OIL AND NATURAL GAS COMMISSION, petitioner, vs.

COURT OF APPEALS and

PACIFIC CEMENT COMPANY, INC., respondents.

1998-07-23 | G.R. No. 114323

DECISION

MARTINEZ, J:

This proceeding involves the enforcement of a foreign judgment rendered by the Civil Judge of Dehra
Dun, India in favor of the petitioner, OIL AND NATURAL GAS COMMISSION and against the private
respondent, PACIFIC CEMENT COMPANY, INCORPORATED.

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

"Except where otherwise provided in the supply order/contract all questions and disputes, relating to the
meaning of the specification designs, drawings and instructions herein before mentioned and as to
quality of workmanship of the items ordered or as to any other question, claim, right or thing whatsoever,
in any way arising out of or relating to the supply order/contract design, drawing, specification, instruction
or these conditions or otherwise concerning the materials or the execution or failure to execute the same
during stipulated/extended period or after the completion/abandonment thereof shall be referred to the
sole arbitration of the persons appointed by Member of the Commission at the time of dispute. It will be
no objection to any such appointment that the arbitrator so appointed is a Commission employer (sic)
that he had to deal with the matter to which the supply or contract relates and that in the course of his
duties as Commission's employee he had expressed views on all or any of the matter in dispute or
difference.

"The arbitrator to whom the matter is originally referred being transferred or vacating his office or being
unable to act for any reason the Member of the Commission shall appoint another person to act as
arbitrator in accordance with the terms of the contract/supply order. Such person shall be entitled to
proceed with reference from the stage at which it was left by his predecessor. Subject as aforesaid the
provisions of the Arbitration Act, 1940, or any Statutory modification or re-enactment there of and the
rules made there under and for the time being in force shall apply to the arbitration proceedings under
this clause.
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"The arbitrator may with the consent of parties enlarge the time, from time to time, to make and publish
the award.

"The venue for arbitration shall be at Dehra dun." 1*

On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in petitioner's favor
setting forth the arbitral award as follows:

"NOW THEREFORE after considering all facts of the case, the evidence, oral and documentarys (sic)
adduced by the claimant and carefully examining the various written statements, submissions, letters,
telexes, etc. sent by the respondent, and the oral arguments addressed by the counsel for the claimants,
I, N.N. Malhotra, Sole Arbitrator, appointed under clause 16 of the supply order dated 26.2.1983,
according to which the parties, i.e. M/S Oil and Natural Gas Commission and the Pacific Cement Co., Inc.
can refer the dispute to the sole arbitration under the provision of the Arbitration Act. 1940, do hereby
award and direct as follows:

"The Respondent will pay the following to the claimant:

1. Amount received by the Respondent against

the letter of credit No. 11/19 dated 28.2.1983 US$ 477,300.00

2. Re-imbursement of expenditure incurred by the claimant on

the inspection team's visit to Philippines in August 1985 US$ 3,881.00

3. L. C. Establishment charges incurred by the claimant US$ 1,252.82

4. Loss of interest suffered by claimant from 21.6.83 to 23.7.88 US$ 417,169.95

Total amount of award US$ 899,603.77

"In addition to the above, the respondent would also be liable to pay to the claimant the interest at the
rate of 6% on the above among, with effect from 24.7.1988 up to the actual date of payment by the
Respondent in full settlement of the claim as awarded or the date of the decree, whichever is earlier.

"I determine the cost at Rs, 70,000/-equivalent to US$5,000 towards the expenses on Arbitration, legal
expenses, stamps duly incurred by the claimant. The cost will be shared by the parties in equal
proportion.

"Pronounced at Dehra Dun to-day, the 23rd of July 1988." 2

To enable the petitioner to execute the above award in its favor, it filed a Petition before the Court of the
Civil Judge in Dehra Dun, India (hereinafter referred to as the foreign court for brevity), praying that the
decision of the arbitrator be made "the Rule of Court" in India. The foreign court issued notices to the
private respondent for filing objections to the petition. The private respondent complied and sent its
objections dated January 16, 1989. Subsequently, the said court directed the private respondent to pay
the filing fees in order that the latter's objections could be given consideration. Instead of paying the
required filing fees, the private respondent sent the following communication addressed to the Civil
Judge of Dehra Dun:

"The Civil Judge

Dehra Dun (U.P.) India
| Page 2 of 11
Re: Misc. Case No. 5 of 1989
M/S Pacific Cement Co.,
Inc. vs. ONGC Case

Sir:

1. We received your letter dated 28 April 1989 only last 18 May 1989.

2. Please inform us how much is the court fee to be paid. Your letter did not mention the amount to be
paid.

3. Kindly give us 15 days from receipt of your letter advising us how much to pay to comply with the
same.

Thank you for your kind consideration.

Pacific Cement Co., Inc.

By:

Jose Cortes, Jr.

President" 3

Without responding to the above communication, the foreign court refused to admit the private
respondent's objections for failure to pay the required filing fees, and thereafter issued an Order on
February 7, 1990, to wit:

"ORDER
Since objections filed by defendant have been rejected through Misc. Suit No. 5 on 7.2.90, therefore,
award should be made "Rule of the Court.

"ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis of conditions of award
decree is passed. Award Paper No. 3/B-1 shall be a part of the decree. The plaintiff shall also be entitled
to get from defendant (US$899,603.77 (US$ Eight Lakhs ninety nine thousand six hundred and three
point seventy seven only) along with 9% interest per annum till the last date of realization." 4

Despite notice sent to the private respondent of the foregoing order and several demands by the
petitioner for compliance therewith, the private respondent refused to pay the amount adjudged by the
foreign court as owing to the petitioner. Accordingly, the petitioner filed a complaint with Branch 30 of the
Regional Trial Court (RTC) of Surigao City for the enforcement of the aforementioned judgment of the
foreign court. The private respondent moved to dismiss the complaint on the following grounds: (1)
plaintiff's lack of legal capacity to sue; (2) lack of cause of action; and (3) plaintiffs claim or demand has
been waived, abandoned, or otherwise extinguished. The petitioner filed its opposition to the said motion
to dismiss, and the private respondent, its rejoinder thereto. On January 3, 1992, the RTC issued an
order upholding the petitioners legal capacity to sue, albeit dismissing the complaint for lack of a valid
cause of action. The RTC held that the rule prohibiting foreign corporations transacting business in the
Philippines without a license from maintaining a suit in Philippine courts admits of an exception, that is,
when the foreign corporation is suing on an isolated transaction as in this case. 5 Anent the issue of the
sufficiency of the petitioner's cause of action, however, the RTC found the referral of the dispute between
the parties to the arbitrator under Clause 16 of their contract erroneous. According to the RTC,
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"a perusal of the above-quoted clause (Clause 16) readily shows that the matter covered by its terms is
limited to "ALL QUESTIONS AND DISPUTES, RELATING TO THE MEANING OF THE
SPECIFICATION, DESIGNS, DRAWINGS AND INSTRUCTIONS HEREIN BEFORE MENTIONED and
as to the QUALITY OF WORKMANSHIP OF THE ITEMS ORDERED or as to any other questions, claim,
right or thing whatsoever, but qualified to 'IN ANY WAY ARISING OR RELATING TO THE SUPPLY
ORDER/CONTRACT, DESIGN, DRAWING, SPECIFICATION, etc.,' repeating the enumeration in the
opening sentence of the clause.

"The court is inclined to go along with the observation of the defendant that the breach, consisting of the
non-delivery of the purchased materials, should have been properly litigated before a court of law,
pursuant to Clause No. 15 of the Contract/Supply Order, herein quoted, to wit:

'JURISDICTION

All questions, disputes and differences, arising under out of or in connection with this supply order, shall
be subject to the EXCLUSIVE JURISDICTION OF THE COURT, within the local limits of whose
jurisdiction and the place from which this supply order is situated.'" 6

The RTC characterized the erroneous submission of the dispute to the arbitrator as a "mistake of law or
fact amounting to want of jurisdiction". Consequently, the proceedings had before the arbitrator were null
and void and the foreign court had therefore, adopted no legal award which could be the source of an
enforceable right. 7

The petitioner then appealed to the respondent Court of Appeals which affirmed the dismissal of the
complaint. In its decision, the appellate court concurred with the RTC's ruling that the arbitrator did not
have jurisdiction over the dispute between the parties, thus, the foreign court could not validly adopt the
arbitrators award. In addition, the appellate court observed that the full text of the judgment of the foreign
court contains the dispositive portion only and indicates no findings of fact and law as basis for the award.
Hence, the said judgment cannot be enforced by any Philippine court as it would violate the
constitutional provision that no decision shall be rendered by any court without expressing therein clearly
and distinctly the facts and the law on which it is based. 8 The appellate court ruled further that the
dismissal of the private respondent's objections for non-payment of the required legal fees, without the
foreign court first replying to the private respondent's query as to the amount of legal fees to be paid,
constituted want of notice or violation of due process. Lastly, it pointed out that the arbitration proceeding
was defective because the arbitrator was appointed solely by the petitioner, and the fact that the
arbitrator was a former employee of the latter gives rise to a presumed bias on his part in favor of the
petitioner. 9

A subsequent motion for reconsideration by the petitioner of the appellate court's decision was denied,
thus, this petition for review on certiorari citing the following as grounds in support thereof:

"RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE LOWER COURT'S

ORDER OF DISMISSAL SINCE:

A. THE NON-DELIVERY OF THE CARGO WAS A MATTER PROPERLY COGNIZABLE BY THE

PROVISIONS OF CLAUSE 16 OF THE CONTRACT;

B. THE JUDGMENT OF THE CIVIL COURT OF DEHRADUN, INDIA WAS AN AFFIRMATION OF THE
FACTUAL AND LEGAL FINDINGS OF THE ARBITRATOR AND THEREFORE ENFORCEABLE IN
THIS JURISDICTION;

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C. EVIDENCE MUST BE RECEIVED TO REPEL THE EFFECT OF A PRESUMPTIVE RIGHT UNDER
A FOREIGN JUDGMENT." 10

The threshold issue is whether or not the arbitrator had jurisdiction over the dispute between the
petitioner and the private respondent under Clause 16 of the contract. To reiterate, Clause 16 provides
as follows:

"Except where otherwise provided in the supply order/contract all questions and disputes, relating to the
meaning of the specification designs, drawings and instructions herein before mentioned and as to
quality of workmanship of the items ordered or as to any other question, claim, right or thing whatsoever,
in any way arising out of or relating to the supply order/contract design, drawing, specification, instruction
or these conditions or otherwise concerning the materials or the execution or failure to execute the same
during stipulated/extended period or after the completion/abandonment thereof shall be referred to the
sole arbitration of the persons appointed by Member of the Commission at the time of dispute. It will be
no objection to any such appointment that the arbitrator so appointed is a Commission employer (sic)
that he had to deal with the matter to which the supply or contract relates and that in the course of his
duties as Commission's employee he had expressed views on all or any of the matter in dispute or
difference." 11

The dispute between the parties had its origin in the non-delivery of the 4,300 metric tons of oil well
cement to the petitioner. The primary question that may be posed, therefore, is whether or not the
non-delivery of the said cargo is a proper subject for arbitration under the above-quoted Clause 16. The
petitioner contends that the same was a matter within the purview of Clause 16, particularly the phrase,
". . . or as to any other questions, claim, right or thing whatsoever, in any way or relating to the supply
order/contract, design, drawing, specification, instruction . . .". 12 It is argued that the foregoing phrase
allows considerable latitude so as to include non-delivery of the cargo which was a "claim, right or thing
relating to the supply order/contract". The contention is bereft of merit. First of all, the petitioner has
misquoted the said phrase, shrewdly inserting a comma between the words "supply order/contract" and
"design" where none actually exists. An accurate reproduction of the phrase reads, ". . . or as to any
other question, claim, right or thing whatsoever, in any way arising out of or relating to the supply
order/contract design, drawing, specification, instruction or these conditions . . ." The absence of a
comma between the words "supply order/contract" and "design" indicates that the former cannot be
taken separately but should be viewed in conjunction with the words "design, drawing, specification,
instruction or these conditions". It is thus clear that to fall within the purview of this phrase, the "claim,
right or thing whatsoever" must arise out of or relate to the design, drawing, specification, or instruction
of the supply order/contract. The petitioner also insists that the non-delivery of the cargo is not only
covered by the foregoing phrase but also by the phrase, ". . . or otherwise concerning the materials or
the execution or failure to execute the same during the stipulated/extended period or after
completion/abandonment thereof . . .".

The doctrine of noscitur a sociis, although a rule in the construction of statutes, is equally applicable in
the ascertainment of the meaning and scope of vague contractual stipulations, such as the
aforementioned phrase. According to the maxim noscitur a sociis, where a particular word or phrase is
ambiguous in itself or is equally susceptible of various meanings, its correct construction may be made
clear and specific by considering the company of the words in which it is found or with which it is
associated, or stated differently, its obscurity or doubt may be reviewed by reference to associated
words. 13 A close examination of Clause 16 reveals that it covers three matters which may be submitted
to arbitration namely,

(1) all questions and disputes, relating to the meaning of the specification designs, drawings and
instructions herein before mentioned and as to quality of workmanship of the items ordered; or
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(2) any other question, claim, right or thing whatsoever, in any way arising out of or relating to the supply
order/contract design, drawing, specification, instruction or these conditions; or

(3) otherwise concerning the materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment thereof.

The first and second categories unmistakably refer to questions and disputes relating to the design,
drawing, instructions, specifications or quality of the materials of the supply/order contract. In the, third
category, the clause, "execution or failure to execute the same", may be read as "execution or failure to
execute the supply order/contract". But in accordance with the doctrine of noscitur a sociis, this reference
to the supply order/contract must be construed in the light of the preceding words with which it is
associated, meaning to say, as being limited only to the design, drawing, instructions, specifications or
quality of the materials of the supply order/contract. The non-delivery of the oil well cement is definitely
not in the nature of a dispute arising from the failure to execute the supply order/contract design, drawing,
instructions, specifications or quality of the materials. That Clause 16 should pertain only to matters
involving the technical aspects of the contract is but a logical inference considering that the underlying
purpose of a referral to arbitration is for such technical matters to be deliberated upon by a person
possessed with the required skill and expertise which may be otherwise absent in the regular courts.

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

"All questions, disputes and differences, arising under out of or in connection with this supply order, shall
be subject to the exclusive jurisdiction of the court, within the local limits of whose jurisdiction and the
place from which this supply order is situated." 14

The following fundamental principles in the interpretation of contracts and other instruments served as
our guide in arriving at the foregoing conclusion:

"ART. 1373. If some stipulation of any contract should admit of several meanings, it shall be understood
as bearing that import which is most adequate to render it effectual." 15

"ART. 1374. The various stipulations of a contract shall be interpreted together, attributing to the doubtful
ones that sense which may result from all of them taken jointly". 16

"Sec. 11. Instrument construed so as to give effect to all provisions. In the construction of an instrument,
where there are several provisions or particulars, such a construction is, if possible, to be adopted as will
give effect to all." 17

Thus, this Court has held that as in statutes, the provisions of a contract should not be read in isolation
from the rest of the instrument but, on the contrary, interpreted in the light of the other related provisions.
18 The whole and every part of a contract must be, considered in fixing the meaning of any of its parts
and in order to produce a harmonious whole. Equally applicable is the canon of construction that in
interpreting a statute (or a contract as in this case), care should be taken that every part thereof be given
effect, on the theory that it was enacted as an integrated measure and not as a hodge-podge of
conflicting provisions. The rule is that a construction that would render a provision inoperative should be
avoided; instead, apparently inconsistent provisions should be reconciled whenever possible as parts of
a coordinated and harmonious whole. 19

The petitioners interpretation that Clause 16 is of such latitude as to contemplate even the non-delivery
of the oil well cement would in effect render Clause 15 a mere superfluity. A perusal of Clause 16 shows
| Page 6 of 11
that the parties did not intend arbitration to be the sole means of settling disputes. This is manifest from
Clause 16 itself which is prefixed with the proviso, "Except where otherwise provided in the supply
order/contract . . .", thus indicating that the jurisdiction of the arbitrator is not all encompassing, and
admits of exceptions as maybe provided elsewhere in the supply order/contract. We believe that the
correct interpretation to give effect to both stipulations in the contract is for Clause 16 to be confined to
all claims or disputes arising from or relating to the design, drawing, instructions, specifications or quality
of the materials of the supply order/contract, and for Clause 15 to cover all other claims or disputes.

The petitioner then asseverates that granting, for the sake of argument, that the non-delivery of the oil
well cement is not a proper subject for arbitration, the failure of the replacement cement to conform to
the specifications of the contract is a matter clearly falling within the ambit of Clause 16. In this
contention, we find merit. When the 4,300 metric tons of oil well cement were not delivered to the
petitioner, an agreement was forged between the latter and the private respondent that Class "G"
cement would be delivered to the petitioner as replacement. Upon inspection, however, the replacement
cement was rejected as it did not conform to the specifications of the contract. Only after this latter
circumstance was the matter brought before the arbitrator. Undoubtedly, what was referred to arbitration
was no longer the mere non-delivery of the cargo at the first instance but also the failure of the
replacement cargo to conform to the specifications of the contract, a matter clearly within the coverage of
Clause 16.

The private respondent posits that it was under no legal obligation to make replacement and that it
undertook the latter only "in the spirit of liberality and to foster good business relationship". 20 Hence, the
undertaking to deliver the replacement cement and its subsequent failure to conform to specifications are
not anymore subject of the supply order/contract or any of the provisions thereof. We disagree.

As per Clause 7 of the supply order/contract, the private respondent undertook to deliver the 4,300
metric tons of oil well cement at "BOMBAY (INDIA) 2181 MT and CALCUTTA 2119 MT". 21 The failure
of the private respondent to deliver the cargo to the designated places remains undisputed. Likewise, the
fact that the petitioner had already paid for the cost of the cement is not contested by the private
respondent. The private respondent claims, however, that it never benefited from the transaction as it
was not able to recover the cargo that was unloaded at the port of Bangkok. 22 First of all, whether or
not the private respondent was able to recover the cargo is immaterial to its subsisting duty to make
good its promise to deliver the cargo at the stipulated place of delivery. Secondly, we find it difficult to
believe this representation. In its Memorandum filed before this Court, the private respondent asserted
that the Civil Court of Bangkok had already ruled that the non-delivery of the cargo was due solely to the
fault of the carrier. 23 It is, therefore, but logical to assume that the necessary consequence of this
finding is the eventual recovery by the private respondent of the cargo or the value thereof. What
inspires credulity is not that the replacement was done in the spirit of liberality but that it was undertaken
precisely because of the private respondent's recognition of its duty to do so under the supply
order/contract, Clause 16 of which remains in force and effect until the full execution thereof.

We now go to the issue of whether or not the judgment of the foreign court is enforceable in this
jurisdiction in view of the private respondent's allegation that it is bereft of any statement of facts and law
upon which the award in favor of the petitioner was based. The pertinent portion of the judgment of the
foreign court reads:

"ORDER

Award dated 23.7.88. Paper No. 3/B-1 is made Rule of the Court. On the basis of conditions of award
decree is passed. Award Paper No. 3/B-1 shall be a part of the decree. The plaintiff shall also be entitled
to get from defendant US$899,603.77 (US$ Eight Lakhs ninety nine thousand six hundred and three
| Page 7 of 11
point seventy seven only) along with 9% interest per annum till the last date of realization." 24

As specified in the order of the Civil Judge of Dehra Dun, "Award Paper No. 3/B-1 shall be a part of the
decree". This is a categorical decoration that the foreign court adopted the findings of facts and law of
the arbitrator as contained in the latters Award Paper. Award Paper No. 3/B-1, contains an exhaustive
discussion of the respective claims and defenses of the parties, and the arbitrator's evaluation of the
same. Inasmuch as the foregoing is deemed to have been incorporated into the foreign court's judgment
the appellate court was in error when it described the latter to be a "simplistic decision containing literally,
only the dispositive portion". 25

The constitutional mandate that no decision shall be rendered by any court without expressing therein
clearly and distinctly the facts and the law on which it is based does not preclude the validity of
"memorandum decisions" which adopt by reference the findings of fact and conclusions of law contained
in the decisions of inferior tribunals. In Francisco v. Permskul, 26 this Court held that the following
memorandum decision of the Regional Trial Court of Makati did not transgress the requirements of
Section 14 Article VIII of the Constitution:

"MEMORANDUM DECISION

After a careful perusal, evaluation and study of the records of this case, this Court hereby adopts
reference the findings conclusions of law contained in the decision of the Metropolitan Trial Court of
Makati, Metro Manila, Branch 63 and finds that there is no cogent reason to disturb the same.

"WHEREFORE, judgment appealed from is hereby affirmed in toto." 27

This Court had occasion to make a similar pronouncement in the earlier case of Romero v. Court of
Appeals, 28 where the assailed decision of the Court of Appeals adopted the findings and disposition of
the Court of Agrarian Relations in this wise:

"We have, therefore, carefully reviewed the evidence and made a re-assessment of the same, and We
are persuaded, nay compelled, to affirm the correctness of the trial court's factual findings and the
soundness of its conclusion. For judicial convenience and expediency, therefore, We hereby adopt by
way of reference, the findings of facts and conclusions of the court a spread in its decision, as integral
part of this Our decision." 29

Hence, even in this jurisdiction, incorporation by reference is allowed if only to avoid the cumbersome
reproduction of the decision of the lower courts, or portions thereof, in the decision of the higher court. 30
This is particularly true when the decision sought to be incorporated is a lengthy and thorough discussion
of the facts and conclusions arrived at, as in this case, where Award Paper No. 3/B-1 consists of
eighteen (18) single spaced pages.

Furthermore, the recognition to be accorded a foreign judgment is not necessarily affected by the fact
that the procedure in the courts of the country in which such judgment was rendered differs from that of
the courts of the country in which the judgment is relied on. 31 This Court has held that matters of
remedy and procedure are governed by the lex fori or the internal law of the forum. 32 Thus, if under the
procedural rules of the Civil Court of Dehra Dun, India, a valid judgment may be rendered by adopting
the arbitrators findings, then the same must be accorded respect. In the same vein, if the procedure in
the foreign court mandates that an Order of the Court becomes final and executory upon failure to pay
the necessary docket fees, then the courts in this jurisdiction cannot invalidate the order of the foreign
court simply because our rules provide otherwise.

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The private respondent claims that its right to due process had been blatantly violated, first by reason of
the fact that the foreign court never answered its queries as to the amount of docket fees to be paid then
refused to admit its objections for failure to pay the same, and second, because of the presumed bias on
the part of the arbitrator who was a former employee of the petitioner.

Time and again this Court has held that the essence of due process is to be found in the reasonable
opportunity to be heard and submit any evidence one may have in support of one's defense 33 or stated
otherwise, what is repugnant to due process is the denial of opportunity to be heard. 34 Thus, there is no
violation of due process even if no hearing was conducted, where the party was given a chance to
explain his side of the controversy and he waived his right to do so. 35

In the instant case, the private respondent does not deny the fact that it was notified by the foreign court
to file its objections to the petition, and subsequently, to pay legal fees in order for its objections to be
given consideration. Instead of paying the legal fees, however, the private respondent sent a
communication to the foreign court inquiring about the correct amount of fees to be paid. On the pretext
that it was yet awaiting the foreign court's reply, almost a year passed without the private respondent
paying the legal fees. Thus, on February 2, 1990, the foreign court rejected the objections of the private
respondent and proceeded to adjudicate upon the petitioner's claims. We cannot subscribe to the private
respondent's claim that the foreign court violated its right to due process when it failed to reply to its
queries nor when the latter rejected its objections for a clearly meritorious ground. The private
respondent was afforded sufficient opportunity to be heard. It was not incumbent upon the foreign court
to reply to the private respondent's written communication. On the contrary, a genuine concern for its
cause should have prompted the private respondent to ascertain with all due diligence the correct
amount of legal fees to be paid. The private respondent did not act with prudence and diligence thus its
plea that they were not accorded the right to procedural due process cannot elicit either approval or
sympathy from this Court. 36

The private respondent bewails the presumed bias on the part of the arbitrator who was a former
employee of the petitioner. This point deserves scant consideration in view of the following stipulation in
the contract:

". . . It will be no objection to any such appointment that the arbitrator so appointed is a commission
employer (sic) that he had to deal with the matter to which the supply or contract relates and that in the
course of his duties as Commission's employee he had expressed views on all or any of the matter in
dispute or difference." 37

Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient Airlines, Inc. v. Court
of Appeals 38 that:

"A foreign judgment is presumed to be valid and binding in the country from which it comes, until the
contrary is shown. It is also proper to presume the regularity of the proceedings and the giving of due
notice therein.

"Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in personam of a tribunal of a
foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between
the parties and their successors-in-interest by a subsequent title. The judgment may, however, be
assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake
of law or fact. Also, under Section 3 of Rule 131, a court, whether of the Philippines or elsewhere, enjoys
the presumption that it was acting in the lawful exercise of jurisdiction and has regularly performed its
official duty." 39

| Page 9 of 11
Consequently, the party attacking a foreign judgment, the private respondent herein, had the burden of
overcoming the presumption of its validity which it failed to do in the instant case.

The foreign judgment being valid, there is nothing else left to be done than to order its enforcement,
despite the fact that the petitioner merely prays for, the remand of the case to the RTC for further
proceedings. As this Court has ruled on the validity and enforceability of the said foreign judgment in this
jurisdiction, further proceedings in the RTC for the reception of evidence to prove otherwise are no
longer necessary.

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

SO ORDERED.

Regalado, Melo and Puno, JJ ., concur.

Mendoza, J ., took no part, having taken part in the consideration of this case below.

Footnotes
1*. Supply Order Contract, ANNEX "C" to PETITION in G.R. No. 114323, p. 5; Rollo, p. 114.
Note: The contract and the foreign judgments or awards by the Indian courts follow the British spelling of
words for which sic will no longer be indicated.
2. Arbitral Award dated July 23, 1988, ANNEX "D" of the Petition, p. 17; Rollo, p. 143-144.
3. DECISION in CA-G.R. CV NO. 37080 promulgated on October 29, 1993, p. 10; Rollo, p. 103; RTC
Records, pp. 143-144.
4. ANNEX "F" of the Petition; Rollo, p. 157.
5. ORDER In Civil Case No. 4006, ANNEX "G" of the Petition, p. 1; Rollo, p. 158.
6. Ibid., p. 4; Rollo, p. 161.
7. Ibid., p. 5; Rollo, p. 162.
8. Article VIII, Section 14 of the 1987 Constitution.
9. CA Decision, Supra, pp. 8-12; Rollo, pp. 101-105.
10. Petition, Supra, p. 9; Rollo, p. 73.
11. See Supply Order Contract.
12. Petition, Supra, pp. 11-12; Rollo, pp. 75-76.
13. Motoomul, et al vs. Dela Paz, et al, 187 SCRA 743, 753 [1990]; Luzon Stevedoring Co. vs. Trinidad,
43 Phil. 804 [1922].
14. Terms and Conditions of Supply Order, "ANNEX C-1" of the Petition, p. 8; Rollo, p. 125-126; RTC
Records, pp. 17-26.
15. Article 1373 of the Civil Code.
16. Article 1374 of the Civil Code.
17. Rule 130, Section 11 of the Rules of Court.
18. De Leon vs. Court of Appeals, 205 SCRA 612, 620 [1992].
19. JMM Promotions & Management, Inc. vs. NLRC, 228 SCRA 129, 134 [1993].
20. Private Respondent's Memorandum In G.R. No. 114323, p. 17.
21. Footnotes text not found in the original file.
22. Supra, Private Respondent's Memorandum, p. 18.
23. Ibid.
24. Court of Dehra Dun, Suit No. 677 of 1988, ONGC vs. Pacific Cement, 7-2-90; Rollo, p. 157.
25. CA Decision.
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26. 173 SCRA 324 [1989].
27. Ibid., p. 326.
28. 147 SCRA 183 [1987].
29. Ibid., p. 189.
30. Francisco v. Permskul, 173 SCRA 324, 333.
31. Francisco, Vicente J., The Revised RULES OF COURT in the Philippines, Volume II, pp. 891-892,
1966 ed. citing 31 Am. Jur. 153-154.
32. Northwest Orient Airlines, Inc. vs. Court of Appeals, 241 SCRA 192, 199 [1995].
33. Roces vs. Aportadera, 243 SCRA 108 [1995]; Mutuc vs. Court of Appeals, 190 SCRA 43, 49 [1990];
Richards vs. Asoy, 152 SCRA 45 [1987]; Tajonera vs. Lamaroza, 110 SCRA 438 [1981].
34. Korean Airlines Co., Ltd. vs. Court of Appeals, 247 SCRA 599, 603 [1995].
35. Roces vs. Aportadera, supra, p. 114; Stayfast sunset view Condominium Corporation vs. NLRC, 228
SCRA 466 [1993]; Villareal vs. Court of Appeals, 219 SCRA 292 [1993].
36. B.R. Sebastian Enterprises, Inc. vs. Court of Appeals, 206 SCRA 28 [1992].
37. Supply Order, Supra.
38. 241 SCRA 192, 199 [1995].
39. Ibid.

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