Zalamea vs.

Court of Appeals 288 SCRA 23 (1993)

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 attorneys 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 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 CAs 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 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.

MIGHTY CORPORATION and LA CAMPANA FABRICA DE TABACO, INC. vs. E.J. GALLO
WINERY and THE ANDRESONS GROUP, INC.

FACTS:
On March 12, 1993, respondents sued petitioners in the RTC-Makati for trademark
and trade name infringement and unfair competition, with a prayer for damages and
preliminary injunction.
They claimed that petitioners adopted the Gallo trademark to ride on Gallo Winerys
and Gallo and Ernest & Julio Gallo trademarks established reputation and popularity, thus
causing confusion, deception and mistake on the part of the purchasing public who had
always associated Gallo and Ernest and Julio & Gallo trademarks with Gallo Winerys
wines.

1.
2.
3.
4.

In their answer, petitioners alleged, among other affirmative defenses that:

petitioners Gallo cigarettes and Gallo Winerys wine were totally unrelated products. To wit:
Gallo Winerys GALLO trademark registration certificates covered wines only, and not
cigarettes;
GALLO cigarettes and GALLO wines were sold through different channels of trade;
the target market of Gallo Winerys wines was the middle or high-income bracket while
Gallo cigarette buyers were farmers, fishermen, laborers and other low-income workers;
the dominant feature of the Gallo cigarette was the rooster device with the manufacturers
name clearly indicated as MIGHTY CORPORATION, while in the case of Gallo Winerys
wines, it was the full names of the founders-owners ERNEST & JULIO GALLO or just their
surname GALLO;
On April 21, 1993, the Makati RTC denied, for lack of merit, respondents prayer for
the issuance of a writ of preliminary injunction.
On August 19, 1993, respondents motion for reconsideration was denied.
On February 20, 1995, the CA likewise dismissed respondents petition for review on
certiorari.
After the trial on the merits, however, the Makati RTC, on November 26, 1998, held
petitioners liable for, permanently enjoined from committing trademark infringement and
unfair competition with respect to the GALLO trademark.
On appeal, the CA affirmed the Makati RTCs decision and subsequently denied
petitioners motion for reconsideration.
ISSUE:

Whether GALLO cigarettes and GALLO wines were identical, similar or related
goods for the reason alone that they were purportedly forms of vice.
HELD:
Wines and cigarettes are not identical, similar, competing or related goods.
In resolving whether goods are related, several factors come into play:
the business (and its location) to which the goods belong
the class of product to which the good belong
the products quality, quantity, or size, including the nature of the package, wrapper or
container
the nature and cost of the articles
the descriptive properties, physical attributes or essential characteristics with reference to
their form, composition, texture or quality
the purpose of the goods
whether the article is bought for immediate consumption, that is, day-to-day household items
the field of manufacture
the conditions under which the article is usually purchased and
the articles of the trade through which the goods flow, how they are distributed, marketed,
displayed and sold.
The test of fraudulent simulation is to the likelihood of the deception of some persons
in some measure acquainted with an established design and desirous of purchasing the
commodity with which that design has been associated. The simulation, in order to be
objectionable, must be as appears likely to mislead the ordinary intelligent buyer who has a
need to supply and is familiar with the article that he seeks to purchase.
The petitioners are not liable for trademark infringement, unfair competition or
damages.
WHEREFORE, petition is granted.

Lacoste vs. Fernandez

La Chemise Lacoste vs. Fernandez
GR 63796-97, 21 May 1984; First Division, Gutierrez Jr. (J)
Facts:

La chemise Lacoste is a French corporation and the actual owner of the trademarks Lacoste, Chemise
Lacoste, Crocodile Device and a composite mark consisting of the word Lacoste and a representation
of a crocodile/alligator, used on clothings and other goods sold in many parts of the world and which has
been marketed in the Philippines (notably by Rustans) since 1964. In 1975 and 1977, Hemandas Q. Co.
was issued certificate of registration for the trademark Chemise Lacoste and Q Crocodile Device both in
the supplemental and Principal Registry. In 1980, La Chemise Lacoste SA filed for the registration of the
Crocodile device and Lacoste. Games and Garments (Gobindram Hemandas, assignee of
Hemandas Q.Co.) opposed the registration of Lacoste.
In 1983, La Chemise Lacoste filed with the NBI a letter-complaint alleging acts of unfair competition
committed by Hemandas and requesting the agencys assistance. A search warrant was issued by the
trial court. Various goods and articles were seized upon the execution of the warrants. Hemandas filed
motion to quash the warrants, which the court granted. The search warrants were recalled, and the
goods ordered to be returned. La Chemise Lacoste filed a petition for certiorari.
Issue:
Whether the proceedings before the patent office is a prejudicial question that need to be resolved before
the criminal action for unfair competition may be pursued.
Held:
No. The proceedings pending before the Patent Office do not partake of the nature of a prejudicial
question which must first be definitely resolved. The case which suspends the criminal action must be a
civil case, not a mere administrative case, which is determinative of the innocence or guilt of the
accused. The issue whether a trademark used is different from anothers trademark is a matter of
defense and will be better resolved in the criminal proceedings before a court of justice instead of raising
it as a preliminary matter in an administrative proceeding.
Inasmuch as the goodwill and reputation of La Chemise Lacoste products date back even before 1964,
Hemandas cannot be allowed to continue the trademark Lacoste for the reason that he was the first
registrant in the Supplemental Register of a trademark used in international commerce. Registration in
the Supplemental Register cannot be given a posture as if the registration is in the Principal Register. It
must be noted that one may be declared an unfair competitor even if his competing trademark is
registered. La Chemise Lacoste is world renowned mark, and by virtue of the 20 November 1980
Memorandum of the Minister of Trade to the director of patents in compliance with the Paris Convention
for the protection of industrial property, effectively cancels the registration of contrary claimants to the
enumerated marks, which include Lacoste"

Pan American World Airways vs. Rapadas (G.R. No. 60673)

Post under case digests, Commercial Law at Thursday, February 23, 2012 Posted by Schizophrenic Mind

Facts: Private
respondent
Jose
Rapadas
held passenger ticket
andbaggage
claim check
for
petitioners flight No. 841 with the routefrom Guam to
Manila. While standing inline to board the flight at the
Guam Airport, Rapadas was ordered by petitioners hand

carry control agent to check-in his samsonite attach

case. Rapadas protested pointing to the fact that other copasengers were permitted to hand carry baggage. He
stepped out of the line only to go back again at the end of
it to try of he can get through without having to register his
attach case. However, the same man in charge of had
carry control did not fail to notice him and ordered him
again to register his baggage. Upon arriving in Manila on
the same day, Rapadas claimed and was given all
his checked in baggage except the attach case.
Issue: Whether or not a passenger is bound by the terms
of apassenger under the Warsaw convention, shall apply
in case of loss, damage or destruction to a registered
luggage of a passenger.
Held: After a review of the various arguments of the
appointing parties, the court found sufficient basis under
the particular facts of the case for the availment of the
liability limitations under the Warsaw Convention. There is
no dispute and the courts below admit that there was such
a notice appearing on page 2 of the airline ticket stating
that the Warsaw Convention governs in case of death or
injury of passengers or of loss, damage or destructionto a
passengers
luggage.
Art.
22(4)
of
the
Warsaw Convention does not preclude an award of
attorneys fees. That provision states that the limits of
liability prescribed in the instrument shall not prevent the
court from awarding in accordance with its own law, in
addition, the whole or part of the court costs and other
expenses of litigation incurred by the plaintiff.