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ASIAN TERMINALS v. PADOSON STAINLESS STEEL CORPORATION

FACTS:

This case involves Asian Terminals, Inc. (ATI) as the petitioner and Padoson Stainless Steel Corporation as the respondent. Padoson hired ATI to provide arrastre, wharfage, and storage services for shipments of stainless steel coils and hot-rolled steel coils. The shipments were stored within ATI's premises until they were discharged on July 29, 2006. However, the shipments became subject to a Hold-Order issued by the Bureau of Customs (BOC) due to a Customs case filed against Padoson. ATI demanded payment for the storage fees from Padoson, but it went unheeded. As a result, ATI filed a complaint with the RTC. Padoson claimed that the shipments suffered deterioration and that ATI failed to exercise the required diligence. Padoson also argued that the BOC should be held liable for the payment of the storage fees. The RTC dismissed ATI's complaint, ruling that the BOC should be liable for the fees. ATI appealed the decision, but the CA affirmed the RTC's ruling.

The case involves a dispute between Asian Terminals, Inc. (ATI), a port operator, and Padoson Industries Corporation (Padoson), a consignee, regarding the liability for damages and storage fees of Padoson's shipments. The RTC ruled in favor of ATI, holding Padoson liable for the storage fees and damages suffered by the shipments while under ATI's custody. Padoson appealed to the CA, which affirmed the RTC's decision. According to the CA, the shipments were under the BOC's constructive possession upon the issuance of a Hold-Order, and therefore, ATI could not be held liable for damages and Padoson could not be held liable for the storage fees. ATI filed a motion for reconsideration, arguing that the documents submitted by Padoson were inadmissible, among other things. The CA denied ATI's motion, prompting ATI to file a petition for review on certiorari before the Supreme Court. The main issue before the Supreme Court is whether the CA erred in affirming the RTC's decision. The Supreme Court granted ATI's petition, stating that the CA and the RTC misapplied a previous case regarding the BOC's exclusive jurisdiction over seizure and forfeiture proceedings. The Supreme Court clarified that the BOC's issuance of a Hold-Order does not constitute constructive possession and does not exempt the private consignee from its obligations to the port operator.

Padoson engaged ATI to perform arrastre, wharfage, and storage services for its shipments. Padoson's shipments were subject to a Hold-Order issued by the BOC. ATI billed Padoson for the storage fees from October 12, 2001, to November 8, 2001, until the shipments were discharged from ATI's premises on July 29, 2006. Padoson refused to pay ATI, claiming that it was not liable for the storage fees because of the BOC's Hold-Order. ATI filed a complaint against Padoson to recover the unpaid storage fees. The trial court ruled in favor of ATI, but the CA upheld the decision. Padoson appealed to the Supreme Court. The issue is whether Padoson is liable to ATI for the payment of storage fees.

ISSUES:

  1. Whether the theory of constructive possession is applicable in this case.

  2. Whether the BOC should be held liable for the storage fees.

  3. Whether the BOC is an indispensable party in the case.

  4. Whether the Bureau of Customs (BOC) is an indispensable party to the collection suit filed by ATI against Padoson.

  5. Whether the photographs presented by Padoson were properly admitted as evidence.

  6. Whether the documents presented by Padoson in relation to the Customs case can be used as evidence against ATI.

  7. Whether ATI can be held liable for negligence in the handling of the shipments based on the evidence presented.

  8. Whether ATI is entitled to the payment of storage fees from Padoson.

  9. Whether Padoson is liable for the payment of storage fees to ATI.

  10. Whether ATI is entitled to the payment of interest on the unpaid storage fees.

  11. Whether or not ATI is entitled to exemplary damages.

  12. Whether or not ATI is entitled to attorney's fees.

RULING:

  1. The theory of constructive possession is not applicable in this case, as it was not raised or impliedly included in the issues raised by ATI in its complaint.

  2. The BOC should not be held liable for the storage fees, as it was Padoson who entered into a contract of service with ATI and benefited from the services.

  3. The BOC is not an indispensable party in the case, as its interest over the shipments is separate and distinct from ATI's collection suit against Padoson.

  4. The BOC is not an indispensable party to the collection suit filed by ATI against Padoson.

  5. The photographs presented by Padoson were not properly admitted as evidence.

  6. The documents presented by Padoson in relation to the Customs case cannot be used as evidence against ATI.

  7. ATI cannot be held liable for negligence based on the insufficient evidence presented by Padoson.

  8. ATI is entitled to the payment of storage fees from Padoson.

  9. Padoson is liable for the payment of the storage fees to ATI. The RTC and CA have already found the amount sought by ATI to be clear and unmistakable, and Padoson has not denied its obligation to pay the fees.

  10. ATI is entitled to the payment of interest on the unpaid storage fees. In cases where the obligation consists of the payment of a sum of money, the interest rate shall be as stipulated in writing. In the absence of a stipulation, the rate of interest shall be 12% per annum from the time of default. However, starting July 1, 2013, the new rate of 6% per annum shall be applied.

  11. ATI is not entitled to exemplary damages because it failed to establish the presence of bad faith, wantonness, fraud, or a malevolent manner in the act committed by the respondent.

  12. ATI is not entitled to attorney's fees because none of the circumstances under Article 2208 of the Civil Code, where attorney's fees may be awarded, are present in this case.

PRINCIPLES:

  • Issues that are not included in the pre-trial order may be considered if they are impliedly included in the issues raised or inferable from the issues raised by necessary implication.

  • The basic principle of relativity of contracts is that contracts can only bind the parties who entered into it and cannot favor or prejudice a third person.

  • A party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court.

  • An indispensable party is one who has such an interest in the controversy or subject matter that a final adjudication cannot be made without their presence, and their absence will result in the dismissal of the case. However, if complete relief can still be afforded to the plaintiff without the presence of the indispensable party, they are not necessary for the resolution of the case.

  • Evidence that has not been admitted cannot be considered by the courts in arriving at their judgments.

  • The essence of due process is the opportunity to be heard, which requires prior notice and a chance to present one's side before judgment is rendered.

  • Mere allegations and speculation are not considered evidence and are not equivalent to proof.

  • Photographs presented as evidence must be properly authenticated and identified by the photographer as to its production, and the circumstances under which they were produced.

  • The value of photographic evidence lies in its being a correct representation or reproduction of the original.

  • A party cannot be held liable based on documents or evidence unrelated to the case in which they were not a party or participant.

  • An obligation of a lender or creditor to refrain from requiring repayment for a given period of time constitutes forbearance of money.

  • Forbearance of money refers to arrangements other than loan agreements where a person allows the temporary use of his money pending the happening of certain events or fulfillment of certain conditions.

  • The rate of interest imposed on an obligation, not constituting a loan or forbearance of money, may be imposed at the discretion of the court at a rate of 6% per annum.

  • The rate of interest applicable at the time of default shall be 12% per annum until June 30, 2013, and 6% per annum from July 1, 2013, until full satisfaction of the monetary award.

  • Exemplary damages and attorney's fees may not be awarded unless provided for by law or stipulated in the agreement between the parties.

  • Exemplary damages may be awarded only in addition to moral, temperate, liquidated, or compensatory damages.

  • Exemplary damages require the presence of bad faith, wantonness, fraud, or a malevolent manner in the act committed.

  • Attorney's fees may only be awarded when there are circumstances provided under Article 2208 of the Civil Code.