G.R. No. 124110 - United Airlines, Inc. vs. Court of Appeals

Contract Formation and Ticket Issuance
On March 1, 1989, private respondent Aniceto Fontanilla purchased through the Philippine Travel Bureau in Manila three “Visit the U.S.A.” tickets for himself, his wife and his minor son Mychal Andrew Fontanilla, covering these confirmed segments:

San Francisco (SFO) → Washington, D.C. (April 15, 1989)
Washington, D.C. → Chicago (April 25, 1989)
Chicago → Los Angeles (April 29, 1989)
Los Angeles → San Francisco (May 1, 1989 for wife; May 5, 1989 for Fontanilla and son)

On April 24, 1989, at Washington Dulles Airport, Fontanilla purchased two additional coupons for each passenger, paid a penalty for rewriting the tickets, and received boarding passes bearing the legend “CHECK-IN REQUIRED” for United Airlines Flight No. 1108 (Los Angeles–San Francisco), scheduled May 5, 1989 at 10:30 a.m.

Events at Los Angeles Airport, May 5, 1989
The Fontanillas arrived in time and presented themselves at the United Airlines check-in counter, attended by an employee identified only as “Linda.” Linda examined their tickets, entered data in the computer, and advised them that boarding would commence in 15 minutes.
At the gate, a stewardess refused them boarding due to absence of seat assignments and directed them back to Linda, who informed them the flight was overbooked. According to the Fontanillas, Linda then:

Made arrogant and discriminatory remarks (“You lousy Flips,” threats to report to immigration, minimized their baggage).
Offered each US$50 “take it or leave it,” which they refused.
Displayed rudeness in front of other passengers, causing shame and humiliation.
Left them unbooked on the next 11:00 a.m. flight; they finally departed on UA 803 at 12:00 noon, retrieving their baggage loaded on Flight 1108.

Procedural History
The Fontanillas filed Civil Case No. 89-4268 before the Regional Trial Court of Makati for damages. The RTC dismissed the complaint and the counterclaim.
On appeal, the Court of Appeals reversed: it deemed admitted Fontanillas’ compliance with check-in, found United Airlines failed to follow denied-boarding procedures, credited the discriminatory conduct, and awarded P200,000 moral damages, P200,000 exemplary damages, and P50,000 attorney’s fees.
United Airlines filed a petition for review before the Supreme Court, assigning errors regarding the CA’s rulings on admission, check-in compliance, and the damage awards.

Whether the Court of Appeals erred in concluding that United Airlines admitted Fontanillas’ compliance with the check-in requirement.
Whether the Court of Appeals erred in ruling that failure to observe the check-in requirement does not defeat a denied-boarding claim when the airline did not comply with the established procedure.
Whether the Court of Appeals correctly awarded P200,000 as moral damages for breach of contract.
Whether the Court of Appeals correctly awarded P200,000 as exemplary damages.
Whether the Court of Appeals correctly awarded P50,000 as attorney’s fees.