G.R. No.
137378               October 12, 2000 contract of distributorship was to be effected within the period
PHILIPPINE ALUMINUM WHEELS, INC., petitioner, 
vs.
FASGI ENTERPRISES, INC., respondent.
DECISION
VITUG, J.:
On 01 June 1978, FASGI Enterprises Incorporated ("FASGI"), a
corporation organized and existing under and by virtue of the laws
of the State of California, United States of America, entered into a
distributorship arrangement with Philippine Aluminum Wheels,
Incorporated ("PAWI"), a Philippine corporation, and Fratelli
Pedrini Sarezzo S.P.A. ("FPS"), an Italian corporation. The
agreement provided for the purchase, importation and
distributorship in the United States of aluminum wheels
manufactured by PAWI. Pursuant to the contract, PAWI shipped
to FASGI a total of eight thousand five hundred ninety four (8,594)
wheels, with an FOB value of US$216,444.30 at the time of
shipment, the first batch arriving in two containers and the second
in three containers. Thereabouts, FASGI paid PAWI the FOB value
of the wheels. Unfortunately, FASGI later found the shipment to
be defective and in non-compliance with stated requirements, viz;
"A. contrary to the terms of the Distributorship
Agreement and in violation of U.S. law, the country of
origin (the Philippines) was not stamped on the wheels;
"B. the wheels did not have weight load limits stamped
on them as required to avoid mounting on excessively
heavy vehicles, resulting in risk of damage or bodily
injury to consumers arising from possible shattering of
the wheels;
"C. many of the wheels did not have an indication as to
which models of automobile they would fit;
"D. many of the wheels did not fit the model
automobiles for which they were purportedly designed;
"E. some of the wheels did not fit any model automobile
in use in the United States;
"F. most of the boxes in which the wheels were packed
indicated that the wheels were approved by the
Specialty Equipment Manufacturer's Association
(hereafter, `SEMA'); in fact no SEMA approval has been
obtained and this indication was therefore false and
could result in fraud upon retail customers purchasing
the wheels."1  immediately take all necessary legal action to protect [its]
On 21 September 1979, FASGI instituted an action against PAWI
and FPS for breach of contract and recovery of damages in the
amount of US$2,316,591.00 before the United States District
Court for the Central District of California. In January 1980, during
the pendency of the case, the parties entered into a settlement,
entitled "Transaction" with the corresponding Italian translation
"Convenzione Transsativa," where it was stipulated that FPS and
PAWI would accept the return of not less than 8,100 wheels after
restoring to FASGI the purchase price of US$268,750.00 via four
(4) irrevocable letters of credit ("LC"). The rescission of the
1
starting January up until April 1980.2 
In a telex message, dated 02 March 1980, PAWI president Romeo
Rojas expressed the company's inability to comply with the
foregoing agreement and proposed a revised schedule of
payment. The message, in part, read:
"We are most anxious in fulfilling all our obligations under
compromise agreement executed by our Mr. Giancarlo Dallera
and your Van Curen. We have tried our best to comply with our
commitments, however, because of the situation as mentioned in
the foregoing and currency regulations and restrictions imposed
by our government on the outflow, of foreign currency from our
country, we are constrained to request for a revised schedule of
shipment and opening of L/Cs.
"After consulting with our bank and government monetary
agencies and on the assumption that we submit the required pro-
forma invoices we can open the letters of credit in your favor
under the following schedule:
"A) First L/C - it will be issued in April 1980 payable 90
days thereafter
"B) Second L/C - it will be issued in June 1980 payable 90
days thereafter
"C) Third L/C - it will be issued in August 1980 payable 90
days thereafter
"D) Fourth L/C - it will be issued in November 1980
payable 90 days thereafter
"We understand your situation regarding the lease of your
warehouse. For this reason, we are willing to defray the extra
storage charges resulting from this new schedule. If you cannot
renew the lease [of] your present warehouse, perhaps you can
arrange to transfer to another warehouse and storage charges
transfer thereon will be for our account. We hope you understand
our position. The delay and the revised schedules were caused by
circumstances totally beyond our control."3 
On 21 April 1980, again through a telex message, PAWI informed
FASGI that it was impossible to open a letter of credit on or before
April 1980 but assured that it would do its best to comply with the
suggested schedule of payments.4 In its telex reply of 29 April
1980, FASGI insisted that PAWI should meet the terms of the
proposed schedule of payments, specifically its undertaking to
open the first LC within April of 1980, and that "If the letter of
credit is not opened by April 30, 1980, then x x x [it would]
position."5 
Despite its assurances, and FASGI's insistence, PAWI failed to open
the first LC in April 1980 allegedly due to Central Bank "inquiries
and restrictions," prompting FASGI to pursue its complaint for
damages against PAWI before the California district court. Pre-trial
conference was held on 24 November 1980. In the interim, the
parties, realizing the protracted process of litigation, resolved to
enter into another arrangement, this time entitled "Supplemental
Settlement Agreement," on 26 November 1980. In substance, the
covenant provided that FASGI would deliver to PAWI a container
of wheels for every LC opened and paid by PAWI:
"3. Agreement
"3.1 Sellers agree to pay FASGI Two Hundred Sixty-Eight
Thousand, Seven Hundred Fifty and 00/100 Dollars ($268,750.00),
plus interest and storage costs as described below. Sellers shall
pay such amount by delivering to FASGI the following four (4)
irrevocable letters of credit, confirmed by Crocker Bank, Main
Branch, Fresno, California, as set forth below:
"(i) on or before June 30, 1980, a documentary letter of credit in
the amount of (a) Sixty-Five Thousand, Three Hundred Sixty-nine
and 00/100 Dollars ($65,369.00), (b) plus interest on that amount
at the annual rate of 16.25% from January 1, 1980 until July 31,
1980, (c) plus Two Thousand Nine Hundred Forty Dollars and
00/100 ($2,940.00) and (d) with interest on that sum at the annual
rate of 16.25% from May 1, 1980 to July 31, 1980, payable on or
after August 31, 1980;
"(ii) on or before September 1, 1980, a documentary letter of
credit in the amount of (a) Sixty-Seven Thousand, Seven Hundred
Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67) plus (b)
Two Thousand, Nine Hundred Forty and 00/100 Dollars
($2,940.00), plus (c) interest at an annual rate equal to the prime
rate of Crocker Bank, San Francisco, in effect from time to time,
plus two percent on the amount in (a) from January 1, 1980 until
December 21, 1980, and on the amount set forth in (b) from May
1, 1980 until December 21, 1980, payable ninety days after the
date of the bill of lading under the letter of credit;
"(iii) on or before November 1, 1980, a documentary letter of
credit in the amount of (a) Sixty-Seven Thousand, Seven Hundred
Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67) plus (b)
Two Thousand, Nine Hundred Forty and 00/100 Dollars
($2,490.00), plus (c) interest at an annual rate equal to the prime
rate of Crocker Bank, San Francisco, in effect from time to time,
plus two percent on the amount in (a) from January 1, 1980 until
February 21, 1981, and on the amount set forth in (b) from May 1,
1980 until February 21, 1981, payable ninety days after the date
of the bill of lading under the latter of credit;
"(iv) on or before January 1, 1981, a documentary letter of credit
in the amount of (a) Sixty-Seven Thousand, Seven Hundred
Ninety-Three Dollars and Sixty-Seven Cents ($67,793.67) plus (b)
Five Thousand, Eight Hundred Eighty and 00/100 Dollars
($5,880.00), plus (c) interest at an annual rate equal to the prime
rate of Crocker Bank, San Francisco, in effect from time to time,
plus two percent on the amount in (a) from January 1, 1980 until
April 21, 1981, and on the amount set forth in (b) from May 1,
1980 until April 21, 1981, payable ninety days after the date of the
bill of lading under the latter of credit."6 
Anent the wheels still in the custody of FASGI, the supplemental
settlement agreement provided that -
"3.4 (a) Upon execution of this Supplemental Settlement
Agreement, the obligations of FASGI to store or maintain the
Containers and Wheels shall be limited to (i) storing the Wheels
and Containers in their present warehouse location and (ii)
maintaining in effect FASGI's current insurance in favor of FASGI,
insuring against usual commercial risks for such storage in the
principal amount of the Letters of Credit described in Paragraph
3.1. FASGI shall bear no liability, responsibility or risk for
uninsurable risks or casualties to the Containers or Wheels.
"x x x           x x x          x x x
2
"(e) From and after February 28, 1981, unless delivery of the
Letters of Credit are delayed past such date pursuant to the
penultimate Paragraph 3.1, in which case from and after such
later date, FASGI shall have no obligation to maintain, store or
deliver any of the Containers or Wheels."7 
The deal allowed FASGI to enter before the California court the
foregoing stipulations in the event of the failure of PAWI to make
good the scheduled payments; thus -
"3.5 Concurrently with execution and delivery hereof, the parties
have executed and delivered a Mutual Release (the `Mutual
Release'), and a Stipulation for Judgment (the `Stipulation for
Judgment') with respect to the Action. In the event of breach of
this Supplemental Settlement Agreement by Sellers, FASGI shall
have the right to apply immediately to the Court for entry of
Judgment pursuant to the Stipulation for Judgment in the full
amount thereof, less credit for any payments made by Sellers
pursuant to this Supplemental Settlement Agreement. FASGI shall
have the right thereafter to enforce the Judgment against PAWI
and FPS in the United States and in any other country where
assets of FPS or PAWI may be located, and FPS and PAWI hereby
waive all defenses in any such country to execution or
enforcement of the Judgment by FASGI. Specifically, FPS and PAWI
each consent to the jurisdiction of the Italian and Philippine courts
in any action brought by FASGI to seek a judgment in those
countries based upon a judgment against FPS or PAWI in the
Action."8 
In accordance with the aforementioned paragraph 3.5 of the
agreement, the parties made the following stipulation before the
California court:
"The undersigned parties hereto, having entered into a
Supplemental Settlement Agreement in this action,
"IT IS HEREBY STIPULATED by and between plaintiff FASGI
Enterprises, Inc. (`FASGI') and defendants Philippine Aluminum
Wheels, Inc., (`PAWI'), and each of them, that judgment may be
entered in favor of plaintiff FASGI and against PAWI, in the
amount of Two Hundred Eighty Three Thousand Four Hundred
Eighty And 01/100ths Dollars ($283,480.01).
"Plaintiff FASGI shall also be entitled to its costs of suit, and to
reasonable attorneys' fees as determined by the Court added to
the above judgment amount."9 
The foregoing supplemental settlement agreement, as well as the
motion for the entry of judgment, was executed by FASGI
president Elena Buholzer and PAWI counsel Mr. Thomas Ready.
PAWI, again, proved to be remiss in its obligation under the
supplemental settlement agreement. While it opened the first LC
on 19 June 1980, it, however, only paid on it nine (9) months after,
or on 20 March 1981, when the letters of credit by then were
supposed to have all been already posted. This lapse,
notwithstanding, FASGI promptly shipped to PAWI the first
container of wheels. Again, despite the delay incurred by PAWI on
the second LC, FASGI readily delivered the second container.
Later, PAWI totally defaulted in opening and paying the third and
the fourth LCs, scheduled to be opened on or before, respectively,
01 September 1980 and 01 November 1980, and each to be paid
ninety (90) days after the date of the bill of lading under the LC. As
so expressed in their affidavits, FASGI counsel Frank Ker and FASGI
president Elena Buholzer were more inclined to believe that
PAWI's failure to pay was due not to any restriction by the Central
Bank or any other cause than its inability to pay. These doubts
were based on the telex message of PAWI president Romeo Rojas
who attached a copy of a communication from the Central Bank
notifying PAWI of the bank's approval of PAWI's request to open
LCs to cover payment for the re-importation of the wheels. The
communication having been sent to FASGI before the
supplemental settlement agreement was executed, FASGI
speculated that at the time PAWI subsequently entered into the
supplemental settlement agreement, its request to open LCs had
already been approved by the Central Bank. Irked by PAWI's
persistent default, FASGI filed with the US District Court of the
Central District of California the following stipulation for judgment
against PAWI.
"PLEASE TAKE NOTICE that on May 17, 1982 at 10:00 A.M. in the
Courtroom of the Honorable Laughlin E. Waters of the above
Court, plaintiff FASGI ENTERPRISES, INC. (hereinafter `FASGI') will
move the Court for entry of Judgment against defendant
PHILIPPINE ALUMINUM WHEELS, INC. (hereinafter `PAWI'),
pursuant to the Stipulation for Judgment filed concurrently
herewith, executed on behalf of FASGI and PAWI by their
respective attorneys, acting as their authorized agents.
"Judgment will be sought in the total amount of P252,850.60,
including principal and interest accrued through May 17, 1982,
plus the sum of $17,500.00 as reasonable attorneys' fees for
plaintiff in prosecuting this action.
"The Motion will be made under Rule 54 of the Federal Rules of
Civil Procedure, pursuant to and based upon the Stipulation for
Judgment, the Supplemental Settlement Agreement filed herein
on or about November 21, 1980, the Memorandum of Points and
Authorities and Affidavits of Elena Buholzer, Franck G. Ker and
Stan Cornwell all filed herewith, and upon all the records, files and
pleadings in this action.
"The Motion is made on the grounds that defendant PAWI has
breached its obligations as set forth in the Supplemental
Settlement Agreement, and that the Supplemental Settlement
Agreement expressly permits FASGI to enter the Stipulation for
Judgment in the event that PAWI has not performed under the
Supplemental Settlement Agreement."10 
On 24 August 1982, FASGI filed a notice of entry of judgment. A
certificate of finality of judgment was issued, on 07 September
1982, by the US District Judge of the District Court for the Central
District of California. PAWI, by this time, was approximately
twenty (20) months in arrears in its obligation under the
supplemental settlement agreement.
Unable to obtain satisfaction of the final judgment within the
United States, FASGI filed a complaint for "enforcement of foreign
judgment" in February 1983, before the Regional Trial Court,
Branch 61, of Makati, Philippines. The Makati court, however, in
an order of 11 September 1990, dismissed the case, thereby
denying the enforcement of the foreign judgment within
Philippine jurisdiction, on the ground that the decree was tainted
with collusion, fraud, and clear mistake of law and fact.11 The
lower court ruled that the foreign judgment ignored the reciprocal
obligations of the parties. While the assailed foreign judgment
ordered the return by PAWI of the purchase amount, no similar
order was made requiring FASGI to return to PAWI the third and
fourth containers of wheels.12 This situation, the trial court
maintained, amounted to an unjust enrichment on the part of
3
FASGI. Furthermore, the trial court said, the supplemental
settlement agreement and the subsequent motion for entry of
judgment upon which the California court had based its judgment
were a nullity for having been entered into by Mr. Thomas Ready,
counsel for PAWI, without the latter's authorization.
FASGI appealed the decision of the trial court to the Court of
Appeals. In a decision,13 dated 30 July 1997, the appellate court
reversed the decision of the trial court and ordered the full
enforcement of the California judgment.
Hence this appeal.
Generally, in the absence of a special compact, no sovereign is
bound to give effect within its dominion to a judgment rendered
by a tribunal of another country; 14 however, the rules of comity,
utility and convenience of nations have established a usage among
civilized states by which final judgments of foreign courts of
competent jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in different
countries.15 
In this jurisdiction, a valid judgment rendered by a foreign tribunal
may be recognized insofar as the immediate parties and the
underlying cause of action are concerned so long as it is
convincingly shown that there has been an opportunity for a full
and fair hearing before a court of competent jurisdiction; that trial
upon regular proceedings has been conducted, following due
citation or voluntary appearance of the defendant and under a
system of jurisprudence likely to secure an impartial
administration of justice; and that there is nothing to indicate
either a prejudice in court and in the system of laws under which
it is sitting or fraud in procuring the judgment.16 A foreign
judgment is presumed to be valid and binding in the country from
which it comes, until a contrary showing, on the basis of a
presumption of regularity of proceedings and the giving of due
notice in the foreign forum. Rule 39, section 48 of the Rules of
Court of the Philippines provides:
Sec. 48. Effect of foreign judgments or final orders - The effect of a
judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
xxxx
(b) In case of a judgment or final order against a person, the
judgment or final order is presumptive evidence of a right as
between the parties and their successors-in-interest by a
subsequent title.
In either case, the judgment or final order may be repelled by
evidence a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
In Soorajmull Nagarmull vs. Binalbagan-Isabela Sugar Co.
Inc.,17 one of the early Philippine cases on the enforcement of
foreign judgments, this Court has ruled that a judgment for a sum
of money rendered in a foreign court is presumptive evidence of a
right between the parties and their successors-in-interest by
subsequent title, but when suit for its enforcement is brought in a
Philippine court, such judgment may be repelled by evidence of
want of jurisdiction, want of notice to the party, collusion, fraud
or clear mistake of law or fact. In Northwest Orient Airlines, Inc.,
vs. Court of Appeals,18 the Court has said that a party attacking a
foreign judgment is tasked with the burden of overcoming its
presumptive validity.
PAWI claims that its counsel, Mr. Ready, has acted without its
authority. Verily, in this jurisdiction, it is clear that an attorney
cannot, without a client's authorization, settle the action or
subject matter of the litigation even when he honestly believes
that such a settlement will best serve his client's interest.19  very existence of the cause of action - such as fraud in obtaining
In the instant case, the supplemental settlement agreement was
signed by the parties, including Mr. Thomas Ready, on 06 October
1980. The agreement was lodged in the California case on 26
November 1980 or two (2) days after the pre-trial conference held
on 24 November 1980.1âwphi1 If Mr. Ready was indeed not
authorized by PAWI to enter into the supplemental settlement
agreement, PAWI could have forthwith signified to FASGI a
disclaimer of the settlement. Instead, more than a year after the
execution of the supplemental settlement agreement, particularly
on 09 October 1981, PAWI President Romeo S. Rojas sent a
communication to Elena Buholzer of FASGI that failed to mention
Mr. Ready's supposed lack of authority. On the contrary, the letter
confirmed the terms of the agreement when Mr. Rojas sought
forbearance for the impending delay in the opening of the first
letter of credit under the schedule stipulated in the agreement.
It is an accepted rule that when a client, upon becoming aware of
the compromise and the judgment thereon, fails to promptly
repudiate the action of his attorney, he will not afterwards be
heard to complain about it.20  promote injustice against this plaintiff because assets can easily be
Nor could PAWI claim any prejudice by the settlement. PAWI was
spared from possibly paying FASGI substantial amounts of
damages and incurring heavy litigation expenses normally
generated in a full-blown trial. PAWI, under the agreement was
afforded time to reimburse FASGI the price it had paid for the
defective wheels. PAWI, should not, after its opportunity to enjoy
the benefits of the agreement, be allowed to later disown the
arrangement when the terms thereof ultimately would prove to
operate against its hopeful expectations.
PAWI assailed not only Mr. Ready's authority to sign on its behalf
the Supplemental Settlement Agreement but denounced likewise
his authority to enter into a stipulation for judgment before the
California court on 06 August 1982 on the ground that it had by
then already terminated the former's services. For his part, Mr.
Ready admitted that while he did receive a request from Manuel
Singson of PAWI to withdraw from the motion of judgment, the
request unfortunately came too late. In an explanatory telex, Mr.
Ready told Mr. Singson that under American Judicial Procedures
when a motion for judgment had already been filed a counsel
would not be permitted to withdraw unilaterally without a court
order. From the time the stipulation for judgment was entered
into on 26 April 1982 until the certificate of finality of judgment
was issued by the California court on 07 September 1982, no
notification was issued by PAWI to FASGI regarding its termination
of Mr. Ready's services. If PAWI were indeed hoodwinked by Mr.
Ready who purportedly acted in collusion with FASGI, it should
have aptly raised the issue before the forum which issued the
judgment in line with the principle of international comity that a
court of another jurisdiction should refrain, as a matter of
propriety and fairness, from so assuming the power of passing
judgment on the correctness of the application of law and the
evaluation of the facts of the judgment issued by another
tribunal.21  the failure and the consequence of loss.28
4
Fraud, to hinder the enforcement within this jurisdiction of a
foreign judgment, must be extrinsic, i.e., fraud based on facts not
controverted or resolved in the case where judgment is
rendered,22 or that which would go to the jurisdiction of the court
or would deprive the party against whom judgment is rendered a
chance to defend the action to which he has a meritorious case or
defense. In fine, intrinsic fraud, that is, fraud which goes to the
the consent to a contract - is deemed already adjudged, and it,
therefore, cannot militate against the recognition or enforcement
of the foreign judgment.23 
Even while the US judgment was against both FPS and PAWI,
FASGI had every right to seek enforcement of the judgment solely
against PAWI or, for that matter, only against FPS. FASGI, in its
complaint, explained:
"17. There exists, and at all times relevant herein there existed, a
unity of interest and ownership between defendant PAWI and
defendant FPS, in that they are owned and controlled by the same
shareholders and managers, such that any individuality and
separateness between these defendants has ceased, if it ever
existed, and defendant FPS is the alter ego of defendant PAWI.
The two entities are used interchangeably by their shareholders
and managers, and plaintiff has found it impossible to ascertain
with which entity it is dealing at any one time. Adherence to the
fiction of separate existence of these defendant corporations
would permit an abuse of the corporate privilege and would
shifted between the two companies thereby frustrating plaintiff's
attempts to collect on any judgment rendered by this Court."24 
Paragraph 14 of the Supplemental Settlement Agreement fixed
the liability of PAWI and FPS to be "joint and several" or solidary.
The enforcement of the judgment against PAWI alone would not,
of course, preclude it from pursuing and recovering whatever
contributory liability FPS might have pursuant to their own
agreement.
PAWI would argue that it was incumbent upon FASGI to first
return the second and the third containers of defective wheels
before it could be required to return to FASGI the purchase price
therefor,25 relying on their original agreement (the
"Transaction").26 Unfortunately, PAWI defaulted on its covenants
thereunder that thereby occasioned the subsequent execution of
the supplemental settlement agreement. This time the parties
agreed, under paragraph 3.4(e)27 thereof, that any further default
by PAWI would release FASGI from any obligation to maintain,
store or deliver the rejected wheels. The supplemental settlement
agreement evidently superseded, at the very least on this point,
the previous arrangements made by the parties.
PAWI cannot, by this petition for review, seek refuge over a
business dealing and decision gone awry. Neither do the courts
function to relieve a party from the effects of an unwise or
unfavorable contract freely entered into. As has so aptly been
explained by the appellate court, the over-all picture might,
indeed, appear to be onerous to PAWI but it should bear
emphasis that the settlement which has become the basis for the
foreign judgment has not been the start of a business venture but
the end of a failed one, and each party, naturally, has had to
negotiate from either position of strength or weakness depending
on its own perception of who might have to bear the blame for
 
Altogether, the Court finds no reversible error on the part of the
appellate court in its appealed judgment.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
No costs.
SO ORDERED.
G.R. No. 141536. February 26, 2001
GIL MIGUEL T. PUYAT, petitioner,  contrary to the laws, public policy and canons of
vs.
RON ZABARTE, respondent.
DECISION
PANGANIBAN, J.:
Summary judgment in a litigation is resorted to if there is
no genuine issue as to any material fact, other than the amount of
damages. If this verity is evident from the pleadings and the
supporting affidavits, depositions and admissions on file with the
court, the moving party is entitled to such remedy as a matter of
course.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, challenging the August 31, 1999 Decision 1 of
the Court of Appeals (CA), which affirmed the Regional Trial Court
(RTC) of Pasig City, Branch 67 in Civil Case No. 64107; and the
January 20, 2000 CA Resolution 2 which denied reconsideration.
The assailed CA Decision disposed as follows:
“WHEREFORE, finding no error in the judgment appealed from,
the same is AFFIRMED." 3
The Facts
The facts of this case, as narrated by the Court of Appeals, are as
follows: 4
“It appears that on 24 January 1994, [Respondent] Ron Zabarte
commenced [an action] to enforce the money judgment rendered
by the Superior Court for the State of California, County of Contra
Costa, U.S.A. On 18 March 1994, [petitioner] filed his Answer with
the following special and affirmative defenses:
x x x             x x x             x x x
‘8) The Superior Court for the State of California, County
of Contra Costa[,] did not properly acquire jurisdiction
over the subject matter of and over the persons
involved in [C]ase #C21-00265.
5
‘9) The Judgment on Stipulations for Entry in Judgment
in Case #C21-00265 dated December 12, 1991 was
obtained without the assistance of counsel for
[petitioner] and without sufficient notice to him and
therefore, was rendered in clear violation of
[petitioner’s] constitutional rights to substantial and
procedural due process.
‘10) The Judgment on Stipulation for Entry in Judgment
in Case #C21-00265 dated December 12, 1991 was
procured by means of fraud or collusion or undue
influence and/or based on a clear mistake of fact and
law.
‘11) The Judgment on Stipulation for Entry in Judgment
in Case #C21-00265 dated December 12, 1991 is
morality obtaining in the Philippines and the
enforcement of such judgment in the Philippines would
result in the unjust enrichment of [respondent] at the
expense of [petitioner] in this case.
‘12) The Judgment on Stipulation for Entry in Judgment
in Case #C21-00265 dated December 12, 1991 is null
and void and unenforceable in the Philippines.
‘13) In the transaction, which is the subject matter in
Case #C21-00265, [petitioner] is not in any way liable, in
fact and in law, to [respondent] in this case, as
contained in [petitioner’s] ‘Answer to Complaint’ in Case
#C21-00265 dated April 1, 1991, Annex ‘B’ of
[respondent’s] ‘Complaint’ dated December 6, 1993.
’14) [Respondent] is guilty of misrepresentation or
falsification in the filing of his ‘Complaint’ in this case
dated December 6, 1993. Worse, [respondent] has no
capacity to sue in the Philippines.
’15) Venue has been improperly laid in this case.’
(Record, pp. 42-44)
“On 1 August 1994, [respondent] filed a [M]otion for
[S]ummary [J]udgment under Rule 34 of the Rules of
Court alleging that the [A]nswer filed by [petitioner]
failed to tender any genuine issue as to the material
facts. In his [O]pposition to [respondent’s] motion,
[petitioner] demurred as follows:
‘2) [Petitioner] begs to disagree[;] in support hereof,
[he] wishes to mention that in his ‘Answer with Special
and Affirmative Defenses’ dated March 16, 1994
[petitioner] has interposed that the ‘Judgment on
Stipulations for Entry in Judgment’ is null and void,
fraudulent, illegal and unenforceable, the same having
been obtained by means of fraud, collusion, undue
influence and/or clear mistake of fact and law. In
addition, [he] has maintained that said ‘Judgment on
Stipulations for Entry in Judgment’ was obtained
without the assistance of counsel for [petitioner] and
without sufficient notice to him and therefore, was
rendered in violation of his constitutional rights to
substantial and procedural due process.’
 “The [M]otion for [S]ummary [J]udgment was set for
hearing on 12 August 1994 during which [respondent]
marked and submitted in evidence the following:
Exhibit ‘A’ - x x x Judgment on Stipulation For Entry In
Judgment of the Supreme Court of the State of
California[,] County of Contra Costa[,] signed by Hon.
Ellen James, Judge of the Superior Court.
Exhibit ‘B’ - x x x Certificate of Authentication of the
[O]rder signed by the Hon. Ellen James, issued by the
Consulate General of the Republic of the Philippines.
Exhibit ‘C’ - [R]eturn of the [W]rit of [E]xecution (writ
unsatisfied) issued by the sheriff/marshall, County of
Santa Clara, State of California.
Exhibit ‘D’ - [W]rit of [E]xecution
Exhibit 'E' [P]roof of [S]ervice of copies of [W]rit of
[E]xecution, [N]otice of [L]evy, [M]emorandum of
[G]arnishee, [E]xemptions from [E]nforcement of
[J]udgment.
Exhibit ‘F’ - Certification issued by the Secretary of State,
State of California that Stephen Weir is the duly elected,
qualified and acting [c]ounty [c]lerk of the County of
Contra Costa of the State of California.
Exhibit ‘G’ - Certificate of [A]uthentication of the [W]rit
of [E]xecution.
“On 6 April 1995, the court a quo issued an [O]rder granting
[respondent’s] [M]otion for [S]ummary [J]udgment [and] likewise
granting [petitioner] ten (10) days to submit opposing affidavits,
after which the case would be deemed submitted for resolution
(Record, pp. 152-153). [Petitioner] filed a [M]otion for
[R]econsideration of the aforesaid [O]rder and [respondent] filed
[C]omment. On 30 June 1995, [petitioner] filed a [M]otion to
[D]ismiss on the ground of lack of jurisdiction over the subject
matter of the case and forum-non-conveniens (Record, pp. 166-
170). In his [O]pposition to the [M]otion (Record, pp. 181-182)
[respondent] contended that [petitioner could] no longer question
the jurisdiction of the lower court on the ground that [the latter’s]
Answer had failed to raise the issue of jurisdiction. [Petitioner]
countered by asserting in his Reply that jurisdiction [could] not be
fixed by agreement of the parties. The lower court dismissed [his]
[M]otion for [R]econsideration and [M]otion [to] [D]ismiss
(Record, pp. 196-198), x x x.”
The RTC 5 eventually rendered its February 21, 1997
Decision, 6 which disposed as follows:
“WHEREFORE, judgment is hereby rendered, ordering [petitioner]
to pay [respondent] the following amounts:
“1. The amount of U.S. dollars $241,991.33, with the interest of
legal rate from October 18, 1991, or its peso equivalent, pursuant
to the [J]udgment of [S]tipulation for [E]ntry in [J]udgment dated
December 19, 1991;
“2. The amount of P30,000.00 as attorney’s fees;
6
“3. To pay the costs of suit.
“The claim for moral damages, not having been substantiated, it is
hereby denied.” 7
Ruling of the Court of Appeals
Affirming the trial court, the Court of Appeals held that petitioner
was estopped from assailing the judgment that had become final
and had, in fact, been partially executed. The CA also ruled that
summary judgment was proper, because petitioner had failed to
tender any genuine issue of fact and was merely maneuvering to
delay the full effects of the judgment.
Citing Ingenohl v. Olsen, 8 the CA also rejected petitioner’s
argument that the RTC should have dismissed the action for the
enforcement of a foreign judgment, on the ground of forum non
conveniens. It reasoned out that the recognition of the foreign
judgment was based on comity, reciprocity and res judicata.
Hence, this Petition. 9
Issue
In his Memorandum, petitioner submits this lone but all-
embracing issue:
“Whether or not the Court of Appeals acted in a manner x x x
contrary to law when it affirmed the Order of the trial court
granting respondent’s Motion for Summary Judgment and
rendering judgment against the petitioner.” 10
In his discussion, petitioner contends that the CA erred in ruling in
this wise:
1. That his Answer failed to tender a genuine issue of fact
regarding the following:
(a) the jurisdiction of a foreign court over the subject matter 
(b) the validity of the foreign judgment 
(c) the judgment’s conformity to Philippine laws, public policy,
canons of morality, and norms against unjust enrichment 
2. That the principle of forum non conveniens was inapplicable to
the instant case.
This Court’s Ruling
The Petition has no merit.
First Question: Summary Judgment
Petitioner vehemently insists that summary judgment is
inappropriate to resolve the case at bar, arguing that his Answer
allegedly raised genuine and material factual matters which he
should have been allowed to prove during trial.
On the other hand, respondent argues that the alleged “genuine
issues of fact” raised by petitioner are mere conclusions of law, or
“propositions arrived at not by any process of natural reasoning
from a fact or a combination of facts stated but by the application
of the artificial rules of law to the facts pleaded.” 11
The RTC granted respondent’s Motion for Summary Judgment
because petitioner, in his Answer, admitted the existence of the
Judgment on Stipulation for Entry in Judgment. Besides, he had
already paid $5,000 to respondent, as provided in the foreign
judgment sought to be enforced.  12 Hence, the trial court ruled
that, there being no genuine issue as to any material fact, the case
should properly be resolved through summary judgment. The CA
affirmed this ruling.
We concur with the lower courts. Summary judgment is a
procedural device for the prompt disposition of actions in which
the pleadings raise only a legal issue, and not a genuine issue as to
any material fact. By genuine issue is meant a question of fact that
calls for the presentation of evidence. It should be distinguished
from an issue that is sham, contrived, set in bad faith and patently
unsubstantial. 13
Summary judgment is resorted to in order to avoid long drawn out
litigations and useless delays. When affidavits, depositions and
admissions on file show that there are no genuine issues of fact to
be tried, the Rules allow a party to pierce the allegations in the
pleadings and to obtain immediate relief by way of summary
judgment. In short, since the facts are not in dispute, the court is
allowed to decide the case summarily by applying the law to the
material facts.  jurisdiction is determined by the allegations in a complaint, he
Petitioner contends that by allowing summary judgment, the two
courts a quo prevented him from presenting evidence to
substantiate his claims. We do not agree. Summary judgment is
based on facts directly proven by affidavits, depositions or
admissions. 14 In this case, the CA and the RTC both merely ruled
that trial was not necessary to resolve the case. Additionally and
correctly, the RTC specifically ordered petitioner to submit
opposing affidavits to support his contentions that (1) the
Judgment on Stipulation for Entry in Judgment was procured on
the basis of fraud, collusion, undue influence, or a clear mistake of
law or fact; and (2) that it was contrary to public policy or the
canons of morality. 15
Again, in its Order 16 dated November 29, 1995, the trial court
clarified that the opposing affidavits were “for [petitioner] to spell
out the facts or circumstances [that] would constitute lack of
jurisdiction over the subject matter of and over the persons
involved in Case No. C21-00265,” and that would render the
judgment therein null and void. In this light, petitioner’s
contention that he was not allowed to present evidence to
substantiate his claims is clearly untenable. 
For summary judgment to be valid, Rule 34, Section 3 of the Rules
of Court, requires (a) that there must be no genuine issue as to
any material fact, except for the amount of damages; and (b) that
the party presenting the motion for summary judgment must be
entitled to a judgment as a matter of law.  17 As mentioned earlier,
petitioner admitted that a foreign judgment had been rendered
against him and in favor of respondent, and that he had paid
$5,000 to the latter in partial compliance therewith. Hence,
respondent, as the party presenting the Motion for Summary
Judgment, was shown to be entitled to the judgment.
The CA made short shrift of the first requirement. To show that
petitioner had raised no genuine issue, it relied instead on the
finality of the foreign judgment which was, in fact, partially
7
executed. Hence, we shall show in the following discussion how
the defenses presented by petitioner failed to tender any genuine
issue of fact, and why a full-blown trial was not necessary for the
resolution of the issues.
Jurisdiction
Petitioner alleges that jurisdiction over Case No. C21-00265, which
involved partnership interest, was vested in the Securities and
Exchange Commission, not in the Superior Court of California,
County of Contra Costa.
We disagree. In the absence of proof of California law on the
jurisdiction of courts, we presume that such law, if any, is similar
to Philippine law. We base this conclusion on the presumption of
identity or similarity, also known as processual presumption. 18 The
Complaint, 19 which respondent filed with the trial court, was for
the enforcement of a foreign judgment. He alleged therein that
the action of the foreign court was for the collection of a sum of
money, breach of promissory notes, and damages. 20
In our jurisdiction, such a case falls under the jurisdiction of civil
courts, not of the Securities and Exchange Commission (SEC). The
jurisdiction of the latter is exclusively over matters enumerated in
Section 5, PD 902-A, 21prior to its latest amendment. If the foreign
court did not really have jurisdiction over the case, as petitioner
claims, it would have been very easy for him to show this. Since
only had to submit a copy of the complaint filed with the foreign
court. Clearly, this issue did not warrant trial.
Rights to Counsel and to Due Process
Petitioner contends that the foreign judgment, which was in the
form of a Compromise Agreement, cannot be executed without
the parties being assisted by their chosen lawyers. The reason for
this, he points out, is to eliminate collusion, undue influence
and/or improper exertion of ascendancy by one party over the
other. He alleges that he discharged his counsel during the
proceedings, because he felt that the latter was not properly
attending to the case. The judge, however, did not allow him to
secure the services of another counsel. Insisting that petitioner
settle the case with respondent, the judge practically imposed the
settlement agreement on him. In his Opposing Affidavit, petitioner
states:
“It is true that I was initially represented by a counsel in the
proceedings in #C21-00625. I discharged him because I then felt
that he was not properly attending to my case or was not
competent enough to represent my interest. I asked the Judge for
time to secure another counsel but I was practically discouraged
from engaging one as the Judge was insistent that I settle the case
at once with the [respondent]. Being a foreigner and not a lawyer
at that I did not know what to do. I felt helpless and the Judge and
[respondent’s] lawyer were the ones telling me what to do. Under
ordinary circumstances, their directives should have been taken
with a grain of salt especially so [since respondent’s] counsel, who
was telling me what to do, had an interest adverse to mine. But
[because] time constraints and undue influence exerted by the
Judge and [respondent’s] counsel on me disturbed and seriously
affected my freedom to act according to my best judgment and
belief. In point of fact, the terms of the settlement were
practically imposed on me by the Judge seconded all the time by
[respondent’s] counsel. I was then helpless as I had no counsel to
assist me and the collusion between the Judge and [respondent’s]
counsel was becoming more evident by the way I was treated in
the Superior Court of [t]he State of California. I signed the
‘Judgment on Stipulation for Entry in Judgment’ without any
lawyer assisting me at the time and without being fully aware of
its terms and stipulations.” 22
The manifestation of petitioner that the judge and the counsel for
the opposing party had pressured him would gain credibility only
if he had not been given sufficient time to engage the services of a
new lawyer. Respondent’s Affidavit 23 dated May 23, 1994,
clarified, however, that petitioner had sufficient time, but he
failed to retain a counsel. Having dismissed his lawyer as early as
June 19, 1991, petitioner directly handled his own defense and
negotiated a settlement with respondent and his counsel in
December 1991. Respondent also stated that petitioner, ignoring
the judge’s reminder of the importance of having a lawyer, argued
that “he would be the one to settle the case and pay” anyway.
Eventually, the Compromise Agreement was presented in court
and signed before Judge Ellen James on January 3, 1992. Hence,
petitioner’s rights to counsel and to due process were not
violated.
Unjust Enrichment
Petitioner avers that the Compromise Agreement violated the
norm against unjust enrichment because the judge made him
shoulder all the liabilities in the case, even if there were two other
defendants, G.S.P & Sons, Inc. and the Genesis Group.
We cannot exonerate petitioner from his obligation under the
foreign judgment, even if there are other defendants who are not
being held liable together with him.  First, the foreign judgment
itself does not mention these other defendants, their participation
or their liability to respondent.  Second, petitioner’s undated
Opposing Affidavit states: “[A]lthough myself and these entities
were initially represented by Atty. Lawrence L. Severson of the
Law Firm Kouns, Quinlivan & Severson, x x x I discharged x x x said
lawyer. Subsequently, I assumed the representation for myself
and these firms and this was allowed by the Superior Court of the
State of California without any authorization from G.G.P. & Sons,
Inc. and the Genesis Group.” 24 Clearly, it was petitioner who chose
to represent the other defendants; hence, he cannot now be
allowed to impugn a decision based on this ground.
In any event, contrary to petitioner’s contention, unjust
enrichment or solutio indebiti does not apply to this case. This
doctrine contemplates payment when there is no duty to pay, and
the person who receives the payment has no right to receive
it. 25 In this case, petitioner merely argues that the other two
defendants whom he represented were liable together with him.
This is not a case of unjust enrichment.
We do not see, either, how the foreign judgment could be
contrary to law, morals, public policy or the canons of morality
obtaining in the country. Petitioner owed money, and the
judgment required him to pay it. That is the long and the short of
this case.
In addition, the maneuverings of petitioner before the trial court
reinforce our belief that his claims are unfounded. Instead of filing
opposing affidavits to support his affirmative defenses, he filed a
Motion for Reconsideration of the Order allowing summary
judgment, as well as a Motion to Dismiss the action on the ground
of forum non conveniens. His opposing affidavits were filed only
after the Order of November 29, 1995 had denied both
8
Motions.26 Such actuation was considered by the trial court as a
dilatory ploy which justified the resolution of the action by
summary judgment. According to the CA, petitioner’s allegations
sought to delay the full effects of the judgment; hence, summary
judgment was proper. On this point, we concur with both courts.
Second Question: Forum Non Conveniens
Petitioner argues that the RTC should have refused to entertain
the Complaint for enforcement of the foreign judgment on the
principle of forum non conveniens. He claims that the trial court
had no jurisdiction, because the case involved partnership
interest, and there was difficulty in ascertaining the applicable law
in California. All the aspects of the transaction took place in a
foreign country, and respondent is not even Filipino.
We disagree. Under the principle of forum non conveniens, even if
the exercise of jurisdiction is authorized by law, courts may
nonetheless refuse to entertain a case for any of the following
practical reasons:
“1) The belief that the matter can be better tried and decided
elsewhere, either because the main aspects of the case transpired
in a foreign jurisdiction or the material witnesses have their
residence there;
2) The belief that the non-resident plaintiff sought the forum[,] a
practice known as forum shopping[,] merely to secure procedural
advantages or to convey or harass the defendant;
3) The unwillingness to extend local judicial facilities to non-
residents or aliens when the docket may already be overcrowded;
4) The inadequacy of the local judicial machinery for effectuating
the right sought to be maintained; and
The difficulty of ascertaining foreign law.” 27
None of the aforementioned reasons barred the RTC from
exercising its jurisdiction. In the present action, there was no more
need for material witnesses, no forum shopping or harassment of
petitioner, no inadequacy in the local machinery to enforce the
foreign judgment, and no question raised as to the application of
any foreign law.
Authorities agree that the issue of whether a suit should be
entertained or dismissed on the basis of the above-mentioned
principle depends largely upon the facts of each case and on the
sound discretion of the trial court. 28Since the present action
lodged in the RTC was for the enforcement of a foreign judgment,
there was no need to ascertain the rights and the obligations of
the parties based on foreign laws or contracts. The parties needed
only to perform their obligations under the Compromise
Agreement they had entered into. 1âwphi1.nêt
Under Section 48, Rule 39 of the 1997 Rules of Civil Procedure, a
judgment in an action in personam rendered by a foreign tribunal
clothed with jurisdiction is presumptive evidence of a right as
between the parties and their successors-in-interest by a
subsequent title. 29
Also, under Section 5(n) of Rule 131, a court -- whether in the
Philippines or elsewhere -- enjoys the presumption that it is acting
in the lawful exercise of its jurisdiction, and that it is regularly
performing its official duty. 30 Its judgment may, however, be
assailed if there is evidence of want of jurisdiction, want of notice
to the party, collusion, fraud or clear mistake of law or fact. But
precisely, this possibility signals the need for a local trial court to
exercise jurisdiction. Clearly, the application of forum non
coveniens is not called for.
The grounds relied upon by petitioner are contradictory. On the
one hand, he insists that the RTC take jurisdiction over the
enforcement case in order to invalidate the foreign judgment; yet,
he avers that the trial court should not exercise jurisdiction over
the same case on the basis of forum non conveniens. Not only do
these defenses weaken each other, but they bolster the finding of
the lower courts that he was merely maneuvering to avoid or
delay payment of his obligation.
WHEREFORE, the Petition is hereby DENIED and the assailed
Decision and Resolution AFFIRMED. Double costs against
petitioner.
SO ORDERED.
G.R. No. 140288             October 23, 2006
ST. AVIATION SERVICES CO., PTE., LTD., petitioner,  person; and (2) the foreign judgment sought to be enforced is void
vs.
GRAND INTERNATIONAL AIRWAYS, INC., respondent.
SANDOVAL-GUTIERREZ, J.:
Challenged in the instant Petition for Review on Certiorari are the
Decision of the Court of Appeals dated July 30, 1999 and its
Resolution dated September 29, 1999 in CA-G.R. SP No. 51134
setting aside the Orders dated October 30, 1998 and December
16, 1998 of the Regional Trial Court (RTC), Branch 117, Pasay City
in Civil Case No. 98-1389.
St. Aviation Services Co., Pte., Ltd., petitioner, is a foreign
corporation based in Singapore. It is engaged in the manufacture,
repair, and maintenance of airplanes and aircrafts. Grand
International Airways, Inc., respondent, is a domestic corporation
engaged in airline operations.
Sometime in January 1996, petitioner and respondent executed
an "Agreement for the Maintenance and Modification of Airbus A
300 B4-103 Aircraft Registration No. RP-C8882" (First Agreement).
Under this stipulation, petitioner agreed to undertake
maintenance and modification works on respondent's aircraft. The
parties agreed on the mode and manner of payment by
respondent of the contract price, including interest in case of
default. They also agreed that the "construction, validity and
performance thereof" shall be governed by the laws of Singapore.
They further agreed to submit any suit arising from their
agreement to the non-exclusive jurisdiction of the Singapore
courts.
9
At about the same time, or on January 12, 1996, the parties
verbally agreed that petitioner will repair and undertake
maintenance works on respondent's other aircraft, Aircraft No.
RP-C8881; and that the works shall be based on a General Terms
of Agreement (GTA). The GTA terms are similar to those of their
First Agreement.
Petitioner undertook the contracted works and thereafter
promptly delivered the aircrafts to respondent. During the period
from March 1996 to October 1997, petitioner billed respondent in
the total amount of US$303,731.67 or S$452,560.18. But despite
petitioner's repeated demands, respondent failed to pay, in
violation of the terms agreed upon.
On December 12, 1997, petitioner filed with the High Court of the
Republic of Singapore an action for the sum of S$452,560.18,
including interest and costs, against respondent, docketed as Suit
No. 2101. Upon petitioner's motion, the court issued a Writ of
Summons to be served extraterritorially or outside Singapore
upon respondent. The court sought the assistance of the sheriff of
Pasay City to effect service of the summons upon respondent.
However, despite receipt of summons, respondent failed to
answer the claim.
On February 17, 1998, on motion of petitioner, the Singapore High
Court rendered a judgment by default against respondent.
On August 4, 1998, petitioner filed with the RTC, Branch 117,
Pasay City, a Petition for Enforcement of Judgment, docketed as
Civil Case No. 98-1389.
Respondent filed a Motion to Dismiss the Petition on two grounds:
(1) the Singapore High Court did not acquire jurisdiction over its
for having been rendered in violation of its right to due process.
On October 30, 1998, the RTC denied respondent's motion to
dismiss, holding that "neither one of the two grounds (of Grand) is
among the grounds for a motion to dismiss under Rule 16 of the
1997 Rules of Civil Procedure."
Respondent filed a motion for reconsideration but was denied by
the RTC in its Order dated December 16, 1998.
On February 15, 1999, respondent filed with the Court of Appeals
a Petition for Certiorari assailing the RTC Order denying its motion
to dismiss. Respondent alleged that the extraterritorial service of
summons on its office in the Philippines is defective and that the
Singapore court did not acquire jurisdiction over its person. Thus,
its judgment sought to be enforced is void. Petitioner, in its
comment, moved to dismiss the petition for being unmeritorious.
On July 30, 1999, the Court of Appeals issued its Decision granting
the petition and setting aside the Orders dated October 30, 1998
and December 16, 1998 of the RTC "without prejudice to the right
of private respondent to initiate another proceeding before the
proper court to enforce its claim." It found:
In the case at bar, the complaint does not involve the
personal status of plaintiff, nor any property in which
the defendant has a claim or interest, or which the
private respondent has attached but purely an action for
collection of debt. It is a personal action as well as an
action in personam, not an action in rem or quasi in rem.
 As a personal action, the service of summons should be
personal or substituted, not extraterritorial, in order to
confer jurisdiction on the court.
Petitioner seasonably filed a motion for reconsideration but it was
denied on September 29, 1999.
Hence, the instant Petition for Review on Certiorari.
The issues to be resolved are: (1) whether the Singapore High
Court has acquired jurisdiction over the person of respondent by
the service of summons upon its office in the Philippines; and (2)
whether the judgment by default in Suit No. 2101 by the
Singapore High Court is enforceable in the Philippines.
Generally, in the absence of a special contract, no sovereign is
bound to give effect within its dominion to a judgment rendered
by a tribunal of another country; however, under the rules of
comity, utility and convenience, nations have established a usage
among civilized states by which final judgments of foreign courts
of competent jurisdiction are reciprocally respected and rendered
efficacious under certain conditions that may vary in different
countries.1 Certainly, the Philippine legal system has long ago
accepted into its jurisprudence and procedural rules the viability
of an action for enforcement of foreign judgment, as well as the
requisites for such valid enforcement, as derived from
internationally accepted doctrines.2
The conditions for the recognition and enforcement of a foreign
judgment in our legal system are contained in Section 48, Rule 39
of the 1997 Rules of Civil Procedure, as amended, thus:
SEC. 48. Effect of foreign judgments. – The effect of a
judgment or final order of a tribunal of a foreign
country, having jurisdiction to render the judgment or
final order is as follows:
(a) In case of a judgment or final order upon a
specific thing, the judgment or final order is
conclusive upon the title to the thing; and
(b) In case of a judgment or final order against
a person, the judgment or final order is
presumptive evidence of a right as between
the parties and their successors in interest by
a subsequent title;
In either case, the judgment or final order may be
repelled by evidence of a want of jurisdiction, want of
notice to the party, collusion, fraud, or clear mistake of
law or fact.
Under the above Rule, a foreign judgment or order against a
person is merely presumptive evidence of a right as between the
parties. It may be repelled, among others, by want of jurisdiction
of the issuing authority or by want of notice to the party against
whom it is enforced. The party attacking a foreign judgment has
the burden of overcoming the presumption of its validity.3
Respondent, in assailing the validity of the judgment sought to be
enforced, contends that the service of summons is void and that
the Singapore court did not acquire jurisdiction over it.
10
Generally, 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, 4 which in this case
is the law of Singapore. Here, petitioner moved for leave of court
to serve a copy of the Writ of Summons outside Singapore. In an
Order dated December 24, 1997, the Singapore High Court
granted "leave to serve a copy of the Writ of Summons on the
Defendant by a method of service authorized by the law of the
Philippines for service of any originating process issued by the
Philippines at ground floor, APMC Building, 136 Amorsolo corner
Gamboa Street, 1229 Makati City, or elsewhere in the
Philippines."5 This service of summons outside Singapore is in
accordance with Order 11, r. 4(2) of the Rules of Court 19966 of
Singapore, which provides.
(2) Where in accordance with these Rules, an originating
process is to be served on a defendant in any country
with respect to which there does not subsist a Civil
Procedure Convention providing for service in that
country of process of the High Court, the originating
process may be served –
a) through the government of that country, where that
government is willing to effect service;
b) through a Singapore Consular authority in that
country, except where service through such an authority
is contrary to the law of the country; or
c) by a method of service authorized by the law of that
country for service of any originating process issued by
that country.
In the Philippines, jurisdiction over a party is acquired by service
of summons by the sheriff,7 his deputy or other proper court
officer either personally by handing a copy thereof to the
defendant8 or by substituted service.9 In this case, the Writ of
Summons issued by the Singapore High Court was served upon
respondent at its office located at Mercure Hotel (formerly Village
Hotel), MIA Road, Pasay City. The Sheriff's Return shows that it
was received on May 2, 1998 by Joyce T. Austria, Secretary of the
General Manager of respondent company.10 But respondent
completely ignored the summons, hence, it was declared in
default.
Considering that the Writ of Summons was served upon
respondent in accordance with our Rules, jurisdiction was
acquired by the Singapore High Court over its person. Clearly, the
judgment of default rendered by that court against respondent is
valid.
WHEREFORE, we GRANT the petition. The challenged Decision
and Resolution of the Court of Appeals in CA-G.R. SP No. 51134
are set aside.
The RTC, Branch 117, Pasay City is hereby DIRECTED to hear Civil
Case No. 98-1389 with dispatch.
SO ORDERED.

G.R. No. 186571               August 11, 2010
GERBERT R. CORPUZ, Petitioner,  validly celebrated and a divorce is thereafter validly obtained
vs.
DAISYLYN TIROL STO. TOMAS and The SOLICITOR
GENERAL, Respondents.
DECISION
BRION, J.:
Before the Court is a direct appeal from the decision 1 of the
Regional Trial Court (RTC) of Laoag City, Branch 11, elevated via a
petition for review on certiorari2 under Rule 45 of the Rules of
Court (present petition).
Petitioner Gerbert R. Corpuz was a former Filipino citizen who
acquired Canadian citizenship through naturalization on
November 29, 2000.3 On January 18, 2005, Gerbert married
respondent Daisylyn T. Sto. Tomas, a Filipina, in Pasig City.4 Due to
work and other professional commitments, Gerbert left for
Canada soon after the wedding. He returned to the Philippines
sometime in April 2005 to surprise Daisylyn, but was shocked to
discover that his wife was having an affair with another man. Hurt
and disappointed, Gerbert returned to Canada and filed a petition
11
for divorce. The Superior Court of Justice, Windsor, Ontario,
Canada granted Gerbert’s petition for divorce on December 8,
2005. The divorce decree took effect a month later, on January 8,
2006.5
Two years after the divorce, Gerbert has moved on and has found
another Filipina to love. Desirous of marrying his new Filipina
fiancée in the Philippines, Gerbert went to the Pasig City Civil
Registry Office and registered the Canadian divorce decree on his
and Daisylyn’s marriage certificate. Despite the registration of the
divorce decree, an official of the National Statistics Office (NSO)
informed Gerbert that the marriage between him and Daisylyn
still subsists under Philippine law; to be enforceable, the foreign
divorce decree must first be judicially recognized by a competent
Philippine court, pursuant to NSO Circular No. 4, series of 1982.6
Accordingly, Gerbert filed a petition for judicial recognition of
foreign divorce and/or declaration of marriage as dissolved
(petition) with the RTC. Although summoned, Daisylyn did not file
any responsive pleading but submitted instead a notarized
letter/manifestation to the trial court. She offered no opposition
to Gerbert’s petition and, in fact, alleged her desire to file a similar
case herself but was prevented by financial and personal
circumstances. She, thus, requested that she be considered as a
party-in-interest with a similar prayer to Gerbert’s. 
In its October 30, 2008 decision,7 the RTC denied Gerbert’s
petition. The RTC concluded that Gerbert was not the proper
party to institute the action for judicial recognition of the foreign
divorce decree as he is a naturalized Canadian citizen. It ruled that
only the Filipino spouse can avail of the remedy, under the second
paragraph of Article 26 of the Family Code,8 in order for him or her
to be able to remarry under Philippine law.9 Article 26 of the
Family Code reads:
Art. 26. All marriages solemnized outside the Philippines, in
accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this
country, except those prohibited under Articles 35(1), (4), (5) and
(6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is
abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under
Philippine law. 
This conclusion, the RTC stated, is consistent with the legislative
intent behind the enactment of the second paragraph of Article 26
of the Family Code, as determined by the Court in Republic v.
Orbecido III;10 the provision was enacted to "avoid the absurd
situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the
Filipino spouse."11
THE PETITION 
From the RTC’s ruling,12 Gerbert filed the present petition.13
Gerbert asserts that his petition before the RTC is essentially for
declaratory relief, similar to that filed in Orbecido; he, thus,
similarly asks for a determination of his rights under the second
paragraph of Article 26 of the Family Code. Taking into account
the rationale behind the second paragraph of Article 26 of the
Family Code, he contends that the provision applies as well to the
benefit of the alien spouse. He claims that the RTC ruling unduly
stretched the doctrine in Orbecido by limiting the standing to file
the petition only to the Filipino spouse – an interpretation he
claims to be contrary to the essence of the second paragraph of
Article 26 of the Family Code. He considers himself as a proper
party, vested with sufficient legal interest, to institute the case, as
there is a possibility that he might be prosecuted for bigamy if he
marries his Filipina fiancée in the Philippines since two marriage
certificates, involving him, would be on file with the Civil Registry
Office. The Office of the Solicitor General and Daisylyn, in their
respective Comments,14 both support Gerbert’s position.  married to the alien spouse who, after obtaining a divorce, is no
Essentially, the petition raises the issue of whether the second
paragraph of Article 26 of the Family Code extends to aliens the
right to petition a court of this jurisdiction for the recognition of a
foreign divorce decree.  provided the Filipino spouse a substantive right to have his or her
THE COURT’S RULING
The alien spouse can claim no right under the second paragraph of
Article 26 of the Family Code as the substantive right it establishes
is in favor of the Filipino spouse
The resolution of the issue requires a review of the legislative
history and intent behind the second paragraph of Article 26 of
the Family Code.  26 of the Family Code provides the direct exception to this rule
The Family Code recognizes only two types of defective marriages
– void15 and voidable16 marriages. In both cases, the basis for the
judicial declaration of absolute nullity or annulment of the
marriage exists before or at the time of the marriage. Divorce, on
the other hand, contemplates the dissolution of the lawful union
for cause arising after the marriage.17 Our family laws do not
recognize absolute divorce between Filipino citizens.18
Recognizing the reality that divorce is a possibility in marriages
between a Filipino and an alien, President Corazon C. Aquino, in
the exercise of her legislative powers under the Freedom
Constitution,19 enacted Executive Order No. (EO) 227, amending
Article 26 of the Family Code to its present wording, as follows:  Given the rationale and intent behind the enactment, and the
Art. 26. All marriages solemnized outside the Philippines, in
accordance with the laws in force in the country where they were
solemnized, and valid there as such, shall also be valid in this
country, except those prohibited under Articles 35(1), (4), (5) and
(6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is
validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the
Filipino spouse shall likewise have capacity to remarry under
Philippine law. 
Through the second paragraph of Article 26 of the Family Code,
EO 227 effectively incorporated into the law this Court’s holding in
Van Dorn v. Romillo, Jr.20 and Pilapil v. Ibay-Somera.21 In both
cases, the Court refused to acknowledge the alien spouse’s
assertion of marital rights after a foreign court’s divorce decree
between the alien and the Filipino. The Court, thus, recognized
that the foreign divorce had already severed the marital bond
between the spouses. The Court reasoned in Van Dorn v. Romillo
that:
12
To maintain x x x that, under our laws, [the Filipino spouse] has to
be considered still married to [the alien spouse] and still subject to
a wife's obligations x x x cannot be just. [The Filipino spouse]
should not be obliged to live together with, observe respect and
fidelity, and render support to [the alien spouse]. The latter
should not continue to be one of her heirs with possible rights to
conjugal property. She should not be discriminated against in her
own country if the ends of justice are to be served.22
As the RTC correctly stated, the provision was included in the law
"to avoid the absurd situation where the Filipino spouse remains
longer married to the Filipino spouse."23 The legislative intent is
for the benefit of the Filipino spouse, by clarifying his or her
marital status, settling the doubts created by the divorce decree.
Essentially, the second paragraph of Article 26 of the Family Code
marriage to the alien spouse considered as dissolved, capacitating
him or her to remarry.24 Without the second paragraph of Article
26 of the Family Code, the judicial recognition of the foreign
decree of divorce, whether in a proceeding instituted precisely for
that purpose or as a related issue in another proceeding, would be
of no significance to the Filipino spouse since our laws do not
recognize divorce as a mode of severing the marital bond;25 Article
17 of the Civil Code provides that the policy against absolute
divorces cannot be subverted by judgments promulgated in a
foreign country. The inclusion of the second paragraph in Article
and serves as basis for recognizing the dissolution of the marriage
between the Filipino spouse and his or her alien spouse. 
Additionally, an action based on the second paragraph of Article
26 of the Family Code is not limited to the recognition of the
foreign divorce decree. If the court finds that the decree
capacitated the alien spouse to remarry, the courts can declare
that the Filipino spouse is likewise capacitated to contract another
marriage. No court in this jurisdiction, however, can make a
similar declaration for the alien spouse (other than that already
established by the decree), whose status and legal capacity are
generally governed by his national law.26
purpose of the second paragraph of Article 26 of the Family Code,
the RTC was correct in limiting the applicability of the provision for
the benefit of the Filipino spouse. In other words, only the Filipino
spouse can invoke the second paragraph of Article 26 of the
Family Code; the alien spouse can claim no right under this
provision. 
The foreign divorce decree is presumptive evidence of a right that
clothes the party with legal interest to petition for its recognition
in this jurisdiction
We qualify our above conclusion – i.e., that the second paragraph
of Article 26 of the Family Code bestows no rights in favor of
aliens – with the complementary statement that this conclusion is
not sufficient basis to dismiss Gerbert’s petition before the RTC. In
other words, the unavailability of the second paragraph of Article
26 of the Family Code to aliens does not necessarily strip Gerbert
of legal interest to petition the RTC for the recognition of his
foreign divorce decree. The foreign divorce decree itself, after its
authenticity and conformity with the alien’s national law have
been duly proven according to our rules of evidence, serves as a
presumptive evidence of right in favor of Gerbert, pursuant to
Section 48, Rule 39 of the Rules of Court which provides for the
effect of foreign judgments. This Section states:
SEC. 48. Effect of foreign judgments or final orders.—The effect of
a judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific
thing, the judgment or final order is conclusive upon the
title of the thing; and
(b) In case of a judgment or final order against a person,
the judgment or final order is presumptive evidence of a
right as between the parties and their successors in
interest by a subsequent title.
In either case, the judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
To our mind, direct involvement or being the subject of the
foreign judgment is sufficient to clothe a party with the requisite
interest to institute an action before our courts for the recognition
of the foreign judgment. In a divorce situation, we have declared,
no less, that the divorce obtained by an alien abroad may be
recognized in the Philippines, provided the divorce is valid
according to his or her national law.27
The starting point in any recognition of a foreign divorce judgment
is the acknowledgment that our courts do not take judicial notice
of foreign judgments and laws. Justice Herrera explained that, as a
rule, "no sovereign is bound to give effect within its dominion to a
judgment rendered by a tribunal of another country."28 This
means that the foreign judgment and its authenticity must be
proven as facts under our rules on evidence, together with the
alien’s applicable national law to show the effect of the judgment
on the alien himself or herself.29 The recognition may be made in
an action instituted specifically for the purpose or in another
action where a party invokes the foreign decree as an integral
aspect of his claim or defense.  A judgment of divorce is a judicial decree, although a foreign one,
In Gerbert’s case, since both the foreign divorce decree and the
national law of the alien, recognizing his or her capacity to obtain
a divorce, purport to be official acts of a sovereign authority,
Section 24, Rule 132 of the Rules of Court comes into play. This
Section requires proof, either by (1) official publications or (2)
copies attested by the officer having legal custody of the
documents. If the copies of official records are not kept in the
Philippines, these must be (a) accompanied by a certificate issued
by the proper diplomatic or consular officer in the Philippine
foreign service stationed in the foreign country in which the
record is kept and (b) authenticated by the seal of his office. 
13
The records show that Gerbert attached to his petition a copy of
the divorce decree, as well as the required certificates proving its
authenticity,30 but failed to include a copy of the Canadian law on
divorce.31 Under this situation, we can, at this point, simply
dismiss the petition for insufficiency of supporting evidence,
unless we deem it more appropriate to remand the case to the
RTC to determine whether the divorce decree is consistent with
the Canadian divorce law. 
We deem it more appropriate to take this latter course of action,
given the Article 26 interests that will be served and the Filipina
wife’s (Daisylyn’s) obvious conformity with the petition. A
remand, at the same time, will allow other interested parties to
oppose the foreign judgment and overcome a petitioner’s
presumptive evidence of a right by proving want of jurisdiction,
want of notice to a party, collusion, fraud, or clear mistake of law
or fact. Needless to state, every precaution must be taken to
ensure conformity with our laws before a recognition is made, as
the foreign judgment, once recognized, shall have the effect of res
judicata32 between the parties, as provided in Section 48, Rule 39
of the Rules of Court.33
In fact, more than the principle of comity that is served by the
practice of reciprocal recognition of foreign judgments between
nations, the res judicata effect of the foreign judgments of divorce
serves as the deeper basis for extending judicial recognition and
for considering the alien spouse bound by its terms. This same
effect, as discussed above, will not obtain for the Filipino spouse
were it not for the substantive rule that the second paragraph of
Article 26 of the Family Code provides. 
Considerations beyond the recognition of the foreign divorce
decree
As a matter of "housekeeping" concern, we note that the Pasig
City Civil Registry Office has already recorded the divorce decree
on Gerbert and Daisylyn’s marriage certificate based on the mere
presentation of the decree.34 We consider the recording to be
legally improper; hence, the need to draw attention of the bench
and the bar to what had been done. 
Article 407 of the Civil Code states that "[a]cts, events and judicial
decrees concerning the civil status of persons shall be recorded in
the civil register." The law requires the entry in the civil registry of
judicial decrees that produce legal consequences touching upon a
person’s legal capacity and status, i.e., those affecting "all his
personal qualities and relations, more or less permanent in
nature, not ordinarily terminable at his own will, such as his being
legitimate or illegitimate, or his being married or not."35
affecting a person’s legal capacity and status that must be
recorded. In fact, Act No. 3753 or the Law on Registry of Civil
Status specifically requires the registration of divorce decrees in
the civil registry: 
Sec. 1. Civil Register. – A civil register is established for recording
the civil status of persons, in which shall be entered: 
(a) births; 
(b) deaths;
(c) marriages;
 (d) annulments of marriages;  specifically providing for a special remedial proceeding by which
entries in the civil registry may be judicially cancelled or corrected.
(e) divorces; Rule 108 of the Rules of Court sets in detail the jurisdictional and
procedural requirements that must be complied with before a
judgment, authorizing the cancellation or correction, may be
(f) legitimations;
annotated in the civil registry. It also requires, among others, that
the verified petition must be filed with the RTC of the province
(g) adoptions; where the corresponding civil registry is located;38that the civil
registrar and all persons who have or claim any interest must be
(h) acknowledgment of natural children; made parties to the proceedings;39and that the time and place for
hearing must be published in a newspaper of general
(i) naturalization; and circulation.40 As these basic jurisdictional requirements have not
been met in the present case, we cannot consider the petition
Gerbert filed with the RTC as one filed under Rule 108 of the Rules
(j) changes of name.  of Court. 

xxxx We hasten to point out, however, that this ruling should not be
construed as requiring two separate proceedings for the
Sec. 4. Civil Register Books. — The local registrars shall keep and registration of a foreign divorce decree in the civil registry – one
preserve in their offices the following books, in which they shall, for recognition of the foreign decree and another specifically for
respectively make the proper entries concerning the civil status of cancellation of the entry under Rule 108 of the Rules of Court. The
persons:  recognition of the foreign divorce decree may be made in a Rule
108 proceeding itself, as the object of special proceedings (such as
(1) Birth and death register;  that in Rule 108 of the Rules of Court) is precisely to establish the
status or right of a party or a particular fact. Moreover, Rule 108
of the Rules of Court can serve as the appropriate adversarial
(2) Marriage register, in which shall be entered not only
proceeding41 by which the applicability of the foreign judgment
the marriages solemnized but also divorces and
can be measured and tested in terms of jurisdictional infirmities,
dissolved marriages. 
want of notice to the party, collusion, fraud, or clear mistake of
law or fact. 
(3) Legitimation, acknowledgment, adoption, change of
name and naturalization register.
WHEREFORE, we GRANT the petition for review on certiorari, and
REVERSE the October 30, 2008 decision of the Regional Trial Court
But while the law requires the entry of the divorce decree in the of Laoag City, Branch 11, as well as its February 17, 2009 order.
civil registry, the law and the submission of the decree by We order the REMAND of the case to the trial court for further
themselves do not ipso facto authorize the decree’s registration. proceedings in accordance with our ruling above. Let a copy of
The law should be read in relation with the requirement of a this Decision be furnished the Civil Registrar General. No costs.
judicial recognition of the foreign judgment before it can be given
res judicata effect. In the context of the present case, no judicial
SO ORDERED.
order as yet exists recognizing the foreign divorce decree. Thus,
the Pasig City Civil Registry Office acted totally out of turn and
without authority of law when it annotated the Canadian divorce
decree on Gerbert and Daisylyn’s marriage certificate, on the
strength alone of the foreign decree presented by Gerbert. 

Evidently, the Pasig City Civil Registry Office was aware of the
requirement of a court recognition, as it cited NSO Circular No. 4,
series of 1982,36 and Department of Justice Opinion No. 181,
series of 198237 – both of which required a final order from a
competent Philippine court before a foreign judgment, dissolving
a marriage, can be registered in the civil registry, but it,
nonetheless, allowed the registration of the decree. For being
contrary to law, the registration of the foreign divorce decree
without the requisite judicial recognition is patently void and
cannot produce any legal effect.1avvphi1

Another point we wish to draw attention to is that the recognition

that the RTC may extend to the Canadian divorce decree does not,
by itself, authorize the cancellation of the entry in the civil
registry. A petition for recognition of a foreign judgment is not the
proper proceeding, contemplated under the Rules of Court, for
the cancellation of entries in the civil registry.

Article 412 of the Civil Code declares that "no entry in a civil
register shall be changed or corrected, without judicial order." The
Rules of Court supplements Article 412 of the Civil Code by
14
 G.R. No. 196049               June 26, 2013

MINORU FUJIKI, PETITIONER, 
vs.
MARIA PAZ GALELA MARINAY, SHINICHI MAEKARA, LOCAL CIVIL
REGISTRAR OF QUEZON CITY, AND THE ADMINISTRATOR AND
CIVIL REGISTRAR GENERAL OF THE NATIONAL STATISTICS
OFFICE,RESPONDENTS.

DECISION

CARPIO, J.:

The Case

This is a direct recourse to this Court from the Regional Trial Court
(RTC), Branch 107, Quezon City, through a petition for review
on certiorari under Rule 45 of the Rules of Court on a pure
question of law. The petition assails the Order 1 dated 31 January
2011 of the RTC in Civil Case No. Q-11-68582 and its Resolution
dated 2 March 2011 denying petitioner’s Motion for
Reconsideration. The RTC dismissed the petition for "Judicial
Recognition of Foreign Judgment (or Decree of Absolute Nullity of
Marriage)" based on improper venue and the lack of personality
of petitioner, Minoru Fujiki, to file the petition.

The Facts

Petitioner Minoru Fujiki (Fujiki) is a Japanese national who

married respondent Maria Paz Galela Marinay (Marinay) in the
Philippines2 on 23 January 2004. The marriage did not sit well with
petitioner’s parents. Thus, Fujiki could not bring his wife to Japan
where he resides. Eventually, they lost contact with each other.

In 2008, Marinay met another Japanese, Shinichi Maekara

(Maekara). Without the first marriage being dissolved, Marinay
and Maekara were married on 15 May 2008 in Quezon City,
Philippines. Maekara brought Marinay to Japan. However,
Marinay allegedly suffered physical abuse from Maekara. She left
Maekara and started to contact Fujiki.3

Fujiki and Marinay met in Japan and they were able to reestablish
their relationship. In 2010, Fujiki helped Marinay obtain a
judgment from a family court in Japan which declared the
marriage between Marinay and Maekara void on the ground of
bigamy.4 On 14 January 2011, Fujiki filed a petition in the RTC
entitled: "Judicial Recognition of Foreign Judgment (or Decree of
Absolute Nullity of Marriage)." Fujiki prayed that (1) the Japanese
Family Court judgment be recognized; (2) that the bigamous
marriage between Marinay and Maekara be declared void ab
initiounder Articles 35(4) and 41 of the Family Code of the
Philippines;5 and (3) for the RTC to direct the Local Civil Registrar
of Quezon City to annotate the Japanese Family Court judgment
on the Certificate of Marriage between Marinay and Maekara and
to endorse such annotation to the Office of the Administrator and
Civil Registrar General in the National Statistics Office (NSO).6

The Ruling of the Regional Trial Court

A few days after the filing of the petition, the RTC immediately
issued an Order dismissing the petition and withdrawing the case
from its active civil docket.7 The RTC cited the following provisions
of the Rule on Declaration of Absolute Nullity of Void Marriages
and Annulment of Voidable Marriages (A.M. No. 02-11-10-SC):
15
Sec. 2. Petition for declaration of absolute nullity of void
marriages. –
(a) Who may file. – A petition for declaration of absolute nullity of
void marriage may be filed solely by the husband or the wife.
xxxx
Sec. 4. Venue. – The petition shall be filed in the Family Court of
the province or city where the petitioner or the respondent has
been residing for at least six months prior to the date of filing, or
in the case of a non-resident respondent, where he may be found
in the Philippines, at the election of the petitioner. x x x
The RTC ruled, without further explanation, that the petition was
in "gross violation" of the above provisions. The trial court based
its dismissal on Section 5(4) of A.M. No. 02-11-10-SC which
provides that "[f]ailure to comply with any of the preceding
requirements may be a ground for immediate dismissal of the
petition."8 Apparently, the RTC took the view that only "the
husband or the wife," in this case either Maekara or Marinay, can
file the petition to declare their marriage void, and not Fujiki.
Fujiki moved that the Order be reconsidered. He argued that A.M.
No. 02-11-10-SC contemplated ordinary civil actions for
declaration of nullity and annulment of marriage. Thus, A.M. No.
02-11-10-SC does not apply. A petition for recognition of foreign
judgment is a special proceeding, which "seeks to establish a
status, a right or a particular fact," 9 and not a civil action which is
"for the enforcement or protection of a right, or the prevention or
redress of a wrong."10 In other words, the petition in the RTC
sought to establish (1) the status and concomitant rights of Fujiki
and Marinay as husband and wife and (2) the fact of the rendition
of the Japanese Family Court judgment declaring the marriage
between Marinay and Maekara as void on the ground of bigamy.
The petitioner contended that the Japanese judgment was
consistent with Article 35(4) of the Family Code of the
Philippines11 on bigamy and was therefore entitled to recognition
by Philippine courts.12
In any case, it was also Fujiki’s view that A.M. No. 02-11-10-SC
applied only to void marriages under Article 36 of the Family Code
on the ground of psychological incapacity.13 Thus, Section 2(a) of
A.M. No. 02-11-10-SC provides that "a petition for declaration of
absolute nullity of void marriages may be filed solely by the
husband or the wife." To apply Section 2(a) in bigamy would be
absurd because only the guilty parties would be permitted to sue.
In the words of Fujiki, "[i]t is not, of course, difficult to realize that
the party interested in having a bigamous marriage declared a
nullity would be the husband in the prior, pre-existing
marriage."14 Fujiki had material interest and therefore the
personality to nullify a bigamous marriage.
Fujiki argued that Rule 108 (Cancellation or Correction of Entries
in the Civil Registry) of the Rules of Court is applicable. Rule 108 is
the "procedural implementation" of the Civil Register Law (Act No.
3753)15 in relation to Article 413 of the Civil Code.16 The Civil
Register Law imposes a duty on the "successful petitioner for
divorce or annulment of marriage to send a copy of the final
decree of the court to the local registrar of the municipality where
the dissolved or annulled marriage was solemnized." 17 Section 2 of
Rule 108 provides that entries in the civil registry relating to
"marriages," "judgments of annulments of marriage" and
"judgments declaring marriages void from the beginning" are
subject to cancellation or correction.18 The petition in the RTC
16
sought (among others) to annotate the judgment of the Japanese
Family Court on the certificate of marriage between Marinay and
Maekara.
Fujiki’s motion for reconsideration in the RTC also asserted that
the trial court "gravely erred" when, on its own, it dismissed the
petition based on improper venue. Fujiki stated that the RTC may
be confusing the concept of venue with the concept of
jurisdiction, because it is lack of jurisdiction which allows a court
to dismiss a case on its own. Fujiki cited Dacoycoy v. Intermediate
Appellate Court19 which held that the "trial court cannot pre-empt
the defendant’s prerogative to object to the improper laying of
the venue by motu proprio dismissing the case."20Moreover,
petitioner alleged that the trial court should not have
"immediately dismissed" the petition under Section 5 of A.M. No.
02-11-10-SC because he substantially complied with the provision.
On 2 March 2011, the RTC resolved to deny petitioner’s motion
for reconsideration. In its Resolution, the RTC stated that A.M. No.
02-11-10-SC applies because the petitioner, in effect, prays for a
decree of absolute nullity of marriage.21 The trial court reiterated
its two grounds for dismissal, i.e. lack of personality to sue and
improper venue under Sections 2(a) and 4 of A.M. No. 02-11-10-
SC. The RTC considered Fujiki as a "third person" 22 in the
proceeding because he "is not the husband in the decree of
divorce issued by the Japanese Family Court, which he now seeks
to be judicially recognized, x x x."23 On the other hand, the RTC did
not explain its ground of impropriety of venue. It only said that
"[a]lthough the Court cited Sec. 4 (Venue) x x x as a ground for
dismissal of this case[,] it should be taken together with the other
ground cited by the Court x x x which is Sec. 2(a) x x x."24
The RTC further justified its motu proprio dismissal of the petition
based on Braza v. The City Civil Registrar of Himamaylan City,
Negros Occidental.25 The Court in Braza ruled that "[i]n a special
proceeding for correction of entry under Rule 108 (Cancellation or
Correction of Entries in the Original Registry), the trial court has
no jurisdiction to nullify marriages x x x."26 Braza emphasized that
the "validity of marriages as well as legitimacy and filiation can be
questioned only in a direct action seasonably filed by the proper
party, and not through a collateral attack such as [a] petition [for
correction of entry] x x x."27
The RTC considered the petition as a collateral attack on the
validity of marriage between Marinay and Maekara. The trial
court held that this is a "jurisdictional ground" to dismiss the
petition.28 Moreover, the verification and certification against
forum shopping of the petition was not authenticated as required
under Section 529 of A.M. No. 02-11-10-SC. Hence, this also
warranted the "immediate dismissal" of the petition under the
same provision.
The Manifestation and Motion of the Office of the Solicitor
General and the Letters of Marinay and Maekara
On 30 May 2011, the Court required respondents to file their
comment on the petition for review.30 The public respondents, the
Local Civil Registrar of Quezon City and the Administrator and Civil
Registrar General of the NSO, participated through the Office of
the Solicitor General. Instead of a comment, the Solicitor General
filed a Manifestation and Motion.31
The Solicitor General agreed with the petition. He prayed that the
RTC’s "pronouncement that the petitioner failed to comply with x
x x A.M. No. 02-11-10-SC x x x be set aside" and that the case be
reinstated in the trial court for further proceedings. 32 The Solicitor
General argued that Fujiki, as the spouse of the first marriage, is
an injured party who can sue to declare the bigamous marriage
between Marinay and Maekara void. The Solicitor General
cited Juliano-Llave v. Republic33 which held that Section 2(a) of
A.M. No. 02-11-10-SC does not apply in cases of bigamy.
In Juliano-Llave, this Court explained:
[t]he subsequent spouse may only be expected to take action if he
or she had only discovered during the connubial period that the
marriage was bigamous, and especially if the conjugal bliss had
already vanished. Should parties in a subsequent marriage benefit
from the bigamous marriage, it would not be expected that they
would file an action to declare the marriage void and thus, in such
circumstance, the "injured spouse" who should be given a legal
remedy is the one in a subsisting previous marriage. The latter is
clearly the aggrieved party as the bigamous marriage not only
threatens the financial and the property ownership aspect of the
prior marriage but most of all, it causes an emotional burden to
the prior spouse. The subsequent marriage will always be a
reminder of the infidelity of the spouse and the disregard of the
prior marriage which sanctity is protected by the Constitution.34
The Solicitor General contended that the petition to recognize the
Japanese Family Court judgment may be made in a Rule 108
proceeding.35 In Corpuz v. Santo Tomas,36 this Court held that
"[t]he recognition of the foreign divorce decree may be made in a
Rule 108 proceeding itself, as the object of special proceedings
(such as that in Rule 108 of the Rules of Court) is precisely to
establish the status or right of a party or a particular
fact."37 While Corpuzconcerned a foreign divorce decree, in the
present case the Japanese Family Court judgment also affected
the civil status of the parties, especially Marinay, who is a Filipino
citizen.
The Solicitor General asserted that Rule 108 of the Rules of Court
is the procedure to record "[a]cts, events and judicial decrees
concerning the civil status of persons" in the civil registry as
required by Article 407 of the Civil Code. In other words, "[t]he
law requires the entry in the civil registry of judicial decrees that
produce legal consequences upon a person’s legal capacity and
status x x x."38 The Japanese Family Court judgment directly bears
on the civil status of a Filipino citizen and should therefore be
proven as a fact in a Rule 108 proceeding.
Moreover, the Solicitor General argued that there is no
jurisdictional infirmity in assailing a void marriage under Rule 108,
citing De Castro v. De Castro39 and Niñal v. Bayadog40 which
declared that "[t]he validity of a void marriage may be collaterally
attacked."41
Marinay and Maekara individually sent letters to the Court to
comply with the directive for them to comment on the
petition.42 Maekara wrote that Marinay concealed from him the
fact that she was previously married to Fujiki.43Maekara also
denied that he inflicted any form of violence on Marinay.44 On the
other hand, Marinay wrote that she had no reason to oppose the
petition.45 She would like to maintain her silence for fear that
anything she say might cause misunderstanding between her and
Fujiki.46
The Issues
Petitioner raises the following legal issues:
17
(1) Whether the Rule on Declaration of Absolute Nullity
of Void Marriages and Annulment of Voidable Marriages
(A.M. No. 02-11-10-SC) is applicable.
(2) Whether a husband or wife of a prior marriage can
file a petition to recognize a foreign judgment nullifying
the subsequent marriage between his or her spouse and
a foreign citizen on the ground of bigamy.
(3) Whether the Regional Trial Court can recognize the
foreign judgment in a proceeding for cancellation or
correction of entries in the Civil Registry under Rule 108
of the Rules of Court.
The Ruling of the Court
We grant the petition.
The Rule on Declaration of Absolute Nullity of Void Marriages and
Annulment of Voidable Marriages (A.M. No. 02-11-10-SC) does
not apply in a petition to recognize a foreign judgment relating to
the status of a marriage where one of the parties is a citizen of a
foreign country. Moreover, in Juliano-Llave v. Republic,47 this
Court held that the rule in A.M. No. 02-11-10-SC that only the
husband or wife can file a declaration of nullity or annulment of
marriage "does not apply if the reason behind the petition is
bigamy."48
I.
For Philippine courts to recognize a foreign judgment relating to
the status of a marriage where one of the parties is a citizen of a
foreign country, the petitioner only needs to prove the foreign
judgment as a fact under the Rules of Court. To be more specific, a
copy of the foreign judgment may be admitted in evidence and
proven as a fact under Rule 132, Sections 24 and 25, in relation to
Rule 39, Section 48(b) of the Rules of Court.49 Petitioner may
prove the Japanese Family Court judgment through (1) an official
publication or (2) a certification or copy attested by the officer
who has custody of the judgment. If the office which has custody
is in a foreign country such as Japan, the certification may be
made by the proper diplomatic or consular officer of the
Philippine foreign service in Japan and authenticated by the seal
of office.50
To hold that A.M. No. 02-11-10-SC applies to a petition for
recognition of foreign judgment would mean that the trial court
and the parties should follow its provisions, including the form
and contents of the petition,51 the service of summons,52 the
investigation of the public prosecutor,53 the setting of pre-
trial,54 the trial55 and the judgment of the trial court. 56 This is
absurd because it will litigate the case anew. It will defeat the
purpose of recognizing foreign judgments, which is "to limit
repetitive litigation on claims and issues."57 The interpretation of
the RTC is tantamount to relitigating the case on the merits.
In Mijares v. Rañada,58 this Court explained that "[i]f every
judgment of a foreign court were reviewable on the merits, the
plaintiff would be forced back on his/her original cause of action,
rendering immaterial the previously concluded litigation."59
A foreign judgment relating to the status of a marriage affects the
civil status, condition and legal capacity of its parties. However,
the effect of a foreign judgment is not automatic. To extend the
effect of a foreign judgment in the Philippines, Philippine courts
must determine if the foreign judgment is consistent with
domestic public policy and other mandatory laws.60 Article 15 of
the Civil Code provides that "[l]aws relating to family rights and
duties, or to the status, condition and legal capacity of persons are
binding upon citizens of the Philippines, even though living
abroad." This is the rule of lex nationalii  in private international
law. Thus, the Philippine State may require, for effectivity in the
Philippines, recognition by Philippine courts of a foreign judgment
affecting its citizen, over whom it exercises personal jurisdiction
relating to the status, condition and legal capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage
void does not require relitigation under a Philippine court of the
case as if it were a new petition for declaration of nullity of
marriage. Philippine courts cannot presume to know the foreign
laws under which the foreign judgment was rendered. They
cannot substitute their judgment on the status, condition and
legal capacity of the foreign citizen who is under the jurisdiction of
another state. Thus, Philippine courts can only recognize the
foreign judgment as a fact according to the rules of evidence.
Section 48(b), Rule 39 of the Rules of Court provides that a foreign
judgment or final order against a person creates a "presumptive
evidence of a right as between the parties and their successors in
interest by a subsequent title." Moreover, Section 48 of the Rules
of Court states that "the judgment or final order may be repelled
by evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact." Thus, Philippine
courts exercise limited review on foreign judgments. Courts are
not allowed to delve into the merits of a foreign judgment. Once a
foreign judgment is admitted and proven in a Philippine court, it
can only be repelled on grounds external to its merits, i.e. , "want
of jurisdiction, want of notice to the party, collusion, fraud, or
clear mistake of law or fact." The rule on limited review embodies
the policy of efficiency and the protection of party
expectations,61 as well as respecting the jurisdiction of other
states.62
Since 1922 in Adong v. Cheong Seng Gee,63 Philippine courts have
recognized foreign divorce decrees between a Filipino and a
foreign citizen if they are successfully proven under the rules of
evidence.64 Divorce involves the dissolution of a marriage, but the
recognition of a foreign divorce decree does not involve the
extended procedure under A.M. No. 02-11-10-SC or the rules of
ordinary trial. While the Philippines does not have a divorce law,
Philippine courts may, however, recognize a foreign divorce
decree under the second paragraph of Article 26 of the Family
Code, to capacitate a Filipino citizen to remarry when his or her
foreign spouse obtained a divorce decree abroad.65
There is therefore no reason to disallow Fujiki to simply prove as a
fact the Japanese Family Court judgment nullifying the marriage
between Marinay and Maekara on the ground of bigamy. While
the Philippines has no divorce law, the Japanese Family Court
judgment is fully consistent with Philippine public policy, as
bigamous marriages are declared void from the beginning under
Article 35(4) of the Family Code. Bigamy is a crime under Article
349 of the Revised Penal Code. Thus, Fujiki can prove the
existence of the Japanese Family Court judgment in accordance
with Rule 132, Sections 24 and 25, in relation to Rule 39, Section
48(b) of the Rules of Court.
II.
18
Since the recognition of a foreign judgment only requires proof of
fact of the judgment, it may be made in a special proceeding for
cancellation or correction of entries in the civil registry under Rule
108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court
provides that "[a] special proceeding is a remedy by which a party
seeks to establish a status, a right, or a particular fact." Rule 108
creates a remedy to rectify facts of a person’s life which are
recorded by the State pursuant to the Civil Register Law or Act No.
3753. These are facts of public consequence such as birth, death
or marriage,66 which the State has an interest in recording. As
noted by the Solicitor General, in Corpuz v. Sto. Tomas this Court
declared that "[t]he recognition of the foreign divorce decree may
be made in a Rule 108 proceeding itself, as the object of special
proceedings (such as that in Rule 108 of the Rules of Court) is
precisely to establish the status or right of a party or a particular
fact."67
Rule 108, Section 1 of the Rules of Court states:
Sec. 1. Who may file petition. — Any person interested in any act,
event, order or decree concerning the civil status of persons
which has been recorded in the civil register, may file a verified
petition for the cancellation or correction of any entry relating
thereto, with the Regional Trial Court of the province where the
corresponding civil registry is located. (Emphasis supplied)
Fujiki has the personality to file a petition to recognize the
Japanese Family Court judgment nullifying the marriage between
Marinay and Maekara on the ground of bigamy because the
judgment concerns his civil status as married to Marinay. For the
same reason he has the personality to file a petition under Rule
108 to cancel the entry of marriage between Marinay and
Maekara in the civil registry on the basis of the decree of the
Japanese Family Court.
There is no doubt that the prior spouse has a personal and
material interest in maintaining the integrity of the marriage he
contracted and the property relations arising from it. There is also
no doubt that he is interested in the cancellation of an entry of a
bigamous marriage in the civil registry, which compromises the
public record of his marriage. The interest derives from the
substantive right of the spouse not only to preserve (or dissolve,
in limited instances68) his most intimate human relation, but also
to protect his property interests that arise by operation of law the
moment he contracts marriage.69 These property interests in
marriage include the right to be supported "in keeping with the
financial capacity of the family"70 and preserving the property
regime of the marriage.71
Property rights are already substantive rights protected by the
Constitution,72 but a spouse’s right in a marriage extends further
to relational rights recognized under Title III ("Rights and
Obligations between Husband and Wife") of the Family
Code.73 A.M. No. 02-11-10-SC cannot "diminish, increase, or
modify" the substantive right of the spouse to maintain the
integrity of his marriage.74 In any case, Section 2(a) of A.M. No. 02-
11-10-SC preserves this substantive right by limiting the
personality to sue to the husband or the wife of the union
recognized by law.
Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse
of a subsisting marriage to question the validity of a subsequent
marriage on the ground of bigamy. On the contrary, when Section
2(a) states that "[a] petition for declaration of absolute nullity of
void marriage may be filed solely by the husband or the wife"75—
it refers to the husband or the wife of the subsisting marriage.
Under Article 35(4) of the Family Code, bigamous marriages are
void from the beginning. Thus, the parties in a bigamous marriage
are neither the husband nor the wife under the law. The husband
or the wife of the prior subsisting marriage is the one who has the
personality to file a petition for declaration of absolute nullity of
void marriage under Section 2(a) of A.M. No. 02-11-10-SC.
Article 35(4) of the Family Code, which declares bigamous
marriages void from the beginning, is the civil aspect of Article 349
of the Revised Penal Code,76 which penalizes bigamy. Bigamy is a
public crime. Thus, anyone can initiate prosecution for bigamy
because any citizen has an interest in the prosecution and
prevention of crimes.77 If anyone can file a criminal action which
leads to the declaration of nullity of a bigamous marriage, 78 there
is more reason to confer personality to sue on the husband or the
wife of a subsisting marriage. The prior spouse does not only
share in the public interest of prosecuting and preventing crimes,
he is also personally interested in the purely civil aspect of
protecting his marriage.
When the right of the spouse to protect his marriage is violated,
the spouse is clearly an injured party and is therefore interested in
the judgment of the suit.79 Juliano-Llave ruled that the prior
spouse "is clearly the aggrieved party as the bigamous marriage
not only threatens the financial and the property ownership
aspect of the prior marriage but most of all, it causes an emotional
burden to the prior spouse."80 Being a real party in interest, the
prior spouse is entitled to sue in order to declare a bigamous
marriage void. For this purpose, he can petition a court to
recognize a foreign judgment nullifying the bigamous marriage
and judicially declare as a fact that such judgment is effective in
the Philippines. Once established, there should be no more
impediment to cancel the entry of the bigamous marriage in the
civil registry.
III.
In Braza v. The City Civil Registrar of Himamaylan City, Negros
Occidental, this Court held that a "trial court has no jurisdiction to
nullify marriages" in a special proceeding for cancellation or
correction of entry under Rule 108 of the Rules of Court. 81 Thus,
the "validity of marriage[] x x x can be questioned only in a direct
action" to nullify the marriage.82 The RTC relied on Braza in
dismissing the petition for recognition of foreign judgment as a
collateral attack on the marriage between Marinay and Maekara.
Braza is not applicable because Braza does not involve a
recognition of a foreign judgment nullifying a bigamous marriage
where one of the parties is a citizen of the foreign country.
To be sure, a petition for correction or cancellation of an entry in
the civil registry cannot substitute for an action to invalidate a
marriage. A direct action is necessary to prevent circumvention of
the substantive and procedural safeguards of marriage under the
Family Code, A.M. No. 02-11-10-SC and other related laws. Among
these safeguards are the requirement of proving the limited
grounds for the dissolution of marriage,83 support pendente lite of
the spouses and children,84 the liquidation, partition and
distribution of the properties of the spouses,85 and the
investigation of the public prosecutor to determine collusion.86 A
direct action for declaration of nullity or annulment of marriage is
also necessary to prevent circumvention of the jurisdiction of the
Family Courts under the Family Courts Act of 1997 (Republic Act
No. 8369), as a petition for cancellation or correction of entries in
19
the civil registry may be filed in the Regional Trial Court "where
the corresponding civil registry is located."87 In other words, a
Filipino citizen cannot dissolve his marriage by the mere expedient
of changing his entry of marriage in the civil registry.
However, this does not apply in a petition for correction or
cancellation of a civil registry entry based on the recognition of a
foreign judgment annulling a marriage where one of the parties is
a citizen of the foreign country. There is neither circumvention of
the substantive and procedural safeguards of marriage under
Philippine law, nor of the jurisdiction of Family Courts under R.A.
No. 8369. A recognition of a foreign judgment is not an action to
nullify a marriage. It is an action for Philippine courts to recognize
the effectivity of a foreign judgment, which presupposes a case
which was already tried and decided under foreign law. The
procedure in A.M. No. 02-11-10-SC does not apply in a petition to
recognize a foreign judgment annulling a bigamous marriage
where one of the parties is a citizen of the foreign country.
Neither can R.A. No. 8369 define the jurisdiction of the foreign
court.
Article 26 of the Family Code confers jurisdiction on Philippine
courts to extend the effect of a foreign divorce decree to a Filipino
spouse without undergoing trial to determine the validity of the
dissolution of the marriage. The second paragraph of Article 26 of
the Family Code provides that "[w]here a marriage between a
Filipino citizen and a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse
capacitating him or her to remarry, the Filipino spouse shall have
capacity to remarry under Philippine law." In Republic v.
Orbecido,88 this Court recognized the legislative intent of the
second paragraph of Article 26 which is "to avoid the absurd
situation where the Filipino spouse remains married to the alien
spouse who, after obtaining a divorce, is no longer married to the
Filipino spouse"89 under the laws of his or her country. The second
paragraph of Article 26 of the Family Code only authorizes
Philippine courts to adopt the effects of a foreign divorce decree
precisely because the Philippines does not allow divorce.
Philippine courts cannot try the case on the merits because it is
tantamount to trying a case for divorce.
The second paragraph of Article 26 is only a corrective measure to
address the anomaly that results from a marriage between a
Filipino, whose laws do not allow divorce, and a foreign citizen,
whose laws allow divorce. The anomaly consists in the Filipino
spouse being tied to the marriage while the foreign spouse is free
to marry under the laws of his or her country. The correction is
made by extending in the Philippines the effect of the foreign
divorce decree, which is already effective in the country where it
was rendered. The second paragraph of Article 26 of the Family
Code is based on this Court’s decision in Van Dorn v.
Romillo90 which declared that the Filipino spouse "should not be
discriminated against in her own country if the ends of justice are
to be served."91
The principle in Article 26 of the Family Code applies in a marriage
between a Filipino and a foreign citizen who obtains a foreign
judgment nullifying the marriage on the ground of bigamy. The
Filipino spouse may file a petition abroad to declare the marriage
void on the ground of bigamy. The principle in the second
paragraph of Article 26 of the Family Code applies because the
foreign spouse, after the foreign judgment nullifying the marriage,
is capacitated to remarry under the laws of his or her country. If
the foreign judgment is not recognized in the Philippines, the
Filipino spouse will be discriminated—the foreign spouse can
remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code,
Philippine courts are empowered to correct a situation where the
Filipino spouse is still tied to the marriage while the foreign
spouse is free to marry. Moreover, notwithstanding Article 26 of
the Family Code, Philippine courts already have jurisdiction to
extend the effect of a foreign judgment in the Philippines to the
extent that the foreign judgment does not contravene domestic
public policy. A critical difference between the case of a foreign
divorce decree and a foreign judgment nullifying a bigamous
marriage is that bigamy, as a ground for the nullity of marriage, is
fully consistent with Philippine public policy as expressed in Article
35(4) of the Family Code and Article 349 of the Revised Penal
Code. The Filipino spouse has the option to undergo full trial by
filing a petition for declaration of nullity of marriage under A.M.
No. 02-11-10-SC, but this is not the only remedy available to him
or her. Philippine courts have jurisdiction to recognize a foreign
judgment nullifying a bigamous marriage, without prejudice to a
criminal prosecution for bigamy.
In the recognition of foreign judgments, Philippine courts are
incompetent to substitute their judgment on how a case was
decided under foreign law. They cannot decide on the "family
rights and duties, or on the status, condition and legal capacity" of
the foreign citizen who is a party to the foreign judgment. Thus,
Philippine courts are limited to the question of whether to extend
the effect of a foreign judgment in the Philippines. In a foreign
judgment relating to the status of a marriage involving a citizen of
a foreign country, Philippine courts only decide whether to extend
its effect to the Filipino party, under the rule of lex
nationalii expressed in Article 15 of the Civil Code.
For this purpose, Philippine courts will only determine (1) whether
the foreign judgment is inconsistent with an overriding public
policy in the Philippines; and (2) whether any alleging party is able
to prove an extrinsic ground to repel the foreign judgment, i.e.
want of jurisdiction, want of notice to the party, collusion, fraud,
or clear mistake of law or fact. If there is neither inconsistency
with public policy nor adequate proof to repel the judgment,
Philippine courts should, by default, recognize the foreign
judgment as part of the comity of nations. Section 48(b), Rule 39
of the Rules of Court states that the foreign judgment is already
"presumptive evidence of a right between the parties." Upon
recognition of the foreign judgment, this right becomes conclusive
and the judgment serves as the basis for the correction or
cancellation of entry in the civil registry. The recognition of the
foreign judgment nullifying a bigamous marriage is a subsequent
event that establishes a new status, right and fact92 that needs to
be reflected in the civil registry. Otherwise, there will be an
inconsistency between the recognition of the effectivity of the
foreign judgment and the public records in the
Philippines.1âwphi1
However, the recognition of a foreign judgment nullifying a
bigamous marriage is without prejudice to prosecution for bigamy
under Article 349 of the Revised Penal Code.93 The recognition of a
foreign judgment nullifying a bigamous marriage is not a ground
for extinction of criminal liability under Articles 89 and 94 of the
Revised Penal Code. Moreover, under Article 91 of the Revised
Penal Code, "[t]he term of prescription [of the crime of bigamy]
shall not run when the offender is absent from the Philippine
archipelago."
Since A.M. No. 02-11-10-SC is inapplicable, the Court no longer
sees the need to address the questions on venue and the contents
and form of the petition under Sections 4 and 5, respectively, of
A.M. No. 02-11-10-SC.
20
WHEREFORE, we GRANT the petition. The Order dated 31 January
2011 and the Resolution dated 2 March 2011 of the Regional Trial
Court, Branch 107, Quezon City, in Civil Case No. Q-11-68582
are REVERSED and SET ASIDE. The Regional Trial Court
is ORDERED to REINSTATE the petition for further proceedings in
accordance with this Decision.
SO ORDERED.
G.R. No. 167052
BANK OF THE PHILIPPINE ISLANDS SECURITIES
CORPORATION, Petitioner, 
vs.
EDGARDO V. GUEVARA, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
Before the Court is a Petition for Review under Rule 45 of the
Rules of Court seeking the reversal and setting aside of the
Decision1 dated December 19, 2003 and Resolution2 dated
February 9, 2005 of the Court Appeals in CA-G.R. CV No. 69348,
affirming the Decision3 dated September 11, 2000 of the Regional
Trial Court (RTC) of Makati City, Branch 57 in Civil Case No. 92-
1445. The RTC acted favorably on the action instituted by
respondent Edgardo V. Guevara for the enforcement of a foreign
judgment, particularly, the Order4 dated March 13, 1990 of the
United States (U.S.) District Court for the Southern District of
Tex.as, Houston Division (U.S. District Court), in Civil Action No. H-
86-440, and ordered petitioner Bank of the Philippine Islands (BPI)
Securities Corporation to pay respondent (a) the sum of
US$49,500.00 with legal interest; (b) P250,000.00 attorney's fees
and litigation ex.penses; and (c) costs of suit.
The facts are culled from the records of the case.
Ayala Corporation, a holding company, and its subsidiaries are
engaged in a wide array of businesses including real estate,
financial services, telecommunications, water and used water,
electronics manufacturing services, automotive dealership and
distributorship, business process outsourcing, power, renewable
energy, and transport infrastructure.5
In the 1980s, Ayala Corporation was the majority stockholder of
Ayala Investment and Development Corporation (AIDC). AIDC, in
turn, wholly owned Philsec Investment Corporation (PHILSEC), a
domestic stock brokerage firm, which was subsequently bought by
petitioner; and Ayala International Finance Limited (AIFL), a Hong
Kong deposit-taking corporation, which eventually became BPI
International Finance Limited (BPI-IFL). PHILSEC was a member of
the Makati Stock Exchange and the rules of the said organization
required that a stockbroker maintain an amount of security equal
to at least 50% of a client's outstanding debt.
Respondent was hired by Ayala Corporation in 1958. Respondent
later became the Head of the Legal Department of Ayala
Corporation and then the President of PHILSEC from September 1,
1980 to December 31, 1983. Thereafter, respondent served as
Vice-President of Ayala Corporation until his retirement on August
31, 1997.
While PHILSEC President, one of respondent's obligations was to
resolve the outstanding loans of Ventura O. Ducat (Ducat), which
the latter obtained separately from PHILSEC and AIFL. Although
Ducat constituted a pledge of his stock portfolio valued at
approximately US$1.4 million, Ducat's loans already amounted to
US$3.1 million. Because the security for Ducat's debts fell below
the 50% requirement of the Makati Stock Exchange, the trading
privileges of PHILSEC was in peril of being suspended.
Ducat proposed to settle his debts by an exchange of assets. Ducat
owned several pieces of real estate in Houston, Texas, in
partnership with Drago Daic (Daic), President of 1488, Inc., a U.S.-
based corporation. Respondent relayed Ducat's proposal to
Enrique Zobel (Zobel), the Chief Executive Officer of Ayala
Corporation. Zobel was amenable to Ducat's proposal but advised
respondent to send Thomas Gomez (Gomez), an AIFL employee
who traveled often to the U.S., to evaluate Ducat's properties.
In December of 1982, Gomez examined several parcels of real
estate that were being offered by Ducat and 1488, Inc. for the
exchange. Gomez, in a telex to respondent, recommended the
acceptance of a parcel of land in Harris County, Texas (Harris
County property), which was believed to be worth around US$2.9
million. Gomez further opined that the "swap would be fair and
reasonable" and that it would be better to take this opportunity
rather than pursue a prolonged legal battle with Ducat. Gomez's
recommendation was brought to Zobel's attention. The property-
for-debt exchange was subsequently approved by the AIFL Board
of Directors even without a prior appraisal of the Harris County
property. However, before the exchange actually closed, an AIFL
director asked respondent to obtain such an appraisal.
William Craig (Craig), a former owner of the Harris County
property, conducted the appraisal of the market value of the said
property. In his January 1983 appraisal, Craig estimated the fair
market value of the Harris County property at US$3,365,000.
Negotiations finally culminated in an Agreement,6 executed on
January 27, 1983 in Makati City, Philippines, among 1488, Inc.,
represented by Daic; Ducat, represented by Precioso Perlas
(Perlas); AIFL, represented by Joselito Gallardo (Gallardo); and
PHILSEC and Athona Holdings, N. V. (ATHONA), both represented
by respondent. Under the Agreement, the total amount of Ducat's
debts was reduced from US$3.1 million to US$2.5 million;
ATHONA, a company wholly owned by PHILSEC and AIFL, would
buy the Harris County property from 1488, Inc. for the price of
US$2,807,209.02; PHILSEC and AIFL would grant ATHONA a loan
of US$2.5 million, which ATHONA would entirely use as initial
payment for the purchase price of the Harris County property;
ATHONA would execute a promissory note in favor of 1488, Inc. in
the sum of US$307,209.02 to cover the balance of the purchase
price for the Harris County property; upon its receipt of the initial
21
payment of US$2.5 million from ATHONA, 1488, Inc. would then
fully pay Ducat's debts to PHILSEC and AIFL in the same amount;
for their part, PHILSEC and AIFL would release and transfer
possession of Ducat's pledged stock portfolio to 1488, Inc.; and
1488, Inc. would become the new creditor of Ducat, subject to
such other terms as they might agree upon.
The series of transactions per the Agreement was eventually
executed. However, after acquiring the Harris County property,
ATHONA had difficulty selling the same. Despite repeated
demands by 1488, Inc., ATHONA failed to pay its promissory note
for the balance of the purchase price for the Harris County
property, and PHILSEC and AIFL refused to release the remainder
of Ducat's stock portfolio, claiming that they were defrauded into
believing that the said property had a fair market value higher
than it actually had.
Civil Action No. H-86-440 before the
U.S. District Court of Southern
District of Texas, Houston Division
On October 17, 1985, 1488, Inc. instituted a suit against PHILSEC,
AIFL, and ATHONA for (a) misrepresenting that an active market
existed for two shares of stock included in Ducat's portfolio when,
in fact, said shares were to be withdrawn from the trading list; (b)
conversion of the stock portfolio; (c) fraud, as ATHONA had never
intended to abide by the provisions of its promissory note when
they signed it; and (d) acting in concert as a common enterprise or
in the alternative, that ATHONA was the alter ego of PHILSEC and
AIFL. The suit was docketed as Civil Action No. H-86-440 before
the U.S. District Court.
PHILSEC, AIFL, and ATHONA filed counterclaims against 1488, Inc.,
Daic, Craig, Ducat, and respondent, for the recovery of damages
and excess payment or, in the alternative, the rescission of the
sale of the Harris County property, alleging fraud, negligence, and
conspiracy on the part of counter-defendants who knew or should
have known that the value of said property was less than the
appraisal value assigned to it by Craig.
Before the referral of the case to the jury for verdict, the U.S.
District Court dropped respondent as counter-defendant for lack
of evidence to support the allegations against him. Respondent
then moved in open court to sanction petitioner (formerly
PHILSEC), AIFL, and ATHONA based on Rule 11 of the U.S. Federal
Rules of Civil Procedure.7
In its Order dated March 13, 1990, the U.S. District Court stated
that on February 14, 1990, after trial, the jury returned a verdict
for 1488, Inc. In the same Order, the U.S. District Court ruled
favorably on respondent's pending motion for sanction, thus:
During the course of the trial, the Court was required to review
plaintiff's Exhibit No. 91 to determine whether the exhibit should
be admitted. After reviewing the exhibit and hearing the evidence,
the Court concluded that the defendants' counterclaims against
Edgardo V. Guevara are frivolous and brought against him simply
to humiliate and embarrass him. It is the opinion of the Court that
the defendants, Philsec Investment Corporation, A/K/A BPI
Securities, Inc., and Ayala International Finance Limited, should be
sanctioned appropriately based on Fed. R. Civ. P. 11 and the
Court's inherent powers to punish unconscionable conduct. Based
upon the motion and affidavit of Edgardo V. Guevara, the Court
finds that $49,450 is reasonable punishment.
ORDERED that defendants, Philsec Investment Corporation A/K/A
BPI Securities, Inc., and Ayala International Finance Limited, jointly
and severally, shall pay to Edgardo V. Guevara $49,450 within 30
days of the entry of this order.8
Petitioner, AIFL, and ATHONA appealed the jury verdict, as well as
the aforementioned order of the U.S. District Court for them to
pay respondent US$49,450.00; while 1488, Inc. appealed a post-
judgment decision of the U.S. District Court to amend the amount
of attorney's fees awarded. The appeals were docketed as Case
No. 90-2370 before the U.S. Court of Appeals, Fifth Circuit.
The U.S. Court of Appeals rendered its Decision on September 3,
1991 affirming the verdict in favor of 1488, Inc. The U.S. Court of
Appeals found no basis for the allegations of fraud made by
petitioner, AIFL, and ATHONA against 1488, Inc., Daic, Craig, and
Ducat:
[2] To state a cause of action for fraud under Texas law, a plaintiff
must allege sufficient facts to show:
(1)that a material representation was made;
(2)that it was false;
(3)that when the speaker made it he knew that it was
false or made it recklessly without any knowledge of the
truth and as a positive assertion;
(4)that he made it with the intention that it should be
acted on by the party;
(5)that the party acted in reliance upon it;
(6)that he thereby suffered injury.
Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977).
We agree with the district court's decision to grant a directed
verdict against the defendants. The defendants failed to allege
sufficient facts to establish the elements necessary to
demonstrate fraud. In particular, the defendants have failed to
allege any facts that would tend to show that the plaintiff or any
of the third party defendants made a false representation or a
representation with reckless disregard as to its truth.
The Houston real estate market was extremely volatile during the
late 1970's and the early 1980's. Like a stream of hot air, property
values rose rapidly as the heat and fury generated by speculation
and construction plans mounted, but, just as rapidly, the climate
cooled and the high-flying market came crashing to an all time
low. The real estate transaction involved in this case was certainly
affected by this environment of capriciousness. Moreover, a
number of additional variables may have contributed to the
uncertainty of its value. For instance, the land abutted a two-lane
asphalt road that had been targeted by the state for conversion
into a major multi-lane divided highway. Water and sewage
treatment facilities were located near the boundary lines of the
property. In addition, Houston's lack of conventional zoning
ordinances meant that the value of the property could fluctuate
depending upon the use (commercial or residential) for which the
property would ultimately be used.
[3]The fact that the defendants were unable to sell the property
at the price for which it had been appraised does not demonstrate
22
that the plaintiff or the third party defendants knew that the value
of the property was less than the appraised value, nor does it
establish that the opposing parties were guilty of negligent
misrepresentation or negligence.
[4]In support of their allegation of fraud, the defendants rely
heavily on a loan application completed by 1488 shortly before
the subject property was transferred to Athona. See Defendant's
Exhibit 29. At the time, 1488 still owed approximately $300,000 to
Republic of Texas Savings Association on its original loan for the
subject property. The debt had matured and 1488 was planning to
move the loan to Home Savings Association of Houston, that is,
take out a loan from Home Savings to pay off the debt to Republic.
1488 had planned to borrow $350,000 for that purpose. A line
item on the Home Savings loan application form asked for the
amount of the loan as a percentage of the appraised value of the
land. A figure of thirty-nine percent was typed into that space, and
the defendants suggest that this proves that the plaintiff knew
Craig's appraisal was erroneous. The defendants reason that if the
$350,000 loan amount was only thirty-nine percent of the land's
appraised value, then the real estate must have been worth
approximately $897,436.
Although their analysis is sound, the conclusion reached by the
defendants cannot withstand additional scrutiny. At the time that
the loan application was completed, 1488 did not request to have
a new appraisal done for the property. Instead, 1488 planned to
use the numbers that had been generated for a quasi-appraisal
done in 1977. The 1977 report purported only to "supplement" an
earlier appraisal that had been conducted in 1974, and the
supplement described its function as estimating market value "for
mortgage loan purposes" only. See Defendant's Trial Exhibit 4. The
two page supplement was based on such old information that
even the Home Savings Association would not accept it without
additional collateral as security for the loan. See Record on
Appeal, Vol. 17 at 5-29 to 5-30. The loan, however, was never
made because the property was transferred to Athona, and the
outstanding loan to Republic was paid off as part of that
transaction. In addition, the loan application itself was never
signed by anyone affiliated with 1488. The district court was
correct in dismissing this argument in support of the defendant's
fraud allegations.
[5] The defendants also allege that the plaintiff and counter
defendants knew that Craig's appraisal was fraudulent because
the purchaser's statement signed by their own representative,
and the seller's statement, signed by the plaintiff, as well as the
title insurance policy all recited a purchase price of $643,416.12.
Robert Higgs, general counsel for 1488, explained that because of
the nature of the transaction, 1488, for tax purposes, wanted the
purchase price on the closing statement to reflect only that
amount of cash actually exchanged at the closing as well as the
promissory note given at the closing. See Record on Appeal, Vol.
17 at 5- 127. Although the closing documents recite a purchase
price well under the actual sales price, nothing indicates that any
of the parties actually believed the property to be worth less than
the sales amount.
The defendants also assert that it was error for the district court
to deny them permission to designate O. Frank McPherson, a
Houston appraiser, as an expert witness after the cutoff date
established by a pretrial order for such designations. The
defendants contend that the error prevented them from
presenting facts that would support their fraud allegations.
Although the defendants were allowed to present the testimony
of another expert witness on the subject of valuation, they argue
that McPherson's testimony was critical because he had
performed an appraisal of the property for the Texas Highway
Department close to the time period during which Craig had made
his appraisal. McPherson's appraisal was performed as part of the
State's condemnation proceedings that preceded the planned
highway expansion next to the subject property.
xxxx
[9] In their briefs, the defendants fail to provide an adequate
explanation for their failure to identify their expert witness in
accordance with the district court's pretrial order. This law suit
was initiated in 1985, and the defendants had until November of
1988 to designate their expert witnesses. The defendants were
aware of the condemnation proceedings, and they, therefore, had
approximately three years to determine the identity of any
appraiser used by the state. The defendants simply failed to make
this inquiry.
Enforcement of the district court's pretrial order did not leave the
defendants without an expert witness on the issue of valuation,
and the available expert had also conducted appraisals for the
Texas Highway Department in the area surrounding the subject
property. x x x
Although the degree of prejudice suffered by the plaintiff due to
the late designation of an expert would not have been great, a
district court still has the discretion to control pretrial discovery
and sanction a party's failure to follow a scheduling order. See id.
at 791. Such action is particularly appropriate here, where the
defendants have failed to provide an adequate explanation for
their failure to identify their expert within the designated
timetable.
xxxx
The defendants failed to produce enough evidence from which
fraud could be inferred to justify the submission of the issue to a
jury. Conclusional allegations or speculation regarding what the
plaintiff knew or did not know concerning the value of the subject
property are insufficient to withstand a motion for a directed
verdict. The district court committed no error in granting the
motion.
xxxx
Since the defendants failed to present the district court with any
facts that would tend to show that the plaintiffs committed a
fraud against them, their claim of a conspiracy to commit fraud
must also fail.9
The U.S. Court of Appeals likewise adjudged that petitioner, AIFL,
and ATHONA failed to prove negligence on the part of 1488, Inc.,
Daic, Craig, and Ducat in the appraisal of the market value of the
said property:
[10, 11] The defendants have likewise failed to present any facts
that would tend to support their claim of negligent
misrepresentation or negligence. The defendants rely on
assumptions and unsupportable conclusions of law in establishing
their case for negligence: "Assuming the Property's true value is
less than $800,000, it is reasonable to assume that the counter
defendants failed to exercise reasonable care or competence . . ."
Brief for Athona at 45-46 x x x. A party may not rely on
23
assumptions of fact to carry their case forward. The defendants
have presented no facts to suggest that the plaintiff was negligent
in acquiring its appraisal. The plaintiff hired Craig, a real estate
broker, to perform the appraisal after the defendants had already
given their initial approval for the transaction. Craig had
performed real estate appraisals in the past, and Texas law
permits real estate brokers to conduct such appraisals, see
Tex.Rev.Civ.Stat.Ann. art. 6573a, §2(2)(E) (Vernon Supp. 1988)
(Original version at Tex.Rev.Civ.Stat.Ann. art. 6573a, §4(1)(e)
(Vernon 1969). These facts do not support a claim of negligence.
For the foregoing reasons the district court committed no error in
granting a directed verdict against the counterclaims advanced by
the defendants.10
The U.S. Court of Appeals, however, vacated the award of
exemplary damages in favor of 1488, Inc. for the fraudulent
misrepresentation regarding the marketability of the two shares
of stock in Ducat's portfolio. Under Texas law, a jury may not
award damages unless it was determined that the plaintiff had
also sustained actual damages. The U.S. Court of Appeals agreed
with petitioner, AIFL, and ATHONA that 1488, Inc. brought its suit
alleging fraudulent misrepresentation after the two-year statute
of limitation had expired. The misrepresentation issue should
never have gone to the jury. Therefore, the jury's finding of actual
damages is nullified; and since the jury verdict is left without a
specific finding of actual damages, the award of exemplary
damages must be vacated.
The U.S. Court of Appeals also vacated the award of Rule 11
sanctions in favor of respondent and against petitioner, AIFL, and
ATHONA for being rendered without due process, and remanded
the issue to the U.S. District Court:
[18-20] The Rule 11 motion was first made by Guevara on
February 14, 1990, and the court immediately ruled on the issue
without giving the defendants an opportunity to prepare a written
response. See Record on Appeal, Vol. 22 at 10-25 to 10-37.
Although, the defendants were given an opportunity to speak, we
conclude that the hearing failed to comport with the
requirements of due process, which demand that the defendants
be provided with adequate notice and an opportunity to prepare a
response. See Henderson v. Department of Public Safety and
Corrections, 901 F.2d 1288, 1293-94 (5th Cir.1990). Providing
specific notice and an opportunity to respond is particularly
important in cases, such as the one before us, in which the
sanctions have been imposed on the clients and not the attorneys.
See Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir.1987) ("If
sanctions are proposed to be imposed on the client, due process
will demand more specific notice because the client is likely
unaware of the existence of Rule 11 and should be given the
opportunity to prepare a defense."). A separate hearing is not a
prerequisite to the imposition of Rule 11 sanctions, see
Donaldson, 819 F.2d at 1560 n. 12, but the defendants in this case,
should have been given more of an opportunity to respond to the
motion than that provided at the hearing in which the motion was
first raised. Providing the defendant with an opportunity to mount
a defense "on the spot" does not comport with due process. Given
that the defendants were not provided with adequate notice or an
opportunity to be heard, we vacate the award of sanctions and
remand so that the district court can provide the defendants with
an adequate opportunity to be heard.11
Finally, the U.S. Court of Appeals similarly vacated the award of
attorney's fees and remanded the matter to the U.S. District Court
for recalculation to conform with the requirements provided in
the promissory note.
In accordance with the Decision dated September 3, 1991 of the
U.S. Court of Appeals, the U.S. District Court issued an
Order12 dated October 28, 1991 giving petitioner, AIFL, and
ATHONA 20 days to formally respond to respondent's motion for
Rule 11 sanctions. Petitioner, AIFL, and ATHONA jointly filed
before the U.S. District Court their opposition to respondent's
motion for Rule 11 sanctions. 13 Respondent filed his reply to the
opposition, to which petitioner, AIFL, and ATHONA, in turn, filed a
reply-brief.14
In an Order15 dated December 31, 1991, the U.S. District Court still
found respondent's motion for Rule 11 sanctions meritorious and
reinstated its Order dated March 13, 1990:
The basis of the Court's prior decision as well as now is the fact
that the defendants filed suit against Guevara with knowledge
that the basis of the suit was unfounded. In the defendants' file
was an appraisal from an international appraisal firm, which the
defendants refused to disclose during discovery and was only
discovered at a bench conference during a discussion about
appraisers. Based on the defendants' own appraisers, no basis
existed for a suit by the defendants against their employee.
The previous judgment entered by this Court is REINSTATED.
The above-quoted Order of the U.S. District Court attained finality
as it was no longer appealed by petitioner, AIFL, and ATHONA.
Through a letter dated February 18, 1992, respondent demanded
that petitioner pay the amount of US$49,450.00 awarded by the
U.S. District Court in its Order dated March 13, 1990. Given the
continuous failure and/or refusal of petitioner to comply with the
said Order of the U.S. District Court, respondent instituted an
action for the enforcement of the same, which was docketed as
Civil Case No. 92-1445 and raffled to the RTC of Makati City,
Branch 57.
Civil Case No. 92-1445 before
Branch 57 of the RTC of Makati City
In his Complaint for the enforcement of the Order dated March
13, 1990 of the U.S. District Court in Civil Action No. H-86-440,
respondent prayed that petitioner be ordered to pay:
1.The sum of US$49,450.00 or its equivalent in
Philippine Pesos x x x with interest from date of
demand;
2.Attorney's fees and litigation expenses in the sum of
P250,000.00;
3.Exemplary damages of P200,000.00; and
4.Costs of the suit.16
In its Amended Answer Ad Cautelam,17 petitioner opposed the
enforcement of the Order dated March 13, 1990 of the U.S.
District Court on the grounds that it was rendered upon a clear
24
mistake of law or fact and/or in violation of its right to due
process.
In the course of the pre-trial and scheduled trial proceedings, the
parties respectively manifested before the court that they were
dispensing with the presentation of their witnesses since the
subject matter of their testimonies had already been stipulated
upon.18
Thereafter, the parties formally offered their respective evidence
which entirely consisted of documentary exhibits. Respondent
submitted authenticated and certified true copies of Rule 11 of
the U.S. Federal Rules of Civil Procedure; 19 the Orders dated
March 13, 1990, October 28, 1991, and December 31, 1991 of the
U.S. District Court in Civil Action No. H-86- 440;20 the Decision
dated September 3, 1991 of the U.S. Court of Appeals in Case No.
90-2370;21 and the opposition to respondent's motion for Rule 11
sanctions and reply-brief filed by PHILSEC, AIFL, and ATHONA
before the U.S. District Court.22 Petitioner presented photocopies
of pleadings, documents, and transcripts of stenographic notes in
Civil Action No. H-86- 440 before the U.S. District Court; 23 the
pleadings filed in other cases related to Civil Case No. 92-
1440;24 and a summary of lawyer's fees incurred by petitioner in
the U.S.25 The RTC admitted in evidence the documentary exhibits
of the parties in its Orders dated September 21, 1998 and
February 8, 1999,26 and then deemed the case submitted for
decision.
The RTC rendered a Decision on September 11, 2000 with the
following dispositive portion:
WHEREFORE, judgment is hereby rendered in favor of
[respondent] Edgardo V. Guevara ordering [petitioner] BPI
Securities Corporation to pay [respondent] the following:
1.the sum of US$49,500.00 with legal interest from the
filing of this case until fully paid;
2.the sum of P250,000.00 as attorney's fees and
litigation expenses; and
3.the costs of suit.
An award of exemplary damages for P200,000.00 is denied for
being speculative.27
Petitioner appealed to the Court of Appeals, assigning the
following errors on the part of the RTC:
A.The trial court erred in not passing upon the merit or
validity of [petitioner's] defenses against the
enforcement of the foreign judgment in the Philippines.
Had the trial court considered [petitioner's] defenses, it
would have concluded that the foreign judgment was
not enforceable because it was made upon a clear
mistake of law or fact and/or was made in violation of
the [petitioner's] right to due process.
B.The trial court erred in not utilizing the standard for
determining the enforceability of the foreign award that
was agreed upon by the parties to this case during the
pre-trial, namely, did the defendants in the Houston
case (PHILSEC, AIFL, AND ATHONA) have reasonable
grounds to implead [respondent] in the Houston case
 based upon the body of the evidence submitted therein.
Thus, whether or not PHILSEC, AIFL and ATHONA
ultimately prevailed against [respondent] was
immaterial or irrelevant; the question only was whether
they had reasonable grounds to proceed against him, for
if they had, then there was admittedly no basis for the
Rule 11 award against them by the Houston Court.
xxxx
C.In the light of its ruling, the trial court failed to pass
upon and resolve the other issues and/or defenses
expressly raised by [petitioner], including the defense
that PHILSEC, AIFL, and ATHONA were deprived of their
right to defend themselves against the Rule 11 sanction
and the main decision because of the prohibitive cost of
legal representation in the us and also because of the
gross negligence of its US counsel. x x x.28
In its Decision dated December 19, 2003, the Fifth Division of the
Court of Appeals decreed:
WHEREFORE, the Decision dated 11 September 2000 in Civil Case
No. 92-1445 of the Regional Trial Court of Makati, Branch 57, is
hereby AFFIRMED in all respect with costs against [petitioner].29
In its Motion for Reconsideration,30 petitioner lamented that the
Fifth Division of the Court of Appeals failed to resolve on its own
petitioner's appeal as the Decision dated December 19, 2003 of
the said Division was copied almost verbatim from respondent's
brief. Thus, petitioner prayed that the Fifth Division of the Court of
Appeals recuse itself from deciding petitioner's Motion for
Reconsideration and that the case be re-raffled to another
division.
The Fifth Division of the Court of Appeals maintained in its
Resolution dated May 25, 2004 that the issues and contentions of
the parties were all duly passed upon and that the case was
decided according to its merits. The said Division, nonetheless,
abstained from resolving petitioner's Motion for Reconsideration
and directed the re-raffle of the case.31
Petitioner's Motion for Reconsideration was re-raffled to and
subsequently resolved by the Tenth Division of the Court of
Appeals. In its Resolution dated February 9, 2005, the Tenth
Division of the appellate court denied the said Motion for lack of
merit.32
Hence, petitioner seeks recourse from this Court via the instant
Petition for Review, insisting that the Court of Appeals erred in
affirming the RTC judgment which enforced the Order dated
March 13, 1990 of the U.S. District Court in Civil Action No. H-86-
440.
Petitioner contends that it was not accorded by the Court of
Appeals the right to refute the foreign judgment pursuant to Rule
39, Section 48 of the Rules of Court because the appellate court
gave the effect of res judicata to the said foreign judgment. The
Court of Appeals copied wholesale or verbatim the respondent's
brief without addressing the body of evidence adduced by
petitioner showing that it had reasonable grounds to implead
respondent in Civil Action No. H-86-440.
25
Petitioner asserts that the U.S. District Court committed a clear
mistake of law and fact in its issuance of the Order dated March
13, 1990, thus, said Order is unenforceable in this jurisdiction.
Petitioner discusses in detail its evidence proving that respondent,
together with 1488, Inc., Ducat, Craig, and Daic, induced
petitioner to agree to a fraudulent deal. Petitioner points out that
respondent had the duty of looking for an independent and
competent appraiser of the market value of the Harris County
property; that instead of choosing an unbiased and skilled
appraiser, respondent connived with 1488, Inc., Ducat, and Daic in
selecting Craig, who turned out to be the former owner of the
Harris County property and a close associate of 1488, Inc. and
Daic; and that respondent endorsed to petitioner Craig's appraisal
of the market value of the Harris County property, which was
overvalued by more than 400%.
According to petitioner, it had reasonable grounds to implead
respondent in Civil Action No. H-86-440 so the sanction imposed
upon it under Rule 11 of the U.S. Federal Rules of Civil Procedure
was unjustified. Petitioner additionally argues that there is no
basis for the U.S. District Court to impose upon it the Rule 11
sanction as there is nothing in the said provision which allows "the
imposition of sanctions for simply bringing a meritless lawsuit." If
the Rule 11 sanction was imposed upon petitioner as punishment
for impleading a party (when it had reasonable basis for doing so)
and not prevailing against said party, then, petitioner claims that
such a sanction is against Philippine public policy and should not
be enforced in this jurisdiction. Settled in this jurisdiction that
there should be no premium attached to the right to litigate,
otherwise parties would be very hesitant to assert a claim in
court.
Petitioner further alleges that it was denied due process in Civil
Action No H-86-440 because: (1) the U.S. District Court imposed
the Rule 11 sanction on the basis of a single document, i.e., the
letter dated September 26, 1983 of Bruce C. Bossom, a partner at
Jones Lang Wooton, a firm of chartered surveyors and
international real estate consultants, addressed to a Mr. Senen L.
Matoto of AIFL (marked as Exhibit 91 before the U.S. District
Court), which was never admitted into evidence; (2) in said letter,
Jones Lang Wooton was "soliciting a listing agreement" and in
which the "said firm unilaterally, without being asked as to the
value of the [Harris County] property, indicated a value for the
[same] which approximate[d] with the value given in the Craig
appraisal," hence, it cannot be used as basis to conclude that
petitioner, AIFL, and ATHONA assented to Craig's appraisal of the
Harris County property; (3) the counsel who represented
petitioner, AIFL, and ATHONA in Civil Action No. H-86-440 before
the U.S. District Court was grossly ignorant and/or negligent in the
prosecution of their counterclaims and/or in proving their
defenses, such as when said counsel failed to present an expert
witness who could have testified as to the actual market value of
the Harris County property or when said counsel failed to discredit
respondent's credibility despite the availability of evidence that
respondent had been previously fined by the Philippine Securities
and Exchange Commission for "stock manipulation;" and (4) the
excessive and unconscionable legal fees charged by their U.S.
counsel effectively prevented them from making further appeal.
The Court finds the Petition bereft of merit.
In Mijares v. Rañada,33 the Court extensively discussed the
underlying principles for the recognition and enforcement of
foreign judgments in Philippine jurisdiction:
There is no obligatory rule derived from treaties or conventions
that requires the Philippines to recognize foreign judgments, or
allow a procedure for the enforcement thereof.1âwphi1 However,
generally accepted principles of international law, by virtue of the
incorporation clause of the Constitution, form part of the laws of
the land even if they do not derive from treaty obligations. The
classical formulation in international law sees those customary
rules accepted as binding result from the combination two
elements: the established, widespread, and consistent practice on
the part of States; and a psychological element known as the
opinion juris sive necessitates (opinion as to law or necessity).
Implicit in the latter element is a belief that the practice in
question is rendered obligatory by the existence of a rule of law
requiring it.
While the definite conceptual parameters of the recognition and
enforcement of foreign judgments have not been authoritatively
established, the Court can assert with certainty that such an
undertaking is among those generally accepted principles of
international law. As earlier demonstrated, there is a widespread
practice among states accepting in principle the need for such
recognition and enforcement, albeit subject to limitations of
varying degrees. The fact that there is no binding universal treaty
governing the practice is not indicative of a widespread rejection
of the principle, but only a disagreement as to the imposable
specific rules governing the procedure for recognition and
enforcement.
Aside from the widespread practice, it is indubitable that the
procedure for recognition and enforcement is embodied in the
rules of law, whether statutory or jurisprudential, adopted in
various foreign jurisdictions. In the Philippines, this is evidenced
primarily by Section 48, Rule 39 of the Rules of Court which has
existed in its current form since the early 1900s. Certainly, the
Philippine legal system has long ago accepted into its
jurisprudence and procedural rules the viability of an action for
enforcement of foreign judgment, as well as the requisites for
such valid enforcement, as derived from internationally accepted
doctrines. Again, there may be distinctions as to the rules adopted
by each particular state, but they all prescind from the premise
that there is a rule of law obliging states to allow for, however
generally, the recognition and enforcement of a foreign judgment.
The bare principle, to our mind, has attained the status of opinio
juris in international practice.
This is a significant proposition, as it acknowledges that the
procedure and requisites outlined in Section 48, Rule 39 derive
their efficacy not merely from the procedural rule, but by virtue of
the incorporation clause of the Constitution. Rules of procedure
are promulgated by the Supreme Court, and could very well be
abrogated or revised by the high court itself. Yet the Supreme
Court is obliged, as are all State components, to obey the laws of
the land, including generally accepted principles of international
law which form part thereof, such as those ensuring the qualified
recognition and enforcement of foreign judgments. (Citations
omitted.)
It is an established international legal principle that final
judgments of foreign courts of competent jurisdiction are
reciprocally respected and rendered efficacious subject to certain
conditions that vary in different countries. 34 In the Philippines, a
judgment or final order of a foreign tribunal cannot be enforced
simply by execution. Such judgment or order merely creates a
right of action, and its non-satisfaction is the cause of action by
which a suit can be brought upon for its enforcement. 35 An action
for the enforcement of a foreign judgment or final order in this
26
jurisdiction is governed by Rule 39, Section 48 of the Rules of
Court, which provides:
SEC. 48. Effect of foreign judgments or final orders. - The effect of
a judgment or final order of a tribunal of a foreign country, having
jurisdiction to render the judgment or final order is as follows:
(a) In case of a judgment or final order upon a specific
thing, the judgment or final order is conclusive upon the
title to the thing; and
(b) In case of a judgment or final order against a person,
the judgment or final order is presumptive evidence of a
right as between the parties and their successors in
interest by a subsequent title.
In either case, the judgment or final order may be repelled by
evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact.
The Court expounded in Mijares on the application of the
aforequoted provision:
There is an evident distinction between a foreign judgment in an
action in rem and one in personam. For an action in rem, the
foreign judgment is deemed conclusive upon the title to the thing,
while in an action in personam, the foreign judgment is
presumptive, and not conclusive, of a right as between the parties
and their successors in interest by a subsequent title. However, in
both cases, the foreign judgment is susceptible to impeachment in
our local courts on the grounds of want of jurisdiction or notice to
the party, collusion, fraud, or clear mistake of law or fact. Thus,
the party aggrieved by the foreign judgment is entitled to defend
against the enforcement of such decision in the local forum. It is
essential that there should be an opportunity to challenge the
foreign judgment, in order for the court in this jurisdiction to
properly determine its efficacy.
It is clear then that it is usually necessary for an action to be filed
in order to enforce a foreign judgment, even if such judgment has
conclusive effect as in the case of in rem actions, if only for the
purpose of allowing the losing party an opportunity to challenge
the foreign judgment, and in order for the court to properly
determine its efficacy. Consequently, the party attacking a foreign
judgment has the burden of overcoming the presumption of its
validity.
The rules are silent as to what initiatory procedure must be
undertaken in order to enforce a foreign judgment in the
Philippines. But there is no question that the filing of a civil
complaint is an appropriate measure for such purpose. A civil
action is one by which a party sues another for the enforcement
or protection of a right, and clearly an action to enforce a foreign
judgment is in essence a vindication of a right prescinding either
from a "conclusive judgment upon title" or the "presumptive
evidence of a right." Absent perhaps a statutory grant of
jurisdiction to a quasi-judicial body, the claim for enforcement of
judgment must be brought before the regular courts.
There are distinctions, nuanced but discernible, between the
cause of action arising from the enforcement of a foreign
judgment, and that arising from the facts or allegations that
occasioned the foreign judgment. They may pertain to the same
set of facts, but there is an essential difference in the right-duty
correlatives that are sought to be vindicated. For example, in a
complaint for damages against a tortfeasor, the cause of action
emanates from the violation of the right of the complainant
through the act or omission of the respondent. On the other hand,
in a complaint for the enforcement of a foreign judgment
awarding damages from the same tortfeasor, for the violation of
the same right through the same manner of action, the cause of
action derives not from the tortious act but from the foreign
judgment itself.
More importantly, the matters for proof are different. Using the
above example, the complainant will have to establish before the
court the tortious act or omission committed by the tortfeasor,
who in turn is allowed to rebut these factual allegations or prove
extenuating circumstances. Extensive litigation is thus conducted
on the facts, and from there the right to and amount of damages
are assessed. On the other hand, in an action to enforce a foreign
judgment, the matter left for proof is the foreign judgment itself,
and not the facts from which it prescinds.
As stated in Section 48, Rule 39, the actionable issues are
generally restricted to a review of jurisdiction of the foreign court,
the service of personal notice, collusion, fraud, or mistake of fact
or law. The limitations on review [are] in consonance with a strong
and pervasive policy in all legal systems to limit repetitive
litigation on claims and issues. Otherwise known as the policy of
preclusion, it seeks to protect party expectations resulting from
previous litigation, to safeguard against the harassment of
defendants, to insure that the task of courts not be increased by
never-ending litigation of the same disputes, and - in a larger
sense - to promote what Lord Coke in the Ferrer's Case of 1599
stated to be the goal of all law: "rest and quietness." If every
judgment of a foreign court were reviewable on the merits, the
plaintiff would be forced back on his/her original cause of action,
rendering immaterial the previously concluded litigation.36
(Emphases supplied, citations omitted.)
Also relevant herein are the following pronouncements of the
Court in
Minoru Fujiki v. Marinay37:
A petition to recognize a foreign judgment declaring a marriage
void does not require relitigation under a Philippine court of the
case as if it were a new petition for declaration of nullity of
marriage. Philippine courts cannot presume to know the foreign
laws under which the foreign judgment was rendered. They
cannot substitute their judgment on the status, condition and
legal capacity of the foreign citizen who is under the jurisdiction of
another state. Thus, Philippine courts can only recognize the
foreign judgment as a fact according to the rules of evidence.
Section 48(b), Rule 39 of the Rules of Court provides that a foreign
judgment or final order against a person creates a "presumptive
evidence of a right as between the parties and their successors in
interest by a subsequent title." Moreover, Section 48 of the Rules
of Court states that "the judgment or final order may be repelled
by evidence of a want of jurisdiction, want of notice to the party,
collusion, fraud, or clear mistake of law or fact." Thus, Philippine
courts exercise limited review on foreign judgments. Courts are
not allowed to delve into the merits of a foreign judgment. Once a
foreign judgment is admitted and proven in a Philippine court, it
can only be repelled on grounds external to its merits, i.e., "want
of jurisdiction, want of notice to the party, collusion, fraud, or
27
clear mistake of law or fact." The rule on limited review embodies
the policy of efficiency and the protection of party expectations,
as well as respecting the jurisdiction of other states. (Emphases
supplied, citations omitted.)
As the foregoing jurisprudence had established, recognition and
enforcement of a foreign judgment or final order requires only
proof of fact of the said judgment or final order. In an action in
personam, as in the case at bar, the foreign judgment or final
order enjoys the disputable presumption of validity. It is the party
attacking the foreign judgment or final order that is tasked with
the burden of overcoming its presumptive validity. 38 A foreign
judgment or final order may only be repelled on grounds external
to its merits, particularly, want of jurisdiction, want of notice to
the party, collusion, fraud, or clear mistake of law or fact.
The fact of a foreign final order in this case is not disputed. It was
duly established by evidence submitted to the RTC that the U.S.
District Court issued an Order on March 13, 1990 in Civil Action
No. H-86-440 ordering petitioner, AIFL, and ATHONA, to pay
respondent the sum of US$49,450.00 as sanction for filing a
frivolous suit against respondent, in violation of Rule 11 of the
U.S. Federal Rules of Civil Procedure. The said Order became final
when its reinstatement in the Order dated December 31, 1991 of
the U.S. District Court was no longer appealed by petitioner, AIFL,
and/or ATHONA.
The Order dated March 13, 1990 of the U.S. District Court in Civil
Action No. H-86-440 is presumptive evidence of the right of
respondent to demand from petitioner the payment of
US$49,450.00 even in this jurisdiction. The next question then is
whether petitioner was able to discharge the burden of
overcoming the presumptive validity of said Order.
The Court rules in the negative.
In complete disregard of the limited review by Philippine courts of
foreign judgments or final orders, petitioner opposes the
enforcement of the Order dated March 13, 1990 of the U.S.
District Court on the very same allegations, arguments, and
evidence presented before and considered by the U.S. District
Court when it rendered its verdict imposing the Rule 11 sanction
against petitioner. Petitioner attempts to convince the Court that
it is necessary to look into the merits of the Order dated March
13, 1990 because the U.S. District Court committed clear mistake
of law and fact in issuing the same. The Court, however, is not
convinced. A Philippine court will not substitute its own
interpretation of any provision of the law or rules of procedure of
another country, nor review and pronounce its own judgment on
the sufficiency of evidence presented before a competent court of
another jurisdiction. Any purported mistake petitioner attributes
to the U.S. District Court in the latter's issuance of the Order dated
March 13,1990 would merely constitute an error of judgment in
the exercise of its legitimate jurisdiction, which could have been
corrected by a timely appeal before the U.S. Court of Appeals.
Petitioner cannot insist that the RTC and the Court of Appeals
resolve the issue of whether or not petitioner, AIFL, and ATHONA
had reasonable grounds to implead respondent as a counter-
defendant in Civil Action No. H-86-440. Although petitioner
submitted such an issue for resolution by the RTC in its Pre-Trial
Brief, the RTC did not issue any pre-trial order actually adopting
the same. In addition, petitioner was also unable to lay the basis,
whether in U.S. or Philippine jurisdiction, for the use of the
"reasonable grounds standard" for determining a party's liability
for or exemption from the sanctions imposed for violations of Rule
11 of the U.S. Federal Rules of Civil Procedure. Equally baseless is
petitioner's assertion that the Rule 11 sanction is contrary to
public policy and in effect, puts a premium on the right to litigate.
It bears to stress that the U.S. District Court imposed the Rule 11
sanction upon petitioner, AIFL, and ATHONA for their frivolous
counterclaims against respondent intended to simply humiliate
and embarrass respondent; and not because petitioner, AIFL, and
ATHONA impleaded but lost to respondent.
Contrary to the claims of petitioner, both the RTC and the Court of
Appeals carefully considered the allegations, arguments, and
evidence presented by petitioner to repel the Order dated March
13, 1990 of the U.S. District Court in Civil Action No. H-86-440.
Worthy of reproducing herein are the following portions of the
RTC judgment:
[Petitioner's] contention that the judgment sought to be enforced
herein is violative of its right to due process and contrary to public
policy because the Houston Court relied upon Exhibit 91 (which is
[petitioner BPI Securities'] Exh. "1" in this case) and the US Court
disregarded the evidence on record in the Houston Action is
unavailing. Whether or not said Exhibit 91 (petitioner's Exh. "1") is
inadmissible or is not entitled to any weight is a question which
should have been addressed to the US of Court of Appeals by
[petitioner]. To ask a Philippine court to pass upon the
admissibility or weight of Exh. 91 is violative of our public policy
not to substitute our judgment for that of a competent court of
another jurisdiction.
[Petitioner] does not deny the fact that the judgment awarding
sanctions based on [Rule 11 of the U.S.] Federal Rules of Civil
Procedure was elevated to the United States Court of Appeals for
the Fifth Circuit which remanded the case to the District Court
precisely to give [petitioner] a reasonable opportunity to be
heard. After remand, the District Court ordered [petitioner] to file
its response to the motion of [respondent] for sanctions and after
the filing of their respective briefs, the District Court reinstated
the former judgment.
Certainly, under these circumstances, the claim of violation of due
process cannot be sustained since [petitioner] was given
reasonable opportunity to present its side before the imposition
of sanctions.
xxxx
[Petitioner] likewise argued that the US District Court committed a
clear mistake of law or fact and in support thereof presented
Exhibits "10" to "18" to establish that the fair market value of the
Houston property in January 1983 was no longer US$800,000.00
by the admissions against interest of 1488 itself, of Craig who
submitted the fraudulent appraisal, and by the previous owners of
the said property and to "show that [respondent] Guevara was
either directly involved in the conspiracy against the Houston
defendants in submitting to the latter a fraudulent appraisal of W.
Craig (or was at least responsible to the Houston defendants for
the injury that they suffered) and that the Houston defendants
had reasonable basis to implead him as a defendant in the
Houston Case on account of his participation in the conspiracy or
his fault of responsibility for the injury suffered by them."
However, none of these documents show that [respondent] had
any participation nor knowledge in the execution, custody or
other intervention with respect to the said. Thus, said Exhibits
28
"10" to "18" are irrelevant and immaterial to the issue of the
enforceability of a foreign judgment. It must be emphasized that
the imposition of the sanctions under [Rule 11 of the U.S.] Federal
Rules of Civil Procedure did not flow from the merits of the civil
case in the US District Court but from the lack of even an iota of
evidence against [respondent] Guevara. To quote the US District
Court:
THE COURT
xxxx
I am disturbed about that. I don't see any evidence at all in this
case, after listening to all of this evidence, that there ever was a
lawsuit that could have been brought against Guevara, and even
after all of the discovery was done, there was still no evidence of a
conspiracy. There is no evidence of any conspiracy to this good
day that he could have been, but there is no proof of it, and that's
what we base these lawsuits on. That's what the Rule 11 is
designed to do, to deal with the circumstance.
So, I brought it up to Mr. Guevara because I know the frustration,
and irrespective as to whether or not he brought it up, it would
have been my position, my own position as an officer of this Court
to sanction the defendants in this case. That is my opinion, that
they are to be sanctioned because they have brought all of the
power that they have in the Philippines to bear and put pressure
on this man so that he would have to come over 10,000 miles to
defend himself or to hire lawyers to defend himself against a
totally frivolous claim.39 (Emphases supplied.)
As for petitioner's contention that the Fifth Division of the Court
of Appeals, in its Decision dated December 19, 2003, copied
verbatim or wholesale from respondent's brief, the Court refers to
its ruling in Halley v. Printwell, Inc.,40thus:
It is noted that the petition for review merely generally alleges
that starting from its page 5, the decision of the RTC "copied
verbatim the allegations of herein Respondents in its
Memorandum before the said court," as if "the Memorandum was
the draft of the Decision of the Regional Trial Court of Pasig," but
fails to specify either the portions allegedly lifted verbatim from
the memorandum, or why she regards the decision as copied. The
omission renders the petition for review insufficient to support
her contention, considering that the mere similarity in language or
thought between Printwell's memorandum and the trial court's
decision did not necessarily justify the conclusion that the RTC
simply lifted verbatim or copied from the memorandum.
It is to be observed in this connection that a trial or appellate
judge may occasionally view a party's memorandum or brief as
worthy of due consideration either entirely or partly. When he
does so, the judge may adopt and incorporate in his adjudication
the memorandum or the parts of it he deems suitable, and yet not
be guilty of the accusation of lifting or copying from the
memorandum. This is because of the avowed objective of the
memorandum to contribute in the proper illumination and correct
determination of the controversy. Nor is there anything untoward
in the congruence of ideas and views about the legal issues
between himself and the party drafting the memorandum. The
frequency of similarities in argumentation, phraseology,
expression, and citation of authorities between the decisions of
the courts and the memoranda of the parties, which may be great
or small, can be fairly attributable to the adherence by our courts
of law and the legal profession to widely know nor universally
accepted precedents set in earlier judicial actions with identical
factual milieus or posing related judicial dilemmas. (Citations
omitted.)
The Court is unmoved by petitioner's allegations of denial of due
process because of its U.S. counsel's exorbitant fees and
negligence.1âwphi1 As aptly pointed out by respondent in his
Memorandum:
On the specific claim that petitioner has been denied legal
representation in the United States in view of the exorbitant legal
fees of US counsel, petitioner is now estopped from asserting that
the costs of litigation resulted in a denial of due process because it
was petitioner which impleaded Guevara. If petitioner cannot
prosecute a case to its final stages, then it should not have filed a
counterclaim against Guevara in the first place. Moreover, there is
no showing that petitioner could not find a less expensive counsel.
Surely, petitioner could have secured the services of another
counsel whose fees were more "affordable."41
Guevara, Ma. Leticia G. Allado, Jose Edgardo B. Guevara, Jose
Emmanuel B. Guevara, and Ma. Joselina G. Gepuela.
WHEREFORE, the instant Petition is hereby DENIED for lack of
merit. The Decision dated December 19, 2003 and Resolution
dated February 9, 2005 of the Court Appeals in CA-G.R. CV No.
69348, affirming the Decision dated September 11, 2000 of the
Regional Trial Court of Makati City, Branch 57 in Civil Case No. 92-
1445, is hereby AFFIRMED with MODIFICATION that petitioner BPI
Securities Corporation is ordered to pay respondent Edgardo V.
Guevara the sum of US$49,450.00 or its equivalent in Philippine
Peso, with interest at six percent (6%) per annum from the filing
of the case before the trial court on May 28, 1992 until fully paid.43
SO ORDERED.

Moreover, petitioner is bound by the negligence of its counsel.

The declarations of the Court in Gotesco Properties, Inc. v.
Moral42 is applicable to petitioner:

The general rule is that a client is bound by the acts, even

mistakes, of his counsel in the realm of procedural
technique.1âwphi1 The basis is the tenet that an act performed by
counsel within the scope of a "general or implied authority" is
regarded as an act of the client. While the application of this
general rule certainly depends upon the surrounding
circumstances of a given case, there are exceptions recognized by
this Court: "(1) where reckless or gross negligence of counsel
deprives the client of due process of law; (2) when its application
will result in outright deprivation of the client's liberty or
property; or (3) where the interests of justice so require."

The present case does not fall under the said exceptions. In Amil v.
Court of Appeals, the Court held that "to fall within the
exceptional circumstance relied upon x x x, it must be shown that
the negligence of counsel must be so gross that the client is
deprived of his day in court. Thus, "where a party was given the
opportunity to defend [its] interests in due course, [it] cannot be
said to have been denied due process of law, for this opportunity
to be heard is the very essence of due process." To properly claim
gross negligence on the part of the counsel, the petitioner must
show that the counsel was guilty of nothing short of a clear
abandonment of the client's cause. (Citations omitted.)

Finally, it is without question that the U.S. District Court, in its

Order dated March 13, 1990 in Civil Action No. H-86-440, ordered
petitioner, AIFL, and ATHONA to pay respondent US$49,450.00 as
sanction for violating Rule 11 of the U.S. Federal Rules of Civil
Procedure. The Court noticed that throughout its Decision dated
September 11, 2000 in Civil Case No. 92-1445, the RTC variably
mentioned the amount of Rule 11 sanction imposed by the U.S.
District Court as US$49,450.00 and US$49,500.00, the latter
obviously being a typographical error. In the dispositive portion,
though, the RTC ordered petitioner to pay respondent
US$49,500.00, which the Court hereby corrects motu proprio to
US$49,450.00 in conformity with the U.S. District Court Order
being enforced.

The Court notes that during the pendency of the instant Petition
before this Court, respondent passed away on August 17, 2007,
and is survived and substituted by his heirs, namely: Ofelia B.

29