transpo ty finals

7/27/2019 Transpo Ty Finals

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TRANSPORTATION AND PUBLIC UTILITY LAW REVIEWER

| Prof. Ty

PART ONE: PUBLIC UTILITIES

I. General Discussion

A. What is a public utility?

Munn v. Illinois

Private property devoted to public use is subject to

public regulation (ex. Common carriers are affected

with public interest). Thus, warehouse monopoly can be

regulated.

Notes: Though theres deprivation of property, private

property for public use subject to regulation

-private right vs. public interest

Munn (free market/ laissez faire) v. Illinois (regulation

for publc)

Luzon Stevedoring Co. v. PSC

In public service, it is not necessary to hold self out as

serving public.

KMU Labor Center v. Garcia

Public utilities are privately owned businesses whose

services are essential to the general public, cater needs

to public. Thus, DOTC and LTFRB Memos are void:

1)delegating to bus operators rate-fixing 2) creating

presumption of public need for CPC

Notes:Why is Maynilad, a water distribution company a public

utility, while neighborhood refilling station is not?

-Public necessity is not the test

-Public consequence is the test

Tests:

1. Public consequence

2. Own infrastructure- use impressed with public

interest; end-user cant avail of it without using facilities

Public service and public utility same

Additional readings:Batson- The Economic Concept of a Public Utility

Legal concept

Political concept

Economic concept

Economic concept- narrower, political and legal wont

apply on top

-high fixed cost

-economies of scale >can discriminate prices

-surplus

Millar- Is Public Utility a Concept v. Gray- The Passing of

the Public Utility Concept

Gray- Public utility concept obsolete

-not laissez faire

-govtl intervention of different format of control

1) More positive regulation on public utilities

2) Creation of new institutions/ new institutiona

arrangements

3) Centralized economic planning avoid every man forhimself/ NEDA

*LUWA- authorizes local water districts

-local water districts- GOCCs

-example of new institutions

Millar- public utility not obsolete, just deregulated

Barriers

-high threshold levels of investment

-even if prices go up, demand same (inelastic)

AT&T sued for anti-trust

-diversification, modernization, consolidation and

concentration

B. What is public service?

CA 146 or Public Service Act Sec 13(b)legal concept o

public utility

Public Utility:

1) Own, operate, manage/ control in the Phils2) For hire/ compensation3) General/limited clientele4) Permanent, occasional, accidental5) For general business purpose

Differentiate public utility from public service? Same

C. Legal Basis and Rationale for Regulation

Legal basis = police power

Rationale = common good

Republic of the Phils v. Meralco

Regulation of rates is founded on police power while

regulation is for common good. Rate should not be toolow to be confiscatory nor too high to be oppressive.

D. Where does the Power to Regulate Public Utilities

Reside?

-Resides in Congress police power (inherent)

Albano v. Reyes

Law allows PPA to contract out management of port

Congress does not have to issue a franchise before

every public utility may operate. Law has granted


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certain administrative agencies the power to grant

license/ authorize operation of public utilities.


Law delegated to LTFRB the power to fix rates for public

utilities but it cannot delegate to bus operators such

power. Law delegated to administrative body.

Agan v. PiatcoSC invalidated contract to operate NAIA 3. Grant of

exclusive right to operate doesnt exempt it from

government regulation.

Batangas CATV v. CA

NTC with sole power to regulate CATV operators to

exclusion of LGU. Regulatory power refers to those

strictly within NTCs competence like rate-fixing.

Sanggunian still with power to enact ordinances per

general welfare clause.

Despite GWC, power given to NTC specific

Relate to Public Service Act 13(a)

What happened to the Public Service Commission?

KMU Labor Center v. Garcia (footnote #2)

PSC Bureau of

Transportation

Land

Transportation

Commission

LTFRB

Bureau of

Communication

NTC

Bureau ofPower and

Waterworks

E. Not a Public Utility

Nebba v. New York

Milk industry is not a public utility in accepted sense. It

has no franchise or monopoly. But it is still affected with

public interest and so state can regulate prices.

Tatad v. GarciaA mere owner and lessor of facilities used by a public

utility is not a public utility. Private corp. doesnt need

franchise because it wont operate LRT3 under BLT

schemed.

Teresa Electric & Power v. PSC

Operation of electric plant exclusively for cement

companys own use and for its EEs free of charge is not

a public utility. Local or legislative franchise not needed

before certificate of public convenience.

See Public Service Act Sec 14 for list of enterprises not

covered by definition of public service

(a) Warehouses;

(b) Vehicles drawn by animals and bancas moved by oa

or sail, and tugboats and lighters;

(c) Airships within the Philippines except as regards the

fixing of their maximum rates on freight and

passengers;(d) Radio companies except with respect to the fixing of

rates;

(e) Public services owned or operated by any

instrumentality of the National Government or by any

government-owned or controlled corporation, except

with respect to the fixing of rates.

- Not case anymore (ie radio)Nature of concession agreements

Freedom from Debt Coalition v. MWSS

MWSS (govt corp) entered into concession agreement

with private entities Maynilad and Manila Water to

privatize waterworks and sewerage system. No ruling if

MWSS is a public utility; concessionaires are agents/

contractors.

- Concessionaires = public utilitiesII. Constitutional Provisions

See Consti Art XII Sec 6, 11, 17, 18, 19

Section 6. The use of property bears a social functionand all economic agents shall contribute to the common

good. Individuals and private groups, including

corporations, cooperatives, and similar collective

organizations, shall have the right to own, establish, and

operate economic enterprises, subject to the duty of

the State to promote distributive justice and to

intervene when the common good so demands.

Section 11. No franchise, certificate, or any other form

of authorization for the operation of a public utility shal

be granted except to citizens of the Philippines or to

corporations or associations organized under the lawsof the Philippines, at least sixty per centum of whose

capital is owned by such citizens; nor shall such

franchise, certificate, or authorization be exclusive in

character or for a longer period than fifty years. Neithe

shall any such franchise or right be granted except

under the condition that it shall be subject to

amendment, alteration, or repeal by the Congress when

the common good so requires. The State shal

encourage equity participation in public utilities by the

general public. The participation of foreign investors in


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the governing body of any public utility enterprise shall

be limited to their proportionate share in its capital, and

all the executive and managing officers of such

corporation or association must be citizens of the

Philippines.

Section 17. In times of national emergency, when the

public interest so requires, the State may, during the

emergency and under reasonable terms prescribed by

it, temporarily take over or direct the operation of anyprivately-owned public utility or business affected with

public interest.

Section 18. The State may, in the interest of national

welfare or defense, establish and operate vital

industries and, upon payment of just compensation,

transfer to public ownership utilities and other private

enterprises to be operated by the Government.

Section 19. The State shall regulate or prohibit

monopolies when the public interest so requires. No

combinations in restraint of trade or unfair competition

shall be allowed.

a. Ownership

Gamboa v. Teves (2011)

Capital in Art XII Sec 11 refers only to shares of stock

that can vote in election of directors. Full beneficial

ownership and voting rights must be 60% Filipino in

public utilities.

Gamboa v. Teves (2012)

60% Filipino refers to voting control and beneficial

ownership. Thus 60% must apply separately to eachclass of shares (ie. 60% Pinoy common, 60% Pinoy

preferred)

-Relate to Public Service Act Sec 16(a) and 20(i)

Section 16. Proceedings of the Commission, upon notice

and hearing. - The Commission shall have power, upon

proper notice and hearing in accordance with the rules

and provisions of this Act, subject to the limitations and

exceptions mentioned and saving provisions to the

contrary :

(a) To issue certificates which shall be known ascertificates of public convenience, authorizing the

operation of public service within the Philippines

whenever the Commission finds 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. Provided, That thereafter,

certificates of public convenience and certificates of

public convenience and necessity will be granted only to

citizens of the Philippines or of the United States or to

corporations, co-partnerships, associations or joint-

stock companies constituted and organized under the

laws of the Philippines; Provided, That sixty per centum

of the stock or paid-up capital of any such corporations

co-partnership, association or joint-stock company must

belong entirely to citizens of the Philippines or of the

United States: Provided, further, That no such

certificates shall be issued for a period of more than

fifty years

Section 20. Acts requiring the approval of theCommission. - Subject to established limitations and

exceptions and saving provisions to the contrary, it shal

be unlawful for any public service or for the owner,

lessee or operator thereof, without the approval and

authorization of the Commission previously had -

(i) To sell, alienate or in any manner transfer shares of

its capital stock to any alien if the result of that sale,

alienation, or transfer in itself or in connection with

another previous sale shall be the reduction to less than

sixty per centum of the capital stock belonging to

Philippine citizens. Such sale, alienation or transfer shal

be void and of no effect and shall be sufficient cause fo

ordering the cancellation of the certificate.

b. Exclusivity

Metro Cebu Water v. Adala

Provision in Local Water District Law granting exclusive

franchise on local water districts, a public utility is

unconstitutional.

Tawang Multi-Purpose Cooperative v. La Trinidad Water

DistrictUpheld Adala case. PD 198 created indirectly exclusive

franchises by allowing BOD of local water districts and

LWUA to create exclusive franchises (prior approval to

create water districts).

c. Subject to Amendment

RCPI v. NTC

EO 546 creating NTC to replace PSC renders provisions

exempting radio companies from public utility

inapplicable/ suspended. Legislative franchise is notenough, need NTC to issue CPC.

Relate to PSA Sec 16(m) (n)






contrary :

(m) To amend, modify or revoke at any time certificate


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issued under the provisions of this Act, whenever the

facts and circumstances on the strength of which said

certificate was issued have been misrepresented or

materially changed.

(n) To suspend or revoke any certificate issued under

the provisions of this Act whenever the holder thereof

has violated or willfully and contumaciously refused to

comply with any order rule or regulation of the

Commission or any provision of this Act: Provided, Thatthe Commission, for good cause, may prior to the

hearing suspend for a period not to exceed thirty days

any certificate or the exercise of any right or authority

issued or granted under this Act by order of the

Commission, whenever such step shall in the judgment

of the Commission be necessary to avoid serious and

irreparable damage or inconvenience to the public or to

private interests.

d. Take-over Power

David v. Macapagal-Arroyo

Though President alone can declare state of national

emergency, President has no power to take over

privately owned public utilities/businesses with public

interest without authority from Congress.

Agan v. Piatco

Provision in contract for NAIA 3 giving PIATCO

reasonable compensation for duration of temporary

takeover is unconstitutional. It obligates government to

compensate PIATCO for exercise of police power.

e. Privatization of State-Operated Public Utilities

(opposite: nationalization)

Kuwait Airways v. PAL

PAL not bound by international agreement bet. RP and

Kuwait after it was privatized. Against due process and

non-impairment of contract

Notes:

Aside from regulation, state can

-operate (Art XII Sec 18)

How government can own:

1. Sale- acquires interest in private corp.2. Take-over (but not ownership)3. Enact a law

Government operated public utilities: MWSS (before),

MRT, PAL (before), Water districts, PPA, PNR

Forms:

1. Legislative franchise2. Administrative franchise (CPC, CPCN

FOA/STOA)

3. Contract (ex: FOA/STOA franchise)Requisites to be PU

1. Citizen2. Financially capable3. Necessity4. Capability

III. Regulation of Public Utilities

A. Authority to Operate

Albano v. Reyes

Congress delegated to PPA power to operate/ contract

out operation of Manila port. Legislative franchise not

necessary for private company to operate

PLDT v. NTC

NTC can grant ETCI provisional authority to operate

cellphone system and can mandate PLDT to

interconnect with competitor. Intervention with

property right is to ensure public access to widest area

Francisco v. Toll Regulatory Board

Franchises may also be granted by administrative

agencies. Upon expiration of PNCCs legislative

franchise, authority to construct tolls will be

administrative franchises from Toll Regulatory Board.- there are still provisions in PNCC Charter still effective

after expiration (i.e. assets turned over government

holds it as trustee)

Napocor v. CA

PIA is a public utility. CPCN not needed for direct power

connection from NPC. But authority to determine if

private franchise holder (CEPALCO) or NPC should

supply PIA with electric power vested with DOE (non

rate fixing function)

Relate to Public Service Act Sec 16(a), Sec 18






contrary :

(a) To issue certificates which shall be known as

certificates of public convenience, authorizing the

operation of public service within the Philippines


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whenever the Commission finds 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. Provided, That thereafter,

certificates of public convenience and certificates of

public convenience and necessity will be granted only to

citizens of the Philippines or of the United States or to

corporations, co-partnerships, associations or joint-

stock companies constituted and organized under thelaws of the Philippines; Provided, That sixty per centum

of the stock or paid-up capital of any such corporations,

co-partnership, association or joint-stock company must

belong entirely to citizens of the Philippines or of the

United States: Provided, further, That no such

certificates shall be issued for a period of more than

fifty years.

Section 18. It shall be unlawful for any individual, co-

partnership, association, corporation or joint-stock

company, their lessees, trustees or receivers appointed

by any court whatsoever, or any municipality, province,

or other department of the Government of the

Philippines to engage in any public service business

without having first secured from the Commission a

certificate of public convenience or certificate of public

convenience and necessity as provided for in this Act,

except grantees of legislative franchises expressly

exempting such grantees from the requirement of

securing a certificate from this Commission as well as

concerns at present existing expressly exempted from

the jurisdiction of the Commission, either totally or in

part, by the provisions of section thirteen of this Act.

i. General Qualifications

Vda. De Lat v. PSC

Requisites for CPCN: 1) Citizen/ corp. organized in Phils

60% stock belong to Phil. 2) Financially capable 3) Public

utility will promote public interest in proper and

suitable manner


To grant CPC: public convenience and necessity.

Proposed facility meets reasonable want of public andsupply need which existing facilities dont adequately

supply.

ii. Revocation or Cancellation

Divinagracia v. Consolidated Broadcasting System

NTC no power to cancel CPCs it issued to legislative

franchises of radio. Not covered by PSC because its

radio. EO 546 didnt grant NTC power. Power to revoke

will inhibit free press and must be subject to strict

scrutiny/ compelling state interest. Proper remedy: quo

warranto (cant collaterally attack)

- Quo warranto not only remedy- depends onpower granted to admin agency

Relate to PSA Sec 16 (m), supra.

iii. CPC v. CPCN

Traditional difference:

CPCN CPC

For PU that needs

legislative franchise

For PUs that dont

legislative franchise

See Public Service Act Sec 15

Section 15. With the exception of those enumerated in

the preceding section, no public service shall operate in

the Philippines without possessing a valid and subsisting

certificate from the Public Service Commission known

as "certificate of public convenience," or "certificate of

public convenience and necessity," as the case may be

to the effect that the operation of said service and the

authorization to do business will promote the public

interests in a proper and suitable manner.

The Commission may prescribe as a condition for the

issuance of the certificate provided in the preceding

paragraph that the service can be acquired by the

Republic of the Philippines or any instrumentality

thereof upon payment of the cost price of its usefu

equipment, less reasonable depreciation; and likewise

that the certificate shall be valid only for a definite

period of time; and that the violation of any of theseconditions shall produce the immediate cancellation of

the certificate without the necessity of any express

action on the part of the Commission.

In estimating the depreciation, the effect of the use of

the equipment, its actual condition, the age of the

model, or other circumstances affecting its value in the

market shall be taken into consideration.

The foregoing is likewise applicable to any extension or

amendment of certificates actually in force and to those

which may hereafter be issued, to permit to modify

itineraries and time schedules of public services, and toauthorizations to renew and increase equipment and

properties.

PAL v. CAB (1997)

Necessity in CPC doesnt modify nature o

certification. It is the law which determines requisites of

the title.

-abolished difference bet. CPC and CPCN

-gleaned Congress intent no legislative franchise

needed


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RA9183 and RA 9517 (2003) Congress still has intent

to require legislative franchise

B. Rate Fixing

See Public Service Act Secs 16 (c) and 20(a)


and hearingc) To fix and determine individual or joint rates, tolls,

charges, classifications, or schedules thereof, as well as

commutation, mileage, kilometrage, and other special

rates which shall be imposed observed and followed

thereafter by any public service: Provided, That the

Commission may, in its discretion, approve rates

proposed by public services provisionally and without

necessity of any hearing; but it shall call a hearing

thereon within thirty 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.

Section 20. Acts requiring the approval of the

Commission. - Subject to established limitations and

exceptions and saving provisions to the contrary, it shall

be unlawful for any public service or for the owner,

lessee or operator thereof, without the approval and

authorization of the Commission previously had -

(a) To adopt, establish, fix, impose, maintain, collect orcarry into effect any individual or joint rates,

commutation, mileage or other special rate, toll, fare,

charge, classification or itinerary. 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 a

reasonable opportunity to be heard and the burden of

the proof to show that the proposed rates or

regulations are just and reasonable shall be upon the

public service proposing the same.

Rate Fixing

1) PU files pleading before regulator for increaseof rates

2) Publication and hearingGuidelines:

-Reasonable- balance: affordable and not arbitrary/

oppressive (underlying conflict)

-Inherent power to fix rates- Congress

-Reasonableness- regulatory boards quasi-judicia

functions

Padua v. Ranada

TRB can grant provisional toll rate adjustments without

hearing. Still subject to adjustment after final hearing

Republic of the Phils v. Meralco

Regulation of rates refers to police power. It must bejust and reasonable- balance investor and public 1) rate

of return- return on reasonable operating expenses 2

rate base- property used by public utility 3) return

itself/ revenue


Rate fixing must not be confiscatory (loss) and not too

high (discriminatory). Cant relinquish rate-fixing powe

to public utilities. Hearing before regulatory board

necessary.

Francisco v. Toll Regulatory Board

Initial toll rates (no hearing needed) v. Subsequent tol

rate adjustment (hearing and publication)

C. Approval of Sales of Public Utility Assets or Equity

Public Service Act Sec 20 (g), (h) and (i)

Section 20. Acts requiring the approval of the

Commission.

g) To sell, alienate, mortgage, encumber or lease its

property, franchises, certificates, privileges, or rights orany part thereof; or merge or consolidate its property,

franchises privileges or rights, or any part thereof, with

those of any other public service. The approval herein

required shall be given, after notice to the public and

hearing the persons interested at a public hearing, if it

be shown that there are just and reasonable grounds

for making the mortgaged or encumbrance, fo

liabilities of more than one year maturity, or the sale,

alienation, lease, merger, or consolidation to be

approved, and that the same are not detrimental to the

public interest, and in case of a sale, the date on whichthe same is to be consummated shall be fixed in the

order of approval: Provided, however, that nothing

herein contained shall be construed to prevent the

transaction from being negotiated or completed before

its approval or to prevent the sale, alienation, or lease

by any public service of any of its property in the

ordinary course of its business.

(h) To sell or register in its books the transfer or sale o

shares of its capital stock, if the result of that sale in

itself or in connection with another previous sale, shal


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be to vest in the transferee more than forty per centum

of the subscribed capital of said public service. Any

transfer made in violation of this provision shall be void

and of no effect and shall not be registered in the books

of the public service corporation. Nothing herein

contained shall be construed to prevent the holding of

shares lawfully acquired. (As amended by Com. Act No.

454.)

(i) To sell, alienate or in any manner transfer shares ofits capital stock to any alien if the result of that sale,

alienation, or transfer in itself or in connection with

another previous sale shall be the reduction to less than

sixty per centum of the capital stock belonging to

Philippine citizens. Such sale, alienation or transfer shall

be void and of no effect and shall be sufficient cause for

ordering the cancellation of the certificate.

Approval of sale of PU- needs prior approval from PSC

Rationale: public interest, public right to presume

rgistered owner liable

20(h)- transfer >40% of stock

rationale: controlling interest

Y Transit v. NLRC

Montoya v. Ignacio

Lease of jeepney without approval of PSC is void. Lessor

still its operator and liable for torts even if the lessee

committed it.

Perez v. Gutierrez

Sale without PSC approval is void and not binding onpublic. Registered owner directly liable to passenger for

torts but can recover from transferee.

PLDT v. NTC

Transfer of shares of more than 40% capital requires

NTC approval while transfer of franchise requires

Congress approval. In the CAB: transfer of shares

approved by NTC

D. Power to set fees and other charges

Republic v. International Communications Corp.

NTC with power to collect permit fee to issue CPCN

even if RA 7921 doesnt include authorization

expenses. However it cant be exorbitant.

E. Other means of regulation

See Sec 16 and 20

PLDT v. NTC

Interconnection is a valid exercise of police power. Its a

valid intervention with property right.

Napocor v. CA

Non-rate fixing functions of ERB transferred to Dept. of

Energy. Determination of which 2 public utilities should

supply electric power to an area lies with the Dept. of

Energy, not supplier of power.-Napocor is not a public utility = just supplier

PART TWO: TRANSPORTATION LAW

I. General Discussion

1. Definition

Transportation- person/ association of persons obligate

themselves to transport persons, thing, news from one

place to another

-email is not transpo- something physical being

transported

2. Relationship to a public utility- certain modes of

transportation are public utilities

3. Nature of a Franchise

Usual franchises

CPC-water, land

CPCN- air

Franchise= privilege (govt can grant, revoke)

Franchise owners with proprietary rights over them

Raymundo v. Luneta Motor

CPC is in the nature of a limited franchise. CPC is

property which can be subject to attachment (w/

beneficial interest, can be sold for value)

Cogeo-Cubao Operator and Driver Association v. CA

CPC is property in the broad sense. For state: doesntconfer proprietary right/ interest/ franchise in the route

covered. For third person: property represents right to

operate facilities for public service. Covered by due

process. Labor union violated right of corp. with CPC in

taking over operations without PSC authorization.

Y Transit Co. v. NLRC

Franchise is personal in nature. Any transfer or lease

needs BOT approval. Sale of buses without BOT

approval is ineffective insofar as third persons. Court


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can still levy on buses to satisfy sellers liability

notwithstanding transfer.

4. Scope of a Franchise

San Pablo v. Pantranco

CPC as bus transportation cant be amended to include

water service. Not a private ferry thats a continuation

of highway but a coastwise/ interisland shipping servicethats a common carrier.

5. Prior-operator rule

Rationale: prevent ruinous competition (for public-

decrease price, decrease quality and safety)

Protect investments of operator

Is this monopoly? But State can regulate to curb evil of

monopoly

Rationale of prior operator rule v. exclusivity

-dont grant exclusivity, just preference

Batangas Transportation v. Orlanes

Denied license to Orlanes because Batangas Transpo

was the first in the field. So long as first licensee keeps

conditions of license and meets demands of public, it

has vested and preferential right over later licensee.

6. Kabit System

-Contrary to public policy (Art 1409 NCC) not illegal per

se

Kabit v. Unregistered sale

1. There is registration2. Liability to public: unregistered and kabit- same3. Treatment of contract

Kabit= contrary to public policy, void

Unregisted transfer= valid between parties

Teja v. IAC

Kabit system- person granted certificate of public

convenience allows another person who owns motor

vehicles to operate under franchise for a fee. Notcriminal but void for being against public policy. Sale

under kabit = in pari delicto and neither can recover.

Santos v. Sibug

Kabit cant defeat levy on vehicle after it was registered

in operators name and assert his ownership. Had kabit

been impleaded in original case, hed be solidarily liable.

Lita Enterprises v. Second Civil Cases Division

Kabit system is void for being against public policy. It is

an abuse of special privilege of CPC. In pari delicto

applies. Kabit cant ask for reconveyance and operato

cant ask for money.

Lim v. Ca

Kabit can recover damages from accident caused bythird person. Thrust of the law in enjoining kabit is to

identify the person liable in accident and protect public

inapplicable in the CAB. 1) Neither of parties in kabit are

being held liable 2) Public not affected 3) No

misrepresentation of ownership

Baliwag Transit v. CA

Possession of franchise to operate negates existence of

kabit system even if one SSS ID No. and similar firm

names.

7. Private nature; rights and obligation of parties inter

se arising from transactions relating to transportation

Private vehicle

1. Not for public use2. Private vehicle3. Not for hire

a. Absent a transportation contract

Lara v. Valencia

Owner and driver only owe duty to exercise reasonablecare to accommodation passengers/ invited guests

They were paid nothing for service.

b. Liability of registered owner

PCI Leasing v. UCPB General Insurance

Registered owner of vehicle driven by negligent driver

still liable if transferred to third person and

unregistered transfer. Even if not common carriers

Public Service Act inapplicable but compulsory motor

vehicle registration (RA 4136) and liabilities oemployers for quasi-delict in NCC apply to protect

public.

II. Regulation of the Transportation Industry

(inherent to legislature)

Notes on regulation:

-not all regulatory powers delegated to administrative

agencies (ex: Water utilities- granted legislative


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franchise despite LUWA, but agencies can regulate

without Congress intervention)

No legislative franchise

needed

Legislative franchise

needed

LTFRB CAB (debatable), licensing

of air carriers, Electricity

Line agencies Attached agenciesUnder direct control and

supervision of DOTC

DOTC cant revoke/

amend decision

LTO, LTFRB CAA, CAAB, MARINA

1. DOTC

a. Air

(i) Civil Aviation Authority of the Phils (CAA)

1. Issue airmans certificate (pilot)

2. Registration of aircraft

3. Jurisdiction over airport4. Flying schools, private planes

(ii) Civil Aeronautics Board (CAB)

-economic aspect

1. Rate-fixing

2. Licensing

Rationale provisional license: urgency (long process of

licensing)

PAL v. CAB

CAB can grant provisional authority to operate or

temporary permit before granting CPCN

PAL v. CAB

CAB can issue a CPCN/ temporary operating permit to

domestic air transporter without legislative franchise

but meets all requirements.

Kuwait Airways v. PAL

CAB with power to compel PAL to terminate

commercial agreement with Kuwait Air because of CMU

(Intl. Agreement with Kuwait). But CAB failed to

exercise such regulatory authority.

b. Land

(i) Land Transportation Office (LTO)

-private (not exclusive licensing of drivers, license

plates)

(ii) Land Transportation Franchising and Regulatory

Board (LTFRB)

-public utilities

-CPC, CPCN, rates, routes

-Why are land transportation regulators line agencies?

Direct control and supervision of DOTC, land

transportation must be regulated more: safety


LTFRB is the regulatory body charged by the Legislature

with power to fix rates for land transportation of

motorized vehicles. It cant delegate that power.

c. Water

(i) Maritime Industry Authority (MARINA)

1. CPCN

2. Registration of vessels

3. Deregulation- no more rate fixing

*Doesnt have jurisdiction over state maritime facilitie

unlike CAAP PPA with jurisdiction

Other Regulators: (Report)

1. Power

Power generation not public utilities (EPIRA law)

-Why? Sell power wholesale, clientele are

distributors

Power distribution- public utility

Power supply- not public utility

2. Water

Who regulates? LUWRB

Water Resource Regulator- all waters belong to the

state

a. Resource regulation- not limited to publicutilities (ex. Farming), water permits

b. Economic regulation- using water as abusiness (ex. Water distributors)

How does LUWRB regulate economic aspect:

-guidelines to creation

-appellate body

-grant permits

-rate-fixing

License to oprate: CPC, issued by LWRB

LUWA- authorizes creation of water utilities

(water district)- LGC

MWSS used to be operator, later became regulator

3. Railroad

-DOTC can authorize railroad operation without

legislative franchise can issue CPC

-not operated by State: Northrail

4. Ports

PPA- not a public utility

-regulator and operator of ports


10/46

III. Common Carriers

A. In General

1. Definition, essential elements Art 1732 NCC

Art 1732. Common carriers are persons, corporations,

firms or associations engaged in the business of carrying

or transporting passengers or goods or both, by land,

water, or air, for compensation, offering their servicesto the public.

Common carrier:

1. Engaged in business of carrying/transportinggoods/ passengers

2. Land, water/ air3. For compensation4. Offered to public

No distinction:

1. Principal/ ancillary2. Regular/ schedule/ occasional (frequency)3. Public/ narrow segment (market)

How to hold self out as CC? advertising for hire

NCC on common carriers = form of public utility

regulation (cf. rate-fixing and licensing)

1. Liability2. Quality of service

US v. Tan Piaco

Public use- open to indefinite public, public may enjoy it

by right. Look at mode of doing business, public interest

not enough. CAB: special contract to transport not

public utility-not good law per De Guzman

Home Insurance Co. v. American Steamship

Common carrier carrying special cargo/ chartered to

special person is private carrier. Stipulation exempting

owner from liability for negligence of agent is void.

De Guzman v. CA

Common carrier (Art 1732 NCC) partially supplemented

by public service (CA 1416) common carrier though

ancillary activity/ sideline, narrow segment ofpopulation and occasional. CAB: load truck with cargo

from different merchants Manila- Pangasinan, primarily

scrap dealer

Bascos v. CA

Test if cc: undertaking is part of business engaged in by

carrier which he held out to public as his occupation.

Not quantity/ extent of business. CAB: admitted in

trucking business. Not contract of lease.

Planters Products Inc. v. CA

Shipowner is public/ common carrier despite charter of

vessel if charter limited to ship only. Charter doesn

cover crew and shipowner retains control over them.

*NOTE: Trend less strict in terms of classifying CCs

Tan Piaco De Guzman Bascos Planters Products

Fabre v. CADont have to be in business of public transportation to

be common carrier. Can be ancillary per De Guzman

CAB: School bus hired for out of town.

First Philippine Industrial Corp. v CA

Common carrier holds self out to public as engaged in

the business of transporting persons/ property for

compensation offering services to public generally.

Test: 1) Engaged in business of carrying goods/ holds

self out ready to public 2) Goods to kind which business

confined 3) Method business conducted 4) For hire

CAB: pipeline concessionaire is a common carrier

- Pipeline is common carrier for tax purposeunsure for NCC purposes

Asia Lighterage and Shipping v. CA

Cited De Guzman and Bascos. Petitioner is a common

carrier- principal business is shipping and lighterage

offers barges to public to transport goods by water fo

compensation, despite limited clientele

Crisostomo v. CA

Travel agent is not a common carrier. Extraordinarydiligence is not required. Ordinary contract of services

(cf. Object of contract of carriage is transportation)

Loadstar Shipping v. CA

Vessel is a common carrier even if carrying cargo fo

one shipper and even carrying passengers. Home

Insurance is not applicable and no undertaking to carry

special cargo/ special person no charter party

2. Nature of Business; power of State to regulate Art

1765Article 1765. The Public Service Commission may, on its

own motion or on petition of any interested party, afte

due hearing, cancel the certificate of public convenience

granted to any common carrier that repeatedly fails to

comply with his or its duty to observe extraordinary

diligence as prescribed in this Section.


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Pantranco v. PSC

PSCs power to amend/ revoke CPC subject to grantees

right to a hearing (present case and tribunal consider

evidence)

3. Nature and Basis of Liability

Art 1733

Article 1733. Common carriers, from the nature of their

business and for reasons of public policy, are bound toobserve extraordinary diligence in the vigilance over the

goods and for the safety of the passengers transported

by them, according to all the circumstances of each

case.

Cangco v. MRR

Liability for breach of contract of carriage- direct and

immediate. Employer directly liable for negligence of

employees. Just prove contract and non-performance

(cf QD-ER presumptive liability for negligence of EEs,

rebut by diligence selection and supervision)

Isaac v. A.L. Ammen

Liability of common carrier (per NCC) 1) Liability

contractual, failure to exert extraordinary diligence

amounts to breach 2) Carry passenger with utmost

diligence of very cautious person 3) CC presumed at

fault in case of death/ injury to passenger 4) Not insurer

against all risks

Fores v. Miranda

Gen: No moral damages for breach of contract unless

CC guilty of malice/ bad faithX: Death of passenger (Art 1764)

Phil. Rabbit v. IAC

Breach of contract: Upon death/ injury CC presumed

liable (X: Extraordinary diligence/ fortuitous event).

Driver not solidarily liable with CC 1) Contract between

carrier and passenger and cc liable even if negligence of

driver 2) cc can recover whole amount paid not just

share in solidary obligation

LRTA v. NavidadCC bound by utmost diligence so long as passenger in

premises in pursuance of contract of carriage. CC still

liable for acts of independent contractor solidary

liability

Sarkies Tours Phils Inc. v. CA

CC liable for loss of goods. Must exercise extraordinary

diligence from the time unconditionally placed in

possession until delivered actually or constructively to

person with right thereto.

4. Classes of common carriers

Art 1732, 1733, 1755

Article 1732. Common carriers are persons

corporations, firms or associations engaged in the

business of carrying or transporting passengers or

goods or both, by land, water, or air, for compensation

offering their services to the public.

Article 1733. Common carriers, from the nature of theirbusiness and for reasons of public policy, are bound to

observe extraordinary diligence in the vigilance over the



case.

Such extraordinary diligence in the vigilance over the

goods is further expressed in articles 1734, 1735, and

1745, Nos. 5, 6, and 7, while the extraordinary diligence

for the safety of the passengers is further set forth in

articles 1755 and 1756.

Article 1755. A common carrier is bound to carry the

passengers safely as far as human care and foresight

can provide, using the utmost diligence of very cautious

persons, with a due regard for all the circumstances.

5. Law Applicable

Art 1766, 1753

Article 1766. In all matters not regulated by this Code,

the rights and obligations of common carriers shall be

governed by the Code of Commerce and by special laws

Article 1753. 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 ordeterioration.

National Devt. Co. v. CA

Law of country where goods are to be transported

governs liability of CC. Goods to be transported to Phils

though ships collided in Japan, Phil. law governs. Code

of Commerce specifically regulates collision (not

NCC/COGSA), carrier liable for negligence/ fault of

captain.

B. Common Carriage of Goods

1. Liability and presumption of negligence

Art 1733, 1734, 1735


business and for reasons of public policy, are bound to




case.

Such extraordinary diligence in the vigilance over the


12/46

goods is further expressed in articles 1734, 1735, and

1745, Nos. 5, 6, and 7, while the extraordinary diligence

for the safety of the passengers is further set forth in

articles 1755 and 1756.

Article 1734. Common carriers are responsible for the

loss, destruction, or deterioration of the goods, unless

the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural

disaster or calamity;(2) Act of the public enemy in war, whether

international or civil;

(3) Act 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) Order or act of competent public authority.

Article 1735. In all cases other than those mentioned in

Nos. 1, 2, 3, 4, and 5 of the preceding article, if the

goods are lost, destroyed or deteriorated, common

carriers are presumed to have been at fault or to have

acted negligently, unless they prove that they observed

extraordinary diligence as required in article 1733.

Ynchausti Steamship Co. v. Dexter

Proof of delivery of goods to carrier in good order and

arrival at destination in bad order is prima facie case

against carrier. CC must prove that loss is due to

accident/ not liable.

Mirasol v. Dollar

Goods delivered in ship in good order and shipowner

delivers to shipper in bad order- upon shipowner toprove goods were damaged by fact which exempts him

from liability. CAB: defendant admits goods damaged in

his possession in transit, he has burden of proof to show

exemption. Damage by sea water not evidence of force

majeure

2. Exemption from liability

(a) Natural disaster

Article 1734. Common carriers are responsible for the

loss, destruction, or deterioration of the goods, unlessthe same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural

disaster or calamity;

Article 1739. In order that the common carrier may be

exempted from responsibility, the natural disaster must

have been the proximate and only cause of the loss.

However, the common carrier must exercise due

diligence to prevent or minimize loss before, during and

after the occurrence of flood, storm or other natural

disaster in order that the common carrier may be

exempted from liability for the loss, destruction, o

deterioration of the goods. The same duty is incumbent

upon the common carrier in case of an act of the public

enemy referred to in article 1734, No. 2.

Article 1740. If the common carrier negligently incurs in

delay in transporting the goods, a natural disaster shal

not free such carrier from responsibility.

ARTICLE 361, Code of Commerce. The merchandise

shall be transported at the risk and venture of theshipper, if the contrary has not been expressly

stipulated. As a consequence, all the losses and

deterioration which the goods may suffer during the

transportation by reason of fortuitous event

force majeure, or the inherent nature and defect of the

goods, shall be for the account and risk of the shipper

Proof of these accidents is incumbent upon the carrier.

Tan Chiong v. Inchausti

Per Art 361 Code of Commerce, damage of goods in

transportation due to accident, force majeure, natura

defect of articles- for account of shipper. Carrier exempt

if it proves force majeure and that its not its

negligence/ fault.

Martini v. Macondray

Shipper who consented to goods carried on deck takes

risk upon self. Carrier is not liable for damage due to

danger at sea when goods placed on deck.

Eastern Shipping v. IAC

Fire not natural disaster/ calamity per Art 1734 NCC

Usually caused by man. Even if natural disaster, must beproximate and only cause of loss and CC exercised due

diligence to minimize/ prevent loss to exempt CC.

Asia Lighterage v. CA

CC failed to prove typhoon was the proximate and only

cause of loss. Chain of events over several days, barge

sank and hole patched before it continued voyage.

(b) Act of public enemy

Art 1734 (2) Act of the public enemy in war, whethe

international or civil;Article 1739. In order that the common carrier may be


have been the proximate and only cause of the loss

However, the common carrier must exercise due

diligence to prevent or minimize loss before, during and

after the occurrence of flood, storm or other natura


exempted from liability for the loss, destruction, o




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(c) Act or omission of shipper

Art 1734 (3) Act or omission of the shipper or owner of

the goods;

Article 1739. In order that the common carrier may be


have been the proximate and only cause of the loss.

However, the common carrier must exercise duediligence to prevent or minimize loss before, during and

after the occurrence of flood, storm or other natural


exempted from liability for the loss, destruction, or




(d) Character of goods, etc

Art 1734(4) The character of the goods or defects in the

packing or in the containers;Article 1742. Even if the loss, destruction, or

deterioration of the goods should be caused by the

character of the goods, or the faulty nature of the

packing or of the containers, the common carrier must

exercise due diligence to forestall or lessen the loss.

ARTICLE 366, COC. Within the twenty-four hours

following the receipt of the merchandise, the claim

against the carrier for damage or average be found

therein upon opening the packages, may be made,

provided that the indications of the damage or average

which gives rise to the claim cannot be ascertained from

the outside part of such packages, in which case theclaim shall be admitted only at the time of receipt.

Government v. Ynchausti

Carrier was able to prove: damage goods because of

nature/ defect of articles (brittle tiles, no packaging).

Consignee/ shipper failed to prove CCs negligence.

Southern Lines v. CA

If improper packaging known to carrier/ apparent and

CC receives it, CC not relieved of liability for loss. Action

for refund of amount paid in excess of delivery and notfor damages- 24 hr rule in Art 366 doesnt apply.

(e) Order of competent authority

Art 1734 (5) Order or act of competent public authority.

Article 1743. If through the order of public authority the

goods are seized or destroyed, the common carrier is

not responsible, provided said public authority had

power to issue the order.

Ganzon v. CA

CC not exempt from liability despite Acting Mayors

command to dump goods. Failed to show he had power

to issue order/ it was lawful/ issued under legal process

Acting Mayor had no valid authority.

3. Duration of Extraordinary Responsibility

Art 1736-1738

Article 1736. The extraordinary responsibility of thecommon carrier lasts from the time the goods are

unconditionally placed in the possession of, and

received by the carrier for transportation until the same

are delivered, actually or constructively, by the carrier

to the consignee, or to the person who has a right to

receive them, without prejudice to the provisions of

article 1738.

Article 1737. The common carrier's duty to observe

extraordinary diligence over the goods remains in ful

force and effect even when they are temporarily

unloaded or stored in transit, unless the shipper or

owner has made use of the right of stoppage in transitu.

Article 1738. The extraordinary liability of the common

carrier continues to be operative even during the time

the goods are stored in a warehouse of the carrier at

the place of destination, until the consignee has been

advised of the arrival of the goods and has had

reasonable opportunity thereafter to remove them o

otherwise dispose of them.

Compania Maritima v. Insurance Company

Complete contract of carriage: Shipper deliver cargo to

CC who took possession by placing it on a lightemanned by its EE. Contract commenced on actua

delivery/ receipt by authorized agent of CC. Bill of lading

unncesessary

Lu Do v. Biamira

CC not liable for goods with arrastre operator because

parties limited liability of CC through agreement: CC not

liable when goods in custody of customs. CC loses

control over goods

APL v. KlepperCC liable for goods that fell while being unloaded from

ship. Extraordinary liability lasts until goods are

delivered actually or constructively to consignee/

person with right to receive.

Samar Mining Co. v. Nordeutscher Lloyd

CC not liable. Valid stipulation in bill of lading exempting

carrier from liability for loss/ damage to goods not in his

custody. From transshipment, not carrier anymore


14/46

agent of consignee. From actual delivery in Manila,

became agent of consignee.

Eastern Shipping v. CA

Carrier, arrastre and broker solidarily liable for goods

damaged while in their successive custody. CC liable-

extraordinary diligence til goods delivered.

4. Agreement Limiting Liability

(a) As to diligence required

Art 1744, 1745, 1751

Article 1744. A stipulation between the common carrier

and the shipper or owner limiting the liability of the

former for the loss, destruction, or deterioration of the

goods to a degree less than extraordinary diligence shall

be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than

the service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

Article 1745. Any of the following or similar stipulations

shall be considered unreasonable, unjust and contrary

to public policy:

(1) That the goods are transported at the risk of the

owner or 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, orof a man of ordinary prudence in the vigilance over the

movables transported;

(5) That the common carrier shall not be responsible for

the acts or omission of his or its employees;

(6) That the common carrier's liability for acts

committed by thieves, or of robbers who do not act

with grave or irresistible threat, violence or force, is

dispensed with or diminished;

(7) That the common carrier is not responsible for the

loss, destruction, or deterioration of goods on account

of the defective condition of the car, vehicle, ship,airplane or other equipment used in the contract of

carriage.

Article 1751. The fact that the common carrier has no

competitor along the line or route, or a part thereof, to

which the contract refers shall be 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.

(b) As to amount of liability

Art 1749, 1750

Article 1749. A stipulation that the common carrier's

liability is limited to the value of the goods appearing in

the bill of lading, unless the shipper or owner declares a

greater value, is binding.

Article 1750. A contract fixing the sum that may be

recovered. by the owner or shipper for the loss

destruction, or deterioration of the goods is valid, if it is

reasonable and just under the circumstances, and hasbeen fairly and freely agreed upon.

Heacock v. Macondray

Stipulation in bill of lading: 1) Exempting carrier from

any liability caused by negligence 2) Unqualified

limitation of liability to agreed valuation 3) Limiting

liability to agreed valuation unless shipper declares

higher value and pays higher rate of freight

1 & 2: void, 3 (CAB): valid; CC gives shipper choice

between 2 rates, lower one conditioned on agreeing to

stipulated valuation of property in case of loss even by

negligence

Why? Protect CC and estoppel

Shewaram v. PAL

Pecuniary liability of CC may be limited to fixed amount

by contract if reasonable and justly, fairly and freely

agreed upon. CAB: Not fairly agreed because stipulation

in ticket stub written at the back in small letters.

Ong Yiu v. CA

Stipulation at back of plane ticket limiting liability of CC

for lost baggage is valid. Pet didnt claim higher value ofluggage/ pay additional charge. Though passenge

didnt sign ticket, bound by contract of adshesion

regardless of lack of knowledge/ assent/

Pan Am v. IAC

Upheld Ong Yiu. Stipulation limiting liability valid

Shewaram inapplicable because print not small and is a

failry agreed contract. Warsaw Convention is not

against public policy.

Cathay Pacific v. CAThough Warsaw Convention has force of law in the

Philippines (treaty), not exclusive enumeration/

absolute limit of CC. Liability for breach of contract in

NCC and other law still apply.

(c) As to delay in delivery

Maersk Line v. CA

CC liable. Stipulation in bill of lading exempting CC from

any delay in delivery void. Absurd situation: leaving date


15/46

of arrival to will of CC. Delivery must be made within

reasonable time in absence of stipulation.

(d) Factor affecting agreement

Art 1746, 1747, 1748, 1751, 1752

Article 1746. An agreement limiting the common

carrier's liability may be annulled by the shipper or

owner if the common carrier refused to carry the goods

unless the former agreed to such stipulation.Article 1747. If the common carrier, without just cause,

delays the transportation of the goods or changes the

stipulated or usual route, the contract limiting the

common carrier's liability cannot be availed of in case of

the loss, destruction, or deterioration of the goods.

Article 1748. An agreement limiting the common

carrier's liability for delay on account of strikes or riots

is valid.

Article 1751. The fact that the common carrier has no

competitor along the line or route, or a part thereof, to

which the contract refers shall be 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.

Article 1752. Even when there is an agreement limiting

the liability of the common carrier in the vigilance over

the goods, the common carrier is disputably presumed

to have been negligent in case of their loss, destruction

or deterioration.

5. Applicable Law in Foreign Trade

Article 1753. The law of the country to which the goods

are to be transported shall govern the liability of thecommon carrier for their loss, destruction or

deterioration.

6. Rules on Passenger Baggage

Art 1754, 1998, 2000 to 2003

Article 1754. The provisions of articles 1733 to 1753

shall apply to the passenger's baggage which is not in

his personal custody or in that of his employee. As to

other baggage, the rules in articles 1998 and 2000 to

2003 concerning the responsibility of hotel-keepers

shall be applicable.Article 1998. The deposit of effects made by travellers

in hotels or inns shall also be regarded as necessary. The

keepers of hotels or inns shall be responsible for them

as depositaries, provided that notice was given to them,

or to their employees, of the effects brought by the

guests and that, on the part of the latter, they take the

precautions which said hotel-keepers or their

substitutes advised relative to the care and vigilance of

their effects.

Article 2000. The responsibility referred to in the two

preceding articles shall include the loss of, or injury to

the personal property of the guests caused by the

servants or employees of the keepers of hotels or inns

as well as strangers; but not that which may proceed

from any force majeure. The fact that travellers are

constrained to rely on the vigilance of the keeper of the

hotels or inns shall be considered in determining the

degree of care required of him. (1784a)

Article 2001. The act of a thief or robber, who hasentered the hotel is not deemed force majeure, unless

it is done with the use of arms or through an irresistible

force. (n)

Article 2002. The hotel-keeper is not liable fo

compensation if the loss is due to the acts of the guest

his family, servants or visitors, or if the loss arises from

the character of the things brought into the hotel. (n)

Article 2003. The hotel-keeper cannot free himself from

responsibility by posting notices to the effect that he is

not liable for the articles brought by the guest. Any

stipulation between the hotel-keeper and the guest

whereby the responsibility of the former as set forth in

articles 1998 to 2001 is suppressed or diminished shal

be void.

Checked-in baggage: common carriers

Handcarried: law on deposit (ordinary diligence)

CC liable for defects in parts defects apparent

discoverable

Notes:

Defenses of CC in carrige of goods:1. Not a common carrier

2. Outside duration

3. No contract

4. Goods not to be transported to Phils

5. Art 1734 exemption

6. Stipulations limiting liability amount/

diligence required

Hierarchy of laws:

1. NCC on Common Carriers

2. Code of Commerce3. Special Laws

C. Common Carriage of Passengers

1. Nature and extent of responsibility

Art 1733, 1755


business and for reasons of public policy, are bound to




16/46


case.

Article 1755. A common carrier is bound to carry the

passengers safely as far as human care and foresight

can provide, using the utmost diligence of very cautious

persons, with a due regard for all the circumstances.

Isaac v. AL Amnen Trans. Co.

CC not liable. Observed ED/ utmost diligence of verycautious person in avoiding collision. Failure to observe

same care of prudent man in sudden emergency not

held to same degree of care. Contributory negligence of

passenger in sticking out arm.

Landingin v. Pantranco

CC liable jumping passengers. Failed to observe utmost

diligence of very cautious persons with due regard for

all circumstances. Defect in cross-joint not fortuitous.

Though inspected cross-joint before travel, CC didnt

give regard for all circumstances (i.e. heavy load,

traverse mountain)

Landicho v. BTCo.

CC not insurer against all risks, good source of stipend

for family. It is enough to see passenger place self inside

carefully.

Necesito v. Paras

CC liable for flaws in equipment if discoverable.

Periodical visual inspection of steering knuckle doesnt

measure up to standard of utmost diligence of very

cautious persons as far as human care and foresight canprovide.

PAL v. CA

CC liable. Duty of outmost diligence is for safety of

passengers and members of crew, complement

operating carrier. PAL liable for injury of co-pilot caused

by pilot.

Sulpicio v. CA

CC liable for death of stevedores in barge. Contract of

carriage called for their presence and CC consented totheir presence.

Japan Airlines v. CA

Power to admit or not an alien into country is a

sovereign act which cant be interfered with by CC. No

breach of contract of carriage.

2. Duration of Responsibility

Cf. Art 1736 NCC (by analogy)

Article 1736. 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

are delivered, actually or constructively, by the carrier

to the consignee, or to the person who has a right to

receive them, without prejudice to the provisions of

article 1738.

Cangco v. MRRWatermelon case. Contract of carriage carries by

implication duty to carry passenger in safety and

provide means of entering and leaving trains. Plaintiff

with right to assume platform was clear, CC failed to

light platform contributory negligence.

Del Prado v. Meralco

Duty of CC to carry passengers safely extends to

persons boarding and alighting. Breach of contract cant

raise diligence of GF in selection and supervision of EEs.

La Mallorca v. CA

CC liable for death of daughter who followed dad in

getting bayong he forgot in bus. Relation of CC and

passenger doesnt cease when passenger alights a

destination but until reasonable time/ opportunity to

leave premises. Presence of girl near bus not

unreasonable.

Bataclan v. Medina

CC liable- breach of contract. Proximate cause was

overturning of bus, not fire. Negligence of driver-

speeding, shouldve known gas spilled by its smell.

Aboitiz v. CA

CC liable to passenger waiting for baggage hit by crane

Contract of carriage continues until passenger with

reasonable opportunity to leave carriers premises

Reasonable presence depends on nature of business

bulk of cargoes, customs of place, ships take longer. CC

bound to give reasonable opportunity to claim baggage.

PAL v. CA

CC failed to exercise ED in leaving passenger in airportwhere battle between govt and Muslim rebels ongoing

near. Though diversion of flight fortuitous, such didnt

terminate contract of carriage. Contract continues unti

he landed at port of destination and left premises.

3. Presumption of Negligence

Article 1756. In case of death of or injuries to

passengers, common carriers are presumed to have

been at fault or to have acted negligently, unless they

prove that they observed extraordinary diligence as


17/46

prescribed in articles 1733 and 1755.

4. Force Majuere

Art 1174 NCC- Except in cases expressly specified by the

law, or when it is otherwise declared by stipulation, or

when the nature of the obligation requires the

assumption of risk, no person shall be responsible for

those events which could not be foreseen, or which,

though foreseen, were inevitable

Bachelor Express v. CA

CC liable. Not enough proximate cause due to force

majeure, must prove not negligent in causing injuries.

Need to prove extraordinary diligence. Stampede in bus

because passenger stabbed soldier.

Yobido v. CA

Tire blowout, though replaced recently not fortuitous

event. Human factors involved: manufacturing defect,

improperly mounted (accidents caused by defects in

auto/ negligence of driver not FE). CC also negligent-

fast, wet roads, winding road

5. Limitation of Liability; validity of stipulations

Art 1757, 1758

Article 1757. The responsibility of a common carrier for

the safety of passengers as required in articles 1733 and

1755 cannot be dispensed with or lessened by

stipulation, by the posting of notices, by statements on

tickets, or otherwise.

Article 1758. When a passenger is carried gratuitously, a

stipulation limiting the common carrier's liability fornegligence is valid, but not for wilful acts or gross

negligence.

The reduction of fare does not justify any limitation of

the common carrier's liability.

6. Responsibility for acts of employees

Arts 1759, 1760

Article 1759. Common carriers are liable for the death

of or injuries to passengers through the negligence or

wilful acts of the former's employees, although such

employees may have acted beyond the scope of theirauthority or in violation of the orders of the common

carriers.

This liability of the common carriers does not cease

upon proof that they exercised all the diligence of a

good father of a family in the selection and supervision

of their employees.

Article 1760. The common carrier's responsibility

prescribed in the preceding article cannot be eliminated

or limited by stipulation, by the posting of notices, by

statements on the tickets or otherwise.

De Gillaco v. MRR

CC not liable for train guard who shot passenger 1)

Fortuitous event- personal grudge 2) Stranger waiting to

transport not EE- no duties yet as CCs agent because

not on shift

Maranan v. Perez

CC liable for cab driver stabbing passenger, differentfrom Gillaco 1) Killing in course of duty of EE 2) Per NCC

(not Old as Gillaco) CC absolute liability for safety of

passengers thru negligence of EEs though they acted

beyond scope of authority/ violation of orders

LRTA v. Navidad

Independent contractor security agency wouldve been

solidarily liable with CC if guard punched passenger who

fell on train. Liability based on tort- 2180- rebutted by

diligence in selection and supervision. But CAB: no

evidence of negligence of EE

7. Responsibility for acts of strangers and co-passengers

Art 1763

Article 1763. A common carrier is responsible fo

injuries suffered by a passenger on account of the wilfu

acts or negligence of other passengers or of strangers, i

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.

Pilapil v. CA

CC not liable for stone-throwing by stander 1Presumption of negligence rebutted- injury wholly

arising from stranger over which CC has no control/

could prevent 2) Willful acts of strangers only degree

of care: good father of family

Bachelor Express Inc v. CA

CC liable for passenger stabbing soldier. Though

proximate cause is running amuck of passenger and so

plaintiffs jumped (fortuitous event), but if failed to

exercise ED in providing for safety (i.e. speeding)

8. Duty of passenger, effect of contributory negligence

Art 1761, 1762

Article 1761. The passenger must observe the diligence

of a good father of a family to avoid injury to himself.

Article 1762. The contributory negligence of the

passenger does not bar recovery of damages for his

death or injuries, if the proximate cause thereof is the

negligence of the common carrier, but the amount of

damages shall be equitably reduced.


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Cangco v. MRR

Watermelons. No contributory negligence alighting

from slowly moving train- not risky

Isaac v. A.L. Amnen

Protruding arm. Guilty of contributory negligence.

Negligence per se for passenger to protrude arm. No

recovery from CC despite Art 1762. Bus driver was a

prudent man.

Notes:

Lesser diligence than extra-ordinary

1. Acts of strangers cause injury to passengers

2. Art 1734- floods, public officer etc and

ordinary diligence during and after

3. Stipulation

Defenses of CC:

1. EOD2. Fortuitous event3. Not insurer against all risks4. Stipulations limiting liability5. Damages liable only for certain types of

damages

D. Damages Recoverable from Common Carriers

1. In general

2. Actual or compensatory

Arts. 2199, 2201, 2203, 1764, 2206

Article 2199. Except as provided by law or bystipulation, one is entitled to an adequate

compensation only for such pecuniary loss suffered by

him as he has duly proved. Such compensation is

referred to as actual or compensatory damages.

Article 2201. In contracts and quasi-contracts, the

damages for which the obligor who acted in good faith

is liable shall be those that are the natural and probable

consequences of the breach of the obligation, and

which the parties have foreseen or could have

reasonably foreseen at the time the obligation was

constituted.In case of fraud, bad faith, malice or wanton attitude,

the obligor shall be responsible for all damages which

may be reasonably attributed to the non-performance

of the obligation. (1107a)

Article 2203. The party suffering loss or injury must

exercise the diligence of a good father of a family to

minimize the damages resulting from the act or

omission in question.

Article 1764. Damages in cases comprised in this Section

shall be awarded in accordance with Title XVIII of this

Book, concerning Damages. Article 2206 shall also apply

to the death of a passenger caused by the breach of

contract by a common carrier.

Article 2206. The amount of damages for death caused

by a crime or quasi-delict shall be at least three

thousand pesos, even though there may have been

mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the

earning capacity of the deceased, and the indemnityshall be paid to the heirs of the latter; such indemnity

shall in every case be assessed and awarded by the

court, unless the deceased on account of permanent

physical disability not caused by the defendant, had no

earning capacity at the time of his death;

(2) If the deceased was obliged to give support

according to the provisions of article 291, the recipient

who is not an heir called to the decedent's inheritance

by the law of testate or intestate succession, may

demand support from the person causing the death, fo

a period not exceeding five years, the exact duration to

be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants

and ascendants of the deceased may demand mora

damages for mental anguish by reason of the death of

the deceased.

Actual damages (1) pecuniary loss (2) duly proven

Kinds of actual damages

1. Foregone income2. Support3. Medical and funeral expense4. Death indemnity- P50K5. Lost/ damaged goods

Cariaga v. LTBCo. And MRR

Income 4th year med student would earn if he finished

degree had accident not happened- could be reasonably

foreseen at time he boarded bus. Part of compensatory

damages. (Breached contract in good faith)

Pan Am v. IAC

CC not liable for lost profits when contracts to showfilms were cancelled coz of lost baggage. Must have

notice of special circumstances requiring prompt

delivery of luggage, otherwise not foreseeable

Villa-Rey v. CA

2 factors determine amount of damages: (1) no. of

years life expectancy (2) rate of damages deduct

necessary living expenses from salary to compute

damages to heirs


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PAL v. CA

Damages for loss of earning capacity of deceased- based

on life expectancy of the deceased, not his beneficiary

Victory Liner v. Gammad

Breach of contract of carriage resulting in death of

passenger, CC liable:

(1) Indemnity for death: P50K per jurisprudence

(2) Loss of earning capacity: documentary evidenceneeded; X: a) self-employed, below minimum wage b)

daily wageworker, below minimum wage. If amount not

proven: temperate damages

(2) Actual damages: substantiated, proven expenses

(through O.R.)

3. Moral

Arts. 2217, 2216, 2219, 2220, 2206(3)

Article 2217. Moral damages include physical suffering,

mental anguish, fright, serious anxiety, besmirched

reputation, wounded feelings, moral shock, social

humiliation, and similar injury. Though incapable of

pecuniary computation, moral damages may be

recovered if they are the proximate result of the

defendant's wrongful act for omission.

Article 2216. No proof of pecuniary loss is necessary in

order that moral, nominal, temperate, liquidated or

exemplary damages, may be adjudicated. The

assessment of such damages, except liquidated ones, is

left to the discretion of the court, according to the

circumstances of each case.

Article 2219. Moral damages may be recovered in the

following and analogous cases:(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in article 309;

(10) Acts and actions referred to in articles 21, 26, 27,

28, 29, 30, 32, 34, and 35.The parents of the female seduced, abducted, raped, or

abused, referred to in No. 3 of this article, may also

recover moral damages.

The spouse, descendants, ascendants, and brothers and

sisters may bring the action mentioned in No. 9 of this

article, in the order named.

Article 2220. Willful injury to property may be a legal

ground for awarding moral damages if the court should

find that, under the circumstances, such damages are

justly due. The same rule applies to breaches of

contract where the defendant acted fraudulently or in

bad faith.

Art 2206(3) The spouse, legitimate and illegitimate

descendants and ascendants of the deceased may

demand moral damages for mental anguish by reason

of the death of the deceased.

Fores v. Miranda

To recover moral damages for breach of contract, onemust prove CCs bad faith and malice

X: Death of passenger (no BF needed)

Air France v. Carrasco

Breach of contract in BF: ejected Pinoy from first class

to seat white man. Entitled to moral damages. BF: state

of mind operating with furtive design/ ill-will/ self-

interest

Lopez v. Pan Am

Breached contract in BF= entitled to moral damages. BF

willful suppression of cancellation of 1st class

reservation by airline EEs. Plaintiff is Senate President/

former VP- taken into consideration in amount.

Ortigas v. Lufthansa

Inattention or lack of care of CC resulting in passengers

failure to be accommodated in class contracted for =

BF/Fraud and entitled moral damages. Discriminated

Pinoy, demoted to economy for Belgian.

PAL v. Miano

In contract of carriage, moral damages awarded only ifCC fraudulent/ BF. Bad faith- breach of known duty

through motive of interest or ill will

CAB: no BF for lost baggage

United Airlines v. CA

BF: willful and deliberate overbooking of airline

Civil Aeronautics Board Rule: willful and deliberate

overbook >10% seating capacity

CAB: no BF, failed to prove overbooking more than 10%

no moral damages

Cathay Pacific v. Vasquez

Upgrading passengers to 1st class despite objections is

breach of contract BUT no BF and so no moral damages

Air France v. Gillego

CC liable moral damage for lost baggage. No reason for

delay in finding, ignoring passengers follow-up calls

BF= indifferent attitude enough, no need fo

discourteous EEs.


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8. Exemplary

Art 2229, 2232, 2233

Article 2229. Exemplary or corrective damages are

imposed, by way of example or correction for the public

good, in addition to the moral, temperate, liquidated or

compensatory damages.

Article 2232. In contracts and quasi-contracts, the court

may award exemplary damages if the defendant acted

in a wanton, fraudulent, reckless, oppressive, ormalevolent manner.

Article 2233. Exemplary damages cannot be recovered

as a matter of right; the court will decide whether or

not they should be adjudicated.

Mecenas v. CA

Entitled to exemplary damages, sinking ship, death of

parents. CC acted recklessly- with gross negligence.

Captain was playing mahjong, failed to keep ship

seaworthy, saw other ship and could prevent collision.

Granted exemplary to deter maritime accidents of poor

people.

9. Nominal, Temperate and Liquidated

Art. 2221,2224, 2226

Article 2221. Nominal damages are adjudicated in order

that a right of the plaintiff, which has been violated or

invaded by the defendant, may be vindicated or

recognized, and not for the purpose of indemnifying the

plaintiff for any loss suffered by him.

Article 2224. Temperate or moderate damages, which

are more than nominal but less than compensatory

damages, may be recovered when the court finds thatsome pecuniary loss has been suffered but its amount

can not, from the nature of the case, be provided with

certainty.

Article 2226. Liquidated damages are those agreed

upon by the parties to a contract, to be paid in case of

breach thereof.

Nominal Temperate

Incapable of pecuniary

estimation

Pecuniary loss but amount

cant be proven withcertainty

Alitalia v.AIC

Entitled to nominal damages. Professor lost baggage,

unable to read paper in conference. No BF in carriers

EEs but special species of injury Nominal damages.

Right of plaintiff violated may be vindicated, not for

indemnity. Dont have to allege nominal damages in

complaint.

Saludo v. CA

Entitled to nominal damages. Mix up of bodies of

deceased and delayed delivery. No BF/ willful breach so

no moral/ exemplary. But right of heirs to be treated

with courtesy violated. Nominal: injury done without

evidence of amount

JAL v. CA

Awarded nominal damages 100K per passengerEruption of Pinatubo, NAIA closed and stranded in

Narita. JAL has no duty to pay for living expenses

because FE but duty to transport passengers to first

available flight. Nominal = to vindicate violated right

not indemnity, from any source of obligation per Art

1157 NCC.

Savellano v. Northwest

Entitled to nominal damage- plane emergency landed in

Seattle. To go back to Manila, plane stopped over a lot

without notice. Nominal- no actual or specific damage

amount is with discretion of court (inconveniences

business class, social standing)

Victory Liner v. Gammad

Awarded temperate damages for loss of earning

capacity of deceased passenger. Loss established but

not amount.

Temperate: more than nominal, less than

compensatory. Awarded 50K

6. Attorneys Fees and Interest

Art. 2208, 2210Article 2208. In the absence of stipulation, attorney's

fees and expenses of litigation, other than judicial costs

cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has

compelled the plaintiff to litigate with third persons or

to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against

the plaintiff;

(4) In case of a clearly unfounded civil action or

proceeding against the plaintiff;(5) Where the defendant acted in gross and evident bad

faith in refusing to satisfy the plaintiff's plainly valid, just

and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household

helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's

compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability

arising from a crime;


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(10) When at least double judicial costs are awarded;

(11) 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.

Article

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