G.R. No. 114323 July 23, 1998
OIL AND NATURAL GAS COMMISSION, petitioner, vs. COURT OF APPEALS and PACIFIC CEMENT COMPANY, INC., respondents.

FACTS

Petitioner Oil and Natural Gas Commission (ONGC), a foreign corporation owned by the Government of India, entered into a contract with private respondent Pacific Cement Company, Inc., a Philippine corporation, on February 26, 1983. The contract obligated Pacific Cement to supply 4,300 metric tons of oil well cement for US$477,300.00. The cement was loaded on board a ship in Surigao City but was held up in Bangkok and never delivered to India. Despite receiving payment, Pacific Cement failed to deliver. After negotiations, Pacific Cement agreed to replace the cement with Class “G” cement, but it failed to meet specifications. ONGC referred the dispute to arbitration per Clause 16 of their contract. The sole arbitrator, Shri N.N. Malhotra, rendered an award on July 23, 1988, in favor of ONGC for US$899,603.77 plus interest and costs. ONGC filed a petition before the Civil Judge of Dehra Dun, India, to make the award a rule of court. Pacific Cement filed objections but failed to pay the required filing fees after inquiring about the amount, which the foreign court did not specify in response. The Indian court rejected the objections for non-payment of fees and issued an Order on February 7, 1990, making the award a rule of court. ONGC filed a complaint for enforcement of this foreign judgment in the Regional Trial Court (RTC) of Surigao City. The RTC dismissed the complaint, ruling that while ONGC had legal capacity to sue on an isolated transaction, it lacked a cause of action because the dispute over non-delivery was erroneously submitted to arbitration under Clause 16 instead of being litigated in court under Clause 15 (Jurisdiction clause), rendering the arbitration proceedings null and void for want of jurisdiction. The Court of Appeals affirmed the dismissal, adding that the foreign judgment contained only a dispositive portion without findings of fact and law, violating the constitutional requirement for decisions, and that the dismissal of Pacific Cement’s objections for non-payment of fees without replying to its query constituted want of notice or violation of due process.

ISSUE

Whether the foreign judgment rendered by the Civil Judge of Dehra Dun, India, is enforceable in the Philippines.

RULING

Yes, the foreign judgment is enforceable. The Supreme Court reversed the decisions of the lower courts. The Court held that the foreign judgment is presumed valid and enforceable in the Philippines absent proof of a ground for non-recognition under Section 50, Rule 39 of the Rules of Court. The grounds for non-recognition are: (1) want of jurisdiction, (2) want of notice to the party, (3) collusion, fraud, or clear mistake of law or fact, and (4) the judgment is contrary to public policy. The Court found none of these grounds present. First, the foreign court had jurisdiction over the case and over Pacific Cement, which voluntarily submitted its objections. Second, there was no want of notice; Pacific Cement participated by filing objections and corresponding with the court. Its failure to pay fees was its own doing. Third, there was no proof of collusion, fraud, or clear mistake. The alleged mistake regarding the arbitrator’s jurisdiction was a matter of substantive law properly within the foreign court’s authority to decide, and its ruling on the arbitral award’s validity is conclusive. The Court also rejected the argument that the foreign judgment violated the constitutional requirement for decisions to state facts and law, as this constitutional provision applies only to Philippine courts, not foreign judgments. The foreign judgment, having become final and executory in India, is entitled to recognition and enforcement in the Philippines under the principle of comity. The case was remanded to the RTC for execution.