EASTERN SHIPPI

NG LI NES, I
NC.,Pet
it
ioner
,v er
sus PRUDENTIAL GUARANTEE AND
ASSURANCE,
INC.,
Respondent
.G.R.No.174116September11,
2009

FACTS:

OnNov ember8,1995,f i
fty-
sixcasesofcompl et
elyknock-
downautopart
sofNi ssanmot or
vehicl
e( cargoes)wer eloadedonboar dM/ VApol l
oTujuh(car
ri
er)atNagoya,Japan,tobe
shippedt oMani l
a.Theshipmentwasconsi gnedtoNissanMotorPhi
li
ppi
nes,I
nc.(Nissan)and
wascov er
edbyBi llofLadingNo.NMA- 1.
[4]Thecarri
erwasownedandoperatedbypet it
ioner
EasternShippingLines,I
nc.

OnNovember16,1995,t hecarri
erarri
vedatt hepor tofManil
a.OnNov ember22,1995,t
he
shi
pmentwasthendischargedfrom t
hev esselontothecust
odyofthearrastr
eoper
ator
,Asi
an
Ter
minal
s,I
nc.(
ATI)
,compl eteandingoodcondi t
ion,
exceptforf
ourcases.[
5]

OnNovember24t
o28,1995,
theshi
pmentwaswi t
hdrawnbySeafr
ontCust
omsandBr
oker
age
fr
om t
hepi
eranddel
i
ver
edtothewarehouseofNi
ssaninQuezonCi
ty.
[6]

A sur veyoft he shi

pmentwas t hen conducted byTan-Gaute Adj ust
mentCompany ,Inc.
(surveyor)atNissanswarehouse.OnJanuar y16,1996,t
hesurveyorsubmi t
tedi
tsreport
[7]with
af i
ndingt hatther
ewer eshort(missing)it
emsi nCasesNos.10/ A26/ T3Kand10/ A26/7Kand
broken/ scrat
chedandbr okenitemsi nCaseNo.10/ A26/
70K;andt hat(i)
n(i
ts)opinion,t
he
shortageanddamagesust ainedbyt heshi pmentwereduet opil
ferageandi mproperhandli
ng,
respectivel
ywhi l
einthecustodyofthev esseland/orArr
ast
reCont r
actors.
[8]

Asa resul
t,Nissan demanded t
hesum ofP1, 047,
298.
34[9]r
epr
esent
ing thecostofthe
damagessustai
nedbyt heshipmentfrom pet
it
ioner
,theownerofthev essel
,andATI
,the
arr
ast
reoper
ator.However
,thedemandswerenotheeded.
[10]

OnAugust21,1996,asi
nsureroftheshi
pmentagainstal
lri
sksperMar i
neOpenPol
i
cyNo.86-
168andMarineCargoRi
skNot eNo.3921/95,
respondentPrudent
ialGuar
ant
eeandAssur
ance
I
nc.pai
dNissanthesum ofP1,047,
298.
34.

OnOct ober1,1996,respondentsuedpet it
ionerandATIforrei
mbur sementoft heamountit
pai
dt oNissanbeforetheRegi onalTri
alCour t(RTC)ofMakat
iCity,Branch148,docket
edas
Civ
ilCaseNo.96- 1665,enti
tl
edPr udent
ialGuaranteeandAssurance,Inc.v.East
ernShi
ppi
ng
Li
nes,Inc.Respondentcl
aimedt hatitwassubr ogatedt
otheri
ghtsofNi ssanbyv i
rt
ueofsai
d
payment

rt
cr endered a deci
si
on infavorofPrudenti
alGuarant
ee.CA af
fi
rmed t
he deci
sion but
exonerat
edATI,render
ingEast
ernShi
ppi
ngsolel
yli
abl
e.

I
SSUE:

I
.WHETHERORNOTTHECOURTOFAPPEALSERREDI
NAFFI
RMI
NGTHEDECI
SIONOFTHE
LOWERCOURTFI
NDI
NGHEREI
NPETI
TIONERLI
ABLEDESPI
TETHEFACTTHATRESPONDENT
FAI
LEDTOSUBMI
TANYI
NSURANCEPOLI
CY.

I
I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT APPLYI

NG THE
US$500.
00/
PACKAGE/
CASEPACKAGELI
MITATI
ONOFLI
ABI
LITYI
NACCORDANCEWITHTHE
CARRIAGEOFGOODSBYSEAACT

HELD:

Thepet i
ti
oni smerit
ori
ous.Anentthef i
rsterror
,pet i
ti
onerarguesthatrespondentwasnot
properl
ysubrogat
edbecauseofthenon- presentat
ionoft hemari
neinsur
ancepolicy.I
nthecase
atbar ,i
nor dertoproveitsclai
m,r espondentpr esentedamar inecargor i
sknot eanda
subrogati
onrecei
pt.Thus,t
hequesti
ont ober esolvediswhetherthetwodocument s,wit
hout
theMar i
neInsur
ancePoli
cy,ar
esuffi
cientt oproverespondent
sr i
ghtofsubrogat
ion.

Bef
oreanyt
hingel
se,itmustbeemphasi
zedt
hatamarineri
sknoteisnotaninsur
ancepoli
cy.I
t
i
sonlyanacknowl edgmentordeclar
ati
onoftheinsurerconf
ir
mi ngthespecifi
cshipment
cov
eredbyit
smarineopenpoli
cy,t
heeval
uat
ionoft
hecargoandthechargeabl
epremium.

In Inter
nati
onal Contai
ner Ter
minal Ser
vices, I
nc. v
. FGU I nsurance Cor
por
ati
on
(
Int
ernati
onal
),
[20]t
henatur
eofamari
necargorisknot
ewasexpl
ained,
thus:

xxxI tisthemar i
neopenpol i
cywhi chisthemaininsurancecontr
act
.Inotherwords,the
marineopenpol i
cyi st
heblanketi
nsurancetobeundertakenbyFGUonallgoodstobeshipped
byRAGCdur i
ngtheexi st
enceofthecontract
,whil
ethemar i
neri
sknotespeci
fi
estheparti
cul
ar
goods/shi
pmenti nsur
edbyFGUont hatspeci
fi
ct r
ansacti
on,i
ncl
udingthesum insur
ed,the
shi
pmentpar ti
cularsaswellasthepremium pai
dforsuchshipment
.xxx

Iti
sundisputedthatthecargoeswerealreadyonboardthecarr
ierasear
lyasNov ember8,1995
andt hatthesamear r
ivedatt heportofMani l
aonNov ember16,1995.Iti
s,howev er
,v er
y
apparentthattheMar i
neCar goRiskNot ewasissuedonlyonNov ember16,1995.Thesame,
ther
efore,shouldhaveraisedar edf
lag,asitwoul
dbei mpossibl
etoknowwhet hersai
dgoods
wereactuall
yinsuredwhilethesamewer eintr
ansitf
rom JapantoManil
a.

i
tisalr
eadyevi
dentwhyherei
npeti
ti
oni smeri
tor
ious.TheMar ineRiskNot
erel
ieduponby
r
espondentast
hebasi
sfori
tscl
aimforsubr
ogat
ionisinsuf
fi
cienttopr
ovesai
dcl
aim.

Aspr evi
ouslyst at
ed,t heMar i
neRi skNotewasi ssuedonl yonNov ember16,1995;hence,
wit
houtacopyoft hemar i
neinsurancepoli
cy,itwouldbei mpossibl
eandsi mplyguessworkto
know whet herthecar gowasi nsuredduri
ngt hev oyagewhi chstart
edonNov ember8,1995.
Again,withoutthemar i
nei nsurancepoli
cy,i
twoul dbei mpossi
blefort hi
sCourttoknow the
fol
lowing:fir
st,thespeci f
icsoft heInst
it
uteCar goCl ausesAandot herter
msandcondi ti
ons
perMar i
neOpenPol icy-86-168asal l
udedtoint heMar ineRi
skNot e;second,i
fthesaidter
ms
andconditionswer eactuallycompl i
edwit
hbef orerespondentpai
dNi ssansclai
m.
Therefore,
sincerespondental
ludedt
oanact ionabledocumentinit
scompl ai
nt,thecont
ractof
i
nsur ancebetweenitandNissan,asi
ntegralt
oitscauseofacti
onagai nstpet
it
ioner,
theMar i
ne
InsurancePolicyshouldhav ebeenat t
achedt ot heComplaint
.Ev eni nit
sf ormalofferof
evidence,r
espondentall
udedtothemar i
neinsurancepoli
cywhichcanst andi
ndependentofthe
Mar i
neCar goRiskNote.

Iti
ssignifi
cantthatt hedatewhent heal
legedinsurancecontractwasconst i
tut
edcannotbe
est
abli
shedwi t
hcer taint
ywithoutt
hecontracti
tsel
f.Saidpointi
scr uci
albecausether
ecanbe
noinsuranceonar iskthathadalreadyoccurr
edbyt heti
met hecont ractwasexecuted.[
33]
Sur
ely,t
heMar ineRiskNot eonitsf
acedoesnotspeci f
ywhent heinsurancewasconsti
tuted.

Alt
hought heCAmayhav erul
edt hatthedamaget othecar gooccur redwhi l
et hesamewasi n
peti
tionerscust ody,thisCour tcannotappl yt herulingi nI nternati
onaltot hecaseatbar .In
contrast,unlikei nInter nati
onalwher et her
ewasnoi ssueasr egardst hepr ovisi
onsoft he
mar i
nei nsur ancepol icy ,sucht hatt hepr esent ati
onoft hecont r
acti t
selfi snecessar yfor
perusal,her ein petiti
onerhad r epeat edlyobj ected tot he non- presentat
ion oft he mar i
ne
i
nsur ance pol icyand had mani fested its desiret o know t he specifi
c pr ovi
sions thereof.
Mor eover,andt hesamei scrit
ical,themar iner i
sknot ei nt hecaseatbari squestionable
because:f ir
st ,itisdatedont hesamedayt hecar goesar riv
edatt hepor tofMani laandnot
duri
ngt hedur ationoft hev oyage;second,wi thoutt heMar i
neI nsurancePol icytoel uci
dateon
thespeci f
icsoft hetermsandcondi t
ionsalludedt oi nt hemar ineri
sknot e,itwoul dbesi mply
guesswor ktoknowi fthesamewer ecompl i
edwi th.

Lastl
y,tocastal
ldoubtont
hemer
it
sofher
einpet
it
ion,t
hisCour
tisgui
dedbyt
her
uli
ngi
n
Malayan,t
owit:

Itcannotbedeni edf rom theonl yest abli

shedfact
st hatMalayanandABBKoppelcompor tedas
i
ft herewasani nsurancer elati
onshi pbetweent hem anddocument sexistt hatev i
ncet he
presenceofsuchl egalr elat
ionshi p.But,underthesepr emises,thev eryi nsur ancecont ract
emer gesast hewhi teelephanti nt heroom anobduratepresencewhi chev erybodyr eactsto, yet
,
l
egallyinvisi
bleasamat terofev idencesincenoat tempthadbeenmadet opr ovei tscor poreal
exist
encei nt hecour toflaw.Itmayseem commonsensi caltoconcludeany wayt hatt herewas
acont r
actofi nsur ancebet weenMal ayanandABBKoppelsi ncetheyobv i
ousl ybehav edi na
mannert hati ndicatessuchr elationship,yetthesameconcl usioncouldbehadev eni f,for
exampl e,thosepar ti
esstagedanel aborat
echaradet oimpressont hewor ldtheexi stenceofan
i
nsurancecont r
actwhent her
eact uall
ywasnone.Whi l
ethereisabsol ut
elynoi ndicationofany
bad f ai
th ofsuch i mpor tbyMal ayan orABB Koppel ,the factt hatt he commonsensi cal
conclusioncanbedr awnev eni ft her
ewasbadf aiththatconv i
ncesust or ejectsuchl ineof
thi
nking.
TheCour tfurtherrecognizest hedangeraspr ecedentshoul dwesust ainMal ayansposi tion,and
notonl ybecausesuchar uling woul dformal lyv i
olatet her ul
eonact ionabl
edocument s.
Malay an woul d hav e us effectuat e an i
nsur ance cont ractwi t
houthav ing to consi deri t s
parti
cul artermsandcondi ti
ons,andonabl i
ndl eapoff aitht hatsuchcont racti
si ndeedv al i
d
andsubsi sti
ng.Theconcl usionf urtherworkstot heutterpr ejudi
ceofdef endantssuchasRegi s
orPai rcargosi ncetheywoul dbedepr i
vedtheoppor tuni
tyt oexami net hedocumentt hatgi ves
ri
set ot hepl ainti
ff
sr i
ghttor ecov eragainstthem,ort or aisear gument sorobjectionsagai nst
thev alidi
tyoradmi ssi
bili
tyofsuchdocument .I falegalcl aimi sirrefragablysourcedf rom an
acti
onabl edocument ,thedef endant scannotbedepr ivedoft her i
ghtt oexami neorut ili
zesuch
documenti nor dertoi nt
ell
igentlyr ai
seadef ense.Thei nabili
tyorr efusalofthepl aintif
ft o
submi tsuch documenti nt
o ev i
dence const i
t utes an ef fecti
ve deni aloft hatr ightoft he
defendantwhi chi sult
imatelyr ootedinduepr ocessofl aw,t osaynot hingonhowsuchf ai
lure
fat
all
ydi minishestheplainti
ffssubst anti
ati
onofi tsowncauseofact ion.[
37]

Inconclusion,t
hisCour tr
ulesthatbasedont heappl i
cabl
ejuri
sprudence,becauseofthe
i
nadequacyoft heMar i
neCargoRiskNoteforther easonsalr
eadystated,i
twasincumbenton
respondenttopresenti
nevi
dencetheMar i
neInsurancePolicy
,andhavingfail
edindoingso,
its
clai
m ofsubrogati
onmustnecessari
l
yfail
.

Becauseoft
hef
oregoi
ng,i
twoul
dbeunnecessar
ytodi
scusst
heseconder
rorr
aisedby
peti
ti
oner
.