Bank of America, NT & SA vs.

American Realty Corporation

G.R. No. 133876, December 29, 1999, J. Buena.
Facts:
Bank of America granted loans to 3 foreign corporations. As security, the latter
mortgaged a property located in the Philippines owned by herein American
Realty Corporation. ARC is a third party mortgagor who pledged its own property
in favor of the 3 debtor-foreign corporations. The debtors failed to pay. Thus,
petitioner filed collection suits in foreign courts to enforce the loan.
Subsequently, it filed a petition in the Sheriff to extra-judicially foreclose the said
mortgage, which was granted.
On 12 February 1993, private respondent filed before the Pasig RTC, Branch 159,
an action for damages against the petitioner, for the latters act of foreclosing
extra-judicially the real estate mortgages despite the pendency of civil suits
before foreign courts for the collection of the principal loan.
Incidentally, petitioner alleges that under English Law, which according to
petitioner is the governing law with regard to the principal agreements, the
mortgage
Issue:
Whether or not Bank of Americas act of filing a collection suit against the
principal debtors for the recovery of the loan before foreign courts constituted a
waiver of the remedy of foreclosure.
Ruling:
The Court rule in the negative.
In a long line of decisions, this Court adopted the well-imbedded principle in our
jurisdiction that there is no 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 in 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 up 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.
SBMA v. Universal International Group of Taiwan
September 14, 2000, Panganiban, J.
Facts:
UIG and SBMA entered into a Lease and Development Agreement (LDA)
wherein SBMA leased to UIG the Binictan Golf Course and appurtenant facilities
thereto to be transformed into a world-class 18-hole golf course/resort. The LDA
contained pre-termination clauses which authorizes SBMA, after due notice to
UIG, to terminate the lease and immediately take possession of the property if
UIG commits a material breach of any of the contracts conditions.
SBMA wrote UIG, calling its attention to its failure to deliver its various
contractual obligations. UIG imputed the delay to the default of its main
contractor, FF Cruz, but committed itself to comply with its undertakings. The
following month, SBMA declared UIG in default. Six months later, UIG still failed
to satisfy its obligations so SBMA served a letter of pre-termination to UIG.
Shortly thereafter, the golf course was formally closed and SBMA took
possession of the subject premises.
UIG filed a complaint against SBMA for Injunction and Damages with prayer for
TRO and preliminary injunction. Trial Court granted UIGs prayer and ordered
SBMA to restore possession of the golf course to UIG. In a subsequent order, Trial
Court denied SBMAs motion to dismiss.
CA upheld UIGs capacity to sue, holding that SBMA is estopped from questioning
its standing. It also held that UIGDC1 and SBGCCI2 were real parties in interest
because they made substantial investments in the venture and had been in
possession in property when SBMA took over.
Issue:
Whether or not IUG has the capacity to sue.
Ruling:
As a general rule, unlicensed foreign non-resident corporations cannot file suits
in the Philippines. A corporation has legal status only within the state or territory
in which it was organized. For this reason, a corporation organized in another
country has no personality to file suits in the Philippines. In order to subject a
foreign corporation doing business in the country to the jurisdiction of our courts,
it must acquire a license from the SEC and appoint an agent for service of
process. Without such license, it cannot institute a suit in the Philippines.
However, after contracting with a foreign corporation, a domestic firm is
estopped from denying the formers capacity to sue. In this case, SBMA is
1 UIG International Development Corporation
2 Subic Bay Gold and Country Club, Inc.

estopped from questioning the capacity to sue UIG. In entering into the LDA with
IUG, SBMA effectively recognized its personality and capacity to institute the suit
before the trial court.