TRANSPORTATION LAW

FRANCHISE
Citizen, or corporations or association whose capital is owned by such citizens
Maximum: 50years
Subject to amendment, alteration, or repeal by congress
Public Utility - business or service engaged in regularly supplyingthe public with some
commodity or service of public consequence
Take over clause - national emergency, public interest; the State may take over
Police Power - basis
Delegation of Power
Operation vs Ownership of facilities - Tatad vs Ca
CPC - no franchise; CPCN - franchise is required
A CPC constitutes neither a franchise nor a contract, confers no property rights and is a
mere license or privilege
If property covered by the franchise is transferred or lease without the requisite approval,
the transfer is not binding against third person
Prior Operator Rule - first licensee will be protected from his investment; so long as it
performs his terms and conditions of its license; he has a vested and preferential right
(BTC vs Orlanes)
Kabit System - Teja vs IAC
Continuation of the highway - San Pablo vs Pantranco
If separated by an open sea, not continuation of the highway - separate CPC
Absent a transpo contract - Lara vs Valencia
Not duty bound to observe extra ordinary diligence; only ordinary care
Issuance of CPC (delegated power)
Land - LTFRB
Not authorized to delegate it further to a CC, a transport etc (KMU vs Garcia)
Air - CAB
Water - MARINA
COMMON CARRIERS
Persons, corps, firms or assoc., engaged in the business of carrying or transporting
passengers or goods or both by land, water, or air for compensation, offering their
service to the public

COMMON CARRIER

PRIVATE CARRIER

Holds himself out in common, that is, to all

persons who choose to employ him, as
ready for hire

Agrees in some special case with some

private individual to carry for hire

Bound to carry all who offer such goods as

it is accustomed to carry and tender
reasonable compensation for carrying them

Not bound unless it enter into a special

agreement to do so

Public service, subject to regulation

Not subject to regulation as CC

TRUE TEST: the character of the business actually carried on by the carrier
Public use - open to the indefinite public
1732 makes no distinction between one whose principal business activity is the carrying
of persons or goods or both and who does such carrying only as an ancillary activity
(sideline)
The fact that one does not hold a CPC is no excuse to exempt him from incurring
liabilities as a CC
Limitation on the power to regulate
Not confiscatory, just compensation, due process of law
When judiciary may interfere
Plainly and palpably unreasonable as equivalent to the taking of property for public use
Extraordinary diligence - for reasons of public policy and the nature of their business
CC is not responsible: (exclusive)
1. Flood, storm, earthquake, lightning or other natural disaster or calamity
2. Act of the public enemy in war, whether international or civil
3. Act or omission of the shipper or owner of the goods
4. The character of the goods or defects in the packaging or the containers
5. Order of competent authority
* fire may not be considered a natural calamity
* defects of the carrier not caso fortuito
In all other cases- presumed at fault, unless they prove extraordinary diligence
Registered Owner Rule
Exception: stolen; unauthorized use

Liability of carrier is contractual

The driver cannot be held jointly liable with the carrier in case of breach of contract of
carriage. Said contract is between the carrier and the passenger, and in the event of
contractual liability, the carrier is exclusively responsible therefore to the passenger even
if such breach be due to the negligence of the driver.
CC cannot interpose the defense that it exercise due diligence in the selection and
supervision of EE.
The principle of last clear chance would call for application in a suit between the owners
and drivers of two colliding vehicles. It does not arise when a passenger demands
responsibility from the carrier to enforce its contractual obligation - Phil Rabbit vs IAC
A vessel should not accept cargo unless it given the type of storage that its character
requires
COMMON CARRIERS OF GOODS
Exemption from liability
Natural disaster
1. must be the sole and only cause of the loss
2. due diligence to prevent or minimize loss before, during and after the occurrence of the
natural disaster
3. CC must not be in delay
All damages suffered by the goods by reason of fortuitous event or by virtue of the nature
and defect of the articles shall be for the account of the shipper
Acts of Public Enemy
1. must be the sole and only cause of the loss
2. due diligence to prevent or minimize loss before, during and after the occurence of the
natural disaster
Acts or omissions of the shipper
1. Must be the proximate cause
2. If shipper merely contributed, CC shall still be liable for damages although it shall be
equitably reduced
Character of the goods
1. CC must still exercise due diligence to forestall or lessen the loss
2. As long as the damage to the goods was due purely to the inherent nature or defect of
the goods or the container
3. If improper packing is known to the carrier and but it accepts the goods
notwithstanding such condition, it is not relieved from liability

Order of Competent Authority

*where the officer acts without legal process, the CC will be held liable - Ganzon vs CA
Duration of Extraordinary Responsibility
From the time the goods are unconditionally placed in the possession of, and received
by the carrier for the transportation until the same are delivered, actually or
constructively, by the CC to the consignee or the person who has a right to receive them
*Storing in transit does not interrupt extraordinary responsibility except the shipper
exercises its rights of stoppage in transitu
*control and possession of goods passes to the carrier
*stipulation that CC is no longer liable for the cargo upon its delivery to the hands of the
custom is valid; CC loses control of the goods
Limitation of liability to a degree less than extraordinary:
1. In writing
2. Valuable consideration
3. Reasonable just and not contrary to public policy
Unreasonable stipulation: (VOID)
1. at the risk of the owner/shipper
2. Not liable for any loss
3. Need not observe any diligence
4. Degree less than that of good father
5. Not responsible for the acts of EE
6. Acts of thieves - no grave or irresistible threats
7. On account of defective of the carrier
Limitation of liability as to amount
A stipulation that the CCs liability is limited to the value of the goods appearing in the
BOL, unless the shipper/owner declares a greater value, is binding
Requisites: 1. Reasonable and just
2. Freely and fairly agreed upon
May be annulled:

1. If the CC refused to carry the goods

2. Without just cause, delays the transportation
3. Without just cause, changes the stipulated or usual route

An agreement limiting liability for delay on account of strikes or riots is valid

Passenger Baggage (Rule on Necessary deposit)
A. Baggage in the custody of the passenger or EEs
CC shall be responsible for sch baggage as depositaries, provided that:
1. Notice was given to them or to their EEs of the baggage brought
2. The passengers take the precautions which said CCs advised relative to the care and

vigilance of their baggage

Exceptions: caso fortuito; act of thief or robber with use of arms through irresistible
force
B. Baggage in the custody of the CC
The provisions of carriage of goods shall apply
COMMON CARRIER OF PASSENGER
CC is bound to carry the passengers safely:
1. As far as human care and foresight can provide
2. Utmost diligence of very cautious persons
3. With due regard for all circumstances
CCs liability for manufacturing defects - the passenger has neither choice nor control
over the carrier in the selection and use of the equipment and appliances in use by the
carrier. Having no privity whatever with the manufacturer, the passenger has no remedy
against him.
Duration of responsibility
It continues until the passenger has reasonable time or reasonable opportunity to leave
the CCs premises. - La Mallorca vs CA
What is reasonable time is to be determined from all circumstances and includes a
reasonable time to see after his baggage and prepare for his departure
Presumption of negligence - in case of death or injury
Not valid defense
1. Negligence or willful acts of the EEs although such employees may have
acted beyond the scope of their authority or in violation of the orders of the CC
Exception: acts of EEs not done in line of duty (EE is deemed as a stranger
or co-passenger)
2. Diligence of a good father of a family in the selection and supervision of EEs
Responsibility for acts of strangers
Liable if CCs EEs could have prevented or stopped the act or omission through
the exercise of ordinary diligence
Not liable if could not have been avoided
How to overcome:
1. Must be independent of human will
2. The occurrence must render it impossible for the obligor to fulfill his obligation in
a normal manner
3. The obligor must be free of a concurrent or contributory fault or negligence
Carrier not precluded from proving negligence of other carrier involved in collission
- CC may file third party complaint

Last Clear Chance not applicable to contracts of carriage

It applies only in a suit between the owners and drivers of two colliding vehicles; it does
not apply where a passenger demands responsibility from the CC to enforce its
contractual obligation
Limitation of liability (carriage of passengers) - the law is much stricter
You cannot apply the requisites for the limitation of liability in the carrying of goods
The responsibility cannot be dispensed with or lessened by stipulation
Exception: If a passenger is carried gratuitously, a stipulation limiting the CCs
liability for negligence is valid, but not for willful acts or gross negligence
Duty of passengers
1. Observe the diligence of a good father of a family to avoid injury to himself
Contributory negligence - CCs liability shall be equitably reduced
It is negligence per se for passengers to protude any part of his body and that no
recovery ca be had for an injury - Isaac vs AL Ammen
DAMAGES
Actual - pecuniary loss duly proved
If CC in GF - natural and probable consequences of the breach of the obligation and
which parties could have foreseen or could have reasonably foreseen
If CC in BF - all damages which may be reasonably attributed to the non-performance
In case of death - Loss of earning capacity (net earning capacity= life expectancy x net
income); Moral damages
Moral - if they are the proximate result of the defendants wrongful act or omission
Assessment is left to the discretion of the court
Applies to breaches of contract where the defendant acted in fraudulently or in BF
or mishaps results in death of the passenger
Spouses, LC and IC of the deceased may demand moral damages for mental anguish by
reason of the death of the deceased.
Where the injured passenger does not die, MD are not recoverable unless it is proved that
CC was guilty of malice or BF
Bad faith means a breach of a known duty through some motive of interest of ill will
It cannot be presumed, it must be established by clear and convincing proof
Exemplary - by way of example or correction for the public good (in addition)
In contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner
Cannot be recovered as a matter of right

Kabit system
Nominal - the right of the plaintiff may be vindicated or recognized, not for the purpose
of indemnifying
When some special injury was caused - Alitalia vs CA
Temperate - some pecuniary loss has been suffered but amount cannot be proved with
certainty
Liquidated - agreed upon by the parties to a contract
Attorneys fees - in the absence of stipulation, it cannot be recovered
Except: exemplary damages, compelled to litigate, malicious prosecution; unfounded
action; gross evident of BF; legal support; recovery of wages; arising from crime
In case of death, damages recoverable are:
1. Indemnity for the death of the victim
2. Indemnity for loss of earning capacity
3. Moral damages
4. Exemplary damages
5. Attorneys fee and expenses of litigation
In the absence of any agreement as to the time of delivery, the law implies a contract
that they shall be delivered at destination within a reasonable time. -TWA case
CODE OF COMMERCE ON TRANSPORTATION OVERLAND
A contract of transportation shall be considered commercial:
1. It involves merchandise or any object of commerce
2. The carrier is a merchant or is customarily (habitually) engaged in transportation
for the public, no matter what its object may be
CONTRACT OF CARRIAGE
Bill of Lading - contract; receipt; symbol of the goods; document of title
Legal basis of the contract bet the shipper and the carrier
After the contract has been complied with, the BOL shall be returned to the carrier
- respective obligation shall be considered canceled, unless the claims which are desire
to reserve shall be reduced in writing
Parole Evidence Rule - In the absence of fraud, concealment or mistake, the terms or
legal import in the contract, when free from ambiguity cannot be explained nor added to
by parol.
Refusal to transport

CC may refuse to accept packages which appear unfit for transportation

If transpo is insisted upon, railroads cannot refuse to carry them, but they shall be
exempt from all responsibility if their objections are made to appear in the BOL
Well-founded suspicions of falsity
1. Before witnesses, in the presence of the shipper or of the consignee
2. Before the notary, who shall draft a certificate in the absence of the shipper/consignee
BOL not essential to contract
Route
When there is agreed route, CC shall be liable for losses due not only to the change of
route but also for other causes, together with the indemnity agreed upon -> CC may not
avail of the contract limiting his liability in case of unjustified change of route
Where there is no agreed route, CC must select one which may be shortest, least
expensive and practically passable
Care of goods
At the risk and venture of the shipper, if the contrary was not expressly stipulated
Duty to deliver in the same condition
Partial delivery - consignee may refuse to receive the goods, if he can prove that he
cannot make use of them independently of those not delivered
Reduction in Value - the obligation of the CC shall be reduced to the payment of
the amount of said reduction in value, after appraisal
Rendered Useless - consignee shall not be bound to receive them, and may leave
them in the hands of the carrier, demanding payment of their value at the current
market price that day. (abandonment)
Conditions precedent for a cause/right of action in case of damaged goods
Claims must be made:
1. Within 24 hours following the receipt of the merchandise if damage is
ascertainable only by opening of the packages
2. At the time of receipt if damage is ascertainable from the outside part of the
package and is apparent
Remedies:
1. Consignation
2. Judicial Deposit a) Where the consignee cannot be found at the residence indicated
b) Where the consignee refused to pay the transpo charges
c) where the consignee refuses to receive the goods
*effect of delivery

Conversion - if there has been a demand and the CC refuses delivery

Successive carriers shall assume the obligations of previous carriers but have right of
action against the previous carriers if the latter are directly responsible for the fault
giving rise to the claim of the shipper
Amount of damage
Loss - the value of the goods stated in the BOL is conclusive between the parties
Except: when CCs fault is so gross as to amount to actual fraud
Delay - cannot exceed the current price of the goods provided there is no express
agrement and no fraud
Right to abandon
a. In case of delay on account of the fault of the carrier
CC shall satisfy the total value of the goods, as if they have been lost or mislaid
Must be exercised during the intervening period between the moment when the
fault of the CC produces a delay until the moment jsut before the arrival of the
goods at the place of delivery
By communicating such abandonment to the CC in writing
b. In case of partial delivery
Where the consignee proves that he cannot make use of the goods capable of delivery
independently of those not delivered
c. Where goods are rendered useless
Right to change consignment
Provided the BOL, if any, be returned
Obligation to pay transportation charges
Consignee may not defer payment after 24hrs from delivery
Delay - CC may demand judicial sale
The goods transported shall be specifically bound to answer for transpo charges
Prescription: 8days after delivery
After the time has prescribed, ordinary action
Shall not be affected by bankruptcy of the consignee, (claim must be made within 30days
from delivery)
ADMIRALTY AND MARITIME COMMERCE
Jurisdiction - RTC (300K non-mm)
Admiralty has jurisdiction of a proceeding in rem or in personam for the breach of a
contract of affreightment
Depends upon the subject matter and the contract has reference to maritime service or
maritime transaction - suit of one party against the other for loss or damage to the cargo
Vessel - those engaged in the navigation,whether coastwise or on high seas

Nature and Acquisition

Acquisition of a vessel must appear in a written instrument and such instrument
must be registered in order that transfer may affect thrid person
Possession in GF will rise into ownership in 3years, with good title duly recorded
Uninterrupted possession for 10yrs regardless in GF or BF
MARINA has the power and authority to register vessel
The shipowner and the shipagent are not liable for the obligations contracted by the
captain if he exceeds his authority, unless the amounts claimed were invested for the
benefit of the vessel
Direct responsibility of the shipowner and shipagent to third persons
The captain shall be civilly liable to the ship agent and the latter is the one liable to
3rd persons
Applies to breaches of contract and tortious negligence of the captain
Doctrine of Limited Liability
The shipagent may exempt himself from liability by abandoning the vessel with all her
equipment and freight it may have earned during the voyage. The creditor cannot refuse.
Applies not only to goods but also in cases like death or injury to passengers
The right of abandonment of vessels does not apply to cases where the injury of the
average is due to shipowners own fault
The total destruction of the vessel extinguishes a maritime lien as there is no longer any
res to which it can attach
3 cases where the loss of the vessel extinguishes the liability of teh shipowner:
a. Negligent acts of the captain
b. Wages of the captain and the crew
c. Liability for collision
Exception:
1. Shipowner at fault
2. Workmens compensation
3. Necessary repairs before its loss
Right of pre-emption and redemption - within 9days ff the record of the sale in the
registry and by delivering the price at once
Captain is a confidential and managerial employee
3 roles:
1. General agent of the shipowner
2. Commander and technical director of the vessel
3. Representative of the country under whose flag he navigates
Supercargoes - an agent of the owner of the goods shipped as cargo on a vessel, who has

charge of the cargo on board, sells the same to the best advantage in the foreign market,
buys cargo to be brought back on the return voyage of the ship and comes home with it.
Administration duties
Average
1. Expenses - extraordinary or accidental; incurred during the voyage; incurred in order
to preserve the vessel, cargo or both
2. Damages - from the time the vessel puts to sea from the port of departure until it casts
anchor in the port of destination; have been suffered by the merchandise from the time
they are loaded in the port of shipment until they are unloaded in the port of consignment
Simple or Particular Average
Include all expenses and damages caused to the vessel or to her cargo which have not
inured to the common benefit and profit of all the persons interested in the vessel and
the cargo
The owner of the goods which gave rise to the expense or suffered the damage shall
bear the simple/particular average
Gross or general average
Include all damages and expenses which are deliberately caused in order to save the
vessel, its cargo or both at the same from a real and known risk (immediate peril)
Formalities
1. An assembly of the sailing mate and other officers with the captain
2. Resolution of the captain
3. Entered into the logbook with the reasons and motives
4. Minutes shall be signed by the parties
5. Within 24hrs, deliver one copy to the maritime judicial authority
Requisites:
1. Common danger
2. Part of the vessel or the cargo or both is sacrificed deliberately
3. Success in saving
4. Formalities have been observed
It is the safety of the property, not the voyage, which constitutes the true foundation if
general average - Magsaysay vs Agan
All persons having an interest in the vessel and cargo at the time of the occurrence of
the average shall contribute
Jettison
Order :
1. Those on deck -> those which embarrass the maneuver or damage the vessel -> the
heaviest ones with the least utility and value

2. Below the upper deck -> greatest weight and smallest value
To be indemnified -> owners must prove the existence on board
Jason Clause - rights to contribution shall not be affected, though the event which gave
rise to the sacrifice or expenditure may have been due to the fault of one of the parties
to the adventure
This shall not prejudice any remedies which may be open against that party for such
fault
Loss or petroleum for common safety shall constitute general average
Arrival under Stress
Arrival of the vessel at the nearest and most convenient port, if during the voyage the
vessel cannot continue the trip to the port of destination due to:
1. Lack of provision
2. Well-founded fear of seizure, privateers or pirates
3. By reason of any accident of the sea disabling it to navigate
Formalities: assembly; entering into the logbook
Expense shall always be for the account of the shipowners*
Requisites for the captain to unload the cargo arriving under stress:
1. Necessary to make repairs or there must be danger that the cargo may suffer damage
2. The captain must be authorized by either a competent court or consul
Collisions
3 times zones
1. All the time up to the moment when the risk of collisions may have said to have
begun
2. The time between the moment when the risk of collisions begins and the moment
when it become a practical necessity
3. The time between the moment when collision has become a practicak certainty and the
moment of actual contract
In extremis - if the vessel having a right of way suddenly changes its course during
the 3rd zone, it cannot create responsibility even if wrong
Classes of collisions
1. Fortuitous event - each shall bear his own damage
2. Culpable - the owner of the vessel at fault shall indemnify the losses and
damages suffered;
If both are at fault - each one shall suffer its own damages and both shall be
solidarily responsible for the losses and damages occasioned to their cargoes
3. Inscrutable Fault - cannot be determined which of the two vessels hs
caused the collision
- each one shall suffer its own damages and both shall be solidarily responsible for

the losses and damages occasioned to their cargoes

Shipwrecks - loss of vessel at sea, either by being swallowed up by the waves, by
running against another vessel or thing at sea or on coast. It renders the ship incapable of
navigation
The losses and deterioration shall be individually for the account of the owners
If due to malice, negligence or lack of skill of the captain or vessel was insufficiently
repaired and equipped, captain shall be liable
Salvage allowance shall be charged against the ship and cargo in proportion of their
respective values
Salvage Elements:
1. Marine peril
2. Service voluntarily rendered when not required as an existing duty or from special
contract
3. Success, in whole or in part, or that the services renedered contributed to such success
Kinds:
1. Voluntary, depends upon success
2. Rendered under contract, payable at all events
Special Contracts
1. Contract of affreightment - involves the use of shipping space or vessels leased by
the owner in part or as a whole to carry goods for others
2. Charter by demise or bareboat charter - the whole vessel is let to the charterer with
a transfer to him if its entire command and possession and consequent control over its
navigation -> private carrier
Demurrage - sum which is fixed by the contract of carriage as remuneration for the
detention of his vessel beyond the number of days allowed by the charter party
Loans on Bottomry - a contract in the nature of a mortgage; the owner of the ship
borrows money for the use, equipment and repair of the vessel and for a definite term
pledges the ship.
If the ship be lost in the course of the specific voyage by any of the perils enumerated
in the contract, the lender shall also lose his money
Loan on respondentia - One made on the goods laden on board the ship and which are
to be sold or exchanged in the course of he voyage.
Real, unilateral and aleatory contract

ORDINARY LOAN

LOAN ON BOTTOMRY AND

RESPONDENTIA

First lender has preference

Last lender has preference

Must be paid absolutely at all events

Required to be paid only upon safe arrival

of the thing given as security at the port of
destination

Subject to usury law

Not subject to usury

When loss does not extinguish loan:

1. By inherent defect of the thing
2. By fault or malice of the borrower
3. Damage by reason of contraband
4. Caused by barratry on the part of the captain
5. Loaded on a vessel different from that designated in the contract
Formalities:
1. Public instrument
2. Policy signed by the parties
3. Private instrument
COGSA
Applicable to all transportation of goods by sea in foreign trade to and from the
Philippines
When the parties expressly stipulate that COGSA shall apply
It does not apply to purely domestic transport
Prescriptive period
One year (damage) from the time the delivery of the goods were made
(loss/non-delivery) from the time the goods should have been delivered
Misdelivery - 10years contracts/4yrs torts (civil code)
3days Notice - if the loss or damage is not apparent;
If apparent - at the time of the removal into the custody of the person entitled to delivery
thereof
Failure to comply with the 3-days notice requirement under COGSA does not affect the
right of the shipper to bring action provided he brings the same within 1year.

INTERNATIONAL AIR TRANSPORT

WARSAW CONVENTION - applicable to all international transportation of persons,
baggage or goods performed by aircraft for hire
Jurisdiction:
1. Domicile of the carrier
2. Principal place of business of the carrier
3. Where it has a place of business through which the contract has been made
4. The court of the place of destination
Liabilities (not exclusive list)
1. Death or wounding - took place on board or in the course of embarking and
disembarking
2. Baggage or the goods are in the charge of the carrier
3. Delay
In what cases can carrier not invoke limitations:
1. Willful misconduct
2. Default amounting to willful misconduct accd to the court where action is brought
3. Accepting passengers w/o passenger ticket
4. Accepting goods w/o airway bill or baggage w/o baggage check
Prescriptive period: 2years
Condition precedent:
After discovery of the damage, the person entitled to delivery must complain to the
carrier, in writing:
Within 3days from the date of receipt - BAGGAGE
Within 7 days - GOODS
Within 14 days from the date on w/c the baggage of goods have been placed at his
disposal - DELAY