Mercantile Law

MALAYAN INSURANCE v. PHILIPPINES FIRST INSURANCE CO., INC. G.R. NO. 184300 July 11, 2012 Common Carrier v. Private Carrier


Wyeth Philippines and respondent Reputable Forwarder Services, Inc. (Reputable) had been executing a contract of carriage, whereby the latter undertook to transport and deliver the former’s products to its customers, dealers or salesmen.

Wyeth procured a Marine Policy from respondent Philippines First Insurance Co., Inc.

Philippines First insured Wyeth’s nutritional, pharmaceutical and other products usual or incidental to the insured’s business while the same were being transported or shipped in the Philippines.

Under the contract, Reputable undertook to answer for “all risks with respect to the goods and shall be liable to Wyeth, for the loss, destruction, or damage of the goods/products due to any and all causes whatsoever, including theft, robbery, flood, storm, earthquakes, lightning, and other force majeure while the goods/products are in transit and until actual delivery to the customers, salesmen, and dealers of Wyeth”.
Reputable signed a Special Risk Insurance Policy (SR Policy) with petitioner Malayan for the amount of P1,000,000.00.

During the effectivity of the Marine Policy and SR Policy, Reputable received from Wyeth 1,000 boxes of Promil infant formula worth P2,357,582.70 to be delivered by Reputable to Mercury Drug in Libis, Quezon City. Unfortunately, the truck carrying Wyeth s products was hijacked by about 10 armed men. The hijacked truck was recovered two weeks later without its cargo.

Philippines First, pursuant to the Marine Policy, paid Wyeth P2,133,257.00 as indemnity. Philippines First then demanded reimbursement from Reputable, having been subrogated to the rights of Wyeth by virtue of the payment. The latter, however, ignored the demand.
Philippines First instituted an action for sum of money against Reputable and alleged that Reputable is a “private corporation engaged in the business of a common carrier.”

In its answer, Reputable claimed that it is a private carrier.
The RTC rendered its Decision finding Reputable liable to Philippines First for the amount of indemnity it paid to Wyeth, among others. In turn, Malayan was found to be liable to Reputable to the extent of the policy coverage.

Dissatisfied, both Reputable and Malayan filed their respective appeals.

The CA sustained the ruling of the RTC.
Malayan’s MR was denied by the CA.

Hence, this petition.


Whether or  not Reputable is a common carrier


The Court agrees with the RTC and CA that Reputable is a private carrier.
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.

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.”

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