G.R. No. 112287 & 112350 December 12, 1997
NATIONAL STEEL CORPORATION, petitioner, vs. COURT OF APPEALS AND VLASONS SHIPPING, INC., respondents. VLASONS SHIPPING, INC., petitioner, vs. COURT OF APPEALS AND NATIONAL STEEL CORPORATION, respondents.

FACTS

On July 17, 1974, National Steel Corporation (NSC) as Charterer and Vlasons Shipping, Inc. (VSI) as Owner entered into a Contract of Voyage Charter Hire for the vessel MV “VLASONS I” to transport steel products from Iligan City to Manila. The contract was on FIOST (Freight In and Out including Stevedoring and Trading) terms, making NSC responsible for loading and unloading. It also stipulated that VSI would not be responsible for losses/damages except on proven willful negligence of the vessel’s officers and incorporated terms from the NANYOZAI Charter Party, including the owner’s duty to exercise due diligence to make the vessel seaworthy.
On August 6-8, 1974, the vessel loaded 1,769 packages of tinplates and hot rolled sheets. Upon arrival in Manila on August 12, 1974, and during unloading from August 13-24, the cargo was found to be wet and rusty. A survey by Manila Adjusters and Surveyors Company (MASCO) reported torn tarpaulin hatch covers and that analysis of packing materials indicated wetting by sea water. NSC filed a claim for damages against VSI, alleging negligence and unseaworthiness. VSI refused payment, counterclaiming for unpaid freight, demurrage for the 11-day unloading delay, and attorney’s fees. The Regional Trial Court dismissed NSC’s complaint and granted VSI’s counterclaim. The Court of Appeals modified the decision by reducing the demurrage award and deleting the attorney’s fees.

ISSUE

The primary issues involve the liability of VSI, as a private carrier, for the cargo damage and the liability of NSC for demurrage and attorney’s fees.

RULING

The Supreme Court denied both petitions and affirmed the Court of Appeals’ Decision. The Court held:
1. On Cargo Damage Liability: VSI, as a private carrier, is not subject to the strict liability of a common carrier under the Civil Code but to the terms of the contract of carriage. The contract expressly limited VSI’s liability to instances of “proven willful negligence of the officers of the vessel.” NSC failed to prove such willful negligence. Furthermore, NSC failed to overcome the presumption of seaworthiness, as VSI presented a valid Certificate of Inspection. The damage was likely caused by perils of the sea encountered during the voyage, for which VSI was exempted from liability under the NANYOZAI Charter Party terms. The FIOST provision also meant the risk of unloading was on NSC.
2. On Demurrage: NSC was liable for demurrage. The 11-day unloading delay was due to interruptions from heavy rain. Under the contract, laytime continued to run regardless of rain interruptions because it was calculated based on “Weather Working Day of 24 consecutive hours, Sundays and Holidays Included” (WWDSHINC), meaning all time counted except when work was actually prevented by weather. Since unloading was only interrupted, not completely prevented, the delay was chargeable to NSC.
3. On Attorney’s Fees: The Court of Appeals correctly deleted the award for attorney’s fees. The institution of a judicial action by NSC, even if unsuccessful, does not automatically justify an award for attorney’s fees in the absence of evidence that the suit was manifestly frivolous or filed in bad faith.
4. On Factual Findings: The Supreme Court reiterated that factual findings of the trial court, affirmed by the Court of Appeals, are generally binding and conclusive. No exceptional circumstance warranted a deviation from this rule.