9/7/2017 G.R. No.

162467

SECONDDIVISION

MINDANAOTERMINALANDG.R.No.162467
BROKERAGESERVICE,INC.
Petitioner,Present:

versusCARPIOMORALES,*JJ.,
ActingChairperson,
TINGA,
PHOENIXASSURANCEVELASCO,JR.,
COMPANYOFNEWYORK/LEONARDODECASTRO,**and
MCGEE&CO.,INC.,BRION,JJ.
Respondent.
Promulgated:
May8,2009
xx

DECISION

TINGA,J.:
[1]
Beforeusisapetitionforreviewoncertiorari underRule45ofthe1997RulesofCivilProcedureof
[2] [3]
the29October2003 DecisionoftheCourtofAppealsandthe26February2004Resolution ofthe
samecourtdenyingpetitionersmotionforreconsideration.

Thefactsofthecasearenotdisputed.

DelMontePhilippines,Inc.(DelMonte)contractedpetitionerMindanaoTerminalandBrokerage
Service, Inc. (Mindanao Terminal), a stevedoring company, to load and stow a shipment of 146,288
cartonsoffreshgreenPhilippinebananasand15,202cartonsoffreshpineapplesbelongingtoDelMonte
FreshProduceInternational,Inc.(DelMonteProduce)intothecargoholdofthevesselM/VMistrau.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 nonlife insurance company, and private respondent McGee & Co. Inc. (McGee), the
[4]
underwritingmanager/agentofPhoenix.

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MindanaoTerminalloadedandstowedthecargoesaboardtheM/VMistrau.Thevesselsetsailfromthe
portofDavaoCityandarrivedattheportofInchon,Korea.Itwasthendiscoveredupondischargethat
someofthecargowasinbadcondition.TheMarineCargoDamageSurveyorofIncokLossandAverage
Adjuster of Korea, through its representative Byeong Yong Ahn (Byeong), surveyed the extent of the
damageoftheshipment.Inasurveyreport,itwasstatedthat16,069cartonsofthebananashipmentand
[5]
2,185cartonsofthepineappleshipmentweresodamagedthattheynolongerhadcommercialvalue.

DelMonteProducefiledaclaimundertheopencargopolicyforthedamagestoitsshipment.McGees
MarineClaimsInsuranceAdjusterevaluatedtheclaimandrecommendedthatpaymentintheamountof
$210,266.43bemade.AcheckfortherecommendedamountwassenttoDelMonteProducethelatter
[6]
thenissuedasubrogationreceipt toPhoenixandMcGee.

[7]
PhoenixandMcGeeinstitutedanactionfordamages againstMindanaoTerminalintheRegionalTrial
[8]
Court(RTC)ofDavaoCity,Branch12.Aftertrial,theRTC, inadecisiondated20October1999,held
thattheonlyparticipationofMindanaoTerminalwastoloadthecargoesonboardtheM/VMistrauunder
thedirectionandsupervisionoftheshipsofficers,whowouldnothaveacceptedthecargoesonboardthe
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
Mistrauhadencounteredduringthevoyage.ItwasfurtherheldthatPhoenixandMcGeehadnocauseof
action against Mindanao Terminal because the latter, whose services were contracted by Del Monte, a
distinctcorporationfromDelMonteProduce,hadnocontractwiththeassuredDelMonteProduce.The
RTC dismissed the complaint and awarded the counterclaim of Mindanao Terminal in the amount of
[9]
P83,945.80asactualdamagesandP100,000.00asattorneysfees. Theactualdamageswereawarded
asreimbursementfortheexpensesincurredbyMindanaoTerminalslawyerinattendingthehearingsin
thecasewhereinhehadtotravelallthewayfromMetroManilatoDavaoCity.

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
TerminaltopayPhoenixandMcGeethetotalamountof$210,265.45pluslegalinterestfromthefilingof
[11]
the complaint until fully paid and attorneys fees of 20% of the claim. It sustained Phoenixs and
McGees argument that the damage in the cargoes was the result of improper stowage by Mindanao

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Terminal. It imposed on Mindanao Terminal, as the stevedore of the cargo, the duty to exercise
extraordinarydiligenceinloadingandstowingthecargoes.Itfurtherheldthatevenwiththeabsenceofa
contractual relationship between Mindanao Terminal and Del Monte Produce, the cause of action of
[12]
PhoenixandMcGeecouldbebasedonquasidelictunderArticle2176oftheCivilCode.

[13]
MindanaoTerminalfiledamotionforreconsideration, whichtheCourtofAppealsdeniedin
[14]
its26February2004 resolution.Hence,thepresentpetitionforreview.

Mindanao Terminal raises two issues in the case at bar, namely: whether it was careless and
negligentintheloadingandstowageofthecargoesonboardM/VMistraumakingitliablefordamages
and,whetherPhoenixandMcGeehasacauseofactionagainstMindanaoTerminalunderArticle2176of
theCivilCodeonquasidelict.Toresolvethepetition,threequestionshavetobeanswered: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
[15]
diligenceintheconductofitsbusinessasrequiredbylawforcommoncarriers andwarehousemen
[16]
and third, whether Mindanao Terminal observed the degree of diligence required by law of a
stevedoringcompany.

We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against
MindanaoTerminal,fromwhichthepresentcasehasarisen,statesacauseofaction.Thepresentactionis
based on quasidelict, 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
MindanaoTerminalandDelMonte,stilltheinsurancecarriersmayhaveacauseofactioninlightofthe
[17]
Courtsconsistentrulingthattheactthatbreaksthecontractmaybealsoatort. Infine,aliabilityfor
[18]
tort may arise even under a contract, where tort is that which breaches the contract . In the present
case,PhoenixandMcGeearenotsuingfordamagesforinjuriesarisingfromthebreachofthecontractof
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
[19]
sufficienttoestablishacauseofactionarisingfromquasidelict.

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Theresolutionofthetworemainingissuesisdeterminativeoftheultimateresultofthiscase.

Article1173oftheCivilCodeisveryclearthatifthelaworcontractdoesnotstatethedegreeof
diligencewhichistobeobservedintheperformanceofanobligationthenthatwhichisexpectedofa
good father of a family or ordinary diligence shall be required. Mindanao Terminal, a stevedoring
companywhichwaschargedwiththeloadingandstowingthecargoesofDelMonteProduceaboardM/V
Mistrau,hadactedmerelyasalaborproviderinthecaseatbar.Thereisnospecificprovisionoflawthat
imposesahigherdegreeofdiligencethanordinarydiligenceforastevedoringcompanyoronewhois
chargedonlywiththeloadingandstowingofcargoes.ItwasneitherallegednorprovenbyPhoenixand
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
cargoesofDelMonteProduceaboardM/VMistrau.

The Court of Appeals erred when it cited the case of Summa Insurance Corporation v. CA and
[20] [21]
PortServiceInc. inimposingahigherdegreeofdiligence, onMindanaoTerminalinloadingand
stowing the cargoes. The case of Summa Insurance Corporation v. CA, which involved the issue of
whetheranarrastreoperatorislegallyliableforthelossofashipmentinitscustodyandtheextentofits
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
shipmentconsignedtotheorderofCaterpillarFarEastLtd.withSemiraraCoalCorporation(Semirara)
as"notifyparty."Theshipment,includingabundleofPC8Ublades,wasdischargedfromthevesselto
thecustodyoftheprivaterespondent,theexclusivearrastreoperatorattheSouthHarbor. Accordingly,
three goodorder cargo receipts were issued by NGSC, duly signed by the ship's checker and a
representativeofprivaterespondent.WhenSemirarainspectedtheshipmentathouse,itdiscoveredthat
thebundleofPC8Ubladeswasmissing.Fromthosefacts,theCourtobserved:

xxxTherelationshipthereforebetweentheconsigneeandthearrastreoperatormustbeexamined.
Thisrelationshipismuchakintothatexistingbetweentheconsigneeorownerofshippedgoodsandthe
[22]
common carrier, or that between a depositor and a warehouseman[ ]. In the performance of its
obligations,anarrastreoperatorshouldobservethesamedegreeofdiligenceasthatrequiredofa
commoncarrierandawarehousemanasenunciatedunderArticle1733oftheCivilCodeandSection
3(b)oftheWarehouseReceiptsLaw,respectively.Beingthecustodianofthegoodsdischargedfrom
avessel,anarrastreoperator'sdutyistotakegoodcareofthegoodsandtoturnthemovertothe
[23]
partyentitledtotheirpossession.(Emphasissupplied)

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[24]
Thereisadistinctionbetweenanarrastreandastevedore. Arrastre,aSpanishwordwhichrefersto
haulingofcargo,comprehendsthehandlingofcargoonthewharforbetweentheestablishmentofthe
consignee or shipper and the ship's tackle. The responsibility of the arrastre operator lasts until the
deliveryofthecargototheconsignee.Theserviceisusuallyperformedbylongshoremen.Ontheother
hand,stevedoringreferstothehandlingofthecargointheholdsofthevesselorbetweentheship'stackle
andtheholdsofthevessel.Theresponsibilityofthestevedoreendsupontheloadingandstowingofthe
cargointhevessel.

It is not disputed that Mindanao Terminal was performing purely stevedoring function while the
privaterespondentintheSumma case was performing arrastre function. In the present case, Mindanao
Terminal,asastevedore,wasonlychargedwiththeloadingandstowingofthecargoesfromthepierto
theshipscargoholditwasneverthecustodianoftheshipmentofDelMonteProduce.Astevedoreisnot
acommoncarrierforitdoesnottransportgoodsorpassengersitisnotakintoawarehousemanforit
doesnotstoregoodsforprofit.Theloadingandstowingofcargoeswouldnothaveafarreachingpublic
ramificationasthatofacommoncarrierandawarehousemanthepublicisadequatelyprotectedbyour
laws on contract and on quasidelict. 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
whichmainlyprovideslaborinloadingandstowingofcargoesforitsclients.

[25]
Inthethirdissue,PhoenixandMcGeefailedtoprovebypreponderanceofevidence thatMindanao
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.Thatistosay,iftheevidencetouchingadisputedfactisequallybalanced,orifitdoesnotproduce
ajust,rationalbeliefofitsexistence,orifitleavesthemindinastateofperplexity,thepartyholdingthe
[26]
affirmativeastosuchfactmustfail.
[27] [28]
We adopt the findings of the RTC, which are not disputed by Phoenix and McGee. The
CourtofAppealsdidnotmakeanynewfindingsoffactwhenitreversedthedecisionofthetrialcourt.
[29]
TheonlyparticipationofMindanaoTerminalwastoloadthecargoesonboardM/VMistrau. Itwas
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
[30]
standard.
It was further established that Mindanao Terminal loaded and stowed the cargoes of Del Monte
ProduceaboardtheM/VMistrauinaccordancewiththestowageplan,aguidefortheareaassignmentsof

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[31]
thegoodsinthevesselshold,preparedbyDelMonteProduceandtheofficersofM/VMistrau. The
loadingandstowingwasdoneunderthedirectionandsupervisionoftheshipofficers.Thevesselsofficer
[32]
wouldordertheclosingofthehatchesonlyiftheloadingwasdonecorrectlyafterafinalinspection.
Thesaidshipofficerswouldnothaveacceptedthecargoesonboardthevesseliftheywerenotproperly
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,waspreparedbythecheckersofMindanaoTerminalandconcurredinbytheChiefOfficerofM/V
[33]
Mistrauaftertheyweresatisfiedthatthecargoeswereproperlyloaded.

[34]
Phoenix and McGee relied heavily on the deposition of Byeong Yong Ahn and on the survey
[35]
report ofthedamagetothecargoes.Byeong,whosetestimonywasrefreshedbythesurveyreport,
[36] [37]
foundthatthecauseofthedamagewasimproperstowage duetothemannerthecargoeswere
arrangedsuchthattherewerenospacesbetweencartons,theuseofcardboardsassupportsystem,and
theuseofsmallropetotiethecartonstogetherbutnotbythenegligentconductofMindanaoTerminalin
[38]
loadingandstowingthecargoes.AsadmittedbyPhoenixandMcGeeintheirComment beforeus,
the latter is merely a stevedoring company which was tasked by Del Monte to load and stow the
shipmentsoffreshbananaandpineappleofDelMonteProduceaboardtheM/VMistrau.Howandwhere
itshouldloadandstowashipmentinavesseliswhollydependentontheshipperandtheofficersofthe
vessel.Inotherwords,theworkofthestevedorewasunderthesupervisionoftheshipperandofficersof
thevessel.Eventhematerialsusedforstowage,suchasropes,pallets,andcardboards,areprovidedfor
bythevessel.Eventhesurveyreportfoundthatitwasbecauseoftheboisterousstormyweatherdueto
thetyphoonSeth,asencounteredbyM/VMistrauduringitsvoyage,whichcausedtheshipmentsinthe
[39]
cargoholdtocollapse,shiftandbruiseinextensiveextent. EventhedepositionofByeongwasnot
supportedbytheconclusioninthesurveyreportthat:


CAUSEOFDAMAGE

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
weatherwhileproceedingfrom1600hrson7thOctoberto0700hrson12thOctober,1994asdescribed
[40]
intheseaprotest.

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As it is clear that Mindanao Terminal had duly exercised the required degree of diligence in
loadingandstowingthecargoes,whichistheordinarydiligenceofagoodfatherofafamily,thegrantof
thepetitionisinorder.

However,theCourtfindsnobasisfortheawardofattorneysfeesinfavorofpetitioner.Noneof
thecircumstancesenumeratedinArticle2208oftheCivilCodeexists.Thepresentcaseisclearlynotan
unfounded civil action against the plaintiff as there is no showing that it was instituted for the mere
purposeofvexationorinjury.Itisnotsoundpublicpolicytosetapremiumtotherighttolitigatewhere
[41]
such right is exercised in good faith, even if erroneously. Likewise, the RTC erred in awarding
P83,945.80actualdamagestoMindanaoTerminal.AlthoughactualexpenseswereincurredbyMindanao
Terminal in relation to the trial of this case in Davao City, the lawyer of MindanaoTerminal incurred
expensesforplanefare,hotelaccommodationsandfood,aswellasothermiscellaneousexpenses,ashe
attended the trials coming all the way from Manila. But there is no showing that Phoenix and McGee
madeafalseclaimagainstMindanaoTerminal resultingin the protracted trial of the case necessitating
[42]
theincurrenceofexpenditures.

WHEREFORE,thepetitionisGRANTED.ThedecisionoftheCourtofAppealsinCAG.R.CV
No.66121isSETASIDEandthedecisionoftheRegionalTrialCourtofDavaoCity,Branch12inCivil
CaseNo.25,311.97isherebyREINSTATEDMINUStheawardsofP100,000.00asattorneysfeesand
P83,945.80asactualdamages.

SOORDERED.


DANTEO.TINGA
AssociateJustice



WECONCUR:




CONCHITACARPIOMORALES
AssociateJustice
ActingChairperson

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PRESBITEROJ.VELASCO,JR.TERESITALEONARDODECASTRO
AssociateJusticeAssociateJustice






ARTUROD.BRION
AssociateJustice




ATTESTATION

IattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecase
wasassignedtothewriteroftheopinionoftheCourtsDivision.

CONCHITACARPIOMORALES
AssociateJustice
ActingChairperson,SecondDivision




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
consultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.



REYNATOS.PUNO
ChiefJustice

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[1]
Rollo,pp.325.

*ActingChairpersonasreplacementofAssociateJusticeLeonardoQuisumbingwhoisonofficialleaveperSpecialOrderNo.618.

**AdditionalmemberoftheSpecialSecondDivisionperSpecialOrderNo.619.

[2]
Id.at2934.PennedbyAssociateJusticeDaniloB.PineandconcurredbyAssociateJusticesCancioC.GarciaandRenatoC.Dacudao.
Thedispositiveportionreadsasfollows:

WHEREFORE, premises considered, the judgment appealed from is hereby REVERSED and SET ASIDE.
MindanaoTerminalBrokerageServices,Inc.isorderedtopaytheplaintiffappellantsthetotalamountof$210,265.45plus
legalinterestfromthefilingofthecomplaintuntilfullypaidandattorneysfeesof20%oftheclaim.

Costsagainstdefendantappellee.

SOORDERED.

[3]
Id.at36.

[4]
Records,pp.234310.


[5]
Rollo,p.30.

[6]
Records,p.350.

[7]
Id.at16.

[8]
Rollo,pp.3844.PennedbyJudgePaulT.Arcangel.


[9]
Id.at44.

[10]
Id.at3334.

[11]
Id.at36.
[12]
Id.at3133.


[13]
CArollo,pp.94104.

[14]
Rollo,p.36.

[15]
CIVILCODE,Art.1733.

[16]
Sec.3(b),Act2137,WarehouseReceiptLaw.


[17]
AirFrancev.Carrascoso,18SCRA155,168(1966).Singsonv.BankofthePhilippineIslands,132Phil.597,600(1968)Mr.&Mrs.
Fabre,Jr.v.CourtofAppeals,328Phil.775,785(1996).

[18]
PSBAv.CourtofAppeals,G.R.No.84698,4February1992,205SCRA729,734.

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[19]
CIVILCODE.Art.2176.Whoeverbyactoromissioncausesdamagetoanother,therebeingfaultornegligence,isobligedtopayfor
the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasidelict and is
governedbytheprovisionsofthisChapter.(Emphasissupplied)

[20]
323Phil.214(1996).

[21]
Rollo,p.32.

[22]
MalayanInsuranceCo.Inc.v.ManilaPortService,138Phil.69(1969).

[23]
Supranoteat222223.

[24]
SeeCompaiaMaritimav.AlliedFreeWorkersUnion,167Phil.381,385(1977).

[25]
SeeRepublicofthePhilippines v. Orfinada Sr.,G.R. No. 141145, November 12, 2004, 442 SCRA 342, 352 citing Gov.Courtof
Appeals,G.R.No.112550,February5,2001citingReyesv.CourtofAppeals,258SCRA651(1996).

[26]
Francisco, Ricardo, Evidence, 3rd(1996),p.555.CitingHowesv.Brown, 75 Ala. 385 Evans v. Winston, 74 Ala. 349 Marlowe v.
Benagh,52Ala.112Brandonv.Cabiness,10Ala.155DelawareCoachv.Savage,81Supp.293.

[27]
ThisCourtisnotatrieroffacts.Furthermore,wellsettledisthedoctrinethatthefindingsoffactbythetrialcourtareaccordedgreat
respect by appellate courts and should not be disturbed on appeal unless the trial court has overlooked, ignored, or disregarded some fact or
circumstancesofsufficientweightorsignificancewhich,ifconsidered,wouldalterthesituation.Thefactsofthecase,asstatedbythetrialcourt,
wereadoptedbytheCourtofAppeals.Andaconscientioussiftingoftherecordsfailstobringtolightanyfactorcircumstancemilitativeagainst
thecorrectnessofthesaidfindingsofthetrialcourtandtheCourtofAppeals.SeeHomeDevelopmentMutualFundv.CA,351Phil.858,859860
(1998).

[28]
Rollo,pp.3844.

[29]
Id.at42.

[30]
Id.at16.

[31]
TSN,6July1999,p.5.

[32]
Id.at910.

[33]
Id.at56.


[34]
Records,pp.8996.

[35]
Id.at99113.

[36]
Id.at93.

[37]
Id.at96.

[38]
Rollo,pp.4749.

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[39]
Records,pp.105.


[40]
Id.at112.

[41]
SeeRamosv.Ramos,158Phil.935,960(1974)Barretov.Arevalo,99Phil.771,779(1956)Mirasolv.JudgeDelaCruz,173Phil.
518(1978).

[42]
SeeUyv.CourtofAppeals,420Phil.408(2001).

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