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Korean Airlines v. CAFacts:

Juanito Lapuz was contracted for employment in Saudi Arabia through Pan PacificRecruiting Services, Inc. He was supposed to leave via Korean Airlines, but was initiallylisted as a chance passenger. According to Lapuz, he was allowed to check in and wascleared for departure. When he was on the stairs going to the airplane, a KAL officerpointed at him and shouted, Down! Down! and he was barred from taking the flight.When he asked for another booking, his ticket was cancelled. He was unable to reportfor work and so he lost his employment. KAL alleged that the agent of Pan Pacific wasinformed that there are 2 seats possibly available. He gave priority to Perico, while theother seat was won by Lapuz through lottery. But because only 1 seat became available,it was given to Perico. The trial court adjudged KAL liable for damages. The decisionwas affirmed by the Court of Appeals, with modification on the damages awarded.

Issues:

(1) Whether there is already a contract of carriage between KAL and Lapuz to hold KALliable for breach of contract

(2) Whether moral and exemplary damages should be awarded, and to what extent

Held:

(1) The status of Lapuz as standby passenger was changed to that of a confirmedpassenger when his name was entered in the passenger manifest of KAL for its FlightNo. KE 903. His clearance through immigration and customs clearly shows that he hadindeed been confirmed as a passenger of KAL in that flight. KAL thus committed abreach of the contract of carriage between them when it failed to bring Lapuz to hisdestination. A contract to transport passengers is different in kind and degree from anyother contractual relation.The business of the carrier is mainly with the travelingpublic. It invites people to avail themselves of the comforts and advantages it offers. Thecontract of air carriage generates a relation attended with a public duty. Passengers havethe right to be treated by the carrier's employees with kindness, respect, courtesy anddue consideration. They are entitled to be protected against personal misconduct,injurious language, indignities and abuses from such employees.So it is that anydiscourteous conduct on the part of these employees toward a passenger gives the latteran action for damages against the carrier. The breach of contract was aggravated in thiscase when, instead of courteously informing Lapuz of his being a "wait-listed"

passenger, a KAL officer rudely shouted "Down! Down!" while pointing at him, thuscausing him embarrassment and public humiliation. The evidence presented by Lapuzshows that he had indeed checked in at the departure counter, passed through customsand immigration, boarded the shuttle bus and proceeded to the ramp of KAL's aircraft.In fact, his baggage had already been loaded in KAL's aircraft, to be flown with him toJeddah. The contract of carriage between him and KAL had already been perfectedwhen he was summarily and insolently prevented from boarding the aircraft.

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(2) The Court of Appeals granted moral and exemplary damages because:

a. The findings of the court a quothat the defendant-appellant has committedbreach of contract of carriage in bad faith and in wanton, disregard of plaintiff-appellant's rights as passenger laid the basis and justification of an award formoral damages.

b. In the instant case, we find that defendant-appellant Korean Air Lines acted in awanton, fraudulent, reckless, oppressive or malevolent manner when it "bumpedoff" plaintiff-appellant on November 8, 1980, and in addition treated him rudelyand arrogantly as a "patay gutom na contract worker fighting Korean Air Lines,"which clearly shows malice and bad faith, thus entitling plaintiff-appellant tomoral damages.

c. Considering that the plaintiff-appellant's entitlement to moral damages has beenfully established by oral and documentary evidence, exemplary damages may beawarded. In fact, exemplary damages may be awarded, even though not soexpressly pleaded in the complaint. By the same token, to provide an example forthe public good, an award of exemplary damages is also proper.

A review of the record of this case shows that the injury suffered by Lapuz is not soserious or extensive as to warrant an award of P1.5 million. The assessment of P100,000as moral and exemplary damages in his favor is, in our view, reasonable and realistic.