G.R. No.

L-57339 December 29, 1983 FIRST DIVISION

AIR FRANCE, petitioner, vs. HONORABLE COUR OF A!!EAL", #O"E G. GANA $Dece%&e'(,
CLARA A. GANA, RA)ON GANA, )ANUEL GANA, )ARIA ERE"A GANA, ROBERO GANA,
#AI)E #A*IER GANA, CLOILDE *DA. DE ARE*ALO, %+' E)IL, "AN #UAN, respondents.
)ELENCIO-HERRERA, J.:
In this petition for review on certiorari, petitioner AIR FRANCE assails the Decision of then
respondent Cort of Appeals
1
pro!l"ated on #$ Dece!%er #&'( in CA)*.R. No. $'#+,)R, entitled
-Jose G. Gana, et al. vs. Sociedad Nacionale Air France-, which reversed the Trial Cort.s /d"!ent
dis!issin" the Co!plaint of private respondents for da!a"es arisin" fro! %reach of contract of carria"e,
and awardin" instead 0&(,(((.(( as !oral da!a"es.
So!eti!e in Fe%rar1, #&2(, the late 3ose *. *ana and his fa!il1, n!%erin" nine 4the *ANAS5,
prchased fro! AIR FRANCE thro"h I!perial Travels, Incorporated, a dl1 athori6ed travel a"ent,
nine 4&5 -open)dated- air passa"e tic7ets for the 8anila9Osa7a9To71o98anila rote. The *ANAS paid
a total of :S;<,$<'.'$ for their econo!1 and first class fares. Said tic7ets were %o"ht at the then
prevailin" e=chan"e rate of 0>.&( per :S;#.((. The *ANAS also paid travel ta=es of 0#((.(( for
each passen"er.
On <, April #&2(, AIR FRANCE e=chan"ed or s%stitted the afore!entioned tic7ets with other
tic7ets for the sa!e rote. At this ti!e, the *ANAS were %oo7ed for the 8anila9Osa7a se"!ent on
AIR FRANCE Fli"ht #', for ' 8a1 #&2(, and for the To71o98anila retrn trip on AIR FRANCE Fli"ht
#'2 on << 8a1 #&2(. The aforesaid tic7ets were valid ntil ' 8a1 #&2#, the date written nder the
printed words -Non vala%le apres de 4!eanin", -not valid after the-5.
The *ANAS did not depart on ' 8a1 #&2(.
So!eti!e in 3anar1, #&2#, 3ose *ana so"ht the assistance of Teresita 8ancdoc, a Secretar1 of
the Sta. Clara ?!%er Co!pan1 where 3ose *ana was the Director and Treasrer, for the e=tension
of the validit1 of their tic7ets, which were de to e=pire on ' 8a1 #&2#. Teresita enlisted the help of
?ee Ella 8ana"er of the 0hilippine Travel @rea, who sed to handle travel arran"e!ents for the
personnel of the Sta. Clara ?!%er Co!pan1. Ella sent the tic7ets to Cesar Rillo, Office 8ana"er of
AIR FRANCE. The tic7ets were retrned to Ella who was infor!ed that e=tension was not possi%le
nless the fare differentials resltin" fro! the increase in fares tri""ered %1 an increase of the
e=chan"e rate of the :S dollar to the 0hilippine peso and the increased travel ta= were first paid.
Ella then retrned the tic7ets to Teresita and infor!ed her of the i!possi%ilit1 of e=tension.
In the !eanti!e, the *ANAS had schedled their departre on 2 8a1 #&2# or one da1 %efore the
e=pir1 date. In the !ornin" of the ver1 da1 of their schedled departre on the first le" of their trip,
Teresita reAested travel a"ent Ella to arran"e the revalidation of the tic7ets. Ella "ave the sa!e
ne"ative answer and warned her that altho"h the tic7ets cold %e sed %1 the *ANAS if the1 left
on 2 8a1 #&2#, the tic7ets wold no lon"er %e valid for the rest of their trip %ecase the tic7ets wold
then have e=pired on ' 8a1 #&2#. Teresita replied that it will %e p to the *ANAS to !a7e the
arran"e!ents. Bith that assrance, Ella on his own, attached to the tic7ets validatin" stic7ers for the
Osa7a9To71o fli"ht, one a 3A?. stic7er and the other an SAS 4Scandinavian Airwa1s S1ste!5 stic7er.
The SAS stic7er indicates thereon that it was -Reevalated %1C the 0hilippine Travel @rea, @ranch
No. <- 4as shown %1 a circlar r%%er sta!p5 and si"ned -Ador-, and the date is handwritten in the
center of the circle. Then appear nder printed headin"s the notationsC 3?. #(' 4Fli"ht5, #+ 8a1
4Date5, #(,( 4Ti!e5, OD 4stats5. Apparentl1, Ella !ade no !ore atte!pt to contact AIR FRANCE as
there was no !ore ti!e.
Notwithstandin" the warnin"s, the *ANAS departed fro! 8anila in the afternoon of 2 8a1 #&2# on
%oard AIR FRANCE Fli"ht #', for Osa7a, 3apan. There is no Aestion with respect to this le" of the
trip.
Eowever, for the Osa7a9To71o fli"ht on #2 8a1 #&2#, 3apan Airlines refsed to honor the tic7ets
%ecase of their e=piration, and the *ANAS had to prchase new tic7ets. The1 encontered the
sa!e difficlt1 with respect to their retrn trip to 8anila as AIR FRANCE also refsed to honor their
tic7ets. The1 were a%le to retrn onl1 after pre)pa1!ent in 8anila, thro"h their relatives, of the
read/sted rates. The1 finall1 flew %ac7 to 8anila on separate Air France Fri"hts on #& 8a1 #&2# for
3ose *ana and <+ 8a1 #&2# for the rest of the fa!il1.
On <$ A"st #&2#, the *ANAS co!!enced %efore the then Cort of First Instance of 8anila,
@ranch III, Civil Case No. ',### for da!a"es arisin" fro! %reach of contract of carria"e.
AIR FRANCE traversed the !aterial alle"ations of the Co!plaint and alle"ed that the *ANAS
%ro"ht pon the!selves the predica!ent the1 fond the!selves in and ass!ed the conseAential
ris7sF that travel a"ent Ella.s affi=in" of validatin" stic7ers on the tic7ets withot the 7nowled"e and
consent of AIR FRANCE, violated airline tariff rles and re"lations and was %e1ond the scope of his
athorit1 as a travel a"entF and that AIR FRANCE was not "ilt1 of an1 fradlent condct or %ad
faith.
On <& 8a1 #&2$, the Trial Cort dis!issed the Co!plaint %ased on 0artial and Additional
Stiplations of Fact as wen as on the doc!entar1 and testi!onial evidence.
The *ANAS appealed to respondent Appellate Cort. Drin" the pendenc1 of the appeal, 3ose
*ana, the principal plaintiff, died.
On #$ Dece!%er #&'(, respondent Appellate Cort set aside and reversed the Trial Cort.s
/d"!ent in a Decision, which decreedC
BEEREFORE, the decision appealed fro! is set aside. Air France is here%1 ordered
to pa1 appellants !oral da!a"es in the total s! of NINETG TEO:SAND 0ESOS
40&(,(((.((5 pls costs.
SO ORDERED.
2
Reconsideration so"ht %1 AIR FRANCE was denied, hence, petitioner.s recorse %efore this
instance, to which we "ave de corse.
The crcial isse is whether or not, nder the environ!ental !ilie the *ANAS have !ade ot a
case for %reach of contract of carria"e entitlin" the! to an award of da!a"es.
Be are constrained to reverse respondent Appellate Cort.s affir!ative rlin" thereon.
0rsant to tariff rles and re"lations of the International Air Transportation Association 4IATA5,
inclded in para"raphs &, #(, and ## of the Stiplations of Fact %etween the parties in the Trial
Cort, dated ># 8arch #&2>, an airplane tic7et is valid for one 1ear. -The passen"er !st nderta7e
the final portion of his /orne1 %1 departin" fro! the last point at which he has !ade a volntar1 stop
%efore the e=pir1 of this li!it 4para". >.#.<. 5 ... That is the ti!e allowed a passen"er to %e"in and to
co!plete his trip 4para"s. >.< and >.>.5. ... A tic7et can no lon"er %e sed for travel if its validit1 has
e=pired %efore the passen"er co!pletes his trip 4para". >.$.#.5 ... To co!plete the trip, the
passen"er !st prchase a new tic7et for the re!ainin" portion of the /orne1- 4ibid.5
3
Fro! the fore"oin" rles, it is clear that AIR FRANCE cannot %e falted for %reach of contract when
it dishonored the tic7ets of the *ANAS after ' 8a1 #&2# since those tic7ets e=pired on said dateF
nor when it reAired the *ANAS to %1 new tic7ets or have their tic7ets re)issed for the
To71o98anila se"!ent of their trip. Neither can it %e said that, when pon sale of the new tic7ets, it
i!posed additional char"es representin" fare differentials, it was !otivated %1 self)interest or n/st
enrich!ent considerin" that an increase of fares too7 effect, as athori6ed %1 the Civil Aeronatics
@oard 4CA@5 in April, #&2#. This procedre is well in accord with the IATA tariff rles which provideC
+. TARIFF R:?ES
2. A00?ICA@?E FARE ON TEE DATE OF DE0ART:RE
>.# *eneral Rle.
All /orne1s !st %e char"ed for at the fare 4or char"e5 in effect on the date on which
transportation co!!ences fro! the point of ori"in. An1 tic7et sold prior to a chan"e
of fare or char"e 4increase or decrease5 occrrin" %etween the date of
co!!ence!ent of the /orne1, is s%/ect to the a%ove "eneral rle and !st %e
ad/sted accordin"l1. A new tic7et !st %e issed and the difference is to %e
collected or refnded as the case !a1 %e. No ad/st!ent is necessar1 if the increase
or decrease in fare 4or char"e5 occrs when the /orne1 is alread1 co!!enced.
-
The *ANAS cannot defend %1 contendin" lac7 of 7nowled"e of those rles since the evidence %ears
ot that Teresita, who handled travel arran"e!ents for the *ANAS, was dl1 infor!ed %1 travel
a"ent Ella of the advice of Reno, the Office 8ana"er of Air France, that the tic7ets in Aestion cold
not %e e=tended %e1ond the period of their validit1 withot pa1in" the fare differentials and additional
travel ta=es %ro"ht a%ot %1 the increased fare rate and travel ta=es.
ATTG. VA?TE
H Bhat did 1o tell 8rs. 8ancdoc, in trn after %ein" told this %1 8r.
RilloI
A I told her, %ecase that is the reason wh1 the1 accepted a"ain the
tic7ets when we retrned the tic7ets spin, that the1 cold not %e
e=tended. The1 cold %e e=tended %1 pa1in" the additional fare,
additional ta= and additional e=chan"e drin" that ti!e.
H Go said so to 8rs. 8ancdocI
A Ges, sir.- ...
5
The rlin" relied on %1 respondent Appellate Cort, therefore, in KLM. vs. Court of Appeals, +$
SCRA <>2 4#&2$5, holdin" that it wold %e nfair to char"e respondents therein with ato!atic
7nowled"e or notice of conditions in contracts of adhesion, is inapplica%le. To all le"al intents and
prposes, Teresita was the a"ent of the *ANAS and notice to her of the re/ection of the reAest for
e=tension of the validit1 of the tic7ets was notice to the *ANAS, her principals.
The SAS validatin" stic7er for the Osa7a9To71o fli"ht affi=ed %1 Era showin" reservations for 3A?.
Fli"ht #(' for #+ 8a1 #&2#, withot clearin" the sa!e with AIR FRANCE alle"edl1 %ecase of the
i!!inent departre of the *ANAS on the sa!e da1 so that he cold not "et in toch with Air
France
.
was certainl1 in contravention of IATA rles altho"h as he had e=plained, he did so pon
Teresita.s assrance that for the onward fli"ht fro! Osa7a and retrn, the *ANAS wold !a7e other
arran"e!ents.
H Referrin" 1o to pa"e >> of the transcript of the last session, I had
this Aestion which reads as followsC .@t did she sa1 an1thin" to 1o
when 1o said that the tic7ets were a%ot to e=pireI. Gor answer
wasC .I a! the one who as7ed her. At that ti!e I told her if the tic7ets
%ein" sed ... I was tellin" her what a%ot their %oo7in"s on the
retrn. Bhat a%ot their travel on the retrnI She told !e it is p for
the *anas to !a7e the arran"e!ent.. 8a1 I 7now fro! 1o what did
1o !ean %1 this testi!on1 of 1orsI
A That was on the da1 when the1 were as7in" !e on 8a1 2, #&2#
when the1 were chec7in" the tic7ets. I told 8rs. 8ancdoc that I was
"oin" to "et the tic7ets. I as7ed her what a%ot the tic7ets onward
fro! the retrn fro! To71o, and her answer was it is p for the *anas
to !a7e the arran"e!ent, %ecase I told her that the1 cold leave on
the seventh, %t the1 cold ta7e care of that when the1 arrived in
Osa7a.
H Bhat do 1o !eanI
A The *anas will !a7e the arran"e!ent fro! Osa7a, To71o and
8anila.
H Bhat arran"e!entI
A The arran"e!ent for the airline %ecase the tic7ets wold e=pire on
8a1 2, and the1 insisted on leavin". I as7ed 8rs. 8ancdoc what
a%ot the retrn onward portion %ecase the1 wold %e travellin" to
Osa7a, and her answer was, it is p to for the *anas to !a7e the
arran"e!ent.
H E=actl1 what were the words of 8rs. 8ancdoc when 1o told her
thatI If 1o can re!e!%er, what were her e=act wordsI
A Eer words onl1, it is p for the *anas to !a7e the arran"e!ent.
H This was in Ta"alo" or in En"lishI
A I thin7 it was in En"lish. ...
7
The circ!stances that AIR FRANCE personnel at the tic7et conter in the airport allowed the
*ANAS to leave is not tanta!ont to an i!plied ratification of travel a"ent Ella.s irre"lar actations.
It shold %e recalled that the *ANAS left in 8anila the da1 %efore the e=pir1 date of their tic7ets and
that -other arran"e!ents- were to %e !ade with respect to the re!ainin" se"!ents. @esides, the
validatin" stic7ers that Ella affi=ed on his own !erel1 reflect the stats of reservations on the
specified fli"ht and cold not le"all1 serve to e=tend the validit1 of a tic7et or revive an e=pired one.
The conclsion is inevita%le that the *ANAS %ro"ht pon the!selves the predica!ent the1 were in
for havin" insisted on sin" tic7ets that were de to e=pire in an effort, perhaps, to %eat the deadline
and in the tho"ht that %1 co!!encin" the trip the da1 %efore the e=pir1 date, the1 cold co!plete
the trip even thereafter. It shold %e recalled that AIR FRANCE was even naware of the validatin"
SAS and 3A?. stic7ers that Ella had affi=ed spriosl1. ConseAentl1, 3apan Air ?ines and AIR
FRANCE !erel1 acted within their contractal ri"hts when the1 dishonored the tic7ets on the
re!ainin" se"!ents of the trip and when AIR FRANCE de!anded pa1!ent of the ad/sted fare
rates and travel ta=es for the To71o98anila fli"ht.
BEEREFORE, the /d"!ent nder review is here%1 reversed and set aside, and the A!ended
Co!plaint filed %1 private respondents here%1 dis!issed.
No costs.
SO ORDERED.
!NB *. RIRAO / G.R. NO. 1-2.1. / #012 31, 2331 3.2 "CRA 21.
F%c4&5
0N@)IF?, a s%sidiar1 co!pan1 of 0N@ e=tended credit to Ritratto and secred %1 the real estate
!ort"a"es on for parcels of land. Since there was defalt, 0N@)IF? thr 0N@, foreclosed the
propert1 and were s%/ect to p%lic action. Ritratto *rop filed a co!plaint for in/nction. 0N@ filed
a !otion to dis!iss on the "ronds of failre to state a case of action and the a%sence of an1
privit1 %etween respondents and petitioner.
I&&0e5
Is 0N@ priv1 to the loan contracts entered into %1 respondent J 0N@)IF? %ein" that 0N@)IF? is
owned %1 0N@I
He1'5
No. The contract Aestioned is one entered into %etween Ritratto and 0N@)IF?. 0N@ was ad!ittedl1
an a"ent of the latter who acted as an a"ent with li!ited athorit1 and specific dties nder a special
power of attorne1 incorporated in the real estate !ort"a"e.
The !ere fact that a corporation owns all of the stoc7s of another corporation, ta7en alone is not
sfficient to /stif1 their %ein" treated as one entit1. If sed to perfor! le"iti!ate fnctions, a
s%sidiar1Ks separate e=istence !a1 %e respected, and the lia%ilit1 of the parent corporation as well
as the s%sidiar1 will %e confined to those arisin" in their respective %siness. The corts !a1, in the
e=ercise of /dicial discretion, step in to prevent the a%ses of separate entit1 privile"e and pierce
the veil of corporate entit1.