TRANSPORTATION LAW | 1st SEM A.Y.

2020-2021

Preliminary Considerations contracting countries regardless of whether or

not there was a break in the transportation or
Governing Laws transshipment
1. New Civil Code – Primary Law o The place of departure and the place of
2. Warsaw Convention – for international transportation by air designation are within the territory of a single
3. Code of Commerce – governs suppletorily; it governs contracting country if there is an agreed
maritime transaction stopping place within a territory subject to the
4. Carriage of goods by Sea Act – for transportation by sea; sovereignty, even though the power is not a
governs suppletorily party to the convention.
5. Salvage Law - APPLICABLE: Applies to all international transportation
6. Public Service Act of person, baggage or goods performed by aircraft for hire
7. Article XII Sec 11 on operation of public convenience of
the 1987 Philippine Constitution
- Transportation to be performed by several successive air
SUMMARY OF RULES carriers shall be deemed to be one undivided transportation,
A. Coastwise Shipping if it has been regarded by the parties as a single operation,
a. NCC – primary law whether it has been agreed upon under the form of a single
b. Code of Commerce – governs suppletory in the contract or of a series of contracts, and it shall not lose its
absence of NCC provisions international character merely because one contract or a
B. Carriage from Foreign Ports to Philippine Ports series of contracts is to be performed entirely within a
a. NCC – primarily law territory subject to the sovereignty, suzerainty, mandate, or
b. Code of Commerce – all matters not regulated authority of the same High Contracting Party. (Art. 1)
by the NCC. - Note: Warsaw prevails over the NCC.
c. Carriage of Goods by Sea Act – suppletory to - INAPPLICABILITY:
the NCC
C. Carriage from the Philippines Ports to Foreign Ports o If there is willful misconduct on the part of the
a. The laws of the country to which the goods are carrier’s employees. The Convention does not
to be transported regulate, much less exempt, carrier from
D. Overland Transportation liability for damages for violating the rights of
a. NCC – primary law its passengers under the contract of carriage
b. Code of Commerce- suppletory (PAL v. CA, 257 SCRA 33). --- if the damage
E. Air Transportation is similarly caused by any agent of the carrier
a. NCC acting within the scope of his employment
b. Code of Commerce o when it contradicts public policy;
c. For International Carriage
o if the requirements under the Convention are
i. Warsaw Convention
not complied with.
Civil Code
- LIABILITY OF CARRIER OF DAMAGES:
- Article 1766 of the Civil Code expresses the primary of the
o Death or injury of a passenger if the accident
said Code over the laws that were in force prior to its
enactment causing it took place on board the aircraft or in
the course of its operations; (Art. 17)
o Destruction, loss or damage to any luggage or
o Article 1766 (Civil Code). In all matters not goods, if it took place during the carriage; (Art.
regulated by this Code, the rights and 18) and
obligations of common carriers shall be o Delay in the transportation of passengers,
governed by the Code of Commerce and by luggage or goods. (Art. 19)
special laws. - The Hague Protocol amended the Warsaw Convention by
- Art. 1753 is also explicit that with respect to cases removing the provision that if the airline took all necessary
involving loss, destruction or deterioration of goods, that steps to avoid the damage, it could exculpate itself
law of the country of destination shall apply. Philippine completely (Art. 20(1)). (Alitalia v. IAC, 192 SCRA 9)
Laws shall apply if the goods are to be transported from - The said provisions merely declare the carrier liable for
Japan to the Philippines. damages in the enumerated cases if the conditions therein
o Article 1753. The law of the country to which specified are present. Neither said provisions nor others in
the goods are to be transported shall govern the aforementioned Convention regulate or exclude liability
the liability of the common carrier for their for OTHER BREACHES of contract of carrier.
loss, destruction or deterioration. - The Convention does not thus operate as an exclusive
- The liability of petitioner carrier is governed primarily by enumeration of the instances of an airline’s liability, or as
the civil code. However, in all matters not regulated by said an absolute limit of the extent of that liability.
Code, the rights and obligations of common carrier shall be - An agreement relieving the carrier from liability or fixing a
governed by the Code of Commerce and by special laws. lower limit is null and void. (Art. 23)
The Carriage of Goods by Sea Act is suppletory to the - Carrier not entitled to the foregoing limit if the damage is
provisions of the NCC. caused by willful misconduct or default on its part. (Art.
- It was explained that collision falls among matters not 25)
specifically regulated by the Civil Code, so Articles 826 to - “Place of Destination”
839 of Book Three of the Code of Commerce shall apply o within the meaning of the Warsaw Convention,
exclusively. is determined by the terms of the contract of
- carriage, or specifically the ticket between the
Warsaw Convention passenger and the carrier. It is the destination
- In international air transportation, the Convention for the and not an agreed stopping place that controls
Unification of Certain Rules Relating to the International for the purpose of ascertaining jurisdiction
Carriage by Air of “Warsaw Convention” with its under the Convention.
amendments should be applied. - COGSA/WARSAW applies to foreign vessels or airplane
- International air transportation means or international travel
o The place of departure and the place of
designation are within the territories of two

SALIH, SHELLA HANNAH J. | 2I

TRANSPORTATION LAW | 1st SEM A.Y. 2020-2021
Code of Commerce
- Code of Commerce applies to inter-island or domestic
travel.
- Article 1766 (Civil Code). In all matters not regulated by
this Code, the rights and obligations of common carriers
shall be governed by the Code of Commerce and by special
laws
- As to the rights and duties of the parties strictly arising out
of delay, the Civil Code is silent. However, the Code of
Commerce provides for such a situation:
o ARTICLE 698. In case a voyage already begun
should be interrupted, the passengers shall be
obliged to pay the fare in proportion to the
distance covered, without right to recover for
losses and damages if the interruption is due to
fortuitous event of force majeure, but with a
right to indemnity if the interruption should
have been caused by the captain exclusively. If
the interruption should be caused by the
disability of the vessel and a passenger should
agree to await the repairs, he may not be
required to pay any increased price of passage,
but his living expenses during the stay shall be
for his own account.
- Note: the carrier is liable for any loss or damage, including
any pecuniary loss or loss of profit, which the passenger
may have suffered by reason thereof.
- In case the vessel is not able to depart on time and the delay
is unreasonable, the passenger may opt to have his/her
ticket immediately refunded without any refund service fee
from the authorized issuing/ticketing office.
- Code of Commerce provides that in the absence of any
agreement, the consignee who is supposed to pay must do
so within 24-hours from the time of delivery.
o Article 374. The consignees to whom the
shipment was made may not defer the payment
of the expenses and transportation charges of
the goods they receive after the lapse of twenty-
four hours following their delivery; and in case
of delay in this payment, the carrier may
demand the judicial sale of the goods
transported in an amount necessary to cover
the cost of transportation and the expenses
incurred.
Carriage of Goods by Sea Act (C.A No. 65)
- Applies suppletory to the Civil Code if the goods are to be
shipped form a foreign port to the Philippines
- COGSA is applicable in international maritime commerce.
It can be applied in domestic sea transportation if agreed
upon by the parties. (paramount clause)
- Under the Sec. 4 (5), the liability limit is set at $500 per
package unless the nature and value of such goods is
declared by the shipper. This is deemed incorporated in the
bill of lading even if not mentioned in it (Eastern Shipping
v. IAC, 150 SCRA 463).
- If by agreement, another maximum amount than that
mentioned may be fixed provided that such maximum shall
not be less than $500 and in no event shall the carrier be
liable for more than the amount of damage actually
sustained
- RECOVERY OF DAMAGES FROM CARRIER FOR
CARRIAGE OF GOODS:
- circumstances specified in Art. 1734 of the
o Overseas –where goods arrived in a damaged
condition from a foreign port to a Philippine
port of entry: (COGSA)
a. upon discharge of goods, if the damage is
apparent, claim should be filled immediately;
o if damage is not apparent, claim should be
filled within 3 days from delivery.
- COGSA is applicable up to the final port of destination and
that the fact that transshipment was made on an interisland
SALIH, SHELLA HANNAH J. | 2I
vessel did not remove the contract of carriage of goods
from the operation of said Act.
- Adopted by the Philippines on October 22, 1936 through
Commonwealth Act No. 65
-  New Civil Code  primary law on goods that are being
transported from a foreign port to the Philippines
- COGSA  remains to be a suppletory law for such type of
transportation – international shipping
o ART. 1753, NCC: THE LAW OF THE
COUNTRY TO WHICH THE GOODS ARE TO
BE TRANSPORTED SHALL GOVERN THE
LIABILITY OF THE COMMON CARRIER
FOR THEIR LOSS, DESTRUCTION OR
DETERIORATION.
- Goods – includes goods, wares, merchandise, and articles
of every kinds whatsoever
- does not include live animals and cargo which by the
contract of carriage is stated as being carried on deck and is
so carried
- Parties:
o Carrier, and
o  Shipper
- They are given their respective rights and obligations under
COGSA.
- Carrier (covered by COGSA)  not limited to the
shipowner; includes charterer who enters into a contract of
carriage with the shipper
- Charterercharters a vessel and conducts his own business
for his own account
- after chartering the vessel, he uses the vessel to conduct a
business of transportation obtaining goods from 3 rd.
persons to transport the latter’s goods
- Duties of the carrier:
o Civil Code requires international carriers to
exercise extraordinary diligence in the
performance of their contractual obligations
o Section 2 of COGSA  carrier’s obligation and
liabilities in relation to the loading, handling,
stowage, carriage, custody, care and discharge
of such goods
o Section 3 of COGSAresponsibilities of the
carrier under COGSA
- Document of title required
o evidenced by the Bill of Lading
o BOL serves as prima facie evidence of the
receipt by the carrier of the goods
- Notice of claim and prescriptive period
o Notice of claim  must be made within 3 days
from delivery if the damage is not apparent; not
mandatory
o Prescriptive period  1 year from delivery for
the filing of the case is a condition precedent or
mandatory; does not apply to cases of mis
delivery or conversion
- Defenses and immunities
o provided for by Section 4 of COGSA
o Section 49(1) of COGSA – carrier shall not be
liable for loss or damages arising from
unseaworthiness
o New Civil Code – carrier will not be liable only
if it can present proof that the unseaworthiness
was caused exclusively by any of the
NCC
- Waiver
o The shipowner and the ship agent may waive
the benefit of any of the defenses in its favor
provided not only under COGSA but also under
other laws
- Limiting provision
o COGSA contains a provision that allows the
shipper to recover only US$500 per package
TRANSPORTATION LAW | 1st SEM A.Y. 2020-2021
unless there is a special declaration unless there
the real value of the goods is declared
o declaration made by the shipper stating an
amount bigger than $500 per package will
make the carrier liable for such bigger amount
but only if the amount so declared is the real
value of the goods
- Right to discharge dangerous cargo
o COGSA allows the carrier to discharge the
good of the carrier discovers that the goods are
dangerous, inflammable or are explosives
-
Salvage Law (Act No.2616)
- SALVAGE – services one person renders to the owner of a
ship or goods, by his own labor, preserving the goods or the
ship which the owner or those entrusted with the care of
them have either abandoned in distress at sea, or are unable
to protect or secure.
- Kinds of Salvage:
o Voluntary – compensation is dependent on the
success.
o Under contract for a per diem or per horam
wage- payable at all events.
o Under contract for compensation – payable
only in case of success.
- Claim for valid salvage:
o  Provides for a reward for voluntary salvage
o Other persons who assist in saving the vessel or
its cargo from shipwreck shall be entitled to a
similar award
- Persons not entitled to salvage compensation:
o Crew of the vessel shipwrecked or which was
in danger of shipwreck
o He who shall have commenced the salvage in
spite of opposition of the captain or of his
representatives
o He who shall have failed to comply with the
provisions of Section 3
 (Section 3. Tthe salvor who saves
or picks up a vessel or merchandise
at sea, in the absence of the ship
captain, ship owner or a
representative of either of them,
they being unknown, shall convey
and deliver the vessel or
merchandise ASAP to the collector
of customs if the port has a
collector and otherwise to the
provincial treasurer or municipal
mayor.
- Requisites of compensation or salvage reward:
1. Object must have been exposed to marine peril (fire, acts
of pirate, thieves)
2. Salvage services rendered voluntarily and is not required
as an existing duty or a form of contract (See Sec. 8)
* Pilots are not entitled to a reward – (Atty. Capanas)
3. Salvage services are successful in whole or in part
4. Valid vessel which is shipwrecked beyond the control of
the crew or shall have been abandoned (not necessary)
* Courts will not interfere in the agreement of the parties
except but where there is no agreement or it is excessive the
reward is fixed by the RTC judge.
* Derelict – a ship or cargo which is abandoned and
deserted at sea by those who were in charge of it, without
any hope of recovering it or without any intention of
returning to it
- determined by ascertaining what was the intention and
expectation of those in charge of it when they quitted it
- boat or vessel found entirely deserted or abandoned on
the sea without hope or intention of recovery or return by
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the master or the crew, whether resulting from wreck,
accident, necessity, or voluntary abandonment
JETSAM, FLOTSAM, LIGAN
- Jetsam – goods that were thrown off a ship which was in
danger
- Flotsam – goods that floated off the ship while ship was in
danger or
- when it sank
- Ligan – goods left as sea on the wreck or tied to a buoy so
that they can be recovered later
- Basis of entitlement to salvage reward (Circumstances to
consider):
o The labor expended by the salvors in rendering
the salvage service
o The promptitude, skill and energy displayed in
rendering the service and saving the property
o The value of the property employed by the
salvors in rendering the service, and danger to
which such property was exposed
o The risk incurred by the salvors in rescuing the
property from the impending peril
o The value of the property salved
o The degree of danger which the property was
rescued
- Rights and obligations of salvors and owners:
o Salvor is entitled to compensation for services
rendered. He has, under the Salvage Law, a lien
upon the property salvaged.
o On the other hand, the owner does not
denounce his right to the property. There is no
presumption of an intention to abandon such
property rights.
- Maritime Lien
o A salvor, in maritime law, has an interest in the
property; called a lien, but it never goes, in the
absence of a contract expressly made, upon the
idea of debt due from the owner to the salvor
but upon the principle that the service creates a
property in the thing saved.
- Rule on salvage reward:
o The reward is fixed by the RTC judge in the
absence of agreement or where the latter is
excessive (Sec. 9).
o If sold (no claim being made within 3 months
from publication), the proceeds, after
deducting expenses and the salvage claim, shall
go to the owner; if the latter does not claim it
within 3 years, 50% of the said proceeds shall
go to the salvors, who shall divide it equitably,
and the other half to the government (Secs. 11-
12).
o If a vessel is the salvor, the reward shall be
distributed as follows:
 50% to the shipowner;
 25% to the captain; and
 25% to the officers and crew in
proportion to their salaries
Public Service Act
The term "public service" includes every person that now or hereafter
may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent,
occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, sub-way
motor vehicle, either for freight or passenger, or both with or without
fixed route and whether may be its classification, freight or carrier
service of any class, express service, steamboat or steamship line,
pontines, ferries, and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine railways, marine repair
shop, [warehouse] wharf or dock, ice plant, ice-refrigeration plant,
canal, irrigation system, gas, electric light, heat and power water supply
TRANSPORTATION LAW | 1st SEM A.Y. 2020-2021

and power, petroleum, sewerage system, wire or wireless
communications system, wire or wireless broadcasting stations and
other similar public services: Provided, however, That a person
engaged in agriculture, not otherwise a public service, who owns a
motor vehicle and uses it personally and/or enters into a special
contract whereby said motor vehicle is offered for hire or compensation
to a third party or third parties engaged in agriculture, not itself or
themselves a public service, for operation by the latter for a limited
time and for a specific purpose directly connected with the cultivation
of his or their farm, the transportation, processing, and marketing of
agricultural products of such third party or third parties shall not be
considered as operating a public service for the purposes of this Act.
Art. XII, Sec. 11
Sec. 11 of Article XII of the 1987 Constitution states that: ―No
franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the
Philippines or to corporations or associations organized under the
laws of the Philippines, at least sixty per centum of whose capital is
owned by such citizens; nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than fifty
years. Neither shall any such franchise or right be granted except
under the condition that it shall be subject to amendment, alteration, or
repeal by the Congress when the common good so requires. The State
shall encourage equity participation in public utilities by the general
public. The participation of foreign investors in the governing body of
any public utility enterprise shall be limited to their proportionate
share in its capital, and all the executive and managing officers of such
corporation or association must be citizens of the Philippines.
The corporation must be a domestic corporation and that 60% of the
capital must be owned by Filipino citizens.
Sec. 18 of Article XII of the 1987 Constitution provides that: ―The
State may, in the interest of national welfare or defense, establish and
operate vital industries and, upon payment of just compensation,
transfer to public ownership utilities and other private enterprises to be
operated by the Government.‖
Q: What are the bases/reasons for regulation of public utilities?
A: Basis: Police Power
Justification: Common good
Regulatory agencies
1. Land Transportation Franchising Regulatory Board
(LTFRB) – land transportation
2. Land Transportation Office – issue license to drivers
3. Maritime Industry Authority (MARINA) – water
transportation
4. National Telecommunications Commission
communication utilities and services, radio
communications systems, wire or wireless telephone and
telegraph systems, radio and television broadcasting
systems and other similar public utilities
5. Energy Regulatory Board – electric or power companies
6. National Water Resources Council – water resources
7. Civil Aeronautics Board – air transportation
Q: What conditions must concur in the grant of certificate of public
convenience and necessity?
A: 1. The grantee must be a citizen of the Philippines or a corporation
or entity 60% of which is owned by such citizens; 2. The grantee must
have sufficient financial capability to undertake the service; and 3. The
service will promote public interest and convenience in a proper and
suitable manner.
Public interest is the first and paramount consideration.
Concept of franchise and certificate of public convenience
Franchise is a grant or privilege from the sovereign power.
Certificate of Public Convenience is a form of regulation through an
administrative agency.
Q: Is a legislative franchise necessary before a public utility can be
allowed to secure a certificate of public convenience?
A: General Rule: NO.
Exception: If a pertinent law requires such legislative franchise.
Factors:
1. Public interest
2. Public convenience
3. Public necessity
Concept of Public Utility & Public Service
Concept of Public Utility & public service Sec. 13 (b) of the Public
Service Act provides that: ―The term 'public service' includes every
person that now or hereafter may own, operate, manage, or control in
the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for
general business purposes, any common carrier, railroad, street
railway, traction railway, sub-way motor vehicle, either for freight or
passenger, or both with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries, and water craft,
engaged in the transportation of passengers or freight or both,
shipyard, marine railway, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas electric light, heat
and power, water supply and power, petroleum, sewerage system, wire
or wireless communications system, wire or wireless broadcasting
stations and other similar public services: Provided, however, That a
person engaged in agriculture, not otherwise a public service, who
owns a motor vehicle and uses it personally and/or enters into a
special contract whereby said motor vehicle is offered for hire or
compensation to a third party or third engaged in agriculture, not itself
or themselves a public service, for operation by the latter for a limited
time and for a specific purpose directly connected with the cultivation
of his or their farm, the transportation, processing, and marketing of
agricultural products of such third party or third parties shall not be
considered as operating a public service for the purposes of this Act.‖
Public utilities are privately owned and operated business whose
services are essential to the general public.
– Case: National Development Company v CA

In Tatad v Garcia, the SC held that the controlling factor is the

citizenship of the person operating a common carrier. Guiding
Principles:

1. Prior or Old Operator Rule – the first licensee will be protected in his
investment and will not be subjected to ruinous competition.
*No certificate of public convenience and necessity will be issued to
other operator as long as the prior operator still in operation and can
satisfy the public and that it still has the capacity to do so.
2. Protection Investment Rule – protects from unfair competition
3. Prior Applicant Rule – protects the first applicant. Principle: all
things being equal

SALIH, SHELLA HANNAH J. | 2I