Singson vs. Court of Appeals

An open-dated round-trip ticket is itself a complete written contract of carriage, and a common carrier breaches that contract when it refuses to confirm a passenger's return-flight booking under the ticket; where the carrier's negligence is gross and reckless, it may amount to bad faith, warranting moral and exemplary damages and attorney's fees.

Carlos Singson was a passenger holding a round-trip ticket issued by Cathay Pacific Airways, a common carrier engaged in air transportation. The law imposes on common carriers the duty to carry passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all circumstances. A contract to transport passengers generates a relation attended with a public duty, and failure to observe this high degree of care renders the carrier liable for damage sustained by its passengers.

On 24 May 1988, Carlos Singson and his cousin Crescentino Tiongson bought from Cathay Pacific Airways, Ltd. at its Metro Manila ticket outlet two open-dated, identically routed, round trip plane tickets for a vacation in the United States. Each ticket had six flight coupons corresponding to the itinerary: Manila to Hongkong; Hongkong to San Francisco; San Francisco to Los Angeles; Los Angeles back to San Francisco; San Francisco to Hongkong; and Hongkong to Manila. At the start of each leg of the trip, the corresponding flight coupon would be removed from the ticket booklet so that at the end no coupon would remain.

On 6 June 1988, Singson and Tiongson left Manila on Cathay Flight No. 902. They arrived safely in Los Angeles and after about three weeks decided to return to the Philippines. On 30 June 1988 they arranged for their return flight at Cathay's Los Angeles Office and chose 1 July 1988, a Friday, for departure. Tiongson easily got a booking, but Singson did not: his ticket booklet did not have flight coupon no. 5 for San Francisco–Hongkong; instead it contained flight coupon no. 3 for San Francisco–Los Angeles, which was supposed to have been used and removed. Cathay was able to arrange Singson's return flight to Manila only on 6 July 1988.

Singson claimed he insisted on confirmation because of very important and urgent business engagements in the Philippines, but Cathay allegedly shrugged off his protestations and directed him to go to San Francisco himself to investigate or purchase a new ticket subject to refund if the missing coupon was unused or subsisting. He remonstrated that Cathay's agent must have committed the mistake of tearing off the wrong coupon; that he did not have enough money to buy new tickets; and that Cathay could conclude the investigation in minutes because of its facilities. Cathay allegedly dismissed him like an impertinent "brown pest." Consequently, he and Tiongson, who deferred his own flight to accompany him, were forced to leave for San Francisco on the night of 1 July 1988 to verify the missing ticket.

Cathay denied these allegations. It averred that because Singson held an open-dated ticket, he was not booked on a specific flight on a particular date, so no contract of carriage yet existed and its refusal to immediately book him could not be a breach. It added that the coupon had been missing for almost a month, so it had to verify whether the ticket was still valid and outstanding before issuing a replacement; it sent a telex on 1 July 1988 to its Hongkong headquarters, but due to the time difference and because 2 and 3 July 1988 were a Saturday and Sunday and 4 July 1988 was U.S. Independence Day, the response was not read until 5 July 1988. Cathay also denied requiring Singson to return to San Francisco; it claimed he informed it of a side trip and that it advised him the Hongkong response would be copied to San Francisco. Cathay's reservation and ticketing agent Timothy Remedios testified that he obtained Singson's computer profile and verified that Singson did have reservations booked for travel: Los Angeles to San Francisco, San Francisco to Hongkong to Manila; he then observed that Singson's ticket did not contain a flight coupon for San Francisco to Hongkong but did contain one for San Francisco to Los Angeles, which was supposed to have been removed by U.S. Air when Singson checked in at San Francisco.

The trial court found that Singson was indeed sent by Cathay to its San Francisco office to verify. The Court of Appeals found no trace of fraud or bad faith and considered Cathay's verification and the delay justified.

• Gross Negligence and Bad Faith: Petitioner claimed the trial court found Cathay guilty of gross negligence amounting to malice and bad faith in (a) detaching the wrong coupon, (b) using that error to deny confirmation of his return flight, and (c) directing him to prematurely return to San Francisco to verify the missing coupon.
• Rude and Demeaning Conduct: Petitioner underscored the scornful and demeaning posture of Cathay's employees toward him.
• Deference to Trial Court Findings: Petitioner argued that findings of fact of the trial court are entitled to the highest degree of respect from appellate courts, especially when supported by evidence, and that the Court of Appeals therefore erred in striking out the award of moral and exemplary damages and attorney's fees for lack of basis.

• No Breach — Open-Dated Ticket: Cathay maintained it did not breach the contract of carriage; it argued that only when a passenger is confirmed on a particular flight and date specifically stated in his ticket will refusal to board result in breach, and Singson's open-dated ticket meant no such confirmation existed.
• No Fraud or Bad Faith: Even assuming breach, Cathay argued there was no fraud or bad faith to justify moral and exemplary damages and attorney's fees.
• Verification and Delay: Cathay asserted the coupon had been missing for almost a month, requiring verification of its status before replacement; it sent a telex to Hongkong on 1 July 1988, and the delay was due to time difference and non-working days.
• No Directive to Go to San Francisco: Cathay denied requiring Singson to go to San Francisco, claiming he informed it of a side trip and that it advised him the Hongkong response would be copied to San Francisco.

• Breach of Contract of Carriage: Whether a breach of contract was committed by Cathay when it failed to confirm the booking of petitioner for its 1 July 1988 flight.
• Liability for Damages: Whether the carrier was liable not only for actual damages but also for moral and exemplary damages, and attorney's fees for failing to book petitioner on his return flight to the Philippines.

• Breach of Contract of Carriage: Yes. The round-trip ticket was itself a complete written contract, already partially executed, and Cathay's refusal to confirm Singson's return booking despite his reservations constituted breach; he was not a mere chance passenger.
• Liability for Damages: Yes. Gross negligence equivalent to bad faith justified moral and exemplary damages and attorney's fees, but the amounts were reduced to P200,000.00 moral, P50,000.00 exemplary, and P25,000.00 attorney's fees, with actual damages of P20,000.00 affirmed.

• Breach of Contract of Carriage: The contention that no contract existed because the ticket was open-dated was untenable. The round trip ticket was a complete written contract with (a) consent, (b) cause or consideration in the fare paid, and (c) object, the transportation from departure to destination and back. It had been partially executed because Cathay transported Singson to Los Angeles; only the return half remained. Cathay's reservation and ticketing agent Timothy Remedios testified that Singson did have reservations booked for travel: Los Angeles to San Francisco, San Francisco to Hongkong to Manila. The ticket lacked the San Francisco–Hongkong coupon but contained the San Francisco–Los Angeles coupon that should have been removed. Singson was therefore not a mere chance passenger. The loss of the coupon was attributable to the negligence of Cathay's agents, either because U.S. Air mistakenly detached the San Francisco–Hongkong coupon thinking it was the San Francisco–Los Angeles portion, or because the booklet did not from issuance include the San Francisco–Hongkong coupon. In either case, the negligence of Cathay's agents was the proximate cause of the non-confirmation. Had the agents double-checked the coupons, there would have been no reason not to confirm Singson's booking, as with Tiongson. Absolving Cathay would put a premium on its agent's negligence, contrary to the policy requiring common carriers to exercise extraordinary diligence.
• Liability for Damages: Moral damages predicated on breach of contract of carriage are recoverable where the mishap results in death or where the carrier is guilty of fraud or bad faith; they are also recoverable where the carrier's negligence is so gross and reckless as to virtually amount to bad faith. The circumstances showed: first, the missing coupon was due to Cathay's agents' negligence; second, Singson and Tiongson presented identically routed ticket booklets, and Remedios confirmed from the computer that Singson had reservations, yet Cathay ignored this and refused to confirm while ready to confirm Tiongson's identically routed ticket on the lame and flimsy excuse that the missing ticket's existence and validity had to be verified; third, Cathay directed Singson to go to its San Francisco office to verify, despite being responsible for the loss and having computers, fax, telex, and telephones at its Los Angeles office; the denial that it required him to go was unpersuasive, and deference was owed to the trial court's finding; fourth, Cathay's telex verification was not prompt because Hongkong received the telex on 1 July 1988 at about 2:00 a.m. and sent its response only on 2 July 1988 at 12:00 noon, more than twenty-four hours later despite access to records and facilities. Being stranded five days in a foreign land because of the carrier's negligence caused profound distress, anxiety, money worries, and embarrassment. The accusation of rudeness was not substantiated, but it did not affect the disposition. Taken together, these acts signified more than ordinary inadvertence and constituted a radical departure from the extraordinary standard of care, gross negligence, recklessness, and wanton disregard indistinguishable from fraud, malice, and bad faith. Moral and exemplary damages and attorney's fees were thus proper. The P500,000.00 moral and P400,000.00 exemplary damages were reduced to P200,000.00 and P50,000.00 because the injury was not so serious or extensive as to warrant P900,000.00; damages are not intended to enrich the complainant, and no hard-and-fast rule fixes moral damages. Actual damages of P20,000.00 were affirmed based on Singson's testimony that he spent around $500 for food and about $30 per meal from 1 July to 6 July 1988, with no countervailing evidence. Attorney's fees were proper because Cathay's act or omission compelled Singson to litigate or incur expenses to protect his interest; P25,000.00 was rational, fair, and reasonable instead of P100,000.00.

• Common Carrier's Extraordinary Diligence — Common carriers are required by law to carry passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all circumstances. A contract to transport passengers generates a relation attended with a public duty, and failure to observe this high degree of care renders the carrier liable for damage sustained by passengers. Applied: Cathay's multiple negligent acts, including the missing coupon and delayed verification, were a radical departure from this standard.
• Open-Dated Round-Trip Ticket as Complete Written Contract — A round-trip ticket issued by a carrier to a passenger is itself a complete written contract between them, containing consent, cause or consideration (the fare paid), and object (transportation from departure to destination and back). An open-dated ticket does not negate the contract; partial performance of one half of the trip leaves the return half obligatory. Applied: Cathay's claim that no contract existed was untenable.
• Chance Passenger — A passenger with reservations booked for travel is not a mere chance passenger with no superior right to be boarded on a specific flight. Applied: Cathay's own agent testified Singson had reservations, so the appellate court's chance-passenger characterization was erroneous.
• Gross Negligence Equivalent to Bad Faith — Moral damages predicated on breach of contract of carriage are recoverable where the mishap results in death, where the carrier is guilty of fraud or bad faith, or where the carrier's negligence is so gross and reckless as to virtually amount to bad faith. Applied: Cathay's refusal to confirm despite its own records, its directive to Singson to verify in San Francisco, and its delayed telex response constituted gross negligence, recklessness, and wanton disregard indistinguishable from fraud, malice, and bad faith.
• Damages Not to Enrich Complainant — The grant of moral damages depends on the court's discretion based on the circumstances of each case; the amount should not be palpably and scandalously excessive as to indicate prejudice or corruption, and damages are intended to alleviate moral suffering, not to enrich the complainant. Applied: The trial court's P500,000.00 moral and P400,000.00 exemplary damages were reduced to P200,000.00 and P50,000.00.
• Attorney's Fees — Attorney's fees may be awarded when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. Applied: Cathay's breach and negligence compelled Singson to litigate; P25,000.00 was awarded.

• "A contract to transport passengers is quite different in kind and degree from any other contractual relation. And this because its business is mainly with the traveling public. In invites people to avail of the comforts and advantages it offers. The contract of carriage, therefore, generates a relation attended with a public duty." — This passage defines the public-duty character of a contract of carriage and supports the extraordinary diligence standard applied to Cathay.
• "To begin with, the round trip ticket issued by the carrier to the passenger was in itself a complete written contract by and between the carrier and the passenger." — This is the ratio for rejecting Cathay's open-dated-ticket defense and finding breach.
• "Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier is so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise becomes entitled to recover moral damages." — This states the controlling rule on moral damages in breach of contract of carriage.
• "Taken together, they indubitably signify more than ordinary inadvertence or inattention and thus constitute a radical departure from the extraordinary standard of care required of common carriers. Put differently, these circumstances reflect the carrier's utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of gross negligence, recklessness and wanton disregard of the rights of the latter, acts evidently indistinguishable or no different from fraud, malice and bad faith." — This applies the gross-negligence-equivalent-to-bad-faith doctrine to Cathay's conduct.

• Air France vs. Carrascoso, No. L-21438, 28 September 1966, 18 SCRA 155, 167-168 — Cited for the public-duty character of a contract of carriage and the extraordinary diligence required of common carriers.
• Filipinas Peralta de Guerrero, et al. vs. Madrigal Shipping Co., Inc., 106 Phil. 485 (1959) — Cited in support of the rule that a round-trip ticket is a complete written contract with the essential elements of consent, cause or consideration, and object.
• China Airlines, Ltd. vs. Intermediate Appellate Court, G.R. No. 73835, 17 January 1989, 169 SCRA 226 — Cited for the rule that moral damages are recoverable in a breach of contract of carriage where the carrier is guilty of fraud or bad faith.
• Fores vs. Miranda, 105 Phil. 266 (1959) — Cited for the principle that gross and reckless negligence of a carrier may virtually amount to bad faith, entitling the passenger to moral damages.
• Alitalia Airway vs. Court of Appeals, G.R. No. 77011, 24 July 1990, 187 SCRA 763, 769-770 — Cited for the rule that appellate courts do not ordinarily review findings of fact of the trial court, which are binding and conclusive absent recognized exceptions.
• Cathay Pacific Airways, Ltd. vs. Court of Appeals, G.R. No. 60501, 5 March 1993, 219 SCRA 520, 527 — Cited for the rule that where an airline breaches a contract of carriage with fraud, malice, or bad faith, moral and exemplary damages may be awarded in addition to actual damages.
• Prudencio vs. Alliance Transport System, Inc., No. L-33836, 16 March 1987, 148 SCRA 440 — Cited for the principle that the grant of moral damages depends on the court's discretion based on the circumstances of each case.
• Siguenza vs. Court of Appeals, No. L-44050, 16 July 1985, 137 SCRA 570 — Cited for the limitation that moral damages should not be palpably and scandalously excessive.
• R & B Surety and Insurance Co., Inc. vs. Intermediate Appellate Court, G.R. No. 64515, 22 June 1984, 129 SCRA 736 — Cited for the principle that damages are not intended to enrich the complainant but to alleviate moral suffering.

• Article 1755, New Civil Code — Requires common carriers to carry passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all circumstances. Applied to hold Cathay to the extraordinary standard of care it failed to meet.
• Articles 1764 and 2206, New Civil Code — Cited in connection with the rule that moral damages predicated upon a breach of contract of carriage may be recoverable where the mishap results in the death of a passenger.
• Article 2220, New Civil Code — Cited for the rule that moral damages may be recovered where the carrier is guilty of fraud or bad faith; the Court applied it through the gross-negligence-equivalent-to-bad-faith principle.

Davide, Jr., Vitug, and Kapunan, JJ., concurred.