April 2011 - Philippine Supreme Court Resolutions
Philippine Supreme Court Resolutions
[G.R. No. 186213 : April 11, 2011]
PREMIER SHIPPING LINES, INC. V. EAGLE STAR REINSURANCE COMPANY, LTD.
G.R. No. 186213 (Premier Shipping Lines, Inc. v. Eagle Star Reinsurance Company, Ltd.). � This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the August 29, 2008 Decision[1] and the January 21, 2009 Resolution[2] of the Court of Appeals (CA), which affirmed with modification the November 29, 2000 ruling of the Regional Trial Court (RTC) of Cebu City, Branch 57, disposed as follows:
WHEREFORE, foregoing considered, judgment is hereby rendered in favor of (respondent). (Petitioner) is hereby ordered to pay (respondent) the sum of Eight Million Five Hundred Thousand (P8,500,000.00) Pesos plus interest of twelve [percent] (12%) per annum from date of decision until fully paid, attorney's fees of One Hundred Thousand Pesos (P100,000.00) and costs.[3]
The facts:
On February 1, 1996, Philippine Phosphate Fertilizer Corporation (Philphos) shipped some 140,000 bags of fertilizers valued at P74,682,500.00 on board petitioner Premier Shipping Lines, Inc.'s M/V Premship V. The cargo was loaded in Isabel, Leyte en route to San Fernando, La Union and Manila.
Philphos insured the cargo with United Coconut Planters Bank General insurance Company (UCPB), which, in turn, reinsured the same with Anchor Insurance Brokerage Corporation (Anchor). Anchor later brokered the reinsurance of UCPB through Nicholson Leslie Marine Limited (Nicholson), a reinsurance broker in London. Subsequently, the Institute of London Underwriters (ILU), of which respondent Eagle Star Reinsurance Company, Ltd. is a member, reinsured UCPB's insurance over the fertilizer cargo.
The cargo did not arrive at its destination in good order and condition, as a part thereof was wet and damaged by sea water entering the cargo hold through the side shell of the vessel's hull.
Philphos filed insurance claims with UCPB, which, in turn, coursed the same through Anchor. Anchor then filed the claims with UCPB and ILU through Nicholson. UCPB appointed B.A. Adjuster & Marine Services as its local adjuster, while Nicholson appointed its own adjusters. The claims and their supporting documents were submitted to ILU through Nicholson. The ILU thereafter coursed the claims and documents through respondent.
After negotiations with. UCPB, Nicholson, respondent, and other underwriters in the ILU settled the claims of Philphos in the sum of P8,500,000.00.
Philphos then executed a subrogation agreement in favor of respondent and other underwriters. The latter then nominated respondent, as the representative of the ILU, to pursue, by arbitration or court action, reimbursement from petitioner.
Claiming to be subrogated to the rights of Philphos and alleging breach of contract of carnage, respondent filed an action for indemnity against petitioner before the RTC.
In the course of the trial, petitioner set up these defenses: (1) that respondent had no capacity to sue before Philippine courts because it is a foreign corporation with no license transact or engage in business in the Philippines; and (2) that the damage to the goods was caused by a fortuitous event when the vessel met. "strong northeasterly winds and very rough seas," causing heavy pounding on (its) hull." The vessel's captain supposedly took shelter at Carmen Bay, Tablas Island, Romblon, and waited for almost two (2) days for the alleged bad weather to subside.
In a decision dated November 29, 2000, the RTC ruled in favor of respondent by ordering petitioner to pay the former P8,500,000.00 plus interest of 12% per annum from the date of the decision until fully paid, and attorney's fees.
On appeal, the CA affirmed the RTC's findings, but modified and clarified the appropriate imposable interest rate, viz.:
WHEREFORE, the instant appeal is DENIED. The Decision dated November 29, 2000 in Civil Case No. CEB-19749 before the Regional Trial Court, Branch 57, Cebu City is AFFIRMED WITH THE SOLE MODIFICATION that (petitioner) Premier Shipping Lines Inc. shall pay (respondent) Eagle Star Reinsurance Company Ltd. legal interest in the amount of six percent (6%) per annum of the amount demanded, i.e., P8,500,000.00 from the date of judicial demand, that is the filing of the complaint with the courts a quo, until the finality of this Decision. After this Decision becomes final and executory, the applicable rate shall be twelve percent (12%) per annum until its satisfaction. Costs of suit in this appeal against (petitioner.)
SO ORDERED.
Petitioner moved for reconsideration of the CA Decision, but the motion was denied in a Resolution[4] dated January 21, 2009. Hence, the instant petition.
We deny the petition.
Well-settled is the rule that this. Court is not a trier of facts. As such, in an appeal by certiorari under Rule 45 of the Rules of Court, only questions of law may be raised. The resolution of factual issues is the function of the lower courts, whose findings on these matters, especially when affirmed by the CA, are received with respect and are, as a rule, binding on this Court.[5] The uniform findings of the RTC and the CA were supported by evidence on record and both have sufficiently disposed of the issues in this case.
Respondent's questioned business deal was an isolated transaction. The reinsurance by the member companies of the ILU led by respondent through broker Nicholson does not fall within the phrase "doing business in the Philippines," as defined under Republic Act No. 7042, otherwise known as the "Foreign Investments Act of 1991."[6] Respondent does not maintain an office, agency, or branch in the Philippines. It transacts reinsurance business through London brokers, such as Nicholson, in the London market. Sometimes, brokers do bring in reinsurance business from the Philippines, but they are not agents of the London underwriters. Respondent deals only through London brokers who pay the reinsurance premium, file claims, and receive payments on behalf of "reassureds." This business is not contracted directly with Philippine clients.
Respondent did not have a direct business transaction with Philphos. Anchor brokered the insurance of UCPB. Its insurance was arranged by Anchor with Nicholson, as the foreign insurance broker. Hence, since respondent is not engaged in the business of insurance in the Philippines but is merely collecting a claim assigned to it, if is not barred from filing the herein suit, although it has not secured a license to transact insurance business in the Philippines.
Petitioner moved for reconsideration of the CA Decision, but the motion was denied in a Resolution dated January 21, 2009. Hence, the instant petition.
Petitioner miserably failed to prove that the cause of the damage to the vessel's hull was due to force majeure. On the contrary, according to the report of PAGASA's Climatology and Agrometeorology Branch, Climate Data Section, the weather and sea condition over Romblon from 2:00 a.m. to 7:59 a.m. on February 3, 1996 was slight. The sea condition as a whole from February 3 to 5, 1996 was generally slight to moderate. It was not reported to be characterized by rough seas, necessitating a ship sailing thereon to seek shelter.
Based on the survey report of Perfect Lambert & Co. (Far East) Ltd. submitted by petitioner itself, the seawater damage was the result of the leaks in the ship's side shell plating but these leaks were not caused by hitting an object. It was more likely that the weld seams were weak and opened when the ship's hull was stressed by motion in the heavy weather during the voyage.
Further, the CA was correct in rectifying and clarifying the proper interest rate imposable on respondent's claim. In Eastern Shipping Lines, Inc. v. Court of Appeals,[7] this Court synthesized the rules on the imposition of interest and the applicable rate, as follows: The 12% per annum rate1 under Central Bank Circular No. 416 shall apply only to loans or forbearance of money, goods, or credits, as well as to judgments involving such loan or forbearance of money, goods, or credit, while the 6% per annum under Article 2209 of the Civil Code applies "when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general," with the application of both rates reckoned "from the time the complaint was filed until the adjudged amount is fully paid."
The award of attorney's fees was likewise proper since respondent was compelled to litigate its claims lo protect its interests.[8]
WHEREFORE, there being no reversible error in the assailed issuances of the Court of Appeals, the petition is hereby DENIED. The August 29, 2008 Decision and the January 21, 2009 Resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.
Very truly yours,
MA. LUISA L. LAUREA
Clerk of Court
By:
(Sgd.) TERESITA AQUINO TUAZON
Asst. Clerk of Court
Endnotes:
[1] Penned by Associate Justice Amy C. Lazaro-Javier, with Associate Justices Francisco P. Acosta and Edgardo L. Delos Santos, concurring; rollo, pp. 40-50.[2] Id. at 51-52.
[3] Id. at 57-64.
[4] Supra note 2.
[5] Rosario Textile Mills, Inc., et al., v. Court of Appeals, et al., G.R. No. 137326, August 25, 2003, 409 SCRA 515, 522.
[6] Section 3 (d): The phrase "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison" offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay in the country for a period or periods totaling one hundred eighty (180) days or more; participating in the management, supervision or control of any domestic business, firm, entity or corporation in the Philippines: and any other act or acts that imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or of the purpose and object of the business organization: Provided, however, That the phrase "doing business: shall not be deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do business, and/or the exercise of rights as such investor: nor having a nominee director or officer to represent its interests in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in its own name and for its own account.
[7] G.R. No. 97412, July 12, 1994, 234, SCRA 78.
[8] Art. 2208 of the Civil Code pertinently states:
�In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
x x x x
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.
