International Container Terminal vs. FGU Insurance Co.

556 SCRA 194

Facts:

Herein respondent is the insurer of 14 cardboards 400 kilograms of silver nitrate with
Republic Asahi Glass Corporation. Said cargo was transported from Germany to Manila, the
port of discharge, with herein petitioner the arrastre contractor.
When the cargo was claimed however, petitioner cannot find the same in its storage
area. As per investigation of the NBI and AAREMA Marine and Cargo Surveyors, Inc, it was
found that the cargo was lost while in petitioners custody.
As insurer, FGU indemnified Asahi Corp the amount of the cargo. In turn, FGU sought
reimbursement from the petitioner but the latter refused.
In the action for damages in the RTC filed by FGU, herein petitioner was found liable.
This was affirmed by the CA when the RTC decision was appealed by International Container
Terminal.
Hence, petitioner sought appeal in the SC, contending that the marine insurance
policy covering the said cargo was no longer in effect during the loss of the cargo and that
only a marine risk note instead was shown by FGU to enforce petitioners liability, and that
the action should have been dismissed due to failure of FGU to present the marine insurance
policy as evidence.
Issue (1): Whether or not petitioner is still liable despite the fact that the the marine
insurance policy covering the cargo lost has already expired and only a marine risk note is
covering the same.
Held (1):
Petitioner is still liable because the marine risk note is sufficient to cover the loss
upon the goods.
Petitioner insists that Marine Open Policy No. MOP-12763 under which the shipment
was insured was no longer in force at the time it was loaded on board the Hannover Express
on June 10, 1994. FGU, on the other hand, insists that it was under Marine Risk Note No.
9798, which was executed on May 26, 1994, that said shipment was covered.
It must be emphasized that a marine risk note is not an insurance policy. It is only an
acknowledgment or declaration of the insurer confirming the specific shipment covered by
its marine open policy, the evaluation of the cargo and the chargeable premium. It is the
marine open policy which is the main insurance contract. In other words, the marine open
policy is the blanket insurance to be undertaken by FGU on all goods to be shipped by RAGC
during the existence of the contract, while the marine risk note specifies the particular
goods/shipment insured by FGU on that specific transaction, including the sum insured, the
shipment particulars as well as the premium paid for such shipment. In any event, as it
stands, it is evident that even prior to the cancellation by FGU of Marine Open Policy No.
MOP-12763 on June 10, 1994, it had already undertaken to insure the shipment of the 400
kgs. of silver nitrate, specially since RAGC had already paid the premium on the insurance of
said shipment. Despite the absence of the marine insurance policy extending the period of
coverage, the marine risk note clearly shows the agreement of the insurer and insured to
have the cargoes insured. Hence, there is a valid insurance contract between the parties.
Issue (2): Whether or not failure of the insurer to present insurance policy as evidence is a
ground for dismissal of the civil action for reimbursement.
Held (2):
The failure of insurer to present insurance policy as evidence is not a ground for
dismissal of the civil action for reimbursement.
Generally, jurisprudence has it that the marine insurance policy needs to be
presented in evidence before the trial court or even belatedly before the appellate court. In

Malayan Insurance Co., Inc. v. Regis Brokerage Corp., the Court stated that the presentation
of the marine insurance policy was necessary, as the issues raised therein arose from the
very existence of an insurance contract between Malayan Insurance and its consignee, ABB
Koppel, even prior to the loss of the shipment. In Wallem Philippines Shipping, Inc. v.
Prudential Guarantee and Assurance, Inc., the Court ruled that the insurance contract must
be presented in evidence in order to determine the extent of the coverage. This was also the
ruling of the Court in Home Insurance Corporation v. Court of Appeals.
However, there are admitted exceptions. In Delsan Transport Lines, Inc. v. Court of
Appeals, the Court stated that the presentation of the insurance policy was not fatal because
the loss of the cargo undoubtedly occurred while on board the petitioner's vessel, unlike in
Home Insurance in which the cargo passed through several stages with different parties and
it could not be determined when the damage to the cargo occurred, such that the insurer
should be liable for it.
There is no doubt that the loss of the cargo in the present case occurred while in
petitioner's custody. Moreover, there is no issue as regards the provisions of Marine Open
Policy No. MOP-12763, such that the presentation of the contract itself is necessary for
perusal, not to mention that its existence was already admitted by petitioner in open court.
And even though it was not offered in evidence, it still can be considered by the court as
long as they have been properly identified by testimony duly recorded and they have
themselves been incorporated in the records of the case.
UCPB General Insurance vs. Aboitiz Shipping Corporation

G.R. No. 168433

Facts:
San Miguel Corporation bought waste water treatment plant with accessories
from Super Max Engineering Enterprises from Taiwan. The goods, insured by herein
petitioner were transported from USA to Manila. From Manila, it was loaded into MV
Aboitiz Supercon, a ship owned by herein respondent, and was transported to Cebu.
Upon opening of the cargo by SMC, it was found that one of the electrical
motors was damaged. As such, UCPB General Insurance indemnified SMC, who
issued the former a subrogation form.
In a suit instituted by UCPB for reimbursement from Aboitiz and several other
respondents, the trial court decided favorably to the plaintiff. However, upon appeal
to CA, the said decision was reversed, on the ground that no formal notice of claim
by UCPB was made within 24 hours from the time SMC received the damaged
merchandise as provided under Article 366 of the Code of Commerce. Thus, the
right of action accruing in favor of UCPB has already prescribed.
In its appeal to the SC UCPB, on the other hand, contended that no formal
notice of claim is necessary since upon joint inspection of the parties of the
merchandise in Manila, the damage was already discovered, thus effecting
notification and dispensing the same.
Issue:
Whether or not a formal notice of claim is necessary before respondents can
be held liable for reimbursement.
Held:
A formal notice of claim is necessary to hold the respondent liable to the insurer.

Art. 366 of the Code of Commerce states:

Art. 366. Within twenty-four hours following the receipt of the

merchandise, the claim against the carrier for damage or average which
may be found therein upon opening the packages, may be made,
provided that the indications of the damage or average which gives rise to
the claim cannot be ascertained from the outside part of such packages,
in which case the claim shall be admitted only at the time of receipt.
After the periods mentioned have elapsed, or the transportation
charges have been paid, no claim shall be admitted against the carrier
with regard to the condition in which the goods transported were
delivered.
The law clearly requires that the claim for damage or average must be made
within 24 hours from receipt of the merchandise if, as in this case, damage cannot
be ascertained merely from the outside packaging of the cargo.
The requirement to give notice of loss or damage to the goods is not an
empty formalism. The fundamental reason or purpose of such a stipulation is not to
relieve the carrier from just liability, but reasonably to inform it that the shipment
has been damaged and that it is charged with liability therefor, and to give it an
opportunity to examine the nature and extent of the injury. This protects the carrier
by affording it an opportunity to make an investigation of a claim while the matter is
still fresh and easily investigated so as to safeguard itself from false and fraudulent
claims.
We have construed the 24-hour claim requirement as a condition precedent to the
accrual of a right of action against a carrier for loss of, or damage to, the goods. The
shipper or consignee must allege and prove the fulfillment of the condition.
Otherwise, no right of action against the carrier can accrue in favor of the former.
The shipment in this case was received by SMC on August 2, 1991. However,
as found by the Court of Appeals, the claims were dated October 30, 1991, more
than three (3) months from receipt of the shipment and, at that, even after the
extent of the loss had already been determined by SMCs surveyor. The claim was,
therefore, clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the
Code of Commerce.
Philippine First Insurance vs. Wallem Philippines Shipping
G.R. No. 165647
Facts:

A shipment of sodium sulphate anhydrous was loaded and shipped to Manila

Shanghai FarEast Ship Business Company for consignee LG Atkimson Export-Import, Inc.
Both the owner/ charterer of the ship and the shipper are acting through its agent in the
Philippines, Wallem Philippines, herein respondent.
Upon arrival and discharge of the cargo in Manila, the subject cargo were found to be
in bad condition, having sustained from spillages and losses.
Since the shipment was insured by herein plaintiff, consignee sought indemnity which
was approved and as a consequence of which, a subrogation receipt was issued to Philippine
First Insurance Company.
In the action for damages by herein plaintiff, herein respondent as the carrier, to
evade liability, contended that the loss was due to the wrong manner of handling of the
cargo by the arrestre service contractor and that its obligation does not extend to the proper
discharge of the cargo from the vessel.
Issue:

Whether or not carriers obligation extends to the proper discharge of the cargo from
the ship so as to hold it liable in cases of loss resulting from the cargos improper discharge.
Held:

The carriers obligation extends to the proper discharge of the cargo from the ship
and so it is liable to losses due to the improper way of handling of the cargo.

Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods
transported by them.
For marine vessels, Article 619 of the Code of Commerce provides that the ship
captain is liable for the cargo from the time it is turned over to him at the dock or
afloat alongside the vessel at the port of loading, until he delivers it on the shore or
on the discharging wharf at the port of unloading, unless agreed otherwise. In
Standard Oil Co. of New York v. Lopez Castelo, the Court interpreted the ship
captains liability as ultimately that of the ship owner by regarding the captain as the
representative of the ship owner.
Lastly, Section 2 of the COGSA provides that under every contract of carriage
of goods by sea, the carrier in relation to the loading, handling, stowage, carriage,
custody, care, and discharge of such goods, shall be subject to the responsibilities
and liabilities and entitled to the rights and immunities set forth in the Act. 1[30]
Section 3 (2) thereof then states that among the carriers responsibilities are to
properly and carefully load, handle, stow, carry, keep, care for, and discharge the
goods carried.