Professional Documents
Culture Documents
Same; Same; The forms in which a foreign element may appear Same; Same; Forum Non Conveniens; Forum Shopping;
are many, such as the fact that one party is a resident Philippine Plaintiff may not, by choice of an inconvenient forum, Âvex,Ê Âharass,Ê
national, and that the other is a resident foreign corporation.·The or ÂoppressÊ the defendant, e.g. by inflicting upon him needless
forms in which this foreign element may appear are many. The expense or disturbance, but unless the balance is strongly in favor of
foreign element may simply consist in the fact that one of the the defendant, the plaintiffÊs choice of forum should rarely be
parties to a contract is an alien or has a foreign domicile, or that a disturbed.·Pragmatic considerations, including the convenience of
contract between nationals of one State involves properties situated the parties, also weigh heavily in favor of the RTC Quezon City
in another State. In other cases, the foreign element may assume a assuming jurisdiction. Paramount is the private interest of the
complex form. In the instant case, the foreign element consisted in litigant. Enforceability of a judgment if one is obtained is quite
the fact that private respondent Morada is a resident Philippine obvious. Relative advantages and obstacles to a fair trial are
national, and that petitioner SAUDIA is a resident foreign equally important. Plaintiff may not, by choice of an inconvenient
corporation. Also, by virtue of the employment of Morada with the forum, Âvex,Ê Âharass,Ê or ÂoppressÊ the defendant, e.g. by inflicting
petitioner SAUDIA as a flight stewardess, events did transpire upon him needless expense or disturbance. But unless the balance
during her many occasions of travel across national borders, is strongly in favor of the defendant, the plaintiff Ês choice of forum
particularly from Manila, Philippines to Jeddah, Saudi Arabia, and should rarely be disturbed.
vice versa, that caused a „conflicts‰ situation to arise.
stressed.·Several theories have been propounded in order to
Same; Same; Forcing a party to seek remedial action in a place
identify the legal system that should ultimately control. Although
where she no longer maintains substantial connections would cause
ideally, all choice-of-law theories should intrinsically advance both
a fundamental unfairness to her.·Weighing the relative claims of
notions of justice and predictability, they do not always do so. The
the parties, the court a quo found it best to hear the case in the
forum is then faced with the problem of deciding which of these two
Philippines. Had it refused to take cognizance of the case, it would
important values should be stressed.
be forcing plaintiff (private respondent now) to seek remedial action
elsewhere, i.e. in the Kingdom of Saudi Arabia where she no longer
maintains substantial connections. That would have caused a Same; Characterization or Doctrine of Qualification; Words and
fundamental unfairness to her. Phrases; Characterization is the „process of deciding whether or not
the facts relate to the kind of question specified in a conflicts rule.‰·
Before a choice can be made, it is necessary for us to determine
Same; Same; A party effectively submits to the trial courtÊs
under what category a certain set of facts or rules fall. This process
jurisdiction by praying for the dismissal of the complaint on grounds
is known as „characterization,‰ or the „doctrine of qualification.‰ It
other than lack of jurisdiction.·The records show that petitioner
is the „process of deciding whether or not the facts relate to the kind
SAUDIA has filed several motions praying for the dismissal of
of question specified in a conflicts rule.‰ The purpose of
MoradaÊs Amended Complaint. SAUDIA also filed an Answer In Ex
„characterization‰ is to enable the forum to select the proper law.
Abundante Cautelam dated February 20, 1995. What is very patent
and explicit from the motions filed, is that SAUDIA prayed for other
Same; Same; An essential element of conflict rules is the
471 indication of a „test‰ or „connecting factor‰ or „point of contact.‰·
Our starting point of analysis here is not a legal relation, but a
factual situation, event, or operative fact. An essential element of
conflict rules is the indication of a „test‰ or „connecting factor‰ or
VOL. 297, OCTOBER 8, 1998 471 „point of contact.‰ Choice-of-law rules invariably consist of a factual
relation-
Saudi Arabian Airlines vs. Court of Appeals
472
reliefs under the premises. Undeniably, petitioner SAUDIA has
effectively submitted to the trial courtÊs jurisdiction by praying for
the dismissal of the Amended Complaint on grounds other than
472 SUPREME COURT REPORTS ANNOTATED
lack of jurisdiction.
Saudi Arabian Airlines vs. Court of Appeals
Same; Choice-of-law problems seek to answer two important
questions: (1) What legal system should control a given situation
ship (such as property right, contract claim) and a connecting factor
where some of the significant facts occurred in two or more states;
or point of contact, such as the situs of the res, the place of
and (2) to what extent should the chosen legal system regulate the
celebration, the place of performance, or the place of wrongdoing.
situation.·As to the choice of applicable law, we note that choice-of-
law problems seek to answer two important questions: (1) What
legal system should control a given situation where some of the Same; Same; „Test Factors‰ or „Points of Contact‰ or
significant facts occurred in two or more states; and (2) to what „Connecting Factors.‰·Note that one or more circumstances may be
extent should the chosen legal system regulate the situation. present to serve as the possible test for the determination of the
applicable law. These „test factors‰ or „points of contact‰ or
„connecting factors‰ could be any of the following: „(1) the
Same; Although ideally, all choice-of-law theories should
nationality of a person, his domicile, his residence, his place of
intrinsically advance both notions of justice and predictability, they
sojourn, or his origin; (2) the seat of a legal or juridical person, such
do not always do so, in which case the forum is then faced with the
as a corporation; (3) the situs of a thing, that is, the place where a
problem of deciding which of these two important values should be
thing is, or is deemed to be situated. In particular, the lex situs is place where the alleged tortious conduct took place). This is because
decisive when real rights are involved; (4) the place where an act it is in the Philippines where petitioner allegedly deceived private
has been done, the locus actus, such as the place where a contract respondent, a Filipina residing and working here. According to her,
has been made, a marriage celebrated, a will signed or a tort she had honestly believed that petitioner would, in the exercise of
committed. The lex loci actus is particularly important in contracts its rights and in the performance of its duties, „act with justice, give
and torts; (5) the place where an act is intended to come into effect, her her due and observe honesty and good faith.‰ Instead, petitioner
e.g., the place of performance of contractual duties, or the place failed to protect her, she claimed. That certain acts or parts of the
where a power of attorney is to be exercised; (6) the intention of the injury allegedly occurred in another country is of no moment. For in
contracting parties as to the law that should govern their our view what is important here is the place where the over-all
agreement, the lex loci intentionis; (7) the place where judicial or harm or the totality of the alleged injury to the person, reputation,
administrative proceedings are instituted or done. The lex fori·the social standing and human rights of complainant, had lodged,
law of the forum·is particularly important because, as we have according to the plaintiff below (herein private respondent). All told,
seen earlier, matters of ÂprocedureÊ not going to the substance of the it is not without basis to identify the Philippines as the situs of the
claim involved are governed by it; and because the lex fori applies alleged tort.
whenever the content of the otherwise applicable foreign law is
excluded from application in a given case for the reason that it falls Same; Same; Same; Same; „State of the Most Significant
under one of the exceptions to the applications of foreign law; and Relationship‰ Rule; The „State of the most significant relationship‰
(8) the flag of a ship, which in many cases is decisive of practically rule is the appropriate modern theory on tort liability to apply in the
all legal relationships of the ship and of its master or owner as such. instant case.·With the widespread criticism of the traditional rule
It also covers contractual relationships particularly contracts of of lex loci delicti commissi, modern theories and rules on tort
affreightment.‰ (Italics ours.) liability have been advanced to offer fresh judicial approaches to
arrive at just results. In keeping abreast with the modern theories
Same; Same; Same; Torts; Where the action is one involving on tort liability, we find here an occasion to apply the „State of the
torts, the „connecting factor‰ or „point of contact‰ could be the place most significant relationship‰ rule, which in our view should be
or places where the tortious conduct or lex loci actus occurred; The appropriate to apply now, given the factual context of this case. In
Philippines is the situs of the tort where it is in the Philippines applying said principle to determine the State which has the most
where the defendant allegedly deceived the plaintiff, a citizen significant relationship, the following contacts are to be taken into
residing and working here, and the fact that certain acts or parts of account and evaluated according to their relative importance with
the injury occurred in another country is of no moment, for what is respect to the particular issue: (a) the place where the injury
important is the place where the over-all harm or the totality of the occurred; (b) the place where the conduct causing the injury
injury to the person, reputation, social standing and human rights of occurred; (c) the domicile, residence, nationality, place of
the plaintiff incorporation and place of business of the parties; and (d) the place
where the relationship, if any, between the parties is centered.
473
Same; Same; Same; Same; Same; Where the Philippines is the
situs of the tort complained of and the place „having the most
interest in the problem,‰ the Philippine law on tort liability should
VOL. 297, OCTOBER 8, 1998 473
have
Saudi Arabian Airlines vs. Court of Appeals
474
„The Petition for the Issuance of a Writ of Preliminary Injunction is The trial court has no jurisdiction to hear and try Civil Case No. Q-
hereby DENIED, after considering the Answer, with Prayer to Deny 93-18394 based on Article 21 of the New Civil Code since the proper
Writ of Preliminary Injunction (Rollo, p. 135) the Reply and law applicable is the law of the Kingdom of Saudi Arabia inasmuch
Rejoinder, it appearing that herein petitioner is not clearly entitled as this case involves what is known in private international law as
thereto (Unciano Paramedical College, et al. v. Court of Appeals, et a Âconflicts problem.Ê Otherwise, the Republic of the Philippines will
al., G.R. No. 100335, April 7, 1993, Second Division). sit in judgment of the acts done by another sovereign state which is
SO ORDERED.‰ abhorred.
II.
On October 20, 1995, SAUDIA29
filed with this Honorable
Court the instant Petition for Review with Prayer for Leave of court before filing a supplemental pleading is not a
Temporary Restraining Order dated October 13, 1995. jurisdictional requirement. Besides, the matter as to absence of
However, during the pendency of the instant Petition,
30 leave of court is now moot and academic when this Honorable Court
respondent Court of Appeals rendered the Decision dated required the respondents to comment on petitionerÊs April 30, 1996
April 10, 1996, now also assailed. It ruled that the Supplemental Petition For Review With Prayer For A Temporary
Philippines is an appropriate forum considering that the Restraining Order Within Ten (10) Days From Notice Thereof.
Amended ComplaintÊs basis for recovery of damages is Further, the Revised Rules of Court should be construed with
Article 21 of the Civil Code, and thus, clearly within the liberality pursuant to Section 2, Rule 1 thereof.
jurisdiction of respondent Court. It further held that
III. for the application of the law of the Kingdom of34Saudi
Arabia, by virtue of the lex loci delicti commissi rule.
Petitioner received on April 22, 1996 the April 10, 1996 decision On the other hand, private respondent contends35 that
in CA-G.R. SP No. 36533 entitled ÂSaudi Arabian Airlines v. Hon. since her Amended Complaint is based on Articles 19 and
36
Rodolfo A. Ortiz, et al.Ê and filed its April 30, 1996 Supplemental 21 of
Petition For Review With Prayer For A Temporary Restraining
Order on May 7, 1996 at 10:29 a.m. or within the 15-day
________________
reglementary period as provided for under Section 1, Rule 45 of the
Revised 33 Rollo, pp. 157-159. All caps in the original.
34 Memorandum for Petitioner, p. 14, rollo, p. 162.
________________ 35 Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
31 Rollo, pp. 80-86.
observe honesty and good faith.
32 Memorandum for Petitioner dated October 9, 1996, rollo, pp. 149-180; and
36 Art. 21. Any person who wilfully causes loss or injury to another in
Memorandum for Private Respondent, October 30, 1996, rollo, pp. 182-210.
a manner that is contrary to morals, good customs or public policy shall
483
482 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals VOL. 297, OCTOBER 8, 1998 483
Saudi Arabian Airlines vs. Court of Appeals
Rules of Court. Therefore, the decision in CA-G.R. SP No. 36533 has
not yet become final and executory and this Honorable Court can
33
take cognizance of this case.‰ the Civil Code,
37
then the instant case is properly a matter of
domestic law.
From the foregoing factual and procedural antecedents, the Under the factual antecedents obtaining in this case,
following issues emerge for our resolution: there is no dispute that the interplay of events occurred in
two states, the Philippines and Saudi Arabia.
I. As stated by private respondent in her Amended
38
contain a „foreign element.‰ The presence of a foreign „Art. 19. Every person must, in the exercise of his rights and in the
element is inevitable since social and economic affairs of performance of his duties, act with justice give everyone his due and
individuals and associations are rarely confined 40
to the observe honesty and good faith.‰
geographic limits of their birth or conception.
The41forms in which this foreign element may appear are On the other hand, Article 21 of the New Civil Code
many. The foreign element may simply consist in the fact provides:
that one of the parties to a contract is an alien or has a „Art. 21. Any person who willfully causes loss or injury to another
foreign domicile, or that a contract between nationals of in a manner that is contrary to morals, good customs or public
one State involves properties situated in another State. In policy shall compensate the latter for damages.‰
other42cases, the foreign element may assume a complex
form. Thus, in45 Philippine National Bank (PNB) vs. Court of
In the instant case, the foreign element consisted in the Appeals, this Court held that:
fact that private respondent Morada is a resident
Philippine national, and that petitioner SAUDIA is a „The aforecited provisions on human relations were intended to
resident foreign corporation. Also, by virtue of the expand the concept of torts in this jurisdiction by granting adequate
employment of Morada with the petitioner SAUDIA as a legal remedy for the untold number of moral wrongs which is
flight stewardess, events did transpire during her many impossible for human foresight to specifically provide in the
occasions of travel across national borders, particularly statutes.‰
from Manila, Philippines to Jeddah, Saudi Arabia, and vice
Although Article 19 merely declares a principle of law,
versa, that caused a „conflicts‰ situation to arise.
Article 21 gives flesh to its provisions. Thus, we agree with
We thus find private respondentÊs assertion that the case
private respondentÊs assertion that violations of Articles 19
is purely domestic, imprecise. A conflicts problem presents
43
and 21 are actionable, with judicially enforceable remedies
itself here, and the question of jurisdiction confronts the
in the municipal forum.
court a quo. 46
Based on the allegations in the Amended Complaint,
After a careful 44study of the private respondentÊs 47
read in the light of the Rules of Court on jurisdiction we
Amended Complaint, and the Comment thereon, we note
find that the Regional Trial Court (RTC) of Quezon City
that she aptly predicated her cause of action on Articles 19 48
possesses jurisdiction over the subject matter of the suit.
and 21 of the New Civil Code.
Its authority
On one hand, Article 19 of the New Civil Code provides:
________________
________________
45 83 SCRA 237, 247.
40 Salonga, Private International Law, 1995 edition, p. 3.
46 Supra, note 17, at p. 6. Morada prays that judgment be rendered
41 Ibid., citing Cheshire and North, Private International Law, p. 5 by
against SAUDIA, ordering it to pay: (1) not less than P250,000.00 as
P.M. North and J.J. Faucett (Butterworths; London, 1992).
actual damages; (2) P4 million in moral damages; (3) P500,000.00 in
42 Ibid.
exemplary damages; and (4) P500,000.00 in attorneyÊs fees.
43 Paras, Philippine Conflict of Laws, sixth edition (1984), p. 24, citing
47 Baguioro v. Barrios, 77 Phil. 120.
Leflar, The Law of Conflict of Laws, pp. 5-6.
48 Jurisdiction over the subject matter is conferred by law and is
44 Supra, note 17.
defined as the authority of a court to hear and decide cases of the
486
487
VOL. 297, OCTOBER 8, 1998 487 488
„Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise But unless the balance is strongly in favor of the
known as the „Judiciary Reorganization Act of 1980,‰ is hereby defendant,49the plaintiff Ês choice of forum should rarely be
amended to read as follows: disturbed.
SEC. 19. Jurisdiction in Civil Cases.·Regional Trial Courts Weighing the relative claims of the parties, the court a
shall exercise exclusive jurisdiction: quo found it best to hear the case in the Philippines. Had it
xxx xxx xxx refused to take cognizance of the case, it would be forcing
(8) In all other cases in which demand, exclusive of interest, plaintiff (private respondent now) to seek remedial action
damages of whatever kind, attorneyÊs fees, litigation expenses, and elsewhere, i.e. in the Kingdom of Saudi Arabia where she
cost or the value of the property in controversy exceeds One no longer maintains substantial connections. That would
hundred thousand pesos (P100,000.00) or, in such other cases in have caused a fundamental unfairness to her.
Metro Manila, where the demand, exclusive of the above-mentioned Moreover, by hearing the case in the Philippines no
items exceeds Two hundred thousand pesos (P200,000.00). unnecessary difficulties and inconvenience have been
(Emphasis ours) shown by either of the parties. The choice of forum of the
xxx xxx xxx plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over
And following Section 2(b), Rule 4 of the Revised Rules of the persons of the parties herein. By filing her Complaint
Court·the venue, Quezon City, is appropriate: and Amended Complaint with the trial court, private
respondent has voluntarily submitted herself to the
„SEC. 2. Venue in Courts of First Instance.·[Now Regional Trial
jurisdiction of the court.
Court]
The records 50show that petitioner SAUDIA has filed
(a) x x x xxx xxx
several motions praying for the dismissal of MoradaÊs
(b) Personal actions.·All other actions may be commenced and
Amended Complaint. SAUDIA also filed an Answer In Ex
tried where the defendant or any of the defendants resides or may
Abundante Cautelam dated February 20, 1995. What is
be found, or where the plaintiff or any of the plaintiff resides, at the
very patent and explicit from the motions filed, is that
election of the plaintiff.‰
SAUDIA prayed for other reliefs under the premises.
Pragmatic considerations, including the convenience of the Undeniably, petitioner SAUDIA has effectively submitted
parties, also weigh heavily in favor of the RTC Quezon City to the trial courtÊs jurisdiction by praying for the dismissal
assuming jurisdiction. Paramount is the private interest of of the Amended Complaint on grounds other than lack of
the litigant. Enforceability of a judgment if one is obtained jurisdiction.
is quite obvious. Relative advantages and obstacles to a fair
trial are equally important. Plaintiff may not, by choice of ________________
an inconvenient forum, Âvex,Ê Âharass,Ê or ÂoppressÊ the
49 Supra, note 37, p. 58, citing Gulf Oil Corporation v. Gilbert, 350
defendant, e.g. by inflicting upon him needless expense or
U.S. 501, 67 Sup. Ct. 839 (1947).
disturbance.
50 Omnibus Motion to Dismiss dated January 14, 1994; Reply (to
Plaintiff Ês Opposition) dated February 19, 1994; Comment (to Plaintiff Ês
________________ Motion to Admit Amended Complaint dated June 23, 1994) dated July
20, 1994; Manifestation and Motion to Dismiss Amended Complaint
general class to which the proceedings in question belong. (Reyes v.
dated June 23, 1994 under date August 11, 1994; and Motion for
Diaz, 73 Phil. 484, 487)
Reconsideration dated September 19, 1994. ________________
„We observe that the motion to dismiss filed on April 14, 1962, aside some of the significant facts occurred in two or more states;
from disputing the lower courtÊs jurisdiction over defendantÊs and (2) to what extent 53
should the chosen legal system
person, prayed for dismissal of the complaint on the ground that regulate the situation.
plaintiff Ês cause of action has prescribed. By interposing such Several theories have been propounded in order to
second ground in its motion to dismiss, Ker and Co., Ltd. availed of identify the legal system that should ultimately control.
an affirmative defense on the basis of which it prayed the court to Although ideally, all choice-of-law theories should
resolve controversy in its favor. For the court to validly decide the intrinsically advance both notions of justice and
said plea of defendant Ker & Co., Ltd., it necessarily had to acquire predictability, they do not always do so. The forum is then
jurisdiction upon the latterÊs person, who, being the proponent of faced with the problem of deciding 54
which of these two
the affirmative defense, should be deemed to have abandoned its important values should be stressed.
special appearance and voluntarily submitted itself to the Before a choice can be made, it is necessary for us to
jurisdiction of the court.‰ determine under what category a certain set of facts or
rules fall. This process is known as „characterization,‰ or
Similarly, the case of De Midgely vs. Ferandos, held that: the „doctrine of qualification.‰ It is the „process of deciding
whether or not the facts relate to55the kind of question
„When the appearance is by motion for the purpose of objecting to
specified in a conflicts rule.‰ The purpose of
the jurisdiction of the court over the person, it must be for the sole
„characterization‰ is to enable the forum to select the
and separate purpose of objecting to the jurisdiction of the court. If 56
proper law.
his motion is for any other purpose than to object to the jurisdiction
Our starting point of analysis here is not a legal
of the court over his person, he thereby submits himself to the 57
relation, but a factual situation, event, or operative fact.
jurisdiction of the court. A special appearance by motion made for
An essential element of conflict rules is the indication of a
the purpose of objecting to the jurisdiction of the court over the
„test‰ or „connecting factor‰ or „point of contact.‰ Choice-of-
person will be held to be a general appearance, if the party in said
law rules invariably consist of a factual relationship (such
motion should, for example, ask for a dismissal of the action upon
as property right, contract claim) and a connecting factor or
the further ground that the court had no jurisdiction over the
52 point of contact, such as the situs of the res, the place of
subject matter.‰
celebration, 58the place of performance, or the place of
Clearly, petitioner had submitted to the jurisdiction of the wrongdoing.
Regional Trial Court of Quezon City. Thus, we find that the Note that one or more circumstances may be present to
trial court has jurisdiction over the case and that its serve as the possible test for the determination of the
exercise thereof, justified. applica-
As to the choice of applicable law, we note that choice-of-
law problems seek to answer two important questions: (1) ________________
What legal system should control a given situation where
53 Coquia and Pangalangan, Conflict of Laws, 1995 edition, p. 65,
citing Von Mehren, Recent Trends in Choice-of-Law Methodology, 60
Cornell L. Rev. 927 (1975). applicable foreign law is excluded from application
54 Ibid. in a given case for the reason that it falls under one
55 Supra, note 40 at p. 94, citing Falconbridge, Essays on the Conflict of the exceptions to the applications of foreign law;
of Laws, p. 50. and
56 Ibid. (8) the flag of a ship, which in many cases is decisive of
57 Supra, note 37 at p. 136; cf. Mussbaum, Principle of Private practically all legal relationships of the ship and of
International Law, p. 173; and Rabel, The Conflict of Laws: A its master or owner as such. It also covers
Comparative Study, pp. 51-52. contractual relationships particularly contracts of
60
58 Supra, note 37, p. 137. affreightment.‰ (Italics ours.)
491
After a careful study of the pleadings on record, including
allegations in the Amended Complaint deemed admitted
VOL. 297, OCTOBER 8, 1998 491 for purposes of the motion to dismiss, we are convinced
Saudi Arabian Airlines vs. Court of Appeals that there is reasonable basis for private respondentÊs
assertion that
59
ble law. These „test factors‰ or „points of contact‰ or
„connecting factors‰ could be any of the following: ________________
59 Ibid.
„(1) the nationality of a person, his domicile, his
60 Supra, note 37 at pp. 138-139.
residence, his place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a 492
corporation;
(3) the situs of a thing, that is, the place where a thing 492 SUPREME COURT REPORTS ANNOTATED
is, or is deemed to be situated. In particular, the lex
situs is decisive when real rights are involved; Saudi Arabian Airlines vs. Court of Appeals
(4) the place where an act has been done, the locus
actus, such as the place where a contract has been although she was already working in Manila, petitioner
made, a marriage celebrated, a will signed or a tort brought her to Jeddah on the pretense that she would
committed. The lex loci actus is particularly merely testify in an investigation of the charges she made
important in contracts and torts; against the two SAUDIA crew members for the attack on
her person while they were in Jakarta. As it turned out,
(5) the place where an act is intended to come into
she was the one made to face trial for very serious charges,
effect, e.g., the place of performance of contractual
including adultery and violation of Islamic laws and
duties, or the place where a power of attorney is to
tradition.
be exercised;
There is likewise logical basis on record for the claim
(6) the intention of the contracting parties as to the law that the „handing over‰ or „turning over‰ of the person of
that should govern their agreement, the lex loci private respondent to Jeddah officials, petitioner may have
intentionis; acted beyond its duties as employer. PetitionerÊs purported
(7) the place where judicial or administrative act contributed to and amplified or even proximately
proceedings are instituted or done. The lex fori·the caused additional humiliation, misery and suffering of
law of the forum·is particularly important private respondent. Petitioner thereby allegedly facilitated
because, as we have seen earlier, matters of the arrest, detention and prosecution of private respondent
ÂprocedureÊ not going to the substance of the claim under the guise of petitionerÊs authority as employer,
involved are governed by it; and because the lex fori taking advantage of the trust, confidence and faith she
applies whenever the content of the otherwise reposed upon it. As purportedly found by the Prince of
Makkah, the alleged conviction and imprisonment of their relative importance with respect to the particular
private respondent was wrongful. But these capped the issue: (a) the place where the injury occurred; (b) the place
injury or harm allegedly inflicted upon her person and where the conduct causing the injury occurred; (c) the
reputation, for which petitioner could be liable as claimed, domicile, residence, nationality, place of incorporation and
to provide compensation or redress for the wrongs done, place of business of the parties; and (d) the place where
62
the
once duly proven. relationship, if any, between the parties is centered.
Considering that the complaint in the court a quo is one As already discussed, there is basis for the claim that
involving torts, the „connecting factor‰ or „point of contact‰ overall injury occurred and lodged in the Philippines. There
could be the place or places where the tortious conduct or is likewise no question that private respondent is a
lex loci actus occurred. And applying the torts principle in a resident Filipina national, working with petitioner, a
conflicts case, we find that the Philippines could be said as resident foreign corporation engaged here in the business
a situs of the tort (the place where the alleged tortious of international air carriage. Thus, the „relationship‰
conduct took place). This is because it is in the Philippines between the parties was centered here, although it should
where petitioner allegedly deceived private respondent, a be stressed that this suit is not based on mere labor law
Filipina residing and working here. According to her, she violations. From the record, the claim that the Philippines
had honestly believed that petitioner would, in the exercise has the most significant contact
of its rights and in the performance of its duties, „act with
justice, give her her due and observe honesty and good ________________
faith.‰ Instead, petitioner failed to protect her, she claimed.
That certain acts or parts of the injury allegedly occurred 61 Includes the (1) German rule of elective concurrence; (2) „State of
in another country is of no moment. For in our view what is the most significant relationship‰ rule (the Second Restatement of 1969);
important here is the place where the (3) State-interest analysis; and (4) CaverÊs Principle of Preference.
62 Supra, note 37, p. 396.
493
494
498
tracts must be carefully scrutinized „in order to shield the unwary
(or weaker party) from deceptive schemes contained in ready-made
contracts.‰·Greater vigilance, however, is required of the courts
498 SUPREME COURT REPORTS ANNOTATED
VOL. 297, OCTOBER 8, 1998 499
Everett Steamship Corporation vs. Court of Appeals
Everett Steamship Corporation vs. Court of Appeals
other words, private respondent is bound by the whole stipulations
in the bill of lading and must respect the same. Thousand Five Hundred (æ1,552,500.00) Yen, the amount
shown in an Invoice No. MTM-941, dated November 14,
PETITION for review on certiorari of a decision of the 1991. However, petitioner offered to pay only One Hundred
Court of Appeals. Thousand (æ100,000.00) Yen, the maximum amount
stipulated under Clause 18 of the covering bill of lading
The facts are stated in the opinion of the Court. which limits the liability of petitioner.
Soo, Gutierrez, Leogardo & Lee for petitioner. Private respondent rejected the offer and thereafter
Atilano Huaben B. Lim for private respondent. instituted a suit for collection docketed as Civil Case No. C-
15532, against petitioner before the Regional Trial Court of
MARTINEZ, J.: Caloocan City, Branch 126.
At the pre-trial conference, both parties manifested that
Petitioner Everett Steamship Corporation, through this
1 they have no testimonial evidence to offer and agreed
petition for review, seeks the reversal of the decision of the
instead to file their respective memoranda.
Court of Appeals, dated June 14, 1995, in CA-G.R. No. 2
On July 16, 1993, the trial court rendered judgment in
428093, which affirmed the decision of the Regional Trial
favor of private respondent, ordering petitioner to pay: (a)
Court of Kalookan City, Branch 126, in Civil Case No. C-
æ1,552,500.00; (b) æ20,000.00 or its peso equivalent
15532, finding petitioner liable to private respondent
representing the actual value of the lost cargo and the
Hernan-dez Trading Co., Inc. for the value of the lost cargo.
material and packaging cost; (c) 10% of the total amount as
Private respondent imported three crates of bus spare
an award for and as contingent attorneyÊs fees; and (d) to
parts marked as MARCO C/No. 12, MARCO C/No. 13 and
pay the cost of the suit. The trial court ruled:
MARCO C/No. 14, from its supplier, Maruman Trading
Company, Ltd. (Maruman Trading), a foreign corporation „Considering defendantÊs categorical admission of loss and its
based in Inazawa, Aichi, Japan. The crates were shipped failure to overcome the presumption of negligence and fault, the
from Nagoya, Japan to Manila on board Court conclusively finds defendant liable to the plaintiff. The next
„ADELFAEVERETTE,‰ a vessel owned by petitionerÊs point of inquiry the Court wants to resolve is the extent of the
principal, Everett Orient Lines. The said crates were liability of the defendant. As stated earlier, plaintiff contends that
covered by Bill of Lading No. NGO53MN. defendant should be held liable for the whole value for the loss of
Upon arrival of the port of Manila, it was discovered the goods in the amount of æ1,552,500.00 because the terms
that the crate marked MARCO C/No. 14 was missing. This appearing at the back of the bill of lading was so written in fine
was confirmed and admitted by petitioner in its letter of prints and that the same was not signed by plaintiff or shipper
January 13, 1992 addressed to private respondent, which thus, they are not bound by the clause stated in paragraph 18 of the
thereafter made a formal claim upon petitioner for the bill of lading. On the other hand, defendant merely admitted that it
value of the lost cargo amounting to One Million Five lost the shipment but shall be liable only up to the amount of
Hundred Fifty Two æ100,000.00.
„The Court subscribes to the provisions of Article 1750 of the
________________ New Civil Code·
1 Penned by Justice Pacita Canizares-Nye and concurred in by Art. 1750. ÂA contract fixing the sum that may be recovered by the owner
Justices Conchita Carpio-Morales and Antonio P. Solano; Rollo, pp. 33- or shipper for the loss, destruction or de-
40.
________________
499
2 Penned by Judge Oscar M. Payawal, Rollo, pp. 43-50.
500 appellee should therefore not be bound by any of the terms and
conditions in the bill of lading.
500 SUPREME COURT REPORTS ANNOTATED
501
Everett Steamship Corporation vs. Court of Appeals
503
502 SUPREME COURT REPORTS ANNOTATED
Everett Steamship Corporation vs. Court of Appeals
VOL. 297, OCTOBER 8, 1998 503
4
Service, Inc. vs. Intermediate Appellate Court, we ruled: Everett Steamship Corporation vs. Court of Appeals
„It seems clear that even if said section 4 (5) of the Carriage of The above stipulations are, to our mind, reasonable and
Goods by Sea Act did not exist, the validity and binding effect of the just. In the bill of lading, the carrier made it clear that its
liability limitation clause in the bill of lading here are nevertheless liability would only be up to One Hundred Thousand
fully sustainable on the basis alone of the cited Civil Code (æ100,000.00) Yen. However, the shipper, Maruman
Provisions. That said stipulation is just and reasonable is arguable Trading, had the option to declare a higher valuation if the
from the fact that it echoes Art. 1750 itself in providing a limit to value of its cargo was higher than the limited liability of the
liability only if a greater value is not declared for the shipment in carrier. Considering that the shipper did not declare a
the bill of lading. To hold otherwise would amount to questioning higher valuation, it had itself to blame for not complying
the justness and fairness of the law itself, and this the private with the stipulations.
respondent does not pretend to do. But over and above that The trial courtÊs ratiocination that private respondent
consideration, the just and reasonable character of such stipulation could not have ÂÂfairly and freelyÊÊ agreed to the limited
is implicit in it giving the shipper or owner the option of avoiding liability clause in the bill of lading because the said
accrual of liability limitation by the simple and surely far from conditions were printed in small letters does not make the
onerous expedient of declaring the nature and value of the bill of lading invalid. 5
shipment in the bill of lading.‰ We ruled in PAL, Inc. vs. Court of Appeals that the
„jurisprudence on the matter reveals the consistent holding
Pursuant to the afore-quoted provisions of law, it is
of the court that contracts of adhesion are not invalid per se
required that the stipulation limiting the common carrierÊs
and that it has on numerous occasions upheld the binding
liability for loss must be „reasonable and just under the
effect thereof.‰ Also, in Philippine American General
circumstances, and has been freely and fairly agreed upon.‰ 6
Insurance Co., Inc. vs. Sweet Lines, Inc. this Court,
The bill of lading subject of the present controversy
speaking through the learned Justice Florenz D. Regalado,
specifically provides, among others:
held:
„18. All claims for which the carrier may be liable shall be adjusted
„x x x Ong Yiu vs. Court of Appeals, et al., instructs us that
and settled on the basis of the shipperÊs net invoice cost plus freight
Âcontracts of adhesion wherein one party imposes a ready-made
and insurance premiums, if paid, and in no event shall the carrier
form of contract on the other x x x are contracts not entirely
be liable for any loss of possible profits or any consequential loss.
prohibited. The one who adheres to the contract is in reality free to
„The carrier shall not be liable for any loss of or any damage to or
reject it entirely; if he adheres he gives his consent.Ê In the present
in any connection with, goods in an amount exceeding One Hundred
case, not even an allegation of ignorance of a party excuses non-
Thousand Yen in Japanese Currency (æ100,000.00) or its equivalent
compliance with the contractual stipulations since the responsibility
in any other currency per package or customary freight unit
for ensuring full comprehension of the provisions of a contract of
(whichever is least) unless the value of the goods higher than this
carriage devolves not on the carrier but on the owner, shipper, or
consignee as the case may be.‰ (Emphasis supplied) The shipper, Maruman Trading, we assume, has been
7 extensively engaged in the trading business. It can not be
It was further explained in Ong Yiu vs. Court of Appeals said to be ignorant of the business transactions it entered
that stipulations in contracts of adhesion are valid and into involving the shipment of its goods to its customers.
binding. The shipper could not have known, or should know the
stipulations in the bill of lading and there it should have
________________ declared a higher valuation of the goods shipped. Moreover,
Maruman Trading has not been heard to complain that it
5 255 SCRA 48, 58 [1996].
has been deceived or
6 212 SCRA 194, 212-213 [1992].
7 91 SCRA 223 [1979]; Philippine Airlines, Inc. vs. Court of Appeals,
________________
255 SCRA 63 [1996].
8 Ayala Corporation vs. Ray Burton Development Corporation, G.R.
504
No. 126699, August 7, 1998. See also Qua Chee Gan vs. Law Union and
Rock Insurance Co., Ltd., 98 Phil. 95 [1955].
504 SUPREME COURT REPORTS ANNOTATED
505
Everett Steamship Corporation vs. Court of Appeals
„While it may be true that petitioner had not signed the plane ticket VOL. 297, OCTOBER 8, 1998 505
x x, he is nevertheless bound by the provisions thereof. ÂSuch Everett Steamship Corporation vs. Court of Appeals
provisions have been held to be a part of the contract of carriage,
and valid and binding upon the passenger regardless of the latterÊs
rushed into agreeing to ship the cargo in petitionerÊs vessel.
lack of knowledge or assent to the regulation.Ê It is what is known
In fact, it was not even impleaded in this case.
as a contract of Âadhesion,Ê in regards which it has been said that
The next issue to be resolved is whether or not private
contracts of adhesion wherein one party imposes a ready-made form
respondent, as consignee, who is not a signatory to the bill
of contract on the other, as the plane ticket in the case at bar, are
of lading is bound by the stipulations thereof.
contracts not entirely prohibited. The one who adheres to the
Again, in Sea-Land Service, Inc. vs. Intermediate
contract is in reality free to reject it entirely; if he adheres, he gives
Appellate Court (supra), we held that even if the consignee
his consent. x x x, a contract limiting liability upon an agreed
was not a signatory to the contract of carriage between the
valuation does not offend against the policy of the law forbidding
shipper and the carrier, the consignee can still be bound by
one from contracting against his own negligence.‰ (Emphasis
the contract. Speaking through Mr. Chief Justice Narvasa,
supplied)
we ruled:
Greater vigilance, however, is required of the courts when „To begin with, there is no question of the right, in principle, of a
dealing with contracts of adhesion in that the said consignee in a bill of lading to recover from the carrier or shipper for
contracts must be carefully scrutinized „in order to shield loss of, or damage to goods being transported under said bill,
the unwary (or weaker party) from8 deceptive schemes although that document may have been·as in practice it oftentimes
contained in ready-made covenants,‰ such as the bill of is·drawn up only by the consignor and the carrier without the
lading in question. The stringent requirement which the intervention of the consignee. x x x.
courts are enjoined to observe is in recognition of Article 24 Âx x x the right of a party in the same situation as respondent
of the Civil Code which mandates that „(i)n all contractual, here, to recover for loss of a shipment consigned to him under a bill
property or other relations, when one of the parties is at a of lading drawn up only by and between the shipper and the carrier,
disadvantage on account of his moral dependence, springs from either a relation of agency that may exist between him
ignorance, indigence, mental weakness, tender age or other and the shipper or consignor, or his status as stranger in whose favor
handicap, the courts must be vigilant for his protection.‰ some stipulation is made in said contract, and who becomes a party
thereto when he demands fulfillment of that stipulation, in this case did not know of the contents, quantity and value of „the
the delivery of the goods or cargo shipped. In neither capacity can he shipment which consisted of three pre-packed crates
assert personally, in bar to any provision of the bill of lading, the described in Bill of Lading
11
No. NGO-53MN merely as Â3
alleged circumstance that fair and free agreement to such provision CASES SPARE PARTS.Ê ‰
was vitiated by its being in such fine print as to be hardly readable. The bill of lading in question confirms petitionerÊs
Parenthetically, it may be observed that in one comparatively recent contention. To defeat the carrierÊs limited liability, the
case (Phoenix Assurance Company vs. Macondray & Co., Inc., 64 aforecited Clause 18 of the bill of lading requires that the
SCRA 15) where this Court found that a similar package limitation shipper should have declared in writing a higher valuation
clause was „printed in the smallest type on the back of the bill of of its goods before receipt thereof by the carrier and insert
lading,‰ it nonetheless ruled that the consignee was bound thereby the said declaration in the bill of lading, with the extra
on the strength of authority holding that such provisions on liability freight paid. These requirements in the bill of lading were
limitation are as much a part of a bill of lading as though physically never complied with by the shipper, hence, the liability of
in it and as though placed therein by agreement of the parties. the carrier under the limited liability clause stands. The
There can, therefore, be no doubt or equivocation about the commercial Invoice No. MTM-
validity and enforceability of freely-agreed-upon stipulations in a
contract of carriage or bill of lading limiting the liability of the ________________
carrier to an agreed valuation unless the shipper declares a higher
value 9 See Mendoza vs. Philippine Air Lines, Inc., 90 Phil. 836, 845-846.
10 Rollo, p. 116.
506 11 Rollo, p. 13.
507
506 SUPREME COURT REPORTS ANNOTATED
Everett Steamship Corporation vs. Court of Appeals
VOL. 297, OCTOBER 8, 1998 507
and inserts it into said contract or bill. This proposition, moreover, Everett Steamship Corporation vs. Court of Appeals
rests upon an almost uniform weight of authority.‰ (Italics supplied)
941 does not in itself sufficiently and convincingly show
When private respondent formally claimed reimbursement
that petitioner has knowledge of the value of the cargo as
for the missing goods from petitioner and subsequently
contended by private respondent. No other evidence was
filed a case against the latter based on the very same bill of
proffered by private respondent to support its contention.
lading, it (private respondent) accepted the provisions of
Thus, we are convinced that petitioner should be liable for
the contract and thereby made itself a party thereto, or at
9 the full value of the lost cargo.
least has come to court to enforce it. Thus, private
In fine, the liability of petitioner for the loss of the cargo
respondent cannot now reject or disregard the carrierÊs
is limited to One Hundred Thousand (æ100,000.00) Yen,
limited liability stipulation in the bill of lading. In other
pursuant to Clause 18 of the bill of lading.
words, private respondent is bound by the whole
WHEREFORE, the decision of the Court of Appeals
stipulations in the bill of lading and must respect the same.
dated June 14, 1995 in C.A.-G.R. CV No. 42803 is hereby
Private respondent, however, insists that the carrier
REVERSED and SET ASIDE.
should be liable for the full value of the lost cargo in the
SO ORDERED.
amount of æ1,552,500.00, considering that the shipper,
Maruman Trading, had „fully declared the shipment x x x, Regalado (Actg. C.J.), Melo, Puno and Mendoza,
the contents of each 10crate, the dimensions, weight and JJ., concur.
value of the contents,‰ as shown in the commercial Invoice
No. MTM-941. Judgment reversed and set aside.
This claim was denied by petitioner, contending that it
Notes.·Parties to sales contracts and/or bills of lading
are bound by arbitration clauses thereat. (Puromines, Inc.
vs. Court of Appeals, 220 SCRA 281 [1993])
The validity of provisions limiting the liability of
carriers contained in bills of lading have been consistently
upheld, though the Supreme Court has likewise cautioned
against blind reliance on adhesion contracts where the
facts and circumstances warrant that they should be
disregarded. (Philippine Airlines, Inc. vs. Court of Appeals,
255 SCRA 48 [1996])
A contract of adhesion is one in which one of the
contracting parties imposes a ready-made form of contract
which the other party may accept or reject, but cannot
modify. (Polotan, Sr. vs. Court of Appeals, 296 SCRA 247
[1998])
··o0o··
508