297 SCRA 469

with judicially enforceable remedies in the municipal forum.

Although Article 19
VOL. 297, OCTOBER 8, 1998 469
________________

Saudi Arabian Airlines vs. Court of Appeals *

FIRST DIVISION.

470
G.R. No. 122191. October 8, 1998.*

SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF 470 SUPREME COURT REPORTS ANNOTATED
APPEALS, MILAGROS P. MORADA and HON. RODOLFO A.
ORTIZ, in his capacity as Presiding Judge of Branch 89,
Saudi Arabian Airlines vs. Court of Appeals
Regional Trial Court of Quezon City, respondents.

Conflict of Laws; Actions; Where the factual antecedents

merely declares a principle of law, Article 21 gives flesh to its
satisfactorily establish the existence of a foreign element, the
provisions. Thus, we agree with private respondents assertion
problem could present a conflicts case.Where the factual
that violations of Articles 19 and 21 are actionable, with
antecedents satisfactorily establish the existence of a foreign
judicially enforceable remedies in the municipal forum. Based
element, we agree with petitioner that the problem herein
on the allegations in the Amended Complaint, read in the light
could present a conflicts case. A factual situation that cuts
of the Rules of Court on jurisdiction we find that the Regional
across territorial lines and is affected by the diverse laws of
Trial Court (RTC) of Quezon City possesses jurisdiction over the
two or more states is said to contain a foreign element. The
subject matter of the suit. Its authority to try and hear the
presence of a foreign element is inevitable since social and
case is provided for under Section 1 of Republic Act No. 7691.
economic affairs of individuals and associations are rarely
confined to the geographic limits of their birth or conception.
Same; Same; Forum Non Conveniens; Forum Shopping;
Plaintiff may not, by choice of an inconvenient forum, vex,
Same; Same; The forms in which a foreign element may
harass, or oppress the defendant, e.g. by inflicting upon
appear are many, such as the fact that one party is a resident
him needless expense or disturbance, but unless the balance
Philippine national, and that the other is a resident foreign
is strongly in favor of the defendant, the plaintiffs choice of
corporation.The forms in which this foreign element may
forum should rarely be disturbed.Pragmatic considerations,
appear are many. The foreign element may simply consist in
including the convenience of the parties, also weigh heavily in
the fact that one of the parties to a contract is an alien or has
favor of the RTC Quezon City assuming jurisdiction. Paramount
a foreign domicile, or that a contract between nationals of one
is the private interest of the litigant. Enforceability of a
State involves properties situated in another State. In other
judgment if one is obtained is quite obvious. Relative
cases, the foreign element may assume a complex form. In
advantages and obstacles to a fair trial are equally important.
the instant case, the foreign element consisted in the fact that
Plaintiff may not, by choice of an inconvenient forum, vex,
private respondent Morada is a resident Philippine national,
harass, or oppress the defendant, e.g. by inflicting upon
and that petitioner SAUDIA is a resident foreign corporation.
him needless expense or disturbance. But unless the balance
Also, by virtue of the employment of Morada with the
is strongly in favor of the defendant, the plaintiffs choice of
petitioner SAUDIA as a flight stewardess, events did transpire
forum should rarely be disturbed.
during her many occasions of travel across national borders,
particularly from Manila, Philippines to Jeddah, Saudi Arabia,
Same; Same; Forcing a party to seek remedial action in a
and vice versa, that caused a conflicts situation to arise.
place where she no longer maintains substantial connections
would cause a fundamental unfairness to her.Weighing the
Same; Same; Damages; While Article 19 of the Civil Code
relative claims of the parties, the court a quo found it best to
merely declares a principle of law, Article 21 gives flesh to its
hear the case in the Philippines. Had it refused to take
provisions; Violations of Articles 19 and 21 are actionable,
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.
Same; Same; A party effectively submits to the trial courts
jurisdiction by praying for the dismissal of the complaint on
grounds other than lack of jurisdiction.The records show
that petitioner SAUDIA has filed several motions praying for
the dismissal of Moradas Amended Complaint. SAUDIA also
filed an Answer In Ex Abundante Cautelam dated February 20,
1995. What is very patent and explicit from the motions filed,
is that SAUDIA prayed for other
471
VOL. 297, OCTOBER 8, 1998 471
Saudi Arabian Airlines vs. Court of Appeals
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.
Same; 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.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.
Same; Although ideally, all choice-of-law theories should
intrinsically advance both notions of justice and predictability,
they do not always do so, in which case the forum is then
faced with the problem of deciding which of these two
important values should be stressed.Several theories have
been propounded in order 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.
Same; Characterization or Doctrine of Qualification; Words
and Phrases; Characterization is the process of deciding
whether or not the facts relate to the kind of question
specified in a conflicts rule.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. The purpose of
characterization is to enable the forum to select the proper
law.
Same; Same; An essential element of conflict rules is the
indication of a test or connecting factor or point of
contact.Our starting point of analysis here is not a legal
relation, but a factual situation, event, or operative fact. 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 relation-
472
472 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
ship (such as property right, contract claim) and a connecting
factor or point of contact, such as the situs of the res, the
place of celebration, the place of performance, or the place of
wrongdoing.
Same; Same; Test Factors or Points of Contact or
Connecting Factors.Note that one or more circumstances
may be present to serve as the possible test for the
determination of the applicable law. 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. (Italics ours.)
Same; Same; Same; Torts; Where the action is one involving
torts, the connecting factor or point of contact could be results. In keeping abreast with the modern theories on tort
the place or places where the tortious conduct or lex loci
actus occurred; The Philippines is the situs of the tort where it
is in the Philippines where the defendant allegedly deceived
the plaintiff, a citizen residing and working here, and the fact
that certain acts or parts of the injury occurred in another
country is of no moment, for what is important is the place
where the over-all harm or the totality of the injury to the
person, reputation, social standing and human rights of the
plaintiff
473
VOL. 297, OCTOBER 8, 1998 473
Saudi Arabian Airlines vs. Court of Appeals
had lodged.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 actus occurred. 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
totality of the alleged injury to the person, reputation, social
standing and human rights of complainant, had lodged,
according to the plaintiff below (herein private respondent).
All told, it is not without basis to identify the Philippines as the
situs of the alleged tort.
Same; Same; Same; Same; State of the Most Significant
Relationship Rule; The State of the most significant
relationship rule is the appropriate modern theory on tort
liability to apply in the instant case.With the widespread
criticism of the traditional rule of lex loci delicti commissi,
modern theories and rules on tort liability have been
advanced to offer fresh judicial approaches to arrive at just
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.
Same; Same; Same; Same; Same; Where the Philippines is
the situs of the tort complained of and the place having the
most interest in the problem, the Philippine law on tort
liability should have
474
474 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
paramount application to and control in the resolution of the 475
legal issues arising therein.As already discussed, there is
basis for the claim that over-all injury occurred and lodged in
VOL. 297, OCTOBER 8, 1998 475
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 Saudi Arabian Airlines vs. Court of Appeals
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 Padilla, Jimenez, Kintanar & Asuncion Law Offices for
violations. From the record, the claim that the Philippines has private respondent.
the most significant contact with the matter in this dispute,
raised by private respondent as plaintiff below against QUISUMBING, J.:

defendant (herein petitioner), in our view, has been properly

established. Prescinding from this premise that the Philippines This petition for certiorari pursuant to Rule 45 of the Rules of

is the situs of the tort complained of and the place having Court seeks to annul and set aside the Resolution1 dated

the most interest in the problem, we find, by way of September 27, 1995 and the Decision2 dated April 10, 1996 of

recapitulation, that the Philippine law on tort liability should the Court of Appeals3 in CA-G.R. SP No. 36533,4 and the

have paramount application to and control in the resolution of Orders5 dated August 29, 19946 and February 2, 19957 that

the legal issues arising out of this case. Further, we hold that were issued by the trial court in Civil Case No. Q-93-18394. 8

the respondent Regional Trial Court has jurisdiction over the

parties and the subject matter of the complaint; the The pertinent antecedent facts which gave rise to the instant

appropriate venue is in Quezon City, which could properly petition, as stated in the questioned Decision, 9 are as follows:

apply Philippine law.

On January 21, 1988 defendant SAUDIA hired plaintiff as a

Same; Pleadings and Practice; Evidence; A party whose cause Flight Attendant for its airlines based in Jeddah, Saudi Arabia.

of action is based on a Philippine law has no obligation to xxx

plead and prove the law of another State.We find untenable

On April 27, 1990, while on a lay-over in Jakarta, Indonesia,
petitioners insistence that [s]ince private respondent
plaintiff went to a disco dance with fellow crew members
instituted this suit, she has the burden of pleading and
Thamer AlGazzawi and Allah Al-Gazzawi, both Saudi nationals.
proving the applicable Saudi law on the matter. As aptly said
Because it was almost morning when they returned to their
by private respondent, she has no obligation to plead and
hotels, they agreed to have breakfast together at the room of
prove the law of the Kingdom of Saudi Arabia since her cause
Thamer. When they were in te (sic) room, Allah left on some
of action is based on Articles 19 and 21 of the Civil Code of
pretext. Shortly after he did,
the Philippines. In her Amended Complaint and subsequent
pleadings, she never alleged that Saudi law should govern this
________________
case. And as correctly held by the respondent appellate court,
considering that it was the petitioner who was invoking the
1
Annex A, PETITION, October 13, 1995; rollo, p. 36.
applicability of the law of Saudi Arabia, then the burden was
on it [petitioner] to plead and to establish what the law of 2
Annex A, SUPPLEMENTAL PETITION, April 30, 1996; rollo,
Saudi Arabia is.
pp. 88-102.

PETITION for review on certiorari of a decision of the Court of 3

Penned by Associate Justice Bernardo L1. Salas, and
Appeals.
concurred in by Associate Justice Jorge S. Imperial and
Associate Justice Pacita Caizares-Nye.
The facts are stated in the opinion of the Court.

Siguion Reyna, Montecillo & Ongsiako for petitioner.

4
Entitled Saudi Arabian Airlines vs. Hon. Judge Rodolfo A.
Ortiz, in his capacity as Presiding Judge of Branch 89 of the
Regional Trial Court of Quezon City and Milagros P. Morada.
5
Issued by respondent Judge Hon. Rodolfo A. Ortiz of Branch
89, Regional Trial Court of Quezon City.
6
Annex B, PETITION, October 13, 1995; rollo, pp. 37-39.
7
Annex B, PETITION, October 13, 1995; rollo, p. 40.
8
Entitled Milagros P. Morada vs. Saudi Arabian Airlines.
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
9
Supra, note 2. Arabia, a few minutes before the departure of her flight to
Manila, plaintiff was not allowed to board the plane and
476
instead ordered to take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of SAUDIA. When she did, a

476 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
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.
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.
477
VOL. 297, OCTOBER 8, 1998 477

When plaintiff returned to Jeddah a few days later, several

SAUDIA officials interrogated her about the Jakarta incident.
Saudi Arabian Airlines vs. Court of Appeals
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
Shortly afterwards, defendant SAUDIA summoned plaintiff to
with the police for the immediate release of the detained crew
report to Jeddah once again and see Miniewy on June 27, 1993
members but did not succeed because plaintiff refused to
for further investigation. Plaintiff did so after receiving
cooperate. She was afraid that she might be tricked into
assurance from SAUDIAs Manila manager, Aslam Saleemi,
something she did not want because of her inability to
that the investigation was routinary and that it posed no
understand the local dialect. She also declined to sign a blank
danger to her.
paper and a document written in the local dialect. Eventually,
SAUDIA allowed plaintiff to return to Jeddah but barred her In Jeddah, a SAUDIA legal officer brought plaintiff to the same
from the Jakarta flights. Saudi court on June 27, 1993. Nothing happened then but on
June 28, 1993, a Saudi judge interrogated plaintiff through an
Plaintiff learned that, through the intercession of the Saudi
interpreter about the Jakarta incident. After one hour of
Arabian government, the Indonesian authorities agreed to
interrogation, they let her go. At the airport, however, just as
deport Thamer and Allah after two weeks of detention.
her plane was about to take off, a SAUDIA officer told her that
Eventually, they were again put in service by defendant
the airline had forbidden her to take flight. At the Inflight
SAUDIA (sic). In September 1990, defendant SAUDIA
Service Office where she was told to go, the secretary of Mr.
transferred plaintiff to Manila.
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
On January 19, 1994, SAUDIA filed an Omnibus Motion To
Dismiss14 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 reply16 thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint 17

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
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 Order19 dated August 29, 1994

Jeddah to help her while her case is on appeal. Meanwhile, to denying the Motion to Dismiss Amended Complaint filed by

pay for her upkeep, she worked on the domestic flight of SAUDIA.

SAUDIA, while Thamer and Allah continued to serve in the

international flights.11 From the Order of respondent Judge20 denying the Motion to
Dismiss, SAUDIA filed on September 20, 1994, its Motion for

Because she was wrongfully convicted, the Prince of Makkah Reconsideration21 of the Order dated August 29, 1994. It

dismissed the case against her and allowed her to leave Saudi alleged that the trial court has no jurisdiction to hear and try
12
Arabia. Shortly before her return to Manila, she was
________________

________________
13
Dated November 19, 1993, and docketed as Civil Case No.
10
Decision, pp. 2-4; see rollo, pp. 89-91. Q-93-18394, Branch 89, Regional Trial Court of Quezon City.

14
11
Private respondents Comment; rollo, p. 50. Dated January 14, 1994.

15
12
Ibid., pp. 50-51. Dated February 4, 1994.

16
478 Reply dated March 1, 1994.

17
Records, pp. 65-84.
478 SUPREME COURT REPORTS ANNOTATED

18
Rollo, p. 65.

Saudi Arabian Airlines vs. Court of Appeals

19
Supra, note 6.

20
Hon. Rodolfo A. Ortiz.
terminated from the service by SAUDIA, without her being
informed of the cause.
21
Dated September 19, 1994.

On November 23, 1993, Morada filed a Complaint 13 for

479
damages against SAUDIA, and Khaled Al-Balawi (Al-Balawi),
its country manager.
 23
Records, pp. 117-128.
VOL. 297, OCTOBER 8, 1998 479

24
Supra, note 7.

Saudi Arabian Airlines vs. Court of Appeals

25
Ibid.

the case on the basis of Article 21 of the Civil Code, since the 480

proper law applicable is the law of the Kingdom of Saudi

Arabia. On October 14, 1994, Morada filed her Opposition 22 (To
480 SUPREME COURT REPORTS ANNOTATED
Defendants Motion for Reconsideration).

In the Reply23 filed with the trial court on October 24, 1994, Saudi Arabian Airlines vs. Court of Appeals

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 Writ of Preliminary Injunction and/or Temporary Restraining

the first time on appeal. Additionally, SAUDIA alleged that the Order26 with the Court of Appeals.

Philippines does not have any substantial interest in the

Respondent Court of Appeals promulgated a Resolution with
prosecution of the instant case, and hence, without
Temporary Restraining Order27 dated February 23, 1995,
jurisdiction to adjudicate the same.
prohibiting the respondent Judge from further conducting any

Respondent Judge subsequently issued another Order24 dated proceeding, unless otherwise directed, in the interim.

February 2, 1995, denying SAUDIAs Motion for

In another Resolution28 promulgated on September 27, 1995,
Reconsideration. The pertinent portion of the assailed Order
now assailed, the appellate court denied SAUDIAs Petition for
reads as follows:
the Issuance of a Writ of Preliminary Injunction dated February

Acting on the Motion for Reconsideration of defendant Saudi 18, 1995, to wit:

Arabian Airlines filed, thru counsel, on September 20, 1994,

The Petition for the Issuance of a Writ of Preliminary
and the Opposition thereto of the plaintiff filed, thru counsel,
Injunction is hereby DENIED, after considering the Answer,
on October 14, 1994, as well as the Reply therewith of
with Prayer to Deny Writ of Preliminary Injunction (Rollo, p.
defendant Saudi Arabian Airlines filed, thru counsel, on
135) the Reply and Rejoinder, it appearing that herein
October 24, 1994, considering that a perusal of the plaintiffs
petitioner is not clearly entitled thereto (Unciano Paramedical
Amended Complaint, which is one for the recovery of actual,
College, et al. v. Court of Appeals, et al., G.R. No. 100335,
moral and exemplary damages plus attorneys fees, upon the
April 7, 1993, Second Division).
basis of the applicable Philippine law, Article 21 of the New
Civil Code of the Philippines, is, clearly, within the jurisdiction
SO ORDERED.
of this Court as regards the subject matter, and there being
nothing new of substance which might cause the reversal or
On October 20, 1995, SAUDIA filed with this Honorable Court
modification of the order sought to be reconsidered, the
the instant Petition29 for Review with Prayer for Temporary
motion for reconsideration of the defendant, is DENIED.
Restraining Order dated October 13, 1995.

SO ORDERED.25
However, during the pendency of the instant Petition,
respondent Court of Appeals rendered the Decision 30 dated
Consequently, on February 20, 1995, SAUDIA filed its Petition
April 10, 1996, now also assailed. It ruled that the Philippines
for Certiorari and Prohibition with Prayer for Issuance of
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
22
Records, pp. 108-116. 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.
________________
26
Dated February 18, 1995; see supra, note 4.
27
Supra, note 7.
28
Records, p. 180.
29
Rollo, pp. 1-44.
30
Supra, note 2.
481
VOL. 297, OCTOBER 8, 1998 481
Saudi Arabian Airlines vs. Court of Appeals
On May 7, 1996, SAUDIA filed its Supplemental Petition for
31
Review with Prayer for Temporary Restraining Order 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
________________
31
Rollo, pp. 80-86.
32
Memorandum for Petitioner dated October 9, 1996, rollo,
pp. 149-180; and Memorandum for Private Respondent,
October 30, 1996, rollo, pp. 182-210.
482
482 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
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 doing business in the Philippines. It may be
THAT IN THIS CASE PHILIPPINE LAW SHOULD GOVERN. served with summons and other court
processes at Travel Wide Associated Sales
Petitioner SAUDIA claims that before us is a conflict of laws (Phils.), Inc., 3rd Floor, Cougar Building, 114
that must be settled at the outset. It maintains that private Valero St., Salcedo Village, Makati, Metro
respondents claim for alleged abuse of rights occurred in the Manila.x x x xxx xxx
Kingdom of Saudi Arabia. It alleges that the existence of a
foreign element qualifies the instant case for the application 2. 6. Plaintiff learned that, through the
of the law of the Kingdom of Saudi Arabia, by virtue of the lex intercession of the Saudi Arabian
loci delicti commissi rule.34 government, the Indonesian authorities
agreed to deport Thamer and Allah after
On the other hand, private respondent contends that since two weeks of detention. Eventually, they
her Amended Complaint is based on Articles 1935 and 2136 of were again put in service by defendant
SAUDIA. In September 1990, defendant
________________ SAUDIA transferred plaintiff to Manila.

33
Rollo, pp. 157-159. All caps in the original. 3. 7. On January 14, 1992, just when plaintiff
thought that the Jakarta incident was
34
Memorandum for Petitioner, p. 14, rollo, p. 162. already behind her, her superiors requested
her to see Mr. Ali Meniewy, Chief Legal
35
Art. 19. Every person must, in the exercise of his rights and Officer of SAUDIA, in Jeddah, Saudi Arabia.
in the performance of his duties, act with justice, give When she saw him, he brought her to the
everyone his due, and observe honesty and good faith. police station where the police took her
passport and questioned her about the
36
Art. 21. Any person who wilfully causes loss or injury to
Jakarta incident. Miniewy simply stood by as
another in a manner that is contrary to morals, good customs
the police put pressure on her to make a
or public policy shall compensate the latter for the damages.
statement dropping the case against
Thamer and Allah. Not until she agreed to
483
do so did the police return her passport and
allowed her to catch the afternoon flight out

VOL. 297, OCTOBER 8, 1998 483 of Jeddah.

4. 8. One year and a half later or on June 16,

Saudi Arabian Airlines vs. Court of Appeals
1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to
Manila, plaintiff was not allowed to board
the Civil Code, then the instant case is properly a matter of
the plane and instead ordered to take a
domestic law.37
later flight to Jeddah to see Mr. Meniewy,
the Chief Legal Officer of SAUDIA. When she
Under the factual antecedents obtaining in this case, there is
did, a certain Khalid of the SAUDIA office
no dispute that the interplay of events occurred in two states,
brought her to a Saudi court where she was
the Philippines and Saudi Arabia.
asked to sign a document written in Arabic.
They told her that this was necessary to
As stated by private respondent in her Amended Complaint 38
close the case against Thamer and Allah. As
dated June 23, 1994:
it

1. 2. Defendant SAUDI ARABIAN AIRLINES or

________________
SAUDIA is a foreign airlines corporation
37
Memorandum for Private Respondent, p. 9, rollo, p. 190.
38
Records, pp. 65-71.
484
484 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
turned out, plaintiff signed a notice to her to appear before
the court on June 27, 1993. Plaintiff then returned to Manila.
1. 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.
2. 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.
3. 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.
4. 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
________________
39
Supra, note 17, pp. 65-68.
485
VOL. 297, OCTOBER 8, 1998 485
Saudi Arabian Airlines vs. Court of Appeals
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 On the other hand, Article 21 of the New Civil Code provides:
that private respondent Morada is a resident Philippine
national, and that petitioner SAUDIA is a resident foreign Art. 21. Any person who willfully causes loss or injury to

corporation. Also, by virtue of the employment of Morada with another in a manner that is contrary to morals, good customs

the petitioner SAUDIA as a flight stewardess, events did or public policy shall compensate the latter for damages.

transpire during her many occasions of travel across national

borders, particularly from Manila, Philippines to Jeddah, Saudi Thus, in Philippine National Bank (PNB) vs. Court of Appeals,45

Arabia, and vice versa, that caused a conflicts situation to this Court held that:

arise.
The aforecited provisions on human relations were intended

We thus find private respondents assertion that the case is to expand the concept of torts in this jurisdiction by granting

purely domestic, imprecise. A conflicts problem presents itself adequate legal remedy for the untold number of moral wrongs

here, and the question of jurisdiction43 confronts the court a which is impossible for human foresight to specifically provide

quo. in the statutes.

After a careful study of the private respondents Amended Although Article 19 merely declares a principle of law, Article

Complaint, 44
and the Comment thereon, we note that she 21 gives flesh to its provisions. Thus, we agree with private

aptly predicated her cause of action on Articles 19 and 21 of respondents assertion that violations of Articles 19 and 21

the New Civil Code. are actionable, with judicially enforceable remedies in the
municipal forum.

On one hand, Article 19 of the New Civil Code provides:

Based on the allegations46 in the Amended Complaint, read in

________________ the light of the Rules of Court on jurisdiction47 we find that the
Regional Trial Court (RTC) of Quezon City possesses
40
Salonga, Private International Law, 1995 edition, p. 3. jurisdiction over the subject matter of the suit.48 Its authority

41
Ibid., citing Cheshire and North, Private International Law, p. ________________
5 by P.M. North and J.J. Faucett (Butterworths; London, 1992).
45
83 SCRA 237, 247.
42
Ibid.
46
Supra, note 17, at p. 6. Morada prays that judgment be
43
Paras, Philippine Conflict of Laws, sixth edition (1984), p. 24, rendered against SAUDIA, ordering it to pay: (1) not less than
citing Leflar, The Law of Conflict of Laws, pp. 5-6. P250,000.00 as actual damages; (2) P4 million in moral
damages; (3) P500,000.00 in exemplary damages; and (4)
44
Supra, note 17. P500,000.00 in attorneys fees.

486 47
Baguioro v. Barrios, 77 Phil. 120.

48
Jurisdiction over the subject matter is conferred by law and
486 SUPREME COURT REPORTS ANNOTATED
is defined as the authority of a court to hear and decide cases
of the
Saudi Arabian Airlines vs. Court of Appeals
487

Art. 19. Every person must, in the exercise of his rights and in
VOL. 297, OCTOBER 8, 1998 487
the performance of his duties, act with justice give everyone
his due and observe honesty and good faith.
Saudi Arabian Airlines vs. Court of Appeals
 ________________

general class to which the proceedings in question belong.

(Reyes v. Diaz, 73 Phil. 484, 487)
to try and hear the case is provided for under Section 1 of
Republic Act No. 7691, to wit: 488

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

488 SUPREME COURT REPORTS ANNOTATED
known as the Judiciary Reorganization Act of 1980, is hereby
amended to read as follows:

Saudi Arabian Airlines vs. Court of Appeals

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

But unless the balance is strongly in favor of the defendant,

xxx xxx xxx the plaintiffs choice of forum should rarely be disturbed. 49

(8) In all other cases in which demand, exclusive of interest,
damages of whatever kind, attorneys fees, litigation
expenses, and cost 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)
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.

xxx xxx xxx Moreover, by hearing the case in the Philippines no

unnecessary difficulties and inconvenience have been shown
And following Section 2(b), Rule 4 of the Revised Rules of
by either of the parties. The choice of forum of the plaintiff
Courtthe venue, Quezon City, is appropriate:
(now private respondent) should be upheld.

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

Similarly, the trial court also possesses jurisdiction over the
Trial Court]
persons of the parties herein. By filing her Complaint and
Amended Complaint with the trial court, private respondent
(a) x x x xxx xxx
has voluntarily submitted herself to the jurisdiction of the
court.
(b) Personal actions.All other actions may be commenced
and tried where the defendant or any of the defendants
The records show that petitioner SAUDIA has filed several
resides or may be found, or where the plaintiff or any of the
motions50 praying for the dismissal of Moradas Amended
plaintiff resides, at the election of the plaintiff.
Complaint. SAUDIA also filed an Answer In Ex Abundante
Cautelam dated February 20, 1995. What is very patent and
Pragmatic considerations, including the convenience of the
explicit from the motions filed, is that SAUDIA prayed for other
parties, also weigh heavily in favor of the RTC Quezon City
reliefs under the premises. Undeniably, petitioner SAUDIA has
assuming jurisdiction. Paramount is the private interest of the
effectively submitted to the trial courts jurisdiction by praying
litigant. Enforceability of a judgment if one is obtained is quite
for the dismissal of the Amended Complaint on grounds other
obvious. Relative advantages and obstacles to a fair trial are
than lack of jurisdiction.
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.
49
Supra, note 37, p. 58, citing Gulf Oil Corporation v. Gilbert,
350 U.S. 501, 67 Sup. Ct. 839 (1947).
50
Omnibus Motion to Dismiss dated January 14, 1994; Reply
(to Plaintiffs Opposition) dated February 19, 1994; Comment
(to Plaintiffs Motion to Admit Amended Complaint dated June
23, 1994) dated July 20, 1994; Manifestation and Motion to
Dismiss Amended Complaint dated June 23, 1994 under date
August 11, 1994; and Motion for Reconsideration dated
September 19, 1994.
489
VOL. 297, OCTOBER 8, 1998
Saudi Arabian Airlines vs. Court of Appeals
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
489
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
________________
51
18 SCRA 207, 213-214.
52
64 SCRA 23, 31.
490
490 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
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 ble law.59 These test factors or points of contact or
determine under what category a certain set of facts or rules connecting factors could be any of the following:
fall. This process is known as characterization, or the
doctrine of qualification. It is the process of deciding 1. (1) the nationality of a person, his

whether or not the facts relate to the kind of question domicile, his residence, his place of sojourn,

specified in a conflicts rule. 55

The purpose of or his origin;

characterization is to enable the forum to select the proper

law.56 2. (2) the seat of a legal or juridical person,
such as a corporation;

Our starting point of analysis here is not a legal relation, but a

factual situation, event, or operative fact.57 An essential 3. (3) the situs of a thing, that is, the place

element of conflict rules is the indication of a test or where a thing is, or is deemed to be

connecting factor or point of contact. Choice-of-law rules situated. In particular, the lex situs is

invariably consist of a factual relationship (such as property decisive when real rights are involved;

right, contract claim) and a connecting factor or point of

contact, such as the situs of the res, the place of celebration, 4. (4) the place where an act has been done,

the place of performance, or the place of wrongdoing.58 the locus actus, such as the place where a
contract has been made, a marriage

Note that one or more circumstances may be present to serve celebrated, a will signed or a tort

as the possible test for the determination of the applica- committed. The lex loci actus is particularly
important in contracts and torts;

________________
5. (5) the place where an act is intended to
53
Coquia and Pangalangan, Conflict of Laws, 1995 edition, p. come into effect, e.g., the place of

65, citing Von Mehren, Recent Trends in Choice-of-Law performance of contractual duties, or the

Methodology, 60 Cornell L. Rev. 927 (1975). place where a power of attorney is to be

exercised;
54
Ibid.
6. (6) the intention of the contracting parties
55
Supra, note 40 at p. 94, citing Falconbridge, Essays on the as to the law that should govern their
Conflict of Laws, p. 50. agreement, the lex loci intentionis;

56
Ibid. 7. (7) the place where judicial or
administrative proceedings are instituted or
57
Supra, note 37 at p. 136; cf. Mussbaum, Principle of Private done. The lex forithe law of the forumis
International Law, p. 173; and Rabel, The Conflict of Laws: A particularly important because, as we have
Comparative Study, pp. 51-52. seen earlier, matters of procedure not
going to the substance of the claim
58
Supra, note 37, p. 137. involved are governed by it; and because
the lex fori applies whenever the content of
491 the otherwise applicable foreign law is
excluded from application in a given case
for the reason that it falls under one of the
VOL. 297, OCTOBER 8, 1998 491
exceptions to the applications of foreign
law; and
Saudi Arabian Airlines vs. Court of Appeals

8. (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
60
affreightment. (Italics ours.)
After a careful study of the pleadings on record, including
allegations in the Amended Complaint deemed admitted for
purposes of the motion to dismiss, we are convinced that
there is reasonable basis for private respondents assertion
that
________________
59
Ibid.
60
Supra, note 37 at pp. 138-139.
492
492 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
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 actus occurred. 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
493
VOL. 297, OCTOBER 8, 1998 493
Saudi Arabian Airlines vs. Court of Appeals
over-all harm or the totality of the alleged injury to the
person, reputation, social standing and human rights of
complainant, had lodged, according to the plaintiff below
(herein private respondent). All told, it is not without basis to
identify the Philippines as the situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule
of lex loci delicti commissi, modern theories and rules on tort
liability61 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
62
relationship, if any, between the parties is centered.
As already discussed, there is basis for the claim that overall
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
________________
61
Includes the (1) German rule of elective concurrence; (2)
State of the most significant relationship rule (the Second
Restatement of 1969); (3) State-interest analysis; and (4)
Cavers Principle of Preference.
62
Supra, note 37, p. 396.
494
494 SUPREME COURT REPORTS ANNOTATED
Saudi Arabian Airlines vs. Court of Appeals
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 complained 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 Philip-pine 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, then 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 expeditious trial itself
indicated by the nature of the case at hand. Indubitably, the
________________
63
Supra, note 59, p. 79, citing Ruben v. Irving Trust Co., 305
N.Y. 288, 305, 113 N.E. 2d 424, 431.
64
Memorandum for Petitioner, p. 22; rollo, p. 170.
65
Memorandum for Private Respondent, pp. 21-22; rollo, pp.
202-203.
66
CA Decision, p. 10; rollo, p. 97.
495

VOL. 297, OCTOBER 8, 1998 495
Saudi Arabian Airlines vs. Court of Appeals
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.
Davide, Jr. (Chairman), Bellosillo, Vitug and Panganiban, JJ.,
concur.
Petition dismissed, Civil Case No. Q-93-18394 remanded to
lower court.
Notes.Forum-shopping originated as a concept in private
international law, where non-resident litigants are given the
option to choose the forum or place wherein to bring their suit
for various reasons or excuses, including to secure procedural
advantages, to annoy and harass the defendant, to avoid
overcrowded dockets, or to select a more friendly venue.
(First Philippine International Bank vs. Court of Appeals, 252
SCRA 259 [1996])
After having acquired jurisdiction over a plaintiff foreign
corporation by virtue of the filing of the original complaint, the
Philippine court now has the discretion, based on the facts of
the case, to either give due course to the suit or dismiss it, on
the principle of forum non conveniens. (Communication
Materials and Design, Inc. vs. Court of Appeals, 260 SCRA 673
[1996])
o0o
496
496 SUPREME COURT REPORTS ANNOTATED
Everett Steamship Corporation vs. Court of Appeals
G.R. No. 122494. October 8, 1998.*
EVERETT STEAMSHIP CORPORATION, petitioner, vs.
COURT OF APPEALS and HERNANDEZ TRADING CO.,
INC., respondents.
Common Carriers; Contracts; Bills of Lading; A stipulation in
the bill of lading limiting the common carriers liability for loss
or destruction of a cargo to a certain sum, unless the shipper
or owner declares a greater value, is sanctioned by law.A
stipulation in the bill of lading limiting the common carriers
liability for loss or destruction of a cargo to a certain sum,
unless the shipper or owner declares a greater value, is
sanctioned by law, particularly Articles 1749 and 1750 of the
Civil Code.
Same; Same; Same; Contracts of Adhesion; Contracts of
adhe-L; sion are not invalid per se.The trial courts
ratiocination that private respondent could not have fairly
and freely agreed to the limited liability clause in the bill of
lading because the said conditions were printed in small
letters does not make the bill of lading invalid. We ruled in
PAL, Inc. vs. Court of Appeals that the juris-prudence on the
matter reveals the consistent holding of the court that
contracts of adhesion are not invalid per se and that it has on
numerous occasions upheld the binding effect thereof. Also,
in Philippine American General Insurance Co., Inc. vs. Sweet
Lines, Inc. this Court, speaking through the learned Justice
Florenz D. Re-galado, held: x x x Ong Yiu vs. Court of
Appeals, et al., instructs us that contracts of adhesion
wherein one party imposes a ready-made form of contract on
the other x x x are contracts not entirely prohibited. The one
who adheres to the contract is in reality free to reject it
entirely; if he adheres he gives his consent. In the present
case, not even an allegation of ignorance of a party excuses
non-compliance with the contractual stipulations since the
responsibility for ensuring full comprehension of the
provisions of a contract of carriage devolves not on the carrier
but on the owner, shipper, or consignee as the case may be. document may have beenas in practice it oftentimes is
(Emphasis supplied) drawn up only by the consignor and the carrier without the
intervention of the consignee. x x x.
Same; Same; Same; Same; Greater vigilance is required of
the courts when dealing with contracts of adhesion in that the Same; Same; Same; When the consignee formally claims
said con- reimbursement for the missing goods from the common
carrier and subsequently files a case against the latter based
________________ on the very same bill of lading, it accepts the provisions of the
contract and thereby makes itself a party thereto.When
*
SECOND DIVISION. private respondent formally claimed reimbursement for the
missing goods from petitioner and subsequently filed a case
497 against the latter based on the very same bill of lading, it
(private respondent) accepted the provisions of the contract
and thereby made itself a party thereto, or at least has come
VOL. 297, OCTOBER 8, 1998 497
to court to enforce it. Thus, private respondent cannot now
reject or disregard the carriers limited liability stipulation in
Everett Steamship Corporation vs. Court of Appeals the bill of lading. In

498
tracts must be carefully scrutinized in order to shield the
unwary (or weaker party) from deceptive schemes contained
498 SUPREME COURT REPORTS ANNOTATED
in ready-made contracts.Greater vigilance, however, is
required of the courts when dealing with contracts of adhesion
in that the said contracts must be carefully scrutinized in Everett Steamship Corporation vs. Court of Appeals
order to shield the unwary (or weaker party) from deceptive
schemes contained in ready-made covenants, such as the bill
of lading in question. The stringent requirement which the other words, private respondent is bound by the whole
courts are enjoined to observe is in recognition of Article 24 of stipulations in the bill of lading and must respect the same.
the Civil Code which mandates that (i)n all contractual,
property or other relations, when one of the parties is at a PETITION for review on certiorari of a decision of the Court of
disadvantage on account of his moral dependence, ignorance, Appeals.
indigence, mental weakness, tender age or other handicap,
the courts must be vigilant for his protection. The facts are stated in the opinion of the Court.

Same; Same; Same; Even if the consignee is not a signatory Soo, Gutierrez, Leogardo & Lee for petitioner.
to the contract of carriage between the shipper and the
carrier, the consignee can still be bound by the contract.The Atilano Huaben B. Lim for private respondent.

next issue to be resolved is whether or not private

respondent, as consignee, who is not a signatory to the bill of MARTINEZ, J.:

lading is bound by the stipulations thereof. Again, in Sea-Land

Service, Inc. vs. Intermediate Appellate Court (supra), we held Petitioner Everett Steamship Corporation, through this petition

that even if the consignee was not a signatory to the contract for review, seeks the reversal of the decision1 of the Court of

of carriage between the shipper and the carrier, the consignee Appeals, dated June 14, 1995, in CA-G.R. No. 428093, which

can still be bound by the contract. Speaking through Mr. Chief affirmed the decision of the Regional Trial Court of Kalookan

Justice Narvasa, we ruled: To begin with, there is no question City, Branch 126, in Civil Case No. C-15532, finding petitioner

of the right, in principle, of a consignee in a bill of lading to liable to private respondent Hernan-dez Trading Co., Inc. for

recover from the carrier or shipper for loss of, or damage to the value of the lost cargo.

goods being transported under said bill, although that

Private respondent imported three crates of bus spare parts
marked as MARCO C/No. 12, MARCO C/No. 13 and MARCO
C/No. 14, from its supplier, Maruman Trading Company, Ltd.
(Maruman Trading), a foreign corporation based in Inazawa,
Aichi, Japan. The crates were shipped from Nagoya, Japan to
Manila on board ADELFAEVERETTE, a vessel owned by
petitioners principal, Everett Orient Lines. The said crates
were covered by Bill of Lading No. NGO53MN.
Upon arrival of the port of Manila, it was discovered that the
crate marked MARCO C/No. 14 was missing. This was
confirmed and admitted by petitioner in its letter of January
13, 1992 addressed to private respondent, which thereafter
made a formal claim upon petitioner for the value of the lost
cargo amounting to One Million Five Hundred Fifty Two
________________
1
Penned by Justice Pacita Canizares-Nye and concurred in by
Justices Conchita Carpio-Morales and Antonio P. Solano; Rollo,
pp. 33-40.
499
VOL. 297, OCTOBER 8, 1998 499
Everett Steamship Corporation vs. Court of Appeals
Thousand Five Hundred (1,552,500.00) Yen, the amount
shown in an Invoice No. MTM-941, dated November 14, 1991.
However, petitioner offered to pay only One Hundred
Thousand (100,000.00) Yen, the maximum amount
stipulated under Clause 18 of the covering bill of lading which
limits the liability of petitioner.
Private respondent rejected the offer and thereafter instituted
a suit for collection docketed as Civil Case No. C-15532,
against petitioner before the Regional Trial Court of Caloocan
City, Branch 126.
At the pre-trial conference, both parties manifested that they
have no testimonial evidence to offer and agreed instead to
file their respective memoranda.
On July 16, 1993, the trial court rendered judgment2 in favor
of private respondent, ordering petitioner to pay: (a)
1,552,500.00; (b) 20,000.00 or its peso equivalent
representing the actual value of the lost cargo and the
material and packaging cost; (c) 10% of the total amount as
an award for and as contingent attorneys fees; and (d) to pay
the cost of the suit. The trial court ruled:
Considering defendants categorical admission of loss and its
failure to overcome the presumption of negligence and fault,
the Court conclusively finds defendant liable to the plaintiff.
The next point of inquiry the Court wants to resolve is the
extent of the liability of the defendant. As stated earlier,
plaintiff contends that defendant should be held liable for the
whole value for the loss of the goods in the amount of
1,552,500.00 because the terms appearing at the back of
the bill of lading was so written in fine prints and that the
same was not signed by plaintiff or shipper thus, they are not
bound by the clause stated in paragraph 18 of the bill of
lading. On the other hand, defendant merely admitted that it
lost the shipment but shall be liable only up to the amount of
100,000.00.
The Court subscribes to the provisions of Article 1750 of the
New Civil Code
Art. 1750. A contract fixing the sum that may be recovered
by the owner or shipper for the loss, destruction or de-
________________
2
Penned by Judge Oscar M. Payawal, Rollo, pp. 43-50.
500
500 SUPREME COURT REPORTS ANNOTATED
Everett Steamship Corporation vs. Court of Appeals
terioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been fairly and freely
agreed upon.
It is required, however, that the contract must be reasonable
and just under the circumstances and has been fairly and
freely agreed upon. The requirements provided in Art. 1750 of
the New Civil Code must be complied with before a common
carrier can claim a limitation of its pecuniary liability in case
of loss, destruction of deterioration of the goods it has
undertaken to transport.
In the case at bar, the Court is of the view that the
requirements of said article have not been met. The fact that
those conditions are printed at the back of the bill of lading in
letters so small that they are hard to read would not warrant
the presumption that the plaintiff or its supplier was aware of
these conditions such that he had fairly and freely agreed to
these conditions. It can not be said that the plaintiff had
actually entered into a contract with the defendant,
embodying the conditions as printed at the back of the bill of
lading that was issued by the defendant to plaintiff.
On appeal, the Court of Appeals deleted the award of
attorneys fees but affirmed the trial courts findings with the
additional observation that private respondent can not be
bound by the terms and conditions of the bill of lading
because it was not privy to the contract of carriage. It said:
As to the amount of liability, no evidence appears on record
to show that the appellee (Hernandez Trading Co.) consented
to the terms of the Bill of Lading. The shipper named in the
Bill of Lading is Maruman Trading Co., Ltd. whom the appellant
(Everett Steamship Corp.) contracted with for the
transportation of the lost goods.
Even assuming arguendo that the shipper Maruman Trading
Co., Ltd. accepted the terms of the bill of lading when it
delivered the cargo to the appellant, still it does not
necessarily follow that appellee Hernandez Trading Company
as consignee is bound thereby considering that the latter was
never privy to the shipping contract.
xxx xxx xxx
Never having entered into a contract with the appellant,
appellee should therefore not be bound by any of the terms
and conditions in the bill of lading.
501
VOL. 297, OCTOBER 8, 1998 501
Everett Steamship Corporation vs. Court of Appeals
Hence, it follows that the appellee may recover the full value
of the shipment lost, the basis of which is not the breach of
contract as appellee was never a privy to the any contract
with the appellant, but is based on Article 1735 of the New
Civil Code, there being no evidence to prove satisfactorily that
the appellant has overcome the presumption of negligence
provided for in the law.
Petitioner now comes to us arguing that the Court of Appeals
erred (1) in ruling that the consent of the consignee to the
terms and conditions of the bill of lading is necessary to make
such stipulations binding upon it; (2) in holding that the
carriers limited package liability as stipulated in the bill of
lading does not apply in the instant case; and (3) in allowing
private respondent to fully recover the full alleged value of its
lost cargo.
We shall first resolve the validity of the limited liability clause
in the bill of lading.
A stipulation in the bill of lading limiting the common carriers
liability for loss or destruction of a cargo to a certain sum,
unless the shipper or owner declares a greater value, is
sanctioned by law, particularly Articles 1749 and 1750 of the
Civil Code which provide:
ART. 1749. A stipulation that the common carriers liabilityis
limited to the value of the goods appearing in the bill of
lading,unless the shipper or owner declares a greater value, is
binding.
ART. 1750. A contract fixing the sum that may be recovered
by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been freely and fairly
agreed upon.
Such limited-liability clause has also been consistently upheld
by this Court in a number of cases.3 Thus, in Sea-Land
________________
3
St. Paul Fire and Marine Insurance Co. vs. Macondray & Co.,
70 SCRA 122 [1976]; Sea Land Services, Inc. vs. Intermediate
Appellate Court, 153 SCRA 552 [1987]; Pan American World
Airways, Inc. vs. Intermediate Appellate Court, 164 SCRA 268
[1988]; Phil. Airlines, Inc. vs. Court of Appeals, 255 SCRA 63
[1996].
502 carrier and inserted in the Bill of Lading and extra freight is
paid as required. (Emphasis supplied)

502 SUPREME COURT REPORTS ANNOTATED

________________

4
Everett Steamship Corporation vs. Court of Appeals 153 SCRA 552 [1987].

503

Service, Inc. vs. Intermediate Appellate Court,4 we ruled:

VOL. 297, OCTOBER 8, 1998 503

It seems clear that even if said section 4 (5) of the Carriage
of Goods by Sea Act did not exist, the validity and binding
effect of the liability limitation clause in the bill of lading here Everett Steamship Corporation vs. Court of Appeals
are nevertheless fully sustainable on the basis alone of the
cited Civil Code Provisions. That said stipulation is just and
reasonable is arguable from the fact that it echoes Art. 1750 The above stipulations are, to our mind, reasonable and just.

itself in providing a limit to liability only if a greater value is In the bill of lading, the carrier made it clear that its liability

not declared for the shipment in the bill of lading. To hold would only be up to One Hundred Thousand (100,000.00)

otherwise would amount to questioning the justness and Yen. However, the shipper, Maruman Trading, had the option

fairness of the law itself, and this the private respondent does to declare a higher valuation if the value of its cargo was

not pretend to do. But over and above that consideration, the higher than the limited liability of the carrier. Considering that

just and reasonable character of such stipulation is implicit in the shipper did not declare a higher valuation, it had itself to

it giving the shipper or owner the option of avoiding accrual of blame for not complying with the stipulations.

liability limitation by the simple and surely far from onerous

expedient of declaring the nature and value of the shipment The trial courts ratiocination that private respondent could

in the bill of lading. not have fairly and freely agreed to the limited liability
clause in the bill of lading because the said conditions were

Pursuant to the afore-quoted provisions of law, it is required printed in small letters does not make the bill of lading invalid.

that the stipulation limiting the common carriers liability for

5
loss must be reasonable and just under the circumstances, We ruled in PAL, Inc. vs. Court of Appeals that the

and has been freely and fairly agreed upon. jurisprudence on the matter reveals the consistent holding of
the court that contracts of adhesion are not invalid per se and

The bill of lading subject of the present controversy that it has on numerous occasions upheld the binding effect

specifically provides, among others: thereof. Also, in Philippine American General Insurance Co.,
6
Inc. vs. Sweet Lines, Inc. this Court, speaking through the

18. All claims for which the carrier may be liable shall be learned Justice Florenz D. Regalado, held:

adjusted and settled on the basis of the shippers net invoice

cost plus freight and insurance premiums, if paid, and in no x x x Ong Yiu vs. Court of Appeals, et al., instructs us that

event shall the carrier be liable for any loss of possible profits contracts of adhesion wherein one party imposes a ready-

or any consequential loss. made form of contract on the other x x x are contracts not
entirely prohibited. The one who adheres to the contract is in

The carrier shall not be liable for any loss of or any damage reality free to reject it entirely; if he adheres he gives his

to or in any connection with, goods in an amount exceeding consent. In the present case, not even an allegation of

One Hundred Thousand Yen in Japanese Currency ignorance of a party excuses non-compliance with the

(100,000.00) or its equivalent in any other currency per contractual stipulations since the responsibility for ensuring

package or customary freight unit (whichever is least) unless full comprehension of the provisions of a contract of carriage

the value of the goods higher than this amount is declared in devolves not on the carrier but on the owner, shipper, or

writing by the shipper before receipt of the goods by the consignee as the case may be. (Emphasis supplied)
 7
It was further explained in Ong Yiu vs. Court of Appeals that
stipulations in contracts of adhesion are valid and binding.
________________
5
255 SCRA 48, 58 [1996].
6
212 SCRA 194, 212-213 [1992].
7
91 SCRA 223 [1979]; Philippine Airlines, Inc. vs. Court of
Appeals, 255 SCRA 63 [1996].
504
504 SUPREME COURT REPORTS ANNOTATED
Everett Steamship Corporation vs. Court of Appeals
While it may be true that petitioner had not signed the plane
ticket x x, he is nevertheless bound by the provisions thereof.
Such provisions have been held to be a part of the contract of
carriage, and valid and binding upon the passenger regardless
of the latters lack of knowledge or assent to the regulation. It
is what is known as a contract of adhesion, in regards which
it has been said that contracts of adhesion wherein one party
imposes a ready-made form of contract on the other, as the
plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality
free to reject it entirely; if he adheres, he gives his consent. x
x x, a contract limiting liability upon an agreed valuation does
not offend against the policy of the law forbidding one from
contracting against his own negligence. (Emphasis supplied)
Greater vigilance, however, is required of the courts when
dealing with contracts of adhesion in that the said contracts
must be carefully scrutinized in order to shield the unwary
(or weaker party) from deceptive schemes contained in ready-
made covenants,8 such as the bill of lading in question. The
stringent requirement which the courts are enjoined to
observe is in recognition of Article 24 of the Civil Code which
mandates that (i)n 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.
The shipper, Maruman Trading, we assume, has been
extensively engaged in the trading business. It can not be
said to be ignorant of the business transactions it entered into
involving the shipment of its goods to its customers. The
shipper could not have known, or should know the stipulations
in the bill of lading and there it should have declared a higher
valuation of the goods shipped. Moreover, Maruman Trading
has not been heard to complain that it has been deceived or
________________
8
Ayala Corporation vs. Ray Burton Development Corporation,
G.R. No. 126699, August 7, 1998. See also Qua Chee Gan vs.
Law Union and Rock Insurance Co., Ltd., 98 Phil. 95 [1955].
505
VOL. 297, OCTOBER 8, 1998 505
Everett Steamship Corporation vs. Court of Appeals
rushed into agreeing to ship the cargo in petitioners vessel. In
fact, it was not even impleaded in this case.
The next issue to be resolved is whether or not private
respondent, as consignee, who is not a signatory to the bill of
lading is bound by the stipulations thereof.
Again, in Sea-Land Service, Inc. vs. Intermediate Appellate
Court (supra), we held that even if the consignee was not a
signatory to the contract of carriage between the shipper and
the carrier, the consignee can still be bound by the contract.
Speaking through Mr. Chief Justice Narvasa, we ruled:
To begin with, there is no question of the right, in principle, of
a consignee in a bill of lading to recover from the carrier or
shipper for loss of, or damage to goods being transported
under said bill, although that document may have beenas in
practice it oftentimes isdrawn up only by the consignor and
the carrier without the intervention of the consignee. x x x.
x x x the right of a party in the same situation as respondent
here, to recover for loss of a shipment consigned to him under
a bill of lading drawn up only by and between the shipper and
the carrier, springs from either a relation of agency that may
exist between him and the shipper or consignor, or his status
as stranger in whose favor some stipulation is made in said
contract, and who becomes a party thereto when he demands
fulfillment of that stipulation, in this case the delivery of the
goods or cargo shipped. In neither capacity can he assert
personally, in bar to any provision of the bill of lading, the
alleged circumstance that fair and free agreement to such
provision was vitiated by its being in such fine print as to be
hardly readable. Parenthetically, it may be observed that in
one comparatively recent case (Phoenix Assurance Company
vs. Macondray & Co., Inc., 64 SCRA 15) where this Court found
that a similar package limitation clause was printed in the
smallest type on the back of the bill of lading, it nonetheless
ruled that the consignee was bound thereby on the strength
of authority holding that such provisions on liability limitation
are as much a part of a bill of lading as though physically in it
and as though placed therein by agreement of the parties.
There can, therefore, be no doubt or equivocation about the
validity and enforceability of freely-agreed-upon stipulations in
a contract of carriage or bill of lading limiting the liability of
the carrier to an agreed valuation unless the shipper declares
a higher value
506
506 SUPREME COURT REPORTS ANNOTATED
Everett Steamship Corporation vs. Court of Appeals
and inserts it into said contract or bill. This proposition,
moreover, rests upon an almost uniform weight of authority.
(Italics supplied)
When private respondent formally claimed reimbursement for
the missing goods from petitioner and subsequently filed a
case against the latter based on the very same bill of lading, it
(private respondent) accepted the provisions of the contract
and thereby made itself a party thereto, or at least has come
to court to enforce it.9 Thus, private respondent cannot now
reject or disregard the carriers limited liability stipulation in
the bill of lading. In other words, private respondent is bound
by the whole stipulations in the bill of lading and must respect
the same.
Private respondent, however, insists that the carrier should be
liable for the full value of the lost cargo in the amount of
1,552,500.00, considering that the shipper, Maruman
Trading, had fully declared the shipment x x x, the contents
of each crate, the dimensions, weight and value of the
contents,10 as shown in the commercial Invoice No. MTM-941.
This claim was denied by petitioner, contending that it did not
know of the contents, quantity and value of the shipment
which consisted of three pre-packed crates described in Bill of
Lading No. NGO-53MN merely as 3 CASES SPARE PARTS. 11
The bill of lading in question confirms petitioners contention.
To defeat the carriers limited liability, the aforecited Clause
18 of the bill of lading requires that the shipper should have
declared in writing a higher valuation of its goods before
receipt thereof by the carrier and insert the said declaration in
the bill of lading, with the extra freight paid. These
requirements in the bill of lading were never complied with by
the shipper, hence, the liability of the carrier under the limited
liability clause stands. The commercial Invoice No. MTM-
________________
9
See Mendoza vs. Philippine Air Lines, Inc., 90 Phil. 836, 845-
846.
10
Rollo, p. 116.
11
Rollo, p. 13.
507
VOL. 297, OCTOBER 8, 1998 507
Everett Steamship Corporation vs. Court of Appeals
941 does not in itself sufficiently and convincingly show that
petitioner has knowledge of the value of the cargo as
contended by private respondent. No other evidence was
proffered by private respondent to support its contention.
Thus, we are convinced that petitioner should be liable for the
full value of the lost cargo.
In fine, the liability of petitioner for the loss of the cargo is
limited to One Hundred Thousand (100,000.00) Yen,
pursuant to Clause 18 of the bill of lading.
WHEREFORE, the decision of the Court of Appeals dated June
14, 1995 in C.A.-G.R. CV No. 42803 is hereby REVERSED and
SET ASIDE.
SO ORDERED.
Regalado (Actg. C.J.), Melo, Puno and Mendoza, JJ., concur.
Judgment reversed and set aside.
Notes.Parties to sales contracts and/or bills of lading are
bound by arbitration clauses thereat. (Puromines, Inc. vs.
Court of Appeals, 220 SCRA 281 [1993])
The validity of provisions limiting the liability of carriers
contained in bills of lading have been consistently upheld,
though the Supreme Court has likewise cautioned against
blind reliance on adhesion contracts where the facts and
circumstances warrant that they should be disregarded.
(Philippine Airlines, Inc. vs. Court of Appeals, 255 SCRA 48
[1996])
A contract of adhesion is one in which one of the contracting
parties imposes a ready-made form of contract which the
other party may accept or reject, but cannot modify. (Polotan,
Sr. vs. Court of Appeals, 296 SCRA 247 [1998])
o0o