G.R. No. L-28773 June 30, 1975
FRANCISCO ORTIGAS, JR., plaintiff-appellant-appellee, vs. LUFTHANSA GERMAN AIRLINES, defendant-appellant-appellee.

FACTS

Plaintiff Francisco Ortigas, Jr., a Filipino citizen holding a confirmed first-class ticket, was denied his first-class accommodation on a Lufthansa flight from San Francisco to Manila. The space was instead given to a Belgian passenger. During the incident, Ortigas was subjected to discriminatory and improper conduct by the airline’s agents. He filed a complaint for damages. The procedural history reveals extensive delays, with the case set for hearing 24 times over several years. Multiple postponements were granted, many at the instance of the defendant airline. On September 28, 1966, the trial court denied Lufthansa’s latest motion for postponement, struck the testimony of its absent witness, and deemed the case submitted for decision based on plaintiff’s evidence alone.
The Court of First Instance of Manila found Lufthansa liable for breach of contract of carriage aggravated by discrimination. It condemned Lufthansa to pay Ortigas P100,000 as moral damages, P30,000 as exemplary damages, P20,000 as attorney’s fees, plus interest and costs. Both parties appealed. Lufthansa contended it was denied its day in court and challenged the damages. Ortigas appealed solely on the ground that the awarded damages were insufficient.

ISSUE

The primary issues are: (1) Whether the trial court denied Lufthansa its right to due process by denying its motion for postponement and declaring the case submitted; and (2) Whether the amounts of moral and exemplary damages awarded were proper.

RULING

The Supreme Court affirmed the trial court’s procedural ruling and modified the damages. On the procedural issue, the Court held the trial court did not commit a grave abuse of discretion. The record showed a pattern of delays attributable to the defendant, and the court had previously warned against further postponements. The denial of the last motion was a valid exercise of judicial discretion to prevent further protraction of the trial, not a denial of due process.
On the merits, the Court sustained the finding of liability. A first-class ticket constitutes a contract entitling the passenger to corresponding accommodation. Lufthansa’s failure to provide this, coupled with the discriminatory act of giving the seat to a foreign national and the offensive conduct of its agents, constituted a breach in bad faith. This breach justifies awards for moral and exemplary damages. The Court increased the awards, citing jurisprudence and the need for deterrence. Moral damages were raised from P100,000 to P150,000, considering the humiliation suffered by a person of Ortigas’s social standing. Exemplary damages were increased from P30,000 to P100,000. The Court emphasized that exemplary damages serve a public purpose—to deter common carriers from similar discriminatory and wanton breaches of contract, especially those affecting public interest. The modified amounts were deemed commensurate with the gravity of the violation and necessary to provide an effective corrective example. The award for attorney’s fees and costs was affirmed.