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Transportation Law

1. 1.
Contract of Transportation contract whereby a certain person or association
of persons obligate themselves to transport persons, things, news, from one place to
another for a fixed price
1. 2.
Parties to the Contract of Transportation:
1.
a.
Shipper one who gives rise to the contract of transportation by
agreeing to deliver the things or news to be transported, or to present his own
person or those of other or others in the case of transportation of passengers
2.
b.
Carrier/Conductor one who binds himself to transport persons, things,
or news, as the case may be, or one employed in or engaged in the business of
carrying goods for others for hire
1. 3.
Common Carrier person, corporation, firm, association engaged in the
business of carrying or transporting passengers, goods or both, by land, water, air, for
compensation, offering services to the public; must exercise extraordinary diligence
Private Carrier not engaged in the business of carrying; no public employment;
undertakes to deliver goods/passengers for compensation; requires only ordinary
diligence
4. Requisites of Caso Fortuito
1.
2.
3.
4.
1.

a.
event independent of human will
b.
occurrence makes it impossible for debtor to perform in normal manner
c.
debtor free from aggravation/participation
d.
impossible to foresee or avoid
5.
Contributory negligence does not entitle passengers to recover
moral/exemplary damages.
1. 6.
Bill of Lading written acknowledgment of receipt of goods and agreement to
transport them to a specific place to a person named or his carrier

It is not indispensable to the creation of a contract of carriage. The contract itself arises
from the moment goods are delivered by shipper to carrier and the carrier agrees to
carry them.
The function of the Bill of Lading: the legal basis of the contract between the shipper
and carrier shall be the bills of lading, by the contents of which all disputes which may
arise with regard to their execution and fulfillment shall be decided, no exceptions being
admissible other than forgery or material errors in the drafting thereof.
Carriers responsibility starts from the moment he receives unconditionally the
merchandise personally or through an agent and lasts until he delivers them actually or
constructively to the consignee or his agent.
Mere delay in the delivery of goods to consignee does not give right to refuse goods
only breach of contract, ergo damages. If delay is unreasonable, then he may refuse to
accept and make carrier liable for conversion.
1.

7.
Vessels those 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
1. 8.
Persons Participating in Maritime Commerce:
1.
a.
ship owner and/or ship agent
2.
b.
captain or master
3.
c.
other officers of the vessel
4.
d.
supercargo
1. 9.
Liability of Ship owners and Ship agents:
1.
a.
civil liability for the acts of the captain

2.

b.
civil liability for contracts entered into by the captain to repair, equip
and provision the vessel, provided that the amount claimed was invested for the
benefit of the vessel
3.
c.
civil liability for indemnities in favor of 3rd 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
Ship owner/ship agent not liable for the obligations contracted by the captain if the

latter exceeds his powers and privileges inherent in his position of those which may
have been conferred upon him by the former. However, if the amount claimed were
made use of for the benefit of the vessel, the ship owner or ship agent is liable.
1. 10. Doctrine of Limited Liability liability of shipowners is limited to amount of
interest in said vessel because of the real and hypothecary nature of maritime law
such that where the vessel is entirely lost, the obligation is extinguished.

Exceptions: (1) vessel is not abandoned


(2)

claims under workmens compensation

(3)

injury/damage due to shipowners fault

(4)

vessel is insured

1.

1.
1.
1.

1.

1.

1.

The doctrine also applies for claims due to death or injuries to passengers, aside from
claims for goods.
In abandoning the vessel, there is no procedure to be followed. There is neither a
prescriptive period within which the ship owner can make the abandonment. He may
do so for so long as he is not estopped from invoking the same or do acts inconsistent
with abandonment.
11. Roles of the Captain:
1.
a.
general agent of the ship owner
2.
b.
technical director of the vessels
3.
c.
represents the government of the country under whose flag he
navigates
12. Loan on Bottomry made by shipowner/ship agent guaranteed by vessel itself,
repayable upon arrival at destination
13. Loan In Respondentia taken on security of the cargo repayable upon the safe
arrival at cargo destination
14. Accidents and Damages in Maritime Commerce:
1.
a.
Averages
2.
b.
Arrivals Under Stress
3.
c.
Collisions
4.
d.
Shipwrecks
15. Average:
1.
a.
all extraordinary or accidental expenses which may be incurred during
the voyage for the preservation of the vessel or cargo or both
2.
b.
all damages or deterioration which the vessel may suffer from the time
it puts to sea at the port of departure until it casts anchor at the port of
destination, and those suffered by the merchandise from the time they are
loaded in the port of shipment until they are unloaded in the port of their
consignment
16. Simple Average expenses/damages caused to the vessel/cargo not inured to
common benefit and profit of all the persons interested in the vessel and her cargo;
borne by respective owners
17. General Average expenses/damages deliberately caused in order to save the
vessel, its cargo or both from a real and known risk

Requisites:
1.

a.

deliberately incurred

2.
3.
4.
1.

b.
intended to save vessel and cargo or both
c.
from real and known risk
d.
there is success
18. Formalities for Incurring Gross Average:
1.
a.
there must be an assembly of the sailing mate and other officers with
the captain including those with interests in the cargo
2.
b.
there must be a resolution of the captain
3.
c.
the resolution shall be entered in the log book, with the reasons and
motives and the votes for and against the resolution
4.
d.
the minutes shall be signed by the parties
5.
e.
within 24 hours upon arrival at the first port the captain makes, he shall
deliver one copy of these minutes to the maritime judicial authority thereat
1. 19. Arrivals under Stress arrival of the vessel at a port not of destination on
account of (a) lack of provisions; (b) well-founded fear of seizure; (c) by reason of
accident of the sea disabling it to navigate

When Not Lawful:


1.
2.
3.
4.
1.
1.
1.

1.

1.

1.

1.

1.

1.
1.

a.
lack of provisions due to negligence to carry according to usage and customs
b.
risk of enemy not well known or manifest
c.
defect of vessel due to improper repair
d.
malice, negligence, lack of foresight or skill of captain
20. Collision impact of 2 vessels both of which are moving
21. Allision striking of a moving vessel against one that is stationary
22. Cases of Collision:
1.
a.
due to the fault, negligence or lack of skill of the captain, sailing mate
or the complement of the vessel ship owner liable for the losses and damages
(Culpable Fault)
2.
b.
due to fortuitous event or force majeure each vessel and its cargo
shall bear its own damages (Fortuitous)
3.
c.
it cannot be determined which of the 2 vessels caused the collision
each vessel shall suffer its own damages, and both shall be solidarily responsible
for the losses and damages occasioned to their cargoes (Inscrutable Fault)
23. Error in Extremis sudden movement made by a faultless vessel during the
3rd zone of collision with another vessel which is at fault, even if the said movement is
wrong, no responsibility will fall on said vessel
24. 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
25. Salvage the 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 peril, or such property recovered from actual peril or loss, in cases of
shipwrecks, derelict or recapture; a service which one person renders to the owner of a
ship or goods by his own labor, preserving the goods or ship which the owner or those
entrusted with the care of them either abandoned in distress at sea or are unable to
protect and secure; a permit is required to engage in the salvage business
26. Derelict a ship or cargo which is abandoned and deserted at sea by those who
are in charge of it, without any hope of recovering it, or without any intention of
returning it
27. Elements of a Valid Salvage:
1.
a.
a marine peril
2.
b.
service voluntarily rendered when not required as an existing duty or
from special contract
3.
c.
success, in whole or in part, or that the services rendered contributed to
such success
28. Contract of Towage contract whereby a vessel usually motorized pulls another
from one place to another for compensation. It is a contract of services.
29. Difference between Towage and Salvage:

Salvage

Towage

crew of salvaging ship is entitled to


salvage, and can look to the salvaged
vessel for its share

crew of the towing ship does not have any


interest or rights with the remuneration
pursuant to the contract

salvor takes possession and may retain


possession until he is paid

tower has no possessory lien; only an


action for recovery of sum of money

court has power to reduce the amount of


remuneration if unconscionable

court has no power to change amount in


towage even if unconscionable

Carriage of Goods by Sea Act


1. 1.
When Applicable:
1.
a.
contracts for the carriage of goods
2.
b.
by sea
3.
c.
to and from Philippine ports
4.
d.
in foreign trade
1. 2.
Notice of Loss or damage must be given in writing to the carrier or his agent at
the port of discharge or at the time of the removal of the goods into the custody of the
person entitled to delivery. If the loss or damage is not apparent, the notice must be
given within 3 days of delivery. However, the carrier shall be discharged from all
liability in respect of loss or damage of goods unless suit is brought within 1 year after
delivery of the goods or the date when the goods should have been delivered. Notice
of loss, if not given, that fact shall not affect or prejudice the right of the shipper to
bring suit within the 1 year prescriptive period.
Warsaw Convention
1. 1.
When Applicable:
1.
a.
international transport by air
2.
b.
transport of persons, baggage, or goods
1. 2.
Liabilities under the Convention:
1.
a.
damage sustained in the event of the death or wounding of a passenger
taking place on board the aircraft or in the course of any of the operations of
embarking or disembarking
2.
b.
loss or damage to any check baggage or goods sustained during the
transport by air
3.
c.
delay in the transport by air of passengers, baggage, or goods

Enumeration of causes of action as above stated is not an exclusive list. (Northwest


Airlines vs. Cancer)
1. 3.
Meaning of Transport by Air period during which the baggage or goods are in
charge of the carrier, whether in an airport or on board an aircraft, or in the case of
landing outside an airport, in any place whatsoever
1. 4.
Action for damages must be brought at the option of the plaintiff, either:
1.
a.
before the court of the domicile of the carrier;
2.
b.
court of principal place of business of carrier;
3.
c.
court where he has a place of business through which the contract has
been made;
4.
d.
before the court at the place of destination
1. 5.
Convention provides for a limitation of liability:
1.
a.
for each passenger limited to 125,000 francs
2.
b.
for goods and checked in baggage limited to 250 francs per kilogram
3.
c.
for hand carry limited to 5,000 francs per passenger

When can you not avail of this limitation?


(1)

willful misconduct

(2)

default amounting to willful misconduct

(3)

accepting passengers without ticket

(4)

accepting goods without airway bill or baggage without baggage chec

1.

6.
The right to damages shall be extinguished if an action is not brought within 2
years from the date of arrival at the destination, or from the date on which the aircraft
ought to have arrived, or from the date on which the transportation stopped.
1. 7.
Notice requirement: damage to baggage : within 3 days from receipt

damage to goods: within 7 days from receipt


delay: within 21 days from receipt

1.

Failure to file written notice, no action shall lie against the carrier, save in the case of
fraud on his part.
8.
Notice Requirements:

COGSA

Code of

Warsaw

Commerce

Convention

loss/damage
apparent

protest at time of
receipt of goods

protest at time of
receipt of goods

loss/damage not
apparent

protest within 3
days from delivery

protest within 24
hours after receipt

damage of baggage

protest within 3
days from receipt

damage of goods

within 7 days from


receipt

delay

within 21 days from


receipt

Public Service Act


1. 1.
Every person that may own, operate, manage, control in the Philippines, for
hire/compensation with general/limited clientele whether permanent, occasional,
accidental, and done for a general business purpose any common carrier, shipyard,
electric light, heat and power and public utility.
1. 2.
Public Utility business or service engaged in regularly supplying the public
with some commodity or service of public consequence such as electricity, gas, water,
transportation, telephone or telegraph service.
1. 3.
Prior Operator Rule before permitting a new operator to invade the territory
of another already established, the prior operator must be given an opportunity to
extend its service to meet the public needs in the matter of transportation.
1. 4.
Prior Applicant Rule presupposes a situation where two interested persons
apply for a CPC in the same community over which no person has yet been granted a
CPC to operate. If both applicants equal, then the applicant who applied first will be
given the CPC.
1. 5.
Distinctions between CPCs and CPCNs
Certificate of Public Convenience
Certificate of Public Convenience

and Necessity

any authorization to operate a public


service issued by the appropriate
government agency

issued by the appropriate government


agency to a public service to which any
political subdivision has granted a
franchise

an authorization issued by the proper


government agency for the operation of
public services for which no franchise,
either municipal or legislative is required
by law

an authorization issued by the proper


government agency for the operation of
public services for which a franchise is
required by law

1.

6.
1.
2.
3.

Requirements of CPC and franchise:


a.
Filipino citizenship
b.
financial capacity
c.
public convenience

Corporation Law

1.

1.

1.
1.
1.

1.

1.

1.

1.
Doctrine of Corporate Opportunity a director is made to account to his
corporation, gains and profits from transactions entered into by him/another
competing corporation in which he has substantial interest, which should have been a
transaction undertaken by the corporation. This s a breach of fiduciary relationship.
2.
Doctrine of Piercing the Veil of Corporate Entity it is to disregard for justifiable
reasons by the state the fiction of juridical personality of the corporation separate and
distinct from the persons composing it
3.
De Jure Corporation corporation formed with all the requirements of law
4.
De Facto Corporation corporation defectively formed from a bona fide
attempt to incorporate under the existing law and exercises corporate powers
5.
Corporation by Estoppel a group of persons which holds itself out as a
corporation and enters into a contract with 3rd persons on the strength of such
appearance cannot be permitted to deny its existence in an action under said contract
6.
Corporation by Prescription body not lawfully organized as a corporation but
has been recognized by immemorial usage as a corporation with rights and duties
maintainable by law (ex. Roman Catholic)
7.
Trust Fund Doctrine the subscribed capital stock of the corporation is a trust
fund for the payment of debts of the corporation which the creditors have the right to
look up to satisfy their credits. Corporations may not dissipate this and the creditors
may sue the stockholders directly for their unpaid subscriptions
8.
Voting Shares
1.
a.
Founders Shares given rights and privileges not enjoyed by owners of
other stocks; right to vote/be voted in the election of directors shall not exceed 5
years

Non-Voting Shares
1. a.
Preferred Shares issued only with par value; given preference in distribution
of assets in liquidation and in payment of dividends and other preferences stated in
the articles of incorporation
2. b.
Redeemable Shares expressly provided in articles; have to be
purchased/taken up upon expiration of period of said shares purchased whether or not
there is unrestricted retained earnings
3. c.
Treasury Stocks stocks previously issued and fully paid for and reacquired by
the corporation through lawful means (purchase, donation, etc.)
1. 9.
Exceptions where holders of non-voting shares may vote:
1.
a.
amendments of articles of incorporation
2.
b.
adoption/amendment of by-laws
3.
c.
increase/decrease of bonded indebtedness
4.
d.
increase/decrease of capital stock
5.
e.
sale/disposition of all/substantially all corporate property
6.
f.
merger/consolidation of corporation
7.
g.
investment of funds in another corporation/another business purpose
8.
h.
corporate dissolution
1. 10. Preferred Cumulative Participating Share of Stock share entitling its holder to
preference in the payment of dividends ahead of common stockholders and to be paid
the dividends ahead of common stockholders and to be paid the dividends due for
prior years and to participate further with common stockholders in dividend
declarations
1. 11. Promotion Stock for Services Rendered Prior to Incorporation Escrow Stock
stock deposited with a 3rd person to be delivered to stockholder/assignor after
complying with certain conditions usually payment of full subscription price
1. 12. Over-issued Stock stock issued in excess of authorized capital stock; null and
void
1. 13. Watered Stock stock issued gratuitously, money/property less than par value,
services less than par value, dividends where no surplus profits exist
1. 14. Certificate of Stock written acknowledgment by the corporation of the
stockholders interest in the corporation. It is the personal property and may be
mortgaged/pledged. Transfer binds the corporation when it is recorded in the
corporate books. A stockholder who does not pay his subscription is not entitled to the

1.

1.

1.

1.

1.

1.

issue of a stock certificate. The total par value of the stocks subscribed by him should
first be paid.
15. Chattel mortgage of shares registered with the Registrar of Deeds need not be
registered in corporate books to bind third parties because corporate books only cover
absolute transfers. But the pledgee/mortgagee may not have voting rights unless
stated in the contract and registered in the corporate name.
16. Methods of Collection of Unpaid Subscription
1.
a.
call, delinquency and sale at public auction of delinquent shares
2.
b.
ordinary civil action
3.
c.
collection from cash dividends and other amounts due to stockholders if
allowed by by-laws/agreed to by him
17. A corporation can reacquire stocks in the following cases:
1.
a.
eliminate fractional shares
2.
b.
corporate indebtedness arising from unpaid subscriptions
3.
c.
purchase delinquent shares
4.
d.
exercise of appraisal right
18. Right of Appraisal
1.
a.
amending articles, changing, restricting, enlarging stockholders
rights/extending, shortening corporate life
2.
b.
sale/disposition of all/substantially all of corporate assets
3.
c.
merger and consolidation
4.
d.
investment of funds in another corporation/for a different purpose
19. Grounds for Rejection of Registration
1.
a.
not in prescribed form
2.
b.
purpose illegal, inimical
3.
c.
treasurers affidavit false
4.
d.
non-compliance with required Filipino stock ownership
20. Corporation must organize within 2 years from issuance of certificate of
incorporation.

How to
1. a.
2. b.
3. c.

organize?
adoption of by-laws
election of Board of Directors
election of officers

But from issuance of certificate, it acquires juridical personality


1.
1.
1.
1.
1.

1.

1.

1.

21. Merger one corporation absorbs the other and remains in existence while the
other is dissolved
22. Consolidation a new corporation is created and the consolidating corporations
are extinguished
23. Theory of General Capacity a corporation is said to hold such powers as are
not prohibited/withheld from it by general law
24. Theory of Special Capacity the corporation cannot exercise powers except
those expressly/impliedly given
25. Concession Theory a group of persons wanting to create a corporation will
have to execute documents and comply with requirements set by the state before
being given corporate personality; merely a privilege; state may provide causes for
which the privilege may be withdrawn
26. Acts requiring majority vote of stockholder:
1.
a.
filing of issue value of no par value share
2.
b.
adoption, amendment, repeal of by-laws
3.
c.
compensation and other per diems for directors
27. Where similar acts have been approved by the directors as a matter of general
practice, custom and policy, the general manager may bind the company even without
formal authorization of the board of directors
28. Powers of stockholders:
1.
a.
a direct participation in management where his vote is needed to
approve certain corporate actions
2.
b.
indirect participation in management to vote or remove directors

1.

1.

1.

1.

3.
c.
proprietary rights
4.
d.
remedial rights
29. Voting Trust Agreement an agreement between a group of stockholders and
trustee for a term not exceeding 5 years in which control over the stocks is lodged in
the trustee. The purpose is for controlling the voting.
1.
a.
in writing, notarized and filed with the SEC and the corporation
2.
b.
period not exceeding 5 years
3.
c.
cannot be entered into to circumvent the laws against monopolies,
illegal combinations in restraint of trade in fraud
30. Cumulative Voting the number of votes that a shareholders number of shares
multiplied by the number of directors may give all said votes to one candidate or he
may distribute them as he may deem fit. Cumulative voting is a matter of right in a
stock corporation. In a non-stock corporation, it cannot be utilized unless allowed by
the by-laws/articles
31. The power of removal of directors that may be exercised with or without cause
cannot apply to the director representing the minority shareholders. He may only be
removed with cause.
32. General Rule: If surplus profits exceed the requirements the corporation shall
declare dividends. This is compulsory if the surplus is equal/or more than the paid-up
capital.

Exceptions:
1.
2.
3.
1.

a.
justified by approved expansion projects
b.
prohibited by creditor to declare dividends
c.
retention is necessary under existing circumstances
33. Business Judgment Rule decisions made by a corporations management body
shall not be interfered with even by the courts unless such acts are
oppressive/unconscionable as to violate the rights of the minority
1. 34. Individual Suit one brought to assert a right of a stockholder peculiar to
himself
1. 35. Representative Suit brought by the stockholder in his own behalf and in behalf
of other stockholders similarly situated, having common cause against the corporation
1. 36. Derivative Suit brought by a stockholder for and in behalf of the corporation to
protect/vindicate corporate rights after he has exhausted intra-corporate remedies

Requisites:
1.
2.
3.

a.
cause of action in favor of the corporation
b.
refusal of corporation to sue
c.
injury to the corporation
Although corporations dissolved have 3 years to wind up, they can convey their
properties to a trustee who can continue the suit beyond the 3 year period. The
lawyer who handled the case in the trial court may be considered as trustee for the
dissolved corporation with respect to the matter in litigation only even if no
appointment was extended to him. (Selano vs. CA)
In a case filed before dissolution, it may continue even beyond the 3 year period until

final determination of litigation. Otherwise, the corporation in liquidation would lose


what justly belongs to them/be exempt from payment of obligations because of a
technicality.
1. 37. Foreign Corporations
1.
a.
Doing Business continuity of commercial dealings incident to
prosecution of purpose and object of the organization. Isolated, occasional or
casual transactions do not amount to engaging in business. But where the
isolated act is not incidental/casual but indicates the foreign corporations
intention to do other business, said single act constitutes engaging in business
in the Philippines
2.
b.
Instances when unlicensed foreign corporations can sue:

(1)

isolated transactions

(2)

action to protect good name, goodwill, and reputation of a foreign corporation

(3)

contracts provide that Phil. Courts will be venue to controversies

(4)

license subsequently granted enables foreign corporation to sue on contracts

executed before the grant of the license


(5)

recovery of misdelivered property

(6)

where the unlicensed foreign corporation has a domestic corporation

1.

1.

38. Religious Corporations


1.
a.
Corporation Sole special form of corporation; associated with the
clergy and consists of 1 person only and his successors; incorporated by law
giving them legal capacity and advantage
2.
b.
Close Corporations one whose articles provide that its shares shall not
be held by more than 20 persons; its issued stock shall be subject to one or
more restrictions on transfer and shall not be listed in any stock exchange/make
public offering
3.
c.
Non-stock Corporation one where no part of its income is distributable
to its members and shall be used in furtherance of the purpose of which it was
organized
39. SEC Jurisdiction
1.
a.
original and exclusive jurisdiction

(1) fraudulent devices and schemes employed by directors detrimental to public


interest
(2) intra-corporate disputes and with the state in relation to their franchise and right
to exist as such
(3)

controversies in the election, appointment of directors, trustees, etc.

(4)

petition to be declared in a state of suspension of payments

1.

b.

Grounds for Suspension/Revocation of Certificate of Registration

(1)

fraud in procuring registration

(2)

serious misrepresentation as to objectives of corporation

(3)

refusal to comply with lawful order of SEC

(4)

continuous inoperation for at least 5 years

(5)

failure to file by-laws within the required period

(6)

failure to file reports

(7)

other similar grounds