Facts:

This case originates from a petition for review on certiorari filed by Asian Terminals, Inc. (ATI) against Padoson Stainless Steel Corporation (Padoson). The dispute centers around contracts for arrastre, wharfage, and storage services that ATI provided to Padoson. Specifically, ATI was engaged to store a shipment of nine stainless steel coils and 72 hot-rolled steel coils, which were imported by Padoson on October 5 and October 30, 2001, respectively. The storage period purportedly lasted from October 12, 2001, to July 29, 2006. However, this shipment was subject to a Hold-Order issued by the Bureau of Customs (BOC) on September 7, 2001, due to a pending customs case against Padoson regarding tax liabilities.

ATI demanded payment from Padoson for its services, totaling approximately ₱8,914,535.28, but these requests were not heeded, prompting ATI to file a civil case for a sum of money and damages with the Regional Trial Court (RTC) on August 4, 2006. In its response, Padoson

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Facts:

Background and Agreement

• Asian Terminals, Inc. (ATI) was hired by Padoson Stainless Steel Corporation (Padoson) to provide arrastre, wharfage, and storage services at the South Harbor, Port of Manila.
• The services related to two shipments:
• Nine stainless steel coils imported on October 5, 2001.
• Seventy-two hot-rolled steel coils imported on October 30, 2001.
• The shipments were stored on ATI’s premises until they were discharged on July 29, 2006.

Customs Hold-Order and Related Proceedings

• On September 7, 2001, a Hold-Order was issued by the Bureau of Customs (BOC) on the shipments.
• The Hold-Order was an offshoot of a separate Customs case filed by the BOC against Padoson concerning alleged unpaid tax liabilities over Padoson’s own shipments.

Claims for Payment and Initiation of Litigation

• ATI made several demands from Padoson forayment of storage fees:
• ₱540,474.48 for the storage of the nine stainless steel coils from October 12, 2001 to July 29, 2006.
• ₱8,374,060.80 for the storage of the seventy-two hot-rolled steel coils from November 8, 2001 to July 29, 2006.
• On August 4, 2006, ATI filed a Complaint for a Sum of Money and Damages with Prayer for the Issuance of Writ of Preliminary Attachment, seeking:
• Total storage fees amounting to ₱8,914,535.28 plus legal interest.
• ₱100,000.00 as exemplary damages.
• ₱100,000.00 as attorney’s fees.

Responsive Defenses and Counterclaims by Padoson

• In its Answer with Compulsory Counterclaim, Padoson alleged that:
• The shipments suffered material and substantial deterioration while in ATI’s custody.
• ATI failed to exercise extraordinary diligence as a competent arrastre operator and was therefore responsible for the damages.
• The BOC’s Hold-Order was used merely as leverage regarding alleged unpaid duties.
• An Ocular Inspection revealed that the shipments were stored in an open area in a deteriorating state.
• Subsequent legal actions led to the release of part of the shipment and the discovery of missing coils and depreciated values resulting in significant lost profits and losses.
• ATI, in its Answer to the Compulsory Counterclaim, asserted that:
• It exercised due diligence in the storage services.
• The shipments were withdrawn in the same condition and quantity as when unloaded from the vessel.

Pre-Trial, Trial Developments, and Evidentiary Disputes

• Pre-trial order was scheduled on August 12, 2009, followed by trial proceedings.
• Padoson presented photographic evidence taken by a witness (Mr. Gregory Ventura) which was later disallowed by the RTC because these photographs were not pre-marked during pre-trial.
• ATI’s witness, Mr. Samuel Goutana (Cash Billing Supervisor), testified on the computation of the storage fees, breaking down the charges for both shipments.

Decisions of Lower Courts and Subsequent Motions

• On July 16, 2012, the Regional Trial Court (RTC) rendered a Decision dismissing ATI’s complaint along with Padoson’s counterclaim.
• The RTC held that although the storage fee computation was “clear and unmistakable” and uncontroverted, the liability to pay the same should instead fall upon the BOC by reason of acquiring constructive possession via the Hold-Order.
• It was noted that ATI had not impleaded the BOC in its complaint, thus precluding relief against the latter.
• The Court of Appeals (CA) affirmed the RTC decision in its Decision dated July 23, 2013, ruling that:
• The RTC did not err in holding that the BOC had constructive possession over the shipments.
• Neither ATI nor Padoson could obtain relief since the BOC was not a party to the proceedings.
• ATI filed a Motion for Reconsideration on March 26, 2014, challenging evidentiary issues and the application of the constructive possession doctrine, which the CA denied.

Issue:

• Whether the CA erred in affirming the RTC’s application of the constructive possession doctrine by holding that the issuance of the BOC’s Hold-Order over Padoson’s shipment constituted a transfer of possession from ATI to the BOC.
• Whether the theory of constructive possession, as applied by the RTC and CA in shifting liability for storage fees to the BOC, correctly excludes Padoson’s contractual obligation with ATI.
• Whether Padoson presented sufficient and admissible evidence to establish that the shipments suffered material deterioration or damage while in ATI’s custody, thereby excusing ATI from liability for damages.
• Whether ATI is entitled to relief for the unpaid storage fees despite Padoson’s counterclaims of negligence, given the clarity of the storage fee computation.
• Whether ATI is entitled to an award of damages, including exemplary damages and attorney’s fees, considering the contractual terms and evidentiary shortcomings raised by Padoson.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)