Case Digest: FRANCISCO S. TATAD, et al. vs. Secretary of DOTC JESUS B. GARCIA, JR., EDSA LRT CORPORATION, LTD.

G.R. No. 114222                 06 April 1995

Facts:

In 1989, the government planned to build a railway transit line along EDSA. No bidding was made but certain corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT Consortium which was obviously formed for this particular undertaking. An agreement was then made between the government, through the Department of Transportation and Communication (DOTC), and EDSA LRT Consortium. The agreement was based on the Build-Operate-Transfer scheme provided for by law (RA 6957, amended by RA 7718). Under the agreement, EDSA LRT Consortium shall build the facilities, i.e., railways, and shall supply the train cabs. Every phase that is completed shall be turned over to the DOTC and the latter shall pay rent for the same for 25 years. By the end of 25 years, it was projected that the government shall have fully paid EDSA LRT Consortium. Thereafter, EDSA LRT Consortium shall sell the facilities to the government for $1.00.

However, Senators Francisco Tatad, John Osmeña, and Rodolfo Biazon opposed the implementation of said agreement as they averred that EDSA LRT Consortium is a foreign corporation as it was organized under Hongkong laws; that as such, it cannot own a public utility such as the EDSA railway transit because this falls under the nationalized areas of activities. The petition was filed against Jesus Garcia, Jr. in his capacity as DOTC Secretary.

Issue: 

Can respondent EDSA LRT Corporation, Ltd., a foreign corporation own EDSA LRT III; a public utility? 

Ruling:

What private 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.

In law, there is a clear distinction between the "operation" of a public utility and the ownership of the facilities and equipment used to serve the public. The right to operate a public utility may exist independently and separately from the ownership of the facilities thereof. One can own said facilities without operating them as a public utility, or conversely, one may operate a public utility without owning the facilities used to serve the public. The devotion of property to serve the public may be done by the owner or by the person in control thereof who may not necessarily be the owner thereof.

Case Digest: PEOPLE OF THE PHILIPPINES vs. MELISSA CHUA

G.R. No. 184058

Ponente: Carpio Morales, J.

DOCTRINE: An employee, even a temporary one, may be held liable for illegal recruitment as principal by direct participation, together with the employer.

FACTS:

Melissa Chua and one Josie Campos were charged with Large Scale Illegal Recruitment and Estafa for allegedly recruiting Erik Tan, Marilyn Macaranas, Napoleon Yu, Harry King and Roberto Angeles as factory workers in Taiwan. Chua, claimed to be merely working as a temporary cashier for Golden Gate, Inc., were paid by the private complainants placement fees in exchange for their promised employments abroad. Said placement fees ranged from Php25,000.00 to Php80,000.00 for which she issued receipts thereto.  After the failure to deploy the complainants and refund their placement fees, they found out that Golden Gate Inc.’s license had already expired.

Chua claims that she did not receive any money for she turned over the placement fees she received to the documentation officer, one Arlene Vega, and was ultimately remitted to Marilyn Calueng.

ISSUE: Whether or not Melissa Chua is guilty of illegal recruitment in a large scale despite being merely a temporary employee of Golden Gate, Inc.

RULING:

Yes. Article 38(a) of the Labor Code, as amended, under which Chua was charged defines illegal recruitment as “any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. x x x Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.” Any recruitment activities to be undertaken by a non-licensee, or in this case, an agency with an expired license, shall be deemed illegal and punishable under Article 39 of the Labor Code. 

Chua was positively identified as one of the persons who enticed the complainants to part with their money upon the fraudulent representation that they would be able to secure from them employment abroad. Even if Chua was a mere temporary cashier of Golden Gate, that did not make her any less liable for illegal recruitment as principal by direct participation, together with her employer, as it is shown that she actively and consciously participated in the recruitment process.

Case Digest: National Development Company vs. Court of Appeals

NATIONAL DEVELOPMENT COMPANY vs. THE COURT OF APPEALS and DEVELOPMENT INSURANCE AND SURETY CORPORATION

G.R. No. L-49407 19 August 1988

Facts:

National Development Company (NDC) appointed Maritime Company of the Philippines (MCP) as its agent to manage and operate its vessel, ‘Dona Nati’, for and in behalf of its account. In 1964, while en route to Japan from San Francisco, Dona Nati collided with a Japanese vessel, ‘SS Yasushima Maru’, causing its cargo to be damaged and lost. The private respondent, as insurer to the consigners, paid almost Php400,000.00 for said lost and damaged cargo. Hence, the private respondent instituted an action to recover from NDC.

Issue: 

Which laws govern the loss and destruction of goods due to collision of vessels outside Philippine waters?

Ruling:

In a previously decided case, it was held that the law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration pursuant to Article 1753 of the Civil Code.  It is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.

It appears, however, that collision falls among matters not specifically regulated by the Civil Code, hence, we apply Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels.

Case Digest: Eternal Gardens Memorial Park vs. Philam Life

ETERNAL GARDENS MEMORIAL PARK CORPORATION vs. THE PHILIPPINE AMERICAN LIFE INSURANCE COMPANY

G.R. No. 166245 09 April 2008

Facts:

Respondent Philamlife entered into an agreement denominated as Creditor Group Life Policy with petitioner. Under the policy, the clients of Eternal who purchased burial lots from it on installment basis would be insured by Philamlife. Among those insured was John Chuang who died with a balance of payments pf PhP100,000.00. More than a year after complying with the required documents, Philamlife had not furnished Eternal with any reply to the latter’s insurance claim. This prompted Eternal to demand from Philamlife the payment of the claim for PhP 100,000 on April 25, 1986. Only then did Philamlife respond that the deceased was not covered by the Policy.

The RTC said that since the contract is a group life insurance, once proof of death is submitted, payment must follow. The CA ruled that the non-accomplishment of the submitted application form violated Section 26 of the Insurance Code. Thus, the CA concluded, there being no application form, Chuang was not covered by Philamlifes insurance.

Issue: May the inaction of the insurer on the insurance application be considered approval of the application?

Ruling:

Yes. As earlier stated, Philamlife and Eternal entered into an agreement denominated as Creditor Group Life Policy No. P-1920 dated December 10, 1980. In the policy, it is provided that:

 

EFFECTIVE DATE OF BENEFIT.

 

The insurance of any eligible Lot Purchaser shall be effective on the date he contracts a loan with the Assured. However, there shall be no insurance if the application of the Lot Purchaser is not approved by the Company.

 

An examination of the above provision would show ambiguity between its two sentences.   A contract of insurance, being a contract of adhesion, par excellence, any ambiguity therein should be resolved against the insurer. Moreover, the mere inaction of the insurer on the insurance application must not work to prejudice the insured; it cannot be interpreted as a termination of the insurance contract. The termination of the insurance contract by the insurer must be explicit and unambiguous.

Case Digest: Philamcare vs. Court of Appeals and Trinos

PHILAMCARE HEALTH SYSTEMS, INC. vs. COURT OF APPEALS and JULITA TRINOS

G.R. No. 125678; 18 March 2002

Facts:

Ernani Trinos, deceased husband of private respondent Julita Trinos, was approved for a health care coverage with petitioner from March 1988 to March1989. The same was extended twice until June 1990. During the period of his coverage, Ernani was hospitalized several times, however, petitioner denied the claim of private respondent because the Health Care Agreement was allegedly void due to the alleged concealment of Ernani that he was not hypertensive, diabetic, and asthmatic, contrary to his answer in the application form.

Petitioner argues that the agreement merely granted living benefits, such as check-ups and hospitalisation, hence it is not an insurance contract. Petitioner further argues that it is not an insurance company, which is governed by the Insurance Commission, but a Health Maintenance Organization under the authority of the Department of Health.

Issues:

1. Whether or not the Health Care Agreement between the deceased and the petitioner falls under the ambit of an insurance contract.
2. Whether the alleged concealment of the deceased will invalidate the Agreement.

Ruling:

1. Yes. In the case at bar, the insurable interest of respondents husband in obtaining the health care agreement was his own health. Section 10 of the Insurance Code is clear that every person has an insurable interest in the life and health of himself.  The health care agreement was in the nature of non-life insurance, which is primarily a contract of indemnity. Once the member incurs hospital, medical or any other expense arising from sickness, injury or other stipulated contingent, the health care provider must pay for the same to the extent agreed upon under the contract
2. No. The answer assailed by petitioner was in response to the question relating to the medical history of the applicant. This largely depends on opinion rather than fact, especially coming from respondents husband who was not a medical doctor. Where matters of opinion or judgment are called for, answers made in good faith and without intent to deceive will not avoid a policy even though they are untrue. (A)lthough false, a representation of the expectation, intention, belief, opinion, or judgment of the insured will not avoid the policy if there is no actual fraud in inducing the acceptance of the risk, or its acceptance at a lower rate of premium, and this is likewise the rule although the statement is material to the risk, if the statement is obviously of the foregoing character, since in such case the insurer is not justified in relying upon such statement, but is obligated to make further inquiry. There is a clear distinction between such a case and one in which the insured is fraudulently and intentionally states to be true, as a matter of expectation or belief, that which he then knows, to be actually untrue, or the impossibility of which is shown by the facts within his knowledge, since in such case the intent to deceive the insurer is obvious and amounts to actual fraud. Under Section 27 of the Insurance Code, a concealment entitles the injured party to rescind a contract of insurance. The right to rescind should be exercised previous to the commencement of an action on the contract.