Course Outline for the Law on Transportation and Public Utilities First Semester, School Year 2014-2015

I. Introduction

A. Concept of “public service”

B. Transportation and public utility

1. Definition of a “public service” 2. Regulation versus free enterprise

C. Regulatory Agencies

D. The contract of transportation

1. Coverage

a. Transportation of persons b. Transportation of things

2. Means of Transportation

a. By land b. By sea c. By air

3. Types of transportation

a. Domestic carriage b. International carriage

E. Use of transport

1. Basic commercial concepts in the use of transport services

2. Parties to the contract of transport

a. Passenger b. Shipper c. Carrier d. Receiver or consignee

II. Transportation and public utilities

1. The regulatory agencies a. Land Transportation, Franchising and Regulatory Board (LTFRB) – EO 202, s. 1987 b. Land Transportation Office (LTO) – RA 4136 c. Light Rail Transit Authority (LRTA) – EO 603. as amended s. 1980 d. Toll Regulatory Board (TRB) – PD1112 as amended e. Civil Aeronautics Board (CAB) – RA 776 f. Civil Aviation Authority of the Philippines (CAAP) – RA 9497 g. Maritime Industry Authority (MARINA) – PD 474, EO 125/125-A, s. 1987, RA 9295 h. Philippine Ports Authority (PPA) – PD 857 i. Philippine Coast Guard (PCG) – RA 9993 j. National Telecommunications Commission (NTC) – EO 546, s. 1979 k. National Water Resources Board (NWRB) – EO 860, s. 2010 1 l. Local Water Utilities Administration (LWUA) – EO 421, s. 2005 m. Energy Regulatory Commission (ERC) – RA 9136

III. Public law aspect of transportation – State regulation

A. Public utility concept of transportation

1. Constitutional basis for regulating public utilities – 1987 Constitution, Article XII, Section 11

 Luzon Stevedoring Corporation v. Anti-Dummy Board, G. R. No. L- 26094, August 18, 1972

a. Historical antecedents of the constitutional provision – Article XIV, Section 8, 1935 Constitution; Article XIV, Section 5, 1973 Constitution

2. Definition of public utilities

 Luzon Brokerage v. Public Service Commission, 57 Phil. 536, G. R. No. 37661, November 16, 1932  North Negros Sugar Co v. Serafin Hidalgo, 63 Phil 664, G. R. No. 42334, October 31, 1936

3. Definition of public services – Section 13 (b) Public Service Act (Com. Act No 146)

 Luzon Stevedoring Company v. Public Service Commission, G. R. No. L- 5458, September 16, 1953, 93 Phil 735

B. Grant of franchises –

1. Legislative franchises

1987 Constitution, Article XII, Section 11

 Pangasinan Transportation Co., Inc. v. Public Service Commission, G. R. No. 47065, June 26, 1940. 70 Phil 221  Radio Communications of the Philippines v. National Telecommunications Commission, G. R. No. L-68729, May 29, 1987

2. Franchises granted through delegated authority; powers and functions of regulatory agencies

a. Land transport

Section 19, Chapter 5, Title XV, Executive Order No. 292 (Administrative Code of 1987)

b. Air transport – Section 11, Republic Act No. 776, (Civil Aeronautics Act of the Philippines)

c. Sea transport

Section 12, Presidential Decree No. 474 (Charter of the Maritime Industry Authority)

2 Section 3, Executive Order No. 125-A, April 13, 1987, amending Section 14 of Executive Order No. 125, January 30, 1987

Section 10, Republic Act No. 9295 (Domestic Shipping Development Act of 2004)

C. Regulation of public services – Section 13 (a), Public Service Act (CA 146)

1. The Certificate of Public Convenience

Nature of a CPC When a CPC is not required

2. Regulation of ownership – Section 16 (a), Public Service Act

 Luzon Stevedoring Corporation v. Anti-Dummy Board, G. R. No. L-26094, August 18, 1972

Sections 3, 5, and 6, Republic Act No. 9295 (Domestic Shipping Development Act of 2004)

Section 12, RA 776

3. Regulation of rates – Section 16 (c). Public Service Act

a. Approval of rates charged

 Kilusang Mayo Uno Labor Center v. Jesus B. Garcia, Jr., et al., G. R. No. 115381, December 23, 1994

b. Return on Rate Base

Republic of the Philippines v. Enrique Medina, et al., G. R. No. L-32068, October 4, 1971

c. Rule with respect to water transport

Sections 8 and 11, RA 9295

d. Rule with respect to air transport

Section 10, RA 776

Right to set rates by legislative franchise grantees subject to the rules of the Civil Aeronautics Board

Paragraph 2.2, Executive Order No. 219, January 3, 1995 (Establishing the Domestic and International Civil Aviation Liberalization Policy)

Also study the charters of to see the nature and extent of legislative franchises:

1. Filipinas Orient 2. Air Manila 3. Silangan Airways 4. Cebu Air 5. All Asia Airlines 6. Air Philippines 7. Grand International Airways 8. Davao Agritech 9. Air Mabuhay 3 10. Laoag International Airlines 11. Provincial Airways 12. Asian Spirit 13. Philippine Airlines (PD 1590)

4. Regulation of authorized routes –

Section 13 (b), Public Service Act

Section 19, Chapter 5, Title XV, EO 292

Section 3, Executive Order No. 125-A, April 13, 1987

Section 11, RA 776

a. General power of regulation

 Laguna Tayabas Bus Company v. Felix T. Regodon, G. R. No. L- 9586, December 27, 1956, 100 Phil 570

b. Presumption of adequacy of service; protection of investments rule; protection of prior operator

 Batangas Transportation Company v. Cayetano Orlanes, G. R. No. 28865, December 19, 1928, 52 Phil 455

c. Change in the rules on presumption of adequacy of service and protection of investments of prior operators

Paragraph 1, Executive Order No. 185, June 28, 1994 (Opening the Domestic Water Transport Industry to New Operators and Investors)

Paragraph 1, Executive Order No. 219, January 3, 1995 (Establishing the Domestic and International Civil Aviation Liberalization Policy)

5. Regulation of equipment used, imposition of reasonable standards – Section 16 (d), Public Service Act

 Ramon L. Corpus v. Public Service Commission, G. R. No. L-325, October 31, 1947, 79 Phil 444

Section 19, Chapter 5, Title XV, EO 292

Section 9 and 10, RA 9295

Section 10 (C), RA 776

6. Regulation of period within which a franchise may be enjoyed

Section 19, Chapter 5, Title XV, EO 292

Section 10, RA 9295

Section 11, RA 776

7. Government’s right of requisition

Section 9, Republic Act No. 7471 (Overseas Shipping Development Act) Section 24, Republic Act No. 9295

4 Legislative franchise of airline grantees – right of government to take over and operate equipment of grantee paying for its use or damages

8. Revocation of license

 Maria Concepcion Paez Vda. De Cruz v. Tobias P. Marcelo, G. R. Nos. L-15301 and L-15302, March 30, 1962

Section 21, paragraph 2, Public Service Act

Section 19, Chapter 5, Title XV, EO 292

Section 10, RA 9295

Section 22, RA 776

Protection of operators from foreign competition – the principle of cabotage

9. Protection of operators from foreign competition – the principle of cabotage

 Luzon Stevedoring Corporation v. Anti-Dummy Board, G. R. No. L- 26094, August 18, 1972

Sections 902 and 905, Part I, Title II, Book II, Tariff and Customs Code

Sections 1001 and 1009, Part I, Title III, Book II, Tariff and Customs Code

Section 6, RA 9295

D. Quasi-judicial functions of regulatory agencies

Sections 16 and 17, Public Service Act

1. LTFRE – Sections 19 and 20, Chapter 5, Title XV, EO 292

2. MARINA –

Section 12, Presidential Decree 474, Charter of the Maritime Industry Authority

Section 12. EO 125-A

Section 10, RA 9295

3. CAB – Sections 10, 13, and 14, RA 776

IV. Private law aspect of transportation – Contractual relations of the parties to the contract of transportation

A. Applicable law

1. Philippine law will apply in the following cases: a. Domestic carriage b. Contractual stipulation applies Philippine law c. There is no contractual stipulation but the passenger or goods are bound for the Philippines 2. Applicable Philippine law: 5 a. Civil Code b. Code of Commerce c. Carriage of Goods by Sea Act

B. Philippine Law – Code of Commerce (1888)

1. Carriage of passengers by water

a. Rights of the carrier

i. Demand payment of passage – Article 694 ii. Grant passage only to the specified person – Article 695

b. Rights of the passenger

i. Demand a refund of passage for suspension or interruption of voyage – Articles 697 and 698

 Trans-Asia Shipping Lines v. Court of Appeals, G. R. No. 118126, March 4, 1996

c. Obligations of the carrier

i. Transport passengers to their ports of destination – Article 698, last paragraph, Article 701 ii. Provide subsistence during the voyage – Article 702

d. Obligations of the passenger

i. Observe measures to maintain order and discipline on board – Article 700

2. Contract for the carriage of goods

a. Carriage on bill of lading terms b. Carriage on charter party terms

3. Carriage on bill of lading terms

a. Definition of a bill of lading

i. Receipt of the goods ii. Evidence of the agreement to transport and deliver the goods iii. Document of title in case of transferable bills of lading

b. Contents of a bill of lading – Articles 350 and 352

c. Carrier’s obligations

i. Deliver the goods within the time stipulated or if no time has been stipulated then within a reasonable time – Articles 358, 370 ii. Deliver the goods in the same condition as when these were shipped – Article 363 iii. Deliver the same goods it received – Article 368

d. Carrier’s rights

i. Refuse packages unfit for transportation – Article 365 6 ii. Inspect the goods prior to acceptance – Article 357 iii. Exercise its lien over the goods in case of non-payment of freight – Articles 374, 375, and 376

e. Carrier’s liability

i. Risk of the shipper and liability of the carrier – Articles 361 and 362  Tan Chiong Sian v. Inchausti and Co., G. R. No. 6092, March 8, 1912  Mauro Ganzon v. Court of Appeals, et al., G. R. no. L-48757, May 30, 1988 ii. Pay for the value of goods that are not delivered – Article 363 iii. Pay for the difference in value of the goods if there has been a deterioration or diminution in value due to the carrier’s fault – Article 364 iv. Pay for any damage to the goods rendered useless for sale and consumption – Article 365 v. Pay for damages in case of delay in delivery and consignee has abandoned the goods to the carrier – Article 371

f. Filing of claims by the consignee

i. For apparent loss, claim must be filed at the time of receipt – Article 366 ii. For non-apparent loss, claim must be filed within 24 hours – Article 366

 Philippine American General Insurance, et al., v. Sweet Lines, Inc., et al., G. R. No. 87434, August 5, 1992  New Zealand Insurance Co., Ltd v. Adriano Choa Joy, G. R. No. L-7311, September 30, 1995

g. Filing of claims in case of multiple carriers – Article 373

h. Liability of agents of carriers – Article 379

4. Carriage on charter party terms

a. Definition of a charter party

i. Contract of carriage ii. Contract of affreightment

 Planters Products, Inc. v. Court of Appeals, Soriamont Steamship Agencies, et al., G. R. No. 101503, September 1993

b. Contents of a charter party – Article 652

c. Relationship between the charter party and the bill of lading – Article 653

 Market Developers, Inc. v. Intermediate Apellate Court. Et al., G. R. No. 74978, September 8, 1989

d. Kinds of charter parties i. Time charters – Article 658 (1) and (2) ii. Voyage charters – Article 658 (3)

e. Demurrage charges – Article 656

7  O’Farrel y Cia v. Manila Electric Company, G. R. No. 31222, October 29, 1929 f. Liability of cargo to pay for freight – Article 665  Overseas Factors, Inc., et al v. South Sea Shipping Co., Ltd., et al., G. R. no. L-12138, February 27, 1962 g. Period when lien on freight subsists – Article 667  Julius Ouano v. Court of Appeals, G. R. no. 95900, July 23, 1992 h. Liability for dead freight – Article 680  National Food Authority et al., v. Court of Appeals, et al., G. R. No. 96543, August 4, 1999

5. Loans on bottomry and respondentia

6. Averages

7. Salvage

C. Philippine law – Civil Code

1. Definition of “common carriers” – Article 1732

 Pedro de Guzman v. Court of Appeals, G. R. No. L-47822, December 22, 1988  Spouses Dante Cruz and Leonora Cruz, vs. Sun Holidays, Inc., G. R. No. 186312. June 29, 2010

2. Contract of carriage in general

a. Carriage of passengers – Articles 1733, 1755 to 1763 b. Carriage of passenger’s luggage – Article 1754 c. Carriage of goods – Articles 1734 to 1753

3. Contract for the carriage of passengers

a. Duty of the carrier to observe utmost diligence – Articles 1755, 1757 and 1758  Olegario Brito Sy v. Malate Taxicab and Garage, G. R. No. L-8937, November 29, 1957, 102 Phil 482  Gregorio Anuran, et al. v. Pepito Buno, et al., G. R. Nos. L-21353 and L-21354, May 20, 1966  Philippine Rabbit Bus Lines, Inc. v. Intermediate Apellate Court, G. R. No. 66102-04 August 30, 1990

i. Worthiness of conveyance used –

 Prescillano Necesito, et al. v. Natividad Paras, et al., G. R. No. L- 10605, June 30, 1958

b. Presumption of fault on the part of the carrier – Article 1756

 Paz Fores v. Ireneo Miranda, G. R. no. L-12163, March 4, 1959, 105 Phil 267

 Philippine Rabbit Bus Lines, Inc., v. Intermediate Appellante Court, G. R. No. 66102-04-August 30, 1990

i. Defense available to the carrier is the exercise of extraordinary diligence – Article 1756 8 ii. Liability of carrier for willful or negligent acts of its employees – Articles 1759 and 1760

 Jose Cangco v. Manila Railroad Co., G. R. No. 12191, October 14, 1918, 38 Phil 768  Ignacio del Prado v. Manila Electric Co., G. R. No. 29462, March 7, 1929, 52 Phil 900  Antonia Maranan v. Pascual Perez, et al., G. R. No. 22272, June 6, 1967

iii. Effect of willful acts or negligence of other passengers or strangers – Article 1763

 Jose Pilapil v. Court of Appeals, et al., G. R. no. 52159, December 22, 1989  Salud Vilianueva vda. De Batacian v. Mariano Medina, G. R. No. L-10126; October 22, 1957, 102 Phil 181 c. Rule in case of gratuitous carriage – Article 1758 d. Duty of passenger

i. Duty to observe due diligence – Article 1763 ii. Contributory negligence of the passenger – Article 1762

 Cesar L. Isaac, v. A. L. Ammen Transportation Co., G. R. No. L-9671, August 23, 1957 e. Contract for the carriage of passenger’s luggage – Article 1754, Civil Code

In the case of carriage by water, Article 703 Code of Commerce in relation to Article 1754, Civil code

i. Luggage in the custody of the carrier (checked in luggage) – Rules applicable to the carriage of goods are applied ii. Luggage in the custody of the passenger (hand-carried luggage) – Article 1998 f. Damages – Article 1754

 Paz Fores v. Ireneo Miranda, G. R. No. L-12163, March 4, 1959, 105 Phil 267  Philippine Rabbit Bus Lines, Inc., et al. v. Patrocinio Esguerra, et al., G. R. No. 31420, October 23, 1982, 203 Phil 107  Sulpicio Lines, Inc. v. Court of Appeals, G. R. No. 113578, July 14, 1995  Air France v. Rafael Carrascoso, et al., G. R. No. L-21438, September 28, 1966  Fernando Lopez, et al., v. Pan American World Airways, G. R. no. L- 22415, March 30, 1966  Francisco Ortigas, Jr. v. Lufthansa German Airlines, G. R. No. L- 28773, June 30, 1975  Air France, petitioner, vs. Bonifacio H. Gillego, G. R. No. 165266, December 15, 2010

i. Liability of registered owner for damages

9  Paz Fores v. Ireneo Miranda, G. R. No. L-12163, March 4, 1959, 105 Phil 267  Jose G. Tamayo v. Inocencio Aquino, et al., G. R. Nos. L-12634 and L-12720, May 29, 1959, 105 Phil 949

4. Contract for the carriage of goods

a.Carrier’s duty to observe extraordinary diligence in the vigilance over the goods – Article 1733

i. Worthiness of the conveyance

 Precillano Necesito, et al. v. Natividad Paras, et al., G. R. No. L- 10605, June 30, 1958  Chan Keep, et al. v. Leon Chan Gioco, et al., G. R. No. 4378, August 18, 1909

b.Presumption of fault in case of loss of the goods – Articles 1734 and 1735

 Eastern Shipping Lines v. Intermediate Appellate Court, G. R. No. 69044, May 29, 1987  Belgian Overseas and Chartering and Shipping N. V., et al. v. Philippine First Insurance Company, Inc., G. R. No. 143133, June 5, 2002  Regional Container Lines (RCL) of Singapore and EDSA Shipping Agency, petitioners, vs. The Netherlands Insurance Co. (Philippines), Inc. G. R. no. 168151. September 4, 2009 (degree of proof required)

c.Period of liability of carrier – Articles 1736, 1737 and 1738

 Lu Do and Lu Ym Corp. v. l., Binamira, G. R. No. L-9840, April 22, 1957, 101 Phil 120  Amparo Servando, et al., v. Philippine Steam Navigation Co., G. R. Nos. L-36481-1, October 23, 1982, 203 Phil 184  Aniceto G. Saludo, Jr., et al. v. Court of Appeals, et al. G. R. No. 95536, March 23, 1992

d.Defenses available to the carrier

i. Exercise of extraordinary diligence – Article 1735 ii. Loss arose from any of the exempting circumstances – Article 1734

 Lu Do and Lu Ym Corp. v. l., V. Binamira, G. R. No. L-9840, April 22, 1957, 101 Phil 120  Pedro de Guzman v. Court of Appeals, G. R. No. L-47822. December 22, 1988

e.Exempting circumstances

i. Flood, storm, earthquake, lightning or other natural disaster or calamity – Articles 1734 (1), 1739 and 1740

 Philippine American General Insurance Company v. Court of Appeals, et al., G. R. no. 101426, May 17, 1993  Philippine American General Insurance Company v. MCG Marine Services, Inc. et al., G. R. No. 135645. March 8, 2002

10 ii. Act of the public enemy in war whether international or civil – Article 1734 (2) iii. Act or omission of the shipper or owner of the goods – Articles 1734 (3), 1741  Compania Maritima v. Court of Appeals, G. R. No. L-31379, August 29, 1988

i. Character of the goods or defect in the packing or the containers – Articles 1734 (4), 1742 ii. Order or act of competent authority – Articles 1734 (5), 1743 iii. Other exempting circumstances

 Pedro de Guzman v. Court of Appeals, G. R. No. L-47822, December 22, 1988 f. Limitation of liability

i. As to diligence required

a. General rule – Articles 1744 and 1746

 Home Insurance Company v. American Steamship Agencies, Inc., G. R. No. L-25599, April 4, 1968

b. Void stipulation – Article 1745 c. Effect of delay in general – Article 1747 d. Effect of delay in case of strikes – Article 1748

ii. As to amount of liability a. Articles 1749 and 1750 of the Civil Code for land transport and air transport and Article 372, Code of Commerce, for land transport  Augusto B. Ong Yiu v. Court of Appeals and Philippine Air Lines, No. L-40597, June 29, 1979

b. Articles 1749 and 1750 of the Civil Code, in relation to the Carriage of Goods by Sea Act, and Articles 587 590 (in all other cases of loss) and 837 (in cases of collision), Code of Commerce, for sea transport

 Eastern and Australian Steamship Co., Ltd v. Great American Insurance Co., G. R. No. L-37604, October 23, 1981  Eastern Shipping Lines v. Intermediate Appellate Court, G. R. No. 69044, May 29, 1987  Sea-Land Service, Inc. v. Intermediate Appellate Court et al., G. R. No. 75118. August 31, 1987  Teodoro Yangco, et al. v. Manuel Lasema, et al., G. R. No. .47447- 47449, October 29, 1941  Chua Yek Hong v. Intermediate Appellate Court, G. R. No. L-74811, September 30, 1988  Aboitiz Shipping Corporation v. Court of Appeals and General Accident Fire and Life Assurance Corporation Ltd., G. R. No. 89757, August 6, 1990

iii. Rules of construction regarding stipulations limiting carrier’s liability – Article 1751

11 iv. Rules of construction on limitation of liability regarding carrier’s presumption of fault – Article 1752

g.Applicable law – Article 1753  American President Lines v. Richard Kleper, G. R. No. 15671, November 29, 1960, 110 Phil 243  Eastern Shipping Lines v. Intermediate Appellate Court, G. R. No. 69044, May 29, 1987

D. Carriage of Goods by Sea Act

1. Application of the law – Section 1

 Eastern Shipping Lines, Inc. v. Intermediate Appellate Court, G. No. 69044, May 29, 1987

2. Duties of the carrier –

a. Provide a seaworthy ship – Section 3 (1)

 Caltex (Phil) v. Sulpicio Lines, Inc., et al., G. R. No. 131166, September 30, 1999

b. Properly care for the cargo – Section 3 c. Issue a bill of lading – Section 3 (3), (7) d. Indicate the apparent order and condition of the goods – Section 3 (3) (c), (4)

3. Duties of the shipper

a. Provide leading marks of the goods – Section 3 (3)(a) b. Provide the number, quantity or weight of the goods – Section 3 (3)(b) c. Guarantee the accuracy of the information given – Section 3 (5) d. Duty not to load dangerous cargo – Section 4 (6)

4. Filing of claims – Section 3 (6)

a. Apparent loss – upon delivery of the goods b. Non-apparent loss – within three days from delivery c. Filing of action to recover loss or damage to cargo

 Benito Chua Kuy v. Everrett Steamship Corporation, G. R. No. L-5554, May 27, 1953, Phil 207 (on application of one year period)  Insurance Company of North America v. Philippine Ports Terminals, Inc., G. R. No. L-6420, July 18, 1955, 97 Phil 288 (on parties covered by COGSA)  Domingo Ang v. American Steamship Agencies, Inc., G. R. No. L-22491, January 27, 1957 (on misdelivery of cargo)  Filipino Merchants Insurance Company, Inc. v. Jose Alejandro, et al., G. R. No. L-54140, October 14, 1986 (on the application of the period of limitation on insurers of cargo)  Mayer Steel Pipe Corporation, et al., v. Court of Appeals, et al., G. R. No. 119571, March 11, 1998 (on the application of the period of limitation on insurers of cargo)  Mitsui O. S. K. Lines Ltd. V. Court of Appeals, G. R. No. 119571, March 11, 1998 (on the application of the period of limitation with respect to recovery of loss other than that arising from loss of or damage to cargo)

12  Insurance Company of America v. Asian Terminals, Inc., G. R. No. 180784, February 15, 2012 (on the application of the prescriptive period)

5. Limitation of liability – Section 4 (5)  Aboitiz Shipping Corporation v. Court of Appeals, G. R. No. 89757, August 6, 1990 (on limits of liability where value has been declared and on the interpretation of “container”  American President Lines v. Richard Kleper, G. R. No. 15671, November 29, 1960, 110 Phil 243  Phoenix Assurance Company v. Macondray and Co., Inc., G. R. No. L-25048, May 13, 1975 (on extent of recovery of insurance company)  Eastern and Australian Steamship Company, Ltd. v. Great American Insurance Company, G. R. No. L-37604, October 23, 1981 (on the interpretation of the maximum liability under the COGSA)

E. International Carriage

1. Law of the contract – varying domestic regimes usually guided by applicable international conventions

a. Carriage by sea

Cargo – Hague Rules as amended by the Visby Protocol and the SDR Protocol Cargo – Hamburg Rules Passengers and their luggage – Athens Convention

b. Carriage by air Warsaw Convention as amended

a. Extent of Airline’s liability to passengers  Alitalia v. Intermediate Appellate Court and Felipa Pablo, G. R. No. 71929, December 4, 1990 b. Limitation of liability  Pan American World Airways v. Intermediate Appellate Court, G. R. No. L-70462, August 11, 1988 c. Applicability of the Warsaw Convention  Philippine Air Lines v. Court of Appeals G. R. No. 92501, March 6, 1992 d. Award of Damages  Lufthansa German Airlines v. Intermediate Appellate Court. G. R. No. 71238, March 19, 1992 e. Proper forum  Augusto Benedicto Santos III v. Northwest Orient Airlines, G. R. No. 101538, June 23, 1992 f. Non-delivery of luggage  Philippine Airlines v. Intermediate Appellate Court, G. R. No. 70481, December 11, 1992 g. Period of limitation  United Airlines v. Willie J. Dy. G. R. No. 127768, November 19, 1999 Monireal Convention

2. Law of the country of destination – Article 1753, Civil Code

13