Northwest Airlines vs. Catapang

A carrier is bound by the terms of the ticket issued by its authorized agent; it cannot later impose a restricted-type upgrade not reflected on the ticket, and its employee’s discourteous treatment of a passenger supports moral and exemplary damages. Attorney’s fees require factual and legal basis, and filing fees are taxable as costs, not actual damages.

Respondent Delfin S. Catapang was a lawyer and, at the material time, Assistant Vice President and Head of the Special Projects Department, Corporate Services Division of the United Coconut Planters Bank (UCPB). UCPB directed him to go to Paris on a business trip, and he intended to proceed afterward to the United States to visit his siblings. Northwest Airlines, Inc. was the carrier involved, and First United Travel, Inc. (FUT) was its authorized agent.

Respondent Delfin S. Catapang requested First United Travel, Inc. (FUT) to issue him a ticket that would allow rebooking or rerouting of flights within the United States after his Paris business trip. FUT informed him by telephone that Northwest Airlines, Inc. was willing to accommodate his request provided he paid an additional US$50 for every rebooking or rerouting of flight, and respondent agreed to the condition. FUT, as petitioner’s authorized agent, issued respondent a ticket covering the New York to Los Angeles via Detroit and the Los Angeles to Manila segments, with the restriction portion annotated: “No end./7 days adv. Purchase US$50 – rebooking/re-routing/cancellation fee.”

On respondent’s arrival in New York, he called petitioner’s office by telephone and was informed that his ticket was not “rebookable or reroutable”; he was nevertheless advised to go to petitioner’s nearest branch office. He then went to petitioner’s ticket office at the World Trade Center, where an employee treated him rudely and told him that his ticket was not rebookable or reroutable because it was a “restricted type,” and that unless he upgraded it by paying US$644.00, he could not rebook. Left with no choice, respondent paid that amount for rebooking and was issued ticket no. 012:4488:504:099.

In his letter of March 24, 1992 to petitioner, respondent recounted that at about 9:30 in the morning of March 11, 1992 he went to the sales office at the World Trade Center, where petitioner’s representative rudely told him that his ticket was the restrictive type and could not be rebooked or rerouted; that when he explained the only restriction was the US$50 rebooking/rerouting fee and asked the representative to read the restriction, the representative rudely and impolitely retorted that he could not understand English and that unless he paid US$644.00 he could not get a rebooking and rerouting; and that despite his appeal and protestation, he was compelled to pay US$644.00 under protest using his American Express Card because his cash was insufficient. He also stated that he asked for cancellation and refund of his Los Angeles-to-Philippines ticket and was given refund application slip no. 012 0230189256 3 at the Los Angeles airport on March 12, 1992. He demanded ₱1,000,000.00 in damages within five days, failing which he would seek redress in court.

Petitioner claimed in its Answer that respondent’s ticket was a discounted one, subject to rules which petitioner’s agents had to abide by; as to the US$50.00 rebooking charge annotation, petitioner explained that it was subject to “rules of applicability” which could not be reflected on the ticket. Respondent’s letter of demand remained unanswered and unheeded, and on July 1, 1992 he filed with the RTC of Makati a complaint for damages against petitioner. In the proceedings, petitioner’s reservation supervisor, Amelia Merris, admitted that the only restriction on respondent’s ticket per the restriction portion was non-endorsement, and that there was no such restriction as the restricted-type upgrade requirement.

• Breach of Contract: Petitioner posited that it was not guilty of breach of contract of carriage, challenging the award of moral damages on that ground.
• Exemplary Damages: Petitioner argued that exemplary damages are not recoverable in cases of breach of contract of carriage unless the carrier is guilty of wanton, fraudulent, reckless, oppressive, or malevolent conduct, which it claimed it was not.
• Attorney’s Fees: Petitioner argued that under Article 2208 of the Civil Code, attorney’s fees and expenses of litigation cannot, as a general rule, be recovered.
• Actual Damages: Petitioner argued that respondent did not suffer any pecuniary loss, so actual damages were improper.
• Filing Fees: Petitioner argued that the order for reimbursement of filing fees had no basis.
• Excessive Damages: Petitioner argued that the total award of ₱700,000.00 in damages was excessive and unprecedented.

• Breach of Contract of Carriage and Moral Damages: Whether petitioner is liable for breach of contract of carriage and for moral damages.
• Exemplary Damages: Whether exemplary damages are recoverable from petitioner in this case.
• Attorney’s Fees: Whether the award of attorney’s fees is proper.
• Filing Fees as Actual Damages: Whether filing fees may be awarded as actual damages.
• Excessive Damages: Whether the total award of ₱700,000.00 in damages is excessive and unprecedented.

• Breach of Contract of Carriage and Moral Damages: Yes. Petitioner breached the contract because its authorized agent issued a ticket with only the US$50 rebooking/rerouting restriction, and petitioner later imposed a US$644 upgrade; the rude treatment supported moral damages.
• Exemplary Damages: Yes. The breach was aggravated by the rude and insulting treatment of respondent, justifying exemplary damages.
• Attorney’s Fees: No. The award is deleted because the trial court did not state the factual and legal basis, and respondent adduced no proof of a retainer agreement.
• Filing Fees as Actual Damages: No. Filing fees are chargeable to costs of suit under Rule 142, not recoverable as actual damages.
• Excessive Damages: No, except that attorney’s fees and filing fees are deleted; the moral and exemplary damages are justified.

• Breach of Contract of Carriage and Moral Damages: The SC found that FUT, as petitioner’s authorized agent, advised respondent that he could rebook/reroute on payment of US$50 for every rebooking, and the ticket’s restriction portion carried only “No end./7 days adv. Purchase US$50 – rebooking/re-routing/cancellation fee.” Petitioner’s reservation supervisor Amelia Merris admitted that the only restriction was non-endorsement and that there was no such restriction requiring a restricted-type upgrade. Petitioner therefore breached the contract when its New York office treated the ticket as restricted and required respondent to pay US$644.00 before rebooking. The breach was aggravated by the undenied rude treatment of respondent, who was insulted by being told he could not understand English in the presence of his brother-in-law and other customers. Passengers have the right to be treated by a carrier’s employees with kindness, respect, courtesy and due consideration, and any discourteous conduct gives the passenger an action for damages against the carrier; the SC cited Korean Airlines Co. Ltd. vs. Court of Appeals. Moral damages were thus justified.
• Exemplary Damages: The SC upheld exemplary damages because petitioner’s breach was aggravated by the rude treatment received by respondent when he tried to rebook. The award of moral and exemplary damages was thus justified.
• Attorney’s Fees: The trial court did not state the factual and legal basis for the award of attorney’s fees. The transcript did not show that respondent adduced proof to sustain his general averment of a retainer agreement in the amount of ₱200,000.00. The SC cited Car Cool Philippines, Inc. vs. Ushio Realty and Development Corporation and deleted the award.
• Filing Fees as Actual Damages: The inclusion of filing fees as part of actual damages is superfluous, if not erroneous, because they are chargeable to the “cost of suit” awarded by the trial court and affirmed by the appellate court. Sections 8 and 10, Rule 142 of the Rules of Court provide for costs, how taxed, and the costs recoverable in Courts of First Instance. The SC therefore deleted the ₱7,372.50 award representing filing fees.
• Excessive Damages: The SC found the petition bereft of merit. It upheld the awards of moral and exemplary damages because the breach and discourteous treatment justified them. The only reductions were the deletion of attorney’s fees for lack of basis and of the ₱7,372.50 filing fees as actual damages; the total award was not otherwise disturbed.

• Carrier Bound by Ticket Issued by Authorized Agent — A carrier is bound by the terms of a ticket issued by its authorized agent; it cannot later impose a restricted-type upgrade or other condition not reflected on the ticket. In this case, FUT issued respondent a ticket with only the US$50 rebooking/rerouting restriction, and petitioner’s reservation supervisor admitted the only restriction was non-endorsement; petitioner therefore breached the contract when it required a US$644 upgrade.
• Passenger’s Right to Courteous Treatment — Passengers have the right to be treated by a carrier’s employees with kindness, respect, courtesy, and due consideration, and are entitled to protection against personal misconduct, injurious language, indignities, and abuses; any discourteous conduct gives the passenger an action for damages against the carrier. Applied because petitioner’s New York employee rudely told respondent he could not understand English and required the US$644 payment.
• Moral and Exemplary Damages for Aggravated Breach of Contract of Carriage — Moral and exemplary damages may be awarded where a carrier’s breach of contract of carriage is aggravated by rude and insulting treatment of the passenger. The SC upheld the awards because the breach was aggravated by the undenied treatment respondent received when he tried to rebook.
• Attorney’s Fees Require Factual and Legal Basis — An award of attorney’s fees must have factual and legal basis; a general averment of a retainer agreement without proof is insufficient. The SC deleted the ₱200,000.00 attorney’s fees because the trial court did not state its basis and the transcript showed no proof of the retainer.
• Filing Fees Are Costs, Not Actual Damages — Filing fees are chargeable to the “cost of suit” under Rule 142 and cannot be awarded as actual damages. The SC deleted the ₱7,372.50 filing fees from actual damages.

• “He was not told by FUT and the ticket did not reflect it that the ticket being issued to him was a "restricted type" to call for its upgrading before a rebooking/rerouting.” — The SC used this to establish that the restricted-type upgrade requirement was not part of the contract and that petitioner breached the ticket terms.
• “Passengers have the right to be treated by a carrier’s employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is that any discourteous conduct on the part of these employees toward a passenger gives the latter an action for damages against the carrier.” — This passage supports the award of moral and exemplary damages for the rude treatment respondent received when he tried to rebook.
• “The inclusion of filing fees as part of the actual damages is superfluous, if not erroneous, the same being chargeable to the "cost of suit" awarded by the trial court and affirmed by the appellate court.” — The SC used this to delete the ₱7,372.50 filing fees from the actual damages award.
• “As for the award of attorney’s fees, the trial court did not state the factual and legal basis thereof.” — This was the basis for deleting the ₱200,000.00 attorney’s fees award.

• Korean Airlines Co. Ltd. vs. Court of Appeals, G.R. Nos. 114061-113842, August 3, 1994, 234 SCRA 717, 723 — Cited by the SC for the rule that passengers have the right to be treated with kindness, respect, courtesy and due consideration, and that discourteous conduct gives an action for damages.
• Car Cool Philippines, Inc. vs. Ushio Realty and Development Corporation, G.R. No. 138088, January 23, 2006, 479 SCRA 404, 414 — Cited by the SC in connection with the deletion of attorney’s fees for lack of factual and legal basis.

• Sections 8 and 10, Rule 142, Rules of Court — The SC quoted these provisions on costs, how taxed, and costs in Courts of First Instance, and applied them to hold that filing fees are chargeable to the “cost of suit” and cannot be awarded as actual damages.
• Article 2208, Civil Code — Invoked by petitioner as the general rule that attorney’s fees and expenses of litigation cannot be recovered; the SC deleted the attorney’s fees award for lack of factual and legal basis.