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A. WHAT IS A “COMMON CARRIER”?- Persons, corporations, firms or associations engaged in the business ofcarrying or transpo...
confined;    • It must undertake to carry by the method by which his business is    conducted and over its established roa...
A “common carrier” may be defined, broadly, as one who holds himselfout to the public as engaged in the business of transp...
Facts: Planters Product Inc. purchased from Mitsubishi internationalcorporation metric tons of Urea fertilizer, which the ...
“wet/stained/torn” and 3 reels of kraft liner board were also torn.                                  Thedamages cost P93,1...
The usual route to Caba, La Union was through Carmen, Pangasinan.However, the bridge at Carmen was under repair, so that p...
Held: EDSA LRT Corporation, Ltd. Is admittedly a foreign corporation “dulyincorporated and existing under the laws of Hong...
Facts: On November 19, 1984, loadstar received on board its M/V“Cherokee” bales of lawanit hardwood, tilewood and Apitong ...
based on the gross receipts for products pumped at GPS-1 for the fiscal year1993 which amounted to P181,681,151.00. In ord...
Because the others denied liability, Home Insurance paid San Miguelthe insurance value loss. This cost was brought by the ...
Epitacio San Pablo (now represented by his heirs) and CardinalShipping Corporation who are franchise holders of the ferry ...
E. DISTINCTIONS BETWEEN COMMON CARRIER AND PRIVATECARRIER             Common Carrier                                      ...
1.                              Domestic Transportation            Civil Code            Code of Commerce    2.         ...
CFI ruled in favor of Samar Mining holding Nordeutscher Lloyd liable.However, defendants may recoup whatever they may pay ...
The insurers filed a suit against the petitioner carrier for recovery of theamounts paid to the insured. However, petition...
Atlas Fertilizer Corporation from Pier 4, North Harbor, to its Warehouse inMandaluyong. Alday met Espiritu at the gate of ...
transport its sawn lumber to the consignee Blue Star in Valenzuela, Bulacan.This cargo truck was registered in the name of...
Issue: Whether the Vidad is liable being the registered owner of the jeepney?Held: As the jeep in question was registered ...
criminal offense but is recognized as one that is against public policy;therefore it is void and inexistent.       It is f...
less than P15,000.00 for the more than 2 times that the motorcycle figured inaccidents aside from the loss of the daily in...
Court of Appeals, which certified the case to the Supreme Court on theground that only questions of law are involved.Issue...
the Manager alleged, had a "better right" to the seat. When asked to vacatehis "first class" seat, the plaintiff, as was t...
highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger buswas also bound for Cebu City, and had come from May...
petitioner Laspiñas as driver of the passenger bus is, thus, binding against petitionerTiu, as the owner of the passenger ...
•  The injured passenger or owner of goods need not prove causation to       establish his case. The presumption arises up...
4. The proximate cause must not be committed by the common carrier.              Fortuitous event must be established to ...
liability due to the loss, destruction or deterioration of goods caused by         public authority.    Requisites:    ▪ T...
the hold. It continues to tilt causing the captain and the crew to abandon ship.The ship sank.       Respondent alleged th...
arguendo that the engine failure was a fortuitous event, it accounted on forthe delay of departure. When the vessel finall...
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34202868 transpo-cases-under-atty-de-grano

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34202868 transpo-cases-under-atty-de-grano

  1. 1. A. WHAT IS A “COMMON CARRIER”?- Persons, corporations, firms or associations engaged in the business ofcarrying or transporting passengers or goods or both, by land, water, or air,for compensation, offering their services to the public. (Art. 1732, CivilCode).- One that holds itself out as ready to engage in the transportation of goodsfor hire as a public employment and not as a casual occupation. (De Guzmanvs. Court of Appeals, No. L-47822, December 22, 1988)B. CHARACTERISTICS OF A COMMON CARRIER • Art. 1732 of the Civil Code avoids any distinction between one whose principal business is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (sideline). • It also avoids a 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. • Article 1732 does not distinguish between a carrier offering its services to the general public, that is the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. • A person or entity is a common carrier even if he did not secure a Certificate of Public Convenience • The Civil Code makes no distinction as to the means of transporting, as long as it is by land, water or air. • The Civil Code does not provide that the transportation should be by motor vehicle. • A person or entity may be a common carrier even if he has no fixed publicly known route, maintains no terminals, and issues no tickets. • Undertakes to carry for all people indifferently and thus is liable for refusal without sufficient reason (Lastimoso vs. Doliente, 3 SCRA , [1961]); • Cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the traffic in these goods; • No monopoly is favored (Batangas Trans. vs. Orlanes, 52 Phil. 455); • Provides public convenience.C. TESTS WHETHER A PARTY IS A COMMON CARRIER OF GOODS: • It must be engaged in the business of carrying goods for others as a public employment and must hold itself out as ready to engage in the transportation of goods generally as a business and not as a casual occupation; • It must undertake to carry goods of the kind to which its business isTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 1Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  2. 2. confined; • It must undertake to carry by the method by which his business is conducted and over its established roads; and • The transportation must be for hire. (First Philippine Industrial Corp. v. CA, 300 SCRA 661, [1998)Test whether a party is a common carrierFIRST PHILIPPINE INDUSTRIAL CORP. VS. COURT OF APPEALS(101 SCRA 661, 1998)Facts: Petitioner is a grantee of a pipeline concession under R.A. No. 387, asamended, a contract, install and operate oil pipelines. The original pipelineconcession was granted in 1967 and renewed by the Energy RegulatoryBoard in 1992. Sometime in January 1995, petitioner applied for a mayor’s permit withthe Office of the Mayor of Batangas City. However, before the mayor’s permitcould be issued, the respondent City Treasurer required petitioner to pay alocal tax based on its gross receipts for the fiscal year 1993 pursuant to theLocal Government Code. The respondent City Treasure assessed a businesstax on the petitioner amounting to P956,076.04 payable in four installmentsbased on the gross receipts for products pumped at GPS-1 for the fiscal year1993 which amounted to P181,681,151.00. in order not to hamper itsoperations, petitioner paid the tax under protest in the amount of P239,019.01 for the first quarter of 1993. On June 15, 1994, petitioner filed with the RTC of Batangas City acomplaint for tax refund with prayer for writ of preliminary injunction againstrespondents City of Batangas and Adoracion Arellano in her capacity as CityTreasurer. In its complaint, petitioner alleged, inter alia, that: (1) theimposition and collection of the business tax on its gross receipts violatesSec. 133 of the Local Government Code; (2) the authority of cities to imposeand collect a tax on the gross receipts of “contractors and independentcontractors” under Sec. 141(e) and 151 does not include the authority tocollect such taxes on transportation contractors for, as defined under Sec.131(h), the term “contractors” excludes transportation contactors; and (3) theCity Treasurer illegally and erroneously imposed and collected the said tax,thus meriting the immediate refund of the tax paid. Traversing the complaint, the respondents argued that petitionercannot be exempt from taxes under Sec. 133 (J) of the Local GovernmentCode as said exemption applied only to “transportation contractors andpersons engaged in the transportation by hire and common carriers by airland and water.” Respondents assert that pipelines are not included in theterm “common carrier” which refers solely to ordinary carriers as trucks,trains, ships and the like. Respondents further posit that the term “commoncarrier” under the said Code pertains to the mode or manner by which aproduct is delivered to its destination.Issue: Whether or not the petitioner is a common carrier so that in theaffirmative, he is not liable to pay the carriers tax under the Local GovernmentCode of 1991?Held: Petitioner is a common carrier.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 2Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  3. 3. A “common carrier” may be defined, broadly, as one who holds himselfout to the public as engaged in the business of transporting persons orproperty from place to place, for compensation, offering his services to thepublic generally. Article 1732 of the Civil Code defines a “common carrier” as “anyperson, corporation, firm or association engaged in the business of carryingor transporting passengers or goods or both, by land, water, or air, forcompensation, offering their services to the public.The test for determining whether a party is a common carrier of goodsis:1. He must be engaged in the carrying of goods for others as a publicemployment, and must hold himself out as ready to engage in thetransportation of goods or persons generally as a business and not as acasual occupation.2. He must undertake to carry goods of the kind to which his business isconfined;3. He must undertake to carry by the method by which his business isconducted and over his established roads; and4. The transportation must be for hire.D. Cases:1. DE GUZMAN VS. COURT OF APPEALS (168 SCRA 612)Facts: Cendena was a junk dealer and was engaged in buying used bottlesand scrap materials in Pangasinan and brought these to Manila for resale. Heused two 6-wheeler trucks. On the return trip to Pangasinan, he would loadhis vehicles with cargo which various merchants wanted delivered toPangasinan. For that service, he charged freight lower than regular rates.General Milk Co. contacted with him for the hauling of 750 cartons of milk. Onthe way to Pangasinan, one of the trucks was hijacked by armed men whotook with them the truck and its cargo and kidnapped the driver and hishelper. Only 150 cartons of milk were delivered. The Milk Co. sued to claimthe value of the lost merchandise based on an alleged contract of carriage.Cendena denied that he was a common carrier and contended that he couldnot be liable for the loss it was due to force majeure. The trial court ruled thathe was a common carrier. The CA reversed.Issue: Whether or not Cendena is a common carrier?Held: Yes, Cendena is properly characterized as a common carrier eventhough he merely backhauled goods for other merchants, and even if it wasdone on a periodic basis rather than on a regular basis, and even if hisprincipal occupation was not the carriage of goods. Article 1732 makes no distinction between one whose principal businessactivity is the carrying of persons or goods or both, and one who does suchcarrying only as an ancillary activity. It also avoids making a distinctionbetween a person or enterprise offering transportation services on a regularor scheduled basis and one offering service on an occasional, episodic orunscheduled basis. Neither does it make a distinction between a carrieroffering its services to the general public and one who offers services orsolicits business only from a narrow segment of population.2. PLANTERS PORDUCTS VS. CA (226 SCRA)TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 3Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  4. 4. Facts: Planters Product Inc. purchased from Mitsubishi internationalcorporation metric tons of Urea fertilizer, which the latter shipped aboard thecargo vessel M/V Sun Plum owned by private respondent Kyosei KisenKabushiki Kaisha. Prior to its voyage, a time charter-party on the vesselrespondent entered into between Mitsubishi as shipper/charterer and KKKKas ship owner, in Tokyo, Japan. Before loading the fertilizer aboard the vessel, (4) of her holds werepresumably inspected by the charterer’s representative and found fit to take aload of urea in bulk. After the Urea fertilizer was loaded in bulk by stevedoreshired by and under the supervision of the shipper, the steel hatches wereclosed with heavy iron lids. Upon arrival of vessel at port, the petitionerunloaded the cargo pursuant to the terms and conditions of the charter-party.The hatches remained open throughout the duration of the discharge. Upon arrival at petitioner’s warehouse a survey conducted over thecargo revealed a shortage and the most of the fertilizer was contaminatedwith dirt. As such, Planters filed an action for damages. The defendant arguedthat the public policy governing common carriers do not apply to thembecause they have become private carriers by reason of the provisions of thecharter-party.Issue: Whether or not the charter-party contract between the ship owner andthe charterer transforms a common carrier into a private carrier?Held: A charter party may either her be time charter wherein the vessel isleased to the charterer, wherein the ship is leased to the charterer for a fixedperiod of time or voyage charter, wherein the ship is leased for a singlevoyage. In both cases, the charter party provides for the hire of the vesselonly, either for a determinate time or for a single or consecutive voyage. It is therefor imperative that such common carrier shall remain as such,notwithstanding the charter of the whole or part of the vessel by one or morepersons, provided the charter is limited to the ship only, as in the case of atime-charter or voyage-charter. It is only when the charter includes both shipand its crew as in bareboat or demise that it becomes a private carrier.Undoubtedly, a shipowner in a time or voyage charter retains in possessionand control of the ship, although her holds may be the property of thecharterer.3. CALVO V. UCPB GENERAL INSURANCE (G.R. NO. 148496 MARCH 19,2002)Facts: Petitioner Virgines Calvo, owner of Transorient Container TerminalServices, Inc. (TCTSI), and a custom broker, entered into a contract with SanMiguel Corporation (SMC) for the transfer of 114 reels of semi-chemicalfluting paper and 124 reels of kraft liner board from the port area to theTabacalera Compound, Ermita, Manila. The cargo was insured byrespondent UCPB General Insurance Co., Inc. On July 14, 1990, contained in 30 metal vans, arrived in Manila onboard “M/V Hayakawa Maru”. After 24 hours, they were unloaded fromvessel to the custody of the arrastre operator, Manila Port Services, Inc.From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC,withdrew the cargo from the arrastre operator and delivered it to SMC’swarehouse in Manila. On July 25, the goods were inspected by Marine CargoSurveyors, reported that 15 reels of the semi-chemical fluting paper wereTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 4Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  5. 5. “wet/stained/torn” and 3 reels of kraft liner board were also torn. Thedamages cost P93,112.00. SMC collected the said amount from respondent UCPB under itsinsurance contract. Respondent on the other hand, as a subrogee of SMC,brought a suit against petitioner in RTC, Makati City. On December 20, 1995,the RTC rendered judgment finding petitioner liable for the damage to theshipment. The decision was affirmed by the CA.Issue: Whether or not Calvo is a common carrier?Held: In this case the contention of the petitioner, that he is not a commoncarrier but a private carrier, has no merit. Article 1732 makes no distinction between one whose principalbusiness activity is the carrying of persons or goods or both, and one whodoes such carrying only as ancillary activity. Article 1732 also carefullyavoids making any distinction between a person or enterprise offeringtransportation service on a regular or scheduled basis and one offering suchservice on an occasional, episodic or unscheduled basis. Neither does Article1732 distinguish between a carrier offering its services to the "general public,"i.e., the general community or population, and one who offers services orsolicits business only from a narrow segment of the general population. Wethink that Article 1733 deliberately refrained from making such distinction. (DeGuzman v. CA, 68 SCRA 612) Te concept of “common carrier” under Article 1732 coincide with thenotion of “public service”, under the Public Service Act which partiallysupplements the law on common carrier. Under Section 13, paragraph (b) ofthe Public Service Act, it includes: “ x x x every person that now or hereafter may own, operate, manage,or control in the Philippines, for hire or compensation, with general or limitedclientele, whether permanent, occasional or accidental, and done for generalbusiness purposes, any common carrier, railroad, street railway, tractionrailway, subway motor vehicle, either for freight or passenger, or both, with orwithout fixed route and whatever may be its classification, freight or carrierservice of any class, express service, steamboat, or steamship line, pontines,ferries and water craft, engaged in the transportation of passengers or freightor both, shipyard, 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 wirelesscommunications systems, wire or wireless broadcasting stations and othersimilar public services. x x x”4. FABRE VS. CA (259 SCRA 426 G.R. NO. 111127, JULY 26, 1996)Facts: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazdaminibus. They used the bus principally in connection with a bus service forschool children which they operated in Manila. It was driven by Porfirio Cabil. On November 2, 1984 private respondent Word for the World ChristianFellowship Inc. (WWCF) arranged with the petitioners for the transportation of33 members of its Young Adults Ministry from Manila to La Union and back inconsideration of which private respondent paid petitioners the amount ofP3,000.00.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 5Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  6. 6. The usual route to Caba, La Union was through Carmen, Pangasinan.However, the bridge at Carmen was under repair, so that petitioner Cabil,who was unfamiliar with the area (it being his first trip to La Union), wasforced to take a detour through the town of Ba-ay in Lingayen, Pangasinan. At11:30 that night, petitioner Cabil came upon a sharp curve on the highway.The road was slippery because it was raining, causing the bus, which wasrunning at the speed of 50 kilometers per hour, to skid to the left roadshoulder. The bus hit the left traffic steel brace and sign along the road andrammed the fence of one Jesus Escano, then turned over and landed on itsleft side, coming to a full stop only after a series of impacts. The bus came torest off the road. A coconut tree which it had hit fell on it and smashed itsfront portion. Because of the mishap, several passengers were injuredparticularly Amyline Antonio. Criminal complaint was filed against the driver and the spouses werealso made jointly liable. Spouses Fabre on the other hand contended thatthey are not liable since they are not a common carrier. The RTC of Makatiruled in favor of the plaintiff and the defendants were ordered to pay jointlyand severally to the plaintiffs. The Court of Appeals affirmed the decision ofthe trial court.Issue: Whether the spouses Fabre are common carriers?Held: Petition was denied. Spouses Fabre are common carriers. The Supreme Court held that this case actually involves a contract ofcarriage. Petitioners, the Fabres, did not have to be engaged in the businessof public transportation for the provisions of the Civil Code on commoncarriers to apply to them. As this Court has held: 10 Art. 1732, Commoncarriers are persons, corporations, firms or associations engaged in thebusiness of carrying or transporting passengers or goods or both, by land,water, or air for compensation, offering their services to the public. The above article makes no distinction between one whose principalbusiness activity is the carrying of persons or goods or both, and one whodoes such carrying only as an ancillary activity (in local idiom, as "a sideline").Article 1732 also carefully avoids making any distinction between a person orenterprise offering transportation service on a regular or scheduled basis andone offering such service on an occasional, episodic or unscheduled basis.Neither does Article 1732 distinguish between a carrier offering its services tothe "general public," i.e., the general community or population, and one whooffers services or solicits business only from a narrow segment of the generalpopulation. We think that Article 1732 deliberately refrained from making suchdistinctions.5. TATAD VS. GARCIA (241 SCRA 334, GR. NO. 114222. APRIL 6, 1995)Facts: DOTC planned to construct a light railway transit line along Edsa.EDSA LRT Corporation, Ltd., a foreign corporation was awarded the contractto build, lease and transfer the said light railway. The said award was questioned by the petitioners on the basis that aforeign corporation cannot own the EDSA LRT III, a public utility as it violatesthe Constitution.Issue: Whether or not an owner and lessor of the facilities used by a publicutility constitute a public utility?TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 6Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  7. 7. Held: EDSA LRT Corporation, Ltd. Is admittedly a foreign corporation “dulyincorporated and existing under the laws of Hong Kong”. However, there is nodispute that once the EDSA LRT III is constructed, the private respondent, aslessor, will turn it over to DOTC as lessee, for the latter to operate the systemand pay rentals for the said use. What private respondent owns are the rail tracks, rolling stocks, railstations, terminals and the power plant, not a public utility. While a franchiseis needed to operate these facilities to serve the public, they do notthemselves constitute a public utility. What constitutes a public utility in nottheir ownership but their use to serve the public. The Constitution, in no uncertain terms, requires a franchise for theoperation of a public utility. However, it does not require a franchise beforeone can own the facilities needed to operate a public utility so long as it doesnot operate them to serve the public. In law, there is a clear distinctionbetween the “operation” of a public utility and the ownership of the facilitiesand the equipment used to serve the public.6. FISHER VS. YANGCO STEAMSHIP (31 PHIL 1)Facts: The complained alleges that plaintiff is a stockholder in YangcoSteamship Company, the owner of the large steam vessels, duly licensed toengage in the coastwise trade of the Philippine Island; that on or about June10, 1912, the directors of the company, adopted a resolution which wasthereafter ratified and affirmed by the stockholders of the company “expresslydeclaring and providing that the classes of merchandise to be carried by thecompany in its business as common carrier do not include dynamite, powderor other explosives, and expressly prohibiting the officers, agents an dservants of the company from offering to carry, accepting for carriage orcarrying said dynamite, powder or other explosives.”Issue: Whether the refusal of the owner and officer of a steam vessel, toaccept for carriage dynamite, powder or other explosives for carriage can beheld to be a lawful act?Held: The traffic in dynamite gun powder and other explosive is vitallyessential to the material and general welfare of the inhabitants of this islandsand it these products are to continue in general use throughout thePhilippines they must be transported from water to port to port in variousisland which make up the Archipelago. It follows that a refusal by a particular vessel engage as a commoncarrier of merchandise in coastwise trade in the Philippine Island to acceptsuch explosives for carriage constitutes a violation. The prohibition against discrimination penalized under the statute,unless it can be shown that there is so Real and substantial danger ofdisaster necessarily involved in the courage of any or all of this article ofmerchandise as to render such refusal a due or unnecessary or a reasonableexercise or prudence and discreation on the part of the ship owner.7. LOADSTAR SHIPPING VS. CA (315 SCRA 339, 1999)TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 7Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  8. 8. Facts: On November 19, 1984, loadstar received on board its M/V“Cherokee” bales of lawanit hardwood, tilewood and Apitong Bolidenized forshipment. The goods, amounting to P6,067, 178. Were insured for the sameamount with the Manila Insurance Company against various risks including“Total Loss by Total Loss of the Vessel”. On November 20, 1984, on its wayto Manila from the port of Nasipit, Agusan Del Norte, the vessel, along with itscargo, sank off Limasawa Island. As a result of the total loss of its shipment,the consignee made a claim with loadstar which, however, ignored the same.As the insurer, MIC paid to the insured in full settlement of its claim, and thelatter executed a subrogation receipt therefor. MIC thereafter filed a complaintagainst loadstar alleging that the sinking of the vessel was due to fault andnegligence of loadstar and its employees. In its answer, Loadstar denied any liability for the loss of the shipper’sgoods and claimed that the sinking of its vessel was due to force majeure.The court a quo rendered judgment in favor of MIC., prompting loadstar toelevate the matter to the Court of Appeals, which however, agreed with thetrial court and affirmed its decision in toto. On appeal, loadstar maintainedthat the vessel was a private carrier because it was not issued a Certificate ofPublic Convenience, it did not have a regular trip or schedule nor a fixedroute, and there was only “one shipper, one consignee for a special crago”.Issue: Whether or not M/V Cherokee was a private carrier so as to exempt itfrom the provisions covering Common Carrier?Held: Loadstar is a common carrier. The Court held that LOADSTAR is a common carrier. It is notnecessary that the carrier be issued a certificate of public convenience, andthis public character is not altered by the fact that the carriage of the goods inquestion was periodic, occasional, episodic or unscheduled. Further, the barefact that the vessel was carrying a particular type of cargo for one shipper,which appears to be purely co-incidental; it is no reason enough to convertthe vessel from a common to a private carrier, especially where, as in thiscase, it was shown that the vessel was also carrying passengers. Article 1732 also carefully avoids making any distinction between aperson or enterprise offering transportation service on a regular or scheduledbasis and one offering such service on an occasional, episodic orunscheduled basis. Neither does Article 1732 distinguish between a carrieroffering its services to the "general public," i.e., the general community orpopulation, and one who offers services or solicits business only from anarrow segment of the general population.8. FIRST PHILIPPINES INDUSTRIAL CORP. VS. CA (300 SCRA 661)Facts: Petitioner is a grantee of a pipeline concession under R.A. No. 387, asamended, a contract, install and operate oil pipelines. The original pipelineconcession was granted in 1967 and renewed by the Energy RegulatoryBoard in 1992. Sometime in January 1995, petitioner applied for a mayor’s permit withthe Office of the Mayor of Batangas City. However, before the mayor’s permitcould be issued, the respondent City Treasurer required petitioner to pay alocal tax based on its gross receipts for the fiscal year 1993 pursuant to theLocal Government Code. The respondent City Treasure assessed a businesstax on the petitioner amounting to P956,076.04 payable in four installmentsTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 8Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  9. 9. based on the gross receipts for products pumped at GPS-1 for the fiscal year1993 which amounted to P181,681,151.00. In order not to hamper itsoperations, petitioner paid the tax but under protest in the amount of P239,019.01 for the first quarter of 1993. On June 15, 1994, petitioner filed with the RTC of Batangas City acomplaint for tax refund with prayer for writ of preliminary injunction againstrespondents City of Batangas and Adoracion Arellano in her capacity as CityTreasurer. Traversing the complaint, the respondents argued that petitionercannot be exempt from taxes under Sec. 133(J) of the Local GovernmentCode as said exemption applied only to “transportation contractors andpersons engaged in the transportation by hire and common carriers by airland and water.” Respondents assert that pipelines are not included in theterm “common carrier” which refers solely to ordinary carriers as trucks,trains, ships and the like. Respondents further posit that the term “commoncarrier” under the said Code pertains to the mode or manner by which aproduct is delivered to its destination.Issue: Whether the petitioner, an oil pipeline operator is a common carrier,and therefore exempted from paying local taxes?Held: Yes. Petitioner is a common carrier. Article 1732 of the Civil Code defines a “common carrier” as “anyperson, corporation, firm or association engaged in the business of carryingor transporting passengers or goods or both, by land, water, or air, forcompensation, offering their services to the public. A “common carrier” may be defined, broadly, as one who holds himselfout to the public as engaged in the business of transporting persons orproperty from place to place, for compensation, offering his services to thepublic generally. The test for determining whether a party is a common carrier of goodsis: 1. He must be engaged in the carrying of goods for others as a publicemployment, and must hold himself out as ready to engage in thetransportation of goods or persons generally as a business and not as acasual occupation; 2.He must undertake to carry goods of the kind to whichhis business is confined; 3. He must undertake to carry by the method bywhich his business is conducted and over his established roads; and 4. Thetransportation must be for hire. Based on the above definition and requirements, there is no doubt thatthe petitioner is a common carrier.9. HOME INSURANCE VS. AMEARICAN STEAMSHIP (23 SCRA 24)Facts: The Consorcio Pesquero del Peru of South America shipped jute bagsof Peruvian fishmeal through SS Crowborough, consigned to San MiguelBrewery, Inc. The cargo, which was insured by Home Insurance Company,arrived at the port of Manila and was discharged to the lighters of the LuzonStevedoring Corporation. When the same was delivered to the consignee,there were shortages amounting to P 12, 033.85, prompting the latter to payagainst Luzon Stevedoring Co.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 9Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  10. 10. Because the others denied liability, Home Insurance paid San Miguelthe insurance value loss. This cost was brought by the former to recoverindemnity from Luzon Stevedoring and the ship owner. Luzon Stevedoringraised the defense that it deliver with due diligence in the same from thecarrier. Mexican Steamship Agencies denied liability on the ground that thecharter party referred to in the bills of lading, the charter, not the ship owner,was responsible for any loss or damage of the cargo. Furthermore, it claimedto have exercised due diligence in stowing the goods and as a mereforwarding agent, it was not responsible for losses or damages to the cargo.Issue: Whether or not the stipulation in the charter party to owner’s non-liability was valid as to absolve the American Steamship from liability loss?Held: The Civil Code provision on common carriers should not be appliedwhere the carrier is not acting as such but as a private carrier. The stipulationin the charter party absolving the owner from liability for loss due to thenegligence of its agent is void only if the strict public policy governingcommon carriers is applied. Such policy has no force where the public atlarge is not involved, as in the case of a ship totally chartered for the use of asingle party.10. SAN PABLO VS. PANTRANCO (153 SCRA 199)Facts: The Pantranco South Express, Inc., hereinafter referred to asPANTRANCO is a domestic corporation engaged in the land transportationbusiness with PUB service for passengers and freight and various certificatesfor public conveniences (CPC) to operate passenger buses from MetroManila to Bicol Region and Eastern Samar. On March 27,1980 PANTRANCOthrough its counsel wrote to Maritime Industry Authority (MARINA) requestingauthority to lease/purchase a vessel named MN "Black Double" "to be usedfor its project to operate a ferryboat service from Matnog, Sorsogon and Allen,Samar that will provide service to company buses and freight trucks that haveto cross San Bernardo Strait. In a reply of April 29,1981 PANTRANCO wasinformed by MARINA that it cannot give due course to the request. PANTRANCO nevertheless acquired the vessel MN "Black Double" onMay 27, 1981 for P3 Million pesos. It wrote the Chairman of the Board ofTransportation (BOT) through its counsel, that it proposes to operate a ferryservice to carry its passenger buses and freight trucks between Allen andMatnog in connection with its trips to Tacloban City. PANTRANCO claims thatit can operate a ferry service in connection with its franchise for bus operationin the highway from Pasay City to Tacloban City "for the purpose ofcontinuing the highway, which is interrupted by a small body of water, the saidproposed ferry operation is merely a necessary and incidental service to itsmain service and obligation of transporting its passengers from Pasay City toTacloban City. Such being the case there is no need to obtain a separatecertificate for public convenience to operate a ferry service between Allen andMatnog to cater exclusively to its passenger buses and freight trucks. Without awaiting action on its request PANTRANCO started to operatesaid ferry service. Acting Chairman Jose C. Campos, Jr. of BOT orderedPANTRANCO not to operate its vessel until the application for hearing onOct. 1, 1981. In another order BOT enjoined PANTRANCO from operating theMN "Black Double" otherwise it will be cited to show cause why its CPCshould not be suspended or the pending application denied.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 10Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  11. 11. Epitacio San Pablo (now represented by his heirs) and CardinalShipping Corporation who are franchise holders of the ferry service in thisarea interposed their opposition. They claim they adequately service thePANTRANCO by ferrying its buses, trucks and passengers. BOT then askedthe legal opinion from the Minister of Justice whether or not a bus companywith an existing CPC between Pasay City and Tacloban City may still berequired to secure another certificate in order to operate a ferry servicebetween two terminals of a small body of water. On October 20, 1981 thenMinister of Justice Ricardo Puno rendered an opinion to the effect that thereis no need for bus operators to secure a separate CPC to operate a ferryboatservice. Thus on October 23, 1981 the BOT rendered its decision holding thatthe ferryboat service is part of its CPC to operate from Pasay to Samar/Leyteby amending PANTRANCOs CPC so as to reflect the same. Cardinal Shipping Corporation and the heirs of San Pablo filedseparate motions for reconsideration of said decision and San Pablo filed asupplemental motion for reconsideration that were denied by the BOT on July21, 1981. Hence, San Pablo filed the herein petition for review on certiorariwith prayer for preliminary injunction seeking the revocation of said decision,and pending consideration of the petition the issuance of a restraining orderor preliminary injunction against the operation by PANTRANCO of said ferryserviceIssue: Whether or not the ferry boat is a common carrier?Held: Considering the environmental circumstances of the case, theconveyance of passengers, trucks and cargo from Matnog to Allen is certainlynot a ferryboat service but a coastwise or interisland shipping service. Underno circumstance can the sea between Matnog and Allen be considered acontinuation of the highway. While a ferryboat service has been consideredas a continuation of the highway when crossing rivers or even lakes, whichare small body of waters separating the land, however, when as in this casethe two terminals, Matnog and Allen are separated by an open sea it can notbe considered as a continuation of the highway. The contention of private respondent PANTRANCO that its ferryservice operation is as a private carrier, not as a common carrier for itsexclusive use in the ferrying of its passenger buses and cargo trucks isabsurd. PANTRANCO does not deny that it charges its passengersseparately from the charges for the bus trips and issues separate ticketswhenever they board the MN "Black Double" that crosses Matnog to Allen.Nevertheless, considering that the authority granted to PANTRANCO is tooperate a private ferry, it can still assert that it cannot be held to account as acommon carrier towards its passengers and cargo. Such an anomaloussituation that will jeopardize the safety and interests of its passengers and thecargo owners cannot be allowed. Thus the Court holds that the water transport service between Matnogand Allen is not a ferryboat service but a coastwise or interisland shippingservice. Before private respondent may be issued a franchise or CPC for theoperation of the said service as a common carrier, it must comply with theusual requirements of filing an application, payment of the fees, publication,adducing evidence at a hearing and affording the oppositors the opportunityto be heard, among others, as provided by law.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 11Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  12. 12. E. DISTINCTIONS BETWEEN COMMON CARRIER AND PRIVATECARRIER Common Carrier Private Carrier As to passengers Holds himself out for all people Contracts with particular individuals indiscriminately. or groups only. As to required diligence Requires extraordinary diligence. Requires only ordinary diligence. As to state regulation Subject to regulation. Not subject to regulation. As to stipulation on limiting liability Parties may not agree on limiting the Parties may agree on limiting the carrier’s liability except when provided carrier’s liability, provided not by law. contrary to law, morals or good customs. Presumption as to fault and negligence Presumption of fault or negligence No fault or negligence is presumed. applies. As to laws applicable on damages Law on common carriers. Law on obligations and contracts.F. GOVERNING/ APPLICABLE LAWA. Transportation by Sea 1. Coastwise ▪ Civil Code (Arts.1732-1766) – primary law ▪ Code of Commerce – suppletory law Note: Carriage of Goods by Sea Act – inapplicable even if the parties expressly provide for it. 2. Carriage from Foreign Ports To Philippine Ports ▪ Civil Code – primary law ▪ Code of Commerce – all matters not regulated by the Civil Code. ▪ Carriage of Goods by Sea Act (COGSA) – suppletory to the Civil Code. 3. Carriage from Philippine Ports To Foreign Ports-laws of the country to which the goods are to be transported.B. Land Transportation a. Common Carriers ▪ Civil Code (Arts.1732-1766) – primary law ▪ Code of Commerce – suppletory law b. Private Carriers Object merchandise ▪ Code of Commerce – primary law ▪ Civil Code – suppletory lawC. Air TransportationTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 12Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  13. 13. 1. Domestic Transportation  Civil Code  Code of Commerce 2. International Transportation – Warsaw Convention  While the Warsaw Convention has the force of law in the Philippines, it does not have an exclusive enumeration of a carrier’s liability for contractual breach or absolute limit of liability. It does not preclude the operation of the Civil Code and other laws.  The liability of the carrier for the loss, destruction or deterioration of goods transported to the Philippines from a foreign country, is primarily governed by the Civil Code not by the Warsaw Convention which applies only to simple loss of baggage. There Is International Transportation When: 1. The place of departure and the place of destination are within the territories of two high contracting parties, regardless of whether or not there was a break in the transportation or transshipment. 2. The place of departure and the place of destination are within the territory of a single contracting party if there is an agreed stopping place within a territory subject to the sovereignty, mandate or authority of another power, even though the power is not a party to the convention. (Mapa v. CA, 275 SCRA [1997])High Contracting Parties ▪ Signatories to the Warsaw Convention and those which subsequently adhered to it. In National Development Co. vs. CA (164 SCRA 593). “The law of thecountry to which the goods are to be transported governs the liability of thecommon carrier in case of loss, destruction or deterioration (Art. 1753, NCC)XXX The liability of the carrier is governed primarily by the Civil Code and inall matters not regulated by the said Code, the rights and obligations ofcommon carriers shall be governed by the code of Commence and by speciallaws (Art. 1766 NCC). Hence, the COGSA /a special law is merelysupppletory to the provisions of the Civil Code”. The “place of destinations”whose law shall be deemed to be the governing law in so far as the liability ofcommon carrier is concerned refers to the place of “ultimate destination” notan agreed stopping place. This is particularly true in so far as the warsawconvention used the term to determine the country where the suit against theinternational carrier should be filled. (Santos III vs. NorthWest Orient Airlines,210 SCRA 256Cases:SAMAR MINING CO., INC. VS. NORDEUTSCHER LLOYD (132 SCRA 529)Facts: Samar Mining imported 1 crate optima welded wire (amounting toaround USD 424 or PhP 1,700) from Germany, which was shipped on avessel owned by Nordeutscher Lloyd (M/S Schwabenstein). The shipmentwas unloaded in Manila into a barge for transshipment to Davao andtemporarily stored in a bonded warehouse owned by AMCYL. The goodsnever reached Davao and were never delivered to or received by theconsignee, Samar Mining Co.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 13Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  14. 14. CFI ruled in favor of Samar Mining holding Nordeutscher Lloyd liable.However, defendants may recoup whatever they may pay Samar Mining byenforcing the judgment against third party defendant AMCYL.Issue: Whether Nordeustscher Lloyd is liable for the loss of the goods ascommon carrier?Held: No. At the time of the loss of the goods, the character of possession ofNordeutscher Lloyd shifted from common carrier to agent of Samar MiningCo. The Bill of Lading is serves both as a receipt of goods and is likewisethe contract to transport and deliver the same as stipulated. It is a contractand is therefore the law between the parties. The Bill of Lading in questionstipulated that Nordeutscher Lloyd only undertook to transport the goods in itsvessel only up to the port of discharge from ship, which is Manila. The Bill ofLading further stipulated that the goods were to be transshipped by the carrierfrom Manila to the port of destination – Davao. By unloading the shipment inManila and delivering the goods to the warehouse of AMCYL, the appellantwas acting within the contractual stipulations contained in the Bill of Lading. Article 1736 of the Civil Code relives the carrier of responsibility overthe shipment as soon as the carrier makes actual or constructive delivery ofthe goods to the consignee or to the person who has a right to receive them. Under the Civil Code provisions governing Agency, an agent can onlybe held liable in cases where his acts are attended by fraud, negligence,deceit or if there is a conflict of interest between him and the principal. Underthe same law an agent is likewise liable if he appoints a substitute when hewas not given the power to appoint one or otherwise appoints one that isnotoriously incompetent or insolvent. These facts were not proven in therecord.EASTERN SHIPPING LINES INC. VS. INTERMEDIATE APPELLATECOURT (150 SCRA 463)Facts: Sometime in or prior to June 1977, the M/S Asiatica, a vesseloperated by petitioner Eastern Shipping Lines Inc., loaded at Kobe, Japan fortransportation to Manila loaded 5,000 pieces of calorized pipes valued atP256,039.00 which was consigned to Philippine Blooming Mills Co, Inc. and7 cases of spare parts valued at P92, 361.75 consigned to Central TextileMills. Both sets of goods were inured against marine risk for their stated valuewith respondent Development Insurance and Surety Corp. In the same vessel, 2 containers of garment fabrics were also loadedwhich was consigned to Mariveles Apparel Corp worth $46,583. The saidcargoes were consigned to Nisshin Fire and Marine Insurance. Anothercargo loaded to the vessel was the surveying instruments consigned to AmanEnterprises and General Merchandise and insured against respondent DowaFire & Marine Insurance for $1,385.00. On the way to Manila, M/S Asiatica caught fire and sank. This resultedto the loss of the ship and its cargoes. The respective Insurers paid thecorresponding marine insurance values and were thus subrogated to therights of the insured.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 14Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  15. 15. The insurers filed a suit against the petitioner carrier for recovery of theamounts paid to the insured. However, petitioner contends that it is not liableon the ground that the loss was due to an extraordinary fortuitous event.Issue: Whether the Civil Code provisions on Common Carriers or theCarriage of the Goods by Sea Act will govern the case at bar?Held: The law of the country to which the goods are to be transportedgoverns the liability of common carrier in case of their loss, destruction ordeterioration. The liability of petitioner is governed primarily by the Civil Codehowever, in all matters not regulated by the Civil Code, the Code ofCommerce and Special Laws will govern with respect to the rights andobligations of the carrier. Therefore COGSA is suppletory to the provisions ofthe Civil Code.G. GOVERNMENT REGULATIONCase/sKMU LABOR CENTER VS. GARCIA (239 SCRA 386)Facts: On June 26,1990, Secretary of DOTC, Oscar M. Orbos issuedmemorandum circular No. 90-395 to then LTFRB, Chairman Remedios A.S.Fernando allowing provincial buses operators to charge passengers within arange of 15% above and 15% below, the LTFRB official rate for a period ofone (1) year. On December 5, 1990 private respondent PBOAP filed anapplication for fare rate increase to P0.085 and again it was reduced toP0.065 per kilometer rate. The application was opposed by the PhilippineConsumer Foundation Inc. that the proposed rate were exorbitant andunreasonable and that the application contained no allegation on the rate oreturn on December 14, 1990. Public respondent LTFRB granted the fare rateincrease on March 16, 1994. Petitioner KMU filed a petition before the LTFRBopposing the upward adjustment of bus fares, it was dismissed for lack ofmerit, hence this petition.Issue: Whether or not the Provincial Bus Operators has the power to reduceand increase fare rated based on the circular order issued by the LTFRB?Held: Supreme Court held that the authority given by the LTFRB to theprovincial bus operators to set a fare range over and above the authorizedexisting fare is illegal and invalid as it is tantamount to an undue delegation oflegislative authority, “Potestas delegata non delegari protest” what has beendelegated further delegation of such power would indeed constitute anegation of the duty in violation of the trust reposed in the delegate inandatedto discharged it directly. Furthermore rate fixing or making is a delicate andsensitive government function that requires dexterity of judgment and sounddiscretion with the settle goal at arriving at a just and reasonable rateacceptable to both public utility and the public.1. REGISTERED OWNER RULEGELISAN VS. ALDAY (154 SCRA 388)Facts: Bienvenido Gelisan and Roberto Espiritu entered into a contract wherethe former hired the truck of Gelisan for the purpose of transporting goods atthe price of P18.00. It is also agreed that Espiritu shall bear and pay alllosses and damages attending the carriage of the goods to be hauled by him.Benito Alday, a trucking operator, had a contract to haul the fertilizers of theTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 15Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  16. 16. Atlas Fertilizer Corporation from Pier 4, North Harbor, to its Warehouse inMandaluyong. Alday met Espiritu at the gate of Pier 4 and the latter offeredthe use of his truck with the driver and helper at 9 centavos per bag offertilizer. The offer was accepted by plaintiff Alday and he instructed hischecker Celso Henson to let Roberto Espiritu haul the fertilizer. Espiritu madetwo hauls of 200 bags of fertilizer per trip. The fertilizer was delivered to thedriver and helper of Espiritu with the necessary way bill receipts, Exhibits Aand B. Espiritu, however, did not deliver the fertilizer to the Atlas Fertilizerbodega at Mandaluyong. Subsequently, plaintiff Alday saw the truck in question on Sto. CristoSt. and he notified the Manila Police Department, and it was impounded bythe police. It was claimed by Bienvenido Gelisan. As a result of theimpounding of the truck according to Gelisan and that for the release of thetruck he paid the premium of P300 to the surety company. Benito Alday was compelled to pay the value of the 400 bags offertilizer, in the amount of P5,397.33, to Atlas Fertilizer Corporation so that,on 12 February 1962, he (Alday) filed a complaint against Roberto Espirituand Bienvenido Gelisan with the CFI Manila Bienvenido Gelisan, upon the other hand, claimed that he had nocontractual relations with the plaintiff Benito Alday.Issue: Whether Gelisan being a registered owner is responsible fordamages?Held: The Court has invariably held in several decisions that the registeredowner of a public service vehicle is responsible for damages that may arisefrom consequences incident to its operation or that may be caused to any ofthe passengers therein. The claim of the petitioner that he is not able in viewof the lease contract executed by and between him and Roberto Espirituwhich exempts him from liability to third persons, cannot be sustainedbecause it appears that the lease contract, adverted to, had not beenapproved by the Public Service Commission. It is settled in our jurisprudencethat if the property covered by a franchise is transferred or leased to anotherwithout obtaining the requisite approval, the transfer is not binding upon thepublic and third persons. Bienvenido Gelisan, the registered owner, is not however withoutrecourse. He has a right to be indemnified by Roberto Espiritu for the amountthat he may be required to pay as damages for the injury caused to BenitoAlday, since the lease contract in question, although not effective against thepublic for not having been approved by the Public Service Commission, isvalid and binding between the contracting parties.BENEDICTO VS.CA (187 SCRA 547)Facts: Private respondent Greenhills Wood Industries Company, Inc. alumber manufacturing firm in Dagupan City, operates a sawmill in Maddela,Quirino. In May 1980, private respondent bound himself to sell and deliver toBluestar Mahogony, Inc. 100,000 board feet of sawn lumber with theunderstanding that the initial delivery would be made on 15 May 1980. Toeffect its first delivery, private respondent’s resident manager in Maddela,Dominador Cruz, contracted Virgilio Licuden, the driver of a cargo truck toTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 16Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  17. 17. transport its sawn lumber to the consignee Blue Star in Valenzuela, Bulacan.This cargo truck was registered in the name of petitioner Ma. Luis Benedicto,the proprietor of Macoven Trucking, business enterprise engaged in haulingfreight, with the main office in B.F. Homes, Parañaque. On 15 May 1980, Cruz in the presence and with the consent of driverLicuden, supervised the loading of 7,690 board feet of sawn lumber withinvoice value of P16, 918.00 aboard the cargo truck. The cargo neverreached Blue Star.Issue: Whether the registered owner is liable even though the vehicle havebeen transferred to another person?Held: Supreme Court held that the prevailing rule on common carrier makesthe registered owner liable for consequences flowing from the operations ofthe common carrier, even though the specific vehicle involve may alreadyhave been transferred to another person. This doctrine rest upon the principlethat in dealing with the vehicles registered under the Public Service Law, thepublic has the right to assume that the registered owner is the actual or lawfulowner thereof. The prevailing doctrine on common carriers makes the registeredowner liable for consequences flowing from the operations of the carrier, eventhough the specific vehicle involved may already have been transferred toanother person. This doctrine rests upon the principle that in dealing withvehicles registered under the Public Service Law, the public has the right toassume that the registered owner is the actual or lawful owner thereof. Itwould be very difficult and often impossible as a practical matter, for membersof the general public to enforce the rights of action that they may have forinjuries inflicted by the vehicles being negligently operated if they should berequired to prove who the actual owner is. The registered owner is notallowed to deny liability by proving the identity of the alleged transferee. Thus,contrary to petitioner’s claim, private respondent is not required to go beyondthe vehicle’s certificate of registration to ascertain the owner of the carrier. Clearly, to permit a common carrier to escape its responsibility for thepassengers or goods transported by its proving a prior sale of the vehicle ormeans of transportation to an alleged vendee would be to attenuatedrastically the carrier’s duty of extraordinary diligence.2. KABIT SYSTEMCase/s:SANTOS VS. SIBUG (104 SCRA 520)Facts: Petitioner Adolfo Santos was the owner of a passenger jeep, but hehad no certificate of public conveyance for the operation of the vehicle as apublic passenger jeep. Santos then transferred his jeep to the name of Vidadso that it could be operated under the latter’s certificate of publicconvenience. In other words, Santos became what is known as kabitoperator. Vidad executed a re-transfer document presumably to be registeredit and when it was decided that the passenger jeep of Santos was to bewithdrawn from kabit arrangement. On the accident date, Abraham Sibug was bumped by the saidpassenger jeep.TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 17Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  18. 18. Issue: Whether the Vidad is liable being the registered owner of the jeepney?Held: As the jeep in question was registered in the name of Vidad, thegovernment or any person affected by the representation that said vehicle isregistered under the name of the particular person had the right to rely on hisdeclaration of his ownership and registration. And the registered owner or anyother person for that matter cannot be permitted to repudiate said declarationwith the objective of proving that the said registered vehicle is owned byanother person and not by the registered owner. Santos, as the kabit, should not be allowed to defeat the levy in hisvehicle and to avoid his responsibility as a kabit owner for he had led thepublic to believe that the vehicle belongs to Vidad. This is one way of curbingthe pernicious kabit system that facilitates the commissions of fraud againstthe traveling public.LITA ENTERPRISES VS. IAC (129 SCRA 464)Facts: Spouses Nicasio Ocampo and Francisca Garcia (privaterespondents) purchased in installment from the Delta Motor SalesCorporation five (5) Toyota Corona Standard cars to be used as taxi. Sincethey had no franchise to operate taxicabs, they contracted with petitioner LitaEnterprise, Inc., through its representative Manuel Concordia, for the use ofthe latter’s certificate of public convenience for a consideration of P1, 000.00and a monthly rental of P200.00/taxicab unit. For the agreement to takeeffect, the cars were registered in the name of Lita Enterprises, Inc. Thepossession, however, remains with spouses Ocampo and Garcia whooperated and maintained the same under Acme Taxi, petitioner’s trade name. A year later, one of the taxicabs, driven by their employee, EmeterioMartin, collided with a motorcycle. Unfortunately the driver of the motorcycle,Florante Galvez died from the injuries it sustained. Criminal case was filed against Emeterio Martin, while a civil case wasfiled by the heir of the victim against Lita Enterprises. In the decision of thelower court Lita Enterprises was held liable for damages for the amount ofP25, 000.00 and P7, 000.00 for attorney’s fees. A writ of execution for the decision followed, 2 of the cars of therespondent’s spouses were levied and were sold to a public auction. On March 1973, respondent Ocampo decided to register his taxicabsin his own name. The manager of petitioner refused to give him theregistration papers. Thus, making spouses file a complaint against petitioner.In the decision, Lita Enterprise was ordered to return the three certificate ofregistration not levied in the prior case. Petitioner now prays that private respondent be held liable to pay theamount they have given to the heir of Galvez.Issue: Whether or not petitioner can recover from private respondent,knowing they are in an arrangement known as “kabit system”.Held: “Kabit system” is defined as, when a person who has been granted acertificate of convenience allows another person who owns a motor vehicle tooperate under such franchise for a fee. This system is not penalized as aTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 18Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  19. 19. criminal offense but is recognized as one that is against public policy;therefore it is void and inexistent. It is fundamental that the court will not aid either of the party to enforcean illegal contract, but will leave them both where it finds them. Upon thispremise, it was flagrant error on the part of both trial and appellate courts tohave accorded the parties relief from their predicament. Specifically Article1412 states that: “If the act in which the unlawful or forbidden cause consists does notconstitute a criminal offense, the following rules shall be observed: “when thefault, is on the part of both contracting parties, neither may recover what hehas given by virtue of the contract, or demand the performance of the other’sundertaking.” The principle of in pari delicto is evident in this case. “the proposition isuniversal that no action arises, in equity or at law, from an illegal contract; nosuit can be maintained for its specific performance, or to recover the propertyagreed to sold or delivered, or damages for its property agreed to be sold ordelivered, or damages for its violation.” The parties in this case are in paridelicto, therefore no affirmative relief can be granted to them.TEJA MARKETING V. IAC (148 SCRA 347)Facts: Pedro Nale bought from Teja Marketing a motorcycle with completeaccessories and a sidecar. A chattel mortgage was constituted as a securityfor the payment of the balance of the purchase price. The records of theLand Transportation Commission show that the motorcycle sold to thedefendant was first mortgaged to the Teja Marketing by Angel Jaucian thoughthe Teja Marketing and Angel Jaucian are one and the same, because it wasmade to appear that way only as the defendant had no franchise of his ownand he attached the unit to the plaintiffs MCH Line. The agreement also ofthe parties here was for the plaintiff to undertake the yearly registration of themotorcycle with the Land Transportation Commission. The plaintiff, howeverfailed to register the motorcycle on that year on the ground that the defendantfailed to comply with some requirements such as the payment of theinsurance premiums and the bringing of the motorcycle to the LTC forstenciling, the plaintiff said that the defendant was hiding the motorcycle fromhim. Lastly, the plaintiff also explained that though the ownership of themotorcycle was already transferred to the defendant, the vehicle was stillmortgaged with the consent of the defendant to the Rural Bank of Camaliganfor the reason that all motorcycle purchased from the plaintiff on credit wasrediscounted with the bank. Teja Marketing made demands for the payment of the motorcycle butjust the same Nale failed to comply, thus forcing Teja Marketing to consult alawyer and file an action for damage before the City Court of Naga in theamount of P546.21 for attorneys fees and P100.00 for expenses of litigation.Teja Marketing also claimed that as of 20 February 1978, the total account ofNale was already P2, 731, 05 as shown in a statement of account; includesnot only the balance of P1, 700.00 but an additional 12% interest per annumon the said balance from 26 January 1976 to 27 February 1978; a 2% servicecharge; and P546.21 representing attorneys fees. On his part, Nale did notdispute the sale and the outstanding balance of P1,700.00 still payable toTeja Marketing; but contends that because of this failure of Teja Marketing tocomply with his obligation to register the motorcycle, Nale suffered damageswhen he failed to claim any insurance indemnity which would amount to noTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 19Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  20. 20. less than P15,000.00 for the more than 2 times that the motorcycle figured inaccidents aside from the loss of the daily income of P15.00 as boundary feebeginning October 1976 when the motorcycle was impounded by the LTC fornot being registered. The City Court rendered judgment in favor of TejaMarketing, dismissing the counterclaim, and ordered Nale to pay TejaMarketing On appeal to the Court of First Instance of Camarines Sur, thedecision was affirmed in toto. Nale filed a petition for review with theIntermediate Appellate Court. On 18 July 1983, the appellate court set asidethe decision under review on the basis of doctrine of "pari delicto," andaccordingly, dismissed the complaint of Teja Marketing, as well as thecounterclaim of Nale; without pronouncements as to costs. Hence, thepetition for review was filed by Teja Marketing and/or Angel Jaucian.Issue: Whether the defendant can recover damages against the plaintiff?Held: Unquestionably, the parties herein operated under an arrangement,commonly known as the "kabit system" whereby a person who has beengranted a certificate of public convenience allows another person who ownsmotor vehicles to operate under such franchise for a fee. A certificate ofpublic convenience is a special privilege conferred by the government. Abuseof this privilege by the grantees thereof cannot be countenanced. The "kabit system" has been identified as one of the root causes of theprevalence of graft and corruption in the government transportation offices.Although not out rightly penalized as a criminal offense, the kabit system isinvariably recognized as being contrary to public policy and, therefore, voidand in existent under Article 1409 of the Civil Code. It is a fundamentalprinciple that the court will not aid either party to enforce an illegal contract,but will leave both where it finds then. Upon this premise it would be error toaccord the parties relief from their predicament.3. BOUNDARY SYSTEMCase/s:MAGBOO V. BERNARDO 7 SCRA 952Facts: Urbano and Emilia Magboo are the parents of Cesar Magboo, a childof 8 years old, who lived with them and was under their custody until hisdeath on 24 October 1956 when he was killed in a motor vehicle accident, thefatal vehicle being a passenger jeepney owned by Delfin Bernardo. At thetime of the accident, said passenger jeepney was driven by Conrado Roque.The contract between Roque and Bernardo was that Roque was to pay toBernardo the sum of P8.00, which he paid to Bernardo, for privilege of drivingthe jeepney, it being their agreement that whatever earnings Roque couldmake out of the use of the jeepney in transporting passengers from one pointto another in the City of Manila would belong entirely to Roque. As aconsequence of the accident and as a result of the death of Cesar Magboo insaid accident, Roque was prosecuted for homicide thru reckless imprudencebefore the CFI Manila. Roque was sentenced to 6 months of arresto mayor,with the accessory penalties of the law; to indemnify the heirs of thedeceased in, with subsidiary imprisonment in case of insolvency, and to paythe costs. Pursuant to said judgment Roque served his sentence but he wasnot able to pay the indemnity because he was insolvent. An action was filedby the spouses Magboo against Bernardo is for enforcement of his subsidiaryliability. The trial court ordered Bernardo to pay the. Bernardo appealed to theTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 20Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  21. 21. Court of Appeals, which certified the case to the Supreme Court on theground that only questions of law are involved.Issue: Whether or not an employer-employee relationship between thejeepney operator and the driver?Held: An employer-employee relationship exists between a jeepney ownerand a driver under a boundary system arrangement. The features whichcharacterize the boundary system - namely the fact that the driver does notreceive a fixed wage but gets only the excess of the amount of fares collectedby him over the amount he pays to the jeep-owner, and the gasolineconsumed by the jeep is for the amount of the driver - are not sufficient towithdraw the relationship between them from that of employee and employer.Consequently, the jeepney owner is subsidiary liable as employer inaccordance with Art.103, Revised Penal Code.II. CONTRACTUAL EFFECTSA. CAUSE OF ACTION1. FABRE VS. CA 259 SCRA 426 (G.R. NO. 111127, JULY 26, 1996)Facts: Petitioner and his wife were owners of a minibus. They used the busprincipally in connection with a bus service for school children which theyoperated in Manila and was driven by Porfirio Cabil. His job was to takeschool children to and from the school. Sometime during November privaterespondent WWCF arranged with petitioners for the transportation of 33members of its ministry form Manila to La Union and back in consideration ofwhich private respondent shall pay petitioners the stipulated amount. On theday of the trip, several members of the ministry came in late, hence, thedeparture was delayed. On the may to La Union, the minibus caught anaccident causing damages and injury to several passengers particularlyAmyline Antonio. Apparently, the driver was unable to see a sharp curveahead of time for him to be able to avoid the mishap. A criminal complaintwas them filed against the driver, while defendant spouses were also madejointly liable.Issue: Whether or not defendant spouses failed to exercise diligence of agood father of the family?Held: Court ruled that defendant spouses were negligent in the exercise oftheir duties as owners of the minibus for it was clearly established byevidence that said vehicle was not properly check if it was fit for the long trip.Moreover, defendants were also negligent in the selection and supervision oftheir employee, particularly, the driver, who was only used to driving shortdistances.2. AIR FRANCE VS CARRASCOSO (18 SCRA 155)Facts: Plaintiff, a civil engineer, was a member of a group of 48 Filipinopilgrims that left Manila for Lourdes on March 30, 1958. On March 28, 1958, the defendant, Air France, through its authorizedagent, Philippine Air Lines, Inc., issued to plaintiff a "first class" round tripairplane ticket from Manila to Rome. From Manila to Bangkok, plaintifftraveled in "first class", but at Bangkok, the Manager of the defendant airlineforced plaintiff to vacate the "first class" seat that he was occupying because,in the words of the witness Ernesto G. Cuento, there was a "white man", who,TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 21Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  22. 22. the Manager alleged, had a "better right" to the seat. When asked to vacatehis "first class" seat, the plaintiff, as was to be expected, refused, and tolddefendants Manager that his seat would be taken over his dead body; acommotion ensued, and, according to said Ernesto G. Cuento, "many of theFilipino passengers got nervous in the tourist class; when they found out thatMr. Carrascoso was having a hot discussion with the white man [manager],they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to givehis seat to the white man" and plaintiff reluctantly gave his "first class" seat inthe plane after being threatened that he will be thrown out of the plane if hedoes not oblige. The captain of the plane, when asked to intervene, refusedto do so.Issue: Whether or not there was bad faith on the part of Air France,petitioner, entitling Rafael Carrascoso, respondent for moral and exemplarydamages as against the petitioner?Held: The court held in favor of the respondent, Carrascoso. The responsibility of an employer for the tortious act of its employeesneed not be essayed. It is well settled in law. For the willful malevolent act ofpetitioners manager, petitioner, his employer, must answer. A contract to transport passengers is quite different in kind and degreefrom any other contractual relation. And this, because of the relation which anair-carrier sustains with the public. Its business is mainly with the travelingpublic. It invites people to avail of the comforts and advantages it offers. Thecontract of air carriage, therefore, generates a relation attended with a publicduty. Neglect or malfeasance of the carriers employees, naturally, could giveground for an action for damages. Passengers do not contract merely for transportation. They have aright to be treated by the carriers employees with kindness, respect, courtesyand due consideration. They are entitled to be protected against personalmisconduct, injurious language, indignities and abuses from such employees.So it is that any rule or discourteous conduct on the part of employeestowards a passenger gives the latter an action for damages against thecarrier. The court held that the judgment of the Court of Appeals does notsuffer from reversible error. CA decision affirmed.3. TIU VS. ARRIESGADO G.R. NO. 138060, SEPTEMBER 1, 2004Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked"Condor Hollow Blocks and General Merchandise" bearing plate numberGBP-675 was loaded with firewood in Bogo, Cebu and left for Cebu City.Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just as the truckpassed over a bridge, one of its rear tires exploded. The driver, SergioPedrano, then parked along the right side of the national highway andremoved the damaged tire to have it vulcanized at a nearby shop, about 700meters away. Pedrano left his helper, Jose Mitante, Jr. to keep watch over thestalled vehicle, and instructed the latter to place a spare tire six fathoms awaybehind the stalled truck to serve as a warning for oncoming vehicles. Thetrucks tail lights were also left on. It was about 12:00 a.m., March 16, 1987. At about 4:45 a.m., D Rough Riders passenger bus with plate numberPBP-724 driven by Virgilio Te Laspiñas was cruising along the nationalTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 22Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  23. 23. highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger buswas also bound for Cebu City, and had come from Maya, Daanbantayan,Cebu. Among its passengers were the Spouses Pedro A. Arriesgado andFelisa Pepito Arriesgado, who were seated at the right side of the bus, aboutthree (3) or four (4) places from the front seat. As the bus was approaching the bridge, Laspiñas saw the stalled truck,which was then about 25 meters away. He applied the breaks and tried toswerve to the left to avoid hitting the truck. But it was too late; the busrammed into the trucks left rear. The impact damaged the right side of the busand left several passengers injured. Pedro Arriesgado lost consciousness andsuffered a fracture in his right colles. His wife, Felisa, was brought to theDanao City Hospital. She was later transferred to the Southern Island MedicalCenter where she died shortly thereafter. Respondent Pedro A. Arriesgado then filed a complaint for breach ofcontract of carriage, damages and attorneys fees before the Regional TrialCourt of Cebu City, Branch 20, against the petitioners, D Rough Riders busoperator William Tiu and his driver, Virgilio Te Laspiñas on May 27, 1987. Therespondent alleged that the passenger bus in question was cruising at a fastand high speed along the national road, and that petitioner Laspiñas did nottake precautionary measures to avoid the accident. The petitioners, for their part, filed a Third-Party Complaint against thefollowing: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII),petitioner Tiu’s insurer; respondent Benjamin Condor, the registered owner ofthe cargo truck; and respondent Sergio Pedrano, the driver of the truck. Theyalleged that petitioner Laspiñas was negotiating the uphill climb along thenational highway of Sitio Aggies, Poblacion, Compostela, in a moderate andnormal speed. It was further alleged that the truck was parked in a slantedmanner, its rear portion almost in the middle of the highway, and that no earlywarning device was displayed. Petitioner Laspiñas promptly applied thebrakes and swerved to the left to avoid hitting the truck head-on, but despitehis efforts to avoid damage to property and physical injuries on thepassengers, the right side portion of the bus hit the cargo truck’s left rear.HELD: The rules which common carriers should observe as to the safety of theirpassengers are set forth in the Civil Code, Articles 1733, 1755and 1756. It isundisputed that the respondent and his wife were not safely transported to thedestination agreed upon. In actions for breach of contract, only the existence of suchcontract, and the fact that the obligor, in this case the common carrier, failed totransport his passenger safely to his destination are the matters that need to be proved.This is because under the said contract of carriage, the petitioners assumed theexpress obligation to transport the respondent and his wife to their destination safelyand to observe extraordinary diligence with due regard for all circumstances. Anyinjury suffered by the passengers in the course thereof is immediately attributable tothe negligence of the carrier. Upon the happening of the accident, the presumption ofnegligence at once arises, and it becomes the duty of a common carrier to prove thathe observed extraordinary diligence in the care of his passengers. It must be stressedthat in requiring the highest possible degree of diligence from common carriers and increating a presumption of negligence against them, the law compels them to curb therecklessness of their drivers. While evidence may be submitted to overcome suchpresumption of negligence, it must be shown that the carrier observed the requiredextraordinary diligence, which means that the carrier must show the utmost diligenceof very cautious persons as far as human care and foresight can provide, or that theaccident was caused by fortuitous event. As correctly found by the trial court,petitioner Tiu failed to conclusively rebut such presumption. The negligence ofTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 23Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  24. 24. petitioner Laspiñas as driver of the passenger bus is, thus, binding against petitionerTiu, as the owner of the passenger bus engaged as a common carrier.B. EXTRAORDINARY DILIGENCEREQUIREMENT OF EXTRAORDINARY DILIGENCE Common Carriers, from the nature of their business and for reasons ofpublic policy, are bound to observe extraordinary diligence on the vigilanceover goods and for the safety of the passengers transported by themaccording to all the circumstances of each case. (Art. 1733, Civil Code)Coverage1. Vigilance over goods (Arts. 1734-1754)2. Safety of passengers (Arts. 1755-1763)Passenger - A person who has entered into a contract of carriage, express orimplied, with the carrier. They are entitled to extraordinary diligence from thecommon carrier. Persons Not Considered As Passengers 1. One who has not yet boarded any part of a vehicle regardless of whether or not he has purchased a ticket; 2. One who remains on a carrier for an unreasonable length of time after he has been afforded every safe opportunity to alight; 3. One who has boarded by fraud, stealth, or deceit; 4. One who attempts to board a moving vehicle, although he has a ticket, unless the attempt be with the knowledge and consent of the carrier; 5. One who boarded a wrong vehicle, has been properly informed of such fact, and on alighting, is injured by the carrier; or 6. One who rides any part of the vehicle which is unsuitable or dangerous or which he knows is not designed or intended for passengers.RULES ON PRESUMPTION OF NEGLIGENCE:A. In the Carriage of Goods: ▪ In case of loss, destruction and deterioration of goods, common carriers are presumed to be at fault or have acted negligently, unless they prove that they exercise extraordinary diligence. ▪ In the transport of goods, mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier.B. In the Carriage of Passengers: ▪ In case of death or injury to passengers, common carriers are presumed to be at fault or have acted negligently, unless they prove that they exercise extraordinary diligence. .(Art. 1755,NCC) ▪ The court need not make an express finding of fault or negligence of common carriers. The law imposes upon common carriers strict liability, as long as it is shown that there exists a relationship between the passenger and the common carrier and that injury or death took place during the existence of the contract. ▪ The common carrier is not an absolute insurer against all possible risks of transportation or travel. (Pilapil vs. CA et al, 180 SCRA 546)Doctrine of Proximate Cause – is NOT applicable to contract of carriageTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 24Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  25. 25. • The injured passenger or owner of goods need not prove causation to establish his case. The presumption arises upon the happening of the accident. (Calalas v. CA, 383 SCRA, [2002])DEFENSES OF COMMON CARRIERSGeneral Rule: Common carriers are responsible for the loss, destruction ordeterioration of the goods.Exceptions: The same is due to any of the following causes only:a. Flood, storm, earthquake, lightning or other natural disaster or calamity;b. Act of public enemy in war, whether international or civil;c. Act or omission of the shipper or the owner of the goods;d. The character of the goods or defects in the packing or in the containers;e. Order or act of competent authority. (Art.1734, Civil Code)  The above enumeration is exclusive. If not one of those enumerated is present, the carrier is liable. (Belgian Chartering and Shipping, N.V. v. Phil. First Insurance Co.,Inc., 383 SCRA, 2002)  The exceptions in Art 1734 must be proven whether the presumption of negligence applies. Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of negligence in case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the instance when the presumption of negligence does not attach. (Delsan v. Trans. American Home Insurance, August 15, 2006)a. Caso Fortuito / Force Majeure Requisites: a. Must be the proximate and only cause of the loss; b. Event independent of human will; c. Occurrence makes it impossible for debtor to fulfill the obligation in a normal manner; d. Obligor must be free of participation in, or aggravation of, the injury to the debtor; and e. Impossible to foresee or impossible to avoid. o Fire is not considered a natural disaster or calamity as it arises almost invariably from some act of man or by human means unless caused by lightning or by natural disaster or calamity. It may even be caused by the actual fault or privity of the common carrier. (Eastern Shipping Lines Inc. vs. IAC, 150 SCRA 469, [1987]) o Mechanical defects are not force majeure if the same was discoverable by regular and adequate inspections. (Aquino T. & Hernando, Notes and Cases on the Law on Transportation and Public Utilities, , R.P. 2004 ed. p.120-122)B. Act of God Requisites: 1. The common carrier must have exercised extraordinary diligence before, during and after the time of the accident; 2. The event must be unforeseen or even if it can be foreseen, it cannot be avoided; 3. There must have been no undue delay on the part of the common carrier;TRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 25Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  26. 26. 4. The proximate cause must not be committed by the common carrier.  Fortuitous event must be established to be the proximate cause of the loss. (Asia Lighterage and Shipping, Inc. v. CA, et al., 409 SCRA, [2003]) Exemption to Liability From Natural Disasters or Calamities: 1. The natural disaster must have been the proximate cause of the loss. 2. It must have been the cause of the loss. 3. The common carrier must have exercised due diligence to prevent or minimize the damage or loss before, during and after the natural disaster. 4. The common carrier has not negligently incurred delay in transporting the goods.C. Acts of Public Enemy In War Requisites: 1. The act of the public enemy must have been the proximate and only cause of the loss; and 2. The common carrier must have exercised due diligence to prevent or minimize the loss before, during or after the act causing the loss, deterioration or destruction of the goods (Art. 1739, Civil Code)D. Act or Omission of the Shipper or Owner of Goods 1. The act or omission of the shipper/owner must have been the sole and proximate cause of the loss. This is an absolute defense. 2. Contributory Negligence: partial defense. (Art. 1741, Civil Code ) Doctrine of Contributory Negligence  Failure of a person who has been exposed to injury by the fault or negligence of another, to use such degree of care for his safety and protection as ordinarily prudent men would use under the circumstances. (Rakes v. Atlantic, Gulf and Pacific Co., 7 Phil. 359 [1907])  The common carrier shall be liable even 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. (Art. 1741, Civil Code)E. Character of the Goods or Defects in the Packing or in the Container ▪ That the loss, destruction or deterioration was caused by the character of the goods or the faulty packing or containers. ▪ Even if the damage should be caused by the inherent defect/character of the goods, the common carrier must exercise due diligence to forestall or lessen the loss. (Art. 1742, Civil Code) o The rule is that if the improper packing is known to the carrier or his employee or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for the resulting damage. (A.F. Sanchez Brokerage Inc. vs. C.A., 447 SCRA 427, [2004])E. Order or Act of Public Authority ▪ The common carrier is not ipso facto relieved fromTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 26Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  27. 27. liability due to the loss, destruction or deterioration of goods caused by public authority. Requisites: ▪ The common carrier must prove that the public authority has the power to issue the order for the seizure or destruction of the goods. ▪ The common carrier must exercise extraordinary diligence to prevent or minimize the loss, destruction or deterioration of he goods at the time of the accident. o Said public authority must have the power to issue the order (Article 1743, Civil Code). Consequently, where the officer acts without legal process, the common carrier will be held liable. (Ganzon v. CA 161, SCRA 646 [1988])Cases:REPUBLIC VS. LORENZO SHIPPING LINES (7 FEBRUARY 2005)Facts: The Republic of the Philippines signed an agreement through theDepartment of Health and the Cooperative for American Relief Everywhere,Inc. (CARE) wherein it would acquire from the US government donations ofNon-Fat Dried Milk and other food products. In turn, the Philippines willtransport and distribute the donated to the intended beneficiaries of thecountry. As a result, it entered into a contract of carriage of goods with theherein respondent. The latter shipped 4,868 bags of non-fat dried milk fromSept-Dec 1988. The consignee named in the bills was Abdurahman Jama,petitioner’s branch supervisor in Zamboanga City. Upon reaching the port ofZamboanga, respondent’s agent, Efren Ruste Shipping Agency unloaded thesaid milks. Before each delivery, Rogelio Rizada and Ismael Zamora bothdelivery checkers of Efren Ruste requested Abdurahman to surrender theoriginals of the Bill of Lading. However, the petitioner alleged that they did notreceive anything and they filed a claim against the herein respondent. Thepetitioner contended that the respondents failed to exercise extraordinarydiligence.Issue: Whether the respondents failed to exercise extraordinary diligencerequired by law?Held The surrender of the Bill of Lading is not a condition precedent for acommon carrier to be discharged of its contractual obligation. If the surrenderis not possible, acknowledgment of the delivery by signing the receiptsuffices. The herein respondent did not even bother to prevent the resignationof abdurhaman Jama to be utilized as a witness.CENTRAL SHIPPING CO. VS. INSURANCE CO. (SEPTEMBER 20, 200,121 SCRA 769)Facts: On July 25, 1990 at Puerto Princesa, Palawan, the petitioner receivedon board its vessel, the M/V Central Bohol, 376 pieces of Round Logs andundertook to transport said shipment to Manila for delivery to Alaska LumberCo., Inc. The cargo is insured for P3, 000, 000.00 against total lost underrespondents MarineCargo Policy. After loading the logs, the vessel starts its voyage. After few hours ofthe trip, the ship tilts 10 degrees to its side, due to the shifting of the logs inTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 27Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  28. 28. the hold. It continues to tilt causing the captain and the crew to abandon ship.The ship sank. Respondent alleged that the loss is due to the negligence and fault ofthe captain. While petitioner contends that the happening is due to monsoonswhich is unforeseen or casa fortuito.Issue: Whether or not petitioner is liable for the loss of cargo?Held: From the nature of their business and for reasons of public policy,common carriers are bound to observe extraordinary diligence over the goodsthey transport, according to all the circumstances of each case. In the eventof loss, destruction or deterioration of the insured goods, common carriers areresponsible; that is, unless they can prove that such loss, destruction ordeterioration was brought about -- among others -- by "flood, storm,earthquake, lightning or other natural disaster or calamity." In all other casesnot specified under Article 1734 of the Civil Code, common carriers arepresumed to have been at fault or to have acted negligently, unless theyprove that they observed extraordinary diligence. The contention of the petitioner that the loss is due to casa fortuitoexempting them from liability is untenable. Petitioner failed to show that suchnatural disaster or calamity was the proximate and only cause of the loss.Human agency must be entirely excluded from the cause of injury or loss. Inother words, the damaging effects blamed on the event or phenomenon mustnot have been caused, contributed to, or worsened by the presence of humanparticipation. The defense of fortuitous event or natural disaster cannot besuccessfully made when the injury could have been avoided by humanprecaution. The monsoon is not the proximate cause of the sinking but is due tothe improper stowage of logs. The logs were not secured by cable wires,causing the logs to shift and later on the sinking the ship. This shows thatthey did not exercise extraordinary diligence, making them liable for suchloss.SWEET LINES INC, VS. CA (121 SCRA 769)Facts: Herein private respondents purchased first-class tickets from petitionerat the latter’s office in Cebu City. They were to board M/V Sweet Grace boundfor Catbalogan, Western Samar. Instead of departing at the scheduled hour ofabout midnight on July 8, 1972, the vessel set sail at 3:00 am of July 9, 1972only to be towed back to Cebu due to engine trouble, arriving there on thesame day at about 4:00 pm. The vessel lifted anchor again on July 10, 1972at around 8:00 am. Instead of docking at Catbalogan (the first port of call), thevessel proceeded direct to Tacloban. Private respondents had no recoursebut to disembark and board a ferry boat to Catbalogan. Hence, the suit forbreach of contract of carriage.Issue: Whether or not the mechanical defect constitutes a fortuitous eventwhich would exempt the carrier from liability.Held: No. As found by the trial court and the Court of Appeals, there was nofortuitous event or force majeure which prevented the vessel from fulfilling itsundertaking of taking the private respondents to Catbalogan. In the first place,mechanical defects in the carrier are not considered a caso fortuito thatexempts the carrier from responsibility. In the second place, even grantingTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 28Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang
  29. 29. arguendo that the engine failure was a fortuitous event, it accounted on forthe delay of departure. When the vessel finally left the port, there was nolonger any force majeure that justified by-passing a port of call.EASTERN SHIPPING LINES VS. CA 234 SCRA 7Facts: On December 4, 1981, two fiber drums of riboflavin were shipped fromYokohama, Japan for delivery vessel "SS EASTERN COMET" owned bydefendant Eastern Shipping Lines under a bill of lading. The shipment wasinsured under plaintiffs Marine Insurance Policy. Upon arrival of the shipmentin Manila on December 12, 1981, it was discharged unto the custody ofdefendant Metro Port Service, Inc. The latter excepted to one drum, said tobe in bad order, which damage was unknown to plaintiff. On January 7, 1982 defendant Allied Brokerage Corporation receivedthe shipment from defendant Metro Port Service, Inc., one drum opened andwithout seal. On January 8 and 14, 1982, defendant Allied BrokerageCorporation made deliveries of the shipment to the consignees warehouse.The latter excepted to one drum which contained spillages, while the rest ofthe contents was adulterated/fake. Plaintiff contended that due to the losses/damage sustained by saiddrum, the consignee suffered losses totaling P19, 032.95, due to the fault andnegligence of defendants. Claims were presented against defendants whofailed and refused to pay the same. As a consequence of the lossessustained, plaintiff was compelled to pay the consignee P19, 032.95 underthe aforestated marine insurance policy, so that it became subrogated to allthe rights of action of said consignee against defendants.Issue: Whether or not a claim for damage sustained on a shipment of goodscan be a solidary or joint and several, liability of the common carrier, thearrastre operator and the customs broker?Held: The common carriers duty to observe the requisite diligence in theshipment of goods lasts from the time the articles are surrendered to orunconditionally placed in the possession of, and received by, the carrier fortransportation until delivered to, or until the lapse of a reasonable time fortheir acceptance by, the person entitled to receive them (Arts. 1736-1738,Civil Code). When the goods shipped either are lost or arrive in damagedcondition, a presumption arises against the carrier of its failure to observe thatdiligence, and there need not be an express finding of negligence to hold itliable (Art. 1735, Civil Code). There are, of course, exceptional cases whensuch presumption of fault is not observed but these cases, enumerated inArticle 1734 of the Civil Code, are exclusive, not one of which can be appliedto this case. As to The question of charging both the carrier and the arrastreoperator with the obligation of properly delivering the goods to the consignee,the legal relationship between the consignee and the arrastre operator is akinto that of a depositor and warehouseman while the relationship between theconsignee and the common carrier is similar to that of the consignee and thearrastre operator. Since it is the duty of the arrastre to take good care of thegoods that are in its custody and to deliver them in good condition to theconsignee, such responsibility also devolves upon the carrier. Both thearrastre and the carrier are therefore charged with the obligation to deliver thegoods in good condition to the consignee. A factual finding of both theSupreme Court and the appellate court was that there was sufficient evidenceTRANSPORTATION LAW: Lawrence Jeffrey Delfin, Flerida Emma Manglicmot, Mark Joseph Mupas, 29Melanie Pascua, Gilbert Ricaforte, Renato Segubiense Jr., Katleen Grace Serrano, Mary Jane Timbang

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