Transportation PDF

G.R. No. 125948 http://www.lawphil.net/judjuris/juri1998/dec1998/gr_125948_1998.
html
Today is Tuesday, December 12, 2017
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,

vs.
! " ! # ! $% & $% &' $ ( & &# $&
) * J.:
This petition for review on certiorari assails the Decision of the Court of Appeals dated November 29, 1995,
in CA-G.R. SP No. 36801, affirming the decision of the Regional Trial Court of Batangas City, Branch 84, in
Civil Case No. 4293, which dismissed petitioners' complaint for a business tax refund imposed by the City
of Batangas.
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install
and operate oil pipelines. The original pipeline concession was granted in 1967+ , -% $
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G.R. No. 125948 http://www.lawphil.net/judjuris/juri1998/dec1998/gr_125948_1998.html
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Crisostomo vs CA : 138334 : August 25, 2003 : J. Ynares-Santiago : Firs... http://sc.judiciary.gov.ph/jurisprudence/2003/aug2003/138334.htm
FIRST DIVISION
[G.R. No. 138334. August 25, 2003]
ESTELA L. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and

CARAVAN TRAVEL & TOURS INTERNATIONAL, INC., respondents.
DECISION
YNARES-SANTIAGO, J.:
In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent Caravan
Travel and Tours International, Inc. to arrange and facilitate her booking, ticketing and
accommodation in a tour dubbed Jewels of Europe. The package tour included the countries of
England, Holland, Germany, Austria, Liechstenstein, 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 because petitioners niece, Meriam Menor, was respondent companys
ticketing manager.
Pursuant to said contract, Menor went to her aunts residence on June 12, 1991 a Wednesday
to deliver petitioners travel documents and plane tickets. Petitioner, in turn, gave Menor the full
payment for the package tour. Menor then told her to be at the Ninoy Aquino International Airport
(NAIA) on Saturday, two hours before her flight on board British Airways.
Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to
take the flight for the first leg of her journey from Manila to Hongkong. To petitioners dismay, she
discovered that the flight she was supposed to take had already departed the previous day. She
learned that her plane ticket was for the flight scheduled on June 14, 1991. She thus called up
Menor to complain.
Subsequently, Menor prevailed upon petitioner to take another tour the British Pageant which
included England, Scotland and Wales in its itinerary. For this tour package, petitioner was asked
anew to pay US$785.00 or P20,881.00 (at the then prevailing exchange rate of P26.60). She gave
respondent US$300 or P7,980.00 as partial payment and commenced the trip in July 1991.
Upon petitioners return from Europe, she demanded from respondent the 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 tour. Despite several demands, respondent
company refused to reimburse the amount, contending that the same was non-refundable.[1]
Petitioner was thus constrained to file a complaint against respondent for breach of contract of
carriage and damages, which was docketed as Civil Case No. 92-133 and raffled to Branch 59 of
the Regional Trial Court of Makati City.
In her complaint,[2] petitioner alleged that her failure to join Jewels of Europe was due to
respondents fault since it did not clearly indicate the departure date on the plane ticket.
Respondent was also negligent in informing her of the wrong flight schedule through its employee
Menor. She insisted that the British Pageant was merely a substitute for the Jewels of Europe tour,
such that the cost of the former should be properly set-off against the sum paid for the latter.
1 of 7 12/12/2017, 3:20 PM
For its part, respondent company, through its Operations Manager, Concepcion Chipeco,
denied responsibility for petitioners failure to join the first tour. Chipeco 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 two days ahead of the scheduled trip. Petitioner had
only herself to blame for missing the flight, as she did not bother to read or confirm her flight
schedule as printed on the ticket.
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 Singapore, Lotus Travel Ltd.,
which had already billed the same even if petitioner did not join the tour. Lotus European tour
organizer, Insight International Tours Ltd., determines the cost of a package tour based on a
minimum number of projected participants. For this reason, it is accepted industry practice to
disallow refund for individuals who failed to take a booked tour.[3]
Lastly, respondent maintained that the British Pageant was not a substitute for the package
tour that petitioner missed. This tour was independently procured by petitioner after realizing that
she made a mistake in missing her flight for Jewels of Europe. Petitioner was allowed to make a
partial payment of only US$300.00 for the 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 P12,901.00 for the British Pageant package tour.
After due proceedings, the trial court rendered a decision,[4] the dispositive part of which reads:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty Three Thousand
Nine Hundred Eighty Nine Pesos and Forty Three Centavos (P53,989.43) with legal interest
thereon at the rate of twelve percent (12%) per annum starting January 16, 1992, the date
when the complaint was filed;
2. Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00) Pesos as and
for reasonable attorneys fees;
3. Dismissing the defendants counterclaim, for lack of merit; and
4. With costs against the defendant.
SO ORDERED.[5]
The trial court held that respondent was negligent in erroneously advising petitioner of her
departure date through its employee, Menor, who was not presented as witness to rebut petitioners
testimony. However, petitioner should have verified the exact date and time of departure by looking
at her ticket and should have simply not relied on Menors verbal representation. The trial court thus
declared that petitioner was guilty of contributory negligence and accordingly, deducted 10% from
the amount being claimed as refund.
Respondent appealed to the Court of Appeals, which likewise found both parties to 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 any form of damages. Petitioner also forfeited her right to
the Jewels of Europe tour 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:
2 of 7 12/12/2017, 3:20 PM
WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26, 1995 is
hereby REVERSED and SET ASIDE. A new judgment is hereby 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 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 PERCENT (12%) interest per annum shall be additionally
imposed on the total obligation until payment thereof is satisfied. The award of attorneys fees is DELETED.
Costs against the plaintiff-appellee.
SO ORDERED.[6]
Upon denial of her motion for reconsideration,[7] petitioner filed the instant petition under Rule
45 on the following grounds:
I
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 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 obliged to observe utmost care and extra-ordinary diligence
which is higher in degree than the ordinary diligence required of the passenger. Thus, even if the petitioner
and private respondent were both negligent, the petitioner cannot be considered to be equally, or worse, more
guilty than the private respondent. At best, petitioners negligence is only contributory while the private
respondent [is guilty] of gross negligence making the principle of pari delicto inapplicable in the case;
II
The Honorable Court of Appeals also erred in not ruling that the Jewels of Europe tour was not indivisible
and the amount paid therefor refundable;
III
The Honorable Court erred in not granting to the petitioner the consequential damages due her as a result of
breach of contract of carriage.[8]
Petitioner contends that respondent did not observe the standard of care required of a common
carrier when it informed her wrongly of the flight schedule. She could not 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 negligent at all, the same is merely contributory and not
the proximate cause of the damage she suffered. Her loss could only be attributed to respondent
as it was the direct consequence of its employees gross negligence.
Petitioners contention has no merit.
By definition, a contract of carriage or transportation is one whereby a certain person or
association of persons obligate themselves to transport persons, things, or news from one place to
another for a fixed price.[9] Such person or association of persons are regarded as carriers and are
classified as private or special carriers and common or public carriers.[10] A common carrier is
defined under Article 1732 of the Civil Code as persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water or
air, for compensation, offering their services to the public.
3 of 7 12/12/2017, 3:20 PM
It is obvious from the above definition that respondent is not an entity engaged in the business
of transporting either passengers or goods and is therefore, neither a private nor a common carrier.
Respondent did not undertake to transport petitioner from one place to another since its covenant
with its customers is simply to make travel arrangements in their behalf. Respondents services as a
travel agency include procuring tickets and facilitating travel permits or visas as well as booking
customers for tours.
While petitioner concededly bought her plane ticket through the efforts of respondent 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 contracted for her carriage to Europe.
Respondents obligation to petitioner in this regard was simply to see to it that petitioner was
properly booked with the airline for the appointed date and time. Her transport to the place of
destination, meanwhile, pertained directly to the airline.
The object of petitioners contractual relation with respondent is the latters service of arranging
and facilitating petitioners booking, ticketing and accommodation in the 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 case was an ordinary one for services and not one of
carriage. Petitioners submission is premised on a wrong assumption.
The nature of the contractual relation between petitioner and respondent is determinative of the
degree of care required in the performance of the latters obligation under the contract. For reasons
of public policy, a common carrier in a 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 due regard for all the circumstances.[11] As earlier stated, however, respondent is not a
common carrier but a travel agency. It is thus not bound under the law to observe extraordinary
diligence in the performance of its obligation, as petitioner claims.
Since the contract between the parties is an ordinary one for services, the standard of care
required of respondent is that of a good father of a family under Article 1173 of the Civil Code.[12]
This connotes reasonable care consistent with that which an ordinarily prudent person would have
observed when confronted with a similar situation. The test to determine whether negligence
attended the performance of an 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 situation? If not, then he is guilty of negligence.[13]
In the case at bar, the lower court found Menor negligent when she allegedly informed
petitioner of the wrong day of departure. Petitioners testimony was accepted as indubitable
evidence of Menors alleged negligent act since respondent did not call Menor to the witness stand
to refute the allegation. The lower court applied the presumption under Rule 131, Section 3 (e)[14] of
the Rules of Court that evidence willfully suppressed would be adverse if produced and thus
considered petitioners uncontradicted testimony to be sufficient proof of her claim.
On the other hand, respondent has consistently denied that Menor was negligent and
maintains that petitioners assertion is belied by the evidence on record. The date and time of
departure was legibly written on the plane ticket and the travel papers were delivered two days in
advance precisely so that petitioner could prepare for the trip. It performed all its obligations to
enable petitioner to join the tour and exercised due diligence in its dealings with the latter.
We agree with respondent.
Respondents failure to present Menor as witness to rebut petitioners testimony could not give
rise to an inference unfavorable to the former. Menor was already working in France at the time of
4 of 7 12/12/2017, 3:20 PM
the filing of the complaint,[15] thereby making it physically impossible for respondent to present her
as a witness. Then too, even if it were possible for respondent to secure Menors testimony, the
presumption under Rule 131, Section 3(e) would still not apply. The opportunity and possibility for
obtaining Menors testimony belonged to both parties, considering that Menor was not just
respondents employee, but also petitioners niece. It was thus error for the lower court to invoke the
presumption that respondent willfully suppressed evidence under Rule 131, Section 3(e). Said
presumption would logically be inoperative if the evidence is not intentionally omitted but is simply
unavailable, or when the same could have been obtained by both parties.[16]
In sum, we do not agree with the finding of the lower court that Menors negligence concurred
with the negligence of petitioner and resultantly caused damage to the latter. Menors negligence
was not sufficiently proved, considering that the only evidence presented on this score was
petitioners uncorroborated narration of the events. It is well-settled that the party alleging a fact has
the burden of proving it and a mere allegation cannot take the place of evidence.[17] If the plaintiff,
upon whom rests 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 exception or
defense.[18]
Contrary to petitioners claim, the evidence on record shows that respondent exercised due
diligence in performing its obligations under the contract and followed standard procedure in
rendering its services to petitioner. As correctly observed by the lower court, the plane ticket[19]
issued to petitioner clearly reflected the departure date and time, contrary to petitioners contention.
The travel documents, consisting of the tour itinerary, vouchers and instructions, were likewise
delivered to petitioner two days prior to the trip. Respondent also properly booked petitioner for the
tour, prepared the necessary documents and procured the plane tickets. It arranged petitioners
hotel accommodation as well as food, land transfers and sightseeing 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 her concerns. This undoubtedly would require that she at least read the
documents in order to assure herself of the important details regarding the trip.
The negligence of the obligor in the performance of the obligation renders him liable for
damages for the resulting loss suffered by the obligee. Fault or negligence of the obligor consists in
his failure to exercise due care and prudence in the performance of the obligation as the nature of
the obligation so demands.[20] There is no fixed standard of diligence applicable to each and every
contractual obligation and each case must be determined upon its particular facts. The degree of
diligence required depends on the circumstances of the specific obligation and whether one has
been negligent is a question of fact that is to be determined after taking into account the particulars
of each case.[21]
The lower court declared that respondents employee was negligent. This factual finding,
however, is not supported by the evidence on record. While factual findings below are generally
conclusive upon this court, the rule is subject to certain exceptions, as when the trial court
overlooked, misunderstood, or misapplied some facts or circumstances of weight and substance
which will affect the result of the case.[22]
In the case at bar, the evidence on record shows that respondent company performed its duty
diligently and did not commit any contractual breach. Hence, petitioner cannot recover and must
5 of 7 12/12/2017, 3:20 PM
bear her own damage.

WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of
Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is ordered to pay
respondent the amount of P12,901.00 representing the balance of the price of the British Pageant
Package Tour, with legal interest thereon at the rate of 6% per 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 12% per annum shall be imposed until the obligation is fully settled, this
interim period being deemed to be by then an equivalent to a forbearance of credit.[23]
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.
[1] TSN, March 4, 1993, pp. 4-6.

[2] RTC Records, p. 1.
[3] TSN, August 30, 1994, pp. 6-9.
[4] Rollo, pp. 38-43.
[5] Id. at 43; penned by Judge Lucia Violago Isnani.
[6] Id. at 36.
[7] Id. at 37.
[8] Id. at 15.
[9] Commentaries and Jurisprudence on the Commercial Laws of the Philippines, Vol. 4 (1993 Edition), Aguedo F.
Agbayani, p. 1, citing 1 Blanco 640.
[10] Id. at 4.
[11] Civil Code of the Philippines, Article 1755.
[12] Article 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place.
When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of
a good father of a family shall be required.
[13] Jarco Marketing Corporation v. Court of Appeals, 378 Phil. 991, 1003 (1999), citing Picart v. Smith, 37 Phil. 809
(1918).
[14] This rule states:
SEC. 3. Disputable presumptions. The following presumptions are satisfactory if uncontradicted, but may be
contradicted and overcome by other evidence:
xxxxxxxxx
(e) That evidence willfully suppressed would be adverse if produced;
xxxxxxxxx
[15] Supra, note 3 at 10.
[16] The Revised Rules of Court in the Philippines, Vol. VII, Part II (1999 Edition) V. Francisco, p. 92.
6 of 7 12/12/2017, 3:20 PM
[17] Pimentel v. Court of Appeals, 307 SCRA 38.

[18] Castilex Industrial Corporation v. Vasquez, Jr., 378 Phil. 1009, 1018 (1999), citing Belen v. Belen, 13 Phil. 202, 206
(1909), cited in Martin v. Court of Appeals, G.R. No. 82248, 205 SCRA 591 (1992).
[19] Supra, note 2 at 60 & 94.
[20] Bayne Adjusters and Surveyors, Inc. v. Court of Appeals, G.R. No. 116332, 323 SCRA 231 (2000), citing Articles
1170, 1172-73, Civil Code; Southeastern College, Inc. v. Court of Appeals, 354 Phil 434 (1998).
[21] Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. IV (1999 Edition), Arturo M. Tolentino, p.
124.
[22] Supra, note 13, citing Borillo v. CA, G.R. No. 55691, 209 SCRA 130 (1992); Mckee v. Intermediate Appellate Court,
G.R. No. 68102, 211 SCRA 517 (1992); and Salvador v. Court of Appeals, 313 Phil. 36 (1995).
[23] Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, 12 July 1994, 234 SCRA 78, 97.
7 of 7 12/12/2017, 3:20 PM
FGU Insurance Corp vs GP Sarmiento Trucking Corp : 141910 : August ... http://sc.judiciary.gov.ph/jurisprudence/2002/aug2002/141910.htm
FIRST DIVISION
[G.R. No. 141910. August 6, 2002]
FGU INSURANCE CORPORATION, petitioner, vs. G.P. SARMIENTO TRUCKING

CORPORATION and LAMBERT M. EROLES, respondents.
DECISION
VITUG, J.:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30)
units of Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles,
from the plant site of Concepcion Industries, Inc., along South Superhighway in Alabang, Metro
Manila, to the Central Luzon Appliances in Dagupan City. While the truck was traversing the north
diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an
unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries,
Inc., the value of the covered cargoes in the sum of P204,450.00. FGU, in turn, being the subrogee
of the rights and interests of Concepcion Industries, Inc., sought reimbursement of the amount it
had paid to the latter from GPS. Since the trucking company failed to heed the claim, FGU filed a
complaint for damages and breach of contract of carriage against GPS and its driver Lambert
Eroles with the Regional Trial Court, Branch 66, of Makati City. In its answer, respondents asserted
that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was not
so engaged in business as a common carrier. Respondents further claimed that the cause of
damage was purely accidental.
The issues having thus been joined, FGU presented its evidence, establishing the extent of
damage to the cargoes and the amount it had paid to the assured. GPS, instead of submitting its
evidence, filed with leave of court a motion to dismiss the complaint by way of demurrer to
evidence on the ground that petitioner had failed to prove that it was a common carrier.
The trial court, in its order of 30 April 1996,[1] granted the motion to dismiss, explaining thusly:
Under Section 1 of Rule 131 of the Rules of Court, it is provided that Each party must prove his own
affirmative allegation, xxx.
In the instant case, plaintiff did not present any single evidence that would prove that defendant is a common
carrier.
xxxxxxxxx
Accordingly, the application of the law on common carriers is not warranted and the presumption of fault or
negligence on the part of a common carrier in case of loss, damage or deterioration of goods during transport
under 1735 of the Civil Code is not availing.
Thus, the laws governing the contract between the owner of the cargo to whom the plaintiff was subrogated
1 of 5 12/12/2017, 2:48 PM
and the owner of the vehicle which transports the cargo are the laws on obligation and contract of the Civil
Code as well as the law on quasi delicts.
Under the law on obligation and contract, negligence or fault is not presumed. The law on quasi delict
provides for some presumption of negligence but only upon the attendance of some circumstances. Thus,
Article 2185 provides:
Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any traffic regulation.
Evidence for the plaintiff shows no proof that defendant was violating any traffic regulation. Hence, the
presumption of negligence is not obtaining.
Considering that plaintiff failed to adduce evidence that defendant is a common carrier and defendants driver
was the one negligent, defendant cannot be made liable for the damages of the subject cargoes.[2]
The subsequent motion for reconsideration having been denied,[3] plaintiff interposed an appeal
to the Court of Appeals, contending that the trial court had erred (a) in holding that the appellee
corporation was not a common carrier defined under the law and existing jurisprudence; and (b) in
dismissing the complaint on a demurrer to evidence.
The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The appellate
court, in its decision of 10 June 1999, [4] discoursed, among other things, that -
"x x x in order for the presumption of negligence provided for under the law governing common carrier
(Article 1735, Civil Code) to arise, the appellant must first prove that the appellee is a common carrier.
Should the appellant fail to prove that the appellee is a common carrier, the presumption would not arise;
consequently, the appellant would have to prove that the carrier was negligent.
"x x x x x x x x x
"Because it is the appellant who insists that the appellees can still be considered as a common carrier, despite
its `limited clientele, (assuming it was really a common carrier), it follows that it (appellant) has the burden of
proving the same. It (plaintiff-appellant) `must establish his case by a preponderance of evidence, which
means that the evidence as a whole adduced by one side is superior to that of the other. (Summa Insurance
Corporation vs. Court of Appeals, 243 SCRA 175). This, unfortunately, the appellant failed to do -- hence,
the dismissal of the plaintiffs complaint by the trial court is justified.
"x x x x x x x x x
"Based on the foregoing disquisitions and considering the circumstances that the appellee trucking
corporation has been `its exclusive contractor, hauler since 1970, defendant has no choice but to comply with
the directive of its principal, the inevitable conclusion is that the appellee is a private carrier.
"x x x x x x x x x
"x x x the lower court correctly ruled that 'the application of the law on common carriers is not warranted and
the presumption of fault or negligence on the part of a common carrier in case of loss, damage or
deterioration of good[s] during transport under [article] 1735 of the Civil Code is not availing.' x x x.
"Finally, We advert to the long established rule that conclusions and findings of fact of a trial court are
2 of 5 12/12/2017, 2:48 PM
entitled to great weight on appeal and should not be disturbed unless for strong and valid reasons."[5]
Petitioner's motion for reconsideration was likewise denied;[6] hence, the instant petition,[7]
raising the following issues:
I
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER AS DEFINED

UNDER THE LAW AND EXISTING JURISPRUDENCE.
II
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE CARRIER, MAY

BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO
TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN ITS PROTECTIVE CUSTODY
AND POSSESSION.
III
WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THE INSTANT CASE.
On the first issue, the Court finds the conclusion of the trial court and the Court of Appeals to
be amply justified. GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc.,
rendering or offering its services to no other individual or entity, cannot be considered a common
carrier. Common carriers are persons, corporations, firms or associations engaged in the business
of carrying or transporting passengers or goods or both, by land, water, or air, for hire or
compensation, offering their services to the public,[8] whether to the public in general or to a limited
clientele in particular, but never on an exclusive basis.[9] The true test of a common carrier is the
carriage of passengers or goods, providing space for those who opt to avail themselves of its
transportation service for a fee.[10] Given accepted standards, GPS scarcely falls within the term
common carrier.
The above conclusion nothwithstanding, GPS cannot escape from liability.
In culpa contractual, upon which the action of petitioner rests as being the subrogee of
Concepcion Industries, Inc., the mere proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief.[11] The law, recognizing the obligatory
force of contracts,[12] will not permit a party to be set free from liability for any kind of
misperformance of the contractual undertaking or a contravention of the tenor thereof.[13] A breach
upon the contract confers upon the injured party a valid cause for recovering that which may have
been lost or suffered. The remedy serves to preserve the interests of the promisee that may include
his expectation interest, which is his interest in having the benefit of his bargain by being put in as
good a position as he would have been in had the contract been performed, or his reliance interest,
which is his interest in being reimbursed for loss caused by reliance on the contract by being put in
as good a position as he would have been in had the contract not been made; or his restitution
interest, which is his interest in having restored to him any benefit that he has conferred on the
other party.[14] Indeed, agreements can accomplish little, either for their makers or for society,
unless they are made the basis for action.[15] The effect of every infraction is to create a new duty,
that is, to make recompense to the one who has been injured by the failure of another to observe
his contractual obligation[16] unless he can show extenuating circumstances, like proof of his
exercise of due diligence (normally that of the diligence of a good father of a family or, exceptionally
by stipulation or by law such as in the case of common carriers, that of extraordinary diligence) or
3 of 5 12/12/2017, 2:48 PM
of the attendance of fortuitous event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence of a contract of carriage between it
and petitioners assured, and admits that the cargoes it has assumed to deliver have been lost or
damaged while in its custody. In such a situation, a default on, or failure of compliance with, the
obligation in this case, the delivery of the goods in its custody to the place of destination - gives rise
to a presumption of lack of care and corresponding liability on the part of the contractual obligor the
burden being on him to establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete proof of his negligence or fault, may not
himself be ordered to pay petitioner. The driver, not being a party to the contract of carriage
between petitioners principal and defendant, may not be held liable under the agreement. A
contract can only bind the parties who have entered into it or their successors who have assumed
their personality or their juridical position.[17] Consonantly with the axiom res inter alios acta aliis
neque nocet prodest, such contract can neither favor nor prejudice a third person. Petitioners civil
action against the driver can only be based on culpa aquiliana, which, unlike culpa contractual,
would require the claimant for damages to prove negligence or fault on the part of the defendant.[18]
A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendant
liable where the thing which caused the injury complained of is shown to be under the latters
management and the accident is such that, in the ordinary course of things, cannot be expected to
happen if those who have its management or control use proper care. It affords reasonable
evidence, in the absence of explanation by the defendant, that the accident arose from want of
care.[19] It is not a rule of substantive law and, as such, it does not create an independent ground of
liability. Instead, it is regarded as a mode of proof, or a mere procedural convenience since it
furnishes a substitute for, and relieves the plaintiff of, the burden of producing specific proof of
negligence. The maxim simply places on the defendant the burden of going forward with the
proof.[20] Resort to the doctrine, however, may be allowed only when (a) the event is of a kind which
does not ordinarily occur in the absence of negligence; (b) other responsible causes, including the
conduct of the plaintiff and third persons, are sufficiently eliminated by the evidence; and (c) the
indicated negligence is within the scope of the defendant's duty to the plaintiff.[21] Thus, it is not
applicable when an unexplained accident may be attributable to one of several causes, for some of
which the defendant could not be responsible.[22]
Res ipsa loquitur generally finds relevance whether or not a contractual relationship exists
between the plaintiff and the defendant, for the inference of negligence arises from the
circumstances and nature of the occurrence and not from the nature of the relation of the parties.[23]
Nevertheless, the requirement that responsible causes other than those due to defendants conduct
must first be eliminated, for the doctrine to apply, should be understood as being confined only to
cases of pure (non-contractual) tort since obviously the presumption of negligence in culpa
contractual, as previously so pointed out, immediately attaches by a failure of the covenant or its
tenor. In the case of the truck driver, whose liability in a civil action is predicated on culpa
acquiliana, while he admittedly can be said to have been in control and management of the vehicle
which figured in the accident, it is not equally shown, however, that the accident could have been
exclusively due to his negligence, a matter that can allow, forthwith, res ipsa loquitur to work
against him.
If a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the
movant shall be deemed to have waived the right to present evidence.[24] Thus, respondent
corporation may no longer offer proof to establish that it has exercised due care in transporting the
cargoes of the assured so as to still warrant a remand of the case to the trial court.
4 of 5 12/12/2017, 2:48 PM
WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66, of Makati
City, and the decision, dated 10 June 1999, of the Court of Appeals, are AFFIRMED only insofar as
respondent Lambert M. Eroles is concerned, but said assailed order of the trial court and decision
of the appellate court are REVERSED as regards G.P. Sarmiento Trucking Corporation which,
instead, is hereby ordered to pay FGU Insurance Corporation the value of the damaged and lost
cargoes in the amount of P204,450.00. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, Ynares-Santiago, and Austria-Martinez, JJ., concur.
[1] Rollo, p. 14.

[2] Rollo, pp. 14-15.
[3] Rollo, p. 17
[4] Rollo, p. 20.
[5] Rollo, pp. 24-28.
[6] Rollo, p. 32.
[7] Rollo, p. 3.
[8] Article 1732, Civil Code.
[9]
Sec. 13[b], Public Service Act as amended; see also Guzman vs. Court of Appeals, G.R. L-47822, 22 December
1988.
[10] National Steel Corporation vs. Court of Appeals, 283 SCRA 45.
[11] Calalas vs. Court of Appeals, 332 SCRA 356; Sabena Belgian World Airlines vs. Court of Appeals, 255 SCRA 38.
[12] See Articles 1159, 1308, 1315, 1356, Civil Code.
[13] Anson on Contracts, 1939, p. 424; 17A Am Jur 2d, p. 728 citing Parks vs. Parks, 187 P2d 145.
[14] Restatement, Second, Contracts, 344.
[15] Fuller and Purdue, The Reliance Interest in Contract Damages, 46 Yale L.J.61 (1936).
[16] Richardson on Contracts, 1951, p. 309.
[17] Article 1311, Civil Code.
[18] Calalas vs. Court of Appeals, supra; See Article 2176, Civil Code.
[19] Africa vs. Caltex (Phils.) Inc., 16 SCRA 448; Layugan vs. Intermediate Appellate Court, 167 SCRA 376.
[20] Ramos vs. Court of Appeals, 321 SCRA 600.
[21]
Sangco, Torts and Damages V.1, 1993, p. 29, citing 58 Am Jur 2d, pp. 56-58. See Ramos vs. Court of Appeals,
supra.
[22] Words and Phrases Vol. 37, p. 483.
[23] 57B Am Jur 2d, p. 496.
[24] Section 1, Rule 35, Rules of Court; Section 1, Rule 33, 1997 Rules of Civil Procedure.
5 of 5 12/12/2017, 2:48 PM
G.R. No. 101503 http://www.lawphil.net/judjuris/juri1993/sep1993/gr_101503_1993.html
Today is Tuesday, December 12, 2017
Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner,

vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA,
respondents.
Gonzales, Sinense, Jimenez & Associates for petitioner.
Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.
BELLOSILLO, J.:
Does a charter-party1 between a shipowner and a charterer transform a common carrier into a private one as to
negate the civil law presumption of negligence in case of loss or damage to its cargo?
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation (MITSUBISHI) of New York,
U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June 1974 aboard
the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai,
Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading No. KP-1 signed
by the master of the vessel and issued on the date of departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform
General Charter2 was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo,
Japan.3 Riders to the aforesaid charter-party starting from par. 16 to 40 were attached to the pre-printed agreement.
Addenda Nos. 1, 2, 3 and 4 to the charter-party were also subsequently entered into on the 18th, 20th, 21st and
27th of May 1974, respectively.
Before loading the fertilizer aboard the vessel, four (4) of her holds4 were all presumably inspected by the charterer's
representative and found fit to take a load of urea in bulk pursuant to par. 16 of the charter-party which reads:
16. . . . At loading port, notice of readiness to be accomplished by certificate from National Cargo
Bureau inspector or substitute appointed by charterers for his account certifying the vessel's readiness
to receive cargo spaces. The vessel's hold to be properly swept, cleaned and dried at the vessel's
expense and the vessel to be presented clean for use in bulk to the satisfaction of the inspector before
daytime commences. (emphasis supplied)
After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the steel
hatches were closed with heavy iron lids, covered with three (3) layers of tarpaulin, then tied with steel bonds. The
hatches remained closed and tightly sealed throughout the entire voyage.5
Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon hatches were opened with the use of
the vessel's boom. Petitioner unloaded the cargo from the holds into its steelbodied dump trucks which were parked
alongside the berth, using metal scoops attached to the ship, pursuant to the terms and conditions of the charter-
partly (which provided for an F.I.O.S. clause).6 The hatches remained open throughout the duration of the
discharge.7
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Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the
consignee's warehouse located some fifty (50) meters from the wharf. Midway to the warehouse, the trucks were
made to pass through a weighing scale where they were individually weighed for the purpose of ascertaining the net
weight of the cargo. The port area was windy, certain portions of the route to the warehouse were sandy and the
weather was variable, raining occasionally while the discharge was in progress.8 The petitioner's warehouse was
made of corrugated galvanized iron (GI) sheets, with an opening at the front where the dump trucks entered and
unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets were placed in-between and alongside the
trucks to contain spillages of the ferilizer.9
It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974 (except July 12th, 14th and 18th).10
A private marine and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to determine
the "outturn" of the cargo shipped, by taking draft readings of the vessel prior to and after discharge. 11 The survey
report submitted by CSCI to the consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of 106.726
M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt. The same results
were contained in a Certificate of Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which showed that
the cargo delivered was indeed short of 94.839 M/T and about 23 M/T were rendered unfit for commerce, having
been polluted with sand, rust and
dirt. 12
Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship Agencies (SSA), the
resident agent of the carrier, KKKK, for P245,969.31 representing the cost of the alleged shortage in the goods
shipped and the diminution in value of that portion said to have been contaminated with dirt. 13
Respondent SSA explained that they were not able to respond to the consignee's claim for payment because,
according to them, what they received was just a request for shortlanded certificate and not a formal claim, and that
this "request" was denied by them because they "had nothing to do with the discharge of the shipment." 14 Hence,
on 18 July 1975, PPI filed an action for damages with the Court of First Instance of Manila. The defendant carrier
argued that the strict public policy governing common carriers does not apply to them because they have become
private carriers by reason of the provisions of the charter-party. The court a quo however sustained the claim of the
plaintiff against the defendant carrier for the value of the goods lost or damaged when it ruled thus: 15
. . . Prescinding from the provision of the law that a common carrier is presumed negligent in case of
loss or damage of the goods it contracts to transport, all that a shipper has to do in a suit to recover for
loss or damage is to show receipt by the carrier of the goods and to delivery by it of less than what it
received. After that, the burden of proving that the loss or damage was due to any of the causes which
exempt him from liability is shipted to the carrier, common or private he may be. Even if the provisions
of the charter-party aforequoted are deemed valid, and the defendants considered private carriers, it
was still incumbent upon them to prove that the shortage or contamination sustained by the cargo is
attributable to the fault or negligence on the part of the shipper or consignee in the loading, stowing,
trimming and discharge of the cargo. This they failed to do. By this omission, coupled with their failure
to destroy the presumption of negligence against them, the defendants are liable (emphasis supplied).
On appeal, respondent Court of Appeals reversed the lower court and absolved the carrier from liability for the value
of the cargo that was lost or damaged. 16 Relying on the 1968 case of Home Insurance Co. v. American Steamship
Agencies, Inc.,17 the appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent KKKK
was a private carrier and not a common carrier by reason of the time charterer-party. Accordingly, the Civil Code
provisions on common carriers which set forth a presumption of negligence do not find application in the case at bar.
Thus —
. . . In the absence of such presumption, it was incumbent upon the plaintiff-appellee to adduce
sufficient evidence to prove the negligence of the defendant carrier as alleged in its complaint. It is an
old and well settled rule that if the plaintiff, upon whom rests the burden of proving his cause of action,
fails to show in a satisfactory manner the facts upon which he bases his claim, the defendant is under
no obligation to prove his exception or defense (Moran, Commentaries on the Rules of Court, Volume
6, p. 2, citing Belen v. Belen, 13 Phil. 202).
But, the record shows that the plaintiff-appellee dismally failed to prove the basis of its cause of action,
i.e. the alleged negligence of defendant carrier. It appears that the plaintiff was under the impression
that it did not have to establish defendant's negligence. Be that as it may, contrary to the trial court's
finding, the record of the instant case discloses ample evidence showing that defendant carrier was not
negligent in performing its obligation . . . 18 (emphasis supplied).
Petitioner PPI appeals to us by way of a petition for review assailing the decision of the Court of Appeals. Petitioner
2 of 8 12/12/2017, 3:04 PM
theorizes that the Home Insurance case has no bearing on the present controversy because the issue raised therein
is the validity of a stipulation in the charter-party delimiting the liability of the shipowner for loss or damage to goods
cause by want of due deligence on its part or that of its manager to make the vessel seaworthy in all respects, and
not whether the presumption of negligence provided under the Civil Code applies only to common carriers and not
to private carriers. 19 Petitioner further argues that since the possession and control of the vessel remain with the
shipowner, absent any stipulation to the contrary, such shipowner should made liable for the negligence of the
captain and crew. In fine, PPI faults the appellate court in not applying the presumption of negligence against
respondent carrier, and instead shifting the onus probandi on the shipper to show want of due deligence on the part
of the carrier, when he was not even at hand to witness what transpired during the entire voyage.
As earlier stated, the primordial issue here is whether a common carrier becomes a private carrier by reason of a
charter-party; in the negative, whether the shipowner in the instant case was able to prove that he had exercised
that degree of diligence required of him under the law.
It is said that etymology is the basis of reliable judicial decisions in commercial cases. This being so, we find it fitting
to first define important terms which are relevant to our discussion.
A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let by the owner
to another person for a specified time or use; 20 a contract of affreightment by which the owner of a ship or other
vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular
voyage, in consideration of the payment of freight; 21 Charter parties are of two types: (a) contract of affreightment
which involves the use of shipping space on vessels leased by the owner in part or as a whole, to carry goods for
others; and, (b) charter by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer
with a transfer to him of its entire command and possession and consequent control over its navigation, including
the master and the crew, who are his servants. Contract of affreightment may either be time charter, wherein the
vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single
voyage. 22 In both cases, the charter-party provides for the hire of vessel only, either for a determinate period of time
or for a single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of the master and
the crew, and defray the expenses for the maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. 23 The definition
extends to carriers either by land, air or water which hold themselves out as ready to engage in carrying goods or
transporting passengers or both for compensation as a public employment and not as a casual occupation. The
distinction between a "common or public carrier" and a "private or special carrier" lies in the character of the
business, such that if the undertaking is a single transaction, not a part of the general business or occupation,
although involving the carriage of goods for a fee, the person or corporation offering such service is a private carrier.
24
Article 1733 of the New Civil Code mandates that common carriers, by reason of the nature of their business, should
observe extraordinary diligence in the vigilance over the goods they carry.25 In the case of private carriers, however,
the exercise of ordinary diligence in the carriage of goods will suffice. Moreover, in the case of loss, destruction or
deterioration of the goods, common carriers are presumed to have been at fault or to have acted negligently, and
the burden of proving otherwise rests on them.26 On the contrary, no such presumption applies to private carriers,
for whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause was
the negligence of the carrier.
It is not disputed that respondent carrier, in the ordinary course of business, operates as a common carrier,
transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V "Sun Plum", the ship
captain, its officers and compliment were under the employ of the shipowner and therefore continued to be under its
direct supervision and control. Hardly then can we charge the charterer, a stranger to the crew and to the ship, with
the duty of caring for his cargo when the charterer did not have any control of the means in doing so. This is evident
in the present case considering that the steering of the ship, the manning of the decks, the determination of the
course of the voyage and other technical incidents of maritime navigation were all consigned to the officers and
crew who were screened, chosen and hired by the shipowner. 27
It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the whole or
portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-
charter or voyage-charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party
is concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship,
although her holds may, for the moment, be the property of the charterer. 28
Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American Steamship Agencies, supra, is
3 of 8 12/12/2017, 3:04 PM
misplaced for the reason that the meat of the controversy therein was the validity of a stipulation in the charter-party
exempting the shipowners from liability for loss due to the negligence of its agent, and not the effects of a special
charter on common carriers. At any rate, the rule in the United States that a ship chartered by a single shipper to
carry special cargo is not a common carrier, 29 does not find application in our jurisdiction, for we have observed that
the growing concern for safety in the transportation of passengers and /or carriage of goods by sea requires a more
exacting interpretation of admiralty laws, more particularly, the rules governing common carriers.
We quote with approval the observations of Raoul Colinvaux, the learned barrister-at-law 30 —
As a matter of principle, it is difficult to find a valid distinction between cases in which a ship is used to
convey the goods of one and of several persons. Where the ship herself is let to a charterer, so that he
takes over the charge and control of her, the case is different; the shipowner is not then a carrier. But
where her services only are let, the same grounds for imposing a strict responsibility exist, whether he
is employed by one or many. The master and the crew are in each case his servants, the freighter in
each case is usually without any representative on board the ship; the same opportunities for fraud or
collusion occur; and the same difficulty in discovering the truth as to what has taken place arises . . .
In an action for recovery of damages against a common carrier on the goods shipped, the shipper or consignee
should first prove the fact of shipment and its consequent loss or damage while the same was in the possession,
actual or constructive, of the carrier. Thereafter, the burden of proof shifts to respondent to prove that he has
exercised extraordinary diligence required by law or that the loss, damage or deterioration of the cargo was due to
fortuitous event, or some other circumstances inconsistent with its liability. 31
To our mind, respondent carrier has sufficiently overcome, by clear and convincing proof, the prima facie
presumption of negligence.
The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19 April 1977 before the
Philippine Consul and Legal Attache in the Philippine Embassy in Tokyo, Japan, testified that before the fertilizer
was loaded, the four (4) hatches of the vessel were cleaned, dried and fumigated. After completing the loading of
the cargo in bulk in the ship's holds, the steel pontoon hatches were closed and sealed with iron lids, then covered
with three (3) layers of serviceable tarpaulins which were tied with steel bonds. The hatches remained close and
tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open
without the use of the ship's boom. 32
It was also shown during the trial that the hull of the vessel was in good condition, foreclosing the possibility of
spillage of the cargo into the sea or seepage of water inside the hull of the vessel. 33 When M/V "Sun Plum" docked
at its berthing place, representatives of the consignee boarded, and in the presence of a representative of the
shipowner, the foreman, the stevedores, and a cargo surveyor representing CSCI, opened the hatches and
inspected the condition of the hull of the vessel. The stevedores unloaded the cargo under the watchful eyes of the
shipmates who were overseeing the whole operation on rotation basis. 34
Verily, the presumption of negligence on the part of the respondent carrier has been efficaciously overcome by the
showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. This was confirmed by
respondent appellate court thus —
. . . Be that as it may, contrary to the trial court's finding, the record of the instant case discloses ample
evidence showing that defendant carrier was not negligent in performing its obligations. Particularly, the
following testimonies of plaintiff-appellee's own witnesses clearly show absence of negligence by the
defendant carrier; that the hull of the vessel at the time of the discharge of the cargo was sealed and
nobody could open the same except in the presence of the owner of the cargo and the representatives
of the vessel (TSN, 20 July 1977, p. 14); that the cover of the hatches was made of steel and it was
overlaid with tarpaulins, three layers of tarpaulins and therefore their contents were protected from the
weather (TSN, 5 April 1978, p. 24); and, that to open these hatches, the seals would have to be
broken, all the seals were found to be intact (TSN, 20 July 1977, pp. 15-16) (emphasis supplied).
The period during which private respondent was to observe the degree of diligence required of it as a public carrier
began from the time the cargo was unconditionally placed in its charge after the vessel's holds were duly inspected
and passed scrutiny by the shipper, up to and until the vessel reached its destination and its hull was reexamined by
the consignee, but prior to unloading. This is clear from the limitation clause agreed upon by the parties in the
Addendum to the standard "GENCON" time charter-party which provided for an F.I.O.S., meaning, that the loading,
stowing, trimming and discharge of the cargo was to be done by the charterer, free from all risk and expense to the
carrier. 35 Moreover, a shipowner is liable for damage to the cargo resulting from improper stowage only when the
stowing is done by stevedores employed by him, and therefore under his control and supervision, not when the
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same is done by the consignee or stevedores under the employ of the latter. 36
Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss, destruction or
deterioration of the goods if caused by the charterer of the goods or defects in the packaging or in the containers.
The Code of Commerce also provides that all losses and deterioration which the goods may suffer during the
transportation by reason of fortuitous event, force majeure, or the inherent defect of the goods, shall be for the
account and risk of the shipper, and that proof of these accidents is incumbent upon the carrier. 37 The carrier,
nonetheless, shall be liable for the loss and damage resulting from the preceding causes if it is proved, as against
him, that they arose through his negligence or by reason of his having failed to take the precautions which usage
has established among careful persons. 38
Respondent carrier presented a witness who testified on the characteristics of the fertilizer shipped and the
expected risks of bulk shipping. Mr. Estanislao Chupungco, a chemical engineer working with Atlas Fertilizer,
described Urea as a chemical compound consisting mostly of ammonia and carbon monoxide compounds which are
used as fertilizer. Urea also contains 46% nitrogen and is highly soluble in water. However, during storage, nitrogen
and ammonia do not normally evaporate even on a long voyage, provided that the temperature inside the hull does
not exceed eighty (80) degrees centigrade. Mr. Chupungco further added that in unloading fertilizer in bulk with the
use of a clamped shell, losses due to spillage during such operation amounting to one percent (1%) against the bill
of lading is deemed "normal" or "tolerable." The primary cause of these spillages is the clamped shell which does
not seal very tightly. Also, the wind tends to blow away some of the materials during the unloading process.
The dissipation of quantities of fertilizer, or its daterioration in value, is caused either by an extremely high
temperature in its place of storage, or when it comes in contact with water. When Urea is drenched in water, either
fresh or saline, some of its particles dissolve. But the salvaged portion which is in liquid form still remains potent and
usable although no longer saleable in its original market value.
The probability of the cargo being damaged or getting mixed or contaminated with foreign particles was made
greater by the fact that the fertilizer was transported in "bulk," thereby exposing it to the inimical effects of the
elements and the grimy condition of the various pieces of equipment used in transporting and hauling it.
The evidence of respondent carrier also showed that it was highly improbable for sea water to seep into the vessel's
holds during the voyage since the hull of the vessel was in good condition and her hatches were tightly closed and
firmly sealed, making the M/V "Sun Plum" in all respects seaworthy to carry the cargo she was chartered for. If there
was loss or contamination of the cargo, it was more likely to have occurred while the same was being transported
from the ship to the dump trucks and finally to the consignee's warehouse. This may be gleaned from the testimony
of the marine and cargo surveyor of CSCI who supervised the unloading. He explained that the 18 M/T of alleged
"bar order cargo" as contained in their report to PPI was just an approximation or estimate made by them after the
fertilizer was discharged from the vessel and segregated from the rest of the cargo.
The Court notes that it was in the month of July when the vessel arrived port and unloaded her cargo. It rained from
time to time at the harbor area while the cargo was being discharged according to the supply officer of PPI, who also
testified that it was windy at the waterfront and along the shoreline where the dump trucks passed enroute to the
consignee's warehouse.
Indeed, we agree with respondent carrier that bulk shipment of highly soluble goods like fertilizer carries with it the
risk of loss or damage. More so, with a variable weather condition prevalent during its unloading, as was the case at
bar. This is a risk the shipper or the owner of the goods has to face. Clearly, respondent carrier has sufficiently
proved the inherent character of the goods which makes it highly vulnerable to deterioration; as well as the
inadequacy of its packaging which further contributed to the loss. On the other hand, no proof was adduced by the
petitioner showing that the carrier was remise in the exercise of due diligence in order to minimize the loss or
damage to the goods it carried.
WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of Appeals, which reversed the trial
court, is AFFIRMED. Consequently, Civil Case No. 98623 of the then Court of the First Instance, now Regional Trial
Court, of Manila should be, as it is hereby DISMISSED.
Costs against petitioner.
SO ORDERED.
Davide, Jr. and Quiason, JJ., concur.
Cruz, J., took no part.
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Griño-Aquino, J., is on leave.
# Footnotes
1 A charter-party is a contract by which an entire ship or some principal part thereof, is let by the owner
to another person for a specified time or use (70 Am Jur 2d,
p. 580, citing Ward v. Thompson, 63 US 330, 16 L Ed 249; a contract in which the owner of a vessel
lets for consideration the whole or part thereof for the conveyance of goods and/or passengers on a
particular voyage to one or more places or until the expiration of a specified time and surrender unto
the lessee or charterer the control, by vesting upon the latter the right to appoint the captain, officers
and members of the crew, of the vessel leased or chartered during the duration of the contract (R.A.
913).
2 The Baltic and International Maritime Uniform General Charter (As Revised 1922 and 1976),
Including "F.I.O.S." Alternative, etc., Code Name: "GENCON" Adopted by the Documentary Committee
of the General Council of British Shipping, London, and the Documentary Committee of the Japan
Shipping Exchange, Inc., Tokyo.
3 Rollo, pp. 105, 128.
4 Although par. 40 of the Rider (Description of "Sun Plum") states that the vessel has 3 holds/3
hatches, Hatch No. 4 which usually was not used for cargo, was converted for such purpose. The time
sheet for 12 July 1974 shows that Hatch
No. 4 was first to be discharge of cargo. This was also testified by the master of the vessel, Captain
Lee Tae Bo.
5 Id., p. 129.
6 Under the terms and conditions of the charter-party, F.I.O.S. (Free In and Out Shipping/Stevedoring)
means that the shipper takes care of the loading, while the unloading is the sole responsibility of the
consignee (Rollo, pp. 128, 184).
7 TSN, 20 July 1977, p. 17.
8 TSN, 20 July 1977, p. 18.
9 Rollo, p. 130.
10 Id., p. 129; ADDENDUM No. 4 dated 17 May 1974 provides: "The cargo to be discharged at the
average rate of 1,000 metric tons per day of 24 hours weather working days, Sundays, holidays
excluded unless used, assuming four (4) sets of vessel's gear simultaneously workable a vessel's
bearthing side."
11 TSN, 5 April 1978, pp. 7-8. "Drop survey" is the drop of the vessel showing certain meters or
centimeters of the vessel. In the ship there is a draft from one meter upward. When the vessel arrives,
(CSCI) conducted initial draft survey before discharging, together with the ship's representative by
getting the draft forward and aft. They divided it by 2 to get the mean draft and the average draft. After
getting the mean draft, they got the displacement scale of the vessel to show certain tons of the ship,
then deducted the non-cargo weight, like the fuel oil, the freshwater. Finally, the total load of the ship is
taken. After discharging, CSCI went over same procedure to get the weight of the vessel. These figures
were then subtracted from the total load of the ships to get the weight of the cargo.
12 Id., p. 106.
13 Id., pp. 49, 68.
14 TSN, 28 Aug. 1979, pp. 9-10.
15 Id., p. 68 "Planters Products, Inc. v. Soriamont Steamship Agencies, et al., "Civil Case No. 98623,
CFI of Manila, Br. 27, decision penned by Judge E.L. Peralta, 24 March 1980.
16 The Court of Appeals (Twelfth Division) rendered its decision on 13 August 1991 in CA-G.R. CV No.
02736 entitled "Planters Products, Inc. vs. Kyosei Kisen Kabushiki Kaisha & Soriamont Steamship
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Agencies." Decision penned by Justice Alfredo L. Benipayo, concurred in by Justices Manuel C.

Herrera and Cancio C. Garcia, Rollo, pp. 13-24.
17 No. L-25599, 4 April 1968, 23 SCRA 24.
18 Rollo, p. 109.
19 Rollo, pp. 8 & 9.
20 Charter Partis; Charters of Demise and Contracts of Affreightment; 70 Am Jur 2d, p. 580; citing
Ward v. Thompson, 63 US 330, 16 L d 249; E.R. Harvey Ivamy, Carriage of Goods by Sea, 13th Ed.,
Chap. 2, pp. 5, 8-10. The term is also defined under R.A. No. 913, known as "An Act Defining 'Lease'
or 'Charter' of Vessels" as to mean a "contract in which the owner of a vessel lets for consideration the
whole or principal part thereof for the conveyance of goods and/or passengers on a particular voyage
to one or more places or until the expiration of a specified time and surrenders unto the lessee or
charterer the control, by vesting upon the latter the right to appoint the captain, officers and members of
the crew, of the vessel leased or chartered during the duration of the contract."
21 Bouvier's Law Dictionary, Third Rev., Vol. I, p. 470.
22 Id., pp. 581-582.
23 Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public.
24 See De Guzman v. Court of Appeals, No. L-47822, 22 December 1988, 168 SCRA 612; U.S. v.
Quinajon, No. 8686, 30 July 1915.
25 Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Arts. 1734, 1735
and 1745, Nos. 5, 6 and 7, while the extraordinary diligence for the safety of the passengers is further
set forth in Arts. 1755 and 1756.
26 Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding article, if
the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or
to have acted negligently, unless they prove that they observed extraordinary diligence as required in
article 1733.
27 E.R. Harvey Ivamy, pp. 8-10.
28 70 Am Jur 2nd, P, 608 S 238, citing Grace v. Palmer, 21 US 605, 5 L Ed 696, and Kerry v. Pacific
Marine Co., 12 CAL 564, 54, p. 89.
29 30 C.J.S., pp. 269-693.
30 British Shipping Laws, Vol. 2, "Carver's Carriage by Sea," By Raoul Colinvaux, Vol. 1, 12th Ed.,
Published by Stevens & Sons Limited of London, Printed in Great Britain, 1971.
31 See Ynchausti Steamship Co. v. Dexter, No. 15652, 41 Phil. 289, 14 Dec. 1920; Mirasol v. Robert
Dollar, Co., No. 29721, 53 Phil. 124, 27 March 1929.
32 Deposition of Capt. Lee Tae Bo, Exh. "4", pp. 22-23.
33 TSN, 20 July 1977, p. 14.
34 TSN, 5 April 1978, pp. 24-25.
35 See Note 6.
36 70 Am Jur 2d, p. 603 S 230, citing Oxford Paper Co. v. The Nidarholm, 282 US 681, 75L ed 614, 51
S Ct 266.
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37 Art. 361, par. 4, Code of Commerce.
38 Art. 362, par. 1, id.
The Lawphil Project - Arellano Law Foundation
8 of 8 12/12/2017, 3:04 PM
G.R. No. 162467 http://sc.judiciary.gov.ph/jurisprudence/2009/may2009/162467.htm
SECOND DIVISION
MINDANAO TERMINAL AND G.R. No. 162467

BROKERAGE SERVICE, INC.
Petitioner, Present:
- versus - CARPIO MORALES ,* JJ.,

Acting Chairperson,
TINGA,
PHOENIX ASSURANCE VELASCO, JR.,
COMPANY OF NEW YORK/ LEONARDO DE CASTRO,** and
MCGEE & CO., INC., BRION, JJ.
Respondent.
Promulgated:
May 8, 2009
x------------------------------------------------------------------------------------x
DECISION
TINGA, J.:
[1]
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure
[2] [3]
of the 29 October 2003 Decision of the Court of Appeals and the 26 February 2004 Resolution of
the same court denying petitioners motion for reconsideration.
The facts of the case are not disputed.
Del Monte Philippines, Inc. (Del Monte) contracted petitioner Mindanao Terminal and
Brokerage Service, Inc. (Mindanao Terminal), a stevedoring company, to load and stow a shipment of
146,288 cartons of fresh green Philippine bananas and 15,202 cartons of fresh pineapples belonging to
Del Monte Fresh Produce International, Inc. (Del Monte Produce) into the cargo hold of the vessel
M/V Mistrau. The vessel was 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 insured
the shipment under an open cargo policy with private respondent Phoenix Assurance Company of New
York (Phoenix), a non-life insurance company, and private respondent McGee & Co. Inc. (McGee), the
[4]
underwriting manager/agent of Phoenix.
1 of 11 12/12/2017, 4:18 PM
Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. The vessel set sail from
the port of Davao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge
that some of the cargo was in bad condition. The Marine Cargo Damage Surveyor of Incok Loss and
Average Adjuster of Korea, through its representative Byeong Yong Ahn (Byeong), surveyed the
extent of the 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 that they no longer had
[5]
commercial value.
Del Monte Produce filed a claim under the open cargo policy for the damages to its shipment. McGees
Marine Claims Insurance Adjuster evaluated the claim and recommended that payment in the amount
of $210,266.43 be made. A check for the recommended amount was sent to Del Monte Produce; the
[6]
latter then issued a subrogation receipt to Phoenix and McGee.
[7]
Phoenix and McGee instituted an action for damages against Mindanao Terminal in the Regional
[8]
Trial Court (RTC) of Davao City, Branch 12. After trial, the RTC, in a 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 ships officers, who would not have accepted the
cargoes on board the vessel and signed the foremans report unless they were properly arranged and
tightly secured to withstand voyage across the open seas. Accordingly, Mindanao Terminal cannot be
held liable for whatever happened to the cargoes after it had loaded and stowed them. Moreover, citing
the survey report, it was found by the RTC that the cargoes were damaged on account of a typhoon
which M/V Mistrau had 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 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 awarded the counterclaim of Mindanao
[9]
Terminal in the amount of P83,945.80 as actual damages and P100,000.00 as attorneys fees. The
actual damages were awarded as reimbursement for the expenses incurred by Mindanao Terminals
lawyer in attending the hearings in the case wherein he had to travel all the way from Metro Manila to
Davao City.
Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed and set
[10]
aside the decision of the RTC in its 29 October 2003 decision. The same court ordered Mindanao
Terminal to pay Phoenix and McGee the total amount of $210,265.45 plus legal interest from the filing
[11]
of the complaint until fully paid and attorneys fees of 20% of the claim. It sustained Phoenixs and
2 of 11 12/12/2017, 4:18 PM
McGees argument that the damage in the cargoes was the result of improper stowage by Mindanao
Terminal. It imposed on Mindanao Terminal, as the stevedore of the cargo, the duty to exercise
extraordinary diligence in loading and stowing the cargoes. It further held that even with the absence
of a contractual relationship between Mindanao Terminal and Del Monte Produce, the cause of action
[12]
of Phoenix and McGee could be based on quasi-delict under Article 2176 of the Civil Code.
[13]
Mindanao Terminal filed a motion for reconsideration, which the Court of Appeals denied in
[14]
its 26 February 2004 resolution. Hence, the present petition for review.
Mindanao Terminal raises two issues in the case at bar, namely: whether it was careless and
negligent in the loading and stowage of the cargoes onboard M/V Mistrau making it liable for
damages; and, whether Phoenix and McGee has a cause of action against Mindanao Terminal under
Article 2176 of the Civil Code on quasi-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, whether Mindanao Terminal, as a stevedoring company, is under obligation to observe the
same extraordinary degree of diligence in the conduct of its business as required by law for common
[15] [16]
carriers and warehousemen; and third, whether Mindanao Terminal observed the degree of
diligence required by law of a stevedoring company.
We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against
Mindanao Terminal, from which the present case has arisen, states a cause of action. The present
action is based on quasi-delict, arising from the negligent and careless loading and stowing of the
cargoes belonging to Del Monte Produce. Even assuming that both Phoenix and McGee have only
been subrogated in the rights of Del Monte Produce, who is not a party to the contract of service
between Mindanao Terminal and Del Monte, still the insurance carriers may have a cause of action in
[17]
light of the Courts consistent ruling that the act that breaks the contract may be also a tort. In fine,
[18]
a liability for tort may arise even under a contract, where tort is that which breaches the contract .
In the present case, Phoenix and McGee are not suing for damages for injuries arising from the breach
of the contract of service but from the alleged negligent manner by which Mindanao Terminal handled
the cargoes belonging to Del Monte Produce. Despite the absence of contractual relationship between
Del Monte Produce and Mindanao Terminal, the allegation of negligence on the part of the defendant
[19]
should be sufficient to establish a cause of action arising from quasi-delict.
The resolution of the two remaining issues is determinative of the ultimate result of this case.
3 of 11 12/12/2017, 4:18 PM
Article 1173 of the Civil Code is very clear that if the law or contract does not state the degree of
diligence which is to be observed in the performance of an obligation then that which is expected of a
good father of a family or ordinary diligence shall be required. Mindanao Terminal, a stevedoring
company which was charged with the loading and stowing the cargoes of Del Monte Produce aboard
M/V Mistrau, had acted merely as a labor provider in the case at bar. There is no specific provision of
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 cargoes. It was neither alleged nor proven by
Phoenix and McGee that Mindanao Terminal was bound by contractual stipulation to observe a higher
degree of diligence than that required of a good father of a family. We therefore conclude that
following Article 1173, Mindanao Terminal was required to observe ordinary diligence only in loading
and stowing the cargoes of Del Monte Produce aboard M/V Mistrau.
The Court of Appeals erred when it cited the case of Summa Insurance Corporation v. CA and
[20] [21]
Port Service Inc. in imposing a higher degree of diligence, on Mindanao Terminal in loading
and stowing the cargoes. The case of Summa Insurance Corporation v. CA, which involved the issue of
whether an arrastre operator is legally liable for the loss of a shipment in its custody and the extent of
its liability, is inapplicable to the factual circumstances of the case at bar. Therein, a vessel owned by
the National Galleon Shipping 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
(Semirara) as "notify party." The shipment, including a bundle of PC 8 U blades, was discharged from
the vessel to the custody of the private respondent, the exclusive arrastre operator at the South Harbor.
Accordingly, three good-order cargo receipts were issued by NGSC, duly signed by the ship's checker
and a representative of private respondent. When Semirara inspected the shipment at house, it
discovered that the bundle of PC8U blades was missing. From those facts, the Court observed:
x x x The relationship therefore between the consignee and the arrastre operator must be
examined. This relationship is much akin to that existing between the consignee or owner of shipped
[22]
goods and the common carrier, or that between a depositor and a warehouseman[ ]. In the
performance of its obligations, an arrastre operator should observe the same degree of diligence
as that required of a common carrier and a warehouseman as enunciated under Article 1733 of
the Civil Code and Section 3(b) of the Warehouse Receipts Law, respectively. Being the custodian
of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the
[23]
goods and to turn them over to the party entitled to their possession. (Emphasis supplied)
[24]
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 between the establishment of the
4 of 11 12/12/2017, 4:18 PM
consignee or shipper and the ship's tackle. The responsibility of the arrastre operator lasts until the
delivery of the cargo to the consignee. The service is usually performed by longshoremen. On the other
hand, stevedoring refers to the handling of the cargo in the holds of the vessel or between the ship's
tackle and the holds of the vessel. The responsibility of the stevedore ends upon the loading and
stowing of the cargo in the vessel.
It is not disputed that Mindanao Terminal was performing purely stevedoring function while the
private respondent in the Summa case was performing arrastre function. In the present case, Mindanao
Terminal, as a stevedore, was only charged with the loading and stowing of the cargoes from the pier
to the ships cargo hold; it was never the custodian of the shipment of Del Monte Produce. A stevedore
is not a common 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 cargoes would not have a far reaching
public ramification as that of a common carrier and a warehouseman; the public is adequately
protected by our laws on contract and on quasi-delict. The public policy considerations in legally
imposing upon a common carrier or a warehouseman a higher degree of diligence is not present in a
stevedoring outfit which mainly provides labor in loading and stowing of cargoes for its clients.
[25]
In the third issue, Phoenix and McGee failed to prove by preponderance of evidence that
Mindanao Terminal had acted negligently. Where the evidence on an issue of fact is in equipoise or
there is any doubt on which side the evidence preponderates the party having the burden of proof fails
upon that issue. That is to say, if the evidence touching a disputed fact is equally balanced, or if it does
not produce a just, rational belief of its existence, or if it leaves the mind in a state of perplexity, the
[26]
party holding the affirmative as to such fact must fail.
[27] [28]
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.
[29]
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
[30]
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
[31]
of the goods in the vessels 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 vessels
officer would order the closing of the hatches only if the loading was done correctly after a final
5 of 11 12/12/2017, 4:18 PM
[32]
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 foremans report, as proof of work done
on board the vessel, was prepared by the checkers of Mindanao Terminal and concurred in by the Chief
[33]
Officer of M/V Mistrau after they were satisfied that the cargoes were properly loaded.
[34]
Phoenix and McGee relied heavily on the deposition of Byeong Yong Ahn and on the survey
[35]
report of the damage to the cargoes. Byeong, whose testimony was refreshed by the survey
[36] [37]
report, found that the cause of the damage was improper stowage due to the manner the
cargoes were arranged such that there were no spaces between cartons, the use of cardboards as
support system, and the use of small rope to tie the cartons together but not by the negligent conduct of
Mindanao Terminal in loading and stowing the cargoes. As admitted by Phoenix and McGee in their
[38]
Comment before us, the latter is merely a stevedoring company which was tasked by Del Monte 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 vessel is wholly dependent on the
shipper and the officers of the vessel. In other words, the work of the stevedore was under the
supervision of the shipper and officers of the vessel. Even the materials used for stowage, such as
ropes, pallets, and cardboards, are provided for by the vessel. Even the survey report found that it was
because of the boisterous stormy weather due to the typhoon Seth, as encountered by M/V Mistrau
during its voyage, which caused the shipments in the cargo hold to collapse, shift and bruise in
[39]
extensive extent. Even the deposition of Byeong was not supported by the conclusion in the survey
report that:
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 ships heavy rolling and pitching under boisterous
weather while proceeding from 1600 hrs on 7th October to 0700 hrs on 12th October, 1994 as
[40]
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
6 of 11 12/12/2017, 4:18 PM
of the petition is in order.
However, the Court finds no basis for the award of attorneys fees in favor of petitioner. 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
[41]
where such right is exercised in good faith, even if erroneously. Likewise, the RTC erred in
awarding P83,945.80 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
[42]
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 P100,000.00 as attorneys
fees and P83,945.80 as actual damages.
SO ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
CONCHITA CARPIO MORALES

Associate Justice
Acting Chairperson
7 of 11 12/12/2017, 4:18 PM
PRESBITERO J. VELASCO, JR. TERESITA LEONARDO DE CASTRO

Associate Justice Associate Justice
ARTURO D. BRION
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
CONCHITA CARPIO MORALES

Associate Justice
Acting Chairperson, Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Acting Chairpersons
Attestation, it is hereby certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
[1]
Rollo, pp. 3-25.
*Acting Chairperson as replacement of Associate Justice Leonardo Quisumbing who is on official leave per Special Order No. 618.
8 of 11 12/12/2017, 4:18 PM
**Additional member of the Special Second Division per Special Order No. 619.
[2]
Id. at 29-34. Penned by Associate Justice Danilo B. Pine and concurred by Associate Justices Cancio C. Garcia and Renato C.
Dacudao. The dispositive portion reads as follows:
WHEREFORE, premises considered, the judgment appealed from is hereby REVERSED and SET ASIDE.
Mindanao Terminal Brokerage Services, Inc. is ordered to pay the plaintiff-appellants the total amount of $210,265.45 plus
legal interest from the filing of the complaint until fully paid and attorneys fees of 20% of the claim.
Costs against defendant-appellee.
SO ORDERED.
[3]
Id. at 36.
[4]
Records, pp. 234-310.
[5]
Rollo, p. 30.
[6]
Records, p. 350.
[7]
Id. at 1-6.
[8]
Rollo, pp. 38-44. Penned by Judge Paul T. Arcangel.
[9]
Id. at 44.
[10]
Id. at 33-34.
[11]
Id. at 36.
[12]
Id. at 31-33.
[13]
CA rollo, pp. 94-104.
[14]
Rollo, p. 36.
[15]
CIVIL CODE, Art. 1733.
[16]
Sec. 3(b), Act 2137, Warehouse Receipt Law.
[17]
Air France v. Carrascoso, 18 SCRA 155, 168 (1966). Singson v. Bank of the Philippine Islands, 132 Phil. 597, 600 (1968); Mr. &
Mrs. Fabre, Jr . v. Court of Appeals, 328 Phil. 775, 785 (1996).
[18]
PSBA v. Court of Appeals, G.R. No. 84698, 4 February 1992, 205 SCRA 729, 734.
[19]
CIVIL CODE. Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and
is governed by the provisions of this Chapter. (Emphasis supplied)
[20]
323 Phil. 214 (1996).
9 of 11 12/12/2017, 4:18 PM
[21]
Rollo, p. 32.
[22]
Malayan Insurance Co. Inc. v. Manila Port Service, 138 Phil. 69 (1969).
[23]
Supra note at 222-223.
[24]
See Compa ia Maritima v. Allied Free Workers Union, 167 Phil. 381, 385 (1977).
[25]
See Republic of the Philippines v. Orfinada Sr., G.R. No. 141145, November 12, 2004, 442 SCRA 342, 352 citing Go v. Court of
Appeals, G.R. No. 112550, February 5, 2001 citing Reyes v. Court of Appeals, 258 SCRA 651 (1996).
[26]
Francisco, Ricardo, Evidence, 3rd (1996), p. 555. Citing Howes v. Brown, 75 Ala. 385; Evans v. Winston, 74 Ala. 349; Marlowe v.
Benagh, 52 Ala. 112; Brandon v. Cabiness, 10 Ala. 155; Delaware Coach v. Savage, 81 Supp. 293.
[27]
This Court is not a trier of facts. Furthermore, well settled is the doctrine that the findings of fact by the trial court are accorded
great respect by appellate courts and should not be disturbed on appeal unless the trial court has overlooked, ignored, or disregarded some fact
or circumstances of sufficient weight or significance which, if considered, would alter the situation. The facts of the case, as stated by the trial
court, were adopted by the Court of Appeals. And a conscientious sifting of the records fails to bring to light any fact or circumstance militative
against the correctness of the said findings of the trial court and the Court of Appeals. See Home Development Mutual Fund v. CA, 351 Phil.
858, 859-860 (1998).
[28]
Rollo, pp. 38-44.
[29]
Id. at 42.
[30]
Id. at 16.
[31]
TSN, 6 July 1999, p. 5.
[32]
Id. at 9-10.
[33]
Id. at 5-6.
[34]
Records, pp. 89-96.
[35]
Id. at 99-113.
[36]
Id. at 93.
[37]
Id. at 96.
[38]
Rollo, pp. 47-49.
[39]
Records, pp. 105.
[40]
Id. at 112.
[41]
See Ramos v. Ramos, 158 Phil. 935, 960 (1974); Barreto v. Arevalo, 99 Phil. 771, 779 (1956); Mirasol v. Judge De la Cruz, 173
Phil. 518 (1978).
10 of 11 12/12/2017, 4:18 PM
[42]
See Uy v. Court of Appeals, 420 Phil. 408 (2001).
11 of 11 12/12/2017, 4:18 PM
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G.R. No. 125948 http://www.lawphil.net/judjuris/juri1998/dec1998/gr_125948_1998.

Today is Tuesday, December 12, 2017

Republic of the Philippines

G.R. No. 125948 December 29, 1998

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,

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& ! !$"% # $ '$ -% # $ $ $ $ @! 00 ! &@ $ 4"

$ $ " '0 !$ $ " ## & > #'-" ! !$ 7<:? # $ $ & ! &

$ <8 # " ! ! && & ! 00 ! F ## " & ""

$ $ 4 %$ ( " $ ( $ $ 6#" $ 6#" $ $

' ' $ " 4 ' "D ,& ! & & $ # $$ @! 00 ! @

& ! G# $ $ H & ## " ! ! && $ $ & ( ( "%

0 $ ( ( &5' & $ $ & '-$ $ $ # $$ & @! 00 ! @

! +77 Common Limitations on the Taxing Powers of Local Government Units

>B? 6 & $ ( && ! #$& $ &# $ $

"- $ & ! '!$ $ '& # & $ $4 & $ ! " 4 0 $

) # D , , '" " D $ # ! $ # ( .2 "

+ $ &$ $ &= @ +/+ G , ! +7+H 00 0$ $ & $

$ ""# ( .2 &'-# ( # 2 $ 6 & $ -'& &&

, ) # D $ $" 0 , '" ! $ ( $ # ( .< D

E $ , , $ $ (' ( &$ ) # D & $ 0# & $

$ & !" $ $ $ " ( &" $ 4 $ $ 6!"' ( 0 $ $ 6 ( # , $ " ! "

$$ & " % # % ( $ >7L? # ! $ ! 00 ! 3& $ 6 $& ( &&

E $ # $$ & -% !& $ &# $ ' $

Bellosillo, Puno and Mendoza, JJ., concur.

/ !& $ (% ('" $ % & ./ .; , ($

7 ! +;7 Tax on Business 0' ! # " $% 0 % 0# & $ 6 & $ "" , (

666 666 666

> ? ! $ !$ & $ # $! $ !$ & !! ! ,$ $

E$ ( && ! #$& $ # ! ( 0 ' $ 6 '0

; $$ $ &$ $ 1 ' % /9 +..; Rollo ## ++9 +++

2 $$ &# $ $% &' Rollo # ++/

< &, 6 @1@ Rollo ## +// +/:

. !& Rollo ## 2< 8/