G.R. No. 92288 - British Airways, Inc. vs. Court of Appeals

On February 26, 1983, the Oil and Natural Gas Commission (ONGC), a government-owned Indian corporation, and Pacific Cement Company, Inc. (Pacific Cement), a Philippine corporation, entered into a supply contract: ONGC would pay US$477,300 via an irrevocable letter of credit for 4,300 metric tons of oil well cement.
The cement was loaded in Surigao City for shipment to Bombay and Calcutta but was detained in Bangkok due to a dispute between the shipowner and Pacific Cement. Despite payment by ONGC, Pacific Cement failed to deliver the cargo.
The parties agreed Pacific Cement would supply, at no additional cost, 4,300 MT of Class “aGa” cement as replacement, but that cement did not meet contractual specifications.

Clause 16 of the contract provided that disputes “relating to the meaning of the specification, design, drawing, instruction or quality of workmanship” or “concerning the materials or the execution or failure to execute the same” be referred to a sole arbitrator in Dehra Dun under the Arbitration Act, 1940.
ONGC referred the replacement-cement dispute to arbitrator N.N. Malhotra, who on July 23, 1988 awarded ONGC US$899,603.77 plus 6% interest from July 24, 1988 and arbitration costs.
ONGC petitioned the Civil Judge of Dehra Dun to make the award a “Rule of Court.” Pacific Cement’s objections were rejected for nonpayment of filing fees, and on February 7, 1990 the foreign court issued a decree making the award a Rule of Court and ordering Pacific Cement to pay US$899,603.77 with 9% interest per annum.

ONGC filed a complaint in RTC Branch 30, Surigao City, to enforce the Indian judgment. Pacific Cement moved to dismiss for lack of ONGC’s capacity, lack of cause of action, and alleged waiver.
RTC upheld ONGC’s capacity but dismissed the complaint: it held Clause 16 did not cover non-delivery (which fell under Clause 15’s exclusive-jurisdiction provision), that the Indian court’s decree lacked findings of fact and law, violated due process by rejecting Pacific Cement’s objections without specifying fees, and that the arbitrator was biased.
The Court of Appeals affirmed the dismissal on the same grounds; ONGC’s motion for reconsideration was denied.

Whether the arbitrator had jurisdiction under Clause 16 to decide the dispute.
Whether the judgment of the Civil Judge of Dehra Dun is enforceable in the Philippines despite alleged lack of findings and procedural irregularities.
Whether Pacific Cement’s due-process and bias objections defeat enforcement.