G.R. No.

108897 October 2, 1997

SARKIES TOURS PHILIPPINES, INC., petitioner,

vs.
HONORABLE COURT OF APPEALS (TENTH DIVISION), DR. ELINO G. FORTADES, MARISOL A.
FORTADES and FATIMA MINERVA A. FORTADES, respondents.

ROMERO, J.:

This petition for review is seeking the reversal of the decision of the Court of Appeals in CA-G.R. CV No.
18979 promulgated on January 13, 1993, as well as its resolution of February 19, 1993, denying petitioner's
motion for reconsideration for being a mere rehash of the arguments raised in the appellant's brief.

The case arose from a damage suit filed by private respondents Elino, Marisol, and Fatima Minerva, all
surnamed Fortades, against petitioner for breach of contract of carriage allegedly attended by bad faith.

On August 31, 1984, Fatima boarded petitioner's De Luxe Bus No. 5 in Manila on her way to Legazpi
City. Her brother Raul helped her load three pieces of luggage containing all of her optometry review
books, materials and equipment, trial lenses, trial contact lenses, passport and visa, as well as her mother
Marisol's U.S. immigration (green) card, among other important documents and personal belongings. Her
belongings were kept in the baggage compartment of the bus, but during a stopover at Daet, it was
discovered that only one bag remained in the open compartment. The others, including Fatima's things,
were missing and might have dropped along the way. Some of the passengers suggested retracing the
route of the bus to try to recover the lost items, but the driver ignored them and proceeded to Legazpi
City.

Fatima immediately reported the loss to her mother who, in turn, went to petitioner's office in Legazpi
City and later at its head office in Manila. Petitioner, however, merely offered her P1,000.00 for each piece
of luggage lost, which she turned down. After returning to Bicol, disappointed but not defeated, mother
and daughter asked assistance from the radio stations and even from Philtranco bus drivers who plied
the same route on August 31st. The effort paid off when one of Fatima's bags was recovered. Marisol
further reported the incident to the National Bureau of Investigation's field office in Legazpi City and to
the local police.

On September 20, 1984, respondents, through counsel, formally demanded satisfaction of their complaint
from petitioner. In a letter dated October 1, 1984, the latter apologized for the delay and said that "(a)
team has been sent out to Bicol for the purpose of recovering or at least getting the full detail" 1 of the
incident.

After more than nine months of fruitless waiting, respondents decided to file the case below to recover
the value of the remaining lost items, as well as moral and exemplary damages, attorney's fees and
expenses of litigation. They claimed that the loss was due to petitioner's failure to observe extraordinary
diligence in the care of Fatima's luggage and that petitioner dealt with them in bad faith from the start.
Petitioner, on the other hand, disowned any liability for the loss on the ground that Fatima allegedly did
not declare any excess baggage upon boarding its bus.

On June 15, 1988, after trial on the merits, the court a quo adjudged the case in favor of respondents, viz.:
PREMISES CONSIDERED, judgment is hereby rendered in favor of the plaintiffs (herein respondents)
and against the herein defendant Sarkies Tours Philippines, Inc., ordering the latter to pay to the former
the following sums of money, to wit:

1. The sum of P30,000.00 equivalent to the value of the personal belongings of plaintiff Fatima Minerva
Fortades, etc. less the value of one luggage recovered;

2. The sum of P90,000.00 for the transportation expenses, as well as moral damages;

3. The sum of P10,000.00 by way of exemplary damages;

4. The sum of P5,000.00 as attorney's fees; and

5. The sum of P5,000.00 as litigation expenses or a total of One Hundred Forty Thousand (P140,000.00)
Pesos.

to be paid by herein defendant Sarkies Tours Philippines, Inc. to the herein plaintiffs within 30 days from
receipt of this Decision.

SO ORDERED.

On appeal, the appellate court affirmed the trial court's judgment, but deleted the award of moral and
exemplary damages. Thus,

WHEREFORE, premises considered, except as above modified, fixing the award for transportation
expenses at P30,000.00 and the deletion of the award for moral and exemplary damages, the decision
appealed from is AFFIRMED, with costs against defendant-appellant.

SO ORDERED.

Its motion for reconsideration was likewise rejected by the Court of Appeals, so petitioner elevated its
case to this Court for a review.

After a careful scrutiny of the records of this case, we are convinced that the trial and appellate courts
resolved the issues judiciously based on the evidence at hand.

Petitioner claims that Fatima did not bring any piece of luggage with her, and even if she did, none was
declared at the start of the trip. The documentary and testimonial evidence presented at the trial,
however, established that Fatima indeed boarded petitioner's De Luxe Bus No. 5 in the evening of August
31, 1984, and she brought three pieces of luggage with her, as testified by her brother Raul, 2 who helped
her pack her things and load them on said bus. One of the bags was even recovered by a Philtranco bus
driver. In its letter dated October 1, 1984, petitioner tacitly admitted its liability by apologizing to
respondents and assuring them that efforts were being made to recover the lost items.

The records also reveal that respondents went to great lengths just to salvage their loss. The incident was
reported to the police, the NBI, and the regional and head offices of petitioner. Marisol even sought the
assistance of Philtranco bus drivers and the radio stations. To expedite the replacement of her mother's
lost U.S. immigration documents, Fatima also had to execute an affidavit of loss. 3 Clearly, they would not
have gone through all that trouble in pursuit of a fancied loss.
Fatima was not the only one who lost her luggage. Apparently, other passengers had suffered a similar
fate: Dr. Lita Samarista testified that petitioner offered her P1,000.00 for her lost baggage and she accepted
it;4 Carleen Carullo-Magno lost her chemical engineering review materials, while her brother lost abaca
products he was transporting to Bicol.5

Petitioner's receipt of Fatima's personal luggage having been thus established, it must now be determined
if, as a common carrier, it is responsible for their loss. Under the Civil Code, "(c)ommon 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 . . . transported by them," 6 and this liability "lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to . . . the person who has a right to receive
them,"7 unless the loss is due to any of the excepted causes under Article 1734 thereof.8

The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of the
baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all of the
luggage was lost, to the prejudice of the paying passengers. As the Court of Appeals correctly observed:

. . . . Where the common carrier accepted its passenger's baggage for transportation and even had it
placed in the vehicle by its own employee, its failure to collect the freight charge is the common carrier's
own lookout. It is responsible for the consequent loss of the baggage. In the instant case, defendant
appellant's employee even helped Fatima Minerva Fortades and her brother load the luggages/baggages
in the bus' baggage compartment, without asking that they be weighed, declared, receipted or paid for
(TSN, August 4, 1986, pp. 29, 34, 54, 57, 70; December 23, 1987, p. 35). Neither was this required of the
other passengers (TSN, August 4, 1986, p. 104; February 5, 1988; p. 13).

Finally, petitioner questions the award of actual damages to respondents. On this point, we likewise
agree with the trial and appellate courts' conclusions. There is no dispute that of the three pieces of
luggage of Fatima, only one was recovered. The other two contained optometry books, materials,
equipment, as well as vital documents and personal belongings. Respondents had to shuttle between
Bicol and Manila in their efforts to be compensated for the loss. During the trial, Fatima and Marisol had
to travel from the United States just to be able to testify. Expenses were also incurred in reconstituting
their lost documents. Under these circumstances, the Court agrees with the Court of Appeals in awarding
P30,000.00 for the lost items and P30,000.00 for the transportation expenses, but disagrees with the
deletion of the award of moral and exemplary damages which, in view of the foregoing proven facts,
with negligence and bad faith on the fault of petitioner having been duly established, should be granted
to respondents in the amount of P20,000.00 and P5,000.00, respectively.

WHEREFORE, the assailed decision of the Court of Appeals dated January 13, 1993, and its resolution
dated February 19, 1993, are hereby AFFIRMED with the MODIFICATION that petitioner is ordered to
pay respondents an additional P20,000.00 as moral damages and P5,000.00 as exemplary damages. Costs
against petitioner.

SO ORDERED

G.R. No. 114167 July 12, 1995

COASTWISE LIGHTERAGE CORPORATION, petitioner,
vs.
COURT OF APPEALS and the PHILIPPINE GENERAL INSURANCE COMPANY, respondents.

RESOLUTION

FRANCISCO, R., J.:

This is a petition for review of a Decision rendered by the Court of Appeals, dated December 17, 1993,
affirming Branch 35 of the Regional Trial Court, Manila in holding that herein petitioner is liable to pay
herein private respondent the amount of P700,000.00, plus legal interest thereon, another sum of
P100,000.00 as attorney's fees and the cost of the suit.

The factual background of this case is as follows:

Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to Manila
with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb barges. The
barges were towed in tandem by the tugboat MT Marica, which is likewise owned by Coastwise.

Upon reaching Manila Bay, while approaching Pier 18, one of the barges, "Coastwise 9", struck an
unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in
through a hole "two inches wide and twenty-two inches long" 1 As a consequence, the molasses at the
cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the
consignee, Pag-asa Sales, Inc. to reject the shipment of molasses as a total loss. Thereafter, Pag-asa Sales,
Inc. filed a formal claim with the insurer of its lost cargo, herein private respondent, Philippine General
Insurance Company (PhilGen, for short) and against the carrier, herein petitioner, Coastwise Lighterage.
Coastwise Lighterage denied the claim and it was PhilGen which paid the consignee, Pag-asa Sales, Inc.,
the amount of P700,000.00, representing the value of the damaged cargo of molasses.

In turn, PhilGen then filed an action against Coastwise Lighterage before the Regional Trial Court of
Manila, seeking to recover the amount of P700,000.00 which it paid to Pag-asa Sales, Inc. for the latter's
lost cargo. PhilGen now claims to be subrogated to all the contractual rights and claims which the
consignee may have against the carrier, which is presumed to have violated the contract of carriage.

The RTC awarded the amount prayed for by PhilGen. On Coastwise Lighterage's appeal to the Court of
Appeals, the award was affirmed.

Hence, this petition.

There are two main issues to be resolved herein. First, whether or not petitioner Coastwise Lighterage
was transformed into a private carrier, by virtue of the contract of affreightment which it entered into
with the consignee, Pag-asa Sales, Inc. Corollarily, if it were in fact transformed into a private carrier, did
it exercise the ordinary diligence to which a private carrier is in turn bound? Second, whether or not the
insurer was subrogated into the rights of the consignee against the carrier, upon payment by the insurer
of the value of the consignee's goods lost while on board one of the carrier's vessels.
On the first issue, petitioner contends that the RTC and the Court of Appeals erred in finding that it was a
common carrier. It stresses the fact that it contracted with Pag-asa Sales, Inc. to transport the shipment of
molasses from Negros Oriental to Manila and refers to this contract as a "charter agreement". It then
proceeds to cite the case of Home Insurance Company vs. American Steamship Agencies, Inc.2 wherein this
Court held: ". . . a common carrier undertaking to carry a special cargo or chartered to a special person
only becomes a private carrier."

Petitioner's reliance on the aforementioned case is misplaced. In its entirety, the conclusions of the court
are as follows:

Accordingly, the charter party contract is one of affreightment over the whole vessel,
rather than a demise. As such, the liability of the shipowner for acts or negligence of its
captain and crew, would remain in the absence of stipulation.3

The distinction between the two kinds of charter parties (i.e. bareboat or demise and contract of
affreightment) is more clearly set out in the case of Puromines, Inc. vs. Court of Appeals,4 wherein we ruled:

Under the demise or bareboat charter of the vessel, the charterer will generally be
regarded as the owner for the voyage or service stipulated. The charterer mans the vessel
with his own people and becomes the owner pro hac vice, subject to liability to others for
damages caused by negligence. To create a demise, the owner of a vessel must
completely and exclusively relinquish possession, command and navigation thereof to
the charterer, anything short of such a complete transfer is a contract of affreightment (time or
voyage charter party) or not a charter party at all.

On the other hand a contract of affreightment is one in which the owner of the vessel
leases part or all of its space to haul goods for others. It is a contract for special service to
be rendered by the owner of the vessel and under such contract the general owner retains
the possession, command and navigation of the ship, the charterer or freighter merely
having use of the space in the vessel in return for his payment of the charter hire. . . . .

. . . . An owner who retains possession of the ship though the hold is the property of the
charterer, remains liable as carrier and must answer for any breach of duty as to the care,
loading and unloading of the cargo. . . .

Although a charter party may transform a common carrier into a private one, the same however is not
true in a contract of affreightment on account of the aforementioned distinctions between the two.

Petitioner admits that the contract it entered into with the consignee was one of affreightment. 5 We agree.
Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to
another, but the possession, command and navigation of the vessels remained with petitioner Coastwise
Lighterage.

Pursuant therefore to the ruling in the aforecited Puromines case, Coastwise Lighterage, by the contract of
affreightment, was not converted into a private carrier, but remained a common carrier and was still
liable as such.
The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in
good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad
order makes for a prima facie case against the carrier.

It follows then that the presumption of negligence that attaches to common carriers, once the goods it
transports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is
overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case.

The records show that the damage to the barge which carried the cargo of molasses was caused by its
hitting an unknown sunken object as it was heading for Pier 18. The object turned out to be a submerged
derelict vessel. Petitioner contends that this navigational hazard was the efficient cause of the accident.
Further it asserts that the fact that the Philippine Coastguard "has not exerted any effort to prepare a chart
to indicate the location of sunken derelicts within Manila North Harbor to avoid navigational
accidents"6 effectively contributed to the happening of this mishap. Thus, being unaware of the hidden
danger that lies in its path, it became impossible for the petitioner to avoid the same. Nothing could have
prevented the event, making it beyond the pale of even the exercise of extraordinary diligence.

However, petitioner's assertion is belied by the evidence on record where it appeared that far from
having rendered service with the greatest skill and utmost foresight, and being free from fault, the carrier
was culpably remiss in the observance of its duties.

Jesus R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed. The Code
of Commerce, which subsidiarily governs common carriers (which are primarily governed by the
provisions of the Civil Code) provides:

Art. 609. — Captains, masters, or patrons of vessels must be Filipinos, have legal capacity
to contract in accordance with this code, and prove the skill capacity and qualifications
necessary to command and direct the vessel, as established by marine and navigation
laws, ordinances or regulations, and must not be disqualified according to the same for
the discharge of the duties of the position. . . .

Clearly, petitioner Coastwise Lighterage's embarking on a voyage with an unlicensed patron violates this
rule. It cannot safely claim to have exercised extraordinary diligence, by placing a person whose
navigational skills are questionable, at the helm of the vessel which eventually met the fateful accident. It
may also logically, follow that a person without license to navigate, lacks not just the skill to do so, but
also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones.
Had the patron been licensed, he could be presumed to have both the skill and the knowledge that would
have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18.

As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to overcome
the presumption of negligence with the loss and destruction of goods it transported, by proof of its
exercise of extraordinary diligence.

On the issue of subrogation, which petitioner contends as inapplicable in this case, we once more rule
against the petitioner. We have already found petitioner liable for breach of the contract of carriage it
entered into with Pag-asa Sales, Inc. However, for the damage sustained by the loss of the cargo which
petitioner-carrier was transporting, it was not the carrier which paid the value thereof to Pag-asa Sales,
Inc. but the latter's insurer, herein private respondent PhilGen.

Article 2207 of the Civil Code is explicit on this point:

Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from
the insurance company for the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who violated the contract. . . .

This legal provision containing the equitable principle of subrogation has been applied in a long line of
cases including Compania Maritima v. Insurance Company of North America;7 Fireman's Fund Insurance
Company v. Jamilla & Company, Inc.,8 and Pan Malayan Insurance Corporation v. Court of Appeals, 9 wherein
this Court explained:

Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If
the insured property is destroyed or damaged through the fault or negligence of a party
other than the assured, then the insurer, upon payment to the assured will be subrogated
to the rights of the assured to recover from the wrongdoer to the extent that the insurer
has been obligated to pay. Payment by the insurer to the assured operated as an equitable
assignment to the former of all remedies which the latter may have against the third party whose
negligence or wrongful act caused the loss. The right of subrogation is not dependent upon,
nor does it grow out of, any privity of contract or upon written assignment of claim. It
accrues simply upon payment of the insurance claim by the insurer.

Undoubtedly, upon payment by respondent insurer PhilGen of the amount of P700,000.00 to Pag-asa
Sales, Inc., the consignee of the cargo of molasses totally damaged while being transported by petitioner
Coastwise Lighterage, the former was subrogated into all the rights which Pag-asa Sales, Inc. may have
had against the carrier, herein petitioner Coastwise Lighterage.

WHEREFORE, premises considered, this petition is DENIED and the appealed decision affirming the
order of Branch 35 of the Regional Trial Court of Manila for petitioner Coastwise Lighterage to pay
respondent Philippine General Insurance Company the "principal amount of P700,000.00 plus interest
thereon at the legal rate computed from March 29, 1989, the date the complaint was filed until fully paid
and another sum of P100,000.00 as attorney's fees and costs"10 is likewise hereby AFFIRMED

SO ORDERED.
G.R. No. 177116 February 27, 2013

ASIAN TERMINALS, INC., Petitioner,

vs.
SIMON ENTERPRISES, INC., Respondent.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision1 dated November 27, 2006 and Resolution2 dated March 23, 2007 of the
Court of Appeals (CA) in CA-G.R. CV No. 71210.

The facts are as follows:

On October 25, 1995, Contiquincybunge Export Company loaded 6,843.700 metric tons of U.S. Soybean
Meal in Bulk on board the vessel MN "Sea Dream" at the Port of Darrow, Louisiana, U.S.A., for delivery
to the Port of Manila to respondent Simon Enterprises, Inc., as consignee. When the vessel arrived at the
South Harbor in Manila, the shipment was discharged to the receiving barges of petitioner Asian
Terminals, Inc. (ATI), the arrastre operator. Respondent later received the shipment but claimed having
received only 6,825.144 metric tons of U.S. Soybean Meal, or short by 18.556 metric tons, which is
estimated to be worth US$7,100.16 or ₱186,743.20.3

On November 25, 1995, Contiquincybunge Export Company made another shipment to respondent and
allegedly loaded on board the vessel M/V "Tern" at the Port of Darrow, Louisiana, U.S.A. 3,300.000 metric
tons of U.S. Soybean Meal in Bulk for delivery to respondent at the Port of Manila. The carrier issued its
clean Berth Term Grain Bill of Lading.4

On January 25, 1996, the carrier docked at the inner Anchorage, South Harbor, Manila. The subject
shipment was discharged to the receiving barges of petitioner ATI and received by respondent which,
however, reported receiving only 3,100.137 metric tons instead of the manifested 3,300.000 metric tons of
shipment. Respondent filed against petitioner ATI and the carrier a claim for the shortage of 199.863
metric tons, estimated to be worth US$79,848.86 or ₱2,100,025.00, but its claim was denied.

Thus, on December 3, 1996, respondent filed with the Regional Trial Court (RTC) of Manila an action for
damages5 against the unknown owner of the vessels M/V "Sea Dream" and M/V "Tern," its local agent
Inter-Asia Marine Transport, Inc., and petitioner ATI alleging that it suffered the losses through the fault
or negligence of the said defendants. Respondent sought to claim damages plus attorney’s fees and costs
of suit. Its claim against the unknown owner of the vessel M/V "Sea Dream," however, was later settled in
a Release and Quitclaim6 dated June 9, 1998, and only the claims against the unknown owner of the M/V
"Tern," Inter-Asia Marine Transport, Inc., and petitioner ATI remained.

In their Answer,7 the unknown owner of the vessel M/V "Tern" and its local agent Inter-Asia Marine
Transport, Inc., prayed for the dismissal of the complaint essentially alleging lack of cause of action and
prescription. They alleged as affirmative defenses the following: that the complaint does not state a cause
of action; that plaintiff and/or defendants are not the real parties-in-interest; that the cause of action had
already prescribed or laches had set in; that the claim should have been filed within three days from
receipt of the cargo pursuant to the provisions of the Code of Commerce; that the defendant could no
longer check the veracity of plaintiff’s claim considering that the claim was filed eight months after the
cargo was discharged from the vessel; that plaintiff hired its own barges to receive the cargo and hence,
any damages or losses during the discharging operations were for plaintiff’s account and responsibility;
that the statement of facts bears no remarks on any short-landed cargo; that the draft survey report
indicates that the cargo discharged was more than the figures appearing in the bill of lading; that because
the bill of lading states that the goods are carried on a "shipper’s weight, quantity and quality unknown"
terms and on "all terms, conditions and exceptions as per charter party dated October 15, 1995," the vessel
had no way of knowing the actual weight, quantity, and quality of the bulk cargo when loaded at the port
of origin and the vessel had to rely on the shipper for such information; that the subject shipment was
discharged in Manila in the same condition and quantity as when loaded at the port of loading; that
defendants’ responsibility ceased upon discharge from the ship’s tackle; that the damage or loss was due
to the inherent vice or defect of the goods or to the insufficiency of packing thereof or perils or dangers or
accidents of the sea, pre-shipment damage or to improper handling of the goods by plaintiff or its
representatives after discharge from the vessel, for which defendants cannot be made liable; that
damage/loss occurred while the cargo was in the possession, custody or control of plaintiff or its
representative, or due to plaintiff’s own negligence and careless actuations in the handling of the cargo;
that the loss is less than 0.75% of the entire cargo and assuming arguendo that the shortage exists, the
figure is well within the accepted parameters when loading this type of bulk cargo; that defendants
exercised the required diligence under the law in the performance of their duties; that the vessel was
seaworthy in all respects; that the vessel went straight from the port of loading to Manila, without
passing through any intermediate ports so there was no chance for any loss of the cargo; the plaintiff’s
claim is excessive, grossly overstated, unreasonable and a mere paper loss and is certainly
unsubstantiated and without any basis; the terms and conditions of the relevant bill of lading and the
charter party, as well as the provisions of the Carriage of Goods by Sea Act and existing laws, absolve the
defendants from any liability; that the subject shipment was received in bulk and thus defendant carrier
has no knowledge of the condition, quality and quantity of the cargo at the time of loading; that the
complaint was not referred to the arbitrators pursuant to the bill of lading; that liability, if any, should not
exceed the CIF value of the lost cargo, or the limits of liability set forth in the bill of lading and the charter
party. As counterclaim, defendants prayed for the payment of attorney’s fees in the amount of ₱220,000.
By way of cross-claim, they ask for reimbursement from their co-defendant, petitioner ATI, in the event
that they are held liable to plaintiff.

Petitioner ATI meanwhile alleged in its Answer 8 that it exercised the required diligence in handling the
subject shipment. It moved for the dismissal of the complaint, and alleged by way of special and
affirmative defense that plaintiff has no valid cause of action against petitioner ATI; that the cargo was
completely discharged from the vessel M/V "Tern" to the receiving barges owned or hired by the plaintiff;
and that petitioner ATI exercised the required diligence in handling the shipment. By way of
counterclaim, petitioner ATI argued that plaintiff should shoulder its expenses for attorney’s fees in the
amount of ₱20,000 as petitioner ATI was constrained to engage the services of counsel to protect its
interest.

On May 10, 2001, the RTC of Manila rendered a Decision 9 holding petitioner ATI and its co-defendants
solidarily liable to respondent for damages arising from the shortage. The RTC held:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendants M/V "Tern" Inter-
Asia Marine Transport, Inc. and Asian Terminal Inc. jointly and severally liable to pay plaintiff Simon
Enterprises the sum of ₱2,286,259.20 with legal interest from the date the complaint was filed until fully
satisfied, 10% of the amount due plaintiff as and for attorney’s fees plus the costs of suit.

Defendants’ counterclaim and cross claim are hereby DISMISSED for lack of merit.

SO ORDERED.10

The trial court found that respondent has established that the losses/shortages were incurred prior to its
receipt of the goods. As such, the burden shifted to the carrier to prove that it exercised extraordinary
diligence as required by law to prevent the loss, destruction or deterioration.

However, the trial court held that the defendants failed to prove that they did so. The trial court gave
credence to the testimony of Eduardo Ragudo, a super cargo of defendant Inter-Asia Marine Transport,
Inc., who admitted that there were spillages or overflow down to the spillage saver. The trial court also
noted that said witness also declared that respondent’s representative was not allowed to sign the
Master’s Certificate. Such declaration, said the trial court, placed petitioner ATI in a bad light and
weakened its stand.

Not satisfied, the unknown owner of the vessel M/V "Tern," Inter-Asia Marine Transport, Inc. and
petitioner ATI respectively filed appeals to the CA. In their petition, the unknown owner of the vessel
M/V "Tern" and Inter-Asia Marine Transport, Inc. raised the question of whether the trial court erred in
finding that they did not exercise extraordinary diligence in the handling of the goods.11

On the other hand, petitioner ATI alleged that:

THE COURT-A-QUO COMMITTED SERIOUS AND REVERSIBLE ERROR IN HOLDING

DEFENDANT[-]APPELLANT ATI SOLIDARILY LIABLE WITH CO-DEFENDANT APPELLANT
INTERASIA MARINE TRANSPORT, INC. CONTRARY TO THE EVIDENCE PRESENTED. 12

On November 27, 2006, the CA promulgated the assailed Decision, the decretal portion of which reads:

WHEREFORE, the appealed Decision dated May 10, 2001 is affirmed, except the award of attorney’s fees
which is hereby deleted.

SO ORDERED.13

In affirming the RTC Decision, the CA held that there is no justification to disturb the factual findings of
the trial court which are entitled to respect on appeal as they were supported by substantial evidence. It
agreed with the findings of the trial court that the unknown owner of the vessel M/V "Tern" and Inter-
Asia Marine Transport, Inc. failed to establish that they exercised extraordinary diligence in transporting
the goods or exercised due diligence to forestall or lessen the loss as provided in Article 1742 14 of the Civil
Code. The CA also ruled that petitioner ATI, as the arrastre operator, should be held jointly and severally
liable with the carrier considering that petitioner ATI’s stevedores were under the direct supervision of
the unknown owner of M/V "Tern" and that the spillages occurred when the cargoes were being
unloaded by petitioner ATI’s stevedores.
Petitioner ATI filed a motion for reconsideration, 15 but the CA denied its motion in a Resolution 16dated
March 23, 2007. The unknown owner of the vessel M/V "Tern" and Inter-Asia Marine Transport, Inc. for
their part, appealed to this Court via a petition for review on certiorari, which was docketed as G.R. No.
177170. Its appeal, however, was denied by this Court on July 16, 2007 for failure to sufficiently show any
reversible error committed by the CA in the challenged Decision and Resolution as to warrant the
exercise of this Court’s discretionary appellate jurisdiction. The unknown owner of M/V "Tern" and Inter-
Asia Marine Transport, Inc. sought reconsideration of the denial but their motion was denied by the
Court in a Resolution dated October 17, 2007.17

Meanwhile, on April 20, 2007, petitioner ATI filed the present petition raising the sole issue of whether
the appellate court erred in affirming the decision of the trial court holding petitioner ATI solidarily liable
with its codefendants for the shortage incurred in the shipment of the goods to respondent.

Petitioner ATI argues that:

1. Respondent failed to prove that the subject shipment suffered actual loss/shortage as there was
no competent evidence to prove that it actually weighed 3,300 metric tons at the port of origin.

2. Stipulations in the bill of lading that the cargo was carried on a "shipper’s weight, quantity and
quality unknown" is not contrary to public policy. Thus, herein petitioner cannot be bound by the
quantity or weight of the cargo stated in the bill of lading.

3. Shortage/loss, if any, may have been due to the inherent nature of the shipment and its
insufficient packing considering that the subject cargo was shipped in bulk and had a moisture
content of 12.5%.

4. Respondent failed to substantiate its claim for damages as no competent evidence was
presented to prove the same.1âwphi1

5. Respondent has not presented any scintilla of evidence showing any fault/negligence on the
part of herein petitioner.

6. Petitioner ATI should be entitled to its counterclaim.18

Respondent, on the other hand, quotes extensively the CA decision and maintains its correctness.

We grant the petition.

The CA erred in affirming the decision of the trial court holding petitioner ATI solidarily liable with its
co-defendants for the shortage incurred in the shipment of the goods to respondent.

We note that the matters raised by petitioner ATI involve questions of fact which are generally not
reviewable in a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, as the Court is not a trier of facts. Section 1 thereof provides that "the petition x x x shall raise
only questions of law, which must be distinctly set forth."
A question of law exists when the doubt or controversy concerns the correct application of law or
jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative
value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact exists
when the doubt or difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and
relevancy of specific surrounding circumstances as well as their relation to each other and to the whole,
and the probability of the situation.19

The well-entrenched rule in our jurisdiction is that only questions of law may be entertained by this
Court in a petition for review on certiorari. This rule, however, is not ironclad and admits certain
exceptions, such as when (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the
inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the
judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no
citation of specific evidence on which the factual findings are based; (7) the findings of absence of facts
are contradicted by the presence of evidence on record; (8) the findings of the Court of Appeals are
contrary to those of the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and
undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the
Court of Appeals are beyond the issues of the case; and (11) such findings are contrary to the admissions
of both parties.20

After a careful review of the records, we find justification to warrant the application of the fourth
exception. The CA misapprehended the following facts.

First, petitioner ATI is correct in arguing that the respondent failed to prove that the subject shipment
suffered actual shortage, as there was no competent evidence to prove that it actually weighed 3,300
metric tons at the port of origin.

Though it is true that common carriers are presumed to have been at fault or to have acted negligently if
the goods transported by them are lost, destroyed, or deteriorated, and that the common carrier must
prove that it exercised extraordinary diligence in order to overcome the presumption, 21 the plaintiff must
still, before the burden is shifted to the defendant, prove that the subject shipment suffered actual
shortage. This can only be done if the weight of the shipment at the port of origin and its subsequent
weight at the port of arrival have been proven by a preponderance of evidence, and it can be seen that the
former weight is considerably greater than the latter weight, taking into consideration the exceptions
provided in Article 173422 of the Civil Code.

In this case, respondent failed to prove that the subject shipment suffered shortage, for it was not able to
establish that the subject shipment was weighed at the port of origin at Darrow, Louisiana, U.S.A. and
that the actual weight of the said shipment was 3,300 metric tons.

The Berth Term Grain Bill of Lading 23 (Exhibit "A"), the Proforma Invoice24 (Exhibit "B"), and the Packing
List25 (Exhibit "C"), being used by respondent to prove that the subject shipment weighed 3,300 metric
tons, do not, in fact, help its cause. The Berth Term Grain Bill of Lading states that the subject shipment
was carried with the qualification "Shipper’s weight, quantity and quality unknown," meaning that it was
transported with the carrier having been oblivious of the weight, quantity, and quality of the cargo. This
interpretation of the quoted qualification is supported by Wallem Philippines Shipping, Inc. v. Prudential
Guarantee & Assurance, Inc.,26 a case involving an analogous stipulation in a bill of lading, wherein the
Supreme Court held that:

Indeed, as the bill of lading indicated that the contract of carriage was under a "said to weigh" clause, the
shipper is solely responsible for the loading while the carrier is oblivious of the contents of the
shipment. (Emphasis supplied)

Similarly, International Container Terminal Services, Inc. v. Prudential Guarantee & Assurance Co.,
Inc.,27 explains the meaning of clauses analogous to "Shipper’s weight, quantity and quality unknown" in
this manner:

This means that the shipper was solely responsible for the loading of the container, while the carrier
was oblivious to the contents of the shipment x x x. The arrastre operator was, like any ordinary
depositary, duty-bound to take good care of the goods received from the vessel and to turn the same over
to the party entitled to their possession, subject to such qualifications as may have validly been imposed
in the contract between the parties. The arrastre operator was not required to verify the contents of the
container received and to compare them with those declared by the shipper because, as earlier stated,
the cargo was at the shipper’s load and count x x x. (Italics in the original; emphasis supplied)

Also, Bankers & Manufacturers Assurance Corporation v. Court of Appeals28 elucidates thus:

The recital of the bill of lading for goods thus transported [i.e., transported in sealed containers or
"containerized"] ordinarily would declare "Said to Contain", "Shipper’s Load and Count", "Full Container
Load", and the amount or quantity of goods in the container in a particular package is only prima
facie evidence of the amount or quantity x x x.

A shipment under this arrangement is not inspected or inventoried by the carrier whose duty is only
to transport and deliver the containers in the same condition as when the carrier received and accepted
the containers for transport x x x. (Emphasis supplied)

Hence, as can be culled from the above-mentioned cases, the weight of the shipment as indicated in the
bill of lading is not conclusive as to the actual weight of the goods. Consequently, the respondent must
still prove the actual weight of the subject shipment at the time it was loaded at the port of origin so that a
conclusion may be made as to whether there was indeed a shortage for which petitioner must be liable.
This, the respondent failed to do.

The Proforma Invoice militates against respondent’s claim that the subject shipment weighed 3,300 metric
tons. The pertinent portion of the testimony of Mr. Jose Sarmiento, respondent’s Claims Manager, is
narrated below:

Atty. Rebano: You also identified a while ago, Mr. Witness Exhibit B, the invoice. Why does it state as
description of the cargo three thousand metric tons and not three thousand three hundred?

A: Usually there is a contract between the supplier and our company that embodied [sic] in the letter
credit [sic] that they have the option to ship the cargo plus or minus ten percent of the quantity.

xxxx
Q: So, it is possible for the shipper to ship less than ten percent in [sic] the quantity stated in the
invoice and it will still be a valid shipment. Is it [sic] correct?

A: It [sic] is correct but we must be properly advised and the commercial invoice should indicate how
much they sent to us.29 (Emphasis supplied)

The quoted part of Mr. Sarmiento’s testimony not only shows uncertainty as to the actual weight of the
shipment, it also shows that assuming respondent did order 3,300 metric tons of U.S. Soybean Meal from
Contiquincybunge Export Company, and also assuming that it only received 3,100.137 metric tons, such
volume would still be a valid shipment because it is well within the 10% allowable shortage. Note that
Mr. Sarmiento himself mentioned that the supplier has the option to "ship the cargo plus or minus ten
percent of the quantity."30

Notably also, the genuineness and the due execution of the Packing List, the Berth Term Grain Bill of
Lading, and the Proforma Invoice, were not established.

Wallem Philippines Shipping, Inc.,31 is instructive on this matter:

We find that the Court of Appeals erred in finding that a shortage had taken place. Josephine Suarez,
Prudential’s claims processor, merely identified the papers submitted to her in connection with GMC’s
claim (Bill of Lading BEDI/1 (Exh. "B"), Commercial Invoice No. 1401 issued by Toepfer International Asia
Pte, Ltd. (Exh. "C"), SGS Certificate of Quality (Exh. "F-1"), and SGS Certificate of Weight (Exh. "F-
3")). Ms. Suarez had no personal knowledge of the contents of the said documents and could only
surmise as to the actual weight of the cargo loaded on M/V Gao Yang x x x.

xxxx

Ms. Suarez’s testimony regarding the contents of the documents is thus hearsay, based as it is on the
knowledge of another person not presented on the witness stand.

Nor has the genuineness and due execution of these documents been established. In the absence of
clear, convincing, and competent evidence to prove that the shipment indeed weighed 4,415.35 metric
tons at the port of origin when it was loaded on the M/V Gao Yang, it cannot be determined whether
there was a shortage of the shipment upon its arrival in Batangas. (Emphasis supplied)

As in the present case, Mr. Sarmiento merely identified the three above-mentioned exhibits, but he had no
personal knowledge of the weight of the subject shipment when it was loaded onto the M/V "Tern" at the
port of origin. His testimony as regards the weight of the subject shipment as described in Exhibits "A,"
"B," and "C" must then be considered as hearsay,32 for it was based on the knowledge of a person who
was not presented during the trial in the RTC.

The presumption that the Berth Term Grain Bill of Lading serves as prima facie evidence of the weight of
the cargo has been rebutted, there being doubt as to the weight of the cargo at the time it was loaded at
the port of origin. Further, the fact that the cargo was shipped with the arrangement "Shipper’s weight,
quantity and quality unknown," indeed means that the weight of the cargo could not be determined
using as basis the figures written on the Berth Term Grain Bill of Lading. This is in line with Malayan
Insurance Co., Inc. v. Jardine Davies Transport Services, Inc.,33 where we said:
The presumption that the bill of lading, which petitioner relies upon to support its claim for
restitution, constitutes prima facie evidence of the goods therein described was correctly deemed by the
appellate court to have been rebutted in light of abundant evidence casting doubts on its veracity.

That MV Hoegh undertook, under the bill of lading, to transport 6,599.23 MT of yellow crude sulphur on a
"said to weigh" basis is not disputed. Under such clause, the shipper is solely responsible for the loading
of the cargo while the carrier is oblivious of the contents of the shipment. Nobody really knows
the actual weight of the cargo inasmuch as what is written on the bill of lading, as well as on the manifest,
is based solely on the shipper’s declaration.

The bill of lading carried an added clause – the shipment’s weight, measure, quantity, quality,
condition, contents and value unknown. Evidently, the weight of the cargo could not be gauged from
the bill of lading. (Italics in the original; emphasis supplied)

The respondent having failed to present evidence to prove the actual weight of the subject shipment
when it was loaded onto the M/V "Tern," its cause of action must then fail because it cannot prove the
shortage that it was alleging. Indeed, if the claimant cannot definitively establish the weight of the subject
shipment at the point of origin, the fact of shortage or loss cannot be ascertained. The claimant then has
no basis for claiming damages resulting from an alleged shortage. Again, Malayan Insurance Co.,
Inc.,34 provides jurisprudential basis:

In the absence of clear, convincing and competent evidence to prove that the cargo indeed
weighed, albeit the Bill of Lading qualified it by the phrase "said to weigh," 6,599.23 MT at the port of
origin when it was loaded onto the MV Hoegh, the fact of loss or shortage in the cargo upon its arrival in
Manila cannot be definitively established. The legal basis for attributing liability to either of the
respondents is thus sorely wanting. (Emphasis supplied)

Second, as correctly asserted by petitioner ATI, the shortage, if any, may have been due to the inherent
nature of the subject shipment or its packaging since the subject cargo was shipped in bulk and had a
moisture content of 12.5%.

It should be noted that the shortage being claimed by the respondent is minimal, and is an indication that
it could be due to consolidation or settlement of the subject shipment, as accurately observed by the
petitioner. A Kansas State University study on the handling and storage of soybeans and soybean
meal35 is instructive on this matter. Pertinent portions of the study reads:

Soybean meal is difficult to handle because of poor flow ability and bridging characteristics. Soybean
meal tends to settle or consolidate over time. This phenomenon occurs in most granular materials and
becomes more severe with increased moisture, time and small particle size x x x.

xxxx

Moisture is perhaps the most important single factor affecting storage of soybeans and soybean
meal. Soybeans contain moisture ranging from 12% to 15% (wet basis) at harvest time x x x.

xxxx
Soybeans and soybean meal are hygroscopic materials and will either lose (desorb) or gain (adsorb)
moisture from the surrounding air. The moisture level reached by a product at a given constant
temperature and equilibrium relative humidity (ERH) is its equilibrium moisture content (EMC) x x x.
(Emphasis supplied)

As indicated in the Proforma Invoice mentioned above, the moisture content of the subject shipment was
12.5%. Taking into consideration the phenomena of desorption, the change in temperature surrounding
the Soybean Meal from the time it left wintertime Darrow, Louisiana, U.S.A. and the time it arrived in
Manila, and the fact that the voyage of the subject cargo from the point of loading to the point of
unloading was 36 days, the shipment could have definitely lost weight, corresponding to the amount of
moisture it lost during transit.

The conclusion that the subject shipment lost weight in transit is bolstered by the testimony of Mr.
Fernando Perez, a Cargo Surveyor of L.J. Del Pan. The services of Mr. Perez were requested by
respondent.36 Mr. Perez testified that it was possible for the subject shipment to have lost weight during
the 36-day voyage, as it was wintertime when M/V "Tern" left the United States and the climate was
warmer when it reached the Philippines; hence the moisture level of the Soybean Meal could have
changed.37 Moreover, Mr. Perez himself confirmed, by answering a question propounded by the RTC,
that loss of weight of the subject cargo cannot be avoided because of the shift in temperature from the
colder United States weather to the warmer Philippine climate.38

More importantly, the 199.863 metric-ton shortage that respondent alleges is a minimal 6.05% of the
weight of the entire Soy Bean Meal shipment. Taking into consideration the previously mentioned option
of the shipper to ship 10% more or less than the contracted shipment, and the fact that the alleged
shortage is only 6.05% of the total quantity of 3,300 metric tons, the alleged percentage loss clearly does
not exceed the allowable 10% allowance for loss, as correctly argued by petitioner. The alleged loss, if
any, not having exceeded the allowable percentage of shortage, the respondent then has no cause of
action to claim for shortages.

Third, we agree with the petitioner ATI that respondent has not proven any negligence on the part of the
former.

As petitioner ATI pointed out, a reading of the Survey Report of Del Pan Surveyors 39 (Exhibits "D" to "D-
4" of respondent) would not show any untoward incident or negligence on the part of petitioner ATI
during the discharging operations.

Also, a reading of Exhibits "D", "D-1", and "D-2" would show that the methods used in determining
whether there was a shortage are not accurate.

Respondent relied on the Survey Reports of Del Pan Surveyors to prove that the subject shipment
suffered loss. The conclusion that there was a shortage arose from an evaluation of the weight of the
cargo using the barge displacement method. This is a type of draught survey, which is a method of cargo
weight determination by ship’s displacement calculations. 40 The basic principle upon which the draught
survey methodology is based is the Principle of Archimedes, i.e., a vessel when floating in water, will
displace a weight of water equal to its own weight.41 It then follows that if a weight of cargo is loaded on
(or unloaded from) a vessel freely floating in water, then the vessel will sink (or float) into the water until
the total weight of water displaced is equal to the original weight of the vessel, plus (or minus) the cargo
which has been loaded (or unloaded) and plus (or minus) density variation of the water between the
starting survey (first measurement) and the finishing survey (second measurement). 42 It can be seen that
this method does not entail the weighing of the cargo itself, but as correctly stated by the petitioner, the
weight of the shipment is being measured by mere estimation of the water displaced by the barges before
and after the cargo is unloaded from the said barges.

In addition, the fact that the measurements were done by Del Pan Surveyors in prevailing slight to
slightly rough sea condition43 supports the conclusion that the resulting measurement may not be
accurate. A United Nations study on draught surveys 44 in fact states that the accuracy of draught surveys
will be dependent upon several factors, one of which is the weather and seas condition in the harbor.

Also, it can be seen in respondent’s own Exhibit "D-1" that the actual weight of the cargo was established
by weighing 20% of the cargo. Though we recognize the practicality of establishing cargo weight through
random sampling, we note the discrepancy in the weights used in the determination of the alleged
shortage.

Exhibit "D-1" of respondent states that the average weight of each bag is 52 kilos. A total of 63,391
bags45 were discharged from the barges, and the tare weight 46 was established at 0.0950 kilos.47 Therefore,
if one were to multiply 52 kilos per bag by 63,391 bags and deduct the tare weight of 0.0950 kilos
multiplied by 63,391 bags, the result would be 3,290,309.65 kilos, or 3,290.310 metric tons. This would
mean that the shortage was only 9.69 metric tons, if we suppose that respondent was able to establish that
the shipment actually weighed 3,300 metric tons at the port of loading.

However, the computation in Exhibit "D-2" would show that Del Pan Surveyors inexplicably used 49
kilos as the weight per bag, instead of 52 kilos, therefore resulting in the total net weight of 3,100,137 kilos
or 3,100.137 metric tons. This was the figure used as basis for respondent's conclusion that there is a
shortage of 199.863 metric tons.48

These discrepancies only lend credence to petitioner ATI's assertion that the weighing methods
respondent used as bases are unreliable and should not be completely relied upon.

Considering that respondent was not able to establish conclusively that the subject shipment weighed
3,300 metric tons at the port of loading, and that it cannot therefore be concluded that there was a
shortage for which petitioner should be responsible; bearing in mind that the subject shipment most
likely lost weight in transit due to the inherent nature of Soya Bean Meal; assuming that the shipment lost
weight in transit due to desorption, the shortage of 199.863 metric tons that respondent alleges is a
minimal 6.05% of the weight of the entire shipment, which is within the allowable 10% allowance for loss;
and noting that the respondent was not able to show negligence on the part of the petitioner and that the
weighing methods which respondent relied upon to establish the shortage it alleges is inaccurate,
respondent cannot fairly claim damages against petitioner for the subject shipment's alleged shortage.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated November 27, 2006
and Resolution dated March 23, 2007 of the Court of Appeals in CA-G.R. CV No. 71210 are REVERSED
AND SET ASIDE insofar as petitioner Asian Terminals, Inc. is concerned. Needless to add, the complaint
against petitioner docketed as RTC Manila Civil Case No. 96-81101 is ordered DISMISSED.