While within the premises of FAM MART, Sarah Yi severed her finger in an accident. Thus, she filed a personal injury claim against the business establishment. The latter then notified its insurer, Great Republic Insurance Agency, a surplus lines broker of Mercantile Insurance Company (petitioner). At first, the insurance company represented the business establishment, but later withdrew its representation. On October 14, 1993, the Superior Court of the State of California for the County of San Diego ruled in favor of Sarah Yi, adjudging FAM MART liable. Thus, she and the Chuns, owner of FAM MART, filed a complaint for breach of insurance contract, breach of covenant of good faith and fair dealing, fraud and negligent misrepresentation and negligence (Civil Case No. 670417) against MIC. Despite service of summons, MIC did not file any pleading, thus judgment was rendered in favor of Sarah Yi and the Chuns against MIC. The judgment became final and executory. Despite a Renewal of Judgment in favor of the plaintiffs, Yi was not able to enforce the judgment in California.
In the Philippines, Yi filed an action for enforcement of judgment before the RTC of Manila. In its defense, MIC alleged that there was no privity of contract with Yi and FAM MART because it was not aware of such judgment its operations being limited to the Philippines.
The RTC dismissed the case. It ruled that Yi was not able to prove her claim because the insurance policy was not presented and it has no jurisdiction over MIC because there was no proper service of summons.
As Yi was not able to enforce the Judgment in California, she filed an action for enforcement of judgment before the RTC. On appeal to the Court of Appeals by Yi, the CA reversed the RTC decision. The CA maintained that in an action to enforce a foreign judgment, the matter left for proof is the foreign judgment itself. Thus, it is not imperative on the part of Yi to provide proof of the insurance policy and her insurable interest.
MIC thus appealed to the Supreme Court.
The Issue:
May the foreign judgment in California be enforced in the Philippines?
The Ruling:
Generally, in the absence of a special compact, no sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another country; however, the rules of comity, utility and convenience of nations have established a usage among civilized states by which final judgments of foreign courts of competent jurisdiction are reciprocally respected and rendered efficacious under certain conditions that may vary in different countries.
Certainly, the Philippine legal system has long ago accepted into its jurisprudence and procedural rules the viability of an action for enforcement of foreign judgment, as well as the requisites for such valid enforcement, as derived from internationally accepted doctrines.
In our jurisdiction, a judgment or final order of a foreign tribunal creates a right of action, and its non-satisfaction is the cause of action by which a suit can be brought upon for its enforcement.
Section 48, Rule 39 of the Rules of Court explicitly provides for the conditions for the recognition and enforcement of a foreign judgment, to wit:
SEC. 48. Effect of foreign judgments or final orders. — 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:
- In case of a judgment or final order upon a specific thing, the judgment or final order is conclusive upon the title to the thing; and
(b) In case of a judgment or final order against a person, the judgment or final order is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title.
In either case, 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.
The causes of action arising from the enforcement of foreign judgment and that arising from the allegations that gave rise to said foreign judgment differs, such that the former stems from the foreign judgment itself, whereas the latter stems from the right in favor of the plaintiff and its violation by the defendant’s act or omission. The evidence to be presented likewise differs. The case of Mijares v. Rañadaillustrates in this wise:
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.
Guided by the foregoing, what is indispensable in an action for the enforcement of a foreign judgment is the presentation of the foreign judgment itself as it comprises both the evidence and the derivation of the cause of action. Further, the above-cited rule provides that a foreign judgment against a person, i.e., an action in personam, as in this case, is merely a presumptive evidence of rights between the parties. Such judgment may be attacked by proving lack of jurisdiction, lack of notice to the party, collusion, fraud, or clear mistake of fact or law.Thus, contrary to MIC’s position, the burden is upon MIC to prove its allegations against the validity of the foreign judgment sought to be enforced.
In disputing the foreign judgment, MIC argues that there was want of notice to it as there was no proper service of summons in the trial before the California court.
On this note, we highlight that matters of remedy and procedure such as those relating to the service of process upon a defendant are governed by the lex fori or the internal law of the forum, which is the State of California in this case. This Court is well aware that foreign laws are not a matter of judicial notice. Like any other fact, they must be alleged and proven.
Section 24, Rule 132 of the Rules of Court provides that the records of the official acts of a sovereign authority may be evidenced by an official publication thereof or by a copy attested by its legal custodian, his deputy, and accompanied with a certificate that such officer has a custody, in case the record is not kept in the Philippines. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice-consul, or consular agent or by 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.
An exception to this rule, however, is recognized in the cases of Willamette Iron & Steel Works v. Muzzal,and Manufacturers Hanover Trust Co. v. Guerrero,wherein we emphatically ruled that the testimony under oath of an attorney-at-law of a foreign state, who quoted verbatim the applicable law and who stated that the same was in force at the time the obligations were contracted, was sufficient evidence to establish the existence of said law. In Manufacturers Hanover Trust, we stated that it is necessary to state the specific law on which the claim was based.
In this case, Atty. Robert G. Dyer (Atty. Dyer), member of the bar of the State of California for more than 30 years, testified as to the applicable law related to summons. In detail, he stated the exact pertinent provision under the California Code of Civil Procedure, to wit:
Section 415.40 A summons may be served on a person outside this state in any manner provided by this article or by sending a copy of the summons and of the complaint to the person to be served by first-class mail, postage prepaid, requiring a return receipt. Service of a summons by this form of mail is deemed complete on the 10th day after such mailing.
Indeed, pursuant to the above-proven law in the State of California, the service of summons by mail to MIC, an entity outside its state, was valid. As such law was sufficiently alleged and proven, it is beyond the province of this Court’s authority to pass upon the issue as to the factual circumstances relating to the proper service of summons upon MIC in the case before the State of California.
It is also significant to note that MIC impeaches the credibility of Atty. Dyer as an expert witness for the first time on appeal. Before the RTC and the CA, MIC merely raised the argument that Atty. Dyer failed to specifically cite the law of the State of California with respect to service of summons.
MIC also contends that failure of Yi to implead the Chuns, who are indispensable parties, renders all actions of the court null and void.
We find that Yi need not implead her co-plaintiffs so as to be afforded the relief prayed for.
As aforementioned, the main consideration in an action for enforcement of a foreign judgment is to put such judgment into force. Verily, direct involvement or being the subject of the foreign judgment is sufficient to clothe a party with the requisite interest to institute an action before our courts for the recognition of the foreign judgment.[34]
Our rules provide that an indispensable party is a party-in-interest without whom no final determination can be had of an action.[ The party’s interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties’ that his legal presence as a party to the proceeding is an absolute necessity. In his absence, there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable.Alternatively put, it is necessary that an indispensable party must be impleaded so that a full resolution of the case can be obtained.
Here, it is apparent that the Chuns are not indispensable parties, whose inclusion is determinative of the final outcome of the case. Their legal presence will not render the resolution of the action incomplete and ineffective for there was a final judgment already rendered by the foreign court. As previously mentioned, what our courts will do is to recognize the foreign judgment as a fact[ and enforce the same as such foreign judgment creates a right of action in favor of Yi. Relevantly, MIC’s failure to satisfy the terms of the foreign judgment engenders a cause of action as to Yi, who becomes clothed with requisite interest to institute an action for enforcement.
WHEREFORE, premises considered, the instant petition is hereby DENIED. Accordingly, the Decision dated May 19, 2017 and the Resolution dated August 25, 2017 of the Court of Appeals in CA-G.R. CV No. 102408 are AFFIRMED.
SO ORDERED.
J. REYES, JR., J.:
Carpio, Acting C.J., (Chairperson), Perlas-Bernabe, Caguioa, and Lazaro-Javier, JJ., concur.
G.R. No. 234501, March 18, 2019, MERCANTILE INSURANCE CO., INC. PETITIONER, V. SARA YI, ALSO KNOWN AS SARAH YI, RESPONDENT.
SEE ALSO:
1 thought on “A judgment or final order of a foreign tribunal creates a right of action, and its non-satisfaction is the cause of action by which a suit can be brought upon for its enforcement.”