6/3/2019 SUPREME COURT REPORTS ANNOTATED VOLUME 556

G.R. No. 161539. June 27, 2008.*

INTERNATIONAL CONTAINER TERMINAL SERVICES,

INC., petitioner, vs. FGU INSURANCE CORPORATION,
respondent.

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 successor­in­interest of
the consignee.—PPA AO 10­81 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

_______________

* THIRD DIVISION.

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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 successor­in­interest of the
consignee, is likewise bound by the management contract. Indeed,
upon taking delivery of the cargo, a consignee (and necessarily its
successor­in­interest) 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. MOP­12763 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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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. Trans­Asia 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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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.

AUSTRIA­MARTINEZ, J.:

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
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

_______________

1 Records, p. 480.

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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, 1995.2 In turn, FGU sought
reimbursement from petitioner, but the latter refused. This
constrained FGU to file with the RTC of Manila Civil Case
No. 95­73532 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 Decision3 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
P3,5000 PER PACKAGE WHICH LIMITS PETITIONER’S
LIABILITY, IF ANY, TO A TOTAL OF ONLY P49,000.00
PURSUANT TO PPA ADMINISTRATIVE ORDER NO. 10­81.
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

_______________

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.
186­195.
4 Id., at pp. 232­233.

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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).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,

_______________

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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there is nothing on record which will show that it falls

within the exceptions. Hence, the petition must be denied.

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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. 10­81
(PPA AO 10­81), 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, workman­like 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 non­delivery 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.”7 (Emphasis supplied)

The CA summarily ruled that PPA AO 10­81 is not

applicable to this case without laying out the reasons
therefor.
PPA AO 10­81 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:

_______________

7 Records, pp. 440­442.

8 323 Phil. 214; 253 SCRA 175 (1996).

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“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
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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 successor­in­interest of the consignee, is likewise
bound by the management contract. Indeed, upon taking delivery
of the cargo, a consignee (and necessarily its successor­in­interest)
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

While it appears in the present case that the RAGC

availed itself of petitioner’s services and therefore, PPA AO
10­81 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 Hapag­Lloyd’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
made aware of the actual value of the shipment, since it
had to examine the pertinent

_______________

9  Id., at pp. 223­224; p. 182.

10 Records, p. 361.
11 Id., at pp. 362­364.
12 Id., at pp. 365­367.

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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
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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
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

_______________

13 Id., at pp. 343­344.

14 Id., at p. 344.
15  Villaruel v. Manila Port Service, 131 Phil. 438, 444­445; 22 SCRA
1326, 1334 (1968).
16 Records, p. 395.

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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

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prior to the cancellation by FGU of Marine Open Policy No.

MOP­12763 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.,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 determine the extent of
the coverage. This was also the ruling of the Court in Home
Insurance Corporation v. Court of Appeals.20

_______________

17  Aboitiz Shipping Corporation v. Philippine American General

Insurance Co., G.R. No. 77530, October 5, 1989, 178 SCRA 357, 360­361.
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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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.
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. MOP­12763, 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

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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.
Trans­Asia 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 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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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.”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,
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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.

Ynares­Santiago (Chairperson) Chico­Nazario,

Nachura and Reyes, JJ., concur.

Petition denied, judgment and resolution affirmed with

modification.

_______________

25 Id., at pp. 448­450.

26 Records, p. 18.
27 Id., at p. 5.

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