G.R. No. L-26001 Case Digest

G.R. No. L-26001, October 29, 1968

Phil. National Bank

Vs. Court of Appeals and Phil. Commercial and Industrial Bank

Ponente: Conception

Facts:

January 15, 1962, Augusto Lim deposited in his account with PCIB a GSIS Check in the sum of P57,415, drawn against the PNB. The check as practiced was forwarded for clearing through the Central Bank to PNB, which did not return the said check and paid the amount to PCIB. This payment made was debited against the account of GSIS in PNB. Later on, it was found that the amount was re-credited from PNB for the reason of forged signatures of the officers. Then PNB demanded from PCIB the refund of the amount. 

The demand of PNB was dismissed by the CFI and CA. Allegedly, Mariano Pulido by forging the signatures of the General Manager and Auditor of GSIS; and later on indorsed it to Manuel Go; Go indorsed it to Augusto Lim, who in turn deposited it to PCIB. Prior to this incident, GSIS have notified PNB that the check had been lost, and requested that its payment be stopped.

Issues:

PNB maintains that the court erred in (1) not finding PCIB as negligent, not finding the signatures forged, (2) in not finding that the signatures are forged (3) not finding PCIB liable by virtue of the warranty on the check, (4) in not holding that clearing is not acceptance in contemplation of negotiable instruments law, (5) in not finding that since the PNB did not accept the check, therefore entitles PNB to reimbursement and in (6) denying the PNB’s right to recover from PCIB.

Ruling:

(2) PCIB is not negligent; There is no absolute evidence, and PNB has not even tried to prove that the indorsements are spurious. PNB refunded the amount of  the check to GSIS, on account of the forgery in signatures, not of the indorsers but, the officers of the GSIS as drawers. This is immaterial to PNB’s liability as drawee, for against the drawee, the indorsement of an immediate bank does not guarantee the signature of the drawer.

(3) PCIB thereby guarantee “all prior indorsements”, not the authenticity of the signatures because GSIS is the drawer, not an indorsor.  It is irrelevant, PNB’s alleged right to recover could have been availed by a subsequent indorsee or holder in due course subsequent to PCIB. PNB is neither, but instead after the payment of PNB, the check ceased to be a negotiable instrument and became a mere voucher or proof of payment.

(4) and (5) Acceptance is not required for checks, for the same are payable on demand. Actual payment of the amount of the check implies not only an assent to the order but also a compliance with such obligation.

(6) and (1) PNB was negligent too. PNB not returning the check implied, under the banking practice, that PNB honoured the check and paid its amount to PCIB; and that only then did PCIB allow Lim to draw said amount from his account. Thus by not returning the check, indicates that PNB had found nothing wrong with the check. PNB induced PCIB to honor the check as well. Hence, PNB is the primary or proximate cause of the loss, hence may not recover from PCIB.

G.R. No. 162420 Case Digest

G.R. No. 162420 April 22, 2008

Jaguar Security and Investigation Agency

vs Rodolfo Sales, etc.

Ponente: Austria-Martinez

Facts:

Jaguar is a private corporation engaged in the business of providing security services; one of their clients is Delta Milling Industries, Inc. The respondents were hired as security guards by Jaguar and were assigned at the premises of Delta. Later on, the security guards instituted an instant labor case before the labor arbiter alleging money claims for their services.

On July 1, 1999, petitioner Jaguar filed a partial appeal questioning the failure of public respondent NLRC to resolve its cross-claim against Delta as the party ultimately liable for payment of the monetary award to the security guards.

In its Resolution dated September 19, 2000, the NLRC dismissed the appeal, holding that it was not the proper forum to raise the issue. It went on to say that Jaguar, being the direct employer of the security guards, is the one principally liable to the employees. Thus, it directed petitioner to file a separate civil action for recovery of the amount before the regular court having jurisdiction over the subject matter, for the purpose of proving the liability of Delta. Jaguar sought reconsideration of the dismissal, but the Commission denied the same.

Petitioner insists that its cross-claim should have been ruled upon in the labor case as the filing of a cross-claim is allowed under Section 3 of the NLRC Rules of Procedure which provides for the suppletory application of the Rules of Court. Petitioner argues that the claim arose out of the transaction or occurrence that is the subject matter of the original action. Petitioner further argues that as principal, Delta Milling Industries, Inc. (Delta Milling) is liable for the awarded wage increases.

There is no question as regards the respective liabilities of petitioner and Delta Milling. Under Articles 106, 107 and 109 of the Labor Code, the joint and several liability of the contractor and the principal is mandated to assure compliance of the provisions therein including the statutory minimum wage. The contractor, petitioner in this case, is made liable by virtue of his status as direct employer. On the other hand, Delta Milling, as principal, is made the indirect employer of the contractor's employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers' performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution.

Issue: whether petitioner may claim reimbursement from Delta Milling through a cross-claim filed with the labor court?

Ruling:

The jurisdiction of labor courts extends only to cases where an employer-employee relationship exists.

In the present case, there exists no employer-employee relationship between petitioner and Delta Milling. In its cross-claim, petitioner is not seeking any relief under the Labor Code but merely reimbursement of the monetary benefits claims awarded and to be paid to the guard employees. There is no labor dispute involved in the cross-claim against Delta Milling. Rather, the cross-claim involves a civil dispute between petitioner and Delta Milling. Petitioner's cross-claim is within the realm of civil law, and jurisdiction over it belongs to the regular courts.

Moreover, the liability of Delta Milling to reimburse petitioner will only arise if and when petitioner actually pays its employees the adjudged liabilities.

Petition is denied.

G.R. No. 112940 Case Digest

G.R. No. 112940 November 21, 1994

Dai-Chi Electronics Manufacturing Corp.

vs Hon. Martin Villarama, Jr. and Adonis Limjuco

Ponente: Quiason

Facts:

July 1993, petitioner filed a complaint for damages with RTC Pasig against Limjuco, a former employee. Dai-Chi alleged that Limjuco violated their contract of employment. Dai-Chi claimed that Limjuco became an employee of Angel Sound Philippines Corp. engaged in the same business as Dai-Chi. Dai-Chi alleged also that Limjuco was the head of material management control department at the competing corporation while employed in Dai-Chi.

Dai-Chi sought to recover liquidated damages in the amount of 100,000 as provided in their contract. Then Judge Villarama, ruled that it had no jurisdiction over the subject matter of the controversy because the complaint is arising from employer-employee relations. Dai-Chi contends that the action did not arise from employer-employee relations, even though the claim is based on the employment contract.

Issue: Is petitioner's claim for damages one arising from employer-employee relations?

Ruling:

No. Petitioner does not ask for any relief under the Labor Code, it seeks to recover damages agreed upon in the contract as redress for private respondent’s breach of his contractual obligation to its "damage and prejudice".

On appeal to this court, we held that jurisdiction over the controversy belongs to the civil courts. We stated that the action was for breach of a contractual obligation, which is intrinsically a civil dispute. We further stated that while seemingly the cause of action arose from employer-employee relations, the employer's claim for damages is grounded on "wanton failure and refusal" without just cause to report to duty coupled with the averment that the employee "maliciously and with bad faith" violated the terms and conditions of the contract to the damage of the employer. Such averments removed the controversy from the coverage of the Labor Code of the Philippines and brought it within the purview of Civil Law.

Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal connection with any of the claims provided for in that article. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations.

Trial Court is ordered to continue with the proceedings.

G.R. No. 104269 Case Digest

G.R. No. 104269 November 11, 1993

Department of Agriculture

vs NLRC

Ponente: Vitug

Facts:

The DA and Sultan Security Agency entered into a contract for security services, pursuant to the agreement guards were deployed by Sultan Agency in the various premises of the DA. September 1990, several guards of Sultan Agency filed a complaint for underpayment of wages, non-payment of 13th month pay, uniform allowances, night shift differential pay, holiday pay and overtime pay, as well as for damages before Regional Arbitration Branch of CDO against the DA and Sultan Security Agency.

The executive labor arbiter rendered that DA and Sultan Agency are jointly and severally liable. Sultan didn't appeal the decision, thus it became final and executory. July 1991, the Labor Arbiter issued a writ of execution commanding the City Sheriff to enforce the judgment against the property of DA and Sultan's property.

DA, filed a petition for injunction, prohibition and mandamus, with prayer for preliminary writ of injunction was filed by the petitioner with the NLRC CDO, saying that the writ issued was affected without the labor arbiter’s jurisdiction over the petitioner. DA also pointed out that the attachment or seizure of its property would hamper and jeopardize petitioner's governmental functions to the prejudice of the public good.

This petition charges NLRC with grave abuse of discretion for refusing to quash the writ of execution. The NLRC has disregarded the cardinal rule on the non-suability of the State. NLRC argued on the other hand that the DA has impliedly waived its immunity from suit by concluding a service contract with Sultan Agency.

Issue: Whether NLRC committed grave abuse of discretion.

Ruling:

Not all contracts entered into by the government operate as a waiver of its non-suability; distinction must still be made between one which is executed in the exercise of its sovereign function and another which is done in its proprietary capacity.

In the instant case, the Department of Agriculture has not pretended to have assumed a capacity apart from its being a governmental entity when it entered into the questioned contract; nor that it could have, in fact, performed any act proprietary in character.

But, be that as it may, the claims of private respondents, i.e. for underpayment of wages, holiday pay, overtime pay and similar other items, arising from the Contract for Service, clearly constitute money claims. Act No. 3083, aforecited, gives the consent of the State to be "sued upon any moneyed claim involving liability arising from contract, express or implied, . . . Pursuant, however, to Commonwealth Act ("C.A.") No. 327, as amended by Presidential Decree ("P.D.") No. 1145, the money claim first be brought to the Commission on Audit.

We fail to see any substantial conflict or inconsistency between the provisions of C.A. No. 327 and the Labor Code with respect to money claims against the State. The Labor code, in relation to Act No. 3083, provides the legal basis for the State liability but the prosecution, enforcement or satisfaction thereof must still be pursued in accordance with the rules and procedures laid down in C.A. No. 327, as amended by P.D. 1445.

Wherefore, the petition is granted.

G.R. No. 163768 Case Digest

G.R. No. 163768 March 27, 2007

Julius Kawachi and Gayle Kawachi

vs Dominie Del Quero and Hon. Judge Taro

Ponente: Tinga

Facts:

Del Quero charged AJ Raymundo Pawnshop, Virgilio Kawachi and Julius Kawachi with illegal dismissal, non-execution of a contract of employment, violation of minimum wage law and non-payment of overtime pay. The complaint was filed before the NLRC.Del Quero also filed an action for damages against Kawachi before the MeTC of Quezon City.

Kwachi moved for the dismissal of the complaint on the grounds of lack of jurisdiction and forum-shopping or splitting cause of action. The MeTC rejected the dismissal and the subsequent motion for reconsideration.

Kawachi then elevated the case to the RTC. RTC held that Del Quero's action for damages was based on the tortious acts committed by her employers and did not seek any relief under the Labor code. RTC also denied the motion for reconsideration, hence this petition for review on certiorari.

Issue: Jurisdiction over the complaint for damages.

Kawachi: NLRC has jurisdiction over the action for damages because the alleged injury is work-related and that Del Quero should not be allowed to split her causes.

Ruling:

Petition is meritorious. Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages arising from employer-employee relations —in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor laws, but also damages governed by the Civil Code.

In the instant case, the allegations in Del Quero's complaint for damages show that her injury was the offshoot of petitioners immediate harsh reaction as her administrative superiors to the supposedly sloppy manner by which she had discharged her duties. This incident was similarly narrated in both illegal dismissal complaint and damages complaint; which shows that the injury is directly related to the employer-employee relations of the parties.

The dismissed employee cannot be allowed to sue in two forums. NLRC has jurisdiction over the complaint for illegal dismissal and damages arising there from.

G.R. No. 89621 Case Digest

G.R. No. 89621 September 24, 1991

Pepsi Cola

vs Hon. Lolita Gal-ang

Ponente: Cruz

Facts:

Some employees of Pepsi were suspected of irregular disposition of empty pepsi bottles. On July 1987, pepsi filed a criminal complaint for theft against the employees but later withdrawn it for falsification of private documents. The MTC Leyte, after conducting a preliminary investigation dismissed the complaint, with a separate civil complaint against Pepsi for damages due to their malicious prosecution.

Pepsi moved to dismiss the civil complaint on the ground of no jurisdiction because it involved an employee-employer relationship which exclusive under the labor arbiter's jurisdiction. The motion was granted. However, Hon. Gal-ang , acting on a motion for reconsideration, reinstated the case saying that it was distinct from labor case for damages. The petitioners then came to SC for relief.

Pepsi cited Getz Corp vs CA when the court said that "for unpaid salary and other employment benefits, termination pay and moral and exemplary damages" the labor arbiter shall have the jurisdiction over the case.

Issue: Whether there the labor arbiter has the jurisdiction over the case for malicious prosecution?

Ruling:

SC: Not every controversy involving workers and their employers can be resolved only by the labor arbiters. This will be so if there is a "reasonable causal connection" between the claims asserted. Absence the link, it will be under the civil or criminal jurisdiction of the regular courts.

At the case at bar, it involves a complaint for damages for malicious prosecution which does not appear that there is a "reasonable causal connection" between the complaint and the relations of the parties. The complaint did not arise from such relations and in fact could have arisen independently of an employment relationship between the parties.

G.R. No. 150751 Case Digest

G.R. No. 150751, September 20, 2004

Central Shipping Company, Inc.

vs Insurance Company of North America

Ponente: Panganiban

Facts:

July 25, 1990, Central Shipping received on board its vessel 276 pieces of round logs and undertook to transport said shipment to Manila for delivery to Alaska Lumber Co. The cargo was insured for P3m against total loss. While on voyage, the vessel completely sank.

Insurance Company alleged that the total loss of the shipment was caused by the fault and negligence of the petitioner. The consignee, Alaska presented a claim for the value of the shipment against the petitioner but the latter failed and refused to settle the claim, hence being the insurer, Insurance company paid and now seeks to be subrogated by the shipping company.

The shipping company argues that the ship was seaworthy and properly manned, putting defense that the proximate cause of the sinking vessel and the loss was a natural disaster which could have not been foreseen. RTC was unconvinced and favoured the insurance company.

CA affirmed the RTC finding that the south western monsoon encountered by the vessel was not unforeseeable.

Issues:

(1) Whether the carrier is liable for the loss of the cargo; and (2) whether the doctrine of limited liability is applicable. These issues involve a determination of factual questions of whether the loss of the cargo was due to the occurrence of a natural disaster; and if so, whether its sole and proximate cause was such natural disaster or whether petitioner was partly to blame for failing to exercise due diligence in the prevention of that loss.

Ruling:

Petition is devoid of merit.

(1) Liability for lost cargo: From the nature of their business and for reasons of public policy, common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common carriers are responsible; that is, unless they can prove that such loss, destruction or deterioration was brought about -- among others -- by flood, storm, earthquake, lightning or other natural disaster or calamity. In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.

In the present case, petitioner has not given the Court sufficient cogent reasons to disturb the conclusion of the CA that the weather encountered by the vessel was not a storm as contemplated by Article 1734(1). Established is the fact that between 10:00 p.m. on July 25, 1990 and 1:25 a.m. on July 26, 1990, M/V Central Bohol encountered a south western monsoon in the course of its voyage.

(2) Doctrine of Limited Liability: The doctrine of limited liability under Article 587 of the Code of Commerce is not applicable to the present case. This rule does not apply to situations in which the loss or the injury is due to the concurrent negligence of the ship owner and the captain. It has already been established that the sinking of M/V Central Bohol had been caused by the fault or negligence of the ship captain and the crew, as shown by the improper stowage of the cargo of logs. Closer supervision on the part of the ship owner could have prevented this fatal miscalculation. As such, the ship owner was equally negligent. It cannot escape liability by virtue of the limited liability rule.

G.R. No. 168433 Case Digest

G.R. No. 168433, February 10, 2009

UCPB General Insurance Co., Inc.

vs Aboitiz Shipping Corp.

Ponente: Tinga

Facts:

On June 1991, 3 units of waste water treatment plant with accessories were purchased by San Miguel Corp from Super Max Engineering. The goods came from Charleston, USA and arrived in port of Manila on board MV Scandutch Star. From Manila it was transported to Cebu on board of Aboitiz Supercon II. In Cebu, with clearance from the Bureau of Customs, the goods were delivered and received by San Miguel at its plant site. It was then discovered that the motor of the unit was damaged.

Pursuant to the insurance agreement, UCPB General Insurance paid San Miguel P1,703,381.40 representing the value of the damaged unit. In turn, San Miguel executed a subrogation form in favor of UCPB. Then, UCPB filed a complaint on Kuly 1992 as subrogee of San Miguel seeking to recover from Aboitiz. Aboitiz moved to admit East Asiatic Co. as general agent of DAMCO Intermodal System. RTC held Aboitiz, East Asiatic and DAMCO solidarily liable.

CA reversed the decision of the RTC and ruled that UCPBs right of action did not accrue because UCPB failed to file a formal notice within 24 hours from the damaged. In a memorandum, UCPB asserts that the claim requirement does not apply to cases concerning damages to the merchandise had already been known to the carrier. UCPB revealed that the damage to the cargo was found upon discharge from the foreign carrier witnessed by the carrier’s representative who signed the request for bad order survey and the turnover of bad order cargoes. This knowledge, UCPB argues, dispenses with the need to give the carrier a formal notice of claim. Incidentally, the carrier’s representative mentioned by UCPB as present at the time the merchandise was unloaded was in fact a representative of respondent Eagle Express Lines (Eagle Express). UCPB further claims that the issue of the applicability of Art. 366 of the Code of Commerce was never raised before the trial court and should, therefore, not have been considered by the CA.

Eagle Express, in its Memorandum dated February 7, 2007, asserts that it cannot be held liable for the damage to the merchandise as it acted merely as a freight forwarders agent in the transaction. It allegedly facilitated the transhipment of the cargo from Manila to Cebu but represented the interest of the cargo owner, and not the carriers.

Aboitiz, on the other hand, points out, in its Memorandum dated March 29, 2007, that it obviously cannot be held liable for the damage to the cargo which, by UCPBs admission, was incurred not during transhipment to Cebu on board one of Aboitizs vessels, but was already existent at the time of unloading in Manila. Aboitiz also argues that Art. 366 of the Code of Commerce is applicable and serves as a condition precedent to the accrual of UCPBs cause of action against it.

Issue: Whether any of the remaining parties may still be held liable by UCPB.

Ruling:

UCPB obviously made a gross misrepresentation to the Court when it claimed that the issue regarding the applicability of the Code of Commerce, particularly the 24-hour formal claim rule, was not raised as an issue before the trial court. The appellate court, therefore, correctly looked into the validity of the arguments raised by Eagle Express, Aboitiz and Pimentel Customs on this point after the trial court had so ill-advisedly centered its decision merely on the matter of extraordinary diligence.

Interestingly enough, UCPB itself has revealed that when the shipment was discharged and opened at the ICTSI in Manila in the presence of an Eagle Express representative, the cargo had already been found damaged. In fact, a request for bad order survey was then made and a turnover survey of bad order cargoes was issued, pursuant to the procedure in the discharge of bad order cargo. The shipment was then repacked and transhipped from Manila to Cebu on board MV Aboitiz Supercon II. When the cargo was finally received by SMC at its Mandaue City warehouse, it was found in bad order, thereby confirming the damage already uncovered in Manila.

We have construed the 24-hour claim requirement as a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfilment of the condition. Otherwise, no right of action against the carrier can accrue in favor of the former.

The shipment in this case was received by SMC on August 2, 1991. However, as found by the Court of Appeals, the claims were dated October 30, 1991, more than three (3) months from receipt of the shipment and, at that, even after the extent of the loss had already been determined by SMCs surveyor. The claim was, therefore, clearly filed beyond the 24-hour time frame prescribed by Art. 366 of the Code of Commerce.

Petition was denied. CA's decision was affirmed.

G.R. No. 165647 Case Digest

G.R. No. 165647, March 26, 2009

Philippines First Insurance Co., Inc.

vs Wallem Phils. Shipping, Inc.

Ponente: Tinga

Facts:

October 1995, Anhui Chemicals Import and Export Corp. loaded on board M/S Offshore Master a shipment consisting of sodium sulphate anhydrous, complete and in good order for transportation to and delivery at the port of Manila for consignee, covered by a clean bill of lading.

On October 16, 1995, the shipment arrived in port of manila and was discharged which caused various degrees of spillage and losses as evidence by the turn over survey of the arrastre operator. Asia Star Freight delivered the shipments from pier to the consignees in Quezon City, during the unloading, it was found by the consignee that the shipment was damaged and in bad condition.

April 29, 1996, the consignee filed a claim with Wallem for the value of the damaged shipment, to no avail. Since the shipment was insured with Phil. First Insurance against all risks in the amount of P2,470,213.50. The consignee filed a claim against the First Insurance. First insurance after examining the turn-over survey, the bad order certificate and other documents paid the consignee but later on sent a demand letter to Wallem for the recovery of the amount paid to the consignee (in exercise of its right of subrogation). Wallem did not respond to the claim.

First Insurance then instituted an action before RTC for damages against Wallem. RTC held the shipping company and the arrastre operator solidarily liable since both are charged with the obligation to deliver the goods in good order condition.

The CA reversed and set aside the RTC's decision. CA says that there is no solidary liability between the carrier and the  arrastre because it was clearly established that the damage and losses of the shipment were attributed to the mishandling by the arrastre operator in the discharge of the shipment.

Issues:

1. Whether or not the Court of Appeals erred in not holding that as a common carrier, the carriers duties extend to the obligation to safely discharge the cargo from the vessel;

2. Whether or not the carrier should be held liable for the cost of the damaged shipment;

3. Whether or not Wallems failure to answer the extra judicial demand by petitioner for the cost of the lost/damaged shipment is an implied admission of the formers liability for said goods;

4. Whether or not the courts below erred in giving credence to the testimony of Mr. Talens.

Ruling:

(1) Yes, the vessel is a common carrier, and thus the determination of the existence or absence of liability will be gauged on the degree of diligence required of a common carrier. (2) The first and second issue will be resolved concurrently.

(3) The damage of the shipment was documented by the turn0over survey and request for bad order survey, with these documents, petitioner insist that the shipment incurred damages while still in the care and responsibility of Wallem before it was turned over to the arrastre operator.  However, RTC found the testimony of Mr. Talens (cargo surveyor) that the loss was caused by the mishandling of the arrastre operator. This mishandling was affirmed by the CA which was the basis for declaring the arrastre operator solely liable for the damage.

It is established that damage or losses were incurred by the shipment during the unloading. As common carrier, they are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them.

For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed otherwise.

COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among the carriers responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.

On the other hand, the functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship's tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.

Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or employees should observe the standards and measures necessary to prevent losses and damage to shipments under its custody. Thus, in this case the appellate court is correct insofar as it ruled that an arrastre operator and a carrier may not be held solidarily liable at all times. But the precise question is which entity had custody of the shipment during its unloading from the vessel?

The records are replete with evidence which show that the damage to the bags happened before and after their discharge and it was caused by the stevedores of the arrastre operator who were then under the supervision of Wallem.

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. In the instant case, the damage or losses were incurred during the discharge of the shipment while under the supervision of the carrier. Consequently, the carrier is liable for the damage or losses caused to the shipment. As the cost of the actual damage to the subject shipment has long been settled, the trial courts finding of actual damages in the amount of P397,879.69 has to be sustained.

(4) Mr Talens credibility must be respected.

CA's decision is set aside. Wallem is liable.

G.R. No. 183526 Case Digest

G.R. No. 183526, August 25, 2009

Violeta Lalican

vs The Insular Life Insurance Company

Ponente: Chico-Nazario

Facts:

Violeta is the widow of the Eulogio Lalican. During his lifetime, Eulogio applied for an insurance policy with Insular Life on April 24, 1997 which contained a 20-year endowment variable income package flexi plan worth P500k with two riders worth P500k each. Violeta was named the primary beneficiary.

Under the terms, Eulogio was to pay premiums on a quarterly basin in the amount of P8,062  with a grace period of 31 days for the payment of each premium subsequent to the first. If any premium was not paid on or before the due date, the policy would be in default, and if the premium remained unpaid until the end of the grace period, the policy would automatically lapse and become void.

Eulogio paid the premiums, however he failed to pay the premium due on January 24, 1998, even after the lapse of the grace period of 31 days. Therefore, lapsed and become void. Eulogio submitted to the Cabanatuan District Office of Insular Life an application for reinstatement together with the payment of the premium due on January 24. Insular Life notified Eulogio that his application for reinstatement could not be fully processed because of the unpaid interest thereon. Eulogio was likewise advised by Malaluan (insurance agent) to pay the premiums that subsequently became due April 1998 and July 1998, plus interest.

September 17, 1998. Eulogio went to Malaluan's house and paid for the interest which was received by Malaluan's husband. Later that day, Eulogio died. Without the knowledge of Eulogio's death, Malaluan forwarded to the Insular Life the application for reinstatement and the payment made by Eulogio. However, Insular Life did not act upon such reinstatement for they knew already of Eulogio's death.

September 28, 1998, Violeta filed for the insurance claim. Insular Life then informed Violeta in a letter that her claim could not be processed because the insurance policy had lapsed already and that Eulogio failed to reinstate the same and the payment made done thru Malaluan's husband was, under the insurance policy, was considered a deposit only until approval of the said application. Enclosed to this letter was a check representing the full refund of the past payments made by Eulogio, amounting to P25,417.

Violeta requested for a reconsideration of her claim and returned the check to Insular Life. Insular Life agreed to conduct a re-evaluation of Violeta's claim. Without waiting for the result of the re-evaluation, Violeta filed with the RTC a complaint for death claim benefit alleging the Insular Life was engaged in unfair claim settlement practice and deliberately failed to act with reasonable promptness on her insurance claim. Violeta claims for the P1.5M insurance, plus interest, attorney's fees and cost of suit.

Insular Life filed with the RTC an answer with counterclaim saying that the insurance claim was rendered void due to non-payment of the premium and countered that Violeta should be ordered to pay attorney's fees and expenses of litigation incurred by Insular Life.

RTC declared that Violeta failed to establish by preponderance of evidence her cause of action against the defendant. Violeta failed to establish that the receipt of payment by Malaluan amounted to the reinstatement of the insurance policy. Violeta filed for motion for reconsideration but was denied as well; hence she elevated her case for review on Certiorari.

Issues: (a) Whether the decision of the court can still be reviewed despite having allegedly attained finality and despite the mode of appeal of Violeta erroneous. (b) Whether the RTC has decided the case on a question of law not in accord with law and applicable decisions of the Supreme Court.

Ruling:

Petition lacks merit.

RTC's decision has long acquired finality for Violeta failed to file a notice of appeal more than five months after the decision was rendered.

As to the substantial claim of whether there is insurable interest, the Court says that the matter of insurable interest is entirely irrelevant and the real point of contention herein is whether Eulogio was able to reinstate the lapsed insurance policy on his life before his death.

The Court rules in the negative, for the insurance policy is clear on the procedure of the reinstatement of the insurance contract, of which Eulogio has failed to accomplish before his death. As provided by the policy, insurance shall be deemed reinstated upon the approval of the insurance policy of the application for reinstatement. The approval should be made during the lifetime of the insured, in the case at bar, it wasn’t.

G.R. No. 119655 Case Digest

G.R. No. 119655 May 24, 1996

Sps. Antonio A Tibay, etc.

vs Court of Appeals and Fortunate Life and General Insurance Co., Inc.

Ponente: Bellosillo

Facts:

January 22, 1987 Fortune Life issued a fire insurance policy in favor of Violeta Tibay and/or Nicolas Roraldo on their two-storey residential building located in Makati City, together with all their personal effects therein. The insurance was for P600k covering the period of Jan 23 19887 to Jan 23 1988. On Jan 23 1987 Violeta paid P600 of the premium of P2, 983.50 leaving a considerable balance unpaid.

On March 8, 1987, the insured building was completely destroyed by fire. Two days later Violeta paid the balance of the premium and filed, on the same day, a claim on the fire insurance policy. Fortune denied the claim. Violeta then filed for damages against Fortune representing the amount of the insurance policy plus interest and attorney's fees.

RTC adjudged Fortune liable for the claim of Violeta. On appeal, CA reversed the decision of the RTC declaring Fortune not liable. Hence this petition.

Issue: May a fire insurance policy be valid, binding and enforceable upon mere partial payment of premium?

Ruling:

We find no merit, hence, we affirm the CA.

In a contract of insurance, the consideration is the premium which must be paid at the time and in the way and manner specified in the policy, and if not so paid, the policy will lapse and be forfeited by its own terms.

Clearly the Policy provides for payment of premium in full. Accordingly, where the premium has only been partially paid and the balance paid only after the peril insured against has occurred, the insurance contract did not take effect and the insured cannot collect at all on the policy.

Petitioners maintain otherwise. Insisting that FORTUNE is liable on the policy despite partial payment of the premium due and the express stipulation thereof to the contrary, petitioners rely heavily on the 1967 case of Philippine Phoenix and Insurance Co., Inc. v. Woodworks, Inc. where the Court through Mr. Justice Arsenio P. Dizon sustained the ruling of the trial court that partial payment of the premium made the policy effective during the whole period of the policy. In that case, the insurance company commenced action against the insured for the unpaid balance on a fire insurance policy. In its defense the insured claimed that non-payment of premium produced the cancellation of the insurance contract.

The 1967 Phoenix case is not persuasive; neither is it decisive of the instant dispute. For one, the factual scenario is different. In Phoenix it was the insurance company that sued for the balance of the premium, i.e., it recognized and admitted the existence of an insurance contract with the insured. In the case before us, there is, quite unlike in Phoenix, a specific stipulation that (t)his policy . . . is not in force until the premium has been fully paid and duly receipted by the Company . . . Resultantly, it is correct to say that in Phoenix a contract was perfected upon partial payment of the premium since the parties had not otherwise stipulated that prepayment of the premium in full was a condition precedent to the existence of a contract.

In Phoenix, by accepting the initial payment of P3,000.00 and then later demanding the remainder of the premium without any other precondition to its enforceability as in the instant case, the insurer in effect had shown its intention to continue with the existing contract of insurance, as in fact it was enforcing its right to collect premium, or exact specific performance from the insured. This is not so here. By express agreement of the parties, no vinculum juris or bond of law was to be established until full payment was effected prior to the occurrence of the risk insured against.

The insurance contract itself expressly provided that the policy would be effective only when the premium was paid in full. It would have been altogether different were it not so stipulated. Ergo, petitioners had absolute freedom of choice whether or not to be insured by FORTUNE under the terms of its policy and they freely opted to adhere thereto.

It must be emphasized here that all actuarial calculations and various tabulations of probabilities of losses under the risks insured against are based on the sound hypothesis of prompt payment of premiums. Upon this bedrock insurance firms are enabled to offer the assurance of security to the public at favorable rates. But once payment of premium is left to the whim and caprice of the insured, as when the courts tolerate the payment of a mere P600.00 as partial undertaking out of the stipulated total premium of P2,983.50 and the balance to be paid even after the risk insured against has occurred, as petitioners have done in this case, on the principle that the strength of the vinculum juris is not measured by any specific amount of premium payment, we will surely wreak havoc on the business and set to naught what has taken actuarians centuries to devise to arrive at a fair and equitable distribution of risks and benefits between the insurer and the insured.

The terms of the insurance policy constitute the measure of the insurer's liability. In the absence of statutory prohibition to the contrary, insurance companies have the same rights as individuals to limit their liability and to impose whatever conditions they deem best upon their obligations not inconsistent with public policy.

Petition is denied.

G.R. No. 138941 Case Digest

G.R. No. 138941 October 8, 2001

American Home Insurance Company

vs Tantuco Enterprises, Inc.

Ponente: Puno

Facts:

Tantuco Enterprises is engaged in the coconut oil milling and refining industry. It owns two oil mills both located in Lucena City. The two oil mills were separately covered by fire insurance policies issued by American Home, 3M and 6M respectively to the two mills.

A fire broke out on September 30, 1991 gutted and consumed the new oil mill (6M policy). Tantuco immediately notified the insurance company of the incident. American Home then sent appraisers who inspected the burned premises and the properties destroyed. Thereafter, American Home rejected the insurance claim on ground that no policy was issued covering the burned oil mill, saying that the 6M policy insures the property located in building no. 5, while the affected oil mill was under building no. 14.

A complaint for specific performance and damages was consequently instituted by the respondent with the RTC. RTC rendered the insurance company liable on the insurance policy. American Home appealed at the CA, but the CA upheld the same decision.

Issues:

(1) The Court of Appeals erred in its conclusion that the issue of non-payment of the premium was beyond its jurisdiction because it was raised for the first time on appeal.

(2) The Court of Appeals erred in its legal interpretation of 'Fire Extinguishing Appliances Warranty' of the policy.

(3) With due respect, the conclusion of the Court of Appeals giving no regard to the parole evidence rule and the principle of estoppel is erroneous.

Ruling:

Petition is devoid of merit.

(1) In construing the words used descriptive of a building insured, the greatest liberality is shown by the courts in giving effect to the insurance. In view of the custom of insurance agents to examine buildings before writing policies upon them, and since a mistake as to the identity and character of the building is extremely unlikely, the courts are inclined to consider that the policy of insurance covers any building which the parties manifestly intended to insure, however inaccurate the description may be.

Notwithstanding, therefore, the misdescription in the policy, it is beyond dispute, to our mind, that what the parties manifestly intended to insure was the new oil mill. This is obvious from the categorical statement embodied in the policy, extending its protection:

On machineries and equipment with complete accessories usual to a coconut oil mill including stocks of copra, copra cake and copra mills whilst contained in the new oil mill building, situate (sic) at UNNO. ALONG NATIONAL HIGH WAY, BO. IYAM, LUCENA CITY UNBLOCKED.

If the parties really intended to protect the first oil mill, then there is no need to specify it as new.

(2) Anent petitioner's argument that the respondent is barred by estoppel from claiming that the description of the insured oil mill in the policy was wrong, we find that the same proceeds from a wrong assumption. Evidence on record reveals that respondent's operating manager, Mr. Edison Tantuco, notified Mr. Borja (the petitioner's agent with whom respondent negotiated for the contract) about the inaccurate description in the policy. However, Mr. Borja assured Mr. Tantuco that the use of the adjective new will distinguish the insured property. The assurance convinced respondent, despite the impreciseness in the specification of the boundaries, the insurance will cover the new oil mill.

(3) When the issues to be resolved in the trial court were formulated at the pre-trial proceedings, the question of the supposed inadequate payment was never raised. Most significant to point, petitioner fatally neglected to present, during the whole course of the trial, any witness to testify that respondent indeed failed to pay the full amount of the premium.

(4) Petitioner argues that the warranty clearly obligates the insured to maintain all the appliances specified therein. The breach occurred when the respondent failed to install internal fire hydrants inside the burned building as warranted. This fact was admitted by the oil mill's expeller operator, Gerardo Zarsuela.

Again, the argument lacks merit. We agree with the appellate court's conclusion that the aforementioned warranty did not require respondent to provide for all the fire extinguishing appliances enumerated therein. Additionally, we find that neither did it require that the appliances are restricted to those mentioned in the warranty. In other words, what the warranty mandates is that respondent should maintain in efficient working condition within the premises of the insured property, fire fighting equipments such as, but not limited to, those identified in the list, which will serve as the oil mill's first line of defense in case any part of it bursts into flame.

To be sure, respondent was able to comply with the warranty. Within the vicinity of the new oil mill can be found the following devices: numerous portable fire extinguishers, two fire hoses, fire hydrant, and an emergency fire engine. All of these equipments were in efficient working order when the fire occurred.

G.R. No. 116940 Case Digest

G.R. No. 116940 June 11, 1997

The Phil. American Gen. Insurance Co., Inc.

vs Court of Appeals and Felman Shipping Lines

Ponente: Bellosillo

Facts:

July 6, 1983 Coca-cola loaded on board MV Asilda, owned and operated by Felman, 7,500 cases of 1-liter Coca-Cola soft drink bottles to be transported to Zamboanga City to Cebu. The shipment was insured with Philamgen.

July 7, the vessel sank in Zamboanga del Norte. July 15, cocacola filed a claim with respondent Felman for recovery of damages. Felman denied thus prompted cocacola to file an insurance claim with Philamgen. Philamgen later on claimed its right of subrogation against Felman which disclaimed any liability for the loss.

Philamgen alleged that the sinking and loss were due to the vessel's unseaworthiness, that the vessel was improperly manned and its officers were grossly negligent. Felman filed a motion to dismiss saying that there is no right of subrogation in favor of Philamgen was transmitted by the shipper.

RTC dismissed the complaint of Philamgen. CA set aside the dismissal and remanded the case to the lower court for trial on the merits. Felman filed a petition for certiorari but was denied.

RTC rendered judgment in favor of Felman. it ruled that the vessel was seaworthy when it left the port of Zamboanga as evidenced by the certificate issued by the Phil. Coast Guard and the ship owner’s surveyor. Thus, the loss is due to a fortuitous event, in which, no liability should attach unless there is stipulation or negligence.

On appeal, CA rendered judgment finding the vessel unseaworthy for the cargo for being top-heavy and the cocacola bottles were also improperly stored on deck. Nonetheless, the CA denied the claim of Philamgen, saying that Philamgen was not properly subrogated to the rights and interests of the shipper plus the filing of notice of abandonment had absolved the ship owner from liability under the limited liability rule.

Issues: (a) Whether the vessel was seaworthy, (b) whether limited liability rule should apply and (c) whether Philamgen was properly subrogated to the rights against Felman.

Ruling:

(a) The vessel was unseaworthy. The proximate cause thru the findings of the Elite Adjusters, Inc., is the vessel's being top-heavy. Evidence shows that days after the sinking coca-cola bottles were found near the vicinity of the sinking which would mean that the bottles were in fact stowed on deck which the vessel was not designed to carry substantial amount of cargo on deck. The inordinate loading of cargo deck resulted in the decrease of the vessel's metacentric height thus making it unstable.

(b) Art. 587 of the Code of Commerce is not applicable, the agent is liable for the negligent acts of the captain in the care of the goods. This liability however can be limited through abandonment of the vessel, its equipment and freightage. Nonetheless, there are exceptions wherein the ship agent could still be held answerable despite the abandonment, as where the loss or injury was due to the fault of the ship owner and the captain. The international rule is that the right of abandonment of vessels, as legal limitation of liability, does not apply to cases where the injury was occasioned by the fault of the ship owner. Felman was negligent, it cannot therefore escape liability.

(c) Generally, in marine insurance policy, the assured impliedly warrants to the assurer that the vessel is seaworthy and such warranty is as much a term of the contract as if expressly written on the face of the policy. However, the implied warranty of seaworthiness can be excluded by terms in writing in the policy of the clearest language. The marine policy issued by Philamgen to cocacola has dispensed that the "seaworthiness of the vessel as between the assured and the underwriters in hereby admitted."

The result of the admission of seaworthiness by Philamgen may mean two things: (1) the warranty of seaworthiness is fulfilled and (2) the risk of unseaworthiness is assumed by the insurance company. This waiver clause would mean that Philamgen has accepted the risk of unseaworthiness, therefore Philamgen is liable.

On the matter of subrogation, it is provided that;

 Art. 2207.            If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

Pan Malayan Insurance Corp. vs CA: The right of subrogation is not dependent upon, nor does it grow out of any privity of contract or upon payment by the insurance company of the insurance claim. It accrues simply upon payment by the insurance company of the insurance claim.

Therefore, the payment made by PHILAMGEN to Coca-Cola Bottlers Philippines, Inc., gave the former the right to bring an action as subrogee against FELMAN. Having failed to rebut the presumption of fault, the liability of FELMAN for the loss of the 7,500 cases of 1-liter Coca-Cola soft drink bottles is inevitable.

WHEREFORE, the petition is GRANTED. Respondent FELMAN SHIPPING LINES is ordered to pay petitioner PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC.