Transportation laws

JURISDICTION

 At the option of the plaintiff, the action for damages may be filed in the:

1. 
   Court of domicile of the carrier;
   
2. 
   Court of its principal place of business;
   
3. 
   Court where it has a place of business through which the contract has been made; or
   
4. 
   Court of the place of destination. (Art. 28(1))
   

NOTE: It is the passenger’s “ultimate destination” not “an agreed stopping place” that determines the country where suit is to be filed.

 The forum of action provided in Art. 28(1) is a matter of jurisdiction rather than of venue. (Santos III vs. Northwest; 2A C.J.S.)

V. SALVAGE LAW (Act No. 2616)

Salvage

 Two concepts:

1. Services one person renders to the owner of a ship or goods, by his own labor, preserving the goods or the ship which the owner or those entrusted with the care of them have either abandoned in distress at sea, or are unable to protect or secure.

2. Compensation allowed to persons by whose voluntary assistance a ship at sea or her cargo or both have been saved in whole or in part from impending sea peril, or such property recovered from actual peril or loss, as in cases of shipwreck, derelict or recapture.

 Requisites:

1. 
   Valid object of salvage;
   
2. 
   Object must have been exposed to marine peril (not perils of the ship);
   
3. 
   Services rendered voluntarily (neither an existing duty nor out of a pre-existing contract);
   
4. 
   Services are successful, total or partial.
   

 Subjects of Salvage:

1. Ship itself;

2. Jetsam – goods which are cast into the sea, and there sink and remain under water;

3. Floatsam or Flotsam – goods which float upon the sea when cast overboard;

4. Ligan or Lagan – goods cast into the sea tied to a buoy, so that they may be found again by the owners (p.173, Judge Diaz).

 Persons who have no right to a reward for salvage:

1. Crew of the vessel saved;

2. Person who commenced Salvage in spite of opposition of the Captain or his representative;

3. In accordance with Sec. 3 of the Salvage Law, a person who fails to deliver a salvaged vessel or cargo to the Collector of Customs.
 Derelict – a ship or her cargo which is abandoned and deserted at sea by those who are in charge of it, without any hope of recovering it, or without any intention of returning to it.
 The intention of those in charge must be ascertained. If those in charge left with the intention of returning, or of procuring assistance, the property is not derelict, but if they quitted the property with the intention of finally leaving it, it is derelict and a change of their intention and an attempt to return will not change its nature (Erlanger & Galinger vs. Swedish East Asiatic Co. Ltd.).
 If it is clear that the intention to return is slight, the salvage which was done thereafter is considered valid. (Notes and Cases on the Law on Transportation and Public Utilities, Aquino, T. & Hernando, R.P. 2004 ed. p. 616)
Contract of Towage

 A contract whereby one vessel, usually motorized, pulls another, whether loaded or not with merchandise, from one place to another, for a compensation. It is a contract for services rather than a contract of carriage.

SALVAGE	TOWAGE
Governed by special law (Act No. 2616)	Governed by Civil Code on contract of lease
Requires success, otherwise no payment	Success is not required
Must be done with the consent of the captain/crewmen	Only the consent of the tugboat owner is needed
Vessel must be involved in an accident	Vessel need not be involved in an accident
Fees distributed among crewmen	Fees belong to the tugboat owner

RULES ON SALVAGE REWARD

1. 
   The reward is fixed by the RTC judge in the absence of agreement or where the latter is excessive. (Sec. 9)
   
2. 
   The reward should constitute a sufficient compensation for the outlay and effort of the salvors and should be liberal enough to offer an inducement to others to render services in similar emergencies in the future.
   
3. 
   If sold (no claim being made within 3 months from publication), the proceeds, after deducting expenses and the salvage claim, shall go to the owner; if the latter does not claim it within 3 years, 50% of the said proceeds shall go to the salvors, who shall divide it equitably, and the other half to the government. (Secs. 11-12)
   
4. 
   If a vessel is the salvor, the reward shall be distributed as follows:
   
   1. 
      50% to the shipowner;
      
   2. 
      25% to the captain; and
      

3. 
   25% to the officers and crew in proportion to their salaries. (Sec. 13)
   

 Taking passengers from a sinking ship, without rendering any service in rescuing the vessel, is not a salvage service, being a duty of humanity and not for reward.

VI. PUBLIC SERVICE ACT

(C.A. No. 146)
PURPOSES:

1. 
   To secure adequate, sustained service for the public at the least possible cost;
   
2. 
   To protect the public against unreasonable charges and poor, inefficient service;
   
3. 
   To protect and secure investments in public services;
   
4. 
   To prevent ruinous competition.
   

AUTHORITY TO OPERATE PUBLIC SERVICES

GENERAL RULE: No public service shall operate without having been issued a certificate of public convenience or a certificate of public convenience and necessity.

EXCEPTIONS:

1. 
   Warehouses;
   
2. 
   Animal drawn vehicles and bancas moved by oar or sail;
   
3. 
   Airships, except for the fixing of maximum rates for fare and freight;
   
4. 
   Radio companies, except for rates fixing;
   
5. 
   Public services owned or operated by the government, except as to rates fixing;
   
6. 
   Ice plants; and
   
7. 
   Public markets.
   

PUBLIC SERVICE

 A person who owns, operates, manages or controls 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 or public utility, ice plants, power and water supplies, communication and similar public services. (Sec. 13b, CA 146)

 A casual or incidental service devoid of public character and interest is not brought within the category. The question depends on such factors as the extent of services, whether such person or company has held himself or itself out as ready to serve the public or a portion of the public generally. (Luzon Stevedoring vs. PSC)

NOTE: The Public Service Commission created under the Public Service Law has already been abolished under P.D. No. 1 and other issuances. It has been replaced by the following government agencies: LTO; LTFRB; ATO; BOE; NTC; NEA; ERB; NWRC; CAB; and MIA.

CERTIFICATE OF PUBLIC CONVENIENCE (CPC)	CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY (CPCN)
An authorization issued by the appropriate government agency for the operation of public services for which no franchise, either municipal or legislative, is required by law, e.g., common carriers.	An authorization issued by the appropriate government agency for the operation of public service for which a prior franchise is required by law; e.g. telephone and other services.

 A CPC or a CPCN constitutes neither a franchise nor a contract, confers no property right, and is a mere license or a privilege. The holder of said certificate does not acquire a property right in the route covered thereby. Nor does it confer upon the holder any proprietary right or interest or franchise in the public highways. Revocation of this certificate deprives him of no vested right. New and additional burdens, alteration of the certificate, or even revocation or annulment thereof is reserved to the State. (Luque vs. Villegas, 30 SCRA 408)

 It is a “property” and has a considerable value and can be the subject of sale or attachment. (Cogeo-Cubao Operators and Drivers Assn. vs. CA, 207 SCRA 343, Raymundo vs. Luneta Motor Co.)
REQUREMENTS FOR GRANTING CPC OR CPCN

1. 
   Applicant must be a citizen of the Philippines or a corporation or entity 60% of the capital of which is owned by such citizens;
   
2. 
   Applicant must prove public necessity;
   
3. 
   Applicant must prove that the operation of the public service proposed and the authorization to do business will promote the public interest on a proper and suitable manner;
   
4. 
   Applicant must have sufficient financial capability to undertake the proposed services and meeting the responsibilities incident to its operation.
   

POWERS REQUIRING PRIOR NOTICE AND HEARING

POWERS EXERCISABLE WITHOUT PRIOR NOTICE AND HEARING

Issuance of CPC or CPCN; Fixing of rates, tolls, and charges; Setting up of standards and classifications; Establishment of rules to secure accuracy of all meters and all measuring appliances; Issuance of orders requiring establishment or maintenance of extension of facilities; Revocation, or modification of CPC or CPCN; 7. Suspension of CPC or CPCN, except when it is necessary to avoid serious and irreparable damage or inconvenience to the public or private interest, in which case, a suspension not more than 30 days may be ordered, prior to the hearing. (Soriano v. Medina, 164 SCRA 36)

Investigation any matter concerning public service; Requiring operators to furnish safe, adequate, and proper service; Requiring public services to pay expenses of investigation; Valuation of properties of public utilities; Examination and test of measuring appliances; Grant of special permits to make extra or special trips in territories specified in the certificate; Uniform accounting system and furnishing of annual reports; Compelling compliance with the laws and regulations.

UNLAWFUL ACTS OF PUBLIC UTILITY COMPANIES

1. 
   Engagement in public service business without first securing the proper certificate;
   
2. 
   Providing or maintaining unsafe, improper or inadequate service as determined by the proper authority;
   
3. 
   Committing any act of unreasonable and unjust preferential treatment to any particular person, corporation or entity as determined by the proper authority;
   
4. 
   Refusing or neglecting to carry public mail upon request. (Secs. 18 and 19)
   

ACTS REQUIRING PRIOR APPROVAL

1. 
   Establish and maintain individual or joint rates;
   
2. 
   Establish and operate new units;
   
3. 
   Issue free tickets;
   
4. 
   Issue any stock or stock certificates representing an increase of capital;
   
5. 
   Capitalize any franchise in excess of the amount actually paid to the Government;
   
6. 
   Sell, alienate, mortgage or lease property, certificates or franchise.
   

 Under Sec. 20(g) of C.A. No. 146, the sale, etc. may be negotiated and completed before the approval by the proper authority. Its approval is not a condition precedent to the validity of the contract. The approval is necessary only to protect public interest.

PRIOR OPERATOR/OLD OPERATOR RULE

 The rule allowing an existing franchised operator to invoke a preferential right within the authorized territory as long as he renders satisfactory and economical service.

 The policy is not to issue a certificate to a second operator to cover the same field and in competition with a first operator who is rendering sufficient, adequate and satisfactory service. The prior operator must first be given an opportunity to improve its service, if inadequate or deficient.

 Purpose: To prevent ruinous and wasteful competition in order that the interests of the public would be conserved and preserved.

 It subordinates the prior applicant rule which gives the first applicant priority only if things and circumstances are equal.
 Where the operator either fails or neglects to make the improvement or effect the increase in services, especially when given the opportunity, new operators should be given the chance to give the services needed by the public.

PRIOR APPLICANT RULE

 Presupposes a situation when two interested persons apply for a certificate to operate a public utility in the same community over which no person has as yet granted any certificate. If it turns out, after the hearing, that the circumstances between the two applicants are more or less equal, then the applicant who applied ahead of the other, will be granted the certificate.
RATE-FIXING POWER

 The rate to be fixed must be just, founded upon conditions which are fair and reasonable to both the owner and the public.

 A rate is just and reasonable if it conforms to the following requirements:

1. 
   One which yields to the carrier a fair return upon the value of the property employed in performing the service; and
   
2. 
   One which is fair to the public for the service rendered.
   

REGISTERED OWNER RULE

 The registered owner of a certificate of public convenience is liable to the public for the injuries or damages suffered by third persons caused by the operation of said vehicle, even though the same had been transferred to a third person.

 The registered owner is not allowed to escape responsibility by proving that a third person is the actual and real owner Reason: It would be easy for him, by collusion with others or otherwise, to transfer the responsibility to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. (Erezo, et al. vs. Jepte 102 Phil 103).
KABIT SYSTEM

 A system whereby a person who has been granted a certificate of public convenience allows other persons who own motor vehicles to operate under such license, for a fee or percentage of such earnings. It is void and inexistent under Art. 1409, Civil Code.

 Effects:

1. 
   The transfer, sale, lease or assignment of the privilege granted is valid between the contracting parties but not upon the public or third persons. (Gelisan vs. Alday, 154 SCRA 388)
   

2. 
   The registered owner is primarily liable for all the consequences flowing from the operations of the carrier.
   

 The public has the right to assume that the registered owner is the actual or lawful owner thereof. It would be very difficult and often impossible, as a practical matter, for the public to enforce their rights of action that they may have for injuries inflicted by the vehicle if they should be required to prove who the actual owner is. (Benedicto vs. IAC, 187 SCRA 547)

3. 
   The thrust of the law in enjoining the kabit system is to identify the person upon whom responsibility may be fixed with the end in view of protecting the riding public (Lim vs. CA 373 SCRA 394).
   
4. 
   The registered owner cannot recover from the actual owner and the latter cannot obtain transfer of the vehicle to himself, both being in pari delicto. (Teja Marketing vs. IAC)
   
5. 
   For the better protection of the public, both the registered owner and the actual owner are jointly and severally liable with the driver. (Zamboanga Transportation Co. vs. CA)
   

Commercial Law Committee

Chairperson: Garny Luisa Alegre  Asst. Chairperson:Jayson O’S Ramos EDP: Beatrix I. Ramos Subject Heads:

Marichelle De Vera (Negotiable Instruments Law); Jose Fernando Llave (Insurance); Aldrich Del Rosario (Transportation Laws);

Shirley Mae Tabangcura, Bon Vincent Agustin (Corporation Law); Karl Steven Co (Special Laws); John Lemuel Gatdula (Banking Laws); Robespierre Cu (Law on Intellectual Property)