Recognition and/or enforcement of foreign money judgments

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

In the case of Mijares v. Ranada, the Supreme Court of the Philippines 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.

(5) Bank of the Philippine Islands Securities Corporation v. Edgardo V. Guevara, G.R. No. 167052, March 11, 2015

In Bank of the Philippine Islands Securities Corporation v. Edgardo V. Guevara, the Supreme Court of the Philippines denied the petition assailing the Regional Trial Court’s judgment enforcing the Order dated March 13, 1990 of the U.S. District Court in Civil Action H-86-440. In that Order, Bank of the Philippine Islands (BPI) Securities Corporation was required to pay Guevara a sum of US$49,500.00 with legal interest from the filing of the case, until fully paid, a sum of PhP250,000.00 as attorney’s fees and litigation expenses, and costs of suit.

BPI Securities Corporation insisted that the foreign judgment was not enforceable because it was made upon a clear mistake of law or fact and/or was made in violation of its right to due process. It likewise argued that the said judgment was not enforceable because the defendants in the Houston case, namely: Philsec Investment Corporation (PHILSEC), Ayala International Finance Limited (AIFL), and Athona Holdings, N.V. (ATHONA) were not given a right to defend themselves against the main decision.

In rejecting the petition, the Supreme Court of the Philippines held that it is a well-established international principle to recognize and give effect to final judgments from competent foreign courts, subject to each country’s conditions. In the Philippines, however, a foreign court’s judgment or final order is not immediately enforceable by execution; it creates a cause of action, and enforcement requires filing a suit based on the judgment’s non‑satisfaction.

Referring to Mijares, the Court explained that Section 48, Rule 39 confines challenges to a foreign judgment to matters like jurisdiction, personal service, collusion, fraud, or factual/legal mistakes. This restriction aligns with the doctrine of preclusion, designed to uphold prior outcomes, shield defendants from repeated suits, conserve judicial resources, and secure the law’s objective of finality. If every foreign judgment could be retried on the merits, earlier adjudications would be rendered meaningless.

The Supreme Court held that enforcing a foreign judgment requires only proof of its existence, as such judgments are presumed valid. The burden lies on the party challenging it to prove otherwise, and it may only be questioned on limited grounds such as lack of jurisdiction, notice, fraud, or clear error. In this case, the U.S. District Court’s order imposing a monetary sanction became final and was properly established before the RTC. The petitioner failed to overcome its presumed validity and merely repeated arguments already resolved by the foreign court. Philippine courts do not review the merits or reinterpret foreign laws or evidence, as any alleged errors should have been addressed through appeal in the foreign jurisdiction. The petitioner’s additional claims, including arguments on “reasonable grounds” and public policy, were found to be without basis.

(6) 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 Supreme Court of the Philippines 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.