G.R. No. L-74442 August 31, 1987
PAN AMERICAN WORLD AIRWAYS, INC., petitioner, vs. THE INTERMEDIATE APPELLATE COURT, TEOFISTA P. TINITIGAN, joined by her husband, SEVERINO TINITIGAN, respondents.

FACTS

Private respondent Teofista Tinitigan, a businesswoman, possessed a Pan Am ticket and sought to travel from Santo Domingo to San Juan on April 29, 1973. At the airport, she exchanged her original ticket for a new one for Flight 431, paid the fare and terminal fee, was issued a boarding pass with a specific seat assignment (3-A), and her luggage was accepted. After clearing immigration and while in line to board, a Pan Am employee ordered her to step aside, announcing loudly that her ticket was not confirmed, causing her public embarrassment. Despite her pleas, she was not allowed to board, and she observed her assigned seat being given to another passenger.
Pan Am’s defense was that Tinitigan held only an “open space” or standby ticket, meaning she could be accommodated only if a confirmed passenger failed to show. The trial court found Pan Am liable for damages, awarding actual, moral, and exemplary damages and attorney’s fees. The Intermediate Appellate Court affirmed but modified the valuation of the actual damages. Pan Am appealed, arguing the findings were unsupported by evidence and that there was no breach of contract.

ISSUE

Whether the respondent appellate court erred in affirming the trial court’s findings of fact and its conclusion that Pan Am breached its contract of carriage with Tinitigan, thereby making it liable for damages.

RULING

The Supreme Court affirmed the appellate court’s decision with modifications to the amounts of damages. The Court held that the issues raised by Pan Am were factual, and the findings of the lower courts, based on their assessment of witness credibility and evidence, are generally conclusive and binding. The trial court’s factual findings, which the appellate court affirmed, established that Tinitigan was issued a boarding pass with a seat assignment after payment, leading her to reasonably believe she was a confirmed passenger. Pan Am’s last-minute denial of boarding in a humiliating manner constituted a breach of contract attended by bad faith.
The Court sustained the award of actual damages for Tinitigan’s financial loss. However, it found the originally awarded moral damages (P500,000) and exemplary damages (P200,000) to be excessive and reduced them to a combined total of P200,000. Attorney’s fees were also reduced from P100,000 to P20,000. The award of US$1,546.15 as actual damages, to be paid at the prevailing exchange rate, was retained. The reductions were made to align the awards with the circumstances while still serving the purposes of compensation and deterrence.