SPOUSES FERNANDO and LOURDES VILORIA v.
CONTINENTAL
AIRLINES, INC.
G.R. No. 188288 | 663 SCRA 57 | January 16, 2012
Facts:
Fernando Viloria (Fernando) purchased round-trip airline tickets for himself
and his wife, Lourdes. The Continental Airline tickets were purchased for $400.00
for each from travel agency, Holiday Travel through one Margaret Mager (Mager).
The tickets were purchased as there were no available seats from Amtrak, an
intercity passenger train service. Subsequently, Fernando requested that Mager to
reschedule their flights. Unfortunately, there were no more seats available and
availing tickets from another airline service would cost more. The inconveniences
led Fernando to opt to have a refund. The request for a refund was denied. Mager
insisted that the tickets were non-refundable and the only option that Fernando has
was to purchase tickets from Frontier Air. Fernando opted to visit Amstrak and
found that there were available seats and that him and his wife can travel any day
he pleased.
Upon such knowledge, Fernando went to Holiday Travel and confronted
Mager with the Amtrak tickets while telling her that she had misled him to buy the
first-purchased Continential Airline tickets. Fernando sent Continental Airlines a
letter demanding a refund and alleging that Maged deluded them.
Continental Airlines denied Fernando’s request for refund and advised him
that he may take the tickets to any of its ticketing location for the reissuance of new
tickets within two (2) years from their issuance. Later on, Fernando visited the the
Makati ticketing location of Continental Airlines and wished to have the tickets be
replaced to a single round trip ticket to Los Angeles, California under his name. It
was then at this time Fernando was informed that Lourdes’ ticket was non-
refundable and cannot be used in his favor. Again, Fernando demanded for a refund
and that he no longer wished for them to be replaced.
Continental Airlines interposed defenses, one of which, is that Mager is not its
employee, hence it cannot be held liable for any of her acts.
The RTC ruled in favor of Spouses Viloria and ordered Continental Airlines to
refund the tickets because the Spouses relied on Mager’s misrepresentation in
purchasing the airline tickets. Mager was in bad faith as she was less candid and
diligent in presenting booking options for the Spouses. The RTC also posed that
Continental Airlines did not deny the allegation. RTC ruled that Mager is not an
employee but an agent of Continental Airlines in view of the latter’s implied
recognition of the former’s status.
The RTC took judicial notice of the common services rendered by travel
agencies that represent themselves such as reserving and booking of local and
foreign tours and the issuance of airline tickets either for a fee or commission.
Mager of Holiday Travel offers said services.
The appellate court reversed the ruling of the RTC. According to the CA,
Continental Airlines cannot be held liable as there was no proof of a principal-agent
relationship existing between Continental Airlines and Holiday Travel. Spouses
Viloria carries the burden of proof to the establish the fact of agency. In actuality,
the contractual relationship between Continental Airlines and Holiday Travel is one
of sale and not of agency.
The CA ruled that by the contract of agency, a person binds him/herself to
render some service or to do something in representation or on behalf of another,
with the consent or authority of the latter. The elements of agency are: consent;
object or subject matter; agent acts as a representative and not for him/herself; and
the agent acts within his/her scope of authority. The basis of agency is
representation and in that, there must be an intention of the principal to appoint an
agent and that there must be an intention of agent to accept the appointment and
act upon it.
The CA added that an agency can never be presumed, neither is it created by
the mere use of the word in a trade or business name. It has been a settled rule
that persons dealing with an assumed agent are bound at their peril. In holding the
principal liable, third persons are to prove the fact of the agency as well as the
nature and extent of the authority.
Issue:
(1) Whether or not a principal-agent relationship exists between
Continental Airlines and Holiday Travel.
(2) Assuming that an agency exists between the parties, is Continental
Airlines bound by the acts of Holiday Travel’s agents such Mager?
Ruling:
(1) Yes. A principal-agent relationship exists between Continental
Airlines and Holiday Travel.
The Supreme Court pointed out that the CA failed to consider undisputed facts
wherein Continental Airlines did not deny that Holiday Agent is one of its agents.
To create and accept a contract of agency, a principal must authorize an agent,
to act for and in his behalf in transactions with third persons. The essential elements
of agency are: (1) there is a consent, implied or express; (2) there is an object which
is the execution of a juridical act in relation to a third person; (3) the agent acting as
a representative for the principal; and (4) the agent acts within the scope of his
authority.
The facts of the case show that all the elements of agency exist. There is
consent and an object as Continental Airlines did not deny that it concluded an
agreement with Holiday Travel, whereby the latter would enter into contracts of
carriage with third persons on the former’s behalf. As to the third element, Holiday
Travel merely acted in representative capacity when it was bound by the contracts
of carriage entered into by it with Continental Airlines. Finally, the fourth element is
also present as Continental Airlines had not made any allegation that Holiday Travel
exceeded its authority.
Agency is basically personal, representative, and derivative in nature. The
authority of the agent comes from the powers granted to him by his principal. The
act of the agent is the act of the principal provided that the former acts within his
authority. Qui facit per alium facit se. “He who acts through another acts himself.”
There has also been a discussion on the distinctions between a contract of sale
and a contract of agency. The guidelines were illustrated in the case of
Commissioner of Internal Revenue v. Constantino, the primordial consideration
differentiating between the two (2) contracts is the transfer of ownership or title
over the property subject of the contract. In an agency, the principal retains
ownership and control over the property and the agent merely acts on the
principal’s behalf. On the other hand, a sale intends to deliver the property that will
relinquish title, control, and ownership in such a way that the recipient may do with
the property as he pleases. In the case at bar, Continental Airlines retained
ownership of the goods and the price and terms of said goods are subject to its
control.
(2) Continental Airlines is not bound by the acts of Holiday Travel’s
agents.
The facts are undisputed that CAI and not Holiday Travel who is the party to the
contracts of carriage executed by Holiday Travel with third persons who desire to
travel via Continental Airlines, and this conclusively indicates the existence of a
principal-agent relationship. That the principal is bound by all the obligations
contracted by the agent within the scope of the authority granted to him is clearly
provided under Art. 1910 of the Civil Code and this constitutes the very notion of
agency.
In actions based on quasi-delict, a principal can only be held liable for
the tort committed by its agent’s employees if it has been established by
preponderance of evidence that the principal was also at fault or negligent
or that the principal exercise control and supervision over them.
An examination of jurisprudence will reveal that an airline company is not
completely exonerated from any liability for the tort committed by its agent’s
employees. A prior determination of the nature of the passenger’s cause of action is
necessary. If the passenger’s cause of action against the airline company is
premised on culpa aquiliana or quasi-delict for a tort committed by the employee of
the airline company’s agent, there must be an independent showing that the airline
company was at fault or negligent or has contributed to the negligence or tortuous
conduct committed by the employee of its agent. The mere fact that the employee
of the airline company’s agent has committed a tort is not sufficient to hold the
airline company liable. There is a need to prove the principal’s own fault or
negligence.
On the other hand, if the passenger’s cause of action for damages against the
airline company is based on contractual breach or culpa contractual, it is not
necessary that there be evidence of the airline company’s fault or negligence.
Spouses Viloria’s cause of action on the basis of Mager’s alleged fraudulent
misrepresentation is clearly one of tort or quasi-delict, there being no pre-existing
contractual relationship between them. It is incumbent upon Spouses Viloria to
prove that CAI exercised control or supervision over Mager by preponderant
evidence. The existence of control or supervision cannot be presumed and CAI is
under no obligation to prove its denial or nugatory assertion.
Without a modicum of evidence that CAI exercised control over Holiday Travel’s
employees or that CAI was equally at fault, no liability can be imposed on CAI for
Mager’s supposed misrepresentation.
