Transportation Law from "Divina on Commercial Law: A Comprehensive Guide Vol. I".
I. Common Carriers: Definitions, Tests, and Governing
Laws
A. Definition and Test
Term Definition Key Test
A person, corporation, firm, or association The test is whether the person holds
engaged in the business of carrying or out to the public that it is engaged in
Common
transporting passengers or goods, or both, by the business of transporting as a
Carrier
land, water, or air for compensation, offering public employment and not a casual
its services to the public. occupation.
One who, without holding himself out to the
Private public, undertakes by special arrangement A private carrier does not offer its
Carrier in a particular instance only to transport service to the public.
persons or property.
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B. Requisites to be a Common Carrier
1. Must be engaged in the business of transporting passengers or goods generally as a
business, not just as a casual occupation.
2. Must undertake to carry passengers or goods over established roads by the method by
which the business was conducted.
3. The transportation must be for hire.
4. The common carrier must be the owner of the vehicle/vessel that carries out the carriage.
C. Examples of Common Carriers
Barge operator.
Passenger jeepney, bus company, or taxi company.
Vessels engaged in inter-island shipping.
Pipeline operator (even with limited clientele, if transporting goods for hire as a public
employment).
School bus operators (if they hold themselves out as a ready transportation
indiscriminately to students of a particular school).
A Customs Broker is also a common carrier because transportation of goods is an
integral part of its business.
D. Entities that are NOT Common Carriers
Freight Forwarder: Generally, not a common carrier; merely selects the carrier.
However, if the forwarder contracts to deliver the goods to their destination, they
become liable as a common carrier.
Arrastre Operator: Not a common carrier; functions involve handling cargo deposited
on the wharf; liability is akin to a warehouseman.
Travel Agency: Not a common carrier; only arranges for transportation.
E. Governing Laws
Carriage Type Primary Law Suppletory Law
Code of
Land Transportation New Civil Code
Commerce
Code of
Water Transportation (Coastwise) New Civil Code
Commerce
Water Transportation (Foreign
Code of Commerce / COGSA New Civil Code
Port to Phil. Port)
New Civil Code, Treaties, Int'l Agreements, Code of
Air Transportation
Montreal Convention Commerce
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II. Liabilities of Common Carriers
A. Diligence Required
Common carriers are bound to observe extraordinary diligence in the vigilance over goods and
the safety of passengers.
B. Vigilance Over Goods
Topic Provision Key Details
Liability starts from the moment the goods are actually or
Duration of
constructively delivered to the carrier. Temporary loading or storage
Liability
is included.
The carrier must prove the loss/damage was due to an exempting cause
Exempting
(e.g., force majeure) AND prove the absence of negligence and
Causes
absence of delay on its part.
An accident caused by defects in the automobile or negligence of the
Fortuitous
driver is not considered a caso fortuito (fortuitous event). The carrier
Event
is still liable unless it proves it was not negligent.
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C. Safety of Passengers
Void Stipulations: Stipulations that limit the carrier's liability for the safety of
passengers are void.
Duration of Liability: Liability extends from the time the passenger is waiting for or
boarding the carrier until the passenger's arrival at the destination.
Liability for Acts of Others: The carrier is liable for the acts of its employees, other
passengers, and strangers.
D. Bill of Lading
Character: The Bill of Lading has a three-fold character: it is a receipt, a contract, and
a symbol of title to the goods.
Delivery: Delivery can be made without surrender of the Bill of Lading, and the
consignee's refusal to take delivery has certain effects.
E. Period for Filing Claims and Actions
Nature of
Action Period Interruption
Carriage
Must be made within the period
The requirement of prior notice is a
Domestic Filing provided in the contract
condition precedent to the accrual
(Coastwise) Claims stipulation (usually Article 366
of the right of action.
of the Code of Commerce).
The one (1) year period of The COGSA prescriptive period is
prescription under the Carriage NOT interrupted by a written
International Filing
of Goods by Sea Act (COGSA) extrajudicial demand, as this Civil
(COGSA) Actions
begins upon delivery of the Code rule only applies to periods in
goods. the Civil Code.
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III. Maritime Commerce
A. Limited Liability Rule
The liability of the shipowner and shipping agent in maritime commerce is limited to the value of
the vessel, its appurtenances, and freightage.
B. Exceptions to the Limited Liability Rule
The rule does not apply in the following cases:
1. Fault/Negligence of Shipowner: When the injury or death of the passenger is due to the
fault or negligence of the shipowner himself (e.g., failing to provide sufficient life belts
or allowing the vessel to sail despite knowledge of a typhoon).
2. Unseaworthiness: When the shipowner reconfigured the bulkhead to load excessive
cargo, making the vessel unseaworthy.
3. Prior Expenses: Expenses for repairs contracted before the vessel is lost.
4. Workmen's Compensation/POEA SEC Claims: Claims of the crew for death or injury
under the Labor Code or POEA Standard Employment Contract (statutory liabilities).
5. Insurance Proceeds: If the vessel is lost, claimants may go after the proceeds of the
insurance covering the vessel.
C. Charter Parties
Type of Charter Description
Bareboat/Demise The entire control and possession of the vessel are transferred to the
Charter charterer, who acts as the owner pro hac vice (for this occasion).
Time Charter Charterer contracts for the vessel's use for a specified period of time.
Voyage/Trip Charter Charterer contracts for the vessel's use for a specified voyage or trip.
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IV. Public Service Act (Commonwealth Act No. 146)
A. Definition of Public Utility
The law applies to a public utility and the necessity of having a Certificate of Public
Convenience (CPC).
B. Requisites for a CPC
1. Citizenship (Filipino majority ownership).
2. Promotion of public interests (necessity).
3. Financial capability.
C. Prior Operator Rule
Meaning: Gives preference to the old/prior operator when new service is proposed.
Exceptions: The rule may be disregarded in cases of ruinous competition.
D. Kabit System
Definition: An illegal arrangement where a person who has been granted a CPC allows a
non-franchise holder to operate under their name, usually for a fee.
Rule: The legal restriction on the kabit system does not apply if the public at large is not
deceived or involved. The real owner may be deemed the "agent" of the registered owner.
E. Sale, Mortgage, or Lease of Property
Any sale, mortgage, encumbrance, or lease of a public utility's property, franchises, or
rights requires the prior approval and authorization of the Commission (now part of
the LTFRB/LTO structure, etc.).
V. Air Transportation
Governing Law: The Warsaw Convention governs the liability of international air
carriers for:
o Death or injury to passengers.
o Destruction, loss, damage, or delay in carrying baggage.
