Case Summary (G.R. No. 211876)
Key Dates
• October–November 2001: Importation of steel coils
• September 7, 2001: BOC issues Hold-Order over shipments
• August 4, 2006: ATI files complaint for unpaid storage fees
• July 16, 2012: RTC decision dismissing ATI’s complaint
• July 23, 2013: CA decision affirming RTC
• June 25, 2018: Supreme Court decision
Applicable Law
• 1987 Philippine Constitution
• Civil Code provisions on contract obligations (Art. 1169 on interest; Arts. 2208, 2229, 2234 on attorney’s fees and exemplary damages)
• Rule 45, Rules of Court (petition for review on certiorari)
• Jurisprudence: Subic Bay Metropolitan Authority v. Rodriguez, Nacar v. Gallery Frames
Factual Background
Padoson engaged ATI to provide arrastre, wharfage and storage services for its imported steel coils. Despite repeated demands, Padoson failed to pay storage fees totaling ₱8,914,535.28. A BOC Hold-Order over the same shipments arose from Padoson’s tax liability in a separate Customs case. ATI sued for unpaid fees and damages; Padoson counterclaimed for alleged deterioration and loss of the shipments during storage.
Procedural History
• RTC (Manila, Branch 41) dismissed ATI’s complaint and Padoson’s counterclaim, holding that BOC’s Hold-Order vested constructive possession in the government, absolving Padoson of liability and rendering BOC an indispensable party not impleaded.
• CA affirmed the RTC, adopting the constructive possession theory and ruling that neither ATI nor Padoson could recover without BOC. ATI’s motion for reconsideration was denied.
• ATI filed a petition for review on certiorari under Rule 45.
Issues Presented
- Whether BOC’s Hold-Order conferred constructive possession that relieved Padoson of its storage fee obligation.
- Whether Padoson proved deterioration of the shipments while in ATI’s custody.
- Whether BOC was an indispensable party to ATI’s collection suit.
- Whether ATI is entitled to damages, interest, exemplary damages, and attorney’s fees.
Court’s Analysis
- Misapplication of SBMA jurisprudence
– In SBMA v. Rodriguez, actual possession by BOC was recognized for enforcing customs laws; mere issuance of a Hold-Order neither grants constructive possession nor affects private contractual obligations. - Privity of contract and liability
– Padoson, as contracting party, alone bears the obligation to pay ATI’s fees. Contracts bind only their parties; third parties (BOC) cannot be saddled with ATI’s claims. - Indispensable party doctrine
– BOC’s interest in tax collection is distinct from ATI’s service contract claim. Complete relief between ATI and Padoson is possible without BOC, making it neither indispensable nor necessary to implead. - Failure of proof on deterioration
– Evidence of damage (photographs, sheriff’s reports, Customs-case documents) was inadmissible or not properly authenticated, and ATI had no opportunity to contest Customs-case findings. Due process forbids binding ATI to proceedings it did not join. - Storage fees and interest
– ATI’s computation of ₱8,914,535.28 was “clear and unmistakable,” uncontested by Padoson. In the absence of an agreed interest stipulation, the Court appli
Case Syllabus (G.R. No. 211876)
Factual Background
- Padoson Stainless Steel Corporation (Padoson) engaged Asian Terminals, Inc. (ATI) for arrastre, wharfage, and storage services at South Harbor, Port of Manila.
- Two shipments—nine stainless steel coils (imported October 5, 2001) and 72 hot-rolled steel coils (imported October 30, 2001)—were stored on ATI’s premises from late 2001 until July 29, 2006.
- On September 7, 2001, the Bureau of Customs (BOC) issued a Hold-Order on the shipments arising from Padoson’s tax liability in a separate Customs case (RTC, Branch 173, Civil Case No. 01-102440).
- ATI repeatedly demanded payment of storage fees:
• PHP 540,474.48 for the nine stainless steel coils (October 12, 2001 to July 29, 2006).
• PHP 8,374,060.80 for the 72 hot-rolled steel coils (November 8, 2001 to July 29, 2006). - Padoson did not pay; ATI filed a complaint for sum of money and damages with prayer for preliminary attachment (RTC, Branch 41, Civil Case No. 06-115638) on August 4, 2006, praying for:
• Payment of PHP 8,914,535.28 plus legal interest (unpaid storage fees).
• PHP 100,000 exemplary damages.
• PHP 100,000 attorney’s fees. - In its counterclaim and answer, Padoson asserted:
• The shipments deteriorated in ATI’s custody.
• ATI failed to exercise extraordinary diligence.
• The BOC Hold-Order was leverage for Padoson’s tax liability.
• Sheriff’s ocular inspection and partial return showed damaged and missing coils.
• Padoson incurred lost profits of PHP 13.8 million (hot-rolled coils) and PHP 2,992,000 (stainless coils). - ATI denied negligence and maintained shipments were released in same condition as when unloaded.
Procedural History
- Pre-trial conducted August 12, 2009; trial ensued.
- RTC (July 16, 2012) dismissed both ATI’s complaint and Padoson’s counterclaim, holding:
• BOC acquired “constructive possession” under SBMA case due to Hold-Order.
• BOC, not Padoson, thus owed storage fees to ATI; ATI failed to implead the BOC. - CA affirmed (Decision July 23, 2013; Resolution March 26, 2014), finding:
• BOC’s Hold-Order placed shipments under its constructive possession.
• Neither ATI nor Padoson entitled to relief since BOC was not impleaded.
• Evidence showed damage but