IV. DISTINGUISHED FROM OTHER SIMILAR CONTRACTS CASE 1 OF 1.
CASE 1 OF 1. W/N there is a principal-agent relationship between CAI and Holiday Travel [YES]
7 a.
SPOUSES VILORIA vs. CONTINENTAL AIRLINES INC January 16,
2012
G.R. No. 188288 J. Reyes
DOCTRINE:
DIFF BETWEEN AGENCY & SALE: transfer of ownership
AGENCY: principal retains ownership and control over property and agent merely acts on
principal’s behalf and under his instruction in furtherance of the objectives for which agency est.
SALE: parties intended that delivery of property will effect a relinquishment of title, control, and
ownership in such a way that recipient may do with property as he pleases.
IMPORTANT RULING RELATED TO THE PROVISION/DOCTRINE:
(Court rulings that don’t state doctrines
FACTS:
1. Spouses Viloria (Fernando + Lourdes) purchased 2 round trip tickets ($400 each) from
San Diego, California to Newark, New Jersey via Continental Airlines, Inc. (CAI) from
a travel agency called “Holiday Travel”
a. Attended to by one Margaret Mager
b. Agreed to buy the tickets after Mager informed them that there were no
available seats at Amtrak, an intercity passenger train service provider
c. Tried to reschedule their flight to an earlier date (from Aug 13 to Aug 6) but
told that CAI fully booked for that date and offered the alternative of a
round trip flight via Frontier Air (for a higher fare of $526 per passenger)
i. Requested for refund but was denied bc tickets non-refundable
ii. Decided to reserve 2 seats with Frontier Air.
2. Having second thoughts, Fernando went to Greyhound Station and found out Amtrak
station had available seats and he could travel anytime and any day
a. From Amtrak, went to Holiday Travel and confronted Mager with Amtrak
tickets telling her that she had misled them into buying CAI tickets and
demanded for refund (still wouldn’t refund bc non-refundable daw)
3. Upon return to PH, Fernando sent a letter to CAI demanding a refund and alleging
that Mager had deluded them into purchasing said subject tickets.
a. Denied request for refund and advised him that he may take the subject
tickets to any Continental ticketing location for re-issuance of new tickets
within 2 yrs from date they were issued
4. Went to CAI’s ticketing office at Ayala Ave to have tickets replaced by single round
trip ticket to LA, California under Fernando’s name
a. Informed that Lourdes’ ticket was non-transferable, thus, cannot be used for
purchase of ticket in his favor (+ ticket was worth $1,867 so kulang parin)
5. Sent another letter demanding refund as he no longer wished to have them replaced
a. Claimed that CAI charging $1,867 when other airlines priced $856 + refusal
to allow him to use Lourdes’ ticket breached their undertaking under 1 st
letter
ISSUES:
W/N CAI bound by acts of HT’s agent and employees. [NOT ALWAYS]
b. W/N Mager’s representation be considered fraudulent [NO]
2. W/N CAI justified in insisting tickets are non-transferable/-refundable. [NO]
3. W/N CAI justified in pegging different price for tickets requested
a. W/N CAI acted in bad faith/renege its obligation to Spouses Viloria to apply
the value of the tickets in the purchase of new ones when it refused to allow
Fernando to use Lourdes’ ticket and in charging a higher price
RULING:
1. ALL ELEMENTS OF AN AGENCY EXIST + ESTOPPED TO DENY AUTHORITY
a. LC ruled that agency is never presumed and that he who alleges it exists
has the burden of proof, HOWEVER, they failed to consider undisputed
facts and erroneously characterized their contractual relationship as contract
of sale
i. Re 1ST & 2ND ELEMENTS: agreement that Holiday Trabel would
enter into contracts of carriage with third persons on CAI’s behalf
ii. Re 3RD ELEMENT: HT merely acted in a representative capacity
and it is CAI who is bound by contracts of carriage entered by HT
iii. Re 4TH ELEMENT: CAI has not made any allegation that HT has
exceeded the authority granted to it (even maintains validity of
contracts HT executed and that Mager was not guilty of any
fraudulent misrepresentation)
C. CAI recognized the validity of the contracts HT entered
into with Spouses Viloria and considered itself bound
with Spouses Viloria by the terms &conditions thereof
and this constitutes unequivocal testament to HT’s
authority to act as its agent.
b. Agency may be expressed, OR IMPLIED FORM THE ACTS OF THE
PRINCIPAL, from his silence or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf w/o authority
c. AGENCY v. SALE (CIR v. Constantino): the primordial difference is
transfer of ownership or title over the property subject of the contract
2. IN ACTIONS BASED ON QUASI-DELICT, PRINCIPAL CAN ONLY BE HELD
LIABLE FOR TORT COMMITTED BY ITS AGENT’S EMPLOYEES IF IT HAS
BEEN ESTABLISHED BY PREPONDERANCE OF EIDENCE THAT PRINCIPAL
WAS ALSO AT FAULT OR NEGLIGENT OR THAT PRINCIPAL EXERCISE
CONTROL AND SUPERVISION OVER THEM.
a. Prior determination of the nature of passenger’s cause of action necessary
(culpa aquiliana (quasi-delict) or cualpa contractual (contractual breach))
i. Mere fact that employee of airline company’s agent has
committed a tort is not sufficient to hold the airline company
liable
b. IF CULPA AQUILIANA: need to prove principal’s own fault/negligence
c. IF CULPA CONTRACTUAL: evidence of fault/negligence not necessary; all
needed to prove is existence of contract + fact of non-performance by carrier
d. Spouses Viloria did not present evidence that CAI was a party or had
contributed to Mager’s complained act either by instructing or authorizing
HT and Mager to issue said misrepresentation.
 i. A person’s vicarious liability is anchored on his possession of
control, whether absolute or limited, on the tortfeasor. Without
such control, there is nothing which could justify extending the
liability to a person other than the one who committed the tort.

3. EVEN ON ASSUMPTION THAT CAI MAY BE HELD LIABLE FOR ACTS OF

MAGER, SPOUSES STILL NOT ENTITLED TO REFUND. MAGER’S
STATEMENT CANNOT BE CONSIDERED A CAUSAL FRAUD THAT WOULD
JUSTIFY ANNULMENT OF SUBJECT CONTRACTS THAT WOULD OBLIGE CAI
TO INDEMNIFY SPOUSES AND RETURN THE MONEY THEY PAID FOR
TICKETS.
a. FRAUD: when, through insidious words or machinations of one of the
contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to.
i. To vitiate consent, it must be CAUSAL (dolo causante), and not
merely incidental (dolo incidente) + must be SERIOUS + existence
ESTABLISHED by clear and convincing evidence.
b. Spouses failed to prove that (a) there were indeed available seats at Amstrak
for a trip to New Jersey on Aug 13 at the time they spoke with Mager on
July 21; (b) Mager knew about this; and (c) that she purposely informed
otherwise
i. Only proof of fraud was Fernando’s testimony that an Amstrak
had assured him of perennial availability of seats at Amstrak
c. Even assuming causal fraud, spouses are nevertheless deemed to have
ratified subject contracts
i. Ratified when they decided to exercise their right to use subject
tickets for purchase of new ones & RATIFICATION
EXTINGUISHES ACTION TO ANNUL A VOIDABLE
CONTRACVT (1392 of CC)

4. NOTHING IN CAI’S LETTER CAN RESTRICTION ON NON-

TRANSFERABILITY OF TICKETS BE INFERRED
a. As a common carrier whose business imbued with public interest, exercise
of extraordinary diligence requires CAI to inform all its passengers of all
terms and conditions governing their contract of carriage
b. BUT! CAI’s refusal to accept Lourdes’ ticket for purchase of new ticket for
Fernando is ONLY A CASUAL BREACH
i. Right to rescind contract for non-performance not absolute
ii. Rescission not permitted for slight/casual breach
iii. Endorsabiity of tickets not an essential part of contract and CAI’s
failure to comply not essential to its fulfillment of undertaking to
issue new tickets upon Spouses’s surrender of tickets