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DECISION AUSTRIA-MARTINEZ, J p: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the August 28, 1998 Decision 1 and the December 24, 1998 Resolution of the Court of Appeals in CA-G.R. CV No. 49725, 2 affirming in toto the decision of the Regional Trial Court of Manila (Branch 9). The factual background of the case is summarized by the appellate court, thus: Sometime in the latter part of 1991, plaintiff Remington Industrial Sales Corporation (hereafter Remington for short) ordered from defendant Wangs Company, Inc. (hereafter Wangs for short) 194 packages of hot rolled steel sheets, weighing 686.565 metric tons, with a total value of $219,380.00, then equivalent to P6,469,759.17. Wangs forwarded the order to its supplier, Burwill (Agencies) Ltd., in Hongkong. On or about November 26, 1991, the 194 packages were loaded on board the vessel MV 'Indian Reliance' at the Port of Gdynia, Poland, for transportation to the Philippines, under Bill of Lading No. 27 (Exh. 'C'). The vessel's owner/charterer is represented in the Philippines by defendant Iron Bulk Shipping Phils., Inc. (hereafter Iron Bulk for short). Remington had the cargo insured for P6,469,759.17 during the voyage by Marine Insurance Policy No. 7741 issued by defendant Pioneer Asia Insurance Corporation (hereafter Pioneer for short). On or about January 3, 1992, the MV 'Indian Reliance' arrived in the Port of Manila, and the 194 packages of hot rolled steel sheets were discharged from the vessel. The cargo was inspected twice by SGS Far East Ltd. and found to be wet (with slight trace of salt) and rusty, extending from 50% to 80% of each plate. Plaintiff filed formal claims for loss amounting to P544,875.17 with Pioneer, Iron Bulk, Manila Port Services, Inc. (MPS) and ESE Brokerage Corporation (ESE). No one honored such claims. Thus, plaintiff filed an action for collection, plus attorney's fees, against Wangs, Pioneer and Iron Bulk . . ." 3 and affirmed in toto the following findings of the trial court, on February 1, 1995, to wit: The evidence on record shows that the direct and immediate cause of the rusting of the goods imported by the plaintiff was the water found inside the cargo hold of M/V 'Indian Reliance' wherein those goods were stored during the voyage, particularly the water found on the surface of the merchandise and on the floor of the vessel hatch. And even at the time the cargoes were being unloaded by crane at the Pier of Manila, Iron Bulk's witnesses noticed that water was dripping from the cargoes. (TSN dated July 20, 1993, pp. 13–14; TSN dated May 30, 1994, pp. 8–9, 14, 24–25; TSN dated June 3, 1994, pp. 31–32; TSN dated July 14, 1994, pp. 10–11). SGS Far East Limited, an inspection agency hired by defendant Wangs, issued Certificate of Inspection and Analysis No. 6401/35071 stating the following findings: Results of tests indicated that a very slight trace of salt was present in the sample as confirmed by the test of Sodium. The results however does not necessarily indicate that the rusty condition of the material was caused by seawater. Tan-Gatue Adjustment Co., Inc., a claims adjustment firm hired by defendant Pioneer, submitted a Report (Exh. 10-Pioneer) dated February 20, 1992 to Pioneer which pertinently reads as follows: All the above 3,971 sheets were heavily rusty at sides/ends/edges/surfaces. Pieces of cotton were rubbed by us on different rusty steel sheets and submitted to Precision Analytical Services, Inc. to determine the cause of wetting. Result thereof as per Laboratory Report No. 077-92 of this firm showed that: 'The sample was wetted/contaminated by fresh water. After considering the foregoing test results and the other evidence on record, the Court found no clear and sufficient proof showing that the water which stayed in the cargo hold of the vessel and which contaminated the merchandise was seawater. The Court, however, is convinced that the subject goods were exposed to salt conditions as evidenced by the presence of about 17% Sodium on the rust sample tested by SGS. CAaDSI As to the source of the water found in the cargo hold, there is also no concrete and competent evidence on record establishing that such water leaked from the pipe installed in Hatch No. 1 of M/V 'Indian Reliance', as claimed by plaintiff. Indeed, the plaintiff based such claim only from information it allegedly received from its supplier, as stated in its letter to defendant Iron Bulk dated March 28, 1992 (Exh. K-3). And no one took the witness stand to confirm or establish the alleged leakage. Nevertheless, since Iron Bulk's own evidence shows that there was water inside the cargo hold of the vessel and that the goods stored therein were wet and full of rust, without sufficient explanation on its part as to when and how water found its way into the vessel holds, the Court finds and so holds that Iron Bulk failed to exercise the extraordinary diligence required by law in the handling and transporting of the goods.
as evidenced by the express finding of the lower court that the contamination and rusting was chemically established to have been caused by fresh water. 3. absurd or impossible. among which are: (1) the conclusion is grounded on speculations. vs. the Court finding preponderance of evidence for the plaintiff hereby renders judgment in favor of it and against all the defendants herein as follows: 1. (7) the finding of absence of facts is contradicted by the presence of evidence on record. 7 Petitioner failed to demonstrate that its petition falls under any one of the above exceptions. and stipulates the rights and obligations assumed by the parties. water was dripping from the cargoes at the time they were being discharged from the vessel. quality and value. It is settled that a bill of lading has a two-fold character. for lack of merit.a. the Court of Appeals erred in not exculpating petitioner since the cargo was not contaminated during the time the same was in possession of the vessel. Incorporated and Iron Bulk Shipping Co. surmises or conjectures. would justify a different conclusion. 8 We find no error in the findings of the appellate court that the questioned bill of lading is a clean bill of lading. weight. 6 There are recognized exceptions to this rule. are generally binding and conclusive upon this court. it is presumed to have been at fault or to have acted negligently. There is no merit to petitioner's contention that the Bill of Lading covering the subject cargo cannot be relied upon to indicate the condition of the cargo upon loading. and (11) such findings are contrary to the admissions of both parties.. xxx xxx xxx WHEREFORE.00 for and as attorney's fees. As a receipt.000.Ordering defendant Iron Bulk Shipping Co. (4) the judgment is based on a misapprehension of facts.e.Ordering defendant Pioneer Asia Insurance Corporation to pay plaintiff the following amounts: a)P544. Inc. Had Iron Bulk done so. Ltd. 2.Granting the cross-claim of defendant Pioneer Asia Insurance Corporation against defendant Iron Bulk by virtue of its right of subrogation. since the goods were undoubtedly damaged. 4. if properly considered.) reckoned from the time of filing of this case until full payment is made. to reimburse defendant Pioneer the total amount it paid to the plaintiff. except as to damages which will be discussed forthwith. (8) the findings of the CA are contrary to the findings of the trial court. describes the goods as to quantity. fixes the route. (6) there is no citation of specific evidence on which the factual findings are based. destination. dimensions. Besides. which the Court of Appeals affirmed. and as Iron Bulk failed to establish by any clear and convincing evidence any of the exempting causes provided for in Article 1734 of the Civil Code. (2) the inference is manifestly mistaken. b)P50. Inc. as shown by the notation. plus interest at the legal rate (6% p. SO ORDERED. it does not indicate any defect in the goods covered by it. showing its lack of care and diligence over the goods. 4 Only Iron Bulk filed the present petition raising the following Assignment of Errors: FIRSTLY. Inc. identification marks and condition.. i. immediately upon payment by defendant Pioneer of the foregoing award to the plaintiff.Dismissing the case against defendant Wangs Company. we held that: [A] bill of lading operates both as a receipt and as a contract. and FINALLY. and c)the cost of suit.Denying the counterclaims of all the defendants and the cross-claim of defendant Wangs Company. the Court of Appeals erred in its insistent reliance on the pro forma Bills of Lading to establish the condition of the cargo upon loading. Anent the first assigned error: That the Court of Appeals erred in relying on the pro forma Bills of Lading to establish the condition of the cargo upon landing. But it did not. 5 The general rule is that only questions of law are entertained in petitions for review by certiorari under Rule 45 of the Rules of Court. which include the consignee. United States Lines. the Court of Appeals erred in making a sweeping finding that the petitioner as carrier failed to exercise the requisite diligence under the law. SECONDLY. it recites the date and place of shipment. As a contract. THIRDLY. in respect to its right of subrogation.875. 5. it could have discovered by ordinary inspection that the cargo holds and the cargoes themselves were affected by water and it could have provided some remedial measures to prevent or minimize the damage to the cargoes. 10 . which is contrary to what is demonstrated by the evidence adduced. which is at best speculative and not supported by damages. The trial court's findings of fact.. and freight rate or charges.17 representing the loss allowance for the goods insured. (3) there is grave abuse of discretion. the Court of Appeals erred in affirming the amount of damages adjudicated by the Court below. It is a receipt for the goods shipped and a contract to transport and deliver the same as therein stipulated. (10) the findings of the CA are beyond the issues of the case.xxx xxx xxx Iron Bulk did not even exercise due diligence because admittedly. (9) the CA manifestly overlooked certain relevant and undisputed facts that. "CLEAN ON BOARD" 9 and "Shipped at the Port of Loading in apparent good condition on board the vessel for carriage to Port of Discharge". (5) the findings of facts are conflicting. it names the contracting parties. In Phoenix Assurance Co.
may be explained. Moreover. 17 In the instant case. made a marginal note in the bill of lading indicating the true condition of the merchandise. commissioned by the carrier to inspect the subject cargo. common carriers are presumed to have been at fault or to have acted negligently.54 metric tons while the twenty-foot steel sheets which were contained in 52 packages weighed 194. the cargo consigned to Remington consisted of hot rolled steel sheets with lengths of eight feet and twenty feet. the carrier could have refused to accept it.00 per metric ton. it accepted the subject cargo and even agreed to the issuance of a clean bill of lading without taking any exceptions with respect to the recitals contained therein. if the goods are lost.Petitioner presented evidence to prove that. (2)Act of the public enemy in war. Based on the Packing List issued by Burwill (Agencies) Limited. usually accepted condition" when it was accepted for shipment. we agree with the Court of Appeals that far from contradicting the recitals contained in the said bill. or other natural disaster or calamity. among others. and to exercise due care in the handling and stowage. 1992. it was reported that the surface of the steel sheets with length of twenty feet were found to be rusty "extending from 60% to 80% per plate". Petitioner's arguments in support of the assigned errors are not plausible. We likewise agree with appellate court's finding that the carrier failed to present proof that it exercised extraordinary diligence in its vigilance over the goods. are unreliable evidence of the true condition of the shipment at the time of loading since said receipts and report were issued twenty days prior to loading and before the issuance of the clean bill of lading covering the subject cargo on November 26. varied or even contradicted. Indeed. 19 The goods were valued at $320. or to the person who has a right to receive them. 21 However. (5)Order or act of competent public authority. comprise the remaining 30% of the cargo. We agree with the contention of the petitioner in its last assigned error that the amount of damages adjudicated by the trial court and affirmed by the appellate court is not in consonance with the evidence presented by the parties. or deterioration of the goods should be caused. such finding should have prompted it to apply additional safety measures to make sure that the cargo is protected from corrosion. even if the loss. while the surveyor. having the nature of a receipt. or at the least. 12 The fact that the issued bill of lading is pro forma is of no moment. 11 However. lightning. found the inspected steel goods to be contaminated with rust he. 18 The Court of Appeals did not err in finding that no competent evidence was presented to prove that the deterioration of the subject cargo was brought about by any of the causes enumerated under the aforequoted Article 1734 of the said Code. 1992. (4)The character of the goods or defects in the packing or in the containers. 15 It requires common carriers to render service with the greatest skill and foresight and to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment. or destruction of the goods entrusted to it for safe carriage and delivery. The eight-foot length steel sheets contained in 142 packages had a weight of 491. like any other receipts. Anent the second and third assigned errors: That the Court of Appeals erred in not finding that the contamination and rusting was chemically to have been caused by fresh water. Article 1734 of the Civil Code states that: Common carriers are responsible for the loss. only 30% of said goods originally consigned to Remington was available for examination at Remington's warehouse in Manila and that Remington had already disposed of the remaining 70%. the cargo therein described as clean on board is actually wet and covered with rust. the carrier is not relieved from its responsibility to exercise due care in handling the merchandise and in employing the necessary precautions to prevent the cargo from further deteriorating. that the subject cargo was already in a damaged condition at the time it was accepted for transportation. 1991. the supplier of the steel sheets. In the Certificate of Inspection issued by SGS. nonetheless. contrary to the asseveration of petitioner. 16 Under Article 1742 of the Civil Code. the common carrier must exercise due diligence to forestall or lessen the loss. storm. It is settled that the extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding damage to. the bill of lading. unless they prove that they observed extraordinary diligence as required under the law. 1991. destruction. petitioner's own evidence shows that the cargo covered by the subject bill of lading. The presumption that the carrier was at fault or that it acted negligently was not overcome by any countervailing evidence. Anent the last assigned error: That the Court of Appeals erred in affirming the amount of damages awarded by the trial court. are bound by the description appearing therein and they are now estopped from denying the contents of the said bill. destroyed or deteriorated. respectively. unless the same is due to any of the following causes only: (1)Flood. although it was partially wet and covered with rust was. and received by the carrier for transportation until the same are delivered actually or constructively. If the bill of lading is not truly reflective of the true condition of the cargo at the time of loading to the effect that the said cargo was indeed in a damaged state. But it did not.25 metric tons. estimated the merchandise to be in a fair and usually accepted condition. on the basis of which the amount of actual damages could have been ascertained. (3)Act or omission of the shipper or owner of the goods. as its representative. This extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of. earthquake. said carrier and the petitioner. Except in the cases mentioned under Article 1734. The judgments of both lower courts are based on misapprehension of facts as we find no competent evidence to prove the actual damages sustained by respondent. This. by the carrier to the consignee. including such methods as their nature requires. or an acknowledgement of the quantity and condition of the goods delivered. there was no proof to show how many metric tons of twenty-foot and eight-foot length steel sheets. nevertheless. by the character of the goods. the carrier failed to do. Even granting. for the sake of argument. if the carrier indeed found the steel sheets to have been covered by rust at the time that it accepted the same for transportation. Petitioner presented in evidence the Mate's Receipts 13 and a Survey Report 14 to prove the damaged condition of the cargo. Since the carrier failed to annotate in the bill of lading the alleged damaged condition of the cargo when it was loaded. 1992 and January 27– 28. No competent evidence was presented to prove the weight of the remaining twenty-foot length steel sheets. destruction or deterioration of the goods. contrary to the recitals contained in the subject bill of lading. found to be in a "fair. dated February 18. . whether international or civil. the Mate's Receipts and the Survey Report which were both dated November 6. On the contrary. 20 It is not disputed that at the time of inspection of the subject merchandise conducted by SGS Far East Limited on January 21–24. However. and that the appellate court erred in finding that petitioner failed to exercise the requisite diligence under the law.
P544. i.875. 25 There is also no proof of the weight of the remaining eight-foot length steel sheets. be proved with certainty. Neither is there competent evidence proving the actual extent of damage sustained by the eight-foot length steel sheets. Art.00 Multiple 70% Qty.56 with the following detailed computation: ————— Plates under 8 ft lengths 491.No proof of pecuniary loss is necessary in order that moral.R. Art./MT US$20. WHEREFORE. We likewise agree with petitioner's claim that it should not be held liable for the payment of attorney's fees because it was always willing to settle its liability by offering to pay 30% of Remington's claim and that it is only Remington's unwarranted refusal to accept such offer that led to the filing of the instant case. damagedUS$43.20 Quantity Damaged25% 13% Loss allowance$5. The assessment of such damages. In Spouses Quisumbing vs.025 MT @ $320. Respondent is awarded temperate damages in the amount of P165. 1998 and the Resolution dated December 24. 2224. 23 prove the quantity of the damaged cargo. SO ORDERED. we find nothing in the said reports and computation to justify the claim of Remington that 70% of the twenty-foot length steel sheets were damaged.000.Temperate or moderate damages. Neither does the alleged survey conducted by Remington consisting only of photographs. Remington's general manager. As found earlier.58 @ $26.Temperate damages must be reasonable under the circumstances.088. It is settled that actual or compensatory damages are not presumed and should be proven before they are awarded. except liquidated ones. Rowina Tan Saban. From the foregoing. Petitioner was therefore justified in refusing to satisfy the full amount of Remington's claims.e. damaged$39. for failure of Remington to present sufficient evidence which is susceptible of measurement. to wit: Art.80 Multiply by 25% Qty. the assailed Decision of the Court of Appeals dated August 28. it is not entitled to actual damages.875.80 Plates 8 ft lengths491.112. 2225. CV No. As to the eight-foot length steel sheets. since it was established that the subject steel sheets sustained damage by reason of the negligence of the carrier. 24 On the other hand.088. Hence.00 is reasonable enough for temperate damages. Meralco 26 . Thirty percent of the alleged cost of damages./MT Total Plates 8 ft lengthsUS$15..81 = P544. may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot. from the nature of the case. after a careful examination of the reports submitted by SGS and Tan-Gatue. In all other respects.211.540 MT—US$157. Remington came up with a summary of the amount of damages sustained by the subject cargo. we held that Actual damages are compensation for an injury that will put the injured party in the position where it was before it was injured. it is evident that the extent of actual damage to the subject cargo is likewise not satisfactorily proven.56 Loss Allowance35% Total claimUS$5.02 Loss Allowance13% Plates under 20 ft.292.17 and which the trial court based the actual damages awarded in favor of Remington. 2216. . 2224 and 2225 of the Civil Code. nominal.112.540 MT @ $320.461.02 Total Plates 20 ft lengthsP544.00 Plates 20 ft lengths194.Remington claims that 70% of the twenty-foot length steel sheets were damaged.000. 22 Saban further testified that on the basis of these reports.71 $15.56 US$62. in CA-G. 1998.211. 49725 are MODIFIED as follows: The award of actual damages and attorney's fees are deleted. temperate. which are more than nominal but less than compensatory damages. albeit no competent proof was presented to justify the award of actual damages.00. according to the circumstances of each case.60 Quantity Damaged70% 35% Loss allowance$15. They pertain to such injuries or losses that are actually sustained and susceptible of measurement. the report issued by Tan-Gatue did not specify the extent of damage done to the said merchandise.292.17 or P165. Nonetheless. there is no evidence that the 70% of the 20-foot length steel sheets which had been disposed of had been damaged. SGS reported that they were found oiled all over which makes it hard to determine the rust condition on its surface. testified that the "70%" figure was based on the reports submitted by SGS and Tan-Gatue and Remington's independent survey to confirm these reports. is left to the discretion of the court.875. However.211.323. we find that Remington is entitled to temperate damages in accordance with Articles 2216. a party is entitled to an adequate compensation only for such pecuniary loss as it has duly proven.025 MT—US$62. the appealed decision and resolution are affirmed. No pronouncement as to costs. lengths 194.323. liquidated or exemplary damages may be adjudicated. Except as provided by law or stipulation. to wit: cHATSI US $157.
for short). to petitioner Lorenzo Shipping. 87-19 under B/L No. and with several holes at different places. The latter. It insured the shipment with respondent Chubb and Sons. Sumitomo informed petitioner Lorenzo Shipping that it will be filing a claim based on the damaged cargo once such damage had been ascertained. Petitioner Lorenzo Shipping Corporation (Lorenzo Shipping. insured the goods with respondent Chubb and Sons. Inc. 2004. 2001 Resolution 2 affirming the March 19. a foreign corporation organized and licensed to engage in insurance business under the laws of the United States of America. a foreign corporation licensed as a common carrier under the laws of Norway and doing business in the Philippines through its agent. is a foreign corporation organized under the laws of the United States of America. and found the steel pipes submerged in it. of San Francisco.A. for carriage to the United States. 1988 where it unloaded the remaining 217 bundles. and also exhibited chloride reactions on testing with silver nitrate. Washington on January 23. petitioner." The rusty condition of the cargo was noted on the mate's receipts and the checker of M/V Lorcon IV signed his conforme thereon. All bills of lading were marked "ALL UNITS HEAVILY RUSTED. M/V San Mateo Victory arrived at Oakland. 10 covering 364 bundles of steel pipes to be discharged at Oakland. indicating pipe had come in contact with salt water. which revealed moderate to heavy amounts of patchy and streaked dark red/orange rust on all lifts which were visible. and the tank top was "rusty.S. where it unloaded 364 bundles of the subject steel pipes. from Manila to Davao City. surveyed the steel pipes. the subject shipment.. the consignee.912. a domestic corporation engaged in coastwise shipping. Manila. for the account of Sumitomo Corporation. From Davao City. U. 147724. for short). 115090. 6 The M/V Lorcon IV arrived at the Sasa Wharf in Davao City on December 2.R. California. Del Pan Surveyors to inspect the shipment prior to and subsequent to discharge. which the latter received on December 9. When the steel pipes were tested with a silver nitrate solution. 1988.[G. Toplis and Harding found that they had come in contact with salt water..A.S. U. DECISION PUNO...S. In addition. 1987. It then sailed to Vancouver. We reserve the right to claim as soon as the amount of claim is determined and the necessary supporting documents are available. evidenced by Delivery Cargo Receipt No. No. and also discovered the latter heavily rusted. The letter reads: Please be advised that the merchandise herein below noted has been landed in bad order ex-Manila voyage No. thinning. 1987 showed that the subject shipment was no longer in good condition. carried the goods on board its vessel M/V San Mateo Victory to the United States. U. 1987. and Bills of Lading Nos. It issued Bills of Lading Nos.84 4 on board the vessel M/V Lorcon IV. Inc. The extent of the loss and/or damage has not yet been determined but apparently all bundles are corroded. loaded 581 bundles of ERW black steel pipes worth US$137. a domestic corporation. 1987.J. T-3 which arrived at the port of Davao City on December 2. The consignee Sumitomo then hired the services of R. Inc. June 8. which in turn.. respondent Gearbulk. DAV/OAK 1 to 7. Moreover. 1987.S. the pipes were found with rust formation on top and/or at the sides. 11 covering 217 bundles of steel pipes to be discharged at Vancouver. respondent Philippine Transmarine Carriers. GEARBULK.R. 1987." While the cargo was in transit from Davao City to the U. 1988 states: xxx xxx xxx We entered the hold for a close examination of the pipe.A. USA. Inc.A. owned by petitioner Lorenzo Shipping.. Samples of the shipment were tested with a solution of silver nitrate revealing both positive and occasional negative chloride reactions. consignee Sumitomo sent a letter 12 of intent dated December 7. the surveyor noted that the cargo hold of the M/V Lorcon IV was flooded with seawater. We trust that you shall make everything in order. (Transmarine Carriers. On January 17. as in fact. all tension applied metal straps were very heavily rusted. California. respondent Gearbulk loaded the shipment on board its vessel M/V San Mateo Victory. attorney's fees and costs of suit. INC. CV No. vs. CHUBB and SONS. Mayer Steel Pipe Corporation of Binondo. 9 After the survey. was the carrier of 581 bundles of black steel pipes. Inc. Ltd. DAV/SEA 1 to 6.] LORENZO SHIPPING CORP. The facts are as follows: On November 21. Inc. 2000 Decision 1 in CA-G. for shipment to Davao City.. respondents. 13 dated January 28. Sumitomo Corporation of San Francisco. 61334 and March 28. xxx xxx xxx . 1987. Petitioner Lorenzo Shipping issued a clean bill of lading designated as Bill of Lading No. 7 It discovered seawater in the hatch of M/V Lorcon IV. Washington. Toplis and Harding. Please find herewith a copy of the survey report which we had arranged for after unloading of our cargo from your vessel in Davao. J p: On appeal is the Court of Appeals' August 14. T-3 5 for the account of the consignee. California. Del Pan's Survey Report 8 dated December 4. Ltd. and PHILIPPINE TRANSMARINE CARRIERS.. 1998 Decision 3 of the Regional Trial Court of Manila which found petitioner liable to pay respondent Chubb and Sons. Respondent Transmarine Carriers received the subject shipment which was discharged on December 4. The survey report.
for lack of merit.It should be noted that subject bills of lading bore the following remarks as to conditions of goods: "ALL UNITS HEAVILY RUSTED. Hence. validly made a claim for damages against Lorenzo Shipping within the period prescribed by the Code of Commerce. It is therefore estopped from litigating the issue on appeal especially because it involves a question of fact which this Court cannot resolve. (2)whether petitioner Lorenzo Shipping is negligent in carrying the subject cargo. The dispositive portion of its Decision states: WHEREFORE. 18 Petitioner Lorenzo Shipping appealed to the Court of Appeals insisting that: (a) respondent Chubb and Sons does not have capacity to sue before Philippine courts.00. moisture and other marine elements. (b) petitioner Lorenzo Shipping was not negligent in the performance of its obligations as carrier of the goods. and. are to share liability for their separate negligence in handling the cargo. as well as the two defendants' cross-claim against Defendant Lorenzo Shipping Corporation. 1989. the consignee Sumitomo. and. the attorney's fees in the sum of P50. 2001. which describes conditions of the cargo as sighted aboard the vessel "LORCON IV. (d) prescription. 1988. 133 of the Corporation Code applies to respondent Chubb." Attached herein is a copy of a survey report issued by Del Pan Surveyors of Davao City. Since Sumitomo does not have capacity to sue. U. has the right to institute this action. after paying the latter's policy claim. December 4.00 or its equivalent in Philippine peso at the current rate of exchange with interest thereon at the legal rate from the date of the institution of this case until fully paid. 2000. Philippines. It contends that because the respondent Chubb and Sons is an insurance company. Petitioner Lorenzo Shipping filed its answer with counterclaim on February 28. whether or not Gearbulk and Transmarine. Gearbulk. has no capacity to sue before Philippine courts. and. The Court of Appeals likewise denied petitioner Lorenzo Shipping's Motion for Reconsideration 19 dated September 3. Respondent Chubb and Sons. it was merely subrogated to the rights of its insured. docketed as Civil Case No. Inc." prior to being laden on board the vessel "SAN MATEO VICTORY" in Davao. and is not suing on an isolated transaction. (e) the law of the country of destination. Inc. petitioner failed to raise the defense that Sumitomo is a foreign corporation doing business in the Philippines without a license. the judgment is hereby rendered ordering Defendant Lorenzo Shipping Corporation to pay the plaintiff the sum of US$104. respondents Gearbulk and Transmarine filed their answer 17 with counterclaim and cross-claim against petitioner Lorenzo Shipping denying liability on the following grounds: (a) respondent Chubb and Sons. alleging. and amended it on May 24. and the two defendants' counterclaim. The Regional Trial Court ruled in favor of the respondent Chubb and Sons. the consignee Sumitomo rejected the damaged steel pipes and declared them unfit for the purpose they were intended. The appellate court denied the petition and affirmed the decision of the trial court. Secondly. (c) that the goods were improperly packed. laches.00. we resolve the following issues: (1)whether respondent Chubb and Sons has capacity to sue before the Philippine courts. neither the subrogee-respondent Chubb and Sons could sue before Philippine courts.151. In the first place. (3)Whether or not a delivery cargo receipt without a notation on it of damages or defects in the shipment. . 14 It then filed a marine insurance claim with respondent Chubb and Sons. We disagree with petitioner. as common carriers. for lack of factual basis. against respondents Lorenzo Shipping. cAaDCE Petitioner argues that respondent Chubb and Sons is a foreign corporation not licensed to do business in the Philippines. finding that: (1) respondent Chubb and Sons. 1989. and Transmarine." prior to and subsequent to discharge at Davao City. 88-47096. Sumitomo. (b) that it made a disclaimer in the bill of lading. Philippines dated. and dismissing the plaintiff's complaint against defendants Gearbulk. is a foreign corporation doing business in the Philippines without a license and does not have capacity to sue before Philippine courts. and that it is suing under an isolated transaction. governs the contract of carriage. (2)Whether or not Sumitomo.. which created a prima facie presumption that the carrier received the shipment in good condition. (d) damage to the steel pipes was not due to their fault or negligence. 1987 at Davao City. (4)Assuming that Lorenzo Shipping was guilty of some lapses in transporting the steel pipes.000. On February 21. in a Resolution 20 promulgated on March 28.A. Evidently. and. has been overcome by convincing evidence..151. (2) petitioner Lorenzo Shipping was negligent in the performance of its obligations as a carrier. Petitioner Lorenzo Shipping submits the following issues for resolution: (1)Whether or not the prohibition provided under Art. plus the costs of the suit. 1989. this petition. Due to its heavily rusted condition. it being a mere subrogee or assignee of the rights of Sumitomo Corporation. likewise a foreign corporation admittedly doing business in the Philippines without a license. and.S. (b) the action should be dismissed on the ground of forum non conveniens. 15 On December 2. Inc. It denied liability. and Philippine Transmarine Carriers. among others: (a) that rust easily forms on steel by mere exposure to air. Inc. and extinguishment of obligations and actions had set in. alleged that it is not doing business in the Philippines. however. the aforementioned rust damages were apparently sustained while the shipment was in the custody of the vessel "LORCON IV. 21 In brief.. Ltd. (c) damage to the steel pipes was due to the inherent nature of the goods or to the insufficiency of packing thereof. which the latter settled in the amount of US$104. petitioner then concludes that. Inc. Inc. respondent Chubb and Sons. filed a complaint 16 for collection of a sum of money. there being no showing that the plaintiff had filed this case against said defendants in bad faith. Inc. Chubb's predecessor-in-interest.
those of the person for whom he is substituted — he cannot acquire any claim. On the contrary. The phrase "isolated transaction" has a definite and fixed meaning. A foreign corporation needs no license to sue before Philippine courts on an isolated transaction. Likewise. when the insurer succeeds to the rights of the insured. i. Capacity to sue is a right personal to its holder. incompetence. Subrogation is the substitution of one person in the place of another with reference to a lawful claim or right. It is conferred by law and not by the parties. hence three transactions were challenged as void on the ground that the three American corporations which are parties to the contracts are not licensed to do business in the Philippines. The person substituted (the insurer) will succeed to all the rights of the creditor (the insured). or its successors or assigns. 33 three contracts. and which amount it now seeks to recover from petitioner Lorenzo Shipping which caused the loss sustained by the insured Sumitomo. are covered by two (2) bills of lading. The execution of the policy is a single act. which bars a foreign corporation from access to our courts. but is suing only under an isolated transaction. remedies or securities pertaining to the payment respondent insurer made for the loss which was sustained by the insured Sumitomo and covered by the contract of insurance. two transactions. pertain only to the payment it made to the insured Sumitomo as stipulated in the insurance contract between them. hence. suit or proceeding in any court or administrative agency of the Philippines. this Court held that: 32 . insanity.] In the case of Gonzales vs. The number and quantity are merely evidence of such intention. . 22 The principle covers the situation under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. from seeking redress in the Philippine courts. but to prevent it from acquiring a domicile for the purpose of business without taking the steps necessary to render it amenable to suit in the local courts . lack of juridical personality. or intervening in Philippine courts.e. but more upon the nature and character of the transactions. Whether a foreign corporation is "doing business" does not necessarily depend upon the frequency of its transactions. Inc. Transactions which are occasional. the rights inherited by the insurer. Intermediate Appellate Court 31 that: . . the intention of an entity to continue the body of its business in the country. has also no capacity to sue in our jurisdiction. covering the damaged steel pipes. he does so only in relation to the debt. having reference to the debt due the latter. an isolated transaction. vs. the implication of the law (being) that it was never the purpose of the legislature to exclude a foreign corporation which happens to obtain an isolated order for business for the Philippines. under the one (1) marine insurance policy issued in favor of the consignee Sumitomo covering the damaged steel pipes. but not greater than. It refers to a plaintiff's general disability to sue. 28 Respondent Chubb and Sons who was plaintiff in the trial court does not possess any of these disabilities. This Court held that "one single or isolated business transaction does not constitute doing business within the meaning of the law. The law on corporations is clear in depriving foreign corporations which are doing business in the Philippines without a license from bringing or maintaining actions before. a subrogee cannot succeed to a right not possessed by the subrogor. We reject the claim of petitioner Lorenzo Shipping that respondent Chubb and Sons is not suing under an isolated transaction because the steel pipes. Ltd. they do not constitute doing business in the Philippines. et al. respondent Chubb and Sons has satisfactorily proven its capacity to sue. However. a transaction or series of transactions set apart from the common business of a foreign enterprise in the sense that there is no intention to engage in a progressive pursuit of the purpose and object of the business organization. . Elser & Company: 30 The object of the statute (Secs. subject of this case. Raquiza. but more importantly. The law does not prohibit foreign corporations from performing single acts of business. Art. [Emphasis supplied. 29 As held by this Court in the case of Marshall-Wells Company vs. respondent Chubb and Sons. 133 of the Corporation Code states: Doing business without a license. incidental. such as on account of minority. after having shown that it is not doing business in the Philippines. — No foreign corporation transacting business in the Philippines without a license. it does not follow that respondent. for it is not the lack of the prescribed license (to do business in the Philippines) but doing business without such license. but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.e. including its remedies or securities. and he may use all means which the creditor could employ to enforce payment. . This Court has not construed the term "isolated transaction" to literally mean "one" or a mere single act. The private respondent may sue in the Philippine courts upon the marine insurance policies issued by it abroad to cover international-bound cargoes shipped by a Philippine carrier. vs. or does not have the necessary qualification to appear in the case. .. The capacity to sue of respondent Chubb and Sons could not perchance belong to the group of rights. or any other disqualifications of a party. 27 In the instant case. Court of Appeals. 68 and 69. . Corporation Law) was not to prevent the foreign corporation from performing single acts. i. Lack of legal capacity to sue means that the plaintiff is not in the exercise of his civil rights. In Eriks Pte. What is determinative of "doing business" is not really the number or the quantity of the transactions.. Where the three transactions indicate no intent by the foreign corporation to engage in a continuity of transactions. and casual — not of a character to indicate a purpose to engage in business — do not constitute the doing or engaging in business as contemplated by law. this Court ruled in Universal Shipping Lines. The stubborn fact remains that these two (2) bills of lading spawned from the single marine insurance policy that respondent Chubb and Sons issued in favor of the consignee Sumitomo. as subrogee. security. or remedy the subrogor did not have. even if it has no license to do business in this country. 23 It contemplates full substitution such that it places the party subrogated in the shoes of the creditor. shall be permitted to maintain or intervene in any action. so that he who is substituted succeeds to the rights of the other in relation to a debt or claim. 26 A subrogee in effect steps into the shoes of the insured and can recover only if insured likewise could have recovered. or does not have the character or representation he claims. 24 The rights to which the subrogee succeeds are the same as." . 25 In other words.assuming arguendo that Sumitomo cannot sue in the Philippines.
the negligence of petitioner was sufficiently established. . respondent Gearbulk." R. or transportation charges have been paid. 366 of the Code of Commerce within which claims must be presented does not begin to run until the consignee has received such possession of the merchandise that he may exercise over it the ordinary control pertinent to ownership. Petitioner Lorenzo Shipping. . petitioner Lorenzo Shipping did not even attempt to present any contrary evidence. M/V Lorcon IV of petitioner Lorenzo Shipping received the steel pipes in good order and condition. 51 In other words. the claim against the carrier for damage or average. and with several holes at different places. provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of such package. thereby exposing the cargo to sea water. not only did the legal presumption of negligence attach to petitioner Lorenzo Shipping upon the occurrence of damage to the cargo. likewise observed the presence of holes at the deck of M/V Lorcon IV. reaching up to three (3) inches deep. and has not physically inspected the same at the time the shipment was discharged from M/V Lorcon IV in Davao City. and the tank top was rusty. R. in which case the claim shall be admitted only at the time of the receipt. itself. Ltd. which payment covers the loss in full. we find no merit to the contention of respondents Gearbulk and Transmarine that American law governs the contract of carriage because the U. is subrogated to the insured's claims arising from such loss. Petitioner Lorenzo Shipping failed to keep its vessel in seaworthy condition. consignee Sumitomo has not received possession of the cargo. T-3 which reads: 50 NOTE:No claim for damage or loss shall be honored twenty-four (24) hours after delivery. Hence. may be made. which may be found therein upon the opening of the packages." 41 A clean bill of lading constitutes prima facie evidence of the receipt by the carrier of the goods as therein described. Operations Manager of respondent Transmarine Carriers. there is evidence that the goods were packed in a superior condition. which Toplis and Harding employed. issued Bills of Lading Nos. DAV/SEA 1 to 6 covering the entire shipment. Del Pan Surveyors found that the cargo hold of the M/V Lorcon IV was flooded with seawater. In the case at bar. 2001 are hereby AFFIRMED. no plastic on the ends . Thus. To be sure." 49 On the issue of prescription of respondent Chubb and Sons' claim for damages. What is clear from the evidence is that the consignee received and took possession of the entire shipment only when the latter reached the United States' shore. aside from being a contract 38 and a receipt. Finally. and the principal.. Section 2 of the 1997 Rules of Civil Procedure defines a real party in interest as one who is entitled to the avails of any judgment rendered in a suit. thinning. Respondent Transmarine Carriers as agent of respondent Gearbulk. respondent insurer Chubb and Sons. The subrogated insurer becomes the owner of the claim and.J. as against petitioner Lorenzo Shipping. On the second issue. or who stands to be benefited or injured by it. 43 In the case at bar. it is clear that respondent insurer was suing on its own behalf in order to enforce its right of subrogation. by virtue of the right of subrogation provided for in the policy of insurance. 47 Significantly. There can be no other conclusion than that the cargo was damaged while on board the vessel of petitioner Lorenzo Shipping.R. woven plastic. there must be delivery of the cargo by the carrier to the consignee at the place of destination.J. thus possesses the right to enforce the claim and the significant interest in the litigation. After the periods mentioned have elapsed. Petitioner Lorenzo Shipping failed to establish that an authorized agent of the consignee Sumitomo received the cargo at Sasa Wharf in Davao City. 2000 and its Resolution dated March 28. . And only then did the 24-hour prescriptive period start to run. The silver nitrate test. 52 In the case at bar.A. marine surveyor of Toplis and Harding. the insurersubrogee is the only real party in interest and must sue in its own name 35 to enforce its right of subrogation against the third party which caused the loss. . 45 The unpatched holes allowed seawater. which received the cargo. 366 of the Code of Commerce states: Within the twenty-four hours following the receipt of the merchandise. 39 is also a symbol 40 of the goods covered by it. Art. and that the damage was due to the latter's negligence. 366 C Com. 44 More so. IN VIEW THEREOF.S.) The twenty-four-hour period prescribed by Art. Rule 3. further verified this conclusion. Whereas typically they would not go to that bother . the place of destination is Davao City. A bill of lading which has no notation of any defect or damage in the goods is called a "clean bill of lading. the petition is DENIED. to enter the flooring of the hatch of the vessel where the steel pipes were stowed. He testified that the shipment had superior packing "because the ends were covered with plastic. they come in with no plastic on the ends. no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. Art. carried the goods from Manila to Davao City. Ltd. Del Pan Surveyors found the tank top of M/V Lorcon IV to be "rusty. Petitioner Lorenzo Shipping issued clean bills of lading covering the subject shipment. Graff. 61334 dated August 14. are not the authorized agents as contemplated by law. we rule that it has not yet prescribed at the time it was made. thinning and perforated. 48 It merely alleged that the: (1) packaging of the goods was defective." Witness Captain Pablo Fernan. Ltd. (Ref. Where an insurance company as subrogee pays the insured of the entire loss it suffered.Furthermore. Only then was delivery made and completed. Philippine law applies. . SO ORDERED. M/V San Mateo Victory of respondent Gearbulk. DAV/OAK 1 to 7 and Nos. evidenced by the clean bills of lading it issued. 37 In the case at bar. subject of this case. we affirm the findings of the lower courts that petitioner Lorenzo Shipping was negligent in its care and custody of the consignee's goods. is the country of destination. all of which were marked "ALL UNITS HEAVILY RUSTED. 46 The contact with sea water caused the steel pipes to rust. They might just be banded. 42 The case law teaches us that mere proof of delivery of goods in good order to a carrier and the subsequent arrival in damaged condition at the place of destination raises a prima facie case against the carrier. When the cargo was unloaded from petitioner Lorenzo Shipping's vessel at the Sasa Wharf in Davao City. Typically. were in good condition when they were loaded at the port of origin (Manila) on board petitioner Lorenzo Shipping's M/V Lorcon IV en route to Davao City. A bill of lading. submerging the latter in sea water. John M. 34 is the real party in interest in the action for damages before the court a quo against the carrier Lorenzo Shipping to recover for the loss sustained by its insured. through its M/V Lorcon IV. which carried the goods from Davao City to the United States. 36 It then. The Decision of the Court of Appeals in CA-G. Costs against petitioner. examined the condition of the cargo on board the vessel San Mateo Victory. The steel pipes. Neither did it offer any proof to establish any of the causes that would exempt it from liability for such damage. A somewhat similar provision is embodied in the Bill of Lading No. the steel pipes were rusted all over. CV No. This is because the insurer in such case having fully compensated its insured. thus entitled to the entire fruits of the action. and (2) claim for damages has prescribed.
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