G.R. No. 188283 - Cathay Pacific Airways, Ltd. vs. Spouses Fuentebella

Respondents, Spouses Arnulfo and Evelyn Fuentebella, filed a complaint for damages against petitioner Cathay Pacific Airways, Ltd., a foreign corporation licensed to do business in the Philippines.
The complaint stemmed from the alleged downgrading of their travel accommodations during a scheduled trip from Manila to Sydney via Hong Kong in 1993.
The respondents claimed that they suffered damage to their reputation, honor, and experienced public embarrassment due to the improper handling of their ticket upgrade request.

Initially, respondents purchased Business Class tickets for the journey on 22 October 1993.
They later decided to upgrade to First Class, a request made through Congressman Alberto Lopez (and, alternatively, with reference to a transaction allegedly handled by Carol Dalag).
Divergent versions emerged: respondents maintained that the upgrade was secured via Cong. Lopez, while petitioner claimed that ticket transactions were handled by Carol Dalag, leading to confusion over the booking arrangements.

Petitioner admitted that First Class tickets were issued; however, they were characterized as open-dated (waitlisted) without explicit conditions printed on them.
At the time of travel on 25 October 1993, respondents were issued boarding passes that indicated Business Class for the Manila–Hong Kong segment and Economy Class for the Hong Kong–Sydney segment, contrary to their expectations of flying First Class.
The issue became apparent when respondents were denied entry to the First Class lounge and later experienced further shortcomings in their travel arrangement.

Respondents queued at the First Class counter only to discover the discrepancy in their booking.
Respondent Fuentebella reported being treated discourteously at the check-in counter, including being told that the plane would depart with or without them.
Multiple encounters at the Hong Kong airport involved dismissive behavior: employees ignored them, briskly relegated them to Economy Class, and in one instance, physically shoved the respondents to the Economy Class line.

Testimonies from both parties were presented. Respondents and Cong. Lopez testified that the fare difference had been paid and the upgrade confirmed, while petitioner relied on the deposition of its personnel, including Nenita Montillana, who testified that the booking for one segment was “under request” and that the First Class tickets were open-dated.
The ticket stub annotations (e.g., “OPEN F OPEN” and “fare difference to be refunded”) played a crucial role in clarifying the nature of the issued tickets.
The trial court gave greater weight to the live testimony of respondents and Cong. Fugoso, in contrast to the depositions favoring petitioner, thereby influencing the findings on credibility.

The Regional Trial Court (RTC) ruled in favor of the respondents, finding a breach of contract on the part of petitioner. It awarded P5 million as moral damages, P1 million as exemplary damages, and P500,000 for attorney’s fees.
Upon review, the Court of Appeals (CA) affirmed the RTC’s decision with modifications, notably reducing the attorney’s fees to P100,000.
The case later reached the Supreme Court through a Petition for Review on Certiorari, which partially granted the petition by modifying the damages award and affirming the CA decision.

Whether petitioner breached its contractual obligation by failing to provide the confirmed First Class accommodations as requested by the respondents.
Whether the issuance of open-dated First Class tickets, without clear explanations or conditions, amounted to a contractual assurance to the passengers.

Whether the manner in which petitioner’s personnel handled the upgrade request—evidenced by discourteous treatment, dismissive attitudes, and physical intimidation—constituted bad faith in fulfilling their contractual obligations.
Whether these actions contributed directly to the respondents’ decision to seek redress through litigation.

Whether the awards for moral and exemplary damages were justified, and if the amounts stipulated by the RTC (modified by the CA) were excessive or appropriate under the circumstances.
Whether the award for attorney’s fees was supported by the conduct of petitioner, particularly in view of the resultant litigation costs incurred by the respondents.

Whether the contract of carriage—considered a contract of adhesion—should be construed against petitioner when there is ambiguity concerning the confirmation and conditions of the First Class upgrade.
Whether respondents could reasonably be expected to understand and accept the open-dated nature of the tickets without explicit disclosure.