G.R. No. L-9090. September 10, 1957

This  is an appeal from a decision of the Court of First Instance of Manila ordering defendant to pay to plaintiff   the sum of $53,037.89 as awarded, by a board of arbitrators on June 20,  1950 and confirmed by the District Court of New York,  U.S.A.  on August 15, 1950,  with legal interest  thereon from December 5,   1950 until  its  payment, and  the costs of suit.

The facts involved in this case which are necessary to be  considered in  this appeal are stated by the trial court  in its  decision which we find to be substantially correct.    They are: “On July 85,   1949,  Atkins,  Kroll & Co., Inc., Manila,  wrote defendant Juan Ysmael & Co.,  Inc. (letter Exh.  1) advising that plaintiff Eastboard Navigation, Ltd., of Toronto, Canada, owners of the S/S EASTWATER, ‘have accepted your terms of payment and are  agreed to charter the S/S EASTWATER to Juan Ysmael & Company,  Inc., Manila,   (to load a cargo of scrap iron in the Philippines for Buenos Aires) under the following terms  and conditions: * * * (10)  Clause Paramount: Terns and conditions for this Charter Party not explicitly or otherwise stated in this letter of  confirmation are to be as per general conditions  of regular Charter Party form..    Will you kindly signify confirmation of the above terms by signing the original and four copies of  this letter?    A formal copy of   the Charter Party document will be forwarded to you within a few days.    Atkins, Kroll & Co.,   Inc., Manila,  acting solely as agents for and in behalf of  the owners of  the S/S Eastwater by cable or letter authority,  sincerely hope we may  be  of service to all parties  concerned and that  the cargo will go forward as scheduled in a satisfactory manner.’    Defendant signed said letter thus,   ‘For Charter Party:  Juan Ysmael & Co., Inc., K. H. Hemady,  President.’    On the same date,  July 25,  1949, charter party agreement   (Exh. A) was executed containing, besides the regular charter party printed form,  a  type written clause reading:   ‘Clauses Nos.  16 to 31 inclusive and U.S.A. Clause Paramount,  War Risks Clauses 1 and 2,  Now Jason Clause and Both-to-Blame Collision Clauses,   as attached, to to coreidered as fully incorporated herein and to form part of   this  Charter Party.’     Clause No.   29 reads as follows:

‘It  is mutually agreed that should any dispute arise between Owners  and  Charterers, the natter in dispute shall   be referred to three persons at Mew York for arbitration,  one to be appointed by each of the parties hereto, and the third by  the two so  chosen;   their decision or that of any two of them, shall be final,  and for the purpose of enforcing any award,   this agreement may be made a rule of the Court.    The Arbitrators shall  be  commercial men.    Should the two so chosen not be able to agree who  the third arbitrator should be,   then the New York Produce Exchange is to appoint such third Arbiter.    The amount in dispute shall  be placed in escrow at  New York subject to the  decision of  the arbitrators.’

“On September 8,  1949,  Atkins,  Kroll & Co.,   Inc., Manila, again wrote defendant company as  follows   (letter Exh.  3):

‘We are today in receipt of  the following cable instructions from our principals the Eastboard Navigation Ltd.,   regarding the  release of your  bills of lading covering balance of your scrap iron loaded at Manila:

“Re Yours sixth agree release bladings against full payment  of freight and guarantee by Irving Trust New York fifteen thousand dollars  covering possible demurrage to be settled in accordance with ruling of arbitration board New York please have Ysmael immediately nominate their arbitrator’

‘In order to facilitate your negotiations of your documents with the Bank of America we shall appreciate very much your putting up a guarantee by Irving Trust New York for the sum of US $15,000,00 and to nominate the name of your arbitrator immediately,1

“On October 1,  1949,   the Bank of America,  Manila  Office, wrote defendant  company (letter Exh.   3-A)  as  follows:

‘In accordance with verbal  instructions of  your President,  Mr. K. H. Hemady,  your draft for $76,354.55 and attached documents were airmailed this morning to  the above bank together with the relative bills of lading which were surrendered to us  by Atkins Kroll & Co.,   Inc.,   for account and by order of Eastboard Navigation,   Ltd, of Toronto.

‘The documents,   which were sent for collection,  cover the third and last shipment under the assignment made to you by Mr. Hector Corvsra under the terms of  the subject credit and cover:

*             *             *             *             *             *‘Deposit account Demurrage under Arbitration – $15,000,00

*             *             *             *             *             *‘We have requested  the  Irving Trust Company to advise us by  cable when the above amounts have been paid.    In the event of non-payment,  we have requested that  they deliver the bills  of lading to   the Eastboard Navigation Ltd.,  under cable advice.

‘We expect  to  be able to  report to you on the above-described collection sometime next week.’

“On December 3,  1949, defendant company wrote the Bank of America   (Manila)   (letter Exh.  3~B) as follows:

‘Please transmit by telegraphic transfer to Irving Trust  Company,  New York,  the amount of Ten Thousand Dollars   ($10,000.00),   for  the account of Eastboard Navigation Ltd., Toronto, Canada,  to be held as deposit for demurrage due the S/S   ‘Eastwater,  together with the $15,000.00 previously remitted to them.   The amount shall be held pending result of  the arbitration of the dispute between  this Company and Eastboard Navigation.’

“The dispute mentioned in its preceding letter having arisen, under date of April 5,  1950, the defendant cabled Attys. Manning,  Harniscii and Hollinger of New York City as follows : ‘Through recommendation of Mr.  Morris  Lipsett we request you kindly present our case before Arbitration Board re  charter vessel S/S Eastwater Writing”  (Exh.  2).    And in its letter Exhibit 2-B of  the same date to said attorneys, defendant confirmed its request as follows:

‘Our good friend,  Mr.  Morris S.  Lipsett, of   the Lipsett Pacific Corporation,  80 Wall Street,  New York, has highly recommended your law firm to us to present our case to the arbitrators in a case we have with the Eastboard Navigation Co.,   Ltd.,  in connection with our charter of their vessel  the S/S  ‘Eastwater’ . May we,   therefore, request you to act as such attorney for us,   and you may bill us accordingly for your services in the matter.

‘We have already spent a considerable sum on this  case, not to mention  the inconvenience it has caused us,  and we are most anxious that   the matter be terminated as soon as possible.

‘Pertinent papers and documents regarding the matter have been turned over to Mr. Lipsett, and we have requested him to  turn those over to you for your purposes.    Should you,  however, need further information regarding the matter, or should you need our assistance at this end, please feel free to ask us.

“On May 23, 1950, Messrs. Manning, Harnisch and Hollinger, acting as attorneys for defendant Juan Ysmasl & Co., Inc., executed with the attorney for plaintiff East board Navigation Ltd.,  arbitration agreement   (Exh.  B) which reads:

We,  the undersigned, hereby mutually covenant and agree to  submit,   and hereby do submit  to   Charles P.  Lambert,  Richard Nathan and Donald E. Simmons, as Arbitrators,  for their adjudication and award,   a controversy existing between us relating to the liability,  if any, of   the undersigned,   Juan Ysmasl & Co.,   Inc., charterers,  to  the undersigned,  Eastboard Navgation,   Ltd.,   owners of the S/S Eastwater, for demurrage, discharging expenses,  wharfage,  extra meals agency fees,   crew overtime and miscellaneous expenses,   under charter party of the S/S Eastwater dated  July 25th,   1949.  

‘And we mutually covenant and promise that the award to be made by said Arbitrators or by a majority of   them,   shall  be well and faithfully kept and observed by us.
‘And by each of us.

‘And it is hereby further mutually agreed that a  judgment of the United States District Court for  the Southern District of New York shall be rendered, upon the award made pursuant to this submission.

‘WITNESS’ our hands this 23rd day of May, 1950.’

“Pursuant to said arbitration agreement, the three arbitrators in New York City passed upon the stifferences between the plaintiff and the defendant  ‘after having heard and received evidence submitted  by both sides’,  and rendered their arbitration decision  (Exh.   C). This arbitration decision  was presented by plaintiff to the U.S.  District Court, Southern District of New York,   for confirmation,   (Admiralty No.  A165-362 )  and said Court confirmed  the said arbitration, decision in its  Order and Final Decree of August  15,   1950, (Exh. D) ordering ‘that   the aforesaid award of arbitrators be and the same hereby is in all respects  confirmed1, and ‘that  the said movant,  Eastboard Navigation,   Ltd., recover of  and  from the said respondent,   Juan Ysmel & Company,’ Inc., the sum of $53,037.89,  with interest  thereon from the 20th day of  June,   1950, amounting to $488.24,   together  with the movant’s costs taxed in  the sum of  $40.00 and amounting in all to  the sum of  $53,566.13, with interest thereon until paid.’”

Plaintiff  brought this action to enforce this aforesaid “Order and Final Decree” pursuant to Section 48, Rule 39, of  the Rules  of  Court which, among others,   provides  “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.”

Defendant,  in its answer,   set  up the defense that said  judgment  cannot be  enforced in  this jurisdiction because   (a) when the New York District   Court acted on the   case it did not have jurisdiction over the person of defendant;   and   (b)  the proceeding where said  judgment was rendered was summary,  there was no trial on  the merits  and defendant did not give its  consent  thereto.    Defendant contends that that judgment does not  come within the purview of Section 48, Rule 39,  of   the Rules  of  Court.

During, the hearing,   the parties agreed as  to  the following facts:  That defendant is a  corporation the stock of which is held as follows: Magdalena Hemady,  3,459 shares; K.  H. Hemady,  6,939 shares;  Felipe Ysmael,  770 shares;   Carlos Kernel Ysmael,   830 shares;   Juan Ysiaael y Cortes,  1 phnrs;  an” Gatoiel Ysmacl, 1 share,  or a  total of 17,000 shares;  that plaintiff,   during the time material to  this  case, was not licensed  to   transact business  in  the Philippines;,  that  this is  the first  business transaction made locally by plaintiff, although previously plaintiff’s vessel was  chartered by the National Rice and Corn Corporation to carry rice  cargo to the Philippines,   the  charter party thereto  being dated April 5, 1949;   that   the charter party Exhibit A is  one approved by the Documentary Council of the Baltic and, White Sea  Conference cad  that  one of   its standard stipulations is a   clause regarding arbitration;   that K.  H.  Hemady,  now deceased,   as  president and general manager of  defendant,   for 25 years,  had entered into numerous other contracts with third parties  in representation of defendant all of which were never ratified nor repudiated  by its  Board  of  Directors;   that one of   the arbitrators Richard Nathan was appointed  by defendant corporation, another one Donald E. Simmons was appointed by plaintiff f   and these two appointed a third ore Charles F. Lambert;  and that  the defense that K.  H.  Henuidy mas not authorized by  the Board  of Directors  of defendant corporation to enter into the arbitration agreement was raised for the  first  time in these proceedings, which means  that it was not raised in the arbitration proceedings   in New York, nor in the proceedings held to confirm the and in the U.S. District  Court of   the Southern District of New York.    In  addition to this stipulation  of facts,   plaintiff and defendant submitted documentary  evidence.

The lower court rendered judgment off inning the decre of the New York District  Court and ordering that  It  be enforced,   from which defendant appealed.    Plaintiff likewise appealed but  only on the score that  the court did not declare defendant liable for the amount  of  the foreign exchange tax due on  the  judgment and for  the fees  it  agreed to pay to its  counsel for this litigation.    We will  discuss separately the issues  involved in this joint appeal.

It is plaintiff-appellant’s contention that,   if  the decision of the  lower  court is  affirmed,   it will  have  to pa 7 the foreign exchange tax on  the amount awarded therein  if the same is  to be remitted to  its home office at  Ontario, Canada;  that  it should have been exempted from said tax had defendant paid   the award immediately after it had been confirmed by the U.S.   New York District  Court  because at   that time Republic Act  No.   601 had not yet  been enacted:   and that  because of defendant’s undue refusal to  pay the  same which gave rise to said, tax liability,  plaintiff will have to shoulder the same.    This  is a loss which defendant shall pay, plaintiff  contends,  under. Article 1107 of  the old Civil Code.

In the first place,  there is no  clear proof on record that defendant’s refusal to pay the award is due to fraud or bad faith.    Plaintiff failed to present any evidence in this regard.   On the contrary,  the stand of defendant does not seem to  be entirely groundless as  evidenced by the several defenses it set up in its answer which give a clear perspective of  the reasons why it declined to pay the award which plaintiff demands.    In the second place,  it would appear that,  if  there is any agreement to pay the interest obligation in a currency other than the Philippine currency,  the same is null and void as  contrary to public policy  (Republic Act  No.  529), arid the most that  it   could be  demanded  is  to pay said obligation in Philippine currency  to be measured in the prevailing rate of exchange at  the time  the obligation was incurred   (Section 1,   Idem. ).     Finally,  inasmuch as the decree of the New York District Court which is now sought to be enforced does not specify the place where the obligation should be paid, the judgment debtor, herein  defendant, may discharge the same here in Manila which is  its  domicile. We find therefore no valid reason for upholding the claim that defendant,  should it  be ordered to pay  the award,  pay the foreign exchange tax required by law at the time the obligation fell due.     At any  rate,   this question would appear now to be moot for the reason  that said tax has already’ been abolished   (Republic Act  No,   1394).

The next issue raised by plaintiff-appellant refers to   the failure of  the lower court to award to it the fees which it agreed to pay to its  counsel in  connection with the present litigation under Article 2H08,  sub-paragraph 5,  of the new Civil Code.    The,alleged sub-paragraph allows a winning party  to recover attorneys  fees “where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid,   just and demandable claim.” From this it would appear that to entitle plaintiff  to attorneys’ fees on this ground,  it is necessary that it be proven that defendant acted  “in gross and evident bad, faith” in refusing plaintiff’s claim,    since, as we have already stated, plaintiff did not present any evidence on  this point, the lower court did not err in denying plaintiff’s  claim on this score.

Coming now to   the appeal of defendant,   we may restate the main issues raised in  its assignment of errors as fol- lows:   (a) whether or not defendant agreed to submit to compulsory arbitration its dispute with plaintiff in the charter party agreement executed between them,  and,  in the affirmative, whether such agreement is valid in this jurisdiction;   (b) whether or not  the arbitration agreement, Exhibit B,  is binding on defendant and,   in the affirmative, whether or not  the arbitration proceedings as well  as the arbitrators’  decision, are valid and binding on defendant; (c) whether or not,  on the assumption that said proceeding; and decision are valid,  the decree of  the U.S.  District Court,  Southern District of New York,  sitting as Admiralty Court,   is  valid and enforceable in this  jurisdiction; and  (d) whether  or not plaintiff,   being a  foreign  corporation without license to transact business in. the  Philippines,   has  capacity to sue in this  jurisdiction.

(a) It should be recalled that as a confirmation of the correspondence had between plaintiff’s agent  in the Philippines and. defendant, represented by its President K.  H. Hemady,  the former sent a letter advising the latter that plaintiff had accepted its offer to charter plaintiff’? vessel  “S/S Eastwater” to load a cargo of scrap iron in the Philippines for Buenos Aires under certain terms and conditions  therein enumerated  (Exhibit 1),  In this letter it is stated that the “terms and conditions for this  charter party not expressly or otherwise stated in this letter of confirmation are to te  as per general  conditions of regular charter party form”,  a formal copy of which would be forwarded to defendant.    This was done,  and the form above referred to is Exhibit A which was  duly signed by plaintiff,   through its president, and by defendant, through its president and general manager, K. H. Hemady.  This document is in printed form with the blanks properly filled out, at  the bottom of which appears a typewritten   clause which states, “Clauses Nos. 16 to 31 inclusive and U.S.A. Clause Paramount,  War Risks Clauses 1 and 2,  Now Jason Clause and Both-to-Blame Collision Clauses,  as attached, to be  considered, as fully  incorporate herein and to form part of the Charter Party.”  (Italics supplied)    Both the printed form and the typewritten sheet containing Clauses  Nos.  16  to 31 inclusive,     Were signed by the contracting parties.    Clause 39 in  the typewritten form, refers  to the arbitration agreement, and reads  as  follows:

“29.  It is mutually agreed that should any dispute arise between Owners  and the Charterers, the matter in dispute shall be referred to three persons at New York for arbitration,  one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them, shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court.  The Arbitrators shall be  commercial men.  Should the two so chosen not be able to agree who the third Arbitrator should be, then the New York Produce Exchange is to appoint such third Arbiter.    The amount in dispute shall be placed in escrow at  New York,  subject.to the decision of the arbitrators.”

It is now’ contended  that while K.H. Hemady had signed Exhibit A which contains a typewritten clause at  the end of the document,   as well as the typewritten sheets attached thereto, wherein is embodied Clause 29 which refers  to the arbitration agreement,  the fact however is that Hemady signed said papers without reading the same and solely on the assumption that they merely  formalized the terms and conditions already agreed upon in the letter of confirmation Exhibit 1.    It is emphasized that Hemady never intended to submit any  dispute  that  may  arise out of  its   charter party to  compulsory arbitration, much less  to  recognize  the findings  or award of  the arbitrators  that may be appointed by the  parties as  final and not subject  to review by our courts. It  is further contended  that Hemady signed the document Exhibit A with the understanding that   the same would merely supplement with its “general  conditions” the terms and conditions not stated  in the letter of  confirmation Exhibit  1,  and the typewritten clause attached to the document Exhibit A, specially that which provides  for foreign arbitration,  refers  to special  conditions which were not intended, by the parties nor included in the preliminary negotiations  conducted between them.    This stand  of Hemady, it is  contended,  is further corroborated by the fact  that when he received from his  lawyers  the arbitration agreement Exhibit B,  he refused to sign it because it was never his intention to submit his dispute with plaintiff to compulsory arbitration.

There are many circumstances on record which discredit this  claim of defendant-appellant. To begin with,   it appears   that the charter party agreement Exhibit A is one the original of which tabs approved by   the Documentary Council of the Baltic and “White Sea Conference in 1922 and one of its standard clauses  is  the arbitration clause and as  such the latter, though in typewritten form,  is  considered as integral part of   the agreement.  This fact was admitted by defendant’s counsel.    In the second place,  Hemady, as it would appear, signed not only the printed portion of the charter party agreement,  but  the typewritten portion as well,  which contains  the arbitration clause,   and it  cannot be believed that a businessman of long experience as  he was,  would affix his signature to a document involving a very important transaction without  knowing its contents and would do  so  only on the assumption that  it  contained mere formalized statements   of the terms and conditions  of  the latter of  confirmation Exhibit  1. Moreover, if Hemady did not intend to submit his dispute with plaintiff  to arbitration  as defendant now contends, why did he appoint Messrs. Manning,  Harnisch and Hollinger as lawyers to represent defendant corporation in the arbitration proceedings  to be held in New York?   (Exhibits   2 and 2-B) why did he instruct  the Bank of America on  two different occasions to transmit to the Irving Trust  Company of New York the total sum of $25,000 to be  “held pending result of the arbitration of   the dispute between this  company (Ysmael) and East board Navigation,  Ltd.?”  (Exhibit  3-B)    If defendant corporation did not really intend to submit its dispute with  the plaintiff  to arbitration, the logical step it should have taken would be to repudiate the act of its President Hemady, but far from doing so, it approved and ratified it by subsequent acts which clearly indicate that it was agreeable to said arbitration.

(b)  The claim that the arbitration proceedings  conducted in New York as well as  the award of  the arbitrators cannot bind defendant  corporation for the reason that the same were conducted without  its authority or contrary  to its instructions,  is  also untenable.    It is  true that when defendant’s counsel sent the document Exhibit B to its President K.H. Hemady for his  signature, the latter returned it without his  signature but that defendant’s counsel nevertheless signed the document in behalf  of  defendant and submitted  it  to the Board of Arbitrators,   and this  act  is  now alleged as  one undertaken without defendant’s authority or one that would indicate that defendant did not agree to submit   the dispute to arbitration.    But  there is  one  circumstance which  justifies the action taken by defendant’s counsel in New York.  Note that said document Exhibit B is mistakenly  termed “arbitration agreement”,  for it  is not so. A perusal thereof would show that  it   is a mere agreement to submit  the  dispute to the arbitrators for arbitration and arbitrators would not know what to arbitrate and decide.    The arbitration agreement is Clause 29 of the charter party Exhibit A.  The fact that Hemady returned said document’ Exhibit B unsigned is of no significance for such is a mere implementation of the authority already previously given by defendant to its  counsel Messrs. Mannings Harniseh and Hollinger “to present our case to the arbitra- tors in a case we have with the Bastboard Navigation Co,, Ltd., in connection with our charter of  their vessel the S/S “Eastwater”, contained in its letter dated April 5,  1950 (Exhibit 2-B).  The signing of said document Exhibit B by defendant’s counsel is therefore perfectly within the scope of  the authority given than, by defendant  corporation.

But defendant insists  that  the decision    of  the arbitrators is not binding upon it because   (1) none of  the arbitrators who acted thereon in accordance with the arbitration agreement had been appointed by defendant,  and (2) even if the appointment of Attys. Manning, Harnisch and Hollinger to represent defendant before the arbitration board would be considered as an authority to  submit their dispute to arbitration,  the decision of  the arbitration board is never  the less void  because  it was  not in  accordance with the  condition of  said submission   that  the arbitrators  consider only claims  or awards  not  in excess  of $25,000.

The claim that none of  the three arbitrators who acted on  the dispute was appointed by defendant,   or under its authority,   is untenable,   for the same is disproved by the evidence.    Thus,  during the trial of this  case the  parties agreed as  to certain facts which appear to  be not disputed among them being  that one of the arbitrators who acted in New York on the  case,  Richard Nathan,  was appointed by authority of dependant corporation,   and this appears  to be supported by   the decision of   the New York District  Court. Thus,  in said decision it appears  that when the case was  called for hearing both parties were represented by  counsel who submitted documentary evidence among which (1) copy of  the authorization signed by defendant corporation empowering one Morris E.  Lipsett to appoint a substitute arbitrator in its behalf, (2)   copy of a letter of  said Morris E. Lipsett  designating Richard Nathan as arbitrator, and  (3)  copy of the letter of Richard Nathan accepting his appointment as  arbitrator (Exhibit D).  Note  that Mr. Morris E.  Lipsett  is the same  person who, according to K.H. Hemady, recommended Messrs.  Manning Harnisch and Hollinger to be his lawyers in  the arbitration  case  in New York: and   that  because he was his  good friend Hemady accepted his  recommendation   (Exhibit 2-B).     On the strength of this evidence,  we cannot therefore take  seriously the contention that   the person,  Richard Nathan,  who acted as arbitrator in behalf of respondent,   did so without  the authority of  the latter.

Of  course,  defendant now  contends  that   the decision of  the arbitrators  can have no binding effect on it because it was  rendered without first  obtaining its written conformity or approval,   or without  its lawyer having first  submitted the matter to it for consultation,   in accordance with the instruction it has  Given, in its  letter dated April  20, 1950  (Exhibit 2- C),  but certainly,   such   instruction,   if any, is  preposterous under the  circumstances,   for to allow that to prevail would be to defeat the very purpose of the arbitration.     The proceeding would be purposeless for no award, can be obtained if  the same should be made dependent  upon the instruction or approval of any of   the parties.

The  contention that defendant  corporation has  limited its  agreement to arbitrate to an amount not exceeding $25,000 cannot also  be sustained.     Such claim is  not  borne  out by the evidence for neither the cable nor the letter which defendant sent to its lawyers in New York contains any statement limiting their authority to represent  it to disputes not exceeding $25,000.     In other words,   there  is no  evidence whatsoever in the record showing; that Mr,  Hemady understood,   or was  made  to understand,  that the arbitration proceeding “would, be conducted solely  for the purpose of friendly adjustment of disputes limited to and not exceeding the amount of  $25,000.”    Moreover,  the aforesaid deposit merely represents  an estimate of the amounts   that may accrue  to plaintiff for demurrage pursuant  to   the  charter agreement while  the vessel   was  in  transit from Manila to  Buenos Aires  and does not include any additional  demurrage   that may be incurred while the vessel is docked in Buenos Aires waiting for the unloading of the cargo.  To sustain defendant’s contention, would be to defeat the purpose of the arbitration which is to settle all disputes  that may arise  out  of   the contract  in  connection with the voyage.  It  cannot  therefore be pretended that  the arbitrators acted beyond the scope  of   their authority.

As a  corollary to the question regarding the existence of  an arbitration agreement,  defendant raises  the issue that, even if  it be granted, that it agreed to submit its  dispute with plaintiff  to arbitration,  said, agreement  is void and without effect for it amounts to removing said dispute from the jurisdiction of   the courts  in which the parties are domiciled or where the dispute occurred. It is  true that there are authorities which hold that  “a clause  in a  contract providing that all matters  in dispute  between  the parties shall be referred to arbitrators and to then, alone,  is contrary to public policy and  cannot oust   the courts of jurisdiction” (Manila Electric Co. v.  Pasay Transportation Co., 57 Phil., 600, 603), however, there are authorities which favor “the more intelligent view that arbitration, as an in- expensive, speedy and amicable method of settling disputes, and as a means of avoiding litigation, should receive every encouragement from the courts which may be  extended without const ravening’ sound public policy or settled, law”   (3 Am.  Jur., p. 835).  Congress has officially adopted this modern view when it reproduced in the new Civil Code the provisions  of the old  Code on arbitration.  And only recently it approved. Republic Act No.  876 expressly authorizing arbitration of future disputes.  Thus Section S of said Act  provides:

“SEC,  2.  Persons and matters subject to arbitration.  – Two or more “persons or  parties may submit to  the arbitration of case or more arbitrators any controversy existing between them at  the time of the submission and which may be the subject of an action,   or the parties  to any contract may in such  contract agree to settle by arbitration a controversy thereafter arising between them.    Such submission or  contract shall be valid,   enforceable and irrevocable,   save upon such grounds as  exist at  law for the revocation of any contract.”

Considering this declared policy of Congress  in  favor of arbitration of all kinds  of disputes,   and the fact  that, according to  the explanatory note of Republic Act  No.  876, “to afford the public a cheap and expeditious procedure of settling not only commercial but  other kinds  of  controversies most of  the states  of   the American Union have adopted statutes providing for arbitration, and American businessmen are reported to have enthusiastically accepted the   innovation because of its  obvious advantages  over the ordinary court procedure”, we find no plausible reason for holding that the arbitration agreement In question,  simply because it refers to a future dispute,  Is  null and void as being against public policy.   (Underlining supplied)

(c)  It is contended  that the decision rendered by the U. S. District Court of New York sitting as an Admiralty Court,  which, ratified the award made by the arbitrators,  has no binding effect  on defendant  corporation,   nor can it  be enforced in this Jurisdiction, for the reason that when said court acted on the case it  did not acquire   jurisdiction over said defendant.  And this  claim is predicated on the alleged fact  that defendant was never served with notice,  summons, or process relative to the submission of   the award of the arbitrators  to said court, invoking in support of  this contention the U.S. Arbitration Act of February 13, 1925 under which the New York District  Court  confirmed the arbitrators’ award. But we find that the law thus invoked does not sustain defendant’s pretense,  for the same,  in case of a nonresident, does not necessarily require  that service of notics of  the application for confirmation be made on the adverse party himself,  it  being sufficient that it  be made upon his attorney (July 30,  1947, c. 392, Sec. 1, 61 Stat.  669, p. 4 Exhibit E).  This  is precisely what was done in this case.  Copy of   the notice of submission of  the award to the District  Court of New York was served upon defendant’s  counsel who in due  time made of record their appearance and actually appeared when the case was heard.    This is clearly stated in the decision of said court   (Exhibit D).  It  is significant that respondent’s  counsel never impugned the jurisdiction of the court over defendant nor did they ever plead before it that they were bereft of authority to represent defendant.  Defendant cannot therefore in this instance defeat the effect  of this  decision by alleging want of   jurisdiction, or want of  notice,  as  provided for in Section 48,  Rule 39 of  our Rules of  Court.

(d)  While plaintiff   is a foreign corporation without license to transact business in  the Philippines,  it does not follow that  it has no capacity to bring the present action.  Such license is not necessary because it is not engaged in business in the Philippines.  In fact, the transaction herein involved is   the first business undertaken by plaintiff  in the Philippines, although on a previous occasion plaintiff’s, vessel was  chartered by the National Rice and corn Corporation to carry rice cargo from abroad to the Philippines. These  two isolated transactions  do not  constitute engaging in business  in the Philippines within the purview of Sections 68 and 69 of the Corporation Law so as to bar plaintiff from seeking redress in our courts.  (Marshall-Wells Co. v. Henry W. Elser & Co., 46 Phil., 70; Pacific Vegetable Oil Corporation vs.  Angel O.  Singzon,  G.R.  No. L-7917,   April 29, 1955.)

Wherefore, the decision appealed from is affirmed, without pronouncement as to costs.

Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.