G.R. No. 77530 October 5, 1989
ABOITIZ SHIPPING CORPORATION, petitioner, vs. PHILIPPINE AMERICAN GENERAL INSURANCE CO., respondent.

FACTS

Marinduque Mining Industrial Corporation imported a shipment of valve parts from the United States. Upon arrival in Manila, the cargo was received and deposited by Aboitiz Shipping Corporation at its Pier 4 terminal for subsequent transshipment. While in Aboitiz’s custody, the shipment was extensively pilfered during heavy rain on the night of July 3, 1980. Marinduque filed a claim against Aboitiz for the value of the lost cargo.
Marinduque was the insured under a continuous Marine Open Policy issued by Philippine American General Insurance Co. (Phil-Am). After Marinduque filed a claim under this insurance policy, Phil-Am paid the insured the sum of P246,430.80. Phil-Am, as subrogee, then filed a complaint against Aboitiz to recover the amount paid. The Regional Trial Court dismissed the complaint, but the Court of Appeals reversed this decision, holding Aboitiz liable.

ISSUE

Whether Aboitiz Shipping Corporation is liable to Phil-Am for the value of the pilfered cargo that was lost while in Aboitiz’s custody at its terminal.

RULING

Yes, Aboitiz is liable. The Supreme Court affirmed the Court of Appeals’ decision. The legal logic centers on Aboitiz’s liability as a depositary and the validity of Phil-Am’s subrogation rights. First, Aboitiz’s liability is clear under the law on deposit. It received the cargo at its terminal, and the pilferage occurred while the goods were in its exclusive possession and control before loading onto its vessel. As a depositary, it was obligated to exercise the diligence of a good father of a family in safeguarding the goods, a duty it failed to fulfill.
Second, the trial court erred in dismissing the complaint based on the timing of a specific Marine Risk Note. The Court clarified that the insurance coverage was governed by a pre-existing, continuous Marine Open Policy, not by the later-issued Risk Note. The Open Policy was effective and attached to the shipment from its point of origin. The Risk Note was merely a confirmatory declaration of coverage for a specific shipment under that overarching Open Policy. Therefore, Phil-Am’s payment to Marinduque was valid under the insurance contract, and Phil-Am was properly subrogated to Marinduque’s right of action against the negligent party.
Finally, the Court found no merit in Aboitiz’s procedural claim of being denied due process, as the records showed it was declared in default for failure to answer the complaint, justifying the ex-parte reception of evidence.