Villoria v. Continental Airlines

(4) Villoria v.
Continental Airlines
663 SCRA 57, 2012
DOCTRINE: Art. 1869. Agency may be express, or implied from 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 without authority.
Essential elements of agency are:
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.
STATEMENT OF FACTS:
1. A complaint for sum of money and damages filed by petitioners, collectively
called Spouses Viloria, against respondent Continental Airlines, Inc. (CAI).
2. While in the United States, Fernando purchased for himself and his wife,
Lourdes, two (2) round trip airline tickets from San Diego, California to
Newark, New Jersey on board Continental Airlines. Fernando purchased the
tickets from a travel agency called “Holiday Travel” and was attended to by a
certain Margaret Mager (Mager). According to Spouses Viloria, Fernando
agreed to buy the said tickets after Mager informed them that there were no
available seats at Amtrak.
3. Fernando then opted to request for a refund. Mager, however, his request
was denied as the subject tickets are non-refundable and the only option that
CAI can offer is the re-issuance of new tickets within one (1) year from the
date the subject tickets were issued. Fernando decided to reserve two (2)
seats with Frontier Air.
4. Fernando then purchased two (2) tickets for Washington, D.C. Fernando
reiterated his demand for a refund but Mager was firm in her position that the
subject tickets are non-refundable.
5. Upon returning to the Philippines, Fernando sent a letter to CAI on February
11, 1998, demanding a refund and alleging that Mager had deluded them into
purchasing the subject tickets.
6. Continental Micronesia informed Fernando that his complaint had been
referred to the Customer Refund Services of CAI at Houston, Texas which
they denied Fernando’s request for a refund and advised him that he may
take the subject tickets to any Continental ticketing location for the re-
issuance of new tickets within two (2) years from the date they were issued.
7. In a letter dated June 21, 1999, Fernando demanded for the refund of the
subject tickets as he no longer wished to have them replaced. In addition to
the dubious circumstances under which the subject tickets were issued,
Fernando claimed that CAI’s act of charging him with US$1,867.40 for a
round trip ticket to Los Angeles, which other airlines priced at US$856.00, and
refusal to allow him to use Lourdes’ ticket, breached its undertaking under its
March 24, 1998 letter. On September 8, 2000, Spouses Viloria filed a
complaint against CAI, praying that CAI be ordered to refund the money they
used in the purchase of the subject tickets with legal interest from July 21,
1997 and to pay P1,000,000.00 as moral damages, P500,000.00 as
exemplary damages and P250,000.00 as attorney’s fees.
STATEMENT OF ISSUE: Whether there is a principal-agent relationship that exist

between CAI and Holiday Travel.
DECISION: YES. A principal-agent relationship exists between CAI and Holiday Travel.

The CA failed to consider undisputed facts, discrediting CAI’s denial that Holiday
Travel is one of its agents. Furthermore, in erroneously characterizing the contractual
relationship between CAI and Holiday Travel as a contract of sale, the CA failed to
apply the fundamental civil law principles governing agency and differentiating it from
sale.
Agency is basically personal, representative, and derivative in nature. The
authority of the agent to act emanates from the powers granted to him by his principal;
his act is the act of the principal if done within the scope of the authority. Qui facit per
alium facit se. "He who acts through another acts himself.
In Rallos v. Felix Go Chan & Sons Realty Corporation, this Court explained the
nature of an agency and spelled out the essential elements of agency are: (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.
Contrary to the findings of the CA, all the elements of an agency exist in this
case. The first and second elements are present as CAI does not deny that it concluded
an agreement with Holiday Travel, whereby Holiday Travel would enter into contracts of
carriage with third persons on CAI’s behalf. The third element is also present as it is
undisputed that Holiday Travel merely acted in a representative capacity and it is CAI
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 CAI has
not made any allegation that Holiday Travel exceeded the authority that was granted to
it. In fact, CAI consistently maintains the validity of the contracts of carriage that Holiday
Travel executed with Spouses Viloria and that Mager was not guilty of any fraudulent
misrepresentation. That CAI admits the authority of Holiday Travel to enter into
contracts of carriage on its behalf is easily discernible from its February 24, 1998 and
March 24, 1998 letters, where it impliedly recognized the validity of the contracts
entered into by Holiday Travel with Spouses Viloria. When Fernando informed CAI that
it was Holiday Travel who issued to them the subject tickets, CAI did not deny that
Holiday Travel is its authorized agent.
It is undisputed that CAI and not Holiday Travel who is the party to the contracts
of carriage executed by Holiday Travel with third persons who desire to travel via
Continental Airlines, and this conclusively indicates the existence of a principal-agent
relationship. That the principal is bound by all the obligations contracted by the agent
within the scope of the authority granted to him is clearly provided under Article 1910 of
the Civil Code and this constitutes the very notion of agency.

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(4) Villoria v.

STATEMENT OF ISSUE: Whether there is a principal-agent relationship that exist

DECISION: YES. A principal-agent relationship exists between CAI and Holiday Travel.

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