TRANSPORTATION LAW BAR QUESTIONNAIRES

2005
XIII

(1) Discuss the “kabit system” in land transportation and its legal consequences. (2%)

SUGGESTED ANSWER:
(1) The “kabit system” is an arragement whereby a person who has been
granted a certificate of public convinience allows another who owns a motor
vehicle to operate under his certificate for a fee or a percentage of the earnings.
The owner of the certificate of public convinience and the actual owner of the
motor vehicle should be held jointly and severally liable for damages to third
persons as a consequence of the negligent operation of the motor vehicle.

(2) Procopio purchased an Isuzu passenger jeepney from Enteng, a holder of a certificate
of public convinience for the operation of public utility vehicle plying the Calamba-Los Baños
route. While Procopio continued offering the jeepney for public transport service he did not
have the registration of the vehicle transferred in his name. Neither did he secure for himself
a certificate of public conviniece for its operation. Thus, per the records of the Land
Transportation Franchising and Regulatory Board, Enteng remained its registered owner and
operator. One day, While the jeepney was travelling southbound, it collide with a ten-wheeler
truck owned bu Emmanuel. The driver of the truck admitted responsibility for the accident,
explaining that the truck lost its brakes.

Procopio sued Emmanuel for damages, but the latter moved to dismiss the case on the
ground that Procopio is not the real party in interest since he is not the registered owner of
the jeepney.

Resolve the motion with reasons. (3%)

SUGGESTED ANSWER:
(2) The motion to dismiss should be denied. The rule enjoining the
registered owner of the motor vehicle under the “kabit system” from proving
another person is the owner is intended to protect third parties. Since this case
does not involve liability of the registered owner to third parties, and it is the
owner of the motor vihicle who is seeking compensation for damages, the rule
is not applicable.

(3) Baldo is a driver of Yellow Cab Company under the boundary system. While cruising
along the South Expressway, Baldo's cab figured in a collision, killing his passenger, Pietro.
The heirs of Pietro sued Yellos Cab Company for damages, but the latter refused to pay the
heirs, insisting that it is not liable because Baldo is not its employee.

Resolve with reasons. (2%)

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SUGGESTED ANSWER:
(3) Yellow Cab Company is liable because there exists an employer-
employee relationship between an owner and a driver under the boundary
system arrangement in accordance with Article 103 of the Revised Penal Code.
Indeed to exempt from liability the owner of a public vehicle who operates it
under the “boundary system” on the ground that he is a mere lessor would be
not only to abet flagrant violations of the Public Service Law but also to place
the riding public at the mercy of reckless and irresponsible drivers reckless
because the measure of their earnings depends largely on the number of trips
they make and, hence, the speed at which they drive; and irresponsible
because most, if not all of them, are in no position to pay the damages they
might cause.

2004
I

A. Under a charter party, XXO Trading Company shipped sugar to Coca-Cola Company
through SS Negros Shipping Corp., insured by Capitol Insurance Company. The cargo
arrived but with shortages. Coca-Cola demanded from Capitol Insurance Co. P500, 000 in
settlement for XXO Trading. The MM Regional Trial Court, where the civil suit was filed,
“absolved the insurance company, declaring that under the Code of Commerce, the shipping
agent is civilly liable for damages in favor of third persons due to the conduct of the carrier's
captain and the stipulation in the charter party exempting the owner for liability is not
against public policy. Coca-Cola appealed. Will its appeal prosper? Reason briefly. (5%)

SUGGESTED ANSWER:
A. No. The appeal of Coca-Cola will not prosper. Under Article 587 of the Code
of Commerce, the shipping agent is civilly liable for damages in favor of third
persons due to the conduct of the carrier's captain, and the shipping agent can
exempt himself therefrom only by abandoning the vessel with all his
equipment and the freight he may have earned during the voyage. On the
other hand, assuming there is bareboat charter, the stipulation in the charter
party exempting the owner from liability is not against public policy because
the public at large is not involved.

B. AA entered into a contract with BB thru CC to transport ladies' wear from Manila to
France with trashipment at Taiwan. Somehow the goods were not loaded at Taiwan on time.
Hence, when the goods arrived in France, they arrived “off-season” and AA was paid only for
one-half the value by the buyer. AA claimed damages from the shipping company and its
agent. The defense of the respondent was prescription.

Considering that the ladies' wear suffered “loss of value,” as claimed by AA, should
the prescriptive period be one year under the Carriage of Goods by Sea Act, or ten years
under the Civil Code? Explaine briefly. (5%)

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SUGGESTED ANSWER:
B. The applicable prescriptive period is ten years under the Civil Code.
The one-year prescriptive period under the Carriage of Goods by Sea Act
applies in cases of loss or damages to the cargo. The term “loss” contemplates a
situation where no delivery at all was made by the carrier of the goods because
the same had perished or gone out of commerce deteriorated or decayed while
in transit. In the present case, the shipment of ladies' wear was actually
delivered. The “loss of value” is not the total loss contemplated by the
Carriage of Goods by Sea Act.

2002
VIII

A. Name two (2) characteristices which differentiate a common carrier from a private
carrier. (3%)

B. Why is the defense of due diligence in the selection and supervision of an employee
not available to common carrier? (2%)

SUGGESTED ANSWER:
A. Two (2) characteristics that differentiate a common carrier from a
private carrier are:
(1) A common carrier offers its service to the public; a private carrier
does not.
(2) A common carrier is required to observe extraordinary diligence;
a private carrier is not so required.

B. The defense of due deligence in the selection and supervision of an

employee is not available to a common carrier because the degree of diligence
of a good father of a family but extraordinary diligence, i.e. diligence of the
greatest skill and utmost foresight.

IX

Discuss whether or not the following stipulations in a contract of carriage of a common

carrier are valid:

1) a stipulation limiting the sum that may be recovered by the shipper or owner to 90%
of the value of the goods in case loss due to theft.

2) a stipulation that in event loss, destruction or deteriotation of goods on account of

the defective condition of the vehicle used in the contract of carriage, the carrier's liability is
limited to the value of the goods appearing in the bill of lading unless the shipper or owner
declares a higher value. (5%)
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SUGGESTED ANSWER:
1) The stipulation considered unreasonable, unjust and contrary to
public policy under Article 1745 of the Civil Code.

2) The stipulation limiting the carrier's liability to the value of the goods
appearing in the bill of lading unless the shipper or owner declares a higher
value, is expressly recognized in Article 1749 of the Civil Code.

2001
XX

Suppose “a” was riding on an airplane of a common carrier when the accident
happened and “A” suffered serious injuries. In an action by “A” against the common carrier,
the latterb calaimed that – (1) there was stipulation in the ticket issued to “A” absolutely
exempting the carrier from liability from the passenger's death or injuries and notices were
posted by the common carrier dispensing with the extraordinary diligence of the carrier, and
(2) “A” was given a discount on his plane fare thereby reducing the liability of the common
carrierwith respect to “A” in particular.
a) Are those valid defenses? (1%)

b) What are the defenses available to any common carrier to limit it from liability?

SUGGESTED ANSWER:
a) No. Theses are not a valid defenses because thet are contrary to law as
they are in violation of the extraordinary diligence required of common
carriers.

b) The defenses available to any common carrier to limit or exempt it

from liability are: observance of extraordinary diligence, or the proximate
cause of the incident is a fortuitous event or force majure, act or omission of
the shipper or owner of the goods, the character of the goods or defects in the
packing or in the containers, and order or acts of competent public authority,
without the common carrier being guilty of even simple negligence.

2000
XII

X has a Tamaraw FX among other cars. Every other day during the workweek, he goes
to his office in Quezon City using his Tamaraw FX andp icks up friends as passengers at
designated points along the way. His passengers pay him a flat fee for the ride, usually P20
per person, one way. Although a lawyer, he never bothered to obtain a license to engage in
this type of income-generating activity. He believes that he is not a common carrier within the
purview of the law. Do you agree with him? Explain. (5%)

SUGGESTED ANSWER:
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No. I do not agree with X. A common carrier holds himself out to the
public as engaged in the business of transporting persons or property from
place to place, for compensation, offering his services to the public generally.
The fact that X has limited clientele does not explude him from the definition
of a common carrier. The law does not make any distinction between one
whose principal business activity is the carriying of persons or goods or both,
asnd the ano who does such carrying only as an ancillary activity or in the
local idiom, as a “sideline”

XIII

a) X Shipping Company spent almost a fortune in refitting and repairingg its luxury
passenger vessel, the MV Marina, which plied the inter-island routes of the company from La
Union in the North to Davao City in the South. The MV Marina met an untimely fate during
its post-repair voyage. It sank off the coast of Zambales while en route to La Union from
Manila. The investigation showed that the captain alone was negligent. There were no
casualties in that disaster. Faced with a claim for the payment of the refitting and repair, X
Shipping Company asserted exemption from rule under Article 587 of the Code of
Commerce. Is X Shipping Company's assertion valid? Explain (3%)

b) MV Superfast, a passenger-cargo vessel owned by SF Shipping Company plying the

inter-island routes, was on its way to Zamboanga City from Manila port when it accidentally,
and without fault or negligence of anyone on the ship, hit a huge floating object. The accident
caused damage to the vessel and loss of an accompanying crated cargo of passenger PR. In
order to lighten the vessel and save it from sinking and in order to avoid risk of damages to
or loss of the rest of the shipped items (none of which was loacated on the deck), some had to
be jettisoned. SF Shipping had the vessel repaired at its port of destination. SF Shipping
thereafter filed a complaint demanding all the other cargo owners to share in the total repair
cost incurred by the company and in the value of the lost and jettisoned cargoes. In answer to
the complaint, the shipper's sole contention was that, under the Code of Commerce, each
damaged party should bear its or his own damages and those that did not suffer any loss or
damages were not obligated to make any contributions in favor of those who did. Is the
shippers contention Valid? Explain. (2%)

SUGGESTED ANSWER:
a) No. The assertion of X Shipping Company is not valid. The total
destruction of the vessel does not affect the liability of the shipowner for
repair on the vessel completed before its loss.

b) No. The shippers' contention is not valid. The owners of the cargo
jettisoned, to save the vessel from sinking and to save the rest of the cargoes,
are entitled to contribution. The Jettisoning of said cargoes constitute general
average loss which entitles the owners thereof to contribution form the owner
of the vessel and also from the owner of the cargoes saved.

XIV

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a) MV Mariposa, one of five passengers ships owned by the Marina Navigation
Company, sank off the coast of Mindoro while en route to Iloilo City. More than 200
passengers perished is the disaster. Evidence showed that the ship captain ignored typhoon
bulletins issued by PAGASA during the 24-hour period immediately prior to the vessel's
departure from Manila. The bulletins warned all types of sea crafts to avoid the typhoon's
expected path near Mindoro. To Make matters worse, he took more load that was allowed for
the ship's rated capacity. Sued for damages by the victim's surviving relatives, Marina
Navigation Company contended 1) that its liability, if any, had been extinguished with the
sinking of MV Mariposa; and 2) that assuming it had not been so extinguished, such liability
should be limited to the loss of the cargo. Are these contentions meritorious in the context of
applicable provisions of the Code of Commerce: 93%)

b) RC imported from the United States and had them shipped to Manila aboard an ocean-
going cargo ship owned by BC Shipping Company. When the cargo arrived at the Manila
seaport and delivered to RC, the crate appeared intact; but upon inspection of the contents,
RC discovered that the items inside had all been badly damaged. He did not file any notice of
damage and how long a time he had to initiate a suit under the provisions of the Carriage of
Goods by Sea Act (C.A. 65). What would your advice be> (2%)

SUGGESTED ANSWER:
a) Yes. The contentions of Marina Navigation Company are
meritorious. The Captain of MV Mariposa is guilty of negligence in ignoring
the typhoon bulletins issued by PAGASA and in overloading the vessel. But
only the shipowner is not. Therefor, the shipowner can invoke the doctrine of
limited liability.

b) My advice would be that RC should give notice of the damages

sustained by the cargo within three (3) days and that he has to file the suit to
recover the damage sustained by the cargo within one (1) year from the date of
the delivery of the cargo to him.