Unitrans International Forwarders, Inc. vs. Insurance Company of North America, et al.

A common carrier is presumed to have been negligent when the goods it transported are lost, destroyed, or deteriorated, and it must prove that it observed extraordinary diligence to overcome this presumption. The carrier must do more than merely show that some other party could be responsible for the damage; it must establish by adequate proof that it exercised extraordinary diligence over the goods.

Unitrans International Forwarders, Inc. is a freight forwarding entity and accredited non-vessel operating common carrier that acted as the delivery and receiving agent of BTI Logistics PTY LTD, a foreign freight forwarder, in connection with a shipment of musical instruments from Melbourne, Australia to Manila. The consignee, San Miguel Foundation for the Performing Arts, insured the shipment with Insurance Company of North America under Policy No. MOPA-06310 against all risks. The shipment was transported from Melbourne to Singapore on M/S Buxcrown, then transferred to M/S Doris Wullf for final transportation to Manila.

On or about April 22, 2002, in Melbourne, Australia, SEACOL, a foreign company, received shipment of musical instruments from the shipper Dominant Musical Instrument for transportation to and delivery at the port of Manila, as evidenced by Bill of Lading No. 502645. SEACOL loaded the insured shipment on board M/S Buxcrown for transportation from Melbourne to Singapore, where the shipment was transferred to M/S Doris Wullf for final transportation to the port of Manila. The shipment was insured with ICNA against all risk under Policy No. MOPA-06310 in favor of the consignee, San Miguel Foundation for the Performing Arts.

On May 12, 2002, M/S Doris Wullf arrived and docked at the Manila International Container Port, North Harbor, Manila. The container van was discharged from the vessel and received by Unitrans. Upon stripping the contents, it was found that two of the cartons containing the musical instruments were in bad order condition, per the Turn Over Survey Report dated May 14, 2002. Unitrans then delivered the subject shipment to the consignee. After further inspection, it was found that two units of musical instruments were damaged and could no longer be used for their intended purpose, hence were declared a total loss. Formal claims were filed against the defendants, but they refused and failed to pay. As cargo-insurer, ICNA paid the sum of US$22,657.83 and was subrogated to the consignee's rights of recovery against the defendants.

Unitrans denied being a ship agent of SEACOL and the vessel M/S Buxcrown's unknown owner or charter, alleging that BTI Logistics, a foreign freight forwarder, engaged its services as delivery or receiving agent. As such agent, Unitrans' obligations were limited to receiving and handling the bill of lading, preparing an inward cargo manifest, notifying the party of the arrival of the shipment, and releasing the bill of lading upon order of the consignee. Unitrans further alleged that San Miguel also engaged its services as customs broker, with obligations limited to paying duties and fees, filing import entry documents with the Bureau of Customs, and picking up and delivering the shipment to the consignee's premises in good condition. TSA and the unknown charterer of M/S Doris Wullf alleged that while TSA was the commercial agent of M/S Doris Wullf, they were not parties to the bill of lading, and that the shipment was discharged complete and in the same condition as when loaded.

The RTC found that Unitrans' own witness, Mr. Gerardo Estanislao Del Rosario, admitted in open court that Unitrans is a non-vessel operating common carrier and the delivery and collecting agent of BTI, duty bound to deliver the subject shipment in good order and condition to San Miguel. The RTC held Unitrans liable as a common carrier under Article 1742 of the New Civil Code. During the pre-trial conference conducted on June 20, 2007, Unitrans admitted that the subject shipment was delivered by Unitrans. Del Rosario also testified that TSA never had an occasion to handle the subject cargo, and that Unitrans engaged itself "to handle the cargo and to make sure that it was delivered to the consignee from the port of Manila to the consignee."

• Misapprehension of Evidence: Unitrans argued that the RTC's finding of liability, as affirmed by the CA, amounted to a misapprehension of the evidence and the facts, warranting recalibration, reassessment, and reexamination of evidentiary matters.
• Non-Compliance with Constitutional Requirement: Unitrans argued that the RTC Decision was non-compliant with Section 14, Article VIII of the 1987 Constitution because it was "totally left in the dark on how and why its co-defendants, except for TSA, had been absolved," and the decision was silent on how the rest of the defendants came to be absolved from liability notwithstanding a prayer for solidary liability in the Complaint.
• Lack of Factual and Legal Basis: Unitrans contended that the trial court had no factual and legal basis in holding it liable as a common carrier and agent of BTI Logistics.
• Failure to Implead Indispensable Parties: Unitrans argued that the failure of the court to issue summons and acquire jurisdiction over SEACOL and the unknown charterer/owner of M/S Buxcrown, which are based abroad, was tantamount to a failure to include indispensable parties.

N/A — The decision does not recount the specific arguments raised by respondents ICNA, TSA, and the unknown charterer of M/S Doris Wullf in their comments and memoranda.

• Question of Fact: Whether the CA erred in affirming the RTC's factual findings and appreciation of evidence holding Unitrans liable to ICNA.
• Constitutional Compliance: Whether the RTC Decision violated Section 14, Article VIII of the 1987 Constitution for failing to clearly and distinctively express the facts and the law on which it was based.

• Question of Fact: No. The issues raised by Unitrans were questions of fact that cannot be raised in an appeal via certiorari before the Court, and the Court found no cogent reason to reverse the RTC's and CA's factual findings, which were amply supported by the evidence on record.
• Constitutional Compliance: No. The RTC's Decision clearly and distinctively narrated the facts and the applicable law, and clearly explained why Unitrans was the entity imposed with liability.

• Question of Fact: A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts, or when the query invites calibration of the whole evidence considering mainly the credibility of witnesses, the existence and relevancy of specific surrounding circumstances, and the probability of the situation. The Court is not a trier of facts and it is not its function to examine and weigh all over again the evidence presented in the proceedings below. Unitrans' own witness, Del Rosario, testified that Unitrans, as a freight forwarding entity and accredited non-vessel operating common carrier, was engaged by BTI Logistics as its delivery agent in Manila, and that Unitrans engaged itself "to handle the cargo and to make sure that it was delivered to the consignee from the port of Manila to the consignee." Unitrans also admitted in its Answer that San Miguel engaged its services as customs broker, with the obligation to pick up the shipment and transport and deliver it to the consignee's premises in good condition. During pre-trial, Unitrans admitted that the subject shipment was delivered by it, yet it is undisputed that the musical instruments were severely damaged beyond use. Under Article 1735 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed, or deteriorated, unless they prove that they observed extraordinary diligence as required in Article 1733. The presumption of negligence arose, and Unitrans failed to discharge its burden of proving extraordinary diligence; it is not enough to show that some other party might have been responsible for the damage.
• Constitutional Compliance: The RTC's Decision clearly explained the reason why Unitrans was the entity imposed with liability. The RTC noted that Unitrans' own witness declared that TSA never had an occasion to handle the subject cargo, thus exempting TSA from liability. The RTC's Decision clearly and distinctively narrated the facts and the applicable law, and therefore did not transgress Section 14, Article VIII of the 1987 Constitution.

• Presumption of Negligence of Common Carriers — Under Article 1735 of the Civil Code, if the goods are lost, destroyed, or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733. The Court applied this doctrine by holding that since the goods were severely damaged, the presumption of negligence arose against Unitrans, and it failed to overcome this presumption by adequate proof of extraordinary diligence.
• Extraordinary Diligence Requirement — Article 1733 of the Civil Code requires common carriers, from the nature of their business and for reasons of public policy, to observe extraordinary diligence in the vigilance over the goods transported, according to all the circumstances of each case. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods; it must do more than merely show that some other party could be responsible for the damage.
• Question of Fact in Rule 45 Petitions — A question of fact exists when the doubt or difference arises as to the truth or falsehood of facts, or when the query invites calibration of the whole evidence considering mainly the credibility of witnesses, the existence and relevancy of specific surrounding circumstances, and the probability of the situation. Questions of fact cannot be raised in an appeal via certiorari before the Supreme Court, which is not a trier of facts.

• "Article 1735 of the Civil Code states that if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in Article 1733." — This passage states the controlling statutory presumption that formed the basis of the Court's ruling against Unitrans.
• "To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage." — This passage articulates the burden of proof required of a common carrier to rebut the presumption of negligence, which Unitrans failed to discharge.
• "A question of facts exists when the doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation." — This passage defines the standard for determining when an issue is a question of fact, which is not proper for a Rule 45 petition before the Supreme Court.

• Republic of the Phils. vs. Sandiganbayan, 426 Phil. 104 (2002) — Cited as authority for the definition of a question of fact and for the principle that the Court is not a trier of facts.
• Bautista vs. Puyat Vinyl Products, Inc., 416 Phil. 305 (2001) — Cited for the consistent rule that questions of fact cannot be raised in an appeal via certiorari before the Court.
• Regional Container Lines (RCL) of Singapore vs. The Netherlands Insurance Co. (Phils.), Inc., 614 Phil. 485 (2009) — Cited as jurisprudence holding that a common carrier is presumed negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported.

• Article 1733, Civil Code — Requires common carriers to observe extraordinary diligence in the vigilance over the goods transported, according to all the circumstances of each case, from the nature of their business and for reasons of public policy.
• Article 1735, Civil Code — Provides that common carriers are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed, or deteriorated, unless they prove that they observed extraordinary diligence. This presumption was applied against Unitrans.
• Article 1742, Civil Code — Cited by the RTC to support its finding that even if the loss, destruction, or deterioration of goods should be caused by the character of the goods or the faulty nature of the packing or containers, the common carrier must exercise due diligence to forestall or lessen the loss.
• Section 14, Article VIII, 1987 Constitution — Requires that no decision shall be rendered by any court without expressing therein clearly and distinctively the facts and the law on which it is based. The Court found that the RTC Decision complied with this requirement.
• Rule 45, Rules of Court — Governs Petitions for Review on Certiorari before the Supreme Court, which may only raise questions of law, not questions of fact.

Carpio (Chairperson), Perlas-Bernabe, J. Reyes, Jr., and Lazaro-Javier, JJ., concurred.