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PNB/NDC vs. COURT OF APPEALS FACTS To finance seven ocean-going vessels, the Philippine International Shipping Corporation (PISC) applied for and was granted by petitioner National Investment and Development Corporation (NIDC) guaranty accommodations. Two of the three guaranty accommodations were in favour of petitioner PNB to finance the acquisition of 5 vessels. As security for theses guaranty accommodations, PISC executed in favour of petitioners chattel mortgage documents wherein the 7 vessels purchased were used as security. Meanwhile, on March 12, 1979, PISC entered into a Contract Agreement with Hong Kong United Dockyards for the repair and conversion of the vessel M/V Asean Liberty (one of the 7 vessels purchased) at a contract price of HK$2,200,000.00. On May 28, 1979, the Central Bank of the Philippines authorized PISC to open with private respondent China Banking Corporation (China Bank) a standby letter of credit for US$545,000.00 in favour of Citibank, N.A. (Citibank) to cover the repair and partial conversion of the vessel M/V Asean Liberty. China Bank issued the irrevocable Standby Letter of Credit. On September 17, 1979, a Promissory note for US$545,000.00 was executed by PISC in favour of Citibank pursuant to the Loan Agreement for US$545,000.00 between PISC, as borrower, and Citibank, as lender. Upon failure of PISC to fulfil its obligations under the said promissory note, Citibank sent to private respondent China Bank a letter drawing on the Letter of Credit. China Bank instructed its correspondent Irving Trust Co., by cable, to pay to Citibank the amount of US$242,225.00. On May 10, 1983, for failure of PISC to settle its obligations in the amount of US$64,789,470.96, petitioner PNB conducted, thru the Sheriff’s Office, an auction sale of the mortgaged vessels, except for the vessel M/V Asean
Objective. Petitioner NIDC emerged as the highest bidder in these auctions. PISC instituted before the RTC of Makati, a civil case against petitioners for the annulment of the foreclosure and auction sale of its vessels and damages. The RTC dismissed the case and NIDC acquired the vessels. Complaints in intervention were filed by a number of companies, which included Lloyd’s and China Bank, for recovery upon maritime liens against the proceeds of the sale of the foreclosed vessels. The parties concerned, except for intervenors Lloyd’s and China Bank, eventually submitted a Compromise Agreement. Intervenor China Bank claims are predicated on (1) a China Bank Standy Letter of Credit in favour of Citibank, (2) a loan worth US$2.7M to reduce PISC’s overhead expenses, and (3) a China Bank commercial letter of credit to PISC in favour of Bank of America for the repair of the vessels. China Bank claimes are premised on the above being preferred maritime liens. NIDC rejects said claims as not being maritime lines, much less preferred maritime liens. The RTC ruled that the claim of private respondent CBC was not a preferred maritime line but was merely a loan extended to PISC by CBC. The CA however reversed. ISSUE (1) W/N China Bank’s claim for US$242,225.00 is in the nature of a maritime lien? YES (2) W/N China Bank’s maritime lien a preferred lien? YES RULING (1) The applicable law on the matter is Presidential Decree No. 1521, otherwise known as the Ship Mortgage Decreee of 1978, specifically Sections 17 and 21. Under these provisions, any person furnishing repairs, supplies, or other necessaries to a vessel on credit will have a maritime lien on the said vessel. Such maritime lien, if it arose prior to the recording of a preferred mortgage lien, shall have priority over the said mortgage lien.
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a maritime lien in favour of Hongkong United Dockyards Ltd. the latter’s debtor.” As applied in the instant case. those who provide credit to a master of a vessel for the purpose of discharging a maritime lien also acquire a lien over the said vessel. It was Citibank. It is the contention of China Bank that it ultimately acquired the maritime lien of Hongkong United Dockyards Ltd. (2) In the case at bench.” Otherwise. petitioners argue that the entirety of the documentary evidence of China Bank does not show that the latter actually paid off the maritime lienholder for the repair of M/V Asean Liberty as required by Section 21 of the Ship Mortgage Act of 1978. Ltd. as guarantor. over the vessel M/V Asean Liberty. by legal subrogation and thus acquired the maritime lien of the latter over the vessel M/V Asean Liberty. or of a person authorized by the owner of such vessel. which originally possessed a maritime lien over the vessel M/V Asian Liberty by virtue of its repair of the said vessel on credit. over the vessel M/V “Asean Liberty. provides that “any person furnishing repairs.M.” Under these doctrines. a person who extends credit for the purpose of discharging a maritime lien is not entitled to the said lien “where the funds were not furnished to the ship on the order of the master and there was no evidence that the money was actually used to pay debts secured by the lien.G. Abaño A. or of a person authorized by the owner has a maritime lien on the vessel which may be enforced by suit in rem. petitioners thus conclude that its lien is preferred as against China Bank’s maritime lien. was constituted. it is clear that China Bank’s claim is predicated on the payment it made to Citibank by virtue of the Irrevocable Letter of Credit it established in the latter’s favor. It was only upon the failure of PISC to fulfil its obligations under its promissory note to Citibank that China Bank was called upon by Citibank to exercise its duties under the Standby Letter of Credit.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty. or other necessaries. it becomes necessary to prove that the credit advanced by Citibank to PISC was actually utilized for the repair and conversion of the vessel M/V “Asean Liberty. was itself subrogated to all the rights of Citibank as against PISC. From the 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . “advances to discharge maritime liens create a lien on the vessel.” As held by the public respondent Court of Appeals. Likewise. 1983 when China Bank actually paid off the outstanding obligation of PISC to Citibank. The Federal Maritime Lien Act of the United States. The provisions of the contract agreement indubitably show that credit was given to the vessel M/V Asean Liberty by Hongkong United Dockyards ltd. the records are replete with documents that show that the proceeds of the loans were used for the repair and conversion of the vessel M/V “Asean Liberty. On this point. a jus in re. and as a result. the same must have arisen prior to the recording of the mortgage on September 25. 1979. towage or use of drydock or maritime railway. to any foreign or domestic vessel on the order of the owner of such vessel. China Bank.” Contrary to the assertions of petitioners. 1979 when the said mortgage was registered with the Philippine Coast Guard Headquarters.” It is clear that the amount used for the repair of the vessel M/V “Asean Liberty” was advanced by Citibank and was utilized for the purpose of paying off the original maritime lienor. 1979. in order for the maritime lien of China Bank to be preferred over the mortgage lien of petitioners. which advanced the money to PISC. Ltd. In short. In the instant case. As such. China Bank was a guarantor of the loan extended by Citibank to PISC. supplies. It is the contention of petitioners that China Bank’s maritime lien under its Standby Letter of Credit arose only on March 30. a maritime lien “constitutes a present right of property in the ship. to be afterward enforced in admiralty by process in rem. In the documentary evidence presented by China Bank. and one advancing money to discharge a valid lien gets a lien of equal dignity with the one discharged. it was Hongkong United Dockyards Ltd. Citibank could not have acquired the maritime lien of Hongkong United Dockyards. petitioners’ mortgage lien arose on September 25. It is the holding of the appellate court that China Bank stepped into the shoes of Hongkong United Dockyards Ltd. Considering that its mortgage lien arose on September 25.+D. Hongkong United Dockyards. like our Ship Mortgage Decree of 1978.
jointly and severally. and when carried into effect by legal process. the finding of the CA that the collision took place within the lane of the Scout car was supported by other conclusive evidence. Thus. it remains a possibility that not all skid marks were washed away. Camarines Norte.G. He was also only 19-years old at the time of the incident and did not have a driver's license.M. is inadmissible as evidence because it was prepared the day after the incident and the alleged "telltale" skid marks and other details had already been obliterated by the heavy downpour which lasted for at least an hour after the accident ISSUE W/N there was enough proof to show liability of the petitioners – YES RULING While it may be accepted that some of the skid marks may have been erased by the "heavy downpour" on or about the time of the accident. Petitioner’s Contention: It was Abcede.+D. made repairs on the said vessel on credit. All its ten occupants.00 for the purpose of paying off PISC’s debt to Hongkong United Dockyards. usurped a portion of the lane occupied by the Scout car before hitting it on its left side. As such. in the absence of evidence to the contrary. any suspicions that the police investigator just invented the skid marks indicated in his report. it was actually enforcing a privilege that attached to the ship as early as March 12. Abaño A. 1979. the impact due to the force exerted by a heavier and bigger passenger bus on the smaller and lighter Scout car. which included four children were injured. the private respondents filed the instant action for damages based on quasi-delict. Also. Ltd. Elena.. TC rendered judgment against petitioners. MANUEL vs.” a maritime lien had already attached to the said vessel. 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . moment the claim or privilege attaches. which left Manila for Camarines Norte with respondent Fernando Abcede.. Also. heavily damaged the latter and threw it against the guard railing.86 in damages to respondents. Due to the impact. There was a drizzle at about 4:10 P. the amount of P49. a trail of broken glass which was scattered along the car's side of the road. it is inchoate. the date of the contract for the repair and conversion of M/V “Asean Liberty. The bus was owned by petitioner Emiliano Manuel. which was then negotiating the zigzag road of Bo.M. 1979. was hit on its left side by a bus. Sta. the fact that the Scout car was found after the impact at rest against the guard railing shows that it must have been hit and thrown backwards by the bus. 1979. Were it not for the railing. The strong presumption of regularity in the performance of official duty erases. seven of the victims sustained serious physical injuries Manuel. the driver of the bus. the maritime lien over the vessel M/V “Asean Liberty” arose or was constituted at the time Hongkong United Drydocks. as early as March 12. it acquired the existing maritime lien over the vessel. The court ordered them to pay. As such. the Scout car would have fallen into a deep ravine. The physical evidence do not show that the Superlines Bus while traveling at high speed. whereas the bus lane was entirely clear of debris Furthermore. CA affirmed the decision. the said maritime lien has priority over the said mortgage lien. when the Scout car. the Scout car was thrown backwards against a protective railing.” In the case at bench.954. was prosecuted for multiple physical injuries through reckless imprudence. Ltd. As he could not be found after he ceased reporting for work a few days following the incident. when private respondent CBC chose to exercise its right to the maritime lien during the proceedings in the trial court. When Citibank advanced the amount of US$242. "Indeed. as the driver of the vehicle. Jr.225. COURT OF APPEALS FACTS Private respondents were passengers of an International Harvester Scout Car (Scout Car) owned by respondent Ramos. On collision.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty. Sr. who was at fault. driver of the Scout car. the sketch made by the police investigator showing the skid marks of the bus. it relates back to the period when it first attached. The maritime lien of private respondent CBC thus arose prior in time to the recording of petitioners’ mortgage on September 25. Paraiso. by a proceeding in rem.
VILLANUEVA vs. Linda Gonzales declared that her presence at the scene of the accident was upon the request of the actual owner of the Mitsubishi Lancer (PHK 201 ’91) for whom she had been working as agent/seller. Pascua recommended the filing of information for reckless imprudence resulting to damage to property and physical injuries. The principle upon which this doctrine is based is that in dealing with vehicles registered under the Public Service Law. a green Mitsubishi Lancer with plate No. impleading Auto Palace Car Exchange as commercial agent and/or buyer-seller and second. Priscilla Domingo’s silver Lancer car with Plate No. Patrocinio N. Jepte. Manila Assistant City Prosecutor Oscar A. DOMINGO FACTS On 22 October 1991 at about 9:45 in the evening. all the defendants filed separate answers to the 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . Ocfemia was driving with expired license and positive for alcoholic breath. Per Traffic Accident Report prepared by Traffic Investigator Pfc. On the other hand.M. however. the trial court found petitioner liable and ordered him to pay respondent actual. How would the public or third persons know against whom to enforce their rights in case of subsequent transfers of the vehicles? We do not imply by his doctrine. the second hitting another parked car in front of it. the public has the right to assume or presume that the registered owner is the actual owner thereof.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty.+D. ISSUE May the registered owner of a motor vehicle be held liable for damages arising from a vehicular accident involving his motor vehicle while being operated by the employee of its buyer without the latter’s consent and knowledge? YES RULING We have consistently ruled that the registered owner of any vehicle is directly and primarily responsible to the public and third persons while it is being operated. Except for Ocfemia. Jr. could not simply exempt petitioner's liability because they were parties at fault for encroaching on the Scout car's lane Be that as it may. As a result of the impact. it could not be held subsidiary liable as employer of Ocfemia because the latter was offduty as utility employee at the time of the incident. who was not duly licensed. Moreover. Nostradamus Villanueva claimed that he was no longer the owner of the car at the time of the mishap because it was swapped with a Pajero owned by Albert Jaucian/Auto Palace Car Exchange.G. For her part. following a green traffic light. The original complaint was amended twice: first. NDW 781 ’91 then driven by Leandro Luis R. Hence. was the one driving the Scout car at the time of the accident. Domingo was cruising along the middle lane of South Superhighway at moderate speed from north to south. this Court has followed a well-entrenched principle that the factual findings of the Court of Appeals are normally given great weight. more so when the findings tally with the findings of the trial court and are supported by the evidence complaint. The evidence with respect to the issue that Fernando Abcede. After trial. NDW 781 ’91 hit two (2) parked vehicles at the roadside. Neither was Ocfemia performing a duty related to his employment. Acido. The rationale behind such doctrine was explained way back in 1957 in Erezo vs. impleading Albert Jaucian as principal defendant doing business under the name and style of Auto Palace Car Exchange. PHK 201 ’91 driven by Renato Dela Cruz Ocfemia darted from Vito Cruz Street towards the South Superhighway directly into the path of NDW 781 ’91 thereby hitting and bumping its left front portion. Suddenly. Abaño A. Auto Palace Car Exchange represented by Albert Jaucian claimed that he was not the registered owner of the car. for it would be difficult for the public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required to prove who the actual owner is. moral and exemplary damages plus appearance and attorney’s fees. that the registered owner may not recover whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold.
that is. The main aim of motor vehicle registration is to identify the owner so that if any accident happens. against the vendee or transferee of the vehicle. does not relieve him directly of the responsibility that the law fixes and places upon him as an incident or consequence of registration.+D. so inconvenient or prejudicial to the public. responsibility therefore can be fixed on a definite individual. To require the driver of the vehicle to be authorized by the actual owner before the registered owner can be held accountable is to defeat the very purpose why motor vehicle legislations are enacted in the first place. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. or to one who possesses no property with which to respond financially for the damage or injury done. A registered owner who has already sold or transferred a vehicle has the recourse to a third-party complaint. The inconvenience of the suit is no justification for relieving him of liability. because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties (Chinchilla vs. or with very scant means of identification. Were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is. by collusion with others or otherwise. the registered owner. 3992. to escape said responsibility and transfer the same to an indefinite person. David. that there was no ordinance or law authorizing such removal.The parties also agreed to submit the case for 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . with its aim and policy in mind. Act No. Rafael and Verdaguer. The members of the Court are in agreement that the defendant-appellant should be held liable to plaintiffappellee for the injuries occasioned to the latter because of the negligence of the driver. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. that the motor vehicle registration is primarily ordained. in the same action brought against him to recover for the damage or injury done.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty. It is to forestall these circumstances. as in land registration cases.G. The law. more importantly. METRO TRAFFIC vs. injury or death caused by the operation of the vehicle in the streets and highways. the registered owner should not be allowed to prove the contrary to the prejudice of the person injured. Instances are numerous where vehicles running on public highways caused accidents or injuries to pedestrians or other vehicles without positive identification of the owner or drivers. should primarily be responsible to the public or to third persons for injuries caused the latter while the vehicle is being driven on the highways or streets. but to permit the use and operation of the vehicle upon any public highway (section 5 [a]. even if the defendant-appellant was no longer the owner of the vehicle at the time of the damage because he had previously sold it to another. He questioned the petitioner's act on the ground not only that the car was not illegally parked but. it would be easy for him. to prove that a third person or another has become the owner. or that any damage or injury is caused by the vehicle on the public highways. who claimed that the rear license plate. of his car was removed by the Metropolitan Traffic Command while the vehicle was parked on Escolta. Registration is required not to make said registration the operative act by which ownership in vehicles is transferred. even if not used for a public service. said inconvenience is the price he pays for failure to comply with the registration that the law demands and requires. Judge Gonong issued a temporary restraining order and the writ of preliminary injunction . so that he may thereby be relieved of the responsibility to the injured person. He asked that the practice be permanently enjoined and that in the meantime a temporary restraining order or a writ of preliminary injunction be issued. GONONG FACTS The original complaint was filed by Dante S. Abaño A. a lawyer. A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or damage. Under the same principle the registered owner of any vehicle. in the interest of the determination of persons responsible for damages or injuries caused on public highways. 888). 39 Phil. If the policy of the law is to be enforced and carried out.M. Whether the driver is authorized or not by the actual owner is irrelevant to determining the liability of the registered owner who the law holds primarily and directly responsible for any accident. as amended). assigned or conveyed the vehicle.
on November 21. streets or thoroughfares in Metropolitan Manila. For his purpose. and a revocation of the driver' license for the fifth offense: Provided. committed within a twelve-month period.00 for the second offense. resolution on the sole issue of whether there was a law or ordinance authorizing the removal of the license plates of illegally parked vehicles. reckoned from the date of birth of the licensee. Abaño A.00 for the third offense. and pertinently provides: Section 1. P50. remove and confiscate vehicle plates of motor vehicles illegally parked and unattended as in the case at bar. That the Metropolitan Manila Commission may impose higher penalties as it may deem proper for violations of its ordinances prohibiting or regulating the use of certain public roads. In case of traffic violations. was issued on November 28. streets and sidewalks.M.G. the Metropolitan Manila Commission or its representatives shall suspend or revoke such license or certificate. The Metropolitan Manila Commission shall have the power to impose fines and otherwise discipline drivers and operators of motor vehicles for violations of traffic laws. 2.+D. When the proper penalty to be imposed is suspension or revocation of driver's license or certificate of public convenience. the LOI had been repealed by PD 1605. The suspended or revoked driver's license or the report of suspension or revocation of the certificate of public convenience shall be sent to the Land Transportation Commission or the Board of Transportation. with the following pertinent provisions: Motor vehicles that stall on the streets and highways. LOI 43. 1. the defendant had not been able to point to any MMC rule or regulation or to any city ordinance to justify the questioned act. 1972." At any rate. ordinances. Judge Gonong held that LOI 43. xxx xxx xxx Section 5.00 for the first offense. Providing Penalties. For the second and subsequent offenses. also by President Marcos. 1978. the amount of fine imposed for the violation and an advice that he can make payment to the city or municipal treasurer where the violation was PD 1605 (Granting the Metropolitan Manila Commission Central Powers Related to Traffic Management. a one-year suspension of driver's license for the fourth offense. Moreover. P20. For the first offense the stalled or illegally parked vehicle shall be removed. as the case may be. for their records update. the powers of the Land 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . which the defendant had invoked. user or claimant. towed and impounded at the expense of the owner. Violations of traffic laws. xxx xxx xxx Section 3. shall immediately be removed by their owners/users. the registry plates of the vehicles shall be confiscated and the owner's certificate of registration cancelled. rules and regulations. It merely authorizes the removal of said vehicles when they are obstacles to free passage or continued flow of traffic on streets and highways. rules and regulations in Metropolitan Manila in such amounts and under such penalties as are herein prescribed. did not empower it "to detach. otherwise said vehicles shall be dealt with and disposed in the manner stated hereunder. shall subject the violator to graduated fines as follows: P10. and for Other Purposes) was issued.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty. Transportation Commission and the Board of Transportation under existing laws over such violations and punishment thereof are hereby transferred to the Metropolitan Manila Commission. ordinances. entitled Measures to Effect a Continuing Flow of Transportation on Streets and Highways. he said. the driver's license shall not be confiscated but the erring driver shall be immediately issued a traffic citation ticket prescribed by the Metropolitan Manila Commission which shall state the violation committed.
city or municipal court. 2. A careful reading of the above decree will show that removal and confiscation of the license plate of any illegally parked vehicle is not among the specified penalties.G. i. RULING 1." It would appear that what the LOI punishes is not a traffic violation but a traffic obstruction. A violation imports an intentional breach or disregard of a rule. all laws. Yes. as where a driver leaves his vehicle in a no-parking area against a known and usually visible prohibition.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty. The petitionerits insists that LOI 43 remains in force despite the issuance of PD 1605. LOI 43 does not punish illegal parking per se but parking of stalled vehicles. ISSUE 1. As it has not been shown that the private respondent's motor vehicle had stalled because of an engine defect or some other accidental cause and. In fact. the penalties being limited in the decree to imposition of fine and suspension or revocation of driver's licenses or certificates of public convenience. his driver's license shall not be renewed until he has paid the fine and corresponding surcharges. committed or to the Philippine National Bank or Philippine Veterans Bank or their branches within seven days from the date of issuance of the citation ticket.e. No.. It is not covered by LOI 43 thus subject to a different penalty. The obstruction is not deliberate. the Metropolitan Manila Commission or the law enforcement agency concerned shall endorse the case to the proper fiscal for appropriate proceedings preparatory to the filing of the case with the competent traffic court. 2. Moreover. including illegal parking. If the offender fails to pay the fine imposed within the period herein prescribed. them. Whether or not private respondent’s license can be confiscated.M. but only because it has stalled. etc. Insofar as the Metropolitan Manila area is concerned. lack of gasoline. It contends that there is no inconsistency between the two measures because the former deals with illegally parked vehicles anywhere in the Philippines whereas the latter deals with the regulation of the flow of traffic in the Metro Manila area only.+D. Contrary to the common impression. confiscation of the license plate cannot be justified under LOI 43. although the Metropolitan Manila Commission is authorized by the decree to "otherwise discipline" and "impose higher penalties" on traffic violators. no less importantly. or other similar cause. decrees. He claims that removal and confiscation of the license plate without notice and hearing violates due process because such license plate is a form of property protected by the Bill of Rights against unlawful deprivation. punctured tires. or parts thereof inconsistent herewith are hereby repealed or modified accordingly. The vehicle is deemed illegally parked because it obstructs the flow of traffic. ordinances. those that involuntarily stop on the road due to some unexpected trouble such as engine defect. Whether or not LOI 43 is valid. whatever sanctions it may impose must be "in such amounts and under such penalties as are herein prescribed. even the petitioner recognizes that "there is a world of difference between a stalled vehicle and an illegally parked and unattended one" and suggests a different treatment for either. He stresses that removal and confiscation of the license plates of illegally parked vehicles is not one of 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . which specifies all the sanctions available against the various traffic violations. including temporary rest. that it had stalled on the road for a second or subsequent time. "The first means one which stopped unnecessarily or broke down while the second means one which stopped to accomplish something. (Emphasis supplied). Abaño A. rules and regulations. orders. xxx xxx xxx Section 8. which is an altogether different offense. The Court holds that LOI 43 is valid but may be applied only against motor vehicles that have stalled in the public streets due to some involuntary cause and not those that have been intentionally parked in violation of the traffic laws. Private respondent argues that LOI 43 has been repealed by PD 1605. If at the time a driver renews his driver's license and records show that he has an unpaid fine.
who admitted that immediately before the collision and after he rounded a curve on the highway. and Mallari Sr. based on the sketch and spot report of the police authorities which were not disputed by petitioners.M. overtook the Fiera while negotiating a curve in the highway. Restrictions on overtaking and passing. ISSUE Was the Court of Appeals correct in reversing the decision of the TC? Yes (petitioners contend there was no evidence showing their negligence) Is the owner of the jeepney liable? Yes RULING The Court of Appeals correctly found. and Alfredo Mallari Jr. The Court of Appeals ordered petitioners Mallari Jr. the insurance company and Felix Angeles to pay jointly and severally Claudia G. Netherlands Insurance Company. And neither can that sanction be sustained under PD 1605. Petitioner Mallari Jr. (BULLETIN. It absolved from any liability respondent BULLETIN. he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. The sketch of the accident showed that the collision occurred after Mallari Jr. MALLARI vs.V. the trial court ordered BULLETIN. he saw the van of respondent BULLETIN coming from the opposite direction. and Alfredo Mallari Jr. its driver Felix Angeles. The impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries. and the N. Before he passed by the Fiera." let alone the license plate of the motor vehicle. otherwise known as The Land Transportation and Traffic Code which provides: Sec. . pars. (a) and (b). This act of overtaking was in clear violation of Sec. (even) the driver's license shall not be confiscated. testified that he went to the left lane of the highway and overtook a Fiera which had stopped on the right lane. Reyes. Bataan. considering the fact that the left front portion of the delivery truck driven by Felix Angeles hit and bumped the left rear portion of the passenger jeepney driven by Alfredo Mallari Jr. If at all. driver of the Bulletin delivery van. Felix Angeles and N. The appellate court ruled that the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. collided with the delivery van of respondent Bulletin Publishing Corp. It was driven by one Felix Angeles. filed a complaint for damages with the Regional Trial Court of Olongapo City against Alfredo Mallari Sr. the widow of Israel M. Netherlands Insurance Company. 41.V. for brevity) along the National Highway in Barangay San Pablo. at about 5:00 o'clock in the morning. Reyes. which clearly provides that "in case of traffic violations. and also against BULLETIN. Hence. COURT OF APPEALS FACTS On 14 October 1987. trial court found that the proximate cause of the collision was the negligence of Felix Angeles.G. the passenger jeepney driven by petitioner Alfredo Mallari Jr. 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . Claudia G. the private respondent may be held liable for illegal parking only and subjected to any of the specific penalties mentioned in Section 3 of the decree. overtook a vehicle in front of it while traversing a curve on the highway.. unless such left side is clearly visible and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety. Abaño A. Reyes. Reyes. of RA 4136 as amended. to compensate Claudia G. 41. Dinalupihan. and owned by his copetitioner Alfredo Mallari Sr. that the collision occurred immediately after petitioner Mallari Jr.(a) The driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty.+D. It also dismissed the complaint against the other defendants Alfredo Mallari Sr.
Sometime in January. and any injury or death that might be suffered by its passengers is right away attributable to the fault or negligence of the carrier. who admittedly was the owner of the passenger jeepney engaged as a common carrier. Under Art. Incorporated. 1759 of the same Code. COURT OF APPEALS *SEE COGSA DIGESTS.G. petitioner Mallari Jr. already saw that the BULLETIN delivery van was coming from the opposite direction and failing to consider the speed thereof since it was still dark at 5:00 o'clock in the morning mindlessly occupied the left lane and overtook two (2) vehicles in front of it at a curve in the highway. Abaño A. a common carrier is presumed to have been at fault or to have acted negligently. for the extension of the validity of their tickets. Further. pursuant to Art. Teresita enlisted the help of Lee Ella Manager of the Philippine Travel Bureau. who recklessly operated and drove his jeepney in a lane where overtaking was not allowed by traffic rules. Ella sent the tickets to Cesar Rillo. by the contract of carriage. The GANAS were booked for the Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May 1970. considering the fact that in an action based on contract of carriage. was the sole negligence of the driver of the passenger jeepney. Clearly. 1971. The tickets were returned to Ella who was informed that extension was not possible unless the fare differentials resulting from the increase in fares triggered by an 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . 2185 of the Civil Code.. 1756 of the Civil Code. unless there is proof to the contrary. in case of death or injuries to passengers. nine (9) "open-dated" air passage tickets for the Manila/Osaka/Tokyo/Manila route.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty. (b) The driver of a vehicle shall not overtake or pass another vehicle proceeding in the same direction when approaching the crest of a grade. numbering nine (the GANAS). COURT OF APPEALS FACTS On 1970.+D. petitioner Alfredo Mallari Jr. purchased from AIR FRANCE through Imperial Travels. Gana and his family. the date written under the printed words "Non valuable apres de (meaning. AMERICAN AIRLINES vs. the carrier jeepney owned by Mallari Sr. 1755 of the Civil Code. "not valid after the"). The aforesaid tickets were valid until 8 May 1971. the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible for the payment of damages sought by the passenger. Negligence and recklessness of the driver of the passenger jeepney is binding against petitioner Mallari Sr. unless it proves that it observed extraordinary diligence.M. Clara Lumber Company where Jose Gana was the Director and Treasurer. a common carrier is bound to carry the passengers safely as far as human care and foresight can provide using the utmost diligence of very cautious persons with due regard for all the circumstances. it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap he was violating a traffic regulation. Office Manager of AIR FRANCE. there is special necessity for keeping to the right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car approaching from the opposite direction comes into view. a Secretary of the Sta. Moreover. where the driver’s view along the highway is obstructed within a distance of five hundred feet ahead except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle: The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety. The GANAS did not depart on 8 May 1970. IT IS THERE AIR FRANCE vs. Clearly. and for the Tokyo/Manila return trip on AIR FRANCE Flight 187 on 22 May 1970. Under Art. it is liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees. By his own admission. a passenger of the jeepney.. Jose Gana sought the assistance of Teresita Manucdoc. nor upon a curve in the highway. which were due to expire on 8 May 1971. under Art. When a motor vehicle is approaching or rounding a curve. a duly authorized travel agent. assumed the express obligation to transport the passengers to their destination safely and to observe extraordinary diligence with due regard for all the circumstances. the proximate cause of the collision resulting in the death of Israel Reyes. the late Jose G.
Teresita requested travel agent Ella to arrange the revalidation of the tickets. ISSUE Whether or not AIR FRANCE is liable to the GANAS for breach of Contract of Carriage? RULING NO. sticker and the other an SAS (Scandinavian Airways System) sticker. 1971. the passenger must purchase a new ticket for the remaining portion of the journey" From the foregoing rules. through their relatives.TRANSPORTATION DIGEST – SPECIAL LAWS IN TRANSPORTATION (B) TRANSPORTATION – Atty. Notwithstanding the warnings. it imposed additional charges representing fare differentials. 3B Digest Group SY 09-10 Ad Deum Per Excellentia Page10 . "The passenger must undertake the final portion of his journey by departing from the last point at which he has made a voluntary stop before the expiry of this limit. To complete the trip. when upon sale of the new tickets. the tickets would no longer be valid for the rest of their trip because the tickets would then have expired on 8 May 1971. nor when it required the GANAS to buy new tickets or have their tickets re-issued for the Tokyo/Manila segment of their trip. Teresita replied that it will be up to the GANAS to make the arrangements. A ticket can no longer be used for travel if its validity has expired before the passenger completes his trip. However. as authorized by the Civil Aeronautics Board (CAB) in April. Ella gave the same negative answer and warned her that although the tickets could be used by the GANAS if they left on 7 May 1971. Ella then returned the tickets to Teresita and informed her of the impossibility of extension.M. it was motivated by self-interest or unjust enrichment considering that an increase of fares took effect. Japan. Ella on his own. Japan Airlines refused to honor the tickets because of their expiration.+D. Neither can it be said that. They were able to return only after pre-payment in Manila. the GANAS had scheduled their departure on 7 May 1971 or one day before the expiry date. the GANAS departed from Manila in the afternoon of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka. it is clear that AIR FRANCE cannot be faulted for breach of contract when it dishonored the tickets of the GANAS after 8 May 1971 since those tickets expired on said date. With that assurance.G. They finally flew back to Manila on separate Air France Frights on 19 May 1971 for Jose Gana and 26 May 1971 for the rest of the family. In the morning of the very day of their scheduled departure on the first leg of their trip. Pursuant to tariff rules and regulations of the International Air Transportation Association (IATA). In the meantime. for the Osaka/Tokyo flight on 17 May 1971. an airplane ticket is valid for one year. increase of the exchange rate of the US dollar to the Philippine peso and the increased travel tax were first paid. attached to the tickets validating stickers for the Osaka/Tokyo flight. There is no question with respect to this leg of the trip. Abaño A. of the readjusted rates. That is the time allowed a passenger to begin and to complete his trip. one a JAL. They encountered the same difficulty with respect to their return trip to Manila as AIR FRANCE also refused to honor their tickets. and the GANAS had to purchase new tickets.
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