4663623 transpo reviewer

8/3/2019 4663623 Transpo Reviewer

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TRANSPORTATION AND MARITIME LAW

Based on the outline of Prof. Rodrigo Quimbo

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I. General Considerations

A. Public Utilities

1. Article XII, 1987 Constitution

Art. XII, Section 11. No franchise,certificate or any other form of authorization forthe operation of a public utility shall be grantedexcept to citizens of the Philippines or tocorporations or associations organized underthe laws of the Philippines at least 60% ofwhose capital is owned by such citizens, norshall such franchise, certificate or authorizationbe exclusive in character or for a longer period

than fifty years. Neither shall any franchise orright be granted except under the condition thatit shall be subject to amendment, alteration orrepeal by the Congress when the common goodso requires. The State shall encourage equityparticipation in public utilities by the generalpublic. The participation of foreign investors inthe governing body of any public utilityenterprise shall be limited to theirproportionate share in its capital, and all theexecutive and managing officers of suchcorporation or association must be citizens ofthe Philippines.

Section 17. In times of nationalemergency, when the public interest sorequires, the State may, during the emergencyand under reasonable terms prescribed by it,temporarily take over or direct the operation ofany privately owned public utility or businessaffected with public interest.

Section 18. The State may, in theinterest of national welfare or defense,establish and operate vital industries and, uponpayment of just compensation, transfer topublic ownership utilities and other privateenterprises to be operated by the Government.

Section 19. The State shall regulate orprohibit monopolies when the public interest sorequires. No combinations in restraint of tradeor unfair competition shall be allowed.

(a) What is a public utility?

A public utility is a business or serviceengaged in regularly supplying the public with somecommodity or service of public consequence such aselectricity, gas, water, transportation, telephone ortelegraph service. Apart from statutes which definethe public utilities that are within the purview of such

statutes, it would be difficult to construct a definitionof a public utility which would fit every conceivablecase. As its name indicates, however, the term publicutility implies a public use and service to the public.(Am. Jur. 2d V. 64, p.549.) (Albano vs Reyes)

(b) What is a public service?

The Public Service Act (CA No. 146 asamended) 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, anddone for general business purposes, any commoncarrier, railroad, street railway, traction railway, sub-way motor vehicle, either for freight or passenger, orboth with or without fixed route and whatever may beits classification, freight or carrier service or any class,express service, steamboat, or steamship line,pontines, ferries, and water craft, engaged in thetransportation of passengers and freight or both,shipyard, marine repairshop, [warehouse], wharf ordock, ice plant, ice refrigeration plant, canal, irrigationsystem, gas, electric light, heat and power, watersupply and power, petroleum, sewerage system, wireor wireless communications system, wire or wirelessbroadcasting stations and other similar publicservices..." [Sec. 13(b)] (Albano vs Reyes)

Albano vs Reyes 175 SCRA 264

F: On 20 April 1987, the Phil. Ports Authority(PPA) adopted a resolution directing mgmt. to preparethe Invitation to Bid and all relevant bidding

documents necessary for the public bidding of thedevelopment, mgmt., and operation of the Manila Intl.Container Terminal (MICT) and authorized the BoardChairman Secretary Reyes to oversee and implementthe project.

Secretary Reyes created a 7-man MICT BiddingCommittee to evaluate all bids and recommend to theBoard the best bid. The PPA published the Invitationto Bid with the reservation that it had the right toreject any bid and to accept such bid it may deemadvantageous to the govt.

Seven companies submitted bids. TheCommittee recommended that the contract beawarded to Intl. Container Terminal Services (ICTSI) onthe ground that it offered the best technical andfinancial proposal. Secretary Reyes awarded thecontract to ICTSI. Before the contract could be signed,two cases were filed questioning the legality orregularity of the bidding. The first was a special actionfor prohibition with prelim injunction filed by Alo, aconcerned taxpayer. The second was a civil case forprohibition with prayer for TRO filed by Sharp Co.which actively participated in the bidding.

The President approved the proposed MICTcontract. The PPA and ICTFSI perfected the contract.Rodolfo Albano, a member of the House ofRepresentatives filed the present case assailing theaward of the contract on the ground that since the

MICT is a public utility, it needs a legislative franchisebefore it can legally operate as a public utility.

Issue : WON a legislative franchise is necessary.

Held : NO. Petition dismissed.A franchise specially granted by Congress is

not necessary for the operation of the MICT by aprivate entity. A contract entered into by the PPA andsuch entity is substantial compliance with the law. 1.Executive Order No. 30 authorized the PPA to takeover, manage and operate the MICT in accordancewith PD 857 (Revised Charter of the PPA). PD 857expressly empowers the PPA to provide services within

Port Districts "whether on its own, by contract orotherwise." Therefore, under EO 30 and PD 857, thePPA may contract with ICTSI for the mgmt., operationand devt. of the MICT.2. Even if the MICT be considered a public utility or apublic service on the theory that it is a wharf or a dockas contemplated by the Public Service Act, itsoperation would not necessarily call for a legislativefranchise. Legislative franchises are not requiredbefore each and every public utility may operate. Thelaw has granted certain administrative agencies the


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power to grant licenses for or to authorize theoperation of certain public utilities.

That the Consti provides that the issuance of afranchise for the operation of a public utility shall besubject to amendment, alteration or repeal byCongress does not necessarily imply that onlyCongress has the power to grant such authorization.There are several laws granting specified agencies in

the Executive Dept. the power to issue suchauthorization for certain classes of public utilities. [ 1.LTFRB wrt Certificates of Public Convenienceauthorizing the operation of public land transportationservices provided by motorized vehicles; 2. ERB wrtoperation of electric power utilities and servicesexcept electric coops]

Reading EO 30 and PD 857 together, the PPAhas been empowered to undertake by itself or toauthorize the operation and mgmt. of the MICT byanother by contract. The latter power having beendelegated to the PPA, a legislative franchise is nolonger necessary. In this case, the PPA's contractingwith ICTSI is wholly within its jurisdiction and powers.3. The award of the contract to ICTSI is all the

authorization that is necessary. The award made bythe PPA and the President enjoys the presumption ofvalidity and regularity of official action. There is noevidence to the contrary.4. Albano has standing to assail the contract. Whilethe expenditure of public funds may not be involvedunder the contract, public interest is definitelyinvolved considering the important role of the MICP inthe economic devt. of the country and the magnitudeof the amount involved. He has sufficient standingsince a public right (disclosure provision) is sought tobe enforced.5. There in no conflict among the 3 branches of govt.The Executive Dept. has not contravened an act of

Congress. There is no usurpation of powers of anotherbranch.6. The determination of the winning bid should be leftto the sound judgment of the PPA. It is in the bestposition to evaluate the bids. It has the technicalexpertise which neither the Court nor Congress has.No abuse of discretion has been shown.

2. CA 146, as amended, Sec 13 (b)

The term public service includes everyperson that now or hereafter may operate,manage, or control in the Philippines, for hire orcompensation, with general or limited clientele,whether permanent, occasional or accidental,and done for general business purposes, anycommon carrier, railroad, street railway,traction railway, sub-way motor vehicle, eitherfor freight or passenger, or both with or withoutfixed route and whatever may be itsclassification, freight or carrier service or anyclass, express service, steamboat, or steamshipline, pontines, ferries, and water craft, engagedin the transportation of passengers and freightor both, shipyard, marine repairshop,[warehouse], wharf or dock, ice plant, icerefrigeration plant, canal, irrigation system,gas, electric light, heat and power, water supply

and power, petroleum, sewerage system, wireor wireless communications system, wire orwireless broadcasting stations and other similarpublic services: Provided, however, that aperson engaged in agriculture, not otherwise apublic service, who owns a motor vehicle anduses it personally and/or enters into a specialcontract whereby said motor vehicle is offeredfor hire or compensation to a third party or thirdparties engaged in agriculture, not itself orthemselves a public service, for operation bythe latter for a limited time and for a specific

purpose directly connected with the cultivationof his or their farm, the transportation,processing, and marketing of agriculturalproducts of such third party or third partiesshall not be considered as operating a publicservice for the purposes of this Act.

B. Transportation

1. Definition - A contract of transportation is one whereby a certain person orassociation of persons obligate themselves totransport persons, things, news from one place toanother for a fixed price. It is the removal of goods orpersons from one place to another.

2. Public Nature

(a) Public Service Act

Section 13 (a) The Commission (PSC)shall have jurisdiction, supervision, and control

over all public services and their franchises,eqpt., and other properties, and in the exerciseof its authority, it shall have the necessarypowers and the aid of the public force:Provided, That public services owned oroperated by govt. entities or GOOCs shall beregulated by the Commission in the same wayas privately owned public services, butcertificates of public convenience or certificatesof public convenience and necessity shall notbe required of such entities or corporations:And provided, further, That it shall have noauthority to require steamboats, motorshipsand steamship lines, whether privately owned

or owned or operated by any govt. controlledcorporation or instrumentality to obtaincertificates of public convenience or toprescribe their definite routes or lines ofservice.

(b) The term public service includesevery person that now or hereafter mayoperate, manage, or control in the Philippines,for hire or compensation, with general orlimited clientele, whether permanent,occasional or accidental, and done for generalbusiness purposes, any common carrier,railroad, street railway, traction railway, sub-way motor vehicle, either for freight orpassenger, or both with or without fixed routeand whatever may be its classification, freightor carrier service or any class, express service,steamboat, or steamship line, pontines, ferries,and water craft, engaged in the transportationof passengers and freight or both, shipyard,marine repairshop, warehouse, wharf or dock,ice plant, ice refrigeration plant, canal,irrigation system, gas, electric light, heat andpower, water supply and power, petroleum,sewerage system, wire or wirelesscommunications system, wire or wirelessbroadcasting stations and other similar publicservices: Provided, however, that a person

engaged in agriculture, not otherwise a publicservice, who owns a motor vehicle and uses itpersonally and/or enters into a special contractwhereby said motor vehicle is offered for hire orcompensation to a third party or third partiesengaged in agriculture, not itself or themselvesa public service, for operation by the latter for alimited time and for a specific purpose directlyconnected with the cultivation of his or theirfarm, the transportation, processing, andmarketing of agricultural products of such thirdparty or third parties shall not be considered as

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operating a public service for the purposes ofthis Act.

(c) The word "person" includes everyindividual, co- partnership, joint stock co. orcorporation, whether domestic or foreign, theirlessees, trustees, or receivers, as well as anymunicipality, province, city, GOOC, or agency of

the govt. of the Philippines, and whatever otherperson or entities that may own or possess oroperate public services.

Section 14. The ff. are exempted fromthe provisions of the preceding section :

(a) Warehouses;(b) Vehicles drawn by animals and

bancas moved by oar or sail, and tugboats andlighters;

(c) Airships within the Philippines exceptas regards the fixing of their maximum rates onfreight and passengers;

(d) Radio companies except with respectto the fixing of rates;

(e) Public services owned or operated byany instrumentality of the Natl. Govt. or by anyGOOC, except with respect to the fixing of rates.

Section 15. With the exception of thoseenumerated in the preceding section, no publicservice shall operate in the Philippines withoutpossessing a valid and subsisting certificatefrom the PSC known as the certificate of publicconvenience, or certificate of publicconvenience and necessity as the case may be,to the effect that the operation of said serviceand the authorization to do business willpromote the public interests in a proper and

suitable manner.The Commission may prescribe as acondition for the issuance of the certificateprovided in the preceding paragraph that theservice can be acquired by the Republic of thePhilippines or any instrumentality thereof uponpayment of the cost price of its useful eqpt.,less reasonable depn.; and likewise, that thecertificate shall be valid only for a definiteperiod of time; and that the violation of any ofthese conditions shall produce the immediatecancellation of the certificate without thenecessity of any express action on the part ofthe Commission.

In estimating the depn., the effect of theuse of the eqpt., its actual condition, the age ofthe model, or other circumstances affecting itsvalue in the market shall be taken intoconsideration.

The foregoing is likewise applicable toany extension or amendment of certificatesactually in force and to those which mayhereafter be issued, to permit to modifyitineraries and time schedules of publicservices, and to authorizations to renew andincrease eqpt. and properties.

Section 16. Proceedings of theCommission, upon notice and hearing. The

Commission shall have power, upon propernotice and hearing in accordance with the rulesand provisions of this Act, subject to thelimitations and exceptions mentioned andsaving provisions to the contrary.

(a) To issue certificates ... authorizingthe operation of public services within thePhilippines, whenever the Commission findsthat the operation of the public serviceproposed and the authorization to do businesswill promote the public interest in a proper and

suitable manner. Provided, that certificates willbe granted only to citizens of the Philippines orof the US or to corps., co-partnerships,associations or joint stock companiesconstituted and organized under the laws of thePhilippines; Provided, that 60% of the stock orpaid-up capital ... must belong entirely tocitizens of the Philippines or of the US;

Provided, further, that no such certificate shallbe issued for a period of more than 50 years.

(b) To approve, subject to constitutionallimitations any franchise, privilege grantedunder the provisions of Act No. 667, as amendedby Act. No. 1022, by any political subdivision ofthe Philippines when, in the judgment of theCommission, such franchise or privilege willproperly conserve the public interests xxx

(c) To fix and determine individual or joint rates, tolls, charges, classifications, orschedules thereof, as well as commutation,mileage, kilometrage, and other special rates

which shall be imposed, observed and followedthereafter by any public service ; Provided,further that in case the public serviceequipment of an operator is used principally orsecondarily for the promotion of a privatebusiness, the net profits of said business shallbe considered in relation with the public serviceof such operator for the purpose of fixing therates.

(d) To fix just and reasonable standards,classifications, regulations, practices,measurements, or service to be furnished,imposed, observed, and followed thereafter by

any public service.

(e) To ascertain and fix adequate andserviceable standards for the measurement ofquantity, quality, pressure, initial voltage, orother condition pertaining to the supply of theproduct or service rendered by any publicservice, and to prescribe reasonable regulationsfor the examination and test of such product orservice and for the measurement thereof.

(f) To establish reasonable rules,regulations, instructions, specifications, andstandards, to secure the accuracy of all metersand appliances for measurements.

(g) To compel any public service tofurnish safe, adequate, and proper service asregards the manner of furnishing the same aswell as the maintenance of the necessarymaterial and eqpt.

(h) To require any public service toestablish, construct, maintain and operate anyreasonable extension of its existing facilities,where, in the judgment of said commission,such extension is reasonable and practicable,and will furnish sufficient business to justify theconstruction and maintenance of the same, and

when the financial condition of the said publicservice reasonably warrants the originalexpenditure required in making and operatingsuch extension.

(i) To direct any railroad, street, railwayor traction co. to establish and maintain at any junction or point of connection or intersectionwith any other line of said road or track, or withany other line of any other railroad, street,railway or traction co., such just and reasonableconnection as shall be necessary to promote the

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convenience of shippers of property, or ofpassengers, and in like manner to direct anyrailroad, street railway or traction co. engagedin carrying merchandise, to construct, maintainand operate, upon reasonable terms, a switchconnection with any private sidetrack whichmay be constructed by any shipper to connectwith the railroad, street railway or traction

company line where, in the judgment of thecommission, such connection is reasonable andpracticable, and can be put in with safety, andwill furnish sufficient business to justify theconstruction and maintenance of the same.

(j) To authorize, in its discretion, anyrailroad, street railway of traction company tolay its tracks across tracks of any otherrailroad, street railway or traction company, oracross any public highway.

(k) To direct any railroad or streetrailway co. to install such safety devices or toadopt such other reasonable measures as mayin the judgment of the commission be necessary

for the protection of the public at passing gradecrossings of (1) public highways and railroads,(2) public highways and street railways, or (3)railroads and street railways.

(l) To fix and determine the proper andadequate rates of depn. of the property of anypublic service which will be observed in properand adequate depn. account to be carried forthe protection of stockholders, or bondholdersor creditors, in accordance with such rules,regulations, and forms of account as thecommission may prescribe. Said rates shall besufficient to provide the amounts required over

and above the expenses of maintenance to keepsuch property in a state of efficiencycorresponding to the progress of the industry.Each public service shall conform itsdepreciation accounts to the rates sodetermined and fixed, and shall set aside themoney so provided for out of its earnings andcarry the same in a depreciation fund. Theincome from such investments of money in suchfund shall likewise be carried in such fund. Thisfund shall not be expended otherwise than fordepreciation, improvements, extensions, newconstructions or additions to the property ofsuch public service.

(m) To amend, modify or revoke at anytime any certificate under the provisions of thisact, whenever the facts and circumstances onthe strength of which said certificate was issuedhave been misrepresented or materiallychanged.

(n) To suspend or revoke any certificateissued under the provisions of this actwhenever the holder thereof has violated orwillfully and consumatedly refused to complywith any order, rule or regulation of thecommission or any provisions of this act:Provided, that the commission for good cause,

may prior to the hearing suspend for a periodnot exceeding 30 days any certificate or theexercise of any right or authority issued orgranted under this act by order of thecommission, whenever such step shall in the judgment of the commission be necessary toavoid serious and irreparable damage orinconvenience to the public or to privateinterests.

(o) To fix, determine, and regulate, asthe convenience of the state may require, a

special type for auto buses, trucks and motortrucks, to be hereafter constructed, purchased,and operated by operators after the approval ofthis act; to fix and determine a specialregistration fee for auto-buses, trucks andmotor trucks so constructed, purchased, andoperated: Provided, that said fees shall besmaller than those charged for auto- buses,

trucks, and motor trucks of types not maderegulation under this subsection.

Section 17. Proceedings of commissionwithout previous hearing:

(a) To investigate, upon its owninitiative, or upon complaint in writing, anymatter concerning any public service as regardsmatters under its jurisdiction; to require anypublic service to furnish safe, adequate andproper service as the public interest mayrequire and warrant; to enforce compliance withany standard xxx and to prohibit or prevent anypublic service from operating without firstsecuring a certificate of public convenience or

public necessity and convenience xxx andrequire existing public services to pay the feesprovided for in this act for the issuance of theproper certificate xxx under the penalty, in thediscretion of the commission, of the revocationand cancellation of any acquired right.

(b) To require payment of actualexpenses incurred in any investigation if aviolation shall be found; to assess costs not toexceed 25% with reference to such investigation

(c) To appraise and value the property ofany public service; in relation thereto, to have

access to and use any books, documents orrecords in the possession of any govt. dept.,bureau, office, or political subdivision

(d) To provide, on motion by or at therequest of any consumer, for the examinationand test of any appliance used for themeasuring of any product or service of a publicservice, to enter any premises where saidappliances may be, and other premises of thepublic service, for the purpose of setting up andusing on said premises any apparatus necessarytherefor, and to fix fees to be paid by theconsumer who may apply for such examination,and in case of defect, to refund the fees paid

(e) To permit any street railway ortraction company to change its existing gaugeto standard steam railroad gauge

(f) To grant any public service specialpermits to make extra or special trips within theterritory covered by its certificate and to makespecial excursions outside if the public interestor special circumstances so require; Providedwhere the public service cannot render suchextra service on its own line or in its ownterritory, a special permit for such extra servicemay be granted to any other public service

(g) To require any public service to keepits books, records, and accounts; to adopt auniform system of accounting as approved bythe auditor general

(h) To require any public service tofurnish annual reports of finances andoperations, covering the 12 month periodending December 31

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(i) To require every public service to filewith the commission a written, verifiedstatement made by the owner, president orsecretary setting forth the officers, authority,power and duties of every officer, as to disclosethe source and origin of each administrative actor rule

(j) To require any public service to

comply with the laws of the Philippines and withany local resolution or ordinance or its charter

(k) To investigate accidents directly orindirectly arising from or connected with themaintenance or operation of the public service

(l) To require every public service to filea complete schedule of every classification,individual or joint rate, toll, fare or charge, andin case of public carriers, a complete statementof itineraries or routes

o Section 18 - It shall be unlawful for anyindividual, co- partnership, association,

corporation or joint-stock company, theirlessees, trustees or receivers xxx to engage inany public service business without having firstsecured from the commission a certificate,except grantees of legislative franchisesexpressly exempting such grantee from thereqts of securing a certificate from thecommission, as well as those expresslyexempted from the jurisdiction of thecommission

Section 19. Unlawful acts - It shall beunlawful for any public service :

(a) To provide or maintain any servicethat is unsafe, improper or inadequate ,orwithhold or refuse any service which canreasonably be demanded and furnished, asfound and determined by the commission in afinal order which shall be conclusive and shalltake effect in accordance with this act, uponappeal or otherwise.

(b) To make or give, directly or indirectly,by itself or through its agents, attorneys orbrokers, or any of them, discounts or rebates onauthorized rates, or grant credit for thepayment of freight charges, or any undue orunreasonable preference or advantage to anyperson or corporation or to any locality or toany particular person or corporation or localityor any particular description of traffic orservice, or subject any particular person orcorporation or locality or any particulardescription of traffic to any prejudice ordisadvantage in any respect whatsoever; toadopt, maintain, or enforce any regulation,practice or measurement which shall be foundor determined by the commission to be unjust,unreasonable, unduly preferential, or unjustlydiscriminatory, in a final order which shall beconclusive and shall take effect in accordancewith the provisions of this act, upon appeal or

otherwise.

(c) To refuse or neglect, when requestedby the director of posts or his authorizedrepresentative to carry public mail on theregular trips of any public land transportationservice maintained or operated by any suchpublic service, upon such terms and conditionsand for a consideration in such amount as maybe agreed upon between the Director of Postsand the public service carrier or fixed by thecommission in the absence of an agreement

between the Director of Posts and the carrier.In case the Director of Posts and the publicservice carrier are unable to agree on theamount of the compensation to be paid for thecarriage of the mail, the Director of Posts shallforthwith request the commission to fix a justand reasonable compensation for such carriageand the same shall be promptly fixed by the

commission in accordance with section 16 ofthis act.

Section 20. Acts requiring the approvalof the Commission - Subject to establishedlimitations and exceptions and savingprovisions to the contrary, it shall be unlawfulfor any public service or for the owner, lessee oroperator thereof, without the approval andauthorization of the Commission previously had-

(a) To adopt, establish, fix, impose,maintain, collect or carry into effect anyindividual or joint rates, commutation, mileage

or other special rate, toll, fare, charge,classification or itinerary. The Commission shallapprove only those that are just and reasonableand not nay that are unjustly discriminatory orunduly preferential, only upon reasonablenotice to the public services and other partiesconcerned, giving them a reasonableopportunity to be heard and the burden of theproof to show that the proposed rates orregulations are just an reasonable shall be uponthe public service proposing the same.

(b) To establish, construct, maintain oroperate new units or extend existing facilities

or make any other addition to or generalextension of the service.

(e) Hereafter to issue any stock or stockcertificates representing an increase of capital;or issue any share of stock without par value; orissue any bonds or other evidence ofindebtedness payable in more than one yearfrom the issuance thereof, provided that it shallbe the duty of the Commission, after hearing, toapprove any such issue maturing in more thanone year from the date thereof, when satisfiedthat the same is to be made in accordance withlaw, and the purpose of such issue be approvedby the Commission.

(g) To sell, alienate, mortgage, encumberor lease its property, franchises, certificates,privileges or rights or any part thereof; ormerge or consolidate its property, franchises,privileges or rights, or any part thereof, withthose of any public service. The approvalherein required shall be given, after notice tothe public and after hearing, if it be shown thatthere are just and reasonable grounds formaking the mortgage or encumbrance, forliabilities of more than one year maturity, or thesale, alienation, lease , merger or consolidationto be approved, and that the same are not

detrimental to the public interest, and in case ofa sale, the date on which the same is to beconsummated shall be fixed in the order ofapproval: Provided, however, that nothingherein contained shall be construed to preventthe transaction from being negotiated orcompleted before its approval or to prevent thesale, alienation, or lease by any public serviceof any of its property in the ordinary course ofits business.

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(h) To sell or register in its books thetransfer or sale of shares of its capital stock, ifthe result of that sale in itself or in connectionwith another previous sale, shall be to vest inthe transferee more than 40% of the subscribedcapital of said public service. Any transfermade in violation of this provision shall be voidand of no effect and shall not be registered in

the books of the public service corporation.Nothing herein contained shall be construed toprevent the holding of shares lawfully acquired.

(i) To sell, alienate or in any mannertransfer shares of its capital stock to any alienif the result of that sale, alienation, or transferin itself or in connection with another previoussale shall be the reduction to less than 60% ofthe capital stock belonging to Philippinecitizens. Such sale, alienation or transfer shallbe void and of no effect and shall be sufficientcause for ordering the cancellation of thecertificate.

(b) The Certificate of PublicConvenience (CPC), the Certificate ofPublic Convenience and Necessity(CPCN), and the Prior Operator Rule

Difference between CPC and CPCN : A CPCN is issuedby the PSC to a public service to which any politicalsubdivision has granted a franchise under Act 667after the PSC has approved the same under Section16(b). A CPC is any authorization to operate a publicservice issued by the PSC. A CPC is an authorizationissued by the Commission for the operation of publicservices for which no franchise, either municipal or

legislative, is required by law (e.g. auto-trucks andmotor vehicles). A CPCN is an authorization issued bythe PSC for the operation of public services for which afranchise is required by law (e.g. electric, telephoneservices).

Nature of certificate : It constitutes neither a franchisenor a contract, confers no property rights and is amere license or privilege, and such privilege isforfeited when the grantee fails to comply with hiscommitments behind which lies the paramountinterest of the public, for public necessity cannot bemade to wait, nor sacrificed for private convenience.

However, certificates represent property rightsto the extent that if the rights which any public utility

is exercising pursuant to lawful orders of the PSC hasbeen invaded by another public utility, in appropriatecases actions may be maintained by the complainantpublic utility. Owners of public utilities have the rightto maintain appropriate actions against other publicutilities not authorized to operate in competition withthe complainant.

Certificates are considered as property asused in Civil Procedure as they have material valueand are material assets. They are subject toattachment and seizure by legal process, and may beacquired by purchase.

Determination of WON an issuance of a certificate is

for public convenience - (1) financial responsibility ofthe applicant, (2) reliability of the applicant, (3)priority of filing the application for a certificate, and(4) priority of operation

Prior operator rule - to carry out the purpose andintent for which the PSC was created the lawcontemplates that the first licensee will be protectedin his investment and will not be subjected to aruinous competition. It is not therefore the policy ofthe law for the PSC to issue a CPC to a secondoperator to cover the same field and in competition

with a first operator who is rendering sufficient,adequate and satisfactory service, and who in allthings and respects is complying with the rules andregulations of the PSC. Accordingly, a CPC or CPCNought not to be granted where there is no complaintas to existing rates and the co. in the field is renderingadequate services.- regular operators are preferred over irregular

operators- prior operator is given opportunity to improve service- prior operator given opportunity to extend lines- basis of rule : to prevent ruinous and wastefulcompetition in order that the interests of the publicwould be conserved and preserved; so long as theoperator complied with the terms and conditions ofthe license and the reasonable demands of the public,it is the duty of the PSC to protect rather than todestroy its investment

Raymundo vs Luneta Motor 58 Phil 889

F: Nicanor de Guzman signing as Guzco Transitpurchased trucks from Luneta Motor and executed PNs

guaranteed by a chattel mortgage on several trucks.Failing to pay the PNs, a suit for collection was filed. Awrit of attachment was issued and garnishment wasserved on the PSC attaching the right, title, andparticipation of Guzco Transit in the CPC covering thebus transportation lines between Manila and Rizal. TheCFI ordered the selling of these certificates in a publicbidding in which Luneta Motor was the highest bidder.

Nine days after the certificates were attached,these were sold to Raymundo (including certificate No.25951 which was not included in the sale to LunetaMotor Co.). The approval of the sale was sought fromthe PSC. The PSC approved the sale in the publicbidding and disapproved the sale to Raymundo except

with respect to Certificate No. 25951 which Raymundocould apply for its approval.

Issue : Which of the two sales should prevail? publicauction by virtue of an attachment vs voluntary saleHeld : Sale to Luneta Motor Co. in a public auction

The Public Service Law authorizes certificatesof public convenience to be secured by public serviceoperators from the PSC. A CPC grants a right in thenature of a limited franchise. The Code of CivilProcedure does not exclude franchises or certificatesfrom the word "property." The test by which todetermine WON a property can be attached and soldupon execution is whether the judgment debtor hassuch a beneficial interest therein that he can sell or

otherwise dispose of it for value. The Public ServiceLaw permits the PSC to approve the sale, alienation,mortgaging, encumbering or leasing of property,franchises, privileges, or rights or any part thereof. Ifthe holder of a certificate can voluntary sell it, there isno reason why the same cannot be sold involuntarilypursuant to court process.

CPCs have considerable material value. Theyare valuable assets. They are subject to being sold forconsideration as much as any other property. Theyare even more valuable than ordinary properties,taking into consideration that they are not granted toevery one who applies for them but only to those whoundertake to furnish satisfactory and convenient

service to the public. Though intangible, they are ofvalue and are considered properties which can beseized through legal process.

Batangas Transportation Co. vs Orlanes 52 Phil 455

F: Orlanes sought to have a CPC to operate a lineof auto trucks with fixed times of departure betweenTaal and Bantilan, with the right to receive passengersand freight from intermediate points. The evidence isconclusive that at the time of his application, Orlanes

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was an irregular operator between Bantilan and Taal,and that BTC was a regular operator betweenBatangas and Rosario. Orlanes sought to have hisirregular operation changed into a regular operation,and to set aside and nullify the prohibition against himin his CPC that he shall not have or receive anypassengers or freight at any of the points served bythe BTC which holds a prior license from the PSC. His

petition is based on the fact that to comply with thegrowing demands of the public, the BTC applied for apermit to increase the no. of trip hours at and betweenthe same places and for an order that all irregularoperators be prohibited from operating unless theyshould observe an interval of 2 hours before or onehour after the regular hours of the BTC. The PSCgranted the petition of Orlanes.

Issue : WON a CPC should be issued to a secondoperator in a field where, and in competition with, afirst operator who is already operating a sufficient,adequate and satisfactory service.

Held : NO. Decision of PSC is revoked.

An autobus line is a public utility, and as such,is a common carrier and an impt. factor in thebusiness affairs of the community.

The PSC has the power to specify and definethe terms and conditions upon which any public utilityshall operate and to make reasonable rules andregulations for its operation, and to fix thecompensation that it shall receive for its service to thepublic, and for good cause may suspend or evenrevoke a license granted.

It is not the policy of the law for the PSC toissue a CPC to a second operator to cover the samefield and in competition with a first operator who isrendering sufficient, adequate and satisfactory

service, and who in all things and respects iscomplying with the rules and regulations of the PSC.The power of the PSC to issue a CPC is

founded on the condition precedent that after a fullhearing and investigation, it shall find as a fact thatthe proposed operation is for the convenience of thepublic.

So long as the first operator keeps andperforms his terms and conditions of its license andcomplies with the reasonable demands of the public, ithas more or less of a vested and preferential rightover another who seeks to acquire a later license tooperate over the same route.

To carry out the purpose and intent for whichthe PSC was created, the law contemplates that the

first license will be protected in his investment andwill not be subjected to ruinous competition.

The primary purpose of the PSC is to secureadequate, sustained service for the public at the leastpossible cost and to protect and conserve investmentswhich have already been made for that purpose. ACPCN for the operation of an auto truck line inoccupied territory should not be granted where thereis no complaint as to existing rates and the co. in thefield is rendering adequate service. It is the duty ofthe PSC to protect rather than to destroy theinvestment of a public utility.

The policy of regulation upon which thepresent public utility commission plan is based and

which tends to do away with competition amongpublic utilities as they are natural monopolies, is atonce the reason that the regulation of an existingsystem of transportation, which is properly serving agiven field, or may be required to do so, is to bepreferred to competition among several independentsystems. While requiring a proper service from asingle system for a territory in consideration forprotecting it as a monopoly for all the service requiredand in conserving its resources, no economic wasteresults and service may be furnished at a minimumcost.

Carmelo vs Monserrat 55 Phil 644

F: Monserrat twice applied to Congress for anexclusive franchise to operate a taxicab service inManila. The Governor General twice vetoed the bill.Monserrat then applied to the PSC for a CPC. It was

granted.Carmelo and Oriol then applied to the PSC fora CPC to operate a taxicab service within Manila.Monserrat opposed. The PSC denied the application.

Held : There is no valid, legal reason why Monserratshould have the exclusive right of operating a taxicabservice. In the granting and refusal of a CPC, thequestion is what is for the best interest of the public.Tested by that rule, it is hard to conceive how it wouldbe for the best interests of the public to have onetaxicab service only, and how the public would beinjured by the granting of the certificate in question,for it must be conceded that two companies in thefield would stimulate the business, and the public

would much sooner and much easier becomeeducated in the use of taxi.

Monserrat does not have a vested right in thebusiness of any person that might want the use of ataxi, for the simple reason that the use of any taxi isthe sole discretion of the customer. This is unlike theBTC case which dealt with an autobus service withfixed schedules and routes.

San Pablo vs Pantranco South Express, Inc. 153 SCRA199

F: Pantranco operates passenger buses fromMetro Manila to Bicol and Eastern Samar. It wrote to

the Maritime Industry Authority (MARINA) requestingauthority to lease/purchase MV Black Double to beused in operating a ferryboat service from Matnog,Sorsogon and Allen, Samar that will provide service toco. buses and freight trucks that have to cross theBernardo Strait. MARINA denied the petition on theground that the Matnog- Allen run is adequatelyserviced by the Cardinal Shipping Corp. and EpitacioSan Pablo and that market conditions cannot supportthe entry of additional tonnage.

Pantranco acquired the vessel. It then appliedto BOT claiming that it can operate a ferry service inconnection with its franchise for bus operation in thehighway from Pasay City to Tacloban City for thepurpose of continuing the highway, which is

interrupted by a small body of water, and that theproposed ferry operation is merely a necessary andincidental service to its main service and obligation oftransferring passengers from Pasay City to TaclobanCity. Accdg. to it, there is no need to obtain a separateCPC to operate a ferry service to cater exclusively toits passenger buses and ferry trucks. Pantranco beganoperating its ferry service. The BOT held that theferryboat service is part of Pantranco's CPC andamended Pantranco's CPC to provide so. The twoother ferry boat services filed motions forreconsideration.

Issue : WON the sea can be considered as a

continuation of the highway. WON a land transpo co.can be authorized to operate a ferry service orcoastwise or interisland shipping service along itsauthorized route as an incident to its franchise withoutthe need of filing a separate application for the same.Held : The water transport service between Matnogand Allen is not a ferryboat service but a coastwise orinterisland shipping service. Before privaterespondent may be issued a franchise or CPC for theoperation of the said service as a common carrier, itmust comply with the usual reqts. of filing anapplication, payment of the fees, publication, adducing

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evidence at a hearing and affording the oppositors theopportunity to be heard.

Considering the environmental circumstancesof the case, the conveyance of passengers fromMatnog to Allen is not a ferryboat service but acoastwise or interisland shipping service. Under nocircumstances can the sea between Matnog and Allenbe considered a continuation of the highway. While a

ferryboat service has been considered as acontinuation of the highway when crossing rivers oreven lakes, which are small body of waters separatingthe land, however, when as in this case the twoterminals are separated by an open sea, it cannot beconsidered a continuation of the highway. Pantrancomust secure a separate CPC for the operation of aninterisland or coastwise shipping service. Its CPCcannot be merely amended to include this waterservice under the guise that it is a mere private ferryservice.

Pantranco does not deny that it charges itspassengers separately from the charges for the bustrips and issues separate tickets whenever they boardthe MV Black Double. It cannot pretend that it issued

tickets as a private carrier and not as a commoncarrier. It in fact accepts walk in passengers duringthe trips. It cannot claim that it is both a privatecarrier and a common carrier at the same time.

In the case of Javellana vs PSC, the Courtdifferentiated between ferry service and interisland orcoastwide service. Ferry means service either bybarges or rafts, even by motor or steam vessels,between the banks of a river or stream to continue thehighway which is interrupted by a body of water, or insome cases, to connect two points on opposite shoresof an arm of the sea such as a bay or lake which doesnot involve too great a distance or too long a time to

navigate. But where the line or service involvescrossing a body of water which is wide and dangerouswith big waves, then such line or service belongsproperly to interisland or coastwide trade.

3. Private nature: rights andobligations of parties inter se arising fromtransactions relating to transportation

(a) absent a transportationcontract

(b) arising from atransportation contract

(i) contract of transportation, defined - onewhereby a certain person orassociation of persons obligatethemselves to transportpersons, things or news fromone place to another for a fixedprice

(ii) contract of transportation, elements

Parties to the contract :

1. shipper- one who gives rise to the contractof transportation by agreeing to deliver the things ornews to be transported, or to present his own personor those of other or others in the case of transportation of passengers

2. carrieror conductor- one who binds himselfto transport persons, things, or news as the case maybe or one employed in or engaged in the business ofcarrying goods for others for hire

Persons or corporations who undertake totransport or convey goods, property, or persons from

one place to another, gratuitously or for hire, and areclassified as private or special carriers and common orpublic carriers

C. Regulation of the Transportation Industry

* The Department of Transportationand Communications

EO 125, Sec. 4. Mandate. The DOTC shallbe the primary policy, planning, programming,coordinating, implementing, regulating, andadministrative entity of the Executive Branch ofthe govt. in the promotion, devt. and regulationof dependable and coordinated networks oftransportation and communication systems, aswell as in the fast, safe, efficient, and reliablepostal, transportation and communicationservices.

To accomplish such mandate, the Dept.shall have the ff. objectives:

(a) promote the devt. of dependable andcoordinated networks of transportation and

communication systems;(b) guide govt. and private investments

in the devt. of the country's inter-modaltransportation and communication system in amost practical, expeditious, and orderly fashionfor maximum safety, service and costeffectiveness;

(c) impose appropriate measures so thattechnical, economic and other conditions for thecontinuing economic viability of thetransportation and communication entities arenot jeopardized and do not encourageinefficiency and distortion of traffic patronage;

(d) develop an integrated plan for a

nationwide transmission system in accordancewith national and intl. telecommunicationsservice reqts. including, among others, radioand television broadcast relaying leasedchannel services and data transmission;

(e) guide govt. and private investmentsin the establishment, operation andmaintenance of an intl. switching system forincoming and outgoing telecommunicationservices;

(f) encourage the devt. of a domestictelecommunications industry in coordinationwith the concerned entities particularly, themanufacture of communications/electronicsequipment and components to complement andsupport, as much as possible, the expansion,development, operation and maintenance of thenationwide telecommunication network;

(g) Provide for a safe, reliable andefficient postal system for the country.

EO 125-A, Sec. 5. To accomplish itsmandate, the Dept. shall have the ff. powersand functions:

(a) formulate and recommend nationalpolicies and guidelines for the preparation andimplementation of integrated andcomprehensive transportation and

communications systems at the national,regional and local levels; (b) establish andadminister comprehensive and integratedprograms for transportation andcommunications, xxx call on any agency, corp.,or organization xxx to participate and assist inthe preparation and implementation of suchprogram;

(c) assess, review and provide directionto xxx research and devt. programs of the govtxxx;

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(d) administer and enforce all laws xxx inthe field of transportation and communication;

(e) coordinate with the DPWH in thedesign, location, devt, rehabilitation,improvement, etc. of all infrastructure projectsand facilities of the Dept. xxx

(f) establish, operate and maintain anationwide postal system xxx;

(g) issue certificates of publicconvenience for the operation of public landand rail transportation utilities and services;

(h) accredit foreign aircraft andmanufactures xxx;

(i) establish and prescribe rules andregulations for identification of routes, zonesand/or areas of operation of particular operatorof public land services;

(j) establish and prescribe rules xxx forthe establishment, operation and maintenanceof such telecommunication facilities in areas notadequately served by the private sector xxx;

(k) establish and prescribe rules xxxoperation and maintenance of a nationwide

postal system xxx;(l) establish and prescribe rules xxx

issuance of CPCs for public land transportationutilities, such as motor vehicles, trimobiles, andrailways;

(m) establish and prescribe rules xxxinspection and registration of air and landtransportation facilities, such as motor vehicles,trimobiles, and aircrafts;

(n) establish and prescribe rules xxxissuance of licenses xxx;

(o) establish and prescribe rules xxxenforcement of laws governing transportationxxx;

(p) determine, fix and/or prescribecharges and/or rates pertinent to the operationof public air and land transportation utilityfacilities and services xxx;

(q) establish and prescribe rules xxxaccreditation of driving schools;

(r) administer and operate the CivilAviation Training Center xxx;

(s) perform such other powers andfunctions as it may be prescribed by law, or asmay be necessary, incidental, or proper to itsmandate, or as may be assigned from time totime by the President.

(a) Air

(i) Air TransportationOffice

EO 125, as amended by EO 125-ASec. 10. Assistant Secretaries and

Service Chiefs.xxx

h) Office of the AssistantSecretary for Air Transportation

Sec. 11. xxx The present Airport Officesof the Bureau of Air Transportation are hereby

abolished and their functions are transferred tothe Dept. Airport Offices. xxx

Sec. 13. xxxd) The Civil Aeronautics Board is hereby

transferred from the Dept. of Tourism to theDept. as an attached agency xxx. The Secretaryof Transportation and Communications or hisdesignated representative shall be theChairman of the Board xxx

Sec. 25, RA 776. The Civil AeronauticsAdministration shall be under theadministrative supervision and control of theDept. of Commerce and Industry (now theDOTC) xxx

(ii) Civil Aeronautics

Board

RA 776, as amended

Section 5. The Civil Aeronautics Boardshall be composed of the Secretary ofCommerce and Industry (now DOTC) asChairman, the CAB Administrator, theCommanding Officer of the Phil. Air Force, and 2others to be appointed by the President xxx

Section 10 (A) Except as otherwiseprovided herein, the Board shall have the powerto regulate the economic aspect of airtransportation, and shall have the general

supervision and regulation of, and jurisdictionand control over, air carriers, as well as theirproperty, property rights, equipment, facilities,and franchise, in so far as may be necessary forthe purpose of carrying out the provisions ofthis Act.

Section 10 (C) Powers and Duties of theCAB

1. issue, deny, amend, revise, alter,modify, cancel, suspend, or revoke xxx anytemporary operating permit or CPCN xxx

2. fix and determine reasonableindividual, joint or special rates, charges, or

fares which an air carrier may demand, collector receive for any service in connection with aircommerce xxx

3. authorize charters whether domesticor intl. and special air services or flights xxx;

4. approve or disapprove increase ofcapital, sale of equipment of an air carrierengaged in air commerce, consolidation,merger, purchase, lease, operating contract, oracquisition and control between domestic aircarriers xxx

5. inquire into the mgmt. of the businessof any air carrier xxx;

6. require annual, monthly, periodicaland special reports from any carrier xxx;

7. prescribe the forms of any and allaccounts, records, and memoranda of themovement of traffic, as well as of the receiptand expenditures of money and the length oftime such accounts, records, and memorandashall be preserved xxx;

8. require each officer and director ofany air carrier to transmit a report describingthe shares of stock or other interest held bysuch air carrier with any person engaged in anyphase of aeronautics, and the holding of thestock in, and control of, other persons engagedin any phase of aeronautics.

Section 11. A CPCN is a permit issued bythe Board authorizing a person to engage in aircommerce and/or air transportation, foreignand/or domestic.

Any permit may be altered, amended,modified, suspended, canceled and revoked bythe Board xxx whenever the Board finds suchaction to be in the public interest.

There shall be attached to the exerciseof the privileges xxx such reasonable terms,conditions, or limitations as, in the judgment ofthe Board, the public interest may require.

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xxx

Section 12. Except as otherwise providedin the Constitution and existing treaty ortreaties, a permit authorizing a person toengage in domestic air commerce and/or airtransportation shall be issued only to citizens ofthe Philippines.

(b) Land

(i) Land TransportationOfficeEO 125-A

Section 9. Assistant Secretaries andService Chiefs

xxxe) Office of the Assistant Secretary for

Land Transportation

Section 11. xxx The present Regional

Offices of the Land Transportation Commissionare hereby abolished and their functions aretransferred to the respective DepartmentRegional offices for Land Transportation. xxx

Section 13 (a) The Land TransportationCommission is hereby abolished and its stafffunctions are transferred to the service officesof the Dept. Proper and line functions aretransferred to the Dept. Regional Offices forLand Transportation as provided in Section 11herein. xxx The quasi-judicial powers andfunctions of the Commission are transferred tothe Dept. The corresponding position structure

and staffing pattern shall be approved andprescribed by the Secretary xxx.

Administrative Code of 1987, Title XV

Sec. 9. The Department shall have thefollowing line offices :

(1) The Office of the Assistant Secretaryfor Land Transportation.

xxx

(ii) Land TransportationFranchising and Regulatory Board

EO 202

Sec.1. There is hereby created in theDOTC, the Land Transportation Franchising andRegulatory Board.

Sec.2. The Board shall be composed of aChairman and 2 members with the same rank,salary and privileges of an Assistant Secretary,xxx

Sec.4. The Secretary of Transportationand Communications, through his dulydesignated Undersecretary, shall exercise

administrative supervision and control over theLTFRB.

Sec.5. Powers and functions:a. prescribe and regulate routes of

service, xxx zones or areas of operation ofpublic land transportation services provided bymotorized vehicles xxx;

b. issue, amend, revise, suspend orcancel CPCs or permits authorizing theoperation of public land transportation servicesprovided by motorized vehicles xxx;

c. determine, prescribe, approve andperiodically review and adjust reasonable fares,rates and other related charges, relative to theoperation of public land transportation servicesprovided by motorized vehicles;

d. issue preliminary or permanentinjunction xxx;

e. punish for contempt of the Board, both

direct and indirect xxx;f. issue subpoena and subpoena ducestecum and to summon witnesses to appear inany proceedings of the Board, to administeroaths and affirmations;

g. conduct investigations and hearings ofcomplaints for violation of the public servicelaws on land transportation and of the Board'srules and regulations xxx;

h. to review motu proprio the decisions,actions of the Regional Franchising andRegulatory Office herein created;

i. promulgate rules and regulationsgoverning proceedings before the Board and theRegional Franchising and Regulatory Office xxx;

j. fix, impose, and collect, andperiodically review and adjust reasonable feesand other related charges for servicesrendered;

k. formulate, promulgate, administer,implement and enforce rules and regulations onland transportation public utilities, standards ofmeasurements and/or design, and rules andregulations requiring operators of any publicland transportation service to equip, install andprovide in their utilities and in their stationssuch devices, eqpt. facilities and operatingprocedures and techniques as may promotesafety, protection, comfort and convenience to

persons and property in their charges as well asthe safety of persons and property within theirareas of operations;

l. coordinate and cooperate with othergovt. agencies and entities xxx;

m. perform such other functions andduties as may be provided by law, or as may benecessary, or proper or incidental to thepurposes and objectives of this Executive Order.

Sec.6. The Board xxx shall sit and renderits decision en banc; xxx concurrence andsignature of at least 2 members xxx

The decision shall be appealable to theSecretary within 30 days from receipt of thedecision; Provided, that the Secretary may motuproprio review any decision or action of theBoard before the same becomes final.

Sec.7. There shall be a RegionalFranchising and Regulatory Office in each of theadministrative regions of the country whichshall be headed by a Board Regional Managerhaving the rank, salary and privileges of a Dept.Assistant Regional Director. The RegionalFranchising and Regulatory Offices shall hearand decide uncontested applications/petitionsfor routes, within their respectiveadministrative regions: Provided, that

applications/petitions for routes extending theirrespective territorial jurisdictions shall be heardand decided by the Board.

Administrative Code, Title XV

Sec. 15. The quasi-judicial powers andfunctions with respect to land transportationshall be exercised through the LandTransportation and Regulatory Board.

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Sec. 16. The Board shall be composed ofa Chairman and 2 members with the rank,salary and privileges of an Assistant Secretary,all of whom shall be appointed by the Presidentupon the recommendation of the Secretary ofTransportation and Communications xxx

Sec. 17. The Board shall have an

Executive Director who shall also be appointedby the President xxx. He shall have the rank,salary and privileges of a Dept. Service Chief.He shall assist the Board in the performance ofits powers and functions.

The Board shall be supported by theTechnical Evaluation Division, Legal Division,Management Information Division,Administrative Division and Finance Division.

Sec. 18. The Secretary of Transportationand Communications shall exerciseadministrative supervision and control over theBoard.

Sec. 19. Powers and functions of theBoard:

1. prescribe and regulate routes xxx;2. issue, amend, revise, suspend, or

cancel CPCs or permits, xxx;3. determine, prescribe, approve and

periodically review and adjust reasonable faresxxx;

4. issue injunctions xxx;5. punish for contempt of the Board xxx;6. issue subpoena and subpoena duces

tecum and to summon witnesses xxx;7. conduct investigations and hearings of

complaints for violation of the public servicelaws on land transportation xxx;8. review motu proprio the decisions,

actions of the Regional Franchising andRegulatory Offices xxx;

9. promulgate rules and regulationsgoverning proceedings before the Board and theRegional Franchising and Regulatory Office xxx;

10. fix, impose and collect, andperiodically review and adjust reasonable fees,and other related charges for servicesrendered;

11. formulate, promulgate, administer,implement and enforce rules and regulations onland transportation xxx;

12. coordinate and cooperate with othergovt. agencies and entities concerned with anyaspect involving public land transportationservices xxx;

13. perform such other functions andduties as may be provided by law, or as may benecessary, or proper or incidental to thepurposes and objectives of the Dept.

Sec. 20. The Board shall xxx sit anddecide en banc; concurrence and signature of atleast 2 members; decision shall be appealableto the Secretary within 30 days from receipt ofthe decision; the Secretary may motu proprio

review any decision or action of the Boardbefore it becomes final.

Sec. 21. Regional Franchising andRegulatory Offices - hear and decideuncontested applications/ petitions for routesxxx;

Sec. 22. decisions of the RegionalFranchising and Regulatory Offices shall beappealable to the Board within 30 days fromreceipt of the decision.

(c) Water

(i) Maritime IndustryAuthority

EO 125, Sec. 14 as amended by EO 125-A, Sec. 3

The Maritime Industry Authority ishereby retained and shall have the ff. functions:

a. develop and formulate plans, policies,projects xxx geared toward the promotion anddevt. of the maritime industry, the growth andeffective regulation of shipping enterprises, andfor the national security objectives of thecountry;

b. establish, prescribe and regulateroutes, zones and/or areas of operation ofparticular operators of public water services;

c. issue CPCs for the operation ofdomestic and overseas water carriers;

d. register vessels as well as issue

certificates, licenses or document necessary orincident thereto;

e. undertake the safety regulatoryfunctions pertaining to vessel construction andoperation including the determination ormanning levels and issuance of certificates ofcompetency to seamen;

f. enforce laws, prescribe and enforcerules and regulations, including penalties forviolations thereof, governing watertransportation and the Phil. merchant marinexxx;

g. undertake the issuance of licenses toqualified seamen and harbor, bay and river

pilots; h. determine, fix, prescribe charges/ratespertinent to the operation of public watertransport utilities xxx;

i. accredit marine surveyors andmaritime enterprises engaged in shipbuilding,ship repair xxx;

j. issue and register the continuousdischarge book of Filipino seamen;

k. establish and prescribe rules andregulations, standards and procedures for theefficient and effective discharge of the abovefunctions;

l. perform such other functions as maynow or hereafter be provided by law.

II. Common Carriers

A. In General

1. Definitions; essential elements

Art. 1732. Common carriers are persons,corporations, firms or associations engaged inthe business of carrying or transportingpassengers or goods or both, by land, water orair, for compensation, offering their services tothe public.

Aguedo F. Agbayani, COMMERCIAL LAWS OF THEPHILIPPINES, vol. 4, 1989 ed. (hereinafter 4 Agbayani)

Transportation defined.-- a contract of transportation is one whereby a certain person orassociation of persons obligate themselves totransport persons, things, or news from one place toanother for a fixed price

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Classification :1. As to object: (1) things; (2) persons; (3) news

2. As to place of travel: (1) land; (2) water; (3) air

Parties to contract of transportation:

(1) shipper or consignor.-- person to betransported; one who gives rise to the contract oftransportation by agreeing to deliver the things ornews to be transported, or to present his own personor those of other or others in the case of transportation of passengers

(2) carrier or conductor.-- one who bindshimself to transport persons, things, or news as thecase may be; one employed in or engaged in thebusiness of carrying goods for other for hire

(3) consignee.-- the party to whom the carrieris to deliver the things being transported; one towhom the carrier may lawfully make delivery inaccordance with its contract of carriage (but theshipper and the consignee may be one person)

Freight defined.-- The terms has been defined as:(1) the price or compensation paid for thetransportation of goods by a carrier, at sea, from portto port. But the term is also used to denote (2) thehire paid for the carriage of goods on land from placeto place, or on inland streams or lakes. The name isalso applied to (3) the goods or merchandisetransported at sea, on land, or inland streams or lakes.Thus the term is used in 2 senses: to designate theprice for the carriage, also called freightage, or todesignate the goods carried.

Contracts through transportation agents.-- A

contract of transportation is not changed, altered oraffected by the mere fact that the obligor avails ofother parties to effect the transportation agreed upon,as in the case of transportation agents.

Carriers defined.-- Persons or corporations whoundertake to transport or convey goods, property orpersons, from one place to another, gratuitously or forhire, and are classified as private or special carriers,and common or public carriers

Private carriers defined.-- Those who transport orundertake to transport in a particular instance for hireor reward

Common carriers vs Private carriers:

(1) the common carrier holds(1) the private carrier agrees

himself out in common, that is,in some special case with some

to all persons who choose to em-private individual to carry

ploy him, as ready to carry forfor hire

hire; no one can be a commoncarrier unless he has held himselfout to the public as a carrier insuch a manner as to render him

liable to an action if he shouldrefuse to carry for anyone whowished to employ him

(2) a common carrier is bound to(2) a private carrier is not

carry all who offer such goods asbound to carry for any reason,

it is accustomed to carry andunless it enter into a special

tender reasonable compensationagreement to do so

for carrying them

(3) a common carrier is a public service(3) a private carrier does not

and is therefore subject to regulationhold itself out as engaged in

the business for the public,

and is therefore not subject

to regulation as a common carrier

Test for a common carrier:

(1) He must be engaged in the business ofcarrying goods for others as a public employment, andmust hold himself out as ready to engage in thetransportation of goods for persons generally as abusiness, and not a casual occupation.

(2) He must undertake to carry goods of thekind to which his business is confined.

(3) He must undertake to carry by themethods by which his business is conducted, and overhis established roads.

(4) The transportation must be for hire.The true test is whether the given undertaking

is a part of the business engaged in by the carrierwhich he has held out to the general public as hisoccupation rather than the quantity or extent of thebusiness actually transacted, or the no. and characterof the conveyances used in the employment (the testis therefore the character of the business actuallycarried on by the carrier.)

Case : an airplane owner is a common carrier where

he undertakes for hire to carry all persons who applyfor passage indiscriminately as long as there is roomand no legal excuse for refusing; airlines engaged inthe passenger service on regular schedules on definiteroutes, who solicit patronage of the traveling public,advertise schedules for routes, times of leaving andrates of fare, and make the usual stipulation as tobaggage are common carriers

Characteristics of common carriers:

(1) The common carrier undertakes to carryfor all people indifferently; he holds himself out asready to engage in the transportation of goods for hire

as a public employment and not as a casualoccupation, and he undertakes to carry for all personsindifferently, within the limits of his capacity and thesphere of the business required of him, so that he isbound to serve all who apply and is liable for refusal,without sufficient reason, to do so

(2) The common carrier cannot lawfullydecline to accept a particular class of goods forcarriage to the prejudice of the traffic in those goods

Exception : for some sufficient reason, wherethe discrimination in such goods is reasonable andnecessary (substantial grounds)

(3) No monopoly is favored - the Commissionhas the power to say what is a reasonable

compensation to the utility and to make reasonablerules and regulations for the convenience of thetraveling public and to enforce them

(4) Public convenience - for the best interestsof the public

Meaning of Public use.-- It is not confined toprivileged individuals, but is open to the indefinitepublic; there must be a right which the law compelsthe owner to give to the general public. Public use isnot synonymous with public interest. The true criterion

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is whether the public may enjoy it by right or only bypermission

The law prohibits unreasonable discriminationby common carriers.-- The law requires commoncarriers to carry for all persons, either passengers orproperty, for exactly the same charge for a like orcontemporaneous service in the transportation of like

kind of traffic under substantially similarcircumstances or conditions. The law prohibitscommon carriers (CC) from subjecting any person, etc.or locality, or any kind of traffic, to any undue orunreasonable prejudice or discrimination whatsoever.

Exception: When the actual cost of handlingand transporting is different, then different rates maybe charged

Cases : (1) merchandise of like quantity may not beconsidered alike - the quantity, kind and quality maybe exactly the same, and yet not be alike, so far as thecost of transportation is concerned

(2) shipments may be alike althoughcomposed of different classes of merchandise -

difference in the charge for handling and transportingmay only be made when the difference is based uponactual cost

Determination of justifiable refusal:

This involves a consideration of the following--

(1) suitability of the vessels of the company forthe transportation of such products;

(2) reasonable possibility of danger ordisaster, resulting from their transportation in theform and under the conditions in which they are

offered for carriage;(3) the general nature of the business done bythe carrier;

(4) all the attendant circumstances whichmight affect the question of the reasonable necessityfor the refusal by the carrier to undertake thetransportation of this class of merchandise

Case: The mere fact that the carriage of dynamitesmay lead to destructive explosions is not sufficient tojustify refusal if it can be proven that in the conditionin which it is offered for carriage there is no realdanger to the carrier nor reasonable ground to fearthat the vessel and those on board will be exposed tounnecessary or unreasonable risks

US vs Tan Piaco, 40 Phil 853

F: Tan Piaco rented two automobile trucks andwas using them upon the highways of Leyte for thepurpose of carrying some passengers and freight. Hecarried passengers and freight under a specialcontract in each case and had not held himself out tocarry all passengers and freight for all persons whomight offer passengers and freight. He was convictedfor violation of the Public Utility Law for operating apublic utility without permission from the Public UtilityCommission.

Issue: WON defendant operated a public utility. NO.

Held: There is no public use. The trucks were usedunder special agreements to carry particular personsand property.

Under the Public Service Law, two things arenecessary : (1) the individual, co-partnership, etc.must be a public utility; and (2) the business in whichsuch individual, co-partnership, etc. is engaged mustbe for public use. "Public use" means the same as"use by the public." The essential feature of public use

is that it is not confined to privileged individuals, butis open to the indefinite public. In determiningwhether a use is public, we must look not only to thecharacter of the business to be done, but also to theproposed mode of doing it. If the use is merelyoptional with the owners, or the public benefit ismerely incidental, it is not a public use, authorizingthe exercise of the jurisdiction of the public utility

commission. There must be, in general, a right whichthe law compels the owner to give to the generalpublic. It is not enough that the general prosperity ofthe public is promoted. Public use is not synonymouswith public interest. The true criterion by which tojudge the character of the use is whether the publicmay enjoy it by right or only by permission.

Home Insurance Co. vs American Steamship Agencies,23 SCRA 24

F: A Peruvian firm shipped fishmeal through theSS Crowborough consigned to the SMB and insured bythe Home Insurance Co. The cargo arrived with

shortages. SMB demanded and Home Insurance Co.paid P14,000 in settlement of SMB's claim. HomeInsurance filed for recovery from Luzon Stevedoringand American Steamship Agencies. LuzonStevedoring claimed that it merely delivered what itreceived from the carrier in the same condition itreceived it. American Steamship contended that it wasnot liable because of a stipulation in the charter partythat the charterer and not the shipowner was to beliable for any loss or damage to the cargo. The CFIabsolved Luzon Stevedoring but ordered AmericanSteamship to reimburse the P14,000 to HomeInsurance, declaring that Art. 587 of the Code ofCommerce makes the ship agent civilly liable for

damages in favor of third persons due to the conductof carrier's captain and that the stipulation in thecharter party exempting owner from liability is againstpublic policy under Art. 1744 of NCC.Issue : Is the stipulation valid? YES.

Held : The provisions of our Civil Code on commoncarriers were taken from Anglo-American law. UnderAmerican jurisprudence, a common carrierundertaking to carry a special cargo or chartered to aspecial person only, becomes a private carrier. As a private carrier, a stipulation exempting the ownerfrom liability for the negligence of its agents is notagainst public policy and is deemed valid.

The Civil Code provisions on common carriersshould not be applied where the carrier is not actingas such but as a private carrier. The stipulation in thecharter party absolving the owner from liability for lossdue to the negligence of the agent would be void onlyif the strict public policy governing CC is applied. Suchpolicy has no force where the public at large is notinvolved, as in the case of a ship totally chartered (asin this case) for the use of a single party. Based on thestipulation, recovery cannot be had, for loss ordamage to the cargo against shipowners, unless thesame is due to personal acts or negligence of saidowner or its managers, as distinguished from agentsor employees. No personal act or negligence has been

proved.In a charter of the entire vessel, the bill of

lading issued by the master to the charterer, asshipper, is in fact and legal contemplation merely areceipt and a document of title and not a contract, forthe contract is the charter party.

De Guzman vs CA, 168 SCRA 612

F: Cendana was a junk dealer and was engagedin buying used bottles and scrap materials inPangasinan and brought these to Manila for resale. He

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used two 6-wheeler trucks. On the return trip toPangasinan, he would load his vehicles with cargowhich various merchants wanted delivered toPangasinan. For that service, he charged freight lowerthan regular rates. General Milk Co. contracted withhim for the hauling of 750 cartons of mild. On the wayto Pangasinan, one of the trucks was hijacked byarmed men who took with them the truck and its

cargo and kidnapped the driver and his helper. Only150 cartons of milk were delivered. The Milk Co. suedto claim the value of the lost merchandise based on analleged contract of carriage. Cendana denied that hewas a common carrier and contended that he couldnot be liable for the loss since it was due to forcemajeure. The TC ruled that he was a common carrier.The CA reversed.

Issue : WON Cendana is a common carrier. YES.

Held : Cendana is properly characterized as a commoncarrier even though he merely backhauled goods forother merchants, and even if it was done on a periodicbasis rather than on a regular basis, and even if his

principal occupation was not the carriage of goods.Art. 1732 makes no distinction between one

whose principal business activity is the carrying ofpersons or goods or both, and one who does suchcarrying only as an ancillary activity. It also avoidsmaking a distinction between a person or enterpriseoffering transportation services on a regular orscheduled basis and one offering service on anoccasional, episodic or unscheduled basis. Neitherdoes it make a distinction between a carrier offeringits services to the general public and one who offersservices or solicits business only from a narrowsegment of the population.

The fact that Cendana does not hold a CPC is

no excuse to exempt him from incurring liabilities as aCC. Otherwise, it would be to reward persons who failto comply with applicable statutory reqts. and wouldbe offensive to public policy. The liability arises themoment a person or firm acts as a common carrier,without regard to whether or not such carrier has alsocomplied with the requirements of the applicableregulatory statute and implementing regulations.

Issue : WON Cendana may be held liable for the loss ofthe milk. NO.

Held: Common carriers by the very nature of theirbusiness and for reasons of public policy are held to avery high degree of care and diligence (extra-ordinary

diligence) in the carriage of goods as well aspassengers. Article 1734 establishes the general rulethat CC are responsible for the loss, destruction, ordeterioration of the goods which they carry unless thesame is due to the causes enumerated therein. Suchenumeration is a closed list. Causes falling outsidethe list, even if they are force majeure, fall within thescope of Art. 1735 which provides that CC arepresumed to have been at fault or to have actednegligently, unless they prove that they observedextraordinary diligence required under Art. 1733.

However, Art. 1745 provides that a CC cannotbe allowed to divest or diminish his responsibility evenfor acts of strangers like thieves or robbers, except

where such thieves or robbers acted with grave orirresistible threat, violence or force. The limits ofextraordinary diligence are reached where there isgrave or irresistible threat, violence or force. In thiscase, the loss was quite beyond the control of the CC.Even CC are not made absolute insurers against allrisks of travel and of transport of goods, and are notliable for acts or events which cannot be foreseen orare inevitable, provided that they shall have compliedwith the rigorous standard of extraordinary diligence.

Planters Products vs CA, G.R. 101503 (Sept. 15, 1993)

F: Planters purchased urea fertilizer fromMitsubishi, New York. The fertilizer was shipped onMV Sun Plum, which is owned by KKKK, from Alaska toSan Fernando, La Union. A time charter party wasentered into between Mitsubishi as shipper/chartererand KKKK as shipowner. Upon arrival in the port, PPI

unloaded the cargo. It took PPI 11 days to unload thecargo. PPI hired a marine and cargo surveyor todetermine if there was any shortage. A shortage andcontamination of the fertilizer was discovered. PPIsent a claim letter to SSA, the resident agent of KKKKfor the amount of the loss. An action for damages wasfiled. SSA contended that the provisions on CC do notapply to them because they have become privatecarriers by reason of the charter-party. The TCawarded damages. The CA reversed.

Issue : Does a charter party between a shipowner anda charterer transform a CC into a private one as tonegate the civil law presumption of negligence in caseof loss or damage to its cargo? NO.

Held : A charter-partyis a contract by which an entireship, or some principal part thereof, is let by theowner to another person for a specified time or use.There are 2 kinds: (1) contract of affreightmentwhichinvolves the use of shipping space or vessels leasedby the owner in part or as a whole, to carry goods forothers; and (2) charter by demise or bareboat charterwhere the whole vessel is let to the charterer with atransfer to him of its entire command and possessionand consequent control over its navigation, includingthe master and the crew, who are his servants.

It is not disputed that the carrier operates as aCC in the ordinary course of business. When PPI

chartered the vessel, the ship captain, its officers andcrew were under the employ of the shipowner andtherefore continued to be under its direct supervisionand control. Thus it continued to be a public carrier.

It is therefore imperative that a public carriershall remain as such, notwithstanding the charter ofthe whole or portion of a vessel, provided the charteris limited to the ship only, as in the case of a time-charter or a voyage-charter. It is only when thecharter includes both the vessel and the crew, as in abareboat or demise that a CC becomes private, insofaras such particular voyage is concerned.

Issue : WON the carrier is liable for damages. NO.

Held : The presumption of negligence on the part ofrespondent carrier has been overcome by the showingof extraordinary zeal and assiduity exercised by thecarrier in the care of the cargo. On the other hand, noproof was adduced by the petitioner showing that thecarrier was remiss in the exercise of due diligence inorder to minimize the loss or damage to the goods itcarried.

Coastwise Lighterage Corp. vs. CA, GR No. 114167,July 12, 1995

F: Pag-asa Sales, Inc. entered into a contract to

transport molasses from Negros to Mla. w/ Coastwise,using the latter's dumb barges. The barges weretowed in tandem by the tugboat MT Marcia, w/c islikewise owned by Coastwise.

Upon reaching Mla. Bay, while approachingPier 18, one of the barges, "Coastwise 9," struck anunknown sunken object. The forward buoyancycompartment was damaged, and water gushed inthrough a hole 2 inches wide and 22 inches long. As aconsequence, the molasses at the cargo tanks werecontaminated and rendered unfit for the use it wasintended. This prompted the consignee, Pag-asa to

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reject the shipment of molasses as a total loss.Thereafter, Pag-asa filed a formal claim w/ the insurerof its cargo, herein pvt. resp., Phil. Gen. Insurance Co.(Philgen) and against the carrier, herein petitionerCoastwise. Coastwise denied the claim and it wasPhilgen w/c paid the consignee the amount ofP700,000 representing the value of the damagedcargo of molasses.

In turn, Phil-gen filed an action agsintCoastwise bef. RTC-Mla. seeking to recover theP700,000 it paid to Pag-asa. RTC ruled in favor ofPhilgen. CA affirmed the RTC decision. Hence, thispetition.

RULINGS: (1) Bareboat charter and contract ofaffreightment, difference; Coastwise, by the contractof affreightment, was not converted into a privatecarrier, but remained a common carrier.-- Under thedemise or bareboat charterof the vessel, the chartererwill generally be regarded as the owner of the voyageor service stipulated. The charterer mans the vesselw/ his own people and becomes the owner pro hacvice, subject to liability to others for damages caused

by negligence. To create a demise, the owner of avessel must completely and exclusively relinquishpossession, command and navigation thereof to thecharterer; anything short of such a complete transferis a contract of affreightment (time or voyage charterparty) or not a charter party at all.

A contract of affreightment is one in w/c theowner of the vessel leases part or all of its space tohaul goods for others. It is a contract for specialservice to be rendered by the owner of the vessel andunder such contract the general owner retains thepossession, command and navigation of the ships, thecharterer or freighter merely having use of the spacein the vessel in return for his payment of the charter

hire. xxxxxxAlthough a charter party may transform a

4663623 transpo reviewer

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