Debt Collection From Foreigners

In the Philippines, foreigners are everywhere. Their stay in the country entails entering into numerous financial transactions. With this, some of them incur debts. In this case, the issue that arises is: how can a Filipino chase a foreigner with unpaid debt who already left the Philippines?

The remedy of a Filipino is to file a case under the Philippine Civil Law for collection of the debt with a corresponding petition for the issuance of a writ of preliminary attachment.

What then is the need for the petition for issuance of said writ? The reason is, to enable our courts to issue summons, commonly referred to as subpoena, in the foreigner’s country. Summons is necessary in order for our courts to acquire jurisdiction over the person of the foreigner. With such, judgment may be rendered against him, regardless of whether he responds to said summons.

Further, a simple civil case for collection cannot extend the reach of our courts to a foreign land. Being an action in personam, the binding effect of our court’s judgment is only between the parties to the case. On the other hand, a petition for the issuance of a writ of preliminary attachment is an action quasi in rem. This means that though the binding effect of the court’s judgment is only between the parties, a lien attaches to the property itself. Such lien binds the whole world.

It is important to note that in attaching properties, the Filipino must be able to look for properties the foreigner owns in the Philippines. These properties include real/immovable properties; and personal/movable properties. Movables include stocks or shares in a corporation; debts and credits including bank deposits, financial interest, royalties, commission; property interests in inheritance; and even those properties in the custody of the court.

Indeed, foreigners must fulfill all their obligations first before leaving the Philippines. A successful return to their country is not an escape from their responsibilities. This may even worsen the situation by losing a case under the Philippine Civil Law.