PIA spokesperson Mashood Tajwar said the mistake was committed by an agency providing luggage handling service to the carrier, the Express Tribune reported.
The PIA has expressed regret over the incident and sympathised with the mourning families.
Tajwar said the Chief Executive Officer of PIA, Dr Musharraf Rasool has taken note of the incident, adding that legal action will be taken against those responsible.
Rasool has also ordered the airline to take responsibility for all funeral arrangements in consultation with the families.
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The goof-up occurred amid reports that the PIA will review its flight operations to the United States from October 31 due to financial issues.
The carrier had temporarily stopped booking US-bound flights for November after the management started mulling over ending operations to the US, an earlier report in the Express Tribune had said.
"We are in the process of devising a strategy for our flights to the US, and will have something more concrete by Monday," Tajwar had said earlier.
He further stated that PIA has been operating flights to the US since 1961, with five weekly flights to the US cities, but they will now be brought down to two flights in a week.
According to the PIA's financial statement for up to September 2016, the total liabilities of the airline mounted to Rs 349 billion as against Rs 113.8 billion assets, the report said.
The losses of the national flag carrier are rising with each passing day, the report had said.