Heavy armor has two ways of mitigating damage: damage absorption and percent damage reduction. When is the percent damage reduction applied, before or after the inflicted damage is checked against the damage absorption?

Let's say I have %40 damage reduction and 15 damage absorb and I'm about to be hit with 16 points of damage.

If the damage reduction is applied before the incoming damage is checked against the damage absorb, then I should take 0 damage ((16*0.4) < 15). Otherwise, if the damage reduction is applied after the damage is checked against the damage absorb then I should take about 6 points of damage (16 > 15).

Thanks.