Conflict - Oil and Natural Gas Commission v. CA

8/23/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 293
26 SUPREME COURT REPORTS ANNOTATED

Oil and Natural Gas Commission vs. Court of Appeals
*
G.R. No. 114323. July 23, 1998.
OIL AND NATURAL GAS COMMISSION, petitioner, vs.

COURT OF APPEALS and PACIFIC CEMENT
COMPANY, INC., respondents.
Statutory Construction; Doctrine of Noscitur a Sociis;

According to the maxim noscitur a sociis, where a particular word
or phrase is ambiguous in itself or is equally susceptible of various
meanings, its correct construction may be made clear and specific
by considering the company of the words in which it is found or
with which it is associated, or stated differently, its obscurity or
doubt may be reviewed by reference to associated words.—The
doctrine of noscitur a sociis, although a rule in the construction of
statutes, is equally applicable in the ascertainment of the
meaning and scope of vague
_______________
* SECOND DIVISION.
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VOL. 293, JULY 23, 1998 27
contractual stipulations, such as the aforementioned phrase.

According to the maxim noscitur a sociis, where a particular word
or phrase is ambiguous in itself or is equally susceptible of
various meanings, its correct construction may be made clear and
specific by considering the company of the words in which it is
found or with which it is associated, or stated differently, its
obscurity or doubt may be reviewed by reference to associated
words.
http://central.com.ph/sfsreader/session/0000016565de66cb009f06bd003600fb002c009e/t/?o=False 1/24
Same; Same; As in statutes, the provisions of a contract

should not be read in isolation from the rest of the instrument but,
on the contrary, interpreted in the light of the other related
provisions.—Thus, this Court has held that as in statutes, the
provisions of a contract should not be read in isolation from the
rest of the instrument but, on the contrary, interpreted in the
light of the other related provisions. The whole and every part of a
contract must be considered in fixing the meaning of any of its
parts and in order to produce a harmonious whole. Equally
applicable is the canon of construction that in interpreting a
statute (or a contract as in this case), care should be taken that
every part thereof be given effect, on the theory that it was
enacted as an integrated measure and not as a hodge-podge of
conflicting provisions. The rule is that a construction that would
render a provision inoperative should be avoided; instead,
apparently inconsistent provisions should be reconciled whenever
possible as parts of a coordinated and harmonious whole.
Same; Same; The non-delivery of the oil well cement is

definitely not in the nature of a dispute arising from the failure to
execute the supply order/contract design, drawing, instructions,
specifications or quality of the materials.—But in accordance with
the doctrine of noscitur a sociis, this reference to the supply
order/contract must be construed in the light of the preceding
words with which it is associated, meaning to say, as being
limited only to the design, drawing, instructions, specifications or
quality of the materials of the supply order/contract. The non-
delivery of the oil well cement is definitely not in the nature of a
dispute arising from the failure to execute the supply
order/contract design, drawing, instructions, specifications or
quality of the materials. That Clause 16 should pertain only to
matters involving the technical aspects of the contract is but a
logical inference considering that the underlying purpose of a
referral to arbitration is for such technical matters to be
deliberated upon by a person possessed with the required skill
and expertise which may be otherwise absent in the regular
courts.
28
Same; Same; Court agrees with the appellate court in its

ruling that the non-delivery of the oil well cement is a matter
properly cognizable by the regular courts as stipulated by the
parties in Clause 15 of their contract.—This Court agrees with the

appellate court in its ruling that the non-delivery of the oil well
cement is a matter properly cognizable by the regular courts as
stipulated by the parties in Clause 15 of their contract: “All
questions, disputes and differences, arising under out of or in
connection with this supply order, shall be subject to the exclusive
jurisdiction of the court, within the local limits of whose
jurisdiction and the place from which this supply order is
situated.”
Remedial Law; Constitutional Law; Judgment; The

constitutional mandate 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 does not preclude the validity of
“memorandum decisions” which adopt by reference the findings of
fact and conclusions of law contained in the decisions of inferior
tribunals.—The constitutional mandate 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 does not
preclude the validity of “memorandum decisions” which adopt by
reference the findings of fact and conclusions of law contained in
the decisions of inferior tribunals. In Francisco v. Permskul, this
Court held that the following memorandum decision of the
Regional Trial Court of Makati did not transgress the
requirements of Section 14, Article VIII of the Constitution:
“MEMORANDUM DECISION—After a careful perusal,
evaluation and study of the records of this case, this Court hereby
adopts by reference the findings of fact and conclusions of law
contained in the decision of the Metropolitan Trial Court of
Makati, Metro Manila, Branch 63 and finds that there is no
cogent reason to disturb the same. “WHEREFORE, judgment
appealed from is hereby affirmed in toto.” (Italics supplied.)
Same; Same; Same; 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.—Hence, 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
29
VOL. 293, JULY 23, 1998 29
and conclusions arrived at, as in this case, where Award Paper

No. 3/B-1 consists of eighteen (18) single spaced pages.
Same; Same; The Court has held that matters of remedy and
procedure are governed by the lex fori or the internal law of the
forum.—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 arbitrator’s
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.
Same; Due Process; The essence of due process is to be found

in the reasonable opportunity to be heard and submit any evidence
one may have in support of one’s defense or, stated otherwise, what
is repugnant to due process is the denial of opportunity to be
heard.—Time and again this Court has held that the essence of
due process is to be found in the reasonable opportunity to be
heard and submit any evidence one may have in support of one’s
defense or stated otherwise, what is repugnant to due process is
the denial of opportunity to be heard. Thus, there is no violation
of due process even if no hearing was conducted, where the party
was given a chance to explain his side of the controversy and he
waived his right to do so.
PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.

Quasha, Ancheta, Peña & Nolasco for petitioner.
Hernandez, Velicaria, Vibar & Santiago for private
respondent.
30

MARTINEZ, J.:
This proceeding involves the enforcement of a foreign

judgment rendered by the Civil Judge of Dehra Dun, India
in favor of the petitioner, OIL AND NATURAL GAS
COMMISSION and against the private respondent,
PACIFIC CEMENT COMPANY, INCORPORATED.
The petitioner is a foreign corporation owned and
controlled by the Government of India while the private
respondent is a private corporation duly organized and
existing under the laws of the Philippines. The present
conflict between the petitioner and the private respondent
has its roots in a contract entered into by and between both
parties on February 26, 1983 whereby the private
respondent undertook to supply the petitioner FOUR
THOUSAND THREE HUNDRED (4,300) metric tons of oil
well cement. In consideration therefor, the petitioner bound
itself to pay the private respondent the amount of FOUR
HUNDRED SEVENTY-SEVEN THOUSAND THREE
HUNDRED U.S. DOLLARS ($477,300.00) by opening an
irrevocable, divisible, and confirmed letter of credit in favor
of the latter. The oil well cement was loaded on board the
ship MV SURUTANA NAVA at the port of Surigao City,
Philippines for delivery at Bombay and Calcutta, India.
However, due to a dispute between the shipowner and the
private respondent, the cargo was held up in Bangkok and
did not reach its point of destination. Notwithstanding the
fact that the private respondent had already received
payment and despite several demands made by the
petitioner, the private respondent failed to deliver the oil
well cement. Thereafter, negotiations ensued between the
parties and they agreed that the private respondent will
replace the entire 4,300 metric tons of oil well cement with
Class “G” cement cost free at the petitioner’s designated
port. However, upon inspection, the Class “G” cement did
not conform to the petitioner’s specifications. The petitioner
then informed the private respondent that it was referring
its claim to an arbitrator pursuant to Clause 16 of their
contract which stipulates:
31
VOL. 293, JULY 23, 1998 31

“Except where otherwise provided in the supply order/contract all

questions and disputes, relating to the meaning of the
specifications, designs, drawings and instructions herein before
mentioned and as to quality of workmanship of the items ordered

or as to any other question, claim, right or thing whatsoever, in
any way arising out of or relating to the supply order/contract
design, drawing, specification, instruction or these conditions or
otherwise concerning the materials or the execution or failure to
execute the same during stipulated/extended period or after the
completion/abandonment thereof shall be referred to the sole
arbitration of the persons appointed by Member of the
Commission at the time of dispute. It will be no objection to any
such appointment that the arbitrator so appointed is a
Commission employer (sic) that he had to deal with the matter to
which the supply or contract relates and that in the course of his
duties as Commission’s employee he had expressed views on all or
any of the matter in dispute or difference.
“The arbitrator to whom the matter is originally referred being
transferred or vacating his office or being unable to act for any
reason the Member of the Commission shall appoint another
person to act as arbitrator in accordance with the terms of the
contract/supply order. Such person shall be entitled to proceed
with reference from the stage at which it was left by his
predecessor. Subject as aforesaid the provisions of the Arbitration
Act, 1940, or any Statutory modification or re-enactment thereof
and the rules made there under and for the time being in force
shall apply to the arbitration proceedings under this clause.
“The arbitrator may with the consent of parties enlarge the
time, from time to time, to make and publish the award.
1*
“The venue for arbitration shall be at Dehra dun.” *
On July 23, 1988, the chosen arbitrator, one Shri N.N.

Malhotra, resolved the dispute in petitioner’s favor setting
forth the arbitral award as follows:
_______________
1 Supply Order Contract, ANNEX “C” to PETITION in G.R. No.

114323, p. 5; Rollo, p. 114.
** Note: The contract and the foreign judgments or awards by the
Indian courts follow the British spelling of words for which sic will no
longer be indicated.
32

“NOW THEREFORE after considering all facts of the case, the

evidence, oral and documentary adduced by the claimant and
carefully examining the various written statements, submissions,
letters, telexes, etc. sent by the respondent, and the oral

arguments addressed by the counsel for the claimants, I, N.N.
Malhotra, Sole Arbitrator, appointed under clause 16 of the
supply order dated 26.2. 1983, according to which the parties, i.e.
M/S Oil and Natural Gas Commission and the Pacific Cement Co.,
Inc. can refer the dispute to the sole arbitration under the
provision of the Arbitration Act, 1940, do hereby award and direct
as follows:—
“The Respondent will pay the following to the claimant:—

1. Amount received by the Respondent
against the letter of credit No. 11/19
dated 28.2.1983 ---US$ 477,300.00
2. Re-imbursement of expenditure incurred
by the claimant on the inspection team’s
visit to Philippines in August 1985 --- US$ 3,881.00
3. L.C. Establishment charges incurred
by the claimant --- US$ 1,252.82
4. Loss of interest suffered by claimant
from 21.6.83 to 23.7.88 --- US$ 417,169.95
Total amount of award US$ 899,603.77
“In addition to the above, the respondent would also be liable to pay to
the claimant the interest at the rate of 6% on the above amount, with
effect from 24.7.1988 up to the actual date of payment by the Respondent
in full settlement of the claim as awarded or the date of the decree,
whichever is earlier.
“I determine the cost at Rs. 70,000/—equivalent to US $5,000 towards
the expenses on Arbitration, legal expenses, stamps duly incurred by the
claimant. The cost will be shared by the parties in equal proportion.
2
“Pronounced at Dehra Dun to-day, the 23rd of July 1988.”
_______________
2 Arbitral Award dated July 23, 1988, ANNEX “D” of the Petition, p. 17;
Rollo, pp. 143-144.
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VOL. 293, JULY 23, 1998 33

To enable the petitioner to execute the above award in its

favor, it filed a Petition before the Court of the Civil Judge
in Dehra Dun, India (hereinafter referred to as the foreign
court for brevity), praying that the decision of the
arbitrator be made “the Rule of Court” in India. The foreign
court issued notices to the private respondent for filing
objections to the petition. The private respondent complied

and sent its objections dated January 16, 1989.
Subsequently, the said court directed the private
respondent to pay the filing fees in order that the latter’s
objections could be given consideration. Instead of paying
the required filing fees, the private respondent sent the
following communication addressed to the Civil Judge of
Dehra Dun:
“The Civil Judge

Dehra Dun (U.P.) India
Re: Misc. Case No. 5 of 1989
M/S Pacific Cement Co.,
Inc. vs. ONGC Case
Sir:
1. We received your letter dated 28 April 1989

only last 18 May 1989.
2. Please inform us how much is the court fee to
be paid. Your letter did not mention the
amount to be paid.
3. Kindly give us 15 days from receipt of your
letter advising us how much to pay to comply
with the same.
Thank you for your kind consideration.
Pacific Cement Co., Inc.

By:
Jose Cortes,
3
Jr.
President”
Without responding to the above communication, the

foreign court refused to admit the private respondent’s
objec-
_______________
3 DECISION in CA-G.R. CV NO. 37080 promulgated on October 29,

1993, p. 10; Rollo, p. 103; RTC Records, pp. 143-144.
34

tions for failure to pay the required filing fees, and

thereafter issued an Order on February 7, 1990, to wit:
“ORDER
Since objections filed by defendant have been rejected through

Misc. Suit No. 5 on 7.2.90, therefore, award should be made ‘Rule
of the Court.’
“ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the

Court. On the basis of conditions of award decree is passed.
Award Paper No. 3/B-1 shall be a part of the decree. The plaintiff
shall also be entitled to get from defendant US$ 899,603.77 (US$
Eight Lakhs ninety nine thousand six hundred and three point
seventy seven only)4 alongwith 9% interest per annum till the last
date of realisation.”
Despite notice sent to the private respondent of the

foregoing order and several demands by the petitioner for
compliance therewith, the private respondent refused to
pay the amount adjudged by the foreign court as owing to
the petitioner. Accordingly, the petitioner filed a complaint
with Branch 30 of the Regional Trial Court (RTC) of
Surigao City for the enforcement of the aforementioned
judgment of the foreign court. The private respondent
moved to dismiss the complaint on the following grounds:
(1) plaintiff’s lack of legal capacity to sue; (2) lack of cause
of action; and (3) plaintiff’s claim or demand has been
waived, abandoned, or otherwise extinguished. The
petitioner filed its opposition to the said motion to dismiss,
and the private respondent, its rejoinder thereto. On
January 3, 1992, the RTC issued an order upholding the
petitioner’s legal capacity to sue, albeit dismissing the
complaint for lack of a valid cause of action. The RTC held
that the rule prohibiting foreign corporations transacting
business in the Philippines without a license from
maintaining a suit in Philippine courts admits of an
exception, that is,
_______________
4 ANNEX “F” of the Petition; Rollo, p. 157.
35
VOL. 293, JULY 23, 1998 35

when the foreign corporation5 is suing on an isolated

transaction as in this case. Anent the issue of the
sufficiency of the petitioner’s cause of action, however, the

RTC found the referral of the dispute between the parties
to the arbitrator under Clause 16 of their contract
erroneous. According to the RTC,
“[a] perusal of the above-quoted clause (Clause 16) readily shows

that the matter covered by its terms is limited to “ALL
QUESTIONS AND DISPUTES, RELATING TO THE MEANING
OF THE SPECIFICATION, DESIGNS, DRAWINGS AND
INSTRUCTIONS HEREIN BEFORE MENTIONED and as to the
QUALITY OF WORKMANSHIP OF THE ITEMS ORDERED or
as to any other questions, claim, right or thing whatsoever, but
qualified to ‘IN ANY WAY ARISING OR RELATING TO THE
SUPPLY ORDER/CONTRACT, DESIGN, DRAWING,
SPECIFICATION, etc.,’ repeating the enumeration in the opening
sentence of the clause.
“The court is inclined to go along with the observation of the
defendant that the breach, consisting of the non-delivery of the
purchased materials, should have been properly litigated before a
court of law, pursuant to Clause No. 15 of the Contract/Supply
Order, herein quoted, to wit:
‘JURISDICTION
All questions, disputes and differences, arising under out of or in

connection with this supply order, shall be subject to the EXCLUSIVE
JURISDICTION OF THE COURT, within the local limits of whose
6
jurisdiction and the place from which this supply order is situated.’ ”
The RTC characterized the erroneous submission of the

dispute to the arbitrator as a “mistake of law or fact
amounting to want of jurisdiction.” Consequently, the
proceedings had before the arbitrator were null and void
and the foreign court had therefore, adopted no legal
7
award
which could be the source of an enforceable right.
_______________
5 ORDER in Civil Case No. 4006, ANNEX “G” of the Petition, p. 1;

Rollo, p. 158.
6 Ibid., p. 4; Rollo, p. 161.
7 Ibid., p. 5; Rollo, p. 162.
36

The petitioner then appealed to the respondent Court of

Appeals which affirmed the dismissal of the complaint. In
its decision, the appellate court concurred with the RTC’s
ruling that the arbitrator did not have jurisdiction over the
dispute between the parties, thus, the foreign court could
not validly adopt the arbitrator’s award. In addition, the
appellate court observed 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 8
and distinctly the facts
and the law on which it is based. The appellate court ruled
further that the dismissal of the private respondent’s
objections for non-payment of the required legal fees,
without the foreign court first replying to the private
respondent’s query as to the amount of legal fees to be paid,
constituted want of notice or violation of due process.
Lastly, it pointed out that the arbitration proceeding was
defective because the arbitrator was appointed solely by
the petitioner, and the fact that the arbitrator was a former
employee of the latter gives rise
9
to a presumed bias on his
part in favor of the petitioner.
A subsequent motion for reconsideration by the
petitioner of the appellate court’s decision was denied,
thus, this petition for review on certiorari citing the
following as grounds in support thereof:
“RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

AFFIRMING THE LOWER COURT’S ORDER OF DISMISSAL
SINCE:
A. THE NON-DELIVERY OF THE CARGO WAS A

MATTER PROPERLY COGNIZABLE BY THE
PROVISIONS OF CLAUSE 16 OF THE CONTRACT;
_______________
8 Article VIII, Section 14 of the 1987 Constitution.

9 CA Decision, supra, pp. 8-12; Rollo, pp. 101-105.
37
VOL. 293, JULY 23, 1998 37

B. THE JUDGMENT OF THE CIVIL COURT OF

DEHRADUN, INDIA WAS AN AFFIRMATION OF
THE FACTUAL AND LEGAL FINDINGS OF THE
ARBITRATOR AND THEREFORE
ENFORCEABLE IN THIS JURISDICTION;
C. EVIDENCE MUST BE RECEIVED TO REPEL
THE EFFECT OF A PRESUMPTIVE10
RIGHT
UNDER A FOREIGN JUDGMENT.”
The threshold issue is whether or not the arbitrator had

jurisdiction over the dispute between the petitioner and the
private respondent under Clause 16 of the contract. To
reiterate, Clause 16 provides as follows:
“Except where otherwise provided in the supply order/contract all

questions and disputes, relating to the meaning of the
specification designs, drawings and instructions herein before
mentioned and as to quality of workmanship of the items ordered
or as to any other question, claim, right or thing whatsoever, in
any way arising out of or relating to the supply order/contract
design, drawing, specification, instruction or these conditions or
otherwise concerning the materials or the execution or failure to
execute the same during stipulated/extended period or after the
completion/abandonment thereof shall be referred to the sole
arbitration of the persons appointed by Member of the
Commission at the time of dispute. It will be no objection to any
such appointment that the arbitrator so appointed is a
Commission employer (sic) that he had to deal with the matter to
which the supply or contract relates and that in the course of his
duties as Commission’s employee he had expressed
11
views on all or
any of the matter in dispute or difference.”
The dispute between the parties had its origin in the non-
delivery of the 4,300 metric tons of oil well cement to the
petitioner. The primary question that may be posed,
therefore, is whether or not the non-delivery of the said
cargo is a proper subject for arbitration under the above-
quoted Clause 16. The petitioner contends that the same
was a matter within the purview of Clause 16, particularly
the phrase, “x x x or as to
_______________
10 Petition, supra, p. 9; Rollo, p. 73.

11 See Supply Order Contract.
38

any other questions, claim, right or thing whatsoever, in

any way arising or relating to the supply order/contract,
12
design, drawing, specification, instruction x x x.” It is
argued that the foregoing phrase allows considerable
latitude so as to include non-delivery of the cargo which
was a “claim, right or thing relating to the supply
order/contract.” The contention is bereft of merit. First of
all, the petitioner has misquoted the said phrase, shrewdly
inserting a comma between the words “supply
order/contract” and “design” where none actually exists. An
accurate reproduction of the phrase reads, “x x x or as to
any other question, claim, right or thing whatsoever, in any
way arising out of or relating to the supply order/contract
design, drawing, specification, instruction or these
conditions x x x.” The absence of a comma between the
words “supply order/contract” and “design” indicates that
the former cannot be taken separately but should be
viewed in conjunction with the words “design, drawing,
specification, instruction or these conditions.” It is thus
clear that to fall within the purview of this phrase, the
“claim, right or thing whatsoever” must arise out of or
relate to the design, drawing, specification, or instruction of
the supply order/contract. The petitioner also insists that
the non-delivery of the cargo is not only covered by the
foregoing phrase but also by the phrase, “x x x or otherwise
concerning the materials or the execution or failure to
execute the same during the stipulated/extended period or
after completion/abandonment thereof x x x.”
The doctrine of noscitur a sociis, although a rule in the
construction of statutes, is equally applicable in the
ascertainment of the meaning and scope of vague
contractual stipulations, such as the aforementioned
phrase. According to the maxim noscitur a sociis, where a
particular word or phrase is ambiguous in itself or is
equally susceptible of various meanings, its correct
construction may be made clear and specific by considering
the company of the words in which it is found or with
which it is associated, or stated differently, its obscurity or
doubt may be reviewed by reference to associated
_______________
12 Petition, supra, pp. 11-12; Rollo, pp. 75-76.
39
VOL. 293, JULY 23, 1998 39

13
words. A close examination of Clause 16 reveals that it
covers three matters which may be submitted to
arbitration namely,
(1) all questions and disputes, relating to the meaning

of the specification designs, drawings and
instructions herein before mentioned and as to
quality of workmanship of the items ordered; or
(2) any other question, claim, right or thing
whatsoever, in any way arising out of or relating to
the supply order/contract design, drawing,
specification, instruction or these conditions; or
(3) otherwise concerning the materials or the execution
or failure to execute the same during
stipulated/extended period or after the
completion/abandonment thereof.
The first and second categories unmistakably refer to

questions and disputes relating to the design, drawing,
instructions, specifications or quality of the materials of the
supply/order contract. In the third category, the clause,
“execution or failure to execute the same,” may be read as
“execution or failure to execute the supply order/contract.”
But in accordance with the doctrine of noscitur a sociis, this
reference to the supply order/contract must be construed in
the light of the preceding words with which it is associated,
meaning to say, as being limited only to the design,
drawing, instructions, specifications or quality of the
materials of the supply order/contract. The non-delivery of
the oil well cement is definitely not in the nature of a
dispute arising from the failure to execute the supply
order/contract design, drawing, instructions, specifications
or quality of the materials. That Clause 16 should pertain
only to matters involving the technical aspects of the
contract is but a logical inference considering that the
underlying purpose of a referral to arbitration is for such
technical matters to be deliberated upon by a person
_______________
13 Motoomul, et al. vs. Dela Paz, et al., 187 SCRA 743, 753 [1990];
Luzon Stevedoring Co. vs. Trinidad, 43 Phil. 804 [1922].
40

possessed with the required skill and expertise which may

be otherwise absent in the regular courts.
This Court agrees with the appellate court in its ruling
that the non-delivery of the oil well cement is a matter
properly cognizable by the regular courts as stipulated by
the parties in Clause 15 of their contract:
“All questions, disputes and differences, arising under out of or in

connection with this supply order, shall be subject to the exclusive
jurisdiction of the court, within the local limits of whose
jurisdiction
14
and the place from which this supply order is
situated.”
The following fundamental principles in the interpretation

of contracts and other instruments served as our guide in
arriving at the foregoing conclusion:
“ART. 1373. If some stipulation of any contract should admit of

several meanings, it shall be understood as bearing
15
that import
which is most adequate to render it effectual.”
“ART. 1374. The various stipulations of a contract shall be
interpreted together, attributing to the doubtful16 ones that sense
which may result from all of them taken jointly.”
“Sec. 11. Instrument construed so as to give effect to all
provisions. In the construction of an instrument, where there are
several provisions or particulars, such a construction
17
is, if
possible, to be adopted as will give effect to all.”
Thus, this Court has held that as in statutes, the

provisions of a contract should not be read in isolation from
the rest of the instrument but, on the contrary,
18
interpreted
in the light of the other related provisions. The whole and
every part of a
_______________
14 Terms and Conditions of Supply Order, “ANNEX C-1” of the Petition,

p. 8; Rollo, pp. 125-126; RTC Records, pp. 17-26.
15 Article 1373 of the Civil Code.
16 Article 1374 of the Civil Code.
17 Rule 130, Section 11 of the Rules of Court.
18 De Leon vs. Court of Appeals, 205 SCRA 612, 620 [1992].
41
VOL. 293, JULY 23, 1998 41

contract must be considered in fixing the meaning of any of

its parts and in order to produce a harmonious whole.
Equally applicable is the canon of construction that in
interpreting a statute (or a contract as in this case), care
should be taken that every part thereof be given effect, on
the theory that it was enacted as an integrated measure
and not as a hodgepodge of conflicting provisions. The rule
is that a construction that would render a provision
inoperative should be avoided; instead, apparently
inconsistent provisions should be reconciled whenever 19
possible as parts of a coordinated and harmonious whole.
The petitioner’s interpretation that Clause 16 is of such
latitude as to contemplate even the non-delivery of the oil
well cement would in effect render Clause 15 a mere
superfluity. A perusal of Clause 16 shows that the parties
did not intend arbitration to be the sole means of settling
disputes. This is manifest from Clause 16 itself which is
prefixed with the proviso, “Except where otherwise
provided in the supply order/contract x x x,” thus indicating
that the jurisdiction of the arbitrator is not all
encompassing, and admits of exceptions as may be
provided elsewhere in the supply order/contract. We believe
that the correct interpretation to give effect to both
stipulations in the contract is for Clause 16 to be confined
to all claims or disputes arising from or relating to the
design, drawing, instructions, specifications or quality of
the materials of the supply order/contract, and for Clause
15 to cover all other claims or disputes.
The petitioner then asseverates that granting, for the
sake of argument, that the non-delivery of the oil well
cement is not a proper subject for arbitration, the failure of
the replacement cement to conform to the specifications of
the contract is a matter clearly falling within the ambit of
Clause 16. In this contention, we find merit. When the
4,300 metric tons of oil well cement were not delivered to
the petitioner, an agreement was forged between the latter
and the private
_______________
19 JMM Promotions & Management, Inc. vs. NLRC, 228 SCRA 129, 134
[1993].
42
respondent that Class “G” cement would be delivered to the

petitioner as replacement. Upon inspection, however, the
replacement cement was rejected as it did not conform to
the specifications of the contract. Only after this latter
circumstance was the matter brought before the arbitrator.
Undoubtedly, what was referred to arbitration was no
longer the mere non-delivery of the cargo at the first
instance but also the failure of the replacement cargo to
conform to the specifications of the contract, a matter
clearly within the coverage of Clause 16.
The private respondent posits that it was under no legal
obligation to make replacement and that it undertook the
latter only “in the spirit
20
of liberality and to foster good
business relationship.” Hence, the undertaking to deliver
the replacement cement and its subsequent failure to
conform to specifications are not anymore subject of the
supply order/contract or any of the provisions thereof. We
disagree.
As per Clause 7 of the supply order/contract, the private
respondent undertook to deliver the 4,300 metric tons of oil
well cement at “BOMBAY 21
(INDIA) 2181 MT and
CALCUTTA 2119 MT.” The failure of the private
respondent to deliver the cargo to the designated places
remains undisputed. Likewise, the fact that the petitioner
had already paid for the cost of the cement is not contested
by the private respondent. The private respondent claims,
however, that it never benefited from the transaction as it
was not able to recover
22
the cargo that was unloaded at the
port of Bangkok. First of all, whether or not the private
respondent was able to recover the cargo is immaterial to
its subsisting duty to make good its promise to deliver the
cargo at the stipulated place of delivery. Secondly, we find
it difficult to believe this representation. In its
Memorandum filed before this Court, the private
respondent asserted that the Civil Court of Bangkok had
already ruled that
_______________
20 Private Respondent’s Memorandum in G.R. No. 114323, p. 17.

21 Supra, Supply Order, p. 2; Rollo, p. 110.
22 Supra, Private Respondent’s Memorandum, p. 18.
43
VOL. 293, JULY 23, 1998 43
the non-delivery
23
of the cargo was due solely to the fault of
the carrier. It is, therefore, but logical to assume that the
necessary consequence of this finding is the eventual
recovery by the private respondent of the cargo or the value
thereof. What inspires credulity is not that the replacement
was done in the spirit of liberality but that it was
undertaken precisely because of the private respondent’s
recognition of its duty to do so under the supply
order/contract, Clause 16 of which remains in force and
effect until the full execution thereof.
We now go to the issue of 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. The pertinent portion of
the judgment of the foreign court reads:
“ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court.
On the basis of conditions of award decree is passed. Award Paper
No. 3/B-1 shall be a part of the decree. The plaintiff shall also be
entitled to get from defendant US$ 899,603.77 (US$ Eight Lakhs
ninety nine thousand six hundred and three point seventy seven
only) alongwith
24
9% interest per annum till the last date of
realisation.”
As specified in the order of the Civil Judge of Dehra Dun,

“Award Paper No. 3/B-1 shall be a part of the decree.” This
is a categorical declaration that the foreign court adopted
the findings of facts and law of the arbitrator as contained
in the latter’s Award Paper. Award Paper No. 3/B-1,
contains an exhaustive discussion of the respective claims
and defenses of the parties, and the arbitrator’s evaluation
of the same. Inasmuch as the foregoing is deemed to have
been incorporated into the foreign court’s judgment the
appellate court was in
_______________
23 Ibid.
24 Court of Dehra Dun, Suit No. 677 of 1988, ONGC vs. Pacific Cement,
7-2-90; Rollo, p. 157.
44

error when it described the latter to be a “simplistic 25

decision containing literally, only the dispositive portion.”
The constitutional mandate 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
does not preclude the validity of “memorandum decisions”
which adopt by reference the findings of fact and
conclusions of law contained in the26 decisions of inferior
tribunals. In Francisco v. Permskul, this Court held that
the following memorandum decision of the Regional Trial
Court of Makati did not transgress the requirements of
Section 14, Article VIII of the Constitution:
“MEMORANDUM DECISION
After a careful perusal, evaluation and study of the records of this

case, this Court hereby adopts by reference the findings of fact and
conclusions of law contained in the decision of the Metropolitan
Trial Court of Makati, Metro Manila, Branch 63 and finds that
there is no cogent reason to disturb the same.
“WHEREFORE,
27
judgment appealed from is hereby affirmed in
toto.” (Italics supplied.)
This Court had occasion to make a similar pronouncement

28
in the earlier case of Romero v. Court of Appeals, where
the assailed decision of the Court of Appeals adopted the
findings and disposition of the Court of Agrarian Relations
in this wise:
“We have, therefore, carefully reviewed the evidence and made a

re-assessment of the same, and We are persuaded, nay compelled,
to affirm the correctness of the trial court’s factual findings and
the soundness of its conclusion. For judicial convenience and
expediency, therefore, We hereby adopt by way of reference, the
findings of facts
_______________
25 CA Decision.
26 173 SCRA 324 [1989].
27 Ibid., p. 326.
28 147 SCRA 183 [1987].
45
VOL. 293, JULY 23, 1998 45

and conclusions of the court a 29quo spread in its decision, as

integral part of this Our decision.” (Italics supplied.)
Hence, even in this jurisdiction, incorporation by reference

is allowed if only to avoid the cumbersome reproduction of
the decision of the lower courts,
30
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.
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 31
courts of
the country in which the judgment is relied on. This Court
has held that matters of remedy and procedure are 32
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 arbitrator’s 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.
The private respondent claims that its right to due
process had been blatantly violated, first by reason of the
fact that the foreign court never answered its queries as to
the amount of docket fees to be paid then refused to admit
its objections for
_______________
29 Ibid., p. 189.
30 Francisco v. Permskul, 173 SCRA 324, 333.
31 Francisco, Vicente J., The Revised RULES OF COURT in the
Philippines, Volume II, pp. 891-892, 1966 ed. citing 31 Am. Jur. 153-154.
32 Northwest Orient Airlines, Inc. vs. Court of Appeals, 241 SCRA 192,
199 [1995].
46

failure to pay the same, and second, because of the

presumed bias on the part of the arbitrator who was a
former employee of the petitioner.
Time and again this Court has held that the essence of
due process is to be found in the reasonable opportunity to
be heard and submit
33
any evidence one may have in support
of one’s defense or stated otherwise, what is repugnant
34
to
due process is the denial of opportunity to be heard. Thus,
there is no violation of due process even if no hearing was
conducted, where the party was given a chance to explain
his35 side of the controversy and he waived his right to do
so.
In the instant case, the private respondent does not
deny the fact that it was notified by the foreign court to file
its objections to the petition, and subsequently, to pay legal
fees in order for its objections to be given consideration.
Instead of paying the legal fees, however, the private
respondent sent a communication to the foreign court
inquiring about the correct amount of fees to be paid. On
the pretext that it was yet awaiting the foreign court’s
reply, almost a year passed without the private respondent
paying the legal fees. Thus, on February 2, 1990, the
foreign court rejected the objections of the private
respondent and proceeded to adjudicate upon the
petitioner’s claims. We cannot subscribe to the private
respondent’s claim that the foreign court violated its right
to due process when it failed to reply to its queries nor
when the latter rejected its objections for a clearly
meritorious ground. The private respondent was afforded
sufficient opportunity to be heard. It was not incumbent
upon the foreign court to reply to the private respondent’s
written communication. On the
____________________________
33 Roces vs. Aportadera, 243 SCRA 108 [1995]; Mutuc vs. Court of
Appeals, 190 SCRA 43, 49 [1990]; Richards vs. Asoy, 152 SCRA 45 [1987];
Tajonera vs. Lamaroza, 110 SCRA 438 [1981].
34 Korean Airlines Co., Ltd. vs. Court of Appeals, 247 SCRA 599, 603
[1995].
35 Roces vs. Aportadera, supra, p. 114; Stayfast Sunset View
Condominium Corporation vs. NLRC, 228 SCRA 466 [1993]; Villareal vs.
Court of Appeals, 219 SCRA 292 [1993].
47
VOL. 293, JULY 23, 1998 47

contrary, a genuine concern for its cause should have

prompted the private respondent to ascertain with all due
diligence the correct amount of legal fees to be paid. The
private respondent did not act with prudence and diligence
thus its plea that they were not accorded the right to
procedural due process cannot
36
elicit either approval or
sympathy from this Court.
The private respondent bewails the presumed bias on
the part of the arbitrator who was a former employee of the
petitioner. This point deserves scant consideration in view
of the following stipulation in the contract:
“x x x. It will be no objection to any such appointment that the

arbitrator so appointed is a Commission employer (sic) that he had
to deal with the matter to which the supply or contract relates and
that in the course of his duties as Commission’s employee he had
expressed views
37
on all or any of the matter in dispute or
difference.” (Italics supplied.)
Finally, we reiterate hereunder our pronouncement in the 38

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
_______________
36 B.R. Sebastian Enterprises, Inc. vs. Court of Appeals, 206 SCRA 28 [1992].
37 Supply Order, supra.
38 241 SCRA 192, 199 [1995].
48

presumption that it was acting in the lawful exercise 39

of
jurisdiction and has regularly performed its official duty.”
Consequently, the party attacking a foreign judgment, the

private respondent herein, 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 the petitioner 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.
WHEREFORE, the instant petition is GRANTED, and
the assailed decision of the Court of Appeals sustaining the
trial court’s dismissal of the OIL AND NATURAL GAS
COMMISSION’s complaint in Civil Case No. 4006 before
Branch 30 of the RTC of Surigao City is REVERSED, and
another in its stead is hereby rendered ORDERING private
respondent PACIFIC CEMENT COMPANY, INC. to pay to
petitioner the amounts adjudged in the foreign judgment
subject of said case.
SO ORDERED.
Regalado (Chairman), Melo and Puno, JJ., concur.

Mendoza, J., No part, having taken part in the
consideration of this case below.
Petition granted. Judgment reversed, another one

entered.
Notes.—Statutes should be construed in the light of the

object to be achieved and the evil or mischief to be
suppressed, and they should be given such construction as
will advance the object suppress the mischief, and secure
the
_______________
39 Ibid.
49
VOL. 293, JULY 23, 1998 49

Premiere Development Bank vs. NLRC
benefits intended. (Paat vs. Court of Appeals, 266 SCRA

167 [1997])
Legislative intent is determined principally from the
language of the statute. (Azarcon vs. Sandiganbayan, 268
SCRA 747 [1997])
——o0o——
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8/23/2018 SUPREME COURT REPORTS ANNOTATED VOLUME 293

26 SUPREME COURT REPORTS ANNOTATED

OIL AND NATURAL GAS COMMISSION, petitioner, vs.

Statutory Construction; Doctrine of Noscitur a Sociis;

VOL. 293, JULY 23, 1998 27

Oil and Natural Gas Commission vs. Court of Appeals

contractual stipulations, such as the aforementioned phrase.

Same; Same; As in statutes, the provisions of a contract

Same; Same; The non-delivery of the oil well cement is

28 SUPREME COURT REPORTS ANNOTATED

Oil and Natural Gas Commission vs. Court of Appeals

Same; Same; Court agrees with the appellate court in its

parties in Clause 15 of their contract.—This Court agrees with the

Remedial Law; Constitutional Law; Judgment; The

Same; Same; Same; Even in this jurisdiction, incorporation by

VOL. 293, JULY 23, 1998 29

Oil and Natural Gas Commission vs. Court of Appeals

and conclusions arrived at, as in this case, where Award Paper

Same; Due Process; The essence of due process is to be found

PETITION for review on certiorari of a decision of the

The facts are stated in the opinion of the Court.

30 SUPREME COURT REPORTS ANNOTATED

This proceeding involves the enforcement of a foreign

VOL. 293, JULY 23, 1998 31

“Except where otherwise provided in the supply order/contract all

mentioned and as to quality of workmanship of the items ordered

On July 23, 1988, the chosen arbitrator, one Shri N.N.

1 Supply Order Contract, ANNEX “C” to PETITION in G.R. No.

32 SUPREME COURT REPORTS ANNOTATED

“NOW THEREFORE after considering all facts of the case, the

letters, telexes, etc. sent by the respondent, and the oral

“The Respondent will pay the following to the claimant:—

“Pronounced at Dehra Dun to-day, the 23rd of July 1988.”

VOL. 293, JULY 23, 1998 33

To enable the petitioner to execute the above award in its

objections to the petition. The private respondent complied

“The Civil Judge

1. We received your letter dated 28 April 1989

Pacific Cement Co., Inc.

Without responding to the above communication, the

3 DECISION in CA-G.R. CV NO. 37080 promulgated on October 29,

34 SUPREME COURT REPORTS ANNOTATED

tions for failure to pay the required filing fees, and

Since objections filed by defendant have been rejected through

Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the

Despite notice sent to the private respondent of the

4 ANNEX “F” of the Petition; Rollo, p. 157.

VOL. 293, JULY 23, 1998 35

when the foreign corporation5 is suing on an isolated

sufficiency of the petitioner’s cause of action, however, the

“[a] perusal of the above-quoted clause (Clause 16) readily shows

All questions, disputes and differences, arising under out of or in

The RTC characterized the erroneous submission of the

5 ORDER in Civil Case No. 4006, ANNEX “G” of the Petition, p. 1;

36 SUPREME COURT REPORTS ANNOTATED

The petitioner then appealed to the respondent Court of

“RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

A. THE NON-DELIVERY OF THE CARGO WAS A

8 Article VIII, Section 14 of the 1987 Constitution.

VOL. 293, JULY 23, 1998 37

B. THE JUDGMENT OF THE CIVIL COURT OF

The threshold issue is whether or not the arbitrator had

“Except where otherwise provided in the supply order/contract all

10 Petition, supra, p. 9; Rollo, p. 73.