G.R. No. 234501 - Mercantile Insurance Co., Inc. vs. Yi

FAM MART Co., Inc. (FAM MART), owned and operated by Young C. Chun and Young H. Chun, was secured by an insurance policy issued by Mercantile Insurance Company, Inc. (MIC) through its California surplus lines broker, Great Republic Insurance Agency (GRI).
The policy in question bore the number MIC 001007, evidencing a contractual relationship between FAM MART and MIC.
On February 14, 1991, Sara Yi (also known as Sarah Yi) was involved in an accident within the premises of FAM MART located in El Cajon, California, which resulted in the severance of her right little finger.
FAM MART notified MIC of the accident in November 1991, and MIC acknowledged in a memorandum the existence of a valid policy and a contract with FAM MART.

On March 16, 1992, Yi initiated a personal injury suit (Civil Case No. 649705) against the Chuns; FAM MART subsequently tendered its claim to MIC.
Initially, MIC defended FAM MART through counsel without reserving its rights, but later withdrew its representation in August 1992.
On October 14, 1993, the Superior Court of California for the County of San Diego rendered a judgment in favor of Yi, awarding damages of $350,000.00 against Fam Mart Co., Inc. and the Chuns.

On November 2, 1993, Yi, together with the Chuns, filed a complaint (Civil Case No. 670417) in California alleging breach of insurance contract, breach of the covenant of good faith and fair dealing, fraud, negligent misrepresentation, and negligence against MIC.
MIC did not respond, and a Judgment by Default was rendered on September 22, 1995, awarding compensatory, general, punitive damages, attorney’s fees, and return of premiums to the plaintiffs.
A Notice of Renewal of Judgment was issued on September 21, 2005, extending Yi’s enforcement period for an additional 10 years, with the renewed judgment amount adjusting to $1,552,664.67.

As Yi was unable to enforce the judgment in California, she filed an action for enforcement of the foreign judgment before the Regional Trial Court (RTC) in Manila.
MIC, in its Answer, denied any liability by asserting no privity of contract with Yi or FAM MART, emphasizing its operations were confined to the Philippines.
The RTC, in its Decision dated September 30, 2013, dismissed the case on several grounds:

Yi failed to present the insurance policy as evidence.
MIC was not properly served with summons given that its operations were outside the Philippines.
There was an alleged compromise between Yi and MIC regarding the award in the California judgment.

Yi appealed the RTC’s dismissal via Rule 44 before the Court of Appeals (CA).
In the CA Decision dated May 19, 2017, the court reversed the RTC ruling, directing MIC to pay the amounts adjudged in the Superior Court of California.
The CA held that in an enforcement action for a foreign judgment, the primary issue is the presentation of the foreign judgment itself, not the underlying insurance policy or insurable interest.
MIC’s challenges regarding improper service of summons and the absence of the insurance policy were deemed irrelevant in the context of enforcing a foreign judgment.
A Motion for Reconsideration by MIC was subsequently filed and denied in a Resolution dated August 25, 2017.

Whether the foreign judgment issued by the Superior Court of California is enforceable in the Philippines.

The core legal question revolves around the recognition and enforcement of a foreign court’s final judgment within Philippine jurisdiction.
Whether Yi is required to prove the underlying insurance policy and her insurable interest, or if the presentation of the foreign judgment itself is sufficient to establish a cause of action for enforcement.
The propriety of MIC’s arguments regarding the lack of proper service of summons and the absence of a contractual link with the insured FAM MART, considering that MIC operates solely in the Philippines.