Transpo Rev 2

REVIEWER IN TRANSPORTATION LAW 1
REVIEWER IN TRANSPORTATION LAW
Introduction
 What is Transportation?
- Transportation is defined as the movement of things or persons from one place to another,
whether by land, by water, or by air.
- The word “transportation” in its practical sense includes waiting time, loading and
unloading, stopping in transit, and all other accessorial services in connection with the
loaded movement
 What are the laws governing the contracts of transportation by land, sea or air in the
Philippines?
(1) The New Civil Code (particularly the section on Common Carriers)
(2) The Code of Commerce (on matters not regulated by the NCC)
(3) Special Laws (such as the Carriage of Goods of Sea Act, Salvage Act, Public Service Act,
Land Transportation and Traffic Act, Tariff and Custom Code and Civil Aeronautics Act
 What is the nature of contracts of transportation or carriage?

- A contract of transportation generates a relation attended with public duty.
- Hence, neglect or malfeasance of the carrier’s employees gives ground for an action for
damages
 What is a carrier in transportation?

- A carrier is one who undertakes the transfer of person or property from one place to
another for hire or gratuitously.
- He may be either common carrier or a private carrier
NEW CIVIL CODE – Common Carrier
Subsection 1: General Provisions
 Definition of Contract of carriage or transportation.

- A contract of carriage or transportation is one whereby a certain person or association of
persons obligate themselves to transport persons, things, or both from one place to another
for a fixed price.
- Such person are regarded as CARRIERS and are classified as private/special carrier or
public carrier
 Who are Common Carriers?

- They are the persons, corporations, firms, or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air for
compensation, and offering their services to the public.
 To be a common carrier, must the carrier’s principal activity be the carriage of persons or
goods?
- No. Article 1732 of the Civil Code does not make any distinction between one whose
principal business activity is the carrying of persons or goods, and one who does it only
as an ancillary activity
 What are the requisites to be a common carrier of goods?

1. He must be engaged in the business of carrying goods for others as a public
employment, and must hold himself out as ready to engage in the transportation of goods
or persons generally as a business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business is confined;
3. He must undertake to carry by the method by which his business is conducted and
over his established routes; and
4. The transportation must be for hire.
 May a custom broker be considered as a common carrier?

- Generally, No
- But, if the custom broker also undertakes to deliver goods for its customer, then he may be
considered as a common carrier
(the law does not distinguish on one whose principal business activity is the carrying of
goods and one who does it only as an ancillary activity)
 Jurisprudence
- As long as an entity holds itself to the public as engaged in the business of transporting
goods or persons, it is considered as a common carrier regardless of whether it owns the
vehicle used or has actually hire it.
- The law does not distinguish on one whose principal business activity is the carrying of
goods and one who does it only as an ancillary activity.
- It is sufficient for an entity to be considered as a common carrier when it undertakes to
deliver goods for pecuniary consideration
- A common carrier may be defined as one who holds himself out to the public as engaged in
the business of transporting persons or property from one place to another, for
compensation, offering services to the general public.
- The means of transportation covers transporting the goods by land, water or air.
- Being a transporter of petroleum products through a pipeline is considered to be an act of a
common carrier
 To be a common carrier, must the carriage of goods or persons be regularly undertaken?

- No. It is not necessary.
- The character of being a common carrier is not altered by the fact that the carriage of the
goods was periodic, occasional, episodic or unscheduled.
 To be considered and liable as a common carrier, must the carrier hold a certificate of public
convenience
- A common carrier is required to obtain a certificate of public convenience, but the absence
of it does not mean that it is not a common carrier.
- A certificate of public convenience is not a requisite to incur liability under the provisions of
the Civil Code governing Common Carrier
- The liability arises from the moment a person or entity acts as a common carrier
 Who is a private carrier?

- He is one who, without making it a vocation, or holding himself out to the public as ready to
act for all who desire his services, undertakes, by special agreement in a particular
instance only, to transport from one place to another either gratuitously or for hire.
 Distinguish a common carrier from a private carrier

Common Carrier Private Carrier
Holds himself out as engaged in public service Carries only for persons with whom he has an
to all person indefinitely initial contract, and assumes no obligation to
carry for others
 What is the test to determine whether the carrier is a common carrier or a private carrier?
- Whether the public may use and enjoy it by RIGHT or by PERMISSION
= if by right, it is a common carrier
= if by permission, it is a private carrier
 Jurisprudence
- Being an exclusive contractor and hauler of an entity or a person, rendering or offering its
services to no other individual or entity, it cant be considered to be a common carrier, but
instead a private carrier
- A private carrier may be held liable if the damage is based on culpa contractual
- A person or entity who did not undertake to transport person or goods from one place to
another is not a carrier (the case of travel agency making travel arrangements in behalf of
the clients)
 May a common carrier act as a private carrier?

- Yes, under some circumstances, common carrier may act as a private carrier, as a matter
of accommodation or special engagement, a common carrier undertakes to carry
something which it is not his business to carry, then he becomes a private carrier.
 Will a charter party of a vessel belonging to a common carrier necessarily convert the carrier
into a private carrier?
- IT DEPENDS. Charter party is a contract
- Types of Charter Party: (1) Time-Charter or Voyage-Charter and (2) Demise or Bare-boat
Charter
- In a Time-Charter or Voyage-Charter, the charter of the whole or portion of the vessel by
one or more persons, provided the charter is limited to the ship only
- In a Demise or Bare-boat Charter, it exists when the charter includes both the vessel and
its crew.
= Thus, it is only in Demise or Bare-boat Charter which makes the undertaking private in
character.
 In a charter party classified as a private carriage, may the parties stipulate on the liability for
the damages the cargo shipped?
- YES. In a contract of private carriage, the parties may freely contract respecting liability for
damage to the goods and other matters
(The basic principle is that “the responsibility for cargo loss falls on the one who agreed to
perform the duty involved”.)
 What is arrastre? How is it different from stevedoring services?

- Arrastre refers to hauling of the cargo, comprehends the handling of cargo on the wharf or
between the establishment of the consignee or shipper and the ship’s tackle. The service is
usually performed by longhorsemen.
- Stevedoring refers to the handling of the cargo in the holds of the vessel or between the
ship’s tackle and the holds of the vessel
 Is an arrastre operator a common carrier?

- No, arrastre operator is not a common carrier.
- Therefore, the 1 year prescriptive period within which an action can be filed against a
common carrier as provided by COGSA does not apply to an arrastre operator.
 What is the nature of the relationship between an arrastre operator and the consignee?
- The legal relationship between an arrastre operator and the consignee is similar to that of a
warehouseman and a depositor.
- It is not maritime
 Consignee is the person to receive the goods
 The relationship between the consignee and the common carrier is similar to that of the
consignee and the arrastre operator
 Are maritime laws applicable to an arrastre operator?

- No. because its services are not maritime
 What is the degree of diligence required of common carriers? What is the purpose?
- Extraordinary Diligence is required from common carriers
- The purpose is to curb the recklessness of drivers which is common in sight in crowded
areas and in the highways throughout the country. It is for the safety of the passengers as
well as the crew operating the carrier.
 What is the presumption when the goods transported are lost, destroyed or deteriorated?
- Common carriers are bound to exercise extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them.
- If the goods transported are lost, destroyed or deteriorated, the common carriers are
presumed to have been at fault or to have acted negligently, unless they can prove
extraordinary diligence.
- The extraordinary diligence lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee or to the person who has the right
to receive them
 Jurisprudence
- The extraordinary diligence lasts from the time the goods are unconditionally placed in the
possession of, and received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee or to the person who has the right
to receive them (the case where coils were delivered in bad and unfit condition)
- A contract of carriage was deemed created upon the purchase of the ticket, entitling the
passenger to all the rights and protection under contractual obligation. It allows the
passenger to have the commitment on the part of the common carrier to exercise
extraordinary diligence in ensuring the safety of the passengers. (the case when a drunk
men argued with a security guard of LRTA, then he fell on the train tracks causing his
death)
- Travel agency is not a common carrier. Hence, they are not required to exercise
extraordinary diligence
- Extraordinary diligence is that extreme measure of care and caution which a person of
unusual prudence and circumspection use for securing and preserving their own property.
- The surrender of the original bill of lading is not a condition precedent for a common carrier
to be discharged of its contractual obligation. If surrender of the bill of lading is not possible,
acknowledgement of the delivery by signing the delivery receipts suffices
 In exercising extraordinary diligence, how should the employees of an airline company treat its
passengers?
- Passengers should be treated by the employees of an airline company with kindness and
courtesy, and should be protected against indignities, abuses, and injurious
language from such employees.
- In case of breach of contract, the airline company shall be held liable
 Is a common carrier always liable for all kinds of injuries sustained by a passenger?
- Not at all times because carriers cannot be made an absolute insurer of the safety of the
passengers, such situations are as follows:
Where the injury sustained by the passenger was
a. In no way due to any defect in the means of transport or in the method of
transporting; or
b. To the negligent or wilful acts of the common carrier’s employees with respect to the
foregoing – when the injury arises wholly from causes created by strangers which
the carrier had no control of or prior knowledge
 Jurisprudence
- Although common carriers are expected to exercise extraordinary diligence, they are not
absolute insurer of the passenger’s safety when the injury sustained by the passenger was
(1) In no way due to any defect in the means of transport or in the method of transporting;
or (2) To the negligent or wilful acts of the common carrier’s employees with respect to the
foregoing – when the injury arises wholly from causes created by strangers which the
carrier had no control of or prior knowledge (the case where a passenger was shot by his
co-passenger when the bus stopped for tire repair.
- When a passenger is killed by an off-duty guard of the common carrier, the latter is not
liable because the killing was done by that of a would-be passenger, since the guard was
off-duty, and that the killing was done not in line with his duty
- When the proximate cause of the death of the passengers is the negligence of the driver,
the common carrier shall be liable (the case where a bus fell during night time, and the
people nearby brought torches , which ignited the spoiled fuels)
Subsection 2: Vigilance over Goods
 Are common carriers liable for the loss, destruction, or deterioration of goods? What are the
exceptions?
- Generally, YES, but there are exceptions:
1. Flood, storm, earthquakes, lightning, or other natural disaster or calamity;
2. Act of the public enemy in war, whether civil or international;
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in the containers;
5. An order or act of competent authority.
 When is the common carrier presumed to be negligent?

- In case of death or injuries to the passengers, the common carrier is presumed to have
been at faulty or to have acted negligently (unless extraordinary diligence is proved)
- The presumption applies as long as:
1. A contract exists between the passenger and the common carrier
2. The injury or death took place during the existence of such contract
 How may the legal presumption of negligence be overcome?

- Prove that the common carrier observed extraordinary diligence as required by Article 1733
 Prima facie presumption of negligence

- When the goods are delivered to the common carrier in good condition, and it was receive
in bad order by the person who has the right to receive it, there is already a Prima facie
presumption of negligence. This can only rebutted by a proof that the common carrier
exercised extraordinary diligence
 The presumption of fault or negligence does not apply in cases / situations mentioned in Nos.
1, 2, 3, 4 and 5 of Article1734 even to common carriers.
 Jurisprudence
- Defect in the crates where the shipper placed its goods in the common carrier resulting to
the damage in the goods is one of the causes under Article 1734 where the common carrier
will not be held liable. Defect is different from “inferior” character of the packaging or
containers
- Fire is not among those enumerated by law that will exempt liability (the case where the
vessel and cargo were burned due to the fire arising from the vessel)
- Fire is not a natural calamity or disaster as it arises almost invariably from some act of man
or by human means
- Even if fire is to be considered a “natural disaster”, it is required that it must have been the
proximate cause of the loss and that the carrier has exercised due diligence to prevent or
minimize the loss before, during, or after the occurrence of the disaster
 Is a common carrier exempted from responsibility for damages (loss, destruction, or

deterioration) caused by natural disasters?
- In order for the common carrier to be exempted, the natural disaster must have been the
proximate cause of the loss, to the exclusion of human intervention from the cause of the
injury or loss
- The carrier must exercise due diligence to prevent or minimize the loss before, during, or
after the occurrence of the disaster
=Therefore, the common carrier could be liable for a loss caused by natural disaster when:
a. When the natural disaster is not the proximate and only cause of the loss
b. When the common carrier failed to exercise due diligence to prevent or minimize the
loss before, during, or after the occurrence of the disaster
c. When the common carrier negligently incurs in delay in transporting the goods
 Jurisprudence
- In order to absolve the common carrier from liability, the natural disaster must be proved to
be the proximate and only cause of the loss and that the common carrier exercised due
diligence to prevent or minimize the loss before, during, or after the occurrence of the
disaster (the case where SMC shipped its beer, the vessel started its voyage with a fine
weather, but during the voyage strong winds and enormous waves hit the vessel resulting
damage to the goods of SMC)
 What is to be considered as fortuitous events?

- The cause of the unforeseen and unexpected events occurrence, or the failure of the
debtor to comply with the obligation must:
1. Must be independent of human will;
2. Must be impossible to foresee the event which constitute the caso fortuito, or if it can
foreseen, it must be possible to avoid;
3. The occurrence must be such to render it impossible for the debtor to fulfil the
obligation in any manner;
4. The obligor must be free from any participation in the aggravation of the injury
resulting to the creditor.
 When will the act of God relieve the carrier from liability?
- The ACT OF GOD DOCTRINE strictly requires that the act must be occasioned solely by
the violence of nature
- Human intervention will make the whole occurrence humanized and remove the application
of the abovementioned doctrine
 Jurisprudence
- “A strong southwest monsoon winds” is not categorized as a storm. Thus, the defense of
natural disaster or fortuitous event cannot be used (the case where the goods in the vessel
was damaged by a strong southwest monsoon winds)
- “Voyage charter” also known as a Contract of Affreightment is where the ship is leased for
a single voyage. The vessel maintains it common carrier status.
- Stipulation to limit the carrier’s liability in a “Voyage Charter” is void for being applied in a
common carrier, since such stipulations are permissible only to private carrier
 When is the shipowner liability limited to its share in the insurance proceeds?
- When the unseaworthiness that caused the loss of the vessel was not due to the fault or
negligence of the shipowner, its liability is limited to its pro rata share in the insurance
proceeds (DOCTRINE OF LIMITED LIABILITY)
- For the doctrine not to apply, the carrier must show that the unseaworthiness of the vessel
was not to his (common carrier) due
 Jurisprudence
- Despite the presence of a storm, when the vessel sunk due to its unseaworthiness, the
shipowner must be held liable (the case where the vessel sunk during a storm)
- Failure to prove that the natural disaster is the proximate and only cause of the loss and
that the common carrier exercised due diligence to prevent or minimize the loss before,
during, or after the occurrence of the disaster will render a LIGHTERAGE AND DRAYAGE
SERVICE PROVIDER liable for damages (the case where a lighterage proceeded with the
pulling of the barge despite the presence of a storm)
- When the common carrier provided evidence that natural disaster is the proximate and
cause of the loss, BUT FAILED TO PROVE that the natural disaster was unforeseen or
unexpected occurrence, he may still be liable (the case of Lea Mer Industries where the
evidence were insufficient to prove that it attempted to minimize or prevent loss before,
during, or after the alleged fortuitous event)
 Who has the burden of proving the cause of the loss, destruction, or deterioration?
- The general rule is that the common carrier is presumed to be negligent and is liable for the
loss, destruction, or deterioration of the goods while it is in his possession.
- To be exempt from liability, the common carrier must prove that the damage was caused by
any of the exceptions in Article 1734
- Once the common carrier has proven that the damage was caused by any of the
exceptions in Article 1734, the shipper has the onus probandi to show the carrier’s fault so
that the latter could be made liable
=when the cause of the damage is a typhoon and the requirements are met, the common
carrier is not liable
= when the cause of the damage is the unseaworthiness of the vessel, the common carrier is
liable
- When a public elected official ordered the dumping of the cargo of the vessel, without
competent authority, the carrier is not duty bound to obey the illegal order to dump the
cargo into the sea. If made by the common carrier, it will not be considered as force
majeure and not one of the enumerated causes in Article 1734
 When does the extraordinary responsibility of the common carrier begin? And when does it
end?
- The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation
until the same is delivered, actually or constructively, by the carrier to the consignee, or to
the person who has the right to receive them, without prejudice to the provisions of Article
1738
- Thus, the risk of the carrier begins from the delivery of the goods to it for immediate
transportation
 To whom must the carrier deliver the goods transported?

- The goods shall be delivered to the consignee or to the person who has the right to
receive them
 What is the test as to whether the relation of shipper and carrier had been established?
- Test = had he control and possession of the cargo been completely surrendered by the
shipper to the carrier
 Where the owner delivered the cargo to a carrier and the latter took possession thereof by
placing it on a lighter or a barge, did the responsibility of the carrier commence from such
time?
- YES, the responsibility of the carrier had already begun
 Is the delivery of the common carrier to the custom authorities considered as delivery to the
consignee?
- NO. because the goods are still in hands of the Government and the owner cannot exercise
dominion over it
 Stipulation exempting the carrier from liability for causes not due to either negligence of the
carrier or due to force majeure is valid, being not contrary to law, morals or public policy
 Is the seller of the goods shipped liable for misdelivery be a carrier who was chosen by the
buyer?
- Misdelivery of the goods is attributable to the carrier and not to the seller (even if the buyer
was the one who chose the carrier)
 Does the responsibility of the common carrier remain when the goods are temporarily
unloaded or stored in transit?
= The extraordinary diligence of the common carrier over the goods continues even when the
goods are (1) temporary unloaded and (2) stored in transit
=Exception: when the shipper or owner has made use of the right of stoppage in transit
 What are the obligations do the carrier have in stoppage in transitu?

- It is the duty of the carrier to return the goods to the owner, or to diver the goods according
to the instructions, and in so doing incurs no liability to the consignee
 What diligence is required in stoppage in transitu?

- The carrier is liable only as a warehouseman, the extraordinary diligence is no longer
required
 Who has liability while the goods are in the warehouse of the common carrier at the place of
destination?
- The extraordinary diligence of the common carrier continues to be operative even during
the time the goods are stored in the warehouse of the common carrier at the place of
destination
- The extraordinary diligence of the common carrier ceases when the consignee has been
informed of the arrival of the goods and had reasonable opportunity to remove the goods
but failed to do so
 What is the effect of contributory negligence of the shipper or owner?

- The liability for damages shall be equitably reduced
 Contributory Negligence cannot be raised and does not apply in criminal cases
 The common carrier must exercise due diligence to forestall or lessen the loss. Thus, if the
common carrier knows that there is an improper packing apparent from ordinary observation,
but it still accepts the goods, it is not relieved from liability for loss or injury resulting therefrom
 Is the common carrier liable if the goods are seized or destroyed through the order of public
authority?
- The common carrier is not liable provided that said authority had power to issue the order
 Is the stipulation between the common carrier and the shipper or owner limiting the liability of
the former to less than extraordinary diligence valid?
- YES, provided that:
(1) In shall be in writing, signed by the shipper or owner
(2) Supported by a valuable consideration other than the service rendered by the common
carrier
(3) Reasonable, just and not contrary to public policy
 What stipulations in a contract of carriage are considered unreasonable, unjust and contrary to
law?
1. That the goods are transported at the risk of the owner of shipper;
2. That the common carrier will not be liable for any loss, destruction or deterioration of the
goods;
3. That the common carrier need not observe any diligence in the custody of the goods;
4. That the common carrier shall exercise a degree of diligence less than that of a good father
of a family, or of a man of prudence in the vigilance over the movables transported;
5. That the common carrier shall not be responsible for the acts or omissions of his
employees
6. That the common carrier’s liability for the acts committed by thieves, robbers who do not
act with grave or irresistible threat, violence or force is dispensed with or diminished; and
7. That the common carrier is not responsible for the loss, destruction or deterioration of the
goods on account of the defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage
 May an agreement to limit the liability of the common carrier be annulled?

- Yes, when the common carrier refused to carry the goods unless the former agreed to such
stipulations
 What is the effect if the common carrier , without just cause, delays in transporting the goods
or changes the stipulated or usual route?
- The contract limiting the common carrier’s liability cannot be availed of in the case of loss,
destruction or deterioration of the goods
 What is the effect of delay on account of strikes or riots?

- The contract limiting the common carrier’s liability is valid and binding
 What are the kinds of stipulations made in the bill of lading concerning the liability of the
common carrier? Are they valid?
=First : one exempting the carrier from liability for loss or damage occasioned by its
own negligence
=Second : one providing for an unqualified limitation on such liability to an agreed valuation
= Third : one limiting the liability of the carrier to an agreed valuation unless the shipper
declares a higher value and pays higher rate of freight
(only the third kind is valid)
- A stipulation that the common carrier’s liability is limited to the value of the goods appearing
in the Bill of Lading, unless the owner or shipper declares a higher value, is valid
 Is a contract fixing the sum that may be recovered by the owner or shipper valid?
- It is valid, if it is reasonable and just under the circumstances, and has been fairly and
freely agreed upon
 Jurisprudence
- The declaration in the Bill of Lading can be the basis of the extent of the carrier’s
- A consignee is bound by the contract even if he was not a signatory to it
 When is the limitation on the carrier’s liability not binding?

- When it is printed in letters so small that they are hard to see and read. This would not
warrant that the passengers are aware of those conditions
 What is the effect of failure of the carrier to object questions during trial regarding the amount
of damages sustained by the passengers?
- The carrier thereby waived his defense of limited liability.
 Which factor is taken into consideration on the question of whether or not a stipulation limiting
the common carrier’s liability is reasonable, just and in consonance with public policy?
- The fact that the common carrier has no competitor
 What is the presumption of law in case of loss, destruction or deterioration of the goods while
in the care of a common carrier?
- Even when there is an agreement limiting the liability of the common carrier, he is still
presumed to have been negligent in case of loss, destruction or deterioration of the goods
while in his care
 What law shall govern the liability of the common carrier where the goods are to be transported
from one country to another?
- The law of the country to which the goods are to be transported shall govern the liability of
the common carrier for their loss, destruction or deterioration
=Example: the goods are shipped from USA bound for Manila--- then the Philippine laws
shall apply
 What provisions of law shall apply to a passenger’s baggage?

(see pages 66-67)
Subsection 3: Safety of Passengers
 What is the obligation of the common carrier to the passengers?

- A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of a very cautious person, with due regard
for all the circumstances
 Jurisprudence
- When a common carrier, despite having threats that certain persons are planning to take
revenge, but did not do anything to protect the safety of its passengers, the common carrier
is held to be liable (the case where the maranaos burned the bus resulting injury to the
passengers)
- The presence of force majeure will not render the common carrier negligent (the case
where an armed robbery to place in PAL despite an NBI agent informing the captain to
inform other NBI authorities)
 What authority do airline companies have over the packages and cargoes of the passengers or
shippers?
- They are authorized to open and investigate suspicious packages and cargoes in the
presence of the owner or shipper, or his authorized representative
- If the owner or shipper, or his authorized representative refuses to have the packages and
cargoes to be opened and inspected, the airline is authorized to refuse the loading thereof
 Jurisprudence
- When the personnel of the airline failed to inspect and discover explosive devises, it could
be a failure to exercise the utmost diligence of a very cautious person
- Common carrier’s act of ordinary diligence is not enough because what the law requires is
the utmost diligence of a very cautious person
- Providing with a professional driver is not sufficient to establish extraordinary diligence
- Passengers are considered still to be passengers entitled under the protection of the
contract of carriage when they are unloading their baggage in the compartment of the bus
- When the proximate cause of the death of the passengers is the negligent act of the bus
driver, the carrier could be held liable
=nature of liability : DIRECT AND PRIMARY of the Common Carrier when it failed to
observe the diligence of a good father of a family in the supervision of its employees and its
maintenance of vehicle
- FOR QUASI-DELICT (as in the case where a bus was rammed by a truck, and the
passengers filed a case against the truck owner) the liability of the negligent conduct of the
subordinate is DIRECT AND PRIMARY, but is subject to the defense of due diligence in the
selection and supervision of the employee
- It is well settled that the owner of the other vehicle which collided with a common carrier is
SOLIDARILY (jointly and severally) liable to the INJURED PASSENGER OF THE
CARRIER
- Common carriers are bound to exercise extraordinary diligence in the vigilance over the
goods transported by them
 Is a common carrier liable for damages due to fortuitous event?

- A common carrier’s liability does not extend to damages caused by fortuitous event.
- A common carrier is not responsible for events which, could not be foreseen, or which,
though foreseen, are inevitable
- Common carrier’s liability rests upon negligence, its failure to exercise the utmost diligence
required by law
 When is there a caso fortuito which would exempt the carrier from liability?
1. Must be independent of human will;
2. The occurrence must be such to render it impossible for the debtor to fulfil the obligation in
any manner;
3. The obligor must be free from any participation in the aggravation of the injury resulting to
the creditor;
4. Must be impossible to foresee the event which constitute the caso fortuito, or if it can
foreseen, it must be possible to avoid.
 Jurisprudence
- Common carriers are not absolutely responsible for all injuries or damages sustained by its
passengers when caused by a fortuitous events (DEFENSE OF FORCE MAJEURE)
---The case where the passengers were stranded due to the eruption of Mt.Pinatubo
- A mishap caused by a defective break is not considered as fortuitous event
- An accident caused by defects in automobile is not a caso fortuito
 What is the presumption in case of death of or injury to passengers?

- Common carriers are presumed to have been at fault or to have acted negligently
- Unless they observed extraordinary diligence
 To hold the common carrier liable for the death or injury of the passenger, must the court make
an express finding or negligence on the part of the common carrier?
- In an action based on a contract of carriage, the court need not make an express finding or
negligence on the part of the common carrier in order to hold it responsible to pay the
damages sought for by the passengers.
- By the contract of carriage, the carrier assumes the express obligation to transport the
passengers to his destination safely and to observe extraordinary diligence
 Is the common carrier liable for the personal conduct of its employees which did not result in
death or injury?
- YES. Passengers should be treated by the employees of an airline company with kindness
and courtesy, and should be protected against indignities, abuses, and injurious
language from such employees.
(the case where the passenger was left at Wake Island)
 Breach of Contract of Carriage exists when the common carrier failed to transport the
passengers in their designated and contracted place
 The Contract of Carriage generates a relation attended with public duty and any discourteous
conduct on the part of the carrier’s employees toward the passengers give the latter an action
for damages against the carrier
 For the carrier to be liable for damages for breach of Contract of Carriage, the breach must be
wanton and deliberately injurious or the one responsible acted fraudulently or with malice or
bad faith
 May the responsibility of a common carrier for the safety of the passengers be dispensed with?
- NO. it cannot be dispensed with or lessened by stipulation, by the posting of notices, or
statements on tickets
 Is the carrier liable for negligence or wilful acts where a passenger is carried gratuitously?
- When a passenger is carried gratuitously, a stipulation limiting the common carrier’s liability
for negligence is valid
- The reduction of the fare does not justify any limitation of the carrier’s liability
 Are children who did not pay the fare considered as passengers?
- YES, provided that the child is with his parents or person in charged who has pay the ticket
or pays fare for himself (the child’s parents being a paying passenger)
- But, NO, when the child is unaccompanied
 What is the effect on the liability of the carrier of negligence or wilful acts of the carrier’s
employees?
- Common carriers are liable, although such employee may have acted beyond the scope of
his authority or in violation of the orders of the common carrier
 What is the effect on the liability of the carrier when it exercise diligence of a good father of the
family in the selection and supervision of its employees?
- It does not cease
 Where is the DEFENSE OF exercise diligence of a good father of the family in the selection
and supervision of its employees applicable?
Quasi-delict or Culpa Aquiliana Culpa Contractual

Applicable Not applicable
 Intentional assaults committed by the employees upon its passengers will make the common
carrier liable
 What are the reasons in making common carrier liable for injuries or death caused by the
negligence or wilful acts of its employees?
1. Full measure of protection afforded by the exercise of high degree of care prescribed by
law
2. Performance of his contract to safely transport passengers
3. Bear the risk of wrongful acts of negligence of its employees against passengers
 May the common carrier’s responsibility for the negligence or wilful acts of its employees be
eliminated or diminished by stipulations?
- It cannot be dispensed with or lessened by stipulation, by the posting of notices, or
statements on tickets
 What degree of diligence must a passenger observe to avoid injury to himself?

- The passengers must observe the diligence of a good father of a family to avoid injury to
himself.
 What is the effect of contributory negligence?

- The amount of damages shall be equitably reduced
 Moral and Exemplary Damages CANNOT be granted
 What is the responsibility of the common carrier for wilful acts or negligence of other
passengers or of strangers?
- The common carrier is responsible for injuries suffered by a passenger on account of wilful
acts or negligence of other passengers or of strangers, IF THE COMMON CARRIER’S
EMPLOYEES, through the exercise of the diligence of a good father of a family, COULD
HAVE PREVENTED OR STOPPED THE ACT OR OMISSION
 What is the degree of diligence required of a common carrier?
In transporting goods EXTRAORDINARY DILIGENCE
In transporting passengers UTMOST DILIGENCE OF A VERY

CAUTIOUS PERSON, WITH DUE REGARD
TO ALL CIRCUMSTANCES
In preventing or stopping injuries to a DILIGENCE OF A GOOD FATHER OF A

passenger on account wilful acts or FAMILY
negligence of other passengers or of
strangers
Subsection 4: Common Provisions (Applicable Provisions of the Civil Code on Damages)

 In an action on Culpa Contractual, must the driver of the carrier be included as party
defendant?
- For breach in contractual obligations, the common carrier is primary liable for damages
- The case may be brought against the carrier alone, without the necessity of including the
driver
 Is the carrier’s contractual liability the same as its driver’s civil liability arising from criminal
negligence?
- The civil action based on the contractual liability of a common carrier is distinct from the
criminal action that may be instituted against the common carrier or its employees
- The civil action is governed by the Civil Code while the criminal action is governed by the
Revised Penal Code
- Being separate and distinct, the civil action may be instituted and prosecuted independently
and regardless of the result of the criminal action
 Is the driver of the carrier jointly and severally liable with the carrier in the case of breach of
contract of carriage?
- NO. The driver of the carrier jointly and severally liable with the carrier in the case of breach
of contract of carriage
- The rationale is that the contract of carriage is between the carrier and the passenger,
and in the event of contractual liability, the carrier is exclusively responsible therefore to the
passengers, even of such breach is due to the negligence of the driver
 In case the registered owner/operator of a public vehicle is leased or sold without the approval
of LTFRB, may such registered owner/operator be made liable for damages caused by said
vehicle?
- The registered owner/operator of a public vehicle is directly and primarily responsible
and liable for damages.
- IF SAID VEHICLE HAD BEEN LEASED, SOLD OR TRANSFERRED, with the requisite
approval of the Public Service Commission, to another person who was the one actually
driving the vehicle at the time of the accident, THE LATTER MERELY ACTED AS AGENT
OF THE REGISTERED OWNER/OPERATOR.
- Thus, regardless of who the actual owner of the vehicle is, THE OPERATOR OF RECORD
CONTINUES TO BE THE OPERATOR OF THE VEHICLE AS REGARDS THE PUBLIC
AND THIRD PERSON, and as such is directly and primarily responsible and liable for
damages incident to its operation
 What are the damages that may be awarded against a common carrier?
- It shall be in accordance with the Civil Code
 What damages may be recovered in case of death of a passenger?

- The following items may be recovered:
a. Indemnity for the death of the victim
b. Indemnity for the loss of earning capacity of the deceased
c. Moral damages
d. Attorney’s fees and expenses of litigation
e. Interest in proper cases
 In fixing a greater amount of damages for death of a passenger than that provided by law,
what may the court consider?
- Article 2206 fixes the minimum indemnity for damages at Php3,000 which the court may
increase according to circumstances
- In fixing a greater amount, the court may consider the financial capacity of the common
carrier, along with other factors:
a. Life expectancy of the deceased or of the beneficiary, whichever is shorter
b. Pecuniary loss to the plaintiff or beneficiary
c. Loss of support
d. Loss of service
e. Loss of society
f. Mental suffering of beneficiaries
g. Medical and funeral expenses
- Based on Jurisprudence, the SC increased the amount of minimum damage for death to
Php50,000
- In awarding Compensatory Damages, the age of the plaintiff, his expected life span, and
his earning capacity within that life span must be taken into consideration
 How may the life expectancy of a person be determined for purposes of fixing the amount of
damages that may be recovered?
- In determining the number of years on the basis of which the damages shall be computed
and the rate at which the loss sustained by said heirs should be fixed using the formula:
2/3 x (80 - age of the decedent) = life expectancy
 When is a common carrier liable for attorney’s fee?

- In the absence of stipulations, attorney’s fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:
a. When exemplary damages are awarded
b. When the defendant’s act or omission has compelled the plaintiff to litigate with third
person or to incur expenses to protect his interests
c. When the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff’s plainly valid, just and demandable claim
d. In a separate civil action to recover civil liability arising from crime
e. When at least double judicial costs are awarded
f. In any other case where the court deems it just and equitable that attorney’s fees
and expenses of litigation should be recovered
- In all cases, the attorney’s fees and expenses of litigation must be reasonable
 As a general rule, may moral damages be recovered in breach of contract of transportation?

- NO. Moral damages are not recoverable in damage actions predicated on a breach of
contract of transportation
- it cannot be considered included in the descriptive term, “analogous cases”
 What are the exceptions to the foregoing rule when moral damages be recovered in breach of
contract of transportation?
- Moral damages may be recovered in an action for breach of contract of transportation in
the following cases:
a. Where the mishap results in the death of a passenger
b. Where it is proved that the carrier was guilty of fraud or bad faith, even if death
does not result
FRAUD – has been defined to include an inducement through insidious machination.

Insidious machination refers to a deceitful scheme or plot with an evil or devious
purpose. Deceit exists where the party, with the intent to deceive, conceals or omits
to state material facts and, by reason of such omission or concealment, the other
party was induced to give consent that not otherwise have been given
BAD FAITH = it does not simply connote bad judgement or negligence. It imports a
dishonest purpose or some moral obliquity and conscious doing of wrong, a breach
of a known duty through some motive or interest or ill will that partakes of the nature
of fraud
 May moral damages be granted in case of breach of contract of transportation which merely
causes physical injuries to passenger?
- In case of breach of contract of carriage only resulting to physical injuries, moral damages
are not recoverable, unless the carrier acted fraudulently or with malice or in bad faith
 Is the doctrine of “last clear chance” applicable to passengers of a common carrier?

- NO. It only applies between the owners and drivers of two colliding vehicle,
- It does not apply where a passenger demands responsibility and liability from the carrier to
enforce its contractual obligation
 What may be done to the certificate of public convenience granted to a common carrier that
repeated fails to comply with its duty to observe extraordinary diligence?
- The Public Service Commission MAY, ON ITS OWN MOTION OR ON PETITION OF ANY
INTERESTED PARTY, after due hearing, CANCEL THE CERTIFICATE OF PUBLIC
CONVENIENCE granted to any common carrier that repeatedly fails to comply with its
duty to observe extraordinary diligence prescribed in this Section
 What law should apply for matters not regulated by the Civil Code?
- All matters not regulated by the Civil Code, the rights and obligations of common carriers
shall be governed by the Code of Commerce and by Special Laws
 Jurisprudence
- The fraud and bad faith must be convincingly proved, absence of which moral damages
cannot be given
- When moral damages is not granted, exemplary damage and attorney’s fee shall not
likewise be granted
- Failure to put bar to safeguard the passengers constitute misconduct, thus moral damages
can be granted
- The heirs of the deceased may substitute the victim is a requirement of due process, hence
it can be allowed
PART II : AIR TRANSPORTATION
 What is the peculiarity of air transportation

- The contract of air carriage is a peculiar one.
- It is quite different in kind and degree from any other contractual relation because of such
relation which an air carrier sustains with the public
- The contract of air carriage generates a relation attended with public duty because its
business is mainly with the travelling public and that it invites people to avail of the comforts
and advantages it offers
 Who is an air carrier

- An air carrier is a person who undertakes, whether directly or indirectly, or by a lease or by
any other agreement to engage in air transportation or in air commerce
 What are: (a) Domestic Air Transportation; and (b) Foreign Air Transportation
a. Domestic Air Transportation means air transportation within the limits of the
Philippine territory
b. Foreign Air Transportation means air transportation between the Philippines and any
place outside it, or wholly outside the Philippines
 When does the contract of carriage for air transportation commence

- A contract of carriage for air transportation arises when an airline issues a ticket to a
passenger and confirmed it for a particular flight on a certain date
- Thus, the passenger has the very right to expect that he be transported on that flight and
on that date, and it becomes the carrier’s obligation to carry him and his luggage safely to
the agreed destination.
- (note: if the passenger is not transported or if in the process of transporting such passenger
dies or is injured, the carrier may be held liable for a breach of contract of carriage)
 When is an air carrier liable for moral damages for breach of air transportation contract
- The air carrier is liable for moral damages when any of the following instances is present:
a. When there is a mishap that results in the death of the passenger; and
b. When the carrier is guilty of bad faith as when it committed a breach of a known duty
through some motive of interest or ill-will
- (note: malice and discrimination may be the basis of bad faith that will justify the grant of
moral damages)
 Jurisprudence
(1) An airline was held liable for moral damages and exemplary damages when its manager
forced and threatened the plaintiff to vacate his seat for a “white man”. There was a
clear contract of carriage between the plaintiff and the airline upon purchasing of the
ticket by the former, and that there was breach tainted by bad faith
(2) An airline was held liable for moral damages and exemplary damages when it misleads
the passenger into purchasing first class tickets in the conviction that they had
confirmed reservations for it, when in fact it was cancelled without their knowledge by
the mistake of the airline’s agent
(3) An airline was held liable for moral damages when it committed gross negligence in the
issuance of tickets with erroneous entries as to the time of the flight and its failure to
correct the same, resulting to the passenger being bumped-off or left by his supposed
scheduled flight. This act by the airline constitutes bad faith
(4) An airline was held liable for moral damages when its employees did not exert effort to
assist a passenger to look for his baggage while in Honolulu, which was later found to
be left in the office of Pan Am in Manila. The act of the employees constitutes
impoliteness and dismaying gestures of impatience towards the passenger
(5) An airline was held liable for moral damages when it off-load a passenger at the stop
over place (not in the proper destination) while humiliating the latter. Such actions
constitutes malice and evident bad faith
(6) An airline was held liable for moral damages when its flight was cancelled due to a
typhoon (force majeure) resulting the passengers to stay in hotels, where one
passenger knew that he was not given reimbursement and while others were given, and
the airline’s act of blatant refusal to accord and give amenities equally to all its stranded
passengers constituted a discriminatory and prejudicial conduct.
(7) An airline was held liable for moral damages when it breached its contract of carriage
because the airline did not transport the passenger to its agreed destination. Likewise,
rudeness of the airline’s employees toward the passenger constituted bad faith
(8) An airline was held liable for exemplary damages when it accommodated waitlisted and
non-revenue passengers over a confirmed passenger. This act is a breach of contract
tainted with bad faith.
(9) An airline was held liable for damages when it insisted to upgrade the seat
accommodation of the passengers despite the refusal of the latter. This act constituted a
breach of contract of carriage
(10) An airline cannot be held liable for breach of contract of carriage when its
passenger is not admitted to a foreign country for overnight stay during stop-over,
because such belongs to the authority of the foreign country being a sovereign act which
the airline cannot interfere
(11) An airline cannot be held liable for damages over missing items in a miscarried
luggage when it can prove that it exerted due diligence in complying with its duty to
return such luggage, thus, no wrongful act or fraud or bad faith can be attributed to the
airline
 What is the Warsaw Convention

- It is the Warsaw Convention for Unification of Certain Rules Relating to International
Carriage by Air
- It was signed at Warsaw, Poland on October 12, 1929
- It provides for rules applicable to international transportation by air
- By its terms, the convention applies to all international transportation of persons performed
by aircraft for hire
 Did the Philippines adhere to the Warsaw Convention

- YES
(Historical Background)
- It was concurred by Philippine Senate on May 16, 1950 through Resolution No. 19, and
was signed by President Elpidio Quirino on October 13, 1950. Such was deposited to the
Polish Government on November 9, 1950
- President Ramon Magsaysay issued Proclamation No. 201 declaring the formal adherence
of the Philippines to the terms of the convention
 Is the Warsaw Convention binding in the Philippines

- It has the force and effect of a law in the Philippines being a treaty commitment assumed
by the Philippine Government.
- However, it does not operate as the exclusive enumeration of the instances for declaring a
carrier liable for breach of contract of carriage or an absolute limit of the extent of such
liability
- It does not preclude the operation of the Civil Code
 What is the meaning of “International Transportation by Air” under the Warsaw

Convention
- There are two categories of international transportation by air:
a. That where the place of departure and the place of destination are situated within
the territories of two High Contracting Parties regardless of whether or not there be a
break in the transportation or a transhipment; and
b. That where the place of departure and the place of destination are situated within
the territories of a single High Contracting Party if there is an agreed stopping place
within the territory subject to the sovereignty, mandate or authority of another power,
even though the power is not a party to the Convention
(Note: High Contracting Parties are the signatories to the Warsaw Convention and
those which subsequently adhered to it)
 Where should an action for violation of a contract of international transportation by air

be brought
- Under Article 28 (1) of the Warsaw Convention, “an action for damages must brought at the
option of the plaintiff, in the territory of one of the High Contracting Parties, either before the
court of the domicile of the carrier or of his principal place of business, or where he has a
place of business through which the contract has been made, or before the court at the
place of destination
= (1) court of the domicile of the carrier
= (2) court of his principal place of business
= (3) court where he has a place of business through which the contract has been made
= (4) court of the place of destination
 Jurisprudence
- (4) court of the place of destination ---- it does not include the place of stop-over
 What is the composition of the Civil Aeronautics Board

- It is composed of the following:
= Secretary of Transportation and Communications (as Chairman)
= Air Transport Office Administrator
= Commanding Officer of the Philippine Air Force
= Two other members appointed by the President of the Philippines
 What is the general power of the Civil Aeronautics Board

- It has the power to regulate the economic aspect of air transportation, and shall have the
general supervision and regulation of, and jurisdiction and control over air carriers, general
sales agent, cargo sales agent, and air-freight forwarders as well as their property, property
rights, equipment, facilities, and franchise, insofar as may be necessary for the purpose of
carrying out of the provisions of this Act
 What are the specific powers and duties of the Civil Aeronautics Board
- It has the specific powers and duties:
1. To issue, deny, amend, revise, alter, modify, cancel, suspend or revoke, in whole or
in part, any temporary operating permit or Certificate of Public Convenience and
Necessity; provided however, that in the case of foreign air carriers, the permit shall
be issued with the approval of the President of the Philippines
2. To fix and determine reasonable individual, joint or special rates, charges or fares
which an air carrier may demand, collect or receive for any service in connection
with air commerce. The Board may adopt rates, charges or fares proposed by an air
carrier if the same are not unduly preferential or unduly discriminatory or

unreasonable
 What is necessary to engage in air commerce

- There should be a Certificate of Public Convenience and Necessity issued by the Civil
Aeronautics Board
 When is the Warsaw Convention not applicable

- It is not applicable to carrier when the damage is caused by its willful misconduct or by
such default in his part, which is considered to be equivalent to a wilful misconduct, or if
such damage is similarly caused by any agent of the carrier acting within the scope of his
employment.
 Jurisprudence
1. International Transportation exists only when any of the following is present: (a) That
where the place of departure and the place of destination are situated within the
territories of two High Contracting Parties regardless of whether or not there be a break
in the transportation or a transhipment; and (b) That where the place of departure and
the place of destination are situated within the territories of a single High Contracting
Party if there is an agreed stopping place within the territory subject to the sovereignty,
mandate or authority of another power, even though the power is not a party to the
Convention
2. The application of the Warsaw Convention is not applicable to carrier when the damage
is caused by its willful misconduct or by such default in his part, which is considered to
be equivalent to a wilful misconduct, or if such damage is similarly caused by any agent
of the carrier acting within the scope of his employment.
3. The Warsaw Convention shall not apply when the carrier failed to prove that the
passenger was negligent and is the proximate cause of the loss of the luggage.
PUBLIC SERVICE ACT
 What is the primary purpose of the Public Service Act (PSA)

- The primary purpose of PSA is to secure adequate, sustained service for the public, at the
least possible costs, and to protect and conserve investments which have already been
made for that known purpose
- It is also made to prevent ruinous competition
 What is Public Utility

- Public Utility is the business or service engaged in supplying the public with some
commodity or service of public consequence, or essential to the public
 What is Public Service

- It includes every person that now or hereafter may own, operate, manage, or control in
the Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, done for the general business purposes, any
common carrier, with or without fixed route and whatever may be its classification,
engaged in the transportation of passengers or freight or both, canal, irrigation
system, gas, electric, light, heat and power, water supply power, petroleum,
sewerage system, wire or wireless communication systems, wire or wireless
broadcasting stations and other similar public services
- The term “public utility” and “public service” are used interchangeably
(Note: a person who owns a tractor in cultivating land, and leases it to third persons is not
engaged in public service)
 Is a public market included among the “public service” defined by law

- NO. though it is a public service or utility, it does not fall under the jurisdiction of the Board,
for not being ejusdem generis with those public services enumerated in Section 13(b) of the
Public Service Act
 What are the exempt from the provisions of the Public Service Act
- The following are exempted:
a. Warehouse;
b. Vehicles drawn by animals and bancas moved by oars or sails, and tugboats and
lighters;
c. Airships within the Philippines, except as regards the fixing of their minimum rates
on freight and passengers;
d. Radio companies except with respect to the fixing of rates;
e. Public service owned or operated by the National Government or by any GOCC,
except with the fixing of rates;
f. Public markets; and
g. Ice plants and cold storage.
 What is required of those engaged in “public service”

- The public service shall have a (1) certificate of public convenience or (2) certificate of
public convenience and necessity issued by the Public Service Commission-PSC (to the
effect that the operation of the said service and the authorization to do business will
promote the public interests in a proper and suitable manner)
- The Commission (PSC) may prescribe conditions for the issuance of a (1) certificate of
public convenience or (2) certificate of public convenience and necessity
- The certificate shall be valid for a definite period of time, and that violations of the condition
may warrant the cancellation of such certificate, even without the necessity of the express
action on the part of the Commission
 What entities engaged in public service is not required to obtain a certificate of public
convenience or certificate of public convenience and necessity
- The following are exempt from obtaining a (1) certificate of public convenience or (2)
certificate of public convenience and necessity:
a. Public service owned or operated by the Government entities or by any GOCC;
(Note: “letter a” shall be regulated by the Commission in the same way as a privately
owned public service, BUT, IT IS NOT REQUIRED TO OBTAIN CERTIFICATE)
b. Grantees of legislative franchise when expressly exempted from obtaining a
certificate from the Commission; and
c. Those expressly exempted from the jurisdiction of the Commission under Section 13
of the PSA
 Where should entities engaged in transportation obtain the necessary certificate of public
convenience
LAND TRANSPORTATION FRANCHISING Those engaged in public land transportation

AND REGULATORY BOARD services by motorized vehicles
(LTFRB)
MARITIME INDUSTRY AUTHORITY Those engaged in the operation of domestic

and overseas water carriers
CIVIL AERONAUTICS BOARD Those engaged in air commerce and/or

domestic
LOCAL SANGUNIANG BAYAN or Those engaged in providing land

SANGGUNIANG PANLUNGSOD transportation by the use of tricycles
 What government agencies govern other entities engaged in public service other than
transportation
NATIONAL TELECOMMUNICATIONS Radio, television, telephone and other

COMMISSION telecommunications entities
NATIONAL ELECTRIFICATION Electric companies and cooperatives

ADMINISTRATION
Local water utilities

LOCAL WATER UTILITIES
PHILIPPINE POSTAL CORPORATION Express and/or messenger services

 When may the commission issue a Certificate of Public Convenience

- Upon notice and hearing, the Commission shall have the power to issue certificates known
as the Certificate of Public Convenience, authorizing the operation of public service within
the Philippines (whenever the Commission finds that the operation of such shall will
promote the public interest in a proper and suitable manner)
 When may the commission issue a Certificate of Public Convenience and Necessity
- Upon notice and hearing, the Commission shall have the power, subject to constitutional
limitations, any franchise or privilege granted under RA667 as amended by RA1022 by any
political subdivision of the Philippines, when in the judgement of the Commission, such
franchise or privilege will properly conserve the public interest, and to issue Certificate of
Public Convenience and Necessity
 Distinguish between “Certificate of Public Convenience” and “Certificate of Public Convenience

and Necessity”
Both upon notice and hearing Both upon notice and hearing
Issued when the Commission finds that the Issued when in the judgement of the
operation of such shall will promote the public Commission, such franchise or privilege will
interest in a proper and suitable manner properly conserve the public interest
A municipal or legislative franchise is not Upon approval of any franchise or privilege

necessary granted by any political subdivision of the
Philippines
 What are the requisites for the grant of a Certificate of Public Convenience” or “Certificate of
Public Convenience and Necessity”
- The following are the requisites:
1. The applicant must be a citizen of the Philippines, or a corporation or association
organized under the laws of the Philippines, at least 60% of such capital is owned by
such citizens;
2. The applicant must be financially capable of undertaking the proposed service and
meeting the responsibilities incident to its operation; and
3. The applicant must prove that the operation of the public service proposed and the
authorization to do business will promote the public interest in a proper and suitable
manner
 What is the primordial consideration in granting franchises and or certificate of public

convenience
- The primary consideration in the grant should be the public interest and convenience.
 What is the power of the commission on the rates to be charged by public utilities
- The Commission has the power to fix and determine individual or joint rates, tools, charges,
classifications or schedules thereof, as well as commutations, mileage, kilometrage, and
other special rates which shall be imposed, observed and followed thereafter by a public
service
(provided that, the Commission may, in its discretion, approve rates proposed by public
services provisionally and without necessity of any hearing; the Commission shall call a
hearing thereon within 30 days thereafter, upon publication and notice to the concerns
operating in the territory affected)
(provided further, that in case the public service equipment of an operator is used
principally or secondarily for the promotion of a private business, the net profits of said
private business shall be considered in relation with the public service of such operator for
the purpose of fixing the rates)
 May the commission order the refund of the amount collected in excess of the allowed rates
- To insure compliance with its order fixing rates, the Commission should have the power to
direct reparation or the return of the excessive rates collected. It is usual for Public Service
authorities to require the refund of overcharges collected
 What power does the commission have over the quality and standard of service to be
furnished
- The Commission has the power to:
1. To fix just and reasonable standards, classifications, regulations, practices,
measurements or services to be furnished, imposed observed, and followed
thereafter by any public service;
2. To ascertain and fix adequate and serviceable standards for the measurement of
quality, quantity, pressure, initial voltage, or other condition pertaining to the supply
of the product or service rendered by any public service, and to prescribe
reasonable regulations for the examination and test of such product or service and
for the measurement thereof;
3. To establish reasonable rules, regulations, instructions, specifications, and
standards, to secure the accuracy of all meters and appliances for measurements;
4. To compel any public service to furnish safe, adequate, and proper service as
regards the manner of furnishing the same as well as the maintenance of the
necessary material and equipment.
 May the commission compel the public service to extend its facilities or install safety devices
- The Commission has the power to:
1. To require any public service to establish, construct, maintain and operate any
reasonable extension of its existing facilities, where, in the judgement of the
Commission, such extension is reasonable and practicable, and will furnish sufficient
business to justify the construction and maintenance of the same, and when the
financial condition of the said public service reasonably warrant the original
expenditure required in making and operating such extension;
2. To direct any railroad, street railway or traction company to establish and maintain at
any junction or point of connection or intersection with any other line of said road or
track, or with any other line of any other railroad, street railway or traction company,
such just and reasonable connection as shall be necessary;
3. To authorize, in its discretion, any railroad, street railway or traction company to lay
its track across the tracks of any other railroad, street railway or traction company, or
across any public highway;
4. To direct any railroad or street railway company to install such safety devices or
adopt such other reasonable measures as may be in the judgement of the
Commission be necessary for the protection of the public.
 May the government or the Republic compel the Philippine Long Distance Com. (PLDT) to
permit interconnection of government telephone system
- YES, it may, in the exercise of the sovereign power of eminent domain as the needs of the
government service may require, subject to the payment of just compensation to be
determined by the Court. (the purpose shall be of public use and benefit)
= real property may, through expropriation, be subjected to an easement of right of way
 What is the prior operator rule

- It means that before permitting a new operator to invade the territory of another already
established with a certificate of public convenience, the prior operator must first be
given the opportunity to extend its services in order to meet public needs in the
matter of transportation.
- It means that a public utility operator should be shielded from ruinous competition by
affording him an opportunity to improve his equipment and service before allowing a new
operator to serve in the same territory he covers
 What is the prior applicant rule

- Where there are various applicants for a public utility over the same territory, all
conditions being equal, priority in the filing of the application for a certificate of public
convenience becomes an important factor in granting or refusal of a certificate.
- But if other conditions are not equal, such priority is not ordinarily of sufficient
importance to control the granting of a certificate of public convenience, and the Public
Service Commission is authorized to determine which of the applicants can best meet the
requirements of the public convenience
 What is the “protection of investment” rule

- It means that one of the purposes of the Public Service Law is to protect and conserve
investments which have already been made for that purpose by public service operators.
- However, the said rule is not absolute, for nobody has an exclusive right to secure a
franchise or a certificate of public convenience. The paramount consideration should
always be the public interest and public convenience.
 When an existing operator claims that the new applicant will provide ruinous competition, what
must the former do?
- It should be shown that the oppositor will not obtain sufficient profits to pay a dividend or
reasonable interest upon invested capital.
- There should be a clear cut evidence of resultant loss
- A mere possibility of reduction in the income of an existing operator does not in itself prove
that the issuance of a permit to another new operator will result to ruinous competition
 When is the “prior operator” or “protection investment” rule not applicable

- The principles do not apply to the following:
1. Where public interest would be better served by the new operator, as when the prior
operator has failed despite ample time and opportunity given to it by the Commission
to render adequate, sufficient and satisfactory service and had violated the important
conditions of its certificate.
= the protection given to prior operator refers only to operators of good standing
= the “prior operator” or “protection investment” rule cannot take precedence over
the convenience of the public
2. Where the old operator has failed to make an offer to meet the increase in traffic
3. Where the certificate of public convenience granted to the new operator is a maiden
certificate, which does not overlap with the entire route of the old operator, but only a
short portion thereof as a convergence point
4. If the application of the rule will be conducive to monopoly of the service, and
contrary to the principle that promotes healthy competition
 Distinguish TH from TPU service

TH Service TPU Service
- it is confined in the haulage of cargo - it is confined in the carrying of passenger
- it has no specific routes or lines, but from a - it has specific routes
given town to any point accessible
 Upon what grounds may the commission suspend or revoke any certificate issued under
Public Service Act
- The certificate issued under the PSA may be suspended or revoked when:
1. The facts and circumstances on the strength of which said certificates was issued
have been misrepresented or materially changed;
2. The holder thereof has violated or wilfully and contumaciously refused to comply
with any order, rule or regulation of the Commission or any provision of this Act;
3. The common carrier repeatedly fails to comply with his duty to observe extraordinary
diligence as prescribed by law
(Note: the Commission, for good cause to avoid serious and irreparable damage or
inconvenience to the public or private interest, may, prior to the hearing, suspend the
certificate or the exercise of any right therein for a period of 30 days)
 May the commission determine the type of motor vehicle to be used by public utilities
- The Commission may fix, determine, and regulate, as the convenience of the state may
require, a special type of auto-busses, trucks, and motor trucks, to be hereafter
constructed, purchased, and operated by operators after approval of this Act
 Are the formal charges and hearing necessary prior to cancellation or revocation of certificate
- The power the cancel or revoke a certificate may be exercised by the Commission even
without a formal charge, with the only limitation that the holder of the certificate should have
been given his day in Court. (it means that the operator should be given a previous notice
and opportunity to explain his side, if not granted, it constitutes a violation of the due
process)
 What powers may the commission exercise without previous hearing

- Even without previous hearing, the commission shall have the power to:
1. Investigate, upon its own initiative, or upon complaint in writing, any matter
concerning any public service as regard matters under its jurisdiction;
2. Require any public service to furnish safe, adequate and proper service as the public
interest may require and warrant; and
3. Enforce compliance with any standard, rule, regulation, order or other requirement of
this Act or of the Commission to prohibit or prevent any public service from operating
without having first secured a (1) certificate of public convenience or a (2) certificate
of public necessity and convenience.
 Who shall bear the costs of investigation conducted by the commission

- It shall be paid by the public service.
(Note: the Commission may require any public service to pay the actual expense incurred
by the Commission in any investigation if it should be found in the same that any rate,
toll, charge, schedule, regulation, practice, act or service thereof is in violation of this
Act or of any certificate, order rule, regulation or requirement issued or established by the
Commission)
(Note: the Commission may also charge and assess against any public service costs not
exceeding twenty-five pesos with reference to such investigation)
OPERATORS OF PUBLIC SERVICES, REGULATIONS AND PROHIBITIONS

 Do water districts fall under the term “public utility”
- YES. It falls under the term public utility
(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 telegraph service)
=Example: National Waterworks and Sewerage Authority (NAWASA) is a public utility

because its primary function is to construct, maintain and operate water reservoirs and
waterworks for the purpose of supplying water to the inhabitants, as well as consolidate
and centralize all water supplies and drainage system in the Philippines
 Does the National Water Resource Board (NWRB) have the power to grant a Certificate of
Public Convenience to operate and maintain waterworks system without the consent of the
local water district
- YES. NWRB has the power to grant a Certificate of Public Convenience to operate and
maintain waterworks system without the consent of the local water district
= the grant of exclusive franchise is deemed to be void ab initio for being irreconcilable
with Article XIV, Section 5 of the 1987 Constitution which states that “no franchise,
certificate, or authorization be exclusive in character”
 What services on the part of the public utility is considered unlawful

- it shall be unlawful for any public utility to provide or maintain any service that is unsafe,
improper, or inadequate, or withhold, or refuse any service which can reasonably be
demanded and furnished, as founded and determined by the Commission in a final order
which shall be conclusive and effect in accordance with this Act, upon appeal or otherwise
 When may a private electric utility or rural electric cooperative disconnect electric services after
serving written notice or warning to that effect
- The private electric utility or rural electric cooperative shall have the right and authority to
disconnect immediately the electric service after serving a written notice or warning to that
effect, even without the need for a court or administrative order.
=Note, the disconnection of electric service cannot be done without prior notice or warning
(Private electric utility or rural electric cooperative may deny restoration of the electricity
when the owner of the house or establishment or someone acting in his behalf have been
caught in flagrante delicto doing any act enumerated in Section 4(a) hereof)
 Jurisprudence
- Failure to give a prior notice before the disconnection is tantamount to a tort
- Disconnection of a consumer without a prior notice on the ground of delinquency on
payment is not proper.
 Does the Energy Regulatory Board have jurisdiction to the reconnection of electric service?
- YES. An electric service provider is under the regulatory jurisdiction and supervision of the
ERB. Hence, it may order the reconnection of electric service.
- Jurisprudence provides that the power of control and supervision over public utilities would
otherwise be meaningless delegations if the ERB is precluded from requiring a public utility
to reconnect electric service pending the determination of propriety of the disconnection.
 Does the Energy Regulatory Board have the authority to grant provisional relief
- YES. As an incident to its principal function, the ERB has the authority to grant provisional
relief (either through its own initiative or by a motion of a party in the case)
 Is the Energy Regulatory Board subject to the same limitations as regular courts in the
issuance of restraining order and injunction
- ERB is an administrative agency, and is not considered as a court. Thus, the prohibition
against the issuance of restraining order or writs of injunction does not apply to ERB
= the “court” contemplated in Section 9 of RA 7832 refers to regular courts only
 May the public utility grant discounts or rebates or give any undue or unreasonable preference
- NO. it is unlawful for any public utility to (1) make or give, directly or indirectly, by itself or
through its agents, discounts or rebates on authorized rates, or (2) grant credit for the
payment of freight charges, (3) or any undue or unreasonable preference or advantage to
any person or corporation or locality or any particular description of traffic to any prejudice
disadvantage in any respect
 In case all persons are treated alike, is the grant of discounts or rebates unlawful
- NO. The law prohibits favouritism and discrimination. When the price charged is for the
purpose of favouring person or localities or particular kinds of merchandise, it is considered
unlawful.
- But, if there is no favouritism and discrimination, the grant is lawful.
 May a public utility refuse to carry public mail

- NO. It is unlawful for a public utility to refuse or neglect, when requested by the Director of
Posts or his duly authorized representative, to carry public mail on the regular trips of any
public land transportation service maintained or operated by any such public service (upon
such terms and conditions, and for a consideration agreed by the parties)
 Due to the increase in the costs of petroleum products, a bus operator increased the rates of
transport without prior approval of the Commission, is it lawful?
- NO. It is illegal. It shall be unlawful for any public service or for the owner, lessee, or
operator thereof to increase the rates without the approval and authorization coming from
the Commission
(Note: the Commission shall approve only those that are just and reasonable and not any
that are unjustly discriminatory or unduly preferential, ONLY UPON reasonable notice to
the public services and other parties concerned, giving them reasonable opportunity to be
heard, and the burden of proof to show that the proposed rates or regulations are just and
reasonable shall be upon service proposing the same)
 May a public utility operate new units without prior approval of the Commission
- NO. It is unlawful for any public utility to establish, construct, maintain, or operate new units
or extend existing facilities or make any other additional to or general extension of the
service without prior approval of the Commission
 What are necessary to entitle a common carrier to increase his units

- A common carrier may only be permitted to increase his units to undertake additional trips
on his route if and when he positively shows the public need of it
- The following must be proved:
1. That he had regularly undertaken all his authorized trips
2. That his busses were always sufficiently loaded with passengers
3. That the travellers could not be conveniently accommodated
 May a public utility sell, mortgage or lease its property, franchise or rights without prior
approval of the Commission
- YES only if there is a prior approval and authorization of the Commission to sell, alienate,
mortgage, encumber or lease its property, franchises, certificates, privileges, or rights or
any part thereof, with those of any other public service.
=the approval shall be given only after notice to the public and after hearing the persons
interested at a public hearing, it must be shown that there are just and reasonable grounds
for such allowance
 May a certificate of public convenience be sold

- YES, but the approval of the Commission is necessary prior to the sale thereof because it
is affected with public interest and must be submitted to the control of the governments for
the common good.
=the certificate of public convenience is included in the term “property” because it has a
considerable material value
 Jurisprudence
- Certificate of public convenience is a property which represents the right and authority to
facilities for public service and cannot be taken and interfered with or without due process
of law (thus, the appropriate actions may be maintained in court by the holder of certificate
of public convenience against whose have not been authorized to operate in competition
with the former)
 Why must a prior approval of the sale, mortgage or leased of the franchise or of the property of
the public utility be obtained
- Since the franchise is personal in nature, any transfer or lease thereof should be brought to
the attention of the Commission so that the latter may take proper safeguards to protect the
interest of the public
- The law requires that before the approval is granted, there should be a public hearing, with
notice to all interested parties, in order that the Commission may determine if there is a
good and reasonable ground justifying the transfer or lease of the property covered by the
franchise, or if the sale or lease is detrimental to the public interest
- The law also requires that before public utilities mortgage their properties, they must obtain
the necessary approval of the Commission for the purpose of determining if the mortgage is
injurious or beneficial to the public interest
 What is the effect of a sale or lease of the property belonging to the public utility without the
prior approval of the Commission
- If the sale or lease has no prior approval of the Commission, the transfer or lease is valid
and binding between the parties, but it has not effect against the public and the
Commission
(note: the approval is necessary to protect the public interest)
 What is the registered owner rule

- In here, the registered owner of a motor vehicle is liable for the consequences which the
motor vehicle may be involved
- Jurisprudence: it is a well-settled rule that in case of a motor vehicle mishap, the registered
owner of the motor vehicle is considered as the employer of the tortfeasor driver and is
made primarily liable for the tort committed by the driver
 May the registered owner/operator of the vehicle be made liable for damages sustained by the
third persons if said vehicle had already been leased, sold or transferred without the approval
of the Public Service Commission
- The registered owner/operator is directly and primarily responsible, and liable for the
damages sustained by passengers or third persons as a consequence of a negligent or
careless operation of the vehicle registered in his name
- If the said vehicle is sold or leased without the prior approval of the Public Service
Commission to another person at the time of the accident, the latter is considered to be
acting only as an agent of the registered owner/operator
(note: regardless of who the actual owner of the vehicle is, the operator of record
continues to be the operator of the vehicle as regards the public and third persons,
and such is directly and primarily liable for the consequences incident to the vehicle’s
operation)
 Jurisprudence
- In dealing with vehicles registered under the Public Service Act, the public has the right to
assume that the registered owner is the actual or the lawful owner thereof. Thus, as a
common carrier, the registered owner is deemed to be liable from the consequences
incident to the operation of the vehicle
- A contract of lease that was not approved by the Commission is binding only to the parties
involved, but it is not binding to the public and the third persons
 What is the “kabit system”

- It is an arrangement whereby a person who has been granted with a certificate of public
convenience allows another person who owns motor vehicle to operate under such
franchise
 Is the “kabit system” legal

- It is not out-rightly penalized as a criminal offense
- BUT, it is recognized as being CONTRARY TO PUBLIC POLICY, therefore, it is a void and
inexistent under Article 1409 of the Civil Code
(Note: the “kabit system” is an imposition upon good faith of the government. It is an abuse
of a certificate of public convenience, which is a special privilege granted by the
government)
 Jurisprudence
- The registered owner or operator of a passenger vehicle is jointly and severally liable with
the driver of the said vehicle for damages incurred by passengers or third persons as a
consequence of injuries or death sustained in the operation of the said vehicle
(note: but, the registered owner or operator has the right to be indemnified by the amount
that he may be required to pay as damages – either through cross-claim, third party
complaint, or an independent action and the result is the same)
- Parties who engaged in the “kabit system” will not receive any aid from the court to enforce
the provisions of the contract between them, since such contract is void and inexistent. The
proposition is universal that no action arises, in equity or in law, from an illegal contract
(note: where the parties are in pari delicto, no affirmative relief or any kind will be given to
one against the other)
 What is the “boundary system”

- it is an arrangement between the owner of the vehicle who owns a certificate of public
convenience, and the driver who uses the vehicle for a fixed number of hours and pays to
the owner a fixed amount and shoulders the gasoline used, where the excess of the total
amount of fares earned over and above the amount paid to the owner, will be the share of
the driver in lieu of a fixed compensation
(note: the owner/operator exercises control and supervision over the driver, where the
management of the vehicle is still in hands of the owner/operator, who, being the holder of
the certificate of public convenience, must see to it that the drive follows the route
prescribed by the franchising and regulatory board, and the rules promulgated with regards
the business operation
 Is the “boundary system” a contract of lease or one of employment

- The employer-employee relationship exists between the owner of the vehicle, and its driver
and conductor operating under the boundary system.
 May the shares in the Capital Stock of the public service be sold without the prior approval of
the Commission
- If the result of the sale is the transfer of more than 40% of the subscribed capital of the
public service to the transferee, the prior approval and authorization of the Commission is
required to register in its books the transfer or sale of the shares in its capital stock
- If the result of the sale is the reduction to less than 60% of the capital stock belonging to
Philippine citizens, the prior approval and authorization of the Commission is required
(note: any transfer made in violation of this shall be void and of no effect, and shall not be
registered in the books of the public service corporation)
 To whom may a public utility give free or discounted tickets without the prior approval of the
Commission
=As a general rule: it is unlawful to issue, give or tender, directly or indirectly, any free ticket,
free pass or free or reduced rate of transportation for passengers without the prior approval of
the Commission
=EXCEPTIONS:
1. Officers, agents, employees, attorneys, physicians, surgeons of the public service,
and members of their families;
2. Inmates of hospitals or charity institution, and persons engaged in charitable works;
3. Indigent, destitute, and homeless persons when transported by charitable societies
or hospitals, and the necessary agents employed in such transportation
4. The necessary care-takers, going and returning, of llivestocks, poultry, fruit and
other freight under uniform and non-discriminatory regulations
5. Employees of sleeping car corporations, express corporations and telegraph and
telephone corporations, railway and marine mail service employees, when travelling
in the course of their official duty
6. Post-office inspector, customs officers and inspectors, immigration inspectors when
engaged in inspection
7. Witnesses attending any legal investigation in which the public service is an
interested party
8. Persons injured in accidents or wrecks, and physicians and nurses attending such
person
9. Peace officer and men of regularly constituted fire departments

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REVIEWER IN TRANSPORTATION LAW 1

REVIEWER IN TRANSPORTATION LAW

 What is the nature of contracts of transportation or carriage?

 What is a carrier in transportation?

NEW CIVIL CODE – Common Carrier

Subsection 1: General Provisions

 Definition of Contract of carriage or transportation.

 Who are Common Carriers?

 What are the requisites to be a common carrier of goods?

 May a custom broker be considered as a common carrier?

 To be a common carrier, must the carriage of goods or persons be regularly undertaken?

 Who is a private carrier?

 Distinguish a common carrier from a private carrier

 May a common carrier act as a private carrier?

 What is arrastre? How is it different from stevedoring services?

 Is an arrastre operator a common carrier?

 Consignee is the person to receive the goods

 Are maritime laws applicable to an arrastre operator?

Subsection 2: Vigilance over Goods

 When is the common carrier presumed to be negligent?

 How may the legal presumption of negligence be overcome?

 Prima facie presumption of negligence

 Is a common carrier exempted from responsibility for damages (loss, destruction, or

 What is to be considered as fortuitous events?

 To whom must the carrier deliver the goods transported?

 What are the obligations do the carrier have in stoppage in transitu?

 What diligence is required in stoppage in transitu?

 What is the effect of contributory negligence of the shipper or owner?

 May an agreement to limit the liability of the common carrier be annulled?

 What is the effect of delay on account of strikes or riots?

(only the third kind is valid)

 When is the limitation on the carrier’s liability not binding?

 What provisions of law shall apply to a passenger’s baggage?

Subsection 3: Safety of Passengers

 What is the obligation of the common carrier to the passengers?

 Is a common carrier liable for damages due to fortuitous event?

 What is the presumption in case of death of or injury to passengers?

Quasi-delict or Culpa Aquiliana Culpa Contractual

 What degree of diligence must a passenger observe to avoid injury to himself?

 What is the effect of contributory negligence?

 Moral and Exemplary Damages CANNOT be granted

 What is the degree of diligence required of a common carrier?

In transporting goods EXTRAORDINARY DILIGENCE

In transporting passengers UTMOST DILIGENCE OF A VERY

In preventing or stopping injuries to a DILIGENCE OF A GOOD FATHER OF A

Subsection 4: Common Provisions (Applicable Provisions of the Civil Code on Damages)

 What damages may be recovered in case of death of a passenger?

2/3 x (80 - age of the decedent) = life expectancy

 When is a common carrier liable for attorney’s fee?

 As a general rule, may moral damages be recovered in breach of contract of transportation?

FRAUD – has been defined to include an inducement through insidious machination.

 Is the doctrine of “last clear chance” applicable to passengers of a common carrier?

PART II : AIR TRANSPORTATION

 What is the peculiarity of air transportation

 Who is an air carrier

 When does the contract of carriage for air transportation commence

 What is the Warsaw Convention

 Did the Philippines adhere to the Warsaw Convention

 Is the Warsaw Convention binding in the Philippines

 What is the meaning of “International Transportation by Air” under the Warsaw

 Where should an action for violation of a contract of international transportation by air

 What is the composition of the Civil Aeronautics Board