MA.ELENA R.

SALUDES 4S

CASE DIGESTS
NORTHWEST ORIENT AIRLINES, INC. petitioner, vs. COURT OF APPEALS and C.F.
SHARP & COMPANY INC., respondents.
G.R. No. 112573 February 9, 1995
PADILLA, JR., J.:
FACTS: Petitioner 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., a corporation incorporated under Philippine laws.
Northwest 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 sued defendant in Tokyo,
Japan.
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. Defendant received from Deputy Sheriff Rolando Balingit the writ of
summons. 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 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 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, a suit for enforcement of the judgment was filed by plaintiff before the
Regional Trial Court of Manila Branch 54.
Defendant averred 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.
ISSUE: 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
HELD: Yes. 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,

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whether of the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful
exercise of jurisdiction and has regularly performed its official duty.
Consequently, the party attacking a foreign judgment has the burden of overcoming the
presumption of its validity. Being the party challenging the judgment rendered by the Japanese
court, SHARP had the duty to demonstrate the invalidity of such judgment. In an attempt to
discharge that burden, it contends that the extraterritorial service of summons effected 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. In this
case, it is the procedural law of Japan where the judgment was rendered that determines
the validity of the extraterritorial service of process on SHARP. As to what this law is is a
question of fact, not of law. It may not be taken judicial notice of and must be pleaded and
proved like any other fact. Sections 24 and 25, Rule 132 of the Rules of Court provide that it may
be evidenced by an official publication or by a duly attested or authenticated copy thereof. It was
then incumbent upon SHARP to present evidence as to what that Japanese procedural law is and
to show 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 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.
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 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.
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. 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

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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
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 ofMilliken 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 domicile of a corporation belongs to the state where it was
incorporated. 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.
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.
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.
DISCUSSION:
The main issue in this case 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. SHARP had the burden of proving the rules on summons in Japan
because the party attacking a foreign judgment must prove the same, being a question of fact. 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.
The Court ruled that matters of remedy and are governed by the lex fori or the internal
law of the forum. 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. Hence, the presumption of validity and regularity of the service of summons
and the decision rendered by the Japanese court must stand.
Because SHARP failed to present evidence on the law of Japan, the presumption of
identity or similarity or the so-called processual presumption was used by the Court. 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.

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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.
G.R. No. 103493 June 19, 1997
MENDOZA, J.:
FACTS: Ducat obtained separate loans from petitioners Ayala and Philsec secured by shares of
stock owned by Ducat. In order to facilitate the payment of the loans, private respondent 1488,
Inc., through its president, private respondent Drago Daic, assumed Ducat's obligation under an
Agreement whereby 1488, Inc. executed a Warranty Deed with Vendor's Lien by which it sold to
petitioner Athona Holdings, N.V. 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, Inc. all the shares of stock
in their possession belonging to Ducat.
As ATHONA failed to pay the interest on the balance, the entire amount covered by the
note became due and demandable. Private respondent 1488, Inc. sued petitioners PHILSEC,
AYALA, and ATHONA in the U.S. for payment of the balance and for damages for breach of
contract and for fraud. Originally instituted in the United States District Court of Texas, the
venue of the action was later transferred to the United States District Court for the Southern
District of Texas which dismissed the counterclaim against Guevarra on the ground that it was
"frivolous. The U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and
ordered them to pay damages to Guevarra.
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. 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.
The trial court issued a writ of preliminary attachment against the real and personal
properties of private respondents. The trial court granted Ducat's 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 Daic's motion to dismiss. The
trial court granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis
pendentia. 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.
The Court of Appeals affirmed the dismissal of Civil Case No. 16563 against Ducat,
1488, Inc., and Daic on the ground of litis pendentia.

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ISSUES: 1. Whether Litis pendentia is applicable

2. Whether the principle of Forum Non Conveniens is applicable
HELD: Petitioners argue that the foreign judgment cannot be given the effect of res judicata
without giving 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, it was after the parties opposed to the judgment had been
given ample opportunity to repel them on grounds allowed under the law. 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.
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.
To sustain the appellate court's ruling that the foreign judgment constitutes res judicata
and is a bar to the claim of petitioners would effectively 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.
Accordingly, to insure the orderly administration of justice, this case and Civil Case No.
92-1070 should be consolidated. In such proceedings, petitioners should have the burden of
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 court's 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. 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 court's desistance.
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 latter's 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

MA.ELENA R. SALUDES 4S

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." 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.
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 socalled 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 under consideration in Civil
Case No. 16563.
Discussion:
In recognizing foreign judgments, the party challenging it must always be given
opportunity to impeach and contradict by presenting evidence of collusion, fraud and mistake. It
cannot be dispensed with. It is not proper for the trial court to disregard the right of the party to
oppose the enforcement of a judgment obtained in a foreign country.

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

INC., respondent.
[G.R. No. 137378. October 12, 2000]
VITUG, J.:
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, 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. 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 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.
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. The parties, realizing
the protracted process of litigation, resolved to enter into another arrangement, this time entitled
"Supplemental Settlement Agreement. In substance, the covenant provided that FASGI would
deliver to PAWI a container of wheels for every LC opened and paid by PAWI.
PAWI, again, proved to be remiss in its obligation under the supplemental settlement
agreement. 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.
FASGI filed a notice of entry of judgment. A certificate of finality of judgment was issued
by the US District Judge of the District Court for the Central District of California. 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

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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. The lower court ruled that the foreign judgment ignored the reciprocal obligations
of the parties. While the assailed foreign judgment ordered the return by PAWI of the purchase
amount, no similar order was made requiring FASGI to return to PAWI the third and fourth
containers of wheels. This situation, 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.
The appellate court reversed the decision of the trial court and ordered the full enforcement
of the California judgment. Hence this appeal.
ISSUE: Whether the enforcement of the California judgment is proper
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;[ 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.
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. 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.

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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.
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.
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.
Discussion: The Supreme Court ruled that 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.
PAWI, after reaping the benefits of their agreement, cannot be permitted thereafter to
oppose it. As long as a party was given full opportunity to present his side, the judgment cannot
be disturbed. Also, PAWI failed to prove the existence of existence of extrinsic fraud.

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.
[G.R. No. 139325. April 12, 2005]
TINGA, J.:
FACTS: 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 who each alleged
having suffered human rights abuses such as arbitrary detention, torture and rape in the hands of

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police or military forces during the Marcos regime. 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.
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) subclasses of torture, summary execution and disappearance victims. Trial ensued, and subsequently
a jury rendered a verdict and an award of compensatory and exemplary damages in favor of the
plaintiff class. Then, 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.
The present petitioners filed Complaint with 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. 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.
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.
Judge Santiago Javier Ranada of the Makati RTC issued the subject Order dismissing the
complaint without prejudice. 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. They prayed for the
annulment of the questioned orders, and an order directing the reinstatement of Civil Case No.
97-1052.
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.
ISSUE: Whether Civil Case No. 97-1052 should be reinstated
HELD: Yes. 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. The conditions required by the Philippines for recognition and enforcement

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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. 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. 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, collusion,
fraud, or clear mistake of law or fact. 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. The party attacking a foreign judgment has the
burden of overcoming the presumption of its validity.
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. 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 neverending 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. 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.
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.
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

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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.
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.
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.
The viability of the public policy defense against the enforcement of a foreign judgment has
been recognized in this jurisdiction. 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. 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. 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. 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.
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.
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.
Discussion: It was held that 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

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accepted practices and principles in international law. International law forms part of the law of
the land. This recognition does not automatically mean that if the petition is given due course,
the other party will no longer have the chance to oppose. The other party can still defend himself
by proving want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
law or fact.