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

Case Summary (G.R. No. 124110)

Conflicting accounts at Los Angeles Airport

United’s account diverges: the carrier alleges the Fontanillas did not first secure seat assignments at the check-in counter and instead joined the boarding queue; the gate attendant instructed them to obtain seat assignments, and upon doing so the customer service representative (Linda Allen) informed them the flight was overbooked, booked them on the next available flight and offered denied boarding compensation. United denies the racist and derogatory statements attributed to its employee.

Trial court and appellate outcomes

The Regional Trial Court of Makati dismissed the complaint after trial on the merits. On appeal, the Court of Appeals reversed, finding (1) an implied admission by United that the Fontanillas observed the check-in requirement; (2) that even if they failed to check in, United had not complied with denied-boarding procedures (relying on U.S. regulations); and (3) that United’s employees acted discourteously, arbitrarily and discriminately, warranting awards of moral and exemplary damages and attorney’s fees. The Court of Appeals ordered United to pay P200,000 moral damages, P200,000 exemplary damages and P50,000 attorney’s fees.

Issues raised before the Supreme Court

United Airlines petitioned, assigning errors that the Court of Appeals (I) erred in finding an admission that the check-in requirement was observed; (II) erred in ruling that failure to check in would not bar recovery because denied-boarding rules were not complied with; (III) erred in awarding moral damages; (IV) erred in awarding exemplary damages; and (V) erred in awarding attorney’s fees.

Legal treatment of alleged admission and Rule 9, Section 1

The Court examined the pleadings. The complaint alleged that the Fontanillas checked in at 9:45 a.m. United’s answer “admitted the allegation except to deny that plaintiff and his son checked in at 9:45 a.m., for lack of knowledge or information at this point in time as to the truth thereof.” The Supreme Court held that a claim of lack of knowledge is treated as a denial except where the fact is plainly within the defendant’s knowledge; nonetheless, even absent a specific denial of compliance with the check-in requirement, United presented evidence contesting the alleged check-in and permitted rebuttal evidence at trial. The Court applied precedent holding that a plaintiff may waive the effect of an alleged admission by introducing evidence and failing to object to the defendant’s refutation. Therefore, the Court rejected the Court of Appeals’ reliance on an implied admission to resolve the factual dispute in favor of the plaintiffs.

Burden of proof and standard of appellate review

The Court reiterated fundamental principles: in civil cases the party asserting a fact must establish it by a preponderance of evidence; a plaintiff must rely on the strength of his own evidence, not on the weakness of the defendant’s. The Supreme Court emphasized deference to trial court findings on factual issues, noting trial judges’ advantage in observing witness demeanor and assessing credibility—factors warranting affirmance of trial court findings unless strong and cogent reasons justify reversal.

Check-in requirement, applicable law and lex loci contractus

The Court rejected the Court of Appeals’ reliance on U.S. Federal Aviation regulations (Code of Federal Regulations Part 250.6) because Philippine law governs the dispute. Applying the doctrine of lex loci contractus, the Court held the law of the place where the contract was made (the Philippines, where the ticket was purchased) governs the contract’s nature and interpretation. The applicable Philippine law is Civil Aeronautics Board Economic Regulations No. 7 (as amended), which conditions denied boarding compensation on the passenger’s compliance with check-in and reconfirmation requirements. Section 5 of that regulation requires passengers to have “presented themselves at the proper place and time and fully complied with the carrier’s check-in and reconfirmation procedures” to be eligible for denied boarding compensation. Consequently, failure to comply with the check-in requirement may bar recovery.

Assessment of the evidence on check-in and credibility

The Court found that plaintiff’s testimony claiming immediate check-in and that the employee punched something into a computer was weak and unsupported by corroborating evidence. The boarding pass itself bore “CHECK-IN REQUIRED” but no seat number; the absence of seat number undermined the claim that they had checked in as alleged. The Court accepted the trial court’s conclusion that their failure to check in, as required on the boarding pass, explained their lack of seat assignments and consequent denial of boarding. Because the plaintiffs failed to carry their burden of proving compliance with the carrier’s check-in requirement and failed to produce corroboration for their allegations, the Court held they did not establish breach in bad faith by United.

Treatment of alleged discriminatory remarks and damages

On the allegations of coarse, derogatory and racist rem

Case Syllabus (G.R. No. 124110)

Case Caption, Citation and Court

G.R. No. 124110, April 20, 2001; reported at 409 Phil. 88; First Division.
Parties: United Airlines, Inc. (petitioner) v. Court of Appeals and Aniceto Fontanilla, in his personal capacity and in behalf of his minor son Mychal Andrew Fontanilla (respondents).
Decision authored by Justice Kapunan; Davide, Jr., C.J. (Chairman), Puno, and Ynares‑Santiago, JJ., concur; Pardo, J., on sick leave.

Factual Background — Ticket Purchase and Itinerary

On March 1, 1989, Aniceto Fontanilla purchased from United Airlines, through the Philippine Travel Bureau in Manila, three "Visit the U.S.A." tickets for himself, his wife, and his minor son Mychal for the following confirmed routes and dates: (a) San Francisco to Washington (15 April 1989); (b) Washington to Chicago (25 April 1989); (c) Chicago to Los Angeles (29 April 1989); (d) Los Angeles to San Francisco (01 May 1989 for petitioner’s wife and 05 May 1989 for petitioner and his son). [1][2]
The Fontanillas used the first coupon from San Francisco to Washington as planned. On April 24, 1989, Aniceto Fontanilla purchased two additional coupons each for himself, his wife and son from United Airlines at its Washington Dulles Airport office; after paying a penalty for rewriting, they were issued tickets with corresponding boarding passes bearing the words "CHECK‑IN REQUIRED" for United Airlines Flight No. 1108 scheduled Los Angeles to San Francisco at 10:30 a.m. on May 5, 1989. [3]

Private Respondents’ Version of Events at Los Angeles Airport (May 5, 1989)

Upon arrival at Los Angeles Airport, Aniceto and his son proceeded to United Airlines counter and were attended by an employee with the nameplate "LINDA."
The employee allegedly examined their tickets, entered something into a computer, and told them boarding would be in fifteen minutes. [4]
When the flight was called and the Fontanillas proceeded to the plane, the gate stewardess refused them boarding because they had no assigned seat numbers and directed them back to the check‑in counter. [4]
At the check‑in counter, the employee "Linda" allegedly informed them the flight had been overbooked and asked them to wait. [5]
The Fontanillas purportedly explained their special circumstances, but Linda allegedly responded arrogantly, "So what, I can not do anything about it." [5]
Three other passengers described as having Caucasian features were allegedly allowed to board after the Fontanillas were told the flight was overbooked. [6]
The plane departed with the Fontanillas’ baggage on board, leaving them behind. [7]
The Fontanillas complained; Linda allegedly gave an "ugly stare" and said "It's not my fault. It's the fault of the company. Just sit down and wait." [8]
When Mr. Fontanilla reminded Linda of the inconvenience, she allegedly retorted with racial epithets: "Who do you think you are? You lousy Flips are good for nothing beggars. You always ask for American aid," and threatened to report them to immigration and told them "You Filipinos should go home." [9]
These statements were allegedly uttered publicly, causing shame, humiliation and embarrassment; the minor son allegedly wept. [10][11]
Linda allegedly then offered the Fontanillas $50.00 each without explanation; they declined. [11]
The Fontanillas went to the United Airlines customer service counter; a male employee allegedly shouted he was "ready for it" and left. [12]
The Fontanillas were not booked on the 11:00 a.m. flight to San Francisco and were able to leave only at 12:00 noon on United Airlines Flight No. 803. [13]

Petitioner United Airlines’ Version of Events

United Airlines contends the Fontanillas did not initially go to the check‑in counter to obtain seat assignments for UA Flight 1108 but instead joined the boarding queue without securing seat assignments as required by their tickets/boarding passes.
Having no seat assignments, the gate stewardess instructed them to return to the check‑in counter, where Linda Allen, United Airlines Customer Representative, informed them the flight was overbooked, booked them on the next available flight, and offered denied boarding compensation.
Linda Allen vehemently denies uttering the derogatory and racist statements attributed to her by the Fontanillas. [14]

Procedural History — Trial Court and Pleadings

The Fontanillas filed Civil Case No. 89‑4268 for damages before the Regional Trial Court (RTC) of Makati. After trial on the merits, the RTC rendered judgment dismissing the complaint; the counterclaim was likewise dismissed as plaintiffs were not actuated by legal malice when they filed the complaint. [15]
Key pleadings: Paragraph 7 of the complaint alleged that on May 5, 1989 at 9:45 a.m. plaintiff and his son checked in at defendant's designated counter for Flight No. 1108. [20]
Petitioner’s answer, paragraph 4, admitted paragraph 7 except it denied that the check‑in occurred at 9:45 a.m., claiming lack of knowledge or information as to the truth thereof. [21]

Court of Appeals Decision and Awards

On appeal, the Court of Appeals (CA) ruled in favor of the Fontanillas, finding (i) an admission by United Airlines that the Fontanillas observed the check‑in requirement; (ii) even if check‑in was not observed, United failed to comply with denied boarding procedures; and (iii) the United employees were discourteous, arbitrary and discriminatory, warranting moral damages.
The CA entered judgment ordering defendant‑appellee to pay: (a) P200,000.00 as moral damages; (b) P200,000.00 as exemplary damages; and (c) P50,000.00 as attorney's fees. No pronouncement as to costs. (Decision dated 29 September 1995.) [16]

Issues Presented to the Supreme Court (Assigned Errors by Petitioner)

Whether the Court of Appeals erred in ruling that the RTC was wrong in failing to consider the alleged admission that private respondents observed the check‑in requirement (Rule 9, Section 1, Rules of Court). [17]
Whether the CA erred in ruling that private respondents' failure to check‑in wo