563 Phil. 1003
We consider whether an insurer, in an action for
recoupment instituted in its capacity as the subrogee of the insured,
may be conferred favorable relief even if it failed to introduce in
evidence the insurance contract or policy, or even allege the existence
nay recite the substance and attach a copy of such document in the
complaint. The answer is as self-evident as meets the eye.
This Petition for Review under Rule 45 was filed by petitioner Malayan Insurance Co., Inc. (Malayan),
[2] assailing the Decision
[3] dated 23 December 2005 of the Court of Appeals in C.A. G.R. SP No. 90505, as well as its Resolution
[4] dated 5 April 2006 denying petitioner’s motion for reconsideration.
The facts require little elaboration. Around 1 February 1995, Fasco
Motors Group loaded 120 pieces of “motors” on board China Airlines
Flight 621 bound for Manila from the United States. The cargo was to be
delivered to consignee ABB Koppel, Inc. (ABB Koppel).
[5]
When the cargo arrived at the Ninoy Aquino International Airport, it
was discharged without exception and forwarded to People’s Aircargo
& Warehousing Corp.’s (Paircargo’s) warehouse for temporary storage
pending release by the Bureau of Customs. Paircargo remained in
possession of the cargo until 7 March 1995, at which point respondent
Regis Brokerage Corp. (Regis) withdrew the cargo and delivered the same
to ABB Koppel at its warehouse.
[6]
When the shipment arrived at ABB Koppel’s warehouse, it was discovered
that only 65 of the 120 pieces of motors were actually delivered and
that the remaining 55 motors, valued at US$2,374.35, could not be
accounted for.
[7]
The shipment was purportedly insured with Malayan by ABB Koppel. Demand
was first made upon Regis and Paircargo for payment of the value of the
missing motors, but both refused to pay.
[8]
Thus, Malayan paid ABB Koppel the amount of P156,549.55 apparently
pursuant to its insurance agreement, and Malayan was on that basis
subrogated to the rights of ABB Koppel against Regis and Paircargo.
[9]
On 24 June 1996, Malayan filed a complaint for damages against Regis
and Paircargo with the Metropolitan Trial Court (MeTC) of Manila,
Branch 9. In the course of trial, Malayan presented Marine Risk Note
No. RN-0001-19832 (Marine Risk Note) dated 21 March 1995 as proof that
the cargo was insured by Malayan.
[10]
The MeTC rendered a Decision
[11]
dated 25 May 2001 adjudging Regis alone liable to Malayan in the amount
of P156,549.00 as actual damages, P15,000.00 as attorney’s fees, and
costs of suits. With the exception of the award of attorney’s fees, the
MeTC decision was affirmed on appeal to the Regional Trial Court (RTC)
of Manila, through a Decision dated 28 February 2005.
[12]
Regis filed a petition for review with the Court of Appeals seeking the
reversal of the MeTC and RTC decisions. On 23 December 2005, the Court
of Appeals promulgated its decision vacating the RTC judgment and
ordering the dismissal of Malayan’s complaint. The central finding that
formed the Court of Appeals decision was that the Marine Risk Note
presented as proof that the cargo was insured was invalid.
[13]
It was observed that the Marine Risk Note was procured from Malayan
only on 21 March 1995, when in fact the insured, ABB Koppel, had
learned of the partial loss of the motors as early as 7 March 1995.
[14]
The appellate court noted that under Section 3 of the Insurance Code,
the past event which may be insured against must be unknown to the
parties and so for that reason the insurance contract in this case
violated Section 3. The Court of Appeals further ruled that the due
execution and authenticity of the subrogation receipt presented before
the trial court by Malayan were not duly proven since the signatories
thereto were not presented by Malayan before the trial court to
identify their signatures thereon, and neither was evidence presented
to establish the genuineness of such signatures.
[15]
Malayan filed a motion for reconsideration with the Court of Appeals
where it contended that the Marine Risk Note is “an open policy per
Marine Open Cargo Policy No. OPEN POLICY-0001-00410 issued before
February 1, 1995.”
[16] The motion was denied by the appellate court,
[17]
which pointed out that Malayan “did not present the aforecited marine
open cargo policy as would indicate the date of its issuance.”
[18]
Hence, the present petition instituted by Malayan. According to
Malayan, the lost cargo was insured not only by the Marine Risk Note
but by the anteceding Marine Insurance Policy No. M/OP/95/0001-410
(Marine Insurance Policy) which it issued in favor of ABB Koppel on 20
January 1995, or many days before the motors were transported to
Manila. A copy of the Marine Insurance Policy was attached to the
present petition, but it is clear and no pretense was made that said
policy had not been presented at the trial.
The key arguments raised before us by Malayan flow from the existence
of the Marine Insurance Policy. Pains are taken to establish that there
existed as between Malayan and ABB Koppel an “open policy” under
Section 60 of the Insurance Code, wherein the value of the thing
insured is not agreed upon but left to be ascertained in case of loss,
and that the Marine Risk Note was nothing but a determination of the
value of the thing insured pursuant to the open policy as established
by the Marine Insurance Policy. Unfortunately for Malayan, the Court
could not attribute any evidentiary weight to the Marine Insurance
Policy.
It is elementary that this Court is not a trier of facts. We generally
refer to the trial court and the Court of Appeals on matters relating
to the admission and evaluation of the evidence. In this case, while
the trial courts and the Court of Appeals arrived at differing
conclusions, we essentially agree with the Court of Appeals’ analysis
of Malayan’s cause of action, and its ordained result. It appeared that
at the very instance the Marine Risk Note was offered in evidence,
Regis already posed its objection to the admission of said document on
the ground that such was “immaterial, impertinent and irrelevant to
this case because the same was issued on March 21, 1995 which is after
the occurrence of the loss on February 1, 1995.”
[19]
Because the trial courts failed to duly consider whether the Marine
Risk Note sufficiently established a valid insurance covering the
subject motors, the Court of Appeals acted correctly in the exercise of
its appellate jurisdiction in setting aside the appealed decisions.
Tellingly, Malayan’s argument before this Court is not that the Court
of Appeals erred in its evaluation of the Marine Risk Note following
that document’s terms alone, but that the appellate court could not
consider the import of the purported Marine Insurance Policy. Indeed,
since no insurance policy was presented at the trial by Malayan, or
even before the Court of Appeals,
[20]
there certainly is no basis for this Court to admit or consider the
same, notwithstanding Malayan’s attempt to submit such document to us
along with its present petition. As we recently held:
Similarly, petitioner in this case cannot "enervate" the
COMELEC's findings by introducing new evidence before this Court, which
in any case is not a trier of facts, and then ask it to substitute its
own judgment and discretion for that of the COMELEC.
The rule in appellate procedure is that a factual question may not be
raised for the first time on appeal, and documents forming no part of
the proofs before the appellate court will not be considered in
disposing of the issues of an action. This is true whether the decision
elevated for review originated from a regular court or an
administrative agency or quasi-judicial body, and whether it was
rendered in a civil case, a special proceeding, or a criminal case.
Piecemeal presentation of evidence is simply not in accord with orderly
justice.[21]
Since the Marine Insurance Policy was never presented in evidence
before the trial court or the Court of Appeals even, there is no legal
basis to consider such document in the resolution of this case,
reflective as that document may have been of the pre-existence of an
insurance contract between Malayan and ABB Koppel even prior to the
loss of the motors. In fact, it appears quite plain that Malayan’s
theory of the case it pursued before the trial court was that the
perfected insurance contract which it relied upon as basis for its
right to subrogation was not the Marine Insurance Policy but the Marine
Risk Note which, unlike the former, was actually presented at the trial
and offered in evidence. The Claims Processor of Malayan who testified
in court in behalf of his employer actually acknowledged that the
“proof that ABB Koppel insured the [shipment] to [Malayan]” was the
Marine Risk Note, and not the Marine Insurance Policy.
[22]
Even the very complaint filed by Malayan before the MeTC stated that
“[t]he subject shipment was insured by [Malayan] under Risk Note No.
0001-19832,”
[23] and not by the Marine Insurance Policy, which was not adverted to at all in the complaint.
[24]
Thus, we can only consider the Marine Risk Note in determining whether
there existed a contract of insurance between ABB Koppel and Malayan at
the time of the loss of the motors. However, the very terms of the
Marine Risk Note itself are quite damning. It is dated 21 March 1995,
or after the occurrence of the loss, and specifically states that
Malayan “ha[d] this day noted the above-mentioned risk in your favor
and hereby guarantee[s] that this document has all the force and effect
of the terms and conditions in the Corporation’s printed form of the
standard Marine Cargo Policy and the Company’s Marine Open Policy.” It
specifies that at risk are the 120 pieces of motors which unfortunately
had already been compromised as of the date of the Marine Risk Note
itself.
[25]
Certainly it would be obtuse for us to even entertain the idea that the
insurance contract between Malayan and ABB Koppel was actually
constituted by the Marine Risk Note alone. We find guidance on this
point in
Aboitiz Shipping Corporation v. Philippine American General Insurance, Co.,[26]
where a trial court had relied on the contents of a marine risk note,
not the insurance policy itself, in dismissing a complaint. For this
act, the Court faulted the trial court in “[obviously mistaking] said
Marine Risk Note as an insurance policy when it is not.”
[27]
The Court proceeded to characterize the marine risk note therein as “an
acknowledgment or declaration of the private respondent confirming the
specific shipment covered by its Marine Open Policy, the evaluation of
the cargo, and the chargeable premium,”
[28]
a description that is reflective as well of the present Marine Risk
Note, if not of marine risk notes in this country in general.
Malayan correctly points out that the Marine Risk Note itself adverts
to “Marine Cargo Policy Number Open Policy-0001-00410” as well as to
“the standard Marine Cargo Policy and the Company’s Marine Open
Policy.” What the Marine Risk Note bears, as a matter of evidence, is
that it is not apparently the contract of insurance by itself, but
merely a complementary or supplementary document to the contract of
insurance that may have existed as between Malayan and ABB Koppel. And
while this observation may deviate from the tenor of the assailed Court
of Appeals’ Decision, it does not presage any ruling in favor of
petitioner. Fundamentally, since Malayan failed to introduce in
evidence the Marine Insurance Policy itself as the main insurance
contract, or even advert to said document in the complaint, ultimately
then it failed to establish its cause of action for restitution as a
subrogee of ABB Koppel.
Malayan’s right of recovery as a subrogee of ABB Koppel cannot be
predicated alone on the liability of the respondent to ABB Koppel, even
though such liability will necessarily have to be established at the
trial for Malayan to recover. Because Malayan’s right to recovery
derives from contractual subrogation as an incident to an insurance
relationship, and not from any proximate injury to it inflicted by the
respondents, it is critical that Malayan establish the legal basis of
such right to subrogation by presenting the contract constitutive of
the insurance relationship between it and ABB Koppel. Without such
legal basis, its cause of action cannot survive.
Our procedural rules make plain how easily Malayan could have adduced
the Marine Insurance Policy. Ideally, this should have been
accomplished from the moment it filed the complaint. Since the Marine
Insurance Policy was constitutive of the insurer-insured relationship
from which Malayan draws its right to subrogation, such document should
have been attached to the complaint itself, as provided for in Section
7, Rule 9 of the 1997 Rules of Civil Procedure:
SECTION 7. Action or defense based on document.—Whenever
an action or defense is based upon a written instrument or document,
the substance of such instrument or document shall be set forth in the
pleading, and the original or a copy thereof shall be attached to the
pleading as an exhibit, which shall be deemed to be a part of the
pleading, or said copy may with like effect be set forth in the
pleading.
Thus, in an action to enforce or rescind a written contract of lease,
the lease contract is the basis of the action and therefore a copy of
the same must either be set forth in the complaint or its substance
recited therein, attaching either the original or a copy to the
complaint.
[29]
The rule has been held to be imperative, mandatory and not merely
directory, though must be given a reasonable construction and not be
extended in its scope so as to work injustice.
[30]
It was incumbent on Malayan, whose right of subrogation derived from
the Marine Insurance Policy, to set forth the substance of such
contract in its complaint and to attach an original or a copy of such
contract in the complaint as an exhibit. Its failure to do so
harbingers a more terminal defect than merely excluding the Marine
Insurance Policy as relevant evidence, as the failure actually casts an
irremissible cloud on the substance of Malayan’s very cause of action.
Since Malayan alluded to an actionable document, the contract of
insurance between it and ABB Koppel, as integral to its cause of action
against Regis and Paircargo, the contract of insurance should have been
attached to the complaint.
It may be that there is no specific provision in the Rules of Court
which prohibits the admission in evidence of an actionable document in
the event a party fails to comply with the requirement of the rule on
actionable documents under Section 7, Rule 9.
[31]
Yet such qualification does not provide safe harbor for Malayan as it
did not even present the Marine Insurance Policy at the trial, relying
instead on the Marine Risk Note only and by its lonesome to constitute
the insurer-insured relationship between it and ABB Koppel, or more
precisely as stated in its Formal Offer of Evidence, “to prove that the
shipment subject of this case was covered by an insurance policy with
the plaintiffs.”
[32] Before
the MeTC, Regis objected to the admission of the Marine Risk Note on
the ground of immateriality and irrelevance because it “was issued on
March 21, 1995 which is after the occurrence of the loss on February 1,
1995.”
[33] The Court of
Appeals upheld this objection of Regis as basis for the dismissal of
the complaint. In our view, Malayan may have not been of the precise
belief that the Marine Risk Note is the insurance contract itself as
even the purpose stated in its Formal Offer may admit to an
interpretation that alludes to “an insurance policy with the
plaintiffs” that may stand independent of the Marine Risk Note. Yet if
that were so, it remains incomprehensible and inexcusable why Malayan
neglected to attach it to its complaint as required by Section 7, Rule
9, or even offer it in the Marine Insurance Policy which constitutes
the insurance contract as evidence before the trial court.
It cannot be denied from the only established facts that Malayan and
ABB Koppel comported as if there was an insurance relationship between
them and documents exist that evince the presence of such legal
relationship. But under these premises, the very insurance contract
emerges as the white elephant in the room – an obdurate presence which
everybody reacts to, yet legally invisible as a matter of evidence
since no attempt had been made to prove its corporeal existence in the
court of law. It may seem commonsensical to conclude anyway that there
was a contract of insurance between Malayan and ABB Koppel since they
obviously behaved in a manner that indicates such relationship, yet the
same conclusion could be had even if, for example, those parties staged
an elaborate charade to impress on the world the existence of an
insurance contract when there actually was none. While there is
absolutely no indication of any bad faith of such import by Malayan or
ABB Koppel, the fact that the “commonsensical” conclusion can be drawn
even if there was bad faith that convinces us to reject such line of
thinking.
The Court further recognizes the danger as precedent should we sustain
Malayan’s position, and not only because such a ruling would formally
violate the rule on actionable documents. Malayan would have us
effectuate an insurance contract without having to consider its
particular terms and conditions, and on a blind leap of faith that such
contract is indeed valid and subsisting. The conclusion further works
to the utter prejudice of defendants such as Regis or Paircargo since
they would be deprived the opportunity to examine the document that
gives rise to the plaintiff’s right to recover against them, or to
raise arguments or objections against the validity or admissibility of
such document. If a legal claim is irrefragably sourced from an
actionable document, the defendants cannot be deprived of the right to
examine or utilize such document in order to intelligently raise a
defense. The inability or refusal of the plaintiff to submit such
document into evidence constitutes an effective denial of that right of
the defendant which is ultimately rooted in due process of law, to say
nothing on how such failure fatally diminishes the plaintiff’s
substantiation of its own cause of action.
Indeed, in the absence of any evidentiary consideration of the actual
Marine Insurance Policy, the substance of Malayan’s right to recovery
as the subrogee of ABB Koppel is not duly confirmed. There can be no
consideration of the particular terms and conditions in the insurance
contract that specifically give rise to Malayan’s right to be
subrogated to ABB Koppel, or to such terms that may have absolved
Malayan from the duty to pay the insurance proceeds to that consignee.
The particular date as to when such insurance contract was constituted
cannot be established with certainty without the contract itself, and
that point is crucial since there can be no insurance on a risk that
had already occurred by the time the contract was executed. Since the
documents in evidence and testimonies allude to “marine insurance” or
“marine risk note,” it also is a legitimate question whether the
particular marine insurance relationship between Malayan and ABB Koppel
also covers cargo delivered not by ships at sea but by airplane
flights, as had occurred in this case. Only the actual policy itself
could definitively settle such a question.
We can even note legitimate questions concerning the integrity or
viability of the Marine Insurance Policy as belatedly presented before
this court. For one, Regis observes that the “Marine Cargo Policy
Number” as denominated in the Risk Note reads: “Open
Policy-0001-00410,” while the copy of the Marine Insurance Policy
submitted before us is numbered “M/OP/95001-410.” The variance may
ultimately be explainable, yet the non-presentation of the Marine
Insurance Policy before the trial court precludes the due evaluation of
the reason for the difference in numbering.
All told, we hold that Malayan was not able to establish its cause of
action as stated in its complaint, based as it was on its right to be
subrogated to ABB Koppel under the insurance contract which it failed
to present as an actionable document, or as evidence before the trial
court. The result reached by the Court of Appeals – the dismissal of
the instant complaint – is thus correct. As such, there is no need to
consider the other issues raised in the petition.
WHEREFORE, the petition is DENIED. Costs against petitioner.
SO ORDERED.
Quisumbing, (Chairperson), Carpio, Carpio Morales, and
Velasco, Jr., JJ., concur.
[1] See note 2.
[2] The petition names
People’s Aircargo & Warehousing Corp. (Paircargo) as a
co-petitioner along with Malayan, but does not contain any attached
Secretary’s Certificate or Board Resolution from Paircargo authorizing
the filing of the present petition. This point was raised by respondent
Regis Brokerage Corp. (Regis) in its Comment (see
rollo,
pp. 54-55), and in the Reply thereto, only Malayan is identified as a
petitioner, id. at 89. It also appears that Paircargo was represented
in the Court of Appeals by Atty. Pedro Santos, Jr. (see CA
rollo, p. 99), but he did not file any pleading in behalf of Paircargo before this Court.
The case records reveal that Paircargo was a co-defendant of Regis in
the complaint filed by Malayan before the Metropolitan Trial Court
(MeTC) of Manila. The MeTC absolved Paircargo from any liability,
although the counterclaim posed against Malayan by that company was
also dismissed. (See id. at 35-37.) Regis alone filed a Notice of
Appeal from the MeTC decision (see id. at 87). The RTC of Manila
affirmed the MeTC ruling, causing Regis to file a petition with the
Court of Appeals seeking the dismissal of the complaint against Regis,
“or by finding Regis free from liability, and declaring Paircargo
solely liable to Malayan, in accordance with Regis’s cross-claim”(id.
at 14). The Court of Appeals opted to dismiss Malayan’s complaint
against Regis, instead of adjudging Paircargo liable in lieu of Regis.
Given these premises, there would be no sensible reason for Paircargo
to join Malayan as a co-petitioner before us, especially since the
petition does not seek any favorable relief in favor of Paircargo.
Neither is there any indication, apart from Paircargo’s denomination as
a petitioner in the petition prepared by Malayan’s counsel alone, that
Paircargo intended to join Malayan as petitioner. The fact that in its
Reply, no more advertence was made to Paircargo as a petitioner,
bolsters the conclusion that Paircargo was erroneously joined as a
petitioner and that such error is ultimately is of no legal consequence
to this petition. Since Section 11, Rule 3 authorizes courts to drop
misjoined parties without consequence to the pending action, the
erroneous joinder of Paircargo as plaintiff should have no legal effect
to this petition.
[3] Rollo,
pp. 27-33. Penned by Associate Justice Edgardo Cruz of the Court of
Appeals Former Special Fourteenth Division, concurred in by Associate
Justices Juan Enriquez, Jr. and Sesinando Villon.
[4] Id. at 35-36.
[5] Id. at 27.
[6] Id. at 28.
[7] Id.
[8] Id.
[9] Id.
[10] See CA
rollo, pp. 25, 56, 61. See also
rollo, pp. 67-68.
[11] CA
rollo, pp. 24-37. Penned by Judge Amelia Fabros.
[12] Id. at 18-23. Penned by
Judge Eduardo Peralta, Jr. of the RTC Manila, Branch 17. The award of
attorney’s fees was excluded “for want of factual and legal foundations
therefor.” Id. at 22.
[13] Rollo, p. 31.
[14] Id.
[15] Id. at 32.
[16] Id. at 35.
[17] See id. at 35-36.
[18] Supra note 15.
[19] Id. at 32.
[20] “Malayan did not present
[before the Court of Appeals] the aforecited marine open cargo policy
as would indicate the date of its issuance.” Resolution dated 5 April
2006 (denying Malayan’s Motion for Reconsideration), supra note 17.
[21] Tan v. COMELEC, G.R. Nos. 66143-47 & 166891, 20 November 2006, 507 SCRA 352;
Matugas v. COMELEC, 465 Phil. 299, 312-313 (2004), citing
Telephone Engineering & Service Co., Inc. v. WCC, G.R. No. L-28694, 13 May 1984, 104 SCRA 354;
Cansino v. Court of Appeals, G.R. No. 125799, 21 August 2003, 409 SCRA 403;
Gonzales-Precilla v. Rosario, 144 Phil. 398 (1970);
De Castro v. Court of Appeals, 75 Phil. 824 (1946);
Dayrit v. Gonzales, 7 Phil. 182 (1906).
[22] See
rollo, p. 67.
[23] CA
rollo, p. 44.
[24] Id. at 43-46.
[25] Rollo, p. 60.
[26] G.R. No. 77530, 5 October 1989, 178 SCRA 357.
[27] Id. at 360.
[28] Id. at 360-361.
[29] V. FRANCISCO, I THE REVISED RULES OF COURT IN THE PHILIPPINES (1973 ed.), p. 587.
[30] Id. at 537.
[31] Id.
[32] CA
rollo, p. 56.
[33] Id. at 78.