Asian Terminals Inc vs PhilAm Insurance

Case on Letter of Credit

Asian Terminals, Inc., Petitioner, vs. Philam Insurance Co., Inc., (now Chartis Philippines Insurance, Inc.), Respondent

G.R. No. 181163, July 24, 2013

Philam Insurance Co., Inc., (now Chartis Philippines Insurance Inc.), Petitioner, vs. Westwind Shipping Corporation and Asian Terminals, Inc., Respondents

G.R. 181262

Westwind Shipping Corporation, Petitioner, vs. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.), Respondent

G.R. 181319

Facts:  The case is a consolidation of three petitions for certiorari assailing the Decision and Resolution of the Court of Appeals where Nichimen Corporation shipped to consignee Universal Motors Corporation packages of automobiles, where upon delivery, said goods were found to have sustained damages. However, being insured with Philam against all risks, said insurance agency compensated Universal Motors and a subrogation receipt was issued thereafter to the insurance company. Philam, now the subrogee of Universal Motors went after Westwind and Asian Terminal for reparation of compensated amount given to Universal Motors.

Issue: What document may be effective used to prove loss and/or damages on the part of the shipper or consignee?

Ruling:    A letter of credit may be used. A letter of credit is a financial device developed by merchants as a convenient and relatively safe mode of dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid, and a buyer, who wants to have control of his goods before paying. Letters of credit are employed by the parties desiring to enter into commercial transaction, mainly for the benefit of the parties to the original transaction. Accordingly, for purposes of reckoning when notice of loss or damage should be given to the carrier or its agent, the date of delivery to Universal Motors is controlling.