Week 6 Case 18 G.R. No. 184300 Flashcards
Is Reputable a private carrier?
Yes.
More importantly, the finding of the RTC and CA that Reputable is a special or private carrier is warranted by the evidence on record, primarily, the unrebutted testimony of Reputable’s Vice President and General Manager, Mr. William Ang Lian Suan, who expressly stated in open court that Reputable serves only one customer, Wyeth.
Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or
transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public. On the other hand, a private carrier is one wherein the carriage is generally undertaken by special
agreement and it does not hold itself out to carry goods for the general public. A common carrier becomes a private carrier when it undertakes to carry a special cargo or chartered to a special person only. For all intents and purposes, therefore, Reputable operated as a private/special carrier with regard to its contract of carriage with Wyeth.
Is Reputable bound by the contract of carriage?
Yes.
The extent of a private carrier’s obligation is dictated by the
stipulations of a contract it entered into, provided its stipulations, clauses, terms, and conditions are not contrary to law, morals, good customs, public order, or public policy. “The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. Public policy governing common carriers has no force where the public at large is not involved.”
Thus, being a private carrier, the extent of Reputable’s liability is fully governed by the stipulations of the contract of carriage, one of which is that it shall be liable to Wyeth for the loss of the goods/products due to any and all causes whatsoever, including theft, robbery and other force majeure while the goods/products are in transit and until actual delivery to Wyeth’s customers, salesmen and dealers.
Is Section 5 of of the SR Policy an “over insurance clause” or an “other insurance clause”?
Section 5 is actually the other insurance clause (also called
“additional insurance” and “double insurance”), one akin to Condition No. 3 in issue in Geagonia v. CA, which validity was upheld by the Court as a warranty that no other insurance exists. The Court ruled that Condition No. 3 is a condition which is not proscribed by law as its incorporation in the policy is allowed by Section 75 of the Insurance Code. It was also the Court’s finding that unlike the other insurance clauses, Condition No. 3 does not absolutely declare void any violation thereof but expressly provides that the condition “shall not apply when the total insurance or insurances in force at the time of the loss or damage is not more than P200,000.00.”
Why is Section 5 of the SR Policy an “other insurance clause”?
In this case, similar to Condition No. 3 in Geagonia, Section 5 does not provide for the nullity of the SR Policy but simply limits the liability of Malayan only up to the excess of the amount that was not covered by the other insurance policy. In interpreting the “other insurance clause” in Geagonia, the Court ruled that the prohibition applies only in case of double insurance. The Court ruled that in order to constitute a violation of the clause, the other insurance must be upon same subject matter, the same interest therein, and the same risk. Thus, even though the multiple insurance policies involved were all issued in the name of the same assured, over the same subject matter and covering the same risk, it was ruled that there was no violation of the “other insurance clause” since there was no double insurance.
Is Section 12 of of the SR Policy an “over insurance clause” or an “other insurance clause”?
Section 12 of the SR Policy, on the other hand, is theover insuranceclause. More particularly, it covers the situation where there is over insurance due to double insurance. In such case, Section 15 provides that Malayan shall “not be liable to pay or contribute more than its ratable proportion of such loss or damage.” This is in accord with the principle of contribution provided under Section 94 (e) of the Insurance Code, which states that “where the insured is over insured by double insurance, each insurer is bound, as between himself and the other insurers, to contribute ratably to the loss in proportion to the amount for which he is liable under his
contract.”
What does Sections 5 and 12 of the SR policy presuppose?
Clearly, both Sections 5 and 12 presuppose the existence of a double insurance. The pivotal question that now arises is whether there is double
insurance in this case such that either Section 5 or Section 12 of the SR Policy may be applied.
What is double insurance?
By the express provision of Section 93 of the Insurance Code, double insurance exists where the same person is insured by several insurers
separately in respect to the same subject and interest. The requisites in order for double insurance to arise are as follows:
- The person insured is the same;
- Two or more insurers insuring separately;
- There is identity of subject matter;
- There is identity of interest insured; and
- There is identity of the risk or peril insured against.
Were the same policies issued over the same subject matter issued over the same person or entity?
No.
In the present case, while it is true that the Marine Policy and the SR Policy were both issued over the same subject matter, i.e., goods belonging to Wyeth, and both covered the same peril insured against, it is, however, beyond cavil that the said policies were issued to two different persons or entities. It is undisputed that Wyeth is the recognized insured of Philippines First under its Marine Policy, while Reputable is the recognized insured of
Malayan under the SR Policy. The fact that Reputable procured Malayan’s SR Policy over the goods of Wyeth pursuant merely to the stipulated requirement under its contract of carriage with the latter does not make Reputable a mere agent of Wyeth in obtaining the said SR Policy.
The interest of Wyeth over the property subject matter of both
insurance contracts is also different and distinct from that of Reputable’s. The policy issued by Philippines First was in consideration of the legal and/or equitable interest of Wyeth over its own goods. On the other hand, what was issued by Malayan to Reputable was over the latter’s insurable interest over the safety of the goods, which may become the basis of the latter’s liability in case of loss or damage to the property and falls within the contemplation of Section 15 of the Insurance Code.
Therefore, even though the two concerned insurance policies were issued over the same goods and cover the same risk, there arises no double insurance since they were issued to two different persons/entities having distinct insurable interests. Necessarily, over insurance by double insurance cannot likewise exist. Hence, as correctly ruled by the RTC and CA, neither Section 5 nor Section 12 of the SR Policy can be applied.
How should ambiguity in contract of insurance be addressed?
“Indemnity and liability insurance policies are construed in accordance with the general rule of resolving any ambiguity therein in favor of the insured, where the contract or policy is prepared by the insurer. A contract of insurance, being a contract of adhesion, par excellence, any ambiguity therein should be resolved
against the insurer; in other words, it should be construed liberally in favor of the insured and strictly against the insurer. Limitations of liability should be regarded with extreme jealousy and must be construed in such a way as to preclude the insurer from noncompliance with its obligations.”
Is Reputable solidarily liable with Malayan? Why?
No.
There is solidary liability only when the obligation expressly so states, when the law so provides or when the nature of the obligation so requires.
Suffice it to say that Malayan’s and Reputable’s respective liabilities arose from different obligations — Malayan’s is based on the SR Policy while
Reputable’s is based on the contract of carriage.
What is the jurisprudential ruling in solidary liability of insurer and insured, as discussed in Heirs of George Y. Poe v. Malayan Insurance Company, Inc?
[W]here the insurance contract provides for indemnity against
liability to third persons, the liability of the insurer is direct and such third persons can directly sue the insurer. The direct liability of the insurer under indemnity contracts against third party[-]liability does
not mean, however, that the insurer can be held solidarily liable with the insured and/or the other parties found at fault, since they are being held liable under different obligations. The liability of the insured carrier or vehicle owner is based on tort, in accordance with the provisions of the Civil Code; while that of the insurer arises from contract, particularly, the insurance policy.
