Loadmasters Customs Services, Inc. v. Golden Brokerage Corp.

Memory Aid: Parties involved are: Loadmasters Customs

Services, Inc.R&B Insurance Corporation Glodel Brokerage
Corporation Columbia Wire and Cable Corporation
Facts:On August 28, 2001, R&B Insurance issued a Marine
Policy (think insurance policies) in favor of Columbia to
insure the shipment of 132 bundles of electric copper cathodes
against ALL RISKS. On the same day, the cargoes were
shipped from Leyte, and arrived at North Harbor, Manila.
Columbia engaged the services of Glodel for the release and
withdrawal of the cargoes from the pier and the subsequent
delivery to its warehouses. Glodel, in turn, engaged the
services of Loadmasters for the use of its delivery trucks to
transport the cargoes to Columbia's warehouses in Bulacan
and Valenzuela City. The goods were loaded on board 12
Loadmasters trucks with drivers and helpers; 6 to Bulacan and
6 toValenzuela. The cargoes in all trucks were duly delivered
except for 1 truck bound for Bulacan, loaded with 11 bundles
or 232 pieces of copper cathodes, which failed to deliver its
cargo. This truck was later recovered with its cargo gone. For
this, Columbia filed with R&B Insurance a claim for insurance
indemnity in the amount of P 1,903,[Link] investigation
and adjustment, R&B Insurance paid Columbia the amount of
P 1,896,789.62 as insurance indemnity. R&B Insurance,
thereafter, filed a complaint for damages against both
Loadmasters and Glodel before the RTC of Manila, seeking
reimbursement of the amount it had paid to Columbia for the
loss of the subject cargo. It claimed that it had been
subrogated "to the right of the consignee to recover from the
party who may be held legally liable for the loss."The RTC
rendered a decision holding Glodel liable and ordering the
same to pay R&B Insurance. An appeal byGlodel to the CA
followed. The CA ruled that since Loadmasters is an agent of
Glodel, it is likewise liable to Glodel for the same amount for
which Glodel has been held liable to R&B Insurance.
Subsequently, Loadmasters filed the instant petition.
Issue:1.
W/N under the set of facts, can petitioner Loadmasters be
legally considered as an agent of respondent Glodel.
Held/Ratio:1.
No. There exists no principalagent relationship between Glodel and Loadmasters, as errone
ously found by theCA. Article 1868 of the Civil Code
provides:By the contract of agency a person binds himself to
render some service or to do something in representation or on
behalf of another, with the consent or authority of the
[Link] elements of a contract of agency are: (1) consent,
express or implied, of the parties to establish the relationship;
(2) the object is the execution of a juridical act in relation to a
third person; (3) the agent acts as a representative and not for
himself; (4) the agent acts within the scope of his authority.
Accordingly, there can be no contract of agency between the
parties.
Loadmasters
never
represented
Glodel. Neither was it ever authorized to make such representa
tion. It is a settled rule that the basis for agency isrepresentatio
n, that is, the agent acts for and on behalf of the principal on
matters within the scope of his authority and said acts have the

same legal effect as if the principal personally executed them.

On the part of the principal, there must be an actual intention
to appoint or an intention naturally inferable from his words or
actions, while on the part of the agent, there must be an
intention to accept the appointment and act on it. Such mutual
intent is not obtaining in this case. However, even if
Loadmasters is correct in saying that it is not an agent of
Glodel, it is not correct to conclude that it is completely
absolved of liability. According to Article 2207, "if the
plaintiff's property has been insured, and he has received
indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of,
the insurance company shall be subrogated to the rights of the
insured against the wrong-doer or the person who has violated
the contract." Therefore, R&B Insurance had the right to seek
reimbursement from either Loadmasters or Glodel or both for
breach of contract. Premises considered, the Court decided
that both Loadmasters and Glodel are jointly and severally
liable to R&B Insurance for the loss of the subject cargo.
Under Article 2194, "the responsibility of two or more persons
who are liable for a quasi-delict is solidary."
Vector Shipping Corporation vs. American Home
Insurance Company
G.R. No. 159213. July 3, 2013
Contracts; Prescription
Facts: Caltex entered into a contract of affreightment3
with Vector for the transport of Caltexs petroleum
cargo through the M/T Vector. Caltex insured the
petroleum cargo with respondent for 7,455,421.08
under Marine Open Policy. After approximately three
months, the entire petroleum cargo of Caltex on board
the M/T Vector perished due to an accident during
voyage on December 20, 1987. The respondent
indemnified Caltex for 7,455,421.08.
The respondent filed a complaint against Vector, Soriano, and
Sulpicio Lines, Inc. to recover the full amount of
7,455,421.08 it paid to Caltex only on March 5, 1992.
Ratio:
The legal provision governing this case was not
Article 1146 of the Civil Code, but Article 1144 of the Civil
Code. However, the present action was not upon a written
contract, but upon an obligation created by law. Hence, it
came under Article 1144 (2) of the Civil Code. This is because
the subrogation of respondent to the rights of Caltex as the
insured was by virtue of the express provision of law
embodied in Article 2207 of the Civil Code, to wit:
Article 2207. If the plaintiffs property has been
insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or
breach of contract complained of, the insurance company shall
be subrogated to the rights of the insured against the
wrongdoer or the person who has violated the contract. If the
amount paid by the insurance company does not fully cover
the injury or loss, the aggrieved party shall be entitled to
recover the deficiency from the person causing the loss or
injury. (Emphasis supplied)

Subrogation under Article 2207 of the Civil Code

gives rise to a cause of action created by law. For purposes of
the law on the prescription of actions, the period of limitation
is ten years.
Danzas vs Abrogar
Petitioner Danzas Corporation, through its agent, petitioner
All Transport Network brings to us this petition for review on
certiorariquestioning the decisioand resolutionof the Court of
Appeals which affirmed two orders issued by the Regional
Trial Court, Makati City, Branch 150.[4]
The facts of the case follow:
On February 22, 1994, petitioner Danzas took a shipment
of nine packages of ICS watches for transport to Manila. The
consignee, International Freeport Traders, Inc. (IFTI) secured
Marine Risk Note No. 0000342 from private respondent
Seaboard.
On March 2, 1994, the Korean Airlines plane
carrying the goods arrived in Manila and discharged the goods
to the custody of private respondent Philippine Skylanders,
Inc. for safekeeping. On withdrawal of the shipment from
private respondent Skylanders warehouse, IFTI noted that
one package containing 475 watches was shortlanded while
the remaining eight were found to have sustained tears on
sides and the retape of flaps. On further examination and
inventory of the cartons, it was discovered that 176 Guess
watches were missing. Private respondent Seaboard, as
insurer, paid the losses to IFTI.
On February 23, 1995, Seaboard, invoking its right of
subrogation, filed a complaint against Skylanders, petitioner
and its authorized representative, petitioner All Transport
Network, Inc. (ATN), praying for actual damages in the
amount of P612,904.97 plus legal interest, attorneys fees and
cost of suit. Petitioners impleaded Korean Airlines (KAL) as
third-party defendant.
While the case was pending, IFTIs treasurer, Mary
Eileen Gozon accepted the proposal of KAL to settle
consignees claim by paying the amount of US $522.20. On
May 8, 1996, Felipe Acebedo, IFTIs representative received a
check from KAL and correspondingly signed a release form.
On July 2, 1996, petitioners filed a motion to dismiss
the case on the ground that private respondent Seaboards
demand had been paid or otherwise extinguished by KAL.
On December 9, 1996, the trial court issued an order
denying the motion to dismiss. Petitioners, private respondent
Skylanders and KAL filed separate motions for
reconsideration. Prior to the resolution of these motions, the
trial court allowed private respondent Skylanders to present
evidence in a preliminary hearing on November 14, 1997,
after which the court set a date to hear the presentation of
rebuttal evidence.
On December 5, 1997, petitioners filed a
manifestation and motion for reconsideration of the order of

the trial court dated November 14, 1997, questioning the

propriety of the preliminary hearing.
On February 18, 1998, the trial court issued an order
denying: (1) the motion for reconsideration of the December
9, 1996 order filed by petitioners, private respondent
Skylanders and KAL; (2) the motion to dismiss filed by
Skylanders and (3) petitioners motion for reconsideration of
the November 14, 1997 order.
On April 6, 1998, petitioners filed in the Court of
Appeals a special civil action for certiorari under Rule 65 of
the Rules of Court. On March 5, 1999, the CA dismissed the
petition.[6] Petitioners filed[7] a motion for reconsideration but
this was denied.[8]
Hence, this petition.
Petitioners principal contention is that private
respondents right of subrogation was extinguished when IFTI
received payment from KAL in settlement of its obligation.
They also claim that public respondent committed grave abuse
of discretion by refusing to dismiss the case on that ground.
Finally, they claim that, by granting private respondent
Skylanders a preliminary hearing on an affirmative defense
other than one of the grounds stated in Section 1, Rule 16 of
the 1997 Rules of Civil Procedure, public respondent
committed another grave abuse of discretion.
For its part, private respondent Seaboard argues that
the payment made by the tortfeasor did not relieve it of
liability because at the time of payment, its (Seaboards) suit
against petitioners was already ongoing. It also insists that
because the assailed order was interlocutory, it was not a
proper subject for certiorari.[9]
Private respondent Skylanders likewise contends that
the order denying dismissal cannot be the subject of certiorari
in the absence of grave abuse of discretion. It also defends the
trial courts order granting a preliminary hearing, saying that,
assuming the trial court had erroneously granted such a
hearing, such error was merely one of judgment and not of
jurisdiction as to merit certiorari.[10]
The petition has no merit.
It is true that the doctrine in Manila Mahogany
Manufacturing Corporation v. Court of Appeals[11] remains
the controlling doctrine on the issue of whether the tortfeasor,
by settling with the insured, defeats the right to subrogation of
the insurer. According to Manila Mahogany:
Since the insurer can be subrogated
to only such rights as the insured may have,
should the insured, after receiving payment
from the insurer, release the wrongdoer who
caused the loss, the insurer loses his rights
against the latter. But in such a case, the
insurer will be entitled to recover from the
insured whatever it has paid to the latter,
unless the release was made with the
consent of the insurer.

This is buttressed by a later decision, Pan Malayan

Insurance Corporation v. Court of Appeals,[12] in which we
cited a number of exceptions to the rule laid down in Article
2207 of the Civil Code.[13] Under the first of these exceptions,
if the assured by his own act releases the wrongdoer or third
party liable for the loss or damage from liability, the insurers
right of subrogation is defeated.
However, certain factual differences pointed out by
private respondent Seaboard render this doctrine inapplicable.
In Manila Mahogany, the tortfeasor San Miguel Corporation
paid the insured without knowing that the insurer had already
made such payment. KAL was not similarly situated, being
fully aware of the prior payment made by the insurer to the
consignee. Private respondent Seaboard asserts that, being in
bad faith, KAL should bear the consequences of its
actions. [14]
While Manila Mahogany is silent on whether the
existence of good faith or bad faith on the tortfeasors part
affects the insurers right of subrogation, there exists a wealth
of U.S. jurisprudence holding that whenever the wrongdoer
settles with the insured without the consent of the insurer and
with knowledge of the insurers payment and right of
subrogation, such right is not defeated by the settlement.[15]
Because this doctrine is actually consistent with the facts
of Mahogany and helps fill a slight gap left by our ruling in
that case, we adopt it now. The trial court correctly refused to
dismiss the case. In that respect, therefore, the trial court did
not commit grave abuse of discretion which would justify
certiorari.
We likewise find that no grave abuse of discretion
was committed by public respondent when it granted private
respondent Skylanders motion for a preliminary hearing.
In California and Hawaiian Sugar Company v.
Pioneer Insurance and Surety Corporation, [16] we held that a
preliminary hearing was not mandatory but was rather subject
to the discretion of the trial court. We found in that instance
that the trial court had committed grave abuse of discretion in
refusing the partys motion for a preliminary hearing on the
ground that the case was premature, not having been
submitted for arbitration. A preliminary hearing could have
settled the entire case, thereby helping decongest the dockets.
It was therefore the refusal to allow the most efficient and
expeditious process which we condemned.
In the instant case, we are not convinced that public
respondents act of allowing a preliminary hearing constituted
grave abuse of discretion.
In Land Bank of the Philippines v. the Court of
Appeals[17] we discussed the meaning of grave abuse of
discretion:
Grave abuse of discretion implies such
capricious and whimsical exercise of
judgment as is equivalent to lack of
jurisdiction or, in other words, where the
power is exercised in an arbitrary manner by

reason of passion, prejudice, or personal

hostility, and it must be so patent or gross as
to amount to an evasion of a positive duty or
to a virtual refusal to perform the duty
enjoined or to act at all in contemplation of
law.
The special civil action for
certiorari is a remedy designed for the
correction of errors of jurisdiction and
not errors of judgment. The raison
detre for the rule is when a court exercises
its jurisdiction, an error committed while so
engaged does not deprive it of the
jurisdiction being exercised when the error
is committed. If it did, every error
committed by a court would deprive it of its
jurisdiction and every erroneous judgment
would be a void judgment. In such a
scenario, the administration of justice would
not survive. Hence, where the issue or
question involved affects the wisdom or
legal soundness of the decisionnot the
jurisdiction of the court to render said
decisionthe same is beyond the
province of a special civil action for
certiorari. (emphasis supplied)
Public respondents order granting the preliminary
hearing does not at all fit the description above. At worst, it
was an error in judgment which is beyond the domain of
certiorari.
WHEREFORE, in view of the foregoing, the
petition is hereby DENIED. The decision and resolution of
the Court of Appeals areAFFIRMED.
Costs against petitioners.