SPOUSES ZALAMEA VS.

COURT OF APPEALS
Gr no. 104235 November 18, 1993

FACTS:

Spouses Zalamea purchased 3 airline tickets from the Manila Agent of

respondent TransWorld Airlines Inc. (TWA) for a flight to New York to Los
Angeles. Two tickets were purchased at a discount price and one was for a full-fare
price. On the time of their flight in New York, they were placed on the wait-list
because the number of the passengers who had checked in had already taken all the
seats available on the flight. Only the first 22 passengers in the wait-list including
Mr. Zalamea were allowed to board since those holding full-fare tickets were given
first priority. Mrs. Zalamea and their daughter were not able to board and were
constrained to buy airline tickets from another airline.

Upon their arrival in the Philippines, Spouses Zalamea filed an action for
damages based on breach of contract of carriage. The RTC ruled in favor of the
spouses which was overturned by the CA which held that moral damages are
recoverable only if there was fraud or bad faith in breaching the contract.

TWA contends that there was no bad faith on their part since The Code of
Federal Regulations of the Civil Aeronautics Board allows overbooking.

ISSUE:

Whether or not TWA was in bad faith and is liable for moral damages.

RULING:

YES. The US Law or regulation allegedly authorizing overbooking has

never been proved by TWA as no official publication of the said code was
presented as evidence. Even if the claimed US Code of Federal Regulations does
exist, the same is not applicable to the case at bar in accordance with the principle
of lex loxi contractus which require 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 respondent
airline. Since the tickets were sold and issued in the Philippines, the applicable law
in this case would be Philippine law.

Since existing jurisprudence in the Philippines explicitly states that overbooking

amounts to bad faith then the passengers concerned are entitled to an award of
moral damages.