Q: What is the socalled kabit system?

A: It is an arrangement whereby a person who has been granted the certificate allows other persons who
own motor vehicles to operate under his license, sometimes for a fee or percentage of the earnings.
Thus, for the safety of passengers and the public who may have been wronged and deceived through the
baneful kabit system, the registered owner of the vehicle is not allowed to prove that another person has
become the owner so that he may be thereby relieved of responsibility. (Lim v. CA, 2002)
Note: Although not out rightly penalized as a criminal offense, the kabit system is invariably recognized
as being contrary to public policy and therefore, void and inexistent under Art. 1409 of the New Civil
Code. It is a fundamental principle that the court will not aid either party to enforce an illegal contract, but
will leave them both where it finds them (Lita Enterprises, Inc. v. IAC, G.R. No. 64693, Apr. 27, 1984)
Q: What is the rationale behind vehicle registration? Who is liable in case of the negligent
operation of a vehicle?
A: The main purpose of vehicle registration is to identify the owner so that if an accident happens, or if
any damage or injury is caused by the vehicle in the public highways, responsibility therefor can be fixed
on a definite individual. The rule is clear that the registered owner is primarily and vicariously liable for the
negligent operation of the vehicle.
Q: Are there exceptions to the rule attaching liability to the registered owner?
A: The registered owner is not liable if:
1. The vehicle was taken or stolen from his garage
2. The vehicle was driven without his knowledge or consent
Q: May the registered owner of the vehicle be allowed to prove that there is already a transfer of
ownership to another person under the kabit system?
A: No. One of the primary factors considered in the granting of a certificate of public convenience for the
business of public transportation is the financial capacity of the holder of the license, so that liabilities
arising from accidents may be duly compensated. The kabit system renders illusory such purpose and,
worse, may still be availed of by the grantee to escape civil liability caused by a negligent use of a vehicle
owned by another and operated under his license.
If a registered owner is allowed to escape liability by proving who the supposed owner of the vehicle is, it
would be easy for him to transfer the subject vehicle to another who possesses no property with which to
respond financially for the damage done. (Lim v. CA, G.R. No. 125817, Jan. 16, 2002)
Q: What is the reason behind the proscription against the kabit system?
A: The thrust of the law in enjoining the kabit system is not so much as to penalize the parties but to
identify the person upon whom responsibility may be fixed in case of an accident with the end view of
protecting the riding public. The policy therefore loses its force if the public at large is not deceived, much
less involved. (Lim v. CA, G.R. No. 125817, Jan. 16, 2002)
Q: What is the rule if there is contributory negligence on the part of the shipper?
GENERAL RULE: If the shipper or owner merely contributed to the loss, destruction or deterioration of
the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be
liable for damages, which however, shall be equitably reduced. (Art. 1741)
EXCEPTION: In a collision case and allision cases, the parties are liable for their own damages.
Q: What is the effect of contributory negligence of the shipper or owner?
A: If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the
proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages,
which however, may be equitably reduced.
Q: May the accused raise contributory negligence as a defense in a criminal prosecution for
reckless imprudence?

A: The defense of contributory negligence does not apply in criminal cases committed through reckless
imprudence, since one cannot allege the negligence of another to evade the effects of his own
negligence.
Q: Explain the extent of the effect of the passengers contributory negligence.
A: Even when the common carrier failed to exercise extraordinary diligence as required by law, a
contributory negligence of the passenger while not exempting the carrier from liability, nevertheless
justified the deletion of the amount adjudicated as moral damages. By the same token, the award of
exemplary damages must be set aside. Exemplary damages may be allowed only in cases where the
defendant acted in wanton, fraudulent, reckless or oppressive or malevolent manner.
Thus in one case, the train of the Philippine National Railways (PNR) was overloaded which compelled
the passenger to sit on the open platform and did not cling tenaciously to the upright metal bar found on
the said platform. As a result, the passenger fell off the train and died. Such passenger was ruled to be
guilty of contributory negligence. Nonetheless, PNR was held liable for the payment of damages for its
failure to exercise extraordinary diligence, but no award for moral and exemplary damages was allowed.
Q: What is the responsibility of the common carrier for willful acts or negligence of other
passengers or of strangers?
A: A common carrier is responsible for the injuries suffered by a passenger on account of the willful acts
or negligence of other passengers or of strangers, if the common carriers employees through the
exercise of the diligence of a good father of a family could have prevented or sotpped the act or omission.
Q: What is the presumption in case of delivery of goods?
A: The mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of
destination in bad order, makes out a prima facie case against the carrier, so that if no explanation is
given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier
to prove that the loss was due to accident or some other circumstance inconsistent with its liability.
Q: What is the presumption in case of death of or injuries to passengers?
A: 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 described under
Art 1733 and 1755 NCC.
Q: To hold the common carrier liable for death injury to a passenger, must the court make an
express finding of fault or negligence on the part of the common carrier?
A: In an action based on a contract of carriage, the court need not make an express finding of fault or
negligence to hold it responsible to pay damages sought for by the passenger. By the contract of carriage,
the carrier assumes the express obligation to transport the passenger to his destination safely and to
observe extraordinary diligence with a due regard for all of the circumstances, and any injury that might
be suffered by the passenger is right way attributable to the fault or negligence of the carrier. This is an
exception to the general rule that negligence must be proved, and it is therefore incumbent upon the
carrier to prove that it has exercised extraordinary diligence as prescribed by law.
Q: Is a common carrier liable for the personal conduct of its employees which did not result in
death or injuries?
A: A common carrier is responsible for the conduct of its employees. Passengers have a right to be
treated by the carriers employees with kindness, respect, courtesy and due consideration. They are
entitled to be protected against personal misconduct, injurious language, indignities, and abuses from
such employees. So any rude or discourteous conduct on the part of the employees gives the latter an
action against the carrier.
Q: What is the effect of the agreement on limiting the liability to the presumption of negligence of
the carrier?

A: Even if there is an agreement limiting the liability of the common carrier in the vigilance over the goods,
the common carrier is still disputably presumed to have been negligent in case of its loss, destruction or
deterioration. (Art. 1752)
Q: When does the duty to exercise extraordinary diligence start and end with respect to carriage
of goods?
A: It 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. (Art. 1736)
Q: To whom should delivery be made?
A: It must be delivered, actually or constructively, to the consignee or to the person who has a right to
receive them.
Note: Delivery of the cargo to the customs authorities is not delivery to the consignee, or to the person
who has a right to receive them. (Lu Do & Lu Ym Corp. v. Binamira, G.R. No. L9840, Apr. 22, 1957)
Q: What is constructive delivery?
A: It is a delivery of a representation of property (as a written instrument) or means of possession (as a
key) that is construed by a court as sufficient to show the transferor's intent or to put the property under
the transferee's control
Q: What is the right of stoppage in transitu?
A: It is the right exercised by the seller by stopping the delivery of the goods to a certain buyer or
consignee (because of insolvency) when such goods are already in transit.
Q: What is the rule as to unloading, storage and stoppage in transitu?
A:
GENERAL RULE: The common carriers duty to observe extraordinary diligence in the vigilance over
the goods remains in full force and effect even when they are temporarily unloaded or stored in transit.
EXCEPTION: When the shipper or owner has made use of the right of stoppage in transitu.
Q: What is the diligence required in exercising the right of stoppage in transitu?
A: Ordinary diligence because of the following:
1. It is holding the goods in the capacity of an ordinary bailee or warehouseman and not as a carrier;
2. There is a change of contract from a contract of carriage to a contract of deposit;
Note: If the seller instructs to deliver it somewhere else, a new contract of carriage is formed and the
carrier must be paid accordingly.
Q: Are stipulations limiting the carriers liability valid?
A: Yes, 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
3. Reasonable, just and not contrary to public policy. (Art. 1744)
Q: May a stipulation limiting the common carriers liability be annulled by the shipper or owner?
A: Yes, if the common carrier refused to carry the goods unless the shipper or owner agreed to such
stipulation. However, under this provision, annulment of the agreement limiting the carriers liability is still
necessary. (Art. 1746)
Note: There is no need to annul, if the common carrier without just cause:
1. Delays the transportation of the goods; or
2. Changes the stipulated or usual route, the contract limiting the common carriers liability cannot
be availed of in case of loss, destruction, or deterioration of the goods. (Art. 1747)
Q: What are some stipulations limiting the liability of common carriers which may be valid?

A:
1. An agreement limiting the common carriers liability for delay on account of strikes or riots. (Art.
1748)
2. A stipulation that the common carriers liability is limited to the value of the goods appearing in the
bill of lading, unless the shipper or owner declares a greater value and pays corresponding
freight. (Art. 1749)
3. A contract fixing the sum that may be recovered for the loss, destruction, and deterioration of
goods is binding provided that it is just and reasonable under the circumstances and it has been
fairly and freely agreed upon. (Art. 1750)
4. When a passenger is carried gratuitously, a stipulation limiting the common carriers liability for
negligence is valid, but not for willful acts or gross negligence. However, the reduction of fare
does not justify any limitation of the common carriers liability. (Art. 1758)
Q: What are void stipulations in a contract of carriage of goods?
A:
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, or 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 omissions of his or its employees
6. That the common carriers 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
8. Any similar stipulation that is unreasonable, unjust and contrary to public policy. (Art. 1745)
Q: What rule will apply on checkedin baggage of passengers?
A: The provisions of Art 1733 to 1753 NCC shall apply.
Q: What rule will apply when the baggage is in the personal custody of the passengers of their
employees?
A:
1. The common carrier shall be responsible for shippers baggage 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 shipper, they take the precautions which said common carriers or their substitutes
advised relative to the care and vigilance of their effects. (Art. 1998, NCC)
2. The responsibility shall include the loss of, or injury to the personal property of the shipper caused
by the employees of the common carrier as well as strangers; but not that which may proceed
from any force majeure. (Art. 2000, NCC)
3. The act of a thief or robber, who has entered the carrier is not deemed force majeure, unless it is
done with the use of arms or through an irresistible force. (Art. 2001, NCC)
4. The common carrier is not liable for compensation if the loss is due to the acts of the shipper, his
family, or servants, or if the loss arises from the character of the things brought into the carrier.
(Art. 2002, NCC)
5. The common carrier cannot free himself from responsibility by posting notices to the effect that he
is not liable for the articles brought by the passenger. Any stipulation between the common carrier
and the shipper whereby the responsibility of the former as set forth in Articles 1998 to 2001 is
suppressed or diminished shall be void. (Art. 2003, NCC)
Q: What are the principles as to the liability of common carriers?
A:
1. The liability of a carrier is contractual and arises upon breach of its obligation. There is breach if it
fails to exert extraordinary diligence according to all circumstances of each case;

2. A carrier is obliged to carry its passenger with the utmost diligence of a very cautious person,
having due regard for all the circumstances;
3. A carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to,
passengers, it being its duty to prove that it exercised extraordinary diligence; and
4. The carrier is not an insurer against all risks of travel. (Isaac v. A.L. Ammen)