CONTRACTS

Pakistan International Airlines vs. Ople

FACTS:
On 2 December 1978, petitioner Pakistan International Airlines Corporation (PIA), a
foreign corporation licensed to do business in the Philippines, executed in Manila two
(2) separate contracts of employment, one with private respondent Ethelynne B. Farrales
and the other with private respondent Ma. M.C. Mamasig. The contracts became
effective on 9 January 1979 and provided for the duration of employment and penalty,
termination and the applicable law which is of Pakistan’s. They were trained in Pakistan
and worked as flight attendants with base station in Manila and flying assignments to
different parts of the Middle East and Europe.

A year and four (4) months prior to the expiration of the contracts of employment, they
received separate letters informing them that their services would be terminated.
Private respondents Farrales and Mamasig jointly instituted a complaint for illegal
dismissal and non-payment of company benefits and bonuses, against PIA with the then
Ministry of Labor and Employment. Several attempts at conciliation were not fruitful.

ISSUE: Whether or not the employment contract is the governing law between the
parties and not the provisions of the Labor Code.

RULING: The principle of party autonomy in contracts is not an absolute principle. The
rule in Article 1306 of the Civil Code is that the contracting parties may establish such
stipulations as they may deem convenient, “provided they are not contrary to law,
morals, good customs, public order or public policy.” Thus, counter-balancing the
principle of autonomy of contracting parties is the equally general rule that provisions
of applicable law, especially provisions relating to matters affected with public policy,
are deemed written into the contract. The law relating to labor and employment are
impressed with public interest. Paragraph 5 of that employment contract was
inconsistent with Articles 280 and 281 of the Labor Code and thus, cannot be given
effect.
Sameer Overseas Placement Agency, Inc. vs. Cabiles

FACTS: Respondent Joy Cabiles was hired by Wacoal Taiwan, Inc., through petitioner
agency Sameer Overseas Placement Agency as a cutter. Subsequently, Cabiles was
informed that her services are already terminated and that she must report to their head
office for her immediate repatriation. Because of this, Cabiles filed a complaint for illegal
dismissal against Sameer and Wacoal. The Labor Arbiter ruled in favor of Sameer and
held that there was no illegal dismissal that took place because the termination of the
services of Cabiles was for a just cause. It gave credence to the contention of Sameer
that Cabiles was terminated from service because of her inefficiency. On appeal, the
NLRC ruled in favor of Cabiles and held that she is illegally dismissed. The Court of
Appeals affirmed the ruling of NLRC. Hence, the current petition.
Sameer reiterates that there was just cause for termination because there was a finding
of Wacoal that respondent was inefficient in her work. Therefore, it claims that
respondent’s dismissal was valid.

ISSUE: Whether or not Cabiles was entitled to the unexpired portion of her salary due to
illegal dismissal.

HELD: YES. The Court held that the award of the three-month equivalent of
respondents salary should be increased to the amount equivalent to the unexpired term
of the employment contract.

A statute or provision which was declared unconstitutional is not a law. It “confers no

rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative
as if it has not been passed at all.”

The Court said that they are aware that the clause “or for three (3) months for every
year of the unexpired term, whichever is less” was reinstated in Republic Act No. 8042
upon promulgation of Republic Act No. 10022 in 2010.
Continental Micronesia, Inc. vs. Basso

Facts: Petitioner Continental Micronesia is a foreign corporation organized and existing

under the laws of and domiciled in the United States of America. It is licensed to do
business in the Philippines. Respondent, a US citizen residing in the Philippines,
accepted an offer to be a General Manager position by Mr. Braden, Managing Director-
Asia of Continental Airlines. On November 7, 1992, CMI took over the Philippine
operations of Continental, with respondent retaining his position as General Manager.
Thereafter, respondent received a letter from Mr. Schulz, who was then CMI’s Vice
President of Marketing and Sales, informing him that he has agreed to work in CMI as a
consultant on an “as needed basis.” Respondent wrote a counter-proposal that was
rejected by CMI.

Respondent then filed a complaint for illegal dismissal against the petitioner
corporation. Alleging the presence of foreign elements, CMI filed a Motion to Dismiss
on the ground of lack of jurisdiction over the person of CMI and the subject matter of
the controversy.

The Labor Arbiter agreed with CMI that the employment contract was executed in the
US “since the letter-offer was under the Texas letterhead and the acceptance of
Complainant was returned there.” Thus, applying the doctrine of lex loci celebrationis,
US laws apply. Also, applying lex loci contractus, the Labor Arbiter ruled that the parties
did not intend to apply Philippine laws.

The NLRC ruled that the Labor Arbiter 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.

The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the
subject matter of the case and over the parties.

Issue:

Whether labor tribunals have jurisdiction over the case.

Held: Yes. The Court ruled that the labor tribunals had jurisdiction over the parties and
the subject matter of the case. The employment contract of Basso was replete with
references to US laws, and that it originated from and was returned to the US, do not
automatically preclude our labor tribunals from exercising jurisdiction to hear and try
this case.
Philippine Export and Foreign Loan Guarantee Corporation vs. Eusebio
Construction, Inc

FACTS: State Organization of Buildings (SOB) and the joint venture V.P. Eusebio
Construction, Inc. (VPECI) and Ajyal Trading and Contracting Company executed the
service contract for the construction of a project in Iraq for 18 months. Under the
Contract, the Joint Venture would supply manpower and materials, and SOB would
refund to the former 25% of the project cost in Iraqi Dinar and the 75% in US dollars at
the exchange rate of 1 Dinar to 3.37777 US Dollars. Also, three layers of guarantees had
to be arranged as a requirement of SOB: (1) Philguarantee, (2) Rafidain Bank of Baghdad
and (3) Al Ahli Bank of Kuwait. The Project was not completed as scheduled and upon
foreseeing the impossibility of meeting the deadline and upon the request of Al Ahli
Bank, the joint venture contractor worked for the renewal or extension of the
Performance Bond and Advance Payment Guarantee as well as the surety bond.

Later, Al Ahli Bank of Kuwait sent a telex call to the petitioner demanding full payment
of its performance bond counter-guarantee. Another telex message from Al Ahli Bank
was received by the petitioner stating that it had already paid to Rafidain Bank under its
letter of guarantee, and demanding reimbursement by the petitioner of what it paid to
the latter bank plus interest thereon and related expenses. Petitioner sent to the
respondents separate letters demanding full payment 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 on 9 July 1991 a civil case for collection of a sum of money against the
respondents before the RTC of Makati City.

ISSUE: Whether the laws of the Philippines should apply.

HELD: 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. 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.
Saudi Arabian Airlines vs. Rebesencio

FACTS: Respondents, who were regular flight attendants were illegally terminated by
petitioner Saudi Arabian Airlines due to their pregnancy which was alleged as a ground
for termination under their employment contract. Faced with the dilemma of resigning
or totally losing their benefits, respondents executed handwritten resignation letters. A
year later, respondents filed a complaint against Saudia for illegal dismissal; the case
was assigned to Labor Arbiter Suelo. Saudia assailed the jurisdiction of the Labor Arbiter
claiming that the complaint be dismissed on the ground of forum non conveniens and
that the respondents had no cause of action as they resigned voluntarily. Hence, this
appeal.

ISSUE: Whether the case should be dismissed on the ground of forum non conveniens.

RULING: No. On the matter of pleading forum non conveniens, we state the rule, thus:
forum non conveniens may not only be clearly pleaded as a ground for dismissal; it
must be pleaded as such at the earliest possible opportunity. Otherwise, it shall be
deemed waived. Furthermore, forum non conveniens finds no application and does not
operate to divest Philippine tribunals of jurisdiction and to require the application of
foreign law. Saudia invokes forum non conveniens to supposedly effectuate the
stipulations of the Cabin Attendant contracts that require the application of the laws of
Saudi Arabia.

In addition, there is no basis for concluding that the case can be more conveniently tried
elsewhere because Saudia is doing business in the Philippines and all four respondents
are Filipino citizens, thus Saudia may be tried under the jurisdiction of Philippine
tribunals.
TORTS AND CRIMES

Saudi Arabian Airlines vs. CA

Facts:

SAUDIA hired Milagros Morada as a Flight Attendant for its airlines based in Jeddah,
Saudi Arabia. While on a lay-over in Jakarta, Morada went to a disco with fellow crew
members Thamer & Allah, both Saudi nationals. Because it was almost morning when
they returned to their hotels, they agreed to have breakfast together at the room of
Thamer. In which Allah left on some pretext. Thamer attempted to rape Morada but she
was rescued by hotel personnel when they heard her cries for help. Indonesian police
came and arrested Thamer and Allah, the latter as an accomplice.

Morada refused to cooperate when SAUDIA’s Legal Officer and its base manager tried
to negotiate the immediate release of the detained crew members with Jakarta police.

Through the intercession of Saudi Arabian government, Thamer and Allah were
deported and, eventually, again put in service by SAUDIA. But Morada was transferred
to Manila.

The next time she was escorted by SAUDIA’s legal officer to court, the judge rendered
a decision against her sentencing her to five months imprisonment and to 286 lashes.
Apparently, she was tried by the court which found her guilty of (1) adultery; (2) going
to a disco, dancing and listening to the music in violation of Islamic laws; and (3)
socializing with the male crew, in contravention of Islamic tradition.

After denial by SAUDIA, Morada sought help from Philippine Embassy during the
appeal. Prince of Makkah dismissed the case against her. SAUDIA fired her without
notice.

Morada filed a complaint for damages against SAUDIA, with the RTC of QC.   SAUDIA
filed Omnibus Motion to Dismiss which raised the ground that the court has no
jurisdiction, among others which was denied

ISSUE: Whether RTC of QC has jurisdiction to hear and try the case

HELD: YES. The RTC of QC has jurisdiction and Philippine law should govern.Its
jurisdiction has basis on Sec. 1 of RA 7691 and Rules of Court on venue. Pragmatic
considerations, including the convenience of the parties, also weigh heavily in favor of
the RTC QC assuming jurisdiction. Paramount is the private interest of the
litigant. Weighing the relative claims of the parties, the court a quo found it best to hear
the case in the Philippines. Had it refused to take cognizance of the case, it would be
forcing Morada 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
fundamental unfairness to her.

By filing a complaint, Morada has voluntarily submitted to the jurisdiction of the court.
By filing several motions and praying for reliefs (such as dismissal), SAUDIA has
effectively submitted to the trial court’s jurisdiction.
Panavision International vs. Dennis Toeppen, 9th Circuit Court of Appeals

FACTS: Plaintiff Panavision Int’l, Ltd. filed suit against Defendant Denis Toeppen under
the Federal Trademark Dilution Act, 15 U.S.C.S. § 1125(c), and the California Anti-dilution
statute, Cal. Bus. & Prof. Code § 14330, claiming that Defendant made commercial use
of Plaintiff's trademark on the internet and his conduct diluted Plaintiff's marks.
Defendant engaged in a scheme of registering company trademarks as his domain
name on the internet, and then, attempting to extort money from them by trading on
the value of their names. The district court found that under the "effects doctrine,"
Defendant was subject to personal jurisdiction in California. The district court then
granted summary judgment in favor of Plaintiff, concluding that Defendant’s conduct
violated the Federal Trademark Dilution Act of 1995, and the California Anti-dilution
statute. Defendant appealed, arguing that the district court erred in exercising personal
jurisdiction over him because any contact he had with California was insignificant,
emanating solely from his registration of domain names on the Internet, which he did in
Illinois. Defendant further argued that the district court erred in granting summary
judgment because his use of Plaintiff’s trademarks on the Internet was not a
commercial use and did not dilute those marks.

ISSUE: Did the district court err in exercising personal jurisdiction over defendant?

RULING: No. The Court held that the district court’s exercise of jurisdiction was proper
and comported with the requirements of due process. According to the Court,
defendant did considerably more than simply register plaintiff’s trademarks as his
domain names on the Internet. He registered those names as part of a scheme to obtain
money from plaintiff. Pursuant to that scheme, he demanded $13,000 from Plaintiff to
release the domain names to it. His acts were aimed at Plaintiff in California, and caused
it to suffer injury there. The Court further held that Plaintiff was entitled to summary
judgment under the federal and state dilution statutes, as Defendant made commercial
use of Plaintiff’s trademarks, and Defendant’s conduct diluted those marks.
Filartiga vs. Pena-Irala

FACTS: Citizens of Paraguay (appellants) filed an action in the United States against
another citizen of Paraguay (appellee), for wrongfully causing the death of a family
member. Appellants alleged that appellee tortured and killed the man in retaliation for
his father's political actions and beliefs. The district court dismissed the action for want
of subject matter jurisdiction. The district court felt constrained to narrowly construe the
"law of nations" as employed in the Alien Tort Statute. Appellants challenged the district
court's decision.

ISSUE: Did the district court have jurisdiction over the subject matter?

RULING: YES.
The court determined that deliberate torture perpetuated under color of official
authority violated universally accepted norms of the international law of human rights,
regardless of the nationality of the parties. Official torture had been prohibited by the
law of nations. The prohibition was clear and unambiguous and admitted no distinction
between treatment of aliens and citizens. Whenever an alleged torturer was found and
served with process by an alien within the borders of the United States, federal
jurisdiction was appropriate. The court determined that its jurisdiction was appropriate.
The court reversed the decision of the district court, which dismissed appellants'
complaint for want of subject matter jurisdiction.
United States of America vs. Manuel Antonio Noriega, et al.

FACTS:
Manuel Antonio Noriega appealed his multiple convictions stemming from his
involvement in cocaine trafficking; and the district court's denial of his motion for a new
trial based on newly discovered evidence. In attacking his convictions, Noriega asserted
that the district court should have dismissed the indictment against him due to his
status as a head of state and the manner in which the United States brought him to
justice. Noriega also contended that the district court committed two reversible
evidentiary errors. Alternatively, he sought new trial based on his discovery of: (1) the
government's suppression of its pact with a non-witness; and/or (2) certain allegations,
lodged after his conviction, that a group associated with the undisclosed, cooperating
non-witness bribed a prosecution witness. 

ISSUE: Should the indictment be dismissed due to the defendant’s status as a head of
state?

RULING: NO.
The court affirmed. The court rejected defendant's contention that the indictment
should have been dismissed due to his status as a head of state and the manner in
which the United States brought him to justice, because he was denied head-of-state
immunity. The court also rejected defendant's alternative contentions that he was
entitled to a new trial based on his discovery of the government's suppression of its pact
with a non-witness, and certain allegations, lodged after his conviction, that a group
associated with the undisclosed, cooperating non-witness bribed a prosecution witness.
United States vs. Fawaz Yunis

Facts:
Yunis (Defendant) and several accomplices hijacked a Jordanian airliner while it was on
the ground in Beirut. The plane flew to several locations around the Mediterranean Sea,
and eventually flew back to Beirut, where the hijackers blew up the plane and then
escaped into the hills. The only connection between the whole event and the United
States was that several Americans were on board the whole time. Yunis (Defendant) was
indicted for violating the Hostage Taking Act, 18 U.S.C. § 1203. He was apprehended,
and later indicted under the Destruction of Aircraft Act, 18 U.S.C. § 32. He moved to
dismiss on grounds of jurisdiction.

Issue:
May the federal government prosecute an airline hijacker even if the hijacking’s only
connection with the United States was the presence of several Americans on board the
plane?

Held:
Yes. The federal government may prosecute an airline hijacker even if the hijacking’s
only connection with the United States was the presence of Americans on board the
plane. There must be jurisdiction under both international and domestic law in order for
jurisdiction to exist in the situation of this case. International law relates to the power of
Congress to have extraterritorial application of its law; domestic law relates to its intent
to do so. International law recognizes several bases for a nation to give extraterritorial
application to its laws. 
Del Socorro vs. Van Wilsem

FACTS: Foreign law should not be applied when its application would work undeniable
injustice to the citizens or residents of the forum. Norma A. Del Socorro and Ernst Van
Wilsem contracted marriage in Holland. They were blessed with a son named Roderigo
Norjo Van Wilsem. Unfortunately, their marriage bond ended by virtue of a Divorce
Decree issued by the appropriate Court of Holland. Thereafter, Norma and her son came
home to the Philippines. According to Norma, Ernst made a promise to provide monthly
support to their son. However, since the arrival of petitioner and her son in the
Philippines, Ernst never gave support to Roderigo. Norma filed a complaint against Ernst
for violation of R.A. No. 9262 for the latter’s unjust refusal to support his minor child
with petitioner. The trial court dismissed the complaint since the facts charged in the
information do not constitute an offense with respect to the accused, he being an alien.

ISSUE: Does a foreign national have an obligation to support his minor child under
Philippine law?

HELD: Yes, since Ernst is a citizen of Holland or the Netherlands, we agree with the RTC
that he is subject to the laws of his country, not to Philippine law, as to whether he is
obliged to give support to his child, as well as the consequences of his failure to do so.
This does not, however, mean that Ernst is not obliged to support Norma’s son
altogether. In international law, the party who wants to have a foreign law applied to a
dispute or case has the burden of proving the foreign law. In the present case, Ernst
hastily concludes that being a national of the Netherlands, he is governed by such laws
on the matter of provision of and capacity to support. While Ernst pleaded the laws of
the Netherlands in advancing his position that he is not obliged to support his son, he
never proved the same. It is incumbent upon Ernst to plead and prove that the national
law of the Netherlands does not impose upon the parents the obligation to support
their child. Foreign laws do not prove themselves in our jurisdiction and our courts are
not authorized to take judicial notice of them. Like any other fact, they must be alleged
and proved. Moreover, foreign law should not be applied when its application would
work undeniable injustice to the citizens or residents of the forum. To give justice is the
most important function of law; hence, a law, or judgment or contract that is obviously
unjust negates the fundamental principles of Conflict of Laws. Applying the foregoing,
even if the laws of the Netherlands neither enforce a parent’s obligation to support his
child nor penalize the non-compliance therewith, such obligation is still duly enforceable
in the Philippines because it would be of great injustice to the child to be denied of
financial support when the latter is entitled thereto.