Borthwick v. Castro-Bartolome
REITERATIONFacts
The Antecedents: Joseph E. Scallon filed a case in the Circuit Court of Hawaii against William B. Borthwick for the payment of four (4) promissory notes totaling $104,817.48, plus interest. Scallon alleged that Borthwick, an American citizen residing in the Philippines, owned real property interests and transacted business in Hawaii, which gave rise to the notes. The notes specified payment in California but allowed the payee to select Manila or Honolulu as additional places for payment, with the law of the place of action applying. Borthwick was personally served summons in California, but he ignored it. A default judgment was rendered against him in Hawaii for $150,953.05. Procedural History: Attempts to execute the Hawaiian judgment in Hawaii and California failed due to lack of Borthwick's assets. Scallon then filed suit in the Court of First Instance (CFI) of Makati, Philippines, seeking enforcement of the Hawaiian judgment and asserting alternative causes of action. Summons was attempted to be served personally on Borthwick at his Metro Manila address but was unsuccessful. Substituted service was effected by leaving a copy with his "house caretaker," Fred Daniel. Borthwick failed to file an answer and was declared in default. The CFI rendered a default judgment ordering the enforcement of the Hawaiian judgment and, alternatively, rescission of an agreement and return of shares or their value. Notice of an amendatory order making the sums payable in Philippine currency was personally accepted by Borthwick. He then moved for a new trial, claiming excusable negligence due to Daniel's failure to transmit the summons and asserting the Hawaiian court lacked jurisdiction over the cause of action and his person because the notes did not arise from business dealings in Hawaii and he did not own real estate there. The CFI denied the motion, finding Daniel a responsible person for substituted service and ruling that Borthwick failed to refute the jurisdictional facts alleged in the Hawaiian complaint. The CFI also stated that defenses to the original action were immaterial in an enforcement proceeding. The Petition: Borthwick filed a petition for review with the Supreme Court, raising issues of law regarding the enforceability of a foreign judgment rendered without jurisdiction and proper summons, the validity of substituted service on Daniel, and whether his motion for new trial should have been granted.
Issue(s)
Whether the foreign judgment of the Hawaii Court is enforceable in the Philippines and whether the Hawaii Court acquired jurisdiction over the person of Borthwick and the cause of action. Whether substituted service of summons on Fred Daniel was valid. Whether Borthwick's motion for new trial should have been granted.
Ruling
The petition for review is denied. The foreign judgment of the Hawaii Court is enforceable in the Philippines.
Ratio Decidendi
On the enforceability of the foreign judgment and jurisdiction of the Hawaii Court: The Court reiterated that a foreign judgment is presumptive evidence of a right and can be rejected for want of jurisdiction. However, the jurisdiction of the Hawaii Court hinged on Borthwick owning real property or transacting business therein, facts clearly alleged in Scallon's complaint. Borthwick was given an opportunity to answer and impugn these facts in Hawaii but failed to appear, leading to a default judgment. This established no evidence of lack of jurisdiction in the Hawaii case. Furthermore, Borthwick was again afforded an opportunity to challenge the jurisdictional facts in the Philippine CFI, but he again defaulted. The CFI affirmed the jurisdictional facts, and Borthwick's current challenge is essentially a third attempt to contest the Hawaii Court's jurisdiction and the merits of the original action, which he cannot do without showing his default was incorrect. On the validity of substituted service of summons: The Court upheld the CFI's finding that Fred Daniel, identified as Borthwick's "houseboy" and "house caretaker," was a responsible person of suitable age and discretion to accept substituted service of summons. The CFI's factual finding, based on Daniel being a resident of Borthwick's address, was not to be disturbed by the Supreme Court, as the petition for review was limited to questions of law. The Court found Borthwick's claim that Daniel was merely an "itinerant gardener" who did not reside at his house "ridiculous" and "queer and hardly coincidental" that Daniel consistently received papers for Borthwick. On the denial of the motion for new trial: The Court affirmed the denial of Borthwick's motion for new trial, which was essentially a motion to lift the order of default. Since Borthwick failed to establish proper grounds for lifting the default, particularly by not successfully challenging the validity of the substituted service or demonstrating excusable negligence, the denial was proper. The CFI correctly found that Borthwick had not refuted the jurisdictional facts and that the opportunity to do so had passed due to his defaults in both the Hawaiian and Philippine proceedings. The Court emphasized that Borthwick was essentially seeking a third opportunity to challenge the jurisdiction and merits, which is not permissible under the circumstances.
Main Doctrine
A foreign judgment sought to be enforced in the Philippines is presumed valid and binding, and the defendant's challenge to the jurisdiction of the foreign court must be raised and proven with evidence, not merely asserted, especially when the defendant was afforded opportunity to contest the same in the foreign court and in the Philippine enforcement proceedings but failed to do so, resulting in default judgments.