woot 2 8 2005 Notes and Cases on the LAW ON TRANSPORTATION AND PUBLIC UTILITIES By ‘TIMOTEO B. AQUINO Professor of Law San Beda College of Law University of Perpetual Help College of Law Prefect of Student Affairs San Beda College of Law Author, Torts and Damages and Notes and Cases on Banks, Negotiable Instruments and Other Commercial Documents Co-Author, Reviewer on Commercial Law and Revised Rules on Summary Procedure: Revisited RAMON PAUL L. HERNANDO Presiding Judge, Branch 29 Regional Trial Court, San Pablo, Laguna Professor of Law, San Beda College of Law, University of Santo Tomas Faculty of Civil Law Far Bastern University Institute of Lawfh SN gs em Philippine Copyright, 2004 Dood te “4 eesk SS RAMON aa LL. HE] ANDO # Fo Prescila !NANDO For my wife, Bernadette and our children Leona Isabelle, Lean Carlo, and Lauren Margaret, my parents Bernabe C. Aquino Sr. and Obdulia B. Aquino, and my aunt Felisa C. Aquino. TIMOTEO B. AQUINO For my parents Judge Teodoro Hernando Sr. and Prescilla L. Hernando and Ms. Cherry Chiara Q. Luat. RAMON PAUL L. HERNANDOstatutor the mat authors is neces provisic the dise that we issuance. Th Jems as tially sh aim of t and doct the use that are tions formula! Ne can stan practitio on the ex lems. Fo is indiap The portatior might be thos ho} tioners a The for all thy thanks Sustice IsPREFACE ‘This book represents the effort of the authors to collate and arrange in one integrated work all relevant laws, jurisprudence and other materials re ating to Transportation and Public Utilities. The authors depart from the style of presentation of textbooks on transportation laws that are currently being ‘used in law schools. This book does not present the materials as annotations of statutory provisions. Instead, the authors tried to systematically arrange all the materials by topic and to group them in such a way that they follow the authors’ chosen organization, It is believed that such structured presentation is necessary because the applicable rules are scattered in numerous statutory provisions. The topical arrangement is also necessary in order to exclude in the discussion the provisions (like some of the Code of Coramerce provisions) that were already impliedly repealed and/or rendered obsolete by new laws, issuances of administrative bodies and current practice in the industry. ‘The authors included as pedagogical tools sample bar examination prob- oms as well as edited cases. Although resort to digest of cases may substan- tially shorten the work, itis believed that the edited cases will better serve the aim of the authors to make the students discover on their own how the laws and doctrines operate in actual cases. The purpose that is normally ascribed to the use of digest of cases is served by the sample bar examination questions that are provided in the work. At the same time, these bar examination ques- tions will familiarize the students in advance with the way bar questions are formulated and the suggested ways of answering those questions, Novertheless, the discussions are presented in such a manner that they can stand on their own without the sample cases and bar questions. Thus, practitioners who are interested only in the discussions may just concentrate ‘on the expository presentation without reading the cases and the sample prob- ems. For law students, however, the study of the cases and sample problems is indispensable. ‘The authors realize that the breadth and complexity of the laws on trans- portation and public utilities make the study thereof difficult for students who might be lost in the underbrush of statutes and regulations. Hence, the au- thors hope that this work can be a useful guide for law students and practi- tioners alike. ‘The authors would like to express their gratitude, in no perfunctory sense, for all the support that they received in the preparation of this vork. Special thanks are due to Very Rev. Anscar J. Chupungco, Rector of San Beda College, Justice Isagani A. Cruz, Dean of the University of Perpetual Help College ofLaw, Dean Virgito Jara, Asst. Dean Domingo Navarro and former De: R. Sundiang of the San Beda College of Law, Dean Augusto K. Aligada of the University of Santo Tomas Faculty of Civil Law, and Dean Andres Bautista of Far Eastern University Institute of Law. Invaluable assistance and support were likewise extended by Judge Eduardo Peralta, Jr., Atty. Caroline O. Peralta, Atty. Maria Paz Tagle-Chua, Atty. Edmundo A. Cruz, Mr. Meneleo Puno, Mr. Charls Zuniga, Ms. Rowena Portes, Mrs. Linda Q. Burce, Mrs. Hllen F. Tisme, Mr. Jun B. Cadugo and the staff of the San Beda College Library. The authors are grateful to ali of them. ‘THE AUTHORS Prefe 1: um.van Jose la of the utista of support | Peralta, ano, Mr. -Tismno, TABLE OF CONTENTS. authors HORS CHAPTER 1 — GENERAL CONCEPTS 1. DEFINITION AND CONCEPT A. CONTRACT OF TRANSPORTATION : B. PARTIES o.ccccencntrnrrnnrnen IL a. Carriage of Passengers Case: Baliwag Transit Corp. v. CA..... b. Carriage of Goods... PERFECTION... a Aircraft b. Buses, Joopneys and Street Cars Trai cnn Case: British Airways, Inc. v. The Hon. CA CARRIER A. TESTS. B. CHARACTERISTICS... a b. ce ©. BRFRCT OF CHARTER PARTY DISTINGUISHED FROM PRIVATE CARRIER Case: ‘De Guzman v. CA Fabre v. CA... Baseos v. CA FGU Insurance Corp. v. G-P. Sarmiento Corp. Asia Lighterage & Shipping, Inc. v. CA. Crisostomo v. CA aoaa ee 10 uw li R 13 u 15 18|. REGISTERED OWNER RULE AND KABIT SYS DISTINGUISHED FROM TOWAGE, ARRASTRE AND STEVEDORING ..... GOVERNINGS LAWS... A. SUMMARY OF RULES... NATURE OF BUSINESS. A. REGISTRATION LAWS.. B. REGISTERED OWNER RULE... C. KABIT SYSTEM....... a. Fari Delicto Rule ... b. Aircrafts and Vessels .... Cases: Santos v. Sibug Baliwag Transit Ine. v. CA. Lita Enterprises v. Second Civi CHA? TER 2 — OBLIGATIONS OF THE PARTIES OBLIGATIONS OF THE CARRIER ... A. DUTY (0 ACCEPT B. DUTY TO DELIVER, a. Time of Delivery b. Consequences of Delay Gs Code of Commerce . @) Abandonment. (3) _ Rights of Passenger ©. WHERE AND TO WHOM DELI a. Place b. Consignee ©. _ Delay to Transport Passengers . D. DUTY TO EXERCISE EXTRAORDINARY DILIGENCE - a. Presumption of Negligence... : Mirasol v. The Robert Doillar Co. b. Duration of Duty. ve (1) Carriage of Goods Macam ¥. CA... (2) Carriage of Passenger: Cases: Light Railway Transit Authority v. Navidad ... Dangwa Transportation Co. v. CA... La Mallorca v. CA..... Aboitiz Shipping Corp. v. CA. E, DEFENSES OF COMMON CARRIERS a. Fortuitous Event 0. oOar 38 40 40 41 aL 46 41 48, 62 62 70 70 n n B 6 1 78 19 80 82 85 85 86 90 93 96 102 107 110 (2) Requisites .. (2) Participation of tie Carrier... Cases: ‘The PHILAMGEM INS. CO. INC. vs. MCO ‘Marine Services. ' oe Pilapit v. Court of Appeals Fortune Express, Ine. v. CA sn Juntilla v. Pontanar. Lasam v. Smith... Gacal, et al. v. PAL © Public Enemy .. Improper Packing wnrnnnseesninnensn €. Order of Publie Authority orn Case: Ganzon v. CA ¥. DEFENSES IN CARRIAGE OF PASSENGERS .... a, Employees... : b. Other Passengers and Third Persons... Cases: Maranan v. Perez De Gillaco v. M: Bachelor Express, Inc. v. Hon. CA G. PASSENGER'S BAGGAGES............ Il, OBLIGATIONS OF SHIPPER, CONSIGNEE, AND PASSENGER «soe A. NEGLIGENCE OF SHIPPER OR PAS a. Last Clear Chance ... i b. Assumption of Risk Cases: Isaac v. A.L. Ammen Transportation C Compania Maritima v. CA... Cangco v. Manila Railroad Co, Del Prado v. Manila Electric Co. PNR v. Hon. CA. B. FREIGHT wenn a, Amount to be paid a 10 a 116 116 119 123 126 130 133 135 138 140 143 145 147 7 150 151 153 184 156 159 163 165 165 166 167 168, 171 175, 183 186 187 187L I. ml. b. Who will pay ©. Tinne to pay .. a (D Carriage of Passengers by Sea (2) Carrier's Lien ©. DEMURRAGE... CHAPTER 3 — EXTRAORDINARY DILIGENCE RATIONALE HOW DUTY IS COMPLIED WITH A. DUTY TO THIRD PERSONS .. EFFECT OF STIPULATION... A. GOODS z B. PASSENGERS . i a. Gratuitous Passengers . EXTRAORDINARY DILIGENCE IN CARRIAGE BY SEA . A. SEAWORTHINESS ..... a. Warranty of Seaworthiness of Shin b. No duty to inquire ‘Meaning of Seaworthiness () Fitness of vessel .. (2) Cargoworthiness (3) Equipment and Manning . (4) Adequate Equipment... OVERLOADING... : PROPER STORAGE... NEGLIGENCE OF CAPTAIN AND CREW. a. Passenger Safety poe Cases: Standard Vacuum Oil Co. v. Luzon Stevedoring Col Planters Products, Ine. v. CA, et al Mecenas v. Hon. CA : E. DEVIATION AND TRANSSHIPMENT 0.0 a. Deviation... b. Transshipment EXTRAORDINARY DILIGE! A. CONDITION OF VEHICLE... B. TRAFFIC RULES .....ccnnnnen Cases: Brinas v. People . BLIB v. IAC . : Batangas Transportation Co, v, Caguimbal Mallar, Sr. ¥. CA ssrneninn 191 191 192 193 193, 193 193 198 196 196 196 197 198 198 199 200 201 201 208 203 206 210 212, 218 218, 219 220 220 221 228 232 234 237 mt188, 788 189 189 190 i91 191 192 193 193 193 193 196 196 1968 196 197 198 198 199 200 201 201 203 203 206 210 212, 218 219 220 220 221 228 232, 234 237 Vi. 0. |. WHEN EFFECTIVE... C._ DUTY TO INSPECT EXTRAORDINARY DILIGENCE IN CARRIAGE BY AIR A. INSPECTION i RA. No. 6235 Cases: PAL V.CA. Abeto v. PAL.. CHAPTER 4 — BILL OF LADING AND CONCEPTS. A. DEFINITION . B. KINDS... a, Clean and Foul Bill of Lading ss.csnccrnmnor on b. Spent Bill of Lading c ¢. Through Bill of Lading. 4. On Board Bill v. Received for Shipment. e f. Custody Bill of Lading .....- : Port Bill of Lading .. NATURE OF BILL OF LADIN BILL OF LADING AS CONTRACT .. CONTRACT OF ADHESION PAROL EVIDENCE RULE o.oo BILL OF LADING AS EVIDENCE ACTIONABLE DOCUMENT BASIC STIPULATIONS... a, Overland Tansportation.. b. Maritime Commerce. ¢. _ Air Transportation ..... PROHIBITED AND LIMITING STIPULATIONS, a. Civil Code (2) Purpose (2) Stipulation Reducing Diligence . b. Carriage of Goods by Sea Act GD Meaning of Package won. BOOP m Cases: HLE, Heacock Co. v. Macondray & Co. Ong Yiu v. Hon. CA Sea-Land Service, In Citadel Lines, Ine. v. CA ... Everetty Steamship Corp. v. CA. C. International Air Transportation sm. 239 244 245, 246 249 254 259 259 259 260 260 260 260 261 261 261 261 262 264 265 266 267 267 268 27% 275 275 277 27 277 278 283 286 291 297 299 3041. Cases: Northwest Airlines, Inc. v. Cuenca Alitalia v. IAC Pan American World Airways v. IAC. China Airlines v. Chiok...... Santos III v. Northwest Or United Airlines v, Uy BILL OF LADING AS RECEIPT ..... BILL OF LADING AS CONTRACT A. NEGOTIABILITY en 8, _ Effect of Notation “Non-negotiable” B. HOW NEGOTIATED......... a. Bearer Document. b. _ crder Document. C. EFFECTS OF NEGOTIATION CsiAPTER 5 — ACTIONS AND DAMAGES arsed by the latter's principal. In awarding actual damages to private respondent, the appellate court hold that the amount of PS08,016.00 representing actual damages refers to private respondant’s second cause of action involving the expenses incurred by the latter which were ‘not reimbursed by ROLACO Engineering. However, in the Complaint filed by private respondent, it was alleged that private respondent suffered actual damages in the amount ‘of P808,016.00 representing the money it borrowed from friends and financiers which is 304,416.00 for the 23 airline tickets and P3,600,00 for the travel tax of the 12 workers, Ais clear therofore that the actual damages private respondent seeks to recover are the airline tickets and travel taxes it spent for its workers which were already reimbursed by its principal and not for any other expenses it had incurred in the process of reeruiting said contract workers, Inasmuch as all expenses including the processing fees incurred by private respondent had already been paid for by the latter’s principal on a staggered basis as admitted in open court by its managing director, Mrs. Bienvenida Brusellas, we Ho not find anyanore justification in the appellate court's decision in granting actual damages to private respondent, ‘Thus, while it may be true thet private respondent was compelled to borrow money for the airfare tickets of its contract workers when petitioner failed to transport said workers, the reimbursements made by its principal to private respondent failed to support the latter's claim that it suffered actual damages as a result of petitioner's failure to transport said workers. It is undisputed that private respondent had consistently ‘admitted that its principal had reimbursed all its expenses. U. CARRIER. Article 1732 of the Civil Code provides the definition of common carriers, viz, ARTICLE 1782. Common carriers are persons, corporations, firms or associations engaged in the business of carrying oF transporting passengers or goods or both, by land, water, or ain, for compensation, offering their services to the public. It has also been defined as “one that holds itself out as ready to engage in ‘he transportation of goods for hire as a public employment and not as a casual occupation™= ‘The cone2pt of “common carrier” under Article 1732 may be seen to coincide neatly with the notion of “public service,” under the Public Service Act (Commonwealth Act No, 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil Code." Under Section 13, paragraph (b) of the Publie Service Act, “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 De Guzman v. Court of Appeals, No. L-47822, December 22, 1986, 168 SCRA 612. "Bid, lier busi rail fori orb ref) pov Ini Supreme ‘common othe toe bus! bus busi In} reiterate: goods or) its transy The Civil Cod servieo” rules or ¢ idio 500 Ne. adamages cady been, hold that, pondent’s ‘were not, ¥ private eamount which is workers, orarethe mbursed cecruiting ineurred taggered sellas, we 1g actual w money port said asupport ‘ilure to sistently cvincide ice Act ements sion 13, ed GENERAL CONCEPTS u lientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehiele, either for freight or passenger, or beth, 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, forries ond water craft, engaged in the transportation of passengers or freight. or both, shipyard, marine repair shop, wharf or dock, ice plant, ice- refrigeration plant, canal, irrigation system, gas, eleciric light, heat and ower, water supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadeasting stations and other similar public services..." A. TESTS. In First Philippine Industrial Corporation v. Court of Appeals, * the Supreme Court reiterated that the tests for determining whether a party is a common carrier of goods are: 1. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready e transportation of goods for person generally us a t as a casual occupation; 2, He must urldertake 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 con Lover his established roads; and 4. The transportation must be for hire. In National Steel Corporation u. Court of Appeals,"* the Supreme Court reiterated the ruling that the true test of a common carrier is the carriage of ‘goods or passengers, provided it has space for all who opt to avail themselves of its transportation for a fee. a B. CHARACTERISTICS. ‘The concept of common carriers contemplated under Article 1732 of the Civil Code and the fact that the said conceptorresponds ta the concept of ‘public service” under the Public Service Act results in the application of the following rules or principles: a) Article 1732 makes no distinction between one whose prineifal 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”) ° Fe 300 SCRA 66 (1995), ‘No. 112287, December 12, 1997, 289 SCRA 45,61 ‘De Guzman v Court of Appeal, supra, at pp. 617-618.2 NOTES AND CASES 0! AND PUB 1B LAW ON TRANSPORTATION LIC UTLIVIOS (b} Article 1792 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 ‘ccasionai, episodic or unscheduled basis.” ,’ Article 1732 does not distinguish between a carrier offering its serviees to the “general public,” ie., the general community or Population, and one who offers services or solicits business only from ‘a narrow segment of the general population."* “d) A person or entity is a common carrier and has the shligation.sefthe common earier under the Civil Cole erent nea Rot seci.cs + Certificate of Public Convenience.” (e.) he Civil Code makes no distinction as to the means of ‘transporting, as Jong as it is by land, water or air? £) The Civil Code does not provide that the transportation should bé Ey motor vehicle * (g) _Aperson or entity may be a common carrier even if he has no fixed and publicly known route, maintains no terminals, and issues no tickets. h.) A person or entity need not be engaged in the business of publié transportation for tho provisions of the Civil Code on common carriers to apply to them.” ‘The above-enumerated characteristics of common carriers derived from case law indicate an expanding concept of common carriers. Carriers who are considered common carriers in a number of decisions do not fall neatly into the concept of common carriers contemplated in the test announced in National ‘Steel Corporation v, Court of Appeals. a. Ancillary Business. Article 1732 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”). Hence, in De Guzman v. Court of Appeals,® private respondent Cendafia was considered “Pi "bid. "Bid, wtp. 613. Vizat Philippine Industrial Corporation x. Court of Appeals, eal, No. 126048, December 28, 1988, 300 SCRA 651 bid, at p- 670. Asia Lighterege and Shipping, Ine. v- Court of Appoals, .R. No. 147246, August 19, 2008, =Prbre, dr. Court of Appeals, No, 131127, July 28,1996, 259 SCRA 428, 435. *Supra- Supra a come Upon bring et which | Tt commer the arez concept, execute: commor In was als fixed an ‘The Sur out that and ito compen: of carry: and wit] known t = °N aS)jon na ing or she dia of ‘on os of od from who are into the ‘ational usiness 2s such once, in sidered veoember 19,2003, SENERAL CONCEPTS 8 a common earner aithouyh Ais onineipal business was as a junk dealer. Said respondent was engagea in buying used botties and scrap metal in Pangasinan, ‘Upon gathering sufficient quantities af such serap material, eespondont would bring such material to Manila for resale, He utilized two (2) st-wwheeler trucks which he owned for hauling the material to ManilaYn :he return trip to Pangasinan, respondent would oad his vehicles with cargo which various merchants wanted delivered to establishments in Pangasinan. For that service, respondent charged freight rates which were commonly lower than regular commercial rates. Thus, even if the transportation of goods was ancillary to the main business of buying and selling used bottles and scrap metals, the Supreme Court/tonsidered the private respondent common carrier, bb. Limited Clientele. ‘The petitioner, a customs broker und warehouscman, was declared a ‘common carrier in one case aithough she does not indiscriminately hold her services out to the public butwifers the same to select parties with whom she ‘may contract in the conduct of her business. In the said case, petitioner entered into a contract with SMC to transfer paper snd kraft board from the Port Area in Manila to SMC's warehouse in Ermita, Manila’ As a common carrier, she is bound to exercise extraordinary diligence in transporting the goods and is presumed to be negligent when she failed to deliver the same. In Phil. American General insurance Uompany, et al. v. PKS Shipping Company, respondent PKS Shipping Corporation transported the 75,000 bags of cement of petisioner DUMC in a barge. ‘The pags af cement sanit together with the barge when the latter was being towed by a img boat. The Supreme Court declared that PKS was a common carrier because it was engaged in the business of carrying goods for others for a fee!“The regularity ofits activities in the area indicates more than just a casual aetivity on its part. Neither ean the concept of a common carrier change merely because individual contracts are executed or entered into with the patrons of the carrier? PES was declared a vommon carrier although it had a limited clienteie.*" In Asia Lighterage and Shipping, inc. v. Court of Appeals,® the petitioner ‘was also involved in thebusiness of carrying goods through its barges. thas no fixed and publicly known route, maintains no terminals, and issues no tickets. ‘The Supreme Court still ruled that the petitioner is a common carricr pointing out that the principal business of the petitioner is that of lighterage and drayage and it offers its barges to the public for carrying or transporting by water for compensation. Petitioner was considered a common carrier whether its business of carrying of goods is done on an irreguiar basis rather than scheduled manner and with a limited clientele. A common carrier need not have a fixed and publicly known route nor does it have to maintain terminals or issue tickets. “No, L-3678, Febramry 28, 1952. its ke ae Po) Sa ay 38, hal bri © AC Howeve vessel w services