Regional Container Lines v. Netherlands Insurance
REITERATIONFacts
The Antecedents: On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be shipped from Singapore to Manila for Temic Telefunken Microelectronics Philippines (Temic). U-Freight Singapore PTE Ltd. contracted Pacific Eagle Lines PTE. Ltd. to transport the cargo, which was packed, stored, and sealed in a refrigerated container kept at 0º Celsius. Pacific Eagle loaded the container onto M/V Piya Bhum, owned by Regional Container Lines (RCL) of Singapore, with which Pacific Eagle had a slot charter agreement. RCL issued its Bill of Lading. Netherlands Insurance Company (Philippines), Inc. (Netherlands Insurance) issued a Marine Open Policy to Temic to insure the cargo. On October 25, 1995, the M/V Piya Bhum docked in Manila. After unloading, the container was plugged into the pier's power terminal. A survey indicated the temperature remained constant at 0º Celsius until midnight of October 25, 1995, when it fluctuated to 33º Celsius, believed to be caused by a burnt condenser fan motor. Temic received the shipment on November 9, 1995, finding the cargo completely damaged. Netherlands Insurance paid Temic ₱1,036,497.00 and was subrogated to Temic's rights. Procedural History: Seven months later, on June 4, 1996, Netherlands Insurance filed a complaint for subrogation against the owner of M/V Piya Bhum and TMS Ship Agencies. The complaint was amended to implead EDSA Shipping Agency (RCL's agent), RCL, and others. Various defendants filed answers, disclaiming liability and attributing negligence to others. RCL and EDSA Shipping denied negligence, asserted no valid subrogation existed, and raised affirmative defenses of lack of cause of action, not being the real party-in-interest, and prescription. After Netherlands Insurance offered its evidence, RCL and EDSA Shipping filed a demurrer to evidence, arguing failure to prove valid subrogation and negligence on their part. On May 22, 2002, the Regional Trial Court (RTC) dismissed the case, ruling that while subrogation was valid, the defendants' liability ended upon discharge of the cargo from the ship. Netherlands Insurance appealed to the Court of Appeals (CA). On May 26, 2004, the CA reversed the dismissal against RCL and EDSA Shipping, deeming them to have waived their right to present evidence pursuant to Section 1, Rule 33 of the Rules of Civil Procedure, and ordered them to reimburse Netherlands Insurance. The CA affirmed the dismissal against other defendants due to prescription. RCL and EDSA Shipping's motion for reconsideration was denied. The Petition: Petitioners RCL and EDSA Shipping filed a petition for review on certiorari seeking to annul the CA's decision, arguing that the CA erred in holding them liable as common carriers under the theory of presumption of negligence.
Issue(s)
Whether the Court of Appeals correctly held Petitioners Regional Container Lines (RCL) and EDSA Shipping Agency liable as common carriers under the theory of presumption of negligence. Whether the damage to the cargo occurred while it was under the custody of the common carriers or the arrastre operator. Whether Petitioners RCL and EDSA Shipping sufficiently proved that they exercised extraordinary diligence to overcome the presumption of negligence. Whether Petitioners RCL and EDSA Shipping are deemed to have waived their right to present evidence due to their demurrer to evidence being reversed on appeal.
Ruling
The petition is denied. The decision of the Court of Appeals dated May 26, 2004, is affirmed in toto. Costs against the petitioners.
Ratio Decidendi
On the issue of whether the Court of Appeals correctly held Petitioners RCL and EDSA Shipping liable as common carriers under the theory of presumption of negligence: Common carriers are bound to observe extraordinary diligence in the vigilance over goods transported. Article 1735 of the Civil Code creates a presumption of fault or negligence against common carriers when goods are lost, destroyed, or deteriorated, unless they prove they observed extraordinary diligence as required by Article 1733. In this case, the petitioners disclaimed responsibility, attributing the damage to the fluctuation of temperature in the reefer van after discharge from the vessel and under the custody of the arrastre operator. However, this argument does not disprove that the condenser fan motor, which caused the temperature fluctuation, was not damaged while the cargo was being unloaded from the ship. Maritime law jurisprudence holds that cargoes generally remain under the custody of the carrier while being unloaded, a fact the petitioners failed to dispute. Therefore, the presumption of negligence under Article 1735 applies. On the issue of whether the damage to the cargo occurred while it was under the custody of the common carriers or the arrastre operator: The petitioners argue that the damage occurred after the cargo was discharged and under the arrastre operator's custody, invoking Article 1734 (paragraphs 3 and 4) which exempts carriers from liability for damage caused by the character of the goods or defects in packing or containers. While the temperature fluctuation was recorded after discharge, this fact alone does not absolve the carriers. The evidence does not preclude the possibility that the condenser fan motor was damaged during the unloading process, which is still within the carrier's period of responsibility. The petitioners failed to present evidence to show that the damage did not occur during transit, unloading, or constructive delivery. On the issue of whether Petitioners RCL and EDSA Shipping sufficiently proved that they exercised extraordinary diligence to overcome the presumption of negligence: To overcome the presumption of negligence, a common carrier must establish by adequate proof that it exercised extraordinary diligence. It is not enough to merely show that another party might be responsible. The petitioners failed to present any evidence to demonstrate the extraordinary care and diligence they allegedly exercised in handling the goods. Their decision to file a demurrer to evidence, which was subsequently reversed on appeal, meant they forfeited the opportunity to present such proof. On the issue of whether Petitioners RCL and EDSA Shipping are deemed to have waived their right to present evidence due to their demurrer to evidence being reversed on appeal: When the RTC dismissed the case on demurrer to evidence, the defendants were spared from presenting their own evidence. However, upon appeal, the CA reversed this dismissal and, pursuant to Section 1, Rule 33 of the Rules of Civil Procedure, deemed the defendants (RCL and EDSA Shipping) to have waived their right to present evidence. This procedural consequence means that the presumption of negligence against them must stand, as they failed to present any evidence to rebut it or to support their affirmative defenses, such as defects in the container or packing.
Main Doctrine
A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. To overcome this presumption, the carrier must establish by adequate proof that it exercised extraordinary diligence, and cannot merely show that some other party could be responsible for the damage. When a demurrer to evidence is granted and subsequently reversed on appeal, the defendant is deemed to have waived the right to present evidence, and the presumption of negligence stands.