CONFLICT OF LAWS (2020) CASE DIGEST
WALDEMAR GRAVADOR
EH401
Hi tag-as kaayo ang digests sorry kay tag-as kaayo
ang cases, then actually na leave out nana ang
uban issues nga dili related sa Conflict. Cheers!
- Conflict Team
Philippine Export and Foreign Loan Guarantee
Corp v. Eusebio Corp.
G.R. No. 140047, July 13, 2004
FACTS:
Petitioner Philippine Export and Foreign Loan
Guarantee Corporation (Philguarantee) sought
reimbursement from the respondents of the sum of
money it paid to Al Ahli Bank of Kuwait pursuant to
a guarantee it issued for respondent V.P. Eusebio
Construction, Inc. (VPECI).
The State Organization of Buildings (SOB), Ministry
of Housing and Construction, Baghdad, Iraq
awarded the construction of the Institute of
Physical Therapy–Medical Rehabilitation Center,
Phase II, in Baghdad, Iraq, (hereinafter the Project)
to Ajyal Trading and Contracting Company
(hereinafter Ajyal), a firm duly licensed with the
Kuwait Chamber of Commerce for a total contract
price of ID5,416,089/046 (or about
US$18,739,668).
3-Plex International, Inc. (hereinafter 3-Plex), a
local contractor engaged in construction business,
entered into a joint venture agreement with Ajyal
wherein the former undertook the execution of the
entire Project, while the latter would be entitled to
a commission of 4% of the contract price. Later,
respondent 3-Plex, not being accredited by or
registered with the Philippine Overseas
Construction Board (POCB), assigned and
transferred all its rights and interests under the
joint venture agreement to VPECI, a construction
and engineering firm duly registered with the
POCB. However, on 2 May 1981, 3-Plex and VPECI
entered into an agreement that the execution of the
Project would be under their joint management.
The SOB required the contractors to submit (1) a
performance bond of representing 5% of the total
contract price and (2) an advance payment bond
representing 10% of the advance payment to be
released upon signing of the contract. 3-Plex and
VPECI applied for the issuance of a guarantee with
petitioner Philguarantee, a government financial
institution empowered to issue guarantees for
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qualified Filipino contractors to secure the
performance of approved service contracts abroad.
Philguarantee approved contractors’ bond.
However, SOB wants bond to be secured by
Rafidain Bank (government bank of Iraq). Rafidain
issued the bonds. Rafidain wants to be counter-
guaranteed. So, it was counter-guarantee by Al Ahli
Bank (Kuwaiti Bank). Al Ahli also wants to be
counter-guaranteed. It was counter-guaranteed by
Philguarantee. (3 Layers of Guarantee):
3plex & VPECI -> Philguarantee -> Al Ahli ->
Rafidain -> SOB
Because of the delay in construction, bonds were
extended as there were about to expire.
As of March 1986, the status of the Project was 51%
accomplished, meaning the structures were
already finished.
On 26 October 1986, Al Ahli Bank of Kuwait sent a
telex call to the petitioner demanding full payment
of its performance bond counter-guarantee.
Upon receiving a copy of that telex message,
respondent VPECI requested Iraq Trade and
Economic Development Minister Mohammad
Fadhi Hussein to recall the telex call on the
performance guarantee for being a drastic action in
contravention of its mutual agreement with the
latter that (1) the imposition of penalty would be
held in abeyance until the completion of the
project; and (2) the time extension would be open,
depending on the developments on the
negotiations for a foreign loan to finance the
completion of the project. It also wrote SOB
protesting the call for lack of factual or legal basis,
since the failure to complete the Project was due to
(1) the Iraqi government's lack of foreign exchange
with which to pay its (VPECI's) accomplishments
and (2) SOB's noncompliance for the past several
years with the provision in the contract that 75%
of the billings would be paid in US dollars.
Subsequently, or on 19 November 1986,
respondent VPECI advised the petitioner not to pay
yet Al Ahli Bank because efforts were being exerted
for the amicable settlement of the Project.
The petitioner received another telex message
from Al Ahli Bank stating that it had already paid to
Rafidain Bank the sum of US$876,564 under its
letter of guarantee, and demanding reimbursement
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CONFLICT OF LAWS (2020)
by the petitioner of what it paid to the latter bank
plus interest thereon and related expenses.
VPECI requested the Central Bank to hold in
abeyance the payment by the petitioner "to allow
the diplomatic machinery to take its course, for
otherwise, the Philippine government, through the
Philguarantee and the Central Bank, would become
instruments of the Iraqi Government in
consummating a clear act of injustice and inequity
committed against a Filipino contractor.
The Central Bank authorized the remittance for its
account of the amount of US$876,564 to Al Ahli
Bank representing full payment of the performance
counter-guarantee for VPECI's project in Iraq. The
petitioner thus paid the amount of US$876,564 to
Al Ahli Bank of Kuwait and US$59,129.83
representing interest and penalty charges
demanded by the latter bank.
Petitioner sent to the respondents separate letters
demanding full payment of the amount plus
accruing interest, penalty charges, and 10%
attorney's fees pursuant to their joint and solidary
obligations under the deed of undertaking and
surety bond. When the respondents failed to pay,
the petitioner filed a civil case for collection of a
sum of money against the respondents before the
RTC.
ISSUE:
Whether the petitioner is entitled to
reimbursement of what it paid to Al Ahli Bank of
Kuwait based on the deed of undertaking and
surety bond from the respondents.
RULING:
No
Petitioner is a guarantor, not a surety.
By guaranty a person, called the guarantor, binds
himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do
so. If a person binds himself solidarily with the
principal debtor, the contract is called suretyship.
In determining petitioner's status, it is necessary to
read Letter of Guarantee, which provides in part as
follows:
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CASE DIGEST ATTY. WALDEMAR GRAVADOR
EH401
In consideration of your issuing the above
performance guarantee/counterguarantee, we
hereby unconditionally and irrevocably guarantee,
under our Ref. No. LG-81-194 F to pay you on your
first written or telex demand Iraq Dinars Two
Hundred Seventy One Thousand Eight Hundred
Eight and fils six hundred ten (ID271,808/610)
representing 100% of the performance bond
required of V.P. EUSEBIO for the construction of
the Physical Therapy Institute, Phase II, Baghdad,
Iraq, plus interest and other incidental expenses
related thereto.
In the event of default by V.P. EUSEBIO, we shall pay
you 100% of the obligation unpaid but in no case
shall such amount exceed Iraq Dinars (ID)
271,808/610 plus interest and other incidental
expenses . . .
As a guaranty, it is still characterized by its
subsidiary and conditional quality because it does
not take effect until the fulfillment of the condition,
namely, that the principal obligor should fail in his
obligation at the time and in the form he bound
himself. In other words, an unconditional
guarantee is still subject to the condition that the
principal debtor should default in his obligation
first before resort to the guarantor could be had. A
conditional guaranty, as opposed to an
unconditional guaranty, is one which depends
upon some extraneous event, beyond the mere
default of the principal, and generally upon notice
of the principal's default and reasonable diligence
in exhausting proper remedies against the
principal.
It appearing that Letter of Guarantee merely stated
that in the event of default by respondent VPECI the
petitioner shall pay, the obligation assumed by the
petitioner was simply that of an unconditional
guaranty, not conditional guaranty. But as earlier
ruled the fact that petitioner's guaranty is
unconditional does not make it a surety. Besides,
surety is never presumed. A party should not be
considered a surety where the contract itself
stipulates that he is acting only as a guarantor. It is
only when the guarantor binds himself solidarily
with the principal debtor that the contract becomes
one of suretyship.
Pertinent Ruling: Respondent is not in default.
A corollary issue is what law should be applied in
determining whether the respondent contractor
has defaulted in the performance of its obligations
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CONFLICT OF LAWS (2020)
under the service contract. The question of
whether there is a breach of an agreement, which
includes default or mora, pertains to the essential
or intrinsic validity of a contract.
No conflicts rule on essential validity of contracts is
expressly provided for in our laws. The rule
followed by most legal systems, however, is that
the intrinsic validity of a contract must be governed
by the lex contractus or "proper law of the
contract." This is the law voluntarily agreed upon
by the parties (the lex loci voluntatis) or the law
intended by them either expressly or implicitly
(the lex loci intentionis). The law selected may be
implied from such factors as substantial
connection with the transaction, or the nationality
or domicile of the parties. Philippine courts would
do well to adopt the first and most basic rule in
most legal systems, namely, to allow the parties to
select the law applicable to their contract, subject
to the limitation that it is not against the law,
morals, or public policy of the forum and that the
chosen law must bear a substantive relationship to
the transaction.
It must be noted that the service contract between
SOB and VPECI contains no express choice of the
law that would govern it. In the United States and
Europe, the two rules that now seem to have
emerged as "kings of the hill" are (1) the parties
may choose the governing law; and (2) in the
absence of such a choice, the applicable law is that
of the State that "has the most significant
relationship to the transaction and the parties."
Another authority proposed that all matters
relating to the time, place, and manner of
performance and valid excuses for non-
performance are determined by the law of the
place of performance or lex loci solutionis, which is
useful because it is undoubtedly always connected
to the contract in a significant way.
In this case, the laws of Iraq bear substantial
connection to the transaction, since one of the
parties is the Iraqi Government and the place of
performance is in Iraq. Hence, the issue of whether
respondent VPECI defaulted in its obligations may
be determined by the laws of Iraq. However, since
that foreign law was not properly pleaded or
proved, the presumption of identity or similarity,
otherwise known as the processual presumption,
comes into play. Where foreign law is not pleaded
or, even if pleaded, is not proved, the presumption
is that foreign law is the same as ours.
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Our law, specifically Article 1169, last paragraph, of
the Civil Code, provides: "In reciprocal obligations,
neither party incurs in delay if the other party does
not comply or is not ready to comply in a proper
manner with what is incumbent upon him." Default
or mora on the part of the debtor is the delay in the
fulfillment of the prestation by reason of a cause
imputable to the former. It is the non-fulfillment of
an obligation with respect to time.
It is undisputed that only 51.7% of the total work
had been accomplished. The 48.3% unfinished
portion consisted in the purchase and installation
of electro-mechanical equipment and materials,
which were available from foreign suppliers, thus
requiring US
Dollars for their importation. The monthly billings
and payments made by SOB reveal that the
agreement between the parties was a periodic
payment by the Project owner to the contractor
depending on the percentage of accomplishment
within the period. The payments were, in turn, to
be used by the contractor to finance the subsequent
phase of the work. However, as explained by VPECI
in its letter to the Department of Foreign Affairs
(DFA), the payment by SOB purely in Dinars
adversely affected the completion of the project.
NB: There was an ongoing Iran-Iraq war which
prevented SOB from setting the foreign exchange
rate (Iraqi Dinar to USD)
As found by both the Court of Appeals and the trial
court, the delay or the noncompletion of the Project
was caused by factors not imputable to the
respondent contractor. It was rather due mainly to
the persistent violations by SOB of the terms and
conditions of the contract, particularly its failure to
pay 75% of the accomplished work in US Dollars.
Indeed, where one of the parties to a contract does
not perform in a proper manner the prestation
which he is bound to perform under the contract,
he is not entitled to demand the performance of the
other party. A party does not incur in delay if the
other party fails to perform the obligation
incumbent upon him. Indeed, where one of the
parties to a contract does not perform in a proper
manner the prestation which he is bound to
perform under the contract, he is not entitled to
demand the performance of the other party. A
party does not incur in delay if the other party fails
to perform the obligation incumbent upon him.
In order that the debtor may be in default it is
necessary that the following requisites be present:
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CONFLICT OF LAWS (2020)
(1) that the obligation be demandable and already
liquidated; (2) that the debtor delays performance;
and (3) that the creditor requires the performance
because it must appear that the tolerance or
benevolence of the creditor must have ended.
As stated earlier, SOB cannot yet demand complete
performance from VPECI because it has not yet
itself performed its obligation in a proper manner,
particularly the payment of the 75% of the cost of
the Project in US Dollars. The VPECI cannot yet be
said to have incurred in delay. Even assuming that
there was delay and that the delay was attributable
to VPECI, still the effects of that delay ceased upon
the renunciation by the creditor, SOB, which could
be implied when the latter granted several
extensions of time to the former. Besides, no
demand has yet been made by SOB against the
respondent contractor. Demand is generally
necessary even if a period has been fixed in the
obligation. And default generally begins from the
moment the creditor demands judicially or
extrajudicially the performance of the obligation.
Without such demand, the effects of default.
Moreover, the petitioner as a guarantor is entitled
to the benefit of excussion, that is, it cannot be
compelled to pay the creditor SOB unless the
property of the debtor VPECI has been exhausted
and all legal remedies against the said debtor have
been resorted to by the creditor. It could also set up
compensation as regards what the creditor SOB
may owe the principal debtor VPECI. In this case,
however, the petitioner has clearly waived these
rights and remedies by making the payment of an
obligation that was yet to be shown to be rightfully
due the creditor and demandable of the principal
debtor.
Petitioner cannot secure reimbursement from
Respondent.
As a rule, a guarantor who pays for a debtor should
be indemnified by the latter and would be legally
subrogated to the rights which the creditor has
against the debtor. However, a person who makes
payment without the knowledge or against the will
of the debtor has the right to recover only insofar
as the payment has been beneficial to the debtor. If
the obligation was subject to defenses on the part
of the debtor, the same defenses which could have
been set up against the creditor can be set up
against the paying guarantor.
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It is clear that the payment made by the petitioner
guarantor did not in any way benefit the principal
debtor, given the project status and the conditions
obtaining at the Project site at that time. Moreover,
the respondent contractor was found to have valid
defenses against SOB, which are fully supported by
evidence and which have been meritoriously set up
against the paying guarantor, the petitioner in this
case. And even if the deed of undertaking and the
surety bond secured petitioner's guaranty, the
petitioner is precluded from enforcing the same by
reason of the petitioner's undue payment on the
guaranty. Rights under the deed of undertaking
and the surety bond do not arise because these
contracts depend on the validity of the
enforcement of the guaranty.
The petitioner guarantor should have waited for
the natural course of guaranty: the debtor VPECI
should have, in the first place, defaulted in its
obligation and that the creditor SOB should have
first made a demand from the principal debtor. It is
only when the debtor does not or cannot pay, in
whole or in part, that the guarantor should pay.
When the petitioner guarantor in this case paid
against the will of the debtor VPECI, the debtor
VPECI may set up against it defenses available
against the creditor SOB at the time of payment.
This is the hard lesson that the petitioner must
learn.
Continental Micronesia vs. Joseph Basso
G.R. No. 178382-83, September 23, 2015
*This is a labor case, but gi disregard lang nako ang
issues about it. Conflict issues ra ang naa diri.
FACTS:
Continental Micronesia (CMI) is a foreign
corporation organized and existing under the laws
in the US. It is licensed to do business here in the
Philippines. Basso, a US citizen, resided in the
Philippines prior to his death. Basso was offered a
General Manager position of the Philippine Branch
of Continental Airlines, he accepted this offer. CMI
took over the Philippine operations of Continental.
Basso received a letter from CMI’s Vice President,
informing Basso that he has agreed to work in CMI
as a consultant on an “as needed basis”, that he will
not earn any monetary compensation, and that he
will be terminated at will upon a 30 day notice. He
offered a counter-proposal but was rejected, thus
he was terminated.
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CONFLICT OF LAWS (2020) CASE DIGEST
EH401
Basso filed a complaint for Illegal Dismissal. CMI
filed a motion to dismiss alleging the existence of
foreign elements; lack of jurisdiction over the
person of CMI and the subject matter. The Labor
Arbiter granted the motion, applying the doctrine
of lex loci contractus and that the terms of the
contract did not intend to apply the Labor Code.
However, the NLRC remanded back the case to
settle the issue on jurisdiction.
RULING OF THE LABOR ARBITER:
The Labor Arbiter dismissed the case for lack of
jurisdiction. The employment contract was
executed in the US. Applying lex loci celebracionis,
US laws apply. Lex loci contractus also applies as
the parties did not intend to apply Philippine Laws.
The contract was prepared in contemplation of
Texas or US laws as there was a payment of US
Federal and Home State income taxes and on
termination by 30-day prior notice.
It was also ruled that Basso was terminated for a
valid cause for a series of acts that constitute
breach of trust and loss of confidence.
RULING OF THE NLRC:
The NLRC did not agree with the Labor Arbiter that
it has no jurisdiction over the controversy. It ruled
that it acquired jurisdiction over the case when CMI
voluntarily submitted to his office’s jurisdiction by
presenting evidence, advancing arguments in
support of the legality of its acts, and praying for
reliefs on the merits of the case.
However, the NLRC agreed that Basso was
dismissed for just and valid cause on the ground of
breach of trust and confidence. Mere existence of a
basis for believing that such employee has
breached the trust of his employer suffices. But,
due process was not complied with.
RULING OF THE COURT OF APPEALS:
The Court of Appeals ruled that the Labor Arbiter
and NLRC had jurisdiction over the subject matter
of the case and over the parties. The case filed is a
termination dispute that is cognizable under our
labor tribunals. Jurisdiction over the person the
person was acquired when Basso filed the
complaint and CMI was served with summons.
However, the allegations of loss of trust and
confidence were not established.
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ISSUE:
Whether or not the labor tribunals had jurisdiction
over the parties and the subject matter.
RULING:
YES.
The labor tribunals had jurisdiction over the
parties and the subject matter (Jurisdiction)
There is a conflict-of-laws issue that needs to be
resolved. The facts established the existence of
foreign elements. The employment contract of
Basso was replete with reference to US laws, and
that it originated form and was returned to the US,
do not automatically preclude our labor tribunals
from exercising jurisdiction to hear and try the
case.
The case stemmed from an illegal dismissal
complaint. The Labor Code, vests original and
exclusive jurisdiction to hear and decide cases
involving termination disputes to the Labor
Arbiter. With this, both Labor Arbiter and NLRC
have jurisdiction over the subject matter.
The Labor Arbiter acquired jurisdiction over the
person of Basso, despite its citizenship, when he
filed the illegal dismissal complaint. CMI was
served also with summon, which they never
denied. Moreover, CMI voluntarily appeared and
participated in the proceedings. CMI, a foreign
corporation, is licensed to do business here in the
Philippines and has a local business address here.
The purpose of this is to subject the foreign
corporations to the jurisdictions of our courts.
The Philippines is a convenient forum (Forum non
conveniens)
Basso may conveniently resort to our labor
tribunals as he and CMI had physical presence in
the Philippines during the duration of the trial. CMI
has a Philippine branch, while Basso was residing
here. Our labor tribunals can also make intelligent
decision as to the law and facts. The incidents of the
case happened in the Philippines. The alleged loss
of trust and confidence happened here and Basso’s
dismissal also took place here.
The law of the Philippines will apply (Choice-of-
law)
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CONFLICT OF LAWS (2020) CASE DIGEST
EH401
CMI argued pursuant to the principles of lex loci
celebracionis and lex loci contractus, US law will
apply. The contract originated and was returned in
the US, and the contract of employment makes
reference to US laws, showing the intention of the
parties that US laws will apply. It was asserted that
the US Railway Labor Act sanctions termination-at-
will provisions in an employment contract.
However, as connecting factors pointed out,
Philippine law is the applicable law, Basso,
although a US citizen, was a resident here from the
time he was hired by CMI and up until his death.
CMI has a license to do business in the Philippines
and maintains a branch here, where Basso was
hired to work, the contract of employment which is
purely consensual was perfected in the Philippines,
the place of performance of Basso’s duties was in
the Philippines and the alleged prohibited acts of
Basso were committed here. Clearly, the
Philippines is the state with the most significant
relationship.
It is also noted that a foreign law, judgment, or
contract contrary to a sound and established public
policy of the forum shall not be applied.
Termination-at-will is anathema to the public
policies on labor protection espoused by our laws
and Constitution, which dictates that no worker
shall be dismissed except for just and authorized
causes provided by law and after observing due
process. Hence, it should not be applied.
Finally, our courts cannot take judicial notice of any
foreign law. Here, the US law may have been
properly pleaded but it was not proved in the labor
tribunals. Here, processual presumption applies,
which gives operation to our own laws here in the
Philippines.
Saudia Arabian Airlines (SAUDIA) vs.
Resbesencio
G.R. No. 198587, January 14, 2015
*daghanag problema aning Saudia oy
FACTS:
Saudia is a foreign corporation established and
existing under the laws of Jeddah, Kingdom of
Saudi Arabia. It has a Philippine office. Ma. Jopette,
Montassah, Rouen, and Loraine (respondents)
were recruited and hired by Saudia as flight
attendants, through a Cabin Attendant contract
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with Saudia. They were separated from service
because they were pregnant.
They had processed their materniaty leaves but it
was disproved and they were required to file their
resignation letters. If they will not resign, they will
be deemed terminated, losing various benefits.
Saudia anchored their termination based on their
Unified Contract, which states:
….that if an Air hostess becomes pregnant at
any time during the term of this contract,
this shall render here employment contract
as void and she will be terminated due to
lack of medical fitness.
They tendered their resignation letters for the fear
of losing some benefits. The filed a complaint
against Saudia for illegal dismissal. Saudia assailed
the jurisdiction of the Labor Arbiter for forum non
conveniens.
RULING OF THE LABOR ARBITER:
The Labor Arbiter dismissed the complaint for lack
of jurisdiction,
RULING OF THE NLRC:
NLRC reversed the ruling. The complainants were
OFW’s which the Labor Arbiter and NLRC has
jurisdiction to hear and decide their illegal
termination. On the matter of forum non
conveniens, it ntoed that there were no special
circumstances that warranted its abstention from
exercising jurisdiction.
RULING OF THE COURT OF APPEALS:
The Court of Appeals modified the award of
separation and backwages.
ISSUE:
Whether the Labor Arbiter and the NLRC may
exercise jurisdiction over Saudia and apply
Philippine law in adjudicating the present dispute.
RULING:
YES.
Summons were validly served on Saudia
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Saudia claimed that the Labor Arbiter and NLRC
had no jurisdiction over it because summons were
never served on it but on “Saudia Manila”. “Saudia
Jeddah” was the employer of respondents and not
“Saudia Manila” as Manila was never a party to the
Cabin Attendant contract, it was Jeddah that
provided the salaries and benefits of respondents,
and it was Jeddah that respondents filed their
resignations.
However, by its own admission Saudia, while a
foreign corporation, has a Philippine office. There
is no real distinction between Jeddah and Manila,
the latter being nothing more than Saudia’s local
office. Service of summons to Manila sufficed to
vest Saudia’s person in Philippine tribunals.
Forum non conveniens and Choice of law
Saudia claims that the difficulty of ascertaining
foreign law calls into operation the principle of
forum non conveniens, thereby rendering improper
the exercise of jurisdiction by Philippines
Tribunals. They are not in a position to make
intelligent decision as to the law and the facts as the
contracts require the application of the laws of
Saudia Arabia. Choice of law and forum non
conveniens are entirely different matters.
Choice of law provisions are an offshoot of the
fundamental principle of autonomy of contracts. In
contrast, forum non conveniens is a device akin to
the rule against forum shopping. It is designed to
frustrate illicit means for securing advantages and
vexing litigants that would otherwise be possible if
the venue of litigation were left entirely to the
whim of either party.
Forum non conveniens relates to forum, not to the
choice of the governing law. This concept may
ultimately result in the application of the foreign
law is merely an incident to its application. Any
evaluation of the propriety of contracting parties'
choice of a forum and its incidents must grapple
with two (2) considerations:
1) The availability and adequacy of
recourse to a foreign tribunal; and
2) The question of where, as between the
forum court and a foreign court, the
balance of interests inhering in a dispute
weighs more heavily.
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Furthermore, two (2) factors weigh into a court's
appraisal of the balance of interests inhering in a
dispute: First, the vinculum which the parties and
their relation have to a given jurisdiction; and
second, the public interest that must animate a
tribunal, in its capacity as an agent of the sovereign,
in choosing to assume or decline jurisdiction. The
first is more concerned with the parties, their
personal circumstances, and private interests; the
second concerns itself with the state and the
greater social order.
Contractual choice of law provisions factor into
transnational litigation and dispute resolution in
one of or in a combination of four ways: (1)
procedures for settling disputes, e.g., arbitration;
(2) forum, i.e., venue; (3) governing law; and (4)
basis for interpretation. Forum non conveniens
relates to, but is not subsumed by, the second of
these.
Likewise, contractual choice of law is not
determinative of jurisdiction. Stipulating on the
laws of a given jurisdiction as the governing law of
a contract does not preclude the exercise of
jurisdiction by tribunals elsewhere. The reverse is
equally true: The assumption of jurisdiction by
tribunals does not ipso facto mean that it cannot
apply and rule on the basis of the parties'
stipulation.
Forum Non Conveniens cannot apply in the case
The case at bar does not entail a preponderance of
linkages that favour a foreign jurisdiction.
1) There is no basis for concluding that the
case can be more conveniently tried
elsewhere. As established earlier, Saudia is
doing business in the Philippines. For their
part, all four (4) respondents are Filipino
citizens maintaining residence in the
Philippines and, apart from their previous
employment with Saudia, have no other
connection to the Kingdom of Saudi
Arabia. It would even be to respondents'
inconvenience if this case were to be tried
elsewhere.
2) The records are bereft of any indication
that respondents filed their Complaint in
an effort to engage in forum shopping or to
vex and inconvenience Saudia.
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3) No indication of "unwillingness to
extend local judicial facilities to non-
residents or aliens." That Saudia has
managed to bring the present controversy.
4) It cannot be said that the local judicial
machinery is inadequate for effectuating
the right sought to be maintained.
Summons was properly served on Saudia
and jurisdiction over its person was
validly acquired.
5) There is not even room for considering
foreign law. Philippine law properly
governs the present dispute.
Even if we were to assume, for the sake of
discussion, that it is the laws of Saudi Arabia which
should apply, it does not follow that Philippine
tribunals should refrain from exercising
jurisdiction. It is not so much the mere applicability
of foreign law which calls into operation forum non
conveniens. Rather, what justifies a court's
desistance from exercising jurisdiction is the
difficulty of ascertaining foreign law or the inability
of a Philippine Court to make an intelligent decision
as to the law.
Consistent with lex loci intentionis, to the extent
that it is proper and practicable (i.e., "to make an
intelligent decision"), Philippine tribunals may
apply the foreign law selected by the parties. In
fact, in this case, respondents themselves have
made averments as to the laws of Saudi Arabia. In
their Comment, respondents write:
Under the Labor Laws of Saudi Arabia and
the Philippines it is illegal and unlawful to
terminate the employment of any woman
by virtue of pregnancy. The law in Saudi
Arabia is even more harsh and strict in that
no employer can terminate the employment
of a female worker or give her a warning of
the same while on Maternity Leave,
Saudias contract is against public policy
Our law on contracts recognizes the validity of
contractual choice of law provisions. Where such
provisions exist, Philippine tribunals, acting as the
forum court, generally defer to the parties'
articulated choice. While a Philippine tribunal
(acting as the forum court) is called upon to respect
the parties' choice of governing law, such respect
must not be so permissive as to lose sight of
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considerations of law, morals, good customs, public
order, or public policy that underlie the contract
central to the controversy.
Article II, Section 14 of the 1987 Constitution
provides that "the State . . . shall ensure the
fundamental equality before the law of women and
men." Contrasted with Article II, Section 1 of the
1987 Constitution's statement that "no person
shall . . . be denied the equal protection of the laws,"
Article II, Section 14 exhorts the State to "ensure."
This does not only mean that the Philippines shall
not countenance nor lend legal recognition and
approbation to measures that discriminate on the
basis of one's being male or female. It imposes an
obligation to actively engage in securing the
fundamental equality of men and women.
Convention on the Elimination of all Forms of
Discrimination against Women (CEDAW), which
forms part to the law of our land defines
“discrimination against women” as:
Any distinction, exclusion or restriction
made on the basis of sex which has the effect
or purpose of impairing or nullifying the
recognition, enjoyment or exercise by
women, irrespective of their marital status,
on a basis of equality of men and women, of
human rights and fundamental freedoms in
the political, economic, social, cultural, civil
or any other field.
The constitutional exhortation to ensure
fundamental equality, as illumined by its enabling
law, the CEDAW, must inform and animate all the
actions of all personalities acting on behalf of the
State. It is, therefore, the bounden duty of this
court, in rendering judgment on the disputes
brought before it, to ensure that no discrimination
is heaped upon women on the mere basis of their
being women.
Saudia's policy entails the termination of
employment of Flight attendants who become
pregnant. At the risk of stating the obvious,
pregnancy is an occurrence that pertains
specifically to women. Saudia's policy excludes
from and restricts employment on the basis of no
other consideration but sex.
The Court did not lose sight of the reality that
pregnancy does present physical limitations that
may render difficult the performance of functions
associated with being a Flight attendant.
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Nevertheless, it would be the height of iniquity to
view pregnancy as a disability so permanent and
immutable that it must entail the termination of
one's employment. It is clear to us that any
individual, regardless of gender, may be subject to
exigencies that limit the performance of functions.
However, the Court failed to appreciate how
pregnancy could be such an impairing occurrence
that it leaves no other recourse but the complete
termination of the means through which a woman
earns a living.
Contracts relating to labor and employment are
impressed with public interest
Article 1700 of the Civil Code provides that “the
relation between capital and labor are not merely
contractual. They are so impressed with public
interest that labor contracts must yield to the
common good. Philippine laws and regulations
cannot be rendered illusory by the parties agreeing
upon some other law to govern their relationship.
As the present dispute relates to the illegal
termination of respondents' employment, this case
is immutably a matter of public interest and public
policy. Consistent with clear pronouncements in
law and jurisprudence, Philippine laws properly
find application in and govern this case.
Industrial Personnel & Management Services,
Inc. vs. De Vera
G.R. No. 205703, March 7, 2016
FACTS:
Petitioner Industrial Personnel & Management
Services, Inc. (IPAMS) is a local placement agency
duly organized and existing under Philippine laws.
Petitioner SNC Lavalin Engineers & Contractors,
Inc. (SNC-Lavalin) is the principal of IPAMS, a
Canadian company with business interests in
several countries.
Respondent Alberto Arriola, a licensed general
surgeon in the Philippines, was hired by SNC-
Lavalin, through its local manning agency, IPAMS,
as a safety officer in its Ambatovy Project site in
Madagascar. After three months, Arriola received a
notice of pre-termination of employment due to
diminishing workload in the area of his expertise
and the unavailability of alternative assignments.
Consequently, Arriola was repatriated and he filed
a complaint against the petitioners for illegal
dismissal and non-payment of overtime pay,
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vacation leave and sick leave pay before the Labor
Arbiter (LA).
He claimed that SNC-Lavalin still owed him unpaid
salaries equivalent to the three-month unexpired
portion of his contract and asserted that the latter
never offered any valid reason for his early
termination and that he was not given enough
notice regarding the same. He also insisted that the
petitioners must prove the applicability of
Canadian law before the same could be applied to
his employment contract.
The petitioner denied the charge of illegal
dismissal against them. They relied on a copy of the
Employment Standards Act (ESA) of Ontario, which
was duly authenticated by the Canadian authorities
and certified by the Philippine Embassy. They
insisted that all of Arriola's employment
documents were processed in Canada, not to
mention that SNC Lavalin's office was in Ontario,
the principle of lex loci celebrationis was
applicable. Hence, they insisted that Canadian laws
governed the contract.
The said foreign law did not require any ground for
early termination of employment, and the only
requirement was the written notice of termination.
Even if Philippine laws should apply, Arriola would
still be validly dismissed because domestic law
recognized retrenchment and redundancy as legal
grounds for termination.
The Labor Arbiter (LA) dismissed the complaint of
Arriola, while the NLRC reversed the LA's ruling
stating the Filipino workers are protected by our
labor laws wherever they may be working. The
petitioners filed a petition for certiorari before the
CA arguing that it should be the ESA, or the Ontario
labor law, that should be applied in Arriola's
employment contract, but the Court of Appeals
affirmed NLRC. Hence, this petition.
ISSUE:
Whether or not Canadian law shall be applied to
this case.
RULING:
NO, Canadian Law cannot be applied. The
contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law,
morals, good customs, public order, or public
policy.
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The foreign law invoked is contrary to the
Constitution and the Labor Code, violative of the
employee’s right to security of tenure. As a rule,
Philippine laws apply even to overseas
employment contracts. This rule is rooted in the
constitutional provision of Section 3, Article XIII
that the State shall afford full protection to labor,
whether local or overseas. Hence, even if the OFW
has his employment abroad, it does not strip him of
his rights to security of tenure, humane conditions
of work and a living wage under our Constitution.
As an exception, the parties may agree that a
foreign law shall govern the employment contract.
A synthesis of the existing laws and jurisprudence
reveals that this exception is subject to the
following requisites:
That it is expressly stipulated in the overseas
employment contract that a specific foreign law
shall govern;
That the foreign law invoked must be proven
before the courts pursuant to the Philippine rules
on evidence;
That the foreign law stipulated in the overseas
employment contract must not be contrary to law,
morals, good customs, public order, or public
policy of the Philippines; and
That the overseas employment contract must be
processed through the POEA.
Lacking any one of the four requisites would
invalidate the application of the foreign law, and
the Philippine law shall govern the overseas
employment contract.
In the present case, even though an authenticated
copy of the ESA was submitted, it did not mean that
said foreign law could be automatically applied to
this case.
The petitioners failed to comply with the first
requisite because no foreign law was expressly
stipulated in the overseas employment contract
with Arriola. The petitioners did not directly cite
any specific provision or stipulation in the said
labor contract which indicated the applicability of
the Canadian labor laws or the ESA. They failed to
show on the face of the contract that a foreign law
was agreed upon by the parties.
The provisions of the ESA are also patently
inconsistent with the right to security of an
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employee of tenure provided by both the
Constitution and the Labor Code. In a host of cases,
the Court has upheld the employee's right to
security of tenure in the face of oppressive
management behavior and management
prerogative. Security of tenure is a right which
cannot be denied on mere speculation of any
unclear and nebulous basis. Furthermore, not only
do these provisions collide with the right to
security of tenure, but they also deprive the
employee of his constitutional right to due process
by denying him of any notice of termination and the
opportunity to be heard.
Augusto Benedicto Santos III, represented by
his father and legal guardian, Augusto
Benedicto Santos, vs. Northwest Orient
Airlines
G.R. No. 101538, June 23, 1982
FACTS:
This case involves the proper interpretation of
Article 28(1) of the Warsaw Convention, reading as
follows:
Art. 28. (1) An action for damage must be brought
at the option of the plaintiff, in the territory of one
of the High Contracting Parties, either before the
court of the domicile of the carrier or of his
principal place of business, or where he has a place
of business through which the contract has been
made, or before the court at the place of
destination.
The petitioner is a minor and a resident of the
Philippines. Private respondent Northwest Orient
Airlines (NOA) is a foreign corporation with
principal office in Minnesota, U.S.A., and licensed to
do business and maintain a branch office in the
Philippines. Petitioner purchased from NOA a
round-trip ticket in San Francisco, U.S.A., for his
flight from San Francisco to Manila via Tokyo and
back. The scheduled departure date from Tokyo
was indicated therein. However, no date was
specified for his return to San Francisco.
He checked in at the NOA counter in the San
Francisco airport for his scheduled departure to
Manila. Despite a previous confirmation and re-
confirmation, he was informed that he had no
reservation for his flight from Tokyo to Manila. He
therefore had to be wait-listed. He then sued NOA
for damages in the Regional Trial Court of Makati.
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NOA herein moved to dismiss the complaint on the
ground of lack of jurisdiction. They contended that
the complaint could be instituted only in the
territory of one of the High Contracting Parties,
before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through
which the contract had been made;
4. the court of the place of destination.
NOA contended that the Philippines was not its
domicile nor was this its principal place of
business. Neither was the petitioner's ticket issued
in this country nor was his destination Manila but
San Francisco in the United States.
RULING OF THE TRIAL COURT:
Granted the motion and dismissed the case.
RULING OF THE COURT OF APPEALS:
Affirmed the decision of the RTC.
ISSUES:
Whether or not Article 28(1) of the Warsaw
Convention violates the constitutional guarantees
of due process and equal protection. (No)
Whether or not Philippine courts has jurisdiction
over the case. (NONE. Most related to topic)
Whether or not Article 24 of the Civil Code on the
protection of minors may be invoked. (No)
RULING:
No. The Warsaw Convention is not
unconstitutional.
The Republic of the Philippines is a party to the
Convention for the Unification of Certain Rules
Relating to International Transportation by Air,
otherwise known as the Warsaw Convention. The
Convention is thus a treaty commitment
voluntarily assumed by the Philippine government
and, as such, has the force and effect of law in this
country.
Petitioner’s Contention (A): No substantial
distinction between a person who purchases a ticket
in Manila and a person who purchases his ticket in
San Francisco. The classification of the places in
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ATTY. WALDEMAR GRAVADOR
which actions for damages may be brought is
arbitrary and irrational and thus violates the due
process and equal protection clauses.
It is well-settled that courts will assume
jurisdiction over a constitutional question only if it
is shown that the essential requisites of a judicial
inquiry into such a question are first satisfied.
There must be an actual case or controversy
involving a conflict of legal rights susceptible of
judicial determination; the constitutional question
must have been opportunely raised by the proper
party; and the resolution of the question is
unavoidably necessary to the decision of the case
itself.
The treaty which is the subject matter of this
petition was a joint legislative-executive act. The
presumption is that it was first carefully studied
and determined to be constitutional before it was
adopted and given the force of law in this country.
The petitioner's allegations are not convincing
enough to overcome this presumption.
Petitioner’s Contention (B): Petitioner invoked the
doctrine of rebus sic stantibus.
According to Jessup, "this doctrine constitutes an
attempt to formulate a legal principle which would
justify non-performance of a treaty obligation if the
conditions with relation to which the parties
contracted have changed so materially and so
unexpectedly as to create a situation in which the
exaction of performance would be unreasonable."
The key element of this doctrine is the vital change
in the condition of the contracting parties that they
could not have foreseen at the time the treaty was
concluded.
It is true that at the time the Warsaw Convention
was drafted, the airline industry was still in its
infancy. However, that circumstance alone is not
sufficient justification for the rejection of the treaty
at this time. The changes recited by the petitioner
were, realistically, not entirely unforeseen
although they were expected in a general sense
only. The Convention itself, anticipated such
developments as contained in Article 41. But the
more important consideration is that the treaty has
not been rejected by the Philippine government.
The doctrine of rebus sic stantibus does not
operate automatically to render the treaty
inoperative. There is a necessity for a formal act of
rejection, usually made by the head of State, with a
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statement of the reasons why compliance with the
treaty is no longer required.
However, the treaty may be denounced even
without an expressed justification for this action.
Such denunciation is authorized under its Article
39. But obviously, rejection of the treaty, whether
on the ground of rebus sic stantibus or pursuant to
Article 39, is not a function of the courts but of the
other branches of government. This is a political
act. The conclusion and renunciation of treaties is
the prerogative of the political departments and
may not be usurped by the judiciary.
Petitioner’s Contention (C): Petitioner claims that
the lower court erred in ruling that the plaintiff must
sue in the United States, because this would deny him
the right to access to our courts.
The constitutional guaranty of access to courts
refers only to courts with appropriate jurisdiction
as defined by law. It does not mean that a person
can go to any court for redress of his grievances
regardless of the nature or value of his claim. If the
petitioner is barred from filing his complaint
before our courts, it is because they are not vested
with the appropriate jurisdiction under the
Warsaw Convention, which is part of the law of our
land.
None. The Philippine Courts has no jurisdiction.
Petitioner’s contention: lower court erred in not
ruling that Article 28(1) of the Warsaw Convention
is a rule merely of venue and was waived by
defendant when it did not move to dismiss on the
ground of improper venue.
By its own terms, the Convention applies to all
international transportation of persons performed
by aircraft for hire. Whether the transportation is
"international" is determined by the contract of the
parties, which in the case of passengers is the
ticket. When the contract of carriage provides for
the transportation of the passenger between
certain designated terminals "within the territories
of two High Contracting Parties," the provisions of
the Convention automatically apply and
exclusively govern the rights and liabilities of the
airline and its passenger. The flight involved in the
case at bar is international and thus subject to the
Warsaw Convention.
Whether Article 28(1) refers to jurisdiction or only
to venue is a question over which authorities are
sharply divided. Venue and jurisdiction are entirely
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distinct matters. Jurisdiction may not be conferred
by consent or waiver upon a court which otherwise
would have no jurisdiction over the subject-matter
of an action; but the venue of an action as fixed by
statute may be changed by the consent of the
parties and an objection that the plaintiff brought
his suit in the wrong county may be waived by the
failure of the defendant to make a timely objection.
Rules as to jurisdiction can never be left to the
consent or agreement of the parties, whether or not
a prohibition exists against their alteration.
A number of reasons tends to support the
characterization of Article 28(1) as a jurisdiction
and not a venue provision:
First, the wording of Article 32, which indicates the
places where the action for damage "must" be
brought, underscores the mandatory nature of
Article 28(1). Second, this characterization is
consistent with one of the objectives of the
Convention, which is to "regulate in a uniform
manner the conditions of international
transportation by air." Third, the Convention does
not contain any provision prescribing rules of
jurisdiction other than Article 28(1), which means
that the phrase "rules as to jurisdiction" used in
Article 32 must refer only to Article 28(1).
Where the matter is governed by the Warsaw
Convention, jurisdiction takes on a dual concept.
Jurisdiction in the international sense must be
established in accordance with Article 28(1) of the
Warsaw Convention, following which the
jurisdiction of a particular court must be
established pursuant to the applicable domestic
law. Only after the question of which court has
jurisdiction is determined will the issue of venue be
taken up. This second question shall be governed
by the law of the court to which the case is
submitted.
The place of destination, within the meaning of the
Warsaw Convention, is determined by the terms of
the contract of carriage or, specifically in this case,
the ticket between the passenger and the carrier.
Examination of the petitioner's ticket shows that
his ultimate destination is San Francisco. Although
the date of the return fight was left open, the
contract of carriage between the parties indicates
that NOA was bound to transport the petitioner to
San Francisco from Manila. Manila should therefore
be considered merely an agreed stopping place and
not the destination.
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Article 1(2) also draws a distinction between a
"destination" and an "agreed stopping place." It is
the "destination" and not an "agreed stopping
place" that controls for purposes of ascertaining
jurisdiction under the Convention. The contract is
a single undivided operation, beginning with the
place of departure and ending with the ultimate
destination.
Petitioner’s contention: The petitioner argues that
the Warsaw Convention was originally written in
French and that in interpreting its provisions,
American courts have taken the broad view that the
French legal meaning must govern. In French, he
says, the "domicile" of the carrier means every place
where it has a branch office.
Notably, the domicile of the carrier is only one of
the places where the complaint is allowed to be
filed under Article 28(1). The plaintiff's request to
adopt this basis of jurisdiction is in effect a request
to create a new jurisdictional standard for the
Convention. There is no suggestion in the treaty
that French law was intended to govern the
meaning of Warsaw's terms, nor have we found any
indication to this effect in its legislative history or
from our study of its application and interpretation
by other courts.
Petitioner’s contention: The petitioner claims that
the lower court erred in not ruling that Art. 28(1) of
the Warsaw Convention does not apply to actions
based on tort.
The petitioner alleges that the gravamen of the
complaint is that private respondent acted
arbitrarily and in bad faith, discriminated against
the petitioner, and committed a willful misconduct
because it canceled his confirmed reservation and
gave his reserved seat to someone who had no
better right to it. In short, the private respondent
committed a tort. Such allegation, he submits,
removes the present case from the coverage of the
Warsaw Convention. This position is negated by
Husserl v. Swiss Air Transport Company, where the
article in question was interpreted. The allegation
of willful misconduct resulting in a tort is
insufficient to exclude the case from the
comprehension of the Warsaw Convention.
The petitioner has apparently misconstrued the
import of Article 25(1) of the Convention. It is
understood under this article that the court called
upon to determine the applicability of the
limitation provision must first be vested with the
appropriate jurisdiction. Article 28(1) is the
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provision in the Convention which defines that
jurisdiction. Article 22 23 merely fixes the
monetary ceiling for the liability of the carrier in
cases covered by the Convention. If the carrier is
indeed guilty of willful misconduct, it can avail
itself of the limitations set forth in this article. But
this can be done only if the action has first been
commenced properly under the rules on
jurisdiction set forth in Article 28 (1).
Article 24 cannot be applied in the case at bar.
The provision assumes that the court is vested with
jurisdiction to rule in favor of the disadvantaged
minor. As already explained, such jurisdiction is
absent in the case at bar.
CONCLUSION:
A number of countries have signified their concern
over the problem of citizens being denied access to
their own courts because of the restrictive
provision of Article 28(1) of the Warsaw
Convention. Among these is the United States,
which has proposed an amendment that would
enable the passenger to sue in his own domicile if
the carrier does business in that jurisdiction. The
proposal was incorporated in the Guatemala
Protocol amending the Warsaw Convention but it
is still ineffective because it has not yet been
ratified by the required minimum number of
contracting parties.
Pending such ratification, the petitioner will still
have to file his complaint only in any of the four
places designated by Article 28(1) of the Warsaw
Convention. The proposed amendment bolsters the
ruling of this Court that a citizen does not
necessarily have the right to sue in his own courts
simply because the defendant airline has a place of
business in his country. WHEREFORE, the petition
is DENIED.
Sabena Belgian Airlines v. Court of Appeals
G.R. No. 104685, March 14, 1996
FACTS:
Plaintiff Ma. Paula San Agustin, herein private
respondent, was a passenger on board Flight SN
284 of defendant airline originating from
Casablanca to Brussels, Belgium on her way back to
Manila. She checked in her luggage which
contained her valuables, namely: jewelries valued
at $2,350.00; clothes $1,500.00; shoes/bag $150;
accessories $75; luggage itself $10.00; or a total of
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$4,265.00, for which she was issued Tag No. 71423.
She stayed overnight in Brussels and her luggage
was left on board Flight SN 284.
She arrived at Manila International Airport and
immediately submitted her Tag No. 71423 but her
luggage was missing. She was advised to
accomplish and submit a property Irregularity
Report which she submitted and filed on the same
day but when her luggage could not be found, she
filed a formal complaint with defendant’s Local
Manager.
Subsequently, plaintiff was furnished copies of
telexes of defendant’s Brussel’s Office that the
latter found her luggage and that they have broken
the locks for identification. Plaintiff was assured by
the defendant that it has notified its Manila Office
that the luggage will be shipped to Manila. But
unfortunately plaintiff was informed that the
luggage was lost for the second time.
Plaintiff demanded from the defendant the money
value of the luggage and its contents or its exchange
value, but defendant refused to settle the
claim. Defendant asserts in its Answer and its
evidence tend to show that while it admits that the
plaintiff was a passenger with a piece of checked in
luggage, the loss of the luggage was due to
plaintiff’s sole if not contributory negligence.
Defenses: Petitioner airline company, in
contending that the alleged negligence of private
respondent should be considered the primary
cause for the loss of her luggage, avers that, despite
her awareness that the flight ticket had been
confirmed only for Casablanca and Brussels, and
that her flight from Brussels to Manila had yet
to be confirmed, she did not retrieve the
luggage upon arrival in Brussels. Petitioner
insists that private respondent, being a seasoned
international traveler, must have likewise been
familiar with the standard provisions contained in
her flight ticket that items of value are required to
be hand-carried by the passenger and that the
liability of the airline or loss, delay or damage to
baggage would be limited, in any event, to only
US$20.00 per kilo unless a higher value is declared
in advance and corresponding additional charges
are paid thereon. At the Casablanca International
Airport, private respondent, in checking in her
luggage, evidently did not declare its contents or
value, pursuant to Section 5(c), Article IX, of the
General Conditions of Carriage (Warsaw
Convention), which states that: “Passengers shall
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not include in his checked baggage, and the carrier
may refuse to carry as checked baggage, fragile or
perishable articles, money, jewelry, precious
metals, negotiable papers, securities or other
valuables.”
ISSUE:
Whether or not the airline is liable for the lost
luggage.
RULING:
Yes
Fault or negligence consists in the omission of that
diligence which is demanded by the nature of an
obligation and corresponds with the circumstances
of the person, of the time, and of the place. When
the source of an obligation is derived from a
contract, the mere breach or non-fulfillment of
the prestation gives rise to the presumption of
fault on the part of the obligor. This rule is not
different in the case of common carriers in the
carriage of goods which, indeed, are bound to
observe not just the due diligence of a good father
of a family but that of “extraordinary” care in the
vigilance over the goods.
The only exceptions to the foregoing extraordinary
responsibility of the common carrier is when the
loss, destruction, or deterioration of the goods is
due to any of the following causes:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers;
(5) Order or act of competent public authority.’
Not one of the above excepted causes obtains in
this case.
The airline cannot invoke the tort doctrine of
proximate cause because the private respondent’s
luggage was lost while it was in the custody of
petitioner. The “loss of said baggage not only once
by twice,” said the appellate court, “underscores
the wanton negligence and lack of care” on the part
of the carrier. The above findings foreclose
whatever rights petitioner might have had to the
UNIVERSITY OF SAN CARLOS
CONFLICT OF LAWS (2020) CASE DIGEST ATTY. WALDEMAR GRAVADOR
EH401

possible limitation of liabilities enjoyed by obligation, including moral and exemplary

international air carriers under the Warsaw damages.
Convention.

In Alitalia vs. Intermediate Appellate Court, the

Court held that “the Warsaw Convention however
denies to the carrier availment ‘of the provisions
which exclude or limit his liability, if the damage is
caused by his willful misconduct or by such default
on his part as, in accordance with the law of the
court seized of the case, is considered to be
equivalent to willful misconduct,’ or ‘if the damage
is (similarly) caused x x x by any agent of the carrier
acting within the scope of his employment.’

The Hague Protocol amended the Warsaw

Convention by removing the provision that if the
airline took all necessary steps to avoid the
damage, it could exculpate itself completely, and
declaring the stated limits of liability not applicable
‘if it is proved that the damage resulted from an act
or omission of the carrier, its servants or agents,
done with intent to cause damage or recklessly and
with knowledge that damage would probably
result.’ The same deletion was effected by the
Montreal Agreement of 1966, with the result that a
passenger could recover unlimited damages upon
proof of wilful misconduct.

The Convention does not thus operate as an

exclusive enumeration of the instances of an
airline’s liability, or as an absolute limit of the
extent of that liability. It should be deemed a limit
of liability only in those cases where the cause of
the death or injury to person, or destruction, loss
or damage to property or delay in its transport is
not attributable to or attended by any willful
misconduct, bad faith, recklessness or
otherwise improper conduct on the part of any
official or employee for which the carrier is
responsible, and there is otherwise no special
or extraordinary form of resulting injury.

Pertinent Ruling: The Court thus sees no error in

the preponderant application to the instant case by
the appellate court, as well as by the trial court, of
the usual rules on the extent of recoverable
damages beyond the Warsaw limitations. Under
domestic law and jurisprudence (the Philippines
being the country of destination), the attendance
of gross negligence (given the equivalent of fraud
or bad faith) holds the common carrier liable for all
damages which can be reasonably attributed,
although unforeseen, to the nonperformance of the

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