Case Summary (G.R. No. L-57339)
Procedural History
The Ganas purchased nine open-dated round-trip tickets in February 1970 and later attempted travel in May 1971. After being denied carriage for portions of the trip because the tickets had expired, the Ganas filed suit for breach of contract of carriage on 25 August 1971. The trial court dismissed the complaint on 29 May 1975. The Court of Appeals reversed on 15 December 1980, awarding moral damages of P90,000. Air France sought certiorari review before the Supreme Court, which granted the petition and issued the challenged decision on 29 December 1983.
Core Facts
The Ganas bought nine open-dated tickets (economy and first class) for Manila/Osaka/Tokyo/Manila, paying US$2,528.85 at P3.90 to the dollar and P100 travel tax per passenger. Air France substituted tickets on 24 April 1970; the tickets bore a printed validity limit of “Non valable apres de” 8 May 1971. The Ganas did not depart on 8 May 1970; they planned departure on 7 May 1971. In January 1971 and again shortly before departure, requests to Air France to extend validity were refused unless fare differentials and additional travel taxes caused by an April 1971 fare increase approved by the Civil Aeronautics Board (CAB) were paid. Despite warnings, the Ganas departed Manila on 7 May 1971. The Manila–Osaka flight was honored; the Osaka–Tokyo segment on 17 May 1971 was refused by JAL because the tickets had expired, forcing the Ganas to buy new tickets. Air France also refused to honor the return coupons, which were only accepted upon payment of adjusted fares. Lee Ella had affixed JAL and SAS validating stickers to the tickets without Air France’s authorization.
Legal Issue Presented
Whether Air France breached the contract of carriage by refusing to honor expired tickets and requiring payment of fare differentials or reissuance for remaining segments, thereby justifying the Court of Appeals’ award of moral damages to the Ganas.
Applicable Rules and Tariff Provisions
The decision is governed by the International Air Transport Association (IATA) tariff rules (stipulated by the parties). Key provisions applied by the Court: (1) tickets are generally valid for one year from commencement; (2) the passenger must undertake the final portion of the journey by departing from the last voluntary stop before expiry of that time limit; (3) a ticket cannot be used for travel if its validity has expired before the passenger completes the trip (3.5.1); and (4) fares applicable are those in effect on the date transportation commences, and any ticket issued prior to a fare change is subject to adjustment on commencement date (tariff rule 3.1 on applicable fare).
Evidence on Notice and Agency
Air France’s office manager informed Teresita Manucdoc via travel agent channels that ticket validity could not be extended without payment of fare differentials and increased travel taxes. Ella also testified that he informed Mrs. Manucdoc that extensions were not possible except with additional payments. Thus, the Court found that Teresita had notice of Air France’s refusal to extend validity absent payment. The Court treated Teresita as the Ganas’ agent for travel arrangements, and notice to her was imputed to the Ganas.
Unauthorized Validation by Travel Agent
Ella’s unilateral affixing of SAS and JAL validating stickers—showing reservations for JAL Flight 108 on 16 May 1971—was found to be beyond his authority and in contravention of IATA rules. The stickers reflected reservation status only and had no legal effect to extend the ticket’s contractual validity or revive an expired ticket. Air France was unaware of those stickers when the passengers departed; the airport counter’s permitting the passengers to board the first leg one day before expiry did not constitute ratification of Ella’s unauthorized act, especially in light of known limitation that further arrangements remained to be made for later segments.
Analysis on Ticket Validity and Airline Rights
Under the stipulated IATA tariff rules and the fact of a CAB-approved fare increase in April 1971, Air France acted within its contractual and regulatory rights in refusing to honor the expired coupons and in requiring payment of adjusted fares or issuance of new tickets for the remaining portions of the trip. The tariff provisions required adjustment to the fare in effect on the date transportation commenced, and barred use of an expired ticket to complete travel. The passengers’ insistence on commencing travel one day before expiry did not entitle them to complete the rest of the itinerary on expired coupons; to do so would contravene the tariff rules.
Agency, Notice, and Assumption of Risk
Because Teresita handled travel arrangements and
...continue readingCase Syllabus (G.R. No. L-57339)
Case Caption and Procedural Posture
- Reported in 211 Phil. 601, First Division, G.R. No. L-57339, decided December 29, 1983; opinion by Justice Melencio-Herrera.
- Petitioner: Air France. Respondents: Honorable Court of Appeals and members of the Gana family (Jose G. Gana, deceased, and his relatives Clara A. Gana, Ramon Gana, Manuel Gana, Maria Teresa Gana, Roberto Gana, Jaime Javier Gana, Clotilde Vda. de Arevalo, and Emily San Juan).
- Petition for review on certiorari by Air France challenging the Court of Appeals Decision dated December 15, 1980 (CA-G.R. No. 58164-R, captioned "Jose G. Gana, et al. vs. Sociedad Nacionale Air France") which reversed the Trial Court and awarded P90,000.00 in moral damages to private respondents.
- Trial Court (Court of First Instance of Manila, Branch III) originally dismissed the Complaint on May 29, 1975; respondents appealed. During the appeal, principal plaintiff Jose G. Gana died.
- The Court of Appeals (Seventh Division, Ponente J. Guillermo P. Villasor; Concurrence by JJ. Venicio Escolin and Onofre A. Villaluz) reversed and awarded P90,000.00 moral damages plus costs; reconsideration denied; Air France sought relief before the Supreme Court.
Factual Background — Purchase and Payment
- In or about February 1970, Jose G. Gana and his family of nine (the "GANAS") purchased nine "open-dated" air passage tickets through Imperial Travels, Inc., a duly authorized travel agent of Air France.
- Total paid for economy and first class fares: US$2,528.85; purchased at the prevailing exchange rate of P3.90 per US$1.00.
- Travel taxes of P100.00 were paid for each passenger.
Factual Background — Reissuance and Booking
- On April 24, 1970 Air France exchanged or substituted the initially purchased tickets with others for the same Manila/Osaka/Tokyo/Manila route.
- The GANAS were booked on Air France Flight 184 for Manila/Osaka scheduled for 8 May 1970, and on Air France Flight 187 for the Tokyo/Manila return scheduled for 22 May 1970.
- The reissued tickets were stamped with a validity limit: "Non valable apres de" indicating the tickets were valid until 8 May 1971.
- The GANAS did not travel on 8 May 1970.
Attempts to Extend Ticket Validity and Advice Received
- In January 1971, Jose Gana sought assistance from Teresita Manucdoc (secretary of Sta. Clara Lumber Company where Gana was Director and Treasurer) to extend the tickets expiring 8 May 1971.
- Teresita engaged Lee Ella, Manager of the Philippine Travel Bureau (who handled travel for Sta. Clara Lumber Company); Ella sent the tickets to Cesar Rillo, Office Manager of Air France.
- Rillo returned the tickets to Ella with advice that extension was not possible unless fare differentials (reflecting increased fares from exchange rate changes) and increased travel tax were paid.
- Ella relayed to Teresita that the tickets could not be extended except by payment of additional fare, additional tax and additional exchange.
Travel Agent Lee Ella’s Conduct on the Day of Departure
- The GANAS scheduled departure for 7 May 1971 (one day before expiration of tickets).
- On the morning of 7 May 1971 Teresita asked Ella to arrange revalidation; Ella reiterated that revalidation without payment was impossible, warned that tickets could be used for travel on 7 May 1971 but would not be valid thereafter.
- Teresita told Ella that it would be up to the GANAS to make arrangements.
- Despite prior warnings, Ella affixed validating stickers to the tickets for the Osaka/Tokyo flight: one JAL sticker and one SAS (Scandinavian Airways System) sticker.
- The SAS sticker bore the legend "Revalidated by the Philippine Travel Bureau, Branch No. 2" as shown by a circular rubber stamp, was signed "Ador," had a handwritten date in the circle, and included printed notations: "JL 108" (flight), "16 May" (date), "1040" (time), "OK" (status).
- Ella made no further attempt to contact Air France before departure, allegedly due to time constraints.
The GANAS' Travel, Airline Actions, and Resulting Expenses
- The GANAS departed Manila on the afternoon of 7 May 1971 on Air France Flight 184 for Osaka; this leg presented no dispute.
- For the Osaka/Tokyo segment (scheduled 17 May 1971), Japan Airlines refused to honor the tickets because they had expired; the GANAS were forced to purchase new tickets for that segment.
- Air France likewise refused to honor the return segment; the GANAS were able to return only after pre-payment in Manila (through relatives) of the readjusted (higher) fare rates.
- The family returned to Manila on separate Air France flights: Jose Gana on 19 May 1971 and the remaining family members on 26 May 1971.
Trial Court Proceedings and Stipulations
- On 25 August 1971 the GANAS filed Civil Case No. 84111 before the then Court of First Instance of Manila for damages arising from breach of contract of carriage.
- Air France denied liability, asserting:
- The GANAS brought the predicament upon themselves and assumed consequential risks.
- Travel agent Ella’s affixing of validating stickers without Air France’s knowledge violated airline tariff rules and exceeded his authority.
- Air France acted without fraud or bad faith.
- The Trial Court dismissed the Complaint on 29 May 1975, based on Partial and Additional Stipulations of Fact (dated 31 March 1973) and documentary and testimonial evidence.