THIRD DIVISION

[G.R. No. 138322. October 2, 2001]

GRACE J. GARCIA, a.k.a. GRACE J. GARCIA-RECIO,

petitioner, vs. REDERICK A. RECIO, respondent.
DECISION
PANGANIBAN, J.:

A divorce obtained abroad by an alien may be recognized in our

jurisdiction, provided such decree is valid according to the national law of
the foreigner. However, the divorce decree and the governing personal law
of the alien spouse who obtained the divorce must be proven. Our courts
do not take judicial notice of foreign laws and judgments; hence, like any
other facts, both the divorce decree and the national law of the alien must
be alleged and proven according to our law on evidence.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of
Court, seeking to nullify the January 7, 1999 Decision[if !supportFootnotes][1][endif]
and the March 24, 1999 Order[if !supportFootnotes][2][endif] of the Regional Trial Court
of Cabanatuan City, Branch 28, in Civil Case No. 3026AF. The assailed
Decision disposed as follows:
WHEREFORE, this Court declares the marriage between Grace J. Garcia
and Rederick A. Recio solemnized on January 12, 1994 at Cabanatuan
City as dissolved and both parties can now remarry under existing and
applicable laws to any and/or both parties.[if !supportFootnotes][3][endif]
The assailed Order denied reconsideration of the above-quoted
Decision.
The Facts
Rederick A. Recio, a Filipino, was married to Editha Samson, an
Australian citizen, in Malabon, Rizal, on March 1, 1987.[if !supportFootnotes][4][endif]
They lived together as husband and wife in Australia. On May 18, 1989, [if !
supportFootnotes][5][endif] a decree of divorce, purportedly dissolving the marriage,
was issued by an Australian family court.
On June 26, 1992, respondent became an Australian citizen, as shown
by a Certificate of Australian Citizenship issued by the Australian
government.[if !supportFootnotes][6][endif] Petitioner -- a Filipina -- and respondent
were married on January 12, 1994 in Our Lady of Perpetual Help Church
in Cabanatuan City.[if !supportFootnotes][7][endif] In their application for a marriage
license, respondent was declared as single and Filipino.[if !supportFootnotes][8][endif]
Starting October 22, 1995, petitioner and respondent lived separately
without prior judicial dissolution of their marriage. While the two were

still in Australia, their conjugal assets were divided on May 16, 1996, in
accordance with their Statutory Declarations secured in Australia.[if !
supportFootnotes][9][endif]

On March 3, 1998, petitioner filed a Complaint for Declaration of

Nullity of Marriage[if !supportFootnotes][10][endif] in the court a quo, on the ground of
bigamy -- respondent allegedly had a prior subsisting marriage at the time
he married her on January 12, 1994. She claimed that she learned of
respondents marriage to Editha Samson only in November, 1997.
In his Answer, respondent averred that, as far back as 1993, he had
revealed to petitioner his prior marriage and its subsequent dissolution.[if !
supportFootnotes][11][endif] He contended that his first marriage to an Australian
citizen had been validly dissolved by a divorce decree obtained in
Australia in 1989;[if !supportFootnotes][12][endif] thus, he was legally capacitated to
marry petitioner in 1994.
On July 7, 1998 -- or about five years after the couples wedding and
while the suit for the declaration of nullity was pending -- respondent was
able to secure a divorce decree from a family court in Sydney, Australia
because the marriage ha[d] irretrievably broken down.[if !supportFootnotes][13][endif]
Respondent prayed in his Answer that the Complaint be dismissed on
the ground that it stated no cause of action.[if !supportFootnotes][14][endif] The Office of
the Solicitor General agreed with respondent.[if !supportFootnotes][15][endif] The court
marked and admitted the documentary evidence of both parties.[if !
supportFootnotes][16][endif] After they submitted their respective memoranda, the case
was submitted for resolution.[if !supportFootnotes][17][endif]
Thereafter, the trial court rendered the assailed Decision and Order.
Ruling of the Trial Court
The trial court declared the marriage dissolved on the ground that the
divorce issued in Australia was valid and recognized in the Philippines. It
deemed the marriage ended, but not on the basis of any defect in an
essential element of the marriage; that is, respondents alleged lack of legal
capacity to remarry. Rather, it based its Decision on the divorce decree
obtained by respondent. The Australian divorce had ended the marriage;
thus, there was no more marital union to nullify or annul.
Hence, this Petition.[if !supportFootnotes][18][endif]

Issues
Petitioner submits the following issues for our consideration:
1

The trial court gravely erred in finding that the divorce decree obtained in
Australia by the respondent ipso facto terminated his first marriage to

Editha Samson thereby capacitating him to contract a second marriage

with the petitioner.
2

The failure of the respondent, who is now a naturalized Australian, to

present a certificate of legal capacity to marry constitutes absence of a
substantial requisite voiding the petitioners marriage to the respondent
3

The trial court seriously erred in the application of Art. 26 of the Family
Code in this case.
4

The trial court patently and grievously erred in disregarding Arts. 11, 13,
21, 35, 40, 52 and 53 of the Family Code as the applicable provisions in
this case.
5

The trial court gravely erred in pronouncing that the divorce decree
obtained by the respondent in Australia ipso facto capacitated the parties to
remarry, without first securing a recognition of the judgment granting the
divorce decree before our courts.[if !supportFootnotes][19][endif]
The Petition raises five issues, but for purposes of this Decision, we
shall concentrate on two pivotal ones: (1) whether the divorce between
respondent and Editha Samson was proven, and (2) whether respondent
was proven to be legally capacitated to marry petitioner. Because of our
ruling on these two, there is no more necessity to take up the rest.
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Proving the Divorce Between Respondent and Editha Samson
Petitioner assails the trial courts recognition of the divorce between
respondent and Editha Samson. Citing Adong v. Cheong Seng Gee,[if !
supportFootnotes][20][endif] petitioner argues that the divorce decree, like any other
foreign judgment, may be given recognition in this jurisdiction only upon
proof of the existence of (1) the foreign law allowing absolute divorce and
(2) the alleged divorce decree itself. She adds that respondent miserably
failed to establish these elements.
Petitioner adds that, based on the first paragraph of Article 26 of the
Family Code, marriages solemnized abroad are governed by the law of the
place where they were celebrated (the lex loci celebrationis). In effect, the
Code requires the presentation of the foreign law to show the conformity
of the marriage in question to the legal requirements of the place where the
marriage was performed.

At the outset, we lay the following basic legal principles as the takeoff points for our discussion. Philippine law does not provide for absolute
divorce; hence, our courts cannot grant it.[if !supportFootnotes][21][endif] A marriage
between two Filipinos cannot be dissolved even by a divorce obtained
abroad, because of Articles 15[if !supportFootnotes][22][endif] and 17[if !supportFootnotes][23][endif]
of the Civil Code.[if !supportFootnotes][24][endif] In mixed marriages involving a
Filipino and a foreigner, Article 26[if !supportFootnotes][25][endif] of the Family Code
allows the former to contract a subsequent marriage in case the divorce is
validly obtained abroad by the alien spouse capacitating him or her to
remarry.[if !supportFootnotes][26][endif] A divorce obtained abroad by a couple, who are
both aliens, may be recognized in the Philippines, provided it is consistent
with their respective national laws.[if !supportFootnotes][27][endif]
A comparison between marriage and divorce, as far as pleading and
proof are concerned, can be made. Van Dorn v. Romillo Jr. decrees that
aliens may obtain divorces abroad, which may be recognized in the
Philippines, provided they are valid according to their national law.[if !
supportFootnotes][28][endif] Therefore, before a foreign divorce decree can be
recognized by our courts, the party pleading it must prove the divorce as a
fact and demonstrate its conformity to the foreign law allowing it.[if !
supportFootnotes][29][endif] Presentation solely of the divorce decree is insufficient.
Divorce as a Question of Fact
Petitioner insists that before a divorce decree can be admitted in
evidence, it must first comply with the registration requirements under
Articles 11, 13 and 52 of the Family Code. These articles read as follows:
ART. 11. Where a marriage license is required, each of the contracting
parties shall file separately a sworn application for such license with the
proper local civil registrar which shall specify the following:
xxxxxxxxx
(5) If previously married, how, when and where the previous marriage was
dissolved or annulled;
xxxxxxxxx
ART. 13. In case either of the contracting parties has been previously
married, the applicant shall be required to
ART. 13. In case either of the contracting parties has been previously
married, the applicant shall be required to furnish, instead of the birth or
baptismal certificate required in the last preceding article, the death
certificate of the deceased spouse or the judicial decree of the absolute
divorce, or the judicial decree of annulment or declaration of nullity of his
or her previous marriage. x x x.

ART. 52. The judgment of annulment or of absolute nullity of the

marriage, the partition and distribution of the properties of the spouses,
and the delivery of the childrens presumptive legitimes shall be recorded
in the appropriate civil registry and registries of property; otherwise, the
same shall not affect their persons.
Respondent, on the other hand, argues that the Australian divorce
decree is a public document -- a written official act of an Australian family
court. Therefore, it requires no further proof of its authenticity and due
execution.
Respondent is getting ahead of himself. Before a foreign judgment is
given presumptive evidentiary value, the document must first be presented
and admitted in evidence.[if !supportFootnotes][30][endif] A divorce obtained abroad is
proven by the divorce decree itself. Indeed the best evidence of a judgment
is the judgment itself.[if !supportFootnotes][31][endif] The decree purports to be a written
act or record of an act of an official body or tribunal of a foreign country.[if !
supportFootnotes][32][endif]

Under Sections 24 and 25 of Rule 132, on the other hand, a writing or

document may be proven as a public or official record of a foreign country
by either (1) an official publication or (2) a copy thereof attested[if !
supportFootnotes][33][endif] by the officer having legal custody of the document. If the
record is not kept in the Philippines, such copy 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. [if !supportFootnotes][34]
[endif]

The divorce decree between respondent and Editha Samson appears to

be an authentic one issued by an Australian family court.[if !supportFootnotes][35][endif]
However, appearance is not sufficient; compliance with the
aforementioned rules on evidence must be demonstrated.
Fortunately for respondents cause, when the divorce decree of May
18, 1989 was submitted in evidence, counsel for petitioner objected, not to
its admissibility, but only to the fact that it had not been registered in the
Local Civil Registry of Cabanatuan City.[if !supportFootnotes][36][endif] The trial court
ruled that it was admissible, subject to petitioners qualification.[if !supportFootnotes]
[37][endif] Hence, it was admitted in evidence and accorded weight by the
judge. Indeed, petitioners failure to object properly rendered the divorce
decree admissible as a written act of the Family Court of Sydney,
Australia.[if !supportFootnotes][38][endif]
Compliance with the quoted articles (11, 13 and 52) of the Family
Code is not necessary; respondent was no longer bound by Philippine

personal laws after he acquired Australian citizenship in 1992.[if !supportFootnotes]

[39][endif] Naturalization is the legal act of adopting an alien and clothing him
with the political and civil rights belonging to a citizen.[if !supportFootnotes][40][endif]
Naturalized citizens, freed from the protective cloak of their former states,
don the attires of their adoptive countries. By becoming an Australian,
respondent severed his allegiance to the Philippines and the vinculum juris
that had tied him to Philippine personal laws.
Burden of Proving Australian Law
Respondent contends that the burden to prove Australian divorce law
falls upon petitioner, because she is the party challenging the validity of a
foreign judgment. He contends that petitioner was satisfied with the
original of the divorce decree and was cognizant of the marital laws of
Australia, because she had lived and worked in that country for quite a
long time. Besides, the Australian divorce law is allegedly known by
Philippine courts; thus, judges may take judicial notice of foreign laws in
the exercise of sound discretion.
We are not persuaded. The burden of proof lies with the party who
alleges the existence of a fact or thing necessary in the prosecution or
defense of an action.[if !supportFootnotes][41][endif] In civil cases, plaintiffs have the
burden of proving the material allegations of the complaint when those are
denied by the answer; and defendants have the burden of proving the
material allegations in their answer when they introduce new matters.[if !
supportFootnotes][42][endif] Since the divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law validating it falls squarely
upon him.
It is well-settled in our jurisdiction that our courts cannot take judicial
notice of foreign laws.[if !supportFootnotes][43][endif] Like any other facts, they must be
alleged and proved. Australian marital laws are not among those matters
that judges are supposed to know by reason of their judicial function.[if !
supportFootnotes][44][endif] The power of judicial notice must be exercised with
caution, and every reasonable doubt upon the subject should be resolved in
the negative.
Second Issue: Respondents Legal Capacity to Remarry
Petitioner contends that, in view of the insufficient proof of the
divorce, respondent was legally incapacitated to marry her in 1994. Hence,
she concludes that their marriage was void ab initio.
Respondent replies that the Australian divorce decree, which was
validly admitted in evidence, adequately established his legal capacity to
marry under Australian law.

Respondents contention is untenable. In its strict legal sense, divorce

means the legal dissolution of a lawful union for a cause arising after
marriage. But divorces are of different types. The two basic ones are (1)
absolute divorce or a vinculo matrimonii and (2) limited divorce or a
mensa et thoro. The first kind terminates the marriage, while the second
suspends it and leaves the bond in full force.[if !supportFootnotes][45][endif] There is no
showing in the case at bar which type of divorce was procured by
respondent.
Respondent presented a decree nisi or an interlocutory decree -- a
conditional or provisional judgment of divorce. It is in effect the same as a
separation from bed and board, although an absolute divorce may follow
after the lapse of the prescribed period during which no reconciliation is
effected.[if !supportFootnotes][46][endif]
Even after the divorce becomes absolute, the court may under some
foreign statutes and practices, still restrict remarriage. Under some other
jurisdictions, remarriage may be limited by statute; thus, the guilty party in
a divorce which was granted on the ground of adultery may be prohibited
from marrying again. The court may allow a remarriage only after proof of
good behavior.[if !supportFootnotes][47][endif]
On its face, the herein Australian divorce decree contains a restriction
that reads:
1. A party to a marriage who marries again before this decree becomes absolute
(unless the other party has died) commits the offence of bigamy.[if !supportFootnotes][48]
[endif]

This quotation bolsters our contention that the divorce obtained by

respondent may have been restricted. It did not absolutely establish his
legal capacity to remarry according to his national law. Hence, we find no
basis for the ruling of the trial court, which erroneously assumed that the
Australian divorce ipso facto restored respondents capacity to remarry
despite the paucity of evidence on this matter.
We also reject the claim of respondent that the divorce decree raises a
disputable presumption or presumptive evidence as to his civil status based
on Section 48, Rule 39[if !supportFootnotes][49][endif] of the Rules of Court, for the
simple reason that no proof has been presented on the legal effects of the
divorce decree obtained under Australian laws.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by
Article 21 of the Family Code was not submitted together with the
application for a marriage license. According to her, its absence is proof
that respondent did not have legal capacity to remarry.

We clarify. To repeat, the legal capacity to contract marriage is

determined by the national law of the party concerned. The certificate
mentioned in Article 21 of the Family Code would have been sufficient to
establish the legal capacity of respondent, had he duly presented it in court.
A duly authenticated and admitted certificate is prima facie evidence of
legal capacity to marry on the part of the alien applicant for a marriage
license.[if !supportFootnotes][50][endif]
As it is, however, there is absolutely no evidence that proves
respondents legal capacity to marry petitioner. A review of the records
before this Court shows that only the following exhibits were presented
before the lower court: (1) for petitioner: (a) Exhibit A Complaint;[if !
supportFootnotes][51][endif] (b) Exhibit B Certificate of Marriage Between Rederick A.
Recio (Filipino-Australian) and Grace J. Garcia (Filipino) on January 12,
1994 in Cabanatuan City, Nueva Ecija;[if !supportFootnotes][52][endif] (c) Exhibit C
Certificate of Marriage Between Rederick A. Recio (Filipino) and Editha
D. Samson (Australian) on March 1, 1987 in Malabon, Metro Manila;[if !
supportFootnotes][53][endif] (d) Exhibit D Office of the City Registrar of Cabanatuan
City Certification that no information of annulment between Rederick A.
Recio and Editha D. Samson was in its records;[if !supportFootnotes][54][endif] and (e)
Exhibit E Certificate of Australian Citizenship of Rederick A. Recio;[if !
supportFootnotes][55][endif] (2) for respondent: (a) Exhibit 1 -- Amended Answer;[if !
supportFootnotes][56][endif] (b) Exhibit 2 Family Law Act 1975 Decree Nisi of
Dissolution of Marriage in the Family Court of Australia;[if !supportFootnotes][57][endif]
(c) Exhibit 3 Certificate of Australian Citizenship of Rederick A. Recio;[if !
supportFootnotes][58][endif] (d) Exhibit 4 Decree Nisi of Dissolution of Marriage in the
Family Court of Australia Certificate;[if !supportFootnotes][59][endif] and Exhibit 5 -Statutory Declaration of the Legal Separation Between Rederick A. Recio
and Grace J. Garcia Recio since October 22, 1995.[if !supportFootnotes][60][endif]
Based on the above records, we cannot conclude that respondent, who
was then a naturalized Australian citizen, was legally capacitated to marry
petitioner on January 12, 1994. We agree with petitioners contention that
the court a quo erred in finding that the divorce decree ipso facto clothed
respondent with the legal capacity to remarry without requiring him to
adduce sufficient evidence to show the Australian personal law governing
his status; or at the very least, to prove his legal capacity to contract the
second marriage.
Neither can we grant petitioners prayer to declare her marriage to
respondent null and void on the ground of bigamy. After all, it may turn
out that under Australian law, he was really capacitated to marry petitioner
as a direct result of the divorce decree. Hence, we believe that the most

judicious course is to remand this case to the trial court to receive

evidence, if any, which show petitioners legal capacity to marry petitioner.
Failing in that, then the court a quo may declare a nullity of the parties
marriage on the ground of bigamy, there being already in evidence two
existing marriage certificates, which were both obtained in the Philippines,
one in Malabon, Metro Manila dated March 1, 1987 and the other, in
Cabanatuan City dated January 12, 1994.
WHEREFORE, in the interest of orderly procedure and substantial
justice, we REMAND the case to the court a quo for the purpose of
receiving evidence which conclusively show respondents legal capacity to
marry petitioner; and failing in that, of declaring the parties marriage void
on the ground of bigamy, as above discussed. No costs.
SO ORDERED.

THIRD DIVISION
ATCI OVERSEAS CORPORATION, AMALIA G. IKDAL
and MINISTRY OF PUBLIC HEALTH-KUWAIT
Petitioners,
- versus -

MA. JOSEFA ECHIN,

Respondent.
G.R. No. 178551
Present:
CARPIO MORALES, Chairperson, J.,

BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.
Promulgated:
October 11, 2010
x------------------------------------------ - - - - - - - -x

DECISION
CARPIO MORALES, J.:
Josefina Echin (respondent) was hired by petitioner
ATCI Overseas Corporation in behalf of its principal-copetitioner, the Ministry of Public Health of Kuwait (the
Ministry), for the position of medical technologist under a twoyear contract, denominated as a Memorandum of Agreement
(MOA), with a monthly salary of US$1,200.00.
Under the MOA,[if !supportFootnotes][1][endif] all newly-hired
employees undergo a probationary period of one (1) year and
are covered by Kuwaits Civil Service Board Employment
Contract No. 2.
Respondent was deployed on February 17, 2000 but was
terminated from employment on February 11, 2001, she not
having allegedly passed the probationary period.

As the Ministry denied respondents request for

reconsideration, she returned to the Philippines on March 17,
2001, shouldering her own air fare.
On July 27, 2001, respondent filed with the National
Labor Relations Commission (NLRC) a complaint[if !
supportFootnotes][2][endif] for illegal dismissal against petitioner ATCI
as the local recruitment agency, represented by petitioner,
Amalia Ikdal (Ikdal), and the Ministry, as the foreign principal.
By Decision[if !supportFootnotes][3][endif] of November 29,
2002, the Labor Arbiter, finding that petitioners neither showed
that there was just cause to warrant respondents dismissal nor
that she failed to qualify as a regular employee, held that
respondent was illegally dismissed and accordingly ordered
petitioners to pay her US$3,600.00, representing her salary for
the three months unexpired portion of her contract.
On appeal of petitioners ATCI and Ikdal, the NLRC
affirmed the Labor Arbiters decision by Resolution[if !
supportFootnotes][4][endif] of January 26, 2004. Petitioners motion for
reconsideration having been denied by Resolution[if !
supportFootnotes][5][endif] of April 22, 2004, they appealed to the
Court of Appeals, contending that their principal, the Ministry,
being a foreign government agency, is immune from suit and,
as such, the immunity extended to them; and that respondent
was validly dismissed for her failure to meet the performance
rating within the one-year period as required under Kuwaits
Civil Service Laws. Petitioners further contended that Ikdal
should not be liable as an officer of petitioner ATCI.

By Decision[if !supportFootnotes][6][endif] of March 30, 2007,

the appellate court affirmed the NLRC Resolution.
In brushing aside petitioners contention that they only
acted as agent of the Ministry and that they cannot be held
jointly and solidarily liable with it, the appellate court noted
that under the law, a private employment agency shall assume
all responsibilities for the implementation of the contract of
employment of an overseas worker, hence, it can be sued
jointly and severally with the foreign principal for any
violation of the recruitment agreement or contract of
employment.
As to Ikdals liability, the appellate court held that under
Sec. 10 of Republic Act No. 8042, the Migrant and Overseas
Filipinos Act of 1995, corporate officers, directors and partners
of a recruitment agency may themselves be jointly and
solidarily liable with the recruitment agency for money claims
and damages awarded to overseas workers.
Petitioners motion for reconsideration having been
denied by the appellate court by Resolution[if !supportFootnotes][7]
[endif] of June 27, 2007, the present petition for review on
certiorari was filed.
Petitioners maintain that they should not be held liable
because respondents employment contract specifically
stipulates that her employment shall be governed by the Civil
Service Law and Regulations of Kuwait. They thus conclude
that it was patent error for the labor tribunals and the appellate
court to apply the Labor Code provisions governing
probationary employment in deciding the present case.

Further, petitioners argue that even the Philippine

Overseas Employment Act (POEA) Rules relative to master
employment contracts (Part III, Sec. 2 of the POEA Rules and
Regulations) accord respect to the customs, practices, company
policies and labor laws and legislation of the host country.
Finally, petitioners posit that assuming arguendo that
Philippine labor laws are applicable, given that the foreign
principal is a government agency which is immune from suit,
as in fact it did not sign any document agreeing to be held
jointly and solidarily liable, petitioner ATCI cannot likewise be
held liable, more so since the Ministrys liability had not been
judicially determined as jurisdiction was not acquired over it.
The petition fails.
Petitioner ATCI, as a private recruitment agency, cannot
evade responsibility for the money claims of Overseas Filipino
workers (OFWs) which it deploys abroad by the mere
expediency of claiming that its foreign principal is a
government agency clothed with immunity from suit, or that
such foreign principals liability must first be established before
it, as agent, can be held jointly and solidarily liable.
In providing for the joint and solidary liability of private
recruitment agencies with their foreign principals, Republic
Act No. 8042 precisely affords the OFWs with a recourse and
assures them of immediate and sufficient payment of what is
due them. Skippers United Pacific v. Maguad[if !supportFootnotes][8]
[endif] explains:
. . . [T]he obligations covenanted in the recruitment
agreement entered into by and between the local

agent and its foreign principal are not coterminous

with the term of such agreement so that if either or
both of the parties decide to end the agreement, the
responsibilities of such parties towards the contracted
employees under the agreement do not at all end, but
the same extends up to and until the expiration of the
employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement.
Otherwise, this will render nugatory the very
purpose for which the law governing the
employment of workers for foreign jobs abroad
was enacted. (emphasis supplied)

The imposition of joint and solidary liability is in line with the

policy of the state to protect and alleviate the plight of the
working class.[if !supportFootnotes][9][endif] Verily, to allow petitioners
to simply invoke the immunity from suit of its foreign
principal or to wait for the judicial determination of the foreign
principals liability before petitioner can be held liable renders
the law on joint and solidary liability inutile.
As to petitioners contentions that Philippine labor laws on
probationary employment are not applicable since it was
expressly provided in respondents employment contract, which
she voluntarily entered into, that the terms of her engagement
shall be governed by prevailing Kuwaiti Civil Service Laws
and Regulations as in fact POEA Rules accord respect to such
rules, customs and practices of the host country, the same was
not substantiated.
Indeed, a contract freely entered into is considered the
law between the parties who can establish stipulations, clauses,
terms and conditions as they may deem convenient, including

the laws which they wish to govern their respective

obligations, as long as they are not contrary to law, morals,
good customs, public order or public policy.
It is hornbook principle, however, that the party
invoking the application of a foreign law has the burden of
proving the law, under the doctrine of processual presumption
which, in this case, petitioners failed to discharge. The Courts
ruling in EDI-Staffbuilders Intl., v. NLRC[if !supportFootnotes][10][endif]
illuminates:

In the present case, the employment contract signed by Gran

specifically states that Saudi Labor Laws will govern matters not
provided for in the contract (e.g. specific causes for termination,
termination procedures, etc.). Being the law intended by the parties (lex
loci intentiones) to apply to the contract, Saudi Labor Laws should govern
all matters relating to the termination of the employment of Gran.
In international law, the party who wants to have a foreign law
applied to a dispute or case has the burden of proving the foreign law.
The foreign law is treated as a question of fact to be properly pleaded
and proved as the judge or labor arbiter cannot take judicial notice of
a foreign law. He is presumed to know only domestic or forum law.
Unfortunately for petitioner, it did not prove the pertinent
Saudi laws on the matter; thus, the International
Law doctrine of presumed-identity approach or
processual presumption comes into play. Where a
foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that foreign law is the
same as ours. Thus, we apply Philippine labor laws

in determining the issues presented before us.

(emphasis and underscoring supplied)

The Philippines does not take judicial notice of foreign laws,

hence, they must not only be alleged; they must be proven. To
prove a foreign law, the party invoking it must present a copy
thereof and comply with Sections 24 and 25 of Rule 132 of the
Revised Rules of Court which reads:
SEC. 24. Proof of official record. The record
of public documents referred to in paragraph (a) of
Section 19, when admissible for any purpose, may be
evidenced by an official publication thereof or by a
copy attested by the officer having the legal custody
of the record, or by his deputy, and accompanied, if
the record is not kept in the Philippines, with a
certificate that such officer has the custody. If the
office in which the record is kept is in a foreign
country, the certificate may be made by a secretary
of the embassy or legation, consul general, consul,
vice consul, or consular agent or by any officer in
the foreign service of the Philippines stationed in
the foreign country in which the record is kept,
and authenticated by the seal of his office.
(emphasis supplied)

SEC. 25. What attestation of copy must state.

Whenever a copy of a document or record is attested
for the purpose of the evidence, the attestation must
state, in substance, that the copy is a correct copy of
the original, or a specific part thereof, as the case may
be. The attestation must be under the official seal of
the attesting officer, if there be any, or if he be the
clerk of a court having a seal, under the seal of such
court.

To prove the Kuwaiti law, petitioners submitted the

following: MOA between respondent and the Ministry, as
represented by ATCI, which provides that the employee is
subject to a probationary period of one (1) year and that the
host countrys Civil Service Laws and Regulations apply; a
translated copy[if !supportFootnotes][11][endif] (Arabic to English) of
the termination letter to respondent stating that she did not pass
the probation terms, without specifying the grounds therefor,
and a translated copy of the certificate of termination,[if !
supportFootnotes][12][endif] both of which documents were certified by
Mr. Mustapha Alawi, Head of the Department of Foreign
Affairs-Office of Consular Affairs Inslamic Certification and
Translation Unit; and respondents letter[if !supportFootnotes][13][endif]
of reconsideration to the Ministry, wherein she noted that in
her first eight (8) months of employment, she was given a
rating of Excellent albeit it changed due to changes in her shift
of work schedule.
These documents, whether taken singly or as a whole,
do not sufficiently prove that respondent was validly
terminated as a probationary employee under Kuwaiti civil
service laws. Instead of submitting a copy of the pertinent

Kuwaiti labor laws duly authenticated and translated by

Embassy officials thereat, as required under the Rules,
what petitioners submitted were mere certifications
attesting only to the correctness of the translations of the
MOA and the termination letter which does not prove at all
that Kuwaiti civil service laws differ from Philippine laws
and that under such Kuwaiti laws, respondent was validly
terminated. Thus the subject certifications read:
xxxx
This is to certify that the herein attached translation/s from
Arabic to English/Tagalog and or vice versa was/were
presented to this Office for review and certification
and the same was/were found to be in order. This
Office, however, assumes no responsibility as to the
contents of the document/s.

This certification is being issued upon request of the

interested party for whatever legal purpose it may
serve. (emphasis supplied)

Respecting Ikdals joint and solidary liability as a

corporate officer, the same is in order too following the express
provision of R.A. 8042 on money claims, viz:

SEC. 10. Money Claims.Notwithstanding any provision of law to the

contrary, the Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing of the complaint,
the claims arising out of an employer-employee relationship or by virtue of
any law or contract involving Filipino workers for overseas deployment
including claims for actual moral, exemplary and other forms of damages.
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and several.
This provision shall be incorporated in the contract for overseas
employment and shall be a condition precedent for its approval. The
performance bond to be filed by the recruitment/placement agency, as
provided by law, shall be answerable for all money claims or damages that
may be awarded to the workers. If the recruitment/placement agency is
a juridical being, the corporate officers and directors and partners as
the case may be, shall themselves be jointly and solidarily liable with
the corporation or partnership for the aforesaid claims and damages.
(emphasis and underscoring supplied)

WHEREFORE, the petition is DENIED.

SO ORDERED.
SECOND DIVISION
MEROPE ENRIQUEZ VDA. DE CATALAN,
Petitioner,

- versus -

LOUELLA A. CATALAN-LEE,
Respondent.
G. R. No. 183622
Present:
CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.
Promulgated:
February 8, 2012
x-------------------------------------------------x
RESOLUTION
SERENO, J.:
Before us is a Petition for Review assailing the Court of
Appeals (CA) Decision[if !supportFootnotes][1][endif] and Resolution[if !
supportFootnotes][2][endif] regarding the issuance of letters of
administration of the intestate estate of Orlando B. Catalan.
The facts are as follows:
Orlando B. Catalan was a naturalized American citizen.
After allegedly obtaining a divorce in the United States from
his first wife, Felicitas Amor, he contracted a second marriage
with petitioner herein.

On 18 November 2004, Orlando died intestate in the

Philippines.
Thereafter, on 28 February 2005, petitioner filed with
the Regional Trial Court (RTC) of Dagupan City a Petition for
the issuance of letters of administration for her appointment as
administratrix of the intestate estate of Orlando. The case was
docketed as Special Proceedings (Spec. Proc.) No. 228.
On 3 March 2005, while Spec. Proc. No. 228 was
pending, respondent Louella A. Catalan-Lee, one of the
children of Orlando from his first marriage, filed a similar
petition with the RTC docketed as Spec. Proc. No. 232.
The two cases were subsequently consolidated.
Petitioner prayed for the dismissal of Spec. Proc. No.
232 on the ground of litis pendentia, considering that Spec.
Proc. No. 228 covering the same estate was already pending.
On the other hand, respondent alleged that petitioner
was not considered an interested person qualified to file a
petition for the issuance of letters of administration of the
estate of Orlando. In support of her contention, respondent
alleged that a criminal case for bigamy was filed against
petitioner before Branch 54 of the RTC of Alaminos,
Pangasinan, and docketed as Crim. Case No. 2699-A.
Apparently, Felicitas Amor filed a Complaint for
bigamy, alleging that petitioner contracted a second marriage
to Orlando despite having been married to one Eusebio Bristol
on 12 December 1959.
On 6 August 1998, the RTC had acquitted petitioner of
bigamy.[if !supportFootnotes][3][endif] The trial court ruled that since
the deceased was a divorced American citizen, and since that
divorce was not recognized under Philippine jurisdiction, the
marriage between him and petitioner was not valid.
Furthermore, it took note of the action for declaration of
nullity then pending action with the trial court in Dagupan City

filed by Felicitas Amor against the deceased and petitioner. It

considered the pending action to be a prejudicial question in
determining the guilt of petitioner for the crime of bigamy.
Finally, the trial court found that, in the first place,
petitioner had never been married to Eusebio Bristol.
On 26 June 2006, Branch 70 of the RTC of Burgos,
Pangasinan dismissed the Petition for the issuance of letters of
administration filed by petitioner and granted that of private
respondent. Contrary to its findings in Crim. Case No. 2699-A,
the RTC held that the marriage between petitioner and Eusebio
Bristol was valid and subsisting when she married Orlando.
Without expounding, it reasoned further that her acquittal in
the previous bigamy case was fatal to her cause. Thus, the trial
court held that petitioner was not an interested party who may
file a petition for the issuance of letters of administration.[if !
supportFootnotes][4][endif]

After the subsequent denial of her Motion for

Reconsideration, petitioner elevated the matter to the Court of
Appeals (CA) via her Petition for Certiorari, alleging grave
abuse of discretion on the part of the RTC in dismissing her
Petition for the issuance of letters of administration.
Petitioner reiterated before the CA that the Petition filed
by respondent should have been dismissed on the ground of
litis pendentia. She also insisted that, while a petition for
letters of administration may have been filed by an
uninterested person, the defect was cured by the appearance of
a real party-in-interest. Thus, she insisted that, to determine
who has a better right to administer the decedents properties,
the RTC should have first required the parties to present their
evidence before it ruled on the matter.
On 18 October 2007, the CA promulgated the assailed
Decision. First, it held that petitioner undertook the wrong
remedy. She should have instead filed a petition for review

rather than a petition for certiorari. Nevertheless, since the

Petition for Certiorari was filed within the fifteen-day
reglementary period for filing a petition for review under Sec.
4 of Rule 43, the CA allowed the Petition and continued to
decide on the merits of the case. Thus, it ruled in this wise:
As to the issue of litis pendentia, we find it not
applicable in the case. For litis pendentia to be a
ground for the dismissal of an action, there must be:
(a) identity of the parties or at least such as to
represent the same interest in both actions; (b) identity
of rights asserted and relief prayed for, the relief being
founded on the same acts, and (c) the identity in the
two cases should be such that the judgment which
may be rendered in one would, regardless of which
party is successful, amount to res judicata in the other.
A petition for letters of administration is a special
proceeding. A special proceeding is an application or
proceeding to establish the status or right of a party, or
a particular fact. And, in contrast to an ordinary civil
action, a special proceeding involves no defendant or
respondent. The only party in this kind of proceeding
is the petitioner of the applicant. Considering its
nature, a subsequent petition for letters of
administration can hardly be barred by a similar
pending petition involving the estate of the same
decedent unless both petitions are filed by the same
person. In the case at bar, the petitioner was not a
party to the petition filed by the private respondent, in
the same manner that the latter was not made a party
to the petition filed by the former. The first element of
litis pendentia is wanting. The contention of the
petitioner must perforce fail.

Moreover, to yield to the contention of the

petitioner would render nugatory the provision of the
Rules requiring a petitioner for letters of
administration to be an interested party, inasmuch as

any person, for that matter, regardless of whether he

has valid interest in the estate sought to be
administered, could be appointed as administrator for
as long as he files his petition ahead of any other
person, in derogation of the rights of those specifically
mentioned in the order of preference in the
appointment of administrator under Rule 78, Section 6
of the Revised Rules of Court, which provides:

xxx xxx xxx

The petitioner, armed with a marriage

certificate, filed her petition for letters of
administration. As a spouse, the petitioner would have
been preferred to administer the estate of Orlando B.
Catalan. However, a marriage certificate, like any
other public document, is only prima facie evidence
of the facts stated therein. The fact that the
petitioner had been charged with bigamy and was
acquitted has not been disputed by the petitioner.
Bigamy is an illegal marriage committed by
contracting a second or subsequent marriage before
the first marriage has been dissolved or before the
absent spouse has been declared presumptively dead
by a judgment rendered in a proper proceedings. The
deduction of the trial court that the acquittal of the
petitioner in the said case negates the validity of
her subsequent marriage with Orlando B. Catalan
has not been disproved by her. There was not even
an attempt from the petitioner to deny the findings
of the trial court. There is therefore no basis for us to
make a contrary finding. Thus, not being an interested
party and a stranger to the estate of Orlando B.
Catalan, the dismissal of her petition for letters of
administration by the trial court is in place.

xxx xxx xxx

WHEREFORE, premises considered, the petition is DISMISSED for

lack of merit. No pronouncement as to costs.
SO ORDERED.[if !supportFootnotes][5][endif] (Emphasis supplied)

Petitioner moved for a reconsideration of this Decision.[if !

supportFootnotes][6][endif] She alleged that the reasoning of the CA
was illogical in stating, on the one hand, that she was acquitted
of bigamy, while, on the other hand, still holding that her
marriage with Orlando was invalid. She insists that with her
acquittal of the crime of bigamy, the marriage enjoys the
presumption of validity.
On 20 June 2008, the CA denied her motion.
Hence, this Petition.
At the outset, it seems that the RTC in the special
proceedings failed to appreciate the finding of the RTC in
Crim. Case No. 2699-A that petitioner was never married to
Eusebio Bristol. Thus, the trial court concluded that, because
petitioner was acquitted of bigamy, it follows that the first
marriage with Bristol still existed and was valid. By failing to
take note of the findings of fact on the nonexistence of the
marriage between petitioner and Bristol, both the RTC and CA
held that petitioner was not an interested party in the estate of
Orlando.
Second, it is imperative to note that at the time the
bigamy case in Crim. Case No. 2699-A was dismissed, we had
already ruled that under the principles of comity, our
jurisdiction recognizes a valid divorce obtained by a spouse of
foreign nationality. This doctrine was established as early as
1985 in Van Dorn v. Romillo, Jr.[if !supportFootnotes][7][endif] wherein
we said:
It is true that owing to the nationality principle
embodied in Article 15 of the Civil Code, only

Philippine nationals are covered by the policy against

absolute divorces[,] the same being considered
contrary to our concept of public policy and morality.
However, aliens may obtain divorces abroad,
which may be recognized in the Philippines,
provided they are valid according to their national
law. In this case, the divorce in Nevada released
private respondent from the marriage from the
standards of American law, under which divorce
dissolves the marriage. xxx

We reiterated this principle in Llorente v. Court of

Appeals,[if !supportFootnotes][8][endif] to wit:
In Van Dorn v. Romillo, Jr. we held that owing
to the nationality principle embodied in Article 15 of
the Civil Code, only Philippine nationals are covered
by the policy against absolute divorces, the same
being considered contrary to our concept of public
policy and morality. In the same case, the Court
ruled that aliens may obtain divorces abroad,
provided they are valid according to their national
law.

Citing this landmark case, the Court held in Quita v. Court of Appeals,
that once proven that respondent was no longer a Filipino citizen
when he obtained the divorce from petitioner, the ruling in Van Dorn
would become applicable and petitioner could very well lose her right
to inherit from him.
In Pilapil v. Ibay-Somera, we recognized the
divorce obtained by the respondent in his country, the
Federal Republic of Germany. There, we stated that
divorce and its legal effects may be recognized in
the Philippines insofar as respondent is concerned
in view of the nationality principle in our civil law
on the status of persons.

For failing to apply these doctrines, the

decision of the Court of Appeals must be reversed.
We hold that the divorce obtained by Lorenzo H.
Llorente from his first wife Paula was valid and
recognized in this jurisdiction as a matter of
comity. xxx

Nonetheless, the fact of divorce must still first be proven

as we have enunciated in Garcia v. Recio,[if !supportFootnotes][9][endif]
to wit:
Respondent is getting ahead of himself. Before
a foreign judgment is given presumptive evidentiary
value, the document must first be presented and
admitted in evidence. A divorce obtained abroad is
proven by the divorce decree itself. Indeed the best
evidence of a judgment is the judgment itself. The
decree purports to be a written act or record of an act
of an official body or tribunal of a foreign country.

Under Sections 24 and 25 of Rule 132, on the

other hand, a writing or document may be proven as a
public or official record of a foreign country by either
(1) an official publication or (2) a copy thereof
attested by the officer having legal custody of the
document. If the record is not kept in the Philippines,
such copy 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.

The divorce decree between respondent and

Editha Samson appears to be an authentic one issued
by an Australian family court. However, appearance is

not sufficient; compliance with the aforementioned

rules on evidence must be demonstrated.

Fortunately for respondent's cause, when the

divorce decree of May 18, 1989 was submitted in
evidence, counsel for petitioner objected, not to its
admissibility, but only to the fact that it had not been
registered in the Local Civil Registry of Cabanatuan
City. The trial court ruled that it was admissible,
subject to petitioner's qualification. Hence, it was
admitted in evidence and accorded weight by the
judge. Indeed, petitioner's failure to object properly
rendered the divorce decree admissible as a written
act of the Family Court of Sydney, Australia.

Compliance with the quoted articles (11, 13

and 52) of the Family Code is not necessary;
respondent was no longer bound by Philippine
personal laws after he acquired Australian citizenship
in 1992. Naturalization is the legal act of adopting an
alien and clothing him with the political and civil
rights belonging to a citizen. Naturalized citizens,
freed from the protective cloak of their former states,
don the attires of their adoptive countries. By
becoming an Australian, respondent severed his
allegiance to the Philippines and the vinculum juris
that had tied him to Philippine personal laws.

Burden of Proving Australian Law

Respondent contends that the burden to prove
Australian divorce law falls upon petitioner, because
she is the party challenging the validity of a foreign
judgment. He contends that petitioner was satisfied
with the original of the divorce decree and was
cognizant of the marital laws of Australia, because she

had lived and worked in that country for quite a long

time. Besides, the Australian divorce law is allegedly
known by Philippine courts; thus, judges may take
judicial notice of foreign laws in the exercise of sound
discretion.

We are not persuaded. The burden of proof

lies with the party who alleges the existence of a
fact or thing necessary in the prosecution or
defense of an action. In civil cases, plaintiffs have
the burden of proving the material allegations of
the complaint when those are denied by the
answer; and defendants have the burden of
proving the material allegations in their answer
when they introduce new matters. Since the
divorce was a defense raised by respondent, the
burden of proving the pertinent Australian law
validating it falls squarely upon him.

It is well-settled in our jurisdiction that our courts cannot take judicial

notice of foreign laws. Like any other facts, they must be alleged and
proved. Australian marital laws are not among those matters that
judges are supposed to know by reason of their judicial function. The
power of judicial notice must be exercised with caution, and every
reasonable doubt upon the subject should be resolved in the negative.
(Emphasis supplied)

It appears that the trial court no longer required

petitioner to prove the validity of Orlandos divorce under the
laws of the United States and the marriage between petitioner
and the deceased. Thus, there is a need to remand the
proceedings to the trial court for further reception of evidence
to establish the fact of divorce.
Should petitioner prove the validity of the divorce and
the subsequent marriage, she has the preferential right to be
issued the letters of administration over the estate. Otherwise,

letters of administration may be issued to respondent, who is

undisputedly the daughter or next of kin of the deceased, in
accordance with Sec. 6 of Rule 78 of the Revised Rules of
Court.
This is consistent with our ruling in San Luis v. San Luis,
[if !supportFootnotes][10][endif] in which we said:
Applying the above doctrine in the instant
case, the divorce decree allegedly obtained by Merry
Lee which absolutely allowed Felicisimo to remarry,
would have vested Felicidad with the legal personality
to file the present petition as Felicisimo's surviving
spouse. However, the records show that there is
insufficient evidence to prove the validity of the
divorce obtained by Merry Lee as well as the
marriage of respondent and Felicisimo under the
laws of the U.S.A. In Garcia v. Recio, the Court laid
down the specific guidelines for pleading and proving
foreign law and divorce judgments. It held that
presentation solely of the divorce decree is
insufficient and that proof of its authenticity and due
execution must be presented. Under Sections 24 and
25 of Rule 132, a writing or document may be proven
as a public or official record of a foreign country by
either (1) an official publication or (2) a copy thereof
attested by the officer having legal custody of the
document. If the record is not kept in the Philippines,
such copy 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.

With regard to respondent's marriage to

Felicisimo allegedly solemnized in California, U.S.A.,
she submitted photocopies of the Marriage Certificate
and the annotated text of the Family Law Act of
California which purportedly show that their marriage

was done in accordance with the said law. As stated in

Garcia, however, the Court cannot take judicial notice
of foreign laws as they must be alleged and proved.

Therefore, this case should be remanded to the trial court for further
reception of evidence on the divorce decree obtained by Merry Lee
and the marriage of respondent and Felicisimo. (Emphasis supplied)

Thus, it is imperative for the trial court to first determine

the validity of the divorce to ascertain the rightful party to be
issued the letters of administration over the estate of Orlando
B. Catalan.
WHEREFORE, premises considered, the Petition is hereby
PARTIALLY GRANTED. The Decision dated 18 October
2007 and the Resolution dated 20 June 2008 of the Court of
Appeals are hereby REVERSED and SET ASIDE. Let this
case be REMANDED to Branch 70 of the Regional Trial
Court of Burgos, Pangasinan for further proceedings in
accordance with this Decision.
SO ORDERED.
SECOND DIVISION
KOREA TECHNOLOGIES CO., G.R. No. 143581
LTD.,
Petitioner,
Present:
- versus - QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
HON. ALBERTO A. LERMA, in TINGA, and
his capacity as Presiding Judge of VELASCO, JR., JJ.

Branch 256 of Regional Trial

Court of Muntinlupa City, and
PACIFIC GENERAL STEEL Promulgated:
MANUFACTURING
CORPORATION,
Respondents. January 7, 2008
x----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
In our jurisdiction, the policy is to favor alternative methods of
resolving disputes, particularly in civil and commercial
disputes. Arbitration along with mediation, conciliation, and
negotiation, being inexpensive, speedy and less hostile
methods have long been favored by this Court. The petition
before us puts at issue an arbitration clause in a contract
mutually agreed upon by the parties stipulating that they would
submit themselves to arbitration in a foreign country.
Regrettably, instead of hastening the resolution of their
dispute, the parties wittingly or unwittingly prolonged the
controversy.
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a
Korean corporation which is engaged in the supply and
installation of Liquefied Petroleum Gas (LPG) Cylinder
manufacturing plants, while private respondent Pacific General
Steel Manufacturing Corp. (PGSMC) is a domestic
corporation.

On March 5, 1997, PGSMC and KOGIES executed a

Contract[if !supportFootnotes][1][endif] whereby KOGIES would set up
an LPG Cylinder Manufacturing Plant in Carmona, Cavite.
The contract was executed in the Philippines. On April 7,
1997, the parties executed, in Korea, an Amendment for
Contract No. KLP-970301 dated March 5, 1997[if !supportFootnotes]
[2][endif] amending the terms of payment. The contract and its
amendment stipulated that KOGIES will ship the machinery
and facilities necessary for manufacturing LPG cylinders for
which PGSMC would pay USD 1,224,000. KOGIES would
install and initiate the operation of the plant for which PGSMC
bound itself to pay USD 306,000 upon the plants production of
the 11-kg. LPG cylinder samples. Thus, the total contract price
amounted to USD 1,530,000.
On October 14, 1997, PGSMC entered into a Contract of
Lease[if !supportFootnotes][3][endif] with Worth Properties, Inc. (Worth)
for use of Worths 5,079-square meter property with a 4,032square meter warehouse building to house the LPG
manufacturing plant. The monthly rental was PhP 322,560
commencing on January 1, 1998 with a 10% annual increment
clause. Subsequently, the machineries, equipment, and
facilities for the manufacture of LPG cylinders were shipped,
delivered, and installed in the Carmona plant. PGSMC paid
KOGIES USD 1,224,000.
However, gleaned from the Certificate[if !supportFootnotes][4]
[endif] executed by the parties on January 22, 1998, after the
installation of the plant, the initial operation could not be
conducted as PGSMC encountered financial difficulties
affecting the supply of materials, thus forcing the parties to
agree that KOGIES would be deemed to have completely

complied with the terms and conditions of the March 5, 1997

contract.
For the remaining balance of USD306,000 for the
installation and initial operation of the plant, PGSMC issued
two postdated checks: (1) BPI Check No. 0316412 dated
January 30, 1998 for PhP 4,500,000; and (2) BPI Check No.
0316413 dated March 30, 1998 for PhP 4,500,000.[if !
supportFootnotes][5][endif]

When KOGIES deposited the checks, these were

dishonored for the reason PAYMENT STOPPED. Thus, on May
8, 1998, KOGIES sent a demand letter[if !supportFootnotes][6][endif] to
PGSMC threatening criminal action for violation of Batas
Pambansa Blg. 22 in case of nonpayment. On the same date,
the wife of PGSMCs President faxed a letter dated May 7,
1998 to KOGIES President who was then staying at a Makati
City hotel. She complained that not only did KOGIES deliver a
different brand of hydraulic press from that agreed upon but it
had not delivered several equipment parts already paid for.
On May 14, 1998, PGSMC replied that the two checks it
issued KOGIES were fully funded but the payments were
stopped for reasons previously made known to KOGIES.[if !
supportFootnotes][7][endif]

On June 1, 1998, PGSMC informed KOGIES that

PGSMC was canceling their Contract dated March 5, 1997 on
the ground that KOGIES had altered the quantity and lowered
the quality of the machineries and equipment it delivered to
PGSMC, and that PGSMC would dismantle and transfer the
machineries, equipment, and facilities installed in the Carmona
plant. Five days later, PGSMC filed before the Office of the

Public Prosecutor an Affidavit-Complaint for Estafa docketed

as I.S. No. 98-03813 against Mr. Dae Hyun Kang, President of
KOGIES.
On June 15, 1998, KOGIES wrote PGSMC informing
the latter that PGSMC could not unilaterally rescind their
contract nor dismantle and transfer the machineries and
equipment on mere imagined violations by KOGIES. It also
insisted that their disputes should be settled by arbitration as
agreed upon in Article 15, the arbitration clause of their
contract.
On June 23, 1998, PGSMC again wrote KOGIES
reiterating the contents of its June 1, 1998 letter threatening
that the machineries, equipment, and facilities installed in the
plant would be dismantled and transferred on July 4, 1998.
Thus, on July 1, 1998, KOGIES instituted an Application for
Arbitration before the Korean Commercial Arbitration Board
(KCAB) in Seoul, Korea pursuant to Art. 15 of the Contract as
amended.
On July 3, 1998, KOGIES filed a Complaint for Specific
Performance, docketed as Civil Case No. 98-117 [if !
supportFootnotes][8][endif] against PGSMC before the Muntinlupa City
Regional Trial Court (RTC). The RTC granted a temporary
restraining order (TRO) on July 4, 1998, which was
subsequently extended until July 22, 1998. In its complaint,
KOGIES alleged that PGSMC had initially admitted that the
checks that were stopped were not funded but later on claimed
that it stopped payment of the checks for the reason that their
value was not received as the former allegedly breached their
contract by altering the quantity and lowering the quality of the
machinery and equipment installed in the plant and failed to

make the plant operational although it earlier certified to the

contrary as shown in a January 22, 1998 Certificate. Likewise,
KOGIES averred that PGSMC violated Art. 15 of their
Contract, as amended, by unilaterally rescinding the contract
without resorting to arbitration. KOGIES also asked that
PGSMC be restrained from dismantling and transferring the
machinery and equipment installed in the plant which the latter
threatened to do on July 4, 1998.
On July 9, 1998, PGSMC filed an opposition to the TRO
arguing that KOGIES was not entitled to the TRO since Art.
15, the arbitration clause, was null and void for being against
public policy as it ousts the local courts of jurisdiction over the
instant controversy.
On July 17, 1998, PGSMC filed its Answer with
Compulsory Counterclaim[if !supportFootnotes][9][endif] asserting that
it had the full right to dismantle and transfer the machineries
and equipment because it had paid for them in full as stipulated
in the contract; that KOGIES was not entitled to the PhP
9,000,000 covered by the checks for failing to completely
install and make the plant operational; and that KOGIES was
liable for damages amounting to PhP 4,500,000 for altering the
quantity and lowering the quality of the machineries and
equipment. Moreover, PGSMC averred that it has already paid
PhP 2,257,920 in rent (covering January to July 1998) to Worth
and it was not willing to further shoulder the cost of renting the
premises of the plant considering that the LPG cylinder
manufacturing plant never became operational.
After the parties submitted their Memoranda, on July 23,
1998, the RTC issued an Order denying the application for a
writ of preliminary injunction, reasoning that PGSMC had paid

KOGIES USD 1,224,000, the value of the machineries and

equipment as shown in the contract such that KOGIES no
longer had proprietary rights over them. And finally, the RTC
held that Art. 15 of the Contract as amended was invalid as it
tended to oust the trial court or any other court jurisdiction
over any dispute that may arise between the parties. KOGIES
prayer for an injunctive writ was denied.[if !supportFootnotes][10][endif]
The dispositive portion of the Order stated:
WHEREFORE, in view of the foregoing consideration, this
Court believes and so holds that no cogent reason
exists for this Court to grant the writ of preliminary
injunction to restrain and refrain defendant from
dismantling the machineries and facilities at the lot
and building of Worth Properties, Incorporated at
Carmona, Cavite and transfer the same to another site:
and therefore denies plaintiffs application for a writ of
preliminary injunction.

On July 29, 1998, KOGIES filed its Reply to Answer

and Answer to Counterclaim.[if !supportFootnotes][11][endif] KOGIES
denied it had altered the quantity and lowered the quality of the
machinery, equipment, and facilities it delivered to the plant. It
claimed that it had performed all the undertakings under the
contract and had already produced certified samples of LPG
cylinders. It averred that whatever was unfinished was
PGSMCs fault since it failed to procure raw materials due to
lack of funds. KOGIES, relying on Chung Fu Industries
(Phils.), Inc. v. Court of Appeals,[if !supportFootnotes][12][endif] insisted
that the arbitration clause was without question valid.

After KOGIES filed a Supplemental Memorandum with

Motion to Dismiss[if !supportFootnotes][13][endif] answering PGSMCs
memorandum of July 22, 1998 and seeking dismissal of
PGSMCs counterclaims, KOGIES, on August 4, 1998, filed its
Motion for Reconsideration[if !supportFootnotes][14][endif] of the July
23, 1998 Order denying its application for an injunctive writ
claiming that the contract was not merely for machinery and
facilities worth USD 1,224,000 but was for the sale of an LPG
manufacturing plant consisting of supply of all the machinery
and facilities and transfer of technology for a total contract
price of USD 1,530,000 such that the dismantling and transfer
of the machinery and facilities would result in the dismantling
and transfer of the very plant itself to the great prejudice of
KOGIES as the still unpaid owner/seller of the plant.
Moreover, KOGIES points out that the arbitration clause under
Art. 15 of the Contract as amended was a valid arbitration
stipulation under Art. 2044 of the Civil Code and as held by
this Court in Chung Fu Industries (Phils.), Inc.[if !supportFootnotes]
[15][endif]

In the meantime, PGSMC filed a Motion for Inspection

of Things[if !supportFootnotes][16][endif] to determine whether there
was indeed alteration of the quantity and lowering of quality of
the machineries and equipment, and whether these were
properly installed. KOGIES opposed the motion positing that
the queries and issues raised in the motion for inspection fell
under the coverage of the arbitration clause in their contract.
On September 21, 1998, the trial court issued an Order
(1) granting PGSMCs motion for inspection; (2) denying
KOGIES motion for reconsideration of the July 23, 1998 RTC
Order; and (3) denying KOGIES motion to dismiss PGSMCs

compulsory counterclaims as these counterclaims fell within

the requisites of compulsory counterclaims.
On October 2, 1998, KOGIES filed an Urgent Motion
for Reconsideration[if !supportFootnotes][17][endif] of the September 21,
1998 RTC Order granting inspection of the plant and denying
dismissal of PGSMCs compulsory counterclaims.
Ten days after, on October 12, 1998, without waiting for
the resolution of its October 2, 1998 urgent motion for
reconsideration, KOGIES filed before the Court of Appeals
(CA) a petition for certiorari[if !supportFootnotes][18][endif] docketed as
CA-G.R. SP No. 49249, seeking annulment of the July 23,
1998 and September 21, 1998 RTC Orders and praying for the
issuance of writs of prohibition, mandamus, and preliminary
injunction to enjoin the RTC and PGSMC from inspecting,
dismantling, and transferring the machineries and equipment in
the Carmona plant, and to direct the RTC to enforce the
specific agreement on arbitration to resolve the dispute.
In the meantime, on October 19, 1998, the RTC denied
KOGIES urgent motion for reconsideration and directed the
Branch Sheriff to proceed with the inspection of the
machineries and equipment in the plant on October 28, 1998.
[if !supportFootnotes][19][endif]

Thereafter, KOGIES filed a Supplement to the

Petition[if !supportFootnotes][20][endif] in CA-G.R. SP No. 49249
informing the CA about the October 19, 1998 RTC Order. It
also reiterated its prayer for the issuance of the writs of
prohibition, mandamus and preliminary injunction which was
not acted upon by the CA. KOGIES asserted that the Branch
Sheriff did not have the technical expertise to ascertain

whether or not the machineries and equipment conformed to

the specifications in the contract and were properly installed.
On November 11, 1998, the Branch Sheriff filed his
Sheriffs Report[if !supportFootnotes][21][endif] finding that the
enumerated machineries and equipment were not fully and
properly installed.
The Court of Appeals affirmed the trial court and declared
the arbitration clause against public policy
On May 30, 2000, the CA rendered the assailed
Decision[if !supportFootnotes][22][endif] affirming the RTC Orders and
dismissing the petition for certiorari filed by KOGIES. The CA
found that the RTC did not gravely abuse its discretion in
issuing the assailed July 23, 1998 and September 21, 1998
Orders. Moreover, the CA reasoned that KOGIES contention
that the total contract price for USD 1,530,000 was for the
whole plant and had not been fully paid was contrary to the
finding of the RTC that PGSMC fully paid the price of USD
1,224,000, which was for all the machineries and equipment.
According to the CA, this determination by the RTC was a
factual finding beyond the ambit of a petition for certiorari.
On the issue of the validity of the arbitration clause, the
CA agreed with the lower court that an arbitration clause
which provided for a final determination of the legal rights of
the parties to the contract by arbitration was against public
policy.
On the issue of nonpayment of docket fees and nonattachment of a certificate of non-forum shopping by PGSMC,

the CA held that the counterclaims of PGSMC were

compulsory ones and payment of docket fees was not required
since the Answer with counterclaim was not an initiatory
pleading. For the same reason, the CA said a certificate of nonforum shopping was also not required.
Furthermore, the CA held that the petition for certiorari
had been filed prematurely since KOGIES did not wait for the
resolution of its urgent motion for reconsideration of the
September 21, 1998 RTC Order which was the plain, speedy,
and adequate remedy available. According to the CA, the RTC
must be given the opportunity to correct any alleged error it
has committed, and that since the assailed orders were
interlocutory, these cannot be the subject of a petition for
certiorari.
Hence, we have this Petition for Review on Certiorari
under Rule 45.
The Issues
Petitioner posits that the appellate court committed the
following errors:
a. PRONOUNCING THE QUESTION OF OWNERSHIP
OVER THE MACHINERY AND FACILITIES AS A
QUESTION OF FACT BEYOND THE AMBIT OF A
PETITION FOR CERTIORARI INTENDED ONLY
FOR CORRECTION OF ERRORS OF
J U R I S D I C T I O N O R G R AV E A B U S E O F
DISCRETION AMOUNTING TO LACK OF (SIC)
EXCESS OF JURISDICTION, AND CONCLUDING
THAT THE TRIAL COURTS FINDING ON THE
SAME QUESTION WAS IMPROPERLY RAISED
IN THE PETITION BELOW;

b. DECLARING AS NULL AND VOID THE

ARBITRATION CLAUSE IN ARTICLE 15 OF THE
CONTRACT BETWEEN THE PARTIES FOR
BEING CONTRARY TO PUBLIC POLICY AND
FOR OUSTING THE COURTS OF JURISDICTION;

[if !supportLists]c.
[endif]DECREEING PRIVATE
RESPONDENTS COUNTERCLAIMS TO BE ALL COMPULSORY
NOT NECESSITATING PAYMENT OF DOCKET FEES AND
CERTIFICATION OF NON-FORUM SHOPPING;
[if !supportLists]d.
[endif]RULING THAT THE PETITION WAS
FILED PREMATURELY WITHOUT WAITING FOR THE
RESOLUTION OF THE MOTION FOR RECONSIDERATION OF THE
ORDER DATED SEPTEMBER 21, 1998 OR WITHOUT GIVING THE
TRIAL COURT AN OPPORTUNITY TO CORRECT ITSELF;
[if !supportLists]e.
[endif]PROCLAIMING THE TWO ORDERS
DATED JULY 23 AND SEPTEMBER 21, 1998 NOT TO BE PROPER
SUBJECTS OF CERTIORARI AND PROHIBITION FOR BEING
INTERLOCUTORY IN NATURE;
[if !supportLists]f.
[endif]NOT GRANTING THE RELIEFS AND
REMEDIES PRAYED FOR IN HE (SIC) PETITION AND, INSTEAD,
DISMISSING THE SAME FOR ALLEGEDLY WITHOUT MERIT.[if !
supportFootnotes][23][endif]

The Courts Ruling

The petition is partly meritorious.
Before we delve into the substantive issues, we shall
first tackle the procedural issues.

The rules on the payment of docket fees for counterclaims

and cross claims were amended effective August 16, 2004
KOGIES strongly argues that when PGSMC filed the
counterclaims, it should have paid docket fees and filed a
certificate of non-forum shopping, and that its failure to do so
was a fatal defect.
We disagree with KOGIES.
As aptly ruled by the CA, the counterclaims of PGSMC
were incorporated in its Answer with Compulsory
Counterclaim dated July 17, 1998 in accordance with Section 8
of Rule 11, 1997 Revised Rules of Civil Procedure, the rule
that was effective at the time the Answer with Counterclaim
was filed. Sec. 8 on existing counterclaim or cross-claim
states, A compulsory counterclaim or a cross-claim that a
defending party has at the time he files his answer shall be
contained therein.
On July 17, 1998, at the time PGSMC filed its Answer
incorporating its counterclaims against KOGIES, it was not
liable to pay filing fees for said counterclaims being
compulsory in nature. We stress, however, that effective
August 16, 2004 under Sec. 7, Rule 141, as amended by A.M.
No. 04-2-04-SC, docket fees are now required to be paid in
compulsory counterclaim or cross-claims.
As to the failure to submit a certificate of forum
shopping, PGSMCs Answer is not an initiatory pleading which
requires a certification against forum shopping under Sec. 5[if !

supportFootnotes][24][endif]

of Rule 7, 1997 Revised Rules of Civil

Procedure. It is a responsive pleading, hence, the courts a quo
did not commit reversible error in denying KOGIES motion to
dismiss PGSMCs compulsory counterclaims.
Interlocutory orders proper subject of certiorari
Citing Gamboa v. Cruz,[if !supportFootnotes][25][endif] the CA
also pronounced that certiorari and Prohibition are neither the
remedies to question the propriety of an interlocutory order of
the trial court.[if !supportFootnotes][26][endif] The CA erred on its
reliance on Gamboa. Gamboa involved the denial of a motion
to acquit in a criminal case which was not assailable in an
action for certiorari since the denial of a motion to quash
required the accused to plead and to continue with the trial,
and whatever objections the accused had in his motion to
quash can then be used as part of his defense and subsequently
can be raised as errors on his appeal if the judgment of the trial
court is adverse to him. The general rule is that interlocutory
orders cannot be challenged by an appeal.[if !supportFootnotes][27]
[endif] Thus, in Yamaoka v. Pescarich Manufacturing
Corporation, we held:
The proper remedy in such cases is an
ordinary appeal from an adverse judgment on the
merits, incorporating in said appeal the grounds for
assailing the interlocutory orders. Allowing appeals
from interlocutory orders would result in the sorry
spectacle of a case being subject of a
counterproductive ping-pong to and from the
appellate court as often as a trial court is perceived to
have made an error in any of its interlocutory rulings.
However, where the assailed interlocutory order was
issued with grave abuse of discretion or patently
erroneous and the remedy of appeal would not afford

adequate and expeditious relief, the Court allows

certiorari as a mode of redress.[if !supportFootnotes][28][endif]

Also, appeals from interlocutory orders would open the

floodgates to endless occasions for dilatory motions. Thus,
where the interlocutory order was issued without or in excess
of jurisdiction or with grave abuse of discretion, the remedy is
certiorari.[if !supportFootnotes][29][endif]
The alleged grave abuse of discretion of the respondent
court equivalent to lack of jurisdiction in the issuance of the
two assailed orders coupled with the fact that there is no plain,
speedy, and adequate remedy in the ordinary course of law
amply provides the basis for allowing the resort to a petition
for certiorari under Rule 65.
Prematurity of the petition before the CA
Neither do we think that KOGIES was guilty of forum
shopping in filing the petition for certiorari. Note that KOGIES
motion for reconsideration of the July 23, 1998 RTC Order
which denied the issuance of the injunctive writ had already
been denied. Thus, KOGIES only remedy was to assail the
RTCs interlocutory order via a petition for certiorari under
Rule 65.
While the October 2, 1998 motion for reconsideration of
KOGIES of the September 21, 1998 RTC Order relating to the
inspection of things, and the allowance of the compulsory
counterclaims has not yet been resolved, the circumstances in

this case would allow an exception to the rule that before

certiorari may be availed of, the petitioner must have filed a
motion for reconsideration and said motion should have been
first resolved by the court a quo. The reason behind the rule is
to enable the lower court, in the first instance, to pass upon and
correct its mistakes without the intervention of the higher
court.[if !supportFootnotes][30][endif]
The September 21, 1998 RTC Order directing the branch
sheriff to inspect the plant, equipment, and facilities when he is
not competent and knowledgeable on said matters is evidently
flawed and devoid of any legal support. Moreover, there is an
urgent necessity to resolve the issue on the dismantling of the
facilities and any further delay would prejudice the interests of
KOGIES. Indeed, there is real and imminent threat of
irreparable destruction or substantial damage to KOGIES
equipment and machineries. We find the resort to certiorari
based on the gravely abusive orders of the trial court sans the
ruling on the October 2, 1998 motion for reconsideration to be
proper.
The Core Issue: Article 15 of the Contract
We now go to the core issue of the validity of Art. 15 of
the Contract, the arbitration clause. It provides:
Article 15. Arbitration.All disputes,
controversies, or differences which may arise between
the parties, out of or in relation to or in connection
with this Contract or for the breach thereof, shall
finally be settled by arbitration in Seoul, Korea in
accordance with the Commercial Arbitration Rules of
the Korean Commercial Arbitration Board. The
award rendered by the arbitration(s) shall be final

and binding upon both parties concerned.

(Emphasis supplied.)

Petitioner claims the RTC and the CA erred in ruling that

the arbitration clause is null and void.
Petitioner is correct.
Established in this jurisdiction is the rule that the law of
the place where the contract is made governs. Lex loci
contractus. The contract in this case was perfected here in the
Philippines. Therefore, our laws ought to govern. Nonetheless,
Art. 2044 of the Civil Code sanctions the validity of mutually
agreed arbitral clause or the finality and binding effect of an
arbitral award. Art. 2044 provides, Any stipulation that the
arbitrators award or decision shall be final, is valid, without
prejudice to Articles 2038, 2039 and 2040. (Emphasis
supplied.)
Arts. 2038,[if !supportFootnotes][31][endif] 2039,[if !supportFootnotes][32]
[endif] and 2040[if !supportFootnotes][33][endif] abovecited refer to
instances where a compromise or an arbitral award, as applied
to Art. 2044 pursuant to Art. 2043,[if !supportFootnotes][34][endif] may
be voided, rescinded, or annulled, but these would not
denigrate the finality of the arbitral award.
The arbitration clause was mutually and voluntarily
agreed upon by the parties. It has not been shown to be
contrary to any law, or against morals, good customs, public
order, or public policy. There has been no showing that the

parties have not dealt with each other on equal footing. We

find no reason why the arbitration clause should not be
respected and complied with by both parties. In Gonzales v.
Climax Mining Ltd.,[if !supportFootnotes][35][endif] we held that
submission to arbitration is a contract and that a clause in a
contract providing that all matters in dispute between the
parties shall be referred to arbitration is a contract.[if !
supportFootnotes][36][endif] Again in Del Monte Corporation-USA v.
Court of Appeals, we likewise ruled that [t]he provision to
submit to arbitration any dispute arising therefrom and the
relationship of the parties is part of that contract and is itself a
contract.[if !supportFootnotes][37][endif]
Arbitration clause not contrary to public policy
The arbitration clause which stipulates that the
arbitration must be done in Seoul, Korea in accordance with
the Commercial Arbitration Rules of the KCAB, and that the
arbitral award is final and binding, is not contrary to public
policy. This Court has sanctioned the validity of arbitration
clauses in a catena of cases. In the 1957 case of Eastboard
Navigation Ltd. v. Juan Ysmael and Co., Inc.,[if !supportFootnotes][38]
[endif] this Court had occasion to rule that an arbitration clause
to resolve differences and breaches of mutually agreed
contractual terms is valid. In BF Corporation v. Court of
Appeals, we held that [i]n this jurisdiction, arbitration has been
held valid and constitutional. Even before the approval on June
19, 1953 of Republic Act No. 876, this Court has countenanced
the settlement of disputes through arbitration. Republic Act
No. 876 was adopted to supplement the New Civil Codes
provisions on arbitration.[if !supportFootnotes][39][endif] And in LM
Power Engineering Corporation v. Capitol Industrial
Construction Groups, Inc., we declared that:

Being an inexpensive, speedy and amicable

method of settling disputes, arbitrationalong with
mediation, conciliation and negotiationis encouraged
by the Supreme Court. Aside from unclogging judicial
dockets, arbitration also hastens the resolution of
disputes, especially of the commercial kind. It is thus
regarded as the wave of the future in international
civil and commercial disputes. Brushing aside a
contractual agreement calling for arbitration between
the parties would be a step backward.

Consistent with the above-mentioned policy of

encouraging alternative dispute resolution methods,
courts should liberally construe arbitration clauses.
Provided such clause is susceptible of an
interpretation that covers the asserted dispute, an
order to arbitrate should be granted. Any doubt should
be resolved in favor of arbitration.[if !supportFootnotes][40]
[endif]

Having said that the instant arbitration clause is not

against public policy, we come to the question on what governs
an arbitration clause specifying that in case of any dispute
arising from the contract, an arbitral panel will be constituted
in a foreign country and the arbitration rules of the foreign
country would govern and its award shall be final and binding.
RA 9285 incorporated the UNCITRAL Model law

to which we are a signatory

For domestic arbitration proceedings, we have particular
agencies to arbitrate disputes arising from contractual
relations. In case a foreign arbitral body is chosen by the
parties, the arbitration rules of our domestic arbitration bodies
would not be applied. As signatory to the Arbitration Rules of
the UNCITRAL Model Law on International Commercial
Arbitration[if !supportFootnotes][41][endif] of the United Nations
Commission on International Trade Law (UNCITRAL) in the
New York Convention on June 21, 1985, the Philippines
committed itself to be bound by the Model Law. We have even
incorporated the Model Law in Republic Act No. (RA) 9285,
otherwise known as the Alternative Dispute Resolution Act of
2004 entitled An Act to Institutionalize the Use of an
Alternative Dispute Resolution System in the Philippines and
to Establish the Office for Alternative Dispute Resolution, and
for Other Purposes, promulgated on April 2, 2004. Secs. 19
and 20 of Chapter 4 of the Model Law are the pertinent
provisions:
CHAPTER 4 - INTERNATIONAL COMMERCIAL
ARBITRATION

SEC. 19. Adoption of the Model Law on

International Commercial Arbitration.International
commercial arbitration shall be governed by the
Model Law on International Commercial Arbitration
(the Model Law) adopted by the United Nations

Commission on International Trade Law on June 21,

1985 (United Nations Document A/40/17) and
recommended for enactment by the General Assembly
in Resolution No. 40/72 approved on December 11,
1985, copy of which is hereto attached as Appendix A.

SEC. 20. Interpretation of Model Law.In

interpreting the Model Law, regard shall be had to its
international origin and to the need for uniformity in
its interpretation and resort may be made to the
travaux preparatories and the report of the Secretary
General of the United Nations Commission on
International Trade Law dated March 25, 1985
entitled, International Commercial Arbitration:
Analytical Commentary on Draft Trade identified by
reference number A/CN. 9/264.

While RA 9285 was passed only in 2004, it nonetheless

applies in the instant case since it is a procedural law which
has a retroactive effect. Likewise, KOGIES filed its application
for arbitration before the KCAB on July 1, 1998 and it is still
pending because no arbitral award has yet been rendered.
Thus, RA 9285 is applicable to the instant case. Well-settled is
the rule that procedural laws are construed to be applicable to
actions pending and undetermined at the time of their passage,
and are deemed retroactive in that sense and to that extent. As
a general rule, the retroactive application of procedural laws

does not violate any personal rights because no vested right

has yet attached nor arisen from them.[if !supportFootnotes][42][endif]
Among the pertinent features of RA 9285 applying and
incorporating the UNCITRAL Model Law are the following:
(1) The RTC must refer to arbitration in proper cases
Under Sec. 24, the RTC does not have jurisdiction over
disputes that are properly the subject of arbitration pursuant to
an arbitration clause, and mandates the referral to arbitration in
such cases, thus:
SEC. 24. Referral to Arbitration.A court
before which an action is brought in a matter which is
the subject matter of an arbitration agreement shall, if
at least one party so requests not later than the pretrial conference, or upon the request of both parties
thereafter, refer the parties to arbitration unless it finds
that the arbitration agreement is null and void,
inoperative or incapable of being performed.

(2) Foreign arbitral awards must be confirmed by the RTC

Foreign arbitral awards while mutually stipulated by the
parties in the arbitration clause to be final and binding are not
immediately enforceable or cannot be implemented
immediately. Sec. 35[if !supportFootnotes][43][endif] of the UNCITRAL
Model Law stipulates the requirement for the arbitral award to
be recognized by a competent court for enforcement, which

court under Sec. 36 of the UNCITRAL Model Law may refuse

recognition or enforcement on the grounds provided for. RA
9285 incorporated these provisos to Secs. 42, 43, and 44
relative to Secs. 47 and 48, thus:
SEC. 42. Application of the New York
Convention.The New York Convention shall govern
the recognition and enforcement of arbitral awards
covered by said Convention.

The recognition and enforcement of such

arbitral awards shall be filed with the Regional Trial
Court in accordance with the rules of procedure to be
promulgated by the Supreme Court. Said procedural
rules shall provide that the party relying on the award
or applying for its enforcement shall file with the
court the original or authenticated copy of the award
and the arbitration agreement. If the award or
agreement is not made in any of the official
languages, the party shall supply a duly certified
translation thereof into any of such languages.

The applicant shall establish that the country

in which foreign arbitration award was made in party
to the New York Convention.

xxxx

SEC. 43. Recognition and Enforcement of

Foreign Arbitral Awards Not Covered by the New
York Convention.The recognition and enforcement of
foreign arbitral awards not covered by the New York
Convention shall be done in accordance with
procedural rules to be promulgated by the Supreme
Court. The Court may, on grounds of comity and
reciprocity, recognize and enforce a non-convention
award as a convention award.

SEC. 44. Foreign Arbitral Award Not Foreign

Judgment.A foreign arbitral award when confirmed by
a court of a foreign country, shall be recognized and
enforced as a foreign arbitral award and not as a
judgment of a foreign court.

A foreign arbitral award, when confirmed by

the Regional Trial Court, shall be enforced in the
same manner as final and executory decisions of
courts of law of the Philippines

xxxx

SEC. 47. Venue and Jurisdiction.Proceedings

for recognition and enforcement of an arbitration
agreement or for vacations, setting aside, correction or
modification of an arbitral award, and any application
with a court for arbitration assistance and supervision
shall be deemed as special proceedings and shall be
filed with the Regional Trial Court (i) where
arbitration proceedings are conducted; (ii) where the
asset to be attached or levied upon, or the act to be
enjoined is located; (iii) where any of the parties to
the dispute resides or has his place of business; or (iv)
in the National Judicial Capital Region, at the option
of the applicant.

SEC. 48. Notice of Proceeding to Parties.In a

special proceeding for recognition and enforcement of
an arbitral award, the Court shall send notice to the
parties at their address of record in the arbitration, or
if any part cannot be served notice at such address, at
such partys last known address. The notice shall be
sent al least fifteen (15) days before the date set for
the initial hearing of the application.

It is now clear that foreign arbitral awards when

confirmed by the RTC are deemed not as a judgment of a
foreign court but as a foreign arbitral award, and when
confirmed, are enforced as final and executory decisions of our
courts of law.
Thus, it can be gleaned that the concept of a final and
binding arbitral award is similar to judgments or awards given
by some of our quasi-judicial bodies, like the National Labor
Relations Commission and Mines Adjudication Board, whose
final judgments are stipulated to be final and binding, but not
immediately executory in the sense that they may still be
judicially reviewed, upon the instance of any party. Therefore,
the final foreign arbitral awards are similarly situated in that
they need first to be confirmed by the RTC.
(3) The RTC has jurisdiction to review foreign arbitral
awards
Sec. 42 in relation to Sec. 45 of RA 9285 designated and
vested the RTC with specific authority and jurisdiction to set
aside, reject, or vacate a foreign arbitral award on grounds
provided under Art. 34(2) of the UNCITRAL Model Law.
Secs. 42 and 45 provide:
SEC. 42. Application of the New York
Convention.The New York Convention shall govern
the recognition and enforcement of arbitral awards
covered by said Convention.

The recognition and enforcement of such

arbitral awards shall be filed with the Regional Trial
Court in accordance with the rules of procedure to be
promulgated by the Supreme Court. Said procedural
rules shall provide that the party relying on the award
or applying for its enforcement shall file with the
court the original or authenticated copy of the award
and the arbitration agreement. If the award or
agreement is not made in any of the official
languages, the party shall supply a duly certified
translation thereof into any of such languages.

The applicant shall establish that the country

in which foreign arbitration award was made is party
to the New York Convention.

If the application for rejection or suspension of

enforcement of an award has been made, the Regional
Trial Court may, if it considers it proper, vacate its
decision and may also, on the application of the party
claiming recognition or enforcement of the award,
order the party to provide appropriate security.

xxxx

SEC. 45. Rejection of a Foreign Arbitral

Award.A party to a foreign arbitration proceeding may
oppose an application for recognition and
enforcement of the arbitral award in accordance with
the procedures and rules to be promulgated by the
Supreme Court only on those grounds enumerated
under Article V of the New York Convention. Any
other ground raised shall be disregarded by the
Regional Trial Court.

Thus, while the RTC does not have jurisdiction over

disputes governed by arbitration mutually agreed upon by the
parties, still the foreign arbitral award is subject to judicial
review by the RTC which can set aside, reject, or vacate it. In
this sense, what this Court held in Chung Fu Industries
(Phils.), Inc. relied upon by KOGIES is applicable insofar as
the foreign arbitral awards, while final and binding, do not oust
courts of jurisdiction since these arbitral awards are not
absolute and without exceptions as they are still judicially
reviewable. Chapter 7 of RA 9285 has made it clear that all
arbitral awards, whether domestic or foreign, are subject to
judicial review on specific grounds provided for.
(4) Grounds for judicial review different in domestic and
foreign arbitral awards
The differences between a final arbitral award from an
international or foreign arbitral tribunal and an award given by

a local arbitral tribunal are the specific grounds or conditions

that vest jurisdiction over our courts to review the awards.
For foreign or international arbitral awards which must
first be confirmed by the RTC, the grounds for setting aside,
rejecting or vacating the award by the RTC are provided under
Art. 34(2) of the UNCITRAL Model Law.
For final domestic arbitral awards, which also need
confirmation by the RTC pursuant to Sec. 23 of RA 876[if !
supportFootnotes][44][endif] and shall be recognized as final and
executory decisions of the RTC,[if !supportFootnotes][45][endif] they
may only be assailed before the RTC and vacated on the
grounds provided under Sec. 25 of RA 876.[if !supportFootnotes][46]
[endif]

(5) RTC decision of assailed foreign arbitral award

appealable
Sec. 46 of RA 9285 provides for an appeal before the
CA as the remedy of an aggrieved party in cases where the
RTC sets aside, rejects, vacates, modifies, or corrects an
arbitral award, thus:
SEC. 46. Appeal from Court Decision or
Arbitral Awards.A decision of the Regional Trial
Court confirming, vacating, setting aside, modifying
or correcting an arbitral award may be appealed to the
Court of Appeals in accordance with the rules and
procedure to be promulgated by the Supreme Court.

The losing party who appeals from the

judgment of the court confirming an arbitral award
shall be required by the appellate court to post a
counterbond executed in favor of the prevailing party
equal to the amount of the award in accordance with
the rules to be promulgated by the Supreme Court.

Thereafter, the CA decision may further be appealed or

reviewed before this Court through a petition for review under
Rule 45 of the Rules of Court.
PGSMC has remedies to protect its interests
Thus, based on the foregoing features of RA 9285,
PGSMC must submit to the foreign arbitration as it bound
itself through the subject contract. While it may have
misgivings on the foreign arbitration done in Korea by the
KCAB, it has available remedies under RA 9285. Its interests
are duly protected by the law which requires that the arbitral
award that may be rendered by KCAB must be confirmed here
by the RTC before it can be enforced.
With our disquisition above, petitioner is correct in its
contention that an arbitration clause, stipulating that the
arbitral award is final and binding, does not oust our courts of
jurisdiction as the international arbitral award, the award of
which is not absolute and without exceptions, is still judicially
reviewable under certain conditions provided for by the
UNCITRAL Model Law on ICA as applied and incorporated
in RA 9285.

Finally, it must be noted that there is nothing in the

subject Contract which provides that the parties may dispense
with the arbitration clause.
Unilateral rescission improper and illegal
Having ruled that the arbitration clause of the subject
contract is valid and binding on the parties, and not contrary to
public policy; consequently, being bound to the contract of
arbitration, a party may not unilaterally rescind or terminate
the contract for whatever cause without first resorting to
arbitration.
What this Court held in University of the Philippines v.
De Los Angeles[if !supportFootnotes][47][endif] and reiterated in
succeeding cases,[if !supportFootnotes][48][endif] that the act of treating
a contract as rescinded on account of infractions by the other
contracting party is valid albeit provisional as it can be
judicially assailed, is not applicable to the instant case on
account of a valid stipulation on arbitration. Where an
arbitration clause in a contract is availing, neither of the parties
can unilaterally treat the contract as rescinded since whatever
infractions or breaches by a party or differences arising from
the contract must be brought first and resolved by arbitration,
and not through an extrajudicial rescission or judicial action.
The issues arising from the contract between PGSMC
and KOGIES on whether the equipment and machineries
delivered and installed were properly installed and operational
in the plant in Carmona, Cavite; the ownership of equipment
and payment of the contract price; and whether there was
substantial compliance by KOGIES in the production of the
samples, given the alleged fact that PGSMC could not supply
the raw materials required to produce the sample LPG

cylinders, are matters proper for arbitration. Indeed, we note

that on July 1, 1998, KOGIES instituted an Application for
Arbitration before the KCAB in Seoul, Korea pursuant to Art.
15 of the Contract as amended. Thus, it is incumbent upon
PGSMC to abide by its commitment to arbitrate.
Corollarily, the trial court gravely abused its discretion
in granting PGSMCs Motion for Inspection of Things on
September 21, 1998, as the subject matter of the motion is
under the primary jurisdiction of the mutually agreed arbitral
body, the KCAB in Korea.
In addition, whatever findings and conclusions made by
the RTC Branch Sheriff from the inspection made on October
28, 1998, as ordered by the trial court on October 19, 1998, is
of no worth as said Sheriff is not technically competent to
ascertain the actual status of the equipment and machineries as
installed in the plant.
For these reasons, the September 21, 1998 and October
19, 1998 RTC Orders pertaining to the grant of the inspection
of the equipment and machineries have to be recalled and
nullified.
Issue on ownership of plant proper for arbitration
Petitioner assails the CA ruling that the issue petitioner raised
on whether the total contract price of USD 1,530,000 was for
the whole plant and its installation is beyond the ambit of a
Petition for Certiorari.
Petitioners position is untenable.

It is settled that questions of fact cannot be raised in an original

action for certiorari.[if !supportFootnotes][49][endif] Whether or not there
was full payment for the machineries and equipment and
installation is indeed a factual issue prohibited by Rule 65.
However, what appears to constitute a grave abuse of
discretion is the order of the RTC in resolving the issue on the
ownership of the plant when it is the arbitral body (KCAB) and
not the RTC which has jurisdiction and authority over the said
issue. The RTCs determination of such factual issue constitutes
grave abuse of discretion and must be reversed and set aside.

RTC has interim jurisdiction to protect the rights of the

parties
Anent the July 23, 1998 Order denying the issuance of
the injunctive writ paving the way for PGSMC to dismantle
and transfer the equipment and machineries, we find it to be in
order considering the factual milieu of the instant case.
Firstly, while the issue of the proper installation of the
equipment and machineries might well be under the primary
jurisdiction of the arbitral body to decide, yet the RTC under
Sec. 28 of RA 9285 has jurisdiction to hear and grant interim
measures to protect vested rights of the parties. Sec. 28
pertinently provides:
SEC. 28. Grant of interim Measure of
Protection.(a) It is not incompatible with an
arbitration agreement for a party to request,
before constitution of the tribunal, from a Court to
grant such measure. After constitution of the arbitral

tribunal and during arbitral proceedings, a request for

an interim measure of protection, or modification
thereof, may be made with the arbitral or to the
extent that the arbitral tribunal has no power to
act or is unable to act effectivity, the request may
be made with the Court. The arbitral tribunal is
deemed constituted when the sole arbitrator or the
third arbitrator, who has been nominated, has accepted
the nomination and written communication of said
nomination and acceptance has been received by the
party making the request.

(b) The following rules on interim or

provisional relief shall be observed:

Any party may request that provisional relief

be granted against the adverse party.

Such relief may be granted:

(i) to prevent irreparable loss or injury;

(ii) to provide security for the performance of

any obligation;

(iii) to produce or preserve any evidence; or

(iv) to compel any other appropriate act or

omission.

(c) The order granting provisional relief may

be conditioned upon the provision of security or any
act or omission specified in the order.

(d) Interim or provisional relief is requested by

written application transmitted by reasonable means
to the Court or arbitral tribunal as the case may be and
the party against whom the relief is sought, describing
in appropriate detail the precise relief, the party
against whom the relief is requested, the grounds for
the relief, and the evidence supporting the request.

(e) The order shall be binding upon the

parties.

(f) Either party may apply with the Court for

assistance in implementing or enforcing an interim
measure ordered by an arbitral tribunal.

(g) A party who does not comply with the

order shall be liable for all damages resulting from
noncompliance, including all expenses, and
reasonable attorney's fees, paid in obtaining the orders
judicial enforcement. (Emphasis ours.)

Art. 17(2) of the UNCITRAL Model Law on ICA

defines an interim measure of protection as:
Article 17. Power of arbitral tribunal to order interim measures
xxx xxx xxx

(2) An interim measure is any temporary measure, whether

in the form of an award or in another form, by which,
at any time prior to the issuance of the award by
which the dispute is finally decided, the arbitral
tribunal orders a party to:

(a) Maintain or restore the status quo pending determination of the dispute;

(b) Take action that would prevent, or refrain from taking action that is
likely to cause, current or imminent harm or prejudice to the arbitral
process itself;

(c) Provide a means of preserving assets out of which a subsequent award

may be satisfied; or

(d) Preserve evidence that may be relevant and material to the resolution of
the dispute.

Art. 17 J of UNCITRAL Model Law on ICA also grants

courts power and jurisdiction to issue interim measures:
Article 17 J. Court-ordered interim measures
A court shall have the same power of issuing
an interim measure in relation to arbitration

proceedings, irrespective of whether their place is in

the territory of this State, as it has in relation to
proceedings in courts. The court shall exercise such
power in accordance with its own procedures in
consideration of the specific features of international
arbitration.

In the recent 2006 case of Transfield Philippines, Inc. v.

Luzon Hydro Corporation, we were explicit that even the
pendency of an arbitral proceeding does not foreclose resort to
the courts for provisional reliefs. We explicated this way:
As a fundamental point, the pendency of arbitral proceedings does not
foreclose resort to the courts for provisional reliefs. The Rules of the ICC,
which governs the parties arbitral dispute, allows the application of a party
to a judicial authority for interim or conservatory measures. Likewise,
Section 14 of Republic Act (R.A.) No. 876 (The Arbitration Law)
recognizes the rights of any party to petition the court to take measures to
safeguard and/or conserve any matter which is the subject of the dispute in
arbitration. In addition, R.A. 9285, otherwise known as the Alternative
Dispute Resolution Act of 2004, allows the filing of provisional or interim
measures with the regular courts whenever the arbitral tribunal has no
power to act or to act effectively.[if !supportFootnotes][50][endif]

It is thus beyond cavil that the RTC has authority and

jurisdiction to grant interim measures of protection.
Secondly, considering that the equipment and
machineries are in the possession of PGSMC, it has the right to
protect and preserve the equipment and machineries in the best
way it can. Considering that the LPG plant was nonoperational, PGSMC has the right to dismantle and transfer the

equipment and machineries either for their protection and

preservation or for the better way to make good use of them
which is ineluctably within the management discretion of
PGSMC.
Thirdly, and of greater import is the reason that
maintaining the equipment and machineries in Worths property
is not to the best interest of PGSMC due to the prohibitive rent
while the LPG plant as set-up is not operational. PGSMC was
losing PhP322,560 as monthly rentals or PhP3.87M for 1998
alone without considering the 10% annual rent increment in
maintaining the plant.
Fourthly, and corollarily, while the KCAB can rule on
motions or petitions relating to the preservation or transfer of
the equipment and machineries as an interim measure, yet on
hindsight, the July 23, 1998 Order of the RTC allowing the
transfer of the equipment and machineries given the nonrecognition by the lower courts of the arbitral clause, has
accorded an interim measure of protection to PGSMC which
would otherwise been irreparably damaged.
Fifth, KOGIES is not unjustly prejudiced as it has
already been paid a substantial amount based on the contract.
Moreover, KOGIES is amply protected by the arbitral action it
has instituted before the KCAB, the award of which can be
enforced in our jurisdiction through the RTC. Besides, by our
decision, PGSMC is compelled to submit to arbitration
pursuant to the valid arbitration clause of its contract with
KOGIES.
PGSMC to preserve the subject equipment and
machineries

Finally, while PGSMC may have been granted the right

to dismantle and transfer the subject equipment and
machineries, it does not have the right to convey or dispose of
the same considering the pending arbitral proceedings to settle
the differences of the parties. PGSMC therefore must preserve
and maintain the subject equipment and machineries with the
diligence of a good father of a family[if !supportFootnotes][51][endif]
until final resolution of the arbitral proceedings and
enforcement of the award, if any.

WHEREFORE, this petition is PARTLY GRANTED, in

that:
(1) The May 30, 2000 CA Decision in CA-G.R. SP No.
49249 is REVERSED and SET ASIDE;
(2) The September 21, 1998 and October 19, 1998 RTC
Orders in Civil Case No. 98-117 are REVERSED and SET
ASIDE;
(3) The parties are hereby ORDERED to submit
themselves to the arbitration of their dispute and differences
arising from the subject Contract before the KCAB; and
(4) PGSMC is hereby ALLOWED to dismantle and
transfer the equipment and machineries, if it had not done so,
and ORDERED to preserve and maintain them until the
finality of whatever arbitral award is given in the arbitration
proceedings.

No pronouncement as to costs.
SO ORDERED.
SECOND DIVISION
TUNA PROCESSING, INC.,
Petitioner,

-versus-

PHILIPPINE KINGFORD, INC.,

Respondent.
G.R. No. 185582
Present:
CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

Promulgated:
February 29, 2012
x----------------------------------------------------------------------------------------x
DECISION
PEREZ, J.:
Can a foreign corporation not licensed to do business in
the Philippines, but which collects royalties from entities in the
Philippines, sue here to enforce a foreign arbitral award?
In this Petition for Review on Certiorari under Rule 45,
[if !supportFootnotes][1][endif] petitioner Tuna Processing, Inc. (TPI), a
foreign corporation not licensed to do business in the
Philippines, prays that the Resolution[if !supportFootnotes][2][endif]
dated 21 November 2008 of the Regional Trial Court (RTC) of
Makati City be declared void and the case be remanded to the
RTC for further proceedings. In the assailed Resolution, the
RTC dismissed petitioners Petition for Confirmation,
Recognition, and Enforcement of Foreign Arbitral Award[if !
supportFootnotes][3][endif] against respondent Philippine Kingford,
Inc. (Kingford), a corporation duly organized and existing
under the laws of the Philippines,[if !supportFootnotes][4][endif] on the
ground that petitioner lacked legal capacity to sue.[if !
supportFootnotes][5][endif]

The Antecedents

On 14 January 2003, Kanemitsu Yamaoka (hereinafter

referred to as the licensor), co-patentee of U.S. Patent No.
5,484,619, Philippine Letters Patent No. 31138, and
Indonesian Patent No. ID0003911 (collectively referred to as
the Yamaoka Patent),[if !supportFootnotes][6][endif] and five (5)
Philippine tuna processors, namely, Angel Seafood
Corporation, East Asia Fish Co., Inc., Mommy Gina Tuna
Resources, Santa Cruz Seafoods, Inc., and respondent
Kingford (collectively referred to as the sponsors/licensees)[if !
supportFootnotes][7][endif] entered into a Memorandum of Agreement
(MOA),[if !supportFootnotes][8][endif] pertinent provisions of which
read:
[if !supportLists]1.
[endif]Background and objectives. The
Licensor, co-owner of U.S.Patent No. 5,484,619, Philippine Patent No.
31138, and Indonesian Patent No. ID0003911 xxx wishes to form an
alliance with Sponsors for purposes of enforcing his three aforementioned
patents, granting licenses under those patents, and collecting royalties.

The Sponsors wish to be licensed under the aforementioned

patents in order to practice the processes claimed in
those patents in the United States, the Philippines,
and Indonesia, enforce those patents and collect
royalties in conjunction with Licensor.

xxx

4. Establishment of Tuna Processors, Inc. The parties hereto

agree to the establishment of Tuna Processors, Inc. (TPI), a

corporation established in the State of California, in order to

implement the objectives of this Agreement.

5. Bank account. TPI shall open and maintain bank accounts in

the United States, which will be used exclusively to deposit
funds that it will collect and to disburse cash it will be obligated
to spend in connection with the implementation of this
Agreement.

6. Ownership of TPI. TPI shall be owned by the Sponsors and

Licensor. Licensor shall be assigned one share of
TPI for the purpose of being elected as member of
the board of directors. The remaining shares of TPI
shall be held by the Sponsors according to their
respective equity shares. [if !supportFootnotes][9][endif]

xxx

The parties likewise executed a Supplemental Memorandum of

Agreement[if !supportFootnotes][10][endif] dated 15 January 2003 and
an Agreement to Amend Memorandum of Agreement[if !
supportFootnotes][11][endif] dated 14 July 2003.
Due to a series of events not mentioned in the petition,
the licensees, including respondent Kingford, withdrew from
petitioner TPI and correspondingly reneged on their

obligations.[if !supportFootnotes][12][endif] Petitioner submitted the

dispute for arbitration before the International Centre for
Dispute Resolution in the State of California, United States
and won the case against respondent.[if !supportFootnotes][13][endif]
Pertinent portions of the award read:
13.1 Within thirty (30) days from the date of transmittal of this Award to
the Parties, pursuant to the terms of this award, the total sum to be paid by
RESPONDENT KINGFORD to CLAIMANT TPI, is the sum of ONE
MILLION SEVEN HUNDRED FIFTY THOUSAND EIGHT
HUNDRED FORTY SIX DOLLARS AND TEN CENTS
($1,750,846.10).
(A) For breach of the MOA by not paying past due
assessments, RESPONDENT KINGFORD shall pay
CLAIMANT the total sum of TWO HUNDRED
TWENTY NINE THOUSAND THREE HUNDRED
AND FIFTY FIVE DOLLARS AND NINETY
CENTS ($229,355.90) which is 20% of MOA
assessments since September 1, 2005[;]

(B) For breach of the MOA in failing to cooperate with

CLAIMANT TPI in fulfilling the objectives of the
MOA, RESPONDENT KINGFORD shall pay
CLAIMANT the total sum of TWO HUNDRED
SEVENTY ONE THOUSAND FOUR HUNDRED
NINETY DOLLARS AND TWENTY CENTS
($271,490.20)[;][if !supportFootnotes][14][endif] and

(C) For violation of THE LANHAM ACT and infringement

of the YAMAOKA 619 PATENT, RESPONDENT
KINGFORD shall pay CLAIMANT the total sum of
ONE MILLION TWO HUNDRED FIFTY

THOUSAND DOLLARS AND NO CENTS

($1,250,000.00). xxx

xxx[if !supportFootnotes][15][endif]

To enforce the award, petitioner TPI filed on 10 October

2007 a Petition for Confirmation, Recognition, and
Enforcement of Foreign Arbitral Award before the RTC of
Makati City. The petition was raffled to Branch 150 presided
by Judge Elmo M. Alameda.
At Branch 150, respondent Kingford filed a Motion to
Dismiss.[if !supportFootnotes][16][endif] After the court denied the
motion for lack of merit,[if !supportFootnotes][17][endif] respondent
sought for the inhibition of Judge Alameda and moved for the
reconsideration of the order denying the motion.[if !supportFootnotes]
[18][endif] Judge Alameda inhibited himself notwithstanding [t]he
unfounded allegations and unsubstantiated assertions in the
motion.[if !supportFootnotes][19][endif] Judge Cedrick O. Ruiz of
Branch 61, to which the case was re-raffled, in turn, granted
respondents Motion for Reconsideration and dismissed the
petition on the ground that the petitioner lacked legal capacity
to sue in the Philippines.[if !supportFootnotes][20][endif]
Petitioner TPI now seeks to nullify, in this instant
Petition for Review on Certiorari under Rule 45, the order of
the trial court dismissing its Petition for Confirmation,
Recognition, and Enforcement of Foreign Arbitral Award.
Issue

The core issue in this case is whether or not the court a

quo was correct in so dismissing the petition on the ground of
petitioners lack of legal capacity to sue.
Our Ruling
The petition is impressed with merit.
The Corporation Code of the Philippines expressly
provides:
Sec. 133. Doing business without a license. No foreign corporation transacting business in the
Philippines without a license, or its successors or
assigns, shall be permitted to maintain or intervene in
any action, suit or proceeding in any court or
administrative agency of the Philippines; but such
corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any
valid cause of action recognized under Philippine laws.

It is pursuant to the aforequoted provision that the court a quo

dismissed the petition. Thus:
Herein plaintiff TPIs Petition, etc. acknowledges that it is a foreign
corporation established in the State of California and was given the
exclusive right to license or sublicense the Yamaoka Patent and was
assigned the exclusive right to enforce the said patent and collect
corresponding royalties in the Philippines. TPI likewise admits that it does
not have a license to do business in the Philippines.

There is no doubt, therefore, in the mind of this

Court that TPI has been doing business in the
Philippines, but sans a license to do so issued by the

concerned government agency of the Republic of the

Philippines, when it collected royalties from five (5)
Philippine tuna processors[,] namely[,] Angel Seafood
Corporation, East Asia Fish Co., Inc., Mommy Gina
Tuna Resources, Santa Cruz Seafoods, Inc. and
respondent Philippine Kingford, Inc. This being the real
situation, TPI cannot be permitted to maintain or
intervene in any action, suit or proceedings in any court
or administrative agency of the Philippines. A priori, the
Petition, etc. extant of the plaintiff TPI should be
dismissed for it does not have the legal personality to
sue in the Philippines.[if !supportFootnotes][21][endif]

The petitioner counters, however, that it is entitled to

seek for the recognition and enforcement of the subject foreign
arbitral award in accordance with Republic Act No. 9285
(Alternative Dispute Resolution Act of 2004),[if !supportFootnotes][22]
[endif] the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards drafted during the United Nations
Conference on International Commercial Arbitration in 1958
(New York Convention), and the UNCITRAL Model Law on
International Commercial Arbitration (Model Law),[if !
supportFootnotes][23][endif] as none of these specifically requires that
the party seeking for the enforcement should have legal
capacity to sue. It anchors its argument on the following:
In the present case, enforcement has been effectively refused on
a ground not found in the [Alternative Dispute
Resolution Act of 2004], New York Convention, or
Model Law. It is for this reason that TPI has brought this
matter before this most Honorable Court, as it [i]s
imperative to clarify whether the Philippines
international obligations and State policy to strengthen
arbitration as a means of dispute resolution may be

defeated by misplaced technical considerations not

found in the relevant laws.[if !supportFootnotes][24][endif]

Simply put, how do we reconcile the provisions of the

Corporation Code of the Philippines on one hand, and the
Alternative Dispute Resolution Act of 2004, the New York
Convention and the Model Law on the other?
In several cases, this Court had the occasion to discuss
the nature and applicability of the Corporation Code of the
Philippines, a general law, viz-a-viz other special laws. Thus,
in Koruga v. Arcenas, Jr.,[if !supportFootnotes][25][endif] this Court
rejected the application of the Corporation Code and applied
the New Central Bank Act. It ratiocinated:
Korugas invocation of the provisions of the
Corporation Code is misplaced. In an earlier case with
similar antecedents, we ruled that:
The Corporation Code, however, is
a general law applying to all types of
corporations, while the New Central Bank
Act regulates specifically banks and other
financial institutions, including the
dissolution and liquidation thereof. As
between a general and special law, the
latter shall prevail generalia specialibus
non derogant. (Emphasis supplied)[if !
supportFootnotes][26][endif]

Further, in the recent case of Hacienda Luisita, Incorporated v.

Presidential Agrarian Reform Council,[if !supportFootnotes][27][endif]
this Court held:
Without doubt, the Corporation Code is the
general law providing for the formation, organization
and regulation of private corporations. On the other
hand, RA 6657 is the special law on agrarian reform. As
between a general and special law, the latter shall
prevailgeneralia specialibus non derogant. [if !
supportFootnotes][28][endif]

Following the same principle, the Alternative Dispute

Resolution Act of 2004 shall apply in this case as the Act, as its
title - An Act to Institutionalize the Use of an Alternative
Dispute Resolution System in the Philippines and to Establish
the Office for Alternative Dispute Resolution, and for Other
Purposes - would suggest, is a law especially enacted to
actively promote party autonomy in the resolution of disputes
or the freedom of the party to make their own arrangements to
resolve their disputes.[if !supportFootnotes][29][endif] It specifically
provides exclusive grounds available to the party opposing an
application for recognition and enforcement of the arbitral
award.[if !supportFootnotes][30][endif]
Inasmuch as the Alternative Dispute Resolution Act of
2004, a municipal law, applies in the instant petition, we do not
see the need to discuss compliance with international
obligations under the New York Convention and the Model
Law. After all, both already form part of the law.

In particular, the Alternative Dispute Resolution Act of

2004 incorporated the New York Convention in the Act by
specifically providing:
SEC. 42. Application of the New York
Convention. - The New York Convention shall govern
the recognition and enforcement of arbitral awards
covered by the said Convention.

xxx

SEC. 45. Rejection of a Foreign Arbitral Award.

- A party to a foreign arbitration proceeding may oppose
an application for recognition and enforcement of the
arbitral award in accordance with the procedural rules to
be promulgated by the Supreme Court only on those
grounds enumerated under Article V of the New York
Convention. Any other ground raised shall be
disregarded by the regional trial court.

It also expressly adopted the Model Law, to wit:

Sec. 19. Adoption of the Model Law on
International Commercial Arbitration. International
commercial arbitration shall be governed by the Model
Law on International Commercial Arbitration (the
Model Law) adopted by the United Nations

Commission on International Trade Law on June 21,

1985 xxx.

Now, does a foreign corporation not licensed to do

business in the Philippines have legal capacity to sue under the
provisions of the Alternative Dispute Resolution Act of 2004?
We answer in the affirmative.
Sec. 45 of the Alternative Dispute Resolution Act of
2004 provides that the opposing party in an application for
recognition and enforcement of the arbitral award may raise
only those grounds that were enumerated under Article V of
the New York Convention, to wit:
Article V
1. Recognition and enforcement of the award may be refused,
at the request of the party against whom it is invoked,
only if that party furnishes to the competent authority
where the recognition and enforcement is sought, proof
that:

(a) The parties to the agreement referred to in article II were,

under the law applicable to them, under some
incapacity, or the said agreement is not valid under the
law to which the parties have subjected it or, failing
any indication thereon, under the law of the country
where the award was made; or

(b) The party against whom the award is invoked was not
given proper notice of the appointment of the arbitrator

or of the arbitration proceedings or was otherwise

unable to present his case; or

(c) The award deals with a difference not contemplated by or

not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond
the scope of the submission to arbitration, provided
that, if the decisions on matters submitted to arbitration
can be separated from those not so submitted, that part
of the award which contains decisions on matters
submitted to arbitration may be recognized and
enforced; or

(d) The composition of the arbitral authority or the arbitral

procedure was not in accordance with the agreement of
the parties, or, failing such agreement, was not in
accordance with the law of the country where the
arbitration took place; or

(e) The award has not yet become binding on the parties, or
has been set aside or suspended by a competent
authority of the country in which, or under the law of
which, that award was made.

2. Recognition and enforcement of an arbitral award may also

be refused if the competent authority in the country
where recognition and enforcement is sought finds
that:

(a) The subject matter of the difference is not capable of

settlement by arbitration under the law of that country;
or

(b) The recognition or enforcement of the award would be

contrary to the public policy of that country.

Clearly, not one of these exclusive grounds touched on the

capacity to sue of the party seeking the recognition and
enforcement of the award.
Pertinent provisions of the Special Rules of Court on
Alternative Dispute Resolution,[if !supportFootnotes][31][endif] which
was promulgated by the Supreme Court, likewise support this
position.
Rule 13.1 of the Special Rules provides that [a]ny party
to a foreign arbitration may petition the court to recognize and
enforce a foreign arbitral award. The contents of such petition
are enumerated in Rule 13.5.[if !supportFootnotes][32][endif] Capacity to
sue is not included. Oppositely, in the Rule on local arbitral
awards or arbitrations in instances where the place of
arbitration is in the Philippines,[if !supportFootnotes][33][endif] it is
specifically required that a petition to determine any question
concerning the existence, validity and enforceability of such
arbitration agreement[if !supportFootnotes][34][endif] available to the
parties before the commencement of arbitration and/or a
petition for judicial relief from the ruling of the arbitral
tribunal on a preliminary question upholding or declining its
jurisdiction[if !supportFootnotes][35][endif] after arbitration has already
commenced should state [t]he facts showing that the persons
named as petitioner or respondent have legal capacity to sue or
be sued.[if !supportFootnotes][36][endif]

Indeed, it is in the best interest of justice that in the

enforecement of a foreign arbitral award, we deny availment
by the losing party of the rule that bars foreign corporations
not licensed to do business in the Philippines from maintaining
a suit in our courts. When a party enters into a contract
containing a foreign arbitration clause and, as in this case, in
fact submits itself to arbitration, it becomes bound by the
contract, by the arbitration and by the result of arbitration,
conceding thereby the capacity of the other party to enter into
the contract, participate in the arbitration and cause the
implementation of the result. Although not on all fours with the
instant case, also worthy to consider is the
wisdom of then Associate Justice Flerida Ruth P.
Romero in her Dissenting Opinion in Asset Privatization Trust
v. Court of Appeals,[if !supportFootnotes][37][endif] to wit:
xxx Arbitration, as an alternative mode of
settlement, is gaining adherents in legal and judicial
circles here and abroad. If its tested mechanism can
simply be ignored by an aggrieved party, one who, it
must be stressed, voluntarily and actively participated
in the arbitration proceedings from the very beginning,
it will destroy the very essence of mutuality inherent in
consensual contracts.[if !supportFootnotes][38][endif]

Clearly, on the matter of capacity to sue, a foreign

arbitral award should be respected not because it is favored
over domestic laws and procedures, but because Republic Act
No. 9285 has certainly erased any conflict of law question.

Finally, even assuming, only for the sake of argument,

that the court a quo correctly observed that the Model Law, not
the New York Convention, governs the subject arbitral award,
[if !supportFootnotes][39][endif] petitioner may still seek recognition and
enforcement of the award in Philippine court, since the Model
Law prescribes substantially identical exclusive grounds for
refusing recognition or enforcement.[if !supportFootnotes][40][endif]
Premises considered, petitioner TPI, although not
licensed to do business in the Philippines, may seek
recognition and enforcement of the foreign arbitral award in
accordance with the provisions of the Alternative Dispute
Resolution Act of 2004.
II
The remaining arguments of respondent Kingford are
likewise unmeritorious.
First. There is no need to consider respondents contention that
petitioner TPI improperly raised a question of fact when it
posited that its act of entering into a MOA should not be
considered doing business in the Philippines for the purpose of
determining capacity to sue. We reiterate that the foreign
corporations capacity to sue in the Philippines is not material
insofar as the recognition and enforcement of a foreign arbitral
award is concerned.
Second. Respondent cannot fault petitioner for not filing a
motion for reconsideration of the assailed Resolution dated 21
November 2008 dismissing the case. We have, time and again,
ruled that the prior filing of a motion for reconsideration is not
required in certiorari under Rule 45.[if !supportFootnotes][41][endif]

Third. While we agree that petitioner failed to observe the

principle of hierarchy of courts, which, under ordinary
circumstances, warrants the outright dismissal of the case,[if !
supportFootnotes][42][endif] we opt to relax the rules following the
pronouncement in Chua v. Ang,[if !supportFootnotes][43][endif] to wit:
[I]t must be remembered that [the principle of
hierarchy of courts] generally applies to cases
involving conflicting factual allegations. Cases which
depend on disputed facts for decision cannot be
brought immediately before us as we are not triers of
facts.[if !supportFootnotes][44][endif] A strict application of this
rule may be excused when the reason behind the rule is
not present in a case, as in the present case, where the
issues are not factual but purely legal. In these types of
questions, this Court has the ultimate say so that we
merely abbreviate the review process if we, because of
the unique circumstances of a case, choose to hear and
decide the legal issues outright.[if !supportFootnotes][45][endif]

Moreover, the novelty and the paramount importance of the

issue herein raised should be seriously considered.[if !
supportFootnotes][46][endif] Surely, there is a need to take cognizance
of the case not only to guide the bench and the bar, but if only
to strengthen arbitration as a means of dispute resolution, and
uphold the policy of the State embodied in the Alternative
Dispute Resolution Act of 2004, to wit:
Sec. 2. Declaration of Policy. - It is hereby
declared the policy of the State to actively promote
party autonomy in the resolution of disputes or the
freedom of the party to make their own arrangements
to resolve their disputes. Towards this end, the State

shall encourage and actively promote the use of

Alternative Dispute Resolution (ADR) as an important
means to achieve speedy and impartial justice and
declog court dockets. xxx

Fourth. As regards the issue on the validity and enforceability

of the foreign arbitral award, we leave its determination to the
court a quo where its recognition and enforcement is being
sought.
Fifth. Respondent claims that petitioner failed to furnish the
court of origin a copy of the motion for time to file petition for
review on certiorari before the petition was filed with this
Court.[if !supportFootnotes][47][endif] We, however, find petitioners
reply in order. Thus:
26. Admittedly, reference to Branch 67 in petitioner TPIs Motion for Time
to File a Petition for Review on Certiorari under Rule 45 is a typographical
error. As correctly pointed out by respondent Kingford, the order sought to
be assailed originated from Regional Trial Court, Makati City, Branch 61.

27. xxx Upon confirmation with the Regional

Trial Court, Makati City, Branch 61, a copy of
petitioner TPIs motion was received by the
Metropolitan Trial Court, Makati City, Branch 67. On 8
January 2009, the motion was forwarded to the
Regional Trial Court, Makati City, Branch 61.[if !
supportFootnotes][48][endif]

All considered, petitioner TPI, although a foreign

corporation not licensed to do business in the Philippines, is
not, for that reason alone, precluded from filing the Petition for
Confirmation, Recognition, and Enforcement of Foreign
Arbitral Award before a Philippine court.
WHEREFORE, the Resolution dated 21 November 2008 of
the Regional Trial Court, Branch 61, Makati City in Special
Proceedings No. M-6533 is hereby REVERSED and SET
ASIDE. The case is REMANDED to Branch 61 for further
proceedings.
SO ORDERED.