AIR FRANCE, PETITIONER, VS. HONORABLE COURT OF APPEALS, JOSE G. GANA (DECEASED), CLARA A. GANA, RAMON GANA, MANUEL GANA, MARIA TERESA GANA, ROBERTO GANA, JAIME JAVIER GANA, CLOT…

In this petition for review on certiorari, petitioner AIR
FRANCE assails the Decision of then respondent Court of Appeals^[1]
promulgated on 15 December 1980 in CA–G.R.
No. 58164-R, entitled “Jose
G. Gana, et al. vs. Sociedad
Nacionale Air France”, which reversed the Trial
Court’s judgment dismissing the Complaint of private respondents for damages
arising from breach of contract of carriage, and awarding instead P90,000.00 as moral damages.

Sometime in February, 1970, the late Jose G. Gana
and his family, numbering nine (the GANAS), purchased from AIR FRANCE through
Imperial Travels, Incorporated, a duly authorized travel agent, nine (9)
“open-dated” air passage tickets for the Manila/Osaka/Tokyo/Manila
route.  The GANAS paid a total of
US$2,528.85 for their economy and first class fares.  Said tickets were bought at the then
prevailing exchange rate of P3.90 per US$1.00. 
The GANAS also paid travel taxes of P100.00 for each passenger.

On 24 April 1970,
AIR FRANCE
exchanged or substituted the aforementioned tickets with other tickets for the
same route.  At this time, the GANAS were
booked for the Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May 1970, and for the Tokyo/Manila return trip on AIR FRANCE Flight 187 on 22 May 1970.  The
aforesaid tickets were valid until 8 May 1971, the date written under the printed words
“Non valable apres
de” (meaning, “not valid after the”).

The GANAS did not depart on 8 May 1970.

Sometime in January, 1971, Jose Gana
sought the assistance of Teresita Manucdoc,
a Secretary of the Sta. Clara Lumber Company where Jose Gana
was the Director and Treasurer, for the extension of the validity of their
tickets, which were due to expire on 8 May 1971.  Teresita enlisted
the help of Lee Ella, Manager of the Philippine Travel Bureau, who used to handle travel arrangements for the
personnel of the Sta. Clara Lumber Company. 
Ella sent the tickets to Cesar Rillo, Office
Manager of AIR FRANCE.  The tickets were returned to
Ella who was informed that extension was not possible unless the fare
differentials resulting from the increase in fares triggered by an increase of
the exchange rate of the US dollar to the Philippine peso and the increased
travel tax were first paid.  Ella then
returned the tickets to Teresita and informed her of
the impossibility of extension.

In the meantime, the GANAS had scheduled their departure on 7 May 1971 or one day before the expiry date.  In the morning of the very day of their scheduled departure on the
first leg of their trip, Teresita requested travel
agent Ella to arrange the revalidation of the tickets.  Ella gave the same negative answer and warned her that although the tickets could be used
by the GANAS if they left on 7 May 1971, the tickets would no longer be valid for
the rest of their trip because the tickets would then have expired on 8 May
1971.  Teresita replied
that it will be up to the GANAS to make the arrangements.  With that assurance, Ella, on his own,
attached to the tickets validating stickers for the Osaka/Tokyo flight, one a
JAL sticker and the other an SAS (Scandinavian Airways System) sticker.  The SAS sticker indicates thereon that it was
“Revalidated by the Philippine Travel Bureau, Branch No. 2” (as shown
by a circular rubber stamp) and signed “Ador“,
and the date is handwritten in the center of the circle.  Then appear under printed headings the
notations:  JL 108 (Flight), 16 May
(Date), 1040 (Time), OK (status). 
Apparently, Ella made no more attempt to contact AIR FRANCE as there was no more time.

Notwithstanding the warnings, the GANAS departed from Manila
in the afternoon of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka,
Japan.  There is no question with respect to this leg
of the trip.

However, for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refused to honor the
tickets because of their expiration, and the GANAS had to purchase new
tickets.  They encountered the same
difficulty with respect to their return trip to Manila
as AIR FRANCE
also refused to honor their tickets. 
They were able to return only after pre-payment in Manila,
through their relatives, of the readjusted rates.  They finally flew back to Manila
on separate Air France Flights on 19
May 1971 for Jose Gana
and 26 May 1971 for
the rest of the family.

On 25 August 1971, the GANAS commenced before the then
Court of First Instance of Manila, Branch III, Civil
Case No. 84111 for damages arising from breach of contract of carriage.

AIR FRANCE traversed the material allegations of the Complaint
and alleged that the GANAS brought upon themselves the predicament they found
themselves in and assumed the consequential risks; that travel agent Ella’s
affixing of validating stickers on the tickets without the knowledge and consent of AIR FRANCE, violated airline
tariff rules and regulations and was beyond the scope of his authority as a
travel agent; and that AIR FRANCE was not guilty of any fraudulent conductor
bad faith.

On 29 May 1975,
the Trial Court dismissed the Complaint based on Partial and Additional
Stipulations of Fact as well as on the documentary and testimonial evidence.

The GANAS appealed to respondent Appellate Court.  During the pendency
of the appeal, Jose Gana, the principal plaintiff,
died.

On 15 December 1980,
respondent Appellate Court set aside and reversed the Trial Court’s judgment in
a Decision, which decreed:

“WHEREFORE, the decision appealed from is set aside.  Air France
is hereby ordered to pay appellants moral damages in the total sum of NINETY
THOUSAND PESOS (P90,000.00) plus costs.”

“SO ORDERED.”^[2]

Reconsideration sought by AIR FRANCE
was denied, hence, petitioner’s recourse before this instance, to which we gave
due course.

The crucial issue is whether or not, under the environmental
milieu, the GANAS have made out a case for breach of contract of carriage
entitling them to an award of damages.

We are constrained to reverse respondent Appellate Court’s
affirmative ruling thereon.

Pursuant to tariff rules and regulations of the International Air
Transportation Association (IATA), included in paragraphs 9, 10, and 11 of the Stipulations of Fact between
the parties in the Trial Court, dated 31 March 1973, an airplane ticket is valid for one year.
“The passenger must undertake the final portion of his journey by
departing from the last point at which he has made a voluntary stop before the
expiry of this limit (parag. 3.1.2) x x x That
is the time allowed a passenger to begin and to complete his trip (parags. 3.2 and 3.3.). 
x x x A ticket can no longer be used for travel if its validity has expired
before the passenger completes his trip (parag.
3.5.1).  x x x To complete the trip, the
passenger must purchase a new ticket for the remaining portion of the
journey” (ibid.)^[3]

From the foregoing rules, it is clear
that AIR FRANCE cannot be faulted for breach of contract when it dishonored the
tickets of the GANAS after 8 May 1971
since those tickets expired on said date; nor when it required the GANAS to buy
new tickets or have their tickets re-issued for the Tokyo/Manila segment of
their trip.  Neither can it be said that,
when upon sale of the new tickets, it
imposed additional charges representing fare differentials, it was motivated by
self-interest or unjust enrichment considering that an increase of fares took effect, as authorized by the Civil
Aeronautics Board (CAB) in April 1971. 
This procedure is well in accord with the IATA tariff rules which
provide:

“6 TARIFF RULES

“3 APPLICABLE FARE ON THE DATE OF DEPARTURE

“3.1 General Rule.

“All journeys must be charged for at the fare (or charge) in
effect on the date on which transportation commences from the point of
origin.  Any ticket sold prior to a
change of fare or charge (increase or decrease) occurring between the date of commencement of the journey, is subject to the above general rule and must be adjusted
accordingly.  A new ticket must be issued
and the difference is to be
collected or refunded as the case may be. 
No adjustment is necessary if the increase or decrease in fare (or
charge) occurs when the journey is already commenced.^[4]

The GANAS cannot defend by contending lack of knowledge of those
rules since the evidence bears out that Teresita, who
handled travel arrangements for the GANAS, was duly informed by travel agent
Ella of the advice of Rillo, the Office Manager of
Air France, that the tickets in question could not be extended beyond the
period of their validity without paying the fare differentials and additional
travel taxes brought about by the increased fare rate and travel taxes.

“ATTY. VALTE

“Q   What did you tell
Mrs. Manucdoc, in turn, after being told this by Mr. Rillo?

“A    I told her, because that is the reason why
they accepted again the tickets when we returned the tickets again, that they
could not be extended.  They could be extended by paying the additional
fare, additional tax and additional exchange during that time.

“Q   You said so to Mrs. Manucdoc?

“A    Yes, sir.” x x x^[5]

The ruling relied on by respondent Appellate Court, therefore, in
KLM vs. Court of Appeals, 65 SCRA 237(1975), holding that it would be unfair to
charge respondents therein with automatic knowledge or notice of conditions in
contracts of adhesion, is inapplicable. 
To all legal intents and purposes, Teresita
was the agent of the GANAS and notice
to her of the rejection of the request for extension of the validity of the
tickets was notice to the GANAS, her principals.

The SAS validating sticker for the Osaka/Tokyo flight affixed by
Ella showing reservations for JAL Flight 108 for 16 May 1971, without clearing
the same with AIR FRANCE allegedly because
of the imminent departure of the GANAS on the same day so that he could not get
in touch with Air France^[6],
was certainly in contravention of IATA rules although as he had explained, he
did so upon Teresita’s assurance that for the onward
flight from Osaka and return, the GANAS would make other arrangements.

“Q   Referring
you to page 33 of the transcript of the last session, I had this question which
reads as follows:  ‘But did she say
anything to you when you said that the tickets were about to expire?’ Your answer was: 
‘I am the one who asked her.  At
that time I told her if the tickets being used….I was telling her what about their
bookings on the return.  What about their
travel on the return?  She told me it is up for the Ganas to make the arrangement.’  May I know from you what did you mean by this
testimony of yours?

“A    That was on the day when they were asking me
on May 7, 1971 when they were checking the tickets.  I told Mrs. Manucdoc
that I was going to get the tickets.  I
asked her what about the tickets onward from the return from Tokyo, and her
answer was it is up for the Ganas to make the arrangement, because I told her that they
could leave on the seventh, but they could take care of that when they arrived
in Osaka.

“Q   What do you mean?

“A    The Ganas will make the arrangement from Osaka,
Tokyo and, Manila.

“Q   What
arrangement?

“A    The arrangement for the airline because the
tickets would expire on May and they insisted on leaving.  I asked Mrs. Manucdoc
what about the return onward portion because they would be traveling to Osaka,
and her answer was, it is up for the Ganas to make the arrangement.

“Q   Exactly what were
the words of Mrs. Manucdoc when you told her that?  If you can remember, what were her exact
words?

“A    Her
words only, it is up for the Ganas to make the
arrangement.

“Q   This was in Tagalog or in English?

“A    I think it was in English.  x x x^[7]

The circumstance that AIR FRANCE personnel at the ticket counter
in the airport allowed the GANAS to leave is not tantamount to an implied
ratification of travel agent Ella’s irregular
actuations.  It should be recalled that
the GANAS left Manila the day
before the expiry date of their tickets and that “other arrangements”
were to be made with respect to the remaining segments.  Besides, the validating stickers that Ella
affixed on his own merely reflect the status of
reservations on the specified flight and could not legally serve to extend the
validity of a ticket or revive an expired one.

The conclusion is inevitable that the GANAS brought upon
themselves the predicament they were in for having insisted on using tickets
that were due to expire in an effort, perhaps, to beat the deadline and in the
thought that by commencing the trip the day before the expiry date, they could
complete the trip even thereafter.  It
should be recalled that AIR FRANCE was even unaware of the validating SAS and
JAL stickers that Ella had affixed spuriously. 
Consequently, Japan Air Lines and AIR FRANCE merely acted within their
contractual rights when they dishonored the tickets on the remaining segments
of the trip and when AIR FRANCE
demanded payment of the adjusted fare rates and travel taxes for the
Tokyo/Manila flight.

WHEREFORE, the judgment under review is hereby reversed and set aside, and the Amended Complaint filed by private
respondents hereby dismissed.

No costs.

SO ORDERED.

Teehankee (Chairman), Plana, Relova, and Gutierrez, Jr., JJ.,
concur.

^[1]
Seventh Division composed of J. Guillermo P. Villasor,
ponente; concurred in by JJ. Venicio Escolin and Onofre A. Villaluz.

^[2] p. 62, Rollo.

^[3]
“3.1.2  The time allowed a passenger
to complete his journey calculated from the date of commencement of the
journey, but exclusive of that date.  The
passenger must undertake the final portion
of his journey by departing from the last point at which he has made a
voluntary stop before the expiry of this limit, regardless of whether this last
segment is covered by a single or several flight coupons.

xxx

“3.2 Time allowed a passenger to begin his trip.

“As a rule, ONE YEAR. It may be modified by periods during which fares or reductions granted are
applicable.

“3.3  Time allowed a passenger to complete his trip.

“In principle, ONE YEAR.  It
may be modified by periods during which fares or reductions granted are
applicable.

x x x     x x x     x x x     x x x

“3.5 Extensions of validity.

“3.5.1  A
ticket can no longer be used for
travel if its validity has expired before the passenger completes his
trip.  It can only be refunded in
accordance with normal refund regulations. 
To complete the trip, the passenger must purchase a new ticket for the
remaining portion of the journey.”

^[4] p. 195, Folder of Exhibits.

^[5] T.s.n., Deposition of Lee Ella, May 15, 1972, p. 7.

^[6] T.s.n., ibid., p.
20.

^[7] T.s.n., ibid., pp.
28-29.