ESTELA L.

CRISOSTOMO
Vs. constrained to file a complaint against respondent for breach of contract of carriage
Court of Appeal and damages, which was docketed as Civil Case No. 92-133 and raffled to Branch
59 of the Regional Trial Court of Makati City.

G.R. No. 138334 In her complaint, petitioner alleged that her failure to join "Jewels of Europe" was due
to respondent’s fault since it did not clearly indicate the departure date on the plane
In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent ticket. Respondent was also negligent in informing her of the wrong flight schedule
Caravan Travel and Tours International, Inc. to arrange and facilitate her booking, through its employee Menor. She insisted that the "British Pageant" was merely a
ticketing and accommodation in a tour dubbed "Jewels of Europe". The package tour substitute for the "Jewels of Europe" tour, such that the cost of the former should be
included the countries of England, Holland, Germany, Austria, Liechstenstein, properly set-off against the sum paid for the latter.
Switzerland and France at a total cost of P74,322.70. Petitioner was given a 5%
discount on the amount, which included airfare, and the booking fee was also waived For its part, respondent company, through its Operations Manager, Concepcion
because petitioner’s niece, Meriam Menor, was respondent company’s ticketing Chipeco, denied responsibility for petitioner’s failure to join the first tour. Chipeco
manager. insisted that petitioner was informed of the correct departure date, which was clearly
and legibly printed on the plane ticket. The travel documents were given to petitioner
Pursuant to said contract, Menor went to her aunt’s residence on June 12, 1991 – a two days ahead of the scheduled trip. Petitioner had only herself to blame for missing
Wednesday – to deliver petitioner’s travel documents and plane tickets. Petitioner, in the flight, as she did not bother to read or confirm her flight schedule as printed on
turn, gave Menor the full payment for the package tour. Menor then told her to be at the ticket.
the Ninoy Aquino International Airport (NAIA) on Saturday, two hours before her flight
on board British Airways. Respondent explained that it can no longer reimburse the amount paid for "Jewels of
Europe", considering that the same had already been remitted to its principal in
Without checking her travel documents, petitioner went to NAIA on Saturday, June Singapore, Lotus Travel Ltd., which had already billed the same even if petitioner did
15, 1991, to take the flight for the first leg of her journey from Manila to Hongkong. To not join the tour. Lotus’ European tour organizer, Insight International Tours Ltd.,
petitioner’s dismay, she discovered that the flight she was supposed to take had determines the cost of a package tour based on a minimum number of projected
already departed the previous day. She learned that her plane ticket was for the flight participants. For this reason, it is accepted industry practice to disallow refund for
scheduled on June 14, 1991. She thus called up Menor to complain. individuals who failed to take a booked tour.

Subsequently, Menor prevailed upon petitioner to take another tour – the "British Lastly, respondent maintained that the "British Pageant" was not a substitute for the
Pageant" – which included England, Scotland and Wales in its itinerary. For this tour package tour that petitioner missed. This tour was independently procured by
package, petitioner was asked anew to pay US$785.00 or P20,881.00 (at the then petitioner after realizing that she made a mistake in missing her flight for "Jewels of
prevailing exchange rate of P26.60). She gave respondent US$300 or P7,980.00 as Europe". Petitioner was allowed to make a partial payment of only US$300.00 for the
partial payment and commenced the trip in July 1991. second tour because her niece was then an employee of the travel agency.
Consequently, respondent prayed that petitioner be ordered to pay the balance of
Upon petitioner’s return from Europe, she demanded from respondent the P12,901.00 for the "British Pageant" package tour.
reimbursement of P61,421.70, representing the difference between the sum she paid
for "Jewels of Europe" and the amount she owed respondent for the "British Pageant" After due proceedings, the trial court rendered a decision, the dispositive part of
tour. Despite several demands, respondent company refused to reimburse the which reads:
amount, contending that the same was non-refundable. Petitioner was thus
WHEREFORE, premises considered, judgment is hereby rendered as follows: annum, to be computed from the time the counterclaim was filed until the finality of
this decision. After this decision becomes final and executory, the rate of TWELVE
1. Ordering the defendant to return and/or refund to the plaintiff the amount PERCENT (12%) interest per annum shall be additionally imposed on the total
of Fifty Three Thousand Nine Hundred Eighty Nine Pesos and Forty Three obligation until payment thereof is satisfied. The award of attorney’s fees is
Centavos (P53,989.43) with legal interest thereon at the rate of twelve DELETED. Costs against the plaintiff-appellee.
percent (12%) per annum starting January 16, 1992, the date when the
complaint was filed; SO ORDERED.

2. Ordering the defendant to pay the plaintiff the amount of Five Thousand Upon denial of her motion for reconsideration, petitioner filed the instant petition
(P5,000.00) Pesos as and for reasonable attorney’s fees; under Rule 45 on the following grounds:

3. Dismissing the defendant’s counterclaim, for lack of merit; and I

4. With costs against the defendant. It is respectfully submitted that the Honorable Court of Appeals committed a
reversible error in reversing and setting aside the decision of the trial court by
SO ORDERED. ruling that the petitioner is not entitled to a refund of the cost of unavailed
"Jewels of Europe" tour she being equally, if not more, negligent than the
private respondent, for in the contract of carriage the common carrier is
The trial court held that respondent was negligent in erroneously advising petitioner
obliged to observe utmost care and extra-ordinary diligence which is higher
of her departure date through its employee, Menor, who was not presented as
in degree than the ordinary diligence required of the passenger. Thus, even if
witness to rebut petitioner’s testimony. However, petitioner should have verified the
the petitioner and private respondent were both negligent, the petitioner
exact date and time of departure by looking at her ticket and should have simply not
cannot be considered to be equally, or worse, more guilty than the private
relied on Menor’s verbal representation. The trial court thus declared that petitioner
respondent. At best, petitioner’s negligence is only contributory while the
was guilty of contributory negligence and accordingly, deducted 10% from the
private respondent [is guilty] of gross negligence making the principle of pari
amount being claimed as refund.
delicto inapplicable in the case;
Respondent appealed to the Court of Appeals, which likewise found both parties to
II
be at fault. However, the appellate court held that petitioner is more negligent than
respondent because as a lawyer and well-traveled person, she should have known
better than to simply rely on what was told to her. This being so, she is not entitled to The Honorable Court of Appeals also erred in not ruling that the "Jewels of
any form of damages. Petitioner also forfeited her right to the "Jewels of Europe" tour Europe" tour was not indivisible and the amount paid therefor refundable;
and must therefore pay respondent the balance of the price for the "British Pageant"
tour. The dispositive portion of the judgment appealed from reads as follows: III

WHEREFORE, premises considered, the decision of the Regional Trial Court dated The Honorable Court erred in not granting to the petitioner the consequential
October 26, 1995 is hereby REVERSED and SET ASIDE. A new judgment is hereby damages due her as a result of breach of contract of carriage.
ENTERED requiring the plaintiff-appellee to pay to the defendant-appellant the
amount of P12,901.00, representing the balance of the price of the British Pageant
Package Tour, the same to earn legal interest at the rate of SIX PERCENT (6%) per
Petitioner contends that respondent did not observe the standard of care required of case was an ordinary one for services and not one of carriage. Petitioner’s
a common carrier when it informed her wrongly of the flight schedule. She could not submission is premised on a wrong assumption.
be deemed more negligent than respondent since the latter is required by law to
exercise extraordinary diligence in the fulfillment of its obligation. If she were The nature of the contractual relation between petitioner and respondent is
negligent at all, the same is merely contributory and not the proximate cause of the determinative of the degree of care required in the performance of the latter’s
damage she suffered. Her loss could only be attributed to respondent as it was the obligation under the contract. For reasons of public policy, a common carrier in a
direct consequence of its employee’s gross negligence. contract of carriage is bound by law to carry passengers as far as human care and
foresight can provide using the utmost diligence of very cautious persons and with
Petitioner’s contention has no merit. due regard for all the circumstances. As earlier stated, however, respondent is not a
common carrier but a travel agency. It is thus not bound under the law to observe
By definition, a contract of carriage or transportation is one whereby a certain person extraordinary diligence in the performance of its obligation, as petitioner claims.
or association of persons obligate themselves to transport persons, things, or news
from one place to another for a fixed price. Such person or association of persons are Since the contract between the parties is an ordinary one for services, the standard
regarded as carriers and are classified as private or special carriers and common or of care required of respondent is that of a good father of a family under Article 1173
public carriers. A common carrier is defined under Article 1732 of the Civil Code as of the Civil Code. This connotes reasonable care consistent with that which an
persons, corporations, firms or associations engaged in the business of carrying or ordinarily prudent person would have observed when confronted with a similar
transporting passengers or goods or both, by land, water or air, for compensation, situation. The test to determine whether negligence attended the performance of an
offering their services to the public. obligation is: did the defendant in doing the alleged negligent act use that reasonable
care and caution which an ordinarily prudent person would have used in the same
It is obvious from the above definition that respondent is not an entity engaged in the situation? If not, then he is guilty of negligence.
business of transporting either passengers or goods and is therefore, neither a
private nor a common carrier. Respondent did not undertake to transport petitioner In the case at bar, the lower court found Menor negligent when she allegedly
from one place to another since its covenant with its customers is simply to make informed petitioner of the wrong day of departure. Petitioner’s testimony was
travel arrangements in their behalf. Respondent’s services as a travel agency include accepted as indubitable evidence of Menor’s alleged negligent act since respondent
procuring tickets and facilitating travel permits or visas as well as booking customers did not call Menor to the witness stand to refute the allegation. The lower court
for tours. applied the presumption under Rule 131, Section 3 (e) of the Rules of Court that
evidence willfully suppressed would be adverse if produced and thus considered
While petitioner concededly bought her plane ticket through the efforts of respondent petitioner’s uncontradicted testimony to be sufficient proof of her claim.
company, this does not mean that the latter ipso facto is a common carrier. At most,
respondent acted merely as an agent of the airline, with whom petitioner ultimately On the other hand, respondent has consistently denied that Menor was negligent and
contracted for her carriage to Europe. Respondent’s obligation to petitioner in this maintains that petitioner’s assertion is belied by the evidence on record. The date
regard was simply to see to it that petitioner was properly booked with the airline for and time of departure was legibly written on the plane ticket and the travel papers
the appointed date and time. Her transport to the place of destination, meanwhile, were delivered two days in advance precisely so that petitioner could prepare for the
pertained directly to the airline. trip. It performed all its obligations to enable petitioner to join the tour and exercised
due diligence in its dealings with the latter.
The object of petitioner’s contractual relation with respondent is the latter’s service of
arranging and facilitating petitioner’s booking, ticketing and accommodation in the We agree with respondent.
package tour. In contrast, the object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the contract between the parties in this
Respondent’s failure to present Menor as witness to rebut petitioner’s testimony her concerns. This undoubtedly would require that she at least read the documents in
could not give rise to an inference unfavorable to the former. Menor was already order to assure herself of the important details regarding the trip.
working in France at the time of the filing of the complaint, thereby making it
physically impossible for respondent to present her as a witness. Then too, even if it The negligence of the obligor in the performance of the obligation renders him liable
were possible for respondent to secure Menor’s testimony, the presumption under for damages for the resulting loss suffered by the obligee. Fault or negligence of the
Rule 131, Section 3(e) would still not apply. The opportunity and possibility for obligor consists in his failure to exercise due care and prudence in the performance
obtaining Menor’s testimony belonged to both parties, considering that Menor was of the obligation as the nature of the obligation so demands. There is no fixed
not just respondent’s employee, but also petitioner’s niece. It was thus error for the standard of diligence applicable to each and every contractual obligation and each
lower court to invoke the presumption that respondent willfully suppressed evidence case must be determined upon its particular facts. The degree of diligence required
under Rule 131, Section 3(e). Said presumption would logically be inoperative if the depends on the circumstances of the specific obligation and whether one has been
evidence is not intentionally omitted but is simply unavailable, or when the same negligent is a question of fact that is to be determined after taking into account the
could have been obtained by both parties. particulars of each case. 1âwphi1

In sum, we do not agree with the finding of the lower court that Menor’s negligence The lower court declared that respondent’s employee was negligent. This factual
concurred with the negligence of petitioner and resultantly caused damage to the finding, however, is not supported by the evidence on record. While factual findings
latter. Menor’s negligence was not sufficiently proved, considering that the only below are generally conclusive upon this court, the rule is subject to certain
evidence presented on this score was petitioner’s uncorroborated narration of the exceptions, as when the trial court overlooked, misunderstood, or misapplied some
events. It is well-settled that the party alleging a fact has the burden of proving it and facts or circumstances of weight and substance which will affect the result of the
a mere allegation cannot take the place of evidence. If the plaintiff, upon whom rests case.
the burden of proving his cause of action, fails to show in a satisfactory manner facts
upon which he bases his claim, the defendant is under no obligation to prove his In the case at bar, the evidence on record shows that respondent company
exception or defense. performed its duty diligently and did not commit any contractual breach. Hence,
petitioner cannot recover and must bear her own damage.
Contrary to petitioner’s claim, the evidence on record shows that respondent
exercised due diligence in performing its obligations under the contract and followed WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the
standard procedure in rendering its services to petitioner. As correctly observed by Court of Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is
the lower court, the plane ticket issued to petitioner clearly reflected the departure ordered to pay respondent the amount of P12,901.00 representing the balance of the
date and time, contrary to petitioner’s contention. The travel documents, consisting of price of the British Pageant Package Tour, with legal interest thereon at the rate of
the tour itinerary, vouchers and instructions, were likewise delivered to petitioner two 6% per annum, to be computed from the time the counterclaim was filed until the
days prior to the trip. Respondent also properly booked petitioner for the tour, finality of this Decision. After this Decision becomes final and executory, the rate of
prepared the necessary documents and procured the plane tickets. It arranged 12% per annum shall be imposed until the obligation is fully settled, this interim
petitioner’s hotel accommodation as well as food, land transfers and sightseeing period being deemed to be by then an equivalent to a forbearance of credit.
excursions, in accordance with its avowed undertaking.

Therefore, it is clear that respondent performed its prestation under the contract as
well as everything else that was essential to book petitioner for the tour. Had
petitioner exercised due diligence in the conduct of her affairs, there would have
been no reason for her to miss the flight. Needless to say, after the travel papers
were delivered to petitioner, it became incumbent upon her to take ordinary care of
 MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. Phoenix and McGee instituted an action for damages against Mindanao Terminal in
Vs. the Regional Trial Court (RTC) of Davao City, Branch 12. After trial, the RTC, in a
PHOENIX ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., decision dated 20 October 1999, held that the only participation of Mindanao
Terminal was to load the cargoes on board the M/V Mistrau under the direction and
supervision of the ship’s officers, who would not have accepted the cargoes on board
G.R. No. 162467
the vessel and signed the foreman’s report unless they were properly arranged and
tightly secured to withstand voyage across the open seas. Accordingly, Mindanao
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Terminal cannot be held liable for whatever happened to the cargoes after it had
Procedure of the 29 October 2003 Decision of the Court of Appeals and the 26 loaded and stowed them. Moreover, citing the survey report, it was found by the RTC
February 2004 Resolution of the same court denying petitioner’s motion for that the cargoes were damaged on account of a typhoon which M/V Mistrau had
reconsideration. encountered during the voyage. It was further held that Phoenix and McGee had no
cause of action against Mindanao Terminal because the latter, whose services were
The facts of the case are not disputed. contracted by Del Monte, a distinct corporation from Del Monte Produce, had no
contract with the assured Del Monte Produce. The RTC dismissed the complaint and
Del Monte Philippines, Inc. (Del Monte) contracted petitioner Mindanao Terminal and awarded the counterclaim of Mindanao Terminal in the amount of ₱83,945.80 as
Brokerage Service, Inc. (Mindanao Terminal), a stevedoring company, to load and actual damages and ₱100,000.00 as attorney’s fees. The actual damages were
stow a shipment of 146,288 cartons of fresh green Philippine bananas and 15,202 awarded as reimbursement for the expenses incurred by Mindanao Terminal’s lawyer
cartons of fresh pineapples belonging to Del Monte Fresh Produce International, Inc. in attending the hearings in the case wherein he had to travel all the way from Metro
(Del Monte Produce) into the cargo hold of the vessel M/V Mistrau. The vessel was Manila to Davao City.
docked at the port of Davao City and the goods were to be transported by it to the
port of Inchon, Korea in favor of consignee Taegu Industries, Inc. Del Monte Produce Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed
insured the shipment under an "open cargo policy" with private respondent Phoenix and set aside the decision of the RTC in its 29 October 2003 decision. The same
Assurance Company of New York (Phoenix), a non-life insurance company, and court ordered Mindanao Terminal to pay Phoenix and McGee "the total amount of
private respondent McGee & Co. Inc. (McGee), the underwriting manager/agent of $210,265.45 plus legal interest from the filing of the complaint until fully paid and
Phoenix. attorney’s fees of 20% of the claim." It sustained Phoenix’s and McGee’s argument
that the damage in the cargoes was the result of improper stowage by Mindanao
Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The Terminal. It imposed on Mindanao Terminal, as the stevedore of the cargo, the duty
vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It to exercise extraordinary diligence in loading and stowing the cargoes. It further held
was then discovered upon discharge that some of the cargo was in bad condition. that even with the absence of a contractual relationship between Mindanao Terminal
The Marine Cargo Damage Surveyor of Incok Loss and Average Adjuster of Korea, and Del Monte Produce, the cause of action of Phoenix and McGee could be based
through its representative Byeong Yong Ahn (Byeong), surveyed the extent of the on quasi-delict under Article 2176 of the Civil Code.
damage of the shipment. In a survey report, it was stated that 16,069 cartons of the
banana shipment and 2,185 cartons of the pineapple shipment were so damaged Mindanao Terminal filed a motion for reconsideration, which the Court of Appeals
that they no longer had commercial value. denied in its 26 February 2004 resolution. Hence, the present petition for review.

Del Monte Produce filed a claim under the open cargo policy for the damages to its Mindanao Terminal raises two issues in the case at bar, namely: whether it was
shipment. McGee’s Marine Claims Insurance Adjuster evaluated the claim and careless and negligent in the loading and stowage of the cargoes onboard M/V
recommended that payment in the amount of $210,266.43 be made. A check for the Mistrau making it liable for damages; and, whether Phoenix and McGee has a cause
recommended amount was sent to Del Monte Produce; the latter then issued a of action against Mindanao Terminal under Article 2176 of the Civil Code on quasi-
subrogation receipt to Phoenix and McGee. delict. To resolve the petition, three questions have to be answered: first, whether
Phoenix and McGee have a cause of action against Mindanao Terminal; second, imposing a higher degree of diligence, on Mindanao Terminal in loading and stowing
whether Mindanao Terminal, as a stevedoring company, is under obligation to the cargoes. The case of Summa Insurance Corporation v. CA, which involved the
observe the same extraordinary degree of diligence in the conduct of its business as issue of whether an arrastre operator is legally liable for the loss of a shipment in its
required by law for common carriers and warehousemen; and third, whether custody and the extent of its liability, is inapplicable to the factual circumstances of
Mindanao Terminal observed the degree of diligence required by law of a stevedoring the case at bar. Therein, a vessel owned by the National Galleon Shipping
company. Corporation (NGSC) arrived at Pier 3, South Harbor, Manila, carrying a shipment
consigned to the order of Caterpillar Far East Ltd. with Semirara Coal Corporation
We agree with the Court of Appeals that the complaint filed by Phoenix and McGee (Semirara) as "notify party." The shipment, including a bundle of PC 8 U blades, was
against Mindanao Terminal, from which the present case has arisen, states a cause discharged from the vessel to the custody of the private respondent, the exclusive
of action. The present action is based on quasi-delict, arising from the negligent and arrastre operator at the South Harbor. Accordingly, three good-order cargo receipts
careless loading and stowing of the cargoes belonging to Del Monte Produce. Even were issued by NGSC, duly signed by the ship's checker and a representative of
assuming that both Phoenix and McGee have only been subrogated in the rights of private respondent. When Semirara inspected the shipment at house, it discovered
Del Monte Produce, who is not a party to the contract of service between Mindanao that the bundle of PC8U blades was missing. From those facts, the Court observed:
Terminal and Del Monte, still the insurance carriers may have a cause of action in
light of the Court’s consistent ruling that the act that breaks the contract may be also x x x The relationship therefore between the consignee and the arrastre operator
a tort. In fine, a liability for tort may arise even under a contract, where tort is that must be examined. This relationship is much akin to that existing between the
which breaches the contract. In the present case, Phoenix and McGee are not suing consignee or owner of shipped goods and the common carrier, or that between a
for damages for injuries arising from the breach of the contract of service but from the depositor and a warehouseman. In the performance of its obligations, an arrastre
alleged negligent manner by which Mindanao Terminal handled the cargoes operator should observe the same degree of diligence as that required of a
belonging to Del Monte Produce. Despite the absence of contractual relationship common carrier and a warehouseman as enunciated under Article 1733 of the
between Del Monte Produce and Mindanao Terminal, the allegation of negligence on Civil Code and Section 3(b) of the Warehouse Receipts Law, respectively. Being the
the part of the defendant should be sufficient to establish a cause of action arising custodian of the goods discharged from a vessel, an arrastre operator's duty is
from quasi-delict. to take good care of the goods and to turn them over to the party entitled to
their possession. (Emphasis supplied)
The resolution of the two remaining issues is determinative of the ultimate result of
this case. There is a distinction between an arrastre and a stevedore. Arrastre, a Spanish word
which refers to hauling of cargo, comprehends the handling of cargo on the wharf or
Article 1173 of the Civil Code is very clear that if the law or contract does not state between the establishment of the consignee or shipper and the ship's tackle. The
the degree of diligence which is to be observed in the performance of an obligation responsibility of the arrastre operator lasts until the delivery of the cargo to the
then that which is expected of a good father of a family or ordinary diligence shall be consignee. The service is usually performed by longshoremen. On the other hand,
required. Mindanao Terminal, a stevedoring company which was charged with the stevedoring refers to the handling of the cargo in the holds of the vessel or between
loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had the ship's tackle and the holds of the vessel. The responsibility of the stevedore ends
acted merely as a labor provider in the case at bar. There is no specific provision of upon the loading and stowing of the cargo in the vessel.1avvphi1
law that imposes a higher degree of diligence than ordinary diligence for a
stevedoring company or one who is charged only with the loading and stowing of It is not disputed that Mindanao Terminal was performing purely stevedoring function
cargoes. It was neither alleged nor proven by Phoenix and McGee that Mindanao while the private respondent in the Summa case was performing arrastre function. In
Terminal was bound by contractual stipulation to observe a higher degree of the present case, Mindanao Terminal, as a stevedore, was only charged with the
diligence than that required of a good father of a family. We therefore conclude that loading and stowing of the cargoes from the pier to the ship’s cargo hold; it was never
following Article 1173, Mindanao Terminal was required to observe ordinary diligence the custodian of the shipment of Del Monte Produce. A stevedore is not a common
only in loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau. carrier for it does not transport goods or passengers; it is not akin to a
warehouseman for it does not store goods for profit. The loading and stowing of by the survey report, found that the cause of the damage was improper stowage due
cargoes would not have a far reaching public ramification as that of a common carrier to the manner the cargoes were arranged such that there were no spaces between
and a warehouseman; the public is adequately protected by our laws on contract and cartons, the use of cardboards as support system, and the use of small rope to tie the
on quasi-delict. The public policy considerations in legally imposing upon a common cartons together but not by the negligent conduct of Mindanao Terminal in loading
carrier or a warehouseman a higher degree of diligence is not present in a and stowing the cargoes. As admitted by Phoenix and McGee in their Comment
stevedoring outfit which mainly provides labor in loading and stowing of cargoes for before us, the latter is merely a stevedoring company which was tasked by Del Monte
its clients. to load and stow the shipments of fresh banana and pineapple of Del Monte Produce
aboard the M/V Mistrau. How and where it should load and stow a shipment in a
In the third issue, Phoenix and McGee failed to prove by preponderance of evidence vessel is wholly dependent on the shipper and the officers of the vessel. In other
that Mindanao Terminal had acted negligently. Where the evidence on an issue of words, the work of the stevedore was under the supervision of the shipper and
fact is in equipoise or there is any doubt on which side the evidence preponderates officers of the vessel. Even the materials used for stowage, such as ropes, pallets,
the party having the burden of proof fails upon that issue. That is to say, if the and cardboards, are provided for by the vessel. Even the survey report found that it
evidence touching a disputed fact is equally balanced, or if it does not produce a just, was because of the boisterous stormy weather due to the typhoon Seth, as
rational belief of its existence, or if it leaves the mind in a state of perplexity, the party encountered by M/V Mistrau during its voyage, which caused the shipments in the
holding the affirmative as to such fact must fail.1avvphi1 cargo hold to collapse, shift and bruise in extensive extent. Even the deposition of
Byeong was not supported by the conclusion in the survey report that:
We adopt the findings of the RTC, which are not disputed by Phoenix and McGee.
The Court of Appeals did not make any new findings of fact when it reversed the
decision of the trial court. The only participation of Mindanao Terminal was to load
the cargoes on board M/V Mistrau. It was not disputed by Phoenix and McGee that
the materials, such as ropes, pallets, and cardboards, used in lashing and rigging the
cargoes were all provided by M/V Mistrau and these materials meets industry
standard.

It was further established that Mindanao Terminal loaded and stowed the cargoes of
Del Monte Produce aboard the M/V Mistrau in accordance with the stowage plan, a
guide for the area assignments of the goods in the vessel’s hold, prepared by Del
Monte Produce and the officers of M/V Mistrau. The loading and stowing was done
under the direction and supervision of the ship officers. The vessel’s officer would
order the closing of the hatches only if the loading was done correctly after a final
inspection. The said ship officers would not have accepted the cargoes on board the
vessel if they were not properly arranged and tightly secured to withstand the voyage
in open seas. They would order the stevedore to rectify any error in its loading and
stowing. A foreman’s report, as proof of work done on board the vessel, was
prepared by the checkers of Mindanao Terminal and concurred in by the Chief Officer
of M/V Mistrau after they were satisfied that the cargoes were properly loaded.

Phoenix and McGee relied heavily on the deposition of Byeong Yong Ahn and on the
survey report of the damage to the cargoes. Byeong, whose testimony was refreshed
CAUSE OF DAMAGE

xxx

From the above facts and our survey results, we are of the opinion that damage
occurred aboard the carrying vessel during sea transit, being caused by ship’s heavy
rolling and pitching under boisterous weather while proceeding from 1600 hrs on 7th
October to 0700 hrs on 12th October, 1994 as described in the sea protest.

As it is clear that Mindanao Terminal had duly exercised the required degree of
diligence in loading and stowing the cargoes, which is the ordinary diligence of a
good father of a family, the grant of the petition is in order.

However, the Court finds no basis for the award of attorney’s fees in favor of
petitioner.lawphil.net None of the circumstances enumerated in Article 2208 of the
Civil Code exists. The present case is clearly not an unfounded civil action against
the plaintiff as there is no showing that it was instituted for the mere purpose of
vexation or injury. It is not sound public policy to set a premium to the right to litigate
where such right is exercised in good faith, even if erroneously. Likewise, the RTC
erred in awarding ₱83,945.80 actual damages to Mindanao Terminal. Although
actual expenses were incurred by Mindanao Terminal in relation to the trial of this
case in Davao City, the lawyer of Mindanao Terminal incurred expenses for plane
fare, hotel accommodations and food, as well as other miscellaneous expenses, as
he attended the trials coming all the way from Manila. But there is no showing that
Phoenix and McGee made a false claim against Mindanao Terminal resulting in the
protracted trial of the case necessitating the incurrence of expenditures.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in

CA-G.R. CV No. 66121 is SET ASIDE and the decision of the Regional Trial Court of
Davao City, Branch 12 in Civil Case No. 25,311.97 is hereby REINSTATED MINUS
the awards of ₱100,000.00 as attorney’s fees and ₱83,945.80 as actual damages.

SO ORDERED.
 SPOUSES DANTE CRUZ and LEONORA CRUZ, The passengers, who had put on their life jackets, struggled to get out of the boat.
vs. Upon seeing the captain, Matute and the other passengers who reached the surface
SUN HOLIDAYS, INC. asked him what they could do to save the people who were still trapped under the
boat. The captain replied "Iligtas niyo na lang ang sarili niyo" (Just save yourselves).
G.R. No. 186312
Help came after about 45 minutes when two boats owned by Asia Divers in Sabang,
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on those two
20011 against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of boats were 22 persons, consisting of 18 passengers and four crew members, who
Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito) were brought to Pisa Island. Eight passengers, including petitioners’ son and his wife,
who perished with his wife on September 11, 2000 on board the boat M/B Coco died during the incident.
Beach III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro
where the couple had stayed at Coco Beach Island Resort (Resort) owned and At the time of Ruelito’s death, he was 28 years old and employed as a contractual
operated by respondent. worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a
basic monthly salary of $900.
The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11,
2000 was by virtue of a tour package-contract with respondent that included Petitioners, by letter of October 26, 2000, demanded indemnification from respondent
transportation to and from the Resort and the point of departure in Batangas. for the death of their son in the amount of at least ₱4,000,000.

Miguel C. Matute (Matute), a scuba diving instructor and one of the survivors, gave Replying, respondent, by letter dated November 7, 2000, denied any responsibility for
his account of the incident that led to the filing of the complaint as follows: the incident which it considered to be a fortuitous event. It nevertheless offered, as an
act of commiseration, the amount of ₱10,000 to petitioners upon their signing of a
Matute stayed at the Resort from September 8 to 11, 2000. He was originally waiver.
scheduled to leave the Resort in the afternoon of September 10, 2000, but was
advised to stay for another night because of strong winds and heavy rains. As petitioners declined respondent’s offer, they filed the Complaint, as earlier
reflected, alleging that respondent, as a common carrier, was guilty of negligence in
On September 11, 2000, as it was still windy, Matute and 25 other Resort guests allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by
including petitioners’ son and his wife trekked to the other side of the Coco Beach the Philippine Atmospheric, Geophysical and Astronomical Services Administration
mountain that was sheltered from the wind where they boarded M/B Coco Beach III, (PAGASA) as early as 5:00 a.m. of September 11, 2000.
which was to ferry them to Batangas.
In its Answer, respondent denied being a common carrier, alleging that its boats are
Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto not available to the general public as they only ferry Resort guests and crew
Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt members. Nonetheless, it claimed that it exercised the utmost diligence in ensuring
from side to side and the captain to step forward to the front, leaving the wheel to one the safety of its passengers; contrary to petitioners’ allegation, there was no storm on
of the crew members. September 11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco
Beach III was not filled to capacity and had sufficient life jackets for its passengers.
By way of Counterclaim, respondent alleged that it is entitled to an award for
The waves got more unwieldy. After getting hit by two big waves which came one
attorney’s fees and litigation expenses amounting to not less than ₱300,000.
after the other, M/B Coco Beach III capsized putting all passengers underwater.
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily The petition is impressed with merit.
requires four conditions to be met before a boat is allowed to sail, to wit: (1) the sea is
calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the Petitioners correctly rely on De Guzman v. Court of Appeals in characterizing
captain and (4) there is clearance from the Resort’s assistant manager. He added respondent as a common carrier.
that M/B Coco Beach III met all four conditions on September 11, 2000, but a
subasco or squall, characterized by strong winds and big waves, suddenly occurred, The Civil Code defines "common carriers" in the following terms:
causing the boat to capsize.
Article 1732. Common carriers are persons, corporations, firms or associations
By Decision of February 16, 2005, Branch 267 of the Pasig RTC dismissed engaged in the business of carrying or transporting passengers or goods or both, by
petitioners’ Complaint and respondent’s Counterclaim. land, water, or air for compensation, offering their services to the public.

Petitioners’ Motion for Reconsideration having been denied by Order dated The above article makes no distinction between one whose principal business activity
September 2, 2005; they appealed to the Court of Appeals. is the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids
By Decision of August 19, 2008, the appellate court denied petitioners’ appeal, making any distinction between a person or enterprise offering transportation service
holding, among other things, that the trial court correctly ruled that respondent is a on a regular or scheduled basis and one offering such service on an occasional,
private carrier which is only required to observe ordinary diligence; that respondent in episodic or unscheduled basis. Neither does Article 1732 distinguish between a
fact observed extraordinary diligence in transporting its guests on board M/B Coco carrier offering its services to the "general public," i.e., the general community or
Beach III; and that the proximate cause of the incident was a squall, a fortuitous population, and one who offers services or solicits business only from a narrow
event. segment of the general population. We think that Article 1733 deliberately refrained
from making such distinctions.
Petitioners’ Motion for Reconsideration having been denied by Resolution dated
January 16, 2009, they filed the present Petition for Review. So understood, the concept of "common carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public service," under the Public Service Act
Petitioners maintain the position they took before the trial court, adding that (Commonwealth Act No. 1416, as amended) which at least partially supplements the
respondent is a common carrier since by its tour package, the transporting of its law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b)
guests is an integral part of its resort business. They inform that another division of of the Public Service Act, "public service" includes:
the appellate court in fact held respondent liable for damages to the other survivors of
the incident. . . . every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether
Upon the other hand, respondent contends that petitioners failed to present evidence permanent, occasional or accidental, and done for general business purposes, any
to prove that it is a common carrier; that the Resort’s ferry services for guests cannot common carrier, railroad, street railway, traction railway, subway motor vehicle, either
be considered as ancillary to its business as no income is derived therefrom; that it for freight or passenger, or both, with or without fixed route and whatever may be its
exercised extraordinary diligence as shown by the conditions it had imposed before classification, freight or carrier service of any class, express service, steamboat, or
allowing M/B Coco Beach III to sail; that the incident was caused by a fortuitous steamship line, pontines, ferries and water craft, engaged in the transportation of
event without any contributory negligence on its part; and that the other case wherein passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant,
the appellate court held it liable for damages involved different plaintiffs, issues and ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power,
evidence. water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar Respondent nevertheless harps on its strict compliance with the earlier mentioned
public services . . . (emphasis and underscoring supplied.) conditions of voyage before it allowed M/B Coco Beach III to sail on September 11,
2000. Respondent’s position does not impress.
Indeed, respondent is a common carrier. Its ferry services are so intertwined with its
main business as to be properly considered ancillary thereto. The constancy of The evidence shows that PAGASA issued 24-hour public weather forecasts and
respondent’s ferry services in its resort operations is underscored by its having its tropical cyclone warnings for shipping on September 10 and 11, 2000 advising of
own Coco Beach boats. And the tour packages it offers, which include the ferry tropical depressions in Northern Luzon which would also affect the province of
services, may be availed of by anyone who can afford to pay the same. These Mindoro. By the testimony of Dr. Frisco Nilo, supervising weather specialist of
services are thus available to the public. PAGASA, squalls are to be expected under such weather condition.

That respondent does not charge a separate fee or fare for its ferry services is of no A very cautious person exercising the utmost diligence would thus not brave such
moment. It would be imprudent to suppose that it provides said services at a loss. stormy weather and put other people’s lives at risk. The extraordinary diligence
The Court is aware of the practice of beach resort operators offering tour packages to required of common carriers demands that they take care of the goods or lives
factor the transportation fee in arriving at the tour package price. That guests who opt entrusted to their hands as if they were their own. This respondent failed to do.
not to avail of respondent’s ferry services pay the same amount is likewise
inconsequential. These guests may only be deemed to have overpaid. Respondent’s insistence that the incident was caused by a fortuitous event does not
impress either.
As De Guzman instructs, Article 1732 of the Civil Code defining "common carriers"
has deliberately refrained from making distinctions on whether the carrying of The elements of a "fortuitous event" are: (a) the cause of the unforeseen and
persons or goods is the carrier’s principal business, whether it is offered on a regular unexpected occurrence, or the failure of the debtors to comply with their obligations,
basis, or whether it is offered to the general public. The intent of the law is thus to not must have been independent of human will; (b) the event that constituted the caso
consider such distinctions. Otherwise, there is no telling how many other distinctions fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid;
may be concocted by unscrupulous businessmen engaged in the carrying of persons (c) the occurrence must have been such as to render it impossible for the debtors to
or goods in order to avoid the legal obligations and liabilities of common carriers. fulfill their obligation in a normal manner; and (d) the obligor must have been free
from any participation in the aggravation of the resulting injury to the creditor.
Under the Civil Code, common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence for the safety To fully free a common carrier from any liability, the fortuitous event must have been
of the passengers transported by them, according to all the circumstances of each the proximate and only cause of the loss. And it should have exercised due diligence
case. They are bound to carry the passengers safely as far as human care and to prevent or minimize the loss before, during and after the occurrence of the
foresight can provide, using the utmost diligence of very cautious persons, with due fortuitous event.
regard for all the circumstances.
Respondent cites the squall that occurred during the voyage as the fortuitous event
When a passenger dies or is injured in the discharge of a contract of carriage, it is that overturned M/B Coco Beach III. As reflected above, however, the occurrence of
presumed that the common carrier is at fault or negligent. In fact, there is even no squalls was expected under the weather condition of September 11, 2000. Moreover,
need for the court to make an express finding of fault or negligence on the part of the evidence shows that M/B Coco Beach III suffered engine trouble before it capsized
common carrier. This statutory presumption may only be overcome by evidence that and sank. The incident was, therefore, not completely free from human intervention.
the carrier exercised extraordinary diligence.
The Court need not belabor how respondent’s evidence likewise fails to demonstrate Applying the above guidelines, the Court determines Ruelito's life expectancy as
that it exercised due diligence to prevent or minimize the loss before, during and after follows:
the occurrence of the squall.
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
Article 1764 vis-à-vis Article 2206 of the Civil Code holds the common carrier in 2/3 x [80 - 28]
breach of its contract of carriage that results in the death of a passenger liable to pay 2/3 x [52]
the following: (1) indemnity for death, (2) indemnity for loss of earning capacity and
(3) moral damages. Life expectancy = 35

Petitioners are entitled to indemnity for the death of Ruelito which is fixed at ₱50,000.
Documentary evidence shows that Ruelito was earning a basic monthly salary of
$900 which, when converted to Philippine peso applying the annual average
As for damages representing unearned income, the formula for its computation is: exchange rate of $1 = ₱44 in 2000, amounts to ₱39,600. Ruelito’s net earning
capacity is thus computed as follows:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and
necessary living expenses). Net Earning = life expectancy x (gross annual income - reasonable and
Capacity necessary living expenses).
Life expectancy is determined in accordance with the formula: = 35 x (₱475,200 - ₱237,600)
= 35 x (₱237,600)
2 / 3 x [80 — age of deceased at the time of death]
Net Earning
= ₱8,316,000
The first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 — Capacity
age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial
of Combined Experience Table of Mortality.
Respecting the award of moral damages, since respondent common carrier’s breach
of contract of carriage resulted in the death of petitioners’ son, following Article 1764
The second factor is computed by multiplying the life expectancy by the net earnings vis-à-vis Article 2206 of the Civil Code, petitioners are entitled to moral damages.
of the deceased, i.e., the total earnings less expenses necessary in the creation of
such earnings or income and less living and other incidental expenses. The loss is
not equivalent to the entire earnings of the deceased, but only such portion as he Since respondent failed to prove that it exercised the extraordinary diligence required
would have used to support his dependents or heirs. Hence, to be deducted from his of common carriers, it is presumed to have acted recklessly, thus warranting the
gross earnings are the necessary expenses supposed to be used by the deceased award too of exemplary damages, which are granted in contractual obligations if the
for his own needs. defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.

In computing the third factor – necessary living expense, Smith Bell Dodwell Shipping Under the circumstances, it is reasonable to award petitioners the amount of
Agency Corp. v. Borja teaches that when, as in this case, there is no showing that the ₱100,000 as moral damages and ₱100,000 as exemplary damages.1avvphi1
living expenses constituted the smaller percentage of the gross income, the living
expenses are fixed at half of the gross income. Pursuant to Article 2208 of the Civil Code, attorney's fees may also be awarded
where exemplary damages are awarded. The Court finds that 10% of the total
amount adjudged against respondent is reasonable for the purpose.
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals teaches that when an WHEREFORE, the Court of Appeals Decision of August 19, 2008 is REVERSED and
obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or SET ASIDE. Judgment is rendered in favor of petitioners ordering respondent to pay
quasi-delicts is breached, the contravenor can be held liable for payment of interest petitioners the following: (1) ₱50,000 as indemnity for the death of Ruelito Cruz; (2)
in the concept of actual and compensatory damages, subject to the following rules, to ₱8,316,000 as indemnity for Ruelito’s loss of earning capacity; (3) ₱100,000 as moral
wit — damages; (4) ₱100,000 as exemplary damages; (5) 10% of the total amount
adjudged against respondent as attorneys fees; and (6) the costs of suit.
1. When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be The total amount adjudged against respondent shall earn interest at the rate of 12%
that which may have been stipulated in writing. Furthermore, the interest due per annum computed from the finality of this decision until full payment.
shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is

breached, an interest on the amount of damages awarded may be imposed
at the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages except when
or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit. (Emphasis supplied).

Since the amounts payable by respondent have been determined with certainty only
in the present petition, the interest due shall be computed upon the finality of this
decision at the rate of 12% per annum until satisfaction, in accordance with
paragraph number 3 of the immediately cited guideline in Easter Shipping Lines, Inc.
 REGIONAL CONTAINER LINES (RCL) OF SINGAPORE and EDSA SHIPPING On October 25, 1995, the M/V Piya Bhum docked in Manila. After unloading the
AGENCY, refrigerated container, it was plugged to the power terminal of the pier to keep its
vs. temperature constant. Fidel Rocha (Rocha), Vice-President for Operations of Marines
THE NETHERLANDS INSURANCE CO. (PHILIPPINES), INC. Adjustment Corporation, accompanied by two surveyors, conducted a protective
survey of the cargo. They found that based on the temperature chart, the
G.R. No. 168151 temperature reading was constant from October 18, 1995 to October 25, 1995 at 0º
Celsius. However, at midnight of October 25, 1995 – when the cargo had already
been unloaded from the ship – the temperature fluctuated with a reading of 33º
For our resolution is the petition for review on certiorari filed by petitioners Regional
Celsius. Rocha believed the fluctuation was caused by the burnt condenser fan motor
Container Lines of Singapore (RCL) and EDSA Shipping Agency (EDSA Shipping) to
of the refrigerated container.
annul and set aside the decision and resolution of the Court of Appeals (CA) dated
May 26, 2004 and May 10, 2005, respectively, in CA-G.R. CV No. 76690.
On November 9, 1995, Temic received the shipment. It found the cargo completely
damaged. Temic filed a claim for cargo loss against Netherlands Insurance, with
RCL is a foreign corporation based in Singapore. It does business in the Philippines
supporting claims documents. The Netherlands Insurance paid Temic the sum of
through its agent, EDSA Shipping, a domestic corporation organized and existing
₱1,036,497.00 under the terms of the Marine Open Policy. Temic then executed a
under Philippine laws. Respondent Netherlands Insurance Company (Philippines),
loss and subrogation receipt in favor of Netherlands Insurance.
Inc. (Netherlands Insurance) is likewise a domestic corporation engaged in the
marine underwriting business.
Seven months from delivery of the cargo or on June 4, 1996, Netherlands Insurance
filed a complaint for subrogation of insurance settlement with the Regional Trial
FACTUAL ANTECEDENTS
Court, Branch 5, Manila, against "the unknown owner of M/V Piya Bhum" and TMS
Ship Agencies (TMS), the latter thought to be the local agent of M/V Piya Bhum’s
The pertinent facts, based on the records are summarized below. unknown owner. The complaint was docketed as Civil Case No. 96-78612.

On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to Netherlands Insurance amended the complaint on January 17, 1997 to implead
be shipped from Singapore to Manila for Temic Telefunken Microelectronics EDSA Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight Singapore, and U-
Philippines (Temic). U-Freight Singapore PTE Ltd. (U-Freight Singapore), a Ocean (Phils.), Inc. (U-Ocean), as additional defendants. A third amended complaint
forwarding agent based in Singapore, contracted the services of Pacific Eagle Lines was later made, impleading Pacific Eagle in substitution of Eagle Liner Shipping
PTE. Ltd. (Pacific Eagle) to transport the subject cargo. The cargo was packed, Agencies.
stored, and sealed by Pacific Eagle in its Refrigerated Container No. 6105660 with
Seal No. 13223. As the cargo was highly perishable, the inside of the container had
TMS filed its answer to the original complaint. RCL and EDSA Shipping filed their
to be kept at a temperature of 0º Celsius. Pacific Eagle then loaded the refrigerated
answers with cross-claim and compulsory counterclaim to the second amended
container on board the M/V Piya Bhum, a vessel owned by RCL, with which Pacific
complaint. U-Ocean likewise filed an answer with compulsory counterclaim and
Eagle had a slot charter agreement. RCL duly issued its own Bill of Lading in favor of
cross-claim. During the pendency of the case, U-Ocean, jointly with U-Freight
Pacific Eagle.
Singapore, filed another answer with compulsory counterclaim. Only Pacific Eagle
and TMS filed their answers to the third amended complaint.
To insure the cargo against loss and damage, Netherlands Insurance issued a
Marine Open Policy in favor of Temic, as shown by MPO-21-05081-94 and Marine
The defendants all disclaimed liability for the damage caused to the cargo, citing
Risk Note MRN-21 14022, to cover all losses/damages to the shipment.
several reasons why Netherland Insurance’s claims must be rejected. Specifically,
RCL and EDSA Shipping denied negligence in the transport of the cargo; they
attributed any negligence that may have caused the loss of the shipment to their co- SO ORDERED. [Emphasis supplied.]
defendants. They likewise asserted that no valid subrogation exists, as the payment
made by Netherlands Insurance to the consignee was invalid. By way of affirmative The CA dismissed Netherland Insurance’s complaint against the other defendants
defenses, RCL and EDSA Shipping averred that the Netherlands Insurance has no after finding that the claim had already been barred by prescription. 5
cause of action, and is not the real party-in-interest, and that the claim is barred by
laches/prescription. Having been found liable for the damage to the cargo, RCL and EDSA Shipping filed
a motion for reconsideration, but the CA maintained its original conclusions.
After Netherlands Insurance had made its formal offer of evidence, the defendants
including RCL and EDSA Shipping sought leave of court to file their respective The sole issue for our resolution is whether the CA correctly held RCL and EDSA
motions to dismiss based on demurrer to evidence. Shipping liable as common carriers under the theory of presumption of negligence.

RCL and EDSA Shipping, in their motion, insisted that Netherlands Insurance had (1) THE COURT’S RULING
failed to prove any valid subrogation, and (2) failed to establish that any negligence
on their part or that the loss was sustained while the cargo was in their custody.
The present case is governed by the following provisions of the Civil Code:
On May 22, 2002, the trial court handed down an Order dismissing Civil Case No. 96-
78612 on demurrer to evidence. The trial court ruled that while there was valid ART. 1733. Common carriers, from the nature of their business and for reasons of
subrogation, the defendants could not be held liable for the loss or damage, as their public policy, are bound to observe extraordinary diligence in the vigilance over the
respective liabilities ended at the time of the discharge of the cargo from the ship at goods and for the safety of the passengers transported by them according to all the
the Port of Manila. circumstances of each case.

Netherlands Insurance seasonably appealed the order of dismissal to the CA. Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for
the safety of the passengers is further set forth in articles1755 and 1756.
On May 26, 2004, the CA disposed of the appeal as follows:
ART. 1734. Common carriers are responsible for the loss, destruction, or
WHEREFORE, in view of the foregoing, the dismissal of the complaint against deterioration of the goods, unless the same is due to any of the following causes
defendants Regional Container Lines and Its local agent, EDSA Shipping Agency, is only:
REVERSED and SET ASIDE. The dismissal of the complaint against the other
defendants is AFFIRMED. Pursuant to Section 1, Rule 33 of the 1997 Rules of Civil
Procedure, defendants Regional Container Lines and EDSA Shipping Agency are 1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
deemed to have waived the right to present evidence.
2) Act of the public enemy in war, whether international or civil;
As such, defendants Regional Container Lines and EDSA Shipping Agency are
ordered to reimburse plaintiff in the sum of ₱1,036,497.00 with interest from date 3) Act of omission of the shipper or owner of the goods;
hereof until fully paid.
4) The character of the goods or defects in the packing or in the containers;
No costs.
5) Order or act of competent public authority.
ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and 5 of the In the present case, RCL and EDSA Shipping disclaim any responsibility for the loss
preceding article, if the goods are lost, destroyed, or deteriorated, common carriers or damage to the goods in question. They contend that the cause of the damage to
are presumed to have been at fault or to have acted negligently, unless they prove the cargo was the "fluctuation of the temperature in the reefer van," which fluctuation
that they observed extraordinary diligence as required by article 1733. occurred after the cargo had already been discharged from the vessel; no fluctuation,
they point out, arose when the cargo was still on board M/V Piya Bhum. As the cause
ART. 1736. The extraordinary responsibility of the common carrier lasts from the time of the damage to the cargo occurred after the same was already discharged from the
the goods are unconditionally placed in the possession of, and received by the carrier vessel and was under the custody of the arrastre operator (International Container
for transportation until the sane are delivered, actually or constructively, by the carrier Terminal Services, Inc. or ICTSI), RCL and EDSA Shipping posit that the
to the consignee, or to the person who has a right to receive them, without prejudice presumption of negligence provided in Article 1735 of the Civil Code should not
to the provisions of articles 1738. apply. What applies in this case is Article 1734, particularly paragraphs 3 and 4
thereof, which exempts the carrier from liability for loss or damage to the cargo when
it is caused either by an act or omission of the shipper or by the character of the
ART. 1738. The extraordinary liability of the common carrier continues to be
goods or defects in the packing or in the containers. Thus, RCL and EDSA Shipping
operative even during the time the goods are stored in a warehouse of the carrier at
seek to lay the blame at the feet of other parties.
the place of destination, until the consignee has been advised of the arrival of the
goods and has had reasonable opportunity thereafter to remove them or otherwise
dispose of them. We do not find the arguments of RCL and EDSA Shipping meritorious.

ART. 1742. Even if the loss, destruction, or deterioration of the goods should be A common carrier is presumed to have been negligent if it fails to prove that it
caused by the character of the goods, or the faulty nature of the packing or of the exercised extraordinary vigilance over the goods it transported. When the goods
containers, the common carrier must exercise due diligence to forestall or lessen the shipped are either lost or arrived in damaged condition, a presumption arises against
loss. the carrier of its failure to observe that diligence, and there need not be an express
finding of negligence to hold it liable.1avvphi1
In Central Shipping Company, Inc. v. Insurance Company of North America, we
reiterated the rules for the liability of a common carrier for lost or damaged cargo as To overcome the presumption of negligence, the common carrier must establish by
follows: adequate proof that it exercised extraordinary diligence over the goods. It must do
more than merely show that some other party could be responsible for the damage.
(1) Common carriers are bound to observe extraordinary diligence over the
goods they transport, according to all the circumstances of each case; In the present case, RCL and EDSA Shipping failed to prove that they did exercise
that degree of diligence required by law over the goods they transported. Indeed,
there is sufficient evidence showing that the fluctuation of the temperature in the
(2) In the event of loss, destruction, or deterioration of the insured goods,
refrigerated container van, as recorded in the temperature chart, occurred after the
common carriers are responsible, unless they can prove that such loss,
cargo had been discharged from the vessel and was already under the custody of the
destruction, or deterioration was brought about by, among others, "flood,
arrastre operator, ICTSI. This evidence, however, does not disprove that the
storm, earthquake, lightning, or other natural disaster or calamity"; and
condenser fan – which caused the fluctuation of the temperature in the refrigerated
container – was not damaged while the cargo was being unloaded from the ship. It is
(3) In all other cases not specified under Article 1734 of the Civil Code, settled in maritime law jurisprudence that cargoes while being unloaded generally
common carriers are presumed to have been at fault or to have acted remain under the custody of the carrier; RCL and EDSA Shipping failed to dispute
negligently, unless they observed extraordinary diligence. this.1avvphi1
RCL and EDSA Shipping could have offered evidence before the trial court to show
that the damage to the condenser fan did not occur: (1) while the cargo was in transit;
(2) while they were in the act of discharging it from the vessel; or (3) while they were
delivering it actually or constructively to the consignee. They could have presented
proof to show that they exercised extraordinary care and diligence in the handling of
the goods, but they opted to file a demurrer to evidence. As the order granting their
demurrer was reversed on appeal, the CA correctly ruled that they are deemed to
have waived their right to present evidence, and the presumption of negligence must
stand.

It is for this reason as well that we find RCL and EDSA Shipping’s claim that the loss
or damage to the cargo was caused by a defect in the packing or in the containers.
To exculpate itself from liability for the loss/damage to the cargo under any of the
causes, the common carrier is burdened to prove any of the causes in Article 1734 of
the Civil Code claimed by it by a preponderance of evidence. If the carrier succeeds,
the burden of evidence is shifted to the shipper to prove that the carrier is negligent.
RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and in
fact offered no evidence at all on this point; a reversal of a dismissal based on a
demurrer to evidence bars the defendant from presenting evidence supporting its
allegations.

WHEREFORE, we DENY the petition for review on certiorari filed by the Regional
Container Lines of Singapore and EDSA Shipping Agency. The decision of the Court
of Appeals dated May 26, 2004 in CA-G.R. CV No. 76690 is AFFIRMED IN TOTO.
Costs against the petitioners.
 VICENTE CALALAS, responsible for the accident. It took cognizance of another case (Civil Case No.
vs. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37
COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, of the same court held Salva and his driver Verena jointly liable to Calalas for the
damage to his jeepney.
G.R. No. 122039
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the
This is a petition for review on certiorari of the decision of the Court of Appeals, dated ground that Sunga's cause of action was based on a contract of carriage, not quasi-
March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch delict, and that the common carrier failed to exercise the diligence required under the
36, Dumaguete City, and awarding damages instead to private respondent Eliza Civil Code. The appellate court dismissed the third-party complaint against Salva and
Jujeurche Sunga as plaintiff in an action for breach of contract of carriage. adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision
reads:
The facts, as found by the Court of Appeals, are as follows:
WHEREFORE, the decision appealed from is hereby REVERSED
and SET ASIDE, and another one is entered ordering defendant-
At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche
appellee Vicente Calalas to pay plaintiff-appellant:
G. Sunga, then a college freshman majoring in Physical Education at the Siliman
University, took a passenger jeepney owned and operated by petitioner Vicente
Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was (1) P50,000.00 as actual and compensatory damages;
given by the conductor an "extension seat," a wooden stool at the back of the door at
the rear end of the vehicle. (2) P50,000.00 as moral damages;

On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a (3) P10,000.00 as attorney's fees; and
passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the
outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio (4) P1,000.00 as expenses of litigation; and
Verena and owned by Francisco Salva bumped the left rear portion of the jeepney.
As a result, Sunga was injured. She sustained a fracture of the "distal third of the left (5) to pay the costs.
tibia-fibula with severe necrosis of the underlying skin." Closed reduction of the
fracture, long leg circular casting, and case wedging were done under sedation. Her
confinement in the hospital lasted from August 23 to September 7, 1989. Her SO ORDERED.
attending physician, Dr. Danilo V. Oligario, an orthopedic surgeon, certified she
would remain on a cast for a period of three months and would have to ambulate in Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the
crutches during said period. negligence of Verena was the proximate cause of the accident negates his liability
and that to rule otherwise would be to make the common carrier an insurer of the
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging safety of its passengers. He contends that the bumping of the jeepney by the truck
violation of the contract of carriage by the former in failing to exercise the diligence owned by Salva was a caso fortuito. Petitioner further assails the award of moral
required of him as a common carrier. Calalas, on the other hand, filed a third-party damages to Sunga on the ground that it is not supported by evidence.
complaint against Francisco Salva, the owner of the Isuzu truck.
The petition has no merit.
The lower court rendered judgment against Salva as third-party defendant and
absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was
The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the Art. 1733. Common carriers, from the nature of their business and for
driver and the owner of the truck liable for quasi-delict ignores the fact that she was reasons of public policy, are bound to observe extraordinary
never a party to that case and, therefore, the principle of res judicata does not apply. diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances
Nor are the issues in Civil Case No. 3490 and in the present case the same. The of each case.
issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for
quasi-delict for the damage caused to petitioner's jeepney. On the other hand, the Such extraordinary diligence in the vigilance over the goods is further
issue in this case is whether petitioner is liable on his contract of carriage. The first, expressed in articles 1734, 1735, and 1746, Nos. 5, 6, and 7, while
quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its the extraordinary diligence for the safety of the passengers is further
source the negligence of the tortfeasor. The second, breach of contract or culpa set forth in articles 1755 and 1756.
contractual, is premised upon the negligence in the performance of a contractual
obligation. Art. 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost
Consequently, in quasi-delict, the negligence or fault should be clearly established diligence of very cautious persons, with due regard for all the
because it is the basis of the action, whereas in breach of contract, the action can be circumstances.
prosecuted merely by proving the existence of the contract and the fact that the
obligor, in this case the common carrier, failed to transport his passenger safely to his Art. 1756. In case of death of or injuries to passengers, common
destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code carriers are presumed to have been at fault or to have acted
provides that common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary
negligently unless they prove that they observed extraordinary diligence as defined in diligence as prescribed by articles 1733 and 1755.
Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common
carrier the burden of proof. In the case at bar, upon the happening of the accident, the presumption of
negligence at once arose, and it became the duty of petitioner to prove that he had to
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, observe extraordinary diligence in the care of his passengers.
finding Salva and his driver Verena liable for the damage to petitioner's jeepney,
should be binding on Sunga. It is immaterial that the proximate cause of the collision Now, did the driver of jeepney carry Sunga "safely as far as human care and
between the jeepney and the truck was the negligence of the truck driver. The foresight could provide, using the utmost diligence of very cautious persons, with due
doctrine of proximate cause is applicable only in actions for quasi-delict, not in regard for all the circumstances" as required by Art. 1755? We do not think so.
actions involving breach of contract. The doctrine is a device for imputing liability to a Several factors militate against petitioner's contention.
person where there is no relation between him and another party. In such a case, the
obligation is created by law itself. But, where there is a pre-existing contractual
relation between the parties, it is the parties themselves who create the obligation, First, as found by the Court of Appeals, the jeepney was not properly parked, its rear
and the function of the law is merely to regulate the relation thus created. Insofar as portion being exposed about two meters from the broad shoulders of the highway,
contracts of carriage are concerned, some aspects regulated by the Civil Code are and facing the middle of the highway in a diagonal angle. This is a violation of the
those respecting the diligence required of common carriers with regard to the safety R.A. No. 4136, as amended, or the Land Transportation and Traffic Code, which
of passengers as well as the presumption of negligence in cases of death or injury to provides:
passengers. It provides:
Sec. 54. Obstruction of Traffic. — No person shall drive his motor
vehicle in such a manner as to obstruct or impede the passage of
any vehicle, nor, while discharging or taking on passengers or
 loading or unloading freight, obstruct the free passage of other majoring in Physical Education. Because of the injury, she was not
vehicles on the highway. able to enroll in the second semester of that school year. She
testified that she had no more intention of continuing with her
Second, it is undisputed that petitioner's driver took in more passengers than the schooling, because she could not walk and decided not to pursue
allowed seating capacity of the jeepney, a violation of §32(a) of the same law. It her degree, major in Physical Education "because of my leg which
provides: has a defect already."

Exceeding registered capacity. — No person operating any motor Plaintiff-appellant likewise testified that even while she was under
vehicle shall allow more passengers or more freight or cargo in his confinement, she cried in pain because of her injured left foot. As a
vehicle than its registered capacity. result of her injury, the Orthopedic Surgeon also certified that she
has "residual bowing of the fracture side." She likewise decided not
to further pursue Physical Education as her major subject, because
The fact that Sunga was seated in an "extension seat" placed her in a peril greater
"my left leg . . . has a defect already."
than that to which the other passengers were exposed. Therefore, not only was
petitioner unable to overcome the presumption of negligence imposed on him for the
injury sustained by Sunga, but also, the evidence shows he was actually negligent in Those are her physical pains and moral sufferings, the inevitable
transporting passengers. bedfellows of the injuries that she suffered. Under Article 2219 of the
Civil Code, she is entitled to recover moral damages in the sum of
P50,000.00, which is fair, just and reasonable.
We find it hard to give serious thought to petitioner's contention that Sunga's taking
an "extension seat" amounted to an implied assumption of risk. It is akin to arguing
that the injuries to the many victims of the tragedies in our seas should not be As a general rule, moral damages are not recoverable in actions for damages
compensated merely because those passengers assumed a greater risk of drowning predicated on a breach of contract for it is not one of the items enumerated under Art.
by boarding an overloaded ferry. This is also true of petitioner's contention that the 2219 of the Civil Code. As an exception, such damages are recoverable: (1) in cases
jeepney being bumped while it was improperly parked constitutes caso fortuito. A in which the mishap results in the death of a passenger, as provided in Art. 1764, in
caso fortuito is an event which could not be foreseen, or which, though foreseen, was relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is
inevitable. This requires that the following requirements be present: (a) the cause of guilty of fraud or bad faith, as provided in Art. 2220.
the breach is independent of the debtor's will; (b) the event is unforeseeable or
unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his In this case, there is no legal basis for awarding moral damages since there was no
obligation in a normal manner, and (d) the debtor did not take part in causing the factual finding by the appellate court that petitioner acted in bad faith in the
injury to the performance of the contract of carriage. Sunga's contention that petitioner's
creditor. Petitioner should have foreseen the danger of parking his jeepney with its admission in open court that the driver of the jeepney failed to assist her in going to a
body protruding two meters into the highway. nearby hospital cannot be construed as an admission of bad faith. The fact that it was
the driver of the Isuzu truck who took her to the hospital does not imply that petitioner
Finally, petitioner challenges the award of moral damages alleging that it is excessive was utterly indifferent to the plight of his injured passenger. If at all, it is merely
and without basis in law. We find this contention well taken. implied recognition by Verena that he was the one at fault for the accident.

In awarding moral damages, the Court of Appeals stated: WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its
resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that
the award of moral damages is DELETED.
Plaintiff-appellant at the time of the accident was a first-year college
student in that school year 1989-1990 at the Silliman University,
 PHILIPPINE CHARTER INSURANCE CORPORATION, ordinary course without damage to the goods, ship, or property or persons and
vs. guarantees the correctness of the particulars, weight or each piece or package and
UNKNOWN OWNER OF THE VESSEL M/V "NATIONAL HONOR," NATIONAL description of the goods and agrees to ascertain and to disclose in writing on
SHIPPING CORPORATION OF THE PHILIPPINES and INTERNATIONAL shipment, any condition, nature, quality, ingredient or characteristic that may cause
CONTAINER SERVICES, INC. damage, injury or detriment to the goods, other property, the ship or to persons, and
for the failure to do so the shipper agrees to be liable for and fully indemnify the
G.R. No. 161833 carrier and hold it harmless in respect of any injury or death of any person and loss or
damage to cargo or property. The carrier shall be responsible as to the correctness of
any such mark, descriptions or representations.
This is a petition for review under Rule 45 of the 1997 Revised Rules of Civil
Procedure assailing the Decision dated January 19, 2004 of the Court of Appeals
(CA) in CA-G.R. CV No. 57357 which affirmed the Decision dated February 17, 1997 The shipment was contained in two wooden crates, namely, Crate No. 1 and Crate
of the Regional Trial Court (RTC) of Manila, Branch 37, in Civil Case No. 95-73338. No. 2, complete and in good order condition, covered by Commercial Invoice No. YJ-
73564 DTD and a Packing List. There were no markings on the outer portion of the
crates except the name of the consignee. Crate No. 1 measured 24 cubic meters and
The Antecedent
weighed 3,620 kgs. It contained the following articles: one (1) unit Lathe Machine
complete with parts and accessories; one (1) unit Surface Grinder complete with
On November 5, 1995, J. Trading Co. Ltd. of Seoul, Korea, loaded a shipment of four parts and accessories; and one (1) unit Milling Machine complete with parts and
units of parts and accessories in the port of Pusan, Korea, on board the vessel M/V accessories. On the flooring of the wooden crates were three wooden battens placed
"National Honor," represented in the Philippines by its agent, National Shipping side by side to support the weight of the cargo. Crate No. 2, on the other hand,
Corporation of the Philippines (NSCP). The shipment was for delivery to Manila, measured 10 cubic meters and weighed 2,060 kgs. The Lathe Machine was stuffed
Philippines. Freight forwarder, Samhwa Inter-Trans Co., Ltd., issued Bill of Lading in the crate. The shipment had a total invoice value of US$90,000.00 C&F Manila. It
No. SH9410306 in the name of the shipper consigned to the order of Metropolitan was insured for ₱2,547,270.00 with the Philippine Charter Insurance Corporation
Bank and Trust Company with arrival notice in Manila to ultimate consignee Blue (PCIC) thru its general agent, Family Insurance and Investment Corporation, under
Mono International Company, Incorporated (BMICI), Binondo, Manila. Marine Risk Note No. 68043 dated October 24, 1994.

NSCP, for its part, issued Bill of Lading No. NSGPBSML512565 in the name of the The M/V "National Honor" arrived at the Manila International Container Terminal
freight forwarder, as shipper, consigned to the order of Stamm International Inc., (MICT) on November 14, 1995. The International Container Terminal Services,
Makati, Philippines. It is provided therein that: Incorporated (ICTSI) was furnished with a copy of the crate cargo list and bill of
lading, and it knew the contents of the crate. The following day, the vessel started
12. This Bill of Lading shall be prima facie evidence of the receipt of the Carrier in discharging its cargoes using its winch crane. The crane was operated by Olegario
apparent good order and condition except as, otherwise, noted of the total number of Balsa, a winchman from the ICTSI, the exclusive arrastre operator of MICT.
Containers or other packages or units enumerated overleaf. Proof to the contrary
shall be admissible when this Bill of Lading has been transferred to a third party Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the
acting in good faith. No representation is made by the Carrier as to the weight, surveyor of the ICTSI, conducted an inspection of the cargo. They inspected the
contents, measure, quantity, quality, description, condition, marks, numbers, or value hatches, checked the cargo and found it in apparent good condition. Claudio
of the Goods and the Carrier shall be under no responsibility whatsoever in respect of Cansino, the stevedore of the ICTSI, placed two sling cables on each end of Crate
such description or particulars. No. 1. No sling cable was fastened on the mid-portion of the crate. In Dauz’s
experience, this was a normal procedure. As the crate was being hoisted from the
13. The shipper, whether principal or agent, represents and warrants that the goods vessel’s hatch, the mid-portion of the wooden flooring suddenly snapped in the air,
are properly described, marked, secured, and packed and may be handled in
about five feet high from the vessel’s twin deck, sending all its contents crashing At the trial, Anthony Abarquez, the safety inspector of ICTSI, testified that the
down hard, resulting in extensive damage to the shipment. wooden battens placed on the wooden flooring of the crate was of good material but
was not strong enough to support the weight of the machines inside the crate. He
BMICI’s customs broker, JRM Incorporated, took delivery of the cargo in such averred that most stevedores did not know how to read and write; hence, he placed
damaged condition. Upon receipt of the damaged shipment, BMICI found that the the sling cables only on those portions of the crate where the arrow signs were
same could no longer be used for the intended purpose. The Mariners’ Adjustment placed, as in the case of fragile cargo. He said that unless otherwise indicated by
Corporation hired by PCIC conducted a survey and declared that the packing of the arrow signs, the ICTSI used only two cable slings on each side of the crate and
shipment was considered insufficient. It ruled out the possibility of taxes due to would not place a sling cable in the mid-section. He declared that the crate fell from
insufficiency of packing. It opined that three to four pieces of cable or wire rope the cranes because the wooden batten in the mid-portion was broken as it was being
slings, held in all equal setting, never by-passing the center of the crate, should have lifted. He concluded that the loss/damage was caused by the failure of the shipper or
been used, considering that the crate contained heavy machinery. its packer to place wooden battens of strong materials under the flooring of the crate,
and to place a sign in its mid-term section where the sling cables would be placed.
BMICI subsequently filed separate claims against the NSCP, the ICTSI, and its
insurer, the PCIC, for US$61,500.00. When the other companies denied liability, The ICTSI adduced in evidence the report of the R.J. Del Pan & Co., Inc. that the
PCIC paid the claim and was issued a Subrogation Receipt for ₱1,740,634.50. damage to the cargo could be attributed to insufficient packing and unbalanced
weight distribution of the cargo inside the crate as evidenced by the types and
shapes of items found.
On March 22, 1995, PCIC, as subrogee, filed with the RTC of Manila, Branch 35, a
Complaint for Damages against the "Unknown owner of the vessel M/V National
Honor," NSCP and ICTSI, as defendants. The trial court rendered judgment for PCIC and ordered the complaint dismissed,
thus:
PCIC alleged that the loss was due to the fault and negligence of the defendants. It
prayed, among others – WHEREFORE, the complaint of the plaintiff, and the respective counterclaims of the
two defendants are dismissed, with costs against the plaintiff.
WHEREFORE, it is respectfully prayed of this Honorable Court that judgment be
rendered ordering defendants to pay plaintiff, jointly or in the alternative, the SO ORDERED.
following:
According to the trial court, the loss of the shipment contained in Crate No. 1 was due
1. Actual damages in the amount of ₱1,740,634.50 plus legal interest at the time of to the internal defect and weakness of the materials used in the fabrication of the
the filing of this complaint until fully paid; crates. The middle wooden batten had a hole (bukong-bukong). The trial court
rejected the certification of the shipper, stating that the shipment was properly packed
and secured, as mere hearsay and devoid of any evidentiary weight, the affiant not
2. Attorney’s fees in the amount of ₱100,000.00;
having testified.
3. Cost of suit.
Not satisfied, PCIC appealed to the CA which rendered judgment on January 19,
2004 affirming in toto the appealed decision, with this fallo –
ICTSI, for its part, filed its Answer with Counterclaim and Cross-claim against its co-
defendant NSCP, claiming that the loss/damage of the shipment was caused
WHEREFORE, the decision of the Regional Trial Court of Manila, Branch 35, dated
exclusively by the defective material of the wooden battens of the shipment,
February 17, 1997, is AFFIRMED. SO ORDERED.
insufficient packing or acts of the shipper.
The appellate court held, inter alia, that it was bound by the finding of facts of the sufficiently packed in wooden boxes, as shown by the fact that it was accepted on
RTC, especially so where the evidence in support thereof is more than substantial. It board the vessel and arrived in Manila safely. It emphasizes that the respondents did
ratiocinated that the loss of the shipment was due to an excepted cause – "[t]he not contest the contents of the bill of lading, and that the respondents knew that the
character of the goods or defects in the packing or in the containers" and the failure manner and condition of the packing of the cargo was normal and barren of defects.
of the shipper to indicate signs to notify the stevedores that extra care should be It maintains that it behooved the respondent ICTSI to place three to four cables or
employed in handling the shipment. It blamed the shipper for its failure to use wire slings in equal settings, including the center portion of the crate to prevent
materials of stronger quality to support the heavy machines and to indicate an arrow damage to the cargo:
in the middle portion of the cargo where additional slings should be attached. The CA
concluded that common carriers are not absolute insurers against all risks in the … [A] simple look at the manifesto of the cargo and the bill of lading would have
transport of the goods. alerted respondents of the nature of the cargo consisting of thick and heavy
machinery. Extra-care should have been made and extended in the discharge of the
Hence, this petition by the PCIC, where it alleges that: subject shipment. Had the respondent only bothered to check the list of its contents,
they would have been nervous enough to place additional slings and cables to
I. support those massive machines, which were composed almost entirely of thick
steel, clearly intended for heavy industries. As indicated in the list, the boxes
contained one lat[h]e machine, one milling machine and one grinding machine-all
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN NOT
coming with complete parts and accessories. Yet, not one among the respondents
HOLDING THAT RESPONDENT COMMON CARRIER IS LIABLE FOR THE
were cautious enough. Here lies the utter failure of the respondents to observed
DAMAGE SUSTAINED BY THE SHIPMENT IN THE POSSESSION OF THE
extraordinary diligence in the handling of the cargo in their custody and possession,
ARRASTRE OPERATOR.
which the Court of Appeals should have readily observed in its appreciation of the
pertinent facts.
II.
The petitioner posits that the loss/damage was caused by the mishandling of the
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW IN NOT shipment by therein respondent ICTSI, the arrastre operator, and not by its
APPLYING THE STATUTORY PRESUMPTION OF FAULT AND NEGLIGENCE IN negligence.
THE CASE AT BAR.
The petitioner insists that the respondents did not observe extraordinary diligence in
III. the care of the goods. It argues that in the performance of its obligations, the
respondent ICTSI should observe the same degree of diligence as that required of a
THE COURT OF APPEALS GROSSLY MISCOMPREHENDED THE FACTS IN common carrier under the New Civil Code of the Philippines. Citing Eastern Shipping
FINDING THAT THE DAMAGE SUSTAINED BY THE [SHIPMENT] WAS DUE TO Lines, Inc. v. Court of Appeals, it posits that respondents are liable in solidum to it,
ITS DEFECTIVE PACKING AND NOT TO THE FAULT AND NEGLIGENCE OF THE inasmuch as both are charged with the obligation to deliver the goods in good
RESPONDENTS. condition to its consignee, BMICI.

The petitioner asserts that the mere proof of receipt of the shipment by the common Respondent NSCP counters that if ever respondent ICTSI is adjudged liable, it is not
carrier (to the carrier) in good order, and their arrival at the place of destination in bad solidarily liable with it. It further avers that the "carrier cannot discharge directly to the
order makes out a prima facie case against it; in such case, it is liable for the loss or consignee because cargo discharging is the monopoly of the arrastre." Liability,
damage to the cargo absent satisfactory explanation given by the carrier as to the therefore, falls solely upon the shoulder of respondent ICTSI, inasmuch as the
exercise of extraordinary diligence. The petitioner avers that the shipment was
discharging of cargoes from the vessel was its exclusive responsibility. Besides, the The Court has defined extraordinary diligence in the vigilance over the goods as
petitioner is raising questions of facts, improper in a petition for review on certiorari. follows:

Respondent ICTSI avers that the issues raised are factual, hence, improper under The extraordinary diligence in the vigilance over the goods tendered for shipment
Rule 45 of the Rules of Court. It claims that it is merely a depository and not a requires the common carrier to know and to follow the required precaution for
common carrier; hence, it is not obliged to exercise extraordinary diligence. It avoiding damage to, or destruction of the goods entrusted to it for sale, carriage and
reiterates that the loss/damage was caused by the failure of the shipper or his packer delivery. It requires common carriers to render service with the greatest skill and
to place a sign on the sides and middle portion of the crate that extra care should be foresight and "to use all reasonable means to ascertain the nature and characteristic
employed in handling the shipment, and that the middle wooden batten on the of goods tendered for shipment, and to exercise due care in the handling and
flooring of the crate had a hole. The respondent asserts that the testimony of Anthony stowage, including such methods as their nature requires."
Abarquez, who conducted his investigation at the site of the incident, should prevail
over that of Rolando Balatbat. As an alternative, it argues that if ever adjudged liable, The common carrier’s duty to observe the requisite diligence in the shipment of
its liability is limited only to ₱3,500.00 as expressed in the liability clause of Gate goods lasts from the time the articles are surrendered to or unconditionally placed in
Pass CFS-BR-GP No. 319773. the possession of, and received by, the carrier for transportation until delivered to, or
until the lapse of a reasonable time for their acceptance, by the person entitled to
The petition has no merit. receive them. When the goods shipped are either lost or arrive in damaged condition,
a presumption arises against the carrier of its failure to observe that diligence, and
The well-entrenched rule in our jurisdiction is that only questions of law may be there need not be an express finding of negligence to hold it liable. To overcome the
entertained by this Court in a petition for review on certiorari. This rule, however, is presumption of negligence in the case of loss, destruction or deterioration of the
not ironclad and admits certain exceptions, such as when (1) the conclusion is goods, the common carrier must prove that it exercised extraordinary diligence.
grounded on speculations, surmises or conjectures; (2) the inference is manifestly
mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the However, under Article 1734 of the New Civil Code, the presumption of negligence
judgment is based on a misapprehension of facts; (5) the findings of fact are does not apply to any of the following causes:
conflicting; (6) there is no citation of specific evidence on which the factual findings
are based; (7) the findings of absence of facts are contradicted by the presence of 1. Flood, storm, earthquake, lightning or other natural disaster or calamity;
evidence on record; (8) the findings of the Court of Appeals are contrary to those of
the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and 2. Act of the public enemy in war, whether international or civil;
undisputed facts that, if properly considered, would justify a different conclusion; (10)
the findings of the Court of Appeals are beyond the issues of the case; and (11) such
findings are contrary to the admissions of both parties. 3. Act or omission of the shipper or owner of the goods;

We have reviewed the records and find no justification to warrant the application of 4. The character of the goods or defects in the packing or in the containers;
any exception to the general rule.
5. Order or act of competent public authority.
We agree with the contention of the petitioner that common carriers, from the nature
of their business and for reasons of public policy, are mandated to observe It bears stressing that the enumeration in Article 1734 of the New Civil Code which
extraordinary diligence in the vigilance over the goods and for the safety of the exempts the common carrier for the loss or damage to the cargo is a closed list. To
passengers transported by them, according to all the circumstances of each case. exculpate itself from liability for the loss/damage to the cargo under any of the
causes, the common carrier is burdened to prove any of the aforecited causes
claimed by it by a preponderance of evidence. If the carrier succeeds, the burden of The case at bar falls under one of the exceptions mentioned in Article 1734 of the
evidence is shifted to the shipper to prove that the carrier is negligent. Civil Code, particularly number (4) thereof, i.e., the character of the goods or defects
in the packing or in the containers. The trial court found that the breakage of the crate
"Defect" is the want or absence of something necessary for completeness or was not due to the fault or negligence of ICTSI, but to the inherent defect and
perfection; a lack or absence of something essential to completeness; a deficiency in weakness of the materials used in the fabrication of the said crate.
something essential to the proper use for the purpose for which a thing is to be used.
On the other hand, inferior means of poor quality, mediocre, or second rate. A thing Upon examination of the records, We find no compelling reason to depart from the
may be of inferior quality but not necessarily defective. In other words, factual findings of the trial court.
"defectiveness" is not synonymous with "inferiority."
It appears that the wooden batten used as support for the flooring was not made of
In the present case, the trial court declared that based on the record, the loss of the good materials, which caused the middle portion thereof to give way when it was
shipment was caused by the negligence of the petitioner as the shipper: lifted. The shipper also failed to indicate signs to notify the stevedores that extra care
should be employed in handling the shipment.
The same may be said with respect to defendant ICTSI. The breakage and collapse
of Crate No. 1 and the total destruction of its contents were not imputable to any fault Claudio Cansino, a stevedore of ICTSI, testified before the court their duties and
or negligence on the part of said defendant in handling the unloading of the cargoes responsibilities:
from the carrying vessel, but was due solely to the inherent defect and weakness of
the materials used in the fabrication of said crate. "Q: With regard to crates, what do you do with the crates?

The crate should have three solid and strong wooden batten placed side by side A: Everyday with the crates, there is an arrow drawn where the sling is placed,
underneath or on the flooring of the crate to support the weight of its contents. Ma’am.
However, in the case of the crate in dispute, although there were three wooden
battens placed side by side on its flooring, the middle wooden batten, which carried Q: When the crates have arrows drawn and where you placed the slings, what do
substantial volume of the weight of the crate’s contents, had a knot hole or " bukong- you do with these crates?
bukong," which considerably affected, reduced and weakened its strength. Because
of the enormous weight of the machineries inside this crate, the middle wooden
batten gave way and collapsed. As the combined strength of the other two wooden A: A sling is placed on it, Ma’am.
battens were not sufficient to hold and carry the load, they too simultaneously with
the middle wooden battens gave way and collapsed (TSN, Sept. 26, 1996, pp. 20- Q: After you placed the slings, what do you do with the crates?
24).
A: After I have placed a sling properly, I ask the crane (sic) to haul it, Ma’am.
Crate No. 1 was provided by the shipper of the machineries in Seoul, Korea. There is
nothing in the record which would indicate that defendant ICTSI had any role in the …
choice of the materials used in fabricating this crate. Said defendant, therefore,
cannot be held as blame worthy for the loss of the machineries contained in Crate Q: Now, what, if any, were written or were marked on the crate?
No. 1.
A: The thing that was marked on the cargo is an arrow just like of a chain, Ma’am.
The CA affirmed the ruling of the RTC, thus:
Q: And where did you see or what parts of the crate did you see those arrows? We agree with the trial and appellate courts.

A: At the corner of the crate, Ma’am. The petitioner failed to adduce any evidence to counter that of respondent ICTSI. The
petitioner failed to rebut the testimony of Dauz, that the crates were sealed and that
Q: How many arrows did you see? the contents thereof could not be seen from the outside. While it is true that the crate
contained machineries and spare parts, it cannot thereby be concluded that the
respondents knew or should have known that the middle wooden batten had a hole,
A: Four (4) on both sides, Ma’am.
or that it was not strong enough to bear the weight of the shipment.
…
There is no showing in the Bill of Lading that the shipment was in good order or
condition when the carrier received the cargo, or that the three wooden battens under
Q: What did you do with the arrows? the flooring of the cargo were not defective or insufficient or inadequate. On the other
hand, under Bill of Lading No. NSGPBSML512565 issued by the respondent NSCP
A: When I saw the arrows, that’s where I placed the slings, Ma’am. and accepted by the petitioner, the latter represented and warranted that the goods
were properly packed, and disclosed in writing the "condition, nature, quality or
… characteristic that may cause damage, injury or detriment to the goods." Absent any
signs on the shipment requiring the placement of a sling cable in the mid-portion of
Q: Now, did you find any other marks on the crate? the crate, the respondent ICTSI was not obliged to do so.

A: Nothing more, Ma’am. The statement in the Bill of Lading, that the shipment was in apparent good condition,
is sufficient to sustain a finding of absence of defects in the merchandise. Case law
has it that such statement will create a prima facie presumption only as to the
Q: Now, Mr. Witness, if there are no arrows, would you place slings on the parts
external condition and not to that not open to inspection.
where there are no arrows?
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit.
A: You can not place slings if there are no arrows, Ma’am."

Appellant’s allegation that since the cargo arrived safely from the port of [P]usan,
Korea without defect, the fault should be attributed to the arrastre operator who
mishandled the cargo, is without merit. The cargo fell while it was being carried only
at about five (5) feet high above the ground. It would not have so easily collapsed
had the cargo been properly packed. The shipper should have used materials of
stronger quality to support the heavy machines. Not only did the shipper fail to
properly pack the cargo, it also failed to indicate an arrow in the middle portion of the
cargo where additional slings should be attached. At any rate, the issue of negligence
is factual in nature and in this regard, it is settled that factual findings of the lower
courts are entitled to great weight and respect on appeal, and, in fact, accorded
finality when supported by substantial evidence.
 ASIAN TERMINALS, INC., Dream" and M/V "Tern," its local agent Inter-Asia Marine Transport, Inc., and
vs. petitioner ATI alleging that it suffered the losses through the fault or negligence of the
SIMON ENTERPRISES, INC., said defendants. Respondent sought to claim damages plus attorney’s fees and
costs of suit. Its claim against the unknown owner of the vessel M/V "Sea Dream,"
G.R. No. 177116
however, was later settled in a Release and Quitclaim dated June 9, 1998, and only
the claims against the unknown owner of the M/V "Tern," Inter-Asia Marine
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Transport, Inc., and petitioner ATI remained.
Procedure, as amended, assailing the Decision dated November 27, 2006 and
Resolution dated March 23, 2007 of the Court of Appeals (CA) in CA-G.R. CV No.
In their Answer, the unknown owner of the vessel M/V "Tern" and its local agent
71210.
Inter-Asia Marine Transport, Inc., prayed for the dismissal of the complaint essentially
alleging lack of cause of action and prescription. They alleged as affirmative
The facts are as follows: defenses the following: that the complaint does not state a cause of action; that
plaintiff and/or defendants are not the real parties-in-interest; that the cause of action
On October 25, 1995, Contiquincybunge Export Company loaded 6,843.700 metric had already prescribed or laches had set in; that the claim should have been filed
tons of U.S. Soybean Meal in Bulk on board the vessel MN "Sea Dream" at the Port within three days from receipt of the cargo pursuant to the provisions of the Code of
of Darrow, Louisiana, U.S.A., for delivery to the Port of Manila to respondent Simon Commerce; that the defendant could no longer check the veracity of plaintiff’s claim
Enterprises, Inc., as consignee. When the vessel arrived at the South Harbor in considering that the claim was filed eight months after the cargo was discharged from
Manila, the shipment was discharged to the receiving barges of petitioner Asian the vessel; that plaintiff hired its own barges to receive the cargo and hence, any
Terminals, Inc. (ATI), the arrastre operator. Respondent later received the shipment damages or losses during the discharging operations were for plaintiff’s account and
but claimed having received only 6,825.144 metric tons of U.S. Soybean Meal, or responsibility; that the statement of facts bears no remarks on any short-landed
short by 18.556 metric tons, which is estimated to be worth US$7,100.16 or cargo; that the draft survey report indicates that the cargo discharged was more than
₱186,743.20. the figures appearing in the bill of lading; that because the bill of lading states that the
goods are carried on a "shipper’s weight, quantity and quality unknown" terms and on
On November 25, 1995, Contiquincybunge Export Company made another shipment "all terms, conditions and exceptions as per charter party dated October 15, 1995,"
to respondent and allegedly loaded on board the vessel M/V "Tern" at the Port of the vessel had no way of knowing the actual weight, quantity, and quality of the bulk
Darrow, Louisiana, U.S.A. 3,300.000 metric tons of U.S. Soybean Meal in Bulk for cargo when loaded at the port of origin and the vessel had to rely on the shipper for
delivery to respondent at the Port of Manila. The carrier issued its clean Berth Term such information; that the subject shipment was discharged in Manila in the same
Grain Bill of Lading. condition and quantity as when loaded at the port of loading; that defendants’
responsibility ceased upon discharge from the ship’s tackle; that the damage or loss
On January 25, 1996, the carrier docked at the inner Anchorage, South Harbor, was due to the inherent vice or defect of the goods or to the insufficiency of packing
Manila. The subject shipment was discharged to the receiving barges of petitioner thereof or perils or dangers or accidents of the sea, pre-shipment damage or to
ATI and received by respondent which, however, reported receiving only 3,100.137 improper handling of the goods by plaintiff or its representatives after discharge from
metric tons instead of the manifested 3,300.000 metric tons of shipment. Respondent the vessel, for which defendants cannot be made liable; that damage/loss occurred
filed against petitioner ATI and the carrier a claim for the shortage of 199.863 metric while the cargo was in the possession, custody or control of plaintiff or its
tons, estimated to be worth US$79,848.86 or ₱2,100,025.00, but its claim was representative, or due to plaintiff’s own negligence and careless actuations in the
denied. handling of the cargo; that the loss is less than 0.75% of the entire cargo and
assuming arguendo that the shortage exists, the figure is well within the accepted
parameters when loading this type of bulk cargo; that defendants exercised the
Thus, on December 3, 1996, respondent filed with the Regional Trial Court (RTC) of required diligence under the law in the performance of their duties; that the vessel
Manila an action for damages against the unknown owner of the vessels M/V "Sea was seaworthy in all respects; that the vessel went straight from the port of loading to
Manila, without passing through any intermediate ports so there was no chance for The trial court found that respondent has established that the losses/shortages were
any loss of the cargo; the plaintiff’s claim is excessive, grossly overstated, incurred prior to its receipt of the goods. As such, the burden shifted to the carrier to
unreasonable and a mere paper loss and is certainly unsubstantiated and without prove that it exercised extraordinary diligence as required by law to prevent the loss,
any basis; the terms and conditions of the relevant bill of lading and the charter party, destruction or deterioration.
as well as the provisions of the Carriage of Goods by Sea Act and existing laws,
absolve the defendants from any liability; that the subject shipment was received in However, the trial court held that the defendants failed to prove that they did so. The
bulk and thus defendant carrier has no knowledge of the condition, quality and trial court gave credence to the testimony of Eduardo Ragudo, a super cargo of
quantity of the cargo at the time of loading; that the complaint was not referred to the defendant Inter-Asia Marine Transport, Inc., who admitted that there were spillages
arbitrators pursuant to the bill of lading; that liability, if any, should not exceed the CIF or overflow down to the spillage saver. The trial court also noted that said witness
value of the lost cargo, or the limits of liability set forth in the bill of lading and the also declared that respondent’s representative was not allowed to sign the Master’s
charter party. As counterclaim, defendants prayed for the payment of attorney’s fees Certificate. Such declaration, said the trial court, placed petitioner ATI in a bad light
in the amount of ₱220,000. By way of cross-claim, they ask for reimbursement from and weakened its stand.
their co-defendant, petitioner ATI, in the event that they are held liable to plaintiff.
Not satisfied, the unknown owner of the vessel M/V "Tern," Inter-Asia Marine
Petitioner ATI meanwhile alleged in its Answer that it exercised the required diligence Transport, Inc. and petitioner ATI respectively filed appeals to the CA. In their
in handling the subject shipment. It moved for the dismissal of the complaint, and petition, the unknown owner of the vessel M/V "Tern" and Inter-Asia Marine
alleged by way of special and affirmative defense that plaintiff has no valid cause of Transport, Inc. raised the question of whether the trial court erred in finding that they
action against petitioner ATI; that the cargo was completely discharged from the did not exercise extraordinary diligence in the handling of the goods.
vessel M/V "Tern" to the receiving barges owned or hired by the plaintiff; and that
petitioner ATI exercised the required diligence in handling the shipment. By way of On the other hand, petitioner ATI alleged that:
counterclaim, petitioner ATI argued that plaintiff should shoulder its expenses for
attorney’s fees in the amount of ₱20,000 as petitioner ATI was constrained to engage
the services of counsel to protect its interest. THE COURT-A-QUO COMMITTED SERIOUS AND REVERSIBLE ERROR IN
HOLDING DEFENDANT[-]APPELLANT ATI SOLIDARILY LIABLE WITH CO-
DEFENDANT APPELLANT INTERASIA MARINE TRANSPORT, INC. CONTRARY
On May 10, 2001, the RTC of Manila rendered a Decision holding petitioner ATI and TO THE EVIDENCE PRESENTED.
its co-defendants solidarily liable to respondent for damages arising from the
shortage. The RTC held:
On November 27, 2006, the CA promulgated the assailed Decision, the decretal
portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
defendants M/V "Tern" Inter-Asia Marine Transport, Inc. and Asian Terminal Inc.
jointly and severally liable to pay plaintiff Simon Enterprises the sum of WHEREFORE, the appealed Decision dated May 10, 2001 is affirmed, except the
₱2,286,259.20 with legal interest from the date the complaint was filed until fully award of attorney’s fees which is hereby deleted.
satisfied, 10% of the amount due plaintiff as and for attorney’s fees plus the costs of
suit. SO ORDERED.

Defendants’ counterclaim and cross claim are hereby DISMISSED for lack of merit. In affirming the RTC Decision, the CA held that there is no justification to disturb the
factual findings of the trial court which are entitled to respect on appeal as they were
SO ORDERED. supported by substantial evidence. It agreed with the findings of the trial court that
the unknown owner of the vessel M/V "Tern" and Inter-Asia Marine Transport, Inc.
failed to establish that they exercised extraordinary diligence in transporting the 4. Respondent failed to substantiate its claim for damages as no competent
goods or exercised due diligence to forestall or lessen the loss as provided in Article evidence was presented to prove the same.1âwphi1
174214 of the Civil Code. The CA also ruled that petitioner ATI, as the arrastre
operator, should be held jointly and severally liable with the carrier considering that 5. Respondent has not presented any scintilla of evidence showing any
petitioner ATI’s stevedores were under the direct supervision of the unknown owner fault/negligence on the part of herein petitioner.
of M/V "Tern" and that the spillages occurred when the cargoes were being unloaded
by petitioner ATI’s stevedores. 6. Petitioner ATI should be entitled to its counterclaim.

Petitioner ATI filed a motion for reconsideration, but the CA denied its motion in a Respondent, on the other hand, quotes extensively the CA decision and maintains its
Resolution dated March 23, 2007. The unknown owner of the vessel M/V "Tern" and correctness.
Inter-Asia Marine Transport, Inc. for their part, appealed to this Court via a petition for
review on certiorari, which was docketed as G.R. No. 177170. Its appeal, however,
was denied by this Court on July 16, 2007 for failure to sufficiently show any We grant the petition.
reversible error committed by the CA in the challenged Decision and Resolution as to
warrant the exercise of this Court’s discretionary appellate jurisdiction. The unknown The CA erred in affirming the decision of the trial court holding petitioner ATI
owner of M/V "Tern" and Inter-Asia Marine Transport, Inc. sought reconsideration of solidarily liable with its co-defendants for the shortage incurred in the shipment of the
the denial but their motion was denied by the Court in a Resolution dated October 17, goods to respondent.
2007.
We note that the matters raised by petitioner ATI involve questions of fact which are
Meanwhile, on April 20, 2007, petitioner ATI filed the present petition raising the sole generally not reviewable in a petition for review on certiorari under Rule 45 of the
issue of whether the appellate court erred in affirming the decision of the trial court 1997 Rules of Civil Procedure, as amended, as the Court is not a trier of facts.
holding petitioner ATI solidarily liable with its codefendants for the shortage incurred Section 1 thereof provides that "the petition x x x shall raise only questions of law,
in the shipment of the goods to respondent. which must be distinctly set forth."

Petitioner ATI argues that: A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts; or when the issue does
1. Respondent failed to prove that the subject shipment suffered actual not call for an examination of the probative value of the evidence presented, the truth
loss/shortage as there was no competent evidence to prove that it actually or falsehood of facts being admitted. A question of fact exists when the doubt or
weighed 3,300 metric tons at the port of origin. difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding circumstances as well as their
2. Stipulations in the bill of lading that the cargo was carried on a "shipper’s relation to each other and to the whole, and the probability of the situation. 19
weight, quantity and quality unknown" is not contrary to public policy. Thus,
herein petitioner cannot be bound by the quantity or weight of the cargo
stated in the bill of lading. The well-entrenched rule in our jurisdiction is that only questions of law may be
entertained by this Court in a petition for review on certiorari. This rule, however, is
not ironclad and admits certain exceptions, such as when (1) the conclusion is
3. Shortage/loss, if any, may have been due to the inherent nature of the grounded on speculations, surmises or conjectures; (2) the inference is manifestly
shipment and its insufficient packing considering that the subject cargo was mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the
shipped in bulk and had a moisture content of 12.5%. judgment is based on a misapprehension of facts; (5) the findings of fact are
conflicting; (6) there is no citation of specific evidence on which the factual findings Shipping, Inc. v. Prudential Guarantee & Assurance, Inc.,26 a case involving an
are based; (7) the findings of absence of facts are contradicted by the presence of analogous stipulation in a bill of lading, wherein the Supreme Court held that:
evidence on record; (8) the findings of the Court of Appeals are contrary to those of
the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and Indeed, as the bill of lading indicated that the contract of carriage was under a "said
undisputed facts that, if properly considered, would justify a different conclusion; (10) to weigh" clause, the shipper is solely responsible for the loading while the
the findings of the Court of Appeals are beyond the issues of the case; and (11) such carrier is oblivious of the contents of the shipment. (Emphasis supplied)
findings are contrary to the admissions of both parties.
Similarly, International Container Terminal Services, Inc. v. Prudential Guarantee &
After a careful review of the records, we find justification to warrant the application of Assurance Co., Inc., explains the meaning of clauses analogous to "Shipper’s weight,
the fourth exception. The CA misapprehended the following facts. quantity and quality unknown" in this manner:

First, petitioner ATI is correct in arguing that the respondent failed to prove that the This means that the shipper was solely responsible for the loading of the
subject shipment suffered actual shortage, as there was no competent evidence to container, while the carrier was oblivious to the contents of the shipment x x x.
prove that it actually weighed 3,300 metric tons at the port of origin. The arrastre operator was, like any ordinary depositary, duty-bound to take good care
of the goods received from the vessel and to turn the same over to the party entitled
Though it is true that common carriers are presumed to have been at fault or to have to their possession, subject to such qualifications as may have validly been
acted negligently if the goods transported by them are lost, destroyed, or imposed in the contract between the parties. The arrastre operator was not
deteriorated, and that the common carrier must prove that it exercised extraordinary required to verify the contents of the container received and to compare them
diligence in order to overcome the presumption, the plaintiff must still, before the with those declared by the shipper because, as earlier stated, the cargo was at
burden is shifted to the defendant, prove that the subject shipment suffered actual the shipper’s load and count x x x. (Italics in the original; emphasis supplied)
shortage. This can only be done if the weight of the shipment at the port of origin and
its subsequent weight at the port of arrival have been proven by a preponderance of Also, Bankers & Manufacturers Assurance Corporation v. Court of Appeals
evidence, and it can be seen that the former weight is considerably greater than the elucidates thus:
latter weight, taking into consideration the exceptions provided in Article 1734 of the
Civil Code. The recital of the bill of lading for goods thus transported [i.e., transported in
sealed containers or "containerized"] ordinarily would declare "Said to Contain",
In this case, respondent failed to prove that the subject shipment suffered shortage, "Shipper’s Load and Count", "Full Container Load", and the amount or quantity of
for it was not able to establish that the subject shipment was weighed at the port of goods in the container in a particular package is only prima facie evidence of the
origin at Darrow, Louisiana, U.S.A. and that the actual weight of the said shipment amount or quantity x x x.
was 3,300 metric tons.
A shipment under this arrangement is not inspected or inventoried by the
The Berth Term Grain Bill of Lading (Exhibit "A"), the Proforma Invoice (Exhibit "B"), carrier whose duty is only to transport and deliver the containers in the same
and the Packing List (Exhibit "C"), being used by respondent to prove that the subject condition as when the carrier received and accepted the containers for
shipment weighed 3,300 metric tons, do not, in fact, help its cause. The Berth Term transport x x x. (Emphasis supplied)
Grain Bill of Lading states that the subject shipment was carried with the qualification
"Shipper’s weight, quantity and quality unknown," meaning that it was transported Hence, as can be culled from the above-mentioned cases, the weight of the shipment
with the carrier having been oblivious of the weight, quantity, and quality of the cargo. as indicated in the bill of lading is not conclusive as to the actual weight of the goods.
This interpretation of the quoted qualification is supported by Wallem Philippines Consequently, the respondent must still prove the actual weight of the subject
shipment at the time it was loaded at the port of origin so that a conclusion may be
made as to whether there was indeed a shortage for which petitioner must be liable. We find that the Court of Appeals erred in finding that a shortage had taken place .
This, the respondent failed to do. Josephine Suarez, Prudential’s claims processor, merely identified the papers
submitted to her in connection with GMC’s claim (Bill of Lading BEDI/1 (Exh. "B"),
The Proforma Invoice militates against respondent’s claim that the subject shipment Commercial Invoice No. 1401 issued by Toepfer International Asia Pte, Ltd. (Exh.
weighed 3,300 metric tons. The pertinent portion of the testimony of Mr. Jose "C"), SGS Certificate of Quality (Exh. "F-1"), and SGS Certificate of Weight (Exh. "F-
Sarmiento, respondent’s Claims Manager, is narrated below: 3")). Ms. Suarez had no personal knowledge of the contents of the said
documents and could only surmise as to the actual weight of the cargo loaded
on M/V Gao Yang x x x.
Atty. Rebano: You also identified a while ago, Mr. Witness Exhibit B, the invoice.
Why does it state as description of the cargo three thousand metric tons and
not three thousand three hundred? xxxx

A: Usually there is a contract between the supplier and our company that embodied Ms. Suarez’s testimony regarding the contents of the documents is thus
[sic] in the letter credit [sic] that they have the option to ship the cargo plus or hearsay, based as it is on the knowledge of another person not presented on
minus ten percent of the quantity. the witness stand.

xxxx Nor has the genuineness and due execution of these documents been
established. In the absence of clear, convincing, and competent evidence to
prove that the shipment indeed weighed 4,415.35 metric tons at the port of
Q: So, it is possible for the shipper to ship less than ten percent in [sic] the
origin when it was loaded on the M/V Gao Yang, it cannot be determined
quantity stated in the invoice and it will still be a valid shipment. Is it [sic]
whether there was a shortage of the shipment upon its arrival in Batangas.
correct?
(Emphasis supplied)
A: It [sic] is correct but we must be properly advised and the commercial invoice
As in the present case, Mr. Sarmiento merely identified the three above-mentioned
should indicate how much they sent to us. (Emphasis supplied)
exhibits, but he had no personal knowledge of the weight of the subject shipment
when it was loaded onto the M/V "Tern" at the port of origin. His testimony as regards
The quoted part of Mr. Sarmiento’s testimony not only shows uncertainty as to the the weight of the subject shipment as described in Exhibits "A," "B," and "C" must
actual weight of the shipment, it also shows that assuming respondent did order then be considered as hearsay, for it was based on the knowledge of a person who
3,300 metric tons of U.S. Soybean Meal from Contiquincybunge Export Company, was not presented during the trial in the RTC.
and also assuming that it only received 3,100.137 metric tons, such volume would
still be a valid shipment because it is well within the 10% allowable shortage. Note
The presumption that the Berth Term Grain Bill of Lading serves as prima facie
that Mr. Sarmiento himself mentioned that the supplier has the option to "ship the
evidence of the weight of the cargo has been rebutted, there being doubt as to the
cargo plus or minus ten percent of the quantity."
weight of the cargo at the time it was loaded at the port of origin. Further, the fact that
the cargo was shipped with the arrangement "Shipper’s weight, quantity and quality
Notably also, the genuineness and the due execution of the Packing List, the Berth unknown," indeed means that the weight of the cargo could not be determined using
Term Grain Bill of Lading, and the Proforma Invoice, were not established. as basis the figures written on the Berth Term Grain Bill of Lading. This is in line with
Malayan Insurance Co., Inc. v. Jardine Davies Transport Services, Inc., where we
Wallem Philippines Shipping, Inc., is instructive on this matter: said:
The presumption that the bill of lading, which petitioner relies upon to support its on the handling and storage of soybeans and soybean meal is instructive on this
claim for restitution, constitutes prima facie evidence of the goods therein matter. Pertinent portions of the study reads:
described was correctly deemed by the appellate court to have been rebutted in
light of abundant evidence casting doubts on its veracity. Soybean meal is difficult to handle because of poor flow ability and bridging
characteristics. Soybean meal tends to settle or consolidate over time. This
That MV Hoegh undertook, under the bill of lading, to transport 6,599.23 MT of yellow phenomenon occurs in most granular materials and becomes more severe with
crude sulphur on a "said to weigh" basis is not disputed. Under such clause, the increased moisture, time and small particle size x x x.
shipper is solely responsible for the loading of the cargo while the carrier is oblivious
of the contents of the shipment. Nobody really knows the actual weight of the cargo xxxx
inasmuch as what is written on the bill of lading, as well as on the manifest, is based
solely on the shipper’s declaration. Moisture is perhaps the most important single factor affecting storage of soybeans
and soybean meal. Soybeans contain moisture ranging from 12% to 15% (wet
The bill of lading carried an added clause – the shipment’s weight, measure, basis) at harvest time x x x.
quantity, quality, condition, contents and value unknown. Evidently, the weight
of the cargo could not be gauged from the bill of lading. (Italics in the original; xxxx
emphasis supplied)
Soybeans and soybean meal are hygroscopic materials and will either lose
The respondent having failed to present evidence to prove the actual weight of the (desorb) or gain (adsorb) moisture from the surrounding air. The moisture level
subject shipment when it was loaded onto the M/V "Tern," its cause of action must reached by a product at a given constant temperature and equilibrium relative
then fail because it cannot prove the shortage that it was alleging. Indeed, if the humidity (ERH) is its equilibrium moisture content (EMC) x x x. (Emphasis supplied)
claimant cannot definitively establish the weight of the subject shipment at the point
of origin, the fact of shortage or loss cannot be ascertained. The claimant then has no
basis for claiming damages resulting from an alleged shortage. Again, Malayan As indicated in the Proforma Invoice mentioned above, the moisture content of the
Insurance Co., Inc., provides jurisprudential basis: subject shipment was 12.5%. Taking into consideration the phenomena of
desorption, the change in temperature surrounding the Soybean Meal from the time it
left wintertime Darrow, Louisiana, U.S.A. and the time it arrived in Manila, and the
In the absence of clear, convincing and competent evidence to prove that the fact that the voyage of the subject cargo from the point of loading to the point of
cargo indeed weighed, albeit the Bill of Lading qualified it by the phrase "said to unloading was 36 days, the shipment could have definitely lost weight, corresponding
weigh," 6,599.23 MT at the port of origin when it was loaded onto the MV Hoegh, to the amount of moisture it lost during transit.
the fact of loss or shortage in the cargo upon its arrival in Manila cannot be
definitively established. The legal basis for attributing liability to either of the
respondents is thus sorely wanting. (Emphasis supplied) The conclusion that the subject shipment lost weight in transit is bolstered by the
testimony of Mr. Fernando Perez, a Cargo Surveyor of L.J. Del Pan. The services of
Mr. Perez were requested by respondent. Mr. Perez testified that it was possible for
Second, as correctly asserted by petitioner ATI, the shortage, if any, may have been the subject shipment to have lost weight during the 36-day voyage, as it was
due to the inherent nature of the subject shipment or its packaging since the subject wintertime when M/V "Tern" left the United States and the climate was warmer when
cargo was shipped in bulk and had a moisture content of 12.5%. it reached the Philippines; hence the moisture level of the Soybean Meal could have
changed. Moreover, Mr. Perez himself confirmed, by answering a question
It should be noted that the shortage being claimed by the respondent is minimal, and propounded by the RTC, that loss of weight of the subject cargo cannot be avoided
is an indication that it could be due to consolidation or settlement of the subject because of the shift in temperature from the colder United States weather to the
shipment, as accurately observed by the petitioner. A Kansas State University study warmer Philippine climate.
More importantly, the 199.863 metric-ton shortage that respondent alleges is a Also, it can be seen in respondent’s own Exhibit "D-1" that the actual weight of the cargo
minimal 6.05% of the weight of the entire Soy Bean Meal shipment. Taking into was established by weighing 20% of the cargo. Though we recognize the practicality of
consideration the previously mentioned option of the shipper to ship 10% more or establishing cargo weight through random sampling, we note the discrepancy in the
less than the contracted shipment, and the fact that the alleged shortage is only weights used in the determination of the alleged shortage.
6.05% of the total quantity of 3,300 metric tons, the alleged percentage loss clearly
does not exceed the allowable 10% allowance for loss, as correctly argued by Exhibit "D-1" of respondent states that the average weight of each bag is 52 kilos. A total
petitioner. The alleged loss, if any, not having exceeded the allowable percentage of of 63,391 bags were discharged from the barges, and the tare weight was established at
shortage, the respondent then has no cause of action to claim for shortages. 0.0950 kilos. Therefore, if one were to multiply 52 kilos per bag by 63,391 bags and
deduct the tare weight of 0.0950 kilos multiplied by 63,391 bags, the result would be
3,290,309.65 kilos, or 3,290.310 metric tons. This would mean that the shortage was only
Third, we agree with the petitioner ATI that respondent has not proven any
9.69 metric tons, if we suppose that respondent was able to establish that the shipment
negligence on the part of the former. actually weighed 3,300 metric tons at the port of loading.

As petitioner ATI pointed out, a reading of the Survey Report of Del Pan Surveyors
However, the computation in Exhibit "D-2" would show that Del Pan Surveyors
(Exhibits "D" to "D-4" of respondent) would not show any untoward incident or negligence
inexplicably used 49 kilos as the weight per bag, instead of 52 kilos, therefore resulting in
on the part of petitioner ATI during the discharging operations.
the total net weight of 3,100,137 kilos or 3,100.137 metric tons. This was the figure used
as basis for respondent's conclusion that there is a shortage of 199.863 metric tons.
Also, a reading of Exhibits "D", "D-1", and "D-2" would show that the methods used in
determining whether there was a shortage are not accurate.
These discrepancies only lend credence to petitioner ATI's assertion that the weighing
methods respondent used as bases are unreliable and should not be completely relied
Respondent relied on the Survey Reports of Del Pan Surveyors to prove that the subject upon.
shipment suffered loss. The conclusion that there was a shortage arose from an
evaluation of the weight of the cargo using the barge displacement method. This is a type
Considering that respondent was not able to establish conclusively that the subject
of draught survey, which is a method of cargo weight determination by ship’s
shipment weighed 3,300 metric tons at the port of loading, and that it cannot therefore be
displacement calculations. The basic principle upon which the draught survey
concluded that there was a shortage for which petitioner should be responsible; bearing in
methodology is based is the Principle of Archimedes, i.e., a vessel when floating in water,
mind that the subject shipment most likely lost weight in transit due to the inherent nature
will displace a weight of water equal to its own weight. It then follows that if a weight of
of Soya Bean Meal; assuming that the shipment lost weight in transit due to desorption,
cargo is loaded on (or unloaded from) a vessel freely floating in water, then the vessel will
the shortage of 199.863 metric tons that respondent alleges is a minimal 6.05% of the
sink (or float) into the water until the total weight of water displaced is equal to the original
weight of the entire shipment, which is within the allowable 10% allowance for loss; and
weight of the vessel, plus (or minus) the cargo which has been loaded (or unloaded) and
noting that the respondent was not able to show negligence on the part of the petitioner
plus (or minus) density variation of the water between the starting survey (first
and that the weighing methods which respondent relied upon to establish the shortage it
measurement) and the finishing survey (second measurement). It can be seen that this
alleges is inaccurate, respondent cannot fairly claim damages against petitioner for the
method does not entail the weighing of the cargo itself, but as correctly stated by the
subject shipment's alleged shortage.
petitioner, the weight of the shipment is being measured by mere estimation of the water
displaced by the barges before and after the cargo is unloaded from the said barges.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
November 27, 2006 and Resolution dated March 23, 2007 of the Court of Appeals in CA-
In addition, the fact that the measurements were done by Del Pan Surveyors in prevailing
G.R. CV No. 71210 are REVERSED AND SET ASIDE insofar as petitioner Asian
slight to slightly rough sea condition supports the conclusion that the resulting
Terminals, Inc. is concerned. Needless to add, the complaint against petitioner docketed
measurement may not be accurate. A United Nations study on draught surveys in fact
as RTC Manila Civil Case No. 96-81101 is ordered DISMISSED
states that the accuracy of draught surveys will be dependent upon several factors, one of
which is the weather and seas condition in the harbor.