May a right created by statute in one state
1. Loucks v. Standard Oil Co., 224 N.Y. 99,
120 N.E. 198, 1918 N.Y. LEXIS 862 (N.Y.
1918)
Brief Fact Summary.
Loucks was killed in Massachusetts when he
was run down by an employee of Standard
Oil (Defendant). His administrator
(Plaintiff) brought a wrongful death suit in
New York based on the Massachusetts
wrongful death statute.
Synopsis of Rule of Law.
A right of action created by the law of a
neighboring state is enforceable in any
other state unless the law is penal in the
international sense or enforcement of the
right would violate the strong public policy
of the forum.
Facts.
Loucks was killed when a negligent driver
employed by Standard Oil (Defendant) ran
him down. The accident took place in
Massachusetts, but he was a resident of
New York, and his administrator (Plaintiff)
brought a suit for wrongful death in New
York. The suit was based on the
Massachusetts wrongful death statute,
which provided a minimum recovery of
$500 and a maximum recovery of $10,000
with the amount of damages awarded to be
based on the degree of fault of the
defendant. Standard Oil (Defendant)
moved to dismiss the complaint on the
grounds that the Massachusetts Statute
was penal in nature and therefore
unenforceable in New York.
Issue.
be enforceable in another state if the
enforcement of the right would not violate
the public policy of the forum and the
underlying statute is not penal in nature?
Held.
(Cardozo, J.) Yes. One state’s penal laws
are not enforceable in any other
state. Whether a statute is penal depends
on the type of liability it creates. Where
the penalty is awarded to the state or a
member of the public is suing in the
interest of the whole community to right a
public wrong, the statute and/or recovery is
penal. While this statute is penal in the
sense that damages are awarded on the
basis of the defendant’s conduct rather
than the plaintiff’s measure of damages,
the right to recover is private and therefore
the statute is not penal in the international
sense. The public policy of New York is
not violated by the enforcement of the
right, as New York recognizes the right of
survivors to recover for wrongful
death. The fact that the Massachusetts
Statute is different in the way it is enforced
does not make the Massachusetts Statute
wrong. The forum may refuse to enforce a
right based on a foreign statute only where
enforcement would violate an express
strong public policy of the forum. That is
not the case here and since the Statute is
not penal in the international sense, there
is no bar to its being enforced in New
York. Judgment reversed and order of the
Special Term affirmed.
Discussion.
Note that the forum has much wider
latitude in applying its own public policy to
deny relief where the original action is
being brought and where it is not a suit on
a judgment obtained somewhere else.
2. GODARD vs. GRAY
Plaintiffs Godar are Frenchmen sued the
defendants, who are Englishmen, on a
charter party made at Sunderland, which
charter party contained the following
clause: "Penalty for non-performance of
this agreement, estimated amount of
freight." The French Court below, treating
this clause as fixing the amount of
liquidated damages, gave judgment against
the defendants for the amount of freight on
two voyages. On appeal, the superior Court
reduced the amount to the estimated
freight of one voyage, giving as their reason
that the charter party itself and the tribunal
proceeds to observe that the amount thus
decreed was after all more than sufficient
to cover all the plaintiffs' loss.
All parties in France seem to have
taken the word for granted in the charter
party which is to be understood in their
natural meaning,
However in English law is accurately
expressed that passage been brought to the
notice of the French tribunal, it would have
known that in an English charter party, as is
there stated, "Such a clause is not the
absolute limit of damages on either side;
the party may, if he thinks fit, ground his
action upon the other clauses or covenants,
and may, in such action, recover damages
beyond the amount of the penalty, if in
justice they shall be found to exceed it. On
the other hand, if the party sue on such a
penal clause, he cannot, in effect, recover
more than the damage actually sustained."
But it was not brought to the notice of the
French tribunal that according to the
interpretation put by the English law on
such a contract, a penal clause of this sort
was in fact idle and inoperative. If it had
been, they would, probably, have
interpreted the English contract made in
England according to the English
construction.1
ISSUE: whether this is a bar to the action
brought in England to enforce that
judgment.
HELD:
"It is not an admitted principle of the
law of nations that a State is bound to
enforce within its territories the judgment
of a foreign tribunal. Several of the
continental nations (including France) do
not enforce the judgments of other
countries, unless where there are reciprocal
treaties to that effect.
However in England and in those
States which are governed by the common
Iaw, such judgments are enforced, not by
virtue of any treaty, nor by virtue of any
statute, but upon a principle very well
stated by Parke, B., in Williams v. Jones (13
M. & W. 628; 14 L.J. Exch. 145):
"Where a Court of competent
jurisdiction has adjudicated a certain sum to
be due from one person to another, a legal
obligation aribes to pay the sum, on which
an action of debt to enforce the judgment
may be maintained. It is in this way that the
judgments of foreign and colonial Courts
are supported and enforced."
A judgment in personam of a foreign
court of competent jurisdiction cannot be
questioned by the parties on the merits
when recognition or enforcement of the
judgment is sought in England,
notwithstanding that it may have been
wrong either in fact or law. This derived
from the mode of pleading an action on a
foreign judgment in debt, and not merely as
evidence of the obligation to pay the
underlying liability.
3. Hilton vs. Guyot
(1895)
FACTS: Guyot, a Frenchman, sued Hilton, an
American, in a French court for the
recovery of a sum of money. The French
court rendered judgment in favor of Guyot.
Plaintiff brought the action to a US court to
recover the sum of money adjudged by the
French court to be due from the defendant
to the plaintiff.
ISSUE: Whether or not a judgment of a
foreign nation’s court entitled to full credit
and has a conclusive effect when sued to
other nation.
HELD: No law has any effect, of its own
force, beyond the limits of the sovereignty
from which its authority is derived. The
extent to which the law of one nation, as
put in force within its territory, whether by
executive order, by legislative act, or by
judicial decree shall be allowed to operate
within the dominion of another nation
depends upon the comity of nations.
A foreign judgment is not entitled to full
faith and credit when sued upon another
nation, but is a prima facie evidence only of
the claim.
4. Philippine Aluminum Wheels vs FASGI
Enterprises
In 1978, FASGI Enterprises Inc. (FASGI), a
foreign corporation organized under the
laws of California, USA, entered into a
contract with Philippine Aluminum Wheels,
Inc. (PAWI), a Philippine corporation,
whereby the latter agrees to deliver 8,594
wheels to FASGI. FASGI received the wheels
and so it paid PAWI $216,444.30. Later
however, FASGI found out that the wheels
are defective and did not comply with
certain US standards. So in 1979, FASGI
sued PAWI in a California court. In 1980, a
settlement was reached but PAWI failed to
comply with the terms of the agreement. A
second agreement was made but PAWI was
again remiss in its obligation. The
agreement basically provides that PAWI
shall return the purchase price in
installment and conversely, FASGI shall
return the wheel in installment. PAWI was
only able to make two installments (which
were actually made beyond the scheduled
date). FASGI also returned the
corresponding number of wheels.
Eventually in 1982, FASGI sought the
enforcement of the agreement and it
received a favorable judgment from the
California court. PAWI is then ordered to
pay an equivalent of P252k plus damages
but FASGI was not ordered to return the
remaining wheels. PAWI was not able to
comply with the court order in the US. So in
1983, FASGI filed a complaint for the
enforcement of a foreign judgment with
RTC-Makati. Hearings were made and in
1990, the trial judge ruled against FASGI on
the ground that the foreign judgment is
tainted with fraud because FASGI was not
ordered to return the remaining wheels
(unjust enrichment) and that PAWI’s
American lawyer entered into the
agreements without the consent of PAWI.
On appeal, the Court of Appeals reversed
the trial court.
ISSUE: Whether or not the foreign
judgment may be enforced here in the
Philippines.
HELD: Yes. The judgment is valid. 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.
In this case, PAWI was very well
represented in the California court. PAWI’s
insistence that its American lawyer colluded
with FASGI; that he entered into the
compromise agreement without PAWI’s
authority is belied by the fact that PAWI
initially complied with the agreement. It did
not disclaim the agreement. It sent two
installments (though belatedly) but failed to
comply on the rest. It cannot now aver that
the agreement is without its authority.
Further, it is just but fair for the California
court not to order FASGI to return the
remaining wheels because of PAWI’s
arrears.
5. PHILSEC INVESTMENT et al vs.CA et al
G.R. No. 103493
June 19, 1997
FACTS:
Private respondent Ducat obtained
separate loans from petitioners Ayala
International Finance Limited (AYALA) and
Philsec Investment Corp (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
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.
(ATHONA) a parcel of land in Texas, U.S.A.,
while PHILSEC and AYALA extended a loan
to ATHONA as initial payment of the
purchase price. The balance was to be paid
by means of a promissory note executed by
ATHONA in favor of 1488, Inc.
Subsequently, upon their receipt of the
money 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.
Accordingly, private respondent 1488, Inc.
sued petitioners PHILSEC, AYALA, and
ATHONA in the United States for payment
of the balance and for damages for breach
of contract and for fraud allegedly
perpetrated by petitioners in
misrepresenting the marketability of the
shares of stock delivered to 1488, Inc.
under the Agreement.
While the Civil Case 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 RTC Makati. The
complaint reiterated the allegation of
petitioners in their respective
counterclaims in the Civil Action in the
United States District Court of Southern
Texas that private respondents committed
fraud by selling the property at a price 400
percent more than its true value.

Ducat moved to dismiss the Civil Case in the
RTC-Makati on the grounds of (1) litis
pendentia, vis-a-vis the Civil Action in the
U.S., (2) forum non conveniens, and (3)
failure of petitioners PHILSEC and BPI-IFL to
state a cause of action.
The trial court granted Ducat’s MTD, 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.
Petitioners appealed to the CA, arguing that
the trial court erred in applying the
principle of litis pendentia and forum non
conveniens.
The CA affirmed the dismissal of Civil Case
against Ducat, 1488, Inc., and Daic on the
ground of litis pendentia.
ISSUE:
is the Civil Case in the RTC-Makati barred by
the judgment of the U.S. court?
HELD:
CA reversed. Case remanded to RTC-Makati
NO
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. 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. Rule 39, §50
provides:
Sec. 50. Effect of foreign judgments. —
The effect of a judgment of a tribunal of
a foreign country, having jurisdiction to
pronounce the judgment is as follows:
(a) In case of a judgment upon a
specific thing, the judgment is
conclusive upon the title to the thing;
(b) In case of a judgment against a
person, the judgment is presumptive
evidence of a right as between the
parties and their successors in interest
by a subsequent title; but the judgment
may be repelled by evidence of a want
of jurisdiction, want of notice to the
party, collusion, fraud, or clear mistake
of law or fact.
 In the case at bar, it cannot be said
that petitioners were given the
opportunity to challenge the
judgment of the U.S. court as basis
for declaring it res judicata or
conclusive of the rights of private
respondents. The proceedings in
the trial court were summary.
Neither the trial court nor the
appellate court was even furnished
copies of the pleadings in the U.S.
court or apprised of the evidence
presented thereat, to assure a
proper determination of whether
the issues then being litigated in
the U.S. court were exactly the
issues raised in this case such that
the judgment that might be
rendered would constitute res
judicata.
Second. Nor is the trial court’s refusal
to take cognizance of the case
justifiable under the principle of forum
non conveniens:
First, a MTD is limited to the grounds
under Rule 16, sec.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.
6. Klaxon Co. v. Stentor Elec. Mfg. Co., 313
U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477,
1941 U.S. LEXIS 1298, 49 U.S.P.Q. (BNA)
515 (U.S. June 2, 1941)
Brief Fact Summary
Stentor Elec. Mfg. Co. (Plaintiff) received
judgment for breach of contract based on
Klaxon’s (Defendant) failure to manufacture
and sell particular goods. Defendant
appeals that part of the order allowing
interest on the damages from when the suit
was filed.
Synopsis of Rule of Law
Federal district courts are required to apply
the conflict of law rules of the state where
the court sits when deciding a case based
upon diversity jurisdiction.
Facts
Stentor Elec. Mfg. Co. (Plaintiff) transferred
its entire business to Klaxon Co. (Defendant)
in 1918 in return for a contractual promise
by Defendant to use best efforts to
promote the sale of particular items Stentor
(Plaintiff) retained patent rights
for. Plaintiff was a New York corporation,
Defendant a Delaware corporation, and the
agreement was executed and partially
performed in New York. Plaintiff, suing in
diversity jurisdiction, brought suit against
Defendant in federal district court in
Delaware in 1929 for breach of the
agreement. A judgment of $100,000 was
rendered in favor of Plaintiff. Plaintiff
then moved to modify the judgment to add
interest at the rate of six percent from the
date the action was commenced. The
motion was based on a New York statute
and was granted by the district court on the
grounds the issue was substantive and that
New York law governed the
dispute. Defendant appealed the motion,
claiming that the district court was bound
to follow the substantive law of Delaware in
diversity actions. The circuit court of
appeals affirmed on the basis that the New
York rule was the “better view.”�
Issue
Must federal district courts apply the
conflict of law rules prevailing in the state
where the court sits when deciding a case
based upon diversity jurisdiction?
Held
(Reed, J.) Yes. Federal courts cannot
make independent determinations of what
the law in the state where the court sits
should be, but are required to apply the
conflicts rules of the state when deciding
diversity jurisdiction cases. An independent
general law of conflicts does not
exist. Each state in the federal system is
free to determine whether a specified
matter is to be governed by the law of the
forum or some other law. There must,
therefore, be uniformity within each state
in order to avoid forum shopping between
state and federal courts within each
state. The proper function of the federal
courts is to determine what the state law is,
rather than what the law should be. Any
other decision would lead to a disruption of
the equal administration of justice in state
and federal courts that sit in the same state
and apply the same state law. Reversed
and remanded.
Discussion
The Klaxon case expands the Erie rule to
include the state conflict of law rules where
they apply to outcome determinative
issues. On remand, the circuit court found
that the Delaware conflicts rules referred
the issue to New York law, and so the
decision remained the same through the
use of differing rules.
7.BORTHWICK vs. CASTRO BARTOLOME
FACTS
Petitioner William Borthwick, an American
citizen living in the Philippines, owned real
property interests in Hawaii. In his business
dealings with private respondent, Joseph
Scallon, Borthwick issued the promissory
notes now sued upon, but failed to pay the
sums owing upon maturity and despite
demands. The promissory notes provided
that upon default, action may be brought
for collection in Los Angeles, California, or
at Scallon's option, in Manila or Honolulu.
Borthwick was served with summons when
he was in California, pursuant to Hawaiian
law allowing service of process on a person
outside the territorial confines of the State.
Because Borthwick ignored the summons, a
judgment by default was entered against
him.
However, Scallon's attempt to have the
judgment executed in Hawaii and
California failed because Borthwick had no
assets in those states. Scallon then came
to the Philippines and brought suit against
Borthwick seeking enforcement of the
default judgment of the Hawaii court.
Again, after due proceedings, judgment by
default was rendered against him, ordering
Borthwick to pay Scallon the amount
prayed for.
The court issued an amendatory order and
upon receipt by Borthwick, he moved for a
new trial, alleging that the promissory
notes did not arise from business dealings
in Hawaii, nor did he own real estate
therein. He contended that the judgment of
the court of Hawaii is unenforceable in the
Philippines because it was invalid for want
of jurisdiction over the cause of action and
over his person. The motion was denied,
hence this petition.]
RULING
"It is true that a foreign judgment against a
person is merely "presumptive evidence of
a right as between the parties," and
rejection thereof may be justified, among
others, by "evidence of a want of
jurisdiction" of the issuing authority, under
Rule 39 of the Rules of Court. In the case at
bar, the jurisdiction of the Circuit Court of
Hawaii hinged entirely on the existence of
either of two facts in accordance with its
State laws, i.e., either Borthwick owned real
property in Hawaii, or the promissory
notes' sued upon resulted from his business
transactions therein. Scallon's complaint
clearly alleged both facts. Borthwick was
accorded opportunity to answer the
complaint and impugn those facts, but he
failed to appear and was in consequence
declared in default. There thus exists no
evidence in the record of the Hawaii case
upon which to lay a conclusion of lack of
jurisdiction, as Borthwick now urges.
The opportunity to negate the foreign
court's competence by proving the
non-existence of said jurisdictional facts
established in the original action, was again
afforded to Borthwick in the Court of First
Instance of MF kati, where enforcement of
the Hawaii judgment was sought. This time
it was the summons of the domestic court
which Borthwick chose to ignore, but with
the same result: he was declared in default.
And in the default judgment subsequently
promulgated, the Court a quo decreed en-
forcement of die judgment affirming among
others the jurisdictional facts, that
Borthwick owned real property in Hawaii
and transacted business therein.
In the light of these antecedents, it is plain
that what Borthwick seeks in essence is one
more opportunity, a third, to challenge the
jurisdiction of the Hawaii Court and the
merits of the cause of action which that
Court had adjudged to have been
established against him. This he may obtain
only if he succeeds in showing that the
declaration of his default was incorrect. He
has unfortunately not been able to do that;
hence, the verdict must go against him."
8. KOSTER VS. AUTOMARK INDUSTRIES,
Inc. 640 F.2d 77, 81 n.3 (7th Cir. 1981)
FACTS:
Koster, a citizen of Netherlands obtained
default judgement for breach of contract in
a Dutch Court against Automark, a
corporation doing business in Illinois. The
case involves a contract executed in Italy
for the production of goods in Switzerland.
There are no other allegations that
Automark had any relationship with the
Netherlands beyond letters, telegram and
telephone call involved on its business
contact with Koster.
ISSUE:
Whether or not the judgement is
enforceable in the U.S. court.
RULING:
No. The court find out that Automark did
not have sufficient contact with the
Netherlands to vest that country's courts
with personal jurisdiction over Automark so
as to permit enforcement of the default
judgment in United States courts. As
established there are no other allegations
that Automark had any relationship with
the Netherlands beyond letters, telegram
and telephone call involved on its business
contact with Koster. Such does not amount
to minimum contacts to vest jurisdiction.
Therefore, the default judgement cannot
be enforced.
9. QUERUBIN V. QUERUBIN, GR No.
L-3693, (July 29, 1950)
FACTS:
In the Superior Court in Los Angeles,
California, an interlocutory judgement of
divorce between plaintiff and defendant
awarded custody of their child to the
plaintiff. It was established that the divorce
was caused by the infidelity of plaintiff (the
wife) who now has her own children with
another man. Defendant (the husband)
brought the child here in the Philippines.
Hence the plaintiff seeks to enforce the
interlocutory judgement here in the
Philippines.
ISSUE:
1. Whether or not the interlocutory
judgement can be enforced here in
the Philippines.
2. Whether or not the interlocutory
judgement can be enforced on the
basis of reciprocity and
international comity.
RULING:
No. The rule is of common knowledge that
the definitive judgment of a court of
another state between the same parties on
the same cause of action, on the merits of
the case is conclusive, but it must be a
definitive judgment on the merits only.
Where the judgment is merely
interlocutory, the determination of the
question by the court which rendered it did
not settle and adjudge finally the rights of
the parties. Because an interlocutory
decree does not constitute final decision, it
cannot therefore be enforced in the
Philippines.
No. Under the Divorce Act No. 2710, the
guilty spouse is not entitled to the custody
of minor children. The current legislation,
morality and public order interest advise
that the child should be out of the care of a
mother who has violated the oath of
fidelity to her husband. The judgments of
foreign courts may not be into force in the
Philippines if they are contrary to the laws,
customs and public order. If such
decisions, for the simple theory of
reciprocity and international comity are
enough for our courts to decide on the
basis of the same base then our courts
would be in poor position of having to
dictate decisions contrary to our laws,
customs and public order. We believe that
this Court should not enforce a decision
given by a foreign court decree that violates
our laws and sound principles of morality
that inform our social structure on family
relationships.
10. Philippine International Shipping
Corporation vs Court of Appeals
172 SCRA 810 [Gr no. 77085 April 26, 1989]
Facts: Plaintiff [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. The other defendants, George
Lim Marcos Bautista, Carlos Laude, Tan Sing
Lim, Antonio Liu Lao and Ong Teh are
Philippine residents. In 1979 to 1981, the
defendant, Philippine International
Shipping Corporation (PISC) leased from the
plaintiff 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. Defendants Philippine
Construction Consortium Corporation,
Pacific Mills Inc. and Universal Steel
Smelting Company, guaranteed to pay (sic)
all monies due, or to become due, to the
plaintiff from (PISC) and any liability of the
latter arising out of the leasing or
purchasing of equipment from the plaintiff
or any of its subsidiaries, affiliates and/or
agents of I.S.C. dry cargo containers and/or
chassis, including but not limited, to per
diem leasing charges, damages protection
plan charges, damages charge and/or
replacement costs of constructively and/or
totally lost containers as well as handling
and drop-off charges. Because of the
unjustifiable failure and refusal of PISC and
its guarantors to jointly and severally pay
their obligations to the plaintiff, the latter
filed on November 16, 1983 a complaint to
enforce the default judgment of the U.S.
District Court against the defendant PISC
and also to enforce the individually
executed Continuing Guaranties of the
other defendants. The defendants were
duly summoned, but they failed to answer
the complaint. On motion of the plaintiff,
they were declared in default and the
plaintiff was allowed to present its
evidence ex parte.
Issue: Whether or not the foreign court
acquired jurisdiction over the case.
Held: Yes. 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 16 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. Moreover, copies
of said Summons and Complaint had
likewise been served upon Prentice-Hall
Corporation System, Inc. (New York),
petitioner PISCs agent, expressly designated
by it in the Master Equipment Leasing
Agreement with respondent Interpool. “for
the purpose of accepting service of any
process within the State of New York, USA
with respect to any claim or controversy
arising out of or relating to directly or
indirectly, this Lease.” The record also
shows that petitioner PISC, without,
however, assailing the jurisdiction of the
U.S. District Court over the person of
petitioner, had filed a Motion to Dismiss
the Complaint in 83 Civil 290 (EW) which
Motion was denied. All of the foregoing
matters, which were stated specifically in
the U.S. District Court’s disputed Default
Judgement, have not been disproven or
otherwise overcome by petitioners, whose
bare and unsubstantiated allegations
cannot prevail over clear and convincing
evidence of record to the contrary.
11. Scherk v. Alberto-Culver Co., 417 U.S.
506 (1974)
Syllabus
Respondent, an American manufacturer
based in Illinois, in order to expand its
overseas operations, purchased from
petitioner a German citizen, three
enterprises owned by him and organized
under the laws of Germany and
Liechtenstein, together with all trademark
rights of these enterprises. The sales
contract, which was negotiated in the
United States, England, and Germany,
signed in Austria, and closed in Switzerland,
contained express warranties by petitioner
that the trademarks were unencumbered
and a clause providing that "any
controversy or claim [that] shall arise out of
this agreement or the breach thereof"
would be referred to arbitration before the
International Chamber of Commerce in
Paris, France, and that Illinois laws would
govern the agreement and its
interpretation and performance.
Subsequently, after allegedly discovering
that the trademarks were subject to
substantial encumbrances, respondent
offered to rescind the contract, but when
petitioner refused, respondent brought suit
in District Court for damages and other
relief, contending that petitioner's
fraudulent representations concerning the
trademark rights violated § 10(b) of the
Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder. Petitioner
moved to dismiss the action or alternatively
to stay the action pending arbitration, but
the District Court denied the motion to
dismiss and, as sought by respondent,
preliminarily enjoined petitioner from
proceeding with arbitration, holding, in
reliance on Wilko v. Swan, 346 U. S. 427,
that the arbitration clause was
unenforceable. The Court of Appeals
affirmed.
Held:
The arbitration clause is to be respected
and enforced by federal courts in accord
with the explicit provisions of the United
States Arbitration Act that an arbitration
agreement, such as is here involved, "shall
be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in
equity for the revocation of any contract." 9
U.S.C. §§ 1, 2. Wilko v. Swan,
supra, distinguished. Pp. 417 U. S. 510-520.
(a) Since uncertainty will almost inevitably
exist with respect to any contract, such as
the one in question here, with substantial
Page 417 U. S. 507
contacts in two or more countries, each
with its own substantive laws and conflict
of laws rules, a contractual provision
specifying in advance the forum for
litigating disputes and the law to be applied
is an almost indispensable precondition to
achieving the orderliness and predictability
essential to any international business
transaction. Such a provision obviates the
danger that a contract dispute might be
submitted to a forum hostile to the
interests of one of the parties or unfamiliar
with the problem area involved. Pp. 417 U.
S. 515-517.
(b) In the context of an international
contract, the advantages that a security
buyer might possess in having a wide
choice of American courts and venue in
which to litigate his claims of violations of
the securities laws, become chimerical,
since an opposing party may by speedy
resort to foreign court block or hinder
access to the American court of the buyer's
choice. Pp. 417 U. S. 517-518.
(c) An agreement to arbitrate before a
specified tribunal is, in effect, a specialized
kind of forum selection clause that posits
not only the situs of suit, but also the
procedure to be used in resolving the
dispute, and the invalidation of the
arbitration clause in this case would not
only allow respondent to repudiate its
solemn promise but would, as well, reflect
a "parochial concept that all disputes must
be resolved under our laws and in our
courts." reversed and remanded.
12. Asiavest Merchant Bankers vs CA
FACTS:
In 1985, the High Court of Malaysia issued
two separate orders directing Philippine
National Construction Corporation (PNCC),
a Filipino company, to pay Asiavest
Merchant Bankers (M) Berhad, a Malaysian
company, a total of $5,108,290.24 for
PNCC’s failure to complete a construction
project. PNCC failed to comply with the
judgment, prompting Asiavest to institute
a complaint in the Philippines.
ISSUE(S):
Whether or not the judgment of a foreign
court may be enforced in the Philippines.
HELD:
YES. Section 50(b), Rule 39 of the Revised
Rules of Court provides that a judgment
against a person of a tribunal of a foreign
country having jurisdiction to pronounce
the same is presumptive evidence of a right
as between the parties and their successors
in interest by a subsequent title.
13.NORTHWEST ORIENT AIRLINES, INC. vs.
CA and C.F. SHARP & COMPANY INC.
G.R. No. 112573 February 9, 1995
FACTS: Petitioner Northwest Orient Airlines,
Inc. (NORTHWEST), a corporation organized
under the laws of the State of Minnesota,
U.S.A., sought to enforce in the RTC- Manila,
a judgment rendered in its favor by a
Japanese court against private respondent
C.F. Sharp & Company, Inc., (SHARP), a
corporation incorporated under Philippine
laws.
factual and procedural antecedents of this
controversy:
On May 9, 1974, Northwest Airlines and
Sharp, through its Japan branch, entered
into an International Passenger Sales
Agency Agreement, whereby the former
authorized the latter to sell its air
transportation tickets. Unable to remit the
proceeds of the ticket sales made by
defendant on behalf of the plaintiff under
the said agreement, plaintiff on March 25,
1980 sued defendant in Tokyo, Japan, for
collection of the unremitted proceeds of
the ticket sales, with claim for damages.
On April 11, 1980, a writ of summons was
issued by the 36th Civil Department, Tokyo
District Court of Japan against defendant at
its office at the Taiheiyo Building, 3rd floor,
132, Yamashita-cho, Naka-ku, Yokohoma,
Kanagawa Prefecture. The attempt to serve
the summons was unsuccessful because the
bailiff was advised by a person in the office
that Mr. Dinozo, the person believed to be
authorized to receive court processes was
in Manila and would be back on April 24,
1980.
On April 24, 1980, bailiff returned to the
defendant’s office to serve the summons.
Mr. Dinozo refused to accept the same
claiming that he was no longer an
employee of the defendant.
After the two attempts of service were
unsuccessful, the judge of the Tokyo
District Court decided to have the
complaint and the writs of summons served
at the head office of the defendant in
Manila. On July 11, 1980, the Director of
the Tokyo District Court requested the
Supreme Court of Japan to serve the
summons through diplomatic channels
upon the defendant’s head office in Manila.
On August 28, 1980, defendant received
from Deputy Sheriff Rolando Balingit the
writ of summons (p. 276, Records). Despite
receipt of the same, defendant failed to
appear at the scheduled hearing. Thus, the
Tokyo Court proceeded to hear the
plaintiff’s complaint and on [January 29,
1981], rendered judgment ordering the
defendant to pay the plaintiff the sum of
83,158,195 Yen and damages for delay at
the rate of 6% per annum from August 28,
1980 up to and until payment is completed
(pp. 12-14, Records).
On March 24, 1981, defendant received
from Deputy Sheriff Balingit copy of the
judgment. Defendant not having appealed
the judgment, the same became final and
executory.
Plaintiff was unable to execute the decision
in Japan, hence, on May 20, 1983, a suit for
enforcement of the judgment was filed by
plaintiff before the Regional Trial Court of
Manila Branch 54.
defendant filed its answer averring that the
judgment of the Japanese Court: (1) the
foreign judgment sought to be enforced is
null and void for want of jurisdiction and (2)
the said judgment is contrary to Philippine
law and public policy and rendered without
due process of law.
In its decision, the Court of Appeals
sustained the trial court. It agreed with the
latter in its reliance upon Boudard vs. Tait
wherein it was held that “the process of the
court has no extraterritorial effect and no
jurisdiction is acquired over the person of
the defendant by serving him beyond the
boundaries of the state.” To support its
position, the Court of Appeals further
stated:
In an action strictly in personam, such as
the instant case, personal service of
summons within the forum is required for
the court to acquire jurisdiction over the
defendant (Magdalena Estate Inc. vs. Nieto,
125 SCRA 230). To confer jurisdiction on the
court, personal or substituted service of
summons on the defendant not
extraterritorial service is necessary.
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. 6
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.(See Sec. 50, R 39)
Being the party challenging the judgment
rendered by the Japanese court, SHARP had
the duty to demonstrate the invalidity of
such judgment.
It is settled that matters of remedy and
procedure such as those relating to the
service of process upon a defendant are
governed by the lex fori or the internal law
of the forum. 8 In this case, it is the
procedural law of Japan where the
judgment was rendered that determines
the validity of the extraterritorial service of
process on SHARP. As to what this law is is a
question of fact, not of law.
It 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.
Where the corporation has no such agent,
service shall be made on the government
official designated by law, to wit: (a) the
Insurance Commissioner in the case of a
foreign insurance company; (b) the
Superintendent of Banks, in the case of a
foreign banking corporation; and (c) the
Securities and Exchange Commission, in the
case of other foreign corporations duly
licensed to do business in the Philippines.
Nowhere in its pleadings did SHARP profess
to having had a resident agent authorized
to receive court processes in Japan.
While it may be true that service could have
been made upon any of the officers or
agents of SHARP at its three other branches
in Japan, the availability of such a recourse
would not preclude service upon the
proper government official, as stated above.
As found by the respondent court, two
attempts at service were made at SHARP’s
Yokohama branch. Both were unsuccessful.
The Tokyo District Court requested the
Supreme Court of Japan to cause the
delivery of the summons and other legal
documents to the Philippines. Acting on
that request, the Supreme Court of Japan
sent the summons together with the other
legal documents to the Ministry of Foreign
Affairs of Japan which, in turn, forwarded
the same to the Japanese Embassy in
Manila . Thereafter, the court processes
were delivered to the Ministry (now
Department) of Foreign Affairs of the
Philippines, then to the Executive Judge of
the Court of First Instance (now Regional
Trial Court) of Manila, who forthwith
ordered Deputy Sheriff Rolando Balingit to
serve the same on SHARP at its principal
office in Manila. This service is equivalent
to service on the proper government
official under Section 14, Rule 14 of the
Rules of Court, in relation to Section 128 of
the Corporation Code. Hence, SHARP’s
contention that such manner of service is
not valid under Philippine laws holds no
water.
We find NORTHWEST’s claim for attorney’s
fees, litigation expenses, and exemplary
damages to be without merit. We find no
evidence that would justify an award for
attorney’s fees and litigation expenses
under Article 2208 of the Civil Code of the
Philippines. Nor is an award for exemplary
damages warranted.
WHEREFORE, the instant petition is partly
GRANTED, and the challenged decision is
AFFIRMED insofar as it denied
NORTHWEST’s claims for attorneys fees,
litigation expenses, and exemplary
damages but REVERSED insofar as in
sustained the trial court’s dismissal of
NORTHWEST’s complaint in Civil Case No.
83-17637 of Branch 54 of the Regional Trial
Court of Manila, and another in its stead is
hereby rendered ORDERING private
respondent C.F. SHARP L COMPANY, INC. to
pay to NORTHWEST the amounts adjudged
in the foreign judgment subject of said case,
with interest thereon at the legal rate from
the filing of the complaint therein until the
said foreign judgment is fully satisfied.
14.PRISCILLA C. MIJARES, et. al. vs. HON.
SANTIAGO JAVIER RANADA, et. al.,
G.R. No. 139325, April 12, 2005, TINGA, J.:
FACTS:
On 9 May 1991, a complaint was
filed with the United States District Court,
District of Hawaii, against the Estate of
former Philippine President Ferdinand E.
Marcos (Marcos Estate) by ten Filipino
citizens who each alleged having suffered
human rights. The presiding judge rendered
a 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) which was
eventually affirmed by the US Court of
Appeals.
 On 20 May 1997, the present claim for enforcement of judgment must be
petitioners filed Complaint with the brought before the regular courts.
Regional Trial Court, City of Makati (Makati
Thus, we are comfortable in
RTC) for the enforcement of the Final
asserting the obvious, that the complaint to
Judgment. On 5 February 1998, the
enforce the US District Court judgment is
Marcos Estate filed a motion to dismiss,
one capable of pecuniary estimation. But at
raising, among others, the non-payment of
the same time, it is also an action based on
the correct filing fees.
judgment against an estate. We find that it
On 9 September 1998, respondent is covered by Section 7(b)(3) of Rule 141,
Judge Santiago Javier Ranada of the Makati involving as it does, "other actions not
RTC issued the subject Order dismissing the involving property."
complaint without prejudice. Respondent
As crafted, Rule 141 of the Rules of
judge said that the subject matter of the
Civil Procedure avoids unreasonableness, as
complaint was indeed capable of pecuniary
it recognizes that the subject matter of an
estimation, as it involved a judgment
action for enforcement of a foreign
rendered by a foreign court ordering the
judgment is the foreign judgment itself, and
payment of definite sums of money. RTC
not the right-duty correlatives that resulted
estimated the proper amount of filing fees
in the foreign judgment. In this particular
was approximately Four Hundred Seventy
circumstance, given that the complaint is
Two Million Pesos, which obviously had not
lodged against an estate and is based on
been paid.
the US District Court's Final Judgment, this
foreign judgment may, for purposes of
classification under the governing
ISSUE:
procedural rule, be deemed as subsumed
under Section 7(b)(3) of Rule 141, i.e.,
What provision should apply in
within the class of "all other actions not
determining the filing fees for an action to
involving property." Thus, only the blanket
enforce a foreign judgment?
filing fee of minimal amount is required.
RULING:
12. BACHCHAN v. INDIAN ABROAD
Absent perhaps a statutory grant of PUBLICATIONS INC.
jurisdiction to a quasi-judicial body, the
FACTS
Bachchan sued Indian Abroad Publications
in the High Court of Justice in London,
alleging defamation from a story written in
London and also for wiring and publishing
in the Indian, New York and United
Kingdom Newspapers.
The English Court awarded £40,000 in
damages plus attorney fees. Plaintiff sought
enforcement of the judgment in New York,
ISSUE
1-Did the NY Supreme Court consider
enforceable a foreign judgement which is
opposed to the provisions stated by US.
Constitution and NY Constitution in regard
to Freedom of Speech and Press?
RULE OR HOLDING
1-NO, The Supreme Court don’t recognize
and enforce foreign judgments when its
provisions were imposed without
safeguards for freedom of speech and the
press as required by the 1rst Amendment
of the US Constitution and NY Constitution,
art 1 & 8. The judgment fails to meet the
constitutional standards for adjudicating
libel claims. The grounds for
non-recognition of foreign judgments are
stipulated in CPLR 5304, (b), this subdivision
b lacks of fair notice to enable defendant to
defend himself and it goes beyond due
process and it is constitutionally
mandatory.
APPLICATION
The Supreme Court considered that the
entry of this English judgment granted
jeopardized the protection to the freedom
of speech and press included in the First
amendment to the United States
Constitution. Also the burden of proving
the truth upon the media defendants who
publish speech of public concern has been
considered unconstitutional and it cause a
chilling effect because of the fear of liability,
it may cause deter such speech.
The Court established that the NY standard
for liability in actions brought by a private
person against press, in many cases is
related to legitimate public concern and
warranting public exposition matters. Then
the party must recover by a preponderance
evidence, and the plaintiff in this case did
not prove as required in Chapadeau v Utica
case that the defendant was grossly
irresponsible.
The present case relates to a publication of
public concern.
The New York Supreme Court denied the
motion for summary judgment in lieu of
complaint.
CONCLUSION
The difference between U.S Court and
English Court lies in the lack of equivalent
to the 1rst amendment to the Constitution
that protect the freedom of speech and
press.
16.Bridgeway corp vs Citibank
Facts
Bridgeway (P) got a final judgment from the
Supreme Court of Liberia. In that action,
Citibank (D) maintained a branch in
Monrovia, Liberia. It closed that branch in
1992 and withdrew from the country in
1995. Before withdrawing, D formulated a
liquidation plan, which was approved by
the National Bank of Liberia. That plan was
completed successfully. P had an account
with D with a balance of $189.376.66 and
brought suit against D claiming that it was
obligated to pay P in US dollars and not
Liberian currency. The trial court ruled in
favor of D; a person may not refuse to
accept Liberian dollars unless there is an
express agreement to the contrary and that
D had the right under the P-D contract to
decide what currency to pay P with. The
Liberian Supreme Court reversed and
entered judgment for P. P then file suit in 17. Siedler vs Jacobson
New York to enforce the judgment and D
removed to federal court. P moved for
summary judgment. The district court
denied that motion and sua sponte granted
summary judgment for D. It found that as a
matter of law, the court of Liberia did not
constitute a system of jurisprudence likely
to secure an impartial administration of
justice. P contends that D voluntarily
participated in the litigation in Liberia and
thus was estopped from challenging the
impartiality of those courts.