G.R. No. 103493 June 19, 1997
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners, vs. THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents.

FACTS

On January 15, 1983, respondent Ventura O. Ducat obtained loans from petitioners Ayala International Finance Limited (later BPI-IFL) and Philsec Investment Corporation. To facilitate payment, respondent 1488, Inc., through its president Drago Daic, assumed Ducat’s obligation. On January 27, 1983, 1488, Inc. sold a parcel of land in Harris County, Texas, U.S.A., to petitioner Athona Holdings, N.V., for US$2,807,209.02. Philsec and Ayala extended a loan to Athona for US$2,500,000.00 as initial payment, with the balance covered by a promissory note. Upon receipt of the payment from 1488, Inc., petitioners released Ducat from his debt and delivered his shares of stock to 1488, Inc.
When Athona failed to pay the interest on the balance, 1488, Inc. sued petitioners in the United States District Court for the Southern District of Texas (Civil Action No. H-86-440) on October 17, 1985, for payment of the balance and damages for breach of contract and fraud regarding the marketability of the shares. Petitioners filed counterclaims, alleging fraud in the overvaluation of the Texas property.
On April 10, 1987, while the U.S. case was pending, petitioners filed a complaint “For Sum of Money with Damages and Writ of Preliminary Attachment” against private respondents in the Regional Trial Court of Makati (Civil Case No. 16563), reiterating the fraud allegation about the overpriced property and praying for the return of excess payment and damages.
The RTC dismissed Civil Case No. 16563 against Ducat on grounds of litis pendentia and forum non conveniens, and later dismissed it against 1488, Inc. and Daic on the same grounds, also holding it had no jurisdiction over these non-residents as the action was in personam and extraterritorial service was ineffective. The Court of Appeals affirmed the dismissal. During the pendency of the appeal, the U.S. District Court rendered a judgment in favor of private respondents, which was affirmed by the Circuit Court of Appeals.

ISSUE

The principal issue is whether Civil Case No. 16563 is barred by the judgment of the U.S. court. Subsidiary issues involve the applicability of the doctrines of litis pendentia and forum non conveniens, and the jurisdiction of the Philippine court over non-resident respondents.

RULING

The Supreme Court reversed the decision of the Court of Appeals and remanded Civil Case No. 16563 to the RTC of Makati for consolidation with a related case and further proceedings.
The Court held that the foreign judgment is not yet res judicata. For a foreign judgment to be conclusive and bar a local action, it must be shown that the judgment relied upon is final. The party invoking res judicata based on a foreign judgment must prove the judgment’s finality. In this case, private respondents failed to present evidence, such as a copy of the final judgment or a certification thereof, to prove the finality of the U.S. court’s decision. Therefore, the defense of res judicata could not be sustained.
On litis pendentia, the Court found it inapplicable because the requisites were not met. The U.S. case and the Philippine case did not involve the same parties. Respondent Ducat was not a party in the U.S. case, and the causes of action were not identical. The U.S. case was for collection of the balance of the purchase price, while the Philippine case was for damages due to alleged fraud in the sale’s execution.
On forum non conveniens, the Court held it is not a ground for dismissal under Rule 16 of the Rules of Court. It is merely a principle that a court may decline to exercise jurisdiction if a trial elsewhere would be more convenient and fair. The trial court improperly dismissed the case on this ground without determining if it was an appropriate case for its application.
Regarding jurisdiction over 1488, Inc. and Daic, the Court held that the trial court acquired jurisdiction over them through the valid attachment of their shares of stock in the Philippines. The action, being one for damages arising from fraud, is a personal action. However, under Section 17, Rule 14 of the Rules of Court, extraterritorial service is allowed when the property of the defendant has been attached within the Philippines. Since petitioners attached shares of stock belonging to 1488, Inc. and Daic in the Philippines, the trial court could properly acquire jurisdiction over them through extraterritorial service.