Conflict - Philsec Investment vs. CA

PHILSEC INVESMENT CORP. vs.
CA
G.R. No. 103493; June 19, 1997
Facts:
Ventura Ducat obtained separate loans in the sum of 2.5m dollars from AYALA and
PHILSEC secured by shares of stocks of Ducat with a market value of P14m . To pay the loan,
another respondent, 1488, INC. thru its president Daic assumed Ducats obligation whereby it
sold to ATHONA, Inc. a parcel of land in Harris County, Texas for 2.8m dollars while PHILSEC
and AYALA extended a loan to ATHONA worth 2.5m dollars as initial payment of the purchase
price. ATHONA executed a promissory note in favor of 1488, Inc. for the balance of 300K
dollars (2.8-2.5= 300k). So now, 1488, Inc. has 2.5M to pay PHILSEC and AYALA (t/n: giassume ni 1488, Inc. ang liability ni Ducat.). Thereafter, Ducat was released from his
indebtedness to PHILSEC and AYALA and the SHARES of Ducat (security) was delivered into
the possession of 1488, Inc. Libog no? KBYE.
ATHONA failed to pay the interest on the balance which made the entire amount due and
demandable. 1488 Inc. sued PHILSEC, AYALA and ATHONA in the US for the payment of the
balance of U$ 307, 209.20 and for damages for breach of contract and for fraud allegedly
perpetrated by petitioners in misrepresenting the marketability of the shares delivered to it.
ATHONA filed an answer with counterclaim, impleading private respondents herein as counter
defendants, for allegedly conspiring in selling the property at a price over its market value.
While the Civil Case 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 RTC Makati. The complaint reiterated the allegation of petitioners in their
respective counterclaims in the Civil Action in 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. (Ang land ang gipertain diri na overpriced). Petitioners claimed
that, as a result of private respondents (1488, Ducat,etc.) fraudulent misrepresentations,
ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase the
Houston property (land). Petitioners prayed that private respondents be ordered to return to
ATHONA the excess payment of US$1,700,000.00 and to pay damages.
Private respondent Ducat moved to dismiss 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. The trial court granted Ducats 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. CA also dismissed the case on same
grounds.
Issue: WON the dismissal of the case was proper on the grounds of LITIS PENDENTIA and
FORUM NON CONVENIENS.
Held: No.
(1) On Litis Pendentia
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 the law. 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. 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.
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.
(2) On Forum Non Conveniens

The Lower Courts refusal to take cognizance of the case on the said ground is
unjustifiable. First, a motion to dismiss is limited to the grounds under Rule 16, 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 courts 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
latters 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.

Conflict - Philsec Investment vs. CA

Uploaded by

Copyright:

Available Formats

Conflict - Philsec Investment vs. CA

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Conflict - Philsec Investment vs. CA

Uploaded by

Copyright:

Available Formats

What was the case about?

What were the grounds for dismissal argued by the defendant?

PHILSEC INVESMENT CORP. vs.

(2) On Forum Non Conveniens

You might also like