Unknown Owner v. Asian Terminals
REITERATIONFacts
The Antecedents: On January 25, 1997, the cargo ship M/V "China Joy" arrived at the Mariveles Grain Terminal Wharf, operated by Asian Terminals, Inc. (ATI). While ATI was unloading soybean meal from Hold No. 2 using its Siwertell Unloader No. 2 on February 3, 1997, the unloader struck a flat steel bar approximately 8 to 10 inches in length, 4 inches in width, and 1 ¼ inch in thickness. This foreign object lodged in the unloader, causing portions of screws numbers 2 and 3 to crack and shear off. ATI sent a Note of Protest to the Vessel's Master, who disclaimed responsibility, stating the metal piece came from the cargo, not the vessel. ATI subsequently sent a claim for damages totaling US$37,185.00 plus US$2,000.00 in labor costs to Inter-Asia Marine Transport, Inc. (Inter-Asia), which rejected the claim, identifying its principal as Samsun Shipping Ltd. (Samsun) and stating the vessel owner was Trans-Pacific Shipping Co. ATI filed a complaint for damages against the Unknown Owner of the Vessel M/V "China Joy," Samsun, and Inter-Asia on March 9, 1999. Procedural History: The Regional Trial Court (RTC) of Manila, Branch 51, dismissed Asian Terminals, Inc.'s (ATI) complaint for damages for insufficiency of evidence on January 30, 2009, stating it was unclear who caused the metal piece to be commingled with the shipment. ATI appealed this decision to the Court of Appeals (CA). The CA, in its Decision dated November 10, 2010, reversed the RTC's ruling, finding the defendants jointly and severally liable to ATI for US$30,300.00 plus interest. The CA applied the doctrine of res ipsa loquitur, holding that the accident, the exclusive control of the vessel by the shipowner, and the absence of ATI's negligence established the defendants' liability. The CA also clarified that the Charter Party Agreement was not FIOST but FISTFO, and that Clause 22 of the agreement placed the loading under the direction and control of the Master, thus making the shipowner liable. The petitioners filed a motion for reconsideration, which the CA denied in a Resolution dated February 14, 2011. The Petition: The petitioners, the Unknown Owner of the Vessel M/V "China Joy," Samsun Shipping Ltd., and Inter-Asia Marine Transport, Inc., filed a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the CA's Decision and Resolution. They argue that the CA erred in applying the doctrine of res ipsa loquitur and in rejecting their argument that they had no participation in the loading and discharge of the cargo due to the Free-In-and-Out Clause. The petitioners contend that the metal object was found in the middle of the cargo, indicating it came with the cargo and not from the vessel. They also assert that the Master's control under Clause 22 is figurative and that liability should rest with the cargo owner, who was not impleaded. They further claim that res ipsa loquitur should support their lack of culpability as they lacked knowledge or opportunity to ascertain the object's presence. ATI, in its comment, counters that res ipsa loquitur is applicable, that the vessel was within the petitioners' exclusive control, and that the petitioners failed to present conclusive evidence regarding the metal bar's location or the loading process.
Issue(s)
Whether the Court of Appeals erred in applying the doctrine of res ipsa loquitur; and the liability for the loading of the cargo. Whether the petitioners had no participation in the loading and discharge of the bulk cargo except to provide use of the vessel's gear; and the amount of damages and interest.
Ruling
The Supreme Court affirmed the Court of Appeals' decision finding the petitioners liable to ATI for the damage sustained by its unloader, but modified the basis of liability to quasi-delict under Article 2176 of the Civil Code, not a contract of carriage. The Court also modified the rate of interest on the damages awarded. Dispositive Portion: The Decision dated November 10, 2010 of the Court of Appeals in CA-G.R. CV No. 93164 is AFFIRMED with MODIFICATION. The petitioners, Unknown Owner of the Vessel M/V China Joy, Samsun Shipping Ltd. and Inter-Asia Marine Transport, Inc., are hereby ordered to pay the respondent, Asian Terminals, Inc., actual and compensatory damages in the amount of US$30,300.00, plus legal interest at the rate of six percent (6%) per annum reckoned from the finality of this Resolution until full satisfaction thereof.
Ratio Decidendi
On the applicability of the doctrine of res ipsa loquitur and liability for loading: The Court affirmed the CA's application of res ipsa loquitur. The Court found that the co-mingling of foreign metal objects with the soybean meal cargo, leading to the damage of ATI's unloader, was an accident that ordinarily does not occur without negligence. The foreign objects were found in Hold No. 2 of the vessel, which was within the exclusive control of the petitioners. Furthermore, there was no evidence that ATI's own negligence contributed to the damage. The presence of these three requisites gave rise to a prima facie presumption of negligence on the part of the petitioners, shifting the burden of evidence to them to prove otherwise, which they failed to do. The Court clarified that there was no contract of carriage between ATI and the petitioners, and ATI's role as an arrastre operator did not involve maritime commerce. Instead, the liability arose from quasi-delict under Article 2176 of the Civil Code. The Court found the petitioners' argument regarding the FIOST clause to be misplaced, as the Charter Party Agreement stipulated that loading was to be under the direction and control of the Master (Clause 22). This stipulation meant that even if stevedores were arranged by charterers, the Master's control over the loading process made the shipowner responsible for damages caused during loading, such as the co-mingling of foreign objects. The Court reiterated that in a contract of affreightment, the rights and responsibilities of ownership rest on the owner, and the charterer is generally free from liability to third persons concerning the ship. The petitioners' failure to present satisfactory evidence explaining how the metal bar came to be mixed with the cargo and what measures were taken to prevent it led to the presumption of their negligence. On the participation and liability for the loading of the cargo, and the amount of damages and interest: The Court agreed with the CA that only US$30,300.00 of ATI's claim was supported by evidence, comprising the cost of replacement screws, freight, and labor. However, the Court modified the interest rates. Citing Nacar v. Gallery Frames, the Court held that the US$30,300.00 shall be subject to legal interest at the rate of six percent (6%) per annum reckoned from the finality of the Resolution until full satisfaction thereof. This modification was based on the guidelines for interest imposition on damages, distinguishing between loans/forbearance of money and other obligations, and specifying the rate from the finality of the judgment.
Main Doctrine
The doctrine of res ipsa loquitur applies to establish negligence in cases involving damage to an arrastre operator's equipment due to foreign objects found in cargo, holding the shipowner and its agents jointly and severally liable, even in the absence of a direct contract of carriage between the arrastre operator and the shipowner. Liability arises from quasi-delict under Article 2176 of the Civil Code.