OIL AND NATURAL GAS vs.
CA ISSUE: Whether or not the judgment of the foreign court is
For those who did not take up arbitration: Big commercial
contracts, particularly international commercial contracts now
usually have a provision to submit all disputes to arbitration. In
arbitration, the parties are free to choose who the arbitrators
who will render the award. An award in an arbitration proceeding
is equivalent to a ruling or decision of a court. After parties
present their arguments and evidence, the arbitrators render the
award. The winning party goes to court to have the award
“confirmed” by a judge or magistrate. Once confirmed by the
court, the party can have it enforced. In this case, the parties
agreed on an arbitrator and the arbitration proceedings were held
in India. The award of the arbitrator was then confirmed or
adopted by a court in India. It was the Indian court’s ruling which
was being sought to be enforced here in the Philippines. They did
this by filing a complaint for the enforcement of a foreign
judgment in the RTC of Pasig.
FACTS
 Oil and Natural Gas Commission is a foreign
corporation, owned and controlled by the Government
of India.
 Pacific Cement Co is a Philippine corporation.
 Pacific was supposed to deliver more than 4,000 metric
tons of oil well cement to Bombay and Calcutta but
because of a dispute with the carrier, the shipment never
reached the destination. Despite payment by Oil and
Natural, as well as repeated demands, Pacific does not
deliver the oil well cement.
 During negotiations, the parties agreed that the Pacific
will replace the oil well cement with Class “G” cement.
Pacific did deliver the Class “G” cement but they were
not according to specifications. Oil and Natural
informed Pacific that they will submit the dispute to
arbitration as provided for in their contract.
 The dispute was therefore submitted to arbitration, the
arbitrator was Shri Malhotra, an employee of Oil and
Natural Gas. The decision of the arbitrator was in
favour of Oil and Natural Gas. The arbitral decision was
confirmed by an Indian court.
 Oil and Natural Gas filed a complaint in Pasig RTC for
the enforcement of the foreign judgment. This was
opposed by Pacific for being “bereft of any statement of
facts and law upon which the award in favor of the
petitioner was based.” The judgment of the Indian court
apparently simply adopted the award of the arbitrator
without stating anything by way of support for its
judgment.
 The Pasig RTC dismissed the complaint. The RTC said
that the contract provided for some disputes to be
settled by the regular court and some to be
submitted to arbitration. This type, the RTC said, was
for the courts. “Consequently, the proceedings had
before the arbitrator were null and void and the
foreign court had therefore, adopted no legal award
which could be the source of an enforceable right.”
 The CA affirmed the dismissal by the RTC. Aside from
agreeing with the RTC that the arbitral award was void,
the CA also said “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 and distinctly the facts and the law on which
it is based.”
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.
RULING
Yes, it is enforceable in this jurisdiction. The SC said that
“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 and conclusions arrived at, as in this
case, where Award Paper No. 3/B-1 consists of eighteen (18)
single spaced pages..” In effect, the SC was saying that we also
do in this country what the Indian court did and it was okay for as
long as the award or decision adopted was complete in terms of
the discussion of the facts and conclusions. The 18 pages of
single spaced award by the arbitrator was, according to the SC,
complete enough. The short decision of the Indian court which
merely adopted the award was acceptable in our jurisdiction.
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 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 arbitrators 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.
Finally, we reiterate hereunder our pronouncement in the 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 presumption that it was acting in the lawful
exercise of jurisdiction and has regularly performed its official
duty."
Consequently, the party attacking a foreign judgment (Pacific
Cement) 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 Oil and
Natural Gas 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.