224 N.Y. 99, 120 N.E.

198
Court of Appeals of New York.
LOUCKS et al.
v.
STANDARD OIL CO. OF NEW YORK.
July 12, 1918.
Action by Fannie F. Loucks and James M. Rutledge, as joint administrators of Everett A. Loucks, deceased, against
the Standard Oil Company of New York. From a judgment of the Appellate Division (172 App. Div. 227, 159 N. Y.
Supp. 282), reversing an order of the Special Term (92 Misc. Rep. 475, 156 N. Y. Supp. 7) and granting defendant's
motion for judgment on the pleadings, plaintiffs appeal. Reversed, and order of the Special Term affirmed.
A. Lee Olmsted, of Syracuse, for appellants. Lyman M. Bass, of Buffalo, for respondent.
Collin, J., dissenting in part.
[**198] [*101] CARDOZO, J.
The action is brought to recover damages for injuries resulting in death. The plaintiffs are the administrators of the
estate of Everett A. Loucks. Their intestate, while traveling on a highway in the state of [*102] Massachusetts, was
run down and killed through the negligence of the defendant's servants then engaged in its business. He left a wife
and two children, residents of New York. A statute of Massachusetts (R. L. c. 171, 2, as amended by L. 1907, c.
375) provides that:
If a person or corporation by his or its negligence, or by the negligence of his or its agents or servants while engaged
in his or its business, causes the death of a person who is in the exercise of due care, and not in his or its
employment or service, he or it shall be liable in damages in the sum of not less than $500, nor more than $10,000,
to be assessed with reference to the degree of his or its culpability, or * * * that of his or its * * * servants, to be
recovered in an action of tort commenced within two years after the injury which caused the death, by the executor or
administrator of the deceased, one-half thereof to the use of the widow and one-half to the use of the children of the
deceased, or, if there are no children, the whole to the use of the widow, or, if there is no widow, the whole to the use
of the next of kin.
The question is whether a right of action under that statute may be enforced in our courts.
1. The courts of no country execute the penal laws of another. The Antelope, 10 Wheat. [23 U.S.] 66, 123, 6 L. Ed.
268. The defendant invokes that principle as applicable here. Penal in one sense the statute indisputably is. The
damages are not limited to compensation; they are proportioned to the offenders guilt. A minimum recovery of $500
is allowed in every case. But the question is not whether the statute is penal in some sense. The question is whether
it is penal within the rules of private international law. A statute penal in that sense is one that awards a penalty to the
state, or to a public officer in its behalf, or to a member of the public, suing in the interest of the whole community to
redress a public wrong. Huntington v. Attrill, 146 U. S. 657, 668, 13 Sup. Ct. 224, 36 L. Ed. 1123; Huntington [*103]
v. Attrill, [1903] A. C. 150, 156 [sic, should be [1893] A.C. 150]; Brady v. Daly, 175 U. S. 148, 154, 157, 20 Sup. Ct. 62,
44 L. Ed. 109; Raulin v. Fischer, [1911] 2 K. B. 93; Dicey, Conflict of Laws, p. 209. The purpose must be, not
reparation to one aggrieved, but vindication of the public justice. Huntington v. Attrill, 146 U. S. 668, 13 Sup. Ct. 224,
36 L. Ed. 1123; Brady v. Daly, supra. The Massachusetts statute has been classified in some jurisdictions as penal,
and in others as remedial. Connecticut, Rhode Island, and Vermont put it in the first category. [**199] Cristilly v.
Warner, 87 Conn. 461, 88 Atl. 711, 51 L. R. A. (N. S.) 415; Gardner v. N. Y. & N. E. Ry. Co., 17 R. I. 790, 24 Atl. 831;

O'Reilly v. N. Y. & N. E. Ry. Co., 16 R. I. 388, 17 Atl. 171, 906, 19 Atl. 244, 5 L. R. A. 364, 6 L. R. A. 719; Adams v.
Fitchburg R. R. Co., 67 Vt. 76, 30 Atl. 687, 48 Am. St. Rep. 800. See also Raisor v. C. & A. Ry. Co., 215 Ill. 47, 74 N.
E. 69, 106 Am. St. Rep. 153, 2 Ann. Cas. 802. New Hampshire and some of the federal courts put it in the second.
Hill v. B. & M. R. R. Co., 77 N. H. 151, 89 Atl. 482, Cas. 1914C, 714, where the subject is fully considered; B. & M. R.
R. Co. v. Hurd, 108 Fed. 116, 47 C. C. A. 615, 56 L. R. A. 193; Malloy v. Am. Hide & Leather Co. (C. C.) 148 Fed.
482. See also Whitlow v. Nashville R. R. Co., 114 Tenn. 344, 84 S. W. 618, 68 L. R. A. 503. The courts of
Massachusetts have said that the question is still an open one. Boott Mills v. B. & M. R. R. Co., 218 Mass. 582, 592,
106 N. E. 680. No matter how they may have characterized the act as penal, they have not meant to hold that it is
penal for every purpose. 218 Mass. 592, 106 N. E. 680. Even without that reservation by them, the essential purpose
of the statute would be a question for our courts. Huntington v. Attrill, 146 U. S. 683, 13 Sup. Ct. 224, 36 L. Ed. 1123;
[1903] A. C. 155; Hill v. B. & M. R. R. Co., supra.
We think the better reason is with those cases which hold that the statute is not penal in the international sense. On
that branch of the controversy, indeed, there is no division of opinion among us. It is true that the offender is
punished, but the purpose of the punishment is reparation to those aggrieved by his offense. Com. v. B. & A. R. R.
Co., 121 Mass. 36, 37; Com. v. Eastern R. R. Co., 5 Gray (Mass.) 473, 474. The common law did not give a cause of
action to surviving relatives. [*104] Insurance Co. v. Brame, 95 U. S. 754, 757, 24 L. Ed. 580; Dennick v. R. R. Co.,
103 U. S. 11, 26 L. Ed. 439; The Harrisburg, 119 U. S. 199, 7 Sup. Ct. 140, 30 L. Ed. 358; Admiralty Commissioners
v. S. S. Amerika, [1917] A. C. 38. In the light of modern legislation, its rule is an anachronism. Nearly everywhere, the
principle is now embodied in statute that the next of kin are wronged by the killing of their kinsman. The family
becomes a legal unit, invested with rights of its own, invested with an interest in the continued life of its members,
much as it was in primitive law. Maine, Ancient Law, pp. 121, 122, 178; 1 Pollock & Maitland, History of English Law,
p. 24; Holmes, the Common Law, p. 342. The damages may be compensatory or punitive according to the statutory
scheme. See 8 Ruling Case Law, title Death, 120, where statutes are collated. In either case the plaintiffs have a
grievance above and beyond any that belongs to them as members of the body politic. They sue to redress an
outrage peculiar to themselves.
We cannot fail to see in the history of the Massachusetts statutes a developing expression of this policy and purpose.
The statutes have their distant beginnings in the criminal law. To some extent the vestiges of criminal forms survive.
But the old forms have been filled with a new content. The purpose which informs and vitalizes them is the protection
of the survivors. They are moods and phases, the particular and varying expression, of a tendency in legislation as
general as the common law. They are not to be viewed in isolation, apart from the stream of events. At first, the
remedy was given only when the wrongdoer was a common carrier. St. 1840, c. 80. That statute goes back to 1840,
antedating Lord Campbell's Act in England. St. 9 & 10 Vict. c. 93 (1846). The remedy was by indictment and fine, the
fine being payable to the widow and next of kin. If there were no survivors of the prescribed class, there could be no
indictment. [*105] Com. v. B. & A. R. R. Co., 121 Mass. 36. The reason was that even then the dominant purpose
was reparation to the family. But later an alternative remedy by civil action at the suit of the executor or administrator
became available even against carriers. Hudson v. L. & B. R. R., 185 Mass. 515, 516, 71 N. E. 66; Grella v. Lewis
Wharf Co., 211 Mass. 54, 58, 97 N. E. 745, Ann. Cas. 1913A, 1136. Then other statutes gave a civil remedy against
other wrongdoers, and a civil remedy exclusively. Some statutes were confined to cases where the defendant was
the employer of the decedent. St. 1887, c. 270; R. L. c. 106, 73; Smith v. Thomson-Houston El. Co., 188 Mass. 371,
74 N. E. 664. Finally there came one which gave a remedy against all persons who had not otherwise been made
liable. T. L. c. 171, 2. That is the statute sued on. The remedy is civil; it is an action of tort.
Through all this legislation there runs a common purpose. Boott Mills v. B. & M. R. R. Co., supra, 218 Mass. 586, 106
N. E. 680; Brown v. Thayer, 212 Mass. 392, 99 N. E. 237. It is penal in one element and one only; the damages are
punitive. The courts of Massachusetts do not give punitive damages even for malicious torts except by force of
statute. Bott Mills v. B. & M. R. R. Co., supra, 218 Mass. 588, 106 N. E. 680; Ellis v. Brockton Pub. Co., 198 Mass.
538, 84 N. E. 1018, 126 Am. St. Rep. 454, 15 Ann. Cas. 83. That may have led them to emphasize unduly the penal
element in such recoveries. But the punishment of the wrongdoer is not designed as atonement for a crime; it is
solace to the individual who has suffered a private wrong. This is seen in many tokens. The employer may be
innocent himself. Smart money will still be due in proportion to his servant's negligence. That is a distribution of
burdens more characteristic of torts than crimes. But even more significant is the distribution of benefits. All the
statutes are in pari material. All or none are [**200] penal in the international sense. Boott Mills Co. v. B. & M. R. R.

Co., supra. Under all, liability is conditioned upon the existence of a widow or of next of kin. Under some, [*106]
there must be proof also that the next of kin were dependent on the decedent's wages for support. R. L. c. 106, 73.
That restriction brings the dominant purpose into clear relief as reparation to those aggrieved. Other purposes may
be served at the same time. It is easy to cite dicta that seem to give them prominence. McCarthy v. Ward Lumber
Co., 219 Mass. 566, 107 N. E. 439; Hudson v. L. & B. R. R., 185 Mass. 510, 71 N. E. 66; Mulhall v. Fallon, 176 Mass.
266, 269, 57 N. E. 386, 54 L. R. A. 934, 79 Am. St. Rep. 309. They are dicta only. Nor are all the dicta on one side.
Brown v. Thayer, 212 Mass. 392, 398, 99 N. E. 237; Upson v. B. & M. R. R. Co., 211 Mass. 446, 98 N. E. 32; Grella v.
Lewis Wharf Co., 211 Mass. 54, 58, 97 N. E. 745, Ann. Cas. 1913A, 1136. There are cross-currents and eddies in the
stream. We follow the main course. The executor or administrator who sues under this statute is not the champion of
the peace and order and public justice of the commonwealth of Massachusetts. He is the representative of the
outraged family. He vindicates a private right.
2. Another question remains. Even though the statute is not penal, it differs from our own. We must determine
whether the difference is a sufficient reason for declining jurisdiction. A tort committed in one state creates a right of
action that may be sued upon in another unless public policy forbids. That is the generally accepted rule in the United
States. Huntington v. Attrill, 146 U. S. 657, 670, 13 Sup. Ct. 224, 36 L. Ed. 1123; Stewart v. B. & O. R. R. Co., 168 U.
S. 445, 18 Sup. Ct. 105, 42 L. Ed. 537; N. Pac. R. R. Co. v. Babcock, 154 U. S. 190, 14 Sup. Ct. 978, 38 L. Ed. 958;
A., T. & St. Fe Ry. Co. v. Sowers, 213 U. S. 55, 67, 68, 29 Sup. Ct. 397, 53 L. Ed. 695; Cuba R. R. Co. v. Crosby, 222
U. S. 473, 478, 479, 32 Sup. Ct. 132, 56 L. Ed. 274, 38 L. R. A. (N. S.) 40; Howarth v. Lombard, 175 Mass. 570, 56
N. E. 888, 49 L. R. A. 301; Walsh v. B. & M. R. R., 201 Mass. 527, 530, 88 N. E. 12. It is not the rule in every
jurisdiction where the common law prevails. In England it has been held that the foreign tort must be also one by
English law (The Halley, L. R. 2 P. C. 193, 204; Phillips v. Eyre, L. R. 6 Q. B. 1, 28; Carr v. Fracis Times & Co., [1902]
A. C. 176, 182; [*107] Dicey, Conflict of Laws, p. 645; 6 Halsbury, Laws of England, p. 248), which then becomes
the source and measure of the resulting cause of action (Machado v. Fontes, [1897] 2 Q. B. 231; Beale, Conflict of
Laws, 163). That is certainly not the rule with us. But there are some decisions in death cases which suggest a
compromise. They say that jurisdiction will be refused unless the statutes of the two states are substantially the
same. That is an approach to the English rule. But then they say that, if substantial correspondence exists, it is the
right of action under the foreign statute, and not the statute of the forum, which our courts will enforce. To that extent
there is a departure from the English rule. There is little doubt about the wisdom of the departure. What is subject to
criticism, is the approach. The question is whether the enforcement of a right of action for tort under the statutes of
another state is to be conditioned upon the existence of a kindred statute here. Support for the restriction is supposed
to be found in four cases in this court: McDonald v. Mallory, 77 N. Y. 546, 33 Am. Rep. 664; Leonard v. Columbia
Steam Navigation Co., 84 N. Y. 48, 38 Am. Rep. 491; Wooden v. Western N. Y. & P. R. R. Co., 126 N. Y. 10, 26 N. E.
1050, 13 L. R. A. 458, 22 Am. St. Rep. 803; and Kiefer v. Grand Trunk R. Co., 12 App. Div. 28, 42 N. Y. Supp. 171,
affirmed on opinion below 153 N. Y. 688, 48 N. E. 1105.
McDonald v. Mallory is altogether irrelevant. In that case, death occurred upon the high seas. The ship hailed from
this state, was registered in one of our ports, and was owned by one of our citizens. She was, therefore,
constructively part of our territory. For that reason, our law governed, and the action was sustained. Rapallo, J., in the
course of his opinion, said that the laws of New York have no operation in foreign jurisdictions, and that, where the
wrong is suffered elsewhere, 'no action therefor can be maintained here, at least without proof of the existence of a
similar statute in the place where the wrong was committed.' That statement was accurate as applied [*108] to the
case that was then at hand. There must be a similar statute, i. e., a statute giving a cause of action for death, in the
place where death is caused. Locus regit actum. It is quite another thing to say that, if there is a foreign statute, it
must be duplicated here.
In Leonard v. Columbia Steam Navigation Co., supra, the death occurred in Connecticut, where there was a statute
similar to our own. The court held that the action would lie. It was unnecessary to determine whether there would
have been another result if the statute had been different. Judge Rapallos statement of the rule in McDonald v.
Mallory was quoted as if it sustained a requirement of correspondence. That was obviously a misapprehension of its
meaning. There was a citation of some English cases. Madrazo v. Willes, 3 B. 3 Ald. 353; Melan v. Duke de FitzJames, 1 B. & P. 138 [, 126 E.R. 822] [PDF, 492 kb]; Mostyn v. Fabrigas, 1 Cowp. 161 [, 98 E.R. 1021] [PDF, 1.2 mb].
They have little bearing on the subject.

In Wooden v. Western N. Y. & P. R. R. Co., supra, the death occurred in Pennsylvania. The case was heard upon
demurrer to the complaint. Counsel on each side assumed that the statutes must be substantially similar.
[**201] The argument was confined to the question whether they were similar. Not unnaturally the court proceeded
upon the same assumption. McDonald v. Mallory and Leonard v. Columbia Steam Navigation Co., supra, were the
only cases cited. The court found substantial similarity between the statutes except in respect of the measure of
recovery. The Pennsylvania statute did not limit the damages. Our statute then prescribed a maximum of $5,000. The
difference was thought to affect the remedy rather than the right. We said that the right created by the foreign statute
would be enforced, but subject to the restriction in amount which expressed the local policy. There was some
suggestion that if the defendant were a nonresident, the restriction would not [*109] apply. The suggestion sounds
like an echo of the theory of the statute personal, a body of national law which the citizen carries about with him.
Beale, Conflict of Laws, 54, 55; Am. Banana Co. v. United Fruit Co., 213 U. S. 347, 356, 29 Sup. Ct. 511, 53 L. Ed.
826, 16 Ann. Cas. 1047. That is a theory which has yielded generally in this country to the principles of the territorial
system and the doctrine of vested rights. Beale, supra, 70, 73. But we do not need to go into distinctions between
residents and nonresidents. Even in its application to residents, the ruling in the Wooden Case expresses a
conception of our public policy which is not to be extended. The Supreme Court of the United States has held under
like conditions that the foreign law governs not only the definition of the tort, but also the assessment of the damages.
Northern Pac. R. R. Co. v. Babcock, 154 U. S. 190, 14 Sup. Ct. 978, 38 L. Ed. 958; Slater v. Mexican Nat. R. R. Co.,
194 U. S. 120, 126, 24 Sup. Ct. 581, 48 L. Ed. 900. An amendment to the Constitution has abrogated the limitation
upon the amount of the recovery, and established the public policy of the state on a new and broader basis. Const.
art. 1, 18. In these circumstances, the authority of the Wooden Case does not extend beyond the specific point
decided.
In Kiefer v. Grand Trunk Ry. Co., supra, the death occurred in Canada. Canada has a statute similar to our own. The
chief variance is in the award of interest. Limiting the ruling in the Wooden Case, we held that interest had relation to
the substance of the right, and must be governed by the foreign statute.
Those are the only decisions of this court which tend to support the rule of similarity. The rule itself has no more
stable foundation than a misapprehended dictum in McDonald v. Mallory. This was pointed out by Bischoff, J., in
Boyle v. Southern R. Co., 36 Misc. Rep. 289, 291, 73 N. Y. Supp. 465, and recently by Veeder, J., in Lauria v. Du
Pont (D. C.) 241 Fed. 687. See, [*110] also, Nelson v. Chesapeake & D. R. R. Co., 88 Va. 971, 975, 976, 14 S. E.
838, 15 L. R. A. 583, reviewing many cases. No case has yet arisen in which the statutes were so dissimilar that
acceptance or rejection of the rule was necessary to a decision. The time has come to re-examine its foundations.
A foreign statute is not law in this state, but it gives rise to an obligation, which, if transitory, follows the person and
may be enforced wherever the person may be found. Slater v. Mex. Nat. R. R. Co., supra; Lauria v. Du Pont, supra;
Cuba R. R. Co. v. Crosby, 222 U. S. 473, 478, 32 Sup. Ct. 132, 56 L. Ed. 274, 38 L. R. A. (N. S.) 40. No law can exist
as such except the law of the land; but * * * it is a principle of every civilized law that vested rights shall be protected.
Beale, supra, 51. The plaintiff owns something, and we help him to get it. Howarth v. Lombard, 175 Mass. 570, 56
N. E. 888, 49 L. R. A. 301; Walsh v. B. & M. R. R., 201 Mass. 527, 88 N. E. 12; Walsh v. N. Y., etc., R. R. 160 Mass.
571, 36 N. E. 584, 39 Am. St. Rep. 514; Beale, Conflict of Laws, 51, 73. We do this unless some sound reason of
public policy makes it unwise for us to lend our aid. The law of the forum is material only as setting a limit of policy
beyond which such obligations will not be enforced there. Cuba R. R. Co. v. Crosby, supra, 222 U. S. 478, 32 Sup.
Ct. 132, 56 L. Ed. 274, 38 L. R. A. (N. S.) 40. Sometimes we refuse to act where all the parties are nonresidents.
Burdick v. Freeman, 120 N. Y. 420, 24 N. E. 949; English v. N. Y., N. H. & H. R. R. Co., 161 App. Div. 831, 146 N. Y.
Supp. 963. That restriction need not detain us; in this case all are residents. If did is to be withheld here, it must be
because the cause of action in its nature offends our sense of justice or menaces the public welfare. A., T. & St. F. Ry.
Co. v. Sowers, 213 U. S. 55, 67, 68, 29 Sup. Ct. 397, 53 L. Ed. 695; Stewart v. Balt. & O. R. R. Co., 168 U. S. 445, 18
Sup. Ct. 105, 42 L. Ed. 537; Zeikus v. Florida E. C. Ry. Co., 153 App. Div. 345, 350, 138 N. Y. Supp. 478.
Our own scheme of legislation may be different. We may even have no legislation on the subject. That is not enough
to show that public policy forbids us to enforce the foreign right. A right of action is property. If a foreign statute gives
[*111] the right, the mere fact that we do not give a like right is no reason for refusing to help the plaintiff in getting
what belongs to him. We are not so provincial as to say that every solution of a problem is wrong because we deal
with it otherwise at home. Similarity of legislation has indeed this importance; its presence shows beyond question

that the foreign statute does not offend the local policy. But its absence does not prove the contrary. It is not to be
exalted into an indispensable condition. The misleading word comity has been responsible for much of the trouble. It
[**202] has been fertile in suggesting a discretion unregulated by general principles. Beale, Conflict of Laws, 71.
The sovereign in its discretion may refuse its aid to the foreign right. St. Louis, I. M. & So. Ry. Co. v. Taylor, 210 U. S.
281, 28 Sup. Ct. 616, 52 L. Ed. 1061; Dougherty v. Am. McKenna Process Co., 255 Ill. 369, 99 N. E. 619, L. R. A.
1915F, 955, Ann. Cas. 1913D, 568. From this it has been an easy step to the conclusion that a like freedom of choice
has been confided to the courts. But that, of course, is a false view. Cuba R. R. Co. v. Crosby, supra, 222 U. S. 478,
32 Sup. Ct. 132, 56 L. Ed. 274, 38 L. R. A. (N. S.) 40. The courts are not free to refuse to enforce a foreign right at
the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors,
unless help would violate some fundamental principle of justice, some prevalent conception of good morals, some
deep-rooted tradition of the common weal.

The judgment of the Appellate Division should be reversed, and the order of the Special Term affirmed, with costs in
the Appellate Division and in this court.
HISCOCK, C. J., and CUDDEBACK, POUND, CRANE, and ANDREWS, JJ., concur. COLLIN, J., dissents from
decision of second question in opinion of CARDOZO, J., but otherwise concurs.
Judgment reversed, etc. should be reversed, and the order of the Special Term affirmed. with costs in the Appellate
Division and in this court.
HISCOCK, C. J., and CUDDEBACK, POUND, CRANE, and ANDREWS, JJ., concur. COLLIN, J., dissents from
decision of second question in opinion of CARDOZO, J., but otherwise concurs.

This test applied, there is nothing in the Massachusetts statute that outrages the public policy of New York. We have
a statute which gives a civil remedy where death is caused in our own state. We have though it so important that we
have now imbedded it in the Constitution. Const. art. 1, 18. The fundamental policy is that there shall be some
atonement for the wrong. Through the defendant's negligence, a resident of New York has been killed in
Massachusetts. He has left a widow and children, who are also residents. The [*112] law of Massachusetts gives
them a recompense for his death. It cannot be that public policy forbids our courts to help in collecting what belongs
to them. We cannot give them the same judgment that our law would give if the wrong had been done here. Very
likely we cannot give them as much. But that is no reason for refusing to give them what we can. We shall not make
things better by sending them to another state, where the defendant may not be found, and where suit may be
impossible. Nor is there anything to shock our sense of justice in the possibility of a punitive recovery. The penalty is
not extravagant. It conveys no hint of arbitrary confiscation. Standard Oil Co. of Ind. v. Missouri, 224 U. S. 270, 286,
32 Sup. Ct. 406, 56 L. Ed. 760, Ann. Cas. 1913D, 936. It varies between moderate limits according to the defendants
guilt. We shall not feel the pricks of conscience, if the offender pays the survivors in proportion to the measure of his
offense.

Judgment reversed, etc.

We have no public policy that prohibits exemplary damages or civil penalties. We give them for many wrongs. To
exclude all penal actions would be to wipe out the distinction between the penalties of public justice and the remedies
of private law. Finally, there are no difficulties of procedure that stand in the way. We have a statute authroizing the
triers of the facts, when statutory penalties are sued for, to fit the award to the offense. Code Civ. Proc. 1898. The
case is not one where special remedies established by the foreign law are incapable of adequate enforcement except
in the home tribunals. Marshall v. Sherman, 148 N. Y. 9, 42 N. E. 419, 34 L. R. A. 757, 51 Am. St. Rep. 654; Howarth
v. Angle, 162 N. Y. 179, 181, 189, 56 N. E. 489, 47 L. R. A. 725; Slater v. Mex. Nat. R. R. Co., supra.

and Reasoning (Cardozo, J.)

We hold, then, that public policy does not prohibit the assumption of jurisdiction by our courts and that this being so,
mere differences of remedy do not count. For many years the courts have been feeling their way in the enforcement
of these statutes. A civil remedy for another's death was something strange and new, and [*113] it did not find at
once the fitting niche, the proper category, in the legal scheme. We need not be surprised, therefore, if some of the
things said, as distinguished from those decided, must be rejected to-day. But the truth, of course, is that there is
nothing sui generis about these death statutes in their relation to the general body of private international law. We
must apply the same rules that are applicable to other torts; and the tendency of those rules to-day is toward a larger
comity, if we must cling to the traditional term. Walsh v. B. & M. R. R., 201 Mass. 527, 533, 88 N. E. 12. The
fundamental public policy is perceived to be that rights lawfully vested shall be everywhere maintained. At least, that
is so among the states of the Union. Walsh v. N. Y. & N. E. R. R. Co., 160 Mass. 571, 573, 36 N. E. 584, 39 Am. St.
Rep. 514; Walsh v. B. & M. R. R., supra; Beach, Uniform Interstate Enforcement of Vested Rights, 27 Yale Law
Journal, 656. There is a growing conviction that only exceptional circumstances should lead one of the states to
refuse to enforce a right acquired in another. The evidences of this tendency are many. One typical instance will
suffice. For many years Massachusetts closed her courts to actions of this order based on foreign statutes.
Richardson v. N. Y. C. R. R., 98 Mass. 85. She has opened them now, and overruled her earlier decisions. Hanlon v.
Leyland & Co., Ltd., 223 Mass. 438, 111 N. E. 907, L. R. A. 1917A, 34; Walsh v. B. & M. R. R., supra. The test of
similarity has been abandoned there. If it has ever been accepted here, we think it should be abandoned now.

CASE SYNOPSIS
Defendants appealed an order from the Circuit Court of the United States (SDNY), which directed a verdict for
plaintiffs in the amount that a French court had awarded.
Defendants alleged fraud on the plaintiff's part.

Facts
Everett Loucks was killed in Massachusetts through the negligence of employees of Standard Oil Co. of New York
(Standard Oil) (defendant). Loucks, his wife, and their two children resided in New York; Standard Oil was also based
there. The administrators of Louckss estate (plaintiffs) filed suit against Standard Oil in a New York court, seeking to
recover under a Massachusetts statute that imposed liability on employers where the negligence of their employees
caused death. The statute authorized damages of up to $10,000, to be based on the degree of culpability. New York
law provided a different, civil remedy for death caused in that state. The Special Term of the Supreme Court allowed
the case to proceed with the application of Massachusetts law. The Appellate Division reversed. Plaintiffs appealed.
Rule of Law

Hilton v. Guyot case brief summary

159 U.S. 113 (1895)

CASE FACTS
Plaintiffs sued the defendants in a French court under a contract claim.
The defendants alleged fraud on the (Ps) part, and the (Ds) sought an injunction from bringing suit. The court,
however, would not admit evidence and entered a directed verdict for plaintiff.
A French appeals court affirmed the judgment.
Defendants sought review in the United States.
DISCUSSION

The court stated that comity was reciprocal.

Because France did not recognize final judgments of the U.S., and would try such judgments anew,
judgements given by France would be given the same treatment.

Therefore, the comity of the United States did not require the court to give conclusive effect to the
judgments of the courts of France.

Defendants could be granted a new trial.

CONCLUSION
The judgment was reversed and the cause was remanded for a new trial.
Comity was not afforded to foreign judgments when the country did not reciprocate comity.

Hilton v. Guyot, 159 U.S. 113 (1895)

FOR THE SOUTHERN DISTRICT OF NEW YORK
Syllabus
A citizen and resident of this country who has his principal place of business here but has an agent in a foreign
country and is accustomed to purchase and store large quantities of goods there, and, in a suit brought against him
by a citizen and in a court of that country, appears and defends with the sole object of preventing his property within
the jurisdiction, but not in the custody of that court, from being taken in satisfaction of any judgment that may be
recovered against him there cannot, in an action brought against him in this country upon such a judgment, impeach
it for want of jurisdiction of his person.

The first of these two cases was an action at law, brought December 18, 1885, in the Circuit Court of the United
States for the Southern District of New York, by Gustave Bertin Guyot, as official liquidator of the firm of Charles
Fortin & Co., and by the surviving members of that firm, all aliens and citizens of the Republic of France, against
Henry Hilton and William Libbey, citizens of the United States and of the State of New York and trading as copartners
in the cities of New York and Paris and elsewhere under the firm name of A. T. Stewart & Co. The action was upon a
judgment recovered in a French court at Paris, in the Republic of France, by the firm of Charles Fortin & Co., all of
whose members were French citizens, against Hilton & Libbey, trading as copartners, as aforesaid, and citizens of
the United States and of the State of New York.
The complaint alleged that in 1886 and since, during the time of all the transactions included in the judgment sued
on, Hilton and Libbey, as successors to Alexander T. Stewart and Libbey, under the firm name of A. T. Stewart & Co.,
carried on a general business as merchants in the Cities of New York and Paris and elsewhere, and maintained a
regular store and place of business at Paris; that during the same time, Charles Fortin & Co. carried on the
manufacture and sale of gloves at Paris, and the two firms had there large dealings in that business, and
controversies arose in the adjustment of accounts between them.
The complaint further alleged that between March 1, 1879, and December 1, 1882, five suits were brought by Fortin
& Co. against Stewart & Co. for sums alleged to be due, and three suits by Stewart & Co. against Fortin & Co., in the
Tribunal of Commerce of the Department of the Seine, a judicial tribunal or court organized and existing under the
laws of France, sitting at Paris and having jurisdiction of suits and controversies between merchants or traders
growing
Page 159 U. S. 115

The admission at the trial in a court of a foreign country, according to its law and practice, of testimony not under oath
and without opportunity of cross-examination, and of documents with which the defendant had no connection and
which by our law would not be admissible against him, is not of itself a sufficient ground for impeaching the judgment
of that court in an action brought upon it in this country.
When an action is brought in a court of this country by a citizen of a foreign country against one of our own citizens to
recover a sum of money adjudged by a court of that country to be due from the defendant to the plaintiff, and the
foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the
parties, and upon due allegations and proofs and opportunity to defend against them, and its proceedings are
according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is
prima facie evidence, at least, of the truth of the matter adjudged, and the judgment is conclusive upon the merits
tried in the foreign court unless some special ground is shown for impeaching it, as by showing that it was affected by
fraud or prejudice or that, by the principles of international law and by the comity of our own country, it is not entitled
to full credit and credit.
A judgment for a sum of money, rendered by a court of a foreign country, having jurisdiction of the cause and of the
parties, in a suit brought by
Page 159 U. S. 114
one of its citizens against one of ours, is prima facie evidence only, and not conclusive of the merits of the claim in an
action brought here upon the judgment if by the law of the foreign country, as in France, judgments of our own courts
are not recognized as conclusive.

out of commercial dealings between them; that Stewart & Co. appeared by their authorized attorneys in all those
suits, and that, after full hearing before an arbitrator appointed by that court and before the court itself, and after all
the suits had been consolidated by the court, final judgment was rendered on January 20, 1883, that Fortin & Co.
recover of Stewart & Co. various sums, arising out of the dealings between them, amounting to 660,847 francs, with
interest, and dismissed part of Fortin & Co.'s claim.
The complaint further alleged that appeals were taken by both parties from that judgment to the Court of Appeal of
Paris, Third Section, an appellate court of record organized and existing under the laws of the Republic of France and
having jurisdiction of appeals from the final judgments of the Tribunal of Commerce of the Department of the Seine,
where the amount in dispute exceeded the sum of 1,500 francs, and that the said Court of Appeal, by a final
judgment rendered March 19, 1884, and remaining of record in the office of its clerk at Paris, after hearing the several
parties by their counsel, and upon full consideration of the merits, dismissed the appeal of the defendants, confirmed
the judgment of the lower court in favor of the plaintiffs, and ordered, upon the plaintiffs' appeal, that they recover the
additional sum of 152,528 francs, with 182,849 francs for interest on all the claims allowed, and 12,559 francs for
costs and expenses.
The complaint further alleged that Guyot had been duly appointed by the Tribunal of Commerce of the Department of
the Seine official liquidator of the firm of Forth & Co., with full powers, according to law and commercial usage, for the
verification and realization of its property, both real and personal, and to collect and cause to be executed the
judgments aforesaid.
The complaint further alleged that the judgment of the Court of Appeals of Paris, and the judgment of the Tribunal of
Commerce, as modified by the judgment of the appellate court, still remain in full force and effect;

"that the said courts respectively had jurisdiction of the subject matter of the controversies so submitted to them, and
of the parties, the
Page 159 U. S. 116
said defendants having intervened, by their attorneys and counsel, and applied for affirmative relief in both courts;
that the plaintiffs have hitherto been unable to collect the said judgments or any part thereof, by reason of the
absence of the said defendants, they having given up their business in Paris prior to the recovery of the said
judgment on appeal, and having left no property within the jurisdiction of the Republic of France out of which the said
judgments might be made;"
and that there are still justly due and owing from the defendants to the plaintiffs upon those said judgments certain
sums, specified in the complaint, and amounting in all to 1,008,783 francs in the currency of the Republic of France,
equivalent to $195,122.47.
The defendants, in their answer, set forth in detail the original contracts and transactions in France between the
parties and the subsequent dealings between them modifying those contracts, and alleged that the plaintiffs had no
just claim against the defendants, but that, on the contrary, the defendants, upon a just settlement of the accounts,
were entitled to recover large sums from the plaintiffs.
The answer admitted the proceedings and judgments in the French courts and that the defendants gave up their
business in France before the judgment on appeal, and had no property within the jurisdiction of France out of which
that judgment could be collected.
The answer further alleged that the Tribunal of Commerce of the Department of the Seine was a tribunal whose
judges were merchants, ship captains, stockbrokers, and persons engaged in commercial pursuits, and of which
Charles Fortin had been a member until shortly before the commencement of the litigation.
The answer further alleged that in the original suits brought against the defendants by Fortin & Co., the citations were
left at their storehouse in Paris; that they were then residents and citizens of the State of New York, and neither of
them at that time, or within four years before, had been within, or resident or domiciled within, the jurisdiction of that
tribunal or owed any allegiance to France, but that
Page 159 U. S. 117
they were the owners of property situated in that country which would by the law of France have been liable to
seizure if they did not appear in that tribunal, and that they unwillingly, and solely for the purpose of protecting that
property, authorized and caused an agent to appear for them in those proceedings, and that the suits brought by
them against Fortin & Co. were brought for the same purpose, and in order to make a proper defense, and to
establish counterclaims arising out of the transactions between the parties, and to compel the production and
inspection of Fortin & Co.'s books, and that they sought no other affirmative relief in that tribunal.
The answer further alleged that, pending that litigation, the defendants discovered gross frauds in the accounts of
Fourtin & Co., that the arbitrator and the tribunal declined to compel Fortin & Co. to produce their books and papers
for inspection, and that, if they had been produced, the judgment would not have been obtained against the
defendants.

The answer further alleged that without any fault or negligence on the part of the defendants, there was not a full and
fair trial of the controversies before the arbitrator, in that no witness was sworn or affirmed; in that Charles Fortin was
permitted to make, and did make, statements not under oath containing many falsehoods; in that the privilege of
cross-examination of Fortin and other persons who made statements before the arbitrator was denied to the
defendants, and in that extracts from printed newspapers, the knowledge of which was not brought home to the
defendants, and letters and other communications in writing between Fortin & Co. and third persons, to which the
defendants were neither privy nor party, were received by the arbitrator; that without such improper evidence, the
judgment would not have been obtained, and that the arbitrator was deceived and misled by the false and fraudulent
accounts introduced by Fortin & Co. and by the hearsay testimony given, without the solemnity of an oath and without
cross-examination, and by the fraudulent suppression of the books and papers.
The answer further alleged that Fortin & Co. made up their statements and accounts falsely and fraudulently, and with
Page 159 U. S. 118
intent to deceive the defendants and the arbitrator and the said courts of France, and those courts were deceived and
misled thereby; that owing to the fraudulent suppression of the books and papers of Fortin & Co. upon the trial and
the false statements of Fortin regarding matters involved in the controversy, the arbitrator and the courts of France
"were deceived and misled in regard to the merits of the controversies pending before them, and wrongfully decided
against said Stewart & Co., as hereinbefore stated; that said judgment, hereinbefore mentioned, is fraudulent, and
based upon false and fraudulent accounts and statements, and is erroneous in fact and in law, and is void; that the
trial hereinbefore mentioned was not conducted according to the usages and practice of the common law, and the
allegations and proofs given by said Fortin & Co., upon which said judgment is founded, would not be competent or
admissible in any court or tribunal of the United States, in any suit between the same parties involving the same
subject matter, and it is contrary to natural justice and public policy that the said judgment should be enforced against
a citizen of the United States, and that, if there had been a full and fair trial upon the merits of the controversies so
pending before said tribunals, no judgment would have been obtained against said Stewart & Co."
"Defendants, further answering, allege that it is contrary to natural justice that the judgment hereinbefore mentioned
should be enforced without an examination of the merits thereof; that by the laws of the Republic of France, to-wit,
article 181 [121] of the Royal Ordinance of June 15, 1629, it is provided namely:"
"Judgments rendered, contracts or obligations recognized, in foreign kingdoms and sovereignties, for any cause
whatever shall give rise to no lien or execution in our Kingdom. Thus, the contracts shall stand for simple promises,
and, notwithstanding such judgments, our subjects against whom they have been rendered may contest their rights
anew before our own judges."
"And it is further provided by the laws of France, by article 546 of the Code de Procedure Civile, as follows:"
" Judgments rendered by foreign tribunals shall be capable of execution
Page 159 U. S. 119
in France only in the manner and in the cases set forth by articles 2123 and 2128 of the Civil Code."
"And it is further provided by the laws of France, by article 2128 [2123] of the Code de Procedure Civile [Civil Code]:"

" A lien cannot, in like manner, arise from judgments rendered in any foreign country, save only as they have been
declared in force by a French tribunal, without prejudice, however, to provisions to the contrary, contained in public
laws and treaties."
"[And by article 2128 of that Code: 'Contracts entered into in a foreign country cannot give a lien upon property in
France if there are no provisions contrary to this principle in public laws or in treaties.']"
"That the construction given to said statutes by the judicial tribunals of France is such that no comity is displayed
towards the judgments of tribunals of foreign countries against the citizens of France, when sued upon in said courts
of France, and the merits of the controversies upon which the said judgments are based are examined anew, unless
a treaty to the contrary effect exists between the said Republic of France and the country in which such judgment is
obtained. That no treaty exists between the said Republic of France and the United States, by the terms or effect of
which the judgments of either country are prevented from being examined anew upon the merits, when sued upon in
the courts of the country other than that in which it is obtained. That the tribunals of the Republic of France give no
force and effect, within the jurisdiction of the said country, to the duly rendered judgments of courts of competent
jurisdiction of the United States against citizens of France, after proper personal service of the process of said courts
is made thereon in this country."
The answer further set up, by way of counterclaim and in detail, various matters arising out of the dealings between
the parties, and alleged that none of the plaintiffs had since 1881 been residents of the State of New York, or within
the jurisdiction of that state, but the defendants were, and always had been, residents of that state.
The answer concluded by demanding that the plaintiffs'
Page 159 U. S. 120
complaint be dismissed, and that the defendants have judgment against them upon the counterclaims, amounting to
$102,942.91.
The plaintiffs filed a replication to so much of the answer as made counterclaims, denying its allegations and setting
up in bar thereof the judgment sued on.
The defendants, on June 22, 1888, filed a bill in equity against the plaintiffs setting forth the same matters as in their
answer to the action at law and praying for a discovery and for an injunction against the prosecution of the action. To
that bill a plea was filed setting up the French judgments, and upon a hearing, the bill was dismissed. 42 F. 249. From
the decree dismissing the bill an appeal was taken, which is the second case now before this Court.
The action at law afterwards came on for trial by a jury, and the plaintiffs put in the records of the proceedings and
judgments in the French courts, and evidence that the jurisdiction of those courts was as alleged in the complaint and
that the practice followed and the method of examining the witnesses were according to the French law, and also
proved the title of Guyot as liquidator.
It was admitted by both parties that for several years prior to 1876, the firm of Alexander T. Stewart & Co., composed
of Stewart and Libbey, conducted their business as merchants in the City of New York, with branches in other cities of
America and Europe; that both partners were citizens and residents of the City and State of New York during the
entire period mentioned in the complaint, and that in April, 1876, Stewart died, and Hilton and Libbey formed a

partnership to continue the business under the same firm name, and became the owners of all the property and rights
of the old firm.
The defendants made numerous offers of evidence in support of all the specific allegations of fact in their answer,
including the allegations as to the law and comity of France. The plaintiffs, in their brief filed in this Court, admitted
that most of these offers
"were offers to prove matters in support of the defenses and counterclaims set up by the defendants in the cases
tried before the French courts, and which, or most
Page 159 U. S. 121
of which, would have been relevant and competent if the plaintiffs in error are not concluded by the result of those
litigations, and have now the right to try those issues, either on the ground that the French judgments are only prima
facie evidence of the correctness of those judgments, or on the ground that the case is within the exception of a
judgment obtained by fraud."
The defendants, in order to show that they should not be concluded by having appeared and litigated in the suits
brought against them by the plaintiffs in the French courts, offered to prove that they were residents and citizens of
the State of New York, and neither of them had been, within four years prior to the commencement of those suits,
domiciled or resident within the jurisdiction of those courts; that they had a purchasing agent and a storehouse in
Paris, but only as a means or facility to aid in the transaction of their principal business, which was in New York, and
they were never otherwise engaged in business in France; that neither of them owed allegiance to France, but they
were the owners of property there which would, according to the laws of France, have been liable to seizure if they
had not appeared to answer in those suits; that they unwillingly, and solely for the purpose of protecting their property
within the jurisdiction of the French tribunal, authorized an agent to appear, and he did appear in the proceedings
before it, and that their motion to compel an inspection of the plaintiffs' books, as well as the suits brought by the
defendants in France, were necessary by way of defense or counterclaim to the suits there brought by the plaintiffs
against them.
Among the matters which the defendants alleged and offered to prove in order to show that the French judgments
were procured by fraud were that Fortin & Co., with intent to deceive and defraud the defendants, and the arbitrator
and the courts of France, entered in their books, and presented to the defendants, and to the French courts, accounts
bearing upon the transactions in controversy which were false and fraudulent, and contained excessive and
fraudulent charges against the defendants in various particulars, specified; that the
Page 159 U. S. 122
defendants made due application to the Tribunal of Commerce to compel Fortin & Co. to allow their account books
and letter books to be inspected by the defendants, and the application was opposed by Fortin & Co., and denied by
the tribunal; that the discovery and inspection of those books were necessary to determine the truth of the
controversies between the parties; that before the Tribunal of Commerce, Charles Fortin was permitted to and did
give in evidence statements not under oath relating to the merits of the controversies there pending, and falsely
represented that a certain written contract made in 1873 between Stewart & Co. and Fortin & Co. concerning their
dealings was not intended by the parties to be operative according to its terms, and in support of that false
representation made statements as to admissions by Stewart in a private conversation with him, and that the
defendants could not deny those statements, because Stewart was dead, and they were not protected from the effect
of Fortin's statements by the privilege of cross-examining him under oath, and that the French judgments were based

upon false and fraudulent accounts presented and statements made by Fortin & Co. before the Tribunal of
Commerce during the trial before it.

Fremont v. United States, 17 How. 542, 58 U. S. 557; The Scotia, 14 Wall. 170, 81 U. S. 188; Respublica v. De
Longchamps, 1 Dall. 111, 1 U. S. 116; Moultrie v. Hunt, 23 N.Y. 394, 396.

The records of the judgments of the French courts, put in evidence by the plaintiffs, showed that all the matters now
relied on to show fraud were contested in and considered by those courts.

No law has any effect, of its own force, beyond the limits of the sovereignty from which its authority is derived. The
extent to which the law of one nation, as put in force within its territory, whether by executive order, by legislative act,
or by judicial decree shall be allowed to operate within the dominion of another nation depends upon what our
greatest jurists have been content to call "the comity of nations." Although the phrase has been often criticized, no
satisfactory substitute has been suggested.

The plaintiffs objected to all the evidence offered by the defendants on the grounds that the matters offered to be
proved were irrelevant, immaterial, and incompetent; that in respect to them the defendants were concluded by the
judgment sued on and given in evidence, and that none of those matters, if proved, would be a defense to this action
upon that judgment.
The court declined to admit any of the evidence so offered by the defendants, and directed a verdict for the plaintiffs
in the sum of $277,775.44, being the amount of the French judgment and interest. The defendants, having duly
excepted to the rulings and direction of the court, sued out a writ of error.
Page 159 U. S. 123
The writ of error in the action at law and the appeal in the suit in equity were argued together in this Court in January,
1894, and, by direction of the Court, were reargued in April, 1894, before a full Bench.
Page 159 U. S. 162
MR. JUSTICE GRAY, after stating the case, delivered the opinion of the Court.
These two cases -- the one at law and the other in equity -- of Hilton v. Guyot, and the case of Ritchie v. McMullen,
which has been under advisement at the same time, present important questions relating to the force and effect of
foreign judgments not hitherto adjudicated by this Court, which have been argued
Page 159 U. S. 163
with great learning and ability and which require for their satisfactory determination a full consideration of the
authorities. To avoid confusion in indicating the parties, it will be convenient first to take the case at law of Hilton v.
Guyot.
International law, in its widest and most comprehensive sense -- including not only questions of right between
nations, governed by what has been appropriately called the "law of nations," but also questions arising under what is
usually called "private international law," or the "conflict of laws," and concerning the rights of persons within the
territory and dominion of one nation by reason of acts, private or public, done within the dominions of another nation
-- is part of our law, and must be ascertained and administered by the courts of justice as often as such questions are
presented in litigation between man and man, duly submitted to their determination.
The most certain guide, no doubt, for the decision of such questions is a treaty or a statute of this country. But when,
as is the case here, there is no written law upon the subject, the duty still rests upon the judicial tribunals of
ascertaining and declaring what the law is, whenever it becomes necessary to do so in order to determine the rights
of parties to suits regularly brought before them. In doing this, the courts must obtain such aid as they can from
judicial decisions, from the works of jurists and commentators, and from the acts and usages of civilized nations.

"Comity," in the legal sense, is neither a matter of absolute

Page 159 U. S. 164
obligation, on the one hand, nor of mere courtesy and goodwill, upon the other. But it is the recognition which one
nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both
to international duty and convenience and to the rights of its own citizens or of other persons was are under the
protection of its laws.
MR. JUSTICE Story, in his Commentaries on the Conflict of Laws, treating of the question in what department of the
government of any state, in the absence of any clear declaration of the sovereign will, resides the authority to
determine how far the laws of a foreign state shall have effect, and observing that this differs in different states
according to the organization of the departments of the government of each, says:
"In England and America, the courts of justice have hitherto exercised the same authority in the most ample manner,
and the legislatures have in no instance (it is believed) in either country interfered to provide any positive regulations.
The common law of both countries has been expanded to meet the exigencies of the times as they have arisen, and
so far as the practice of nations, or the jus gentium privatum, has been supposed to furnish any general principle, it
has been followed out."
Story's Conflict of Laws 23, 24.
Afterwards, speaking of the difficulty of applying the positive rules laid down by the Continental jurists, he says that
"there is indeed great truth" in these remarks of Mr. Justice Porter, speaking for the Supreme Court of Louisiana:
"They have attempted to go too far to define and fix that which cannot, in the nature of things, be defined and fixed.
They seem to have forgotten that they wrote on a question which touched the comity of nations, and that that comity
is, and ever must be, uncertain; that it must necessarily depend on a variety of circumstances which cannot be
reduced to any certain rule; that no nation will suffer the laws of another to interfere with her own to the injury of her
citizens; that whether they do or not must depend on the condition of the country in which the foreign law is sought to
be enforced, the particular nature of her legislation, her policy, and the character
Page 159 U. S. 165
of her institutions; that in the conflict of laws it must often be a matter of doubt which should prevail, and that,
whenever a doubt does exist, the court which decides will prefer the laws of its own country to that of the stranger."
Story's Conflict of Laws 28; Saul v. His Creditors (1827), 5 Martin (N.S.) 569, 596.

Again, Mr. Justice Story says:

"It has been thought by some jurists that the term comity is not sufficiently expressive of the obligation of nations to
give effect to foreign laws when they are not prejudicial to their own rights and interests. And it has been suggested
that the doctrine rests on a deeper foundation; that it is not so much a matter of comity or courtesy as a matter of
paramount moral duty. Now, assuming that such a moral duty does exist, it is clearly one of imperfect obligation, like
that of beneficence, humanity, and charity. Every nation must be the final judge for itself not only of the nature and
extent of the duty, but of the occasions on which its exercise may be justly demanded."

"No sovereign is bound, unless by special compact, to execute within his dominions a judgment rendered by the
tribunals of another state, and if execution be sought by suit upon the judgment or otherwise, the tribunal in which the
suit is brought, or from which execution is sought, is on principle at liberty to examine into the merits of such
judgment, and to give effect to it or not, as may be found just and equitable. The general comity, utility, and
convenience of nations have, however, established a usage among most civilized states by which the final judgments
of foreign courts of competent jurisdiction are reciprocally carried into execution, under certain regulations and
restrictions, which differ in different countries."
147.

And after further discussion of the matter, be concludes:

"There is, then, not only no impropriety in the use of the phrase 'comity of nations,' but it is the most appropriate
phrase to express the true foundation and extent of the obligation of the laws of one nation within the territories of
another."
Story's Conflict of Laws 33-38.
Chief Justice Taney, likewise, speaking for this Court, while Mr. Justice Story was a member of it, and largely
adopting his words, said:
"It is needless to enumerate here the instances in which, by the general practice of civilized countries, the laws of the
one will, by the comity of nations, be recognized and executed in another where the rights of individuals are
concerned. . . . The comity thus extended to other nations is no impeachment of sovereignty. It is the voluntary act of
the nation by which it is offered, and is inadmissible when contrary to its policy, or prejudicial to its interests. But it
contributes so largely to promote justice between individuals, and to produce a friendly intercourse between the
sovereignties to which they belong, that courts of justice have continually acted upon it as a part of the voluntary law
of nations. . . . It is not the comity of the courts, but the comity
Page 159 U. S. 166
of the nation, which is administered and ascertained in the same way, and guided by the same reasoning, by which
all other principles of municipal law are ascertained and guided."
Bank v. Earle (1839), 13 Pet. 519, 38 U. S. 589; Story on Conflict of Laws 38.
Mr. Wheaton says:
"All the effect which foreign laws can have in the territory of a state depends absolutely on the express or tacit
consent of that state. . . . The express consent of a state to the application of foreign laws within its territory is given
by acts passed by its legislative authority, or by treaties concluded with other states. Its tacit consent is manifested by
the decisions of its judicial and administrative authorities, as well as by the writings of its publicists. There is no
obligation recognized by legislators, public authorities, and publicists to regard foreign laws; but their application is
admitted only from considerations of utility and the mutual convenience of states, ex commitate, ob reciprocam
utilitatem."
Wheaton's International Law (8th ed.) 78, 79.

Chancellor Kent says: "The effect to be given to foreign judgments is altogether a matter of comity in cases where it
is not regulated by treaty." 2 Kent Com. (6th ed.) 120.
In order to appreciate the weight of the various authorities cited at the bar, it is important to distinguish different kinds
of judgments. Every foreign judgment, of whatever nature, in order to be entitled to any effect, must have been
rendered
Page 159 U. S. 167
by a court having jurisdiction of the cause, and upon regular proceedings, and due notice. In alluding to different
kinds of judgments, therefore, such jurisdiction, proceedings, and notice will be assumed. It will also be assumed that
they are untainted by fraud, the effect of which will be considered later.
A judgment in rem, adjudicating the title to a ship or other movable property within the custody of the court, is treated
as valid everywhere. As said by Chief Justice Marshall:
"The sentence of a competent court proceeding in rem is conclusive with respect to the thing itself, and operates as
an absolute change of the property. By such sentence, the right of the former owner is lost and a complete title given
to the person who claims under the decree. No court of coordinate jurisdiction can examine the sentence. The
question, therefore, respecting its conformity to general or municipal law can never arise, for no coordinate tribunal is
capable of making the inquiry."
Williams v. Armroyd, 7 Cranch 423, 11 U. S. 432. The most common illustrations of this are decrees of courts of
admiralty and prize, which proceed upon principles of international law. Croudson v. Leonard, 4 Cranch 434; Williams
v. Armroyd, above cited; Ludlow v. Dale, 1 Johns.Cas. 16. But the same rule applies to judgments in rem under
municipal law. Hudson v. Guestier, 4 Cranch 293; Ennis v. Smith, 14 How. 400, 45 U. S. 430; Wisconsin v. Pelican
Ins. Co., 127 U. S. 265, 127 U. S. 291; Scott v. McNeal, 154 U. S. 34, 154 U. S. 46; Castrique v. Imrie, L.R. 4 H.L.
414; Monroe v. Douglas, 4 Sandf.Ch. 126.
A judgment affecting the status of persons, such as a decree confirming or dissolving a marriage, is recognized as
valid in every country unless contrary to the policy of its own law. Cottington's Case, 2 Swanston 326; Roach v.
Garvan, 1 Ves.Sen. 157; Harvey v. Farnie, 8 App.Cas. 43; Cheely v. Clayton, 110 U. S. 701. It was of a foreign
sentence of divorce that Lord Chancellor Nottingham, in the House of Lords, in 1678, in Cottington's Case, above
cited, said:
"It is against the law of nations not to give credit to the judgments and sentences of foreign countries till they be
reversed by the law,

Page 159 U. S. 168

and according to the form, of those countries wherein they were given, for what right hath one kingdom to reverse the
judgment of another? And how can we refuse to let a sentence take place till it be reversed? And what confusion
would follow in Christendom if they should serve us so abroad, and give no credit to our sentences."
Other judgments, not strictly in rem, under which a person has been compelled to pay money, are so far conclusive
that the justice of the payment cannot be impeached in another country, so as to compel him to pay it again. For
instance, a judgment in foreign attachment is conclusive, as between the parties, of the right to the property or money
attached. Story on Conflict of Laws (2d ed.) 592a. And if, on the dissolution of a partnership, one partner promises
to indemnify the other against the debts of the partnership, a judgment for such a debt, under which the latter has
been compelled to pay it, is conclusive evidence of the debt in a suit by him to recover the amount upon the promise
of indemnity. It was of such a judgment and in such a suit that Lord Nottingham said:
"Let the plaintiff receive back so much of the money brought into court as may be adequate to the sum paid on the
sentence for custom, the justice whereof is not examinable here."
Gold v. Canham (1679), 2 Swanst. 325, 1 Cas. in Ch. 311. See also Tarleton v. Tarleton, 4 M. & S. 20; Konitzky v.
Meyer, 49 N.Y. 571.
Other foreign judgments which have been held conclusive of the matter adjudged were judgments discharging
obligations contracted in the foreign country between citizens or residents thereof. Story on Conflict of Laws 330341; May v. Breed, 7 Cush. 15. Such was the case cited at the bar of Burroughs or Burrows v. Jamineau or Jemino,
Mosely 1, 2 Strange 733, 2 Eq.Cas.Ab. p. 525, pl. 7, 12 Vin.Ab. p. 87, pl. 9 Sel.Cas. in Ch. 69; 1 Dickens 48.
In that case, bills of exchange drawn in London were negotiated, endorsed, and accepted at Leghorn, in Italy, by the
law of which an acceptance became void if the drawer failed without leaving effects in the acceptor's hands. The
acceptor accordingly, having received advices that the drawer had failed
Page 159 U. S. 169
before the acceptances, brought a suit at Leghorn against the last endorsees to be discharged of his acceptances,
paid the money into court, and obtained a sentence there by which the acceptances were vacated as against those
endorsees, and all the endorsers and negotiators of the bills, and the money deposited was returned to him. Being
afterwards sued at law in England by subsequent holders of the bills, he applied to the Court of Chancery, and
obtained a perpetual injunction. Lord Chancellor King, as reported by Strange,
"was clearly of opinion that this cause was to be determined according to the local laws of the place where the bill
was negotiated, and, the plaintiff's acceptance of the bill having been vacated and declared void by a court of
competent jurisdiction, he thought that sentence was conclusive, and bound the Court of Chancery here;"

It is doubtful, at the least, whether such a sentence was entitled to the effect given to it by Lord Chancellor King. See
Novelli v. Rossi, 2 B. & A. 757; Castrique v. Imrie, L.R. 4 H.L. 414, 435; 2 Smith's Lead.Cas. (2d ed.) 450.
The remark of Lord Hardwicke, arguendo, as Chief Justice, in Boucher v. Lawson (1734) that
"the reason gone upon by Lord Chancellor King, in the case of Burroughs v. Jamineau, was certainly right that where
any court, whether foreign or domestic, that has the proper jurisdiction of the cases makes a determination, it is
conclusive to all other courts,"
evidently had reference, as the context shows, to judgments of a court having jurisdiction of the thing, and did not
touch the effect of an executory judgment for a debt. Cas.temp.Hardw. 85, 89; Cunningham 144, 148.
In former times, foreign decrees in admiralty in personam were executed, even by imprisonment of the defendant, by
the court of admiralty in England, upon letters rogatory from the foreign sovereign, without a new suit. Its right to
Page 159 U. S. 170
do so was recognized by the court of King's Bench in 1607 in a case of habeas corpus, cited by the plaintiffs, and
reported as follows:
"If a man of Frizeland sues an Englishman in Frizeland before the governor there, and there recovers against him a
certain sum, upon which the Englishman, not having sufficient to satisfy it, comes into England, upon which the
governor sends his letters missive into England, omnes magistratus infra regnum Angliae rogans, to make execution
of the said judgment, the judge of the admiralty may execute this judgment by imprisonment of the party, and he shall
not be delivered by the common law, for this is by the law of nations that the justice of one nation should be aiding to
the justice of another nation, and for one to execute the judgment of the other, and the law of England takes notice of
this law, and the judge of the admiralty is the proper magistrate for this purpose, for he only hath the execution of the
civil law within the realm. Pasch. 5 Jac.B.R., Weir's Case, resolved upon a habeas corpus and remanded."
1 Rol.Ab. p. 530, pl. 12; 6 Vin.Ab. p. 512, pl. 12. But the only question there raised or decided was of the power of the
English court of admiralty, and not of the conclusiveness of the foreign sentence, and in later times the mode of
enforcing a foreign decree in admiralty is by a new libel. See The City of Mecca, 5 P.D. 28, 6 P.D. 106.
The extraterritorial effect of judgments in personam at law or in equity may differ according to the parties to the
cause. A judgment of that kind between two citizens or residents of the country, and thereby subject to the jurisdiction
in which it is rendered, may be held conclusive as between them everywhere. So if a foreigner invokes the jurisdiction
by bringing an action against a citizen, both may be held bound by a judgment in favor of either, and if a citizen sues
a foreigner and judgment is rendered in favor of the latter, both may be held equally bound. Ricardo v. Garcias, 12 Cl.
& Fin. 368; The Griefswald, Swabey 430, 435; Barber v. Lamb, 8 C.B. (N.S.) 95; Lea v. Deakin, 11 Bissell 23.
The effect to which a judgment, purely executory, rendered

as reported in Viner, that "the court at Leghorn had jurisdiction of the thing and of the persons;" and, as reported by
Mosely, that though
"the last endorsees had the sole property of the bills, and were therefore made the only parties to the suit at Leghorn,
yet the sentence made the acceptance void against the now defendants and all others."

Page 159 U. S. 171

in favor of a citizen or resident of the country, in a suit there brought by him against a foreigner, may be entitled in an
action thereon against the latter in his own country, as is the case now before us, presents a more difficult question,
upon which there has been some diversity of opinion.

Early in the last century, it was settled in England that a foreign judgment on a debt was considered not like a
judgment of a domestic court of record, as a record or a specialty, a lawful consideration for which was conclusively
presumed, but as a simple contract only.
This clearly appears in Dupleix v. De Roven (1705), where one of two merchants in France recovered a judgment
there against the other for a sum of money, which not being paid, he brought a suit in chancery in England for a
discovery of assets and satisfaction of the debt, and the defendant pleaded the statute of limitations of six years, and
prevailed, Lord Keeper Cowper saying:

reported, with references to Lord Hardwicke's note book, and to the original record, as Morgan v. Morgan (17371738), West.Ch. 181, 597; s.c., 1 Atk. 53, 408.
In Gage v. Bulkeley (1744), briefly reported in 3 Atk. 215, cited by the plaintiffs, a plea of a foreign sentence in a
commissary court in France was overruled by Lord Hardwicke, saying: "It is the most proper case to stand for an
answer, with liberty to except, that I ever met with." His reasons are fully stated in two other reports of the case.
According to one of them, at the opening of the argument, he said:

"Although the plaintiff obtained a judgment or sentence in France, yet here the debt must be considered as a debt by
simple contract. The plaintiff can maintain no action here but an indebitatus assumpsit or an insimul computassent,
so that the statute of limitations is pleadable in this case."

"Can a sentence or judgment pronounced by a foreign jurisdiction be pleaded in this Kingdom to a demand for the
same thing in any court of justice here? I always thought it could not, because every sentence, having its authority
from the sovereign in whose dominions it is given, cannot bind the jurisdiction of foreign courts, who own not the
same authority,

2 Vernon 540.

Page 159 U. S. 173

Several opinions of Lord Hardwicke define and illustrate the effect of foreign judgments when sued on or pleaded in
England.

and have a different sovereign, and are only bound by judicial sentence given under the same sovereign power by
which they themselves act. . . . But though a foreign sentence cannot be used by way of plea in the courts here, yet it
may be taken advantage of in the way of evidence. . . . You cannot in this Kingdom maintain debt upon judgment
obtained for money in a foreign jurisdiction, but you may on assumpsit in nature of debt, upon a simple contract, and
give the judgment in evidence, and have a verdict, so that the distinction seems to be, where such foreign sentence
is used as a plea to bind the courts here as a judgment, and when it is made use of in evidence as binding the justice
of the case only."

In Otway v. Ramsay (1736), in the King's Bench, Lord Hardwicke treated it as worthy of consideration "what credit is
to be given by one court to the courts of another nation, proceeding both by the same rules of law," and said: "It is
very desirable in such case that the judgment given in one kingdom should be considered as res judicata in another."
But it was held that debt would not lie in Ireland upon an English judgment, because "Ireland must be considered as a
provincial kingdom, part of the dominions of the crown of England, but no part of the realm," and an action of debt on
a judgment was local. 4 B. & C. 414-416, note; s.c., 14 Vin.Ab. 569, pl.;, 2 Stra. 1090.
A decision of Lord Hardwicke as Chancellor was mentioned
Page 159 U. S. 172
in Walker v. Witter (1778), 1 Doug. 1, 6, by Lord Mansfield, who said:
"He recollected a case of a decree on the chancery side in one of the courts of great sessions in Wales, from which
there was an appeal to the House of Lords, and the decree affirmed there. Afterwards, a bill was filed in the Court of
Chancery, on the foundation of the decree so affirmed, and Lord Hardwicke thought himself entitled to examine into
the justice of the decision of the House of Lords, because the original decree was in the court of Wales, whose
decisions were clearly liable to be examined."
And in Galbraith v. Neville (1789), 1 Doug. 6, note, Mr. Justice Buller said:
"I have often heard Lord Mansfield repeat what was said by Lord Hardwicke in the case alluded to from Wales, and
the ground of his lordship's opinion was this: when you call for my assistance to carry into effect the decision of some
other tribunal, you shall not have it if it appears that you are in the wrong, and it was on that account that he said he
would examine into the propriety of the decree."
The case before Lord Hardwicke mentioned by Lord Mansfield would appear (notwithstanding the doubt of its
authenticity expressed by Lord Kenyon in Galbraith v. Neville) to have been a suit to recover a legacy, briefly

10

And afterwards, in giving his decision, he said:

"The first question is whether the subject matter of the plea is good. The second is whether it is well pleaded. The first
question depends upon this: whether the sentence or judgment of a foreign court can be used by way of plea in a
court of justice in England, and no authority, either at law or in equity, has been produced to show that it may be
pleaded, and therefore I shall be very cautious how I establish such a precedent. . . . It is true such sentence is an
evidence which may affect the right of this demand when the cause comes to be heard, but if it is no plea in a court of
law to bind their jurisdiction, I do not see why it should be so here."
Ridgeway temp. Hardw. 263, 264, 270, 273. A similar report of his judgment is in 2 Ves.Sen. (Belt's Supp.) 409, 410.
In Roach v. Garvan (1748), where an infant ward of the Court of Chancery had been married in France by her
guardian to his son before a French court, and the son "petitioned for a decree for cohabitation with his wife, and to
have some money out of the bank," Lord Hardwicke said, as to the validity of the marriage:
"It has been argued to be valid, from being established by the sentence of a court in France having proper
jurisdiction, and it is true that, if so, it is conclusive, whether in a foreign court or not, from the law of nations in such
cases; otherwise, the rights of mankind would be very precarious and uncertain. But the question is whether this is a
proper sentence, in a proper cause, and between proper
Page 159 U. S. 174
parties, of which it is impossible to judge without looking further into the proceedings, this being rather the execution
of the sentence than the sentence itself."

And after observing upon the competency of the French tribunal and pointing out that restitution of conjugal rights
was within the jurisdiction of the ecclesiastical court, and not of the Court of Chancery, he added: "Much less will I
order any money out of the bank to be given him." 1 Ves.Sen. 157, 159. He thus clearly recognized the difference
between admitting the effect of a foreign judgment as adjudicating the status of persons and executing a foreign
judgment by enforcing a claim for money.

of the debt. That being so, the judgment was not a specialty, but the debt only a simple contract debt, for assumpsit
will not lie on a specialty. The difficulty in the case had arisen from not fixing accurately what a court of record is in the
eye of the law. That description is confined properly to certain courts in England, and their judgments cannot be
controverted. Foreign courts, and courts in England not of record, have not that privilege, nor the courts in Wales, etc.
But the doctrine in the case of Sinclair v. Fraser was unquestionable. Foreign judgments are

These decisions of Lord Hardwicke demonstrate that, in his opinion, whenever the question was of giving effect to a
foreign judgment for money in a suit in England between the parties, it did not have the weight of a domestic
judgment, and could not be considered as a bar or as conclusive, but only as evidence of the same weight as a
simple contract, and the propriety and justice of the judgment might be examined.

Page 159 U. S. 176

In Sinclair v. Fraser (1771), the appellant, having as attorney in Jamaica made large advances for his constituent in
Scotland and having been superseded in office, brought an action before the Supreme Court of Jamaica, and, after
appearance, obtained judgment against him, and afterwards brought an action against him in Scotland upon that
judgment. The Court of Session determined that the plaintiff was bound to prove before it the ground, nature, and
extent of the demand on which the judgment in Jamaica was obtained, and therefore gave judgment against him. But
the House of Lords (in which, as remarked by one reporter, Lord Mansfield was then the presiding spirit, acting in
concert with or for the Lord Chancellor in disposing of the Scotch appeals)
"ordered and declared that the judgment of the Supreme Court of Jamaica ought to be received as evidence prima
facie of the debt, and that it lies upon the defendant to impeach the justice thereof or to show the same to have been
irregularly obtained,"
and therefore reversed the judgment of the Court of Session. 2 Paton ix, 253; s.c., 6 Morison Dict.Dec. 4542; 1 Doug.
5, note.
Page 159 U. S. 175
Accordingly, in Crawford v. Witten (1773), a declaration in assumpsit, in an action in England upon a judgment
recovered in the Mayor's Court of Calcutta, in Bengal, without showing the cause of action there, was held good on
demurrer. Lord Mansfield considered the case perfectly clear. Mr. Justice Aston, according to one report, said: "The
declaration is sufficient. We are not to suppose it an unlawful debt," and, according to another report:

a ground of action everywhere, but they are examinable."

Justices Willes, Ashurst, and Buller concurred, the two latter saying that wherever indebitatus assumpsit will lie, debt
will also lie. 1 Doug. 1, 5, 6.
In Herbert v. Cook (1782), again, in an action of debt upon a judgment of an inferior English court, not a court of
record, Lord Mansfield said that it was "like a foreign judgment, and not conclusive evidence of the debt." Willes 36,
note.
In Galbraith v. Neville (1789), upon a motion for a new trial after verdict for the plaintiff in an action of debt on a
judgment of the Supreme Court of Jamaica, Lord Kenyon expressed "very serious doubts concerning the doctrine
laid down in Walker v. Witter that foreign judgments are not binding on the parties here." But Mr. Justice Buller said:
"The doctrine which was laid down in Sinclair v. Fraser has always been considered as the true line ever since -namely that the foreign judgment shall be prima facie evidence of the debt, and conclusive till it be impeached by the
other party. . . . As to actions of this sort, see how far the court could go if what was said in Walker v. Witter were
departed from. It was there held that the foreign judgment was only to be taken to be right prima facie -- that is, we
will allow the same force to a foreign judgment that we do to those of our own courts not of record. But if the matter
were carried further, we should give them more credit; we should give them equal force with those of courts of record
here. Now a foreign judgment has never been considered as a record. It cannot be declared on as such, and a plea
of nul tiel record, in such a case, is a mere nullity. How then can it have the same obligatory force? In short, the result
is this: that it is prima facie evidence of the justice of the demand in an action of assumpsit, having no more credit
than is given to every species of written agreement, viz., that it shall be considered as good till it is impeached."
1 Doug. 6, note. And the court afterwards unanimously refused the new trial, because,

"They admitted the assumpsit by their demurrer. When an action comes properly before any court, it must be
determined by the laws which govern the country in which the action accrued."
And Mr. Justice Ashurst said: "I have often known assumpsit brought on judgments in foreign courts. The judgment is
a sufficient consideration to support the implied promise." Loft, 154; s.c., nom. Crawford v. Whittal, 1 Doug. 4, note.
In Walker v. Witter (1778), an action of debt was brought in England upon a judgment recovered in Jamacia. The
defendant pleaded nil debet and nul tiel record. Judgment was given for the plaintiff, Lord Mansfield saying:
"The plea of nul tiel record was improper. Though the plaintiffs had called the judgment a record, yet, by the
additional words in the declaration, it was clear they did not mean that sort of record to which implicit faith is given by
the courts of Westminster Hall. They had not misled the court nor the defendant, for they spoke of it as a court of
record in Jamaica. The question was brought to a narrow point, for it was admitted on the part of the defendant that
indebitatus assumpsit would have lain, and on the part of the plaintiff that the judgment was only prima facie evidence

11

"without entering into the question how far a foreign judgment was impeachable, it was at all events clear that it was
prima facie evidence of the debt, and they were of opinion
Page 159 U. S. 177
that no evidence had been adduced to impeach this."
5 East 475, note.
In Messing v. Massareene (1791), the plaintiff, having obtained a judgment against the defendants in a French court,
brought an action of assumpsit upon it in England, and, the defendants having suffered a default, moved for a
reference to a master, and for a final judgment on his report, without executing a writ of inquiry. The motion was
denied, Lord Kenyon saying: "This is an attempt to carry the rule further than has yet been done, and, as there is no

instance of the kind, I am not disposed to make a precedent for it," and Mr. Justice Buller saying: "Though debt will lie
here on a foreign judgment, the defendant may go into the consideration of it." 4 T.R. 493.

appears in evidence that persons suing under similar circumstances neither had met, nor could meet, with justice,
that fact cannot be immaterial as an answer to the presumption."

In Bayley v. Edwards (1792), the judicial committee of the Privy Council, upon appeal from Jamaica, held that a suit in
equity pending in England was not a good plea in bar to a subsequent bill in Jamaica for the same matter, and Lord
Camden said:

6 Ves. 714, 730.

"In Gage v. Bulkeley [evidently referring to the full report in Ridgeway, above quoted, which had been cited by
counsel], Lord Hardwicke's reasons go a great way to show the true effect of foreign sentences in this country, and all
the cases show that foreign sentences are not conclusive bars here, but only evidence of the demand."

Under Lord Ellenborough, the distinction between a suit on a foreign judgment in favor of the plaintiff against the
defendant, and a suit to recover money which the plaintiff had been compelled to pay under a judgment abroad, was
clearly maintained.

3 Swanston 703, 708, 710.

In Buchanan v. Rucker (1808), in assumpsit upon a judgment rendered in the Island of Tobago, the defendant
pleaded non assumpsit and prevailed because it appeared that he was not a resident of the island, and was neither
personally served with process nor came in to defend, and the only notice was, according to the practice of the court,
by nailing up a copy of the declaration at the courthouse door. It was argued that "the presumption was in favor of a
foreign judgment, as well as of a judgment obtained in one of the courts of this country," to which Lord Ellenborough
answered:

In Phillips v. Hunter (1795), the House of Lords, in accordance with the opinion of the majority of the judges consulted
and against that of Chief Justice Eyre, decided that a creditor of an English bankrupt, who had obtained payment of
his debt by foreign attachment in Pennsylvania, was liable to an action for the money by the assignees in bankruptcy
in England. But it was agreed on all hands that the judgment in Pennsylvania and payment under it were conclusive
as between the garnishee and the plaintiff in that suit, and the distinction between the effect of a foreign judgment
which vests title, and of one which only declares that a certain sum of money is due, was clearly stated by Chief
Justice Eyre as follows:
Page 159 U. S. 178
"This judgment against the garnishee in the court of Pennsylvania was recovered properly or improperly. If,
notwithstanding the bankruptcy, the debt remained liable to an attachment according to the laws of that country, the
judgment was proper; if, according to the laws of that country, the property in the debt was divested out of the
bankrupt debtor and vested in his assignees, the judgment was improper. But this was a question to be decided, in
the cause instituted in Pennsylvania, by the courts of that country, and not by us. We cannot examine their judgment,
and if we could, we have not the means of doing it in this case. It is not stated upon this record, nor can we take
notice, what the law of Pennsylvania is upon this subject. If we had the means, we could not examine a judgment of a
court in a foreign state, brought before us in this manner."
"It is in one way only that the sentence or judgment of a court of a foreign state is examinable in our courts, and that
is when the party who claims the benefit of it applies to our courts to enforce it. When it is thus voluntarily submitted
to our jurisdiction, we treat it not as obligatory to the extent to which it would be obligatory, perhaps, in the country in
which it was pronounced, nor as obligatory to the extent to which, by our law, sentences and judgments are
obligatory not as conclusive, but as matter in pais, as consideration prima facie sufficient to raise a promise. We
examine it as we do all other considerations or promises, and for that purpose we receive evidence of what the law of
the foreign state is, and whether the judgment is warranted by that law."
2 H.Bl. 402, 409-410.
In Wright v. Simpson (1802), Lord Chancellor Eldon said:
"Natural law requires the courts of this country to give credit to those of another for the inclination and power to do
justice, but not if that presumption is proved to be ill founded in that transaction which is the subject of it, and if it

12

Page 159 U. S. 179

"That may be so if the judgment appears, on the face of it, consistent with reason and justice, but it is contrary to the
first principles of reason and justice that, either in civil or criminal proceedings, a man should be condemned before
he is heard. . . . There might be such glaring injustice on the face of a foreign judgment, or it might have a vice
rendering it so ludicrous, that it could not raise an assumpsit, and, if submitted to the jurisdiction of the courts of this
country, could not be enforced."
1 Camp. 63, 66-67. A motion for a new trial was denied. 9 East 192. And see Sadler v. Robins (1808), 1 Camp. 253,
256.
In Hall v. Odber (1809), in assumpsit upon a judgment obtained in Canada, with other counts on the original debt,
Lord Ellenborough and Justices Grose, Le Blanc, and Bayley agreed that a foreign judgment was not to be
considered as having the same force as a domestic judgment, but only that of a simple contract between the parties,
and did not merge the original cause of action, but was only evidence of the debt, and therefore assumpsit would lie,
either upon the judgment or upon the original cause of action. 11 East 118.
In Tarleton v. Tarleton (1815), on the other hand, the action was brought upon a covenant of indemnity in an
agreement for dissolution of a partnership to recover a sum which the
Page 159 U. S. 180
plaintiff had been compelled to pay under a decision in a suit between the parties in the Island of Grenada. Such was
the case of which Lord Ellenborough, affirming his own ruling at the trial, said:
"I thought that I did not sit at nisi prius to try a writ of error in this case upon the proceedings in the court abroad. The
defendant had notice of the proceedings, and should have appeared and made his defense. The plaintiff, by this
neglect, has been obliged to pay the money in order to avoid a sequestration."
The distinction was clearly brought out by Mr. Justice Bayley, who said: "As between the parties to the suit, the justice
of it might be again litigated, but as against a stranger it cannot. 4 M. & S. 20, 22-23.

In Harris v. Saunders (1825), Chief Justice Abbott (afterwards Lord Tenterden) and his associates, upon the authority
of Otway v. Ramsay, above cited, held that even since the Act of Union of 39 & 40 Geo. III. c. 67, assumpsit would lie
in England upon a judgment recovered in Ireland, because such a judgment could not be considered a specialty debt
in England. 4 B. & C. 411, 6 D. & R. 471.

such faith and credit given to them in every court within the United States as they have by law or usage in the courts
of the state from whence the said records are or shall be taken."

The English cases above referred to have been stated with the more particularity and detail, because they directly
bear upon the question what was the English law, being then our own law, before the Declaration of Independence?
They demonstrate that, by that law as generally understood, and as declared by Hardwicke, Mansfield, Buller,
Camden, Eyre, and Ellenborough, and doubted by Kenyon only, a judgment recovered in a foreign country for a sum
of money, when sued upon in England, was only prima facie evidence of the demand, and subject to be examined
and impeached. The law of England since it has become to us a foreign country will be considered afterwards.

The effect of these provisions of the Constitution and laws of the United States was at first a subject of diverse
opinions not only in the courts of the several states, but also in the circuit courts of the United States; Mr. Justice
Cushing, Mr. Justice Wilson, and Mr. Justice Washington, holding that judgments of the courts of a state had the
same effect throughout the Union as within that state, but Chief Justice Marshall (if accurately reported) being of
opinion that they were not entitled to conclusive effect, and that their consideration might be impeached. Armstrong v.
Carson (1794), 2 Dall. 302; Green v. Sarmiento (1811), 3 Wash. C.C. 17, 21; Pet. C.C. 74, 78; Peck v. Williamson
(reported as in November, 1813, apparently a mistake for 1812), 1 Carolina Law Repository 53.

The law upon this subject as understood in the United States at the time of their separation from the mother country
was clearly set forth by Chief Justice Parsons, speaking for the Supreme Judicial Court of Massachusetts in 1813,
and by Mr. Justice Story in his Commentaries on the Constitution of the United States, published in 1833. Both those

Act May 26, 1790, c. 11, 1 Stat. 122; Rev.Stat. 905.

The decisions of this Court have clearly recognized that judgments of a foreign state are prima facie evidence only,
and that, but for these constitutional and legislative provisions, judgments of a state of the Union, when sued upon in
another state, would have no greater effect.

Page 159 U. S. 181

eminent jurists declared that, by the law of England, the general rule was that foreign judgments were only prima
facie evidence of the matter which they purported to decide, and that, by the common law before the American
Revolution, all the courts of the several colonies and states were deemed foreign to each other, and consequently
judgments rendered by any one of them were considered as foreign judgments, and their merits reexaminable in
another colony not only as to the jurisdiction of the court which pronounced them, but also as to the merits of the
controversy, to the extent to which they were understood to be reexaminable in England. And they noted that in order
to remove that inconvenience, statutes had been passed in Massachusetts, and in some of the other colonies, by
which judgments rendered by a court of competent jurisdiction in a neighboring colony could not be impeached.
Bissell v. Briggs, 9 Mass. 462, 464-465; Mass.Stat. 1773-74, c. 16; 5 Prov.Laws, 323, 369; Story on the Constitution
(1st ed.) 1301, 1302; (4th ed.) 1306, 1307.
It was because of that condition of the law as between the American colonies and states that the United States, at the
very beginning of their existence as a nation, ordained that full faith and credit should be given to the judgments of
one of the states of the Union in the courts of another of those states.
By the articles of confederation of 1777, Art. 4, 3, "full faith and credit shall be given, in each of these states, to the
records, acts and judicial proceedings of the courts and magistrates of every other state." 1 Stat. 4. By the
Constitution of the United States, Article IV, 1,
"Full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other
state, and the Congress may by general laws prescribe the manner in which such acts, records and proceedings
shall be proved, and the effect thereof."
And the first Congress of the United States under the Constitution, after prescribing the manner in which the records
and judicial proceedings of the courts of any state should be authenticated and proved, enacted that
"the said records and judicial proceedings, authenticated as aforesaid, shall have
Page 159 U. S. 182

13

In Croudson v. Leonard (1808), in which this Court held that the sentence of a foreign court of admiralty in rem
condemning a vessel for breach of blockade was conclusive evidence of that fact in an action on a policy of
insurance, Mr. Justice Washington, after speaking of the conclusiveness of domestic judgments generally, said:
"The judgment of a foreign court is equally conclusive, except in the single instance where the party claiming the
benefit of it applies to the courts in England to enforce it, in which case only the judgment is prima facie evidence. But
it is to be remarked that in such a case, the judgment is no more conclusive as to the right it establishes than as to
the fact it decides."
8 U. S. 4 Cranch 434, 8 U. S. 442.
In Mills v. Duryee (1813), in which it was established that, by virtue of the Constitution and laws of the United States,
the judgment of a court of one of the states was conclusive
Page 159 U. S. 183
evidence, in every court within the United States, of the matter adjudged, and therefore nul tiel record, and not nil
debet, was a proper plea to an action brought in a court of the United States in the District of Columbia upon a
judgment recovered in a court of the State of New York, this Court, speaking by Mr. Justice Story, said:
"The pleadings in an action are governed by the dignity of the instrument on which it is founded. If it be a record
conclusive between the parties, it cannot be denied but by the plea of nul tiel record, and when Congress gave the
effect of a record to the judgment it gave all the collateral consequences. . . . Were the construction contended for by
the plaintiff in error to prevail, that judgments of the state courts ought to be considered prima facie evidence only,
this clause in the Constitution would be utterly unimportant and illusory. The common law would give such judgments
precisely the same effect."
11 U. S. 7 Cranch 481, 11 U. S. 484-485.

In Hampton v. McConnell (1818), the point decided in Mills v. Duryee was again adjudged, without further discussion,
in an opinion delivered by Chief Justice Marshall. 16 U. S. 3 Wheat. 234.

In Bischoff v. Wethered (1869), in an action on an English judgment rendered without notice to the defendant other
than by service on him in this country, this Court, speaking by Mr. Justice Bradley, held that the proceeding in
England

The obiter dictum of Mr. Justice Livingston in Hopkins v. Lee (1821), 6 Wheat. 109, 19 U. S. 114, repeated by Mr.
Justice Daniel in Pennington v. Gibson (1853), 16 How. 65, 57 U. S. 78, as to the general effect of foreign judgments,
has no important bearing upon the case before us.

"was wholly without jurisdiction of the person, and whatever validity it may have in England, by virtue of statute law,
against property of the defendant there situate, it can have no validity here, even of a prima facie character."

In McElmoyle v. Cohen (1839), Mr. Justice Wayne, discussing the effect of the act of Congress of 1790, said that

76 U. S. 9 Wall. 812, 76 U. S. 814.

"the adjudications of the English courts have now established the rule to be that foreign judgments are prima facie
evidence of the right and matter they purport to decide."

Page 159 U. S. 185

38 U. S. 13 Pet. 312, 38 U. S. 325.

In D'Arcy v. Ketchum (1850), in which this Court held that the provisions of the Constitution and laws of the United
States gave no effect in one state to judgments rendered in another state by a court having no jurisdiction of the
cause or of the parties, Mr. Justice Catron said:
"In construing the act of 1790, the law as it stood when the act was passed
Page 159 U. S. 184
must enter into that construction, so that the existing defect in the old law may be seen and its remedy by the act of
Congress comprehended. Now it was most reasonable, on general principles of comity and justice, that among states
and their citizens united as ours are, judgments rendered in one should bind citizens of other states where
defendants had been served with process or voluntarily made defense. As these judgments, however, were only
prima facie evidence, and subject to be inquired into by plea when sued on in another state, Congress saw proper to
remedy the evil and to provide that such inquiry and double defense should not be allowed. To this extent, it is
declared in the case of Mills v. Duryee, Congress has gone in altering the old rule."

In Hanley v. Donoghue (1885), 116 U. S. 1, 116 U. S. 4, and in Wisconsin v. Pelican Ins. Co. (1888), 127 U. S. 265,
127 U. S. 292, it was said that judgments recovered in one state of the Union, when proved in the courts of another,
differed from judgments recovered in a foreign country in no other respect than in not being reexaminable on their
merits nor impeachable for fraud in obtaining them if rendered by a court having jurisdiction of the cause and of the
parties.
But neither in those cases nor in any other has this Court hitherto been called upon to determine how far foreign
judgments may be reexamined upon their merits, or be impeached for fraud in obtaining them.
In the courts of the several states it was long recognized and assumed as undoubted and indisputable that by our
law, as by the law of England, foreign judgments for debts were not conclusive, but only prima facie evidence of the
matter adjudged. Some of the cases are collected in the margin. *
In the leading case of Bissell v. Briggs, above cited, Chief Justice Parsons said:
"A foreign judgment may be produced here by a party to it either to justify himself by the execution of that judgment in
the country in which it was rendered or to obtain the execution of it from our courts. . . . If the foreign court rendering
the judgment had jurisdiction of the cause, yet the courts here will not execute the judgment, without first

52 U. S. 11 How. 165, 52 U. S. 175-176.

Page 159 U. S. 186

In Christmas v. Russell (1866), in which this Court decided that because of the Constitution and laws of the United
States, a judgment of a court of one state of the Union, when sued upon in a court of another, could not be shown to
have been procured by fraud, Mr. Justice Clifford, in delivering the opinion, after stating that under the rules of the
common law a domestic judgment rendered in a court of competent jurisdiction could not be collaterally impeached or
called in question, said:

allowing an inquiry into its merits. The judgment of a foreign court therefore is by our laws considered only as
presumptive evidence of a debt, or as prima facie evidence of a sufficient consideration of a promise, where such
court had jurisdiction of the cause, and if an action of debt be sued on any such judgment, nil debet is the general
issue, or if it be made the consideration of a promise, the general issue is non assumpsit. On these issues the
defendant may impeach the justice of the judgment by evidence relative to that point. On these issues, the defendant
may also, by proper evidence, prove that the judgment was rendered by a foreign court which had no jurisdiction, and
if his evidence be sufficient for this purpose, he has no occasion to impeach the justice of the judgment."

"Common law rules placed foreign judgments upon a different footing, and those rules remain, as a general remark,
unchanged to the present time. Under these rules, a foreign judgment was prima facie evidence of the debt, and it
was open to examination, not only to show that the court in which it was rendered had no jurisdiction of the subject
matter, but also to show that the judgment was fraudulently obtained."
72 U. S. 5 Wall. 290, 72 U. S. 304.

14

9 Mass. 463, 464.

In a less known case, decided in 1815 but not published until 1879, the reasons for this view were forcibly stated by
Chief Justice Jeremiah Smith, speaking for the Supreme Court of New Hampshire, as follows:

"The respect which is due to judgments, sentences, and decrees of courts in a foreign state by the law of nations
seems to be the same which is due to those of our own courts. Hence, the decree of an admiralty court abroad is
equally conclusive with decrees of our admiralty courts. Indeed, both courts proceed by the same rule, are governed
by the same law -- the maritime law of nations, Coll.Jurid. 100, which is the universal law of nations except where
treaties alter it."

ever go to this length. The general language of the books is that the defendant must impeach the judgment by
showing affirmatively that it was unjust by being irregularly or unfairly procured."

"The same comity is not extended to judgments or decrees which may be founded on the municipal laws of the state
in which they are pronounced. Independent states do not choose to adopt such decisions without examination. These
laws and regulations may be unjust, partial to citizens, and against foreigners. They may operate injustice to our
citizens, whom we are bound to protect. They may be, and the decisions of courts founded on them, just cause of
complaint against the supreme power of the state where rendered. To adopt them is not merely saying that the courts
have decided correctly on the law, but it is approbating the law itself. Wherever, then, the court may have proceeded
on municipal

Chancellor Kent afterwards, treating of the same subject in the first edition of his Commentaries (1827), put the right
to impeach a foreign judgment somewhat more broadly, saying:

Page 159 U. S. 187

law, the rule is that the judgments are not conclusive evidence of debt, but prima facie evidence only. The
proceedings have not the conclusive quality which is annexed to the records or proceedings of our own courts, where
we approve both of the rule and of the judges who interpret and apply it. A foreign judgment may be impeached.
Defendant may show that it is unjust, or that it was irregularly or unduly obtained. Doug. 5, note."
Bryant v. Ela, Smith (N.H.) 396, 404.
From this review of the authorities, it clearly appears that at the time of the separation of this country from England,
the general rule was fully established that foreign judgments in personam were prima facie evidence only, and not
conclusive of the merits of the controversy between the parties. But the extent and limits of the application of that rule
do not appear to have been much discussed or defined with any approach to exactness in England or America until
the matter was taken up by Chancellor Kent and by Mr. Justice Story.
In Taylor v. Bryden (1811), an action of assumpsit brought in the Supreme Court of the State of New York on a
judgment obtained in the State of Maryland against the defendant as endorser of a bill of exchange, and which was
treated as a foreign judgment, so far as concerned its effect in New York (the decision of this Court to the contrary in
Mills v. Duryee, 7 Cranch 481, not having yet been made), Chief Justice Kent said:
"The judgment in Maryland is presumptive evidence of a just demand, and it was incumbent upon the defendant, if he
would obstruct the execution of the judgment here, to show by positive proof that it was irregularly or unduly obtained.
. . . To try over again, as of course, every matter of fact which had been duly decided by a competent tribunal would
be disregarding the comity which we justly owe to the courts of other states, and would be carrying the doctrine of
reexamination to an oppressive extent. It would be the same as granting a new trial in every case and upon every
question of fact. Suppose a recovery in another state, or in any foreign court, in an action for a
Page 159 U. S. 188
tort, as for an assault and battery, false imprisonment, slander, etc., and the defendant was duly summoned and
appeared, and made his defense, and the trial was conducted orderly and properly, according to the rules of a
civilized jurisprudence, is every such case to be tried again here on the merits? I much doubt whether the rule can

15

But the case was decided upon the ground that the defendant had done no more than raise a doubt of the
correctness of the judgment sued on. 8 Johns. 173, 177, 178.

"No sovereign is obliged to execute within his dominion a sentence rendered out of it, and if execution be sought by a
suit upon the judgment or otherwise, he is at liberty, in his courts of justice, to examine into the merits of such
judgment [for the effect to be given to foreign judgments is altogether a matter of comity in cases where it is not
regulated by treaty]. In the former case [of a suit to enforce a foreign judgment], the rule is that the foreign judgment
is to be received in the first instance as prima facie evidence of the debt, and it lies on the defendant to impeach the
justice of it or to show that it was irregularly and unduly obtained. This was the principle declared and settled by the
House of Lords in 1771 in the case of Sinclair v. Fraser upon an appeal from the Court of Cession in Scotland."
In the second edition (1832), he inserted the passages above printed in brackets, and in a note to the fourth edition
(1840), after citing recent conflicting opinions in Great Britain, and referring to Mr. Justice Story's reasoning in his
Commentaries on the Conflict of Laws, 607, in favor of the conclusiveness of foreign judgments, he added:
"And that is certainly the more convenient and the safest rule, and the most consistent with sound principle, except in
cases in which the court which pronounced the judgment has not due jurisdiction of the case, or of the
Page 159 U. S. 189
defendant, or the proceeding was in fraud, or founded in palpable mistake or irregularity, or bad by the law of the rei
judicatae, and in all such cases, the justice of the judgment ought to be impeached."
2 Kent Com. (1st ed.) 102; (later Eds.) 120.
Mr. Justice Story, in his Commentaries on the Conflict of Laws, first published in 1834, after reviewing many English
authorities, said: "The present inclination of the English courts seems to be to sustain the conclusiveness of foreign
judgments," to which, in the second edition, in 1841, he added: "Although certainly there yet remains no
inconsiderable diversity of opinion among the learned judges of the different tribunals." 606.
He then proceeded to state his own view of the subject on principle, saying:
"It is indeed very difficult to perceive what could be done if a different doctrine were maintainable to the full extent of
opening all the evidence and merits of the cause anew on a suit upon the foreign judgment. Some of the witnesses
may be since dead; some of the vouchers may be lost or destroyed. The merits of the cause, as formerly before the
court upon the whole evidence, may have been decidedly in favor of the judgment; upon a partial possession of the
original evidence, they may now appear otherwise. Suppose a case purely sounding in damages, such as an action
for an assault, for slander, for conversion of property, for a malicious prosecution, or for a criminal conversation; is the
defendant to be at liberty to retry the whole merits, and to make out, if he can, a new case upon new evidence? Or is
the court to review the former decision, like a Court of Appeal, upon the old evidence? In a case of covenant, or of
debt, or of a breach of contract, are all the circumstances to be reexamined anew? If they are, by what laws and rules

of evidence and principles of justice is the validity of the original judgment to be tried? Is the court to open the
judgment, and to proceed ex aequo et bono? Or is it to administer strict law, and stand to the doctrines of the local
administration of justice? Is it to act upon the rules of evidence acknowledged in its own jurisprudence, or upon those
of the foreign jurisprudence? These and many more questions might be put to

"If a civilized nation seeks to have the sentences of its own courts held of any validity elsewhere, they ought to have a
just regard to the rights and usages of other civilized nations and the principles of public and national law in the
administration of justice."
3 Sumnner 600, 608-609.

Page 159 U. S. 190

show the intrinsic difficulties of the subject. Indeed, the rule that the judgment is to be prima facie evidence for the
plain tiff would be a mere delusion if the defendant might still question it by opening all or any of the original merits on
his side, for under such circumstances it would be equivalent to granting a new trial. It is easy to understand that the
defendant may be at liberty to impeach the original justice of the judgment by showing that the court had no
jurisdiction, or that he never had any notice of the suit, or that it was procured by fraud, or that upon its face it is
founded in mistake, or that it is irregular and bad by the local law, fori rei judicatae. To such an extent, the doctrine is
intelligible and practicable. Beyond this, the right to impugn the judgment is in legal effect the right to retry the merits
of the original cause at large, and to put the defendant upon proving those merits."

In Burnham v. Webster (1845), in an action of assumpsit upon a promissory note, brought in the Circuit Court of the
United States for the District of Maine, the defendant pleaded a former judgment in the Province of New Brunswick in
his favor in an action there brought by the plaintiff. The plaintiff replied that the note was withdrawn from that suit, by
consent of parties and leave of the court, before verdict and judgment, and the defendant demurred to the replication.
Judge Ware, in overruling the demurrer, said:
"Whatever difference of opinion there may be as to the binding force of foreign judgments, all agree that they are not
entitled to the same authority as the judgments of domestic courts of general jurisdiction. They are but evidence of
what they purport to decide, and liable to be controlled by counter evidence, and do not, like domestic judgments,
import absolute verity and remain incontrovertible and conclusive until reversed."

607.
He then observed:

And he added that if the question stood entirely clear from authority, he should be of opinion that the plaintiff could not
be allowed to deny the validity of the proceedings of a court whose authority he had invoked. 2 Ware, 236, 239-241.

"The general doctrine maintained in the American courts in relation to foreign judgments certainly is that they are
prima facie evidence, but that they are impeachable. But how far and to what extent this doctrine is to be carried does
not seem to be definitely settled. It has been declared that the jurisdiction of the court, and its power over the parties
and the things in controversy, may be inquired into, and that the judgment may be impeached for fraud. Beyond this,
no definite lines have as yet been drawn."

At a subsequent trial of that case before a jury, (1846) 1 Woodb. & Min. 172, the defendant proved the judgment in
New Brunswick. The plaintiff then offered to prove the facts stated in his replication, and that any entry on the record
of the judgment in New Brunswick concerning this note was therefore by mistake or inadventure. This evidence was

608.

excluded, and a verdict taken for the plaintiff, subject to the opinion of the court. Mr. Justice Woodbury, in granting a
new trial, delivered a thoughtful and discriminating opinion upon the effect of foreign judgments, from which the
following passages are taken:

After stating the effect of the Constitution of the United States and referring to the opinions of some foreign jurists,
and to the law of France, which allows the merits of foreign judgments to be examined, Mr. Justice Story concluded
his treatment of the subject as follows:
"It is difficult to ascertain what the prevailing rule is in regard to foreign judgments in some of the other nations of
continental Europe -- whether they are deemed conclusive evidence or only prima facie evidence. Holland seems at
all times, upon the general principle of reciprocity, to have given great weight to foreign judgments and in many
cases, if not in all cases, to have given to them a weight equal to that given to domestic judgments, wherever the like
rule of reciprocity with regard to Dutch
Page 159 U. S. 191
judgments has been adopted by the foreign country whose judgment is brought under review. This is certainly a very
reasonable rule, and may perhaps hereafter work itself firmly into the structure of international jurisprudence."
618.
In Bradstreet v. Neptune Ins. Co. (1839), in the Circuit Court of the United States for the District of Massachusetts,
Mr. Justice Story said:

16

Page 159 U. S. 192

"They do, like domestic ones, operate conclusively, ex proprio vigore, within the governments in which they are
rendered, but not elsewhere. When offered and considered elsewhere, they are, ex commitate, treated with respect,
according to the nature of the judgment and the character of the tribunal which rendered it and the reciprocal mode, if
any, in which that government treats our judgments, and according to the party offering it, whether having sought or
assented to it voluntarily or not, so as to give it in some degree the force of a contract, and hence to be respected
elsewhere by analogy according to the lex loci contractus. With these views I would go to the whole extent of the
cases decided by Lords Mansfield and Buller, and where the foreign judgment is not in rem, as it is in admiralty,
having the subject matter before the court, and acting on that, rather than the parties, I would consider it only prima
facie evidence as between the parties to it."
P. 175.
"By returning to that rule, we are enabled to give parties at times most needed and most substantial relief, such as in
judgments abroad against them without notice, or without a hearing on the merits, or by accident or mistake of facts,
as here, or on rules of evidence and rules of law they never assented to, being foreigners and their contracts made
elsewhere but happening to be traveling through a foreign jurisdiction and being compelled in invitum to litigate
there."

P. 177.
"Nor would I permit the prima facie force of the foreign judgment to go far if the court was one of a barbarous or semibarbarous government, and acting on no established principles of civilized jurisprudence, and not resorted to willingly
by both parties, or both not inhabitants and citizens of the country. Nor can much comity be asked for the judgments
of another nation which, like France, pays no respect to those of other countries except, as before remarked, on the
principle of the parties belonging there or assenting to a trial there."

on clear mistake or irregularity, or was bad by the law of the place where it was rendered. Story on Conflict of Laws
607; 2 Kent Com. (6th ed.) 120.
The word "mistake" was evidently used by Story and Kent in this connection not in its wider meaning of error in
judgment, whether upon the law or upon the facts, but in the stricter sense of misapprehension or oversight, and as
equivalent to what, in Burnham v. Webster, before cited, Mr. Justice Woodbury spoke of as "some objection to the
judgment's reaching the merits, and tending to prove that they had not been acted on," "some accident or mistake,"
or "that the court did not decide at all on the merits." 1 Woodb. & Min. 180.

P. 179.
Page 159 U. S. 193
"On the other hand, by considering a judgment abroad as only prima facie valid, I would not allow the plaintiff abroad,
who had sought it there, to avoid it, unless for accident or mistake, as here, because, in other respects, having been
sought there by him voluntarily, it does not lie in his mouth to complain of it. Nor would I in any case permit the whole
merits of the judgment recovered abroad to be put in evidence as a matter of course, but, being prima facie correct,
the party impugning it, and desiring a hearing of its merits, must show first, specifically, some objection to the
judgment's reaching the merits, and tending to prove they had not been acted on, or [as?] by showing there was no
jurisdiction in the court, or no notice, or some accident or mistake, or fraud which prevented a full defense, and has
entered into the judgment, or that the court either did not decide at all on the merits or was a tribunal not acting in
conformity to any set of legal principles, and was not willingly recognized by the party as suitable for adjudicating on
the merits. After matters like these are proved, I can see no danger, but rather great safety, in the administration of
justice in permitting to every party before us at least one fair opportunity to have the merits of his case fully
considered, and one fair adjudication upon them before he is estopped forever."

The suggestion that a foreign judgment might be impeached for error in law of the country in which it was rendered is
hardly consistent with the statement of Chief Justice Marshall, when, speaking of the disposition of this Court to adopt
the construction given to the laws of a state by its own courts, he said:
"This course is founded on the principle, supposed to be universally recognized, that the judicial department of every
government, where such department exists, is the appropriate organ for construing the legislative acts of that
government. Thus, no court in the universe which professed to be governed by principle would, we presume,
undertake to say that the courts of Great Britain or of France or of any other nation had misunderstood their own
statutes, and therefore erect itself into a tribunal which should correct such misunderstanding. We receive the
construction given by the courts of the nation as the true sense of the law, and feel ourselves no more at liberty to
depart from that construction than to depart from the words of the statute."
Elmendorf v. Taylor (1825), 10 Wheat. 152, 23 U. S. 159-160.
In recent times, foreign judgments rendered within the dominions

P. 180.

Page 159 U. S. 195

In De Brimont v. Penniman (1873), in the Circuit Court of the United States for the Southern District of New York,
Judge Woodruff said:

of the English Crown and under the law of England, after a trial on the merits, and no want of jurisdiction and no fraud
or mistake being shown or offered to be shown, have been treated as conclusive by the highest courts of New York,
Maine, and Illinois. Lazier v. Westcott (1862), 26 N.Y. 146, 150; Dunstan v. Higgins (1893), 138 N.Y. 70, 74; Rankin v.
Goddard (1866), 54 Me. 28, and (1868) 55 Me. 389; Baker v. Palmer (1876), 83 Ill. 568. In two early cases in Ohio, it
was said that foreign judgments were conclusive unless shown to have been obtained by fraud. Lake Bank v.
Harding (1832), 5 Ohio 545, 547; Anderson v. Anderson (1837), 8 Ohio 108, 110. But in a later case in that state, it
was said that they were only prima facie evidence of indebtedness. Pelton v. Platner (1844), 13 Ohio, 209, 217. In
Jones v. Jamison (1860), 15 La.Ann. 35, the decision was only that, by virtue of the statutes of Louisiana, a foreign
judgment merged the original cause of action as against the plaintiff.

"The principle on which foreign judgments receive any recognition from our courts is one of comity. It does not
require, but rather forbids, it where such a recognition works a direct violation of the policy of our laws, and does
violence to what we deem the rights of our citizens."
And he declined to maintain an action against a citizen of the United States, whose daughter had been married in
France to a French citizen, upon a decree of a French court requiring the defendant, then resident in France and duly
served with process there, to pay an annuity to his son-in-law. 10 Blatchford 436, 441.
Mr. Justice Story and Chancellor Kent, as appears by the passages above quoted from their Commentaries,
concurred in
Page 159 U. S. 194
the opinion that, in a suit upon a foreign judgment, the whole merits of the case could not as matter of course be
reexamined anew, but that the defendant was at liberty to impeach the judgment not only by showing that the court
had no jurisdiction of the case or of the defendant, but also by showing that it was procured by fraud, or was founded

17

The result of the modern decisions in England, after much diversity, not to say vacillation, of opinion does not greatly
differ (so far as concerns the aspects in which the English courts have been called upon to consider the subject) from
the conclusions of Chancellor Kent and of Justices Story and Woodbury.
At one time it was held that, in an action brought in England upon a judgment obtained by the plaintiff in a foreign
country, the judgment must be assumed to be according to the law of that country unless the contrary was clearly
proved, manifestly implying that proof on that point was competent. Becquet v. MacCarthy (1831), 2 B. & Ad. 951,
957; Alivon v. Furnival (1834), 1 Cr., M. & R. 277, 293, 4 Tyrwh. 751, 768.

Lord Brougham, in the House of Lords, as well as Chief Justice Tindal and Chief Justice Wilde (afterwards Lord
Chancellor Truro) and their associates, in the Common Bench, considered it to be well settled that an Irish or colonial
judgment or a foreign judgment was not, like a judgment of a domestic court of record, conclusive evidence, but only,
like a
Page 159 U. S. 196
simple contract, prima facie evidence of a debt. Houlditch v. Donegal (1834), 8 Bligh N.R. 301, 342, 346, 2 Cl. & Fin.
470, 476-479; Don v. Lippmann (1837), 5 Cl. & Fin. 1, 20-22; Smith v. Nicolls (1839), 7 Scott 147, 166-170, 5
Bing.N.C. 208, 220-224, 7 Dowl. 282; Bank of Australasia v. Harding (1850), 9 C.B. 661, 686-687.
On the other hand, Vice Chancellor Shadwell, upon an imperfect review of the early cases, expressed the opinion
that a foreign judgment was conclusive. Martin v. Nicolls (1830), 3 Sim. 458.
Like opinions were expressed by Lord Denman, speaking for the Court of Queen's Bench, and by Vice Chancellor
Wigram, in cases of Irish or colonial judgments, which were subject to direct appellate review in England. Ferguson v.
Mahon (1839), 11 Ad. & El. 179, 183, 3 Per. & Dav. 143, 146; Henderson v. Henderson (1844), 6 Q.B. 288, 298, 299;
Henderson v. Henderson (1843), 3 Hare 100, 118.
In Bank v. Nias (1851), in an action upon an Australian judgment, pleas that the original promises were not made, and
that those promises, if made, were obtained by fraud, were held bad on demurrer. Lord Campbell, in delivering
judgment, referred to Story on the Conflict of Laws, and adopted substantially his course of reasoning in 607, above
quoted, with regard to foreign judgments. But he distinctly put the decision upon the ground that the defendant might
have appealed to the Judicial Committee of the Privy Council, and thus have procured a review of the colonial
judgment, and he took the precaution to say:

"no foreign judgment [which is defined as a judgment of 'a civil tribunal beyond the limits of British India, and not
having authority in British India, nor established by the governor general in council'] shall operate as a bar to a suit in
British India, . . . if it appears on the face of the proceeding to be founded on an incorrect view of international law,"
or "if it is, in the opinion of the court before which it is produced, contrary to natural justice." Piggott on Foreign
Judgments (2d ed.) 380, 381.
It was formerly understood in England that a foreign judgment was not conclusive if it appeared upon its face to be
founded on a mistake or disregard of English law. Arnott v. Redfern (1825-1826) 2 Car. & P. 88, 3 Bing. 353, and 11 J.
B. Moore 209; Novelli v. Rossi (1831) 2 B. & Ad. 757; 3 Burge on Colonial and Foreign Laws 1065; 2 Smith's
Lead.Cas. (2d ed.) 448; Reimers v. Druce (1856), 23 Beavan 145.
In Simpson v. Fogo (1860), 1 Johns. & Hem. 18, and (1862) 1 Hem. & Mil. 195, Vice Chancellor Wood (afterwards
Lord Hatherley) refused to give effect to a judgment in personam of a court in Louisiana, which had declined to
recognize the title of a mortgagee of an English ship under the English law. In delivering judgment upon demurrer, he
said:
"The State of Louisiana may deal as it pleases with foreign law; but if it asks courts of this country to respect its law, it
must be on a footing of paying a like respect to ours. Any comity between the courts of two nations holding such
Page 159 U. S. 198

"How far it would be permitted to a defendant to impeach the competency or the integrity of a foreign court from
which there was no appeal it is unnecessary here to inquire."

opposite doctrines as to the authority of the lex loci is impossible. While the courts of Louisiana refuse to recognize a
title acquired here, which is valid according to our law, and hand over to their own citizens property so acquired, they
cannot at the same time expect us to defer to a rule of their law which we are no more bound to respect than a law
that any title of foreigners should be disregarded in favor of citizens of Louisiana. The answer to such a demand must
be that a country which pays so little regard to our laws as to set aside a paramount title acquired here must not
expect at our hands any greater regard for the title so acquired by the citizens of that country."

16 Q.B. 717, 734-737.

1 Johns. & Hem. 28, 29. And upon motion for a decree, he elaborated the same view, beginning by saying:

The English courts, however, have since treated that decision as establishing that a judgment of any competent
foreign court could not, in an action upon it, be questioned either because that court had mistaken its own law or
because it had come to an erroneous conclusion upon the facts. De Cosse Brissac v. Rathbone (1861) 6 H. & N. 301;
Scott v. Pilkington

"Whether this judgment does so err or not against the recognized principles of what has been commonly called the
comity of nations by refusing to regard the law of the country where the title to the ship was acquired is one of the
points which I have to consider,"

Page 159 U. S. 197

(1862) 2 B. & S. 11, 41-42; Vanquelin v. Bouard (1863), 15 C.B. (N.S.) 341, 368; Castrique v. Imrie (1870), L.R. 4 H.L.
414, 429-430; Godard v. Gray (1870), L.R. 6 Q.B. 139, 150; Ochsenbein v. Papelier (1873), 8 Ch.App. 695, 701. In
Meyer v. Ralli (1876), a judgment in rem, rendered by a French court of competent jurisdiction, was held to be
reexaminable upon the merits solely because it was admitted by the parties, in the special case upon which the
cause was submitted to the English court, to be manifestly erroneous in regard to the law of France. 1 C.P.D. 358.
In view of the recent decisions in England, it is somewhat remarkable that, by the Indian Code of Civil Procedure of
1877,

18

and concluding that it was "so contrary to law, and to what is required by the comity of nations" that he must
disregard it. 1 Hem. & Mil. 222-247. See also Liverpool Co. v. Hunter (1867), L.R. 4 Eq. 62, 68, and (1868) L.R. 3 Ch.
479, 484.
In Scott v. Pilkington (1862), Chief Justice Cockburn treated it as an open question whether a judgment recovered in
New York for a debt could be impeached on the ground that the record showed that the foreign court ought to have
decided the case according to English law, and had either disregarded the comity of nations by refusing to apply the
English law or erred in its view of English law. 2 B. & S. 11, 42. In Castrique v. Imrie (1870), the French judgment
which was adjudged not to be impeachable for error in law, French or English, was, as the House of Lords construed
it, a judgment in rem, under which the ship to which the plaintiff in England claimed title had been sold. L.R. 4 H.L.
414. In Godard v. Gray (1870), shortly afterwards, in which the court of Queen's Bench held that a judgment in
personam of a French court could not be impeached because it had put

Page 159 U. S. 199

a construction erroneous, according to English law, upon an English contract, the decision was put by Justices
Blackburn and Mellor upon the ground that it did not appear that the foreign court had "knowingly and perversely
disregarded the rights given by the English law," and by Justice Hannen solely upon the ground that the defendant
did not appear to have brought the English law to the knowledge of the foreign court. L.R. 6 Q.B. 139, 149, 154. In
Messina v. Petrococchino (1872), Sir Robert Phillimore, delivering judgment in the Privy Council, said: "A foreign
judgment of a competent court may, indeed, be impeached if it carries on the face of it a manifest error." L.R. 4 P.C.
144, 157.

"that anything which negatives the existence of that legal obligation or excuses the defendant from the performance
of it must form a good defense to the action."
Godard v. Gray (1870), L.R. 6 Q.B. 139, 148-149; Schibsby v. Westenholz, 6 Q.B. 155, 159. And his example has
been followed by some other English judges: Fry, J., in Rousillon v. Rousillon (1880), 14 Ch.D. 351, 370; North, J., in
Nouvion v. Freeman (1887), 35 Ch.D. 704, 714-715; Cotton and Lindley, L. JJ., in Nouvion v. Freeman (1887), 37
Ch.D. 244, 250, 256.
Page 159 U. S. 201

The result of the English decisions therefore would seem to be that a foreign judgment in personam may be
impeached for a manifest and willful disregard of the law of England.

But the theory that a foreign judgment imposes or creates a duty or obligation is a remnant of the ancient fiction,
assumed by Blackstone, saying that

Lord Abinger, Baron Parke, and Baron Alderson were wont to say that the judgment of a foreign court of competent
jurisdiction for a sum certain created a duty or legal obligation to pay that sum; or, in Baron Parke's words, that the
principle on which the judgments of foreign and colonial courts are supported and enforced was

"upon showing the judgment once obtained still in full force and yet unsatisfied, the law immediately implies that, by
the original contract of society, the defendant hath contracted a debt and is bound to pay it."

"that where a court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, a
legal obligation arises to pay that sum, on which an action of debt to enforce the judgment may be maintained."
Russell v. Smyth (1842), 9 M. & W. 810, 818-819; Williams v. Jones (1845), 13 M. & W. 628, 633, 634.
But this was said in explaining why, by the technical rules of pleading, an action of assumpsit or of debt would lie
upon a foreign judgment, and had no reference to the question how far such a judgment was conclusive of the matter
adjudged. At common law, an action of debt would lie on a debt appearing by a record or by any other specialty, such
as a contract under seal, and would also lie for a definite sum of money due by simple contract. Assumpsit would not
lie upon a record or other specialty, but would lie upon any other contract, whether expressed by the party or implied
by law. In an action upon a record, or upon a contract under seal, a lawful consideration was conclusively presumed
to exist, and could not be denied,

3 Bl.Com. 160. That fiction which embraced judgments upon default or for torts cannot convert a transaction wanting
the assent of parties into one which necessarily implies it. Louisiana v. New Orleans, 109 U. S. 285, 109 U. S. 288.
While the theory in question may help to explain rules of pleading which originated while the fiction was believed in, it
is hardly a sufficient guide at the present day in dealing with questions of international law, public or private, and of
the comity of our own country, and of foreign nations. It might be safer to adopt the maxim applied to foreign
judgments by Chief Justice Weston, speaking for the Supreme Judicial Court of Maine, judicium redditur in invitum,
or, as given by Lord Coke, in praesumptione legis judicium redditur in invitum. Jordan v. Robinson (1838), 15 Me.
167, 168; Co.Litt. 248b.
In Russell v. Smyth, above cited, Baron Parke took the precaution of adding: "Nor need we say how far the judgment
of a court of competent jurisdiction, in the absence of fraud, is conclusive upon the parties." 9 M. & W. 819. He could
hardly have contemplated erecting a rule of local procedure into a canon of private international law, and a substitute
for "the comity of nations," on which, in an earlier case, he had himself relied as the ground for enforcing in England a
right created by a law of a foreign country. Alivon v. Furnival, 1 Cr., M. & R. 277, 296, 4 Tyrwh. 751, 771.

Page 159 U. S. 200

but in an action, whether in debt or in assumpsit, upon a simple contract, express or implied, the consideration was
open to inquiry. A foreign judgment was not considered, like a judgment of a domestic court of record, as a record or
specialty. The form of action, therefore, upon a foreign judgment was not in debt, grounded upon a record or a
specialty, but was either in debt, as for a definite sum of money due by simple contract, or in assumpsit upon such a
contract. A foreign judgment, being a security of no higher nature than the original cause of action, did not merge that
cause of action. The plaintiff might sue either on the judgment or on the original cause of action, and in either form of
suit the foreign judgment was only evidence of a liability equivalent to a simple contract, and was therefore liable to
be controlled by such competent evidence as the nature of the case admitted. See cases already cited, especially
Walker v. Witter, 1 Doug. 1; Phillips v. Hunter, 2 H.Bl. 402, 410; Bissell v. Briggs, 9 Mass. 463, 464; Mills v. Duryee, 7
Cranch 481, 11 U. S. 485; D'Arcy v. Ketchum, 11 How. 165, 52 U. S. 176; Hall v. Odber, 11 East 118; Smith v. Nicolls,
7 Scott 147, 5 Bing. N.C. 208. See also Grant v. Easton, 13 Q.B.D. 302, 303; Lyman v. Brown, 2 Curtis 559.
Mr. Justice Blackburn, indeed, in determining how far a foreign judgment could be impeached either for error in law or
for want of jurisdiction, expressed the opinion that the effect of such a judgment did not depend upon what he termed
"that which is loosely called comity,'" but upon the saying of Baron Parke, above quoted, and consequently

19

In Abouloff v. Oppenheimer (1882), Lord Coleridge and Lord Justice Brett carefully avoided adopting the theory of a
legal obligation to pay a foreign judgment as the test in determining how far such a judgment might be impeached. 10
Q.B.D. 295, 300, 305. In Hawksford v. Giffard (1886), in the Privy Council, on appeal from the Royal Court of Jersey,
Lord Herschell said:
"This action is brought upon an English judgment which, until a judgment was obtained in Jersey, was in
Page 159 U. S. 202
that country no more than evidence of a debt."
12 App.Cas. 122, 126. In Nouvion v. Freeman (1889), in the House of Lords, Lord Herschell, while he referred to the
reliance placed by counsel on the saying of Baron Parke, did not treat a foreign judgment as creating or imposing a
new obligation, but only as declaring and establishing that a debt or obligation existed. His words were:

"The principle upon which I think our enforcement of foreign judgments must proceed is this, that in a court of
competent jurisdiction, where according to its established procedure, the whole merits of the case were open at all
events, to the parties, however much they may have failed to take advantage of them, or may have waived any of
their rights, a final adjudication has been given that a debt or obligation exists which cannot thereafter in that court be
disputed, and can only be questioned in an appeal to a higher tribunal. In such a case, it may well be said that, giving
credit to the courts of another country, we are prepared to take the fact that such adjudication has been made as
establishing the existence of the debt or obligation."

Abinger and Barons Alderson and Rolfe concurring), expressed a decided opinion that the pleas were bad in
substance, for these reasons:

And Lord Bramwell said:

Page 159 U. S. 204

"How can it be said that there is a legal obligation on the part of a man to pay a debt who has a right to say, 'I owe
none, and no judgment has established against me that I do?' I cannot see."

of the defendant as an answer, in an adverse suit in a foreign country, whose laws they were under no obligation to
obey."

The foreign judgment in that case was allowed no force, for want of finally establishing the existence of a debt. 15
App.Cas. 1, 9-10, 14.

11 M. & W. 877, 894, 13 Law Journal (N.S.) Exch. 168, 176.

In view of all the authorities upon the subject and of the trend of judicial opinion in this country and in England,
following the lead of Kent and Story, we are satisfied that where there has been opportunity for a full and fair trial
abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or
voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial
administration of justice between the citizens of its own country and those of other countries, and there is nothing to
show either prejudice in the court or in the system of laws under which it was sitting, or fraud in procuring the
judgment, or any other special reason why the comity of this nation should not allow it full effect,
Page 159 U. S. 203
the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new
trial or an appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact. The
defendants therefore cannot be permitted upon that general ground to contest the validity or the effect of the
judgment sued on.
But they have sought to impeach that judgment upon several other grounds which require separate consideration.
It is objected that the appearance and litigation of the defendants in the French tribunals were not voluntary, but by
legal compulsion, and therefore that the French courts never acquired such jurisdiction over the defendants that they
should be held bound by the judgment.

"They do not state that the plaintiffs were French subjects, or resident or even present in France, when the suit
began, so as to be bound, by reason of allegiance or domicile or temporary presence, by a decision of a French
court, and they did not select the tribunal and sue as plaintiffs, in any of which cases the determination might have
possibly bound them. They were mere strangers, who put forward the negligence

But it is now settled in England that while an appearance by the defendant in a court of a foreign country, for the
purpose of protecting his property already in the possession of that court, may not be deemed a voluntary
appearance, yet an appearance solely for the purpose of protecting other property in that country from seizure is
considered as a voluntary appearance. De Cosse Brissac v. Rathbone (1861), 6 H. & N. 301, 20 Law Journal (N.S.)
Exch. 238; Schibsby v. Westenholz (1870), L.R. 6 Q.B. 155, 162; Voinet v. Barrett (1885), Cab. & El. 554, 54 Law
Journal (N.S.) Q.B. 521, and 55 Law Journal (N.S.) Q.B. 39.
The present case is not one of a person traveling through or casually found in a foreign country. The defendants,
although they were not citizens or residents of France, but were citizens and residents of the State of New York, and
their principal place of business was in the City of New York, yet had a storehouse and an agent in Paris, and were
accustomed to purchase large quantities of goods there, although they did not make sales in France. Under such
circumstances, evidence that their sole object in appearing and carrying on the litigation in the French courts was to
prevent property in their storehouse at Paris, belonging to them, and within the jurisdiction, but not in the custody, of
those courts from being taken in satisfaction of any judgment that might be recovered against them would not,
according to our law, show that those courts did not acquire jurisdiction of the persons of the defendants.
It is next objected that in those courts, one of the plaintiffs was permitted to testify not under oath, and was not
subjected to cross-examination by the opposite party, and that the defendants were therefore deprived of safeguards
which are by our law considered essential to secure honesty and to detect fraud in a witness, and also that
documents and papers were admitted in evidence with which the defendants had no connection
Page 159 U. S. 205

Upon the question what should be considered such a voluntary appearance as to amount to a submission to the
jurisdiction of a foreign court, there has been some difference of opinion in England.
In General Steam Navigation Co. v. Guillou (1843), in an action at law to recover damages to the plaintiffs' ship by a
collision with the defendant's ship through the negligence of the master and crew of the latter, the defendant pleaded
a judgment by which a French court, in a suit brought by him and after the plaintiffs had been cited, had appeared,
and had asserted fault on this defendant's part, had adjudged that it was the ship of these plaintiffs, and not that of
this defendant, which was in fault. It was not shown or suggested that the ship of these plaintiffs was in the custody or
possession of the French court. Yet Baron Parke, delivering a considered judgment of the Court of Exchequer (Lord

20

and which would not be admissible under our own system of jurisprudence. But it having been shown by the plaintiffs,
and hardly denied by the defendants, that the practice followed and the method of examining witnesses were
according to the laws of France, we are not prepared to hold that the fact that the procedure in these respects
differed from that of our own courts is, of itself, a sufficient ground for impeaching the foreign judgment.
It is also contended that a part of the plaintiffs' claim is affected by one of the contracts between the parties having
been made in violation of the revenue laws of the United States, requiring goods to be invoiced at their actual market
value. Rev.Stat. 2854. It may be assumed that, as the courts of a country will not enforce contracts made abroad in
evasion or fraud of its own laws, so they will not enforce a foreign judgment upon such a contract. Armstrong v. Toler,

11 Wheat. 258; De Brimont v. Penniman, 10 Blatchford 436; Lang v. Holbrook, Crabbe 179; Story on Conflict of Laws
244, 246; Wharton's Conflict of Laws, 656. But as this point does not affect the whole claim in this case, it is
sufficient for present purposes to say that there does not appear to have been any distinct offer to prove that the
invoice value of any of the goods sold by the plaintiffs to the defendants was agreed between them to be or was in
fact lower than the actual market value of the goods.
It must however always be kept in mind that it is the paramount duty of the court before which any suit is brought to
see to it that the parties have had a fair and impartial trial before a final decision is rendered against either party.
When an action is brought in a court of this country by a citizen of a foreign country against one of our own citizens to
recover a sum of money adjudged by a court of that country to be due from the defendant to the plaintiff, and the
foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the
parties, and upon due allegations and proofs and opportunity to defend against them, and its proceedings are
according to the course of a civilized jurisprudence, and are stated in a clear and formal
Page 159 U. S. 206
record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged, and it should be held
conclusive upon the merits tried in the foreign court unless some special ground is shown for impeaching the
judgment, as by showing that it was affected by fraud or prejudice or that, by the principles of international law and by
the comity of our own country, it should not be given full credit and effect.
There is no doubt that both in this country, as appears by the authorities already cited, and in England, a foreign
judgment may be impeached for fraud.
Shortly before the Declaration of Independence, the House of Lords, upon the trial of the Duchess of Kingston for
bigamy, put to the judges the question whether -- assuming a sentence of the ecclesiastical court against a marriage,
in a suit for jactitation of marriage, to be conclusive evidence so as to prevent the counsel for the crown from proving
the marriage upon an indictment for polygame -- "the counsel for the crown may be admitted to avoid the effect of
such sentence by proving the same to have been obtained by fraud or collusion." Chief Justice De Grey, delivering
the opinion of the judges, which was adopted by the House of Lords, answering this question in the affirmative, said:
"But if it was a direct and decisive sentence upon the point, and, as it stands, to be admitted as conclusive evidence
upon the court, and not to be impeached from within, yet, like all other acts of the highest judicial authority, it is
impeachable from without. Although it is not permitted to show that the court was mistaken, it may be shown that they
were misled. Fraud is an intrinsic collateral act, which vitiates the most solemn proceedings of courts of justice. Lord
Coke says it avoids all judicial acts, ecclesiastical or temporal."
20 Howell's State Trials 537, 543, note; 2 Smith's Lead.Cas. 573.
All the subsequent English authorities concur in holding that any foreign judgment, whether in rem or in personam,
may be impeached upon the ground that it was fraudulently obtained. White v. Hall (1806), 12 Ves. 321, 324; Bowles
v. Orr (1835), 1 Yo. & Col.Exch. 464, 473; Price v. Dewhurst (1837) 8 Sim. 279, 302-305; Don v. Lippmann (1837), 5
Cl &
Page 159 U. S. 207

21

Fin. 1, 20; Bank of Australasia v. Nias (1851), 16 Q.B. 717, 735; Reimers v. Druce (1856), 23 Beav. 145, 150;
Castrique v. Imrie (1870), L.R. 4 H.L. 414, 445-446; Godard v. Gray (1870), L.R. 6 Q.B. 139, 149; Messina v.
Petrococchino (1872), L.R. 4 P.C. 144, 157; Ochsenbein v. Papelier (1873), 8 Ch. 695.
Under what circumstances this may be done does not appear to have ever been the subject of judicial investigation in
this country.
It has often, indeed, been declared by this Court that the fraud which entitles a party to impeach the judgment of one
of our own tribunals must be fraud extrinsic to the matter tried in the cause, and not merely consist in false and
fraudulent documents or testimony submitted to that tribunal, and the truth of which was contested before it and
passed upon by it. United States v. Throckmorton, 98 U. S. 61, 98 U. S. 65-66; Vance v. Burbank, 101 U. S. 514, 101
U. S. 519; Steel v. Smelting Co., 106 U. S. 447, 106 U. S. 453; Moffat v. United States, 115 U. S. 24, 115 U. S. 32;
United States v. Minor, 114 U. S. 233, 114 U. S. 242. And in one English case, where a ship had been sold under a
foreign judgment, the like restriction upon impeaching that judgment for fraud was suggested, but the decision was
finally put upon the ground that the judicial sale passed the title to the ship. Cammell v. Sewell (1858-60), 3 H. & N.
617, 646, 5 H. & N. 728, 729, 742.
But it is now established in England by well considered and strongly reasoned decisions of the Court of Appeal that
foreign judgments may be impeached if procured by false and fraudulent representations and testimony of the
plaintiff, even if the same question of fraud was presented to and decided by the foreign court.
In Abouloff v. Oppenheimer (1882), the plaintiff had recovered a judgment at Tiflis, in Russia, ordering the defendants
to return certain goods, or to pay their value. The defendants appealed to a higher Russian court, which confirmed
the judgment and ordered the defendants to pay, besides the sum awarded below, an additional sum for costs and
expenses. In an action in the English High Court of
Page 159 U. S. 208
Justice upon those judgments, the defendants pleaded that they were obtained by the gross fraud of the plaintiff in
fraudulently representing to the Russian courts that the goods in question were not in her possession when the suit
was commenced, and when the judgment was given, and during the whole time the suit was pending, and by
fraudulently concealing from those courts the fact that those goods, as the fact was and as she well knew, were in her
actual possession. A demurrer to this plea was overruled and judgment entered for the defendants. And that
judgment was affirmed in the Court of Appeal by Lord Chief Justice Coleridge, Lord Justice Baggallay, and Lord
Justice Brett, all of whom delivered concurring opinions, the grounds of which sufficiently appear in the opinion
delivered by Lord Justice Brett (since Lord Esher, M.R.), who said:
"With regard to an action brought upon a foreign judgment, the whole doctrine as to fraud is English, and is to be
applied in an action purely English. I am prepared to hold, according to the judgment of the House of Lords adopting
the proposition laid down by De Grey, C.J., that if the judgment upon which the action is brought was procured from
the foreign court by the successful fraud of the party who is seeking to enforce it, the action in the English court will
not lie. This proposition is absolute and without any limitation, and as the Lord Chief Justice has pointed out, is
founded on the doctrine that no party in an English court shall be able to take advantage of his own wrongful act or,
as it may be stated in other language, that no obligation can be enforced in an English court of justice which has
been procured by the fraud of the person relying upon it as an obligation. . . . I will assume that in the suit in the
Russian courts, the plaintiff's fraud was alleged by the defendants, and that they gave evidence in support of the
charge. I will assume even that the defendants gave the very same evidence which they propose to adduce in this
action. Nevertheless the defendants will not be debarred at the trial of this action from making the same charge of

fraud and from adducing the same evidence in support of it, and if the High Court of Justice is satisfied that the
allegations of the defendants are true and

Touillier, Droit Civil, lib. 3, tit. 3, c. 6, sect. 3, No. 77.

By the French Code of Civil Procedure, art. 546,

Page 159 U. S. 209

that the fraud was committed, the defendants will be entitled to succeed in the present action. It has been contended
that the same issue ought not to be tried in an English court which was tried in the Russian courts, but I agree that
the question whether the Russian courts were deceived never could be an issue in the action tried before them. . . .
In the present case, we have had to consider the question fully, and according to the best opinion which I can form,
fraud committed by a party to a suit for the purpose of deceiving a foreign court is a defense to an action in this
country founded upon the judgment of that foreign court. It seems to me that if we were to accede to the argument for
the plaintiff, the result would be that a plausible deceiver would succeed, whereas a deceiver who is not plausible
would fail. I cannot think that plausible fraud ought to be upheld in any court of justice in England. I accept the whole
doctrine, without any limitation, that whenever a foreign judgment has been obtained by the fraud of the party relying
upon it, it cannot be maintained in the courts of this country, and further that nothing ought to persuade an English
court to enforce a judgment against one party which has been obtained by the fraud of the other party to the suit in
the foreign court."

"Judgments rendered by foreign tribunals, and acts acknowledged before foreign officers, shall not be capable of
execution in France except in the manner and in the cases provided by articles 2123 and 2128 of the Civil Code,"
which are as follows: by article 2123,
"A lien cannot arise from judgments rendered in a foreign country except so far as they have been declared executory
by a French tribunal, without prejudice to provisions to the contrary which may exist in public laws and treaties."
By article 2128,
"Contracts entered into in a foreign country cannot give a lien upon property in France if there are no provisions
contrary to this principle in public laws or in treaties."

10 Q.B.D. 295, 305-308.

Touillier, ubi sup., No. 84.

The same view was affirmed and acted on in the same court by Lords Justices Lindley and Bowen in Vadala v.
Lawes (1890), 25 Q.B.D. 310, 317-320, and by Lord Esher and Lord Justice Lopes in Crozat v. Brogden [1894] 2
Q.B. 30, 34-35.

The defendants in their answer cited the above provisions of the statutes of France, and alleged, and at the trial
offered to prove, that by the construction given to
Page 159 U. S. 211

In the case at bar, the defendants offered to prove in much detail that the plaintiffs presented to the French court of
first instance and to the arbitrator appointed by that court, and upon whose report its judgment was largely based,
false and fraudulent statements and accounts against the defendants by which the arbitrator and the French courts
were deceived and misled, and their judgments were based upon such false and fraudulent statements and
accounts. This offer, if satisfactorily proved, would, according to the decisions of the English Court of Appeal in
Abouloff v. Oppenheimer, Vadala v. Lawes, and Crozat v. Brogden, above cited,
Page 159 U. S. 210

these statutes by the judicial tribunals of France, when the judgments of tribunals of foreign countries against the
citizens of France are sued upon in the courts of France, the merits of the controversies upon which those judgments
are based are examined anew, unless a treaty to the contrary effect exists between the Republic of France and the
country in which such judgment is obtained (which is not the case between the Republic of France and the United
States), and that the tribunals of the Republic of France give no force and effect, within the jurisdiction of that country,
to the judgments duly rendered by courts of competent jurisdiction of the United States against citizens of France
after proper personal service of the process of those courts has been made thereon in this country. We are of opinion
that this evidence should have been admitted.

be a sufficient ground for impeaching the foreign judgment and examining into the merits of the original claim.
But whether those decisions can be followed in regard to foreign judgments, consistently with our own decisions as to
impeaching domestic judgments for fraud, it is unnecessary in this case to determine, because there is a distinct and
independent ground upon which we are satisfied that the comity of our nation does not require us to give conclusive
effect to the judgments of the courts of France, and that ground is the want of reciprocity on the part of France as to
the effect to be given to the judgments of this and other foreign countries.
In France, the royal ordinance of June 15, 1629, art. 121, provided as follows:
"Judgments rendered, contracts or obligations recognized, in foreign kingdoms and sovereignties for any cause
whatever shall have no lien or execution in our kingdom. Thus, the contracts shall stand for simple promises, and,
notwithstanding the judgments, our subjects against whom they have been rendered may contest their rights anew
before our judges."

22

In Odwin v. Forbes (1817), President Henry, in the Court of Demerara, which was governed by the Dutch law and
was, as he remarked, "a tribunal foreign to and independent of that of England," sustained a plea of an English
certificate in bankruptcy, upon these grounds:
"It is a principle of their law, and laid down particularly in the ordinances of Amsterdam, . . . that the same law shall be
exercised towards foreigners in Amsterdam as is exercised with respect to citizens of that state in other countries,
and upon this principle of reciprocity, which is not confined to the City of Amsterdam, but pervades the Dutch laws,
they have always given effect to the laws of that country which has exercised the same comity and indulgence in
admitting theirs; . . . that the Dutch bankrupt laws proceed on the same principles as those of the English; that the
English tribunals give effect to the Dutch bankrupt laws, and that, on the principle of reciprocity and mutual comity,
the Dutch tribunals, according to their own ordinances, are bound to give effect to the English bankrupt laws when
duly proved, unless there is any express law or ordinance prohibiting their admission."

And his judgment was affirmed in the Privy Council on appeal. Case of Odwin v. Forbes, pp. 89, 159-161, 173-176;
(1817) Buck Bankr.Cas. 57, 64.
Page 159 U. S. 212

"The law, in the course of procedure abroad, sometimes differs so mainly from ours in the principles upon which it is
bottomed that it would seem a strong thing to hold that our courts were bound conclusively to give execution to the
sentence of foreign courts when, for aught we know, there is not anyone of those things which are reckoned the
elements or the corner stones of the due administration of justice present to the procedure in these foreign courts."

President Henry, at page 76 of his Treatise on Foreign Law, published as a preface to his report of that case, said:

Houlditch v. Donegal, 8 Bligh, N.R. 301, 338.

"This comity in giving effect to the judgments of other tribunals is generally exercised by states under the same
sovereign, on the ground that he is the fountain of justice in each, though of independent jurisdiction, and it has also
been exercised in different states of Europe with respect to foreign judgments, particularly in the Dutch states, who
are accustomed by the principle of reciprocity to give effect in their territories to the judgments of foreign states which
show the same comity to theirs; but the tribunals of France and England have never exercised this comity to the
degree that those of Holland have, but always required a fresh action to be brought, in which the foreign judgment
may be given in evidence. As this is a matter of positive law and internal policy in each state, no opinion need be
given. Besides, it is a mere question of comity, and perhaps it might be neither politic nor prudent, in two such great
states, to give indiscriminate effect to the judgment of each other's tribunals, however the practice might be proper or
convenient in federal states or those under the same sovereign."

Chief Justice Smith, of New Hampshire, in giving reasons why foreign judgments or decrees, founded on the
municipal laws of the state in which they are pronounced, are not conclusive evidence of debt, but prima facie
evidence only, said:

It was that statement which appears to have called forth the observations of Mr. Justice Story, already cited:

Mr. Justice Story said:

"Holland seems at all times, upon the general principle of reciprocity, to have given great weight to foreign judgments,
and in many cases, if not in all cases, to have given to them a weight equal to that given to domestic judgments
wherever the like rule of reciprocity with regard to Dutch judgments has been adopted by the foreign country whose
judgment is brought under review. This is certainly a very reasonable rule, and may perhaps hereafter work itself
firmly into the structure of international jurisprudence."

"If a civilized nation seeks to have the sentences of its own courts of any validity elsewhere, they ought to have a just
regard to the rights and usages of other civilized nations, and the principles of public and national law in the
administration of justice."

Story on Conflict of Laws 618.

"These laws and regulations may be unjust, partial to citizens, and against foreigners; they may operate injustice to
our citizens, whom we are bound to protect; they may be, and the decisions of courts founded on them, just cause of
complaint against the supreme power of the state where rendered. To adopt them is not merely saying that the courts
have decided correctly on the law, but it is approbating the law itself."
Bryant v. Ela, Smith (N.H.) 396, 404.

Bradstreet v. Neptune Ins. Co., 3 Sumner 600, 608.

Page 159 U. S. 214

This rule, though never either affirmed or denied by express adjudication in England or America, has been indicated,
more or less distinctly, in several of the authorities already cited.

Mr. Justice Woodbury said that judgments in personam, rendered under a foreign government,

Lord Hardwicke threw out a suggestion that the credit to be given by one court to the judgment of a foreign court

"are, ex commitate, treated with respect according to the nature of the judgment and the character of the tribunal
which rendered it and the reciprocal mode, if any, in which that government treats our judgments,"

Page 159 U. S. 213

might well be affected by "their proceeding both by the same rules of law." Otway v. Ramsay, 4 B. & C. 414-416, note.
Lord Eldon, after saying that "natural law" (evidently intending the law of nations) "requires the courts of this country
to give credit to those of another for the inclination and power to do justice," added that
"if it appears in evidence that persons suing under similar circumstances neither had met nor could meet with justice,
that fact cannot be immaterial as an answer to the presumption."
Wright v. Simpson, 6 Ves. 714, 730.
Lord Brougham, presiding as lord Chancellor in the House of Lords, said:

23

and added "nor can much comity be asked for the judgments of another nation which, like France, pays no respect to
those of other countries." Burnham v. Webster, 1 Woodb. & Min. 172, 175, 179.
Mr. Justice Cooley said: "True comity is equality. We should demand nothing more and concede nothing less."
McEwan v. Zimmer, 38 Mich. 765, 769.
Mr. Wheaton said:
"There is no obligation recognized by legislators, public authorities, and publicists to regard foreign laws, but their
application is admitted only from considerations of utility and the mutual convenience of states -- ex commitate, ob
reciprocam utilitatem."

"The general comity, utility, and convenience of nations have, however, established a usage among most civilized
states by which the final judgments of foreign courts of competent jurisdiction are reciprocally carried into execution."
Wheaton's International Law (8th ed.) 79, 147.
Since Story, Kent, and Wheaton wrote their commentaries, many books and essays have been published upon the
subject of the effect to be allowed by the courts of one country to the judgments of another, with references to the
statutes and decisions in various countries. Among the principal ones are Foelix, Droit International Prive (4th ed., by
Demangeat, 1866) lib. 2, tits. 7, 8; Moreau, Effets Internationaux des Jugements (1884); Piggott, on Foreign
Judgments (2d ed., 1884); Constant, De l'Execution des Jugements Etrangers (2d ed., 1890), giving the text of the
articles of most of the modern codes upon the subject, and of French treaties with Italian, German, and Swiss states,
and numerous papers in Clunet's Journal de Droit International Prive, established in 1874 and continued to the
present time. For the reasons stated at the outset of this opinion, we have not thought it important to state the
conflicting theories of continental commentators
Page 159 U. S. 215
and essayists as to what each may think the law ought to be, but have referred to their works only for evidence of
authoritative declarations, legislative or judicial, of what the law is.
By the law of France, settled by a series of uniform decisions of the Court of Cassation, the highest judicial tribunal,
for more than half a century, no foreign judgment can be rendered executory in France without a review of the
judgment au fond (to the bottom), including the whole merits of the cause of action on which the judgment rests.
Pardessus, Droit Commercial 1488; Bard, Precis de Droit International (1883) nos. 234-239; Story on Conflict of
Laws 615-617; Pigggott 452; Westllake on Private International Law (3d ed., 1890) 350.
A leading case was decided by the Court of Cassation on April 19, 1819, and was as follows: a contract of
partnership was made between Holker, a French merchant, and Parker, a citizen of the United States. Afterwards,
and before the partnership accounts were settled, Parker came to France, and Holker sued him in the Tribunal of
Commerce of Paris. Parker excepted on the ground that he was a foreigner, not domiciled in France, and obtained a
judgment, affirmed on appeal, remitting the matter to the American courts -- obtint son renvoi devant les tribunaux
Americains. Holker then sued Parker in the Circuit Court of the United States for the District of Massachusetts, and in
1814 obtained a judgment there ordering Parker to pay him $529,949. One branch of the controversy had been
brought before this Court in 1813. Holker v. Parker, 7 Cranch 436. Holker, not being able to obtain execution of that
judgment in America because Parker had no property there and continued to reside in Paris, obtained from a French
judge an order declaring the judgment executory. Upon Parker's application to nullify the proceeding, the Royal Court
of Paris, reversing the judgment of a lower court, set aside that order, assigning these reasons:
"Considering that judgments rendered by foreign courts have neither effect nor authority in France; that this rule is
doubtless more particularly applicable

Kingdom of France, and that the Civil Code, art. 2123, gives to this principle the same latitude when it declares that a
lien cannot result from judgments rendered in a foreign country, except so far as they have been declared executory
by a French tribunal -- which is not a matter of mere form, like the granting in past times of a pareatis from one
department to another for judgments rendered within the Kingdom, but which assumes, on the part of the French
tribunals, a cognizance of the cause, and a full examination of the justice of the judgment presented for execution, as
reason demands, and that this has always been practiced in France, according to the testimony of our ancient
authorities; that there may result from this an inconvenience where the debtor, as is asserted to have happened in the
present case, removes his property and his person to France, while keeping his domicile in his native country; that it
is for the creditor to be watchful, but that no consideration can impair a principle on which rests the sovereignty of
governments, and which, whatever be the case, must preserve its whole force."
The court therefore adjudged that, before the tribunal of first instance, Holker should state the grounds of his action,
to be contested by Parker, and to be determined by the court upon cognizance of the whole cause. That judgment
was confirmed, upon deliberate consideration, by the Court of Cassation, for the reasons that the ordinance of 1629
enacted, in absolute terms and without exception, that foreign judgments should not have execution in France; that it
was only by the Civil Code and the Code of Civil Procedure that the French tribunals had been authorized to declare
them executory; that therefore the ordinance of 1629 had no application; that the articles of the Codes
Page 159 U. S. 217
referred to did not authorize the courts to declare judgments rendered in a foreign country executory in France
without examination; that such an authorization would be as contrary to the institution of the courts as would be the
award or the refusal of execution arbitrarily and at will, would impeach the right of sovereignty of the French
government, and was not in the intention of the legislature, and that the Codes made no distinction between different
judgments rendered in a foreign country, and permitted the judges to declare them all executory, and therefore those
judgments, whether against a Frenchman or against a foreigner, were subject to examination on the merits. Holker v.
Parker, Merlin, Questions do Droit, Jugement, 14, No. 2.
The Court of Cassation has ever since constantly affirmed the same view. Moreau, No. 106, note, citing many
decisions; Clunet, 1882, p. 166. In Clunet, 1894, p. 913, note, it is said to be
"settled by judicial decisions -- il est de jurisprudence -- that the French courts are bound, in the absence of special
diplomatic treaties, to proceed to the revision on the whole merits -- au fond -- of foreign judgments, execution of
which is demanded of them,"
citing, among other cases, a decision of the Court of Cassation on February 2, 1892, by which it was expressly held
to result from the articles of the Codes above cited
"that judgments rendered in favor of a foreigner against a Frenchman, by a foreign court, are subject, when execution
of them is demanded in France, to the revision of the French tribunals which have the right and the duty to examine
them, both as to the form and as to the merits."

Page 159 U. S. 216

Sirey, 1892, 1, 201.
in favor of Frenchmen, to whom the King and his officers owe a special protection, but that the principle is absolute,
and may be invoked by all persons, without distinction, being founded on the independence of states; that the
ordinance of 1629, in the beginning of its article 121, lays down the principle in its generality when it says that
judgments rendered in foreign kingdoms and sovereignties for any cause whatever shall have no execution in the

24

In Belgium the Code of Civil Procedure of 1876 provides that if a treaty on the basis of reciprocity be in existence
between Belgium and the country in which the foreign judgment has been given, the examination of the judgment in
the Belgian courts shall bear only upon the questions whether it "contains nothing contrary to public order, to the

principles of the Belgian public order;" whether, by the law of the country in which it was rendered, it has the force of
res judicata; whether the copy is duly authenticated; whether the
Page 159 U. S. 218
defendant's rights have been duly respected, and whether the foreign court is not the only competent court, by
reason of the nationality of the plaintiff. Where, as is the case between Belgium and France, there is no such treaty,
the Belgian Court of Cassation holds that the foreign judgment may be reexamined upon the merits. Constant, 111,
116; Moreau, No. 189; Clunet, 1887, p. 217; 1888, p. 837; Piggott 439. And in a very recent case, the Civil Tribunal of
Brussels held that,
"considering that the right of revision is an emanation of the right of sovereignty; that it proceeds from the emporium,
and that as such it is within the domain of public law; that from that principle it manifestly follows that, if the legislature
does not recognize executory force in foreign judgments where there exists no treaty upon the basis of reciprocity, it
cannot belong to the parties to substitute their will for that of the legislature by arrogating to themselves the power of
delegating to the foreign judge a portion of sovereignty."
Clunet, 1894, pp. 164, 165.
In Holland, the effect given to foreign judgments has always depended upon reciprocity, but whether by reason of
Dutch ordinances only or of general principles of jurisprudence does not clearly appear. Odwin v. Forbes, and Henry
on Foreign Law, above cited; Story on Conflict of Laws 618; Foelix, No. 397, note; Clunet, 1879, p. 369; 1
Ferguson's International Law, 85; Constant, 171; Moreau, No. 213.
In Denmark, the courts appear to require reciprocity to be shown before they will execute a foreign judgment. Foelix,
Nos. 328, 345; Clunet, 1891, p. 987; Westlale, ubi sup. In Norway, the courts reexamine the merits of all foreign
judgments, even of those of Sweden. Foelix, No. 401; Piggott, 504, 505; Clunet, 1892, p. 296. In Sweden, the
principle of reciprocity has prevailed from very ancient times. The courts give no effect to foreign judgments unless
upon that principle, and it is doubtful whether they will even then unless reciprocity is secured by treaty with the
country in which the judgment was rendered. Foelix, No. 400; Olivecrona, in Clunet, 1880, p. 83; Constant, 191;
Moreau, No. 222; Piggott, 503; Westlake, ubi sup.
Page 159 U. S. 219
In the empire of Germany, as formerly in the states which now form part of that empire, the judgments of those states
are mutually executed, and the principle of reciprocity prevails as to the judgments of other countries. Foelix, Nos.
328, 331, 333-341; Moreau, Nos. 178, 179; Vierhaus, in Piggott, 460-474; Westlake, ubi sup. By the German Code of
1877,
"compulsory execution of the judgment of a foreign court cannot take place unless its admissibility has been declared
by a judgment of exequatur; . . . the judgment of exequatur is to be rendered without examining whether the decision
is conformable to law;"
but it is not to be granted "if reciprocity is not guaranteed." Constant, 79-81; Piggott, 466. The Reichsgericht, or
imperial court, in a case reported in full in Piggott, has held that an English judgment cannot be executed in Germany,
because, the court said, the German courts, by the Code, when they execute foreign judgments at all, are "bound to
the unqualified recognition of the legal validity of the judgments of foreign courts," and

25

"it is therefore an essential requirement of reciprocity that the law of the foreign state should recognize in an equal
degree the legal validity of the judgments of German courts, which are to be enforced by its courts, and that an
examination of their legality, both as regards the material justice of the decision as to matters of fact or law, and with
respect to matters of procedure, should neither be required as a condition of their execution, by the court ex officio,
nor be allowed by the admission of pleas which might lead to it."
Piggott, 470-471. See also Clunet, 1882, p. 35; 1883, p. 246; 1884, p. 600.
In Switzerland, by the federal Constitution, civil judgments in one canton are executory throughout the republic. As to
foreign judgments, there is no federal law, each canton having its own law upon the subject. But civil judgments in
one canton are executory other cantons, foreign judgments are executed according to the rule of reciprocity only.
Constant, 193-204; Piggott, 505-516; Clunet, 1887, p. 762; Westlake, ubi sup. The law upon this subject has been
clearly stated by Brocher, President of the Court of Cassation of Geneva and professor of law in the university there.
In his Nouveau
Page 159 U. S. 220
Traite de Droit International Prive (1876) 174, treating of the question whether "it might not be convenient that
states should execute, without reviewing their merits, judgments rendered on the territory of each of them
respectively," he says:
"It would certainly be advantageous for the parties interested to avoid the delays, the conflicts, the differences of
opinion, and the expenses resulting from the necessity of obtaining a new judgment in each locality where they
should seek execution. There might thence arise for each sovereignty a juridical or moral obligation to lend a strong
hand to foreign judgments. But would not such an advantage be counterbalanced, and often surpassed, by the
dangers that might arise from that mode of proceeding? There is here, we believe, a question of reciprocal
appreciation and confidence. One must at the outset inquire whether the administration of the foreign judiciary, whose
judgments it is sought to execute without verifying their merits, presents sufficient guaranties. If the propriety of such
an execution be admitted, there is ground for making it the object of diplomatic treaties. That form alone can guaranty
the realization of a proper reciprocity. It furnishes, moreover, to each state the means of acting upon the judicial
organization and procedure of other states."
In an article in the Journal, after a review of the Swiss decisions, he recognizes and asserts that "it comes within the
competency of each canton to do what seems to it proper in such matters." Clunet, 1879, pp. 88, 94. And in a later
treatise he says:
"We cannot admit that the recognition of a state as sovereign ought necessarily to have as a consequence the
obligation of respecting and executing the judicial decisions rendered by its tribunals. In strict right, the authority of
such acts does not extend beyond the frontier. Each sovereignty possesses in particular, and more or less in private,
the territory subject to its power. No other can exercise there an act of its authority. This territorial independence finds
itself, in principle, directly included in the very act by which one nation recognizes a foreign state as a sovereign; but
there cannot result therefrom a promise to adopt, and to cause to be executed upon the national territory, judgments
rendered by
Page 159 U. S. 221

the officials of the foreign state, whoever they may be. That would be an abdication of its own sovereignty, and would
bind it in such sort as to make it an accomplice in acts often injurious, and in some cases even criminal. Such
obligations suppose a reciprocal confidence. They are not undertaken, moreover, except upon certain conditions, and
by means of a system of regulations intended to prevent or to lessen the dangers which might result from them."

"in admitting a contrary conclusion, there would be impugned one of the cardinal principles of international relations,
namely the principle of reciprocity, according to which each state recognizes juridical rights and relations, originating
or established in another country, only in the measure in which the latter, in its turn, does not disregard the rights and
relations existing in the former."

3 Cours de Droit International Prive (1885) 126, 127.

Clunet, 1884, pp. 494-495.

In Russia, by the Code of 1864, "the judgments of foreign tribunals shall be rendered executory according to the rules
established by reciprocal treaties and conventions," and where no rules have been established by such treaties, are
to be "put in execution in the empire only after authorization granted by the courts of the empire," and

In Roumania, it is provided by Code that

"in deciding upon demands of this kind the courts do not examine into the foundation of the dispute adjudged by the
foreign tribunals, but decide only whether the judgment does not contain dispositions which are contrary to the public
order, or which are not permitted by the laws of the empire."
Constant, 183-185. Yet a chamber of the Senate of St. Petersburg, sitting as a Court of Cassation, and the highest
judicial tribunal of the empire in civil matters, has declined to execute a French judgment upon the grounds that, by
the settled law of Russia,
"it is a principle in the Russian empire that only the decisions of the authorities to whom jurisdiction has been
delegated by the sovereign power have legal value by themselves and of full right,"
and that, "in all questions of international law, reciprocity must be observed and maintained as a fundamental
principle." Adam v. Schipoff, Clunet, 1884, pp. 45, 46, 134. And Professor Englemann, of the Russian University of
Dorpat, in an able essay, explaining that and other Russian decisions, takes the following view of them:
"The execution of a treaty is not the only proof of reciprocity. . . . It is necessary to commit the ascertainment of the
existence of reciprocity to the judicial tribunals, for the same reasons for which there is conferred upon them the right
to settle all questions incident to the cause to be adjudged. The existence of reciprocity between
Page 159 U. S. 222
two states ought to be proved in the same manner as all the positive facts of the case. . . . It is true that the principle
of reciprocity is a principle not of right, but of policy, yet the basis of the principle of all regular and real policy is also
the fundamental principle of right, and the point of departure of all legal order -- the suum cuique. This last principle
comprehends right, reciprocity, utility, and reciprocity is the application of right to policy. . . . Let this principle be
applied wherever there is the least guaranty or even a probability of reciprocity, and the cognizance of this question
be committed to the judicial tribunals, and one will arrive at important results, which, on their side, will touch the
desired end -- international accord. But for this it is indispensable that the application of this principle should be
entrusted to judicial tribunals, accustomed to decide affairs according to right, and not to administrative authorities,
which look above all to utility, and are accustomed to be moved by political reasons, intentions, and even passions."
Clunet, 1884, pp. 120-122. But it would seem that no foreign judgment will be executed in Russia unless reciprocity is
secured by treaty. Clunet, 1884, pp. 46, 113, 139, 140, 602.
In Poland, the provisions of the Russian Code are in force, and the Court of Appeal of Warsaw has decided that
where there is no treaty, the judgments of a foreign country cannot be executed, because

26

"judicial decisions rendered in foreign countries cannot be executed in Roumania except in the same manner in
which Roumanian judgments are executed in the country in question, and provided they are declared executory by
competent Roumanian judges,"
and this article seems to be held to require legislative reciprocity.
Page 159 U. S. 223
Moreau, No. 219; Clunet, 1879, p. 351; 1885, p. 537; 1891, p. 452; Piggott, 495.
In Bulgaria, by a resolution of the supreme court in 1881,
"the Bulgarian judges should, as a general rule, abstain from entering upon the merits of the foreign judgment. They
ought only to inquire whether the judgment submitted to then does not contain dispositions contrary to the public
order and to the Bulgarian laws."
Constant, 129, 130; Clunet, 1886, p. 570. This resolution closely follows the terms of the Russian Code, which, as
has been seen, has not precluded applying the principle of reciprocity.
In Austria, the rule of reciprocity does not rest upon any treaty or legislative enactment, but has been long
established, by imperial decrees and judicial decisions, upon general principles of jurisprudence. Foelix, No. 331;
Constant, 100-108; Moreau, No. 185; Weiss, Traite de Droit International (1886) 950; Clunet, 1891, p. 1003; 1894, p.
(1886) 980; Clunet, 1891, p. 1003; 1894, p. 908; Piggott, 434. In Hungary, the same principles were always followed
as in Austria, and reciprocity has been made a condition by a law of 1880. Constant, 109; Moreau, No. 186, and note;
Piggott, 436; Weiss, ubi sup.
In Italy, before it was united into one kingdom, each state had its own rules. In Tuscany and in Modena, in the
absence of treaty, the whole merits were reviewed. In Parma, as by the French ordinance of 1629, the foreign
judgment was subject to fundamental revision if against a subject of Parma. In Naples, the Code and the decisions
followed those of France. In Sardinia, the written laws required above all the condition of reciprocity, and if that
condition was not fulfilled, the foreign judgment was reexaminable in all respects. Fiore, Effetti Internazionali delle
Sentenze (1875) 40-44; Moreau, No. 204. In the papal states, by a decree of the Pope in 1820,
"the exequatur shall not be granted, except so far as the judgments rendered in the states of his Holiness shall enjoy
the same favor in the foreign countries; this reciprocity is presumed if there is no particular reason to doubt it."
Toullier, Droit Civil, lib. 3, tit. 3, c. 6, 3, No. 93. And see Foelix, No. 343; Westlake, ubi sup. In the Kingdom of Italy,

Page 159 U. S. 224

by the Code of Procedure of 1865,
"executory force is given to the judgments of foreign judicial authorities by the Court of Appeal in whose jurisdiction
they are to be executed, by obtaining a judgment on an exequatur in which the court examines (a) if the judgment
has been pronounced by a competent judicial authority; (b) if it has been pronounced, the parties being regularly
cited; (c) if the parties have been legally represented or legally defaulted; (d) if the judgment contains dispositions
contrary to public order or to the internal public law of the realm."
Constant, 157. In 1874, the Court of Cassation of Turin,
"considering that in international relations is admitted the principle of reciprocity, as that which has its foundation in
the natural reason of equality of treatment, and in default thereof opens the way to the exercise of the right of
retaliation,"
and that the French courts examine the merits of Italian judgments before allowing their execution in France, decided
that the Italian courts of appeal, when asked to execute a French judgment, ought not only to inquire into the
competency of the foreign court, but also to review the merits and the justice of the controversy. Levi v. Pitre, in
Rossi, Execuzione delle Sentenze Straniere (1st ed. 1875) 70, 284, and in Clunet, 1879, p. 295. Some
commentators, however, while admitting that decision to be most authoritative, have insisted that it is unsound, and
opposed to other Italian decisions, to which we have not access. Rossi, ubi sup. (2d ed. 1890) 92; Fiore, 142-143;
Clunet, 1878, p. 237; Clunet, 1879, pp. 296, 305; Piggott, 483; Constant, 161.
In the principality of Monaco, foreign judgments are not executory, except by virtue of a special ordinance of the
prince, upon a report of the Advocate General. Constant, 169; Piggott, 488.
In Spain, formerly, foreign judgments do not appear to have been executed at all. Foelix, No. 398; Moreau, No. 197;
Silvela, in Clunet, 1881, p. 20. But by the Code of 1855, revised in 1881 without change in this respect,
"judgments pronounced in foreign countries shall have in Spain the force that the respective treaties given them; if
there are no special treaties with the nation in which they have been rendered, they shall
Page 159 U. S. 225
have the same force that is given by the laws of that nation to Spanish executory judgments; if the judgment to be
executed proceeds from a nation by whose jurisprudence effect is not given to the judgments pronounced by Spanish
tribunals, it shall have no force in Spain,"
and
"application for the execution of judgments pronounced in foreign countries shall be made to the Supreme Tribunal of
Justice, which, after examining an authorized translation of the foreign judgment, and after hearing the party against
whom it is directed and the public minister, shall decide whether it ought or ought not to be executed."

27

Constant, 141-142; Piggott, 499-500. A case in which the Supreme Court of Spain in 1880 ordered execution of a
French judgment after reviewing its merits is reported in Clunet, 1881, p. 365. In another case, in 1888, the same
court, after hearing the parties and the public minister, ordered execution of a Mexican judgment. The public minister,
in his demand for its execution, said:
"Our law of civil procedure, inspired, to a certain point, by the modern theories of international law which, recognizing
among civilized nations a true community of right, and considering mankind as a whole, in which nations occupy a
position identical with that of individuals towards society, gives authority in Spain to executory judgments rendered by
foreign tribunals, even in the absence of special treaty, provided that those countries do not proscribe the execution
there of our judgments, and under certain conditions, which, if they limit the principle, are inspired by the wish of
protecting our sovereignty and by the supreme exigencies of justice. When nothing appears either for or against as to
the authority of the judgments of our courts in the foreign country, one should not put an obstacle to the fulfillment, in
our country, of judgments emanating from other nations, especially when the question is of a country which, by its
historic origin, its language, its literature, and by almost the identity of its customs, its usages, and its social
institutions, has so great a connection with our own, which obliges us to maintain with it the most intimate relations of
friendship and courtesy."
And he pointed out that Mexico, by its Code, had adopted reciprocity as a fundamental principle.
Page 159 U. S. 226
Among the reasons assigned by the court for ordering the Mexican judgment to be executed was that "there exists in
Mexico no precedent of jurisprudence which refuses execution to judgments rendered by the Spanish tribunals."
Clunet, 1891, pp. 288-292.
In Portugal, foreign judgments, whether against a Portuguese or against a foreigner, are held to be reviewable upon
the merits before granting execution thereof. Foelix, No. 399; Clunet, 1875, pp. 54, 448; Moreau, No. 217; Constant,
176-180; Westlake, ubi sup.
In Greece, by the provisions of the Code of 1834, foreign judgments both parties to which are foreigners are enforced
without examination of their merits, but if one of the parties is a Greek, they are not enforced if found contradictory to
the facts proved or if they are contrary to the prohibitive laws of Greece. Foelix, No. 396; Constant, 151, 152; Moreau,
No. 202; Saripolos, in Clunet, 1880, p. 173; Piggott, 475.
In Egypt, under the influence of European jurisprudence, the Code of Civil Procedure has made reciprocity a
condition upon which foreign judgments are executed. Constant, 136; Clunet, 1887, pp. 98, 228; 1889, p. 322.
In Cuba and in Porto Rico, the Codes of Civil Procedure are based upon the Spanish Code of 1855. Piggott, 435,
503. In Hayti, the Code reenacts the provisions of the French Code. Constant, 153; Moreau, No. 203; Piggott, 460.
In Mexico, the system of reciprocity has been adopted by the Code of 1884 as the governing principle. Constant, 168;
Clunet, 1891, p. 290.
The rule of reciprocity likewise appears to have generally prevailed in South America. In Peru, foreign judgments do
not appear to be executed without examining the merits unless when reciprocity is secured by treaty. Clunet, 1879,
pp. 266, 267; Piggott, 548. In Chili, there appears to have been no legislation upon the subject, but, according to a
decision of the Supreme Court of Santiago in 1886, "the Chilian tribunals should not award an exequatur, except

upon decisions in correct form, and also reserving the general principle of reciprocity." Clunet, 1889, p. 135;
Constant, 131-132.
Page 159 U. S. 227
In Brazil, foreign judgments are not executed unless because of the country in which they were rendered admitting
the principle of reciprocity or because of a placet of the government of Brazil, which may be awarded according to the
circumstances of the case. Constant, 124, and note; Moreau, No. 192; Piggott, 543-546; Westlake, ubi sup. In the
Argentine Republic, the principle of reciprocity was maintained by the courts, and was affirmed by the Code of 1878
as a condition sine qua non of the execution of foreign judgments, but has perhaps been modified by later legislation.
Moreau, No. 218; Palomeque, in Clunet, 1887, pp. 539-558.
It appears, therefore, that there is hardly a civilized nation on either continent which by its general law allows
conclusive effect to an executory foreign judgment for the recovery of money. In France and in a few smaller states -Norway, Portugal, Greece, Monaco, and Hayti -- the merits of the controversy are reviewed as of course, allowing to
the foreign judgment, at the most, no more effect than of being prima facie evidence of the justice of the claim. In the
great majority of the countries on the continent of Europe -- in Belgium, Holland, Denmark, Sweden, Germany, in
many cantons of Switzerland, in Russia and Poland, in Roumania, in Austria and Hungary (perhaps in Italy), and in
Spain -- as well as in Egypt, in Mexico, and in a great part of South America, the judgment rendered in a foreign
country is allowed the same effect only as the courts of that country allow to the judgments of the country in which the
judgment in question is sought to be executed.
The prediction of Mr. Justice Story (in 618 of his Commentaries on the Conflict of Laws, already cited) has thus
been fulfilled, and the rule of reciprocity has worked itself firmly into the structure of international jurisprudence.
The reasonable, if not the necessary, conclusion appears to us to be that judgments rendered in France, or in any
other foreign country by the laws of which our own judgments are reviewable upon the merits are not entitled to full
credit and conclusive effect when sued upon in this country, but are prima facie evidence only of the justice of the
plaintiffs' claim.
Page 159 U. S. 228
In holding such a judgment, for want of reciprocity, not to be conclusive evidence of the merits of the claim, we do not
proceed upon any theory of retaliation upon one person by reason of injustice done to another, but upon the broad
ground that international law is founded upon mutuality and reciprocity, and that by the principles of international law
recognized in most civilized nations, and by the comity of our own country, which it is our judicial duty to known and to
declare, the judgment is not entitled to be considered conclusive.
By our law at the time of the adoption of the Constitution, a foreign judgment was considered as prima facie
evidence, and not conclusive. There is no statute of the United States, and no treaty of the United States with France
or with any other nation, which has changed that law or has made any provision upon the subject. It is not to be
supposed that if any statute or treaty had been or should be made, it would recognize as conclusive the judgments of
any country which did not give like effect to our own judgments. In the absence of statute or treaty, it appears to us
equally unwarrantable to assume that the comity of the United States requires anything more.
If we should hold this judgment to be conclusive, we should allow it an effect to which, supposing the defendants'
offers to be sustained by actual proof, it would, in the absence of a special treaty, be entitled in hardly any other

28

country in Christendom except the country in which it was rendered. If the judgment had been rendered in this
country, or in any other outside of the jurisdiction of France, the French courts would not have executed or enforced it
except after examining into its merits. The very judgment now sued on would be held inconclusive in almost any other
country than France. In England and in the colonies subject to the law of England, the fraud alleged in its
procurement would be a sufficient ground for disregarding it. In the courts of nearly every other nation, it would be
subject to reexamination either merely because it was a foreign judgment or because judgments of that nation would
be reexaminable in the courts of France.
Page 159 U. S. 229
For these reasons, in the action at law, the
Judgment is reversed, and the cause remanded to the circuit court, with directions to set aside the verdict and to
order a new trial.
For the same reasons, in the suit in equity between these parties, the foreign judgment is not a bar, and therefore the
Decree dismissing the bill is reversed the plea adjudged bad, and the cause remanded to the circuit court for further
proceedings not inconsistent with this opinion.

PHILIPPINE ALUMINUM WHEELS, INC., petitioner, vs. FASGI ENTERPRISES, INC.,

respondent.

Singson Valdez & Associates for petitioner.

Quasha Ancheta Pea & Nolasco for private respondent.

SYNOPSIS
On 01 June 1978, FASGI Enterprises, Inc., an American corporation, entered into a distributorship arrangement with
Philippine Aluminum Wheels, Inc. (PAWI), a Philippine corporation, and Fratelli Pedrini Sarezzo S.P.A., (FPS), an
Italian corporation. Pursuant to their 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. FASGI paid PAWI the FOB value
of the wheels. Unfortunately, FASGI found the shipment to be defective and in non-compliance with stated
requirements. On 21 September 1979, FASGI instituted an action against PAWI and FPS for breach of contract and
recovery of damages 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". Despite PAWI's assurances, and FASGI's
insistence, PAWI failed to open the first Letter of Credit (LC) in April 1980 as agreed upon in the said "Transaction,"
prompting FASGI to pursue its complaint for damages against PAWI before the California District Court. In the
interim, the parties resolved to enter into another arrangement, "Supplemental Settlement Agreement," which
provided that FASGI would deliver to PAWI a container of wheels for every LC opened and paid by PAWI, and in the
event of failure to comply therewith, FASGI is allowed to apply before the California court for the entry of judgment
based on that Supplemental Settlement Agreement. Again, PAWI proved to be remiss in its obligation under the
Supplemental Settlement Agreement. Thus, on 24 August 1982, FASGI filed a notice of entry of judgment with the US
District Court of the Central District of California. On 07 September 1982, a certificate of finality of judgment was
issued. Unable to obtain satisfaction of the final judgment within the United States, FASGI filed a complaint for
enforcement of foreign judgment before the Regional Trial Court, Branch 61, Makati. The Makati court, however,

dismissed the case. On appeal, the appellate court reversed the decision of the trial court and ordered the full
enforcement of the California judgment. Hence, this appeal.
The Court ruled that 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 bees 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. PAWI
cannot, by this petition, seek refuge over a business dealing and decision gone awry. Neither do the courts function to
relieve a party from the effects of an unwise or unfavorable contract freely entered into. As has so aptly been
explained by the appellate court, the over-all picture might, indeed, appear to be onerous to PAWI, but it should bear
emphasis that the settlement which has become the basis for the foreign judgment has not been the start of a
business venture but the end of a failed one, and each party, naturally, has had to negotiate from either position of
strength or weakness depending on its own perception of who might have to bear the blame for the failure and the
consequence of loss.
The decision of the Court of Appeals was AFFIRMED.

SYLLABUS
1. INTERNATIONAL LAW; FINAL JUDGMENTS OF FOREIGN COURTS; RECIPROCALLY RESPECTED AND
RENDERED EFFICACIOUS UNDER CERTAIN CONDITIONS THAT MAY VARY IN DIFFERENT COUNTRIES.
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.
2. REMEDIAL LAW; CIVIL PROCEDURE; FOREIGN JUDGMENT; MAY BE RECOGNIZED IN THIS JURISDICTION,
SO LONG AS IT IS SHOWN THAT THERE WAS A FULL AND FAIR HEARING BEFORE A COURT OF
COMPETENT JURISDICTION. 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.
3. ID.; ID.; ID.; MAY BE REPELLED BY EVIDENCE OF WANT OF JURISDICTION OR NOTICE TO THE PARTY,
COLLUSION, FRAUD OR CLEAR MISTAKE OF LAW OR FACT. In Soorajmull Nagarmull vs. Binalbagan-Isabela
Sugar Co. Inc., 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 want of jurisdiction, want of notice to the party, collusion, fraud or clear
mistake of law or fact. In Northwest Orient Airlines, Inc., vs. Court of Appeals, the Court has said that a party attacking
a foreign judgment is tasked with the burden of overcoming its presumptive validity.
4. ID.; ID.; ID.; TO HINDER ENFORCEMENT THEREOF, THERE MUST BE EXTRINSIC FRAUD; EXTRINSIC
FRAUD DIFFERENTIATED FROM INTRINSIC FRAUD. Fraud, to hinder the enforcement within this jurisdiction of

29

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 line, 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.
5. LEGAL AND JUDICIAL ETHICS; LAWYER-CLIENT RELATIONSHIP; A LAWYER CANNOT SETTLE AN ACTION
OR SUBJECT MATTER OF LITIGATION WITHOUT CLIENT'S AUTHORIZATION. [I]n this jurisdiction, it is clear
that an attorney cannot, without a client's authorization, settle the action or subject matter of the litigation even when
he honestly believes that such a settlement will best serve his client's interest.
6. ID.; ID.; WHEN A CLIENT FAILS TO PROMPTLY REPUDIATE THE ACTION OF HIS COUNSEL, HE WILL NOT
AFTERWARDS BE HEARD TO COMPLAIN ABOUT IT. 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.
7. ID.; ID.; ID.; APPLIED IN CASE AT BAR. In the instant case, the supplemental settlement agreement was
signed by the parties, including Mr. Thomas Ready, on 06 October 1980. The agreement was lodged in the California
case on 26 November 1980 or two (2) days after the pre-trial conference held on 24 November 1980. If Mr. Ready
was indeed not authorized by PAWI to enter into the supplemental settlement agreement, PAWI could have forthwith
signified to FASGI a disclaimer of the settlement. Instead, more than a year after the execution of the supplemental
settlement agreement, particularly on 09 October 1981, PAWI President Romeo S. Rojas sent a communication to
Elena Buholzer of FASGI that failed to mention Mr. Ready's supposed lack of authority. On the contrary, the letter
confirmed the terms of the agreement when Mr. Rojas sought forbearance for the impending delay in the opening of
the first letter of credit under the schedule stipulated in the agreement.
8. CIVIL LAW; OBLIGATIONS AND CONTRACTS; ESTOPPEL; A PARTY SHOULD NOT BE ALLOWED TO LATER
DISOWN THE ARRANGEMENT WHEN THE TERMS THEREOF WOULD PROVE TO OPERATE AGAINST ITS
HOPEFUL EXPECTATIONS. Nor could PAWI claim any prejudice by the settlement. PAWI was spared from
possibly paying FASGI substantial amounts of damages and incurring heavy litigation expenses normally generated
in a full-blown trial. PAWI, under the agreement was afforded time to reimburse FASGI the price it had paid for the
defective wheels. PAWI, should not, after its opportunity to enjoy the benefits of the agreement, be allowed to later
disown the arrangement when the terms thereof ultimately would prove to operate against its hopeful expectations.
THESAD

9. INTERNATIONAL LAW; PRINCIPLE OF INTERNATIONAL COMITY; APPLICABLE IN CASE AT BAR. From the
time the stipulation for judgment was entered into on 26 April 1982 until the certificate of finality of judgment was
issued by the California court on 07 September 1982, no notification was issued by PAWI to FASGI regarding its
termination of Mr. Ready's services. If PAWI were indeed hoodwinked by Mr. Ready who purportedly acted in
collusion with FASGI, it should have aptly raised the issue before the forum which issued the judgment in line with the
principle of international comity that a court of another jurisdiction should refrain, as a matter of propriety and
fairness, from so assuming the power of passing judgment on the correctness of the application of law and the
evaluation of the facts of the judgment issued by another tribunal.
10. CIVIL LAW; OBLIGATIONS AND CONTRACTS; SOLIDARY OBLIGATIONS; IN A SOLIDARY LIABILITY OF TWO
COMPANIES, ENFORCEMENT OF JUDGMENT AGAINST ONE COMPANY WILL NOT PRECLUDE IT FROM
PURSUING AND RECOVERING WHATEVER CONTRIBUTORY LIABILITY OF ANOTHER COMPANY. Even
while the US judgment was against both FPS and PAWI, FASGI had every right to seek enforcement of the judgment
solely against PAWI or for that matter, only against FPS. FASGI, in its complaint, explained: "17. There exists, and at
all times relevant herein there existed, a unity of interest and ownership between defendant PAWI and defendant
FPS, in that they are owned and controlled by the same shareholders and managers, such that any individuality and

separateness between these defendants has ceased, if it ever existed, and defendant FPS is the alter ego of
defendant PAWI. The two entities are used interchangeably by their shareholders and managers, and plaintiff has
found it impossible to ascertain with which entity it is dealing any one time. Adherence to the fiction of separate
existence of these defendant corporations would permit an abuse of the corporate privilege and would promote
injustice against this plaintiff because assets can easily be shifted between the two companies thereby frustrating
plaintiff's attempts to collect on any judgment rendered by this Court." Paragraph 14 of the Supplemental Settlement
Agreement fixed the liability of PAWI and FPS to be "joint and several" or solidary. The enforcement of the judgment
against PAWI alone would not, of course, preclude it from pursuing and recovering whatever contributory liability FPS
might have pursuant to their own agreement.
11. ID.; ID.; SUPPLEMENTAL AGREEMENT SUPERSEDED PREVIOUS ARRANGEMENTS MADE BY THE
PARTIES. PAWI would argue that it was incumbent upon FASGI to first return the second and the third containers
of defective wheels before it could be required to return to FASGI the purchase price therefor, relying on their original
agreement (the "Transaction"). Unfortunately, PAWI defaulted on its covenants thereunder that thereby occasioned
the subsequent execution of the supplemental settlement agreement. This time the parties agreed, under paragraph
3.4 (e) thereof, that any further default by PAWI would release FASGI from any obligation to maintain, store or deliver
the rejected wheels. The supplemental settlement agreement evidently superseded, at the very least on this point,
the previous arrangement made by the parties. ECTIcS
12. ID.; ID.; A PARTY CANNOT USE THE COURTS TO RELIEVE IT FROM THE EFFECTS OF AN UNWISE OR
UNFAVORABLE CONTRACT FREELY ENTERED INTO. PAWI cannot, by this petition for review, seek refuge
over a business dealing and decision gone awry. Neither do the courts function to relieve a party from the effects of
an unwise or unfavorable contract freely entered into. As has so aptly been explained by the appellate court, the
over-all picture might, indeed, appear to be onerous to PAWI but it should bear emphasis that the settlement which
has become the basis for the foreign judgment has not been the start of a business venture but the end of a failed
one, and each party, naturally, has had to negotiate from either position of strength or weakness depending on its
own perception of who might have to bear the blame for the failure and the consequence of loss.

DECISION

"D. many of the wheels did not fit the model automobiles for which they were purportedly
designed;
"E. some of the wheels did not fit any model automobile in use in the United States;
"F. most of the boxes in which the wheels were packed indicated that the wheels were
approved by the Specialty Equipment Manufacturer's Association (hereafter, SEMA'); in
fact no SEMA approval has been obtained and this indication was therefore false and could
result in fraud upon retail customers purchasing the wheels." 1
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. In January 1980, 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. 2
In a telex message, dated 02 March 1980, PAWI president Romeo Rojas expressed the company's inability to comply
with the foregoing agreement and proposed a revised schedule of payment. The message, in part read:
"We are most anxious in fulfilling all our obligations under compromise agreement
executed by our Mr. Giancarlo Dallera and your Van Curen. We have tried our best to
comply with our commitments, however, because of the situation as mentioned in the
foregoing and currency regulations and restrictions imposed by our government on the
outflow of foreign currency from our country, we are constrained to request for a revised
schedule of shipment and opening of LCS.
"After consulting with our bank and government monetary agencies and on the assumption
that we submit the required pro-forma invoices we can open the letters of credit in your
favor under the following schedule:

VITUG, J p:
On 01 June 1978, 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 noncompliance with stated requirements, viz;
"A. contrary to the terms of the Distributorship Agreement and in violation of U.S. law, the
country of origin (the Philippines) was not stamped on the wheels;
"B. the wheels did not have weight load limits stamped on them as required to avoid
mounting on excessively heavy vehicles, resulting in risk of damage or bodily injury to
consumers arising from possible shattering of the wheels;

30

"C many of the wheels did not have an indication as to which models of automobile they
would fit;

"A) First L/C it will be issued in April 1980 payable 90 days thereafter
"B) Second L/C it will be issued in June 1980 payable 90 days thereafter
"C) Third L/C it will be issued in August 1980 payable 90 days thereafter
"D) Fourth L/C it will be issued in November 1980 payable 90 days thereafter
"We understand your situation regarding the lease of your warehouse. For this reason, we
are willing to defray the extra storage charges resulting from this new schedule. If you
cannot renew the lease [of] your present warehouse, perhaps you can arrange to transfer
to another warehouse and storage charges transfer thereon will be for our account. We
hope you understand our position. The delay and the revised schedules were caused by
circumstances totally beyond our control." 3

On 21 April 1980, again through a telex message, PAWI informed FASGI that it was impossible to open a letter of
credit on or before April 1980 but assured that it would do its best to comply with the suggested schedule of
payments. 4 In its telex reply of 29 April 1980, FASGI insisted that PAWI should meet the terms of the proposed
schedule of payments, specifically its undertaking to open the first LC within April of 1980, and that "If the letter of
credit is not opened by April 30, 1980, then . . . [it would] immediately take all necessary legal action to protect [its]
position." 5
Despite its assurances, and FASGI's insistence, PAWI failed to open the first LC in April 1980 allegedly due to Central
Bank "inquiries and restrictions," prompting FASGI to pursue its complaint for damages against PAWI before the
California district court. Pre-trial conference was held on 24 November 1980. In the interim, the parties, realizing the
protracted process of litigation, resolved to enter into another arrangement, this time entitled "Supplemental
Settlement Agreement," on 26 November 1980. In substance, the covenant provided that FASGI would deliver to
PAWI a container of wheels for every LC opened and paid by PAWI:
"3. Agreement
"3.1 Sellers agree to pay FASGI Two Hundred Sixty-Eight Thousand, Seven Hundred Fifty
and 00/100 Dollars ($268,750.00), plus interest and storage costs as described below.
Sellers shall pay such amount by delivering to FASGI the following four (4) irrevocable
letters of credit, confirmed by Crocker Bank, Main Branch, Fresno, California, as set forth
below:

"(i) on or before June 30, 1980, a documentary letter of credit in the amount of (a) SixtyFive Thousand, Three Hundred Sixty-nine and 00/100 Dollars ($65,369.00), (b) plus
interest on that amount at the annual rate of 16.25% from January 1, 1980 until July 31,
1980, (c) plus Two Thousand Nine Hundred Forty Dollars and 00/100 ($2,940.00) and (d)
with interest on that sum at the annual rate of 16.25% from May 1, 1980 to July 31, 1980,
payable on or after August 31, 1980;
"(ii) on or before September 1, 1980, a documentary letter of credit in the amount of (a)
Sixty-Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents
($67,793.67) plus (b) Two Thousand, Nine Hundred Forty and 00/100 Dollars ($2,940.00),
plus (c) interest at an annual rate equal to the prime rate of Crocker Bank, San Francisco,
in effect from time to time, plus two percent on the amount in (a) from January 1, 1980 until
December 21, 1980, and on the amount set forth in (b) from May 1, 1980 until December
21, 1980, payable ninety days after the date of the bill of lading under the letter of credit;
"(iii) on or before November 1, 1980, a documentary letter of credit in the amount of (a)
Sixty-Seven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents
($67,793.67) plus (b) Two Thousand, Nine Hundred Forty and 00/100 Dollars ($2,490.00),
plus (c) interest at an annual rate equal to the prime rate of Crocker Bank, San Francisco,
in effect from time to time, plus two percent on the amount in (a) from January 1, 1980 until
February 21, 1981, and on the amount set forth in (b) from May 1, 1980 until February 21,
1981, payable ninety days after the date of the bill of lading under the letter of credit;
"(iv) on or before January 1, 1981, a documentary letter of credit in the amount of (a) SixtySeven Thousand, Seven Hundred Ninety-Three Dollars and Sixty-Seven Cents
($67,793.67) plus (b) Five Thousand, Eight Hundred Eighty and 00/100 Dollars
($5,880.00), plus (c) interest at an annual rate equal to the prime rate of Crocker Bank,
San Francisco, in effect from time to time, plus two percent on the amount in (a) from
January 1, 1980 until April 21, 1981, and on the amount set forth in (b) from May 1, 1980

31

until April 21, 1981, payable ninety days after the date of the bill of lading under the letter of
credit." 6
Anent the wheels still in the custody of FASGI, the supplemental settlement agreement provided that cATDIH
"3.4 (a) Upon execution of this Supplemental Settlement Agreement, the obligations of
FASGI to store or maintain the Containers and Wheels shall be limited to (i) storing the
Wheels and Containers in their present warehouse location and (ii) maintaining in effect
FASGI's current insurance in favor of FASGI, insuring against usual commercial risks for
such storage in the principal amount of the Letters of Credit described in Paragraph 3.1.
FASGI shall bear no liability, responsibility or risk for uninsurable risks or casualties to the
Containers or Wheels.
"xxx xxx xxx
"(e) From and after February 28, 1981, unless delivery of the Letters of Credit are delayed
past such date pursuant to the penultimate Paragraph 3.1, in which case from and after
such later date, FASGI shall have no obligation to maintain, store or deliver any of the
Containers or Wheels." 7
The deal allowed FASGI to enter before the California court the foregoing stipulations in the event of the failure of
PAWI to make good the scheduled payments; thus
"3.5 Concurrently with execution and delivery hereof, the parties have executed and
delivered a Mutual Release (the 'Mutual Release'), and a Stipulation for Judgment (the
'Stipulation for Judgment') with respect to the Action. In the event of breach of this
Supplemental Settlement Agreement by Sellers, FASGI shall have the right to apply
immediately to the Court for entry of Judgment pursuant to the Stipulation for Judgment in
the full amount thereof, less credit for any payments made by Sellers pursuant to this
Supplemental Settlement Agreement. FASGI shall have the right thereafter to enforce the
Judgment against PAWI and FPS in the United States and in any other country where
assets of FPS or PAWI may be located, and FPS and PAWI hereby waive all defenses in
any such country to execution or enforcement of the Judgment by FASGI. Specifically, FPS
and PAWI each consent to the jurisdiction of the Italian and Philippine courts in any action
brought by FASGI to seek a judgment in those countries based upon a Judgment against
FPS or PAWI in the Action." 8
In accordance with the aforementioned paragraph 3.5 of the agreement, the parties made the following stipulation
before the California court:
"The undersigned parties hereto, having entered into a Supplemental Settlement
Agreement in this action,
"IT IS HEREBY STIPULATED by and between plaintiff FASGI Enterprises, Inc. ('FASGI')
and defendants Philippine Aluminum Wheels, Inc., ('PAWI'), and each of them, that
judgment may be entered in favor of plaintiff FASGI and against PAWI, in the amount of
Two Hundred Eighty Three Thousand Four Hundred Eighty And 01/100ths Dollars
($283,480.01).
"Plaintiff FASGI shall also be entitled to its costs of suit, and to reasonable attorneys' fees
as determined by the Court added to the above judgment amount." 9

The foregoing supplemental settlement agreement, as well as the motion for the entry of judgment, was
executed by FASGI president Elena Buholzer and PAWI counsel Mr. Thomas Ready.
PAWI, again, proved to be remiss in its obligation under the supplemental settlement agreement. While it opened the
first LC on 19 June 1980, it, however, only paid on it nine (9) months after, or on 20 March 1981, when the letters of
credit by then were supposed to have all been already posted. This lapse, notwithstanding, FASGI promptly shipped
to PAWI the first container of wheels. Again, despite the delay incurred by PAWI on the second LC, FASGI readily
delivered the second container. Later, PAWI totally defaulted in opening and paying the third and the fourth LCs,
scheduled to be opened on or before, respectively, 01 September 1980 and 01 November 1980, and each to be paid
ninety (90) days after the date of the bill of lading under the LC. As so expressed in their affidavits, FASGI counsel
Frank Ker and FASGI president Elena Buholzer were more inclined to believe that PAWl's failure to pay was due not
to any restriction by the Central Bank or any other cause than its inability to pay. These doubts were based on the
telex message of PAWI president Romeo Rojas who attached a copy of a communication from the Central Bank
notifying PAWI of the bank's approval of PAWI's request to open LCs to cover payment for the re-importation of the
wheels. The communication having been sent to FASGI before the supplemental settlement agreement was
executed, FASGI speculated that at the time PAWI subsequently entered into the supplemental settlement
agreement, its request to open LCs had already been approved by the Central Bank. Irked by PAWI's persistent
default, FASGI filed with the US District Court of the Central District of California the following stipulation for judgment
against PAWI.
"PLEASE TAKE NOTICE that on May 17, 1982 at 10:00 A.M. in the Courtroom of the
Honorable Laughlin E. Waters of the above court, plaintiff FASGI ENTERPRISES, INC.
(hereinafter 'FASGI') will move the Court for entry of Judgment against defendant
PHILIPPINE ALUMINUM WHEELS, INC. (hereinafter 'PAWI'), pursuant to the Stipulation
for Judgment filed concurrently herewith, executed on behalf of FASGI and PAWI by their
respective attorneys, acting as their authorized agents.
"Judgment will be sought in the total amount of P252,850.60, including principal and
interest accrued through May 17, 1982, plus the sum of $17,500.00 as reasonable
attorneys' fees for plaintiff in prosecuting this action.
"The Motion will be made under Rule 54 of the Federal Rules of Civil Procedure, pursuant
to and based upon the Stipulation for Judgment, the Supplemental Settlement Agreement
filed herein on or about November 21, 1980, the Memorandum of Points and Authorities
and Affidavits of Elena Buholzer, Franck G. Ker and Stan Cornwell all filed herewith, and
upon all the records, files and pleadings in this action.
"The Motion is made on the grounds that defendant PAWI has breached its obligations as
set forth in the Supplemental Settlement Agreement, and that the Supplemental Settlement
Agreement expressly permits FASGI to enter the Stipulation for Judgment in the event that
PAWI has not performed under the Supplemental Settlement Agreement." 10
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. The Makati
court, however, in an order of 11 September 1990, dismissed the case, thereby denying the enforcement of the
foreign judgment within Philippine jurisdiction, on the ground that the decree was tainted with collusion, fraud, and
clear mistake of law and fact. 11 The lower court ruled that the foreign judgment ignored the reciprocal obligations of
the parties. While the assailed foreign judgment ordered the return by PAWI of the purchase amount, no similar order
was made requiring FASGI to return to PAWI the third and fourth containers of wheels. 12 This situation, the trial
court maintained, amounted to an unjust enrichment on the part of FASGI. Furthermore, the trial court said, the

32

supplemental settlement agreement and the subsequent motion for entry of judgment upon which the California court
had based its judgment were a nullity for having been entered into by Mr. Thomas Ready, counsel for PAWI, without
the latter's authorization.

FASGI appealed the decision of the trial court to the Court of Appeals. In a decision, 13 dated 30 July 1997, the
appellate court reversed the decision of the trial court and ordered the full enforcement of the California judgment.
Hence this appeal.
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; 14 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. 15
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. 16 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 provides:
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:
xxx xxx xxx
(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 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.
In Soorajmull Nagarmull vs. 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 want of
jurisdiction, want of notice to the party, collusion, fraud or clear mistake of law or fact. In Northwest Orient Airlines,
Inc., vs. 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.
PAWI claims that its counsel, Mr. Ready, has acted without its authority. Verily, in this jurisdiction, it is clear that an
attorney cannot, without a client's authorization, settle the action or subject matter of the litigation even when he
honestly believes that such a settlement will best serve his client's interest. 19

In the instant case, the supplemental settlement agreement was signed by the parties, including Mr. Thomas Ready,
on 06 October 1980. The agreement was lodged in the California case on 26 November 1980 or two (2) days after
the pre-trial conference held on 24 November 1980. If Mr. Ready was indeed not authorized by PAWI to enter into the
supplemental settlement agreement, PAWI could have forthwith signified to FASGI a disclaimer of the settlement.
Instead, more than a year after the execution of the supplemental settlement agreement, particularly on 09 October
1981, PAWI President Romeo S. Rojas sent a communication to Elena Buholzer of FASGI that failed to mention Mr.
Ready's supposed lack of authority. On the contrary, the letter confirmed the terms of the agreement when Mr. Rojas
sought forbearance for the impending delay in the opening of the first letter of credit under the schedule stipulated in
the agreement.
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. 20
Nor could PAWI claim any prejudice by the settlement. PAWI was spared from possibly paying FASGI substantial
amounts of damages and incurring heavy litigation expenses normally generated in a full-blown trial. PAWI, under the
agreement was afforded time to reimburse FASGI the price it had paid for the defective wheels. PAWI, should not,
after its opportunity to enjoy the benefits of the agreement, be allowed to later disown the arrangement when the
terms thereof ultimately would prove to operate against its hopeful expectations.
PAWI assailed not only Mr. Ready's authority to sign on its behalf the Supplemental Settlement Agreement but
denounced likewise his authority to enter into a stipulation for judgment before the California court on 06 August 1982
on the ground that it had by then already terminated the former's services. For his part, Mr. Ready admitted that while
he did receive a request from Manuel Singson of PAWI to withdraw from the motion of judgment, the request
unfortunately came too late. In an explanatory telex, Mr. Ready told Mr. Singson that 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. From the time the stipulation for judgment was entered into on 26 April 1982 until
the certificate of finality of judgment was issued by the California court on 07 September 1982, no notification was
issued by PAWI to FASGI regarding its termination of Mr. Ready's services. If PAWI were indeed hoodwinked by Mr.
Ready who purportedly acted in collusion with FASGI, it should have aptly raised the issue before the forum which
issued the judgment in line with the principle of international comity that a court of another jurisdiction should refrain,
as a matter of propriety and fairness, from so assuming the power of passing judgment on the correctness of the
application of law and the evaluation of the facts of the judgment issued by another tribunal. 21

Paragraph 14 of the Supplemental Settlement Agreement fixed the liability of PAWI and FPS to be "joint and
several" or solidary. The enforcement of the judgment against PAWI alone would not, of course, preclude it from
pursuing and recovering whatever contributory liability FPS might have pursuant to their own agreement.
PAWI would argue that it was incumbent upon FASGI to first return the second and the third containers of defective
wheels before it could be required to return to FASGI the purchase price therefor, 25 relying on their original
agreement (the "Transaction"). 26 Unfortunately, PAWI defaulted on its covenants thereunder that thereby
occasioned the subsequent execution of the supplemental settlement agreement. This time the parties agreed, under
paragraph 3.4(e) 27 thereof, that any further default by PAWI would release FASGI from any obligation to maintain,
store or deliver the rejected wheels. The supplemental settlement agreement evidently superseded, at the very least
on this point, the previous arrangements made by the parties.
PAWI cannot, by this petition for review, seek refuge over a business dealing and decision gone awry. Neither do the
courts function to relieve a party from the effects of an unwise or unfavorable contract freely entered into. As has so
aptly been explained by the appellate court, the over-all picture might, indeed, appear to be onerous to PAWI but it
should bear emphasis that the settlement which has become the basis for the foreign judgment has not been the start
of a business venture but the end of a failed one, and each party, naturally, has had to negotiate from either position
of strength or weakness depending on its own perception of who might have to bear the blame for the failure and the
consequence of loss. 28

Altogether, the Court finds no reversible error on the part of the appellate court in its appealed judgment.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
No costs.
SO ORDERED.
||| (Phil. Aluminum Wheels, Inc. v. FASGI Enterprises, Inc., G.R. No. 137378, [October 12, 2000], 396 PHIL 893-914)

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, 22 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. 23
Even while the US judgment was against both FPS and PAWI, FASGI had every right to seek enforcement of the
judgment solely against PAWI or, for that matter, only against FPS. FASGI, in its complaint, explained:
"17. There exists, and at all times relevant herein there existed, a unity of interest and
ownership between defendant PAWI and defendant FPS, in that they are owned and
controlled by the same shareholders and managers, such that any individuality and
separateness between these defendants has ceased, if it ever existed, and defendant FPS
is the alter ego of defendant PAWI. The two entities are used interchangeably by their
shareholders and managers, and plaintiff has found it impossible to ascertain with which
entity it is dealing at any one time. Adherence to the fiction of separate existence of these
defendant corporations would permit an abuse of the corporate privilege and would
promote injustice against this plaintiff because assets can easily be shifted between the
two companies thereby frustrating plaintiff's attempts to collect on any judgment rendered
by this Court." 24

33

PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED,

and ATHONA HOLDINGS, N.V., petitioners, vs. THE HONORABLE COURT OF
APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS
and WILLIAM H. CRAIG, respondents.

Padilla Law Office for petitioners.

Salonga Hernandez & Mendoza for Guevarra.
Oreta, Suarez & Narvasa Law Firm for private respondents.

SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; FOREIGN JUDGMENT; WHEN CAN BE GIVEN THE EFFECT OF RES
JUDICATA. While this court has given the effect of res judicata to foreign judgments in several cases, it was after

the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under Sec.
50, Rule 39 of the Rules of Court. 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. SDHETI
2. ID.; ID.; MOTION TO DISMISS; PRINCIPLE OF "FORUM NON CONVENIENS", NOT A GROUND. The trial
court's refusal to take cognizance of the case is not justifiable under the principle of forum non conveniens. First, a
motion to dismiss is limited to the grounds under Rule 16, Sec. 1, which does not include forum non conveniens. 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 court's 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 latter's 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. ID.; ID.; SERVICE OF SUMMON; WHEN MAY BE EFFECTED. 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, Sec. 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." 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. ICaDHT

DECISION

MENDOZA, J p:
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.
The facts are as follows:
On January 15, 1983, private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala
International Finance Limited (hereafter called AYALA) 1 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 Ducat's obligation under an Agreement, dated January 27, 1983, whereby
1488, Inc. executed a Warranty Deed with Vendor's 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.

34

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. Accordingly, on October 17, 1985, 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. Originally instituted in the United States District Court of
Texas, 165th Judicial District, where it was docketed as Case No. 85-57746, the venue of the action was later
transferred to the United States District Court for the Southern District of Texas, where 1488, Inc. filed an amended
complaint, reiterating its allegations in the original complaint. ATHONA filed an answer with counterclaim, impleading
private respondents herein as counterdefendants, for allegedly conspiring in selling the property at a price over its
market value. Private respondent Perlas, who had allegedly appraised the property, was later dropped as
counterdefendant. ATHONA sought the recovery of damages and excess payment allegedly made to 1488, Inc. and,
in the alternative, the rescission of sale of the property. For their part, PHILSEC and AYALA filed a motion to dismiss
on the ground of lack of jurisdiction over their person, but, as their motion was denied, they later filed a joint answer
with counterclaim against private respondents and Edgardo V. Guevarra, PHILSEC's own former president, for the
rescission of the sale on the ground that the property had been over-valued. On March 13, 1990, the United States
District Court for the Southern District of Texas dismissed the counterclaim against Edgardo V. Guevarra on the
ground that it was "frivolous and [was] brought against him simply to humiliate and embarrass him." For this reason,
the U.S. court imposed so-called Rule 11 sanctions on PHILSEC and AYALA and ordered them to pay damages to
Guevarra.
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. 2
Private respondent Ducat moved to dismiss Civil Case No. 16563 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. Ducat contended that the alleged overpricing of the property
prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and
whose only participation was to extend financial accommodation to ATHONA under a separate loan agreement. On
the other hand, private respondents 1488, Inc. and its president Daic filed a joint "Special Appearance and Qualified
Motion to Dismiss," contending that the action being in personam, extraterritorial service of summons by publication
was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation,
and Daic, who is a non-resident alien.
On January 26, 1988, the trial court granted Ducat's 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.
A separate hearing was held with regard to 1488, Inc. and Daic's motion to dismiss. On March 9, 1988, the trial court
3 granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that
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)

ACTS OR CONDUCT PRIVATE RESPONDENTS (WHO ARE MOSTLY NON-RESIDENT

ALIENS) INFLICTED UPON THEM HERE IN THE PHILIPPINES.
The 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.
Petitioners appealed to the Court of Appeals, arguing that the trial court erred in applying the principle of litis
pendentia and forum non conveniens and in ruling that it had no jurisdiction over the defendants, despite the previous
attachment of shares of stocks belonging to 1488, Inc. and Daic.
On January 6, 1992, the Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488, Inc.,
and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are
Philsec, the Ayala International Finance Ltd. (BPI-IFL's former name) and the Athona
Holdings, NV. The case at bar involves the same parties. The transaction sued upon by the
parties, in both cases is the Warranty Deed executed by and between Athona Holdings and
1488 Inc. In the U.S. case, breach of contract and the promissory notes are sued upon by
1488 Inc., which likewise alleges fraud employed by herein appellants, on the marketability
of Ducat's securities given in exchange for the Texas property. The recovery of a sum of
money and damages, for fraud purportedly committed by appellees, in overpricing the
Texas land, constitute the action before the Philippine court, which likewise stems from the
same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a sum of
money for alleged tortious acts, so that service of summons by publication did not vest the trial court with jurisdiction
over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the ground of forum non conveniens was
likewise affirmed by the Court of Appeals on the ground that the case can be better tried and decided by the U.S.
court:
The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to wit: 1) the
property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign
corporation; 3) although the buyer, Athona Holdings, a foreign corporation which does not claim to be doing business
in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL,
also a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A.
In their present appeal, petitioners contend that:
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 COURT'S 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

35

We will deal with these contentions in the order in which they are made.
First. It is important to note in connection with the first point that while the present case was pending in the Court of
Appeals, the United States District Court for the Southern District of Texas rendered judgment 5 in the case before it.
The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of Appeals. 6
Thus, the principal issue to be resolved in this case is whether Civil Case No. 16536 is barred by the judgment of the
U.S. court.
Private respondents contend that for a foreign judgment to be pleaded as res judicata, a judgment admitting the
foreign decision is not necessary. On the other hand, petitioners argue that the foreign judgment cannot be given the
effect of res judicata without giving them an opportunity to impeach it on grounds stated in Rule 39, 50 of the Rules
of Court, to wit: "want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact."
Petitioners' contention is meritorious. While this court has given the effect of res judicata to foreign judgments in
several cases, 7 it 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. 9 Rule 39, 50 provides:
SEC. 50. 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; but the
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.
Thus, in the case of General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd., 10 which
private respondents invoke for claiming conclusive effect for the foreign judgment in their favor, the foreign judgment
was considered res judicata because this Court found "from the evidence as well as from appellant's own pleadings"
11 that the foreign court did not make a "clear mistake of law or fact" or that its judgment was void for want of
jurisdiction or because of fraud or collusion by the defendants. Trial had been previously held in the lower court and
only afterward was a decision rendered, declaring the judgment of the Supreme Court of the State of Washington to
have the effect of res judicata in the case before the lower court. In the same vein, in Philippine International
Shipping Corp. v. Court of Appeals, 12 this court held that the foreign judgment was valid and enforceable in the
Philippines there being no showing that it was vitiated by want of notice to the party, collusion, fraud or clear mistake
of law or fact. The prima facie presumption under the Rule had not been rebutted.
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. As the trial court stated in its disputed order dated March 9, 1988.

On the plaintiff's claim in its Opposition that the causes of action of this case and the
pending case in the United States are not identical, precisely the Order of January 26,
1988 never found that the causes of action of this case and the case pending before the
USA Court, were identical. (emphasis added)
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. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of judgment
in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to Branch 134,
although the proceedings were suspended because of the pendency of this case. To sustain the appellate court's
ruling that the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would effectively
preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could then arise: a foreign
judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in
this case, but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in a
separate proceeding. This is plainly untenable. It has been held therefore that:
[A] foreign judgment may not be enforced if it is not recognized in the jurisdiction where
affirmative relief is being sought. Hence, in the interest of justice, the complaint should be
considered as a petition for the recognition of the Hongkong judgment under Section 50
(b), Rule 39 of the Rules of Court in order that the defendant, private respondent herein,
may present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact
and law, if applicable. 14
Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should be
consolidated. 15 After all, the two have been filed in the Regional Trial Court of Makati, albeit in different salas, this
case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch
134 of Judge Ignacio Capulong. In such proceedings, petitioners should have the burden of impeaching the foreign
judgment and only in the event they succeed in doing so may they proceed with their action against private
respondents.

Fourth. As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the proceedings in
Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the
petitioners by the U.S. court, the Court finds that the judgment sought to be enforced is severable from the main
judgment under consideration in Civil Case No. 16563. The separability of Guevarra's claim is not only admitted by
petitioners, 20 it appears from the pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil
Case No. 16563. 21 Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed. cdasia
WHEREFORE, the decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED to the
Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further proceedings in
accordance with this decision. The temporary restraining order issued on June 29, 1994 is hereby LIFTED.
SO ORDERED.
||| (Philsec Investment Corp. v. Court of Appeals, G.R. No. 103493, [June 19, 1997], 340 PHIL 232-244)
U.S. Supreme Court
Klaxon Co. v. Stentor Elec. Mfg. Co., Inc., 313 U.S. 487 (1941)
Klaxon Company v. Stentor Electric Manufacturing Co., Inc.
No. 741
Argued May 1, 2, 1941
Decided June 2, 1941
313 U.S. 487
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE THIRD CIRCUIT

Second. Nor is the trial court's 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 court's desistance. 17
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 latter's 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.
Third. 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." 1 8 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.
19

36

Syllabus
1. 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. Erie R. Co. v. Tompkins, 304 U. S. 64. P. 313 U. S. 496.
2. In an action in a federal court. in Delaware, for breach of a New York contract, the applicability of a New York
statute directing that interest be added to the recovery in contract cases is a question of conflict of laws, which the
federal court must determine by the law of Delaware. P. 313 U. S. 496.
3. The Full Faith and Credit Clause does not require that a State, contrary to its own policy, shall give effect in actions
brought locally on contracts made in other States, to laws of those States relating, not to the validity of such
contracts, but to the right to add interest to the recovery as an incidental item of damages.
Page 313 U. S. 488

 480 N.Y.Civ.Prac. Act. John Hancock Mutual Life Inc. Co. v. Yates, 299 U. S. 178, distinguished. P. 313 U. S. 497.
115 F.2d 268, reversed.
Certiorari, 312 U.S. 674, to review the affirmance of a judgment recovered for breach of a contract, 30 F.Supp. 425.
The review in this Court was limited to the question whether 480 of the New York Civil Practice Act is applicable to
an action in the federal court in Delaware.
Page 313 U. S. 494
MR. JUSTICE REED delivered the opinion of the Court.
The principal question in this case is whether, in diversity cases, the federal courts must follow conflict of laws rules
prevailing in the states in which they sit. We left this open in Ruhlin v. New York Life Insurance Co., 304 U. S. 202,
304 U. S. 208, note 2. The frequent recurrence of the problem, as well as the conflict of approach to the problem
between the Third Circuit's opinion here and that of the First Circuit in Sampson v. Channell, 110 F.2d 754, 759-762,
led us to grant certiorari.
In 1918, 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
Page 313 U. S. 495
at the rate of six percent from June 1, 1929, the date the action had been brought. The basis of the motion was the
provision in section 480 of the New York Civil Practice Act directing that, in contract actions, interest be added to the
principal sum "whether theretofore liquidated or unliquidated." [Footnote 1] 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. 30 F.Supp. 425, 431. The Circuit Court of Appeals affirmed, 115 F.2d 268,
275, and we granted certiorari, limited to the question whether section 480 of the New York Civil Practice Act is
applicable to an action in the federal court in Delaware. 312 U.S. 674.
The Circuit Court of Appeals was of the view that, under New York law, the right to interest before verdict under
section 480 went to the substance of the obligation, and that proper construction of the contract in suit fixed New York
as the place of performance. It then concluded that section 480 was applicable to the case because
"it is clear by what we think is undoubtedly the better view of the law that the rules for ascertaining the measure of
damages are not a matter of procedure at all, but are
Page 313 U. S. 496

37

matters of substance which should be settled by reference to the law of the appropriate state according to the type of
case being tried in the forum. The measure of damages for breach of a contract is determined by the law of the place
of performance; Restatement, Conflict of Laws 413."
The court referred also to section 418 of the Restatement, which makes interest part of the damages to be
determined by the law of the place of performance. Application of the New York statute apparently followed from the
court's independent determination of the "better view," without regard to Delaware law, for no Delaware decision or
statute was cited or discussed.
We are of opinion that the prohibition declared in Erie R. Co. v. Tompkins, 304 U. S. 64, against such 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. [Footnote 2] Otherwise, the
accident of diversity of citizenship would constantly disturb equal administration of justice in coordinate state and
federal courts sitting side by side. See Erie R. Co. v. Tompkins, supra, at 304 U. S. 74-77. Any other ruling would do
violence to the principle of uniformity within a state upon which the Tompkins decision is based. Whatever lack of
uniformity this may produce between federal courts in different states is attributable to our 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. Subject only to review by this Court
Page 313 U. S. 497
on any federal question that may arise, Delaware is free to determine whether a given matter is to be governed by
the law of the forum or some other law. Cf. Milwaukee County v. White Co., 296 U. S. 268, 296 U. S. 272. This
Court's views are not the decisive factor in determining the applicable conflicts rule. Cf. Funkhouser v. J. B. Preston
Co., 290 U. S. 163. And the proper function of the Delaware federal court is to ascertain what the state law is, not
what it ought to be.
Besides these general considerations, the traditional treatment of interest in diversity cases brought in the federal
courts points to the same conclusion. Section 966 of the Revised Statutes, 28 U.S.C. 811, relating to interest on
judgments, provides that it be calculated from the date of judgment at such rate as is allowed by law on judgments
recovered in the courts of the state in which the court is held. In Massachusetts Benefit Association v. Miles, 137 U.
S. 689, this Court held that section 966 did not exclude the allowance of interest on verdicts as well as judgments,
and the opinion observed that "the courts of the state and the federal courts sitting within the state should be in
harmony upon this point." (P. 137 U. S. 691.)
Looking, then, to the Delaware cases, petitioner relies on one group to support his contention that the Delaware state
courts would refuse to apply 480 of the New York Civil Practice Act, and respondent on another to prove the
contrary. We make no analysis of these Delaware decisions, but leave this for the Circuit Court of Appeals when the
case is remanded.
Respondent makes the further argument that the judgment must be affirmed because, under the full faith and credit
clause of the Constitution, Art. 4, 1, the state courts of Delaware would be obliged to give effect to the New York
statute. The argument rests mainly on the decision of this Court in John Hancock Mutual Life Ins. Co. v. Yates,
Page 313 U. S. 498

299 U. S. 178, where a New York statute was held such an integral part of a contract of insurance that Georgia was
compelled to sustain the contract under the full faith and credit clause. Here, however, section 480 of the New York
Civil Practice Act is in no way related to the validity of the contract in suit, but merely to an incidental item of
damages, interest, with respect to which courts at the forum have commonly been free to apply their own or some
other law as they see fit. Nothing in the Constitution ensures unlimited extraterritorial recognition of all statutes or of
any statute under all circumstances. Pacific Employers Insurance Co. v. Industrial Accident Comm'n, 306 U. S. 493;
Kryger v. Wilson, 242 U. S. 171. The full faith and credit clause does not go so far as to compel Delaware to apply
section 480 if such application would interfere with its local policy.

it denied Borthwick's motion to lift the order of default (which is what the motion for new trial actually is) because
Borthwick had failed to establish any proper ground therefor.
3. ID.; CIVIL PROCEDURE; APPEAL FROM A DECISION OF THE COURT OF FIRST INSTANCE TO THE
SUPREME COURT; MAY RAISE ONLY QUESTION OF LAW. Under Rule 42 of the Rules of Court, a party
appealing 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.

Accordingly, the judgment is reversed and the case remanded to the Circuit Court of Appeals for decision in
conformity with the law of Delaware.

DECISION

Reversed.
NARVASA, J p:
[G.R. No. L-57338. July 23, 1987.]
WILLIAM 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.

SYLLABUS
1. REMEDIAL LAW; EFFECT OF FOREIGN JUDGMENT; JUDGMENT IS PRESUMPTIVE EVIDENCE OF A RIGHT
BETWEEN PARTIES. 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. 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. 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. ID.; EVIDENCE; FINDINGS OF FACT OF THE TRIAL COURT UPHELD ON APPEAL. 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. In any case, a review of the
records shows that the Trial Court was correct in refusing to believe Borthwick's representation that "Daniel gardens
at the residence of Borthwick, then goes home to La Union after gardening itinerantly." As said Court observed, that
situation is "ridiculous," it being "queer and hardly coincidental why on all papers served on the defendant, it was
Fred Daniel who signed and acknowledged receipt." There was therefore no error committed by the Trial Court when

By action commenced in the Circuit Court of the First Circuit, State of Hawaii, U.S.A., 1 Joseph E. Scallon sought to
compel payment by William B. Borthwick on four (4) promissory notes 2 in the amounts of $32,408.95, $29,584.94,
$2,832.59 and $40,000.00, plus stipulated interest. Scallon's complaint alleged, inter alia that Borthwick, an American
citizen living in the Philippines, owned real property interests in Hawaii where he last resided and transacted business
therein; that business dealings which transpired in Honolulu, Hawaii had given rise to the promissory notes sued
upon, and Borthwick had failed to pay the sums thereunder owing upon maturity and despite demand. 3 Attached to
the complaint were the promissory notes, which although uniformly specifying the city of Palos Verdes, Los Angeles,
California as the place of payment, also provided that
"in the event that payment . . . shall not have been made in full on or before the maturity
date . . . at . . . (such) place . . ., payee may select, at his option, Manila, Philippines, or
Honolulu, Hawaii as additional places for payment . . . and . . . any court in any of said
places having jurisdiction over the subject matter shall be a proper Court for the trial of any
action brought to enforce payment of this note and the law of the place in which said action
is brought shall apply." 4
Borthwick being then in Monterey, California, summons 5 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 Hawaii 6 alleged to consist as to Borthwick in the negotiation and dealings
regarding the promissory notes. Borthwick ignored the summons. Default was entered against him, and in due course
a default judgment was rendered as follows:
"DEFAULT JUDGMENT
"That Defendant WILLIAM B. BORTHWICK having failed to plead or otherwise defend in
the above-entitled action and his default having been duly entered herein;
"Now, upon the application of the Plaintiff JOSEPH E. SCALLON and upon the affidavit
that the Defendant WILLIAM B. BORTHWICK is indebted to said Plaintiff in the sum of
$104,817.48.
"IT IS HEREBY ORDERED, ADJUDGED, and decreed that Plaintiff JOSEPH E. SCALLON
recover from Defendant WILLIAM B. BORTHWICK the sum of $104,817.48 together with.
"(1) The transaction of any business within the State;

38

xxx xxx xxx

"(3) The ownership, use or possession of any real estate situated in
this State;
xxx xxx xxx

may be, as it is hereby ordered, enforced in the Philippines.

(b) Service of process upon any person who is subject to the

jurisprudence of the courts of this State, as provided in this section, may be
made as provided by sections 634-36, if he cannot be found in the State, with
the same force and effect as though summons had been personally served
within this State.
"[634-36] Manner of service under sections 634-33 to 35.
When service of summons is provided for by sections 634-33, 634-34, or 63435, service shall be made by leaving a certified copy thereof with the director of
regulatory agencies or his deputy, . . . provided that notice of the service and a
certified copy of the summons are served upon the defendant personally by
any person authorized to serve process in the place which he may be found or
appointed by the court for that purpose, or sent by certified or registered mail . .
. The service shall be deemed complete upon delivery of the required papers to
the defendant outside the State, personally or by mail as provided;" Rollo, pp.
143-144.
interest in the sum of $41,807.93, costs of Court in the sum of $37.00 and
attorney's fees in the sum of $4,290.64 for a total sum of $150,963.05.
DATED: Honolulu, Hawaii, APR. 30, 1987.
"(Sgd.)
V. CHING
Clerk of the aboveentitled Court" 7
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. 8 Scallon and his wife, Jewell, then came to the Philippines and on March
15, 1980 brought suit against Borthwick in the Court of First Instance of Makati, 9 seeking enforcement of the default
judgment of the Hawaii Court and asserting two other alternative causes of action. 10
The sheriff's initial efforts to serve summons on Borthwick personally at his address at 861 Richmond St., Greenhills,
Mandaluyong, Metro Manila having been unsuccessful Borthwick was "always out on official business" the
sheriff effected substituted service by leaving a copy of the summons and the complaint with Borthwick's "house
caretaker, " a man named Fred Daniel. 11
Borthwick filed no answer to the Scallons' complaint. He was declared in default. After due proceedings judgment by
default was rendered against him, the dispositive portion of which reads: cdll
"WHEREFORE, judgment is hereby rendered as follows:
1. The decision of the Court of Hawaii in Civil Case No. 56660 reading:

39

'IT IS HEREBY ORDERED, ADJUDGED AND DECREED that

Plaintiff JOSEPH E. SCALLON recover from Defendant WILLIAM B.
BORTHWICK the sum of $104,817.48 together with interest in the sum of
$41,807.93, costs of Court in the sum of $37.00 and attorney's fees in the sum
of $4,290.64 for a total sum of $160,53.05.'

2. The second alternative cause of action in the event that the satisfaction of the said
judgment becomes impossible, the rescission of the agreement (Exh. L) of the parties is
hereby granted. Defendant Borthwick is hereby ordered:
"(a) To return and deliver to plaintiffs Joseph and Jewell Scallon
their 800 shares of stock of Manila Memorial Park Cemetery, Inc. and 180
shares of stock of Trans-Pacific Development Management Corporation,
together with any and or all stock dividends, cash dividends and similar
corporate distributions accruing to said shares of stock from and after
December 3, 1973 (the date of the Agreement, Exh. L);

"(b) In the event that such shares cannot be returned and delivered,
to pay to plaintiff Scallon the value of the same from the execution of the
agreement, Exh. L, together with any increase in value from the said date to
the `finality of this judgment.
"SO ORDERED. 12
Again, it was with Fred Daniel, identifying himself as Borthwick's "houseboy," that a copy of the decision was left. 13
No response from Borthwick was forthcoming until after the Court subsequently amended its judgment so as to make
the sums due under the Hawaii Court decision payable in their equivalent in Philippine currency. 14 Notice of this
amendatory order was somehow personally accepted by Borthwick at this time. Borthwick then moved for a new trial,
claiming that it was by accident, mistake and excusable negligence that his "off and on itinerant gardener," Daniel,
failed to transmit the summons to him, which omission consequently prevented Borthwick from knowing of the judicial
proceedings against him., Alleging too that "the promissory notes did not arise from business dealings in Hawaii," nor
"did (he) own real estate" therein, 15 Borthwick contended that the judgment sought to be enforced was invalid for
want of jurisdiction of the Hawaii Court over the cause of action and over his person. Cdpr
The motion for new trial was denied by the Trial Court upon the factual finding that "Fred Daniel is a responsible
person" "of suitable age and discretion" "resident of the address . . . (of the) defendant" on whom substituted service of
summons had been duly made. 16 As to Borthwick's attack on the validity of the foreign judgment, the Trial Court
ruled that "under the . . . (Hawaii Revised Statute) cited by the defendant the Hawaii Court has jurisdiction" because
the factual premises upon which the exercise of such jurisdiction was based "had not been refuted by the defendant"
although he "appears to be a lawyer, and the summons in the Hawaii case was served personally on him." 17 Finally,
the Trial Court disposed of Borthwick's other defenses 18 saying that the present action "is (for) the enforcement of a
foreign judgment" where the validity of his defenses to the original action is immaterial. 19
Borthwick proceeded directly to this Court and filed a petition for review, 20 raising issues of law, framed as follows:
"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?
"3. Where a motion for new trial was filed on time, duly supported with affidavits to prove
the grounds relied upon, should not the Court grant the same? 21
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. 22 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. LexLib
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.
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 appealing 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 . . .," 23 and is thus precluded
from impugning the factual findings of the trial court, being deemed to have admitted the correctness of such findings
24 and waived his right to open them to question. 25
In any case, a review of the records shows that the Trial Court was correct in refusing to believe Borthwick's
representation that "Daniel gardens at the residence of Borthwick, then goes home to La Union after gardening
itinerantly." As said Court observed, that situation is "ridiculous," it being "queer and hardly coincidental why on all
papers served on the defendant, it was Fred Daniel who signed and acknowledged receipt." 26
There was therefore no error committed by the Trial Court when it denied Borthwick's motion to lift the order of default
(which is what the motion for new trial actually is) because Borthwick had failed to establish any proper ground
therefor.
WHEREFORE, the petition for review is denied, with costs against petitioner.
SO ORDERED.
||| (Borthwick v. Castro-Bartolome, G.R. No. L-57338, [July 23, 1987], 236 PHIL 247-257)
hendrik KOSTER, a Citizen of the Netherlands, Plaintiff-Appellee,
v.
AUTOMARK INDUSTRIES, INCORPORATED, a Delaware Corporation,
Defendant-Appellant.

40

No. 80-1765.
United States Court of Appeals,
Seventh Circuit.
Argued Dec. 11, 1980.
Decided Feb. 3, 1981.
John C. Loring, Chicago, Ill., for defendant-appellant.
Thomas B. Cassidy, Martin, Craig, Chester & Sonnenschein, Chicago, Ill., for plaintiff-appellee.
Before SPRECHER, BAUER and WOOD, Circuit Judges.
HARLINGTON WOOD, Jr., Circuit Judge.
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1
This diversity case involves the appeal of defendant Automark Industries, Inc. ("Automark"), a corporation doing
business in Illinois, from the district court's determination on motion for summary judgment in favor of plaintiff Hendrik
Koster, a citizen of the Netherlands. The district court's decision granted enforcement of a default judgment obtained
in district court in Amsterdam by Koster against Automark in a case brought on a claimed breach of contract. Finding
that Automark did not have sufficient contact with the Netherlands to vest that country's courts with personal
jurisdiction over Automark so as to permit enforcement of the default judgment in United States courts, we reverse.
2
Whether a court may, under American law, assert jurisdiction over a foreign defendant-company depends upon
whether the company "purposefully avails itself of the privilege of conducting activities within the forum State." Shaffer
v. Heitner, 433 U.S. 186, 216, 97 S.Ct. 2569, 2586, 53 L.Ed.2d 683 (1977). This means that the company must pass
a threshold of minimum contacts with the forum state so that it is fair to subject it to the jurisdiction of that state's
courts. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980);
International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).
3
The parties agree that the document alleged to be Automark's contract to purchase up to 600,000 units of Koster's
valve cap gauges was executed in Milan, Italy.1 The Milan meeting between Koster and Automark followed
preliminary inquiry and discussion between the two parties during a period of five months. The discussion was carried
on via mail between Koster's Amsterdam office and Automark's Illinois address. Automark began the exchange of
letters in June, 1970 with a one-sentence request for "descriptive material and prices" of Koster's product. Automark
subsequently expressed interest in marketing the tire gauges, but stated that it needed to know the details of such
important factors as Koster's relationship with the Swiss factory that produced the gauges, Koster's present patent
rights, and his rights to worldwide distribution of the total output of the Swiss factory. Automark expressly disclaimed
willingness to negotiate and conclude a contract through the mail.2 In early November, 1970, Automark's vicepresident, J. L. Bohmrich, wrote that he would like to meet with Koster in Amsterdam or at the Swiss factory during a
European trip Bohmrich planned to take later in the month. Koster replied that he would instead be willing to meet in
Milan, and would telephone Bohmrich's Illinois office to make arrangements. As noted, the Milan meeting resulted in
execution of the document involved in this case. So far as the record shows, Automark never ordered Koster's
gauges, and Koster never shipped any gauges.
4
The business contacts described above are insufficient to reach the minimum level needed to satisfy due process
requirements prerequisite to enforcement of the Dutch default judgment. A recent opinion of this court, Lakeside
Bridge & Steel Co. v. Mountain State Construction Co., 597 F.2d 596 (7th Cir. 1979), thoroughly analyzed the due
process requirements of minimum contacts in concluding that a federal court sitting in a diversity case arising in
Wisconsin did not have personal jurisdiction of a West Virginia defendant. Whether it be Wisconsin or the
Netherlands, the standard of minimum contacts is the same. See generally Somportex Limited v. Philadelphia
Chewing Gum Corp., 453 F.2d 435, 440 (3d Cir. 1971), cert. denied 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479

(1972). The facts in the Lakeside case were similar to those involved here, and if anything, presented a more
compelling case for recognizing personal jurisdiction.
5
In Lakeside, the defendant construction company had ordered structural assemblies from plaintiff Lakeside, a
Wisconsin company. Several letters and telephone calls had been exchanged between the two businesses, and a
contract concluded by mail. The assemblies were delivered, and Lakeside sued when the defendant withheld part of
the purchase price. The court assumed that the defendant believed that Lakeside would perform the contract in
Wisconsin, the forum state. Focusing on the nature and quality of the contacts between the two companies, the court
nevertheless concluded that Wisconsin could not assert jurisdiction over the West Virginia company because the
defendant's Wisconsin contacts did not show that it "purposefully avail(ed) itself of the privilege of conducting
activities within the forum state." 597 F.2d at 603.
6
The document at issue in the case before us was executed in Italy and involved the purchase of goods manufactured
in Switzerland. While the document contains language that might be construed as an agreement to pay, which
payment Koster claims was to take place in the Netherlands, such a promise even if so interpreted is not sufficient
contact to confer personal jurisdiction. Kulko v. California Superior Court, 436 U.S. 84, 93 n.6, 98 S.Ct. 1690, 1697,
n.6, 56 L.Ed.2d 132 (1978) (child-support payments required under separation agreement to spouse living in
California insufficient contact to confer jurisdiction on that state).
7
In comparison to the facts in the Lakeside case, Automark's only contacts with the Netherlands were eight letters, and
possibly a telegram and a transatlantic telephone call all preliminary to the meeting in Italy. In Lakeside, 597 F.2d at
604, the court notes that such contacts cannot be held to satisfy jurisdictional requirements, otherwise "(u)se of the
interstate telephone and mail service to communicate with (an out-of-state) plaintiff, if constituting contacts supporting
jurisdiction, would give jurisdiction to any state into which communications were directed." Such a result would make
virtually every business subject to suit in any state with which it happened to communicate in some manner. That
clearly would not satisfy the demands of due process.
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8
Lakeside emphasizes that "the best interests of the international and state systems" of commerce should be
considered when making determinations about minimum contacts in individual cases. 597 F.2d at 603, quoting
Restatement (Second) of Conflict of Laws 37, Comment a (1971). This consideration weighs in favor of Automark,
since it "is based on the proposition that '(a) state should not improperly impinge upon the interests of other states by
trying in its courts a case with which it has no adequate relationship.' " 597 F.2d at 603, quoting Restatement, supra,
24, Comment b. The Netherlands lacks an adequate relationship to defendant's presence and conduct to justify trial
of the case in that country. The interests of international business are better served by protecting potential
international purchasers from being unreasonably called to defend suits commenced in foreign courts which lack
jurisdiction according to our recognized standards of due process. See 597 F.2d at 603 n.12.
9
Moreover, the Lakeside opinion stresses that where the nature of a defendant's business contact in the forum state
does not involve activities dangerous to persons and property, the propriety of vesting personal jurisdiction in that
state must be considered in light of its relationship with the defendant other than that at issue in the lawsuit. 597 F.2d
at 603. The purchase and shipment of valve gauges is not a dangerous activity. And here, there are no allegations
that Automark had any relationship with the Netherlands beyond the letters, telegram and telephone call involved in
its business contact with Koster.
10
On these facts, Automark did not have the minimum contacts necessary to show that it purposefully utilized the
privilege to conduct business activities in the Netherlands sufficient to confer on that country's courts personal
jurisdiction over Automark. The district court concluded that cases decided under the Illinois long-arm statute,
Ill.Rev.Stat.Ch. 110, 17(a), supported his finding that Automark satisfied the requirement of minimum contacts to
support the Dutch court's jurisdiction. We disagree. We note that the Illinois courts have held that the state long-arm
statute is intended to assert jurisdiction over non-resident defendants only "to the extent permitted by the due process

41

clause." Colony Press, Inc. v. Fleeman, 17 Ill.App.3d 14, 19, 308 N.E.2d 78 (1974). The Lakeside court's discussion
of the application of Wisconsin's long-arm statute to a decision on the basis of federal due process rights is pertinent.
The court noted that the Wisconsin law "was intended by the state legislature to reach only so far as permitted by the
due process clause.... In these circumstances we are interpreting the statute, not ruling on its constitutionality, when
we decide the due process question; yet we are of course not bound by the (state courts') determination of that
federal question". 597 F.2d at 599. Likewise, in the case before us we are not bound by Illinois judicial determinations
on the requirements of due process to support personal jurisdiction. This is especially true where we are considering
the powers of a court in a jurisdiction other than Illinois.
11
At any rate, the cases relied upon by the district court for its determination that the Dutch court was vested with
personal jurisdiction do not detract from our holding here. Thus, in Colony Press, supra, the state court noted that the
"essential points" for purposes of its determination that an Ohio corporation was subject to a suit brought in Illinois
courts by an Illinois company were that the contract was accepted in Illinois and performance thereunder was
expected to occur wholly within that state. 17 Ill.App.3d at 18, 308 N.E.2d 78. As our discussion indicates, the
document involved in this case was executed in Italy, and the goods to which it related were to be produced in
Switzerland: the Netherlands was not the situs of either activity.
12
And the other case relied upon by the district judge, Cook Associates, Inc. v. Colonial Broach & Machine Co., 14
Ill.App.3d 965, 304 N.E.2d 27 (1973), dealt with a service contract involving an out-of-state company that had used
the services of an Illinois employment agency via a single telephone call. This satisfied the requirements for minimum
contacts under the circumstances of that case since "that call was all that was necessary for defendant to achieve its
(business) purpose", i. e., obtaining the names of prospective employees. 14 Ill.App.3d at 970, 304 N.E.2d 27. The
conclusion and performance of the contract were carried out in Illinois via that telephone call, unlike the situation
before us where neither activity occurred in the Netherlands.
13
Absent personal jurisdiction over Automark in the Dutch case that resulted in a default judgment, the courts of this
country lack jurisdiction to enforce the foreign default judgment. The decision of the district court accordingly is
reversed and the case is remanded with directions to dismiss the complaint.3
1
There apparently was some disagreement before the district court as to where this document was executed, since it
bears the handwritten words "Scope (Koster's company) Amsterdam, Neth." The briefs of both parties on appeal
agree that the document was executed in Milan, Italy
The text of the handwritten document, which serves as the alleged contract, reads as follows:
"We agree to purchase up to 600,000 pieces of Amico valve cap gauges bulkpacked from you at $0.11 each C.I.T.
N.Y. within the 12 mos. period beginning 1/1/71."
It is signed by Automark's vice-president. It is questionable whether the document represents a valid contract, as it
contains no corresponding promise by Koster. In light of our disposition of this case, however, we need not reach the
question of the sufficiency of the document to satisfy the prerequisites to a binding contract.
2
Automark's letter to Koster of September 22, 1970 reads in pertinent part as follows:
Anyone who will conclude a major international marketing program by mail is not, in our opinion, worth doing
business with and we wonder why you are so anxious to sign up anyone so long as it is done in a matter of days.
If and when we get into a program with you, it will be because we have met you personally and come to a meeting of
the minds and because we have subsequently committed major marketing funds and energies to an AMICO program.

If you are interested in a "hit and miss", "catch as catch can" program (unfortunately these are American colloquial
expressions but I do not know what to replace them with), then we have no place in your program and you should
proceed without us.
3
Automark raised another issue which because of our resolution of the case becomes a collateral matter
Automark contends that the Dutch statute governing service of process on defendants who reside in foreign countries
provides insufficient assurances of actual notice to comport with American due process requirements. Absence of
personal jurisdiction in the Netherlands courts would prevent a court in this country from enforcing a judgment
rendered in the Netherlands. Hilton v. Guyot, 159 U.S. 113, 184, 202, 16 S.Ct. 139, 151, 158, 40 L.Ed. 95 (1895). The
provisions of the Dutch statute that are pertinent here require that when a foreign defendant is named in a case that
will be tried in the Netherlands, process notifying the defendant must be served on the Dutch Department of Foreign
Affairs. The Dutch statute, as it appears in the record, contains no provision requiring the Department to follow up by
serving notice to the foreign defendant. The issue of service is of particular significance in this case because,
although a summons apparently was mailed, Automark insists it never received notice of the Dutch lawsuit and thus
was unable to defend its interests in the case that resulted in default.
In a somewhat analogous situation, many states in this country have statutory provisions whereby notice of a lawsuit
arising from an automobile accident in the forum state may be served on a non-resident defendant by delivery to the
forum state's Secretary of State. Under that procedure, due process requires an additional step. The Secretary in turn
must serve notice on the defendant through certified mail or other means reasonably calculated to result in actual
notice. Wuchter v. Pizzutti, 276 U.S. 13, 19, 48 S.Ct. 259, 260, 72 L.Ed. 446 (1928).
The district court stated, quite correctly, that certified mail, the method used in the case before us, generally is
sufficient to fulfill due process requirements regardless of actual notice. While this analysis is fine so far as it goes, it
ignores the Wuchter conclusion that a statutory provision is not reasonably calculated to provide notice unless its
terms relating to the sending of notice are mandatory. Thus, in Wuchter, even though the defendant received actual
notice of the lawsuit when the forum state's Secretary in fact mailed the summons, "(n)ot having been directed by the
statute (actual notice via the Secretary's mailing) cannot, therefore, supply constitutional validity to the statute or to
service under it." 276 U.S. at 24, 48 S.Ct. at 262. Here, there is nothing in the Dutch statute that requires the Dutch
Department of Foreign Affairs to serve process on a foreign defendant by certified mail or any other reasonable
means. That the Department as a matter of practice may exercise its discretion to serve process in some reasonable
manner is not dispositive, since "(t)he right of a citizen to due process of law must rest upon a basis more substantial
than favor or discretion." Roller v. Holly, 176 U.S. 306, 409, 20 S.Ct. 410, 418, 44 L.Ed. 520 (1900). Compare Boivin
v. Talcott, 102 F.Supp. 979 (N.D.Ohio 1951) (refusing to enforce Canadian default judgment where actual notice but
no mandatory form of serving process other than discretion of Canadian court). An affidavit appended to Koster's
brief on appeal states that "Dutch law" requires that the Department serve the summons on a defendant once it
receives notice of the lawsuit. The conclusory and vague terms of the affidavit render it of no use in dealing with the
issue of the statute's requirements, since the affidavit does not say whether the "Dutch law" referred to is delineated
in a part of the statute not in the record, is a formal regulation or body of case law, or is an informal matter of practice.

SYLLABUS
1. DERECHO INTERNACIONAL PRIVADO; SENTENCIAS EXTRANJERAS; DECRETO
INTERLOCUTORIO. Un decreto interlocutorio sobre la custodia de un menor no es decision final. Por su
naturaleza no es firme. Esta sujeto a cambios como cambian las circunstancias.
2. ID.; ID.; ID.; MANUTENCION. La pension no es fija y se aumenta o disminuye como
aumentan o disminuyen las necesidades del pensionista o como exijan las condiciones economicas del que la
da.
3. ID.; ID.; SU CUMPLIEMENTO EN FILIPINAS. El decreto interlocutorio no constituye decision
final, no cabe pedir cumpliemento en Filipinas.
4. ID.; ID.; DECRETO DE DIVORCIO; EFECTO EN FILIPINAS. En general, un decreto de
divorcio encomendando la custodia de un hijo del matrimonio a uno de los conyuges se respeta por los
juzgados de otros estados "at the time and under the circumstances of its rendition but that such a decree has
no controlling effect in another state as to facts or conditions arising subsequently to the date of the decree; and
the courts of the latter state may, in roper proceedings, award the custody otherwise upon proof of matters
subsequent to the decree which justify the change in the interest of the child."
5. PATERNIDAD Y FILACION; PORVENIR DE LA NIA SUPERIOR A TODA CONSIDERACION.
No se trata solo de resolver el derecho preferente del padre y de la madre en la custodia. La vital y
transcendental cuestion del polvenir de la nia es superior a toda consideracion.
6. DERECHO INTERNACIONAL PRIVADO; SENTENCIA EXTRAJERA QUE CONTRAVIENE
NUESTRAS LEYES. El tribunal Supremo no debe hacir cumplir un decreto dictado por un tribunal
extranjeros, que contraviene nuestras leyes y los sanos principios de moralidad que informan nuestra
estructura social sobre relaciones familiares.
7. ID.; ID. Las sentencias de tribunales extranjeros no pueden ponerse en vigor en Filipinas si
son contrarias a las leyes, costumbres y orden publico. Si dichas decisiones, por la simple teoria de
repciprocidad, cortesia judicial y urbanidad internacinal son base suficiente para que nuetron tribunale decidan
a tenor de las mismas, entonces nuestros juzgados estarian en la pobre tesitura de tener que dictar sentencias
contracias a nuestras leyes, costumbres y orden publico. esto es absurdo.
8. ID.; LA RECIPROCIDAD ENTRE NACIONES. La reciprocidad, a cortesia entre naciones no
es absoluta. Rige cuando hay tratado y hay igualdad de legislacion. Se adopta la doctrina de reciprocidad
cuando el tribunal extranjero tiene jurisdiccion para connocer de la causa, las partes han comparecido y
discutido el asunto en el fondo. Algunas veces se concede como privilegio pero no como estricto derecho. La
cortesio pedida no ha sido reconocida por este Tribunal cuando declaro que los derechos y deberes de familia,
estado, condicion y capacidad legal de las personas se rigen por las leyes de Filipinas y no por las de america.

DECISION

Under these circumstances the Dutch default judgment could not be enforced in our courts.
[G.R. No. L-3693. Julio 29, 1950.]
PABLO, M p:
MARGARET QUERUBIN, recurrente-apelante, contra SILVESTRE QUERUBIN,
recurrido-apelado.

Manuel A. Argel en representacion del recurrente y apelante.

Maximino V. Bello en representacion del recurrido y apelado.

42

Silvestre Querubin es de Caoayan, Ilocos Sur, de padres filipinos. En 1926 se marcho a los
Estados Unidos con el objeto de estudiar pero con el proposito de volver despues a su pais natal. Obtuvo el
titulo de "Master of Arts and Sciences" en la "University of Southern California," institucion domiciliada en los
Angeles, California, en donde el recurrido empezo a vivir desde 1934.
En 20 de octubre de 1943, Silvestre Querubin contrajo matrimonio con la recurrente, Margaret
Querubin, en Albuquerque, New Mexico. Como fruto de este matrimonio nacio Querubina Querubin, quien, al
tiempo de la vista de la causa en el Juzgado de primera instancia de Ilocos Sur, tenia cuatro aos de edad
poco mas o menos.

La recurrente entablo en 1948 una demanda de divorcio contra el recurrido, fundada en "crueldad
mental." En 7 de febrero de 1948 el divorcio fue concedido al marido en virtud de una contrademanda
presentada por el y fundada en la infidelidad de su esposa. En 5 de abril de 1949, y a peticion del demandado
y contrademandante, (recurrido en esta actuacion de habeas corpus) el Juzgado superior de Los Angeles dicto
una orden interlocutoria disponiendo lo siguiente:
"It is therefore ordered, adjudged and decreed that the interlocutory judgment
of divorce hereinbefore entered on February 27, 1948, in Book 1891, page 319, be and the
same is hereby modified in the following particulars in connection with the custody of the
minor child of the parties only:
"(1) The care, custody and control of the minor child of the parties, Querubina
Querubin, is hereby awarded to defendant and cross- complainants;
"(2) Said child is to be maintained in a neutral home, subject to the right of
reasonable visitation on the part of both parties to this action;
"(3) Each party shall have the right to take said child away from said neutral
home but plaintiff and cross-defendant is restrained from taking said child to her place of
residence;
"(4) Each party is restrained from molesting the other, or in any way interfering
with the other's right of reasonable visitation of said child;
"(5) Each party is restrained from removing the child from the State of
California without first securing the permission of the court; said parties are further
restrained from keeping the child out of the County of Los Angeles for more than one day
without first securing the consent of the court."
El recurrido salio de San Francisco en 7 de noviembre de 1949, arribando a Manila en 25 del
mismo mes. En 27 de susodicho mes llego a Caoayan, Ilocos Sur, donde vive actualmente, llevandose consigo
a la nia Querubina, a quien trajo a Filipinas porque, en su calidad de padre, queria evitar que llegase a
conocimiento de ella la conducta indecorosa de su propia madre. El recurrido queria que su hija fuera educada
en un ambiente de elevada moralidad.
A peticion de la recurrente Margaret, el Juzgado superior de los Angeles, California, en 30 de
noviembre de 1949 modifico su orden de 5 de abril de 1949, disponiendo lo siguiente:
"Under interlocutory decree of March 7, 1949, the child, a girl now 3 1/2 years
old, was granted to deft husband, but the child was to be kept in a neutral home; both
parties were given reasonable visitation and both were restrained from removing the child
out of the state. Deft has taken the child with him to the Philippine Islands. At time of trial
custody was apparently denied ptf because she was then living with another man. She is
now married to this man and they have a well equipped home. Ptf appears to be a devoted
mother. She has one child, the issue of her present marriage, and is also caring for a child
that was abandoned by certain friends of hers. Ptf's husband is regularly and permanently
employed. Witnesses testified in behalf of the ptf in reference to her motherly qualities and
the condition of her home. She visited the child in question sufficiently when the child was
in the neutral home and brought her toys and other articles. Service of the order to show
cause was made on deft's attorneys of record.
"The interlocutory decree is modified so as to provide that custody of the child
shall be awarded to ptf and deft shall have the right of reasonable visitation. Deft shall pay
ptf for the support of the child $30 each month on the 1st day thereof, commencing Jan.
1950."
En el dia de la vista de esta causa de habeas corpus en Ilocos Sur, el recurrida declaro que nunca
intento cambiar su ciudadania; que cuando vino al pais tenia unos P2,000 de ahorro: que tres semanas
despues de su arribo recibio oferta para ensear con sueldo P250 mensual en el colegio establecido por el Dr.
Sobrepea en Villasis, Pangasinan; que nunca se le ha privado de patria potestad por sentencia judicial, ni
declarado ausente de Filipinas, ni sujeto a interdiccion civil. Segun el juzgado a quo, el recurrido es de
irreprochable conducta.

43

En 10 de febrero de 1950 la recurrente Margaret Querubin, por medio de su abogado, presento en

el Juzgado de primera instancia de Ilocos Sur una solicitud de habeas corpus reclamando la custodia de su
hija Querubina, alegando como fundamento el decreto interlocutorio del juzgado de California que concedio a
ella dicha custodia. Despues de la vista correspondiente, el Juzgado a quo, en 28 de febrero de 1950 denego
la solicitud. La recurrente acude en apelacion ante este Tribunal.
La recurrente sostiene que bajo el articulo 48 de la Regla 39, el decreto Exhibit A-1 del Juzgado de
los Angeles, California, debe cumplirse en Filipinas. Su parte dispositiva dice textualmente:
"The interlocutory decree is modified so as to provide that custody of the child
shall be awarded to ptf and deft shall have the right of reasonable visitation. Deft shall pay
ptf for the support of the child $30 each month on the 1st day thereof, commencing Jan.
1950."
Un decreto interlocutorio sobre la custodia de un menor no es una decision final. Por su naturaleza
no es firme. Esta sujeto a cambios como cambian las circunstancias. En el primer decreto se dio al padre la
custodia de la menor. A peticion del padre, se dicto el decreto de 5 de abril prohibiendo a la madre que llevase
a la menor a su casa porque estaba otra vez en relaciones adulterinas con otro hombre. Cuando ya no estaba
el recurrido en Los Angeles, porque ya habia venido a Filipinas, se enmendo la ultima orden y se dispuso que
la custodia estuviese encomendada a la recurrente, pagando a ella el recurrido $30 al mes para la
manutencion de la menor. La pension no es fija y se aumenta o disminuye como aumentan o disminuyen las
necesidades del pensionista o como exijan las condiciones economicas del que la da.
Porque el decreto interlocutorio, Exhibit A-1, no constituye decision final, no cabe pedir su
cumplimiento en Filipinas. En los mismos Estados Unidos no puede pedirse el cumplimiento de una orden
interlocutoria en el juzgado de otro estado.
"The rule is of common knowledge that the definitive judgment of a court of
another state between the same parties on the same cause of action, on the merits of the
case is conclusive, but it must be a definitive judgment on the merits only. Where the
judgment is merely interlocutory, the determination of the question by the court which
rendered it did not settle and adjudge finally the rights of the parties." (National Park Bank
vs. Old Colony Trust Co., 186 N. Y. S., 717.)
"As already stated the Minnesota decree, to the extent that it is final and not
subject to modification, is entitled to the protection of the full faith and credit clause of the
federal Constitution and must be enforced in this state. If, however, a part of the Minnesota
decree in not final, but is subject to modification by the court which rendered it, then neither
the United States Constitution nor the principle of comity compels the courts of this state to
enforce that part of the decree; for no court other than the one granting the original decree
could undertake to administer relief without bringing about a conflict of authority." (Levine
vs. Levine, 187 Pac., 609.)
"A judgment rendered by a competent court, having jurisdiction in one state, is
conclusive on the merits in the courts of every other state, when made the basis of an
action and the merits cannot be reinvestigated. Our own Supreme Court so holds. Cook vs.
Thornhill, 13 Tex. 293, 65 Am. Dec. 63. But before such a judgment rendered in one state
is entitled to acceptance, in the courts of another state, as conclusive on the merits, it must
be a final judgment and not merely an interlocutory decree. Freeman on Judgment, Sec.
575; Baugh vs. Baugh, 4 Bibb (7 Ky.) 556; Brinkley vs. Brinkley, 50 N.Y. 184, 10 Am. Rep.
460; Griggs, vs. Becker, 87 Wis. 313, 58 N. W. 396." (Walker vs. Garland et al., 235 S. W.,
1078.)
En general, un decreto de divorcio encomendando la custodia de un hijo del matrimonio a uno de
los conyuges se respeta por los juzgados de otros estados "at the time and under the circumstances of its
rendition but that such a decree has no controlling effects in another state as to facts or conditions arising
subsequently to the date of the decree; and the courts of the latter state may, in proper proceedings, award the
custody otherwise upon proof of matters subsequent to the decree which justify the change in the interest of the
child." (20 A. L. R., 815.).

En el caso presente las circunstancias han cambiado. Querubina ya no esta en los Angeles sino en
Caoayan, Ilocos Sur. Esta bajo el cuidado de su padre. Hay una distancia enorme desde Los Angeles y el
presente domicilio de la menor y el costo del pasaje hasta aquella ciudad seria muy elevado, y aun es posible
que este fuera del alcance de la recurrente. No hay pruebas de que ella esta en condiciones de pagar los
gastos de viaje de la menor y del que la acompae. Ella no es un paquete de cigarrillos que se puede enviar
por correo a Los Angeles.
No consta que las circunstancias que se daban en noviembre de 1949 en Los Angeles, prevalecian
en el mismo estado hasta el momento en que se vio la causa en el Juzgado de primera instancia de Ilocos Sur.
Tampoco hay pruebas de que la recurrente dispone de suficientes fondos para costear el viaje de la nia
Querubina desde Caoayan, Ilocos Sur, hasta Los Angeles, California, y para responder de su alimentacion,
cuidado y educacion, y constando en autos que el padre, mas que nadie, esta interesado en el cuidado y
educacion de su hija, y que tiene ahorros de mas de P2,000 depositados en un banco, creemos que el
Juzgado a quo no erro al denegar la solicitud.
El Juzgado no podia, sin prueba satisfactoria, disponer sin remordimiento de conciencia la entrega
de la nia al abogado de la recurrente: es su obligacion velar por la seguridad y bienestar de ella. No se trata
solo de resolver el derecho preferente del padre y de la madre en la custodia. La vital y trascendental cuestion
del porvenir de la nia es superior a toda consideracion. El Estado vela por sus ciudadanos. El articulo 171 del
Codigo Civil dispone que "Los Tribunales podran privar a los padres de la patria potestad, o suspender el
ejercicio de esta, si trataren a sus hijos con dureza excesiva, o si les dieren ordenes, consejos o ejemplos
corruptores." En Cortes contra Castillo y otra (41 Jur. Fil., 495), este Tribunal declaro que no erro el Juzgado de
primera instancia al nombrar a la abuela, como tutora de dos menores, en vez de su madre que fue condenada
por adulterio.
El articulo 154 del Codigo Civil dispone que "El padre, y en su defecto la madre, tienen potestad
sobre sus hijos legitimos no emancipados." Con todo, si se hace indebido ejercicio de esta facultad, los
tribunales, como ya hemos dicho, pueden privarle de ella y encomendar el cuidado del menor a otras
instituciones, como dispone el articulo 6 de la Regla 100, que es reproduccion del articulo 771 de la Ley No.
190. En el asunto de Lozano contra Martinez y De Vega (36 Jur. Fil., 1040), en que el primero, en un recurso
de habeas corpus, reclamaba contra su esposa la custodia de su hijo menor de 10 aos, este Tribunal, en
apelacion, declaro que el juzgado a quo no abuso de la discrecion conferida a el por el articulo 771 del Codigo
de procedimiento civil al denegar la solicitud. Esta interpretacion del articulo en cuanto al debido ejercicio de la
discrecion de un Juzgado de primera instancia ha sido reafirmada en el asunto de Pelayo contra Lavin (40 Jur.
Fil., 529).
En la solicitud presentada, no hay siquiera alegacion de que el juzgado a quo haya abusado de su
discrecion. Este Tribunal no debe revocar su actuacion.
En la vista de la causa en el Juzgado de Primera Instancia de Ilocos Sur, el recurrido declaro que
habia traido su hija a Filipinas porque queria evitar que ella tuviera conocimiento de la conducta impropia y de
la infidelidad cometida por la madre, impidiendo que la viese convivir con el hombre que habia ofendido a su
padre. El recurrido dijo que queria que su hija se criase en un ambiente de elevada moral, y que no se
sancionara indirectamente la infidelidad de la esposa. Bajo la Ley de Divorcio No. 2710, el conyuge culpable
no tiene derecho a la custodia de los hijos menores. La legislacion vigente, las buenas costumbres y los
intereses del orden publico aconsejan que la nia debe estar fuera del cuidado de una madre que ha violado el
juramento de fidelidad a su marido. Creemos que este Tribunal no debe hacer cumplir un decreto dictado por
un tribunal extranjero, que contraviene nuestras leyes y los sanos principios de moralidad que informan nuestra
estructura social sobre relaciones familiares.
En el asunto de Manuela Barretto Gonzales contra Augusto Gonzales (58 Jur. Fil., 72), se pidio por
la demandante que el divorcio obtenido por el demandado en Reno, Nevada, en 28 de noviembre de 1927,
fuera confirmado y ratificado por el Juzgado de primera instancia de Manila. Este juzgado dicto sentencia a
tenor de la peticion. Teniendo en cuenta el articulo 9 del Codigo civil que dispone que "Las leyes relativas a los
derechos y deberes de familia, o al estado, condicion y capacidad legal de las personas, obligan a los
espaoles (flipinos) aunque residan en pais extranjero" y el articulo 11 del mismo codigo que dice en parte que
". . . las leyes prohibitivas concernientes a las personas, sus actos o sus bienes, y las que tienen por objeto el
orden publico y las buenas costumbres, no quedaran sin efecto por leyes o sentencias dictadas, ni por
disposiciones o convenciones acordadas en pais extranjero," este Tribunal, en apelacion, declaro: "Los
litigantes, mediante convenio 'mutuo, no pueden obligar a los tribunales a que aprueben sus propios actos, ni

44

que permitan que las relaciones personales de los ciudadanos de estas Islas queden afectadas por decretos
de paises extranjeros en una forma que nuestro Gobierno cree que es contraria al orden publico y a la recta
moral," y revoco la decision del juzgado inferior.
Las sentencias de tribunales extranjeros no pueden ponerse en vigor en Filipinas si son contrarias
a las leyes, costumbres y orden publico. Si dichas decisiones, por la simple teoria de reciprocidad, cortesia
judicial y urbanidad internacional son base suficiente para que nuestros tribunales decidan a tenor de las
mismas, entonces nuestros juzgados estarian en la pobre tesitura de tener que dictar sentencias contrarias a
nuestras leyes, costumbres y orden publico. Esto es absurdo.
En Ingenohl contra Olsen & Co. (47 Jur. Fil., 199), se discutio el alcance de la cortesia
internacional. El articulo 311 del Codigo de Procedimiento Civil que es hoy el articulo 48, Regla 39, fue la base
de la accion presentada por Ingenohl. Pidio en su demanda que el Juzgado de primera instancia de Manila
dictase sentencia de acuerdo con la dictada por el Tribunal Supremo de Hongkong. Despues de la vista
correspondiente, el juzgado dicto sentencia a favor del demandante con intereses legales y costas. En
apelacion, se alego que el juzgado inferior erro al no declarar que la decision y sentencia del Tribunal Supremo
de Hongkong se dicto y registro como resultado de un error manifiesto de hecho y de derecho. Este Tribunal
declaro que "Es principio bien sentado que, a falta de un tratado o ley, y en virtud de la cortesia y del derecho
internacional, una sentencia dictada por un tribunal de jurisdiccion competente de un pais extranjero, en el que
las partes han comparecido y discutido un asunto en el fondo, sera reconocida y puesta en vigor en cualquier
otro pais extranjero." Pero teniendo en cuenta el articulo 311 del Codigo de Procedimiento Civil que dispone
que "la sentencia puede ser rechazada mediante prueba de falta de competencia, o de haber sido dictada sin
la previa notificacion a la parte, o que hubo connivencia, fraude o error manifiesto de derecho o de hecho,"
concluyo: "En virtud de esa Ley cuando una persona trata de hacer cumplir una sentencia extranjera, el
demandado tiene derecho a ejercitar cualquier defensa de esas, y si se llegara a demostrar que existe
propiamente alguna de ellas, destruira los efectos de la sentencia." Revoco la decision del juzgado inferior y
declaro y fallo que "la sentencia dictada por el Tribunal de Hongkong, contra la demandada, constituyo un error
manifiesto de hecho y de derecho, y, por tal razon, no debe exigirse su cumplimiento en las Islas Filipinas."
Si se concede la solicitud, la menor estaria bajo el cuidado de su madre que fue declarada
judicialmente culpable de infidelidad conyugal; viviria bajo un techo juntamente con el hombre que deshonro a
su madre y ofendio a su padre; jugaria y creceria con el fruto del amor adulterino de su madre; llegaria a la
pubertad con la idea de que una mujer que fue infiel a su marido tiene derecho a custodiar a su hija. En
semejante medio ambiente no puede criarse a una nia de una manera adecuada: si llegara a saber durante
su adolescencia que su padre ha sido traicionado por su madre con el hombre con quien vive, esa nia viviria
bajo una impresion de inferioridad moral de incalculables consecuencias, y por ello nunca seria feliz; y si, bajo
la influencia de su madre, llegara a creer que la infidelidad de una esposa es solo un incidente tan pasajero
como cambiar de tocado, la nia iria por el camino de la perdicion. Y la educacion moral que puede darle su
padrasto dificilmente puede ser mejor.
Si se deniega la solicitud, la nia viviria con su padre con el beneficio de un cuidado paternal
exclusivo, y no con la dividida atencion de una madre que tiene que atender a su esposo, a sus dos hijas y a
una tercera nia, la protegida. Para el bienestar de la menor Querubina, que es lo que mas importa en el caso
presente, su custodia por el padre debe considerarse preferente.
En los mismos Estados Unidos, el punto cardinal que tienen en cuenta los juzgados, no es la
reclamacion de las partes o la fuerza del decreto interlocutorio, sino el bienestar del menor.
"A consideration of all the facts and circumstances leads to the conclusion that
comity does not require the courts of this state, regardless of the well-being of the child, to
lend their aid to the enforcement of the Iowa decree by returning Winifred to the custody of
her grandmother. A child is not a chattel to which title and the right of possession may be
secured by the decree of any court. If the decree had been rendered by a domestic court of
competent jurisdiction, it would not have conclusively established the right to the custody of
the child. In a contest between rival claimants, this court would have been free,
notwithstanding the decree, to award the custody solely with an eye to the child's welfare."
(State ex rel. Aldridge vs. Aldridge, 204 N. W. 324.)

"On habeas corpus by the mother to obtain possession from the father of two
children aged four and six years, whose custody she alleged had been awarded her in
divorce proceedings in another state, it appeared that the mother was without property, and
had no means of support save her personal earnings of $15 per month, was in poor health,
and lived with her mother, in immoral surroundings, and that the father was an industrious
and sober man, earning $100 per month. Held, that the welfare of the children was the only
thing to be considered, and a judgment awarding their custody to the mother should be
reversed." (Kentzler vs. Kentzler, 28 Pac., 370.)
La recurrente, como ultimo recurso, invoca la comity of nations. La reciprocidad, la cortesia entre
naciones no es absoluta. Rige cuando hay tratado y hay igualdad de legislacion. Se adopta la doctrina de
reciprocidad cuando el tribunal extranjero tiene jurisdiccion para conocer de la causa, las partes han
comparecido y discutido el asunto en el fondo. Algunas veces se concede como privilegio pero no como
estricto derecho. La cortesia pedida no ha sido reconocida por este Tribunal cuando declaro que los derechos
y deberes de familia, estado, condicion y capacidad legal de las personas se rigen por las leyes de Filipinas y
no por las de America (Gonzales contra Gonzales, supra) y no dio validez a la decision del Tribunal Supremo
de Hongkong porque era erronea en sus conclusiones de hecho y de derecho (Ingenohl contra Olsen y Co.,
supra.) La reciprocidad entre los estados de la Union Americana no es absoluta. No es regla inquebrantable.
Los varios casos citados mas arriba lo demuestran. He ahi otro caso:
"On the question of comity, this court said in the habeas corpus case of In re
Stockman, 71 Mich. 180, 38 N. W. 876:
"'Comity cannot be considered in a case like this, when the future welfare of the
child is the vital question in the case. The good of the child is superior to all other
considerations. It is the polar star to guide to the conclusion in all cases of infants, whether
the question is raised upon a writ of habeas corpus or in a court of chancery.'" (Ex parte
Leu, 215 N. W., 384.)
Ya hemos visto que la orden interlocutoria cediendo la custodia de la menor a la recurrente esta en
pugna con las disposiciones expresas de la legislacion vigente en Filipinas. En el primer decreto y en el
enmendatorio se encomendo la custodia de la menor al padre y se prohibio, en la orden enmendada, a la
madre llevar a la menor a su casa porque estaba otra vez en relaciones ilegales con otro hombre. Pero el
ultimo decreto enmendatorio, contrario al sentido de justicia, a la ley, y a las buenas costumbres, encomendo la
custodia de la menor a la que fue esposa infiel porque ya estaba casada con quien cometio adulterio. Y bajo la
doctrina de la comity of nations, la recurrente contiende que debe cumplirse en Filipinas ese decreto.
Opinamos que por las varias razones arriba expuestas, la pretension es insostenible.
Se confirma la sentencia apelada. La recurrente pagara las costas.
Ozaeta, Bengzon, Montemayor y Reyes, MM., estan conformes.
Tuason, J., I concur in the result.
||| (Querubin v. Querubin, G.R. No. L-3693, [July 29, 1950], 87 PHIL 124-137)
[G.R. No. 77085. April 26, 1989.]
PHILIPPINE INTERNATIONAL SHIPPING CORPORATION (PISC), GEORGE LIM,
MARCOS BAUTISTA, CARLOS LAUDE, TAN SING LIM, ANTONIO LIU LAO, ONG TEH,
PHILIPPINE CONSORTIUM CONSTRUCTION CORPORATION, PACIFIC MILLS, INC.,
and UNIVERSAL STEEL SMELTING CO., INC., petitioners, vs. THE HON. COURT OF
APPEALS, HON. JOSE C. DE GUZMAN, as Judge presiding Branch 93 of the
Regional Trial Court of Quezon City, INTERPOOL, LTD. and SHERIFF NORBERTO V.
DOBLADO, JR., respondents.

SYLLABUS

45

1. REMEDIAL LAW; FOREIGN JUDGMENT BY DEFAULT; VALID AND ENFORCEABLE IN THE PHILIPPINE
JURISDICTION, AFTER ATTAINING FINALITY AND NOT VITIATED BY "WANT OF NOTICE TO THE PARTY,
COLLUSION, FRAUD OR CLEAR MISTAKE OF LAW OR FACT." The evidence of record clearly shows that the
U.S. District Court had validly acquired jurisdiction over petitioner PISC under the procedural law applicable in that
forum, i.e., the U.S. Federal Rules on Civil Procedure. Copies of the Summons and Complaint in 83 Civil 290 (EW)
which were in fact attached to the Petition for Review filed with this Court, were stamped "Received, 18 Jan 1983,
P.I.S.C., Manila." indicating that service thereof had been made upon and acknowledged by the PISC office in Manila
on, 18 January 1983, and that PISC had actual notice of such Complaint and Summons. Moreover, copies of said
Summons and Complaint had likewise been served upon Prentice-Hall Corporation System, Inc. (New York),
petitioner PISC'S agent, expressly designated by it in the Master Equipment Leasing Agreement with respondent
Interpool. "for the purpose of accepting service of any process within the State of New York, USA with respect to any
claim or controversy arising out of or relating to directly or indirectly, this Lease." The record also shows that petitioner
PISC, without, however, assailing the jurisdiction of the U.S. District Court over the person of petitioner, had filed a
Motion to Dismiss the Complaint in 83 Civil 290 (EW), which Motion was denied. All of the foregoing matters, which
were stated specifically in the U.S. District Court's disputed Default Judgment, have not been disproven or otherwise
overcome by petitioners, whose bare and unsubstantiated allegations cannot prevail over clear and convincing
evidence of record to the contrary. That foreign judgment which had become final and executory, no appeal having
been taken therefrom and perfected by petitioner PISC is thus "presumptive evidence of a right as between the
parties [i.e., PISC and Interpool] and their successors in interest by a subsequent title." We note, further, that there
has been in this case no showing by petitioners that the Default Judgment rendered by the U.S. District Court in 83
Civil 290 (EW), was vitiated by "want of notice to the party, collusion, fraud, or clear mistake of law or fact." In other
words, the Default Judgment imposing upon petitioner PISC a liability of U.S.$94,456.28 in favor of respondent
Interpool, is valid and may be enforced in this jurisdiction.
2. ID.; ID.; LIABILITY OF OTHER DEFENDANTS NOT IMPLEADED THEREIN, BASED ON "CONTINUING
GUARANTEES EXECUTED BY THEM; SECTION 6, RULE 3 OF THE RULES OF COURT APPLICABLE IN CASE
AT BAR. The existence of liability (i.e., in the amount of U.S.$94,456.28) on the part of petitioner PISC having
been duly established in the U.S. case, it was not improper for respondent Interpool, in seeking enforcement in this
jurisdiction of the foreign judgment imposing such liability, to have included the other nine (9) petitioners herein (i.e.,
George Lim, Marcos Bautista, Carlos Laude, Tan Sing Lim, Antonio Liu Lao, Ong Teh, Philippine Consortium
Construction Corporation, Pacific Mills, Inc. and Universal Steel Smelting Co., Inc.) as defendants in Civil Case No.
Q-39927, filed with Branch 93 of the Regional Trial Court of Quezon City. With respect to the latter, Section 6, Rule 3
of the Revised Rules of Court expressly provides: "Sec. 6. Permissive joinder of parties. All persons in whom or
against whom any right to relief in respect to or arising out of the some transaction or series of transactions is alleged
to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these rules, join as
plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs
or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any
plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may
have no interest." The record shows that said nine (9) petitioners had executed "continuing guarantees" to secure
performance by petitioner PISC of its contractual obligations, under the Membership Agreement and Hiring
Conditions and Master Equipment Leasing Agreement with respondent Interpool. As guarantors, they had held
themselves out as liable. "whether jointly, severally, or in the alternative," to respondent Interpool under their separate
"continuing guarantees" executed in the Philippines, for any breach of those Agreements on the part of PISC The
liability of the nine (9) other petitioners was, in other words, not based upon the Membership Agreement and the
Master Equipment Leasing Agreement to which they were not parties. The New York award of U.S.$94,456.28 is
precisely premised upon a breach by PISC of its own obligations under those Agreements. We, therefore, consider
the nine (9) other petitioners as persons "against whom [a] right to relief in respect to or arising out of the same
transaction or series of transactions [has been] alleged to exist." as contemplated in the Rule quoted above and,
consequently, properly impleaded as defendants in Civil Case No. Q-39927. There was, in other words, no need at
all, in order that Civil Case No. Q-39927 would prosper, for respondent Interpool to have first impleaded the nine (9)
other petitioners in the New York case and there obtain judgment against all ten (10) petitioners.
3. ID.; JURISDICTION OVER THE PERSON OF THE DEFENDANT; FILING OF MOTION FOR EXTENSION TO
FILE ANSWER AND MOTION FOR BILL OF PARTICULARS, TANTAMOUNT TO VOLUNTARY SUBMISSION
THERETO. Petitioners' argument of lack or absence of jurisdiction on the part of the Quezon City Regional Trial
Court, on the alleged ground of non-service of notice or summons in Civil Case No. Q-39927, does not persuade. But

we do not need to address this specific argument. For even assuming (though merely arguendo) that none of the ten
(10) petitioner herein had been served with notice or summons below, the record shows, however, that they did in
fact file with the Regional Trial Court's a Motion for Extension of Time to file Answer (dated 9 December 1983) as well
as Motion for Bill of Particulars (dated 15 December 1983), both addressing respondent Interpool's Complaint in Civil
Case No. Q-39927. In those pleadings, petitioners not only manifested their intention to controvert the allegations in
the Complaint, but they neither questioned nor assailed the jurisdiction of the trial court, either over the case filed
against them or over their individual persons, as defendants therein. There was here, in effect, voluntary submission
to the jurisdiction of the Quezon City trial court by petitioners, who are thereby estopped from asserting otherwise
before this Court.

1979, in the amounts at the time and in the manner set out in the said agreements and to
indemnify plaintiff against all claims, liabilities, costs, damages and expenses (including
legal fees) suffered or incurred by plaintiff, arising out of or in connection with any failure by
defendant Philippine International Shipping Corporation to perform any of its obligations
under the aforesaid Agreements (Exhibit D, E, F, G, H, and I). 4

In 1979 to 1981, defendant Philippine International Shipping Corporation incurred

outstanding and unpaid obligations with the plaintiff, in the amount of $94,456.28,
representing unpaid per diems, drop-off charges, interest and other agreed charges. prcd

RESOLUTION

FELICIANO, J p:
The subject of the present Petition is the Decision of the Court of Appeals dated 12 December 1986, in CA-G.R. SP
No. 10614. The appellate court upheld the Order of Branch 93 of the Regional Trial Court of Quezon City granting the
issuance of a writ of execution, in Civil Case No. Q-39927.
The undisputed facts are stated in the appealed decision:
"Plaintiff [respondent Interpool, Ltd.] is a foreign corporation, duly organized and existing
under the laws of Bahamas Islands, with office and business address at 630, 3rd Avenue,
New York, New York, and not licensed to do, and not doing business, in the Philippines.
Defendants Philippine International Shipping Corporation, Philippine Construction
Consortium Corporation, Pacific Mills, Inc., and Universal Steel Smelting Company, Inc.,
are corporations duly organized and existing under and by virtue of the laws of the
Philippines. The other defendants, George Lim, Marcos Bautista, Carlos Laude, Tan Sing
Lim, Antonio Liu Lao and Ong Teh are Philippine residents.
In 1979 to 1981, the defendant, Philippine International Shipping Corporation (PISC)
leased from the plaintiff and its wholly owned subsidiary, the Container Trading
Corporation, several containers pursuant to the Membership Agreement and Hiring
Conditions (Exhibit B) 1 and the Master Equipment Leasing Agreement (Exhibit C), 2 both
dated June 8, 1979.
Defendants Philippine Construction Consortium Corporation, Pacific Mills, Inc. and
Universal Steel Smelting Company, guaranteed to pay (sic) all monies due, or to become
due, to the plaintiff from PISC and any liability of the latter arising out of the leasing or
purchasing of equipment from the plaintiff or any of its subsidiaries, affiliates and/or agents
of I.S.C. dry cargo containers and/or chassis, including but not limited, to per diem leasing
charges, damages protection plan charges, damages charge and/or replacement costs of
constructively and/or totally lost containers as well as handling and drop-off charges
(Exhibit J). 3
The other defendants, namely: 1) George Lim; 2) Marcos Bautista; 3) Carlos Laude; 4) Tau
Sing Lim; 5) Antonio Liu Lao; and (6) Ong Teh, unconditionally and irrevocably guaranteed
to pay (sic) plaintiff all payments due to it under the Master Equipment Leasing Agreement
(Exhibit C) and Membership Agreement and Hiring Conditions (Exhibit B) dated June 8,

46

The plaintiff sent letters to the defendants (Exhibit K, L, M, N, O, P, Q, R, S, and T), 5

demanding payment of their outstanding and unpaid obligations, but to no avail, so plaintiff
was constrained to file a case against the principal defendant, PISC, before the United
States District Court, Southern District of New York, which was docket as 83 Civil 290
(EW). Plaintiff obtained a Default Judgment on July 3, 1983 against PISC ordering it to pay
the plaintiff the sum of $80,779.33, as liquidated damages, together with interest in the
amount of $13,676.95 and cost in the amount of $80.00. or for a total judgment of
$94,456.28 (Exhibit A). 6
Because of the unjustifiable failure and refusal of PISC and its guarantors to jointly and
severally pay their obligations to the plaintiff, the latter filed on November 16, 1983 a
complaint [docketed as Civil Case No. Q-39927, Branch 93, Regional Trial Court of
Quezon City] (Annex A) 7 to enforce the default judgment of the U.S. District Court against
the defendant PISC, and also to enforce the individually executed Continuing Guaranties of
the other defendants (Annexes D, E, F, G, H, I, and J of the Complaint).
The defendants (herein petitioners) were duly summoned, but they failed to answer the
complaint. On motion of the plaintiff, they were declared in default 8 and the plaintiff (herein
private respondent) was allowed to present its evidence ex parte.
On April 11, 1985 the court rendered judgment for the plaintiff, 9 the dispositive part
reading as follows:
'WHEREFORE, judgment is hereby rendered in favor of the plaintiff
and against the defendants, ordering:
1) The defendant, Philippine International Shipping Corporation,
and the defendants-Guarantors, to jointly and severally pay plaintiff the
liquidated amount of $80,779.33, together with interest in the amount of
$13,676.95 and costs in the amount of $80.00 or a total of $94,456.28,
pursuant to the Default Judgment rendered by the United States District Court,
Southern District of New York, or in the Philippine currency equivalent of the
aforesaid amount of $94,456.28, computed at the time of payment, with interest
for late payment at the rate of 18% per annum from July 4, 1983, until fully
paid;
2) The defendant, Philippine International Shipping Corporation,
and the defendants-Guarantors, to jointly and severally pay plaintiff the sum
equivalent to twenty (20%) percent of the total amount due from the defendants
by way of attorney's fees; and

3) To pay the costs.'

On May 17, 1985, the defendants appealed the decision to this Appellate Court (AC-G.R.
UDK No. 7383) which dismissed the appeal on November 13, 1985 for failure of the
appellants to pay the docketing fee despite their receipt of the notice to do so on August
26, 1985. 10 Entry of that final resolution was made on December 6, 1985.
In view of the finality of the decision, the plaintiff filed on July 23, 1986 a motion for
execution and for appointment of as special sheriff to enforce it. 11
Over the defendants' opposition, the trial court issued an order of execution on October 15,
1986 and appointed Norberto V. Doblado, Jr., of the office of the Makati Sheriff, as special
sheriff for the purpose (Annex D)." 12
On 20 November 1986, petitioners (defendants below) filed with the Court of Appeals a Petition to Annul Judgment
(docketed as C.A.-G.R. SP No. 10614) 13 directed at the 15 October 1986 Order of the Regional Trial Court. On 12
December 1986, the appellate court rendered a Decision 14 denying that petition for lack of merit. A Motion for
Reconsideration was likewise denied for lack of merit. 15
In the instant Petition for Review, filed with this Court on 27 February 1987, petitioners allege that both the Default
Judgment rendered by the U.S. District Court, Southern District of New York, in 83 Civil 290 (EW), and the Decision
of the Regional Trial Court of Quezon City, in Civil Case No. Q-39927, are null and void essentially on jurisdictional
grounds. In the first instance, petitioners contend that the U.S. District Court, never acquired jurisdiction over their
persons as they had not been served with summons and a copy of the Complaint in 83 Civil 290 (EW). In the second
instance, petitioners contend that such jurisdictional infirmity effectively prevented the Regional Trial Court of Quezon
City from taking cognizance of the Complaint in Civil Case No. Q-39927 and from enforcing the U.S. District Court's
Default Judgment against them. Petitioners contend, finally, that assuming the validity of the disputed Default
Judgment, the same may be enforced only against petitioner Philippine International Shipping Corporation. ("PISC"),
the other nine (9) petitioners not having been impleaded originally in the case filed in New York, U.S.A. Cdpr

2. The existence of liability (i.e., in the amount of U.S.$94,456.28) on the part of petitioner PISC having been duly
established in the U.S. case, it was not improper for respondent Interpool, in seeking enforcement in this jurisdiction
of the foreign judgment imposing such liability, to have included the other nine (9) petitioners herein (i.e., George Lim,
Marcos Bautista, Carlos Laude, Tan Sing Lim, Antonio Liu Lao, Ong Teh, Philippine Consortium Construction
Corporation, Pacific Mills, Inc. and Universal Steel Smelting Co., Inc.) as defendants in Civil Case No. Q-39927, filed
with Branch 93 of the Regional Trial Court of Quezon City. With respect to the latter, Section 6, Rule 3 of the Revised
Rules of Court expressly provides: cdphil
"Sec. 6. Permissive joinder of parties. All persons in whom or against whom any right to
relief in respect to or arising out of the some transaction or series of transactions is alleged
to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided
in these rules, join as plaintiffs or be joined as defendants in one complaint, where any
question of law or fact common to all such plaintiffs or to all such defendants may arise in
the action; but the court may make such orders as may be just to prevent any plaintiff or
defendant from being embarrassed or put to expense in connection with any proceedings
in which he may have no interest." (Italics supplied)
The record shows that said nine (9) petitioners had executed "continuing guarantees" to secure performance by
petitioner PISC of its contractual obligations, under the Membership Agreement and Hiring Conditions and Master
Equipment Leasing Agreement with respondent Interpool. As guarantors, they had held themselves out as liable.
"whether jointly, severally, or in the alternative," to respondent Interpool under their separate "continuing guarantees"
executed in the Philippines, for any breach of those Agreements on the part of PISC The liability of the nine (9) other
petitioners was, in other words, not based upon the Membership Agreement and the Master Equipment Leasing
Agreement to which they were not parties. The New York award of U.S.$94,456.28 is precisely premised upon a
breach by PISC of its own obligations under those Agreements. We, therefore, consider the nine (9) other petitioners
as persons "against whom [a] right to relief in respect to or arising out of the same transaction or series of
transactions [has been] alleged to exist." as contemplated in the Rule quoted above and, consequently, properly
impleaded as defendants in Civil Case No. Q-39927. There was, in other words, no need at all, in order that Civil
Case No. Q-39927 would prosper, for respondent Interpool to have first impleaded the nine (9) other petitioners in the
New York case and there obtain judgment against all ten (10) petitioners.

The Petition must fail.

1. To begin with, the evidence of record clearly shows that the U.S. District Court had validly acquired jurisdiction over
petitioner PISC under the procedural law applicable in that forum, i.e., the U.S. Federal Rules on Civil Procedure.
Copies of the Summons and Complaint 16 in 83 Civil 290 (EW) which were in fact attached to the Petition for Review
filed with this Court, were stamped "Received, 18 Jan 1983, P.I.S.C., Manila." indicating that service thereof had been
made upon and acknowledged by the PISC office in Manila on, 18 January 1983, and that PISC had actual notice of
such Complaint and Summons. Moreover, copies of said Summons and Complaint had likewise been served upon
Prentice-Hall Corporation System, Inc. (New York), petitioner PISC'S agent, expressly designated by it in the Master
Equipment Leasing Agreement with respondent Interpool. "for the purpose of accepting service of any process within
the State of New York, USA with respect to any claim or controversy arising out of or relating to directly or indirectly,
this Lease." 17 The record also shows that petitioner PISC, without, however, assailing the jurisdiction of the U.S.
District Court over the person of petitioner, had filed a Motion to Dismiss 18 the Complaint in 83 Civil 290 (EW), which
Motion was denied. All of the foregoing matters, which were stated specifically in the U.S. District Court's disputed
Default Judgment, 19 have not been disproven or otherwise overcome by petitioners, whose bare and
unsubstantiated allegations cannot prevail over clear and convincing evidence of record to the contrary.
That foreign judgment which had become final and executory, no appeal having been taken therefrom and
perfected by petitioner PISC is thus "presumptive evidence of a right as between the parties [i.e., PISC and
Interpool] and their successors in interest by a subsequent title." 20 We note, further, that there has been in this case
no showing by petitioners that the Default Judgment rendered by the U.S. District Court in 83 Civil 290 (EW), was
vitiated by "want of notice to the party, collusion, fraud, or clear mistake of law or fact." 21 In other words, the Default
Judgment imposing upon petitioner PISC a liability of U.S.$94,456.28 in favor of respondent Interpool, is valid and
may be enforced in this jurisdiction.

47

3. Petitioners' argument of lack or absence of jurisdiction on the part of the Quezon City Regional Trial Court, on the
alleged ground of non-service of notice or summons in Civil Case No. Q-39927, does not persuade. But we do not
need to address this specific argument. For even assuming (though merely arguendo) that none of the ten (10)
petitioner herein had been served with notice or summons below, the record shows, however, that they did in fact file
with the Regional Trial Court Motion for Extension of Time to file Answer 22 (dated 9 December 1983) as well as
Motion for Bill of Particulars 23 (dated 15 December 1983), both addressing respondent Interpool's Complaint in Civil
Case No. Q-39927. In those pleadings, petitioners not only manifested their intention to controvert the allegations in
the Complaint, but they neither questioned nor assailed the jurisdiction of the trial court, either over the case filed
against them or over their individual persons, as defendants therein. There was here, in effect, voluntary submission
to the jurisdiction of the Quezon City trial court by petitioners, who are thereby estopped from asserting otherwise
before this Court. 24
ACCORDINGLY, the Petition for Review is DENIED and the Decision dated 12 December 1986 of the Court of
Appeals in C.A.-G.R. SP No. 10614, is hereby AFFIRMED. This Resolution is immediately executory. Costs against
petitioners.
SO ORDERED.

[G.R. No. 110263. July 20, 2001.]

ASIAVEST MERCHANT BANKERS (M) BERHAD, petitioner, vs. COURT OF APPEALS
and PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, respondents.

Sycip Salazar Hernandez & Gatmaitan for petitioner.The Government Corporate Counsel for respondents.

SYNOPSIS
On September 13, 1995, petitioner Asiavest Merchant Bankers (M) Berhad, a corporation organized under the laws
of Malaysia, obtained a favorable money judgment for its collection suit from the High Court of Malaya in Kuala
Lumpur against herein private respondent Philippine National Construction Corporation, a corporation duly
incorporated and existing under Philippine laws, then known as Construction and Development Corporation of the
Philippines. For its failure to secure payment from private respondent under the judgment, petitioner subsequently
filed a complaint before the Regional Trial Court of Pasig, Metro Manila, to enforce the judgment of the High Court of
Malaya. Private respondent opposed the complaint, contending that the alleged judgment of the High Court of Malaya
should be denied recognition or enforcement since on its 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. On its part, petitioner claimed
that the High Court of Malaya acquired jurisdiction over the person of private respondent by its voluntary submission
to 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. In due time,
the trial court rendered its Decision which dismissed petitioner's complaint. The decision of the trial court was affirmed
by the Court of Appeals. Hence, petitioner elevated the matter before the Supreme Court. IEHSDA
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. In
addition, 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, the Court found
that the petitioner sufficiently established the existence of the money judgment of the High Court of Malaya by the
evidence it offered, both testimonial and documentary. Having thus proven the existence and authenticity of the
foreign judgment, said foreign judgment enjoys presumptive validity. Private respondent had, therefore, the ultimate
duty to demonstrate the alleged invalidity of such foreign judgment, being the party challenging the judgment
rendered by the High Court of Malaya. But instead of doing so, respondent merely argued to which the trial court
agreed, that the burden lay upon petitioner to prove the validity of the money judgment. Such was clearly erroneous
and would render meaningless the presumption of validity accorded a foreign judgment were the party seeking to
enforce it be required to first establish its validity. Accordingly, the presumption of validity and regularity of the
proceedings and the decision thereafter rendered by the High Court of Malaya must stand.
Petition granted.

SYLLABUS
1. REMEDIAL LAW; JUDGMENT; EXECUTION AND ENFORCEMENT; RECOGNITION OF FOREIGN JUDGMENT.
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

48

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.
2. ID.; ID.; ID.; FOREIGN JUDGMENT; ENJOYS PRESUMPTIVE VALIDITY; EFFECT OF FOREIGN 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), Rule 39 of the Revised Rules of Court, which was the governing law at the time the instant case was
decided by the trial 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. SHAcID
3. ID.; ID.; ID.; ID.; EXISTENCE AND AUTHENTICITY THEREOF MUST BE PROVED; CASE AT BAR. In the
instant case, petitioner sufficiently established the existence of the money judgment of the High Court of Malaya by
the evidence it offered. Vinayak Prabhakar Pradhan, presented as petitioner's sole witness, testified to the effect that
he is in active practice of the law profession in Malaysia; that he was connected with Skrine and Company as Legal
Assistant up to 1981; that private respondent, then known as Construction and Development Corporation of the
Philippines, was sued by his client, Asiavest Merchant Bankers (M) Berhad, in Kuala Lumpur; that the writ of
summons were served on March 17, 1983 at the registered office of private respondent and on March 21, 1983 on
Cora S. Deala, a financial planning officer of private respondent for Southeast Asia operations; that upon the filing of
the case, Messrs. Allen and Gledhill, Advocates and Solicitors, with address at 24th Floor, UMBC Building, Jalan
Sulaiman, Kuala Lumpur, entered their conditional appearance for private respondent questioning the regularity of the
service of the writ of summons but subsequently withdrew the same when it realized that the writ was properly
served; that because private respondent failed to file a statement of defense within two (2) weeks, petitioner filed an
application for summary judgment and submitted affidavits and documentary evidence in support of its claim; that the
matter was then heard before the High Court of Kuala Lumpur in a series of dates where private respondent was
represented by counsel; and that the end result of all these proceedings is the judgment sought to be enforced. In
addition to the said testimonial evidence, petitioner offered the following documentary evidence: . . . 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.
4. ID.; ID.; ID.; ID.; RECOGNITION ACCORDED THEREON NOT AFFECTED BY THE FACT THAT PROCEDURE IN
COURTS OF COUNTRY IN WHICH THE JUDGMENT WAS RENDERED DIFFERS FROM THAT OF THE COURT
OF COUNTRY IN WHICH THE JUDGMENT IS RELIED ON. The reasons or grounds relied upon by private
respondent in preventing enforcement and recognition of the Malaysian judgment primarily refer to matters of remedy
and procedure taken by the Malaysian High Court relative to the suit for collection initiated by petitioner. Needless to
stress, 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. Ultimately, matters of remedy and procedure such as those relating to the service of
summons or court process upon the defendant, the authority of counsel to appear and represent a defendant and the
formal requirements in a decision are governed by the lex fori or the internal law of the forum, i.e., the law of Malaysia
in this case.
5. ID.; ID.; ID.; ID.; PROCEDURAL LAW OF THE COURT OF COUNTRY IN WHICH THE JUDGMENT WAS
RENDERED MUST BE PLEADED AND PROVED; CASE AT BAR. In this case, it is the procedural law of Malaysia
where the judgment was rendered that determines the validity of the service of court process on private respondent
as well as other matters raised by it. As to what the Malaysian procedural law is, remains a question of fact, not of
law. It may not be taken judicial notice of and must be pleaded and proved like any other fact. Sections 24 and 25 of
Rule 132 of the Revised Rules of Court provide that it may be evidenced by an official publication or by a duly

attested or authenticated copy thereof. It was then incumbent upon private respondent to present evidence as to
what that Malaysian procedural law is and to show that under it, the assailed service of summons upon a financial
officer of a corporation, as alleged by it, is invalid. It did not. Accordingly, the presumption of validity and regularity of
service of summons and the decision thereafter rendered by the High Court of Malaya must stand.

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 non-payment of the loan it extended to Asiavest-CDCP Sdn.
Bhd. for the completion of Paloh Hanai and Kuantan By-Pass Project.
On September 13, 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." The judgment reads in
full:

6. ID.; ID.; ID.; ID.; INTRINSIC FRAUD CANNOT MILITATE AGAINST ENFORCEMENT THEREOF. 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. The facts which the trial court found "intriguing" amounted to
mere conjectures and specious observations. The trial court's finding on the absence of judgment against AsiavestCDCP Sdn. Bhd. is contradicted by evidence on record that recovery was also sought against Asiavest-CDCP Sdn.
Bhd. but the same was found insolvent. Furthermore, even when the foreign judgment is based on the drafts
prepared by counsel for the successful party, such is not per se indicative of collusion or fraud. Fraud to hinder the
enforcement within the 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
defense. Intrinsic fraud is one which goes to the very existence of the cause of action is deemed already adjudged,
and it, therefore, cannot militate against the recognition or enforcement of the foreign judgment. Evidence is wanting
on the alleged extrinsic fraud. Hence, such unsubstantiated allegation cannot give rise to liability therein.
7. ID.; ID.; ID.; ID.; INTERNAL LAW OF THE FORUM GOVERNS MATTERS OF REMEDY AND PROCEDURE.
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 this jurisdiction
cannot invalidate the judgment of the foreign court simply because our rules provide otherwise. TCADEc
8. ID.; ID.; ID.; ID.; PARTY CHALLENGING THE FOREIGN JUDGMENT HAS BURDEN OF PROVING INVALIDITY
THEREOF. Private respondent had the ultimate duty to demonstrate the alleged invalidity of such foreign
judgment, being the party challenging the judgment rendered by the High Court of Malaya. But instead of doing so,
private respondent merely argued, to which the trial court agreed, that the burden lay upon petitioner to prove the
validity of the money judgment. Such is clearly erroneous and would render meaningless the presumption of validity
accorded a foreign judgment were the party seeking to enforce it be required to first establish its validity.

SUIT NO. C638 of 1983

Between
Asiavest Merchant Bankers (M) Berhad Plaintiffs
And
1. Asiavest-CDCP Sdn. Bhd.
2. Construction & Development
Corporation of the Philippines Defendant
JUDGMENT
The 2nd Defendant having entered appearance herein and the Court having under Order
14, Rule 3 ordered that judgment as hereinafter provided be entered for the Plaintiffs
against the 2nd Defendant.
IT IS THIS DAY ADJUDGED that the 2nd defendant do pay the Plaintiffs the sum of
$5,108,290.23 (Ringgit Five million one hundred and eight thousand two hundred and
ninety and Sen twenty-three) together with interest at the rate of 12% per annum on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of
payment; and SETaHC

DE LEON, JR., J p:
Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals dated May 19, 1993 in CAG.R. CV No. 35871 affirming the Decision 2 dated October 14, 1991 of the Regional Trial Court of Pasig, Metro
Manila, Branch 168 in Civil Case No. 56368 which dismissed the complaint of petitioner Asiavest Merchant Bankers
(M) Berhad for the enforcement of the money judgment of the High Court of Malaya in Kuala Lumpur against private
respondent Philippine National Construction Corporation.
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.
It appears that sometime 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

49

(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date of
payment; and $350.00 (Ringgit Three Hundred and Fifty) costs.
Dated the 13th day of September, 1985.
Senior Assistant Registrar,
High Court, Kuala Lumpur
This Judgment is filed by Messrs. Skrine & Co., 3rd Floor, Straits Trading Building, No. 4,
Leboh Pasar, Besar, Kuala Lumpur, Solicitors for the Plaintiffs abovenamed.
(VP/Ong/81194.7/83) 4
On the same day, September 13, 1985, the High Court of Malaya issued an Order directing the private respondent
(also designated therein as the "2nd Defendant") to pay petitioner interest on the sums covered by the said
Judgment, thus:

SUIT NO. C638 OF 1983

Between

Following unsuccessful attempts 6 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. 7
Private respondent sought the dismissal of the case via a Motion to Dismiss filed on October 5, 1988, contending that
the alleged judgment of the High Court of Malaya should be denied recognition or enforcement since on its 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. 8 Dismissal was, however, denied by the trial court considering that the grounds relied upon
are not the proper grounds in a motion to dismiss under Rule 16 of the Revised Rules of Court. 9

Asiavest Merchant Bankers (M) Berhad Plaintiffs

And
1. Asiavest-CDCP Sdn. Bhd.

On May 22, 1989, private respondent filed its Answer with Compulsory Counterclaim 10 and therein raised the
grounds it brought up in its motion to dismiss. In its Reply 11 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 to 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.

2. Construction & Development

Corporation of the Philippines Defendants
BEFORE THE SENIOR ASSISTANT REGISTRAR
CIK SUSILA S. PARAM
THIS 13th DAY OF SEPTEMBER 1985 IN CHAMBERS
ORDER

Hence, the instant petition which is anchored on two (2) assigned errors, 12 to wit:

Upon the application of Asiavest Merchant Bankers (M) Berhad, the Plaintiffs in this action
AND UPON READING the Summons in Chambers dated the 16th day of August, 1984 and
the Affidavit of Lee Foong Mee affirmed on the 14th day of August 1984 both filed herein
AND UPON HEARING Mr. T. Thomas of Counsel for the Plaintiffs and Mr. Khaw Chay Tee
of Counsel for the 2nd Defendant abovenamed on the 26th day of December 1984 IT WAS
ORDERED that the Plaintiffs be at liberty to sign final judgment against the 2nd Defendant
for the sum of $5,108,290.23 AND IT WAS ORDERED that the 2nd Defendant do pay the
Plaintiffs the costs of suit at $350.00 AND IT WAS FURTHER ORDERED that the plaintiffs
be at liberty to apply for payment of interest AND upon the application of the Plaintiffs for
payment of interest coming on for hearing on the 1st day of August in the presence of Mr.
Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of Counsel for
the 2nd Defendant above-named AND UPON HEARING Counsel as aforesaid BY
CONSENT IT WAS ORDERED that the 2nd Defendant do pay the Plaintiffs interest at a
rate to be assessed AND the same coming on for assessment this day in the presence of
Mr. Palpanaban Devarajoo of Counsel for the Plaintiffs and Mr. Khaw Chay Tee of Counsel
for the 2nd Defendant AND UPON HEARING Counsel as aforesaid BY CONSENT IT IS
ORDERED that the 2nd Defendant do pay the Plaintiffs interest at the rate of 12% per
annum on:
(i) the sum of $2,586,866.91 from the 2nd day of March 1983 to the date of
payment; and
(ii) the sum of $2,521,423.32 from the 11th day of March 1983 to the date of
Payment.
Dated the 13th day of September, 1985.
Senior Assistant Registrar,
High Court, Kuala Lumpur. 5

50

In due time, the trial court rendered its Decision dated October 14, 1991 dismissing petitioner's complaint. Petitioner
interposed an appeal with the Court of Appeals, but the appellate court dismissed the same and affirmed the decision
of the trial court in a Decision dated May 19, 1993.

I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE MALAYSIAN COURT DID
NOT ACQUIRE PERSONAL JURISDICTION OVER PNCC, NOTWITHSTANDING THAT
(a) THE FOREIGN COURT HAD SERVED SUMMONS ON PNCC AT ITS MALAYSIA
OFFICE, AND (b) PNCC ITSELF APPEARED BY COUNSEL IN THE CASE BEFORE
THAT COURT.

II
THE COURT OF APPEALS ERRED IN DENYING RECOGNITION AND ENFORCEMENT
TO (SIC) THE MALAYSIAN COURT JUDGMENT. SaIHDA
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; 13 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. 14
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. 15
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.

(i) Summons in Chambers and Affidavit of Khaw Chay Tee, counsel for private respondent,
submitted during the proceedings before the Malaysian High Court; 32

In the instant case, petitioner sufficiently established the existence of the money judgment of the High Court of
Malaya by the evidence it offered. Vinayak Prabhakar Pradhan, presented as petitioner's sole witness, testified to the
effect that he is in active practice of the law profession in Malaysia; 17 that he was connected with Skrine and
Company as Legal Assistant up to 1981; 18 that private respondent, then known as Construction and Development
Corporation of the Philippines, was sued by his client, Asiavest Merchant Bankers (M) Berhad, in Kuala Lumpur; 19
that the writ of summons were served on March 17, 1983 at the registered office of private respondent and on March
21, 1983 on Cora S. Deala, a financial planning officer of private respondent for Southeast Asia operations; 20 that
upon the filing of the case, Messrs. Allen and Gledhill, Advocates and Solicitors, with address at 24th Floor, UMBC
Building, Jalan Sulaiman, Kuala Lumpur, entered their conditional appearance for private respondent questioning the
regularity of the service of the writ of summons but subsequently withdrew the same when it realized that the writ was
properly served; 21 that because private respondent failed to file a statement of defense within two (2) weeks,
petitioner filed an application for summary judgment and submitted affidavits and documentary evidence in support of
its claim; 22 that the matter was then heard before the High Court of Kuala Lumpur in a series of dates where private
respondent was represented by counsel; 23 and that the end result of all these proceedings is the judgment sought to
be enforced.

(l) Letter dated November 6, 1985 from petitioner's Malaysian counsel to private
respondent's counsel in Malaysia. 35

In addition to the said testimonial evidence, petitioner offered the following documentary evidence:
(a) A certified and authenticated copy of the Judgment promulgated by the Malaysian High
Court dated September 13, 1985 directing private respondent to pay petitioner
the sum of $5,108,290.23 Malaysian Ringgit plus interests from March 1983
until fully paid; 24
(b) A certified and authenticated copy of the Order dated September 13, 1985 issued by
the Malaysian High Court in Civil Suit No. C638 of 1983; 25
(c) Computation of principal and interest due as of January 31, 1990 on the amount
adjudged payable to petitioner by private respondent; 26
(d) Letter and Statement of Account of petitioner's counsel in Malaysia indicating the costs
for prosecuting and implementing the Malaysian High Court's Judgment; 27
(e) Letters between petitioner's Malaysian counsel, Skrine and Co., and its local counsel,
Sycip Salazar Law Offices, relative to institution of the action in the Philippines;
28
(f) Billing Memorandum of Sycip Salazar Law Offices dated January 2, 1990 showing
attorney's fees paid by and due from petitioner; 29
(g) Statement of Claim, Writ of Summons and Affidavit of Service of such writ in petitioner's
suit against private respondent before the Malaysian High Court; 30
(h) Memorandum of Conditional Appearance dated March 28, 1983 filed by counsel for
private respondent with the Malaysian High Court; 31

51

(j) Record of the Court's Proceedings in Civil Case No. C638 of 1983; 33
(k) Petitioner's verified Application for Summary Judgment dated August 14, 1984; 34 and

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." 36
Private respondent relied solely on the testimony of its two (2) witnesses, namely, Mr. Alfredo N. Calupitan, an
accountant of private respondent, and Virginia Abelardo, Executive Secretary and a member of the staff of the
Corporate Secretariat Section of the Corporate Legal Division, of private respondent, both of whom failed to shed
light and amplify its defense or claim for non-enforcement of the foreign judgment against it. IDESTH
Mr. Calupitan's testimony centered on the following: that from January to December 1982 he was assigned in
Malaysia as Project Comptroller of the Pahang Project Package A and B for road construction under the joint venture
of private respondent and Asiavest Holdings; 37 that under the joint venture, Asiavest Holdings would handle the
financial aspect of the project, which is fifty-one percent (51%) while private respondent would handle the technical
aspect of the project, or forty-nine percent (49%); 38 and, that Cora Deala was not authorized to receive summons
for and in behalf of the private respondent. 39 Ms. Abelardo's testimony, on the other hand, focused on the following:
that there was no board resolution authorizing Allen and Gledhill to admit all the claims of petitioner in the suit brought
before the High Court of Malaya, 40 though on cross-examination she admitted that Allen and Gledhill were the
retained lawyers of private respondent in Malaysia. 41
The foregoing reasons or grounds relied upon by private respondent in preventing enforcement and recognition of the
Malaysian judgment primarily refer to matters of remedy and procedure taken by the Malaysian High Court relative to
the suit for collection initiated by petitioner. Needless to stress, 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. 42 Ultimately, matters of
remedy and procedure such as those relating to the service of summons or court process upon the defendant, the
authority of counsel to appear and represent a defendant and the formal requirements in a decision are governed by
the lex fori or the internal law of the forum, 43 i.e., the law of Malaysia in this case.
In this case, it is the procedural law of Malaysia where the judgment was rendered that determines the validity of the
service of court process on private respondent as well as other matters raised by it. As to what the Malaysian
procedural law is, remains a question of fact, not of law. It may not be taken judicial notice of and must be pleaded
and proved like any other fact. Sections 24 and 25 of Rule 132 of the Revised Rules of Court provide that it may be
evidenced by an official publication or by a duly attested or authenticated copy thereof. It was then incumbent upon
private respondent to present evidence as to what that Malaysian procedural law is and to show that under it, the

assailed service of summons upon a financial officer of a corporation, as alleged by it, is invalid. It did not.
Accordingly, the presumption of validity and regularity of service of summons and the decision thereafter rendered by
the High Court of Malaya must stand. 44

private respondent Philippine National Construction Corporation to pay petitioner Asiavest Merchant Bankers (M)
Berhad the amounts adjudged in the said foreign Judgment, subject of the said case. aDHCEA
Costs against the private respondent.
SO ORDERED.

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, 45 but of greater significance is the fact that petitioner offered in evidence relevant
Malaysian jurisprudence 46 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. 47
Furthermore, there is no basis for or truth to the appellate court's conclusion that the conditional appearance of
private respondent's counsel who was allegedly not authorized to appear and represent, cannot be considered as
voluntary submission to the jurisdiction of the High Court of Malaya, inasmuch as said conditional appearance was
not premised on the alleged lack of authority of said counsel but the conditional appearance was entered to question
the regularity of the service of the writ of summons. Such conditional appearance was in fact subsequently withdrawn
when counsel realized that the writ was properly served. 48
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. The facts which the trial court found "intriguing"
amounted to mere conjectures and specious observations. The trial court's finding on the absence of judgment
against Asiavest-CDCP Sdn. Bhd. is contradicted by evidence on record that recovery was also sought against
Asiavest-CDCP Sdn. Bhd. but the same was found insolvent. 49 Furthermore, even when the foreign judgment is
based on the drafts prepared by counsel for the successful party, such is not per se indicative of collusion or fraud.
Fraud to hinder the enforcement within the 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, 50 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 defense. 51 Intrinsic fraud is one which goes to the very existence of the cause of
action is deemed already adjudged, and it, therefore, cannot militate against the recognition or enforcement of the
foreign judgment. 52 Evidence is wanting on the alleged extrinsic fraud. Hence, such unsubstantiated allegation
cannot give rise to liability therein.

||| (Asiavest Merchant Bankers (M) Berhad v. Court of Appeals, G.R. No. 110263, [July 20, 2001], 414 PHIL 13-32)
Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974)
Scherk v. Alberto-Culver Co.
No. 73-781
Argued April 29, 1974
Decided June 17, 1974
417 U.S. 506
Syllabus

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. 53 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 this
jurisdiction cannot invalidate the judgment of the foreign court simply because our rules provide otherwise.

Respondent, an American manufacturer based in Illinois, in order to expand its overseas operations, purchased from
petitioner a German citizen, three enterprises owned by him and organized under the laws of Germany and
Liechtenstein, together with all trademark rights of these enterprises. The sales contract, which was negotiated in the
United States, England, and Germany, signed in Austria, and closed in Switzerland, contained express warranties by
petitioner that the trademarks were unencumbered and a clause providing that "any controversy or claim [that] shall
arise out of this agreement or the breach thereof" would be referred to arbitration before the International Chamber of
Commerce in Paris, France, and that Illinois laws would govern the agreement and its interpretation and
performance. Subsequently, after allegedly discovering that the trademarks were subject to substantial
encumbrances, respondent offered to rescind the contract, but when petitioner refused, respondent brought suit in
District Court for damages and other relief, contending that petitioner's fraudulent representations concerning the
trademark rights violated 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Petitioner moved to dismiss the action or alternatively to stay the action pending arbitration, but the District Court
denied the motion to dismiss and, as sought by respondent, preliminarily enjoined petitioner from proceeding with
arbitration, holding, in reliance on Wilko v. Swan, 346 U. S. 427, that the arbitration clause was unenforceable. The
Court of Appeals affirmed.

All in all, private respondent had the ultimate duty to demonstrate the alleged invalidity of such foreign judgment,
being the party challenging the judgment rendered by the High Court of Malaya. But instead of doing so, private
respondent merely argued, to which the trial court agreed, that the burden lay upon petitioner to prove the validity of
the money judgment. Such is clearly erroneous and would render meaningless the presumption of validity accorded a
foreign judgment were the party seeking to enforce it be required to first establish its validity. 54

Held: The arbitration clause is to be respected and enforced by federal courts in accord with the explicit provisions of
the United States Arbitration Act that an arbitration agreement, such as is here involved, "shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C.
1, 2. Wilko v. Swan, supra, distinguished. Pp. 417 U. S. 510-520.

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated May 19, 1993 in CAG.R. CV No. 35871 sustaining the Decision dated October 14, 1991 in Civil Case No. 56368 of the Regional Trial
Court of Pasig, Branch 168 denying the enforcement of the Judgment dated September 13, 1985 of the High Court of
Malaya in Kuala Lumpur is REVERSED and SET ASIDE, and another in its stead is hereby rendered ORDERING

(a) Since uncertainty will almost inevitably exist with respect to any contract, such as the one in question here, with
substantial

52

Page 417 U. S. 507

contacts in two or more countries, each with its own substantive laws and conflict of laws rules, a contractual
provision specifying in advance the forum for litigating disputes and the law to be applied is an almost indispensable
precondition to achieving the orderliness and predictability essential to any international business transaction. Such a
provision obviates the danger that a contract dispute might be submitted to a forum hostile to the interests of one of
the parties or unfamiliar with the problem area involved. Pp. 417 U. S. 515-517.
(b) In the context of an international contract, the advantages that a security buyer might possess in having a wide
choice of American courts and venue in which to litigate his claims of violations of the securities laws, become
chimerical, since an opposing party may by speedy resort to foreign court block or hinder access to the American
court of the buyer's choice. Pp. 417 U. S. 517-518.
(c) An agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of forum selection clause that
posits not only the situs of suit, but also the procedure to be used in resolving the dispute, and the invalidation of the
arbitration clause in this case would not only allow respondent to repudiate its solemn promise but would, as well,
reflect a "parochial concept that all disputes must be resolved under our laws and in our courts." The Bremen v.
Zapata Off-Shore Co., 407 U. S. 1, 407 U. S. 9. P. 417 U. S. 519.
484 F.2d 611, reversed and remanded.
STEWART, J., delivered the opinion of the Court, in which BURGER, C.J., and BLACKMUN, POWELL, and
REHNQUIST, JJ., joined. DOUGLAS, J., filed a dissenting opinion, in which BRENNAN, WHITE, and MARSHALL,
JJ., joined, post, p. 417 U. S. 521.

other relief in a Federal District Court in Illinois, contending that Scherk's fraudulent representations concerning the
status of the trademark rights constituted violations of 10(b) of the Securities Exchange Act of 1934, 48 Stat. 891,
15 U.S.C. 78j(b), and Rule 10b-5 promulgated thereunder, 17 CFR 240.10b-5.
In response, Scherk filed a motion to dismiss the action for want of personal and subject matter jurisdiction as well as
on the basis of forum non conveniens, or, alternatively, to stay the action pending arbitration in Paris pursuant to the
agreement of the parties. Alberto
Page 417 U. S. 510
Culver, in turn, opposed this motion and sought a preliminary injunction restraining the prosecution of arbitration
proceedings. [Footnote 2] On December 2, 1971, the District Court denied Scherk's motion to dismiss, and, on
January 14, 1972, it granted a preliminary order enjoining Scherk from proceeding with arbitration. In taking these
actions, the court relied entirely on this Court's decision in Wilko v. Swan, 346 U. S. 427, which held that an
agreement to arbitrate could not preclude a buyer of a security from seeking a judicial remedy under the securities
Act of 1933, in view of the language of 14 of that Act, barring
[a]ny condition, stipulation, or provision binding any person acquiring any security to waive compliance with any
provision of this subchapter. . . .
48 Stat. 84, 15 U.S.C. 7n. [Footnote 3] The Court of Appeals for the Seventh Circuit, with one judge dissenting,
affirmed upon what it considered the controlling authority of the Wilko decision. 484 F.2d 611. Because of the
importance of the question presented, we granted Scherk's petition for a writ of certiorari. 414 U.S. 1156.

MR. JUSTICE STEWART delivered the opinion of the Court.

Alberto-Culver Co., the respondent, is an American company incorporated in Delaware with its principal office in
Illinois. It manufactures and distributes toiletries and hair products in this country and abroad. During the 1960's,
Alberto-Culver decided to expand its overseas operations, and as part of this program it approached the petitioner
Fritz Scherk, a German citizen residing at the time of trial in Switzerland. Scherk was the owner of three interrelated
business entities, organized under the laws of Germany and Liechtenstein, that were engaged in the manufacture of
toiletries and the licensing of trademarks for such toiletries. An initial contact with Scherk was made by a
representative of Alberto-Culver in Germany in June, 1967, and negotiations followed at further meetings in both
Europe and the United States during 1967 and 1968. In February, 1969, a contract was signed in Vienna, Austria,
which provided for the transfer of the ownership of Scherk's enterprises to Alberto-Culver, along with all rights held by
these enterprises to trademarks in cosmetic goods. The contract contained a number of express warranties whereby
Scherk guaranteed the sole and unencumbered ownership of these trademarks. In addition, the contract contained
an arbitration clause providing that "any controversy or claim [that] shall arise out of this agreement or the breach
thereof" would be referred to arbitration before the International Chamber of Commerce in Paris, France, and that
"[t]he laws of the State of Illinois, U.S.A. shall apply to and govern this agreement, its interpretation and
performance." [Footnote 1]
Page 417 U. S. 509
The closing of the transaction took place in Geneva, Switzerland, in June, 1969. Nearly one year later, Alberto-Culver
allegedly discovered that the trademark rights purchased under the contract were subject to substantial
encumbrances that threatened to give others superior rights to the trademarks and to restrict or preclude AlbertoCulver's use of them. Alberto-Culver thereupon tendered back to Scherk the property that had been transferred to it
and offered to rescind the contract. Upon Scherk's refusal, Alberto-Culver commenced this action for damages and

53

I
The United States Arbitration Act, now 9 U.S.C. 1 et seq., reversing centuries of judicial hostility to arbitration
agreements, [Footnote 4] was designed to allow parties to avoid
Page 417 U. S. 511
"the costliness and delays of litigation," and to place arbitration agreements "upon the same footing as other
contracts. . . ." H.R.Rep. No. 96, 68th Cong., 1st Sess., 1, 2 (1924); see also S.Rep. No. 536, 68th Cong., 1st Sess.
(1924). Accordingly, the Act provides that an arbitration agreement such as is here involved "shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."
9 U.S.C. 2. [Footnote 5] The Act also provides in 3 for a stay of proceedings in a case where a court is satisfied
that the issue before it is arbitrable under the agreement, and 4 of the Act directs a federal court to order parties to
proceed to arbitration if there has been a "failure, neglect, or refusal" of any party to honor an agreement to arbitrate.
In Wilko v. Swan, supra, this Court acknowledged that the Act reflects a legislative recognition of the "desirability of
arbitration as an alternative to the complications of litigation," 346 U.S. at 346 U. S. 431, but nonetheless declined to
apply the Act's provisions. That case involved an agreement between Anthony Wilko and Hayden, Stone & Co., a
large brokerage firm, under which Wilko agreed to purchase on margin a number of shares of a corporation's
common stock. Wilko alleged that his purchase of the stock was induced by false representations
Page 417 U. S. 512

on the part of the defendant concerning the value of the shares, and he brought suit for damages under 12(2) of the
Securities Act of 1933, 15 U.S.C. 771. The defendant responded that Wilko had agreed to submit all controversies
arising out of the purchase to arbitration, and that this agreement, contained in a written margin contract between the
parties, should be given full effect under the Arbitration Act.
The Court found that "[t]wo policies, not easily reconcilable, are involved in this case." 346 U.S. at 346 U. S. 438. On
the one hand, the Arbitration Act stressed "the need for avoiding the delay and expense of litigation," id. at 346 U. S.
431, and directed that such agreements be "valid, irrevocable, and enforceable" in federal courts. On the other hand,
the Securities Act of 1933 was "[d]esigned to protect investors" and to require
"issuers, underwriters, and dealers to make full and fair disclosure of the character of securities sold in interstate and
foreign commerce and to prevent fraud in their sale,"
by creating "a special right to recover for misrepresentation. . . ." 346 U.S. at 346 U. S. 431 (footnote omitted). In
particular, the Court noted that 14 of the Securities Act, 15 U.S.C. 7n, provides:
"Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any
provision of this subchapter or of the rules and regulations of the Commission shall be void."
The Court ruled that an agreement to arbitrate "is a stipulation,' and [that] the right to select the judicial forum is the
kind of `provision' that cannot be waived under 14 of the Securities Act." [Footnote 6] 346 U.S. at 346 U. S. 434435.
Page 417 U. S. 513
Thus, Wilko's advance agreement to arbitrate any disputes subsequently arising out of his contract to purchase the
securities was unenforceable under the terms of 14 of the Securities Act of 1933.
Alberto-Culver, relying on this precedent, contends that the District Court and Court of Appeals were correct in
holding that its agreement to arbitrate disputes arising under the contract with Scherk is similarly unenforceable in
view of its contentions that Scherk's conduct constituted violations of the Securities Exchange Act of 1934 and rules
promulgated thereunder. For the reasons that follow, we reject this contention, and hold that the provisions of the
Arbitration Act cannot be ignored in this case.
At the outset, a colorable argument could be made that even the semantic reasoning of the Wilko opinion does not
control the case before us. Wilko concerned a suit brought under 12(2) of the Securities Act of 1933, which
provides a defrauded purchaser with the "special right" of a private remedy for civil liability, 346 U.S. at 346 U. S. 431.
There is no statutory counterpart of 12(2) in the Securities Exchange Act of 1934, and neither 10(b) of that Act nor
Rule 10b-5 speaks of a private remedy to redress violations of the kind alleged here. While federal case law has
established that 10(b) and Rule 10b-5 create an implied private cause of action, see
Page 417 U. S. 514
6 L. Loss, Securities Regulation 3869-3873 (1969) and cases cited therein; cf. J. I. Case Co. v. Borak, 377 U. S. 426,
the Act itself does not establish the "special right" that the Court in Wilko found significant. Furthermore, while both
the Securities Act of 1933 and the Securities Exchange Act of 1934 contain sections barring waiver of compliance
with any "provision" of the respective Acts, [Footnote 7] certain of the "provisions" of the 1933 Act that the Court held

54

could not be waived by Wilko's agreement to arbitrate find no counterpart in the 1934 Act. In particular, the Court in
Wilko noted that the jurisdictional provision of the 1933 Act, 15 U.S.C. 77v, allowed a plaintiff to bring suit "in any
court of competent jurisdiction -- federal or state and removal from a state court is prohibited." 346 U.S. at 346 U. S.
431. The analogous provision of the 1934 Act, by contrast, provides for suit only in the federal district courts that have
"exclusive jurisdiction," 15 U.S.C. 78aa, thus significantly restricting the plaintiff's choice of forum. [Footnote 8]
Page 417 U. S. 515
Accepting the premise, however, that the operative portions of the language of the 1933 Act relied upon in Wilko are
contained in the Securities Exchange Act of 1934, the respondent's reliance on Wilko in this case ignores the
significant and, we find, crucial differences between the agreement involved in Wilko and the one signed by the
parties here. Alberto-Culver's contract to purchase the business entities belonging to Scherk was a truly international
agreement. Alberto-Culver is an American corporation with its principal place of business and the vast bulk of its
activity in this country, while Scherk is a citizen of Germany whose companies were organized under the laws of
Germany and Liechtenstein. The negotiations leading to the signing of the contract in Austria and to the closing in
Switzerland took place in the United States, England, and Germany, and involved consultations with legal and
trademark experts from each of those countries and from Liechtenstein. Finally, and most significantly, the subject
matter of the contract concerned the sale of business enterprises organized under the laws of and primarily situated
in European countries, whose activities were largely, if not entirely, directed to European markets.
Such a contract involves considerations and policies significantly different from those found controlling in Wilko. In
Wilko, quite apart from the arbitration provision, there was no question but that the laws of the United States
generally, and the federal securities laws in particular, would govern disputes arising out of the stock purchase
agreement. The parties, the negotiations, and the subject matter of the contract were all
Page 417 U. S. 516
situated in this country, and no credible claim could have been entertained that any international conflict of laws
problems would arise. In this case, by contrast, in the absence of the arbitration provision considerable uncertainty
existed at the time of the agreement, and still exists, concerning the law applicable to the resolution of disputes
arising out of the contract. [Footnote 9]
Such uncertainty will almost inevitably exist with respect to any contract touching two or more countries, each with its
own substantive laws and conflict of laws rules. A contractual provision specifying in advance the forum in which
disputes hall be litigated and the law to be applied is, therefore, an almost indispensable precondition to achievement
of the orderliness and predictability essential to any international business transaction. Furthermore, such a provision
obviate the danger that a dispute under the agreement might be submitted to a forum hostile to the interests of one of
the parties or unfamiliar with the problem area involved. [Footnote 10]
A parochial refusal by the courts of one country to enforce an international arbitration agreement would not only
frustrate these purposes, but would invite
Page 417 U. S. 517
unseemly and mutually destructive jockeying by the parties to secure tactical litigation advantages. In the present
case, for example, it is not inconceivable that, if Scherk had anticipated that Alberto-Culver would be able in this
country to enjoin resort to arbitration, he might have sought an order in France or some other country enjoining

Alberto-Culver from proceeding with its litigation in the United States. Whatever recognition the courts of this country
might ultimately have granted to the order of the foreign court, the dicey atmosphere of such a legal no-man's land
would surely damage the fabric of international commerce and trade, and imperil the willingness and ability of
businessmen to enter into international commercial agreements. [Footnote 11]

For all these reasons, we hold that the agreement of the parties in this case to arbitrate any dispute arising out of
their international commercial transaction is to be

The exception to the clear provisions of the Arbitration Act carved out by Wilko is simply inapposite to a case such as
the one before us. In Wilko, the Court reasoned

respected and enforced by the federal courts in accord with the explicit provisions of the Arbitration Act. [Footnote 15]

Page 417 U. S. 518

that,
"[w]hen the security buyer, prior to any violation of the Securities Act, waives his right to sue in courts, he gives up
more than would a participant in other business transactions. The security buyer has a wider choice of courts and
venue. He thus surrenders one of the advantages the Act gives him. . . ."

Page 417 U. S. 520

Accordingly, the judgment of the Court of Appeals is

Page 417 U. S. 521
reversed and the case is remanded to that court with directions to remand to the District Court for further proceedings
consistent with this opinion.
It is so ordered.

346 U.S. at 346 U. S. 435. In the context of an international contract, however, these advantages become chimerical
since, as indicated above, an opposing party may by speedy resort to a foreign court block or hinder access to the
American court of the purchaser's choice. [Footnote 12]
Two Terms ago, in The Bremen v. Zapata Off-Shore Co., 407 U. S. 1, we rejected the doctrine that a forum selection
clause of a contract, although voluntarily adopted by the parties, will not be respected in a suit brought in the United
States "unless the selected state would provide a more convenient forum than the state in which suit is brought.'" Id.
at 407 U. S. 7. Rather, we concluded that a "forum clause should control absent a strong showing that it should be
set aside." Id. at 407 U. S. 15. We noted that

[G.R. No. 83033. June 8, 1990.]

NORTHWEST ORIENT AIRLINES, petitioner, vs. COURT OF APPEALS, CONCEPCION
S. SALONGA, BENJAMIN SALONGA, ANNETE S. PASTORAL, JOY ANN S.
PASTORAL (represented by their parents BENJAMIN C. PASTORAL and ERLINDA S.
PASTORAL) and MARILOU VELISANO (represented by her parents CARMELITA
VELISANO and GABRIEL VELISANO), respondents.

Guerrero and Torres for petitioner.

"much uncertainty and possibly great inconvenience to both parties could arise if a suit could be maintained in any
jurisdiction in which an accident might occur or if jurisdiction were left to any place [where personal or in rem
jurisdiction might be established]. The elimination of all such uncertainties by agreeing in advance on a forum
acceptable to both parties is an indispensable element in international trade, commerce, and contracting."

Salonga, Andres, Hernandez & Associates and Angara, Concepcion, Regala & Cruz for private respondents.

SYLLABUS
Id. at 407 U. S. 13-14.
Page 417 U. S. 519
An agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of forum selection clause that
posits not only the situs of suit, but also the procedure to be used in resolving the dispute. [Footnote 13] The
invalidation of such an agreement in the case before us would not only allow the respondent to repudiate its solemn
promise, but would, as well, reflect a
"parochial concept that all disputes must be resolved under our laws and in our courts. . . . We cannot have trade and
commerce in world markets and international waters exclusively on our terms, governed by our laws, and resolved in
our courts."
Id. at 407 U. S. 9. [Footnote 14]

55

1. CIVIL LAW; MORAL DAMAGES; PROPER IN CASE OF CAVALIER TREATMENT OF AIRLINE PERSONNEL.
We accept the findings of the lower courts in this regard, absent a clear showing that they were arbitrarily reached.
We are satisfied with the evidence that the petitioner's personnel in Hongkong were less than polite to the two young
ladies who, it must be added, had not provoked any boorishness. And we also agree with the following observation of
the respondent court: We find no merit in the contention of appellant NOA that no coercion or threat or force (was)
used on the passengers in the payment of the additional amount of $261.00 from each passenger. The worries and
anxiety of the Plaintiffs passengers started when the Hongkong office of NOA refused to issued their tickets for the
rest of their trip to the United States. There may be no threat with physical sense but the mere fact of the refusal of
defendant's office in Hongkong to issue the pre-paid tickets was enough tension as they could be stranded in
Hongkong with meager funds. We hold that the acts of the petitioner, assessed in their totality, constituted more than
mere negligence and assumed the dimensions of bad faith. There was clear malice here, manifested in the
contemptuous disregard of the passenger's protest and the abrupt rejection of their request that the Manila office be
contacted for verification of the correct billing. Rudeness is never excusable. It is especially condemnable if it is
committed in one's own country against a foreign guest, as in the case at bar.
2. ID.; ID.; ENTITLEMENT THEREOF, NOT AFFECTED BY FAILURE OF WITNESS TO TESTIFY AS TO THE
SOCIAL HUMILIATION; WOUNDED FEELING AND ANXIETY SUFFERED. It is not correct to say that moral

damages are not due Concepcion Salonga and Joy Ann Pastoral because they had not testified on the effects of the
petitioner's acts upon them. The other two girls took the stand to described their common experiences and reactions
and were later corroborated by Benjamin Salonga. Their testimonies were enough. It is true that we denied moral
damages to the plaintiff in Francisco v. GSIS, because she failed to testify as to her social humiliation, wounded
feelings and anxiety. In that case, however, there was absolutely no evidence in this respect from her or from any
other source, let alone the fact that bad faith had also not been proved.

On January 4, 1979, the private respondents sued the petitioner and ITI for breach of contract and damages. After
trial, judgment was rendered for the plaintiffs and the defendants were jointly and severally required.

3. ID.; EXEMPLARY DAMAGES; GRANT THEREOF WARRANTED. We sustain the award of exemplary
damages, to deter the petitioner and other airlines from the commission of the acts complained of by the private
respondents. Airlines should always bear in mind the special responsibilities they owe their passengers not only of
carrying them safely and comfortably according to their contracts but also of extending to them the courtesy due them
in all matters relating to their trip, including reservations, confirmation of bookings, ticketing and other ground and inflight services. The fare of the passenger includes payment for politeness.

2. To pay moral damages for physical sufferings, mental anguish, serious anxiety and
humiliation in the amount of P400,000.00 incurred by each passenger;

DECISION

1. To pay unto the plaintiffs the expenses of Benjamin Salonga from Manila to Tokyo only
which should be less than P5,000.00 to include actual fare and incidental expenses of
travel;

3. To pay exemplary damages unto plaintiffs in the breach of contract and a public duty as
a carrier P200,000.00; and
4. To pay for and as attorney's fees P80,000.00 for having failed to honor immediately
plaintiffs' just and lawful demand thus compelling plaintiffs to go to court; and to pay the
costs of the proceedings. 1
On its motion for reconsideration, however, ITI was absolved of liability as a mere agent of the petitioner. 2

CRUZ, J p:
As found by the respondent court, the facts of this case are simple.
Three young ladies, Annette Pastoral, Joy Ann Pastoral, and Marilou Velisano, who are among the private
respondent herein, were gifted on their graduation with their first trip abroad, to Hongkong, Tokyo and the United
States, by their parents. Accompanied by their grandmother, Concepcion Salonga, they flew on April 23, 1978, to
Hongkong, where they were to await their plane tickets for the rest of their trip. cdphil
On April 26, 1978, Erlinda Pastoral and her uncle, Serafin Salonga, went to the Office of the petitioner's agent, the
Inter-Pacific Transit, Inc., in Manila to purchase the said tickets. They paid the computed total price of P25,100.40 in
the afternoon of that same day and were assured that the tickets would be delivered to the passengers in Hongkong
in time for their flight to Japan the following day.

On appeal, the findings of the trial court were sustained by the respondent court which, however, modified the
decision as follows:
WHEREFORE, the decision appealed from is modified by ordering the defendant
Northwest Orient Airlines to pay P50,000.00 to each passenger as moral damages,
P10,000.00 each to the passengers as exemplary damages and P50,000.00 as attorney's
fees.
The award of P5,000.00 to Benjamin Salonga is eliminated.
Costs against the appellant Northwest Orient Airlines.
SO ORDERED. 3

The Hongkong office of the Northwest Orient Airlines found, however, that ITI had made a mistake in the computation
of the price of the tickets in fact, two mistakes. That office first sent a telex to the Manila office that the wrong
conversion rates of exchange had been used and that there was a deficit of $160.70 for each ticket. Then a second
telex advised that the 10% mileage surcharge had not been paid, which meant that the revised additional charge
should be further increased to $261.60 per ticket.
As a result of these errors, the NOA office in Hongkong refused to release the prepaid tickets to the four passengers
when Annette Pastoral and Marilou Velisano came to claim them on April 27, 1978. They were told they had to pay
the additional fare of $261.60 per ticket. The girls requested the NOA personnel to check with their Manila Office, but
this request was arrogantly rejected in the presence of many persons. As the flight was scheduled at one o'clock that
same afternoon, the girls had no choice but to pay the total differential fare of $1,046.40.
That unexpected expense depleted their foreign currency and caused them a great deal of tension and
inconvenience. They had to stay in a cheap hotel in Tokyo, with all four of them occupying only one room. Marilou got
sick. The 69-year old Concepcion, who had a heart condition, fretted. Frantic and worried over their dwindling funds,
the girls called up their parents for assistance. Their grandfather, Benjamin Salonga, finally decided to fly to Japan to
join them, incurring additional expenses for this purpose.

The petitioner now challenges this ruling on the ground that there is no factual or legal basis for the award to the
plaintiffs of the moral and exemplary damages, and neither are the attorney's fees justified. While it now concedes
that it was negligent in computing the correct fare, it insists it had not acted in bad faith or with malice, to warrant the
said awards.
The rule, indeed, is that even if there is a breach of contract, as admitted in this case, moral damages are
nevertheless not justified where only simple negligence can be imputed to the defendant.
In China Airlines v. Intermediate Appellate Court, 4 we held as follows:
With respect to moral damages, the rule is that the same are recoverable in a damage suit
predicated upon a breach of contract of carriage only where (1) the mishap results in the
death of a passenger and (2) it is proved that the carrier was guilty of fraud or bad faith,
even if death does not result. As the present case does not fall under either of the cited
instances, the award of moral damages should be, as it is hereby disallowed.
And only recently, Sabena Belgian World vs. Court of Appeals 5 affirmed the doctrine that:

56

In cases of breach of contract, moral damages can be awarded only where the defendant
has acted fraudulently or in bad faith. Mere negligence, even if thereby the plaintiff suffers
mental anguish or serious fright is not ground for awarding moral damages.
However, the finding of the trial court in the case at bar is that the petitioner should not be faulted with mere
negligence that would absolve it from damages for its breach of contract. Rejecting its defense of good faith, Judge
Rafael de la Cruz observed:
To evade liability good faith is being claimed by the defendants in the performance of their
part of the obligation. The facts adduced from the pleadings and the records, to our mind,
are not sufficient to make good faith the thinly veiled excuse for justification because as
aptly said: "A contract to transport passengers is quite different in kind and degree from
any other contractual relations. And this is so because of the relation which an air carrier
sustains with the public. Its business is mainly with the travelling public. It invites people to
avail of the comfort and advantages it offers. The contract of air carriage therefore
generates a relation attended with public duty. Neglect or malfeasance of the carriers'
employees, naturally, could give ground for an action for damages."

The court agrees.

We note first the error upon error committed by the petitioner's agent in computing the passengers' fare, a task with
which it was not exactly unfamiliar, being experienced in the travel business. That negligence imposed needless
burden on the passengers who had gone on their trip, the first abroad for the three girls, precisely to enjoy
themselves. Worse, the negligence, which was strange enough as it was, was not the only vexation. On top of this
annoyance was the manner in which the petitioner's personnel in Hongkong sought to rectify the supposed mistakes
of its Manila office. It was far from acceptable.
The petitioner's employees should have been at least polite if not even sympathetic and apologetic to the two young
girls in the foreign land. Instead they were overbearing and hostile, forgetting that they were dealing not with
bothersome persons begging for a free ride. The girls were respectable passengers who had in fact paid for their
tickets in advance in the exact amount computed by the petitioner's own agent in Manila.
Annete Pastoral and Marilou Velisano testified that they were treated coldly and arrogantly by the NOA Hongkong
personnel. They were flatly told their tickets would not be released unless the additional charge was paid. They were
humiliated when their request to contact the Manila office by telex was haughtily rejected in the presence and within
hearing of other persons. They were not accorded the courtesy due them even only as ordinary individuals if not,
indeed, as pre-paid passengers.
We accept the findings of the lower courts in this regard, absent a clear showing that they were arbitrarily reached.
We are satisfied with the evidence that the petitioner's personnel in Hongkong were less than polite to the two young
ladies who, it must be added, had not provoked any boorishness. And we also agree with the following observation of
the respondent court:
We find no merit in the contention of appellant NOA that no coercion or threat or force
(was) used on the passengers in the payment of the additional amount of $261.00 from
each passenger.

57

The worries and anxiety of the Plaintiffs passengers started when the Hongkong office of
NOA refused to issued their tickets for the rest of their trip to the United States. There may
be no threat with physical sense but the mere fact of the refusal of defendant's office in
Hongkong to issue the pre-paid tickets was enough tension as they could be stranded in
Hongkong with meager funds.
The cavalier treatment of the two girls at the Hongkong NOA office requires a brief comment. The Court feels it is
about time foreigners realized that Filipinos, whatever their station in life, are entitled to the same civility accorded
other persons when they are in an alien land. We cannot be dismissed or disdained on the basis of our nationality,
which is as proud and as respectable as any other on this earth. The haughty attitude of some foreigners who seem
to think they belong to a superior race has irked not a few Filipino travelers. Let it be stressed to our credit that we are
not impressed at all by such self-importance. Airlines should especially advise their personnel against
superciliousness when dealing with citizens of the Philippines and are cautioned that this Court will not countenance
that kind of conduct.
We hold that the acts of the petitioner, assessed in their totality, constituted more than mere negligence and assumed
the dimensions of bad faith. There was clear malice here, manifested in the contemptuous disregard of the
passenger's protest and the abrupt rejection of their request that the Manila office be contacted for verification of the
correct billing. Rudeness is never excusable. It is especially condemnable if it is committed in one's own country
against a foreign guest, as in the case at bar.
It is not correct to say that moral damages are not due Concepcion Salonga and Joy Ann Pastoral because they had
not testified on the effects of the petitioner's acts upon them. The other two girls took the stand to describe their
common experiences and reactions and were later corroborated by Benjamin Salonga. Their testimonies were
enough. It is true that we denied moral damages to the plaintiff in Francisco v. GSIS, 6 because she failed to testify
as to her social humiliation, wounded feelings and anxiety. In that case, however, there was absolutely no evidence in
this respect from her or from any other source, let alone the fact that bad faith had also not been proved.
But we do agree that the amount awarded in the present case is rather steep. We hereby reduce it to P10,000.00 for
each of the four passengers plus another P10,000.00 each for Annette Pastoral and Marilou Velisano for their
humiliation at the NOA Hongkong office.
We sustain the award of exemplary damages, to deter the petitioner and other airlines from the commission of the
acts complained of by the private respondents. Airlines should always bear in mind the special responsibilities they
owe their passengers not only of carrying them safely and comfortably according to their contracts but also of
extending to them the courtesy due them in all matters relating to their trip, including reservations, confirmation of
bookings, ticketing and other ground and in-flight services. The fare of the passenger includes payment for
politeness.
In view of our findings regarding the mala fides of the petitioner, we also approve the award of attorney's fees but
reduce it in our discretion to P20,000.00.
WHEREFORE, with the modification of the amount of the moral damages and of the attorney's fees as above
indicated, the appealed decision of the respondent court is AFFIRMED, with costs against the petitioner. prLL
SO ORDERED.
||| (Northwest Orient Airlines v. Court of Appeals, G.R. No. 83033, [June 8, 1990], 264 PHIL 814-822)