Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&amp;view=article&amp;id=33855:g-r-no-104235-november-18,-1993-zalamea-v-court-of-appeals,-et-al&amp;catid=1308&amp;Itemid=566
Timestamp: 2019-04-18 19:07:59+00:00

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SPOUSES CESAR & SUTHIRA ZALAMEA AND LIANA ZALAMEA, Petitioners, v. HONORABLE COURT OF APPEALS AND TRANSWORLD AIRLINES, INC., Respondents.
Sycip, Salazar, Hernandez, Gatmaitan, for Petitioners.
Quisumbing, Torres & Evangelista for private-respondent.
1.	REMEDIAL LAW; EVIDENCE; FOREIGN LAWS, HOW PROVED. — That there was fraud or bad faith on the part of respondent airline when it did not allow petitioners to board their flight for Los Angeles in spite of confirmed tickets cannot be disputed. The U.S. law or regulation allegedly authorizing overbooking has never been proved. Foreign laws do not prove themselves nor can the courts take judicial notice of them. Like any other fact, they must be alleged and proved. Written law may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied with a certificate that such officer has custody. The certificate may be made by a secretary of an embassy or legation, consul general, consul, vice-consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.
2.	ID.; ID.; ID.; U.S. LAW OR REGULATION AUTHORIZING OVERBOOKING, NOT PROVED BY MERE TESTIMONY OF RESPONDENT’S AIRLINE CUSTOMER SERVICE AGENT. — Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in her deposition dated January 27, 1986 that the Code of Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside from said statement, no official publication of said code was presented as evidence. Thus, respondent court’s finding that overbooking is specifically allowed by the US Code of Federal Regulations has no basis in fact.
3.	CIVIL LAW; APPLICATION OF LAWS; CONTRACT GOVERNED BY LAWS OF PLACE WHERE EXECUTED; CASE AT BAR. — Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at bar in accordance with the principle of lex loci contractus which requires that the law of the place where the airline ticket was issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant airline. Since the tickets were sold and issued in the Philippines, the applicable law in this case would be Philippine law.
6.	ID.; ID.; NON-INCORPORATION OF STIPULATIONS ON OVERBOOKING AND IN NOT INFORMING PASSENGERS OF ITS POLICY GIVING LESS PRIORITY TO DISCOUNTED TICKET, CONSTITUTE BAD FAITH; PASSENGERS ENTITLED TO BOTH MORAL AND EXEMPLARY DAMAGES; CASE AT BAR. — Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to properly inform its passengers about these policies so that the latter would be prepared for such eventuality or would have the choice to ride with another airline. Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to discounted tickets. It is respondent TWA’s position that the practice of overbooking and the airline system of boarding priorities are reasonable policies, which when implemented do not amount to bad faith. But the issue raised in this case is not the reasonableness of said policies but whether or not said policies were incorporated or deemed written on petitioners’ contracts of carriage. Respondent TWA failed to show that there are provisions to that effect. Neither did it present any argument of substance to show that petitioners were duly apprised of the overbooked condition of the flight or that there is a hierarchy of boarding priorities in booking passengers. It is evident that petitioners had the right to rely upon the assurance of respondent TWA, thru its agent in Manila, then in New York, that their tickets represented confirmed seats without any qualification. The failure of respondent TWA to so inform them when it could easily have done so thereby enabling respondent to hold on to them as passengers up to the last minute amounts to bad faith. Evidently, respondent TWA placed its self-interest over the rights of petitioners under their contracts of carriage. Such conscious disregard of petitioners’ rights makes respondent TWA liable for moral damages. To deter breach of contracts by respondent TWA in similar fashion in the future, we adjudge respondent TWA liable for exemplary damages, as well. However, the award for moral and exemplary damages by the trial court is excessive in the light of the fact that only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral damages and another P50,000.00 exemplary damages would suffice under the circumstances obtaining in the instant case.
7.	ID.; ID.; PASSENGER ENTITLED TO REIMBURSEMENT FOR COST OF TICKETS BOUGHT FOR ANOTHER FLIGHT ON ANOTHER AIRLINE; CASE AT BAR. — The respondent court erred, however, in not ordering the refund of the cost of the American Airlines tickets purchased and used by petitioners Suthira and Liana. The evidence shows that petitioners Suthira and Liana were constrained to take the American Airlines flight to Los Angeles not because they "opted not to use their TWA tickets on another TWA flight" but because respondent TWA could not accommodate them either on the next TWA flight which was also fully booked. The purchase of the American Airlines tickets by petitioners Suthira and Liana was the consequence of respondent TWA’s unjustifiable breach of its contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code, respondent TWA should, therefore, be responsible for all damages which may be reasonably attributed to the non-performance of its obligation. In the previously cited case of Alitalia Airways v. Court of Appeals, this Court explicitly held that a passenger is entitled to be reimbursed for the cost of the tickets he had to buy for a flight on another airline. Thus, instead of simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the actual cost of their flight from New York to Los Angeles.
8.	ID.; ID.; ATTORNEY’S FEES; RECOVERABLE WHERE A PARTY WAS COMPELLED TO LITIGATE TO PROTECT HIS RIGHTS. — The award to petitioners of attorney’s fees is also justified under Article 2208(2) of the Civil Code which allows recovery when the defendant’s act or omission has compelled plaintiff to litigate or to incur expenses to protect his interest.
Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea, purchased three (3) airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight from New York to Los Angeles on June 6, 1984. The tickets of petitioners-spouses were purchased at a discount of 75% while that of their daughter was a full fare ticket. All three tickets represented confirmed reservations.
Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated because it was also fully booked. Thus, they were constrained to book in another flight and purchased two tickets from American Airlines at a cost of Nine Hundred Eighteen ($918.00) Dollars.
"(6)	The costs of suit.
On appeal, the respondent Court of Appeals held that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage only where there is fraud or bad faith. Since it is a matter of record that overbooking of flights is a common and accepted practice of airlines in the United States and is specifically allowed under the Code of Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld Airlines.
Moreover, while respondent TWA was remiss in not informing petitioners that the flight was overbooked and that even a person with a confirmed reservation may be denied accommodation on an overbooked flight, nevertheless it ruled that such omission or negligence cannot under the circumstances be considered to be so gross as to amount to bad faith.
"(3)	P50,000.00 as and for attorney’s fees.
"(4)	The costs of suit.
". . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART OF RESPONDENT TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.
". . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.
Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at bar in accordance with the principle of lex loci contractus which requires that the law of the place where the airline ticket was issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is issued in such State by the defendant airline. 8 Since the tickets were sold and issued in the Philippines, the applicable law in this case would be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, 9 where passengers with confirmed bookings were refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case all of them would show up for check in. For the indignity and inconvenience of being refused a confirmed seat on the last minute, said passenger is entitled to an award of moral damages.
In fact, existing jurisprudence abounds with rulings where the breach of contract of carriage amounts to bad faith. In Pan American World Airways, Inc. v. Intermediate Appellate Court, 11 where a would-be passenger had the necessary ticket, baggage claim and clearance from immigration all clearly and unmistakably showing that she was indeed a confirmed passenger and that she was, in fact, included in the passenger manifest of said flight, and yet was denied accommodation in said flight, this Court did not hesitate to affirm the lower court’s finding awarding her damages.
Respondent TWA contends that Exhibit I, the detached flight coupon upon which were written the name of the passenger and the points of origin and destination, contained such a notice. An examination of Exhibit I does not bear this out. At any rate, said exhibit was not offered for the purpose of showing the existence of a notice of overbooking but to show that Exhibit I was used for Flight 007 in first class of June 11, 1984 from New York to Los Angeles.
Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before departure time because the full-fare ticket he was holding was given priority over discounted tickets. The other two petitioners were left behind.
Petitioners also assail the respondent court’s decision not to require the refund of Liana Zalamea’s ticket because the ticket was used by her father. On this score, we uphold the respondent court. Petitioners had not shown with certainty that the act of respondent TWA in allowing Mr. Zalamea to use the ticket of her daughter was due to inadvertence or deliberate act. Petitioners had also failed to establish that they did not accede to said arrangement. The logical conclusion, therefore, is that both petitioners and respondent TWA agreed, albeit impliedly, to the course of action taken.
The award to petitioners of attorney’s fees is also justified under Article 2208(2) of the Civil Code which allows recovery when the defendant’s act or omission has compelled plaintiff to litigate or to incur expenses to protect his interest. However, the award for moral and exemplary damages by the trial court is excessive in the light of the fact that only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral damages and another P50,000.00 exemplary damages would suffice under the circumstances obtaining in the instant case.
1.	Penned by Judge Job B. Madayag.
3.	Penned by Associate Justice Venancio D. Aldecoa, Jr. and concurred in by Associate Justices Jose C. Campos, Jr. and Filemon H. Mendoza.
6.	The Collector of Internal Revenue v. Fisher and Fisher v. The Collector of Internal Revenue, 110 Phil. 686 (1961).
7.	Salonga, Private International Law (1979), pp. 82-83.
9.	G.R. No. 77011, 187 SCRA 763 (1990).
10.	G.R. No. 61418, 154 SCRA 211 (1987).
11.	G.R. No. 74442, 153 SCRA 521 (1987).
12.	G.R. No. L-28589, 43 SCRA 397 (1972).
13.	TransWorld Airlines v. Court of Appeals, G.R. No. 78656, 165 SCRA 143 (1988).
14.	TSN, August 12, 1985, p. 19.

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