IQUINA, EUNICE I.

JD 3 Conflict of Laws

1. ABC and XYZ entered into a contract in Japan, whereby it was agreed that ABC would
build a commercial building for XYZ in the Philippines, and in payment for the
construction, XYZ will transfer and convey his cattle ranch located in the United States in
favor of ABC. Now a case was filed in the Philippines, how do you resolve the conflict of
laws situation? (10)

What law would govern:

a) The validity of the contract?

The law that will govern the validity of the contract is the law of Japan.

The law provides that the law of the place where the contract is made or entered into governs
with respect to the nature and validity, obligation and interpretation.

In the case provided, the contract was entered into in Japan. Therefore, the laws of Japan will
govern the contract.

b) The performance of the contract?

The law of Japan will govern the performance of the contract.

The law provides that the law of the place where the contract is made or entered into governs
with respect to nature and validity, obligation and interpretation.

In the case provided, the contract was entered into in Japan. Therefore, the performance of the
obligation in the contract will be governed by the laws of Japan.

c) The consideration of the contract?

The law that will govern the consideration of the contract is the agreement said in the contract.

The law provides that the contract is the law of the parties.

In the case provided, the contract provided for the consideration which both parties agreed upon
when it was perfected. Therefore, the contract will serve as the law of the parties.

2. Juan, a citizen and resident of New York, U.S.A., under whose law he was still a minor,
being only 20 years of age, was hired by ABC Corporation of Manila to serve for two
years as its chief computer programmer. But after serving for only four months, he
resigned to join XYZ Corporation, which enticed him by offering more advantageous
terms. His first employer sues him in Manila for damages arising from the breach of his
contract of employment. He sets up his minority as a defense and asks for annulment of
the contract on that ground. The plaintiff disputes this by alleging that since the contract
was executed in the Philippines under whose law the age of majority is 18 years, he was
no longer a minor at the time of perfection of the contract. (10)
IQUINA, EUNICE I. JD 3 Conflict of Laws

​ ) Will the suit prosper?

a
Yes, the suit will prosper.

The law provides that the law of the place where the contract is made or entered into governs
with respect to the nature and validity and obligation and interpretation of the said contract.

In the case provided, the contract entered into by Juan was perfected in the Philippines in which
he is no longer a minor considering Philippine laws.

Therefore, the suit will prosper because Juan violated his contract with ABC Corporation.

​ ) Suppose XYZ Corporation is impleaded as a co-defendant, what would be the basis

b
of its liability if any?

If XYZ Corporation was impleaded as a co-defendant, it will not have any liability. The breach of
contract will only be affected if Juan would accept XYZ’s job offer and such breach will be
caused by Juan himself, not XYZ.

The fact that Juan accepted the offer would not cause any liability against XYZ Corporation
since no fraud or deceit was used by XYZ for Juan to accept its offer.

3. Edna was hired as a domestic helper in Hongkong by Dragon Services, Ltd., through
its local agent. She executed a standard employment contract designed by the Philippine
Overseas Workers Administration (POEA) for overseas Filipino workers. It provided for
her employment for one year at a salary of US$1,000.00 a month. It was submitted to and
approved by the POEA. However, when she arrived in Hongkong, she was asked to sign
another contract by Dragon Services, Ltd. which reduced her salary to only US$600.00 a
month. Having no other choice, Edna signed the contract but when she returned to the
Philippines, she demanded payment of the salary differential of US$400.00 a month.
Both Dragon Services, Ltd. and its local agent claimed that the second contract is valid
under the laws of Hongkong, and therefore binding on Edna.

Is their claim correct? Explain. (10)

No, their claim is not correct.

The law provides that the law of the place where the contract is made or entered into governs
with respect to the nature and validity, obligation and interpretation.

In the case provided, the contract was perfected in the Philippines and the second contract
should be considered invalid since there was use of force and deceit to get the consent of Edna.

Therefore, the claim of Dragon Services, Ltd. is not valid.

IQUINA, EUNICE I. JD 3 Conflict of Laws

4. On 8 December 1991 Alma purchased from the Manila office of Euro-Aire an airline
ticket for its Flight No. 710 from Dallas to Chicago on 16 January 1992. Her flight
reservation was confirmed. On her scheduled departure, Alma checked in on time at the
Dallas airport. However, at the check-in counter, she discovered that she was waitlisted
with some other passengers because of intentional overbooking, a Euro-Aire policy, and
practice. Euro-Alre admitted that Alma was not advised of such policy when she
purchased her plane ticket. Alma was only able to fly two days later by taking another
airline.

Alma sued Euro-Aire in Manila for breach of contract and damages. Euro-Aire claimed
that it cannot be held liable for damages because its practice of overbooking passengers
was allowed by the U.S. Code of Federal Regulations. Alma on the other hand
contended that assuming that the U.S. Code of Federal Regulations allowed Intentional
overbooking, the airline company cannot invoke the U.S. Code on the ground that the
ticket was purchased in Manila, hence, Philippine law should apply, under which Alma
can recover damages for breach of contract of carriage. Whose contention is correct.
Decide and discuss fully. (10).
Alma’s contention is correct.

The law provides that the law of the place where the ticket was issued will govern.

In the case provided, the ticket was issued in the Philippines and in Philippine law, overbooking
amounts to fraud or bad faith.

Therefore, Alma’s contention that Philippine Law should apply and that she can recover for
damages for breach of contract is correct.

5. The Japan Air Lines (JAL), a foreigner corporation licensed to do business in the
Philippines, executed in Manila a contract of employment with Maritess Guapa under
which the latter was hired as a stewardess on the aircraft flying the Manila-Japan-Manila
route. The contract specifically provides that (1) the duration of the contract shall be two
(2) years, (2) notwithstanding the above duration, JAL may terminate the agreement at
any time by giving her notice in writing ten (10) days in advance, and (3) the contract
shall be construed as governed under and by the laws of Japan and only the court in
Tokyo, Japan shall have the jurisdiction to consider any matter arising from or relating to
the contract.

JAL dismissed Maritess on the fourth month of her employment without giving her due
notice. Maritess then filed a complaint with the Labor Arbiter for reinstatement, back
wages, and damages. The lawyer of JAL contends that neither the Labor Arbiter nor any
other agency or court in the Philippines has jurisdiction over the case in view of the
above provision (3) of the contract which Maritess voluntarily signed. The contract is the
law between her and JAL. (10)
IQUINA, EUNICE I. JD 3 Conflict of Laws

a) Whose contention is correct? Decide with reasons.

The contention of Maritess is correct.

Generally, the law provides that the contracting parties may establish the stipulations of the
contract as they deem convenient. An exception to this is if such stipulations are contrary to law,
morals, good customs, public order and public policy.

In the situation provided, there was a counterbalance of the principle of autonomy of the
contracting parties. Such stipulation as early termination without given notice is contrary to
public policy.

Therefore, JAL is liable and the contention of Maritess is correct.

b) Where under a State’s own conflicts rule that domestic law of another
State should apply, may the courts of the former nevertheless refuse to apply the latter?
If so, under what circumstance?

Yes, the courts of the former may still refuse to apply the domestic law of the other State.

The law provides that the parties to a contract may select the law by which it is to be governed
but exceptions to this rule are:
1. Where the foreign law chosen is contrary to peremptory provisions dealing with matters
impressed with public interest.
2. Where the relationship of the contracting parties affects public interest in the country of
one of the parties.
3. Where the substantial contracts arising therefrom point to the law of another country as
the applicable law.