TRANSPORTATION LAW

I.

INTRODUCTION
A. DEFINITIONS
1. PUBLIC UTILITY - business or service which
is engaged in regularly supplying the public
with some commodity or service of public
consequences; implies public use and service
to an indefinite public which has a legal right
to demand and receive service.
2. PUBLIC SERVICE - A person who owns,
operates, manages or controls in the
Philippines for hire or compensation, with
general or limited clientele, whether
permanent, occasional or accidental, and
done for general business purposes, any
common carrier or public utility, ice plants,
power and water supplies, communication
and similar public services. (Sec. 13b, CA
146)
3. TRANSPORTATION - movement of things or
person from one place to another
B. CONSTITUTIONAL PROVISIONS
1. ART XII
a. 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.
b. SECTION 17 - temporarily take over
public utility; 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 privatelyowned public utility or business affected
with public interest.
c. SECTION 18 - permanent transfer of
ownership to public from private; The
State may, in the interest of national
II.
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.
2. TATAD, ET AL. V GARCIA AND EDSA LRT
CORP. LTD., APRIL 16, 1985
FACTS: DOTC planned to construct EDSA LRT
III, a light railway transit line along EDSA, a
major thoroughfare in Metro Manila, which
shall traverse the cities of Pasay, Quezon,
Mandaluyong and Makati.
Pursuant to this, RA 6957 entitled An Act
Authorizing the Financing, Construction,
Operation and Maintenance of Infrastructure
Projects by the Private Sector, and For Other
Purposes was created. This provides for 2
schemes for the financing, construction and
operation of government projects through
private initiative and investment: BuildOperate-Transfer (BOT) or Build-Transfer
(BT). The PBAC was also created by the
DOTC to screen and select private
corporations for the project. Only the EDSA
LRT Corporation, a private corporation
organized under the laws of Hong Kong, met
the qualifications of the DOTC. An
agreement was then made providing that
private respondents shall undertake and
finance the entire project. Upon full or
partial completion and viability thereof,
private respondent shall deliver the use and
possession of the completed portion to
DOTC which shall operate the same. The
DOTC shall pay rentals to private
respondent for 25 years and upon
completion, the ownership shall be
transferred to the DOTC. Petitioners, in their
capacity as senators and taxpayers
questioned the respondents ownership of
the EDSA LRT III, being a public utility.
ISSUE: can respondent own EDSA LRT III, a
public utility?
RULING: Foreign corporations cannot own
public utility but in this case, what the
respondent owns are the rail tracks, rolling
stocks like the coaches, rail stations,
terminals and the power plant, not a public
utility. While a franchise is needed to
operate these facilities to serve the public,
they do not by themselves constitute a
public utility. What constitutes a public
utility is not their ownership but their use to
serve the public (Iloilo Ice & Cold Storage
Co. v. Public Service Board, 44 Phil. 551, 557
558 [1923]).
Section 11 of the Constitution contemplates
is the operation of a public utility and not
the ownership of the facilities.
COMMON CARRIERs
A. COMMON CARRIERS IN GENERAL

1. DEFINITION
a. ARTICLE 1732 CIVIL CODE: 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.
b. SECTION 13 COMMONWEALTH ACT NO.
146:
(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 privatelyowned 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 privatelyowned, 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.
(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, icerefrigeration plant, canal, irrigation system,
gas, electric light, heat and power water
supply and power, petroleum, sewerage
system, wire or wireless communications
system, wire or wireless broadcasting
stations and other similar public services:
Provided, however, That a person engaged in
agriculture, not otherwise a public service,
who owns a motor vehicle and uses it

personally and/or enters into a special

contract whereby said motor vehicle is
offered for hire or compensation to a third
party or third parties engaged in agriculture,
not itself or themselves a public service, for
operation by the latter for a limited time and
for a specific purpose directly connected with
the cultivation of his or their farm, the
transportation, processing, and marketing of
agricultural products of such third party or
third parties shall not be considered as
operating a public service for the purposes of
this Act.
c. DE GUZMAN V CA L-47822 DECEMBER
12, 1988
FACTS: Respondent Ernesto Cendana was a junk
dealer. He buys scrap materials and brings those
that he gathered to Manila for resale using 2 sixwheeler trucks. On the return trip to Pangasinan,
respondent would load his vehicle with cargo
which various merchants wanted delivered,
charging fee lower than the commercial rates.
Sometime in November 1970, petitioner Pedro de
Guzman contracted with respondent for the
delivery of 750 cartons of Liberty Milk. On
December 1, 1970, respondent loaded the cargo.
Only 150 boxes were delivered to petitioner
because the truck carrying the boxes was
hijacked along the way. Petitioner commenced an
action claiming the value of the lost merchandise.
Petitioner argues that respondent, being a
common
carrier,
is
bound
to
exercise
extraordinary diligence, which it failed to do.
Private respondent denied that he was a common
carrier, and so he could not be held liable for
force majeure. The trial court ruled against the
respondent, but such was reversed by the Court
of Appeals.
Issues:
(1) Whether or not private respondent is a
common carrier
(2) Whether private respondent is liable for
the loss of the goods
Held:
(1) Article 1732 makes no distinction between
one whose principal business activity is the
carrying of persons or goods or both, and one
who does such carrying only as an ancillary
activity. Article 1732 also carefully avoids
making any distinction between a person or
enterprise offering transportation service on a
regular or scheduled basis and one offering
such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its

services to the "general public," i.e., the

general community or population, and one
who offers services or solicits business only
from a narrow segment of the general
population. It appears to the Court that
private respondent is properly characterized
as a common carrier even though he merely
"back-hauled" goods for other merchants from
Manila
to
Pangasinan,
although
such
backhauling was done on a periodic or
occasional rather than regular or scheduled
manner,
and
even
though
private
respondent's principal occupation was not the
carriage of goods for others. There is no
dispute that private respondent charged his
customers a fee for hauling their goods; that
fee frequently fell below commercial freight
rates is not relevant here. A certificate of
public convenience is not a requisite for the
incurring of liability under the Civil Code
provisions governing common carriers.
(2) Article 1734 establishes the general rule
that common carriers are responsible for the
loss, destruction or deterioration of the goods
which they carry, "unless the same is due to
any of the following causes only:
a. Flood, storm, earthquake, lightning, or
other natural disaster or calamity;
b. Act of the public enemy in war, whether
international or civil;
c. Act or omission of the shipper or owner of
the goods;
d. The character of the goods or defects in the
packing or in the containers; and
e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not

fall within any of the five (5) categories of
exempting causes listed in Article 1734.
Private respondent as common carrier is
presumed to have been at fault or to have
acted negligently. This presumption, however,
may be overthrown by proof of extraordinary
diligence on the part of private respondent.
We believe and so hold that the limits of the
duty of extraordinary diligence in the
vigilance over the goods carried are reached
where the goods are lost as a result of a
robbery which is attended by "grave or
irresistible threat, violence or force." we hold
that the occurrence of the loss must
reasonably be regarded as quite beyond the
control of the common carrier and properly
regarded as a fortuitous event. It is necessary
to recall that even common carriers are not
made absolute insurers against all risks of
travel and of transport of goods, and are not
held liable for acts or events which cannot be
foreseen or are inevitable, provided that they
shall have complied with the rigorous
standard of extraordinary diligence.
2. ELEMENTS OF A COMMON CARRIER
a. persons' corporations, firms or associations
b. engaged in the businessof carrying or
transportingpassengers, goods or both
c. means of carriage is by land, water or air
d. the carrying of passengers , goods or both
is for compensation

III.

3.
B.

e. the service is offered to the public without

distinction.