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DETERMINATION OF JURISDICTION HELD: YES, the act of filing a collection suit against the
principal debtors for the recovery of the loan before foreign
CHOICE OF LAW courts CONSTITUTED A WAIVER of the remedy of
foreclosure.
Cases where public policy prevailed over foreign law
Philippine laws prohibit the creditor to avail two remedies:
BANK OF AMERICA, NT and SA vs. AMERICAN collection of loan and foreclosure of mortgage. It may opt to
REALTY CORP & CA exercise only one of two remedies so as not to violate the
rule against splitting a cause of action. On the basis of
(Collection suits sa HK and England + REM foreclosure sa Philippine laws, the filing for collection abroad amounts to
Philippines para more chances of winning pero pildi nuon) waiver of petitioner to institute foreclosure proceedings.
Doctrine: When the foreign law, judgment or contract is On the question of the choice of law, Philippine law shall
contrary to a sound and established public policy of the apply notwithstanding the evidence presented by petitioner
forum, the said foreign law, judgment or order shall not be to prove the English law on the matter. A foreign law must be
applied. properly pleaded and proved as a fact. Thus, if the foreign
law involved is not properly pleaded and proved, our courts
FACTS: Petitioner Bank of America granted loans to 3 will presume that the foreign law is the same as our local or
corporate borrowers (foreign affiliates of private respondent). domestic or internal law. This is the doctrine of processual
Due to default in payment of the loans, Bank of America and presumption.
the 3 corporate borrowers entered into restructuring
agreements. As additional security for the restructured loans, Assuming arguendo that the English Law on the matter were
private respondent American Realty Corporation (domestic properly pleaded and proved, said foreign law would still not
corporation), as third party mortgagor, executed 2 REMs. find applicability. Thus, when the foreign law, judgment or
The 3 corporate borrowers (foreign affiliates of private contract is contrary to a sound and established public policy
respondent) defaulted in the payment of the restructured of the forum, the said foreign law, judgment or order shall not
loans. Bank of America filed civil actions before the foreign be applied. The public policy sought to be protected in the
courts for the collection of the principal loan. 2 cases were instant case is the principle imbedded in our jurisdiction
filed before the High Court of Justice in England and 2 cases proscribing the splitting up of a single cause of action.
were filed before the Supreme Court of Hong Kong High Moreover, foreign law should not be applied when its
Court. In these civil suits, the private respondent was not application would work undeniable injustice to the citizens or
impleaded as party-defendant. residents of the forum. Clearly, English Law is not applicable
and the doctrine of processual presumption cannot be
Despite the pendency of civil suits before the foreign courts applied.
for the collection of the principal loan, petitioner Bank of
America filed before the Office of the Provincial Sheriff of Case Follow-up Questions (during oral recitations)
Bulacan, Philippines an application for extrajudicial
foreclosure of REM. Eventually, the mortgaged properties 1. Who put up the collaterals? American Realty
were sold at public auction in an extrajudicial foreclosure sale Corporation (domestic corporation), a third party
to a third party. mortgagor executed 2 REMs. Take note,
Respondent filed before RTC – Pasig an action for damages 2. Where was the collection suit filed? Bank of
against the petitioner. Respondent alleged that petitioner America filed civil actions before the foreign courts
waived its remedy to foreclose the REMs by filing an action for the collection of the principal loan. 2 cases were
for collection of the principal loan before foreign courts. filed before the High Court of Justice in England and
2 cases were filed before the SC of HK High Court.
In its answer, petitioner alleged that: 1) respondent was not
a party defendant in the civil cases filed in HK and England; In relation to the foreclosure suit, Bank of America
2) There is no civil suit for sum of money filed in the filed before the Office of the Provincial Sheriff od
Philippines; and 3) Under the English Law, which is the Bulacan an application for extrajudicial foreclosure
governing law or choice of law under the principal of REM.
agreements, the mortgagee does not lose its security interest
by filing civil actions for sums of money. 3. The issue of the case is regarding the remedies
of the creditor in order to collect his credit. How
The RTC rendered a decision in favor of the respondent and would you classify this? Intrinsic validity of the
declared that the filing in foreign courts by the defendant of contract so you either apply lex voluntatis or lex
collection suits against the principal debtors operated as intentionis.
waiver of the security of the mortgages. Consequently, the
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CONFLICT OF LAWS (2019) MIDTERM REVIEWER ATTY. JOSEPH RANDI TORREGOSA
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CONFLICT OF LAWS (2019) MIDTERM REVIEWER ATTY. JOSEPH RANDI TORREGOSA
or not or its procedure for execution). Lex loci celebracionis Most Significant Relationship Rule
apply
INTRINSIC VALIDITY
Concerns itself with the substantive aspect of the contract
(validity of subject matter, terms and conditions, rights and
duties and liabilities of the parties and interpretations of the
terms and conditions of the contract). Lex contractus
governs.
Lex contractus
It is recognized in our jurisdiction that we follow lex
contractus, based on the general principles of contracts of
Liberality of contracts.
Exceptions:
a. If the stipulation is contrary to law, morals, good
custom and public policy, etc.
b. If the law stipulated has no relation at all to the
contract.
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