G.R. No.

110263 July 20, 2001

ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner,

vs.
COURT OF APPEALS and PHILIPPINE NATIONAL CONSTRUCTION
CORPORATION, respondents.

Facts: 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."3

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 nonpayment 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. "

Following unsuccessful attempts6 to secure payment from private respondent under the judgment,
petitioner initiated a complaint before Regional Trial Court of Pasig, Metro Manila, to enforce the
judgment of the High Court of Malaya.7

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 in 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.

Dismissal was granted by the RTC and affirmed by the CA.

Issue: WON the denying of recognition and enforcement to the Malaysian court judgment is proper.

Held: 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;13 however, the rules of comity,
utility and convenience of nations have established a usage among civilized states by which final
judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in different countries. 14

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. 15
In the instant case, petitioner sufficiently established the existence of the money judgment of the High
Court of Malaya by the evidence it offered. Vinayak Prabhakar Pradhan, presented as petitioner's sole
witness, testified to the effect that he is in active practice of the law profession in Malaysia; 17 that he
was connected with Skrine and Company as Legal Assistant up to 1981;18 that private respondent,
then known as Construction and Development Corporation of the Philippines, was sued by his client,
Asiavest Merchant Bankers (M) Berhad, in Kuala Lumpur;19that 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. Testimonial evidence
and documentary evidence were also given by the petitioner.

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 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."

A. 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.
B. 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.
C. 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.53 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 the jurisdiction cannot invalidate the judgment of the foreign court simply because
our rules provide otherwise.
G.R. No. 137378 October 12, 2000

PHILIPPINE ALUMINUM WHEELS, INC., petitioner,

vs.
FASGI ENTERPRISES, INC., respondent.

Facts: 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. 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.

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. During the pendency of the case, the parties entered into a settlement, entitled
"Transaction" where it was stipulated that 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"). Despite its assurances, and FASGI's insistence, PAWI still failed to open LC prompting FASGI
to pursue its complaint for damages against PAWI before the California district court. In the interim,
the parties, realizing the protracted process of litigation, resolved to enter into another arrangement,
this time entitled "Supplemental Settlement Agreement. PAWI still failed to comply with the obligations
under the settlement agreement.

Unable to obtain satisfaction of the Stipulation for Judgment filed concurrently under the US courts,
executed on behalf of FASGI and PAWI by their respective attorneys, acting as their authorized
agents, FASGI filed a complaint for "enforcement of foreign judgment" in February 1983, before the
Regional Trial Court, Branch 61, of Makati, Philippines.

RTC 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. The appellate court reversed the decision of the trial court and ordered the full enforcement of
the California judgment.

Hence this appeal.

It was the contention of the petitioners in this case that Mr. Ready, their counsel, has acted without its
authority in entering Supplemental Settlement Agreement.

Issue: WON the foreign judgment must be given effect in the Philippines.

Held: Yes. 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 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.

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

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

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 Mr. Ready's supposed lack of authority.

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
recognition or enforcement of the foreign judgment.23
Extrinsic Fraud is a fraud that induces one not to present a case in court or deprives one of the
opportunity to be heard or is not involved in the actual issues.

Intrinsic fraud is an intentionally false representation which is part if the fraud and can be
considered in determining general and punitive damages,
G.R. No. L-22470 May 28, 1970

SOORAJMULL NAGARMULL, plaintiff-appellee,

vs.
BINALBAGAN-ISABELA SUGAR COMPANY, INC., defendant-appellant.

Facts: Soorajmull Nagarmull is a foreign corporation with offices at No. 8 Dalhousie Square (East)
Calcutta, India, agreed to sell to defendant, a domestic corporation with offices at the Chronicle
Building, Aduana Street, Manila. They entered into a contract wherein the plaintiff is to deliver Hessian
Bags to defendant. The shipment of the bags were to be delivered in installments in the months of
July, August, September and October, 1949. Plaintiff failed to deliver some on the bags on time
because of the alleged failure of the Adamjee Jute Mills to supply the goods in due time.

Meanwhile, on October 1, 1949, the Government of India increased the export duty of jute bags from
80 to 350 rupees per ton, and on October 5, 1949, plaintiff requested defendant to increase its letter
of credit to cover the enhanced rate of export duty imposed upon the goods that were to be shipped
in October, reminding the latter that under their agreement, any alteration in export duty was to be for
the buyer's account.

Defendant refused to pay thus plaintiff submitted the said claim before the Tribunal of Arbitration
(India). The whole case revolved on the question of whether or not defendant is liable to the plaintiff
for the payment of increased export taxes imposed by the Indian Government on the shipments of jute
sacks. Defendant contended that if the jute sacks in question were delivered by plaintiff in the months
of July, August, and September, 1949, pursuant to the terms of the contract, then there would have
been no increased export taxes to pay because said increased taxes became effective only on October
1, 1949.

The Bengal Chamber of Commerce, Tribunal of Arbitration, refused to sustain defendant's contention
and decided in favor of the plaintiff, ordering the defendant to pay to the plaintiff the sum of 18,562
rupees and 8 annas.

For about two years, the plaintiff attempted to enforce the said award through the Philippine Charge
de'Affaires in Calcutta, the Indian Legation here in the Philippines, and the Department of Foreign
Affairs.

Thereafter, no communication was received by defendant from plaintiff or its lawyers regarding their
claim until June, 1959, when the present complaint was filed in the Court of First Instance of Manila in
Civil Case No. 41103.

Issue: WON the decision of the Tribunal of Arbitration of the Bengal Chamber of Commerce, as
affirmed by the High Court of Judicature of Calcutta, is enforceable in the Philippines.

Held: No. Under the provisions of Section 50 of Rule 39, Rules of Court, a judgment for a sum of
money rendered by a foreign court "is presumptive evidence of a right as between the parties and their
successors in interest by a subsequent title", but when suit for its enforcement is brought in a Philippine
court, said 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"

Upon the facts of record, We are constrained to hold that the decision sought to be enforced was
rendered upon a "clear mistake of law" and because of that it makes appellant — an innocent party —
suffer the consequences of the default or breach of contract committed by appellee.
There is no question at all that appellee (Soorajmull Nagarmull) was guilty of a breach of contract
when it failed to deliver one-hundred fifty-four Hessian bales which, according to the contract entered
into with appellant (Binalbagan-Isabela Sugar Company, Inc.), should have been delivered to the latter
in the months of July, August and September, all of the year 1949. It is equally clear beyond doubt
that had these one-hundred fifty-four bales been delivered in accordance with the contract aforesaid,
the increase in the export tax due upon them would not have been imposed because said increased
export tax became effective only on October 1, 1949.

When appellant demanded that appellee deliver the shortage of 154 bales it did nothing more than to
demand that to which it was entitled as a matter of right. The breach of contract committed by appellee
gave appellant, under the law and even under general principles of fairness, the right to rescind the
contract or to ask for its specific performance, in either case with right to demand damages. Part of
the damages appellant was clearly entitled to recover from appellee growing out of the latter's breach
of the contract consists precisely of the amount of the increase decreed in the export tax due on the
shortage — which, because of appellee's fault, had to be delivered after the effectivity of the increased
export tax.

To the extent, therefore, that the decisions of the Tribunal of Arbitration of the Bengal Chamber of
Commerce and of the High Court of Judicature of Calcutta fail to apply to the facts of this case
fundamental principles of contract, the same may be impeached, as they have been sufficiently
impeached by appellant, on the ground of "clear mistake of law".
G.R. No. 77085 April 26, 1989

PHILIPPINE INTERNATIONAL SHIPPING CORPORATION (PISC), GEORGE LIM, MARCOS

BAUTISTA, CARLOS LAUDE, TAN SING LIM, ANTONIO LIU LAO, ONG TEH, PHILIPPINE
CONSORTIUM CONSTRUCTION CORPORATION, PACIFIC MILLS, INC., and UNIVERSAL
STEEL SMELTING CO., INC., petitioners,
vs.
THE HON. COURT OF APPEALS, HON. JOSE C. DE GUZMAN, as Judge presiding Branch 93 of
the Regional Trial Court of Quezon City, INTERPOOL, LTD. and SHERIFF NORBERTO V.
DOBLADA JR., respondents.

Facts: Respondent Interpool, Ltd. is a foreign corporation, duly organized and existing under the laws
of Bahamas Islands with office and business address at 630, 3rd Avenue, New York, New York, and
not licensed to do, and not doing business, in the Philippines.

Defendants Philippine International Shipping Corporation, Philippine Construction Consortium

Corporation, Pacific Mills Inc., and Universal Steel Smelting Company, Inc., are corporations duly
organized and existing under and by virtue of the laws of the Philippines.

Philippine International Shipping Corporation (PISC) leased from the Interpool Ltd. and its wholly
owned subsidiary, the Container Trading Corporation, several containers pursuant to the Membership
Agreement and Hiring Conditions and the Master Equipment Leasing Agreement both dated June 8,
1979.

Philippine Construction Consortium Corporation, Pacific Mills Inc. and Universal Steel Smelting
Company, and the other petitioners in this case namely: 1) George Lim; 2) Marcos Bautista; 3) Carlos
Laude 4) Tan Sing Lim; 5) Antonio Liu Lao and 6) Ong Teh, unconditionally and irrevocably guaranteed
to pay (sic) Interpool all payments due to it under the said agreements.

Philippine International Shipping Corporation incurred outstanding and unpaid obligations with the
plaintiff, in the amount of $94,456.28, representing unpaid per diems, drop-off charges, interest and
other agreed charges.

Interpool sent letters to the petitioners herein demanding payment of their outstanding and unpaid
obligations, but to no avail. They filed a case with the United States District Court, Southern District of
New York which rendered petitioners liable for the liquidated damages, interest and costs.

Because of the unjustifiable failure and refusal of PISC and its guarantors to jointly and severally pay
their obligations to Interpool, the latter filed on November 16, 1983 a complaint [docketed as Civil
Case No. Q-39927, Branch 93, Regional Trial Court of Quezon City] to enforce the default judgment
of the U.S. District Court against PISC and also to enforce the individually executed Continuing
Guaranties of the other petitioners in this case.

Herein petitioners were duly summoned, but they failed to answer the complaint. On motion of
Interpool, they were declared in default and the herein private respondent was allowed to present its
evidence ex parte.

The lower court ordered the Philippine International Shipping Corporation, and the Guarantors, to
jointly and severally pay Interpool the liquidated amount, interests and costs.

Hence this petition.

Petitioners allege that both the Default Judgment rendered by the U.S. District Court, Southern District
of New York, in 83 Civil 290 (EW), and the Decision of the Regional Trial Court of Quezon City, in Civil
Case No. Q-39927, are null and void essentially on jurisdictional grounds. In the first instance,
petitioners contend that the U.S. District Court never acquired jurisdiction over their persons as they
had not been served with summons and a copy of the Complaint in 83 Civil 290 (EW). In the second
instance, petitioners contend that such jurisdictional ty effectively prevented the Regional Trial Court
of Quezon City from taking cognizance of the Complaint in Civil Case No. Q-39927 and from enforcing
the U.S. District Court's Default Judgment against them. Petitioners contend, finally, that assuming the
validity of the disputed Default Judgment, the same may be enforced only against petitioner Philippine
International Shipping Corporation (PISC) the other nine (9) petitioners not having been impleaded
originally in the case filed in New York, U.S.A.

Issue: WON the US District Court had acquired jurisdiction over the persons of the petitioners.

Held: Yes.

1. The evidence of record clearly shows that the U.S. District Court had validly acquired
jurisdiction over petitioner (PISC) under the procedural law applicable in that forum i.e., the
U.S. Federal Rules on Civil Procedure. Copies of the Summons and Complaint in 83 Civil 290
(EW) which were in fact attached to the Petition for Review filed with this Court, were
stamped "Received, 18 Jan 1983, PISC Manila." indicating that service thereof had been
made upon and acknowledged by the (PISC) office in Manila on, 18 January 1983, and that
(PISC) had actual notice of such Complaint and Summons.

That foreign judgment-which had become final and executory, no appeal having been taken
therefrom and perfected by petitioner PISC-is thus "presumptive evidence of a right as
between the parties [i.e., PISC and Interpool] and their successors in interest by a subsequent
title."

2. The existence of liability (i.e., in the amount of U.S.$94,456.28) on the part of petitioner PISC
having been duly established in the U.S. case, it was not improper for respondent Interpool, in
seeking enforcement in this jurisdiction of the foreign judgment imposing such liability, to have
included the other nine (9) petitioners herein as defendants in Civil Case No. Q- 39927, filed
with Branch 93 of the Regional Trial Court of Quezon City. With respect to the latter, Section
6, Rule 3 of the Revised Rules of Court expressly provides:

Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to relief
in respect to or arising out of the same transaction or series of transactions is alleged to exist,
whether jointly, severally, or in the alternative, may, except as otherwise provided in these
rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law
or fact common to all such plaintiffs or to all such defendants may arise in the action; but the
court may make such orders as may be just to prevent any plaintiff or defendant from being
embarrassed or put to expense in connection with any proceedings in which he may have no
interest.

The liability of the nine (9) other petitioners was, in other words, not based upon the
Membership Agreement and the Master Equipment Leasing Agreement to which they were
not parties. The New York award of U.S.$94,456.28 is precisely premised upon a breach by
PISC of its own obligations under those Agreements. We, therefore, consider the nine (9) other
petitioners as persons 44 against whom [a] right to relief in respect to or arising out of the same
transaction or series of transactions [has been] alleged to exist." as contemplated in the Rule
quoted above and, consequently, properly impleaded as defendants in Civil Case No. Q-
 39927. There was, in other words, no need at all, in order that Civil Case No. Q-39927 would
prosper, for respondent Interpool to have first impleaded the nine (9) other petitioners in the
New York case and there obtain judgment against all ten (10) petitioners.

3. Assuming arguendo that none of the ten (10) petitioner herein had been served with notice or
summons below, the record shows, however, that they did in fact file with the Regional Trial
Court a Motion for Extension of Time to file Answer as well as Motion for Bill of Particulars,
both addressing respondent Interpool's Complaint in Civil Case No. Q-39927. In those
pleadings, petitioners not only manifested their intention to controvert the allegations in the
Complaint, but they neither questioned nor assailed the jurisdiction of the trial court, either over
the case filed against them or over their individual persons, as defendants therein. There was
here, in effect, voluntary submission to the jurisdiction of the Quezon City trial court by
petitioners, who are thereby estopped from asserting otherwise before this Court.