[CASE01] Saudi Arabian v CA

8/10/2019 [CASE01] Saudi Arabian v CA

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3/14/14 9:5REME COURT REPORTS ANNOTATED VOLUME 297

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particularly from Manila, Philippines to Jeddah, Saudi Arabia, andvice versa, that caused a conflicts situation to arise.

Same; Same; Damages; While Article 19 of the Civil Codemerely declares a principle of law, Article 21 gives flesh to its

provisions; Violations of Articles 19 and 21 are actionable, with judicially enforceable remedies in the municipal forum. Although

Article 19

________________

* FIRST DIVISION.

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470 SUPREME COURT REPORTS ANNOTATED

Saudi Arabian Airlines vs. Court of Appeals

merely declares a principle of law, Article 21 gives flesh to itsprovisions. Thus, we agree with private respondents assertion thatviolations of Articles 19 and 21 are actionable, with judiciallyenforceable remedies in the municipal forum. Based on theallegations in the Amended Complaint, read in the light of theRules of Court on jurisdiction we find that the Regional Trial Court(RTC) of Quezon City possesses jurisdiction over the subject matterof the suit. Its authority to try and hear the case is provided forunder Section 1 of Republic Act No. 7691.

Same; Same; Forum Non Conveniens; Forum Shopping; Plaintiff may not, by choice of an inconvenient forum, vex, harass, or oppress the defendant, e.g. by inflicting upon him needless

expense or disturbance, but unless the balance is strongly in favor of

the defendant, the plaintiffs choice of forum should rarely bedisturbed. Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor of the RTC Quezon Cityassuming jurisdiction. Paramount is the private interest of thelitigant. Enforceability of a judgment if one is obtained is quiteobvious. Relative advantages and obstacles to a fair trial areequally important. Plaintiff may not, by choice of an inconvenient


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forum, vex, harass, or oppress the defendant, e.g. by inflicting upon him needless expense or disturbance. But unless the balanceis strongly in favor of the defendant, the plaintiffs choice of forumshould rarely be disturbed.

Same; Same; Forcing a party to seek remedial action in a placewhere she no longer maintains substantial connections would cause

a fundamental unfairness to her. Weighing the relative claims of the parties, the court a quo found it best to hear the case in thePhilippines. Had it refused to take cognizance of the case, it wouldbe forcing plaintiff (private respondent now) to seek remedial actionelsewhere, i.e. in the Kingdom of Saudi Arabia where she no longermaintains substantial connections. That would have caused afundamental unfairness to her.

Same; Same; A party effectively submits to the trial courts jurisdiction by praying for the dismissal of the complaint on groundsother than lack of jurisdiction. The records show that petitionerSAUDIA has filed several motions praying for the dismissal of Moradas Amended Complaint. SAUDIA also filed an Answer In Ex

Abundante Cautelam dated February 20, 1995. What is very patentand explicit from the motions filed, is that SAUDIA prayed for other

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VOL. 297, OCTOBER 8, 1998 471


reliefs under the premises. Undeniably, petitioner SAUDIA haseffectively submitted to the trial courts jurisdiction by praying forthe dismissal of the Amended Complaint on grounds other thanlack of jurisdiction.

Same; Choice-of-law problems seek to answer two importantquestions: (1) What legal system should control a given situationwhere some of the significant facts occurred in two or more states;and (2) to what extent should the chosen legal system regulate thesituation. As to the choice of applicable law, we note that choice-of-law problems seek to answer two important questions: (1) Whatlegal system should control a given situation where some of the


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significant facts occurred in two or more states; and (2) to whatextent should the chosen legal system regulate the situation.

Same; Although ideally, all choice-of-law theories shouldintrinsically advance both notions of justice and predictability, theydo not always do so, in which case the forum is then faced with the

problem of deciding which of these two important values should be

stressed. Several theories have been propounded in order toidentify the legal system that should ultimately control. Althoughideally, all choice-of-law theories should intrinsically advance bothnotions of justice and predictability, they do not always do so. Theforum is then faced with the problem of deciding which of these twoimportant values should be stressed.

Same; Characterization or Doctrine of Qualification; Words and Phrases; Characterization is the process of deciding whether or notthe facts relate to the kind of question specified in a conflicts rule. Before a choice can be made, it is necessary for us to determineunder what category a certain set of facts or rules fall. This processis known as characterization, or the doctrine of qualification. Itis the process of deciding whether or not the facts relate to the kindof question specified in a conflicts rule. The purpose of characterization is to enable the forum to select the proper law.

Same; Same; An essential element of conflict rules is theindication of a test or connecting factor or point of contact.

Our starting point of analysis here is not a legal relation, but afactual situation, event, or operative fact. An essential element of conflict rules is the indication of a test or connecting factor orpoint of contact. Choice-of-law rules invariably consist of a factualrelation-

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472 SUPREME COURT REPORTS ANNOTATEDSaudi Arabian Airlines vs. Court of Appeals

ship (such as property right, contract claim) and a connecting factoror point of contact, such as the situs of the res , the place of celebration, the place of performance, or the place of wrongdoing.


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Same; Same; Test Factors or Points of Contact orConnecting Factors. Note that one or more circumstances may bepresent to serve as the possible test for the determination of theapplicable law. These test factors or points of contact orconnecting factors could be any of the following: (1) thenationality of a person, his domicile, his residence, his place of sojourn, or his origin; (2) the seat of a legal or juridical person, such

as a corporation; (3) the situs of a thing, that is, the place where athing is, or is deemed to be situated. In particular, the lex situs isdecisive when real rights are involved; (4) the place where an acthas been done, the locus actus, such as the place where a contracthas been made, a marriage celebrated, a will signed or a tortcommitted. The lex loci actus is particularly important in contractsand torts ; (5) the place where an act is intended to come into effect,

e.g., the place of performance of contractual duties, or the placewhere a power of attorney is to be exercised; (6) the intention of thecontracting parties as to the law that should govern theiragreement, the lex loci intentionis ; (7) the place where judicial oradministrative proceedings are instituted or done. The lex fori thelaw of the forumis particularly important because, as we haveseen earlier, matters of procedure not going to the substance of theclaim involved are governed by it; and because the lex fori applieswhenever the content of the otherwise applicable foreign law isexcluded from application in a given case for the reason that it fallsunder one of the exceptions to the applications of foreign law; and(8) the flag of a ship, which in many cases is decisive of practically

all legal relationships of the ship and of its master or owner as such.It also covers contractual relationships particularly contracts of affreightment. (Italics ours.)

Same; Same; Same; Torts; Where the action is one involvingtorts, the connecting factor or point of contact could be the placeor places where the tortious conduct or lex loci actus occurred; The

Philippines is the situs of the tort where it is in the Philippineswhere the defendant allegedly deceived the plaintiff, a citizenresiding and working here, and the fact that certain acts or parts of the injury occurred in another country is of no moment, for what isimportant is the place where the over-all harm or the totality of theinjury to the person, reputation, social standing and human rights of the plaintiff

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VOL. 297, OCTOBER 8, 1998 473


had lodged. Considering that the complaint in the court a quo isone involving torts, the connecting factor or point of contact

could be the place or places where the tortious conduct or lex lociactus occurred. And applying the torts principle in a conflicts case,we find that the Philippines could be said as a situs of the tort (theplace where the alleged tortious conduct took place). This is becauseit is in the Philippines where petitioner allegedly deceived privaterespondent, a Filipina residing and working here. According to her,she had honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, act with justice, giveher her due and observe honesty and good faith. Instead, petitionerfailed to protect her, she claimed. That certain acts or parts of theinjury allegedly occurred in another country is of no moment. For inour view what is important here is the place where the over-allharm or the totality of the alleged injury to the person, reputation,social standing and human rights of complainant, had lodged,according to the plaintiff below (herein private respondent). All told,it is not without basis to identify the Philippines as the situs of thealleged tort.

Same; Same; Same; Same; State of the Most Significant

Relationship Rule; The State of the most significant relationship rule is the appropriate modern theory on tort liability to apply in theinstant case. With the widespread criticism of the traditional ruleof lex loci delicti commissi , modern theories and rules on tortliability have been advanced to offer fresh judicial approaches toarrive at just results. In keeping abreast with the modern theorieson tort liability, we find here an occasion to apply the State of themost significant relationship rule, which in our view should beappropriate to apply now, given the factual context of this case. Inapplying said principle to determine the State which has the most

significant relationship, the following contacts are to be taken intoaccount and evaluated according to their relative importance withrespect to the particular issue: (a) the place where the injuryoccurred; (b) the place where the conduct causing the injuryoccurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties; and (d) the placewhere the relationship, if any, between the parties is centered.


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Same; Same; Same; Same; Same; Where the Philippines is thesitus of the tort complained of and the place having the mostinterest in the problem, the Philippine law on tort liability shouldhave

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paramount application to and control in the resolution of the legalissues arising therein. As already discussed, there is basis for theclaim that over-all injury occurred and lodged in the Philippines.There is likewise no question that private respondent is a resident

Filipina national, working with petitioner, a resident foreigncorporation engaged here in the business of international aircarriage. Thus, the relationship between the parties was centeredhere, although it should be stressed that this suit is not based onmere labor law violations. From the record, the claim that thePhilippines has the most significant contact with the matter in thisdispute, raised by private respondent as plaintiff below againstdefendant (herein petitioner), in our view, has been properlyestablished. Prescinding from this premise that the Philippines isthe situs of the tort complained of and the place having the mostinterest in the problem, we find, by way of recapitulation, that thePhilippine law on tort liability should have paramount applicationto and control in the resolution of the legal issues arising out of thiscase. Further, we hold that the respondent Regional Trial Court has

jurisdiction over the parties and the subject matter of thecomplaint; the appropriate venue is in Quezon City, which couldproperly apply Philippine law.

Same; Pleadings and Practice; Evidence; A party whose cause of

action is based on a Philippine law has no obligation to plead and prove the law of another State. We find untenable petitionersinsistence that [s]ince private respondent instituted this suit, shehas the burden of pleading and proving the applicable Saudi law onthe matter. As aptly said by private respondent, she has noobligation to plead and prove the law of the Kingdom of Saudi

Arabia since her cause of action is based on Articles 19 and 21 of


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the Civil Code of the Philippines. In her Amended Complaint andsubsequent pleadings, she never alleged that Saudi law shouldgovern this case. And as correctly held by the respondent appellatecourt, considering that it was the petitioner who was invoking theapplicability of the law of Saudi Arabia, then the burden was on it[petitioner] to plead and to establish what the law of Saudi Arabiais.

PETITION for review on certiorari of a decision of theCourt of Appeals.

The facts are stated in the opinion of the Court. Siguion Reyna, Montecillo & Ongsiako for petitioner.

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Padilla, Jimenez, Kintanar & Asuncion Law Offices forprivate respondent.

QUISUMBING, J .:

This petition for certiorari pursuant to Rule 45 of the Rulesof Court seeks to annul and set aside the Resolution

1 dated

September 27, 1995 and the Decision2 dated April 10, 1996

of the Court of Appeals 3 in CA-G.R. SP No. 36533, 4 and theOrders

5 dated August 29, 1994

6 and February 2, 1995

7 that

were issued by the trial court in Civil Case No. Q-93-18394.

8

The pertinent antecedent facts which gave rise to theinstant petition, as stated in the questioned Decision,

9 are

as follows:

On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines based in Jeddah, Saudi Arabia. x x x

On April 27, 1990, while on a lay-over in Jakarta, Indonesia,plaintiff went to a disco dance with fellow crew members Thamer

AlGazzawi and Allah Al-Gazzawi, both Saudi nationals. Because itwas almost morning when they returned to their hotels, they agreedto have breakfast together at the room of Thamer. When they werein te (sic) room, Allah left on some pretext. Shortly after he did,
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________________

1 Annex A, PETITION, October 13, 1995; rollo, p. 36.2 Annex A, SUPPLEMENTAL PETITION, April 30, 1996; rollo, pp. 88-102.3 Penned by Associate Justice Bernardo L1. Salas, and concurred in by

Associate Justice Jorge S. Imperial and Associate Justice Pacita Caizares-

Nye.4 Entitled Saudi Arabian Airlines vs. Hon. Judge Rodolfo A. Ortiz, in his

capacity as Presiding Judge of Branch 89 of the Regional Trial Court of Quezon

City and Milagros P. Morada.5 Issued by respondent Judge Hon. Rodolfo A. Ortiz of Branch 89, Regional

Trial Court of Quezon City.6 Annex B, PETITION, October 13, 1995; rollo, pp. 37-39.7 Annex B, PETITION, October 13, 1995; rollo, p. 40.8 Entitled Milagros P. Morada vs. Saudi Arabian Airlines.9 Supra , note 2.

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Thamer attempted to rape plaintiff. Fortunately, a roomboy andseveral security personnel heard her cries for help and rescued her.Later, the Indonesian police came and arrested Thamer and Allah

Al-Gazzawi, the latter as an accomplice.When plaintiff returned to Jeddah a few days later, several

SAUDIA officials interrogated her about the Jakarta incident. Theythen requested her to go back to Jakarta to help arrange the releaseof Thamer and Allah. In Jakarta, SAUDIA Legal Officer Sirah

Akkad and base manager Baharini negotiated with the police forthe immediate release of the detained crew members but did notsucceed because plaintiff refused to cooperate. She was afraid thatshe might be tricked into something she did not want because of herinability to understand the local dialect. She also declined to sign ablank paper and a document written in the local dialect.

Eventually, SAUDIA allowed plaintiff to return to Jeddah butbarred her from the Jakarta flights.

Plaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesian authorities agreed to deportThamer and Allah after two weeks of detention. Eventually, theywere again put in service by defendant SAUDIA (sic). In September1990, defendant SAUDIA transferred plaintiff to Manila.


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On January 14, 1992, just when plaintiff thought that theJakarta incident was already behind her, her superiors requestedher to see Mr. Ali Meniewy, Chief Legal Officer of SAUDIA, inJeddah, Saudi Arabia. When she saw him, he brought her to thepolice station where the police took her passport and questioned herabout the Jakarta incident. Miniewy simply stood by as the policeput pressure on her to make a statement dropping the case against

Thamer and Allah. Not until she agreed to do so did the policereturn her passport and allowed her to catch the afternoon flightout of Jeddah.

One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few minutes before the departure of her flight to Manila,plaintiff was not allowed to board the plane and instead ordered totake a later flight to Jeddah to see Mr. Miniewy, the Chief LegalOfficer of SAUDIA. When she did, a certain Khalid of the SAUDIA office brought her to a Saudi court where she was asked to sign adocument written in Arabic. They told her that this was necessary

to close the case against Thamer and Allah. As it turned out,plaintiff signed a notice to her to appear before the court on June27, 1993. Plaintiff then returned to Manila.

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Shortly afterwards, defendant SAUDIA summoned plaintiff toreport to Jeddah once again and see Miniewy on June 27, 1993 forfurther investigation. Plaintiff did so after receiving assurance fromSAUDIAs Manila manager, Aslam Saleemi, that the investigationwas routinary and that it posed no danger to her.

In Jeddah, a SAUDIA legal officer brought plaintiff to the sameSaudi court on June 27, 1993. Nothing happened then but on June28, 1993, a Saudi judge interrogated plaintiff through aninterpreter about the Jakarta incident. After one hour of

interrogation, they let her go. At the airport, however, just as herplane was about to take off, a SAUDIA officer told her that theairline had forbidden her to take flight. At the Inflight ServiceOffice where she was told to go, the secretary of Mr. Yahya Saddicktook away her passport and told her to remain in Jeddah, at thecrew quarters, until further orders.

On July 3, 1993, a SAUDIA legal officer again escorted plaintiff


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to the same court where the judge, to her astonishment and shock,rendered a decision, translated to her in English, sentencing her tofive months imprisonment and to 286 lashes. Only then did sherealize that the Saudi court had tried her, together with Thamerand Allah, for what happened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing and listening tothe music in violation of Islamic laws; and (3) socializing with the

male crew, in contravention of Islamic tradition.

10

Facing conviction, private respondent sought the help of her employer, petitioner SAUDIA. Unfortunately, she wasdenied any assistance. She then asked the PhilippineEmbassy in Jeddah to help her while her case is on appeal.Meanwhile, to pay for her upkeep, she worked on thedomestic flight of SAUDIA, while Thamer and Allahcontinued to serve in the international flights.

11

Because she was wrongfully convicted, the Prince of

Makkah dismissed the case against her and allowed her toleave Saudi Arabia. Shortly before her return to Manila,

12

she was

________________

10 Decision, pp. 2-4; see rollo, pp. 89-91.11 Private respondents Comment; rollo, p. 50.12 Ibid ., pp. 50-51.

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terminated from the service by SAUDIA, without her being informed of the cause.

On November 23, 1993, Morada filed a Complaint13

fordamages against SAUDIA, and Khaled Al-Balawi (Al-Balawi), its country manager.

On January 19, 1994, SAUDIA filed an Omnibus MotionTo Dismiss

14 which raised the following grounds, to wit: (1)

that the Complaint states no cause of action againstSAUDIA; (2) that defendant Al-Balawi is not a real partyin interest; (3) that the claim or demand set forth in theComplaint has been waived, abandoned or otherwise
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extinguished; and (4) that the trial court has no jurisdictionto try the case.

On February 10, 1994, Morada filed her Opposition (ToMotion to Dismiss).

15 SAUDIA filed a reply

16 thereto on

March 3, 1994.On June 23, 1994, Morada filed an Amended

Complaint17

wherein Al-Balawi was dropped as party

defendant. On August 11, 1994, SAUDIA filed itsManifestation and Motion to Dismiss AmendedComplaint.

18

The trial court issued an Order19

dated August 29, 1994denying the Motion to Dismiss Amended Complaint filed bySAUDIA.

From the Order of respondent Judge20

denying theMotion to Dismiss, SAUDIA filed on September 20, 1994,its Motion for Reconsideration

21 of the Order dated August

29, 1994. It alleged that the trial court has no jurisdictionto hear and try

________________

13 Dated November 19, 1993, and docketed as Civil Case No. Q-93-

18394, Branch 89, Regional Trial Court of Quezon City.14 Dated January 14, 1994.15 Dated February 4, 1994.16 Reply dated March 1, 1994.17 Records, pp. 65-84.18 Rollo, p. 65.19 Supra , note 6.20 Hon. Rodolfo A. Ortiz.21 Dated September 19, 1994.

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the case on the basis of Article 21 of the Civil Code, sincethe proper law applicable is the law of the Kingdom of Saudi Arabia. On October 14, 1994, Morada filed herOpposition

22 (To Defendants Motion for Reconsideration).

In the Reply23

filed with the trial court on October 24,1994, SAUDIA alleged that since its Motion for
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Reconsideration raised lack of jurisdiction as its cause of action, the Omnibus Motion Rule does not apply, even if that ground is raised for the first time on appeal.

Additionally, SAUDIA alleged that the Philippines does nothave any substantial interest in the prosecution of theinstant case, and hence, without jurisdiction to adjudicatethe same.

Respondent Judge subsequently issued another Order24

dated February 2, 1995, denying SAUDIAs Motion forReconsideration. The pertinent portion of the assailedOrder reads as follows:

Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines filed, thru counsel, on September 20, 1994, and theOpposition thereto of the plaintiff filed, thru counsel, on October 14,1994, as well as the Reply therewith of defendant Saudi Arabian

Airlines filed, thru counsel, on October 24, 1994, considering that a

perusal of the plaintiffs Amended Complaint, which is one for therecovery of actual, moral and exemplary damages plus attorneysfees, upon the basis of the applicable Philippine law, Article 21 of the New Civil Code of the Philippines, is, clearly, within the

jurisdiction of this Court as regards the subject matter, and therebeing nothing new of substance which might cause the reversal ormodification of the order sought to be reconsidered, the motion forreconsideration of the defendant, is DENIED.

SO ORDERED.25

Consequently, on February 20, 1995, SAUDIA filed itsPetition for Certiorari and Prohibition with Prayer forIssuance of

________________

22 Records, pp. 108-116.23 Records, pp. 117-128.24 Supra , note 7.25 Ibid .

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Writ of Preliminary Injunction and/or TemporaryRestraining Order

26 with the Court of Appeals.

Respondent Court of Appeals promulgated a Resolutionwith Temporary Restraining Order

27 dated February 23,

1995, prohibiting the respondent Judge from furtherconducting any proceeding, unless otherwise directed, inthe interim.

In another Resolution28

promulgated on September 27,1995, now assailed, the appellate court denied SAUDIAsPetition for the Issuance of a Writ of PreliminaryInjunction dated February 18, 1995, to wit:

The Petition for the Issuance of a Writ of Preliminary Injunction ishereby DENIED, after considering the Answer, with Prayer to DenyWrit of Preliminary Injunction (Rollo, p. 135) the Reply andRejoinder, it appearing that herein petitioner is not clearly entitledthereto ( Unciano Paramedical College, et al. v. Court of Appeals, et

al., G.R. No. 100335, April 7, 1993, Second Division ).SO ORDERED.

On October 20, 1995, SAUDIA filed with this HonorableCourt the instant Petition

29 for Review with Prayer for

Temporary Restraining Order dated October 13, 1995.However, during the pendency of the instant Petition,

respondent Court of Appeals rendered the Decision30

dated April 10, 1996, now also assailed. It ruled that thePhilippines is an appropriate forum considering that the

Amended Complaints basis for recovery of damages is Article 21 of the Civil Code, and thus, clearly within the jurisdiction of respondent Court. It further held thatcertiorari is not the proper remedy in a denial of a Motionto Dismiss, inasmuch as the petitioner should haveproceeded to trial, and in case of an adverse ruling, findrecourse in an appeal.

________________

26 Dated February 18, 1995; see supra , note 4.27 Supra , note 7.28 Records, p. 180.29 Rollo, pp. 1-44.30 Supra , note 2.

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VOL. 297, OCTOBER 8, 1998 481


On May 7, 1996, SAUDIA filed its Supplemental Petitionfor Review with Prayer for Temporary Restraining Order

31

dated April 30, 1996, given due course by this Court. Afterboth parties submitted their Memoranda,

32 the instant case

is now deemed submitted for decision.Petitioner SAUDIA raised the following issues:

I.

The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on Article 21 of the New Civil Code since the properlaw applicable is the law of the Kingdom of Saudi Arabia inasmuchas this case involves what is known in private international law asa conflicts problem. Otherwise, the Republic of the Philippines will

sit in judgment of the acts done by another sovereign state which isabhorred.

II.

Leave of court before filing a supplemental pleading is not a jurisdictional requirement. Besides, the matter as to absence of leave of court is now moot and academic when this Honorable Courtrequired the respondents to comment on petitioners April 30, 1996Supplemental Petition For Review With Prayer For A Temporary

Restraining Order Within Ten (10) Days From Notice Thereof.Further, the Revised Rules of Court should be construed withliberality pursuant to Section 2, Rule 1 thereof.

III.

Petitioner received on April 22, 1996 the April 10, 1996 decisionin CA-G.R. SP No. 36533 entitled Saudi Arabian Airlines v. Hon.Rodolfo A. Ortiz, et al. and filed its April 30, 1996 SupplementalPetition For Review With Prayer For A Temporary Restraining

Order on May 7, 1996 at 10:29 a.m. or within the 15-dayreglementary period as provided for under Section 1, Rule 45 of theRevised

________________

31 Rollo, pp. 80-86.32 Memorandum for Petitioner dated October 9, 1996, rollo, pp. 149-180; and


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Memorandum for Private Respondent, October 30, 1996, rollo, pp. 182-210.

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Rules of Court. Therefore, the decision in CA-G.R. SP No. 36533 hasnot yet become final and executory and this Honorable Court cantake cognizance of this case.

33

From the foregoing factual and procedural antecedents, thefollowing issues emerge for our resolution:

I.

WHETHER RESPONDENT APPELLATE COURT ERRED IN

HOLDING THAT THE REGIONAL TRIAL COURT OF QUEZONCITY HAS JURISDICTION TO HEAR AND TRY CIVIL CASE NO.Q-93-18394 ENTITLED MILAGROS P. MORADA V. SAUDI

ARABIAN AIRLINES.

II.

WHETHER RESPONDENT APPELLATE COURT ERRED INRULING THAT IN THIS CASE PHILIPPINE LAW SHOULDGOVERN.

Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the outset. It maintains thatprivate respondents claim for alleged abuse of rightsoccurred in the Kingdom of Saudi Arabia. It alleges thatthe existence of a foreign element qualifies the instant casefor the application of the law of the Kingdom of Saudi

Arabia, by virtue of the lex loci delicti commissi rule.34

On the other hand, private respondent contends thatsince her Amended Complaint is based on Articles 19

35 and

21

36

of

________________

33 Rollo, pp. 157-159. All caps in the original.34 Memorandum for Petitioner, p. 14, rollo, p. 162.35 Art. 19. Every person must, in the exercise of his rights and in the

performance of his duties, act with justice, give everyone his due, and
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6.

7.

observe honesty and good faith.36 Art. 21. Any person who wilfully causes loss or injury to another in

a manner that is contrary to morals, good customs or public policy shall

compensate the latter for the damages.

483

VOL. 297, OCTOBER 8, 1998 483Saudi Arabian Airlines vs. Court of Appeals

the Civil Code, then the instant case is properly a matter of domestic law.

37

Under the factual antecedents obtaining in this case,there is no dispute that the interplay of events occurred intwo states, the Philippines and Saudi Arabia.

As stated by private respondent in her Amended

Complaint38

dated June 23, 1994:

2. Defendant SAUDI ARABIAN AIRLINES orSAUDIA is a foreign airlines corporation doing business in the Philippines. It may be served withsummons and other court processes at Travel Wide

Associated Sales (Phils.), Inc., 3rd Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila .x x x x x x x x xPlaintiff learned that, through the intercession of the Saudi Arabian government, the Indonesianauthorities agreed to deport Thamer and Allahafter two weeks of detention. Eventually, they wereagain put in service by defendant SAUDIA. InSeptember 1990, defendant SAUDIA transferred

plaintiff to Manila .On January 14, 1992, just when plaintiff thoughtthat the Jakarta incident was already behind her,her superiors requested her to see Mr. Ali Meniewy,

Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia . When she saw him, he brought her to thepolice station where the police took her passportand questioned her about the Jakarta incident.Miniewy simply stood by as the police put pressureon her to make a statement dropping the caseagainst Thamer and Allah. Not until she agreed to


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8.

9.

10.

do so did the police return her passport and allowedher to catch the afternoon flight out of Jeddah.One year and a half later or on June 16, 1993, inRiyadh, Saudi Arabia, a few minutes before thedeparture of her flight to Manila, plaintiff was notallowed to board the plane and instead ordered totake a later flight to Jeddah to see Mr. Meniewy,

the Chief Legal Officer of SAUDIA. When she did, acertain Khalid of the SAUDIA office brought her toa Saudi court where she was asked to sign adocument written in Arabic. They told her that thiswas necessary to close the case against Thamer and

Allah. As it

________________

37 Memorandum for Private Respondent, p. 9, rollo, p. 190.38 Records, pp. 65-71.

484



turned out, plaintiff signed a notice to her to appear beforethe court on June 27, 1993. Plaintiff then returned to

Manila .

Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff did so after receiving assurance fromSAUDIAs Manila manager, Aslam Saleemi, thatthe investigation was routinary and that it posed nodanger to her.

In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judgeinterrogated plaintiff through an interpreter aboutthe Jakarta incident. After one hour of interrogation, they let her go. At the airport,however, just as her plane was about to take off, a


19/45



11.

12.

SAUDIA officer told her that the airline hadforbidden her to take that flight. At the InflightService Office where she was told to go, thesecretary of Mr. Yahya Saddick took away herpassport and told her to remain in Jeddah, at thecrew quarters, until further orders.On July 3, 1993 a SAUDIA legal officer again

escorted plaintiff to the same court where the judge,to her astonishment and shock, rendered a decision,translated to her in English, sentencing her to fivemonths imprisonment and to 286 lashes. Only thendid she realize that the Saudi court had tried her,together with Thamer and Allah, for whathappened in Jakarta. The court found plaintiff guilty of (1) adultery; (2) going to a disco, dancing,and listening to the music in violation of Islamiclaws; (3) socializing with the male crew, incontravention of Islamic tradition.

Because SAUDIA refused to lend her a hand in thecase, plaintiff sought the help of the Philippine

Embassy in Jeddah . The latter helped her pursuean appeal from the decision of the court. To pay forher upkeep, she worked on the domestic flights of defendant SAUDIA while, ironically, Thamer and

Allah freely served the international flights.39

Where the factual antecedents satisfactorily establish theexistence of a foreign element, we agree with petitionerthat the problem herein could present a conflicts case.

A factual situation that cuts across territorial lines andis affected by the diverse laws of two or more states is saidto

________________

39 Supra , note 17, pp. 65-68.

485

VOL. 297, OCTOBER 8, 1998 485

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contain a foreign element. The presence of a foreignelement is inevitable since social and economic affairs of individuals and associations are rarely confined to thegeographic limits of their birth or conception.

40

The forms in which this foreign element may appear aremany.

41 The foreign element may simply consist in the fact

that one of the parties to a contract is an alien or has a

foreign domicile, or that a contract between nationals of one State involves properties situated in another State. Inother cases, the foreign element may assume a complexform.

42

In the instant case, the foreign element consisted in thefact that private respondent Morada is a residentPhilippine national, and that petitioner SAUDIA is aresident foreign corporation. Also, by virtue of theemployment of Morada with the petitioner SAUDIA as aflight stewardess, events did transpire during her manyoccasions of travel across national borders, particularlyfrom Manila, Philippines to Jeddah, Saudi Arabia, and viceversa, that caused a conflicts situation to arise.

We thus find private respondents assertion that thecase is purely domestic, imprecise. A conflicts problempresents itself here, and the question of jurisdiction

43

confronts the court a quo . After a careful study of the private respondents

Amended Complaint,44

and the Comment thereon, we note

that she aptly predicated her cause of action on Articles 19and 21 of the New Civil Code.On one hand, Article 19 of the New Civil Code provides:

________________

40 Salonga, Private International Law , 1995 edition, p. 3.41 Ibid ., citing Cheshire and North, Private International Law , p. 5 by

P.M. North and J.J. Faucett (Butterworths; London, 1992).42 Ibid .

43 Paras, Philippine Conflict of Laws , sixth edition (1984), p. 24, citing Leflar, The Law of Conflict of Laws , pp. 5-6.

44 Supra , note 17.

486



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Art. 19. Every person must, in the exercise of his rights and in theperformance of his duties, act with justice give everyone his due andobserve honesty and good faith.

On the other hand, Article 21 of the New Civil Code

provides:Art. 21. Any person who willfully causes loss or injury to anotherin a manner that is contrary to morals, good customs or publicpolicy shall compensate the latter for damages.

Thus, in Philippine National Bank (PNB) vs. Court of Appeals ,

45 this Court held that:

The aforecited provisions on human relations were intended toexpand the concept of torts in this jurisdiction by granting adequate

legal remedy for the untold number of moral wrongs which isimpossible for human foresight to specifically provide in thestatutes.

Although Article 19 merely declares a principle of law, Article 21 gives flesh to its provisions. Thus, we agree withprivate respondents assertion that violations of Articles 19and 21 are actionable, with judicially enforceable remediesin the municipal forum.

Based on the allegations46

in the Amended Complaint,read in the light of the Rules of Court on jurisdiction 47 wefind that the Regional Trial Court (RTC) of Quezon Citypossesses jurisdiction over the subject matter of the suit.

48

Its authority

________________

45 83 SCRA 237, 247.46 Supra , note 17, at p. 6. Morada prays that judgment be rendered

against SAUDIA, ordering it to pay: (1) not less than P250,000.00 as

actual damages; (2) P4 million in moral damages; (3) P500,000.00 in

exemplary damages; and (4) P500,000.00 in attorneys fees.47 Baguioro v. Barrios , 77 Phil. 120.48 Jurisdiction over the subject matter is conferred by law and is

defined as the authority of a court to hear and decide cases of the

487


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VOL. 297, OCTOBER 8, 1998 487


to try and hear the case is provided for under Section 1 of Republic Act No. 7691, to wit:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise

known as the Judiciary Reorganization Act of 1980, is herebyamended to read as follows:

SEC. 19. Jurisdiction in Civil Cases .Regional Trial Courtsshall exercise exclusive jurisdiction:

x x x x x x x x x(8) In all other cases in which demand, exclusive of interest,

damages of whatever kind , attorneys fees, litigation expenses, andcost or the value of the property in controversy exceeds Onehundred thousand pesos (P100,000.00) or, in such other cases inMetro Manila, where the demand, exclusive of the above-mentioneditems exceeds Two hundred thousand pesos (P200,000.00).(Emphasis ours)

x x x x x x x x x

And following Section 2(b), Rule 4 of the Revised Rules of Courtthe venue, Quezon City, is appropriate:

SEC. 2. Venue in Courts of First Instance .[Now Regional TrialCourt]

(a) x x x x x x x x x(b) Personal actions .All other actions may be commenced and

tried where the defendant or any of the defendants resides or maybe found, or where the plaintiff or any of the plaintiff resides, at theelection of the plaintiff.

Pragmatic considerations, including the convenience of theparties, also weigh heavily in favor of the RTC Quezon Cityassuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a judgment if one is obtainedis quite obvious. Relative advantages and obstacles to a fairtrial are equally important. Plaintiff may not, by choice of an inconvenient forum, vex, harass, or oppress thedefendant, e.g . by inflicting upon him needless expense ordisturbance.

________________


23/45



general class to which the proceedings in question belong. ( Reyes v. Diaz , 73 Phil. 484, 487)

488



But unless the balance is strongly in favor of thedefendant, the plaintiffs choice of forum should rarely bedisturbed.

49

Weighing the relative claims of the parties, the court aquo found it best to hear the case in the Philippines. Had itrefused to take cognizance of the case, it would be forcing plaintiff (private respondent now) to seek remedial actionelsewhere, i.e . in the Kingdom of Saudi Arabia where she

no longer maintains substantial connections. That wouldhave caused a fundamental unfairness to her.Moreover, by hearing the case in the Philippines no

unnecessary difficulties and inconvenience have beenshown by either of the parties. The choice of forum of theplaintiff (now private respondent) should be upheld.

Similarly, the trial court also possesses jurisdiction overthe persons of the parties herein. By filing her Complaintand Amended Complaint with the trial court, privaterespondent has voluntarily submitted herself to the

jurisdiction of the court.The records show that petitioner SAUDIA has filed

several motions50

praying for the dismissal of Moradas Amended Complaint. SAUDIA also filed an Answer In Ex Abundante Cautelam dated February 20, 1995. What isvery patent and explicit from the motions filed, is thatSAUDIA prayed for other reliefs under the premises.Undeniably, petitioner SAUDIA has effectively submittedto the trial courts jurisdiction by praying for the dismissal

of the Amended Complaint on grounds other than lack of jurisdiction.

________________

49 Supra , note 37, p. 58, citing Gulf Oil Corporation v. Gilbert , 350U.S. 501, 67 Sup. Ct. 839 (1947).

50 Omnibus Motion to Dismiss dated January 14, 1994; Reply (to


24/45



Plaintiffs Opposition) dated February 19, 1994; Comment (to Plaintiffs

Motion to Admit Amended Complaint dated June 23, 1994) dated July

20, 1994; Manifestation and Motion to Dismiss Amended Complaint

dated June 23, 1994 under date August 11, 1994; and Motion for

Reconsideration dated September 19, 1994.

489

VOL. 297, OCTOBER 8, 1998 489


As held by this Court in Republic vs. Ker and Company, Ltd. :

51

We observe that the motion to dismiss filed on April 14, 1962, asidefrom disputing the lower courts jurisdiction over defendantsperson, prayed for dismissal of the complaint on the ground thatplaintiffs cause of action has prescribed. By interposing suchsecond ground in its motion to dismiss, Ker and Co., Ltd. availed of an affirmative defense on the basis of which it prayed the court toresolve controversy in its favor. For the court to validly decide thesaid plea of defendant Ker & Co., Ltd., it necessarily had to acquire

jurisdiction upon the latters person, who, being the proponent of the affirmative defense, should be deemed to have abandoned itsspecial appearance and voluntarily submitted itself to the

jurisdiction of the court.

Similarly, the case of De Midgely vs. Ferandos , held that:

When the appearance is by motion for the purpose of objecting tothe jurisdiction of the court over the person, it must be for the soleand separate purpose of objecting to the jurisdiction of the court. If his motion is for any other purpose than to object to the jurisdictionof the court over his person, he thereby submits himself to the

jurisdiction of the court. A special appearance by motion made forthe purpose of objecting to the jurisdiction of the court over the

person will be held to be a general appearance, if the party in saidmotion should, for example, ask for a dismissal of the action uponthe further ground that the court had no jurisdiction over thesubject matter.

52

Clearly, petitioner had submitted to the jurisdiction of theRegional Trial Court of Quezon City. Thus, we find that thetrial court has jurisdiction over the case and that its


25/45



exercise thereof, justified. As to the choice of applicable law, we note that choice-of-

law problems seek to answer two important questions: (1)What legal system should control a given situation where

________________

51 18 SCRA 207, 213-214.52 64 SCRA 23, 31.

490



some of the significant facts occurred in two or more states;

and (2) to what extent should the chosen legal systemregulate the situation.53

Several theories have been propounded in order toidentify the legal system that should ultimately control.

Although ideally, all choice-of-law theories shouldintrinsically advance both notions of justice andpredictability, they do not always do so. The forum is thenfaced with the problem of deciding which of these twoimportant values should be stressed.

54

Before a choice can be made, it is necessary for us to

determine under what category a certain set of facts orrules fall. This process is known as characterization, orthe doctrine of qualification. It is the process of deciding whether or not the facts relate to the kind of questionspecified in a conflicts rule.

55 The purpose of

characterization is to enable the forum to select theproper law.

56

Our starting point of analysis here is not a legal relation,but a factual situation, event, or operative fact.

57 An

essential element of conflict rules is the indication of atest or connecting factor or point of contact. Choice-of-law rules invariably consist of a factual relationship (suchas property right, contract claim) and a connecting factor orpoint of contact, such as the situs of the res , the place of celebration, the place of performance, or the place of wrongdoing.

58

Note that one or more circumstances may be present to
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(1)

(2)

(3)

(4)

(5)

(6)

serve as the possible test for the determination of theapplica-

________________

53 Coquia and Pangalangan, Conflict of Laws , 1995 edition, p. 65,citing Von Mehren, Recent Trends in Choice-of-Law Methodology , 60Cornell L. Rev. 927 (1975).

54 Ibid .55 Supra , note 40 at p. 94, citing Falconbridge, Essays on the Conflict

of Laws , p. 50.56 Ibid .57 Supra , note 37 at p. 136; cf. Mussbaum, Principle of Private

International Law , p. 173; and Rabel, The Conflict of Laws: AComparative Study , pp. 51-52.

58 Supra , note 37, p. 137.

491

VOL. 297, OCTOBER 8, 1998 491


ble law.59

These test factors or points of contact orconnecting factors could be any of the following:

the nationality of a person, his domicile, his

residence, his place of sojourn, or his origin;the seat of a legal or juridical person, such as acorporation;the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In particular, the lexsitus is decisive when real rights are involved;the place where an act has been done, the locusactus, such as the place where a contract has beenmade, a marriage celebrated, a will signed or a tort

committed. The lex loci actus is particularlyimportant in contracts and torts ;the place where an act is intended to come intoeffect, e.g ., the place of performance of contractualduties, or the place where a power of attorney is tobe exercised;the intention of the contracting parties as to the law


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(7)

(8)

that should govern their agreement, the lex lociintentionis ;the place where judicial or administrativeproceedings are instituted or done. The lex fori thelaw of the forumis particularly importantbecause, as we have seen earlier, matters of procedure not going to the substance of the claim

involved are governed by it; and because the lex foriapplies whenever the content of the otherwiseapplicable foreign law is excluded from applicationin a given case for the reason that it falls under oneof the exceptions to the applications of foreign law;andthe flag of a ship, which in many cases is decisive of practically all legal relationships of the ship and of its master or owner as such. It also covers

contractual relationships particularly contracts of affreightment.60

(Italics ours.)

After a careful study of the pleadings on record, including allegations in the Amended Complaint deemed admittedfor purposes of the motion to dismiss, we are convincedthat there is reasonable basis for private respondentsassertion that

________________

59 Ibid .60 Supra , note 37 at pp. 138-139.

492



although she was already working in Manila, petitionerbrought her to Jeddah on the pretense that she wouldmerely testify in an investigation of the charges she madeagainst the two SAUDIA crew members for the attack onher person while they were in Jakarta. As it turned out,she was the one made to face trial for very serious charges,including adultery and violation of Islamic laws and


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tradition.There is likewise logical basis on record for the claim

that the handing over or turning over of the person of private respondent to Jeddah officials, petitioner may haveacted beyond its duties as employer. Petitioners purportedact contributed to and amplified or even proximatelycaused additional humiliation, misery and suffering of

private respondent. Petitioner thereby allegedly facilitatedthe arrest, detention and prosecution of private respondentunder the guise of petitioners authority as employer,taking advantage of the trust, confidence and faith shereposed upon it. As purportedly found by the Prince of Makkah, the alleged conviction and imprisonment of private respondent was wrongful. But these capped theinjury or harm allegedly inflicted upon her person andreputation, for which petitioner could be liable as claimed,to provide compensation or redress for the wrongs done,once duly proven.

Considering that the complaint in the court a quo is oneinvolving torts, the connecting factor or point of contactcould be the place or places where the tortious conduct orlex loci actus occurred. And applying the torts principle in aconflicts case, we find that the Philippines could be said asa situs of the tort (the place where the alleged tortiousconduct took place). This is because it is in the Philippineswhere petitioner allegedly deceived private respondent, a

Filipina residing and working here. According to her, shehad honestly believed that petitioner would, in the exerciseof its rights and in the performance of its duties, act with

justice, give her her due and observe honesty and goodfaith. Instead, petitioner failed to protect her, she claimed.That certain acts or parts of the injury allegedly occurredin another country is of no moment. For in our view what isimportant here is the place where the

493

VOL. 297, OCTOBER 8, 1998 493


over-all harm or the totality of the alleged injury to theperson, reputation, social standing and human rights of complainant, had lodged, according to the plaintiff below


29/45



(herein private respondent). All told, it is not without basisto identify the Philippines as the situs of the alleged tort.

Moreover, with the widespread criticism of thetraditional rule of lex loci delicti commissi , modern theoriesand rules on tort liability

61 have been advanced to offer

fresh judicial approaches to arrive at just results. Inkeeping abreast with the modern theories on tort liability,

we find here an occasion to apply the State of the mostsignificant relationship rule, which in our view should beappropriate to apply now, given the factual context of thiscase.

In applying said principle to determine the State whichhas the most significant relationship, the following contactsare to be taken into account and evaluated according totheir relative importance with respect to the particularissue: (a) the place where the injury occurred; (b) the placewhere the conduct causing the injury occurred; (c) thedomicile, residence, nationality, place of incorporation andplace of business of the parties; and (d) the place where therelationship, if any, between the parties is centered.

62

As already discussed, there is basis for the claim thatoverall injury occurred and lodged in the Philippines. Thereis likewise no question that private respondent is aresident Filipina national, working with petitioner, aresident foreign corporation engaged here in the businessof international air carriage. Thus, the relationship

between the parties was centered here, although it shouldbe stressed that this suit is not based on mere labor lawviolations. From the record, the claim that the Philippineshas the most significant contact

________________

61 Includes the (1) German rule of elective concurrence; (2) State of

the most significant relationship rule (the Second Restatement of 1969);

(3) State-interest analysis; and (4) Cavers Principle of Preference.

62 Supra , note 37, p. 396.

494




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with the matter in this dispute,63

raised by privaterespondent as plaintiff below against defendant (hereinpetitioner), in our view, has been properly established.

Prescinding from this premise that the Philippines is thesitus of the tort complained of and the place having themost interest in the problem, we find, by way of recapitulation, that the Philippine law on tort liability

should have paramount application to and control in theresolution of the legal issues arising out of this case.Further, we hold that the respondent Regional Trial Courthas jurisdiction over the parties and the subject matter of the complaint; the appropriate venue is in Quezon City,which could properly apply Philip-pine law. Moreover, wefind untenable petitioners insistence that [s]ince privaterespondent instituted this suit, she has the burden of pleading and proving the applicable Saudi law on thematter.

64 As aptly said by private respondent, she has no

obligation to plead and prove the law of the Kingdom of Saudi Arabia since her cause of action is based on Articles19 and 21 of the Civil Code of the Philippines. In her

Amended Complaint and subsequent pleadings, she neveralleged that Saudi law should govern this case.

65 And as

correctly held by the respondent appellate court,considering that it was the petitioner who was invoking the applicability of the law of Saudi Arabia, then theburden was on it [petitioner] to plead and to establish what

the law of Saudi Arabia is.66

Lastly, no error could be imputed to the respondentappellate court in upholding the trial courts denial of defendants (herein petitioners) motion to dismiss the case.Not only was jurisdiction in order and venue properly laid,but appeal after trial was obviously available, andexpeditious trial itself indicated by the nature of the case athand. Indubitably, the

________________

63 Supra , note 59, p. 79, citing Ruben v. Irving Trust Co. , 305 N.Y. 288,305, 113 N.E. 2d 424, 431.

64 Memorandum for Petitioner, p. 22; rollo, p. 170.65 Memorandum for Private Respondent, pp. 21-22; rollo, pp. 202-203.66 CA Decision, p. 10; rollo, p. 97.


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495

VOL. 297, OCTOBER 8, 1998 495


Philippines is the state intimately concerned with the

ultimate outcome of the case below, not just for the benefitof all the litigants, but also for the vindication of thecountrys system of law and justice in a transnationalsetting. With these guidelines in mind, the trial court mustproceed to try and adjudge the case in the light of relevantPhilippine law, with due consideration of the foreignelement or elements involved. Nothing said herein, of course, should be construed as prejudging the results of thecase in any manner whatsoever.

WHEREFORE, the instant petition for certiorari ishereby DISMISSED Civil Case No. Q-93-18394 entitledMilagros P. Morada vs. Saudi Arabia Airlines is herebyREMANDED to Regional Trial Court of Quezon City,Branch 89 for further proceedings.

SO ORDERED.

Davide, Jr. (Chairman), Bellosillo, Vitug and Panganiban, JJ., concur.

Petition dismissed, Civil Case No. Q-93-18394 remandedto lower court.

Notes. Forum-shopping originated as a concept inprivate international law, where non-resident litigants aregiven the option to choose the forum or place wherein tobring their suit for various reasons or excuses, including tosecure procedural advantages, to annoy and harass thedefendant, to avoid overcrowded dockets, or to select amore friendly venue. ( First Philippine International Bankvs. Court of Appeals , 252 SCRA 259 [1996])

After having acquired jurisdiction over a plaintiff foreigncorporation by virtue of the filing of the original complaint,the Philippine court now has the discretion, based on thefacts of the case, to either give due course to the suit ordismiss it, on the principle of forum non conveniens.(Communication Materials and Design, Inc. vs. Court of

Appeals , 260 SCRA 673 [1996])


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o0o

496


Everett Steamship Corporation vs. Court of Appeals

G.R. No. 122494. October 8, 1998. *

EVERETT STEAMSHIP CORPORATION, petitioner, vs .COURT OF APPEALS and HERNANDEZ TRADING CO.,INC., respondents.

Common Carriers; Contracts; Bills of Lading; A stipulation inthe bill of lading limiting the common carriers liability for loss or

destruction of a cargo to a certain sum, unless the shipper or ownerdeclares a greater value, is sanctioned by law .A stipulation in thebill of lading limiting the common carriers liability for loss ordestruction of a cargo to a certain sum, unless the shipper or ownerdeclares a greater value, is sanctioned by law, particularly Articles1749 and 1750 of the Civil Code.

Same; Same; Same; Contracts of Adhesion; Contracts of adhe-L;sion are not invalid per se .The trial courts ratiocination thatprivate respondent could not have fairly and freely agreed to the

limited liability clause in the bill of lading because the saidconditions were printed in small letters does not make the bill of lading invalid. We ruled in PAL, Inc. vs. Court of Appeals that thejuris-prudence on the matter reveals the consistent holding of thecourt that contracts of adhesion are not invalid per se and that ithas on numerous occasions upheld the binding effect thereof. Also,in Philippine American General Insurance Co., Inc. vs. Sweet Lines,

Inc . this Court, speaking through the learned Justice Florenz D. Re-galado, held: x x x Ong Yiu vs. Court of Appeals, et al ., instructs usthat contracts of adhesion wherein one party imposes a ready-madeform of contract on the other x x x are contracts not entirelyprohibited. The one who adheres to the contract is in reality free toreject it entirely; if he adheres he gives his consent. In the presentcase, not even an allegation of ignorance of a party excuses non-compliance with the contractual stipulations since the responsibility

for ensuring full comprehension of the provisions of a contract of carriage devolves not on the carrier but on the owner, shipper, or


33/45



consignee as the case may be . (Emphasis supplied)

Same; Same; Same; Same; Greater vigilance is required of thecourts when dealing with contracts of adhesion in that the said con-

________________

* SECOND DIVISION.

497

VOL. 297, OCTOBER 8, 1998 497


tracts must be carefully scrutinized in order to shield the unwary(or weaker party) from deceptive schemes contained in ready-madecontracts. Greater vigilance, however, is required of the courtswhen dealing with contracts of adhesion in that the said contractsmust be carefully scrutinized in order to shield the unwary (orweaker party) from deceptive schemes contained in ready-madecovenants, such as the bill of lading in question. The stringentrequirement which the courts are enjoined to observe is inrecognition of Article 24 of the Civil Code which mandates that (i)nall contractual, property or other relations, when one of the partiesis at a disadvantage on account of his moral dependence, ignorance,indigence, mental weakness, tender age or other handicap , thecourts must be vigilant for his protection.

Same; Same; Same; Even if the consignee is not a signatory tothe contract of carriage between the shipper and the carrier, theconsignee can still be bound by the contract .The next issue to beresolved is whether or not private respondent, as consignee, who is

not a signatory to the bill of lading is bound by the stipulationsthereof. Again, in Sea-Land Service, Inc. vs. Intermediate AppellateCourt (supra) , we held that even if the consignee was not asignatory to the contract of carriage between the shipper and thecarrier, the consignee can still be bound by the contract. Speaking through Mr. Chief Justice Narvasa, we ruled: To begin with, thereis no question of the right, in principle, of a consignee in a bill of


34/45



lading to recover from the carrier or shipper for loss of, or damageto goods being transported under said bill, although that documentmay have beenas in practice it oftentimes isdrawn up only by theconsignor and the carrier without the intervention of the consignee. xx x.

Same; Same; Same; When the consignee formally claims

reimbursement for the missing goods from the common carrier andsubsequently files a case against the latter based on the very samebill of lading, it accepts the provisions of the contract and therebymakes itself a party thereto .When private respondent formallyclaimed reimbursement for the missing goods from petitioner andsubsequently filed a case against the latter based on the very samebill of lading, it (private respondent) accepted the provisions of thecontract and thereby made itself a party thereto, or at least hascome to court to enforce it. Thus, private respondent cannot nowreject or disregard the carriers limited liability stipulation in thebill of lading. In

498



other words, private respondent is bound by the whole stipulationsin the bill of lading and must respect the same.

PETITION for review on certiorari of a decision of theCourt of Appeals.

The facts are stated in the opinion of the Court. Soo, Gutierrez, Leogardo & Lee for petitioner. Atilano Huaben B. Lim for private respondent.

MARTINEZ, J .:

Petitioner Everett Steamship Corporation, through thispetition for review, seeks the reversal of the decision

1 of the

Court of Appeals, dated June 14, 1995, in CA-G.R. No.428093, which affirmed the decision of the Regional TrialCourt of Kalookan City, Branch 126, in Civil Case No. C-


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15532, finding petitioner liable to private respondentHernan-dez Trading Co., Inc. for the value of the lost cargo.

Private respondent imported three crates of bus spareparts marked as MARCO C/No. 12, MARCO C/No. 13 andMARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd. (Maruman Trading), a foreign corporationbased in Inazawa, Aichi, Japan. The crates were shipped

from Nagoya, Japan to Manila on boardADELFAEVERETTE, a vessel owned by petitionersprincipal, Everett Orient Lines. The said crates werecovered by Bill of Lading No. NGO53MN.

Upon arrival of the port of Manila, it was discoveredthat the crate marked MARCO C/No. 14 was missing. Thiswas confirmed and admitted by petitioner in its letter of January 13, 1992 addressed to private respondent, whichthereafter made a formal claim upon petitioner for thevalue of the lost cargo amounting to One Million FiveHundred Fifty Two

________________

1 Penned by Justice Pacita Canizares-Nye and concurred in by

Justices Conchita Carpio-Morales and Antonio P. Solano; Rollo, pp. 33-

40.

499

VOL. 297, OCTOBER 8, 1998 499


Thousand Five Hundred (1,552,500.00) Yen, the amountshown in an Invoice No. MTM-941, dated November 14,1991. However, petitioner offered to pay only One HundredThousand (100,000.00) Yen, the maximum amountstipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner.

Private respondent rejected the offer and thereafterinstituted a suit for collection docketed as Civil Case No. C-15532, against petitioner before the Regional Trial Court of Caloocan City, Branch 126.

At the pre-trial conference, both parties manifested thatthey have no testimonial evidence to offer and agreedinstead to file their respective memoranda.


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On July 16, 1993, the trial court rendered judgment2 in

favor of private respondent, ordering petitioner to pay: (a) 1,552,500.00; (b) 20,000.00 or its peso equivalentrepresenting the actual value of the lost cargo and thematerial and packaging cost; (c) 10% of the total amount asan award for and as contingent attorneys fees; and (d) topay the cost of the suit. The trial court ruled:

Considering defendants categorical admission of loss and itsfailure to overcome the presumption of negligence and fault, theCourt conclusively finds defendant liable to the plaintiff. The nextpoint of inquiry the Court wants to resolve is the extent of theliability of the defendant. As stated earlier, plaintiff contends thatdefendant should be held liable for the whole value for the loss of the goods in the amount of 1,552,500.00 because the termsappearing at the back of the bill of lading was so written in fineprints and that the same was not signed by plaintiff or shipper

thus, they are not bound by the clause stated in paragraph 18 of thebill of lading. On the other hand, defendant merely admitted that itlost the shipment but shall be liable only up to the amount of

100,000.00.The Court subscribes to the provisions of Article 1750 of the

New Civil Code

Art. 1750 . A contract fixing the sum that may be recovered by the owneror shipper for the loss, destruction or de-

________________

2 Penned by Judge Oscar M. Payawal, Rollo, pp. 43-50.

500



terioration of the goods is valid, if it is reasonable and just underthe circumstances, and has been fairly and freely agreed upon.It is required, however, that the contract must be reasonable

and just under the circumstances and has been fairly and freelyagreed upon. The requirements provided in Art. 1750 of the NewCivil Code must be complied with before a common carrier canclaim a limitation of its pecuniary liability in case of loss,destruction of deterioration of the goods it has undertaken to


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transport.In the case at bar, the Court is of the view that the

requirements of said article have not been met. The fact that thoseconditions are printed at the back of the bill of lading in letters sosmall that they are hard to read would not warrant thepresumption that the plaintiff or its supplier was aware of theseconditions such that he had fairly and freely agreed to these

conditions. It can not be said that the plaintiff had actually enteredinto a contract with the defendant, embodying the conditions asprinted at the back of the bill of lading that was issued by thedefendant to plaintiff.

On appeal, the Court of Appeals deleted the award of attorneys fees but affirmed the trial courts findings withthe additional observation that private respondent can notbe bound by the terms and conditions of the bill of lading because it was not privy to the contract of carriage. It said:

As to the amount of liability, no evidence appears on record toshow that the appellee (Hernandez Trading Co.) consented to theterms of the Bill of Lading. The shipper named in the Bill of Lading is Maruman Trading Co., Ltd. whom the appellant (EverettSteamship Corp.) contracted with for the transportation of the lostgoods.

Even assuming arguendo that the shipper Maruman Trading Co., Ltd. accepted the terms of the bill of lading when it deliveredthe cargo to the appellant, still it does not necessarily follow that

appellee Hernandez Trading Company as consignee is boundthereby considering that the latter was never privy to the shipping contract.

x x x x x x x x xNever having entered into a contract with the appellant,

appellee should therefore not be bound by any of the terms andconditions in the bill of lading.

501

VOL. 297, OCTOBER 8, 1998 501


Hence, it follows that the appellee may recover the full value of theshipment lost, the basis of which is not the breach of contract asappellee was never a privy to the any contract with the appellant,


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but is based on Article 1735 of the New Civil Code, there being noevidence to prove satisfactorily that the appellant has overcome thepresumption of negligence provided for in the law.

Petitioner now comes to us arguing that the Court of Appeals erred (1) in ruling that the consent of theconsignee to the terms and conditions of the bill of lading isnecessary to make such stipulations binding upon it; (2) inholding that the carriers limited package liability asstipulated in the bill of lading does not apply in the instantcase; and (3) in allowing private respondent to fully recoverthe full alleged value of its lost cargo.

We shall first resolve the validity of the limited liabilityclause in the bill of lading.

A stipulation in the bill of lading limiting the commoncarriers liability for loss or destruction of a cargo to acertain sum, unless the shipper or owner declares a greater

value, is sanctioned by law, particularly Articles 1749 and1750 of the Civil Code which provide:

ART. 1749. A stipulation that the common carriers liabilityislimited to the value of the goods appearing in the bill of lading,unless the shipper or owner declares a greater value

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