NOTES IN TRANSPORTATION LAW

Atty. Zarah Villanueva-Castro (FEU / San Beda)

GOVERNING LAWS
Land Transportation
1. Common Carriers
1.1. New Civil Code (NCC) primary
1.2. Code of Commerce suppletory
2. Private Carriers
2.1. Object is a merchandise
2.1.1. Code of Commerce primary
2.1.2. NCC suppletory
2.2. Object is non-commercial
2.2.1. Law on deposit if object is property
2.2.2. Law on contracts if passenger

Transportation by Sea
1. Coastwise
1.1. NCC primary
1.2. Code of Commerce suppletory
1.3. Carriage of Goods by Sea Act (COGSA) does not
apply even if the parties expressly provide for it
2. Philippine port to foreign ports law of the country of
destination
3. Foreign ports to Philippine ports
3.1. NCC primary
3.2. Code of Commerce
3.3. COGSA
3.4. Philippine laws still apply even if the collision
actually takes place in foreign waters.

Air Transportation
1. Domestic NCC; Code of Commerce
2. International Warsaw Convention

COMMON CARRIERS

A person, corporation, firm or association, engaged in

the business of carrying or transporting passengers or
goods or both, by land, water or air, for
compensation, offering their services to the public
(Art. 1732 NCC)

Tests:
1. He must be engaged in the business of carrying goods
for others as a public employment, and must hold
himself out as ready to engage in transportation of
goods for persons generally as a business and not as a
casual occupation;
2. He must undertake to carry goods of a kind to which
his business is confined;
3. He must undertake to carry by the method by which
his business is conducted and over his established
roads; and
4. The transportation must be for hire (First Phil.
Industrial vs. CA, 300 SCRA 661)
Characteristics:

Art. 1732 makes no distinction between one whose

principal business activity is the carrying of persons
or goods or both, and one who does such carrying
only as an ancillary activity (sideline).
It also avoids distinction between offering
transportation service on a regular or scheduled
basis, and on an occasional, episodic or unscheduled
basis.
Neither does it distinguish between a carrier offering
its services to the general public (general
community or population) and one who offers
services only from a narrow segment of the
population.
A person or entity is a common carrier even if he did
not secure a Certificate of Public Convenience (De
Guzman vs. CA, 168 SCRA 612)
It does not provide that the transportation should be
by motor vehicle.
Hence, a grantee of pipeline concession under the
Petroleum Act is considered a common carrier (First
Phil. Industrial vs. CA, supra)
One is a common carrier even if he has no fixed and
publicly known route, maintains no terminals, and
issues no tickets (Asia Lighterage Shipping vs. CA GR
No. 147246, August 19, 2003)
A common carrier shall remain as such,
notwithstanding the charter of the whole or portion
of a vessel, provided the charter is limited to the ship
only, as in the case of a time or voyage charter.
It is only when the charter includes both the vessel
and its crew, as in a bareboat or demise, that a
common carrier becomes private (Planters Products
vs. CA, 226 SCRA 476)
A travel agency is not a common carrier. Its services
include procuring tickets and facilitating travel
permits or visas as well as booking customers for
tours (Crisostomo vs. CA, GR No. 138334, Aug. 25,
2003)

Distinctions between a Common and a Private Carrier:

COMMON CARRIER
Holds himself out for
all people
indiscriminately
Extraordinary diligence
is required
Subject to State
regulation
There is a presumption
of fault or negligence
Exempting
circumstances are
proof of extraordinary
diligence and Art. 1734
NCC

PRIVATE CARRIER
Contracts with
particular individuals or
groups only
Only ordinary diligence
is required
Not subject to State
regulation
No presumption of fault
or negligence
Exempting
circumstance is
fortuitous event

Parties may not agree

on limiting the carriers
liability except when
provided by law

Governed by law on
common carriers

Parties may even

exempt carriers
liability, provided it is
not contrary to law,
morals, good customs,
public order or public
policy
Governed by law on
obligations and
contracts

Registered Owner Rule

A registered owner of a vehicle (even if not used for
public service) is the lawful operator insofar as the
public
and
third
persons
are
concerned;
consequently, it is directly and primarily responsible
for the consequences of its operation.
1.

2.

In contemplation of the law, the owner/operator

of record is the employer of the driver, the
actual operator and employer being considered
as merely its agent (Equitable Leasing Corp. vs.
Suyom, GR No. 143360. Sept. 5, 2002)
The
registered
owner
cannot
escape
responsibility by proving that a third person is
the actual and real owner. He is liable to the
injured party subject to his right of recourse
against the transferee or buyer.
a. The registered owner is liable even
if the vehicle was leased to another
(BA Finance Corp. vs. CA, 215 SCRA 715)
b. It would be absurd to hold liable
the owner of a stolen vehicle for an accident
caused by the person who stole the vehicle
(Duavit vs. CA, 173 SCRA 490)

Kabit System
A system whereby a person who has been granted a
certificate of public convenience allows other persons
who own motor vehicles to operate under such
license, for a fee or a percentage of such earnings. It
is void under Art. 1409 NCC.

Effects:
1. The thrust of the law in enjoining the kabit
system is to identify the person upon whom
responsibility may be fixed with the end in view
of protecting the riding public
2. The registered owner is primarily liable for all
the consequences of the operations of the
carrier.
3. The registered owner cannot recover from the
actual owner and the latter cannot obtain
transfer of the vehicle to himself, both being in
pari delicto (Teja Marketing vs. IAC, 148 SCRA
347)
4. Both the registered owner and the actual owner
are solidarily liable with the driver (Zamboanga
Tranportation Co. vs. CA, 30 SCRA 717)

5.

The transfer, sale, lease or assignment of the

privilege granted is valid between the
contracting parties but not upon the public or
third persons (Gelisan vs. Alday, 152 SCRA 388)

Exceptions to kabit system:

When neither of the parties to the kabit system is

being held liable for damages.

When the case arose from the negligence of another

vehicle in using the public road to whom no
representation or misrepresntation as regards the
ownership and operation of passenger jeepney was
made.

When the riding public was not bothered or

inconvenienced at the very least by the illegal
arrangement. (Lim vs. CA, 373 SCRA 394)
Boundary System (2005 Bar Exam)
The driver pays for the gasoline consumed and does
not receive a fixed wage but gets only the excess of
the receipt of the fares collected by him over the
amount he has agreed to pay to the owner of the
vehicle

The owner cannot escape liability:

1. The owner is subsidiarily liable as employer in
accordance with Art. 103 RPC
2. From the viewpoint of labor laws, he is an
employee, being entitled to all privileges going
along with the employer-employee relationship
3. From the viewpoint of the NCC, the driver is a
lessee because he pays a fixed amount of rental
for his use of the vehicle
4. From the viewpoint of the law on common
carriers, he is an employee of the operator for
purpose of the latters liability to passengers

Arrastre Operator
The legal relationship between the consignee and the
arrastre operator is akin to that of a depositor and a
warehouseman. The relationship between the
consignee and the common carrier is similar to that
of the consignee and the arrastre operator. Hence,
the duty of the arrastre operator to take care of the
goods that are in its custody and to deliver them in
good condition to the consignee also devolves upon
the common carrier. Thus, the arrastre operator and
the common carrier are liable in solidum for the
proper delivery of the goods to the consignee
(Eastern Shipping Lines v. CA, 234 SCRA 78)

TOWAGE

A vessel is hired to bring another

vessel to another place

ARRASTRE

A contract for unloading of goods

from a vessel.
Services are not maritime. They
are in fact no different from
those of a depositary or
warehouseman.
Loading and unloading of
coastwise vessels calling at the
port

the consignee. However, the parties may agree to

limit the liability of carrier (Lu Do vs. Binamira, 101
Phil. 120)

I. CARRIAGE OF GOODS

Defenses
1. Flood, storm, earthquake, lighting, or other natural
disaster or calamity.(Caso Fortuito/Force Majeure)
2. Act of public enemy in war, whether international or
civil
3. Act or omission of shipper or owner of goods
4. Character of goods or defects in packing or in
containers.
5. Order or act of competent authority (Art. 1734)
6. Stipulation limiting liability of carrier (Arts. 1744,
1448, 1749, 1750)

Extraordinary Diligence (1997, 2001, 2002 Bar Exams)

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 passengers transported by
them, according to all circumstances of each case
(Art. 1733, NCC)

Caso Fortuito/Force Majeure

1. Must be proximate and only cause of loss
2. Carrier must exercise due diligence to prevent or
minimize the loss before, during or after the disaster
(Art. 1739)
3. Carrier not in delay in transporting the goods (Art.
1740)

Presumption of Negligence
1. If the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault
or to have acted negligently (Art. 1735)
2. Mere proof of the delivery of goods in good order to a
common carrier and their arrival in bad order at their
destination makes for a prima facie case against the
carrier (Coastwise Lighterage Corp. vs. CA, 245 SCRA
796)
3. The court need not make an express finding of fault
or negligence, the law imposes liability upon common
carriers, as long as it is shown that:
a. There is a contract between the shipper and
common carrier
b. Loss or deterioration took place during the
existence of contract

STEVEDORING

Duration of Liability
Commencement: from the time the goods are
unconditionally placed in the possession of, and received
by the carrier for transportation
Termination: actual or constructive delivery by the
carrier to the consignee or to the person who has the right
to receive them (Art. 1736)
Liability remains:
1. Even when goods are temporarily unloaded or stored
in transit unless the shipper or owner has made use of
the right of stoppage in transitu (Art. 1737)
2. And when goods are stored in the carriers warehouse
at the place of destination until the consignee has
been advised of the arrival thereof and had
reasonable opportunity thereafter to remove or
dispose them (Art. 1738)
3. Delivery to the customs authorities is not delivery to

Fire may not be considered a natural disaster

(Eastern Shipping vs. IAC, 150 SCRA 463)
Very rough seas and stormy weather were not caso
fortuito, but normal occurences that an ocean-going
vessel, particularly in the month of September which,
in our area, is a month of rains and heavy seas would
encounter as a matter of routine (Eastern Shipping
vs, CA, 196 SCRA 570)

Acts of Public Enemy

1. Must be proximate and only cause of loss
2. Carrier must exercise due diligence to prevent or
minimize loss before, during or after the act causing
loss, of goods (Art. 1739)
Contributory Negligence
If shipper or owner merely contributed to the loss,
the proximate cause thereof being the negligence of
carrier, the carrier shall still be liable for damages,
but such shall be equitably reduced (Art. 1741)
Character of the Goods
Even if damage caused by the inherent
defect/character of goods, the common carrier must
exercise due diligence to forestall or lessen loss (Art.
1742)
Carrier who, knowing the fact of improper packing of
the goods upon ordinary observation, still accepts the
goods notwithstanding such condition is not relieved
of liability for loss resulting therefrom (Southern
Lines, Inc. v. CA, 4 SCRA 258)
Order or Act of Public Authority
Public authority must have power to issue the order
(Art. 1743). Where the officer acts without legal
process, the common carrier will be held liable.

Stipulation Limiting Liability of Carrier

Common carrier and shipper may agree on carriers
observance of diligence to a degree less than
extraordinary, provided it be:
1. In writing, signed by shipper or owner;
2. Supported by a valuable consideration other than
the service rendered by carriers; and
3. Reasonable, just and not contrary to public
policy. (Art. 1744)
Valid Stipulations:
1. Carrier's liability limited to the value of goods
appearing in the bill of lading, unless the shipper
or owner declares a greater value. (Art. 1749)
2. Fixing the sum to be recovered by the owner or
shipper, if it is reasonable and just under the
circumstances and has been fairly and freely
agreed upon. (Art. 1750)
3. Limiting carriers liability for delay on account of
strikes or riots. (Art. 1748)
Invalid Stipulations:
1. Goods are transported at the risk of the owner or
shipper;
2. Carrier will not be liable for any loss of goods;
3. Carrier need not observe any diligence in the
custody of goods;
4. Carrier shall exercise a degree of diligence less
than that of a good father of a family;
5. Carrier shall not be responsible for the acts or
omissions of his or its employees;
6. Carriers liability for acts committed by thieves
or robbers who do not act with grave or
irresistible threat, violence or force is dispensed
with or diminished;
7. Carrier not responsible for the loss of goods on
account of defective condition of car, vehicle,
ship or other equipment used in the contract of
carriage. (Art. 1745)

5.
6.
7.
8.
9.

Injurious to health
Goods will be exposed to untoward danger like flood,
capture by enemies and the like
Goods like livestock will be exposed to diseases
Strike
Failure to tender goods in time

Duty to Deliver Goods

Oft-Repeated Rule: In the absence of a special
contract, a carrier is not an insurer against delay in
transportation of goods
Consequences of Delay:
1. A natural disaster shall not free carrier from
responsibility (Art. 1740)
2. Contract limiting carrier's liability cannot be
availed of in case of loss of goods (Art. 1747)
3. Excusable delays in carriage suspend, but do not
generally terminate, the contract of carriage,
and when the cause is removed, the master must
proceed with the voyage and make delivery
4. During delay the vessel continues to be liable as
a common carrier, not as a warehouseman, and
remains duty bound to exercise extraordinary
diligence
5. Payment of indemnity:
a. Stipulated in bill of lading
b. If no indemnity stipulated, then carrier shall
be liable for damages incurred due to delay
6. Consignee may:
a. Leave goods transported in the hands of
carrier (Abandonment) advising him thereof
in writing before their arrival at the point of
destination. The carrier shall pay the full
value of goods as if they had been lost or
mislaid.
b. If
no
abandonment
was
made
indemnification shall not exceed the current
price of goods at the time it should have
been delivered
II. CARRIAGE OF PASSENGERS

Effect of Delay
If, without just cause,
goods or (2) changes
the contract limiting
cannot be availed of
1747)

(1) delays the transportation of

the stipulated or usual route,
the common carrier's liability
in case of loss of goods (Art.

Presumption despite stipulation

Even when there is an agreement limiting the
liability, the common carrier is disputably presumed
to have been negligent in case of their loss. (Art.
1752)
Grounds for valid refusal to accept goods:
1. Dangerous objects or substances including dynamites
and other explosives
2. Unfit for transportation
3. Acceptance would result in overloading
4. Contrabands or illegal goods

Not Passengers:
1. One who has boarded by fraud, stealth or deceit
2. Rides any part of the vehicle unsuitable or dangerous
or which he knows is not designated or intended for
passengers
3. Remains on a carrier for an unreasonable length of
time after he has been afforded every safe
opportunity to alight
Utmost Diligence
A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons,
with a due regard for all the circumstances (Art.
1755)
BAR QUESTION (Q): X, an 80-year old epileptic,
boarded the S/S Tamaraw in Manila going to

Mindoro. To disembark, the passengers have to

walk thru a gang plank. While negotiating the gang
plank, X slipped and fell into the waters. X was
saved from drowning, brought to a hospital but
after a month, died from pneumonia. Except for X,
all the passengers were able to walk thru the gang
plank. What is the liability of the owner of S/S
Tamaraw?
SUGGESTED ANSWER (SA): The owner of S/S
Tamaraw is liable for the death of X in failing to
exercise utmost diligence in the safety of
passengers. Evidently, the carrier did not take the
necessary precautions in ensuring the safety of
passengers in the boarding of and disembarking
from the vessel. Unless shown to the contrary, a
common carrier is presumed to have been negligen
tin cases of death or injury to its passengers (Arts.
1755-1756, NCC). Since X has not completely
disembarked yet, the obligation of the shipowner
to exercise utmost diligence still then subsisted
and he can still be held liable.
Duration of Liability
Commencement: From the moment the person who
purchases the ticket (or token or card) presents
himself at the proper place and in a proper manner to
be transported with a bona fide intent to ride the
coach (Vda. De Nunca vs. Manila Railroad Co., 13
SCRA 249)

Termination: Until the passenger has, after reaching

his destination, (1) safely alighted; or (2) had a
reasonable opportunity to leave the carriers
premises

Liability remains:
1. Not only during the course of the trip, but for so
long as the passengers are within its premises
and where they ought to be in pursuance to the
contract of carriage (LRTA vs. Navidad)
2. Includes reasonable time to remain on the
premises to see after his baggage and prepare for
his departure (La Mallorca vs. CA, 17 SCRA 739)
3. Extends to persons boarding the cars as well as to
those alighting therefrom. It is the duty of
common carriers to stop their conveyances a
reasonable length of time to afford passengers an
opportunity to enter (Dangwa Trans Co. vs. CA,
202 SCRA 574)

Presumption of Negligence
1. In case of death of or injury to passengers, common
carriers are presumed to have been at fault or to
have acted negligently (Art. 1756 NCC). This provision
applies the doctrine of res ipsa loquitor for several
reasons:
a. The contract imposes on the carrier the
obligation to transport the passengers safely,
hence the burden of explaining should fall on the
carrier;

b.

2.

The cause of accident is better known to the

carrier than the passenger; and
c. The accident could not have happened if due
care was exercised by the carrier
The court need not make an express finding of fault
or negligence of the common carrier to hold it liable

Liability for Acts of Employees

1. Common carriers are liable for the death of or
injuries to passengers through the negligence or
willful acts of the formers employees, although:
a. Such employees may have acted beyond the
scope of their authority or
b. In violation of the orders of common carriers
(Art. 1759)
2. Not a defense:
a. Proof of exercise of diligence of a good father of
a family in the selection and supervision of
employees (Ibid)
b. Cannot be eliminated or limited by stipulation,
posting of notices, statements on the tickets or
otherwise (Art. 1760)
3. Liability of carrier for the personal violence of its
employees or agents upon its passengers extends only
to those acts that the carrier could foresee or avoid
through the exercise of the degree of diligence
required.
4. Diligence in the selection and supervision of
employees under Art. 2180 NCC cannot be interposed
by the common carrier to prevent damages because
the liability of the carriers arises from the breach of
the contract of carriage. The defense under Art. 2180
is applicable to negligence in quasi-delicts (Del Prado
v. Manila Electric Co., 52 Phil 900)
Liability for Acts of Strangers or other Passengers
1. A common carrier is responsible for 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 stopped the act or omission (Art. 1763)
2. The carrier is liable when its personnel allowed a
passenger to drive the vehicle causing it to collide
with another vehicle resulting to the injuries suffered
by the other passengers (MRR v. Ballesteros, 16 SCRA
641)
Effect of Stipulation on Liability
General Rule: Liability cannot be dispensed with or
lessened by stipulation, posting of notices,
statements on tickets or otherwise (Art. 1757)

Exception: When a passenger is carried gratuitously, a

stipulation limiting the common carriers liability for
negligence is valid

Exception to the exception: Willful acts or gross

negligence (Art. 1758)

Passengers Hand-carried Baggage

3.
HAND-CARRIED
(In custody of passengers
or their employees)
Necessary deposit
Common carrier
exercises diligence of a
depositary (ordinary
diligence)
Governed by Arts. 1998
and 2000-2003

CHECKED-IN
(In custody of the
carrier)
Considered as goods
Requires extraordinary
diligence
Governed by Arts. 17331753

III. ACTIONS
Causes of Action:
1. Culpa Contractual
The liability of the carrier is not merely
subsidiary or secondary but direct, immediate
and primary. (Medina vs. Cresencia, 99 Phil. 506)
Only the carrier is primarily liable and not the
driver, because there is no privity between the
driver and the passenger.
No defense of due diligence in the selection and
supervision of employees. (Art. 1759)
2.

3.

Culpa Aquiliana
The carrier and driver are solidarily liable as
joint tortfeasors.
Defense of due diligence in the selection and
supervision of employees is available. Except:
maritime tort resulting in collision
Culpa Delictual
The driver is primarily liable. The carrier is
subsidiarily liable only if the driver is convicted
and declared insolvent (Art. 100 RPC)

OVERLAND TRANSPORTATION
Scope:
1. Domestic land and water/maritime transportation
2. Domestic air transportation
Bill of lading
Written acknowledgment of receipt of goods and
agreement to transport them to a specific place to a
person named or to his order.
Note: It is not indispensable for the creation of a
contract of carriage. The contract itself arises from
the moment goods are delivered by the shipper to the
carrier and the carrier agrees to carry them
(Compania Maritima v. Insurance Company of North
America, 12 SCRA 213)
Functions:
1. A receipt for the goods shipped.
2. A contract which the three parties (shipper, carrier,

consignees) undertake specific responsibilities and

assume stipulated obligations.
A legal evidence of the contract between the shipper
and the carrier. Its contents shall decide all disputes
which may arise with regard to their execution and
fulfillment. (Magellan Manufacturing v. CA, 201 SCRA
2021)
In the absence of a bill of lading, their respective
claims may be determined by legal proofs which each
of the contracting parties may present in conformity
with law.

Obligations of the Carrier

1. Duty to Accept Goods see notes on Common Carriers
for ground for valid refusal to accept goods
2. Duty to Deliver Goods to (i) person indicated in bill of
lading; or (ii) any person to whom bill of lading was
validly transferred or negotiated
3. see notes on Common Carriers for effects of delay
4. Duty to exercise extraordinary diligence
Right of Consignee to Abandon the Goods
1. Partial non-delivery, where goods are useless with
others (Art. 363 Code of Commerce)
2. Goods rendered useless for sale or consumption for
purposes for which they are properly destined (Art.
365)
3. In case of delay through the fault of carrier (Art. 371)
Notice of Damage
Condition precedent
Damage apparent immediately upon delivery
Damage not apparent within 24 hours from delivery
(Art. 366)
Prescriptive Period
1. Not provided by Art. 366, hence NCC applies
2. No bill of lading within 6 years
3. With bill of lading 10 years
ART. 366
CODE OF COMMERCE
Notice of damage is a
condition precedent
24-hour period for nonapparent damage
No prescriptive period
provided. NCC applies
Does not cover
misdelivery or delay
Extrajudicial demand
tolls prescriptive period
Parties can stipulate
shorter period

COGSA
Notice of damage not a
condition precedent
3-day period for nonapparent damage
1-year period
Also does not cover
misdelivery or delay
Extrajudicial demand
does not toll prescriptive
period
1-year period cannot be
shortened

MARITIME LAW
Characteristics:
1. Real
a. Similar to transactions over real property with
respect to effectivity against third persons which
is done through registration
b. Evidence of real nature is shown by (1) limitation
of liability of agents to actual value of the vessel
and freight money; and (2) right to retain cargo
and embargo and detention of vessel (Luzon
Stevedoring Corp v. CA, 156 SCRA 169)
2. Hypothecary
Liability of owner of vessel is limited to the value
of vessel (Doctrine of Limited Liability)

7.

May be made to be exempted from the following

liabilities:
a. Civil liability to third persons arising from the
conduct of the captain in the vigilance over the
goods
b. Proportionate contribution of co-owners of the
vessel to a common fund for the results of the
acts of the captain referred to in Art. 587 Code
of Commerce
c. Civil liability incurred by the ship owner in case
of collision

Admiralty Jurisdiction
all actions in admiralty and maritime jurisdiction
where the claim exceeds P300,000 or in Metro Manila,
exceeds P400,000 the RTC has jurisdiction (Sec. 19(3)
BP 129, as amended by RA 7691)

I. DOCTRINE OF LIMITED LIABILITY

II. VESSELS
No vessel, no liability
The liability of ship owners is limited to the amount
of interest in said vessel such that where vessel is
entirely lost, the obligation is extinguished (Luzon
Stevedoring v. Escano, 156 SCRA 169)
Interest extends to:
1. Vessel itself
2. Equipments
3. Freightage
4. Insurance proceeds (Chua v. IAC, 166 SCRA 183)
Exceptions:
1. Where injury or damage is due to ship owners fault
2. Vessel is insured
3. Claims under Workmens Compensation
4. Expenses for repair on vessel before loss
5. Vessel is not abandoned
6. Voyage is not maritime but only in a river or gulf
Abandonment
1. Indispensable requirement before the shipowner or
ship agent can enjoy the benefits of the limited
liability principle. The only instance where such
abandonment is dispensed with is when the vessel
was entirely lost.
2. Only the ship owner and the ship agent can make an
abandonment
3. What may be abandoned vessel
4. Instances:
a. Civil liability from indemnities to third persons
(Art. 587 Code of Commerce)
b. Leakage of at least of contents of cargo
containing liquids (Art. 687)
c. Constructive loss of vessel (Sec. 138 Insurance
Code)
See notes on Overland Transportation for right
of consignee to abandon goods
5. No procedure to be followed
6. No prescriptive period provided not estopped from
invoking the same or do acts inconsistent with
abandonment

Engaged in navigation, whether coastwise or on the

high seas, including floating docks, pontoons,
dredges, scows and any other floating apparatus
destined for the services of the industry or maritime
commerce. Excluded are local and foreign military
vessels, bancas and other watercrafts of less than 3
tons gross capacity and small watercrafts engaged in
river and bay traffic.

Ownership
1. Acquisition
a. Prescription (1) acquisition must appear in a
written instrument, (2) which shall not produce
any effect to third persons if not inscribed in the
registry of vessels and (3) shall be acquired by
possession in good faith, continued for 3 years,
(4) with a just title duly recorded. (5) In the
absence of any of these, continuous possession
for 10 years shall be necessary to acquire
ownership.
b. Sale
If made while it is on voyage the freightage
which it earns from the time it receives its last
cargo shall pertain entirely to the purchaser,
and the payment of the crew and other
persons who make up its complement shall be
for his account.
If made after vessel arrived at port of its
destination freightage shall pertain to the
vendor, and the payment of the crew and
other individuals who make up its complement
shall be for his account, unless the contrary is
stipulated in either case.
2.

Registration through the Maritime Industry Authority

(MARINA)

Ships Manifest - Declaration of the entire cargo. The

object is to furnish customs officers with a list to check

against, to inform the revenue officers what goods are

brought into a port of the country on a vessel. Hence, the
requirement that a vessel must carry a manifest is not
complied with even if a bill of lading can be presented

A bill of lading is just a declaration of a specific cargo

rather than the entire cargo. It is issued as a matter
of convenience by virtue of a contract.

III. PARTIES
1.
2.
3.
4.

Ship-owners and ship agents

Captains and masters of the vessel
Officers and crew of the vessel
Supercargoes

Shipowners and Ship Agents

Liabilities:
1. Acts of the captain (Art. 618)
2. Contracts of the captain, whether authorized or
not, to repair, equip and provision the vessel,
provided that the amount claimed was invested
for the benefit of the vessel (Art. 586)
3. Indemnities in favor of third persons which may
arise from the conduct of the captain in the care
of the goods which the vessel carried, as well as
for the safety of the passengers transported
4. Damages to the goods loaded on the vessel
without prejudice to their right to free
themselves from liability by abandoning the
vessel to the creditors (Art. 587)
Notes:
Liable jointly and severally
Not liable for an obligation contracted by the captain
in excess of the latters powers and privileges
pertaining to him. However, if the amount claimed
were used for the benefit of the vessel, the ship
owner or ship agent is liable
Captains and Masters of Vessels

Nature of Position
1. General agent of the ship-owner
2. Technical director of the vessel
3. Representative of the government of the country
under whose flag he navigates
Qualifications:
1. Filipino citizen
2. Legal capacity to contract
3. must have passed the required physical and
mental examinations required for licensing him
as such (Art. 609)
Supercargoes - Persons who discharge administrative
duties assigned to him by ship agent or shippers,
keeping an account and record of transaction as
required in the accounting book of the captain (Art.
649)

IV. CHARTER PARTY

Contract by which an entire ship, or some principal

part thereof is let by the owner to another person for
a specified time or use for the conveyance of goods,
in consideration of the payment of freight (Caltex
Phils. vs. Sulpicio Lines, 315 SCRA 709)
LEASE
If for a definite
period, lessee cannot
give up lease by
paying a portion of the
amount agreed upon
If the leased property
is sold to one who
knows of the existence
of the lease, the new
owner must respect
the lease

CHARTER PARTY
Charterer may rescind
charter party by
paying half of
freightage agreed
upon
The new owner is not
compelled to respect
the charter party so
long as he can load
the vessel with his
own cargo

Classes:
1. Bareboat or Demise Charter
Charterer provides crew, food and fuel. The
charterer is liable as if he were the owner,
except when such arises from the unworthiness
of the vessel
Owner pro hac vice a demise charterer, in spite
of the fact that somebody else is the owner of
the vessel, is treated as the owner of the
chartered vessel, just for that one particular
purpose only.
Effect: charterer assumes customary rights and
liabilities of the ship-owner to third persons and
is held liable for the expense of the voyage and
the wages of the seamen
2. Contract of Affreightment
Owner leases the boat or part of it for the
carriage of goods
1. Time charter vessel is chartered for a
period of time or duration of voyage
2. Voyage or trip charter contract for hire of
vessel for one or series of voyages
BAREBOAT / DEMISE
Charterer becomes liable
to others caused by its
negligence
Charterer regarded as
owner pro hac vice for
the voyage
Owner of vessel
relinquishes possession,
command and navigation
to charterer
Common carrier becomes
private

AFFREIGHTMENT
Owner remains liable as
carrier and must
answer for any breach
of duty
Charterer is not
regarded as owner
Owner retains
possession, command
and navigation of the
ship
Common carrier
remains as such

Freight Parties may fix the manner or form in which the

charter price shall be satisfied
Lay days period when vessel will be delayed in the port
for loading and unloading
Primage bonus to be paid to the captain after the
successful voyage
Deadfreight where the charterer failed to occupy the
leased portion of the vessel, he may thereby be made
liable by the ship-owner
Demurrage sum due, by express contract, for the
detention of the vessel, in loading and unloading, beyond
the time allowed in the contract of affreightment, and to
any other improper detention or delay beyond the time
set for loading

Exceptions to the Hypothecary Nature:

1. Loss due to inherent defect
2. Loss due to the barratry on the part of the captain
3. Loss due to the fault of malice of the borrower
4. Vessel was engaged in contraband
5. Cargo loaded on the vessel be different in form that
agreed upon
When Bottomry/Respondentia Regarded as Simple Loan
1. Lender loaned an amount larger than the value of the
object due to fraudulent means employed by
borrower (Art. 726)
2. Full amount of the loan is not used for the cargo or
given on the goods if all of them could not have been
loaded, the balance will be considered a simple loan
(Art. 727)
3. If the effects on which the money is taken is not
subjected to any risk (Art. 729)
BOTTOMRY/
RESPONDENTIA
May or may not have a
collateral
Collateral may be any
property
Absolutely repayable

V. BOTTOMRY AND RESPONDENTIA

Bottomry loan made by ship-owner or ship agent
guaranteed by the vessel itself and repayable upon arrival
of vessel at destination (Art. 719)
Respondentia loan, taken on security of the cargo laden
on a vessel, and repayable upon safe arrival of cargo at
destination (Art. 719)
Common Requisites:
1. Borrows money for use, equipment or repair of vessel
2. For a definite term
3. With extraordinary interest called premium
4. Secured by pledge of vessel or portion thereof (in
bottomry) or goods (respondentia)
5. Loan repayment depends or conditioned on the safe
arrival of the vessel (bottomry) or goods
(respondentia)
6. Obligation to repay extinguished if vessel is lost due
to specific marine perils in the course or voyage
within a limited time, or if pledged goods are lost

Need not be in writing

but interest shall not be
due unless expressly
stipulated in writing
Need not be registered
to bind third persons
Loss of collateral does
not extinguish the loan

Must have collateral

Must be vessel or cargo
subject to maritime risks
Depends upon the safe
arrival of the collateral
at the port
Must be in writing

Must be recorded in the

registry of vessels of the
port of registry of the
vessel
Loss of collateral
extinguishes the same

VI. ACCIDENTS

Formal Requirements:
1. By means of public instrument
2. Policy signed by the contracting parties and the
broker taking part therein
3. Private instrument
Who may contract:
Bottomry ship owner or ship agent. Outside of the
residence of the owners, the captain.
Respondentia only the owner of the cargo, except:
(i) on the portion of the vessel he owns, provided no
money has been previously borrowed on the whole
vessel, nor exists any other kind of lien or obligation
chargeable against her; (ii) when he is permitted to
do so, he must necessarily state what interest he has
in the vessel

ORDINARY LOAN

1.
2.
3.
4.

Averages
Collision
Arrival Under Stress
Shipwreck

Protest written statement by the master of a vessel or

any authorized officer, attested by proper officer or a
notary, to the effect that damages has been suffered by
the ship.

Required in the following instances:

1. Vessel makes an arrival under stress
2. Vessel is shipwrecked
3. Vessel has gone through hurricane or the captain
has suffered damages or averages
4. Maritime collisions

Note: Should be made within 24 hours following the

arrival of the vessel at the first port. Upon arrival at
the place of destination, the captain shall ratify the
protest within 24 hours.
Averages
1. An extra-ordinary or accidental expense incurred
during the voyage in order to preserve the cargo,
vessel or both; and
2. All damages or deterioration suffered by the vessel
from departure to the port of destination, and to the
cargo from the port of loading to the port
consignment (Art. 806)
Classes of Averages
1. Particular or Simple Average
(i) Damage or expenses caused to the vessel or cargo
that did not inure to common benefit, and (ii) borne
by respective owners (Art. 809)
2. Gross or General Average
2.1. Damage or expenses deliberately caused in order
to save the vessel, its cargo or both from real
and known risk (Art. 811)
All the persons having an interest in the vessel
and the cargo therein at the time of the
occurrence of the average shall contribute to
satisfy this average (Art. 812)
Requisites:
2.3.1. Common danger present
2.3.2. Arising from accidents of sea, disposition
of authority
2.3.3. Peril imminent and ascertained
2.3.4. Part of vessel or cargo deliberately
sacrificed
2.3.5. Intended to save vessel or cargo or both
2.3.6. Successful saving of vessel or cargo
2.3.7. Proper legal steps and authority taken
Procedure for recovery:
There must be an assembly of the sailing mate
and other officers with the captain
including those with interests in the cargo
Resolution of the captain
The resolution must be entered in the logbook,
with reasons and motives and the votes for
and against the resolution
2.4.5. The minutes shall be signed by the parties
2.4.6. The captain shall deliver a copy of the
minutes to the maritime judicial authority
of the first port he may make, within 24
hours after his arrival, and to ratify it
immediately under oath (Art. 813-814)
York-Antwerp Rules: Liability for contribution on
averages:
1. Deck cargo is permitted in coastwise shipping but
prohibited in overseas shipping
2. Overseas trade must always contribute to general
average, but should the same be jettisoned, it would

3.

not be entitled to reimbursement because there is

violation of the Y-A Rules
Coastwise shipping must always contribute to
general average and if jettisoned would be entitled
to reimbursement

Collision Impact of two vessels both of which are moving

Allision Impact between a moving vessel and a
stationary one

Zones of Time in the Collision of vessels:

1. First zone - all time up to the moment when risk
of collision begins
2. Second zone - time between moment when risk
of collision begins and moment it becomes a
practical certainty;
3. Third zone - time when collision is certain and
time of impact

Error in Extremis sudden movement made by a

faultless vessel during the third zone of collision with
another vessel which is at fault during the second
zone. Even if such sudden movement is wrong, no
responsibility will fall on said faultless vessel (Urrutia
and Co. v. Baco River Plantation, 26 Phil. 632)
Cases Covered:
1. One vessel at fault such vessel is liable for
damage caused to innocent vessel as well as
damages suffered by the owners of cargo of both
vessels
2. Both vessels at fault each vessel must bear its
own loss, but the shippers of both vessels may go
against the ship owners who will be solidarily
liable
3. Vessel at fault not known
Doctrine of Inscrutable Fault (1997 Bar Exam)
In case of collision where it cannot be
determined which between the two vessels
was at fault, both vessels bear their
respective damage, but both should be
solidarily liable for damage to the cargo of
both vessels.
4. Third vessel at fault same rule as (1)
5. Fortuitous event each bears its own loss
Procedure:
1. Protest should be made within 24 hours before
the competent authority at the point of collision
or at the first port of arrival, if in the Philippines
and to the Philippine consul, if the collision took
place abroad (Art. 835)
2. Injuries to persons and damage to cargo of
owners not on board on collision time need not
be protested (Art. 836)

Arrival under Stress

Arrival of a vessel at a port of destination on account
of lack of provision, well-founded fear of seizure,

pirates, or accidents of sea disabling navigation (Art.

819)

When Not Lawful:

1. Lack of provisions due to negligence to carry
according to usage and customs
2. Risk of enemy not well known or manifest
3. Defect of vessel due to improper repair; and
4. Malice, negligence, lack of foresight or skill of
captain (Art. 820)
Who Bears Expenses:
1. The ship-owner or ship agent except for damages
caused by the shippers by reason of a lawful
arrival (Art. 821)
2. The captain shall be liable for damages caused by
his delay, if after the cause of the arrival under
stress has ceased, he continues the voyage (Art.
825)
Procedure:
1. Captain determines during the voyage if there is
well founded fear of seizure, privateers and
other valid grounds
2. He shall then assemble the officers
3. He shall summon the persons interested in the
cargo who may be present and who may attempt
but without right to vote
4. The officers determine and agree if there is well
founded
reason
after
examining
the
circumstances. The captain shall have the
deciding vote
5. The agreement shall be drafted and the proper
minutes shall be signed and entered in the log
book
6. Objections and protests shall likewise entered in
the minutes

Shipwreck
Denotes all types of loss/ wreck of a vessel at sea
either by being swallowed up by the waves, by
running against another vessel or thing at sea or on
coast where the vessel is rendered incapable of
navigation
SALVAGE LAW (Act 2616)

Salvage - Compensation allowed to persons by whose

voluntary assistance a ship at sea or her cargo or both
have been saved in whole or in part from an
impending or actual peril, shipwrecks, derelicts or
recapture
- Services one person render to the owner of a
ship or goods, by his own labor, preserving the goods
or the ship which the owner or those entrusted with
the care of them have either abandoned in distress at
sea, or are unable to protect or secure

Derelict Ship or her cargo which is abandoned and

deserted at sea by those who were in charge of it,
without any hope of recovering it, or without any
intention of returning to it

Requisites for Salvage Award:

1. Valid object of salvage
2. Exposed to marine peril
3. Voluntary salvage services
4. Success in whole or in part, or that services
contributed to success

Rules on Salvage Award

1. Fixed by RTC in the absence of agreement or
where the latter is excessive (Sec. 9)
2. If sold (no claim being made within 3 months
from publication)
a. Proceeds, after deducting expenses and the
salvage claim, shall go to the owner
b. If he does not claim it within 3 years, 50% of
the said proceeds shall go to the salvors, and
the other half to the government (Secs. 1112)
3. If a vessel is the salvor, the reward shall be
distributed as follows:
a. 50% to ship owner
b. 25% to captain
c. 25% to officers and crew in proportion to
their salaries (Sec. 13)

Persons Without Right to a Salvage Reward:

1. Crew of the vessel saved
2. Persons who commenced salvage in spite of
opposition of the captain or his representative
3. Person who fails to deliver a salvaged vessel or
cargo to the Collector of Customs (Sec. 3)

Towage - contract whereby one vessel, usually

motorized, pulls another from one place to another,
for compensation. It is a contract for services rather
than a contract of carriage.
SALVAGE
Governed by special law
(Act No. 2616)
Requires success,
otherwise no payment
Must be done with the
consent of the
captain/crewmen
Vessel must be involved
in an accident
Fees distributed among
crewmen
Salvor takes possession
and may retain
possession until paid
Court can reduce amount
of renumeration if
unconscionable

TOWAGE
Governed by NCC on
contract of lease
Success not required
Only the consent of the
tugboat owner is needed
Vessel need not be
involved in an accident
Fees belong to the
tugboat owner
Tower has no possessory
lien; only an action for
sum of money
Court cannot change
amount in towage even
if unconscionable

Contrary agreement between parties

4. Delivery to the wrong person prescriptive
period is (i) 10 years because there is a breach of
contract, or (ii) 4 years for quasi-delict (Ang v.
American SS Agencies (19 SCRA 631)
Delay or late delivery are not the damage or
loss contemplated under the COGSA. The goods
are not actually lost or damaged. The
applicable period is 10 years (Mitsui vs. CA 287
SCRA 366)

CARRIAGE OF GOODS BY SEA ACT (CA 65)

Requisites:
1. Contracts for carriage of goods
2. By sea
3. To and from Philippine ports
4. In foreign trade

Shipper guarantees at time of shipment the accuracy

of marks, number quantity and weight as furnished by
him. He shall indemnify the carrier against all loss,
damages and expenses arising from inaccuracies in
such particulars

To recover loss or damage to cargo, notice and

general nature thereof in writing must be given by
the shipper or consignee to the carrier or his agent at
the port of discharge or at the time of removal of the
goods
1. If loss/damage not apparent within 3 days from
delivery
2. May be endorsed upon receipt for the goods
given by the person taking delivery thereof
3. Need not be given if the state of goods at the
time of their receipt has been the subject of
joint inspection
Prescriptive Periods:
1. To give notice if loss or damage is apparent
notice in writing must be given to carrier or
agent at time of removal of goods by persons
entitled to delivery.
2. To give notice if not apparent within 3 days
from delivery.
3. To bring suits 1 year after delivery or when
goods should have been delivered a suit must be
filed (whether notice of loss/damage is given),
otherwise prescribed.
Stipulation reducing the 1 year period is null
and void, but a written agreement to
suspend it is valid (Maritime Company of the
Philippines vs. CA, 164 SCRA 593)
An extra-judicial demand does not suspend
the period
An insurer who is exercising its right of
subrogation is also bound by the 1-year
period (Fil. Merchants vs. Alejandro 145
SCRA 42). It does not apply to a claim
against the insurer for the insurance
proceeds. The claim against the insurer is
based on contract that expires in 10 years
(Mayer Steel Pipe Corp. vs. CA 274 SCRA
432)
If there is no delivery in case of undelivered
or lost cargo the one-year period starts to
run from the day the vessel left port
When interrupted
Action is filed in court

Liability under COGSA:

1. Maximum of $500 per package or, if not shipped
in packages, per customary freight unit (e.g.
metric ton)
2. Nature and value of goods may be declared by
shipper and inserted in bill of lading; declaration
is prima facie evidence and not conclusive on
carrier
3. Shipper and carrier may agree on another
maximum amount, but not more than the amount
of damage actually sustained

No Liability under COGSA:

1. Nature or value of goods knowingly and
fraudulently misstated by shipper
2. Damage resulted from dangerous nature of
shipment loaded without consent of carrier
3. Unseaworthiness not due to negligence of carrier
4. Deviation was to save life or property at sea

SHIP MORTGAGE DECREE

Purpose: To accelerate the growth and development of
the shipping industry in the Philippines and to finance the
acquisition, construction, purchase or initial operation of
vessels
Salient Features: Recognizes the creation of preferred
mortgage that must be satisfied prior to all other claims
and it allows for the arrest of the vessel which in effect
treats the vessel itself as the defendant in an action

Preferred Mortgage Lien - One constituted for the

financing, acquisition, purchase, construction and
initial operation of vessels under the provisions of PD
1521
Requisites
1. Recorded in MARINA
2. Affidavit of good faith
3. Mortgage does not stipulate the waiver of
preferred status of claim
4. Mortgage must be valid
5. Mortgage includes the whole vessel of
domestic ownership
If Vessel is of Foreign Ownership it will be
recognized if:
1. Mortgage, hypothecation or similar charge
has been duly and validly executed in

2.

accordance with the laws of the country

under which the vessel is documented
Same has been duly registered in accordance
with such laws in a public register either at
the port of registry of vessel or at a central
office

Claims Preferred Over a Preferred Mortgage Lien:

1. Taxes
2. Judicial costs
3. Pilotage and tonnage charges and other sea and
port charges
4. Salaries of depositaries and keepers of vessel
5. Captain and crews wages
6. General average
7. Salvage
8. Prior maritime liens
9. Damages arising out of tort
10. Prior preferred mortgage lien

3.

Scope:
1. International transport by air
2. Transport of persons, baggage, or goods
Note: Warsaw Convention prevails over the Civil
Code, Rules of Court and all laws in the Philippines
since an international law prevails over general law.
International Transportation by Air any
transportation in which the place of departure and
the place of destination are situated either:
1. Within the territories of two High Contracting
Parties regardless of whether or not there be a
break in the transportation or transshipment
2. Within the territory of a single High Contracting
Party, if there is an agreed stopping place within
a territory subject to the sovereignty, mandate
or authority of another power, even though that
power is not a party to the Convention (round
trip)
Note: Absence of agreement concerning stopping
place transportation not deemed international for
purposes of the WC

When Not Applicable:

1. If there is willful misconduct on the part of the
carriers employees (PAL v. CA, 257 SCRA 33).
2. When it contradicts public policy
3. If requirements under WC are not complied with
Liability of Air Carriers
1. Death or injury of a passenger if the accident
causing it took place on board the aircraft or in
the course of its operations (Art. 17)
2. Destruction, loss or damage to any luggage or
goods, if it took place during the carriage (Art.
18)

of

passengers,

Note: The Hague Protocol amended the Warsaw

Convention by removing the provision that if the
airline took all necessary steps to avoid the damage,
it could exculpate itself completely (Art. 20(1))
(Alitalia v. IAC, 192 SCRA 9)

WARSAW CONVENTION OF 1929

Delay in the transportation

luggage or goods (Art. 19)

Action for Damages

1. Condition precedent
1.1. Written complaint (protest) must me made:
1.1.1. Damage to baggage 3 days from
receipt
1.1.2. Damage to goods 7 days from receipt
1.1.3. Delay 14 days from receipt
1.2. Otherwise the action is barred except in
case of fraud on the part of the carrier (Art.
26)
2. Jurisdiction governed by domestic law
3. Venue at the option of the plaintiff:
3.1. Court of domicile of carrier
3.2. Its principal place of business
3.3. Where it has a place of business through
which the contract has been made
3.4. Place of destination (Art. 28)
Note: The above enumeration cannot be
waived, but are jurisdictional in nature
(Santos III vs. Northwest Orient Airlines 210
SCRA 256)
4. Prescriptive period 2 years from:
4.1. Arrival at the destination
4.2. Expected arrival
4.3. Date the transportation stopped (Art. 29)
5. Rule in case of various successive carriers
5.1. In case of transportation of passengers
action is filed only against the carrier in
which the accident or delay occurred unless
there is an agreement whereby the first
carrier assumed liability for the whole
journey.
5.2. Transportation of baggage or goods
5.2.1. Consignor can file an action against
the first carrier and the carrier in
which the damage occurred
5.2.2. Consignee can file an action against
the last carrier and the carrier in
which the damage occurred
5.2.3. These carriers are jointly and
severally liable (Art. 30)
Limit of Liability
1. Passengers $10,000 to $100,000
except: agreement to a higher limit
2. Checked-in baggage $20 / kg
except: consigner declared its value and paid a
supplementary sum, carrier liable to not more
than the declared sum unless it proves the sum is
greater than its actual value
3. Hand-carry baggage $400 to $1000 / passenger
(Art. 22 as amended by Guatemala Protocol,

1971; Alitalia v. IAC, supra)

An agreement relieving the carrier from liability
or fixing a lower limit is null and void (Art. 23)
Carrier not entitled to the foregoing limit if the
damage is caused by his willful misconduct or
default (Art. 25)

Special Rules on Liabilities of Airline Carriers:

1. In case of flight diversion due to bad weather or
other circumstances beyond the pilots control,
the relation between carrier and passenger
continues until the latter has been landed at the
port of destination and has left the carriers
premises.
The
carrier
should
exercise
extraordinary diligence in safeguarding the safety
of its stranded passengers until they have
reached their final destination (Philippine
Airlines v. CA, 226 SCRA 423)
2.

Even where overbooking of passengers is allowed

as a commercial practice, the airline company
would still be guilty of bad faith and still be
liable for damages if it did not properly inform
passenger that it could breach the contract of
carriage even if they were confirmed passengers
(Zalamea v. CA, 228 SCRA 23)

3.

An open-dated ticket constitutes a complete

contract between the carrier and passenger.
Hence, the airline company is liable if it refused
to confirm a passengers flight reservation
(Singson v. CA, 282 SCRA 149)

4.

An airline company which issued a confirmed

ticket to a passenger covering successive trips on
different airlines can be held liable for damages
occasioned by bumping off by one of the
successive airlines (Lufthansa German Airlines v.
CA, 238 SCRA 290)

5.

An airline ticket providing that carriage by

successive air carriers is to be regarded as a
single operation is to make the issuing carrier
liable for the tortuous conduct of the other
carrier. A printed provision in the ticket limiting
liability only to its own conduct is not enough to
rebut that liability (KLM Royal Dutch Airlines v.
CA, 65 SCRA 237)

steamship line, ferries, and water craft, shipyard,

ice-plant, electric light, heat and power or any public
utility (Sec. 13(b) Commercial Act 146)

CERTIFICATE OF PUBLIC CONVENIENCE

No public service shall operate without having been
issued a certificate of public convenience (no
franchise is required by law, e.g. common carriers) or
a certificate of public convenience and necessity (a
prior franchise is required by law, e.g. telephone and
other services) (Sec. 15 Comm. Act 146)

The certificate constitutes neither a franchise nor a

contract, confers no property right, and is a mere
license or privilege. The holder of said certificate
does not acquire a property right in the route covered
thereby. Nor does it confer any property right,
interest or interest in the public highways.
Revocation of this certificate deprives him of no
vested right. New and additional burdens, alteration
of the certificate, or even revocation or annulment
thereof is reserved to the State (Luque vs. Villegas,
30 SCRA 408)

It is a property and has a considerable value and

can be the subject of sale or attachment (CogeoCubao Operators vs. CA, 207 SCRA 343)

Exceptions:
1. Warehouses
2. Animal drawn vehicles and bancas moved by oar
or sail; tugboats
3. Airships, except for the fixing of maximum rates
for fare and freight
4. Radio companies, except for rates fixing
5. Public services owned or operated by the
government, except as to rates fixing
6. Ice plants
7. Public markets

Requirements for granting certificate:

1. Citizen of the Philippines, or a corporation, etc.
constituted and organized under the laws of the
Philippines at least 60% of its stock or paid-up
capital must belong entirely to citizens of the
Philippines
2. Financially capable of undertaking the proposed
service
3. Proof of public necessity, interest and
convenience (KMU vs. Garcia, Jr., 239 SCRA 386)

Grounds for revocation of certificate:

1. Where holder is a mere dummy
2. Where operator ceased operation and placed his
buses on storage

PUBLIC SERVICE ACT (CA 146, as amended)

Public Service - Includes any person who may own,

operate, manage, or control in the Philippines for
hire or compensation, with general or limited
clientele, whether permanent, occasional or
accidental, and done for general business purposes,
any common carrier, railroad, street railway, traction
railway, subway motor vehicle, steamboat, or

A casual or incidental service devoid of public

character and interest is not brought within the
category (Luzon Stevedoring vs. PSC, 156 SCRA 169)

3.

Where operator totally abandons the service

(Manzanal vs. Ausejo, 164 SCRA 36)

NOTICE AND HEARING

REQUIRED
1. Issuance of Certificate
2. Fixing of rates, tolls
and charges
3. Setting up of standards
and classifications
4. Establishment of rules
to secure accuracy of
all meters and all
measuring appliances
5. Issuance of orders
requiring establishment
or maintenance of
extension facilities
6. Revocation of
modification of
Certificate
7. Suspension of
Certificate (except
when it is necessary to
avoid serious and
irreparable damage or
inconvenience to the
public or private
interest, in which case,
a suspension not more
than 30 days may be
ordered prior to the
hearing)

WHEN NOT REQUIRED

1. Investigation of any
matter concerning
public service
2. Requiring operators to
furnish safe, adequate
and proper service
3. Requiring public
services to pay
expenses of
investigation
4. Valuation of properties
of public utilities
5. Examination and test
of measuring
appliances
6. Grant of special
permits to make extra
or special trips in
territories specified in
certificate
7. Uniform accounting
system and furnishing
of annual reports
8. Compelling compliance
with the laws and
regulations