Professional Documents
Culture Documents
54
MEMORY AID IN COMMERCIAL LAW
TRANSPORTATION LAWS
Law on common carriers Law on obligations and attempt be with the knowledge and consent
contracts of the carrier;
e. One who has boarded a wrong vehicle, has
GOVERNING LAWS been properly informed of such fact, and on
A. Domestic/inter-island/coastwise alighting, is injured by the carrier;
Applicable to Land, Water, and Air transportation f. Invited guests and accommodation
1. Civil Code - primary passengers. (Lara vs. Valencia)
2. Code of Commerce (Arts. 349, 379, 573-734, g. One who rides any part of the vehicle which
580, 806-845) - suppletory is unsuitable or dangerous or which he
knows is not designed or intended for
B. International/foreign/overseas (Foreign passengers.
country to Philippines)
Applicable to Water/maritime and Air transportation DEFENSES OF A COMMON CARRIER IN THE
CARRIAGE OF GOODS
The law of the country of destination generally
1. CASO FORTUITO/FORCE MAJEURE
applies.
Requisites:
1. Civil Code - primary
a. Must be the proximate and only cause of the
2. Code of Commerce - suppletory
3. Others - suppletory loss
b. Exercise of due diligence to prevent or
a. Water/maritime: Carriage of Goods by
Sea Act (COGSA) minimize the loss before, during or after the
occurrence of the disaster (Art. 1739)
b. Air: Warsaw Convention
c. Carrier has not negligently incurred in delay
in transporting the goods (Art. 1740)
I. NEW CIVIL CODE
(Arts. 1732-1766) Fire is not considered a natural disaster or calamity
as it arises almost invariably from some act of man.
REQUIREMENT OF EXTRAORDINARY (Eastern Shipping Lines Inc. vs. IAC)
DILIGENCE Mechanical defects are not force majeure if the
Rendition of service with the greatest skill and same was discoverable by regular and adequate
utmost foresight. (Davao Stevedore Co. v. Fernandez) inspections. (Notes and Cases on the Law on
Rationale: Transportation and Public Utilities, Aquino, T. &
1. From the nature of the business and for Hernando, R.P. 2004 ed. p.120-122)
reasons of public policy (Art. 1733)
2. ACTS OF PUBLIC ENEMY
2. Relationship of trust
3. Business is impressed with a special public Requisites:
duty a. Must be the proximate and only cause of the
4. Possession of the goods loss
5. Preciousness of human life b. Exercise of due diligence to prevent or
A common carrier is not an absolute insurer of all minimize the loss before, during or after the act
risks of travel. causing the loss, deterioration or destruction of
the goods (Art. 1739)
COVERAGE
3. NEGLIGENCE OF THE SHIPPER OR OWNER
1. Vigilance over goods (Arts. 1734-1754); and
2. Safety of passengers (Arts. 1755-1763). a. Sole and proximate cause: absolute defense
b. Contributory: partial defense. (Art. 1741)
PASSENGER
4. CHARACTER OF THE GOODS OR DEFECTS IN THE
A person who has entered into a contract of
PACKING OR IN THE CONTAINER
carriage, express or implied, with the carrier. They are
Even if the damage should be caused by the
entitled to extraordinary diligence from the common
inherent defect/character of the goods, the common
carrier.
The following are not considered passengers, and carrier must exercise due diligence to forestall or
lessen the loss. (Art. 1742)
are entitled to ordinary diligence only:
The carrier which, knowing the fact of improper
a. One who has not yet boarded any part of a
vehicle regardless of whether or not he has packing of the goods upon ordinary observation, still
accepts the goods notwithstanding such condition, is
purchased a ticket;
b. One who remains on a carrier for an not relieved of liability or loss or injury resulting
therefrom. (Southern Lines, Inc. v. CA, 4 SCRA 258)
unreasonable length of time after he has
been afforded every safe opportunity to
5. ORDER OR ACT OF PUBLIC AUTHORITY
alight;
c. One who has boarded by fraud, stealth, or Said public authority must have the power to issue
deceit; the order (Art. 1743). Consequently, where the officer
d. One who attempts to board a moving acts without legal process, the common carrier will be
vehicle, although he has a ticket, unless the held liable. (Ganzon v. CA 161 SCRA 646)
LIABILITY OF A COMMON CARRIER FOR The carrier is liable when its personnel
DEATH OR INJURIES TO PASSENGERS DUE TO allowed a passenger to drive the vehicle
ACTS OF ITS EMPLOYEES AND OTHER causing it to collide with another vehicle
PASSENGERS OR STRANGERS resulting to the injuries suffered by the other
passengers. (MRR vs. Ballesteros, 16 SCRA 641)
FOR ACTS OF OTHER
FOR ACTS OF ITS PASSENGERS OR
EMPLOYEES STRANGERS
Parties
1. Common carrier 1. Common carrier
2. Shipper 2. Passenger
3. Consignee
Cause of liability
Delay in delivery, loss, destruction, or deterioration of Death or injury to the passengers
the goods
Duration of liability
From the time the goods are unconditionally placed in The duty of a common carrier to provide safety to its
the possession of, and received by the carrier for passengers so obligates it not only during the course
transportation until the same are delivered actually or of the trip, but for so long as the passengers are
constructively by the carrier to the consignee or to the within its premises and where they ought to be in
person who has the right to receive them. (Art. 1736) pursuance to the contract of carriage. (LRTA v.
It remains in full force and effect even when they Navidad, [2003])
are temporarily unloaded or stored in transit unless the All persons who remain on the premises within a
shipper or owner has made use of the right of reasonable time after leaving the conveyance are to
stoppage in transitu. (Art. 1737) be deemed passengers, and what is a reasonable time
It continues to be operative even during the time or a reasonable delay within this rule is to be
the goods are stored in a warehouse of the carrier at determined from all the circumstances, and includes a
the place of destination until the consignee has bee reasonable time to see after his baggage and prepare
advised of the arrival of the goods and has had for his departure. (La Mallorca v. CA, 17 SCRA 739 ;
reasonable opportunity thereafter to remove them or Abiotiz Shipping Corporation v. CA, 179 SCRA 95)
otherwise dispose of them. (Art. 1738) It is the duty of common carriers of passengers to
Delivery of goods to the custom authorities is not stop their conveyances a reasonable length of time in
delivery to the consignee. (Lu Do v. Binamira, 101 Phil order to afford passengers an opportunity to enter,
120) and they are liable for injuries suffered from the
sudden starting up or jerking of their conveyances
while doing so. The duty which the carrier of
passengers owes to its patrons extends to persons
boarding the cars as well as to those alighting
therefrom (Dangwa Trans Co., Inc. vs. CA 202 SCRA
574).
Presumption of negligence
Void stipulations
1. That the goods are transported at the risk of the Dispensing with or lessening the extraordinary
owner or shipper; responsibility of a common carrier for the safety of
2. That carrier will not be liable for any loss, passengers imposed by law by stipulation, by posting
destruction or deterioration of the goods; of notices, by statements on tickets or otherwise. (Art.
3. That the carrier need not observe any diligence 1757)
in the custody of the goods;
4. That the carrier shall exercise a degree of
diligence less than that of a good father of a family
over the movable transported;
5. That the carrier shall not be responsible for the
acts or omissions of his or its employees;
6. That the carrier’s 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. That the carrier is not responsible for the loss,
destruction or deterioration of the goods on account
of the defective condition of the car, vehicle, ship or
other equipment used in the contract of carriage.
(Art. 1745)
Terms:
Who may contract
1. Primage - bonus to be paid to the captain after
the successful voyage. Shipowner or ship Only the owner of the
2. Demurrage – the sum fixed in the charter party agent. Outside of the cargo.
as a remuneration to the owner of the ship for residence of the
the detention of his vessel beyond the number of owners - the captain.
days allowed by the charter party for loading or Common elements:
unloading or for sailing. 1. Exposure of security to marine peril;
3. Deadfreight – the amount paid by or recoverable 2. Obligation of the debtor conditioned only
from a charterer of a ship for the portion of the upon safe arrival of the security at the point
ship’s capacity the latter contracted for but failed of destination.
to occupy. Forms:
4. Lay Days - days allowed to charter parties for 1. Public instrument
loading and unloading the cargo. 2. Policy signed by the contracting parties and
5. Extra Lay Days – days which follow after the lay the broker taking part therein
days have elapsed. 3. Private instrument (Art. 720)
Contents:
USUAL FORMS OF CONSUMMATING CONTRACTS 1. Kind, name and registry of the vessel;
1. C.I.F. – cost, insurance and freight; 2. Name, surname and domicile of the captain;
2. F.O.B. - free on board; 3. Names, surnames and domiciles of the
3. F.A.S. - free alongside ship; and borrower and the lender;
4. C. & F. - cost and freight. 4. Amount of the loan and the premium
stipulated;
TRANSSHIPMENT OF GOODS 5. Time for repayment;
The act of taking cargo out of one ship and loading 6. Goods pledged to secure repayment;
it in another, or the transfer of goods from the vessel 7. Voyage during which the risk is run (Art.721)
stipulated in the contract of affreightment to another
vessel before the place of destination named in the
contract has been reached, or the transfer for further
transportation from one ship or conveyance to BOTTOMRY/ ORDINARY LOAN
another. RESPONDENTIA (MUTUUM)
It is not dependent on the ownership of the Not subject to Usury Subject to Usury Law
transporting ships or in the change of carriers, but Law
rather on the fact of actual physical transfer of cargo
from one vessel to another. Liability of the Not subject to any
If done without legal excuse, however competent borrower is contingent contingency (absolute
and safe the vessel into which the transfer is made, is on the safe arrival of liability)
a violation of contract and infringement of right of the vessel or cargo at
shipper and subjects carrier to liability if freight is lost destination
event by cause otherwise excepted. (Magellan
Manufacturing vs. CA, 201 SCRA 102) The last lender is a The first lender is a
preferred creditor preferred creditor
LOAN ON BOTTOMRY AND RESPONDENTIA
would apply to the hypothecation of the cargo by
WHEN LOAN ON BOTTOMRY OR respondentia. (Pandect of Commercial Law and
RESPONDENTIA REGARDED AS SIMPLE LOAN Jurisprudence, Justice Jose Vitug, 1997 ed.)
1. Lender loaned an amount larger than the
value of the object due to fraudulent means ACCIDENTS IN MARITIME COMMERCE
employed by the borrower. (ART.726) 1. Averages
2. Full amount of the loan is not used for the 2. Arrival Under Stress
cargo or given on the goods if all of them 3. Collision
could not have been loaded, the balance will 4. Shipwreck
be considered a simple loan. (ART.727)
3. If the effects on which the money is taken is AVERAGE
not subjected to any risk. (ART.729) An extraordinary or accidental expense incurred
during the voyage in order to preserve the cargo,
Note: Under existing laws, the parties to a loan, vessel or both, and all damages or deterioration
whether ordinary or maritime, may agree on any rate suffered by the vessel from departure to the port of
of interest. (CB Circular 905) destination, and to the cargo from the port of loading
to the port of consignment. (Art. 806)
The person whose property has been saved must
MARINE INSURANCE LOAN ON contribute to reimburse the damage caused or
BOTTOMRY OR expense incurred if the situation constitutes general
RESPONDENTIA average.
Indemnity is paid after the Indemnity is paid in Classes:
loss has occurred advance by way of 1. Particular or Simple Average
a loan 2. Gross or General Average
In case of loss of the vessel In case of loss of Where both vessel and cargo are saved, it is
due to a risk insured the vessel due to a general average; where only the vessel or only the
against, the obligation of marine peril, the cargo is saved, it is particular average.
the insurer becomes obligation of the Expenses incurred to refloat a vessel, which
absolute borrower to pay is accidentally ran aground, in order to continue its
extinguished voyage, do not constitute general average. Not only is
Consensual contract Real contract there absence of a marine peril, common safety factor,
and deliberateness. It is the safety of the property,
Hypothecary Nature of Bottomry/ Respondentia and not the voyage, which constitutes the true
GENERAL RULE: The obligation of the borrower to foundation of general average. (A. Magsaysay, Inc. vs.
pay the loan is extinguished if the goods given as Agan, G.R.No. L-6393, Jan. 31, 1955)
security are absolutely lost by reason of an accident of
the sea, during the voyage designated, and if it is
proven that the goods were on board. PARTICULAR OR GROSS OR GENERAL
EXCEPTIONS: SIMPLE
1. Loss due to inherent defect; Definition
2. Loss due to the barratry on the part of the Damages or expenses Damages or expenses
captain; caused to the vessel or deliberately caused in
3. Loss due to the fault or malice of the borrower; cargo that did not inure order to save the
4. The vessel was engaged in contraband; and to the common benefit, vessel, its cargo or both
5. The cargo loaded on the vessel be different in and borne by respective from real and known
from that agreed upon. owners. (Art. 809) risk. (Art. 811)
Requisites
Concurrence of Marine Insurance and Loan on 1. common danger;
Bottomry/Respondentia 2. deliberate
1. The insurable interest of the owner of a ship sacrifice;
hypothecated by bottomry is only the excess 3. success;
of the value over the amount secured by 4. proper formalities
bottomry. (Sec. 101, Insurance Code) and legal steps.
2. The value of what may be saved in case of Liability
shipwreck shall be divided between the The owner of the goods All the persons having
lender and the insurer in proportion to the which gave rise to the an interest in the vessel
interest of each one. (Art. 735) expense or suffered the and the cargo therein
damage shall bear this at the time of the
Note: If a vessel is hypothecated by bottomry only the average. (Art. 810) occurrence of the
excess is insurable, since a loan on bottomry partakes average shall contribute
of the nature likewise of an insurance coverage to the to satisfy this average.
extent of the loan accommodation. The same rule (Art. 812)
The insurers in the gross or general average, the existence of the
(Art.859) and lenders cargo on board should be proven by means of the bill
on bottomry and of lading. (Art. 816)
respondentia shall
likewise contribute. York-Antwerp (Y-A) Rules on Determining
(Art.732). Liability for Averages With Regard To Deck
Number of interests involved Cargo
Only one interest Several interests 1. Deck cargo is allowed only in
involved involved domestic/coastwise/inter-island shipping, and is
Share in the damage or expense prohibited in international/overseas/foreign shipping.
100% share In proportion to the 2. If deck cargo is loaded with the consent of the
value of the owner’s shipper on overseas trade, it must always contribute
property saved to general average, but should the same be jettisoned,
Right to recover it would not be entitled to reimbursement because
No reimbursement There may be there is violation of the Y-A Rules.
reimbursement 3. If deck cargo is loaded with the consent of the
shipper on coastwise shipping, it must always
Kinds (not exclusive)
contribute to general average and if jettisoned would
Art. 809 Art. 811
be entitled to reimbursement.
Procedure for recovery
Reason: In domestic shipping, voyages are
1. Assembly and
deliberation usually short and the seas are generally not
2. Resolution of the rough. In overseas shipping, the vessel is
captain exposed for many days to perils of the sea.
3. Entry of the
resolution in the DOMESTIC INTERNATIONAL
logbook Deck cargo is allowed Deck cargo is not
4. Detailed minutes
allowed
5. Delivery of the
With shipper’s consent
minutes to the maritime
General average Particular average
judicial authority of the
Without shipper’s consent
first port, within 24
hours from arrival, Captain is liable Captain is liable
6. Ratification by
captain under oath. ARRIVAL UNDER STRESS (ARRIBADA)
(Arts. 813-814) The arrival of a vessel at the nearest and most
convenient port instead of the port of destination, if
GOODS NOT COVERED BY GENERAL AVERAGE during the voyage the vessel cannot continue the trip
EVEN IF SACRIFICED to the port of destination.
1. Goods carried on deck. (ART.855)
2. Goods not recorded in the books or records When lawful When Who bears
of the vessel. (ART.855 (2)) unlawful expenses:
3. Fuel for the vessel if there is more than
sufficient fuel for the voyage. (Rule IX, The inability to 1. Lack of The shipowner
York-Antwerp Rule) continue provisions due or ship agent is
voyage is due to negligence to liable in case of
Jettison to lack of carry according unlawful arrival
Act of throwing cargo overboard in order to lighten provisions, to usage and under stress.
the vessel. well-founded customs; But they shall
Order of goods to be cast overboard: fear of seizure, 2. Risk of not be liable
1. Those which are on the deck, preferring the privateers, enemy not well for the
heaviest one with the least utility and value; pirates, or known or damages
2. Those which are below the upper deck, accidents of manifest caused by
beginning with the one with greatest weight the sea 3. Defect of reason of a
and smallest value. (Art. 815) disabling it to vessel due to lawful arrival.
navigate. (Art. improper (Art. 821)
Jettisoned goods are not res nullius nor deemed 819) repair; and
“abandoned” within the meaning of civil law so as to 4. Malice,
be the object of occupation by salvage. (Pandect of negligence, lack
Commercial Law and Jurisprudence, Justice Jose of foresight or
Vitug, 1997 ed.) skill of captain.
In order that the jettisoned goods may be included (Art. 820)
aside therefrom. (Smith Bell v. CA)
It is the duty of the captain to continue the voyage
without delay after the cause of the arrival under Nautical Rules as to Sailing Vessel and
stress has ceased failing in such duty renders him Steamship
liable. However, in case the cause has been risk of 1. Where a steamship and a sailing vessel are
enemies, there must first be an assembly before approaching each other from opposite directions,
departure. (Art. 825) or on intersecting lines, the steamship from the
Steps: moment the sailing vessel is seen, shall watch
1. Captain should determine during the voyage with the highest diligence her course and
if there is well founded fear of seizure, movements so as to be able to adopt such timely
privateers and other valid grounds; means of precaution as will necessarily prevent
2. Captain shall assemble the officers and the two boats from coming in contact.
summon the persons interested in the cargo 2. The sailing vessel is required to keep her course
who may attend the meeting but without a unless the circumstances require otherwise.
right to vote;
3. The officers shall determine and agree if Zones of Time in the Collision of Vessels
there is well-founded reason after examining 1. First zone – all time up to the moment when risk of
the circumstances. The captain shall have collision begins.
the deciding vote; No rule is as yet applicable for none is necessary.
4. The agreement shall be drafted and the 2. Second zone – time between moment when risk of
proper minutes shall be signed and entered collision begins and moment it becomes a practical
in the log book; certainty.
5. Objections and protests shall likewise be It is in this period where conduct of the vessels is
entered in the minutes. primordial. It is in this zone that vessels must strictly
observe nautical rules, unless a departure therefrom
COLLISION becomes necessary to avoid imminent danger.
Impact of two vessels both of which are moving. 3. Third zone – time when collision is certain and time
of impact.
Allision An error in this zone would no longer be legally
Impact between a moving vessel and a stationary consequential.
one. Error in Extremis - sudden movement made by a
faultless vessel during the third zone of collision with
Nautical Rules to Determine Negligence another vessel which is at fault during the 2nd zone.
1. When two vessels are about to enter a port, the Even if such sudden movement is wrong, no
farther one must allow the nearer to enter first; if responsibility will fall on said faultless vessel. (Urrutia
they collide, the fault is presumed to be and Co. v. Baco River Plantation Co., 26 PHIL 632)
imputable to the one who arrived later, unless it
can be proved that there was no fault on its part. Cases Covered By Collision and Allision
2. When two vessels meet, the smaller should give 1. One vessel at fault
the right of way to the larger one. Vessel at fault is liable for damage caused to
3. A vessel leaving port should leave the way clear innocent vessel as well as damages suffered by the
for another which may be entering the same owners of cargo of both vessels. (Art. 826)
port. 2. Both vessels at fault
4. The vessel which leaves later is presumed to Each vessel must bear its own loss, but the
have collided against one which has left earlier. shippers of both vessels may go against the
5. There is a presumption against the vessel which shipowners who will be solidarily liable. (Art. 827)
sets sail in the night. 3. Vessel at fault not known
6. There is a presumption against the vessel with Each vessel must bear its own loss, but the
spread sails which collides with another which is shippers of both vessels may go against the
at anchor and cannot move, even when the crew shipowners who will be solidarily liable. (Art. 828)
of the latter has received word to lift anchor, Doctrine of Inscrutable Fault – In case of
when there was not sufficient time to do so or collision where it cannot be determined which
there was fear of a greater damage or other between the two vessels was at fault, both
legitimate reason. vessels bear their respective damage, but both
7. There is a presumption against an improperly should be solidarily liable for damage to the
moored vessel. cargo of both vessels.
8. There is a presumption against a vessel which 4. Third vessel at fault
has no buoys to indicate the location of its The third vessel will be liable for losses and
anchors to prevent damage to vessels which may damages. (Art. 831)
approach it. 5. Fortuitous event/force majeure
9. Vessels must have “proper look-outs” or persons No liability. Each bears its own loss. (Art. 830)
trained as such and who have no other duty
The doctrine of res ipsa loquitur applies in case a ARRASTRE SERVICE
moving vessel strikes a stationary object, such as a A contract for the unloading of goods from a vessel.
bridge post, dock, or navigational aid. (Far Eastern Applicability: Overseas trade only. (Commercial
Shipping v. CA, Luzon Stevedoring vs. CA) Law Review, C. Villanueva, 2004 ed.)
Significance: When a person brings in cargo from
Even if the cause of action against the common abroad, he cannot unload and deliver the cargo by
carrier is based on quasi-delict, the defense of due himself. The unloading must be done by the arrastre
diligence in the selection and supervision of employees operator, which will then deliver the cargo to the
is unavailing in case of a maritime tort resulting in importer. (Commercial Law Review, C. Villanueva,
collision. It is not a civil tort governed by the Civil 2004 ed.)
Code but a maritime one governed by Arts. 826-839 of Nature of business: It is a public utility,
the Code of Commerce. (Manila Steamship vs. Insa discharging functions which are heavily invested with
Abdulhaman) public interest.
Liability:
Doctrine of Last Clear Chance and Rule on 1. Similar to a warehouseman (Lua Kian v. Manila
Contributory Negligence cannot be applied in collision Railroad)
cases because of Art.827 of the Code of Commerce. 2. Similar to a common carrier (Northern Motors v.
(Notes and Cases on the Law on Transportation and Prince Line)
Public Utilities, Aquino, T. & Hernando, R.P. 2004 ed.) 3. Solidary liability with the common carrier
MARITIME PROTEST Note: In order that the arrastre operator may be held
Condition precedent or prerequisite to recovery of liable, the consignee must prove that the damage was
damages arising from collisions and other maritime due to the negligence and while the goods are in the
accidents. custody of the arrastre operator. (Hartford Fire
It is a written statement made under oath by the Insurance v. E. Razon, Inc.)
captain of a vessel after the occurrence of an accident
or disaster in which the vessel or cargo is lost or STEVEDORING SERVICE
damaged, with respect to the circumstances attending The carriage of goods from the warehouse or pier
such occurrence, for the purpose of recovering losses to the holds of the vessel. (Chief of Staff vs. CIR)
and damages. As understood in the port business, the term
Excuses for not filing protest: 1) where the consists of the handling of cargo from the hold of the
interested person is not on board the vessel; and 2) ship to the dock, in case of pier-side unloading; or to a
on collision time, need not be protested. (Art. 836) barge, in case of unloading at sea. (Anglo-Fil Trading
Cases applicable: Corp. vs. Lazaro)
1. Collision (Art. 835); The loading on the ship of outgoing cargo is also
2. Arrival under stress (Art. 612(8)); part of stevedoring work. (Ibid.)
3. Shipwrecks (Arts. 612(15), 843);
4. Where the vessel has gone through a CONTAINERIZATION/ “SAID-TO-CONTAIN”/
hurricane or when the captain believes that “SHIPPER’S LOAD AND COUNT” SYSTEM
the cargo has suffered damages or averages System whereby the shipper loads his cargoes in a
(Art. 624). specially designed container, seals the container and
Who makes: Captain delivers it to the carrier for transportation. The carrier
When made: within 24 hours from the time the does not participate in the counting of the
collision took place. merchandise for loading into the container, the actual
Before whom made: competent authority at the loading, and the sealing of the container. (US Lines v.
point of collision or at the first port of arrival, if in the Comm. Of Customs, ICTSI v. Prudential Guarantee)
Philippines and to the Philippine consul, if the collision The matter of quantity, description and conditions
took place abroad. (Art. 835) of the cargo inside the container is the sole
responsibility of the shipper, unless there is stipulation
SHIPWRECK to the contrary. (US Lines vs. Comm. Of Customs,
It is the loss of the vessel at sea as a consequence Reyma Brokerage v. Phil. Home Assurance)
of its grounding, or running against an object in sea or
on the coast. It occurs when the vessel sustains Note: In order to attribute to the carrier any damage
injuries due to a marine peril rendering her incapable to the shipment that may be found, inspection of the
of navigation. goods should be done at pier-side. (Bankers vs. CA)
If the wreck was due to malice, negligence or lack
of skill of the captain, the owner of the vessel may III. CARRIAGE OF GOODS BY SEA ACT/COGSA
demand indemnity from said captain. (Art. 841) (C.A. No. 65)
The rules on collision or allision, as may be
pertinent, can equally apply to shipwrecks. APPLICABILITY
The transportation must be:
SPECIAL CONCEPTS 1. Water/maritime transportation;
2. for the carriage of goods; and demand. (Dole Phils.,Inc. vs. Maritime Co.,148 SCRA
3. overseas/international/foreign (from foreign 118)
port to Philippine port).
It can be applied in domestic sea transportation if The one-year period shall run from delivery to the
agreed upon by the parties. (Clause paramount or arrastre operator and not to the consignee. (Union
paramount clause) Carbide Phils, Inc. vs. Manila Railroad Co.,SCRA 359)
CERTIFICATE OF CERTIFICATE OF
c. 25% to the officers and crew in proportion
PUBLIC PUBLIC
to their salaries. (Sec. 13)
CONVENIENCE CONVENIENCE AND
(CPC) NECESSITY (CPCN)
Taking passengers from a sinking ship, without
rendering any service in rescuing the vessel, is not a
salvage service, being a duty of humanity and not for
An authorization An authorization
reward.
issued by the issued by the
appropriate appropriate
VI. PUBLIC SERVICE ACT
government agency for government agency for
(C.A. No. 146)
the operation of public the operation of public
services for which no service for which a
PURPOSES:
franchise, either prior franchise is
1. To secure adequate, sustained service for
municipal or required by law; e.g.
the public at the least possible cost;
legislative, is required telephone and other
2. To protect the public against unreasonable
by law, e.g., common services.
charges and poor, inefficient service;
carriers.
3. To protect and secure investments in public
services;
4. To prevent ruinous competition.
A CPC or a CPCN constitutes neither a franchise nor
AUTHORITY TO OPERATE PUBLIC SERVICES
a contract, confers no property right, and is a mere
GENERAL RULE: No public service shall operate
license or a privilege. The holder of said certificate
without having been issued a certificate of public
does not acquire a property right in the route covered
convenience or a certificate of public convenience and
thereby. Nor does it confer upon the holder any
necessity.
proprietary right or interest or franchise in the public
EXCEPTIONS:
highways. Revocation of this certificate deprives him
1. Warehouses;
of no vested right. New and additional burdens,
2. Animal drawn vehicles and bancas moved by
alteration of the certificate, or even revocation or
oar or sail;
annulment thereof is reserved to the State. (Luque vs.
3. Airships, except for the fixing of maximum
Villegas, 30 SCRA 408)
rates for fare and freight;
4. Radio companies, except for rates fixing;
It is a “property” and has a considerable value and
5. Public services owned or operated by the
can be the subject of sale or attachment. (Cogeo-
government, except as to rates fixing;
Cubao Operators and Drivers Assn. vs. CA, 207 SCRA 2. Providing or maintaining unsafe, improper or
343, Raymundo vs. Luneta Motor Co.) inadequate service as determined by the proper
authority;
REQUREMENTS FOR GRANTING CPC OR CPCN 3. Committing any act of unreasonable and unjust
1. Applicant must be a citizen of the Philippines or a preferential treatment to any particular person,
corporation or entity 60% of the capital of which corporation or entity as determined by the proper
is owned by such citizens; authority;
2. Applicant must prove public necessity; 4. Refusing or neglecting to carry public mail upon
3. Applicant must prove that the operation of the request. (Secs. 18 and 19)
public service proposed and the authorization to
do business will promote the public interest on a ACTS REQUIRING PRIOR APPROVAL
proper and suitable manner; 1. Establish and maintain individual or joint rates;
4. Applicant must have sufficient financial capability 2. Establish and operate new units;
to undertake the proposed services and meeting 3. Issue free tickets;
the responsibilities incident to its operation. 4. Issue any stock or stock certificates representing
an increase of capital;
5. Capitalize any franchise in excess of the amount
POWERS POWERS actually paid to the Government;
REQUIRING PRIOR EXERCISABLE 6. Sell, alienate, mortgage or lease property,
NOTICE AND WITHOUT PRIOR certificates or franchise.
HEARING NOTICE AND
HEARING Under Sec. 20(g) of C.A. No. 146, the sale, etc.
may be negotiated and completed before the approval
1. Issuance of CPC 1. Investigation any by the proper authority. Its approval is not a condition
or CPCN; matter concerning precedent to the validity of the contract. The approval
2. Fixing of rates, public service; is necessary only to protect public interest.
tolls, and charges; 2. Requiring
3. Setting up of operators to furnish PRIOR OPERATOR/OLD OPERATOR RULE
standards and safe, adequate, and The rule allowing an existing franchised operator to
classifications; proper service; invoke a preferential right within the authorized
4. Establishment of 3. Requiring public territory as long as he renders satisfactory and
rules to secure services to pay economical service.
accuracy of all meters expenses of The policy is not to issue a certificate to a second
and all measuring investigation; operator to cover the same field and in competition
appliances; 4. Valuation of with a first operator who is rendering sufficient,
5. Issuance of properties of public adequate and satisfactory service. The prior operator
orders requiring utilities; must first be given an opportunity to improve its
establishment or 5. Examination and service, if inadequate or deficient.
maintenance of test of measuring Purpose: To prevent ruinous and wasteful
extension of facilities; appliances; competition in order that the interests of the public
6. Revocation, or 6. Grant of special would be conserved and preserved.
modification of CPC or permits to make extra
CPCN; or special trips in It subordinates the prior applicant rule which gives
7. Suspension of CPC territories specified in the first applicant priority only if things and
or CPCN, except when the certificate; circumstances are equal.
it is necessary to 7. Uniform
avoid serious and accounting system and Where the operator either fails or neglects to make
irreparable damage or furnishing of annual the improvement or effect the increase in services,
inconvenience to the reports; especially when given the opportunity, new operators
public or private 8. Compelling should be given the chance to give the services
interest, in which compliance with the needed by the public.
case, a suspension laws and regulations.
not more than 30 PRIOR APPLICANT RULE
days may be ordered, Presupposes a situation when two interested
prior to the hearing. persons apply for a certificate to operate a public
(Soriano v. Medina, utility in the same community over which no person
164 SCRA 36) has as yet granted any certificate. If it turns out, after
the hearing, that the circumstances between the two
applicants are more or less equal, then the applicant
UNLAWFUL ACTS OF PUBLIC UTILITY
who applied ahead of the other, will be granted the
COMPANIES
certificate.
1. Engagement in public service business without
first securing the proper certificate;
RATE-FIXING POWER
The rate to be fixed must be just, founded upon
conditions which are fair and reasonable to both the 2. The registered owner is primarily liable for all the
owner and the public. consequences flowing from the operations of the
A rate is just and reasonable if it conforms to the carrier.
following requirements: The public has the right to assume that the
1. One which yields to the carrier a fair return registered owner is the actual or lawful owner
upon the value of the property employed in thereof. It would be very difficult and often
performing the service; and impossible, as a practical matter, for the public to
2. One which is fair to the public for the enforce their rights of action that they may have
service rendered. for injuries inflicted by the vehicle if they should
be required to prove who the actual owner is .
REGISTERED OWNER RULE (Benedicto vs. IAC, 187 SCRA 547)
The registered owner of a certificate of public 3. The thrust of the law in enjoining the kabit
convenience is liable to the public for the injuries or system is to identify the person upon whom
damages suffered by third persons caused by the responsibility may be fixed with the end in view
operation of said vehicle, even though the same had of protecting the riding public (Lim vs. CA 373
been transferred to a third person. SCRA 394).
The registered owner is not allowed to escape 4. The registered owner cannot recover from the
responsibility by proving that a third person is the actual owner and the latter cannot obtain transfer
actual and real owner Reason: It would be easy for of the vehicle to himself, both being in pari
him, by collusion with others or otherwise, to transfer delicto. (Teja Marketing vs. IAC)
the responsibility to an indefinite person, or to one 5. For the better protection of the public, both the
who possesses no property with which to respond registered owner and the actual owner are jointly
financially for the damage or injury done. (Erezo, et al. and severally liable with the driver. (Zamboanga
vs. Jepte 102 Phil 103). Transportation Co. vs. CA)
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 percentage of such earnings.
It is void and inexistent under Art. 1409, Civil Code.
Effects:
1. 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, 154 SCRA 388)