Republic of the Philippines

Court of Appeals
Manila

Special Fourteenth (14th) Division

AIG PHILIPPINES CA-G.R. CV No. 112536

INSURANCE, INC. (formerly
Chartis Philippines Insurance,
Inc.), Members:
Plaintiff-Appellant,
LANTION, J.A.C., Chairperson
- versus - AZCARRAGA-JACOB,M.C., and
*
ONG, W.S., JJ.
THE RIGGING COMPANY and
STRONGHOLD INSURANCE Promulgated:
COMPANY INCORPORATED,
Defendants-Appellees. DECEMBER 05, 2019

DECISION

LANTION, J.A.C., J.:

Before this Court is an appeal from the Decision1 dated 28

August 2018 of the Regional Trial Court of Makati City, Branch 149
(hereinafter referred to as court a quo) in Civil Case No. 15-668 for
Damages, and the Order2 dated 19 November 2018, which denied the
Motion for Reconsideration3 thereof. The dispositive portion of the said
Decision and Order read:

Decision dated 28 August 2018

“WHEREFORE, in view of the foregoing considerations, the

Court hereby FINDS in favor of the defendant RIGGING, hence, it
hereby DISMISS the case based on Res Judicata. Further, the
Plaintiff is ordered to pay the Rigging the amount of Php50,000.00
as Attorney's fees plus cost of suit.

SO ORDERED.”

*
Per Office Order No. 612-19-RSF dated 29 November 2019.
1
Records, pp. 480-489. Penned by Presiding Judge Cesar O. Untalan.
2
Id., p. 528. Penned by Presiding Judge Cesar O. Untalan.
3
Id., pp. 490-500.
CA-G.R. CV No. 112536 Page 2 of 12
Decision

Order dated 19 November 2018

“WHEREFORE, premises considered, the Motion for

Reconsideration is hereby DENIED for utter lack of merit.

SO ORDERED.”

THE ANTECEDENT FACTS

Plaintiff-appellant AIG Philippines Insurance, Inc., (hereinafter

referred to as appellant) is a domestic corporation engaged in the
marine and cargo insurance business.4

On the other hand, defendant-appellee The Rigging Company

(hereinafter referred to as appellee Rigging) is a partnership engaged,
among others, in heavy lift operations and in the rental of machinery
and movers.5 In addition, defendant-appellee Stronghold Insurance
Company (hereinafter referred to as appellee Stronghold Insurance)
is a domestic corporation engaged in the insurance business.

The appellant alleged that on 1 October 2010, from the port of

Hamburg, a shipper - Trumpf Maschinen Austria, loaded on board a
marine vessel, a shipment of four (4) packages of pressbrakes packed
inside a container van, in good order and condition, for delivery to
Fuji-Haya Electric Corporation of the Phils. (Fuji-Haya Phils.). One
of the said packages include – a unit of Trumpf Trubend 3120 Bending
Machine, the subject shipment. The shipment was covered under Bill
of Lading No. 10111.6

Fuji-Haya Phils. insured the said shipment with the appellant

for P5,364,124.40, under Marine Cargo Certificate No. 0801072892.7

The shipment arrived at the port of Manila on 11 November

2010, and was discharged from the carrying vessel. Later on, appellee
Rigging brought the shipment to the warehouse of Fuji-Haya Phils. at
Laguna. The appellant averred that while in the process of pulling
4
Records, p. 2. Records show that the appellant was formerly known as Chartis Philippines Insurance, Inc.
5
Id., pp. 29-30. The appellee is also named as The Rigging Company, LTD., in some parts of the records.
6
Id., p. 9.
7
Id., p. 10.
CA-G.R. CV No. 112536 Page 3 of 12
Decision

out the Trumpf Trubend 3120 Bending Machine, the subject shipment,
from the container van using a “self-loader,” the said machine tilted
slightly and its upper cover then hit the container van. The appellant
added that the machine suffered extensive damages brought about
by appellee Rigging's fault.8 Consequently, Fuji-Haya Phils. suffered
losses in the total amount of P717,021.40, representing the value of
the damaged subject shipment.

Later on, and after evaluation, the appellant paid the insurance
claim of Fuji-Haya Phils. for the losses it had incurred, in the amount
of P717,021.40, as evidenced by, a photocopy of a Security Bank Check
No. 000004349 dated 19 October 2011, the Subrogation Receipt10 and
Voucher Number 000132548, issued by the said assured.

The appellant then sent a demand letter to appellee Rigging,

but to no avail.11

Claiming to have paid the insurance claim of Fuji-Haya Phils.

for the loss it had suffered, on 14 July 2015, the appellant filed a
Complaint12 for damages against appellee Rigging. The complaint was
later amended to include appellee Stronghold Insurance.13 In the said
complaint, the appellant asserted that it had been subrogated to all
rights of Fuji-Haya Phils., the assured cargo owner. The appellant
prayed that the appellees be ordered to pay: 1) actual damages in the
amount of P717,021.40 plus legal interest of six percent (6%) from the
date the complaint was filed until it is fully paid; 2) compensatory
damages; and, 3) cost of suit.

Thereafter, on 24 August 2015, appellee Rigging filed its Answer

with Counterclaim.14 Appellee Rigging countered that herein appellant
has no cause of action against it, and that the present case should be
dismissed on the ground of res judicata.

Appellee Rigging averred that on 10 November 2010, Fuji-Haya

8
Records, pp. 11-14.
9
Id., p. 16.
10
Id., p. 15.
11
Id., pp. 17-18.
12
Id., pp. 1-8.
13
Id., pp. 131-139.
14
Id., pp. 28-54.
CA-G.R. CV No. 112536 Page 4 of 12
Decision

Phils. had engaged its services for the unloading and uncrating of the
subject shipment. Appellee Rigging insured the said shipment with
appellee Stronghold Insurance, under Insurance Policy No. MO/CGL-
039278. Thereafter, on 6 January 2011, during the actual operation,
Accubend Inc., who was not privy between appellee Rigging and
Fuji-Haya Phils., interfered with the unloading of the shipment.
Appellee Rigging alleged that a certain Fernando Masa, the safety
supervisor of Accubend Inc., insisted on loading the subject shipment
on a crane, which is not one of the specified tools to be used, and as
stated in their agreement. Also, there was no space to cater the crane
since it could not penetrate inside the loading area. The loading was
held in abeyance. Late afternoon of the same day, appellee Rigging
eventually unloaded the subject shipment using a “self-loader.”15

Appellee Rigging also alleged that while pulling out the subject
shipment, it tilted slightly and accidentally crashed into the side of
the container van, and caused damage on the top cover of the subject
shipment. The purchasing officer of Fuji-Haya Phils. then demanded
for the replacement of the damage parts. Appellee Rigging then filed
an insurance claim with appellee Stronghold Insurance to answer for
the damaged parts on the subject shipment. The claims adjuster of
appellee Stronghold Insurance proceeded to the office of Fuji-Haya
Phils. to make an inspection on the damaged shipment, but the latter
refused to cooperate.16

For failure to pay the services it had rendered, appellee Rigging

filed a complaint for sum of money against Fuji-Haya Phils. before
the Metropolitan Trial Court of Parañaque City, Branch 78 (MeTC of
Parañaque, Branch 78).17 Fuji-Haya Phils. then filed its Answer with
Counterclaim,18 praying that appellee Rigging be ordered to pay for
actual damages caused on the damaged subject shipment.

The MeTC of Parañaque, Branch 78 then issued a Decision19

dated 7 August 2012, in favor of appellee Rigging, and denied the
counterclaim of Fuji-Haya Phils. Thereafter, Fuji-Haya Phils. filed a
notice of appeal,20 but later withdrew the same stating that – on 9
15
Records, pp. 32-34.
16
Id., p. 93.
17
Id., pp. 94-98. The said complaint was filed on 28 October 2011.
18
Id., pp. 99-103.
19
Id., pp. 110-112.
20
Id., pp. 113-114.
CA-G.R. CV No. 112536 Page 5 of 12
Decision

October 2012, the parties through their counsel, filed a Joint Manifestation
stating that the judgment/decision dated 7 August 2012 has been satisfied
and fully executed thereby putting an end to the controversy.21 Thus, an
order was issued for the withdrawal of the notice of appeal, 22 and
consequently, the Decision of the MeTC of Parañaque, Branch 78 had
become final.

Finally, appellee Rigging added that it was not negligent in the

performance of its duties, as the damage incurred by the machine
was due to Fuji-Haya Phils. violation. The appellee prayed that the
complaint against it be dismissed, and that the appellant be ordered
to pay the sum of P150,000.00 as attorney's fees and cost of suit.

For its part, on 14 April 2016, appellee Stronghold Insurance

filed a Motion to Dismiss,23 on the ground that the appellant's Amended
Complaint fails to state a cause of action, and that it is not the proper
party with respect to the latter's claim. Thus, appellee Stronghold
Insurance prayed that the said complaint against it be dismissed.

The court a quo initially referred the case for mediation,24 but
was unsuccessful and thus,25 the case was returned to the court a quo.

In the court a quo's Pre-Trial Order26 dated 7 June 2017, herein

appellant identified and marked its pieces of evidence.

Trial thereafter ensued wherein appellee Rigging presented its

witness, a certain Edsel D. Dulay.

On the other hand, the appellant presented the following as

witnesses: 1) Elmer S. Dumo, a former claims examiner; and, 2) Ramir
K. Noceja.

The parties then filed their respective formal offer of evidence.27

21
Records, p. 117-118, 333.
22
Id., p. 335. The Order dated 25 October 2012 of the RTC of Parañaque City, Branch 195.
23
Id., pp. 170-176.
24
Id., p. 125. The case was referred for mediation on a earlier date, 25 August 2015.
25
Id., pp. 126-127.
26
Id., pp. 291-292.
27
Id., pp. 298-303, 406-411.
CA-G.R. CV No. 112536 Page 6 of 12
Decision

In the assailed Decision dated 28 August 2018, the court a quo

dismissed the case on the ground of res judicata. The court a quo found
that all the requisites of res judicata are present as to bar the action of
the appellant. The court added that there was substantial identity of
parties, ruling that the appellant in the case is a subrogee to the rights
of subrogor – Fuji-Haya Phils., which had its claim for damages
already denied before the MeTC of Parañaque, Branch 78. Thus, the
rights of the appellant cannot be superior to the rights of the Fuji-
Haya Phils., which does not possess the right to be indemnified.

The appellant moved for reconsideration, but the same was

denied by the court a quo in the assailed Order dated 19 November
2018.

The appellant then filed its Notice of Appeal28 on 29 November

2018, which was subsequently approved by the court a quo.29

Hence, the appellant interposes this appeal upon the following

assignment of errors, viz:30

1. The court a quo erred in applying the principle of res judicata

as not all the requisites are present in the collection case filed
with the MeTC of Parañaque, Branch 78, and in the present case
for damages, and in consequently awarding damages and costs
of suit to appellee Rigging;

2. The court a quo erred in not declaring the appellee Rigging to

be liable for the loss of the subject cargo based on Articles 1265
and 1735 of the Civil Code; and,

3. The court a quo erred in not finding that appellee Rigging is

liable to pay the appellant the amount of P717,021.40 plus
interest, attorney's fees and cost of suit based on the right of
subrogation.

The errors assigned by the appellant may be summed up into

these two (2) core issues: 1) whether or not the court a quo erred in
28
Rollo, p. 526-527.
29
Id., p. 529.
30
Id., p. 34.
CA-G.R. CV No. 112536 Page 7 of 12
Decision

dismissing the case on the ground of res judicata; and, 2) whether or

not the award of damages is proper.

THIS COURT'S RULING

The appeal fails.

On the first issue of whether or not the court a quo erred in

dismissing the case on the ground of res judicata, the appellant insists
that res judicata cannot apply in the present case for not all of the
requisites are present.31

We are not persuaded.

The doctrine of res judicata, under the concept of bar by prior

judgment, as embodied under Section 47(b), Rule 39 of the Revised Rules
of Court32 states that - “the effect of a judgment or final order rendered by a
court or of the Philippines, having jurisdiction to pronounce the judgment
or final order, may be as follows: xxx, b) in other cases, the judgment or final
order is, with respect to the matter directly adjudged or as to any other
matter that could have been raised in relation thereto, conclusive between
the parties and their successors in interest by title subsequent to the
commencement of the action or special proceeding, litigating for the same
thing and under the same title and in the same capacity.”

These are the elements that must concur in order for res judicata,
as a bar by prior judgment to apply: 1) the former judgment or order
must be final; 2) the judgment or order must be on the merits; 3) the
decision must have been rendered by a court having jurisdiction over
the subject matter and the parties; and, 4) there must be, between the
first and the second action, identity of parties, of subject matter and
of causes of action.33

A judicious review of the records reveal that the court a quo

correctly dismissed the case on the ground of res judicata.

31
Rollo, pp. 36-37.
32
1997 RULES OF CIVIL PROCEDURE, rule 39, section 47.
33
Rivera v. Spouses Chua, G.R. Nos 184458 & 184472, 14 January 2015.
CA-G.R. CV No. 112536 Page 8 of 12
Decision

Here, all the above-mentioned requisites are present.

As to the first and second elements that - the former judgment or

order must be final, and that such judgment or order must be on the merits,
it is undisputed that the Decision dated 7 August 2012 of the MeTC of
Parañaque, Branch 78, which denied the claim for damages of Fuji-
Haya Phils.,34 had already attained finality.

Records reveal that Fuji-Haya Phils. had filed a notice of appeal

from the said Decision of the MeTC of Parañaque, Branch 78, but later
withdrew the same. As a consequence, We hold that the withdrawal
of the said appeal has the effect of rendering the appealed decision
final and executory.35

In addition, the Supreme Court ruled that a judgment on the

merits is one wherein there is an unequivocal determination of the
rights and obligations of the parties with respect to the causes of
action and the subject matter,36 such as the Decision of the MeTC of
Parañaque, Branch 78 which resolved to deny the damages claim of
Fuji-Haya Phils. for want of basis. Indubitably, the final judgment
which is an adjudication on the merits had finally disposed of the
case leaving nothing more to be done by the said MeTC of Parañaque
in respect thereto.37 Thus, the first and second elements are satisfied.

As to the next element that - the decision must have been rendered
by a court having jurisdiction over the subject matter and the parties, the
appellant asserts that the MeTC of Parañaque, Branch 78 had no
jurisdiction over the counterclaim of Fuji-Haya Phils. in the amount
of P717,021.40, and as such, there can be no valid judgment.38

The said assertion does not convince this Court.

It is settled that jurisdiction over the subject matter of the case is

conferred by law and is determined by the allegations of a complaint,
irrespective of whether the plaintiff is entitled to recover upon all or
34
Records, p. 112.
35
Development Bank of the Philippines v. Pingol Land Transport System Co., Inc., G.R. No. 145908, 22 January 2004.
36
De Leon v. Dela Llana, G.R. No. 212277, 11 February 2015.
37
Heirs of Gabriel v. Cebrero, G.R. No. 222737, 12 November 2018.
38
Records, pp. 37-38.
CA-G.R. CV No. 112536 Page 9 of 12
Decision

some of the claims asserted therein. As a necessary consequence, the

jurisdiction of the court cannot be made to depend upon the defenses
set up in the answer, or upon the motion to dismiss, for otherwise,
the question of jurisdiction would almost entirely depend upon the
defendant.39

Perusing the records, We find that the said MeTC of Parañaque

had acquired jurisdiction over the parties – appellee Rigging and Fuji-
Haya Phils. The said court had jurisdiction over the subject matter of
appellee Rigging's complaint for sum of money in the amount of
P158,000.00. Here, said parties submitted their respective pleadings
in support of their respective claims, and had actively participated in
the proceedings before the said court. In fact, when Fuji-Haya Phils.
filed its Answer with Counterclaim, it had recognized the jurisdiction of
the MeTC of Parañaque, Branch 78, and is bound to the outcome of
the case even if the amount of its counterclaim was in excess of the
jurisdictional amount.40 Thus, this element is also present.

Lastly, as regards the element that - there must be, between the
first and the second action, identity of parties, of subject matter and of
causes of action, the appellant still insists that there is no identity of the
parties since it is not a party in Civil Case No. 2011-131, and that it was
not privy to the right of Fuji-Haya Phils. for the purpose of the right
to unpaid service in favor of appellee Rigging.41

We are not convinced.

We must stress that absolute identity of parties is not a condition

sine qua non for res judicata to apply, as shared identity of interest is
sufficient to invoke the coverage of this principle. Thus, it is
enough that there is a community of interest between a party in the
first case and a party in the second case even if the latter was not
impleaded in the first case.42

We stress that the appellant's claim against appellee Rigging is

39
Rapsing v. Ables, G.R. No. 171855, 15 October 2012.
40
Oca v. Court of Appeals, G.R. No. 144817, 7 March 2002.
41
Rollo, p. 37.
42
Degayo v. Magbanua-Dinglasan, G.R. No. 173148, 6 April 2015.
CA-G.R. CV No. 112536 Page 10 of 12
Decision

based on subrogation, as provided under Article 2207 of the Civil Code,43

to the rights of Fuji-Haya Phils. as the assured owner of the subject
shipment. In relation to such, We emphasize that the rights of a
subrogee cannot be superior to the rights possessed by a subrogor.

The Supreme Court ruled that subrogation is the substitution of

one person in the place of another with reference to a lawful claim or
right, so that he who is substituted succeeds to the rights of the other
in relation to a debt or claim, including its remedies or securities. The
rights to which the subrogee succeeds are the same as, but not greater
than, those of the person for whom he is substituted, that is, he
cannot acquire any claim, security or remedy the subrogor did not
have. In other words, a subrogee cannot succeed to a right not possessed
by the subrogor. A subrogee in effect steps into the shoes of the insured
and can recover only if the insured likewise could have recovered.44

In this case, there is substantial identity of interest between the

parties of the civil case before the MeTC of Parañaque, Branch 78,
appellee Rigging and subrogor - Fuji-Haya Phils., and parties involved in
the present case – appellee Rigging and subrogee – the appellant. In fact,
there is clearly substantial identity of interest since the denial of the
subrogor's claim for damages materially affects the appellant's claim
for reimbursement against appellee Rigging.

Moreover, considering that the claim of Fuji-Haya Phils. for

damages, by way of counterclaim, was already denied by the MeTC
of Parañaque as it had failed to substantiate its claim, We rule that
the subrogee – the appellant, does not have the right to recover from
appellee Rigging. It is settled that an insurer indemnifies the insured
based on the loss or damage the latter actually suffered from. Here,
indemnification for damages is not due to Fuji-Haya Phils. We are
mindful of the rule that the right of subrogation accrues simply upon
payment by the insurance company – the appellant, of the insurance
claim.45 However, such is not the case at bar. As such, the appellant
43
An Act to Ordain and Institute the Civil Code of the Philippines [CIVIL CODE], Republic Act No. 386 (1950).
Article 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.
44
Loadstar Shipping Co., Inc. v. Malayan Insurance Co., Inc., G.R. No. 185565, 26 November 2014.
45
Keihin-Everrett Forwarding Co., Inc, v. Tokio Marine Malayan Insurance, Co., Inc., G.R. No. 212107, 28 January
2019.
CA-G.R. CV No. 112536 Page 11 of 12
Decision

takes the risk of not being able to seek recompense from appellee
Rigging when it paid the insurance claim of Fuji-Haya Phils. This is
because the supposed subrogor - Fuji-Haya Phils., did not possess the
right to be indemnified and therefore, no right to collect is passed on
to the subrogee.46

Finally, there is no dispute as regards the identity of the subject

matter in this case. The subject of an action is defined as the matter or
thing with respect to which the controversy has arisen, concerning
which a wrong has been done.47 The subject matter in this case, and in
the civil case for damages before the MeTC of Parañaque was the
damage to the subject shipment - Trubend 3120 Bending Machine.

Thus, the last element is satisfied.

One final note. This Court cannot pass upon the issue raised by
the appellant for the first time on appeal which asserted that appellee
Rigging is a common carrier, and is bound to observe extraordinary
diligence. It is settled that no question will be entertained on appeal
unless it has been raised in the proceedings below. Any issue raised
for the first time on appeal is deemed barred.48

As to the award of attorney's fees, the same is likewise in order

as appellee Rigging was clearly compelled to litigate to protect its
interest. Attorney's fees are allowed in the court's discretion after
considering several factors which are discernible from the facts
brought out during the trial. Here, appellee Rigging was compelled
to litigate in order to protect his interest from payment of a baseless
insurance claim filed by the appellant.49

All told, the court a quo did not err in rendering the assailed
Decision dated 28 August 2018 and Order dated 19 November 2018.

WHEREFORE, the instant appeal is DENIED. The Decision

dated 28 August 2018 and the Order dated 19 November 2018 of the
46
Loadstar Shipping Co., Inc. v. Malayan Insurance Co., Inc., G.R. No. 185565, 26 November 2014.
47
Taganas v. Emuslan, G.R. No. 146980, 2 September 2003.
48
Rebadulla v. Republic, G.R. Nos. 222159 & 222171, 31 January 2018.
49
Keihin-Everett Forwarding Co., Inc. v. Tokio Marine Malayan Co., Inc., G.R. No. 212107, 28 January 2019.
CA-G.R. CV No. 112536 Page 12 of 12
Decision

Regional Trial Court of Makati City, Branch 149 in Civil Case No. 15-
668 are AFFIRMED.

SO ORDERED.

JANE AURORA C. LANTION

Associate Justice
Chairperson

WE CONCUR:

MARIE CHRISTINE AZCARRAGA-JACOB

Associate Justice

WALTER S. ONG
Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is

hereby certified that the conclusions in the above decision were
reached in consultation before the case was assigned to the writer of
the opinion of the court.

JANE AURORA C. LANTION

Associate Justice
Chairperson, Special Fourteenth Division