Transportation and Insurance Law

Seatwork Exercises

1. The PLI Company shipped 20,000 bags of soya beans through the S/S Sweet, owned
and operated by Sweet Lines Shipping Co., consigned to Marca Datu Swan Soy Sauce Factory and
insured by Malayan Cathay Insurance and Surety Inc., against all risks. PLI Company hired the
entire vessel, with the option to go north or south, loading, stowing and discharging at its own
risk and expense. The owner and shipper agreed on a stipulation exempting the owner of liability
for the negligence of its agents.

When the cargo was delivered to the consignee, there were shortages amounting to
Php200,000.00. The insurance company paid for the damage and sought reimbursement from
Sweet Lines Shipping Co. as carrier.

Explain whether or not the following statements are valid.

a. The carrier is liable because the stipulation exempting the owner from liability for
the negligence of its agent is against public policy, hence, void.
b. The carrier is liable because in case of loss, destruction or deterioration of goods,
common carriers are presumed at fault under Article 1735 of the Civil Code.
c. The carrier is not liable because it exercised due diligence in stowing the goods.
d. The carrier is not liable, because it is not a common carrier and the parties to a
contract, as such, may enter into stipulation exempting the owner from liability for
the negligence of its agents.
e. The insurance company cannot recover from any party as it assumed the risk
insured against.

2. Baliwag Victory Rabbit Transit Lines, a common carrier, entered into a contract with
New India Trading Ltd. Co., whereby it agreed to furnish New India Trading Ltd. Co., for a fixed
amount, a bus for a company excursion on its foundation anniversary. It was agreed that New
India Trading Ltd. Co., would have the use of the bus and its driver from 7:00 AM to 7:00 PM on
the stipulated date, and that the bus driver would be obliged to follow the instructions of the
company’s general manager as to the places to be visited. New India Trading Ltd. Co., agreed to
bear the cost of the gasoline consumed. Baliwag

The transportation contract signed by New India Trading Ltd. Co., contained a stipulation
that Baliwag Victory Rabbit Transit Lines would be exempt from liability on account of acts or
omissions of its employees.

On the return trip from the excursion site, the bus had an accident and several employees
of New India Trading Ltd. Co., died while others were injured, including the driver.

It appears that X, a businessman, boarded the Pantranco-BLTB bus bound for BGC at the
Fort where he would be meeting Y, for a business transaction worth Php5million. Somewhere
along EDSA, A and his friends, who were bar reviewees and law students at the college of law in
Rockwell, likewise took the ride. As the Pantranco-BLTB Bus was cruising along EDSA, the Baliwag
Victory Rabbit Transit Lines bus tried to overtake the Pantranco-BLTB. A and his friends dared the
driver of the Pantranco-BLTB bus to race with the Baliwag Victory Rabbit Transit bus. The driver
took the dare, to the delight of A and his friends, as well as X who happens to be a race enthusiast
himself, and they all cheered the driver, who was gaining on the other bus. On a curve, the
Pantranco-BLTB bus failed to slow down and it turned turtle, resulting in the death of A, and
injuries to his friends, as well as X. By reason thereof, the Baliwag Victory Rabbit Transit bus
collided with the Pantranco-BLTB.

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 Feeling aggrieved by the accident, the relatives of A and his friends filed an action for
damages against Pantranco-BLTB bus who claimed in its defense that it should be absolved of any
liability because A and his friends clearly violated the Pantranco-BLTB bus sign that says “Do not
talk to the driver while the bus is in motion, otherwise the company will not assume liability for any
accident.”

X likewise files an action for damages for his injuries and breach of contract for the lost
business transaction amounting to Php5million he had forthcoming with Y whom he was not able
to meet because of the accident.

The buses are insured by one and the same insurance company, the Cia Maritima
Insurance.

a. Discuss and explain the rights, obligations, and liability(ies) of each of the involved
parties, individually and as between whom can each claim liability for insurance,
reimbursement, and damages.

b. Claiming that in long trips, a driver should have a reliever-driver, and that the duty
to exercise the utmost diligence on the part of the common carrier for safety
extends to both passengers and crew, the drivers of each of the buses seek your
advice as to whom can they recover damages from, how would you advice the
drivers?

c. In an action grounded on the contract of carriage, is there a need for the court to
make an express finding of fault or negligence on the part of the carrier to hold it
liable for claims filed in behalf of the injured or deceased passenger(s)?

d. Is there any exception to any answer you may give to the above-question?

e. Would your decisions on the claims of the parties be the same if the Pantranco-
BLTB bus was intercepted and seized by the Sheriff of the Makati Regional Trial
Court, at the instance of Cia Maritima who had earlier obtained from the court a
writ of attachment for a loan obligation that the Pantranco-BLTB Co. owed Cia
Maritima, resulting to the loss of the business transaction of X with Y, and the lost
opportunity for learning of A and his friends? Explain.

3. Discuss/Explain the following concepts

a. Common Carrier
b. Private Carrier
c. Extraordinary diligence
d. Presumption of fault or negligence
e. Contributory negligence

4. Istokwa brought 10 sacks of palay to the LRT/MRT Palpak Railways Co. He paid for
its freight charges and was issued a way bill. The cargo was then loaded on the freight wagon of
the LRT/MRT Palpak train. Without any permission, Istokwa boarded the freight wagon and not
the passenger coach. Before reaching its last stop at EDSA, the LRT/MRT Palpak Train suffered
technical glitch making it overshoot its tracks and even passed thru to pedestrian traffic. There is
no evidence that Istokwa bought a ticket or paid his fare at the same time he paid for the freight
charges for his cargo. Istokwa was among those who suffered injuries.

a. Is Istokwa a passenger of LRT/MRT Palpak Railways Co.?

b. Over which does the liability, if any, of LRT/MRT Palpak Railways Co., extend?

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c. Would your answers in items a and b be the same if Istokwa, being a friend of the
LRT/MRT train coach captain took him in the cockpit for him to have a front seat
experience?
d. Would your answers in items a, b and c be the same if Istokwa bought and paid for
his ticket?
e. May Istokwa recover for himself and reimbursement for the 10 sacks of palay from
the insurance held by LRT/MRT Palpak Railways Co.? Explain.

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