Northwest Airlines v. Catapang
REITERATIONFacts
The Antecedents: Delfin S. Catapang (respondent), a lawyer and UCPB officer, requested a rebookable/reroutable ticket from First United Travel, Inc. (FUT), an authorized agent of Northwest Airlines, Inc. (petitioner). FUT informed respondent that petitioner would accommodate the request for an additional US$50 per rebooking/rerouting. Respondent agreed, and FUT issued a ticket with this annotation. Upon arrival in New York, respondent was informed by petitioner's office that the ticket was not rebookable/reroutable. He was advised to go to petitioner's branch office, where an employee rudely informed him that the ticket was of a "restricted type" and required an upgrade fee of US$644.00 to rebook. Respondent paid this amount under protest to meet his travel obligations. Upon returning to the Philippines, respondent sent a demand letter to petitioner for damages due to breach of contract and shabby treatment. Petitioner did not respond, prompting respondent to file a complaint for damages. Procedural History: The Regional Trial Court (RTC) Makati found petitioner liable for breach of contract of carriage and awarded actual damages (US$823.00 or Peso equivalent plus Php7,372.50 for filing fees), moral damages (Php800,000.00), exemplary damages (Php100,000.00), attorney's fees (Php200,000.00), and costs. The Court of Appeals (CA) affirmed the RTC decision with modification, reducing moral damages to Php400,000.00 but affirming other awards. The Petition: Petitioner assails the CA decision, arguing it was not guilty of breach of contract, and that moral and exemplary damages, attorney's fees, and actual damages for filing fees were improperly awarded. Petitioner also claims the total damages awarded were excessive.
Issue(s)
Whether petitioner committed a breach of contract of carriage. Whether respondent is entitled to moral damages. Whether respondent is entitled to exemplary damages. Whether respondent is entitled to attorney's fees. Whether respondent is entitled to actual damages for filing fees.
Ruling
The petition is bereft of merit. The Court of Appeals Decision dated June 30, 2006 is AFFIRMED with MODIFICATION: the award of attorney's fees is deleted for lack of basis, and the award of actual damages of Php7,372.50 representing filing fees is deleted.
Ratio Decidendi
On the issue of breach of contract of carriage: The Court held that petitioner committed a breach of contract. Respondent's ticket was issued by FUT, petitioner's authorized agent, with an annotation allowing rebooking/rerouting for a US$50 fee. Petitioner's subsequent refusal to honor this condition and demand for a higher upgrade fee of US$644.00 constituted a unilateral change in the contract terms without respondent's consent. Petitioner's reservation supervisor admitted that the only restriction on the ticket pertained to non-endorsement, not to the type of ticket requiring an upgrade for rebooking. On the entitlement to moral damages: The Court affirmed the award of moral damages. Petitioner's breach was aggravated by the rude treatment respondent received from its employee in New York. The employee's discourteous conduct, including telling respondent he could not understand English and insisting on the upgrade fee, caused respondent humiliation and embarrassment. Passengers have a right to be treated with kindness, respect, and courtesy by a carrier's employees, and any discourteous conduct gives rise to an action for damages. On the entitlement to exemplary damages: The Court found the award of exemplary damages justified. While exemplary damages are generally not awarded in breach of contract cases unless the carrier is guilty of wanton, fraudulent, reckless, oppressive, or malevolent conduct, the "shabby treatment" and "rudeness" exhibited by petitioner's employee, coupled with the breach of contract, demonstrated such oppressive conduct. The airline's actions went beyond a mere contractual breach, involving discourteous and insulting behavior towards a passenger. On the entitlement to attorney's fees: The Court deleted the award of attorney's fees for lack of basis. The trial court did not state the factual and legal basis for the award, and the records did not show that respondent adduced proof of a retainer agreement to sustain the general averment for attorney's fees. On the entitlement to actual damages for filing fees: The Court deleted the award of Php7,372.50 for filing fees as part of actual damages. The Court clarified that filing fees are chargeable to the "cost of suit" awarded by the trial court and affirmed by the appellate court, as provided under Sections 8 and 10, Rule 142 of the Rules of Court, and not as a component of actual damages.
Main Doctrine
An airline is liable for breach of contract of carriage and damages when its employee rudely treats a passenger and imposes unauthorized charges for rebooking or rerouting of a ticket, despite assurances from the ticketing agent that such rebooking was possible with a specified fee.