Enforcement of foreign judgment - "It is true that under the provisions of Section 50 of Rule 39, Rules of Court, a judgment for a sum of money rendered by a foreign court "is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title", but when suit for its enforcement is brought in a Philippine court, said 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""

G.R. No. L-22470 May 28, 1970
SOORAJMULL NAGARMULL, plaintiff-appellee,
vs.
BINALBAGAN-ISABELA SUGAR COMPANY, INC., defendant-appellant.


"x x x.

The main issue to be resolved is whether or not the decision of the Tribunal of Arbitration of the Bengal Chamber of Commerce, as affirmed by the High Court of Judicature of Calcutta, is enforceable in the Philippines.

For the purpose of this decision We shall assume that appellee — contrary to appellant's contention — has the right to sue in Philippine courts and that, as far as the instant case is concerned, it is not guilty of laches. This notwithstanding, We are constrained to reverse the appealed decision upon the ground that it is based upon a clear mistake of law and its enforcement will give rise to a patent injustice.

It is true that under the provisions of Section 50 of Rule 39, Rules of Court, a judgment for a sum of money rendered by a foreign court "is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title", but when suit for its enforcement is brought in a Philippine court, said 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" (Emphasis supplied.)

Upon the facts of record, We are constrained to hold that the decision sought to be enforced was rendered upon a "clear mistake of law" and because of that it makes appellant — an innocent party — suffer the consequences of the default or breach of contract committed by appellee.

There is no question at all that appellee was guilty of a breach of contract when it failed to deliver one-hundred fifty-four Hessian bales which, according to the contract entered into with appellant, should have been delivered to the latter in the months of July, August and September, all of the year 1949. It is equally clear beyond doubt that had these one-hundred fifty-four bales been delivered in accordance with the contract aforesaid, the increase in the export tax due upon them would not have been imposed because said increased export tax became effective only on October 1, 1949.

To avoid its liability for the aforesaid increase in the export tax, appellee claims that appellant should be held liable therefor on the strength of its letter of September 29, 1949 asking appellee to ship the shortage. This argument is unavailing because it is not only illogical but contrary to known principles of fairness and justice. When appellant demanded that appellee deliver the shortage of 154 bales it did nothing more than to demand that to which it was entitled as a matter of right. The breach of contract committed by appellee gave appellant, under the law and even under general principles of fairness, the right to rescind the contract or to ask for its specific performance, in either case with right to demand damages. Part of the damages appellant was clearly entitled to recover from appellee growing out of the latter's breach of the contract consists precisely of the amount of the increase decreed in the export tax due on the shortage — which, because of appellee's fault, had to be delivered after the effectivity of the increased export tax.

To the extent, therefore, that the decisions of the Tribunal of Arbitration of the Bengal Chamber of Commerce and of the High Court of Judicature of Calcutta fail to apply to the facts of this case fundamental principles of contract, the same may be impeached, as they have been sufficiently impeached by appellant, on the ground of "clear mistake of law". We agree in this regard with the majority opinion in Ingenohl vs. Walter E. Olsen & Co. (47 Phil. 189), although its view was reversed by the Supreme Court of the United States (273 U.S. 541, 71 L. ed. 762) which at that time had jurisdiction to review by certiorari decisions of this Court. We can not sanction a clear mistake of law that would work an obvious injustice upon appellant.

x x x."