Case Summary (G.R. No. 188283)
Procedural History and Relief Sought
Respondents sued for damages (P13 million prayed for) for besmirched reputation, humiliation and public embarrassment. The RTC found for respondents and awarded P5,000,000 moral damages, P1,000,000 exemplary damages and P500,000 attorney’s fees. The Court of Appeals affirmed the ruling but reduced attorney’s fees to P100,000. Cathay Pacific petitioned to the Supreme Court seeking dismissal or substantial reduction of damages. The Supreme Court partially granted the petition by reducing the moral and exemplary damages while otherwise affirming the CA’s disposition.
Legal Issues Presented
- Whether petitioner breached the contract of carriage by failing to provide First Class accommodations despite issuance of First Class tickets.
- Whether the tickets issued to respondents were confirmed First Class or merely open‑dated/waitlisted, and whether respondents had notice of any restrictions.
- Whether petitioner’s conduct exhibited bad faith justifying moral and exemplary damages.
- Quantum of moral and exemplary damages and entitlement to attorney’s fees and interest.
Supreme Court’s Finding on Breach of Contract and Ticketing Evidence
The Court applied the settled rule that in breach of contract of carriage the injured party must prove the contract and the carrier’s nonperformance; fault need not be separately established. Reviewing ticketing records and cross‑referencing ticket numbers, the Court concluded respondents were indeed holding First Class tickets on the day of the flight and that petitioner’s claim of separate unused Business Class and open‑dated First Class tickets intended to rebut the upgrade was contradicted by the issuance records. The issuance of First Class tickets on the same day of travel and the notation that those First Class tickets were “issued in exchange” for specific Business Class tickets supported the conclusion that respondents were entitled to First Class accommodation and that petitioner failed to perform that contractual obligation.
Contracts of Adhesion and Construction Against the Carrier
The trial court treated the passenger ticket as a contract of adhesion and construed ambiguous terms against the carrier. The Court of Appeals and the Supreme Court gave weight to that construction in light of petitioner’s acceptance of the fare difference, issuance of First Class tickets, and the absence on the ticket face of clear conditions that would alert ordinary passengers to the open‑dated or waitlist nature of those tickets. The Supreme Court emphasized that petitioner’s conduct in issuing First Class tickets without adequately informing respondents of restrictions reasonably led respondents to believe their upgrade was approved.
Bad Faith, Conduct of Ground Staff, and Standard of Proof
Both trial and appellate courts found bad faith attributable to petitioner based on the inattentiveness, discourtesy and physical handling by ground staff (e.g., being ignored, turned away, shoved to an Economy line). The Supreme Court upheld this factfinding: bad faith is a question of fact requiring clear and convincing evidence, and the victim’s testimony need not be independently corroborated where the opposing party had a full opportunity to rebut. The Court relied on prior jurisprudence recognizing that gross inattentiveness and rude conduct by airline personnel may constitute bad faith sufficient to warrant moral and exemplary damages.
Awards of Moral and Exemplary Damages: Rationale and Reduction
The Supreme Court agreed that moral and exemplary damages were warranted because the carrier acted in bad faith, but found the RTC’s awards excessive in light of precedent. The Court noted prior highest awards in similar airline cases and applied principles limiting windfalls; it stated that the passenger’s official position (Congressman) alone does not justify an automatic upward departure from established damages in airline contexts. Accordingly, the Court reduced moral damages from P5,000,000 to P500,000 and exemplary damages from P1,000,000 to P50,000. The Court sustained the CA’s reduction of attorney’s fees to P100,000 (original RTC award P500,000) under Article 2208(2) of the Civil Code, and ordered that aw
...continue readingCase Syllabus (G.R. No. 188283)
Case Citation and Procedural Posture
- Supreme Court decision: 790 Phil. 604; 113 OG No. 20, 3733 (May 15, 2017). First Division; G.R. No. 188283, July 20, 2016.
- Nature of the action: Petition for Review on Certiorari filed by Cathay Pacific Airways Ltd. from the Court of Appeals (CA) Decision and Resolution in CA-G.R. CV No. 87698.
- Prior rulings:
- Regional Trial Court (RTC), Branch 30, San Jose, Camarines Sur, Civil Case No. T-635 — Decision dated 19 May 2006 (records at pp. 1242-1260).
- Court of Appeals Decision dated 31 March 2009 (rollo, pp. 77-96) and Resolution dated 11 June 2009 (rollo, p. 98).
- Reliefs sought by petitioner: dismissal of the Complaint or, in the alternative, substantial and equitable reduction of damages.
- Final disposition by the Supreme Court: Petition partially granted; CA Decision affirmed with modification reducing moral and exemplary damages; legal interest ordered at 6% per annum from finality until full payment.
Parties and Roles
- Petitioner: Cathay Pacific Airways, Ltd. — a foreign corporation licensed to do business in the Philippines.
- Respondents / Plaintiffs below: Spouses Arnulfo and Evelyn Fuentebella.
- Other relevant persons/testifiers:
- Congressman Alberto Lopez — claimed to have arranged travel and corroborated upgrade request.
- Congressman Leonardo Fugoso — testified in open court supporting respondents.
- Carol Dalag — alleged by petitioner to have transacted on behalf of the congressmen; existence denied by Cong. Lopez.
- Nenita Montillana — petitioner’s senior reservation supervisor; testified by deposition.
- Manuel Benipayo — airport service officer; testified by deposition.
- Raquel Galvez-Leonio — airport services supervisor; testified by deposition.
Factual Background and Travel Itinerary
- Official purpose: In 1993, the Speaker of the House authorized Congressmen Fuentebella, Lopez and Fugoso to travel on official business to Sydney, Australia, from 25 October to 6 November 1993.
- Ticket purchase and upgrade request:
- On 22 October 1993, respondents bought Business Class tickets for Manila–Hong Kong–Sydney–Hong Kong–Manila.
- Respondents decided to upgrade to First Class; the upgrade request and payment were asserted to have been arranged through Cong. Lopez (testified), who said he requested an upgrade for all six persons and sent a staff member to pay the fare difference.
- Petitioner’s account: claimed a person named Carol Dalag transacted for the group; that a passenger called on 23 October 1993 to request splitting the booking into two separate reservations (one for Spouses Lopez and Fugoso, a separate one for respondents).
- Tickets and annotations:
- Petitioner admits First Class tickets were issued to respondents but characterizes them as open-dated (waitlisted), and points to ticket annotations of “OPEN F OPEN” on the plane tickets.
- CA noted a handwritten notation on First Class tickets stating “fare difference to be refunded.”
- Records include entries showing different dates of issue for Business Class and First Class tickets; the Supreme Court highlighted ticket numbering and exchange annotations linking Business Class and First Class tickets.
- On 25 October 1993 (initial outbound segment):
- Respondents queued at the First Class counter at the airport.
- They were issued boarding passes for Business Class on CX 902 (Manila–Hong Kong) and Economy Class on CX 101 (Hong Kong–Sydney).
- They discovered the lack of First Class accommodation when denied entry to the First Class lounge.
- Respondent Arnulfo Fuentebella returned to the check-in counter to demand First Class seats or at least lounge access; he testified he was treated discourteously, arrogantly and rudely, and was allegedly told the plane would leave with or without them.
- Treatment during transit and on the plane:
- Respondents alleged rude, inattentive and disrespectful treatment by ground staff in Hong Kong: one employee turned her back; another brushed them off and told them to fall in line for Economy; a third pushed them into the Economy line in front of many people.
- For the Hong Kong–Sydney flight, respondents were placed in narrow seats for eight and a half hours and reported feeling groggy and miserable upon landing.
- Respondents flew First Class on Sydney–Hong Kong on 30 October 1993.
- On the return segment Hong Kong–Manila on 2 November 1993, they were issued Business Class boarding passes.
- Post-flight demands and investigation:
- Upon arrival in the Philippines, respondents demanded a formal apology and payment of damages.
- Petitioner conducted an investigation and maintained that no undue harm had been done.
Parties’ Factual Contentions and Evidentiary Accounts
- Respondents’ contentions:
- They had been assured they would be accommodated in First Class after paying the fare difference.
- Their travel arrangements and upgrade request were processed through Cong. Lopez.
- They held First Class tickets and were nevertheless assigned lower-class seats and denied lounge access, publicly embarrassed and physically shoved by ground staff.
- Petitioner’s contentions:
- Respondents had confirmed reservations only for Business Class; the Hong Kong–Sydney leg upgrade was “under request” and could not be approved due to full flight.
- First Class tickets issued were open-dated/waitlisted; no seat could be guaranteed because the sections were full and respondents failed to reconfirm.
- Petitioner denied that personnel were arrogant; suggested respondent Fuentebella was hostile.
- Petitioner presented depositions (e.g., Montillana, Benipayo, Galvez-Leonio) to support its version.
- Testimony and documentary evidence:
- Nenita Montillana (deposition): based on locator records, confirmed Business Class for several sectors, one sector “under request”; admitted First Class tickets were issued but open-dated; referred to ticket annotations “OPEN F OPEN.”
- Manuel Benipayo (deposition): identified as ground staff who dealt with respondents; testified respondent Fuentebella loudly insisted on First Class and that records showed Business Class; said he politely explained the situation, attempted to secure First Class via telex to Hong Kong office, and claimed he was intimidated into making “Involuntary Downgrading” and “fare difference to be refunded” notations on the tickets.
- Raquel Galvez-Leonio (deposition): company policy not to engage in debates with passengers and to address concerns properly; admitted lack of personal knowledge of compliance outside NAIA.
- Cong. Lopez (deposition/transcript): denied knowledge of Carol Dalag; testified upgrade request and payment were made for the entire group and that he sent a staff member to pay the difference; his testimony was given in open court or via transcript at various points.
- Documentary evidence included tickets, ticket numbers and notations, and a telex to Hong Kong.
Trial Court (RTC) Findings and Rationale
- Contract characterization:
- The RTC identified the ticket as a contract of adhesion and held that its terms should be construed against petitioner (the drafter).
- Found that respondents entered into the contract based on assurances they would be given First Class seats.
- Credibility determinations:
- RTC gave full faith and credence to live testimony of respondents and Cong. Fugoso, finding them frank, spontaneous, positive and forthright.
- The court expressed doubts ab