Case Digest: KMU vs. Garcia, 239 SCRA 386, G.R. No. 115381

 

KMU vs. Garcia, 239 SCRA 386, G.R. No. 115381, December 23, 1994

Subject: Transportation Law

FACTS

The instant petition for certiorari assails the constitutionality and validity of certain memoranda, circulars and/or orders of the DOTC and LTFRB which, among others, establish a presumption of public need in favor of applicants for certificates of public convenience (CPC) and place on the oppositor the burden of proving that there is no need for the proposed service, in patent violation not only of Sec. 16(c) of CA 146, as amended, but also of Sec. 20(a) of the same Act mandating that fares should be “just and reasonable.”

In Dec 1990, Provincial Bus Operators Association of the Philippines, Inc. (PBOAP) filed an application for fare rate increase. It was granted by LTFRB. In March 1992, the DOTC Secretary issued Department Order No. 92-587 defining the policy framework on the regulation of transport services. It provides among others: “The requirements to grant a certificate to operate, or certificate of public convenience, shall be: proof of Filipino citizenship, financial capability, public need, and sufficient insurance cover to protect the riding public. In determining public need, the presumption of need for a service shall be deemed in favor of the applicant. The burden of proving that there is no need for a proposed service shall be with the oppositor(s).”

The LTFRB then issued Memorandum Circular No. 92-009 promulgating the guidelines for the implementation of DOTC DO 92-587. The Circular provides, among others, the challenged portions: Part IV. Policy Guidelines on the Issuance of Certificate of Public Convenience. The issuance of a Certificate of Public Convenience is determined by public need. The presumption of public need for a service shall be deemed in favor of the applicant, while burden of proving that there is no need for the proposed service shall be the oppositor(s).

In March 1994, petitioner KMU filed a petition before the LTFRB opposing the upward adjustment of bus fares. KMU claimed that the establishment of a presumption of public need in favor of an applicant for a proposed transport service without having to prove public necessity, is illegal for being violative of the Public Service Act. But the LTFRB dismissed the petition for lack of merit. Hence, the instant petition for certiorari with an urgent prayer for issuance of a temporary restraining order.

In their Comment filed by the OSG, public respondents DOTC Secretary Jesus B. Garcia, Jr. and the LTFRB claimed that it is within DOTC and LTFRB’s authority to set a fare range scheme and establish a presumption of public need in applications for certificates of public convenience.

ISSUE

Whether DOTC DO 92-587 and LTFRB Memorandum Circular No. 92-009 are violative of the Public Service Act insofar as they affect provisions creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the opposition.

RULING

Yes, DOTC DO 92-587 and LTFRB Memorandum Circular No. 92-009 are violative of the Public Service Act insofar as they affect provisions creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the opposition.

A certificate of public convenience (CPC) is an authorization granted by the LTFRB for the operation of land transportation services for public use as required by law. Pursuant to Section 16(a) of the Public Service Act, as amended, the following requirements must be met before a CPC may be granted, to wit

(i) the applicant must be a citizen of the Philippines, or a corporation or co-partnership, association or joint-stock company constituted and organized under the laws of the Philippines, at least 60 per centum of its stock or paid-up capital must belong entirely to citizens of the Philippines;

(ii) the applicant must be financially capable of undertaking the proposed service and meeting the responsibilities incident to its operation; and

(iii) the applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest in a proper and suitable manner. It is understood that there must be proper notice and hearing before the PSC can exercise its power to issue a CPC.

In this case, Part IV of LTFRB Memorandum Circular No. 92- 009 is entirely incompatible and inconsistent with Section 16(c)(iii) of the Public Service Act which requires that before a CPC will be issued, the applicant must prove by proper notice and hearing that the operation of the public service proposed will promote public interest in a proper and suitable manner. On the contrary, the policy guideline states that the presumption of public need for a public service shall be deemed in favor of the applicant. In case of conflict between a statute and an administrative order, the former must prevail. By its terms, public convenience or necessity generally means something fitting or suited to the public need. As one of the basic requirements for the grant of a CPC, public convenience and necessity exists when the proposed facility or service meets a reasonable want of the public and supply a need which the existing facilities do not adequately supply. The existence or nonexistence of public convenience and necessity is therefore a question of fact that must be established by evidence, real and/or testimonial; empirical data; statistics and such other means necessary, in a public hearing conducted for that purpose.

Verily, the power of a regulatory body to issue a CPC is founded on the condition that after full-dress hearing and investigation, it shall find, as a fact, that the proposed operation is for the convenience of the public. Basic convenience is the primary consideration for which a CPC is issued, and that fact alone must be consistently borne in mind. Also, existing operators in subject routes must be given an opportunity to offer proof and oppose the application. Therefore, an applicant must, at all times, be required to prove his capacity and capability to furnish the service which he has undertaken to render. And all this will be possible only if a public hearing were conducted for that purpose. Therefore, DOTC DO 92-587 and LTFRB Memorandum Circular No. 92-009 are violative of the Public Service Act insofar as they affect provisions creating a presumption of public need for a service in favor of the applicant for a certificate of public convenience and placing the burden of proving that there is no need for the proposed service to the opposition. 

Case Digest: Agan, Jr. vs. Philippine International Air Terminals Co., Inc., G.R. No. 155001

Agan, Jr. vs. Philippine International Air Terminals Co., Inc., G.R. No. 155001, May 5, 2003

Subject: Transportation Law

FACTS

In 1989, DOTC engaged in the services of Aeroport de Paris (ADP) to conduct a study of the Ninoy Aquino International Airport (NAIA) to determine whether the airport can cope with traffic development by year 2010.

In 1993, Asia’s Emerging Dragon Corp (ADEA) was formed by John Gokongwei, Henry Sy, Lucio Tan, Andrew Gotianun, George Ty, and Alfonso Yuchengco, for the purpose of exploring the possibility of constructing a new international airport terminal. ADEA then submitted an unsolicited proposal to the government through the DOTC/MIAA and called the project NAIA International Airport Terminal III (NAIA ITP III) under the build-operate-and-transfer arrangement pursuant to the BOT Law.

DOTC/MIAA published in two daily newspapers the invitation for competitive or comparative proposals on AEDC’s proposal and the bidders were required to submit three separate envelopes containing the prequalification documents, technical proposal, and financial proposal.

The government granted Philippine International Airport Terminals Co, Inc. (PIATCO, formerly known as Pairgo), to operate and maintain NAIA IPT III during the concession period and to collect the fees, rentals and other charges in accordance with the rates or schedules stipulated in the 1997 Concession Agreement.

On November 26, 1998, the Government and PIATCO signed an Amended and Restated Concession Agreement (ARCA).

Subsequently, the Government and PIATCO signed three Supplements to the ARCA. The First Supplement was signed on August 27, 1999; the Second Supplement on September 4, 2000; and the Third Supplement on June 22, 2001 (collectively, Supplements).

Due to various issues and petitions, former President Arroyo did not honour the PIATCO contract.

ISSUE

Whether or not the exclusive right granted to PIATCO to solely operate a commercial international passenger terminal at the NAIA IPT III is unconstitutional.

RULING

No, the exclusive right granted to PIATCO to solely operate a commercial international passenger terminal at the NAIA IPT III is not unconstitutional, but the government must have strict regulation towards its operation.

Article XII, Section 19 of the 1987 Constitution states: The state shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. The operation of an international passenger airport terminal is no doubt an undertaking imbued with public interest.

In this case, while PIATCO may be authorized to exclusively operate NAIA IPT III as an international passenger terminal, the Government, through the MIAA, has the right and the duty to ensure that it is done in accord with public interest. PIATCO's right to operate NAIA IPT III cannot also violate the rights of third parties. PIATCO, by the mere expedient of claiming an exclusive right to operate, cannot require the Government to break its contractual obligations to the service providers. As the primary government agency tasked with the job, it is MIAA's responsibility to ensure that whoever by contract is given the right to operate NAIA IPT III will do so within the bounds of the law and with due regard to the rights of third parties and above all, the interest of the public.

Case Digest: Albano vs. Reyes, G.R. No. 83551, July 11, 1989

 

Albano vs. Reyes, G.R. No. 83551, July 11, 1989

Subject: Transportation Law

FACTS

The Philippine Ports Authority (PPA) board directed the PPA management to prepare for the public bidding of the development, management and operation of the Manila International Container Terminal (MICT) at the Port of Manila. A Bidding Committee was formed by the DOTC for the public bidding. After evaluation of several bids, the Bidding Committee recommended the award of the contract to respondent International Container Terminal Services, Inc. (ICTSI). Accordingly, Rainerio Reyes, then DOTC secretary, declared the ICTSI consortium as the winning bidder.

On May 18, 1988, the President of the Philippines approved the same with directives that PPA shall still have the responsibility for planning, detailed engineering, construction, expansion, rehabilitation and capital dredging of the port, as well as the determination of how the revenues of the port system shall be allocated for future works; and the contractor shall not collect taxes and duties except that in the case of wharfage or tonnage dues.

Petitioner Albano, as taxpayer and Congressman, assailed the legality of the award and claimed that since the MICT is a public utility, it needs a legislative franchise before it can legally operate as a public utility.

ISSUE

Whether a franchise is needed for the operation of the MICT.

RULING

No, the franchise is needed for the operation of the MICT.

While the PPA has been tasked under E.O. No. 30 with the management and operation of the MICT and to undertake the provision of cargo handling and port related services thereat, the law provides that such shall be “in accordance with P.D. 857 and other applicable laws and regulations”. P.D. 857 expressly empowers the PPA to provide services within Port Districts “whether on its own, by contract, or otherwise”.

Even if the MICT is considered a public utility, its operation would not necessarily need a franchise from the legislature because the law has granted certain administrative agencies the power to grant licenses for or to authorize the operation of public utilities. Reading E.O. 30 and P.D. 857 together, it is clear that the lawmaker has empowered the PPA to undertake by itself the operation and management of the MICP or to authorize its operation and management by another by contract or other means, at its option.

Case Digest: National Power Corp. vs. CA, 345 Phil 9, G.R. No. 112702

National Power Corp. vs. CA, 345 Phil 9, G.R. No. 112702, September 26, 1997

Subject: Transportation Law

FACTS

Cagayan Electric and Power Light Company (CEPALCO) was enfranchised by RA 3247 for 50 years to construct, maintain, and operate an electric light, heat, and power system for the purpose of generating and/or distributing power for sale within Cagayan de Oro City and its suburbs. The franchise was expanded to include municipalities of Tagoloan and Opol, Misamis Oriental, Villanueva, and Jasaan, Misamis Oriental, in 1969.

In 1973, PD 243 issued created Philippine Veterans Investment Development Corporation (PHIVIDEC), authorized to engage in commercial, industrial, mining, agricultural, and other enterprises to allow the full and continued employment of productive capabilities of and investment of veterans and retirees of the Armed Forces of the Philippines. In 1974, PD 538 created PHIVIDEC Industrial Authority (PIA) which shall promote the professional management of well-planned industrial areas.

PIA granted CEPALCO a temporary authority to retail electric power to the industries operating within PIE-MO, allowing CEPALCO to operate, administer, construct, and distribute electric power within the area for a period of 5 years, renewable for another 5 years. At the end of the period, PIA has the option to take over the operation of the electric service and acquire CEPALCO's assets within PIE-MO.

CEPALCO was unable to meet the demands of the industries in PIE-MO, leading most companies to close. PIA applied with the National Power Company (NPC) for direct power connection, which was approved. CEPALCO contended that FPI violated its right as the authorized operator of an electric light and power system in the area and the national electrification policy.

CEPALCO filed a petition with the ERB, praying that the ERB order the discontinuance of all existing direct supply of power by the NPC within the petitioner's franchise area. However, PIA contracted the NPC for the construction of a transmission line from Namutulan substation to the substation of PIA, which was dismissed on the ground of res judicata.

ISSUE

Whether or not transportation is a public utility.

RULING

Yes, the transportation is a public utility.

Under the law, a "public utility" is a business or service engaged in regularly supplying the public with some commodity or service of public consequence such as electricity, gas, water, transportation, telephone or telegraph service. The term implies public use and service.

In this case, Sec. 4 of P.D. No. 538 grants the agency has the authority to construct, own, lease, operate, and maintain transportation networks, as necessary for the conduct of industry and commerce. This discuss transportation as a public utility since transportation is specifically used for public use and service in this Presidential Decree.

Case Digest: JG Summit Holdings. Inc. vs CA, G.R. No. 124293

 

JG Summit Holdings, Inc. vs. CA, G.R. No. 124293, September 24, 2003

Subject: Transportation Law

FACTS

A joint venture (JVA) was entered by a government corporation, National Investment and Development Corporation (NIDC) with a Japanese corporation, Kawasaki Heavy Industries, Ltd. for a shipyard business, Philippine Shipyard and Engineering Corporation (PHILSECO), with an agreement of a shareholding proportion of 60%-40 respectively and a right of first refusal to Kawasaki. Thereafter, NIDC transferred all its rights, title and interest to the Philippine National Bank (PNB).

After several months, by virtue of Administrative Order 14, PNB's interest in PHILSECO was transferred to the National Government. Then President Aquino’s Proclamation No. 50 was issued establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to and possession of, conserve, manage and dispose of non-performing assets of the National Government.

A trust agreement was entered into between the National Government and the APT by virtue of which the latter was named the trustee of the National Government's share in PHILSECO. As a result of a quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the National Government's shareholdings in PHILSECO increased to 97.41% thereby reducing Kawasaki's shareholdings to 2.59%.

After negotiations, it was agreed that Kawasaki’s right of first refusal under the JVA be “exchanged” for the right to top by 5% the highest bid for said shares. Kawasaki informed that Philyards Holdings, Inc. (PHI), in which it was a stockholder, would exercise this right in its stead. Petitioner JG Summit Holdings was declared highest bidder.

Even so, because of the right to top by 5% percent the highest bid, Kawasaki/PHI’s was able to top the winning bid. JG Summit protested, contending that PHILSECO, as a shipyard is a public utility and, hence, must observe the 60%-40% Filipino-foreign capitalization. By buying 87.67% of PHILSECO’s capital stock at bidding, Kawasaki/PHI in effect now owns more than 40% of the stock, thus violative of the laws.

ISSUE

Whether or not PHILSECO, a shipyard, is a public utility and hence Kawasaki, a foreign corporation, can acquire only a maximum of 40% of its capital.

RULING

No, a shipyard such as PHILSECO is not considered a public utility.

First, a shipyard which is a place or enclosure where ships are built or repaired is in its nature serves a limited clientele and not legally obliged to render its services indiscriminately to the public. While the business may be regulated for public good, it does not justify the qualifications for public utility which implies public use and service to the public hence it must be engaged in regularly supplying the public with some commodity or service of public consequence.

Second, it is not declared as public utility by law. Based on its legislative history, since the enactment of Act No. 2307 which created the Public Utility Commission (PUC) until repealed by Commonwealth Act No. 146 establishing Public Service Commission, a shipyard was a public utility and should abide by the Filipino citizenship requirement of 60-40 capital of a corporation. Thereafter, Pres. Marcos issued PD No. 666 which removed the shipbuilding and ship repair industry from the list of public utilities thereby freeing it from the 60-40 citizenship requirement. Batas Pambansa Blg. 391 repealed the PD No. 666 and reverted shipyards as public utilities. Then Pres. Aquino’s Executive Order No. 226 repealed the previous laws with no revival of the principle that shipyards are public utilities. Thus, absent of such legislation declaring the same, a shipyard reverts back to its status as a non-public utility.

With this, there was nothing preventing Kawasaki from acquiring more than 40% of PHILSECO’s total capitalization. The JVA should also be interpreted as the phrase “maintaining a proportion of 60%-40%” refers to their respective share of the burden each time the Board of Directors decides to increase the subscription to reach the target paid-up capital of P312 million. It does not bind the parties to maintain the sharing scheme all throughout the existence of their partnership.

Case Digest: Air France vs. Court of Appeals, 126 SCRA 442, G.R. No. L-57339

 

Air France vs. Court of Appeals, 126 SCRA 442, G.R. No. L-57339, December 29, 1983

Subject: Transportation Law

FACTS

The Ganas purchased nine "open-dated" air tickets for the Manila/Osaka/Tokyo/Manila route from Air France through a travel agent in February 1970. The tickets had a validity period of one year, according to the International Air Transportation Association (IATA) tariff rules.

In January 1971, Jose Ganas sought the assistance of Teresita Manucdoc, for the extension of the validity of their tickets, which were due to expire on 8 May 1971. However, they were informed that extension was not possible unless the fare differentials resulting from the increase in fares triggered by an increase of the exchange rate of the US dollar to the Philippine peso and the increased travel tax were first paid.

Then the Ganas scheduled their departure on 7 May 1971 or one day before the expiry date. They were warned that the tickets could be used on 7 May 1971 but the tickets would no longer be valid for the rest of their trip because the tickets would then have expired on 8 May 1971. Notwithstanding the warnings, the GANAS departed from Manila in the afternoon of 7 May 1971 on board AIR FRANCE Flight 184 for Osaka, Japan.

In 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.

The Ganas filed a lawsuit in CFI of Manila against Air France for breach of contract and moral damages. CFI (now RTC) dismissed the complaint based on Partial and Additional Stipulations of Fact on the documentary and testimonial evidence. On appeal, the CA reversed RTC’s decision.

ISSUE

Whether or not the GANAS have made out a case for breach of contract of carriage entitling them to an award of damages.

RULING

No, there was no breach of carriage of carriage entitling GANAS to the award of damages.

The General Tariff Rule is that all journeys must be charged for at the fare or charge in effect on the date on which transportation commences from the point of origin. Any ticket sold before a change of fare or charge increase or decrease occurring between the date of commencement of the journey, is subject to the above general rule and must be adjusted accordingly. A new ticket must be issued, and the difference is to be collected or refunded as the case may be. No adjustment is necessary if the increase or decrease in fare or charge occurs when the journey is already commenced."

In this case, Air carrier is not liable for breach of contract for having dishonored plane tickets of persons which had expired. From the foregoing tariff 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.

Case Digest: American Airlines vs. Court of Appeals, 327 SCRA 482

 

American Airlines vs. Court of Appeals, 327 SCRA 482

Subject: Transportation Law

FACTS

Democrito Mendoza purchased a conjunction ticket from Singapore Airlines for a multi-leg trip. In Geneva, Mendoza decided to skip Copenhagen and fly directly to New York. He exchanged the unused portion of his ticket for a one-way ticket from Geneva to New York with American Airlines.

Mendoza filed a lawsuit against American Airlines in the Regional Trial Court of Cebu for damages before the regional trial court of Cebu for the alleged embarrassment and mental anguish he suffered at the Geneva Airport.

The petitioner filed a motion to dismiss for lack of jurisdiction of Philippine courts to entertain the said proceedings under Art. 28 (1) of the Warsaw Convention. The trial court denied the motion. CA affirmed the ruling of the trial court.

The petitioner asserts that the Philippines is neither the domicile nor the principal place of business of the defendant airline; nor is it the place of destination. As regards the third option of the plaintiff, the petitioner contends that since the Philippines is not the place where the contract of carriage was made between the parties herein, Philippine courts do not have jurisdiction over this action for damages.

ISSUE

Whether or not the contract of transportation between the petitioner and the private respondent would be considered as a single operation and part of the contract of transportation entered into by the latter with Singapore Airlines in Manila.

RULING

Yes, the contract of transportation between the parties is a single operation and part of the contract by Mendoza with Singapore Airlines.

Article 1(3) of the Warsaw Convention clearly states that a contract of air transportation is taken as a single operation whether it is founded on a single contract or a series of contracts. In addition, members of the IATA are under a general pool partnership agreement wherein they act as agents of each other in the issuance of tickets to contracted passengers.

In this case, when the petitioner accepted the unused portion of the conjunction tickets, entered it in the IATA clearing house, and undertook to transport the private respondent over the route covered by the unused portion of the conjunction tickets, i.e., Geneva to New York, the petitioner tacitly recognized its commitment under the IATA pool arrangement to act as agent of the principal contracting airline, Singapore Airlines, as to the segment of the trip the petitioner agreed to undertake. As such, the petitioner thereby assumed the obligation to take the place of the carrier originally designated in the original conjunction ticket. Therefore, there was no separate or second contract between American Airlines and Mendoza but a contract considered a single operation and part of the contract of transportation entered into by Mendoza with Singapore Airlines in Manila.

Case Digest: Anonuevo vs. Court of Appeals, 441 SCRA 24

Anonuevo vs. Court of Appeals, 441 SCRA 24

Subject: Transportation Law

FACTS

Villagracia was traveling along Boni Ave. on his bicycle, while Añonuevo, traversing the opposite lane was driving a Lancer car owned by Procter and Gamble Inc., the employer of Añonuevo’s brother. Añonuevo was in the course of making a left turn towards Libertad Street when the collision occurred.

Villagracia sustained serious injuries and had to undergo four operations. Villagracia instituted an action for damages against P&G Phils., Inc. and Añonuevo before the RTC. He had also filed a criminal complaint against Añonuevo before the Metropolitan Trial Court of Mandaluyong, but the latter was subsequently acquitted of the criminal charge.

Añonuevo claims that Villagracia violated traffic regulations when he failed to register his bicycle or install safety gadgets. He posits that Article 2185 of the Civil Code applies by analogy. Article 2185. 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 any traffic regulation.

ISSUE

Whether or not Article 2185 of the New Civil Code should apply to non-motorized vehicles, making Villagracia presumptively negligent.

RULING

No.

Article 2185 of the New Civil Code provides that, 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 any traffic regulation.

In this case, Aonuevo’s characterization of a vibrant intra-road dynamic between motorized and non-motorized vehicles is more apropos to the past than to the present. There is pertinent basis for segregating between motorized and non-motorized vehicles. A motorized vehicle, unimpeded by the limitations in physical exertion. Is capable of greater speeds and acceleration than non-motorized vehicles. At the same time, motorized vehicles are more capable in inflicting greater injury or damage in the event of an accident or collision. This is due to a combination of factors peculiar to the motor vehicle, such as the greater speed, its relative greater bulk of mass, and greater combustibility due to the use of fuel.

Case Digest: Mallari vs. Court of Appeals, G.R. No. 128607

 

Mallari vs. Court of Appeals, G.R. No. 128607, January 31, 2000

Subject: Transportation Law

FACTS

the passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo Mallari Sr. collided with the delivery van of respondent Bulletin Publishing Corp.) along the National Highway in Barangay San Pablo, Dinalupihan, Bataan. The collision occurred after Mallari Jr. overtook the Fiera while negotiating a curve in the highway 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. The complaint alleged that the collision which resulted in the death of Israel Reyes was caused by the fault and negligence of both drivers of the passenger jeepney and the Bulletin Isuzu delivery van.

The trial court found that the proximate cause of the collision was the negligence of Felix Angeles, driver of the Bulletin delivery van. Hence, the trial court ordered BULLETIN and Felix Angeles to pay jointly and severally Claudia G. Reyes, widow of the deceased victim. On appeal the CA reversed RTC’s decision absolving respondent BULLETIN, Felix Angeles and N.V. Netherlands Insurance Company. It ordered petitioners Mallari Jr. and Mallari Sr. to compensate Claudia G. Reyes. Hence, this petition.

ISSUE

Whether or not the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr.

RULING

Yes, the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr.

Under the law, 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.

In this case, 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. As found by the appellate court, petitioners failed to present satisfactory evidence to overcome this legal presumption.

Case Digest: Baliwag Transit vs. Court of Appeals, 256 SCRA 746

 

Baliwag Transit vs. Court of Appeals, 256 SCRA 746

Subject: Transportation Law

FACTS

On July 31, 1980, Leticia Garcia and her five-year-old son, Allan Garcia, boarded Baliwag Transit Bus No. 2036 bound for Cabanatuan City. They took the seat behind the driver, Jaime Santiago. At around 7:30 in the evening, the bus passengers saw a cargo truck parked at the shoulder of the national highway. The truck driver, Julio Recontique, and his helper, Arturo Escala, were replacing a flat tire when Santiago was driving at an inordinately fast speed. Santiago failed to notice the truck and the kerosene lamp at the edge of the road, and the danger of collision became imminent.

Santiago and Escala died, and several others were injured. Leticia suffered a fracture in her pelvis and right leg, while Allan broke a leg and received emergency treatment. Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J Trading, and Julio Recontique for damages in the Regional Trial Court of Bulacan. Baliwag, A & J Trading, and Recontique disclaimed responsibility for the mishap, claiming that the accident was caused solely by the fault and negligence of A & J Trading and its driver, Recontique.

ISSUE

Whether or not Baliwag Transit Bus is liable. 

RULING

Yes, Baliwag is liable. 

Under the law, a common carrier is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of a very cautious person, with due regard for all the circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured.

In this case, Baliwag, a common carrier, is liable for damages due to its driver's recklessness in a bus accident. The evidence shows the driver's disregard for passengers' safety, leading to physical suffering and mental anguish. The accident resulted in Leticia Garcia's hip replacement and Allan's foot injury.

Case Digest: Pollard vs. NDC, G.R. No. 143866

 

Pollard vs. NDC, G.R. No. 143866, August 22, 2005

Subject: Transportation Law

FACTS

Poliand is an assignee of the of the rights of Asian Hardwood over the outstanding obligation of National Development Corporation (NDC), the latter being the owner of Galleon which previously secured credit accommodations from Asian Hardwood for its expenses on provisions, oil, repair, among others. Galleon also obtained loans from Japanese lenders to finance acquisition of vessels which was guaranteed by DBP in consideration of a promise by Galleon to secure a first mortgage on the vessels. DBP later transferred ownership of the vessel to NDC.  A collection suit was filed after repeated demands of Poliand for the satisfaction of the obligation from Galleon, NDC and DBP went unheeded.

ISSUE

Whether or not Poliand has a maritime lien enforceable against NDC or DBP.

RULING

Yes, Poliand has a maritime lien which is more superior than DBP’s mortgage lien. Before POLIAND’s claim may be classified as superior to the mortgage constituted on the vessel, it must be shown to be one of the enumerated claims which Section 17, P.D. No. 1521 declares as having preferential status in the event of the sale of the vessel. One of such claims enumerated under Section 17, P.D. No. 1521 which is considered to be superior to the preferred mortgage lien is a maritime lien arising prior in time to the recording of the preferred mortgage. Such maritime lien is described under Section 21, P.D. No. 1521.

Under the aforequoted provision, the expense must be incurred upon the order of the owner of the vessel or its authorized person and prior to the recording of the ship mortgage. Under the law, it must be established that the credit was extended to the vessel itself.

In this case, the trial court found that GALLEON’s advances obtained from Asian Hardwood were used to cover for the payment of bunker oil/fuel, unused stores and oil, bonded stores, provisions, and repair and docking of the GALLEON vessels.

Case Digest: Crescent Petroleum vs. MV Lor, G.R. No. 155014

 

Crescent Petroleum vs. MV Lor, G.R. No. 155014, November 11, 2005

Subject: Transportation Law

FACTS

Respondent M/V "Lok Maheshwari" (Vessel) is an oceangoing vessel of Indian registry that is owned by respondent Shipping Corporation of India (SCI), a corporation organized and existing under the laws of India. It was time-chartered by respondent SCI to Halla Merchant Marine Co. Ltd. (Halla), a South Korean company.

Halla, in turn, sub-chartered the Vessel through a time charter to Transmar Shipping, Inc. (Transmar). Transmar further sub-chartered the Vessel to Portserv Limited (Portserv). Both Transmar and Portserv are corporations organized and existing under the laws of Canada. November 1, 1995, Portserv requested petitioner Crescent, a corporation organized and existing under the laws of Canada that is engaged in the business of selling petroleum and oil products for the use and operation of oceangoing vessels, to deliver marine fuel oils to the Vessel.

Petitioner Crescent granted and confirmed the request through an advice via facsimile dated November 2, 1995. Crescent received two (2) checks as security payment. Crescent then contracted the supplier, Marine Petrobulk Limited, another Canadian corporation, for the physical delivery of the bunker fuels to the Vessel.

On November 4, 1995, Marine Petrobulk delivered the bunker fuels at the port of Pioneer Grain, Vancouver, Canada and was acknowledge and received the delivery receipt by the Chief Engineer.    

On May 2, 1996, while the Vessel was docked at the port of Cebu City, petitioner Crescent instituted before the RTC of Cebu City an action "for a sum of money with prayer for temporary restraining order and writ of preliminary attachment" against respondents Vessel and SCI, Portserv and/or Transmar and was granted.

ISSUE

Whether or not Ship Mortgage Decree provides for relief to Crescent Petroleum for its unpaid claim.

RULING

Yes. 

Under P.D. No. 1521 or the Ship Mortgage Decree of 1978, the following are the requisites for maritime liens on necessaries to exist: (1) the "necessaries" must have been furnished to and for the benefit of the vessel; (2) the "necessaries" must have been necessary for the continuation of the voyage of the vessel; (3) the credit must have been extended to the vessel; (4) there must be necessity for the extension of the credit; and (5) the necessaries must be ordered by persons authorized to contract on behalf of the vessel.

In this case, Not enjoying the presumption of authority, petitioner Crescent should have proved that Portserv was authorized by the shipowner to contract for supplies. Thus, Crescent Petroleum failed.

Case Digest: United Airlines vs. Uy, G.R. No. 127768

 

United Airlines vs. Uy, G.R. No. 127768, November 19, 1999

Subject: Transportation Law

FACTS

In October 13, 1989, Willie J. Uy, a revenue passenger on United Airlines Flight No. 819 from San Francisco to Manila, faced humiliation from United Airlines employees over an overweight luggage issue. Despite complying with repacking, issues arose when the airline refused to honor his miscellaneous charge order (MCO) for overweight charges. Upon arrival in Manila, Uy discovered one of his bags had been slashed and its contents stolen, totaling around US $5,310.00. He notified United Airlines of his losses and sought reimbursement, but the airline offered payment based on the maximum liability of US $9.70 per pound. Uy made additional demands for an out-of-court settlement, which the airline rejected.

Legal proceedings ensued as on June 9, 1992, Uy filed a complaint against United Airlines, alleging ill treatment, humiliation, and property loss. United Airlines moved to dismiss, invoking Art. 29 of the Warsaw Convention, citing a two-year limitation for filing damages from the date of arrival. Uy argued for reconciliation with local laws determining the period of limitation. The trial court granted United Airlines' motion, asserting the action must be brought within two years from arrival, excluding local interruption rules. Despite Uy's motion for reconsideration, the trial court denied it. Subsequently, Uy filed a notice of appeal two days after receiving the denial order. United Airlines moved for dismissal, asserting the notice of appeal was filed out of time.

The Court of Appeals, citing relevant jurisprudence allowing the review of orders despite procedural lapses, accepted the appeal. The Court of Appeals ruled that the Warsaw Convention did not override the Civil Code and other laws, asserting Uy's cause of action had not prescribed. Dissatisfied, United Airlines filed a petition for review on certiorari, challenging the timeliness of the notice of appeal and contesting the applicability of the Warsaw Convention.

ISSUE

1. Whether the notice of appeal was timely filed.

2. Whether Art. 29 of the Warsaw Convention should apply to the case.

RULING

1. The Court, considering the unique and peculiar facts of the case and the serious question of law it poses, inclined to give due course to the appeal despite the two-day delay in filing the notice of appeal.

2. The Court affirmed the ruling of the Court of Appeals that the Warsaw Convention did not preclude the operation of the Civil Code and other laws. While respondent's second cause of action was time-barred under the Warsaw Convention, the delaying tactics employed by United Airlines justified the filing of the action beyond the prescribed period. Therefore, respondent's second cause of action could proceed.

Case Digest: Alitalia vs. IAC, 192 SCRA 9

 

Alitalia vs. IAC, 192 SCRA 9

Subject: Transportation Law

FACTS

Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations in Ispra, Italy. She was to read a paper regarding foreign substances in food and the agriculture environment which she had specialized knowledge of. She booked a flight to Italy with Alitalia airlines, petitioner herein. She had arrived in Milan the day before the meeting however her luggage did not arrive with her. The airline informed her that her luggage was delayed because it was placed in one of the succeeding flights to Italy. She never got her luggage.

Back in Manila, she demanded that Alitalia compensate her for the damages that she suffered. Petitioner herein offered free airline tickets to compensate for the alleged damages, however, she rejected this offer and instead filed a case. Subsequently, it was found out that the luggage of Dr. Pablo was not placed in the succeeding flights. She received her luggage 11 months after and after she had already instituted a case against Alitalia.

The lower court rendered a decision in favor of Dr. Pablo and ordered the plaintiff to pay damages. On appeal, the Court of Appeals affirmed the decision and even increased the amount of damages to be awarded to Dr. Pablo. Hence this petition for certiorari.

ISSUE

Whether or not Alitalia is liable for damages incurred by Dr. Pablo.

RULING

Yes, Alitalia is liable to pay Dr. Pablo for nominal damages.

The Warsaw Convention provides that an air carrier is made liable for damages when: (1) the death, wounding or other bodily injury of a passenger if the accident causing it took place on board the aircraft or in the course of its operations of embarking or disembarking; (2) the destruction or loss of, or damage to, any registered luggage or goods, if the occurrence causing it took place during the carriage by air"; and (3) delay in the transportation by air of passengers, luggage or goods. However, the claim for damages may be brought subject to limitations provided in the said convention.

In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper in Italy. This was due to the fact that Alitalia misplaced her luggage. There was no bad faith or malice on the part of Alitalia in the said delay in the arrival of her luggage. Dr. Pablo received all her things which were returned to her in good condition although 11 months late. Therefore, she shall receive nominal damages for the special injury caused.

Case Digest: Luna v. Court of Appeals, 216 SCRA 107

 

Luna v. Court of Appeals, 216 SCRA 107

Subject: Transportation Law

FACTS

In May 1989, petitioners Rufino Luna, Rodolfo Alonso, and Porfirio Rodriguez encountered issues with Northwest Airlines during their trip to the Rotary International Convention in Seoul. Due to engine trouble, they were transferred to a Korean Airlines plane, resulting in the loss of their luggage, which allegedly ended up in Seattle. After a four-day delay, they recovered their belongings but missed most of the convention. Despite sending claims to Northwest Airlines, the airline disowned liability, prompting the petitioners to file a complaint for breach of contract.

Their complaints were initially dismissed for not stating prior claims within the prescribed period. The petitioners appealed, but the Court of Appeals, applying the Warsaw Convention, dismissed Luna and Alonso's petition, citing that certiorari was not a substitute for a lost appeal. Rodriguez's petition was referred to the Court of Appeals. The petitioners argued three grounds, including the Convention's non-exclusive nature and the inapplicability of its reglementary period in cases of willful misconduct.

Northwest Airlines claimed the dismissal orders were final due to the petitioners' failure to appeal within the reglementary period. They argued that no demand letter was received within the 21-day period stipulated in the Conditions of Contract. Referring to foreign jurisprudence, they contended that the Warsaw Convention's limitation of liability in cases of willful misconduct only applied to the monetary ceiling on damages.

ISSUE

Whether or not Northwest Airlines is liable for damages for breach of contract.

RULING

 Yes.

The Warsaw Convention does not operate as an exclusive enumeration of the instances for declaring an airline liable for breach of contract of carriage or as an absolute limit of the extent of that liability. The Convention merely declares the carrier liable for damages in the enumerated cases, if the conditions therein specified are present.  For sure, it does not regulate the liability, much less exempt, the carrier for violating the rights of others which must simply be respected in accordance with their contracts of carriage. The application of the Convention must not therefore be construed to preclude the operation of the Civil Code and other pertinent laws.

In this case, petitioners' alleged failure to file a claim with the common carrier as mandated by the provisions of the Warsaw Convention should not be a ground for the summary dismissal of their complaints since private respondent may still be held liable for breach of other relevant laws which may provide a different period or procedure for filing a claim. Considering that petitioners indeed filed a claim which private respondent admitted having received on 21 June, 1989, their demand may have very well been filed within the period prescribed by those applicable laws. Consequently, respondent trial courts, as well as respondent appellate court, were in error when they limited themselves to the provisions of the Warsaw Convention and disregarding completely the provisions of the Civil Code.

Case Digest: Northwest Airlines vs. Court of Appeals, 284 SCRA 408

 

Northwest Airlines vs. Court of Appeals, 284 SCRA 408

Subject: Transportation Law

FACTS

The plaintiff, [Torres], allegedly on a special mission to purchase firearms for the Philippine Senate, purchased a round trip ticket from defendant [Northwest] for his travel to Chicago and back to Manila. Via defendant's flight, plaintiff left for United States.

On  the way back to Manila, plaintiff checked-in his two identical baggage, one of which contained firearms. After document verification by the airline staff, plaintiff thereafter sealed the baggage and defendant's representative placed a red tag on the baggage with firearms with the marking "CONTAINS FIREARMS".

In Manila, plaintiff was not able to claim one of his baggages for it was recalled back to Chicago by defendant for US Customs verification. A telex to this effect was shown to plaintiff. Later on plaintiff was able to claim his other baggage in the presence of defendant's representative and found out that the firearms were missing.

On account of continuous refusal of defendant to settle amicably, plaintiff then prayed before the trial court that defendant be ordered to pay damages.

Northwest argued in its motion for summary judgment that the Warsaw Convention and the contract of carriage limited its liability to US$640 and that the evidence presented by Torres did not entitle him to moral, exemplary, and temperate damages and attorney's fees.

The trial court ordered Northwest to pay Torres. Both appeal to the CA. The affirmed the trial court's finding as to the right of Torres to actual damages but set aside the rest of the appealed decision. It then remanded the case to the court a quo for further proceedings. Hence, this petition.

ISSUE

Whether or not limiting liability stated in Section 22(2) of the Warsaw Convention applies in this case.

RULING

No, Northwest's liability for actual damages may not be limited to that prescribed in Section 22(2) of the Warsaw Convention.

In this case, SC held that a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport is not attributable to or attended by any willful misconduct, bad faith, recklessness, or otherwise improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting injury. The Convention's provisions, in short, do not "regulate or exclude liability for other breaches of contract by the carrier" or misconduct of its officers and employees, or for some particular or exceptional type of damage.

Case Digest: ICTS vs. Prudential Guarantee, 320 SCRA 244, G.R. No. 134514

 

ICTS vs. Prudential Guarantee, 320 SCRA 244, G.R. No. 134514, December 8, 1999

Subject: Transportation Law

FACTS

Mother vessel Tao He loaded and received on board in San Francisco, California, a shipment of five lots of canned foodstuff complete and in good order and condition for transport to Manila in favor of Duel Food Enterprises (consignee) under “shipper’s load and count”.

The shipment arrived at the port of Manila and discharged by the vessel MS Wei He in favor of ICTSI for safekeeping. The brokerage withdrew the shipment and delivered the same to the consignee. An inspection there revealed that 161 cartoons were missing valued at P85,984.40. Consignee learned of such shortage on June 4, 1990. It filed claim for loss on October 2, 1990. Claim for indemnification of the loss having been denied by ICTSI and the brokerage, consignee sought payment from Prudential (insurer) under the marine cargo policy.

The appellate court found ICTSI negligent in its duty to exercise due diligence over the shipment. It also ruled that the filing of a claim depended on the issuance of a certificate of loss by ICTSI based on the liability clause printed on the back of the arrastre and wharfage receipt. Since ICTSI did not issue such a certificate despite being informed of the shortage, the 15-day period given to the consignee for filing a formal claim never began. Prudential, therefore can hold the ICTSI liable for the shortage.

ISSUE/S

1) Whether or not ICTSI negligent in its duty to exercise due diligence over the shipment. 

2) Whether or not the consignee fail to file a formal claim within the period stated on the dorsal side of the arrastre and wharfage receipt. 

RULING

1)  No. The consigned goods were shipped under “shipper’s load and count”. This means that the shipper was solely responsible for the loading of the container, while the carrier was oblivious to the contents of the shipment. Protection against pilferage of the shipment was the consignee’s lookout. The arrastre operator was not required to verify the contents of the container received and to compare them with those declared by the shipper because as earlier stated, the cargo was at the shipper’s load and count. In this case, the arrastre operator was expected to deliver to the consignee only the container received from the carrier. The legal relationship between the arrastre and consignee is akin to that between a warehouseman and a depositor. As to both the nature of the functions and the place of their performance, arrastre operator’s services are clearly not maritime in character.

2)  Yes. In order to hold the arrastre operator liable for lost or damaged goods, the claimant should file with the operator a claim for the value of said goods “within the 15-day period from the date of discharge of the last package from the carrying vessel.” The filing within the period is in the nature of a prescriptive period for bringing an action and is a condition precedent to holding the arrastre operator liable. In an endeavor to promote fairness, equity and justness, however, a long line of cases has held that the 15-day period for filing claims should be counted from the date the consignee learns of the loss, damage or misdelivery of goods.

In this case, by the time the claim for the loss was filed on October 2, 1990, four months had already elapsed from the date of delivery. In any event, within 15 days from the time the loss was discovered, the consignee could have filed a provisional claim, which would have constituted substantial compliance with the rule. Its failure to do so relieved the arrastre operator of any liability for the non-delivery of the goods. The rationale between the time limit is that, without it, a consignee could too easily concoct or fabricate claims and deprive the arrastre operator of the best opportunity to prove immediately their veracity.