Conflics - Airline & Tort Cases

Airline to Tort Cases - 1
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 Certiorari 1 under Rule 45 of the Rules of Court, seeking to reverse the August 7, 2001
Decision2 and the February 7, 2002 Resolution 3 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 defendantsappellants 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. 82-13690, 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 cross-claim 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 all-important 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,35 we 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?
A
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
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 V? 41
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.
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 Appeals 47 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 exemplary 50 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,52 the 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
LanaodelNortepraying 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 non-application 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. 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, 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, or where the carrier is guilty of fraud or bad faith.
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, 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 Director-General 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.'"
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. 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. 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. 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. 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 prearranged conference with the Director General of Trade of the host country.
In one case, his 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.
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.
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO, Respondents.
[G.R. No. 71929 : December 4, 1990.]192 SCRA 9
Alitalia vs. Intermediate Appellate Court
The Warsaw Convention's provisions, do not regulate or exclude liability for other breaches of contract by the carrier' 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. 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.
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. 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.
---------------------------------------------------------------------------------------------------------------------------------------------------ALITALIA vs. IAC
Facts:
Dr. Felipa Pablo, an associate professor in UP, was invited to a meeting of the Department of Research and Isotopes of the Joint FAOIAEA Division of Atomic Energy in Food and Agriculture of UN in Ispra, Italy. 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 petitioners personnel there at Milan that her luggage was delayed inasmuch as the same was
in one of the succeeding flights from Rome to Milan. Her luggage consisted of two suitcases. But the other flights arriving from Rome did
not have her baggage on board. The suitcases were not actually restored to Prof. Pablo by petitioner until eleven months and four
months after the institution of her action.
Issue: Did petitioner act in bad faith so as to entitle private respondent to damages?
Held:
No. The Warsaw Convention does not exclude liability for other breaches of contract by the carrier. Thus:
"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. 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 willful 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 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.' 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.
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 species
of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointeda 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 embarrassment and the disappointment and
annoyance of the organizers.
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. 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."
---------------------------------------------------------------------------------------------------------------------------------------------------[G.R. No. 71929 : December 4, 1990.]
192 SCRA 9
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO, Respondents.
NARVASA, J.:
Dr. Felipa Pablo an associate professor in the University of the Philippines, 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. 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." The program announced that she would be the
second speaker on the first day of the meeting. 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."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.

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 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, Italy, but only on the day after her scheduled
appearance and participation at the U.N. meeting there. 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.
After appropriate proceedings and trial, the Court of First Instance rendered judgment in Dr. Pablo's favor:
"(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. 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. That
increase it justified as follows:
"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.
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.
Under the Warsaw Convention, 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;
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;" and
3) delay in the transportation by air of passengers, luggage or goods.
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.
The Convention also purports to limit the liability of the carriers in the following manner:
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.
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
kilogram, 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 willful 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 willful misconduct," or "if the damage is (similarly) caused . . by any agent of the carrier acting within the
scope of his employment." 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, 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 willful misconduct.
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. 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 willful 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" 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." 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.In Pan American World Airways, Inc. v. I.A.C., 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. 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, or ousted a brown Asiatic from the plane to give his seat to a white
man, or gave the seat of a passenger with a confirmed reservation to another, or subjected a passenger to extremely rude, even barbaric
treatment, as by calling him a "monkey."
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.
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," or "where the court deems it
just and equitable."
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.
Cruz, Gancayco, Grio-Aquino and Medialdea, JJ., concur.
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. 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.
Teehankee, C.J., Narvasa and Paras, JJ., concur.
Gancayco, J., is on leave.
G.R. No. 78656 August 30, 1988
TRANS WORLD AIRLINES, petitioner,
vs.
COURT OF APPEALS and ROGELIO A. VINLUAN, respondents.
Nature of action:
Petition for review by the TWA contending 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.
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 York-Los 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 reconfirmed 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 former 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 attorneys 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. 3 Flight 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, firstserved 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 economy. 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.
Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.
G.R. No. 150843
March 14, 2003
CATHAY PACIFIC AIRWAYS, LTD., petitioner,

vs.
SPOUSES DANIEL VAZQUEZ and MARIA LUISA MADRIGAL VAZQUEZ, respondents.
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 forupgrading 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 self-imposed 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 CX905, 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 decision1 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 Appeals3 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.
Vitug, Carpio, and Azcuna, JJ., concur.
Ynares-Santiago, J., on leave.
SANTOS III vs. NORTHWEST ORIENT AIRLINE
VALIDITY OF WARSAW CONVENTION: Warsaw Convention is constitutional, a treaty commitment voluntarily assumed by the Philippine
government and, as such, has the force and effect of law in this country.
APPLICATION OF WARSAW CONVENTION: To all "international transportations of persons by aircraft for hire." Whether the
transportation is "international" is determined by the contract of the parties, which in the case of passengers is the ticket. When the
contract of carriage provides for the transportation of the passenger between certain designated terminals "within the territories of two
High Contracting Parties," the provisions of the Convention automatically apply and exclusively govern the rights and liabilities of the
airline and its passenger.

JURISDICTION OF WARSAW CONVENTION: Place of Destination vis-a-vis Agreed Stopping Place: The contract is a single undivided
operation, beginning with the place of departure and ending with the ultimate destination. The use of the singular in this expression
indicates the understanding of the parties to the Convention that every contract of carriage has one place of departure and one place of
destination. An intermediate place where the carriage may be broken is not regarded as a "place of destination."
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 non-performance 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 the 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 non-waiver 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 ofAranas 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 hereby 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,
24
1971. 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.
Narvasa, C.J., Gutierrez, Jr., Paras, Feliciano, Padilla, Bidin, Grio-Aquino, Medialdea, Regalado, Davide, Jr., Romero, Nocon and
Bellosillo, JJ., concur.

SAUDI ARABIAN AIRLINES V CA (MORADA)
297 SCRA 469
QUISUMBING; October 8, 1998
NATURE
Petition for certiorari to annul and set aside CA resolution and decision
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.
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and set aside the Resolution 1dated 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. . . .
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 Al-Gazzawi, 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 SAUDIA's 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 Defendant's 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 SAUDIA's 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
attorney's 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 SAUDIA's 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 30dated April 10, 1996, now also
assailed. It ruled that the Philippines is an appropriate forum considering that the Amended Complaint's 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 31dated 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 petitioner's 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 THIS 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 respondent's 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
then the instant case is properly a matter of domestic law. 37
35
and 21 36 of the Civil Code,
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.
xxx xxx xxx
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
reauested 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 sigh 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 SAUDIA's Manila manger,
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 Philippines 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 respondent's 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 respondent's 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 respondent's
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:
Sec. 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:
xxx xxx xxx

(8) In all other cases in which demand, exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses, and cots 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)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules of Court the venue, Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. [Now Regional Trial Court]
(a) xxx xxx xxx
(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 Morada's 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 court's
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 court's jurisdiction over
defendant's person, prayed for dismissal of the complaint on the ground that plaintiff's 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 latter's 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-oflaw 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 situs of the res, the place of celebration,
the place of performance, or the place of wrongdoing. 58
Note that one or more circumstances may be present to serve as the possible test for the determination of the applicable law.
"test factors" or "points of contact" or "connecting factors" could be any of the following:
59
These
(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 fori the law of the forum
is 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(Emphasis 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 respondent's 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. Petitioner's 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 petitioner's 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 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.
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 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 Philippine law.
Moreover, we find untenable petitioner's 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 court's denial of defendant's (herein petitioner's)
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 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 country's 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., Bellosillo, Vitug and Panganiban, JJ., concur.
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 non-resident 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 subject-matter 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 non-resident 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 non-resident 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 nonessential, 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 "many 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."
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 non-residents 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 nonresident'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 certificate 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 judgment 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 being quasi 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 from 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 interpleaders 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. 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 superfluous reasoning but from the nature of the relief prayed for.
For all the foregoing, petition is hereby denied, with costs against petitioner.
Avancea, C.J., Villa-Real, Imperial, Diaz and Concepcion, JJ., concur.
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.
Arellano, C.J., Cooper, Smith, Willard, Mapa, and Ladd, JJ., concur.
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.
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 our 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 bring 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.
Araullo, C.J., Street, Malcolm, Avancea, Villamor, Ostrand and Johns, JJ., concur.
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 ST-23 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 reluctant 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 petitioner-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 petitioner-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 petitioner-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 petitioner-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 petitioner-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. Petitioner-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 petitionersappellants.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Capistrano, JJ., concur.
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 non-resident
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 respondent-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 out-of-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 respondent-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 nonresident 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 out-of-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 non-resident 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 respondent-plaintiffs could not file a criminal case for libel against a non-resident defendant does not make Republic Act No. 4363
incongruous or 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
respondent-plaintiffs 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 respondentplaintiffs 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 apropos 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.
Concepcion, C.J., Dizon, Makalintal, Fernando, Teehankee, Barredo, Villamor and concur.
Castro, J., took no part.

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Airline to Tort Cases - 1

G.R. No. 152122

July 30, 2003

CHINA AIRLINES, petitioner,

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Did you say were not notified?

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

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

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

Atty. Fruto: Yes.

I believe I saw it.

This is what we call a computer reference.

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

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

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March 14, 2003

CATHAY PACIFIC AIRWAYS, LTD., petitioner,

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and 21 36 of the Civil Code,

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Conflics - Airline & Tort Cases

Conflics - Airline & Tort Cases