General Principles of Common Carriers | TRANSPORTATION

General Principles of Common Carriers in Mercantile and Taxation Law (Philippines)

I. Definition of Common Carrier

A common carrier is defined under Philippine law as any person, corporation, firm, or association engaged in the business of transporting goods or passengers for compensation, offering its services to the public. This definition can be found under Article 1732 of the Civil Code of the Philippines, which covers all carriers operating by land, water, or air, whether publicly or privately owned.

1. Scope of Application: Common carriers encompass all businesses that offer transportation services to the public, regardless of whether the activity is regular or occasional, as long as it meets the “public service” criterion.
2. Business of Transport: Common carriers must transport goods or passengers as a regular business for compensation; incidental or isolated transport activities generally do not constitute common carriage.

II. Distinction from Private Carriers

The Philippine Civil Code distinguishes common carriers from private carriers. Unlike private carriers, common carriers do not have the right to choose whom they serve, as they offer their services indiscriminately to the general public. Private carriers, on the other hand, transport goods or passengers selectively and based on a private arrangement, typically under contract.

III. Nature of Liability of Common Carriers

The law presumes that a common carrier is liable for loss, destruction, or deterioration of goods entrusted to it, arising from its operation. The principles governing liability include:

1. Presumption of Negligence: Under Article 1735 of the Civil Code, in case of loss, destruction, or damage to goods, there is a presumption of negligence on the part of the common carrier. The carrier can only be exempt from liability by proving that the damage or loss was due to causes that were unforeseen and beyond its control.

2. Duty of Extraordinary Diligence: Article 1733 mandates that common carriers exercise extraordinary diligence in the vigilance over the goods and safety of passengers. This higher degree of diligence is imposed due to the public service nature of their business and is integral to their contractual and quasi-contractual obligations.

3. Liability for Acts of Employees: Common carriers are liable for the negligent acts of their employees within the course and scope of employment. This includes both permanent employees and temporary agents acting under the carrier’s authority.

IV. Grounds for Exemption from Liability

Common carriers may be exempt from liability if they can establish that the loss, damage, or deterioration of goods was due to any of the following causes, as listed under Article 1734 of the Civil Code:

1. Natural Disasters (Force Majeure): Acts of God, such as earthquakes, floods, or typhoons.
2. Public Enemies: Loss or damage caused by war or civil commotion.
3. Neglect or Default of the Shipper: When the act or omission of the shipper or owner caused the damage.
4. Character of the Goods: If the goods were inherently defective or prone to damage (e.g., perishables).
5. Order or Act of Public Authority: If an official act directly results in the destruction or confiscation of the goods.

V. Limitations on Carrier’s Right to Limit Liability

Article 1744 of the Civil Code allows common carriers to limit their liability through contracts, but only for loss or damage arising from specific causes and not due to the carrier's negligence or willful acts. The general principles include:

1. Prohibition Against Waiver of Liability for Negligence: Article 1745 states that stipulations exempting a common carrier from liability for its negligence, or that of its employees, are considered void. Thus, any attempt to limit liability for acts or omissions amounting to negligence is against public policy.

2. Conformity with Public Policy: Contracts with limitations on liability must align with the principles of public policy, as common carriers are charged with the public duty of care.

VI. Rights and Obligations of Common Carriers

1. Right to Collect Freight and Other Charges: Common carriers are entitled to charge and collect fees for the transportation of goods or passengers. Freight rates are often regulated, especially for public transportation carriers, to protect public interests.
2. Obligation to Provide Safe Transportation: Carriers must provide safe, prompt, and secure transportation for goods or passengers. This includes maintaining equipment, abiding by legal standards, and ensuring adequate safety measures.

VII. Special Provisions for the Carriage of Passengers

1. Liability for Passenger Injuries: Under Article 1755, common carriers are bound to exercise extraordinary diligence to prevent injury or death to passengers. The presumption of negligence applies in cases of injury or death, thus placing a heavy burden of proof on the carrier to show due diligence.
2. Extent of Liability for Death or Injuries: Article 1764 specifies that common carriers are liable for the death or injury of passengers, unless they can prove that it was due to causes exempted by law, such as an act of God or fault of the passenger.

VIII. Taxation Aspects of Common Carriers

1. Common Carrier’s Tax: Under the National Internal Revenue Code (NIRC), common carriers engaged in transporting goods or passengers within the Philippines are subject to a percentage tax based on gross receipts. This tax rate may vary and is in lieu of the value-added tax (VAT), but it applies only to certain types of domestic carriers.

2. Exemptions and Incentives: Certain carriers, especially those engaging in international or interisland shipping, may be eligible for tax exemptions or incentives, such as deductions on expenses or special tax rates, under the NIRC and related tax regulations.

3. Local Government Taxation: Local government units (LGUs) may also impose taxes on common carriers operating within their jurisdictions, although such local taxes must not duplicate or conflict with national taxes. However, the Local Government Code allows LGUs to impose taxes on the gross receipts of common carriers operating within their areas.

IX. Jurisdictional and Regulatory Oversight

1. Philippine Civil Aeronautics Board (CAB): For air carriers, the CAB regulates fare rates, safety standards, and operations, ensuring compliance with local and international aviation standards.

2. Maritime Industry Authority (MARINA): For waterborne transportation, MARINA is the key regulatory body, enforcing standards, approving routes, and issuing necessary certificates for compliance.

3. Land Transportation Franchising and Regulatory Board (LTFRB): The LTFRB oversees land-based transportation, granting franchises, approving rates, and ensuring safety regulations for common carriers operating within the Philippines.

X. Recent Developments and Case Law

Recent case law from the Supreme Court of the Philippines has further clarified the obligations of common carriers, particularly with respect to extraordinary diligence and the presumption of negligence. For example, courts continue to affirm that common carriers have an implied contractual obligation to prioritize the safety of passengers, and that contractual waivers do not absolve carriers from liabilities arising from negligence.

This encapsulation of common carrier principles under Philippine mercantile and taxation law underscores the stringent regulatory and statutory requirements imposed to protect the public interest, as well as the strict liability standards applied to carriers for the welfare and security of both goods and passengers in transit.