Cadalin vs. POEA G.R. No. L-104776, Dec.

5, 1994 GENERAL RULE: A foreign procedural law will not be applied in the forum. EXCEPTION: When the country of the forum has a "borrowing statute," the country of the forum will apply the foreign statute of limitations. EXCEPTION TO THE EXCEPTION: The court of the forum will not enforce any foreign claim obnoxious to the forum's public policy.

FACTS: Cadalin et al. are overseas contract workers recruited by respondent-appellant AIBC for its accredited foreign principal, Brown & Root, on various dates from 1975 to 1983. As such, they were all deployed at various projects in several countries in the Middle East as well as in Southeast Asia, in Indonesia and Malaysia. The case arose when their overseas employment contracts were terminated even before their expiration. Under Bahrain law, where some of the complainants were deployed, the prescriptive period for claims arising out of a contract of employment is one year. ISSUE: Whether it is the Bahrain law on prescription of action based on the Amiri Decree No. 23 of 1976 or a Philippine law on prescription that shall be the governing law HELD: As a general rule, a foreign procedural law will not be applied in the forum. Procedural matters, such as service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by teh laws of the forum. This is true even if the action is based upon a foreign substantive law. A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive, depending on the characterization given such a law. However, the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum has a borrowing statute. Said statute has the practical effect of treating the foreign statute of limitation as one of substance. A borrowing statute directs the state of the forum to apply the foreign statute of limitations to the pending claims based on a foreign law. While there are several kinds of borrowing statutes, one form provides that an action barred by the laws of the place where it accrued, will not be enforced in the forum even though the local statute has not run against it. Section 48 of our Code of Civil Procedure is of this kind. Said Section provides: If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the Philippine Islands. In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex propio vigore insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claims obnoxious to the forums public policy. To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would contravene the public policy on the protection to labor.

Bank of America, NT vs. American Realty Corporation G.R. No. 133876, Dec. 29, 1999

When foreign laws, despite having been duly presented and proven, may not be given application

FACTS: Petitioner Bank of America (BANTSA) is an international banking and financing institution duly licensed to do business in the Philippines, organized and existing under and by virtue of the laws of the State of California, USA while private respondent American Realty (ARC) is a domestic corporation. On numerous occasions, BANTSA and Bank of America International Limited (BAIL), organized under the laws of England, granted US Dollar loans to certain foreign corporate borrowers. These loans were later restructured, the restructured loans secured by two real estate mortgages with private respondent ARC as third-party mortgagor. When the corporate borrowers defaulted, BANTSA sued them for collection before foreign courts, without impleading ARC as party-defendant. While these civil suits are still pending before the foreign courts, BANTSA filed an extra-judicial foreclosure of real estate mortgage before the Office of the Provincial Sheriff of Bulacan, Philippines. The properties were sold at public auction, prompting ARC to file this action for damages against BANTSA. The trial court ruled in favour of ARC and this was affirmed by the CA. Hence, this appeal. ISSUES:

Whether or not the petitioners act of filing a collection suit against the principal debtors for the recovery of the loan before foreign courts constituted waiver of the remedy of foreclosure Whether or not the award by the lower court of actual and exemplary damages in favour of private respondent ARC, as third-party mortgagor, is proper

HELD: Available Remedies

THEORIES OF PETITIONER: 1. A waiver of the remedy of foreclosure requires the concurrence of 2 requisites: an ordinary civil action for collection should be filed and subsequently a final judgment be correspondingly rendered therein. 2. Under English law, which according to petitioner is the governing law with regard to the principal agreements, the mortgagee does not lose its security interest by simply filing civil actions for sums of money. 1. REMEDIES ARE ALTERNATIVE, NOT CUMULATIVE: A mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In our jurisdiction, the remedies available to the mortgage creditor are deemed alternative and not cumulative. Notably, an election of one remedy operates as a waiver of the other. For this purpose, a remedy is deemed chosen upon the filing of the suit for collection or upon the filing of the complaint in an action for foreclosure of mortgage, pursuant to the provision of Rule 68 of the 1997 Rules of Civil Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor upon filing of the petition not with any court of justice but with the Office of the Sheriff of the province where the sale is to be made. In the case at bench, private respondent ARC constituted real estate mortgages over its properties as security for the debt of the principal debtors. By doing so, private respondent subjected itself to the liabilities of a third party mortgagor. Under the law, third persons who are not parties to a loan may secure the latter by pledging or mortgaging their own property. Notwithstanding, there is no legal provision nor jurisprudence in our jurisdiction which makes a third person who secures the fulfillment of anothers obligation by mortgaging his own property, to be solidarily bound with the principal obligor. The signatory to the principal contractloanremains to be primarily bound. It is only upon default of the latter that the creditor may have recourse on the mortgagors by foreclosing the mortgaged properties in lieu of an action for the recovery of the amount of the loan. In the instant case, petitioners contention that the requisites of filing the action for collection and rendition of final judgment therein should concur, is untenable. PHILIPPINE LAW, NOT ENGLISH LAW, SHALL APPLY: In the case at bench, Philippine law shall apply notwithstanding the evidence presented by petitioner to prove the English law on the matter. In a long line of decisions, this Court adopted the well-imbedded principle in our jurisdiction that there is judicial notice of any foreign law. A foreign law must be properly pleaded and proved as a fact. Thus, if the foreign law involved is not properly pleaded and proved, our courts will presume that the foreign law is the same as our local or domestic or internal law. This is what we refer to as the doctrine of processual presumption.

In the instant case, assuming arguendo that the English Law on the matter were properly pleaded and proved xxx, said foreign law would still not find applicability. Thus, when the foreign law, judgment or contract is contrary to a sound and established public policy of the forum, the said foreign law, judgment or order shall not be applied. Additionally, prohibitive laws concerning persons, their acts or property, and those which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country. The public policy sought to be protected in the instant case is the principle imbedded in our jurisdiction proscribing the splitting of a single cause of action. Moreover, foreign law should not be applied when its application would work undeniable injustice to the citizens or residents of the forum. To give justice is the most important function of law; hence, a law, or judgment or contract that is obviously unjust negates the fundamental principles of Conflict of Laws. Clearly then, English Law is not applicable. Award of Damages As to the second pivotal issue, we hold that the private respondent is entitled to the award of actual or compensatory damages inasmuch as the act of petitioner BANTSA in extrajudicially foreclosing the real estate mortgages constituted a clear violation of the rights of herein private respondent ARC, as thirdparty mortgagor.