factual finding that "Fred Daniel is a
responsible person" "of suitable age and discretion" "resident of the address *** (of the) defendant"
on whom substituted service of summons had been duly made.16 As to Borthwick's attack on the
validity of the foreign judgment, the Trial Court ruled that "under the ** (Hawaii Revised Statute) cited
by the defendant the Hawaii Court has jurisdiction" because the factual premises upon which the
exercise of such jurisdiction was based "had not been refuted by the defendant" although he
"appears to be a lawyer, and the summons in the Hawaii case was served personally on him."17
Finally, the Trial Court disposed of Borthwick's other defenses18 saying that the present action "is (for)
the enforcement of a foreign judgment" where the validity of his defenses to the original action is
immaterial.19 Borthwick proceeded directly to this Court and filed a petition for review,20 raising issues
of law, framed as follows:
 1. Is a foreign judgment against a person rendered without jurisdiction over the cause
of action and without proper summons to the defendant enforceable in the
Philippines?

2. Has the respondent Judge acquired jurisdiction over the person of defendant when
summons was served on an itinerant gardener who did not reside in defendant's
house?

3. Where a motion for new trial was filed on time, duly supported with affidavits to
prove the grounds relied upon, should not the Court grant the same? 21

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.22 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.

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 Makati, 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 the 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 succeed 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.

It is not for this Court to disturb the express finding of the Court of First Instance that Daniel was
Borthwick's resident domestic houseboy, and of sufficient age and discretion to accept substituted
service of summons for Borthwick. Under Rule 42 of the Rules of Court, a party appealling from the
Courts of First Instance (now the Regional Trial Courts) to the Supreme Court may "raise only
questions of law (and) no other question **,"23 and is thus precluded from impugning the factual
findings of the trial court, being deemed to have admitted the correctness of such findings24 and
waived his right to open them to question.25

In any case, a review of the records shows that the Trial Court was correct in refusing to believe
Borthwick's representation that "Daniel gardens at the residence of Borthwick, then goes home to La
Union after gardening itinerantly." As said Court observed, that situation is "ridiculous," it being I
"queer and hardly coincidental why on all papers served on the defendant, it was Fred Daniel who
signed and acknowledged receipt. "26
There was therefore no error committed by the Trial Court when it denied Borthwick's motion to lift
the order of default (which is what the motion for new trial actually is) because Borthwick had failed
to establish any proper ground therefor.

WHEREFORE, the petition for review is denied, with costs against petitioner.

SO ORDERED.

Teehankee, C.J., Cruz, Paras and Gancayco, JJ., concur.

Footnotes

1
Docketed therein as Civil Case No. 56660.

2
Three bearing the date of November 1, 1973 and the last, January 15, 1974.

3
Complaint, Rollo, pp. 38 et seq., and 214.

4
Rollo, pp. 42, 44, 46 and 47.

5
Together with a copy of the complaint and notice of prior receipt by the Director of
Regulatory Agencies of Hawaii of a copy of the summons; Rollo, pp. 48-58.

6
The Hawaii Revised Statute provides:

"[ 364-351 Acts submitting to jurisdiction.

(a) Any person, whether or not a citizen or resident of this State, who ***
does any of the acts herein enumerated, thereby submits such person *** to
the jurisdiction of the courts of this State as to any cause of action arising
from the doing of any of the acts:

7 Rollo, p. 68; also p. 63.

8 Rollo, p. 30.

9 Docketed therein as Civil Case No. 36503.

10Joseph Scallon alternatively sued upon the same promissory notes subject of the
foreign judgment "in the remote possibility that the Hawaiian Decision *** will not be
*** enforced." Under the second alternative cause of action, the Spouses Scallon
prayed for the return of 800 shares of stock in the Manila Memorial Park and 180
shares in the Trans-Pacific Development Management Corporation-capital stock the
Scallons assigned to Borthwick on December 3, 1973 in consideration for his
assumption of their liability for the purchase price thereof to Nathan Ira Tinkham, but
which indebtedness the spouses were eventually compelled to settle anyway, hence
the issuance by Borthwick of two of the four unpaid promissory notes.
 11 Rollo, p. 81.

12 Rollo, pp. 104-105.

13 Rollo, p. 245.

14 Rollo, p. 107.

15 Rollo, pp. 9-10.

16 Rollo, pp. 173-174.

17 Rollo, pp. 175.

18 That "the promissory note for $32,408.95 *** was not genuine ***; that he has ***
valid counterclaims against plaintiff;" that the clause "whereby (Borthwick) agreed to
save Scallon harmless from all claims by Tinkham was cancelled;" that "the stocks
were really transferred to (Borthwick's) wife and the *** notes, consideration of said
transfer, have prescribed; that the stocks have already been conveyed *** to third
persons; that the action for rescission has already prescribed;" Rollo, p. 120.

19 Rollo, p. 176.

20 Rollo, p. 13.

21 Section 50(b) of Rule 39, Rules of Court.

22 Sec. 2, Rule 42, Rules of Court.

23Fernandez v. Fernandez, et al. 88 Phil. 162; Comilang v. Delenela, et al., 10 SCRA

598 citing Jacinto v. Jacinto, L-12313, July 31, 1959; Abuyo v. De Suazo, 18 SCRA
600, citing Aballo v. Santino, L-16307, April 30, 1963, Cabrera et al. v. Tiano, L-
17299, July 31, 1963; DBP v. Ozarraga, L-16631, July 20, 1965; Cason v. San
Pedro, 9 SCRA 925.

24 Descutido v. Baltazar, I SCRA 1171; Flores v. Plasina, 94 Phil. 327.

Wilson v. Berkenkotter, 92 Phil. 918; Flores v. Plasina, supra; J.M. Tuason & Co., Inc. v.
25

Macalindong, 6 SCRA 983.

 SECOND DIVISION

SPS. DOMINGO M. BELEN and G.R. No. 175334

DOMINGA P. BELEN, herein
represented by their attorney- Present:
in-fact NERY B. AVECILLA,
Petitioners, QUISUMBING, J.,
Chairperson,
CARPIO-MORALES,
TINGA,
- versus - NAZARIO, and
VELASCO, JR., JJ.

HON. PABLO R. CHAVEZ, Presiding Promulgated:

Judge, RTC-Branch 87, Rosario,
Batangas and all other persons acting March 26, 2008
under his orders and SPS. SILVESTRE
N. PACLEB and PATRICIA A. PACLEB,
represented herein by their attorney-in-
fact JOSELITO RIOVEROS,
Respondents.

x---------------------------------------------------------------------------x

DECISION

TINGA, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure assailing the Decision29 and Resolution30 of the Court of Appeals in
CA-G.R. SP No. 88731. The appellate courts decision dismissed the petition for
certiorari which sought to nullify the orders of the Regional Trial Court (RTC) of
Rosario, Batangas, Branch 87, denying herein petitioners motion to quash writ of
execution and their motion for reconsideration. The Court of Appeals resolution
denied petitioners motion for reconsideration of the decision.

The instant petition originated from the action for the enforcement of a
foreign judgment against herein petitioners, spouses Domingo and Dominga Belen,
filed by private respondent spouses Silvestre and Patricia Pacleb, represented by
their attorney-in-fact, Joselito Rioveros, before the RTC of Rosario, Batangas.

29
Rollo, p. 16; dated 31 July 2006 and penned by J. Normandie B. Pizarro and concurred in by JJ. Josefina
Guevara-Salonga, Chairman of the Seventeenth Division, and Aurora Santiago-Lagman.

30
Id. at 26; dated 3 November 2006.
 The complaint alleged that private respondents secured a judgment by
default in Case No. NC021205 rendered by a certain Judge John W. Green of the
Superior Court of the State of California. The judgment ordered petitioners to pay
private respondents the amount of $56,204.69 representing loan repayment and
share in the profits plus interest and costs of suit. The summons was served on
petitioners address in San Gregorio, Alaminos, Laguna, as was alleged in the
complaint, and received by a certain Marcelo M. Belen.

On 5 December 2000, Atty. Reynaldo Alcantara entered his appearance as

counsel for petitioners, stating that his legal services were retained at the instance
of petitioners relatives. Atty. Alcantara subsequently filed an answer, alleging that
contrary to private respondents averment, petitioners were actually residents of
California, USA. The answer also claimed that petitioners liability had been
extinguished via a release of abstract judgment issued in the same collection case.

In view of petitioners failure to attend the scheduled pre-trial conference,

the RTC ordered the ex parte presentation of evidence for private respondents
before the branch clerk of court. On 16 March 2001, before the scheduled ex parte
presentation of evidence, Atty. Alcantara filed a motion to dismiss, citing the
judgment of dismissal issued by the Superior Court of the State of California, which
allegedly dismissed Case No. NC021205. The RTC held in abeyance the ex parte
presentation of evidence of private respondents and the resolution of Atty.
Alcantaras motion pending the submission of a copy of the judgment of dismissal.
 For failure to present a copy of the alleged judgment of dismissal, the RTC
denied the motion to dismiss in an Order dated 19 February 2002. Through a
motion, Atty. Alcantara sought the reinstatement of the motion to dismiss by
attaching a copy of the said foreign judgment.

For their part, private respondents filed a motion for the amendment of the
complaint. The amended complaint attached to the motion averred that private
respondents were constrained to withdraw their complaint against petitioners
from the California court because of the prohibitive cost of litigation, which
withdrawal was favorably considered by said court. The amended complaint prayed
for judgment ordering petitioners to satisfy their obligation to private respondents
in the amount of P2,810,234.50.

The answer to the amended complaint raised the defenses of lack of cause
of action, res judicata and lack of jurisdiction over the subject matter and over the
persons of the defendants since the amended complaint had raised an entirely new
cause of action which should have been ventilated in another complaint.
 Petitioners and Atty. Alcantara failed to appear at the rescheduled pre-trial
conference. Thus, the RTC declared petitioners in default and allowed private
respondents to present evidence ex parte. On 15 March 2003, Atty. Alcantara
passed away without the RTC being informed of such fact until much later.

On 5 August 2003, the RTC rendered a Decision, the dispositive portion of

which reads:

WHEREFORE, in view of the foregoing, the defendants are hereby directed

to pay the plaintiffs the following, to wit:

a) The amount of P656,688.00 (equivalent to $27,362.00) in an exchange

ratio of One (1) dollar is to P24.00 Philippine Currency;
b) Plus 30% of P656,688.00 which is P197,006.40;
c) Plus P1,576,051.20 (30% for eight (8) years, 1995-2003); and
d) Plus 12% per annum as interest of the principal obligation
(P656,688.00) from 1995 to 2003;

SO ORDERED.31

31
CA rollo, p. 74.
 A copy of the RTC decision intended for Atty. Alcantara was returned with
the notation Addressee Deceased. A copy of the RTC decision was then sent to the
purported address of petitioners in San Gregorio, Alaminos, Laguna and was
received by a certain Leopoldo Avecilla on 14 August 2003. Meanwhile,
immediately after the promulgation of the RTC decision, private respondents filed
an ex-parte motion for preliminary attachment which the RTC granted in its Order
dated 15 September 2003.

On 24 November 2003, private respondents sought the execution of the RTC

decision. In its Order dated 10 December 2003, the RTC directed the issuance of a
writ of execution. Upon the issuance of a writ of execution, the real properties
belonging to petitioners were levied upon and the public auction scheduled on 15
January 2004.

On 16 December 2003, Atty. Carmelo B. Culvera entered his appearance as

counsel for petitioners. On 22 December 2003, Atty. Culvera filed a Motion to
Quash Writ of Execution (With Prayer to Defer Further Actions). On 6 January 2004,
he filed a Notice of Appeal from the RTC Decision averring that he received a copy
thereof only on 29 December 2003.
 In an Order dated 7 July 2004, the RTC denied the motion seeking the quashal
of the writ of execution.32 Subsequently, the RTC denied Atty. Culveras motion for
reconsideration of said order.

Thus, petitioners filed a Rule 65 petition before the Court of Appeals,

imputing on the RTC grave abuse of discretion tantamount to lack or excess of
jurisdiction (1) in rendering its decision although it had not yet acquired jurisdiction
over their persons in view of the improper service of summons; (2) in considering
the decision final and executory although a copy thereof had not been properly
served upon petitioners; (3) in issuing the writ of execution before the decision had
become final and executory and despite private respondents failure to comply with
the procedural requirements in filing the motion for the issuance of the said writ;
and (4) in denying petitioners motion to quash the writ of execution and notice of
appeal despite sufficient legal bases in support thereof.

On 31 July 2006, the Court of Appeals rendered the assailed Decision

dismissing the petition for certiorari. On 3 November 2006, it issued the assailed
Resolution denying petitioners motion for reconsideration.

Hence, the instant petition, attributing to the Court of Appeals the following
errors:

32
Id. at 23.
 THE COURT OF APPEALS COMMITTED SERIOUS ERRORS [OF] LAW IN
RULING THAT THE TRIAL COURT ACTED WITHIN ITS JURISDICTION OR DID NOT
COMMIT GRAVE ABUSE OF DISCRETION WHEN IT CONSIDERED THE APPEARANCE
OF THE COUNSEL AS THEIR SUBMISSION TO THE JURISDICTION OF THE TRIAL
COURT ALTHOUGH SUCH APPEARANCE OF THE SAID COUNSEL WAS WITHOUT
THEIR EXPRESS AUTHORITY BUT WAS DONE BY THEIR ALLEGED RELATIVES.

THE COURT OF APPEALS COMMITTED SERIOUS ERRORS [OF] LAW WHEN

IT RULED THAT THE DECISION OF THE TRIAL COURT WAS DULY SERVED UPON THE
PETITIONERS THROUGH THEIR ALLEGED RELATIVES ALTHOUGH THE RECORDS OF
THIS CASE CLEARLY SHOWS THAT THE SAID PETITIONERS ARE RESIDENTS OF
UNITED STATES OF AMERICA.33

In a Resolution dated 22 January 2007, the Court denied the petition because
it is not accompanied by a valid verification and certification of non-forum
shopping. Petitioners sought reconsideration, which the Court granted in a
Resolution dated 16 April 2007. The Court also ordered the reinstatement of the
petition and the filing of a comment.

33
Rollo, p. 4.
 The instant petition raises two issues, thus: (1) whether the RTC acquired
jurisdiction over the persons of petitioners through either the proper service of
summons or the appearance of the late Atty. Alcantara on behalf of petitioners and
(2) whether there was a valid service of the copy of the RTC decision on petitioners.

On one hand, courts acquire jurisdiction over the plaintiffs upon the filing of
the complaint. On the other hand, jurisdiction over the defendants in a civil case is
acquired either through the service of summons upon them or through their
voluntary appearance in court and their submission to its authority. As a rule, if
defendants have not
been summoned, the court acquires no jurisdiction over their person, and a
judgment rendered against them is null and void. To be bound by a decision, a party
should first be subject to the courts jurisdiction.34

In Asiavest Limited v. Court of Appeals,35 the Court underscored the necessity

of determining first whether the action is in personam, in rem or quasi in rem
because the rules on service of summons under Rule 14 of the Rules of Court of the
Philippines apply according to the nature of the action.36 The Court elaborated,
thus:

In an action in personam, jurisdiction over the person of the defendant is

necessary for the court to validly try and decide the case. Jurisdiction over the
person of a resident defendant who does not voluntarily appear in court can be
acquired by personal service of summons as provided under Section 7, Rule 14 of
the Rules of Court. If he cannot be personally served with summons within a
reasonable time, substituted service may be made in accordance with Section 8
of said Rule. If he is temporarily out of the country, any of the following modes of
service may be resorted to: (1) substituted service set forth in Section 8; (2)
personal service outside the country, with leave of court; (3) service by
publication, also with leave of court; or (4) any other manner the court may deem
sufficient.

However, in an action in personam wherein the defendant is a non-

resident who does not voluntarily submit himself to the authority of the court,
personal service of summons within the state is essential to the acquisition of

34
Bank of the Philippine Islands v. Sps. Evangelista and LTS Corp., G.R. No. 146553, 27 November 2002, 393
SCRA 187.

35
357 Phil. 536 (1998).

36
Id.
jurisdiction over her person. This method of service is possible if such defendant
is physically present in the country. If he is
 not found therein, the court cannot acquire jurisdiction over his person and
therefore cannot validly try and decide the case against him. An exception was
laid down in Gemperle v. Schenker wherein a non-resident was served with
summons through his wife, who was a resident of the Philippines and who was
his representative and attorney-in-fact in a prior civil case filed by him;
moreover, the second case was a mere offshoot of the first case.

On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over

the person of the defendant is not a prerequisite to confer jurisdiction on the court
provided that the court acquires jurisdiction over the res. Nonetheless, summons
must be served upon the defendant not for the purpose of vesting the court with
jurisdiction but merely for satisfying the due process requirements. Thus, where
the defendant is a non-resident who is not found in the Philippines and (1) the
action affects the personal status of the plaintiff; (2) the action relates to, or the
subject matter of which is property in the Philippines in which the defendant has
or claims a lien or interest; (3) the action seeks the exclusion of the defendant
from any interest in the property located in the Philippines; or (4) the property of
the defendant has been attached in the Philippines service of summons may be
effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem
sufficient.37

The action filed against petitioners, prior to the amendment of the

complaint, is for the enforcement of a foreign judgment in a complaint for breach
of contract whereby petitioners were ordered to pay private respondents the
monetary award. It is in the nature of an action in personam because private
respondents are suing to enforce their personal rights under said judgment.

37
Supra note 7 at 538. Emphasis supplied.
 Applying the foregoing rules on the service of summons to the instant case,
in an action in personam, jurisdiction over the person of the defendant who does
not voluntarily submit himself to the authority of the court is necessary for the
court to validly try and decide the case through personal service or, if this is not
possible and he cannot be personally served, substituted service as provided in Rule
14, Sections 6-7.38

In an action strictly in personam, personal service on the defendant is the

preferred mode of service, that is, by handing a copy of the summons to the
defendant in person. If the defendant, for justifiable reasons, cannot be served with
the summons within a reasonable period, then substituted service can be resorted
to. While substituted service of summons is permitted, it is extraordinary in
character and in derogation of the usual method of service.39

If defendant cannot be served with summons because he is temporarily

abroad, but otherwise he is a Philippine resident, service of summons may, by leave
of court, be effected out of the Philippines under Rule 14, Section 15. In all of these
cases, it should be noted, defendant must be a resident of the Philippines,
otherwise an action in personam cannot be brought because jurisdiction over his
person is essential to make a binding decision.40

38
Valmonte v. Court of Appeals, 322 Phil. 97 (1996).

39
Manotoc v. Court of Appeals, G.R. No.130974, 16 August 2006, 499 SCRA 21, 33.
 However, the records of the case reveal that herein petitioners have been
permanent residents of California, U.S.A. since the filing of the action up to the
present. From the time Atty. Alcantara filed an answer purportedly at the instance
of petitioners relatives, it has been consistently maintained that petitioners were
not physically present in the Philippines. In the answer, Atty. Alcantara had already
averred that petitioners were residents of California, U.S.A. and that he was
appearing only upon the instance of petitioners relatives.41 In addition, private
respondents attorney-in-fact, Joselito Rioveros, testified during the ex parte
presentation of evidence that he knew petitioners to be former residents of
Alaminos, Laguna but are now living in California, U.S.A.42 That being the case, the
service of summons on petitioners purported address in San Gregorio, Alaminos,
Laguna was defective and did not serve to vest in court jurisdiction over their
persons.

Nevertheless, the Court of Appeals correctly concluded that the appearance

of Atty. Alcantara and his filing of numerous pleadings were sufficient to vest

40
Supra note 10 at 97.

41
CA rollo, p, 47.

42
Id. at 99.
jurisdiction over the persons of petitioners. Through certain acts, Atty. Alcantara
was impliedly authorized by petitioners to appear on their behalf. For instance, in
support of the motion to dismiss the complaint, Atty. Alcantara attached thereto a
duly authenticated copy of the judgment of dismissal and a photocopy
of the identification page of petitioner Domingo Belens U.S. passport. These
documents could have been supplied only by petitioners, indicating that they have
consented to the appearance of Atty. Alcantara on their behalf. In sum, petitioners
voluntarily submitted themselves through Atty. Alcantara to the jurisdiction of the
RTC.

We now come to the question of whether the service of a copy of the RTC
decision on a certain Teodoro Abecilla is the proper reckoning point in determining
when the RTC decision became final and executory.

The Court of Appeals arrived at its conclusion on the premise that Teodoro
Abecilla acted as petitioners agent when he received a copy of the RTC decision.
For their part, private respondents contend that the service of a copy of the RTC
decision on Atty. Alcantara, notwithstanding his demise, is valid. On the other hand,
petitioners reiterate that they are residents of California, U.S.A. and thus, the
service of the RTC decision of a residence which is not theirs is not proper.

As a general rule, when a party is represented by counsel of record, service

of orders and notices must be made upon said attorney and notice to the client and
to any other lawyer, not the counsel of record, is not notice in law. The exception
to this rule is when service upon the party himself has been ordered by the court.43

43
De Leon v. Court of Appeals, G.R. No. 138884, 6 June 2002, 383 SCRA 216.
In cases where service was made on the counsel of record at his given address,
notice sent to petitioner itself is not even necessary.44

The following provisions under Rule 13 of the Rules of Court define the
proper modes of service of judgments:

SEC. 2. Filing and service, defined.x x x

Service is the act of providing a party with a copy of the pleading or paper
concerned. x x x

SEC. 5. Modes of service.Service of pleadings, motions, notices, orders,

judgments and other papers shall be made either personally or by mail.

SEC. 9. Service of judgments, final orders or resolutions. Judgments, final

orders or resolutions shall be served either personally or by registered mail. When
a party summoned by publication has failed to appear in the action, judgments,
final orders or resolutions against him shall be served upon him also by publication
at the expense of the prevailing party.

SEC. 6. Personal service. Service of the papers may be made by delivering

personally a copy to the party or his counsel, or by leaving it in his office with his
clerk or with a person having charge thereof. If no person is found in his office, or
his office is not known, or he has no office, then by leaving the copy, between the
hours of eight in the morning and six in the evening, at the partys or counsels
residence, if known, with a person of sufficient age and discretion then residing
therein.

44
GCP-Manny Transport Services, Inc. v. Principe, G.R. No. 141484, 11 November 2005, 474 SCRA 555.
 SEC. 7. Service by mail. Service by registered mail shall be made by
depositing the copy in the post office, in a sealed envelope, plainly addressed to
the party or his counsel at his office, if known, otherwise at his residence, if known,
with postage fully pre-paid, and with instructions to the postmaster to return the
mail to the sender after ten (10) days if undelivered. If no registry service is
available in the locality of either the sender or the addressee, service may be done
by ordinary mail.
 SEC. 8. Substituted service. If service of pleadings, motions, notices,
resolutions, orders and other papers cannot be made under the two preceding
sections, the office and place of residence of the party or his counsel being
unknown, service may be made by delivering the copy to the clerk of court, with
proof of failure of both personal service and service by mail. The service is
complete at the time of such delivery.

In the instant case, a copy of the RTC decision was sent first to Atty.
Alcantara, petitioners counsel of record. However, the same was returned
unserved in view of the demise of Atty. Alcantara. Thus, a copy was subsequently
sent to petitioners last known address in San Gregorio, Alaminos, Laguna, which
was received by a certain Leopoldo Avecilla.

Undoubtedly, upon the death of Atty. Alcantara, the lawyer-client

relationship between him and petitioners has ceased, thus, the service of the RTC
decision on him is ineffective and did not bind petitioners.

The subsequent service on petitioners purported last known address by

registered mail is also defective because it does not comply with the requisites
under the aforequoted Section 7 of Rule 13 on service by registered mail. Section
7 of Rule 13 contemplates service at the present address of the party and not at
any other address of the party. Service at the partys former address or his last
known address or any address other than his present address does not qualify as
substantial compliance with the requirements of Section 7, Rule 13. Therefore,
service by registered mail presupposes that the present address of the party is
known and if the person who receives the same is not the addressee, he must be
duly authorized by the former to receive the paper on behalf of the party.

Since the filing of the complaint, petitioners could not be physically found in
the country because they had already become permanent residents of California,
U.S.A. It has been established during the trial that petitioners are former residents
of Alaminos, Laguna, contrary to the averment in the complaint that they reside
and may be served with court processes thereat. The service of the RTC decision at
their former address in Alaminos, Laguna is defective and does not bind petitioners.

On many occasions,45 the Court has strictly construed the requirements of

the proper service of papers and judgments. Both in Heirs of Delos Santos v. Del
Rosario46 and Tuazon v. Molina,47 the service of the trial courts decision at an
adjacent office and the receipt thereof by a person not authorized by the counsel
of record was held ineffective. Likewise, the service of the decision made at the
ground floor instead of at the 9th floor of a building in the address on record of

45
See also Adamson Ozanan Educational Institution, Inc. v. Adamson University Faculty and Employees
Association, G. R. No. 86819, 9 November 1989, 179 SCRA 279; BPI-Family Savings Bank, Inc. v. Court of Appeals, G.
R. No. 94925, 22 April 1991, 196 SCRA 242.

46
G.R. No. 139167, 29 June 2005, 462 SCRA 98.

47
No. L-55697, 26 February 1981, 103 SCRA 365.
petitioners counsel, was held invalid in PLDT v. NLRC.48 In these cases, there was no
constructive service of the decision even if

48
No. L-60050, 213 Phil. 362 (1984).
the service was made at the offices adjacent to the address on record of the parties
counsels and even if the copies eventually found their way to persons duly
authorized to receive them.

In view of the foregoing, the running of the fifteen-day period for appeal did
not commence upon the service of the RTC decision at the address on record of
Atty. Alcantara or at the Laguna address. It is deemed served on petitioners only
upon its receipt by Atty. Culvera on 29 December 2003. Therefore, the filing of the
Notice of Appeal on 06 January 2004 is within the reglementary period and should
be given due course.

WHEREFORE, the instant petition for review on certiorari is GRANTED and

the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 88731 are
REVERSED and SET ASIDE. Accordingly, the orders dated 7 July 2004 and 2 February
2005 of the Regional Trial Court of Rosario. Batangas, Branch 87 are SET ASIDE. The
RTC is also ordered to GIVE DUE COURSE to the Notice of Appeal filed by Atty.
Culvera on 06 January 2004 . Costs against private respondents.

SO ORDERED.
 DANTE O. TINGA

Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CONCHITA CARPIO MORALES MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION
 I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts
Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice
 THIRD DIVISION

[G.R. No. 141536. February 26, 2001]

GIL MIGUEL T. PUYAT, petitioner, vs. RON ZABARTE, respondent.

DECISION
PANGANIBAN, J.:

Summary judgment in a litigation is resorted to if there is no genuine issue as to any material

fact, other than the amount of damages. If this verity is evident from the pleadings and the
supporting affidavits, depositions and admissions on file with the court, the moving party is
entitled to such remedy as a matter of course.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
challenging the August 31, 1999 Decision49 of the Court of Appeals (CA), which affirmed the
Regional Trial Court (RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the January
20, 2000 CA Resolution50 which denied reconsideration.
The assailed CA Decision disposed as follows:
WHEREFORE, finding no error in the judgment appealed from, the same is AFFIRMED."51

The Facts

The facts of this case, as narrated by the Court of Appeals, are as follows: 52
It appears that on 24 January 1994, [Respondent] Ron Zabarte commenced [an action] to enforce the
money judgment rendered by the Superior Court for the State of California, County of Contra Costa, U.S.A.
On 18 March 1994, [petitioner] filed his Answer with the following special and affirmative defenses:

49
Penned by Justice Portia Alio-Hormachuelos with the concurrence of Justices Buenaventura J. Guerrero, Division
chairman; and Remedios A. Salazar-Fernando, member. Rollo, pp. 27-37.
50
Rollo, p. 26.
51
Rollo, p. 37.
52
CA Decision, pp. 2- 9; pp. 28-35.
xxx xxx xxx
8) The Superior Court for the State of California, County of Contra Costa[,] did not
properly acquire jurisdiction over the subject matter of and over the persons involved in [C]ase
#C21-00265.
9) The Judgment on Stipulations for Entry in Judgment in Case #C21-00265 dated
December 12, 1991 was obtained without the assistance of counsel for [petitioner] and without
sufficient notice to him and therefore, was rendered in clear violation of [petitioners]
constitutional rights to substantial and procedural due process.
10) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated
December 12, 1991 was procured by means of fraud or collusion or undue influence and/or based
on a clear mistake of fact and law.
11) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated
December 12, 1991 is contrary to the laws, public policy and canons of morality obtaining in the
Philippines and the enforcement of such judgment in the Philippines would result in the unjust
enrichment of [respondent] at the expense of [petitioner] in this case.
12) The Judgment on Stipulation for Entry in Judgment in Case #C21-00265 dated
December 12, 1991 is null and void and unenforceable in the Philippines.
13) In the transaction, which is the subject matter in Case #C21-00265, [petitioner] is not
in any way liable, in fact and in law, to [respondent] in this case, as contained in [petitioners]
Answer to Complaint in Case #C21-00265 dated April 1, 1991, Annex B of [respondents]
Complaint dated December 6, 1993.
14) [Respondent] is guilty of misrepresentation or falsification in the filing of his
Complaint in this case dated December 6, 1993. Worse, [respondent] has no capacity to sue in the
Philippines.
15) Venue has been improperly laid in this case.
(Record, pp. 42-44)
On 1 August 1994, [respondent] filed a [M]otion for [S]ummary [J]udgment under Rule 34 of the
Rules of Court alleging that the [A]nswer filed by [petitioner] failed to tender any genuine issue as to
the material facts. In his [O]pposition to [respondents] motion, [petitioner] demurred as follows:
2) [Petitioner] begs to disagree[;] in support hereof, [he] wishes to mention that in his
Answer with Special and Affirmative Defenses dated March 16, 1994 [petitioner] has interposed
that the Judgment on Stipulations for Entry in Judgment is null and void, fraudulent, illegal and
unenforceable, the same having been obtained by means of fraud, collusion, undue influence
and/or clear mistake of fact and law. In addition, [he] has maintained that said Judgment on
Stipulations for Entry in Judgment was obtained without the assistance of counsel for [petitioner]
and without sufficient notice to him and therefore, was rendered in violation of his constitutional
rights to substantial and procedural due process.
The [M]otion for [S]ummary [J]udgment was set for hearing on 12 August 1994 during which
[respondent] marked and submitted in evidence the following:
Exhibit A - x x x Judgment on Stipulation For Entry In Judgment of the Supreme Court
of the State of California[,] County of Contra Costa[,] signed by Hon. Ellen
James, Judge of the Superior Court.
Exhibit B - x x x Certificate of Authentication of the [O]rder signed by the Hon. Ellen
 James, issued by the Consulate General of the Republic of the Philippines.
Exhibit C - [R]eturn of the [W]rit of [E]xecution (writ unsatisfied) issued by the
sheriff/marshall, County of Santa Clara, State of California.
Exhibit D - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of [E]xecution, [N]otice of
[L]evy, [M]emorandum of [G]arnishee, [E]xemptions from [E]nforcement of
[J]udgment.
Exhibit F - Certification issued by the Secretary of State, State of California that
Stephen Weir is the duly elected, qualified and acting [c]ounty [c]lerk of the
County of Contra Costa of the State of California.
Exhibit G - Certificate of [A]uthentication of the [W]rit of [E]xecution.
On 6 April 1995, the court a quo issued an [O]rder granting [respondents] [M]otion for [S]ummary
[J]udgment [and] likewise granting [petitioner] ten (10) days to submit opposing affidavits, after which the
case would be deemed submitted for resolution (Record, pp. 152-153). [Petitioner] filed a [M]otion for
[R]econsideration of the aforesaid [O]rder and [respondent] filed [C]omment. On 30 June 1995, [petitioner]
filed a [M]otion to [D]ismiss on the ground of lack of jurisdiction over the subject matter of the case and
forum-non-conveniens (Record, pp. 166-170). In his [O]pposition to the [M]otion (Record, pp. 181-182)
[respondent] contended that [petitioner could] no longer question the jurisdiction of the lower court on the
ground that [the latters] Answer had failed to raise the issue of jurisdiction. [Petitioner] countered by
asserting in his Reply that jurisdiction [could] not be fixed by agreement of the parties. The lower court
dismissed [his] [M]otion for [R]econsideration and [M]otion [to] [D]ismiss (Record, pp. 196-198), x x x.
The RTC53 eventually rendered its February 21, 1997 Decision,54 which disposed as follows:
WHEREFORE, judgment is hereby rendered, ordering [petitioner] to pay [respondent] the following
amounts:
1. The amount of U.S. dollars $241,991.33, with the interest of legal rate from October 18, 1991, or
its peso equivalent, pursuant to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated December
19, 1991;
2. The amount of P30,000.00 as attorneys fees;
3. To pay the costs of suit.
The claim for moral damages, not having been substantiated, it is hereby denied.55

Ruling of the Court of Appeals

Affirming the trial court, the Court of Appeals held that petitioner was estopped from assailing
the judgment that had become final and had, in fact, been partially executed. The CA also ruled
that summary judgment was proper, because petitioner had failed to tender any genuine issue of

53
Presided by Judge Apolinario B. Santos.
54
Rollo, pp. 115-117.
55
RTC Decision, p. 3; rollo, p. 117.
fact and was merely maneuvering to delay the full effects of the judgment.
Citing Ingenohl v. Olsen,56 the CA also rejected petitioners argument that the RTC should
have dismissed the action for the enforcement of a foreign judgment, on the ground of forum non
conveniens. It reasoned out that the recognition of the foreign judgment was based on comity,
reciprocity and res judicata.
Hence, this Petition.57

Issue

In his Memorandum, petitioner submits this lone but all-embracing issue:

Whether or not the Court of Appeals acted in a manner x x x contrary to law when it affirmed the
Order of the trial court granting respondents Motion for Summary Judgment and rendering judgment
against the petitioner.58
In his discussion, petitioner contends that the CA erred in ruling in this wise:
1. That his Answer failed to tender a genuine issue of fact regarding the following:
(a) the jurisdiction of a foreign court over the subject matter
(b) the validity of the foreign judgment
(c) the judgments conformity to Philippine laws, public policy, canons of morality, and
norms against unjust enrichment
2. That the principle of forum non conveniens was inapplicable to the instant case.

This Courts Ruling

The Petition has no merit.

First Question: Summary Judgment

Petitioner vehemently insists that summary judgment is inappropriate to resolve the case at
bar, arguing that his Answer allegedly raised genuine and material factual matters which he should

56
47 Phil. 189, 239-240, January 12, 1925
57
This case was deemed submitted for decision upon the receipt by this Court of the Memorandum for the Respondent
on September 15, 2000. It was signed by Attys. Henry S. Rojas and Dominic V. Isberto of Catindig Tiongco &
Nibungco. The Memorandum for the Petitioner, signed by Atty. Gelacio C. Mamaril of Mamaril Arca & Associates,
had been received earlier, on August 24, 2000.
58
Rollo, p. 181.
have been allowed to prove during trial.
On the other hand, respondent argues that the alleged genuine issues of fact raised by
petitioner are mere conclusions of law, or propositions arrived at not by any process of natural
reasoning from a fact or a combination of facts stated but by the application of the artificial rules
of law to the facts pleaded.59
The RTC granted respondents Motion for Summary Judgment because petitioner, in his
Answer, admitted the existence of the Judgment on Stipulation for Entry in Judgment. Besides, he
had already paid $5,000 to respondent, as provided in the foreign judgment sought to be enforced.60
Hence, the trial court ruled that, there being no genuine issue as to any material fact, the case
should properly be resolved through summary judgment. The CA affirmed this ruling.
We concur with the lower courts. Summary judgment is a procedural device for the prompt
disposition of actions in which the pleadings raise only a legal issue, and not a genuine issue as to
any material fact. By genuine issue is meant a question of fact that calls for the presentation of
evidence. It should be distinguished from an issue that is sham, contrived, set in bad faith and
patently unsubstantial.61
Summary judgment is resorted to in order to avoid long drawn out litigations and useless
delays. When affidavits, depositions and admissions on file show that there are no genuine issues
of fact to be tried, the Rules allow a party to pierce the allegations in the pleadings and to obtain
immediate relief by way of summary judgment. In short, since the facts are not in dispute, the court
is allowed to decide the case summarily by applying the law to the material facts.
Petitioner contends that by allowing summary judgment, the two courts a quo prevented him
from presenting evidence to substantiate his claims. We do not agree. Summary judgment is based
on facts directly proven by affidavits, depositions or admissions.62 In this case, the CA and the
RTC both merely ruled that trial was not necessary to resolve the case. Additionally and correctly,
the RTC specifically ordered petitioner to submit opposing affidavits to support his contentions
that (1) the Judgment on Stipulation for Entry in Judgment was procured on the basis of fraud,
collusion, undue influence, or a clear mistake of law or fact; and (2) that it was contrary to public
policy or the canons of morality.63
Again, in its Order64 dated November 29, 1995, the trial court clarified that the opposing
affidavits were for [petitioner] to spell out the facts or circumstances [that] would constitute lack
of jurisdiction over the subject matter of and over the persons involved in Case No. C21-00265,
and that would render the judgment therein null and void. In this light, petitioners contention that

59
Respondents Memorandum, p. 13; rollo, p. 200, citing Syquian v. People, 171 SCRA 223, 231, March 13, 1989.
60
Rollo, pp. 62-63.
61
Paz v. Court of Appeals, 181 SCRA 26, 30, January 11, 1990; Diman v. Lacalle, 299 SCRA 459, 476, November
27, 1998; and Mallilin Jr. v. Castillo, GR. No. 136803, p. 8, June 16, 2000.
62
Diman v. Alumbres, supra; Army & Navy Club of Manila, Inc. v. Court of Appeals, 271 SCRA 36, 49, April 8,
1997; Northwest Airlines, Inc. v. Court of Appeals, 284 SCRA 408, 417, January 20, 1998.
63
Order dated April 6, 1995 of Judge Danilo B. Pine; rollo, pp. 60-61.
64
Annex L; rollo, pp. 89-91.
he was not allowed to present evidence to substantiate his claims is clearly untenable.
For summary judgment to be valid, Rule 34, Section 3 of the Rules of Court, requires (a) that
there must be no genuine issue as to any material fact, except for the amount of damages; and (b)
that the party presenting the motion for summary judgment must be entitled to a judgment as a
matter of law.65 As mentioned earlier, petitioner admitted that a foreign judgment had been
rendered against him and in favor of respondent, and that he had paid $5,000 to the latter in partial
compliance therewith. Hence, respondent, as the party presenting the Motion for Summary
Judgment, was shown to be entitled to the judgment.
The CA made short shrift of the first requirement. To show that petitioner had raised no
genuine issue, it relied instead on the finality of the foreign judgment which was, in fact, partially
executed. Hence, we shall show in the following discussion how the defenses presented by
petitioner failed to tender any genuine issue of fact, and why a full-blown trial was not necessary
for the resolution of the issues.

Jurisdiction

Petitioner alleges that jurisdiction over Case No. C21-00265, which involved partnership
interest, was vested in the Securities and Exchange Commission, not in the Superior Court of
California, County of Contra Costa.
We disagree. In the absence of proof of California law on the jurisdiction of courts, we
presume that such law, if any, is similar to Philippine law. We base this conclusion on the
presumption of identity or similarity, also known as processual presumption.66 The Complaint,67
which respondent filed with the trial court, was for the enforcement of a foreign judgment. He
alleged therein that the action of the foreign court was for the collection of a sum of money, breach
of promissory notes, and damages.68
In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities
and Exchange Commission (SEC). The jurisdiction of the latter is exclusively over matters
enumerated in Section 5, PD 902-A,69 prior to its latest amendment. If the foreign court did not

65
SEC. 3. Motion and proceedings thereon.x x x After the hearing, the judgment sought shall be rendered forthwith
if the pleadings, supporting affidavits, depositions, and admissions on file, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.
66
Asiavest Limited v. Court of Appeals, 296 SCRA 539, 552, September 25, 1998.
67
Par. 3, Complaint (Annex B); rollo, p. 38.
68
Par. 3, Complaint dated December 6, 1993; rollo, p. 38.
69 SEC. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange
Commission over corporations, partnerships and other forms of associations registered with it as expressly
granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide
cases involving
(a) Devices or schemes employed by, or any acts of, the board of directors, business associates, its officers or
partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of
really have jurisdiction over the case, as petitioner claims, it would have been very easy for him to
show this. Since jurisdiction is determined by the allegations in a complaint, he only had to submit
a copy of the complaint filed with the foreign court. Clearly, this issue did not warrant trial.

Rights to Counsel and to Due Process

Petitioner contends that the foreign judgment, which was in the form of a Compromise
Agreement, cannot be executed without the parties being assisted by their chosen lawyers. The
reason for this, he points out, is to eliminate collusion, undue influence and/or improper exertion
of ascendancy by one party over the other. He alleges that he discharged his counsel during the
proceedings, because he felt that the latter was not properly attending to the case. The judge,
however, did not allow him to secure the services of another counsel. Insisting that petitioner settle
the case with respondent, the judge practically imposed the settlement agreement on him. In his
Opposing Affidavit, petitioner states:
It is true that I was initially represented by a counsel in the proceedings in #C21-00625. I discharged
him because I then felt that he was not properly attending to my case or was not competent enough to
represent my interest. I asked the Judge for time to secure another counsel but I was practically discouraged
from engaging one as the Judge was insistent that I settle the case at once with the [respondent]. Being a
foreigner and not a lawyer at that I did not know what to do. I felt helpless and the Judge and [respondents]
lawyer were the ones telling me what to do. Under ordinary circumstances, their directives should have
been taken with a grain of salt especially so [since respondents] counsel, who was telling me what to do,
had an interest adverse to mine. But [because] time constraints and undue influence exerted by the Judge
and [respondents] counsel on me disturbed and seriously affected my freedom to act according to my best
judgment and belief. In point of fact, the terms of the settlement were practically imposed on me by the
Judge seconded all the time by [respondents] counsel. I was then helpless as I had no counsel to assist me
and the collusion between the Judge and [respondents] counsel was becoming more evident by the way I
was treated in the Superior Court of [t]he State of California. I signed the Judgment on Stipulation for Entry
in Judgment without any lawyer assisting me at the time and without being fully aware of its terms and

the stockholders, partners, members of associations or organizations registered with the Commission
(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders,
members, or associates; between any or all of them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such corporation, partnership or association and the
state insofar as it concerns their individual franchise or right to exist as such entity
(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations,
partnerships or associations
(d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments
in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but
foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its liabilities, but is under the management of a
Rehabilitation Receiver or Management Committee created pursuant to this Decree. (Pres. Decree No. 902-A, as
amended)
See also Justice Jose C. Vitug, Pandect of Commercial Laws and Jurisprudence, rev. ed., pp. 425-427; Sunset View
Condominium Corporation v. Campos, 104 SCRA 295, 303, April 27, 1981; and Union Glass v. Securities & Exchange
Commission, 126 SCRA 31, 38, November 28, 1983.
stipulations.70
The manifestation of petitioner that the judge and the counsel for the opposing party had
pressured him would gain credibility only if he had not been given sufficient time to engage the
services of a new lawyer. Respondents Affidavit71 dated May 23, 1994, clarified, however, that
petitioner had sufficient time, but he failed to retain a counsel. Having dismissed his lawyer as
early as June 19, 1991, petitioner directly handled his own defense and negotiated a settlement
with respondent and his counsel in December 1991. Respondent also stated that petitioner,
ignoring the judges reminder of the importance of having a lawyer, argued that he would be the
one to settle the case and pay anyway. Eventually, the Compromise Agreement was presented in
court and signed before Judge Ellen James on January 3, 1992. Hence, petitioners rights to counsel
and to due process were not violated.

Unjust Enrichment

Petitioner avers that the Compromise Agreement violated the norm against unjust enrichment
because the judge made him shoulder all the liabilities in the case, even if there were two other
defendants, G.S.P & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the foreign judgment, even if there
are other defendants who are not being held liable together with him. First, the foreign judgment
itself does not mention these other defendants, their participation or their liability to respondent.
Second, petitioners undated Opposing Affidavit states: [A]lthough myself and these entities were
initially represented by Atty. Lawrence L. Severson of the Law Firm Kouns, Quinlivan &
Severson, x x x I discharged x x x said lawyer. Subsequently, I assumed the representation for
myself and these firms and this was allowed by the Superior Court of the State of California
without any authorization from G.G.P. & Sons, Inc. and the Genesis Group.72 Clearly, it was
petitioner who chose to represent the other defendants; hence, he cannot now be allowed to impugn
a decision based on this ground.
In any event, contrary to petitioners contention, unjust enrichment or solutio indebiti does not
apply to this case. This doctrine contemplates payment when there is no duty to pay, and the person
who receives the payment has no right to receive it.73 In this case, petitioner merely argues that the
other two defendants whom he represented were liable together with him. This is not a case of
unjust enrichment.
We do not see, either, how the foreign judgment could be contrary to law, morals, public
policy or the canons of morality obtaining in the country. Petitioner owed money, and the judgment
required him to pay it. That is the long and the short of this case.
In addition, the maneuverings of petitioner before the trial court reinforce our belief that his

70
Rollo, pp. 99-100.
71
Ibid., pp. 55-56.
72
Rollo, p. 250.
73
Power Commercial & Industrial Corporation v. Court of Appeals, 274 SCRA 597, 612-613, June 20, 1997.
claims are unfounded. Instead of filing opposing affidavits to support his affirmative defenses, he
filed a Motion for Reconsideration of the Order allowing summary judgment, as well as a Motion
to Dismiss the action on the ground of forum non conveniens. His opposing affidavits were filed
only after the Order of November 29, 1995 had denied both Motions.74 Such actuation was
considered by the trial court as a dilatory ploy which justified the resolution of the action by
summary judgment. According to the CA, petitioners allegations sought to delay the full effects
of the judgment; hence, summary judgment was proper. On this point, we concur with both courts.

Second Question: Forum Non Conveniens

Petitioner argues that the RTC should have refused to entertain the Complaint for enforcement
of the foreign judgment on the principle of forum non conveniens. He claims that the trial court
had no jurisdiction, because the case involved partnership interest, and there was difficulty in
ascertaining the applicable law in California. All the aspects of the transaction took place in a
foreign country, and respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction
is authorized by law, courts may nonetheless refuse to entertain a case for any of the following
practical reasons:
1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects
of the case transpired in a foreign jurisdiction or the material witnesses have their residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,]
merely to secure procedural advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may
already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained;
and
The difficulty of ascertaining foreign law.75
None of the aforementioned reasons barred the RTC from exercising its jurisdiction. In the
present action, there was no more need for material witnesses, no forum shopping or harassment
of petitioner, no inadequacy in the local machinery to enforce the foreign judgment, and no
question raised as to the application of any foreign law.
Authorities agree that the issue of whether a suit should be entertained or dismissed on the
basis of the above-mentioned principle depends largely upon the facts of each case and on the
sound discretion of the trial court.76 Since the present action lodged in the RTC was for the

74
Petitioners Affidavit was filed together with his Second Motion for Reconsideration on September 23, 1999. Rollo,
pp. 92-102.
75
Jovito R. Salonga, Private International Law, 1979 ed., p. 47.
76
Ibid., p. 49; Philsec Investment Corporation v. Court of Appeals, 274 SCRA 102, 113, June 19, 1997; K.K. Shell
Sekiyu Osaka Hatsubaisho v. Court of Appeals, 188 SCRA 145, 153, July 30, 1990; and Hongkong and Shanghai
Banking Corp. v. Sherban, 176 SCRA 331, 339, August 11, 1989.
enforcement of a foreign judgment, there was no need to ascertain the rights and the obligations
of the parties based on foreign laws or contracts. The parties needed only to perform their
obligations under the Compromise Agreement they had entered into.
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a judgment in an action in
personam rendered by a foreign tribunal clothed with jurisdiction is presumptive evidence of a
right as between the parties and their successors-in-interest by a subsequent title.77
Also, under Section 5(n) of Rule 131, a court -- whether in the Philippines or elsewhere --
enjoys the presumption that it is acting in the lawful exercise of its jurisdiction, and that it is
regularly performing its official duty.78 Its judgment may, however, be assailed if there is evidence
of want of jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact.
But precisely, this possibility signals the need for a local trial court to exercise jurisdiction. Clearly,
the application of forum non coveniens is not called for.
The grounds relied upon by petitioner are contradictory. On the one hand, he insists that the
RTC take jurisdiction over the enforcement case in order to invalidate the foreign judgment; yet,
he avers that the trial court should not exercise jurisdiction over the same case on the basis of
forum non conveniens. Not only do these defenses weaken each other, but they bolster the finding
of the lower courts that he was merely maneuvering to avoid or delay payment of his obligation.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision and Resolution
AFFIRMED. Double costs against petitioner.
SO ORDERED.
Melo, (Chairman), Vitug, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

77SEC. 48. Effects of foreign judgments or final orders.The effect of a judgment or final order of a tribunal
of a foreign country, having jurisdiction to render the judgment or final order, is as follows:
(a) In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive upon the
title to the thing; and
(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of
a right as between the parties and their successors in interest by a subsequent title.
In either case, the judgment or final order may be repealed by evidence of a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.
78Oil & Natural Gas Commission v. Court of Appeals, 293 SCRA 26, 47-48, July 23, 1998. Section 5 (n) of
Rule 131 provides: SEC. 5. Disputable presumptions.The following presumptions are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence:
xxx xxx xxx
(n) That a court, or judge acting as such, whether in the Philippines or elsewhere, was acting in the lawful exercise
of his jurisdiction;
xxx xxx x x x.
 FIRST DIVISION

[G.R. No. 128803. September 25, 1998]

ASIAVEST LIMITED, petitioner, vs. THE COURT OF APPEALS AND

ANTONIO HERAS, respondents.

DECISION
DAVIDE, JR., J.:

In issue is the enforceability in the Philippines of a foreign judgment. The antecedents are
summarized in the 24 August 1990 Decision79 of Branch 107 of the Regional Trial Court of Quezon
City in Civil Case No. Q-52452; thus:
The plaintiff Asiavest Limited filed a complaint on December 3, 1987 against the defendant
Antonio Heras praying that said defendant be ordered to pay to the plaintiff the amounts awarded
by the Hong Kong Court Judgment dated December 28, 1984 and amended on April 13, 1987, to
wit:
1) US$1,810,265.40 or its equivalent in Hong Kong currency at the time of payment
with legal interest from December 28, 1984 until fully paid;
2) interest on the sum of US$1,500.00 at 9.875% per annum from October 31, 1984 to
December 28, 1984; and
3) HK$905.00 at fixed cost in the action; and
4) at least $80,000.00 representing attorneys fees, litigation expenses and cost, with
interest thereon from the date of the judgment until fully paid.
On March 3, 1988, the defendant filed a Motion to Dismiss. However, before the court could
resolve the said motion, a fire which partially razed the Quezon City Hall Building on June 11,
1988 totally destroyed the office of this Court, together with all its records, equipment and
properties. On July 26, 1988, the plaintiff, through counsel filed a Motion for Reconstitution of
Case Records. The Court, after allowing the defendant to react thereto, granted the said Motion
and admitted the annexes attached thereto as the reconstituted records of this case per Order dated
September 6, 1988. Thereafter, the Motion to Dismiss, the resolution of which had been deferred,
was denied by the Court in its Order of October 4, 1988.
On October 19, 1988, defendant filed his Answer. The case was then set for pre-trial
conference. At the conference, the parties could not arrive at any settlement. However, they
agreed on the following stipulations of facts:
1) The defendant admits the existence of the judgment dated December 28, 1984 as

79
Annex B of Petition; Rollo, 66-74. Per Judge (now Associate Justice of the Court of Appeals) Delilah Vidallon
Magtolis.
 well as its amendment dated April 13, 1987, but not necessarily the authenticity
or validity thereof;
2) The plaintiff is not doing business and is not licensed to do business in the
Philippines;
3) The residence of defendant, Antonio Heras, is New Manila, Quezon City.
The only issue for this Court to determine is, whether or not the judgment of the Hong Kong
Court has been repelled by evidence of want of jurisdiction, want of notice to the party, collusion,
fraud or clear mistake of law or fact, such as to overcome the presumption established in Section
50, Rule 39 of the Rules of Court in favor of foreign judgments.
In view of the admission by the defendant of the existence of the aforementioned judgment
(Pls. See Stipulations of Facts in the Order dated January 5, 1989 as amended by the Order of
January 18, 1989), as well as the legal presumption in favor of the plaintiff as provided for in
paragraph (b), Sec. 50, (Ibid.), the plaintiff presented only documentary evidence to show
rendition, existence, and authentication of such judgment by the proper officials concerned (Pls.
See Exhibits A thru B, with their submarkings). In addition, the plaintiff presented testimonial
and documentary evidence to show its entitlement to attorneys fees and other expenses of
litigation.
On the other hand, the defendant presented two witnesses, namely, Fortunata dela Vega and
Russel Warren Lousich.
The gist of Ms. dela Vegas testimony is to the effect that no writ of summons or copy of a
statement of claim of Asiavest Limited was ever served in the office of the Navegante Shipping
Agency Limited and/or for Mr. Antonio Heras, and that no service of the writ of summons was
either served on the defendant at his residence in New Manila, Quezon City. Her knowledge is
based on the fact that she was the personal secretary of Mr. Heras during his JD Transit days up
to the latter part of 1972 when he shifted or diversified to shipping business in Hong Kong; that
she was in-charge of all his letters and correspondence, business commitments, undertakings,
conferences and appointments, until October 1984 when Mr. Heras left Hong Kong for good; that
she was also the Officer-in-Charge or Office Manager of Navegante Shipping Agency LTD, a
Hong Kong registered and based company acting as ships agent, up to and until the company
closed shop sometime in the first quarter of 1985, when shipping business collapsed worldwide;
that the said company held office at 34-35 Connaught Road, Central Hong Kong and later
transferred to Caxton House at Duddel Street, Hong Kong, until the company closed shop in 1985;
and that she was certain of such facts because she held office at Caxton House up to the first
quarter of 1985.
Mr. Lousich was presented as an expert on the laws of Hong Kong, and as a representative
of the law office of the defendants counsel who made a verification of the record of the case filed
by the plaintiff in Hong Kong against the defendant, as well as the procedure in serving Court
processes in Hong Kong.
In his affidavit (Exh. 2) which constitutes his direct testimony, the said witness stated that:
The defendant was sued on the basis of his personal guarantee of the obligations of
Compania Hermanos de Navegacion S.A. There is no record that a writ of summons
was served on the person of the defendant in Hong Kong, or that any such attempt at
service was made. Likewise, there is no record that a copy of the judgment of the High
Court was furnished or served on the defendant; anyway, it is not a legal requirement to
do so under Hong Kong laws;
 a) The writ of summons or claim can be served by the solicitor (lawyer) of the
claimant or plaintiff. In Hong Kong there are no Court personnel who serve
writs of summons and/or most other processes.
b) If the writ of summons or claim (or complaint) is not contested, the claimant or
the plaintiff is not required to present proof of his claim or complaint nor
present evidence under oath of the claim in order to obtain a Judgment.
c) There is no legal requirement that such a Judgment or decision rendered by the
Court in Hong Kong [to] make a recitation of the facts or the law upon which
the claim is based.
d) There is no necessity to furnish the defendant with a copy of the Judgment or
decision rendered against him.
e) In an action based on a guarantee, there is no established legal requirement or
obligation under Hong Kong laws that the creditor must first bring proceedings
against the principal debtor. The creditor can immediately go against the
guarantor.
On cross examination, Mr. Lousich stated that before he was commissioned by the law firm
of the defendants counsel as an expert witness and to verify the records of the Hong Kong case,
he had been acting as counsel for the defendant in a number of commercial matters; that there
was an application for service of summons upon the defendant outside the jurisdiction of Hong
Kong; that there was an order of the Court authorizing service upon Heras outside of Hong Kong,
particularly in Manila or any other place in the Philippines (p. 9, TSN, 2/14/90); that there must
be adequate proof of service of summons, otherwise the Hong Kong Court will refuse to render
judgment (p. 10, ibid); that the mere fact that the Hong Kong Court rendered judgment, it can be
presumed that there was service of summons; that in this case, it is not just a presumption because
there was an affidavit stating that service was effected in [sic] a particular man here in Manila;
that such affidavit was filed by one Jose R. Fernandez of the firm Sycip Salazar on the 21st of
December 1984, and stated in essence that on Friday, the 23rd of November 1984 he served the
4th defendant at No. 6 First Street, Quezon City by leaving it at that address with Mr. Dionisio
Lopez, the son-in-law of the 4th defendant the copy of the writ and Mr. Lopez informed me and I
barely believed that he would bring the said writ to the attention of the 4th defendant (pp. 11-12,
ibid.); that upon filing of that affidavit, the Court was asked and granted judgment against the 4th
defendant; and that if the summons or claim is not contested, the claimant of the plaintiff is not
required to present proof of his claim or complaint or present evidence under oath of the claim in
order to obtain judgment; and that such judgment can be enforced in the same manner as a
judgment rendered after full hearing.
The trial court held that since the Hong Kong court judgment had been duly proved, it is a
presumptive evidence of a right as between the parties; hence, the party impugning it had the
burden to prove want of jurisdiction over his person. HERAS failed to discharge that burden. He
did not testify to state categorically and under oath that he never received summons. Even his own
witness Lousich admitted that HERAS was served with summons in his Quezon City residence.
As to De la Vegas testimony regarding non-service of summons, the same was hearsay and had no
probative value.
As to HERAS contention that the Hong Kong court judgment violated the Constitution and
the procedural laws of the Philippines because it contained no statements of the facts and the law
on which it was based, the trial court ruled that since the issue related to procedural matters, the
law of the forum, i.e., Hong Kong laws, should govern. As testified by the expert witness Lousich,
such legalities were not required under Hong Kong laws. The trial court also debunked HERAS
contention that the principle of excussion under Article 2058 of the Civil Code of the Philippines
was violated. It declared that matters of substance are subject to the law of the place where the
transaction occurred; in this case, Hong Kong laws must govern.
The trial court concluded that the Hong Kong court judgment should be recognized and given
effect in this jurisdiction for failure of HERAS to overcome the legal presumption in favor of the
foreign judgment. It then decreed; thus:
WHEREFORE, judgment is hereby rendered ordering defendant to pay to the plaintiff the
following sums or their equivalents in Philippine currency at the time of payment:
US$1,810,265.40 plus interest on the sum of US$1,500,000.00 at 9.875% per annum from
October 31, 1984 to December 28, 1984, and HK$905 as fixed cost, with legal interests on the
aggregate amount from December 28, 1984, and to pay attorneys fees in the sum of P80,000.00.
ASIAVEST moved for the reconsideration of the decision. It sought an award of judicial costs
and an increase in attorneys fees in the amount of US$19,346.45 with interest until full payment
of the said obligations. On the other hand, HERAS no longer opposed the motion and instead
appealed the decision to the Court of Appeals, which docketed the appeal as CA-G.R. CV No.
29513.
In its order80 November 1990, the trial court granted ASIAVESTs motion for reconsideration
by increasing the award of attorneys fees to US$19,345.65 OR ITS EQUIVALENT IN
PHILIPPINE CURRENCY, AND TO PAY THE COSTS OF THIS SUIT, provided that
ASIAVEST would pay the corresponding filing fees for the increase. ASIAVEST appealed the
order requiring prior payment of filing fees. However, it later withdrew its appeal and paid the
additional filing fees.
On 3 April 1997, the Court of Appeals rendered its decision81 reversing the decision of the
trial court and dismissing ASIAVESTs complaint without prejudice. It underscored the fact that a
foreign judgment does not of itself have any extraterritorial application. For it to be given effect,
the foreign tribunal should have acquired jurisdiction over the person and the subject matter. If
such tribunal has not acquired jurisdiction, its judgment is void.
The Court of Appeals agreed with the trial court that matters of remedy and procedure such
as those relating to service of summons upon the defendant are governed by the lex fori, which
was, in this case, the law of Hong Kong. Relative thereto, it gave weight to Lousichs testimony
that under the Hong Kong law, the substituted service of summons upon HERAS effected in the
Philippines by the clerk of Sycip Salazar Hernandez & Gatmaitan firm would be valid provided
that it was done in accordance with Philippine laws. It then stressed that where the action is in
personam and the defendant is in the Philippines, the summons should be personally served on the
defendant pursuant to Section 7, Rule 14 of the Rules of Court. 82 Substituted service may only be
availed of where the defendant cannot be promptly served in person, the fact of impossibility of

80
Original Record (OR), 326.2 of
81
Annex A of Petition; Rollo, 49-65. Per Mabutas, R., Jr., J., with the concurrence of Imperial, J., and Alio-
Hormachuelos, P., JJ.
82 This section (now Section 6, Rule 14 of the 1997 Rules of Civil Procedure) provided:
SEC. 7. Personal Service of Summons. - The summons shall be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive it, by tendering it to him.
personal service should be explained in the proof of service. It also found as persuasive HERAS
argument that instead of directly using the clerk of the Sycip Salazar Hernandez & Gatmaitan law
office, who was not authorized by the judge of the court issuing the summons, ASIAVEST should
have asked for leave of the local courts to have the foreign summons served by the sheriff or other
court officer of the place where service was to be made, or for special reasons by any person
authorized by the judge.
The Court of Appeals agreed with HERAS that notice sent outside the state to a non-resident
is unavailing to give jurisdiction in an action against him personally for money recovery. Summons
should have been personally served on HERAS in Hong Kong, for, as claimed by ASIAVEST,
HERAS was physically present in Hong Kong for nearly 14 years. Since there was not even an
attempt to serve summons on HERAS in Hong Kong, the Hong Kong Supreme Court did not
acquire jurisdiction over HERAS. Nonetheless, it did not totally foreclose the claim of
ASIAVEST; thus:
While We are not fully convinced that [HERAS] has a meritorious defense against
[ASIAVESTs] claims or that [HERAS] ought to be absolved of any liability, nevertheless, in
view of the foregoing discussion, there is a need to deviate from the findings of the lower court
in the interest of justice and fair play. This, however, is without prejudice to whatever action
[ASIAVEST] might deem proper in order to enforce its claims against [HERAS].
Finally, the Court of Appeals also agreed with HERAS that it was necessary that evidence
supporting the validity of the foreign judgment be submitted, and that our courts are not bound to
give effect to foreign judgments which contravene our laws and the principle of sound morality
and public policy.
ASIAVEST forthwith filed the instant petition alleging that the Court of Appeals erred in
ruling that
I.
IT WAS NECESSARY FOR [ASIAVEST] TO PRESENT EVIDENCE SUPPORTING THE
VALIDITY OF THE JUDGMENT;
II.
THE SERVICE OF SUMMONS ON [HERAS] WAS DEFECTIVE UNDER PHILIPPINE
LAW;
III.
SUMMONS SHOULD HAVE BEEN PERSONALLY SERVED ON HERAS IN HONG KONG;
IV.
THE HONG KONG SUMMONS SHOULD HAVE BEEN SERVED WITH LEAVE OF
PHILIPPINE COURTS;
V.
THE FOREIGN JUDGMENT CONTRAVENES PHILIPPINE LAWS, THE PRINCIPLES OF
SOUND MORALITY, AND THE PUBLIC POLICY OF THE PHILIPPINES.
Being interrelated, we shall take up together the assigned errors.
 Under paragraph (b) of Section 50, Rule 39 of the Rules of Court,83 which was the governing
law at the time this case was decided by the trial court and respondent Court of Appeals, a foreign
judgment against a person rendered by a court having jurisdiction to pronounce the judgment is
presumptive evidence of a right as between the parties and their successors in interest by the
subsequent title. However, the judgment may be repelled by evidence of want of jurisdiction, want
of notice to the party, collusion, fraud, or clear mistake of law or fact.
Also, Section 3(n) of Rule 131 of the New Rules of Evidence provides that in the absence of proof to
the contrary, a court, or judge acting as such, whether in the Philippines or elsewhere, is presumed to have
acted in the lawful exercise of jurisdiction.
Hence, once the authenticity of the foreign judgment is proved, the burden to repel it on
grounds provided for in paragraph (b) of Section 50, Rule 39 of the Rules of Court is on the party
challenging the foreign judgment -- HERAS in this case.
At the pre-trial conference, HERAS admitted the existence of the Hong Kong judgment. On
the other hand, ASIAVEST presented evidence to prove rendition, existence, and authentication
of the judgment by the proper officials. The judgment is thus presumed to be valid and binding in
the country from which it comes, until the contrary is shown.84 Consequently, the first ground
relied upon by ASIAVEST has merit. The presumption of validity accorded foreign judgment
would be rendered meaningless were the party seeking to enforce it be required to first establish
its validity.
The main argument raised against the Hong Kong judgment is that the Hong Kong Supreme
Court did not acquire jurisdiction over the person of HERAS. This involves the issue of whether
summons was properly and validly served on HERAS. It is settled that matters of remedy and
procedure such as those relating to the service of process upon the defendant are governed by the
lex fori or the law of the forum,85 i.e., the law of Hong Kong in this case. HERAS insisted that
according to his witness Mr. Lousich, who was presented as an expert on Hong Kong laws, there
was no valid service of summons on him.
In his counter-affidavit,86 which served as his direct testimony per agreement of the parties,87
Lousich declared that the record of the Hong Kong case failed to show that a writ of summons was
served upon HERAS in Hong Kong or that any such attempt was made. Neither did the record
show that a copy of the judgment of the court was served on HERAS. He stated further that under
Hong Kong laws (a) a writ of summons could be served by the solicitor of the claimant or plaintiff;
and (b) where the said writ or claim was not contested, the claimant or plaintiff was not required
to present proof under oath in order to obtain judgment.
On cross-examination by counsel for ASIAVEST, Lousich testified that the Hong Kong court
authorized service of summons on HERAS outside of its jurisdiction, particularly in the
Philippines. He admitted also the existence of an affidavit of one Jose R. Fernandez of the Sycip

83
This Section is now Section 48 of Rule 39 of the 1997 Rules of Civil Procedure with the following amendments:
(1) inclusion of final orders of a tribunal of a foreign country; and (2) clarification that the grounds to repel a foreign
judgment or final order are applicable to both judgment or final order upon a title to a specific thing and one against
a person.
84
Northwest Orient Airlines, Inc. v. Court of Appeals, 241 SCRA 192, 199 [1995].
85
Ibid.
86
Exhibit 2, OR, Civil Case No. Q-52452, 197-200.
87
TSN, 14 February 1990, 5.
Salazar Hernandez & Gatmaitan law firm stating that he (Fernandez) served summons on HERAS
on 13 November 1984 at No. 6, 1st St., Quezon City, by leaving a copy with HERASs son-in-law
Dionisio Lopez.88 On redirect examination, Lousich declared that such service of summons would
be valid under Hong Kong laws provided that it was in accordance with Philippine laws.89
We note that there was no objection on the part of ASIAVEST on the qualification of Mr.
Lousich as an expert on the Hong Kong law. Under Sections 24 and 25, Rule 132 of the New Rules
of Evidence, the record of public documents of a sovereign authority, tribunal, official body, or
public officer may be proved by (1) an official publication thereof or (2) a copy attested by the
officer having the legal custody thereof, which must be accompanied, if the record is not kept in
the Philippines, with a certificate that such officer has the custody. The certificate may be issued
by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent,
or any officer in the foreign service of the Philippines stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office. The attestation must state, in substance,
that the copy is a correct copy of the original, or a specific part thereof, as the case may be, and
must be under the official seal of the attesting officer.
Nevertheless, the testimony of an expert witness may be allowed to prove a foreign law. An
authority90 on private international law thus noted:
Although it is desirable that foreign law be proved in accordance with the above rule,
however, the Supreme Court held in the case of Willamette Iron and Steel Works v. Muzzal,91 that
Section 41, Rule 123 (Section 25, Rule 132 of the Revised Rules of Court) does not exclude the
presentation of other competent evidence to prove the existence of a foreign law. In that case, the
Supreme Court considered the testimony under oath of an attorney-at-law of San Francisco,
California, who quoted verbatim a section of California Civil Code and who stated that the same
was in force at the time the obligations were contracted, as sufficient evidence to establish the
existence of said law. Accordingly, in line with this view, the Supreme Court in the Collector of
Internal Revenue v. Fisher et al.,92 upheld the Tax Court in considering the pertinent law of
California as proved by the respondents witness. In that case, the counsel for respondent testified
that as an active member of the California Bar since 1951, he is familiar with the revenue and
taxation laws of the State of California. When asked by the lower court to state the pertinent
California law as regards exemption of intangible personal properties, the witness cited Article 4,
Sec. 13851 (a) & (b) of the California Internal and Revenue Code as published in Derrings
California Code, a publication of Bancroft-Whitney Co., Inc. And as part of his testimony, a full
quotation of the cited section was offered in evidence by respondents. Likewise, in several
naturalization cases, it was held by the Court that evidence of the law of a foreign country on
reciprocity regarding the acquisition of citizenship, although not meeting the prescribed rule of
practice, may be allowed and used as basis for favorable action, if, in the light of all the
circumstances, the Court is satisfied of the authenticity of the written proof offered.93 Thus, in a
number of decisions, mere authentication of the Chinese Naturalization Law by the Chinese
Consulate General of Manila was held to be competent proof of that law.94

88
Id., 11-12.
89
Id., 13-15.
90
JOVITO R. SALONGA, PRIVATE INTERNATIONAL LAW 101-102 [1995].
91
61 Phil. 471 [1935].
92
1 SCRA 93 [1961].
93
Citing Pardo v. Republic, 85 Phil. 323 [1950]; Delgado v. Republic, G.R. No. L-2546, January 28, 1950.
94
Citing Yap v. Solicitor General, 81 Phil. 468; Yee Bo Mann v. Republic, 83 Phil. 749; Go v. Anti-Chinese League,
47 O.G. 716; Leelin v. Republic, 47 O.G. 694.
 There is, however, nothing in the testimony of Mr. Lousich that touched on the specific law
of Hong Kong in respect of service of summons either in actions in rem or in personam, and where
the defendant is either a resident or nonresident of Hong Kong. In view of the absence of proof of
the Hong Kong law on this particular issue, the presumption of identity or similarity or the so-
called processual presumption shall come into play. It will thus be presumed that the Hong Kong
law on the matter is similar to the Philippine law.95
As stated in Valmonte vs. Court of Appeals,96 it will be helpful to determine first whether the
action is in personam, in rem, or quasi in rem because the rules on service of summons under Rule
14 of the Rules of Court of the Philippines apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An
action in rem is an action against the thing itself instead of against the person.97 An action quasi in
rem is one wherein an individual is named as defendant and the purpose of the proceeding is to
subject his interest therein to the obligation or lien burdening the property.98
In an action in personam, jurisdiction over the person of the defendant is necessary for the
court to validly try and decide the case. Jurisdiction over the person of a resident defendant who
does not voluntarily appear in court can be acquired by personal service of summons as provided
under Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons
within a reasonable time, substituted service may be made in accordance with Section 8 of said
Rule. If he is temporarily out of the country, any of the following modes of service may be resorted
to: (1) substituted service set forth in Section 8;99 (2) personal service outside the country, with
leave of court; (3) service by publication, also with leave of court; 100 or (4) any other manner the
court may deem sufficient.101

95
Northwest Orient Airlines, Inc. v. Court of Appeals, supra note 6, at 200.
96
252 SCRA 92, 99 [1996].
97
Dial Corp. v. Soriano, 161 SCRA 737 [1988].
98
Brown v. Brown, 3 SCRA 451, 456 [1961].
99
Montalban v. Maximo, 22 SCRA 1070, 1078-1081 [1968]; Valmonte v. Court of Appeals, supra note 18, at 100; 1
MANUEL V. MORAN, COMMENTS ON THE RULES OF COURT 459 [1979] (hereafter 1 MORAN).
100
Section 18 in relation to Section 17, Rule 14 of the Rules of Court; Montalban v. Maximo, supra note 21 at 1080-
1081; Valmonte v. Court of Appeals, supra note 18, at 100; 1 MORAN 459.
101 Section 18 in relation to Section 17, Rule 14 of the Rules of Court. These provisions read:
SEC. 18. Residents temporarily out of the Philippines. - When an action is commenced against a defendant
who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be
effected out of the Philippines, as under the preceding section.

SEC. 17. Extraterritorial service. - When the defendant does not reside and is not found in the Philippines
and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within
the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the
defendant has been attached within the Philippines, service may, by leave of court, be effected out of the
Philippines by personal service as under section 7; or by publication in a newspaper of general circulation in such
places and for such time as the court may order, in which case a copy of the summons and order of the court shall
be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem
 However, in an action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons within the
state is essential to the acquisition of jurisdiction over her person.102 This method of service is
possible if such defendant is physically present in the country. If he is not found therein, the court
cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case
against him.103 An exception was laid down in Gemperle v. Schenker104 wherein a non-resident was
served with summons through his wife, who was a resident of the Philippines and who was his
representative and attorney-in-fact in a prior civil case filed by him; moreover, the second case
was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires
jurisdiction over the res. Nonetheless, summons must be served upon the defendant not for the
purpose of vesting the court with jurisdiction but merely for satisfying the due process
requirements.105 Thus, where the defendant is a non-resident who is not found in the Philippines
and (1) the action affects the personal status of the plaintiff; (2) the action relates to, or the subject
matter of which is property in the Philippines in which the defendant has or claims a lien or interest;
(3) the action seeks the exclusion of the defendant from any interest in the property located in the
Philippines; or (4) the property of the defendant has been attached in the Philippines -- service of
summons may be effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem sufficient.106
In the case at bar, the action filed in Hong Kong against HERAS was in personam, since it
was based on his personal guarantee of the obligation of the principal debtor. Before we can apply
the foregoing rules, we must determine first whether HERAS was a resident of Hong Kong.
Fortunata de la Vega, HERASs personal secretary in Hong Kong since 1972 until 1985,107
testified that HERAS was the President and part owner of a shipping company in Hong Kong
during all those times that she served as his secretary. He had in his employ a staff of twelve.108 He
had business commitments, undertakings, conferences, and appointments until October 1984 when
[he] left Hong Kong for good.109 HERASs other witness, Russel Warren Lousich, testified that he
had acted as counsel for HERAS for a number of commercial matters.110 ASIAVEST then infers
that HERAS was a resident of Hong Kong because he maintained a business there.
It must be noted that in his Motion to Dismiss,111 as well as in his Answer112 to ASIAVESTs

sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days
after notice, within which the defendant must answer.
102
Boudart v. Tait, 67 Phil. 170, 174-175 1 [1939].
103
1 MORAN 456.
104
19 SCRA 45 [1967].
105
Valmonte v. Court of Appeals, supra note 18 at 100-101.
106
Section 17, Rule 14 of the Rules of Court.
107
TSN, 5 July 1989, 7, 13-14, 23.
108
Id., 13-14, 20-23.
109
Exhibit, 1, OR, 189.
110
TSN, 14 February 1990, 7.
111
OR, 31-40.
112
Id., 101-110.
complaint for the enforcement of the Hong Kong court judgment, HERAS maintained that the
Hong Kong court did not have jurisdiction over him because the fundamental rule is that
jurisdiction in personam over non-resident defendants, so as to sustain a money judgment, must
be based upon personal service of summons within the state which renders the judgment.113
For its part, ASIAVEST, in its Opposition to the Motion to Dismiss114 contended: The question
of Hong Kong courts want of jurisdiction is therefore a triable issue if it is to be pleaded by the
defendant to repel the foreign judgment. Facts showing jurisdictional lack (e.g. that the Hong Kong
suit was in personam, that defendant was not a resident of Hong Kong when the suit was filed or
that he did not voluntarily submit to the Hong Kong courts jurisdiction) should be alleged and
proved by the defendant.115
In his Reply (to the Opposition to Motion to Dismiss),116 HERAS argued that the lack of
jurisdiction over his person was corroborated by ASIAVESTs allegation in the complaint that he
has his residence at No. 6, 1st St., New Manila, Quezon City, Philippines. He then concluded that
such judicial admission amounted to evidence that he was and is not a resident of Hong Kong.
Significantly, in the pre-trial conference, the parties came up with stipulations of facts, among
which was that the residence of defendant, Antonio Heras, is New Manila, Quezon City.117
We note that the residence of HERAS insofar as the action for the enforcement of the Hong
Kong court judgment is concerned, was never in issue. He never challenged the service of
summons on him through a security guard in his Quezon City residence and through a lawyer in
his office in that city. In his Motion to Dismiss, he did not question the jurisdiction of the Philippine
court over his person on the ground of invalid service of summons. What was in issue was his
residence as far as the Hong Kong suit was concerned. We therefore conclude that the stipulated
fact that HERAS is a resident of New Manila, Quezon City, Philippines refers to his residence at
the time jurisdiction over his person was being sought by the Hong Kong court. With that
stipulation of fact, ASIAVEST cannot now claim that HERAS was a resident of Hong Kong at the
time.
Accordingly, since HERAS was not a resident of Hong Kong and the action against him was,
indisputably, one in personam, summons should have been personally served on him in Hong
Kong. The extraterritorial service in the Philippines was therefore invalid and did not confer on
the Hong Kong court jurisdiction over his person. It follows that the Hong Kong court judgment
cannot be given force and effect here in the Philippines for having been rendered without
jurisdiction.
Even assuming that HERAS was formerly a resident of Hong Kong, he was no longer so in
November 1984 when the extraterritorial service of summons was attempted to be made on him.
As declared by his secretary, which statement was not disputed by ASIAVEST, HERAS left Hong
Kong in October 1984 for good.118 His absence in Hong Kong must have been the reason why
summons was not served on him therein; thus, ASIAVEST was constrained to apply for leave to

113
Citing Boudart v. Tait, supra note 24.
114
OR, 47-53.
115
Id., 52. Emphasis supplied.
116
OR, 61-69.
117
OR, 127.
118
Exhibit 1.
effect service in the Philippines, and upon obtaining a favorable action on the matter, it
commissioned the Sycip Salazar Hernandez& Gatmaitan law firm to serve the summons here in
the Philippines.
In Brown v. Brown,119 the defendant was previously a resident of the Philippines. Several days
after a criminal action for concubinage was filed against him, he abandoned the Philippines. Later,
a proceeding quasi in rem was instituted against him. Summons in the latter case was served on
the defendants attorney-in-fact at the latters address. The Court held that under the facts of the
case, it could not be said that the defendant was still a resident of the Philippines because he ha[d]
escaped to his country and [was] therefore an absentee in the Philippines. As such, he should have
been summoned in the same manner as one who does not reside and is not found in the Philippines.
Similarly, HERAS, who was also an absentee, should have been served with summons in the
same manner as a non-resident not found in Hong Kong. Section 17, Rule 14 of the Rules of Court
providing for extraterritorial service will not apply because the suit against him was in personam.
Neither can we apply Section 18, which allows extraterritorial service on a resident defendant who
is temporarily absent from the country, because even if HERAS be considered as a resident of
Hong Kong, the undisputed fact remains that he left Hong Kong not only temporarily but for good.
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered DENYING the
petition in this case and AFFIRMING the assailed judgment of the Court of Appeals in CA-G.R.
CV No. 29513.
No costs.
SO ORDERED.
Bellosillo, Vitug, and Panganiban, JJ., concur.
Quisumbing, J., no part., former partner of a counsel.

119
Supra note 20.
 SECOND DIVISION

[G.R. No. 110263. July 20, 2001]

ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner, vs. COURT

OF APPEALS and PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, respondents.

DECISION
DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision120 of the Court of Appeals dated
May 19, 1993 in CA-G.R. CV No. 35871 affirming the Decision121 dated October 14, 1991 of the
Regional Trial Court of Pasig, Metro Manila, Branch 168 in Civil Case No. 56368 which dismissed
the complaint of petitioner Asiavest Merchant Bankers (M) Berhad for the enforcement of the
money judgment of the High Court of Malaya in Kuala Lumpur against private respondent
Philippine National Construction Corporation.
The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized under the
laws of Malaysia while private respondent Philippine National Construction Corporation is a
corporation duly incorporated and existing under Philippine laws.
It appears that sometime in 1983, petitioner initiated a suit for collection against private
respondent, then known as Construction and Development Corporation of the Philippines, before
the High Court of Malaya in Kuala Lumpur entitled Asiavest Merchant Bankers (M) Berhad v.
Asiavest CDCP Sdn. Bhd. and Construction and Development Corporation of the Philippines.122
Petitioner sought to recover the indemnity of the performance bond it had put up in favor of
private respondent to guarantee the completion of the Felda Project and the non-payment of the
loan it extended to Asiavest-CDCP Sdn. Bhd. for the completion of Paloh Hanai and Kuantan By-
Pass Project.
On September 13, 1985, the High Court of Malaya (Commercial Division) rendered judgment
in favor of the petitioner and against the private respondent which is also designated therein as the
2nd Defendant. The judgment reads in full:

120
Penned by Associate Justice Segundino G. Chua and concurred in by Associate Justices Serafin V.C. Guingona
and Ramon Mabutas, Jr., Sixteenth Division, in C-A G.R. CV No. 35871, Rollo, pp. 31-37.
121
Penned by Judge Benjamin V. Pelayo, Records, pp. 444-454.
122
Docketed as Suit No. C638 of 1983.
 SUIT NO. C638 of 1983
Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest-CDCP Sdn. Bhd.
2. Construction & Development
Corporation of the Philippines Defendant
JUDGMENT
The 2nd Defendant having entered appearance herein and the Court having under Order 14, rule 3
ordered that judgment as hereinafter provided be entered for the Plaintiffs against the 2nd Defendant.
IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of $5,108,290.23
(Ringgit Five million one hundred and eight thousand two hundred and ninety and Sen twenty-three)
together with interest at the rate of 12% per annum on: -
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of payment; and
(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date of payment; and
$350.00 (Ringgit Three Hundred and Fifty) costs.
Dated the 13th day of September, 1985.
Senior Assistant Registrar,
High Court, Kuala Lumpur
This Judgment is filed by Messrs. Skrine & Co., 3rd Floor, Straits Trading Building, No. 4, Leboh
Pasar, Besar, Kuala Lumpur, Solicitors for the Plaintiffs abovenamed. (VP/Ong/81194.7/83)123
On the same day, September 13, 1985, the High Court of Malaya issued an Order directing
the private respondent (also designated therein as the 2nd Defendant) to pay petitioner interest on
the sums covered by the said Judgment, thus:
SUIT NO. C638 OF 1983
Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest-CDCP Sdn. Bhd.
2. Construction & Development
Corporation of the Philippines Defendants
BEFORE THE SENIOR ASSISTANT REGISTRAR
CIK SUSILA S. PARAM
THIS 13th DAY OF SEPTEMBER, 1985 IN CHAMBERS

123
Records, pp. 126-127.
 ORDER
Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs in this action AND
UPON READING the Summons in Chambers dated the 16th day of August, 1984 and the Affidavit of Lee
Foong Mee affirmed on the 14th day of August 1984 both filed herein AND UPON HEARING Mr. T.
Thomas of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2nd Defendant
abovenamed on the 26th day of December 1984 IT WAS ORDERED that the Plaintiffs be at liberty to sign
final judgment against the 2nd Defendant for the sum of $5,108.290.23 AND IT WAS ORDERED that the
2nd Defendant do pay the Plaintiffs the costs of suit at $350.00 AND IT WAS FURTHER ORDERED that
the plaintiffs be at liberty to apply for payment of interest AND upon the application of the Plaintiffs for
payment of interest coming on for hearing on the 1st day of August in the presence of Mr. Palpanaban
Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for the 2 nd Defendant above-
named AND UPON HEARING Counsel as aforesaid BY CONSENT IT WAS ORDERED that the 2nd
Defendant do pay the Plaintiffs interest at a rate to be assessed AND the same coming on for assessment
this day in the presence of Mr. Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee
of Counsel for the 2nd Defendant AND UPON HEARING Counsel as aforesaid BY CONSENT IT IS
ORDERED that the 2nd Defendant do pay the Plaintiffs interest at the rate of 12% per annum on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of payment; and
(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date of Payment.
Dated the 13th day of September, 1985.
Senior Assistant Registrar,
High Court, Kuala Lumpur.124
Following unsuccessful attempts125 to secure payment from private respondent under the
judgment, petitioner initiated on September 5, 1988 the complaint before Regional Trial Court of
Pasig, Metro Manila, to enforce the judgment of the High Court of Malaya.126
Private respondent sought the dismissal of the case via a Motion to Dismiss filed on October
5, 1988, contending that the alleged judgment of the High Court of Malaya should be denied
recognition or enforcement since on its face, it is tainted with want of jurisdiction, want of notice
to private respondent, collusion and/or fraud, and there is a clear mistake of law or fact.127 Dismissal
was, however, denied by the trial court considering that the grounds relied upon are not the proper
grounds in a motion to dismiss under Rule 16 of the Revised Rules of Court.128
On May 22, 1989, private respondent filed its Answer with Compulsory Counterclaim 129 and
therein raised the grounds it brought up in its motion to dismiss. In its Reply130 filed on June 8,
1989, the petitioner contended that the High Court of Malaya acquired jurisdiction over the person

124
Records, pp. 129-130.
125
TSN, March 5, 1990, p. 31.
126
Records, pp. 1-4.
127
Records, pp. 17-25.
128
Order dated February 8, 1989, Records, p. 49.
129
Records, pp. 69-72.
130
Records, pp. 73-74.
of private respondent by its voluntary submission to the courts jurisdiction through its appointed
counsel, Mr. Khay Chay Tee. Furthermore, private respondents counsel waived any and all
objections to the High Courts jurisdiction in a pleading filed before the court.
In due time, the trial court rendered its Decision dated October 14, 1991 dismissing petitioners
complaint. Petitioner interposed an appeal with the Court of Appeals, but the appellate court
dismissed the same and affirmed the decision of the trial court in a Decision dated May 19, 1993.
Hence, the instant petition which is anchored on two (2) assigned errors,131 to wit:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN COURT DID
NOT ACQUIRE PERSONAL JURISDICTION OVER PNCC, NOTWITHSTANDING THAT (a)
THE FOREIGN COURT HAD SERVED SUMMONS ON PNCC AT ITS MALAYSIA OFFICE,
AND (b) PNCC ITSELF APPEARED BY COUNSEL IN THE CASE BEFORE THAT COURT.
II
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND ENFORCEMENT
TO (SIC) THE MALAYSIAN COURT JUDGMENT.
Generally, in the absence of a special compact, no sovereign is bound to give effect within its
dominion to a judgment rendered by a tribunal of another country;132 however, the rules of comity,
utility and convenience of nations have established a usage among civilized states by which final
judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in different countries.133
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 the 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.134
A foreign judgment is presumed to be valid and binding in the country from which it comes,
until a contrary showing, on the basis of a presumption of regularity of proceedings and the giving
of due notice in the foreign forum. Under Section 50(b),135 Rule 39 of the Revised Rules of Court,
131
Rollo, pp. 13-14.
132
Cucullu v. Louisiana Insurance Co. (La) 5 Mart NS 464, 16 Am Dec 199.
133
30 Am Jur 2d Enforcement and Execution of Judgments 779; Hilton v. Guyot, 159 US 113, 40 L Ed 95, 16 S Ct
139.
134
Private International Law, Jovito R. Salonga, 1995 Edition, p. 543; 30 Am Jur 2d Executions and Enforcement of
Judgments 780; Southern v. Southern, 43 NC App 159, 258 SE2d 422.
135 Now Sec. 48, Rule 39 of the 1997 Rules of Civil Procedure.
Sec. 48. Effect of foreign judgments or final orders The effect of a judgment or final order of a tribunal of a foreign
country, having jurisdiction to render the judgment or final order is as follows:
xxx xxx xxx
which was the governing law at the time the instant case was decided by the trial court and
respondent appellate court, a judgment, against a person, of a tribunal of a foreign country having
jurisdiction to pronounce the same is presumptive evidence of a right as 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. In addition, under Section 3(n), Rule 131 of the Revised Rules of Court, a court,
whether in the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of its jurisdiction. Hence, once the authenticity of the foreign judgment is proved, the
party attacking a foreign judgment, is tasked with the burden of overcoming its presumptive
validity.
In the instant case, petitioner sufficiently established the existence of the money judgment of
the High Court of Malaya by the evidence it offered. Vinayak Prabhakar Pradhan, presented as
petitioners sole witness, testified to the effect that he is in active practice of the law profession in
Malaysia;136 that he was connected with Skrine and Company as Legal Assistant up to 1981;137 that
private respondent, then known as Construction and Development Corporation of the Philippines,
was sued by his client, Asiavest Merchant Bankers (M) Berhad, in Kuala Lumpur;138 that the writ
of summons were served on March 17, 1983 at the registered office of private respondent and on
March 21, 1983 on Cora S. Deala, a financial planning officer of private respondent for Southeast
Asia operations;139 that upon the filing of the case, Messrs. Allen and Gledhill, Advocates and
Solicitors, with address at 24th Floor, UMBC Building, Jalan Sulaiman, Kuala Lumpur, entered
their conditional appearance for private respondent questioning the regularity of the service of the
writ of summons but subsequently withdrew the same when it realized that the writ was properly
served;140 that because private respondent failed to file a statement of defense within two (2) weeks,
petitioner filed an application for summary judgment and submitted affidavits and documentary
evidence in support of its claim;141 that the matter was then heard before the High Court of Kuala
Lumpur in a series of dates where private respondent was represented by counsel;142 and that the
end result of all these proceedings is the judgment sought to be enforced.
In addition to the said testimonial evidence, petitioner offered the following documentary
evidence:
(a) A certified and authenticated copy of the Judgment promulgated by the Malaysian High Court

(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of a right
as between the parties and their successors in interest by a subsequent title.
In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake of law or fact.
136
TSN, March 5, 1990, p. 3.
137
TSN, March 5, 1990, p. 4.
138
TSN, March 5, 1990, p. 4.
139
TSNs, March 5, 1990, pp. 21-22; September 4, 1990, pp. 6-7.
140
TSN, March 5, 1990, pp. 10, 23-26.
141
TSN, March 5, 1990, pp. 10-11, 26-28.
142
TSN, March 5, 1990, pp. 19-20, 28-30, 37.
 dated September 13, 1985 directing private respondent to pay petitioner the sum of
$5,108,290.23 Malaysian Ringgit plus interests from March 1983 until fully paid;143
(b) A certified and authenticated copy of the Order dated September 13, 1985 issued by the
Malaysian High Court in Civil Suit No. C638 of 1983;144
(c) Computation of principal and interest due as of January 31, 1990 on the amount adjudged
payable to petitioner by private respondent;145
(d) Letter and Statement of Account of petitioners counsel in Malaysia indicating the costs for
prosecuting and implementing the Malaysian High Courts Judgment;146
(e) Letters between petitioners Malaysian counsel, Skrine and Co., and its local counsel, Sycip
Salazar Law Offices, relative to institution of the action in the Philippines;147
(f) Billing Memorandum of Sycip Salazar Law Offices dated January 2, 1990 showing attorneys
fees paid by and due from petitioner;148
(g) Statement of Claim, Writ of Summons and Affidavit of Service of such writ in petitioners suit
against private respondent before the Malaysian High Court;149
(h) Memorandum of Conditional Appearance dated March 28, 1983 filed by counsel for private
respondent with the Malaysian High Court;150
(i) Summons in Chambers and Affidavit of Khaw Chay Tee, counsel for private respondent,
submitted during the proceedings before the Malaysian High Court;151
(j) Record of the Courts Proceedings in Civil Case No. C638 of 1983;152
(k) Petitioners verified Application for Summary Judgment dated August 14, 1984;153 and
(l) Letter dated November 6, 1985 from petitioners Malaysian counsel to private respondents
counsel in Malaysia.154
Having thus proven, through the foregoing evidence, the existence and authenticity of the
foreign judgment, said foreign judgment enjoys presumptive validity and the burden then fell upon

143
Exhibits A, A-1 and A-2, Records, pp. 125-127.
144
Exhibits B, B-1 and B-2, Records, pp. 128-130.
145
Exhibits C, C-1 and C-2, Records, pp. 131-133.
146
Exhibits D, D-1 and D-2, Records, pp. 134-136.
147
Exhibits E, E-1, E-2, E-4, E-5, E-6, E-7 and E-8, Records, pp. 137-144.
148
Exhibits F and F-1, Records, pp. 147-148.
149
Exhibits G, G-1 and G-2, Records, pp. 149-159.
150
Exhibits H and H-1, Records, pp. 160-161.
151
Exhibits I, I-1 and I-2, Records, pp. 162-167.
152
Exhibits J, J-1 to J-4, Records, pp. 168-173.
153
Exhibits K and K-1, Records, pp. 174-179.
154
Exhibit L, Records, p. 217.
the party who disputes its validity, herein private respondent, to prove otherwise.
Private respondent failed to sufficiently discharge the burden that fell upon it to prove by clear
and convincing evidence the grounds which it relied upon to prevent enforcement of the Malaysian
High Court judgment, namely, (a) that jurisdiction was not acquired by the Malaysian Court over
the person of private respondent due to alleged improper service of summons upon private
respondent and the alleged lack of authority of its counsel to appear and represent private
respondent in the suit; (b) the foreign judgment is allegedly tainted by evident collusion, fraud and
clear mistake of fact or law; and (c) not only were the requisites for enforcement or recognition
allegedly not complied with but also that the Malaysian judgment is allegedly contrary to the
Constitutional prescription that the every decision must state the facts and law on which it is
based.155
Private respondent relied solely on the testimony of its two (2) witnesses, namely, Mr. Alfredo
N. Calupitan, an accountant of private respondent, and Virginia Abelardo, Executive Secretary and
a member of the staff of the Corporate Secretariat Section of the Corporate Legal Division, of
private respondent, both of whom failed to shed light and amplify its defense or claim for non-
enforcement of the foreign judgment against it.
Mr. Calupitans testimony centered on the following: that from January to December 1982 he
was assigned in Malaysia as Project Comptroller of the Pahang Project Package A and B for road
construction under the joint venture of private respondent and Asiavest Holdings;156 that under the
joint venture, Asiavest Holdings would handle the financial aspect of the project, which is fifty-
one percent (51%) while private respondent would handle the technical aspect of the project, or
forty-nine percent (49%);157 and, that Cora Deala was not authorized to receive summons for and
in behalf of the private respondent.158 Ms. Abelardos testimony, on the other hand, focused on the
following: that there was no board resolution authorizing Allen and Gledhill to admit all the claims
of petitioner in the suit brought before the High Court of Malaya,159 though on cross-examination
she admitted that Allen and Gledhill were the retained lawyers of private respondent in Malaysia.160
The foregoing reasons or grounds relied upon by private respondent in preventing
enforcement and recognition of the Malaysian judgment primarily refer to matters of remedy and
procedure taken by the Malaysian High Court relative to the suit for collection initiated by
petitioner. Needless to stress, 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.161
Ultimately, matters of remedy and procedure such as those relating to the service of summons or
court process upon the defendant, the authority of counsel to appear and represent a defendant and

155
Citing Article VIII, Section 14 of the 1987 Constitution.
156
TSNs, July 30, 1990, pp. 4-5; September 4, 1990, p. 3.
157
TSN, July 30, 1990, pp. 5-6, 8.
158
TSN, July 30, 1990, p. 15.
159
TSN, October 5, 1990, pp. 6-10.
160
TSN, October 5, 1990, p. 11.
161
30 Am Jur Executions and Enforcement of Judgments 843; In re Osborne, 205 NC 716, 172 SE 491.
the formal requirements in a decision are governed by the lex fori or the internal law of the forum,162
i.e., the law of Malaysia in this case.
In this case, it is the procedural law of Malaysia where the judgment was rendered that
determines the validity of the service of court process on private respondent as well as other matters
raised by it. As to what the Malaysian procedural law is, remains a question of fact, not of law. It
may not be taken judicial notice of and must be pleaded and proved like any other fact. Sections
24 and 25 of Rule 132 of the Revised 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 private
respondent to present evidence as to what that Malaysian procedural law is and to show that under
it, the assailed service of summons upon a financial officer of a corporation, as alleged by it, is
invalid. It did not. Accordingly, the presumption of validity and regularity of service of summons
and the decision thereafter rendered by the High Court of Malaya must stand.163
On the matter of alleged lack of authority of the law firm of Allen and Gledhill to represent
private respondent, not only did the private respondents witnesses admit that the said law firm of
Allen and Gledhill were its counsels in its transactions in Malaysia,164 but of greater significance
is the fact that petitioner offered in evidence relevant Malaysian jurisprudence165 to the effect that
(a) it is not necessary under Malaysian law for counsel appearing before the Malaysian High Court
to submit a special power of attorney authorizing him to represent a client before said court, (b)
that counsel appearing before the Malaysian High Court has full authority to compromise the suit,
and (c) that counsel appearing before the Malaysian High Court need not comply with certain pre-
requisites as required under Philippine law to appear and compromise judgments on behalf of their
clients before said court.166
Furthermore, there is no basis for or truth to the appellate courts conclusion that the
conditional appearance of private respondents counsel who was allegedly not authorized to appear
and represent, cannot be considered as voluntary submission to the jurisdiction of the High Court
of Malaya, inasmuch as said conditional appearance was not premised on the alleged lack of
authority of said counsel but the conditional appearance was entered to question the regularity of
the service of the writ of summons. Such conditional appearance was in fact subsequently
withdrawn when counsel realized that the writ was properly served.167
On the ground that collusion, fraud and clear mistake of fact and law tainted the judgment of
the High Court of Malaya, no clear evidence of the same was adduced or shown. The facts which
the trial court found intriguing amounted to mere conjectures and specious observations. The trial
courts finding on the absence of judgment against Asiavest-CDCP Sdn. Bhd. is contradicted by

162
Oil and Natural Gas Commission v. Court of Appeals, 293 SCRA 26, 45 [1998].
163
Northwest Orient Airlines, Inc. v. Court of Appeals, 241 SCRA 192, 199 [1995].
164
TSNs, September 4, 1990, p. 11; October 5, 1990, pp. 11-12.
165
Matthews v. Munster XX QBD 141, 1887, Great Atlantic Insurance Co. v. Home Insurance Co. and others, 2 ALR
485 [1981]; Waugh and others v. H.B. Clifford and Sons Ltd. and others, 1 ALR 1095 [1982]; Exhibits M, M-1 and
M-2, Records, pp. 355-385.
166
Also Sovereign General Insurance Sdn. Bhd. v. Koh Tian Bee, 1 MLJ 304 (1988), Exhibit M-3, Records, pp. 386-
389.
167
TSN, March 5, 1990, pp. 10, 23-26.
evidence on record that recovery was also sought against Asiavest-CDCP Sdn. Bhd. but the same
was found insolvent.168 Furthermore, even when the foreign judgment is based on the drafts
prepared by counsel for the successful party, such is not per se indicative of collusion or fraud.
Fraud to hinder the enforcement within the 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,169 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 defense.170
Intrinsic fraud is one which goes to the very existence of the cause of action is deemed already
adjudged, and it, therefore, cannot militate against the recognition or enforcement of the foreign
judgment.171 Evidence is wanting on the alleged extrinsic fraud. Hence, such unsubstantiated
allegation cannot give rise to liability therein.
Lastly, there is no merit to the argument that the foreign judgment is not enforceable in view
of the absence of any statement of facts and law upon which the award in favor of the petitioner
was based. As aforestated, the lex fori or the internal law of the forum governs matters of remedy
and procedure.172 Considering that under the procedural rules of the High Court of Malaya, a valid
judgment may be rendered even without stating in the judgment every fact and law upon which
the judgment is based, then the same must be accorded respect and the courts in this jurisdiction
cannot invalidate the judgment of the foreign court simply because our rules provide otherwise.
All in all, private respondent had the ultimate duty to demonstrate the alleged invalidity of
such foreign judgment, being the party challenging the judgment rendered by the High Court of
Malaya. But instead of doing so, private respondent merely argued, to which the trial court agreed,
that the burden lay upon petitioner to prove the validity of the money judgment. Such is clearly
erroneous and would render meaningless the presumption of validity accorded a foreign judgment
were the party seeking to enforce it be required to first establish its validity.173
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals
dated May 19, 1993 in CA-G.R. CV No. 35871 sustaining the Decision dated October 14, 1991 in
Civil Case No. 56368 of the Regional Trial Court of Pasig, Branch 168 denying the enforcement
of the Judgment dated September 13, 1985 of the High Court of Malaya in Kuala Lumpur is
REVERSED and SET ASIDE, and another in its stead is hereby rendered ORDERING private
respondent Philippine National Construction Corporation to pay petitioner Asiavest Merchant
Bankers (M) Berhad the amounts adjudged in the said foreign Judgment, subject of the said case.
Costs against the private respondent.
SO ORDERED.

168
TSN, March 5, 1990, pp. 22-25; Exhibits G, and G-2, Records, pp. 149-159.
169
Labayen v. Talisay-Silay Mining Co., 40 O.G. 2nd Supp. No. 3, p. 109 .
170
30 Am Jur 2d Executions and Enforcement of Judgments 840; Pentz v. Kuppinger (2nd Dist) 31 Cal App 3d 590,
107 Cal Rptr 540.
171
Private International Law, Jovito R. Salonga, 1995 Edition, p. 558; Beale, Conflict of Law, Vol. II, p. 1402;
Abouloff v. Oppenwhimer and Another [1852], 58 L.J. Q.B. 1.
172
Northwest Orient Airlines, Inc. v. Court of Appeals, supra.
173
Asiavest Limited v. Court of Appeals, 296 SCRA 539, 549 [1998].
 Bellosillo, (Chairman), Mendoza and Buena, JJ., concur.
Quisumbing, J., on official business.

SECOND DIVISION

[G.R. No. 103493. June 19, 1997]

PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL

FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners, vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO
DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM
H. CRAIG, respondents.

DECISION
MENDOZA, J.:

This case presents for determination the conclusiveness of a foreign judgment upon
the rights of the parties under the same cause of action asserted in a case in our local
court. Petitioners brought this case in the Regional Trial Court of Makati, Branch 56,
which, in view of the pendency at the time of the foreign action, dismissed Civil Case No.
16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal,
the Court of Appeals affirmed. Hence this petition for review on certiorari.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans
from petitioners Ayala International Finance Limited (hereafter called AYALA) 174 and
Philsec Investment Corporation (hereafter called PHILSEC) in the sum of
US$2,500,000.00, secured by shares of stock owned by Ducat with a market value of
P14,088,995.00. In order to facilitate the payment of the loans, private respondent 1488,
Inc., through its president, private respondent Drago Daic, assumed Ducats obligation
under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty
Deed with Vendors Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter
called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02,
while PHILSEC and AYALA extended a loan to ATHONA in the amount of
US$2,500,000.00 as initial payment of the purchase price. The balance of
US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in
favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488,
Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488,

174
Now BPI-International Finance Ltd. (hereafter called BPI-IFL).
Inc. all the shares of stock in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire
amount covered by the note became due and demandable. Accordingly, on October 17,
1985, private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in
the United States for payment of the balance of US$307,209.02 and for damages for
breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting
the marketability of the shares of stock delivered to 1488, Inc. under the Agreement.
Originally instituted in the United States District Court of Texas, 165th Judicial District,
where it was docketed as Case No. 85-57746, the venue of the action was later
transferred to the United States District Court for the Southern District of Texas, where
1488, Inc. filed an amended complaint, reiterating its allegations in the original complaint.
ATHONA filed an answer with counterclaim, impleading private respondents herein as
counterdefendants, for allegedly conspiring in selling the property at a price over its
market value. Private respondent Perlas, who had allegedly appraised the property, was
later dropped as counterdefendant. ATHONA sought the recovery of damages and
excess payment allegedly made to 1488, Inc. and, in the alternative, the rescission of
sale of the property. For their part, PHILSEC and AYALA filed a motion to dismiss on the
ground of lack of jurisdiction over their person, but, as their motion was denied, they later
filed a joint answer with counterclaim against private respondents and Edgardo V.
Guevarra, PHILSECs own former president, for the rescission of the sale on the ground
that the property had been overvalued. On March 13, 1990, the United States District
Court for the Southern District of Texas dismissed the counterclaim against Edgardo V.
Guevarra on the ground that it was frivolous and [was] brought against him simply to
humiliate and embarrass him. For this reason, the U.S. court imposed so-called Rule 11
sanctions on PHILSEC and AYALA and ordered them to pay damages to Guevarra.
On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States,
petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary
Attachment against private respondents in the Regional Trial Court of Makati, where it
was docketed as Civil Case No. 16563. The complaint reiterated the allegation of
petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United
States District Court of Southern Texas that private respondents committed fraud by
selling the property at a price 400 percent more than its true value of US$800,000.00.
Petitioners claimed that, as a result of private respondents fraudulent misrepresentations,
ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to
purchase the Houston property. Petitioners prayed that private respondents be ordered
to return to ATHONA the excess payment of US$1,700,000.00 and to pay damages. On
April 20, 1987, the trial court issued a writ of preliminary attachment against the real and
personal properties of private respondents.175
Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of
(1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the
U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to
state a cause of action. Ducat contended that the alleged overpricing of the property
prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were
175
Records, p. 58.
not parties to the sale and whose only participation was to extend financial
accommodation to ATHONA under a separate loan agreement. On the other hand,
private respondents 1488, Inc. and its president Daic filed a joint Special Appearance and
Qualified Motion to Dismiss, contending that the action being in personam, extraterritorial
service of summons by publication was ineffectual and did not vest the court with
jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and Daic, who is
a non-resident alien.
On January 26, 1988, the trial court granted Ducats motion to dismiss, stating that
the evidentiary requirements of the controversy may be more suitably tried before the
forum of the litis pendentia in the U.S., under the principle in private international law of
forum non conveniens, even as it noted that Ducat was not a party in the U.S. case.
A separate hearing was held with regard to 1488, Inc. and Daics motion to dismiss.
On March 9, 1988, the trial court176 granted the motion to dismiss filed by 1488, Inc. and
Daic on the ground of litis pendentia considering that
the main factual element of the cause of action in this case which is the validity of the
sale of real property in the United States between defendant 1488 and plaintiff ATHONA
is the subject matter of the pending case in the United States District Court which, under
the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate
matters needed to determine the assessment and/or fluctuations of the fair market value
of real estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1983
up to the present and verily, . . . (emphasis by trial court)
The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they
were non-residents and the action was not an action in rem or quasi in rem, so that
extraterritorial service of summons was ineffective. The trial court subsequently lifted the
writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in
applying the principle of litis pendentia and forum non conveniens and in ruling that it had
no jurisdiction over the defendants, despite the previous attachment of shares of stocks
belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals177 affirmed the dismissal of Civil Case No.
16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants
are Philsec, the Ayala International Finance Ltd. (BPI-IFLs former name) and the Athona
Holdings, NV. The case at bar involves the same parties. The transaction sued upon by
the parties, in both cases is the Warranty Deed executed by and between Athona
Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory note are
sued upon by 1488 Inc., which likewise alleges fraud employed by herein appellants, on
the marketability of Ducats securities given in exchange for the Texas property. The
recovery of a sum of money and damages, for fraud purportedly committed by appellees,
in overpricing the Texas land, constitute the action before the Philippine court, which

176
Per Judge Fernando V. Gorospe, Jr.
177
Per Associate Justice Consuelo Ynares-Santiago with Associate Justices Ricardo L. Pronove, Jr. and Nicolas P.
Lapea, Jr., concurring.
 likewise stems from the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for
the recovery of a sum of money for alleged tortious acts, so that service of summons by
publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The
dismissal of Civil Case No. 16563 on the ground of forum non conveniens was likewise
affirmed by the Court of Appeals on the ground that the case can be better tried and
decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve
foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas,
U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the
buyer, Athona Holdings, a foreign corporation which does not claim to be doing business
in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings
is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was executed
in Texas, U.S.A.
In their present appeal, petitioners contend that:
1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME
PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE
COURT OF APPEALS IN AFFIRMING THE TRIAL COURTS DISMISSAL OF THE
CIVIL ACTION IS NOT APPLICABLE.
2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE
COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF
THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.
3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS
ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE
ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS
RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY
REASON TO PROTECT AND VINDICATE PETITIONERS RIGHTS FOR TORTIOUS
OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE
MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE
PHILIPPINES.
We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present
case was pending in the Court of Appeals, the United States District Court for the
Southern District of Texas rendered judgment178 in the case before it. The judgment, which
was in favor of private respondents, was affirmed on appeal by the Circuit Court of
Appeals.179 Thus, the principal issue to be resolved in this case is whether Civil Case No.
16536 is barred by the judgment of the U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata,
a judgment admitting the foreign decision is not necessary. On the other hand, petitioners
argue that the foreign judgment cannot be given the effect of res judicata without giving

178
C.A. Rollo, pp. 205-206.
179
Rollo, p. 303.
them an opportunity to impeach it on grounds stated in Rule 39, 50 of the Rules of Court,
to wit: want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
law or fact.
Petitioners contention is meritorious. While this Court has given the effect of res
judicata to foreign judgments in several cases,180 it was after the parties opposed to the
judgment had been given ample opportunity to repel them on grounds allowed under the
law.181 It is not necessary for this purpose to initiate a separate action or proceeding for
enforcement of the foreign judgment. What is essential is that there is opportunity to
challenge the foreign judgment, in order for the court to properly determine its efficacy.
This is because in this jurisdiction, with respect to actions in personam, as distinguished
from actions in rem, a foreign judgment merely constitutes prima facie evidence of the
justness of the claim of a party and, as such, is subject to proof to the contrary. 182 Rule 39,
50 provides:
SEC. 50. Effect of foreign judgments. - The effect of a judgment of a tribunal of a
foreign country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the
title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence
of a right as between the parties and their successors in interest by a subsequent title;
but the judgment may be repelled by evidence of a want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.
Thus, in the case of General Corporation of the Philippines v. Union Insurance
Society of Canton, Ltd.,183 which private respondents invoke for claiming conclusive effect
for the foreign judgment in their favor, the foreign judgment was considered res judicata
because this Court found from the evidence as well as from appellants own pleadings 184
that the foreign court did not make a clear mistake of law or fact or that its judgment was
void for want of jurisdiction or because of fraud or collusion by the defendants. Trial had
been previously held in the lower court and only afterward was a decision rendered,
declaring the judgment of the Supreme Court of the State of Washington to have the
effect of res judicata in the case before the lower court. In the same vein, in Philippine
International Shipping Corp. v. Court of Appeals,185 this Court held that the foreign
judgment was valid and enforceable in the Philippines there being no showing that it was
vitiated by want of notice to the party, collusion, fraud or clear mistake of law or fact. The

180
Philippine International Shipping Corp. v. Court of Appeals, 172 SCRA 810 (1989); Nagarmull v. Binalbagan-
Isabela Sugar Co., Inc., 33 SCRA 46 (1970); General Corporation of the Philippines v. Union Insurance Society of
Canton Ltd., G.R. No. L-2303, Dec. 29, 1951 (unreported); Boudard v. Tait, 67 Phil. 170 (1939).
181
Hang Lung Bank v. Saulog, 201 SCRA 137 (1991).
182
Boudard v. Tait, 67 Phil. 170.
183
G.R. No. L-2303, Dec. 29, 1951.
184
Id., p. 6.
185
172 SCRA 810.
prima facie presumption under the Rule had not been rebutted.
In the case at bar, it cannot be said that petitioners were given the opportunity to
challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive
of the rights of private respondents. The proceedings in the trial court were summary.
Neither the trial court nor the appellate court was even furnished copies of the pleadings
in the U.S. court or apprised of the evidence presented thereat, to assure a proper
determination of whether the issues then being litigated in the U.S. court were exactly the
issues raised in this case such that the judgment that might be rendered would constitute
res judicata. As the trial court stated in its disputed order dated March 9, 1988:
On the plaintiffs claim in its Opposition that the causes of action of this case and
the pending case in the United States are not identical, precisely the Order of January
26, 1988 never found that the causes of action of this case and the case pending
before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners action is
barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the
U.S. court over their persons, but their claim was brushed aside by both the trial court
and the Court of Appeals.186
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition
for the enforcement of judgment in the Regional Trial Court of Makati, where it was
docketed as Civil Case No. 92-1070 and assigned to Branch 134, although the
proceedings were suspended because of the pendency of this case. To sustain the
appellate courts ruling that the foreign judgment constitutes res judicata and is a bar to
the claim of petitioners would effectively preclude petitioners from repelling the judgment
in the case for enforcement. An absurdity could then arise: a foreign judgment is not
subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a
claim as in this case, but it may be opposed by the defendant if the foreign judgment is
sought to be enforced against him in a separate proceeding. This is plainly untenable. It
has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction
where affirmative relief is being sought. Hence, in the interest of justice, the complaint
should be considered as a petition for the recognition of the Hongkong judgment under
Section 50 (b), Rule 39 of the Rules of Court in order that the defendant, private
respondent herein, may present evidence of lack of jurisdiction, notice, collusion, fraud
or clear mistake of fact and law, if applicable.187
Accordingly, to insure the orderly administration of justice, this case and Civil Case
No. 92-1070 should be consolidated.188 After all, the two have been filed in the Regional
Trial Court of Makati, albeit in different salas, this case being assigned to Branch 56
(Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of
Judge Ignacio Capulong. In such proceedings, petitioners should have the burden of

186
C.A. Decision, p. 6; Rollo, p. 52.
187
Hang Lung Bank v. Saulog, 201 SCRA 137.
188
Borromeo v. Intermediate Appellate Court, 255 SCRA 75 (1995).
impeaching the foreign judgment and only in the event they succeed in doing so may they
proceed with their action against private respondents.
Second. Nor is the trial courts refusal to take cognizance of the case justifiable under
the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds
under Rule 16, 1, which does not include forum non conveniens.189 The propriety of
dismissing a case based on this principle requires a factual determination, hence, it is
more properly considered a matter of defense. Second, while it is within the discretion of
the trial court to abstain from assuming jurisdiction on this ground, it should do so only
after vital facts are established, to determine whether special circumstances require the
courts desistance.190
In this case, the trial court abstained from taking jurisdiction solely on the basis of the
pleadings filed by private respondents in connection with the motion to dismiss. It failed
to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the
defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latters
debt which was the object of the transaction under litigation. The trial court arbitrarily
dismissed the case even after finding that Ducat was not a party in the U.S. case.
Third. It was error we think for the Court of Appeals and the trial court to hold that
jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in
personam and summons were served by extraterritorial service. Rule 14, 17 on
extraterritorial service provides that service of summons on a non-resident defendant may
be effected out of the Philippines by leave of Court where, among others, the property of
the defendant has been attached within the Philippines.191 It is not disputed that the
properties, real and personal, of the private respondents had been attached prior to
service of summons under the Order of the trial court dated April 20, 1987.192
Fourth. As for the temporary restraining order issued by the Court on June 29, 1994,
to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to
enforce so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the
Court finds that the judgment sought to be enforced is severable from the main judgment

189
Development Bank of the Philippines v. Pundogar, 218 SCRA 118 (1993).
190
K.K. Shell Sekiyu Osaka Hatsubaisho v. Court of Appeals, 188 SCRA 145 at 153 (1990); Hongkong and Shanghai
Banking Corp. v. Sherban, 176 SCRA 331 at 339 (1987).
191 Rule 14, 17.
SEC. 17. Extraterritorial service. - When the defendant does not reside and is not found in the Philippines
and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the
Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief
demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the
defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service
may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by publication in
a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of
the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in
any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which
shall not be less than sixty (60) days after notice, within which the defendant must answer. (emphasis added)
192
Records, pp. 58, 80 and 100. (Sheriffs Report, Record, p. 100).
under consideration in Civil Case No. 16563. The separability of Guevarras claim is not
only admitted by petitioners,193 it appears from the pleadings that petitioners only belatedly
impleaded Guevarra as defendant in Civil Case No. 16563.194 Hence, the TRO should be
lifted and Civil Case No. 92-1445 allowed to proceed.
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case
No. 16563 is REMANDED to the Regional Trial Court of Makati for consolidation with Civil
Case No. 92-1070 and for further proceedings in accordance with this decision. The
temporary restraining order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.

193
Rollo, p. 353.
194
Edgardo V. Guevara was impleaded as party defendant in petitioners amended complaint on March 31, 1992.