Professional Documents
Culture Documents
CONTRACTS
Conflicts of Law 2016
Report by:
Submitted to:
Dean-Doctor Ulpiano Sarmiento III
CHAPTER IX
CONTRACTS
I.
A. DEGREE OF SUBMISSION
1. Compulsory/Imperative effect- the law of the place where the
contract was executed is controlling
2. Permissive/Optional- Second American Restatement:
(1) The formalities required to make a valid contract are
determined by the local law of the State chosen by the
parties to govern their contract or, in default thereof, by the
local law of the state which has the most significant
relationship in the transaction;
(2) Formalities which meet the requirements of the place
where the parties execute the contract will usually be
acceptable.
Relevant Cases:
Molina v. Dela Riva, 6 Phil. 12 (1906)
Facts: Plaintiff transferred to the defendant the abaca and coprax
business theretofore carried on by him at various places in the
Island of Catanduanes, with all the property and right pertaining to
the said business, or the sum of 134,636 pesos and 12 cents,
payable in Mexican currency or its equivalent in local currency.
Defendant paid at the time of the execution of the contract, on
account of the purchase price, the sum of P33,659 pesos and 3
cents, promising to pay the balance on three installments. It was
for the recovery of this first installment that their action was
brought in the Court of First Instance of the City of Manila. The
complaint alleged that both parties were residents of Manila.
of
the
Civil
Code
optional
or
The rule nowadays is that the law that should govern a contract is the
law of the state with which the contract has its more significant
relationship.
2. As to married women
Article 39 of the Civil Code provides that a married
woman, 21 years of age or over, is qualified for all acts of
civil life, except in cases specified by law.
Article 165 provides that the wife is incapacitated to
bind the conjugal partnership without the husbands
consent. So what happens when the wife is disqualified to
enter into a contract by Philippine laws but otherwise
capacitated in another country where she contracts with?
II.
B. Particular contracts
1. Money deposits
- Such deposits of money, whether in sum or in specie are
naturally bound to the place of the banking or financial
institution to which they are entrusted. Logically, the law of
that place governs the deposit.
Two reasons:
(1) The money is brought to that place to be conserved and
repaid there; and
(2) The transaction is one of a mass of similar transactions
by the institution
N.B. Ruben Martinez vs. Court of Appeals, the Supreme Court,
citing Rabel, maintained the rule that money deposits are naturally
bound to the place of the banking or financial institution to which they
are entrusted. Hence, if a Filipino makes a deposit with the Swiss Credit
Bank in Zurich, all questions arising from the deposit such as service
charges, the manner of keeping the deposit, the effects of currency
fluctuations, the mode of withdrawal of the deposits in Switzerland will
usually be determined by the law prevailing in that place. Thus, Swiss
banking privacy laws have made it possible for persons of all
nationalities to safeguard their assets and to keep them away from
inquiry. In protecting their customers privacy, Swiss banks have also
become an instrument in the money laundering practices of businesses
and individuals.
2. Contracts With Arbitration and Choice of Forum Clauses
An Arbitration Clause is a commonly used clause in a
contract that requires the parties to resolve their disputes through
an arbitration process. Although such a clause may or may not
specify that arbitration occur within a specific jurisdiction, it always
binds the parties to a type of resolution outside of the courts, and
is therefore considered a kind of forum selection clause.
Warsaw Convention
- a multilateral treaty governing international aviation, adhered
to by the Philippines and by most other countries whose
airlines have international routes. It is an international
convention which regulates liability for international carriage
of persons, luggage or goods performed by aircraft for
reward. The Convention was originally signed in 1929 in
Warsaw, was amended in 1955 at The Hague, and in 1975
in Montreal.
- concurred in by the Philippine Senate, per Resolution No.
19, on May 16, 1950
- signed by President Quirino on October 13, 1950 and
became applicable to the Philippines on February 9, 1951
- On September 23, 1955, President Magsaysay issued
Proclamation No. 201, declaring the Philippines formal
adherence to the Convention.
III.
questions, the lex fori may provide the answer, which may
lead to the applicability of a number of divergent laws.
Where the passengers are residents and nationals of
the forum and the ticket is issued in such State by the
defendant airline, the court may justifiably apply the law of
the forum in a suit covered by the provisions of the Warsaw
Convention.
In cases where the Convention does not apply, the
validity of the contract of carriage as well as the rights
created thereby are determined, in the absence of an
effective choice of law by the parties, by the local law of the
State from which the passenger departs or the goods are
dispatched, unless with respect to the particular issue, some
other State has a more significant relationship to the contract
and to the parties.
In the absence of an effective choice of law, the courts
have usually applied the local law of the State of departure,
sometimes on the stated ground that is was the place of
making or the center of gravity of the contract. The forum
has a sound legitimate basis for the application of the policy
found on its own internal law when it is the center of gravity
of the contract and has the most significant relationship to
the parties and the contract.
A. Liabilities Under the Convention
Chapter III of the Warsaw Convention, as amended- regulates the
liability of the carrier.
- Article 17 makes the carrier liable in the event of death or
wounding of any passenger or any other bodily injury suffered
by the passenger if the accident which caused the damage took
place on board the aircraft or in the course of the operation of
embarking or disembarking. Likewise, the carrier is liable for
damage sustained in the event of loss of, or damage to, any
checked baggage if the occurrence which caused the damage
took place during the transportation by air a term which
comprises the period during which the baggage or goods are in
the charge of the carrier, whether in an airport or on board an
aircraft or, in the case of landing outside of an airport, in any
place whatsoever.
- The carrier is liable for damage occasioned by delay in the
transportation by air of passenger, baggage or goods. The
Convention only applies to the air carrier and does not apply to
Issues:
1. Whether or not PAL is guilty of only simple
negligence and not gross negligence?
2. Whether the doctrine of limited liability doctrine
applies in the instant case?
Held1: PAL had not acted in bad faith. It exercised due
diligence in looking for petitioners luggage which had been
miscarried. Had petitioner waited or caused someone to wait
at the airport for the arrival of the morning flight which carried
his luggage, he would have been able to retrieve his luggage
sooner. In the absence of a wrongful act or omission or
fraud, the petitioner is not entitled to moral damages. Neither
is he entitled to exemplary damages absent any proof that
the defendant acted in a wanton, fraudulent, reckless
manner
Held2: The limited liability applies in this case. On the
presumed negligence of PAL, its liability for the loss
however, is limited on the stipulation written on the back of
the plane ticket which is P100 per baggage. The petitioner
not having declared a greater value and not having called
the attention of PAL on its true value and paid the tariff
therefore. The stipulation is printed in reasonably and fairly
big letters and is easily readable. Moreso, petitioner had
been a frequent passenger of PAL from Cebu to Butuan City
and back and he being a lawyer and a businessman, must
be fully aware of these conditions.
Pan American World Airways Inc. vs Intermediate Appellate
Court G.R. No. 70462 August 11, 1988
Facts: Pangan entered into two contracts regarding the
exhibition of films and the production of necessary
advertisement and promotional materials for such films. One
contract was entered in San Francisco, USA and the other,
in Guam. For the purpose of fulfilling his obligations in said
contracts, Pangan purchased tickets from petitioners Manila
office through Your Travel Guide tour and travel office. Two
hours before departure, Pangan checked in two luggages
and was issued baggage claim tickets. Upon arrival in
Guam, his two luggages containing the promotional and
advertising materials did not arrive, and as a consequence of
which, his agreements in Guam and in theUnited States
were cancelled. Upon arrival in the Philippines Pangan
contacted his lawyer, who made the necessary
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