Home » Maritime » Marine Risk Note v Insurance Policy

SOMETIME in February 1995, FA Motors of California USA shipped 120 pieces of “motors” via China Airlines bound for Manila, with ABB, Inc (ABB) as the consignee. The cargo arrived in Manila without any exception and sent for temporary storage to the People’s Aircargo Warehouse (PAW) pending release by the Bureau of Customs.

Ruby Brokerage Corp (RUBY) withdrew the cargo from PAW and delivered the same to the consignee. But when the shipment arrived at the consignee’s warehouse, only 65 of the 120 pieces of “motors” were delivered.

The shipment was insured with Mayan Insurance (MAYAN). ABB demanded payment from RUBY and PAW for the missing motors. The two entities refused to pay. MAYAN thus paid ABB.

Subsequently, MAYAN filed a complaint for damages with the Metropolitan Trial Court of Manila. In the course of trial, it presented a “marine risk note” as proof that the cargo was insured with MAYAN.

The Metropolitan Trial Court of Manila adjudged RUBY alone liable to MAYAN. The Regional Trial Court affirmed on appeal the decision of the trial court.

In the Court of Appeals, the decision of the Regional Trial Court was reversed and the complaint of MAYAN was ordered dismissed. The central finding that formed the Court of Appeals decision was that the Marine Risk Note presented as proof that the cargo was insured was invalid.

MAYAN filed a motion for reconsideration but was denied by the appellate court.

Hence, MAYAN elevated the case to the Supreme Court. And the Supreme Court ruled in the following tenor:

“ x x x. Since the Marine Insurance Policy was never presented in evidence before the trial court or the Court of Appeals, there is no legal basis to consider such document in the resolution of this case, reflective as that document may have been of the pre-existence of an insurance contract between MAYAN and ABB even prior to the loss of the motors. In fact, it appears quite plain that MAYAN’a theory of the case it pursued before the trial court was that the perfected insurance contract which it relied upon as a basis for its right to subrogation was not the Marine Insurance Policy but the Marine Risk Note.

x x x. MAYAN’s right of recovery as a subrogee of ABB cannot be predicated alone on the liability of the respondent [ RUBY ] to ABB, even though such liability will necessarily have to be established at the trial for MAYAN to recover. Because MAYAN’s right to recovery derives from contractual subrogation as an incident to an insurance relationship, and not from any proximate injury to it inflicted by the respondents. It is critical that MAYAN establish the legal basis of such right to subrogation by presenting the contract constitutive of the insurance relationship between it and ABB. Without such legal basis, its cause of action cannot survive.”

It is always prudent and necessary to present as evidence in court the insurance policy in order to substantiate the insurer’s right to recovery as the subrogee. The marine risk note cannot stand on its own.

For comments or inquiries, email the writer at jtb@pac-atlantic.com.ph.

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