Transpo Case Digest

1. National Development Company v. CA, August 19, 1998 (G.R.

No. L-49407)
Facts: In accordance with a memorandum agreement entered into
between defendants NDC and MCP, defendant NDC as the first
preferred mortgagee of three ocean going vessels including one with
the name 'Dona Nati' appointed defendant MCP as its agent to manage
and operate said vessel for and in its behalf and account. Several
companies loaded their cargoes with the Dona Nati. However, while en
route to Manila, the vessel figured in a collision with a Japanese vessel.
As a result thereof, some of the cargoes were lost, damaged and
destroyed. Thus, respondent Development Insurance and Surety
Corporation, had paid as insurer the total amount of P364,915.86 to
the consignees or their successors-in-interest, for the said lost or
damaged cargoes. Later on, respondent filed a complaint to recover
said amount from the defendants-NDC and MCP as owner and ship
agent respectively, of the said 'Dofia Nati' vessel. The lower court ruled
in their favor, applying the Article 287 of the Code of Commerce.
On appeal, NDC argued that the Carriage of Goods by Sea Act should
apply to the case at bar and not the Civil Code or the Code of
Commerce. Under Section 4 (2) of said Act, the carrier is not
responsible for the loss or damage resulting from the "act, neglect or
default of the master, mariner, pilot or the servants of the carrier in the
navigation or in the management of the ship." Thus, NDC insists that
based on the findings of the trial court which were adopted by the
Court of Appeals, both pilots of the colliding vessels were at fault and
negligent, NDC would have been relieved of liability under the Carriage
of Goods by Sea Act.
Issue: Whether or not the contention of the petitioner should be
upheld.
Held: No. Under Article 1733 of the Civil Code, common carriers from
the nature of their business and for reasons of public policy are bound
to observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them according to all
circumstances of each case. Accordingly, under Article 1735 of the
same Code, in all other than those mentioned is Article 1734 thereof,
the common carrier shall be presumed to have been at fault or to have
acted negligently, unless it proves that it has observed the
extraordinary diligence required by law. It appears, however, that
collision falls among matters not specifically regulated by the Civil
Code, so that no reversible error can be found in respondent courses

application to the case at bar of Articles 826 to 839, Book Three of the
Code of Commerce, which deal exclusively with collision of vessels.
More specifically, Article 826 of the Code of Commerce provides that
where collision is imputable to the personnel of a vessel, the owner of
the vessel at fault, shall indemnify the losses and damages incurred
after an expert appraisal. But more in point to the instant case is
Article 827 of the same Code, which provides that if the collision is
imputable to both vessels, each one shall suffer its own damages and
both shall be solidarily responsible for the losses and damages suffered
by their cargoes.
Significantly, under the provisions of the Code of Commerce,
particularly Articles 826 to 839, the ship owner or carrier, is not exempt
from liability for damages arising from collision due to the fault or
negligence of the captain. Primary liability is imposed on the ship
owner or carrier in recognition of the universally accepted doctrine that
the shipmaster or captain is merely the representative of the owner
who has the actual or constructive control over the conduct of the
voyage (Y'eung Sheng Exchange and Trading Co. v. Urrutia & Co., 12
Phil. 751 [1909]).

2. Tatad v. Sec. Garcia, April 16, 1995

Facts: EDSA LRT Consortium, a foreign corporation, was awarded with
the construction of Light Rail Transit III (LRT III) as the only bidder who
has qualified with the requirements provided by the PBAC. The said
foreign corporation will construct the LRT III in a Built-Lease-Transfer
agreement that such public utility will be leased by the government
through the Department of Transportation and Communication (DOTC)
and then it would be subsequently sold by the corporation to the
government. An objection was raised by the petitioner, alleging that
the agreement was unconstitutional since it grants the consortium,
which is a foreign corporation, the ownership of the EDSA LRT which is
a public utility.
Issue: Whether or not the awarding of the bid to EDSA LRT Consortium
is against the Constitution
Held: No. The Court ruled that what the LRT Consortium owns are the
rail tracks, rolling stocks like the coaches, rail stations, terminals and
the power plant, not a public utility. While a franchise is needed to
operate these facilities to serve the public, they do not by themselves
constitute a public utility. What constitutes a public utility is not their

ownership but their use to serve the public. There is a distinction

between ownership and operation. The consortium will not run the light
rail vehicles and collect fees from the riding public. It will have no
dealings with the public and the public will have no right to demand
any services from it. A franchise is only required for the operation
and not the ownership.
3. Radio Communications of the Phils v. NTC, 150 SCRA 450
Facts: Kayumanggi Radio Network Inc. filed a complaint with NTC
alleging that petitioner RCPI was operating in Catarman without
certificate of public convenience and necessity. RCPI counter-alleged
that its telephone services in the areas are covered by the legislative
franchise recognized by NTC and its predecessor Public Service
Commission.
After conducting hearing, NTC ordered RCPI to immediately cease from
operating in these areas, stating that under EO 546, a certificate of
public convenience and necessity is mandatory for the operation of
communication utilities and services including radio communications.
The petitioner contends that its franchise cannot be affected by
Executive Order No. 546 on the ground that it has long been in
operation since 1957.
Issue: Whether or not petitioner RCPI, a grantee of a legislative
franchise to operate a radio company, is required to secure a
certificate of public convenience and necessity before it can validly
operate its radio stations including radio telephone services
Held: Yes. A franchise, being merely a privilege emanating from the
sovereign power of the state and owing its existence to a grant, is
subject to regulation by the state itself by virtue of its police power
through its administrative agencies. We ruled in Pangasinan
transportation Co., Inc. v. Public Service Commission (70 Phil. 221)
that:
... statutes enacted for the regulation of public utilities, being
a proper exercise by the State of its police power, are
applicable not only to those public utilities coming into
existence after its passage, but likewise to those already
established and in operation ...
Executive Order No. 546, being an implementing measure of P.D. No. I
insofar as it amends the Public Service Law (CA No. 146, as amended)

is applicable to the petitioner who must be bound by its provisions. The

mere fact that the petitioner possesses a franchise to put up and
operate a radio communications system in certain areas is not an
insuperable obstacle to the public respondent's issuing the proper
certificate to an applicant desiring to extend the same services to
those areas. The Constitution mandates that a franchise cannot be
exclusive in nature nor can a franchise be granted except that it must
be subject to amendment, alteration, or even repeal by the legislature
when the common good so requires. (Art. XII, sec. 11 of the 1986
Constitution).