Conflicts of Law - Enforcement of Judgement -Digested Cases

Conflicts of Law Topic: Enforcement of Judgement (Digested Cases)

G.R. No. 110263       July 20, 2001ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner, vs.COURT OF APPEALS and PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, respondents.DELEON, JR., J.:

Facts:

The petitioner Asiavest Merchant Bankers (M) Berhad is a corporation organized under the laws of Malaysia while private respondent Philippine National Construction Corporation is a corporation duly incorporated and existing under Philippine laws.

In 1983, petitioner initiated a suit for collection against private respondent, then known as Construction and Development Corporation of the Philippines, before the High Court of Malaya in Kuala Lumpur entitled "Asiavest Merchant Bankers (M) Berhad v. Asiavest CDCP Sdn. Bhd. and Construction and Development Corporation of the Philippines."3

Petitioner sought to recover the indemnity of the performance bond it had put up in favor of private respondent to guarantee the completion of the Felda Project and the nonpayment of the loan it extended to Asiavest-CDCP Sdn. Bhd. for the completion of Paloh Hanai and Kuantan By Pass; Project.

1985, the High Court of Malaya (Commercial Division) rendered judgment in favor of the petitioner and against the private respondent which is also designated therein as the "2nd Defendant. " 

1. the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of payment; and

2. the sum Of $2,521,423.32 from the 11th day of March 1983 to the date of Payment.

Following unsuccessful attempts6 to secure payment from private respondent under the judgment, petitioner initiated on September 5, 1988 the complaint before Regional Trial Court of Pasig, Metro Manila, to enforce the judgment of the High Court of Malaya

Private respondent sought the dismissal of the case via a Motion to Dismiss. Contending that the alleged judgment of the High Court of Malaya should be denied recognition or enforcement since on in face, it is tainted with want of jurisdiction, want of notice to private respondent, collusion and/or fraud, and there is a clear mistake of law or fact. 

RTC denied the motion.

On May 22, 1989, private respondent filed its Answer with Compulsory Counter claim's and therein raised the grounds it brought up in its motion to dismiss.

In its Reply filed on June 8, 1989, the petitioner contended that the High Court of Malaya acquired jurisdiction over the Person of private respondent by its voluntary submission the court's jurisdiction through its appointed counsel, Mr. Khay Chay Tee. Furthermore, private respondent's counsel waived any and all objections to the High Court's jurisdiction in a pleading filed before the court.

RTC dismissed petitioner’s complaint.

CA denied. 

ISSUE:

THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND ENFORCEMENT TO (SIC) THE MALAYSIAN COURT JUDGMENT.

RULING: 

Yes. 

Generally, in the absence of a special compact, no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another country; however, the rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries.

In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction; that the trial upon regular proceedings has been conducted, following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice; and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment

A foreign judgment is presumed to be valid and binding in the country from which it comes, until a contrary showing, on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum Under Section 50(b),16 Rule 39 of the Revised Rules of Court, which was the governing law at the time the instant case was decided by the trial court and respondent appellate court, a judgment, against a person, of a tribunal of a foreign country having jurisdiction to pronounce the same is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title. The judgment may, however, be assailed by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. In addition, under Section 3(n), Rule 131 of the Revised Rules of Court, a court, whether in the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of its jurisdiction. Hence, once the authenticity of the foreign judgment is proved, the party attacking a foreign judgment, is tasked with the burden of overcoming its presumptive validity.

In the instant case, petitioner sufficiently established the existence of the money judgment of the High Court of Malaya by the evidence it offered (testimonial and documentary evidences)

Having thus proven, through the foregoing evidence, the existence and authenticity of the foreign judgment, said foreign judgment enjoys presumptive validity and the burden then fell upon the party who disputes its validity, herein private respondent, to prove otherwise.

Private respondent failed to sufficiently discharge the burden that fell upon it - to prove by clear and convincing evidence the grounds which it relied upon to prevent enforcement of the Malaysian High Court judgment, namely, 

(a) that jurisdiction was not acquired by the Malaysian Court over the person of private respondent due to alleged improper service of summons upon private respondent and the alleged lack of authority of its counsel to appear and represent private respondent in the suit; 

(b) the foreign judgment is allegedly tainted by evident collusion, fraud and clear mistake of fact or law; and 

(c) not only were the requisites for enforcement or recognition allegedly not complied with but also that the Malaysian judgment is allegedly contrary to the Constitutional prescription that the "every decision must state the facts and law on which it is based.

1. On the matter of alleged lack of authority of the law firm of Allen and Gledhill to represent private respondent, not only did the private respondent's witnesses admit that the said law firm of Allen and Gledhill were its counsels in its transactions in Malaysia, but of greater significance is the fact that petitioner offered in evidence relevant Malaysian jurisprudence to the effect that (a) it is not necessary under Malaysian law for counsel appearing before the Malaysian High Court to submit a special power of attorney authorizing him to represent a client before said court, (b) that counsel appearing before the Malaysian High Court has full authority to compromise the suit, and (c) that counsel appearing before the Malaysian High Court need not comply with certain pre-requisites as required under Philippine law to appear and compromise judgments on behalf of their clients before said court.

2. On the ground that collusion, fraud and, clear mistake of fact and law tainted the judgment of the High Court of Malaya, no clear evidence of the same was adduced or shown.

3. Lastly, there is no merit to the argument that the foreign judgment is not enforceable in view of the absence of any statement of facts and law upon which the award in favor of the petitioner was based. As aforestated, the lex fori or the internal law of the forum governs matters of remedy and procedure. Considering that under the procedural rules of the High Court of Malaya, a valid judgment may be rendered even without stating in the judgment every fact and law upon which the judgment is based, then the same must be accorded respect and the courts in the jurisdiction cannot invalidate the judgment of the foreign court simply because our rules provide otherwise.

WHEREFORE, the instant petition is GRANTED

[G.R. No. 103493. June 19, 1997]PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V., Petitioners, v. THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, Respondents.D E C I S I O NMENDOZA, J.:

This case presents for determination the conclusiveness of a foreign judgment upon the rights of the parties under the same cause of action asserted in a case in our local court. Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari.

Facts:

On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala International Finance Limited (hereafter called AYALA) and Philsec Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a market value of P14,088,995.00. 

In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducats obligation under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendors Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. 

The balance of US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat.

As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by the note became due and demandable.

Private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the Agreement. the venue of the action was later transferred to the United States District Court for the Southern District of Texas

On April 10, 1987, while Civil Case No. H-86-440 was pending in the United States, petitioners filed a complaint For Sum of Money with Damages and Writ of Preliminary Attachment against private respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United States District Court of Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners claimed that, as a result of private respondents’ fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase the Houston property. Petitioners prayed that private respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary attachment against the real and personal properties of private respondents

Private respondent Ducat moved to dismiss on the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action.

The trial court granted Ducats motion to dismiss, stating that the evidentiary requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international law of forum non conveniens, even as it noted that Ducat was not a party in the U.S. case

the main factual element of the cause of action in this case which is the validity of the sale of real property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter of the pending case in the United States District Court which, under the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate matters needed to determine the assessment and/or fluctuations of the fair market value of real estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the present and verily,... (emphasis by trial court)

RTC: trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial service of summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic

CA: affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia

ISSUE(S)

1. THE DOCTRINE OF PENDENCY OF ANOTHER ACTION BETWEEN THE SAME PARTIES FOR THE SAME CAUSE (LITIS PENDENTIA) RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE TRIAL COURTS DISMISSAL OF THE CIVIL ACTION IS NOT APPLICABLE.

2. THE PRINCIPLE OF FORUM NON CONVENIENS ALSO RELIED UPON BY THE COURT OF APPEALS IN AFFIRMING THE DISMISSAL BY THE TRIAL COURT OF THE CIVIL ACTION IS LIKEWISE NOT APPLICABLE.

3. AS A COROLLARY TO THE FIRST TWO GROUNDS, THE COURT OF APPEALS ERRED IN NOT HOLDING THAT PHILIPPINE PUBLIC POLICY REQUIRED THE ASSUMPTION, NOT THE RELINQUISHMENT, BY THE TRIAL COURT OF ITS RIGHTFUL JURISDICTION IN THE CIVIL ACTION FOR THERE IS EVERY REASON TO PROTECT AND VINDICATE PETITIONERS RIGHTS FOR TORTIOUS OR WRONGFUL ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT ALIENS) INFLICTED UPON THEM HERE IN THE PHILIPPINES.

RULING: 

1. Petitioners contention is meritorious. While this Court has given the effect of res judicata to foreign judgments in several cases,7it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law.8 It is not necessary for this purpose to initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment, in order for the court to properly determine its efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of a party and, as such, is subject to proof to the contrary. 

In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court were exactly the issues raised in this case such that the judgment that might be rendered would constitute res judicata.

It was error therefore for the Court of Appeals to summarily rule that petitioners action is barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons, but their claim was brushed aside by both the trial court and the Court of Appeals.

2. Nor is the trial courts refusal to take cognizance of the case justifiable under the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, 1, which does not include forum non conveniens.16 The propriety of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a matter of defense. Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after vital facts are established, to determine whether special circumstances require the courts desistance.

In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latters debt which was the object of the transaction under litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case.

3. It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in personam and summons were served by extraterritorial service. Rule 14, 17 on extraterritorial service provides that service of summons on a non-resident defendant may be effected out of the Philippines by leave of Court where, among others, the property of the defendant has been attached within the Philippines.18 It is not disputed that the properties, real and personal, of the private respondents had been attached prior to service of summons under the Order of the trial court dated April 20, 1987.

WHEREFORE, the decision of the Court of Appeals is REVERSED. 

[G.R. No. 137378. October 12, 2000.]PHILIPPINE ALUMINUM WHEELS, INC., Petitioner, v. FASGI ENTERPRISES, INC., Respondent.VITUG, J.:

Facts:

FASGI Enterprises Incorporated ("FASGI"), a corporation organized and existing under and by virtue of the laws of the State of California, United States of America, entered into a distributorship arrangement with Philippine Aluminum Wheels, Incorporated ("PAWI"), a Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A. ("FPS"), an Italian corporation. The agreement provided for the purchase, importation and distributorship in the United States of aluminum wheels manufactured by PAWI.

Pursuant to the contract, PAWI shipped to FASGI a total of eight thousand five hundred ninety four (8,594) wheels, with an FOB value of US$216,444.30 at the time of shipment, the first batch arriving in two containers and the second in three containers. Thereabouts, FASGI paid PAWI the FOB value of the wheels.

Unfortunately, FASGI later found the shipment to be defective and in non-compliance with the requirements.

On 21 September 1979, FASGI instituted an action against PAWI and FPS for breach of contract and recovery of damages in the amount of US$2,316,591.00 before the United States District Court for the Central District of California.

During the pendency of the case, the parties entered into a settlement, entitled "Transaction" with the corresponding Italian translation "Convenzione Transsativa," where it was stipulated that FPS and PAWI would accept the return of not less than 8,100 wheels after restoring to FASGI the purchase price of US$268,750.00 via four (4) irrevocable letters of credit ("LC"). The rescission of the contract of distributorship was to be effected within the period starting January up until April 1980

On 24 August 1982, FASGI filed a notice of entry of judgment. A certificate of finality of judgment was issued, on 07 September 1982, by the US District Judge of the District Court for the Central District of California. PAWI, by this time, was approximately twenty (20) months in arrears in its obligation under the supplemental settlement agreement.

Unable to obtain satisfaction of the final judgment within the United States, FASGI filed a complaint for "enforcement of foreign judgment" in February 1983, before the Regional Trial Court, Branch 61, of Makati, Philippines. 

Makati Court Dismissed the Case, on the ground that the 

1. decree was tainted with collusion, fraud, and clear mistake of law and fact.

2. lower court ruled that the foreign judgment ignored the reciprocal obligations of the parties

CA: reversed the RTC judgment 

ISSUE:

Whether the CA erred in reversing the trial court’s decision on enforcing the foreign judgment.

RULING:

NO.

Generally, in the absence of a special compact, no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another country; however, the rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries. 

In this jurisdiction, a valid judgment rendered by a foreign tribunal may be recognized insofar as the immediate parties and the underlying cause of action are concerned so long as it is convincingly shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction; that trial upon regular proceedings has been conducted, following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice; and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment. A foreign judgment is presumed to be valid and binding in the country from which it comes, until a contrary showing, on the basis of a presumption of regularity of proceedings and the giving of due notice in the foreign forum. Rule 39, section 48 of the Rules of Court of the Philippines

Sec. 48. Effect of foreign judgments or final orders — The effect of a judgment or final order of a tribunal of a foreign country, having jurisdiction to render the judgment or final order is as follows: 

x       x       x

(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of a right as between the parties and their successors-in-interest by a subsequent title.

In Soorajmull Nagarmull v. Binalbagan-Isabela Sugar Co. Inc., 17 one of the early Philippine cases on the enforcement of foreign judgments, this Court has ruled that a judgment for a sum of money rendered in a foreign court is presumptive evidence of a right between the parties and their successors in-interest by subsequent title, but when suit for its enforcement is brought in a Philippine court, such judgment may be repelled by, evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

Burden of Proof: In Northwest Orient Airlines, Inc., v. Court of Appeals, 18 the Court has said that a party attacking a foreign judgment is tasked with the burden of overcoming its presumptive validity.

1. Mr. Ready has authority from his client. supplemental settlement agreement was signed by the parties, including Mr. Thomas Ready. It is an accepted rule that when a client, upon becoming aware of the compromise and the judgment thereon, fails to promptly repudiate the action of his attorney, he will not afterwards be heard to complain about it. 

Termination of service of Mr. Ready came too late and under American Judicial Procedures when a motion for judgment had already been filed a counsel would not be permitted to withdraw unilaterally without a court order.

2. Fraud, to hinder the enforcement within this jurisdiction of a foreign judgment, must be extrinsic, i.e., fraud based on facts not controverted or resolved in the case where judgment is rendered,  or that which would go to the jurisdiction of the court or would deprive the party against whom judgment is rendered a chance to defend the action to which he has a meritorious case or defense. In fine, intrinsic fraud, that is, fraud which goes to the very existence of the cause of action – such as fraud in obtaining the consent to a contract – is deemed already adjudged, and it, therefore, cannot militate against the recognition or enforcement of the foreign judgment.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED.

[G.R. No. 141536. February 26, 2001.]
GIL MIGUEL T. PUYAT, Petitioner, v. RON ZABARTE, Respondent.
PANGANIBAN, J.:

Facts:

Respondent Ron Zabarte commenced an action to enforce the money judgment rendered by the Superior Court for the State of California, County of Contra Costa, U.S.A. petitioner filed his Answer contending among others, Superior Court for the State of California, did not properly acquire jurisdiction over the subject matter of and over the persons involved, jdugement was obtained withour the assistance of a lawyer, was procured by means of fraud or collusion or undue influence and/or based on a clear mistake of fact and law, is contrary to the laws, public policy and canons of morality obtaining in the Philippines and the enforcement of such judgment in the Philippines would result in the unjust enrichment.

Zabarte then filed a motion for summary judgment as he argued that Puyat’s Answer tendered no issue. The trial court granted the motion and eventually gave a favorable judgment for Zabarte. The Court of Appeals affirmed the decision of the trial court.

Puyat now avers that the trial court should have never taken cognizance of the case because it had no jurisdiction over the case pursuant to the forum non conveniens rule. He averred that under this principle, since all the transaction involved in this case occurred in California, he being a foreigner, and the California law was not properly determined, the trial court had no jurisdiction. He also assailed the validity of the trial court’s act in granting the motion for summary judgment filed by Zabarte.

ISSUE:

Whether the foreign judgment may be enforced?

RULING:

Yes. 

We disagree. In the absence of proof of California law on the jurisdiction of courts, we presume that such law, if any, is similar to Philippine law. We base this conclusion on the presumption of identity or similarity, also known as processual presumption. 18 The Complaint, 19 which respondent filed with the trial court, was for the enforcement of a foreign judgment. He alleged therein that the action of the foreign court was for the collection of a sum of money, breach of promissory notes, and damages. 20

In our jurisdiction, such a case falls under the jurisdiction of civil courts, not of the Securities and Exchange Commission (SEC). The jurisdiction of the latter is exclusively over matters enumerated in Section 5, PD 902-A, 21 prior to its latest amendment. If the foreign court did not really have jurisdiction over the case, as petitioner claims, it would have been very easy for him to show this. Since jurisdiction is determined by the allegations in a complaint, he only had to submit a copy of the complaint filed with the foreign court. Clearly, this issue did not warrant trial.

Forum Non Conveniens

Petitioner argues that the RTC should have refused to entertain the Complaint for enforcement of the foreign judgment on the principle of forum non conveniens. He claims that the trial court had no jurisdiction, because the case involved partnership interest, and there was difficulty in ascertaining the applicable law in California. All the aspects of the transaction took place in a foreign country, and respondent is not even Filipino.

We disagree. Under the principle of forum non conveniens, even if the exercise of jurisdiction is authorized by law, courts may nonetheless refuse to entertain a case for any of the following practical reasons: 

"1) The belief that the matter can be better tried and decided elsewhere, either because the main aspects of the case transpired in a foreign jurisdiction or the material witnesses have their residence there;

2) The belief that the non-resident plaintiff sought the forum[,] a practice known as forum shopping[,] merely to secure procedural advantages or to convey or harass the defendant;

3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be overcrowded;

4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and

5) The difficulty of ascertaining foreign law."

None of the aforementioned reasons barred the RTC from exercising its jurisdiction.

G.R. No. 114323 July 23, 1998OIL AND NATURAL GAS COMMISSION, Petitioner, v. COURT OF APPEALS and PACIFIC CEMENT COMPANY, INC., Respondents.MARTINEZ, J.:

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

Facts: 

The petitioner is a foreign corporation owned and controlled by the Government of India while the private respondent is a private corporation duly organized and existing under the laws of the Philippines. 

The conflict between the petitioner and the private respondent has its roots in a contract entered into by and between both parties on February 26, 1983 whereby the private respondent undertook to supply the petitioner FOUR THOUSAND THREE HUNDRED (4,300) metric tons of oil well cement. In consideration therefor, the petitioner bound itself to pay the private respondent the amount of FOUR HUNDRED SEVENTY-SEVEN THOUSAND THREE HUNDRED U.S. DOLLARS ($477,300.00) by opening an irrevocable, divisible, and confirmed letter of credit in favor of the latter. 

However, due to a dispute between the shipowner and the private respondent, the cargo was held up in Bangkok and did not reach its point destination. Notwithstanding the fact that the private respondent had already received payment and despite several demands made by the petitioner, the private respondent failed to deliver the oil well cement.

negotiations ensued between the parties and they agreed that the private respondent will replace the entire 4,300 metric tons of oil well cement with Class "G" cement cost free at the petitioner's designated port.

However, upon inspection, the Class "G" cement did not conform to the petitioner's specifications. The petitioner then informed the private respondent that it was referring its claim to an arbitrator pursuant to Clause 16 of their contract.

chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in petitioner's favor.

To enable the petitioner to execute the above award in its favor, it filed a Petition before the Court of the Civil Judge in Dehra Dun. India. The Court decided in favor of the petitioner.

Despite notice sent to the private respondent of the foregoing order and several demands by the petitioner for compliance therewith, the private respondent refused to pay the amount adjudged by the foreign court as owing to the petitioner. Accordingly, the petitioner filed a complaint with Branch 30 of the Regional Trial Court (RTC) of Surigao City for the enforcement of the aforementioned judgment of the foreign court. 

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

CA affirmed the decision of RTC. 

Issue:

Whether the arbitrator had jurisdiction over the dispute between the petitioner and the private respondent.

Ruling:

The constitutional mandate that no decision shall be rendered by any court without expressing therein dearly and distinctly the facts and the law on which it is based does not preclude the validity of "memorandum decisions" which adopt by reference the findings of fact and conclusions of law contained in the decisions of inferior tribunals.

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

WHEREFORE, the instant petition is GRANTED

[G.R. NO. 139325: April 12, 2005]PRISCILLA C. MIJARES, LORETTA ANN P. ROSALES, HILDA B. NARCISO, SR. MARIANI DIMARANAN, SFIC, and JOEL C. LAMANGAN in their behalf and on behalf of the Class Plaintiffs in Class Action No. MDL 840, United States District Court of Hawaii, Petitioner, v. HON. SANTIAGO JAVIER RANADA, in his capacity as Presiding Judge of Branch 137, Regional Trial Court, Makati City, and the ESTATE OF FERDINAND E. MARCOS, through its court appointed legal representatives in Class Action MDL 840, United States District Court of Hawaii, namely: Imelda R. Marcos and Ferdinand Marcos, Jr., Respondents.TINGA, J.:

Our martial law experience bore strange unwanted fruits, and we have yet to finish weeding out its bitter crop. While the restoration of freedom and the fundamental structures and processes of democracy have been much lauded, according to a significant number, the changes, however, have not sufficiently healed the colossal damage wrought under the oppressive conditions of the martial law period. The cries of justice for the tortured, the murdered, and the desaparecidos arouse outrage and sympathy in the hearts of the fair-minded, yet the dispensation of the appropriate relief due them cannot be extended through the same caprice or whim that characterized the ill-wind of martial rule. The damage done was not merely personal but institutional, and the proper rebuke to the iniquitous past has to involve the award of reparations due within the confines of the restored rule of law.

The petitioners in this case are prominent victims of human rights violations1 who, deprived of the opportunity to directly confront the man who once held absolute rule over this country, have chosen to do battle instead with the earthly representative, his estate. The clash has been for now interrupted by a trial court ruling, seemingly comported to legal logic, that required the petitioners to pay a whopping filing fee of over Four Hundred Seventy-Two Million Pesos (P472,000,000.00) in order that they be able to enforce a judgment awarded them by a foreign court.   There is an understandable temptation to cast the struggle within the simplistic confines of a morality tale, and to employ short-cuts to arrive at what might seem the desirable solution. But easy, reflexive resort to the equity principle all too often leads to a result that may be morally correct, but legally wrong.

Nonetheless, the application of the legal principles involved in this case will comfort those who maintain that our substantive and procedural laws, for all their perceived ambiguity and susceptibility to myriad interpretations, are inherently fair and just. The relief sought by the petitioners is expressly mandated by our laws and conforms to established legal principles. The granting of this petition for certiorari is warranted in order to correct the legally infirm and unabashedly unjust ruling of the respondent judge.

Facts:

a complaint was filed with the United States District Court (US District Court), District of Hawaii, against the Estate of former Philippine President Ferdinand E. Marcos (Marcos Estate). The action was brought forth by ten Filipino citizens2 who each alleged having suffered human rights abuses such as arbitrary detention, torture and rape in the hands of police or military forces during the Marcos regime.

The Alien Tort Act was invoked as basis for the US District Court's jurisdiction over the complaint, as it involved a suit by aliens for tortious violations of international law.4 These plaintiffs brought the action on their own behalf and on behalf of a class of similarly situated individuals, particularly consisting of all current civilian citizens of the Philippines, their heirs and beneficiaries, who between 1972 and 1987 were tortured, summarily executed or had disappeared while in the custody of military or paramilitary groups. Plaintiffs alleged that the class consisted of approximately ten thousand (10,000) members; hence, joinder of all these persons was impracticable.

Trial ensued, and subsequently a jury rendered a verdict and an award of compensatory and exemplary damages in favor of the plaintiff class. he US District Court, presided by Judge Manuel L. Real, rendered a Final Judgment (Final Judgment) awarding the plaintiff class a total of One Billion Nine Hundred Sixty-Four Million Five Thousand Eight Hundred Fifty Nine Dollars and Ninety Cents ($1,964,005,859.90). The Final Judgment was eventually affirmed by the US Court of Appeals for the Ninth Circuit, in a decision rendered on 17 December 1996

On 20 May 1997, the present petitioners filed Complaint with the Regional Trial Court, City of Makati (Makati RTC) for the enforcement of the Final Judgment. 

On 5 February 1998, the Marcos Estate filed a motion to dismiss, raising, among others, the non-payment of the correct filing fees.

Makati RTC issued the subject Order dismissing the complaint without prejudice. the subject matter of the complaint was indeed capable of pecuniary estimation, as it involved a judgment rendered by a foreign court ordering the payment of definite sums of money, allowing for easy determination of the value of the foreign judgment. 

The Commission on Human Rights (CHR) argued the Makati RTC erred in interpreting the action for the execution of a foreign judgment as a new case, in violation of the principle that once a case has been decided between the same parties in one country on the same issue with finality, it can no longer be relitigated again in another country.13 The CHR likewise invokes the principle of comity, and of vested rights.

In a real action, the assessed value of the property, or if there is none, the estimated value, thereof shall be alleged by the claimant and shall be the basis in computing the fees.

It is worth noting that the provision also provides that in real actions, the assessed value or estimated value of the property shall be alleged by the claimant and shall be the basis in computing the fees. Yet again, this provision does not apply in the case at bar. A real action is one where the plaintiff seeks the recovery of real property or an action affecting title to or recovery of possession of real property.16 Neither the complaint nor the award of damages adjudicated by the US District Court involves any real property of the Marcos Estate.

Issue: 

Whether or not the amount rendered by foreign judgment is capable of pecuniary estimation?

Ruling: 

To resolve this question, a proper understanding is required on the nature and effects of a foreign judgment in this jurisdiction.

The rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries.17 This principle was prominently affirmed in the leading American case of Hilton v. Guyot18 and expressly recognized in our jurisprudence beginning with Ingenholl v. Walter E. Olsen & Co.19 The conditions required by the Philippines for recognition and enforcement of a foreign judgment were originally contained in Section 311 of the Code of Civil Procedure, which was taken from the California Code of Civil Procedure which, in turn, was derived from the California Act of March 11, 1872.20 Remarkably, the procedural rule now outlined in Section 48, Rule 39 of the Rules of Civil Procedure has remained unchanged down to the last word in nearly a century. Section 48 states:

SEC. 48.  Effect of foreign judgments. 'The effect of a judgment of a tribunal of a foreign country, having jurisdiction to pronounce the judgment is as follows:

(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;

(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title;

In either case, the judgment or final order may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.

Petitioners appreciate this distinction, and rely upon it to support the proposition that the subject matter of the complaintthe enforcement of a foreign judgmentis incapable of pecuniary estimation. Admittedly the proposition, as it applies in this case, is counter-intuitive, and thus deserves strict scrutiny. For in all practical intents and purposes, the matter at hand is capable of pecuniary estimation, down to the last cent. In the assailed Order, the respondent judge pounced upon this point without equivocation:

The Rules use the term "where the value of the subject matter cannot be estimated." The subject matter of the present case is the judgment rendered by the foreign court ordering defendant to pay plaintiffs definite sums of money, as and for compensatory damages. The Court finds that the value of the foreign judgment can be estimated; indeed, it can even be easily determined. The Court is not minded to distinguish between the enforcement of a judgment and the amount of said judgment, and separate the two, for purposes of determining the correct filing fees. Similarly, a plaintiff suing on promissory note for P1 million cannot be allowed to pay only P400 filing fees (sic), on the reasoning that the subject matter of his suit is not the P1 million, but the enforcement of the promissory note, and that the value of such "enforcement" cannot be estimated.35

The jurisprudential standard in gauging whether the subject matter of an action is capable of pecuniary estimation is well-entrenched. The Marcos Estate cites Singsong v. Isabela Sawmill and Raymundo v. Court of Appeals, which ruled:

[I]n determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought.   If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim.   However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance (now Regional Trial Courts).

while the subject matter of the action is undoubtedly the enforcement of a foreign judgment, the effect of a providential award would be the adjudication of a sum of money. Perhaps in theory, such an action is primarily for "the enforcement of the foreign judgment," but there is a certain obtuseness to that sort of argument since there is no denying that the enforcement of the foreign judgment will necessarily result in the award of a definite sum of money.

But before we insist upon this conclusion past beyond the point of reckoning, we must examine its possible ramifications. Petitioners raise the point that a declaration that an action for enforcement of foreign judgment may be capable of pecuniary estimation might lead to an instance wherein a first level court such as the Municipal Trial Court would have jurisdiction to enforce a foreign judgment. But under the statute defining the jurisdiction of first level courts, B.P. 129, such courts are not vested with jurisdiction over actions for the enforcement of foreign judgments.

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in civil cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including the grant of provisional remedies in proper cases, where the value of the personal property, estate, or amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where such personal property, estate, or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00) exclusive of interest damages of whatever kind, attorney's fees, litigation expenses, and costs, the amount of which must be specifically alleged: Provided, That   where there are several claims or causes of action between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions;

(2) Exclusive original jurisdiction over cases of forcible entry and unlawful detainer: Provided, That when, in such cases, the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession.

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That value of such property shall be determined by the assessed value of the adjacent lots.45

Section 33 of B.P. 129 refers to instances wherein the cause of action or subject matter pertains to an assertion of rights and interests over property or a sum of money. But as earlier pointed out, the subject matter of an action to enforce a foreign judgment is the foreign judgment itself, and the cause of action arising from the adjudication of such judgment.

An examination of Section 19(6), B.P. 129 reveals that the instant complaint for enforcement of a foreign judgment, even if capable of pecuniary estimation, would fall under the jurisdiction of the Regional Trial Courts, thus negating the fears of the petitioners. Indeed, an examination of the provision indicates that it can be relied upon as jurisdictional basis with respect to actions for enforcement of foreign judgments, provided that no other court or office is vested jurisdiction over such complaint:

Sec. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original jurisdiction:

xxx

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising jurisdiction or any court, tribunal, person or body exercising judicial or quasi-judicial functions.

Thus, we are comfortable in asserting the obvious, that the complaint to enforce the US District Court judgment is one capable of pecuniary estimation. But at the same time, it is also an action based on judgment against an estate, thus placing it beyond the ambit of Section 7(a) of Rule 141. What provision then governs the proper computation of the filing fees over the instant complaint? For this case and other similarly situated instances, we find that it is covered by Section 7(b)(3), involving as it does, "other actions not involving property."

Notably, the amount paid as docket fees by the petitioners on the premise that it was an action incapable of pecuniary estimation corresponds to the same amount required for "other actions not involving property." The petitioners thus paid the correct amount of filing fees, and it was a grave abuse of discretion for respondent judge to have applied instead a clearly inapplicable rule and dismissed the complaint.

[G.R. NO. 182013 : December 4, 2009]QUASHA ANCHETA PEÑA & NOLASCO LAW OFFICE and LEGEND INTERNATIONAL RESORTS, LIMITED, Petitioners, v. THE SPECIAL SIXTH DIVISION of the COURT OF APPEALS, KHOO BOO BOON and the Law Firm of PICAZO BUYCO TAN FIDER & SANTOS, Respondents.CHICO-NAZARIO, J.:

Facts:

Petitioner Quasha Law Office is the duly authorized counsel of petitioner LIRL in the Philippines. Petitioner LIRL is a foreign corporation organized under the laws of Hong Kong and licensed to operate a resort casino hotel in Subic Bay, Philippines, on the basis of the 19 March 1993 Agreement it entered into with Philippine Amusement and Gaming Corporation (PAGCOR) and Subic Bay Metropolitan Authority (SBMA), which was later amended in July, 2000. It is doing business in the Philippines through its branch, LIRL-Subic.

Private respondent Khoo Boo Boon was the former Chief Executive Officer of LIRL-Subic. Private respondent Picazo Buyco Tan Fider and Santos Law Office (Picazo Law Office) was the former counsel of petitioner LIRL in the Philippines.

Petitioner LIRL filed a Complaint for Annulment of Contract, Specific Performance with Damages and Application for Preliminary Injunction and Temporary Restraining Order before the Regional Trial Court (RTC) against PAGCOR and SBMA for amending the 19 March 1993 Agreement, notwithstanding the total absence of any consideration supporting petitioner LIRL's additional obligations imposed under the amended Agreement.

the trial court rendered a Decision2 annulling the amendment to the 19 March 1993 Agreement executed between petitioner LIRL, PAGCOR and SBMA, as well as all the agreements that may have been entered into by PAGCOR pursuant thereto. The trial court also restrained PAGCOR from enforcing the amendment. 

Meanwhile, in relation to petitioner LIRL Companies' Winding-Up filed before the Hong Kong Court the said foreign court issued Orders appointing (Flynn) and (Borrelli) as the joint and several liquidators of petitioner LIRL and granting them the power to carry on and manage the business of petitioner LIRL, including its business in Subic, Philippines. 

Flynn terminated the legal services LIRL. petitioner Quasha Law Office filed its Entry of Appearance as counsel for petitioner LIRL. Court of Appeals refused to recognize petitioner Quasha Law Office as the new counsel of petitioner LIRL.

The appellate court ratiocinated that a mere photocopy of a letter dated 10 July 2006, which was sent by one of the appointed liquidators of petitioner LIRL, informing private respondent Picazo Law Office that its legal services as counsel of LIRL had been terminated, had no probative value. Further the appointment of petitioner LIRL's joint and several liquidators were made pursuant to an Order of the Hong Kong Court. Because it was a foreign judgment, our courts could not take judicial notice thereof, as the final orders of foreign tribunals could only be enforced in Philippine courts after appropriate proceedings filed therein. Thus, the appellate court concluded that until the alleged Order of the Hong Kong Court had been validated and recognized in an appropriate proceeding before our local courts, private respondent Picazo Law Office was recognized as the only counsel entitled to represent and file pleadings for and on behalf of petitioner LIRL

Issue:

whether the Special Sixth Division of the Court of Appeals gravely abused its discretion in considering that the Orders of the Hong Kong Court appointing liquidators for petitioner LIRL involved enforcement and recognition of a foreign judgment.

Ruling:

We hold that the same is already barred by the principle of res judicata conclusiveness of judgment.

The doctrine of res judicata actually embraces two different concepts: (1) bar by former judgment and (b) conclusiveness of judgment.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

The second concept - conclusiveness of judgment - states that a fact or question, which was in issue in a former suit and was there judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies in the same court or any other court of concurrent jurisdiction on either the same or a different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity of cause of action is not required, but merely identity of issues.

petitioner LIRL's proper legal representation and Quasha Law Office's entry of appearance as tantamount to an enforcement of a foreign judgment, were also raised. On 26 February 2009, the said division of the Court of Appeals rendered a Decision stating that no enforcement of a foreign judgment was involved in the said case. It further decreed that petitioner LIRL's appointed liquidators had been duly authorized to manage petitioner LIRL. The authority of the said liquidators extended to all of petitioner LIRL's branches, wherever situated, the branch in the Philippines included. Pursuant to 9 June 2006 Orders of the Hong Kong Court, the appointed liquidators were given the power to, among other powers, "bring or defend any action or other legal proceeding in the name and on behalf of the company or themselves in Hong Kong, the Republic of the Philippines or attorneys in the Republic of the Philippines or elsewhere and appoint a solicitor in Hong Kong and lawyers or assist the Liquidators in the performance of their duties generally." No cogent reason existed to prevent petitioner LIRL from exercising its prerogative in terminating the services of one counsel and in engaging the services of another. Such act was purely an internal affair of the corporation, which did not require prior recognition in a separate action.

G.R. No. L-57338.July 23, 1987WILLIAM B. BORTHWICK, petitioner,vs.HON. FLORELIANA CASTRO-BARTOLOME, Presiding Judge, Br. XV, Makati, of the Court of First Instance of Rizal; JOSEPH E. SCALLON, and JEWELL C. SCALLON, respondents.NARVASA, J.:

Facts:

Petitioner William Borthwick, an American citizen living in the Philippines, owned real property interests in Hawaii. In his business dealings with private respondent, Joseph Scallon, Borthwick issued the promissory notes now sued upon, but failed to pay the sums owing upon maturity and despite demands. The promissory notes provided that upon default, action may be brought for collection in Los Angeles, California, or at Scallon's option, in Manila or Honolulu.

Borthwick being then in Monterey, California, summons5 was served upon him personally in that place, pursuant to Hawaiian law allowing service of process on a person outside the territorial confines of the State, if he had otherwise submitted himself to the jurisdiction of its courts as to causes of action arising from, among others, the act of transacting any business within Hawaii6 — alleged to consist as to Borthwick in the negotiation and dealings regarding the promissory notes. Borthwick ignored the summons. Default was entered against him.

However, Scallon's attempts to have the judgment executed in Hawaii and California failed, because no assets of Borthwick could be found in those states.

The court issued an amendatory order and upon receipt by Borthwick, he moved for a new trial, alleging that the promissory notes did not arise from business dealings in Hawaii, nor did he own real estate therein. He contended that the judgment of the court of Hawaii is unenforceable in the Philippines because it was invalid for want of jurisdiction over the cause of action and over his person. The motion was denied, hence this petition.

Issues:

1. Is a foreign judgment against a person rendered without jurisdiction over the cause of action and without proper summons to the defendant enforceable in the Philippines?

2. Has the respondent Judge acquired jurisdiction over the person of defendant when summons was served on an itinerant gardener who did not reside in defendant's house?

Ruling:

1. It is true that a foreign judgment against a person is merely "presumptive evidence of a right as between the parties," and rejection thereof may be justified, among others, by "evidence of a want of jurisdiction" of the issuing authority, under Rule 39 of the Rules of Court. In the case at bar, the jurisdiction of the Circuit Court of Hawaii hinged entirely on the existence of either of two facts in accordance with its State laws, i.e., either Borthwick owned real property in Hawaii, or the promissory notes sued upon resulted from his business transactions therein. Scallon's complaint clearly alleged both facts. Borthwick was accorded opportunity to answer the complaint and impugn those facts, but he failed to appear and was in consequence declared in default. There thus exists no evidence in the record of the Hawaii case upon which to lay a conclusion of lack of jurisdiction, as Borthwick now urges.

The opportunity to negate the foreign court's competence by proving the non-existence of said jurisdictional facts established in the original action, was again afforded to Borthwick in the Court of First Instance of Makati, where enforcement of the Hawaii judgment was sought. This time it was the summons of the domestic court which Borthwick chose to ignore, but with the same result: he was declared in default. And in the default judgment subsequently promulgated, the Court a quo decreed enforcement of the judgment affirming among others the jurisdictional facts, that Borthwick owned real property in Hawaii and transacted business therein.

In the light of these antecedents, it is plain that what Borthwick seeks in essence is one more opportunity, a third, to challenge the jurisdiction of the Hawaii Court and the merits of the cause of action which that Court had adjudged to have been established against him. This he may obtain only if he succeed in showing that the declaration of his default was incorrect. He has unfortunately not been able to do that; hence, the verdict must go against him.

2. It is not for this Court to disturb the express finding of the Court of First Instance that Daniel was Borthwick's resident domestic houseboy, and of sufficient age and discretion to accept substituted service of summons for Borthwick. Under Rule 42 of the Rules of Court, a party appealling from the Courts of First Instance (now the Regional Trial Courts) to the Supreme Court may "raise only questions of law (and) no other question **," and is thus precluded from impugning the factual findings of the trial court, being deemed to have admitted the correctness of such findings and waived his right to open them to question. 

Klaxon Co. v. Stentor Elec. Mfg. Co. - 313 U.S. 487, 61 S. Ct. 1020 (1941)

Source: https://www.lexisnexis.com/community/casebrief/p/casebrief-klaxon-co-v-stentor-elec-mfg-co

The prohibition against independent determinations by the federal courts extends to the field of conflict of laws. The conflict of laws rules to be applied by the federal court in Delaware must conform to those prevailing in Delaware's state courts. Otherwise, the accident of diversity of citizenship would constantly disturb equal administration of justice in coordinate state and federal courts sitting side by side. Whatever lack of uniformity this may produce between federal courts in different states is attributable to the federal system, which leaves to a state, within the limits permitted by the Constitution, the right to pursue local policies diverging from those of its neighbors. It is not for the federal courts to thwart such local policies by enforcing an independent "general law" of conflict of laws.

FACTS:

Respondent, a New York corporation, transferred its entire business to petitioner, a Delaware corporation. Petitioner contracted to use its best efforts to further the manufacture and sale of certain patented devices covered by the agreement, and respondent was to have a share of petitioner's profits. The agreement was executed in New York, the assets were transferred there, and petitioner began performance there although later it moved its operations to other states. Respondent was voluntarily dissolved under New York law in 1919. Ten years later it instituted this action in the United States District Court for the District of Delaware, alleging that petitioner had failed to perform its agreement to use its best efforts. Jurisdiction rested on diversity of citizenship. In 1939 respondent recovered a jury verdict of $100,000, upon which judgment was entered. Respondent then moved to correct the judgment by adding interest at the rate of six percent from June 1, 1929, the date the action had been brought. The District Court granted the motion, taking the view that the rights of the parties were governed by New York law and that under New York law the addition of such interest was mandatory. The Circuit Court of Appeals affirmed.

ISSUE:

In diversity cases, should the federal courts follow conflict of laws rules prevailing in the states in which they sit?

Ruling:

Yes. The court upheld the ruling in Erie R. Co. v. Tompkins, 304 U.S. 64 that states: “In diversity of citizenship cases, the federal courts, when deciding questions of conflict of laws, must follow the rules prevailing in the States in which they sit.”