Malayan Insurance Co., Inc. vs. Regis Brokerage Corp.

An insurer acting as a subrogee cannot recover against a third party without presenting the insurance contract or policy in evidence or complying with the rule on actionable documents, because the right of subrogation is entirely derived from the insurance relationship, and the failure to produce the policy deprives the defendant of the opportunity to examine the terms and conditions of the subrogee's right of recovery.

Fasco Motors Group loaded 120 pieces of motors on a China Airlines flight bound for Manila, consigned to ABB Koppel, Inc. Upon arrival, the cargo was discharged without exception and stored at People’s Aircargo & Warehousing Corp.’s (Paircargo) warehouse. Regis Brokerage Corp. (Regis) withdrew the cargo and delivered it to ABB Koppel’s warehouse, where only 65 pieces were received; 55 motors valued at US$2,374.35 were missing. Demand for payment was made upon Regis and Paircargo, but both refused. Malayan Insurance Co., Inc. (Malayan) paid ABB Koppel ₱156,549.55 purportedly under an insurance agreement and was subrogated to the rights of the insured.

• The Lost Shipment: On February 1, 1995, 120 motors were shipped to Manila for ABB Koppel. After discharge at NAIA and storage at Paircargo, Regis withdrew and delivered the shipment. ABB Koppel discovered 55 motors missing upon delivery on March 7, 1995.
• The Insurance Claim: Malayan paid ABB Koppel ₱156,549.55 for the lost motors and obtained a subrogation receipt.
• Trial Evidence: Malayan sued Regis and Paircargo but presented only Marine Risk Note No. RN-0001-19832 as proof of insurance. The Marine Risk Note was dated March 21, 1995—after the loss had already occurred. The actual Marine Insurance Policy was neither attached to the complaint nor offered in evidence. Malayan's own claims processor testified that the Marine Risk Note was the proof of insurance, and the complaint itself stated the shipment was insured "under Risk Note No. 0001-19832."
• Objections: Regis objected to the admission of the Marine Risk Note on grounds of immateriality and irrelevance due to its post-loss issuance date. The signatories to the subrogation receipt were not presented to authenticate it.

• Existence of Anteceding Open Policy: Malayan argued that the cargo was insured not only by the Marine Risk Note but by an anteceding Marine Insurance Policy (Open Policy) issued on January 20, 1995, before the loss.
• Nature of the Marine Risk Note: Petitioner maintained that the Marine Risk Note was merely a determination of the value of the thing insured pursuant to the open policy, not the insurance contract itself.
• Error of the Appellate Court: Malayan contended that the Court of Appeals erred in not considering the import of the Marine Insurance Policy, which was belatedly attached to the Supreme Court petition.

• Invalidity of the Marine Risk Note: Respondent countered that the Marine Risk Note was invalid because it was procured after the insured had already learned of the loss, violating Section 3 of the Insurance Code.
• Lack of Authentication: Respondent argued that the due execution and authenticity of the subrogation receipt were not proven because the signatories were not presented to identify their signatures.
• Non-Presentation of the Policy: Respondent pointed out that Malayan never presented the Marine Open Cargo Policy before the trial court or the Court of Appeals, precluding its consideration on appeal.

• Subrogation and Evidentiary Requirement: Whether an insurer acting as a subrogee can be granted favorable relief without introducing the insurance contract in evidence or attaching it to the complaint as an actionable document.
• Admissibility of New Evidence on Appeal: Whether the actual Marine Insurance Policy may be considered by the appellate courts or the Supreme Court when it was not presented before the trial court.

• Subrogation and Evidentiary Requirement: The complaint was correctly dismissed. A subrogee's right of recovery derives from the insurance contract, not merely from the liability of the third party to the insured. Because Malayan failed to present the Marine Insurance Policy in evidence or attach it to the complaint pursuant to Section 7, Rule 9 of the Rules of Court, the legal basis for subrogation was not established. The Marine Risk Note is merely a complementary document—an acknowledgment of a specific shipment covered by an open policy—and cannot constitute the insurance contract itself. Furthermore, the failure to present the policy deprives the defendant of the opportunity to examine its terms and conditions, violating due process.
• Admissibility of New Evidence on Appeal: The Marine Insurance Policy cannot be considered. The rule in appellate procedure prohibits raising factual questions or presenting documents for the first time on appeal. Piecemeal presentation of evidence is disallowed. Since the policy was neither presented at the trial nor before the Court of Appeals, it carries no evidentiary weight before the Supreme Court.

• Principle of Subrogation — The right of subrogation is derived from the insurance contract constituting the insurer-insured relationship. An insurer must establish the legal basis of its right to subrogation by presenting the insurance contract; without it, the cause of action for restitution cannot survive.
• Actionable Documents (Section 7, Rule 9) — Whenever an action or defense is based on a written instrument, the substance of the instrument must be set forth in the pleading, and the original or a copy must be attached as an exhibit. This rule is imperative and mandatory, ensuring the opposing party the right to examine the document giving rise to the claim.
• Marine Risk Note vs. Marine Insurance Policy — A Marine Risk Note is not an insurance policy. It is an acknowledgment or declaration confirming the specific shipment covered by a Marine Open Policy, the evaluation of the cargo, and the chargeable premium. It is merely a complementary or supplementary document to the main insurance contract.

• "The rule in appellate procedure is that a factual question may not be raised for the first time on appeal, and documents forming no part of the proofs before the appellate court will not be considered in disposing of the issues of an action."
• "Malayan’s right of recovery as a subrogee of ABB Koppel cannot be predicated alone on the liability of the respondent to ABB Koppel... Because Malayan’s right to recovery derives from contractual subrogation as an incident to an insurance relationship... it is critical that Malayan establish the legal basis of such right to subrogation by presenting the contract constitutive of the insurance relationship between it and ABB Koppel."
• "If a legal claim is irrefragably sourced from an actionable document, the defendants cannot be deprived of the right to examine or utilize such document in order to intelligently raise a defense."

• Aboitiz Shipping Corporation v. Philippine American General Insurance Co. — Followed. Established that a Marine Risk Note is not an insurance policy but an acknowledgment or declaration confirming a specific shipment covered by a Marine Open Policy, the evaluation of the cargo, and the chargeable premium.

• Section 3, Insurance Code — Provides that the past event which may be insured against must be unknown to the parties. Applied to invalidate the Marine Risk Note, which was procured after the insured learned of the loss.
• Section 60, Insurance Code — Defines an open policy as one where the value of the thing insured is not agreed upon but left to be ascertained in case of loss. Referenced by petitioner to argue the Marine Risk Note was merely a valuation under an open policy.
• Section 7, Rule 9, 1997 Rules of Civil Procedure — Requires that whenever an action is based on a written instrument, the substance of the instrument must be set forth in the pleading and the original or a copy attached as an exhibit. Applied to mandate the attachment of the Marine Insurance Policy to the complaint, the failure of which was fatal to the cause of action.

Leonardo A. Quisumbing, Antonio T. Carpio, Conchita Carpio Morales, Presbitero J. Velasco, Jr.