Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83083:57069&catid=1584&Itemid=566
Timestamp: 2019-04-19 11:05:08+00:00

Document:
G.R. No. 185964, June 16, 2014 - ASIAN TERMINALS, INC., Petitioner, v. FIRST LEPANTO-TAISHO INSURANCE CORPORATION, Respondent.
ASIAN TERMINALS, INC., Petitioner, v. FIRST LEPANTO-TAISHO INSURANCE CORPORATION, Respondent.
On July 6, 1996,3 3,000 bags of sodium tripolyphosphate contained in 100 plain jumbo bags complete and in good condition were loaded and received on board M/V “Da Feng” owned by China Ocean Shipping Co. (COSCO) in favor of consignee, Grand Asian Sales, Inc. (GASI). Based on a Certificate of Insurance4 dated August 24, 1995, it appears that the shipment was insured against all risks by GASI with FIRST LEPANTO for P7,959,550.50 under Marine Open Policy No. 0123.
The shipment arrived in Manila on July 18, 1996 and was discharged into the possession and custody of ATI, a domestic corporation engaged in arrastre business. The shipment remained for quite some time at ATI’s storage area until it was withdrawn by broker, Proven Customs Brokerage Corporation (PROVEN), on August 8 and 9, 1996 for delivery to the consignee.
Upon receipt of the shipment,5 GASI subjected the same to inspection and found that the delivered goods incurred shortages of 8,600 kilograms and spillage of 3,315 kg for a total of 11,915 kg of loss/damage valued at P166,772.41.
Thereafter, GASI executed a Release of Claim11 discharging FIRST LEPANTO from any and all liabilities pertaining to the lost/damaged shipment and subrogating it to all the rights of recovery and claims the former may have against any person or corporation in relation to the lost/damaged shipment.
As such subrogee, FIRST LEPANTO demanded from COSCO, its shipping agency in the Philippines, SMITH BELL, PROVEN and ATI, reimbursement of the amount it paid to GASI. When FIRST LEPANTO’s demands were not heeded, it filed on May 29, 1997 a Complaint12 for sum of money before the Metropolitan Trial Court (MeTC) of Manila, Branch 3. FIRST LEPANTO sought that it be reimbursed the amount of P166,772.41, twenty-five percent (25%) thereof as attorney’s fees, and costs of suit.
ATI denied liability for the lost/damaged shipment and claimed that it exercised due diligence and care in handling the same.13 ATI averred that upon arrival of the shipment, SMITH BELL requested for its inspection14 and it was discovered that one jumbo bag thereof sustained loss/damage while in the custody of COSCO as evidenced by Turn Over Survey of Bad Order Cargo No. 47890 dated August 6, 199615 jointly executed by the respective representatives of ATI and COSCO. During the withdrawal of the shipment by PROVEN from ATI’s warehouse, the entire shipment was re-examined and it was found to be exactly in the same condition as when it was turned over to ATI such that one jumbo bag was damaged. To bolster this claim, ATI submitted Request for Bad Order Survey No. 40622 dated August 9, 199616 jointly executed by the respective representatives of ATI and PROVEN. ATI also submitted various Cargo Gate Passes17 showing that PROVEN was able to completely withdraw all the shipment from ATI’s warehouse in good order condition except for that one damaged jumbo bag.
WHEREFORE, in light of the foregoing, judgment is hereby rendered DISMISSING the instant case for failure of [FIRST LEPANTO] to sufficiently establish its cause of action against [ATI, COSCO, SMITH BELL, and PROVEN].
The counterclaims of [ATI and PROVEN] are likewise dismissed for lack of legal basis.
On appeal, the Regional Trial Court (RTC) reversed the MeTC’s findings. In its Decision25 dated January 26, 2007, the RTC of Manila, Branch 21, in Civil Case No. 06-116237, rejected the contentions of ATI upon its observation that the same is belied by its very own documentary evidence. The RTC remarked that, if, as alleged by ATI, one jumbo bag was already in bad order condition upon its receipt of the shipment from COSCO on July 18, 1996, then how come that the Request for Bad Order Survey and the Turn Over Survey of Bad Order Cargo were prepared only weeks thereafter or on August 9, 1996 and August 6, 1996, respectively. ATI was adjudged unable to prove that it exercised due diligence while in custody of the shipment and hence, negligent and should be held liable for the damages caused to GASI which, in turn, is subrogated by FIRST LEPANTO.
WHEREFORE, in light of the foregoing, the judgment on appeal is hereby REVERSED.
[ATI] is hereby ordered to reimburse [FIRST LEPANTO] the amount of [P]165,772.40 with legal interest until fully paid, to pay [FIRST LEPANTO] 10% of the amount due the latter as and for attorney’s fees plus the costs of suit.
The complaint against [COSCO/SMITH BELL and PROVEN] are DISMISSED for lack of evidence against them. The counterclaim and cross[-]claim of [ATI] are likewise DISMISSED for lack of merit.
ATI sought recourse with the CA challenging the RTC’s finding that FIRST LEPANTO was validly subrogated to the rights of GASI with respect to the lost/damaged shipment. ATI argued that there was no valid subrogation because FIRST LEPANTO failed to present a valid, existing and enforceable Marine Open Policy or insurance contract. ATI reasoned that the Certificate of Insurance or Marine Cover Note submitted by FIRST LEPANTO as evidence is not the same as an actual insurance contract.
In its Decision27 dated October 10, 2008, the CA dismissed the appeal and held that the Release of Claim and the Certificate of Insurance presented by FIRST LEPANTO sufficiently established its relationship with the consignee and that upon proof of payment of the latter’s claim for damages, FIRST LEPANTO was subrogated to its rights against those liable for the lost/damaged shipment.
WHEREFORE, premises considered, the assailed Decision is hereby AFFIRMED and the instant petition is DENIED for lack of merit.
It must be emphasized that factual questions pertaining to ATI’s liability for the loss/damage sustained by GASI has already been settled in the uniform factual findings of the RTC and the CA that: ATI failed to prove by preponderance of evidence that it exercised due diligence in handling the shipment.
None of these instances, however, are present in this case. Moreover, it is unmistakable that ATI has already conceded to the factual findings of RTC and CA adjudging it liable for the shipment’s loss/damage considering the absence of arguments pertaining to such issue in the petition at bar.
These notwithstanding, the Court scrutinized the records of the case and found that indeed, ATI is liable as the arrastre operator for the lost/damaged portion of the shipment.
ATI failed to discharge its burden of proof. Instead, it insisted on shifting the blame to COSCO on the basis of the Request for Bad Order Survey dated August 9, 1996 purportedly showing that when ATI received the shipment, one jumbo bag thereof was already in damaged condition.
The RTC and CA were both correct in concluding that ATI’s contention was improbable and illogical. As judiciously discerned by the courts a quo, the date of the document was too distant from the date when the shipment was actually received by ATI from COSCO on July 18, 1996.
In fact, what the document established is that when the loss/damage was discovered, the shipment has been in ATI’s custody for at least two weeks. This circumstance, coupled with the undisputed declaration of PROVEN’s witnesses that while the shipment was in ATI’s custody, it was left in an open area exposed to the elements, thieves and vandals,36 all generate the conclusion that ATI failed to exercise due care and diligence while the subject shipment was under its custody, control and possession as arrastre operator.
To prove the exercise of diligence in handling the subject cargoes, an arrastre operator must do more than merely show the possibility that some other party could be responsible for the loss or the damage.37 It must prove that it used all reasonable means to handle and store the shipment with due care and diligence including safeguarding it from weather elements, thieves or vandals.
It is conspicuous from the records that ATI put in issue the submission of the insurance contract for the first time before the CA. Despite opportunity to study FIRST LEPANTO’s complaint before the MeTC, ATI failed to allege in its answer the necessity of the insurance contract. Neither was the same considered during pre-trial as one of the decisive matters in the case. Further, ATI never challenged the relevancy or materiality of the Certificate of Insurance presented by FIRST LEPANTO as evidence during trial as proof of its right to be subrogated in the consignee’s stead.
While the Court may adopt a liberal stance and relax the rule, no reasonable explanation, however, was introduced to justify ATI’s failure to timely question the basis of FIRST LEPANTO’s rights as a subrogee.
The fact that the CA took cognizance of and resolved the said issue did not cure or ratify ATI’s faux pas. “[A] judgment that goes beyond the issues and purports to adjudicate something on which the court did not hear the parties, is not only irregular but also extrajudicial and invalid.”41 Thus, for resolving an issue not framed during the pre-trial and on which the parties were not heard during the trial, that portion of the CA’s judgment discussing the necessity of presenting an insurance contract was erroneous.
At any rate, the non-presentation of the insurance contract is not fatal to FIRST LEPANTO’s right to collect reimbursement as the subrogee of GASI.
Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrong-doer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.
Nevertheless, the rule is not inflexible. In certain instances, the Court has admitted exceptions by declaring that a marine insurance policy is dispensable evidence in reimbursement claims instituted by the insurer.
Based on the attendant facts of the instant case, the application of the exception is warranted. As discussed above, it is already settled that the loss/damage to the GASI’s shipment occurred while they were in ATI’s custody, possession and control as arrastre operator. Verily, the Certificate of Insurance53 and the Release of Claim54 presented as evidence sufficiently established FIRST LEPANTO’s right to collect reimbursement as the subrogee of the consignee, GASI.
In the present case, ATI was notified of the loss/damage to the subject shipment as early as August 9, 1996 thru a Request for Bad Order Survey60 jointly prepared by the consignee’s broker, PROVEN, and the representatives of ATI. For having submitted a provisional claim, GASI is thus deemed to have substantially complied with the notice requirement to the arrastre operator notwithstanding that a formal claim was sent to the latter only on September 27, 1996. ATI was not deprived the best opportunity to probe immediately the veracity of such claims. Verily then, GASI, thru its subrogee FIRST LEPANTO, is not barred by filing the herein action in court.
ATI cannot rely on the ruling in Prudential61 because the consignee therein made no provisional claim thru request for bad order survey and instead filed a claim for the first time after four months from receipt of the shipment.
All told, ATI is liable to pay FIRST LEPANTO the amount of the P165,772.40 representing the insurance indemnity paid by the latter to GASI. Pursuant to Nacar v. Gallery Frames,62 the said amount shall earn a legal interest at the rate of six percent (6%) per annum from the date of finality of this judgment until its full satisfaction.
WHEREFORE, premises considered, the petition is hereby DENIED. The Decision dated October 10, 2008 of the Court of Appeals in CA-G.R. SP No. 99021 is hereby AFFIRMED insofar as it adjudged liable and ordered Asian Terminals, Inc., to pay First Lepanto-Taisho Insurance Corp., the amount of P165,772.40, ten percent (10%) thereof as and for attorney’s fees, plus costs of suit. The said amount shall earn legal interest at the rate of six percent (6%) per annum from the date of finality of this judgment until its full satisfaction.
2 Penned by Associate Justice Marlene Gonzales-Sison, with Associate Justices Juan Q. Enriquez, Jr. and Isaias P. Dicdican, concurring; id. at 41-51.
20 Per the findings of the Regional Trial Court; id. at 215.
21 FIRST LEPANTO’s Omnibus Motion dated January 16, 2001, id. at 72-74.
22 MeTC Order dated July 23, 2001, id. 75-76.
23 Issued by Presiding Judge Juan O. Bermejo, Jr.; id. at 155-162.
25 Issued by Judge Amor A. Reyes; id. at 213-218.
30 445 Phil. 136 (2003).
31 377 Phil. 1082 (1999).
32Asian Terminals, Inc. v. Malayan Insurance Co., Inc., G.R. No. 171406, April 4, 2011, 647 SCRA 111, 126.
34 Asian Terminals, Inc. v. Daehan Fire and Marine Insurance Co., Ltd., G.R. No. 171194, February 4, 2010, 611 SCRA 555, 562-563.
36 Paragraph 12 of PROVEN’s Memorandum before the MeTC, rollo, p. 152.
37 Supra note 34, at 563-564.
38 Supra note 32, at 122.
39 G.R. No. 169380, November 26, 2012, 686 SCRA 323.
41Commission on Internal Revenue v. Mirant Pagbilao Corporation, 535 Phil. 481, 490 (2006).
42 Loadmasters Customs Services, Inc. v. Glodel Brokerage Corporation, G.R. No. 179446, January 10, 2011, 639 SCRA 69, 78-79.
43 563 Phil. 1003 (2007).
45 G.R. No. 109293, August 18, 1993, 225 SCRA 411.
49 420 Phil. 824 (2001).
51 578 Phil. 751 (2008).
55PHILAMGEN v. CA, 339 Phil. 455, 466 (1997).
58 G.R. No. 180784, February 15, 2012, 666 SCRA 226.
62 G.R. No. 189871, August 13, 2013, 703 SCRA 439.
63 See New World International Development (Phils.), Inc. v. NYK-FilJapan Shipping Corp., G.R. No. 171468, August 24, 2011, 656 SCRA 129, 138-139.

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