CHAPTER II
CHOICE OF LAW Facts
Default law = local law
Reason: The minds of the parties are set on the local
law upon entering into the agreement.
Exception: When the parties stipulate their choice of
law that will govern their relationship.
CHOICE OF LAW PRINCIPLES
Choice of law – governed by several principles.
1) A court, subject to constitutional restrictions,
will follow a statutory directive of its own
state on choice of law.
2) When there is no such directive, the factors
relevant to the choice of the applicable rule of
law include:
a) Needs of the interstate and international
systems
b) Relevant policies of the forum
c) Relevant policies of other interests states
d) Protection of justified expectations
e) Basic policies underlying the particular field
of law
f) Certainty, predictability and uniformity of
result
g) Ease in the determination and application
of the law to be applied.
PRINCIPLE 1: LOCAL LAW
- This is the general rule
- It provides the local law to be the default law
that will govern the relationship of the parties
to a dispute.
Example:
Art. 15: National law governs family rights, duties,
status and condition of Filipinos even if they are not in
the Philippines.
Art. 16: The law of the place where the property is
situated for real or personal properties. Intestate and
testamentary successions are governed by the national
law of the deceased.
The Problem of Renvoi
- A local law requires the forum court to apply a
foreign law to the case in dispute
- The foreign law, in turn, directs the application
of the laws of the forum court to the case
under consideration.
- There is a reference back to the local laws
of the forum court.
- To solve this problem, the local court must:
o Apply the directive of the foreign
state’s laws.
AZNAR vs GARCIA
Edward Christensen, a US citizen, died in the
Philippines while domiciled therein.
He left a will where he bequeathed:
o P3,600 to Helen Christensen Garcia
o The rest of the estate to Mary Lucy
Christensen Daney.
Helen’s contention:
The Philippine law should govern the
distribution of her father’s estate.
Decision of Court of First Instance:
“The successional rights and intrinsic validity of
the provisions in his will are to be governed by the law
of California, in accordance with which a testator has
the right to dispose of his property in the way he
desires.”
Issue
WON California law or Philippine law governs
the testamentary dispositions of the deceased.
Held
The Philippine law governs the testamentary
dispositions of the deceased.
1) Art. 16 governs the validity of his testamentary
dispositions.
2) There is no single American law governing the
validity of testamentary provisions in the US.
3) What is the law in California governing the
disposition of personal property?
- A testator may dispose of his property by will
in the form and manner he desires.
- “If there is no law to the contrary, in the place
where personal property is situated, it is
deemed to follow the person of its owner, and
is governed by the law of his domicile.”
4) Theory of renvoi (Ruckverweisung)
- A jural matter is presented which the conflict of
laws rule of the forum refers to a foreign law.
- The court of the forum, in determining the
question before it, must take into account the
whole law of the other jurisdiction, but also its
rules as to conflict of laws, and then apply the
law to the actual question which the rules of
the other jurisdiction prescribe.
5) California internal law – for citizens residing
therein
Conflict of laws rules – for citizens domiciled
abroad

BELLIS vs BELLIS
FACTS
Amos Bellis was a citizen of the US from Texas.
He had:
5 – legitimate children from 1st wife
($240,000)
3 – legitimate children from 2nd wife
(The rest of his estate)
3 – illegitimate children
(P120,000.00)
Contention of 2 illegitimate children
- They were deprived of their legitimes.
Lower Court’s Decision
- It denied the opposition and approved the
project of partition on the ground that Texas
law, which is the national law of the decedent
and which did not provide for legitimes,
governed his successional rights.
ISSUE (1)
WON the doctrine of renvoi applies.
HELD
The doctrine is usually pertinent where the
decedent is a national of one country and a
domicile of another.
In this case, the decent was both a national of
Texas and a domicile thereof at the time of his death.
PRINCIPLE 2: NEEDS OF THE INTERSTATE AND
INTERNATIONAL SYSTEMS
PRINCIPLE 3: RELEVANT POLICIES OF THE
FORUM
- Each forum considers certain values to be of
highest import to them.
- In considering a foreign law, US Courts may
look at the fundamental fairness of a law
before recognizing its validity.
- In the Philippines, the courts consider
protection for labor to be of highest import.
- **IF a case implicates a foreign law which is
prejudicial to the interest of labor, courts are
quick to strike down the foreign law in
favor of the applicability of local law.
Public Policy
Policies are fundamental public policies when:
1) They cannot be contractually waived
2) They protect against otherwise inequitable
results
3) They promote the public interest
PITZER COLLEGE vs INDIAN HARBOR INSURANCE
COMPANY
FACTS
Pitzer had an insurance policy from Indian
Harbor. The policy insured Pitzer for legal and
remediation expenses resulting from pollution
conditions. The policy designated New York law as the
choice of law of the parties. NY Law commands
denial of coverage where timely notice is not
provided by the insured.
Without consent of Indian Harbor, Pitzer
commenced remediation work after discovering
darkened soils at the construction site. Pitzer only
informed Indian Harbor of the remediation work 3
months later.
Indian Harbor denied coverage because of
Pitzer’s failure to give notice as soon as practicable.
Pitzer filed a suit against Indian Harbor for
declaratory relief and breach of contract.
The court held that Indian harbor had no
obligation to indemnify Pitzer, that NY Law was
applicable, and that NY Law did not supplant California
public policy.
ISSUE
WON NY Law contravenes California’s
fundamental public policy.
HELD
NY Law contravenes California’s fundamental
public policy
California’s notice-prejudice rule – requires
an insurer to prove that the insured’s late notice of a
claim has substantially prejudiced its ability to
investigate and negotiate payment for the insured’s
claim.
The first reason for establishing the notice-
prejudice rule as a fundamental policy of our state is
that the notice-prejudice rule cannot be
contractually waived and thus, restricts freedom
of contract.
CADALIN, et.al. vs POEA ADMINISTRATOR
FACTS
Cadalin et.al., were recruited by AIBC and
employed by BRII to work in several countries. Some
were deployed to work in Bahrain.
They were prematurely terminated from their
work and upon their return to the Philippines, they
sued AIBC and BRII for illegal dismissal and monetary
claims.
Bahrain had a law governing prescription of
actions:
“Claim arising out of a contract of
employment shall not be actionable after the
lapse of 1 year from the date of the expiry of
the contract.”
POEA Ruling
That the prescriptive period for the filing of
claims was 10 years.
NLRC reversed the ruling of the POEA stating
that the prescriptive period was 3 years as provided
under the Labor Code.
ISSUE
WON Amiri Decree No. 23 could be applied in
our jurisdiction.
HELD
No. Amiri Decree No. 23 is contrary to our
public policy on the protection of labor.
The courts of the forum will not enforce any
foreign claim obnoxious to the former’s public policy.
To enforce the 1-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 & ASIA VS AMERICAN
REALTY CORPORATION
FACTS
BANTSA granted multi-million-dollar loans to
several borrowers who were not able to pay. Both
creditor and debtor entered into restructuring
agreements secured by real estate mortgages
executed by ARC over its properties located in the
Philippines.
The borrowers failed to pay their loan
obligations upon maturity.
The creditor filed the following:
a) Collection cases in England and Hongkong
b) Extrajudicial foreclosure of real estate
mortgages before the Provincial Sheriff of
Bulacan.
The properties under the real estate mortgages
were subsequently sold at public auction.
ARC filed an action for damages against
BANTSA before the RTC for the latter’s act of
foreclosing extrajudicially the real estate mortgages
despite the pendency of collection suits before foreign
courts.
BANTSA appealed to the SC contending that
“the mere filing of a personal action to collect the
principal loan does not suffice. A final judgment must
be secured and obtained.”
ISSUE
WON the petitioner’s act of filing a collection
suit against the principal debtors for the recovery of
the loan before the foreign courts constituted a waiver
of the remedy of foreclosure?
HELD
Yes.
1) In our jurisdiction, the remedies available to
the mortgage creditor are deemed alternative
and not cumulative.
o An election of 1 remedy operates a
waiver of the other.
o 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 Sherriff of the
province where the sale is to be made.
2) The mere filing of an ordinary action for
collection operates a waiver of the mortgage-
creditor’s remedy to foreclosure the mortgage.
- NO FINAL JUDGMENT IN THE COLLECTION
SUIT IS REQUIRED FOR THE RULE ON WAIVER
TO APPLY!
3) BANTSA alleges that under English law, the
mortgage does not lose its security interest by
simply filing civil actions for sums of money.
- The Philippine law shall apply notwithstanding
the evidence presented by petitioner to prove
the English law on the matter.
4) 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 contract
shall not be applied.
5) The public policy sought to be protected in the
instant case is the principle imbedded in our
jurisdiction proscribing the splitting up of a
single cause of action.
6) Foreign law should not be applied when its
application would work undeniable injustice to
the citizens or residents of the forum.
DACASIN VS DACASIN
FACTS
Harold, an American, and Susan, a Filipino,
were married in Manila in 1994. They had a daughter
named Stephanie who was born in 1995.
Harold and Susan were divorced in the US in
June 1999.
In 2002, they executed in Manila an agreement
for the joint custody of Stephanie.
ISSUE
Is the agreement valid and enforceable in the
Philippines?
RULING:
NO!
Parties to a contract are free to stipulate the
terms of agreement subject to the minimum ban on
stipulations contrary to law, morals, good customs,
public order or public policy.
At the time the partners executed the
agreement, 2 facts are undisputed:
1) Stephanie was under 7 yrs old;
2) Petitioner and respondent were no longer
married under the laws of the US because of
the divorce decree.
In a Philippine law, “no child under 7 years of age
shall be separated from the mother.” Thus, the
agreement contravenes the same.
PRINCIPLE 4: RELEVANT POLICIES OF OTHER
INTERESTED STATES
It indulges the courts to engage in a governmental
interest analysis when 2 states have conflicting laws
and interests.
In governmental interest analysis, courts:
1) Compare the laws and interests of 2 states
2) Determine if there is a real conflict
3) If a real conflict exists, apply the law of the
state whose interest is more impaired.
KEARNEY VS SALOMON SMITH BARNEY
FACTS
Kearney and Levy are California residents
employed with WorldCom. They were granted stock
options which could only be exercised through SSB.
They filed claims against SSB for malfeasance,
fraud, and breach of fiduciary duties.
During the hearing, they learned that SSB
employees recorded their telephone conversations
without their consent.
SSB contended that “under both Georgia and
federal law recordings may lawfully be made in Georgia
with 1 party’s consent.”
ISSUE
Whether California law or Georgia law governs
Kearney and Levy’s claims?
HELD
California law governs.
California has applied the governmental
interest analysis in resolving choice-of-law issues.
First, the court determines whether the
relevant law of each of the potentially affected
jurisdictions with regard to the particular issue in
question is the same or different.
Second, if there is a difference, the court
examines each jurisdiction’s interest in the application
of its own law under the circumstances of the
particular case to determine whether a true conflict
exists.
Third, if the court finds that there is a true
conflict, it carefully evaluates and compares the nature
and strength of the interest of each jurisdiction in the
application of its own law “to determine which state’s
interest would be more impaired if its policy were
subordinated to the policy of the other state.”
NOTE: The language of Sec 632 does not explicitly
address the issue whether the statute was intended to
apply when 1 party to a telephone call is in California
and another party is outside California.
The legislatively prescribed purpose is “to protect the
privacy of the people of his state” and that purpose
certainly supports application of the statute of the
statute in a setting in which a person outside California
records, without the Californian’s knowledge or
consent, a telephone conversation of a California
resident who is within California.

B
The basic provision of the Georgia privacy
statute provides that “it shall be unlawful for:
1) Any person in a clandestine manner
intentionally to overhear, transmit, or record or
attempt to overhear, transmit or record the
private conversation of another which shall
originate in any private place.”