VOL.

357, APRIL 20, 2001 99

United Airlines, Inc. vs. Court of Appeals

*
G.R. No. 124110. April 20, 2001.

UNITED AIRLINES, INC., petitioner, vs. COURT OF

APPEALS, ANICETO FONTANILLA, in his personal
capacity and in behalf of his minor son MYCHAL
ANDREW FONTANILLA, respondents.

Civil Procedure; Evidence; The general rule in civil cases is

that the party having the burden of proof of an essential fact must
produce a preponderance of evidence thereon; Although plaintiffs
evidence is stronger than that presented by the defendant a
judgment cannot be entered in favor of the former if his evidence is
not sufficient to sustain his cause of action.—It must be
remembered that the general rule in civil cases is that the party
having the burden of proof of an essential fact must produce a
preponderance of evidence thereon. Although the evidence
adduced by the plaintiff is stronger than that presented by the
defendant, a judgment cannot be entered in favor of the former, if
his evidence is not sufficient to sustain his cause of action. The
plaintiff must rely on the strength of his own evidence and not
upon the weakness of the defendant’s.
Same; Same; Appeals; Appellate courts should not, unless for
strong and cogent reasons, reverse the findings of facts of trial
courts.—Time and again, the Court has pronounced that appellate
courts should not, unless for strong and cogent reasons, reverse
the findings of facts of trial courts. This is so because trial judges
are in a better position to examine real evidence and at a vantage
point to observe the actuation and the demeanor of the witnesses.
While not the sole indicator of the credibility of a witness, it is of
such weight that it has been said to be the touchstone of
credibility.
Civil Law; Private International Law; Doctrine of lex loci
contractus; According to the doctrine, as a general rule, the law of
the place where a contract is made or entered into governs with
respect to its nature and validity, obligation and interpretation.—
In the case of Zalamea vs. Court of Appeals, this Court applied the
doctrine of lex loci contractus. According to the doctrine, as a
general rule, the law of the place where a contract is made or
entered into governs with respect to its nature and validity,
obligation and interpretation. This has been said to be the rule
even though the place where the contract was made is different
from the place where it is to be performed, and particularly so, if
the place of the making and the place of performance are the
same. Hence, the court should apply the law

______________

* FIRST DIVISION.

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100 SUPREME COURT REPORTS ANNOTATED

United Airlines, Inc. vs. Court of Appeals

of the place where the airline ticket was issued, when the
passengers are residents and nationals of the forum and the ticket
is issued in such State by the defendant airline.
Same; Damages; For the plaintiff to be entitled to an award of
moral damages arising from a breach of contract of carriage, the
carrier must have acted with fraud or bad faith.—As to the award
of moral and exemplary damages, we find error in the award of
such by the Court of Appeals. For the plaintiff to be entitled to an
award of moral damages arising from a breach of contract of
carriage, the carrier must have acted with fraud or bad faith.

PETITION for review on certiorari of a decision of the

Court of Appeals.

The facts are stated in the opinion of the Court.

     Quisumbing, Torres & Evangelista for petitioner.
     Yulo, Aliling & Associates for private respondent.

KAPUNAN, J.:

On March 1, 1989, private respondent Aniceto Fontanilla

purchased from petitioner United Airlines, through the
Philippine Travel Bureau in Manila, three (3) “Visit the
U.S.A.” tickets for himself, his wife and his minor son
Mychal for the following routes:

(a) San Francisco to Washington (15 April 1989);

(b) Washington to Chicago (25 April 1989);
 (c) Chicago to Los Angeles (29 April 1989);
(d) Los Angeles to San Francisco (01 May 1989 for
petitioner’s
1
wife and 05 May 1989 for petitioner and
his son).

All flights
2
had been confirmed previously by United
Airlines.
The Fontanillas proceeded to the United States as
planned, where they used the first coupon from San
Francisco to Washington. On April 24, 1989, Aniceto
Fontanilla bought two (2) addi-

_____________

1 Records, p. 35.
2 Ibid.

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United Airlines, Inc. vs. Court of Appeals

tional coupons each for himself, his wife and his son from
petitioner at its office in Washington Dulles Airport. After
paying the penalty for rewriting their tickets, the
Fontanillas were issued tickets with corresponding
boarding passes with the words “CHECK-IN REQUIRED,”
for United Airlines Flight No. 1108, set to leave from3 Los
Angeles to San Francisco at 10:30 a.m. on May 5, 1989.
The cause of the non-boarding of the Fontanillas on
United Airlines Flight No. 1108 makes up the bone of
contention of this controversy.
Private respondents’ version is as follows:
Aniceto Fontanilla and his son Mychal claim that on
May 5, 1989, upon their arrival at the Los Angeles Airport
for their flight, they proceeded to United Airlines counter
where they were attended by an employee wearing a
nameplate bearing the name “LINDA.” Linda examined
their tickets, punched something into her computer and 4
then told them that boarding would be in fifteen minutes.
When the flight was called, the Fontanillas proceeded to
the plane. To their surprise, the stewardess at the gate did
not allow them to board the plane, as they had no assigned
seat numbers. They were then directed to go back to the
“check-in” counter where Linda subsequently informed
them that
5
the flight had been over-booked and asked them
to wait.
 The Fontanillas tried to explain to Linda the special
circumstances of their visit. However, Linda told them in6
arrogant manner, “So what, I cannot do anything about it.”
Subsequently, three other passengers with Caucasian
features were graciously allowed to board, after the 7
Fontanillas were told that the flight had been overbooked.

_______________

3 Id.
4 Records, pp. 35-36.
5 Id., at 36.
6 Ibid.
7 Id.

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102 SUPREME COURT REPORTS ANNOTATED

United Airlines, Inc. vs. Court of Appeals

The plane then took off with 8

the Fontanillas’ baggage in
tow, leaving them behind.
The Fontanillas then complained to Linda, who in turn
gave them an ugly stare and rudely uttered, “It’s not my9
fault. It’s the fault of the company. Just sit down and wait.”
When Mr. Fontanilla reminded Linda of the inconvenience
being caused to them, she bluntly retorted, “Who do you
think you are? You lousy Flips are good for nothing beggars.
You always ask for American aid.” After which she
remarked “Don’t worry about your baggage. Anyway there
is nothing in there. What are you doing here anyway? I will 10
report you to immigration. You Filipinos should go home,”
Such rude statements were made in front of other people in
the airport causing the Fontanillas to suffer shame,
humiliation and embarrassment. The chastening situation 11
even caused the younger Fontanilla to break into tears.
After some time, Linda, without any explanation, offered
the Fontanillas $50.00 each. She simply 12
said “Take it or
leave it.” This, the Fontanillas declined.
The Fontanillas then proceeded to the United Airlines
customer service counter to plead their case. The male
employee at the counter reacted by shouting 13
that he was
ready for it and left without saying anything.
The Fontanillas were not booked on the next flight,
which departed for San Francisco at 11:00 a.m. It was only
at 12:00 noon that they were able to leave Los Angeles on
United Airlines Flight No. 803.
 Petitioner United Airlines has a different version of
what occurred at the Los Angeles Airport on May 5, 1989.
According to United Airlines, the Fontanillas did not
initially go to the check-in counter to get their seat
assignments for UA Flight

________________

8 Id.
9 Id.
10 Records, p. 37.
11 Ibid.
12 Id.
13 Id., at 39.

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VOL. 357, APRIL 20, 2001 103

United Airlines, Inc. vs. Court of Appeals

1108. They instead proceeded to join the queue boarding

the aircraft without first securing their seat assignments
as required in their ticket and boarding passes. Having no
seat assignments, the stewardess at the door of the plane
instructed them to go to the check-in counter. When the
Fontanillas proceeded to the check-in counter, Linda Allen,
the United Airlines Customer Representative at the
counter informed them that the flight was overbooked. She
booked them on the next available flight and offered them
denied boarding compensation. Allen vehemently denies
uttering the derogatory
14
and racist words attributed to her
by the Fontanillas.
The incident prompted the Fontanillas to file Civil Case
No. 89-4268 for damages before the Regional Trial Court of
Makati. After trial on the merits, the trial court rendered a
decision, the dispositive portion of which reads as follows:

WHEREFORE, judgment is rendered dismissing the complaint.

The counterclaim is likewise dismissed as it appears that
plaintiffs were not15 actuated by legal malice when they filed the
instant complaint.

On appeal, the Court of Appeals ruled in favor of the

Fontanillas. The appellate court found that there was an
admission on the part of United Airlines that the
Fontanillas did in fact observe the check-in requirement. It
ruled further that even assuming there was a failure to
observe the check-in requirement. United Airlines failed to
comply with the procedure laid down in cases where a
passenger is denied boarding. The appellate court likewise
gave credence to the claim of Aniceto Fontanilla that the
employees of United Airlines were discourteous and
arbitrary and, worse, discriminatory. In light of such
treatment, the Fontanillas were entitled to moral damages.
The dispositive portion of the decision of the respondent
Court of Appeals dated 29 September 1995, states as
follows:

WHEREFORE, in view of the foregoing, judgment appealed

herefrom is hereby REVERSED and SET ASIDE, and a new
judgment is entered ordering defendant-appellee to pay plaintiff-
appellant the following:

______________

14 Id., at 119-204.
15 CA Decision, Rollo, pp. 7-25.

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104 SUPREME COURT REPORTS ANNOTATED

United Airlines, Inc. vs. Court of Appeals

a) P200,000.00 as moral damages;

b) P200,000.00 as exemplary damages;
c) P50,000.00 as attorney’s fees.

No pronouncement16as to costs.
SO ORDERED.

Petitioner United Airlines now comes to this Court raising

the following assignment of errors:

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

RULING THAT THE TRIAL COURT WAS WRONG IN FAILING
TO CONSIDER THE ALLEGED ADMISSION THAT PRIVATE
RESPONDENT OBSERVED THE CHECK-IN REQUIREMENT.

II

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

RULING THAT PRIVATE RESPONDENTS FAILURE TO
CHECK-IN WILL NOT DEFEAT HIS CLAIMS BECAUSE THE
DENIED BOARDING RULES WERE NOT COMPLIED WITH.
 III

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

RULING THAT PRIVATE RESPONDENT IS ENTITLED TO
MORAL DAMAGES OF P200,000.

IV

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

RULING THAT PRIVATE RESPONDENT IS ENTITLED TO
EXEMPLARY DAMAGES OF P200,000.

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

RULING THAT PRIVATE RESPONDENT
17
IS ENTITLED TO
ATTORNEY’S FEES OF P50,000.

On the first issue raised by the petitioner, the respondent

Court of Appeals
18
ruled that when Rule 9, Section 1 of the
Rules of Court,

_______________

16 Rollo, p. 25.
17 Id., at 37.
18 Section 1. Allegations not specifically denied deemed admitted.—
Material Averment in the complaint, other than those as to the amount of

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United Airlines, Inc. vs. Court of Appeals

there was an implied admission in petitioner’s answer in

the allegations in the complaint that private respondent
and his son observed the “check-in requirement at the Los
Angeles Airport.” Thus:

A perusal of the above pleadings filed before the trial court

disclosed that there exists a blatant admission on the part of the
defendant-appellee that the plaintiffs-appellants indeed observed
the “check-in” requirement at the Los Angeles Airport on May 5,
1989. In view of defendant-appellee’s admission of plaintiffs-
appellants’ material averment in the complaint, We find19 no
reason why the trial court should rule against such admission.

We disagree with the above conclusion reached by

respondent Court of Appeals. Paragraph 7 of private
respondents’ complaint states:
 7. On May 5, 1989 at 9:45 a.m., plaintiff and his son
checked in at defendant’s designated counter at the airport
in Los Angeles for their scheduled
20
flight to San Francisco
on defendant’s Flight No. 1108.
Responding to the above allegations, petitioner averred
in paragraph 4 of its answer, thus:
4. Admits the allegation set forth in paragraph 7 of the
complaint except to deny that plaintiff and his son checked
in at 9:45 a.m., for lack of knowledge21 or information at this
point in time as to the truth thereof.
The rule authorizing an answer that the defendant has
no knowledge or information sufficient to form a belief as to
the truth of an averment and giving such answer the effect
of a denial, does not apply where the fact as to which want
of knowledge is asserted is so plainly and necessarily
within the defendant’s knowledge that

_____________

damage, shall be deemed admitted when not specifically admitted when

not specifically denied. Allegations of usury are deemed not denied
specifically when not denied specifically under oath.
19 Rollo, p. 75.
20 CA Rollo, p. 2.
21 Id., at 14.

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106 SUPREME COURT REPORTS ANNOTATED

United Airlines, Inc. vs. Court of Appeals

22
his averment of ignorance must be palpably untrue.
Whether or not private respondents checked in at
petitioner’s designated counter at the airport at 9:45 a.m.
on May 5, 1989 must necessarily be within petitioner’s
knowledge.
While there was no specific denial as to the fact” of
compliance with the “check-in” requirement by private
respondents, petitioner presented evidence to support its
contention that there indeed was no compliance.
Private respondents then are said to have waived the
rule on admission. It not only presented evidence to
support its contention that there was compliance with the
check-in requirement, it even allowed petitioner to present
rebuttal evidence. In the case of Yu Chuck vs. “Kong Li Po,”
we ruled that:
The object of the rule is to relieve a party of the trouble and
expense in proving in the first instance an alleged fact, the
existence or nonexistence of which is necessarily within the
knowledge of the adverse party, and of the necessity (to his
opponent’s case) of establishing which such adverse party is
notified by his opponent’s pleadings.
The plaintiff may, of course, waive the rule and that is what
must be considered to have done (sic) by introducing evidence as
to the execution of the document and failing to object to the
defendant’s evidence in refutation; all this evidence
23
is now
competent and the case must be decided thereupon.

The determination of the other issues raised is dependent

on whether or not there was a breach of contract in bad
faith on the part of the petitioner in not allowing the
Fontanillas to board United Airlines Flight 1108.
It must be remembered that the general rule in civil
cases is that the party having the burden of proof of an
essential24 fact must produce a preponderance of evidence
thereon. Although the evi-

______________

22 Warner Barnes and Co. Ltd. vs. Reyes, 103 Phil. 662 (1958); PNB vs.
Utility Assurance and Surety Co., Inc., 177 SCRA 210 (1989).
23 46 Phil. 604, 613.
24 Ricardo J. Francisco, THE REVISED RULES OF COURT IN THE
PHILIPPINES, EVIDENCE, Volume VII, Par II, 1997, citing I Moore on
Facts 54.

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United Airlines, Inc. vs. Court of Appeals

dence adduced by the plaintiff is stronger than that

presented by the defendant, a judgment cannot be entered
in favor of the former, if his evidence is not sufficient to
sustain his cause of action. The plaintiff must rely on the
strength of his own
25
evidence and not upon the weakness of
the defendant’s. Proceeding from this, and considering the
contradictory findings of facts by the Regional Trial Court
and the Court of Appeals, the question before this Court is
whether or not private respondents were able to prove with
adequate evidence his allegations of breach of contract in
bad faith.
We rule in the negative.
 Time and again, the Court has pronounced that
appellate courts should not, unless for strong and cogent
reasons, reverse the findings of facts of trial courts. This is
so because trial judges are in a better position to examine
real evidence and at a vantage point to observe 26
the
actuation and the demeanor of the witnesses. While not
the sole indicator of the credibility of a witness, it is of such
weight that 27
it has been said to be the touchstone of
credibility.
Aniceto Fontanilla’s assertion that upon arrival at the
airport at 9:45 a.m., he immediately proceeded to the
check-in counter, and that Linda Allen punched in
something into the computer is specious and not supported
by the evidence on record. In support of their allegations,
private respondents submitted a copy of the boarding pass.
Explicitly printed on the boarding pass are the words
“Check-In Required.” Curiously, the said pass did not
indicate any seat number. If indeed the Fontanillas
checked in at the designated time as they claimed, why
then were they not assigned seat numbers? Absent any
showing that Linda was so, motivated, we do not buy into
private respondents’ claim that Linda intentionally
deceived him,28
and made him the laughing stock among the
passengers. Hence, as correctly observed by the trial
court:

____________

25 Nolan vs. Jalandoni, 23 Phil. 292.

26 Matuguina Integrated Wood Products, Inc. vs. CA, 263 SCRA 490
(1996) citing Bael vs. IAC, 169 SCRA 617 (1989).
27 Connor vs. Connor, 77 A. 2d 697.
28 Records, p. 39.

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108 SUPREME COURT REPORTS ANNOTATED

United Airlines, Inc. vs. Court of Appeals

Plaintiffs fail to realize that their failure to check in, as expressly

required in their boarding passes, is the very reason why they
were not given their respective29
seat numbers, which resulted in
their being denied boarding.

Neither do we agree with the conclusion reached by the

appellate court that private respondents’ failure to comply
with the check-in requirement will not defeat his claim as
the denied boarding rules were not complied with. Notably,
the appellate court relied on the Code of Federal
Regulation Part on Oversales, which states:

250.6 Exceptions to eligibility for denied boarding compensation.

A passenger denied board involuntarily from an oversold flight
shall not be eligible for denied board compensation if:
(a) The passenger does not comply with the carrier’s contract of
carriage or tariff provisions regarding ticketing, reconfirmation,
check-in, and acceptability for transformation.

The appellate court, however, erred in applying the laws of

the United States as, in the case at bar, Philippine law is
the applicable law. Although, the contract of carriage was
to be performed in the United States, the tickets were
purchased through petitioner’s agent in Manila. It is true
that the tickets were “rewritten” in Washington, D.C.
However, such fact did not change the nature of the
original contract of carriage entered into by the parties in
Manila. 30
In the case of Zalamea vs. Court of Appeals, this Court
applied the doctrine of lex loci contractus. According to the
doctrine, as a general rule, the law of the place where a
contract is made or entered into governs with respect to its
nature and validity, obligation and interpretation. This has
been said to be the rule even though the place where the
contract was made is different from the place where it is to
be performed, and particularly so, if the place of the
making and the place of performance are the same. Hence,
the court should apply the law of the place where the
airline ticket was

___________

29 CA Rollo, p. 40.
30 228 SCRA 23 (1993).

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VOL. 357, APRIL 20, 2001 109

United Airlines, Inc. vs. Court of Appeals

issued, when the passengers are residents and nationals of

the forum and the ticket is issued in such State by the
defendant airline.
The law of the forum on the subject matter is Economic
Regulations No. 7 as amended by Boarding Priority and
Denied Boarding Compensation of the Civil Aeronautics
Board, which provides that the check-in requirement be
complied with before a passenger may claim against a
carrier for being denied boarding:

SEC. 5. Amount of Denied Boarding Compensation.—Subject to

the exceptions provided hereinafter under Section 6, carriers shall
pay to passengers holding confirmed reserved space and who have
presented themselves at the proper place and time and fully
complied with the carrier’s check-in and reconfirmation procedures
and who are acceptable for carriage under the Carrier’s tariffs but
who have been denied boarding for lack of space, a compensation
at the rate of: x x

Private respondents’ narration that they were subjected to

harsh and derogatory remarks seems incredulous.
However, this Court will not attempt to surmise what
really happened. Suffice to say, private respondent was not
able to prove his cause of action, for as the trial court
correctly observed:

x x x plaintiffs claim to have been discriminated against and

insulted in the presence of several people. Unfortunately,
plaintiffs limited their evidence to the testimony [of] Aniceto
Fontanilla, without any corroboration by the people who saw or
heard the discriminatory remarks and insults; while such limited
testimony could possibly be true, it does not enable the Court to
reach the conclusion that plaintiffs have, by a preponderance of
evidence, proven31 that they are entitled to P1,650,000.00 damages
from defendant.

As to the award of moral and exemplary damages, we find

error in the award of such by the Court of Appeals. For the
plaintiff to be entitled to an award of moral damages
arising from a breach of contract of carriage, the carrier
must have acted with fraud or bad faith. The appellate
court predicated its award on our pronounce-

______________

31 CA Rollo, p. 41.

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110 SUPREME COURT REPORTS ANNOTATED

United Airlines, Inc. vs. Court of Appeals

ment in the case of Zalamea vs. Court of Appeals, supra,

where we stated:
Existing jurisprudence explicitly states that overbooking amounts
to bad faith, entitling passengers concerned to an award of moral
damages. In Alitalia Airways v. Court of Appeals, where
passengers with confirmed booking were refused carriage on the
last minute, this Court held that when an airline issues a ticket to
a passenger confirmed on a particular flight, on a certain date, a
contract of carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date. If he does
not, then the carrier opens itself to a suit for breach of contract of
carriage. Where an airline had deliberately overbooked, it took the
risk of having to deprive some passengers of their seats in case all
of them would show up for check in. For the indignity and
inconvenience of being refused a confirmed seat on the last
minute, said passenger is entitled to moral damages. (Emphasis
supplied.)

However, the Court’s ruling in said case should be read in

consonance with existing laws, particularly, Economic
Regulations No. 7, as amended, of the Civil Aeronautics
Board:

Sec. 3. Scope.—This regulation shall apply to every Philippine and

foreign air carrier with respect to its operation of flights or
portions of flights originating from or terminating at, or serving a
point within the territory of the Republic of the Philippines
insofar as it denies boarding to a passenger on a flight, or portion
of a flight inside or outside the Philippines, for which he holds
confirmed reserved space. Furthermore, this Regulation is
designed to cover only honest mistakes on the part of the carriers
and excludes deliberate and willful acts of non-accommodation.
Provided, however, that overbooking not exceeding 10% of the
seating capacity of the aircraft shall not be considered as a
deliberate and willful act of non-accommodation.

What this Court considers as bad faith is the willful and

deliberate overbooking on the part of the airline carrier.
The above-mentioned law clearly states that when the
overbooking does not exceed ten percent (10%), it is not
considered as deliberate and therefore does not amount to
bad faith. While there may have been overbooking in this
case, private respondents were not able to prove that the
overbooking on United Airlines Flight 1108 exceeded ten
percent.
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United Airlines, Inc. vs. Court of Appeals
 As earlier stated, the Court is of the opinion that the
private respondents were not able to prove that they were
subjected to coarse and harsh treatment by the ground
crew of United Airlines. Neither were they able to show
that there was bad faith on part of the carrier airline.
Hence, the award of moral and exemplary damages by the
Court of Appeals is improper. Corollarily, the award of
attorney’s fees is, likewise, denied for lack of any legal and
factual basis.
WHEREFORE, the petition is GRANTED. The decision
of the Court of Appeals in CA-G.R. CV No. 37044 is hereby
REVERSED and SET ASIDE. The decision of the Regional
Trial Court of Makati City in Civil Case No. 89-4268 dated
April 8, 1991 is hereby REINSTATED.
SO ORDERED.

          Davide, Jr. (C.J., Chairman), Puno, Pardo and

Ynares-Santiago, JJ., concur.

Petition granted, judgment reversed and set aside. That

of the trial court reinstated.

Note.—In civil cases, the party having the burden of

proof must establish his cause by a preponderance of
evidence. (Ceremonia vs. Court of Appeals, 314 SCRA 731
[1999]

——o0o——

112

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