Airlines, Ltd.
(CAL for brevity) airline passenger ticket number 297:4402:004:278:5 for air
THIRD DIVISION
[G.R. No. 152122. July 30, 2003.]
CHINA AIRLINES, Petitioner, v. DANIEL CHIOK, Respondent.
DECISION
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.chanrob1es virtua1 1aw
1ibrary
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 Decision 2 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:jgc:chanrobles.com.ph
"WHEREFORE, premises considered, the assailed Decision dated July 5, 1991 of Branch 31,
Regional Trial Court, National Capital Judicial Region, Manila, in Civil Case No. 82-13690, is
hereby MODIFIED by deleting that portion regarding defendants-appellants’ liabilities for the
payment of the actual damages amounting to HK$14,128.80 and US$2,000.00 while all other
respects are AFFIRMED. Costs against defendants-appellants." 4
The assailed Resolution denied Petitioner’s Motion for Partial Reconsideration.
The Facts
The facts are narrated by the CA 5 as follows:jgc:chanrobles.com.ph
"On September 18, 1981, Daniel Chiok (hereafter referred to as Chiok) purchased from China
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 Chiok’s plane ticket and his luggage.
Lok called the attention of Carmen Chan (hereafter referred to as Carmen), PAL’s terminal
supervisor, and informed the latter that Chiok’s name was not in the computer list of
passengers. Subsequently, Carmen informed Chiok that his name did not appear in PAL’s
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 PAL’s Hongkong office and confronted PAL’s 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 former’s 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 PAL’s 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:jgc:chanrobles.com.ph
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against the defendants to
jointly and severally pay:chanrob1es virtual 1aw library
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 petitioner’s claim that it had merely acted
as an issuing agent for the ticket covering the Hong Kong-Manila leg of respondent’s journey.
In support of its Decision, the CA quoted a purported ruling of this Court in KLM Loyal Dutch
Airlines v. Court of Appeals 8 as follows:jgc:chanrobles.com.ph
"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 carrier’s 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
carrier’s 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 PAL’s 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 airline’s 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 RTC’s 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 latter’s 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 PAL’s 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. PAL’s Motion for
Reconsideration was denied with finality on January 21, 2002.
Only the appeal of CAL 11 remains in this Court.
Issues
In its Memorandum, petitioner raises the following issues for the Court’s
consideration:jgc:chanrobles.com.ph
"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 v. Court of Appeals,
Et Al., 65 SCRA 237 and in magnifying its misconduct by denying the petitioner’s 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 Court’s Ruling
The Petition is not meritorious.
First Issue:chanrob1es virtual 1aw library
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 Court’s 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 CA’s 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:jgc:chanrobles.com.ph
"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:jgc:chanrobles.com.ph
"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. 17 In 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 Court’s ponencia, when used to support a judgment or ruling, should be quoted
accurately. 19
Second Issue:chanrob1es virtual 1aw library
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
Court 20 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:jgc:chanrobles.com.ph
"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:jgc:chanrobles.com.ph
"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."cralaw virtua1aw
library
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.
". . . 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 and 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 petitioner’s 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 petitioner’s
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."25cralaw:red
Likewise, as the principal in the contract of carriage, the petitioner in British Airways v. Court
of Appeals 26 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:jgc:chanrobles.com.ph
"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.
x x x have acted fraudulently, with malice or in bad faith, the award of moral and exemplary
"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."
(Emphasis 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 carrier’s 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 airline’s 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:jgc:chanrobles.com.ph
". . . [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
damages, in addition to actual damages, is proper." 36 (Emphasis 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 PAL’s employees, particularly Chan, clearly fell short of the extraordinary standard
of care that the law requires of common carriers. 38 As narrated in Chan’s 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:jgc:chanrobles.com.ph
"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:chanrob1es virtual 1aw library
Q Did you say "were not notified?’
A I believe they were not, but believe me, I was on day-off.
Atty. Calica:chanrob1es virtual 1aw library
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 . . . 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
x x x
"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?
Q No, no, no. That was the ticket he used.
A 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 . . . look at them. Yes, it says O.K. . . .; but [there is] no validation.
Q O.K. Miss Chan what do you understand by these entries here R bar M N 6 V? 41
A 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 Airline’s 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. Chiok’s 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 . . . 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 don’t know." 42
x x x
"Q So, between six and eight o’clock 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.
Q That is what he told you. He insisted on that flight?
A Yes.
Q And did you not try to call up Swire Building — Philippine Airlines and verify indeed if Mr.
Chiok was there?

A Swire House building is not directly under Philippine Airlines. It is just an agency for selling
Philippine Airlines ticket. And besides around six o’clock they’re 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.
Q And also to confirm spaces for and on behalf of Philippine Airlines.
A 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 Court’s 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 airline’s breach of its contractual obligation.
48 We held that, as shown by the flow of telexes from one of the airline’s 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
respondent’s needs.
In Singson v. Court of Appeals, 49 we said:jgc:chanrobles.com.ph
". . . 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."cralaw virtua1aw library
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 respondent’s name had been entered in
PAL’s computer.
Since the status of respondent on Flight PR 311 was "OK," as a matter of right testified to by
PAL’s 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 carrier’s
offices where he was consistently assured of a seat thereon — PAL’s 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:chanrob1es virtual 1aw library
Propriety of the Cross-Claim
We now look into the propriety of the ruling on CAL’s 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 PAL’s employees who had acted negligently.
Section 8 of Rule 6 of the Rules of Court reads:jgc:chanrobles.com.ph
"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."cralaw virtua1aw library
For purposes of a ruling on the cross-claim, PAL is an indispensable party. In BA Finance
Corporation v. CA, 52 the Court stated:jgc:chanrobles.com.ph
". . .. An indispensable party is one whose interest will be affected by the court’s action in the
litigation, and without whom no final determination of the case can be had. The party’s 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.
x x x
"Without the presence of indispensable parties to a suit or proceeding, judgment of a court
cannot attain real finality."cralaw virtua1aw library
PAL’s interest may be affected by any ruling of this Court on CAL’s 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.chanrob1es virtua1 1aw 1ibrary
Although PAL was petitioner’s 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.
Puno, Corona and Carpio-Morales, JJ., concur.
Sandoval-Gutierrez, J., on official leave.

FIRST DIVISION
[G.R. No. 60501. March 5, 1993.]
CATHAY PACIFIC AIRWAYS, LTD, Petitioner, v. 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.:
This is a petition for review on certiorari of the decision of the Court of Appeals which
affirmed with modification that of the trial court by increasing the award of damages in favor
of private respondent Tomas L. Alcantara.
The facts are undisputed: On 19 October 1975, respondent Tomas L. Alcantara was a first class
passenger of petitioner Cathay Pacific Airways, Ltd. (CATHAY for brevity) on its Flight No.
CX-900 from Manila to Hongkong and onward from Hongkong to Jakarta on Flight No. CX-
711. The purpose of his trip was to attend the following day, 20 October 1975, a conference
with the Director General of Trade of Indonesia, Alcantara being the Executive Vice-President
and General Manager of Iligan Cement Corporation, Chairman of the Export Committee of the
Philippine Cement Corporation, and representative of the Cement Industry Authority and the
Philippine Cement Corporation. He checked in his luggage which contained not only his
clothing and articles for personal use but also papers and documents he needed for the
conference.
Upon his arrival in Jakarta, respondent discovered that his luggage was missing. When he
inquired about his luggage from CATHAY’s representative in Jakarta, private respondent was
told that his luggage was left behind in Hongkong. For this, respondent Alcantara was offered
$20.00 as "inconvenience money" to buy his immediate personal needs until the luggage could
be delivered to him.
His luggage finally reached Jakarta more than twenty four (24) hours after his arrival.
However, it was not delivered to him at his hotel but was required by petitioner to be picked up
by an official of the Philippine Embassy.
On 1 March 1976, respondent filed his complaint against petitioner with the Court of First
Instance (now Regional Trial Court) of Lanao del Norte praying for temperate, moral and
exemplary damages, plus attorney’s fees.
On 18 April 1976, the trial court rendered its decision ordering CATHAY to pay Plaintiff
P20,000.00 for moral damages, P5,000.00 for temperate damages, P10,000.00 for exemplary
damages, and P25,000.00 for attorney’s fees, and the costs. 1
Both parties appealed to the Court of Appeals. CATHAY assailed the conclusion of the trial
court that it was accountable for breach of contract and questioned the 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. 2 At any rate, it is not impressed with merit. Petitioner breached its contract of carriage
with private respondent when it failed to deliver his luggage at the designated place and time, it
being the obligation of a common carrier to carry its passengers and their luggage safely to
their destination, which includes the duty not to delay their transportation, 3 and the evidence
shows that petitioner acted fraudulently or in bad faith.
Moral damages predicated upon a breach of contract of carriage may only be recoverable in
instances where the mishap results in death of a passenger, 4 or where the carrier is guilty of
fraud or bad faith. 5
In the case at bar, both the trial court and the appellate court found that CATHAY was grossly
negligent and reckless when it failed to deliver the luggage of petitioner at the appointed place
and time. We agree. CATHAY alleges that as a result of mechanical trouble, all pieces of
luggage on board the first aircraft bound for Jakarta were unloaded and transferred to the
second aircraft which departed an hour and a half later. Yet, as the Court of Appeals noted,
petitioner was not even aware that it left behind private respondent’s luggage until its attention
was called by the Hongkong Customs authorities. More, bad faith or otherwise improper
conduct may be attributed to the employees of petitioner. While the mere failure of CATHAY
to deliver respondent’s luggage at the agreed place and time did not ipso facto amount to
willful misconduct since the luggage was eventually delivered to private respondent, albeit
belatedly, 6 We are persuaded that the employees of CATHAY acted in bad faith. We refer to
the deposition of Romulo Palma, Commercial Attache of the Philippine Embassy at Jakarta,
who was with respondent Alcantara when the latter sought assistance from the employees of
CATHAY. This deposition was the basis of the findings of the lower courts when both
awarded moral damages to private Respondent. Hereunder is part of Palma’s testimony —
"Q: What did Mr. Alcantara say, if any?
A. Mr. Alcantara was of course . . . . I could understand his position. He was furious for the
experience because probably he was thinking he was going to meet the 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.’" 7
Indeed, the aforequoted testimony shows that the language and conduct of petitioner’s
representative towards respondent Alcantara was discourteous or arbitrary to justify the grant
of moral damages. The CATHAY representative was not only indifferent and impatient; he
was also rude and insulting. He simply advised Alcantara to buy anything he wanted. But even
that was not sincere because the representative knew that the passenger was limited only to
$20.00 which, certainly, was not enough to purchase comfortable clothings appropriate for an
executive conference. Considering that Alcantara was not only a revenue passenger but even For sure, the latter underwent profound distress and anxiety, and the fear of losing the
paid for a first class airline accommodation and accompanied at the time by the Commercial opportunity to fulfill the purpose of his trip. In fact, for want of appropriate clothings for the
Attache of the Philippine Embassy who was assisting him in his problem, petitioner or its occasion brought about by the delay of the arrival of his luggage, to his embarrassment and
agents should have been more courteous and accommodating to private respondent, instead of consternation respondent Alcantara had to seek postponement of his pre-arranged conference
giving him a curt reply, "What can we do, the baggage is missing. I cannot do anything . . . with the Director General of Trade of the host country.
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 In one case, 13 this Court observed that a traveller would naturally suffer mental anguish,
apprehensions. To compound matters, CATHAY refused to have the luggage of Alcantara anxiety and shock when he finds that his luggage did not travel with him and he finds himself
delivered to him at his hotel; instead, he was required to pick it up himself and an official of in a foreign land without any article of clothing other than what he has on.
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 Thus, respondent is entitled to moral and exemplary damages. We however find the award by
class accommodation. 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,
Where in breaching the contract of carriage the defendant airline is not shown to have acted as well as the attorney’s fees of P25,000.00 considering that petitioner’s act or omission has
fraudulently or in bad faith, liability for damages is limited to the natural and probable compelled Alcantara to litigate with third persons or to incur expenses to protect his interest.
consequences of the breach of obligation which the parties had foreseen or could have 14
reasonably foreseen. In that case, such liability does not include moral and exemplary
damages. 8 Conversely, if the defendant airline is shown to have acted fraudulently or in bad WHEREFORE, the assailed decision of respondent Court of Appeals is AFFIRMED with the
faith, the award of moral and exemplary damages is proper. 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
However, respondent Alcantara is not entitled to temperate damages, contrary to the ruling of exemplary damages is maintained as reasonable together with the attorney’s fees of
the court a quo, in the absence of any showing that he sustained some pecuniary loss. 9 It P25,000.00. The moral and exemplary damages shall earn interest at the legal rate from 1
cannot be gainsaid that respondent’s luggage was ultimately delivered to him without serious March 1976 when the complaint was filed until full payment.
or appreciable damage.
SO ORDERED.
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. Cruz, Griño-Aquino and Quiason, JJ., concur.
We do not agree. As We have repeatedly held, although the Warsaw Convention has the force
and effect of law in this country, being a treaty commitment assumed by the Philippine
government, said convention does not operate as an exclusive enumeration of the instances for
declaring a carrier liable for breach of contract of carriage or as an absolute limit of the extent
of that liability. 10 The Warsaw Convention declares the carrier liable for damages in the
enumerated cases and under certain limitations. 11 However, it must not be construed to
preclude the operation of the Civil Code and other pertinent laws. It does not regulate, much
less exempt, the carrier from liability for damages for violating the rights of its passengers
under the contract of carriage, 12 especially if wilfull misconduct on the part of the carrier’s
employees is found or established, which is clearly the case before Us. For, the Warsaw
Convention itself provides in Art. 25 that —

"(1) The carrier shall not be entitled to avail himself of the provisions of this convention which
exclude or limit his liability, if the damage is caused by his wilfull misconduct or by such
default on his part as, in accordance with the law of the court to which the case is submitted, is
considered to be equivalent to wilfull misconduct."cralaw virtua1aw library

(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."cralaw virtua1aw library

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.

FIRST DIVISION
[G.R. No. 71929. December 4, 1990.]
ALITALIA, Petitioner, v. INTERMEDIATE APPELLATE COURT and FELIPA E.
PABLO, Respondents.
Santiago & Santiago for Petitioner.
Alfredo L. Bentulan for Private Respondent.
DECISION
NARVASA, J.:
Dr. Felipa Pablo — an associate professor in the University of the Philippines, 1 and a research
grantee of the Philippine Atomic Energy Agency — was invited to take part at a meeting of the
Department of Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in
Food and Agriculture of the United Nations in Ispra, Italy. 2 She was invited in view of her
specialized knowledge in "foreign substances in food and the agriculture environment." She
accepted the invitation, and was then scheduled by the organizers, to read a paper on "The Fate
of Radioactive Fusion Products Contaminating Vegetable Crops." 3 The program announced
that she would be the second speaker on the first day of the meeting. 4 To fulfill this
engagement, Dr. Pablo booked passage on petitioner airline, ALITALIA.
She arrived in Milan on the day before the meeting in accordance with the itinerary and time
table set for her by ALITALIA. She was however told by the ALITALIA personnel there at
Milan that her luggage was "delayed inasmuch as the same . . . (was) in one of the succeeding
flights from Rome to Milan." 5 Her luggage consisted of two (2) suitcases: one contained her
clothing and other personal items; the other, her scientific papers, slides and other research
material. But the other flights arriving from Rome did not have her baggage on board.
By then feeling desperate, she went to Rome to try to locate her bags herself. There, she
inquired about her suitcases in the domestic and international airports, and filled out the forms
prescribed by ALITALIA for people in her predicament. However, her baggage could not be
found. Completely distraught and discouraged, she returned to Manila without attending the
meeting in Ispra, Italy.chanrobles.com : virtual law library
Once back in Manila she demanded that ALITALIA make reparation for the damages thus
suffered by her. ALITALIA offered her "free airline tickets to compensate her for any alleged
damages. . . ." She rejected the offer, and forthwith commenced the action 6 which has given
rise to the present appellate proceedings.
As it turned out, Prof. Pablo’s suitcases were in fact located and forwarded to Ispra, 7 Italy, but
only on the day after her scheduled appearance and participation at the U.N. meeting there. 8
Of course Dr. Pablo was no longer there to accept delivery; she was already on her way home
to Manila. And for some reason or other, the suitcases were not actually restored to Prof. Pablo
by ALITALIA until eleven (11) months later, and four (4) months after institution of her
action. 9
After appropriate proceedings and trial, the Court of First Instance rendered judgment in Dr.
Pablo’s favor: 10
"(1) Ordering the defendant (ALITALIA) to pay . . . (her) the sum of TWENTY THOUSAND
PESOS (P20,000.00), Philippine Currency, by way of nominal damages;
(2) Ordering the defendant to pay . . . (her) the sum of FIVE THOUSAND PESOS
(P5,000.00), Philippine Currency, as and for attorney’s fees; (and)
(3) Ordering the defendant to pay the costs of the suit."cralaw virtua1aw library
ALITALIA appealed to the Intermediate Appellate Court but failed to obtain a reversal of the
judgment. 11 Indeed, the Appellate Court not only affirmed the Trial Court’s decision but also
increased the award of nominal damages payable by ALITALIA to P40,000.00. 12 That
increase it justified as follows: 13
"Considering the circumstances, as found by the Trial Court and the negligence committed by
defendant, the amount of P20,000.00 under present inflationary conditions as awarded . . . to
the plaintiff as nominal damages, is too little to make up for the plaintiff’s frustration and
disappointment in not being able to appear at said conference; and for the embarrassment and
humiliation she suffered from the academic community for failure to carry out an official
mission for which she was singled out by the faculty to represent her institution and the
country. After weighing carefully all the considerations, the amount awarded to the plaintiff for
nominal damages and attorney’s fees should be increased to the cost of her round trip air fare
or at the present rate of peso to the dollar at P40,000,00."cralaw virtua1aw library
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.:chanrob1es virtual 1aw library
1) that the Warsaw Convention should have been applied to limit ALITALIA’S liability; and
2) that there is no warrant in fact or in law for the award to Dr. Pablo of nominal damages and
attorney’s fees. 14
In addition, ALITALIA postulates that it was error for the Intermediate Appellate Court to
have refused to pass on all the assigned errors and in not stating the facts and the law on which
its decision is based. 15
Under the Warsaw Convention, 16 an air carrier is made liable for damages for:chanrob1es
virtual 1aw library
1) the death, wounding or other bodily injury of a passenger if the accident causing it took
place on board the aircraft or in the course of its operations of embarking or disembarking; 17
2) the destruction or loss of, or damage to, any registered luggage or goods, if the occurrence
causing it took place during the carriage by air;" 18 and
3) delay in the transportation by air of passengers, luggage or goods. 19
In these cases, it is provided in the Convention that the "action for damages, however, founded,
can only be brought subject to conditions and limits set out" therein. 20
The Convention also purports to limit the liability of the carriers in the following manner: 21
1. In the carriage of passengers the liability of the carrier for each passenger is limited to the
sum of 250,000 francs . . . Nevertheless, by special contract, the carrier and the passenger may
agree to a higher limit of liability.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
2. a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a
sum of 250 francs per kilogramme, unless the passenger or consignor has made, at the time
when the package was handed over to the carrier, a special declaration of interest in delivery at
destination and has paid a supplementary sum if the case so requires. In that case the carrier
will be liable to pay a sum not exceeding the declared sum, unless he proves that sum is greater
than the actual value to the consignor at delivery.
b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any object
contained therein, the weight to be taken into consideration in determining the amount to which
the carrier’s liability is limited shall be only the total weight of the package or packages
concerned. Nevertheless, when the loss, damage or delay of a part of the registered baggage or
cargo, or of an object contained therein, affects the value of other packages covered by the
same baggage check or the same air way bill, the total weight of such package or packages
shall also be taken into consideration in determining the limit of liability.
3. As regards objects of which the passenger takes charge himself the liability of the carrier is
limited to 5000 francs per passenger.
4. The limits prescribed . . shall not prevent the court from awarding, in accordance with its
own law, in addition, the whole or part of the court costs and of the other expenses of litigation
incurred by the plaintiff. The foregoing provision shall not apply if the amount of the damages
awarded, excluding court costs and other expenses of the litigation, does not exceed the sum
which the carrier has offered in writing to the plaintiff within a period of six months from the
date of the occurrence causing the damage, or before the commencement of the action, if that is
later.
The Warsaw Convention however denies to the carrier availment "of the provisions which
exclude or limit his liability, if the damage is caused by his wilful misconduct or by such
default on his part as, in accordance with the law of the court seized of the case, is considered
to be equivalent to wilful misconduct," or "if the damage is (similarly) caused . . by any agent
of the carrier acting within the scope of his employment." 22 The Hague Protocol amended the
Warsaw Convention by removing the provision that if the airline took all necessary steps to
avoid the damage, it could exculpate itself completely, 23 and declaring the stated limits of
liability not applicable "if it is proved that the damage resulted from an act or omission of the
carrier, its servants or agents, done with intent to cause damage or recklessly and with
knowledge that damage would probably result." The same deletion was effected by the
Montreal Agreement of 1966, with the result that a passenger could recover unlimited damages
upon proof of wilful misconduct. 24
The Convention does not thus operate as an exclusive enumeration of the instances of an
airline’s liability, or as an absolute limit of the extent of that liability. Such a proposition is not
borne out by the language of the Convention, as this Court has now, and at an earlier time,
pointed out. 25 Moreover, slight reflection readily leads to the conclusion that it should be
deemed a limit of liability only in those cases where the cause of the death or injury to person,
or destruction, loss or damage to property or delay in its transport is not attributable to or
attended by any wilful misconduct, bad faith, recklessness, or otherwise improper conduct on
the part of any official or employee for which the carrier is responsible, and there is otherwise
no special or extraordinary form of resulting injury. The Convention’s provisions, in short, do
not "regulate or exclude liability for other breaches of contract by the carrier" 26 or misconduct
of its officers and employees, or for some particular or exceptional type of damage. Otherwise,
"an air carrier would be exempt from any liability for damages in the event of its absolute
refusal, in bad faith, to comply with a contract of carriage, which is absurd." 27 Nor may it for
a moment be supposed that if a member of the aircraft complement should inflict some
physical injury on a passenger, or maliciously destroy or damage the latter’s property, the
Convention might successfully be pleaded as the sole gauge to determine the carrier’s liability
to the passenger. Neither may the Convention be invoked to justify the disregard of some
extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond
the limits set by said Convention. It is in this sense that the Convention has been applied, or
ignored, depending on the peculiar facts presented by each case.chanrobles virtual lawlibrary
In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw Convention was
applied as regards the limitation on the carrier’s liability, there being a simple loss of baggage
without any otherwise improper conduct on the part of the officials or employees of the airline
or other special injury sustained by the passenger.
On the other hand, the Warsaw Convention has invariably been held inapplicable, or as not
restrictive of the carrier’s liability, where there was satisfactory evidence of malice or bad faith
attributable to its officers and employees. 29 Thus, an air carrier was sentenced to pay not only
compensatory but also moral and exemplary damages, and attorney’s fees, for instance, where
its employees rudely put a passenger holding a first-class ticket in the tourist or economy
section, 30 or ousted a brown Asiatic from the plane to give his seat to a white man, 31 or gave
the seat of a passenger with a confirmed reservation to another, 32 or subjected a passenger to
extremely rude, even barbaric treatment, as by calling him a "monkey." 33
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the
employees of petitioner airline; and Dr. Pablo’s luggage was eventually returned to her,
belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some
special species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced her
baggage and failed to deliver it to her at the time appointed — a breach of its contract of
carriage, to be sure — with the result that she was unable to read the paper and make the
scientific presentation (consisting of slides, autoradiograms or films, tables and tabulations) Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
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."cralaw virtua1aw library

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.chanrobles virtual
lawlibrary

This Court also agrees that respondent Court of Appeals correctly awarded attorney’s fees to
Dr. Pablo, and the amount of P5,000.00 set by it is reasonable in the premises. The law
authorizes recovery of attorney’s fees inter alia where, as here, "the defendant’s act or omission
has compelled the plaintiff to litigate with third persons or to incur expenses to protect his
interest," 34 or "where the court deems it just and equitable." 35

WHEREFORE, no error being perceived in the challenged decision of the Court of Appeals, it
appearing on the contrary to be entirely in accord with the facts and the law, said decision is
hereby AFFIRMED, with costs against the petitioner.

SO ORDERED.

FIRST DIVISION
[G.R. No. L-61418. September 24, 1987.]
KOREAN AIRLINES CO., LTD., Petitioner, v. 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.
DECISION
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.chanrobles.com : virtual law
library
The issues are mainly factual. They have been resolved by the trial court, which has been
affirmed by the respondent court, except as to the award of damages, which has been reduced.
We see no reason why the decision had to be elevated to us.
Time and again we have stressed that this Court is not a trier of facts. 1 We leave these matters
to the lower courts, which have more opportunity and facilities to examine these matters. We
have no jurisdiction as a rule to reverse their findings. 2 The exception invoked is that there is a
clear showing of a grave abuse of discretion on their part, but we do not see it here.
We are satisfied from the findings of the respondent court (and of the trial court) that the
private respondent was, in the language of the airline industry, "bumped off." She had a
confirmed ticket. She arrived at the airport on time. However, she was not allowed to board
because her seat had already been given to another passenger. As a result, she suffered
damages for which the petitioner should be held liable.
Specifically, petitioner Korean Airlines (herein after 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.chanrobles lawlibrary : rednad
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 8 instead 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.chanrobles.com:cralaw:red
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.

FIRST DIVISION
[G.R. No. 78656. August 30, 1988.]
TRANS WORLD AIRLINES, Petitioner, v. COURT OF APPEALS and ROGELIO A.
VINLUAN, Respondents.
Guerrero & Torres Law Offices for Petitioner.
Angara, Abello, Concepcion, Regala & Cruz for Private Respondent.
The Solicitor General for public Respondent.
SYLLABUS
1. CIVIL LAW; DAMAGES; MORAL AND EXEMPLARY DAMAGES; BASIS FOR THE
AWARD THEREOF IN THE CASE AT BAR. — 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. 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.
2. ID.; ID.; MORAL DAMAGES; PRESENCE OF BAD FAITH JUSTIFIES AWARD
THEREOF. — 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.
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.
DECISION
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."cralaw virtua1aw library
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 Cauns 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:jgc:chanrobles.com.ph
"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 complaint was filed until fully paid.
Correspondingly, defendant’s counterclaim is dismissed.
Costs against the defendant.
SO ORDERED."cralaw virtua1aw library
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:jgc:chanrobles.com.ph
"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 attorney’s fees to P50,000.00 without interest, the rest of the decision is
affirmed. Costs against Appellant.
SO ORDERED."cralaw virtua1aw library
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, first-served basis. An
announcement was allegedly made to all passengers in the entire terminal of the airport
advising them to get boarding cards for Flight No. 6041 to San Francisco and that the first ones
getting them would get first preference as to seats in the aircraft. It denied declining to give any
explanation for the downgrading of private respondent as well as the discourteous attitude of
Mr. Braam.
On the other hand, private respondent asserts that he did not hear such announcement at the
terminal and that he was among the early passengers to present his ticket for check-in only to
be informed that there was no first class seat available for him and that he had to be
downgraded.
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, Griño-Aquino and Medialdea, JJ., concur.

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 Cauns 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

FIRST DIVISION
[G.R. No. 150843. March 14, 2003.]
CATHAY PACIFIC AIRWAYS, LTD., Petitioner, v. SPOUSES DANIEL VAZQUEZ
and MARIA LUISA MADRIGAL VAZQUEZ, Respondents.
DECISION
DAVIDE, JR., C.J.:
Is an involuntary upgrading of an airline passenger’s 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.chanrob1es virtua1 1aw 1ibrary
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:chanrob1es virtual 1aw library
Cathay is a common carrier engaged in the business of transporting passengers and goods by
air. Among the many routes it services is the Manila-Hongkong-Manila course. As part of its
marketing strategy, Cathay accords its frequent flyers membership in its Marco Polo Club. The
members enjoy several privileges, such as priority for upgrading of booking without any extra
charge whenever an opportunity arises. Thus, a frequent flyer booked in the Business Class has
priority for upgrading to First Class if the Business Class Section is fully booked.
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez are
frequent flyers of Cathay and are Gold Card members of its Marco Polo Club. On 24
September 1996, the Vazquezes, together with their maid and two friends Pacita Cruz and
Josefina Vergel de Dios, went to Hongkong for pleasure and business.
For their return flight to Manila on 28 September 1996, they were booked on Cathay’s 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 Cathay’s 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 Cathay’s
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.chanrob1es virtua1 1aw 1ibrary
In his reply of 14 October 1996, Mr. Larry Yuen, the assistant to Cathay’s Country Manager
Argus Guy Robson, informed the Vazquezes that Cathay would investigate the incident and get
back to them within a week’s time.
On 8 November 1996, after Cathay’s 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 attorney’s 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. Chiu’s 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]."cralaw virtua1aw library
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, Cathay’s 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. Vazquez’s
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 Cathay’s
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 attorney’s fees. Hence, it prayed for the
dismissal of the complaint and for payment of P100,000 for exemplary damages and P300,000
as attorney’s 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.chanrob1es virtua1 1aw 1ibrary
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 Cathay’s policy of upgrading the seat accommodation of its Marco Polo
Club members when an opportunity arises. The upgrading of the Vazquezes to First Class was
done in good faith; in fact, the First Class Section is definitely much better than the Business
Class in terms of comfort, quality of food, and service from the cabin crew. They also testified
that overbooking is a widely accepted practice in the airline industry and is in accordance with
the International Air Transport Association (IATA) regulations. Airlines overbook because a
lot of passengers do not show up for their flight. With respect to Flight CX-905, there was no
overall overbooking to a degree that a passenger was bumped off or downgraded. Yuen and
Robson also stated that the demand letter of the Vazquezes was immediately acted upon.
Reports were gathered from their office in Hong Kong and immediately forwarded to their
counsel Atty. Remollo for legal advice. However, Atty. Remollo begged off because his
services were likewise retained by the Vazquezes; nonetheless, he undertook to solve the
problem in behalf of Cathay. But nothing happened until Cathay received a copy of the
complaint in this case. For her part, Ms. Chiu denied that she shouted or used foul or impolite
language against the Vazquezes. Ms. Barrientos testified on the amount of attorney’s fees and
other litigation expenses, such as those for the taking of the depositions of Yuen and Chiu.
In its decision 1 of 19 October 1998, the trial court found for the Vazquezes and decreed as
follows:cralaw : red
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:chanrob1es virtual 1aw
library
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) Attorney’s 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 Cathay’s revenues. Cathay’s 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 attorney’s 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 former’s 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.chanrob1es
virtua1 1aw 1ibrary
However, the Court of Appeals was not convinced that Ms. Chiu shouted at, or meant to be
discourteous to, Dr. Vazquez, although it might seemed that way to the latter, who was a
member of the elite in Philippine society and was not therefore used to being harangued by
anybody. Ms. Chiu was a Hong Kong Chinese whose fractured Chinese was difficult to
understand and whose manner of speaking might sound harsh or shrill to Filipinos because of
cultural differences. But the Court of Appeals did not find her to have acted with deliberate
malice, deceit, gross negligence, or bad faith. If at all, she was negligent in not offering the
First Class accommodations to other passengers. Neither can the flight stewardess in the First
Class Cabin be said to have been in bad faith when she failed to assist Dr. Vazquez in lifting
his baggage into the overhead storage bin. There is no proof that he asked for help and was
refused even after saying that he was suffering from "bilateral carpal tunnel syndrome." Anent
the delay of Yuen in responding to the demand letter of the Vazquezes, the Court of Appeals
found it to have been sufficiently explained.
The Vazquezes and Cathay separately filed motions for a reconsideration of the decision, both
of which were denied by the Court of Appeals.
Cathay seasonably filed with us this petition in this case. Cathay maintains that the award for
moral damages has no basis, since the Court of Appeals found that there was no "wanton,
fraudulent, reckless and oppressive" display of manners on the part of its personnel; and that
the breach of contract was not attended by fraud, malice, or bad faith. If any damage had been
suffered by the Vazquezes, it was damnum absque injuria, which is damage without injury,
damage or injury inflicted without injustice, loss or damage without violation of a legal right,
or a wrong done to a man for which the law provides no remedy. Cathay also invokes our
decision in United Airlines, Inc. v. Court of Appeals 3 where we recognized that, in accordance
with the Civil Aeronautics Board’s 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 attorney’s fees,
for lack of proof of overbooking exceeding ten percent or of bad faith on the part of the airline
carrier.chanrob1es virtua1 1aw 1ibrary
On the other hand, the Vazquezes assert that the Court of Appeals was correct in granting
awards for moral and nominal damages and attorney’s 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.chanrob1es virtua1 1aw 1ibrary
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 passenger’s 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
Cathay’s 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.chanrob1es virtua1 1aw
1ibrary
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
Cathay’s 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.chanrob1es
virtua1 1aw 1ibrary
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:chanrob1es virtual 1aw library
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:chanrob1es virtual 1aw library
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 defendant’s 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.chanrob1es virtua1 1aw 1ibrary
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 attorney’s fees. 17
The most that can be adjudged in favor of the Vazquezes for Cathay’s breach of contract is an
award for nominal damages under Article 2221 of the Civil Code, which reads as
follows:chanrob1es virtual 1aw library
Article 2221 of the Civil Code provides:chanrob1es virtual 1aw library
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 Cathay’s 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:chanrob1es virtual 1aw library
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.chanrob1es virtua1 1aw 1ibrary
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:chanrob1es virtual 1aw
library

We are not amused but alarmed at the lower court’s 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 attorney’s 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."cralaw virtua1aw library

The presiding judge of the lower court is enjoined to hearken to the Supreme Court’s
admonition in Singson v. CA (282 SCRA 149 [1997]), where it said:chanrob1es virtual 1aw
library

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 v. CA (187 SCRA 763 [1990], where it was held:chanrob1es virtual
1aw library

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 attorney’s fees are set aside and deleted, and the award for
nominal damages is reduced to P5,000.chanrobles virtual law library

No pronouncement on costs.

SO ORDERED.

Vitug, Carpio and Azcuna, JJ., concur.

Ynares-Santiago, J., is on leave.


EN BANC
[G.R. No. 101538. June 23, 1992.]
AUGUSTO BENEDICTO SANTOS III, represented by his father and legal guardian,
Augusto Benedicto Santos, Petitioner, v. NORTHWEST ORIENT AIRLINES and
COURT OF APPEALS, Respondents.
DECISION
CRUZ, J.:
This case involves the proper interpretation of Article 28(1) of the Warsaw Convention,
reading as follows:chanrob1es virtual 1aw library
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:chanrob1es virtual 1aw
library
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:chanrob1es virtual 1aw
library
(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 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:chanrob1es virtual
1aw library
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. here 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:chanrobles virtual lawlibrary
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:chanrob1es
virtual 1aw library
(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 a 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 damage "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:chanrob1es virtual 1aw library
. . . 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."cralaw virtua1aw library
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 state 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."cralaw virtua1aw library
Article 32 provides:chanrob1es virtual 1aw library
Article 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:chanrob1es virtual 1aw
library
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 v. Intermediate Court of Appeals: 13
Legally, of course, the lack of proper venue was deemed waived by the petitioners when they
failed to invoke it in their original motion to dismiss. Even so, the motivation of the private
respondent should have been taken into account by both the trial judge and the respondent
court in arriving at their decisions.
The petitioner also invokes KLM Royal Dutch Airlines v. RTC, 14 a decision of our Court of
Appeals, where it was held that Article 28(1) is a venue provision. However, the private
respondent avers that this was in effect reversed by the case of Aranas v. United Airlines, 15
where the same court held that Article 28(1) is a jurisdictional provision. Neither of these cases
is finding on this Court, of course, nor was either of them appealed to us. Nevertheless, we here
express our own preference for the later case of Aranas insofar as its pronouncements on
jurisdiction conform to the judgment we now make in this petition.
B. The petitioner claims that the lower court erred in not ruling that under Article 28(1) of the
Warsaw Convention, this case was properly filed in the Philippines, because Manila was the
destination of the plaintiff.
The petitioner contends that the facts of this case are analogous to those in Aanestad v. Air
Canada. 16 In that case, Mrs. Silverberg purchased a round-trip ticket from Montreal to Los
Angeles and back to Montreal. The date and time of departure were specified but not of the
return flight. The plane crashed while en 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:chanrob1es virtual 1aw library
. . . 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 Log Angeles on a certain flight, a certain tine 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:chanrob1es virtual 1aw
library
. . . 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 he a "place of destination."cralaw virtua1aw library

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 v. Giliberto,
19 it was held:chanrob1es virtual 1aw library
The plaintiffs’ first contention is that Air France is domiciled in the United States. They say
that the domicile of a corporation incudes 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:chanrob1es virtual 1aw library
. . . 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 Conventio’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 not 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."cralaw virtua1aw library
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 allege 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:chanrob1es virtual 1aw library
. . . 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," is 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 . . .
x x x
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(1) of the Convention,
which reads as follows:chanrob1es virtual 1aw library
Article 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 which 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 Court can only sympathize with the petitioner, who must prosecute his claims in the
United States rather than in his own country at less 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 is 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, Griño-Aquino, Medialdea,
Regalado, Davide, Jr., Romero, Nocon and Bellosillo, JJ., concur.

THE ISSUE OF PROTECTION TO MINORS

The petitioner calls our attention to Article 24 of the Civil Code, which states:chanrob1es
virtual 1aw library

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:chanrob1es virtual 1aw library

In the event a US citizen temporarily residing abroad purchases a Rome to New York to Rome
ticket on a foreign air carrier which is generally subject to the jurisdiction of the US, Article 28
would prevent that person from suing the carrier in the US in a "Warsaw Case" even though
such a suit could be brought in the absence of the Convention.

The proposal was incorporated in the Guatemala Protocol amending the Warsaw Convention,
which was adopted at Guatemala City on March 8, 1971. 24 But it is still ineffective because it
has not yet been ratified by the required minimum number of contracting parties. Pending such
ratification, the petitioner will still have to file his complaint only in any of the four places
designated by Article 28(1) of the Warsaw Convention.

The proposed amendment bolsters the ruling of this Court that a citizen does not necessarily
have the right to sue in his own courts simply because the defendant airline has a place of
business in his country.chanrobles.com:cralaw:red

FIRST DIVISION
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 1 dated September 27, 1995 and the Decision 2 dated April 10, 1996 of the
Court of Appeals 3 in CA-G.R. SP No. 36533, 4 and the Orders 5 dated August 29, 1994 6 and
February 2, 1995 7 that were issued by the trial court in Civil Case No. Q-93-18394.8
The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision 9, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for its airlines
based in Jeddah, Saudi Arabia. . . .
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 lune 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.
29
On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition for
Review with Prayer for Temporary Restraining Order dated October 13, 1995.
However, during the pendency of the instant Petition, respondent Court of Appeals rendered
the Decision 30 dated April 10, 1996, now also assailed. It ruled that the Philippines is an
appropriate forum considering that the Amended 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 31 dated April 30, 1996, given due course by this Court. After
both parties submitted their Memoranda, 32 the instant case is now deemed submitted for
decision.
Petitioner SAUDIA raised the following issues:
I
The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on Article
21 of the New Civil Code since the proper law applicable is the law of the Kingdom of Saudi
Arabia inasmuch as this case involves what is known in private international law as a "conflicts
problem". Otherwise, the Republic of the Philippines will sit in judgment of the acts done by
another sovereign state which is abhorred.
II
Leave of court before filing a supplemental pleading is not a jurisdictional requirement.
Besides, the matter as to absence of leave of court is now moot and academic when this
Honorable Court required the respondents to comment on 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 35 and 21 36 of the Civil Code, then the instant case is properly a matter of domestic
law. 37
Under the factual antecedents obtaining in this case, there is no dispute that the interplay of
events occurred in two states, the Philippines and Saudi Arabia.
As stated by private respondent in her Amended Complaint 38 dated June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines corporation
doing business in the Philippines. It may be served with summons and other court processes at
Travel Wide Associated Sales (Phils.). Inc., 3rd Floor, Cougar Building, 114 Valero St.,
Salcedo Village, Makati, Metro Manila.
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-of-law theories should intrinsically advance
both notions of justice and predictability, they do not always do so. The forum is then faced
with the problem of deciding which of these two important values should be stressed. 54
Before a choice can be made, it is necessary for us to determine under what category a certain
set of facts or rules fall. This process is known as "characterization", or the "doctrine of
qualification". It is the "process of deciding whether or not the facts relate to the kind of
question specified in a conflicts rule." 55 The purpose of "characterization" is to enable the
forum to select the proper law. 56
Our starting point of analysis here is not a legal relation, but a factual situation, event, or
operative fact. 57 An essential element of conflict rules is the indication of a "test" or
"connecting factor" or "point of contact". Choice-of-law rules invariably consist of a factual
relationship (such as property right, contract claim) and a connecting factor or point of contact,
such as the 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. 59 These "test factors" or "points of contact" or
"connecting factors" could be any of the following:
(1) The nationality of a person, his domicile, his residence, his place of sojourn, or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed to be situated. In
particular, the lex situs is decisive when real rights are involved;
(4) the place where an act has been done, the locus actus, such as the place where a contract
has been made, a marriage celebrated, a will signed or a tort committed. The lex loci actus is
particularly important in contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the place of performance of
contractual duties, or the place where a power of attorney is to be exercised;
(6) the intention of the contracting parties as to the law that should govern their agreement,
the lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or done. The lex 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.


EN BANC
[G.R. No. 46631. November 16, 1939. ]
IDONAH SLADE PERKINS, Petitioner, v. ARSENIO P. DIZON, Judge of First Instance
of Manila, EUCENE 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.
SYLLABUS
1. SERVICE BY PUBLICATION; NON-RESIDENT DEFENDANT. — Section 398 of the
Code of Civil Procedure provides that when a nonresident 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 may be made by
publication.
2. ID.; ID. — The meaning of the provision of section 398 of the Code of Civil Procedure has
been fully explained in El Banco Español Filipino v. Palanca (37 Phil., 921), and the rules laid
down therein are reiterated.
3. ID; ID.; ACTION "QUASI IN REM" ; CASE AT BAR. — In the instant case, there can be
no question that the action brought by E. A. P. in his amended complaint against the petitioner,
I. S. P., seeks to exclude her from any interest in a property located in the Philippines. That
property consists in certain shares of stock 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 certificates evidencing the ownership of those shares are within or without that
jurisdiction. (Fletcher Cyclopedia Corporations, Permanent ed., vol. 11, p. 95.) Under these
circumstances, Held: 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., 503.)
4. ID.; ID.; ID.; ID. — The action being quasi in rem, the Court of First Instance of Manila has
jurisdiction to try the same even if it can acquire no 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 the 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 been 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 nonresident. In the amended complaint filed by E. A. P., 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.
DECISION
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 H. 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 may be made by
publication.
We have fully explained the meaning of this provision in El Banco Español Filipino v. Palanca,
37 Phil., 921, wherein we laid down the following rules:chanrob1es virtual 1aw library
(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 voluntarily, 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 decision, and of other 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 v. Raher, 35 L. R. A. [N. S. ], 292; see also 5 L. R. A. 585;
35 L. R. A. L. R. 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."cralaw virtua1aw library
(4) As before stated, in an action in rem or quasi in rem against a non-resident defendant,
jurisdiction over his person is non-essential, and if the law requires in such case that the
summons upon the defendant be served by publication, it is merely to satisfy the constitutional
requirement of due process. If any be said, in this connection, that "many reported cases can be
cited in which it is assumed that the question of the sufficiency of publication or notice in a
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 mounded 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 language in which the courts have expounded their ideas."cralaw virtua1aw library
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
own 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 non-resident’s
obligations to its own citizens, and the inquiry can then be carried only to the extent necessary
to control the disposition of the property. If the non-resident has no property in the State, there
is nothing upon which the tribunals can adjudicate." (Pennoyer v. Neff, supra.)
In the instant case, there can be no question that the action brought by Eugene Arthur Ferkins
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 stock 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 certificates
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):jgc:chanrobles.com.ph
"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 larger and more general senses 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."cralaw virtua1aw library
The action being quasi in rem, the Court of First Instance of Manila has jurisdiction to try the
same even if it can acquire no 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 the 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 been 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 he 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, and
thereupon 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 interpleader simply disclaims any personal interest in
the controversy. What would be the situation if, after the claimants 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
now. 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 res adjudicata, lis
pendens and lack of jurisdiction 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 her 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 of the foregoing, petition is hereby denied, with costs against petitioner.
Avanceña, C.J., Villa-Real, Imperial, Diaz and Concepcion, JJ., concur.

EN BANC
[G.R. No. 496. December 31, 1902. ]
THE UNITED STATES, Complainant-Appellant, v. WILLIAM FOWLER ET
AL., Defendants-Appellees.
Assistant Attorney-General Constantino, for Appellant.
William Lane O’Neill, for Appellees.
SYLLABUS
1. CRIMINAL LAW; JURISDICTION; CRIMES ON HIGH SEAS. — Courts of First
Instance of the Philippines have no jurisdiction to take cognizance of crimes committed on the
high seas on board of a transport or other vessel not registered or licensed in the Philippines.
DECISION
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
vessels flying the flag of the United States has been vested in the Courts 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 was 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 bard 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.

FIRST DIVISION
[G.R. No. L-18924. October 19, 1922. ]
THE PEOPLE OF THE PHILIPPINE ISLANDS, Plaintiff-Appellant, v. WONG CHENG
(alias WONG CHUN), Defendant-Appellee.
Attorney-General Villa-Real for Appellant.
Edgardo Gutierrez Repide for Appellee.
SYLLABUS
1. JURISDICTION; FOREIGN MERCHANT VESSELS; CRIMES COMMITTED
ABOARD. — 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 vessel 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 whose territory they were committed. Of
these 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 the matter are authority in the Philippines
which is now a territory of the United States.
2. ID., ID., CRIME OF SMOKING OPIUM. — The mere possession of opium aboard a
foreign vessel in transit was held by this court in United States v. Look Chaw (18 Phil., 573),
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 had in mind in enacting the aforesaid repressive statute, and is, therefore, triable in
our courts.
DECISION
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 to said court has or has no jurisdiction over
said offense.
The point at issue is whether the courts of the Philippines have jurisdiction over a crime, like
the one herein involved, committed aboard merchant vessels anchored in our jurisdictional
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 vessel
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 whose 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 case of The Schooner Exchange v. M’Faddon and Others (7 Cranch [U. S. ]. 116), Chief
Justice Marshall said:jgc:chanrobles.com.ph
". . . When merchant vessels enter for the purposes of trade, it would be obviously inconvenient
and dangerous to society, and would subject the law to continual infraction, and the
government to degradation, if such individual or merchants did not owe temporary and local
allegiance, and were not amenable to the jurisdiction of the country. . . ."cralaw virtua1aw
library
In United States v. Bull (15 Phil., 7), this court held:jgc:chanrobles.com.ph
". . . 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
tree 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. . . ."cralaw virtua1aw library
It is true that in certain cases the comity of nations is observed, as in Mali and Wildenhus v. But to smoke opium within our territorial limits, even though aboard a foreign merchant ship,
Keeper of the Common Jail (120 U. S., 1), wherein it was said that:jgc:chanrobles.com.ph 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
". . . The principle which governs the whole matter is this: Disorders which disturb only the Legislature has in mind in enacting the aforesaid repressive statute. Moreover, as the Attorney-
peace of the ship or those on board are to be dealt with exclusively by the sovereignty of the General aptly observes:jgc:chanrobles.com.ph
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 ". . . The idea of a person smoking opium securely on board a foreign vessel at anchor in the
all times to determine to which of the two jurisdictions a particular act of disorder belongs. port of Manila in open defiance of the local authorities, who are impotent to lay hands on him,
Much will undoubtedly depend on the attending circumstances of the particular case, but all is simply subversive of public order. It requires no unusual stretch of the imagination to
must concede that felonious homicide is a subject for the local jurisdiction, and that if the conceive that a foreign ship may come into the port of Manila and allow or solicit Chinese
proper authorities are proceeding with the case in the regular way the consul has no right to residents to smoke opium on board."cralaw virtua1aw library
interfere to prevent it."cralaw virtua1aw library
The order appealed from is revoked and the cause ordered remanded to the court of origin for
Hence in United States v. Look Chaw (18 Phil., 573), this court held further proceedings in accordance with law, without special finding as to costs. So ordered.
that:jgc:chanrobles.com.ph
Araullo, C.J., Street, Malcolm, Avanceña, Villamor, Ostrand, and Johns, JJ., concur.
"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 vessel 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 vessel 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."cralaw virtua1aw library

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:jgc:chanrobles.com.ph

"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.

EN BANC
[G.R. No. L-24170. February 28, 1969.]
ILLUH ASAALI, HATIB ABDURASID, INGKOH BANTALA, BASOK INGKIN, and
MOHAMMAD BANTALLA, Petitioners, v. THE COMMISSIONER OF
CUSTOMS, Respondent.
SYLLABUS
1. ADMINISTRATIVE LAW AND PROCEDURE; BUREAU OF CUSTOMS;
JURISDICTION AND SUPERVISION OVER MARITIME ZONE, SEAS AND INLAND
WATERS. — Section 1141 of the Revised Administrative Code insofar as pertinent provides:
"For the due and effective exercise of the powers conferred by law in the Bureau of Customs,
and to the extent requisite therefore, said Bureau shall have the right of supervision and police
authority over all seas within the jurisdiction of the Government of the Republic of the
Philippines and over all coasts, ports, harbors, bays, rivers, and inland waters navigable from
the sea." The present legal statutory provision is found in the Tariff and Customs Code in the
Philippines in almost identical language except for the explicit reference to jurisdiction being
exercised over airports.
2. ID.; ID.; SECTION 1141, REVISED ADMINISTRATIVE CODE NOT GIVEN
RESTRICTIVE SIGNIFICANCE. — Section 1141 of the Revised Administrative Code, while
apparently lending support to the contention of petitioners in their motion for reconsideration,
should not be given a restrictive significance, especially one which would negate the power
exercised by the Commissioner of Customs in this case in view of the undeniable fact of
smuggling. If, under the circumstances disclosed, the government would be rendered powerless
and its effort to protect itself from the evils of smuggling nugatory, then a competence, the
existence of which as pointed out in Church v. Hubbart (2 Cranch 187 (1804), "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," is not subject to doubt in accordance with an accepted International Law
doctrine, would be taken away from it. We should be loathe to arrive at such a result,
repugnant as it is, to the constitutional precept that among the basic postulates of our policy is
the adoption of "the generally accepted principles of international law as part of the law of the
nation."cralaw virtua1aw library
3. ID.; ID.; SEIZURE; JURISDICTION OF CUSTOMS AUTHORITIES TO SEIZE
VESSELS AND ITS CARGOES OUTSIDE TERRITORIAL WATERS, JUSTIFIED IN
INSTANT CASE. — There is an equally valid ground for so construing the Administrative
Code provision in question as to justify the seizure herein made. So it would necessarily follow
from the decisive facts as found by the Court of Tax Appeals. Considering, as the language of
the late Judge Luciano so emphatically stressed, that even for "a simpleton or a perennial
optimist" the thought that these vessels "were probably not bound for a Philippine port," would
be "quite irrational" for Filipino sailors "manning five Philippine vessels (would not) 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 . . ." There is
thus more than ample justification for indulging in the legal fiction that the seizure conducted
under such peculiar circumstances could be considered as having taken place within Philippine
waters. Any other view would render nugatory a conceded governmental power.
RESOLUTION*
FERNANDO, J.:
Our decision of December 16, 1968, sustaining the action taken by respondent Commissioner
of Customs, the case reaching us in view of its affirmance by the Court of Tax Appeals,
upholding the validity of the seizure of the vessels and cargo in question, done outside our
territorial jurisdiction, a decision intended, according to our opinion, to lend support to the
governmental "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," is under fire
from petitioners. In their printed motion for reconsideration, dated January 14, 1969,
substantially a rehash of the points previously raised by them, there is an insistence on the
alleged lack of jurisdiction of the Customs authorities justifying such seizure on the high seas.
It may not be amiss, therefore, to give further thought to such a jurisdictional
issue.chanroblesvirtuallawlibrary
According to our decision of December 16, 1968, Petitioners, "owners of five sailing vessels
and the cargo loaded therein declared forfeited by respondent Commissioner of Customs for
smuggling," raised the principal question of "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." The answer to such a
question depended on the finding of facts of the Court of Tax Appeals, well-nigh decisive in its
effect. For we are bound by what was found by the Court of Tax Appeals, the case having
reached us in a petition for the review of its decision of November 19, 1964, the opinion being
penned by the late Associate Judge Augusto M. Luciano.
As noted in our decision: "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 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.’"

It should not escape notice that the jurisdictional question was vigorously pressed before the
Court of Tax Appeals. It was not deemed persuasive. As noted in its opinion:" ‘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.’"
As a matter of fact, our decision likewise quoted the vigorous language employed by the late
Judge Luciano in rejecting such a plea, one that must have been prompted by his sense of
realism. As he so emphatically expressed it:" ‘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.’"
We did not point out that our decision affirming that of the Court of Tax Appeals could be
based correctly on such a finding. No other outcome could be expected. It is rare, as was noted,
for us to substitute our own discretion for the Court of Tax Appeals. Certainly, the situation
before us was not one of them.
Both the appreciation of the relevant facts and the appraisal made cannot be impugned.
Nonetheless, we gave more than a passing consideration to the allegation of absence of
jurisdiction and upheld the action of the Commissioner of Customs as affirmed by the Court of
Tax Appeals. Why we did so was explained in our opinion thus: "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. . . 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."cralaw virtua1aw library
There was an added reason for the conclusion reached by us. Thus: "Moreover, it is a well-
settled doctrine of International Law that goes back to Chief Justice Marshall’s opinion in
Church v. Hubbart, 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.’"
Petitioner, undeterred, would, invoking Section 1141 of the Revised Administrative Code,
press anew the jurisdictional question. Thus: "The seizure of the said vessels and their cargoes,
on the high seas, by the Collector, under whose direction it was effected, constitutes a gross
misuse of government powers, which is not only not legally justified in our system of
government, but in violation of our laws. Even under the present stress brought upon our
government by the serious problem of smuggling said misuse of government powers is
condemned by the very system of our government." 1
Section 1141 of the Revised Administrative Code insofar as pertinent provides: "For the due
and effective exercise of the powers conferred by law in the Bureau of Customs, and to the
extent requisite therefor, said Bureau shall have the right of supervision and police authority
over all seas within the jurisdiction of the Government of the Republic of the Philippines and
over all coasts, ports, harbors, bays, rivers, and inland waters navigable from the sea." 2 The
present legal statutory provision is found in the Tariff and Customs Code in the Philippines in
almost identical language except for the explicit reference to jurisdiction being exercised over
airports. 3
The above section, while apparently lending support to the contention of petitioners in their
motion for reconsideration, should not be given a restrictive significance, especially one which
would negate the power exercised by the Commissioner of Customs in this case in view of the
undeniable fact of smuggling. If, under the circumstances disclosed, the government would be
rendered powerless and its effort to protect itself from the evils of smuggling nugatory, then a
competence, the existence of which as above pointed out in Church v. Hubbart 4 is not subject
to doubt in accordance with an accepted International Law doctrine, would be taken away from
it. We should be loathe to arrive at such a result, repugnant as it is, to the constitutional precept
that among the basic postulates of our policy is the adoption of "the generally accepted
principles of international law as part of the law of the nation." 5
There may be need of a more extensive citation from the opinion of Justice Marshall in Church
v. Hubbart. Thus: "That the law of nations prohibits the exercise of any act of authority over a
vessel in the situation of the Aurora, and that this seizure is, on that account, a mere marine
trespass, not within the exception, cannot be admitted. To reason from the extent of protection
a nation will afford to foreigners to the extent of the means it may use for its own security does
not seem to be perfectly correct. It is opposed by principles which are universally
acknowledged. 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. . . These means do not
appear to be limited within any certain marked boundaries, which remain the same at all times
and in all situations." That Church v. Hubbart is a leading case is attested by its being cited
almost textually in such leading case books as Hudson, 6 Fenwick 7 and Briggs. 8
There is an equally valid ground for so construing the Administrative Code provision in
question as to justify the seizure herein made. So it would necessarily follow from the decisive
facts as found by the Court of Tax Appeals. Considering, as the language of the late Judge
Luciano so emphatically stressed, that even for "a simpleton or a perennial optimist" the
thought that these vessels "were probably not bound for a Philippine port," would be "quite
irrational" for Filipino sailors "manning five Philippine vessels [would not] 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 . . ." There is
thus more than ample justification for indulging in the legal fiction that the seizure conducted
under such peculiar circumstances could be considered as having taken place within Philippine
waters. Any other view would render nugatory a conceded governmental power.

In the recent case of Tayag v. Benguet Consolidated, Inc., 9 in order to frustrate an attempt of
the domicillary administrator, the County Trust Company of New York, from refusing to honor
a valid order of a probate court, we held that the shares of stocks in the possession of such
domicillary administrator could be considered as lost contrary to the admitted fact, so that new
shares of stocks of the Benguet Consolidated, Inc. could be issued in their place for delivery to
the ancillary administrator in the Philippines. As we pointed out in our opinion: "It may be
admitted of course that such alleged loss as found by the lower court did not correspond
exactly with the facts. To be more blunt, the quality of truth may be lacking in such a
conclusion arrived at. It is to be remembered however, again to borrow from Frankfurter, ‘that
fictions which the law may rely upon in the pursuit of legitimate ends have played an important
part in its development.’" Nor did we stop there. Thus: "Speaking of the common law in its
earlier period, Cardozo could state that fictions ‘were devices to advance the ends of justice
[even if] clumsy and at times offensive.’ Some of them persisted even to the present, that
eminent jurist, noting ‘the quasi-contract, the adopted child, the constructive trust, all of
flourishing vitality, to attest the empire of ‘as if today.’ He likewise noted ‘a class of fictions of
another order, the fiction which is a working tool of thought, but which at times hides itself
from view till reflection and analysis have brought it to the light.’" 10

The other point raised regarding the denial of due process was already passed upon by us in our
decision. After quoting the applicable statutory prescriptions, we stated in our opinion: "From
the above recital of the legal provisions relied upon it would appear most clearly that the due
process question raised is unsubstantial. Certainly, the facts on which the seizure was based
were not unknown to petitioners-appellants. On those facts the liability of the vessels and
merchandise under the above terms of the statute would appear to be undeniable. The action
taken then by the Commissioner of Customs was in accordance with law." There is nothing in
the motion for reconsideration that should call for a different conclusion.

Our decision closed on this note: "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." We reiterate such a view. Authority, reason and policy are in unison
in support of the decision thus reached.chanroblesvirtual|awlibrary

WHEREFORE, the motion for reconsideration is denied.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Ruiz Castro, Capistrano,
Teehankee, and Barredo, JJ., concur.

Sanchez, J., did not take part.


EN BANC
[G.R. No. L-28882. May 31, 1971.]
TIME, INC., Petitioner, v. 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.
SYLLABUS
1. CIVIL LAW; DAMAGES; LIBEL; "MULTIPLE PUBLICATION" and "SINGLE
PUBLICATION" RULES DIFFERENTIATED. — 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, . .
."cralaw virtua1aw library
2. REMEDIAL LAW; CIVIL PROCEDURE; VENUE OF ACTIONS; LIBEL; LIMITATION
OF CHOICES OF VENUE INTRODUCED BY REPUBLIC ACT 4363; PURPOSE. — The
limitation of the choices of venue, as introduced into the Penal Code through its amendment 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.’’ The intent of the law is clear: a libeled public official must 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 respondents, Mayor Villegas of Manila and Undersecretary of Finance
Enrile, who were the offended parties.
3. ID.; SPECIAL CIVIL ACTIONS; DENIAL OR DEFERMENT OF ACTION ON MOTION
TO DISMISS FOR LACK OF JURISDICTION CORRECTIBLE BY WRIT OF
CERTIORARI OR PROHIBITION. —" ‘ 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 v. 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., v. Ibañez, Et Al., 50 Off. Gaz. 1036;
Enrique v. Macadaeg, Et Al., 47 Off. Gaz. 1207; see also San Beda College v. CIR, 51 Off.
Gaz. 5636.)’ (University of Sto Tomas v. Villanueva, L-13748, 30 October 1959.)" Similarly,
in Edward J. Nell Co. v. Cubacub, L-20843, 23 June 1965. 14 SCRA 419, This Court held:" ‘. .
. It is a settled rule 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." ‘
4. ID.; REMEDY PROVIDED BY STATUTE FOR ENFORCEMENT OF RIGHT
EXCLUSIVE; JURISDICTION CONFERRED UPON PARTICULAR COURT LIKEWISE
EXCLUSIVE; EXCEPTION. — 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.
5. COMMERCIAL LAW; PRIVATE CORPORATIONS; DOCTRINE THAT FOREIGN
CORPORATION NOT LICENSED TO DO BUSINESS CANNOT MAINTAIN SUIT NOT
APPLICABLE TO CASE AT BAR. — Private respondents also invoke the ruling in Marshall-
Wells Co. v. Elser & Co., Inc. 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. v. Cebu Stevedoring Co., Inc. that "where . . . the law denies to a
foreign corporation the right to maintain suit unless it has previously complied with a certain
requirement, then such compliance or the fact that the suing corporation is exempt therefrom,
becomes a necessary averment in the complaint." We fail to see how these doctrines can be a
propos in the case at bar, since the petitioner is not "maintaining any suit" but is merely
defending one against itself; it did not file any complaint but only a corollary defensive petition
to prohibit the lower court from further proceeding with a suit that it had no jurisdiction to
entertain.
6. ID.; ID.; FOREIGN CORPORATION’S FAILURE TO AVER ITS LEGAL CAPACITY
TO INSTITUTE PETITION FOR PROHIBITION NOT FATAL. — "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, 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."
DECISION
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 v. 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 Rockefeller 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 Philippines. 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:jgc:chanrobles.com.ph
"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:jgc:chanrobles.com.ph
"(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."cralaw
virtua1aw library
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.chanroblesvirtuallawlibrary
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 harrasments and inconvenience, as well as
disruption of public service do not appear indubitable . . ."cralaw virtua1aw library
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 re affirming the deferment, and the writ of attachment are sought to be
annulled in the petition.chanrobles virtual lawlibrary
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:chanrob1es virtual 1aw library
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:jgc:chanrobles.com.ph
"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:chanrob1es virtual 1aw library
‘ARTICLE 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.chanroblesvirtuallawlibrary:red
‘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 this law.
‘x x x
"SECTION 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."cralaw virtua1aw library
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 with 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 . . ."cralaw virtua1aw library
The complaint lodged in the court of Rizal by respondents does not allege that the libelous
article was printed and first published in the province of Rizal and, since the respondents-
plaintiffs are public officers with offices in Manila at the time of the commission of the alleged
offense, it is clear that the only place left for them wherein to file their action is the Court of
First Instance of Manila.
The limitation of the choices of venue, as introduced into the Penal Code through its
amendments by Republic Act 4363, was intended "to minimize or limit the filing of 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
must 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 labeled 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.chanrobles virtualawlibrary
chanrobles.com:chanrobles.com.ph
But respondents-plaintiffs argue that Republic Act No. 4363 is not applicable where the action
is against non-resident defendant, as petitioner Time, Inc., for several reasons. They urge that,
in enacting Republic Act No. 4363, Congress did not intend to protect non-resident defendants
as shown by Section 3, which provides for the effectivity of the statute only if and when the
"newspapermen in the Philippines" have organized a "Philippine Press Council" whose
function shall be to promulgate a Code of Ethics for "them" and "the Philippine press" ; and
since a non-resident defendant is not in a position to comply with the conditions imposed for
the effectivity of the statute, such defendant may not invoke its provisions; that a foreign
corporation is not inconvenienced by an 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.chanrobles virtual lawlibrary
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 Philippines Press Council has been organized is made a pre-condition to the effectivity of
the entire Republic Act No. 4363, and no terms are employed therein to indicate that the law
can or will be effective only as to some, but not all, of those that may be charged with libeling
our public officers.
The assertion that a foreign corporation or a non-resident defendant is not inconvenienced by
an out-of-town suit is irrelevant and untenable, for venue and jurisdiction are not dependent
upon convenience or inconvenience to a party; and moreover, venue was fixed under Republic
Act No. 4363, pursuant to the basic policy of the law that is, as previously stated, to protect the
interest of the public service when the offended party is a public officer, by minimizing as
much as possible any interference with the discharge of his duties.
That respondents-plaintiffs could not file a criminal case for libel against a non-resident
defendant does not make Republic Act No. 4363 incongruous of absurd, for such inability to
file a criminal case against a non-resident natural person equally exists in crimes other than
libel. It is a fundamental rule of international jurisdiction that no state can by its laws, and no
court which is only a creature of the state, can by its judgments or decrees, directly bind or
affect property or persons beyond the limits of that state.5 Not only this, but if the accused is a
corporation, no criminal action can lie against it,6 whether such corporation be resident or non-
resident. At any rate, the case filed by respondents-plaintiffs is not a criminal cases but a civil
case for damages.chanrobles.com:cralaw:red
50 Am. Jur. 2d 659 differentiates the "multiple publication" and "single publication" rules
(invoked by private respondents) to be as follows:jgc:chanrobles.com.ph
"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. . ."cralaw virtua1aw library
These rules are not pertinent in the present case, because the number of causes of action that
may be available to the respondents-plaintiffs is not here in issue. We are here confronted by a
specific venue statute, conferring jurisdiction in cases of libel against public officials to
specified courts, and no other. The rule is that where a statute creates a right and provides a
remedy for its enforcement, the remedy is exclusive; and where it confers jurisdiction upon a
particular court, that jurisdiction is likewise exclusive, unless otherwise provided. Hence, the
venue provisions of Republic Act No 4363 should be deemed mandatory for the party bringing
the action, unless the question of venue should be waived by the defendant, which was not the
case here. Only thus can the policy of the Act be upheld and maintained. Nor is there any
reason why the inapplicability of one alternative venue should result in rendering the other
alternative also inapplicable.chanroblesvirtualawlibrary
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:jgc:chanrobles.com.ph
"SECTION 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. v. 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. v. Cebu
Stevedoring Co., Inc.8 that "where . . . the law denies to a foreign corporation the right to
maintain suit unless it has previously complied with a certain requirement, then such
compliance or the fact that the suing corporation is exempt therefrom, becomes a necessary
averment in the complaint." We fail to see how these doctrines can be a propos in the case at
bar, since the petitioner is not "maintaining any suit" but is merely defending one against itself;
it did not file any complaint but only a corollary defensive petition to prohibit the lower court
from further proceeding with a suit that it had no jurisdiction to entertain.
Petitioner’s failure to aver its legal capacity to institute the present petition is not fatal, for . . .
"A foreign corporation may, by writ of prohibition, seek relief against the wrongful assumption
of jurisdiction. And a foreign corporation seeking a writ of prohibition against further
maintenance of a suit, on the ground of want of jurisdiction, 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 v. 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. v. Ibañez, Et Al., 50 Off. Gaz. 1036; Enrique v. Macadaeg, Et
Al., 47 Off. Gaz. 1207; see also San Beda College v. CIR, 51 Off. Gaz. 5636.)’ (University of
Sto. Tomas v. Villanueva, L-13748, 30 October 1959.)"
Similarly, in Edward J. Nell Co. v. Cubacub, L-20843, 23 June 1965, 14 SCRA 419, this Court
held:jgc:chanrobles.com.ph
"‘. . . It is a settled rule 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 v. Fernando, 83 Phil. 943; Administrator of
Hacienda Luisita Estate v. Alberto, L-12133, 21 October 1958.chanroblesvirtuallawlibrary:red

Summing up, We hold:chanrob1es virtual 1aw library

(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 of the city or province where the offended functionary held office
at the time of the 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 correctible 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.chanroblesvirtual|awlibrary

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo, Villamor and
Makasiar, JJ., concur.

Castro, J., took no part.