TRANSPORTATION LAW – ATTY.
MEDALLE
DEFINITION AND CONCEPT
Contract of Transportation – a person obligates
himself to transport persons or property from one place
to another for a consideration.
The contract may involve carriage of passengers
or carriage of goods.
Common or private carrier – a person who
obligates himself to transport the goods or passengers.
The parties in a contract of carriage of
passengers are the common carrier and the passenger.
Passenger – one who travels in a public
conveyance by virtue of contract, express or implied,
with the carrier as to the payment of fare or that which
is accepted as an equivalent thereof. He is also still a
passenger even if he is being gratuitously or under a
reduced fair
BALIWAG TRANSIT CORP vs. CA
Bus accident. The parents paid a fortune for their
son’s medication. Son settled with a Release of Claim in
the amount of 8k.
What is the legal effect of the Release of Claims
executed by the son during the pendency of this case?
Since the suit is one for breach of contract of
carriage, the Release of Claims executed by him (the
son), as the injured party, discharging Fortune Insurance
and Baliwag from any and all liability is valid.
He was then of legal age and has the capacity to
do acts with legal effects. Thus, he can sue and be sued
without the assistance of his parents.
Significantly, the contract of carriage was
actually between George, as the paying passenger, and
Baliwag, as the common carrier. Since a contract may
only be violated by the parties thereto, as against each
other, in an action upon that contract, the real parties in
interest, either as plaintiff or as defendant, must be
parties to said contract. In the absence of any contract
of carriage between Baliwag and George’s parents, the
latter are not real parties-in-interest in an action for
breach of that contract.
The general rule of the common law is that every
action must be brought in the name of the party whose
legal right has been invaded or infringed. For the
immediate wrong and damage the person injured is the
only one who can maintain the action.
CARRIAGE OF GOODS
Parties – shipper (the person who delivers the
goods to the carrier for transportation; pays for the
ATOC, DAMIE JANE A.
consideration or on whose behalf payment is made) and
carrier.
Consignee - the person to whom the goods are
to be delivered. The consignee may be the shipper
himself. However, the consignee may be a third person
who is not actually a party to the contract.
There are instances when the third-party
consignee is bound by the agreement between the
shipper and the carrier
2 TYPES OF CONTRACT OF CARRIAGE OF PASSENGER
1. Contract to carry- an agreement to carry the
passenger at some future date. This contract is
consensual and is therefore perfected by mere
consent.
2. Contract of carriage or of common carriage itself
– a real contract for not until the carrier is
actually used can the carrier be said to have
already assumed the obligation of the carrier
There may be a consensual contract to carry goods
whereby the carrier agrees to accept and transport
goods at some future date. However, by the act of
delivery of the goods or when the goods are
unconditionally placed in the possession and control of
the carrier, and upon their receipt by the carrier for
transportation, the contract of carriage is perfected.
ARTICLE 1732 – Definition of Common Carriers
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. It is also one that holds himself out as ready
to engage in the transportation of goods for hire as a
public employment and not as a casual occupation.
FIRST PHILIPPINE INDUSTRIAL CORPORATION vs. CA
Petitioner is a grantee of a pipeline concession to
contract, install and operate oil pipelines.
Petitioner applied for a mayor's permit with the Office of
the Mayor of Batangas City. However, before the mayor's
permit could be issued, the respondent City Treasurer
required petitioner to pay a local tax based on its gross
receipts.
On 1994, petitioner filed a letter-protest addressed to
the respondent City Treasurer. respondent City
Treasurer denied the protest contending that petitioner
cannot be considered engaged in transportation
business, thus it cannot claim exemption under Section
133 (j) of the Local Government Code.
Petitioner filed with the RTC a complaint for tax refund.
Respondents argued that petitioner cannot be exempt
 TRANSPORTATION LAW – ATTY. MEDALLE
from taxes under Section 133 (j) of the Local Government
Code as said exemption applies only to "transportation
contractors and persons engaged in the transportation
by hire and common carriers by air, land and water."
Respondents assert that pipelines are not included in the
term "common carrier" which refers solely to ordinary
carriers such as trucks, trains, ships and the like.
Respondents further posit that the term "common
carrier" under the said code pertains to the mode or
manner by which a product is delivered to its destination.
RTC rendered a decision dismissing the complaint ruling
that Plaintiff is either a contractor or other independent
contractor and that plaintiff is not a common carrier, but
a special carrier extending its services and facilities to a
single specific or "special customer" under a "special
contract."
CA rendered a decision affirming the trial court's
dismissal of petitioner's complaint. Petitioner's motion
for reconsideration was denied
Hence, this petition.
Petitioner claims that the respondent Court of Appeals
erred in holding that the petitioner is not a common
carrier or a transportation contractor.
SC: There is merit in the petition.
A "common carrier" may be defined, broadly, as one who
holds himself out to the public as engaged in the business
of transporting persons or property from place to place,
for compensation, offering his services to the public
generally.
TEST FOR DETERMING WHETHER A PARTY IS A COMMON
CARRIER OF GOODS:
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 the method by which
his business is conducted and over his
established roads; and
4. The transportation must be for hire
Based on the above definitions and requirements, there
is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying
goods, i.e. petroleum products. The fact that petitioner
has a limited clientele does not exclude it from the
definition of a common carrier.
Also, respondent's argument that the term "common
carrier" as used in Section 133 (j) of the Local
ATOC, DAMIE JANE A.
Government Code refers only to common carriers
transporting goods and passengers through moving
vehicles or vessels either by land, sea or water, is
erroneous.
As correctly pointed out by petitioner, the definition of
"common carriers" in the Civil Code makes no distinction
as to the means of transporting, as long as it is by land,
water or air. It does not provide that the transportation
of the passengers or goods should be by motor vehicle.
Under the Petroleum Act of the, petitioner is considered
a "common carrier." Republic Act 387 also regards
petroleum operation as a public utility. Pertinent portion
of Article 7 thereof provides: that everything relating to
the exploration for and exploitation of petroleum . . . and
everything relating to the manufacture, refining, storage,
or transportation by special methods of petroleum, is
hereby declared to be a public utility. The Bureau of
Internal Revenue likewise considers the petitioner a
"common carrier." It declared: . . . since [petitioner] is a
pipeline concessionaire that is engaged only in
transporting petroleum products, it is considered a
common carrier under Republic Act No. 387 . . . . Such
being the case, it is not subject to withholding tax
prescribed by Revenue Regulations No. 13-78, as
amended.
From the foregoing disquisition, there is no doubt that
petitioner is a "common carrier" and, therefore, exempt
from the business tax as provided for in Section 133 (j),
of the Local Government Code, to wit:
Sec. 133. Common Limitations on the Taxing Powers of
Local Government Units. — Unless otherwise provided
herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to
the levy of the following:
xxx xxx xxx
(j) Taxes on the gross receipts of transportation
contractors and persons engaged in the transportation
of passengers or freight by hire and common carriers by
air, land or water, except as provided in this Code.
It is clear that the legislative intent in excluding from the
taxing power of the local government unit the imposition
of business tax against common carriers is to prevent a
duplication of the so-called "common carrier's tax.
Petition is GRANTED.
CHARACTERISTICS (EXPANDED CONCEPT OF COMMON
CARRIERS)
The concept of common carriers contemplated
under Article 1732 of the Civil Code and the fact that the
said concept corresponds to the concept of “public
 TRANSPORTATION LAW – ATTY. MEDALLE
service” under the Public Service Act results in the
application of the following rules or principles:
DE GUZMAN VS. COURT OF APPEALS
1. Article (Art. 1732, Civil Code) 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").
2. Article 1732 . . . 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.
3. 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.
So understood, the concept 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 Public
Service Act.
Private respondednt Cendana was considered a
common carrier although his principal business
was a junk dealer.
Respondent was engaged in buying used bottles
and scrap metal in pangasinan. Upon gathering
sufficient quantities of such scrap material,
respondent would bring such material to manila for
rescale. He utilized 2 six-wheeler trucks which he
owned for hauling the materials to manila.
On the return trip to pangasinan, respondent would
load 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.
It appears that private respondent is properly
characterized as a common carrier even though he
merely “black-hauled” goods for other merchants
from manila to pangasinan, although backhauling
was done on a periodic or occasional rather than
regular or scheduled manner, and even though
private respondent’s principal occupation was not
the carriage of goods for others. There is no
dispute that private respondent charged his
customer a fee for hauling their goods; that fee
frequently fell below the commercial freight rates
is not relevant.
ATOC, DAMIE JANE A.
Thus, even if the transportation of goods was
ancillary to the main business of buying and selling
used bottles and scrap metals, the SC considered
the private respondent a common carrier.
4. A person or entity is a common carrier and has
the obligations of the common carrier under the
Civil Code even if he did not secure a Certificate
of Public Convenience
5. The Civil Code makes no distinction as to the
means of transporting, as long as it is by land,
water or air
6. The Civil Code does not provide that the
transportation should be by motor vehicle
7. A person or entity may be a common carrier
even if he has no fixed and publicly known route,
maintains no terminals, and issues no tickets
8. A person or entity need not be engaged in the
business of public transportation for the
provisions of the Civil Code on common carrier
to apply to them
LIMITED CLIENTEL
As a common carrier, a person is bound to
exercise extraordinary diligence in transporting the
goods and is presumed to be negligent when he fails to
deliver the same.
Common Carrier – it is engaged in the business
of carrying goods for others for a fee. The regularity of its
activities in the area indicated more than just a casual
activity on its part. Neither can the concept of common
carrier change merely because individual contracts are
executed or entered into with the patrons of the carrier.
A common carrier need not have a fixed and
publicly known route nor does it have to maintain
terminals or issue tickets.
EFFECT OF CHARTER PARTY
Charter Party – may transform a common carrier
into a private carrier. It must be a bareboat or demise
charter where the character mans the vessel with his
own people and becomes, in effect, the owner for the
voyage or service stipulated. The common carrier is not
transformed into a private carrier if the charter party is a
contract of affreightment.
Article 1733 of the New Civil Code mandates that
common carriers, by reason of the nature of their
business, should observe extraordinary diligence in the
vigilance over the goods they carry.
In the case of private carrier, the exercise of
ordinary diligence in the carriage of goods will suffice.
Diligence of a good father of a family.
 TRANSPORTATION LAW – ATTY. MEDALLE
In case of loss, destruction or deterioration of the goods,
common carriers are presumed to have been at fault or
have acted negligently, and the burden of proving
otherwise rest on them.
No such presumption applies to private carriers,
for whosoever alleges damage to or deterioration of the
goods carried has the onus of proving that the cause was
the negligence of the carrier.
DISTINGUISHED FROM PRIVATE CARRIER
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
a single transaction, not a part of a general business or
occupation offering such service is a private carrier.
A stipulation involving a common carrier is void
for being contrary to public policy.
FGU INSURANCE CORPORATION vs. G.P. SARMIENTO
TRUCKING CORPORATION AND LAMBERT M. EROLES
G.P. Sarmiento Trucking Corporation (GPS) undertook to
deliver 30 units of Condura refrigerators aboard one of
its Isuzu truck, driven by Lambert Eroles, from the plant
site to the Central Luzon Appliances.
While the truck was traversing the highway it collided
with an unidentified truck, causing it to fall into a deep
canal, resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the
shipment, paid to Concepcion Industries, Inc, in turn,
being the subrogee of the rights and interests of
Concepcion Industries, Inc., sought reimbursement of
the amount it had paid to the latter from GPS.
Since the trucking company failed to heed the claim, FGU
filed a complaint for damages and breach of contract of
carriage against GPS and its driver Lambert Eroles with
the Regional Trial Court.
In its answer, respondents asserted that GPS was the
exclusive hauler only of Concepcion Industries, Inc., since
1988, and it was not so engaged in business as a common
carrier. Respondents further claimed that the cause of
damage was purely accidental.
The issues having thus been joined, FGU presented its
evidence, establishing the extent of damage to the
cargoes and the amount it had paid to the assured. GPS,
instead of submitting its evidence, filed with leave of
court a motion to dismiss the complaint by way of
demurrer to evidence on the ground that petitioner had
failed to prove that it was a common carrier.
The trial court granted the motion to dismiss.
ATOC, DAMIE JANE A.
The subsequent motion for reconsideration having been
denied plaintiff interposed an appeal to the Court of
Appeals, contending that the trial court had erred (a) in
holding that the appellee corporation was not a common
carrier defined under the law and existing jurisprudence.
The Court of Appeals rejected the appeal of petitioner
and ruled in favor of GPS, saying among others:
In order for the presumption of negligence
provided for under the law governing common carrier
(Article 1735, Civil Code) to arise, the appellant must first
prove that the appellee is a common carrier. Should the
appellant fail to prove that the appellee is a common
carrier, the presumption would not arise; consequently,
the appellant would have to prove that the carrier was
negligent.
Petitioner's motion for reconsideration was likewise
denied
Hence, the instant petition
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A
COMMON CARRIER AS DEFINED UNDER THE LAW AND
EXISTING JURISPRUDENCE.
GPS, being an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or offering its
services to no other individual or entity, cannot be
considered a common carrier. 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 hire or
compensation, offering their services to
the public, whether to the public in general or to a
limited clientele in particular, but never on an exclusive
basis. The true test of a common carrier is the carriage of
passengers or goods, providing space for those who opt
to avail themselves of its transportation service for a
fee. Given accepted standards, GPS scarcely falls within
the term "common carrier."
LOADMASTER CUSTOMS SERVICES, INC. vs. GLODEL
BROKERAGE CORPORATION
R&B Insurance issued a Marine Policy in favor of
Columbia to insure the shipment of 132 bundles of
electric copper cathodes against All Risks. the cargoes
were shipped on board the vessel "Richard Rey" from
Leyte to manila. They arrived on the same date.
Columbia engaged the services of Glodel for the
release and withdrawal of the cargoes from the pier
and the subsequent delivery to its warehouses/plants.
Glodel, in turn, engaged the services of Loadmasters
for the use of its delivery trucks to transport the cargoes
to Columbia’s warehouses/plants.
 TRANSPORTATION LAW – ATTY. MEDALLE
The goods were loaded on board twelve (12) trucks
owned by Loadmasters, driven by its employed drivers
and accompanied by its employed truck helpers.
Later on, the said truck, an Isuzu with Plate No. NSD-
117, was recovered but without the copper cathodes.
Because of this incident, Columbia filed with R&B
Insurance a claim for insurance indemnity. After the
requisite investigation and adjustment, R&B Insurance
paid Columbia insurance indemnity.
R&B Insurance, thereafter, filed a complaint for
damages against both Loadmasters and Glodel before
the RTC. It sought reimbursement of the amount it had
paid to Columbia for the loss of the subject cargo. It
claimed that it had been subrogated "to the right of the
consignee to recover from the party/parties who may
be held legally liable for the loss."
the RTC rendered a decision3 holding Glodel liable for
damages for the loss of the subject cargo and
dismissing Loadmasters’ counterclaim for damages
and attorney’s fees against R&B Insurance.
Both R&B Insurance and Glodel appealed the RTC
decision to the CA.
On August 24, 2007, the CA rendered the assailed
decision which reads in part:
Considering that appellee is an agent
of appellant Glodel, whatever liability the latter
owes to appellant R&B Insurance Corporation
as insurance indemnity must likewise be the
amount it shall be paid by appellee
Loadmasters.
Hence, the case at bar
ISSUE - 2. Under the set of facts established and
undisputed in the case, can petitioner
Loadmasters be legally considered as an Agent of
respondent Glodel?6
Loadmasters argues that it cannot be considered an
agent of Glodel because it never represented the
latter in its dealings with the consignee.
Glodel, in its Comment,7 counters that Loadmasters is
liable to it under its cross-claim because the latter was
grossly negligent in the transportation of the subject
cargo.
finally, Glodel argues that its relationship with
Loadmasters is that of Charter wherein the
transporter (Loadmasters) is only hired for the specific
job of delivering the merchandise. Thus, the diligence
required in this case is merely ordinary diligence or
that of a good father of the family, not the
extraordinary diligence required of common carriers.
As to the relationship between Loadmasters and
Glodel, R&B Insurance contends that a contract of
agency existed between the two corporations.8 R&B
Insurance is subrogated to the rights of the insured to
ATOC, DAMIE JANE A.
the extent of the amount it paid the consignee under
the marine insurance.
The issue now is who, between Glodel and
Loadmasters, is liable to pay R&B Insurance for the
amount of the indemnity it paid Columbia.
RELEVANT: At the outset, it is well to resolve the
issue of whether Loadmasters and Glodel are
common carriers to determine their liability for the loss
of the subject cargo.
Loadmasters is a common carrier because it is
engaged in the business of transporting goods by land,
through its trucking service. It is a common carrier as
distinguished from a private carrier wherein the
carriage is generally undertaken by special agreement
and it does not hold itself out to carry goods for the
general public.10 The distinction is significant in the
sense that "the rights and obligations of the parties to
a contract of private carriage are governed principally
by their stipulations, not by the law on common
carriers."
In the present case, there is no indication that the
undertaking in the contract between Loadmasters and
Glodel was private in character. There is no showing
that Loadmasters solely and exclusively rendered
services to Glodel.
In fact, Loadmasters admitted that it is a common
carrier.
In the same vein, Glodel is also considered a common
carrier within the context of Article 1732. In its
Memorandum,13 it states that it "is a corporation duly
organized and existing under the laws of the Republic
of the Philippines and is engaged in the business of
customs brokering." It cannot be considered otherwise
because customs broker is also regarded as a
common carrier, the transportation of goods being an
integral part of its business.
Loadmasters and Glodel, being both common carriers,
are mandated from the nature of their business and for
reasons of public policy, to observe the extraordinary
diligence in the vigilance over the goods transported by
them according to all the circumstances of such case,
as required by Article 1733 of the Civil Code.
hen the Court speaks of extraordinary diligence, it is
that extreme measure of care and caution which
persons of unusual prudence and circumspection
observe for securing and preserving their own property
or rights.1
This exacting standard imposed on common carriers in
a contract of carriage of goods is intended to tilt the
scales in favor of the shipper who is at the mercy of the
common carrier once the goods have been lodged for
shipment.16 Thus, in case of loss of the goods, the
common carrier is presumed to have been at fault or to
have acted negligently.17 This presumption of fault or
negligence, however, may be rebutted by proof that the
 TRANSPORTATION LAW – ATTY. MEDALLE

common carrier has observed extraordinary diligence

over the goods.

With respect to the time frame of this extraordinary

responsibility, the Civil Code provides that the
exercise of extraordinary diligence 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.18

Premises considered, the Court is of the view that

both Loadmasters and Glodel are jointly and severally
liable to R & B Insurance for the loss of the subject
cargo

âwphi1sasf

ATOC, DAMIE JANE A.