Makati Finance vs Sincere Maritime

Republic of the PhilippinesCourt of Appeals

Manila

FOURTH DIVISION

MAKATI INSURANCECORPORATION,

Plaintiff-Appellant,

- versus -

SINCERE MARITIMECORPORATION, CARGILL NORTHASIA LTD., and MARITIME PHILS.PORT SERVICES, INC.,

Defendants-Appellees.x-------------------------------------------------xSINCERE MARITIMECORPORATION, CARGILL NORTHASIA LTD., and MARITIME PHILS.PORT SERVICES, INC., Third-Party Plaintiffs-Appellants,

- versus -

MARIA CRISTINA CHEMICALINDUSTRIES, INC., Third-Party Defendant-Appellee.

CA-G.R. CV No. 63146

Members:

VIDALLON-MAGTOLIS, D.,ChairDE LOS SANTOS, E. R., and BRION, A.D., JJ.

Promulgated:____________

x-----------------------------------------------------------------------------------------x

CA-G.R. CV No. 63146Decision

D E C I S I O N

BRION, J.:

Before us are separate appeals that are both grounded on the

damages the vessel MV Sincere No. 5 (vessel) and the private

wharf of the Maria Cristina Chemical Industries Inc. (MCCI)

suffered while the vessel was docked at the MCCI private wharf to

discharge a cargo of salt for the consignee Mabuhay Vinyl

Corporation (Mabuhay).

Makati Insurance Corporation (Makati Insurance) is the

insurer of MCCI who paid for the damages MCCI incurred in the MV

Sincere No. 5 incident. It filed the complaint, Civil Case No. 93-

64936,1 for a sum of money before the Regional Trial Court (RTC)

of Manila, Branch 40, in the exercise of its right of subrogation under

Article 2207 of the Civil Code. RTC Judge Felipe G. Pacquing

dismissed the complaint on the ground that the damage to MCCIs

wharf was caused by force majeure.2 MCCI brought this judgment of

dismissal to us on appeal.

1 Record, at pp.1-4.2 Id., at pp. 365-368.

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With leave of court, the defendants filed a third-party

complaint3 against MCCI on the ground that the structure and

maintenance of the MCCI wharf contributed to the damage that the

vessel suffered. The lower court dismissed the complaint in its

orders dated February 10, 1995,4 April 25, 19955 and October 23, 19956

on the ground that the third-party complaint fails to state a cause of

action. The third-party plaintiffs likewise brought the dismissal of

their third-party complaint to us on appeal.

BACKGROUND

Makati Insurances complaint recites that

3. On or about February 26, 1992, the vessel MV SincereNo. 5 berthed and secured herself at the private wharf of MariaCristina Chemical Industries, Inc., at Iligan City to discharge hercargo of industrial salt in favor of Mabuhal Vinyl Corporation wholeased said wharf from its owner for the purpose of receiving thesaid shipment.

4. Discharging of the cargo having been suspended due tothe presence of Northeasterly winds, the master of the MK/VSincere No. 5 was requested by the pier owner to pull out thevessel from the pier to prevent damage to the pier, which requestsaid master refused to heed;

5. As a result, the vessel continuously bumped the piersfender clusters, thus, causing extensive damage thereto, as well as

3 Id., at pp. 125-130.4 Record, at p. 1855 Id., at p. 216.6 Id., at p. 224.

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to the piers deck and the mooring ballard, rendering the wharfunusable;

6. The aforesaid pier facilities together with other relatedmachineries and equipment of Maria Cristina Chemicals Industries,Inc. was insured by the latter with plaintiff under and by virtue ofPolicy No. SPF-0858;

7. The aforementioned damages to the pier facilities werebrought about by the fault or negligence of the defendants; sheerlack of prudence, lack of foresight, and lack of skill of the vesselsmaster who did not act swiftly to avert the damages as aforesaid orat least to minimize the same;

The defendants Sincere Maritime Corporation and Maritime

Philippine Ports Services, Inc. admitted in their Answer7 that the

vessel was docked at the MCCI pier but otherwise denied the

negligence imputed against the vessels master, citing as defenses the

fact that there was force majeure and the negligence of the

managers/operators of the pier.

Subsequently, Cargill North Asia Ltd., the charterer of MV

Sincere No. 5, was impleaded as a party defendant through an

amended complaint.8 The defendants, for their part, sought leave

and was allowed by the lower court to file a third-party complaint

against Maria Cristina Chemical Industries, Inc.9 The third-party

complaint states that:

7 Record, at pp.19-23.8 Id., at pp. 67-71.9 Id., at pp. 125-130.

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3. On February 25, 1992, M/V Sincere No. 5, owned by SincereMaritime and under charter by CARGILL and represented in thePhilippines by MARITIME PHIL., arrived at the Iligan roadstead,Philippines, to discharge her cargo of industrial salt of theconsignee, Mabuhay Vinyl Corporation, but which temporarily lied(sic) idle while awaiting berthing instruction from said consignee ofthe shipment;

4. However, on or about the morning of February 26, 1992, thelocal harbor pilot boarded M/V SINCERE NO. 5 for docking; andshe was safely secured along side (sic) a private wharf or pier ofMARIA CRISTINA and started discharging her said shipment forthe consignee;

5. While discharging its said shipment that same day, anortheasterly wind occurred and prevailed in the sorrounding (sic)areas, which temporarily stopped the ongoing discharging ofshipment, as M/V SINCERE NO. 5 begun (sic) to have a strongcontact and crushed to the fenders cluster piles of the wharf/pier;

6. With the contacts between M/V SINCERE NO. 5 and the onlyfour (4) fender-cluster piles, which were inadequate and defective,the latter easily gave way with one cluster uprooted, causingdamages to M/V SINCERE NO. 5 and the wharf/pier;

7. In fine, the damages incurred by M/V SINCERE NO. 5 andallegedly by the wharf/pier were caused by a force-majeure, thenortheasterly wind, and the inadequate and defective wharf/pier asa result of the lack of proper maintenance by and/or malfeasanceand /or negligence of its owner/operator, MARIA CRISTINA,considering the undeniable fact that the same wharf/pier used to beconstantly hit by other ships/vessels before M/V SINCE NO. 5came to dock thereat;

x x x

9. Third-party Defendant, MARIA CRISTINA, is liable alone tocompensate and/or pay for whatever loss and/or claim of Plaintiffunder the insurance Policy No. SPF-0858, since the damages on thewharf/pier in question were caused by the inadequate and defectivewharf/pier itself, more specifically its delapidated/defective (sic)

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fender-cluster piles, due to lack of proper maintainance (sic) byand/or malfeasance and/or negligence of MARIA CRISTINA, asstated in paragraphs 5,6 and 7 hereof:

It was this third-party complaint that the lower court dismissed for

lack of cause of action.

At the trial, the plaintiff-appellant presented two witnesses.

Efren C. Cabungan10 testified that MCCI is insured by their company

and identified the MCCIs insurance policy.11 Upon receipt of

MMCIs claim, they immediately assigned the claim to one of their

adjusters, the Toplis and Harding company, who was tasked to

proceed to the cite (sic), inspect the damage sustained by the vessel and to

submit a formal report. . .12 Toplis submitted a preliminary report

identified and marked as Exhibit B13 and a subsequent evaluation

report14 marked as Exhibit C. The witness confirmed that the

plaintiff paid MCCIs insurance claim and identified the subrogation

receipt (Exh. D)15 and Exhibit E, a Sworn Statement on Proof of

Loss. On the whole, his testimony went towards proving the right of

the plaintiff to be subrogated to the right of MMCI to claim damages

against the defendants.

10 TSN, January 8, 1998.11 Exhibit A - Property Floater Policy dated August 26, 1993; A-1 Premium Inventory No.A-16238; Record, at p. 323.12 TSN, January 8, 1998, at p. 6.13 Id., at p. 9; Exh. B, Record at pp. 324-326.14 Id., at pp. 9-10; Exh. C, Record at pp. 327-331.15 Id., at p. 15; Exh. D, Record, at p. 332.

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Valentino Aboy, the second witness for the plaintiff, is a civil

engineer and adjuster. He was presented to testify on the adjustment

and investigation made in this pier incident. . . to explain to the court how

the amount or the value of the losses has been arrived at. . . identify some

documents in support to (sic) his recommendation made as to how much

was the actual losses suffered by the pier facilities.16 Mr. Aboy

confirmed that he is an adjuster and the Vice President of his

company. His company was instructed or commissioned by the MCCI

to adjust the claims filed by the insured, the Maria Cristina Chemical

Industries for the damages sustained by their pier facilities as a result of the

incident.17 He narrated that his people went to the loss site to gather

information surrounding the circumstances of the incident as well as

to inspect the damages that resulted from the incident.18 He himself

did not go to the MCCI pier.19 The data and documents were

analyzed by his staff and submitted to him. He identified the same

Exhibits B and C that the previous witness identified.

The defendants uniformly objected to the admission of these

exhibits for lack of proper identification. They likewise presented

two witnesses in their defense. Their first witness was Alfredo Saso,

General Manager of Survey Specialist, who acted as surveyor and

16 TSN, Feb. 27, 1998, at p. 4.17 TSN, Feb. 27, 1998, at pp. 5-6.18 Id., at p. 22.19 Id., at. pp. 22-23.

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who testified20 on the inspection made on the site and on his survey

reports (Exhibits 1 and 2 with sub-markings)21. In the course of

his testimony, he identified the following:

a. Exhibit 322 Marine Note of Protest by Capt. Lui Jen-Yu

dated Feb. 26, 1992, subsequently offered to prove that the master of

the vessel made a protest;

b. Exhibit 423 Letter dated Feb. 25, 1992, addressed by

Mabuhay Vinyl Corporation to Capt. Lui Jen-Yu;

c. Exhibit 524 Letter of Mabuhay to Capt. Lui Jen-Yu dated

Feb. 27, 1992, advising the Captain to undock the vessel so that

unloading can be undertaken at the Iligan pier;

d. Exhibit 5-A25 Masters remarks on the Mabuhay letter;

and

e. Exhibits 6 and 7 with submarkings26 refer to the layout

of the MCCI pier and the photographs of the damaged pier and

vessel.

The second defense witness was Diomedes Rabadam, a claims

processor, who testified27 on the Vessels Damage Report, marked

20 TSN, Oct. 20, 199821 Plaintiffs Evidence Folder: Exh. 1, pp.1-2; Exh. 2, pp. 3-9.22 Id., at p. 1023 Id., at p. 1124 Plaintiffs Evidence Folder, at p. 1225 Ibid.26 Id., at pp. 13-1427 TSN, Nov. 17, 1998

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and offered as Exhibit 9. 28 He likewise identified as part of Exhibit

9 the Statement of the Master of the Vessel consisting of his

insights and comments on the February 26, 1992 incident. The cited

Statement was separately marked as Exhibit 8.29

The plaintiff objected to all the defendants exhibits but

particularly to the survey reports for violation of the opinion rule

and to the Marine Protest by the Master of the vessel (Exh. 3), the

Masters remarks on the Mabuhay letter (Exhibit 5-A), and the

Statement of the Master of the Vessel (Exhibit 8) for being hearsay.

In its decision, the lower court identified the outstanding

issues (as identified by the parties in their pre-trial briefs) as follows:

1. Was there damage in the pier facilities?

2. Was there proper subrogation?

3. Are defendants liable for damages?

4. Will the counterclaim be granted?

After summarily disposing of the two initial issues, the lower

court, proceeded to rule on the third issue as follows:

Are the defendants liable? While there was propersubrogation, the defendants claim that the damage of the insuredproperty was caused by force-majeur is valid.

28 Plaintiffs Evidence Folder, at. p. 6029 Id., at pp. 43-59

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The last paragraph of exhibit B-1 reads as follows:

However, at about 1:30 p.m., discharging operationswas stopped due to the presence of strongnortheasterly winds which also enduced (sic) longswells to occur. This condition prevailed until 6:45p.m. and caused the vessel to continuously bumped(sic) the piers fender clusters. (Emphasis provided)

Exhibit 2, under the heading VESSEL POUNDING ONMCCI PIER gave the following account:

Accordingly, at 1330 hours of the above date,discharging of cargo from the aforementioned vesselwas temporarily stopped due to alleged strongNortheasterly wind (25-30 knots) and long swell thatprevailed in the area. As a consequence, the vesselsstarboard section made of (sic) contact and crushed to(sic) the fender cluster piles, as well as to (sic) theMCCI pier. Due to the incessant contact between thevessel and the four (4) fender cluster piles at that time,the latter, which were installed in line with the mainpier and (two clusters for each side), gave way withone cluster uprooted, causing the vessels starboardsection, which was in line of the overhand section ofthe concrete pier in way of Hold No. 3, to crushagainst it. As a result, the vessels starboard sectionand the MCCIs concrete pier sustained damage.(Emphasis supplied)

From the above exhibits, it is clear that the proximate causeof the damage of the insured property of MCCI is due to the strongnortheasterly winds of about 25 to 30 knots which enduced (sic)long swells and caused SINCERE No. 5 to bump and damage thepier of MCCI. This is considered force-majeur to which thedefendants should not be held liable for the damage done.

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Apparently for the same reason, the lower court dismissed the

counterclaim as well.

I. APPEAL FROM THE DECISION DATED JANUARY 4, 1999:

ASSIGNMENT OF ERRORS

In its appeal, Makati Insurance assigns the following errors:

1. THE HONORABLE LOWER COURT ERRED IN

RULING THAT THE PROXIMATE CAUSE OF THEDAMAGE OF THE INSURED PROPERTY WASFORCE MAJEURE;

2. THE HONORABLE LOWER COURT ERRED INRULING THAT THE DEFENDANTS SHOULD NOTBE HELD LIABLE FOR THE DAMAGE DONE;

3. THE HONORABLE COURT ERRED IN DISMISSINGTHE COMPLAINT.

THE COURTS RULING

We see no merit in the appeal.

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We went out of our way to extensively quote portions of the

complaint in order to clarify at the outset what the case is all about

and what requires to be proven to support or defeat the complaint.

The complaint is for damages based on Article 2176 of the Civil Code

and is anchored on the existence of damages and negligence. Thus,

the complaint alleges that The abovementioned damages to the pier

facilities were brought about by the fault or negligence of the defendants,

sheer lack of prudence, lack of foresight, and lack of skill of the vessels

master who did not act swiftly to avert the damages as aforesaid or at least,

to minimize the same.30

In a civil litigation (as in the present case), it is the plaintiff who

has the burden of proving the cause of action embodied in the

complaint. It is basic law that a plaintiff must prove the existence of

its legal right, the correlative legal duty on the part of the defendant

to respect the plaintiffs legal right, and an act or omission of the

defendant in violation of plaintiffs right.31 Under Article 2176

involved in the present case, the cause of action centers on the act or

omission on the part of the vessel, attended by fault or negligence,

causing damage to the MCCI wharf.

30 Complaint, Record, p. 331 Mathay v. Consolidated Bank, 58 SCRA 559; Dulay v. Court of Appeals, 243 SCRA 221.

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We extensively reviewed the evidence adduced by the plaintiff-

appellant to prove the elements that would entitle it to recover from

the defendants. Thus, for purposes of this Decision, we even

outlined the evidence, both testimonial and documentary, that the

plaintiff-appellants witnesses presented. Unlike the lower court

who dismissed the complaint in recognition of the defense of force

majeure, we conclude after our evaluation that the plaintiff-appellant

miserably failed to prove the allegations of its complaint.

Incidentally, we are keenly aware that the plaintiff-appellants failure

to prove the allegations of the complaint is not an error specifically

assigned in the present appeal. A review or assessment of this aspect

of the case is necessary, however, even before the defense of force

majeure the focal point of the present appeal can be considered.

Thus, it is an issue which we can legitimately tackle and rule upon in

this appeal because it is an issue upon which the determination of the

assigned error depends.32

The plaintiff-appellant presented only two witnesses, one of

whom, Efren Cabungan, testified solely on MCCIs insurance claim

and the documentary support to entitle the plaintiff to exercise the

right of subrogation. Thus, he said nothing that would support the

Article 2176 aspect of the complaint.

32 Law Firm of Abrenica, et. al. vs. CA, et. al., G.R. No. 143706, April 5, 2002.

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The second witness was Valentino Aboy, an adjuster, who

frankly admitted the role of his company and his own role in the

whole affair. They were there to adjust the claim. In one case,33 the

Honorable Supreme Court had occasion to define the role of an

adjuster and the High Court put it in these words:

An insurance adjuster is ordinarily a special agent for the personor company for whom he acts, and his authority is prima faciecoextensive with the business entrusted to him. . .

An adjuster does not discharge functions of a quasi-judicialnature, but represents his employer, to whom he owes faithfulservice, and for his acts, in the employer's interest, the employer isresponsible so long as the acts are done while the agent is actingwithin the scope of his employment. (45 C.J.S., 1338-1340.)

This was Valentino Aboys role and as confirmed by the first witness,

Mr. Cabugan, Aboys company was there to survey the damage

caused to MCCI and to submit a report for insurance payment

purposes. Valentino Aboy was frank enough to admit this role, the

fact that the reports he identified were prepared by his own people,

and that he did not go to the site of the damage himself. Thus,

Valentino Aboy had nothing to testify on with respect to the

causation of the damage to the pier and to the vessel, much less on

the question of whether there was fault, negligence or force majeure.

Under this evidentiary situation, the plaintiff-appellant may

have established the fact of damage that MCCI suffered and its

33 Smith, Bell & Co. Inc. vs. Court of Appeals, et al., G.R. No. 110668. February 6, 1997.

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extent, but has done nothing more beyond this. To be sure, this type

of evidence may have been sufficient in a case by an insured against

his insurance company where the issue is the fact of damage and the

extent of the amount that the insured should recover. This type of

evidence, however, is fatally deficient in a quasi-delict case where the

plaintiff has to establish the element of causation and the existence of

fault or negligence through competent and admissible evidence. In

the context of the present case, the plaintiff has to show that the

resulting damage to MCCIs pier was caused by MV Sincere No. 5

and that there was attendant fault or negligence in causing the

damage. In the absence of competent proof establishing all these

elements, we see no need to discuss the issue of force majeure, a

defense that comes into play to show that the damage, even if caused

by the defendant, is excused by a cause (force majeure) recognized by

law. Thus, the dismissal of plaintiff-appellants appeal and of the

complaint are legally in order.

II. APPEAL FROM THE ORDERS DATED FEBRUARY 10, 1995,APRIL 25, 1995 AND OCTOBER 23, 1995

The appealed Order dated February 10, 199534 states: For

resolution is a motion to dismiss third party complaint filed by third party

defendants and the opposition thereat of the third party plaintiff, and after a34 Record, p. 185

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careful evaluation of their pleadings, the Court resolves to dismiss the third

party complaint for lack of cause of action against the third party

defendants. This dismissal was confirmed in the subsequent orders of

the lower court dated April 25, 1995 and October 23, 1995.

The third-party plaintiffs appeal from these orders under the

following -

ASSIGNMENT OF ERRORS

1. THE HONORABLE LOWER COURT ERRED INHOLDING THAT THE THIRD-PARTY COMPLAINTDID NOT CLEARLY STATE THE ULTIMATE FACTSREQUIRED BY LAW FOR A COMPLAINT TO BEVALID.

2. THE HONORABLE LOWER COURT ERRED IN NOTHOLDING THAT IT CAN RENDER A VALIDJUDGMENT IN THE INSTANT THIRD-PARTYCOMPLAINT, IF THE ALLEGATIONS OF FACTSTHEREIN ARE HYPOTHETICALLY ADMITTED:HENCE, THE SAME STATES CAUSE(S) OF ACTION,AGAINST THIRD-PARTY DEFENDANT.

3. THE HONORABLE COURT ERRED IN NOTHOLDING THAT THE ORDER OF DISMISSAL ISDEFECTIVE IN FORM AND SUBSTANCE.

THE COURTS RULING

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We resolve to dismiss the appeal for lack of jurisdiction.

A third-party complaint is a claim that a defending party may,

with leave of court, file against a person not a party to the action,

called the third-party defendant, for contribution, indemnity,

subrogation or any other relief, in respect of his opponents claim.35

A third-party complaint is actually independent of and separate and

distinct from the plaintiffs complaint. Were it not for the Rules of

Court, it would have to be filed independently and separately from

the original complaint by the defendant against the third-party.36

Based on this relationship, there are really two cases for which

separate judgments may be rendered in the action. Separate appeals

may be made which remedies may be separately treated by this

Court37 as we are doing in the present case.

A dismissal based on lack of cause of action brought through a

motion to dismiss before the lower court looks solely at the

allegations of the complaint and hypothetically admits all these

allegations to test whether a cause of action is alleged. Necessarily,

the consideration made by the court is purely legal since no

questions of facts are required to be passed upon. As held by our

Supreme Court, "a question of law exists when the doubt or controversy

35 Section 11, Rule 6, Rules of Court.36 Remedial Law, Herrera, Vol I, 2000 Ed., at p. 486.37 See: Benaza v. Bonilla, 1 SCRA 1154; Singapore Airlines, Ltd. v. Court of Appeals, et al., G.R.No. 107356. March 31, 1995

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concerns the correct application of law or jurisprudence to a certain set of

facts; or when the issue does not call for an examination of the probative

value of the evidence presented, the truth or falsehood of facts being

admitted.38

There is purely legal consideration as well in the issue of

whether a set of allegations are allegations of ultimate facts and in

the issue of whether a resolution of dismissal is defective in form and

substance. In the first case, the question is whether the allegations

existing in the complaint are ultimate facts in legal contemplation;

in the second, the question is whether the given form and the

substance of the lower courts order satisfy legal standards. Thus in

both, no examination of evidence is required, only a consideration -

in light of existing law and jurisprudence - of the disputed complaint

or order that is before the court.

Under these legal situations, we have no option but to dismiss

the third-party plaintiffs appeal pursuant to Section 2, Rule 50 of the

Rules of Court since appeals of purely legal questions must be

brought, not to us, but to the Honorable Supreme Court.

38 Posadas-Moya & Associates Construction Co. Inc., vs. Greenfield Development Corporation, etal., G.R. No. 141115. June 10, 2003, citing Republic v. Sandiganbayan, GR No. 102508, January 30,2002.

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WHEREFORE, based on the above premises, we hereby

DISMISS the appeal and AFFIRM the dismissal of the complaint in

Civil Case No. 93-64936. We likewise hereby DISMISS the third-

party plaintiffs appeal from the Orders dated February 10, 1995,

April 25, 1995 and October 23, 1995 for lack of jurisdiction. No

pronouncement as to costs.

SO ORDERED.

ARTURO D. BRION Associate Justice

WE CONCUR:

DELILAH VIDALLON-MAGTOLIS ELIEZER R. DE LOS SANTOS Associate Justice Associate Justice

C E R T I F I C A T I O N

Pursuant to Article VIII, Section 13 of the Constitution, it ishereby certified that the conclusions in the above decision werereached in consultation before the case was assigned to the writer ofthe opinion of the Court.

DELILAH VIDALLON-MAGTOLISAssociate Justice

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Chair, Fourth Division

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Documents

Makati Finance vs Sincere Maritime