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Notes of Atty. Tabigne

 

Transportation Law

 

Commonwealth act no 146 of 1936 = public service act

 

I. Concept and definitions

 

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

 

 

            Common carriers are persons engaged in the business of carrying or transporting passengers of goods or both, by land, sea/water or air transportation offering their services to the public (Art 1732 NCC)

 

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

 

Held:

            It appears to the court that Cendana is properly characterized as a common carrier (under Art 1732 NCC and sec 13b CA 146) even though he merely back-hauled goods for other merchants and done on a periodic or occasional rather than regular or scheduled manner and even though his principal occupation was not the carriage of goods of others.

 

            The law make no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity side line. Neither as between person offering his service on a regular or scheduled basis and one offering such service on occasional or episodic or unscheduled basis, as well as to offer of the service to the general public and one offering to narrow segments of the public. (J. Feliciano) cited by Campos Jr in Bascos vs CA, 221 SCRA 318, ’93.

 

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

 

            In Asia Lighterage & Shipping Co vs CA, April 9, 2003, a common carrier need not have a fixed and public route known nor does have a terminals or issue tickets.

 

            In First Phil Industrial Corp vs CA, Aug 19, 2003, a common carrier is not limited to the transportation of goods by motor vehicle, ship or plane. In this case a pipe transporting liquid is considered as common carrier.

 

 

            Public utility is a business or service engaged in regularly supplying the public with some commodity or service of public consequence, such as electricity, gas, water, transportation, telephone or telegraphic service. The term implies public use and service. (National Power Corp vs CA, 279 SCRA 408)

 

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

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

            Ans: No, because there’s no compensation which an element of common carrier or public utility.

 

Constitutional Provisions touching on Public Utility

  1. Protection of Filipino enterprises against foreign competition and trade practices: Equitable distribution of opportunities, income and wealth (Sec.1 Art XII)
  2. Issuance of franchise, certificate or other form of authorization for the operation of public utility shall be granted to Filipino citizens or to corporation whose capital 60% of which are Filipino owned. (Sec 11, ibid)
  3. Taking over or directing operation of any privately owned public utility or business affected with public interest by the state temporarily in times of national emergency when the public interest so requires and under reasonable terms prescribed by it. (Sec 17, ibid)
  4. Transfer to public ownership utilities and other private enterprises to be operated by the Govt in the interest pf national welfare or defense and upon payment of just compensation. The state may also establish and operate vital industries under such condition. (Sec 18, ibid)
  5. Regulation or prohibition of monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed. (Sec 19, ibid)

 

State’s Control and Regulation of Public Utilities: Basis

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

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

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

            Likewise mere owner of the facilities used by a public utility is not a public utility.

 

State’s Control & Rgulation of Public Utilities: Agencies

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

  1. Land Transportation: (a) Land Transportation Office (LTO) for registration: (b) Land Transportation Franchising Regulatory Board (LTFRB) for franchising
  2. Air Transportation: Air Transportation Office (ATO) and Civil Aeronautics Board (CAB)
  3. Water Transportation: Maritime Industry Authority (MARINA), Phil Coast Guard: Phil Port Authority (PD 474 ’74:  RA 7471)

 

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

      The power to fix rates of public utility is a legislative power that has been delegated to the regulatory agencies, and such cannot be further delegated by such administrative regulatory agency (KMU Labor Center vs Garcia, 239 SCRA 386)

      However RA 9295 of 2004 – Domestic Shipping Development Act provides for the deregulation of Marina over domestic ship operators who are authorized to establish their own domestic shipping rates, provided that effective competition is fostered and public interest is served. This is to encourage investments in the domestic shipping industry and attract new investment. (Sec. 8: Sec 11 provides also that every ship operator shall have the right to fix its own passenger or cargo rates or both. NB the law also provided in Sec 14 for a compulsory insurance coverage for passengers and cargo)

 

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

      The requirement of reasonableness means that such rate must not be confiscatory or to too high as to be oppressive. It is essential to consider the given situation, requirements and opportunity of the utility. (ibid)

 

Factors Considered in Fixing Rates: (ibid)

  1. Rate of returns – this is a judgment percentage which, if multiplied with the base rate, provides a fair return on the public utility for the use of the property for the service to the public. This is not prescribed by statute but by administrative or judicial pronouncement. SC consistently adopted 12% in return.
  2. Rate Base – is an evaluation of the property devoted by the utility to the public service, or the value of invested capital or property which the utility is entitled to a return.
  3. The Return Itself – this is a computed revenue to be earned by the public utility based on the rate of return and rate base.
  4. Operating expenses incurred in connection with the services provided. Excluded are expenses not attributable to the operation of the public utility.

 

Authorization to operate Public Utilities – Transportation

            The grant of franchise, certificate or other form of authorization for the operation of public utility shall be to Filipino citizens or corporation 60% of its capital owned by Filipino.

            The power to authorize and control the operation of public utilities is a legislative function and Congress may delegate such power to the executive branch thru its administrative agency. (PAL vs CAB, 270 SCRA 539)

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

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

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

 

 

Common Carrier

Concept and Definition

            Transportation is a public service or public utility which consists in engaging in the business of carrying-transporting passengers and/or goods for compensation by land, air or sea.

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

            The law makes no distinctions between one whose principal business activity is the transporting of persons, goods or both, and one who does it as an ancillary activity such as side-line: between one doing it on a regular or scheduled basis and one doing on unscheduled, occasional or episodic basis: and between one offering the service to the public in general and one offering it to limited clienteles or narrow segment of the public (De Guzman vs CA, 168 SCRA 617, ’88 –Junkman case)

 

Cases:

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

Facts:

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

Held:

(a)    Calvo is a common carrier based on De Guzman ruling because her business is to transport goods for her customers, regardless whether limited or not, for compensation. Thus she has the obligation to exercise the extra ordinary diligence and is covered by the presumption of negligence.

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

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

 

First Phil Industrial Corp vs CA, 300 SCRA 661

Held:

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

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

 

Classes of carriers or transportation

1. Common or Public Carriers are person engaged in the business of carrying-transporting goods or persons or both by land, air or sea. (Art 1732)

Test in determining a carrier is a common carrier:

  1. is the carriage of passengers or goods or both offered for all who opt to avail themselves of the service for a fee? A carrier which does not qualify under the above test is deemed a private carrier which undertakes a service by special agreement and the carrier does not hold itself out to carry for the general public. (National Steel Corp vs CA, 283 SCRA 51, ’97)
  2. existence of the following conditions:
  1. must be engaged in the business of carrying goods for others as a public employment and holds itself out as ready to engage in the transportation of goods for persons generally as a business and not as a casual occupation
  2. must undertake the carry goods of the kind to which the businesses is confined
  3. must undertake to carry by the method by which his business is conducted and over his established route
  4. the transportation must be for hire (First Phil Industrial Corp vs CA. 300 SCRA 661)

 

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

One whose undertaking is a single transaction which is not a part of the general business or occupation. (Planters Products Inc vs CA, 226 SCRA 484)

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

Case:

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

Facts:

Caltex chartered MT Vector-Tanker of Vector Shipping Corp to transport its fuel products from Limay, Bataan to Masbate. On Dec 2, 1987 while enroute the Tanker collided with MV Dona Paz of Sulpicio Lines Inc resulting to the sinking of the latter vessel and the death of about 4000 passengers with only 24 survivors.

Held:

The charterer “Caltex” under a contract of affreightment has no liability for damages under maritime laws. It is the shipowner “Vector” who is liable as it is in possession, control and navigation of the tanker. As such “Vector” is a common carrier subject to the presumption of negligence which it was found guilty by the Board of Maritime Inquiry in 1988. Thus “Vector” is liable to reimburse/indemnify “Sulpicio Lines” for whatever damages, atty fees and cost the latter is adjudged to pay. (Note Sulpicio was also negligent with respects to its passengers – overloading which contrary to maritime rules and regulation- liable for breach of carriage)

 

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

Facts:

GPS was contracted by Conception Industry to transport 30 units of Condura Ref from Alabang, Makati to Dagupan city. On the way GPS truck collided with another truck, resulting to damages of cargo of former truck. FGU-insurer of the damaged cargoes paid and as subrogee sued GPS for breach of contract of carriage.

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

Held:

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

            As the driver of the insured was not shown to be at fault, he cannot be ordered to pay FGU because the driver is not the party to the contract of carriage. FGU’s civil action against the driver can only be based on culpa aquiliana which requires proof of fault on the part of the defendant unlike culpa contractual.

            GPS liable to pay under culpa contractual in which liability arises or attaches upon failure of the comply with the contract on which the presumption of negligence immediately arises.

 

Distinctions between

Common Carrier

Private Carrier

1. Service offered to the public at large

1. Offered to specific

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

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

3. Bound to observe extra ordinary diligence

3. Diligence of a good father of the family required

4. Contract of adhesion

4. Parties are free to stipulate terms

5. Void stipulation exempting carrier for loss caused by employees

5. Valid stipulation exempting carrier etc

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

6. Did not have the obligation

7. Law governing is the Civil Code

7. Code of commerce

 

 

Land Transportation

Duty: Obligation

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

            Common carriers are bound to carry passengers safely as far as human care and foresight may provide, using the utmost diligence of a very cautious person, with due regard for all circumstances. (Art 1755)

 

Presumption

            In case of loss, destruction or deterioration of the goods carried, common carriers are presumed to have been at fault or to have acted negligently for which they are responsible. (Art 1734 and Art 1735)

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

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

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

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

 

Rebuttal of Presumption or Defenses of Common Carrier

Exercise or observation of extra ordinary diligence

            The presumption is juris tantum and not juris et de jure and is rebutted by showing a satisfactory proof of having exercise of extra ordinary diligence prescribed in Art 1733 and Art 1735

            The defense of diligence of a good father of a family to prevent the accident by carefully selecting and supervising its employees is not available in criminal action but in civil action based on tort. Neither it is available in civil action based on breached of contract of carriage.

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

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

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

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

 

Exempting Causes (Art 1734) – Closed List

1. Caso fortuitous or Force Majeure or Natural Calamity of disaster, such as typhoon, earthquake, lightning, storm or flood.

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

Case: Gatchalian vs Delim, 203 S 153

Facts:

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

Held:

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

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

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

3. Acts or Omission of the shipper or owner of the goods provided such act is the proximate cause. If contributory, the carrier’s liability will be equitably reduced.

Case: Cia Maritima vs CA, 164 SCRA 685

Facts: Shipper, to avoid paying proper freightage misdeclared weight of its cargo as 2.5 tons instead of the actual weight of 7.5 tons. Thus in unloading the cargo, the arrastre operator used a forklift capacitated to lift 5.5 tons, resulting to falling cargo and sustaining damages.

4. Character of the goods or defects in the packing or in container. Nonetheless that carrier must exercise due diligence in forestalling or lessening the loss. (Art 1742)

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

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

Case: Calvo vs UCPB Ins Corp

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

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

Case: Ganzon vs CA, 171 SCRA 646

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

            These 5 enumerated “Exempting Causes” in Art 1734 had been held as a “Closed List”, such that any cause not included in the list, even if they appear to be or constitute as a specie of caso fortuito, will not be considered as exempting cause under Art 1734.

 

Highjaking

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

Case: Basco vs CA, 221 SCRA 318

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

Defective Motor Vehicles

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

Case: Yobido vs CA, 281 S 1, ‘97

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

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

(a)    cause is unforeseeable, unexpected occurrence, or if foreseeable is impossible to avoid – unavoidable

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

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

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

 

Acts or Omissions of the Following Persons

            Employees of the Common Carriers. Even if such employees have acted beyond the scope of their authority or in violation of the orders of their employers. (Art 1759)

            A liability which cannot be dispensed with or lessened by stipulation, by posting of notices or statements in the tickets or otherwise (Art 1756)

            However, it may limit the carrier’s liability to passenger who is carried gratuitously but not fare paying passengers. (Arts 1757 and 1758)

 

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

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

 

Case: Maranan vs Perez, 20 SCRA 413, ‘67

            Bus conductor stabbed a passenger in a hatred alteracation over the ticket’s printed of carrier’s limited liability.

Case: BLTB Co vs IAC, 167 SCRA 385

            Driver under the boundary system is considered as lessee because he pay a fixed amount of rental for the use of the vehicle under the Civil Code. Under the labor code, he is considered as employee of the owner/operator of the bus for the purpose of the latter’s liabilities to the passengers. Liability is solidary.

Case: Castilex Industrial Corp vs Vasquez, 321 SCRA 393

Facts: Company’s car driven by its manager collided with a motorcycle resulting to death of the latter’s driver.

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

 

Kabit System

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

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

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

 

Transferor

            Registered Franchisor or vehicle remains to be owner and the transferee merely holds as agent of the vehicle for the registered owner. (Y Transit Co Inc vs NLRC, 229 SCRA 508)

Registered Owner

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

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

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

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

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

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

 

Acts of Passengers

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

Bachelor Express vs CA, 188 SCRA 216, ‘90

Held: While the sudden stabbing by a passenger of another passenger inside the bus may be considered as force majeure as to absolved the carrier from liability, the carrier must prove that it was not at fault of negligent causing the injuries.

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

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

Facts: 3 Muslim Maranaoans boarded a bus and upon reaching Kauswagan, held up the bus and ordered all the other passengers to get of the bus. On passenger requested to go back to get something inside the bus for which he was allowed. He was shot while pleading with one of the Muslim to spare the life of the bus driver. The bus operator was warned before of the plot to burn all their buses plying Cagayan de Oro City to Marawi City by route by a group of Muslim out to avenge the death of their kin involved in a motor vehicular accident involving the operator’s bus.

Held: The event was foreseeable because of the PC report of plot to burn their buses, the operator did not take steps to safeguard the lives and properties of its passengers. The event was not a fortuitous that would exempt the carrier.

Contributory Negligence

            Where the proximate cause of a passenger’s injury or death is the negligence of the common carrier, it will not bar recovery of damages but the amount shall be equitably reduced. (Art 1762)

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

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

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

 

Acts of Strangers – non passenger or non-employees

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

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

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

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

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

 

Hijackers

            Robbers or thieves who acted with grave or irresistible force, threat or violence caused the loss, destruction or damages.

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

Note Gacal vs PAL, 183 SCRA 189

Facts: PAL’s plane was hijacked by MNLF during the martial law regime.

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

 

Stipulations Limiting Carrier’s Liability

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

            In a contract of private carriage, the parties may validly stipulate that responsibility rests the charterer, exempting the carrier from liability for loss or damage of the cargo caused even by the employees negligence. (Valenzuela Hardwood vs CA, 274 SCRA 642, ’97)

 

Valid Stipulations (Art 1744)

  1. in writing and signed by the shipper
  2. supported by valuable consideration other than the service rendered by the carrier and
  3. reasonable, just, fair and not contrary to law, moral and public policy etc
  4. delay caused by riots or strikes (Art 1748)

 

Void Stipulations (Art 1745)

  1. goods are transported at the risk of the owners
  2. not liable for any loss, damages or destruction
  3. need not to observe any diligence in the custody of the goods
  4. exercise diligence less than required of a good father of the family or a men of ordinary prudence in the vigilance of the goods
  5.  not responsible for acts or omission of its employee (except as stipulated in private carrier)
  6. not responsible for act of robbers or thieves who did not act with grave, irresistible force, threat or violence
  7. not responsible for loss, destruction or deterioration of goods on account of the defective condition of the carrier’s equipments

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

 

 

Damages Recoverable in Transportation Mishap

  1. Death – indemnity of P50,000 (Art 1764 and 2206)
  2. Actual or Compensatory damages – pecuniary loss suffered as duly proved. This may include medical expenses, loss of valuable properties and burial-funeral was expenses. (2199)
  3. Loss of earning capacity

Given:

Life expectancy = 80 – age of death

Net income = Gross – ½ = necessity living expense

Formula = net capacity = life expectancy * net income

  1. Moral Damages (Art 2206)
  2. Exemplary Damages of defendant acted in a wanton, malevolent, oppressive and reckless manner
  3. Attorney’s fees
  4. Cost of suit

 

Actions and Doctrines applied

Negligence

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

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

Emergency Rule

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

 

Case: McKee vs IAC:

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

Last Clear Chance

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

Acquittal in Criminal Action – Effect of Civil Suit

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

Applicability of Laws

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

Cases:

National Dev Corp vs CA, 164 SCRA 601

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

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

Zalamea vs CA, 228 SCRA 23, ‘93

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

United Airlines vs CA, April 20, 2001 – Reiterated Zalamea

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

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

 

Means of Regulation and Supervision of Transportation Business

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

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

 

Requisites for the Issuance of CPC or CPCN

(a)    Filipino Citizen

(b)   Financial Capacity  and willingness to pay such claims and other contingies during the operation.

(c)    Public need, public interest and the common good are decisive and overriding-principal consideration

Grounds for the Suspension or Cancellation of CPC and CPCN

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

(b)   Dummy operator

(c)    Abandonment of the services or ceases to operate

Factors Considered in the Grant or Issuance of CPC or CPCN

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

(b)   Prior or old operator rule.

(c)    Prior applicant rule

 

Prior Operator Rule

            Before a new CPC or CPCN is issued to a new operator, the old operator is given opportunity to extend its service to meet the increasing public need.

            However, this rule is no longer controlling as held in

Qualitran Limousine vs Royal Class Limousine, 179 SCRA 569

            Under the constitution, it is to the best interest of the public to have two or more companies in the field to stimulate business and prevent monopolies pursuant to the constitutional mandate of equitable distribution of opportunities, income and wealth, and regulation of competition and prohibition of monopolies.

PLDT vs NTC, 190 SCRA 717, ‘91

            The free competition in the industry provides improvement in the quality and delivery of service of public utililities. After all no public utility has the constitutional right of monopoly.


Prior Applicant Rule

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

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

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

Held:

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

            Operator of public utility must have a franchise and CPC or CPCN while the owner public utility facilities need have not have franchise and CPC or CPCN.

 

Liabilities of Carriers

Goods – Common carriers are responsible for the loss, destruction or deterioration of the goods carried. (Art 1734) They are presumed to have been at fault or to have acted negligently unless they prove having exercised-observe extraordinary diligence. (Art 1735)

            For delay in the transportation without just cause – negligent, even if the cause is a natural disaster. (Art 1740) and stipulation limiting the liability cannot be available of in case of loss, destruction or deterioration of the goods. (Art 1747) (Arts 370-374 Code of Commerce)

            Common carrier granted CPC is duty bound to accept cargo and/or passenger without discrimination. However, there are instances or grounds for valid refusal of the carrier to accept the goods or passengers. (FC Fisher vs Yangco Steamship, 31 Phil 1, 1934)

1.      Hazardous and dangerous goods.

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

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

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

            Passenger must observe the diligence of a good father of a family to avoid injury to himself. (Art 1761) Their contributory negligence will equitably reduce the carrier’s libility.

 

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

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

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

            Also laid down the “Emergency Rule” that where a driver is confronted with a sudden emergency-predicament, he may not be held liable for acts taken where is not given enough time to take proper course of action as he should under ordinary circumstances.

 

Defective mechanism of vehicle

            Damage or injury caused by defective vehicle had been consistently held not caused by fortuitous event. The rationale of this rule is the fact that the passenger has neither choice nor control over the carrier on the selection and use of the equipment and appliances used by the carrier.

Fortuitous event

 

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

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

 

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

 

 

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

 

 

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

 

 

(5) Order or act of competent public authority.

            Fortuitous event may be availed by carrier as a defense under the following conditions (requisites):

1.      the cause or event is unforeseen, unexpected occurrence or foreseeable cannot be avoided-impossible

2.      the occurrence renders it impossible for the carrier to fulfill his obligation in a normal manner

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

4.      the event must be the proximate and only cause of the loss

Fire – This is not considered a natural disaster or calamity as that caused by lightning, earthquake, tempest or public enemy. (Eastern Shipping Lines vs IAC, 150 SCRA 469) because fire is generally caused by man.

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

Facts:

            Ship sunk during attendance of strong winds and enormous waves despite continuous pumping out of water that entered into the ship’s hold thru a crack or hole at the bottom of the ship’s hull.

Held:

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