G.R. No. 161539; June 27, 2008
International Container Terminal Services, Inc. vs. FGU Insurance Corporation

FACTS

Petitioner International Container Terminal Services, Inc. (ICTSI), an arrastre operator, lost a shipment of silver nitrate while the cargo was in its custody. The consignee, Republic Asahi Glass Corporation, was insured by respondent FGU Insurance Corporation, which paid the claim and was subrogated to the consignee’s rights. FGU then demanded reimbursement from ICTSI, which refused payment, leading FGU to file a collection case. The Regional Trial Court ruled in favor of FGU, a decision affirmed by the Court of Appeals.

ISSUE

The primary issues were whether ICTSI’s liability was limited by PPA Administrative Order No. 10-81, whether the marine open policy was valid, whether FGU’s failure to present the insurance policy was fatal to its claim, and whether the award of 12% interest was proper.

RULING

The Supreme Court denied the petition. On the limitation of liability, the Court held that PPA AO 10-81, which limits liability to P3,500 per package, was inapplicable. The contract provision requires the consignee to communicate the higher value in writing before the discharge of the goods, supported by a certified packing list. The consignee’s broker only submitted a provisional invoice and a packing list after the loss was discovered, which did not comply with the strict precondition. Thus, ICTSI could not invoke the liability cap.
Regarding the insurance policy, the Court found no merit in ICTSI’s claim that the marine open policy was no longer in force. The validity of the insurance contract between FGU and the consignee was a matter properly proven during trial and not a proper subject for review under a Rule 45 petition, which deals only with questions of law. The Court also ruled that FGU’s failure to formally offer the insurance policy in evidence was not fatal. The policy’s existence and FGU’s right of subrogation were sufficiently established by other competent evidence, including the subrogation receipt and correspondence, adhering to the principle that rules of procedure should not override substantial justice.
Finally, the Court affirmed the 12% per annum interest on the award from the date of judicial demand until full payment. This was justified under prevailing jurisprudence, as the interim period from final judgment until satisfaction is deemed equivalent to a forbearance of credit. The Court, however, modified the monetary award to correct a clerical error, aligning it with the actual amount paid as shown in the subrogation receipt.