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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 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 60% 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 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.
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.
Section 19. The State shall regulate or prohibit monopolies when
the public interest so requires. No combinations in restraint of
trade or unfair competition shall be allowed.
(a) What is a public utility?
A public utility is a business or service engaged in regularly
supplying the public with some commodity or service of public
consequence such as electricity, gas, water, transportation,
telephone or telegraph service. Apart from statutes which define
the public utilities that are within the purview of such statutes,
it would be difficult to construct a definition of a public utility
which would fit every conceivable case. As its name indicates,
however, the term public utility 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 as amended) provides that the
term public service "includes every person that now or hereafter
may own, operate, manage, or control in the Philippines, for hire
or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and
done for general business purposes, any common carrier,
railroad, street railway, traction railway, sub-way motor vehicle,
either for freight or passenger, or both with or without fixed
route and whatever may be its classification, freight or carrier
service or any class, express service, steamboat, or steamship
line, pontines, ferries, and water craft, engaged in the
transportation of passengers and freight or both, shipyard, marine
repairshop, [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..." [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 prepare the Invitation to Bid and all
relevant bidding documents necessary for the public bidding of the
development, mgmt., and operation of the Manila Intl. Container
Terminal (MICT) and authorized the Board Chairman Secretary Reyes
to oversee and implement the project.
Secretary Reyes created a 7-man MICT Bidding Committee to
evaluate all bids and recommend to the Board the best bid. The PPA
published the Invitation to Bid with the reservation that it had
the right to reject any bid and to accept such bid it may deem
advantageous to the govt.
Seven companies submitted bids. The Committee recommended that
the contract be awarded to Intl. Container Terminal Services
(ICTSI) on the ground that it offered the best technical and
financial proposal. Secretary Reyes awarded the contract to ICTSI.
Before the contract could be signed, two cases were filed
questioning the legality or regularity of the bidding. The first
was a special action for prohibition with prelim injunction filed
by Alo, a concerned taxpayer. The second was a civil case for
prohibition with prayer for TRO filed by Sharp Co. which actively
participated in the bidding.
The President approved the proposed MICT contract. The PPA and
ICTFSI perfected the contract. Rodolfo Albano, a member of the
House of Representatives filed the present case assailing the award
of the contract on the ground that since the MICT is a public
utility, it needs a legislative franchise before 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 a private entity.
A contract entered into by the PPA and such entity is substantial
compliance with the law. 1. Executive Order No. 30 authorized the
PPA to take over, manage and operate the MICT in accordance with PD
857 (Revised Charter of the PPA). PD 857 expressly empowers the PPA
to provide services within Port Districts "whether on its own, by
contract or otherwise." Therefore, under EO 30 and PD 857, the PPA
may contract with ICTSI for the mgmt., operation and devt. of the
MICT.2. Even if the MICT be considered a public utility or a public
service on the theory that it is a wharf or a dock as contemplated
by the Public Service Act, its operation would not necessarily call
for a legislative franchise. Legislative franchises are not
required before each and every public utility may operate. The law
has granted certain administrative agencies the power to grant
licenses for or to authorize the operation of certain public
utilities.
That the Consti provides that the issuance of a franchise for
the operation of a public utility shall be subject to amendment,
alteration or repeal by
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TRANSPORTATION AND MARITIME LAW
Congress does not necessarily imply that only Congress has the
power to grant such authorization. There are several laws granting
specified agencies in the Executive Dept. the power to issue such
authorization for certain classes of public utilities. [ 1. LTFRB
wrt Certificates of Public Convenience authorizing the operation of
public land transportation services provided by motorized vehicles;
2. ERB wrt operation of electric power utilities and services
except electric coops]
Reading EO 30 and PD 857 together, the PPA has been empowered to
undertake by itself or to authorize the operation and mgmt. of the
MICT by another by contract. The latter power having been delegated
to the PPA, a legislative franchise is no longer necessary. In this
case, the PPA's contracting with 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 by the PPA
and the President enjoys the presumption of validity and regularity
of official action. There is no evidence to the contrary. 4. Albano
has standing to assail the contract. While the expenditure of
public funds may not be involved under the contract, public
interest is definitely involved considering the important role of
the MICP in the economic devt. of the country and the magnitude of
the amount involved. He has sufficient standing since a public
right (disclosure provision) is sought to be 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 another branch.6. The determination of the winning bid
should be left to the sound judgment of the PPA. It is in the best
position to evaluate the bids. It has the technical expertise 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 every person that now or
hereafter may operate, manage, or control in the Philippines, for
hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction
railway, sub-way motor vehicle, either for freight or passenger, or
both with or without fixed route and whatever may be its
classification, freight or carrier service or any class, express
service, steamboat, or steamship line, pontines, ferries, and water
craft, engaged in the transportation of passengers and freight or
both, shipyard, marine repairshop, [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.
B. Transportation
1. Definition - A contract of transportation is one whereby a
certain person or association of persons obligate themselves to
transport persons, things, news from one place to another for a
fixed price. It is the removal of goods or persons 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 exercise of its
authority, it shall have the necessary powers and the aid of the
public force: Provided, That public services owned or operated by
govt. entities or GOOCs shall be regulated by the Commission in the
same way as privately owned public services, but certificates of
public convenience or certificates of public convenience and
necessity shall not be required of such entities or corporations:
And provided, further, That it shall have no authority to require
steamboats, motorships and steamship lines, whether privately owned
or owned or operated by any govt. controlled corporation or
instrumentality to obtain certificates of public convenience or to
prescribe their definite routes or lines of service.
(b) The term public service includes every person that now or
hereafter may operate, manage, or control in the Philippines, for
hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business
purposes, any common carrier, railroad, street railway, traction
railway, sub-way motor vehicle, either for freight or passenger, or
both with or without fixed route and whatever may be its
classification, freight or carrier service or any class, express
service, steamboat, or steamship line, pontines, ferries, and water
craft, engaged in the transportation of passengers and freight or
both, shipyard, marine repairshop, 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 co. or
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corporation, whether domestic or foreign, their lessees,
trustees, or receivers, as well as any municipality, province,
city, GOOC, or agency of the govt. of the Philippines, and whatever
other person or entities that may own or possess or operate public
services.
Section 14. The ff. are exempted from the provisions of the
preceding section :
(a) Warehouses;(b) Vehicles drawn by animals and
bancas moved by oar or sail, and tugboats and lighters;
(c) Airships within the Philippines except as regards the fixing
of their maximum rates on freight and passengers;
(d) Radio companies except with respect to the fixing of
rates;
(e) Public services owned or operated by any instrumentality of
the Natl. Govt. or by any GOOC, except with respect to the fixing
of rates.
Section 15. With the exception of those enumerated in the
preceding section, no public service shall operate in the
Philippines without possessing a valid and subsisting certificate
from the PSC known as the certificate of public convenience, or
certificate of public convenience and necessity as the case may be,
to the effect that the operation of said service and the
authorization to do business will promote the public interests in a
proper and suitable manner.
The Commission may prescribe as a condition for the issuance of
the certificate provided in the preceding paragraph that the
service can be acquired by the Republic of the Philippines or any
instrumentality thereof upon payment of the cost price of its
useful eqpt., less reasonable depn.; and likewise, that the
certificate shall be valid only for a definite period of time; and
that the violation of any of these conditions shall produce the
immediate cancellation of the certificate without the necessity of
any express action on the part of the Commission.
In estimating the depn., the effect of the use of the eqpt., its
actual condition, the age of the model, or other circumstances
affecting its value in the market shall be taken into
consideration.
The foregoing is likewise applicable to any extension or
amendment of certificates actually in force and to those which may
hereafter be issued, to permit to modify itineraries and time
schedules of public services, and to authorizations to renew and
increase eqpt. and properties.
Section 16. Proceedings of the Commission, upon notice and
hearing. The Commission shall have power, upon proper notice and
hearing in accordance with the rules and provisions of this Act,
subject to the limitations and exceptions mentioned and saving
provisions to the contrary.
(a) To issue certificates ... authorizing the operation of
public services within the Philippines, whenever the Commission
finds that the operation of the public service proposed and the
authorization to do business will promote the public interest in a
proper and suitable manner. Provided, that certificates will be
granted only to citizens of the Philippines or of the US or to
corps., co-partnerships, associations or joint stock companies
constituted and organized under the laws of the
Philippines; Provided, that 60% of the stock or paid-up capital
... must belong entirely to citizens of the Philippines or of the
US; Provided, further, that no such certificate shall be issued for
a period of more than 50 years.
(b) To approve, subject to constitutional limitations any
franchise, privilege granted under the provisions of Act No. 667,
as amended by Act. No. 1022, by any political subdivision of the
Philippines when, in the judgment of the Commission, such franchise
or privilege will properly conserve the public interests xxx
(c) To fix and determine individual or joint rates, tolls,
charges, classifications, or schedules thereof, as well as
commutation, mileage, kilometrage, and other special rates which
shall be imposed, observed and followed thereafter by any public
service ; Provided, further that in case the public service
equipment of an operator is used principally or secondarily for the
promotion of a private business, the net profits of said business
shall be considered in relation with the public service of such
operator for the purpose of fixing the rates.
(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 and serviceable standards for
the measurement of quantity, quality, pressure, initial voltage, or
other condition pertaining to the supply of the product or service
rendered by any public service, and to prescribe reasonable
regulations for the examination and test of such product or service
and for the measurement thereof.
(f) To establish reasonable rules, regulations, instructions,
specifications, and standards, to secure the accuracy of all meters
and appliances for measurements.
(g) To compel any public service to furnish safe, adequate, and
proper service as regards the manner of furnishing the same as well
as the maintenance of the necessary material and eqpt.
(h) To require any public service to establish, construct,
maintain and operate any reasonable 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 the construction and maintenance of
the same, and when the financial condition of the said public
service reasonably warrants the original expenditure required in
making and operating such extension.
(i) To direct any railroad, street, railway or traction co. to
establish and maintain at any junction or point of connection or
intersection with any other line of said road or track, or with any
other line of any other railroad, street, railway or traction co.,
such just and reasonable connection as shall be necessary to
promote the convenience of shippers of property, or of passengers,
and in like manner to direct any railroad, street railway or
traction co. engaged in carrying merchandise, to construct,
maintain and operate, upon reasonable terms, a switch
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connection with any private sidetrack which may be constructed
by any shipper to connect with the railroad, street railway or
traction company line where, in the judgment of the commission,
such connection is reasonable and practicable, and can be put in
with safety, and will furnish sufficient business to justify the
construction and maintenance of the same.
(j) To authorize, in its discretion, any railroad, street
railway of traction company to lay its tracks across tracks of any
other railroad, street railway or traction company, or across any
public highway.
(k) To direct any railroad or street railway co. to install such
safety devices or to adopt such other reasonable measures as may in
the judgment of the commission be necessary for the protection of
the public at passing grade crossings 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 and adequate rates of depn.
of the property of any public service which will be observed in
proper and adequate depn. account to be carried for the protection
of stockholders, or bondholders or creditors, in accordance with
such rules, regulations, and forms of account as the commission may
prescribe. Said rates shall be sufficient to provide the amounts
required over and above the expenses of maintenance to keep such
property in a state of efficiency corresponding to the progress of
the industry. Each public service shall conform its depreciation
accounts to the rates so determined and fixed, and shall set aside
the money so provided for out of its earnings and carry the same in
a depreciation fund. The income from such investments of money in
such fund shall likewise be carried in such fund. This fund shall
not be expended otherwise than for depreciation, improvements,
extensions, new constructions or additions to the property of such
public service.
(m) To amend, modify or revoke at any time any certificate under
the provisions of this act, whenever the facts and circumstances on
the strength of which said certificate was issued have been
misrepresented or materially changed.
(n) To suspend or revoke any certificate issued under the
provisions of this act whenever the holder thereof has violated or
willfully and consumatedly refused to comply with any order, rule
or regulation of the commission or any provisions of this act:
Provided, that the commission for good cause, may prior to the
hearing suspend for a period not exceeding 30 days any certificate
or the exercise of any right or authority issued or granted under
this act by order of the commission, whenever such step shall in
the judgment of the commission be necessary to avoid serious and
irreparable damage or inconvenience to the public or to private
interests.
(o) To fix, determine, and regulate, as the convenience of the
state may require, a special type for auto buses, trucks and motor
trucks, to be hereafter constructed, purchased, and operated by
operators after the approval of this act; to fix and determine a
special registration fee for auto-buses, trucks and motor trucks so
constructed, purchased, and operated:
Provided, that said fees shall be smaller than those charged for
auto- buses, trucks, and motor trucks of types not made regulation
under this subsection.
Section 17. Proceedings of commission without previous
hearing:
(a) To investigate, upon its own initiative, or upon complaint
in writing, any matter concerning any public service as regards
matters under its jurisdiction; to require any public service to
furnish safe, adequate and proper service as the public interest
may require and warrant; to enforce compliance with any standard
xxx and to prohibit or prevent any public service from operating
without first securing a certificate of public convenience or
public necessity and convenience xxx and require existing public
services to pay the fees provided for in this act for the issuance
of the proper certificate xxx under the penalty, in the discretion
of the commission, of the revocation and cancellation of any
acquired right.
(b) To require payment of actual expenses incurred in any
investigation if a violation shall be found; to assess costs not to
exceed 25% with reference to such investigation
(c) To appraise and value the property of any public service; in
relation thereto, to have access to and use any books, documents or
records in the possession of any govt. dept., bureau, office, or
political subdivision
(d) To provide, on motion by or at the request of any consumer,
for the examination and test of any appliance used for the
measuring of any product or service of a public service, to enter
any premises where said appliances may be, and other premises of
the public service, for the purpose of setting up and using on said
premises any apparatus necessary therefor, and to fix fees to be
paid by the consumer who may apply for such examination, and in
case of defect, to refund the fees paid
(e) To permit any street railway or traction company to change
its existing gauge to standard steam railroad gauge
(f) To grant any public service special permits to make extra or
special trips within the territory covered by its certificate and
to make special excursions outside if the public interest or
special circumstances so require; Provided where the public service
cannot render such extra service on its own line or in its own
territory, a special permit for such extra service may be granted
to any other public service
(g) To require any public service to keep its books, records,
and accounts; to adopt a uniform system of accounting as approved
by the auditor general
(h) To require any public service to furnish annual reports of
finances and operations, covering the 12 month period ending
December 31
(i) To require every public service to file with the commission
a written, verified statement made by the owner, president or
secretary setting forth the officers, authority, power and duties
of every officer, as to disclose the source and origin of each
administrative act or rule
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(j) To require any public service to comply with the laws of the
Philippines and with any local resolution or ordinance or its
charter
(k) To investigate accidents directly or indirectly arising from
or connected with the maintenance or operation of the public
service
(l) To require every public service to file a complete schedule
of every classification, individual or joint rate, toll, fare or
charge, and in case of public carriers, a complete statement of
itineraries or routes
o Section 18 - It shall be unlawful for any individual, co-
partnership, association, corporation or joint-stock company, their
lessees, trustees or receivers xxx to engage in any public service
business without having first secured from the commission a
certificate, except grantees of legislative franchises expressly
exempting such grantee from the reqts of securing a certificate
from the commission, as well as those expressly exempted from the
jurisdiction of the commission
Section 19. Unlawful acts - It shall be unlawful for any public
service :
(a) To provide or maintain any service that is unsafe, improper
or inadequate ,or withhold or refuse any service which can
reasonably be demanded and furnished, as found and determined by
the commission in a final order which shall be conclusive and shall
take effect in accordance with this act, upon appeal or
otherwise.
(b) To make or give, directly or indirectly, by itself or
through its agents, attorneys or brokers, or any of them, discounts
or rebates on authorized rates, or grant credit for the payment of
freight charges, or any undue or unreasonable preference or
advantage to any person or corporation or to any locality or to any
particular person or corporation or locality or any particular
description of traffic or service, or subject any particular person
or corporation or locality or any particular description of traffic
to any prejudice or disadvantage in any respect whatsoever; to
adopt, maintain, or enforce any regulation, practice or measurement
which shall be found or determined by the commission to be unjust,
unreasonable, unduly preferential, or unjustly discriminatory, in a
final order which shall be conclusive and shall take effect in
accordance with the provisions of this act, upon appeal or
otherwise.
(c) To refuse or neglect, when requested by the director of
posts or his authorized representative to carry public mail on the
regular trips of any public land transportation service maintained
or operated by any such public service, upon such terms and
conditions and for a consideration in such amount as may be agreed
upon between the Director of Posts and the public service carrier
or fixed by the commission in the absence of an agreement between
the Director of Posts and the carrier. In case the Director of
Posts and the public service carrier are unable to agree on the
amount of the compensation to be paid for the carriage of the mail,
the Director of Posts shall forthwith request the commission to fix
a just and reasonable compensation for such carriage and the same
shall be promptly fixed by the
commission in accordance with section 16 of this act.
Section 20. Acts requiring the approval of the Commission -
Subject to established limitations and exceptions and saving
provisions to the contrary, it shall be unlawful for any public
service or for the owner, lessee or operator thereof, without the
approval and authorization of the Commission previously had -
(a) To adopt, establish, fix, impose, maintain, collect or carry
into effect any individual or joint rates, commutation, mileage or
other special rate, toll, fare, charge, classification or
itinerary. The Commission shall approve only those that are just
and reasonable and not nay that are unjustly discriminatory or
unduly preferential, only upon reasonable notice to the public
services and other parties concerned, giving them a reasonable
opportunity to be heard and the burden of the proof to show that
the proposed rates or regulations are just an reasonable shall be
upon the public service proposing the same.
(b) To establish, construct, maintain or operate new units or
extend existing facilities or make any other addition to or general
extension of the service.
(e) Hereafter to issue any stock or stock certificates
representing an increase of capital; or issue any share of stock
without par value; or issue any bonds or other evidence of
indebtedness payable in more than one year from the issuance
thereof, provided that it shall be the duty of the Commission,
after hearing, to approve any such issue maturing in more than one
year from the date thereof, when satisfied that the same is to be
made in accordance with law, and the purpose of such issue be
approved by the Commission.
(g) To sell, alienate, mortgage, encumber or lease its property,
franchises, certificates, privileges or rights or any part thereof;
or merge or consolidate its property, franchises, privileges or
rights, or any part thereof, with those of any public service. The
approval herein required shall be given, after notice to the public
and after hearing, if it be shown that there are just and
reasonable grounds for making the mortgage or encumbrance, for
liabilities of more than one year maturity, or the sale,
alienation, lease , merger or consolidation to be approved, and
that the same are not detrimental to the public interest, and in
case of a sale, the date on which the same is to be consummated
shall be fixed in the order of approval: Provided, however, that
nothing herein contained shall be construed to prevent the
transaction from being negotiated or completed before its approval
or to prevent the sale, alienation, or lease by any public service
of any of its property in the ordinary course of its business.
(h) To sell or register in its books the transfer or sale of
shares of its capital stock, if the result of that sale in itself
or in connection with another previous sale, shall be to vest in
the transferee more than 40% of the subscribed capital of said
public service. Any transfer made in violation of this provision
shall be void and of no effect and shall not be registered in the
books of the public service corporation.
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Nothing herein contained shall be construed to prevent the
holding of shares lawfully acquired.
(i) To sell, alienate or in any manner transfer shares of its
capital stock to any alien if the result of that sale, alienation,
or transfer in itself or in connection with another previous sale
shall be the reduction to less than 60% of the capital stock
belonging to Philippine citizens. Such sale, alienation or transfer
shall be void and of no effect and shall be sufficient cause for
ordering the cancellation of the certificate.
(b) The Certificate of Public Convenience (CPC), the Certificate
of Public Convenience and Necessity (CPCN), and the Prior Operator
Rule
Difference between CPC and CPCN : A CPCN is issued by the PSC to
a public service to which any political subdivision has granted a
franchise under Act 667 after the PSC has approved the same under
Section 16(b). A CPC is any authorization to operate a public
service issued by the PSC. A CPC is an authorization issued by the
Commission for the operation of public services for which no
franchise, either municipal or legislative, is required by law
(e.g. auto-trucks and motor vehicles). A CPCN is an authorization
issued by the PSC for the operation of public services for which a
franchise is required by law (e.g. electric, telephone
services).
Nature of certificate : It constitutes neither a franchise nor a
contract, confers no property rights and is a mere license or
privilege, and such privilege is forfeited when the grantee fails
to comply with his commitments behind which lies the paramount
interest of the public, for public necessity cannot be made to
wait, nor sacrificed for private convenience.
However, certificates represent property rights to the extent
that if the rights which any public utility is exercising pursuant
to lawful orders of the PSC has been invaded by another public
utility, in appropriate cases actions may be maintained by the
complainant public utility. Owners of public utilities have the
right to maintain appropriate actions against other public
utilities not authorized to operate in competition with the
complainant.
Certificates are considered as property as used in Civil
Procedure as they have material value and are material assets. They
are subject to attachment and seizure by legal process, and may be
acquired by purchase.
Determination of WON an issuance of a certificate is for public
convenience - (1) financial responsibility of the 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 and intent for
which the PSC was created the law contemplates that the first
licensee will be protected in his investment and will not be
subjected to a ruinous competition. It is not therefore the policy
of the law for the PSC to issue a CPC to a second operator to cover
the same field and in competition with a first operator who is
rendering sufficient, adequate and satisfactory service, and who in
all things and respects is complying with the rules and regulations
of the PSC. Accordingly, a CPC or CPCN ought not to be granted
where there is no complaint as to existing rates and the co. in the
field is rendering adequate 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 wasteful competition in order that the
interests of the public would be conserved and preserved; so long
as the operator complied with the terms and conditions of the
license and the reasonable demands of the public, it is the duty of
the PSC to protect rather than to destroy its investment
Raymundo vs Luneta Motor 58 Phil 889
F: Nicanor de Guzman signing as Guzco Transit purchased 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. A writ of attachment was issued and garnishment was
served on the PSC attaching the right, title, and participation of
Guzco Transit in the CPC covering the bus transportation lines
between Manila and Rizal. The CFI ordered the selling of these
certificates in a public bidding 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 Luneta Motor Co.). The approval of the sale was
sought from the PSC. The PSC approved the sale in the public
bidding and disapproved the sale to Raymundo except with respect to
Certificate No. 25951 which Raymundo could apply for its
approval.
Issue : Which of the two sales should prevail? public auction by
virtue of an attachment vs voluntary saleHeld : Sale to Luneta
Motor Co. in a public auction
The Public Service Law authorizes certificates of public
convenience to be secured by public service operators from the PSC.
A CPC grants a right in the nature of a limited franchise. The Code
of Civil Procedure does not exclude franchises or certificates from
the word "property." The test by which to determine WON a property
can be attached and sold upon execution is whether the judgment
debtor has such a beneficial interest therein that he can sell or
otherwise dispose of it for value. The Public Service Law permits
the PSC to approve the sale, alienation, mortgaging, encumbering or
leasing of property, franchises, privileges, or rights or any part
thereof. If the holder of a certificate can voluntary sell it,
there is no reason why the same cannot be sold involuntarily
pursuant to court process.
CPCs have considerable material value. They are valuable assets.
They are subject to being sold for consideration as much as any
other property. They are even more valuable than ordinary
properties, taking into consideration that they are not granted to
every one who applies for them but only to those who undertake to
furnish satisfactory and convenient service to the public. Though
intangible, they are of value and are considered properties which
can be seized through legal process.
Batangas Transportation Co. vs Orlanes 52 Phil 455
F: Orlanes sought to have a CPC to operate a line of auto trucks
with fixed times of departure between Taal and Bantilan, with the
right to receive passengers and freight from intermediate points.
The evidence is conclusive that at the time of his application,
Orlanes was an irregular operator between Bantilan and Taal, and
that BTC was a regular operator between Batangas and Rosario.
Orlanes sought to have his irregular operation changed into a
regular operation, and to set aside and nullify the prohibition
against him in his CPC that he shall not have or receive any
passengers or freight at any of the points served by the BTC which
holds a prior license from the PSC. His petition is based on the
fact that to comply with the
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growing demands of the public, the BTC applied for a permit to
increase the no. of trip hours at and between the same places and
for an order that all irregular operators be prohibited from
operating unless they should observe an interval of 2 hours before
or one hour after the regular hours of the BTC. The PSC granted the
petition of Orlanes.
Issue : WON a CPC should be issued to a second operator in a
field where, and in competition with, a first 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 the business affairs
of the community.
The PSC has the power to specify and define the terms and
conditions upon which any public utility shall operate and to make
reasonable rules and regulations for its operation, and to fix the
compensation that it shall receive for its service to the public,
and for good cause may suspend or even revoke a license
granted.
It is not the policy of the law for the PSC to issue a CPC to a
second operator to cover the same field and in competition with a
first operator who is rendering sufficient, adequate and
satisfactory service, and who in all things and respects is
complying 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 full hearing and investigation, it shall
find as a fact that the proposed operation is for the convenience
of the public.
So long as the first operator keeps and performs his terms and
conditions of its license and complies with the reasonable demands
of the public, it has more or less of a vested and preferential
right over another who seeks to acquire a later license to operate
over the same route.
To carry out the purpose and intent for which the PSC was
created, the law contemplates that the first license will be
protected in his investment and will not be subjected to ruinous
competition.
The primary purpose of the PSC is to secure adequate, sustained
service for the public at the least possible cost and to protect
and conserve investments which have already been made for that
purpose. A CPCN for the operation of an auto truck line in occupied
territory should not be granted where there is no complaint as to
existing rates and the co. in the field is rendering adequate
service. It is the duty of the PSC to protect rather than to
destroy the investment of a public utility.
The policy of regulation upon which the present public utility
commission plan is based and which tends to do away with
competition among public utilities as they are natural monopolies,
is at once the reason that the regulation of an existing system of
transportation, which is properly serving a given field, or may be
required to do so, is to be preferred to competition among several
independent systems. While requiring a proper service from a single
system for a territory in consideration for protecting it as a
monopoly for all the service required and in conserving its
resources, no economic waste results and service may be furnished
at a minimum cost.
Carmelo vs Monserrat 55 Phil 644
F: Monserrat twice applied to Congress for an exclusive
franchise to operate a taxicab service in Manila. 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 for a CPC to operate a
taxicab service within Manila. Monserrat opposed. The PSC denied
the application.
Held : There is no valid, legal reason why Monserrat should have
the exclusive right of operating a taxicab service. In the granting
and refusal of a CPC, the question is what is for the best interest
of the public. Tested by that rule, it is hard to conceive how it
would be for the best interests of the public to have one taxicab
service only, and how the public would be injured by the granting
of the certificate in question, for it must be conceded that two
companies in the field would stimulate the business, and the public
would much sooner and much easier become educated in the use of
taxi.
Monserrat does not have a vested right in the business of any
person that might want the use of a taxi, for the simple reason
that the use of any taxi is the sole discretion of the customer.
This is unlike the BTC case which dealt with an autobus service
with fixed schedules and routes.
San Pablo vs Pantranco South Express, Inc. 153 SCRA 199
F: Pantranco operates passenger buses from Metro Manila to Bicol
and Eastern Samar. It wrote to the Maritime Industry Authority
(MARINA) requesting authority to lease/purchase MV Black Double to
be used in operating a ferryboat service from Matnog, Sorsogon and
Allen, Samar that will provide service to co. buses and freight
trucks that have to cross the Bernardo Strait. MARINA denied the
petition on the ground that the Matnog- Allen run is adequately
serviced by the Cardinal Shipping Corp. and Epitacio San Pablo and
that market conditions cannot support the entry of additional
tonnage.
Pantranco acquired the vessel. It then applied to BOT claiming
that it can operate a ferry service in connection with its
franchise for bus operation in the highway from Pasay City to
Tacloban City for the purpose of continuing the highway, which is
interrupted by a small body of water, and that the proposed ferry
operation is merely a necessary and incidental service to its main
service and obligation of transferring passengers from Pasay City
to Tacloban City. Accdg. to it, there is no need to obtain a
separate CPC to operate a ferry service to cater exclusively to its
passenger buses and ferry trucks. Pantranco began operating its
ferry service. The BOT held that the ferryboat service is part of
Pantranco's CPC and amended Pantranco's CPC to provide so. The two
other ferry boat services filed motions for reconsideration.
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 or coastwise or interisland shipping service along
its authorized route as an incident to its franchise without the
need of filing a separate application for the same.Held : The water
transport service between Matnog and Allen is not a ferryboat
service but a coastwise or interisland shipping service. Before
private respondent may be issued a franchise or CPC for the
operation of the said service as a common carrier, it must comply
with the usual reqts. of filing an application, payment of the
fees, publication, adducing evidence at a hearing and affording the
oppositors the opportunity to be heard.
Considering the environmental circumstances of the case, the
conveyance of passengers from Matnog to Allen is not a ferryboat
service but a coastwise or interisland shipping service. Under no
circumstances can the sea between Matnog and Allen be considered a
continuation of the highway. While a ferryboat service has been
considered as a
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continuation of the highway when crossing rivers or even lakes,
which are small body of waters separating the land, however, when
as in this case the two terminals are separated by an open sea, it
cannot be considered a continuation of the highway. Pantranco must
secure a separate CPC for the operation of an interisland or
coastwise shipping service. Its CPC cannot be merely amended to
include this water service under the guise that it is a mere
private ferry service.
Pantranco does not deny that it charges its passengers
separately from the charges for the bus trips and issues separate
tickets whenever they board the MV Black Double. It cannot pretend
that it issued tickets as a private carrier and not as a common
carrier. It in fact accepts walk in passengers during the trips. It
cannot claim that it is both a private carrier and a common carrier
at the same time.
In the case of Javellana vs PSC, the Court differentiated
between ferry service and interisland or coastwide service. Ferry
means service either by barges or rafts, even by motor or steam
vessels, between the banks of a river or stream to continue the
highway which is interrupted by a body of water, or in some cases,
to connect two points on opposite shores of an arm of the sea such
as a bay or lake which does not involve too great a distance or too
long a time to navigate. But where the line or service involves
crossing a body of water which is wide and dangerous with big
waves, then such line or service belongs properly to interisland or
coastwide trade.
3. Private nature: rights and obligations of parties inter se
arising from transactions relating to transportation
(a) absent a transportation contract
(b) arising from a transportation contract
(i) contract of transportation, defined - one whereby a certain
person or association of persons obligate themselves to transport
persons, things or news from one place to another for a fixed
price
(ii) contract of transportation, elements
Parties to the contract :
1. shipper - one who gives rise to the contract of
transportation by agreeing to deliver the things or news to be
transported, or to present his own person or those of other or
others in the case of transportation of passengers
2. carrier or conductor - one who binds himself to transport
persons, things, or news as the case may be or one employed in or
engaged in the business of carrying goods for others for hire
Persons or corporations who undertake to transport or convey
goods, property, or persons from one place to another, gratuitously
or for hire, and are classified as private or special carriers and
common or public carriers
C. Regulation of the Transportation Industry
* The Department of Transportation and Communications
EO 125, Sec. 4. Mandate. The DOTC shall be the primary policy,
planning, programming, coordinating, implementing, regulating, and
administrative entity of the Executive Branch of the govt. in the
promotion, devt. and regulation of dependable and coordinated
networks of transportation and communication systems, as well as in
the fast, safe, efficient, and reliable postal, transportation and
communication services.
To accomplish such mandate, the Dept. shall have the ff.
objectives:
(a) promote the devt. of dependable and coordinated networks of
transportation and communication systems;
(b) guide govt. and private investments in the devt. of the
country's inter-modal transportation and communication system in a
most practical, expeditious, and orderly fashion for maximum
safety, service and cost effectiveness;
(c) impose appropriate measures so that technical, economic and
other conditions for the continuing economic viability of the
transportation and communication entities are not jeopardized and
do not encourage inefficiency and distortion of traffic
patronage;
(d) develop an integrated plan for a nationwide transmission
system in accordance with national and intl. telecommunications
service reqts. including, among others, radio and television
broadcast relaying leased channel services and data
transmission;
(e) guide govt. and private investments in the establishment,
operation and maintenance of an intl. switching system for incoming
and outgoing telecommunication services;
(f) encourage the devt. of a domestic telecommunications
industry in coordination with the concerned entities particularly,
the manufacture of communications/electronics equipment and
components to complement and support, as much as possible, the
expansion, development, operation and maintenance of the nationwide
telecommunication network;
(g) Provide for a safe, reliable and efficient postal system for
the country.
EO 125-A, Sec. 5. To accomplish its mandate, the Dept. shall
have the ff. powers and functions:
(a) formulate and recommend national policies and guidelines for
the preparation and implementation of integrated and comprehensive
transportation and communications systems at the national, regional
and local levels; (b) establish and administer comprehensive and
integrated programs for transportation and communications, xxx call
on any agency, corp., or organization xxx to participate and assist
in the preparation and implementation of such program;
(c) assess, review and provide direction to xxx research and
devt. programs of the govt xxx;
(d) administer and enforce all laws xxx in the field of
transportation and communication;
(e) coordinate with the DPWH in the design, location, devt,
rehabilitation, improvement, etc. of all infrastructure projects
and facilities of the Dept. xxx
(f) establish, operate and maintain a nationwide postal system
xxx;
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TRANSPORTATION AND MARITIME LAW
(g) issue certificates of public convenience for the operation
of public land and rail transportation utilities and services;
(h) accredit foreign aircraft and manufactures xxx;
(i) establish and prescribe rules and regulations for
identification of routes, zones and/or areas of operation of
particular operator of public land services;
(j) establish and prescribe rules xxx for the establishment,
operation and maintenance of such telecommunication facilities in
areas not adequately served by the private sector xxx;
(k) establish and prescribe rules xxx operation and maintenance
of a nationwide postal system xxx;
(l) establish and prescribe rules xxx issuance of CPCs for
public land transportation utilities, such as motor vehicles,
trimobiles, and railways;
(m) establish and prescribe rules xxx inspection and
registration of air and land transportation facilities, such as
motor vehicles, trimobiles, and aircrafts;
(n) establish and prescribe rules xxx issuance of licenses
xxx;
(o) establish and prescribe rules xxx enforcement of laws
governing transportation xxx;
(p) determine, fix and/or prescribe charges and/or rates
pertinent to the operation of public air and land transportation
utility facilities and services xxx;
(q) establish and prescribe rules xxx accreditation of driving
schools;
(r) administer and operate the Civil Aviation Training Center
xxx;
(s) perform such other powers and functions as it may be
prescribed by law, or as may be necessary, incidental, or proper to
its mandate, or as may be assigned from time to time by the
President.
(a) Air
(i) Air Transportation Office
EO 125, as amended by EO 125-ASec. 10. Assistant Secretaries
and
Service Chiefs.xxx
h) Office of the Assistant Secretary for Air Transportation
Sec. 11. xxx The present Airport Offices of the Bureau of Air
Transportation are hereby abolished and their functions are
transferred to the Dept. Airport Offices. xxx
Sec. 13. xxxd) The Civil Aeronautics Board is hereby
transferred from the Dept. of Tourism to the Dept. as an
attached agency xxx. The Secretary of Transportation and
Communications or his designated representative shall be the
Chairman of the Board xxx
Sec. 25, RA 776. The Civil Aeronautics Administration shall be
under the administrative supervision and control of the Dept. of
Commerce and Industry (now the DOTC) xxx
(ii) Civil Aeronautics Board
RA 776, as amended
Section 5. The Civil Aeronautics Board shall be composed of the
Secretary of Commerce and Industry (now DOTC) as Chairman, the CAB
Administrator, the Commanding Officer of the Phil. Air Force, and 2
others to be appointed by the President xxx
Section 10 (A) Except as otherwise provided herein, the Board
shall have the power to regulate the economic aspect of air
transportation, and shall have the general supervision and
regulation of, and jurisdiction and control over, air carriers, as
well as their property, property rights, equipment, facilities, and
franchise, in so far as may be necessary for the purpose of
carrying out the provisions of this Act.
Section 10 (C) Powers and Duties of the CAB
1. issue, deny, amend, revise, alter, modify, cancel, suspend,
or revoke xxx any temporary operating permit or CPCN xxx
2. fix and determine reasonable individual, joint or special
rates, charges, or fares which an air carrier may demand, collect
or receive for any service in connection with air commerce xxx
3. authorize charters whether domestic or intl. and special air
services or flights xxx;
4. approve or disapprove increase of capital, sale of equipment
of an air carrier engaged in air commerce, consolidation, merger,
purchase, lease, operating contract, or acquisition and control
between domestic air carriers xxx
5. inquire into the mgmt. of the business of any air carrier
xxx;
6. require annual, monthly, periodical and special reports from
any carrier xxx;
7. prescribe the forms of any and all accounts, records, and
memoranda of the movement of traffic, as well as of the receipt and
expenditures of money and the length of time such accounts,
records, and memoranda shall be preserved xxx;
8. require each officer and director of any air carrier to
transmit a report describing the shares of stock or other interest
held by such air carrier with any person engaged in any phase of
aeronautics, and the holding of the stock in, and control of, other
persons engaged in any phase of aeronautics.
Section 11. A CPCN is a permit issued by the Board authorizing a
person to engage in air commerce and/or air transportation, foreign
and/or domestic.
Any permit may be altered, amended, modified, suspended,
canceled and revoked by the Board xxx whenever the Board finds such
action to be in the public interest.
There shall be attached to the exercise of the privileges xxx
such reasonable terms, conditions, or limitations as, in the
judgment of the Board, the public interest may require.
xxx
Section 12. Except as otherwise provided in the Constitution and
existing treaty or treaties, a permit authorizing a person to
engage in domestic air commerce and/or air transportation shall be
issued only to citizens of the Philippines.
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TRANSPORTATION AND MARITIME LAW
(b) Land
(i) Land Transportation OfficeEO 125-A
Section 9. Assistant Secretaries and Service Chiefs
xxxe) Office of the Assistant Secretary for
Land Transportation
Section 11. xxx The present Regional Offices of the Land
Transportation Commission are hereby abolished and their functions
are transferred to the respective Department Regional offices for
Land Transportation. xxx
Section 13 (a) The Land Transportation Commission is hereby
abolished and its staff functions are transferred to the service
offices of the Dept. Proper and line functions are transferred to
the Dept. Regional Offices for Land Transportation as provided in
Section 11 herein. xxx The quasi-judicial powers and functions of
the Commission are transferred to the Dept. The corresponding
position structure and staffing pattern shall be approved and
prescribed by the Secretary xxx.
Administrative Code of 1987, Title XV
Sec. 9. The Department shall have the following line offices
:
(1) The Office of the Assistant Secretary for Land
Transportation.
xxx
(ii) Land Transportation Franchising and Regulatory Board
EO 202
Sec.1. There is hereby created in the DOTC, the Land
Transportation Franchising and Regulatory Board.
Sec.2. The Board shall be composed of a Chairman and 2 members
with the same rank, salary and privileges of an Assistant
Secretary, xxx
Sec.4. The Secretary of Transportation and Communications,
through his duly designated Undersecretary, shall exercise
administrative supervision and control over the LTFRB.
Sec.5. Powers and functions:a. prescribe and regulate routes
of
service, xxx zones or areas of operation of public land
transportation services provided by motorized vehicles xxx;
b. issue, amend, revise, suspend or cancel CPCs or permits
authorizing the operation of public land transportation services
provided by motorized vehicles xxx;
c. determine, prescribe, approve and periodically review and
adjust reasonable fares, rates and other related charges, relative
to the operation of public land transportation services provided by
motorized vehicles;
d. issue preliminary or permanent injunction xxx;
e. punish for contempt of the Board, both direct and indirect
xxx;
f. issue subpoena and subpoena duces tecum and to summon
witnesses to appear in any proceedings of the Board, to administer
oaths and affirmations;
g. conduct investigations and hearings of complaints for
violation of the public service laws on land transportation and of
the Board's rules and regulations xxx;
h. to review motu proprio the decisions, actions of the Regional
Franchising and Regulatory Office herein created;
i. promulgate rules and regulations governing proceedings before
the Board and the Regional Franchising and Regulatory Office
xxx;
j. fix, impose, and collect, and periodically review and adjust
reasonable fees and other related charges for services
rendered;
k. formulate, promulgate, administer, implement and enforce
rules and regulations on land transportation public utilities,
standards of measurements and/or design, and rules and regulations
requiring operators of any public land transportation service to
equip, install and provide in their utilities and in their stations
such devices, eqpt. facilities and operating procedures and
techniques as may promote safety, protection, comfort and
convenience to persons and property in their charges as well as the
safety of persons and property within their areas of
operations;
l. coordinate and cooperate with other govt. agencies and
entities xxx;
m. perform such other functions and duties as may be provided by
law, or as may be necessary, or proper or incidental to the
purposes and objectives of this Executive Order.
Sec.6. The Board xxx shall sit and render its decision en banc;
xxx concurrence and signature of at least 2 members xxx
The decision shall be appealable to the Secretary within 30 days
from receipt of the decision; Provided, that the Secretary may motu
proprio review any decision or action of the Board before the same
becomes final.
Sec.7. There shall be a Regional Franchising and Regulatory
Office in each of the administrative regions of the country which
shall be headed by a Board Regional Manager having the rank, salary
and privileges of a Dept. Assistant Regional Director. The Regional
Franchising and Regulatory Offices shall hear and decide
uncontested applications/petitions for routes, within their
respective administrative regions: Provided, that
applications/petitions for routes extending their respective
territorial jurisdictions shall be heard and decided by the
Board.
Administrative Code, Title XV
Sec. 15. The quasi-judicial powers and functions with respect to
land transportation shall be exercised through the Land
Transportation and Regulatory Board.
Sec. 16. The Board shall be composed of a Chairman and 2 members
with the rank, salary and privileges of an Assistant Secretary, all
of whom shall be appointed by the President upon the recommendation
of the Secretary of Transportation and Communications xxx
Sec. 17. The Board shall have an Executive Director who shall
also be appointed
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TRANSPORTATION AND MARITIME LAW
by the President xxx. He shall have the rank, salary and
privileges of a Dept. Service Chief. He shall assist the Board in
the performance of its powers and functions.
The Board shall be supported by the Technical Evaluation
Division, Legal Division, Management Information Division,
Administrative Division and Finance Division.
Sec. 18. The Secretary of Transportation and Communications
shall exercise administrative supervision and control over the
Board.
Sec. 19. Powers and functions of the Board:
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 fares xxx;
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 service laws on land
transportation xxx;
8. review motu proprio the decisions, actions of the Regional
Franchising and Regulatory Offices xxx;
9. promulgate rules and regulations governing proceedings before
the Board and the Regional Franchising and Regulatory Office
xxx;
10. fix, impose and collect, and periodically review and adjust
reasonable fees, and other related charges for services
rendered;
11. formulate, promulgate, administer, implement and enforce
rules and regulations on land transportation xxx;
12. coordinate and cooperate with other govt. agencies and
entities concerned with any aspect involving public land
transportation services xxx;
13. perform such other functions and duties as may be provided
by law, or as may be necessary, or proper or incidental to the
purposes and objectives of the Dept.
Sec. 20. The Board shall xxx sit and decide en banc; concurrence
and signature of at least 2 members; decision shall be appealable
to the Secretary within 30 days from receipt of the decision; the
Secretary may motu proprio review any decision or action of the
Board before it becomes final.
Sec. 21. Regional Franchising and Regulatory Offices - hear and
decide uncontested applications/ petitions for routes xxx;
Sec. 22. decisions of the Regional Franchising and Regulatory
Offices shall be appealable to the Board within 30 days from
receipt of the decision.
(c) Water
(i) Maritime Industry Authority
EO 125, Sec. 14 as amended by EO 125-A, Sec. 3
The Maritime Industry Authority is hereby retained and shall
have the ff. functions:
a. develop and formulate plans, policies, projects xxx geared
toward the promotion and devt. of the maritime industry, the growth
and effective regulation of shipping enterprises, and for the
national security objectives of the country;
b. establish, prescribe and regulate routes, zones and/or areas
of operation of particular operators of public water services;
c. issue CPCs for the operation of domestic and overseas water
carriers;
d. register vessels as well as issue certificates, licenses or
document necessary or incident thereto;
e. undertake the safety regulatory functions pertaining to
vessel construction and operation including the determination or
manning levels and issuance of certificates of competency to
seamen;
f. enforce laws, prescribe and enforce rules and regulations,
including penalties for violations thereof, governing water
transportation and the Phil. merchant marine xxx;
g. undertake the issuance of licenses to qualified seamen and
harbor, bay and river pilots;
h. determine, fix, prescribe charges/rates pertinent to the
operation of public water transport utilities xxx;
i. accredit marine surveyors and maritime enterprises engaged in
shipbuilding, ship repair xxx;
j. issue and register the continuous discharge book of Filipino
seamen;
k. establish and prescribe rules and regulations, standards and
procedures for the efficient and effective discharge of the above
functions;
l. perform such other functions as may now 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 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.
Aguedo F. Agbayani, COMMERCIAL LAWS OF THE PHILIPPINES, vol. 4,
1989 ed. (hereinafter 4 Agbayani)
Transportation defined.-- a contract of transportation is one
whereby a certain person or association of persons obligate
themselves to transport persons, things, or news from one place to
another for a fixed price
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:
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(1) shipper or consignor.-- person to be transported; one who
gives rise to the contract of transportation by agreeing to deliver
the things or news to be transported, or to present his own person
or those of other or others in the case of transportation of
passengers
(2) carrier or conductor.-- one who binds himself to transport
persons, things, or news as the case may be; one employed in or
engaged in the business of carrying goods for other for hire
(3) consignee.-- the party to whom the carrier is to deliver the
things being transported; one to whom the carrier may lawfully make
delivery in accordance with its contract of carriage (but the
shipper and the consignee may be one person)
Freight defined.-- The terms has been defined as: (1) the price
or compensation paid for the transportation of goods by a carrier,
at sea, from port to port. But the term is also used to denote (2)
the hire paid for the carriage of goods on land from place to
place, or on inland streams or lakes. The name is also applied to
(3) the goods or merchandise transported at sea, on land, or inland
streams or lakes. Thus the term is used in 2 senses: to designate
the price for the carriage, also called freightage, or to designate
the goods carried.
Contracts through transportation agents.-- A contract of
transportation is not changed, altered or affected by the mere fact
that the obligor avails of other parties to effect the
transportation agreed upon, as in the case of transportation
agents.
Carriers defined.-- Persons or corporations who undertake to
transport or convey goods, property or persons, from one place to
another, gratuitously or for hire, and are classified as private or
special carriers, and common or public carriers
Private carriers defined.-- Those who transport or undertake to
transport in a particular instance for hire or 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 for for hire
hire; no one can be a common carrier unless he has held himself
out to the public as a carrier in such 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 as bound to carry for any
reason,
it is accustomed to carry and unless it enter into a special
tender reasonable compensation agreement 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 regulation hold 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 of carrying goods for
others as a public employment, and must hold himself out as ready
to engage in the transportation of goods for persons generally as a
business, and not a casual occupation.
(2) He must undertake to carry goods of the kind to which his
business is confined.
(3) He must undertake to carry by the methods by which his
business is conducted, and over his 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 carrier which he has
held out to the general public as his occupation rather than the
quantity or extent of the business actually transacted, or the no.
and character of the conveyances used in the employment (the test
is therefore the character of the business actually carried on by
the carrier.)
Case : an airplane owner is a common carrier where he undertakes
for hire to carry all persons who apply for passage
indiscriminately as long as there is room and no legal excuse for
refusing; airlines engaged in the passenger service on regular
schedules on definite routes, who solicit patronage of the
traveling public, advertise schedules for routes, times of leaving
and rates of fare, and make the usual stipulation as to baggage are
common carriers
Characteristics of common carriers:
(1) The common carrier undertakes to carry for all people
indifferently; he holds himself out as ready to engage in the
transportation of goods for hire as a public employment and not as
a casual occupation, and he undertakes to carry for all persons
indifferently, within the limits of his capacity and the sphere of
the business required of him, so that he is bound to serve all who
apply and is liable for refusal, without sufficient reason, to do
so
(2) The common carrier cannot lawfully decline to accept a
particular class of goods for carriage to the prejudice of the
traffic in those goods
Exception : for some sufficient reason, where the discrimination
in such goods is reasonable and necessary (substantial grounds)
(3) No monopoly is favored - the Commission has the power to say
what is a reasonable compensation to the utility and to make
reasonable rules and regulations for the convenience of the
traveling public and to enforce them
(4) Public convenience - for the best interests of the
public
Meaning of Public use.-- It is not confined to privileged
individuals, but is open to the indefinite public; there must be a
right which the law compels the owner to give to the general
public. Public use is not synonymous with public interest. The true
criterion is whether the public may enjoy it by right or only by
permission
The law prohibits unreasonable discrimination by common
carriers.-- The law requires common carriers to carry for all
persons, either passengers or property, for exactly the same charge
for a like or contemporaneous service in the transportation of like
kind of traffic under substantially similar
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TRANSPORTATION AND MARITIME LAW
circumstances or conditions. The law prohibits common carriers
(CC) from subjecting any person, etc. or locality, or any kind of
traffic, to any undue or unreasonable prejudice or discrimination
whatsoever.
Exception: When the actual cost of handling and transporting is
different, then different rates may be charged
Cases : (1) merchandise of like quantity may not be considered
alike - the quantity, kind and quality may be exactly the same, and
yet not be alike, so far as the cost of transportation is
concerned
(2) shipments may be alike although composed of different
classes of merchandise - difference in the charge for handling and
transporting may only be made when the difference is based upon
actual cost
Determination of justifiable refusal:
This involves a consideration of the following--
(1) suitability of the vessels of the company for the
transportation of such products;
(2) reasonable possibility of danger or disaster, resulting from
their transportation in the form and under the conditions in which
they are offered for carriage;
(3) the general nature of the business done by the carrier;
(4) all the attendant circumstances which might affect the
question of the reasonable necessity for the refusal by the carrier
to undertake the transportation of this class of merchandise
Case: The mere fact that the carriage of dynamites may lead to
destructive explosions is not sufficient to justify refusal if it
can be proven that in the condition in which it is offered for
carriage there is no real danger to the carrier nor reasonable
ground to fear that the vessel and those on board will be exposed
to unnecessary or unreasonable risks
US vs Tan Piaco, 40 Phil 853
F: Tan Piaco rented two automobile trucks and was using them
upon the highways of Leyte for the purpose of carrying some
passengers and freight. He carried passengers and freight under a
special contract in each case and had not held himself out to carry
all passengers and freight for all persons who might offer
passengers and freight. He was convicted for violation of the
Public Utility Law for operating a public utility without
permission from the Public Utility Commission.
Issue: WON defendant operated a public utility. NO.
Held: There is no public use. The trucks were used under special
agreements to carry particular persons and property.
Under the Public Service Law, two things are necessary : (1) the
individual, co-partnership, etc. must be a public utility; and (2)
the business in which such individual, co-partnership, etc. is
engaged must be 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, but is open to the
indefinite public. In determining whether a use is public, we must
look not only to the character of the business to be done, but also
to the proposed mode of doing it. If the use is merely optional
with the owners, or the public benefit is merely incidental, it is
not a public use, authorizing the exercise of the jurisdiction of
the public utility commission. There must be, in general, a right
which the law compels the
owner to give to the general public. It is not enough that the
general prosperity of the public is promoted. Public use is not
synonymous with public interest. The true criterion by which to
judge the character of the use is whether the public may 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 the SS Crowborough
consigned to the SMB and insured by the Home Insurance Co. The
cargo arrived with shortages. SMB demanded and Home Insurance Co.
paid P14,000 in settlement of SMB's claim. Home Insurance filed for
recovery from Luzon Stevedoring and American Steamship Agencies.
Luzon Stevedoring claimed that it merely delivered what it received
from the carrier in the same condition it received it. American
Steamship contended that it was not liable because of a stipulation
in the charter party that the charterer and not the shipowner was
to be liable for any loss or damage to the cargo. The CFI absolved
Luzon Stevedoring but ordered American Steamship to reimburse the
P14,000 to Home Insurance, declaring that Art. 587 of the Code of
Commerce makes the ship agent civilly liable for damages in favor
of third persons due to the conduct of carrier's captain and that
the stipulation in the charter party exempting owner from liability
is against public policy under Art. 1744 of NCC. Issue : Is the
stipulation valid? YES.
Held : The provisions of our Civil Code on common carriers were
taken from Anglo-American law. Under American jurisprudence, a
common carrier undertaking to carry a special cargo or chartered to
a special person only, becomes a private carrier. As a private
carrier, a stipulation exempting the owner from liability for the
negligence of its agents is not against public policy and is deemed
valid.
The Civil Code provisions on common carriers should not be
applied where the carrier is not acting as such but as a private
carrier. The stipulation in the charter party absolving the owner
from liability for loss due to the negligence of the agent would be
void only if the strict public policy governing CC is applied. Such
policy has no force where the public at large is not involved, as
in the case of a ship totally chartered (as in this case) for the
use of a single party. Based on the stipulation, recovery cannot be
had, for loss or damage to the cargo against shipowners, unless the
same is due to personal acts or negligence of said owner or its
managers, as distinguished from agents or 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, as shipper, is in fact and legal
contemplation merely a receipt and a document of title and not a
contract, for the contract is the charter party.
De Guzman vs CA, 168 SCRA 612
F: Cendana was a junk dealer and was engaged in buying used
bottles and scrap materials in Pangasinan and brought these to
Manila for resale. He used two 6-wheeler trucks. On the return trip
to Pangasinan, he would load his vehicles with cargo which various
merchants wanted delivered to Pangasinan. For that service, he
charged freight lower than regular rates. General Milk Co.
contracted with him for the hauling of 750 cartons of mild. On the
way to Pangasinan, one of the trucks was hijacked by armed men who
took with them the truck and its cargo and kidnapped the driver and
his helper. Only 150
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cartons of milk were delivered. The Milk Co. sued to claim the
value of the lost merchandise based on an alleged contract of
carriage. Cendana denied that he was a common carrier and contended
that he could not be liable for the loss since it was due to force
majeure. 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 common carrier
even though he merely backhauled goods for other merchants, and
even if it was done on a periodic basis 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 of persons or goods or both, and
one who does such carrying only as an ancillary activity. It also
avoids making a distinction between a person or enterprise offering
transportation services on a regular or scheduled basis and one
offering service on an occasional, episodic or unscheduled basis.
Neither does it make a distinction between a carrier offering its
services to the general public and one who offers services or
solicits business only from a narrow segment of the population.
The fact that Cendana does not hold a CPC is no excuse to exempt
him from incurring liabilities as a CC. Otherwise, it would be to
reward persons who fail to comply with applicable statutory reqts.
and would be offensive to public policy. The liability arises the
moment a person or firm acts as a common carrier, without regard to
whether or not such carrier has also complied with the requirements
of the applicable regulatory statute and implementing
regulations.
Issue : WON Cendana may be held liable for the loss of the milk.
NO.
Held: Common carriers by the very nature of their business and
for reasons of public policy are held to a very high degree of care
and diligence (extra-ordinary diligence) in the carriage of goods
as well as passengers. Article 1734 establishes the general rule
that CC are responsible for the loss, destruction, or deterioration
of the goods which they carry unless the same is due to the causes
enumerated therein. Such enumeration is a closed list. Causes
falling outside the list, even if they are force majeure, fall
within the scope of Art. 1735 which provides that CC are presumed
to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence required under
Art. 1733.
However, Art. 1745 provides that a CC cannot be allowed to
divest or diminish his responsibility even for acts of strangers
like thieves or robbers, except where such thieves or robbers acted
with grave or irresistible threat, violence or force. The limits of
extraordinary diligence are reached where there is grave or
irresistible threat, violence or force. In this case, the loss was
quite beyond the control of the CC. Even CC are not made absolute
insurers against all risks of travel and of transport of goods, and
are not liable for acts or events which cannot be foreseen or are
inevitable, provided that they shall have complied with the
rigorous standard of extraordinary diligence.
Planters Products vs CA, G.R. 101503 (Sept. 15, 1993)
F: Planters purchased urea fertilizer from Mitsubishi, New York.
The fertilizer was shipped on MV Sun Plum, which is owned by KKKK,
from Alaska to San Fernando, La Union. A time charter party was
entered into between Mitsubishi as shipper/charterer and KKKK as
shipowner. Upon arrival in the port, PPI unloaded the cargo. It
took PPI 11 days to unload the cargo. PPI
hired a marine and cargo surveyor to determine if there was any
shortage. A shortage and contamination of the fertilizer was
discovered. PPI sent a claim letter to SSA, the resident agent of
KKKK