G.R. No. 162467 Mindanao Terminal and Brokerage Vs Phoenix Insurance Stevedore

Supreme Court E-Library
VOL. 605, MAY 8, 2009 507

Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix
Assurance Co. of New York/MCGEE & Co., Inc.
SECOND DIVISION
[G.R. No. 162467. May 8, 2009]
MINDANAO TERMINAL AND BROKERAGE SERVICE,

INC., petitioner, vs. PHOENIX ASSURANCE
COMPANY OF NEW YORK/MCGEE & CO., INC.,
respondent.
SYLLABUS
1. CIVIL LAW; EXTRA CONTRACTUAL OBLIGATIONS;

QUASI-DELICTS; PRESENT ACTION IS BASED ON
QUASI-DELICT AND THE ALLEGATION OF
NEGLIGENCE ON THE PART OF THE DEFENDANT IS
SUFFICIENT TO ESTABLISH A CAUSE OF ACTION.—
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 light of the Court’s consistent ruling that
the act that breaks the contract may be also a tort. In fine, 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 should be sufficient to establish a cause of
action arising from quasi-delict.
2. ID.; ID.; ID.; PETITIONER HAD ACTED MERELY AS A
LABOR PROVIDER AND SINCE THERE IS NO SPECIFIC
PROVISION OF LAW THAT IMPOSES A HIGHER
DEGREE OF DILIGENCE THAN ORDINARY DILIGENCE
508 PHILIPPINE REPORTS

FOR A STEVEDORING COMPANY, PETITIONER WAS

REQUIRED ONLY TO OBSERVE ORDINARY
DILIGENCE IN THE LOADING AND STOWING OF THE
SUBJECT CARGOES.— 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.
3. ID.; ID.; ID.; RELIANCE OF THE APPELLATE COURT IN
THE CASE OF SUMMA INSURANCE CORPORATION V.
COURT OF APPEALS AND PORT SERVICE INC. IS
MISPLACED CONSIDERING THE DISTINCTION OF AN
ARRASTRE AND A STEVEDORE WITH RESPECT TO
RESPONSIBILITY OF THE CARGO BEING HANDLED;
THE RESPONSIBILITY OF AN ARRASTRE OPERATOR
LASTS UNTIL THE DELIVERY OF THE CARGO TO THE
CONSIGNEE WHILE THE RESPONSIBILITY OF A
STEVEDORE ENDS UPON THE LOADING AND STOWING
OF THE CARGO IN THE VESSEL.— The Court of Appeals
erred when it cited the case of Summa Insurance Corporation
v. CA and 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
VOL. 605, MAY 8, 2009 509

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 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
goods and to turn them over to the party entitled to their
possession. 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 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.
4. ID.; ID.; ID.; PETITIONER, AS A STEVEDORE, WAS ONLY
CHARGED WITH THE LOADING AND STOWING OF THE
CARGOES FROM THE PIER TO THE SHIP’S CARGO
HOLD AND WAS NEVER THE CUSTODIAN OF THE
SHIPMENT; 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.— 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 ship’s 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.
5. ID.; ID.; ID.; RESPONDENTS FAILED TO PROVE BY
PREPONDERANCE OF EVIDENCE THAT PETITIONER
HAD ACTED NEGLIGENTLY; ESTABLISHED FACTS
SHOWS THAT THE ONLY PARTICIPATION OF
PETITIONER WAS THE LOADING OF THE CARGOES
ON BOARD THE VESSEL.— 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 party holding the affirmative as to such fact
must fail. We adopt the findings of the RTC, which are not
disputed by Phoenix and McGee. The Court of Appeals did
not make any new findings of fact when it reversed the decision
of the trial court. The only participation of Mindanao Terminal
was to load the cargoes on board M/V Mistrau. It was not
disputed by Phoenix and McGee that the materials, such as
ropes, pallets, and cardboards, used in lashing and rigging the
cargoes were all provided by M/V Mistrau and these materials
meets industry standard. It was further established that Mindanao
VOL. 605, MAY 8, 2009 511

Terminal loaded and stowed the cargoes of Del Monte Produce

aboard the M/V Mistrau in accordance with the stowage plan,
a guide for the area assignments of the goods in the vessel’s
hold, prepared by Del Monte Produce and the officers of M/V
Mistrau. The loading and stowing was done under the direction
and supervision of the ship officers. The vessel’s officer would
order the closing of the hatches only if the loading was done
correctly after a final inspection. The said ship officers would
not have accepted the cargoes on board the vessel if they were
not properly arranged and tightly secured to withstand the voyage
in open seas. They would order the stevedore to rectify any
error in its loading and stowing. A foreman’s report, as proof
of work done on board the vessel, was prepared by the checkers
of Mindanao Terminal and concurred in by the Chief Officer
of M/V Mistrau after they were satisfied that the cargoes were
properly loaded.
6. ID.; ID.; ID.; THE DAMAGE SURVEY REPORT OF THE
ADJUSTER REVEALS THAT IT WAS THE TYPHOON
ENCOUNTERED BY THE VESSEL DURING THE
VOYAGE WHICH CAUSED THE SHIPMENTS IN THE
CARGO HOLD TO COLLAPSE, SHIFT AND BRUISE IN
EXTENSIVE EVENT.— Phoenix and McGee relied heavily
on the deposition of Byeong Yong Ahn and on the survey report
of the damage to the cargoes. Byeong, whose testimony was
refreshed by the survey 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 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 extensive extent. Even the deposition of
Byeong was not supported by the conclusion in the survey report
that: CAUSE OF DAMAGE x x x From the above facts and
our survey results, we are of the opinion that damage occurred
aboard the carrying vessel during sea transit, being caused by
ship’s heavy rolling and pitching under boisterous weather while
proceeding from 1600 hrs on 7 th October to 0700 hrs on 12th
October, 1994 as described in the sea protest. As it is clear
that Mindanao Terminal had duly exercised the required degree
of diligence in loading and stowing the cargoes, which is the
ordinary diligence of a good father of a family, the grant of
the petition is in order.
7. ID.; DAMAGES; NO BASIS FOR AWARD OF ATTORNEY’S
FEES.— The Court finds no basis for the award of attorney’s
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 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
protracted trial of the case necessitating the incurrence of
expenditures.
APPEARANCES OF COUNSEL
Froilan M. Bacungan & Associates for petitioner.

Fajardo Law Offices for respondents.
VOL. 605, MAY 8, 2009 513

DECISION
TINGA, J.:
Before us is a petition for review on certiorari1 under Rule 45

of the 1997 Rules of Civil Procedure of the 29 October 20032
Decision of the Court of Appeals and the 26 February 2004
Resolution3 of the same court denying petitioner’s 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 underwriting
manager/agent of Phoenix.4
1
Rollo, pp. 3-25.
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 attorney’s
fees of 20% of the claim.
Costs against defendant-appellee.
SO ORDERED.
3
Id. at 36.
4
Records, pp. 234-310.

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 commercial
value.5
Del Monte Produce filed a claim under the open cargo policy
for the damages to its shipment. McGee’s 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
latter then issued a subrogation receipt 6 to Phoenix and McGee.
Phoenix and McGee instituted an action for damages7 against
Mindanao Terminal in the Regional Trial Court (RTC) of Davao
City, Branch 12. After trial, the RTC, 8 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 ship’s officers, who
would not have accepted the cargoes on board the vessel and
signed the foreman’s report unless they were properly arranged
and tightly secured to withstand voyage across the open seas.
Accordingly, Mindanao 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
5
Rollo, p. 30.
6
Records, p. 350.
7
Id. at 1-6.
8
Rollo, pp. 38-44. Penned by Judge Paul T. Arcangel.
VOL. 605, MAY 8, 2009 515

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 Terminal in the amount of P83,945.80
as actual damages and P100,000.00 as attorney’s fees. 9 The
actual damages were awarded as reimbursement for the expenses
incurred by Mindanao Terminal’s 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 aside10 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 of the complaint
until fully paid and attorney’s fees of 20% of the claim.”11 It
sustained Phoenix’s and McGee’s 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 of Phoenix
and McGee could be based on quasi-delict under Article 2176
of the Civil Code. 12
Mindanao Terminal filed a motion for reconsideration,13 which
the Court of Appeals denied in its 26 February 200414 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
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.

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 carriers 15 and
warehousemen;16 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 light of the Court’s consistent ruling that
the act that breaks the contract may be also a tort.17 In fine, a
liability for tort may arise even under a contract, where tort is
that which breaches the contract.18 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
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.
VOL. 605, MAY 8, 2009 517

the defendant should be sufficient to establish a cause of action

arising from quasi-delict.19
The resolution of the two remaining issues is determinative
of the ultimate result of this case.
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 Port Service Inc.20 in imposing
a higher degree of diligence,21 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
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).
21
Rollo, p. 32.

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
goods and the common carrier, or that between a depositor and a
warehouseman. 22 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 goods and to turn them over to the
party entitled to their possession. (Emphasis supplied) 23
There is a distinction between an arrastre and a stevedore. 24

Arrastre, a Spanish word which refers to hauling of cargo,
comprehends the handling of cargo on the wharf or between
the establishment of the 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
22
Malayan Insurance Co. Inc. v. Manila Port Service, 138 Phil. 69
(1969).
23
Supra note at 222-223.
24
See Compañia Maritima v. Allied Free Workers Union, 167 Phil.
381, 385 (1977).
VOL. 605, MAY 8, 2009 519

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
ship’s 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.
In the third issue, Phoenix and McGee failed to prove by
preponderance of evidence25 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
party holding the affirmative as to such fact must fail.26
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.

We adopt the findings27 of the RTC,28 which are not disputed

by Phoenix and McGee. The Court of Appeals did not make
any new findings of fact when it reversed the decision of the
trial court. The only participation of Mindanao Terminal was
to load the cargoes on board M/V Mistrau.29 It was not disputed
by Phoenix and McGee that the materials, such as ropes, pallets,
and cardboards, used in lashing and rigging the cargoes were all
provided by M/V Mistrau and these materials meets industry
standard. 30
It was further established that Mindanao Terminal loaded
and stowed the cargoes of Del Monte Produce aboard the M/V
Mistrau in accordance with the stowage plan, a guide for the
area assignments of the goods in the vessel’s hold, prepared by
Del Monte Produce and the officers of M/V Mistrau. 31 The
loading and stowing was done under the direction and supervision
of the ship officers. The vessel’s officer would order the closing
of the hatches only if the loading was done correctly after a
final inspection.32 The said ship officers would not have accepted
the cargoes on board the vessel if they were not properly arranged
and tightly secured to withstand the voyage in open seas. They
would order the stevedore to rectify any error in its loading and
stowing. A foreman’s report, as proof of work done on board
the vessel, was prepared by the checkers of Mindanao Terminal
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.
VOL. 605, MAY 8, 2009 521

and concurred in by the Chief Officer of M/V Mistrau after

they were satisfied that the cargoes were properly loaded. 33
Phoenix and McGee relied heavily on the deposition of Byeong
Yong Ahn 34 and on the survey report 35 of the damage to the
cargoes. Byeong, whose testimony was refreshed by the survey
report, 36 found that the cause of the damage was improper
stowage 37 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 Comment38 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 extensive extent. 39 Even the deposition of Byeong
was not supported by the conclusion in the survey report that:
CAUSE OF DAMAGE
xxx xxx xxx
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.

From the above facts and our survey results, we are of the opinion
that damage occurred aboard the carrying vessel during sea transit,
being caused by ship’s heavy rolling and pitching under boisterous
weather while proceeding from 1600 hrs on 7 th October to 0700
hrs on 12 th October, 1994 as described in the sea protest.40
As it is clear that Mindanao Terminal had duly exercised the

required degree of diligence in loading and stowing the cargoes,
which is the ordinary diligence of a good father of a family, the
grant of the petition is in order.
However, the Court finds no basis for the award of attorney’s
fees in favor of petitioner. None of the circumstances enumerated
in Article 2208 of the Civil Code exists. The present case is
clearly not an unfounded civil action against the plaintiff as
there is no showing that it was instituted for the mere purpose
of vexation or injury. It is not sound public policy to set a
premium to the right to litigate where such right is exercised in
good faith, even if erroneously.41 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 protracted
trial of the case necessitating the incurrence of expenditures. 42
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 (sic) is hereby
REINSTATED MINUS the awards of P100,000.00 as attorney’s
fees and P83,945.80 as actual damages.
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).
42
See Uy v. Court of Appeals, 420 Phil. 408 (2001).
VOL. 605, MAY 8, 2009 523

Malabanan vs. Rural Bank of Cabuyao, Inc.
SO ORDERED.
Carpio Morales, * Velasco, Jr., Leonardo-de Castro,** and
Brion, JJ., concur.
SECOND DIVISION
[G.R. No. 163495. May 8, 2009]
SAMUEL MALABANAN, petitioner, vs. RURAL BANK OF

CABUYAO, INC., respondent.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; FORUM

SHOPPING; ELEMENTS; NOT PRESENT IN CASE AT
BAR; A JUDGMENT IN AN EJECTMENT CASE WOULD
NOT AMOUNT TO RES JUDICATA IN AN ANNULMENT
OF TITLE CASE.— Forum-shopping exists where the elements
of litis pendentia are present, namely: (a) identity of parties
or at least such as representing the same interests in both actions;
(b) identity of rights asserted and reliefs prayed for, the relief
being founded on the same facts; and (c) the identity in the
two cases should be such that the judgment that may be rendered
in one would, regardless of which party is successful, amounts
to res judicata in the other. Petitioner and respondent are the
same parties in the annulment and ejectment cases. The issue
of ownership was likewise being contended, with same set of
evidence being presented in both cases. However, it cannot
be inferred that a judgment in the ejectment case would amount
*
Acting Chairperson as replacement of Associate Justice Leonardo
Quisumbing who is on official leave per Special Order No. 618.
**
Additional member of the Special Second Division per Special Order
No. 619.

G.R. No. 162467 Mindanao Terminal and Brokerage Vs Phoenix Insurance Stevedore

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G.R. No. 162467 Mindanao Terminal and Brokerage Vs Phoenix Insurance Stevedore

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VOL. 605, MAY 8, 2009 507

[G.R. No. 162467. May 8, 2009]

MINDANAO TERMINAL AND BROKERAGE SERVICE,

1. CIVIL LAW; EXTRA CONTRACTUAL OBLIGATIONS;

508 PHILIPPINE REPORTS

FOR A STEVEDORING COMPANY, PETITIONER WAS

VOL. 605, MAY 8, 2009 509

Harbor, Manila, carrying a shipment consigned to the order of

510 PHILIPPINE REPORTS

LOADING AND STOWING OF CARGOES FOR ITS

VOL. 605, MAY 8, 2009 511

Terminal loaded and stowed the cargoes of Del Monte Produce

512 PHILIPPINE REPORTS

the typhoon Seth, as encountered by M/V Mistrau during its

Froilan M. Bacungan & Associates for petitioner.

VOL. 605, MAY 8, 2009 513

Before us is a petition for review on certiorari1 under Rule 45

514 PHILIPPINE REPORTS

Mindanao Terminal loaded and stowed the cargoes aboard

VOL. 605, MAY 8, 2009 515

against Mindanao Terminal because the latter, whose services

516 PHILIPPINE REPORTS

of the cargoes onboard M/V Mistrau making it liable for damages;

VOL. 605, MAY 8, 2009 517

the defendant should be sufficient to establish a cause of action

518 PHILIPPINE REPORTS

Pier 3, South Harbor, Manila, carrying a shipment consigned

There is a distinction between an arrastre and a stevedore. 24

VOL. 605, MAY 8, 2009 519

responsibility of the stevedore ends upon the loading and stowing

520 PHILIPPINE REPORTS

We adopt the findings27 of the RTC,28 which are not disputed

VOL. 605, MAY 8, 2009 521

and concurred in by the Chief Officer of M/V Mistrau after

522 PHILIPPINE REPORTS

As it is clear that Mindanao Terminal had duly exercised the

VOL. 605, MAY 8, 2009 523

[G.R. No. 163495. May 8, 2009]

SAMUEL MALABANAN, petitioner, vs. RURAL BANK OF

1. REMEDIAL LAW; CIVIL PROCEDURE; FORUM

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