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Notes of Atty. Tabigne

Transportation Law

Commonwealth act no 146 of 1936 = public service act

I. Concept and definitions

Public Service includes every person who owns, operates, manages or control
in the Phils for hire or compensation, with general or limited clientele,
whether permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction railway,
subway motor, either for freight or passenger, or both with or without fixed
route and may be classified as freight or carrier service of any class, express
service, steamboat or steamship line, pentanes, ferries and water craft,
engaged in the transportation of passengers or freight or both, shipyard
marine railways, marine repair shop, wharf or dock. (Sec 13b) other services
of gas, electric light, heat power, wireless communication)
 Common carriers are persons engaged in the business of carrying or
transporting passengers of goods or both, by land, sea/water or air
transportation offering their services to the public (Art 1732 NCC)

The concept of common carrier under Art 1732 NCC coincides neatly
with the notion of public service under CA 146 as held in De Guzman vs Ca,
168 SCRA 612, 88 case of Junkman Candana who after bringing his
materials to Manila in his six-wheeler truck let the truck on the return trip to
Pangasinan to merchants with goods to be delivered or carried. One of these
merchants was Pedro de Guzman with cartoons of Liberty Filled Milk who
hired Cendanan to haul the goods from Makati to Urdaneta, Pang. at a charge
lower than the commonly regular freight rates. On the way, the truck was
hijacked and the goods were lost. De Guzman sued to reover the value of the
lost goods asserting that Cendana as a common carrier is liable for having
failed to exercise the extraordinary diligence required of him by law. Cendana
denied that he is a common carrier and thus he could not be held liable for
the loss which was a force majeur.

Held:

It appears to the court that Cendana is properly characterized as a

common carrier (under Art 1732 NCC and sec 13b CA 146) even though he
merely back-hauled goods for other merchants and done on a periodic or
occasional rather than regular or scheduled manner and even though his
principal occupation was not the carriage of goods of others.
 The law make no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity side line. Neither as between person
offering his service on a regular or scheduled basis and one offering such
service on occasional or episodic or unscheduled basis, as well as to offer of
the service to the general public and one offering to narrow segments of the
public. (J. Feliciano) cited by Campos Jr in Bascos vs CA, 221 SCRA 318, 93.

In Calvo vs UCPB Gen Ins Co. Mar 19, 2003 a custom broker who
offers her service to a selot clientele with whom she contract in the conduct
of her business was held as a common carrier.

In Asia Lighterage & Shipping Co vs CA, April 9, 2003, a common

carrier need not have a fixed and public route known nor does have a
terminals or issue tickets.

In First Phil Industrial Corp vs CA, Aug 19, 2003, a common carrier is
not limited to the transportation of goods by motor vehicle, ship or plane. In
this case a pipe transporting liquid is considered as common carrier.
 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 telegraphic service. The
term implies public use and service. (National Power Corp vs CA, 279 SCRA
408)

Public utilities are enterprises (privately or publicly owned and

operated business) whose service are essential to the public, cater to the
needs of the public and conduce to their comfort and convenience and thus
are impressed with public interest and concern. As such there is super
induced upon it the right of public regulation. They cease to be jurisprivati
and subject to the control by the public for the common good. (Kilusang Mayo
Uan vs Garcia, 239 SCRA 386)

QUARE: A hotel which transport its guest free of charge from airport
to hotel and back be considered engaged in public utility or common carrier?

Ans: No, because theres no compensation which an element of

common carrier or public utility.

Constitutional Provisions touching on Public Utility

Protection of Filipino enterprises against foreign competition and trade

practices: Equitable distribution of opportunities, income and wealth (Sec.1
Art XII)

Issuance of franchise, certificate or other form of authorization for the

operation of public utility shall be granted to Filipino citizens or to corporation
whose capital 60% of which are Filipino owned. (Sec 11, ibid)
 Taking over or directing operation of any privately owned public utility or
business affected with public interest by the state temporarily in times of
national emergency when the public interest so requires and under
reasonable terms prescribed by it. (Sec 17, ibid)

Transfer to public ownership utilities and other private enterprises to be

operated by the Govt in the interest pf national welfare or defense and upon
payment of just compensation. The state may also establish and operate vital
industries under such condition. (Sec 18, ibid)

Regulation or prohibition of monopolies when the public interest so

requires. No combinations in restraint of trade or unfair competition shall be
allowed. (Sec 19, ibid)

States Control and Regulation of Public Utilities: Basis

Under its Police Power, the state may regulate business affected with
public interest. Since the prime characteristic of Public Utilities is public
service or public use, it falls under the States control and regulation to
protect the public interest and promote the comfort, convenience, health,
safety and welfare of the people. (Laguna Tayabas Bus Co vs PSC, GR No.
47332, Dec 5, 1940)

Whenever a private property is used for a public purpose and is

affected with public interest, it ceases to be a juris private only and becomes
subject to regulation to promote the common good. The regulation ceases
when the owner discontinue the public utility. (Republic of the Phil vs Manila
Electric Corp, Nov 15, 2002)

In Tatad vs Garcia Jr. 243 SCRA 436, 95 held that the mere
formation of a public utility corp does not ipso facto characterized the corp as
one operating a public utility. Its only when it applies for a franchise that it is
necessary to determine the requisite Filipino nationality.
 Likewise mere owner of the facilities used by a public utility is not a
public utility.

States Control & Rgulation of Public Utilities: Agencies

CA 146 created the Phil Service Commission (PSC) charged with the
supervision and control over all public service and their franchises,
equipments and other properties. (Sec 13.a) However, its powers are now
distributed among the following reference to transportation services.

Land Transportation: (a) Land Transportation Office (LTO) for registration:

(b) Land Transportation Franchising Regulatory Board (LTFRB) for franchising

Air Transportation: Air Transportation Office (ATO) and Civil Aeronautics

Board (CAB)

Water Transportation: Maritime Industry Authority (MARINA), Phil Coast

Guard: Phil Port Authority (PD 474 74: RA 7471)

Rates and Regulation by the state is for the protection of the public against
arbitrary and excessive rates charged while maintaining the efficiency and
quality of service rendered (Sec. 15, o :Republic of the Phil Vs Manila Electric
Corp)

The power to fix rates of public utility is a legislative power that has been
delegated to the regulatory agencies, and such cannot be further delegated
by such administrative regulatory agency (KMU Labor Center vs Garcia, 239
SCRA 386)
 However RA 9295 of 2004 Domestic Shipping Development Act provides
for the deregulation of Marina over domestic ship operators who are
authorized to establish their own domestic shipping rates, provided that
effective competition is fostered and public interest is served. This is to
encourage investments in the domestic shipping industry and attract new
investment. (Sec. 8: Sec 11 provides also that every ship operator shall have
the right to fix its own passenger or cargo rates or both. NB the law also
provided in Sec 14 for a compulsory insurance coverage for passengers and
cargo)

Standard in fixing rates = Reasonable and just (Rep of the Phil vs Manila
Electric Corp, Nov 15, 2002)

The requirement of reasonableness means that such rate must not be

confiscatory or to too high as to be oppressive. It is essential to consider the
given situation, requirements and opportunity of the utility. (ibid)

Factors Considered in Fixing Rates: (ibid)

Rate of returns this is a judgment percentage which, if multiplied with the

base rate, provides a fair return on the public utility for the use of the
property for the service to the public. This is not prescribed by statute but by
administrative or judicial pronouncement. SC consistently adopted 12% in
return.

Rate Base is an evaluation of the property devoted by the utility to the

public service, or the value of invested capital or property which the utility is
entitled to a return.

The Return Itself this is a computed revenue to be earned by the public

utility based on the rate of return and rate base.

Operating expenses incurred in connection with the services provided.

Excluded are expenses not attributable to the operation of the public utility.

Authorization to operate Public Utilities Transportation

The grant of franchise, certificate or other form of authorization for

the operation of public utility shall be to Filipino citizens or corporation 60% of
its capital owned by Filipino.

The power to authorize and control the operation of public utilities is a

legislative function and Congress may delegate such power to the executive
branch thru its administrative agency. (PAL vs CAB, 270 SCRA 539)

Ex. The MARINA have the power and authority to issue certificates of public
convenience to qualified domestic ship operators. (Sec 7, RA 9295 =
Domestic Shipping Dev Act of 2004)

The LTFRB have the power to issue, amend, revise, suspend or cancel
certificates of public convenience or permits authorizing the operation of
public land transportation services provided by motorized vehicles (Sec 5 b,
Executive Order No 202 of 1987)

The Civil Aeronautics Board have the power to authorize to issue certificate of
public convenience and necessity which is a permit authorizing a person to
engage in air commerce and /or air transportation, domestic or foreign. No
person shall engage in air commerce unless there is in force a permit issued
by the board. (Sec 11, RA 776-1952 = The Civil Aeronautics Act of the
Philippines).
Common Carrier

Concept and Definition

Transportation is a public service or public utility which consists in

engaging in the business of carrying-transporting passengers and/or goods
for compensation by land, air or sea.

The concept of common carriers under Art 1732 NCC coincides with
the notion of public service under Sec 13.b of the Public Service Act which
supplements the Civil Codes provisions on common carriers.

The law makes no distinctions between one whose principal business

activity is the transporting of persons, goods or both, and one who does it as
an ancillary activity such as side-line: between one doing it on a regular or
scheduled basis and one doing on unscheduled, occasional or episodic basis:
and between one offering the service to the public in general and one
offering it to limited clienteles or narrow segment of the public (De Guzman
vs CA, 168 SCRA 617, 88 Junkman case)

Cases:

1. Calvo vs UCPB Gen Ins Corp. Mar 19, 02

Facts:
Customs broker Calvo was contracted by consignee to transport shipment in
the Manila Port Area to the SMC Warehouse at Ermita, Manila. Goods were
insured by UCPB and were unloaded from the vessel M/V Hayakawa Maru
by the Arrastre Operator on July 14, 1990. Calvo get the shipment on July 23,
1990 from the Arrastre operator and delivered them to SMC warehouse. The
goods were found in bad condition upon inspection. Insurer paid when the
ship owner refused to pay the damages. As subrogee, insurer sued Calvo who
raised the defense that (a) it is not a common carrier but a private carrier
offering services to limited selected parties and (b) Art 1734 NCC does not
apply-exempting cause of character of goods or defects in the packaging or
container.

Held:

(a) Calvo is a common carrier based on De Guzman ruling because her

business is to transport goods for her customers, regardless whether limited
or not, for compensation. Thus she has the obligation to exercise the extra
ordinary diligence and is covered by the presumption of negligence.

(b) For Art 1734 NCC to apply, it must be shown that the defect in the
package or container is known to the carrier or is apparent upon ordinary
observation. In this case, it was shown that (i) Calvo took the goods from the
Arrastre Operator.

Hence, the presumption of negligence was not rebutted for failing to prove
having exercised the extra ordinary diligence required by Art 1735 NCC. Art
1734 was not applied to Calvo because Calvo has knowledge of the defect in
the goods when she received it without protest from the arrestre operator.

First Phil Industrial Corp vs CA, 300 SCRA 661

Held:
 A corp engaged in the business of transporting oil and other products
through its pipers is considered as a common carrier as the transportation is
for hire, offering its services to the public.

Note in this case, transportation of goods need not be a motor

vehicle.

Classes of carriers or transportation

1. Common or Public Carriers are person engaged in the business of carrying-

transporting goods or persons or both by land, air or sea. (Art 1732)

Test in determining a carrier is a common carrier:

is the carriage of passengers or goods or both offered for all who opt to
avail themselves of the service for a fee? A carrier which does not qualify
under the above test is deemed a private carrier which undertakes a service
by special agreement and the carrier does not hold itself out to carry for the
general public. (National Steel Corp vs CA, 283 SCRA 51, 97)

existence of the following conditions:

must be engaged in the business of carrying goods for others as a public

employment and holds itself out as ready to engage in the transportation of
goods for persons generally as a business and not as a casual occupation

must undertake the carry goods of the kind to which the businesses is
confined

must undertake to carry by the method by which his business is conducted

and over his established route
 the transportation must be for hire (First Phil Industrial Corp vs CA. 300
SCRA 661)

Private Carriers are those who does not transport cargo or shipment for the
general public and whose services available only to specific persons who
enter into special contract (bareboat or demise charter party). (National Steel
Corp vs CA, 283 SCRA 484)

One whose undertaking is a single transaction which is not a part of the

general business or occupation. (Planters Products Inc vs CA, 226 SCRA 484)

The bare fact that the vessel was carrying a particular cargo for one shipper,
in the absence of a special contract to carry or a charter party to special
person, the carriage of the goods is purely incidental and is not a reason
enough to convert the vessel from a common carrier into a private carrier,
especially where it was shown that the vessel was also carrying passengers.
(Loadstar Shipping Co vs CA, 283 SCRA 315, 99)

Case:

Caltex (Phils) Inc vs Sulpicio Lines, Inc., 315 SCRA 709

Facts:

Caltex chartered MT Vector-Tanker of Vector Shipping Corp to transport its fuel

products from Limay, Bataan to Masbate. On Dec 2, 1987 while enroute the
Tanker collided with MV Dona Paz of Sulpicio Lines Inc resulting to the sinking
of the latter vessel and the death of about 4000 passengers with only 24
survivors.
Held:

The charterer Caltex under a contract of affreightment has no liability for

damages under maritime laws. It is the shipowner Vector who is liable as it
is in possession, control and navigation of the tanker. As such Vector is a
common carrier subject to the presumption of negligence which it was found
guilty by the Board of Maritime Inquiry in 1988. Thus Vector is liable to
reimburse/indemnify Sulpicio Lines for whatever damages, atty fees and
cost the latter is adjudged to pay. (Note Sulpicio was also negligent with
respects to its passengers overloading which contrary to maritime rules and
regulation- liable for breach of carriage)

Case = FGU Insurance Corp vs G.P Sarmiento, 385 SCRA 312 02

Facts:

GPS was contracted by Conception Industry to transport 30 units of Condura

Ref from Alabang, Makati to Dagupan city. On the way GPS truck collided with
another truck, resulting to damages of cargo of former truck. FGU-insurer of
the damaged cargoes paid and as subrogee sued GPS for breach of contract
of carriage.

GPS asserted that it is not engaged as a common carrier and that the
cause of the damages was purely accidental.

Held:

It being shown that GPS was exclusively contractor and hauler of

Conception Industry, rendering services to no other persons or entities, GPS
cannot be considered as a common carrier engaged in the transportation
business for hire offering its services to the public in general. However, GPS is
liable culpa contractual. The mere proof of existence of contract of carriage
and the failure to comply therewith, justify, prima facie, corresponding right
of relief.

As the driver of the insured was not shown to be at fault, he cannot

be ordered to pay FGU because the driver is not the party to the contract of
carriage. FGUs civil action against the driver can only be based on culpa
aquiliana which requires proof of fault on the part of the defendant unlike
culpa contractual.

GPS liable to pay under culpa contractual in which liability arises or

attaches upon failure of the comply with the contract on which the
presumption of negligence immediately arises.

Distinctions between

Common Carrier

Private Carrier

1. Service offered to the public at large

1. Offered to specific

2. Presumption of fault/negligence on the part of the carrier

2. no presumption, whoever alleges has the onus to show proof

3. Bound to observe extra ordinary diligence

3. Diligence of a good father of the family required

4. Contract of adhesion

4. Parties are free to stipulate terms

5. Void stipulation exempting carrier for loss caused by employees

5. Valid stipulation exempting carrier etc

6. Shipowners obligation to show the ship is sea worthy. (National Steel Corp
vs CA)

6. Did not have the obligation

7. Law governing is the Civil Code

7. Code of commerce

Land Transportation

Duty: Obligation

From the nature of the business and by reason of public policy,

common carriers are bound to exercise extra-ordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by
them according to all the circumstance of each case. (Art 1733)

Common carriers are bound to carry passengers safely as far as

human care and foresight may provide, using the utmost diligence of a very
cautious person, with due regard for all circumstances. (Art 1755)

Presumption

In case of loss, destruction or deterioration of the goods carried,

common carriers are presumed to have been at fault or to have acted
negligently for which they are responsible. (Art 1734 and Art 1735)

A statutory presumption arises that the common carrier was at fault

or had acted negligently in case of death or bodily injury of a passenger. For
this presumption, the court need not even make an express finding of fault or
negligence on the part of the common carrier in order to hold liable.
(Gatchalian vs Delim, 203 SCRA 134) Any injury or death of a passenger is
right away attributed to the fault or negligence of the common carrier. This is
an exception to the general rule that negligence must be proven (in tort)
(Abeto vs PAL, 115 SCRA 489)

In case of loss, destruction or deterioration of goods, the presumption

of law arises that there was negligence of fault on the part of the carrier
either in the selection or supervision over their employees. (Laguyan vs IAC,
167 SCRA 377)

Doctrine of Res Ipsa Loquitor is a rule of evidence the thing speaks

for itself. Where the thing which causes the injury or damage is shown to
have been under the exclusive control of its owner and the accident were not
have happened and there been absence of negligence, it gives rise to the
inference of negligence. This doctrine transfer the onus of proving not being
negligent to the carrier and furnishes a substitute for a specific proof of
negligence until the same is rebutted. (Laguyan case)

The doctrine is not a substantive law but as mode of proof or a mere

procedural convenience as it serves to furnish a substitute for and relieves
the plaintiff of the burden of producing specific proof of negligence. The
maxim simply places on the defendant the burden of proving not being
negligent. (FGU Ins Corp vs CA. 386 S 312)

Rebuttal of Presumption or Defenses of Common Carrier

Exercise or observation of extra ordinary diligence

The presumption is juris tantum and not juris et de jure and is

rebutted by showing a satisfactory proof of having exercise of extra ordinary
diligence prescribed in Art 1733 and Art 1735

The defense of diligence of a good father of a family to prevent the

accident by carefully selecting and supervising its employees is not available
in criminal action but in civil action based on tort. Neither it is available in
civil action based on breached of contract of carriage.

Case: Metro Manila Trans Corp vs CA, 386 SCRA 126, 02

Facts: MMTCs bus ran over a predistrian crossing the streen when the traffic
light turned red.

Held: Driver-employees negligence causing injury gives rise to presumption

juris tantum of negligence on the part of the carrier-employer either Culpa in
Eligiendo (selection of employees) or Culpa in Vigilando (supervision). To
escape solidarity for the quasi-delict committed by its employee, the
employer must rebut the presumption by proving having exercised the care
or diligence of a good father of a family in the selection and supervision of its
employees. MMTC failed to do so.

MTCC is a public utility organized and owned by the Govt for public
transportation service, hence is liable under Art 2180 NCC.

Exempting Causes (Art 1734) Closed List

1. Caso fortuitous or Force Majeure or Natural Calamity of disaster, such as

typhoon, earthquake, lightning, storm or flood.
 To constitute as a defense to exempt a carrier from liability, it must be
shown that is the proximate and only cause absence of human intervention or
participation. Any human participation will defeat the defense.

Case: Gatchalian vs Delim, 203 S 153

Facts:

A minibus while running produced a snapping sound and later caused the
minibus to swerve bumping a cement flower pot on the road side and went
off the road turning turtle and fell into ditch.

Held:

The accident was caused by a mechanical defect which has been cinsistently
held as not falling within the ambit of caso fortuito. While it may be so,
however, there is human intervention or participation in the form of carriers
failure to look into and to maintain the vehicle in Roadworthy condition,
aside from the fact that the driver did not heed the passengers cry of alarm
to stop the bus after hearing the snapping sound. The drivers act of
continuing to drive constituted wanton disregarded for the safety of its
passengers, which shown a failure in the exercise of extra ordinary diligence
to prevent the mishap.

See Yobido vs CA, 281 SCRA 1, 97 exploding tire

2. Acts of public enemy in war time, civil or international. However the carrier
must still exercise due diligence to prevent or minimize the loss. (Art 1739)

3. Acts or Omission of the shipper or owner of the goods provided such act is
the proximate cause. If contributory, the carriers liability will be equitably
reduced.
Case: Cia Maritima vs CA, 164 SCRA 685

Facts: Shipper, to avoid paying proper freightage misdeclared weight of its

cargo as 2.5 tons instead of the actual weight of 7.5 tons. Thus in unloading
the cargo, the arrastre operator used a forklift capacitated to lift 5.5 tons,
resulting to falling cargo and sustaining damages.

4. Character of the goods or defects in the packing or in container.

Nonetheless that carrier must exercise due diligence in forestalling or
lessening the loss. (Art 1742)

Case: Southern Lines Inc, vs CA, 4 SCRA 258

Ship Agent accepted a cargo contained in an old sacks which boke during the
trip causing its content of rice to spill out. Carrier is held liable

Case: Calvo vs UCPB Ins Corp

Custom broker Calvo accepted cargo from the Arrastre operator without
protest or objection on the apparent bad condition of the cargo. Incident is
not covered by Art 1734 NCC.

5. Order or Acts of Compentent Authority who has the power to issue the
order.

Case: Ganzon vs CA, 171 SCRA 646

Acting Mayonr issued an order to the ship captain to dump the scrap
iron on board the ship into the sea. As the order was not validly legal, the
captain of the ship was not duty to bound to obey. If he did, his act will not
exempt from liability for the loss of the cargo

These 5 enumerated Exempting Causes in Art 1734 had been held

as a Closed List, such that any cause not included in the list, even if they
appear to be or constitute as a specie of caso fortuito, will not be considered
as exempting cause under Art 1734.

Highjaking

While not included in the exempting causes under Art 1734 had been
held as caso fortuito under Art 1735. which provides for acts committed by
robbers or thieves with grave irresistible force, threat or violence that
exonerate the carrier. (note this exception to void stipulation contract of
carriage) (De Guzman vs CA)

Case: Basco vs CA, 221 SCRA 318

Almost the same fact as De Guzman, except that Basco was held
liable because she failed to adduce evidence establishing that the hijacking
was committed by robbers acting with grave, irresistible force. She merely
presented her drivers affidavit without the affiant. Affidavit not considered
the best evidence alone.

Defective Motor Vehicles

The failure of the carrier to look into and to maintain their vehicles
Roadworthiness and safety of their passengers. (Gatchalian vs Delim)

Case: Yobido vs CA, 281 S 1, 97

Facts: Tumboy boarded Yobidos Liner Bus in Mangagoy, Surigao del Sur
bound for Davao City. Enroute the bus fell into a ravine as a consequence of
the tire exploding. Tumboy died. Heirs sued. Carrier raised the defense of
caso fortuito.

Held: For caso fortuito to exempt the carrier from liability, it must have the
following characteristics:

(a) cause is unforeseeable, unexpected occurrence, or if foreseeable is

impossible to avoid unavoidable

(b) occurrence renders it impossible for the carrier to fulfill its obligation in a
normal course

(c) carrier must be free from any participation in the occurrence

Explosion of the bus tire had been consistently held as not a caso fortuito
because of the human intervention or participation manifested in its failure to
check the vehicles roadworthiness, neglected to check tire which has too
much air pressure, overloading of the bus, overspeeding and disregarded of
the rough condition of the road which is winding and wet due to rain.

Acts or Omissions of the Following Persons

Employees of the Common Carriers. Even if such employees have

acted beyond the scope of their authority or in violation of the orders of their
employers. (Art 1759)
 A liability which cannot be dispensed with or lessened by stipulation,
by posting of notices or statements in the tickets or otherwise (Art 1756)

However, it may limit the carriers liability to passenger who is carried

gratuitously but not fare paying passengers. (Arts 1757 and 1758)

Case: Philtranco Service Ent vs CA, 273 SCRA 562, 97

Held: The liability of a common carrier for damages arising from the tortuous
act of its drivers is direct, primary and solidary.

Case: Maranan vs Perez, 20 SCRA 413, 67

Bus conductor stabbed a passenger in a hatred alteracation over the

tickets printed of carriers limited liability.

Case: BLTB Co vs IAC, 167 SCRA 385

Driver under the boundary system is considered as lessee because he

pay a fixed amount of rental for the use of the vehicle under the Civil Code.
Under the labor code, he is considered as employee of the owner/operator of
the bus for the purpose of the latters liabilities to the passengers. Liability is
solidary.

Case: Castilex Industrial Corp vs Vasquez, 321 SCRA 393

Facts: Companys car driven by its manager collided with a motorcycle
resulting to death of the latters driver.

Held: The mere fact that an employee is driving the companys car at the
time of the accident is not itself sufficient to charge the employer liable for
the negligent operation of the car unless the employee is acting within the
scope or course of his employment. vicarious liability of employer for acts of
its employees.

Kabit System

A person with CPC allows other owner of vehicle to operate under his
CPC for a fee or percentage of the earnings (Dizon vs Octavio, OG No 8, p
4059)

The person with the CPC is liable for the injury suffered by the
passenger or third person caused by the KABIT operator, with right to
recover from the real owner unless they are considered in pari delicto. i.e. no
recovery (Lita Enterprises vs IAC, 129 SCRA 79; Benedicto vs IAC, 187 SCRA
547)

Regardless of who is the actual owner of a motor vehicle, the

registered owner is the operator of the same with respect to the public and
third person. As such he is directly and primarily responsible for the
operations consequences. The actual operator and employer are considered
merely as his agent. (First Malayan Leasing vs CA, 209 SCRA 660)
Transferor

Registered Franchisor or vehicle remains to be owner and the

transferee merely holds as agent of the vehicle for the registered owner. (Y
Transit Co Inc vs NLRC, 229 SCRA 508)

Registered Owner

The registered owner or a mother vehicle is primarily responsible to

the public and third parties for injuries caused by the vehicle even which such
vehicle is no longer owned as it was sold to another who had not yet
registered his ownership.

Case: Equipment Leasing Corp vs Suyom, Sept 5, 02

Facts: ELC is the registered owner of a tractor which was sold in 1992 to
Ecatine Corp which had not registered the sale. In 1994 the tractor driven an
employee of Ecatine Corp rammed a house cum store causing damages to
property and death and bodily injuries.

Held: The sale of the vehicle is not binding the third party until and unless the
sale is registered. In case of accident the victim may sue the registered
owner who is liable for the acts of the driver or employee of the unregistered
new owner.

Case: Aguilar Sr vs Commercial Saving Bank, 360 SCRA 395

Held: Registered owner of motor vehicle is primarily and directly liable for the
death or bodily injuries caused by the operation of the vehicle which he no
longer own.
Acts of Passengers

Where the carriers employees, thru the exercise of the diligence of a

good father of the family, could have prevented or stopped a passenger from
causing injury but failed to do so, he is liable. (Art 1763)

Bachelor Express vs CA, 188 SCRA 216, 90

Held: While the sudden stabbing by a passenger of another passenger inside

the bus may be considered as force majeure as to absolved the carrier from
liability, the carrier must prove that it was not at fault of negligent causing
the injuries.

It was shown that the buss door is not properly kept in that the mere
push makes it opens easily causing some of the passengers fell during the
commotion and despite of the panic inside the bus caused by the stabbing,
the conductor failed to blow his whistle to signal the driver to stop and the
driver continued driving unminding the commotion going on. Clearly the
carriers employees failed to exercise the extra ordinary diligence in
preventing or minimizing the injuries during and after the incident. The
carrier failed to rebut the presumption of being at fault or acted negligently.

Case: Fortune Express vs CA, 305 SCRA 25, 99

Facts: 3 Muslim Maranaoans boarded a bus and upon reaching Kauswagan,

held up the bus and ordered all the other passengers to get of the bus. On
passenger requested to go back to get something inside the bus for which he
was allowed. He was shot while pleading with one of the Muslim to spare the
life of the bus driver. The bus operator was warned before of the plot to burn
all their buses plying Cagayan de Oro City to Marawi City by route by a group
of Muslim out to avenge the death of their kin involved in a motor vehicular
accident involving the operators bus.
Held: The event was foreseeable because of the PC report of plot to burn their
buses, the operator did not take steps to safeguard the lives and properties of
its passengers. The event was not a fortuitous that would exempt the carrier.

Contributory Negligence

Where the proximate cause of a passengers injury or death is the

negligence of the common carrier, it will not bar recovery of damages but the
amount shall be equitably reduced. (Art 1762)

Case: Isaac vs Ammen Transportation, 101 Phil 1046, 57

Facts: Bus passengers placed his elbow outside the window railing of the bus.
An oncoming bus hit his elbow.

Held: Carrier is not held liable because the proximate cause of the injury was
the passengers own contributory negligence which serves as complete
defense to the carrier and absolves it from liability.

Acts of Strangers non passenger or non-employees

Common carriers are liable for the acts of stranger if the employee
failed or had not taken measures which could have prevented or minimized
stopped the act or omission. (Art 1763)

Case: Pilapil vs CA, 180 SCRA 546, 89 stone throwing

Facts: an unidentified bystander along the highway hurled a stone at a
passing bus hitting one of the passengers.

Held: While the law requires the highest degree of diligence extraordinary
from common carrier in the safe transport of its passengers and creates a
presumption of fault or negligence against them, it does not, however, makes
the carrier an insurer of the absolute safety of the passengers.

The presumption of fault or negligence in this case was rebutted by

the fact that the injury sustained was not due to defect in the bus. Neither
due to the negligence or fault of carriers employees which were not an issue.
Thus the carrier was not held liable. The injury caused by the strangers act
over which the carrier had no control or even knowledge nor could have
prevented-serves also as a rebuttal. Thus the tort committed by the stranger
causing injury does not accord a cause of action to the injured passenger
against the carrier.

Hijackers

Robbers or thieves who acted with grave or irresistible force, threat or

violence caused the loss, destruction or damages.

Case: De Guzman vs CA, 168 SCRA 612: Basco vs CA, 221 SCRA 318

Note Gacal vs PAL, 183 SCRA 189

Facts: PALs plane was hijacked by MNLF during the martial law regime.

Held: PAL was not held liable because the responsibility for the safety of the
passenger was placed with the military in frisking passengers and checking
cargoes.

Stipulations Limiting Carriers Liability

Stipulation printed bill of lading limiting the carriers liability for loss or
damage or destruction of a cargo to certain sum, unless the shipper or owner
declares a higher or greater value is sanction by law (Art 1749) provided such
stipulations are reasonable and just under the circumstances, and has been
freely and fairly agreed upon. (Everett Steamship Corp Vs CA. 297 SCRA 496,
98)

In a contract of private carriage, the parties may validly stipulate that

responsibility rests the charterer, exempting the carrier from liability for loss
or damage of the cargo caused even by the employees negligence.
(Valenzuela Hardwood vs CA, 274 SCRA 642, 97)

Valid Stipulations (Art 1744)

in writing and signed by the shipper

supported by valuable consideration other than the service rendered by

the carrier and

reasonable, just, fair and not contrary to law, moral and public policy etc

delay caused by riots or strikes (Art 1748)

Void Stipulations (Art 1745)

goods are transported at the risk of the owners

not liable for any loss, damages or destruction

need not to observe any diligence in the custody of the goods

exercise diligence less than required of a good father of the family or a

men of ordinary prudence in the vigilance of the goods

not responsible for acts or omission of its employee (except as stipulated

in private carrier)

not responsible for act of robbers or thieves who did not act with grave,
irresistible force, threat or violence

not responsible for loss, destruction or deterioration of goods on account of

the defective condition of the carriers equipments

Void because they are unjust, unreasonable and contrary to law, customs,
morale, public policy or public order.

Damages Recoverable in Transportation Mishap

Death indemnity of P50,000 (Art 1764 and 2206)

Actual or Compensatory damages pecuniary loss suffered as duly proved.

This may include medical expenses, loss of valuable properties and burial-
funeral was expenses. (2199)

Loss of earning capacity

Given:

Life expectancy = 80 age of death

Net income = Gross = necessity living expense

Formula = net capacity = life expectancy * net income

Moral Damages (Art 2206)

Exemplary Damages of defendant acted in a wanton, malevolent,

oppressive and reckless manner

Attorneys fees

Cost of suit

Actions and Doctrines applied

Negligence

It is defined or described as the omission to do something which as

reasonable man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do, or the doing of something which a
prudent and reasonable man would not do (Laguyan vs IAC, 167 SCRA 383)

It is the want of care required by the circumstances. It is relative or

comparative, not absolute, term and its application depends upon the
circumstance or situation of the parties and the degree of care and vigilance
which the circumstances reasonably required.

Emergency Rule

One who suddenly finds himself in a place of danger and is required

that may be adopted to avoid the impending danger, is not guilty of
negligence, if he fails to adopt what subsequently and upon reflection may
appear to have been a better method, unless the emergency in which he
finds himself is brought about by his own negligence

Case: McKee vs IAC:

Facts: Two boys suddenly darted before McKees car forcing McKee to
swerve the car to avoid hitting the boys and in the process entered into the
opposite lane and collided with the oncoming cargo truck in the opposite
lane.

Last Clear Chance

This is applied in quasi-delict or tort cases in a stipulation where the

plaintiff is guilty of negligence but is not precluded to recover damages
caused by the defendants negligence where it appear that the defendant, by
exercising reasonable care and prudence, might have avoided the impending
harm but failed to do so, thus making the defendant liable for injurious
consequences of the accident suffered by the plaintiff notwithstanding the
latters prior negligence. The defendant has the last clear chance to avoid.
(Bustamante vs CA, 103 SCRA 603. 91 citing 1918 case of Picart vs Smith, 37
Phil 809)

Acquittal in Criminal Action Effect of Civil Suit

 The acquittal judgment may extinguish the civil liability when it
declares that the facts from which the civil liability might arise did not exist.
(Art 29 NCC: Lontoc vs MD Transit & Taxi Co Inc, 160 SCRA 370, 88)

Applicability of Laws

Foreign laws - the law of the port of destination shall govern the rights and
liabilities of the carriers for the loss, damages, destruction or deterioration of
goods carried. (Art 1753)

Cases:

National Dev Corp vs CA, 164 SCRA 601

Facts: Ship bound for the Phils while in Japanese water bumped another ship
resulting to losses.

Held: The Phil Law applies, the civil code provisions on common carrier
relating to the diligence of the carrier in the carriage of the cargoes and the
code of commerce provisions on Maritime Commerce relating

Zalamea vs CA, 228 SCRA 23, 93

Held: The law of the place where the contract was made governs the nature,
validity obligation and interpretation of the contract. (Doctrine of Lex Loci
Celebrationis)

United Airlines vs CA, April 20, 2001 Reiterated Zalamea

Facts: Ticket brought in Manila agent of the airline was rewritten in
Washington DC, USA resulting to the buyers was being refused to board the
plane.

Held: The rewriting of the ticket in America did not change the nature of the
original contract of carriage entered into by the parties in Manila. The CA
erred in applying American Law instead of Philippine Law.

Means of Regulation and Supervision of Transportation Business

Franchise this is a special privilege granted by the state thru legislation to

corporations. A privilege of public concern which cannot be exercised at will
or pleasure but is reserved for public control and administration. The power
to issue franchise may be delegated by Congress to the Executive
Administrative Agencies like LTFRB and the CAB.

CPC and CPCN Certificate of Public Convenience and Certificate of Public

Convenience and Necessity for franchise holders. The lack of CPC or CPCN
has no effect on the liability on common carriers.

Requisites for the Issuance of CPC or CPCN

(a) Filipino Citizen

(b) Financial Capacity and willingness to pay such claims and other
contingies during the operation.
(c) Public need, public interest and the common good are decisive and
overriding-principal consideration

Grounds for the Suspension or Cancellation of CPC and CPCN

(a) Violation of contumacious refusal to comply with the law

(b) Dummy operator

(c) Abandonment of the services or ceases to operate

Factors Considered in the Grant or Issuance of CPC or CPCN

(a) Public need, public interest and the common good.

(b) Prior or old operator rule.

(c) Prior applicant rule

Prior Operator Rule

Before a new CPC or CPCN is issued to a new operator, the old

operator is given opportunity to extend its service to meet the increasing
public need.
 However, this rule is no longer controlling as held in

Qualitran Limousine vs Royal Class Limousine, 179 SCRA 569

Under the constitution, it is to the best interest of the public to have

two or more companies in the field to stimulate business and prevent
monopolies pursuant to the constitutional mandate of equitable distribution
of opportunities, income and wealth, and regulation of competition and
prohibition of monopolies.

PLDT vs NTC, 190 SCRA 717, 91

The free competition in the industry provides improvement in the

quality and delivery of service of public utililities. After all no public utility has
the constitutional right of monopoly.

Prior Applicant Rule

This rule is applied where there are no prior operator issued CPC or
CPCN and there are many applications at the same time for authorization to
operate public utility. When all the applications have meet equally the
requirements for the issuance of the CPC or CPCN, the first to have filed his
application will be granted.

The fact that an operator of public utility has no facilities of its own is
disqualified, nor that the fact that the owner of facilities for public utility is
qualified to be issued a CPC or CPCN.

Case: Kilusang Mayo Uno Labor Center vs Garcia Jr. 239 SCRA 386, 94
Held:

The right to operate public utility may exist independently and

separately from the ownership of utilities thereof. One can own said facilities
without operating them as public utility: conversely, one may operate a public
utility without owning the facilities necessarily used to serve the public.

Operator of public utility must have a franchise and CPC or CPCN

while the owner public utility facilities need have not have franchise and CPC
or CPCN.

Liabilities of Carriers

Goods Common carriers are responsible for the loss, destruction or

deterioration of the goods carried. (Art 1734) They are presumed to have
been at fault or to have acted negligently unless they prove having exercised-
observe extraordinary diligence. (Art 1735)

For delay in the transportation without just cause negligent, even if

the cause is a natural disaster. (Art 1740) and stipulation limiting the liability
cannot be available of in case of loss, destruction or deterioration of the
goods. (Art 1747) (Arts 370-374 Code of Commerce)

Common carrier granted CPC is duty bound to accept cargo and/or

passenger without discrimination. However, there are instances or grounds
for valid refusal of the carrier to accept the goods or passengers. (FC Fisher
vs Yangco Steamship, 31 Phil 1, 1934)

1. Hazardous and dangerous goods.

2. Unfit for transportation due to improper packaging or defect in their
container

Passengers common carriers are bound to observe extraordinary diligence

for the safety of the passengers transported by them according to all
circumstance of each case. They are bound to carry the passengers safely as
far as human care and foresight can provide using utmost diligence of very
cautious person, with due regard for all circumstances. (Art 1755)

In case of death of or injuries to passengers, common carriers are

presumed to have been at fault or to have acted negligently, unless they
prove observation of extraordinary diligence. (Art 1756) A responsibility that
cannot be dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets or otherwise. (Art 1757 and 1760)

Passenger must observe the diligence of a good father of a family to

avoid injury to himself. (Art 1761) Their contributory negligence will equitably
reduce the carriers libility.

Case: Isaac vs Ammen Transportation, 101 Phil 1046, 57

Facts: Bus passengers placed his elbow outside the window railing of the bus.
An oncoming bus hit his elbow.

Held: Carrier is not held liable because the proximate cause of the injury was
the passengers own contributory negligence which serves as complete
defense to the carrier and absolves it from liability. (Note the bus was only a
victim of the collision)

Also laid down the Emergency Rule that where a driver is

confronted with a sudden emergency-predicament, he may not be held liable
for acts taken where is not given enough time to take proper course of action
as he should under ordinary circumstances.

Defective mechanism of vehicle

Damage or injury caused by defective vehicle had been consistently

held not caused by fortuitous event. The rationale of this rule is the fact that
the passenger has neither choice nor control over the carrier on the selection
and use of the equipment and appliances used by the carrier.

Fortuitous event

Art. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following
causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act of omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.

Fortuitous event may be availed by carrier as a defense under the

following conditions (requisites):

1. the cause or event is unforeseen, unexpected occurrence or foreseeable

cannot be avoided-impossible

2. the occurrence renders it impossible for the carrier to fulfill his

obligation in a normal manner

3. the carrier must be free from any participation in the aggravation of the
injury resulting

4. the event must be the proximate and only cause of the loss
Fire This is not considered a natural disaster or calamity as that caused by
lightning, earthquake, tempest or public enemy. (Eastern Shipping Lines vs
IAC, 150 SCRA 469) because fire is generally caused by man.

Phil Am Gen Ins Co vs MCG Marine Service, Mar 8, 02

Facts:

Ship sunk during attendance of strong winds and enormous waves

despite continuous pumping out of water that entered into the ships hold
thru a crack or hole at the bottom of the ships hull.

Held:

The presence of the strong winds and enormous waves at the time of
the sinking of the ship was the proximate cause and thus the shipowner may
not be held liable for the loss of the cargo. (As for the hole in the hull, it was
not accessible for the crew to check and control the flow of sea water into the
ship aggravated by the pounding of strong wind and huge waves)