G.R. No. 195031 March 28, 2014
International Container Terminal Services, Inc., Petitioner, vs. Celeste M. Chua, Respondent.

FACTS

On April 2, 1997, respondent Celeste M. Chua’s container van containing her personal effects arrived at the North Harbor, Manila, and was placed in petitioner International Container Terminal Services, Inc.’s depot for safekeeping pending customs inspection. On April 6, 1997, the van was partially inspected. A further inspection was scheduled for May 8, 1997. However, on that date, petitioner’s depot was gutted by fire, and respondent’s container van, along with 44 others, was burned. A survey revealed 70% of the contents were totally burnt and 30% were wet, dirty, and unusable. Respondent demanded reimbursement for the value of the goods, but her demands were unheeded. She filed a suit on August 23, 1999, alleging the fire’s proximate cause was the storage of combustible chemicals in the depot and that petitioner failed to exercise due diligence. She claimed the goods’ value was US$87,667.00 but possessed only machine copies of receipts totaling US$67,535.61, as she had given the originals to petitioner’s representative. Petitioner, in its Answer, admitted accepting the van for storage but denied negligence, asserting the fire was a fortuitous event. It also contended respondent had no cause of action or that it had prescribed, as the complaint was not filed within twelve months, and that the Bill of Lading indicated the contents had no commercial value. The Regional Trial Court ruled in favor of respondent, ordering petitioner to pay actual damages of US$67,535.61, moral damages of P50,000.00, and attorney’s fees of P50,000.00. The Court of Appeals affirmed the decision. Petitioner elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

1. Whether the Court of Appeals erred in affirming the trial court’s decision holding petitioner liable for actual damages.
2. Whether the Court of Appeals erred in affirming the award of moral damages and attorney’s fees.
3. Whether the Court of Appeals erred in not granting petitioner’s counterclaim.

RULING

The petition is partly meritorious. The Supreme Court affirmed the finding of liability but modified the award of damages.
On the first issue, the Court held that the lower courts correctly applied the doctrine of res ipsa loquitur. The fire occurred while the container van was under petitioner’s exclusive custody and control. The doctrine applies as the fire would not have happened in the ordinary course of things if reasonable care had been exercised, and direct evidence on the cause was absent. Petitioner failed to prove it exercised the required diligence to prevent the fire. The Court also ruled that the fire was not a fortuitous event, as it was not caused by lightning or a natural disaster unattributable to human agency. The Court further held that respondent’s cause of action had not prescribed, as the one-year period under the Carriage of Goods by Sea Act applies only to claims against the carrier, not the arrastre operator (petitioner). However, the Court found that respondent failed to sufficiently prove the exact amount of actual damages. The machine copies of receipts were inadmissible as secondary evidence because respondent did not establish the requisites for their admission, specifically that the originals were lost without bad faith on her part. Consequently, the award of US$67,535.61 as actual damages was deleted. The Court also ruled that petitioner’s liability is limited to P3,500.00 per package pursuant to Philippine Ports Authority Administrative Order No. 10-81. While respondent was not a direct party to the management contract containing this limit, the stipulation is binding as a stipulation pour autrui, and the gate pass/delivery receipt system incorporates this limit, which respondent would have been bound by had she taken delivery.
On the second issue, the Court deleted the awards for moral damages and attorney’s fees. The trial court’s finding of bad faith was based solely on petitioner’s denial of respondent’s claim. A denial of a claim, without more, does not necessarily constitute bad faith. There was no clear evidence of fraud, malice, or wanton disregard of respondent’s rights to justify moral damages. Attorney’s fees are also not warranted as respondent was not compelled to litigate due to a clearly unfounded refusal by petitioner; the case involved a genuine dispute over liability and damages.
On the third issue, the Court found no basis to grant petitioner’s counterclaim, as respondent’s action was not baseless or filed in bad faith.