G.R. No. 195661, March 11, 2015
UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD., AND INTER-ASIA MARINE TRANSPORT, INC., Petitioners, v. ASIAN TERMINALS, INC., Respondent.
R E S O L U T I O N
On 25 January 1997, the cargo ship M/V “China Joy” (the Vessel) arrived at the Mariveles Grain Terminal Wharf, operated by plaintiff [ATI].
According to the Berth Term Grain Bills of Lading, the Vessel carried soybean meal that had been shipped by ContiQuincyBunge L.L.C[.] (ContiQuincyBunge), an exporter of soybean meal and related products, in favor of several consignees in the Philippines.
Under the Charter Party Agreement over M/V “China Joy,” ContiQuincyBunge represented itself as the Charterer of the Vessel, with San Miguel Foods, Inc. as Co-Charterer, and defendant [Samsun] represented itself as the Agent of the Shipowners. Samsun is a foreign corporation not doing business in the Philippines.
On 3 February 1997[,] ATI used its Siwertell Unloader No. 2 to unload the soybean meal from the Vessel’s Hold No. 2. The Siwertell Unloader is a pneumatic vacubator that uses compressed gas to vertically move heavy bulk grain from within the hatch of the ship in order to unload it off the ship.
The unloading operations were suddenly halted when the head of Unloader No. 2 hit a flat low-carbon or “mild” steel bar measuring around 8 to 10 inches in length, 4 inches in width, and 1 ¼ inch in thickness that was in the middle of the mass of soybean meal. The flat steel bar lodged itself between the vertical screws of Unloader No. 2, causing portions of screw numbers 2 and 3 to crack and be sheared off under the torsional load.
According to the quotation of BMH Marine AB Sweden, the sole manufacturer of Siwertell unloaders, the replacement cost of each screw is US$12,395.00 or US$24,790.00 for the 2 screws plus freight. The labor cost to remove and re-assemble the screws is estimated at US$2,000.00.
On 4 February 1997, ATI sent a Note of Protest to the Master of the Vessel for the damages sustained by its unloading equipment as a result of encountering the flat steel bar among the soybean meal. However, the Vessel’s Master wrote a note on the Protest stating that it is not responsible for the damage because the metal piece came from the cargo and not from the vessel itself.
On 5 March 1997, ATI sent a claim to defendant [Inter-Asia] for the amount of US$37,185.00 plus US$2,000.00 labor cost representing the damages sustained by its unloading equipment.
Inter-Asia rejected ATI’s claim for the alleged reason that it is not the Shipowner’s Agent. Inter-Asia informed ATI that its principal is Samsun. Moreover, according to Inter-Asia, the owner of the Vessel is Trans-Pacific Shipping Co., c/o Lasco Shipping Company. Inter-Asia, however, offered to relay ATI’s claim to Trans-Pacific through Samsun.
As previously noted, the Charter Party Agreement states Samsun to be the Agent of the Shipowners, but since Samsun is a foreign corporation not licensed to do business in the Philippines, it transacted its business through Inter-Asia. Hence, Inter-Asia is the Agent of the Agent of the Shipowners.
When negotiations for settlement failed, ATI filed the instant Complaint for Damages against Samsun, Inter-Asia and the “Unknown Owner of the Vessel M/V ‘China Joy’” on 9 March 1999.
In the joint Answer, Inter-Asia reiterated that it is not the Agent of the Shipowners. Defendants further averred that the soybean meal was shipped on board the M/V “China Joy” under a Free-In-and-Out-Stowed-and-Trimmed (FIOST) Clause, which supposedly means that the Shipper/Charterer itself (ContiQuincyBunge LLC) loaded the cargo on board the Vessel, and the latter and her complement had no participation therein except to provide the use of the Vessel’s gear. Similarly, under the FIOST clause, the discharge of the cargo was to be done by the consignees’ designated personnel without any participation of the Vessel and her complement.
Defendants argued that since the metal foreign object was found in the middle of the cargo, it could not have come from the bottom of the hatch because the hatch had been inspected and found clean prior to loading. Defendants further averred that neither could the metal bar have been part of the Vessel that had broken off and fallen into the hatch because tests conducted on the metal piece revealed that said metal bar was not part of the Vessel.
Defendants concluded that the metal bar could only have been already co-mingled with the soybean meal upon loading by ContiQuincyBunge at loadport, and, therefore, defendants are not liable for the damages sustained by the unloader of ATI.7 (Citations omitted)
WHEREFORE, the appeal is GRANTED, x x x. Defendants-appellees are found jointly and severally liable to [ATI] for the amount of US$30,300.00 with interest thereon at 6% per annum from the filing of the Complaint on 9 March 1999 until the judgment becomes final and executory. Thereafter, an interest rate of 12% per annum shall be imposed until the amount is fully and actually paid.The CA explained its ruling, viz:chanRoblesvirtualLawlibrary
As a rule of evidence, the doctrine of res ipsa loquitur is peculiar to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of negligence.Anent the amount of the herein petitioners’ solidary liability, the CA found that only US$30,300.00 of ATI’s claim is supported by evidence. The quotation submitted by the manufacturer of Siwertell unloaders indicated that (a) the replacement cost for the two damaged screws is US$24,790.00, (b) freight cost is US$3,510.00, and (c) labor cost in removing and re-assembling the screws is US$2,000.00.13chanroblesvirtuallawlibrary
x x x x
We find the application of the doctrine of res ipsa loquitur to be appropriate in the case at bar.
First. Since the cargo to be unloaded was free-flowing soybean meal in bulk, ATI correctly used a pneumatic vacubator unloader to extract the soybean meal from the holds. Under normal unloading procedures of bulk grain, it is not expected that a metal foreign object would be among the grain to be unloaded. x x x.
Such an accident does not occur in the ordinary course of things, unless the loading of the soybean meal at loadport was mismanaged in some way that allowed a metal foreign object to be co-mingled with the soybean meal cargo.
Second. The damage to the vertical screws of ATI’s unloader was caused by the presence of the metal bar among the soybean meal in Hold No. 2 of the ship: an instrumentality within the exclusive control of the shipowner.
x x x According to defendants, “the vessel and her complement had no participation in the loading and discharge of said bulk cargo except to provide use of the vessel’s gear.”
Defendants’ argument is neither accurate nor meritorious. In the first place, the terms of the Charter Party in this case was not Free-In-and-Out-Stowed-and-Trimmed [FIOST] but Free-In-and-Spout-Trimmed-and-Free-Out [FISTFO].
x x x x
x x x [I]t appears that the FIOST clause in a Charter Party Agreement speaks of who is to bear the cost or expense of loading, spout trimming and unloading the cargo. “Free In and Out” means that the shipowner is free from such expenses. This becomes clearer when the FIOST clause is stipulated as an adjunct to the terms of payment of the freight rate.
x x x x
Being a provision for the apportionment of expense (as an exclusion from the rate of freight to be paid), the interpretation of the FIOST clause should not be extended to mean an apportionment of liability, unless specified in clear and unambiguous terms.
While there are instances where a Charter Party Agreement clearly states that the Charterer will be liable to third parties for damages caused by its cargo (as in the case of spills of petroleum oil cargo, or of damage to third parties caused by toxic cargo), there is no such provision in this case. Therefore, liability or non-liability for such damage cannot be presumed from the FIOST clause alone, and the Charter Party Agreement must be closely scrutinized for the parties’ intention on liability.
Clause 22 of the Charter Party Agreement states:chanRoblesvirtualLawlibrary“At loadport, the stevedores[,] although arranged by charterers, shippers, or their agents[, are] to be under the direction and control of the Master. All claims for damage allegedly caused by stevedores [are] to be settled between stevedores and Owners. Charterers shall render assistance to Owners to settle such damage in case of need.”x x x Clause 22 clearly states that loading shall be done under the direction and control of the Master. Hence, if the metal bar that damaged ATI’s unloader was inadvertently mixed into the soybean meal during loading, by express provision of the Charter Party Agreement, the cost of the damage should be borne by the shipowner because the loading was done under the supervision and control of the Master of the Vessel.
Hence, not only did defendants have presumed exclusive control of the Vessel during the loading of the soybean meal by reason of them being the owners or agents of the owners thereof, they also had actual exclusive control thereof by express stipulation in the Charter Party Agreement that the loading of the cargo shall be under the direction and control of the Master of the Vessel.
This is as it should be, considering that the charter in this case is a contract of affreightment by which the owner of a ship lets the whole or 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. The Supreme Court has held that if the charter is a contract of affreightment, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.
Third. There is neither allegation nor evidence in the record that ATI’s negligence contributed to the damage of its unloader.
All 3 requisites of res ipsa loquitur being present, the presumption or inference arises that defendants’ negligence was the proximate cause of the damage to ATI’s unloader. The burden of evidence shifted to defendants to prove otherwise. Th[e] defendants failed to do so.
x x x x
Defendants’ testimonial evidence consisted of the sole testimony of the former Operations Manager of Inter-Asia, who x x x on cross-examination, x x x admitted that he was not present at the loading of the cargo and, therefore, did not actually see that the soybean meal was free of any foreign metal object.
Defendants’ evidence, which heavily relies on (1) their erroneous interpretation of the FIOST clause in the Charter Party Agreement; (2) the Master’s unsupported allegation written on the Note of Protest that the metal bar did not come from the vessel; and (3) their witness’ dubious interpretation that the notation “loaded clean” on the Berth Term[ ]Grain Bills of Lading means that the soybean meal had no foreign material included therein, does not present a satisfactory answer to the question: How did the metal bar get co-mingled with the soybean meal, and what did the Master of the Vessel do to prevent such an occurrence? x x x.
By their failure to explain the circumstances that attended the accident, when knowledge of such circumstances is accessible only to them, defendants failed to overcome the prima facie presumption that the accident arose from or was caused by their negligence or want of care.
The res ipsa loquitur doctrine is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the accident or has the best opportunity of ascertaining it and that the plaintiff has no such knowledge, and therefore is compelled to allege negligence in general terms and to rely upon the proof of the happening of the accident in order to establish negligence. x x x.
x x x x
The prima facie evidence of defendants’ negligence, being unexplained and uncontroverted, is sufficient to maintain the proposition affirmed. Hence, the negligence of the Master of the Vessel is conclusively presumed to be the proximate cause of the damage sustained by ATI’s unloader. Moreover, since the Master’s liability is ultimately that of the shipowner because he is the representative of the shipowner, the shipowner and its agents are solidarily liable to pay ATI the amount of damages actually proved.
Articles 587 and 590 under Book III of the Code of Commerce provide for the liability of the shipowner and its agents for acts of the Master or Captain, as follows:chanRoblesvirtualLawlibraryArt. 587. The ship agent shall also be civilly liable for the indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel; but he may exempt himself therefrom by abandoning the vessel with all her equipment and the freight it may have earned during the voyage.
Art. 590. The co-owners of the vessel shall be civilly liable in the proportion of their interests in the common fund for the results of the acts of the captain referred to in Art. 587.12 (Citations omitted, italics and emphasis in the original, and underscoring ours)
Under this provision, petitioner’s functions as arrastre operator are (1) to receive, handle, care for, and deliver all merchandise imported and exported, upon or passing over Government-owned wharves and piers in the Port of Manila, (2) as well as to record or cheek all merchandise which may be delivered to said port at shipside, and in general[,] (3) to furnish light and water services and other incidental services in order to undertake its arrastre service. Note that there is nothing in those functions which relate to the trade and business of navigation x x x, nor to the use or operation of vessels x x x. Both as to the nature of the functions and the place of their performance (upon wharves and piers shipside), petitioner’s services are clearly not maritime. As we held in the Macondray case, they are no different from those of a depositary or warehouseman. Granting, arguendo, that petitioner’s arrastre service depends on, assists, or furthers maritime transportation x x x, it may be deemed merely incidental to its aforementioned functions as arrastre operator and does not, thereby, make petitioner’s arrastre service maritime in character.27 (Citations omitted, italics in the original, emphasis and underscoring ours)“The functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. 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.”28chanroblesvirtuallawlibrary
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.cralawredIn Taylor v. Manila Electric Railroad and Light Co.,31 the Court explained that to establish a plaintiff’s right to recovery for quasi-delicts, three elements must exist, to wit: (a) damages to the plaintiff; (b) negligence by act or omission of which defendant personally, or some person for whose acts it must respond, was guilty; and (c) the connection of cause and effect between the negligence and the damage.32chanroblesvirtuallawlibrary
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:The Court agrees with the CA that as regards ATI’s claim, only the amount of US$30,300.00 is duly supported by evidence. However, in view of Nacar, the said amount shall be subject to legal interest at the rate of six percent (6%) per annum reckoned from the finality of this Resolution, the date when the quantification of damages may be deemed to have been reasonably ascertained, until full satisfaction thereof.
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
x x x x.35 (Citation omitted, emphasis and italics in the original, and underscoring ours)
- When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
- When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
- When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
1Rollo, pp. 9-19.
2 Penned by Associate Justice Ricardo R. Rosario, with Associate Justices Hakim S. Abdulwahid and Samuel H. Gaerlan concurring; id. at 23-42.
3 Id. at 44.
4 Issued by Judge Gregorio B. Clemeña, Jr.; id. at 193-200.
5 Id. at 46-50.
6 Subsequently identified as Trans-Pacific Shipping Company, with address at 3200 N.W. Yeon Avenue, Portland, Oregon, United States of America, id. at 92.
7 Id. at 23-27.
8 Id. at 193-200.
9 Id. at 199.
10 Id. at 203-237.
11 Id. at 41.
12 Id. at 29-40.
13 Id. at 40.
14 Id. at 41.
15 Id. at 12.
16 Id. at 14.
17 Id. at 15.
18 Id. at 15-16.
19 Id. at 16-17.
20 Id. at 16.
21 Id. at 259-271.
22 Id. at 264.
23 Id. at 268.
24 Id. at 269.
25 Id. at 10.
26 111 Phil. 452 (1961).
27 Id. at 457.
28Asian Terminals, Inc. v. Philam Insurance Co., Inc., G.R. No. 181163, July 24, 2013, 702 SCRA 88, 115.
29International Container Terminal Services, Inc. v. Prudential Guarantee & Assurance Co., Inc., 377 Phil. 1082, 1090 (1999).
30 G.R. No. 180784, February 15, 2012, 666 SCRA 226.
31 16 Phil. 8 (1910).
32 Id. at 15.
33United States v. Barias, 23 Phil. 434, 437 (1912).
34 G.R. No. 189871, August 13, 2013, 703 SCRA 439.
35 Id. at 457-458.