Aquino x Hernando Transpo Notes

REVIEWER BASED ON “ESSENTIALS OF TRANSPORTATION AND PUBLIC UTITLITIES LAW” BY AQUINO AND HERNANDO

CHAPTER 1

CONTRACT OF TRANSPORTATION

When a person obligates himself to transport persons or property from one place to another for consideration.

The contract may involve carriage of passengers or carriage of goods.

The person who obligates himself to transport the goods or passengers may be a common carrier or a private carrier.

PARTIES

The contract of transportation would depend on whether it is for carriage of passenger or carriage of goods.

Carriage of Passengers

·        Common Carrier

·        Passenger – one who travels in a public conveyance by virtue of contract, express or implied, with the carrier subject to payment of fare or an equivalent thereof.

Carriage of Goods

·        Carrier

·        Shipper – The person who delivers the goods to the carrier for transportation. The person who pays the consideration or on whose behalf payment is made.

Consignee

The person to whom the goods are to be delivered.

The consignee may be the shipper himself as in the case where the goods will be delivered to one of the branch offices of the shipper. However, the consignee may be a third person who is not actually a party to the contract of carriage.

PERFECTION

Two views in perfection of a contract of carriage of passengers.

·        Contract to Carry – an agreement to carry the passenger to carry the passenger at some future date. This contract is consensual and is therefore perfected by mere consent.

·        Contract of carriage or of common carriage itself – considered a real contract for not until the facilities of the carrier are actually used can the carrier be said to have already assumed the obligation of the carrier.

On Contract of Carriage of Goods

With respect to carriage of goods, there may be a consensual contract to carry goods whereby the carrier agrees to accept and transport goods at some future date.

Compania Maritima vs Insurance Company of North America

The test as to whether the relation of shipper and carrier had been established is, Had the control and possession of the cotton been completely surrendered by the shipper to the railroad company? Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper, then it can be said with certainty that the relation of shipper and carrier has been established.

Carriage of Passengers

Breach of contract to carry may be sustained even if no tickets were issued, a verbal contract to carry is already a binding consensual contract.

WRITTEN CONRACT NOT ESSENTIAL

The presence of a ticket or a bill of lading or any written contract is not necessary for the perfection of the contract of carriage.

The Code does not demand, as necessary requisite in the contract of transportation, the delivery of the bill of lading to the shipper, but gives right to both the carrier and the shipper to mutually demand of each other the delivery of said bill.

AIRCRAFT

There is a perfected contract to carry passengers even if no tickets have been issued to said passengers so long as there was already a meeting of minds with respect to the subject matter and the consideration.

BUSES, JEEPNEYS, AND STREET CARS.

Continuing offer rule, it is the duty of the drivers to stop their conveyances for a reasonable length of time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting from sudden starting up of the carrier.

It follows that the passenger is deemed to be accepting  the offer if he already attempting to board the conveyances and the contract of carriage is PERFECTED from that point.

TRAINS

Requisites for a person to be deemed as a passenger (doesn’t have to be in order):

·        Bona fide intention to use the facilities of the carrier.

·        Possess sufficient fare with which to pay for his passage.

·        Present himself to the carrier for transportation in the place and manner provided.

COMMON CARRIER

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.

·        It has also been defined as “one that holds itself out as ready to engage in the transportation of goods for hire as a public employment and not as a casual occupation.”

Public Service. The concept of “common carrier” under Art. 1732 may be seen to coincide neatly with the notion of “public service,” under the Public Service Act (Commonwealy Act No. 1416, as amended) that at least partially supplements the law on common carriers set forth in the Civil Code. Under Section 13 paragraph (b) of the Public Service Act, “public service” 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, and done for general business purposes, any common carrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, or both with or without fixed route and whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railways, marine repair shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power water supply and power, petroleum, sewerage system, wire or wireless communications system, wire or wireless broadcasting stations and other similar public services: Provided, however, That a person engaged in agriculture, not otherwise a public service, who owns a motor vehicle and uses it personally and/or enters into a special contract whereby said motor vehicle is offered for hire or compensation to a third party or third parties engaged in agriculture, not itself or themselves a public service, for operation by the latter for a limited time and for a specific purpose directly connected with the cultivation of his or their farm, the transportation, processing, and marketing of agricultural products of such third party or third parties shall not be considered as operating a public service for the purposes of this Act.

TEST

First Philippine Industrial Corp vs CA

1. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; 2. He must undertake to carry goods of the kind to which his business is confined; 3. He must undertake to carry by the method by which his business is conducted and over his established roads; and 4. The transportation must be for hire.

Public Use. Means the same as “use by the public.” The essential feature of the public use is that it is not confined to privileged individuals, but is open to the indefinite public us is that it is not confined to privileged individuals, but is open to the indefinite public.

Sps. Cruz v Sun Holidays

Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly considered ancillary thereto. The constancy of respondent’s ferry services in its resort operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public.

THE TRUE TEST

Sps. Perena vs Sps. Nicolas

As all the foregoing indicate, the true test for a common carrier is not the quantity or extent of the business actually transacted, or the number and character of the conveyances used in the activity, but whether the undertaking is a part of the activity engaged in by the carrier that he has held out to the general public as his business or occupation. If the undertaking is a single transaction, not a part of the general business or occupation engaged in, as advertised and held out to the general public, the individual or the entity rendering such service is a private, not a common, carrier. The question must be determined by the character of the business actually carried on by the carrier, not by any secret intention or mental reservation it may entertain or assert when charged with the duties and obligations that the law imposes.

CHARACTERISTICS

Common Carrier contemplated under Art.1732

·        Art. 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, AND one who does such carrying only as an ancillary activity (side line).

·        1732 also carefully avoids making any distinction between a person or enterprise offering [1]transportation service on a regular or scheduled basis AND one offering such services on an occasional, episodic, or unscheduled basis.

·        1732 does not distinguish between a carrier offering its services to the “general public”, i.e., the general community or population, AND one who offers services or solicits business only from a narrow segment of the general population.

·        A person or entity is a common carrier and has the obligations of the common carrier under the Civil Code even if he did not secure a Certificate of Public Convenience.

·        The Civil Code makes no distinction as to the means of transporting, as long as it is by land, water, or air.

·        The Civil Code does not provide that the transportation should be by motor vehicle.

·        A person or entity may be a common carrier even if he has no fixed and publicly known route, maintains no terminals, and issues no tickets.

·        A person or entity need not be engaged in the business of public transportation for the provisions of the Civil Code on common carriers to apply to them.

·        The Carrier can also be a common carrier even if the operator does not own the vehicle or vessel that he or she operates

ANCILLARY BUSINESS

Art. 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, AND one who does such carrying only as an ancillary activity

De Guzman vs CA

Thus, even if the transportation of goods was ancillary to the main business of buying and selling used bottles and scrap metals, the SC considered the private respondent a common carrier.

LIMITED CLIENTELE

Although the clientele is limited, the regularity of the activities of a carrier may indicate that the same carrier is a common carrier.

Sps. Perena vs Sps. Nicolas

Applying these considerations to the case before us, there is no question that the Pereñas as the operators of a school bus service were: (a) engaged in transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers over established roads by the method by which the business was conducted; and (c) transporting students for a fee. Despite catering to a limited clientèle, the Pereñas operated as a common carrier because they held themselves out as a ready transportation indiscriminately to the students of a particular school living within or near where they operated the service and for a fee.

MEANS OF TRANSPORTATION

First Philippine Industrial Corp. vs CA

Pipeline operators are common carriers that are subject to business taxes on common carriers. Such operators are common carriers even if the oil or petroleum products are being transported not through motor vehicles but through pipelines.

NOT COMMON CARRIER BY LAW

Note that under Section 7 of R.A. No. 10668, foreign vessels engaging in carriage conducted in accordance with the said law shall not be considered common carriers under the New Civil Code; they are also not offering a public service and this shall fall outside the coverage R.A. No. 9295 or the “Domestic Shipping Development Act of 2004.

EFFECT OF CHARTER PARTY

A Charter Party may transform a common carrier into a private carrier. However, it must be bareboat or demise charter where the charterer mans the vessel with his own people and becomes, in effect the owner for the voyage or service stipulated.

The common carrier is not transformed into a private carrier if the charter party is a contract of a affreightment like a voyage charter or a tome charter.

A Charter Party  is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use. Charter Parties are of two types:

a.       Contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for others

b.      Charter by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation, including the master and the crew, who are his servants.

COMMON CARRIER VS THE WORLD

Common Carrier	Private Carrier
A person, corporation, firm, or association engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering such services to the public.	One who, without making the activity a vocation, or without holding himself or itself out to the public as ready to act for all who may desire his or its services, undertakes by special agreement in a particular instance only, to transport goods or persons from one place to another either gratuitously or for hire
	Towage
	One vessel is hired to bring another vessel to another place.
	Arrastre
	A Spanish word that refers to hauling cargo, comprehend the handling of cardo on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. They are, in fact, no different from those of a depository or warehouseman.
	Stevedoring
	Involves the loading and unloading of the coastwise vessels calling at the port. 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.
	Travel Agency
	The object of contractual relation of a person who purchases a ticket through a travel agency is only the agency’s service of arranging and facilitating the booking, ticketing and accommodation in a package tour.

TRAMP SERVICE VS LINE SERVICE

(basis is R.A. 9515)

Tramp Service	Line Service
The operation of a contract carrier which has no regular and fixed routes and schedules but accepts cargo wherever and whenever the shipper desires, is hired on a contractual basis, or chartered by any one or few shippers under mutually agreed terms and usually carries bulk or break bulk cargoes.	The operation of a common carrier which publicly offers services without discrimination to any user, has regular ports  of call/destination, fixed sailing schedules and frequencies and published freight rates and attendant charges and usually carries multiple consignments.

GOVERNING LAWS

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 or deterioration.

NATURE OF BUSINESS

Common carriers exercise a sort of pubic office, and have duties to perform in which the public is interested.

Common carriers are public utilities; they are enterprise that specially cater to the needs of the public and conduce to their comfort and convenience. As such common carriers are impressed with public interest and concern. Consequently, common carriers are subject to regulation by the State.

REGISTERED OWNER RULE AND KABIT SYSTEM

In certain cases, it is not only the operator of the vehicle who may be held liable even if the cause if actions is culpa contractual[2]. Ordinarily, the person who can be sued for breach of contract is the contracting party. However, in certain cases, by reason of public policy, the law allows victims of accidents to sue those who, strictly speaking, are third parties. This obtains in the cases covered by the registered owner rule.

REGISTRATION LAWS

Registration of motor vehicles is now governed by R.A. 4136 otherwise known as “The Land Transportation and Traffic Code.” The Land Transportation Office is now administering the law on registration.

REGISTERED OWNER RULE

·        The rule in this jurisdiction is that the person who is the registered owner of a vehicle is liable for any damage caused by the negligent operation of the vehicle although the same was already sold or conveyed to another person at the time of the incident. This rule is a matter of public interest. The registered owner is liable to the injured party subject to his right of recourse against the transferee or the buyer.

·        The registered owner is not liable if the vehicle was taken from his garage without his knowledge and consent. To hold the registered owner liable would be absurd as it would be like holding liable the owner of a stolen vehicle for an accident caused by the person who stole such vehicle.

·        Indeed, unauthorized use and/or theft of the vehicle may be invoked in proper cases. However, absent the circumstance of unauthorized use or that the subject vehicle was stolen which are valid defenses available to a registered owner, the registered owner cannot escape liability resulting from the use of the registered owner’s vehicle.

·        The registered owner rule applies in a financial lease.

·        If the registered owner is made liable despite the transfer of the vehicle, the transferee is liable to the registered owner for the damages caused to the passenger.

KABIT SYSTEM

The “registered owner” rule is applicable whenever the persons involved are engaged in what is known as the “kabit system”.

The Kabit System is an arrangement whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate then under his license, sometimes for a fee or percentage of the earnings.

Although the law does not outrightly penalize the parties to such an agreement, the system is invariably recognized as being contrary to public policy and therefore void and inexistent under Article 1409 of the Civil Code.

PARI DELICTO RULE

Persons who are parties to the kabit system cannot invole the same as against each other either to enforce their illegal agreement or to invoke the same to escape liability. This is consistent with the time-honored maxim “ex pacto ilicto no oritur action” [ No action arises out of an illicit bargain].

LAND TRANSPORTATION RULES

The LTFRB imposes similar rules that implement the registered owner rule and prohibits Kabit System.

AIRCRAFTS AND VESSELS

It is believed that the policy, which prohibits the Kabit system, may also be applied to vessels and aircrafts that are covered by certificates of public convenience and necessity.

It is a basic rule that no person can operate a common carrier without securing a certificate of pubic convenience and necessity.

BOUNDARY SYSTEM

In land transportation where the boundary system may be implemented by the common carrier, the carrier cannot escape liability by claiming that the driver is a lessee.

The carrier cannot exempt himself on the ground he is a lessor because to tolerate such position would not only abet flagrant violations of the Public Service Law but also to place the riding public at the mercy of reckless and irresponsible driver – reckless because the measure of their earning depends largely upon the number of trips they make and, hence the speed at which they drive; and irresponsible because the most if not all of them are in no position to pay the damages they might cause.

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[1] Ancillary - providing necessary support to the primary activities or operation of an organization, institution, industry, or system. (en.oxforddictionaries.com)

[2] culpa contractual, which is the fault or negligence incident in the performance of an obligation which already existed, and which increases the liability from such already existing obligation.