615 Phil. 627
MENDOZA, J.:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants Eastern Shipping Lines, Inc. and ATI, and said defendants are hereby ordered to pay jointly and solidarily plaintiff the following:
1) The claim of P1,047,298.34 with legal interest thereon of 6% per annum from the date of the filing of this complaint until the same is fully paid;
2) [Twenty-five (25%)] percent of the principal claim, as and for attorney's fees;
3) Plus costs of suit.
Both the counterclaims and crossclaims are without legal basis. The counterclaims and crossclaims are based on the assumption that the other defendant is the one solely liable. However, inasmuch as the solidary liability of the defendants have been established, the counterclaims and crossclaims must be denied.
Equal costs against Eastern Shipping Lines, Inc. and Asian Terminals, Inc.
SO ORDERED.[13]
WHEREFORE, the appealed decision is AFFIRMED with MODIFICATIONS, in that (i) defendant-appellant Eastern Shipping Lines, Inc. is ordered to pay appellee (a) the amount of P904,293.75 plus interest thereon at the rate of 6% per annum from the filing of the complaint up to the finality of this judgment, when the interest shall become 12% per annum until fully paid, and (b) the costs of suit; (ii) the award of attorney's fees is DELETED; and (iii) the complaint against defendant-appellant Asian Terminals, Inc. is DISMISSED.
SO ORDERED.[14]
I.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE LOWER COURT FINDING HEREIN PETITIONER LIABLE DESPITE THE FACT THAT RESPONDENT FAILED TO SUBMIT ANY INSURANCE POLICY.II.
WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT APPLYING THE US$500.00/PACKAGE/CASE PACKAGE LIMITATION OF LIABILITY IN ACCORDANCE WITH THE CARRIAGE OF GOODS BY SEA ACT.[17]
x x x 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. x x x.[21]
RN NO 39821/95
Date: Nov. 16, 1995
NISSAN MOTOR PHILS., INC.
x x x
Gentlemen:
We have this day noted a Risk in your favor subject to all clauses and condition of the Company's printed form of Marine Open Policy No. 86-168
For PHILIPINE PESOS FOURTEEN MILLION ONE HUNDRED SEVENTY-THREE THOUSAND FORTY-TWO & 91/100 ONLY (P14, 173,042.91) xxx
CARGO: 56 CASES NISSAN MOTOR VEHICLE CKD (GC22)
CONDITIONS: INSTITUTE CARGO CLAUSES "A"OTHER TERMS AND CONDITIONS PERMOP-86-168
From: NAGOYA
To: MANILA, PHILS.
ETD: NOV. 8, 1995 ETA: NOV. 17, 1995
CARRIER: "APOLLO TUJUH"
B/L NO: NMA-1
BANK: BANK OF THE PHILLIPINE ISLANDS
L/C NO: 026010051971
Shipper/ Consignee: MARUBENI CORPORATION
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."[24]
Exhibit "B," Marine Cargo Risk Note No. 39821 dated November 16, 1995 is being objected to for being irrelevant and immaterial as it was executed on November 16, 1995. The cargoes arrived in Manila on November 16, 1995. This means that the cargoes are not specifically covered by any particular insurance at the time of transit. The alleged Marine Open Policy was not presented. Marine Open Policy may be subject to Institute Cargo Clauses which may require arbitration prior to the filing of an action in court.[26]
Q. Are you also the one preparing the Marine Insurance Contract? A. No, sir. Q. Who is the one? A. Our Marine Cargo Underwriting Department. Q. And do you know anybody in that department? A. Yes, sir. Q. And you were aware that this particular cargo of the shipment was insured? A. Yes, sir, per policy issued. Q. And that you are referring to Exhibit? A. The Marine Cargo Risk. Q. Is this the only contract of Insurance between Prudential Guarantee and Nissan? A. Sir, there is a Marine Open Policy. Q. Do you have any copy of that? A. It is in the office. Atty. Alojado Can you produce that copy? Atty. Zapa May we know the request of counsel for producing this Marine Open Policy? Atty. Alojado The basis of the question is the answer of the witness which says that there is another contract of insurance. COURT Yes, that is a Marine Open Policy. Are you familiar with Marine Open Policy? Atty. Alojado Yes, Your Honor. But we would also like to be familiarize with that contract. COURT But you know already a Marine Open Policy Atty. Alojado Yes, Your Honor. COURT I do not know if you work as a lawyer for several Insurance Company? Atty. Alojado No, Your Honor. Honestly, Your Honor I worked as a Maritime lawyer. COURT Then you should know what is Marine Open Policy. Atty. Alojado I would like to know the specification of the Marine Open Policy in this regard. Atty. Zapa I think your Honor, between the plaintiff and the defendant there is no issue against the insurance. COURT Yes because this witness it not testifying on the Marine Open Policy. Atty. Alojado We submit. COURT Proceed. Atty. Alojado Q. But there is a Marine Open Policy A. Yes, sir.[27] x x x x COURT Q. Is the policy a standing policy, a continuing policy or is it going only for only a year or for a particular shipment or what? A. For this particular consignee, they have Marine Open Policy. Atty. Alojado That was not presented. COURT That's why I'm asking. So the policy is not only for a particular shipment, but all other shipments that may come? A. Yes, Your Honor. Q. Are covered? A. Yes, Your Honor. Q. Without any specifications? A. Yes, Your Honor.[28]
Q. Are you also the one preparing the Marine Insurance Contract? A. No, sir. Q. Who is the one? A. Our Marine Cargo Underwriting Department. Q. And do you know anybody in that department? A. Yes, sir. Q. And you were aware that this particular cargo of the shipment was insured? A. Yes, sir, per policy issued. Q. And that you are referring to Exhibit? A. The Marine Cargo Risk. Q. Is this the only contract of Insurance between Prudential Guarantee and Nissan? A. Sir, there is a Marine Open Policy. Q. Do you have any copy of that? A. It is in the office. Atty. Alojado Can you produce that copy? Atty. Zapa May we know the request of counsel for producing this Marine Open Policy? Atty. Alojado The basis of the question is the answer of the witness which says that there is another contract of insurance. COURT Yes, that is a Marine Open Policy. Are you familiar with Marine Open Policy? Atty. Alojado Yes, Your Honor. But we would also like to be familiarize with that contract. COURT But you know already a Marine Open Policy Atty. Alojado Yes, Your Honor. COURT I do not know if you work as a lawyer for several Insurance Company? Atty. Alojado No, Your Honor. Honestly, Your Honor I worked as a Maritime lawyer. COURT Then you should know what is Marine Open Policy. Atty. Alojado I would like to know the specification of the Marine Open Policy in this regard. Atty. Zapa I think your Honor, between the plaintiff and the defendant there is no issue against the insurance. COURT Yes because this witness it not testifying on the Marine Open Policy. Atty. Alojado We submit. COURT Proceed. Atty. Alojado Q. But there is a Marine Open Policy A. Yes, sir.[27] x x x x COURT Q. Is the policy a standing policy, a continuing policy or is it going only for only a year or for a particular shipment or what? A. For this particular consignee, they have Marine Open Policy. Atty. Alojado That was not presented. COURT That's why I'm asking. So the policy is not only for a particular shipment, but all other shipments that may come? A. Yes, Your Honor. Q. Are covered? A. Yes, Your Honor. Q. Without any specifications? A. Yes, Your Honor.[28]
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.
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: x x x[31]
EXH "B" = Marine Cargo Risk Note No. 39821/95 Dated November 16, 1995.
Purpose: As proof that the subject shipment was covered by insurance for P14,173, 042.91 under Marine Open Policy No. 86-168.[32]
x x x Wallem still cannot be held liable because of the failure of Prudential to present the contract of insurance or a copy thereof. Prudential claims that it is subrogated to the rights of GMC pursuant to their insurance contract. For this purpose, it submitted a subrogation receipt (Exh. J) and a marine cargo risk note (Exh. D). However, as the trial court pointed out, this is not sufficient. As GMC's subrogee, Prudential can exercise only those rights granted to GMC under the insurance contract. The contract of insurance must be presented in evidence to indicate the extent of its coverage. As there was no determination of rights under the insurance contract, this Court's ruling in Home Insurance Corporation v. Court of Appeals is applicable:
The insurance contract has not been presented. It may be assumed for the sake of argument that the subrogation receipt may nevertheless be used to establish the relationship between the petitioner [Home Insurance Corporation] and the consignee [Nestlé Phil.] and the amount paid to settle the claim. But that is all the document can do. By itself alone, the subrogation receipt is not sufficient to prove the petitioner's claim holding the respondent [Mabuhay Brokerage Co., Inc.] liable for the damage to the engine.
. . . .
It is curious that the petitioner disregarded this rule, knowing that the best evidence of the insurance contract was its original copy, which was presumably in the possession of Home itself. Failure to present this original (or even a copy of it), for reasons the Court cannot comprehend, must prove fatal to this petition.[35]
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 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.
As in Delsan, 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.[36]
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.[37]