G.R. No.

181300               September 18, 2009 on September 5, 1995 a Complaint9 against herein respondents ATI and Jardine Davies Transport
Services, Inc. (Jardine Davies), as alleged shipagent of MV Hoegh, together with CCBI and the
MALAYAN INSURANCE CO., INC., Petitioner,
"Unknown Owner and Unknown Shipagent" of the MV Hoegh, before the Regional Trial Court
vs.
(RTC) of Manila, for recovery of the amount it paid to LMG. As the identities and addresses of
JARDINE DAVIES TRANSPORT SERVICES, INC. and ASIAN TERMINALS, INC., Respondents.
CCBI and the "Unknown Owner and Unknown Shipagent" could not be ascertained, only Jardine
DECISION Davies and ATI were served with summons.10

CARPIO MORALES, J.: ATI filed its Answer with Compulsory Counterclaim and Crossclaim11 denying any liability for the
value of the loss of part of the cargo, claiming that it had exercised due care and diligence in the
On July 23, 1994, Petrosul International (Petrosul) shipped on board the vessel "MV Hoegh discharge of the cargo from the vessel onto CCBI’s barges; that its participation was limited to
Merchant" (MV Hoegh) from Vancouver, Canada yellow crude sulphur "said to supplying the stevedores who undertook the discharging operations from the vessel to the
weigh 6,599.23 metric tons as per draft survey" for transportation to Manila, consigned to LMG barges; and that any loss to the cargo was sustained either prior to its discharge from the vessel
Chemicals Corporation (LMG).1 or due to the negligence of CCBI.
Upon arrival of the MV Hoegh in Manila on September 5, 1994, the stevedores of respondent Jardine Davies likewise filed its Answer with Compulsory Counterclaim and Crossclaim12 claiming
Asian Terminals, Inc. (ATI) undertook discharging operations of the shipment or cargo from the that it was not the shipagent of the MV Hoegh but a mere commercial agent; that any loss
vessel directly onto the steel barges of Creed Customs Brokerage, Inc. (CCBI), which barges were sustained by the cargo was due to the inherent vice or defect of the goods and unrecovered
later towed upriver and arrived at the consignee LMG’s storage area in Pasig, Manila. spillages, among other things; and that the complaint failed to state a cause of action as there
The consignee’s hired workers thereupon received and unloaded the cargo with the use of an was no valid subrogation.
overhead crane and clamshell grab. By Decision of September 9, 2004, Branch 52 of the Manila RTC found for petitioner, disposing as
During the discharge of the cargo "ex vessel" onto CCBI’s barges, SMS Average Surveyors and follows:
Adjusters, Inc. (SMS), LMG’s appointed surveyors, reported the Outturn Quantity/Weight of the WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the
cargo at 6,247.199 Metric Tons (MT),2 hence, given that as indicated in the Bill of Lading the plaintiff ordering the defendants Jardine Davies Transport Services, Inc. and Asian Terminals, Inc.
weight was 6,599.23 MT, there was a shortage of 352.031 MT. to pay in solidum the former, the following:
Once on board the barges, the weight of the cargo was again taken and recorded at 6,122.023 (a) P1,144,108.43 representing the unpaid principal obligation plus legal interest thereon from
MT,3 thus reflecting a shortage of 477.207 MT. the time of demand until fully paid;
The weight of the cargo, taken a third time upon discharge at LMG’s storage area, was recorded (b) 25% of the amount due as and by way of attorney’s fees;
at 6,206.748 MT4 to thus reflect a shortage of 392.482 MT.
(c) costs of suit; and
The cargo having been insured, LMG filed a claim for the value of shortage of cargo with its
insurer Malayan Insurance Co., Inc., (petitioner) which paid LMG the sum of ₱1,144,108.43 in (d) Defendant Creed Customs Brokerage, Inc. and the unknown Owner and Unknown Shipagent
February 19955 and was accordingly subrogated to the rights of LMG. of M/V "Hoegh Merchant" are ordered DROPPED from the complaint as the court has not
acquired jurisdiction over their persons.
For failing to heed demands to pay for the value of the cargo loss and on the basis of Marine Risk
Note RN-0001-175516 and Marine Insurance Policy No. 001-0343,7 petitioner as subrogee8 filed SO ORDERED.13 (Underscoring supplied)
Discussing in two paragraphs the basis for holding herein respondents Jardine Davies and ATI In fine, the appellate court held that the presumption accorded to a bill of lading - as prima facie
solidarily liable for the loss, the trial court stated: evidence of the goods described therein, had been sufficiently rebutted.

It must be emphasized that the loss occurred while the cargo was in the possession, custody and Since the right of subrogation in favor of an insurer arises only upon payment of a valid insurance
control of the defendants. Absent any proof of exercise of due diligence required by law in the claim, the appellate court held that petitioner was not entitled to restitution, the insurance
vigilance over the cargo, defendants are presumed to be at fault or to have acted negligently. policy between LMG and petitioner having already expired on December 31, 199322 or seven (7)
Such presumption, the defendants failed to overturn to the satisfaction of this court. months prior to the loading of the shipment on July 23, 1994; and that the premium for Marine
Risk Note RN-0001-17551 and/or the Endorsements23 which purportedly extended the effectivity
Moreover, defendants cannot escape liability by raising as a defense any defect in the contract of
of the policy was paid only on October 6, 1994 or a month after the arrival of the cargo.24
insurance as they are not privies thereto. Besides, whatever defect found therein is deemed to
have been waived by the subsequent payment made by the plaintiff of consignee’s claim The appellate court went on to note that petitioner also failed to prove that respondent Jardine
(Compania Maritima v. Insurance Co. of North America, 12 SCRA 213). Davies was the local shipagent of the MV Hoegh given that such vessel was sub-chartered by
LMG’s shipper Petrosul from Jardine Davies’ principal Pacific Commerce Line (PCL), thereby
x x x x14 (Underscoring supplied)
making Petrosul the carrier which undertook to transport LMG’s cargo.
On respondents’ appeal, the Court of Appeals, by Decision of January 14, 2008,15 vacated the trial
The appellate court thus concluded that liability could not be imputed to Jardine Davies, its
court’s decision and dismissed the complaint. It, however, upheld the dropping from the
principal PCL not being the carrier of the cargo and no privity of contract existed between it
complaint of CCBI and the "Unknown Owner and Unknown Shipagent" of M/V Hoegh.
(Jardine Davies) and Petrosul.
Thus the appellate court disposed:
Respecting ATI, the appellate court held that no evidence that any shortage occurred since
WHEREFORE, the assailed Decision is MODIFIED, in that portions (a), (b), and (c) of the same are neither LMG nor its surveyors lodged any protest on the manner by which ATI’s stevedores
VACATED and SET ASIDE. Accordingly, judgment is hereby rendered DISMISSING the complaint carried out the discharging operations.25
against Asian Terminals, Inc. and Jardine Davies Transport Services, Inc. in Civil Case No. 95-
Hence, the present petition raising the following issues:
75224. Costs against Malayan Insurance Corp., Inc.
I
SO ORDERED.16
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT (THE)
In sustaining respondents’ appeal, the appellate court held that petitioner failed to establish the
PRESUMPTION ACCORDED ON THE BILL OF LADING HAS BEEN REBUTTED.
fact of shortage in the cargo, doubts having arisen from the disparity in quantity as stated the bill
of lading (6,559.23 MT) and the shipment invoice17 (6,477.81 MT), as well as the discrepancy in II
quantity as reflected in SMS’s Report of Survey18 and the Comparison of Outturns19 incorporated
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT MALAYAN IS NOT
therein; that the same Report shows that inaccuracies or errors in the manner of/or equipment
ENTITLED TO REIMBURSEMENT SINCE THERE WAS NO VALID SUBROGATION.
used in measuring the weight of the cargo might have resulted in variances in the outturn
quantity; and that the testimonies of petitioner’s witnesses, Eutiquiano Patiag20 and Emmanuel III
Gotladera,21 relative to the contents of the bill of lading may not be credited since they were not
present at the actual weighing and loading of the cargo. WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT DEFENDANT
ASIAN TERMINALS, INC. IS NOT SOLIDARILY LIABLE WITH DEFENDANT JARDINE DAVIES.

IV
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN HOLDING THAT PLAINTIFF DID Petitioner argues, in the main, that the appellate court erred in failing to consider the bill of
NOT CONSIDER JARDINE DAVIES AS "M/V HOEGH’S" LOCAL SHIPAGENT.26 lading as a binding contract between the carrier and shipper or consignee insofar as the accuracy
of the weight of the cargo is concerned. It insists:
The issue boils down to whether petitioner discharged its burden of proving by clear, competent
and convincing evidence that there was shortage in the shipment of yellow crude sulphur to the x x x [T]here is no need to confirm the correctness of its contents by other evidence outside the
consignee LMG. Bill of Lading as it is already conclusive upon the parties. To argue otherwise would be to allow
an anomalous situation since defendant carrier can opt not to honor the terms and conditions of
The Court holds not.
the bill of lading which they themselves [sic] prepared by simply questioning the disparity of the
Before proceeding to the substantive issues, the Court deems it fit to first resolve a procedural quantity between the bill of lading and the invoice. x x x30
issue raised by respondents in their respective Comments27 – that the present petition seeks to
The presumption that the bill of lading, which petitioner relies upon to support its claim for
pass upon questions of fact which is not allowed in a certiorari petition whose province is
restitution, constitutes prima facie evidence of the goods therein described was correctly
confined to questions of law.
deemed by the appellate court to have been rebutted in light of abundant evidence casting
While it is settled that the Court’s jurisdiction in a petition for review on certiorari under Rule 45 doubts on its veracity.
of the Revised Rules of Court is limited to a review of errors of law and does not, as a rule,
That MV Hoegh undertook, under the bill of lading, to transport 6,599.23 MT of yellow crude
involve the re-examination of the evidence presented by the parties, the Court has recognized
sulphur on a "said to weigh" basis is not disputed. Under such clause, the shipper is solely
several exceptions, viz:
responsible for the loading of the cargo while the carrier is oblivious of the contents of the
The rule in our jurisdiction is that only questions of law may be entertained by this Court in a shipment.31 Nobody really knows the actual weight of the cargo inasmuch as what is written on
petition for review on certiorari. This rule, however, is not ironclad and admits certain the bill of lading, as well as on the manifest, is based solely on the shipper’s declaration.32
exceptions, such as when (1) the conclusion is grounded on speculations, surmises or
The bill of lading carried an added clause – the shipment’s weight, measure, quantity, quality,
conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave
condition, contents and value unknown." Evidently, the weight of the cargo could not be gauged
abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of
from the bill of lading.
fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are
based; (7) the findings of absence of facts are contradicted by the presence of evidence on As observed by the Court of Appeals, there were also significant differences in shipment quantity
record; (8) the findings of the CA are contrary to those of the trial court; (9) the CA manifestly at various stages of transit. These disparities in the quantity at various stages of the cargo’s
overlooked certain relevant and undisputed facts that, if properly considered, would justify a transfer after its arrival to its final destinations in Manila are reflected in the Comparison of
different conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such Outturns33 embodied in SMS’s Report of Survey, the pertinent portions of which read:
findings are contrary to the admissions of both parties.28 (Emphasis supplied)
GENERAL REMARKS
Given the bold-faced exceptions in the immediately-quoted ruling of the Court, which are
The resultant variations among the foregoing figures per stage of transit as compared against the
present in the case at bar, not to mention the fact that the trial court’s conclusion "that the loss
Bill of Lading Quantity/Weight could probably be attributed to any and/or a confluence of the
occurred while the cargo was in the possession, custody and control of the defendants" is bereft
following factors:
of any reference to specific evidence on record upon which it was based, the Court takes a
second, hard look at the evidence.29 1. Variance in moisture content; evaporation and/or absorption of moisture due to exposure of
the subject shipment to the elements otherwise atmospheric change, attendant all throughout
the stages of transit from port of loading/origin to final destination at consignee’s receiving Respondents were thus well within their rights to scrutinize the contents thereof for the purpose
terminal; of determining the terms of its validity or effectivity, among other things.1avvphi1

2. Unrecovered spillages during unloading of the subject shipment from vessel to barges, and Given that it is respondents who stand to be prejudiced by any claims for restitution arising from
during receiving at LMG Terminal from barges to stock pile area; petitioner’s right of subrogation under the open policy, it is, at best specious to insist that they
are barred from invoking any contractual defect as a defense under the pretext that they were
3. Shortage of about 352.031 Metric Tons as established on completion of discharging the
not privy to the insurance contract.
subject shipment per vessel’s draft, and/or 477.207 Metric Tons as established based on
quantity/weight received by barges at shipside per displacement method; Recall that petitioner’s main cause of action under the complaint was based on both the Marine
Risk Note and the Open Policy. The Subrogation Receipt37 clearly states that the amount paid was
4. Probable error/oversight aboard vessel and barges due rough sea condition prevailing at the
in full settlement of LMG’s claim under petitioner’s Marine Risk Note Number RN-001-17551. The
time of initial and final draft surveys; and
Marine Risk Note, however, is not the insurance policy. It merely constitutes an acknowledgment
5. Variance due to inaccuracies or errors in manner, procedure, method, and/or equipments or declaration of the shipper about the specific shipment covered by the marine insurance policy,
used or applied in determining the outturn quantity/weight of the subject shipment per stage of the evaluation of the cargo and the chargeable premium.38 The marine open policy is the blanket
transit from port of loading/origin to final port of destination at consignee’s designated receiving insurance to be undertaken by the insurer on all goods to be shipped by the consignee during the
terminal.34 (Underscoring supplied) existence of the contract.

In the absence of clear, convincing and competent evidence to prove that the cargo indeed Apart from not being a legal source of subrogation, the Marine Risk Note is invalid for, as earlier
weighed, albeit the Bill of Lading qualified it by the phrase "said to weigh," 6,599.23 MT at the stated, it was issued only on July 20, 1994 or after the main insurance contract had already
port of origin when it was loaded onto the MV Hoegh, the fact of loss or shortage in the cargo lapsed (by the end of December 1993), and the insurance premium on this risk note was paid
upon its arrival in Manila cannot be definitively established. The legal basis for attributing liability only on October 6, 199439 or a month after the shipment had already arrived in Manila, a
to either of the respondents is thus sorely wanting. peculiarity that none of petitioner’s witnesses has endeavored to explain.

Petitioner points out, however, that the shipment was covered not only by the Marine Risk Note Petitioner’s marine insurance policy explicitly states under its effectivity clause that it shall cover
but also by Open Marine Insurance Policy which, it explains, means that the value of the thing "all shipments effective January 10, 1993 sailings and all shipments made thereafter until
insured has not been agreed upon but left to be ascertained in the event of loss and, therefore, December 31, 1993 sailings."40 Coverage had, therefore, expired almost seven (7) months prior to
covered by a continuing insurance long before the cargo even loaded on board; and that Jardine the loading of the shipment on July 23, 1994.
Davies cannot set up any defect in the insurance policy as a defense since it is not privy to the
Petitioner can take no refuge in its claim that the Endorsement dated December 29,
contract of insurance between it (petitioner) and LMG.
199341 proves that the subject insurance policy was amended or renewed. The said Endorsement
These matters pointed out by petitioner are closely intertwined with the terms and conditions was never adverted to in the complaint filed before the trial court, its existence coming to light
embodied in the insurance contract between petitioner and LMG such that petitioner’s right to only at the close of the testimony on cross of petitioner’s witness Emmanuel Gotladera on the
recovery unquestionably derives from contractual subrogation as an incident to an insurance expired marine insurance policy.42 In fact, said witness did not identify the signatory to the
relationship.35 Endorsement nor on its genuineness and due execution, thus rendering his testimony thereon as
mere hearsay.
Jurisprudence mandates the presentation in evidence of the marine insurance policy so that its
terms and conditions can be scrutinized and the extent of coverage36 can be determined.
A final note. It bears stressing that there is nothing in the records showing that ATI was negligent
in its handling of the cargo when its stevedores discharged the same from the vessel directly
onto the steel barges of CCBI.

Contrary to the trial court’s findings, ATI was never in custody or possession of the shipment, its
participation having been limited to where "the stevedores of Asian Terminals, Inc. (ATI)
undertook the discharging operations of the shipment ex vessel to barges thru the use of vessel’s
cargo gears, and clamshell/ grab,"43 a fact confirmed by petitioner’s own witness Eutiquiano
Patiag.

More importantly, representatives of SMS, the consignee’s assigned surveyors, were present
throughout the entire discharging operations - from the time the cargo was unloaded from the
MV Hoegh until its discharge at LMG’s chemical terminal - and never reported any mishap or
incidence of mishandling on the part of ATI.44

WHEREFORE, the assailed Court of Appeals January 14, 2008 Decision in connection with CA-G.R.
CV No. 84139 is AFFIRMED.

Costs against petitioner.

SO ORDERED.