Posted on

HOW TO ENFORCE FOREIGN JUDGMENTS IN THE PHILIPPINES

Preliminary Statement

I am writing a treatise about a seemingly simple topic but is actually a complicated and highly technical legal subject which is useful for Filipino spouses whose respective foreign spouses obtained a decree of divorce abroad which is valid in the country where the case for divorce was filed in order for the Filipino spouse concerned to remarry under Philippine law. Moreover, money judgments and court decisions on commercial matters obtained abroad may be enforced in the Philippines under certain conditions. Hereunder are the things you must know about the topic. Pardon my legalese since I cannot avoid using legal and technical terms and quoting authorities on the subject.

Requisites for Enforcement

For the foreign judgment to be recognized or enforced in the Philippines, the following requisites must be satisfied:

1. The foreign judgment was rendered by a judicial or quasi-judicial tribunal which had jurisdiction over the person and the case in the proper proceedings. An arbitration body whose procedure is fair and reasonable will qualify.

2. It must be a judgment on civil or commercial matters, including questions of status.  As a general rule, foreign judgments in criminal cases, tax cases, or strictly administrative proceedings may not be enforced in the Philippines.

3. The court issuing the judgment must be a court of competent jurisdiction.  Some authorities maintain that the foreign court issuing the judgment must be a court of competent jurisdiction in the “international” sense, and this is usually taken to mean that the court should be competent not according to its own law, but also according to the law of the second State where the judgment is sought to be enforced or recognized.

4. The judgment must emanate from an impartial court.

5. The judgment must be valid under the laws of the court that rendered it.

6. The judgment must be final and executory and must amount to res judicata in the country where it was delivered.  The test is whether the judgment conclusively establishes the fact upon which the plaintiff rests his claim and sets the issue between the parties at rest forever.

7. A judgment for the payment of money must be for a fixed sum.  It is at least necessary that the court should be able to find an absolute minimum which the defendant undoubtedly owes before it can order the defendant to pay it.

8. Corollary to the preceding requirements, the foreign judgment must have disposed of the controversy on its merits.  As to whether a judgment disposes of the case on the merits is determined by the law of the forum in which the judgment was rendered.

9. The foreign judgment must not be barred by prescription under the law of the State in which it was promulgated or under the law of the State in which its recognition or enforcement is being sought.  Where the statute of limitations of the forum is shorter than that of the state of rendition, the foreign judgment may be denied enforcement in the forum provided the law of the forum applies equally to domestic and foreign judgments.  Under Article 1144 of the Civil Code, an action upon a judgment must be brought within ten years from the time the right of action accrues.

10. The judgment must not be contrary to the public policy or good morals of the country where it is to be enforced.

11.  In a number of English cases, it is required that the foreign judgment must not be contrary to natural or substantial justice.  The obvious meaning seems to be that natural and substantial justice is violated if (a) the defendant is not afforded a reasonable opportunity of presenting his case, or was entirely ignorant of the proceedings; and (b) the litigant, though present at the proceedings, was unfairly prejudiced in the presentation of his case to the court.  But the defense will not succeed if the alleged unfairness consisted of something that might have been attacked and removed in the foreign action.

12. The foreign judgment should not have been obtained by fraud.  The fraud available against a foreign judgment is generally fraud that has deprived the party of the opportunity to make a full and complete defense, or fraud in obtaining jurisdiction over the defendant.

13.  The foreign judgment must not constitute a clear mistake of fact or law.

Reference: Private International Law, Jovito Salonga, 1995 Edition, pp. 544-560.

Presumption of Validity

Under Section 3 of Rule 131 of the Rules of Court, a court, whether of the Philippines or elsewhere, enjoys the presumption that it was acting in the lawful exercise of jurisdiction and has regularly performed its official duty.  Consequently, the party attacking the foreign judgment has the burden of overcoming the presumption of its validity (Asiavest Merchant Bankers (M) Berhad v. Court of Appeals, G.R. No. 110263, July 20, 2001, 361 SCRA 489).

Defenses Against a Foreign Judgment

The judgment may be assailed by want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact (last sentence of Section 48, Rule 39 of the Rules of Court).  This enumeration is restrictive, which limitation is in consonance with a strong and pervasive policy in all legal systems to limit repetitive litigation on claims and issues (Mijares v. Ranada, G.R. No. 139325, April 12, 2005 455 SCRA 397).

In this connection, matters of remedy and procedure such as those relating to the service of process upon a defendant are governed by lex fori or the internal law of the forum.  As to what that foreign law is a question of fact not of law.  It cannot be taken judicial notice of and must be pleaded and proved like any other fact.  It is incumbent upon the party attacking the foreign judgment to present evidence as to what that foreign law is.  In the absence of evidence, the presumption of validity and regularity of the decision must stand.  Alternatively, the presumption of identity or the so-called processual presumption may be invoked (Northwest Orient Airlines, Inc. v. Court of Appeals, G.R. No. 112573, February 9, 1995, 241 SCRA 192).

There is no merit to the argument that the foreign judgment is not enforceable in view of the absence of any statement of facts and law upon which the award in favor of the petitioner was based.  The lex fori or the internal law of the forum governs matters of remedy and procedure (Asiavest Merchant Bankers vs. Court of Appeals, supra).

Next, fraud must be extrinsic, i.e., fraud based on facts not controverted or resolved in the case where the judgment is rendered, or that which would go to the jurisdiction of the court or would deprive the party against whom judgment is rendered a chance to defend the action to which he has a meritorious defense (ibid.).

Procedure For Enforcement

The Rules of Court 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 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.”  (Mijares v. Ranada, supra).

An authenticated copy of the foreign judgment to be enforced must be attached (Conflict of Laws, Jorge R. Coquia and Elizabeth Pangalangan, 2000 Edition, p. 561).

In correlation, under Sections 24 and 25, Rule 132 of the Rules of Evidence, the record of public documents of a sovereign authority, tribunal, official body, or public officer may be proved by (1) an official publication thereof or (2) a copy attested by the officer having the legal custody thereof, which must be accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody.  The certificate may be issued by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent, or any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.  The attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be, and must be under the official seal of the attesting officer.  (Asiavest Limited v. Court of Appeals, G.R. No. 128803, September 25, 1998, 296 SCRA 489).

Which Court has jurisdiction?

A foreign judgment case is cognizable by the Regional Trial Court.  The basis is Section 19(6) of B.P. 129: “in all cases not within the exclusive jurisdiction of any court, xxx” (Mijares v. Ranada, supra).

Filing Fees

The subject matter of an action for the enforcement of a foreign judgment is the foreign judgment itself and not the right-duty correlatives that resulted in the foreign judgment.  Accordingly, the High Tribunal held: “In this case, given that the complaint is lodged against an estate and is based on the US District Court’s Final Judgment, this foreign judgment may, for purposes of classification under the governing procedural rule, be deemed as subsumed under Section 7(b)(3) of Rule 141, within the class of “all other actions not involving property.  Thus, only the blanket filing fee of minimal amount is required” (ibid.).

Effect of a Foreign Judgment

The effect of a foreign judgment is as follows:

1. In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing.

2. 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.

In either case, the foreign judgment may be repelled by evidence of want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact (Section 48, Rule 39 of the Rules of Civil Procedure.)

Under the above rule, 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, not conclusive, of a right as between the parties and their successors in interest by a subsequent title (Mijares v. Ranada, supra).

However, in both cases, the foreign judgment is susceptible to impeachment in Philippine courts upon the grounds mentioned in the rule (ibid.).

Closing Statement

By this time, I am sure that you will be interested in knowing more about the law especially Philippine law and your rights under the law.

Posted on

Data Privacy

Backgrounder

Since time immemorial, the right to privacy has been recognized in civilized societies. Take for instance the Anglo-Saxons in England made the edict that not even the King can enter into one’s humble home. Hundreds of years later, in 1928, Justice Louis Brandeis of the United States Federal Supreme Court termed the right to privacy as the “the right to be left alone” in his dissenting opinion in Olmstead vs. United States.

In our own jurisdiction, in 1968, the Philippine Supreme Court acknowledged the right to privacy as deserving of constitutional guarantee in Morfe vs. Mutuc. Then too, decades later or in 2008, it came up with the “writ of habeas data” which safeguards a person’s right to privacy and allows the individual to control any information concerning him/her.

Note that I am speaking of privacy in general owing to the fact that the right to privacy takes several forms like the privacy of communication/correspondence, the integrity of one’s person/body, one’s home, and, most especially, personal data/information which is the subject matter of this discussion.

In this light, sometime in 2014, the Court of Justice of the European Union in the Google Spain SL case broadened the right to privacy by recognizing the “right to be forgotten” having its leanings on the 1995 Directive for Data Protection.

Indeed, data privacy laws have been in place in the West since the 1970s. But with the rapid advancement in technology and the digitization of information, personal data today has become a highly monetized product. This must be secured and protected in the face of increasing incidents of hacking and data breaches, thereby necessitating an updating of existing laws. Hence, data protection laws were enacted in the 1990s and again further updated up until recent years.

In our own country, the law has caught up with data privacy brought about by the pressure and dictates of the modern world. Our leaders thus came up with the Data Privacy Act of 2012. However, it was not until March 2016 that the National Privacy Commission (NPC, for brevity) was appointed. The said Commission came up with the Implementing Rules and Regulations only in September 2016. Soon after, circulars, advisories and advisory opinions were released while the NPC’s initial deadline for mandatory registration ended in September 2017. Presently, government agencies and those organizations and individuals/professionals in the covered business sectors who registered during the first deadline need not renew their registration until March 2020.

References: Partly from retired Chief Justice Artemio Panganiban; and from the National Privacy Commission

Posted on

Can a condominium project built on Philippine soil be sold entirely to foreigners?

By: Atty. Jeremy O. Panganiban

The answer depends on whether the condominium corporation will hold title to the land or will merely lease it from another person/entity.

This is because if it will own the private land, the capital stock of the condominium corporation must be 60% Filipino owned so as not to contravene the prohibition under the Philippine Constitution in relation to the Condominium Act, as amended.

However, if the condominium corporation merely leases the land from another person/entity, particularly from the developer or landowner, then there is no legal impediment for the condominium project, not the land, to be entirely owned by foreigners and, accordingly, there will be no limit to the foreign ownership of the Condominium Corporation, this on the basis of the opinion issued by the Securities & Exchange Commission.

Posted on

How can you retain your real properties within the family even after death?

By: Atty. Jeremy O. Panganiban

There are two modes of planning for one’s death as a good way of helping your potential heirs keep the real properties within the family.

The first one is putting up a close corporation: You can set up, and transfer your real properties (land and building) to a “family” corporation. This is essential if you have acquired several pieces of real estate. The transfer to the company that will be put up is tax-free. Moreover, you continue to have control over your assets while you are still alive through the corporation. This is because your real properties will be converted into shares of stock and will practically make you the controlling stockholder with your potential heirs owning a minimum of one share of stock each.

However, you can later on distribute a substantial amount of your shares of stock thru a Deed of Assignment to your potential heirs, which transfer used to be subject to 5% capital gains tax for shares of stock worth not over P100,000.00, and 10% in excess of P100,000.00 under the old Tax Reform Code of 1997; but, with the enactment of the TRAIN law with effectivity date of January 1, 2018, a final tax of 15% on capital gains on the sale or other disposition of shares of stock not traded through the local stock exchange is imposed. Your potential heir also needs to pay 1.5% documentary stamp tax and 75% of 1% transfer tax which remain unchanged. The good thing about this is that the assets can be preserved and retained since what your potential heirs can sell if they opt out of the corporation are their shares of stock and not the real properties due to their transformation into corporate assets.

In putting up your family corporation, under the old Corporation Code, there must be at least 5 incorporators but not more than 15. With this, the 5 incorporators should be composed of at least 4 potential heirs and then yourself. If you have potential heirs who are foreigners, their shareholdings must not exceed 40% of the total capital stock.

The second mode of retaining real properties within the family is by executing a last will and testament which under Philippine laws may either be a “notarial will” which must comply with the formalities required by law in order to be probated; or a “holographic will” which must be entirely written, dated and signed by you in your own handwriting. In executing a last will and testament, you can prohibit the sale, disposition or encumbrance of your real properties within a period of 20 years from the time of your demise. By doing so, your potential heirs’ hands are tied and cannot sell to anyone their respective portion of their inheritance over your properties during the prohibited period.

Posted on

Estate Tax under the TRAIN Law

By: Atty. Jeremy O. Panganiban

The Tax Reform for Acceleration and Inclusion Act (TRAIN, for brevity) took effect on January 1, 2018, instituting further reforms and amendments to the Tax Reform Code of 1997, as amended. The taxes that were improved and simplified include estate tax.

Specifically, estate tax is now at a flat rate of 6% based on the amount in excess of P5,000,000.00 for decedents who died on or after the effectivity date of the new law.

The allowable deductions to the estate in order to get the net estate of a citizen or resident are, to wit: (1) P5 million as standard deduction; and (2) P10,000,000.00 as deduction for the family home.

It bears stressing that funeral expenses and medical expenses incurred by the decedent were removed as allowable deductions. What is more, the requirement to secure a certification from the Punong Barangay for the decedent’s home so as to be considered as a family home for estate tax purposes has been deleted.

In contrast, for deductions allowed to non-resident estates, there is a standard deduction of P500,000.00; and a proportionate deduction on: (a) claims against the estate; (b) claims of the decedent against insolvent persons; and (c) for unpaid mortgages upon or any debt/outstanding obligation relative to the property.

Futhermore, the new law has increased the gross value of an estate, for which a return is required to be filed, to P5 million. This must be supported by a statement duly attested to by a Certified Public Accountant. In addition, the time for filing an estate tax return is now one year from the time of the decedent’s death. The requisite notice of death to be submitted to the Bureau of Internal Revenue has been removed.

However, an estate, consisting of registrable property like stocks, real property, motor vehicle or other similar property is still required to have an estate tax return, regardless of value.

Likewise, under the new law, payment by installment on the estate tax due is allowed subject to the following requisites: (a) there is insufficient cash to pay the total estate tax due; (b) payment by installment must be made within 2 years from the statutory date; and (c) it is not subject to civil penalty and interest. Finally, unlike in the old tax law, bank deposits are now withdrawable. To be sure, the funds from the decedent’s bank account can now be withdrawn subject to the automatic deduction of 6% withholding tax, and the same funds shall be excluded from the gross estate for purposes of computing the estate tax.