TRANSPORTATION LAW REVIEWER by ramon joma bungabong
Elements:
I. PRELIMINARY CONSIDERATIONS
B. Concept of Public Utility and Public Service (Sec. 13, Public Service Act)
CONCEPT
Public Utility - a buisness or service engaged in regularly supplying the public with
some commodity or service of public consequence such as electricity, gas, water,
transportation, telephone service. The term implies public use and public service.
Meaning of Public service under Public Service Act:
"The term 'public service' includes every person that now or hereafter may own,
operate, manage, or control in the Philippines, 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, sub-way motor vehicle,
either for freight or passenger, or both with or without fixed route and whatever may
be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries, and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine railway, marine
repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system,
gas electric light, heat and power, water supply and power, petroleum, sewerage
system, wire or wireless communications system, wire or wireless broadcasting
stations and other similar public services
Provided, however, That a person engaged in agriculture, not otherwise a public
service, who owns a motor vehicle and uses it personally and/or enters into a special
contract whereby said motor vehicle is offered for hire or compensation to a third
party or third engaged in agriculture, not itself or themselves a public service, for
operation by the latter for a limited time and for a specific purpose directly connected
with the cultivation of his or their farm, the transportation, processing, and marketing
of agricultural products of such third party or third parties shall not be considered as
operating a public service for the purposes of this Act.
To be considered a public service -
1. The person must own, operate, manage or control in the PH public services w/c
may include distribution of goods or rendering of services to the public
( such as common carrier, railroad, street railway, subway motor vehicle, either for
freight or passenger, shipyard, marine railways, marine repair shop wharf or dock,
ice plant, ice-refrigeration plant, canal, irrigation system, gas electric light, heat and
power, water supply and power, petroleum, sewerage system, wire or wireless
communications system, wire or wireless broadcasting stations)
2. The ownership, operation, management or control must be for hire or
compensation
3. The ownership, operation, management or control must be done for general
business purposes.
Characteristics
1. Not required that the buisness is permanent (permanent or accidental)
2. Buisness maybe with general or limited clientele - with respect to carriers, they
are considered public service if: they transport either freight or passenger or both;
or wihout a fixed route
3. Classification may be freight or carrier service of any class, express service,
steamboat or steamship line, pontiness, ferries and watercraft.
C. Constitutional Limitations on operation of public utilities (Art. XII, 1987
Consti)
1. No franchise, certificate, or any other form of authorization for the operation
of a public utility shall be granted except to citizens of the Philippines or to
corporations or associations organized under the laws of the Philippines, at least
sixty per centum of whose capital is owned by such citizens;
2. nor shall such franchise, certificate, or authorization be exclusive in character
or for a longer period than fifty years.
 3. Neither shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or repeal by the Congress
when the common good so requires.
4. The State shall encourage equity participation in public utilities by the general
public.
5. The participation of foreign investors in the governing body of any public
utility enterprise shall be limited to their proportionate share in its capital,
6. and all the executive and managing officers of such corporation or
association must be citizens of the Philippines.
7. In times of national emergency, when public interest requires, the state may
temporarily take over or direct operation of any privately owned public utility pr
buisness
8. The state may, in national welfare and defense, upon payment of just
compensation, transfer to public ownership utilities and other private enterprises to
be operated by the Govt.
9. State shall regulate or prohibit monopolies when public interest requires
10. Combinations in restrains of trade or unfair competition are not allowed.
D. REGULATORY AGENCIES
The basic law that governs public service is the Public Service Act,
Commonwealth Act 146. However, many of its provisions specifically those
concerning the organization and administration of the Public Service Commission
(PSC) have been repealed by subsequent issuances. The powers of the PSC are
now distributed among diffrent govt agencies:
1. Dept. Of Transportation - other agencies are under this department and it is the
agency that issues certificates of public convenience for operation of national
railroad carriers.
2. Land Transportation Franchising Regulatory Board (LTFRB) - land transportation
3. Land Transportation office - registration of drivers and motor vehicles
4. Maritime Industry Authority (MARINA) - water transportation
5. Phil. Coast Guard - concerned w/ safety in water transportation
6. National Telecommunications Commission - communication utilities and services,
radio communications systems, wire or wireless telephone systems, radio and tv
broadcasting systems and the like.
7. Energy Regulatory Commission - electric or power distribution companies
8. National Water Resources Council - water resources
9. Civil Aeronautics Board - air transpo, economic aspects in particular.
10. Civil Aviation Authority of the PH - undertakes maintenance and operation of
airports and othr similar facilities; registers aircraft and other incidents concerning
the same and provides safety regulations in air transportation.
11. Phil. Ports Authority - wharves and ports
12. Local Water Utilities Administration - water districts
13. Toll Regulatory Board - toll operators
E. CONCEPT OF FRANCHISE & CERTIFICATE OF PUBLIC CONVENIENCE
Legislative franchise - is a grant or privilege from the sovereign power
Cert. Of Public Convenience - is a form of regulation through administrative agencies
A franchise, being merely a privilege emanating from the sovereign power of the
state and owing its existence to a grant, is subject to regulation by the state itself by
virtue of its police power thru its administrative agencies.
A. The power to authorize and control the operation of a public utility is admittedly a
prerogative of the legislature, since Congress is that branch of govt vested with
plenary powers of legislation.
The franchise is a legislative grant, whether made directly by the legislature itself or
by anyone of its instrumentalities. The grant, when made, binds the public and is
directly or indirectly, the act of the State. Congress, by giving a Board or
Administrative agency the power to issue permits for the operation of a public utility
has delegated to the said body the authority to determine the capability and
competence of a prospective domestic transport operator to engage in such venture.

B. Nevertheless, to be valid, the delegation itself must be circumscribed by
C. legislative restrictions, not a roving commission that will give the delegate
unlimited legislative authority, otherwise the delegation is an abdication of legislative
authority, a total surrender by the legislature of its prerogatives in favor of the
delegate.
D. Although the Constitution provides in Art. XII, Section 11 that the issuance of a
E. franchise, certificate or other form of authorization for the operation of a public
utility shall be subject to amendment, alteration or repeal by Congress, it does not
imply that only Congress has the power to grant such authorization. In fact,
franchises issued by Congress are generally not required before each and every
public utility may operate. Thus the law has granted certain administrative agencies
the power to grant licenses for or to authorize the operation of certain public utilities,
the power to grant franchises has frequently been delegated, even to agencies other
than those of a legislative nature. And privileges conferred by grant by administrative
agencies as agents for the state constitute as much a legislative franchise as though
it had been made by an act of the legislature.
Example:
a wharf or dock as contemplated under the Public Service Act is a public utility, its
operation would not necessarily call for a franchise from the legislative branch, Thus
the law has granted certain administrative agencies the power to grant licenses for
or to authorize the operation of certain public utilities.
PPA was tasked with the operation and management of the port, in accordance with
P.D. 857 and other applicable laws and regulations. However, P.D. 857 itself
authorizes the PPA to perform service by itself, by contracting it out, or through other
means. The conclusion is that the lawmaker has empowered the PPA to undertake
by itself the operation and management of the port or to authorize its operation and
management by another by contract or other means - the latter power having been
delegated to the PPA, a franchise from Congress to authorize an entity other than
the PPA to operate and manage the port becomes unnecessary.
WHEN LEGISLATIVE FRANCHISE IS NECESSARY
-even if there was already a delegation of authority to a specific administrative
agency to issue certificates of public convenience, it does not follow that a legislative
franchise is no longer necessary. It would still depend on the enabling law.
Ex. The EPIRA law provides that the power to grant franchises to persons
engaged in the transmission and distribution of electricity shall be vested exclusively
in the Congress.
DELEGATION TO LOCAL GOVERNMENT UNITS
Cities and municipalities are likewise given delegated authorities to grant franchises
to certain public utilities including franchises of tricycle operators, ferries and
wharves. Thus under the Local Government Code, the Sanggunian Bayan is
empowered to:
(vi) Subject to the guideline prescribed by the Dept. Of Transportation and
Communications, regulate the operation of tricycles and grant franchises for the
operation thereof within the territorial jurisdiction of the municipality;
(vii) Upon approval by a majority vote of all the members of the sangunniang
bayan, grant a franchise to any person, partnership, corporation, or cooperative to
establish, construct, operate and maintain ferries, wharves, markets or
slaughterhouses, or such other similar activities within the municipality as may be
allowed by applicable laws.
BASIC RULES ON ISSUANCE OF CPC UNDER THE PSA
- a public utility has for its object public service in general, the law in order to prevent
the public from being unjustly exploited, requires that every enterprise of such
nature , before commencing operations, shall obtain a certificate of public
convenience. The basic rules regarding this is sections 15 and 16 of the PSA.
Although the above quoted statutory rules are now modified by the constitution on
ownership and subsequent special laws governing specific regulatory agencies,
certain basic principles are still in force. Thus the issuance of a CPC still requires
the concurrence of the following:
1. Applicant must be citizen of PH, or a corporation or co-partnership, association or PROVISIONAL AUTHORITY - certain public utilities may be allowed to operate for
joint stock company constituted and organized under the laws of the PH, 60 per a limited period pending the issuance of a CPC by acquiring a provisional authority.
centum at least of the stock or paid capital of which entirely belong to citizens of the Not an equivalent of a temporary permit.
PH

INSTANCES WHEN CPC IS NOT REQUIRED

2. Applicant mus be financially capable of undertaking the proposed service and
meeting the responsibilities incident to its operations A. Warehouses
B. Vehicles drawn by animals and bancas moved by oar or sail and tugboats and
lighters
3. Applicant must prove that the operation of the public service proposed and the
authorization to do buisness will promote the public interest in a proper and suitable C. Airships w/n PH except as regards the fixing of their maximum rates on freight
manner. and passengers
D. Radio companies except with respect to the fixing of rates

NATURE OF CPC E. Public services owned or operated by any instrumentality of the National Govt or
any government-owned or controlled corporation except with respect to the fixing of
A certificate of public convenience may or may not be considered property rates
depending on the perspective or viewpoint. A certificate is a mere privilege that is
always subject to the regulation of the state. Insofar as the State is concerned a
CPC constitutes a franchise nor a contract, confers no property right and is a mere TRANSFER OF CERTIFICATE
license or privilege.
-Under Sec. 20 of the PSA, the PSC has the power and authority to approve a sale
or transfer of a certificate if 1) there are just and reasonable grounds for making the
A. A common carrier that holds such certificate does not acquire property right in the transfer and 2) the sale or transfer is not detrimental to the public interest.
route covered thereby. No vested right will be affected if the govt decides to re-route
the traffic thereby changing the route of the carrier. The same is true where what is
involved is a ban of provinvial buses from entering a particular city.

II COMMON CARRIER
B. However in a broad sense it may be considered property, Under the Public
service law, a certificate of public convenience can be sold by the holder thereof
because it has considerable material value and is considered a valuable asset. A. Contract of carriage, Definition
However with respect to other persons and other public utilities, a certificate of public
- There is a contract of carriage when a person obligates himself to transport persons
convenience as property, which represents the right and authority to operate its
or property from one place to another for a consideration. The contract may involve
facilities for public service, cannot be taken or interfered with without due process of
carriage of passengers or carriage of goods. The person who obligates himself to
law. Appropriate actions may be maintained in courts by the holder of the certificate
transport the goods or passengers may be a common carrier.
against those who have not been authorized to operate in competition with the
former and those who invade the rights which the former has pursuant to the
authority granted by the Public Service Commission.
When an airline issues a ticket to a passenger confirmed for a particular flight on a
certain date, a contract of carriage arises. The passenger then has every right to
expect that he would fly on that flight and on that date. If he does not, then the carrier
opens itself to a suit for breach of contract of carriage. (SPOUSES JESUS
FERNANDO and ELIZABETH S. FERNANDO, vs.NORTHWEST AIRLINES, INC.,
Respondent)
B. Common Carrier, Definition
- Art. 1732 Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public.
Petitioner is a common carrier. Whether its carrying of goods is done
on an irregular rather than scheduled manner, and with an only limited clientele. A
common carrier need not have fixed and publicly known routes. Neither does it have
to maintain terminals or issue tickets. Petitioner fits the test of a common carrier as
laid down in Bascos vs. Court of Appeals. The test to determine a common carrier
is "whether the given undertaking is a part of the business engaged in by the carrier
which he has held out to the general public as his occupation rather than the quantity
or extent of the business transacted." (Asia Lighterage and Shipping)
C. Common Carrier and Private Carrier, Distinguished
- it lies in the character of the business, such that if the undertaking is a single
transaction, not a part of a general business or occupation, although involving the
carriage of goods for a fee, the person or corporation offering such service is a
private carrier. For instance, if a person agrees to carry a person to the airport using
his privately-owned car that is meant for personal use, he will be considered a
private carrier.
"Generally, private carriage is undertaken by special agreement and the carrier does
not hold himself out to carry goods for the general public. The most typical, although
not the only form of private carriage, is the charter party, a maritime contract by
which the charterer, a party other than the shipowner, obtains the use and service
of all or some part of a ship for a period of time or a voyage or voyages." (National
Steel Corp. vs CA)
Much of the distinction between a common or public carrier and a private or special
carrier lies in the character of the business, such that if the undertaking is an isolated
transaction, not a part of the business or occupation, and the carrier does not hold
itself out to carry the goods for the general public or to a limited clientele, although
involving the carriage of goods for a fee,[3] the person or corporation providing such
service could very well be just a private carrier. A typical case is that of a charter
party which includes both the vessel and its crew, such as in a bareboat or demise,
where the charterer obtains the use and service of all or some part of a ship for a
period of time or a voyage or voyages[4] and gets the control of the vessel and its
crew. (Phil. American Insurance vs PKS Shipping)
The Civil Code provisions on common carriers should not be applied where the
carrier is not acting as such but as a private carrier. The stipulation in the charter
party absolving the owner from liability for loss due to the negligence of its agent
would be void only if the strict public policy governing common carriers is applied.
Such policy has no force where the public at large is not involved, as in the case of
a ship totally chartered for the use of a single party (Home Insurance Company vs
American Steamship Agencies)
D. Distinguished from towage, arastre, and stevedoring
- Towage: one vessel is hired to bring another vessel to another place. Thus a
tugboat may be hired by a common carrier to bring a barge to the port. In this case
the operator of the tugboat cannot be considered a common carrier.
-Arrastre: refers to hauling of cargo, comprehends the handling of cargo on the wharf
or between the establishment of the consignee or shipper and the ships tackle. The
responsibility of the arrastre oerator lasts until the delivery of the cargo to the
consignee.
-Stevedoring: refers to the handling of the cargo in the holds of the vessel or between
the ships tackle and the holds of the vessel. The responsibility of the stevedore ends
upon the loading and stowing of cargo in the vessel.
E. Tests to determine Common Carrier
- (First Phil. Industrial Corporation v Court of Appeals)
The test for determining whether a party is a common carrier of goods is:
(1) He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of
goods for person generally as a business and not as a casual occupation;
(2) He must undertake to carry goods of the kind to which his business is confined;
(3) He must undertake to carry by the method by which his business is conducted
and over his established roads; and
(4) The transportation must be for hire.
the true test for a common carrier is not the quantity or extent of the business
actually transacted, or the number and character of the conveyances used in
the activity, but whether the undertaking is a part of the activity engaged in by
the carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of the general
business or occupation engaged in, as advertised and held out to the general
public, the individual or the entity rendering such service is a private, not a
common, carrier. The question must be determined by the character of the business
actually carried on by the carrier, not by any secret intention or mental reservation it
may entertain or assert when charged with the duties and obligations that the law
imposes. (Sps. Perena v. Sps. Nicolas)
The above article makes 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
(in local idiom, as a “sideline). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional, episodic
or unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the “general public,” i.e., the general community or population,
and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1732 deliberately refrained from making
such distinctions.”(Estrelita Bascos vs CA)
F. Parties to the contract of carriage
-it depends on whether it is for carriage of passengers or carriage of goods:
CARRIAGE OF PASSENGERS - common carrier and passenger
CARRIAGE OF GOODS - shipper(delivers the goods to the carrier), carrier, and
consignee(to whom the goods are delivered)
G. Diligence required of a common carrier
ART 1733. Common carriers, from the nature of their business and for reasons
of public policy, are bound to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported.
Such extraordinary diligence in the vigilance over goods is further expressed
in 1734,1735,1745
Extraordinary diligence for the safety of passengers is further set forth in 1755
and 1756
ART 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances.
1. Extraordinary diligence and the underlying reason
-To prove the exercise of extraordinary diligence, the carrier must do more than
merely show the possibility that some other party could be responsible. It must prove
that it used all reasonable means to ascertain the nature and characteristics of the
goods transported and it exercised due care in handling them.
-This extraordinary diligence calculated to protect passengers from the tragic
mishaps that frequently occur in connection with rapid modern transportation. This
high standard of care is imperatively demanded by the preciousness of human life
and by the consideration that every person must in every way be safeguarded
against all injury.
2. Requirements of extra ordinary diligence in carriage by sea
A. WARRANTY OF SEA WORTHINESS OF A VESSEL

COGSA:
SEC 3. (1) The carrier shall be bound before and at the beginning of the voyage
to exercise due diligence to-
A. Make the ship sea worthy
B. Properly man, equip and supply the ship
C. Make the holds, refrigerating and cooling chambers and all other parts
of the ship in which the goods are carried, fit and safe for their reception,
carriage and preservation.
(2) The carrier shall properly and carefully load, handle, stow, carry, keep, care
for, and discharge the goods carried.
Seaworthiness - is that strength, durability and engineering skill made a part of the
ships construction and continued maintenance, together with a competent and
sufficient crew, which would withstand the dangers of the elements which might be
reasonably expected or encountered during the voyage without loss or damage to
her particular cargo.
ART 609 Code of Commerce:
Captains, masters or patrons of vessels must be filipinos, have legal
capacity to contract in accordance with this code, and prove the skill, capacity,
and qualifications necessary to command and direct the vessel, as
established by marine or navigation laws, ordinances, or regulations, and
must not be disqualified according to the same for the discharge of the duties
of the position.
If the owner of a vessel desires to be the captain thereof, without having
the legal qualifications therefor, he shall limit himself to the financial
administration of the vessel, and shall in trust the navigation to a person
possessing the qualifications required by said ordinances and regulations.
B. NO OVERLOADING
- duty to exercise due diligence likewise includes the duty to take passengers
or cargoes that are within the carrying capacity of the vessel.
C. PROPER STORAGE
-the vessel itself may be suitable for the cargo but this is not enough because
the cargo must also be properly stored.
D. RULE ON DEVIATION AND TRANSHIPMENT
ART 359 Code of Commerce
DEVIATON
If there is an agreement between the shipper and the carrier as to the road over
which the conveyance is to be made, the carrier may not change the route, unless
it be by reason of force majeure; and should he do so without this cause, he sahll
be liable for all the losses which the goods he transports may suffer from any other
cause beside paying the sum which may have been stipulated for such case.
When on account of said cause of force majeure, the carrier had to take another
route which produced an increase in transportation charges, he shall be reimbursed
upon formal proof.
TRANSHIPMENT
-transhipment, in maritime law, is the act of taking cargo out of one ship and
loading it in another, or the transfer of goods from one vessel stipulated in the
contract and loading it into another vessel before the place of destination.
- it is a well known commercial usage that transhipment of freight without legal
cause, however competent and safe the vessel into which the transfer is made, is a
violation of the contract and infringement of the right of the shipper, and subjects the
carrier to liability if the freight is lost even by a cause otherwise excepted.
Tariff System
- tariff is a rule or condition of air travel that regulates and binds the airline
3. Requirements of Extraordinary diligence in carriage by land and passengers. Tariffs are developed and imposed by air carriers with the
approval of the Civil Aeronautics Board. These are provided for in the
tickets that are binding although they are in the nature of a contract of
A. Good condition of the vehicle (roadworthiness) adhesion.

-they are required to make sure that vehicles they are using are in good
order and condition. Care of Baggage
- duty to take care of the baggage of the carriers passengers
B. Compliance with traffic rules
-The basic traffic rules to be complied with include those provided under H. Liabilities of the Common Carriers in case of breach of contract of carriage
the Land Transportation and Traffic Code, R.A. 4136. Other traffic rules are
embodied in the ordinance issued by the local government units and Metro
Manila Development Authority. These rules are violated if the carrier did not
comply with the rules on overtaking on a curve under sec. 41 of the code, when 1. Culpa contractual, Culpa Aquiliana, Culpa Criminal
there was improper parking undeer sec. 54, when the carrier is overloaded in
sec. 32, or overtaking in a junction without extreme caution.
Passengers and shippers who suffered damages because of the breach of
contractual obligation of the carrier may sue the latter for damages. The source of
C. Obligation to inspect obligation is culpa contractual

- There is no unbending duty to inspect each and every package or

baggage that is being brought inside the bus or jeepney. The duty of a carrier
to conduct an inspection depends on the circumstances

4. Requirements of Extraordinary diligence by in carriage by air

Airworthiness
- aircraft must be fit to transport goods and passengers. The aircraft must
be in such a condition that it must be able to withstand the rigors of flight.
Under sec 3 of the civil aeronautics act of 2008, airworthiness means
that an aircraft, its engines, propellers and other components and
accessories are of proper design and construction, and are safe for
CULPA CULPA AQUILIANA CULPA CRIMINAL
navigation, such design and construction being consistent with accepted
CONTRACTUAL
engineering practice and in accordance with aerodynamic laws and
aircraft science.
 A. Negligence is Negligence is direct, Negligence is -Whoever by act or ommission causes damage to another, there being fault or
merely incidental substantive and direct, substantive negligence, is obliged to pay for the damage. Such fault or negligence, if there
independent of a and independent of is no pre-existing contractual relation between the parties, is called a quasi-
B. to the contract a contract delict and is governed by the provision of this chapter.
performance of
an obligation
already existing
because of a Art. 100 RPC - Civil liability of a person guilty of a felony
contract. -Every person criminally liable for a felony is also civilly liable.
C. There is a No pre-exisiting No pre-exisiting
pre-existing obligation (except obligation
obligation (a the duty to be Concurrent Causes of Action
contract) careful in all human (except the duty
actuations) never to harm - The same act that breaches the contract may also be a tort. Hence, a negligent act
others) that breaches the contract may give rise to a liability based on a contract as well as
quasi delict under Art. 2176 of the NCC. In fact, with respect to the employee of the
D. Proof needed Proof needed - Proof needed in a carrier, civil liability may be based on quasi delict as well as on criminal liability under
- preponderance preponderance of crime - proof of Art. 100 of the RPC
of evidence evidence guilt beyond
reasonable doubt

E. As long as its Ordinarily, the victim Accused is Hence the cause of action of a passenger or shipper against the common carrier
proved that has to prove the presumed innocent can be culpa contractual or culpa aquiliana while the basis of liability on the part of
there was a negligence of the until contrary is the driver is either culpa criminal or culpa aquiliana. The driver of the carrier is not
contract and it defendant. This is proven, so liable based on contract because there is no privity of contract.
was not carried because his action prosecution has the
out, it is is based on the burden of proving
presumed that negligence of the the negligence of
the debtor is at defendant the accused
fault, and it is his Concurrence with third persons
duty to prove
that there was -if the negligence of third persons concurs with the breach (as in the case where the
no negligence in passenger was injured because the carrier collided with another vehicle), the liability
carrying out the of the third person who was driving another vehicle and or his employer may be
terms of the based on quasi-delict. The driver alone may be held criminally liable and civil liability
contract may be imposed on him based on the delict. In the latter case, the employer is
subsidiarily liable.

-however, in a case of injury to a passenger due to the negligence of the driver of

Art 2176. NCC - Culpa Aquiliana (Quasi-Delict)
the vehicle on which he was riding and the driver of another vehicle, the drivers and
the owners of the two vehicles are jointly and severally liable for damages. It does
not make any diffrence if the liability of the other springs from contract or the other
from quasi delict
SOLIDARY LIABILITY
-in case the negligence of the carriers driver and a third person concurs, the liability
of the parties - carrier and his driver, third person - is joint and several.
2. PRESCRIPTIVE PERIOD
A. Overland transportation of goods and coastwise shipping (Art. 366 Code of
Commerce)
-Code of Commerce, Article 366 – Within the twenty-four hours following the
receipt of the merchandise, the claim against the carrier for damage or
average be found therein upon opening the packages, may be made, provided
that the indications of the damage or average which gives rise to the claim
cannot be ascertained from the outside part of such packages, in which case
the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have
been paid, no claim shall be admitted against the carrier with regard to the
condition in which the goods transported were delivered.
B. International carriage of goods by sea (Art. 3(6) Code of Commerce)
- The registered owner rule is applicable whenever the persons involved are
I. REGISTERED OWNER RULE AND KABIT SYSTEM
Registered Owner Rule
Ordinarily, the person who can be sued for breach of contract is the contracting
party, However in certain cases, by reason of public policy, the law allows victims of
accidents to sue those who are third parties. This obtains in the cases covered by
the registered owner rule.
The rule in this jurisdiction is that the person who is the registered owner of a
vehicle is liable for any damage caused by the negligent operation of the vehicle
although the same was already sold or conveyed to another person at the time of
the accident. This rule is a matter of public interest. The registered owner is liable to
the injured party subject to his right of recourse against the transferee or the
buyer.Registration of motor vehicles is now governed by R.A. 4136 The Land
Transportation and Traffic Code
Kabit System
engaged in the kabit system. It is an arrangement whereby a person who has been
granted a certificate of public convenience allows other persons who own motor
vehicles to operate them under his license, sometimes for a fee or percentage of
earnings. Although the law does not outrightly penalize the parties to such an
arrangement, kabit system is ivariably recognized as being contrary to public policy
and therefore void and inexistent under Art. 1409 of the Civil Code.
III OBLIGATIONS OF THE COMMON CARRIER IN THE CARRIAGE OF GOODS

A. Vigilance of goods
1. Exercise of extraordinary diligence
ART 1733. Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported.
Such extraordinary diligence in the vigilance over goods is further expressed in
1734,1735,1745
Extraordinary diligence for the safety of passengers is further set forth in 1755 and
1756
2. Presumption of Negligence
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of 1734,
if the goods are lost, destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently unless they prove that they observed
extraordinary diligence as required in Article 1733.
3. Duration of Liability
Art. 1736. The extraordinary responsibility of the common carrier lasts from the time
the goods are unconditionally placed in the possession of, and received by the
carrier for transportation until the same are delivered, actually or constructively, by
the carrier to the consignee, or to the person who has a right to receive them, without
prejudice to the provisions of Article 1738.
Art. 1737. The common carrier’s duty to observe extraordinary diligence in the
vigilance over the goods remains in full force and effect even when they are
temporarily unloaded or stored in transit, unless the shipper or owner has made use
of the right of stoppage in transitu.
Stoppage in transitu(The act by which the unpaid vendor of goods stops their
progress and resumes possession of them, while they are in course of transit from
him to the purchaser, and not yet actually delivered to the latter.)
Art. 1738. The extraordinary liability of the common carrier continues to be operative
even during the time the goods are stored in a warehouse of the carrier at the place
of destination, until the consignee has been advised of the arrival of the goods and
has had reasonable opportunity thereafter to remove them or otherwise dispose of
them.
A. Delivery of goods to the commom carrier
- The goods are deemed delivered to the carrier when the goods are ready for and
have been placed in the exclusive possession, custody and control of the carrier for
the purpose of their immediate transportation and the carrier has accepted them.
When the carrier has accepted such delivery, liability of the carrier commences “eo
instanti”
B. Actual or constructive delivery
-Actual - goods are physically put in possession of the carrier
Constructive - when a third person in possession of the goods acknowledges to the
buyer that he holds the goods in the buyers behalf
C. Temporary unloading or storage
- The goods have not been yet delivered to the consignee and that the voyage of
the carrier will resume.
4. Exempting Causes
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 or 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.
Art. 1739. In order that the common carrier may be exempted from responsibility,
the natural disaster must have been the proximate and only cause of the loss.
However, the common carrier must exercise due diligence to prevent or minimize
loss before, during and after the occurrence of fl ood, storm, or other natural disaster
in order that the common carrier may be exempted from liability for the loss,
destruction, or deterioration of the goods. The same duty is incumbent upon the
common carrier in case of an act of the public enemy referred to in Article 1734, No.
2.
Art. 1740. If the common carrier negligently incurs in delay in transporting the goods,
a natural disaster shall not free such carrier from responsibility.
Art. 1742. Even if the loss, destruction, or deterioration of the goods should be
caused by the character of the goods, or the faulty nature of the packing or of the
containers, the common carrier must exercise due diligence to forestall or lessen
the loss.
Art. 1743. If through the order of public authority the goods are seized or destroyed,
the common carrier is not responsible, provided said public authority had power to
issue the order.
Requirement of the absence of negligence
Absence of Delay
Due diligence to prevent or lessen the loss
5. Contributory Negligence
Art. 1741. If the shipper or owner merely contributed to the loss, destruction, or
deterioration of the goods, the proximate cause thereof being the negligence of the
common carrier, the latter shall be liable in damages, which however, shall be
equitably reduced.
6. Stipulations limiting the liability of common carriers
A. VOID STIPULATIONS:
Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
That the goods are transported at the risk of the owner or shipper;
That the common carrier will not be liable for any loss, destruction, or deterioration
of the goods;
That the common carrier need not observe any diligence in the custody of the goods;
That the common carrier shall exercise a degree of diligence less than that of a good
father of a family, or of a man of ordinary prudence in the vigilance over the movables
transported;
That the common carrier shall not be responsible for the acts or omissions of his or
its employees;
That the common carrier’s liability for acts committed by thieves, or of robbers who
do not act with
grave or irresistible threat, violence or force, is dispensed with or diminished;
That the common carrier is not responsible for the loss, destruction, or deterioration
of goods on account of the defective condition of the car, vehicle, ship, airplane or
other equipment used in the contract of carriage.
B. Limitation of liability in absence of declaration of greater value:
Art. 1749. A stipulation that the common carrier’s liability is limited to the value of
the goods appearing in the bill of lading, unless the shipper or owner declares a
greater value, is binding.
C. Limitation of liability:
Art. 1744. A stipulation between the common carrier and the shipper or owner
limiting the liability of the former for the loss, destruction, or deterioration of the
goods to a degree less than extraordinary diligence shall be valid, provided it be: (1)
In writing, signed by the shipper or owner; (2) Supported by a valuable consideration
other than the service rendered by the common carrier; and (3) Reasonable, just
and not contrary to public policy
Art. 1748. An agreement limiting the common carrier’s liability for delay on account
of strikes or riots is valid.
Art. 1750. A contract fi xing the sum that may be recovered by the owner or shipper
for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and
just under the circumstances, and has been fairly and freely agreed upon.
D. Effect of Delay
Art. 1747. If the common carrier without just cause, delays the transportation of the
goods or changes the stipulated or usual route, the contract limiting the common
carrier’s liability cannot be availed of in case of the loss, destruction, or deterioration
of the goods.
E. Rule on presumption of negligence despite stipulation
Art. 1752. Even when there ie an agreement limiting the liability of the common
carrier in the vigilance over the goods, the common carrier is disputably presumed
to have been negligent in case of their loss, destruction or deterioration.
7. Liability of baggage of passengers
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger’s
baggage which is not in his personal custody or in that of his employees. As to other
baggage, the rules in Articles 1998 and 2000 to 2003 concerning the responsibility
of hotel-keepers shall be applicable.
Art. 1998. The deposit of effects made by travellers in hotels or inns shall also be
regarded as necessary. The keepers of hotels or inns shall be responsible for them
as depositaries, provided that notice was given to them, or to their employees, of
the effects brought by the guests and that, on the part of the latter, they take the
precautions which said hotel-keepers or their substitutes advised relative to the care
and vigilance of their effects.
Art. 2000. The responsibility referred to in the two preceding articles shall include
the loss of, or injury to the personal property of the guests caused by the servants
or employees of the keepers of hotels or inns as well as by strangers; but not that
which may proceed from any force majeure. The fact that the travellers are
constrained to rely on the vigilance of the keeper of the hotels or inns shall be
considered in determining the degree of care required of him.
Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force
majeure, unless it is done with the use of arms or through an irresistible force.
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the
acts of the guest, his family, servants or visitors, or if the loss arises from the
character of the things brought into the hotel.
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting
notices to the effect that he is not liable for the articles brought by the guest. Any
stipulation between the hotel-keeper and the guest whereby the responsibility of the
former as set forth in Articles 1998 to 2001 is suppressed or diminished shall be void.
B. OTHER OBLIGATIONS
A. Other obligations
1. Duty to accept goods
a. Grounds for valid refusal to accept goods
i. General Rule: Goods sought to be transported are dangerous
objects or substances including dynamite and other explosives;
Exception: Carriers that are permitted or allowed to transport
dangerous objects or substances for the reason that it is their
function to do so or it is their operation.
ii. Goods are unfit for transportation;
*This can be found under Code of Commerce
iii. Acceptance would result in overloading;
iv. Contrabands or illegal goods;
v. Goods are injurious to health;
vi. Goods will be exposed to untoward danger like flood, capture
by enemies and the like;
vii. Goods like livestock will be exposed to disease;
viii. Strike; and
ix. Failure to tender goods on time
2. Duty to deliver goods
a. Time of delivery
General Rule: It is by stipulation
Exception: In the absence of stipulation Code of Commerce
governs.
Article 358 of the Code of Commerce provides that: “If there is no
period fixed for the delivery of the goods the carrier shall be bound
to forward them in the first shipment of the same or similar goods
which he may make to the point where he must deliver them; and
should he not do so, the damages caused by the delay should be
for his account.”
*When a common carrier undertakes to convey goods, the law
implies a contract that they shall be delivered at destination within
a reasonable time, in the absence of any agreement as to the time
of delivery.
*Mercantile usage or practice
With stipulation Without stipulation
Carrier is bound to fulfil the 1. Within a
contract and is liable for reasonable time.
2. Carrier is bound to
any delay; no matter from
forward them in the
what cause it may have
arisen first shipment of
the same or similar
goods which he
may make to the
point of delivery
b. Consequences of delay
Article 1740 of the New Civil Code provides that: “If the common
carrier negligently incurs in delay in transporting the goods, a
natural disaster shall not free such carrier from responsibility.”
Article 1747 of the New Civil Code provides that: “If the common
carrier, without just cause, delays the transportation of the goods or
changes the stipulated or usual route, the contract limiting the
common carrier's liability cannot be availed of in case of the loss,
destruction, or deterioration of the goods.”
Article 370 of the Code of Commerce provides that: “If a period
has been fixed for the delivery of the goods, it must be made within
such time, and, for failure to do so, the carrier shall pay the
indemnity stipulated in the bill of lading, neither the shipper nor the
consignee being entitled to anything else. If no indemnity has been
stipulated and the delay exceeds the time fixed in the bill of lading,
the carrier shall be liable for the damages which the delay may have
caused.”
Article 371 of the Code of Commerce provides that: “In case of
delay through the fault of the carrier, referred to in the preceding
articles, the consignee may leave the goods transported in the
hands of the former, advising him thereof in writing before their
arrival at the point of destination. When this abandonment takes
place, the carrier shall pay the full value of the goods as if they had
been lost or mislaid. If the abandonment is not made, the
indemnification for losses and damages by reason of the delay
cannot exceed the current price which the goods transported would
have had on the day and at the place in which they should have
been delivered; this same rule is to be observed in all other cases
in which this indemnity may be due.”
Article 372 of the Code of Commerce states that: “The value of
the goods which the carrier must pay in cases of loss or
misplacement shall be determined in accordance with that declared
in the bill of lading, the shipper not being allowed to present proof
that among the goods declared therein there were articles of greater
value and money. Horses, vehicles, vessels, equipment and all
other principal and accessory means of transportation shall be
especially bound in favour of the shipper, although with respect to
railroads said liability shall be subordinated to the provisions of the
laws of concession with respect to the property, and to what this
Code established as to the manner and form of effecting seizures
and attachments against said companies.”
Article 373 of the Code of Commerce states that: “The carrier who
makes the delivery of the merchandise to the consignee by virtue
of combined agreements or services with other carriers shall
assume the obligations of those who preceded him in the
conveyance, reserving his right to proceed against the latter if he
was not the party directly responsible for the fault which gave rise
to the claim of the shipper or consignee. The carrier who makes the
delivery shall likewise acquire all the actins and rights of those who
preceded him in the conveyance. The shipper and the consignee
shall have an immediate right of action against the carrier who
executed the transportation contract, or against the other carriers
who may have received the goods transported without reservation.
However, the reservation made by the latter shall not relieve them
from the responsibilities which they may have incurred by their own
acts.”
Article 374 of the Code of Commerce states that: “The
consignees to whom the shipment was made may not defer the
payment of the expenses and transportation charges of the goods
they receive after the lapse of 24 hours following their delivery; and
in case of delay in this payment, the carrier may demand the judicial
sale of the goods transported in an amount necessary to cover the
cost of transportation and the expenses incurred.”
Effects of delay:
1. Excusable delay in carriage merely suspends and generally
does not terminate the contract of carriage. When the cause is
removed, the master must proceed with the voyage and make
delivery;
2. Carrier remains duty bound to exercise extraordinary diligence;
3. Natural disaster shall not free the carrier from responsibility;
4. If delay is without just cause, the contract limiting the common
carrier’s liability cannot be availed of in case of loss or
deterioration of the goods.
c. Place of Delivery
Article 360 of the Code of Commerce provides that: “The shipper,
without changing the place where the delivery is to be made, may
change the consignment of the goods which he delivered to the
carrier, provided that at the time of ordering the change of
consignee the bill of lading signed by the carrier, if one has been
issued, be returned to him, in exchange for another wherein the
novation of the contract appears. The expenses which this change
of consignment occasions shall be for the account of the shipper.”
d. To whom delivery shall be made
Article 368 of the Code of Commerce provides that: “The carrier
must deliver to the consignee, without any delay or obstruction, the
goods which he may have received, by the mere fact of being
named in the bill of lading to receive them; and if he does not do so,
he shall be liable for the damages which may be caused thereby.”
Article 369 of the Code of Commerce provides that: “If the
consignee cannot be found at the residence indicated in the bill of
lading, or if he refuses to pay the transportation charges and
expenses, or if he refuses to receive the goods, the municipal judge,
where there is none of the first instance, shall provides for their
deposit at the disposal of the shipper, this deposit producing all the
effects of delivery without prejudice to third parties with a better
right.”