CATHAY PACIFIC AIRWAYS Vs SPOUSES VASQUEZ

CATHAY PACIFIC AIRWAYS, LTD.
, petitioner,
vs.
SPOUSES DANIEL VAZQUEZ and MARIA LUISA MADRIGAL VAZQUEZ, respondents.
FACTS
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez are frequent
flyers of Cathay and are Gold Card members of its Marco Polo Club. On 24 September 1996, the
Vazquezes, together with their maid and two friends Pacita Cruz and Josefina Vergel de Dios, went to
Hongkong for pleasure and business.
For their return flight to Manila they were booked on Cathay’s Flight and were given their respective
boarding passes, to wit, Business Class boarding passes for the Vazquezes and their two friends,
When boarding time was announced, the Vazquezes and their two friends went to Departure Gate No.
28, which was designated for Business Class passengers. Dr. Vazquez presented his boarding pass
Ms. Chiu approached Dr. Vazquez and told him that the Vazquezes’ accommodations were upgraded to
First Class. Dr. Vazquez refused the upgrade, reasoning that it would not look nice for them as hosts to
travel in First Class and their guests, in the Business Class; and moreover, they were going to discuss
business matters during the flight.
Dr. Vazquez continued to refuse, so Ms. Chiu told them that if they would not avail themselves of the
privilege, they would not be allowed to take the flight. Eventually, after talking to his two friends, Dr.
Vazquez gave in. He and Mrs. Vazquez then proceeded to the First Class Cabin.
Upon their return to Manila, the Vazquezes, in a letter of 2 October 1996 addressed to Cathay’s Country
Manager, demanded that they be indemnified in the amount of P1million for the "humiliation and
embarrassment" caused by its employees.
On 8 November 1996, after Cathay’s failure to give them any feedback within its self-imposed deadline,
the Vazquezes instituted before the Regional Trial Court of Makati City an action for damages
RTC
the Vazquezes alleged that when they informed Ms. Chiu that they preferred to stay in Business Class,
Ms. Chiu "obstinately, uncompromisingly and in a loud, discourteous and harsh voice threatened" that
they could not board and leave with the flight unless they go to First Class
In its answer, Cathay alleged that it is a practice among commercial airlines to upgrade passengers to the
next better class of accommodation, whenever an opportunity arises, such as when a certain section is
fully booked. Priority in upgrading is given to its frequent flyers,
the trial court found for the Vazquezes
WHEREFORE, finding preponderance of evidence to sustain the instant complaint, judgment is

hereby rendered in favor of plaintiffs Vazquez spouses and against defendant Cathay Pacific
Airways, Ltd., ordering the latter to pay each plaintiff the following:
a) Nominal damages in the amount of P100,000.00 for each plaintiff;
b) Moral damages in the amount of P2,000,000.00 for each plaintiff;
c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;

d) Attorney’s fees and expenses of litigation in the amount of P1,000,000.00 for each
plaintiff; and
e) Costs of suit.
CA
the Court of Appeals, in its decision of 24 July 2001,2 deleted the award for exemplary damages;
and it reduced the awards for moral and nominal damages for each of the Vazquezes to P250,000
and P50,000, respectively, and the attorney’s fees and litigation expenses to P50,000 for both of
them.
ISSUE
The key issues for our consideration are whether (1) by upgrading the seat accommodation of the
Vazquezes from Business Class to First Class Cathay breached its contract of carriage with the
Vazquezes; (2) the upgrading was tainted with fraud or bad faith; and (3) the Vazquezes are entitled to
damages
HELD
WON by upgrading the seat accommodation of the Vazquezes from Business Class to First Class
Cathay breached its contract of carriage with the Vazquezes;- YES
The Vazquezes should have been consulted first whether they wanted to avail themselves of the
privilege or would consent to a change of seat accommodation
WON the upgrading was tainted with fraud or bad faith- NO
We are not, however, convinced that the upgrading or the breach of contract was attended by
fraud or bad faith. Thus, we resolve the second issue in the negative.
The Vazquezes were not induced to agree to the upgrading through insidious words or deceitful
machination or through willful concealment of material facts.
Neither was the transfer of the Vazquezes effected for some evil or devious purpose.
We are not persuaded by the Vazquezes’ argument that the overbooking of the Business Class
Section constituted bad faith on the part of Cathay
It is clear from this section that an overbooking that does not exceed ten percent is not considered
deliberate and therefore does not amount to bad faith. 10 Here, while there was admittedly an overbooking
of the Business Class, there was no evidence of overbooking of the plane beyond ten percent, and no
passenger was ever bumped off or was refused to board the aircraft.
WON the Vazquezes are entitled to damages

Thus, case law establishes the following requisites for the award of moral damages: (1) there must be
an injury clearly sustained by the claimant, whether physical, mental or psychological; (2) there must
be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant
is the proximate cause of the injury sustained by the claimant; and (4) the award for damages is
predicated on any of the cases stated in Article 2219 of the Civil Code.12
In this case, we have ruled that the breach of contract of carriage, which consisted in the involuntary
upgrading of the Vazquezes’ seat accommodation, was not attended by fraud or bad faith . The
Court of Appeals’ award of moral damages has, therefore, no leg to stand on.
The deletion of the award for exemplary damages by the Court of Appeals is correct. It is a
requisite in the grant of exemplary damages that the act of the offender must be accompanied by
bad faith or done in wanton, fraudulent or malevolent manner.15 Such requisite is absent in this
case. Moreover, to be entitled thereto the claimant must first establish his right to moral,
temperate, or compensatory damages.16 Since the Vazquezes are not entitled to any of these
damages, the award for exemplary damages has no legal basis

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CATHAY PACIFIC AIRWAYS, LTD.

the trial court found for the Vazquezes

WHEREFORE, finding preponderance of evidence to sustain the instant complaint, judgment is

a) Nominal damages in the amount of P100,000.00 for each plaintiff;

b) Moral damages in the amount of P2,000,000.00 for each plaintiff;

c) Exemplary damages in the amount of P5,000,000.00 for each plaintiff;

WON the upgrading was tainted with fraud or bad faith- NO

WON the Vazquezes are entitled to damages

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