G.R. No. 168987; October 17, 2012
PHILIPPINE AIRLINES, INC., Petitioner, vs. FRANCISCO LAO LIM, THE HEIRS OF HENRY GO, MANUEL LIMTONG and RAINBOW TOURS AND TRAVEL, INC., Respondents.

FACTS

Respondents Francisco Lao Lim, Henry Go, and Manuel Limtong, Cebu-based businessmen, purchased confirmed roundtrip tickets from Rainbow Tours and Travel, Inc. for a PAL flight to Hong Kong on February 26, 1991, for crucial business meetings. On February 23, Lao Lim inquired with Rainbow Tours about rescheduling to a later flight but left without canceling their original confirmed bookings. As scheduled, they flew to Manila. However, at the Manila-Hong Kong check-in, Lao Lim and Go were informed their bookings on the 8:00 a.m. flight were cancelled and their names were absent from the passenger list. Despite pleas, they were denied boarding. Limtong was allowed to board. Lao Lim and Go could only depart on a 5:00 p.m. flight, missing their morning appointments.
The respondents sued PAL for breach of contract of carriage and damages. They alleged PAL personnel shouted at them, called their tickets “cheap,” causing humiliation. They claimed the missed meetings led to the loss of profitable business deals worth millions. PAL defended that the cancellation was upon the instruction of Rainbow Tours’ agent, Gemma Dingal, who called to change the itinerary after learning the preferred later flight was fully booked. PAL impleaded Rainbow Tours as a third-party defendant.

ISSUE

Whether Philippine Airlines is liable for breach of contract of carriage and damages for denying boarding to passengers holding confirmed tickets.

RULING

Yes, PAL is liable. The Supreme Court affirmed the CA’s finding of breach of contract. A contract of carriage was perfected upon ticket issuance, obligating PAL to transport the passengers on the confirmed date and flight. PAL failed to fulfill this obligation. Its defense—that the travel agent requested the cancellation—was insufficient to absolve it. As a common carrier, PAL bears the responsibility for the care of passengers from departure until arrival. The purported cancellation instruction from the agent was not verified with the passengers themselves. PAL’s negligence in handling the reservation and its failure to exercise extraordinary diligence directly caused the breach.
Regarding damages, the Court awarded temperate damages of P25,000 each to Lao Lim and Go for the lost business opportunities, as actual damages for lost profits were not proven with reasonable certainty. However, moral damages were deleted for lack of sufficient evidence that the PAL personnel’s conduct was so abusive as to warrant such award. The Court also found Rainbow Tours negligent for its agent’s unauthorized actions. Applying Article 2194 of the Civil Code, the concurrent negligence of PAL and Rainbow Tours made them joint tortfeasors, solidarily liable to the injured passengers. The award to Manuel Limtong was deleted as he suffered no damage, having boarded the flight as scheduled.