Philippines – CACJ

RECOGNITION & ENFORCEMENT OF FOREIGN MONEY JUDGMENTS (Philippines)

Teo Jing Lu — Sat, 16 Nov 2024 16:44:39 +0000

RULES

(1) Rule 39, Section 48 of the 2019 Amendments to the 1997 Rules of Civil Procedure (A.M. No. 09-10-20-SC)

(2) Sections 42 to 45 of Republic Act No. 9285, Alternative Dispute Resolution Act

(3) Rules 12 and 13, Special Rules of Court on Alternative Dispute Resolution (A.M. No. 07-11-08-SC)

CASE LAW

(1) Mijares v. Ranada, G.R. No. 139325, April 12, 2005

(2) Pioneer Insurance & Surety Corporation v. The Insurance Company, G.R. No. 256177, June 27, 2022

(1) Rules of Civil Procedure

The Rules of Civil Procedure being enforced in the Philippines is part of remedial law that has been promulgated by the Supreme Court of the Philippines to prescribe rules and procedures involving civil lawsuits. Under its Rule 39, Section 48, the effect of a foreign judgment depends upon the subject of litigation. When the foreign judgment is upon a specific thing, the judgment is conclusive upon the title to the thing. On the other hand, when the foreign judgment is against a person, the judgment is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title.

(2) Republic Act No. 9285

Under Philippine jurisdiction, a foreign judgment may also come in the form of a foreign arbitral award. This presupposes that the parties had a prior written agreement to refer a dispute to arbitration to be conducted outside the Philippines. As a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), the Philippines follows the principles for the recognition and enforcement of arbitral awards covered by the New York Convention, where the award is rendered by a court of a foreign country who is a party to the said Convention. Nonetheless, where an award is rendered by a court of a foreign country that is not a party to the Convention, the pertinent provisions of the Rules of Court shall apply. In enforcing a foreign arbitral award, it must first be confirmed by the appropriate Regional Trial Court.

When confirmed by the Regional Trial Court, the award shall be recognized and enforced as a foreign arbitral award and not as a judgment of a foreign court. In this regard, the recognition and enforcement of the arbitral award may still be questioned on grounds enumerated under the New York Convention, which are:

(a) Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

(i) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(ii) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

(iii) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(iv) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

(v) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

(b) Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

(i) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or

(ii) The recognition or enforcement of the award would be contrary to the public policy of that country.

(3) Mijares v. Ranada, G.R. No. 139325, April 12, 2005

In the case of Mijares v. Ranada, the Supreme Court explained the rules on recognition and enforcement of foreign judgment as follows:

There is an evident distinction between a foreign judgment in an action in rem and one in personam. For an action in rem, the foreign judgment is deemed conclusive upon the title to the thing, while in an action in personam, the foreign judgment is presumptive, and not conclusive, of a right as between the parties and their successors in interest by a subsequent title. However, in both cases, the foreign judgment is susceptible to impeachment in our local courts on the grounds of want of jurisdiction or notice to the party, collusion, fraud, or clear mistake of law or fact. Thus, the party aggrieved by the foreign judgment is entitled to defend against the enforcement of such decision in the local forum. It is essential that there should be an opportunity to challenge the foreign judgment, in order for the court in this jurisdiction to properly determine its efficacy.

It is clear then that it is usually necessary for an action to be filed in order to enforce a foreign judgment, even if such judgment has conclusive effect as in the case of in rem actions, if only for the purpose of allowing the losing party an opportunity to challenge the foreign judgment, and in order for the court to properly determine its efficacy. Consequently, the party attacking a foreign judgment has the burden of overcoming the presumption of its validity.

The rules are silent as to what initiatory procedure must be undertaken in order to enforce a foreign judgment in the Philippines. But there is no question that the filing of a civil complaint is an appropriate measure for such purpose. A civil action is one by which a party sues another for the enforcement or protection of a right, and clearly an action to enforce a foreign judgment is in essence a vindication of a right prescinding either from a “conclusive judgment upon title” or the “presumptive evidence of a right.” Absent perhaps a statutory grant of jurisdiction to a quasi-judicial body, the claim for enforcement of judgment must be brought before the regular courts.

There are distinctions, nuanced but discernible, between the cause of action arising from the enforcement of a foreign judgment, and that arising from the facts or allegations that occasioned the foreign judgment. They may pertain to the same set of facts, but there is an essential difference in the right-duty correlatives that are sought to be vindicated. For example, in a complaint for damages against a tortfeasor, the cause of action emanates from the violation of the right of the complainant through the act or omission of the respondent. On the other hand, in a complaint for the enforcement of a foreign judgment awarding damages from the same tortfeasor, for the violation of the same right through the same manner of action, the cause of action derives not from the tortious act but from the foreign judgment itself.

More importantly, the matters for proof are different. Using the above example, the complainant will have to establish before the court the tortious act or omission committed by the tortfeasor, who in turn is allowed to rebut these factual allegations or prove extenuating circumstances. Extensive litigation is thus conducted on the facts, and from there the right to and amount of damages are assessed. On the other hand, in an action to enforce a foreign judgment, the matter left for proof is the foreign judgment itself, and not the facts from which it prescinds.

As stated in Section 48, Rule 39, the actionable issues are generally restricted to a review of jurisdiction of the foreign court, the service of personal notice, collusion, fraud, or mistake of fact or law. The limitations on review is in consonance with a strong and pervasive policy in all legal systems to limit repetitive litigation on claims and issues. Otherwise known as the policy of preclusion, it seeks to protect party expectations resulting from previous litigation, to safeguard against the harassment of defendants, to insure that the task of courts not be increased by never- ending litigation of the same disputes, and – in a larger sense – to promote what Lord Coke in the Ferrer’s Case of 1599 stated to be the goal of all law: “rest and quietness.” If every judgment of a foreign court were reviewable on the merits, the plaintiff would be forced back on his/her original cause of action, rendering immaterial the previously concluded litigation.

(4) Pioneer Insurance & Surety Corporation v. The Insurance Company, G.R. No. 256177, June 27, 2022

In Pioneer Insurance & Surety Corporation v. The Insurance Company, the Court upheld the RTC’s Decision confirming, recognizing, and enforcing a Final Award of the United States Board of Arbitrators which ordered Pioneer Insurance & Surety Corporation (Pioneer Insurance) to pay The Insurance Company USD 344,991.68.

The Court explained that Philippine courts may refuse recognition and enforcement of a foreign arbitral award if recognition and enforcement would be contrary to public policy, but rejected Pioneer Insurance’s contention that the assailed Final Award was contrary to public policy:

Rule 13.4(b)(ii) of the Special ADR Rules provides that the Philippine court may refuse the recognition and enforcement of a foreign arbitral award when it finds that its recognition and enforcement would be contrary to public policy. In Mabuhay Holdings Corporation v. Sembcorp Logistics Limited, the Court adopted the narrow approach in determining whether the enforcement of an arbitral award is contrary to public policy. The Court emphasized that not all violations of law may be deemed contrary to public policy. The Philippine court may only refuse to recognize or enforce a foreign arbitral award when its enforcement would be against the fundamental tenets of justice and morality, or would blatantly be injurious to the public, or the interests of the society, thus:

In light of the foregoing and pursuant to the State’s policy in favor of arbitration and enforcement of arbitral awards, the Court adopts the majority and narrow approach in determining whether enforcement of an award is contrary to Our public policy. Mere errors in the interpretation of the law or factual findings would not suffice to warrant refusal of enforcement under the public policy ground. The illegality or immorality of the award must reach a certain threshold such that, enforcement of the same would be against Our State’s fundamental tenets of justice and morality, or would blatantly be injurious to the public, or the interests of the society. (Emphasis supplied)

In the same case, the Court cited an example in another jurisdiction when the arbitral award would violate public policy:

Most arbitral jurisdictions adopt a narrow and restrictive approach in defining public policy pursuant to the pro- enforcement policy of the New York Convention. The public policy exception, thus, is “a safety valve to be used in those exceptional circumstances when it would be impossible for a legal system to recognize an award and enforce it without abandoning the very fundaments on which it is based.”

An example of a narrow approach adopted by several jurisdictions is that the public policy defense may only be invoked “where enforcement [of the award] would violate the forum state’s most basic notions of morality and justice.” Thus, in Hong Kong, an award obtained by fraud was denied enforcement by the court on the ground that fraud is contrary to Hong Kong’s “fundamental notions of morality and justice.” In Singapore, also a Model Law country, the public policy ground is entertained by courts only in instances where upholding the award is “clearly injurious to the public good or … wholly offensive to the ordinary reasonable and fully informed member of the public.” (Emphases supplied and citations omitted)

Based on the foregoing, the party raising the ground of violation of public policy in opposing the recognition and enforcement of a foreign arbitral award must: (a) identify the State’s fundamental tenets of justice and morality; (b) prove the illegality or immorality of the award; and (c) show the possible injury to the public or the interests of the society.

Pioneer’s prescription and violation of public policy arguments rest on shaky ground. Pioneer identifies the State’s policy against stale claims, but its evidence falls short in proving the illegality or immorality of the award. It fails to establish that Clearwater’s claims have already prescribed.

… .

All told, the final award will significantly affect Pioneer, but it will not injure the public or compromise the society’s interest. The final award’s alleged violation of our policy against stale claims was not established with certainty. Thus, confirming and enforcing the final award is not contrary to public policy.

The information in the above write-up is provided only for general guidance and is not intended to be taken as legal advice. Readers and/or users should refrain from acting on the above information without first seeking independent legal advice.

Key Court Issuances

Teo Jing Lu — Thu, 03 Nov 2022 15:32:15 +0000

Pursuant to the power of the Supreme Court of the Philippines to promulgate rules concerning practice and procedure in all courts, the Supreme Court has made the following issuances, among others:

1. The Amendments to Rule 140 of the Rules of Court, which expanded the coverage of the Rule governing administrative disciplinary cases against members, officials, and employees of the Judiciary;

Link: https://sc.judiciary.gov.ph/25939/

2. The Rule on Facilitated Naturalization of Refugees and Stateless Persons, the first of its kind globally, which aims to simplify and reduce legal hurdles in obtaining Philippine citizenship, to facilitate the assimilation and naturalization of refugees and stateless persons into Philippine society;

Link: https://sc.judiciary.gov.ph/25634/

3. The Rules on Expedited Procedures in the First Level Courts, which were promulgated to simplify and expedite proceedings in the First Level Courts, the first tier in the Philippine hierarchy of courts, expanding its coverage and institutionalizing the one-step appeal system;

Link: https://sc.judiciary.gov.ph/25687/

4. The Benchbook for Family Courts, which provides all trial courts specialising in Family Cases targeted guidance in handling matters affecting women and children, protecting them from all forms of abuse and exploitation;

5. The Benchbook for Commercial Courts, which responds to the needs of litigants with specific issues related to financial and commercial concerns falling within the cognizance of Special Commercial Courts; and finally,

6. The Rule on International Child Abduction Cases, which provides an expeditious procedure to facilitate the prompt return of children, who have been wrongfully removed or retained across international boundaries.

Copies of the Amendments to Rule 140 of the Rules of Court, Rule on Facilitated Naturalization of Refugees and Stateless Persons, and Rules on Expedited Procedures in the First Level Courts are also attached for reference.

Philippines Site Map

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Philippines

Resources

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Strategic Plan for Judicial Innovations 2022-2027

2021 Judiciary Annual Report

Supreme Court of the Philippines Official Website

Court of Appeals Official Website

Sandiganbayan Official Website

Court of Tax Appeals Official Website

Senate of the Philippines Official Website

House of Representatives of the Philippines Official Website

Official Gazette of the Philippines

ASEAN Law Association

COVID-19 MEASURES

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The Philippine Judiciary Amidst the COVID-19 Pandemic: Link here

The COVID-19 Speech by the Chief Justice of the Supreme Court of the Philippines at the 9th CACJ Meeting, delivered on 7 October 2021, may be accessed here: Link here

Key Legislation

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The statutes of the Philippines are found in the various enactments of the Philippine legislature since its creation in 1900. From the establishment of the American civil government in 1900 to 1935, there were 4,275 laws passed by the Philippine Commission and its bicameral successor, the Philippine Legislature. The Commonwealth period witnessed the enactment of 733 statutes while 6,635 Republic Acts were legislated from 04 July 1946 to 21 September 1972. During the martial law period, a total of 2,035 Presidential Decrees were promulgated as of 20 February 1986. A total of 302 Executive Orders have been issued by President Corazon C Aquino. The Philippine Congress convened on 27 July 1987 and has enacted considerable Republic Acts to date. (http://www.aseanlawassociation.org/papers/phil_chp2.pdf)

Among the more notable laws in force today are the Civil Code (R.A. No. 386, as amended), the Revised Penal Code (Act No. 3815), Election Code (Batas Pambansa Bilang 88), The Family Code of the Philippines (Executive Order No. 209), Code of Muslim Personal Laws of the Philippines (Presidential Decree No. 1083), the Labor Code of the Philippines (Presidential Decree No. 442), The Local Government Code (Republic Act No. 7160), The General Banking Law (Republic Act No. 337), and others.

Overview

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The main sources of Philippine law are:

the Constitution – the fundamental and supreme law of the land
Statutes – including Acts of Congress, municipal charters, municipal legislation, court rules, administrative rules and orders, legislative rules and presidential issuances.
Treaties and conventions – these have the same force of authority as statutes.
Judicial decisions – Article 8 of the Civil Code of the Philippines provides that ‘judicial decisions applying to or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines’. Only decisions of its Supreme Court establish jurisprudence and are binding on all other courts.

To some extent, customary law also forms part of the Filipino legal system. Art XIV, Section 17 of the 1987 Constitution provides that ‘the State shall recognise, respect, and protect the rights of indigenous cultural communities to preserve and develop their cultures, traditions and institutions’.

Introduction to the Legal System

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The legal system of the Philippine is a mixture of Roman (civil law) and Anglo-American (common law) systems, customary usage, and Islamic law. The civil law operates in areas such as family relations, property, succession, contract and criminal law while statutes and principles of common law origin are evident in such areas as constitutional law, procedure, corporations law, taxation, insurance, labour relations, banking and currency.

Philippine Court System

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The Supreme Court has both original and appellate jurisdiction. It exercises original jurisdiction (cases are directly filed with the SC in the first instance without passing through any of the lower courts) over cases affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus. (Art. VIII, §5(1)). It also has original jurisdiction over writs of amparo, habeas data and the environmental writ of kalikasan. It exercises appellate jurisdiction to review, revise, reverse, modify, or affirm final judgments, and orders of the lower courts in:

All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question.
All cases involving the legality of any tax, impost, assessment, or toll, or any penalty imposed in relation thereto.
All cases in which the jurisdiction of any lower court is in issue.
All criminal cases in which the penalty imposed is reclusion perpetua or higher.
All cases in which only an error or question of law is involved.

The Supreme Court has administrative supervision over all courts and court personnel. (Article VIII, §6) It exercises this power through the Office of the Court Administrator.

The Supreme Court shall be composed of a Chief Justice and fourteen Associate Justices. It may sit en banc or, in its discretion, in divisions of three, five, or seven members. (Art. VIII, §4) Its members shall be appointed by the President from a list of at least three nominees prepared by the Judicial and Bar Council for every vacancy, without need of confirmation by the Commission on Appointments. (Art. VIII, §9) Members of the Supreme Court are required to have proven competence, integrity, probity and independence; they must be natural-born citizens of the Philippines, at least forty years old, with at least fifteen years of experience as a judge of a lower court or law practice in the country. (Art. VIII, §7) Justices shall hold office during good behavior until they reach the age of seventy years, or become incapacitated to discharge the duties of office. (Art. VIII, §11)

The Supreme Court has the exclusive power to promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice, and procedure in all courts, the admission to the practice of law, the integrated bar, and legal assistance to the underprivileged. Any such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court. (Art. VIII, §54(5))

The Court of Appeals was established on February 1, 1936 by virtue of Commonwealth Act No. 3 and is considered as the second highest tribunal in the country. It is composed of one presiding justice and 68 associate justices, all of which are appointed by the President from a shortlist submitted by the Judicial and Bar Council. The associate justices shall have precedence according to the dates (or order, in case of similar appointment dates) of their respective appointments. The qualifications for the justices of the Supreme Court also apply to members of the Court of Appeals.

The Court of Appeals’ principal mandate is to exercise appellate jurisdiction on all cases not falling within the original and exclusive jurisdiction of the Supreme Court. Its decisions are final except when appealed to the Supreme Court on questions of law. The jurisdiction of the Court of Appeals are as follows:

Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of its appellate jurisdiction;
Exclusive original jurisdiction over actions for annulment of judgements of Regional Trial Courts; and
Exclusive appellate jurisdiction over all final judgements, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commission.

The Court of Appeals shall also have the power to try cases and conduct hearings, receive evidence and perform acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or proceedings.

https://ca2.judiciary.gov.ph/

Both the 1973 and 1987 Constitution contain provisions on the present anti-graft court known as the Sandiganbayan. It has jurisdiction over criminal and civil cases involving graft and corrupt practices and such other offenses committed by public officers and employees, including those in government-owned or controlled corporations, in relation to their office as may be determined by law. The jurisdiction of the Sandiganbayan is perhaps one of the most often amended provision from the 1973 Constitution to Republic Act (R.A.) No. 8249. Before R.A. No. 8249, jurisdiction of the Sandiganbayan was determined on the basis of the penalty imposable on the offense charged. Thereafter, it was amended such that regardless of the penalty, so long as the offense charged was committed by a public officer, the Sandiganbayan was vested with jurisdiction. Under R.A. No. 8249, to determine whether the Sandiganbayan has jurisdiction, a person must look into two (2) criteria, namely, the nature of the offense and the salary grade of the public official.

http://sb.judiciary.gov.ph/

The Court of Tax Appeals (CTA) was created on June 16, 1954, through the enactment of Republic Act No. 1125 (R.A. 1125). Its jurisdiction and composition have been increased with passage of several legislations. With the enactment of Republic Act (R.A.) No. 9282 on April 23, 2004, the CTA became an appellate Court, equal in rank to the Court of Appeals. The composition of the Court increased to six (6) Justices with one (1) Presiding Justice and five (5) Associate Justices.

R.A. No. 9503 took effect on July 5, 2008, which further enlarged the organizational structure of the CTA. The CTA is now composed of one (1) Presiding Justice and eight (8) Associate Justices. The CTA may sit en banc or in three (3) divisions with each division consisting of three (3) Justices. A decision of a division of the CTA may be appealed to the CTA En Banc, and the latter’s decision may further be appealed by verified petition for certiorari to the Supreme Court.

http://cta.judiciary.gov.ph/

Regional Trial Courts are also known as Second Level Courts, which were established among the thirteen Judicial regions in the Philippines consisting of Regions I to XII and the National Capital Region (NCR). There are as many Regional Trial Courts in each region as the law mandates. RTCs were formerly called as the Court of First Instance since the Spanish era. It was only in the Judiciary Reorganization Act of 1980 that its name was changed from being called the Court of First Instance to Regional Trial Court.

Each city and municipality in the Philippines has its own trial court. These First Level Courts are more commonly referred to as Metropolitan Trial Courts (MeTC), Municipal Trial Courts in Cities (MTCC), Municipal Trial Court (MTC), and Municipal Circuit Trial Courts (MCTC). The MeTCs are the first level courts in the Metropolitan Manila area. First level courts in cities outside Metropolitan Manila are referred to as the MTCCs. The MTCs are first level courts that cover only one municipality, whereas MCTCs cover multiple municipalities.

The Shari’a District Courts are equivalent to the Regional Trial Courts in rank, which were established in certain provinces in Mindanao where the Muslim Code on Personal Laws is being enforced. On the other hand, the Shari’a Circuit Courts are the counterpart of the Municipal Circuit Trial Courts established in certain municipalities in Mindanao.

Flowchart

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Philippines – CACJ

RECOGNITION & ENFORCEMENT OF FOREIGN MONEY JUDGMENTS (Philippines)

Recognition and/or enforcement of foreign money judgments

Key Court Issuances

Key Court Issuances

Philippines Site Map

Philippines Site Map

Resources

Resources

COVID-19 MEASURES

COVID-19 MEASURES

Key Legislation

Key Legislation

Overview

Overview

Introduction to the Legal System

Introduction to the Legal System

Philippine Court System

Philippine Court System

The Supreme Court

Composition of the Supreme Court

Rule-Making Powers

The Court of Appeals

The Sandiganbayan

The Court of Tax Appeals

The Second Level Courts

The First Level Courts

The Shari'a District & Circuit Courts

Flowchart

Flowchart