Professional Documents
Culture Documents
conveniens and
counterclaim.11
prayed
for
damages
by
way
of
compulsory
court of its jurisdiction over Civil Case No. No. 1192-BG and the parties
involved.
MEDIALDEA, J.:
POLYTRADE
CORPORATION, plaintiff-appellee, vs.VICTORIANO
BLANCO, defendant-appellant.
SANCHEZ, J.:
Suit before the Court of First Instance of Bulacan on four causes of
action to recover the purchase price of rawhide delivered by plaintiff to
defendant.1 Plaintiff corporation has its principal office and place of
business in Makati, Rizal. Defendant is a resident of Meycauayan,
Bulacan. Defendant moved to dismiss upon the ground of improper
venue. He claims that by contract suit may only be lodged in the courts
of Manila. The Bulacan court overruled him. He did not answer the
complaint. In consequence, a default judgment was rendered against
him on September 21, 1966, thus:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and
against defendant ordering defendant to pay plaintiff the following
amounts:
fees from the stipulated 25% "of the total amount involved, principal
and interest, then unpaid" to only 25% of the principal amount due.
There is no reason why such judgment should be disturbed.
FOR THE REASON GIVEN, the appealed judgment is hereby affirmed,
except that interest granted, in reference to the fourth cause of action,
should start from March 24, 1965.
Costs against defendant-appellant. So ordered.
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. x x x
On April 27, 1990, while on a lay-over in Jakarta,
Indonesia, plaintiff went to a disco dance with fellow crew
members Thamer Al-Gazzawi and Allah 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
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.
In the Reply[23] filed with the trial court on October 24, 1994,
SAUDIA alleged that since its Motion for Reconsideration raised lack of
jurisdiction as its cause of action, the Omnibus Motion Rule does not
apply, even if that ground is raised for the first time on
appeal. Additionally, SAUDIA alleged that the Philippines does not
have any substantial interest in the prosecution of the instant case, and
hence, without jurisdiction to adjudicate the same.
Respondent Judge subsequently issued another Order[24] dated
February 2, 1995, denying SAUDIAs Motion for Reconsideration. The
pertinent portion of the assailed Order reads as follows:
Acting on the Motion for Reconsideration of defendant
Saudi Arabian Airlines filed, thru counsel, on September
20, 1994, and the Opposition thereto of the plaintiff filed,
thru counsel, on October 14, 1994, as well as the Reply
therewith of defendant Saudi Arabian Airlines filed, thru
counsel, on October 24, 1994, considering that a perusal
of the plaintiffs Amended Complaint, which is one for the
recovery of actual, moral and exemplary damages plus
attorneys fees, upon the basis of the applicable Philippine
law, Article 21 of the New Civil Code of the Philippines, is,
clearly, within the jurisdiction of this Court as regards the
subject matter, and there being nothing new of substance
which might cause the reversal or modification of the
order sought to be reconsidered, the motion for
reconsideration of the defendant, is DENIED.
SO ORDERED.[25]
Petitioner received on April 22, 1996 the April 10, 1996 decision in CAG.R. SP NO. 36533 entitled Saudi Arabian Airlines v. Hon. Rodolfo A.
Ortiz, et al. and filed its April 30, 1996 Supplemental Petition For
Review With Prayer For A Temporary Restraining Order on May 7,
1996 at 10:29 a.m. or within the 15-day reglementary period as
provided for under Section 1, Rule 45 of the Revised Rules of
Court. Therefore, the decision in CA-G.R. SP NO. 36533 has not yet
become final and executory and this Honorable Court can take
cognizance of this case.[33]
From the foregoing factual and procedural antecedents, the
following issues emerge for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED
IN HOLDING THAT THE REGIONAL TRIAL COURT OF
QUEZON CITY HAS JURISDICTION TO HEAR AND TRY
CIVIL CASE NO. Q-93-18394 ENTITLED MILAGROS P.
MORADA V. SAUDI ARABIAN AIRLINES.
II.
WHETHER RESPONDENT APPELLATE COURT ERRED
IN RULING THAT IN THE CASE PHILIPPINE LAW
SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that
must be settled at the outset. It maintains that private respondents
claim for alleged abuse of rights occurred in the Kingdom of Saudi
Arabia. It alleges that the existence of a foreign element qualifies the
instant case for the application of the law of the Kingdom of Saudi
Arabia, by virtue of the lex loci delicti commissi rule.[34]
On the other hand, private respondent contends that since her
Amended Complaint is based on Articles 19 [35] and 21[36] of the Civil
Code, then the instant case is properly a matter of domestic law.[37]
Under the factual antecedents obtaining in this case, there is no
dispute that the interplay of events occurred in two states, the
Philippines and Saudi Arabia.
I
The trial court has no jurisdiction to hear and try Civil Case No. Q-9318394 based on Article 21 of the New Civil Code since the proper law
applicable is the law of the Kingdom of Saudi Arabia inasmuch as this
case involves what is known in private international law as a conflicts
problem. Otherwise, the Republic of the Philippines will sit in judgment
of the acts done by another sovereign state which is abhorred.
II.
Leave of court before filing a supplemental pleading is not a
jurisdictional requirement. Besides, the matter as to absence of leave
of court is now moot and academic when this Honorable Court
required the respondents to comment on petitioners April 30, 1996
Supplemental Petition For Review With Prayer For A Temporary
Restraining Order Within Ten (10) Days From Notice Thereof. Further,
the Revised Rules of Court should be construed with liberality pursuant
to Section 2, Rule 1 thereof.
III.
in
her
Amended
In the instant case, the foreign element consisted in the fact that
private respondent Morada is a resident Philippine national, and that
petitioner SAUDIA is a resident foreign corporation. Also, by virtue of
the employment of Morada with the petitioner Saudia as a flight
stewardess, events did transpire during her many occasions of travel
across national borders, particularly from Manila, Philippines to
Jeddah, Saudi Arabia, and vice versa, that caused a conflicts situation
to arise.
We thus find private respondents assertion that the case is
purely domestic, imprecise. A conflicts problem presents itself here,
and the question of jurisdiction[43] confronts the court a quo.
After a careful study of the private respondents Amended
Complaint,[44] and the Comment thereon, we note that she aptly
predicated her cause of action on Articles 19 and 21 of the New Civil
Code.
On one hand, Article 19 of the New Civil Code provides;
Art. 19. Every person must, in the exercise of his rights
and in the performance of his duties, act with justice give
everyone his due and observe honesty and good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to
another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for
damages.
[45]
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.
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 forithe law of the forumis
particularly important because, as we have seen earlier,
matters of procedure not going to the substance of the
claim involved are governed by it; and because the lex
fori applies whenever the content of the otherwise
applicable foreign law is excluded from application in a
given case for the reason that it falls under one of the
exceptions to the applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of
practically all legal relationships of the ship and of its
master or owner as such. It also covers contractual
relationships particularly contracts of affreightment.
[60]
(Underscoring ours.)
After a careful study of the pleadings on record, including
allegations in the Amended Complaint deemed submitted for purposes
of the motion to dismiss, we are convinced that there is reasonable
basis for private respondents assertion that although she was already
working in Manila, petitioner brought her to Jeddah on the pretense
that she would merely testify in an investigation of the charges she
made against the two SAUDIA crew members for the attack on her
person while they were in Jakarta. As it turned out, she was the one
made to face trial for very serious charges, including adultery and
violation of Islamic laws and tradition.
There is likewise logical basis on record for the claim that the
handing over or turning over of the person of private respondent to
Jeddah officials, petitioner may have acted beyond its duties as
employer. Petitioners purported act contributed to and amplified or
even proximately caused additional humiliation, misery and suffering of
January 7, 2008
On September 21, 1998, the trial court issued an Order (1) granting
PGSMCs motion for inspection; (2) denying KOGIES motion for
reconsideration of the July 23, 1998 RTC Order; and (3) denying
KOGIES motion to dismiss PGSMCs compulsory counterclaims as
these counterclaims fell within the requisites of compulsory
counterclaims.
On October 2, 1998, KOGIES filed an Urgent Motion for
Reconsideration17 of the September 21, 1998 RTC Order granting
inspection of the plant and denying dismissal of PGSMCs compulsory
counterclaims.
Ten days after, on October 12, 1998, without waiting for the resolution
of its October 2, 1998 urgent motion for reconsideration, KOGIES filed
before the Court of Appeals (CA) a petition for certiorari 18 docketed as
CA-G.R. SP No. 49249, seeking annulment of the July 23, 1998 and
September 21, 1998 RTC Orders and praying for the issuance of writs
of prohibition, mandamus, and preliminary injunction to enjoin the RTC
and PGSMC from inspecting, dismantling, and transferring the
machineries and equipment in the Carmona plant, and to direct the
RTC to enforce the specific agreement on arbitration to resolve the
dispute.
In the meantime, on October 19, 1998, the RTC denied KOGIES
urgent motion for reconsideration and directed the Branch Sheriff to
proceed with the inspection of the machineries and equipment in the
plant on October 28, 1998.19
Thereafter, KOGIES filed a Supplement to the Petition 20 in CA-G.R. SP
No. 49249 informing the CA about the October 19, 1998 RTC Order. It
also reiterated its prayer for the issuance of the writs of prohibition,
mandamus and preliminary injunction which was not acted upon by the
CA. KOGIES asserted that the Branch Sheriff did not have the
technical expertise to ascertain whether or not the machineries and
equipment conformed to the specifications in the contract and were
properly installed.
On November 11, 1998, the Branch Sheriff filed his Sheriffs Report 21
finding that the enumerated machineries and equipment were not fully
and properly installed.
The Court of Appeals affirmed the trial court and declared
the arbitration clause against public policy
On May 30, 2000, the CA rendered the assailed Decision 22 affirming
the RTC Orders and dismissing the petition for certiorari filed by
KOGIES. The CA found that the RTC did not gravely abuse its
discretion in issuing the assailed July 23, 1998 and September 21,
1998 Orders. Moreover, the CA reasoned that KOGIES contention that
the total contract price for USD 1,530,000 was for the whole plant and
had not been fully paid was contrary to the finding of the RTC that
PGSMC fully paid the price of USD 1,224,000, which was for all the
machineries and equipment. According to the CA, this determination by
the RTC was a factual finding beyond the ambit of a petition for
certiorari.
On the issue of the validity of the arbitration clause, the CA agreed with
the lower court that an arbitration clause which provided for a final
determination of the legal rights of the parties to the contract by
arbitration was against public policy.
On the issue of nonpayment of docket fees and non-attachment of a
certificate of non-forum shopping by PGSMC, the CA held that the
counterclaims of PGSMC were compulsory ones and payment of
docket fees was not required since the Answer with counterclaim was
not an initiatory pleading. For the same reason, the CA said a
certificate of non-forum shopping was also not required.
Furthermore, the CA held that the petition for certiorari had been filed
prematurely since KOGIES did not wait for the resolution of its urgent
motion for reconsideration of the September 21, 1998 RTC Order
which was the plain, speedy, and adequate remedy available.
According to the CA, the RTC must be given the opportunity to correct
any alleged error it has committed, and that since the assailed orders
were interlocutory, these cannot be the subject of a petition for
certiorari.
Hence, we have this Petition for Review on Certiorari under Rule 45.
The Issues
Petitioner posits that the appellate court committed the following errors:
a. PRONOUNCING THE QUESTION OF OWNERSHIP
OVER THE MACHINERY AND FACILITIES AS "A
QUESTION OF FACT" "BEYOND THE AMBIT OF A
PETITION FOR CERTIORARI" INTENDED ONLY FOR
CORRECTION OF ERRORS OF JURISDICTION OR
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF (SIC) EXCESS OF JURISDICTION, AND CONCLUDING
THAT THE TRIAL COURTS FINDING ON THE SAME
QUESTION WAS IMPROPERLY RAISED IN THE PETITION
BELOW;
b. DECLARING AS NULL AND VOID THE ARBITRATION
CLAUSE IN ARTICLE 15 OF THE CONTRACT BETWEEN
THE PARTIES FOR BEING "CONTRARY TO PUBLIC
POLICY" AND FOR OUSTING THE COURTS OF
JURISDICTION;
c.
DECREEING
PRIVATE
RESPONDENTS
COUNTERCLAIMS TO BE ALL COMPULSORY NOT
NECESSITATING PAYMENT OF DOCKET FEES AND
CERTIFICATION OF NON-FORUM SHOPPING;
d. RULING THAT THE PETITION WAS FILED
PREMATURELY
WITHOUT
WAITING
FOR
THE
RESOLUTION
OF
THE
MOTION
FOR
RECONSIDERATION
OF
THE
ORDER
DATED
SEPTEMBER 21, 1998 OR WITHOUT GIVING THE TRIAL
COURT AN OPPORTUNITY TO CORRECT ITSELF;
e. PROCLAIMING THE TWO ORDERS DATED JULY 23
AND SEPTEMBER 21, 1998 NOT TO BE PROPER
SUBJECTS OF CERTIORARI AND PROHIBITION FOR
BEING "INTERLOCUTORY IN NATURE;"
f. NOT GRANTING THE RELIEFS AND REMEDIES
PRAYED FOR IN HE (SIC) PETITION AND, INSTEAD,
DISMISSING THE SAME FOR ALLEGEDLY "WITHOUT
MERIT."23
The Courts Ruling
The petition is partly meritorious.
Before we delve into the substantive issues, we shall first tackle the
procedural issues.
The rules on the payment of docket fees for counterclaims
and cross claims were amended effective August 16, 2004
KOGIES strongly argues that when PGSMC filed the counterclaims, it
should have paid docket fees and filed a certificate of non-forum
shopping, and that its failure to do so was a fatal defect.
We disagree with KOGIES.
As aptly ruled by the CA, the counterclaims of PGSMC were
incorporated in its Answer with Compulsory Counterclaim dated July
17, 1998 in accordance with Section 8 of Rule 11, 1997 Revised Rules
of Civil Procedure, the rule that was effective at the time the Answer
with Counterclaim was filed. Sec. 8 on existing counterclaim or crossclaim states, "A compulsory counterclaim or a cross-claim that a
defending party has at the time he files his answer shall be contained
therein."
On July 17, 1998, at the time PGSMC filed its Answer incorporating its
counterclaims against KOGIES, it was not liable to pay filing fees for
said counterclaims being compulsory in nature. We stress, however,
that effective August 16, 2004 under Sec. 7, Rule 141, as amended by
A.M. No. 04-2-04-SC, docket fees are now required to be paid in
compulsory counterclaim or cross-claims.
As to the failure to submit a certificate of forum shopping, PGSMCs
Answer is not an initiatory pleading which requires a certification
against forum shopping under Sec. 5 24 of Rule 7, 1997 Revised Rules
of Civil Procedure. It is a responsive pleading, hence, the courts a quo
did not commit reversible error in denying KOGIES motion to dismiss
PGSMCs compulsory counterclaims.
Interlocutory orders proper subject of certiorari
the
UNCITRAL
Model
law
COMMERCIAL
CHAPTER
4
ARBITRATION
INTERNATIONAL
xxxx
xxxx
SEC. 45. Rejection of a Foreign Arbitral Award.A party to a
foreign arbitration proceeding may oppose an application for
recognition and enforcement of the arbitral award in
accordance with the procedures and rules to be promulgated
by the Supreme Court only on those grounds enumerated
under Article V of the New York Convention. Any other
ground raised shall be disregarded by the Regional Trial
Court.
Thus, while the RTC does not have jurisdiction over disputes governed
by arbitration mutually agreed upon by the parties, still the foreign
arbitral award is subject to judicial review by the RTC which can set
aside, reject, or vacate it. In this sense, what this Court held in Chung
Fu Industries (Phils.), Inc. relied upon by KOGIES is applicable insofar
as the foreign arbitral awards, while final and binding, do not oust
courts of jurisdiction since these arbitral awards are not absolute and
without exceptions as they are still judicially reviewable. Chapter 7 of
RA 9285 has made it clear that all arbitral awards, whether domestic or
foreign, are subject to judicial review on specific grounds provided for.
(4) Grounds for judicial review different in domestic and foreign arbitral
awards
The differences between a final arbitral award from an international or
foreign arbitral tribunal and an award given by a local arbitral tribunal
are the specific grounds or conditions that vest jurisdiction over our
courts to review the awards.
For foreign or international arbitral awards which must first be
confirmed by the RTC, the grounds for setting aside, rejecting or
vacating the award by the RTC are provided under Art. 34(2) of the
UNCITRAL Model Law.
For final domestic arbitral awards, which also need confirmation by the
RTC pursuant to Sec. 23 of RA 876 44 and shall be recognized as final
and executory decisions of the RTC,45 they may only be assailed
before the RTC and vacated on the grounds provided under Sec. 25 of
RA 876.46
(5) RTC decision of assailed foreign arbitral award appealable
The issues arising from the contract between PGSMC and KOGIES on
whether the equipment and machineries delivered and installed were
properly installed and operational in the plant in Carmona, Cavite; the
ownership of equipment and payment of the contract price; and
whether there was substantial compliance by KOGIES in the
production of the samples, given the alleged fact that PGSMC could
not supply the raw materials required to produce the sample LPG
cylinders, are matters proper for arbitration. Indeed, we note that on
July 1, 1998, KOGIES instituted an Application for Arbitration before
the KCAB in Seoul, Korea pursuant to Art. 15 of the Contract as
amended. Thus, it is incumbent upon PGSMC to abide by its
commitment to arbitrate.
Corollarily, the trial court gravely abused its discretion in granting
PGSMCs Motion for Inspection of Things on September 21, 1998, as
the subject matter of the motion is under the primary jurisdiction of the
mutually agreed arbitral body, the KCAB in Korea.
In addition, whatever findings and conclusions made by the RTC
Branch Sheriff from the inspection made on October 28, 1998, as
ordered by the trial court on October 19, 1998, is of no worth as said
Sheriff is not technically competent to ascertain the actual status of the
equipment and machineries as installed in the plant.
For these reasons, the September 21, 1998 and October 19, 1998
RTC Orders pertaining to the grant of the inspection of the equipment
and machineries have to be recalled and nullified.
Issue on ownership of plant proper for arbitration
Petitioner assails the CA ruling that the issue petitioner raised on
whether the total contract price of USD 1,530,000 was for the whole
plant and its installation is beyond the ambit of a Petition for Certiorari.
Petitioners position is untenable.
It is settled that questions of fact cannot be raised in an original action
for certiorari.49 Whether or not there was full payment for the
machineries and equipment and installation is indeed a factual issue
prohibited by Rule 65.
However, what appears to constitute a grave abuse of discretion is the
order of the RTC in resolving the issue on the ownership of the plant
when it is the arbitral body (KCAB) and not the RTC which has
jurisdiction and authority over the said issue. The RTCs determination
of such factual issue constitutes grave abuse of discretion and must be
reversed and set aside.
RTC has interim jurisdiction to protect the rights of the parties
Anent the July 23, 1998 Order denying the issuance of the injunctive
writ paving the way for PGSMC to dismantle and transfer the
equipment and machineries, we find it to be in order considering the
factual milieu of the instant case.
Firstly, while the issue of the proper installation of the equipment and
machineries might well be under the primary jurisdiction of the arbitral
body to decide, yet the RTC under Sec. 28 of RA 9285 has jurisdiction
to hear and grant interim measures to protect vested rights of the
parties. Sec. 28 pertinently provides:
SEC. 28. Grant of interim Measure of Protection.(a) It is
not incompatible with an arbitration agreement for a party to
request, before constitution of the tribunal, from a Court to
tickets, punched something into her computer and then told them that
boarding would be in fifteen minutes.4
When the flight was called, the Fontanillas proceeded to the plane. To
their surprise, the stewardess at the gate did not allow them to board
the plane, as they had no assigned seat numbers. They were then
directed to go back to the "check-in" counter where Linda subsequently
informed them that the flight had been overbooked and asked them to
wait.5
Finally, while PGSMC may have been granted the right to dismantle
and transfer the subject equipment and machineries, it does not have
the right to convey or dispose of the same considering the pending
arbitral proceedings to settle the differences of the parties. PGSMC
therefore must preserve and maintain the subject equipment and
machineries with the diligence of a good father of a family 51 until final
resolution of the arbitral proceedings and enforcement of the award, if
any.
WHEREFORE, this petition is PARTLY GRANTED, in that:
(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is
REVERSED and SET ASIDE; (2) The September 21, 1998 and
October 19, 1998 RTC Orders in Civil Case No. 98-117 are
REVERSED and SET ASIDE; (3) The parties are hereby ORDERED
to submit themselves to the arbitration of their dispute and differences
arising from the subject Contract before the KCAB; and (4) PGSMC is
hereby ALLOWED to dismantle and transfer the equipment and
machineries, if it had not done so, and ORDERED to preserve and
maintain them until the finality of whatever arbitral award is given in the
arbitration proceedings.No pronouncement as to costs.
G.R. No. 124110
Petitioner United Airlines now comes to this Court raising the following
assignments of errors;
I.RESPONDENT COURT OF APPEALS GRVAELY ERRED IN
RULING THAT THE TRIAL COURT WAS WRONG IN FAILING TO
CONSIDER THE ALLEGED ADMISSION THAT PRIVATE
RESPONDENT OBSERVED THE CHECK-IN REQUIREMENT.
II.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
RULING THAT PRIVATE RESPONDENTS FAILURE TO CHECK-IN
WILL NOT DEFEAT HIS CLAIMS BECAUSE THE DENIED
BOARDING RULES WERE NOT COMPLIED WITH.
III.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
RULING THAT PRIVATE RESPONDENT IS ENTITLED TO MORAL
DAMAGES OF P200,000.
IV.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
RULING THAT PRIVATE RESPONDENT IS ENTITLED TO
EXEMPLARY DAMAGES OF P200,000.
V.RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
RULING THAT PRIVATE RESPONDENT IS ENTITLED TO
ATTORNEYS FEES OF P50,000.17
While there was no specific denial as to the fact of compliance with the
"check-in" requirement by private respondents, petitioner presented
evidence to support its contention that there indeed was no
compliance.
Private respondents then are said to have waived the rule on
admission. It not only presented evidence to support its contention that
there was compliance with the check-in requirement, it even allowed
petitioner to present rebutal evidence. In the case of Yu Chuck vs.
"Kong Li Po," we ruled that:
The object of the rule is to relieve a party of the
trouble and expense in proving in the first instance
an alleged fact, the existence or non-existence of
which is necessarily within the knowledge of the
adverse party, and of the necessity (to his
opponents case) of establishing which such
adverse party is notified by his opponents
pleadings.
The plaintiff may, of course, waive the rule and
that is what must be considered to have done (sic)
by introducing evidence as to the execution of the
document and failing to object to the defendants
evidence in refutation; all this evidence is now
competent and the case must be decided
thereupon.23
The determination of the other issues raised is dependent on whether
or not there was a breach of contract in bad faith on the part of the
petitioner in not allowing the Fontanillas to board United Airlines Flight
1108.
It must be remembered that the general rule in civil cases is that the
party having the burden of proof of an essential fact must produce a
preponderance of evidence thereon.24 Although the evidence adduced
by the plaintiff is stronger than that presented by the defendant, a
judgment cannot be entered in favor of the former, if his evidence is not
sufficient to sustain his cause of action. The plaintiff must rely on the
strength of his own evidence and not upon the weakness of the
defendants.25 Proceeding from this, and considering the contradictory
findings of facts by the Regional Trial Court and the Court of Appeals,
the question before this Court is whether or not private respondents
were able to prove with adequate evidence his allegations of breach of
contract in bad faith.
We rule in the negative.
Time and again, the Court has pronounced that appellate courts should
not, unless for strong and cogent reasons, reverse the findings of facts
of trial courts. This is so because trial judges are in better position to
examine real evidence and at a vantage point to observe the actuation
and the demeanor of the witnesses. 26 While not the sole indicator of
the credibility of a witness, it is of such weight that it has been said to
be the touchstone of credibility.27
amount to bad faith. While there may have been overbooking in this
case, private respondents were not able to prove that the overbooking
on United Airlines Flight 1108 exceeded ten percent.
As earlier stated, the Court is of the opinion that the private
respondents were not able to prove that they were subjected to coarse
and harsh treatment by the ground crew of united Airlines. Neither
were they able to show that there was bad faith on part of the carrier
airline. Hence, the award of moral and exemplary damages by the
Court of Appeals is improper. Corollarily, the award of attorneys fees
is, likewise, denied for lack of any legal and factual basis.
WHEREFORE, the petition is GRANTED. The decision of the Court of
Appeals in CA-G.R. CV No. 37044 is hereby REVERSED and SET
ASIDE. The decision of the Regional Trial Court of Makati City in Civil
Case No. 89-4268 dated April 8, 1991 is hereby REINSTATED.
G.R. No. 138104
SANDOVAL-GUTIERREZ, J.:
In the present Petition for Review on Certiorari, petitioner MR Holdings,
Ltd. assails the a) Decision1 dated January 8, 1999 of the Court of
Appeals in CA-G.R. SP No. 49226 finding no grave abuse of discretion
on the part of Judge Leonardo P. Ansaldo of the Regional Trial Court
(RTC), Branch 94, Boac, Marinduque, in denying petitioners
application for a writ of preliminary injunction;2 and b) Resolution3 dated
March 29, 1999 denying petitioners motion for reconsideration.
Under a "Principal Loan Agreement"4 and "Complementary Loan
Agreement,"5 both dated November 4, 1992, Asian Development Bank
(ADB), a multilateral development finance institution, agreed to extend
to Marcopper Mining Corporation (Marcopper) a loan in the aggregate
amount of US$40,000,000.00 to finance the latters mining project at
Sta. Cruz, Marinduque. The principal loan of US$ 15,000,000.00 was
sourced from ADBs ordinary capital resources, while the
complementary loan of US$ 25,000,000.00 was funded by the Bank of
Nova Scotia, a participating finance institution.
On even date, ADB and Placer Dome, Inc., (Placer Dome), a foreign
corporation which owns 40% of Marcopper, executed a "Support and
Standby Credit Agreement" whereby the latter agreed to provide
Marcopper with cash flow support for the payment of its obligations to
ADB.
To secure the loan, Marcopper executed in favor of ADB a "Deed of
Real Estate and Chattel Mortgage"6 dated November 11, 1992,
covering substantially all of its (Marcoppers) properties and assets in
Marinduque. It was registered with the Register of Deeds on November
12, 1992.
When Marcopper defaulted in the payment of its loan obligation, Placer
Dome, in fulfillment of its undertaking under the "Support and Standby
Credit Agreement," and presumably to preserve its international credit
standing, agreed to have its subsidiary corporation, petitioner MR
Holding, Ltd., assumed Marcoppers obligation to ADB in the amount of
US$ 18,453,450.02. Consequently, in an "Assignment Agreement"7
dated March 20, 1997, ADB assigned to petitioner all its rights,
interests and obligations under the principal and complementary loan
agreements, ("Deed of Real Estate and Chattel Mortgage," and
"Support and Standby Credit Agreement"). On December 8, 1997,
Marcopper likewise executed a "Deed of Assignment" 8 in favor of
"WHEREFORE,
PREMISES
CONSIDERED,
partial
judgment is hereby rendered ordering defendant Marcopper
Mining Corporation, as follows:
1. To pay plaintiff Solidbank the sum of Fifty Two Million Nine Hundred
Seventy Thousand Pesos Seven Hundred Fifty Six and 89/100 only
(PHP 52,970,756.89), plus interest and charges until fully paid; 2. To
pay an amount equivalent to Ten Percent (10%) of above-stated
amount as attorneys fees; and 3. To pay the costs of suit.
Upon Solidbanks motion, the RTC of Manila issued a writ of execution
pending appeal directing Carlos P. Bajar, respondent sheriff, to require
Marcopper "to pay the sums of money to satisfy the Partial
Judgment."10 Thereafter, respondent Bajar issued two notices of levy
on Marcoppers personal and real properties, and over all its stocks of
scrap iron and unserviceable mining equipment. 11 Together with sheriff
Ferdinand M. Jandusay (also a respondent) of the RTC, Branch 94,
Boac, Marinduque, respondent Bajar issued two notices setting the
public auction sale of the levied properties on August 27, 1998 at the
Marcopper mine site.12
Having learned of the scheduled auction sale, petitioner served an
"Affidavit of Third-Party Claim"13 upon respondent sheriffs on August
26, 1998, asserting its ownership over all Marcoppers mining
properties, equipment and facilities by virtue of the "Deed of
Assignment."
Upon the denial of its "Affidavit of ThirdParty Claim" by the RTC of
Manila,14 petitioner commenced with the RTC of Boac, Marinduque,
presided by Judge Leonardo P. Ansaldo, a complaint for reivindication
of properties, etc., with prayer for preliminary injunction and temporary
restraining order against respondents Solidbank, Marcopper, and
sheriffs Bajar and Jandusay.15 The case was docketed as Civil Case
No. 98-13.
In an Order16 dated October 6, 1998, Judge Ansaldo denied petitioners
application for a writ of preliminary injunction on the ground that a)
petitioner has no legal capacity to sue, it being a foreign corporation
doing business in the Philippines without license; b) an injunction will
amount "to staying the execution of a final judgment by a court of coequal and concurrent jurisdiction;" and c) the validity of the
xxx
xxx
"While petitioner may just be an assignee to the
Deeds of Assignment, it may still fall within the
meaning of "doing business" in light of the
Supreme Court ruling in the case of Far East
International Import and Export Corporation vs.
Nankai Kogyo Co., 6 SCRA 725, that:
contracts can only bind the parties who had entered into it,
and it cannot favor or prejudice a third person (Quano vs.
Court of Appeals, 211 SCRA 40). Moreover, by express
stipulation, the said deeds shall be governed, interpreted
and construed in accordance with laws of New
York.1wphi1.nt
"The Deeds of Assignment executed by Marcopper, through
its President, Atty. Teodulo C. Gabor, Jr., were clearly made
in bad faith and in fraud of creditors, particularly private
respondent Solidbank. The first Assignment Agreement
purportedly executed on March 20, 1997 was entered into
after Solidbank had filed on September 19, 1996 a case
against Marcopper for collection of sum of money before
Branch 26 of the Regional Trial Court docketed as Civil Case
No. 96-80083. The second Deed of Assignment purportedly
executed on December 28, 1997 was entered into by
President Gabor after Solidbank had filed its Motion for
Partial Summary Judgment, after the rendition by Branch 26
of the Regional Trial Court of Manila of a Partial Summary
Judgment and after the said trial court had issued a writ of
execution, and which judgment was later affirmed by the
Court of Appeals. While the assignments (which were not
registered with the Registry of Property as required by Article
1625 of the new Civil Code) may be valid between the
parties thereof, it produces no effect as against third parties.
The purported execution of the Deeds of Assignment in favor
of petitioner was in violation of Article 1387 of the New Civil
Code x x x." (Emphasis Supplied)
Hence, the present Petition for Review on Certiorari by MR Holdings,
Ltd. moored on the following grounds:
"A. THE HONORABLE COURT OF APPEALS COMMITS A
REVERSIBLE ERROR IN COMPLETELY DISREGARDING
AS A MATERIAL FACT OF THE CASE THE EXISTENCE OF
THE PRIOR, REGISTERED 1992 DEED OF REAL ESTATE
AND CHATTEL MORTGAGE CREATING A LIEN OVER
THE LEVIED PROPERTIES, SUBJECT OF THE
ASSIGNMENT AGREEMENT DATED MARCH 20, 1997,
THUS, MATERIALLY CONTRIBUTING TO THE SAID
COURTS MISPERCEPTION AND MISAPPRECIATION OF
THE MERITS OF PETITIONERS CASE.
B. THE HONORABLE COURT OF APPEALS COMMITS A
REVERSIBLE ERROR IN MAKING A FACTUAL FINDING
THAT THE SAID ASSIGNMENT AGREEMENT IS NOT
REGISTERED, THE SAME BEING CONTRARY TO THE
FACTS
ON
RECORD,
THUS,
MATERIALLY
CONTRIBUTING
TO
THE
SAID
COURTS
MISPERCEPTION AND MISAPPRECIATION OF THE
MERITS OF PETITIONERS CASE.
C. THE HONORABLE COURT OF APPEALS COMMITS A
REVERSIBLE ERROR IN MAKING A FACTUAL FINDING
ON THE EXISTENCE OF AN ATTACHMENT ON THE
PROPERTIES SUBJECT OF INSTANT CASE, THE SAME
BEING CONTRARY TO THE FACTS ON RECORD, THUS,
MATERIALLY CONTRIBUTING TO THE SAID COURTS
MISPERCEPTION AND MISAPPRECIATION OF THE
MERITS OF PETITIONERS CASE.
D. THE HONORABLE COURT OF APPEALS COMMITS A
REVERSIBLE ERROR IN HOLDING THAT THE SAID
ASSIGNMENT AGREEMENT AND THE DEED OF
ASSIGNMENT ARE NOT BINDING ON RESPONDENT
cash flow support in paying its obligations to ADB, does not mean that
its personality has merged with that of Marcopper. This singular
undertaking, performed by Placer Dome with its own stockholders in
Canada and elsewhere, is not a sufficient ground to merge its
corporate personality with Marcopper which has its own set of
shareholders, dominated mostly by Filipino citizens. The same view
applies to petitioners payment of Marcoppers remaining debt to ADB.
With the foregoing considerations and the absence of fraud in the
transaction of the three foreign corporations, we find it improper to
pierce the veil of corporate fiction that equitable doctrine developed
to address situations where the corporate personality of a corporation
is abused or used for wrongful purposes.
IV
On the issue of forum shopping, there could have been a violation of
the rules thereon if petitioner and Marcopper were indeed one and the
same entity. But since petitioner has a separate personality, it has the
right to pursue its third-party claim by filing the independent
reivindicatory action with the RTC of Boac, Marinduque, pursuant to
Rule 39, Section 16 of the 1997 Rules of Civil Procedures. This
remedy has been recognized in a long line of cases decided by this
Court.41 In Rodriguez vs. Court of Appeals,42 we held:
". . . It has long been settled in this jurisdiction that the claim
of ownership of a third party over properties levied for
execution of a judgment presents no issue for determination
by the court issuing the writ of execution.
. . .Thus, when a property levied upon by the sheriff pursuant
to a writ of execution is claimed by third person in a sworn
statement of ownership thereof, as prescribed by the rules,
an entirely different matter calling for a new adjudication
arises. And dealing as it does with the all important question
of title, it is reasonable to require the filing of proper
pleadings and the holding of a trial on the matter in view of
the requirements of due process.
. . . In other words, construing Section 17 of Rule 39 of the
Revised Rules of Court (now Section 16 of the 1997 Rules of
Civil Procedure), the rights of third-party claimants over
certain properties levied upon by the sheriff to satisfy the
judgment may not be taken up in the case where such
claims are presented but in a separate and independent
action instituted by the claimants." (Emphasis supplied)
This "reivindicatory action" has for its object the recovery of ownership
or possession of the property seized by the sheriff, despite the third
party claim, as well as damages resulting therefrom, and it may be
brought against the sheriff and such other parties as may be alleged to
have connived with him in the supposedly wrongful execution
proceedings, such as the judgment creditor himself. Such action is an
entirely separate and distinct action from that in which execution has
been issued. Thus, there being no identity of parties and cause of
action between Civil Case No. 98-13 (RTC, Boac) and those cases
filed by Marcopper, including Civil Case No. 96-80083 (RTC, Manila)
as to give rise to res judicata or litis pendentia, Solidbanks allegation
of forum-shopping cannot prosper.43
All considered, we find petitioner to be entitled to the issuance of a writ
of preliminary injunction. Section 3, Rule 58 of the 1997 Rules of Civil
Procedure provides:
xxx
xxx
xxx
xxx
against petitioner SBMA for Injunction and Damages with prayer for a
writ of temporary restraining order and writ of preliminary injunction. On
3 October 1997, respondent court issued the two assailed orders
subject of the petition."
Ruling of the Court of Appeals
The Court of Appeals upheld the capacity to sue of Respondent
Universal International Group of Taiwan (UIG) because petitioners,
having entered into a Lease Development Agreement (LDA) with it,
were estopped from questioning its standing. It also held that
Respondents UIG International Development Corporation (UIGDC)
and Subic Bay Golf and Country Club, Inc., (SBGCCI) were real
parties in interest because they had made substantial investments in
the venture and had been in possession of the property when Subic
Bay Metropolitan Authority (SBMA) rescinded the LDA.
Likewise, it debunked petitioners submission that Section 21 of RA
72279 was "a blanket proscription against the issuance of any and all
injunctive relief[s] against SBMA." It said that "those actions which are
removed from the stated objectives of the corporate entity x x x cannot
be placed beyond the pale of prohibitory writs."10
While it conceded that the law allowed extrajudicial rescission of a
contract, it ruled that "no rationalization was possible" for the
extrajudicial taking of possession. It reasoned that "no one may take
the law into his own hands. To hold otherwise would be productive of
nothing but mischief and chaos."
It also rejected petitioners reliance on Consing v. Jamandre,11 in which
the Supreme Court allowed a contractual stipulation giving the lessor
the right to take possession of the leased property without need of
court order. It explained that Consing was a "judicial aberration, not
common but not unknown in the body of our jurisprudence, which lays
down a ruling contrary to the teaching of the greater mass of cases."12
Furthermore, it held that the issuance of the Writ of Preliminary
Injunction did not dispose of the main issue. Concluding, it observed
that "we cannot and should not send the message to foreigners who do
business here that we are a group of jingoists who cannot look beyond
our narrow interests and must look at every stranger with a wary eye
and treat them with uneven hands."
Disagreeing with the above judgment, petitioners elevated the matter
to this Court.13
The Issues
In its Memorandum, Petitioner SBMA submits the following issues for
our consideration:14
I. "Whether or not the respondent court committed a reversible error in
ruling that petitioners action of extra-judicially recovering the
possession of the subject premises is supposedly illegal [as it] runs
counter to the established law and [the] applicable decisions of the
Supreme Court on the matter.
II."Whether or not the respondent court committed a reversible error in
ruling that:
(a) The trial court ha[d] jurisdiction over the nature and subject matter
of the case despite the fact that the suit filed by private respondents is
essentially an ejectment case, and(b) The trial court ha[d] authority to
Interest
of
Petitioners contend that the RTC was barred from issuing a writ of
injunction in this case, pursuant to Section 21 of RA 7227 which
provides as follows:
"Sec. 21. Injunction and Restraining Order. -- The implementation of
the projects for the conversion into alternative productive uses of the
military reservations is urgent and necessary and shall not be
restrained or enjoined except by an order issued by the Supreme Court
of the Philippines."25
We are not persuaded. We agree with the CA that the present
provision is not a blanket prohibition of the issuance of an injunctive
relief against any SBMA action. Section 21 of RA 7227 prohibits only
such court orders which restrain the "implementation of the projects for
the conversion into alternative productive uses of the military
reservations."
The Writ issued in this case did not restrain or enjoin the
implementation of any of SBMAs conversion projects. In fact, it
allowed UIG to proceed with the development of the golf course
pursuant to the LDA. It merely restrained SBMA from taking over the
golf course. Clearly, the assailed RTC Order did not seek to delay or
hamper the conversion of the former naval base into civilian uses.
Moreover, the assailed Writ of Preliminary Injunction was issued in
connection with a dispute pertaining to the correct interpretation of the
LDA. To divest the trial court of that authority is to give SBMA
unhampered discretion to disregard its contractual obligations under
the guise of implementing its projects. Indeed, Section 21 of RA 7227
should not bar judicial scrutiny of irregularities allegedly committed by
SBMA.26
(b) Right of Respondents to Injunctive Relief
A writ of mandatory injunction requires the performance of a particular
act27 and is granted only upon a showing of the following requisites:
"1. The invasion of the right is material and substantial;
2. The right of a complainant is clear and unmistakable.
3. There is an urgent and permanent necessity for the writ to prevent
serious damage."28
Because it commands the performance of an act, a mandatory
injunction does not preserve the status quo 29 and is thus more
cautiously regarded than a mere prohibitive injunction. Accordingly, the
issuance of the former is justified only in a clear case, free from doubt
and dispute. Necessarily, the applicant has the burden of showing that
it is entitled to the writ.
In this case, the first assailed RTC Order dated October 3, 1997 was
effectively a preliminary mandatory injunction because it "directed
[herein petitioners] to restore peacefully to the [herein respondents]
possession of the golf course, clubhouse, offices and other
appurtenances subject of the Lease and Development Agreement
between UIG Taiwan and the SBMA." In addition, it was also a
prohibitive injunction because it restrained petitioners from obstructing
or meddling in the operation and management of the disputed property.
based its assailed Order mainly on the ground that SBMAs takeover
was "not legally justifiable." Thus, it ruled in this wise:30
"From all the foregoing, the Court is of the considered view that the
forcible take over [by] the [petitioners] of the golf course and its
appurtenances is not legally justifiable. Based on the evidence
adduced during the hearing, the [respondents] have established a
clear right to continue the operation and management of the golf
course, and x x x continued withholding of the premises by the
[petitioners] will result to irreparable damages to [respondents]."
Furthermore, the CA did not make any categorical ruling that
respondents established a "clear and unmistakable right" to the Writ.
Like the RTC, it emphasized that there was "no rationalization" for
SBMAs extrajudicial takeover of the disputed property. In other words,
both the CA and the trial court effectively ruled that respondents are
entitled to the Writ of Mandatory Injunction because SBMAs action
was not in accordance with law.
On this point, we disagree with the trial and the appellate courts. As we
will now show, there is legal basis for petitioners rescission of the
contract and takeover of the property without any court order.
(c) Legality of SBMAs Rescission of the LDA and Takeover of the
Property
Because of UIGs failure to comply with several of its contractual
undertakings, SBMA rescinded the LDA and took over the possession,
the operation and the management of the property without any judicial
imprimatur. In doing so, it relied on the provisions of the LDA, which we
quoted earlier.
The Court of Appeals held that the extrajudicial rescission of the LDA
was lawful, but that the extrajudicial takeover of the property was not. It
relied on Nera v. Vacante,31 in which the Supreme Court held:
"x x x. A stipulation entitling one party to take possession of the land
and building if the other party violates the contract does not ex proprio
vigore confer upon the former the right to take possession thereof if
objected to without judicial intervention and determination."
It also cited Zulueta v. Mariano,32 which reiterated the above-quoted
ruling. That case was purportedly applicable because it involved a
similar contractual stipulation, which reads as follows:
"12. That upon failure of the BUYER to fulfill any of the conditions
herein stipulated, BUYER automatically and irrevocably authorizes
OWNER to recover extra-judicially, physical possession of the land,
building and other improvements which are subject of this contract,
and to take possession also extra-judicially whatever personal
properties may be found within the aforesaid premises from the date of
said failure to answer for whatever unfulfilled monetary obligations
BUYER may have with OWNER; and this contract shall be considered
as without force and effect also from said date; x x x."
Because Zulueta was a subsequent Decision, it supposedly overturned
the "diametrically opposed" earlier ruling in Consing v. Jamandre,33 in
which the Supreme Court upheld a contractual stipulation authorizing
the sub-lessor to take possession of the leased premises in case of
contractual breach. As earlier noted, the CA also ruled that Consing
was a "judicial aberration."
We disagree. At the outset, it should be underscored that these cases
are not "diametrically opposed" to each other. In fact, they coexist. It
should be noted also that the CA erred in holding that Zulueta, being a
later case, overturned Consing. The CA logic is flawed, because after
the promulgation of Zulueta, Consing was reiterated in 1991 in Viray v.
IAC.34
Moreover, Zulueta and Nera recognized the validity and the effectivity
of a contractual provision authorizing the extrajudicial rescission of a
contract and the concomitant recovery of possession. Like Nera,
Zulueta merely added the qualification that the stipulation "has legal
effect x x x where the other party does not oppose it. Where it is
objected to, a judicial determination of the issues is still necessary."
Significantly, they did not categorically rule that such stipulation was
void.
In fact, the stipulation is lawful. In Consing, the Court held that "this
kind of contractual stipulation is not illegal, there being nothing in the
law proscribing such kind of agreement." 35 Affirming this ruling, the
Court in Viray v. IAC36 reiterated that the stipulation "was in the nature
of a resolutory condition, for upon the exercise by the sub-lessor of his
right to take possession of the leased property, the contract is deemed
terminated."
UP v. De los Angeles37 is instructive on this point. Pursuant to a
stipulation similar to that in the present case, the University of the
Philippines (UP) rescinded its Logging Agreement with ALUMCO and
subsequently appointed another concessionaire to take over the
logging operation. Hence, the issue was "whether [P]etitioner UP can
treat its contract with ALUMCO rescinded, and may disregard the
same before any judicial pronouncement to that effect." Ruling in favor
of UP, the Court held that a party could enforce such stipulation:
"[T]he party who deems the contract violated may consider it resolved
or rescinded, and act accordingly, without previous court action, but it
proceeds at its own risk. For it is only the final judgment of the
corresponding court that will conclusively and finally settle whether the
action taken was or was not correct in law. But the law definitely does
not require that the contracting party who believes itself injured must
first file suit and wait for a judgment before taking extrajudicial steps to
protect its interest. Otherwise, the party injured by the others breach
will have to passively sit and watch its damages accumulate during the
pendency of the suit until the final judgment of rescission is rendered
when the law itself requires that he should exercise due diligence to
minimize its own damages." (Emphasis supplied.)
The Court also noted that the rescission was "provisional" and "subject
to scrutiny and review by the proper court." It further noted that "if the
other party denies that rescission is justified, it is free to resort to
judicial action in its own behalf, and bring the matter to court." It
observed that the "practical effect of the stipulation [was] to transfer to
the defaulter the initiative of instituting suit, instead of the rescinder."
In the present case, it is clear that the subject stipulation is allowed by
law. Moreover, a party is free to enforce it by rescinding the contract
and recovering possession of the property even without court
intervention. Where it is objected to, however, a judicial determination
of the issue is still necessary.38 Force or bloodshed cannot be justified
in the enforcement of the stipulation. Where the lessees offer physical
resistance, the lessors may apply for a writ of preliminary mandatory
injunction, to which they have a clear and unmistakable right. Indeed,
courts are the final arbiters.
Thus, contrary to the ruling of the CA and the RTC, there is a
rationalization and a legal justification for the stipulation authorizing
SBMA to rescind the contract and to take over the property.
during the trial on the merits, the Court holds that they failed to do so in
their application for a writ of preliminary injunction.
Epilogue
The Court of Appeals expressed its apprehension that a ruling against
UIG would send a message to foreign investors that we "are a group of
jingoists." We do not share that view. Jingoism is not an issue here.
Far from it. In partially reversing the CA, this Court is merely
performing its mandate to do justice and to apply the law to the facts of
the case. It is merely affirming the message that in this country, the rule
of law prevails; and contracts freely entered into, whether by foreign or
by local investors, must be complied with. Indeed, rule of law and
faithfulness in the performance of contracts are cherished values
everywhere.
WHEREFORE, the Petition is partially GRANTED, and the assailed
Decision of the Court of Appeals REVERSED and SET ASIDE insofar
as it affirmed the Writ of Preliminary Injunction issued by the trial court.
The said Writ is hereby LIFTED and the case REMANDED to the RTC
for trial on the merits. In the meantime, respondents shall, upon finality
of this Decision, yield the possession, the operation and the
management of the subject property to SBMA. No costs.
G.R. No. 127768 November 19, 1999
UNITED AIRLINES, petitioner, vs.WILLIE J. UY, respondent.
BELLOSILLO, J.:
UNITED AIRLINES assails in this petition for review on certiorari under
Rule 45 the 29 August 1995 Decision of the Court of Appeals in CAG.R. CV No. 39761 which reversed the 7 August 1992 order issued by
the trial court in Civil Case No. Q-92-12410 1 granting petitioner's
motion to dismiss based on prescription of cause of action. The issues
sought to be resolved are whether the notice of appeal to the appellate
court was timely filed, and whether Art. 29 of the Warsaw
Convention 2 should apply to the case at bar.
On 13 October 1989 respondent Willie J. Uy, a revenue passenger on
United Airlines Flight No. 819 for the San Francisco Manila route,
checked in together with his luggage one piece of which was found to
be overweight at the airline counter. To his utter humiliation, an
employee of petitioner rebuked him saying that he should have known
the maximum weight allowance to be 70 kgs. per bag and that he
should have packed his things accordingly. Then, in a loud voice in
front of the milling crowd, she told respondent to repack his things and
transfer some of them from the overweight luggage to the lighter ones.
Not wishing to create further scene, respondent acceded only to find
his luggage still overweight. The airline then billed him overweight
charges which he offered to pay with a miscellaneous charge order
(MCO) or an airline pre-paid credit. However, the airline's employee,
and later its airport supervisor, adamantly refused to honor the MCO
pointing out that there were conflicting figures listed on it. Despite the
explanation from respondent that the last figure written on the MCO
represented his balance, petitioner's employees did not accommodate
him. Faced with the prospect of leaving without his luggage,
respondent paid the overweight charges with his American Express
credit card.
Respondent's troubles did not end there. Upon arrival in Manila, he
discovered that one of his bags had been slashed and its contents
stolen. He particularized his losses to be around US $5,310.00. In a
letter dated 16 October 1989 respondent bewailed the insult,
embarrassment and humiliating treatment he suffered in the hands of
United Airlines employees, notified petitioner of his loss and requested
reimbursement thereof. Petitioner United Airlines, through Central
Baggage Specialist Joan Kroll, did not refute any of respondent's
allegations and mailed a check representing the payment of his loss
based on the maximum liability of US $9.70 per pound. Respondent,
thinking the amount to be grossly inadequate to compensate him for
his losses, as well as for the indignities he was subjected to, sent two
(2) more letters to petitioner airline, one dated 4 January 1990 through
a certain Atty. Pesigan, and another dated 28 October 1991 through
Atty. Ramon U. Ampil demanding an out-of-court settlement of
P1,000,000.00. Petitioner United Airlines did not accede to his
demands.
Consequently, on 9 June 1992 respondent filed a complaint for
damages against United Airlines alleging that he was a person of good
station, sitting in the board of directors of several top 500 corporations
and holding senior executive positions for such similar firms; 3 that
petitioner airline accorded him ill and shabby treatment to his extreme
embarrassment and humiliation; and, as such he should be paid moral
damages of at least P1,000,000.00, exemplary damages of at least
P500,000.00, plus attorney's fees of at least P50,000.00. Similarly, he
alleged that the damage to his luggage and its stolen contents
amounted to around $5,310.00, and requested reimbursement
therefor.
United Airlines moved to dismiss the complaint on the ground that
respondent's cause of action had prescribed, invoking Art. 29 of the
Warsaw Convention which provides
Art. 29 (1) The right to damages shall be
extinguished if an action is not brought within two
(2) years, reckoned from the date of arrival at the
destination, or from the date on which the aircraft
ought to have arrived, or from the date on which
the transportation stopped.
(2) The method of calculating the period of
limitation shall be determined by the law of the
court to which the case is submitted.
Respondent countered that par. (1) of Art. 29 of the Warsaw
Convention must be reconciled with par. (2) thereof which states that
"the method of calculating the period of limitation shall be determined
by the law of the court to which the case is submitted." Interpreting
thus, respondent noted that according to Philippine laws the
prescription of actions is interrupted "when they are filed before the
court, when there is a written extrajudicial demand by the creditors,
and when there is any written acknowledgment of the debt by the
debtor." 4 Since he made several demands upon United Airlines: first,
through his personal letter dated 16 October 1989; second, through a
letter dated 4 January 1990 from Atty. Pesigan; and, finally, through a
letter dated 28 October 1991 written for him by Atty. Ampil, the two (2)year period of limitation had not yet been exhausted.
On 2 August 1992 the trial court ordered the dismissal of the action
holding that the language of Art. 29 is clear that the action must be
brought within two (2) years from the date of arrival at the destination.
It held that although the second paragraph of Art. 29 speaks of
deference to the law of the local court in "calculating the period of
limitation," the same does not refer to the local forum's rules in
interrupting the prescriptive period but only to the rules of determining
the time in which the action may be deemed commenced, and within
our jurisdiction the action shall be deemed "brought" or commenced by
the filing of a complaint. Hence, the trial court concluded that Art. 29
excludes the application of our interruption rules.
Respondent received a copy of the dismissal order on 17 August 1992.
On 31 August 1992, or fourteen (14) days later, he moved for the
reconsideration of the trial court's order. The trial court denied the
motion and respondent received copy of the denial order on 28
September 1992. Two (2) days later, on 1 October 1992 respondent
filed his notice of appeal.
United Airlines once again moved for the dismissal of the case this
time pointing out that respondent's fifteen (15)-day period to appeal
had already elapsed. Petitioner argued that having used fourteen (14)
days of the reglementary period for appeal, respondent Uy had only
one (1) day remaining to perfect his appeal, and since he filed his
notice of appeal two (2) days later, he failed to meet the deadline.
In its questioned Decision dated 29 August 1995 5 the appellate court
gave due course to the appeal holding that respondent's delay of two
(2) days in filing his notice of appeal did not hinder it from reviewing the
appealed order of dismissal since jurisprudence dictates that an appeal
In the same vein must we rule upon the circumstances brought before
us. Verily, respondent filed his complaint more than two (2) years later,
beyond the period of limitation prescribed by the Warsaw Convention
for filing a claim for damages. However, it is obvious that respondent
was forestalled from immediately filing an action because petitioner
airline gave him the runaround, answering his letters but not giving in
to his demands. True, respondent should have already filed an action
at the first instance when his claims were denied by petitioner but the
same could only be due to his desire to make an out-of-court
settlement for which he cannot be faulted. Hence, despite the express
mandate of Art. 29 of the Warsaw Convention that an action for
damages should be filed within two (2) years from the arrival at the
place of destination, such rule shall not be applied in the instant case
because of the delaying tactics employed by petitioner airline itself.
Thus, private respondent's second cause of action cannot be
considered as time-barred under Art. 29 of the Warsaw Convention.
WHEREFORE, the assailed Decision of the Court of Appeals reversing
and setting aside the appealed order of the trial court granting the
motion to dismiss the complaint, as well as its Resolution denying
reconsideration, is AFFIRMED. Let the records of the case be
remanded to the court of origin for further proceedings taking its
bearings from this disquisition.
[G.R. Nos. 121576-78. June 16, 2000]
BANCO DO BRASIL, petitioner, vs. THE COURT OF APPEALS, HON.
ARSENIO M. GONONG, and CESAR S. URBINO, SR., respondents.
DECISION
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the Decision[1] and the
Resolution[2] of the Court of Appeals[3] dated July 19, 1993 and August
15, 1995, respectively, which reinstated the entire Decision [4] dated
February 18, 1991 of the Regional Trial Court of Manila, Branch 8,
holding, among others, petitioner Banco do Brasil liable to private
respondent Cesar Urbino, Sr. for damages amounting to $300,000.00.
[5]
At the outset, let us state that this case should have been consolidated
with the recently decided case of Vlason Enterprises Corporation v.
Court of Appeals and Duraproof Services, represented by its General
Manager, Cesar Urbino Sr.[6], for these two (2) cases involved the
same material antecedents, though the main issue proffered in the
present petition vary with the Vlason case.
The material antecedents, as quoted from the Vlason[7] case, are:
Poro Point Shipping Services, then acting as the
local agent of Omega Sea Transport Company of
Honduras & Panama, a Panamanian Company
(hereafter referred to as Omega), requested
permission for its vessel M/V Star Ace, which had
engine trouble, to unload its cargo and to store it
at the Philippine Ports Authority (PPA) compound
in San Fernando, La Union while awaiting
transhipment to Hongkong. The request was
approved by the Bureau of Customs.[8] Despite the
approval, the customs personnel boarded the
vessel when it docked on January 7, 1989, on
suspicion that it was the hijacked M/V Silver Med
owned by Med Line Philippines Co., and that its
cargo would be smuggled into the country.[9] The
district customs collector seized said vessel and
its cargo pursuant to Section 2301, Tariff and
Customs Code. A notice of hearing of SFLU
Seizure Identification No. 3-89 was served on its
consignee, Singkong Trading Co. of Hongkong,
and its shipper, Dusit International Co., Ltd. of
Thailand.
While seizure proceedings were ongoing, La
Union was hit by three typhoons, and the vessel
ran aground and was abandoned. On June 8,
1989, its authorized representative, Frank
Cadacio, entered into salvage agreement with
effectively "giving way to the entire [decision dated February 18, 1991
of the x x x Regional Trial Court of Manila, Branch 8, in Civil Case No.
89-51451 which remains valid, final and executory, if not yet wholly
executed."[48]
Private respondent Urbino, Vlason Enterprises and petitioner Banco do
Brasil filed separate motions for reconsideration. For its part, petitioner
Banco do Brasil sought reconsideration, insofar as its liability for
damages, on the ground that there was no valid service of summons
as service was on the wrong party the ambassador of Brazil. Hence, it
argued, the trial court did not acquire jurisdiction over petitioner Banco
do Brasil.[49] Nonetheless, the appellate court denied the motions for
reconsideration in its Resolution[50] dated August 15, 1995.
Hence, the instant petition.
Petitioner Banco do Brasil takes exception to the appellate courts
declaration that the suit below is in rem, not in personam,[51] thus,
service of summons by publication was sufficient for the court to
acquire jurisdiction over the person of petitioner Banco do Brasil, and
thereby liable to private respondent Cesar Urbino for damages
claimed, amounting to $300,000.00. Petitioner further challenges the
finding that the February 18, 1991 decision of the trial court was
already final and thus, cannot be modified or assailed.[52]
Petitioner avers that the action filed against it is an action for damages,
as such it is an action in personam which requires personal service of
summons be made upon it for the court to acquire jurisdiction over it.
However, inasmuch as petitioner Banco do Brasil is a non-resident
foreign corporation, not engaged in business in the Philippines, unless
it has property located in the Philippines which may be attached to
convert the action into an action in rem, the court cannot acquire
jurisdiction over it in respect of an action in personam.
The petition bears merit, thus the same should be as it is hereby
granted.
First. When the defendant is a nonresident and he is not found in the
country, summons may be served extraterritorially in accordance
with Rule 14, Section 17[53] of the Rules of Court.Under this provision,
there are only four (4) instances when extraterritorial service of
summons is proper, namely: "(1) when the action affects the personal
status of the plaintiffs; (2) when the action relates to, or the subject of
which is property, within the Philippines, in which the defendant claims
a lien or interest, actual or contingent; (3) when the relief demanded in
such action consists, wholly or in part, in excluding the defendant from
any interest in property located in the Philippines; and (4) when the
defendant non-residents property has been attached within the
Philippines."[54] In these instances, service of summons may be
effected by (a) personal service out of the country, with leave of court;
(b) publication, also with leave of court; or (c) any other manner the
court may deem sufficient.[55]
Clear from the foregoing, extrajudicial service of summons apply only
where the action is in rem, an action against the thing itself instead of
against the person, or in an action quasi in rem, where an individual is
named as defendant and the purpose of the proceeding is to subject
his interest therein to the obligation or loan burdening the property.
This is so inasmuch as, in in rem and quasi in rem actions, jurisdiction
over the person of the defendant is not a prerequisite to confer
jurisdiction on the court provided that the court acquires jurisdiction
over the res.[56]
However, where the action is in personam, one brought against a
person on the basis of his personal liability, jurisdiction over the person
of the defendant is necessary for the court to validly try and decide the
case. When the defendant is a non-resident, personal service of
summons within the state is essential to the acquisition of jurisdiction
over the person.[57]This cannot be done, however, if the defendant is
not physically present in the country, and thus, the court cannot
acquire jurisdiction over his person and therefore cannot validly try and
decide the case against him.[58]
In the instant case, private respondents suit against petitioner is
premised on petitioners being one of the claimants of the subject
vessel M/V Star Ace.[59] Thus, it can be said that private respondent
initially sought only to exclude petitioner from claiming interest over the
subject vessel M/V Star Ace. However, private respondent testified
Evidently, the Pasig City Civil Registry Office was aware of the
requirement of a court recognition, as it cited NSO Circular No. 4,
series of 1982,36 and Department of Justice Opinion No. 181, series of
198237 both of which required a final order from a competent
Philippine court before a foreign judgment, dissolving a marriage, can
be registered in the civil registry, but it, nonetheless, allowed the
registration of the decree. For being contrary to law, the registration of
the foreign divorce decree without the requisite judicial recognition is
patently void and cannot produce any legal effect.1avvphi1
Another point we wish to draw attention to is that the recognition that
the RTC may extend to the Canadian divorce decree does not, by
itself, authorize the cancellation of the entry in the civil registry. A
petition for recognition of a foreign judgment is not the proper
proceeding, contemplated under the Rules of Court, for the
cancellation of entries in the civil registry.
Article 412 of the Civil Code declares that "no entry in a civil register
shall be changed or corrected, without judicial order." The Rules of
Court supplements Article 412 of the Civil Code by specifically
providing for a special remedial proceeding by which entries in the civil
registry may be judicially cancelled or corrected. Rule 108 of the Rules
of Court sets in detail the jurisdictional and procedural requirements
that must be complied with before a judgment, authorizing the
cancellation or correction, may be annotated in the civil registry. It also
requires, among others, that the verified petition must be filed with the
RTC of the province where the corresponding civil registry is
located;38 that the civil registrar and all persons who have or claim any
interest must be made parties to the proceedings; 39 and that the time
and place for hearing must be published in a newspaper of general
circulation.40As these basic jurisdictional requirements have not been
met in the present case, we cannot consider the petition Gerbert filed
with the RTC as one filed under Rule 108 of the Rules of Court.
We hasten to point out, however, that this ruling should not be
construed as requiring two separate proceedings for the registration of
a foreign divorce decree in the civil registry one for recognition of the
foreign decree and another specifically for cancellation of the entry
under Rule 108 of the Rules of Court. The recognition of the foreign
divorce decree may be made in a Rule 108 proceeding itself, as the
object of special proceedings (such as that in Rule 108 of the Rules of
Court) is precisely to establish the status or right of a party or a
particular fact. Moreover, Rule 108 of the Rules of Court can serve as
the appropriate adversarial proceeding41 by which the applicability of
the foreign judgment can be measured and tested in terms of
jurisdictional infirmities, want of notice to the party, collusion, fraud, or
clear mistake of law or fact.
WHEREFORE, we GRANT the petition for review on certiorari, and
REVERSE the October 30, 2008 decision of the Regional Trial Court of
Laoag City, Branch 11, as well as its February 17, 2009 order. We
order the REMAND of the case to the trial court for further proceedings
in accordance with our ruling above. Let a copy of this Decision be
furnished the Civil Registrar General. No costs.
SO ORDERED.
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