Transportation Law

I. PRELIMINARY CONSIDERATIONS
A. Pertinent Laws – NEW CIVIL CODE OF THE PHILIPPINES Articles 1732-1766

SECTION 4. - COMMON CARRIERS (N)

SUBSECTION 1. - General Provisions

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to
all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos.
5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756.

SUBSECTION 2. - Vigilance Over Goods

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is
due to any of the following causes only:
(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 of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.

Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as required in Article 1733.

Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally
placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the
provisions of Article 1738.

Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force and effect
even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of
stoppage in transitu.

Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods
are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the
goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been
the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize
loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common
carrier in case of an act of the public enemy referred to in Article 1734, No. 2.

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free
such carrier from responsibility.

Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the
proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however,
shall be equitably reduced.

Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or
the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the
loss.

Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not
responsible, provided said public authority had power to issue the order.

Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for
the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.

Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public
policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man
of ordinary prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage.

Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common
carrier refused to carry the goods unless the former agreed to such stipulation.

Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated
or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or
deterioration of the goods.

Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid.

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of
lading, unless the shipper or owner declares a greater value, is binding.
 Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed
upon.

Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the
contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's
liability is reasonable, just and in consonance with public policy.

Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods,
the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

Art. 1753. 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.

Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in his personal
custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003 concerning the
responsibility of hotel-keepers shall be applicable.

SUBSECTION 3. - Safety of Passengers

Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755.

Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles 1733 and 1755
cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise.

Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is
valid, but not for wilful acts or gross negligence.

The reduction of fare does not justify any limitation of the common carrier's liability.

Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of
the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their employees.

Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or limited by
stipulation, by the posting of notices, by statements on the tickets or otherwise.

Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.

Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if
the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.
 Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or
negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a
good father of a family could have prevented or stopped the act or omission.

SUBSECTION 4. - Common Provisions

Art. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book,
concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common
carrier.
Art. 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after due
hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly fails to comply with his or
its duty to observe extraordinary diligence as prescribed in this Section.

Art. 1766. 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.

2. CODE OF COMMERCE – Sections 349-379, 573-736, 806-869

COMMERCIAL CONTRACTS FOR TRANSPORTATION

ARTICLE 349. A contract of transportation by land or water ways of any kind shall be considered commercial:

1. When it has for its object merchandise or any article of commerce.

2. When, whatever its object may be, the carrier is a merchant or is habitually engaged in transportation for the public.

ARTICLE 350. The shipper as well as the carrier of merchandise or goods may mutually demand that a bill of lading be
made, stating:
1. The name, surname and residence of the shipper.
2. The name, surname and residence of the carrier.
3. The name, surname and residence of the person to whom or to whose order the goods are to be sent or whether
they are to be delivered to the bearer of said bill.
4. The description of the goods, with a statement of their kind, of their weight, and of the external marks or signs of the
packages in which they are contained.
5. The cost of transportation.
6. The date on which shipment is made.
7. The place of delivery to the carrier.
8. The place and the time at which delivery to the consignee shall be made.
9. The indemnity to be paid by the carrier in case of delay, if there should be any agreement on this matter.

ARTICLE 351. In transportation made by railroads or other enterprises subject to regulation rate and time schedules, it
shall be sufficient for the bills of lading or the declaration of shipment furnished by the shipper to refer, with respect to the
cost, time and special conditions of the carriage, to the schedules and regulations the application of which he requests; and if
the shipper does not determine the schedule, the carrier must apply the rate of those which appear to be the lowest, with the
conditions inherent thereto, always including a statement or reference to in the bill of lading which he delivers to the shipper.

ARTICLE 352. The bills of lading, or tickets in cases of transportation of passengers, may be diverse, some for persons
and others for baggage; but all of them shall bear the name of the carrier, the date of shipment, the points of departure and
arrival, the cost, and, with respect to the baggage, the number and weight of the packages, with such other manifestations
which may be considered necessary for their easy identification.

ARTICLE 353. The legal evidence of the contract between the shipper and the carrier shall be the bills of lading, by the
contents of which the disputes which may arise regarding their execution and performance shall be decided, no exceptions
being admissible other than those of falsity and material error in the drafting.

After the contract has been complied with, the bill of lading which the carrier has issued shall be returned to him, and by
virtue of the exchange of this title with the thing transported, the respective obligations and actions shall be considered
cancelled, unless in the same act the claim which the parties may wish to reserve be reduced to writing, with the exception of
that provided for in Article 366.
 In case the consignee, upon receiving the goods, cannot return the bill of lading subscribed by the carrier, because of its
loss or of any other cause, he must give the latter a receipt for the goods delivered, this receipt producing the same effects as
the return of the bill of lading.

ARTICLE 354. In the absence of a bill of lading, disputes shall be determined by the legal proofs which the parties may
present in support of their respective claims, according to the general provisions established in this Code for commercial
contracts.

ARTICLE 355. The responsibility of the carrier shall commence from the moment he receives the merchandise,
personally or through a person charged for the purpose, at the place indicated for receiving them.

ARTICLE 356. Carriers may refuse packages which appear unfit for transportation; and if the carriage is to be made by
railway, and the shipment is insisted upon, the company shall transport them, being exempt from all responsibility if its
objections, is made to appear in the bill of lading.

ARTICLE 357. If by reason of well-founded suspicion of falsity in the declaration as to the contents of a package the
carrier should decide to examine it, he shall proceed with his investigation in the presence of witnesses, with the shipper or
consignee in attendance.

If the shipper or consignee who has to be cited does not attend, the examination shall be made before a notary, who
shall prepare a memorandum of the result of the investigation, for such purposes as may be proper.

If the declaration of the shipper should be true, the expense occasioned by the examination and that of carefully
repacking the packages shall be for the account of the carrier and in a contrary case for the account of the shipper.

ARTICLE 358. If there is no period fixed for the delivery of the goods the carrier shall be bound to forward them in the
first shipment of the same or similar goods which he may make point where he must deliver them; and should he not do so,
the damages caused by the delay should be for his account.

ARTICLE 359. If there is an agreement between the shipper and the carrier as to the road over which the conveyance is
to be made, the carrier may not change the route, unless it be by reason of force majeure; and should he do so without this
cause, he shall be liable for all the losses which the goods he transports may suffer from any other cause, beside paying the
sum which may have been stipulated for such case.

When on account of said cause of force majeure, the carrier had to take another route which produced an increase in
transportation charges, he shall be reimbursed for such increase upon formal proof thereof.

ARTICLE 360. The shipper, without changing the place where the delivery is to be made, may change the consignment
of the goods which he delivered to the carrier, provided that at the time of ordering the change of consignee the bill of lading
signed by the carrier, if one has been issued, be returned to him, in exchange for another wherein the novation of the contract
appears.
The expenses which this change of consignment occasions shall be for the account of the shipper.

ARTICLE 361. The merchandise shall be transported at the risk and venture of the shipper, if the contrary has not been
expressly stipulated.
As a consequence, all the losses and deteriorations which the goods may suffer during the transportation by reason of
fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of the
shipper. Proof of these accidents is incumbent upon the carrier.

ARTICLE 362. Nevertheless, the carrier shall be liable for the losses and damages resulting from the causes mentioned in
the preceding article if it is proved, as against him, that they arose through his negligence or by reason of his having failed to
take the precautions which usage has established among careful persons, unless the shipper has committed fraud in the bill of
lading, representing the goods to be of a kind or quality different from what they really were.
If, notwithstanding the precautions referred to in this article, the goods transported run the risk of being lost, on account
of their nature or by reason of unavoidable accident, there being no time for their owners to dispose of them, the carrier may
proceed to sell them, placing them for this purpose at the disposal of the judicial authority or of the officials designated by
special provisions.

ARTICLE 363. Outside of the cases mentioned in the second paragraph of Article 361, the carrier shall be obliged to
deliver the goods shipped in the same condition in which, according to the bill of lading, they were found at the time they were
received, without any damage or impairment, and failing to do so, to pay the value which those not delivered may have at the
point and at the time at which their delivery should have been made.
 If those not delivered form part of the goods transported, the consignee may refuse to receive the latter, when he proves
that he cannot make use of them independently of the others.

ARTICLE 364. If the effect of the damage referred to in Article 361 is merely a diminution in the value of the goods, the
obligation of the carrier shall be reduced to the payment of the amount which, in the judgment of experts, constitutes such
difference in value.

ARTICLE 365. If, in consequence of the damage, the goods are rendered useless for sale and consumption for the
purposes for which they are properly destined, the consignee shall not be bound to receive them, and he may have them in the
hands of the carrier, demanding of the latter their value at the current price on that day.
If among the damaged goods there should be some pieces in good condition and without any defect, the foregoing
provision shall be applicable with respect to those damaged and the consignee shall receive those which are sound, this
segregation to be made by distinct and separate pieces and without dividing a single object, unless the consignee proves the
impossibility of conveniently making use of them in this form.
The same rule shall be applied to merchandise in bales or packages, separating those parcels which appear sound.

ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for
damage or average be found therein upon opening the packages, may be made, provided that the indications of the damage or
average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim
shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted
against the carrier with regard to the condition in which the goods transported were delivered.

ARTICLE 367. If doubts and disputes should arise between the consignee and the carrier with respect to the condition of
the goods transported at the time their delivery to the former is made, the goods shall be examined by experts appointed by
the parties, and, in case of disagreement, by a third one appointed by the judicial authority, the results to be reduced to
writing; and if the interested parties should not agree with the expert opinion and they do not settle their differences, the
merchandise shall be deposited in a safe warehouse by order of the judicial authority, and they shall exercise their rights in the
manner that may be proper.

ARTICLE 368. The carrier must deliver to the consignee, without any delay or obstruction, the goods which he may have
received, by the mere fact of being named in the bill of lading to receive them; and if he does not do so, he shall be liable for
the damages which may be caused thereby.

ARTICLE 369. If the consignee cannot be found at the residence indicated in the bill of lading, or if he refuses to pay the
transportation charges and expenses, or if he refuses to receive the goods, the municipal judge, where there is none of the first
instance, shall provide for their deposit at the disposal of the shipper, this deposit producing all the effects of delivery without
prejudice to third parties with a better right.

ARTICLE 370. If a period has been fixed for the delivery of the goods, it must be made within such time, and, for failure
to do so, the carrier shall pay the indemnity stipulated in the bill of lading, neither the shipper nor the consignee being entitled
to anything else.
If no indemnity has been stipulated and the delay exceeds the time fixed in the bill of lading, the carrier shall be liable for
the damages which the delay may have caused.

ARTICLE 371. In case of delay through the fault of the carrier, referred to in the preceding articles, the consignee may
leave the goods transported in the hands of the former, advising him thereof in writing before their arrival at the point of
destination.
When this abandonment takes place, the carrier shall pay the full value of the goods as if they had been lost or mislaid.
If the abandonment is not made, the indemnification for losses and damages by reason of the delay cannot exceed the
current price which the goods transported would have had on the day and at the place in which they should have been
delivered; this same rule is to be observed in all other cases in which this indemnity may be due.

ARTICLE 372. The value of the goods which the carrier must pay in cases if loss or misplacement shall be determined in
accordance with that declared in the bill of lading, the shipper not being allowed to present proof that among the goods
declared therein there were articles of greater value and money.

Horses, vehicles, vessels, equipment and all other principal and accessory means of transportation shall be especially
bound in favor of the shipper, although with respect to railroads said liability shall be subordinated to the provisions of the
laws of concession with respect to the property, and to what this Code established as to the manner and form of effecting
seizures and attachments against said companies.
 ARTICLE 373. The carrier who makes the delivery of the merchandise to the consignee by virtue of combined
agreements or services with other carriers shall assume the obligations of those who preceded him in the conveyance,
reserving his right to proceed against the latter if he was not the party directly responsible for the fault which gave rise to the
claim of the shipper or consignee.
The carrier who makes the delivery shall likewise acquire all the actions and rights of those who preceded him in the
conveyance.
The shipper and the consignee shall have an immediate right of action against the carrier who executed the
transportation contract, or against the other carriers who may have received the goods transported without reservation.
However, the reservation made by the latter shall not relieve them from the responsibilities which they may have
incurred by their own acts.

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.

ARTICLE 375. The goods transported shall be especially bound to answer for the cost of transportation and for the
expenses and fees incurred for them during their conveyance and until the moment of their delivery.
This special right shall prescribe eight days after the delivery has been made, and once prescribed, the carrier shall have
no other action than that corresponding to him as an ordinary creditor.

ARTICLE 376. The preference of the carrier to the payment of what is owed him for the transportation and expenses of
the goods delivered to the consignee shall not be cut off by the bankruptcy of the latter, provided it is claimed within the eight
days mentioned in the preceding article.

ARTICLE 377. The carrier shall be liable for all the consequences which may arise from his failure to comply with the
formalities prescribed by the laws and regulations of the public administration, during the whole course of the trip and upon
arrival at the point of destination, except when his failure arises from having been led into error by falsehood on the part of
the shipper in the declaration of the merchandise. If the carrier has acted by virtue of a formal order of the shipper or
consignee of the merchandise, both shall become responsible.

ARTICLE 378. Agents for transportation shall be obliged to keep a special registry, with the formalities required by
Article 36, in which all the goods the transportation of which is undertaken shall be entered in consecutive order of number
and dates, with a statement of the circumstances required in Article 350 and others following for the respective bills of lading.

ARTICLE 379. The provisions contained in Articles 349 and following shall be understood as equally applicable to those
who, although they do not personally effect the transportation of the merchandise, contract to do so through others, either as
contractors for a particular and definite operation, or as agents for transportations and conveyances.

In either case they shall be subrogated in the place of the carriers themselves, with respect to the obligations and
responsibility of the latter, as well as with regard to their rights.

3. WARSHAW CONVENTION
International civil aviation agreement that establishes the legal framework for carriage of passengers, luggage (baggage),
and goods (cargo). It (1) covers conditions of carriage that (a) define liability of the carrier in case of loss, damage, injury or
death due to accident on international flights, and (b) spell out procedures for claims and restitution, (2) lays down out the
requirements for format and content of air transport documents (passenger tickets, luggage tickets, air consignment notes,
etc. Signed in 1929 in Warsaw (Poland) by 31 states, it has evolved into one of the most important instruments of private
international law adhered to by 105 signatory nations.

4. CARRIAGE OF GOODS BY SEA ACT ( Commonwealth act No. 65)

The primordial purpose of the said Acts is to bring about uniformity in ocean bills of lading and to give effect to the
Brussels Treaty, signed by the United States with other powers; accepted to be made applicable to all contracts for the carriage
of goods by sea to and from Philippine ports in foreign trade: Provided, That nothing in the Act shall be construed as repealing
any existing provision of the Code of Commerce which is now in force, or as limiting its application.
 5. SALVAGE LAW – ACT No. 2616
In the Philippines, salvage is no different from the concept as it exists in the United Kingdom. The party that
performs the salvage must be a volunteer, there must be danger, and there must be resulting success. There is no
specialised salvage arbitration forum in the Philippines like that in the United Kingdom, so most commercial salvors
use the LOF salvage agreement, or for a less complicated service, the salvage is negotiated for a fixed fee. The
Philippines is not a signatory to the Salvage Convention 1989.
Any person who wishes to engage in the business or operation of salvaging vessels, wrecks, derelicts and other
hazards to navigation, or of salvaging cargoes carried by sunken vessels, is required to secure a salvage permit from
the PCG. Under Presidential Decree No. 890,a salvage operation performed without a permit is a criminal offence.

6. PUBLIC SERVICE ACT ( CA NO. 146 as amended)

Created as a guide for the general supervision and control over, all public services, and also over their
property, property rights, equipment, facilities and franchises so far as may be necessary.

7. LAND TRANSPORTATION AND TRAFFIC CODE ( RA 4136)

The Act that control, as far as they apply, the registration and operation of motor vehicles and the licensing of
owners, dealers, conductors, drivers, and similar matters.

8. Article XII, Sec. 11 of the 1987 Philippine Constitution

“Section 11. 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.”

B. CONCEPT OF PUBLIC UTILITY AND PUBLIC SERVICE ( Sec. 13, Public Service Act)

Public Utility - A business or service engaged in regularly supplying the public with some commodity or service of
public consequence sush as electricity, gas, water, transportation, telephone or telegraph service.

Section 13 (b), CA no. 146 – Public Service Act

(b) 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 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.

(c) The word "person" includes every individual, co-partnership, joint-stock company or corporation, whether domestic
or foreign, their lessees, trustees, or receivers, as well as any municipality, province, city, government-owned or
controlled corporation, or agency of the Government of the Philippines, and whatever other persons or entities that
may own or possess or operate public services. (As amended by Com. Act 454 and RA No. 2677)
C. CONSTITUTIONAL LIMITATIONS ON THE OPERATION OF PUBLIC UTILITIES (ART. XII, 1987 CONSTITUTION)

SECTION 17. In times of national emergency, when the public interest so requires, the State may,
during the emergency and under reasonable terms prescribed by it, temporarily take over or direct the
operation of any privately owned public utility or business affected with public interest.

SECTION 18. 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.

D. REGULATORY AGENCIES

ROAD TRANSPORT

 THE LAND TRANSPORTATION OFFICE (LTO)

The LTO promotes the safety and comfort of the traveling public with respect to motor
vehicles. The LTO is also tasked with collecting various fees from the registration of motor vehicles,
the issuance of licenses to qualified motor vehicle drivers, the collection of fines and penalties for
motor vehicle related infractions, and the issuance of motor vehicle license plates.

 THE LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD (LTFRB)

The LTFRB was created by virtue of an Executive order issued on June 19, 1987, with the
goal of simplifying the land transportation industry franchising system. Since the creation of the
LTFRB, the issuance of franchises for land transport operators has become more stringent, resulting
in higher safety standards for land travel. Technical evaluation staff ensure that operating and safety
standards of commercial and private vehicles are observed, prior to the issuance of operating
franchises.

MARITIME TRANSPORT

 THE PHILIPPINE COAST GUARD (PCG)

The PCG is an armed and uniformed service primarily tasked with enforcing all
applicable laws within the philippine waters, conducting maritime security operations,
safeguarding of life and property at sea and protecting the marine environment and
resources.

ATTACHED AGENCIES

 OFFICE FOR TRANSPORTATION SECURITY (OTS)

The Office for Transportation Security (OTS) is the single authority responsible for the security
of the transportation systems of the country, including, but not limited to, the following: Civil Aviation,
Sea Transport and Maritime Infrastructure, Land Transportation, Rail System and Infrastructure. It
was created by virtue of Executive Order No.277. In response to the international mandate (i.e. ICAO
and IMO guidelines) calling for a single authority for all modes of transportation security in the
Philippines, E.O. 311 was issued on April 26, 2004.

CIVIL AVIATION

 CIVIL AVIATION AUTHORITY OF THE PHILIPPINES (CAAP)

The CAAP is responsible for implementing policies on civil aviation in order to ensure safe,
economical, and efficient air travel. As an independent regulatory body with quasi-judicial and quasi-
legislative powers, the CAAP is mandated to set comprehensive, clear and impartial rules and
regulations for the Philippine aviation industry.

 MANILA INTERNATIONAL AIRPORT AUTHORITY (MIAA)

Created by executive order 778, the miaa provides safe, efficient, and reliable airport facilities
for international and domestic travel at the ninoy aquino international airport (naia). It is also tasked
with promoting naia as a center for international trade and tourism.

 CLARK INTERNATIONAL AIRPORT CORPORATION

 The CIAC fully commits to provide quality management of airport infrastructure and services in
order to realize our vision to be premier world-class airport of the Philippines by 2020; the secondary
airport of choice by 2017; and, a competitive aviation services center in the Asia Pacific Region by
2015.

 CIVIL AERONAUTICS BOARD (CAB)

The CAB is tasked with regulating, promoting, and developing the economic aspects of civil
aviation in the Philippines. The CAB regulates the lease, purchase, and sales of aircraft, along with
overseeing consolidations and mergers of domestic air carriers.

 MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA)

The MCIAA is in charge of operating and maintaining the Mactan International Airport, which
is currently the premier gateway to the Central Visayas. The MCIAA provides airport safety and
security, and also implements airport rules and regulations.

 PHILIPPINE AEROSPACE DEVELOPMENT CORPORATION (PADC)

The PADC undertakes business and development activities for the establishment of a reliable
aviation and aerospace industry within the Philippines. It engages in the design, manufacture, and
sale of all forms of aircraft, and also develops local capabilities in the maintenance, repair, and
modification of aviation equipment.

ROAD TRANSPORT

 TOLL REGULATORY BOARD (TRB)

The Toll Regulatory Board supervises and regulates the construction, operation, and
maintenance of toll facilities, and is also responsible for the collection of toll fees. It was created by
virtue of Presidential Decree (P.D.•) No. 1112 (a.k.a. the Toll Operation Decree).

 OFFICE OF TRANSPORT COOPERATIVES (OTC)

The OTC was created in 1963 by virtue of Executive Order 898, and was originally known as
the Committee on Transport Cooperatives. The current objective of the OTC is to integrate the
transport cooperatives program into the public transport and transit system, in order to achieve
economies of scale with respect to fuel consumption.

 PHILIPPINE NATIONAL RAILWAYS (PNR)

The PNR was created via legislation in June 1964, in order to provide a nationwide railway
transportation system. There are currently plans to create new lines connecting the rapidly developing
areas in Central Luzon and the South Tagalog region with Metro-Manila.

 LIGHT RAIL TRANSIT TRANSIT AUTHORITY (LRTA)

The LRTA was created via Executive Order 603 on July 12, 1980, in order to oversee the
construction and operation of the Light Rail Transit project extending from Baclaran in Pasay City, to
Monumento in Caloocan. Since then, the LRTA's mandate has expanded to encompass other light
rail projects in Metro-Manila.

 NORTH LUZON RAILWAYS CORPORATION (NLRC / Northrail)

The North Luzon Railways Corporation, or Northrail, was created to implement the Northrail
Project, a major undertaking of the Philippine government which aims to build a fast, reliable, and
efficient railway system in Central and Northern Luzon. The railway system is expected to further
enhance the development and growth potential of the aforementioned areas.

MARITIME TRANSPORT

 PHILIPPINE PORTS AUTHORITY (PPA)

The PPA is the primary government agency concerned with the planning and development of
the country’s seaports. Established in 1974, the PPA’s charter was amended by Executive Order 857,
which expanded its functions to include the integration and coordination of ports nationwide.

 MARITIME INDUSTRY AUTHORITY (MARINA)

The MARINA oversees the promotion and development of the maritime industry, and also
provides effective regulation of shipping enterprises. Since its establishment in June 1994, MARINA
was granted the authority to issue Certificates of Public Convenience (CPC), permitting the operation
of domestic and overseas water carriers. Other functions of the agency include the registration of
 vessels, the issuance of licenses, the addressing of safety concerns pertaining to vessel construction,
and the enforcement of maritime law.

 CEBU PORTS AUTHORITY (CPA)

The Cebu Ports Authority (CPA) was created through the enactment of Republic Act No.
7621, signed on June 26, 1992. The CPA's mandate is to administer all ports located in Cebu
Province, thus effectively separating these ports from the Philippine Ports Authority (PPA) system.
The CPA began operations and officially took over all Cebu ports on January 1, 1996.

 PHILIPPINE MERCHANT MARINE ACADEMY (PMMA)

The PMMA, formerly known as the Philippine Nautical School, was created in January 1963
via Republic Act 3680. The PMMA produces efficient and well-trained merchant marine officers of an
international caliber. PMMA graduates spearhead Philippine efforts in international trade, and are
also capable of serving as auxiliary naval officers during times of conflict.

E. CONCEPT OF FRANCHISE AND CERTIFICATE OF PUBLIC CONVENIENCE

FRANCHISE
There is no statutory definition of franchising in the Philippines. Instead, franchise agreements are
categorised as technology transfer arrangements (TTAs). TTAs are defined in the Intellectual Property
Code of the Philippines as contracts or agreements that involve either:

 Transfer of systematic knowledge for the manufacture of a product, the application of a process
or rendering of a service, including management contracts.

 Transfer, assignment or licensing of all forms of IP rights, including the licensing of computer
software (except computer software developed for a mass market).

CERTIFICATE OF PUBLIC CONVENIENCE

An authorization issued for the operation of public services for which no franchise, either municipal or
legislative, is required by law, such as a common carrier.

Under the Public Service Law, a certificate of public convenience can be sold by the holder thereof because it has
considerable material value and is considered a valuable asset (Raymundo v. Luneta Motor Co., G.R. No. 39902,
Nov. 29, 1933).

REQUIREMENTS:
1. Applicant must be a citizen of the Philippines. If the applicant is a Corporation, 60% of its capital
must be owned by Filipinos

2. Applicant must prove public necessity

3. Applicant must prove the operation of proposed public service will promote public interest in a proper
and suitable manner; and

4. Applicant must have sufficient financial capability to undertake proposed services and meeting
responsibilities incidental to its operation. (Kilusang Mayo Uno v. Garcia G.R. No. 108584, Dec. 22,
1994)

INSTANCES WHERE A CERTIFICATE OF PUBLIC CONVENIENCE IS NOT NECESSARY:

1. Warehouses
2. Animal-‐drawn vehicles or banca powered by oar or by sail; tug boats and lighters
3. Airships except as to fixing rates
4. Radio companies, except as to fixing of rates
5. Ice plants
6. Public market
7. Public utilities operated by the national government or political subdivision except as to rates.
 F. CASES:
1. Transportation Law\CASES\1 National Development Company v. CA.docx
2. Tatad v. Sec Garcia, GR. 114222, April 6, 1995
3. Transportation Law\CASES\3. Radio Telecommunications v NTC.docx

II. COMMON CARRIERS

A. CONTRANCT OF CARRIAGE
Binding agreement which contains the conditions of carriage that spell out the obligations and the
rights of a carrier and a shipper/passenger. The carrier undertakes to deliver the goods/passengers from
a named place of departure to a named destination, in consideration for freight/fare. The contract
contains what is being carried, and how goods/passengers is assessed, apportioned, and paid. In airline,
cruise ship, and other passenger-transport industries, it also contains the carrier’s policy regarding
baggage, bumping, cancellation and delays, claims, reservations, ticket validity, etc.

B. COMMON CARRIER
ARTICLE 1732. Common carriers are persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.

C. DISTINGTION OF COMMON CARRIER AND PRIVATE CARRIER

COMMON CARRIER PRIVATE CARRIER

AVAILABILITY
Holds himself out in the common, that is to all
Agrees in some special case with some private
persons who choose to employ him, as ready to
individual to carry for hire
carry him for hire

BINDING EFFECT

Not bound to carry for any reason, such goods as it is

Bound to carry all who offer and tender reasonable
accustomed to carry, unless it enters into a special
compensation for carrying them
agreement to do so

DILIGENCE REQUIRED

EXTRAORDINARY ORDINARY

GOVERNING LAW
Civil Code; Code of Commerce and special laws, if not
regulated by the Civil Code (Art. 1766); law of the
country to which the good are to be transported, if Law on obligations and contracts
regarding the liability for loss, destruction, or
deterioration of goods

REGULATION
A public service, therefore subject to the provisions
Not subject to regulation as a common carrier
governing common carriers and public utilities