Northwest Orient Airlines, Inc. v. Court of Appeals and C.F. Sharp & Company Inc.
REITERATIONFacts
The Antecedents: Northwest Orient Airlines, Inc. (NORTHWEST), a U.S. corporation, entered into an International Passenger Sales Agency Agreement with C.F. Sharp & Company, Inc. (SHARP), a Philippine corporation, authorizing SHARP to sell its air transportation tickets. SHARP failed to remit proceeds, prompting NORTHWEST to file a collection suit in Tokyo, Japan. Attempts to serve summons on SHARP's Japan branch were unsuccessful. The Tokyo District Court then ordered service through diplomatic channels on SHARP's head office in Manila. SHARP received the summons but failed to appear, resulting in a default judgment against it. NORTHWEST filed a suit in the Philippines to enforce the Japanese judgment. Procedural History: The Regional Trial Court (RTC), Branch 54, Manila, dismissed NORTHWEST's complaint, holding that the Japanese court lacked jurisdiction over SHARP due to extraterritorial service of summons. The Court of Appeals affirmed the RTC's decision, relying on Boudard v. Tait and the principle that personal service within the forum is required for actions in personam. The Petition: NORTHWEST elevated the case to the Supreme Court, contending that the respondent courts erred in holding that SHARP was not a resident of Japan and that summons could only be served within that country.
Issue(s)
Whether the Japanese court acquired jurisdiction over C.F. Sharp & Company, Inc. (SHARP) for the purpose of rendering a judgment in personam, and whether the extraterritorial service of summons on SHARP in the Philippines was valid. Whether the foreign judgment sought to be enforced is valid and enforceable in the Philippines. Whether NORTHWEST is entitled to attorney's fees, litigation expenses, and exemplary damages.
Ruling
The petition is partly GRANTED. The challenged decision is AFFIRMED regarding the denial of NORTHWEST's claims for attorney's fees, litigation expenses, and exemplary damages. However, the decision is REVERSED concerning the dismissal of NORTHWEST's complaint. A new judgment is rendered ORDERING C.F. SHARP & COMPANY, INC. to pay NORTHWEST the amounts adjudged in the foreign judgment, with legal interest from the filing of the complaint until full satisfaction.
Ratio Decidendi
On the jurisdiction of the Japanese court and the validity of extraterritorial service of summons: The Court held that a foreign judgment is presumed valid and binding. The burden of proving its invalidity rests on the party assailing it. SHARP failed to present evidence of Japanese procedural law to demonstrate the invalidity of the extraterritorial service. In the absence of such proof, the processual presumption applies, meaning Japanese law is presumed similar to Philippine law. Under Philippine law, a foreign corporation doing business in the Philippines is considered a resident for venue purposes. Conversely, a Philippine corporation doing business in Japan, with duly registered branches there, may be deemed a resident of Japan for purposes of jurisdiction and service of process. The extraterritorial service of summons, effected through diplomatic channels and ultimately served by a Philippine sheriff on SHARP's head office in Manila after failed attempts in Japan, was considered equivalent to service on the proper government official under Philippine law, thus conferring jurisdiction on the Japanese court. The Court distinguished this case from Boudard v. Tait, Magdalena Estate, Inc. v. Nieto, and Dial Corp. v. Soriano, noting that SHARP was actively doing business in Japan through multiple branches, unlike the defendants in those cases. On the enforceability of the foreign judgment: Given that the Japanese court was found to have acquired jurisdiction over SHARP, the judgment rendered is considered valid and enforceable in the Philippines, provided it does not fall under the exceptions outlined in Section 50, Rule 39 of the Rules of Court (want of jurisdiction, want of notice, collusion, fraud, or clear mistake of law or fact). SHARP failed to prove any of these exceptions. On the claim for attorney's fees, litigation expenses, and exemplary damages: The Court found NORTHWEST's claim for attorney's fees and litigation expenses to be without merit, as no evidence justified such an award under Article 2208 of the Civil Code. Furthermore, exemplary damages were denied because NORTHWEST failed to prove entitlement to moral, temperate, or compensatory damages, a prerequisite under Article 2234 of the Civil Code.
Main Doctrine
A foreign judgment is presumed valid and binding. The party assailing it bears the burden of proving want of jurisdiction, notice, collusion, fraud, or mistake. Matters of procedure, including service of process, are governed by the lex fori. In the absence of proof of foreign law, the processual presumption of similarity with Philippine law applies. A corporation doing business in a foreign country may be deemed a resident thereof for purposes of jurisdiction and service of process.