Eastern Shipping Lines, Inc. vs. Prudential Guarantee G.R. No.

174116
(2009)
September 11, 2009 MENDOZA, J.:
TOPIC IN SYLLABUS: Guidelines on Claims Settlement Subrogation
SUMMARY: Prudential Guarantee paid Nissan, allegedly on a marine open policy, for damage to the cargo
shipped on a vessel owned by Eastern Shipping. Prudential Guarantee sued Eastern Shipping, but during trial
it presented, in lieu of the marine open policy, a marine risk note and a subrogation receipt.

[DIVINA, p. 112] The insurer, upon happening of the risk insured against and after payment to the insured, is
subrogated to the rights and cause of action of the latter. As such, the insurer has the right to seek reimbursement
for all the expenses paid. However, in a contract of carriage involving he shipment of knock-down auto parts of
Nissan motor vehicles which were allegedly lost and destroyed, the insurer was not properly subrogated because
of the non-presentation of any marine insurance policy. The submission of a marine risk note instead of the
insurance policy doesnt satisfy the requirement for subrogation. The marine risk note is not an insurance policy.
It is only an acknowledgement or declaration of the insurer confirming the specific shipment covered by its marine
open policy, the evaluation of the cargo, and the chargeable premium.

FACTS:
56 cases of completely knock-down auto parts of Nissan motor vehicles were loaded on board the M/V
Apollo Tujuh at Nagoya, Japan to be shipped to Manila.
o Nissan was the consignee; Eastern Shipping owned and operated the M/V Apollo Tujuh.
At Nissans warehouse, the surveyor t found missing items as well as broken items, the result of pilferage
and improper handling while in the custody of the vessel and/or the arrastre contractors.
o Prudential Guarantee, as insurer of the shipment against all risks, paid Nissan the total amount it
had demanded from Eastern Shipping and the arrastre operator.
Prudential Guarantee sued Eastern Shipping and the arrastre operator for reimbursement
RTC: decided in favor of Prudential Guarantee.
CA: GRANTED the appeal of the arrastre operator and held Eastern Shipping solely liable the CA ruled
that the right of subrogation accrues upon payment by the insurer of the insurance claim and that the
presentation of the insurance policy was NOT indispensable before the insurer could recover in the
exercise of its subrogatory right.

ISSUES:
1. Was Prudential Guarantee properly subrogated, notwithstanding the non-presentation of the
marine insurance policy? (Note: the documents submitted in lieu of the marine insurance policy
were a marine cargo risk note and a subrogation receipt.)

HELD: (Petition GRANTED)

1. NO. Eastern Shipping was not remiss when it openly objected to the non-presentation of the Marine
Insurance Policy.
SEE: Summary the contract of insurance must be presented in evidence to indicate the extent of its
coverage.
o It is the marine open policy which is the main insurance contract.
The cargoes were already on board the carrier as early as November 8, 1995 and that the same arrived
at the port of Manila on November 16, 1995 the Marine Cargo Risk Note was, however, issued only on
November 16, 1995.
o That the date on the Marine Cargo Risk Note bears the same date as that of the arrival of the
vessel at the port of Manila means that the cargoes had not been specifically covered by any
particular insurance at the time of transit.
In sum, without the marine insurance policy, it would be impossible to know the following:
o first, the specifics of the "Institute Cargo Clauses A and other terms and conditions per Marine
Open Policy-86-168" as alluded to in the Marine Risk Note;
o second, if the said terms and conditions were actually complied with before respondent paid
Nissan's claim.

DODOT CASE #758