Agency III.

Power and Obligations of the Agent

! YU ENG CHO v. PAN AMERICAN AIRWAYS
G.R. No. 123560 March 27, 2000
! This is a petition for review seeking the reversal of the CA decision holding private respondent
Claudia Tagunicar solely liable for moral and exemplary and attorney’s fees, deleting the RTC’s award for
actual damages.
!Facts
- Yu Eng Cho is the owner of Young Hardware Co. and Achilles Marketing. He travels from time to time
to Malaysia, Taipei, and Hong Kong.
- On July 10, 1976, he bought plane tickets from private respondent Claudia Tagunicar, who represented
herself as an agent of Tourist World Services, Inc. (TWSI). Each ticket cost PhP25,000 and the
destinations were Hong Kong, Tokyo, and San Francisco.
- She advised petitioners to take Pan Am since Northwest Airlines was on strike and Pan Am had a
Tokyo-San Francisco flight.
- Petitioner was supposed to go to Fairfield, New Jersey to purchase two lines of infrared heating system
processing textured plastic article.
- Only the Manila-HK, then Tokyo was confirmed on the said date. Plan 002 or the flight from Tokyo-
San Franciso was on “RQ” status or “on request.” She told the petitioners to come back after a few days
to confirm the last flight.
- After calling Julieta Canilao, the office manager of TWSI, Tagunicar confirmed the petitioners flight to
San Francisco and attached confirmation stickers on their tickets.
- Adrian Yu, son of petitioner, called the Pan Am office to verify the status of their flight, and a personnel
from Pan Am confirmed it.
- They left for Hong Kong and stayed there for five days before leaving for Tokyo. In Tokyo, they again
called Pan Am for reconfirmation to which said office said that their names were not on the manifest.
- Since they were transient passengers, they couldn’t stay in Japan for more than 72 hours. They couldn’t
get any flights to San Francisco because Northwest Airlines was on strike at that time and booking a
flight was difficult.
- They were offered tickets to Taipei, which they paid for, but upon reaching Taipei, they were forced to
go back to Manila since there were no flights available.
- Petitioner lost the chance to buy said infrared heating system from Radiant Heat, which could’ve given
them profit of PhP300-400,000.
- However, based on defendants testimony, petitioners were referred to Tagunicar who was an
independent travel solicitor. She helps process travel papers, tickets, booking of passengers, and airport
assistance. They know her because they’ve dealt with her in the past.

!- She then bought tickets from Canilao with the following schedule:

Manila-HK 07-23-78 1135/1325hrs (flight out of Manila was thru Cathay

HK-Tokyo 07-28-78 1615/2115hrs Pacific*)
Tokyo-San Francisco 07-29-78 1930/1640hrs
!- Tagunicar says Julieta Canilao told her, “o, sige Claudia, confirm na,” which she even noted in her
index card. However, TWSI/Canilao denied confirming the San Francisco flight since it was really
difficult to book one because of the strike.
- Neither TWSI nor Pan Am confirmed the flight and they never authorised Tagunicar to attach said
confirmation stickers.
- A complaint for damages was filed by petitioners with the RTC of Manila, Branch 3. They rendered
judgement in favour of petitioners, holding Pan Am, TWSI, and Tagunicar jointly and severally liable.
(Canilao was not included since she was just doing her job as the general manager of TWSI.) They
were ordered to pay PhP200,000 for actual damages, PhP100,000 as exemplary damages, 20% of the
award as attorney’s fees, and PhP30,000 for litigation expenses.
- Pan Am and Tagunicar appealed. CA modified the judgement holding Tagunicar solely liable, lowering
the amount for moral and exemplary damages, and attorney’s fees to PhP50,000 and PhP25,000, and
PhP10,000 only plus cost of suit, and deleting the amount for actual damages.
- CA found that Tagunicar is an independent travel solicitor and is not a duly authorised agent or
representative of TWSI or Pan Am.
!
*use of another airline out of Manila was allowed as long as it was connected with a Pan Am flight
Issue
Whether or not Tagunicar was an agent of Pan American Airways or Travel World Services Inc.
!Held
No. Petitioners assert that Tagunicar is a sub-agent of TWSI while TWSI is a duly authorized ticketing agent
of Pan Am. Proceeding from this premise, they contend that TWSI and Pan Am should be held liable as
principals for the acts of Tagunicar. They stubbornly insist that the existence of the agency relationship has
been established by the judicial admissions allegedly made by respondents that: (1) the admission made by
Pan Am in its Answer that TWSI is its authorized ticket agent; (2) the affidavit executed by Tagunicar where
she admitted that she is a duly authorized agent of TWSI; and (3) the admission made by Canilao that TWSI
received commissions from ticket sales made by Tagunicar. However, Tagunicar has openly denied in court
that she was an agent of TWSI, and declared that she is an independent travel solicitor. In case of conflict
between statements in the affidavit and testimonial declarations, the latter command greater weight.
!By the contract of agency, a person binds himself to render some service or to do something in representation
or on behalf of another, with the consent or authority of the latter. The elements of agency are: (1) 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; (4) the agent acts
within the scope of his authority. TWSI nor Pan Am never authorised private respondent Tagunicar to
confirm subject flight to San Francisco. It is a settled rule that persons dealing with an assumed agent are
bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also
the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to
establish it
!
WHEREFORE, the decision appealed from is hereby AFFIRMED. Cost against petitioners.

SO ORDERED.

*use of another airline out of Manila was allowed as long as it was connected with a Pan Am flight