Conflict of Laws (Torts) Case Digests

G.R. No. 129406 March 6, 2006 REPUBLIC OF THE PHILIPPINES represented by the PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG) vs. SANDIGANBAYAN (SECOND DIVISION) and ROBERTO S. BENEDICTO. (Page 11). FACTS: The PCGG issued writs placing under sequestration all business enterprises, entities and other properties, real and personal, owned or registered in the name of private respondent Benedicto, or of corporations in which he appeared to have controlling or majority interest due to his involvement in cases of ill-gotten wealth. Among the properties thus sequestered and taken over by PCGG fiscal agents were the 227 shares in NOGCCI owned by and registered under the name of private respondent. As sequester of the 227 shares formerly owned by Benedicto, PCGG did not pay the monthly membership fee. Later on, the shares were declared to be delinquent to be put into an auction sale. Despite filing a writ of injunction, it was nevertheless dismissed. So petitioner Republic and private respondent Benedicto entered into a Compromise Agreement which contains a general release clause where petitioner agreed and bound itself to lift the sequestration on the 227 NOGCCI shares acknowledging that it was within private respondent‟s capacity to acquire the same shares out of his income from business and the exercise of his profession. Implied in this undertaking is the recognition by petitioner that the subject shares of stock could not have been ill-gotten Benedicto filed a Motion for Release from Sequestration and Return of Sequestered Shares/Dividends praying, inter alia, that his NOGCCI shares of stock be specifically released from sequestration and returned, delivered or paid to him as part of the parties‟ Compromise Agreement in that case. It was granted but the shares were ordered to be put under the custody of the Clerk of Court. Along with this, PCGG was ordered to deliver the shares to the Clerk of Court which it failed to comply with without any justifiable grounds. In a last-ditch attempt to escape liability, petitioner Republic, through the PCGG, invokes state immunity from suit. ISSUE: WON the Republic can invoke state immunity. HELD: NO. In fact, by entering into a CompromiseAgreement with private respondent Benedicto, petitioner Republic thereby stripped itself of its immunity from suit and placed itself in the same level of its adversary. When the State enters into contract, through its officers or agents, in furtherance of a legitimate aim and purpose and pursuant to constitutional legislative authority, whereby mutual or reciprocal benefits accrue and rights and obligations arise therefrom, the State may be sued even without its express consent, precisely because by

entering into a contract the sovereign descends to the level of the citizen. Its consent to be sued is implied from the very act of entering into such contract, breach of which on its part gives the corresponding right to the other party to the agreement.

KAZUHIRO HASEGAWA and NIPPON ENGINEERING CONSULTANTS CO., LTD., vs MINORU KITAMURA G.R. No. 149177 November 23, 2007 FACTS: Nippon Engineering Consultants (Nippon), a Japanese consultancy firm providing technical and management support in the infrastructure projects national permanently residing in the Philippines. The agreement provides that Kitamaru was to extend professional services to Nippon for a year. Nippon assigned Kitamaru to work as the project manager of the Southern Tagalog Access Road (STAR) project. When the STAR project was near completion, DPWH engaged the consultancy services of Nippon, this time for the detailed engineering & construction supervision of the Bongabon-Baler Road Improvement (BBRI) Project. Kitamaru was named as the project manger in the contract. Hasegawa, Nippon’s general manager for its International Division, informed Kitamaru that the company had no more intention of automatically renewing his ICA. His services would be engaged by the company only up to the substantial completion of the STAR Project. Kitamaru demanded that he be assigned to the BBRI project. Nippon insisted that Kitamaru’s contract was for a fixed term that had expired. Kitamaru then filed for specific performance & damages w/ the RTC of Lipa City. Nippon filed a MTD. Nippon’s contention: The ICA had been perfected in Japan & executed by & between Japanese nationals. Thus, the RTC of Lipa City has no jurisdiction. The claim for improper pre-termination of Kitamaru’s ICA could only be heard & ventilated in the proper courts of Japan following the principles of lex loci celebrationis & lex contractus. The RTC denied the motion to dismiss. The CA ruled hat the principle of lex loci celebrationis was not applicable to the case, because nowhere in the pleadings was the validity of the written agreement put in issue. It held that the RTC was correct in applying the principle of lex loci solutionis. ISSUE:

Whether or not the subject matter jurisdiction of Philippine courts in civil cases for specific performance & damages involving contracts executed outside the country by foreign nationals may be assailed on the principles of lex loci celebrationis, lex contractus, “the state of the most significant relationship rule,” or forum non conveniens. HELD: NO. In the judicial resolution of conflicts problems, 3 consecutive phases are involved: jurisdiction, choice of law, and recognition and enforcement of judgments. Jurisdiction & choice of law are 2 distinct concepts.Jurisdiction considers whether it is fair to cause a defendant to travel to this state; choice of law asks the further question whether the application of a substantive law w/c will determine the merits of the case is fair to both parties. The power to exercise jurisdiction does not automatically give a state constitutional authority to apply forum law. While jurisdiction and the choice of the lex foriwill often coincide, the “minimum contacts” for one do not always provide the necessary “significant contacts” for the other. The question of whether the law of a state can be applied to a transaction is different from the question of whether the courts of that state have jurisdiction to enter a judgment. In this case, only the 1st phase is at issue—jurisdiction. Jurisdiction, however, has various aspects. For a court to validly exercise its power to adjudicate a controversy, it must have jurisdiction over the plaintiff/petitioner, over the defendant/respondent, over the subject matter, over the issues of the case and, in cases involving property, over the res or the thing w/c is the subject of the litigation.In assailing the trial court's jurisdiction herein, Nippon is actually referring to subject matter jurisdiction. Jurisdiction over the subject matter in a judicial proceeding is conferred by the sovereign authority w/c establishes and organizes the court. It is given only by law and in the manner prescribed by law. It is further determined by the allegations of the complaint irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. To succeed in its motion for the dismissal of an action for lack of jurisdiction over the subject matter of the claim, the movant must show that the court or tribunal cannot act on the matter submitted to it because no law grants it the power to adjudicate the claims. In the instant case, Nippon, in its MTD, does not claim that the RTC is not properly vested by law w/ jurisdiction to hear the subject controversy for a civil case for specific performance & damages is one not capable of pecuniary estimation & is properly cognizable by the RTC of Lipa City.What they rather raise as grounds to question subject matter jurisdiction are the principles of lex loci celebrationis and lex contractus, and the “state of the most significant relationship rule.” The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the “law of the place of the ceremony” or the law of the place where a contract is made. The doctrine of lex contractus or lex loci contractusmeans the “law of the place where a contract is executed or to be performed.” It controls the nature, construction, and validity of the contract and it may pertain to the law voluntarily agreed upon by the parties or the law intended by them either expressly or implicitly. Under the “state of the most significant relationship rule,” to ascertain what state law to apply to a dispute, the court should determine which state has the most substantial connection to the occurrence and the parties. In a case involving a contract, the court should consider where the contract was made, was negotiated, was to be performed, and the domicile, place of business, or place of incorporation of the parties.This rule takes into account several contacts and evaluates them according to their relative importance with respect to the particular issue to be resolved. Since these 3 principles in conflict of laws make reference to the law applicable to a dispute, they are rules proper for the 2nd phase, the choice of law. They determine which state's law is to be applied in resolving the substantive issues of a conflicts problem. Necessarily, as the only issue in this case is that of jurisdiction, choice-of-law rules are not only inapplicable but also not yet called for. Further, Nippon’s premature invocation of choice-of-law rules is exposed by the fact that they have not yet pointed out any conflict between the laws of Japan and ours. Before determining which law should apply, 1st there should exist a conflict of laws situation requiring the application of the conflict of laws rules. Also, when the law of a foreign country is invoked to provide the proper rules for the solution of a case, the existence of such law must be pleaded and proved. It should be noted that when a conflicts case, one involving a foreign element, is brought before a court or administrative agency, there are 3 alternatives open to the latter in disposing of it: (1) dismiss the case, either because of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume jurisdiction over the case and apply the internal law of the forum; or (3) assume jurisdiction over the case and take into account or apply the law of some other State or States. The court’s power to hear cases and controversies is derived from the Constitution and the laws. While it may choose to recognize laws of foreign nations, the court is not limited by foreign sovereign law short of treaties or other formal agreements, even in matters regarding rights provided by foreign sovereigns. Neither can the other ground raised, forum non conveniens, be used to deprive the RTC of its jurisdiction. 1st, it is not a proper basis for a motion to dismiss because Sec. 1, Rule 16 of the Rules of Court does not include it as a ground. 2nd, whether a suit should be entertained or dismissed on the basis of the said doctrine depends largely upon the facts of the particular case and is addressed to the sound discretion of the RTC. In this case, the RTC decided to assume jurisdiction. 3rd, the propriety of dismissing a case

based on this principle requires a factual determination; hence, this conflicts principle is more properly considered a matter of defense.

UNITED AIRLINES, INC., Petitioner vs. COURT OF APPEALS, ANICETO FONTANILLA, et al.Facts:Private respondent Aniceto Fontanilla purchased from petitioner United Airlines in Manila three (3) "Visit the U.S.A." tickets for himself,his wife and his son.The Fontanillas proceeded to the United States as planned, where they used the first coupon from San Francisco to Washington. On April24, 1989, Aniceto Fontanilla bought two (2) additional coupons each for himself, his wife and his son from petitioner at its office inWashington Dulles Airport. After paying the penalty for rewriting their tickets, the Fontanillas were issued tickets with corresponding boardingpasses with the words "CHECK-IN REQUIRED," for United Airlines Flight No. 1108.The cause of the non-boarding of the Fontanillas on United Airlines Flight No. 1108 makes up the bone of contention of this controversy. The Fontanillas claim that they were denied boarding, that the employees of United Airlines were discourteous, arbitrary and discriminatoryOn the other hand, according to United Airlines, the Fontanillas did not initially go to the check-in counter to get their seat assignments for UAFlight 1108. They instead proceeded to join the queue boarding the aircraft without first securing their seat assignments as required in their ticket and boarding passes. Having no seat assignments, the stewardess at the door of the plane instructed them to go to the checkincounter. When the Fontanillas proceeded to the check-in counter, Linda Allen, the United Airlines Customer Representative at the counter informed them that the flight was overbooked. She booked them on the next available flight and offered them denied boarding compensation. Allen vehemently denies uttering the derogatory and racist words attributed to her by the Fontanillas.The incident prompted the Fontanillas to file Civil Case No. 89-4268 for damages before the Regional Trial Court of Makati. The TC ruled infavour of the Petitioner. CA reversed, finding that there was an admission on the part of United Airlines that the Fontanillas did in factobserve the check-in requirement and ruled further that even assuming there was a failure to observe the check-in requirement, United Airlines failed to comply with the procedure laid down in cases where a passenger is denied boarding. Issue: Whether or not respondent court of appeals gravely erred in ruling that private respondent‟s failure to check -in will not defeat hisclaims because the denied boarding rules were not complied with. Held: T he Court does not agree with the conclusion reached by the appellate court that private respondents‟ failure to comply with t

he check-in requirement will not defeat his claim as the denied boarding rules were not complied with. Notably, the appellate court relied on the Codeof Federal Regulation Part on Oversales.The appellate court, however, erred in applying the laws of the United States as, in the case at bar, Philippine law is the applicable law. Although, the contract of carriage was to be performed in the United States, the tickets were purchased through petitioner‟s agent in Manila. It is true that the tickets were "rewritten" in Washington, D.C. however, such fact did not change the nature of the original contract of carriageentered into by the parties in Manila.The doctrine of lex loci contractus. According to the doctrine, as a general rule, the law of the place where a contract is made or entered intogoverns with respect to its nature and validity, obligation and interpretation. This has been said to be the rule even though the place wherethe contract was made is different from the place where it is to be performed, and particularly so, if the place of the making and the place of performance are the same. Hence, the court should apply the law of the place where the airline ticket was issued, when the passengers areresidents and nationals of the forum and the ticket is issued in such State by the defendant airline.The law of the forum on the subject matter is Economic Regulations No. 7 as amended by Boarding Priority and Denied BoardCompensation of the Civil Aeronautics Board which provides that the check-in requirement be complied with before a passenger may claimagainst a carrier for being denied boarding:Sec. 5. Amount of Denied Boarding Compensation Subject to the exceptions provided hereinafter under Section 6,carriers shall pay to passengers holding confirmed reserved space and who have presented themselves at the proper place and time and fully complied with the carrier‟s check -in and reconfirmation procedures and who are acceptable for carriage under the Carrier‟s tariff but who have been denied boarding for lack of space, a compensation at the rate of: xxxPlaintiffs fail to realize that their failure to check in, as expressly required in their boarding passes, is they very reason why they were notgiven their respective seat numbers, which resulted in their being denied boarding. the private respondents were not able to prove that theywere subjected to coarse and harsh treatment by the ground crew of united Airlines. Neither were they able to show that there was bad faithon part of the carrier airline. CA decision reversed Philippine Export and Foreign Loan Guarantee Corporation vs V. P. Eusebio Construction G.R. No. 140047 March 31, 2003 Lessons Applicable: No conflicts rule on essential validity of contracts (conflicts of law) FACTS: ● ●

November 8, 1980: State Organization of Buildings (SOB), Ministry of Housing and Construction, Baghdad, Iraq, awarded the construction of the Institute of Physical Therapy–Medical Rehabilitation Center, Phase II, in Baghdad, Iraq, (Project) to Ajyal Trading and Contracting Company (Ajyal), a firm duly licensed

with the Kuwait US$18,739,668) ● ●

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Chamber of Commerce for ID5,416,089/046 (or about

March 7, 1981: 3-Plex International, Inc. represented by Spouses Eduardo and Iluminada Santos a local contractor engaged in construction business, entered into a joint venture agreement with Ajyal. However since it was not accredited under the Philippine Overseas Construction Board (POCB), it had to assign and transfer all its right to VPECI. VPECI entered into an agreement that the execution of the project will be under their joint management. To comply with the requirements of performance bond of ID271,808/610 and an an advance payment bond of ID541,608/901, 3-Plex and VPECI applied for the issuance of a guarantee with Philguarantee, a government financial institution empowered to issue guarantees for qualified Filipino contractors to secure the performance of approved service contracts abroad. Subsequently, letters of guarantee were issued by Philguarantee to the Rafidain Bank of Baghdad. Al Ahli Bank of Kuwait was, therefore, engaged to provide a counter-guarantee to Rafidain Bank, but it required a similar counterguarantee in its favor from the Philguarantee The Surety Bond was later amended to increase the amount of coverage from P6.4 million to P6.967 million and to change the bank in whose favor the petitioner's guarantee was issued, from Rafidain Bank to Al Ahli Bank of Kuwait SOB and the joint venture VPECI and Ajyal executed the service contract for the construction of the Institute of Physical Therapy – Medical Rehabilitation Center, Phase II, in Baghdad, Iraq. It commenced only on the last week of August 1981 instead of the June 2 1981 Prior to the deadline, upon foreseeing the impossibility to meet it, the surety bond was also extended for more than 12 times until May 1987 and the Advance Payment Guarantee was extended three times more until it was cancelled for reimbursement On 26 October 1986, Al Ahli Bank of Kuwait sent a telex call to the petitioner demanding full payment of its performance bond counter-guarantee VPECI requested Iraq Trade and Economic Development Minister Mohammad Fadhi Hussein to recall the telex call on the performance guarantee for being a drastic action in contravention of its mutual agreement that (1) the imposition of penalty would be held in abeyance until the completion of the project;

and (2) the time extension would be open, depending on the developments on the negotiations for a foreign loan to finance the completion of the project. ● ○ ○

VPECI Ahli Bank settlement of

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advised the Philguarantee not to pay yet Al because efforts were being exerted for the amicable the Project

VPECI received Bank stating that it had already US$876,564 under its letter of reimbursement by Philguarantee

another telex message from Al Ahli paid to Rafidain Bank the sum of guarantee, and demanding

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VPECI requested the Central Bank to hold in abeyance the payment by the Philguarantee "to allow the diplomatic machinery to take its course, for otherwise, the Philippine government , through the Philguarantee and the Central Bank, would become instruments of the Iraqi Government in consummating a clear act of injustice and inequity committed against a Filipino contractor Central

Bank authorized the remittance to Al Ahli Bank

Philguarantee informed VPECI that it would remit US$876,564 to Al Ahli Bank, and reiterated the joint and solidary obligation of the respondents to reimburse the Philguarantee for the advances made on its counter-guarantee but they failed to pay so a case was filed in the RTC

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RTC and CA: Against Philguarantee since no cause of action since it was expired because VPECI. Inequity to allow the Philguarantee to pass on its losses to the Filipino contractor VPECI which had sternly warned against paying the Al Ahli Bank and constantly apprised it of the developments in the Project implementation. ISSUE: W/N the Philippine laws should be applied in determining VPECI's default in the performance of its obligations under the service contract HELD: YES. ● ● No conflicts rule on essential validity of contracts is expressly provided for in our laws ● ○ ○ The rule followed by most legal systems, however, is that the intrinsic validity of a contract must be governed by the lex contractus or "proper law of the contract." This is the law voluntarily agreed upon by the parties (the lex loci voluntatis) or the law

intended by them either expressly or implicitly (the lex loci intentionis) - none in this case ○ ● ●

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In this case, the laws of Iraq bear substantial connection to the transaction, since one of the parties is the Iraqi Government and the place of performance is in Iraq. Hence, the issue of whether respondent VPECI defaulted in its obligations may be determined by the laws of Iraq. However, since that foreign law was not properly pleaded or proved, the presumption of identity or similarity, otherwise known as the processual presumption, comes into play. Where foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours In the United States and Europe, the two rules that now seem to have emerged as "kings of the hill" are (1) the parties may choose the governing law; and (2) in the absence of such a choice, the applicable law is that of the State that "has the most significant relationship to the transaction and the parties Another authority proposed that all matters relating to the time, place, and manner of performance and valid excuses for non-performance are determined by the law of the place of performance or lex loci solutionis, which is useful because it is undoubtedly always connected to the contract in a significant way In this case, the laws of Iraq bear substantial connection to the transaction, since one of the parties is the Iraqi Government and the place of performance is in Iraq. Hence, the issue of whether respondent VPECI defaulted in its obligations may be determined by the laws of Iraq. However, since that foreign law was not properly pleaded or proved, the presumption of identity or similarity, otherwise known as the processual presumption, comes into play. Where foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours delay or the non-completion of the Project was caused by factors not imputable to the respondent contractor such as the war in Iraq petitioner as a guarantor is entitled to the benefit of excussion, that is, it cannot be compelled to pay the creditor SOB unless the property of the debtor VPECI has been exhausted and all legal remedies against the said debtor have been resorted to by the creditor. It could also set up compensation as regards what the creditor SOB may owe the principal debtor VPECI. In this case, however, the petitioner has clearly waived these rights and remedies by making the payment of an obligation that was yet to be shown to be rightfully due the creditor and demandable of the principal debtor.

HONGKONG SHANGAI BANKING CORPORATION v. SHERMAN G.R. No. 72494 August 11, 1989

FACTS In 1981, Eastern Book Supply Service PTE, Ltd., (Eastern) a company incorporated in Singapore applied w/, & was granted by the Singapore branch of HSBC an overdraft facility in the max amount of Singapore $200,000 (w/c amount was subsequently increased to Singapore $375,000) w/ interest at 3% over HSBC prime rate, payable monthly, on amounts due under said overdraft facility. As a security for the repayment by Eastern of sums advanced by HSBC to it through the aforesaid overdraft facility, in 1982, Jack Sherman, Dodato Reloj, and a Robin de Clive Lowe, all of whom were directors of Eastern at such time, executed a Joint and Several Guarantee in favor of HSBC whereby Sherman, Reloj and Lowe agreed to pay, jointly and severally, on demand all sums owed by Eastern to HSBC under the aforestated overdraft facility.

The Joint and Several Guarantee provides that: “This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this guarantee.”

Eastern failed to pay its obligation. Thus, HSBC demanded payment of the obligation from Sherman & Reloj, conformably w/ the provisions of the Joint and Several Guarantee. Inasmuch as Sherman & Reloj still failed to pay, HSBC filed a complaint for collection of a sum of money against them. Sherman & Reloj filed a motion to dismiss on the grounds that (1) the court has no jurisdiction over the subject matter of the complaint, and (2) the court has no jurisdiction over the person of the defendants.

ISSUE W/N Philippine courts should have jurisdiction over the suit.

RULING YES. While it is true that "the transaction took place in Singaporean setting" and that the Joint and Several Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that "this guarantee and all rights, obligations & liabilities arising hereunder shall be construed & determined under & may be enforced in accordance w/ the laws of the Republic of Singapore. We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee" be liberally construed. One basic principle underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in rem

quasi in rem or in personam. To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice. Indeed, as pointed-out by HSBC at the outset, the instant case presents a very odd situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, w/ more reason as a defendant. However, in this case, Sherman & Reloj are Philippine residents (a fact which was not disputed by them) who would rather face a complaint against them before a foreign court and in the process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve the case. Their stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a just obligation.

The defense of Sherman & Reloj that the complaint should have been filed in Singapore is based merely on technicality. They did not even claim, much less prove, that the filing of the action here will cause them any unnecessary trouble, damage, or expense. On the other hand, there is no showing that petitioner BANK filed the action here just to harass Sherman & Reloj. The parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction. Neither did the clause in question operate to divest Philippine courts of jurisdiction. In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things w/in its boundaries subject to certain exceptions. Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory w/ the permission of the latter's authorities. This authority, which finds its source in the concept of sovereignty, is exclusive w/in and throughout the domain of the State. A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them. Pan American World Airways vs. Rapadas (G.R. No. 60673) Facts: Private respondent Jose Rapadas held passenger ticket and baggage claim check for petitioner‟s flight No. 841 with the route from Guam to Manila. While standing inline to board the flight at the Guam Airport, Rapadas was ordered by petitioner‟s hand carry control agent to check-in his samsonite attaché case. Rapadas protested pointing to the fact that other copasengers were permitted to hand carry baggage. He stepped out of the line only to go back again at the end of it to try of he can get through without having to register his attaché case. However, the same man in charge of had carry control did not fail to notice him and ordered him again to register his baggage. Upon arriving in Manila on the same day, Rapadas claimed and was given all his checked in baggage except the attaché case. Issue: Whether or not a passenger is bound by the terms of a passenger under the Warsaw convention, shall apply in case of loss, damage or destruction to a registered luggage of a passenger. Held: After a review of the various arguments of the appointing parties, the court found sufficient basis under the particular facts of the case for the availment of the liability limitations

under the Warsaw Convention. There is no dispute and the courts below admit that there was such a notice appearing on page 2 of the airline ticketstating that the Warsaw Convention governs in case of death or injury of passengers or of loss, damage or destructionto a passenger‟s luggage. Art. 22(4) of the Warsaw Convention does not preclude an award of attorney‟s fees. That provision states that the limits of liability prescribed in the instrument shall not prevent the court from awarding in accordance with its own law, in addition, the whole or part of the court costs and other expenses of litigation incurred by the plaintiff. Insular Government vs. Frank 13 Phil 236, G.R.No.2935. March 23, 1909. FACTS: In 1903 in the state of Illinois, Mr. Frank, a US citizen and a representative of the Insular Government of the Philippines entered into a contract whereby the former shall serve as stenographer in the Philippines for a period of 2 years. The contract contained a provision that in case of violation of its terms, Mr. Frank shall be liable for the amount incurred by the Philippine Government for his travel from Chicago to Manila and one-half salary paid during such period. After serving for 6 months, defendant left the service and refused to make further compliance with the terms of the contract, therefore the Government sued him to recover the amount of $269.23 plus damages. The lower court ruled in favor of the plaintiff, hence the defendant appealed presenting minority as his special defense. By reason of the fact that under the laws of the Philippines, contracts made by person who did not reach majority age of 23 are unenforceable. Defendant claim that he is an adult when he left Chicago but was a minor when he arrived in Manila and at the time the plaintiff attempted to enforce the contract. ISSUE: Whether or not the contract is valid. RULING: Mr. Frank being fully qualified to enter into a contract at the place and time the contract was made, he cannot therefore plead infancy as a defense at the place where the contract is being enforced. Although Mr. Frank was still a minor under Philippine laws, he was nevertheless considered an adult under the laws of the state of Illinois,the place where the contract was made.No rule is better settled in law than that matters bearing upon the execution, interpretation and validity of a contract are determined by the law of the place where the contract is made. Matters connected to its performance are regulated by the law prevailing at the place of its performance. Matters respecting a remedy, such as bringing of a suit, admissibility of evidence, and statutes of limitations, depend upon the law of the place where the suit is brought. Although generally, capacity of the parties to enter into a contract is governed by national law. This is one case not involving real property which was decided by our Supreme Court, where instead of national law, what should determine capacity to enter into a contract is the lex loci celebrationis. According to Conflict of Laws writer Edgardo Paras, Frank‟s capacity should be judged by his national law and not by the law of the place where the contract was entered into. In the instant case whether it is the place where the contract was made or Frank‟s nationality, the result would be the same. However,as suggested by the mentioned author, for the conflicts rule in capacity in general, national law of the parties is controlling

American President Lines, Ltd. vs. CA Facts: American President Lines (APL) vessel President Washington(Carrier for short) receive and loaded on board at Los Angeles, California, the subject of the shipment of one (1) unit of Submersible Jocky Pump, contained in (3) boxes, complete and in good order condition, covered by Commercial Invoice No. 602956, and Packing List. It was for transport to Manila in favor or Lindale Development Corporation, the consignee. The CARRIER, thru Forwarders Direct Container Lines, Inc., issued its clean Bill of Lading No. CHI-MNL-120. The shipment was insured by FGU Ins. Corp. for P481, 842.24 The defendant CARRIER transshipped the shipment in Hongkong on board the vessel MS „Partas‟, which arrived at the Port of Manila, on September 6, 1987. On the same date, the shipment was discharged and turned over to Marina Port Services, Inc.(Arrastre0, with one box in bad order condition, showing signs of having been previously tampered; hence, covered by a Turn over Survey Cargoes No. A-08851. The cargo remained with the ARRASTRE for ten days until it was withdrawn on April 16, 1987 by the defendant broker which delivered the same to the consignee, aforementioned, at its warehouse, where the said shipment was examined and inventoried, and the one box discharged from the CARRIER‟s vessel in bad order condition, was found short of one piece waster cone and one piece Main Relief valued, per invoice, at P28, 248.58. Private respondent FGU Ins. Corp. filed a complaint for recovery of a sum of money against APL, Marina Port Services, Inc., and LCM Brokerage Co., Inc. The trial court found in favor of private respondent and ordered APL to pay private respondent the amount of P28, 248.58. In actual damages,

Issue: What law is applicable the Civil Code provisions or COGSA?

Held: The Civil Code. With regard to the contention of the carrier that COGSA should control in this case, the same is of no moment. Art. 1763 of the New Civil Code provides that “the laws of the country to which the goods are transported shall govern the liability of the common carrier in case of loss, destruction and deterioration.” This means that the law of the Philippines on the New Civil Code. Under 1766 of NCC, “in all matter not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by Special Laws.” Art. 1736-1738, NCC governs said rights and obligations. Therefore, although Sec 4(5) of COGSA states that the carrier shall not be liable in an amount exceeding $500 per package unless the value of the goods had been declared by the shipper and asserted in the bill of lading, said section is merely supplementary to the provisions of the New Civil Code. Santos III vs. Northwest Orient Airlines G.R. No. 101538, June 23, 1992

INTERNATIONAL LAW: Warsaw Convention is constitutional, a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country. INTERNATIONAL LAW: Warsaw Convention, when applicable: To all "international transportations of persons by aircraft for hire." Whether the transportation is "international" is determined by the contract of the parties, which in the case of passengers is the ticket. When the contract of carriage provides for the transportation of the passenger between certain designated terminals "within the territories of two High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the airline and its passenger. INTERNATIONAL LAW: Warsaw Convention, jurisdiction: Place of Destination vis-a-vis Agreed Stopping Place: The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination."

FACTS:

Petitioner is a minor and a resident of the Philippines. Private respondent Nortwest Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A. and licensed to do business and maintain a branch office in the Philippines. The petitioner purchased from NOA a round-trip ticket in San Francisco, U.S.A. In December 19, 1986, the petitioner checked in the at the NOA counter in the San Francisco airport for his departure to Manila. Despite a previous confirmation and re-confirmation, he was informed that he had no reservation for his flight for Tokyo to Manila. He therefore had to be wait-listed. On March 12, 1987, the petitioner sued NOA for damages in RTC Makati. NOA moved to dismiss the complaint on the ground of lack of jurisdiction.

ISSUE:

Whether or not Article 28 (1) of the Warsaw Convention is in accordance with the constitution so as to deprive the Philippine Courts jurisdiction over the case

HELD:

Art. 28. (1) An action for damage must be brought at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the court of the domicile of the carrier or of his principal place of business, or where he has a place of business through which the contract has been made, or before the court at the place of destination.

Constitutionality of the Warsaw Convention

The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto. "to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the citizens thereof."

The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and effect of law in this country.

Does the Warsaw Convention apply in this case?

By its own terms, the Convention applies to all international transportation of persons performed by aircraft for hire.

International transportation is defined in paragraph (2) of Article 1 as follows:

(2) For the purposes of this convention, the expression "international transportation" shall mean any transportation in which, according to the contract made by the parties, the place of

departure and the place of destination, whether or not there be a break in the transportation or a transshipment, are situated [either] within the territories of two High Contracting Parties . . .

Whether the transportation is "international" is determined by the contract of the parties, which in the case of passengers is the ticket. When the contract of carriage provides for the transportation of the passenger between certain designated terminals "within the territories of two High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the airline and its passenger.

Since the flight involved in the case at bar is international, the same being from the United States to the Philippines and back to the United States, it is subject to the provisions of the Warsaw Convention, including Article 28(1), which enumerates the four places where an action for damages may be brought.

Does Article 28(1) refer to Jurisdiction or Venue?

...where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept. Jurisdiction in the international sense must be established in accordance with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court must be established pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is determined will the issue of venue be taken up. This second question shall be governed by the law of the court to which the case is submitted.

Was the case properly filed in the Philippines, since the plaintiff‟s destination was Manila?

The place of destination, within the meaning of the Warsaw Convention, is determined by the terms of the contract of carriage or, specifically in this case, the ticket between the passenger and the carrier. Examination of the petitioner's ticket shows that his ultimate destination is San Francisco. Although the date of the return flight was left open, the contract of carriage between the parties indicates that NOA was bound to transport the petitioner to San Francisco from Manila. Manila should therefore be considered merely an agreed stopping place and not the destination.

Article 1(2) also draws a distinction between a "destination" and an "agreed stopping place." It is the "destination" and not an "agreed stopping place" that controls for purposes of ascertaining jurisdiction under the Convention.

The contract is a single undivided operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression indicates the understanding of the parties to the Convention that every contract of carriage has one place of departure and one place of destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination."

WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.