Spouses Yu Eng Cho and Francisco Tao Yu v. Pan American World Airways, Inc., Tourist World Services, Inc.

, Julieta Canilao and Claudia Tagunicar G.R. No. 123560 March 27, 2000 Puno, J. FACTS: Yu Eng Cho is the owner of Young Hardware Co. and Achilles Marketing. In connection with his business, he travels from time to time to Malaysia, Taipei and Hongkong. On July 10, 1976, petitioners bought plane tickets from Claudia Tagunicar who represented herself to be an agent of Tourist World Services, Inc. (TWSI). The destinations are Hongkong, Tokyo, San Francisco, U.S.A., for the amount of P25,000.00. The purpose of this trip is to go to Fairfield, New Jersey, U.S.A. to buy to 2 lines of infrared heating system processing textured plastic article. On said date, only the passage from Manila to Hongkong, then to Tokyo, were confirmed. The flight from Tokyo to San Francisco was on RQ status, meaning on request. Per instruction of Tagunicar, petitioners returned after a few days for the confirmation of the Tokyo-San Francisco segment of the trip. After calling up Canilao of TWSI, Tagunicar told petitioners that their flight is now confirmed all the way. Thereafter, she attached the confirmation stickers on the plane tickets. On July 23, 1978, plaintiffs left for Hongkong and stayed there for 5 days. Upon their arrival in Tokyo, they called up Pan-Am office for reconfirmation of their flight to San Francisco. Said office, however, informed them that their names are not in the manifest. Since petitioners were supposed to leave on the 29th of July, and could not remain in Japan for more than 72 hours, they were constrained to agree to accept airline tickets for Taipei instead, per advice of Japan Air Lines officials. This is the only option left to them because Northwest Airlines was then on strike, hence, there was no chance for the petitioners to obtain airline seats to the United States within 72 hours. Petitioners paid for these tickets. Upon reaching Taipei, there were no flights available for petitioners, thus, they were forced to return back to Manila on August 3, 1978, instead of proceeding to the United States. Japan Air Lines refunded the petitioners the difference of the price for Tokyo-Taipei and Tokyo-San Francisco. In view of their failure to reach Fairfield, New Jersey, Radiant Heat Enterprises, Inc. cancelled Yu Eng Chos option to buy the two lines of infra-red heating system. The agreement was for him to inspect the equipment and make final arrangements with the said company not later than August 7, 1978. From this business transaction, Yu Eng Cho expected to realize a profit of P300,000.00 to P400,000.00. Note: Tagunicar is an independent travel solicitor (not an agent of Pan Am or TWSI), for the purchase of their plane tickets. As such travel solicitor, she helps in the processing of travel papers like passport, plane tickets, booking of passengers and some assistance at the airport. She is known to Pan-Am, TWSI/Julieta Canilao, because she has been dealing with them in the past years. CA found Tagunicar not a duly authorized agent or representative of either Pan Am or TWSI. It held that their business transactions are not sufficient to consider Pan Am as the principal, and Tagunicar and TWSI as its agent and sub-agent, respectively. It further held that Tagunicar was not authorized to confirm the bookings of, nor issue validation stickers to, herein petitioners and hence, Pan Am and TWSI cannot be held responsible for her actions. ISSUE: WON Tagunicar is a sub-agent of TWSI while TWSI is a duly authorized ticketing agent of Pan Am HELD: No. 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. 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. Tagunicar testified that when she pays TWSI, she already deducts in advance her commission and merely gives the net amount to TWSI. From all sides of the legal prism, the transaction is simply a contract of sale wherein Tagunicar buys airline tickets from TWSI and then sells it at a premium to her clients. There is nothing in the records to show that respondent Tagunicar has been employed by Pan Am as its agent, except the bare allegation of petitioners.