G.R. No. 146754 - Spouses Cachopero vs. Celestial

Plaintiff Yu Eng Cho owns Young Hardware Co. and Achilles Marketing and frequently travels to Malaysia, Taipei, and Hongkong for business.
On July 10, 1978, petitioners (spouses Yu Eng Cho and Francisco Tao Yu) bought plane tickets costing P25,000.00 from respondent Claudia Tagunicar, who represented herself as an agent of Tourist World Services, Inc. (TWSI). The itinerary was Manila–Hongkong–Tokyo–San Francisco, U.S.A., intending to proceed to Fairfield, New Jersey for business dealings involving the purchase of infrared heating system equipment.

At the time of ticket issuance, only the segments Manila–Hongkong and Hongkong–Tokyo were confirmed. The Tokyo–San Francisco flight was on “RQ” (request) status, meaning not yet confirmed.
Per Tagunicar’s instructions, petitioners returned a few days later for confirmation. Tagunicar communicated with Canilao of TWSI and subsequently informed petitioners that the entire flight was confirmed, even attaching validation stickers on the tickets.
Petitioners’ son, Adrian Yu, also called Pan Am’s office prior to departure and was informed that the bookings were confirmed.

Petitioners departed for Hongkong on July 23, 1978, stayed five days, and proceeded to Tokyo on July 28, 1978. In Tokyo, inquiries made to Pan Am revealed that petitioners’ names were not on the passenger manifest for the Tokyo–San Francisco flight.
Due to the non-confirmation and a 72-hour limit on transit in Japan, petitioners accepted alternative airline tickets to Taipei, at their own expense, per advice from Japan Air Lines (JAL). Northwest Airlines was on strike, preventing alternative U.S. flights within that timeframe.
Upon arrival in Taipei, no connecting flights were available to the U.S., forcing petitioners to return to Manila on August 3, 1978, thereby failing to complete their intended trip. JAL refunded the difference between the original and used ticket prices amounting to P2,602.00.

The failure to reach Fairfield, New Jersey resulted in the cancellation of Yu Eng Cho’s purchase option for the infrared heating equipment, with expected profits from the deal estimated between P300,000.00 to P400,000.00.

Tagunicar identified as an independent travel solicitor and not a duly authorized agent of either Pan Am or TWSI, though she had dealings with them in the past.
She purchased tickets from TWSI and sold them to clients, receiving a commission, and facilitated processing of travel documents but was not authorized to confirm flights or issue validation stickers.
The validation stickers attached by Tagunicar to petitioners’ tickets bore Pan Am’s exclusive stamping and an IATA number differing from TWSI’s official number, indicating unauthorized use.
Defendants TWSI and Canilao denied confirming the Tokyo–San Francisco segment of petitioners’ flight.

The Regional Trial Court (RTC) initially held Pan Am, TWSI, and Tagunicar jointly and severally liable, awarding P200,000.00 actual damages (less P2,602.00 refunded), P200,000.00 moral damages, P100,000.00 exemplary damages, 20% attorney’s fees, and P30,000.00 litigation expenses.
On appeal, the Court of Appeals held Tagunicar solely liable for moral damages (P50,000.00), exemplary damages (P25,000.00), and attorney’s fees (P10,000.00), deleting actual damages and absolving Pan Am and TWSI of liability due to lack of agency relationship and non-confirmation of tickets.

Whether the Court of Appeals erred in reversing the RTC decision and in deleting the award for actual damages.
Whether an agency relationship existed among Pan Am, TWSI, and Tagunicar, thereby making Pan Am and TWSI liable for Tagunicar’s acts.
Whether Pan Am can be held liable for the failure of petitioners to be carried to the U.S., given the state of their tickets and status.