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NICHOLAS Y. CERVANTES v. CA

FACTS:

Philippine Air Lines, Inc. (PAL) issued a round-trip plane ticket to Nicholas Cervantes (petitioner) that had an expiration date of March 27, 1990. On March 23, 1990, petitioner used the ticket to travel from Manila to Los Angeles and booked a return ticket with PAL for the April 2, 1990 flight. He made arrangements with PAL to board the flight in San Francisco instead of Los Angeles. However, when petitioner checked in on April 2, 1990, the PAL personnel refused to allow him to board due to the expiration of the ticket's validity. Petitioner filed a Complaint for Damages, but the complaint was dismissed for lack of merit. Petitioner appealed to the Court of Appeals, which affirmed the dismissal. Petitioner then filed a Petition for Review before the Supreme Court. The issues raised in the case were whether the confirmation by PAL agents extended the ticket's validity, whether the defense of lack of authority was correctly ruled upon, and whether the denial of the award for damages was proper. The trial court found that the ticket clearly stated its expiration date, and therefore, it was not valid after March 27, 1990. The trial court's finding was based on the ruling in Lufthansa vs. Court of Appeals. Petitioner argued that the confirmation by PAL's agents changed the compromise agreement, but the appellate court rejected this argument.

ISSUES:

  1. Whether or not the act of the PAL agents in confirming the ticket extended its validity.

  2. Whether or not the defense of lack of authority was correctly ruled upon.

  3. Whether or not the denial of the award for damages was proper.

RULING:

  1. The act of the PAL agents in confirming the ticket did not extend its validity. The ticket clearly stated that it was valid until March 27, 1990, and the conditions of contract also provided for a one-year validity from the date of issue. The confirmation by the agents does not change the terms of the contract. The Court held that contracts are to be interpreted according to their literal meaning when the terms are clear and leave no doubt as to the intention of the parties.

  2. The defense of lack of authority was correctly ruled upon. The trial court found no evidence to support the claim that the PAL agents in Los Angeles and San Francisco were authorized to extend the validity of the ticket. As such, the defense of lack of authority was valid.

  3. The denial of the award for damages was proper. Since there was no breach of contract on the part of PAL, there was no basis for the award of damages to the petitioner.

PRINCIPLES:

  • Contracts are to be interpreted according to their literal meaning when the terms are clear and leave no doubt as to the intention of the parties.

  • Confirmation by airline agents does not extend the validity of a ticket if the terms and conditions clearly state a specific validity period.

  • Lack of authority is a valid defense if there is no evidence to support the claim that an agent is authorized to extend the validity of a ticket.

  • Damages may only be awarded if there is a breach of contract.