Case No. 268 | GR No. 114323 | July 23, 1998 | Martinez, J.

Judicial Department

OIL AND NATURAL GAS COMMISSION vs. COURT OF APPEALS and PACIFIC CEMENT
COMPANY, INC.

Big commercial contracts, particularly international commercial contracts now usually have a
provision to submit all disputes to arbitration. In arbitration, the parties are free to choose who the
arbitrators who will render the award. An award in an arbitration proceeding is equivalent to a ruling
or decision of a court. After parties present their arguments and evidence, the arbitrators render the
award. The winning party goes to court to have the award confirmed by a judge or magistrate. Once
confirmed by the court, the party can have it enforced. In this case, the parties agreed on an arbitrator
and the arbitration proceedings were held in India. The award of the arbitrator was then confirmed or
adopted by a court in India. It was the Indian courts ruling which was being sought to be enforced here
in the Philippines. They did this by filing a complaint for the enforcement of a foreign judgment in the
RTC of Pasig.

FACTS:
Oil and Natural Gas Commission is a foreign corporation, owned and controlled by the
Government of India.
Pacific Cement Co is a Philippine corporation.
Pacific was supposed to deliver more than 4,000 metric tons of oil well cement to Bombay
and Calcutta but because of a dispute with the carrier, the shipment never reached the
destination. Despite payment by Oil and Natural, as well as repeated demands, Pacific does
not deliver the oil well cement.
During negotiations, the parties agreed that the Pacific will replace the oil well cement with
Class G cement. Pacific did deliver the Class G cement but they were not according to
specifications. Oil and Natural informed Pacific that they will submit the dispute to arbitration
as provided for in their contract.
The dispute was therefore submitted to arbitration, the arbitrator was Shri Malhotra, an
employee of Oil and Natural Gas. The decision of the arbitrator was in favour of Oil and
Natural Gas. The arbitral decision was confirmed by an Indian court.
Oil and Natural Gas filed a complaint in Pasig RTC for the enforcement of the foreign
judgment. This was opposed by Pacific for being bereft of any statement of facts and law
upon which the award in favor of the petitioner was based. The judgment of the Indian court
apparently simply adopted the award of the arbitrator without stating anything by way of
support for its judgment.
The Pasig RTC dismissed the complaint. The RTC said that the contract provided for some
disputes to be settled by the regular court and some to be submitted to arbitration. This type,
the RTC said, was for the courts. Consequently, the proceedings had before the arbitrator
were null and void and the foreign court had therefore, adopted no legal award which could
be the source of an enforceable right.
The CA affirmed the dismissal by the RTC. Aside from agreeing with the RTC that the arbitral
award was void, the CA also said that the full text of the judgment of the foreign court
contains the dispositive portion only and indicates no findings of fact and law as basis for the
 award. Hence, the said judgment cannot be enforced by any Philippine court as it would
violate the constitutional provision that no decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based.

ISSUE: Whether or not the judgment of the foreign court is enforceable in this jurisdiction in view of
the private respondent's allegation that it is bereft of any statement of facts and law upon which the
award in favor of the petitioner was based.

RULING: YES, it is enforceable in this jurisdiction.

Even in this jurisdiction, incorporation by reference is allowed if only to avoid the cumbersome
reproduction of the decision of the lower courts, or portions thereof, in the decision of the higher
court. This is particularly true when the decision sought to be incorporated is a lengthy and thorough
discussion of the facts and conclusions arrived at, as in this case, where Award Paper No. 3/B-1
consists of eighteen (18) single spaced pages. The 18 pages of single spaced award by the arbitrator
was, according to the SC, complete enough. The short decision of the Indian court which merely
adopted the award was acceptable in our jurisdiction.

Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected by the fact
that the procedure in the courts of the country in which such judgment was rendered differs from
that of the courts of the country in which the judgment is relied on. This Court has held that matters
of remedy and procedure are governed by the lex fori or the internal law of the forum. Thus, if under
the procedural rules of the Civil Court of Dehra Dun, India, a valid judgment may be rendered by
adopting the arbitrators findings, then the same must be accorded respect. In the same vein, if the
procedure in the foreign court mandates that an Order of the Court becomes final and executory upon
failure to pay the necessary docket fees, then the courts in this jurisdiction cannot invalidate the
order of the foreign court simply because our rules provide otherwise.

Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines, Inc. v.
Court of Appeals that: "A foreign judgment is presumed to be valid and binding in the country from
which it comes, until the contrary is shown. It is also proper to presume the regularity of the
proceedings and the giving of due notice therein.

"Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal of
a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as
between the parties and their successors-in-interest by a subsequent title. The judgment may,
however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact. Also, under Section 3 of Rule 131, a court, whether of the Philippines
or elsewhere, enjoys the presumption that it was acting in the lawful exercise of jurisdiction and has
regularly performed its official duty."

Consequently, the party attacking a foreign judgment (Pacific Cement) had the burden of overcoming
the presumption of its validity which it failed to do in the instant case.
The foreign judgment being valid, there is nothing else left to be done than to order its enforcement,
despite the fact that Oil and Natural Gas merely prays for, the remand of the case to the RTC for
further proceedings. As this Court has ruled on the validity and enforceability of the said foreign
judgment in this jurisdiction, further proceedings in the RTC for the reception of evidence to prove
otherwise are no longer necessary.

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