Title
Marina Port Services, Inc. vs. American Assurance Corp.
Case
G.R. No. 201822
Decision Date
Aug 12, 2015
A shipment of flour arrived intact, but shortages were discovered after delivery. AHAC, as subrogee, sued MPSI for damages. The Supreme Court ruled MPSI not liable, citing lack of evidence and proper diligence.
negligence
tampering
shipment
A

Case Summary (G.R. No. 201822)

Factual Background

On September 21, 1989, Countercorp Trading PTE., Ltd. shipped ten container vans of soft wheat flour from Singapore to the Philippines aboard M/V Uni Fortune. The shipment arrived at Manila South Harbor on September 25, 1989 and was discharged in apparent good and complete order with safety seals intact. The arrastre operator, Marina Port Services, Inc., received custody. Customs officials opened the containers for tax examination and thereafter resealed them with safety wire seals; MSC Distributor (the consignee) had its broker padlock the containers. MPSI placed the containers in the yard under the surveillance of MPSI and Philippine Ports Authority security. On October 10, 1989, MSC’s representative, AD’s Customs Services (ACS), took five vans with gate passes issued by MPSI; upon warehouse receipt MSC discovered shortages and filed a claim. Between October 12 and 14, 1989 ACS took out the remaining five vans and MSC again found shortages. MSC alleged 1,650 missing bags valued at PHP 257,083.00. AHAC, as insurer, paid MSC and received subrogation, then filed a Complaint for damages against MPSI.

Trial Court Proceedings

American Home Assurance Corporation filed its Complaint before the RTC alleging that the loss occurred while the goods were under MPSI’s custody and that MPSI was negligent. Marina Port Services, Inc. denied liability, asserted it received sealed containers and delivered them in the same condition, and pointed to MSC’s failure to request a bad order survey. Trial ensued. On October 17, 2006 the RTC dismissed AHAC’s Complaint, finding that AHAC failed to prove that the loss occurred while the shipment was under MPSI’s responsibility.

Ruling of the Court of Appeals

The Court of Appeals reversed the RTC. It applied the rule that an arrastre operator bears the burden of proving delivery in proper condition and that a presumption of fault arises under Article 1265 and Article 1981 of the Civil Code when loss occurs in the possessor’s custody. The CA found that MPSI failed to rebut that presumption and was negligent in its handling and safekeeping because it did not implement effective measures to detect or prevent pilferage and did not act after MSC’s initial claim. The CA ordered MPSI to pay AHAC PHP 257,083.00 with interest and PHP 50,000.00 as attorney’s fees.

Issues Presented

The principal issue presented to the Supreme Court was whether Marina Port Services, Inc. was liable for the loss of the bags of flour.

Supreme Court’s Ruling

The Petition for Review on Certiorari was granted. The Supreme Court reversed and set aside the Court of Appeals’ Decision and Resolution, reinstated the RTC Decision of October 17, 2006, and dismissed the Complaint. The Court held that MPSI was not liable for the alleged loss.

Legal Basis and Reasoning

The Court acknowledged that the petition raised factual questions but proceeded under recognized exceptions to the limitation of Rule 45 review, citing Asian Terminals, Inc. v. Philam Insurance Co., Inc. and the ten articulated exceptions where the Supreme Court may resolve factual issues. The Court found that the case fell within several of those exceptions, including where the CA’s inferences were manifestly mistaken and where the CA’s findings were contrary to the trial court’s findings. The Court reiterated settled law that an arrastre operator’s relationship with a consignee resembles that of a warehouseman or common carrier and that the operator must exercise diligence like a warehouseman or common carrier per Section 3(b) of the Warehouse Receipts Act and Article 1733. The arrastre operator carries the burden to prove delivery to the appropriate party and to show that any loss did not result from its negligence; absent such proof, fault is presumed under Article 1265 and Article 1981. Nevertheless, the presumption under Article 1981 arises only when it is shown that the seals or locks were broken through the depositary’s fault or when there is evidence that resealing was broken a second time.

Evidentiary Findings

The Court found that Marina Port Services, Inc. proved delivery in good and complete condition through ten gate passes admitted as evidence and testimony of MPSI employees who personally examined the containers and issued the gate passes. Each gate pass bore the signature of MSC’s representative and an express acknowledgment that issuance of the gate pass constituted delivery in good order and condition unless a bad order certificate appeared. MPSI witnesses testified that no complaint or request for inspection was made by the broker at time of turnover. The Court held that the gate passes and testimony established that the containers, padlocks, and wirings were intact at turnover to ACS. The Manila Adjuster & Surveyors Company (MASCO) survey report relied upon by AHAC was not substantiated by the report’s preparer and thus constituted hearsay of no probative value. AHAC’s allegation that stripping could not be done at the pier and therefore ACS could not have discovered loss when it first took out vans was unproven.

Application of Articles 1265 and 1981

The Court explained that no presumption of fault under Article 1981 arose because it was not sufficiently shown that the containers were reopened or that locks and seals were broken a second time after customs resealing. The unrebutted fact that c

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