G.R. No. 77085, April 26, 1989
Philippine International Shipping Corporation (PISC), et al. vs. The Hon. Court of Appeals, et al.

FACTS

The case originated from a default judgment rendered by the United States District Court, Southern District of New York, against petitioner Philippine International Shipping Corporation (PISC) for unpaid container lease obligations amounting to $94,456.28. Respondent Interpool, Ltd., a foreign corporation not doing business in the Philippines, was the lessor. The other petitioners, including several corporations and individuals, were co-defendants as guarantors under separate Continuing Guaranty agreements. After PISC failed to satisfy the U.S. judgment, Interpool filed a complaint for its enforcement in the Regional Trial Court (RTC) of Quezon City.
The petitioners were declared in default in the RTC for failure to answer. The trial court rendered a judgment ordering petitioners to pay the amount of the U.S. judgment, plus interest and attorney’s fees. Petitioners appealed to the Court of Appeals, but their appeal was dismissed for failure to pay the docket fee. Upon finality of the RTC judgment, Interpool moved for execution. Petitioners then filed a Petition to Annul Judgment with the Court of Appeals, arguing the RTC judgment was void for lack of jurisdiction, primarily because the U.S. judgment was allegedly rendered without jurisdiction over PISC. The Court of Appeals dismissed this petition, prompting the petitioners to elevate the matter to the Supreme Court via the present petition.

ISSUE

The principal issue is whether the Regional Trial Court acquired jurisdiction to enforce the foreign judgment, and consequently, whether its decision and the subsequent writ of execution are valid.

RULING

The Supreme Court denied the petition and affirmed the assailed Court of Appeals decision. The Court held that the RTC validly acquired jurisdiction and its judgment was not void. A foreign judgment is presumed valid and enforceable in the Philippines unless the party challenging it proves, through convincing evidence, any of the grounds for non-recognition under Section 50 of Rule 39 of the Rules of Court, such as lack of jurisdiction, want of notice, collusion, fraud, or clear mistake of law or fact. Petitioners failed to overcome this presumption.
The Court found that the U.S. court validly acquired jurisdiction over PISC. The Master Equipment Leasing Agreement contained a stipulation where PISC expressly appointed a specific agent in New York to receive legal processes. Service of summons was duly effected upon this contractual agent. This constituted valid service under U.S. procedural rules, which was not contradicted by petitioners. Furthermore, the defense of lack of jurisdiction over PISC, being a matter of fact, was deemed waived when petitioners were declared in default in the Philippine enforcement case for their failure to file an answer. The RTC’s judgment, having become final and executory after the dismissal of petitioners’ appeal, was beyond attack via a petition for annulment absent any compelling proof of extrinsic fraud or lack of jurisdiction. The Court concluded that the enforcement proceedings in the Philippines were regular and the issuance of the writ of execution was proper.