UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD.

, AND
INTER-ASIA MARINE TRANSPORT, INC., v. ASIAN TERMINALS, INC.
G.R. No. 195661, March 11, 2015
FACTS: On 25 January 1997, the cargo ship M/V “China Joy” (the Vessel) arrived at the
Mariveles Grain Terminal Wharf, operated by plaintiff [ATI]. According to the Berth Term Grain
Bills of Lading, the Vessel carried soybean meal that had been shipped by ContiQuincyBunge
L.L.C[.] (ContiQuincyBunge), an exporter of soybean meal and related products, in favor of
several consignees in the Philippines. Under the Charter Party Agreement over M/V “China
Joy,” ContiQuincyBunge represented itself as the Charterer of the Vessel, with San Miguel
Foods, Inc. as Co-Charterer, and defendant [Samsun] represented itself as the Agent of the
Shipowners. Samsun is a foreign corporation not doing business in the Philippines. On 3
February 1997[,] ATI used its Siwertell Unloader No. 2 to unload the soybean meal from the
Vessel’s Hold No. 2. The Siwertell Unloader is a pneumatic vacubator that uses compressed
gas to vertically move heavy bulk grain from within the hatch of the ship in order to unload it off
the ship. The unloading operations were suddenly halted when the head of Unloader No. 2 hit a
flat low-carbon or “mild” steel bar measuring around 8 to 10 inches in length, 4 inches in width,
and 1 ¼ inch in thickness that was in the middle of the mass of soybean meal. The flat steel bar
lodged itself between the vertical screws of Unloader No. 2, causing portions of screw numbers
2 and 3 to crack and be sheared off under the torsional load.According to the quotation of BMH
Marine AB Sweden, the sole manufacturer of Siwertell unloaders, the replacement cost of each
screw is US$12,395.00 or US$24,790.00 for the 2 screws plus freight. The labor cost to remove
and re-assemble the screws is estimated at US$2,000.00.

On 4 February 1997, ATI sent a Note of Protest to the Master of the Vessel for the damages
sustained by its unloading equipment as a result of encountering the flat steel bar among the
soybean meal. However, the Vessel’s Master wrote a note on the Protest stating that it is not
responsible for the damage because the metal piece came from the cargo and not from the
vessel itself. On 5 March 1997, ATI sent a claim to defendant [Inter-Asia] for the amount of
US$37,185.00 plus US$2,000.00 labor cost representing the damages sustained by its
unloading equipment.Inter-Asia rejected ATI’s claim for the alleged reason that it is not the
Shipowner’s Agent. Inter-Asia informed ATI that its principal is Samsun. Moreover, according to
Inter-Asia, the owner of the Vessel is Trans-Pacific Shipping Co., c/o Lasco Shipping Company.
Inter-Asia, however, offered to relay ATI’s claim to Trans-Pacific through Samsun.

As previously noted, the Charter Party Agreement states Samsun to be the Agent of the

In the joint Answer, Inter-Asia reiterated that it is not the Agent of the Shipowners. Defendants
further averred that the soybean meal was shipped on board the M/V “China Joy” under a Free-
In-and-Out-Stowed-and-Trimmed (FIOST) Clause, which supposedly means that the
Shipper/Charterer itself (ContiQuincyBunge LLC) loaded the cargo on board the Vessel, and the
latter and her complement had no participation therein except to provide the use of the Vessel’s
gear. Similarly, under the FIOST clause, the discharge of the cargo was to be done by the
consignees’ designated personnel without any participation of the Vessel and her complement.
Defendants argued that since the metal foreign object was found in the middle of the cargo, it
could not have come from the bottom of the hatch because the hatch had been inspected and
found clean prior to loading. Defendants further averred that neither could the metal bar have
been part of the Vessel that had broken off and fallen into the hatch because tests conducted on
the metal piece revealed that said metal bar was not part of the Vessel. Defendants concluded
that the metal bar could only have been already co-mingled with the soybean meal upon loading
by ContiQuincyBunge at loadport, and, therefore, defendants are not liable for the damages
sustained by the unloader of ATI.

ISSUE: Whether or Not the petitioners had no participation in the loading and discharge of the
bulk cargo except to provide use of the vessel’s gear.

RULING: The Court agrees with the CA that the petitioners are liable to ATI for the damage
sustained by the latter’s unloader. However, the Court finds the petitioners’ liability to be based
on quasi-delict and not on a contract of carriage. There is no contract of carriage between ATI,
on one hand, and the shipowner, Samsun, ContiQuincyBunge L.L.C., and Inter-Asia, on the
other. It likewise bears stressing that the subject of the complaint, from which the instant petition
arose, is not the damage caused to the cargo, but to the equipment of an arrastre operator.
Further, ATI’s contractual relation is not with the petitioners, but with the consignee and with the
Philippine Ports Authority (PPA).
“The functions of an arrastre operator involve the handling of cargo deposited on the wharf or
between the establishment of the consignee or shipper and the ship’s tackle. Being the
custodian of the goods discharged from a vessel, an arrastre operator’s duty is to take good
care of the goods and to turn them over to the party entitled to their
possession.”28chanroblesvirtuallawlibrary

“The legal relationship between an arrastre operator and a consignee is akin to that between a
warehouseman and a depositor. As to both the nature of the functions and the place of their
performance, an arrastre operator’s services are clearly not maritime in
character.”29chanroblesvirtuallawlibrary

In Insurance Company of North America v. Asian Terminals, Inc.,30 the Court explained that the
liabilities of the arrastre operator for losses and damages are set forth in the contract for cargo
handling services it had executed with the PPA. Corollarily then, the rights of an arrastre
operator to be paid for damages it sustains from handling cargoes do not likewise spring from
contracts of carriage.
In the case under consideration, the parties do not dispute the facts of damage upon ATI’s
unloader, and of such damage being the consequence of someone’s negligence. However, the
petitioners deny liability claiming that it was not established with reasonable certainty whose
negligence had caused the co-mingling of the metal bars with the soybean meal cargo. The
Court, on this matter, agrees with the CA’s disquisition that the petitioners should be held jointly
and severally liable to ATI. ATI cannot be faulted for its lack of direct access to evidence
determinative as to who among the shipowner, Samsun, ContiQuincyBunge and Inter-Asia
should assume liability. The CA had exhaustively discussed why the doctrine of res ipsa
loquitur applies. The metal bars which caused damage to ATI’s unloader was found co-mingled
with the cargo inside Hold No. 2 of the ship, which was then within the exclusive control of the
petitioners. Thus, the presumption that it was the petitioners’ collective negligence, which
caused the damage, stands. This is, however, without prejudice to the petitioners’ rights to seek
reimbursements among themselves from the party whose negligence primarily caused the
damage.