Cadalin v POEA The project was delayed which required extension of the guarantees.
In this case, petitioners and 700+ other overseas contract workers filed a Subsequently, when the project was 51% completed, the Kuwait bank demanded
complaint for payment of money claims against AIBC and BRII. In the award of full payment of the performance bond. VPECI requested the Iraq bank to recall
money claims, the NLRC applied the Amiri Decree, or the laws of Bahrain which the collection of the performance guarantee. However, the Iraq bank still
provides for greater benefits as compared to the benefits stipulated in the collected from the Kuwait Bank. Hence, Philguarantee was compelled to pay the
overseas-employment contracts. So, AIBC and BRII were caliming that the NLRC counter bond.
acted capriciously when it enforced the laws of Bahrain instead of the OECs.
After paying the counterbond, the petitioners then collected from the
Issue: What laws should be applied, the laws of Bahrain or Philippines. respondents, and reiterated the joint and solidary obligation of the respondents to
reimburse the Philguarantee. The respondents faulted petitioners for paying the
Held: The court noted in this case that the overseas contract contains a counter-guarantee, arguing among others that they incurred no delay in the
stipulation that the laws of the host country (Bahrain) would be applied to the execution of the project which would trigger the payment of the bond.
employment contracts if they offer terms and conditions more favorable than the
ones stipulated in the overseas contracts. The issue is whether or not the respondents incurred delay. In conflict of laws
issue is what laws should be applied to determine whether or not the
The Court state that parties to a contract may select the law which will govern respondents incurred delay.
their contract. This may be done in two ways:
First, by adopting the foreign law as a system to regulate the relations of HELD
the parties (capacity, formalities, performance, etc) The Court held that there are no conflicts rule on essential validity of the
Second, by agreement that specific provisions of the stature shall be contracts in the Philippines. However, in most legal systesm, what is applied in
incorporation in the provision of the contract. So instead of adopting the lex contractus (or law of the contract).
foreign law, it will only adopt certain provisions. The law voluntarily agreed upon by the parties; or
o In doing so, the contract does not become a contract governed The law intended by them either expressly or implicitly.
by foreign law. Rather, the foreign law forms part of the Subject to the limitation that (1) it is not against law, morals, public policy of the
contractual terms of the contract. forum and (2) the chosen law must bear a substantive relationship to the
transaction.
Philippine Export v V.P. Eusebio
State Organization of Buildings of Iraq awarded construction project of a In the absence of a choice of law, the State that has the “most significant
Rehabilitation Center to a firm in Kuwait. The Kuwait firm entered into a JV relationship to the transaction and that parties” prevails.
agreement with 3-Plex International. However, because 3-Plex is not accredited All matters relating to the time, place and manner of performance and
in the Philippines, it assigned all its rights to respondent in this case. Between 3- validity of excuses for non-performance are determined by the law of the
Plex and VP Eusebio, there is an agreement of joint management. place of performance (lex loci solutionis).
The SOB required from the respondent’s performance bond and advance In this case, there is no express choice of law in the service contract. Hence, the
payment bond. The respondents applied for an issuance of guarantee letter from law of Iraq should be considered as the applicable law since Iraq bears
the petitioner, Philguarantee. However, this is not accepted by the SOB since substantial connection to the transaction and the place of performance is in Iraq.
what they require is a letter-guarantee from their government bank (Rafidain However, the court noted that the laws of Iraq was not properly pleaded and
Bank). Ragadain bank then issued the bonds, on the condition that another bank proved. Thus, the rule on processual presumption applies.
would issue a counter guarantee. Pursuant to this, Al Ahli Bank of Kuwait issued Ultimately, the Court applied the Civil Code and held that respondents
a counter-guarantee, but it required similar guarantee from philguarantee. was not in delay because under the Philippine laws, neither party incurs
in delay if the other does not comply with what is incumbent upon him.
So basically, there are three layers of guarantee. In this case, the SOB failed to comply with the stipulation on
reimbursement to respondents. There is also no demand from the SOB
Under the service contract, the construction will be completed within 18 months. for the respondents to comply with its obligation.
Respondents would supply the manpower and materials, and the cost of which
would be refunded by the SOB. The refund would be 25% in Iraqi Dinar while the
remaining portion will be paid in US Dollars.
