G.R. No.

152122

July 30, 2003

CHINA AIRLINES, petitioner,

vs.
DANIEL CHIOK, respondent.
PANGANIBAN, J.:
A common carrier has a peculiar relationship with and an exacting responsibility to its
passengers. For reasons of public interest and policy, the ticket-issuing airline acts as
principal in a contract of carriage and is thus liable for the acts and the omissions of any
errant carrier to which it may have endorsed any sector of the entire, continuous trip.
The Case
Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of
Court, seeking to reverse the August 7, 2001 Decision2 and the February 7, 2002
Resolution3 of the Court of Appeals (CA) in CA-GR CV No. 45832. The challenged
Decision disposed as follows:
"WHEREFORE, premises considered, the assailed Decision dated July 5, 1991 of
Branch 31, Regional Trial Court, National Capital Judicial Region, Manila, in Civil
Case No. 82-13690, is hereby MODIFIED by deleting that portion regarding
defendants-appellants liabilities for the payment of the actual damages amounting to
HK$14,128.80 and US$2,000.00 while all other respects are AFFIRMED. Costs
against defendants-appellants."4
The assailed Resolution denied Petitioners Motion for Partial Reconsideration.
The Facts
The facts are narrated by the CA5 as follows:
"On September 18, 1981, Daniel Chiok (hereafter referred to as Chiok) purchased
from China Airlines, Ltd. (CAL for brevity) airline passenger ticket number
297:4402:004:278:5 for air transportation covering Manila-Taipei-Hongkong-Manila.
Said ticket was exclusively endorseable to Philippine Airlines, Ltd. (PAL for brevity).
"Subsequently, on November 21, 1981, Chiok took his trip from Manila to Taipei
using [the] CAL ticket. Before he left for said trip, the trips covered by the ticket
were pre-scheduled and confirmed by the former. When he arrived in Taipei, he went
to the CAL office and confirmed his Hongkong to Manila trip on board PAL Flight
No. PR 311. The CAL office attached a yellow sticker appropriately indicating that
his flight status was OK.
"When Chiok reached Hongkong, he went to the PAL office and sought to reconfirm

his flight back to Manila. The PAL office confirmed his return trip on board Flight
No. PR 311 and attached its own sticker. On November 24, 1981, Chiok proceeded to
Hongkong International Airport for his return trip to Manila. However, upon reaching
the PAL counter, Chiok saw a poster stating that PAL Flight No. PR 311 was
cancelled because of a typhoon in Manila. He was then informed that all the
confirmed ticket holders of PAL Flight No. PR 311 were automatically booked for its
next flight, which was to leave the next day. He then informed PAL personnel that,
being the founding director of the Philippine Polysterene Paper Corporation, he ha[d]
to reach Manila on November 25, 1981 because of a business option which he ha[d]
to execute on said date.
"On November 25, 1981, Chiok went to the airport. Cathay Pacific stewardess Lok
Chan (hereafter referred to as Lok) ha[d] taken and received Chioks plane ticket and
his luggage. Lok called the attention of Carmen Chan (hereafter referred to as
Carmen), PALs terminal supervisor, and informed the latter that Chioks name was
not in the computer list of passengers. Subsequently, Carmen informed Chiok that his
name did not appear in PALs computer list of passengers and therefore could not be
permitted to board PAL Flight No. PR 307.
"Meanwhile, Chiok requested Carmen to put into writing the alleged reason why he
was not allowed to take his flight. The latter then wrote the following, to wit: PAL
STAFF CARMEN CHAN CHKD WITH R/C KENNY AT 1005H NO SUCH NAME
IN COMPUTER FOR 311/24 NOV AND 307/25 NOV. The latter sought to recover
his luggage but found only 2 which were placed at the end of the passengers line.
Realizing that his new Samsonite luggage was missing, which contained cosmetics
worth HK$14,128.80, he complained to Carmen.
"Thereafter, Chiok proceeded to PALs Hongkong office and confronted PALs
reservation officer, Carie Chao (hereafter referred to as Chao), who previously
confirmed his flight back to Manila. Chao told Chiok that his name was on the list
and pointed to the latter his computer number listed on the PAL confirmation sticker
attached to his plane ticket, which number was R/MN62.
"Chiok then decided to use another CAL ticket with No. 297:4402:004:370:5 and
asked Chao if this ticket could be used to book him for the said flight. The latter,
once again, booked and confirmed the formers trip, this time on board PAL Flight
No. PR 311 scheduled to depart that evening. Later, Chiok went to the PAL check-in
counter and it was Carmen who attended to him. As this juncture, Chiok had already
placed his travel documents, including his clutch bag, on top of the PAL check-in
counter.
"Thereafter, Carmen directed PAL personnel to transfer counters. In the ensuing
commotion, Chiok lost his clutch bag containing the following, to wit: (a) $2,000.00;
(b) HK$2,000.00; (c) Taipei $8,000.00; (d) P2,000.00; (e) a three-piece set of gold
(18 carats) cross pens valued at P3,500; (f) a Cartier watch worth about P7,500.00;
(g) a tie clip with a garnet birthstone and diamond worth P1,800.00; and (h) a [pair

of] Christian Dior reading glasses. Subsequently, he was placed on stand-by and at
around 7:30 p.m., PAL personnel informed him that he could now check-in.
"Consequently, Chiok as plaintiff, filed a Complaint on November 9, 1982 for
damages, against PAL and CAL, as defendants, docketed as Civil Case No. 8213690, with Branch 31, Regional Trial Court, National Capital Judicial Region,
Manila.
"He alleged therein that despite several confirmations of his flight, defendant PAL
refused to accommodate him in Flight No. 307, for which reason he lost the business
option aforementioned. He also alleged that PALs personnel, specifically Carmen,
ridiculed and humiliated him in the presence of so many people. Further, he alleged
that defendants are solidarily liable for the damages he suffered, since one is the
agent of the other."6
The Regional Trial Court (RTC) of Manila held CAL and PAL jointly and severally liable
to respondent. It did not, however, rule on their respective cross-claims. It disposed as
follows:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the
defendants to jointly and severally pay:
1. Actual damages in the amount of HK$14,128.80 or its equivalent in Philippine
Currency at the time of the loss of the luggage consisting of cosmetic products;
2. US$2,000.00 or its equivalent at the time of the loss of the clutch bag containing
the money;
3. P200,000.00 by way of moral damages;
4. P50,000.00 by way of exemplary damages or corrective damages;
5. Attorney[]s fees equivalent to 10% of the amounts due and demandable and
awarded in favor of the plaintiff; and
6. The costs of this proceedings."7
The two carriers appealed the RTC Decision to the CA.
Ruling of the Court of Appeals
Affirming the RTC, the Court of Appeals debunked petitioners claim that it had merely
acted as an issuing agent for the ticket covering the Hong Kong-Manila leg of
respondents journey. In support of its Decision, the CA quoted a purported ruling of this
Court in KLM Royal Dutch Airlines v. Court of Appeals8 as follows:

"Article 30 of the Warsaw providing that in case of transportation to be performed by

various successive carriers, the passenger can take action only against the carrier who
performed the transportation during which the accident or the delay occurred
presupposes the occurrence of either an accident or delay in the course of the air trip,
and does not apply if the damage is caused by the willful misconduct on the part of
the carriers employee or agent acting within the scope of his employment.
"It would be unfair and inequitable to charge a passenger with automatic knowledge
or notice of a condition which purportedly would excuse the carrier from liability,
where the notice is written at the back of the ticket in letters so small that one has to
use a magnifying glass to read the words. To preclude any doubt that the contract was
fairly and freely agreed upon when the passenger accepted the passage ticket, the
carrier who issued the ticket must inform the passenger of the conditions prescribed
in the ticket or, in the very least, ascertain that the passenger read them before he
accepted the passage ticket. Absent any showing that the carriers officials or
employees discharged this responsibility to the passenger, the latter cannot be bound
by the conditions by which the carrier assumed the role of a mere ticket-issuing agent
for other airlines and limited its liability only to untoward occurrences in its own
lines.
"Where the passage tickets provide that the carriage to be performed thereunder by
several successive carriers is to be regarded as a single operation, the carrier which
issued the tickets for the entire trip in effect guaranteed to the passenger that the latter
shall have sure space in the various carriers which would ferry him through the
various segments of the trip, and the ticket-issuing carrier assumes full responsibility
for the entire trip and shall be held accountable for the breach of that guaranty
whether the breach occurred in its own lines or in those of the other carriers."9
On PALs appeal, the appellate court held that the carrier had reneged on its obligation to
transport respondent when, in spite of the confirmations he had secured for Flight PR
311, his name did not appear in the computerized list of passengers. Ruling that the
airlines negligence was the proximate cause of his excoriating experience, the appellate
court sustained the award of moral and exemplary damages.
The CA, however, deleted the RTCs award of actual damages amounting to
HK$14,128.80 and US$2,000.00, because the lost piece of luggage and clutch bag had
not actually been "checked in" or delivered to PAL for transportation to Manila.
On August 28, 2001, petitioner filed a Motion for Partial Reconsideration, contending
that the appellate court had erroneously relied on a mere syllabus of KLM v. CA, not on
the actual ruling therein. Moreover, it argued that respondent was fully aware that the
booking for the PAL sector had been made only upon his request; and that only PAL, not
CAL, was liable for the actual carriage of that segment. Petitioner likewise prayed for a
ruling on its cross-claim against PAL, inasmuch as the latters employees had acted
negligently, as found by the trial court.

Denying the Motion, the appellate court ruled that petitioner had failed to raise any new
matter or issue that would warrant a modification or a reversal of the Decision. As to the
alleged misquotation, the CA held that while the portion it had cited appeared to be
different from the wording of the actual ruling, the variance was "more apparent than real
since the difference [was] only in form and not in substance."10
CAL and PAL filed separate Petitions to assail the CA Decision. In its October 3, 2001
Resolution, this Court denied PALs appeal, docketed as GR No. 149544, for failure to
serve the CA a copy of the Petition as required by Section 3, Rule 45, in relation to
Section 5(d) of Rule 56 and paragraph 2 of Revised Circular No. 1-88 of this Court.
PALs Motion for Reconsideration was denied with finality on January 21, 2002.
Only the appeal of CAL11 remains in this Court.
Issues
In its Memorandum, petitioner raises the following issues for the Courts consideration:
"1. The Court of Appeals committed judicial misconduct in finding liability against
the petitioner on the basis of a misquotation from KLM Royal Dutch Airlines vs.
Court of Appeals, et al., 65 SCRA 237 and in magnifying its misconduct by denying
the petitioners Motion for Reconsideration on a mere syllabus, unofficial at that.
"2. The Court of Appeals committed an error of law when it did not apply applicable
precedents on the case before it.
"3. The Court of Appeals committed a non sequitur when it did not rule on the crossclaim of the petitioner."12
The Courts Ruling
The Petition is not meritorious.
First Issue:
Alleged Judicial Misconduct
Petitioner charges the CA with judicial misconduct for quoting from and basing its ruling
against the two airlines on an unofficial syllabus of this Courts ruling in KLM v. CA.
Moreover, such misconduct was allegedly aggravated when the CA, in an attempt to
justify its action, held that the difference between the actual ruling and the syllabus was
"more apparent than real."13
We agree with petitioner that the CA committed a lapse when it relied merely on the
unofficial syllabus of our ruling in KLM v. CA. Indeed, lawyers and litigants are
mandated to quote decisions of this Court accurately.14 By the same token, judges should

do no less by strictly abiding by this rule when they quote cases that support their
judgments and decisions. Canon 3 of the Code of Judicial Conduct enjoins them to
perform official duties diligently by being faithful to the law and maintaining their
professional competence.
However, since this case is not administrative in nature, we cannot rule on the CA
justices administrative liability, if any, for this lapse. First, due process requires that in
administrative proceedings, the respondents must first be given an opportunity to be
heard before sanctions can be imposed. Second, the present action is an appeal from the
CAs Decision, not an administrative case against the magistrates concerned. These two
suits are independent of and separate from each other and cannot be mixed in the same
proceedings.
By merely including the lapse as an assigned error here without any adequate and proper
administrative case therefor, petitioner cannot expect the imposition of an administrative
sanction.
In the case at bar, we can only determine whether the error in quotation would be
sufficient to reverse or modify the CA Decision.
Applicability of KLM v. CA
In KLM v. CA, the petitioner therein issued tickets to the Mendoza spouses for their
world tour. The tour included a Barcelona-Lourdes route, which was serviced by the Irish
airline Aer Lingus. At the KLM office in Frankfurt, Germany, they obtained a
confirmation from Aer Lingus of their seat reservations on its Flight 861. On the day of
their departure, however, the airline rudely off-loaded them.
When sued for breach of contract, KLM sought to be excused for the wrongful conduct of
Aer Lingus by arguing that its liability for damages was limited only to occurrences on its
own sectors. To support its argument, it cited Article 30 of the Warsaw Convention,
stating that when transportation was to be performed by various successive carriers, the
passenger could take action only against the carrier that had performed the transportation
when the accident or delay occurred.
In holding KLM liable for damages, we ruled as follows:
"1. The applicability insisted upon by the KLM of article 30 of the Warsaw
Convention cannot be sustained. That article presupposes the occurrence of either an
accident or a delay, neither of which took place at the Barcelona airport; what is here
manifest, instead, is that the Aer Lingus, through its manager there, refused to
transport the respondents to their planned and contracted destination.
"2. The argument that the KLM should not be held accountable for the tortious
conduct of Aer Lingus because of the provision printed on the respondents' tickets
expressly limiting the KLM's liability for damages only to occurrences on its own

lines is unacceptable. As noted by the Court of Appeals that condition was printed in
letters so small that one would have to use a magnifying glass to read the words.
Under the circumstances, it would be unfair and inequitable to charge the
respondents with automatic knowledge or notice of the said condition so as to
preclude any doubt that it was fairly and freely agreed upon by the respondents when
they accepted the passage tickets issued to them by the KLM. As the airline which
issued those tickets with the knowledge that the respondents would be flown on the
various legs of their journey by different air carriers, the KLM was chargeable with
the duty and responsibility of specifically informing the respondents of conditions
prescribed in their tickets or, in the very least, to ascertain that the respondents read
them before they accepted their passage tickets. A thorough search of the record,
however, inexplicably fails to show that any effort was exerted by the KLM officials
or employees to discharge in a proper manner this responsibility to the respondents.
Consequently, we hold that the respondents cannot be bound by the provision in
question by which KLM unilaterally assumed the role of a mere ticket-issuing agent
for other airlines and limited its liability only to untoward occurrences on its own
lines.
"3. Moreover, as maintained by the respondents and the Court of Appeals, the
passage tickets of the respondents provide that the carriage to be performed
thereunder by several successive carriers is to be regarded as a single operation,
which is diametrically incompatible with the theory of the KLM that the respondents
entered into a series of independent contracts with the carriers which took them on
the various segments of their trip. This position of KLM we reject. The respondents
dealt exclusively with the KLM which issued them tickets for their entire trip and
which in effect guaranteed to them that they would have sure space in Aer Lingus
flight 861. The respondents, under that assurance of the internationally prestigious
KLM, naturally had the right to expect that their tickets would be honored by Aer
Lingus to which, in the legal sense, the KLM had indorsed and in effect guaranteed
the performance of its principal engagement to carry out the respondents' scheduled
itinerary previously and mutually agreed upon between the parties.
"4. The breach of that guarantee was aggravated by the discourteous and highly
arbitrary conduct of an official of the Aer Lingus which the KLM had engaged to
transport the respondents on the Barcelona-Lourdes segment of their itinerary. It is
but just and in full accord with the policy expressly embodied in our civil law which
enjoins courts to be more vigilant for the protection of a contracting party who
occupies an inferior position with respect to the other contracting party, that the KLM
should be held responsible for the abuse, injury and embarrassment suffered by the
respondents at the hands of a supercilious boor of the Aer Lingus."15
In the instant case, the CA ruled that under the contract of transportation, petitioner -- as
the ticket-issuing carrier (like KLM) -- was liable regardless of the fact that PAL was to
perform or had performed the actual carriage. It elucidated on this point as follows:
"By the very nature of their contract, defendant-appellant CAL is clearly liable under

the contract of carriage with [respondent] and remains to be so, regardless of those
instances when actual carriage was to be performed by another carrier. The issuance
of a confirmed CAL ticket in favor of [respondent] covering his entire trip abroad
concretely attests to this. This also serves as proof that defendant-appellant CAL, in
effect guaranteed that the carrier, such as defendant-appellant PAL would honor his
ticket, assure him of a space therein and transport him on a particular segment of his
trip."16
Notwithstanding the errant quotation, we have found after careful deliberation that the
assailed Decision is supported in substance by KLM v. CA. The misquotation by the CA
cannot serve as basis for the reversal of its ruling.
Nonetheless, to avert similar incidents in the future, this Court hereby exhorts members
of the bar and the bench to refer to and quote from the official repository of our decisions,
the Philippine Reports, whenever practicable.17In the absence of this primary source,
which is still being updated, they may resort to unofficial sources like the SCRA.18 We
remind them that the Courts ponencia, when used to support a judgment or ruling, should
be quoted accurately.19
Second Issue:
Liability of the Ticket-Issuing Airline
We now come to the main issue of whether CAL is liable for damages. Petitioner posits
that the CA Decision must be annulled, not only because it was rooted on an erroneous
quotation, but also because it disregarded jurisprudence, notably China Airlines v.
Intermediate Appellate Court20 and China Airlines v. Court of Appeals.21
Jurisprudence Supports CA Decision
It is significant to note that the contract of air transportation was between petitioner and
respondent, with the former endorsing to PAL the Hong Kong-to-Manila segment of the
journey. Such contract of carriage has always been treated in this jurisdiction as a single
operation. This jurisprudential rule is supported by the Warsaw Convention,22 to which
the Philippines is a party, and by the existing practices of the International Air Transport
Association (IATA).
Article 1, Section 3 of the Warsaw Convention states:
"Transportation to be performed by several successive air carriers shall be deemed,
for the purposes of this Convention, to be one undivided transportation, if it has been
regarded by the parties as a single operation, whether it has been agreed upon under
the form of a single contract or of a series of contracts, and it shall not lose its
international character merely because one contract or a series of contracts is to be
performed entirely within a territory subject to the sovereignty, suzerainty, mandate,
or authority of the same High Contracting Party."23

Article 15 of IATA-Recommended Practice similarly provides:

"Carriage to be performed by several successive carriers under one ticket, or under a
ticket and any conjunction ticket issued therewith, is regarded as a single operation."
In American Airlines v. Court of Appeals,24 we have noted that under a general pool
partnership agreement, the ticket-issuing airline is the principal in a contract of carriage,
while the endorsee-airline is the agent.
"x x x Members of the IATA are under a general pool partnership agreement wherein
they act as agent of each other in the issuance of tickets to contracted passengers to
boost ticket sales worldwide and at the same time provide passengers easy access to
airlines which are otherwise inaccessible in some parts of the world. Booking and
reservation among airline members are allowed even by telephone and it has become
an accepted practice among them. A member airline which enters into a contract of
carriage consisting of a series of trips to be performed by different carriers is
authorized to receive the fare for the whole trip and through the required process of
interline settlement of accounts by way of the IATA clearing house an airline is duly
compensated for the segment of the trip serviced. Thus, when the petitioner accepted
the unused portion of the conjunction tickets, entered it in the IATA clearing house
and undertook to transport the private respondent over the route covered by the
unused portion of the conjunction tickets, i.e., Geneva to New York, the petitioner
tacitly recognized its commitment under the IATA pool arrangement to act as agent
of the principal contracting airline, Singapore Airlines, as to the segment of the trip
the petitioner agreed to undertake. As such, the petitioner thereby assumed the
obligation to take the place of the carrier originally designated in the original
conjunction ticket. The petitioners argument that it is not a designated carrier in the
original conjunction tickets and that it issued its own ticket is not decisive of its
liability. The new ticket was simply a replacement for the unused portion of the
conjunction ticket, both tickets being for the same amount of US$ 2,760 and having
the same points of departure and destination. By constituting itself as an agent of the
principal carrier the petitioners undertaking should be taken as part of a single
operation under the contract of carriage executed by the private respondent and
Singapore Airlines in Manila."25
Likewise, as the principal in the contract of carriage, the petitioner in British Airways v.
Court of Appeals26 was held liable, even when the breach of contract had occurred, not
on its own flight, but on that of another airline. The Decision followed our ruling in
Lufthansa German Airlines v. Court of Appeals,27 in which we had held that the
obligation of the ticket-issuing airline remained and did not cease, regardless of the fact
that another airline had undertaken to carry the passengers to one of their destinations.
In the instant case, following the jurisprudence cited above, PAL acted as the carrying
agent of CAL. In the same way that we ruled against British Airways and Lufthansa in
the aforementioned cases, we also rule that CAL cannot evade liability to respondent,
even though it may have been only a ticket issuer for the Hong Kong-Manila sector.

Moral and Exemplary Damages

Both the trial and the appellate courts found that respondent had satisfactorily proven the
existence of the factual basis for the damages adjudged against petitioner and PAL. As a
rule, the findings of fact of the CA affirming those of the RTC will not be disturbed by
this Court.28 Indeed, the Supreme Court is not a trier of facts. As a rule also, only
questions of law -- as in the present recourse -- may be raised in petitions for review
under Rule 45.
Moral damages cannot be awarded in breaches of carriage contracts, except in the two
instances contemplated in Articles 1764 and 2220 of the Civil Code, which we quote:
"Article 1764. Damages in cases comprised in this Section shall be awarded in
accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall
also apply to the death of a passenger caused by the breach of contract by a common
carrier.
xxx

xxx

xxx

"Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith." (Italics supplied)
There is no occasion for us to invoke Article 1764 here. We must therefore determine if
CAL or its agent (PAL) is guilty of bad faith that would entitle respondent to moral
damages.
In Lopez v. Pan American World Airways,29 we defined bad faith as a breach of a known
duty through some motive of interest or ill will.
In the case at bar, the known duty of PAL was to transport herein respondent from Hong
Kong to Manila. That duty arose when its agent confirmed his reservation for Flight PR
311,30 and it became demandable when he presented himself for the trip on November
24, 1981.
It is true that due to a typhoon, PAL was unable to transport respondent on Flight PR 311
on November 24, 1981. This fact, however, did not terminate the carriers responsibility
to its passengers. PAL voluntarily obligated itself to automatically transfer all confirmed
passengers of PR 311 to the next available flight, PR 307, on the following day.31 That
responsibility was subsisting when respondent, holding a confirmed ticket for the former
flight, presented himself for the latter.
The records amply establish that he secured repeated confirmations of his PR 311 flight
on November 24, 1981. Hence, he had every reason to expect that he would be put on the
replacement flight as a confirmed passenger. Instead, he was harangued and prevented

from boarding the original and the replacement flights. Thus, PAL breached its duty to
transport him. After he had been directed to pay the terminal fee, his pieces of luggage
were removed from the weighing-in counter despite his protestations.32
It is relevant to point out that the employees of PAL were utterly insensitive to his need to
be in Manila on November 25, 1981, and to the likelihood that his business affairs in the
city would be jeopardized because of a mistake on their part. It was that mistake that had
caused the omission of his name from the passenger list despite his confirmed flight
ticket. By merely looking at his ticket and validation sticker, it is evident that the glitch
was the airlines fault. However, no serious attempt was made by PAL to secure the allimportant transportation of respondent to Manila on the following day. To make matters
worse, PAL allowed a group of non-revenue passengers, who had no confirmed tickets or
reservations, to board Flight PR 307.33
Time and time again, this Court has stressed that the business of common carriers is
imbued with public interest and duty; therefore, the law governing them imposes an
exacting standard.34 In Singson v. Court of Appeals,35we said:
"x x x [T]he carrier's utter lack of care and sensitivity to the needs of its passengers,
clearly constitutive of gross negligence, recklessness and wanton disregard of the
rights of the latter, [are] acts evidently indistinguishable or no different from fraud,
malice and bad faith. As the rule now stands, where in breaching the contract of
carriage the defendant airline is shown to have acted fraudulently, with malice or in
bad faith, the award of moral and exemplary damages, in addition to actual damages,
is proper."36(Italics supplied)
In Saludo v. Court of Appeals,37 the Court reminded airline companies that due to the
nature of their business, they must not merely give cursory instructions to their personnel
to be more accommodating towards customers, passengers and the general public; they
must require them to be so.
The acts of PALs employees, particularly Chan, clearly fell short of the extraordinary
standard of care that the law requires of common carriers.38 As narrated in Chans oral
deposition,39 the manner in which the airline discharged its responsibility to respondent
and its other passengers manifested a lack of the requisite diligence and due regard for
their welfare. The pertinent portions of the Oral Deposition are reproduced as follows:
"Q
Now you said that flight PR 311 on 24th November was cancelled due to [a]
typhoon and naturally the passengers on said flight had to be accommodated on the
first flight the following day or the first flight subsequently. [W]ill you tell the
Honorable Deposition Officer the procedure followed by Philippine Airlines in the
handling of passengers of cancelled flight[s] like that of PR 311 which was cancelled
due to [a] typhoon?
A
The procedure will be: all the confirmed passengers from [PR] 311 24th
November [are] automatically transfer[red] to [PR] 307, 25th November[,] as a

protection for all disconfirmed passengers.

Q
Aside from this procedure[,] what do you do with the passengers on the
cancelled flight who are expected to check-in on the flights if this flight is cancelled
or not operating due to typhoon or other reasons[?] In other words, are they not
notified of the cancellation?
A
I think all these passengers were not notified because of a typhoon and
Philippine Airlines Reservation were [sic] not able to call every passenger by phone.
Atty. Fruto:
Q

Did you say were not notified?

I believe they were not, but believe me, I was on day-off.

Atty. Calica:
Q
Per procedure, what should have been done by Reservations Office when a
flight is cancelled for one reason or another?
A
If there is enough time, of course, Reservations Office x x x call[s] up all the
passengers and tell[s] them the reason. But if there [is] no time[,] then the
Reservations Office will not be able to do that."40
xxx

xxx

xxx

"Q
I see. Miss Chan, I [will] show you a ticket which has been marked as Exh.
A and A-1. Will you please go over this ticket and tell the court whether this is the
ticket that was used precisely by Mr. Chiok when he checked-in at [F]light 307, 25
November 81?
A

[Are you] now asking me whether he used this ticket with this sticker?

No, no, no. That was the ticket he used.

Yes, [are you] asking me whether I saw this ticket?

Atty. Fruto: Yes.

A

I believe I saw it.

Q
You saw it, O.K. Now of course you will agree with me Miss Chan that this
yellow stub here which has been marked as Exh. A-1-A, show[s] that the status on
flight 311, 24th November, is O.K., correct?

Yes.

Q
You agree with me. And you will also agree with me that in this ticket of
flight 311, on this, another sticker Exh. A-1-B for 24 November is O.K.?
A
Q
V?41
A

May I x x x look at them. Yes, it says O.K. x x x, but [there is] no validation.
O.K. Miss Chan what do you understand by these entries here R bar M N 6
This is what we call a computer reference.

Q
I see. This is a computer reference showing that the name of Mr. Chiok has
been entered in Philippine Airlines computer, and this is his computer number.
A

Yes.

Q
Now you stated in your answer to the procedure taken, that all confirmed
passengers on flight 311, 24 November[,] were automatically transferred to 307 as a
protection for the passengers, correct?
A

Correct.

Q
So that since following the O.K. status of Mr. Chioks reservation [on] flight
311, [he] was also automatically transferred to flight 307 the following day?
A

Should be.

Q
Should be. O.K. Now do you remember how many passengers x x x were
transferred from flight 311, 24 November to flight 307, 25 November 81?
A
I can only give you a very brief idea because that was supposed to be air bus
so it should be able to accommodate 246 people; but how many [exactly], I dont
know."42
xxx

xxx

xxx

"Q
So, between six and eight oclock in the evening of 25 November 81, Mr.
Chiok already told you that he just [came] from the Swire Building where Philippine
Airlines had [its] offices and that he told you that his space for 311 25 November 81
was confirmed?
A

Yes.

That is what he told you. He insisted on that flight?

Yes.

Q
And did you not try to call up Swire Building-- Philippine Airlines and verify
indeed if Mr. Chiok was there?
A
Swire House building is not directly under Philippine Airlines. it is just an
agency for selling Philippine Airlines ticket. And besides around six o clock theyre
close[d] in Central.
Q
So this Swire Building is an agency authorized by Philippine Airlines to issue
tickets for and on behalf of Philippine Airlines and also...
A

Yes.

And also to confirm spaces for and on behalf of Philippine Airlines.

Yes."43

Under the foregoing circumstances, we cannot apply our 1989 ruling in China Airlines v.
Intermediate Appellate Court,44 which petitioner urges us to adopt. In that case, the
breach of contract and the negligence of the carrier in effecting the immediate flight
connection for therein private respondent was incurred in good faith.45 Having found no
gross negligence or recklessness, we thereby deleted the award of moral and exemplary
damages against it.46
This Courts 1992 ruling in China Airlines v. Court of Appeals47 is likewise inapplicable.
In that case, we found no bad faith or malice in the airlines breach of its contractual
obligation.48 We held that, as shown by the flow of telexes from one of the airlines
offices to the others, petitioner therein had exercised diligent efforts in assisting the
private respondent change his flight schedule. In the instant case, petitioner failed to
exhibit the same care and sensitivity to respondents needs.
In Singson v. Court of Appeals,49 we said:
"x x x Although the rule is that moral damages predicated upon a breach of contract
of carriage may only be recoverable in instances where the mishap results in the
death of a passenger, or where the carrier is guilty of fraud or bad faith, there are
situations where the negligence of the carrier is so gross and reckless as to virtually
amount to bad faith, in which case, the passenger likewise becomes entitled to
recover moral damages."
In the present case, we stress that respondent had repeatedly secured confirmations of his
PR 311 flight on November 24, 1981 -- initially from CAL and subsequently from the
PAL office in Hong Kong. The status of this flight was marked "OK" on a validating
sticker placed on his ticket. That sticker also contained the entry "RMN6V." Ms Chan
explicitly acknowledged that such entry was a computer reference that meant that

respondents name had been entered in PALs computer.

Since the status of respondent on Flight PR 311 was "OK," as a matter of right testified to
by PALs witness, he should have been automatically transferred to and allowed to board
Flight 307 the following day. Clearly resulting from negligence on the part of PAL was its
claim that his name was not included in its list of passengers for the November 24, 1981
PR 311 flight and, consequently, in the list of the replacement flight PR 307. Since he had
secured confirmation of his flight -- not only once, but twice -- by personally going to the
carriers offices where he was consistently assured of a seat thereon -- PALs negligence
was so gross and reckless that it amounted to bad faith.
In view of the foregoing, we rule that moral and exemplary50 damages were properly
awarded by the lower courts.51
Third Issue:
Propriety of the Cross-Claim
We now look into the propriety of the ruling on CALs cross-claim against PAL.
Petitioner submits that the CA should have ruled on the cross-claim, considering that the
RTC had found that it was PALs employees who had acted negligently.
Section 8 of Rule 6 of the Rules of Court reads:
"Sec. 8. Cross-claim. - A cross claim is any claim by one party against a co-party
arising out of the transaction or occurrence that is the subject matter either of the
original action or of a counterclaim therein. Such cross-claim may include a claim
that the party against whom it is asserted is or may be liable to the cross-claimant for
all or part of a claim asserted in the action against the cross-claimant."
For purposes of a ruling on the cross-claim, PAL is an indispensable party. In BA Finance
Corporation v. CA,52the Court stated:
"x x x. An indispensable party is one whose interest will be affected by the courts
action in the litigation, and without whom no final determination of the case can be
had. The partys interest in the subject matter of the suit and in the relief sought are
so inextricably intertwined with the other parties that his legal presence as a party to
the proceeding is an absolute necessity. In his absence there cannot be a resolution of
the dispute of the parties before the court which is effective, complete, or equitable.
xxx

xxx

xxx

"Without the presence of indispensable parties to a suit or proceeding, judgment of a

court cannot attain real finality."
PALs interest may be affected by any ruling of this Court on CALs cross-claim. Hence,

it is imperative and in accordance with due process and fair play that PAL should have
been impleaded as a party in the present proceedings, before this Court can make a final
ruling on this matter.
Although PAL was petitioners co-party in the case before the RTC and the CA, petitioner
failed to include the airline in the present recourse. Hence, the Court has no jurisdiction
over it. Consequently, to make any ruling on the cross-claim in the present Petition would
not be legally feasible because PAL, not being a party in the present case, cannot be
bound thereby.53
WHEREFORE, the Petition is DENIED. Costs against petitioner.
SO ORDERED.
G.R. No. 60501. March 5, 1993.
CATHAY PACIFIC AIRWAYS, LTD, petitioner, vs. COURT OF APPEALS and TOMAS
L. ALCANTARA, respondents.
Siguion-Reyna, Montecillo & Ongsiako and Tomacruz, Manguiat & Associates for
petitioner.
Tanjuatco, Oreta, Tanjuatco, Berenger & Corpus for private respondent.
SYLLABUS
1. CIVIL LAW; CONTRACT OF CARRIAGE; BREACH THEREOF; PETITIONER
BREACHED ITS CONTRACT OF CARRIAGE WITH PRIVATE RESPONDENT
WHEN IT FAILED TO DELIVER HIS LUGGAGE AT THE DESIGNATED PLACE
AND TIME. Petitioner breached its contract of carriage with private respondent when
it failed to deliver his luggage at the designated place and time, it being the obligation of
a common carrier to carry its passengers and their luggage safely to their destination,
which includes the duty not to delay their transportation, and the evidence shows that
petitioner acted fraudulently or in bad faith.
2. DAMAGES; MORAL AND EXEMPLARY DAMAGES PREDICATED UPON A
BREACH OF CONTRACT OF CARRIAGE; RECOVERABLE ONLY IN INSTANCES
WHERE THE MISHAP RESULTS IN DEATH OF A PASSENGER, OR WHERE THE
CARRIER IS GUILTY OF FRAUD OR BAD FAITH; THE CONDUCT OF
PETITIONER'S REPRESENTATIVE TOWARDS RESPONDENT JUSTIFIES THE
GRANT OF MORAL AND EXEMPLARY DAMAGES IN CASE AT BAR. Moral
damages predicated upon a breach of contract of carriage may only be recoverable in
instances where the mishap results in death of a passenger, or where the carrier is guilty
of fraud or bad faith. The language and conduct of petitioner's representative towards
respondent Alcantara was discourteous or arbitrary to justify the grant of moral damages.
The CATHAY representative was not only indifferent and impatient; he was also rude and

insulting. He simply advised Alcantara to buy anything he wanted. But even that was not
sincere because the representative knew that the passenger was limited only to $20.00
which, certainly, was not enough to purchase comfortable clothings appropriate for an
executive conference. Considering that Alcantara was not only a revenue passenger but
even paid for a first class airline accommodation and accompanied at the time by the
Commercial Attache of the Philippine Embassy who was assisting him in his problem,
petitioner or its agents should have been more courteous and accommodating to private
respondent, instead of giving him a curt reply, "What can we do, the baggage is missing. I
cannot do anything . . . Anyhow, you can buy anything you need, charged to Cathay
Pacific." Where in breaching the contract of carriage the defendant airline is not shown to
have acted fraudulently or in bad faith, liability for damages is limited to the natural and
probable consequences of the breach of obligation which the parties had foreseen or
could have reasonably foreseen. In that case, such liability does not include moral and
exemplary damages. Conversely, if the defendant airline is shown to have acted
fraudulently or in bad faith, the award of moral and exemplary damages is proper.
3. TEMPERATE DAMAGES; RECOVERABLE ONLY UPON PROOF THAT THE
CLAIMANT SUSTAINED SOME PECUNIARY LOSS. However, respondent
Alcantara is not entitled to temperate damages, contrary to the ruling of the court a quo,
in the absence of any showing that he sustained some pecuniary loss. It cannot be
gainsaid that respondent's luggage was ultimately delivered to him without serious or
appreciable damage.
4. WARSAW CONVENTION; DOES NOT OPERATE AS AN EXCLUSIVE
ENUMERATION OF THE INSTANCES FOR DECLARING A CARRIER LIABLE
FOR BREACH OF CONTRACT OF CARRIAGE OR AS AN ABSOLUTE LIMIT OF
THE EXTENT OF THAT LIABILITY; DOES NOT PRECLUDE THE OPERATION OF
THE CIVIL CODE AND OTHER PERTINENT LAWS. As We have repeatedly held,
although the Warsaw Convention has the force and effect of law in this country, being a
treaty commitment assumed by the Philippine government, said convention does not
operate as an exclusive enumeration of the instances for declaring a carrier liable for
breach of contract of carriage or as an absolute limit of the extent of that liability. The
Warsaw Convention declares the carrier liable for damages in the enumerated cases and
under certain limitations. However, it must not be construed to preclude the operation of
the Civil Code and other pertinent laws. It does not regulate, much less exempt, the
carrier from liability for damages for violating the rights of its passengers under the
contract of carriage, especially if wilfull misconduct on the part of the carrier's employees
is found or established, which is clearly the case before Us.
DECISION
BELLOSILLO, J p:
This is a petition for review on certiorari of the decision of the Court of Appeals which
affirmed with modification that of the trial court by increasing the award of damages in
favor of private respondent Tomas L. Alcantara.

The facts are undisputed: On 19 October 1975, respondent Tomas L. Alcantara was a first
class passenger of petitioner Cathay Pacific Airways, Ltd. (CATHAY for brevity) on its
Flight No. CX-900 from Manila to Hongkong and onward from Hongkong to Jakarta on
Flight No. CX-711. The purpose of his trip was to attend the following day, 20 October
1975, a conference with the Director General of Trade of Indonesia, Alcantara being the
Executive Vice-President and General Manager of Iligan Cement Corporation, Chairman
of the Export Committee of the Philippine Cement Corporation, and representative of the
Cement Industry Authority and the Philippine Cement Corporation. He checked in his
luggage which contained not only his clothing and articles for personal use but also
papers and documents he needed for the conference.
Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When he
inquired about his luggage from CATHAY's representative in Jakarta, private respondent
was told that his luggage was left behind in Hongkong. For this, respondent Alcantara
was offered $20.00 as "inconvenience money" to buy his immediate personal needs until
the luggage could be delivered to him.
His luggage finally reached Jakarta more than twenty four (24) hours after his arrival.
However, it was not delivered to him at his hotel but was required by petitioner to be
picked up by an official of the Philippine Embassy.
On 1 March 1976, respondent filed his complaint against petitioner with the Court of
First Instance (now Regional Trial Court) of Lanao del Norte praying for temperate,
moral and exemplary damages, plus attorney's fees.
On 18 April 1976, the trial court rendered its decision ordering CATHAY to pay Plaintiff
P20,000.00 for moral damages, P5,000.00 for temperate damages, P10,000.00 for
exemplary damages, and P25,000.00 for attorney's fees, and the costs. 1
Both parties appealed to the Court of Appeals. CATHAY assailed the conclusion of the
trial court that it was accountable for breach of contract and questioned the nonapplication by the court of the Warsaw Convention as well as the excessive damages
awarded on the basis of its finding that respondent Alcantara was rudely treated by
petitioner's employees during the time that his luggage could not be found. For his part,
respondent Alcantara assigned as error the failure of the trial court to grant the full
amount of damages sought in his complaint.
On 11 November 1981, respondent Court of Appeals rendered its decision affirming the
findings of fact of the trial court but modifying its award by increasing the moral
damages to P80,000.00, exemplary damages to P20,000.00 and temperate or moderate
damages to P10,000.00. The award of P25,000.00 for attorney's fees was maintained.
The same grounds raised by petitioner in the Court of Appeals are reiterated before Us.
CATHAY contends that: (1) the Court of Appeals erred in holding petitioner liable to
respondent Alcantara for moral, exemplary and temperate damages as well as attorney's
fees; and, (2) the Court of Appeals erred in failing to apply the Warsaw Convention on

the liability of a carrier to its passengers.

On its first assigned error, CATHAY argues that although it failed to transport respondent
Alcantara's luggage on time, the one-day delay was not made in bad faith so as to justify
moral, exemplary and temperate damages. It submits that the conclusion of respondent
appellate court that private respondent was treated rudely and arrogantly when he sought
assistance from CATHAY's employees has no factual basis, hence, the award of moral
damages has no leg to stand on.
Petitioner's first assigned error involves findings of fact which are not reviewable by this
Court. 2 At any rate, it is not impressed with merit. Petitioner breached its contract of
carriage with private respondent when it failed to deliver his luggage at the designated
place and time, it being the obligation of a common carrier to carry its passengers and
their luggage safely to their destination, which includes the duty not to delay their
transportation, 3 and the evidence shows that petitioner acted fraudulently or in bad faith.
Moral damages predicated upon a breach of contract of carriage may only be recoverable
in instances where the mishap results in death of a passenger, 4 or where the carrier is
guilty of fraud or bad faith. 5
In the case at bar, both the trial court and the appellate court found that CATHAY was
grossly negligent and reckless when it failed to deliver the luggage of petitioner at the
appointed place and time. We agree. CATHAY alleges that as a result of mechanical
trouble, all pieces of luggage on board the first aircraft bound for Jakarta were unloaded
and transferred to the second aircraft which departed an hour and a half later. Yet, as the
Court of Appeals noted, petitioner was not even aware that it left behind private
respondent's luggage until its attention was called by the Hongkong Customs authorities.
More, bad faith or otherwise improper conduct may be attributed to the employees of
petitioner. While the mere failure of CATHAY to deliver respondent's luggage at the
agreed place and time did not ipso facto amount to willful misconduct since the luggage
was eventually delivered to private respondent, albeit belatedly, 6 We are persuaded that
the employees of CATHAY acted in bad faith. We refer to the deposition of Romulo
Palma, Commercial Attache of the Philippine Embassy at Jakarta, who was with
respondent Alcantara when the latter sought assistance from the employees of CATHAY.
This deposition was the basis of the findings of the lower courts when both awarded
moral damages to private respondent. Hereunder is part of Palma's testimony
"Q: What did Mr. Alcantara say, if any?
A. Mr. Alcantara was of course . . . . I could understand his position. He was furious for
the experience because probably he was thinking he was going to meet the DirectorGeneral the following day and, well, he was with no change of proper clothes and so, I
would say, he was not happy about the situation.
Q: What did Mr. Alcantara say?

A: He was trying to press the fellow to make the report and if possible make the delivery
of his baggage as soon as possible.
Q: And what did the agent or duty officer say, if any?
A: The duty officer, of course, answered back saying 'What can we do, the baggage is
missing. I cannot do anything.' something like it. 'Anyhow you can buy anything you
need, charged to Cathay Pacific.'
Q: What was the demeanor or comportment of the duty officer of Cathay Pacific when he
said to Mr. Alcantara 'You can buy anything chargeable to Cathay Pacific'?
A: If I had to look at it objectively, the duty officer would like to dismiss the affair as
soon as possible by saying indifferently 'Don't worry. It can be found.'" 7
Indeed, the aforequoted testimony shows that the language and conduct of petitioner's
representative towards respondent Alcantara was discourteous or arbitrary to justify the
grant of moral damages. The CATHAY representative was not only indifferent and
impatient; he was also rude and insulting. He simply advised Alcantara to buy anything
he wanted. But even that was not sincere because the representative knew that the
passenger was limited only to $20.00 which, certainly, was not enough to purchase
comfortable clothings appropriate for an executive conference. Considering that
Alcantara was not only a revenue passenger but even paid for a first class airline
accommodation and accompanied at the time by the Commercial Attache of the
Philippine Embassy who was assisting him in his problem, petitioner or its agents should
have been more courteous and accommodating to private respondent, instead of giving
him a curt reply, "What can we do, the baggage is missing. I cannot do anything . . .
Anyhow, you can buy anything you need, charged to Cathay Pacific." CATHAY's
employees should have been more solicitous to a passenger in distress and assuaged his
anxieties and apprehensions. To compound matters, CATHAY refused to have the
luggage of Alcantara delivered to him at his hotel; instead, he was required to pick it up
himself and an official of the Philippine Embassy. Under the circumstances, it is evident
that petitioner was remiss in its duty to provide proper and adequate assistance to a
paying passenger, more so one with first class accommodation.
Where in breaching the contract of carriage the defendant airline is not shown to have
acted fraudulently or in bad faith, liability for damages is limited to the natural and
probable consequences of the breach of obligation which the parties had foreseen or
could have reasonably foreseen. In that case, such liability does not include moral and
exemplary damages. 8 Conversely, if the defendant airline is shown to have acted
fraudulently or in bad faith, the award of moral and exemplary damages is proper.
However, respondent Alcantara is not entitled to temperate damages, contrary to the
ruling of the court a quo, in the absence of any showing that he sustained some pecuniary
loss. 9 It cannot be gainsaid that respondent's luggage was ultimately delivered to him
without serious or appreciable damage.

As regards its second assigned error, petitioner airline contends that the extent of its
liability for breach of contract should be limited absolutely to that set forth in the Warsaw
Convention. We do not agree. As We have repeatedly held, although the Warsaw
Convention has the force and effect of law in this country, being a treaty commitment
assumed by the Philippine government, said convention does not operate as an exclusive
enumeration of the instances for declaring a carrier liable for breach of contract of
carriage or as an absolute limit of the extent of that liability. 10 The Warsaw Convention
declares the carrier liable for damages in the enumerated cases and under certain
limitations. 11 However, it must not be construed to preclude the operation of the Civil
Code and other pertinent laws. It does not regulate, much less exempt, the carrier from
liability for damages for violating the rights of its passengers under the contract of
carriage, 12 especially if wilfull misconduct on the part of the carrier's employees is
found or established, which is clearly the case before Us. For, the Warsaw Convention
itself provides in Art. 25 that
"(1) The carrier shall not be entitled to avail himself of the provisions of this convention
which exclude or limit his liability, if the damage is caused by his wilfull misconduct or
by such default on his part as, in accordance with the law of the court to which the case is
submitted, is considered to be equivalent to wilfull misconduct."
(2) Similarly the carrier shall not be entitled to avail himself of the said provisions, if the
damage is caused under the same circumstances by any agent of the carrier acting within
the scope of his employment."
When petitioner airline misplaced respondent's luggage and failed to deliver it to its
passenger at the appointed place and time, some special species of injury must have been
caused to him. For sure, the latter underwent profound distress and anxiety, and the fear
of losing the opportunity to fulfill the purpose of his trip. In fact, for want of appropriate
clothings for the occasion brought about by the delay of the arrival of his luggage, to his
embarrassment and consternation respondent Alcantara had to seek postponement of his
pre-arranged conference with the Director General of Trade of the host country.
In one case, 13 this Court observed that a traveller would naturally suffer mental anguish,
anxiety and shock when he finds that his luggage did not travel with him and he finds
himself in a foreign land without any article of clothing other than what he has on.
Thus, respondent is entitled to moral and exemplary damages. We however find the
award by the Court of Appeals of P80,000.00 for moral damages excessive, hence, We
reduce the amount to P30,000.00. The exemplary damages of P20,000.00 being
reasonable is maintained, as well as the attorney's fees of P25,000.00 considering that
petitioner's act or omission has compelled Alcantara to litigate with third persons or to
incur expenses to protect his interest. 14
WHEREFORE, the assailed decision of respondent Court of Appeals is AFFIRMED with
the exception of the award of temperate damages of P10,000.00 which is deleted, while
the award of moral damages of P80,000.00 is reduced to P30,000.00. The award of

P20,000.00 for exemplary damages is maintained as reasonable together with the

attorney's fees of P25,000.00. The moral and exemplary damages shall earn interest at the
legal rate from 1 March 1976 when the complaint was filed until full payment.
SO ORDERED.
FIRST DIVISION
[G.R. No. 71929 : December 4, 1990.]
192 SCRA 9
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E.
PABLO, Respondents.
DECISION
NARVASA, J.:
Dr. Felipa Pablo an associate professor in the University of the Philippines, 1 and a
research grantee of the Philippine Atomic Energy Agency was invited to take part at a
meeting of the Department of Research and Isotopes of the Joint FAO-IAEA Division of
Atomic Energy in Food and Agriculture of the United Nations in Ispra, Italy. 2 She was
invited in view of her specialized knowledge in "foreign substances in food and the
agriculture environment." She accepted the invitation, and was then scheduled by the
organizers, to read a paper on "The Fate of Radioactive Fusion Products Contaminating
Vegetable Crops." 3 The program announced that she would be the second speaker on the
first day of the meeting. 4 To fulfill this engagement, Dr. Pablo booked passage on
petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting in accordance with the itinerary and
time table set for her by ALITALIA. She was however told by the ALITALIA personnel
there at Milan that her luggage was "delayed inasmuch as the same . . . (was) in one of
the succeeding flights from Rome to Milan." 5 Her luggage consisted of two (2)
suitcases: one contained her clothing and other personal items; the other, her scientific
papers, slides and other research material. But the other flights arriving from Rome did
not have her baggage on board.
By then feeling desperate, she went to Rome to try to locate her bags herself. There, she
inquired about her suitcases in the domestic and international airports, and filled out the
forms prescribed by ALITALIA for people in her predicament. However, her baggage
could not be found. Completely distraught and discouraged, she returned to Manila
without attending the meeting in Ispra, Italy. : nad
Once back in Manila she demanded that ALITALIA make reparation for the damages
thus suffered by her. ALITALIA offered her "free airline tickets to compensate her for
any alleged damages. . . ." She rejected the offer, and forthwith commenced the action 6

which has given rise to the present appellate proceedings.

As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to Ispra, 7
Italy, but only on the day after her scheduled appearance and participation at the U.N.
meeting there. 8 Of course Dr. Pablo was no longer there to accept delivery; she was
already on her way home to Manila. And for some reason or other, the suitcases were not
actually restored to Prof. Pablo by ALITALIA until eleven (11) months later, and four (4)
months after institution of her action. 9
After appropriate proceedings and trial, the Court of First Instance rendered judgment in
Dr. Pablo's favor: 10
"(1) Ordering the defendant (ALITALIA) to pay . . . (her) the sum of TWENTY
THOUSAND PESOS (P20,000.00), Philippine Currency, by way of nominal
damages;
(2) Ordering the defendant to pay . . . (her) the sum of FIVE THOUSAND
PESOS (P5,000.00), Philippine Currency, as and for attorney's fees; (and)
(3) Ordering the defendant to pay the costs of the suit."
ALITALIA appealed to the Intermediate Appellate Court but failed to obtain a reversal of
the judgment. 11 Indeed, the Appellate Court not only affirmed the Trial Court's decision
but also increased the award of nominal damages payable by ALITALIA to P40,000.00.
12 That increase it justified as follows: 13
"Considering the circumstances, as found by the Trial Court and the negligence
committed by defendant, the amount of P20,000.00 under present inflationary
conditions as awarded . . . to the plaintiff as nominal damages, is too little to make
up for the plaintiff's frustration and disappointment in not being able to appear at
said conference; and for the embarrassment and humiliation she suffered from the
academic community for failure to carry out an official mission for which she was
singled out by the faculty to represent her institution and the country. After
weighing carefully all the considerations, the amount awarded to the plaintiff for
nominal damages and attorney's fees should be increased to the cost of her round
trip air fare or at the present rate of peso to the dollar at P40,000,00."
ALITALIA has appealed to this Court on Certiorari. Here, it seeks to make basically the
same points it tried to make before the Trial Court and the Intermediate Appellate Court,
i.e.:
1) that the Warsaw Convention should have been applied to limit ALITALIA'S
liability; and
2) that there is no warrant in fact or in law for the award to Dr. Pablo of nominal
damages and attorney's fees. 14
In addition, ALITALIA postulates that it was error for the Intermediate Appellate Court to
have refused to pass on all the assigned errors and in not stating the facts and the law on
which its decision is based. 15
Under the Warsaw Convention, 16 an air carrier is made liable for damages for:
1) the death, wounding or other bodily injury of a passenger if the accident

causing it took place on board the aircraft or in the course of its operations of
embarking or disembarking; 17
2) the destruction or loss of, or damage to, any registered luggage or goods, if the
occurrence causing it took place during the carriage by air;" 18 and
3) delay in the transportation by air of passengers, luggage or goods. 19
In these cases, it is provided in the Convention that the "action for damages, however,
founded, can only be brought subject to conditions and limits set out" therein. 20
The Convention also purports to limit the liability of the carriers in the following manner:
21
1. In the carriage of passengers the liability of the carrier for each passenger is
limited to the sum of 250,000 francs . . . Nevertheless, by special contract, the
carrier and the passenger may agree to a higher limit of liability.: nad
2. a) In the carriage of registered baggage and of cargo, the liability of the carrier
is limited to a sum of 250 francs per kilogramme, unless the passenger or
consignor has made, at the time when the package was handed over to the carrier,
a special declaration of interest in delivery at destination and has paid a
supplementary sum if the case so requires. In that case the carrier will be liable to
pay a sum not exceeding the declared sum, unless he proves that sum is greater
than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage or cargo, or
of any object contained therein, the weight to be taken into consideration in
determining the amount to which the carrier's liability is limited shall be only the
total weight of the package or packages concerned. Nevertheless, when the loss,
damage or delay of a part of the registered baggage or cargo, or of an object
contained therein, affects the value of other packages covered by the same
baggage check or the same air way bill, the total weight of such package or
packages shall also be taken into consideration in determining the limit of
liability.
3. As regards objects of which the passenger takes charge himself the liability of
the carrier is limited to 5000 francs per passenger.
4. The limits prescribed . . shall not prevent the court from awarding, in
accordance with its own law, in addition, the whole or part of the court costs and
of the other expenses of litigation incurred by the plaintiff. The foregoing
provision shall not apply if the amount of the damages awarded, excluding court
costs and other expenses of the litigation, does not exceed the sum which the
carrier has offered in writing to the plaintiff within a period of six months from
the date of the occurrence causing the damage, or before the commencement of
the action, if that is later.
The Warsaw Convention however denies to the carrier availment "of the provisions which
exclude or limit his liability, if the damage is caused by his wilful misconduct or by such
default on his part as, in accordance with the law of the court seized of the case, is
considered to be equivalent to wilful misconduct," or "if the damage is (similarly)

caused . . by any agent of the carrier acting within the scope of his employment." 22 The
Hague Protocol amended the Warsaw Convention by removing the provision that if the
airline took all necessary steps to avoid the damage, it could exculpate itself completely,
23 and declaring the stated limits of liability not applicable "if it is proved that the
damage resulted from an act or omission of the carrier, its servants or agents, done with
intent to cause damage or recklessly and with knowledge that damage would probably
result." The same deletion was effected by the Montreal Agreement of 1966, with the
result that a passenger could recover unlimited damages upon proof of wilful misconduct.
24
The Convention does not thus operate as an exclusive enumeration of the instances of an
airline's liability, or as an absolute limit of the extent of that liability. Such a proposition
is not borne out by the language of the Convention, as this Court has now, and at an
earlier time, pointed out. 25 Moreover, slight reflection readily leads to the conclusion
that it should be deemed a limit of liability only in those cases where the cause of the
death or injury to person, or destruction, loss or damage to property or delay in its
transport is not attributable to or attended by any wilful misconduct, bad faith,
recklessness, or otherwise improper conduct on the part of any official or employee for
which the carrier is responsible, and there is otherwise no special or extraordinary form of
resulting injury. The Convention's provisions, in short, do not "regulate or exclude
liability for other breaches of contract by the carrier" 26 or misconduct of its officers and
employees, or for some particular or exceptional type of damage. Otherwise, "an air
carrier would be exempt from any liability for damages in the event of its absolute
refusal, in bad faith, to comply with a contract of carriage, which is absurd." 27 Nor may
it for a moment be supposed that if a member of the aircraft complement should inflict
some physical injury on a passenger, or maliciously destroy or damage the latter's
property, the Convention might successfully be pleaded as the sole gauge to determine
the carrier's liability to the passenger. Neither may the Convention be invoked to justify
the disregard of some extraordinary sort of damage resulting to a passenger and preclude
recovery therefor beyond the limits set by said Convention. It is in this sense that the
Convention has been applied, or ignored, depending on the peculiar facts presented by
each case.:-cralaw
In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw Convention
was applied as regards the limitation on the carrier's liability, there being a simple loss of
baggage without any otherwise improper conduct on the part of the officials or employees
of the airline or other special injury sustained by the passenger.
On the other hand, the Warsaw Convention has invariably been held inapplicable, or as
not restrictive of the carrier's liability, where there was satisfactory evidence of malice or
bad faith attributable to its officers and employees. 29 Thus, an air carrier was sentenced
to pay not only compensatory but also moral and exemplary damages, and attorney's fees,
for instance, where its employees rudely put a passenger holding a first-class ticket in the
tourist or economy section, 30 or ousted a brown Asiatic from the plane to give his seat
to a white man, 31 or gave the seat of a passenger with a confirmed reservation to
another, 32 or subjected a passenger to extremely rude, even barbaric treatment, as by
calling him a "monkey." 33
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the

employees of petitioner airline; and Dr. Pablo's luggage was eventually returned to her,
belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some
special species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced
her baggage and failed to deliver it to her at the time appointed a breach of its contract
of carriage, to be sure with the result that she was unable to read the paper and make
the scientific presentation (consisting of slides, autoradiograms or films, tables and
tabulations) that she had painstakingly labored over, at the prestigious international
conference, to attend which she had traveled hundreds of miles, to her chagrin and
embarrassment and the disappointment and annoyance of the organizers. She felt, not
unreasonably, that the invitation for her to participate at the conference, extended by the
Joint FAO/IAEA Division of Atomic Energy in Food and Agriculture of the United
Nations, was a singular honor not only to herself, but to the University of the Philippines
and the country as well, an opportunity to make some sort of impression among her
colleagues in that field of scientific activity. The opportunity to claim this honor or
distinction was irretrievably lost to her because of Alitalia's breach of its contract.
Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and
anxiety, which gradually turned to panic and finally despair, from the time she learned
that her suitcases were missing up to the time when, having gone to Rome, she finally
realized that she would no longer be able to take part in the conference. As she herself put
it, she "was really shocked and distraught and confused."
Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention for delay in the
transport of baggage.
She is not, of course, entitled to be compensated for loss or damage to her luggage. As
already mentioned, her baggage was ultimately delivered to her in Manila, tardily but
safely. She is however entitled to nominal damages which, as the law says, is
adjudicated in order that a right of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated and recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered and this Court agrees that the respondent Court of
Appeals correctly set the amount thereof at P40,000.00. As to the purely technical
argument that the award to her of such nominal damages is precluded by her omission to
include a specific claim therefor in her complaint, it suffices to draw attention to her
general prayer, following her plea for moral and exemplary damages and attorney's fees,
"for such other and further just and equitable relief in the premises," which certainly is
broad enough to comprehend an application as well for nominal damages. Besides,
petitioner should have realized that the explicit assertion, and proof, that Dr. Pablo's right
had been violated or invaded by it absent any claim for actual or compensatory
damages, the prayer thereof having been voluntarily deleted by Dr. Pablo upon the return
to her of her baggage necessarily raised the issue of nominal damages.: rd
This Court also agrees that respondent Court of Appeals correctly awarded attorney's fees
to Dr. Pablo, and the amount of P5,000.00 set by it is reasonable in the premises. The law
authorizes recovery of attorney's fees inter alia where, as here, "the defendant's act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to
protect his interest," 34 or "where the court deems it just and equitable." 35

WHEREFORE, no error being perceived in the challenged decision of the Court of

Appeals, it appearing on the contrary to be entirely in accord with the facts and the law,
said decision is hereby AFFIRMED, with costs against the petitioner.
SO ORDERED.
G.R. No. L-61418 September 24, 1987
KOREAN AIRLINES CO., LTD., petitioner,
vs.
HON. COURT OF APPEALS, THE HON. EDUARDO C. TUTAAN, Presiding Judge,
Court of First Instance of Rizal, Branch V. Quezon City, AZUCENA and JANUARIO
TOMAS, respondents.

CRUZ, J.:
This is one of the many cases that have unnecessarily clogged the dockets of this Court
because they should not have been brought to us in the first place.
The issues are mainly factual. They have been resolved by the trial court, which has been
affirmed by the respondent court, except as to the award of damages, which has been
reduced. We see no reason why the decision had to be elevated to us.
Time and again we have stressed that this Court is not a trier of facts. 1 We leave these
matters to the lower courts, which have more opportunity and facilities to examine these
matters. We have no jurisdiction as a rule to reverse their findings. 2 The exception
invoked is that there is a clear showing of a grave abuse of discretion on their part, but we
do not see it here.
We are satisfied from the findings of the respondent court (and of the trial court) that the
private respondent was, in the language of the airline industry, "bumped off." She had a
confirmed ticket. She arrived at the airport on time. However, she was not allowed to
board because her seat had already been given to another passenger. As a result, she
suffered damages for which the petitioner should be held liable.
Specifically, petitioner Korean Airlines (hereinafter called KAL) issued to Azucena
Tomas a plane ticket to Los Angeles, California, U.S.A., on Flight No. KE 612 departing
from the Manila International Airport on July 29, 1977, at 2:20 p.m. She paid the fare of
P2,587.88 3 She and her husband arrived at the KAL check-in counter at 1.:50 p.m. of
that date 4 and presented her ticket to Augusto Torres, Jr., who was in charge. Torres
refused to check her in, saying that the Immigration Office was already closed. 5 Januario
Tomas, her husband, rushed to the said office, which was still open, and was told by the
immigration officer on duty that his wife could still be cleared for departure. Januario
rushed back to Torres to convey this information and asked that his wife be checked in.
Torres said this was no longer possible because her seat had already been given to another

passenger. His reason was that Azucena had arrived late and had not checked in within
forty minutes before departure time. 6

There is no evidence in the record of any rule requiring passengers to check in at least
forty minutes before departure time, as invoked by Torres. KAL admits that it has not
been able to cite any statutory or administrative requirement to this effect. 7 In fact, the
alleged rule is not even a condition of the plane ticket purchased by Azucena.
At the same time, KAL invokes the memorandum-circular of February 24, 1975, issued
by the Commission on Immigration and Deportation which says that "all passengers
authorized to leave for abroad shall be required to check in with the Immigration
Departure Control Officer at least thirty minutes before the scheduled departure." The
record shows that Azucena was ready to comply.
If, as Torres said, he gave Azucena's seat to a chance passenger thirty-eight minutes
before departure time 8instead of waiting for Azucena, then he was intentionally violating
the said circular. Significantly, it was proved he was not telling the truth when he said the
Immigration Office was already closed although it was in fact still open at the time the
private respondents arrived. Moreover, the immigration officer on duty expressed his
willingness to clear Azucena Tomas for departure, thus indicating that she was well
within the provisions of the memorandum-circular. Torres' refusal to check her in was
clearly unjustified.
As it appeared later, the real reason why she could not be checked in was not her
supposed tardiness but the circumstance that Torres had prematurely given her seat to a
chance passenger. That person certainly had less right to prior accommodation than the
private respondent herself.
The claim that the real party in interest is the Gold N. Apparel Manufacturing
Corporation and not the private respondent 9 is also untenable. Counsel for Azucena
Tomas declared at the trial that she was suing in her personal capacity. 10 In testifying
about her participation in the said corporation, she was only stressing her status as a
respected and well-connected businesswoman to show the extent of the prejudice caused
to her interests by the unjustified acts of the petitioner.
It is clear that the petitioner acted in bad faith in violating the private respondent's rights
under their contract of carriage and is therefore liable for the injuries she has sustained as
a result. We agree with the Court of Appeals, however, that the award should be reduced
to P50,000.00 for actual and compensatory damages, P30,000.00 for moral damages, and
P20,000.00 for attorney's fees, the exemplary damages to be eliminated altogether.
WHEREFORE, the appealed decision of the respondent court is AFFIRMED in toto, with
costs against the petitioner.

SO ORDERED.
G.R. No. 78656 August 30, 1988
TRANS WORLD AIRLINES, petitioner,
vs.
COURT OF APPEALS and ROGELIO A. VINLUAN, respondents.
Guerrero & Torres Law Offices for petitioner.
Angara, Abello, Concepcion, Regala & Cruz for private respondent.
The Solicitor General for public respondent.

GANCAYCO, J.:

Rogelio A. Vinluan is a practicing lawyer who had to travel in April, 1979 to several
cities in Europe and the U.S. to attend to some matters involving several clients. He
entered into a contract for air carriage for valuable consideration with Japan Airlines first
class from Manila to Tokyo, Moscow, Paris, Hamburg, Zurich, New York, Los Angeles,
Honolulu and back to Manila thru the same airline and other airlines it represents for
which he was issued the corresponding first class tickets for the entire trip.
On April 18, 1979, while in Paris, he went to the office of Trans World Airlines (TWA) at
the De Gaulle Airport and secured therefrom confirmed reservation for first class
accommodation on board its Flight No. 41 from New York to San Francisco which was
scheduled to depart on April 20, 1979. A validated stub was attached to the New YorkLos Angeles portion of his ticket evidencing his confirmed reservation for said flight with
the mark "OK " 1 On April 20, 1979, at about 8:00 o'clock A.M., Vinluan reconfirrred his
reservation for first class accommodation on board TWA Flight No. 41 with its New York
office. He was advised that his reservation was confirmed. He was even requested to
indicate his seat preference on said flight on said scheduled date of departure of TWA
Flight No. 41. Vinluan presented his ticket for check-in at the counter of TWA at JFK
International Airport at about 9:45 o'clock A.M., the scheduled time of the departure
being 11:00 o'clock A.M. He was informed that there was no first class seat available for
him on the flight. He asked for an explanation but TWA employees on duty declined to
give any reason. When he began to protest, one of the TWA employees, a certain Mr.
Braam, rudely threatened him with the words "Don't argue with me, I have a very bad
temper."
To be able to keep his schedule, Vinluan was compelled to take the economy seat offered
to him and he was issued a refund application" as he was downgraded from first class to

economy class.
While waiting for the departure of Flight No. 41. Vinluan noticed that other passengers
who were white Caucasians and who had checked-in later than him were given
preference in some first class seats which became available due to "no show" passengers.
On February 15, 1980, Vinluan filed an action for damages against the TWA in the Court
of First Instance of Rizal alleging breach of contract and bad faith. After trial on the
merits, a decision was rendered the dispositive part of which reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against
the defendant holding the latter liable to the for-mer for the amount representing
the difference in fare between first class and economy class accommodations on
board Flight No. 6041 from New York to San Francisco, the amount of
P500,000.00 as moral damages, the amount of P300,000.00 as exemplary
damages, and the amount of P100,000.00 as and for attorney's fees, all such
amounts to earn interest at the rate of twelve (12%) percent per annum from
February 15, 1980 when the complainant was filed until fully paid.
Correspondingly, defendant's counterclaim is dismissed. Costs against the
defendant.
SO ORDERED.
Not satisfied therewith, the TWA appealed to the Court of Appeals wherein in due course
a decision was rendered on May 27, 1987, 2 the dispositive part of which reads as
follows:
WHEREFORE, the decision dated March 8, 1984 is hereby modified by (1)
fixing the interest which appellant must pay on the awards of moral and
exemplary damages at six per cent (6%) per annum from the date of the decision
a quo, March 8, 1984 until date of full payment and (2) reducing the attorne's
fees to P50,000.00 without interest, the rest of the decision is affirmed. Cost
against appellant.
SO ORDERED.
Hence, the herein petition for review.
The theory of the petitioner is that because of maintenance problems of the aircraft on the
day of the flight, TWA Flight No. 41 was cancelled and a special Flight No. 6041 was
organized to operate in lieu of Flight No. 41. 3Flight No. 41 was to have utilized a
Lockheed 1011 with 34 first class seats, but instead, a smaller Boeing 707 with only 16
first class seats was substituted for use in Flight No. 6041. Hence, passengers who had
first class reservations on Flight No. 41 had to be accommodated on Flight No. 6041 on a
first-come, first-served basis. An announcement was allegedly made to all passengers in

the entire terminal of the airport advising them to get boarding cards for Flight No. 6041
to San Francisco and that the first ones getting them would get first preference as to seats
in the aircraft. It denied declining to give any explanation for the downgrading of private
respondent as well as the discourteous attitude of Mr. Braam.
On the other hand, private respondent asserts that he did not hear such announcement at
the terminal and that he was among the early passengers to present his ticket for check-in
only to be informed that there was no first class seat available for him and that he had to
be downgraded.
The petitioner contends that the respondent Court of Appeals committed a grave abuse of
discretion in finding that petitioner acted maliciously and discriminatorily, and in
granting excessive moral and exemplary damages and attorney's fees.
The contention is devoid of merit. Private respondent had a first class ticket for Flight No.
41 of petitioner from New York to San Francisco on April 20, 1979. It was twice
confirmed and yet respondent unceremoniously told him that there was no first class seat
available for him and that he had to be downgraded to the economy class. As he
protested, he was arrogantly threatened by one Mr. Braam. Worst still, while he was
waiting for the flight, he saw that several Caucasians who arrived much later were
accommodated in first class seats when the other passengers did not show up.
The discrimination is obvious and the humiliation to which private respondent was
subjected is undeniable. Consequently, the award of moral and exemplary damages by the
respondent court is in order. 4
Indeed, private respondent had shown that the alleged switch of planes from a Lockheed
1011 to a smaller Boeing 707 was because there were only 138 confirmed economy class
passengers who could very well be accommodated in the smaller plane and not because
of maintenance problems.
Petitioner sacrificed the comfort of its first class passengers including private respondent
Vinluan for the sake of econonmy. Such inattention and lack of care for the interest of its
passengers who are entitled to its utmost consideration, particularly as to their
convenience, amount to bad faith which entitles the passenger to the award of moral
damages. 5 More so in this case where instead of courteously informing private
respondent of his being downgraded under the circumstances, he was angrily rebuffed by
an employee of petitioner.
At the time of this unfortunate incident, the private respondent was a practicing lawyer, a
senior partner of a big law firm in Manila. He was a director of several companies and
was active in civic and social organizations in the Philippines. Considering the
circumstances of this case and the social standing of private respondent in the
community, he is entitled to the award of moral and exemplary damages. However, the
moral damages should be reduced to P300,000.00, and the exemplary damages should be
reduced to P200,000.00. This award should be reasonably sufficient to indemnify private

respondent for the humiliation and embarrassment that he suffered and to serve as an
example to discourage the repetition of similar oppressive and discriminatory acts.
WHEREFORE, with the above modification reducing the moral and exemplary damages
as above-stated, the decision subject of the petition for review is AFFIRMED in all other
respects, without pronouncement as to costs in this instance.
SO ORDERED.

[G.R. No. 150843. March 14, 2003]

CATHAY PACIFIC AIRWAYS, LTD., petitioner, vs. SPOUSES DANIEL VAZQUEZ

and MARIA LUISA MADRIGAL VAZQUEZ, respondents.
DECISION
DAVIDE, JR., C.J.:
Is an involuntary upgrading of an airline passengers accommodation from one class
to a more superior class at no extra cost a breach of contract of carriage that would entitle
the passenger to an award of damages? This is a novel question that has to be resolved in
this case.
The facts in this case, as found by the Court of Appeals and adopted by petitioner
Cathay Pacific Airways, Ltd., (hereinafter Cathay) are as follows:
Cathay is a common carrier engaged in the business of transporting passengers and
goods by air. Among the many routes it services is the Manila-Hongkong-Manila course.
As part of its marketing strategy, Cathay accords its frequent flyers membership in its
Marco Polo Club. The members enjoy several privileges, such as priority for upgrading
of booking without any extra charge whenever an opportunity arises. Thus, a frequent
flyer booked in the Business Class has priority for upgrading to First Class if the Business
Class Section is fully booked.
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal
Vazquez are frequent flyers of Cathay and are Gold Card members of its Marco Polo
Club. On 24 September 1996, the Vazquezes, together with their maid and two friends
Pacita Cruz and Josefina Vergel de Dios, went to Hongkong for pleasure and business.
For their return flight to Manila on 28 September 1996, they were booked on
Cathays Flight CX-905, with departure time at 9:20 p.m. Two hours before their time of
departure, the Vazquezes and their companions checked in their luggage at Cathays
check-in counter at Kai Tak Airport and were given their respective boarding passes, to
wit, Business Class boarding passes for the Vazquezes and their two friends, and
Economy Class for their maid. They then proceeded to the Business Class passenger

lounge.
When boarding time was announced, the Vazquezes and their two friends went to
Departure Gate No. 28, which was designated for Business Class passengers. Dr. Vazquez
presented his boarding pass to the ground stewardess, who in turn inserted it into an
electronic machine reader or computer at the gate. The ground stewardess was assisted by
a ground attendant by the name of Clara Lai Han Chiu. When Ms. Chiu glanced at the
computer monitor, she saw a message that there was a seat change from Business Class to
First Class for the Vazquezes.
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes accommodations
were upgraded to First Class. Dr. Vazquez refused the upgrade, reasoning that it would
not look nice for them as hosts to travel in First Class and their guests, in the Business
Class; and moreover, they were going to discuss business matters during the flight. He
also told Ms. Chiu that she could have other passengers instead transferred to the First
Class Section. Taken aback by the refusal for upgrading, Ms. Chiu consulted her
supervisor, who told her to handle the situation and convince the Vazquezes to accept the
upgrading. Ms. Chiu informed the latter that the Business Class was fully booked, and
that since they were Marco Polo Club members they had the priority to be upgraded to
the First Class. Dr. Vazquez continued to refuse, so Ms. Chiu told them that if they would
not avail themselves of the privilege, they would not be allowed to take the flight.
Eventually, after talking to his two friends, Dr. Vazquez gave in. He and Mrs. Vazquez
then proceeded to the First Class Cabin.
Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996 addressed
to Cathays Country Manager, demanded that they be indemnified in the amount of
P1million for the humiliation and embarrassment caused by its employees. They also
demanded a written apology from the management of Cathay, preferably a responsible
person with a rank of no less than the Country Manager, as well as the apology from Ms.
Chiu within fifteen days from receipt of the letter.
In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathays Country
Manager Argus Guy Robson, informed the Vazquezes that Cathay would investigate the
incident and get back to them within a weeks time.
On 8 November 1996, after Cathays failure to give them any feedback within its selfimposed deadline, the Vazquezes instituted before the Regional Trial Court of Makati
City an action for damages against Cathay, praying for the payment to each of them the
amounts of P250,000 as temperate damages; P500,000 as moral damages; P500,000 as
exemplary or corrective damages; and P250,000 as attorneys fees.
In their complaint, the Vazquezes alleged that when they informed Ms. Chiu that they
preferred to stay in Business Class, Ms. Chiu obstinately, uncompromisingly and in a
loud, discourteous and harsh voice threatened that they could not board and leave with
the flight unless they go to First Class, since the Business Class was overbooked. Ms.
Chius loud and stringent shouting annoyed, embarrassed, and humiliated them because
the incident was witnessed by all the other passengers waiting for boarding. They also
claimed that they were unjustifiably delayed to board the plane, and when they were
finally permitted to get into the aircraft, the forward storage compartment was already

full. A flight stewardess instructed Dr. Vazquez to put his roll-on luggage in the overhead
storage compartment. Because he was not assisted by any of the crew in putting up his
luggage, his bilateral carpal tunnel syndrome was aggravated, causing him extreme pain
on his arm and wrist. The Vazquezes also averred that they belong to the uppermost and
absolutely top elite of both Philippine Society and the Philippine financial community,
[and that] they were among the wealthiest persons in the Philippine[s].
In its answer, Cathay alleged that it is a practice among commercial airlines to
upgrade passengers to the next better class of accommodation, whenever an opportunity
arises, such as when a certain section is fully booked. Priority in upgrading is given to its
frequent flyers, who are considered favored passengers like the Vazquezes. Thus, when
the Business Class Section of Flight CX-905 was fully booked, Cathays computer sorted
out the names of favored passengers for involuntary upgrading to First Class. When Ms.
Chiu informed the Vazquezes that they were upgraded to First Class, Dr. Vazquez refused.
He then stood at the entrance of the boarding apron, blocking the queue of passengers
from boarding the plane, which inconvenienced other passengers. He shouted that it was
impossible for him and his wife to be upgraded without his two friends who were
traveling with them. Because of Dr. Vazquezs outburst, Ms. Chiu thought of upgrading
the traveling companions of the Vazquezes. But when she checked the computer, she
learned that the Vazquezes companions did not have priority for upgrading. She then tried
to book the Vazquezes again to their original seats. However, since the Business Class
Section was already fully booked, she politely informed Dr. Vazquez of such fact and
explained that the upgrading was in recognition of their status as Cathays valued
passengers. Finally, after talking to their guests, the Vazquezes eventually decided to take
the First Class accommodation.
Cathay also asserted that its employees at the Hong Kong airport acted in good faith
in dealing with the Vazquezes; none of them shouted, humiliated, embarrassed, or
committed any act of disrespect against them (the Vazquezes). Assuming that there was
indeed a breach of contractual obligation, Cathay acted in good faith, which negates any
basis for their claim for temperate, moral, and exemplary damages and attorneys fees.
Hence, it prayed for the dismissal of the complaint and for payment of P100,000 for
exemplary damages and P300,000 as attorneys fees and litigation expenses.
During the trial, Dr. Vazquez testified to support the allegations in the complaint. His
testimony was corroborated by his two friends who were with him at the time of the
incident, namely, Pacita G. Cruz and Josefina Vergel de Dios.
For its part, Cathay presented documentary evidence and the testimonies of Mr.
Yuen; Ms. Chiu; Norma Barrientos, Comptroller of its retained counsel; and Mr. Robson.
Yuen and Robson testified on Cathays policy of upgrading the seat accommodation of its
Marco Polo Club members when an opportunity arises. The upgrading of the Vazquezes
to First Class was done in good faith; in fact, the First Class Section is definitely much
better than the Business Class in terms of comfort, quality of food, and service from the
cabin crew. They also testified that overbooking is a widely accepted practice in the
airline industry and is in accordance with the International Air Transport Association
(IATA) regulations. Airlines overbook because a lot of passengers do not show up for
their flight. With respect to Flight CX-905, there was no overall overbooking to a degree

that a passenger was bumped off or downgraded. Yuen and Robson also stated that the
demand letter of the Vazquezes was immediately acted upon. Reports were gathered from
their office in Hong Kong and immediately forwarded to their counsel Atty. Remollo for
legal advice. However, Atty. Remollo begged off because his services were likewise
retained by the Vazquezes; nonetheless, he undertook to solve the problem in behalf of
Cathay. But nothing happened until Cathay received a copy of the complaint in this case.
For her part, Ms. Chiu denied that she shouted or used foul or impolite language against
the Vazquezes. Ms. Barrientos testified on the amount of attorneys fees and other
litigation expenses, such as those for the taking of the depositions of Yuen and Chiu.
In its decision[1] of 19 October 1998, the trial court found for the Vazquezes and
decreed as follows:
WHEREFORE, finding preponderance of evidence to sustain the instant complaint,
judgment is hereby rendered in favor of plaintiffs Vazquez spouses and against defendant
Cathay Pacific Airways, Ltd., ordering the latter to pay each plaintiff the following:
a) Nominal damages in the amount of P100,000.00 for each plaintiff;
b) Moral damages in the amount of P2,000,000.00 for each plaintiff;
c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;
d) Attorneys fees and expenses of litigation in the amount of P1,000,000.00
for each plaintiff; and
e) Costs of suit.
SO ORDERED.
According to the trial court, Cathay offers various classes of seats from which
passengers are allowed to choose regardless of their reasons or motives, whether it be due
to budgetary constraints or whim. The choice imposes a clear obligation on Cathay to
transport the passengers in the class chosen by them. The carrier cannot, without
exposing itself to liability, force a passenger to involuntarily change his choice. The
upgrading of the Vazquezes accommodation over and above their vehement objections
was due to the overbooking of the Business Class. It was a pretext to pack as many
passengers as possible into the plane to maximize Cathays revenues. Cathays actuations
in this case displayed deceit, gross negligence, and bad faith, which entitled the
Vazquezes to awards for damages.
On appeal by the petitioners, the Court of Appeals, in its decision of 24 July 2001,[2]
deleted the award for exemplary damages; and it reduced the awards for moral and
nominal damages for each of the Vazquezes to P250,000 and P50,000, respectively, and
the attorneys fees and litigation expenses to P50,000 for both of them.
The Court of Appeals ratiocinated that by upgrading the Vazquezes to First Class,
Cathay novated the contract of carriage without the formers consent. There was a breach

of contract not because Cathay overbooked the Business Class Section of Flight CX-905
but because the latter pushed through with the upgrading despite the objections of the
Vazquezes.
However, the Court of Appeals was not convinced that Ms. Chiu shouted at, or meant
to be discourteous to, Dr. Vazquez, although it might seemed that way to the latter, who
was a member of the elite in Philippine society and was not therefore used to being
harangued by anybody. Ms. Chiu was a Hong Kong Chinese whose fractured Chinese
was difficult to understand and whose manner of speaking might sound harsh or shrill to
Filipinos because of cultural differences. But the Court of Appeals did not find her to
have acted with deliberate malice, deceit, gross negligence, or bad faith. If at all, she was
negligent in not offering the First Class accommodations to other passengers. Neither can
the flight stewardess in the First Class Cabin be said to have been in bad faith when she
failed to assist Dr. Vazquez in lifting his baggage into the overhead storage bin. There is
no proof that he asked for help and was refused even after saying that he was suffering
from bilateral carpal tunnel syndrome. Anent the delay of Yuen in responding to the
demand letter of the Vazquezes, the Court of Appeals found it to have been sufficiently
explained.
The Vazquezes and Cathay separately filed motions for a reconsideration of the
decision, both of which were denied by the Court of Appeals.
Cathay seasonably filed with us this petition in this case. Cathay maintains that the
award for moral damages has no basis, since the Court of Appeals found that there was no
wanton, fraudulent, reckless and oppressive display of manners on the part of its
personnel; and that the breach of contract was not attended by fraud, malice, or bad faith.
If any damage had been suffered by the Vazquezes, it was damnum absque injuria, which
is damage without injury, damage or injury inflicted without injustice, loss or damage
without violation of a legal right, or a wrong done to a man for which the law provides no
remedy. Cathay also invokes our decision in United Airlines, Inc. v. Court of Appeals [3]
where we recognized that, in accordance with the Civil Aeronautics Boards Economic
Regulation No. 7, as amended, an overbooking that does not exceed ten percent cannot be
considered deliberate and done in bad faith. We thus deleted in that case the awards for
moral and exemplary damages, as well as attorneys fees, for lack of proof of overbooking
exceeding ten percent or of bad faith on the part of the airline carrier.
On the other hand, the Vazquezes assert that the Court of Appeals was correct in
granting awards for moral and nominal damages and attorneys fees in view of the breach
of contract committed by Cathay for transferring them from the Business Class to First
Class Section without prior notice or consent and over their vigorous objection. They
likewise argue that the issuance of passenger tickets more than the seating capacity of
each section of the plane is in itself fraudulent, malicious and tainted with bad faith.
The key issues for our consideration are whether (1) by upgrading the seat
accommodation of the Vazquezes from Business Class to First Class Cathay breached its
contract of carriage with the Vazquezes; (2) the upgrading was tainted with fraud or bad
faith; and (3) the Vazquezes are entitled to damages.
We resolve the first issue in the affirmative.

A contract is a meeting of minds between two persons whereby one agrees to give
something or render some service to another for a consideration. There is no contract
unless the following requisites concur: (1) consent of the contracting parties; (2) an object
certain which is the subject of the contract; and (3) the cause of the obligation which is
established.[4] Undoubtedly, a contract of carriage existed between Cathay and the
Vazquezes. They voluntarily and freely gave their consent to an agreement whose object
was the transportation of the Vazquezes from Manila to Hong Kong and back to Manila,
with seats in the Business Class Section of the aircraft, and whose cause or consideration
was the fare paid by the Vazquezes to Cathay.
The only problem is the legal effect of the upgrading of the seat accommodation of
the Vazquezes. Did it constitute a breach of contract?
Breach of contract is defined as the failure without legal reason to comply with the
terms of a contract.[5] It is also defined as the [f]ailure, without legal excuse, to perform
any promise which forms the whole or part of the contract.[6]
In previous cases, the breach of contract of carriage consisted in either the bumping
off of a passenger with confirmed reservation or the downgrading of a passengers seat
accommodation from one class to a lower class. In this case, what happened was the
reverse. The contract between the parties was for Cathay to transport the Vazquezes to
Manila on a Business Class accommodation in Flight CX-905. After checking-in their
luggage at the Kai Tak Airport in Hong Kong, the Vazquezes were given boarding cards
indicating their seat assignments in the Business Class Section. However, during the
boarding time, when the Vazquezes presented their boarding passes, they were informed
that they had a seat change from Business Class to First Class. It turned out that the
Business Class was overbooked in that there were more passengers than the number of
seats. Thus, the seat assignments of the Vazquezes were given to waitlisted passengers,
and the Vazquezes, being members of the Marco Polo Club, were upgraded from
Business Class to First Class.
We note that in all their pleadings, the Vazquezes never denied that they were
members of Cathays Marco Polo Club. They knew that as members of the Club, they had
priority for upgrading of their seat accommodation at no extra cost when an opportunity
arises. But, just like other privileges, such priority could be waived. The Vazquezes
should have been consulted first whether they wanted to avail themselves of the privilege
or would consent to a change of seat accommodation before their seat assignments were
given to other passengers. Normally, one would appreciate and accept an upgrading, for it
would mean a better accommodation. But, whatever their reason was and however odd it
might be, the Vazquezes had every right to decline the upgrade and insist on the Business
Class accommodation they had booked for and which was designated in their boarding
passes. They clearly waived their priority or preference when they asked that other
passengers be given the upgrade. It should not have been imposed on them over their
vehement objection. By insisting on the upgrade, Cathay breached its contract of carriage
with the Vazquezes.
We are not, however, convinced that the upgrading or the breach of contract was
attended by fraud or bad faith. Thus, we resolve the second issue in the negative.

Bad faith and fraud are allegations of fact that demand clear and convincing proof.
They are serious accusations that can be so conveniently and casually invoked, and that is
why they are never presumed. They amount to mere slogans or mudslinging unless
convincingly substantiated by whoever is alleging them.
Fraud has been defined to include an inducement through insidious machination.
Insidious machination refers to a deceitful scheme or plot with an evil or devious
purpose. Deceit exists where the party, with intent to deceive, conceals or omits to state
material facts and, by reason of such omission or concealment, the other party was
induced to give consent that would not otherwise have been given.[7]
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of a known
duty through some motive or interest or ill will that partakes of the nature of fraud.[8]
We find no persuasive proof of fraud or bad faith in this case. The Vazquezes were
not induced to agree to the upgrading through insidious words or deceitful machination or
through willful concealment of material facts. Upon boarding, Ms. Chiu told the
Vazquezes that their accommodations were upgraded to First Class in view of their being
Gold Card members of Cathays Marco Polo Club. She was honest in telling them that
their seats were already given to other passengers and the Business Class Section was
fully booked. Ms. Chiu might have failed to consider the remedy of offering the First
Class seats to other passengers. But, we find no bad faith in her failure to do so, even if
that amounted to an exercise of poor judgment.
Neither was the transfer of the Vazquezes effected for some evil or devious purpose.
As testified to by Mr. Robson, the First Class Section is better than the Business Class
Section in terms of comfort, quality of food, and service from the cabin crew; thus, the
difference in fare between the First Class and Business Class at that time was $250.[9]
Needless to state, an upgrading is for the better condition and, definitely, for the benefit
of the passenger.
We are not persuaded by the Vazquezes argument that the overbooking of the
Business Class Section constituted bad faith on the part of Cathay. Section 3 of the
Economic Regulation No. 7 of the Civil Aeronautics Board, as amended, provides:
Sec 3. Scope. This regulation shall apply to every Philippine and foreign air carrier with
respect to its operation of flights or portions of flights originating from or terminating at,
or serving a point within the territory of the Republic of the Philippines insofar as it
denies boarding to a passenger on a flight, or portion of a flight inside or outside the
Philippines, for which he holds confirmed reserved space.Furthermore, this Regulation is
designed to cover only honest mistakes on the part of the carriers and excludes deliberate
and willful acts of non-accommodation. Provided, however, that overbooking not
exceeding 10% of the seating capacity of the aircraft shall not be considered as a
deliberate and willful act of non-accommodation.
It is clear from this section that an overbooking that does not exceed ten percent is
not considered deliberate and therefore does not amount to bad faith.[10] Here, while
there was admittedly an overbooking of the Business Class, there was no evidence of

overbooking of the plane beyond ten percent, and no passenger was ever bumped off or
was refused to board the aircraft.
Now we come to the third issue on damages.
The Court of Appeals awarded each of the Vazquezes moral damages in the amount
of P250,000. Article 2220 of the Civil Code provides:
Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly
due. The same rule applies to breaches of contract where the defendant acted fraudulently
or in bad faith.
Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury. Although incapable of pecuniary computation, moral damages may be recovered if
they are the proximate result of the defendants wrongful act or omission.[11] Thus, case
law establishes the following requisites for the award of moral damages: (1) there must
be an injury clearly sustained by the claimant, whether physical, mental or psychological;
(2) there must be a culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by the claimant;
and (4) the award for damages is predicated on any of the cases stated in Article 2219 of
the Civil Code.[12]
Moral damages predicated upon a breach of contract of carriage may only be
recoverable in instances where the carrier is guilty of fraud or bad faith or where the
mishap resulted in the death of a passenger.[13] Where in breaching the contract of
carriage the airline is not shown to have acted fraudulently or in bad faith, liability for
damages is limited to the natural and probable consequences of the breach of the
obligation which the parties had foreseen or could have reasonably foreseen. In such a
case the liability does not include moral and exemplary damages.[14]
In this case, we have ruled that the breach of contract of carriage, which consisted in
the involuntary upgrading of the Vazquezes seat accommodation, was not attended by
fraud or bad faith. The Court of Appeals award of moral damages has, therefore, no leg to
stand on.
The deletion of the award for exemplary damages by the Court of Appeals is correct.
It is a requisite in the grant of exemplary damages that the act of the offender must be
accompanied by bad faith or done in wanton, fraudulent or malevolent manner.[15]
Such requisite is absent in this case. Moreover, to be entitled thereto the claimant must
first establish his right to moral, temperate, or compensatory damages.[16] Since the
Vazquezes are not entitled to any of these damages, the award for exemplary damages has
no legal basis. And where the awards for moral and exemplary damages are eliminated,
so must the award for attorneys fees.[17]
The most that can be adjudged in favor of the Vazquezes for Cathays breach of
contract is an award for nominal damages under Article 2221 of the Civil Code, which
reads as follows:

Article 2221 of the Civil Code provides:

Article 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
Worth noting is the fact that in Cathays Memorandum filed with this Court, it prayed
only for the deletion of the award for moral damages. It deferred to the Court of Appeals
discretion in awarding nominal damages; thus:
As far as the award of nominal damages is concerned, petitioner respectfully defers to the
Honorable Court of Appeals discretion. Aware as it is that somehow, due to the resistance
of respondents-spouses to the normally-appreciated gesture of petitioner to upgrade their
accommodations, petitioner may have disturbed the respondents-spouses wish to be with
their companions (who traveled to Hong Kong with them) at the Business Class on their
flight to Manila. Petitioner regrets that in its desire to provide the respondents-spouses
with additional amenities for the one and one-half (1 1/2) hour flight to Manila,
unintended tension ensued.[18]
Nonetheless, considering that the breach was intended to give more benefit and advantage
to the Vazquezes by upgrading their Business Class accommodation to First Class
because of their valued status as Marco Polo members, we reduce the award for nominal
damages to P5,000.
Before writing finis to this decision, we find it well-worth to quote the apt
observation of the Court of Appeals regarding the awards adjudged by the trial court:
We are not amused but alarmed at the lower courts unbelievable alacrity, bordering on
the scandalous, to award excessive amounts as damages. In their complaint, appellees
asked for P1 million as moral damages but the lower court awarded P4 million; they
asked for P500,000.00 as exemplary damages but the lower court cavalierly awarded a
whooping P10 million; they asked for P250,000.00 as attorneys fees but were awarded P2
million; they did not ask for nominal damages but were awarded P200,000.00. It is as if
the lower court went on a rampage, and why it acted that way is beyond all tests of
reason. In fact the excessiveness of the total award invites the suspicion that it was the
result of prejudice or corruption on the part of the trial court.
The presiding judge of the lower court is enjoined to hearken to the Supreme Courts
admonition in Singson vs. CA (282 SCRA 149 [1997]), where it said:
The well-entrenched principle is that the grant of moral damages depends upon the
discretion of the court based on the circumstances of each case. This discretion is limited
by the principle that the amount awarded should not be palpably and scandalously
excessive as to indicate that it was the result of prejudice or corruption on the part of the
trial court.
and in Alitalia Airways vs. CA (187 SCRA 763 [1990], where it was held:

Nonetheless, we agree with the injunction expressed by the Court of Appeals that
passengers must not prey on international airlines for damage awards, like trophies in a
safari. After all neither the social standing nor prestige of the passenger should determine
the extent to which he would suffer because of a wrong done, since the dignity affronted
in the individual is a quality inherent in him and not conferred by these social indicators.
[19]
We adopt as our own this observation of the Court of Appeals.
WHEREFORE, the instant petition is hereby partly GRANTED. The Decision of the
Court of Appeals of 24 July 2001 in CA-G.R. CV No. 63339 is hereby MODIFIED, and
as modified, the awards for moral damages and attorneys fees are set aside and deleted,
and the award for nominal damages is reduced to P5,000.
No pronouncement on costs.
SO ORDERED.
G.R. No. 101538 June 23, 1992
AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian,
Augusto Benedicto Santos, petitioner,
vs.
NORTHWEST ORIENT AIRLINES and COURT OF APPEALS, respondents.

CRUZ, J.:
This case involves the Proper interpretation of Article 28(1) of the Warsaw Convention,
reading as follows:
Art. 28. (1) An action for damage must be brought at the option of the plaintiff,
in the territory of one of the High Contracting Parties, either before the court of
the domicile of the carrier or of his principal place of business, or where he has a
place of business through which the contract has been made, or before the court
at the place of destination.
The petitioner is a minor and a resident of the Philippines. Private respondent Northwest
Orient Airlines (NOA) is a foreign corporation with principal office in Minnesota, U.S.A.
and licensed to do business and maintain a branch office in the Philippines.
On October 21, 1986, the petitioner purchased from NOA a round-trip ticket in San
Francisco. U.S.A., for his flight from San Francisco to Manila via Tokyo and back. The
scheduled departure date from Tokyo was December 20, 1986. No date was specified for
his return to San Francisco. 1

On December 19, 1986, the petitioner checked in at the NOA counter in the San
Francisco airport for his scheduled departure to Manila. Despite a previous confirmation
and re-confirmation, he was informed that he had no reservation for his flight from Tokyo
to Manila. He therefore had to be wait-listed.
On March 12, 1987, the petitioner sued NOA for damages in the Regional Trial Court of
Makati. On April 13, 1987, NOA moved to dismiss the complaint on the ground of lack
of jurisdiction. Citing the above-quoted article, it contended that the complaint could be
instituted only in the territory of one of the High Contracting Parties, before:
1. the court of the domicile of the carrier;
2. the court of its principal place of business;
3. the court where it has a place of business through which the contract had been
made;
4. the court of the place of destination.
The private respondent contended that the Philippines was not its domicile nor was this
its principal place of business. Neither was the petitioner's ticket issued in this country
nor was his destination Manila but San Francisco in the United States.
On February 1, 1988, the lower court granted the motion and dismissed the case. 2 The
petitioner appealed to the Court of Appeals, which affirmed the decision of the lower
court. 3 On June 26, 1991, the petitioner filed a motion for reconsideration, but the same
was denied. 4 The petitioner then came to this Court, raising substantially the same issues
it submitted in the Court of Appeals.
The assignment of errors may be grouped into two major issues, viz:
(1) the constitutionality of Article 28(1) of the Warsaw Convention; and
(2) the jurisdiction of Philippine courts over the case.
The petitioner also invokes Article 24 of the Civil Code on the protection of minors.
I
THE ISSUE OF CONSTITUTIONALITY
A. The petitioner claims that the lower court erred in not ruling that Article 28(1)
of the Warsaw Convention violates the constitutional guarantees of due process
and equal protection.

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." 5

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.
The petitioner contends that Article 28(1) cannot be applied in the present case because it
is unconstitutional. He argues that there is no substantial distinction between a person
who purchases a ticket in Manila and a person who purchases his ticket in San Francisco.
The classification of the places in which actions for damages may be brought is arbitrary
and irrational and thus violates the due process and equal protection clauses.
It is well-settled that courts will assume jurisdiction over a constitutional question only if
it is shown that the essential requisites of a judicial inquiry into such a question are first
satisfied. Thus, there must be an actual case or controversy involving a conflict of legal
rights susceptible of judicial determination; the constitutional question must have been
opportunely raised by the proper party; and the resolution of the question is unavoidably
necessary to the decision of the case itself. 6

Courts generally avoid having to decide a constitutional question. This attitude is based
on the doctrine of separation of powers, which enjoins upon the departments of the
government a becoming respect for each other's acts.
The treaty which is the subject matter of this petition was a joint legislative-executive act.
The presumption is that it was first carefully studied and determined to be constitutional
before it was adopted and given the force of law in this country.
The petitioner's allegations are not convincing enough to overcome this presumption.
Apparently, the Convention considered the four places designated in Article 28 the most
convenient forums for the litigation of any claim that may arise between the airline and
its passenger, as distinguished from all other places. At any rate, we agree with the
respondent court that this case can be decided on other grounds without the necessity of
resolving the constitutional issue.

B. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of
the Warsaw Convention is inapplicable because of a fundamental change in the
circumstances that served as its basis.

The petitioner goes at great lengths to show that the provisions in the Convention were
intended to protect airline companies under "the conditions prevailing then and which
have long ceased to exist." He argues that in view of the significant developments in the
airline industry through the years, the treaty has become irrelevant. Hence, to the extent
that it has lost its basis for approval, it has become unconstitutional.
The petitioner is invoking the doctrine of rebus sic stantibus. According to Jessup, "this
doctrine constitutes an attempt to formulate a legal principle which would justify nonperformance of a treaty obligation if the conditions with relation to which the parties
contracted have changed so materially and so unexpectedly as to create a situation in
which the exaction of performance would be unreasonable." 7 The key element of this
doctrine is the vital change in the condition of the contracting parties that they could not
have foreseen at the time the treaty was concluded.
The Court notes in this connection the following observation made in Day v. Trans World
Airlines, Inc.: 8

The Warsaw drafters wished to create a system of liability rules that would cover
all the hazards of air travel . . . The Warsaw delegates knew that, in the years to
come, civil aviation would change in ways that they could not foresee. They
wished to design a system of air law that would be both durable and flexible
enough to keep pace with these changes . . . The ever-changing needs of the
system of civil aviation can be served within the framework they created.
It is true that at the time the Warsaw Convention was drafted, the airline industry was still
in its infancy. However, that circumstance alone is not sufficient justification for the
rejection of the treaty at this time. The changes recited by the petitioner were,
realistically, not entirely unforeseen although they were expected in a general sense only.
In fact, the Convention itself, anticipating such developments, contains the following
significant provision:
Article 41. Any High Contracting Party shall be entitled not earlier than two
years after the coming into force of this convention to call for the assembling of
a new international conference in order to consider any improvements which
may be made in this convention. To this end, it will communicate with the
Government of the French Republic which will take the necessary measures to
make preparations for such conference.

But the more important consideration is that the treaty has not been rejected by the
Philippine government. The doctrine of rebus sic stantibus does not operate automatically
to render the treaty inoperative. There is a necessity for a formal act of rejection, usually
made by the head of State, with a statement of the reasons why compliance with the
treaty is no longer required.
In lieu thereof, the treaty may be denounced even without an expressed justification for
this action. Such denunciation is authorized under its Article 39, viz:
Article 39. (1) Any one of the High Contracting Parties may denounce this
convention by a notification addressed to the Government of the Republic of
Poland, which shall at once inform the Government of each of the High
Contracting Parties.
(2) Denunciation shall take effect six months after the notification of
denunciation, and shall operate only as regards the party which shall have
proceeded to denunciation.
Obviously. rejection of the treaty, whether on the ground of rebus sic stantibus or
pursuant to Article 39, is not a function of the courts but of the other branches of
government. This is a political act. The conclusion and renunciation of treaties is the
prerogative of the political departments and may not be usurped by the judiciary. The
courts are concerned only with the interpretation and application of laws and treaties in
force and not with their wisdom or efficacy.
C. The petitioner claims that the lower court erred in ruling that the plaintiff
must sue in the United States, because this would deny him the right to access to
our courts.

The petitioner alleges that the expenses and difficulties he will incur in filing a suit in the
United States would constitute a constructive denial of his right to access to our courts for
the protection of his rights. He would consequently be deprived of this vital guaranty as
embodied in the Bill of Rights.
Obviously, the constitutional guaranty of access to courts refers only to courts with
appropriate jurisdiction as defined by law. It does not mean that a person can go to any
court for redress of his grievances regardless of the nature or value of his claim. If the
petitioner is barred from filing his complaint before our courts, it is because they are not
vested with the appropriate jurisdiction under the Warsaw Convention, which is part of
the law of our land.
II
THE ISSUE OF JURISDICTION.

A. The petitioner claims that the lower court erred in not ruling that Article 28(1)
of the Warsaw Convention is a rule merely of venue and was waived by
defendant when it did not move to dismiss on the ground of improper venue.

By its own terms, the Convention applies to all international transportation of persons
performed by aircraft for hire.
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.
Whether Article 28(1) refers to jurisdiction or only to venue is a question over which
authorities are sharply divided. While the petitioner cites several cases holding that
Article 28(1) refers to venue rather than jurisdiction, 9 there are later cases cited by the
private respondent supporting the conclusion that the provision is jurisdictional. 10

Venue and jurisdiction are entirely distinct matters. Jurisdiction may not be conferred by
consent or waiver upon d court which otherwise would have no jurisdiction over the
subject-matter of an action; but the venue of an action as fixed by statute may be changed
by the consent of the parties and an objection that the plaintiff brought his suit in the
wrong county may be waived by the failure of the defendant to make a timely objection.
In either case, the court may render a valid judgment. Rules as to jurisdiction can never
be left to the consent or agreement of the parties, whether or not a prohibition exists
against their alteration. 11

A number of reasons tends to support the characterization of Article 28(1) as a

jurisdiction and not a venue provision. First, the wording of Article 32, which indicates
the places where the action for damages "must" be brought, underscores the mandatory
nature of Article 28(1). Second, this characterization is consistent with one of the
objectives of the Convention, which is to "regulate in a uniform manner the conditions of
international transportation by air." Third, the Convention does not contain any provision
prescribing rules of jurisdiction other than Article 28(1), which means that the phrase
"rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the
last sentence of Article 32 specifically deals with the exclusive enumeration in Article
28(1) as "jurisdictions," which, as such, cannot be left to the will of the parties regardless
of the time when the damage occurred.
This issue was analyzed in the leading case of Smith v. Canadian Pacific Airways, Ltd.,
12 where it was held:
. . . Of more, but still incomplete, assistance is the wording of Article 28(2),
especially when considered in the light of Article 32. Article 28(2) provides that
"questions of procedure shall be governed by the law of the court to which the
case is submitted" (Emphasis supplied). Section (2) thus may be read to leave for
domestic decision questions regarding the suitability and location of a particular
Warsaw Convention case.
In other words, where the matter is governed by the Warsaw Convention, jurisdiction
takes on a dual concept. Jurisdiction in the international sense must be established in
accordance with Article 28(1) of the Warsaw Convention, following which the
jurisdiction of a particular court must be established pursuant to the applicable domestic
law. Only after the question of which court has jurisdiction is determined will the issue of
venue be taken up. This second question shall be governed by the law of the court to
which the case is submitted.
The petitioner submits that since Article 32 states that the parties are precluded "before
the damages occurred" from amending the rules of Article 28(1) as to the place where the
action may be brought, it would follow that the Warsaw Convention was not intended to
preclude them from doing so "after the damages occurred."
Article 32 provides:
Art. 32. Any clause contained in the contract and all special agreements entered
into before the damage occurred by which the parties purport to infringe the
rules laid down by this convention, whether by deciding the law to be applied, or
by altering the rules as to jurisdiction, shall be null and void. Nevertheless for
the transportation of goods, arbitration clauses shall be allowed, subject to this
convention, if the arbitration is to take place within one of the jurisdictions
referred to in the first paragraph of Article 28.
His point is that since the requirements of Article 28(1) can be waived "after the damages

(shall have) occurred," the article should be regarded as possessing the character of a
"venue" and not of a "jurisdiction" provision. Hence, in moving to dismiss on the ground
of lack of jurisdiction, the private respondent has waived improper venue as a ground to
dismiss.
The foregoing examination of Article 28(1) in relation to Article 32 does not support this
conclusion. In any event, we agree that even granting arguendo that Article 28(1) is a
venue and not a jurisdictional provision, dismissal of the case was still in order. The
respondent court was correct in affirming the ruling of the trial court on this matter, thus:
Santos' claim that NOA waived venue as a ground of its motion to dismiss is not
correct. True it is that NOA averred in its MOTION TO DISMISS that the
ground thereof is "the Court has no subject matter jurisdiction to entertain the
Complaint" which SANTOS considers as equivalent to "lack of jurisdiction over
the subject matter . . ." However, the gist of NOA's argument in its motion is that
the Philippines is not the proper place where SANTOS could file the action
meaning that the venue of the action is improperly laid. Even assuming then that
the specified ground of the motion is erroneous, the fact is the proper ground of
the motion improper venue has been discussed therein.
Waiver cannot be lightly inferred. In case of doubt, it must be resolved in favor of nonwaiver if there are special circumstances justifying this conclusion, as in the petition at
bar. As we observed in Javier vs. Intermediate Court of Appeals: 13

Legally, of course, the lack of proper venue was deemed waived by the
petitioners when they failed to invoke it in their original motion to dismiss. Even
so, the motivation of the private respondent should have been taken into account
by both the trial judge and the respondent court in arriving at their decisions.
The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our
Court of Appeals, where it was held that Article 28(1) is a venue provision. However, the
private respondent avers that this was in effect reversed by the case of Aranas v. United
Airlines, 15 where the same court held that Article 28(1) is a jurisdictional provision.
Neither of these cases is binding on this Court, of course, nor was either of them appealed
to us. Nevertheless, we here express our own preference for the later case of Aranas
insofar as its pronouncements on jurisdiction conform to the judgment we now make in
this petition.
B. The petitioner claims that the lower court erred in not ruling that under Article
28(1) of the Warsaw Convention, this case was properly filed in the Philippines,
because Manila was the destination of the plaintiff.

The Petitioner contends that the facts of this case are analogous to those in Aanestad v.
Air Canada. 16 In that case, Mrs. Silverberg purchased a round-trip ticket from Montreal
to Los Angeles and back to Montreal. The date and time of departure were specified but
not of the return flight. The plane crashed while on route from Montreal to Los Angeles,
killing Mrs. Silverberg. Her administratrix filed an action for damages against Air Canada
in the U.S. District Court of California. The defendant moved to dismiss for lack of
jurisdiction but the motion was denied thus:
. . . It is evident that the contract entered into between Air Canada and Mrs.
Silverberg as evidenced by the ticket booklets and the Flight Coupon No. 1, was
a contract for Air Canada to carry Mrs. Silverberg to Los Angeles on a certain
flight, a certain time and a certain class, but that the time for her to return
remained completely in her power. Coupon No. 2 was only a continuing offer by
Air Canada to give her a ticket to return to Montreal between certain dates. . . .
The only conclusion that can be reached then, is that "the place of destination" as
used in the Warsaw Convention is considered by both the Canadian C.T.C. and
the United States C.A.B. to describe at least two "places of destination," viz., the
"place of destination" of a particular flight either an "outward destination" from
the "point of origin" or from the "outward point of destination" to any place in
Canada.
Thus the place of destination under Art. 28 and Art. 1 of the Warsaw Convention
of the flight on which Mrs. Silverberg was killed, was Los Angeles according to
the ticket, which was the contract between the parties and the suit is properly
filed in this Court which has jurisdiction.
The Petitioner avers that the present case falls squarely under the above ruling because
the date and time of his return flight to San Francisco were, as in the Aanestad case, also
left open. Consequently, Manila and not San Francisco should be considered the
petitioner's destination.
The private respondent for its part invokes the ruling in Butz v. British Airways, 17 where
the United States District Court (Eastern District of Pennsylvania) said:
. . . Although the authorities which addressed this precise issue are not extensive,
both the cases and the commentators are almost unanimous in concluding that
the "place of destination" referred to in the Warsaw Convention "in a trip
consisting of several parts . . . is the ultimate destination that is accorded treaty
jurisdiction." . . .
But apart from that distinguishing feature, I cannot agree with the Court's
analysis in Aanestad; whether the return portion of the ticket is characterized as
an option or a contract, the carrier was legally bound to transport the passenger

back to the place of origin within the prescribed time and. the passenger for her
part agreed to pay the fare and, in fact, did pay the fare. Thus there was
mutuality of obligation and a binding contract of carriage, The fact that the
passenger could forego her rights under the contract does not make it any less a
binding contract. Certainly, if the parties did not contemplate the return leg of the
journey, the passenger would not have paid for it and the carrier would not have
issued a round trip ticket.
We agree with the latter case. 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.
The petitioner submits that the Butz case could not have overruled the Aanestad case
because these decisions are from different jurisdictions. But that is neither here nor there.
In fact, neither of these cases is controlling on this Court. If we have preferred the Butz
case, it is because, exercising our own freedom of choice, we have decided that it
represents the better, and correct, interpretation of Article 28(1).
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."
C. The petitioner claims that the lower court erred in not ruling that under Art.
28(1) of the Warsaw Convention, this case was properly filed in the Philippines
because the defendant has its domicile in the Philippines.

The petitioner argues that the Warsaw Convention was originally written in French and
that in interpreting its provisions, American courts have taken the broad view that the
French legal meaning must govern. 18 In French, he says, the "domicile" of the carrier
means every place where it has a branch office.
The private respondent notes, however, that in Compagnie Nationale Air France vs.
Giliberto, 19 it was held:

The plaintiffs' first contention is that Air France is domiciled in the United
States. They say that the domicile of a corporation includes any country where
the airline carries on its business on "a regular and substantial basis," and that the
United States qualifies under such definition. The meaning of domicile cannot,
however, be so extended. The domicile of a corporation is customarily regarded
as the place where it is incorporated, and the courts have given the meaning to
the term as it is used in article 28(1) of the Convention. (See Smith v. Canadian
Pacific Airways, Ltd. (2d Cir. 1971), 452 F2d 798, 802; Nudo v. Societe
Anonyme Belge d' Exploitation de la Navigation Aerienne Sabena Belgian
World Airlines (E.D. pa. 1962). 207 F. Supp, 191; Karfunkel v. Compagnie
Nationale Air France (S.D.N.Y. 1977), 427 F. Suppl. 971, 974). Moreover, the
structure of article 28(1), viewed as a whole, is also incompatible with the
plaintiffs' claim. The article, in stating that places of business are among the
bases of the jurisdiction, sets out two places where an action for damages may be
brought; the country where the carrier's principal place of business is located,
and the country in which it has a place of business through which the particular
contract in question was made, that is, where the ticket was bought, Adopting the
plaintiffs' theory would at a minimum blur these carefully drawn distinctions by
creating a third intermediate category. It would obviously introduce uncertainty
into litigation under the article because of the necessity of having to determine,
and without standards or criteria, whether the amount of business done by a
carrier in a particular country was "regular" and "substantial." The plaintiff's
request to adopt this basis of jurisdiction is in effect a request to create a new
jurisdictional standard for the Convention.
Furthermore, it was argued in another case 20 that:
. . . In arriving at an interpretation of a treaty whose sole official language is
French, are we bound to apply French law? . . . We think this question and the
underlying choice of law issue warrant some discussion
. . . We do not think this statement can be regarded as a conclusion that internal
French law is to be "applied" in the choice of law sense, to determine the
meaning and scope of the Convention's terms. Of course, French legal usage
must be considered in arriving at an accurate English translation of the French.
But when an accurate English translation is made and agreed upon, as here, the
inquiry into meaning does not then revert to a quest for a past or present French
law to be "applied" for revelation of the proper scope of the terms. It does not
follow from the fact that the treaty is written in French that in interpreting it, we
are forever chained to French law, either as it existed when the treaty was written
or in its present state of development. There is no suggestion in the treaty that
French law was intended to govern the meaning of Warsaw's terms, nor have we
found any indication to this effect in its legislative history or from our study of
its application and interpretation by other courts. Indeed, analysis of the cases
indicates that the courts, in interpreting and applying the Warsaw Convention,
have, not considered themselves bound to apply French law simply because the
Convention is written in French. . . .

We agree with these rulings.

Notably, the domicile of the carrier is only one of the places where the complaint is
allowed to be filed under Article 28(1). By specifying the three other places, to wit, the
principal place of business of the carrier, its place of business where the contract was
made, and the place of destination, the article clearly meant that these three other places
were not comprehended in the term "domicile."
D. The petitioner claims that the lower court erred in not ruling that Art. 28(1) of
the Warsaw Convention does not apply to actions based on tort.

The petitioner alleges that the gravamen of the complaint is that private respondent acted
arbitrarily and in bad faith, discriminated against the petitioner, and committed a willful
misconduct because it canceled his confirmed reservation and gave his reserved seat to
someone who had no better right to it. In short. the private respondent committed a tort.
Such allegation, he submits, removes the present case from the coverage of the Warsaw
Convention. He argues that in at least two American cases, 21 it was held that Article
28(1) of the Warsaw Convention does not apply if the action is based on tort.
This position is negated by Husserl v. Swiss Air Transport Company, 22 where the article
in question was interpreted thus:
. . . Assuming for the present that plaintiff's claim is "covered" by Article 17,
Article 24 clearly excludes any relief not provided for in the Convention as
modified by the Montreal Agreement. It does not, however, limit the kind of
cause of action on which the relief may be founded; rather it provides that any
action based on the injuries specified in Article 17 "however founded," i.e.,
regardless of the type of action on which relief is founded, can only be brought
subject to the conditions and limitations established by the Warsaw System.
Presumably, the reason for the use of the phrase "however founded," in two-fold:
to accommodate all of the multifarious bases on which a claim might be founded
in different countries, whether under code law or common law, whether under
contract or tort, etc.; and to include all bases on which a claim seeking relief for
an injury might be founded in any one country. In other words, if the injury
occurs as described in Article 17, any relief available is subject to the conditions
and limitations established by the Warsaw System, regardless of the particular
cause of action which forms the basis on which a plaintiff could seek
relief . . .
The private respondent correctly contends that the allegation of willful misconduct
resulting in a tort is insufficient to exclude the case from the comprehension of the
Warsaw Convention. The petitioner has apparently misconstrued the import of Article
25(l) of the Convention, which reads as follows:

Art. 25 (1). The carrier shall not be entitled to avail himself of the provisions of
this Convention which exclude or limit his liability. if the damage is caused by
his willful misconduct or by such default on his part as, in accordance with the
law of the court to which the case is submitted, is considered to be equivalent to
willful misconduct.
It is understood under this article that the court called upon to determine the applicability
of the limitation provision must first be vested with the appropriate jurisdiction. Article
28(1) is the provision in the Convention which defines that jurisdiction. Article 22 23
merely fixes the monetary ceiling for the liability of the carrier in cases covered by the
Convention. If the carrier is indeed guilty of willful misconduct, it can avail itself of the
limitations set forth in this article. But this can be done only if the action has first been
commenced properly under the rules on jurisdiction set forth in Article 28(1).
III
THE ISSUE OF PROTECTION TO MINORS
The petitioner calls our attention to Article 24 of the Civil Code, which states:
Art. 24. In all contractual property or other relations, when one of the parties is
at a disadvantage on account of his moral dependence, ignorance, indigence,
mental weakness, tender age or other handicap, the courts must be vigilant for
his protection.
Application of this article to the present case is misplaced. The above provision assumes
that the court is vested with jurisdiction to rule in favor of the disadvantaged minor, As
already explained, such jurisdiction is absent in the case at bar.
CONCLUSION
A number of countries have signified their concern over the problem of citizens being
denied access to their own courts because of the restrictive provision of Article 28(1) of
the Warsaw Convention. Among these is the United States, which has proposed an
amendment that would enable the passenger to sue in his own domicile if the carrier does
business in that jurisdiction. The reason for this proposal is explained thus:
In the event a US citizen temporarily residing abroad purchases a Rome to New
York to Rome ticket on a foreign air carrier which is generally subject to the
jurisdiction of the US, Article 28 would prevent that person from suing the
carrier in the US in a "Warsaw Case" even though such a suit could be brought in
the absence of the Convention.
The proposal was incorporated in the Guatemala Protocol amending the Warsaw
Convention, which was adopted at Guatemala City on March 8,
1971. 24 But it is still ineffective because it has not yet been ratified by the required

minimum number of contracting parties. Pending such ratification, the petitioner will still
have to file his complaint only in any of the four places designated by Article 28(1) of the
Warsaw Convention.
The proposed amendment bolsters the ruling of this Court that a citizen does not
necessarily have the right to sue in his own courts simply because the defendant airline
has a place of business in his country.
The Court can only sympathize with the petitioner, who must prosecute his claims in the
United States rather than in his own country at least inconvenience. But we are unable to
grant him the relief he seeks because we are limited by the provisions of the Warsaw
Convention which continues to bind us. It may not be amiss to observe at this point that
the mere fact that he will have to litigate in the American courts does not necessarily
mean he will litigate in vain. The judicial system of that country in known for its sense of
fairness and, generally, its strict adherence to the rule of law.
WHEREFORE, the petition is DENIED, with costs against the petitioner. It is so ordered.

[G.R. No. 122191. October 8, 1998]

SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS, MILAGROS P.

MORADA and HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge
of Branch 89, Regional Trial Court of Quezon City, respondents.
DECISION
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul
and set aside the Resolution[1] dated September 27, 1995 and the Decision[2] dated
April 10, 1996 of the Court of Appeals[3] in CA-G.R. SP No. 36533,[4] and the
Orders[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 the instant 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 Al-Gazzawi and Allah AlGazzawi, both Saudi nationals. Because it was almost morning when they
returned to their hotels, they agreed to have breakfast together at the room of
Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly

after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and

several 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. They then requested her to go back to
Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA
Legal Officer Sirah Akkad and base manager Baharini negotiated with the police
for the immediate release of the detained crew members but did not succeed
because plaintiff refused to cooperate. She was afraid that she might be tricked
into something she did not want because of her inability to understand the local
dialect. She also declined to sign a blank paper and a document written in the
local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but
barred her from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi Arabian government,
the Indonesian authorities agreed to deport Thamer and Allah after two weeks of
detention.Eventually, they were again put in service by defendant SAUDI (sic).
In September 1990, defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that 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 the police station where the police took her passport and
questioned her about the Jakarta incident.Miniewy simply stood by as the police
put pressure on her to make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police return her passport and
allowed her to catch the afternoon flight out 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 to take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of
the SAUDIA office brought her to a Saudi court where she was asked to sign a
document 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 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 from SAUDIAs Manila manager, Aslam
Saleemi, that the investigation was routinary and that it posed no danger 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 judge
interrogated plaintiff through an interpreter about the 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 SAUDIA officer told her that the airline had forbidden

her to take flight. At the Inflight Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her passport and told her to remain in
Jeddah, at the crew 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 five months imprisonment and to
286 lashes. Only then did she realize that the Saudi court had tried her, together
with Thamer and Allah, for what happened in Jakarta. The court found plaintiff
guilty of (1) adultery; (2) going to a disco, dancing and listening to the music in
violation of Islamic laws; and (3) socializing with the male crew, in
contravention of Islamic tradition.[10]
Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine
Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her
upkeep, she worked on the domestic flight of SAUDIA, while Thamer and Allah
continued to serve in the international flights.[11]
Because she was wrongfully convicted, the Prince of Makkah dismissed the case
against her and allowed her to leave Saudi Arabia. Shortly before her return to Manila,
[12] she was terminated from the service by SAUDIA, without her being informed of
the cause.
On November 23, 1993, Morada filed a Complaint[13] for damages against
SAUDIA, and Khaled Al-Balawi (Al- Balawi), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss[14] which
raised the following grounds, to wit: (1) that the Complaint states no cause of action
against Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the
claim or demand set forth in the Complaint has been waived, abandoned or otherwise
extinguished; and (4) that the trial court has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss)[15]
Saudia filed a reply[16] thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint[17] wherein Al-Balawi
was dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation and
Motion to Dismiss Amended Complaint[18].
The trial court issued an Order[19] dated August 29, 1994 denying the Motion to
Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge[20] denying the Motion 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 jurisdiction to hear and try the case
on the basis of Article 21 of the Civil Code, since the proper law applicable is the law of
the Kingdom of Saudi Arabia.On October 14, 1994, Morada filed her Opposition[22]
(To Defendants Motion for Reconsideration).
In the Reply[23] filed with the trial court on October 24, 1994, SAUDIA alleged

that since its Motion for 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 not have any
substantial interest in the prosecution of the instant case, and hence, without jurisdiction
to adjudicate the same.
Respondent Judge subsequently issued another Order[24] dated February 2, 1995,
denying SAUDIAs Motion for Reconsideration. The pertinent portion of the assailed
Order reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines
filed, thru counsel, on September 20, 1994, and the Opposition 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
the recovery of actual, moral and exemplary damages plus attorneys fees, 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 there being nothing new of substance which might cause the
reversal or modification of the order sought to be reconsidered, the motion for
reconsideration of the defendant, is DENIED.
SO ORDERED.[25]
Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and
Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary
Restraining Order[26] with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining
Order[27] dated February 23, 1995, prohibiting the respondent Judge from further
conducting any proceeding, unless otherwise directed, in the interim.
In another Resolution[28] promulgated on September 27, 1995, now assailed, the
appellate court denied SAUDIAs Petition for the Issuance of a Writ of Preliminary
Injunction dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is hereby
DENIED, after considering the Answer, with Prayer to Deny Writ of
Preliminary Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that
herein petitioner is not clearly entitled thereto (Unciano Paramedical College,
et. Al., v. Court of Appeals, et. Al., 100335, April 7, 1993, Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court 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 Decision[30] dated April 10, 1996, now also assailed. It ruled that the
Philippines 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 that certiorari is not the proper remedy in
a denial of a Motion to Dismiss, inasmuch as the petitioner should have proceeded to
trial, and in case of an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for
Temporary Restraining Order[31] dated April 30, 1996, given due course by this Court.
After both 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 proper law applicable is the law of the
Kingdom of Saudi Arabia inasmuch as this case involves what is known in private
international law as a conflicts problem. Otherwise, the Republic of the Philippines will
sit in judgment of the acts done by another sovereign state which is abhorred.
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 Court required the respondents to comment on petitioners April 30, 1996
Supplemental 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 with liberality pursuant to Section 2, Rule 1 thereof.
III.
Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP NO.
36533 entitled Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al. and filed its April
30, 1996 Supplemental Petition For Review With Prayer For A Temporary Restraining
Order on May 7, 1996 at 10:29 a.m. or within the 15-day reglementary period as provided
for under Section 1, Rule 45 of the Revised Rules of Court. Therefore, the decision in
CA-G.R. SP NO. 36533 has not yet become final and executory and this Honorable Court
can take cognizance of this case.[33]
From the foregoing factual and procedural antecedents, the following issues emerge
for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING
THAT THE REGIONAL TRIAL COURT OF QUEZON CITY 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 IN RULING

THAT IN THE CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at
the outset. It maintains that private respondents claim for alleged abuse of rights occurred
in the Kingdom of Saudi Arabia. It alleges that the existence of a foreign element
qualifies the instant case for 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 that since her Amended Complaint is
based on Articles 19[35] and 21[36] of 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 in two states, the Philippines and Saudi Arabia.
As stated by private respondent in her Amended Complaint[38] dated June 23,
1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines
corporation doing business in the Philippines. It may be served with summons
and other court processes at Travel Wide Associated Sales (Phils.), Inc., 3rd
Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro Manila.
xxxxxxxxx
6. Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah after
two weeks of detention.Eventually, they were again put in service by defendant
SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to
Manila.
7. On January 14, 1992, just when plaintiff thought that 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 the police station where the police took her passport and
questioned her about the Jakarta incident.Miniewy simply stood by as the police
put pressure on her to make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police return her passport and
allowed her to catch the afternoon flight out of Jeddah.
8. 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 to take a later flight to Jeddah to see Mr.
Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid
of the SAUDIA office brought her to a Saudi court where she was asked to sign
a document 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 June 27, 1993. Plaintiff then returned to Manila.
9. 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 from SAUDIAs Manila manager,
Aslam Saleemi, that the investigation was routinary and that it posed no danger
to her.
10. 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 judge
interrogated plaintiff through an interpreter about the 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 SAUDIA officer told her that the airline had forbidden
her to take that flight. At the Inflight Service Office where she was told to go,
the secretary of Mr. Yahya Saddick took away her passport and told her to
remain in Jeddah, at the crew quarters, until further orders.
11. 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 five months imprisonment and to
286 lashes. Only then did she realize that the Saudi court had tried her, together
with Thamer and Allah, for what happened in Jakarta. The court found plaintiff
guilty of (1) adultery; (2) going to a disco, dancing, and listening to the music in
violation of Islamic laws; (3) socializing with the male crew, in contravention of
Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought the
help of the Philippine Embassy in Jeddah. The latter helped her pursue an
appeal from the decision of the court. To pay for her 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 the existence of a foreign
element, we agree with petitioner that the problem herein could present a conflicts case.
A factual situation that cuts across territorial lines and is affected by the diverse laws
of two or more states is said to contain a foreign element. The presence of a foreign
element is inevitable since social and economic affairs of individuals and associations are
rarely confined to the geographic limits of their birth or conception.[40]
The forms in which this foreign element may appear are many.[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. In other cases, the foreign element may assume a
complex form.[42]
In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a
flight stewardess, events did transpire during her many occasions of travel across national
borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa,
that caused a conflicts situation to arise.

We thus find private respondents assertion that the case is purely domestic,
imprecise. A conflicts problem presents 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 19
and 21 of the New Civil Code.
On one hand, Article 19 of the New Civil Code provides;
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 observe 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 another in a manner
that is contrary to morals, good customs or public policy 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 to expand the
concept of torts in this jurisdiction by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to
specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondents assertion that violations of Articles
19 and 21 are actionable, with judicially enforceable remedies in the municipal forum.
Based on the allegations[46] in the Amended Complaint, read in the light of the
Rules of Court on jurisdiction[47] we find that the Regional Trial Court (RTC) of
Quezon City possesses jurisdiction over the subject matter of the suit.[48] Its authority
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 hereby amended to read as follows:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive
jurisdiction:
xxxxxxxxx
(8) In all other cases in which demand, exclusive of interest, damages of whatever kind,
attorneys fees, litigation expenses, and costs or the value of the property in controversy
exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro
Manila, where the demand, exclusive of the above-mentioned items exceeds Two
hundred Thousand pesos (P200,000.00). (Emphasis ours)

xxxxxxxxx
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 Trial Court]
(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 may be found, or where the
plaintiff or any of the plaintiff resides, at the election of the plaintiff.
Pragmatic considerations, including the convenience of the parties, also weigh
heavily in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private
interest of the litigant. Enforceability of a judgment if one is obtained is quite obvious.
Relative advantages and obstacles to a fair trial are equally important. 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 be disturbed.[49]
Weighing the relative claims of the parties, the court a quo found it best to hear the
case in the Philippines. Had it refused to take cognizance of the case, it would be forcing
plaintiff (private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom
of Saudi Arabia where she no longer maintains substantial connections. That would have
caused a fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and
inconvenience have been shown by either of the parties. The choice of forum of the
plaintiff (now private respondent) should be upheld.
Similarly, the trial court also possesses jurisdiction over the persons of the parties
herein. By filing her Complaint and Amended Complaint with the trial court, private
respondent has voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions[50] praying for
the dismissal of Moradas Amended Complaint. SAUDIA also filed an Answer In Ex
Abundante Cautelam dated February 20, 1995. What is very patent and explicit from the
motions filed, is that SAUDIA prayed for other reliefs under the premises. Undeniably,
petitioner SAUDIA has effectively submitted to the trial courts jurisdiction by praying for
the dismissal of the Amended Complaint on grounds other than lack of jurisdiction.
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, aside from
disputing the lower courts jurisdiction over defendants person, prayed for
dismissal of the complaint on the ground that plaintiffs cause of action has
prescribed. By interposing such second ground in its motion to dismiss, Ker and
Co., Ltd. availed of an affirmative defense on the basis of which it prayed the
court to resolve controversy in its favor. For the court to validly decide the said
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 its special 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 to the
jurisdiction of the court over the person, it must be for the sole and separate
purpose of objecting to the jurisdiction of the court. If his motion is for any
other purpose than to object to the jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction of the court.A special appearance by
motion made for the purpose of objecting to the jurisdiction of the court over
the person will be held to be a general appearance, if the party in said motion
should, for example, ask for a dismissal of the action upon the further ground
that the court had no jurisdiction over the subject matter.[52]
Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its
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 some of the significant facts occurred in two or more states; and (2) to what extent
should the chosen legal system regulate the situation.[53]
Several theories have been propounded in order to identify the legal system that
should ultimately control. Although ideally, all choice-of-law theories should intrinsically
advance both notions of justice and predictability, they do not always do so. The forum is
then faced with the problem of deciding which of these two important 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 or rules fall. This process is known as characterization, or the
doctrine of qualification. It is the process of deciding whether or not the facts relate to the
kind of question specified in a conflicts rule.[55] The purpose of characterization is to
enable the forum to select the proper 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 a
test or connecting factor or point of contact. Choice-of-law rules invariably consist of a
factual relationship (such as property right, contract claim) and a connecting factor or
point of contact, such as the situsof 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 serve as the possible test for
the determination of the applicable law.[59] These test factors or points of contact or
connecting factors could be any of the following:
(1) The nationality 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 a thing is, or is deemed to be
situated. In particular, the lex situs is decisive when real rights are involved;
(4) the place where an act has been done, the locus actus, such as the place
where a contract has been made, a marriage celebrated, a will signed or a tort
committed.The lex loci actus is particularly important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney is to
be exercised;
(6) the intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or done.
The lex forithe law of the forumis particularly important because, 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 fori applies whenever the
content of the otherwise applicable foreign law is excluded from application in a
given case for the reason that it falls under 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.[60]
(Underscoring ours.)
After a careful study of the pleadings on record, including allegations in the
Amended Complaint deemed submitted for purposes of the motion to dismiss, we are
convinced that there is reasonable basis for private respondents assertion that although
she was already working in Manila, petitioner brought her to Jeddah on the pretense that
she would merely testify in an investigation of the charges she made against the two
SAUDIA crew members for the attack on her 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 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 have
acted beyond its duties as employer. Petitioners purported act contributed to and
amplified or even proximately caused additional humiliation, misery and suffering of
private respondent. Petitioner thereby allegedly facilitated the arrest, detention and
prosecution of private respondent under the guise of petitioners authority as employer,
taking advantage of the trust, confidence and faith she reposed upon it. As purportedly
found by the Prince of Makkah, the alleged conviction and imprisonment of private
respondent was wrongful. But these capped the injury or harm allegedly inflicted upon
her person and reputation, 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 one involving torts, the

connecting factor or point of contact could be the place or places where the tortious
conduct or lex loci actusoccurred. And applying the torts principle in a conflicts case, we
find that the Philippines could be said as a situs of the tort (the place where the alleged
tortious conduct took place). This is because it is in the Philippines where petitioner
allegedly deceived private respondent, 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, give her her due and observe honesty and good
faith. Instead, petitioner failed to protect her, she claimed. That certain acts or parts of the
injury allegedly occurred in another country is of no moment. For in our view what is
important here is the place where the over-all harm or the fatality 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 the alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability[61] have been advanced to offer
fresh judicial approaches to arrive at just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to apply the State of the most
significant relationship rule, which in our view should be appropriate to apply now, given
the factual context of this case.
In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated according
to their relative importance with respect to the particular issue: (a) the place where the
injury occurred; (b) the place where the conduct causing the injury occurred; (c) the
domicile, residence, nationality, place of incorporation and place of business of the
parties, and (d) the place where the relationship, if any, between the parties is centered.
[62]
As already discussed, there is basis for the claim 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 foreign corporation engaged
here in the business of international air carriage. Thus, the relationship between the
parties was centered here, although it should be stressed that this suit is not based on mere
labor law violations. From the record, the claim that the Philippines has the most
significant contact with the matter in this dispute,[63] raised by private respondent as
plaintiff below against defendant (herein petitioner), in our view, has been properly
established.
Prescinding from this premise that the Philippines is the situs of the tort complaint of
and the place having the most 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 the resolution of the legal issues arising out of this case. Further, we hold that the
respondent Regional Trial Court has jurisdiction over the parties and the subject matter of
the complaint; the appropriate venue is in Quezon City, which could properly apply
Philippine law. Moreover, we find untenable petitioners insistence that [s]ince private
respondent instituted this suit, she has the burden of pleading and proving the applicable
Saudi law on the matter.[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 Articles 19 and 21 of the Civil Code of the Philippines. In her Amended
Complaint and subsequent pleadings she never alleged 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, thus the
burden 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 respondent appellate 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, and the expeditious trial itself indicated by the nature of the case at hand.
Indubitably, the Philippines is the state intimately concerned with the ultimate outcome of
the case below not just for the benefit of all the litigants, but also for the vindication of
the countrys system of law and justice in a transnational setting. With these guidelines in
mind, the trial court must proceed to try and adjudge the case in the light of relevant
Philippine law, with due consideration of the foreign element or elements involved.
Nothing said herein, of course, should be construed as prejudging the results of the case
in any manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case
No. Q-93-18394 entitled Milagros P. Morada vs. Saudi Arabia Airlines is hereby
REMANDED to Regional Trial Court of Quezon City, Branch 89 for further proceedings.
SO ORDERED.
G.R. No. 46631

November 16, 1939

IDONAH SLADE PERKINS, petitioner,

vs.
ARSENIO P. DIZON, Judge of First Instance of Manila, EUGENE ARTHUR PERKINS,
and BENGUET CONSOLIDATED MINING COMPANY, respondents.
Alva J. Hill for petitioner.
Ross, Lawrence, Selph & Carrascoso for respondent Judge and Benguet Consolidated
Mining Company.
DeWitt, Perkins & Ponce Enrile for respondent Perkins.

MORAN, J.:
On July 6, 1938, respondent, Eugene Arthur Perkins, instituted an action in the Court of
First Instance of Manila against the Benguet Consolidated Mining Company for
dividends amounting to P71,379.90 on 52,874 shares of stock registered in his name,
payment of which was being withheld by the company; and, for the recognition of his
right to the control and disposal of said shares, to the exclusion of all others. To the
complaint, the company filed its answer alleging, by way of defense, that the withholding

of such dividends and the non-recognition of plaintiff's right to the disposal and control of
the shares were due to certain demands made with respect to said shares by the petitioner
herein, Idonah Slade Perkins, and by one George H. Engelhard. The answer prays that the
adverse claimants be made parties to the action and served with notice thereof by
publication, and that thereafter all such parties be required to interplead and settle the
rights among themselves. On September 5, 1938, the trial court ordered respondent
Eugene Arthur Perkins to include in his complaint as parties defendant petitioner, Idonah
Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in
addition to the relief prayed for in the original complaint, respondent Perkins prayed that
petitioner Idonah Slade Perkins and George Engelhard be adjudged without interest in the
shares of stock in question and excluded from any claim they assert thereon. Thereafter,
summons by publication were served upon the non-resident defendants, Idonah Slade
Perkins and George H. Engelhard, pursuant to the order of the trial court. On December
9, 1938, Engelhard filed his answer to the amended complaint, and on December 10,
1938, petitioner Idonah Slade Perkins, through counsel, filed her pleading entitled
"objection to venue, motion to quash, and demurrer to jurisdiction" wherein she
challenged the jurisdiction of the lower court over her person. Petitioner's objection,
motion and demurrer having been overruled as well as her motion for reconsideration of
the order of denial, she now brought the present petition for certiorari, praying that the
summons by publication issued against her be declared null and void, and that, with
respect to her, respondent Judge be permanently prohibited from taking any action on the
case.
The controlling issue here involved is whether or not the Court of First Instance of
Manila has acquired jurisdiction over the person of the present petitioner as a nonresident defendant, or, notwithstanding the want of such jurisdiction, whether or not said
court may validly try the case. The parties have filed lengthy memorandums relying on
numerous authorities, but the principles governing the question are well settled in this
jurisdiction.
Section 398 of our Code of Civil Procedure provides that when a non-resident defendant
is sued in the Philippine courts and it appears, by the complaint or by affidavits, that the
action relates to real or personal property within the Philippines in which said defendant
has or claims a lien or interest, actual or contingent, or in which the relief demanded
consists, wholly or in part, in excluding such person from any interest therein, service of
summons maybe made by publication.
We have fully explained the meaning of this provision in El Banco Espaol Filipino vs.
Palanca, 37 Phil., 921, wherein we laid down the following rules:
(1) In order that the court may validly try a case, it must have jurisdiction over the
subject-matter and over the persons of the parties. Jurisdiction over the subjectmatter is acquired by concession of the sovereign authority which organizes a court
and determines the nature and extent of its powers in general and thus fixes its
jurisdiction with reference to actions which it may entertain and the relief it may
grant. Jurisdiction over the persons of the parties is acquired by their voluntary

appearance in court and their submission to its authority, or by the coercive power of
legal process exerted over their persons.
(2) When the defendant is a non-resident and refuses to appear voluntary, the court
cannot acquire jurisdiction over his person even if the summons be served by
publication, for he is beyond the reach of judicial process. No tribunal established by
one State can extend its process beyond its territory so as to subject to its decisions
either persons or property located in another State. "There are many expressions in
the American reports from which it might be inferred that the court acquires personal
jurisdiction over the person of the defendant by publication and notice; but such is
not the case. In truth, the proposition that jurisdiction over the person of a nonresident cannot be acquired by publication and notice was never clearly understood
even in the American courts until after the decision had been rendered by the
Supreme Court of the United States in the leading case of Pennoyer v. Neff (95 U.S.,
714; 24 Law. ed., 565). In the light of that decisions which have subsequently been
rendered in that and other courts, the proposition that jurisdiction over the person
cannot be thus acquired by publication and notice is no longer open to question; and
it is now fully established that a personal judgment upon constructive or substituted
service against a non-resident who does not appear is wholly invalid. This doctrine
applies to all kinds of constructive or substituted process, including service by
publication and personal service outside of the jurisdiction in which the judgment is
rendered; and the only exception seems to be found in the case where the nonresident defendant has expressly or impliedly consented to the mode of service.
(Note to Raher vs. Raher, 35 L. R. A. [N. S.], 292; see also L.R.A. 585; 35 L.R.A.
[N.S.], 312.)
(3) The general rule, therefore, is that a suit against a non-resident cannot be
entertained by a Philippine court. Where, however, the action is in rem or quasi in
rem in connection with property located in the Philippines, the court acquires
jurisdiction over the res, and its jurisdiction over the person of the non-resident is
non-essential. In order that the court may exercise power over the res, it is not
necessary that the court should take actual custody of the property, potential custody
thereof being sufficient. There is potential custody when, from the nature of the
action brought, the power of the court over the property is impliedly recognized by
law. "An illustration of what we term potential jurisdiction over the res, is found in
the proceeding to register the title of land under our system for the registration of
land. Here the court, without taking actual physical control over the property ,
assumes, at the instance of some person claiming to be owner, to exercise a
jurisdiction in rem over the property and to adjudicate the title in favor of the
petitioner against all the world."
(4) As before stated, in an action in rem or quasi in rem against a non-resident
defendant, jurisdiction over his person is non-essential, and if the law requires in
such case that the summons upon the defendant be served by publication, it is merely
to satisfy the constitutional requirement of due process. If any be said, in this
connection, that "may reported cases can be cited in which it is assumed that the

question of the sufficiency of publication or notice in the case of this kind is a

question affecting the jurisdiction of the court, and the court is sometimes said to
acquire jurisdiction by virtue of the publication. This phraseology was undoubtedly
originally adopted by the court because of the analogy between service by
publication and personal service of process upon the defendant; and, as has already
been suggested, prior to the decision of Pennoyer v. Neff (supra), the difference
between the legal effects of the two forms of service was obscure. It is accordingly
not surprising that the modes of expression which had already been moulded into
legal tradition before that case was decided have been brought down to the present
day. But it is clear that the legal principle here involved is not affected by the peculiar
languages in which the courts have expounded their ideas."lawphi1.net
The reason for the rule that Philippine courts cannot acquire jurisdiction over the person
of a non-resident, as laid down by the Supreme Court of the United States in Pennoyer v.
Neff, supra, may be found in a recognized principle of public law to the effect that "no
State can exercise direct jurisdiction and authority over persons or property without its
territory. Story, Confl. L., ch. 2; Wheat, Int. L., pt. 2, ch. 2. The several States are of equal
dignity and authority, and the independence of one implies the exclusion of power from
all others. And so it is laid down by jurists, as an elementary principle, that the laws of
one State have no operation outside of its territory, except so far as is allowed by comity;
and that no tribunal established by it can extend its process beyond that territory so as to
subject either persons or property to its decisions. "Any exertion of authority of this sort
beyond this limit," says Story, "is a mere nullity, and incapable of binding such persons or
property in any other tribunals." Story, Confl. L., sec. 539." (Pennoyer v. Neff, 95 U.S.,
714; 24 Law. ed., 565, 568-569.).
When, however, the action relates to property located in the Philippines, the Philippine
courts may validly try the case, upon the principle that a "State, through its tribunals, may
subject property situated within its limits owned by non-residents to the payment of the
demand of its own citizens against them; and the exercise of this jurisdiction in no respect
infringes upon the sovereignty of the State where the owners are domiciled. Every State
owes protection to its citizens; and, when non-residents deal with them, it is a legitimate
and just exercise of authority to hold and appropriate any property owned by such nonresidents to satisfy the claims of its citizens. It is in virtue of the State's jurisdiction over
the property of the non-resident situated within its limits that its tribunals can inquire into
the non-resident's obligations to its own citizens, and the inquiry can then be carried only
to the extent necessary to control the disposition of the property. If the non-resident has
no property in the State, there is nothing upon which the tribunals can adjudicate."
(Pennoyer v. Neff, supra.)
In the instant case, there can be no question that the action brought by Eugene Arthur
Perkins in his amended complaint against the petitioner, Idonah Slade Perkins, seeks to
exclude her from any interest in a property located in the Philippines. That property
consists in certain shares of stocks of the Benguet Consolidated Mining Company, a
sociedad anonima, organized in the Philippines under the provisions of the Spanish Code
of Commerce, with its principal office in the City of Manila and which conducts its

mining activities therein. The situs of the shares is in the jurisdiction where the
corporation is created, whether the certificated evidencing the ownership of those shares
are within or without that jurisdiction. (Fletcher Cyclopedia Corporations, Permanent ed.
Vol. 11, p. 95). Under these circumstances, we hold that the action thus brought is quasi
in rem, for while the judgement that may be rendered therein is not strictly a judgment in
rem, "it fixes and settles the title to the property in controversy and to that extent partakes
of the nature of the judgment in rem." (50 C.J., p 503). As held by the Supreme Court of
the United States in Pennoyer v. Neff (supra);
It is true that, in a strict sense, a proceeding in rem is one taken directly against
property, and has for its object the disposition of the property, without reference to
the title of individual claimants; but , in a large and more general sense, the terms are
applied to actions between parties, where the direct object is to reach and dispose of
property owned by them, or of some interest therein.
The action being in quasi in rem, The Court of First Instance of Manila has jurisdiction
over the person of the non-resident. In order to satisfy the constitutional requirement of
due process, summons has been served upon her by publication. There is no question as
to the adequacy of publication made nor as to the mailing of the order of publication to
the petitioner's last known place of residence in the United States. But, of course, the
action beingquasi in rem and notice having be made by publication, the relief that may be
granted by the Philippine court must be confined to the res, it having no jurisdiction to
render a personal judgment against the non-resident. In the amended complaint filed by
Eugene Arthur Perkins, no money judgment or other relief in personam is prayed for
against the petitioner. The only relief sought therein is that she be declared to be without
any interest in the shares in controversy and that she be excluded from any claim thereto.
Petitioner contends that the proceeding instituted against her is one of interpleading and is
therefore an action in personam. Section 120 of our Code of Civil Procedure provides that
whenever conflicting claims are or may be made upon a person for or relating to personal
property, or the performance of an obligation or any portion thereof, so that he may be
made subject to several actions by different persons, such person may bring an action
against the conflicting claimants, disclaiming personal interest in the controversy, and the
court may order them to interplead with one another and litigate their several claims
among themselves, there upon proceed to determine their several claims. Here, The
Benguet Consolidated Mining Company, in its answer to the complaint filed by Eugene
Arthur Perkins, averred that in connection with the shares of stock in question, conflicting
claims were being made upon it by said plaintiff, Eugene Arthur Perkins, his wife Idonah
Slade Perkins, and one named George H. Engelhard, and prayed that these last two be
made parties to the action and served with summons by publication, so that the three
claimants may litigate their conflicting claims and settle their rights among themselves.
The court has not issued an order compelling the conflicting claimants to interplead with
one another and litigate their several claims among themselves, but instead ordered the
plaintiff to amend his complaint including the other two claimants as parties defendant.
The plaintiff did so, praying that the new defendants thus joined be excluded fro any
interest in the shares in question, and it is upon this amended complaint that the court

ordered the service of the summons by publication. It is therefore, clear that the
publication of the summons was ordered not in virtue of an interpleading, but upon the
filing of the amended complaint wherein an action quasi in rem is alleged.
Had not the complaint been amended, including the herein petitioner as an additional
defendant, and had the court, upon the filing of the answer of the Benguet Consolidated
Mining Company, issued an order under section 120 of the Code of Civil Procedure,
calling the conflicting claimants into court and compelling them to interplead with one
another, such order could not perhaps have validly been served by publication or
otherwise, upon the non-resident Idonah Slade Perkins, for then the proceeding would be
purely one of interpleading. Such proceeding is a personal action, for it merely seeks to
call conflicting claimants into court so that they may interplead and litigate their several
claims among themselves, and no specific relief is prayed for against them, as the
interpleader have appeared in court, one of them pleads ownership of the personal
property located in the Philippines and seeks to exclude a non-resident claimant from any
interest therein, is a question which we do not decide not. Suffice it to say that here the
service of the summons by publication was ordered by the lower court by virtue of an
action quasi in rem against the non-resident defendant.
Respondents contend that, as the petitioner in the lower court has pleaded over the
subject-matter, she has submitted herself to its jurisdiction. We have noticed, however,
that these pleas have been made not as independent grounds for relief, but merely as
additional arguments in support of her contention that the lower court had no jurisdiction
over the person. In other words, she claimed that the lower court had no jurisdiction over
her person not only because she is a non-resident, but also because the court had no
jurisdiction over the subject-matter of the action and that the issues therein involved have
already been decided by the New York court and are being relitigated in the California
court. Although this argument is obviously erroneous, as neither jurisdiction over the
subject-matter nor res adjudicata nor lis pendens has anything to do with the question of
jurisdiction over her person, we believe and so hold that the petitioner has not, by such
erroneous argument, submitted herself to the jurisdiction of the court. Voluntary
appearance cannot be implied from either a mistaken or superflous reasoning but from the
nature of the relief prayed for.
For all the foregoing, petition is hereby denied, with costs against petitioner.
G.R. No. L-496 December 31, 1902
THE UNITED STATES, complainant-appellant,
vs.
WILLIAM FOWLER, ET AL., defendants-appellees.
Assistant Attorney-General Constantino, for appellant.
William Lane O'Neill, for appellees.

TORRES, J.:
The two defendants have been accused of the theft of sixteen bottles of champagne of the
value of $20, on the 12th August, 1901, while on board the transport Lawton, then
navigating the high seas, which said bottles of champagne formed part of the cargo of the
said vessel and were the property of Julian Lindsay, and which were taken lucri causa,
and with the intent to appropriate the same, without violence or intimidation, and without
the consent of the owner, against the statute in the case made and provided.
The accused having been brought before the court, the prosecuting attorney being present
on behalf of the Government, counsel for the defendants presented a demurrer, alleging
that the Court of First Instance was without jurisdiction to try the crime charged,
inasmuch as it appeared from the information that the crime was committed on the high
seas, and not in the city of Manila, or within the territory comprising the Bay of Manila,
or upon the seas within the 3-mile limit to which the jurisdiction of the court extends, and
asked, upon these grounds, that the case be dismissed.
This contention was opposed by the prosecuting attorney, who alleged that the court has
original jurisdiction in all criminal cases in which the penalty exceeds six month's
imprisonment, or a fine of over $100; that, in accordance with the orders of the Military
Governor and the Civil Commission admiralty jurisdiction over all crimes committed on
board vessel flying the flag of the United States has been vested in the Court of First
Instance of the city of Manila. Among other laws and orders he cited the order of August
14, 1898, and Acts Nos. 76 and 186 of the United States Civil Commission. He argued
that the President of the United States had unquestionable authority to authorize the
commanding general and the Civil Commission to establish a judicial system with
authority to take cognizance of maritime and admiralty causes, citing a decision of the
Supreme Court of the United States in support of this doctrine, which was applicable to
this Archipelago, which is now analogous to the status of some of the States of the Union
during the Mexican war and the war of secession.
The judge, however, by an order of the 14th of September, 1901, held that the court was
without jurisdiction to try the accused for the theft alleged to have been committed on the
high seas, sustained the demurrer, and ordered the discharge of the defendants, with the
costs to the Government. Against this order the prosecuting attorney appealed, and the
case was brought before this court.
This case deals with a theft committed on board a transport while navigating the high
seas. Act No. 136 of the organic law, as well as Act No. 186 passed by the Civil
Commission, and which repealed the former law, Act No. 76, do not expressly confer
jurisdiction or authority upon this court to take cognizance of all crimes committed on
board vessels on the high seas. While the provisions of the law are clear and precise with
respect to civil admiralty or maritime cases, this is not true with respect to criminal cases.
If any doubt could arise concerning the true meaning of the law applicable to the case,
Act No. 400 effectively dissipates such doubts.

This law, which is an addition to Act No. 136, by which the courts of justice of the
Philippine Islands were organized, in article 1 adds to article 56, consisting of seven
paragraphs, another paragraph numbered 8, which reads as follows: "Of all crimes and
offenses committed on the high seas or beyond the jurisdiction of any country, or within
any of the navigable waters of the Philippine Archipelago, on board a ship or water craft
of any kind registered or licensed in the Philippine Islands in accordance with the laws
thereof." The purpose of this law was to define the jurisdiction of the courts of First
Instance in criminal cases for crimes committed on board vessels registered or licensed in
the Philippine Islands. The transport Lawton not being a vessel of this class, our courts
are without jurisdiction to take cognizance of a crime committed on board the same.
Upon these grounds we consider that the order appealed should be affirmed, with the
costs de oficio. So ordered.
G.R. No. L-18924

October 19, 1922

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellant,

vs.
WONG CHENG (alias WONG CHUN), defendant-appellee.
Attorney-General Villa-Real for appellant.
Eduardo Gutierrez Repide for appellee.
ROMUALDEZ, J.:
In this appeal the Attorney-General urges the revocation of the order of the Court of First
Instance of Manila, sustaining the demurrer presented by the defendant to the information
that initiated this case and in which the appellee is accused of having illegally smoked
opium, aboard the merchant vessel Changsa of English nationality while said vessel was
anchored in Manila Bay two and a half miles from the shores of the city.
The demurrer alleged lack of jurisdiction on the part of the lower court, which so held
and dismissed the case.
The question that presents itself for our consideration is whether such ruling is erroneous
or not; and it will or will not be erroneous according as said court has or has no
jurisdiction over said offense.
The point at issue is whether the courts of the Philippines have jurisdiction over crime,
like the one herein involved, committed aboard merchant vessels anchored in our
jurisdiction waters. 1awph!l.net
There are two fundamental rules on this particular matter in connection with International
Law; to wit, the French rule, according to which crimes committed aboard a foreign
merchant vessels should not be prosecuted in the courts of the country within whose
territorial jurisdiction they were committed, unless their commission affects the peace and

security of the territory; and the English rule, based on the territorial principle and
followed in the United States, according to which, crimes perpetrated under such
circumstances are in general triable in the courts of the country within territory they were
committed. Of this two rules, it is the last one that obtains in this jurisdiction, because at
present the theories and jurisprudence prevailing in the United States on this matter are
authority in the Philippines which is now a territory of the United States.
In the cases of The Schooner Exchange vs. M'Faddon and Others (7 Cranch [U. S.], 116),
Chief Justice Marshall said:
. . . When merchant vessels enter for the purposes of trade, it would be obviously
inconvenient and dangerous to society, and would subject the laws to continual
infraction, and the government to degradation, if such individuals or merchants did
not owe temporary and local allegiance, and were not amenable to the jurisdiction of
the country. . . .
In United States vs. Bull (15 Phil., 7), this court held:
. . . No court of the Philippine Islands had jurisdiction over an offense or crime
committed on the high seas or within the territorial waters of any other country, but
when she came within three miles of a line drawn from the headlands, which
embrace the entrance to Manila Bay, she was within territorial waters, and a new set
of principles became applicable. (Wheaton, International Law [Dana ed.], p. 255,
note 105; Bonfils, Le Droit Int., secs. 490 et seq.; Latour, La Mer Ter., ch. 1.) The
ship and her crew were then subject to the jurisdiction of the territorial sovereign
subject to such limitations as have been conceded by that sovereignty through the
proper political agency. . . .
It is true that in certain cases the comity of nations is observed, as in Mali and Wildenhus
vs. Keeper of the Common Jail (120 U.., 1), wherein it was said that:
. . . The principle which governs the whole matter is this: Disorder which disturb
only the peace of the ship or those on board are to be dealt with exclusively by the
sovereignty of the home of the ship, but those which disturb the public peace may be
suppressed, and, if need be, the offenders punished by the proper authorities of the
local jurisdiction. It may not be easy at all times to determine which of the two
jurisdictions a particular act of disorder belongs. Much will undoubtedly depend on
the attending circumstances of the particular case, but all must concede that felonious
homicide is a subject for the local jurisdiction, and that if the proper authorities are
proceeding with the case in the regular way the consul has no right to interfere to
prevent it.
Hence in United States vs. Look Chaw (18 Phil., 573), this court held that:
Although the mere possession of an article of prohibited use in the Philippine Islands,
aboard a foreign vessel in transit in any local port, does not, as a general rule,

constitute a crime triable by the courts of the Islands, such vessels being considered
as an extension of its own nationality, the same rule does not apply when the article,
the use of which is prohibited in the Islands, is landed from the vessels upon
Philippine soil; in such a case an open violation of the laws of the land is committed
with respect to which, as it is a violation of the penal law in force at the place of the
commission of the crime, no court other than that established in the said place has
jurisdiction of the offense, in the absence of an agreement under an international
treaty.
As to whether the United States has ever consented by treaty or otherwise to renouncing
such jurisdiction or a part thereof, we find nothing to this effect so far as England is
concerned, to which nation the ship where the crime in question was committed belongs.
Besides, in his work "Treaties, Conventions, etc.," volume 1, page 625, Malloy says the
following:
There shall be between the territories of the United States of America, and all the
territories of His Britanic Majesty in Europe, a reciprocal liberty of commerce. The
inhabitants of the two countries, respectively, shall have liberty freely and securely to
come with their ships and cargoes to all such places, ports and rivers, in the
territories aforesaid, to which other foreigners are permitted to come, to enter into the
same, and to remain and reside in any parts of the said territories, respectively; also
to hire and occupy houses and warehouses for the purposes of their commerce; and,
generally, the merchants and traders of each nation respectively shall enjoy the most
complete protection and security for their commerce, but subject always to the laws
and statutes of the two countries, respectively. (Art. 1, Commerce and Navigation
Convention.)
We have seen that the mere possession of opium aboard a foreign vessel in transit was
held by this court not triable by or courts, because it being the primary object of our
Opium Law to protect the inhabitants of the Philippines against the disastrous effects
entailed by the use of this drug, its mere possession in such a ship, without being used in
our territory, does not being about in the said territory those effects that our statute
contemplates avoiding. Hence such a mere possession is not considered a disturbance of
the public order.
But to smoke opium within our territorial limits, even though aboard a foreign merchant
ship, is certainly a breach of the public order here established, because it causes such drug
to produce its pernicious effects within our territory. It seriously contravenes the purpose
that our Legislature has in mind in enacting the aforesaid repressive statute. Moreover, as
the Attorney-General aptly observes:
. . . The idea of a person smoking opium securely on board a foreign vessel at anchor
in the port of Manila in open defiance of the local authorities, who are impotent to
lay hands on him, is simply subversive of public order. It requires no unusual stretch
of the imagination to conceive that a foreign ship may come into the port of Manila
and allow or solicit Chinese residents to smoke opium on board.

The order appealed from is revoked and the cause ordered remanded to the court of origin
for further proceedings in accordance with law, without special findings as to costs. So
ordered.
G.R. No. L-24170

December 16, 1968

ILLUH ASAALI, HATIB ABDURASID, INGKOH BANTALA, BASOK INGKIN, and

MOHAMMAD BANTALLA,petitioners,
vs.
THE COMMISSIONER OF CUSTOMS, respondent.
FERNANDO, J.:
The policy relentlessly adhered to and unhesitatingly pursued to minimize, if not to do
away entirely, with the evil and corruption that smuggling brings in its wake would be
frustrated and set at naught if the action taken by respondent Commissioner of Customs
in this case, as affirmed by the Court of Tax Appeals, were to be set aside and this appeal
from the decision of the latter were to succeed. Fortunately, the controlling principles of
law do not call for a contrary conclusion. It cannot be otherwise if the legitimate authority
vested in the government were not to be reduced to futility and impotence in the face of
an admittedly serious malady, that at times has assumed epidemic proportions.
The principal question raised by petitioners, owners of five sailing vessels and the cargo
loaded therein declared forfeited by respondent Commissioner of Customs for smuggling,
is the validity of their interception and seizure by customs officials on the high seas, the
contention being raised that importation had not yet begun and that the seizure was
effected outside our territorial waters..
Why such a plea could not be given the least credence without doing violence to common
sense and placing the law in disrepute would be apparent from a statement of the case and
the findings of facts as set forth in the decision now under review, of the Court of Tax
Appeals, dated November 19, 1964, the opinion being penned by the late Associate Judge
Augusto M. Luciano.
His opinion starts thus: "This is an appeal from the decision of the Acting Commissioner
of Customs in Customs Case No. 113, dated September 26, 1961, (Jolo Seizure
Identification Cases Nos. 38, 39, 40, 41 & 42) decreeing the forfeiture of five (5) sailing
vessels (kumpits) named 'Iroc-Iroc,' 'Lahat-lahat,' 'Liberal Wing III,' 'Sulu Area
Command,' and 'Business,' with their respective cargoes of blue seal cigarettes and rattan
chairs for violation of Section 1363(a) of the Revised Administrative Code and Section
20 of Republic Act No. 426 in relation with Section 1363(f) of the Revised
Administrative Code."1
The facts according to the above opinion "are not controverted." Thus: "It appears that on
September 10, 1950, at about noon time, a customs patrol team on board Patrol Boat ST23 intercepted the five (5) sailing vessels in question on the high seas, between British

North Borneo and Sulu while they were heading towards Tawi-tawi, Sulu. After ordering
the vessels to stop, the customs officers boarded and found on board, 181 cases of
'Herald' cigarettes, 9 cases of 'Camel' cigarettes, and some pieces of rattan chairs. The
sailing vessels are all of Philippine registry, owned and manned by Filipino residents of
Sulu, and of less than thirty (30) tons burden. They came from Sandakan, British North
Borneo, but did not possess any permit from the Commissioner of Customs to engage in
the importation of merchandise into any port of the Sulu sea, as required by Section
1363(a) of the Revised Administrative Code. Their cargoes were not covered by the
required import license under Republic Act No. 426, otherwise known as the Import
Control Law."2
Respondent Commissioner of Customs, as noted at the outset, affirmed the decision
rendered by the Collector of Customs of Jolo, who found cause for forfeiture under the
law of the vessels and the cargo contained therein. He was, as also already made known,
sustained by the Court of Tax Appeals. Hence this petition for review.
The first two errors assigned by petitioners would impugn the jurisdiction of the Bureau
of Customs to institute seizure proceedings and thereafter to declare the forfeiture of the
vessels in question and their cargo. They would justify their stand thus: "In the light of
the fact that the vessels involved with the articles laden therein were apprehended and
seized on the high seas, beyond the territorial waters of the Philippines, the said vessels
could not have touched any place or port in the Philippines, whether a port or place of
entry or not, consequently, the said vessels could not have been engaged in the
importation of the articles laden therein into any Philippine port or place, whether a port
or place of entry or not, to have incurred the liability of forfeiture under Section 1363(a)
of the Revised Administrative Code."3
Such a contention was advanced by petitioners before the Court of Tax Appeals. It met
the repudiation that it deserved. Thus: "We perfectly see the point of the petitioners but
considering the circumstances surrounding the apprehension of the vessels in question,
we believe that Section 1363(a) of the Revised Administrative Code should be applied to
the case at bar. It has been established that the five vessels came from Sandakan, British
North Borneo, a foreign port, and when intercepted, all of them were heading towards
Tawi-tawi, a domestic port within the Sulu sea. Laden with foreign manufactured
cigarettes, they did not possess the import license required by Republic Act No. 426, nor
did they carry a permit from the Commissioner of Customs to engage in importation into
any port in the Sulu sea. Their course announced loudly their intention not merely to skirt
along the territorial boundary of the Philippines but to come within our limits and land
somewhere in Tawi-tawi towards which their prows were pointed. As a matter of fact,
they were about to cross our aquatic boundary but for the intervention of a customs patrol
which, from all appearances, was more than eager to accomplish its mission."4
The sense of realism and the vigorous language employed by the late Judge Luciano in
rejecting such a plea deserve to be quoted. Thus: "To entertain even for a moment the
thought that these vessels were probably not bound for a Philippine port would be too
much a concession even for a simpleton or a perennial optimist. It is quite irrational for

Filipino sailors manning five Philippine vessels to sneak out of the Philippines and go to
British North Borneo, and come a long way back laden with highly taxable goods only to
turn about upon reaching the brink of our territorial waters and head for another foreign
port."5
1. We find no plausible reason not to accept in its entirety such a conclusion reached by
the Court of Tax Appeals. Nor, even if the persuasive element in the above view were not
so overwhelming, could we alter the decisive facts as found by it. For it is now beyond
question that its finding, if supported by substantial evidence, binds us, only questions of
law being for us to resolve. Where the issue raised belongs to the former category, we
lack the power of review.6
Moreover, for understandable reasons, we feel extreme reluctance to substitute our own
discretion for that of the Court of Tax Appeals in its appreciation of the relevant facts and
its appraisal of their significance. As we had occasion to state in a relatively recent
decision: "Nor as a matter of principle is it advisable for this Court to set aside the
conclusion reached by an agency such as the Court of Tax Appeals which is, by the very
nature of its function, dedicated exclusively to the study and consideration of tax
problems and has necessarily developed an expertise on the subject, ..., there has been an
abuse or improvident exercise of its authority."7
2. We thus could rest our decision affirming that of the Court of Tax Appeals on the above
consideration.
It might not be amiss however to devote some degree of attention to the legal points
raised in the above two assignment of errors, discussed jointly by petitioners-appellants,
alleging the absence of jurisdiction, the deprivation of property without due process of
law and the abatement of liability consequent upon the repeal of Republic Act No. 426.
Not one of the principles of law relied upon suffices to call for reversal of the action
taken by the respondent Commissioner of Customs, even if the facts presented a situation
less conclusive against the pretension of petitioners-appellants.
From the apprehension and seizure of the vessels in question on the high seas beyond the
territorial waters of the Philippines, the absence of jurisdiction of Commissioner of
Customs is predicated. Such contention of petitioners-appellants is without merit.
It is unquestioned that all vessels seized are of Philippine registry. The Revised Penal
Code leaves no doubt as to its applicability and enforceability not only within the
Philippines, its interior waters and maritime zone, but also outside of its jurisdiction
against those committing offense while on a Philippine ship ...8 The principle of law that
sustains the validity of such a provision equally supplies a firm foundation for the seizure
of the five sailing vessels found thereafter to have violated the applicable provisions of
the Revised Administrative Code.9
Moreover, it is a well settled doctrine of International Law that goes back to Chief Justice
Marshall's opinion in Church v. Hubbart,10 an 1804 decision, that a state has the right to

protect itself and its revenues, a right not limited to its own territory but extending to the
high seas. In the language of Chief Justice Marshall: "The authority of a nation within its
own territory is absolute and exclusive. The seizure of a vessel within the range of its
cannon by a foreign force is an invasion of that territory, and is a hostile act which it is its
duty to repel. But its power to secure itself from injury may certainly be exercised beyond
the limits of its territory."
The question asked in the brief of petitioners-appellants as to whether the seizure of the
vessels in question and the cargoes on the high seas and thus beyond the territorial waters
of the Philippines was legal must be answered in the affirmative.
4. The next question raised is the alleged denial of due process arising from such
forfeiture and seizure. The argument on the alleged lack of validity of the action taken by
the Commissioner of Customs is made to rest on the fact that the alleged offense imputed
to petitioners-appellants is a violation of Section 1363(a) and not Section 1363(f). The
title of Section 1363 is clear, "Property subject to forfeiture under customs laws." The
first subsection thereof, (a) cover any vessel including cargo unlawfully engaged in the
importation of merchandise except a port of entry. Subsection (f) speaks of any
merchandise of any prohibited importation, the importation of which is effected or
attempted contrary to law and all other merchandise which in the opinion of the Collector
of Customs have been used are or were intended to be used as instrument in the
importation or exportation of the former.
From the above recital of the legal provisions relied upon, it would appear most clearly
that the due process question raised is insubstantial. Certainly, the facts on which the
seizure was based were not unknown to petitioners-appellants. On those facts the liability
of the vessels and merchandise under the above terms of the statute would appear to be
undeniable. The action taken then by the Commissioner of Customs was in accordance
with law.
How could there be a denial of due process? There was nothing arbitrary about the
manner in which such seizure and forfeiture were effected. The right to a hearing of
petitioners-appellants was respected. They could not have been unaware of what they
were doing. It would be an affront to reason if under the above circumstances they could
be allowed to raise in all seriousness a due process question. Such a constitutional
guaranty, basic and fundamental, certainly should not be allowed to lend itself as an
instrument for escaping a liability arising from one's own nefarious acts.
5. Petitioners-appellants would further assail the validity of the action taken by the
respondent Commissioner of Customs by the plea that the repeal of Republic Act No. 426
abated whatever liability could have been incurred thereunder. This argument raised
before the Court of Tax Appeals was correctly held devoid of any persuasive force. The
decision under review cited our opinion in Golay-Buchel & Cie v. Commissioner of
Customs11 to the effect that the expiration of the Import Control Law "did not produce
the effect of declaring legal the importation of goods which were illegally imported and
the seizure and forfeiture thereof as ordered by the Collector of Customs illegal or null

and void."
Roxas v. Sayoc 12 announced that principle earlier. Thus: "Herein, we are concerned with
the effect of the expiration of a law, not with the abrogation of a law, and we hold the
view that once the Commissioner of Customs has acquired jurisdiction over the case, the
mere expiration of Republic Act No. 650 will not divest him of his jurisdiction thereon
duly acquired while said law was still in force. In other words, we believe that despite the
expiration of Republic Act No. 650 the Commissioner of Customs retained his
jurisdiction over the case and could continue to take cognizance thereof until its final
determination, for the main question brought in by the appeal from the decision of the
Collector of Customs was the legality or illegality of the decision of the Collector of
Customs, and that question could not have been abated by the mere expiration of
Republic Act No. 650. We firmly believe that the expiration of Republic Act No. 650
could not have produced the effect (1) of declaring legal the importation of the cotton
counterpanes which were illegally imported, and (2) of declaring the seizure and
forfeiture ordered by the Collector of Customs illegal or null and void; in other words it
could not have the effect of annulling or setting aside the decision of the Collector of
Customs which was rendered while the law was in force and which should stand until it is
revoked by the appellate tribunal."
As late as 1965, in Bombay Dept. Store v. Commissioner of Customs,13 we had occasion
to reaffirm the doctrine in the above two decisions, the present Chief Justice, speaking for
the Court, stating that such expiration of the period of effectivity of Republic Act No. 650
"did not have the effect of depriving the Commissioner of Customs of the jurisdiction,
acquired by him prior thereto, to act on cases of forfeiture pending before him, which are
in the nature of proceeding in rem...."
It is thus most evident that the Court of Tax Appeals had not in any wise refused to adhere
faithfully to controlling legal principles when it sustained the action taken by respondent
Commissioner of Customs. It would be a reproach and a reflection on the law if on the
facts as they had been shown to exist, the seizure and forfeiture of the vessels and cargo
in question were to be characterized as outside the legal competence of our government
and violative of the constitutional rights of petitioners-appellants. Fortunately, as had
been made clear above, that would be an undeserved reflection and an unwarranted
reproach. The vigor of the war against smuggling must not be hampered by a misreading
of international law concepts and a misplaced reliance on a constitutional guaranty that
has not in any wise been infringed.
WHEREFORE, the decision of respondent Court of Tax Appeals of November 19, 1964,
is affirmed. With costs against petitioners-appellants.
G.R. No. L-28882 May 31, 1971
TIME, INC., petitioner,
vs.
HON. ANDRES REYES, as Judge of the Court of First Instance of Rizal, ELISEO S.

ZARI, as Deputy Clerk of Court, Branch VI, Court of First Instance of Rizal, ANTONIO
J. VILLEGAS and JUAN PONCE ENRILE,respondents.
Sycip, Salazar, Luna, Manalo & Feliciano for petitioner.
Angel C. Cruz Law Office for respondents.

REYES, J.B.L., J.:

Petition for certiorari and prohibition, with preliminary injunction, to annul certain orders
of the respondent Court of First Instance of Rizal, issued in its Civil Case No. 10403,
entitled "Antonio J. Villegas and Juan Ponce Enrile vs. Time, Inc., and Time-Life
International, Publisher of 'Time' Magazine (Asia Edition)", and to prohibit the said court
from further proceeding with the said civil case.
Upon petitioner's posting a bond of P1,000.00, this Court, as prayed for, ordered, on 15
April 1968, the issuance of a writ of preliminary injunction.
The petition alleges that petitioner Time, Inc., 1 is an American corporation with principal
offices at Rocketfeller Center, New York City, N. Y., and is the publisher of "Time", a
weekly news magazine; the petition, however, does not allege the petitioner's legal
capacity to sue in the courts of the Philippine. 2

In the aforesaid Civil Case No. 10403, therein plaintiffs (herein respondents) Antonio J.
Villegas and Juan Ponce Enrile seek to recover from the herein petitioner damages upon
an alleged libel arising from a publication of Time (Asia Edition) magazine, in its issue of
18 August 1967, of an essay, entitled "Corruption in Asia", which, in part, reads, as
follows:
The problem of Manila's mayor, ANTONIO VILLEGAS, is a case in point.
When it was discovered last year that the mayor's coffers contained far more
pesos than seemed reasonable in the light of his income, an investigation was
launched. Witnesses who had helped him out under curious circumstance were
asked to explain in court. One government official admitted lending Villegas
P30,000 pesos ($7,700) without interest because he was the mayor's compadre.
An assistant declared he had given Villegas loans without collateral because he
regarded the boss as my own son. A wealthy Manila businessman testified that
he had lent Villegas' wife 15,000 pesos because the mayor was like a brother to
me. With that, Villegas denounced the investigation as an invasion of his family's
privacy. The case was dismissed on a technicality, and Villegas is still mayor. 3

More specifically, the plaintiffs' complaint alleges, inter alia that:

(4) Defendants, conspiring and confederating, published a libelous article,
publicly, falsely and maliciously imputing to Plaintiffs the commission of the
crimes of graft, corruption and nepotism; that said publication particularly
referred to Plaintiff Mayor Antonio J. Villegas as a case in point in connection
with graft, corruption and nepotism in Asia; that said publication without any
doubt referred to co-plaintiff Juan Ponce Enrile as the high government official
who helped under curious circumstances Plaintiff Mayor Antonio J. Villegas in
lending the latter approximately P30,000.00 ($7,700.00) without interest because
he was the Mayor's compadre; that the purpose of said Publications is to cause
the dishonor, discredit and put in public contempt the Plaintiffs, particularly
Plaintiff Mayor Antonio J. Villegas.
On motion of the respondents-plaintiffs, the respondent judge, on 25 November 1967,
granted them leave to take the depositions "of Mr. Anthony Gonzales, Time-Life
international", and "Mr. Cesar B. Enriquez, Muller & Phipps (Manila) Ltd.", in
connection with the activities and operations in the Philippines of the petitioner, and, on
27 November 1967, issued a writ of attachment on the real and personal estate of Time,
Inc.
Petitioner received the summons and a copy of the complaint at its offices in New York
on 13 December 1967 and, on 27 December 1967, it filed a motion to dismiss the
complaint for lack of jurisdiction and improper venue, relying upon the provisions of
Republic Act 4363. Private respondents opposed the motion.
In an order dated 26 February 1968, respondent court deferred the determination of the
motion to dismiss until after trial of the case on the merits, the court having considered
that the grounds relied upon in the motion do not appear to be indubitable.
Petitioner moved for reconsideration of the deferment private respondents again opposed.
On 30 March 1968, respondent judge issued an order re-affirming the previous order of
deferment for the reason that "the rule laid down under Republic Act. No. 4363,
amending Article 360 of the Revised Penal Code, is not applicable to actions against nonresident defendants, and because questions involving harassment and inconvenience, as
well as disruption of public service do not appear indubitable. ..."
Failing in its efforts to discontinue the taking of the depositions, previously adverted to,
and to have action taken, before trial, on its motion to dismiss, petitioner filed the instant
petition for certiorari and prohibition.
The orders for the taking of the said depositions, for deferring determination of the
motion to dismiss, and for reaffirming the deferment, and the writ of attachment are

sought to be annulled in the petition..

There is no dispute that at the time of the publication of the allegedly offending essay,
private respondents Antonio Villegas and Juan Ponce Enrile were the Mayor Of the City
of Manila and Undersecretary of Finance and concurrently Acting Commissioner of
Customs, respectively, with offices in the City of Manila. The issues in this case are:
1. Whether or not, under the provisions of Republic Act No. 4363 the respondent Court of
First Instance of Rizal has jurisdiction to take cognizance of the civil suit for damages
arising from an allegedly libelous publication, considering that the action was instituted
by public officers whose offices were in the City of Manila at the time of the publication;
if it has no jurisdiction, whether or not its erroneous assumption of jurisdiction may be
challenged by a foreign corporation by writ of certiorari or prohibition; and
2. Whether or not Republic Act 4363 is applicable to action against a foreign corporation
or non-resident defendant.
Provisions of Republic Act No. 4363, which are relevant to the resolution of the
foregoing issues, read, as follows:
Section 1. Article three hundred sixty of the Revised Penal Code, as amended by
Republic Act Numbered Twelve hundred and eighty-nine, is further amended to
read as follows:
'ART. 360. Persons responsible. Any person who shall publish,
exhibit, or cause the publication or exhibition of any defamation in
writing or by similar means, shall be responsible for the same.
The author or editor of a book or pamphlet, or the editor or business manager of
a daily newspaper, magazine or serial publication, shall be responsible for the
defamations contained therein to the extent as if he were the author thereof.
The criminal and civil action for damages in cases of written defamations as
provided for in this chapter, shall be filed simultaneously or separately with the
court of first instance of the province or city where the libelous article is printed
and first published or where any of the offended parties actually resides at the
time of the commission of the offense; Provided, however, That where one of the
offended parties is a public officer whose office is in the City of Manila at the
time of the commission of the offense, the action shall be filed in the Court of
First Instance of the City of Manila or of the city or province where the libelous
article is printed and first published, and in case such public officer does not hold
office in the City of Manila, the action shall be filed in the Court of First
Instance of the province or city where he held office at the time of the
commission of the offense or where the libelous article is printed and first
published and in case one of the offended parties is a private individual, the
action shall be filed in the Court of First Instance of the province or city where

he actually resides at the time of the commission of the offense or where the
libelous matter is printed and first published; Provided, further, That the civil
action shall be filed in the same court where the criminal action is filed and vice
versa; Provided, furthermore, That the court where the criminal action or civil
action for damages is first filed, shall acquire jurisdiction to the exclusion of
other courts; And provided finally, That this amendment shall not apply to cases
of written defamations, the civil and/or criminal actions which have been filed in
court at the time of the effectivity of the law
xxx xxx xxx
xxx xxx xxx
Sec. 3. This Act shall take effect only if and when, within thirty days from its
approval, the newspapermen in the Philippines shall organize, and elect the
members of, a Philippine Press Council, a private agency of the said
newspapermen, whose function shall be to promulgate a Code of Ethics for them
and the Philippine press investigate violations thereof, and censure any
newspaperman or newspaper guilty of any violation of the said Code, and the
fact that such Philippine Press Council has been organized and its members have
been duly elected in accordance herewith shall be ascertained and proclaimed by
the President of the Philippines.
Under the first proviso in section 1, the venue of a civil action for damages in cases of
written defamations is localized upon the basis of, first, whether the offended party or
plaintiff is a public officer or a private individual; and second, if he is a public officer,
whether his office is in Manila or not in Manila, at the time of the commission of the
offense. If the offended party is a public officer in the office in the City of Manila, the
proviso limits him to two (2) choices of venue, namely, in the Court of First instance of
the City of Manila or in the city or province where the libelous article is printed and first
published ..."
The complaint lodged in the court of Rizal by respondents does not allege that the
libelous article was printed and first published in the province of Rizal and, since the
respondents-plaintiffs are public officers with offices in Manila at the time of the
commission of the alleged offense, it is clear that the only place left for them wherein to
file their action, is the Court of First Instance of Manila.
The limitation of the choices of venue, as introduced into the Penal Code through its
amendments by Republic Act 4363, was intended "to minimize or limit the filing of outof-town libel suits" to protect an alleged offender from "hardships, inconveniences and
harassments" and, furthermore, to protect "the interest of the public service" where one of
the offended parties is a public officer." 4 The intent, of the law is clear: a libeled public
official might sue in the court of the locality where he holds office, in order that the
prosecution of the action should interfere as little as possible with the discharge of his
official duties and labors. The only alternative allowed him by law is to prosecute those

responsible for the libel in the place where the offending article was printed and first
published. Here, the law tolerates the interference with the libeled officer's duties only for
the sake of avoiding unnecessary harassment of the accused. Since the offending
publication was not printed in the Philippines, the alternative venue was not open to
respondent Mayor Villegas of Manila and Undersecretary of Finance Enrile, who were
the offended parties.
But respondents-plaintiffs argue that Republic Act No. 4363 is not applicable where the
action is against non-existent defendant, as petitioner Time, Inc., for several reasons.
They urge that, in enacting Republic Act No. 4363, Congress did not intend to protect
non-resident defendants as shown by Section 3, which provides for the effectivity of the
statute only if and when the "newspapermen in the Philippines" have organized a
"Philippine Press Council" whose function shall be to promulgate a Code of Ethics for
"them" and "the Philippine press"; and since a non-resident defendant is not in a position
to comply with the conditions imposed for the effectivity of the statute, such defendant
may not invoke its provisions; that a foreign corporation is not inconvenienced by an outof-town libel suit; that it would be absurd and incongruous, in the absence of an
extradition treaty, for the law to give to public officers with office in Manila the second
option of filing a criminal case in the court of the place where the libelous article is
printed and first published if the defendant is a foreign corporation and that, under the
"single publication" rule which originated in the United States and imported into the
Philippines, the rule was understood to mean that publications in another state are not
covered by venue statutes of the forum.
The implication of respondents' argument is that the law would not take effect as to nonresident defendants or accused. We see nothing in the text of the law that would sustain
such unequal protection to some of those who may be charged with libel. The official
proclamation that a Philippine Press Council has been organized is made a pre-condition
to the effectivity of the entire Republic Act No. 4363, and no terms are employed therein
to indicate that the law can or will be effective only as to some, but not all, of those that
may be charged with libeling our public officers.
The assertion that a foreign corporation or a non-resident defendant is not inconvenienced
by an out-of-town suit is irrelevant and untenable, for venue and jurisdiction are not
dependent upon convenience or inconvenience to a party; and moreover, venue was fixed
under Republic Act No. 4363, pursuant to the basic policy of the law that is, as previously
stated, to protect the interest of the public service when the offended party is a public
officer, by minimizing as much as possible any interference with the discharge of his
duties.
That respondents-plaintiffs could not file a criminal case for libel against a non-resident
defendant does not make Republic Act No. 4363 incongruous of absurd, for such inability
to file a criminal case against a non-resident natural person equally exists in crimes other
than libel. It is a fundamental rule of international jurisdiction that no state can by its
laws, and no court which is only a creature of the state, can by its judgments or decrees,
directly bind or affect property or persons beyond the limits of the state. 5 Not only this,

but if the accused is a corporation, no criminal action can lie against it, 6 whether such
corporation or resident or non-resident. At any rate, the case filed by respondentsplaintiffs is case for damages.
50 Am. Jur. 2d 659 differentiates the "multiple publication" and "single publication" rules
(invoked by private respondents) to be as follows:
The common law as to causes of action for tort arising out of a single publication
was to the effect that each communication of written or printed matter was a
distinct and separate publication of a libel contained therein, giving rise to a
separate cause of action. This rule ('multiple publication' rule) is still followed in
several American jurisdictions, and seems to be favored by the American Law
Institute. Other jurisdictions have adopted the 'single publication' rule which
originated in New York, under which any single integrated publication, such as
one edition of a newspaper, book, or magazine, or one broadcast, is treated as a
unit, giving rise to only one cause of action, regardless of the number of times it
is exposed to different people. ...
These rules are not pertinent in the present scheme because the number of causes of
action that may be available to the respondents-plaintiffs is not here in issue. We are here
confronted by a specific venue statute, conferring jurisdiction in cases of libel against
Public officials to specified courts, and no other. The rule is that where a statute creates a
right and provides a remedy for its enforcement, the remedy is exclusive; and where it
confers jurisdiction upon a particular court, that jurisdiction is likewise exclusive, unless
otherwise provided. Hence, the venue provisions of Republic Act No. 4363 should be
deemed mandatory for the party bringing the action, unless the question of venue should
be waived by the defendant, which was not the case here. Only thus can the policy of the
Act be upheld and maintained. Nor is there any reason why the inapplicability of one
alternative venue should result in rendering the other alternative, also inapplicable.
The dismissal of the present petition is asked on the ground that the petitioner foreign
corporation failed to allege its capacity to sue in the courts of the Philippines.
Respondents rely on section 69 of the Corporation law, which provides:
SEC. 69. No foreign corporation or corporations formed, organized, or existing
under any laws other than those of the Philippines shall be permitted to ...
maintain by itself or assignee any suit for the recovery of any debt, claim, or
demand whatever, unless it shall have the license prescribed in the section
immediately preceding. ..." ...;
They also invoke the ruling in Marshall-Wells Co. vs. Elser & Co., Inc. 7 that no foreign
corporation may be permitted to maintain any suit in the local courts unless it shall have
the license required by the law, and the ruling in Atlantic Mutual Ins. Co., Inc. vs. Cebu
Stevedoring Co., Inc. 8 that "where ... the law denies to a foreign corporation the right to
maintain suit unless it has previously complied with a certain requirement, then such
compliance or the fact that the suing corporation is exempt therefrom, becomes a

necessary averment in the complaint." We fail to see how these doctrines can be a propos
in the case at bar, since the petitioner is not "maintaining any suit" but is merely
defending one against itself; it did not file any complaint but only a corollary defensive
petition to prohibit the lower court from further proceeding with a suit that it had no
jurisdiction to entertain.
Petitioner's failure to aver its legal capacity to institute the present petition is not fatal, for
...
A foreign corporation may, by writ of prohibition, seek relief against the
wrongful assumption of jurisdiction. And a foreign corporation seeking a writ of
prohibition against further maintenance of a suit, on the ground of want of
jurisdiction in which jurisdiction is not bound by the ruling of the court in which
the suit was brought, on a motion to quash service of summons, that it has
jurisdiction. 9

It is also advanced that the present petition is premature, since respondent court has not
definitely ruled on the motion to dismiss, nor held that it has jurisdiction, but only
argument is untenable. The motion to dismiss was predicated on the respondent court's
lack of jurisdiction to entertain the action; and the rulings of this Court are that writs of
certiorari or prohibition, or both, may issue in case of a denial or deferment of action on
such a motion to dismiss for lack of jurisdiction.
If the question of jurisdiction were not the main ground for this petition for
review by certiorari, it would be premature because it seeks to have a review of
an interlocutory order. But as it would be useless and futile to go ahead with the
proceedings if the court below had no jurisdiction this petition was given due
course.' (San Beda vs. CIR, 51 O.G. 5636, 5638).
'While it is true that action on a motion to dismiss may be deferred until the trial
and an order to that effect is interlocutory, still where it clearly appears that the
trial judge or court is proceeding in excess or outside of its jurisdiction, the
remedy of prohibition would lie since it would be useless and a waste of time to
go ahead with the proceedings. (Philippine International Fair, Inc., et al. vs.
Ibaez, et al., 50 Off. Gaz. 1036; Enrique v. Macadaeg, et al., 47 Off. Gaz. 1207;
see also San Beda College vs. CIR, 51 Off. Gaz. 5636.)' (University of Sto.
Tomas v. Villanueva, L-13748, 30 October 1959.).
Similarly, in Edward J. Nell Co. vs. Cubacub, L-20843, 23 June 1965, 14 SCRA 419, this
Court held:
'.......................................................... It is a settledrule that the jurisdiction of a

court over the subject-matter is determined by the allegations in the complaint;

and when a motion to dismiss is filed for lack of jurisdiction those allegations
are deemed admitted for purposes of such motion, so that it may be resolved
without waiting for the trial. Thus it has been held that the consideration thereof
may not be postponed in the hope that the evidence may yield other qualifying or
concurring data which would bring the case under the court's jurisdiction.'
To the same effect are the rulings in: Ruperto vs. Fernando, 83 Phil. 943; Administrator of
Hacienda Luisita Estate vs. Alberto, L-12133, 21 October 1958.
Summing up, We hold:
(1) The under Article 360 of the Revised Penal Code, as amended by Republic Act No.
4363, actions for damages by public officials for libelous publications against them can
only be filed in the courts of first instance ofthe city or province where the offended
functionary held office at the time ofthe commission of the offense, in case the libelous
article was first printed or published outside the Philippines.
(2) That the action of a court in refusing to rule, or deferring its ruling, on a motion to
dismiss for lack of jurisdiction over the subject matter, or for improper venue, is in excess
of jurisdiction and correctable by writ of prohibition or certiorari sued out in the appellate
Court, even before trial on the merits is had.
WHEREFORE, the writs applied for are granted: the respondent Court of First Instance
of Rizal is declared without jurisdiction to take cognizance of its Civil Case No. 10403;
and its orders issued in connection therewith are hereby annulled and set aside,.
Respondent court is further commanded to desist from further proceedings in Civil case
No. 10403 aforesaid. Costs against private respondents, Antonio J. Villegas and Juan
Ponce Enrile.
The writ of preliminary injunction heretofore issued by this Supreme Court is made
permanent.