Case Summary (G.R. No. 213418)
Key Dates
Ticket purchase: 7 August 2003.
Outbound flight: 8 August 2003.
Scheduled return flight from Xiamen: 12 August 2003 at 1920H.
Extrajudicial demand: 18 August 2003.
RTC Decision: 23 March 2009.
CA Decision: 19 March 2013.
CA Resolution on partial reconsideration (interest): 9 July 2014.
Supreme Court Decision (final disposition summarized herein): decision date checked — 2016, so the 1987 Philippine Constitution governs.
Applicable Law and Legal Standards
- Applicable constitution: 1987 Philippine Constitution (case decided in 2016).
- Governing civil rules: New Civil Code provisions on common carriers (Art. 1755) and on damages and assessment (Art. 2216, Art. 2220).
- Established rules cited by the courts: (a) a contract of carriage arises when a confirmed ticket is issued and the passenger may expect carriage on the specified flight and date; (b) in breach of a contract of carriage the plaintiff need only prove existence of the contract and non-performance by the carrier — fault need not be separately proven; (c) moral damages are recoverable where breach is attended by fraud or bad faith; (d) exemplary damages may be awarded for wanton, oppressive, fraudulent or malevolent conduct; (e) assessment of damages is left to judicial discretion but must be fair and not palpably excessive; (f) pre-judgment interest rules from Nacar v. Gallery Frames govern interest from extrajudicial demand to finality, and post-finality interest thereafter.
Factual Summary
Petitioners bought five roundtrip tickets from Active Travel Agency for US$985 (7 August 2003). They successfully flew to Xiamen. For the return flight on 12 August 2003, petitioners checked in their luggage, received claim stubs, and paid terminal fees, but were nevertheless denied boarding. An airline agent characterized them as “chance passengers” and said they could board only if they paid an additional 500 RMB per person. Petitioners declined and their luggage was offloaded; the flight departed without them. To reach Manila, petitioners traveled by car to a train station, proceeded to Hong Kong, and purchased new tickets from Philippine Airlines to fly back to Manila. They sought reimbursement and, on refusal, sued China Southern Airlines and Active Travel for actual, moral, and exemplary damages and costs.
Procedural History
- RTC of Manila (Branch 36) received evidence and rendered judgment on 23 March 2009 in favor of petitioners, awarding P62,000 actual damages, P300,000 moral damages, P300,000 exemplary damages, and P30,000 attorney’s fees.
- On appeal, the Court of Appeals affirmed liability and the award of actual damages but deleted the awards for moral and exemplary damages, reasoning that petitioners failed to prove bad faith by the airline; CA awarded the peso value of the PAL ticket plus attorney’s fees (P30,000).
- On petition for partial reconsideration, the CA granted interest at 6% per annum on the P62,000 as actual damages from the CA decision’s finality until satisfaction.
- Petitioners elevated the case to the Supreme Court by Petition for Review on Certiorari.
Issues Presented to the Supreme Court
- Whether the Court of Appeals erred in deleting the awards of moral and exemplary damages.
- Whether the CA erred in finding that the bumping-off was not attended by bad faith or malice.
- Whether legal interest on the award should run from the date of extrajudicial demand (18 August 2003) rather than from the date of finality of the decision.
Supreme Court Findings on Contract of Carriage and Liability
The Supreme Court affirmed that a contract of carriage existed as evidenced by issued two-way tickets with specified itineraries and by the facts that petitioners had checked in, had luggage claim stubs, and had paid terminal fees. Under the legal standard for common carriers (Art. 1755, New Civil Code), issuance of a ticket and completion of check-in procedures establish the carrier’s contractual obligation to transport. In breach-of-contract claims against common carriers, the injured party need only prove existence of the contract and non-performance; fault or negligence need not be separately established to recover compensatory damages.
Supreme Court Findings on Bad Faith and Moral Damages
The Court concluded that China Southern Airlines acted in bad faith. The Court rejected the airline’s assertion that petitioners were only “chance passengers,” finding that airlines do not ordinarily accept luggage from passengers who lack confirmed reservations and noting the sequence of events (ticket issuance, check-in, claim stubs, terminal-fee payment, and then denial of boarding). The offer to permit boarding only upon payment of an additional fee was characterized as an aggravation of the breach and as evidence of dishonest purpose or moral obliquity sufficient to constitute bad faith. Applying Article 2220 and relevant jurisprudence (including Japan Airlines v. Simangan and other cited authorities), the Court held that moral damages were warranted to redress the mental suffering and humiliation caused by the carrier’s culpable action.
Supreme Court Findings on Exemplary Damages
The Court also found exemplary damages appropriate. It determined that the airline’s conduct was wantonly oppressive and sufficiently reckless or malevolent to justify exemplary damages under the Civil Code principle that they may be awarded where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Exemplary damages were awarded by way of example and correction for the public good, given the public-interest nature of common-carrier obligations.
Assessment and Quantum of Damages
Exercising judicial discretion within the bounds of reasonableness (Art. 2216), the Supreme Court found the trial court’s amounts to be fair and proportionate. The Court affirmed the trial court’s award of P300,000 for moral damages and P300,000 for exemplary damag
Case Syllabus (G.R. No. 213418)
Parties
- Petitioners: Alfredo S. Ramos, Conchita S. Ramos, Benjamin B. Ramos, Nelson T. Ramos and Robinson T. Ramos — private individuals who purchased roundtrip airline tickets and brought suit for damages arising from alleged refusal to transport them on a scheduled flight.
- Respondent: China Southern Airlines Co. Ltd. — airline company sued for breach of contract of carriage and related damages.
- Third party referenced in factual background: Active Travel Agency / Active Travel (agent/ticketing intermediary involved in sale and dealings with petitioners).
Procedural History
- Tickets purchased on 7 August 2003; events giving rise to suit occurred in August 2003.
- Petitioners filed Complaint docketed as Civil Case No. 04-109574 in the Regional Trial Court (RTC) of Manila, Branch 36, seeking actual, moral and exemplary damages and costs.
- RTC rendered Decision dated 23 March 2009 awarding actual damages, moral and exemplary damages, and attorney’s fees.
- China Southern Airlines appealed to the Court of Appeals (CA). CA rendered Decision dated 19 March 2013, affirming actual damages but deleting award of moral and exemplary damages.
- Petitioners filed Motion for Partial Reconsideration before the CA. CA issued Resolution dated 9 July 2014 partially granting the motion by adding interest of 6% per annum on P62,000.00 from finality of CA’s decision until full satisfaction.
- Petitioners filed a Petition for Review on Certiorari to the Supreme Court, assailing the CA Decision and Resolution.
- Supreme Court granted the petition and rendered Decision (G.R. No. 213418) dated September 21, 2016. Notice of Judgment received by the Office on November 16, 2016.
Factual Background
- On 7 August 2003 petitioners purchased five China Southern Airlines roundtrip plane tickets from Active Travel Agency for USD 985.00.
- Itineraries specified departure from Manila on 8 August 2003 at 0900H and return departure from Xiamen on 12 August 2003 at 1920H.
- Outbound flight to Xiamen proceeded without incident and petitioners arrived at Xiamen International Airport.
- For the return flight on 12 August 2003, petitioners were prevented from boarding despite: confirmation by an Active Tours agent earlier that day; having completed check-in procedures; having their baggage checked and claim stubs issued; and having paid the corresponding terminal fees.
- At the airport petitioners were informed by China Southern Airlines’ agent that they were “chance passengers” and could only be allowed to join the flight if they paid an additional 500 Renminbi (RMB) per person.
- Petitioners refused to pay the additional amount; their baggage was offloaded and China Southern Airlines’ 1920H flight departed Xiamen without them.
- Because of business commitments in Manila, petitioners rented a car to Chuan Chio Station, took a train to Hong Kong, and purchased new tickets from Philippine Airlines (PAL) to return to Manila.
- Upon arrival in Manila petitioners notified Active Travel; Active Travel offered to refund ticket price, which petitioners refused.
- Petitioners demanded reimbursement from China Southern Airlines for airfare and travel expenses amounting to P87,375.00; demand was refused, prompting the filing of the Complaint.
- In its Answer, China Southern Airlines denied liability, averring petitioners were not confirmed passengers and that the tickets required reconfirmation at least 72 hours before departure, which was not done, resulting in automatic cancellation of bookings.
RTC Decision (23 March 2009)
- RTC found in favor of petitioners and awarded:
- P62,000.00 as actual damages;
- P300,000.00 as moral damages;
- P300,000.00 as exemplary damages;
- P30,000.00 for attorney’s fees.
- RTC dismissed defendants’ counterclaim for insufficiency of evidence to sustain damages claimed.
Court of Appeals Decision (19 March 2013) and Resolution (9 July 2014)
- CA modified RTC’s award by deleting moral and exemplary damages, reasoning petitioners failed to show China Southern Airlines acted with bad faith, fraud or malice.
- CA held recoverable damages limited to natural and probable consequences of the breach and awarded petitioners the peso value of the PAL ticket they purchased for return flight, plus attorney’s fees (P30,000.00).
- CA observed China Southern Airlines offered the option of boarding as “chan