CONFLICTS OF LAW

Zalamea vs. Court of Appeals

G.R. No. 104235
November 18, 1993

NOCON, J.:

FACTS:

Spouses Cesar and Suthira Zalamea, and their daughter, Liana Zalamea, purchased three (3)
airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. (TWA) for a flight
from New York to Los Angeles on June 6, 1984. The tickets of the spouses were purchased at a
discount of 75% while that of their daughter was a full fare ticket. All three tickets represented
confirmed reservations.

While in New York, on June 4, 1984, the spouses Zalamea and their daughter received a notice
of reconfirmation of their reservations for said flight. On the appointed date, however, the
spouses Zalamea and their daughter checked in at 10:00 am, an hour earlier than the scheduled
flight at 11:00 am but were placed on the wait-list because the number of passengers who
checked in before tem had already taken all the seats available on the flight.

Out of the 42 names on the wait-list, the first 22 names were eventually allowed to board the
flight to Los Angeles, including Cesar Zalamea. The two others, on the other hand, being ranked
lower than 22, were not able to fly. As it were, those holding full-fare ticket were given first
priority among the wait-listed passengers. Mr. Zalamea, who was holding the full-fare ticket of
his daughter, was allowed to board the plane; while his wife and daughter, who presented the
discounted tickets were denied boarding. Even in the next TWA flight to Los Angeles, Mrs.
Zalamea and her daughter, could not be accommodated because it was full booked. Thus, they
were constrained to book in another flight and purchased two tickets from American Airlines.

Upon their arrival in the Philippines, the spouses Zalamea filed an action for damages based on
breach of contract of air carriage before the RTC of Makati which rendered a decision in their
favor ordering the TWA to pay the price of the tickets bought from American Airlines together
with moral damages and attorney’s fees. On appeal, the CA 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. It further stated that 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, neither fraud nor bad faith
could be imputed on TWA.

ISSUE:

Whether or not the CA erred in accepting the finding that overbooking is specifically allowed by
the US Code of Federal Regulations and in holding that there was no fraud or bad faith on the
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part of TWA ?

HELD:

The CA was in error. There was fraud or bad faith on the part of TWA when it did not allow Mrs.
Zalamea and her daughter to board their flight for Los Angeles in spite of confirmed tickets. The
US law or regulation allegedly authorizing overbooking has never been proved.

1.) Foreign laws do not prove themselves nor can the court 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 officers having 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 Phil. stationed in the foreign country
in which the record is kept and authenticated by the seal of his office. Here, TWA relied solely on
the testimony of its customer service agent in her deposition that the Code of Federal
Regulations of the Civil Aeronautic Board allows overbooking. Aside from said statement, no
official publication of said code was presented as evidence. Thus, the CA’s finding that
overbooking is specifically allowed by the US Code of Federal Regulations has no basis in fact.

"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.

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."

"Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to
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the case at bar in accordance with the principle of lex loci 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
defendant airline. Since the tickets were sold and issued in the Philippines, the applicable law in
this case would be Philippine law."

Other Issues:

2.) 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 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
airline.

3.) Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral damages. 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. This
is so, for a contract of carriage generates a relation attended with public duty --- a duty to provide
public service and convenience to its passengers which must be paramount to self-interest or
enrichment. Even on the assumption that overbooking is allowed, 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. Moreover, TWA was also guilty of not
informing its passengers of its alleged policy of giving less priority to discounted tickets.
Evidently, TWA placed self-interest over the rights of the spouses Zalamea and their daughter
under their contract of carriage. Such conscious disregard make respondent TWA liable for moral
damages, and to deter breach of contracts by TWA in similar fashion in the future, the SC
adjudged TWA liable for exemplary damages, as well.
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PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK VS VENICIO ESCOLIN

In November 1952, Linnie Jane Hodges, an American citizen from Texas made a will. In May
1957, while she was domiciled here in the Philippines (Iloilo City), she died.
In her will, she left all her estate in favor of her husband, Charles Newton Hodges. Linnie
however also stated in her will that should her husband later die, said estate shall be turned over
to her brother and sister.
In December 1962, Charles died (it appears he was also domiciled here). Atty. Leon Gellada, the
lawyer of Charles filed a motion before the probate court (there was an ongoing probate on the
will of Linnie) so that a certain Avelina Magno may be appointed as the administratrix of the
estate. Magno was the trusted employee of the Hodges when they were alive. Atty. Gellada
manifested that Charles himself left a will but the same was in an iron trunk in Charles’ office.
Hence, in the meantime, he’d like to have Magno appointed as administratrix. Judge Venicio
Escolin approved the motion.
Later, Charles’ will was found and so a new petition for probate was filed for the said will. Since
said will basically covers the same estate, Magno, as admininistratrix of Linnie’s estate opposed
the said petition. Eventually, the probate of Charles’ will was granted. Eventually still, the
Philippine Commercial and Industrial Bank was appointed as administrator. But Magno refused
to turn over the estate.
Magno contended that in her will, Linnie wanted Charles to turn over the property to Linnie’s
brother and sister and since that is her will, the same must be respected. Magno also contended
that Linnie was a Texan at the time of her death (an alien testator); that under Article 16 of the
Civil Code, successional rights are governed by Linnie’s national law; that under Texas law,
Linnie’s will shall be respected regardless of the presence of legitimes (Charles’ share in the
estate).
PCIB argued that the law of Texas refers the matter back to Philippine laws because Linnie was
domiciled outside Texas at the time of her death (applying the renvoi doctrine).
ISSUE: Whether or not Texas Law should apply.
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HELD: The Supreme Court remanded the case back to the lower court. Both parties failed to
adduce proof as to the law of Texas. The Supreme Court held that for what the Texas law is on
the matter, is a question of fact to be resolved by the evidence that would be presented in the
probate court. The Supreme Court however emphasized that Texas law at the time of
Linnie’s death is the law applicable (and not said law at any other time).

MANUFACTURERS HANOVER TRUST v. GUERRERO

February 19, 2003 | Carpio, J.

PETITIONER: Manufacturers Hanover Trust Co., and/or Chemical Bank

RESPONDENT: Rafael Ma. Guerrero

SUMMARY: Respondent Guerrero filed a complaint for damages against petitioner

Bank regarding his bank account. The Bank claimed that his account is governed by
New York law which does not permit any claim except actual damages. The Bank
moved for a partial summary judgment which was supported by an affidavit by a NY
Atty. claiming that the governing law is New York law as stipulated by Guerrero’s
bank account. SC ruled that there is a need for a trial as the Walden affidavit shows
that the facts and allegations were disputed. Foreign laws are not a matter of judicial
notice and must be alleged and proven.

FACTS:

1. Respondent Guerrero filed a complaint for damages against petitioner Bank for allegedly:
(a) illegally withheld taxes charged against interests on his checking account with the Bank;
(b) a returned check worth USS18,000.99 due to signature verification problems; and (c)
unauthorized conversion of his account.
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2. The Bank claimed that by stipulation Guerrero’s account is governed by New York and this
law does not permit any claim except actual damages. The Bank filed a Motion for Partial
Summary Judgment seeking to dismiss the claims for consequential, nominal, temperate,
moral and exemplary damages.

3. The affidavit of Alyssa Walden, a New York attorney, supported the Bank’s claim that
Guerrero’s bank account stipulated that the governing law is New York law and that this law
bars all of the claims except actual damages. The Philippine Consular Office in NY
authenticated the Walden affidavit.

4. CA: Even if the Walden affidavit is used for purpose of summary judgment, the Bank must
still comply with the procedure prescribed by the Rule 132, Sec. 24

ISSUE: WoN there are genuine issues of fact that necessitate formal trial—YES.

RULING: Petition DENIED. There being substanstial triable issues, motion for partial
summary judgment is denied.

RATIO:

1. A genuine issue means an issue of fact which calls for the presentation of evidence as
distinguished from an issue which is fictitious or contrived so as not to constitute a genuine
issue for trial. Walden affidavit shows that the facts and material allegations as pleaded
by the parties are disputed and there are substantial triable issues necessitating a
formal trial. Resolution of whether a foreign law allows only the recovery of actual
damages is a question of fact as far as the trial court is concerned since foreign laws do not
prove themselves in our courts.

Foreign laws are not a matter of judicial notice. Like any other fact, they must be
alleged and proven. The conflicting allegations as to whether New York law or Philippine
law applies to Guerreros claims present a clear dispute on material allegations which can be
resolved only by a trial on the merits. The Walden affidavit cannot be considered as proof of
New York law on damages not only because it is self-serving but also because it does not
state the specific New York law on damages.

Guerrero cannot be said to have admitted the averments in the Banks motion for partial
summary judgment and the Walden affidavit just because he failed to file an opposing
affidavit. The Bank still had the burden of proving New York law and jurisprudence even if
Guerrero did not present an opposing affidavit.
CONFLICTS OF LAW