G.R. No. 188288; January 16, 2012
SPOUSES FERNANDO and LOURDES VILORIA, Petitioners, vs. CONTINENTAL AIRLINES, INC., Respondent.

FACTS

On or about July 21, 1997, petitioner Fernando Viloria purchased two non-refundable round-trip airline tickets from San Diego to Newark from a travel agency called “Holiday Travel,” attended to by a certain Margaret Mager. Fernando agreed to buy the tickets after Mager informed him that there were no available seats on Amtrak. Subsequently, Fernando requested to reschedule the flight to an earlier date. Mager informed him that flights via Continental Airlines were fully booked and offered an alternative flight via Frontier Air at a higher fare. Fernando then opted to request a refund, but Mager denied it, stating the tickets were non-refundable and only re-issuable within one year. Fernando later discovered that Amtrak had available seats, confronted Mager, and again demanded a refund, which was denied. Upon returning to the Philippines, Fernando sent a demand letter to respondent Continental Airlines, Inc. (CAI). CAI, through Continental Micronesia, denied the refund request in a letter dated March 24, 1998, but advised that the tickets could be re-issued within two years. On June 17, 1999, Fernando went to CAI’s ticketing office in Makati to have the tickets replaced with a single round-trip ticket to Los Angeles under his name but was informed that Lourdes’ ticket was non-transferable and that he would have to pay the difference for a higher-priced ticket. Fernando then demanded a refund via letter dated June 21, 1999. On September 8, 2000, the spouses filed a complaint for sum of money and damages against CAI. CAI defended that the tickets were non-refundable and non-transferable, that Mager was not its employee, and that it acted without bad faith.

ISSUE

Whether the Court of Appeals erred in reversing the Regional Trial Court’s decision which held CAI liable for a refund and damages based on the alleged misrepresentation by its agent, Margaret Mager.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ decision. The Court held that petitioners failed to prove by preponderance of evidence that an agency relationship existed between CAI and Margaret Mager or Holiday Travel. The printed conditions on the ticket, which incorporated CAI’s conditions of carriage, explicitly stated the tickets were non-refundable and non-transferable. Petitioners did not present evidence, such as a contract or power of attorney, to establish that Mager was CAI’s agent. The mere act of selling tickets does not constitute agency; travel agents typically act as independent contractors. Furthermore, petitioners failed to prove that Mager made fraudulent misrepresentations. Fernando’s claim that he was misled about Amtrak’s availability was uncorroborated. The principle of estoppel was not applicable as there was no proof CAI clothed Mager with authority or ratified her acts. Consequently, CAI was not liable for breach of contract or damages. The counterclaim was denied, and costs were imposed on petitioners.