Republic of the Philippines

Supreme Court
Baguio City
FIRST DIVISION
ASIAN TERMINALS, INC.,
G.R. No. 171406
Petitioner,
- versusMALAYAN INSURANCE, CO., INC.,
Respondent.
Promulgated:
April 4, 2011
x--------------------------------------------------------x
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 hereby AFFIRMED 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.