ASIAN TERMINAL V MALAYAN INSURANCE

FIRST DIVISION

ASIAN TERMINALS, INC., G.R. No. 171406

Petitioner,

Present:

CORONA, C. J., Chairperson,

- versus- VELASCO, JR.,

DEL CASTILLO, and

PEREZ, JJ.

MALAYAN INSURANCE, CO., INC., Promulgated:

DECISION

DEL CASTILLO, J.:

Once the insurer pays the insured, equity demands reimbursement as no one should benefit at the expense of another.

This Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court assails the July 14, 2005 Decision[2] and the February 14, 2006 Resolution[3] of the

Court of Appeals (CA) in CA G.R. CV No. 61798.

Factual Antecedents

On November 14, 1995, Shandong Weifang Soda Ash Plant shipped on board the vessel MV Jinlian I 60,000 plastic bags of soda ash dense (each bag weighing 50

kilograms) from China to Manila.[4] The shipment, with an invoice value of US$456,000.00, was insured with respondent Malayan Insurance Company, Inc. under Marine

Risk Note No. RN-0001-21430, and covered by a Bill of Lading issued by Tianjin Navigation Company with Philippine Banking Corporation as the consignee and Chemphil

Albright and Wilson Corporation as the notify party.[5]

On November 21, 1995, upon arrival of the vessel at Pier 9, South Harbor, Manila,[6] the stevedores of petitioner Asian Terminals, Inc., a duly registered

domestic corporation engaged in providing arrastre and stevedoring services,[7] unloaded the 60,000 bags of soda ash dense from the vessel and brought them to the open

storage area of petitioner for temporary storage and safekeeping, pending clearance from the Bureau of Customs and delivery to the consignee.[8] When the unloading of

the bags was completed on November 28, 1995, 2,702 bags were found to be in bad order condition.[9]

On November 29, 1995, the stevedores of petitioner began loading the bags in the trucks of MEC Customs Brokerage for transport and delivery to the

consignee.[10] On December 28, 1995, after all the bags were unloaded in the warehouses of the consignee, a total of 2,881 bags were in bad order condition due to

spillage, caking, and hardening of the contents.[11]

On April 19, 1996, respondent, as insurer, paid the value of the lost/ damaged cargoes to the consignee in the amount of P643,600.25.[12]

Ruling of the Regional Trial Court

On November 20, 1996, respondent, as subrogee of the consignee, filed before the Regional Trial Court (RTC) of Manila, Branch 35, a Complaint[13] for

damages against petitioner, the shipper Inchcape Shipping Services, and the cargo broker MEC Customs Brokerage.[14]

After the filing of the Answers,[15] trial ensued.

On June 26, 1998, the RTC rendered a Decision[16] finding petitioner liable for the damage/loss sustained by the shipment but absolving the other

defendants. The RTC found that the proximate cause of the damage/loss was the negligence of petitioners stevedores who handled the unloading of the cargoes from the

vessel.[17] The RTC emphasized that despite the admonitions of Marine Cargo Surveyors Edgar Liceralde and Redentor Antonio not to use steel hooks in retrieving and

picking-up the bags, petitioners stevedores continued to use such tools, which pierced the bags and caused the spillage.[18] The RTC, thus, ruled that petitioner, as

employer, is liable for the acts and omissions of its stevedores under Articles 2176[19] and 2180 paragraph (4)[20] of the Civil Code.[21] Hence, the dispositive portion of the

Decision reads:
 WHEREFORE, judgment is rendered ordering defendant Asian Terminal, Inc. to pay plaintiff Malayan Insurance Company, Inc. the sum
of P643,600.25 plus interest thereon at legal rate computed from November 20, 1996, the date the Complaint was filed, until the principal obligation
is fully paid, and the costs.

The complaint of the plaintiff against defendants Inchcape Shipping Services and MEC Customs Brokerage, and the counterclaims of
said defendants against the plaintiff are dismissed.

SO ORDERED.[22]

Ruling of the Court of Appeals

Aggrieved, petitioner appealed[23] to the CA but the appeal was denied. In its July 14, 2005 Decision, the CA agreed with the RTC that the damage/loss was

caused by the negligence of petitioners stevedores in handling and storing the subject shipment.[24] The CA likewise rejected petitioners assertion that it received the subject

shipment in bad order condition as this was belied by Marine Cargo Surveyors Redentor Antonio and Edgar Liceralde, who both testified that the actual counting of bad

order bags was done only after all the bags were unloaded from the vessel and that the Turn Over Survey of Bad Order Cargoes (TOSBOC) upon which petitioner

anchors its defense was prepared only on November 28, 1995 or after the unloading of the bags was completed.[25] Thus, the CA disposed of the appeal as follows:

WHEREFORE, premises considered, the appeal is DENIED. The assailed Decision dated June 26, 1998 of the Regional Trial Court of
Manila, Branch 35, in Civil Case No. 96-80945 is herebyAFFIRMED in all respects.

SO ORDERED.[26]

Petitioner moved for reconsideration[27] but the CA denied the same in a Resolution[28] dated February 14, 2006 for lack of merit.

Issues

Hence, the present recourse, petitioner contending that:

1. RESPONDENT-INSURER IS NOT ENTITLED TO THE RELIEF GRANTED AS IT FAILED TO ESTABLISH ITS CAUSE OF ACTION
AGAINST HEREIN PETITIONER SINCE, AS THE ALLEGED SUBROGEE, IT NEVER PRESENTED ANY
VALID, EXISTING, ENFORCEABLE INSURANCE POLICY OR ANY COPY THEREOF IN COURT.

2. THE HONORABLE COURT OF APPEALS ERRED WHEN IT OVERLOOKED THE FACT THAT THE TOSBOC & RESBOC WERE
ADOPTED AS COMMON EXHIBITS BY BOTH PETITIONER AND RESPONDENT.

3. CONTRARY TO TESTIMONIAL EVIDENCE ON RECORD, VARIOUS DOCUMENTATIONS WOULD POINT TO THE VESSELS LIABILITY
AS THERE IS, IN THIS INSTANT CASE, AN OVERWHELMING DOCUMENTARY EVIDENCE TO PROVE THAT THE DAMAGE IN
QUESTION WERE SUSTAINED WHEN THE SHIPMENT WAS IN THE CUSTODY OF THE VESSEL.

4. THE HONORABLE COURT OF APPEALS ERRED WHEN IT ADJUDGED HEREIN DEFENDANT LIABLE DUE TO [THE] FACT THAT THE
TURN OVER SURVEY OF BAD ORDER CARGOES (TOSBOC) WAS PREPARED ONLY AFTER THE COMPLETION OF THE
DISCHARGING OPERATIONS OR ON NOVEMBER 28, 1995. THUS, CONCLUDING THAT DAMAGE TO THE CARGOES WAS DUE
TO THE IMPROPER HANDLING THEREOF BY ATI STEVEDORES.

5. THE HONORABLE COURT OF APPEALS ERRED IN NOT TAKING JUDICIAL NOTICE OF THE CONTRACT FOR CARGO HANDLING
SERVICES BETWEEN PPA AND ATI AND APPLYING THE PERTINENT PROVISIONS THEREOF AS REGARDS ATIS LIABILITY.[29]

In sum, the issues are: (1) whether the non-presentation of the insurance contract or policy is fatal to respondents cause of action; (2) whether the proximate cause of the

damage/loss to the shipment was the negligence of petitioners stevedores; and (3) whether the court can take judicial notice of the Management Contract between

petitioner and the Philippine Ports Authority (PPA) in determining petitioners liability.

Petitioners Arguments

Petitioner contends that respondent has no cause of action because it failed to present the insurance contract or policy covering the subject shipment.[30] Petitioner argues

that the Subrogation Receipt presented by respondent is not sufficient to prove that the subject shipment was insured and that respondent was validly subrogated to the

rights of the consignee.[31]Thus, petitioner submits that without proof of a valid subrogation, respondent is not entitled to any reimbursement.[32]

Petitioner likewise puts in issue the finding of the RTC, which was affirmed by the CA, that the proximate cause of the damage/loss to the shipment was the

negligence of petitioners stevedores.[33] Petitioner avers that such finding is contrary to the documentary evidence, i.e., the TOSBOC, the Request for Bad Order Survey

(RESBOC) and the Report of Survey.[34]According to petitioner, these documents prove that it received the subject shipment in bad order condition and that no additional

damage was sustained by the subject shipment under its custody.[35] Petitioner asserts that although the TOSBOC was prepared only after all the bags were unloaded by

petitioners stevedores, this does not mean that the damage/loss was caused by its stevedores.[36]

Petitioner also claims that the amount of damages should not be more than P5,000.00, pursuant to its Management Contract for cargo handling services with

the PPA.[37] Petitioner contends that the CA should have taken judicial notice of the said contract since it is an official act of an executive department subject to judicial

cognizance.[38]

Respondents Arguments
Respondent, on the other hand, argues that the non-presentation of the insurance contract or policy was not raised in the trial court. Thus, it cannot be raised for the first

time on appeal.[39] Respondent likewise contends that under prevailing jurisprudence, presentation of the insurance policy is not indispensable.[40] Moreover, with or without

the insurance contract or policy, respondent claims that it should be allowed to recover under Article 1236[41] of the Civil Code.[42] Respondent further avers that the right of

subrogation has its roots in equity - it is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by

one who in justice, equity and good conscience ought to pay.[43]

Respondent likewise maintains that the RTC and the CA correctly found that the damage/loss sustained by the subject shipment was caused by the negligent

acts of petitioners stevedores.[44] Such factual findings of the RTC, affirmed by the CA, are conclusive and should no longer be disturbed.[45] In fact, under Section 1[46] of

Rule 45 of the Rules of Court, only questions of law may be raised in a petition for review on certiorari.[47]

As to the Management Contract for cargo handling services, respondent contends that this is outside the operation of judicial notice.[48] And even if it is not,

petitioners liability cannot be limited by it since it is a contract of adhesion.[49]

Our Ruling

The petition is bereft of merit.

Non-presentation of the insurance contract or policy is not fatal in the instant case

Petitioner claims that respondents non-presentation of the insurance contract or policy between the respondent and the consignee is fatal to its cause of action.

We do not agree.

First of all, this was never raised as an issue before the RTC. In fact, it is not among the issues agreed upon by the parties to be resolved during the

pre-trial.[50] As we have said, the determination of issues during the pre-trial conference bars the consideration of other questions, whether during trial or on appeal.[51] Thus,

[t]he parties must disclose during pre-trial all issues they intend to raise during the trial, except those involving privileged or impeaching matters. x x x The basis of the rule is

simple. Petitioners are bound by the delimitation of the issues during the pre-trial because they themselves agreed to the same.[52]

Neither was this issue raised on appeal.[53] Basic is the rule that issues or grounds not raised below cannot be resolved on review by the Supreme Court, for to

allow the parties to raise new issues is antithetical to the sporting idea of fair play, justice and due process.[54]

Besides, non-presentation of the insurance contract or policy is not

necessarily fatal.[55] In Delsan Transport Lines, Inc. v. Court of Appeals,[56] we ruled that:

Anent the second issue, it is our view and so hold that the presentation in evidence of the marine insurance policy is not
indispensable in this case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of
its subrogatory right. The subrogation receipt, by itself, is sufficient to establish not only the relationship of herein private respondent as
insurer and Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim.
The right of subrogation accrues simply upon payment by the insurance company of the insurance claim.

The presentation of the insurance policy was necessary in the case of Home Insurance Corporation v. CA (a case cited by petitioner)
because the shipment therein (hydraulic engines) passed through several stages with different parties involved in each stage. First, from the shipper
to the port of departure; second, from the port of departure to the M/S Oriental Statesman; third, from the M/S Oriental Statesman to the M/S Pacific
Conveyor; fourth, from the M/S Pacific Conveyor to the port of arrival; fifth, from the port of arrival to the arrastre operator; sixth, from the arrastre
operator to the hauler, Mabuhay Brokerage Co., Inc. (private respondent therein); and lastly, from the hauler to the consignee. We emphasized in
that case that in the absence of proof of stipulations to the contrary, the hauler can be liable only for any damage that occurred from the time it
received the cargo until it finally delivered it to the consignee. Ordinarily, it cannot be held responsible for the handling of the cargo before it actually
received it. The insurance contract, which was not presented in evidence in that case would have indicated the scope of the insurers liability, if any,
since no evidence was adduced indicating at what stage in the handling process the damage to the cargo was sustained.[57] (Emphasis supplied.)

In International Container Terminal Services, Inc. v. FGU Insurance Corporation,[58] we used the same line of reasoning in upholding the Decision of the CA

finding the arrastre contractor liable for the lost shipment despite the failure of the insurance company to offer in evidence the insurance contract or policy. We explained:

Indeed, 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, as in every general rule, 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 petitioners 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.

As in Delsan, there is no doubt that the loss of the cargo in the present case occurred while in petitioners 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.[59]
 Similarly, in this case, the presentation of the insurance contract or policy was not necessary. Although petitioner objected to the admission of the Subrogation

Receipt in its Comment to respondents formal offer of evidence on the ground that respondent failed to present the insurance contract or policy,[60] a perusal of petitioners

Answer[61] and Pre-Trial Brief[62] shows that petitioner never questioned respondents right to subrogation, nor did it dispute the coverage of the insurance contract or

policy. Since there was no issue regarding the validity of the insurance contract or policy, or any provision thereof, respondent had no reason to present the insurance

contract or policy as evidence during the trial.

Factual findings of the CA, affirming the RTC, are conclusive and binding

Petitioners attempt to absolve itself from liability must likewise fail.

Only questions of law are allowed in petitions for review on certiorari under Rule 45 of the Rules of Court. Thus, it is not our duty to review, examine, and evaluate or weigh

all over again the probative value of the evidence presented,[63] especially where the findings of both the trial court and the appellate court coincide on the matter.[64] As we

have often said, factual findings of the CA affirming those of the RTC are conclusive and binding, except in the following cases: (1) when the inference made is manifestly

mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when

the judgment of the [CA] is based on misapprehension of facts; (5) when the [CA], in making its findings, went beyond the issues of the case and the same is contrary to

the admissions of both appellant and appellee; (6) when the findings of fact are conclusions without citation of specific evidence on which they are based; (7) when the [CA]

manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (8) when the findings of

fact of the [CA] are premised on the absence of evidence and are contradicted by the evidence on record.[65] None of these are availing in the present case.

Both the RTC and the CA found the negligence of petitioners stevedores to be the proximate cause of the damage/loss to the shipment. In disregarding the contention of

petitioner that such finding is contrary to the documentary evidence, the CA had this to say:

ATI, however, contends that the finding of the trial court was contrary to the documentary evidence of record, particularly, the Turn Over
Survey of Bad Order Cargoes dated November 28, 1995, which was executed prior to the turn-over of the cargo by the carrier to the arrastre
operator ATI, and which showed that the shipment already contained 2,702 damaged bags.

We are not persuaded.

Contrary to ATIs assertion, witness Redentor Antonio, marine cargo surveyor of Inchcape for the vessel Jinlian I which arrived on
November 21, 1995 and up to completion of discharging on November 28, 1995, testified that it was only after all the bags were unloaded from
the vessel that the actual counting of bad order bags was made, thus:

xxxx

The above testimony of Redentor Antonio was corroborated by Edgar Liceralde, marine cargo surveyor connected with SMS
Average Surveyors and Adjusters, Inc., the company requested by consignee Chemphil Albright and Wilson Corporation to provide
superintendence, report the condition and determine the final outturn of quantity/weight of the subject shipment. x x x

xxxx

Defendant-appellant ATI, for its part, presented its claim officer as witness who testified that a survey was conducted by the shipping
company and ATI before the shipment was turned over to the possession of ATI and that the Turn Over Survey of Bad Order Cargoes was
prepared by ATIs Bad Order (BO) Inspector.

Considering that the shipment arrived on November 21, 1998 and the unloading operation commenced on said date and was
completed on November 26, 1998, while the Turn Over Survey of Bad Order Cargoes, reflecting a figure of 2,702 damaged bags, was
prepared and signed on November 28, 1998 by ATIs BO Inspector and co-signed by a representative of the shipping company, the trial courts
finding that the damage to the cargoes was due to the improper handling thereof by ATIs stevedores cannot be said to be without
substantial support from the records.

We thus see no cogent reason to depart from the ruling of the trial court that ATI should be made liable for the 2,702 bags of damaged
shipment. Needless to state, it is hornbook doctrine that the assessment of witnesses and their testimonies is a matter best undertaken by the trial
court, which had the opportunity to observe the demeanor, conduct or attitude of the witnesses. The findings of the trial court on this point are
accorded great respect and will not be reversed on appeal, unless it overlooked substantial facts and circumstances which, if considered, would
materially affect the result of the case.

We also find ATI liable for the additional 179 damaged bags discovered upon delivery of the shipment at the consignees warehouse
in Pasig. The final Report of Survey executed by SMS Average Surveyors & Adjusters, Inc., and independent surveyor hired by the
consignee, shows that the subject shipment incurred a total of 2881 damaged bags.

The Report states that the withdrawal and delivery of the shipment took about ninety-five (95) trips from November 29,
1995 to December 28, 1995 and it was upon completion of the delivery to consignees warehouse where the final count of 2881 damaged bags was
made. The damage consisted of torn/bad order condition of the bags due to spillages and caked/hardened portions.

We agree with the trial court that the damage to the shipment was caused by the negligence of ATIs stevedores and for which ATI is
liable under Articles 2180 and 2176 of the Civil Code. The proximate cause of the damage (i.e., torn bags, spillage of contents and caked/hardened
portions of the contents) was the improper handling of the cargoes by ATIs stevedores, x x x

xxxx

ATI has not satisfactorily rebutted plaintiff-appellees evidence on the negligence of ATIs stevedores in the handling and safekeeping of
the cargoes. x x x
 xxxx

We find no reason to disagree with the trial courts conclusion. Indeed, from the nature of the [damage] caused to the shipment, i.e., torn
bags, spillage of contents and hardened or caked portions of the contents, it is not difficult to see that the damage caused was due to the negligence
of ATIs stevedores who used steel hooks to retrieve the bags from the higher portions of the piles thereby piercing the bags and spilling their
contents, and who piled the bags in the open storage area of ATI with insufficient cover thereby exposing them to the elements and [causing] the
contents to cake or harden.[66]

Clearly, the finding of negligence on the part of petitioners stevedores is supported by both testimonial and documentary evidence. Hence, we see no reason to

disturb the same.

Judicial notice does not apply

Finally, petitioner implores us to take judicial notice of Section 7.01,[67] Article VII of the Management Contract for cargo handling services it entered with the PPA, which

limits petitioners liability to P5,000.00 per package.

Unfortunately for the petitioner, it cannot avail of judicial notice.

Sections 1 and 2 of Rule 129 of the Rules of Court provide that:

SECTION 1. Judicial notice, when mandatory. A court shall take judicial notice, without the introduction of evidence, of the existence and
territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts
of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive and judicial
departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions.

SEC. 2. Judicial notice, when discretionary. A court may take judicial notice of matters which are of public knowledge, or are capable of
unquestionable demonstration or ought to be known to judges because of their judicial functions.

The Management Contract entered into by petitioner and the PPA is clearly not among the matters which the courts can take judicial notice of. It cannot be considered an

official act of the executive department. The PPA, which was created by virtue of Presidential Decree No. 857, as amended,[68] is a government-owned and controlled

corporation in charge of administering the ports in the country.[69] Obviously, the PPA was only performing a proprietary function when it entered into a Management

Contract with petitioner. As such, judicial notice cannot be applied.

WHEREFORE, the petition is hereby DENIED. The assailed July 14, 2005 Decision and the February 14, 2006 Resolution of the Court of Appeals in CA-G.R.

CV No. 61798 are hereby AFFIRMED.

SO ORDERED.