Cervantes v. Court of Appeals and Philippine Air Lines, Inc.
REITERATIONFacts
The Antecedents: Philippine Air Lines, Inc. (PAL) issued a round trip plane ticket to Nicholas Y. Cervantes (petitioner) valid for one year, until March 27, 1990. This was pursuant to a Compromise Agreement in previous suits. Petitioner used the ticket on March 23, 1990, and upon arrival in Los Angeles, booked his return flight for April 2, 1990. He later arranged to board the return flight in San Francisco instead of Los Angeles, as the plane would stop over there. Procedural History: Upon checking in at the PAL counter in San Francisco on April 2, 1990, petitioner was denied boarding, with his ticket marked "TICKET NOT ACCEPTED DUE EXPIRATION OF VALIDITY." Petitioner filed a Complaint for Damages for breach of contract of carriage, which was dismissed by the Regional Trial Court (RTC) for lack of merit. The Court of Appeals (CA) affirmed the RTC's decision. The Petition: Petitioner filed a Petition for Review on certiorari with the Supreme Court, assailing the CA's decision.
Issue(s)
Whether the act of PAL agents in confirming the ticket extended its validity period. Whether the defense of lack of authority was correctly ruled upon. Whether the denial of the award for damages was proper.
Ruling
The Petition is DENIED, and the decision of the Court of Appeals dated July 25, 1995 is AFFIRMED in toto.
Ratio Decidendi
On Issue 1: The Court affirmed the lower courts' findings that the PAL agents' confirmation of the return flight did not extend the ticket's validity. The plane ticket itself, along with its conditions of contract, explicitly stated it was valid for one year from issuance, until March 27, 1990. The ruling in Lufthansa vs. Court of Appeals was applied, emphasizing that "the ticket constitute[s] the contract between the parties" and "when the terms are clear and leave no doubt as to the intention of the contracting parties, contracts are to be interpreted according to their literal meaning." Petitioner was aware of the expiry date and the need for a written request for extension to PAL's legal counsel, which he did not pursue. The confirmation by agents without authority could not alter the express terms of the contract. On Issue 2: The Court found the defense of lack of authority to be unsustainable under Rule 9, Section 2 of the Revised Rules of Court, as it was not raised in the Answer or Motion to Dismiss. However, this omission was cured because the issue of authority was litigated upon during the trial, specifically through the testimony of the petitioner himself. Petitioner admitted knowledge that a written request to PAL's legal counsel was necessary for an extension, indicating his awareness of the agents' limited authority. Rule 10, Section 5 of the 1997 Rules of Civil Procedure was applied, stating that issues not raised in the pleadings but tried with the express or implied consent of the parties are treated as if they were raised. The admission by Cervantes regarding the need for a written request to the legal department was considered as evidence presented with implied consent, curing the defect in pleading. On Issue 3: The Court held that an award of damages was improper because petitioner failed to demonstrate that PAL acted in bad faith. For moral damages in breach of contract of carriage, the breach must be wanton, deliberately injurious, or accompanied by fraud or malice. Petitioner's knowledge of the ticket's expiry and his purchase of a back-up ticket suggested he anticipated potential issues, potentially shifting the burden of bad faith onto him. The actions of the PAL employees were characterized as simple negligence, and no injury resulted due to the back-up ticket. Exemplary damages were also denied as there was no showing of wanton, fraudulent, reckless, or malevolent conduct by PAL. Consequently, attorney's fees were also deemed improper.
Main Doctrine
The terms of a plane ticket constitute the contract between the parties, and when clear, they are to be interpreted according to their literal meaning. Acts of agents beyond their authority do not bind the principal unless ratified, especially when the third party is aware of the agent's limitations. Failure to raise a defense is cured if the issue is litigated with the implied consent of the parties.