OUR LADY OF FATIMA

UNVERSITY

CASE STUDY
ON BREACH OF CONTRACT AND AWARDING OF
DAMAGES

PREPARED BY:
ALVENDIA, JAIME
ASPA, JETHER PAUL
FUNTANO, HANNAH
JOVENAL, GIAN
PUBLICO, GERALDINE
ROBLES, KYLE ANGELES
ROQUE, MAUREEN
TAYAG, LANCE
TUPLANO, KRISTEL
URBANO, RENZ
Question 1:

Make a one-page summary on the case making point on the obligation of Cathay Pacific to its
passengers, the case of the Vazquez family and in your own point of view, whether or not they have the
right to file a case or not for the seat upgrading that they got from Cathay Pacific.

Answer: The Cathay is an aircraft that has many routes to different countries all over the world. Like
other companies, it has marketing strategies, and one of them is the Marco Polo Club it has the great
privilege of each of its members that only the rich are capable and allowed to be a member of it. In
September 1996, Mr. and Mrs. Vazquez and their friends and maids will be returning to Manila from
Hong Kong. Cathay pacific was their plane transport back to the Philippines, and a few hours before their
departure, the first thing they do was they arranged their luggage and boarding pass while waiting for
boarding. After a while, they were asked to go to the designated departure gate, but Mr. and Mrs.
Vazquez were unaware that there would be a change in their accommodations (business class to first
class), then Ms. Chiu (the ground attendant assigned to assist the Vazquezes) immediately informed Mr.
and Mrs. Vazquez of such a change. The Vazquezes immediately refused the said change in their
accommodation because they had something to talk about during the flight, all that convincing ways Ms.
Chiu has already been done but the Vazquezes insisted they would not take that. That scene lasted a
little longer, and the Vazquez couple and their companions finally agreed rather than not being able to
leave at that time.

October 2, 1996, the Vazquezes were already in Manila, and they filed a letter containing that Cathay
pacific must pay for what they did to the Vazquezes. Moreover, they also asked for the apology of the
people who were with and behind that embarrassing incident. Cathay pacific assistant manager Mr.
Larry Yuen replied to them that they would first review the incident in a short time. After weeks of
receiving no response from Cathay Pacific, Vazquezes decided to launch a lawsuit for the situation they
had experienced, asking Cathay Pacific to compensate them for the damages they had suffered.

Ms. Chiu is a rude and shouting voice with the threat that if they do not agree to upgrade their
accommodations, they will not be able to leave at those times stated in the complaints of the Vazquezes.
It turns out that they were very embarrassed by the incident and the other passengers saw it. No one
assisted them when they were inside the plane, so Mr. Vazquez placed their luggage in the overhead
apartment, which allegedly caused pain in his arm… In response to such a complaint by the Vazquez's,
Cathay pacific says that they have no bad intentions there in changing the accommodations, they just
want to be able to provide good and proper service especially, to those like the couple. Cathay Pacific
and the employee involved in the said incident did nothing wrong and they just acted in good faith in
dealing with the passengers in some respects. No one was embarrassed and no one was humiliated, so
Cathay Pacific asked for the dismissal of the vazquezes ’complaint and its demands.

In my own point of view, employees and employers only follow what is in the policy of a company or
organization to have better results and protect its reputation. I know that there is nothing wrong with
what the airline has done. They just wanted to provide better service and fulfill the service that they
have. Stubborn passengers are unavoidable and that's part of the job especially with airlines. Hence,
having long patience is required in this work and how they can handle such incidents with humility and
some respects. We will always remember that it is not bad to argue if you are in the right and no one else
is hurt.
Question 2:

By upgrading the seat accommodation of the Vazquez’s from Business Class to First Class, did Cathay
breach its contract of carriage with the Vazquez’s. Why?

Answer: Cathay Pacific did breach the contract of carriage. It is because an agreement or contract
should have its consent, or it will result in a breach of contract. In this case, Cathay Pacific did not consult
their flyers or the Vasquezes if they wanted to avail themselves of the seat upgrade before the airline
took off their original seats and gave them to other passengers. Whether the Vasquezes are aware that
they are a member of the Marco Polo Club and prioritize upgrading their seating accommodation to a
higher class, the Vasquezes have the right to refuse or decline the said upgrade for whatever their
reason is. The Vasquezes rejected their priority, and Cathay Pacific should not force their customers or
flyers to upgrade their seats without consulting them in the first place; thus, it results in a breach of
contract of carriage.

Question 3:

Was the upgrading of seat by Cathay Pacific tainted with fraud or bad faith? Explain your answer.

Answer: No. In this case, we found no evidence of fraud or bad faith in the violation of carriage contract,
which consisted of the Vazquez’s' seat accommodations being upgraded involuntarily. As a result, the
moral damages judgement made by the Court of Appeals has no merit.

Question 4:

Are the Vazquez’s entitled for damages? Why?

Answer: Vazquezes are not entitled for any of these damages and they were threatened by Ms.
Chiu therefore the award for exemplary damages has no legal basis.

Question 5:

Did Cathay Pacific act on bad faith when they overbooked the business class section of the flight? Is
overbooking legal or not?

Answer: Cathay Pacific did not act on bad faith when they overbooked the business class section
of the flight; They stated that, to the accordance on International Air Transport Association regulations,
overbooking is an accepted practice in the airline industry due to a plenty amount of customer are not
showing up to their flight. Furthermore, accordance to the Civil Aeronautics Boards economic regulation
no. 7, as amended, an overbooking that does not exceed ten percent cannot be considered deliberated
and done in bad faith. Based on the International Air Transport Association and Civil Aeronautics Board
regulations, overbooking is legal if they are correctly handled and complying with the regulations.
Question 6:

Before Cathay Pacific filed for an appeal in the Court of Appeals, the lower court ordered Cathay Pacific
to pay the Vazquez’s of P2 million pesos and P5 million pesos each for the moral and exemplary
damages. Do you think that the lower court is just in ordering a huge amount of damages in favor of the
plaintiff?

Answer: No, the lower Court is not just for ordering an excessive amount of damages in favor of
the plaintiff. The Court of Appeals clearly stated that they are not convinced that Ms. Chiu humiliated the
Vasquezes, and there was no basis or evidence. Also, there was no evidence or lack of proof about
overbooking exceeding ten percent or bad faith on the part of the airline carrier.

Question 7:

If you were the supervisor of Cathay Pacific, will you insist on asking the passengers to take the upgrade
seats even though they don’t want to take it?

Answer: Yes, one of my duty and responsibilities as supervisor is to help employees issues and disputes
special in this kind of matter. The supervisor needs to take a responsibility if the passengers are making
argument with employee. Allow passengers to know the options and let them make a decision since the
passengers are VIP’s before take the upgrade seats’ and it can’t make any problem with them.

Question 8:

Based on the facts presented, do you believe that Ms. Chiu acted in bad faith, shouted, and humiliated
the Vazquez’s during the boarding time?

Answer: No, Ms. Chiu did not act in bad faith, shout, or humiliate the Vasquezes because, according to
the appeal and final ruling, the Court of Appeals is not convinced that Ms. Chiu shouted or meant to be
discourteous Dr. Vasquez. Also, there could be some misunderstanding since Ms. Chiu, a Hongkong
Chinese who has difficulties understanding Dr. Vasquez and whose manner of speaking might sound
harsh to Dr. Vasquez that might sound harsh or shrill for us Filipinos. It is because of cultural differences.