UNIVERSITY OF THE PHILIPPINES COLLEGE OF LAW TRANSPORTATION AND PUBLIC UTILITY LAW First Semester, AY 2013-2014 Prof.

Nicholas Felix L. Ty BASIS FOR EVALUATION Recitation: Final Examination: Attendance: Total: Fifty Percent (50%) Forty-Five Percent (45%) Five Percent (5%) One Hundred Percent (100%) GRADE EQUIVALENTS Score 97-100 94-96 90-93 87-89 83-86 80-82 77-79 74-76 70-73 0-69 Grade Equivalent 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 5.00 TENTATIVE SCHEDULE Inclusive Dates 06 -10 June 2013 13 June 01 July 2013 04 - 22 July 2013 25 July - 02 September 2013 05-09 September 2013 05 September September 2013 26-30 September 2013 As scheduled 24 No. Meetings 1 3 3 6 1 3 1 of Topic Introduction and Orientation Public Utilities Transportation Law Parts I and II Common Carriers Code of Commerce Provisions on Overland Transport Admiralty and Maritime Commerce Part V of Course Outline: International Air Transport Final Examination

REFERENCES: Agbayani, Aguedo F., Commentaries & Jurisprudence on the Commercial Laws of the Philippines Aquino, Timoteo B. & Hernando, Ramon Paul L., Notes and Cases on the Law of Transportation and Public Utilities

COURSE OUTLINE1 PART ONE: PUBLIC UTILITIES I. General Discussion

A. What is a public utility? Munn v Illinois, 94 U.S. 113 (1876) Luzon Stevedoring Co., Inc. v. PSC, G.R. No L-5458. September 16, 1953

Additional Readings: Batson, H.E., The Economic Concept of a Public Utility, Economica, No. 42 (November 1933), pp 457-472.

B. What is a public service? Commonwealth Act No. 146 or the Public Service Act, as Sec 13(b) amended,

(b) 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 whether may be its classification, freight or carrier service of any class, express service, steamboat or steamship line, pontines, ferries, and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine railways, marine repair shop, [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. Differentiate public utility from public service? C. Legal Basis and Rationale for Regulation Republic of the Philippines v. Meralco, 391 SCRA 700

The original version of this course outline was patterned after the course outline of Prof. Rodrigo Lope S. Quimbo. Additions and amendments to the original outline are in italics.
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Additional Readings: Millar, Edythe S., Is the Public Utility Concept Obsolete?, Land Economics, Vol. 71, No. 3, Social Control of Private Power: The Past and Future of Public Utility Regulation (August 1995), pp. 273-285 Gray, Horace M., The Passing of the Public Utility Concept, The Journal of Land & Public Utility Economics, Vol. 16, No. 1 (February 1940), pp 8 -20

D. Where does the Power to Regulate Public Utilities Reside? Albano v. Reyes, 175 SCRA 264 KMU Labor Center v. Garcia, 239 SCRA 386 Batangas CATV v. Court of Appeals, G.R. No. 138819, September 29, 2004

Relate to Public Service Act 13(a) Section 13. (a) The Commission shall have jurisdiction, supervision, and control over all public services and their franchises, equipment, 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 government entities or government-owned or controlled corporations 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, motor ships and steamship lines, whether privately-owned, or owned or operated by any Government controlled corporation or instrumentality to obtain certificate of public convenience or to prescribe their definite routes or lines of service. What happened to the Public Service Commission? See footnote #2 in KMU Labor Center v. Garcia, supra, E. Not a Public Utility Nebbia v. New York, 291 U.S. 502 (1934) Tatad v. Garcia, 243 SCRA 436 Teresa Electric & Power Co. v PSC, 21 SCRA 198

See Public Service Act, Sec. 14 for list of enterprises not covered by definition of public service Section 14. The following 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 National Government or by any government-owned or controlled corporation, except with respect to the fixing of rates. (As amended by Com. Act 454, RA No. 2031, and RA No. 2677 ) Nature of concession agreements Freedom from Debt Coalition v. MWSS, G.R. No. 173044, December 10, 2007

II.

Constitutional Provisions See Article XII, Secs. 6, 11, 17, 18, 19, 1987 Constitution Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. 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 sixty per centum 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 such 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. Ownership Gamboa v. Teves, G.R. No. 176579, June 28, 2011 Gamboa v. Teves, G.R. No. 176579, October 9, 2012 Relate to Public Service Act, Sec 16 (a) and Sec. 20 (i) 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 which shall be known as certificates of public convenience, authorizing the operation of public service 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 thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years. 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 (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 sixty per centum 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. Exclusivity Metro Cebu Water v. Adala, G.R. No. 168914, July 4, 2007 Tawang Multi-Purpose Cooperative v. La Trinidad Water District, G.R. No. 166471, March 22, 2011 c. Subject to Amendment RCPI v NTC, 150 SCRA 450 Relate to Public Service Act, Sec. 16 (m) and (n) d. Take-over Power David v. Macapagal-Arroyo, G.R. No, 171396, May 3, 2006 Agan v. Piatco, G.R. No. 155001, January 21, 2004 e. Privatization Utilities of State-Operated Public

Kuwait Airways v. Philippine Airlines, G.R. No. 156087, May 8, 2009 III. Regulation of Public Utilities A. Authority to Operate Albano v. Reyes, 175 SCRA 264 PLDT v NTC, G.R. No. 88404, October 18, 1990 Francisco v. Toll Regulatory Board, G.R. No. 166910, October 19, 2010 Napocor v. Court of Appeals, 279 SCRA 408 Relate to Public Service Act, Section 16 (a), Sec. 18 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 which shall be known as certificates of public convenience, authorizing the operation of public service 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 thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years. Section 18. It shall be unlawful for any individual, co-partnership, association, corporation or joint-stock company, their lessees, trustees or receivers appointed by any court whatsoever, or any municipality, province, or other department of the Government of the Philippines to engage in any public service business without having first secured from the Commission a certificate of public convenience or certificate of public convenience and necessity as provided for in this Act, except grantees of legislative franchises expressly exempting such grantees from the requirement of securing a certificate from this Commission as well as concerns at present existing expressly exempted from the jurisdiction of the Commission, either totally or in part, by the provisions of section thirteen of this Act. i. General Qualifications Vda. de Lat v. PSC, G.R. No. L-34978, Feb. 26, 1988 KMU Labor Center v. Garcia, supra ii. Revocation or Cancellation Divinagracia v Consolidated Broadcasting System, Inc. G.R. No 162272, April 7, 2009 Relate to Public Service Act, Section 16(m) 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 :

(m) To amend, modify or revoke at any time certificate issued 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. iii. CPC v. CPCN

See Public Service Act, Section 15 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 Public Service Commission known as "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 equipment, less reasonable depreciation; 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 depreciation, the effect of the use of the equipment, 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 equipment and properties. PAL v. CAB, 270 SCRA 538 (see also Republic Acts No. 9183 and 9517 in relation to case)

RA 9183 AN ACT GRANTING THE ASIAN SPIRIT, INC. A FRANCHISE TO ESTABLISH, OPERATE AND MAINTAIN DOMESTIC AND INTERNATIONAL AIR TRANSPORT SERVICES Be it enacted by the Senate and House of Representative of the Philippines in Congress assembled: Section 1. Nature and Scope of Franchise. - Subject to the provisions of the Constitution and applicable laws, rules and regulations, there is hereby granted to Asian Spirits, Inc., hereunder referred to as the grantee, its successors

or assigns, a franchise to establish, operate and maintain transport services for the carriage of passengers, mail, goods and property by air, both domestic and international. Air transport services shall include the maintenance and operation of hangars and aircraft service stations and facilities and other services of similar nature which may be necessary, convenient or useful as an auxiliary to aircraft transportation. The Grantee shall have the rights at its terminal and landing fields, as well as in its aircraft, to construct, operate and maintain stations or transmitting sets for wireless telegraphy and direction findings, and other radio aids to air navigation, using wavelengths in accordance with the rules and regulations made from time to time by the proper agencies of the government. The wireless communication facilities shall be used solely for receiving and transmitting weather forecasts and other matters in connection with the grantees services. Section 2. Civil Aeronautics Board/Air Transportation Office.- The grantee shall secure from the Civil Aeronautics Board the appropriate permits and licenses for its operations. All aircraft used by the grantee including their accessories and equipment shall at all times be air worthy and the new crew members shall be licensed by the Government of the Philippines. They shall be equipped with radio communication, safety and other equipment and shall be operated and maintained in accordance with the regulations and technical requirements of the Air Transportation Office or such other regulatory bodies the government may prescribe for this purpose. The grantees equipment and the operation of such equipment shall at all times be subject to inspection and regulation by the Air Transportation Office. The grantees shall comply with the provisions of Republic Act Numbered Seven hundred and seventy-six (R.A. No. 776), and the regulation promulgated thereunder from time to time. Section 3. Responsibility to the Public. - Excepting cases of force majeure and whenever weather conditions permit, the grantee shall maintain scheduled and/or non scheduled and/or chartered air transport services to any and all points and places throughout the Philippines and between the Philippines and other countries at such frequencies as traffic needs may require: Provided, however, That at least twenty-five percent (25%) of all its frequencies shall be for domestic market. Section 4. Rates for Services. - The grantee shall fix just and reasonable rates for the transportation of passengers, mail, goods and freight, subject to the regulations and approval of the Civil Aeronautics Board and other proper regulatory agencies of the government. Section 5. Terms of Franchise. - This franchise shall be for a term of twenty-five (25) years from the date of effectivity of this Act, unless sooner revoked or cancelled. This franchise shall be deemed ipso facto revoked in the event the grantee fails to comply with any of the following conditions:

(a)Commence operation within one (1) year from the approval of its permit by the Civil Aeronautics Board; (b)Operate continuously for two (2) years and; (c)Commence operations within two (2) years from the effectivity of this Act. Section 6. Acceptance and Compliance. - Acceptance of this franchise shall be given in writing within sixty (60) days after the effectivity of this Act. Upon giving such acceptance, the grantee shall exercise the privileges granted under this Act. Nonacceptance shall render the franchise void. Section 7. Bond. - The grantee shall file a bond issued in favor of the Civil Aeronautics Board, which shall determine the amount, to guarantee the compliance with the fulfillment of the conditions under which this franchise is granted. If, after three (3) years from the date of the approval of its permit by the Board. Otherwise, the bond shall be forfeited in favor of the government and the franchise ipso facto revoked. Section 8. Landing Facilities. - The grantee may use the landing and other airport facilities on land and water as may be maintained or owned by the government within the Philippines on the grantees line subject to such terms and conditions, restrictions and national policy considerations as the Philippine Government shall have the right to use the landing and other airport facilities as may be maintained and owned by the grantee in the Philippines. Section 9. Contracts. - The grantee is authorized to enter into transportation contracts with the Philippine Government, including the carrying of mail, upon such terms and conditions as may be mutually agreed upon. The grantee shall give preferential consideration to contracts with the Philippine Government. The grantee may likewise enter into transportation maintenance and/or servicing contracts, and such other contracts relating to air transport with other foreign-owned airlines particularly with those which have international routes. Section 10. Right of Government. - A special right is hereby reserved to the President of the Philippines, in time of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to temporarily take over and operate the facilities or equipment of the grantee, to temporarily suspend the operation of any facility or equipment of the grantee, to temporarily suspend the operation of any facility or equipment in the interest of public safety, security and public welfare, or to authorize the temporary use and operation thereof by any agency of the government, upon due compensation to the grantee for the use of said facilities or equipment during period when they shall be so operated. Section 11. Warranty Favor of the National and Local Governments. - The grantee shall hold the national, provincial, city and municipal governments of the Philippines harmless from all claims, account, demands or actions arising out of accidents or injuries, whether to property or to persons, caused by the operation of the services under the franchise hereby granted. Section 12. Sale, Lease, Transfer, Usufruct, Etc. - The grantee shall not lease, transfer, grant the usufruct of, sell

nor assign this franchise or the rights and privilege acquired thereunder to any person, firm, company, corporation or other commercial or legal entity, nor merge with any other corporation or entity, nor shall the controlling interest of the grantee be transferred, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person , firm company, corporation or entity without the prior approval of the Congress of the Philippines. Any person or entity to which this franchise is sold, transferred or assigned, shall be subject to the same conditions, terms, restrictions and limitations of this Act. Section 13. Dispersal of Ownership. - In accordance with the constitutional provision to encourage public participation in public utilities, the grantee shall offer at least thirty percent (30%) of its outstanding capital stock or a higher percentage that may hereafter be provided by law in any securities exchange in the Philippines within five (5) years from the commencement of its operations. Noncompliance therewith shall render the franchise ipso facto revoked. Section 14. Interpretation of Franchise. - This franchise shall not be interpreted to mean as an exclusive grant of the privileges herein provided for . However, in the event that any competing individual, partnership or corporation shall receive a similar permit or franchise with terms and/or provisions more favorable than those herein granted or which tend to place the herein grantee at any disadvantage, then such terms and/or provisions shall be deemed part hereof and shall operate equally in favor of the herein grantee. Section 15. Separability Clause. - If any of the sections or provisions of this Act is held invalid, all other provisions not affected thereby shall remain valid. Section 16. Repealabilty and Nonexclusivity Clause. - This franchise shall be subject to amendment, alteration or repeal by the Congress of the Philippines when the public interest so requires and shall not be interpreted as an exclusive grant of the privileges herein provided for. Section 17. Reportorial Requirement. - The grantee shall submit an annual report to the Congress of the Philippines on its compliance with the terms and conditions of the franchise and on its operations within sixty (60) days from the end of every year. Section 18. Effectivity Clause. - This Act shall take effect fifteen (15) days from the date of its publication, upon the initiative of the grantee, in at least two (2) newspapers of general circulation in the Philippines. RA 9517 AN ACT GRANTING SOUTHEAST ASIAN AIRLINES (SEAir), INC. A FRANCHISE TO ESTABLISH, OPERATE AND MAINTAIN DOMESTIC AND INTERNATIONAL AIR TRANSPORT SERVICES, WITH CLARKFIELD, PAMPANGA AS ITS BASE Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled. Section 1. Nature and Scope of Franchise. - Subject to the provisions of the Constitution and applicable laws, rules

and regulations, there is hereby granted to Southeast Asian Airlines (SEAir),Inc., hereunder referred to as the grantee, its successors or assigns, a franchise to establish, operate and maintain transport services for the carriage of passengers, mail, goods and property by air, both domestic and international. Air transport services shall include the maintenance and operation of hangars and aircraft service stations and facilities and other services of similar nature which may be necessary, convenient or useful as an auxiliary to aircraft transportation. The grantee shall have the right at its terminal and landing fields, as well as in its aircraft, to construct, operate and maintain stations or transmitting sets for wireless telegraphy and direction findings, and other radio aids to air navigation, using wavelengths in accordance with the rules and regulations made from time to time by the proper agencies of the government. The wireless communication facilities shall be used solely for receiving and transmitting weather forecasts and other matters in connection with the grantee's services. Section 2. Civil Aeronautics Board (CAB). - The grantee shall secure from the CAB the appropriate permits and licenses for its operations. All aircraft used by the grantee including their accessories and equipment shall at all times be air worthy and the crew members shall be licensed by the Government of the Philippines. They shall be equipped with radio communications, safety and other equipment and shall be operated and maintained in accordance with the regulations and technical requirements of the Civil Aviation Authority of the Philippines or such other regulatory bodies the government may prescribe for this purpose.lawph!1 The grantee's equipment and the operation of such equipment shall at all times be subject to inspection and regulation by the Civil Aviation Authority of the Philippines. The grantee shall comply with the provisions of Republic Act Numbered Seven hundred and seventy six (R.A. No. 776), otherwise known as the "Civil Aeronautics Act of the Philippines", and the regulation promulgated there under from time to time. Section 3. Responsibility to the Public. - Excepting cases of force majeure and whenever weather conditions permit, the grantee shall maintain scheduled and/or non scheduled and/or chartered air transport services to any and all points and places throughout the Philippines and between the Philippines and other countries at such frequencies as traffic needs may require: Provided, however, That at least twenty - five percent (25%) of all its frequencies shall be for domestic market. Section 4. Rates for Services. - The grantee shall fix just and reasonable rates for the transportation of passengers, mail, goods and freight, subject to the regulations and approval of the CAB and other proper regulatory agencies of the government. Section 5. Term of Franchise. - This franchise shall be for a term of twenty - five (25) years from the date of effectivity of this Act, unless sooner revoked or cancelled. This

franchise shall be deemed ipso facto revoked in the event the grantee fails to comply with any of the following conditions: (a) Commence operations within one (1) year from the approval of its permit by the CAB; (b) Operate continuously for two (2) years; and (c) Commence operations within two (2) years from the effectivity of this Act. Section 6. Acceptance and Compliance. - Acceptance of this franchise shall be given in writing within sixty (60) days after the effectivity of this Act. Upon giving such acceptance, the grantee shall exercise the privileges granted under this Act. Nonacceptance shall render the franchise void. Section 7. Bond. - The grantee shall file a bond issued in favor of the CAB, which shall determine the amount, to guarantee the compliance with and fulfillment of the conditions under which this franchise is granted. If, after three (3) years from the date of the approval of its permit by the Board, the grantee shall have fulfilled the same, the bond shall be cancelled by the Board. Otherwise, the bond shall be forfeited in favor of the government and the franchise ipso facto revoked. Section 8. Landing Facilities. - The grantee may use the landing and other airport facilities on land and water as may be maintained or owned by the government within the Philippines on the grantee's line subject to such terms and conditions, restrictions and national policy considerations as the Philippine Government may impose:Provided, That the Philippine Government shall have the right to use the landing and other airport facilities as may be maintained and owned by the grantee in the Philippines. Section 9. Contracts. - The grantee is authorized to enter into transportation contracts with the Philippine Government, including the carrying of mail, upon such terms and conditions a may be mutually agreed upon. The grantee shall give preferential consideration to contracts with the Philippine Government. The grantee may 'likewise enter into transportation maintenance and/or servicing contracts, and such other contracts relating to air transport with other foreign - owned airlines particularly with those which have international routes. Section 10. Right of Government. - A special right is hereby reserved to the President of the Philippines, in times of war, rebellion, public peril, calamity, emergency, disaster or disturbance of peace and order, to temporarily take over and operate the facilities or equipment of the grantee, to temporarily suspend the operation of any facility or equipment in the interest of public safety, security and public welfare, or to authorize the temporary use and operation thereof by any agency of the government, upon due compensation to the grantee, for the use of said facilities or equipment during the period when they shall be so operated. Section 11. Warranty in Favor of the National and Local Governrnents. - The grantee shall hold the national, provincial, city and municipal governments of the Philippines harmless from all claims, accounts, demands or actions arising out of accidents or injuries, whether to

property or to persons, caused by the operation of the services under the franchise hereby granted. Section 12. Nontransferability of Franchise. - The grantee shall not lease, transfer, grant the usufruct of, sell nor assign this franchise or the rights and privileges acquired thereunder to any person, firm, company, corporation or other commercial or legal entity, nor merge with any other corporation or entity, nor shall the controlling interest of the grantee be transferred, whether as a whole or in parts and whether simultaneously or contemporaneously, to any such person, firm, company, corporation or entity without the prior approval of the Congress of the Philippines. Any person or entity to which this franchise is sold, transferred or assigned, shall be subject to the same conditions, terms, restrictions and limitations of this Act. Section 13. Dispersal of Ownership. - In accordance with the constitutional provision to encourage public participation in public utilities, the grantee shall offer at least thirty percent (30%) of its outstanding capital stock or a higher percentage that may hereafter be provided by law in any securities exchange in the Philippines within five (5) years from the commencement of its operations. Noncompliance therewith shall render the franchise ipso facto revoked. Section 14. Reportorial Requirement. - The grantee shall submit an annual report to Congress of the Philippines on its compliance with the terms and conditions of the franchise and on its operations within sixty (60) days from the end of every year. Section 15. Equality Clause. - In the event that any competing individual, partnership or corporation receives or enjoys or shall receive similar permit or franchise with terms, provisions and/or privileges more favorable than those herein granted or which tend tu place the herein grantee at any disadvantage, then such terms and/or provisions shall be deemed part hereof and shall operate equally in favor of the herein grantee. Section 16. Separability Clause. - If any of the sections or provisions of this Act is held invalid, all other provisions not affected thereby shall remain valid. Section 17. Repealability and Nonexclusivity Clause. - This franchise shall be subject to amendment, alteration or repeal by the Congress of the Philippines when the public interest so requires and shall not be interpreted as an exclusive grant of the privileges herein provided for. Section 18. Effectivity Clause. - This Act shall take effect fifteen (15) days from the date of its publication, upon the initiative of the grantee, in at least two(2) newspapers of general circulation in the Philippines. B. Rate-Fixing See Public Service Act, Sections 16(c) and 20(a) 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 :

(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, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice to the concerns operating in the territory affected: 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 private business shall be considered in relation with the public service of such operator for the purpose of fixing the rates. 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 any 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 and reasonable shall be upon the public service proposing the same. o o o o Padua v. Ranada, G.R. No. 141949, October 14, 2002 Republic of the Philippines v. Meralco, supra KMU Labor Center v. Garcia, supra Francisco v. Toll Regulatory Board, supra

C. Approval of Sales of Public Utility Assets or Equity Public Service Act, Section 20 (g), (h) and (i) 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 (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 other public service. The approval herein required shall be given, after notice to the public and hearing the persons interested at a public hearing, if it be shown that there are just and reasonable grounds for making the mortgaged 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 forty per centum 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. Nothing herein contained shall be construed to prevent the holding of shares lawfully acquired. (As amended by Com. Act No. 454.) (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 sixty per centum 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. Montoya v. Ignacio, G.R. No. L-5868, December 29, 1953 Perez v. Gutierrez, 53 SCRA 149 D. Power to set fees and other charges Republic v. International Communications Corporation, G.R. No. 141667, July 17, 2006 E. Other means of regulation See Public Service Act, Section 16 and 20 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 which shall be known as certificates of public convenience, authorizing the operation of public service 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 thereafter, certificates of public convenience and certificates of public convenience and necessity will be granted only to citizens of the Philippines or of the United States or to corporations, co-partnerships, associations or joint-stock companies constituted and organized under the laws of the Philippines; Provided, That sixty per centum of the stock or paid-up capital of any such corporations, co-partnership, association or joint-stock company must belong entirely to citizens of the Philippines or of the United States: Provided, further, That no such certificates shall be issued for a period of more than fifty years.

(b) To approve, subject to constitutional limitations any franchise or privilege granted under the provisions of Act No. Six Hundred and Sixty-seven, as amended by Act No. One Thousand and twenty-two, by any political subdivision of the Philippines when, in the judgment of the Commission, such franchise or privilege will properly conserve the public interests, and the Commission shall in so approving impose such conditions as to construction, equipment, maintenance, service, or operation as the public interests and convenience may reasonably require, and to issue certificates of public convenience and necessity when such is required or provided by any law or franchise. (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, That the Commission may, in its discretion, approve rates proposed by public services provisionally and without necessity of any hearing; but it shall call a hearing thereon within thirty days, thereafter, upon publication and notice to the concerns operating in the territory affected: 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 private 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, measurement, 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 equipment. (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 company 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 to promote, such just and reasonable connection as shall be necessary to promote the convenience of shippers of property, or of passengers,

and in like manner direct any railroad, street railway, or traction company engaged in carrying merchandise, to construct, maintain and operate, upon reasonable terms, a switch 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 out 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 or traction company to lay its tracks across the tracks of any other railroad, street railway or traction company or across any public highway. (k) To direct any railroad or street railway company to install such safety devices or about such other reasonable measures as may in the judgment of the Commission be necessary for the protection of the public are passing grade crossing of (1) public highways and railroads, (2) public highways and streets railway, or (3) railways and street railways. (l) To fix and determine proper and adequate rates of depreciation of the property of any public service which will be observed in a proper and adequate depreciation account to be carried for the protection of stockholders, bondholders or creditors in accordance with such rules, regulations, and form of account as the Commission may prescribe. Said rates shall be sufficient to provide the amounts required over and above the expense 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 moneys so provided for out of its earnings and carry the same in a depreciation fund. The income from investments of money in such fund shall likewise be carried in such fund. This fund shall not be expended otherwise than for depreciation, improvements, new construction, extensions or conditions to the properly of such public service. (m) To amend, modify or revoke at any time certificate issued 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 contumaciously refused to comply with any order rule or regulation of the Commission or any provision of this Act: Provided, That the Commission, for good cause, may prior to the hearing suspend for a period not to exceed thirty 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-busses, 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 more those charged for auto-busses, trucks, and motor trucks of types not made regulation under the subsection. 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 any 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 and 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. (c) To abandon any railroad station or stop the sale of passenger tickets, or cease to maintain an agent to receive and discharge freight at any station now or hereafter established at which passenger tickets are now or may hereafter be regularly sold, or at which such agent is now or may hereafter be maintained, or make any permanent change in its time tables or itineraries on any railroad or in its service. (d) To lay any railroad or street railway track across any highway, so as to make a new crossing at grade, or cross the tracks of any other railroad or street railway, provided, that this subsection shall not apply to replacements of lawfully existing tracks. (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. (f) To capitalize any franchise in excess of the amount, inclusive of any tax or annual charge, actually paid to the Government of the Philippines or any political subdivision thereof as the consideration of said franchise; capitalize any contract for consolidation, merger or lease, or issue any bonds or other evidence of indebtedness against or as a lien upon any contract for consolidation, merger, or lease: Provided, however, that the provisions of this section shall not prevent the issuance of stock, bonds, or other evidence of indebtedness subject to the approval of the Commission by any lawfully merged or consolidated public services not in contravention of the provisions of this section. (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 other public service. The approval herein required shall be given, after notice to the public and hearing the persons interested at a public hearing, if it be shown that there are just and reasonable grounds for making the mortgaged 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 forty per centum 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. Nothing herein contained shall be construed to prevent the holding of shares lawfully acquired. (As amended by Com. Act No. 454.) (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 sixty per centum 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. (j) To issue, give or tender, directly or indirectly, any free ticket free pass or free or reduced rate of transportation for passengers, except to the following persons: (1) officers, agents, employees, attorneys, physicians and surgeons of said public service, and members of their families; (2) inmates of hospitals or charity institutions, and persons engaged in charitable work; (3) indigent, destitute, and homeless persons when transported by charitable societies or hospitals, and the necessary agents employed in such transportation; (4) the necessary caretakers, going and returning, of livestock, poultry, fruit, and other freight under uniform and non-discriminatory regulation; (5) employees of sleeping car corporations, express corporations and telegraph and telephone corporations, railway and marine mail service employees, when traveling in the course of their official duly; (6) post-office inspectors, customs officers and inspectors, and immigration inspectors when engaged in inspection; (7) witnesses attending any legal investigation in which the public service is an interested party; (8) persons injured in accidents or wrecks, and physicians and nurses attending such persons; (9) peace officers and men of regularly constituted fire departments. (As amended by Com. Act No. 454.) (k) Adopt, maintain, or apply practices or measures, rules or regulations to which the public shall be subject in its relations with the public service. PLDT v NTC, supra

PART TWO: TRANSPORATION LAW I General Discussion 1. Definition 2. Relationship to a public utility 3. Nature of a Franchise Raymundo v. Luneta Motor, 58 Phil. 889 Cogeo-Cubao Operator & Driver Association v. CA, G.R. No. 100727, March 18, 1992 Y Transit Co., Inc. v. NLRC, 229 SCRA 508 4. Scope of a Franchise San Pablo v. Pantranco, 153 SCRA 199 5. Prior-operator rule Batangas Transportation v. Orlanes, 52 Phil 455 6. Kabit System Teja v. IAC, 148 SCRA 347 Santos vs. Sibug 104 SCRA 520 Lita Enterprises, Inc. v. Second Civil Cases Division, 129 SCRA 79 Lim v. CA, G.R. No. 125817, January 16, 2002 Baliwag Transit, Inc. v Court of Appeals, G.R. No. L57493, January 7, 1987 7. Private nature; rights and obligations of parties inter se arising from transactions relating to transportation a. absent a transportation contract Lara v Valencia, 104 Phil 65 b. liability of registered owner PCI Leasing v UCPB General Insurance, 557 SCRA 141 II Regulation of the Transportation Industry 1. The Department of Transportation and Communication, EO 125, Sec. 4 and 5 (as amended by EO 125-A); Sec. 4. Mandate. The Ministry shall be the primary policy, planning, programming, coordinating, implementing, regulating and administrative entity of the Executive Branch of the government in the promotion, development 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 communications services. To accomplish such mandate, the Ministry shall have the following objectives: (a) Promote the development of dependable and coordinated networks of transportation and communications systems; (b) Guide government and private investment in the development of the country's intermodal transportation and communications systems in a most practical, expeditious, and orderly fashion for maximum safety, service, and cost effectiveness; (c) Impose appropriate measures to that technical, economic and other conditions for the continuing economic viability of the transportation and communications 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 international telecommunications service requirements including, among others, radio and television broadcast relaying, leased channel services and data transmission; (e) Guide government and private investments in the establishment, operation and maintenance of an international switching system for incoming and outgoing telecommunications services; (f) Encourage the development of a domestic telecommunications industry in coordination with the concerned entities particularly, the manufacture of communications/electronics equipment and components to complete and support, as much as possible, the expansion, development, operation and maintenance of the nationwide telecommunications network; (g) Provide for a safe, reliable and efficient postal system for the country. [ORIGINAL] Sec. 5. Powers and Functions. To accomplish its mandate, the Ministry shall have the following 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, and for this purpose, may call on any agency, corporation, or organization, whether public or private, whose development programs include transportation and communications as an integral part thereof, to participate and assist in the preparation and implementation of such programs;

(c) Assess, review and provide direction to transportation and communications research and development programs of the government in coordination with other institutions concerned; (d) Administer all laws, rules and regulations in the field of transportation and communications; (e) Coordinate with the Ministry of Public Works and Highways in the design, development, rehabilitation, improvement, construction, maintenance and repair of telecommunications, ports, airports and railways projects and facilities including navigational aids and implement its development works through competitive bidding, negotiated contracts of other methods as the President may authorize; (f) Establish operate and maintain a nationwide postal system that shall include mail processing, delivery services, and money order services and promote the art of philately; (g) Sub-allocate series of frequencies of bands allocated by the International Telecommunications Union to the specific services; (h) Accredit foreign aircraft manufacturer and/or international organizations for aircraft certification in accordance with procedures and standards established by the Bureau of Air Transportation; (i) Deputize the Philippine Airlines and/or the Airline Pilots Association of the Philippines for licensing of pilots in accordance with rules, procedures and standards established by the Bureau of Air Transportation; (j) Perform such other powers and functions as may be prescribed by law. [AMENDED] Sec. 5. Powers and Functions. To accomplish its mandate, the Department shall have the following 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, and for this purpose, may call on any agency, corporation, or organization, whether public or private, whose development programs include transportation and communications as an integral part thereof, to participate and assist in the preparation and implementation of such program; (c) Assess, review and provide direction to transportation and communication research and development programs of the government in coordination with other institutions concerned; (d) Administer and enforce all laws, rules and regulations in the field of transportation and communications;

(e) Coordinate with the Department of Public Works and Highways in the design, location, development, rehabilitation, improvement, construction, maintenance and repair of all infrastructure projects and facilities of the Department. However, government corporate entities attached to the Department shall be authorized to undertake specialized telecommunications, ports, airports and railways projects and facilities as directed by the President of the Philippines or as provided by law; (f) Establish, operate and maintain a nationwide postal system that shall include mail processing, delivery services, and money order services and promote the art of philately; (g) Issue certificates of public convenience for the operation of public land and rail transportation utilities and services; (h) Accredit foreign aircraft manufacturers and/or international organizations for aircraft certification in accordance with established procedures and standards; (i) Establish and prescribe rules and regulations for identification of routes, zones and/or areas of operations of particular operators of public land services; (j) Establish and prescribe rules and regulations for the establishment, operation and maintenance of such telecommunications facilities in areas not adequately served by the private sector in order to render such domestic and overseas services that are necessary with due consideration for advances in technology; (k) Establish and prescribe rules and regulations for the operation and maintenance of a nationwide postal system that shall include mail processing, delivery services, money order services and promotion of philately; (l) Establish and prescribe rules and regulations for issuance of certificates of public convenience for public land transportation utilities, such as motor vehicles, trimobiles and railways; (m) Establish and prescribe rules and regulations for the inspection and registration of air and land transportation facilities, such as motor vehicles, trimobiles, railways and aircrafts; (n) Establish and prescribe rules and regulations for the issuance of licenses to qualified motor vehicle drivers, conductors, and airmen; (o) Establish and prescribe the corresponding rules and regulations for the enforcement of laws governing land transportation, air transportation and postal services, including the penalties for violations thereof, and for the deputation of appropriate law enforcement agencies in pursuance thereof; (p) Determine, fix and/or prescribe charges and/or rates pertinent to the operation of public air and land transportation utility facilities and services, except such rates and/or charges as may

be prescribed by the Civil Aeronautics Board under its charter, and, in cases where charges or rates are established by international bodies or associations of which the Philippines is a participating member or by bodies or associations recognized by the Philippine government as the proper arbiter of such charges or rates; (q) Establish and prescribe the rules, regulations, procedures and standards for the accreditation of driving schools; (r) Administer and operate the Civil Aviation Training Center (CATC) and the National Telecommunications Training Institute (NTTI); and (s) Perform such other powers and functions as 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 of the Republic of the Philippines. See also EO 292 Book IV, Title XV Title XV TRANSPORTATION AND COMMUNICATIONS CHAPTER 1 GENERAL PROVISIONS Section 1. Declaration of Policy. - The State is committed to the maintenance and expansion of viable, efficient, fast, safe and dependable transportation and communications systems as effective instruments for national recovery and economic progress. It shall not compete as a matter of policy with private enterprise and shall operate transportation and communications facilities only in those areas where private initiatives are inadequate or non-existent. Section 2. Mandate. - The Department of Transportation and Communications shall be the primary policy, planning, programming, coordinating, implementing, regulating and administrative entity of the Executive Branch of the government in the promotion, development and regulation of dependable and coordinated networks of transportation and communications systems as well as in the fast, safe, efficient and reliable postal, transportation and communications services. Section 3. Powers and Functions.- To accomplish its mandate, the Department shall: (1) 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; (2) Establish and administer comprehensive and integrated programs for transportation and communications, and for this purpose, it may call on any agency, corporation or organization, whether public or private, whose development programs include

transportation and communications as integral parts thereof, to participate and assist in the preparation and implementation of such programs; (3) Assess, review and provide direction to transportation and communications research and development programs of the government in coordination with other institutions concerned; (4) Administer and enforce all laws, rules and regulations in the field of transportation and communications; (5) Coordinate with the Department of Public Works and Highways in the design, location, development, rehabilitation, improvement, construction, maintenance and repair of all infrastructure projects and facilities of the Department. However, government corporate entities attached to the Department shall be authorized to undertake specialized telecommunications, ports, airports and railways projects and facilities as directed by the President of the Philippines or as provided by law; (6) Establish, operate and maintain a nationwide postal system that shall include mail processing, delivery services and money order services and promote the art of philately; (7) Issue certificates of public convenience for the operation of public land and rail transportation utilities and services; (8) Accredit foreign aircraft manufacturers or international organizations for aircraft certification in accordance with established procedures and standards; (9) Establish and prescribe rules and regulations for identification of routes, zones or areas of operation of particular operators of public land services; (10) Establish and prescribe rules and regulations for the establishment, operation and maintenance of such telecommunications facilities in areas not adequately served by the private sector in order to render such domestic and overseas services that are necessary with due consideration for advances in technology; (11) Establish and prescribe rules and regulations for the issuance of certificates of public convenience for public land transportation utilities, such as motor vehicles, trimobiles and railways; (12) Establish and prescribe rules and regulations for the inspection and registration of air and land transportation facilities, such as motor vehicles, trimobiles, railways and aircraft; (13) Establish and prescribe rules and regulations for the issuance of licenses to qualified motor vehicle drivers, conductors and airmen; (14) Establish and prescribe the corresponding rules and regulations for enforcement of laws governing land transportation, air transportation and postal services, including the penalties for

violations thereof, and for the deputation of appropriate law enforcement agencies in pursuance thereof; (15) Determine, fix or prescribe charges or rates pertinent to postal services and to the operation of public air and land transportation utility facilities and services, except such rates or charges as may be prescribed by the Civil Aeronautics Board under its charter and, in cases where charges or rates are established by international bodies or associations of which the Philippines is a participating member or by bodies or associations recognized by the Philippine government as the proper arbiter of such charges or rates; (16) Establish and prescribe the rules, regulations, procedures and standards for the accreditation of driving schools; (17) Administer and operate the Civil Aviation Training Center (CATC) and the National Telecommunications Training Institute (NTTI); and (18) Perform such other powers and functions as may be provided by law. Section 4. Organizational Structure. - The Department shall consist of the Department Proper, the Department Regional Offices, the Land Transportation Franchising and Regulatory Board, and the Attached Agencies. CHAPTER 2 DEPARTMENT PROPER Section 5. Office of the Secretary. - The Office of the Secretary shall consist of the Secretary, his immediate staff, the Franchising Review Staff and the Investigation, Security and Law Enforcement Staff. The Franchising Review Staff shall be headed by a Review Staff Director with the same rank, salary and privileges of a Department Regional Director who shall be appointed by the President upon the recommendation of the Secretary. The Franchising Review Staff shall assist the Secretary in the review of cases and matters pertaining to, among others, grants of franchises and the regulation thereof. The Investigation, Security and Law Enforcement Staff shall be headed by a Staff Director with the same rank, salary and privileges of a Department Service Chief. The Investigation, Security and Law Enforcement Staff shall be responsible for: (a) providing security and intelligence for the Department; (b) coordinating security and intelligence activities of security units of its offices and attached agencies; and (c) undertaking law enforcement, functions and activities relating to land transportation. Section 6. Undersecretaries. - The Secretary shall be assisted by four (4) Undersecretaries. Each Undersecretary shall have control and supervision over the respective offices and services assigned to him by the Secretary.

Section 7. Assistant Secretaries. - The Secretary shall also be assisted by eight (8) Assistant Secretaries each of whom shall be responsible for the four (4) staff offices and four (4) line offices. Each Assistant Secretary shall report to the respective Undersecretary to whom he is assigned by the President. Section 8. Staff Offices. - The Department shall have the following staff offices: (1) The Office of the Assistant Secretary for Administrative and Legal Affairs composed of the Administrative Service and the Legal Service; (2) The Office of the Assistant Secretary for Finance and Comptrollership composed of the Finance and Management Service and the Comptrollership Service; (3) The Office of the Assistant Secretary for Planning and Project Development composed of the Planning Service and the Project Development Service; and (4) The Office of the Assistant Secretary for Management Information and Project Management composed of the Management Information Service and the Project Management Service. Section 9. Line Offices. - The Department shall have the following line offices: (1) The Office of the Assistant Secretary for Land Transportation; (2) The Office of the Assistant Secretary for Postal Services; (3) The Office of the Assistant Secretary for Telecommunications; and (4) The Office of the Assistant Secretary for Air Transportation. The line offices shall each have an Executive Director who shall assist the respective Assistant Secretary in the implementation and enforcement of the policies, programs and projects, and the pertinent laws on their respective areas of responsibilities. Section 10. Service Units in the Office of the Assistant Secretary for Land Transportation. - There shall be two service units in the Office of the Assistant Secretary for Land Transportation, namely: (1) Law Enforcement Service, and (2) Traffic Adjudication Service. Each of the aforesaid service units shall be headed by a Service Chief to be appointed by the President upon recommendation of the Secretary of Transportation and Communication. Section 11. Functions of the Law Enforcement Service. The Law Enforcement Service shall have the same functions and powers as those that the former Law Enforcement Division in the

Office of the exercised.

Assistant

Secretary

for

Land

Transportation

Section 12. Functions of the Traffic Adjudication Service. - The Traffic Adjudication Service shall have the following powers and functions: (1) To hear and decide cases involving violations of laws, rules and regulations governing land transportation and to impose fines and/or penalties therefor; provided that violations resulting in damage to property and/or physical injuries or violations constituting offenses punishable under the Revised Penal Code and other penal laws shall be under the jurisdiction of the regular courts; (2) To order the impounding of motor vehicles and confiscation of plates or the arrest of violators of laws, rules and regulations governing land transportation; (3) To issue subpoena and subpoena duces tecum and to summon witnesses to appear in any proceedings thereof, and to administer oaths and affirmations; (4) To promulgate rules and regulations governing the proceedings before it; provided that except with respect to paragraph c, the rules of procedure and evidence prevailing in the courts of law shall not be controlling and all reasonable means to ascertain the facts in each case shall be used without regard to technicalities of law and procedures but all in the interest of due process; and (5) To perform such other functions and duties as may be provided by law, or as may be necessary, or proper or incidental to its powers and functions. CHAPTER 3 DEPARTMENT SERVICES Section 13. Department Services. Services shall include the following: (1) Administrative Service; (2) Legal Service; (3) Finance and Management Service; (4) Comptrollership Service; (5) Planning Service; (6) Project Development Service; (7) Management Information Service; and (8) Project Management Service. Each of the above named services shall be headed by a Service Chief appointed by the President upon the recommendation of the Secretary. The Department

CHAPTER 4 REGIONAL OFFICES Section 14. Regional Offices. - The Department shall have three (3) Regional Offices in each of the administrative regions of the country: the Regional Office for Land Transportation, the Regional Office for Telecommunications and the Regional Office for Postal Services. Each Regional Office shall be headed by a Regional Director to be assisted by an Assistant Regional Director. The Regional Offices shall essentially be line in character and shall be responsible for the delivery of all front line services of the Department. For such purposes, the Regional Offices shall have, within their respective administrative regions, the following functions: (1) Implement laws, policies, plans, programs, projects, rules and regulations of the Department; (2) Provide efficient and effective service to the people; (3) Coordinate with regional offices of other departments, offices and agencies; (4) Coordinate with local government units; and (5) Perform such other functions as may be provided by law. The Office of the Secretary shall have direct line supervision and control over Regional Offices. CHAPTER 5 REGULATORY BOARD Section 15. Land Transportation Franchising and Regulatory Board. - The quasi-judicial powers and functions with respect to land transportation shall be exercised through the Land Transportation and Regulatory Board, hereinafter referred to as the "Board". Section 16. Composition of the Board. - The Board shall be composed of a Chairman and two (2) members with the rank, salary and privileges of an Assistant Secretary, all of whom shall be appointed by the President of the Philippines upon recommendation of the Secretary of Transportation and Communications. One (1) member of the Board shall be a member of the Bar and shall have been engaged in the practice of law in the Philippines for at least five (5) years, another a holder of a degree in civil engineering, and the other a holder of a degree in economics, finance or management both with the same number of years of experience and practice. Section 17. Executive Director and Support Staff of the Board. - The Board shall have an Executive Director who shall also be appointed by the President of the Philippines upon the recommendation of the Secretary of Transportation and Communications. He shall have the rank, salary and privileges of

a Department 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. Section 18. Supervision and Control Over the Board. - The Secretary of Transportation and Communications, through his duly designated Undersecretary, shall exercise administrative supervision and control over the Land Transportation Franchising and Regulatory Board. Section 19. Powers and Functions of the Land Transportation Franchising and Regulatory Board. - The Board shall: (1) Prescribe and regulate routes, economically viable capacities, and zones or areas of operation of public land transportation services provided by motorized vehicles in accordance with the public land transportation development plans and programs approved by the Department of Transportation and Communications; (2) Issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits authorizing the operation of public land transportation services provided by motorized vehicles, and prescribe the appropriate terms and conditions therefor; (3) 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; (4) Issue preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in which it has jurisdiction and in which cases the pertinent provisions of the Rules of Court shall apply; (5) Punish for contempt of the Board, both direct and indirect, in accordance with the pertinent provisions of, and the penalties prescribed by, the Rules of Court; (6) Issue subpoena and subpoena duces tecum and to summon witnesses to appear in any proceedings of the Board, to administer oaths and affirmations, and, in appropriate cases, to order the search and seizure of all vehicles and documents, upon probable cause and as may be necessary for the proper disposition of the cases before it; (7) Conduct investigations and hearings of complaints for violation of the public service laws on land transportation and of the Board's rules and regulations, orders, decisions or rulings and to impose fines or penalties for such violations; (8) Review motu propio the decisions/actions of the Regional Franchising and Regulatory Offices;

(9) Promulgate rules and regulations governing proceedings before the Board and the Regional Franchising and Regulatory Office. However, except with respect to paragraphs 4, 5, 6, and 7 hereof, the rules of procedure and evidence prevailing in the courts of law should not be controlling but rather the spirit and intention of said rules. The Board and the Regional Franchising and Regulatory Offices shall use every and all reasonable means to ascertain facts in each case speedily and objectively and without regard to technicalities of law and procedures, all in the interest of due process; (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 public utilities, standards of measurements 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, equipment, 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 operation; (12) Coordinate and cooperate with other government agencies and entities concerned with any aspect involving public land transportation services with the end in view of effecting continuing improvement of such services; and (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 Department; Section 20. Decisions of the Board; Appeals therefrom or Review Thereof . - The Board, in the exercise of its powers and functions, shall sit and render its decision en banc. Every such decision, order, or resolution of the Board must bear the concurrence and signature of at least two (2) members thereof. The decision, order or resolution of the Board shall be appealable to the Secretary within thirty (30) days from receipt of the decision. However, the Secretary may motu propio review and decision or action of the Board before the same becomes final. Section 21. Regional Franchising and Regulatory Offices. There shall be a Regional Franchising and Regulatory Office in each of the administrative regions of the country which shall be headed by a Regional Director having the rank, salary and privileges of a Department Assistant Regional Director. The Regional Franchising and Regulatory Offices shall hear and decide uncontested applications/petitions for routes, within their respective administrative regions but that applications/petitions for routes extending beyond their respective territorial jurisdiction shall be heard and decided by the Board. Section 22. Appeals. - The decisions, orders or resolutions of the Regional Franchising and Regulatory Offices shall be appealable to the Board within thirty (30) days from receipt of the decision.

CHAPTER 6 ATTACHED AGENCIES Section 23. Attached Agencies and Corporations. - The following agencies and corporations are attached to the Department: The Philippine National Railways, the Maritime Industry Authority, the Philippine National Lines, the Philippine Aerospace Development Corporation, the Metro Manila Transit Corporation, the Office of Transport Cooperatives, the Philippine Ports Authority, the Philippine Merchant Marine Academy, the Toll Regulatory Board, the Light Rail Transit Authority, the Transport Training Center, the Civil Aeronautics Board, the National Telecommunications Commission and the Manila International Airport Authority. Section 24. Functions of Attached Agencies and Corporations. - The Agencies attached to the Department shall continue to operate and function in accordance with the respective charters or laws creating them, except when they conflict with this Code.

a. Air (i) Civil Aviation Authority of the Philippines, Republic Act No. 9497 (2008), Sec. 4, 21, 24, 35 SEC. 4. Creation of the Authority. - There is hereby created an independent regulatory body with quasi-judicial and quasi-legislative powers and possessing corporate attributes to be known as the Civil Aviation Authority of the Philippines (CAAP), hereinafter referred to as the "Authority" attached to the Department of Transportation and Communications (DOTC) for the purpose of policy coordination. For this purpose, the existing Air Transportation Office created under the provisions of Republic Act No. 776, as amended, is hereby abolished. Notwithstanding the foregoing, nothing in this Act shall diminish the powers and functions of the Civil Aeronautics Board (CAB) as provided for under Republic Act. No. 776, also known as "The Civil Aeronautics Act of the Philippines", as amended. (a) Establishment of Authority Headed by a Director General - The Authority shall beheaded by a Director General of Civil Aviation, referred to in this Act as the "Director General," who shall be appointed by the President of the Philippines and shall be responsible for all civil aviation in the Philippines and the administration of this Act. The Director General shall be appointed based on the qualifications herein provided and shall have a tenure of office for a period of four (4) years. His appointment may be extended for another non-extendible term of four (4) years and shall only be removed for cause in accordance with the rules and regulations prescribed by the Civil Service Commission. (b) Responsibility of the Director General - The Director General shall be responsible for the exercise of all powers and the discharge of all duties of the Authority and shall have control over all personnel and activities of the Authority. SEC. 21. Policies. - In the exercise and performance of its powers and duties under this Act, the Authority shall consider the following, among other things, as being in the public interest and in accordance with the public convenience and necessity: (a) The development and utilization of the air potential of the Philippines;

(b) The encouragement and development of an air transportation system properly adapted to the present and future of foreign and domestic commerce of the Philippines; (c) The regulation of air transportation in such manner as to support sound economic condition in such transportation and to improve the relations between air carriers; (d) Ensuring the safety, quality, reliability, and affordability of air transport services for the riding public; and (e) The encouragement and development of a viable and globally competitive Philippine aviation industry. SEC. 24. Powers of the Board. - The Board shall have the following general powers: (a) Provide comprehensive policy guidance for the promotion and development of the Philippine aviation industry, as provided for in this Act; (b) Ensure that the Authority performs its functions in a proper, efficient and effective manner; (c) Decide the objectives, strategies and policies of the Authority in accordance with the provisions of this Act; (d) Determine the organizational structure of the Authority in accordance with the provisions of this Act, establish a human resources management system based on merit and fitness, and adopt a rational compensation and benefits scheme; (e) Exercise appellate powers on any decisions, findings and rulings of the Director General, to issue subpoena ad testificandum or subpoena duces tecum requiring the attendance and testimony of witnesses in any matter or inquiry pending before the Board and require the production of books, papers, contracts, agreements and all other documents submitted for purposes of this section to be under oath and verified by the person in custody thereof as to the truth and correctness of data appearing in such books, papers, tariffs, contracts, agreements and all other documents; (f) Exercise appellate powers to order the taking of depositions in any proceeding, or investigation, pending before the Board at any stage of such proceeding or investigation;

(g) Use available services, equipment, personnel and facilities of other agencies of the Philippine Government, on a reimbursable basis when appropriate and, on a similar basis, to cooperate with those agencies in the establishment and use of services, equipment and facilities of the Authority; (h) Use the property of the Authority in such a manner as may appear to the Authority to be requisite, advantageous or convenient with a view to making the best use of any of the property of the Authority in relation to its functions under this Act; (i) Invest such of the Authority's funds that are not immediately required for operating expenses, or other immediate obligations in any business venture the Board may deem appropriate, or in such secured note, government securities, and other negotiable instruments that satisfy the guidelines prescribed by the Board. Funds of the Authority shall be deposited in such commercial and universal banks as the Board may determine, subject to the requirements of existing laws. The Board shall designate the officials authorized to deposit in or withdraw funds from such depository banks; (j) Promulgate rules and regulations as may be necessary in the interest of safety in air commerce pertaining to the issuance of the airman's certificate including the licensing of operating and mechanical personnel, type certificate for aircraft, aircraft engines, propellers and appliances, airworthiness certificates, air carrier operating certificates, air agency certificates, navigation facility and aerodrome certificates; air traffic routes; radio and aeronautical telecommunications and air navigation aids; aircraft accident inquiries; aerodromes, both public and private-owned; construction of obstructions to aerodromes; height of buildings; antennae and other edifices; registration of aircrafts; search and rescue; facilitation of air transports; operations of aircrafts, both for domestic and international, including scheduled and nonscheduled; meteorology in relation to civil aviation; rules of the air; air traffic services; rules for prevention of collision of aircrafts, identification of aircraft; rules for safe altitudes of flight; and such other rules and regulations, standards, governing other practices, methods and/or procedures as the Director General may find necessary and appropriate to provide adequately for safety regularity and efficiency in air commerce and air navigation;

(k) Impose and fix reasonable charges and fees for the use of government aerodromes or air navigation facilities; for services rendered by the Authority in the rating of any aerodrome or air navigation facilities, civil aviation schools and instructors, aircraft repair stations, and aircraft radio and aeronautical telecommunications stations; (l) Fix the reasonable charges to be imposed in the use of privately-owned air navigation facilities and aerodromes; (m) Adopt a system for the registration of aircraft as hereinafter provided; (n) Determine and fix, landing fees, parking space fees, royalties on sales or deliveries, direct or indirect, to any aircraft for its use of aviation gasoline, oil and lubricants, spare parts, accessories and supplies, tools, other royalties, fees or rentals for the use of any of the property under its management and control; (o) Approve the annual and supplementary budget plan and utilization of retained revenue; (p) Exercise the corporate powers granted to the Authority; (q) Upon its own initiative or the recommendation of the Director General or an application of a private person, grant exemption from the requirements of observing rules or regulations issued in accordance with this Act: Provided, That said grant of exemption is not prejudicial to flight safety; (r) Formulate rules and regulations concerning compliance of the carrier and the public for the safe transport of goods and materials by air pursuant to international standards or Annexes to the Chicago Convention; and (s) In coordination with the appropriate government agency tasked to provide airport security, shall: (1) Prescribe reasonable regulation requiring that all passengers and all property intended to be carried in the aircraft cabin in commercial air transport be screened by weapon-detecting procedure or facilities employed or operated by employees or agents of the air operator or foreign air operator prior to boarding the aircraft for such transportation;

(2) Prescribe such other reasonable rules and regulations requiring such parties, methods and procedures as the Director General may find necessary to protect persons and property aboard aircraft operating in commercial air transport against acts of criminal violence and aircraft piracy; and (3) To the extent practicable, require uniform procedures for the inspection, detention, and search of persons and property in domestic commercial air transport and international commercial air transport to assure their safety and to assure that they will receive courteous and efficient treatment by air operators and their agents and employees. SEC. 35. Powers and Functions of the Director General. - The Director General shall be the chief executive and operating officer of the Authority. He shall have the following powers, duties and responsibilities: (a) To carry out the purposes and policies established in this Act; to enforce the provisions of the rules and regulations issued in pursuance to said Act; and he shall primarily be vested with authority to take charge of the technical and operational phase of civil aviation matters; (b) To designate and establish civil airways, to acquire, control, operate and maintain along such airways, navigation facilities and to chart such airways and arrange for their publication including the aeronautical charts or maps required by the international aeronautical agencies, by utilizing the equipment, supplies or assistance of existing agencies of the government as far as practicable; (c) To issue airman's certificate specifying the capacity in which the holder thereof is authorized to serve as airman in connection with aircraft and shall be issued only upon the finding that the applicant is properly qualified and physically able to perform the duties of the position. The certificate shall contain such terms, conditions and limitations as the Director General may determine to be necessary to assure safety in air commerce: Provided, however, That the airman's license shall be issued only to qualified persons who are citizens of the Philippines or qualified citizens of countries granting similar rights and privileges to citizens of the Philippines;

(d) To issue airworthiness certificate for aircraft which shall prescribe the duration of such certificate, the type of service for which the aircraft may be used, and such other terms and conditions and limitations as are required; (e) To issue air carrier operating certificate in accordance with the minimum safety standards for the operation of the air carrier to whom such certificate is issued. The air carrier operating certificate shall be issued only to aircrafts registered under the provisions of this Act; (f) To issue type certificate for aircraft, aircraft engine, propellers and appliances; (g) To inspect, classify and rate any air navigation facilities and aerodromes available for the use of aircraft as to its suitability for such use and to issue a certificate for such air navigation facility and aerodrome; and to determine the suitability of foreign aerodromes, air navigation facilities as well as air routes to be used prior to the operation of Philippineregistered aircraft in foreign air transportation and from time to time thereafter as may be required in the interest of safety in air commerce; (h) To issue certificates of persons or civil aviation schools giving instruction in flying, repair stations, and other air agencies and provide for the examination and rating thereof; (i) To provide for the enforcement of the rules and regulations issued under the provisions of this Act and to conduct investigation for violations thereto. In undertaking such investigation, to require by subpoena ad testificandum or subpoena duces tecum, the attendance and testimony of witnesses, the production of books, papers, documents, exhibits matter, evidence, or the taking of depositions before any person authorized to administer oath. Refusal to submit the reasonable requirements of the investigation committee shall be punishable in accordance with the provisions of this Act; (j) To collect and disseminate information relative to civil aeronautics and the development of air commerce and the aeronautical industry; to exchange with foreign governments, information pertaining to civil aeronautics; and to provide for direct communication on all matters relating to the technical or operational phase of aeronautics with international aeronautical agencies:

(k) To acquire and operate such aircraft as may be necessary to execute the duties and functions of the Authority prescribed in this Act; (l) To plan, design, acquire, establish, construct, operate, improve, maintain, and repair necessary aerodromes and other air navigation facilities; (m) To collect and receive charges and fees for the registration of aircraft and for the issuance and/or renewal of licenses or certificates for aircraft, aircraft engines, propellers and appliances, and airmen as provided in this Act; (n) To impose fines and/or civil penalties in respect thereto; (o) To participate actively with the largest possible degree in the development of international standardization of practices in aviation matters important to safe, expeditious, and easy navigation, and to implement as far as practicable the international standards, recommended practices and policies adopted by appropriate international aeronautical agencies; (p) To exercise and perform its powers and duties under this Act consistent with any obligation assumed by the Republic of the Philippines in any treaty, convention or agreement on civil aviation matters; (q) To cooperate, assist and coordinate with any research and technical agency of the government on matters relating to research and technical studies on design, materials, workmanship, construction, performance, maintenance and operation of aircraft, aircraft engines, propellers, appliances, and air navigation facilities including aircraft fuel and oil: Provided, That nothing in this Act shall be construed to authorize the duplication of the laboratory research, activities or technical studies of any existing governmental agency; (r) To designate such prohibited and danger areas, in consonance with the requirements of the international aeronautical agencies and national security; (s) To issue, deny, suspend, cancel or revoke any certificate, license pertaining to aircraft, airmen and air agencies: Provided, That any order denying, suspending, cancelling, revoking the certificate or license may he appealed to the

Board, whose decisions shall he final within fifteen (15) days from the date of notification of such denial, cancellation or revocation; (t) To grant authorization to civil aircraft or persons to carry instruments or photographic devices to be used for aerial photography or taking of pictures by photograph or sketching of any part of the Philippines; and (u) Pursuant to a board resolution, to enter into, make and execute contracts of any kind with any person, firm, or public or private corporation. (ii) Civil Aeronautics Board, RA 776, as amended, Secs. 5, 10 (A), (C); Secs. 11,12 SECTION 5. Composition of the Board. - The Civil Aeronautics Board shall be composed of the Secretary of Transportation and Communications or his designated representative as Chairman, the Assistant Secretary for Air Transportation of the Department of Transportation and Communications as Vice-Chairman, the Commanding General of the Philippine Air Force* and two (2) members to be appointed by the President of the Philippines. They shall hold office at the pleasure of the President. No member of the Board shall have any pecuniary interest in, or own any stock or bond of, any civil aeronautics enterprise. SECTION 10. Powers and duties of the Board. - (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, the jurisdiction and control over, air carriers, general sales agents, cargo sales agents, and airfreight forwarders 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. (C) The Board shall have the following specific powers and duties: (1) In accordance with the provisions of Chapter 4 of this Act, to issue, deny, amend, revise, alter, modify, cancel, suspend, or revoke, in whole or in part, upon petition or complaint, or upon its own initiative, any temporary operating permit or Certificate of Public

Convenience and Necessity; Provided, however, That in the case of foreign air carriers, the permit shall be issued with the approval of the President of the Republic of the Philippines. (2) To 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. The Board may adopt any original, amended, or new individual, joint or special rates, charges or fares proposed by an air carrier if the proposed individual, joint, or special rates, charges for fares are not unduly preferential or unduly discriminatory or unreasonable. The burden of proof to show that the proposed individual, joint or special rates, charges or fares are just and reasonable shall be upon the air carrier proposing the same. In fixing rates, charges, fares under the provisions of this Act, the Board shall take into consideration, among other factors: (a) The effect of such rates upon the movement of traffic; (b) The need in the public interest of adequate and efficient transportation of persons and property by air carriers at the lowest cost consistent with the furnishing of such service. (c) Such standards respecting the character and quality of service to be rendered by air carriers as may be prescribed by or pursuant to law; (d) The inherent advantages of transportation by aircraft; and (e) The need of each air carrier for revenues sufficient to enable such air carrier, under honest, economical, and efficient management, to provide adequate and efficient air carrier service. (3) To authorize any type of charters whether domestic or international and special air services or flight under such terms and conditions as in its judgment public interest requires. Notwithstanding the existence of bilateral air agreement, the CAB is authorized to grant any foreign airline increase in frequencies and/or capacities on international routes when in its judgment the national interest requires it, provided that the utilization of the increase frequencies and capacities is not more than thirty days. All grants of frequencies and/or capacities shall be subject to the approval of the President. (4) To approve or disapprove increase and/or decrease of capital, lease, purchase, sales of aircraft of air carrier engaged in air commerce;

consolidation, merger, purchase, lease and acquisition and control of operating contracts between domestic foreign air carriers, or between domestic air carriers or any person engaged in any phase of aeronautics. (5) To inquire into the management of the business of any air carrier and, to the extent reasonably necessary for such inquiry, to obtain from such carrier, and from any person controlling, or controlled by, or under common control with, such air carrier, full and complete reports and other informations. Such reports shall be under oath whenever the Board so requires. (6) To require annual, monthly, periodical, and special reports from any air carrier, to prescribe the manner and form in which such reports shall be made, and to require from any air carrier specific answers to all questions upon which the Board may deem information to be necessary. Such reports shall be under oath whenever the Board so requires. The Board may also require any air carrier to file with it any contract, agreement, understanding or arrangement, or a true copy thereof, between such air carrier and any other carrier or person, in relation to any traffic affected by the provisions of this Act. (7) To prescribe the forms of any and all accounts, records, and memoranda of the movement of traffic, as well as of the receipts and expenditures of money, and the length of times such accounts, records and memoranda shall be preserved: Provided, that any air carrier may keep additional accounts, records, or memoranda if they do not impair the integrity of the accounts, records, or memoranda prescribed or approved by the Board and do not constitute an undue financial burden on such air carrier. (8) To require each officer and director of any air carrier to transmit a report describing the shares of stock with any persons engaged in any phase or other interest held by such air carrier of aeronautics, and the holding of the stock in and control of, other persons engaged in any phase of aeronautics. SECTION 11. Nature, terms and conditions. Certificate of Public Convenience and Necessity is a permit issued by the Board authorizing a person to engage in air commerce and/or transportation, foreign and/or domestic. No

person shall engage in air commerce unless there is in force a permit issued by the Board. No general sales agent, cargo sales agent or airfreight forwarder shall engage in any of the activities mentioned in Section 3 paragraphs (jj), (kk) and (ll) respectively, unless there is in force a permit or any other form of authorization issued by the Board. Any permit may be altered, amended, modified, suspended, canceled or revoked by the Board in whole or in part, upon complaints or petition or upon the Board's initiative as hereinafter provided, whenever the Board finds such action to be in the public interest. There shall be attached to the exercise of the privileges granted by the permit, or amendment thereto, such reasonable terms, conditions, or limitations as, in the judgment of the Board, the public interest may require. No permit shall confer any proprietary, property, or exclusive right in the use of any air space, civil airway, landing area of government air navigation facility. The permit shall, among others specify the terminal and intermediate points, if any, between which the air carrier is authorized to operate the service to be rendered, the time of arrival and departure at each point, and the frequency of flights. Provided, that no change in routes, rates, schedules or frequency nor supplemental or additional flights to those covered by an air commerce permit or franchise shall be affected without prior approval of the Civil Aeronautics Board. In so far as the operation is to take place within the Philippines, the permit shall designate the terminal and intermediate points only insofar as the Board shall deem practicable, and otherwise shall designate only the general route or routes to be followed. No carrier shall abandon any route, or part thereof for which a permit has been issued, unless upon findings by the Civil Aeronautics Board that such an abandonment is uneconomical and is in the public interest. SECTION 12. Citizenship requirement. Except as otherwise provided, in the Constitution and existing treaty or treaties, permit authorizing a person to engage in domestic air commerce and/or transportation

shall be issued Philippines.

only

to

citizens

of

the

PAL v. CAB, 23 SCRA 992 PAL v. CAB, supra Kuwait Airways v. PAL, supra b. Land (i) Land Transporation Office, EO 125-A, Secs. 9, 11, 13(a); Administrative Code of 1987, Title XV, Sec 9(1) Sec. 9. Assistant Secretaries and Service Chiefs. The Secretary shall also be assisted by eight (8) Assistant Secretaries appointed by the President upon the recommendation of the Secretary, each of whom shall respectively be responsible for the following four (4) staff offices composed of eight (8) services and four (4) line offices, and shall report to the respective Undersecretaries assigned by the Secretary, which Undersecretary shall have control and supervision over said respective services and offices: (a) Office of the Assistant Secretary Administrative and Legal Affairs; 1) Administrative Service, and 2) Legal Service for

(b) Office of the Assistant Secretary for Finance and Comptrollership; 1) Finance and Management Service, and 2) Comptrollership Service c) Office of the Assistant Secretary for Planning and Project Development; 1) Planning Service, and 2) Project Development Service (d) Office of the Assistant Secretary for Management Information Service and Project Management; 1) Management Information Service, and 2) Project Management Service e) Office of the Assistant Secretary for Land Transportation; (f) Office of the Assistant Secretary for Postal Services; (g) Office of the Assistant Telecommunications; Secretary for

(h) Office of the Assistant Secretary for Air Transportation. Each of the above-named services shall be headed by a service chief appointed by the President upon the recommendation of the Secretary. Sec. 11. Department Regional Offices. The Department shall have three (3) Department Regional Offices in each of the administrative regions of the country: the Department Regional Office for land Transportation, the Department Regional Office for Telecommunications and the Department Regional Office for Postal Services. 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. The present Regional Offices of the Bureau of Telecommunications are hereby abolished and their functions are transferred to the respective Department Regional Offices for Telecommunications. The present Regional Offices of the Bureau of Posts are hereby abolished and their functions are transferred to the corresponding Department Regional Offices for Postal Services. Each Department Regional Office shall be headed by a Department Regional Director and assisted by a Department Assistant Regional Director. The present Airport Offices of the Bureau of Air Transportation are hereby abolished and their functions are transferred to the Department Airport Offices. The abolition of the herein Regional Offices and the transfer of their functions shall be governed by the provisions of Section 15 (b) hereof. The Department Regional Offices shall essentially be line in character and shall be responsible for the delivery of all front line services of the Department. For such purposes, the Department Regional Offices shall have within their respective administrative regions, the following functions: (a) Implement laws, and policies, plans, programs, projects, rules and regulations of the Department; (b) Provide efficient, and effective service to the people; (c) Coordinate with regional offices of other departments, offices and agencies; (d) Coordinate with local government units; (e) Perform such other functions as may be provided by law.

[ACTUALLY DELETED UNDER EO 125-A] SECTION 13. Bureau of Land Transportation. The Bureau of Land Transportation is hereby created and shall have the functions of developing, formulating and recommending plans, programs, policies, standards, specifications and guidelines pertaining to land transportation. For such purposes, it shall, with the approval of the Minister: A) Establish a prescribe rules and regulations for routes, zones and/or areas of particular operators of public land services; Section 9. Line Offices. - The Department shall have the following line offices: (1) The Office of the Assistant Secretary for Land Transportation; (ii) Land Transportation Franchising and Regulatory Board, EO 202, Secs. 1, 2, 4, 5, 6, 7; Administrative Code of 1987, Title XV, Secs. 15-22 Sec. 1. Creation of the Land Transportation Franchising and Regulatory Board. There is hereby created in the Department of Transportation and Communications, the Land Transportation Franchising and Regulatory Board hereinafter referred to as the "Board". Sec. 2. Composition of the Board. The Board shall be composed of a Chairman and two (2) members with the same rank, salary and privileges of an Assistant Secretary, all of whom shall be appointed by the President of the Philippines upon recommendation of the Secretary of Transportation and Communications. One (1) member of the Board shall be a member of the Bar and shall have engaged in the practice of law in the Philippines for at least five (5) years, another a holder of a degree in civil engineering, and the other a holder of a degree in economics, finance or management both with the same number of years of experience and practice. Sec. 4. Supervision and Control Over the Board. The Secretary of Transportation and Communications, through his duly designated Undersecretary, shall exercise administrative supervision and control over the Land Transportation Franchising and Regulatory Board.

Sec. 5. Powers and Functions of the Land Transportation Franchising and Regulatory Board. The Board shall have the following powers and functions: a. To prescribe and regulate routes of service, economically viable capacities and zones or areas of operation of public land transportation services provided by motorized vehicles in accordance with the public land transportation development plans and programs approved by the Department of Transportation and Communications; b. To issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits authorizing the operation of public land transportation services provided by motorized vehicles, and to prescribe the appropriate terms and conditions therefor; c. To determine, prescribe and 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. To issue preliminary or permanent injunction, whether prohibitory or mandatory, in all cases in which it has jurisdiction, and in which cases the pertinent provisions of the Rules of Court shall apply; e. To punish for contempt of the Board, both direct and indirect, in accordance with the pertinent provisions of, and the penalties prescribed by, the Rules of Court; f. To issue subpoena and subpoena duces tecum and summon witnesses to appear in any proceedings of the Board, to administer oaths and affirmations; g. To conduct investigations and hearings of complaints for violation of the public service laws on land transportation and of the Board's rules and regulations, orders, decisions and/or rulings and to impose fines and/or penalties for such violations; h. To review motu proprio the decisions/actions of the Regional Franchising and Regulatory Office herein created; i. To promulgate rules and regulations governing proceedings before the Board and the Regional Franchising and Regulatory Office: Provided, That except with respect to paragraphs d, e, f and g hereof, the rules of

procedure and evidence prevailing in the courts of laws should not be controlling and it is the spirit and intention of said rules that the Board and the Regional Franchising and Regulatory Offices shall use every and all reasonable means to ascertain facts in its case speedily and objectively and without regard to technicalities of law and procedures, all in the interest of due process; j. To fix, impose and collect, and periodically review and adjust, reasonable fees and other related charges for services rendered; k. To 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, equipment 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. To coordinate and cooperate with other government agencies and entities concerned with any aspect involving public land transportation services with the end in view of effecting continuing improvement of such services; and m. To 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. Decision of the Board; Appeals therefrom and/or Review thereof. The Board, in the exercise of its powers and functions, shall sit and render its decisions en banc. Every such decision, order, or resolution of the Board must bear the concurrence and signature of at least two (2) members thereof. The decision, order or resolution of the Board shall be appealable to the Secretary within thirty (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. Creation of Regional Franchising and Regulatory Offices. 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 Department 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. CHAPTER 5 REGULATORY BOARD Section 15. Land Transportation Franchising and Regulatory Board. - The quasi-judicial powers and functions with respect to land transportation shall be exercised through the Land Transportation and Regulatory Board, hereinafter referred to as the "Board". Section 16. Composition of the Board. The Board shall be composed of a Chairman and two (2) members with the rank, salary and privileges of an Assistant Secretary, all of whom shall be appointed by the President of the Philippines upon recommendation of the Secretary of Transportation and Communications. One (1) member of the Board shall be a member of the Bar and shall have been engaged in the practice of law in the Philippines for at least five (5) years, another a holder of a degree in civil engineering, and the other a holder of a degree in economics, finance or management both with the same number of years of experience and practice. Section 17. Executive Director and Support Staff of the Board. - The Board shall have an Executive Director who shall also be appointed by the President of the Philippines upon the recommendation of the Secretary of Transportation and Communications. He shall have the rank, salary and privileges of a Department 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. Section 18. Supervision and Control Over the Board. - The Secretary of Transportation and Communications, through his duly

designated Undersecretary, shall exercise administrative supervision and control over the Land Transportation Franchising and Regulatory Board. Section 19. Powers and Functions of the Land Transportation Franchising and Regulatory Board. - The Board shall: (1) Prescribe and regulate routes, economically viable capacities, and zones or areas of operation of public land transportation services provided by motorized vehicles in accordance with the public land transportation development plans and programs approved by the Department of Transportation and Communications; (2) Issue, amend, revise, suspend or cancel Certificates of Public Convenience or permits authorizing the operation of public land transportation services provided by motorized vehicles, and prescribe the appropriate terms and conditions therefor; (3) 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; (4) Issue preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in which it has jurisdiction and in which cases the pertinent provisions of the Rules of Court shall apply; (5) Punish for contempt of the Board, both direct and indirect, in accordance with the pertinent provisions of, and the penalties prescribed by, the Rules of Court; (6) Issue subpoena and subpoena duces tecum and to summon witnesses to appear in any proceedings of the Board, to administer oaths and affirmations, and, in appropriate cases, to order the search and seizure of all vehicles and documents, upon probable cause and as may be necessary for the proper disposition of the cases before it; (7) Conduct investigations and hearings of complaints for violation of the public service laws on land transportation and of the Board's rules and regulations, orders, decisions or rulings and to impose fines or penalties for such violations;

(8) Review motu propio the decisions/actions of the Regional Franchising and Regulatory Offices; (9) Promulgate rules and regulations governing proceedings before the Board and the Regional Franchising and Regulatory Office. However, except with respect to paragraphs 4, 5, 6, and 7 hereof, the rules of procedure and evidence prevailing in the courts of law should not be controlling but rather the spirit and intention of said rules. The Board and the Regional Franchising and Regulatory Offices shall use every and all reasonable means to ascertain facts in each case speedily and objectively and without regard to technicalities of law and procedures, all in the interest of due process; (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 public utilities, standards of measurements 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, equipment, 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 operation; (12) Coordinate and cooperate with other government agencies and entities concerned with any aspect involving public land transportation services with the end in view of effecting continuing improvement of such services; and (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 Department; Section 20. Decisions of the Board; Appeals therefrom or Review Thereof . - The Board, in the exercise of its powers and functions, shall sit and render its decision en banc. Every such decision, order, or resolution of the Board must bear the concurrence and signature of at least two (2) members thereof. The decision, order or resolution of the Board shall be appealable to the Secretary within thirty (30) days from receipt of the decision.

However, the Secretary may motu propio review and decision or action of the Board before the same becomes final. Section 21. Regional Franchising and Regulatory Offices. - There shall be a Regional Franchising and Regulatory Office in each of the administrative regions of the country which shall be headed by a Regional Director having the rank, salary and privileges of a Department Assistant Regional Director. The Regional Franchising and Regulatory Offices shall hear and decide uncontested applications/petitions for routes, within their respective administrative regions but that applications/petitions for routes extending beyond their respective territorial jurisdiction shall be heard and decided by the Board. Section 22. Appeals. - The decisions, orders or resolutions of the Regional Franchising and Regulatory Offices shall be appealable to the Board within thirty (30) days from receipt of the decision. KMU Labor Center v. Garcia, supra c. Water (i) Maritime Industry Authority, EO 125, Sec. 14, as amended by EO-125-A, Sec. 4. See also Republic Act No. 9295, Section 10 and 11, in relation to Section 8 Sec. 12. Maritime Industry Authority. The Maritime Industry Authority is hereby retained and shall have the following functions: a. Develop and formulate plans, policies, programs, projects, standards, specifications and guidelines geared toward the promotion and development 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 Certificates of Public Convenience for the operation of domestic and overseas water carriers; d. Register vessels as well as issue certificates, licenses or documents necessary or incident thereto; e. Undertake the safety regulatory functions pertaining to vessel construction and operation including the determination of

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 Philippine merchant marine, and deputize the Philippine Coast Guard and other law enforcement agencies to effectively discharge these functions; g. Undertake the issuance of licenses to qualified seamen and harbor, bay and river pilots; h. Determine, fix and/or prescribe charges and/or rates pertinent to the operation of public water transport utilities, facilities and services except in cases where charges or rates are established by international bodies or associations of which the Philippines is a participating member or by bodies or associations recognized by the Philippine Government as the proper arbiter of such charges or rates. i. Accredit marine surveyors and maritime enterprises engaged in shipbuilding, shiprepair, shipbreaking, domestic and overseas shipping ship management and agency; 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. SECTION 4. Mandate. The Ministry shall be the primary policy, planning, programming, coordinating, implementing, regulating, and administrative entity of the Executive Branch of the government in the promotion, development and regulation of dependable and coordinated networks of transportation and communication system, as well as in the fast, sale, efficient and reliable postal, transportation and communication services. To accomplish such mandate, the Ministry shall have the following objectives: 1. Promote the development of dependable and coordinated networks of transportation and communication systems; 2. Guide government and private investment in the development of the country's inter- model transportation and communication systems in a most practical, expeditious, and orderly

3.

4.

5.

6.

7.

fashion for maximum safety, service, and cost effectiveness; Impose appropriate measure so that technical, economic and other condition for the continuing economic viability of the transportation and communication entities are not jeopardized and do not encourage inefficiency and distortion of traffic patronage; Develop an integrated plan for a nationwide transmission system in accordance with the national and international telecommunication service requirement including, among others, radio and television broadcast relaying, leased channel services and data transmission; Guide government and private investment in the establishment, operation and maintenance of an international switching system for incoming and outgoing telecommunication services; Encourage the development of a domestic telecommunication industry in coordination with the concern 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 telecommunications network; Provide for a safe, reliable and efficient postal system for the country.

SEC. 8. Deregulation of the Domestic Shipping Industry. - In order to encourage investments in the domestic shipping industry by existing domestic ship operators and attract new investment from new operators and investors, domestic ship operators are hereby authorized to establish their own domestic shipping rates: Provided, That effective competition is fostered and public interest is served. The MARINA shall monitor all shipping operations and exercise regulatory intervention where it is established after due process that public interest needs to be protected and safeguarded. SEC. 10. Jurisdiction; Power; and Duties of MARINA. - The MARINA shall have the power and authority to:

(1) Register vessels; (2) Issue certificates of public convenience or any extensions or amendments thereto, authorizing the operation of all kinds. Classes and types of vessels in domestic shipping: Provided, That no such certificate shall be valid for a period of more than twenty-five (25) years; (3) Modify, suspend or revoke at any time upon notice and hearing, any certificate, license or accreditation it may have issued to any domestic ship operator; (4) Establish and prescribe routes, zones or areas of operations of domestic ship operators; (5) Require any domestic ship operator to provide shipping services to any coastal area, island or region in the country where such services are necessary for the development of the area, to meet emergency sealift requirements, or when public interest so requires; (6) Set safety standards for vessels in accordance with applicable conventions and regulations; (7) Require all domestic ship operators to comply with operational and safety standards for vessels set by applicable conventions and regulations, maintain its vessels in safe and serviceable conditions, meet the standards of safety of life at sea and safe manning requirements, and furnish safe, adequate, efficient, reliable and proper service at all times; (8) Inspect all vessels to ensure and enforce compliance with safety standards and other regulations; (9) Ensure that all domestic ship operators shall have the financial capacity to provide and sustain safe, reliable, efficient and economic passenger or cargo service, or both; (10) Determine the impact which any new service shall have to the locality it will serve; (11) Adopt and enforce such rules and regulations which will ensure compliance by every domestic ship operator with required safety standards and other rules and regulations on vessel safety; (12) Adopt such rules and regulations which ensure the reasonable stability of passengers

and freight rates and, if necessary, to intervene in order to protect public interest; (13) Hear and adjudicate any complaint made in writing involving any violation of this law or the rules and regulations of the Authority; (14) Impose such fines and penalties on, including the revocations of licenses of any domestic ship operator who shall fail to maintain its vessels in safe and serviceable condition, or who shall violate or fail to comply with safety regulations; (15) Investigate any complaint made in writing against any domestic ship operator, or any shipper, or any group of shippers regarding any matter involving violations of the provisions of this Act; (16) Upon notice and hearing, impose such fines, suspend or revoke certificates of public convenience or other license issued, or otherwise penalize any ship operator, shipper or group of shippers found violating the provisions of this Act; and (17) Issue such rules and regulations necessary to implement the provisions of this Act: Provided, That such rules and regulations cannot change or in any way amend or be contrary to the intent and purposes of this Act. SEC. 11. Rates. - Every domestic ship operator shall have the right to fix its own passenger pr cargo rates, or both. IV. 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. ELEMENTS (See First Phil. Industrial Corp. v. CA) 1. It is engaged in the business of carrying or transporting goods for others as a public employment 2. It is for compensation or for hire 3. It is operated generally as a business and not as a casual operation 4. It holds out to the public as ready to engage in the transportation of goods of the kind to which his business is confined

NEED TO DETERMINE WON IT IS A COMMON CARRIER Common carriers are subject to the presumption of negligence. They need to show employment of extraordinary diligence to rebut this. NO NEED FOR CPC/N TO BECOME A COMMON CARRIER It is the conduct that makes one a common carrier (De Guzman v. CA). Liability arises from NCC. COMMON CARRIER PRIVATE CARRIER It holds itself out as ready to Carriers that transport or engage in the transportation of undertake to transport goods goods or persons for hire as a or persons in a a particular public employment and not as a instance for hire or reward casual occupation whether: 1. Regular or scheduled 2. Occasional, episodic or unscheduled 3. Offered to the general public or merely a narrow segment of the general population NATURE It will be held liable should it It agrees in some special case refuse to carry anyone who with a private individual to wishes to employ it carry for hire BASIS OR CONSIDERATION Tender of reasonable Not bound to carry for any compensation for carrying goods reason unless it enters into a special agreement to do so REGULATION It is considered a public service It does not hold itself out as and is therefore subject to engaged in the business for the regulation public and is therefore not subject to the same rules on regulation as a common carrier LEVEL OF DILIGENCE REQUIRED Extraordinary diligence Diligence of a good father of a family STIPULATIONS ON LIABILITY It cannot stipulate that it will be It may stipulate that it will be exempt from liability or future exempt from liability or future negligence negligence U.S. v. Tan Piaco Home Insurance Co. v. American Steamship De Guzman v. CA Bascos v. CA Planters Products Inc. v. Court of Appeals Fabre v. Court of Appeals First Philippine Industrial Corporation v. Court of Appeals Loadstar Shipping Co., Inc. v. Court of Appeals Asia Lighterage and Shipping v. Court of Appeals Crisostomo v. Court of Appeals 2. Nature of Business; power of State to regulate

Art. 1765. The Public Service Commission may, on its own motion or on petition of any interested party, after due hearing, cancel the certificate of public convenience granted to any common carrier that repeatedly fails to comply with his or its duty to observe extraordinary diligence as prescribed in this Section. Pantranco v. PSC 3. Nature and Basis of Liability Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Cangco v. MRR Isaac v. A.L. Ammen Fores v. Miranda Phil. Rabbit v. IAC Sarkies Tours Phils., Inc. v. Court of Appeals LRTA v. Navidad 4. Classes of common carriers Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. 5. Law applicable Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration. National Development Co. v. Court of Appeals

B. Common Carriage of Goods 1. Liability and presumption of negligence Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6,

and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756. Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act of omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733. Ynchausti Steamship Co. v. Dexter Mirasol v. Dollar 2. Exemption from liability (a) Natural Disaster Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2. Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility. Art. 361, Code of Commerce. Merchandise shall be transported at the risk and venture of the shipper, unless the contrary was expressly stipulated. Therefore, all damages and impairment suffered by the goods in transportation, by reason of accident, force majeure, or by virtue of the nature or defect of the articles, shall be for the account and risk of the shipper. The proof of these accidents is incumbent on the carrier.

Tan Chiong v. Inchausti Martini v. Macondray Eastern Shipping v. IAC Asia Lighterage v. Court of Appeals, supra (b) Act of public enemy Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (2) Act of the public enemy in war, whether international or civil; Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2. (c) Act or omission of shipper Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (3) Act of omission of the shipper or owner of the goods; Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced. (d) Character of goods, etc Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (4) The character of the goods or defects in the packing or in the containers; Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss. ARTICLE 366, Code of Commerce. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average be found therein upon opening the packages, may be made, provided that the indications of the

damage or average which gives rise to the claim cannot be ascertained from the outside part of such packages, in which case the claim shall be admitted only at the time of receipt. After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. Government v. Ynchausti Southern Lines v. CA (e) Order of competent authority Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (5) Order or act of competent public authority. Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order. Ganzon v. Court of Appeals

3. Duration of Extraordinary Responsibility Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu. Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. Compania Maritima v. Insurance Company Lu Do v. Binamira APL v. Klepper Samar Mining Co., Inc. vs. Nordeutscher Lloyd Eastern Shipping v. CA 4. Agreement Limiting Liability (a) As to diligence required

Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy. Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper; (2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods; (3) That the common carrier need not observe any diligence in the custody of the goods; (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported; (5) That the common carrier shall not be responsible for the acts or omission of his or its employees; (6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished; (7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of carriage. Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy. (b) As to amount of liability Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding. Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon. Heacock v. Macondray Shewaram v. PAL Ong Yiu v. CA Pan Am v. IAC

Cathay Pacific v. CA (c) As to delay in delivery Maersk Line vs. Court of Appeals (d) Factor affecting agreement Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation. Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods. Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid. Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy. Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration. 5. Applicable Law in Foreign Trade Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss, destruction or deterioration. 6. Rules on Passenger Baggage Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003 concerning the responsibility of hotelkeepers shall be applicable. Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. (1783)

Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as strangers; but not that which may proceed from any force majeure. The fact that travellers are constrained to rely on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required of him. (1784a) Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done with the use of arms or through an irresistible force. (n) Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family, servants or visitors, or if the loss arises from the character of the things brought into the hotel. (n) Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void. (n) C. Common Carriage of Passengers 1. Nature and extent of responsibility Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in Articles 1755 and 1756. Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances. Isaac v. A.L. Amnen Trans. Co., supra Landingin v. Pantranco Landicho v. BTCo. Necesito v. Paras PAL v. CA Sulpicio v. CA Japan Airlines v. Court of Appeals

2. Duration of responsibility Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. Cangco v. MRR, supra Del Prado v. Meralco La Mallorca v. Court of Appeals Bataclan v. Medina Aboitiz v. CA Philippine Airlines v. CA 3. Presumption of Negligence Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755. 4. Force Majeure Bachelor Express v. CA Yobido vs. Court of Appeals 5. Limitation of Liability; validity of stipulations Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise. Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid, but not for wilful acts or gross negligence. The reduction of fare does not justify any limitation of the common carrier's liability. 6. Responsibility for acts of employees Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise. De Gillaco v. MRR Maranan v. Perez LRTA v. Navidad, supra 7. Responsibility for acts of strangers and co-passengers Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Pilapil v. CA Bachelor Express, Inc. v. CA, supra 8. Duty of passenger; effect of contributory negligence Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself. Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced. Cangco v. MRR, supra Isaac v. A.L. Amnen, supra D. Damages Recoverable from Common Carriers 1. In general 2. Actual or compensatory Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. (1107a) Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question.

Art. 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier. Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: 1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; 2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; 3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Cariaga v. LTBCo. and MRR Pan Am v. IAC, supra Villa-Rey v. CA PAL v. CA Victory Liner v. Gammad 3. Moral Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2219. Moral damages may be recovered in the following and analogous cases: 1. A criminal offense resulting in physical injuries; 2. Quasi-delicts causing physical injuries; 3. Seduction, abduction, rape, or other lascivious acts; 4. Adultery or concubinage; 5. Illegal or arbitrary detention or arrest; 6. Illegal search; 7. Libel, slander or any other form of defamation; 8. Malicious prosecution; 9. Acts mentioned in Article 309; 10. Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Fores v. Miranda, supra Air France v. Carrascoso Lopez v. Pan Am Ortigas v. Lufthansa PAL v. Miano United Airlines v. Court of Appeals Cathay Pacific v. Vasquez Air France v. Gillego 4. Exemplary Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. Mecenas v. Court of Appeals 5. Nominal, Temperate and Liquidated Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty.

Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. Alitalia v. AIC Saludo v. Court of Appeals Japan Airlines v. Court of Appeals Savellano v. Northwest Victory Liner v Gammad, supra 6. Attorneys Fees and Interest Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: 1) When exemplary damages are awarded; 2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; 3) In criminal cases of malicious prosecution against the plaintiff; 4) In case of a clearly unfounded civil action or proceeding against the plaintiff; 5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; 6) In actions for legal support; 7) In actions for the recovery of wages of household helpers, laborers and skilled workers; 8) In actions for indemnity under workmen's compensation and employer's liability laws; 9) In a separate civil action to recover civil liability arising from a crime; 10) When at least double judicial costs are awarded; 11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. In all cases, the attorney's fees and expenses of litigation must be reasonable. Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract.

IV. Code of Commerce Provisions on Overland Transportation A. Scope of Overload Transportation B. Nature of Contract ARTICLE 349. A contract for all kinds of transportation over land or river shall be considered commercial: 1. When it involves merchandise or any commercial goods. 2. When, no matter what its object may be, the carrier is a merchant or is customarily engaged in making transportation for the public. C. Effect of Civil Code

Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. Art. 2270. The following laws and regulations are hereby repealed: (1) Those parts and provisions of the Civil Code of 1889 which are in force on the date when this new Civil Code becomes effective: (2) The provisions of the Code of Commerce governing sales, partnership, agency, loan, deposit and guaranty; (3) The provisions of the Code of Civil Procedure on prescription as far as inconsistent with this Code; and (4) All laws, Acts, parts of Acts, rules of court, executive orders, and administrative regulations which are inconsistent with this Code. (n) D. Contract of Carriage 1. Bill of Lading (a) Definition, Subject Matter ARTICLE 352. Bills of lading or tickets in the case of transportation of passengers may be different, one for persons and another for baggage, but all of them shall contain the name of the carrier, the date of shipment, the points of departure and arrival, the price, and with regard to baggage, the number and weight of the packages, with any other indications which may be considered necessary in order to easily identify them. (b) Form, Contents ARTICLE 350. The shipper as well as the carrier of merchandise and goods may mutually demand of each other the issue of a bill of lading in which there shall be stated: 1. The name, surname, and domicile of the shipper. 2. The name, surname, and domicile of the carrier. 3. The name, surname and domicile of the person to whom or to whose order the goods are addressed, or whether they are to be delivered to the bearer of the said bill. 4. A description of the goods, stating their generic character, their weight, and the external marks or signs of the packages containing the same. 5. The cost of the transportation. 6. The date on which the shipment is made. 7. The place of the delivery to the carrier. 8. The place and time at which the delivery is to be made to the consignee. 9. The damages to be paid by the carrier in case of delay, if any agreement is made on this point. ARTICLE 351. In shipments made over railroads or by other enterprises which are subject to schedules or the time fixed by regulations, it shall be sufficient that the bills of lading or declarations of shipment furnished by the shipper refer, with regard to the rate, terms, and special conditions of the transportation, to the schedules and regulations, the application of which is requested; and should no schedule be determined the carrier must apply the rate of the merchandise paying the lowest, with the condition inherent thereto, always including such statement or reference in the bill of lading delivered to the shipper.

(c) Function ARTICLE 353. The legal basis of the contract between the shipper and the carrier shall be the bills of lading, by the contents of which all disputes which may arise with regard to their execution and fulfillment shall be decided without admission of other exceptions than forgery or material errors in the drafting thereof. After the contract has been complied with the bill of lading issued by the carrier shall be returned to him, and by virtue of the exchange of this certificate for the article transported, the respective obligations and actions shall be considered as canceled, unless in the same act the claims which the contracting parties desired to reserve are reduced to writing, exception being made of the provisions of Article 366. If in case of loss or for any other reason whatsoever, the consignee cannot return upon receiving the merchandise the bill of lading subscribed by the carrier, he shall give said carrier a receipt for the goods delivered, this receipt producing the same effects as the return of the bill of lading. 2. Refusal to Transport ARTICLE 356. Carriers may refuse to accept packages which appear unfit for transportation; and if said transportation is to be made over a railroad, and the shipment is insisted on, the company shall carry it, being exempt from all liability if its objections are so stated in the bill of lading. 3. Doubtful declaration of contents ARTICLE 357. If the carrier by reason of well-founded suspicions as to the correctness of the declaration of the contents of a package should determine to examine it, he shall do so before witnesses, in the presence of the shipper or of the consignee. Should the shipper or consignee to be cited not appear, the examination shall be made before a notary, who shall draft a certificate of the result of the examination, for the proper purposes. If the declaration of the shipper should be correct, the expenses caused by the examination and those of carefully repacking the packages shall be defrayed by the carrier, and in a contrary case by the shipper. 4. No Bill of Lading ARTICLE 354. In the absence of a bill of lading the respective claims of the parties shall be decided by the legal proofs that each one may submit in support of his claims, in accordance with the general provisions established in this Code for commercial contracts. ARTICLE 351. In shipments made over railroads or by other enterprises which are subject to schedules or the time fixed by regulations, it shall be sufficient that the bills of lading or declarations of shipment furnished by the shipper refer, with regard to the rate, terms, and special conditions of the transportation, to the schedules and regulations, the application of which is requested; and should no schedule be determined the carrier must apply the rate of the merchandise paying the lowest, with the condition inherent thereto, always including such statement or reference in the bill of lading delivered to the shipper. E. Responsibility of the Carrier 1. When it commences ARTICLE 355. The liability of the carrier shall begin from the moment he receives the merchandise, in person or through a person intrusted thereto in the place indicated for their reception.

2. Route ARTICLE 359. If there should be an agreement between the shipper and the carrier with regard to the road over which the transportation is to be made, the carrier can not change the route, unless obliged to do so by force majeure; and should he do so without being forced to, he shall be liable for any damage which may be suffered by the goods transported for any other cause whatsoever, besides being required to pay the amount which may have been stipulated for such a case. When on account of the said force majeure the carrier is obliged to take another route, causing an increase in the transportation charges, he shall be reimbursed for said increase after presenting the formal proof thereof. 3. Care of Goods ARTICLE 361. Merchandise shall be transported at the risk and venture of the shipper, if the contrary was not expressly stipulated. Therefore, all damages and impairment suffered by the goods during the transportation, by reason of accident, force majeure, or by virtue of the nature or defect of the articles, shall be for the account and risk of the shipper. cdta The proof of these accidents is incumbent on the carrier. ARTICLE 362. The carrier, however, shall be liable for the losses and damages arising from the causes mentioned in the foregoing article if it is proved that they occurred on account of his negligence or because he did not take the precautions usually adopted by careful persons, unless the shipper committed fraud in the bill of lading, making him believe that the goods were of a class or quality different from what they really were. If, notwithstanding the precaution referred to in this article, the goods transported run the risk of being lost on account of the nature or by reason of an unavoidable accident, without there being time for the owners of the same to dispose thereof, the carrier shall proceed to their sale, placing them for this purpose at the disposal, of the judicial authority or the officials determined by special provisions. Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act of omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733. 4. Delivery (a) Condition of Goods ARTICLE 363. With the exception of the cases prescribed in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods transported in the same condition in which, according to the bill of lading, they were at the time of their receipt, without any detriment or impairment, and should he not do so, he shall be

obliged to pay the value of the goods not delivered at the point where they should have been and at the time the delivery should have taken place. If part of the goods transported should be delivered the consignee may refuse to receive them, when he proves that he cannot make use thereof without the others. ARTICLE 364. If the effect of the damage referred to in Article 361 should be only a reduction in the value of the goods, the obligation of the carrier shall be reduced to the payment of the amount of said reduction in value, after appraisal by experts. ARTICLE 365. If, on account of the damage, the goods are rendered useless for purposes of sale or consumption in the use for which they are properly destined the consignee shall not be bound to receive them, and may leave them on the hands of the carrier, demanding payment therefor at current market prices. If among the goods damaged there should be some in good condition and without any defect whatsoever, the foregoing provision shall be applicable with regard to the damaged ones, and the consignee shall receive those which are sound, this separation being made by distinct and separate articles, no object being divided for the purpose, unless the consignee proves the impossibility of conveniently making use thereof in this form. cdt The same provision shall be applied to merchandise in bales or packages, with distinction of the packages which appear sound. ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise a claim may be brought against the carrier on account of damage or average found therein on opening the packages, provided that the indications of the damage or average giving rise to the claim can not be ascertained from the exterior of said packages, in which case said claim would only be admitted on the receipt of the packages. After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. ARTICLE 367. If there should occur doubts and disputes between the consignee and the carrier with regard to the condition of goods transported at the time of their delivery to the former, the said goods shall be examined by experts appointed by the parties, and a third one, in case of disagreement, appointed by the judicial authority, the result of the examination being reduced to writing; and if the persons interested should not agree to the report of the experts and could not settle their disputes, said judicial authority shall order the deposits of the merchandise in a safe warehouse, and the parties interested shall make use of their rights in the proper manner. (b) To Whom Delivery Made ARTICLE 368. The carrier must deliver to the consignee without any delay or difficulty the merchandise received by him, by reason of the mere fact of being designated in the bill of lading to receive it; and should said carrier not do so he shall be liable for the damages which may arise therefrom. (c) When to be made ARTICLE 370. If a period has been fixed for the delivery of the goods, it must be made within the same, and otherwise the carrier shall pay the indemnity agreed upon in the bill of lading, neither the shipper nor consignee being entitled to anything else. Should no indemnity have been agreed upon and the delay exceeds the time fixed in the bill of lading, the carrier shall be liable for the damages which may have been caused by the delay.

ARTICLE 358. Should no period within which goods are to be delivered be previously fixed, the carrier shall be under the obligation to forward them in the first shipment of the same or similar merchandise which he may make to the point of delivery; and should he not do so, the damages occasioned by the delay shall be suffered by him. F. Rights and Obligations or Shipper and/or Consignee 1. Right to damages (a) Condition imposed on right ARTICLE 366. Within the twenty-four hours following the receipt of the merchandise a claim may be brought against the carrier on account of damage or average found therein on opening the packages, provided that the indications of the damage or average giving rise to the claim can not be ascertained from the exterior of said packages, in which case said claim would only be admitted on the receipt of the packages. After the periods mentioned have elapsed, or after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. ARTICLE 357. If the carrier by reason of well-founded suspicions as to the correctness of the declaration of the contents of a package should determine to examine it, he shall do so before witnesses, in the presence of the shipper or of the consignee. Should the shipper or consignee to be cited not appear, the examination shall be made before a notary, who shall draft a certificate of the result of the examination, for the proper purposes. If the declaration of the shipper should be correct, the expenses caused by the examination and those of carefully repacking the packages shall be defrayed by the carrier, and in a contrary case by the shipper. (b) Amount of damages for loss ARTICLE 732. Lenders on bottomry or respondentia shall suffer in proportion to their respective interest, the general average which may take place in the goods on which the loan was made. In particular averages, in the absence of an express agreement between the contracting parties, the lender on bottomry or respondentia shall also contribute in proportion to his respective interest, should it not belong to the kind of risks excepted in the foregoing article. Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be: (1) In writing, signed by the shipper or owner; (2) Supported by a valuable consideration other than the service rendered by the common carrier; and (3) Reasonable, just and not contrary to public policy. (c) Amount of damages for delay ARTICLE 371 (3). Should the abandonment not occur the indemnity for loss and damages on account of the delays cannot exceed the current price of the goods transported on the day and at the place where the delivery was to have been made. The same provision shall be observed in all cases where this indemnity is due. 2. Right to abandon

ARTICLE 371. In cases of delay on account of the fault of the carrier, referred to in the foregoing articles, the consignee may leave the goods transported on the hands of the carrier, informing him thereof in writing before the arrival of the same at the point of destination. When this abandonment occurs, the carrier shall satisfy the total value of the goods, as if they had been lost or mislaid. Should the abandonment not occur the indemnity for loss and damages on account of the delays cannot exceed the current price of the goods transported on the day and at the place where the delivery was to have been made. The same provision shall be observed in all cases where this indemnity is due. ARTICLE 360. The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and the latter shall comply with his orders, provided that at the time of making the change of the consignee the bill of lading subscribed by the carrier be returned to him, if one were issued, exchanging it for another containing the novation of the contract. The expenses arising from the change of consignment shall be defrayed by the shipper. ARTICLE 365. If, on account of the damage, the goods are rendered useless for purposes of sale or consumption in the use for which they are properly destined the consignee shall not be bound to receive them, and may leave them on the hands of the carrier, demanding payment therefor at current market prices. If among the goods damaged there should be some in good condition and without any defect whatsoever, the foregoing provision shall be applicable with regard to the damaged ones, and the consignee shall receive those which are sound, this separation being made by distinct and separate articles, no object being divided for the purpose, unless the consignee proves the impossibility of conveniently making use thereof in this form. cdt The same provision shall be applied to merchandise in bales or packages, with distinction of the packages which appear sound. ARTICLE 363. With the exception of the cases prescribed in the second paragraph of Article 361, the carrier shall be obliged to deliver the goods transported in the same condition in which, according to the bill of lading, they were at the time of their receipt, without any detriment or impairment, and should he not do so, he shall be obliged to pay the value of the goods not delivered at the point where they should have been and at the time the delivery should have taken place. If part of the goods transported should be delivered the consignee may refuse to receive them, when he proves that he cannot make use thereof without the others. 3. Right to change consignment ARTICLE 360. The shipper may, without changing the place where the delivery is to be made, change the consignment of the goods delivered to the carrier, and the latter shall comply with his orders, provided that at the time of making the change of the consignee the bill of lading subscribed by the carrier be returned to him, if one were issued, exchanging it for another containing the novation of the contract. The expenses arising from the change of consignment shall be defrayed by the shipper. 4. Obligation to pay transportation charges ARTICLE 376. The preference of the carrier to the payment of what is due him for the transportation and expenses of the goods delivered to the consignee shall not be affected by the bankruptcy of the latter, provided the action is brought within the eight days mentioned in the foregoing article.

Art. 2241. With reference to specific movable property of the debtor, the following claims or liens shall be preferred: (9) Credits for transportation, upon the goods carried, for the price of the contract and incidental expenses, until their delivery and for thirty days thereafter; 5. Obligation to return bill of lading ARTICLE 353 (2). After the contract has been complied with the bill of lading issued by the carrier shall be returned to him, and by virtue of the exchange of this certificate for the article transported, the respective obligations and actions shall be considered as canceled, unless in the same act the claims which the contracting parties desired to reserve are reduced to writing, exception being made of the provisions of Article 366. G. Applicability of Provisions ARTICLE 379. The provisions contained in Articles 349 et seq. shall also be understood as relating to persons who, although they do not personally effect the transportation of commercial goods, contract to do so through others, either as contractors for a special and fixed transaction or as freight and transportation agents. In either case they shall be subrogated to the place of the carriers with regard to the obligations and liability of the latter, as well as with regard to their right. V. Admiralty and Maritime Commerce A. Concept of Admiralty; Jurisdiction over admiralty cases BP 129, Sec. 19 [as amended by RA 7691]. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction. (3) In all actions in admiralty and maritime jurisdiction where the demand or claim exceeds One hundred thousand pesos (P100,000.00) or, in Metro Manila, where such demand or claim exceeds Two hundred thousand pesos (P200,000.00); BP 129, Sec. 33 [as amended by RA 7691]. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise: (1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and intestate, including the grant of provisional remedies in proper cases, where the value of the personal property, estate, or amount of the demand does not exceed One hundred thousand pesos (P100,000.00) or, in Metro Manila where such personal property, estate, or amount of the demand does not exceed Two hundred thousand pesos (P200,000.00), exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs, the amount of which must be specifically alleged: Provided, That interest, damages of whatever kind, attorney's fees, litigation expenses, and costs shall be included in the determination of the filing fees: Provided, further, That where there are several claims or causes of actions between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions;

International Harvester v. Aragon B. Vessels 1. Meaning Lopez v. Duruelo E. Nature and acquisition of ARTICLE 573. Merchant vessels constitute property which may be acquired and transferred by any of the means recognized by law. The acquisition of a vessel must be included in a written instrument, which shall not produce any effect with regard to third persons if not recorded in the mercantile registry. cd The ownership of a vessel shall also be acquired by the possession thereof in good faith for three years, with a good title duly recorded. In the absence of any of these requisites, uninterrupted possession for ten years shall be necessary in order to acquire ownership. A captain cannot acquire by prescription the ship of which he is in command. ARTICLE 583. If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Spanish * territory, and otherwise to the consul of Spain, * should there be one, and, in his absence to the judge or court or to the proper local authority, presenting the certificate of the registry of the vessel treated of in Article 612, and the instruments proving the obligation contracted. The judge or court, the consul or the local authority as the case may be, in view of the result of the proceedings instituted, shall make a temporary memorandum in the certificate of their result, in order that it may be recorded in the registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obligation in case of sale before the return, by reason of the sale of the vessel by virtue of a declaration of unseaworthiness. The lack of this formality shall make the captain personally liable to the creditors who may be prejudiced through his fault. Art. 712. Ownership is acquired by occupation and by intellectual creation. Ownership and other real rights over property are acquired and transmitted by law, by donation, by estate and intestate succession, and in consequence of certain contracts, by tradition. They may also be acquired by means of prescription. (609a) F. Registration; certificates issued; distinctions RA 9295, SEC. 10. Jurisdiction; Power; and Duties of MARINA. - The MARINA shall have the power and authority to: (1) Register vessels; 4. Significance of registration of transactions affecting vessels Arroyo v. Yu Rubiso v. Rivera C. Persons Participating in Maritime Commerce 1. Shipowners and shipagents Arts. 586 to 608; 618

ARTICLE 586. The owner of a vessel and the agent shall be civilly liable for the acts of the captain and for the obligations contracted by the latter to repair, equip, and provision the vessel, provided the creditor proves that the amount claimed was invested therein. By agent is understood the person intrusted with the provisioning of a vessel, or who represents her in the port in which she happens to be. ARTICLE 587. The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight he may have earned during the voyage. ARTICLE 588. Neither the owner of the vessel nor the agent shall be liable for the obligations contracted by the captain if the latter exceeds his powers and privileges which are his by reason of his position or have been conferred upon him by the former. However, if the amounts claimed were made use of for the benefit of the vessel, the owner or agent shall be liable. ARTICLE 589. If two or more persons should be part owners of a merchant vessel, an association shall be presumed as established by the part owners. This association shall be governed by the resolutions of a majority of the members. A majority shall be the relative majority of the voting members. If there should be only two part owners, in case of disagreement the vote of the member having the largest interest shall be decisive. If the interests are equal, it shall be decided by lot. The representation of the smallest part in the ownership shall have one vote; and proportionately the other part owners as many votes as they have parts equal to the smallest one. aisadc A vessel can not be detained, attached or levied upon execution in her entirety for the private debts of a part owner, but the proceedings shall be limited to the interest the debtor may have in the vessel, without interfering with her navigation. ARTICLE 590. The owners of a vessel shall be civilly liable in the proportion of their contribution to the common fund, for the results of the acts of the captain, referred to in Article 587. Each part owner may exempt himself from this liability by the abandonment before a notary of the part of the vessel belonging to him. ARTICLE 591. All the part owners shall be liable, in proportion to their respective ownership, for the expenses of repairs to the vessel, and for other expenses which are incurred by virtue of a resolution of the majority. They shall likewise be liable in the same proportion for the expenses of maintenance, equipment, and provisioning of the vessel, necessary for navigation. ARTICLE 592. The resolutions of the majority with regard to the repair, equipment, and provisioning of the vessel in the port of departure shall bind the majority unless the partners in the minority renounce their participation therein, which must be acquired by the other part owners after a judicial appraisement of the value of the portion or portions assigned. The resolutions of the majority relating to the dissolution of the association and sale of the vessel shall also be binding on the minority. The sale of the vessel must take place at a public auction, subject to the provisions of the law of civil procedure unless the part owners unanimously agree

otherwise, the right of option to purchase and to withdraw mentioned in Article 575 being always reserved in favor of said part owners. ARTICLE 593. The owners of a vessel shall have preference in her charter to other persons, offering equal conditions and price. If two or more of the former should claim said right the one having greater interest shall be preferred, and should they have an equal interest it shall be decided by lot. ARTICLE 594. The part owners shall elect the manager who is to represent them in the capacity of agent. The appointment of director or agent shall be revocable at the will of the members. ARTICLE 595. The agent, be he at the same time an owner of a vessel or a manager for an owner or for an association of co-owners, must be qualified to trade and must be recorded in the merchant's registry of the province. The agent shall represent the ownership of the vessel, and may in his own name and in such capacity take judicial and extrajudicial steps in all that relates to commerce. ARTICLE 596. The agent may discharge the duties of captain of the vessel, subject, in every case, to the provisions contained in Article 609. If two or more co-owners request the position of captain, the disagreement shall be decided by a vote of the members; and if the vote should result in a tie, the position shall be given to the part owner having the larger interest in the vessel. If the interest of the petitioners should be the same, and there should be a tie, the matter shall be decided by lot. ARTICLE 597. The agent shall select and come to an agreement with the captain, and shall contract in the name of the owners, who shall be bound in all that refers to repairs, details of equipment, armament, provisions, fuel, and freight of the vessel, and, in general, in all that relates to the requirements of navigation. ARTICLE 598. The agent can not order a new voyage, nor make contracts for a new charter, nor insure the vessel, without the authority of her owner or by virtue of a resolution of the majority of the co-owners, unless these privileges were granted him in the certificate of his appointment. cdasia If he should insure the vessel without authority therefor he shall be secondarily liable for the solvency of the underwriter. ARTICLE 599. The managing agent of an association, shall give his co-owners an account of the results of each voyage of the vessel, without prejudice to always having the books and correspondence relating to the vessel and to its voyages at the disposal of the same. ARTICLE 600. After the account of the managing agent has been approved by a relative majority, the co-owners shall satisfy the expenses in proportion to their interest, without prejudice to the civil or criminal actions which the minority may deem fit to institute afterwards. In order to enforce the payment, the managing agent shall have a right of action to secure execution, which shall be instituted by virtue of a resolution of the majority, and without further proceedings than the acknowledgment of the signatures of the persons who voted the resolution. ARTICLE 601. Should there be any profits, the co-owners may demand of the managing agent the amount due them, by means of an executory action without further requisites than the acknowledgment of the signatures of the instrument approving the account.

ARTICLE 602. The agent shall indemnify the captain for all the expenses he may have incurred from his own funds or from those of other persons, for the benefit of the vessel. ARTICLE 603. Before a vessel goes out to sea the agent shall have at his discretion, a right to discharge the captain and members of the crew whose contract did not state a definite period nor a definite voyage, paying them the salaries earned according to their contracts, and without any indemnity whatsoever, unless there is a special and specific agreement in respect thereto. ARTICLE 604. If the captain or any other member of the crew should be discharged during the voyage, they shall receive their salary until the return to the place where the contract was made, unless there are good reasons for the discharge, all in accordance with Articles 636 et seq. of this Code. ARTICLE 605. If the contracts of the captain and members of the crew with the agent should be for a definite period or voyage, they can not be discharged until the fulfillment of their contracts, except for reasons of insubordination in serious matters, robbery, theft, habitual drunkenness, and damage caused to the vessel or to its cargo by malice or manifest or proven negligence. ARTICLE 606. If the captain should be a part owner in the vessel, he can not be discharged without the agent returning him the amount of his interest therein, which, in the absence of an agreement between the parties, shall be appraised by experts appointed in the manner established in the law of civil procedure. ARTICLE 607. If the captain who is a part owner should have obtained the command of the vessel by virtue of a special agreement contained in the articles of co-partnership, he can not be deprived thereof except for the reasons mentioned in Article 605. ARTICLE 608. In case of the voluntary sale of the vessel, all contracts between the agent and captain shall terminate, the right to proper indemnity being reserved in favor of the captain, according to the agreements made with the agent. They vessel sold shall remain subject to the security of the payment of said indemnity if, after the action against the vendor has been instituted, the latter should be insolvent. ARTICLE 618. The captain shall be civilly liable to the agent, and the latter to the third persons who may have made contracts with the former 1. For all the damages suffered by the vessel and his cargo by reason of want of skill or negligence on his part. If a misdemeanor or crime has been committed he shall be liable in accordance with the Penal Code. cda 2. For all the thefts committed by the crew, reserving his right of action against the guilty parties. 3. For the losses, fines, and confiscations imposed an account of violation of the laws and regulations of customs, police, health, and navigation. 4. For the losses and damages caused by mutinies on board the vessel, or by reason of faults committed by the crew in the service and defense of the same, if he does not prove that he made full use of his authority to prevent or avoid them. 5. For those arising by reason of an undue use of powers and non-fulfillment of the obligations which are his in accordance with Articles 610 and 612. 6. For those arising by reason of his going out of his course or taking a course which he should not have taken without sufficient cause, in the opinion of the officers of the vessel, at a meeting with the shippers or supercargoes who may be on board. No exception whatsoever shall exempt him from this obligation.

7. For those arising by reason of his voluntarily entering a port other than his destination, with the exception of the cases or without the formalities referred to in Article 612. 8. For those arising by reason of the non-observance of the provisions contained in the regulations for lights and evolutions for the purpose of preventing collisions. Standard Oil v. Castelo a. Responsibilities and liabilities Yu Con v. Ipil Manila Streamship v. Abdulhaman Wing Kee Compradoring Co. v. Bark Mononhaela b. The doctrine of limited liability ARTICLE 587. The agent shall also be civilly liable for the indemnities in favor of third persons which arise from the conduct of the captain in the care of the goods which the vessel carried; but he may exempt himself therefrom by abandoning the vessel with all her equipments and the freight he may have earned during the voyage. Manila Steamship v. Abdulhaman, supra Yangco v. Laserna Abueg v. San Diego Aboitiz Shipping v. General Accident Fire and Life Assurance Corporation, Ltd. c. Specific rights and prerogatives ARTICLE 575. Part owners of vessels shall enjoy the right of option of purchase and withdrawal in the sales made to strangers; but they can only exercise it within the nine days following the record of the sale in the registry and by delivering the price at once. ARTICLE 593. The owners of a vessel shall have preference in her charter to other persons, offering equal conditions and price. If two or more of the former should claim said right the one having greater interest shall be preferred, and should they have an equal interest it shall be decided by lot. ARTICLE 594. The part owners shall elect the manager who is to represent them in the capacity of agent. The appointment of director or agent shall be revocable at the will of the members. ARTICLE 596. The agent may discharge the duties of captain of the vessel, subject, in every case, to the provisions contained in Article 609. If two or more co-owners request the position of captain, the disagreement shall be decided by a vote of the members; and if the vote should result in a tie, the position shall be given to the part owner having the larger interest in the vessel. If the interest of the petitioners should be the same, and there should be a tie, the matter shall be decided by lot. ARTICLE 601. Should there be any profits, the co-owners may demand of the managing agent the amount due them, by means of an executory action without further requisites than the acknowledgment of the signatures of the instrument approving the account. 2. Captains and Master

(a) Qualifications and licensing RA 5173, Section 3. Specific Functions. The Philippine Coast Guard shall perform the following functions: (a) To prevent and suppress illegal entry, smuggling, other customs frauds and violations of other maritime laws that may be committed within the waters subject to the jurisdiction of the Republic of the Philippines, and for the purpose surveillance by the Philippine Coast Guard may be made on vessels entering and/or leaving the Philippine territory; (b) To assist in the suppression of fishing by means of dynamite, explosives or toxic substances or other methods as may be declared destructive by proper authorities; (c) To promulgate and enforce rules for lights, signals, speed, steering, sailing, passing, anchorage, movement and towlines of vessels and lights and signals on bridges; (d) To approve plans for the construction, repair, or alteration of vessels; approve materials, equipment and appliances of vessels; approved the classification of vessels; inspect vessels and their equipment and appliances; register all types of motorized watercraft plying in Philippine waters; issue certificates of inspection and of permits indicating the approval of vessels for operation; issue certificates of Philippine registry of vessels; administer load line requirements; promulgate and enforce other provisions for the safety of life and property on vessels; and determine the numbering of undocumented vessels: Provided, That certification and approval of any plans, equipment and any vessel by internationally known classification societies which are recognized by the Philippine Government shall be deemed to have complied with this section; (e) To issue licenses and certificates to officers, pilots, major and minor patrons and seamen, as well as suspend and revoke such licenses and certificates; (f) To investigate marine casualties and disasters including those arising from marine protests filed with the Bureau of Customs relative to the liability of shipowners and officers; (g) To enforce laws, rules and regulations governing manning, citizenship and mustering and drilling of crews requirements, control of logbooks, shipment, discharge, protection, and welfare merchant seamen; (h) To enforce laws requiring the performance of duties of shipowners and officers after accidents; (i) To prescribe and enforce regulations for outfitting and operation of motorboats and the licensing of motorboat operators; (j) To regulate regattas and marine parades; (k) To render aid to distressed persons or vessels on the high seas and on waters subject to the jurisdiction of the Philippines, and, in this connection, the Philippine Coast Guard may perform any and all acts necessary to rescue and aid persons; furnish clothing, food, lodging, medicine and other necessary supplies and services to persons succored; protect, save, and take charge of all property saved from marine disasters until such property is delivered to persons authorized to receive it or is otherwise disposed of in accordance with law or applicable regulations; and collect and take charge of bodies of those who may perish in such disasters;

(l) To develop, establish, maintain, and operate aids to maritime navigation. In the performance of these functions, the Philippine Coast Guard is authorized to destroy or tow in port sunken of floating dangers to navigation; (m) To supervise nautical schools with reference to activities relative to navigation, seamanship, marine engineering and other allied matters, in coordination with the Department of Education; (n) To perform functions pertaining to maritime communications which are not specifically delegated to some other office or department; and (o) To assist, within its capabilities and upon request of the appropriate authorities, other Government agencies in the performance of their functions, within the waters subject to the jurisdiction of the Philippines, relating to matters and activities not specifically mentioned in this section: Provided, That in the exercise of these functions, personnel of the Philippine Coast Guard shall be deemed to be acting as agents of the particular departments, bureau, office, agency or instrumentality charged with the enforcement and administration of the particular law. Members of the Philippine Coast Guard are peace officers for all purposes of this Act and shall be, and shall act, as law enforcement agents of the Bureau of Customs, and the Bureau of Immigration, the Bureau of Internal Revenue, the Fisheries Commission, and such other departments, bureaus or offices in the enforcement of pertinent laws, rules and regulations. ARTICLE 609. Captains and masters of vessels must be Spaniards * having legal capacity to bind themselves in accordance with this Code, and must prove that they have the skill, capacity, and qualifications required to command and direct the vessel, as established by marine laws, ordinances, or regulations, or by those of navigation, and that they are not disqualified according to the same for the discharge of the duties of that position. cdt If the owner of a vessel desires to be the captain thereof and does not have the legal qualifications therefor, he shall limit himself to the financial administration of the vessel, and shall intrust her navigation to a person possessing the qualifications required by said ordinances and regulations. (b) Powers and Duties ARTICLE 610. The following powers are inherent in the position of captain or master of a vessel: (1) To appoint or make contracts with the crew in the absence of the agent and propose said crew, should said agent be present; but the agent shall not be permitted to employ any member against the captain's express refusal. (2) To command the crew and direct the vessel to the port of its destination, in accordance with the instructions he may have received from the agent. (3) To impose, in accordance with the agreements and the laws and regulations of the merchants marine, on board the vessel, correctional punishment upon those who do not comply with his orders or who conduct themselves against discipline, holding a preliminary investigation on the crimes committed on board the vessel on the high seas, which shall be turned over to the authorities, who are to take cognizance thereof, at the first port touched. (4) To make contracts for the charter of the vessel in the absence of the agent or of her consignee, acting in accordance with the instructions received and protecting the interests of the owner most carefully. (5) To adopt all the measures which may be necessary to keep the vessel well supplied and equipped, purchasing for the purpose all that may be necessary, provided there is no time to request instructions of the agent. (6) To make, in similar urgent cases and on a voyage, the repairs to the hull and engines of the vessel and to her rigging and equipment which are

absolutely necessary in order for her to be able to continue and conclude her voyage; but if she should arrive at a point where there is a consignee of the vessel, he shall act in concurrence with the latter. ARTICLE 611. In order to comply with the obligations mentioned in the foregoing article, the captain, when he has no funds and does not expect to receive any from the agent, shall procure the same in the successive order stated below: 1. By requesting said funds of the consignees or correspondents of a vessel. 2. By applying to the consignees of the cargo or to the persons interested therein. 3. By drawing on the agent. 4. By borrowing the amount required by means of a bottomry bond. 5. By selling a sufficient amount of the cargo to cover the amount absolutely necessary to repair the vessel, and to equip her to pursue the voyage. cd In the two latter cases he must apply to the judicial authority of the port, if in Spain * and to the Spanish * consul, if in a foreign country; and where there should be none, to the local authority, proceeding in accordance with the prescriptions of Article 583, and with the provisions of the law of civil procedure. ARTICLE 612. The following obligations are inherent in the office of captain: 1. To have on board before starting on a voyage a detailed inventory of the hull, engines, rigging, tackle, stores, and other equipments of the vessel; the navigation certificate; the roll of the persons who make up the crew of the vessel, and the contracts entered into with the crew; the list of passengers; the health certificate; the certificate of the registry proving the ownership of the vessel, and all the obligations which encumber the same up to that date; the charters or authenticated copies thereof; the invoices or manifest of the cargo, and the instrument of the expert visit or inspection, should it have been made at the port of departure. 2. To have a copy of this Code on board. 3. To have three folioed and stamped books, placing at the beginning of each one a note of the number of folios it contains, signed by the maritime official, and in his absence by the competent authority. In the first book, which shall be called "log book," he shall enter every day the condition of the atmosphere, the prevailing winds, the course sailed, the rigging carried, the horsepower of the engines, the distance covered, the maneuvers executed, and other incidents of navigation. He shall also enter the damage suffered by the vessel in her hull, engines, rigging, and tackle, no matter what is its cause, as well as the imperfections and averages of the cargo, and the effects and consequence of the jettison, should there be any; and in cases of grave resolutions which require the advice or a meeting of the officers of the vessel, or even of the passengers and crew, he shall record the decision adopted. For the informations indicated he shall make use of the binnacle book, and of the steam or engine book kept by the engineer. In the second book, called the "accounting book," he shall enter all the amounts collected and paid for the account of the vessel, entering specifically article by article, the sources of the collection, and the amounts invested in provisions, repairs, acquisition of rigging or goods, fuel, outfits, wages, and all other expenses. He shall furthermore enter therein a list of all the members of the crew, stating their domiciles, their wages and salaries, and the amounts they may have received on account, either directly or by delivery to their families. In the third book, called "freight book," he shall record the entry and exit of all the goods, stating their marks and packages, names of the shippers and of the consignees, ports of loading and unloading, and the freight earned. In the same book he shall record the names and places of sailing of the passengers and the number of packages of which their baggage consists, and the price of the passage.

4. To make, before receiving the freight, with the officers of the crew, and the two experts, if required by the shippers and passengers, an examination of the vessel, in order to ascertain whether she is watertight, and whether the rigging and engines are in good condition; and if she has the equipment required for good navigation, preserving a certificate of the memorandum of this inspection, signed by all the persons who may have taken part therein, under their liability. The experts shall be appointed one by the captain of the vessel and the other one by the persons who request the examination, and in case of disagreement a third shall be appointed by the marine authority of the port. 5. To remain constantly on board the vessel with the crew during the time the freight is taken on board and carefully watch the stowage thereof; not to consent to any merchandise or goods of a dangerous character to be taken on, such as inflammable or explosive substances, without the precautions which are recommended for their packing, management and isolation; not to permit that any freight be carried on deck which by reason of its disposition, volume, or weight makes the work of the sailors difficult, and which might endanger the safety of the vessel; and if, on account of the nature of the merchandise, the special character of the shipment, and principally the favorable season it takes place, he allows merchandise to be carried on deck, he must hear the opinion of the officers of the vessel, and have the consent of the shippers and of the agent. 6. To demand a pilot at the expense of the vessel whenever required by navigation, and principally when a port, canal, or river, or a roadstead or anchoring place is to be entered with which neither he, the officers nor the crew are acquainted. 7. To be on deck at the time of sighting land and to take command on entering and leaving ports, canals, roadsteads, and rivers, unless there is a pilot on board discharging his duties. He shall not spend the night away from the vessel except for serious causes or by reason of official business. 8. To present himself, when making a port in distress, to the maritime authority if in Spain * and to the Spanish * consul if in a foreign country, before twenty-four hours have elapsed, and make a statement of the name, registry, and port of departure of the vessel, of its cargo, and reason of arrival, which declaration shall be vised by the authority or by the consul if after examining the same it is found to be acceptable, giving the captain the proper certificate in order to show his arrival under stress and the reasons therefor. In the absence of marine officials or of the consul, the declaration must be made before the local authority. 9. To take the steps necessary before the competent authority in order to enter in the certificate of the Commercial Registry of the vessel the obligations which he may contract in accordance with Article 583. 10. To put in a safe place and keep all the papers and belongings of any members of the crew who might die on the vessel, drawing up a detailed inventory, in the presence of passengers as witnesses, and, in their absence, of members of the crew. 11. To conduct himself according to the rules and precepts contained in the instructions of the agent, being liable for all that he may do in violation thereof. 12. To give an account to the agent from the port where the vessel arrives, of the reason thereof, taking advantage of the semaphore, telegraph, mail, etc., according to the cases; notify him the freight he may have received, stating the name and domicile of the shippers, freight earned, and amounts borrowed on bottomry bond, advise him of his departure, and give him any information and data which may be of interest. 13. To observe the rules on the situation of lights and evolutions to prevent collisions.

14. To remain on board in case of danger to the vessel, until all hope to save her is lost, and before abandoning her to hear the officers of the crew, abiding by the decision of the majority; and if he should have to take a boat he shall take with him, before anything else, the books and papers, and then the articles of most value, being obliged to prove in case of the loss of the books and papers that he did all he could to save them. 15. In case of wreck he shall make the proper protest in due form at the first port reached, before the competent authority or the Spanish * consul, within twenty-four hours, stating therein all the incidents of the wreck, in accordance with case 8 of this article. 16. To comply with the obligations imposed by the laws and rules of navigation, customs, health, and others. ARTICLE 622. If when on a voyage the captain should receive news of the appearance of privateers or men of war against his flag, he shall be obliged to make the nearest neutral port, inform his agent or shippers, and await an occasion to sail under convoy or until the danger is over or to receive final orders from the agent or shippers. ARTICLE 624. A captain whose vessel has gone through a hurricane or who believes that the cargo has suffered damages or averages, shall make a protest thereon before the competent authority at the first port he touches within the twenty-four hours following his arrival, and shall ratify it within the same period when he arrives at the place of his destination, immediately proceeding with the proof of the facts, it not being permitted to open the hatches until this has been done. The captain shall proceed in the same manner if, the vessel having been wrecked, he is saved alone or with part of his crew, in which case he shall appear before the nearest authority, and make a sworn statement of the facts. The authority or the consul abroad shall verify the said facts, receiving a sworn statement of the members of the crew and passengers who may have been saved, and taking the other steps which may assist in arriving at the facts, drafting a certificate of the result of the proceedings in the log book and in that of the sailing mate, and shall deliver the original records of the proceedings to the captain, stamped and folioed, with a memorandum of the folios, which he must rubricate, for their presentation to the judge or court of the port of destination. The statement of the captain shall be believed if it is in accordance with those of the crew and passengers; if they disagree, the latter shall be accepted, unless there is proof to the contrary. ARTICLE 625. The captain, under his personal liability, as soon as he arrives at the port of destination, obtains the necessary permission from the health and customs officers and fulfills the other formalities required by the regulations of the administration, shall turn over the cargo, without any defalcation, to the consignees, and, in a proper case, the vessel, rigging, and freights to the agent. If, by reason of the absence of the consignee or on account of the nonappearance of a legal holder of the invoices, the captain does not know to whom he is to make the legal delivery of the cargo, he shall place it at the disposal of the proper judge or court or authority, in order that he may decide with regard to its deposit, preservation, and custody. Inter Orient v. NLRC (c) Prohibited acts and transactions ARTICLE 613. A captain who navigates for freight in common or on shares can not make any transaction for his exclusive account, and should he do so the profit shall

belong to the other persons in interest, and the losses shall be for his own exclusive account. ARTICLE 614. A captain who, having made an agreement to make a voyage, should not fulfill his obligation, without being prevented by an accident case or by force majeure, shall pay for all the losses his action may cause, without prejudice to criminal penalties which may be proper. ARTICLE 615. Without the consent of the agent, the captain can not have himself substituted by another person; and should he do so, besides being liable for all the acts of the substitute and bound to the indemnities mentioned in the foregoing article, the substitute as well as the captain may be discharged by the agent. ARTICLE 617. The captain can not contract loans on respondentia, and should he do so the contracts shall be void. Neither can he borrow money on bottomry for his own transactions, except on the portion of the vessel he owns, provided no money has been previously borrowed on the whole vessel, and provided there does not exist any other kind of lien or obligation thereon. When he is permitted to do so, he must necessarily state what interest he has in the vessel. In case of violation of this article the principal, interest, and costs shall be charged to the private account of the captain, and the agent may furthermore have the right to discharge him. ARTICLE 621. A captain who borrows money on bottomry, or who pledges or sells merchandise or provisions in other cases and without the formalities prescribed in this Code, shall be liable for the principle, interest, and costs, and shall indemnify for the damages he may cause. The captain who commits fraud in his accounts shall reimburse the amount defrauded, and shall be subject to the provisions contained in the Penal Code. ARTICLE 583. If the ship being on a voyage the captain should find it necessary to contract one or more of the obligations mentioned in Nos. 8 and 9 of Article 580, he shall apply to the judge or court if he is in Spanish * territory, and otherwise to the consul of Spain, * should there be one, and, in his absence to the judge or court or to the proper local authority, presenting the certificate of the registry of the vessel treated of in Article 612, and the instruments proving the obligation contracted. The judge or court, the consul or the local authority as the case may be, in view of the result of the proceedings instituted, shall make a temporary memorandum in the certificate of their result, in order that it may be recorded in the registry when the vessel returns to the port of her registry, or so that it can be admitted as a legal and preferred obligation in case of sale before the return, by reason of the sale of the vessel by virtue of a declaration of unseaworthiness. The lack of this formality shall make the captain personally liable to the creditors who may be prejudiced through his fault. 3. Other Officers and Crew (a) Contracts and formalities ARTICLE 634. The captain may make up his crew with the number he may consider advisable, and in the absence of Spanish * sailors he may ship foreigners residing in the country, the number thereof not to exceed one-fifth of the total crew. If in foreign ports the captain should not find a sufficient number of Spanish * sailors, he may make up the crew with foreigners, with the consent of the consul or marine authorities. The agreements which the captain may make with the members of the crew and others who go to make up the complement of the vessels, to which reference is made in Article 612, must be reduced to writing in the account book without the

intervention of a notary public or clerk, signed by the parties thereto, and vised by the marine authority if they are executed in Spanish * territory, or by the consuls or consular agents of Spain * if executed abroad, stating therein all the obligations which each one contracts and all the rights they acquire, said authorities taking care that these obligations and rights are recorded in a concise and clear manner, which will not give rise to doubts or claims. cd The captain shall take care to read to them the articles of this Code, which concern them, stating that they were read in the said document. If the book includes the requisites prescribed in Article 612, and there should not appear any signs of alterations in its clauses, it shall be admitted as evidence in questions which may arise between the captain and the crew with regard to the agreements contained therein and the amounts paid on account of the same. Every member of the crew may request a copy of the captain, signed by the latter, of the agreement and of the liquidation of his wages, as they appear in the book. (b) Duties and liabilities ARTICLE 635. A sailor who has been contracted to serve on a vessel can not rescind his contract nor fail to comply therewith except by reason of a legitimate impediment which may have occurred. Neither can he pass from the service of one vessel to another without obtaining the written consent of the vessel on which he may be. If, without obtaining said permission, the sailor who has signed for one vessel should sign for another one, the second contract shall be void, and the captain may choose between forcing him to fulfill the service to which he first bound himself or look for a person to substitute him at his expense. Said sailor shall furthermore lose the wages earned on his first contract to the benefit of the vessel for which he may have signed. A captain who, knowing that a sailor is in the service of another vessel, should have made a new agreement with him, without having requested the permission referred to in the foregoing paragraphs, shall be personally liable to the captain of the vessel to which the sailor first belonged for that part of the indemnity, referred to in the third paragraph of this article, which the sailor could not pay. (c) Rights ARTICLE 636. Should a fixed period for which a sailor has signed not be stated, he can not be discharged until the end of the return voyage to the port where he enrolled. ARTICLE 637. Neither can the captain discharge a sailor during the time of his contract except for sufficient cause, the following being considered as such: 1. The perpetration of a crime which disturbs order on the vessel. 2. Repeated offenses of insubordination, against discipline, or against the fulfillment of the service. 3. Repeated incapacity or negligence in the fulfillment of the service to be rendered. 4. Habitual drunkenness. 5. Any occurrence which incapacitates the sailor to carry out the work under his charge, with the exception of the provisions contained in Article 644. 6. Desertion. The captain may, however, before setting out on a voyage and without giving any reason whatsoever, refuse to permit a sailor he may have engaged from going on board and may leave him on land, in which case he will be obliged to pay him his wages as if he had rendered services. This indemnity shall be paid from the funds of the vessel if the captain should have acted for reasons of prudence and in the interest of the safety and good

service of the former. Should this not be the case, it shall be paid by the captain personally. aisadc After the vessel has sailed, and during the voyage and until the conclusion thereof, the captain can not abandon any member of his crew on land or on the sea, unless, by reason of being guilty of some crime, his imprisonment and delivery to the competent authority is proper in the first port touched, which will be obligatory on the captain. ARTICLE 638. If, the crew having been engaged, the voyage is revoked by the will of the agent or of the charterers before or after the vessel has put to sea or if the vessel is in the same manner given a different destination than that fixed in the agreement with the crew, the latter shall be indemnified because of the rescission of the contract according to the case, viz: 1. If the revocation of the voyage should be decided before the departure of the vessel from the port, each sailor engaged shall be given one month's salary, besides what may be due him in accordance with his contract, for the services rendered to the vessel up to the date of the revocation. 2. If the agreement should have been for a fixed amount for the whole voyage, there shall be graduated what may be due for said month and days, calculating the same in proportion to the estimated duration of the voyage, in the judgment of experts, in the manner established in the law of civil procedure; and if the proposed voyage should be of such short duration that it is calculated at one month more or less, the indemnity shall be fixed for fifteen days, discounting in all cases the sums advanced. 3. If the revocation should take place after the vessel has put to sea, the sailors engaged for a fixed amount for the voyage shall receive the salary which may have been offered them in full as if the voyage had terminated, and those engaged by the month shall receive the amount corresponding to the time they might have been on board and to the time they may require to arrive at the port of destination, the captain being obliged, furthermore, to pay said sailors the passage to the said port or to the port of sailing of the vessel, as may be convenient for them. 4. If the agent or the charterers of the vessel should give said vessel a destination other than that fixed in the agreement, and the members of the crew should not agree thereto, they shall be given by way of indemnity half the amount fixed in case No. 1, besides what may be owed them for the part of the monthly wages corresponding to the days which have elapsed from the date of their agreements. If they accept the change, and the voyage, on account of the greater distance or for other reasons, should give rise to an increase of wages, the latter shall be privately regulated, or through amicable arbitrators in case of disagreement. Even though the voyage may be to a nearer point, this shall not give rise to a reduction in the wages agreed upon. If the revocation or change of the voyage should originate from the shippers or charterers, the agent shall have a right to demand of them the indemnity which is justly due. ARTICLE 639. If the revocation of the voyage should arise from a just cause independent of the will of the agent or charterers, and the vessel should not have left the port, the members of the crew shall not have any other right than to receive the wages earned up to the day on which the revocation took place. ARTICLE 640. The following shall be just causes for the revocation of the voyage: 1. A declaration of war or interdiction of commerce with the power to whose territory the vessel was bound.

2. The blockade of the port of destination or the breaking out of an epidemic after the agreement. 3. The prohibition to receive in said port the goods which make up the cargo of the vessel. 4. The detention or embargo of the same by order of the Government, or for any other reason independent of the will of the agent. 5. The inability of the vessel to navigate. cdasia ARTICLE 641. If, after a voyage has been begun, any of the first three causes mentioned in the foregoing article should occur, the sailors shall be paid at the port the captain may deem it advisable to make for the benefit of the vessel and cargo, according to the time they may have served thereon; but if the vessel is to continue the voyage, the captain and the crew may mutually demand the enforcement of the contract. In case of the occurrence of the fourth cause, the crew shall continue to be paid half wages, if the agreement is by month but if the detention should exceed three months, the engagement shall be rescinded and the crew shall be paid what they should have earned, according to the contract, if the voyage had been made. And if the agreement had been made for a fixed sum for the voyage, the contract must be complied within the terms agreed upon. In the fifth case, the crew shall not have any other right than be entitled to recover the wages earned; but if the disability of the vessel should have been caused by the negligence or lack of skill of the captain, engineer, or sailing mate, they shall indemnify the crew for the loss suffered, always reserving the criminal liability which may be proper. ARTICLE 642. If the crew has been engaged to work on shares they shall not be entitled, by reason of the revocation, delay, or greater extension of the voyage, to anything but the proportionate part of the indemnity paid into the common funds of the vessel by the persons liable for said occurrences. ARTICLE 643. If the vessel and her freight should be totally lost, by reason of capture or wreck, all rights of the crew to demand any wages whatsoever shall be extinguished, as well as that of the agent for the recovery of the advances made. If a portion of the vessel or freight should be saved, or part of either, the crew engaged on wages, including the captain, shall retain their rights on the salvage, so far as they go, on the remainder of the vessel as well as value of the freightage or the cargo saved; but sailors who are engaged on shares shall not have any right whatsoever to the salvage of the hull, but only on the portion of the freightage saved. If they should have worked to collect the remainder of the ship-wrecked vessel, they shall be given an award in proportion to the efforts made and to the risks encountered in order to accomplish the salvage.

ARTICLE 644. A sailor who falls sick shall not lose his right to wages during the voyage, unless the sickness is the result of his own fault. At any rate, the costs of the attendance and cure shall be defrayed from the common funds, in the form of a loan. If the sickness should be caused by an injury received in the service or defense of the vessel the sailor shall be attended and cured from the common funds, there being deducted before anything else from the proceeds of the freight, the cost of the attendance and cure. ARTICLE 645. If a sailor should die during the voyage his heir shall be given the wages earned and not received, according to his engagement and the reason for his death, namely If he should have died a natural death and should have been engaged on wages there shall be paid what may have been earned up to the date of his death. If the engagement had been made for a fixed sum for the whole voyage there shall be paid half the amount earned if the sailor died on the voyage out, and the whole amount if he died on the return voyage. And if the engagement had been made on shares and the death should have occurred after the voyage was begun, the heirs shall be paid the entire portion due the sailor; but should the latter have died before the departure of the vessel from the port, the heirs shall not be entitled to claim anything. If the death should have occurred in the defense of the vessel, the sailor shall be considered as living, and his heirs shall be paid, at the end of the voyage, the full amount of wages or the full part of the profits due him as to the others of his grade. The sailor shall likewise be considered as present in the event of his capture when defending the vessel, in order to enjoy the same benefits as the rest; but should he have been captured on account of carelessness or other accident not related to the service, he shall only receive the wages due up to the day of his capture. ARTICLE 646. The vessel with her engines, rigging, equipment, and freights shall be liable for the wages earned by the crew engaged per month or for the trip, the liquidation and payment ought to take place between one voyage and the other. After a new voyage has been undertaken, credits such as the former shall lose their right of preference. ARTICLE 647. The officers and the crew of the vessel shall be exempted from all obligations contracted, if they deem it proper, in the following cases: 1. If, before the beginning of the voyage, the captain attempts to change it, or there occurs a naval war with the power to which the vessel was destined. 2. If a disease should break out and be officially declared epidemic in the port of destination. 3. If the vessel should change owner or captain. 4. Supercargoes ARTICLE 649. Supercargoes shall discharge on board the vessel the administrative duties which the agent or shippers may have assigned them; they shall keep an account and record of their transactions in a book which shall have the same conditions and requisites as required for the accounting book of the captain, and shall respect the latter in his duties as chief of the vessel. Cdta The powers and liabilities of the captain shall cease, when there is a supercargo, with regard to that part of the administration legitimately conferred upon the latter, but shall continue in force for all acts which are inseparable from his authority and office. ARTICLE 650. All the provisions contained in the second section of Title III, Book II, with regard to qualifications, manner of making contracts, and liabilities of factors shall be applicable to supercargoes.

ARTICLE 651. Supercargoes can not, without special authorization or agreement, make any transaction for their own account during the voyage, with the exception of the ventures which, in accordance with the custom of the port of destination, they are permitted to do. Neither shall they be permitted to invest in the return trip more than the profits from the ventures, unless there is a special authorization thereto from the principals.

TRANSPO PROVISIONS 12 September 2013 D. Accidents and Damages in Maritime Commerce 1. Averages (a) Nature and Kinds ARTICLE 806. For the purposes of this Code the following shall be considered averages: 1. All extraordinary or accidental expenses which may be incurred during the navigation for the preservation of the vessel or cargo, or both. 2. All damages or deterioration the vessel may suffer from the time she puts to sea from the port of departure until she casts anchor in the port of destination, and those suffered by the merchandise from the time it is loaded in the port of shipment until it is unloaded in the port of consignment. ARTICLE 807. The petty and ordinary expenses of navigation, such as pilotage of coasts and ports, lighterage and towage, anchorage dues, inspection, health, quarantine, lazaretto, and other so-called port expenses, costs of barges, and unloading, until the merchandise is placed on the wharf, and any other expenses common to navigation shall be considered ordinary expenses to be defrayed by the shipowner, unless there is a special agreement to the contrary. ARTICLE 808. Averages shall be: 1. Simple or particular. 2. General or gross. (1) Simple or Particular (a) Defined ARTICLE 809. Simple or particular averages shall be, as a general rule, all the expenses and damages caused to the vessel or to her cargo which have not redounded to the benefit and common profit of all the persons interested in the vessel and her cargo, and especially the following: 1. The damages suffered by the cargo from the time of its embarkation until it is unloaded, either on account of the nature of the goods or by reason of an accident at sea or force majeure, and the expenses incurred to avoid and repair the same. 2. The damages suffered by the vessel in her hull, rigging, arms, and equipment, for the same causes and reasons, from the time she puts to sea from the port of departure until she anchored in the port of destination. 3. The damages suffered by the merchandise loaded on deck, except in coastwise navigation, if the marine ordinances allow it. 4. The wages and victuals of the crew when the vessel should be detained or embargoed by a legitimate order or force majeure, if the charter should have been for a fixed sum for the voyage.

5. The necessary expenses on arrival at a port, in order to make repairs or secure provisions. 6. The lowest value of the goods sold by the captain in arrivals under stress for the payment of provisions and in order to save the crew, or to cover any other requirement of the vessel against which the proper amount shall be charged. 7. The victuals and wages of the crew during the time the vessel is in quarantine. 8. The damage suffered by the vessel or cargo by reason of an impact or collision with another, if it were accidental and unavoidable. If the accident should occur through the fault or negligence of the captain, the latter shall be liable for all the damage caused. 9. Any damage suffered by the cargo through the faults, negligence, or barratry of the captain or of the crew, without prejudice to the right of the owner to recover the corresponding indemnity from the captain, the vessel, and the freight. (b) Effects ARTICLE 810. The owner of the goods which gave rise to the expense or suffered the damage shall bear the simple or particular averages. (2) Gross or General (a) Defined ARTICLE 811. General or gross averages shall be, as a general rule, all the damages and expenses which are deliberately caused in order to save the vessel, her cargo, or both at the same time, from a real and known risk, and particularly the following: 1. The goods or cash invested in the redemption of the vessel or cargo captured by enemies, privateers, or pirates, and the provisions, wages, and expenses of the vessel detained during the time the arrangement or redemption is taking place. 2. The goods jettisoned to lighten the vessel, whether they belong to the vessel, to the cargo, or to the crew, and the damage suffered through said act by the goods kept. 3. The cables and masts which are cut or rendered useless, the anchors and the chains which are abandoned in order to save the cargo, the vessel, or both. 4. The expenses of removing or transferring a portion of the cargo in order to lighten the vessel and place her in condition to enter a port or roadstead, and the damage resulting therefrom to the goods removed or transferred. 5. The damage suffered by the goods of the cargo through the opening made in the vessel in order to drain her and prevent her sinking. 6. The expenses caused through floating a vessel intentionally stranded for the purpose of saving her. 7. The damage caused to the vessel which it is necessary to break open, scuttle, or smash in order to save the cargo. 8. The expenses of curing and maintaining the members of the crew who may have been wounded or crippled in defending or saving the vessel. 9. The wages of any member of the crew detained as hostage by enemies, privateers, or pirates, and the necessary expenses which he may incur in his imprisonment, until he is returned to the vessel or to his domicile, should he prefer it. 10. The wages and victuals of the crew of a vessel chartered by the month during the time it should be embargoed or detained by force majeure or by order of the Government, or in order to repair the damage caused for the common good.

11. The loss suffered in the value of the goods sold at arrivals under stress in order to repair the vessel because of gross average. 12. The expenses of the liquidation of the average. ARTICLE 817. If in lightening a vessel on account of a storm, in order to facilitate her entry into a port or roadstead, part of her cargo should be transferred to lighters or barges and be lost, the owner of said part shall be entitled to indemnity, as if the loss has originated from a gross average, the amount thereof being distributed between the entire vessel and cargo which caused the same. If, on the contrary, the merchandise transferred should be saved and the vessel should be lost, no liability can be demanded of the salvage. ARTICLE 818. If, as a necessary measure to extinguish a fire in a port; roadstead; creek, or bay, it should be decided to sink any vessel, this loss shall be considered gross average, to which the vessels saved shall contribute. (b) Essential Requisites ARTICLE 813. In order to incur the expenses and cause the damages corresponding to gross average, a previous resolution of the captain, adopted after deliberation with the sailing mate and other officers of the vessel, and with a hearing of the persons interested in the cargo who may be present, shall be required. If the latter shall object, and the captain and officers, or a majority, or the captain, if opposed to the majority, should consider certain measures necessary, they may be executed under his liability, without prejudice to the freighters exercising their rights against the captain before the judge or court of competent jurisdiction, if they can prove that he acted with malice, lack of skill, or negligence. If the persons interested in the cargo, being on the vessel, should not be heard, they shall not contribute to the gross average, which contribution shall be paid by the captain, unless the urgency of the case should be such that the time necessary for previous deliberation was lacking. ARTICLE 814. The resolution adopted to cause the damages which constitute a general average must necessarily be entered in the log book, stating the motives and reasons therefor, the votes against it, and the reasons for the disagreement should there be any, and the irresistible and urgent causes which moved the captain if he acted of his own accord. In the first case the minutes shall be signed by all the persons present who could do so before taking action if possible, and if not at the first opportunity; in the second case by the captain and by the officers of the vessel. In the minutes and after the resolution there shall be stated in detail all the goods cast away, and mention shall be made of the injuries caused to those kept on board. The captain shall be obliged to deliver one copy of these minutes to the maritime judicial authority of the first port he may make within twenty-four hours after his arrival, and to ratify it immediately by an oath. ARTICLE 860. If, notwithstanding the jettison of the merchandise, breakage of masts, ropes, and equipment, the vessel should be lost running said risk, no contribution whatsoever by reason of gross average shall be proper. The owners of the goods saved shall not be liable for the indemnity of those jettisoned, lost, or damaged.

Magsaysay Inc. v. Agan (c) Effects ARTICLE 812. In order to satisfy the amount of the gross or general averages, all the persons having an interest in the vessel and cargo therein at the time of the occurrence of the average shall contribute. (d) Jettison ARTICLE 815. The captain shall supervise the jettison, and shall order the goods cast overboard in the following order: 1. Those which are on deck, beginning with those which embarrass the handling of the vessel or damage her, preferring, if possible, the heaviest ones and those of least utility and value. 2. Those in the hold, always beginning with those of the greatest weight and smallest value, to the amount and number absolutely indispensable. ARTICLE 816. In order that the goods jettisoned may be included in the gross average and the owners thereof be entitled to indemnity, it shall be necessary in so far as the cargo is concerned that their existence on board be proven by means of the bill of lading; and with regard to those belonging to the vessel, by means of the inventory made up before the departure, in accordance with the first paragraph of Article 612. (e) Jason Clauses York-Antwerp Rules, Rule D Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure; but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault. 2. Arrival Under Stress (a) Causes ARTICLE 819. If the captain during the navigation should believe that the vessel can not continue the voyage to the port of destination on account of the lack of provisions, well founded fear of seizure, privateers or pirates, or by reason of any accident of the sea disabling her to navigate, he shall assemble the officers and shall call the persons interested in the cargo who may be present, and who may attend the meeting without the right to vote; and if, after examining the circumstances of the case, the reasons should be considered well founded, it shall be decided to make the nearest and most convenient port drafting and entering in the log book the proper minutes, which shall be signed by all. The captain shall have the deciding vote and the persons interested in the cargo may make the objections and protests they may deem proper, which shall be entered in the minutes in order that they may make use thereof in the manner they may consider advisable. ARTICLE 820. The arrival under stress shall not be considered legal in the following cases: 1. If the lack of provisions should arise from the failure to take the necessary provisions for the voyage, according to usage and custom, or if they should have been rendered useless or lost through bad stowage or negligence in their care.

2. If the risk of enemies, privateers, or pirates should not have been well known, manifest, and based on positive and justifiable facts. 3. If the injury to the vessel should have been caused by reason of her not being repaired, rigged, equipped, and arranged in a convenient manner for the voyage, or by reason of some erroneous order of the captain. 4. Whenever malice, negligence, want of foresight, or lack of skill on the part of the captain is the reason for the act causing the damage. (b) Formalities (c) Expenses ARTICLE 821. The expenses caused by the arrival under stress shall always be for the account of the shipowner or agent, but the latter shall not be liable for the damage which may be caused the shippers by reason of the arrival under stress, provided the latter is legitimate. Otherwise, the shipowner or agent and the captain shall be jointly liable. ARTICLE 822. If in order to make repairs to the vessel or because there should be danger of the cargo suffering damage it should be necessary to unload, the captain must request authorization of the judge or court of competent jurisdiction to lighten the vessel, and do so with the knowledge of the person interested or representative of the cargo, should there be one. In a foreign port, it shall be the duty of the Spanish * consul, where there is one, to give the authorization. In the first case, the expenses shall be defrayed by the ship agent or owner, and in the second, they shall be for the account of the owners of the merchandise, for whose benefit the act took place. If the unloading should take place for both reasons, the expenses shall be defrayed in proportion to the value of the vessel and that of the cargo. (d) Responsibility of Captain ARTICLE 823. The care and preservation of the cargo which has been unloaded shall be in charge of the captain, who shall be responsible for the same, except in cases of force majeure. ARTICLE 824. If the entire cargo or part thereof should appear to be damaged, or there should be imminent danger of its being damaged, the captain may request of the judge or court of competent jurisdiction or the consul, in a proper case, the sale of all or of part of the former, and the person taking cognizance of the matter shall authorize it after an examination and declaration of experts, advertisements, and other formalities required by the case and an entry in the book, in accordance with the provisions of Article 624. The captain shall, in a proper case, justify the legality of the procedure, under the penalty of answering to the shipper for the price the merchandise would have brought if it should have arrived at the port of its destination in good condition. ARTICLE 825. The captain shall answer for the damages caused by his delay, if the reason for the arrival under stress having ceased, he should not continue the voyage. If the reason for said arrival should have been the fear of enemies, privateers, or pirates, before sailing, a discussion and resolution of a meeting of the officers of the

vessel and persons interested in the cargo who may be present shall take place, in accordance with the provisions contained in Article 819. 3. Collisions (a) Classes and Effects (1) Fortuitous ARTICLE 830. If a vessel should collide with another by reason of an accident or through force majeure, each vessel and her cargo shall be liable for their own damage. ARTICLE 832. If, by reason of a storm or other cause of force majeure, a vessel which is properly anchored and moored should collide with those in her immediate vicinity, causing them damage, the injury occasioned shall be looked upon as particular average to the vessel run into. (2) Culpable ARTICLE 826. If a vessel should collide with another through the fault, negligence, or lack of skill of the captain, sailing mate, or any other member of the complement, the owner of the vessel at fault shall indemnify the losses and damages suffered, after an expert appraisal. ARTICLE 827. If both vessels may be blamed for the collision, each one shall be liable for his own damages, and both shall be jointly responsible for the losses and damages suffered by their cargoes. ARTICLE 831. If a vessel should be forced to collide with another one by a third vessel, the owner of the third vessel shall indemnify for the losses and damages caused, the captain thereof being civilly liable to said owner. (3) Inscrutable Fault ARTICLE 828. The provisions of the foregoing article are applicable to the case in which it can not be decided which of the two vessels was the cause of the collision. A. Urrutia & Co. v. Baco River Plantation Co. National Development Company v. Court of Appeals Government v. Philippine Streamship Co., Inc. Smith Bell and Company v. Court of Appeals 4. Shipwrecks ARTICLE 840. The losses and deteriorations suffered by a vessel and her cargo by reason of shipwreck or stranding shall be individually for the account of the owners, the part of the wreck which may be saved belonging to them in the same proportion. ARTICLE 841. If the wreck or stranding should arise through the malice, negligence, or lack of skill of the captain, or because the vessel put to sea insufficiently repaired and prepared, the owner or the freighters may demand indemnity of the captain for the damages caused to the vessel or cargo by the accident, in accordance with the provisions contained in Articles 610, 612, 614, and 621.

ARTICLE 842. The goods saved from the wreck shall be specially liable for the payment of the expenses of the respective salvage, and the amount thereof must be paid by the owners of the former before they are delivered to them, and with preference to any other obligation, if the merchandise should be sold. cd05LET ARTICLE 843. If several vessels navigate under convoy, and any of them should be wrecked, the cargo saved shall be distributed among the rest in the proportion to the amount each one can receive. If any captain should refuse, without sufficient cause, to receive what may correspond to him, the captain of the wrecked vessel shall enter a protest against him before two sea officials of the losses and damages resulting therefrom, ratifying the complaint within twenty-four hours after arrival at the first port, and including it in the proceedings he must institute in accordance with the provisions contained in Article 612. Should it not be possible to transfer to the other vessels the entire cargo of the one wrecked, the goods of the highest value and smallest volume shall be saved first, the designation thereof being made by the captain, in concurrence with the officers of his vessel. (a) Salvage Law (Act No. 2616) Section 1. When in case of shipwreck, the vessel or its cargo shall be beyond the control of the crew, or shall have been abandoned by them, and picked up and conveyed to a safe place by other persons, the latter shall be entitled to a reward for the salvage. Those who, not being included in the above paragraph, assist in saving a vessel or its cargo from shipwreck, shall be entitled to a like reward. Sec. 2. If the captain of the vessel, or the person acting in his stead, is present, no one shall take from the sea, or from the shores or coast merchandise or effects proceeding from a shipwreck or proceed to the salvage of the vessel, without the consent of such captain or person acting in his stead. Sec. 3. He who shall save or pick up a vessel or merchandise at sea, in the absence of the captain of the vessel, owner, or a representative of either of them, they being unknown, shall convey and deliver such vessel or merchandise, as soon as possible, to the Collector of Customs, if the port has a collector, and otherwise to the provincial treasurer or municipal mayor. Sec. 4. After the salvage is accomplished, the owner or his representative shall have a right to the delivery of the vessel or things saved, provided that he pays, or gives a bond to secure, the expenses and the proper reward. The amount and sufficiency of the bond, in the absence of agreement, shall be determined by the Collector of Customs or by the Judge of the Court of First Instance of the province in which the things saved may be found. Sec. 5. The Collector of Customs, provincial treasurer, or municipal mayor, to whom a salvage is reported, shall order: a. That the things saved be safeguard and inventoried. b. The sale at public auction of the things saved which may be in danger of immediate loss or of those whose conservation is evidently prejudicial to the interests of the owner, when no objection is made to such sale. c. The advertisement within the thirty days subsequent to the salvage, in one of the local newspapers or in the nearest newspaper published, of all the details

of the disaster, with a statement of the mark and number of the effects requesting all interested persons to make their claims. Sec. 6. If, while the vessel or things saved are at the disposition of the authorities, the owner or his representative shall claim them, such authorities shall order their delivery to such owner or his representative, provided that there is no controversy over their value, and a bond is given by the owner or his representative to secure the payment of the expenses and the proper reward. Otherwise, the delivery shall nor be made until the matter is decided by the Court of First Instance of the province. Sec. 7. No claim being presented in the three months subsequent to the publication of the advertisement prescribed in sub-section (c) of Section five, the things save shall be sold at public auction, and their proceeds, after deducting the expenses and the proper reward shall be deposited in the insular treasury. If three years shall pass without anyone claiming it, one-half of the deposit shall be adjudged to him who saved the things, and the other half to the insular government. Sec. 8. The following shall have no right to a reward for salvage or assistance: a. The crew of the vessel shipwrecked or which was is danger of shipwreck; b. He who shall have commenced the salvage in spite of opposition of the captain or his representative; and c. He who shall have failed to comply with the provisions of Section three. Sec. 9. If, during the danger, an agreement is entered into concerning the amount of the reward for salvage or assistance, its validity may be impugned because it is excessive, and it may be required to be reduced to an amount proportionate to the circumstances. Sec. 10. In a case coming under the last preceding section, as well as in the absence of an agreement, the reward for salvage or assistance shall be fixed by the Court of First Instance of the province where the things salvaged are found, taking into account principally the expenditures made to recover or save the vessel or the cargo or both, the zeal demonstrated, the time employed, the services rendered, the excessive express occasioned the number of persons who aided, the danger to which they and their vessels were exposed as well as that which menaced the things recovered or salvaged, and the value of such things after deducting the expenses. Sec. 11. From the proceeds of the sale of the things saved shall be deducted, first, the expenses of their custody, conservation, advertisement, and auction, as well as whatever taxes or duties they should pay for their entrance; then there shall be deducted the expenses of salvage; and from the net amount remaining shall be taken the reward for the salvage or assistance which shall not exceed fifty per cent of such amount remaining. Sec. 12. If in the salvage or in the rendering of assistance different persons shall have intervened the reward shall be divided between them in proportion to the services which each one may have rendered, and, in case of doubt, in equal parts. Those who, in order to save persons, shall have been exposed to the same dangers shall also have a right to participation in the reward. Sec. 13. If a vessel or its cargo shall have been assisted or saved, entirely or partially, by another vessel, the reward for salvage or for assistance shall be divided between the owner, the captain, and the remainder of the crew of the latter vessel, so as to give the owner a half, the captain a fourth, and all the remainder of the crew the other fourth of the reward, in proportion to their respective salaries, in the absence of an agreement to the contrary. The express of salvage, as well as the reward for salvage or assistance, shall be a charge on the things salvaged on their value.

Sec. 14. This Act shall take effect on its passage. Enacted: February 4, 1916 G. Urrutia & Company v. The Pasig Steamer and Lighter Co. Erlanger & Galinger v. Swedish East Asiatic Co. Ltd. Atlantic, Gulf & Pacific Company v Uchida Kisen Kaisha, Barrios v. Go Thong E. Special Contracts of Maritime Commerce 1. Charter Parties a. Definition b. Kinds Planters Products v. CA, supra Coastwise Lighterage Corp. v. CA Caltex Philippines v. Sulpicio Lines 2. Loans on Bottomry and Respondentia a. Loan on Bottomry, defined b. Loan on Respondentia, defined c. Character of Loan ARTICLE 719. A loan on bottomry or respondentia shall be considered that which the repayment of the sum loaned and the premium stipulated, under any condition whatsoever, depends on the safe arrival in port of the goods on which it is made, or of their value in case of accident. F. Bill of Lading 1. Contents ARTICLE 706. The captain and the freighter of the vessel are obliged to draft the bill of lading, in which there shall be stated: 1. The name, registry, and tonnage of the vessel. 2. The name of the captain and his domicile. 3. The port of loading and that of unloading. 4. The name of the shipper. 5. The name of the consignee, if the bill of lading is issued to order. 6. The quantity, quality, number of packages, and marks of the merchandise. 7. The freight and the primage stipulated. The bill of lading may be issued to bearer, to order, or in the name of a specific person, and must be signed within twenty-four hours after the cargo has been received on board, the freighter being able to request the unloading thereof at the expense of the captain should he not sign it, and in every case indemnity for the losses and damages suffered thereby. ARTICLE 707. Four true copies of the original bill of lading shall be made, all of which shall be signed by the captain and by the freighter. Of these copies the freighter shall keep one and send another to the consignee; the captain shall take two, one for himself and another for the agent. ARTICLE 713. If before delivering the cargo a new bill of lading should be demanded of the captain, it being alleged that the previous ones are not presented on account

of their loss or for any other sufficient cause, he shall be obliged to issue it, provided security for the value of the cargo is given to his satisfaction; but without changing the consignment and stating therein the circumstances prescribed in the last paragraph of Article 707, when the bills of lading referred to therein are in question, under the penalty otherwise to be liable for said cargo if not properly delivered through his fault. ARTICLE 714. If before the vessel puts to sea the captain should die or should discontinue in his position through any accident, the freighters shall have a right to demand of the new captain the ratification of the first bills of lading, and the latter must do so, provided all the copies previously issued be presented or returned to him, and it should appear from an examination of the cargo that they are correct. The expenses arising from the examination of the cargo shall be defrayed by the agent, without prejudice to the right of action of the latter against the first captain, if he ceased to be such through his own fault. Should said examination not be made, it shall be understood that the new captain accepts the cargo as it appears from the bills of lading issued. 2. Probative Value ARTICLE 709. A bill of lading drawn up in accordance with the provisions of this title shall be proof as between all those interested in the cargo and between the latter and the underwriters, proof to the contrary being reserved by the latter. ARTICLE 710. Should the bills of lading not agree, and there should not be observed any correction or erasure in any of them, those possessed by the freighter or consignee signed by the captain shall be proof against the captain or agent in favor of the consignee or freighter; and those possessed by the captain or agent signed by the freighter shall be proof against the freighter or consignee in favor of the captain or agent. G. Passenger on Sea Voyage 1. Nature of Contracts ARTICLE 695. The right to passage, if issued to a specified person, can not be transferred without the consent of the captain or of the consignee. 2. Obligations of Passengers ARTICLE 693. Should the passage price not have been agreed upon, the judge or court shall summarily fix it, after a statement of experts. ARTICLE 699. After the contract has been rescinded, before or after the commencement of the voyage, the captain shall have a right to claim payment for what he may have furnished the passengers. ARTICLE 704. The captain, in order to collect the price of the passage and expenses of maintenance, may retain the goods belonging to the passenger, and in case of the sale of the same he shall be given preference over the other creditors, acting in the same way as in the collection of freight. ARTICLE 694. Should the passenger not arrive on board at the time fixed, or should leave the vessel without permission from the captain, when the latter is ready to

leave the port, the captain may continue the voyage and demand the full passage price. ARTICLE 700. In all that relates to the preservation of order and police on board the vessel the passengers shall conform to the orders given by the captain, without any distinction whatsoever. 3. Rights of Passengers ARTICLE 697. If before beginning the voyage it should be suspended through the sole fault of the captain or agent, the passengers shall be entitled to have their passage refunded and to recover for losses and damages; but if the suspension was due to an accidental cause, or to force majeure, or to any other cause beyond the control of the captain or agent, the passengers shall only be entitled to the return of the passage money. cd ARTICLE 698. In case a voyage already begun should be interrupted the passengers shall be obliged only to pay the passage in proportion to the distance covered, and shall not be entitled to recover for losses and damages if the interruption is due to an accidental cause or to force majeure, but have a right to indemnity if the interruption should have been caused by the captain exclusively. If the interruption should be by reason of the disability of the vessel, and the passenger should agree to await her repair, he can not be required to pay any increased price of passage, but his living expenses during the delay shall be for his own account. In case the departure of the vessel is delayed the passengers have a right to remain on board and to be furnished with food for the account of the vessel, unless the delay is due to an accidental cause or to force majeure. If the delay should exceed ten days, the passengers who request it shall be entitled to the return of the passage; and if it were due exclusively to the captain or agent they may furthermore demand indemnity for losses and damages. A vessel which is exclusively destined to the transportation of passengers must take them directly to the port or ports of destination, no matter what the number of passengers may be, making all the stops indicated in her itinerary. Sweet Lines v. CA Trans-Asia Shipping v. CA J. Carriage of Goods by Sea Act COMMONWEALTH ACT No. 65 IN ACT TO DECLARE THAT PUBLIC ACT NUMBERED FIVE HUNDRED AND TWENTY-ONE, KNOWN AS "CARRIAGE OF GOODS BY SEA ACT," ENACTED BY THE SEVENTY-FOURTH CONGRESS OF THE UNITED STATES, BE ACCEPTED, AS IT IS HEREBY ACCEPTED BY THE NATIONAL ASSEMBLY WHEREAS, the Seventy-fourth Congress of the United States enacted Public Act Numbered Five hundred and twenty-one, entitled: "Carriage of Goods by Sea Act"; WHEREAS, the primordial purpose of the said Acts is to bring about uniformity in ocean bills of lading and to give effect to the Brussels Treaty, signed by the United States with other powers;

WHEREAS, the Government of the United States has left it to the Philippine Government to decide whether or not the said Act shall apply to carriage of goods by sea in foreign trade to and from Philippine ports; WHEREAS, the said Act of Congress contains advanced legislation, which is in consonance with modern maritime rules and the practices of the great shipping countries of the world; WHEREAS, shipping companies, shippers, and marine insurance companies, and various chambers of commerce, which are directly affected by such legislation, have expressed their desire that said Congressional Act be made applicable and extended to the Philippines; therefore, Be it enacted by the National Assembly of the Philippines: Section 1. That the provisions of Public Act Numbered Five hundred and twenty-one of the Seventy-fourth Congress of the United States, approved on April sixteenth, nineteen hundred and thirty-six, be accepted, as it is hereby accepted to be made applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade: Provided, That nothing in the Act shall be construed as repealing any existing provision of the Code of Commerce which is now in force, or as limiting its application. Section 2. This Act shall take effect upon its approval. Approved: October 22,1936. Public Act No. 521, 74th US Congress An Act Relating to the Carriage of Goods by Sea. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That every bill of landing or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, shall have effect subject to the provisions of the Act. TITLE I Section 1. When used in this Act (a) The term "carrier" includes the owner or the charterer who enters into a contract of carriage with a shipper. (b) The term "contract of carriage" applies only to contracts of carriage covered by a bill of lading or any similar document of title, insofar as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same. (c) The term "goods" includes goods, wares, merchandise, and articles of every kind whatsoever, except live animals and cargo which by the contract of carriage is stated as being carried on deck and is so carried. (d) The term "ship" means any vessel used for the carriage of goods by sea. (e) The term "carriage of goods" covers the period from the time when the goods are loaded on to the time when they are discharged from the ship. RISKS Section 2. Subject to the provisions of section 6, under every contract of carriage of goods by sea, the carrier in relation to the loading handling, stowage, carriage,

custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities hereinafter set forth. RESPONSIBILITIES AND LIABILITIES Section 3. (1) The carrier shall be bound, before and at the beginning of the voyage, to exercise due diligence to (a) Make the ship seaworthy; (b) Properly man, equip, and supply the ship; (c) Make the holds, refrigerating and cooling chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception carriage and preservation. (2) The carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. (3) After receiving the goods into his charge the carrier, or the master or agent of the carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things (a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts, provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a manner as should ordinarily remain legible until the end of the voyage. (b) Either the number of packages or pieces, or the quantity or weight, as the case may be, as furnished in writing by the shipper. (c) The apparent order and condition of the goods: Provided, That no carrier, master, or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking. (4) Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraphs (3) (a), (b), and (c) of this section: Provided, That nothing in this Act shall be construed as repealing or limiting the application of any part of the Act, as amended, entitled "An Act relating to bills of lading in interstate and foreign commerce," approved August 29, 1916 (U. S. C. title 49, secs. 81-124), commonly known as the "Pomerene Bills of Lading Act." (5) The shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished by him; and the shipper shall indemnify the carrier against all loss damages, and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage or to any person other than the shipper. (6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage maybe endorsed upon the receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the time of their receipt been the subject of joint survey or inspection. In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring

suit within one year after the delivery of the goods or the date when the goods should have been delivered In the case of any actual or apprehended loss or damage the carrier and the receiver shall give all reasonable facilities to each other for inspecting and tallying the goods. (7) After the goods are loaded the bill of lading to be issued by the carrier, master, or agent of the carrier to the shipper shall, if the shipper so demands, be a "shipped" bill of lading Provided, That if the shipper shall have previously taken up any document of title to such goods, he shall surrender the same as against the issue of the "shipped" bill of lading, but at the option of the carrier such document of title may be noted at the port of shipment by the carrier, master, or agent with name or name the names of the ship or ships upon which the goods have been shipped and the date or dates of shipment, and when so noted the same shall for the purpose of this section be deemed to constitute a "shipped" bill of lading. (8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this Act, shall be null and void and of no effect. A benefit of insurance in favor of the carrier, or similar clause, shall be deemed to be a clause relieving the carrier from liability. RIGHTS AND IMMUNITIES Section 4. (1) Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy, and to secure that the ship is properly manned, equipped, and supplied, and to make to the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried fit and safe for their reception, carriage, and preservation in accordance with the provisions of paragraph (1) of section 3. Whenever loss or damage has resulted from unseaworthiness, the burden of proving the exercise of due diligence shall be on the carrier or other persons claiming exemption under the section. (2) Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship; (b) Fire, unless caused by the actual fault or privity of the carrier; (c) Perils, dangers, and accidents of the sea or other navigable waters; (d) Act of God; (e) Act of war, (f) Act of public enemies; (g) Arrest or restraint of princes, rulers, or people, or seizure under legal process; (h) Quarantine restrictions; (i) Act or omission of the shipper or owner of the goods, his agent or representative; (j) Strikes or lockouts or stoppage or restraint of labor from whatever cause, whether partial or general; Provided, That nothing herein contained shall be construed to relieve a carrier from responsibility for the carrier's own acts; (k) Riots and civil commotions (l) Saving or attempting to save life or property at sea; (m) Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods; (n) Insufficiency of packing; (o) Insufficiency of inadequacy of marks; (p) Latent defects not discoverable by due diligence; and (q) Any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that

neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. (3) The shipper shall not be responsible for loss or damage sustained by the carrier or the ship arising from any cause without the act, fault, or neglect of the shipper, his agents, or servants. (4) Any deviation in saving or attempting to save life or property at sea, or any reasonable deviation shall not be deemed to be an infringement or breach of this Act or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom: Provided, however, That if the deviation is for the purpose of loading cargo or unloading cargo or passengers it shall, prima facie, be regarded as unreasonable. (5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $600 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier. By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained. Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with the transportation of the goods if the nature or value thereof has been knowingly and fraudulently misstated by the shipper in the bill of lading. (6) Goods of an inflammable, explosive, or dangerous nature to the shipment whereof the carrier, master or agent of the carrier, has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any. SURRENDER OF RIGHTS AND RESPONSIBILITIES AND LIABILITIES IMMUNITIES AND INCREASE OF

Section 5. A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities or to increase any of his responsibilities and liabilities under this Act, provided such surrender or increase shall be embodied in the bill of lading issued to the shipper. The provisions of this Act shall not be applicable to charter parties; but if bills of lading are issued in the case of a ship under charter party, they shall comply with the terms of this Act. Nothing in this Act shall be held to prevent the insertion in a bill of lading of any lawful provision regarding general average. SPECIAL CONDITIONS Section 6. Notwithstanding the provisions of the preceding sections, a carrier, master or agent of the carrier, and a shipper shall, in regard to any particular goods

be at liberty to enter into any agreement in any terms as to the responsibility and liability of the carrier for such goods, and as to the rights and immunities of the carrier in respect of such goods, or his obligation as to seaworthiness (so far as the stipulation regarding seaworthiness is not contrary to public policy), or the care or diligence of his servants or agents in regard to the loading, handling stowage, carriage, custody, care, and discharge of the goods carried by sea: Provided, That in this case no bill of lading has been or shall be issued and that the terms agreed shall be embodied in a receipt which shall be a non-negotiable document and shall be marked as such. Any agreement so entered into shall have full legal effect: Provided, That this section shall not apply to ordinary commercial shipments made in the ordinary course of trade but only to other shipments where the character or condition of the property to be carried or the circumstances, terms, and conditions under which the carriage is to be performed are such as reasonably to justify a special agreement. Section 7. Nothing contained in this Act shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to or in connection with the custody and care and handling of goods prior to the loading on and subsequent to the discharge from the ship on which the goods are carried by sea. Section 8. The provisions of this Act shall not affect the rights and obligations of the carrier under the provisions of the Shipping Act, 1916, or under the provisions of section 4281 to 4289, inclusive, of the Revised Statutes of the United States, or of any amendments thereto; or under the provisions of any other enactment for the time being in force relating to the limitation of the liability of the owners of seagoing vessels. TITLE II Section 9. Nothing contained in this Act shall be construed as permitting a common carrier by water to discriminate between competing shippers similarly place in time and circumstances, either (a) with respect to the right to demand and receive bills of lading subject to the provisions of this Act; or (b) when issuing such bills of lading, either in the surrender of any of the carrier's rights and immunities or in the increase of any of the carrier's responsibilities and liabilities pursuant to section 6, title I, of this Act or (c) in any other way prohibited by the Shipping Act, 1916, s amended. Section 10. Section 25 of the Interstate Commerce Act is hereby amended by adding the following proviso at the end of paragraph 4 thereof: "Provided, however, That insofar as any bill of lading authorized hereunder relates to the carriage of goods by sea, such bill of lading shall be subject to the provisions of the Carriage of Goods by Sea Act." Section 11. Where under the customs of any trade the weight of any bulk cargo inserted in the bill of lading is a weight ascertained or accepted by a third party other than the carrier or the shipper, and the fact that the weight is so ascertained or accepted is stated in the bill of lading, then, notwithstanding any thing in this Act, the bill of lading shall not be deemed to be prima facie evidence against the carrier of the receipt of goods of the weight so inserted in the bill of lading, and the accuracy thereof at the time of shipment shall not be deemed to have been guaranteed by the shipper. Section 12. Nothing in this Act shall be construed as superseding any part of the Act entitled "An act relating to navigation of vessels, bills of lading, and to certain obligations, duties, and rights in connection with the carriage of property," approved

February 13,1893, or of any other law which would be applicable in the absence of this Act, insofar as they relate to the duties, responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded on or after the time they are discharged from the ship. Section 13. This Act shall apply to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade. As used in this Act the term "United States" includes its districts, territories, and possessions: Provided, however, That the Philippine legislature may by law exclude its application to transportation to or from ports of the Philippine Islands. The term "foreign trade" means the transportation of goods between the ports of the United States and ports of foreign countries. Nothing in this Act shall be held to apply to contracts for carriage of goods by sea between any port of the United States or its possessions, and any other port of the United States or its possession: Provided, however, That any bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea between such ports, containing an express statement that it shall be subject to the provisions of this Act, shall be subjected hereto as fully as if subject hereto as fully as if subject hereto by the express provisions of this Act: Provided, further, That every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea from ports of the United States, in foreign trade, shall contain a statement that it shall have effect subject to the provisions of this Act. Section 14. Upon the certification of the Secretary of Commerce that the foreign commerce of the United States in its competition with that of foreign nations is prejudiced the provisions, or any of them, of Title I of this Act, or by the laws of any foreign country or countries relating to the carriage of goods by sea, the President of the United States, may, from time to time, by proclamation, suspend any or all provisions of Title I of this Act for such periods of time or indefinitely as may be designated in the proclamation. The President may at any time rescind such suspension of Title I hereof, and any provisions thereof which may have been suspended shall thereby be reinstated and again apply to contracts thereafter made for the carriage of goods by sea. Any proclamation of suspension or rescission of any such suspension shall take effect on a date named therein, which date shall be not less than ten days from the issue of the proclamation. Any contract for the carriage of goods by sea, subject to the provisions of this Act, effective during any period when title I hereof, or any part thereof, is suspended, shall be subject to all provisions of law now or hereafter applicable to that part of Title I which may have thus been suspended. Section 15. This Act shall take effect ninety days after the date of its approval; but nothing in this Act shall apply during a period not to exceed one year following its approval to any contract for the carriage of goods by sea, made before the date on which this Act is approved, nor to any bill of lading or similar document of title issued, whether before or after such date of approval in pursuance of any such contract as aforesaid. Section 16. This Act may be cited as the "Carriage of Goods by Sea Act." Approved, April 16, 1936. Ang v. American Steamship Agencies F.H. Stevens v. Nordeutscher V. Air Transportation

A. International Air Transportation

PROCLAMATION NO. 201 MAKING PUBLIC THE ADHERENCE OF THE REPUBLIC OF THE PHILIPPINES TO THE CONVENTION FOR THE UNIFICATION OF CERTAIN RULES RELATING TO INTERNATIONAL TRANSPORTATION BY AIR AND THE ADDITIONAL PROTOCOL THERETO, 1929 WHEREAS, a Convention for the Unification of Certain Rules Relating to International Transportation by Air and an Additional Protocol thereto relating to Article 2 of the Convention were signed at Warsaw by the plenipotentiaries of thirty-two countries; WHEREAS, Article 38 of the aforesaid Convention provides that a Government on behalf of which this Convention has not been signed, shall be allowed to adhere thereto at any time after the Convention has come into force, by means of a notification addressed to the Government of the Republic of Poland; WHEREAS, the Senate of the Congress of the Philippines, by its Resolution No. 19 adopted on May 16, 1950, concurred in the adherence by the Government of the Republic of the Philippines to the said Convention and the said Protocol in accordance with the Constitution of the Philippines, subject to the reservation, as provided in the Additional Protocol, that the first paragraph of Article 2 of the Convention shall not apply to international transportation that may be performed by the Republic of the Philippines; WHEREAS, the Government of the Republic of the Philippines has formally adhered to the said Convention its Additional Protocol, and the Government of the Republic of Poland was notified of said adherence on November 9, 1950, when the instrument of adherence was registered in accordance with Article 38 (2) of said Convention; and, WHEREAS, the adherence of the Government of the Republic of the Philippines, pursuant to Article 38 (3) of said Convention, took effect as from the ninetieth day after November 9, 1950. NOW, THEREFORE, be it known that I, Ramon Magsaysay, President of the Philippines, in pursuance of the aforesaid concurrence of the Senate of the Congress of the Philippines and subject to the reservation as provided, in the Additional Protocol that the first paragraph of Article 2 of the Convention shall not apply to international transportation that may be performed by the Republic of the Philippines, do hereby proclaim and make public the said Convention and said Protocol, a copy of which is hereto attached, to the end that the same and every article and clause thereof may be observed and fulfilled with good faith by the Republic of the Philippines and the citizens thereof. IN WITNESS WHEREOF, I have hereunto set my hand and caused to be affixed the seal of the Republic of the Philippines. Done in the City of Manila, this 23rd day of September, in the year of Our Lord, nineteen hundred and fifty-five, and of the Independence of the Philippines, the tenth. RAMON MAGSAYSAY President of the Philippines By the President: MARIANO YENKO, JR. Assistant Executive Secretary

1. Constitutionality Santos v. Northwest 2. When applicable Warsaw Convention, Article 1 (1). This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking. 3. Liabilities under the Convention Warsaw Convention, Article 17. The carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Warsaw Convention, Article 18. 1. The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered luggage or any goods, if the occurrence which caused the damage so sustained took place during the carriage by air. 2. The carriage by air within the meaning of the preceding paragraph comprises the period during which the luggage or goods are in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever. 3. The period of the carriage by air does not extend to any carriage by land, by sea or by river performed outside an aerodrome. If, however, such a carriage takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air. Warsaw Convention, Article 19. The carrier is liable for damage occasioned by delay in the carriage by air of passengers, luggage or goods. Northwest v. Cuenca Alitalia v. IAC, supra 4. Limitations on Liability Warsaw Convention, Article 22. 1. In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of 125,000 francs. Where, in accordance with the law of the Court seised of the case, damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed 125,000 francs. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability. 2. In the carriage of registered luggage and of goods, the liability of the carrier is limited to a sum of 250 francs per kilogram, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the actual value to the consignor at delivery.

3. As regards objects of which the passenger takes charge himself the liability of the carrier is limited to 5,000 francs per passenger. 4. The sums mentioned above shall be deemed to refer to the French franc consisting of 65 milligrams gold of millesimal fineness 900. These sums may be converted into any national currency in round figures. Pan Am v. IAC 5. When limitations unavailable Warsaw Convention, Article 3. 1. For the carriage of passengers the carrier must deliver a passenger ticket which shall contain the following particulars: a) The place and date of issue; b) The place of departure and of destination; c) The agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity, and that if he exercises that right, the alteration shall not have the effect of depriving the carriage of its international character; d) The name and address of the carrier or carriers; e) A statement that the carriage is subject to the rules relating to liability established by this Convention. 2. The absence, irregularity or loss of the passenger ticket does not affect the existence or the validity of the contract of carriage, which shall none the less be subject to the rules of this Convention. Nevertheless, if the carrier accepts a passenger without a passenger ticket having been delivered he shall not be entitled to avail himself of those provisions of this Convention which exclude or limit his liability. Warsaw Convention, Article 25. 1. The carrier shall not be entitled to avail himself of the provisions of this Convention which exclude or limit his liability, if the damage is caused by his willful misconduct or by such default on his part as, in accordance with the law of the Court seised of the case, is considered to be equivalent to willful misconduct. 2. Similarly the carrier shall not be entitled to avail himself of the said provisions, if the damage is caused as aforesaid by any agent of the carrier acting within the scope of his employment. TWA v. CA 6. Conditions on Imposition of Liability Warsaw Convention, Article 26. 1. Receipt by the person entitled to delivery of luggage or goods without complaint is prima facie evidence that the same have been delivered in good condition and in accordance with the document of carriage. 2. In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within three days from the date of receipt in the case of luggage and seven days from the date of receipt in the case of goods. In the case of delay the complaint must be made at the latest within fourteen days from the date on which the luggage or goods have been placed at his disposal. 3. Every complaint must be made in writing upon the document of carriage or by separate notice in writing despatched within the times aforesaid.

4. Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part. Warsaw Convention, Article 28. 1. An action for damages must be brought, at the option of the plaintiff, in the territory of one of the High Contracting Parties, either before the Court having jurisdiction where the carrier is ordinarily resident, or has his principal place of business, or has an establishment by which the contract has been made or before the Court having jurisdiction at the place of destination. 2. Questions of procedure shall be governed by the law of the Court seised of the case. Warsaw Convention, Article 29. 1. The right to damages shall be extinguished if an action is not brought within two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped. 2. The method of calculating the period of limitation shall be determined by the law of the Court seised of the case. Santos v. Northwest, supra Luna v. Court of Appeals Lhuillier v. British Airways PAL v. Savillo United Airlines v Uy B. Passenger Rights JOINT DOTC-DTI ADMINISTRATIVE ORDER NO. 01 Series of 2012 SUBJECT: PROVIDING FOR A BILL OF RIGHTS FOR AIR PASSENGERS AND CARRIER OBLIGATIONS WHEREAS, pursuant to the Republic Act No. 776, otherwise known as the Civil Aeronautics Act of the Philippines, the Department of Transportation and Communications (DOTC), through the Civil Aeronautics Board (CAB), is mandated by law to regulate the economic aspect of aviation, and develop and promote the air potential of the Philippines, with due regard to public interest and convenience; WHEREAS, pursuant to Republic Act No. 7394, otherwise known as the Consumer Act of the Philippines, the Department of Trade and Industry (DTI) is the agency mandated to protect the consumers against deceptive, unfair and unconscionable sales acts or practices and from misleading advertisements and fraudulent sales promotions, other than those falling under the jurisdiction of the Department of Health; WHEREAS, the Philippine aviation industry, under a liberalized aviation regime, and especially with the emerging dominance of low cost carriers, has dramatically expanded, as shown by the unprecedented and consistent double digit growth rates of domestic and international travel in the last five (5) years; WHEREAS, it is the thrust of public policy to encourage the entry of more players in the air transportation industry and promote greater competition among air carriers, which, in turn will enhance air service availability and create more options for better, safer, and more efficient and affordable air transportation, in support of trade, tourism and public convenience;

WHEREAS, it is equally the objective of public policy to maintain a level playing field in the air transportation industry, conducive to sound, healthy and fair competition among industry players, as against disastrous and ruinous competition that can undermine public interest; WHEREAS, an air carrier ticket constitutes a contract of carriage between an air carrier and a passenger, whereby the air carrier, for consideration, obligates itself to transport a passenger by air safely, efficiently and conveniently along a stipulated route at a given date and time, subject to certain conditions and/or restrictions; WHEREAS, such a contract of carriage creates an asymmetrical relationship between an air carrier and a passenger, considering that, while a passenger has the option to buy or not to buy the service, the decision of the passenger to buy the ticket binds such passenger, by adhesion, to all the conditions and/or restrictions attached to the air carrier ticket on an all-or-nothing basis, without any say, whatsoever, with regard to the reasonableness of the individual conditions and restrictions attached to the air carrier ticket; WHEREAS, there is a need to infuse a certain measure of balance, fairness and reasonableness between the precarious position of a passenger vis--vis the vast resources at the disposal of the air carrier, especially in a liberalized and highly competitive aviation environment, which, if unfettered can lead to unsound business policies and practices of air carriers that are prejudicial to the rights and interests of the passengers; NOW, THEREFORE, this Order is hereby prescribed for the information, guidance, and compliance of all concerned. CHAPTER I GENERAL PROVISIONS Section 1. Title of Regulation. This Regulation shall be known and cited as the Air Passenger Bill of Rights. Section 2. Definition. For the purpose of this Regulation: 2.1 Air Carrier refers to a Philippine-based carrier operating scheduled or nonscheduled domestic and/or international flights to or from or serving a point within the Philippines, or a foreign carrier operating scheduled or non-scheduled international flights from the Philippines. Air carriers are also generally referred to as airlines. 2.2 Baggage is any personal property carried by the passenger, either by check-in or hand-carry. Off-loaded Baggage refers to baggage which has been checked in but has either not been put in or been subsequently removed from the cargo hold of the carrier. 2.3 Cancellation is the act of calling off a flight. This shall include the following instances: (a) Cancellation by the air carrier before the estimated time of departure (ETD) with or without its fault; (b) Cancellation by the air carrier after an unduly long delay; (c) Cancellation by the passenger holding a regular fare/ticket, or a situation deemed cancelled as contemplated in Section 12.2;

2.4 Check-in deadline refers to the point in time before the published ETD on or before which a passenger must present himself/herself to the air carrier at the latters check-in counter, which is usually not less than forty-five (45) minutes before such ETD. 2.5 Check-in period is the time when the air carriers check-in counters are open for accepting and processing passengers checking in for their flights, which starts at least two (2) hours before the ETD in international airports and in other airports designated by the DOTC. In other airports, the check-in period shall start at least one (1) hour before the ETD. 2.6 Confirmed Reserved Seat means a seat on a specific date and on a specific flight and class of service of a carrier, which has been requested by a passenger, and which the carrier or its agent has verified, by appropriate notation on the ticket, as being reserved for the accommodation of the passenger. 2.7 Convention refers to the applicable international agreement, convention, or treaty on carriage of goods or persons by air signed and/or ratified by the Philippines. 2.8 Delay is the result of the deferment of a flight to a later time. Terminal Delay is a delay that occurs while passengers are still inside the terminal waiting for boarding, while Tarmac Delay is a delay that occurs while passengers are already on board the aircraft. 2.9 Denied Check-in takes place when a passenger, who has presented himself/herself for check-in at the appointed area and at the appointed time, is denied or not processed for boarding a particular flight. Denied Boarding takes place when a passenger, who holds a confirmed reserved seat, and who has presented himself/herself for carriage at the proper time and place and fully complied with the carriers check-in and reconfirmation procedures, and who is acceptable for carriage under the carriers tariff, was not a llowed to board the aircraft. 2.10 Fare is payment in consideration for the carriage of a passenger. Regular Fare is any fare that is offered on a regular basis and does not qualify as promotional fare. Promotional Fare, which is generally lower tha n a regular fare, is applied for before, and approved as such by, the CAB. 2.11 Government requisition of space refers to a formal request by the government or its agencies to an air carrier company for the use of an aircraft, or any part thereof, for regulatory, safety, security, and/or emergency purposes. 2.12 No-show is the failure of the passenger to appear at the check -in counter within the check-in deadline or to show up at the boarding gate at the time indicated on the boarding pass. 2.13 Overbooking is the practice by air carriers of selling confirmed reserved space beyond the actual seat capacity of the aircraft. 2.14 Passenger shall refer herein to a person actually travelling by air. A person who is named in the flight ticket shall be considered a passenger for the purpose of these rules. 2.15 Person with disability or PWD includes those who have long -term physical, mental, intellectual or sensory impairments, which, in interaction with various barriers, may hinder their full and effective participation in society on an equal basis with others.

2.16 Sales Promotion means techniques intended for broad consumer participation which contain promises of gain, such as prizes, in cash or in kind, as reward for the purchase of a product, security, service or winning in a contest, game, tournament, and other similar competitions which involve determination of winner/s and which utilize mass media and/or widespread media of information. It also means techniques purely intended to increase the sales, patronage and/or goodwill of a product. 2.17 Senior citizen refers to any resident citizen of the Philippines at least sixty (60) years old. Passengers may be asked to present identification documents, in line with Republic Act No. 9994, otherwise known as the Expanded Senior Citizens Act of 2010, and its Implementing Rules and Regulations, in order to avail of benefits and privileges reserved for senior citizens. Section 3. Scope. This Regulation shall apply to all aspects of contracts of carriage for flights or portions of a flight into, from, and within the territory of the Philippines operated by Philippine air carriers, and flights or portions of a flight from the territory of the Philippines operated by foreign air carriers. Provided, that the compensation rules shall not apply to carriers flying into the territory of the Philippines, if the laws of the country of origin provide similar or higher compensation. Otherwise, these rules shall apply in full. CHAPTER II: RIGHT TO BE PROVIDED WITH ACCURATE INFORMATION BEFORE PURCHASE Section 4. Right to Full, Fair, and Clear Disclosure of the Service Offered and All the Terms and Conditions of the Contract of Carriage. Every passenger shall, before purchasing any ticket for a contract of carriage by the air carrier or its agents, be entitled to the full, fair, and clear disclosure of all the terms and conditions of the contract of carriage about to be purchased. The disclosure shall include, among others, documents required to be presented at check-in, provisions on check-in deadlines, refund and rebooking policies, and procedures and responsibility for delayed and/or cancelled flights. These terms and conditions may include liability limitations, claim-filing deadlines, and other crucial conditions. 4.1 An air carrier shall cause the disclosure under this Section to be printed on or attached to the passenger ticket and/or boarding pass, or the incorporation of such terms and conditions of carriage by reference. Incorporation by reference means that the ticket and/or boarding pass shall clearly state that the complete terms and conditions of carriage are available for perusal and/or review on the air carriers website, or in some other document that may be sent to or delivered by post or electronic mail to the passenger upon his/her request. 4.2 The air carrier must also ensure that passengers receive an explanation of key terms identified on the ticket from any location where the carriers tickets are sold, including travel agencies. In case of online bookings, the air carrier must establish a system wherein the purchaser is fully apprised of the required disclosures under this Section twice prior to the final submission of his/her online offer to purchase. 4.3 Aside from the printing and/or publication of the above disclosures, the same shall likewise be verbally explained to the passenger by the air carrier and/or its agent/s in English and Filipino, or in a language that is easily understood by the purchaser, placing emphasis on the limitations and/or restrictions attached to the ticket. 4.4 The key terms of a contract of carriage, which should include, among others, the rebooking, refunding, baggage allowance and check-in policies, must be provided to

a passenger and shall substantially be stated in the following manner and, if done in print, must be in bold letters: (English) NOTICE: The ticket that you conditions/restrictions: 1. 2. 3. _______________ _______________ _______________ are purchasing is subject to the following

Your purchase of this ticket becomes a binding contract on your part to follow the terms and conditions of the ticket and of the flight. Depending on the fare rules applicable to your ticket, non-use of the same may result in forfeiture of the fare or may subject you to the payment of penalties and additional charges if you wish to change or cancel your booking. For more choices and/or control in your flight plans, please consider other fare types. (Filipino) PAALALA: Ang tiket na ito ay binibili ninyo nang may mga kondisyon/ restriksyon: 1. 2. 3. ________________ ________________ ________________

Sa pagpili at pagbili ng tiket na ito, kayo ay sumasang-ayon sa mga kondisyon at restriksyon na nakalakip dito, bilang kontrata ninyo sa air carrier. Depende sa patakarang angkop sa iyong tiket, ang hindi paggamit nito ay maaaring magresulta sa pagwawalang bisa sa inyong tiket o sa paniningil ng karagdagang bayad kung nais ninyong baguhin o kanselahin ang inyong tiket. Para sa mas maraming pagpipilian at malawak na control sa inyong flight, inaanyayahan kayong bumili ng iba pang klase ng tiket galing sa air carrier. 4.5 Any violation of the afore-stated provisions shall be a ground for the denial of subsequent applications for approval of promotional fare, or for the suspension or recall of the approval made on the advertised fare/rate. Section 5. Right to Clear and Non-Misleading Advertisements of, and Important Reminders Regarding Fares. Advertisements of fares shall be clear and not misleading. 5.1 Major restrictions, such as those on rebookability or refundability, which may be attached to certain fare types, shall be disclosed in full and in such a way that the passenger may fully understand the consequences of purchasing such tickets and the effect of non-use thereof. 5.2 Every air carrier causing the publication of fare advertisements in any medium, shall likewise disclose the following: (a) Conditions and restrictions attached to the fare type;

(b) Refund and rebooking policies, if any; (c) Baggage allowance policies; (d) Government taxes and fuel surcharges; (e) Other mandatory fees and charges; (f) Contact details of the carrier (i.e. phone number, website, e-mail, etc.); and (g) Other information necessary to apprise the passenger of the conditions and the full/total price of the ticket purchased. Provided, that, in case of promotional fares, the additional information shall be included: (h) Number of seats offered on a per sector basis; (i) (j) The duration of the promo; and The CAB Approval No. of Fares.

Provided, further, that, where there are differing conditions, such as fuel surcharge in relation to the points of destinations or origin, the advertisements of these carriers may provide only the range thereof and not the actual surcharge of each route. 5.3 The above-mentioned required disclosures shall occupy not less than one-third (1/3) of the advertising material. A copy of the same shall be printed on or attached to the ticket in English and Filipino. In the case of broadcast media, it shall be enough that the air carrier and/or advertising agent incorporate the foregoing terms and conditions by reference, as provided for in Section 4.1. Section 6. Right Against Misleading and Fraudulent Sales Promotion Practices. Consistent with the declared policy of the State to protect the interests of the consumers, which includes protection from misleading and fraudulent sales promotion practices, all sales promotion campaigns and activities of air carriers shall be carried out with honesty, transparency and fairness, and in accordance with the requirements of the Consumer Act of the Philippines, and its Implementing Rules and Regulations. Air carriers shall provide to DTI a copy of its promotional materials for post audit not later than the publication, release, or launch date whichever is earlier. It is understood that professional authorities for those engaged in advertising, sales and promotion may impose additional standards or measures to regulate their industry. CHAPTER III RIGHT TO RECEIVE THE FULL VALUE OF THE SERVICE PURCHASED Section 7. Right to Transportation and Baggage Conveyance. Every passenger is entitled to transportation, baggage conveyance and ancillary services, in accordance with the terms and conditions of contract of carriage with the air carrier. Thus, any violation of the terms and conditions of the contract of carriage due to the fault or negligence of the air carrier shall entitle the passenger to compensation or

alternative arrangements, as provided in this Air Passenger Bill of Rights, which are acceptable to the passenger. Section 8. Right to be Processed for Check-In. In accordance with the usual air carrier procedures, a passenger holding a confirmed ticket, whether promotional or regular, with complete documentary requirements, and who has complied with the check-in procedures, shall be processed accordingly at the check-in counter within the check-in deadline. The airline shall, therefore, and subject to infrastructure limitations, clearly designate the boundaries of its assigned check-in area/s or counter/s. A passenger within the air carriers cordoned or other designated check -in area as herein defined at least one (1) hour before the published ETD shall not be considered late or a no-show, and shall not be denied check-in. The carrier shall exert utmost diligence in ensuring that passengers within the cordoned or other designated check-in area and/or lined up at the check-in counters are checked in for their flights before the check-in deadline. A passenger who is late in accordance with the preceding paragraph may be denied check-in and directed to a standby or rebooking counter, as the case may be, for proper processing. Any dispute under this Section shall be resolved by the air carrier on-site. For this purpose, the air carrier must present to the passenger proof, including, but not limited to, closed-circuit television monitor recordings, processing or number slips issued at the entrance of the check-in area, and other applicable or available means, that the latter failed to appear within the prescribed time for the check-in procedure. Section 9. Right to Sufficient Processing Time. Passengers shall be given enough time before the published ETD within which to go through the check-in and final security processes. For this purpose, air carriers operating in international airports and in other airports designated by the DOTC shall open their check-in counters in such airports at least two (2) hours before the ETD. In other airports, air carriers shall open their check-in counters at least one (1) hour before the ETD. 9.1 Air carriers operating in international airports and in other airports designated by the DOTC shall open a separate dedicated counter for a flight nearing check-in deadline to facilitate the checking in of passengers at least one (1) hour before the published ETD. 9.2 To ensure that PWDs and senior citizens shall have equal access to air transportation services, air carriers shall at all times and in all instances adhere to the mandate of Batas Pambansa Blg. 344, otherwise known as An Act to Enhance the Mobility of Disabled Persons by Requiring Certain Buildings, Institutions, Establishments and Public Utilities to Install Facilities and Other Devices, the provisions of the Expanded Senior Citizens Act of 2010, and other related laws. Accordingly, an air carrier shall designate at least one (1) check-in counter which will prioritize PWDs, senior citizens, and persons requiring special assistance or handling. If this is not practicable, the air carrier shall instead provide for priority handling and processing of such passengers. The air carrier shall likewise coordinate with the appropriate authorities for the use of proper airport equipment, entryways, and/or aerobridges, as the case may be, when the same are available, to facilitate transactions, movement, boarding, and/or disembarkation of PWDs, senior citizens, and/or persons requiring special equipment, at the airport. Persons accompanying a PWD, a senior citizen, or a person requiring special assistance or handling should also be accommodated at the designated check-in counter mentioned in the preceding paragraph. It is the duty of an air carrier or its authorized agent to inform its passengers if additional costs will be incurred for the

use of facilities designed for passengers needing special assistance in airports located in other countries. It is the responsibility of a PWD to declare his/her need for special assistance or handling to the airline, upon booking his/her flight. If the PWD fails to do so, the airline may not be held liable for any services it was not able to provide the passenger and/or for any additional costs incurred for the use of special assistance facilities. Section 10. Right to Board Aircraft for the Purpose of Flight. A passenger checked in for a particular flight has the right to board the aircraft for the purpose of flight, except when there is legal or other valid cause, such as, but not limited to, immigration issues, safety and security, health concerns, non-appearance at the boarding gate at the appointed boarding time, or government requisition of space as provided for in Section 10.2. Other than these causes, no passenger may be denied boarding without his/her consent. 10.1 While it is an accepted practice for an air carrier to overbook its flights, any expense, consequence, or inconvenience caused to affected passengers must be borne by the air carrier, as follows: (a) The air carrier shall determine the number of passengers in excess of the actual seat capacity of the aircraft. (b) The air carrier shall announce that the flight is overbooked, and that it is looking for volunteers willing to give up their seats in exchange for air carrier compensation. (c) The air carrier shall provide the interested passengers or volunteers a list of amenities and offers, which they can choose from, which list of amenities shall always include the option to be given priority booking in the next flight with available space or to be endorsed to another air carrier upon payment of any fare difference, and provided that space and other circumstances permit such accommodation, at the option of the passenger, and/or a cash incentive. (d) In case the number of volunteers is not enough to resolve the overbooking, the air carrier shall increase the compensation package by certain degrees or by adding more amenities/services until the required number of volunteers is met. 10.2 Government agencies and/or officials wanting to acquire aircraft space for official government purposes shall submit a written request justifying the requisition to the CAB, which shall then make the request to the air carrier concerned, detailing: (a) The number, identities, and affiliation of the persons requesting for space; (b) The date and time (if applicable) of the flight; and (c) The destination. Should government requisition result in passengers having to forego their confirmed space, the air carrier shall look for volunteers in accordance with Section 10.1. Provided, that the air carrier shall have the right to claim from the requesting government entity the full-fare value of the seats requisitioned by the latter. 10.3 The settling of compensation for passengers pursuant to this Section shall not be an excuse for the undue delay of the flights ETD. CHAPTER IV

RIGHT TO COMPENSATION Section 11. Right to Compensation and Amenities in Case of Cancellation of Flight. In case of cancellation of flights, the following shall be observed: 11.1 In case of flight cancellation attributable to the carrier, a passenger shall have the right to: (a) Be notified beforehand via public announcement, written/published notice and flight status update service (text); (b) Be provided with the following, if he/she is already at the airport at the time of the announcement of the flight cancellation: sufficient refreshments or meals (e.g. snacks consisting of at least a bottle of water and a sandwich, or breakfast, lunch, or dinner, or a voucher for the same, as the case may be); hotel accommodation (conveniently accessible from the airport); transportation from the airport to the hotel, v.v.; free phone calls, text or e-mails, and first aid, if necessary; and (c) Reimbursement of the value of the fare, including taxes and surcharges, of the sector cancelled, or both/all sectors, in case the passenger decides not to fly the ticket or all the routes/sectors; or (d) Be endorsed to another air carrier without paying any fare difference, at the option of the passenger, and provided that space and other circumstances permit such re-accommodation; or (e) Rebook the ticket, without additional charge, to the next flight with available space, or, within thirty (30) days, to a future trip within the period of validity of the ticket. However, for rebooking made in excess of the aforementioned thirty (30) days for a trip likewise within the validity of the ticket, fees and/or fare difference shall apply. Provided, that in case a carrier cancels a flight at least twenty-four (24) hours before the ETD, it shall not be liable for the foregoing amenities, except, it shall be obliged to notify the passenger, and, in accordance with the preceding provisions, to rebook or reimburse the passenger, at the option of the latter. 11.2 In case the air carrier cancels the flight because of force majeure, safety and/or security reasons, as certified by the Civil Aviation Authority of the Philippines, a passenger shall have the right to be reimbursed for the full value of the fare. 11.3 The provisions of this Section shall be the minimum entitlement of a passenger in case of cancellation, and shall not prohibit the air carrier from granting more favourable conditions or recourses, as it may deem appropriate. Section 12. Right to Compensation and Amenities in Case of Flight Delay and Exceptions Thereto. 12.1 In case of Terminal Delay of at least three (3) hours after the ETD, whether or not such is attributable to the carrier, a passenger shall have the right to: (a) Be provided with refreshments or meals (sufficient snacks, breakfast, lunch, or dinner, as the case may be), free phone calls, text or e-mails, and first aid, if necessary; and (b) Rebook or refund his/her ticket in accordance with the preceding Section or be endorsed to another carrier, in accordance with the preceding Section.

12.2 In case such Terminal Delay extends to at least six (6) hours after the ETD for causes attributable to the carrier, it shall be deemed cancelled for the purpose of making available to the passenger the rights and amenities required to be provided in case of actual cancellation, as provided for in Section 11.1; and in addition, an affected passenger shall be given the following: (a) Additional compensation equivalent to at least the value of the sector delayed or deemed cancelled to be paid in the form of cash or voucher, at the discretion of the air carrier; and (b) The right to board the flight if it takes place more than six (6) hours after the ETD and the affected passenger has not opted to rebook and/or refund. For this purpose, the air carrier is obliged to exert all efforts to contact the passenger for the flight. 12.3 A passenger shall likewise have the right to be provided with sufficient food and beverage, in cases of Tarmac Delay of at least two (2) hours after the ETD, reckoned from the closing of the aircraft doors, or when the aircraft is at the gate with the doors still open but passengers are not allowed to deplane. 12.4 The provisions of this Section shall be the minimum entitlement of a passenger in case of delay and shall not prohibit the air carrier from granting more favourable conditions or recourses, as it may deem appropriate. Section 13. Compensation under Section 10 as Liquidated Damages. The compensation provided in Section 10, if accepted by the passenger, shall constitute liquidated damages for all damages incurred by the passenger as a result of the air carriers failure to provide the passenger with a confirmed reserved seat. Provided that, while a confirmed reservation is necessary to make a passenger eligible for compensation, a written confirmation issued by the air carrier or its authorized agent qualifies the passenger in this regard, even if the air carrier cannot find the reservation in the electronic records, as long as the passenger did not cancel the reservation or miss a reconfirmation deadline. Section 14. Right to Compensation for Delayed, Lost, and Damaged Baggage. A passenger shall have the right to have his/her baggage carried on the same flight that such passenger takes, subject to considerations of safety, security, or any other legal and valid cause. 14.1 In case a checked-in baggage has been off-loaded for operational, safety, or security reasons, the air carrier shall inform the passenger at the soonest practicable time and in such manner that the passenger will readily know of the offloading (i.e. that his/her baggage has been off-loaded and the reason therefor). If the passengers baggage has been off-loaded, the air carrier should make the appropriate report and give the passenger a copy thereof, even if it had already announced that the baggage would be on the next flight. The air carrier shall carry the off-loaded baggage in the next flight with available space, and deliver the same to the passenger either personally or at his/her residence. For every twenty-four (24) hours of delay in such delivery, the air carrier shall tender an amount of Two Thousand Pesos (Php2,000.00) to the passenger, as compensation for the inconvenience the latter experienced. A fraction of a day shall be considered as one day for purposes of calculating the compensation. For the purposes of this section, the twenty four (24)-hour period shall commence one (1) hour from the arrival of the flight of the passenger carrying such baggage.

14.2 Should such baggage, whether carried on the same or a later flight, be lost or suffer any damage attributable to the air carrier, the passenger shall be compensated in the following manner: (a) For international flights, the relevant convention shall apply. (b) For domestic flights, upon proof, a maximum amount equivalent to half of the amount in the relevant convention (for international flights) in its Peso equivalent. 14.3 For compensation purposes, a passengers baggage is presumed to have been permanently and totally lost, if within a period of seven (7) days, counted from the time the passenger or consignee should have received the same, the baggage is not delivered to said passenger or consignee. Section 15. Right to Compensation In Case of Death or Bodily Injury of a Passenger. For international flights, in case of death or bodily injury sustained by a passenger, the relevant Convention and inter-carrier agreement shall apply. However, for an international carriage performed under the 1966 Montreal Inter-Carrier Agreement, which includes a point in the United States of America as a point of origin, a point of destination or agreed stopping place, the limit of liability for each passenger for death, wounding or other bodily injury shall be the sum of Seventy-Five Thousand United States Dollars (US$75,000.00), inclusive of legal fees and costs. Provided, in the case of a claim brought in a state where a provision is made for a separate award for legal fees and costs, the limit shall be the sum of Fifty-Eight Thousand United States Dollars (US$58,000.00), exclusive of legal fees and costs. For domestic flights, the compensation shall be based on the stipulated amount in the relevant convention which governs international flights, the same to be given in Peso denominations. Section 16. Right to Immediate Payment of Compensation. An air carrier liable for any and all compensations provided by these rules shall make the same available to the affected passenger at the air carriers counters at the airport on the date when the occasion entitling the passenger to compensation occurred, or at the main office or any branch of the air carrier at the discretion of the passenger. The air carrier shall tender a check for the amount specified, or cash, or the document necessary to claim the compensation or benefits mentioned above; Provided, that such document shall be convertible to cash within fifteen (15) days from the date when the occasion entitling the passenger to such compensation occurred. CHAPTER V ADMINISTRATIVE MATTERS Section 17. Air Carrier and CAB Complaint and Assistance Desks. Air carriers shall provide Customer Service Representatives who can address common problems, such as arranging for meals and hotel rooms for stranded passengers, settling denied boarding compensation, arranging luggage resolutions, and settling other routine claims or complaints, on the spot. In addition, the CAB may provide Complaints and Assistance Desks in all airports. These shall be manned by CAB or CAB-deputized personnel, who shall assist passengers whose rights to the service have not been fully satisfied by the air carrier. The said personnel shall assist in the filing and prosecution of the complaints of passengers whose rights have been violated and who wish to go after the concerned air carriers. Section 18. Refund of Other Fees. Every air carrier must refund checked baggage fees and other optional service fees (i.e. insurance, donation to WWF, seat selector fee, etc.), if the passenger did not use his/her ticket provided, that the said ticket is refundable and that the passenger is not at fault. Provided, further, that refund of checked baggage fees will also apply, if the baggage was not delivered to the

passenger within twenty-four (24) hours from the arrival of flight, on top of the compensation fee as mentioned in Section 14.1. Section 19. Written Reports. Air carriers shall submit a monthly report to the CAB on the following: (a) The number of regular and promotional fare passengers who have been denied boarding, or whose flights were delayed or cancelled; (b) The number of regular and promotional fare passengers whose baggage was lost, damaged, or off-loaded; and (c) The number of regular and promotional fare passengers who died or sustained an injury during the course of the flight or performance of the contract of carriage, as well as the reasons and other circumstances of such occurrences. Provided, that the air carriers shall maintain a database containing the names, addresses, and/or other particulars of such passengers, their flights, concerns or complaints, as well as records of the air carriers personnel regarding the same, if any, and other pertinent information, available to the CAB upon request. CHAPTER VI FINAL PROVISIONS Section 20. Periodic review. This Order shall be reviewed periodically by an interagency body consisting of representatives from the DOTC, the DTI, the CAB, and airport operators, in consultation with the air carrier companies and/or other directly affected stakeholders. Such review may include the assessment, modification, removal, and/or update of provisions in accordance with issues arising from the implementation of this Order. Section 21. Separability Clause. If any section(s) or any part of this Regulation is declared unconstitutional by a competent authority, the remaining sections or parts thereof shall not be affected thereby. Section 22. Repealing Clause. All other orders, guidelines, economic regulations, and other issuances of the CAB, the DTI and the DOTC, which are inconsistent with these provisions, are hereby amended, repealed or modified accordingly. Otherwise, provisions not deemed inconsistent shall be of suppletory application. Section 23. Violations and Penalties. All violations of this Joint Administrative Order shall be penalized in accordance with the pertinent provisions of the Civil Aeronautics Act of the Philippines, save for violations pertaining to Sections 5 and 6 which are governed by the relevant provisions of the Consumer Act of the Philippines, the implementing agency of which is DTI. Section 24. Effectivity. This Regulation shall take effect ten (10) days after its publication in a newspaper of general application. A copy of this Regulation shall be deposited with the University of the Philippines Law Center in compliance with Revised Administrative Code. APPROVED, 10 December 2012. #