FACTS:

The case involves a dispute between Wyeth Philippines, Inc. (Wyeth) and Reputable Forwarder Services, Inc. (Reputable) regarding a contract of carriage for the transportation of Wyeth's products. Wyeth procured an insurance policy from Philippines First Insurance Co., Inc. (Philippines First) to secure its interest over its products, while Reputable signed a Special Risk Insurance Policy (SR Policy) with Malayan Insurance Co., Inc. (Malayan) to secure an insurance policy on Wyeth's goods. During the effectivity of both insurance policies, the truck carrying Wyeth's products was hijacked by armed men. Philippines First, in accordance with the Marine Policy, paid Wyeth for the loss of the products and demanded reimbursement from Reputable. Reputable ignored the demand, leading to a lawsuit filed by Philippines First against Reputable. Reputable then impleaded Malayan as a third-party defendant to collect the amount covered in the SR Policy. Malayan argued that the SR Policy does not cover loss or damage to property insured by any marine policy and that it expressly excluded third-party liability. The RTC found Reputable liable to Philippines First and Malayan liable to Reputable to the extent of the policy coverage. Both Reputable and Malayan filed appeals from the RTC decision.

The case involves a dispute between Reputable Forwarder and Brokerage Corporation (Reputable), Malayan Insurance Co., Inc. (Malayan), and Philippines First Insurance Co., Inc. (Philippines First) in relation to the loss of a shipment of pharmaceutical products belonging to Wyeth Philippines, Inc. (Wyeth). Reputable is a freight forwarding company that contracted with Wyeth to transport the said shipment. The shipment was covered by a "Shipper's Risk Policy" (SR Policy) issued by Malayan, with a coverage of P1,000,000. At the same time, Philippines First issued a marine policy covering the same subject matter. During the transport, the shipment was hijacked and lost. Wyeth filed a claim with Philippines First, which paid the corresponding amount under its marine policy. Philippines First, as subrogated insurer, filed a complaint against Reputable and Malayan to recover the amount it paid to Wyeth. Reputable, in turn, filed a third-party complaint against Malayan seeking indemnification. Reputable argued that Malayan, as insurer, should be held liable for the full amount of the policy coverage. Malayan, on the other hand, invoked certain provisions in the SR Policy to limit its liability or seek the dismissal of the third-party complaint against it. The Regional Trial Court (RTC) ruled in favor of Philippines First and ordered Malayan to pay the full amount of the policy coverage. Malayan appealed to the Court of Appeals (CA), but its appeal was denied. Hence, this petition for review.

The case involves an insurance policy issued by defendant Malayan Insurance Company, Inc. (Malayan) in favor of plaintiff Philippines First Insurance Company, Inc. (Philippines First). The policy covered a shipment of cigarettes by plaintiff Reputable Forwarder Corporation (Reputable) from Manila to Cebu. While in transit, the shipment was allegedly damaged due to water. Reputable filed a claim with Malayan, seeking indemnification for the damages sustained. However, Malayan denied liability, stating that the policy only covered losses caused by perils of the sea and that water damage was not covered. Aggrieved, Reputable filed a complaint against Malayan and Philippines First before the Regional Trial Court (RTC) for damages. The RTC ruled in favor of Reputable, holding that the insurance policy covered water damage and ordered Malayan and Philippines First to pay the amount claimed. On appeal, the Court of Appeals (CA) reversed the RTC decision, stating that water damage was not covered by the policy. Reputable filed a motion for reconsideration, contending that the CA erred in its interpretation of Sections 5 and 12 of the insurance policy. Reputable also argued that if Malayan is found liable, then Philippines First should be held solidarily liable for the amount due. The CA denied the motion for reconsideration, prompting Reputable to file a petition for review before the Supreme Court.

ISSUES:

1. Whether Reputable is a private carrier or a common carrier.

2. Whether Reputable is bound by the terms of the contract of carriage.

3. Whether the "other insurance" clause and the "over insurance" clause in Malayan's SR Policy are applicable.

4. Whether Section 5 or Section 12 of the SR policy is applicable in this case.

5. Whether there is double insurance.

6. Whether or not there is double insurance in this case.

7. Whether or not Section 5 or Section 12 of the Special Risk Policy can be applied.

8. Whether or not Reputable is solidarily liable with Malayan.

RULING:

1. Reputable is a private carrier. The Supreme Court agrees with the lower courts that Reputable is a private carrier based on the facts, prevailing law, and jurisprudence. The alleged judicial admission made by Philippines First, a party not in a position to make such a pronouncement, is not conclusive against Reputable. Reputable's own admission and the unrebutted testimony of its Vice President further support the finding that it operates as a private/special carrier.

2. Reputable is bound by the terms of the contract of carriage. As a private carrier, Reputable's obligations are dictated by the stipulations of the contract it entered into, as long as those stipulations are not contrary to law, morals, good customs, public order, or public policy.

3. The "other insurance" clause and the "over insurance" clause in Malayan's SR Policy are not applicable. The CA ruled that the two provisions are in direct conflict with each other. Since Section 5 absolves Malayan in cases where there is sufficient other insurance to cover the loss, and Section 12 provides for pro-rata contribution between insurers, the CA held that these provisions should not be applied in this case.

4. Section 5 does not apply in this case because it pertains to the other insurance clause which is not applicable if the total insurance in force is not more than a certain amount. Section 12 does not apply either because it refers to double insurance and there is no double insurance in this case.

5. There is no double insurance in this case because the Marine Policy and the SR Policy were issued to two different entities, Wyeth and Reputable, respectively. The interests of Wyeth and Reputable are also different.

6. There is no double insurance in this case, as the insurance policies were issued to two different entities with distinct insurable interests.

7. Neither Section 5 nor Section 12 of the Special Risk Policy can be applied, as they do not apply in the absence of double insurance.

8. Reputable is not solidarily liable with Malayan, as their liabilities arise from different obligations - Malayan's liability is based on the Special Risk Policy, while Reputable's liability is based on the contract of carriage.

PRINCIPLES:

• The nature of a carrier, whether private or common, is determined based on the facts and prevailing law. Judicial admissions made by a party not in a position to make a pronouncement on the carrier's nature are not binding against the carrier.

• The obligations and liability of a private carrier are governed by the terms of the contract of carriage, as long as those terms are not contrary to law, morals, good customs, public order, or public policy.

• Provisions in an insurance policy may not be applicable if they are in direct conflict with each other.

• The intention of the parties in interpreting an insurance contract should be given effect.

• Section 5 is an other insurance clause and Section 12 is an over insurance clause.

• The prohibition of the other insurance clause applies only in case of double insurance.

• Double insurance exists when the same person is insured by several insurers separately in respect to the same subject and interest, and there is identity of subject matter, interest insured, and risk or peril insured against.

• Indemnity and liability insurance policies should be construed in favor of the insured, and any ambiguity in the policy should be resolved against the insurer.

• Solidary liability exists only when it is expressly stated in the obligation, provided by law, or required by the nature of the obligation.