Conflict of
Laws
Atty. Fernando B. Alonzo
Professor
Contracts…
Contracts…
-
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The forms and solemnities of contracts,
wills, and other public instruments shall be
governed by the laws of the country in
which they are executed.
When the acts referred to are executed
before the diplomatic or consular officials
of the Republic of the Philippines in a
foreign
country,
the
solemnities
established by PH laws shall be observed
in their execution. [Art. 17, NCC]
Contracts
Lex Loci Contractus
General Rule: The law of the place where the
contract is made or entered into governs with
respect to its nature and validity, obligation and
interpretation.
Exceptions:
1. When parties agree as to the choice of law;
2. Lex rei sitae – in case of contracts affecting
land or title thereto
3. Minimum/substantial contact(s) in the forum
State [CFI v. Basso]
A.
B. Choice of law by the parties; exceptions
General Rule: The parties to a contract may select
the law by which it is to be governed.
Exceptions:
1. Where the foreign law chosen is contrary to
peremptory provisions dealing with matters
impressed with public interests;
2. Where the relationship of the contracting
parties affects public interest in either country;
and
3. Where the substantial contacts arising therefrom
point to the law of another country as the
applicable law.
Contract stipulation
Contract Stipulation: PH Law or Law of
Registry, whichever is higher [Norse
Management Co. vs. NSB, GR No. L-54204, 30
Sept, 1982]
Facts:
The deceased, husband of the complainant herein,
was employed as a Second Engineer by respondents and
served as such in the vessel, “MT Cherry Earl.” While at sea,
he suffered apoplectic stroke and died four days later.
Complainant widow thus filed a claim for death benefits and
contended that in determining the amount of the claim, the
law of Singapore, where the vessel is registered should
considered.
In their contract, there is an stipulation that any claim
shall be governed by the law of PH or law of the country
where the vessel is registered, whichever is higher.
For its part, respondents argue that PH laws should
govern considering that the law of SG was never presented
and the NSB cannot take judicial notice of foreign laws.
Contract Stipulation: PH Law or Law of
Registry, whichever is higher [Norse
Management Co. vs. NSB, GR No. L-54204, 30
Sept, 1982]
Issue:
WON the law of SG ought to be
applied in the case.
Contract Stipulation: PH Law or Law of
Registry, whichever is higher [Norse
Management Co. vs. NSB, GR No. L-54204, 30
Sept, 1982]
Held:
SC held in the affirmative.
On the issue that SG Law was not
presented
before
NSB,
SC
held
that
administrative and quasi-judicial body is not
bound strictly by technical rules. It has always
been the policy of the board that in cases of
valid claims for benefits on account of injury or
death while in the course of the employment,
the law of the country in which the vessel is
registered shall be considered.
Contract Stipulation: PH Law or Law of
Registry, whichever is higher [Norse
Management Co. vs. NSB, GR No. L-54204, 30
Sept, 1982]
Held:
Moreover, the employment agreement
stipulated that compensation shall be paid
under PH Law or the law of registry of the
vessel, whichever is higher. Thus, the amount
under SG law being higher, the same should
apply in accordance with the stipulation.
Contract is law of the parties
Contract is law of the parties [Bagong Filipinas
Overseas Corp. Vs. NLRC, GR No. L-66006, 28 Feb
1985]
Facts:
Pancho was hired by Bagong Filipinas
Overseas Corp. as an oiler on board the M/V
Olivine, a vessel registered in Hongkong (HK).
While the vessel was docked at Sweden, he
suffered a cerebral stroke and was rushed to the
hospital. Later, he was repatriated to PH where he
died later on. His widow filed for compensation
benefits with the NSB, which board awarded her
disability compensation benefits under the
employment contract. NLRC, however, modified
the decision and instead applied the HK Law,
awarding a higher amount of benefits to the
widow.
Contract is law of the parties [Bagong Filipinas
Overseas Corp. Vs. NLRC, GR No. L-66006, 28
Feb 1985]
Issue:
WON
applied?
the
HK
law
should
be
Take Note:
1. Vessel is registered under HK Laws;
2. There was an agreement as to how
much is the compensation for
disability
Contract is law of the parties [Bagong Filipinas
Overseas Corp. Vs. NLRC, GR No. L-66006, 28
Feb 1985]
Held:
SC held that the employment contract
should be applied, not HK Law. The case of
Norse cannot be a precedent because it was
expressly stipulated in the employment contract
in that case that the workmen’s compensation
payable to the employee should be in
accordance with the PH Law or the law of the
country where the vessel is registered,
whichever is higher. No such stipulation in this
case.
When stipulation is Contrary to Public
Policy
When stipulation is Contrary to Public Policy
[Pakistan International Airlines Corp, vs. Ople
GR No. 61594, 28 Sept, 1990]
Facts:
Pakistan International, a foreign corporation
licensed to do business in the PH, executed 2
contracts of employment with private respondents
for their services as flight stewardess. The contract
had a term of 3 years but also with the stipulation
that, notwithstanding any provisions to the contrary,
the employer reserves the right to pre-terminate it at
any time. Before the expiration of the 3-year term,
Pakistan International sent notices of dismissal to
private complainants, prompting them to file this
case for illegal dismissal and recovery of wages and
other benefits.
When stipulation is Contrary to Public Policy
[Pakistan International Airlines Corp, vs. Ople
GR No. 61594, 28 Sept, 1990]
Issue:
WON the stipulation in the contract as
to the right of the employer to terminate
employees at any time should be
respected?
When stipulation is Contrary to Public Policy
[Pakistan International Airlines Corp, vs. Ople
GR No. 61594, 28 Sept, 1990]
Held:
SC held in the negative.
A contract freely entered into should be
respected since it is a law between the parties.
The principle of party autonomy in contracts is
not, however, an absolute principle. The rule in
Article 1306, NCC, is that the contracting parties
may establish such stipulations as they may
deem convenient, “provided” they are not
contrary to law, morals, good customs, public
order and public policy.
When stipulation is Contrary to Public Policy
[Pakistan International Airlines Corp, vs. Ople
GR No. 61594, 28 Sept, 1990]
Held:
Stipulation 1 - term of 3 years;
Stipulation 2- notwithstanding any provisions
to the contrary, the employer reserves the
right to pre-terminate it at any time.
Being contrary to Public Policy, respondents
are entitled to compensation.
C. No agreement on choice of law
If there is no agreement as to the
choice of law, the courts of the forum will
apply any of the conflict of laws rules, such
as lex loci contractus/celebrationis or State
of the Most Significant Relationship Theory.
In cases involving claims of Filipino
workers on account of injury or death
during employment or in the course of
services in a vessel owned by the foreign
employer, the law of registry of the vessel, if
favorable to the worker, is applied.
D. No agreement or treaty
The plaintiff makes the choice of the
forum, or the court where the action or
complaint is filed. Thus, in Saudi Arabia
Airlines, there being no choice of law clause
in the employment contract, the plaintiff
chose to file her case before the courts of
her home country and the PH Court applied
the State of the Most Significant
Relationship Theory to resolve the case in
her favor.
E. ‘Lex Loci contractus’ or Place of Performance
The law of the country where
the contract is to be performed
generally governs the liability for
breach of contract by the obligor to
perform his part of the obligation.
The Warsaw Convention
F. The Warsaw Convention
Otherwise known as the Convention
for the Unification of Certain Rules Relating
to International Transportation by Air, which
took effect on 13 February 1933.
- Where there is a treaty or convention
to which the Philippines is a signatory on
where an action coming within the purview
of such treaty or convention may be filed,
the plaintiff must follow the provisions
thereof on the matter.
F. The Warsaw Convention
Limited Liability of International Carriers –
limited to US$20.00 per kilo unless a higher value is
declared in advance and corresponding additional
charges are paid.
Exceptions:
1.
When the airline itself is at fault;
2.
When the airline or its employees commit
wrongful act or are negligent;
3.
When there is waiver on the part of the airline;
4.
When delay is caused by force majeure and the
airline is guilty of neglect or malfeasance.
Limited Liability in International Carriers;
Exception, Airlines’ Negligence
Limited Liability in International Carriers;
Exception, Airlines’ Negligence [Sabena
Belgian World Airlines vs. CA; GR No. 104685,
14 March 1996]
Facts:
Ma. Paula Augustin was a passenger
of Sabena Airlines. Her flight plan was from
Casablanca to Manila with stopover in
Brussels, Belgium. When she arrived in
Manila, she found out that her luggage was
missing. After reporting the matter to
defendant, she was notified that the
Brussels Office of the airlines found it and
that they will be shipping it to Manila.
Limited Liability in International Carriers;
Exception, Airlines’ Negligence [Sabena
Belgian World Airlines vs. CA; GR No. 104685,
14 March 1996]
Facts:
However, she was informed that her
luggage was lost for the second time. Thus,
this claim for damages in an amount
equivalent to the value of the luggage. But
defendant denied liability, citing Augustin’s
own negligence, and that if they are liable,
arguendo, their liability is limited only to
US$20.00 per kilo due to Augustin’s failure to
declare a higher value.
Limited Liability in International Carriers;
Exception, Airlines’ Negligence [Sabena
Belgian World Airlines vs. CA; GR No. 104685,
14 March 1996]
Issue:
WON the airline is entitled to
limited liability.
Limited Liability in International Carriers;
Exception, Airlines’ Negligence [Sabena
Belgian World Airlines vs. CA; GR No. 104685,
14 March 1996]
Held:
SC Held in the negative.
The loss of said baggage of the private
respondent happened not only once but twice. This
underscores the wanton negligence and lack of
care on the part of the carrier. Because of such, this
forecloses whatever rights petitioner might have had
to the possible limitation of liabilities enjoyed by
international air carriers
under the Warsaw
Convention.
PH Law shall govern.
When Airline not liable: force majeure,
exceptions
When Airline not liable: force majeure,
exceptions [Japan Airlines vs. CA, GR No.
118664, 7 Aug. 1998]
Facts:
On 13 June 1991, private respondent
Jose Miranda, his wife and child boarded
JAL from Los Angeles, CA to Manila. As an
incentive for travelling on JAL, they were
given overnight stop over at Narita, Japan,
at the airlines’ expense, thereafter
proceeding to Manila the following day.
When Airline not liable: force majeure,
exceptions [Japan Airlines vs. CA, GR No.
118664, 7 Aug. 1998]
Facts:
However, while in Japan, MT.
Pinatubo in the PH erupted, causing
unrelenting ash fall and rendering NAIA
inaccessible to airline traffic. Hence, their
flight to Manila was delayed indefinitely. At
first, JAL rebooked all the Manila –bound
passengers and offered to pay for their
hotel expenses for their unexpected
overnight stay.
When Airline not liable: force majeure,
exceptions [Japan Airlines vs. CA, GR No.
118664, 7 Aug. 1998]
Facts:
However, because of NAIA’s indefinite
closure, their flight was again cancelled. AT
this point, JAL informed them that it would
no longer defray their hotel and
accommodation expenses during their stay
in Narita. When they eventually got to
Manila, they commenced an action for
damages against JAL.
When Airline not liable: force majeure,
exceptions [Japan Airlines vs. CA, GR No.
118664, 7 Aug. 1998]
Issue:
Whether JAL, as common carrier, has
the obligation to shoulder the hotel and
meal expenses of its stranded passengers
until they have reached their final
destination, even if the delay were caused
by “force majeure.”
When Airline not liable: force majeure,
exceptions [Japan Airlines vs. CA, GR No.
118664, 7 Aug. 1998]
Held:
The general rule is that a party is not liable if the nonperformance is due to force majeure. Since the eruption of the Mt.
Pinatubo is such force majeure, JAL therefore cannot be charged for
whatever losses or damages incurred. To hold JAL, in the absence of
bad faith or negligence, liable for the amenities of its stranded
passengers by reason of a fortuitous event is too much of a burden
to assume.
However, JAL still has the obligation to make the necessary
arrangement to transport its passenger to Manila. (CA – Manila –
contract of carriage)
Common Carriers are not insurer of all risk
2-year prescriptive period does not apply to
torts and when lapse is due to airlines’
delaying tactics
2-year prescriptive period does not apply to
torts and when lapse is due to airlines’
delaying tactics [United Airlines vs. Uy, GR No.
127768, 19 Nov. 1999
Facts:
Willie Uy is a passenger of United
Airlines, bound for San Francisco – Manila.
While in San Francisco, it was found out that
one piece of his luggage was over the
maximum weight limit, for which a United
Airlines personnel rebuked him and in a
loud voice, in front of the milling crowd,
ordered him to repack his things.
2-year prescriptive period does not apply to
torts and when lapse is due to airlines’
delaying tactics [United Airlines vs. Uy, GR No.
127768, 19 Nov. 1999
Facts:
But even after repacking, his luggage
was still overweight, forcing Willie to pay for
the excess. Upon arrival to Manila, he
discovered that one of his bags had been
slashed and its contents stolen. Willie sent a
letter of demand to United Airlines, which
only offered to pay him the value of US$9.70
per pound (the limit/US$20 per kilo).
2-year prescriptive period does not apply to
torts and when lapse is due to airlines’
delaying tactics [United Airlines vs. Uy, GR No.
127768, 19 Nov. 1999
Facts:
Willie, however, rejected the offer and
sent two more demand letters, which were
ignored , thus prompting him to file a
complaint for damages with the PH courts
based on tort and the loss of his luggage.
United Airlines moved to dismiss the
complaint on the ground that it was filed
beyond the 2-year prescriptive period
under the Warsaw convention.
2-year prescriptive period does not apply to
torts and when lapse is due to airlines’
delaying tactics [United Airlines vs. Uy, GR No.
127768, 19 Nov. 1999
Issue:
WON the action for damages is
barred by prescription.
2-year prescriptive period does not apply to
torts and when lapse is due to airlines’
delaying tactics [United Airlines vs. Uy, GR No.
127768, 19 Nov. 1999
Held:
SC held that although the 2-year
prescriptive
period
under
the
Warsaw
Convention had already lapsed by the time
Willie filed the complaint for damages, this did
not preclude the application of pertinent
provisions of the NCC. Thus, the action for
damages could still be filed based on tort which
can be filed within 4 years from the time cause
of action accrued.
2-year prescriptive period does not apply to
torts and when lapse is due to airlines’
delaying tactics [United Airlines vs. Uy, GR No.
127768, 19 Nov. 1999
Held:
As to the action pertaining to the loss of
the contents of the luggage, while it was well
within the bounds of the Warsaw Convention,
SC found that there was an exception the
applicability of the 2-year prescriptive period –
that is when the airline employed delaying
tactics and gave the passenger the run-around.
Thus, the action has not yet prescribed.
Conflict of Laws - Contracts…
No.
Condition
Conflict Rules
1.
No stipulation and to be
performed in the same country
where the contract was
executed
Apply the laws of the place where
the contract was executed
2.
No stipulation and to be
performed in other country
Form, Validity and Interpretation of the
contract – Place of execution
Violation/Default - apply the law of the
country where the contract is to be
performed
3.
With stipulation (valid)
Apply the law of the place as
stipulated in the contract
4.
With stipulation but contrary to
law, morals, good customs, public
order or public policy
-
Apply the above-mentioned
rules
Apply the most significant rule
(totality rule);
Apply the law of the forum
Overbooking of flight is bad faith; Lex
Loci Contractus – law of the place
where the ticket was issued governs
Overbooking of flight is bad faith; Lex Loci
Contractus – law of the place where ticket
was issued governs [Zalamea vs. CA, GR No.
104235, 18 Nov. 1993]
Facts:
The Zalamea spouses and their daughter
purchased 3 airline tickets from the Manila
agent of the respondent TransWorld Airlines
(TWA) for a flight from Manila to New York to Los
Angeles and back to Manila. The tickets of the
spouses were purchased at a discount of 75%
while that of their daughter was a full-fare
ticket. All three tickets represented confirmed
reservations.
Overbooking of flight is bad faith; Lex Loci
Contractus – law of the place where ticket
was issued governs [Zalamea vs. CA, GR No.
104235, 18 Nov. 1993]
Facts:
Once in New York, however, they found that
their flight back to Manila was overbooked, as a
result of which they had to be wait-listed. Out of
those wait-listed, the ones with full-fare tickets were
preferred. Thus, only the Zalamea husband, who was
holding his daughter’s ticket, was able to get on
board while his wife and daughter had to wait for
the next flight. However, in turned out this next flight
was likewise overbooked, forcing the Zalameas to
purchase tickets from another airlines. Lately, they
sued TWA for breach of contract in the PH.
Overbooking of flight is bad faith; Lex Loci
Contractus – law of the place where ticket
was issued governs [Zalamea vs. CA, GR No.
104235, 18 Nov. 1993]
Facts:
WON TWA is liable for breach of
contract of carriage.
Overbooking of flight is bad faith; Lex Loci
Contractus – law of the place where ticket
was issued governs [Zalamea vs. CA, GR No.
104235, 18 Nov. 1993]
Held:
SC held in the affirmative.
Overbooking of flights amounts to fraud
or bad faith, entitling plaintiff to an award of
moral damages because of bad faith
attending the breach of contract. The holding
that overbooking was allowed under US Federal
Regulations was found erroneous because: (1)
this regulation was not proved and our courts
cannot take judicial notice to it, and (2) even if
such regulation was proven, the rule of lex loci
contractus negated its application.
Overbooking of flight is bad faith; Lex Loci
Contractus – law of the place where ticket
was issued governs [Zalamea vs. CA, GR No.
104235, 18 Nov. 1993]
Held:
According to this rule, the law of the place
where the airline ticket was issued should be
applied. Since tickets were sold and issued in the
PH, the applicable law in this case would be PH
Law. Under our jurisprudence, overbooking of
flight is bad faith. Moreover, the hierarchy of
tickets practices by TWA was evidence of its selfinterest over that of its passengers, which SC held
to be improper considering the public interest
involved in a contract of carriage.
CMI v. Basso
1.
2.
3.
4.
5.
Corporation is registered in USA;
Basso is a US National;
Contract was perfected/negotiated in
PH and USA;
Service was rendered in PH;
Illegal dismissal was made in the PH;
Thank You…