SECOND DIVISION

[G.R. No. 114323. July 23, 1998.]

OIL AND NATURAL GAS COMMISSION, petitioner, vs. COURT
OF APPEALS and PACIFIC CEMENT COMPANY, INC.,
respondents.
Quasha, Ancheta, Pea & Nolasco for petitioner.
Hernandez, Velicaria, Vibar, & Santiago for private respondent.
SYNOPSIS
Petitioner and private respondent entered into a contract whereby the latter undertook to
supply the former 4,300 metric tons of oil well cement in consideration of $477,300.00.
The oil well cement was loaded on board a ship at the port of Surigao City, Philippines
for delivery in India. But the cargo was held up in Bangkok and did not reach its point of
destination because of a dispute between the shipowner and the private respondent.
Despite the fact that the private respondent had already received payment and several
demands made by the petitioner, the private respondent failed to deliver the oil well
cement.
Private respondent agreed to replace the entire 4,300 metric tons of oil well cement with
Class "G" cement cost free at the petitioner's designated port. The cement, however, did
not conform to the petitioner's specifications. The petitioner then referred its claim to an
arbitrator pursuant to Clause 16 of their contract.
The chosen arbitrator resolved the dispute in petitioner's favor. To execute the award in its
favor, petitioner filed a petition before the Court of the Civil Judge in Dehra Dun, India,
praying that the decision of the arbitrator be made "the Rule of Court" in India.
Because of the refusal of private respondent to pay the amount adjudged by the foreign
court as owing to the petitioner, the latter filed a complaint with the RTC of Surigao City
for the enforcement of the judgment of the foreign court. The RTC upheld the petitioner's
legal capacity to sue, but dismissed the complaint for lack of a valid cause of action. The
RTC characterized the erroneous submission of the dispute to the arbitrator as a "mistake
of law or fact amounting to want of jurisdiction." Thus, 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.

The petitioner appealed to the respondent Court of Appeals which affirmed the dismissal
of the complaint. It ruled that since the arbitrator did not have jurisdiction over the
dispute between the parties, the foreign court could not validly adopt the arbitrator's
award. A motion for reconsideration of the appellate court's decision was denied. Thus,
this petition.
The petitioner asseverates that granting that the non-delivery of the oil well cement is not
a proper subject for arbitration, the failure of the replacement cement to conform to the
specifications of the contract is a matter clearly falling within the ambit of Clause 16. The
Court found merit in this contention. The replacement cement, upon inspection, was
rejected as it did not conform to the specifications of the contract. What was then referred
to arbitration was no longer the mere non-delivery of the cargo but also the failure of the
replacement cargo to conform to the specifications of the contract, a matter clearly within
the coverage of Clause 16.
HaECDI

The private respondent was ordered to pay to petitioner the amounts adjudged in the
foreign judgment subject of this case.
SYLLABUS
REMEDIAL LAW; FOREIGN JUDGMENT; JUDGMENT OF A FOREIGN COURT IS
ENFORCEABLE IN THIS JURISDICTION. We now go to the issue of whether or
not the judgment of the foreign court is enforceable in this jurisdiction in view of the
private respondent's allegation that it is bereft of any statement of facts and law upon
which the award in favor of the petitioner was based. As specified in the order of the
Civil Judge of Dehra Dun, "Award Paper No. 3/B-1 shall be a part of the decree." This is
a categorical declaration that the foreign court adopted the findings of facts and law of
the arbitrator as contained in the latter's Award Paper. Award Paper No. 3/B-1, contains an
exhaustive discussion of the respective claims and defenses of the parties, and the
arbitrator's evaluation of the same. Inasmuch as the foregoing is deemed to have been
incorporated into the foreign court's judgment the appellate court was in error when it
described the latter to be a "simplistic decision containing literally, only the dispositive
portion." 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.
TDcAaH

DECISION

MARTINEZ, J :
p

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.
LLphil

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 present 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. The oil well cement was loaded on board the ship MV
SURUTANA NAVA at the port of Surigao City, Philippines for delivery at Bombay and
Calcutta, India. 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 of 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. Thereafter, 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 which stipulates:
"Except where otherwise provided in the supply order/contract all questions and
disputes, relating to the meaning of the specification designs, drawings and
instructions herein before mentioned and as to quality of workmanship of the
items ordered or as to any other question, claim, right or thing whatsoever, in
any way arising out of or relating to the supply order/contract design, drawing,
specification, instruction or these conditions or otherwise concerning the
materials or the execution or failure to execute the same during

stipulated/extended period or after the completion/abandonment thereof shall be

referred to the sole arbitration of the persons appointed by Member of the
Commission at the time of dispute. It will be no objection to any such
appointment that the arbitrator so appointed is a Commission employer (sic) that
he had to deal with the matter to which the supply or contract relates and that in
the course of his duties as Commission's employee he had expressed views on
all or any of the matter in dispute or difference.
"The arbitrator to whom the matter is originally referred being transferred or
vacating his office or being unable to act for any reason the Member of the
Commission shall appoint another person to act as arbitrator in accordance with
the terms of the contract/supply order. Such person shall be entitled to proceed
with reference from the stage at which it was left by his predecessor. Subject as
aforesaid the provisions of the Arbitration Act, 1940, or any Statutory
modification or re-enactment there of and the rules made there under and for the
time being in force shall apply to the arbitration proceedings under this clause.
"The arbitrator may with the consent of parties enlarge the time, from time to
time, to make and publish the award.
"The venue for arbitration shall be at Dehra Dun." 1*

On July 23, 1988, the chosen arbitrator, one Shri N.N. Malhotra, resolved the dispute in
petitioner's favor setting forth the arbitral award as follows:
"NOW THEREFORE after considering all facts of the case, the evidence, oral
and documentarys (sic) adduced by the claimant and carefully examining the
various written statements, submissions, letters, telexes, etc. sent by the
respondent, and the oral arguments addressed by the counsel for the claimants,
I, N.N. Malhotra, Sole Arbitrator, appointed under clause 16 of the supply order
dated 26.2.1983, according to which the parties, i.e. M/S Oil and Natural Gas
Commission and the Pacific Cement Co., Inc. can refer the dispute to the sole
arbitration under the provision of the Arbitration Act. 1940, do hereby award
and direct as follows:
"The Respondent will pay the following to the claimant:

1. Amount received by the Respondent

against the letter of credit No. 11/19
dated 28.2.1983 US$ 477,300.00
2. Re-imbursement of expenditure incurred

by the claimant on the inspection team's

visit to Philippines in August 1985 US$ 3,881.00
3. L. C. Establishment charges incurred
by the claimant US$ 1,252.82
4. Loss of interest suffered by claimant
from 21.6.83 to 23.7.88 US$ 417,169.95

Total amount of award US$ 899,603.77

"In addition to the above, the respondent would also be liable to pay to the
claimant the interest at the rate of 6% on the above among, with effect from
24.7.1988 up to the actual date of payment by the Respondent in full settlement
of the claim as awarded or the date of the decree, whichever is earlier.
"I determine the cost at Rs, 70,000/-equivalent to US$5,000 towards the
expenses on Arbitration, legal expenses, stamps duly incurred by the claimant.
The cost will be shared by the parties in equal proportion.
"Pronounced at Dehra Dun to-day, the 23rd of July 1988." 2

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 (hereinafter referred to as the
foreign court for brevity), praying that the decision of the arbitrator be made "the Rule
of Court" in India. The foreign court issued notices to the private respondent for filing
objections to the petition. The private respondent complied and sent its objections
dated January 16, 1989. Subsequently, the said court directed the private respondent to
pay the filing fees in order that the latter's objections could be given consideration.
Instead of paying the required filing fees, the private respondent sent the following
communication addressed to the Civil Judge of Dehra Dun:
"The Civil Judge
Dehra Dun (U.P.) India
Re: Misc. Case No. 5 of 1989
M/S Pacific Cement Co.,

Inc. vs. ONGC Case

Sir:
1. We received your letter dated 28 April 1989 only last 18 May 1989.
2. Please inform us how much is the court fee to be paid. Your letter did not
mention the amount to be paid.
3. Kindly give us 15 days from receipt of your letter advising us how much to
pay to comply with the same.
Thank you for your kind consideration.
Pacific Cement Co., Inc.
By:
Jose Cortes, Jr.
President" 3

Without responding to the above communication, the foreign court refused to admit the
private respondent's objections for failure to pay the required filing fees, and thereafter
issued an Order on February 7, 1990, to wit:
"ORDER
Since objections filed by defendant have been rejected through Misc. Suit No. 5
on 7.2.90, therefore, award should be made "Rule of the Court.
"ORDER
Award dated 23.7.88, Paper No. 3/B-1 is made Rule of the Court. On the basis
of conditions of award decree is passed. Award Paper No. 3/B-1 shall be a part
of the decree. The plaintiff shall also be entitled to get from defendant
(US$899,603.77 (US$ Eight Lakhs ninety nine thousand six hundred and three
point seventy seven only) along with 9% interest per annum till the last date of
realization." 4

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. The

private respondent moved to dismiss the complaint on the following grounds: (1)
plaintiff's lack of legal capacity to sue; (2) lack of cause of action; and (3) plaintiffs claim
or demand has been waived, abandoned, or otherwise extinguished. The petitioner filed
its opposition to the said motion to dismiss, and the private respondent, its rejoinder
thereto. On January 3, 1992, the RTC issued an order upholding the petitioners legal
capacity to sue, albeit dismissing the complaint for lack of a valid cause of action. The
RTC held that the rule prohibiting foreign corporations transacting business in the
Philippines without a license from maintaining a suit in Philippine courts admits of an
exception, that is, when the foreign corporation is suing on an isolated transaction as in
this case. 5 Anent the issue of the sufficiency of the petitioner's cause of action, however,
the RTC found the referral of the dispute between the parties to the arbitrator under
Clause 16 of their contract erroneous. According to the RTC,
"[a] perusal of the above-quoted clause (Clause 16) readily shows that the
matter covered by its terms is limited to "ALL QUESTIONS AND DISPUTES,
RELATING TO THE MEANING OF THE SPECIFICATION, DESIGNS,
DRAWINGS AND INSTRUCTIONS HEREIN BEFORE MENTIONED and as
to the QUALITY OF WORKMANSHIP OF THE ITEMS ORDERED or as to
any other questions, claim, right or thing whatsoever, but qualified to 'IN ANY
WAY ARISING OR RELATING TO THE SUPPLY ORDER/CONTRACT,
DESIGN, DRAWING, SPECIFICATION, etc.,' repeating the enumeration in the
opening sentence of the clause.
"The court is inclined to go along with the observation of the defendant that the
breach, consisting of the non-delivery of the purchased materials, should have
been properly litigated before a court of law, pursuant to Clause No. 15 of the
Contract/Supply Order, herein quoted, to wit:
'JURISDICTION
All questions, disputes and differences, arising under out of or in
connection with this supply order, shall be subject to the EXCLUSIVE
JURISDICTION OF THE COURT, within the local limits of whose
jurisdiction and the place from which this supply order is situated.'" 6

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. 7
The petitioner then appealed to the respondent Court of Appeals which affirmed the
dismissal of the complaint. In its decision, the appellate court concurred with the RTC's
ruling that the arbitrator did not have jurisdiction over the dispute between the parties,
thus, the foreign court could not validly adopt the arbitrators award. In addition, the
appellate court observed that the full text of the judgment of the foreign court contains

the dispositive portion only and indicates no findings of fact and law as basis for the
award. Hence, the said judgment cannot be enforced by any Philippine court as it would
violate the constitutional provision that no decision shall be rendered by any court
without expressing therein clearly and distinctly the facts and the law on which it is
based. 8 The appellate court ruled further that the dismissal of the private respondent's
objections for non-payment of the required legal fees, without the foreign court first
replying to the private respondent's query as to the amount of legal fees to be paid,
constituted want of notice or violation of due process. Lastly, it pointed out that the
arbitration proceeding was defective because the arbitrator was appointed solely by the
petitioner, and the fact that the arbitrator was a former employee of the latter gives rise to
a presumed bias on his part in favor of the petitioner. 9
A subsequent motion for reconsideration by the petitioner of the appellate court's decision
was denied, thus, this petition for review on certiorari citing the following as grounds in
support thereof:
"RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING
THE LOWER COURT'S ORDER OF DISMISSAL SINCE:
A. THE NON-DELIVERY OF THE CARGO WAS A MATTER PROPERLY
COGNIZABLE BY THE PROVISIONS OF CLAUSE 16 OF THE
CONTRACT;
B. THE JUDGMENT OF THE CIVIL COURT OF DEHRADUN, INDIA WAS
AN AFFIRMATION OF THE FACTUAL AND LEGAL FINDINGS OF THE
ARBITRATOR AND THEREFORE ENFORCEABLE IN THIS
JURISDICTION;
C. EVIDENCE MUST BE RECEIVED TO REPEL THE EFFECT OF A
PRESUMPTIVE RIGHT UNDER A FOREIGN JUDGMENT." 10

The threshold issue is whether or not the arbitrator had jurisdiction over the dispute
between the petitioner and the private respondent under Clause 16 of the contract. To
reiterate, Clause 16 provides as follows:
"Except where otherwise provided in the supply order/contract all questions and
disputes, relating to the meaning of the specification designs, drawings and
instructions herein before mentioned and as to quality of workmanship of the
items ordered or as to any other question, claim, right or thing whatsoever, in
any way arising out of or relating to the supply order/contract design, drawing,
specification, instruction or these conditions or otherwise concerning the
materials or the execution or failure to execute the same during
stipulated/extended period or after the completion/abandonment thereof shall be
referred to the sole arbitration of the persons appointed by Member of the
Commission at the time of dispute. It will be no objection to any such

appointment that the arbitrator so appointed is a Commission employer (sic) that

he had to deal with the matter to which the supply or contract relates and that in
the course of his duties as Commission's employee he had expressed views on
all or any of the matter in dispute or difference." 11

The dispute between the parties had its origin in the non-delivery of the 4,300 metric tons
of oil well cement to the petitioner. The primary question that may be posed, therefore, is
whether or not the non-delivery of the said cargo is a proper subject for arbitration under
the above-quoted Clause 16. The petitioner contends that the same was a matter within
the purview of Clause 16, particularly the phrase, ". . . or as to any other questions,
claim, right or thing whatsoever, in any way or relating to the supply order/contract,
design, drawing, specification, instruction . . .". 12 It is argued that the foregoing phrase
allows considerable latitude so as to include non-delivery of the cargo which was a
"claim, right or thing relating to the supply order/contract". The contention is bereft of
merit. First of all, the petitioner has misquoted the said phrase, shrewdly inserting a
comma between the words "supply order/contract" and "design" where none actually
exists. An accurate reproduction of the phrase reads, ". . . or as to any other question,
claim, right or thing whatsoever, in any way arising out of or relating to the supply
order/contract design, drawing, specification, instruction or these conditions . . ." The
absence of a comma between the words "supply order/contract" and "design" indicates
that the former cannot be taken separately but should be viewed in conjunction with the
words "design, drawing, specification, instruction or these conditions". It is thus clear that
to fall within the purview of this phrase, the "claim, right or thing whatsoever" must arise
out of or relate to the design, drawing, specification, or instruction of the supply
order/contract. The petitioner also insists that the non-delivery of the cargo is not only
covered by the foregoing phrase but also by the phrase, ". . . or otherwise concerning the
materials or the execution or failure to execute the same during the stipulated/extended
period or after completion/abandonment thereof . . .".
prLL

The doctrine of noscitur a sociis, although a rule in the construction of statutes, is equally
applicable in the ascertainment of the meaning and scope of vague contractual
stipulations, such as the aforementioned phrase. According to the maxim noscitur a
sociis, where a particular word or phrase is ambiguous in itself or is equally susceptible
of various meanings, its correct construction may be made clear and specific by
considering the company of the words in which it is found or with which it is associated,
or stated differently, its obscurity or doubt may be reviewed by reference to associated
words. 13 A close examination of Clause 16 reveals that it covers three matters which may
be submitted to arbitration namely,
(1) all questions and disputes, relating to the meaning of the specification designs,
drawings and instructions herein before mentioned and as to quality of workmanship of
the items ordered; or

(2) any other question, claim, right or thing whatsoever, in any way arising out of or
relating to the supply order/contract design, drawing, specification, instruction or these
conditions; or
(3) otherwise concerning the materials or the execution or failure to execute the same
during stipulated/extended period or after the completion/abandonment thereof.
The first and second categories unmistakably refer to questions and disputes relating to
the design, drawing, instructions, specifications or quality of the materials of the
supply/order contract. In the, third category, the clause, "execution or failure to execute
the same", may be read as "execution or failure to execute the supply order/contract". But
in accordance with the doctrine of noscitur a sociis, this reference to the supply
order/contract must be construed in the light of the preceding words with which it is
associated, meaning to say, as being limited only to the design, drawing, instructions,
specifications or quality of the materials of the supply order/contract. The non-delivery of
the oil well cement is definitely not in the nature of a dispute arising from the failure to
execute the supply order/contract design, drawing, instructions, specifications or quality
of the materials. That Clause 16 should pertain only to matters involving the technical
aspects of the contract is but a logical inference considering that the underlying purpose
of a referral to arbitration is for such technical matters to be deliberated upon by a person
possessed with the required skill and expertise which may be otherwise absent in the
regular courts.
This Court agrees with the appellate court in its ruling that the non-delivery of the oil
well cement is a matter properly cognizable by the regular courts as stipulated by the
parties in Clause 15 of their contract:
"All questions, disputes and differences, arising under out of or in connection
with this supply order, shall be subject to the exclusive jurisdiction of the court,
within the local limits of whose jurisdiction and the place from which this
supply order is situated." 14

The following fundamental principles in the interpretation of contracts and other

instruments served as our guide in arriving at the foregoing conclusion:
"ART. 1373. If some stipulation of any contract should admit of several
meanings, it shall be understood as bearing that import which is most adequate
to render it effectual." 15
"ART. 1374. The various stipulations of a contract shall be interpreted together,
attributing to the doubtful ones that sense which may result from all of them
taken jointly". 16

"Sec. 11. Instrument construed so as to give effect to all provisions. In the

construction of an instrument, where there are several provisions or particulars,
such a construction is, if possible, to be adopted as will give effect to all." 17

Thus, this Court has held that as in statutes, the provisions of a contract should not be
read in isolation from the rest of the instrument but, on the contrary, interpreted in the
light of the other related provisions. 18 The whole and every part of a contract must be,
considered in fixing the meaning of any of its parts and in order to produce a harmonious
whole. Equally applicable is the canon of construction that in interpreting a statute (or a
contract as in this case), care should be taken that every part thereof be given effect, on
the theory that it was enacted as an integrated measure and not as a hodge-podge of
conflicting provisions. The rule is that a construction that would render a provision
inoperative should be avoided; instead, apparently inconsistent provisions should be
reconciled whenever possible as parts of a coordinated and harmonious whole. 19
The petitioners interpretation that Clause 16 is of such latitude as to contemplate even the
non-delivery of the oil well cement would in effect render Clause 15 a mere superfluity. A
perusal of Clause 16 shows that the parties did not intend arbitration to be the sole means
of settling disputes. This is manifest from Clause 16 itself which is prefixed with the
proviso, "Except where otherwise provided in the supply order/contract . . .", thus
indicating that the jurisdiction of the arbitrator is not all encompassing, and admits of
exceptions as maybe provided elsewhere in the supply order/contract. We believe that the
correct interpretation to give effect to both stipulations in the contract is for Clause 16 to
be confined to all claims or disputes arising from or relating to the design, drawing,
instructions, specifications or quality of the materials of the supply order/contract, and for
Clause 15 to cover all other claims or disputes.
The petitioner then asseverates that granting, for the sake of argument, that the nondelivery of the oil well cement is not a proper subject for arbitration, the failure of the
replacement cement to conform to the specifications of the contract is a matter clearly
falling within the ambit of Clause 16. In this contention, we find merit. When the 4,300
metric tons of oil well cement were not delivered to the petitioner, an agreement was
forged between the latter and the private respondent that Class "G" cement would be
delivered to the petitioner as replacement. Upon inspection, however, the replacement
cement was rejected as it did not conform to the specifications of the contract. Only after
this latter circumstance was the matter brought before the arbitrator. Undoubtedly, what
was referred to arbitration was no longer the mere non-delivery of the cargo at the first
instance but also the failure of the replacement cargo to conform to the specifications of
the contract, a matter clearly within the coverage of Clause 16.
The private respondent posits that it was under no legal obligation to make replacement
and that it undertook the latter only "in the spirit of liberality and to foster good business
relationship". 20 Hence, the undertaking to deliver the replacement cement and its

subsequent failure to conform to specifications are not anymore subject of the supply
order/contract or any of the provisions thereof. We disagree.
As per Clause 7 of the supply order/contract, the private respondent undertook to deliver
the 4,300 metric tons of oil well cement at "BOMBAY (INDIA) 2181 MT and
CALCUTTA 2119 MT". 21 The failure of the private respondent to deliver the cargo to
the designated places remains undisputed. Likewise, the fact that the petitioner had
already paid for the cost of the cement is not contested by the private respondent. The
private respondent claims, however, that it never benefited from the transaction as it was
not able to recover the cargo that was unloaded at the port of Bangkok. 22 First of all,
whether or not the private respondent was able to recover the cargo is immaterial to its
subsisting duty to make good its promise to deliver the cargo at the stipulated place of
delivery. Secondly, we find it difficult to believe this representation. In its Memorandum
filed before this Court, the private respondent asserted that the Civil Court of Bangkok
had already ruled that the non-delivery of the cargo was due solely to the fault of the
carrier. 23 It is, therefore, but logical to assume that the necessary consequence of this
finding is the eventual recovery by the private respondent of the cargo or the value
thereof. What inspires credulity is not that the replacement was done in the spirit of
liberality but that it was undertaken precisely because of the private respondent's
recognition of its duty to do so under the supply order/contract, Clause 16 of which
remains in force and effect until the full execution thereof.
We now go to the issue of whether or not the judgment of the foreign court is enforceable
in this jurisdiction in view of the private respondent's allegation that it is bereft of any
statement of facts and law upon which the award in favor of the petitioner was based. The
pertinent portion of the judgment of the foreign court reads:
"ORDER
Award dated 23.7.88. Paper No. 3/B-1 is made Rule of the Court. On the basis
of conditions of award decree is passed. Award Paper No. 3/B-1 shall be a part
of the decree. The plaintiff shall also be entitled to get from defendant
US$899,603.77 (US$ Eight Lakhs ninety nine thousand six hundred and three
point seventy seven only) along with 9% interest per annum till the last date of
realization." 24

As specified in the order of the Civil Judge of Dehra Dun, "Award Paper No. 3/B-1 shall
be a part of the decree". This is a categorical decoration that the foreign court adopted the
findings of facts and law of the arbitrator as contained in the latters Award Paper. Award
Paper No. 3/B-1, contains an exhaustive discussion of the respective claims and defenses
of the parties, and the arbitrator's evaluation of the same. Inasmuch as the foregoing is
deemed to have been incorporated into the foreign court's judgment the appellate court
was in error when it described the latter to be a "simplistic decision containing literally,
only the dispositive portion". 25

The constitutional mandate that no decision shall be rendered by any court without
expressing therein clearly 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. In
Francisco v. Permskul, 26 this Court held that the following memorandum decision of
the Regional Trial Court of Makati did not transgress the requirements of Section 14
Article VIII of the Constitution:
"MEMORANDUM DECISION
After a careful perusal, evaluation and study of the records of this case, this
Court hereby adopts reference the findings conclusions of law contained in the
decision of the Metropolitan Trial Court of Makati, Metro Manila, Branch 63
and finds that there is no cogent reason to disturb the same.
"WHEREFORE, judgment appealed from is hereby affirmed in toto." 27
(Emphasis supplied.)

This Court had occasion to make a similar pronouncement in the earlier case of
Romero v. Court of Appeals, 28 where the assailed decision of the Court of Appeals
adopted the findings and disposition of the Court of Agrarian Relations in this wise:
"We have, therefore, carefully reviewed the evidence and made a re-assessment
of the same, and We are persuaded, nay compelled, to affirm the correctness of
the trial court's factual findings and the soundness of its conclusion. For judicial
convenience and expediency, therefore, We hereby adopt by way of reference,
the findings of facts and conclusions of the court a spread in its decision, as
integral part of this Our decision." 29 (Emphasis supplied)

Hence, even in this jurisdiction, incorporation by reference is allowed if only to avoid

the cumbersome reproduction of the decision of the lower courts, or portions thereof,
in the decision of the higher court. 30 This is particularly true when the decision
sought to be incorporated is a lengthy and thorough discussion of the facts and
conclusions arrived at, as in this case, where Award Paper No. 3/B-1 consists of
eighteen (18) single spaced pages.
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. 31 This Court has held that matters of remedy and procedure are
governed by the lex fori or the internal law of the forum. 32 Thus, if under the procedural
rules of the Civil Court of Dehra Dun, India, a valid judgment may be rendered by

adopting the arbitrators 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.
The private respondent claims that its right to due process had been blatantly violated,
first by reason of the fact that the foreign court never answered its queries as to the
amount of docket fees to be paid then refused to admit its objections for failure to pay the
same, and second, because of the presumed bias on the part of the arbitrator who was a
former employee of the petitioner.
Time and again this Court has held that the essence of due process is to be found in the
reasonable opportunity to be heard and submit any evidence one may have in support of
one's defense 33 or stated otherwise, what is repugnant to due process is the denial of
opportunity to be heard. 34 Thus, there is no violation of due process even if no hearing
was conducted, where the party was given a chance to explain his side of the controversy
and he waived his right to do so. 35
In the instant case, the private respondent does not deny the fact that it was notified by
the foreign court to file its objections to the petition, and subsequently, to pay legal fees
in order for its objections to be given consideration. Instead of paying the legal fees,
however, the private respondent sent a communication to the foreign court inquiring
about the correct amount of fees to be paid. On the pretext that it was yet awaiting the
foreign court's reply, almost a year passed without the private respondent paying the legal
fees. Thus, on February 2, 1990, the foreign court rejected the objections of the private
respondent and proceeded to adjudicate upon the petitioner's claims. We cannot subscribe
to the private respondent's claim that the foreign court violated its right to due process
when it failed to reply to its queries nor when the latter rejected its objections for a
clearly meritorious ground. The private respondent was afforded sufficient opportunity to
be heard. It was not incumbent upon the foreign court to reply to the private respondent's
written communication. On the contrary, a genuine concern for its cause should have
prompted the private respondent to ascertain with all due diligence the correct amount of
legal fees to be paid. The private respondent did not act with prudence and diligence thus
its plea that they were not accorded the right to procedural due process cannot elicit either
approval or sympathy from this Court. 36
The private respondent bewails the presumed bias on the part of the arbitrator who was a
former employee of the petitioner. This point deserves scant consideration in view of the
following stipulation in the contract:
". . . It will be no objection to any such appointment that the arbitrator so
appointed is a commission employer (sic) that he had to deal with the matter to

which the supply or contract relates and that in the course of his duties as
Commission's employee he had expressed views on all or any of the matter in
dispute or difference." 37 (Emphasis supplied.)

Finally, we reiterate hereunder our pronouncement in the case of Northwest Orient

Airlines, Inc. v. Court of Appeals 38 that:
"A foreign judgment is presumed to be valid and binding in the country from
which it comes, until the contrary is shown. It is also proper to presume the
regularity of the proceedings and the giving of due notice therein.
"Under Section 50, Rule 39 of the Rules of Court, a judgment in an action in
personam 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. Also, under Section 3 of Rule
131, a court, whether of the Philippines or elsewhere, enjoys the presumption
that it was acting in the lawful exercise of jurisdiction and has regularly
performed its official duty." 39

Consequently, the party attacking a foreign judgment, the private respondent herein,
had the burden of overcoming the presumption of its validity which it failed to do in
the instant case.
The foreign judgment being valid, there is nothing else left to be done than to order its
enforcement, despite the fact that the petitioner merely prays for, the remand of the case
to the RTC for further proceedings. As this Court has ruled on the validity and
enforceability of the said foreign judgment in this jurisdiction, further proceedings in the
RTC for the reception of evidence to prove otherwise are no longer necessary.
WHEREFORE, the instant petition is GRANTED, and the assailed decision of the Court
of Appeals sustaining the trial court's dismissal of the OIL AND NATURAL GAS
COMMISSION's complaint in Civil Case No. 4006 before Branch 30 of the RTC of
Surigao City is REVERSED, and another in its stead is hereby rendered ORDERING
private respondent PACIFIC CEMENT COMPANY, INC. to pay to petitioner the
amounts adjudged in the foreign judgment subject of said case.
SO ORDERED.

LLjur

Regalado, Melo and Puno, JJ ., concur.

Mendoza, J ., took no part, having taken part in the consideration of this case below.
Footnotes

1*. Supply Order Contract, ANNEX "C" to PETITION in G.R. No. 114323, p. 5; Rollo, p. 114.
Note: The contract and the foreign judgments or awards by the Indian courts follow the British
spelling of words for which sic will no longer be indicated.
2. Arbitral Award dated July 23, 1988, ANNEX "D" of the Petition, p. 17; Rollo, p. 143-144.
3. DECISION in CA-G.R. CV NO. 37080 promulgated on October 29, 1993, p. 10; Rollo, p.
103; RTC Records, pp. 143-144.
4. ANNEX "F" of the Petition; Rollo, p. 157.
5. ORDER In Civil Case No. 4006, ANNEX "G" of the Petition, p. 1; Rollo, p. 158.
6. Ibid., p. 4; Rollo, p. 161.
7. Ibid., p. 5; Rollo, p. 162.
8. Article VIII, Section 14 of the 1987 Constitution.
9. CA Decision, Supra, pp. 8-12; Rollo, pp. 101-105.
10. Petition, Supra, p. 9; Rollo, p. 73.
11. See Supply Order Contract.
12. Petition, Supra, pp. 11-12; Rollo, pp. 75-76.
13. Motoomul, et al vs. Dela Paz, et al, 187 SCRA 743, 753 [1990]; Luzon Stevedoring Co. vs.
Trinidad, 43 Phil. 804 [1922].
14. Terms and Conditions of Supply Order, "ANNEX C-1" of the Petition, p. 8; Rollo, p. 125126; RTC Records, pp. 17-26.
15. Article 1373 of the Civil Code.
16. Article 1374 of the Civil Code.
17. Rule 130, Section 11 of the Rules of Court.
18 De Leon vs. Court of Appeals, 205 SCRA 612, 620 [1992].
19. JMM Promotions & Management, Inc. vs. NLRC, 228 SCRA 129, 134 [1993].
20. Private Respondent's Memorandum In G.R. No. 114323, p. 17.

21. Footnotes text not found in the original file.

22. Supra, Private Respondent's Memorandum, p. 18.
23. Ibid.
24. Court of Dehra Dun, Suit No. 677 of 1988, ONGC vs. Pacific Cement, 7-2-90; Rollo, p.
157.
25. CA Decision.
26. 173 SCRA 324 [1989].
27. Ibid., p. 326.
28. 147 SCRA 183 [1987].

29. Ibid., p. 189.

30. Francisco v. Permskul, 173 SCRA 324, 333.
31. Francisco, Vicente J., The Revised RULES OF COURT in the Philippines, Volume II, pp.
891-892, 1966 ed. citing 31 Am. Jur. 153-154.
32. Northwest Orient Airlines, Inc. vs. Court of Appeals, 241 SCRA 192, 199 [1995].
33. Roces vs. Aportadera, 243 SCRA 108 [1995]; Mutuc vs. Court of Appeals, 190 SCRA 43,
49 [1990]; Richards vs. Asoy, 152 SCRA 45 [1987]; Tajonera vs. Lamaroza, 110 SCRA
438 [1981].
34. Korean Airlines Co., Ltd. vs. Court of Appeals, 247 SCRA 599, 603 [1995].
35. Roces vs. Aportadera, supra, p. 114; Stayfast Sunset View Condominium Corporation vs.
NLRC, 228 SCRA 466 [1993]; Villareal vs. Court of Appeals, 219 SCRA 292 [1993].
36. B.R. Sebastian Enterprises, Inc. vs. Court of Appeals, 206 SCRA 28 [1992].
37. Supply Order, Supra.
38. 241 SCRA 192, 199 [1995].
39. Ibid.

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