Asiavest Merchant Bankers (M) Berhad vs Court of Appeals

Conflict of Laws Private International Law Foreign Judgments How Assailed

In 1985, the High Court of Malaysia ordered the Philippine National Construction
Corporation (PNCC) to pay $5.1 million to Asiavest Merchant Bankers (M) Berhad. This
was the result of a recovery suit filed by Asiavest against PNCC in Malaysia for PNCCs
failure to complete a construction project there despite due payment from Asiavest.
Despite demand, PNCC failed to comply with the judgment in Malaysia hence Asiavest
filed a complaint for the enforcement of the Malaysian ruling against PNCC in the
Philippines. The case was filed with the Pasig RTC which eventually denied the
complaint. The Court of Appeals affirmed the decision of the RTC.
Asiavest appealed. In its defense, PNCC alleged that the foreign judgment cannot be
enforced here because of want of jurisdiction, want of notice to PNCC, collusion and/or
fraud, and there is a clear mistake of law or fact. Asiavest assailed the arguments of
PNCC on the ground that PNCCs counsel participated in all the proceedings in the
Malaysian Court.
ISSUE: Whether or not the Malaysian Court judgment should be enforced against
PNCC in the Philippines.
HELD: Yes. PNCC failed to prove and substantiate its bare allegations of want of
jurisdiction, want of notice, collusion and/or fraud, and mistake of fact. On the contrary,
Asiavest was able to present evidence as to the validity of the proceedings that took
place in Malaysia. Asiavest presented the certified and authenticated copies of the
judgment and the order issued by the Malaysian Court. It also presented
correspondences between Asiavests lawyers and PNCCs lawyers in and out of court
which belied PNCCs allegation that the Malaysian court never acquired jurisdiction over
it. PNCCs allegation of fraud is not sufficient too, further, it never invoked the same in
the Malaysian Court.
The Supreme Court notes, to assail a foreign judgment the party must present evidence
of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of
law or fact. Otherwise, the judgment enjoys the presumption of validity so long as it was

duly certified and authenticated. In this case, PNCC failed to present the required
evidence.
Communication Materials and Design, Inc. vs. CA
G.R. No. 102223, August 22, 1996
Doctrine: A foreign corporation although not authorized to do business here in the Philippines, may sue in our
courts against a Philippine citizen or entity who had contracted with and benefited by said corporation. A party is
estopped to challenge the personality of a corporation after having acknowledged the same by entering into a
contract with it.
Nature: Petition for review on certiorari of the decision of the CA
Facts:
1. Petitioners Communication Materials and Design (CMDI) and Aspac Multi-Trade, Inc. (CASPAC) are both
domestic corporations while petitioner Francisco Aguirre is their President and majority stockholder.
Respondents ITEC INC. and/ or ITEC INTERNATIONAL, INC. (ITEC) on the other hand are corporations
duly organized and existing under the laws of the State of Alabama, United States of America. It is a
foreign corporation not licensed to do business in the Philippines.
2. ITEC entered into a contract with ASPA referred to as Representative Agreement. Pursuant to this
agreement, ITEC engaged ASPAC as the exclusive representative in the Philippines for the sale of
ITECs products. ASPAC was paid a stipulated commission. The agreement was initially for a term of 24
months, and was renewed for another 24 months.
3. The parties subsequently entered into a License Agreement. Through this, ASPAC was able to
incorporate and use the name of ITEC in its own name. Thus, ASPAC Multi-Trade became legally and
publicly known as ASPAC-ITEC Philippines.
4. By virtue of the said contracts, ASPAC sold electronic products exported by ITEC to their sole customer,
the Philippine Long Distance Company (PLDT).
5. ITEC eventually decided to terminate their Representative Agreement. ASPAC allegedly violated their
contractual commitment by using the knowledge and information of ITECs products specifications to
develop their own line of equipment and product support which are identical to ITECs own, and offering
it to ITECs former customer.
6. RTC Level
-ITEC filed a complaint before the RTC:
a. To enjoin ASPAC from selling copied products
b. To cease from using its corporate name, letter heads, business dealings, etc.
c. Damages
- On the other hand, ASPAC filed a motion to dismiss on the following grounds:
a. Being a foreign corporation, ITEC has no capacity to sue. It has no BOI authority and SEC license
b. engaged in forum shopping
-RTC ruling: - Motion to dismiss denied on both grounds
- Preliminary injunction be issued against ASPAC
7. CA level
-ASPAC filed a Petition for Certiorari (Rule 65) and Prohibition assailing the issuance of the Writ of
preliminary injunction
- CA denied the same.
- MR was filed before the CA, which was also denied. Thus, this petition.
8. ASPAC contends that:
a. ITEC being a foreign corporation actually doing business in the Philippines, without the requisite
authority and license from the Board of Investments and the Securities and Exchange Commission is disqualified

from instituting a court action. ASPAC is not an independent entity; it is merely an extension of ITEC in the
Philippines, thus ITEC is not exempted from the requirements of RA 54551.
b. Having no capacity to bring suit here, the Philippines is not the most convenient forum because the
trial court has no power to enforce its orders or decisions in a case that could not have been commenced to begin
with
9. ITEC on the other hand contends that:
a. Although ASPAC was named as representative of ITEC, it actually acted in its own name and for its own
account. Their Representative Agreement shows that ASPAC named itself as an Independent Contractor.
Issue/s:
1.) Is ITEC an unlicensed corporation doing business in the Philippines? YES
2.) Is it disqualified from instituting a court action? NO
Held:
-

A foreign corporation has no legal existence within the state in which it is foreign. Before it can transact
business in the Philippines, it must first obtain a license to transact business in the Philippines and a
certificate from the appropriate government agency. If it transacts without a license, it shall not be
permitted to file an action before any court but it may be sued on any valid cause.
o Purpose of the law is to submit the foreign corporation doing business in the Philippines to the
jurisdiction of its courts
The true test to determine whether a foreign corporation is doing business seems to be whether the
foreign corporation is continuing the substance of the business for which it was organized.
The court ruled that ITEC had been doing business in the Philippines. It introduces itself to the general
public through ASPAC; it has local technical representatives and a local service center
ASPACs contract with ITEC is highly restrictive, meaning the former acts exclusively for the latter; No
Competing Product clause of their agreement proves the same
Notwithstanding the courts finding that ITEC is doing business in the country without the required
certificate, ASPAC is estopped from raising this fact in order to bar ITEC from instituting an injunction
case.
o A foreign corporation although not authorized to do business here in the Philippines, may sue in
our courts against a Philippine citizen or entity who had contracted with and benefited by said
corporation
o A party is estopped to challenge the personality of a corporation after having acknowledged the
same by entering into a contract with it.
o The doctrine of estoppels to deny corporate existence applies to a foreign as well as to domestic
corporations
By entering into a Representative Agreement with ITEC, ASPAC is charged with knowledge that it has
no license to engage into business in the country. It is thus estopped from raising in defense such incapacity,
having chosen to ignore or even presumptively take advantage of the same
The court has already acquired jurisdiction over ITEC through the injunction suit it originally filed against
ASPAC.

Wherefore, the petition is dismissed. Decision of CA upholding the RTC affirmed.

1

RA 5455 requires a BOI and SEC certificate for a foreign corporation to operate. As mentioned in the case of TopWeld Manufacturing Inc. vs. ECED et. al., one could be exempted from the requirements if the local company is an
independent entity which buys and distributes products not only of the foreign company but also other
manufacturers or suppliers

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 Ducats obligation
under an Agreement, whereby 1488, Inc. executed a Warranty Deed with
Vendors 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 Ducats 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 courts 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 courts
desistance.