THIRD DIVISION

[G.R. No. 161539. June 27, 2008.]

INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. ,

petitioner, vs. FGU INSURANCE CORPORATION, respondent.

DECISION

AUSTRIA-MARTINEZ, J : p

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. 1 HEScID

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 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. 2 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. HDIATS

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 3 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. 4
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 P3,500 PER PACKAGE WHICH
LIMITS PETITIONER'S LIABILITY, IF ANY, TO A TOTAL OF ONLY
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 P49,000.00 PURSUANT TO PPA ADMINISTRATIVE ORDER NO. 10-
81. AHcCDI

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 POLICY 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. ISADET

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). 5

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

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
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 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) . . . 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 . . . 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 . . . . 7
(Emphasis supplied) cHEATI

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, 8 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 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. 9 IDScTE

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, 10 Degussa's Commercial Invoice, which indicates that value of
the shipment, including seafreight charges, was DM94.960,00 (CFR Manila);
11 and Degussa's Packing List, which likewise notes that the value of the

shipment was DM94.960,00. 12 It is highly unlikely that petitioner was not

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 made aware of the actual value of the shipment, since it had to examine the
pertinent 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. 13 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." 14
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. 15 DCHaTc

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." 16 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 marine open policy, the evaluation of
the cargo and the chargeable premium. 17 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. DHSaCA

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., 18
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. , 19 the Court ruled
that the insurance contract must be presented in evidence in order to
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 determine the extent of the coverage. This was also the ruling of the Court in
Home Insurance Corporation v. Court of Appeals. 20
However, as in every general rule, there are admitted exceptions. In
Delsan Transport Lines, Inc. v. Court of Appeals, 21 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. HSDaTC

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. 22 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. 23
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., 24 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 satisfaction, this interim
period being deemed to be by then an equivalent to a forbearance of
credit. STDEcA

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. 25 (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, 26 as
prayed for in its Complaint, 27 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
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 July 1, 1999 should be P1,835,068.88 instead of P1,875,068.88. cCaEDA

Costs against petitioner.

SO ORDERED.
Ynares-Santiago, Chico-Nazario, Nachura and Reyes, JJ., concur.

Footnotes

1. Records, p. 480. TcIaHC

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 232-233.

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.
7. Records, pp. 440-442. EICDSA

8. 323 Phil. 214 (1996).

9. Id. at 223-224.
10. Records, p. 361.

11. Id. at 362-364.

12. Id. at 365-367.
13. Id. at 343-344.
14. Id. at 344. TCAHES

15. Villaruel v. Manila Port Service, 131 Phil. 438, 444-445 (1968).

16. Records, p. 395.

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 (2003).
20. G.R. No. 109293, August 18, 1993, 225 SCRA 411, 416.
21. 420 Phil. 824, 835 (2001).

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

23. People of the Philippines v. Libnao, 443 Phil. 506, 519 (2003); Mato v. Court of
Appeals, 320 Phil. 344, 349 (1995).

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

25. Id. at 448-450.

26. Records, p. 18. aCHcIE

27. Id. at 5.

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