Airport authority spokesman Octavio Lina said part of the flooring near the affected section gave way, exposing some of the cargo below, and part of the ceiling also collapsed.
"Upon disembarkation, there were some passengers who vomited. You can see in their faces that they were really scared," he said.
'Gust of wind'
Passengers described hearing a large bang and feeling a rush of wind and debris through the cabin about an hour after Flight QF30 left Hong Kong at 0900 local time (0100 GMT).
The Australian Transport Safety Bureau said the aircraft made an emergency descent from 29,000ft to 10,000ft. It said initial information indicated that a section of the fuselage had separated in the area of the forward cargo compartment.
The damage to the fuselage exposed part of the hold.
Passenger Olivia Lucas told the BBC everyone was "pretty scared for a few moments".
"Then everyone focused on getting their oxygen masks on," she said. "Everyone was calm and quiet and there was notable relief when we landed. Everyone applauded the pilot."
"We are very lucky we landed safely and no-one was hurt."
Phill Restall, from the UK, was woken "with a jolt" by the loud bang before the plane descended rapidly.
"No-one panicked, there was no screaming. It wasn't your typical television movie," he told the BBC News website.
"Everyone listened to the cabin staff."
He said other passengers had told him young children in the main cabin were crying.
Mr Restall, who was reassured to see the engines "still spinning", said they wore the oxygen masks for about 15 minutes, until the plane levelled out.
WHY QF30 DESCENDED 20,000FT
Planes are pressurised as cruising altitudes are freezing and lack sufficient oxygen to breathe
Hole causes decompression, rapidly reducing air pressure and risking exposure
Oxygen masks are deployed and pilot makes emergency descent to breathable altitude
The pilot then told passengers they were going to land in Manila to have a look at the damage.
"Everyone was fairly calm, partly because they didn't realise the extent of it," he said.
"After we disembarked it started to dawn on people that this was a major incident. There were 350 people up there who were very lucky.
"Seeing the hole caused a lot of emotion. People were physically shaking. Many realised how close they were to their own mortality."
Other passengers reported seeing items flying out of the aircraft.
Dr David Newman, of Flight Medicine Systems, says forcing the plane into a rapid descent after a sudden loss of pressure is a standard emergency procedure.
He says that when cruising, the internal cabin is pressurised to a much lower altitude than outside the aircraft, which is also extremely cold.
"When you've lost pressure, all that high pressure air in the cabin leaves the airplane and from a medical point of view you've got the risk of lack of oxygen - which is compensated for by the oxygen masks," he said.
"The descent is designed to limit how much time you spend up there and of course one of the other issues is that the mass flow of air leaving the airplane - if it's an explosive decompression - will take a lot of loose objects and articles around the cabin and basically try and leave the aircraft via the hole."
The flight, which had been due to arrive in Melbourne at 1145 GMT, landed in Manila just after 0300 GMT (1100 local time ).
Qantas chief executive Geoff Dixon said engineers were investigating what might have caused the hole in the fuselage.
He said Qantas had provided all passengers with accommodation and a replacement aircraft had been arranged.
The airline boasts of never having lost a jet, but has seen some of its aircraft involved in minor accidents in recent years.
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