INTERNATIONAL CONTAINER

TERMINAL SERVICES, INC.,

petitioner, vs. FGU INSURANCE
CORPORATION, respondent.
G.R. No. 161539. June 27, 2008.*

Appeals; Certiorari; Only questions of law may be entertained by the Supreme

Court in a petition for review on certiorari; Exceptions.—The rule in our
jurisdiction is that only questions of law may be entertained by this Court in a
petition for review on certiorari. This rule, however, is not ironclad and admits
certain exceptions, such as when (1) the conclusion is grounded on
speculations, surmises or conjectures; (2) the inference is manifestly mistaken,
absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is
based on a misapprehension of facts; (5) the findings of fact are conflicting; (6)
there is no citation of specific evidence on which the factual findings are based;
(7) the findings of absence of facts are contradicted by the presence of evidence
on record; (8) the findings of the CA are contrary to those of the trial court; (9)
the CA manifestly overlooked certain relevant and undisputed facts that, if
properly considered, would justify a different conclusion; (10) the findings of
the CA are beyond the issues of the case; and (11) such findings are contrary to
the admissions of both parties. In the present case, there is nothing on record
which will show that it falls within the exceptions. Hence, the petition must be
denied.

Contracts; Stipulation Pour Autrui; Management Contracts; In cargo handling

services, an arrastre operator is bound by the management contract it had
executed with the Bureau of Customs; A management contract, which is a sort
of a stipulation pour autrui within the meaning of Article 1311 of the Civil
Code, is also binding on a consignee and the insurer, as successor-in-interest of
the consignee.—PPA AO 10-81 is the management contract between by the
Philippine Ports Authority and the cargo handling services providers. In
Summa Insurance Corporation v. Court of Appeals, 253 SCRA 175 (1996), the
Court ruled that: In the performance of its job, an arrastre operator is bound by
the management contract it had executed with the Bureau of Customs.
However, a management con-

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* THIRD DIVISION.

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International Container Terminal Services, Inc. vs. FGU Insurance Corporation

tract, which is a sort of a stipulation pour autrui within the meaning of Article
1311 of the Civil Code, is also binding on a consignee because it is
incorporated in the gate pass and delivery receipt which must be presented by
the consignee before delivery can be effected to it. The insurer, as successor-in-
interest of the consignee, is likewise bound by the management contract.
Indeed, upon taking delivery of the cargo, a consignee (and necessarily its
successor-in-interest) tacitly accepts the provisions of the management
contract, including those which are intended to limit the liability of one of the
contracting parties, the arrastre operator. However, a consignee who does not
avail of the services of the arrastre operator is not bound by the management
contract. Such an exception to the rule does not obtain here as the consignee
did in fact accept delivery of the cargo from the arrastre operator.
Same; Insurance; Marine Insurance Policy; Marine Risk Note; A marine risk
note is not an insurance policy—it is only an acknowledgment or declaration of
the insurer confirming the specific shipment covered by its marine open policy,
the evaluation of the cargo and the chargeable premium; It is the marine open
policy which is the main insurance contract.—It must be emphasized that a
marine risk note is not an insurance policy. It is only an acknowledgment or
declaration of the insurer confirming the specific shipment covered by its
marine open policy, the evaluation of the cargo and the chargeable premium. It
is the marine open policy which is the main insurance contract. In other words,
the marine open policy is the blanket insurance to be undertaken by FGU on all
goods to be shipped by RAGC during the existence of the contract, while the
marine risk note specifies the particular goods/shipment insured by FGU on
that specific transaction, including the sum insured, the shipment particulars as
well as the premium paid for such shipment. In any event, as it stands, it is
evident that even prior to the cancellation by FGU of Marine Open Policy No.
MOP-12763 on June 10, 1994, it had already undertaken to insure the shipment
of the 400 kgs. of silver nitrate, specially since RAGC had already paid the
premium on the insurance of said shipment.

Same; Same; Same; The marine insurance policy needs to be presented in

evidence before the trial court or even belatedly before the appellate court,
though presentation of the insurance policy is not necessary when loss of the
cargo occurred while it was still on the

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196 SUPREME COURT REPORTS ANNOTATED

International Container Terminal Services, Inc. vs. FGU Insurance Corporation

insured’s vessel.—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., 538
SCRA 681 (2007), 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., 397
SCRA 158 (2003), 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, 225 SCRA 411 (1993). However, as in every general rule, there are
admitted exceptions. In Delsan Transport Lines, Inc. v. Court of Appeals, 369
SCRA 24 (2001), the Court stated that the presentation of the insurance policy
was not fatal because the loss of the cargo undoubtedly occurred while on
board the petitioner’s vessel, unlike in Home Insurance in which the cargo
passed through several stages with different parties and it could not be
determined when the damage to the cargo occurred, such that the insurer should
be liable for it.

Obligations and Contracts; Interests; When the judgment of the court awarding
a sum of money becomes final and executory, the rate of legal interest,
regardless of whether the obligation involves a loan or forbearance of money,
shall be 12% per annum from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to a forbearance of credit.—
Petitioner questions the imposition of a 12% interest rate, instead of 6%, on its
adjudged liability. The ruling in Prudential Guarantee and Assurance Inc. v.
Trans-Asia Shipping Lines, Inc., 491 SCRA 411 (2006), to wit: This Court in
Eastern Shipping Lines, Inc. v. Court of Appeals, 234 SCRA 78 (1994),
inscribed the rule of thumb in the application of interest to be imposed on
obligations, regardless of their source. Eastern emphasized beyond cavil that
when the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, regardless of whether the obligation
involves a loan or forbearance of money, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit. We find application of the rule in the case
at bar proper, thus, a rate of 12% per annum from

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International Container Terminal Services, Inc. vs. FGU Insurance Corporation

the finality of judgment until the full satisfaction thereof must be imposed on
the total amount of liability adjudged to PRUDENTIAL. It is clear that the
interim period from the finality of judgment until the satisfaction of the
same is deemed equivalent to a forbearance of credit, hence, the imposition
of the aforesaid interest.

PETITION for review on certiorari of the decision and resolution of the Court
of Appeals.

The facts are stated in the opinion of the Court.

Del Rosario & Del Rosario for petitioner.

Dollete, Blanco, Ejercito & Associates for respondent.

In a Decision dated July 1, 1999 in Civil Case No. 95-73532, the Regional Trial
Court (RTC) of Manila, Branch 30, ordered International Container Terminal
Services, Inc. (petitioner) to pay FGU Insurance Corporation (respondent) the
following sums: (1) P1,875,068.88 with 12% interest per annum from January
3, 1995 until fully paid; (2) P50,000.00 as attorney’s fees; and (3) P10,000.00
as litigation expenses.
Petitioner’s liability arose from a lost shipment of “14 Cardboards 400 kgs. of
Silver Nitrate 63.53 FCT Analytically Pure (purity 99.98 PCT),” shipped by
Hapag-Lloyd AG through the vessel Hannover Express from Hamburg,
Germany on July 10, 1994, with Manila, Philippines as the port of discharge,
and Republic Asahi Glass Corporation (RAGC) as consignee. Said shipment
was insured by FGU Insurance Corporation (FGU). When RAGC’s customs
broker, Desma Cargo Handlers, Inc., was claiming the shipment, petitioner,
which was the arrastre contractor, could not find it in its storage area. At the
behest of petitioner, the National Bureau of Investigation (NBI) conducted an
investigation. The AAREMA Marine and

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1 Records, p. 480.

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198 SUPREME COURT REPORTS ANNOTATED

International Container Terminal Services, Inc. vs. FGU Insurance Corporation

Cargo Surveyors, Inc. also conducted an inquiry. Both found that the shipment
was lost while in the custody and responsibility of petitioner.

As insurer, FGU paid RAGC the amount of P1,835,068.88 on January 3, 1995.

In turn, FGU sought reimbursement from petitioner, but the latter refused. This
constrained FGU to file with the RTC of Manila Civil Case No. 95-73532 for a
sum of money.

After trial, the RTC rendered its Decision dated July 1, 1999 finding petitioner
liable.

Petitioner appealed to the Court of Appeals (CA), which, in the assailed

Decision dated October 22, 2003, affirmed the RTC Decision. Petitioner filed a
motion for reconsideration which the CA denied in its Resolution dated January
8, 2004.

Hence, the present petition for review on certiorari under Rule 45 of the Rules
of Court, with the following assignment of errors:

1. THE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO

APPLY THE LIMITATION OF LIABILITY OF P3,5000 PER PACKAGE
WHICH LIMITS PETITIONER’S LIABILITY, IF ANY, TO A TOTAL OF
ONLY P49,000.00 PURSUANT TO PPA ADMINISTRATIVE ORDER NO.
10-81.

2. THE COURT OF APPEALS SERIOUSLY ERRED IN UPHOLDING

THE MARINE OPEN POLICY DESPITE THE FACT THAT THE SAME
WAS NO LONGER IN FORCE AT THE TIME THE SHIPMENT WAS
LOADED ON BOARD THE CARRYING VESSEL.

3. THE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO

DISMISS THE COMPLAINT ON THE GROUND OF RESPONDENT’S
FAILURE TO OFFER THE INSURANCE POL-

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2 Records, p. 18.

3 Penned by Associate Justice Roberto A. Barrios, with the concurrence of

Associate Justices Juan Q. Enriquez, Jr. and Arsenio J. Magpale, CA Rollo, pp.
186-195.

4 Id., at pp. 232-233.

199
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International Container Terminal Services, Inc. vs. FGU Insurance Corporation

ICY IN EVIDENCE PURSUANT TO THIS HONORABLE COURT’S

DECISION IN HOME INSURANCE CORPORATION VS. COURT OF
APPEALS (225 SCRA 411) AND THE FAIRLY RECENT DECISION IN
WALLEM PHILIPPINES SHIPPING, INC. AND SEACOAST MARITIME
CORP. VS. PRUDENTIAL GUARANTEE AND ASSURANCE, INC. AND
COURT OF APPEALS, G.R. NO. 152158, 07 FEBRUARY 2003.

4. ASSUMING ARGUENDO THAT PETITIONER IS LIABLE, THE

COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE AWARD
OF 12% INTEREST DESPITE THE FACT THAT THE OBLIGATION
PURPORTEDLY BREACHED DOES NOT CONSTITUTE A LOAN OF
FORBEARANCE OF MONEY AND DESPITE THE CLEAR GUIDELINES
SET FORTH BY THIS HONORABLE COURT IN EASTERN SHIPPING
LINES, INC. VS. COURT OF APPEALS (234 SCRA 78).

The rule in our jurisdiction is that only questions of law may be entertained by
this Court in a petition for review on certiorari. This rule, however, is not
ironclad and admits certain exceptions, such as when (1) the conclusion is
grounded on speculations, surmises or conjectures; (2) the inference is
manifestly mistaken, absurd or impossible; (3) there is grave abuse of
discretion; (4) the judgment is based on a misapprehension of facts; (5) the
findings of fact are conflicting; (6) there is no citation of specific evidence on
which the factual findings are based; (7) the findings of absence of facts are
contradicted by the presence of evidence on record; (8) the findings of the CA
are contrary to those of the trial court; (9) the CA manifestly overlooked certain
relevant and undisputed facts that, if properly considered, would justify a
different conclusion; (10) the findings of the CA are beyond the issues of the
case; and (11) such findings are contrary to the admissions of both parties. In
the present case,

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5 Rollo, p. 35.

6 Philippine Charter Insurance Corporation v. Unknown Owner of the Vessel

M/V “National Honor,” G.R. No. 161833 , July 8, 2005, 463 SCRA 202, 215.

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200 SUPREME COURT REPORTS ANNOTATED

International Container Terminal Services, Inc. vs. FGU Insurance Corporation

there is nothing on record which will show that it falls within the exceptions.
Hence, the petition must be denied.

Petitioner posits that its liability for the lost shipment should be limited to
P3,500.00 per package as provided in Philippine Ports Authority
Administrative Order No. 10-81 (PPA AO 10-81), under Article VI, Section
6.01 of which provides:

“Section 6.01. Responsibility and Liability for Losses and Damages;

Exceptions.—The CONTRACTOR shall at its own expense handle all
merchandise in all work undertaken by it hereunder deligently [sic] and in a
skillful, workman-like and efficient manner; that the CONTRACTOR shall be
solely responsible as an independent CONTRACTOR, and hereby agrees to
accept liability and to promptly pay to the shipping company consignees,
consignors or other interested party or parties for the loss, damage, or non-
delivery of cargoes to the extent of the actual invoice value of each package
which in no case shall be more than THREE THOUSAND FIVE HUNDRED
PESOS (P3,500.00) (for import cargo) x x x for each package unless the value
of the cargo importation is otherwise specified or manifested or
communicated in writing together with the declared bill of lading value
and supported by a certified packing list to the CONTRACTOR by the
interested party or parties before the discharge x x x of the goods, as well
as all damage that may be suffered on account of loss, damage, or destruction
of any merchandise while in custody or under the control of the
CONTRACTOR in any pier, shed, warehouse facility or other designated place
under the supervision of the AUTHORITY x x x.” (Emphasis supplied)

The CA summarily ruled that PPA AO 10-81 is not applicable to this case
without laying out the reasons therefor.

PPA AO 10-81 is the management contract between by the Philippine Ports

Authority and the cargo handling services providers. In Summa Insurance
Corporation v. Court of Appeals, the Court ruled that:

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7 Records, pp. 440-442.

8 323 Phil. 214; 253 SCRA 175 (1996).

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International Container Terminal Services, Inc. vs. FGU Insurance Corporation

“In the performance of its job, an arrastre operator is bound by the management
contract it had executed with the Bureau of Customs. However, a management
contract, which is a sort of a stipulation pour autrui within the meaning of
Article 1311 of the Civil Code, is also binding on a consignee because it is
incorporated in the gate pass and delivery receipt which must be presented by
the consignee before delivery can be effected to it. The insurer, as successor-in-
interest of the consignee, is likewise bound by the management contract.
Indeed, upon taking delivery of the cargo, a consignee (and necessarily its
successor-in-interest) tacitly accepts the provisions of the management
contract, including those which are intended to limit the liability of one of the
contracting parties, the arrastre operator.

However, a consignee who does not avail of the services of the arrastre
operator is not bound by the management contract. Such an exception to the
rule does not obtain here as the consignee did in fact accept delivery of the
cargo from the arrastre operator.”

While it appears in the present case that the RAGC availed itself of petitioner’s
services and therefore, PPA AO 10-81 should apply, the Court finds that the
extent of petitioner’s liability should cover the actual value of the lost shipment
and not the P3,500.00 limit per package as provided in said Order.

It is borne by the records that when Desma Cargo Handlers was negotiating for
the discharge of the shipment, it presented Hapag-Lloyd’s Bill of Lading,
Degussa’s Commercial Invoice, which indicates that value of the shipment,
including seafreight charges, was DM94.960,00 (CFR Manila); and Degussa’s
Packing List, which likewise notes that the value of the shipment was
DM94.960,00. It is highly unlikely that petitioner was not made aware of the
actual value of the shipment, since it had to examine the pertinent

_______________

9 Id., at pp. 223-224; p. 182.

10 Records, p. 361.
11 Id., at pp. 362-364.

12 Id., at pp. 365-367.

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202 SUPREME COURT REPORTS ANNOTATED

International Container Terminal Services, Inc. vs. FGU Insurance Corporation

documents for stripping purposes and, later on, for the discharge of the
shipment to the consignee or its representative. In fact, the NBI Report dated
September 26, 1994 on the investigation conducted by it regarding the loss of
the shipment shows that petitioner’s Admeasurer Rosco Esquibal was shown
the Bill of Lading by Desma Brokerage’s representative, Rey Villanueva.
Esquibal also stated that another representative of Desma Brokerage, Joey
Laurente, went to their office and furnished him a copy of the “processed
papers of the fourteen cartons of Asahi Glass cargoes.”

By its own act of not charging the corresponding arrastre fees based on the
value of the shipment after it came to know of such declared value from the
marine insurance policy, petitioner cannot escape liability for the actual value
of the shipment. The value of the merchandise or shipment may be declared or
stated not only in the bill of lading or shipping manifest, but also in other
documents required by law before the shipment is cleared from the piers.

Petitioner insists that Marine Open Policy No. MOP-12763 under which the
shipment was insured was no longer in force at the time it was loaded on board
the Hannover Express on June 10, 1994, as provided in the Endorsement
portion of the policy, which states: “IT IS HEREBY DECLARED AND
AGREED that effective June 10, 1994, this policy is deemed CANCELLED.”
FGU, on the other hand, insists that it was under Marine Risk Note No. 9798,
which was executed on May 26, 1994, that said shipment was covered.

It must be emphasized that a marine risk note is not an insurance policy. It is

only an acknowledgment or declaration of the insurer confirming the specific
shipment covered by its

_______________

13 Id., at pp. 343-344.

14 Id., at p. 344.

15 Villaruel v. Manila Port Service, 131 Phil. 438, 444-445; 22 SCRA 1326,
1334 (1968).

16 Records, p. 395.

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International Container Terminal Services, Inc. vs. FGU Insurance Corporation

marine open policy, the evaluation of the cargo and the chargeable premium. It
is the marine open policy which is the main insurance contract. In other words,
the marine open policy is the blanket insurance to be undertaken by FGU on all
goods to be shipped by RAGC during the existence of the contract, while the
marine risk note specifies the particular goods/shipment insured by FGU on
that specific transaction, including the sum insured, the shipment particulars as
well as the premium paid for such shipment. In any event, as it stands, it is
evident that even prior to the cancellation by FGU of Marine Open Policy No.
MOP-12763 on June 10, 1994, it had already undertaken to insure the shipment
of the 400 kgs. of silver nitrate, specially since RAGC had already paid the
premium on the insurance of said shipment.

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.

_______________

17 Aboitiz Shipping Corporation v. Philippine American General Insurance

Co., G.R. No. 77530, October 5, 1989, 178 SCRA 357, 360-361.

18 G.R. No. 172156, November 23, 2007, 538 SCRA 681, 688.

19 445 Phil. 136, 153; 397 SCRA 158, 170 (2003).

20 G.R. No. 109293, August 18, 1993, 225 SCRA 411, 416.

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204 SUPREME COURT REPORTS ANNOTATED
International Container Terminal Services, Inc. vs. FGU Insurance Corporation

However, as in every general rule, there are admitted exceptions. In Delsan

Transport Lines, Inc. v. Court of Appeals, the Court stated that the presentation
of the insurance policy was not fatal because the loss of the cargo undoubtedly
occurred while on board the petitioner’s vessel, unlike in Home Insurance in
which the cargo passed through several stages with different parties and it
could not be determined when the damage to the cargo occurred, such that the
insurer should be liable for it.

As in Delsan, there is no doubt that the loss of the cargo in the present case
occurred while in petitioner’s custody. Moreover, there is no issue as regards
the provisions of Marine Open Policy No. MOP-12763, such that the
presentation of the contract itself is necessary for perusal, not to mention that
its existence was already admitted by petitioner in open court. And even though
it was not offered in evidence, it still can be considered by the court as long as
they have been properly identified by testimony duly recorded and they have
themselves been incorporated in the records of the case.

Finally, petitioner questions the imposition of a 12% interest rate, instead of

6%, on its adjudged liability. The ruling in Prudential Guarantee and
Assurance Inc. v. Trans-Asia Shipping Lines, Inc., to wit:

“This Court in Eastern Shipping Lines, Inc. v. Court of Appeals, inscribed the
rule of thumb in the application of interest to be imposed on obligations,
regardless of their source. Eastern emphasized beyond cavil that when the
judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest, regardless of whether the obligation involves a loan or
forbearance of money, shall be 12% per annum from such finality until its
satisfac-

_______________

21 420 Phil. 824, 835; 369 SCRA 24, 34 (2001).

22 See CA Decision, supra note 3, at p. 192.

23 People of the Philippines v. Libnao, 443 Phil. 506, 519; 395 SCRA 407, 417
(2003); Mato v. Court of Appeals, 320 Phil. 344, 349; 250 SCRA 283, 287
(1995).

24 G.R. No. 151890, June 20, 2006, 491 SCRA 411.

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International Container Terminal Services, Inc. vs. FGU Insurance Corporation

tion, this interim period being deemed to be by then an equivalent to a

forbearance of credit.

We find application of the rule in the case at bar proper, thus, a rate of 12% per
annum from the finality of judgment until the full satisfaction thereof must be
imposed on the total amount of liability adjudged to PRUDENTIAL. It is clear
that the interim period from the finality of judgment until the satisfaction
of the same is deemed equivalent to a forbearance of credit, hence, the
imposition of the aforesaid interest.” (Emphasis supplied)

is instructive. The CA did not commit any error in applying the same.

The Court notes, however, an apparent clerical error made in the dispositive
portion of the RTC Decision. While it appears that FGU paid RAGC the
amount of P1,835,068.88, as shown in the Subrogation Receipt, as prayed for
in its Complaint, the RTC awarded the sum of P1,875,068.88. Thus, a
necessary modification should be made on this score.

WHEREFORE, the petition is DENIED. The Decision dated October 22, 2003
and Resolution dated January 8, 2004 of the Court of Appeals are AFFIRMED,
with the modification that the award in the RTC Decision dated July 1, 1999
should be P1,835,068.88 instead of P1,875,068.88.

Costs against petitioner.

SO ORDERED.

Ynares-Santiago (Chairperson) Chico-Nazario, Nachura and Reyes, JJ.,

concur.

Petition denied, judgment and resolution affirmed with modification.

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25 Id., at pp. 448-450.

Records, p. 18.

Id., at p. 5.