G.R. No. 197743 - Heirs of Jose Mariano and Helen S. Mariano, represented by Danilo David S. Mariano, et al. vs. City of Naga

In May 1988, petitioner Carlos Singson and his cousin Crescentino Tiongson purchased two open-dated, identically routed, round trip air tickets from Cathay Pacific Airways at its Metro Manila ticket outlet.
The itinerary on each ticket consisted of six sequential flight coupons:

As a procedural matter, at the commencement of each leg of the journey the corresponding flight coupon was to be detached from the ticket booklet, ensuring that no coupon remained at the end of the trip.

On 6 June 1988, Singson and Tiongson departed Manila on Cathay’s Flight No. 902 and safely reached Los Angeles.
After spending approximately three weeks in Los Angeles, they planned to return on 1 July 1988.
When arranging their return flight at Cathay’s Los Angeles office:

Tiongson’s ticket was found to be in order.
Singson’s ticket, however, was discovered to be missing the crucial flight coupon for the San Francisco–Hongkong sector (coupon no. 5). Instead, the ticket erroneously contained a coupon for a leg (San Francisco to Los Angeles) that should have already been used.

Petitioner alleged that he insisted on immediate confirmation of his return flight due to pressing and important business engagements in the Philippines.
He contended that:

A mistake had been made by a Cathay agent, who had torn off the wrong flight coupon.
Cathay Pacific, despite having the facilities to quickly verify the status of the missing coupon, responded dismissively and arrogantly.
He was instructed to personally verify the error by traveling to San Francisco, thereby incurring additional expenses and inconvenience.

Petitioner also complained about the demeaning attitude of Cathay’s representatives, alleging that he was treated with contempt.

Cathay asserted that since the ticket was open-dated, it merely evidenced an invitation to contract and that no binding contract of carriage was in place for a fixed flight date.
The airline argued:

Its refusal to confirm the booking for the July 1, 1988, flight was appropriate pending verification of the status of the missing coupon.
A telex had been sent on 1 July 1988 to Cathay’s Hongkong headquarters, but due to different time zones, weekends, and a public holiday (U.S. Independence Day), the response was only received on 5 July 1988.
There was no instruction from Cathay for Singson to travel to San Francisco; rather, Singson had volunteered to make a side trip for verification purposes.

The Regional Trial Court of Vigan, Ilocos Sur, ruled in favor of petitioner and found Cathay guilty of gross negligence amounting to malice and bad faith.

On appeal, the Court of Appeals reversed the trial court’s findings regarding moral and exemplary damages as well as attorney’s fees, holding that:

The open-dated nature of the ticket precluded a breach of a fixed contract of carriage.
The negligence, though present, did not amount to fraud or bad faith sufficient to justify punitive damages.

Subsequently, petitioner’s motion for reconsideration was filed, and the case was elevated for review.

Whether Cathay Pacific Airways committed a breach of contract by failing to confirm petitioner’s return flight on 1 July 1988 due to the missing flight coupon.
Whether the open-dated nature of the ticket absolved the carrier of the duty to confirm a specific flight reservation.

Whether Cathay’s negligence, exemplified by the removal of the wrong coupon and the failure to promptly resolve the issue, warrants:

Whether the actions (and inactions) of Cathay and its agents, including the delay in the verification process and the alleged dismissive treatment of petitioner, constitute gross negligence amounting to bad faith, thereby justifying an award of elevated damages.