Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=53042:gr-181300-2009&catid=1522&Itemid=566
Timestamp: 2019-04-26 11:58:51+00:00

Document:
G.R. No. 181300 - Malayan Insurance Co., Inc. v. Jardine Davies Transport Services, Inc. and Asian Terminals, Inc.
MALAYAN INSURANCE CO., INC., Petitioner, v. JARDINE DAVIES TRANSPORT SERVICES, INC. and ASIAN TERMINALS, INC., Respondents.
Upon arrival of the MV Hoegh in Manila on September 5, 1994, the stevedores of respondent Asian Terminals, Inc. (ATI) undertook discharging operations of the shipment or cargo from the vessel directly onto the steel barges of Creed Customs Brokerage, Inc. (CCBI), which barges were later towed upriver and arrived at the consignee LMG's storage area in Pasig, Manila.
The consignee's hired workers thereupon received and unloaded the cargo with the use of an overhead crane and clamshell grab.
During the discharge of the cargo "ex vessel" onto CCBI's barges, SMS Average Surveyors and Adjusters, Inc. (SMS), LMG's appointed surveyors, reported the Outturn Quantity/Weight of the cargo at 6,247.199 Metric Tons (MT),2 hence, given that as indicated in the Bill of Lading the weight was 6,599.23 MT, there was a shortage of 352.031 MT.
Once on board the barges, the weight of the cargo was again taken and recorded at 6,122.023 MT,3 thus reflecting a shortage of 477.207 MT.
The weight of the cargo, taken a third time upon discharge at LMG's storage area, was recorded at 6,206.748 MT4 to thus reflect a shortage of 392.482 MT.
The cargo having been insured, LMG filed a claim for the value of shortage of cargo with its insurer Malayan Insurance Co., Inc., (petitioner) which paid LMG the sum of P1,144,108.43 in February 19955 and was accordingly subrogated to the rights of LMG.
ATI filed its Answer with Compulsory Counterclaim and Crossclaim11 denying any liability for the value of the loss of part of the cargo, claiming that it had exercised due care and diligence in the discharge of the cargo from the vessel onto CCBI's barges; that its participation was limited to supplying the stevedores who undertook the discharging operations from the vessel to the barges; and that any loss to the cargo was sustained either prior to its discharge from the vessel or due to the negligence of CCBI.
Jardine Davies likewise filed its Answer with Compulsory Counterclaim and Crossclaim12 claiming that it was not the shipagent of the MV Hoegh but a mere commercial agent; that any loss sustained by the cargo was due to the inherent vice or defect of the goods and unrecovered spillages, among other things; and that the complaint failed to state a cause of action as there was no valid subrogation.
(d) Defendant Creed Customs Brokerage, Inc. and the unknown Owner and Unknown Shipagent of M/V "Hoegh Merchant" are ordered DROPPED from the complaint as the court has not acquired jurisdiction over their persons.
It must be emphasized that the loss occurred while the cargo was in the possession, custody and control of the defendants. Absent any proof of exercise of due diligence required by law in the vigilance over the cargo, defendants are presumed to be at fault or to have acted negligently. Such presumption, the defendants failed to overturn to the satisfaction of this court.
Moreover, defendants cannot escape liability by raising as a defense any defect in the contract of insurance as they are not privies thereto. Besides, whatever defect found therein is deemed to have been waived by the subsequent payment made by the plaintiff of consignee's claim (Compania Maritima v. Insurance Co. of North America, 12 SCRA 213).
On respondents' appeal, the Court of Appeals, by Decision of January 14, 2008,15 vacated the trial court's decision and dismissed the complaint. It, however, upheld the dropping from the complaint of CCBI and the "Unknown Owner and Unknown Shipagent" of M/V Hoegh.
WHEREFORE, the assailed Decision is MODIFIED, in that portions (a), (b), and (c) of the same are VACATED and SET ASIDE. Accordingly, judgment is hereby rendered DISMISSING the complaint against Asian Terminals, Inc. and Jardine Davies Transport Services, Inc. in Civil Case No. 95-75224. Costs against Malayan Insurance Corp., Inc.
In sustaining respondents' appeal, the appellate court held that petitioner failed to establish the fact of shortage in the cargo, doubts having arisen from the disparity in quantity as stated the bill of lading (6,559.23 MT) and the shipment invoice17 (6,477.81 MT), as well as the discrepancy in quantity as reflected in SMS's Report of Survey18 and the Comparison of Outturns19 incorporated therein; that the same Report shows that inaccuracies or errors in the manner of/or equipment used in measuring the weight of the cargo might have resulted in variances in the outturn quantity; and that the testimonies of petitioner's witnesses, Eutiquiano Patiag20 and Emmanuel Gotladera,21 relative to the contents of the bill of lading may not be credited since they were not present at the actual weighing and loading of the cargo.
In fine, the appellate court held that the presumption accorded to a bill of lading - as prima facie evidence of the goods described therein, had been sufficiently rebutted.
The appellate court went on to note that petitioner also failed to prove that respondent Jardine Davies was the local shipagent of the MV Hoegh given that such vessel was sub-chartered by LMG's shipper Petrosul from Jardine Davies' principal Pacific Commerce Line (PCL), thereby making Petrosul the carrier which undertook to transport LMG's cargo.
The appellate court thus concluded that liability could not be imputed to Jardine Davies, its principal PCL not being the carrier of the cargo and no privity of contract existed between it (Jardine Davies) and Petrosul.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT (THE) PRESUMPTION ACCORDED ON THE BILL OF LADING HAS BEEN REBUTTED.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT MALAYAN IS NOT ENTITLED TO REIMBURSEMENT SINCE THERE WAS NO VALID SUBROGATION.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT ASIAN TERMINALS, INC. IS NOT SOLIDARILY LIABLE WITH DEFENDANT JARDINE DAVIES.
The issue boils down to whether petitioner discharged its burden of proving by clear, competent and convincing evidence that there was shortage in the shipment of yellow crude sulphur to the consignee LMG.
Before proceeding to the substantive issues, the Court deems it fit to first resolve a procedural issue raised by respondents in their respective Comments27 - that the present petition seeks to pass upon questions of fact which is not allowed in a certiorari petition whose province is confined to questions of law.
The presumption that the bill of lading, which petitioner relies upon to support its claim for restitution, constitutes prima facie evidence of the goods therein described was correctly deemed by the appellate court to have been rebutted in light of abundant evidence casting doubts on its veracity.
The bill of lading carried an added clause - the shipment's weight, measure, quantity, quality, condition, contents and value unknown." Evidently, the weight of the cargo could not be gauged from the bill of lading.
In the absence of clear, convincing and competent evidence to prove that the cargo indeed weighed, albeit the Bill of Lading qualified it by the phrase "said to weigh," 6,599.23 MT at the port of origin when it was loaded onto the MV Hoegh, the fact of loss or shortage in the cargo upon its arrival in Manila cannot be definitively established. The legal basis for attributing liability to either of the respondents is thus sorely wanting.
Petitioner points out, however, that the shipment was covered not only by the Marine Risk Note but also by Open Marine Insurance Policy which, it explains, means that the value of the thing insured has not been agreed upon but left to be ascertained in the event of loss and, therefore, covered by a continuing insurance long before the cargo even loaded on board; and that Jardine Davies cannot set up any defect in the insurance policy as a defense since it is not privy to the contract of insurance between it (petitioner) and LMG.
Given that it is respondents who stand to be prejudiced by any claims for restitution arising from petitioner's right of subrogation under the open policy, it is, at best specious to insist that they are barred from invoking any contractual defect as a defense under the pretext that they were not privy to the insurance contract.
Recall that petitioner's main cause of action under the complaint was based on both the Marine Risk Note and the Open Policy. The Subrogation Receipt37 clearly states that the amount paid was in full settlement of LMG's claim under petitioner's Marine Risk Note Number RN-001-17551. The Marine Risk Note, however, is not the insurance policy. It merely constitutes an acknowledgment or declaration of the shipper about the specific shipment covered by the marine insurance policy, the evaluation of the cargo and the chargeable premium.38 The marine open policy is the blanket insurance to be undertaken by the insurer on all goods to be shipped by the consignee during the existence of the contract.
Apart from not being a legal source of subrogation, the Marine Risk Note is invalid for, as earlier stated, it was issued only on July 20, 1994 or after the main insurance contract had already lapsed (by the end of December 1993), and the insurance premium on this risk note was paid only on October 6, 199439 or a month after the shipment had already arrived in Manila, a peculiarity that none of petitioner's witnesses has endeavored to explain.
Petitioner's marine insurance policy explicitly states under its effectivity clause that it shall cover "all shipments effective January 10, 1993 sailings and all shipments made thereafter until December 31, 1993 sailings."40 Coverage had, therefore, expired almost seven (7) months prior to the loading of the shipment on July 23, 1994.
Petitioner can take no refuge in its claim that the Endorsement dated December 29, 199341 proves that the subject insurance policy was amended or renewed. The said Endorsement was never adverted to in the complaint filed before the trial court, its existence coming to light only at the close of the testimony on cross of petitioner's witness Emmanuel Gotladera on the expired marine insurance policy.42 In fact, said witness did not identify the signatory to the Endorsement nor on its genuineness and due execution, thus rendering his testimony thereon as mere hearsay.
A final note. It bears stressing that there is nothing in the records showing that ATI was negligent in its handling of the cargo when its stevedores discharged the same from the vessel directly onto the steel barges of CCBI.
Contrary to the trial court's findings, ATI was never in custody or possession of the shipment, its participation having been limited to where "the stevedores of Asian Terminals, Inc. (ATI) undertook the discharging operations of the shipment ex vessel to barges thru the use of vessel's cargo gears, and clamshell/ grab,"43 a fact confirmed by petitioner's own witness Eutiquiano Patiag.
WHEREFORE, the assailed Court of Appeals January 14, 2008 Decision in connection with CA-G.R. CV No. 84139 is AFFIRMED.
* Additional member per Special Order No. 691 dated September 4, 2009.
2 Vide Report of Survey, Exhibits "H-2"; id. at 189.
3 Id., Exhibit "H-3"; id. at 190.
4 Id., Exhibit "H-5"; id. at 192.
5 Based on the shortage of 392.482 MT.
6 Exhibit "A"; records, p. 175.
7 Exhibit "B"; id. at 176-181.
8 Vide Subrogation Receipt, Exhibit "F"; id. at 185.
10 Vide October 21, 1996 Order; id. at 79-80.
13 Vide note 2 at 405-406.
15 Penned by Justice Normandie B. Pizarro, with the concurrence of Justices Edgardo P. Cruz and Fernanda Lampas Peralta; CA rollo, pp. 171-173.
17 Invoice No. 114171, Exhibit "G;" records, p.186.
18 Exhibit "H"; id. at 187-193.
19 Exhibit "4"; id. at 192.
20 A surveyor employed with SM Santos Adjusters and Surveyors (formerly SMS Average Surveyors and Adjusters, Inc.).
21 A Claims Processor for petitioner Malayan Insurance.
22 Vide note 9 at 179.
23 Exhibits "K" and "M," dated December 8, 1994 and December 29, 1993, respectively; id. at 196 and 198.
24 The phrase was erroneously stated in the appellate court's decision as "or a month after the loading of the cargo."
26 Rollo, p. 28. Bracketed insertion supplied.
27 Jardine's and ATI's Comment; id. at 75-83 and 85-96, respectively.
28 International Container Services, Inc. v. FGU Insurance Corporation, G.R. No. 161539, June 27, 2008, 556 SCRA 194, 199 citing Philippine Charter Insurance Corporation v. Unknown Owner of the Vessel M/V "National Honor, G.R. No. 161833.
29 Wallem Philippines Shipping, Inc. v. Prudential Guarantee & Assurance, Inc., G.R. No. 152158, February 7, 2003, 397 SCRA 158, 167.
30 Vide Petition, rollo, p. 31.
31 Wallem Philippines Shipping, Inc. v. Prudential Guarantee & Assurance, Inc., supra note 29.
34 Exhibits "H-5" to "H-6"; records, pp. 192-193.
35 Malayan Insurance Co., Inc. v. Regis Brokerage Corp., G.R. No. 172156, November 23, 2007, 538 SCRA 681, 690.
36 Malayan Insurance Co., Inc. v. Regis Brokerage Corp.; Wallem Philippines Shipping, Inc., v. Prudential Guarantee and Assurance, Inc., supra notes 36 and 29 respectively.
38 Aboitiz Shipping Corporation v. Philippine American General Insurance, Co., G.R. No. 77530, October 5, 1989, 178 SCRA 357, 360.
39 Vide Exhibit "I"; records, p. 194.
40 Exhibit "B-3-b"; id. at 179.
42 TSN September 1, 2000, pp. 10-12.
43 Vide Report of Survey at note 18; records, p. 188.
44 Vide TSN January 26, 2001 (Eutiquiano Patiag), pp. 5-8.

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