Recognition and enforcement of foreign judgments in Philippines

Yes. Rule 39, Section 48 of the Rules of Court governs the recognition and enforcement of foreign judgments. Pursuant to this rule, the effect of a judgment or final order of a tribunal of a foreign country having jurisdiction to render the judgment or final order is as follows:

1. In case of a judgment or final order upon a specific thing, it would be conclusive as to the title to the thing, and
2. In case of a judgment or final order against a person, it would be presumptive evidence of a right as between the parties and their successors-in-interest.

The Philippine Supreme Court has ruled in BPI Securities Corporation v. Guevara (G.R. No. 167052, March 11, 2015) that the recognition and enforcement of a foreign judgment or final order requires only proof of fact of the said judgment or final order and that, once proven, it would enjoy a disputable presumption of validity, i.e. with regard to the title of the said thing or the right as between the parties and the successors-in-interest as the case may be.

The Supreme Court explained in Mijares v. Ranada (G.R. No. 139325, April 12, 2005) that foreign judgments may be enforced in the Philippines under: (i) procedural rules; or (ii) jurisprudence. The applicable procedural rules are set out in the Rules of Court (Rule 39, Section 48). The decisions of the Supreme Court applying or interpreting the rule form part of the legal system of the Philippines pursuant to Civil Code of the Philippines, Article 8.

In Asiavest Merchant Bankers v. Court of Appeals (G.R. No. 110263, July 20, 2001) the Supreme Court ruled that a judgment of a foreign tribunal may be recognized in the Philippines provided that it can be “shown that there has been an opportunity for a full and fair hearing before a court of competent jurisdiction; that the trial upon regular proceedings has been conducted, following due citation or voluntary appearance of the defendant and under a system of jurisprudence likely to secure an impartial administration of justice; and that there is nothing to indicate either a prejudice in court and in the system of laws under which it is sitting or fraud in procuring the judgment.”

The Court has also ruled that the oppositor is entitled to defend against the enforcement of such decision since “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.” [Mijares v. Ranada (G.R. No. 139325, April 12, 2005)]

If the defendant had also been a party to and actually participated in the proceedings in the foreign court, he is bound by the judgment and the doctrine of res judicata will apply to such foreign judgment. [General Corporation of the Philippines v. Union Insurance Society of Canton, Ltd., et al. (G.R. No. 2684, September 14, 1950)]

No. Foreign judgments enjoy a presumption of validity and the party who seeks to challenge such foreign judgment has the burden of overcoming this presumptive validity [BPI Securities Corporation v. Guevara (G.R. No. 167052, March 11, 2015)]. Rule 39, Section 48 of the Rules of Court limits the grounds to question the validity of foreign judgments to the following: want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact. The ability to challenge the validity of foreign judgments is discussed further in paragraph 6 below.

In this regard, the Supreme Court recognized that “[t]he limitation on the review of a foreign judgment is in place in order to avoid repetitive litigation on claims and issues, prevent harassment of the parties and avoid undue imposition on the courts,” thus:

“The policy of preclusion rests on principles of comity, utility and convenience of nations. As a generally accepted principle of international law, it is part of the law of the Philippines by virtue of the incorporation clause of the Constitution (Sec. 2, Art. II).” [Raytheon International, Inc. v. Rouzie, Jr. (G.R. No. 162894, Feb. 26, 2008)].

Further, the Supreme Court explained that “[t]he rule on limited review embodies the policy of efficiency and the protection of party expectations, as well as respecting the jurisdiction of other states.” [Fujiki v. Marinay (G.R. No. 196049, June 26, 2013)].  

Notably, raising the ground of “clear mistake of law or fact” can be considered as a merit-based defence, and the Supreme Court had ruled in BPI Securities Corporation v. Guevara (G.R. No. 167052, March 11, 2015) that it is not necessary to look into the merits of the foreign judgment because “a Philippine court will not substitute its own interpretation of any provision of the law or rules of procedure of another country, nor review and pronounce its own judgment on the sufficiency of evidence presented before a competent court of another jurisdiction.” The Supreme Court further clarified that “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.”

The proceeding may take at least 12 to 18 months, subject to the extent and nature of the challenge lodged by the adverse party and the congestion of the court’s docket.

Yes. Rule 39, Section 48 of the Rules of Court provides that the recognition and enforcement of the judgment or final order 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.

An oppositor or the defendant may also raise the defence that the foreign judgment is contrary to public policy. [Bayot v. Court of Appeals (G.R. No. 155635 and G.R. No. 163979, November 7, 2008) citing Llorente v. Court of Appeals (G.R. No. 124371, November 23, 2000) and Mijares v. Ranada (G.R. No. 139325, April 12, 2005)].

Yes. Under the Special Rules of Court on Alternative Dispute Resolution (or the Special ADR Rules, A.M. No. 07-11-08-SC), the Alternative Dispute Resolution Act of 2004 (Republic Act No. 9285), the Implementing Rules and Regulation of the Alternative Dispute Resolution Act of 2004, UNCITRAL Model Law and the New York Convention, any party to a foreign arbitration and at any time after receipt of a foreign arbitral award can file a petition to the local courts to recognize and enforce the arbitral award. 

The petition can be filed in the Regional Trial Court of the place in the Philippines: (a) where the assets to be attached or levied upon are located, (b) where the act to be enjoined is being performed, (c) in the principal place of business in the Philippines of any of the parties, (d) if any of the parties is an individual, where any of those individuals resides, or (e) in the National Capital Judicial Region. (Rule 13.3 of the Special ADR Rules and Section 47 of the Alternative Dispute Resolution Act of 2004).

It is presumed that a foreign arbitral award was made and released in due course of arbitration and is subject to enforcement by the court. The decision of the court recognizing and enforcing a foreign arbitral award is immediately executory. (Rule 13.11 of the Special ADR Rules).

The Supreme Court has ruled that “[f]oreign arbitral awards while mutually stipulated by the parties in the arbitration clause to be final and binding are not immediately enforceable or cannot be implemented immediately.” The award must be confirmed and will be subject to judicial review by a Philippine court under limited circumstances, and the court also has jurisdiction to issue interim measures of protection. [Korea Technologies Co., Ltd. v. Lerma (G.R. No. 143581, January 7, 2008)]

In Tuna Processing, Inc. v. Philippine Kingford, Inc. (G.R. No. 185582, February 29, 2012), the Supreme Court ruled that even if the petitioner is not licensed to do business in the Philippines, it may seek the enforcement and recognition of a foreign arbitral award under the Alternative Dispute Resolution Act of 2004. This is because the grounds to deny the enforcement of a foreign judgment or arbitral award are specific and limited, and do not require the capacity to sue of the party.

In Mabuhay Holdings Corp. v. Sembcorp Logistics Limited (G.R. No. 212734, December 5, 2018), the Supreme Court ruled that the Philippines adopts a policy in favor of arbitration. This is shown by the Alternative Dispute Resolution Act of 2004 and the Special ADR Rules, which “[b]oth declare as a policy that the State shall encourage and actively promote the use of alternative dispute resolution, such as arbitration, as an important means to achieve speedy and impartial justice and declog court dockets.”  This pro-arbitration policy is further bolstered by the Special ADR Rules on the presumption in favour of enforcement of a foreign arbitral award. Thus, “it is the party attacking a foreign judgment that had the burden of overcoming the presumption of its validity.” [Philippine National Bank v. D.B. Teodoro Development Corp. (G.R. Nos. 167925 & 169362, July 29, 2015)]

As with recognition and enforcement of foreign judgments, a proceeding to confirm and enforce a foreign arbitral award may take at least 12 to 18 months, subject to the extent and nature of the challenge lodged by the adverse party.

Rule 13 of the Special ADR Rules allows the adverse party to oppose the recognition and enforcement of a foreign arbitral award under limited grounds set out in rule 13.4:

1. A party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereof, under the law of the country where the award was made; or
2. The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
3. The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or 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, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
4. The composition of the arbitral tribunal 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 arbitration took place; or
5. The award has not yet become binding on the parties or has been set aside or suspended by a court of the country in which that award was made.

The oppositor may also raise the defence that the foreign judgment is contrary to public policy. [Bayot v. Court of Appeals, (G.R. No. 155635 and G.R. No. 163979, November 7, 2008)]