Transpo Mercantile LAW 2017 Golden Notes Faculty-152-197 PDF

Preview

Summary

MERCANTILE LAWinsured’s service. Is Matino correct in denying the claim? (2014 Bar)A: Matino Insurance is not correct in denying the claim. The loss of the motor vehicle is not excluded under the insurance policy as the loss was due to theft, not malicious damage. The “malicious damage” clause under...

Description

MERCANTILE LAW The maximum sum of guaranteed benefits is not more than one thousand (1000) times of current daily minimum wage rate for nonagricultural workers in Metro Manila. (IC, Sec. 187)

insured’s service. Is Matino correct in denying the claim? (2014 Bar) A: Matino Insurance is not correct in denying the claim. The loss of the motor vehicle is not excluded under the insurance policy as the loss was due to theft, not malicious damage. The “malicious damage” clause under the policy is not applicable but rather the “theft” clause. Thus, the provision under the policy that ”the company shall not be liable for any malicious damage caused by the insured, any member of his family or by a person in the insured’s service” is not applicable. (Alpha Insurance and Surety Co. v. Castor, G.R. No. 198174, September 2,2003).

NOTE: No insurance company or mutual benefit association shall engage in the business of microinsurance unless it possesses all the requirements as may be prescribed by the Commissioner. The Commissioner shall issue such rules and regulations governing microinsurance. (IC, Sec. 188)

TRANSPORTATION LAW Laws that govern contracts of transportation

Limitations with respect to compulsory motor vehicle liability insurance over solicitation 1.

2. 3.

Contracts of transportation, whether by land, sea, or air, [i] if within the Philippines; or [ii] if the transportation of goods be from a foreign country to the Philippines, shall be governed by the following laws, arranged by order of application:

No government office or agency having the duty of implementing the provisions of the Insurance Code on CMVLI shall act as agent in procuring the insurance policy or surety bond required; No official or employee of such office or agency shall similarly act as such agent; and The commission of an agent procuring the corresponding insurance policy or surety bond shall in no case exceed 10% of the amount of premiums therefore. (IC, Sec. 400)

1. 2. 3.

Q: When a passenger jeepney, insured but with an authorized driver’s clause and was driven by a driver who only holds a Traffic Violation Report (TVR) because his license was confiscated, met an accident, may the owner of the jeepney claim from the insurance company? (2003 Bar)

Provisions of the New Civil Code on Common Carriers; Code of Commerce; and Special laws such as Carriage of Goods by the Sea (COGSA); Salvage Law; Public Service Act; Land Transportation and Traffic Code; Tariff and Customs Code; and Civil Aeronautics Act (Art. 1735 and 1766, NCC; American President Lines, Ltd. v. Klepper, G.R. No. L-15671, November 29, 1960).

NOTE: In case of international carriage in air transportation, (i) the Montreal Convention as ratified by the Philippines in 2015; and (ii) the Warsaw Convention (R.A. 9497 may be applicable.

A: YES. The fact that the driver was merely holding a TVR does not violate the condition that the driver should have a valid and existing driver’s license. Besides, such a condition should be disregarded because what is involved is a passenger jeepney, and what is involved here is not own damage insurance but third party liability where the injured party is a third party not privy to the contract of insurance.

If the goods are to be transported from the Philippines to a foreign country, the law of the latter country shall govern the transportation contract (Art. 1753, CC; National Development Co. v. CA, G.R. No. L-49407, August 19, 1988). COMMON CARRIER

MICROINSURANCE

Requisites for an entity to be classified as a common carrier (1996, 1997, 2000, 2002 Bar) (PBL-FP) 1. Must be a Person, corporation, firm or association 2. Engaged in the Business of carrying or transporting passengers or goods or both; 3. The carriage or transport must either be by Land, water or air; 4. The service is for a Fee; 5. The service is offered to the Public (Art. 1732, NCC).

It is a financial product or service that meets the risk protection needs of the poor where: The amount of contributions, premiums, fees or charges, computed on a daily basis, does not exceed seven and a half percent (7.5%) of the current daily minimum wage rate for nonagricultural workers in Metro Manila; and

130

TRANSPORTATION LAW of a particular school living within or near where they operated the service and for a fee.

NOTE: A pipeline operator who carries oil and other petroleum products through pipes/pipelines is a common carrier. The law does not distinguish as to the means by which transportation is carried out, as long as it is by land, water, or air. Neither does the law require that transportation be through a motor vehicle (First Phil. Industrial Corp. v. CA, G.R. No. 125948, December 29, 1998).

Test for determining whether one is a common carrier (1996 Bar): Whether the person or entity, for some business purpose, and with general or limited clientele, offers the servic e of carrying or transporting passengers or goods or both for compensation.

Q: The Pereñas were engaged in the business of transporting students from their respective residences in Parañaque City to Don Bosco in Pasong Tamo, Makati City and back. They employed Clemente Alfaro as driver of the van. The Zarates contracted the Pereñas to transport their son, Aaron, to and from Don Bosco. However, a train hit the rear end of the van driven by Alfaro, and the impact threw nine (9) students in the rear, including Aaron, out of the van. Aaron landed on the path of the train, which dragged his body and severed his head, instantaneously killing him.

The true test for a common carrier is not the quantity or extent of the business actually transacted, or the number and character of the conveyances used in the activity, but whether the undertaking is a part of the activity engaged in by the carrier that he has held out to the general public as his business or occupation. The question must be determined by the character of the business actually carried on by the carrier, not by any secret intention or mental reservation it may entertain or assert when charged with the duties and obligations that the law imposes. (Spouses Teodoro and Nanette Pereña v. Spouses Teresita Philippine Nicolas and L. Zarate, G.R. No. 157917, August 29, 2012).

The Zarates commenced an action for damages against Alfaro, the Pereñas, PNR, and Alano. The Zarates’ claim against the Pereñas was upon breach of the contract of carriage and based on quasi-delict under Article 2176, Civil Code against PNR.

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 services on a 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. (Perez, 2009, citing Caltex [Phils.] v. CA, G.R. No. 131166, September 30, 1999).

The Pereñas argued that they exercised the diligence of a good father of the family in the selection and supervision of Alfaro by making sure that Alfaro had been issued a driver’s license and had not been involved in any vehicular accident prior to the collision. a. Is the defense of Pereñas tenable? b. Is the operation of a school bus service considered as a private carrier? A: a. NO. Such defense is inappropriate in an action for breach of contract of carriage. b.

NOTE: Certificate of public convenience is not necessary before a carrier can be considered a common carrier

NO. The Pereñas, as the operators of a school bus service, were: (a) engaged in transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers over established roads by the method by which the business was conducted; and (c) transporting students for a fee.

Q: AM Trucking, a small company, operates two trucks for hire on a selective basis. It caters only to a few customers, and its trucks do not make regular or scheduled trips. It does not have a certificate of public convenience. On one occasion, Reynaldo contracted AM to transport, for a fee, 100 sacks of rice from Manila to Tarlac. However, AM failed to deliver the cargo because its truck was hijacked when the driver stopped in Bulacan to visit his girlfriend.

Despite catering to a limited clientèle, the Pereñas operated as a common carrier because they held themselves out as a ready transportation indiscriminately to the students

131

MERCANTILE LAW is his main business or is incidental to such business, whether it is scheduled or unscheduled service, and whether he offers his services to the general public or to a limited few (De Guzman v. CA, G.R. No. 47822, December 27, 1988).

May Reynaldo hold AM liable as a common carrier? A: YES. The fact that AM Trucking operates only two trucks for hire on a selective basis, caters only to a few customers, does not make regular or scheduled trips, and does not have a certificate of public convenience are of no moment. The law does not distinguish between one whose principal business activity is the carrying of persons or goods or both and anyone who does such carrying only as an ancillary activity; between a person or enterprise offering transportation service on a regular or scheduled basis and one on an occasional, episodic or unscheduled basis; and between a carrier offering its services to the general public and one who offers services or solicits business only from a narrow segment of the general population (Pedro de Guzman v. CA, G.R. No. L-47822 December 27, 1988)

Q: Spouses Dante and Leona Cruz lodged a Complaint against Sun Holidays, Inc. with the RTC for damages arising from the death of their son who perished with his wife while on board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the couple had stayed at Coco Beach Island Resort owned by Sun Holidays. Spouses contended that as a common carrier, it was guilty of negligence in allowing M/B Coco Beach to sail notwithstanding storm warning bulletins issued by PAGASA. Sun Holidays denied being a common carrier, alleging that its boats are not available to the general public as they only ferry resort guests and crew members.

Q: Alejandro Camaling is engaged in buying copra, charcoal, firewood, and used bottles and in reselling them in Cebu City. He uses two (2) big Isuzu trucks for the purpose; however, he has no certificate of public convenience or franchise to do business as a common carrier. On the return trips to Alegria, he loads his trucks with various merchandise of other merchants in Alegria and in the two neighboring municipalities. He charges them freight rates much lower than the regular rates. In one of the return trips, one cargo truck was loaded with several boxes of sardines, owned by Pedro Rabor. While passing the zigzag road between Carcar and Barili, the truck was hijacked by three (3) armed men who took all the boxes of sardines and kidnapped the driver and his helper, releasing them only two (2) days later.

Is Sun Holidays liable as a common carrier? A: YES. Sun Holiday’s ferry services are so intertwined with its main business as to be properly considered ancillary thereto. The constancy of respondent’s ferry services in its resort operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public (Spouses Dante Cruz v. Sun Holidays, G.R. No. 18312, June 29, 2010). Private carrier A private carrier is one who, without making the activity a vocation, or without holding himself or itself out to the public as ready to act for all who may desire his or its services, undertakes, by special agreement in a particular instance only, to transport goods or persons from one place to another either gratuitously or for hire (Spouses Pereña v. Spouses Zarate, G.R. No. 157917, August 29, 2012).

Rabor sought to recover from Alejandro the value of the sardines. The latter argued that he is not a common carrier. If you were the judge, would you sustain the contention of Alejandro? (1991 Bar)

A carrier which does not qualify under the A: NO. If I were the judge, I would rule that requisites of a common carrier is deemed a private Alejandro is a common carrier. A person who offers carrier (National Steel Corporation v CA, G.R. No. his services to carry passengers or goods for a fee is a common carrier, regardless of whether he has a 112287, December 12, 1997). certificate of public convenience or not, whether it Common carrier v. Private carrier (2002 Bar)

To whom the carrier caters its services

COMMON CARRIER PRIVATE CARRIER Undertakes to carry passengers or Carriage is generally undertaken by special goods for the public agreement and it does not hold itself out to carry goods for the general public

132

TRANSPORTATION LAW Governing laws

Civil Code Provisions on Common Civil Code provisions on ordinary contracts Carriers, Public Service Act, and other special laws relating to transportation

Degree of Diligence required Presumption of Negligence

Extraordinary diligence

Ordinary diligence or diligence of a good father of the family

1. If the goods are lost, destroyed or deteriorated. 2. In case of death of or injuries to passengers

No presumption as to negligence

Whether subject to regulation or not Exemption from liability

Subject to regulation by a regulatory NOT subject to regulation by a regulatory agency agency A common carrier cannot stipulate that it is exempt from liability for negligence of its agents or employees. Such stipulation is void as it is against public policy

Q: Are common carriers liable for injuries to passengers even if they have observed ordinary diligence and care? Explain. (2015 Bar)

DILIGENCE REQUIRED OF COMMON CARRIERS The diligence required of common carriers is extraordinary diligence (Art. 1733, NCC).

A: YES, common carriers are liable to injuries to passengers even if the carriers observed ordinary diligence and care because the obligation imposed upon them by law is to exercise extraordinary diligence. Common carriers are 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.

It is that extreme measure of care and caution which persons of unusual prudence and circumspection use for securing and preserving their own property or rights. The law requires common carriers to render service with the greatest skill and utmost foresight (Loadmasters Services v. Glodel Brokerage, G.R. 197446, January 10, 2011). Reasons for the requirement of extraordinary diligence 1. 2.

A private carrier may validly enter into a stipulation exempting it from liability.

Exercise of extraordinary diligence in the carriage of goods and transport of passengers

Nature of the business of common carrier which is public service; Public policy - the common carriers are supposed to serve the public interest and therefore, they have to exercise extraordinary diligence (Martin, 1989).

EXTRAORDINARY DILIGENCE in Carriage of Goods Transport of Passengers Commences from the Commences from the time the goods are moment the person unconditionally placed in who purchases the the possession of and ticket from the carrier received by the carrier presents himself at the for transportation proper place and in a proper manner to be transported

Q: Why is the defense of due diligence in the selection and supervision of an employee not available to a common carrier? (2002 Bar) A: The defense of due diligence in the selection and supervision of an employee is not available to a common carrier because the degree of diligence required of a common carrier is not the diligence of a good father of a family but extraordinary diligence, i.e., diligence of the greatest skill and utmost foresight.

Continues until the goods are delivered, actually or constructively, by the carrier to the consignee or to the person who has

133

Continues until the passenger has been landed at the port of destination and has left the vessel owner’s dock or premises

MERCANTILE LAW Orient Freight Int’l, Inc. (OFII), the customs broker of SMC, withdrew from ATI the 197 containers, including the six in damaged condition, and delivered the same at SMC’s warehouse in Laguna. It was discovered upon discharge that additional nine containers were also damaged due to the forklift operations; thus, making the total number of 15 containers in bad order. Almost a year after, SMC filed a claim against UCPB, Westwind, ATI and OFII to recover the amount corresponding to the damaged 15 containers. When UCPB paid to SMC, the latter signed the subrogation receipt. Thereafter, UCPB instituted a complaint for damages against Westwind, ATI and OFII. Westwind and OFII was ordered to pay UCPB. It ruled that Westwind, the common carrier is liable for the six damaged containers and not the arrastre operator.

a right to receive them, and even when they are temporarily unloaded or stored in transit, unless the shipper or owner had made use of the right or stoppage in transit It also continues 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 been given a reasonable opportunity thereafter to remove them or otherwise dispose of them.

Did Westwind’s responsibility to observe extraordinary diligence already ceased from the moment the cargoes were delivered to ATI, the arrastre operator?

When consignee failed to claim a machinery after its arrival and the carrier deposited it in a warehouse, the carrier is not liable for the damages sustained by the machinery after its delivery to the warehouse (Sea-Land Service, Inc. v. CA, G.R. No. 122605, April 30, 2001).

A: NO. Under the Civil Code, other pertinent laws and jurisprudence, the extraordinary responsibility of common carriers lasts until the time the goods are actually or constructively delivered by the carrier to the consignee or the person who has the right to receive. There is actual delivery in contracts for the transport of goods when possession has been turned over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. In this case, since the discharging of the containers had not yet been completed at the time the damage occurred, there was still no delivery, actual or constructive, of the cargoes to ATI. (Westwind Shipping Corporation v. UCPB General Insurance Co., G.R. No. 200289 November 25, 2013)

NOTE: The execution of a receipt or bill of lading is not required for the commencement of the responsibility to observe extraordinary diligence The requirement to observe extraordinary diligence begins with the actual delivery of the goods for transportation, and not merely with the formal execution of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete delivery and acceptance by the carrier (Compania Maritima v. Insurance Co. of North America, G.R. No. L-18965, October 30, 1964).

Q: X, while driving his Toyota Altis, tried to ...