NOTE:

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you like it

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 Sheriffs Office,
an auction sale of the mortgaged vessels, except for the vessel M/V Asean

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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 Lloyds and China Bank, for recovery upon maritime liens against
the proceeds of the sale of the foreclosed vessels. The parties concerned,
except for intervenors Lloyds 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
PISCs 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 Banks claim for US$242,225.00 is in the nature of a
maritime lien? YES
(2) W/N China Banks 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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In the instant case, it was Hongkong United Dockyards Ltd. which

originally possessed a maritime lien over the vessel M/V Asian Liberty by
virtue of its repair of the said vessel on credit. The provisions of the
contract agreement indubitably show that credit was given to the vessel
M/V Asean Liberty by Hongkong United Dockyards ltd. and as a result, a
maritime lien in favour of Hongkong United Dockyards Ltd. was
constituted.
It is the contention of China Bank that it ultimately acquired the maritime
lien of Hongkong United Dockyards Ltd. over the vessel M/V Asean Liberty.
In the documentary evidence presented by China Bank, it is clear that
China Banks claim is predicated on the payment it made to Citibank by
virtue of the Irrevocable Letter of Credit it established in the latters favor.
In short, China Bank was a guarantor of the loan extended by Citibank to
PISC. It was Citibank, which advanced the money to PISC. 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.
It is the holding of the appellate court that China Bank stepped into the
shoes of Hongkong United Dockyards Ltd. by legal subrogation and thus
acquired the maritime lien of the latter over the vessel M/V Asean Liberty.
On this point, 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.
The Federal Maritime Lien Act of the United States, like our Ship Mortgage
Decree of 1978, provides that any person furnishing repairs, supplies,
towage or use of drydock or maritime railway, or other necessaries, to any
foreign or domestic vessel on the order of the owner of such vessel, or of a
person authorized by the owner of such vessel, or of a person authorized
by the owner has a maritime lien on the vessel which may be enforced by
suit in rem.
As held by the public respondent Court of Appeals, 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. Likewise, advances to

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discharge maritime liens create a lien on the vessel, and one advancing
money to discharge a valid lien gets a lien of equal dignity with the one
discharged.
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. As applied in the instant case, 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. Otherwise, Citibank
could not have acquired the maritime lien of Hongkong United Dockyards,
Ltd. over the vessel M/V Asean Liberty.
Contrary to the assertions of petitioners, 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. 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, Hongkong United Dockyards, Ltd.
China Bank, as guarantor, was itself subrogated to all the rights of Citibank
as against PISC, the latters debtor.
(2) In the case at bench, petitioners mortgage lien arose on September
25, 1979 when the said mortgage was registered with the Philippine Coast
Guard Headquarters. As such, in order for the maritime lien of China Bank
to be preferred over the mortgage lien of petitioners, the same must have
arisen prior to the recording of the mortgage on September 25, 1979.
It is the contention of petitioners that China Banks maritime lien under its
Standby Letter of Credit arose only on March 30, 1983 when China Bank
actually paid off the outstanding obligation of PISC to Citibank.
Considering that its mortgage lien arose on September 25, 1979,
petitioners thus conclude that its lien is preferred as against China Banks
maritime lien.

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a maritime lien constitutes a present right of property in the ship, a jus in

re, to be afterward enforced in admiralty by process in rem. From the

moment the claim or privilege attaches, it is inchoate, and when carried

into effect by legal process, by a proceeding in rem, it relates back to the
period when it first attached.
In the case at bench, the maritime lien over the vessel M/V Asean
Liberty arose or was constituted at the time Hongkong United Drydocks,
Ltd. made repairs on the said vessel on credit. As such, as early as March
12, 1979, the date of the contract for the repair and conversion of M/V
Asean Liberty, a maritime lien had already attached to the said vessel.
When Citibank advanced the amount of US$242,225.00 for the purpose of
paying off PISCs debt to Hongkong United Dockyards, Ltd., it acquired the
existing maritime lien over the vessel. Thus, when private respondent CBC
chose to exercise its right to the maritime lien during the proceedings in
the trial court, it was actually enforcing a privilege that attached to the
ship as early as March 12, 1979.
The maritime lien of private respondent CBC thus arose prior in time to the
recording of petitioners mortgage on September 25, 1979. As such, the
said maritime lien has priority over the said mortgage lien.
MANUEL vs. COURT OF APPEALS
FACTS
Private respondents were passengers of an International Harvester Scout
Car (Scout Car) owned by respondent Ramos, which left Manila for
Camarines Norte with respondent Fernando Abcede, Sr. as the driver of the
vehicle.
There was a drizzle at about 4:10 P.M. when the Scout car, which was then
negotiating the zigzag road of Bo. Paraiso, Sta. Elena, Camarines Norte,
was hit on its left side by a bus. The bus was owned by petitioner Emiliano
Manuel. Due to the impact, the Scout car was thrown backwards against a
protective railing. Were it not for the railing, the Scout car would have
fallen into a deep ravine. All its ten occupants, which included four children
were injured, seven of the victims sustained serious physical injuries
Manuel, the driver of the bus, was prosecuted for multiple physical injuries
through reckless imprudence. As he could not be found after he ceased

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reporting for work a few days following the incident, the private
respondents filed the instant action for damages based on quasi-delict.
TC rendered judgment against petitioners. The court ordered them to pay,
jointly and severally, the amount of P49,954.86 in damages to
respondents. CA affirmed the decision.
Petitioners Contention: It was Abcede, Jr., driver of the Scout car, who
was at fault. He was also only 19-years old at the time of the incident and
did not have a driver's license. Also, the sketch made by the police
investigator showing the skid marks of the bus, 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, it
remains a possibility that not all skid marks were washed away. The strong
presumption of regularity in the performance of official duty erases, in the
absence of evidence to the contrary, any suspicions that the police
investigator just invented the skid marks indicated in his report. Also, the
finding of the CA that the collision took place within the lane of the Scout
car was supported by other conclusive evidence. "Indeed, a trail of broken
glass which was scattered along the car's side of the road, whereas the
bus lane was entirely clear of debris
Furthermore, 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. The physical evidence do not show that the
Superlines Bus while traveling at high speed, usurped a portion of the lane
occupied by the Scout car before hitting it on its left side. On collision, the
impact due to the force exerted by a heavier and bigger passenger bus on
the smaller and lighter Scout car, heavily damaged the latter and threw it
against the guard railing.

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The evidence with respect to the issue that Fernando Abcede, Jr. who was
not duly licensed, was the one driving the Scout car at the time of the
accident, 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, 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

VILLANUEVA vs. DOMINGO

FACTS
On 22 October 1991 at about 9:45 in the evening, following a green traffic
light, Priscilla Domingos silver Lancer car with Plate No. NDW 781 91
then driven by Leandro Luis R. Domingo was cruising along the middle
lane of South Superhighway at moderate speed from north to south.
Suddenly, a green Mitsubishi Lancer with plate No. 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. As a result of the impact, NDW 781 91 hit
two (2) parked vehicles at the roadside, the second hitting another parked
car in front of it.
Per Traffic Accident Report prepared by Traffic Investigator Pfc. Patrocinio
N. Acido, Ocfemia was driving with expired license and positive for
alcoholic breath. Hence, Manila Assistant City Prosecutor Oscar A. Pascua
recommended the filing of information for reckless imprudence resulting to
damage to property and physical injuries.
The original complaint was amended twice: first, impleading Auto Palace
Car Exchange as commercial agent and/or buyer-seller and second,
impleading Albert Jaucian as principal defendant doing business under the
name and style of Auto Palace Car Exchange.
Except for Ocfemia, all the defendants filed separate answers to the

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complaint. 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. For her part,
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. On the other
hand, Auto Palace Car Exchange represented by Albert Jaucian claimed
that he was not the registered owner of the car. Moreover, 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. Neither was Ocfemia
performing a duty related to his employment.
After trial, the trial court found petitioner liable and ordered him to pay
respondent actual, moral and exemplary damages plus appearance and
attorneys fees.
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 latters 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. The rationale behind such doctrine was explained way
back in 1957 in Erezo vs. Jepte.
The principle upon which this doctrine is based is that in dealing with
vehicles registered under the Public Service Law, the public has the right
to assume or presume that the registered owner is the actual owner
thereof, 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. 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, however, 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,

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assigned or conveyed the vehicle.

Under the same principle the registered owner of any vehicle, even if not
used for a public service, 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. 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, 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.
Registration is required not to make said registration the operative act by
which ownership in vehicles is transferred, as in land registration cases,
because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties (Chinchilla vs.
Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of
the vehicle upon any public highway (section 5 [a], Act No. 3992, as
amended). The main aim of motor vehicle registration is to identify the
owner so that if any accident happens, or that any damage or injury is
caused by the vehicle on the public highways, responsibility therefore can
be fixed on a definite individual, the registered owner. 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, or with very scant means of identification. It is to
forestall these circumstances, so inconvenient or prejudicial to the public,
that the motor vehicle registration is primarily ordained, in the interest of
the determination of persons responsible for damages or injuries caused
on public highways.
The law, with its aim and policy in mind, does not relieve him directly of
the responsibility that the law fixes and places upon him as an incident or
consequence of registration. Were a registered owner allowed to evade
responsibility by proving who the supposed transferee or owner is, it would
be easy for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or
injury done. A victim of recklessness on the public highways is usually
without means to discover or identify the person actually causing the

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injury or damage. He has no means other than by a recourse to the

registration in the Motor Vehicles Office to determine who is the owner.
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. If the policy of the law is to be enforced and
carried out, the registered owner should not be allowed to prove the
contrary to the prejudice of the person injured, that is, to prove that a
third person or another has become the owner, so that he may thereby be
relieved of the responsibility to the injured person.
A registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against
him to recover for the damage or injury done, against the vendee or
transferee of the vehicle. The inconvenience of the suit is no justification
for relieving him of liability; said inconvenience is the price he pays for
failure to comply with the registration that the law demands and requires.
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, injury or
death caused by the operation of the vehicle in the streets and highways.
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.
METRO TRAFFIC vs. GONONG
FACTS
The original complaint was filed by Dante S. David, a lawyer, who claimed
that the rear license plate, of his car was removed by the Metropolitan
Traffic Command while the vehicle was parked on Escolta. He questioned
the petitioner's act on the ground not only that the car was not illegally
parked but, more importantly, that there was no ordinance or law
authorizing such removal. 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.

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Judge Gonong issued a temporary restraining order and the writ of

preliminary injunction .The parties also agreed to submit the case for

resolution on the sole issue of whether there was a law or ordinance

authorizing the removal of the license plates of illegally parked vehicles.
Judge Gonong held that LOI 43, which the defendant had invoked, did not
empower it "to detach, remove and confiscate vehicle plates of motor
vehicles illegally parked and unattended as in the case at bar. It merely
authorizes the removal of said vehicles when they are obstacles to free
passage or continued flow of traffic on streets and highways." At any rate,
he said, the LOI had been repealed by PD 1605. Moreover, the defendant
had not been able to point to any MMC rule or regulation or to any city
ordinance to justify the questioned act.
LOI 43, entitled Measures to Effect a Continuing Flow of Transportation on
Streets and Highways, was issued on November 28, 1972, with the
following pertinent provisions:
Motor vehicles that stall on the streets and highways,
streets and sidewalks, shall immediately be removed by
their owners/users; otherwise said vehicles shall be dealt
with and disposed in the manner stated hereunder;
1. For the first offense the stalled or illegally parked
vehicle shall be removed, towed and impounded at the
expense of the owner, user or claimant;
2.

For the second and subsequent offenses, the registry

plates of the vehicles shall be confiscated and the
owner's certificate of registration cancelled.

PD 1605 (Granting the Metropolitan Manila Commission Central Powers

Related to Traffic Management, Providing Penalties, and for Other
Purposes) was issued, also by President Marcos, on November 21, 1978,
and pertinently provides:
Section 1. 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, ordinances, rules and regulations in Metropolitan
Manila in such amounts and under such penalties as are
herein prescribed. For his purpose, the powers of the Land

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Transportation
Commission
and
the
Board
of
Transportation under existing laws over such violations and
punishment thereof are hereby transferred to the
Metropolitan Manila Commission. When the proper penalty
to be imposed is suspension or revocation of driver's
license or certificate of public convenience, the
Metropolitan Manila Commission or its representatives shall
suspend or revoke such license or certificate. 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, as the case
may be, for their records update.
xxx xxx xxx
Section 3. Violations of traffic laws, ordinances, rules and
regulations, committed within a twelve-month period,
reckoned from the date of birth of the licensee, shall
subject the violator to graduated fines as follows: P10.00
for the first offense, P20.00 for the second offense, P50.00
for the third offense, a one-year suspension of driver's
license for the fourth offense, and a revocation of the
driver' license for the fifth offense: Provided, 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, streets or thoroughfares in Metropolitan
Manila.
xxx xxx xxx
Section 5. In case of traffic violations, 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, 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

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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.
If the offender fails to pay the fine imposed within the
period herein prescribed, 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, city or municipal court.
If at the time a driver renews his driver's license and
records show that he has an unpaid fine, his driver's
license shall not be renewed until he has paid the fine and
corresponding surcharges.
xxx xxx xxx
Section 8. Insofar as the Metropolitan Manila area is
concerned, all laws, decrees, orders, ordinances, rules and
regulations, or parts thereof inconsistent herewith are
hereby repealed or modified accordingly. (Emphasis
supplied).

ISSUE
1. Whether or not LOI 43 is valid.
2. Whether or not private respondents license can be confiscated.
RULING
1. Yes. The petitionerits insists that LOI 43 remains in force despite the
issuance of PD 1605. 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.
Private respondent argues that LOI 43 has been repealed by PD 1605,
which specifies all the sanctions available against the various traffic
violations, including illegal parking. He stresses that removal and
confiscation of the license plates of illegally parked vehicles is not one of

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them, the penalties being limited in the decree to imposition of fine and
suspension or revocation of driver's licenses or certificates of public
convenience, etc. 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.
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. 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. Moreover, although the Metropolitan Manila
Commission is authorized by the decree to "otherwise discipline" and
"impose higher penalties" on traffic violators, whatever sanctions it may
impose must be "in such amounts and under such penalties as are herein
prescribed."
It would appear that what the LOI punishes is not a traffic violation but a
traffic obstruction, which is an altogether different offense. A violation
imports an intentional breach or disregard of a rule, as where a driver
leaves his vehicle in a no-parking area against a known and usually visible
prohibition. Contrary to the common impression, LOI 43 does not punish
illegal parking per se but parking of stalled vehicles, i.e., those that
involuntarily stop on the road due to some unexpected trouble such as
engine defect, lack of gasoline, punctured tires, or other similar cause. The
vehicle is deemed illegally parked because it obstructs the flow of traffic,
but only because it has stalled. The obstruction is not deliberate. In fact,
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. "The first means one which stopped
unnecessarily or broke down while the second means one which stopped to
accomplish something, including temporary rest.
2. No. It is not covered by LOI 43 thus subject to a different penalty. 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, no
less importantly, that it had stalled on the road for a second or subsequent
time, confiscation of the license plate cannot be justified under LOI 43.

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And neither can that sanction be sustained under PD 1605, which clearly
provides that "in case of traffic violations, (even) the driver's license shall
not be confiscated," let alone the license plate of the motor vehicle. If at
all, 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.
MALLARI vs. COURT OF APPEALS
FACTS
On 14 October 1987, at about 5:00 o'clock in the morning, the passenger
jeepney driven by petitioner Alfredo Mallari Jr. and owned by his copetitioner Alfredo Mallari Sr. collided with the delivery van of respondent
Bulletin Publishing Corp. (BULLETIN, for brevity) along the National
Highway in Barangay San Pablo, Dinalupihan, Bataan.
Petitioner Mallari Jr. testified that he went to the left lane of the highway
and overtook a Fiera which had stopped on the right lane. Before he
passed by the Fiera, he saw the van of respondent BULLETIN coming from
the opposite direction.
It was driven by one Felix Angeles. The sketch of the accident showed that
the collision occurred after Mallari Jr. overtook the Fiera while negotiating a
curve in the highway.
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.
Claudia G. Reyes, the widow of Israel M. Reyes, filed a complaint for
damages with the Regional Trial Court of Olongapo City against Alfredo
Mallari Sr. and Alfredo Mallari Jr., and also against BULLETIN, its driver
Felix Angeles, and the N.V. Netherlands Insurance Company.
trial court found that the proximate cause of the collision was the
negligence of Felix Angeles, driver of the Bulletin delivery van, 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. Hence, the trial court ordered BULLETIN, the

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insurance company and Felix Angeles to pay jointly and severally Claudia
G. Reyes.
It also dismissed the complaint against the other defendants Alfredo
Mallari Sr. and Alfredo Mallari Jr.
The appellate court ruled that the collision was caused by the sole
negligence of petitioner Alfredo Mallari Jr. who admitted that immediately
before the collision and after he rounded a curve on the highway, 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 Court of Appeals
ordered petitioners Mallari Jr. and Mallari Sr. to compensate Claudia G.
Reyes.
It absolved from any liability respondent BULLETIN, Felix Angeles and N.V.
Netherlands Insurance Company.
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, based on the sketch and spot report
of the police authorities which were not disputed by petitioners, that the
collision occurred immediately after petitioner Mallari Jr. overtook a vehicle
in front of it while traversing a curve on the highway. This act of overtaking
was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as
amended, otherwise known as The Land Transportation and Traffic Code
which provides:
Sec. 41. Restrictions on overtaking and passing. - (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, 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.

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(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, nor upon a curve in the
highway, where the drivers 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.
When a motor vehicle is approaching or rounding a curve, 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.M.+D.G.

TRANSPORTATION

the utmost diligence of very cautious persons with due regard for all the
circumstances. Moreover, under Art. 1756 of the Civil Code, in case of
death or injuries to passengers, a common carrier is presumed to have
been at fault or to have acted negligently, unless it proves that it observed
extraordinary diligence. Further, pursuant to Art. 1759 of the same Code,
it is liable for the death of or injuries to passengers through the negligence
or willful acts of the formers employees.
Clearly, by the contract of carriage, the carrier jeepney owned by Mallari
Sr. assumed the express obligation to transport the passengers to their
destination safely and to observe extraordinary diligence with due regard
for all the circumstances, and any injury or death that might be suffered
by its passengers is right away attributable to the fault or negligence of
the carrier.
AMERICAN AIRLINES vs. COURT OF APPEALS
*SEE COGSA DIGESTS, IT IS THERE

By his own admission, 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. Clearly, the proximate cause of the collision
resulting in the death of Israel Reyes, a passenger of the jeepney, was the
sole negligence of the driver of the passenger jeepney, petitioner Alfredo
Mallari Jr., who recklessly operated and drove his jeepney in a lane where
overtaking was not allowed by traffic rules. Under Art. 2185 of the Civil
Code, unless there is proof to the contrary, 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.

AIR FRANCE vs. COURT OF APPEALS

Negligence and recklessness of the driver of the passenger jeepney is

binding against petitioner Mallari Sr., who admittedly was the owner of the
passenger jeepney engaged as a common carrier, considering the fact that
in an action based on contract of carriage, 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.
Under Art. 1755 of the Civil Code, a common carrier is bound to carry the
passengers safely as far as human care and foresight can provide using

Sometime in January, 1971, Jose Gana sought the assistance of Teresita

Manucdoc, a Secretary of the Sta. Clara Lumber Company where Jose
Gana was the Director and Treasurer, for the extension of the validity of
their tickets, which were due to expire on 8 May 1971. Teresita enlisted
the help of Lee Ella Manager of the Philippine Travel Bureau, Ella sent the
tickets to Cesar Rillo, Office Manager of AIR FRANCE. 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

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FACTS
On 1970, the late Jose G. Gana and his family, numbering nine (the
GANAS), purchased from AIR FRANCE through Imperial Travels,
Incorporated, a duly authorized travel agent, nine (9) "open-dated" air
passage tickets for the Manila/Osaka/Tokyo/Manila route. The GANAS were
booked for the Manila/Osaka segment on AIR FRANCE Flight 184 for 8 May
1970, and for the Tokyo/Manila return trip on AIR FRANCE Flight 187 on
22 May 1970. The aforesaid tickets were valid until 8 May 1971, the date
written under the printed words "Non valuable apres de (meaning, "not
valid after the"). The GANAS did not depart on 8 May 1970.

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increase of the exchange rate of the US dollar to the Philippine peso and
the increased travel tax were first paid. Ella then returned the tickets to
Teresita and informed her of the impossibility of extension.
In the meantime, the GANAS had scheduled their departure on 7 May
1971 or one day before the expiry date. In the morning of the very day of
their scheduled departure on the first leg of their trip, Teresita requested
travel agent Ella to arrange the revalidation of the tickets. 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, the tickets would no longer
be valid for the rest of their trip because the tickets would then have
expired on 8 May 1971. Teresita replied that it will be up to the GANAS to
make the arrangements. With that assurance, Ella on his own, attached to
the tickets validating stickers for the Osaka/Tokyo flight, one a JAL. sticker
and the other an SAS (Scandinavian Airways System) sticker.
Notwithstanding the warnings, the GANAS departed from Manila in the
afternoon of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka,
Japan. There is no question with respect to this leg of the trip. However,
for the Osaka/Tokyo flight on 17 May 1971, Japan Airlines refused to honor
the tickets because of their expiration, and the GANAS had to purchase
new tickets. They encountered the same difficulty with respect to their
return trip to Manila as AIR FRANCE also refused to honor their tickets.
They were able to return only after pre-payment in Manila, through their
relatives, of the readjusted rates. 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.

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TRANSPORTATION

the passenger must purchase a new ticket for the remaining portion of the
journey" From the foregoing rules, 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; nor when it
required the GANAS to buy new tickets or have their tickets re-issued for
the Tokyo/Manila segment of their trip. Neither can it be said that, when
upon sale of the new tickets, it imposed additional charges representing
fare differentials, it was motivated by self-interest or unjust enrichment
considering that an increase of fares took effect, as authorized by the Civil
Aeronautics Board (CAB) in April, 1971.

RULING
NO. Pursuant to tariff rules and regulations of the International Air
Transportation Association (IATA), an airplane ticket is valid for one year.
"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. That is the time allowed a passenger to begin and
to complete his trip. A ticket can no longer be used for travel if its validity
has expired before the passenger completes his trip. To complete the trip,

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ISSUE
Whether or not AIR FRANCE is liable to the GANAS for breach of Contract
of Carriage?