Baldo is a driver of Yellow Cab Company under the boundary system.

While cruising along the

South Expressway, Baldos cab figured in a collision, killing his
passenger, Pietro. The heirs of Pietro sued Yellow 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%)

SUGGESTED ANSWER:
Yellow Cab Company shall be liable with Baldo, on a solidary basis, for the death of passenger
Pietro. Baldo is an employee of Yellow Cab under the boundary system. As such, the death of
passenger Pietro is breach of contract of carriage, making both the common carrier Yellow Cab
and its employee, Baldo, solidarily liable.
(Hernandez v. Dolor, G.R, No. 160286, July 30, 2004)












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

SUGGESTED ANSWER:
The kabit system is an arrangement where a person granted a certificate of public convenience
allows other persons to operate their motor vehicles under his license, for a fee or percentage
of their earnings (Lim v. Court of Appeals and Gonzalez, G.R, No. 125817, January 16, 2002,
citing Baliwag Trannit v. Court of Appeals, G.R. No. 57493, January 7, 1987) The law enjoining
the kabit system aims to identify the person responsible for an accident in order to protect the
riding public. The policy has no force when the public at large is neither deceived nor involved.
The law does not penalize the parties to a kabit agreement. But the kabit system is contrary to
public policy and therefore void and inexistent. (Art. 1409[1], Civil Code)













Procopio purchased an Isuzu passenger jeepney from Enteng, a holder of a certificate of public
convenience for the operation of public utility vehicle plying the Calamba-Los Baos route.
While Procopio continued offering the jeepney for public transport services, he did not have
the registration of the vehicle transferred in his name. Neither did he secure for himself a
certificate of public convenience 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 traveling southbound, it collided with a ten-wheeler
truck owned by 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.

SUGGESTED ANSWER:
The motion to dismiss should be denied because Procopio, as the real owner of the jeepney, is
the real party in interest. Procopio falls under the Kabit system. However, the legal restriction
as regards the Kabit system does not apply in this case because the public at large is not
deceived nor involved. (Lim v. Court of Appeals, G.R. No. 125817, January 16, 2002, citing
Baliwag Transit v. Court of Appeals, G.R. No. 57493, January 7, 1987)
In any event, Procoprio is deemed to be "the agent" of the registered owner. (First Malayan
Leasing v. Court of Appeals, G.R. No. 91378, June 9,1992; and "F" Transit Co., Inc. v. NLRC, G.R.
Nos, 88195-96, January 27, 1994)