SPS. FERNANDO AND LOURDES VILORIA vs. CONTINENTAL AIRLINES, INC.

G.R. No. 188288, January 16, 2012, J. Carpio

In actions based on quasi-delict, a principal can only be held liable for the tort committed by
its agents employees if it has been established by preponderance of evidence that the principal was
also at fault or negligent or that the principal exercise control and supervision over them.

Facts:

In 1997, while the spouses Viloria were in the United States, they approached Holiday
Travel, a travel agency working for Continental Airlines, to purchase tickets from Newark to San
Diego. The travel agent, Margaret Mager, advised the couple that they cannot travel by train
because it was already fully booked; that they must purchase plane tickets for Continental Airlines;
that if they wont purchase plane tickets; theyll never reach their destination in time. The couple
believed Magers representations and so they purchased two plane tickets worth $800.00.

Later however, the spouses found out that the train trip wasnt really fully booked and so
they purchased train tickets and went to their destination by train instead. Then they called up
Mager to request for a refund for the plane tickets. Mager referred the couple to Continental
Airlines. As the couple were now in the Philippines, they filed their request with Continental
Airlines office in Ayala. The spouses Viloria alleged that Mager misled them into believing that the
only way to travel was by plane and so they were fooled into buying expensive plane tickets.

Continental Airlines refused to refund the amount of the tickets and so the spouses sued
the airline company. In its defense, Continental Airlines claimed that the tickets sold to them by
Mager were non-refundable; that, if any, they were not bound by the misrepresentations of Mager
because theres no contract of agency existing between Continental Airlines and Mager.

The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling
of the RTC. The CA ruled that continental Airlines cannot be held liable for Magers act in the
absence of any proof that a principal-agent relationship existed between Continental Airlines and
Holiday Travel, as the contract was not an agency but that of a sale.

Issues:

1) Whether a contract of agency exists between Continental Airlines and Mager.

2) Whether Continental Airlines is bound by the acts of Holiday Travels agents.

Ruling:

1) A contract of agency exists between Continental Airlines and Mager.

All the elements of agency are present, to wit:

1. there is consent, express or implied of the parties to establish the relationship;
2. the object is the execution of a juridical act in relation to a third person;
3. the agent acts as a representative and not for himself, and
4. the agent acts within the scope of his authority.
 The first and second elements are present as Continental Airlines does not deny that it
concluded an agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel
would enter into contracts of carriage with third persons on the airlines behalf. The third element
is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and
it is Continental Airlines and not Holiday Travel who is bound by the contracts of carriage entered
into by Holiday Travel on its behalf. The fourth element is also present considering that Continental
Airlines has not made any allegation that Holiday Travel exceeded the authority that was granted
to it.

Continental Airlines also never questioned the validity of the transaction between Mager and the
spouses. Continental Airlines is therefore in estoppel.

2) Continental Airlines is not bound by the acts of Holiday Travels agents

An airline company is not completely exonerated from any liability for the tort committed
by its agents employees. A prior determination of the nature of the passengers cause of action is
necessary. If the passengers cause of action against the airline company is premised on culpa
aquiliana or quasi-delict for a tort committed by the employee of the airline companys agent, there
must be an independent showing that the airline company was at fault or negligent or has
contributed to the negligence or tortuous conduct committed by the employee of its agent. The
mere fact that the employee of the airline companys agent has committed a tort is not sufficient to
hold the airline company liable. There is no vinculum juris between the airline company and its
agents employees and the contractual relationship between the airline company and its agent does
not operate to create a juridical tie between the airline company and its agents employees. Article
2180 of the Civil Code does not make the principal vicariously liable for the tort committed by its
agents employees and the principal-agency relationship per se does not make the principal a party
to such tort; hence, the need to prove the principals own fault or negligence.

On the other hand, if the passengers cause of action for damages against the airline
company is based on contractual breach or culpa contractual, it is not necessary that there be
evidence of the airline companys fault or negligence.

Since, Spouses Vilorias cause of action is clearly one of tort or quasi-delict, it was incumbent
upon them to prove that Continental Airlines was equally at fault. This they failed to do.