G.R. No. 112287 December 12, 1997 SO ORDERED.

NATIONAL STEEL CORPORATION, petitioner, The Facts

vs. COURT OF APPEALS AND VLASONS SHIPPING, INC., respondents.
The MV Vlasons I is a vessel which renders tramping service and, as such, does not
G.R. No. 112350 December 12, 1997 transport cargo or shipment for the general public. Its services are available only to
specific persons who enter into a special contract of charter party with its owner. It is
VLASONS SHIPPING, INC., petitioner, undisputed that the ship is a private carrier. And it is in the capacity that its owner,
vs. COURT OF APPEALS AND NATIONAL STEEL CORPORATION, respondents. Vlasons Shipping, Inc., entered into a contract of affreightment or contract of voyage
charter hire with National Steel Corporation.
The Court finds occasion to apply the rules on the seaworthiness of private carrier, its
owner's responsibility for damage to the cargo and its liability for demurrage and The facts as found by Respondent Court of Appeals are as follows:
attorney's fees. The Court also reiterates the well-known rule that findings of facts of
trial courts, when affirmed by the Court of Appeals, are binding on this Court. (1) On July 17, 1974, plaintiff National Steel Corporation (NSC) as Charterer
and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract
The Case of Voyage Charter Hire (Exhibit "B"; also Exhibit "1") whereby NSC hired VSI's
vessel, the MV "VLASONS I" to make one (1) voyage to load steel products at
Iligan City and discharge them at North Harbor, Manila, under the following
Before us are two separate petitions for review filed by National Steel Corporation terms and conditions, viz:
(NSC) and Vlasons Shipping, Inc. (VSI), both of which assail the August 12, 1993
Decision of the Court of Appeals. 1 The Court of Appeals modified the decision of the
Regional Trial Court of Pasig, Metro Manila, Branch 163 in Civil Case No. 23317. The 1. . . .
RTC disposed as follows:
2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or
WHEREFORE, judgment is hereby rendered in favor of defendant and less at Master's option.
against the plaintiff dismissing the complaint with cost against plaintiff, and
ordering plaintiff to pay the defendant on the counterclaim as follows: 3. . . .

1. The sum of P75,000.00 as unpaid freight and P88,000.00 as demurrage 4. Freight/Payment: P30.00/metric ton, FIOST basis. Payment upon
with interest at the legal rate on both amounts from April 7, 1976 until the presentation of Bill of Lading within fifteen (15) days.
same shall have been fully paid;
5. Laydays/Cancelling: July 26, 1974/Aug. 5, 1974.
2. Attorney's fees and expenses of litigation in the sum of P100,000.00; and
6. Loading/Discharging Rate: 750 tons per WWDSHINC. (Weather Working
3. Costs of suit. Day of 24 consecutive hours, Sundays and Holidays Included).

SO ORDERED.2 7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.

On the other hand, the Court of Appeals ruled: 8. . . .

WHEREFORE, premises considered, the decision appealed from is modified 9. Cargo Insurance: Charterer's and/or Shipper's must insure the cargoes.
by reducing the award for demurrage to P44,000.00 and deleting the award Shipowners not responsible for losses/damages except on proven willful
for attorney's fees and expenses of litigation. Except as thus modified, the negligence of the officers of the vessel.
decision is AFFIRMED. There is no pronouncement as to costs.
10. Other terms: (a) All terms/conditions of NONYAZAI C/P [sic] or other (3) hatches containing the shipment were opened by plaintiff's agents, nearly
internationally recognized Charter Party Agreement shall form part of this all the skids of tinplates and hot rolled sheets were allegedly found to be wet
Contract. and rusty. The cargo was discharged and unloaded by stevedores hired by
the Charterer. Unloading was completed only on August 24, 1974 after
xxx xxx xxx incurring a delay of eleven (11) days due to the heavy rain which interrupted
the unloading operations. (Exhibit "E")
The terms "F.I.O.S.T." which is used in the shipping business is a standard
provision in the NANYOZAI Charter Party which stands for "Freight In and Out (4) To determine the nature and extent of the wetting and rusting, NSC called
including Stevedoring and Trading", which means that the handling, loading for a survey of the shipment by the Manila Adjusters and Surveyors Company
and unloading of the cargoes are the responsibility of the Charterer. Under (MASCO). In a letter to the NSC dated March 17, 1975 (Exhibit "G"), MASCO
Paragraph 5 of the NANYOZAI Charter Party, it states, "Charterers to load, made a report of its ocular inspection conducted on the cargo, both while it
stow and discharge the cargo free of risk and expenses to owners. . . . was still on board the vessel and later at the NDC warehouse in Pureza St.,
(Emphasis supplied). Sta. Mesa, Manila where the cargo was taken and stored. MASCO reported
that it found wetting and rusting of the packages of hot rolled sheets and
metal covers of the tinplates; that tarpaulin hatch covers were noted torn at
Under paragraph 10 thereof, it is provided that "(o)wners shall, before and at various extents; that container/metal casings of the skids were rusting all over.
the beginning of the voyage, exercise due diligence to make the vessel MASCO ventured the opinion that "rusting of the tinplates was caused by
seaworthy and properly manned, equipped and supplied and to make the contact with SEA WATER sustained while still on board the vessel as a
holds and all other parts of the vessel in which cargo is carried, fit and safe for consequence of the heavy weather and rough seas encountered while en
its reception, carriage and preservation. Owners shall not be liable for loss of route to destination (Exhibit "F"). It was also reported that MASCO's surveyors
or damage of the cargo arising or resulting from: unseaworthiness unless drew at random samples of bad order packing materials of the tinplates and
caused by want of due diligence on the part of the owners to make the vessel delivered the same to the M.I.T. Testing Laboratories for analysis. On August
seaworthy, and to secure that the vessel is properly manned, equipped and 31, 1974, the M.I.T. Testing Laboratories issued Report No. 1770 (Exhibit "I")
supplied and to make the holds and all other parts of the vessel in which which in part, states, "The analysis of bad order samples of packing
cargo is carried, fit and safe for its reception, carriage and preservation; . . . ; materials . . . shows that wetting was caused by contact with SEA WATER".
perils, dangers and accidents of the sea or other navigable waters; . . . ;
wastage in bulk or weight or any other loss or damage arising from inherent
defect, quality or vice of the cargo; insufficiency of packing; . . . ; latent defects (5) On September 6, 1974, on the basis of the aforesaid Report No. 1770,
not discoverable by due diligence; any other cause arising without the actual plaintiff filed with the defendant its claim for damages suffered due to the
fault or privity of Owners or without the fault of the agents or servants of downgrading of the damaged tinplates in the amount of P941,145.18. Then on
owners." October 3, 1974, plaintiff formally demanded payment of said claim but
defendant VSI refused and failed to pay. Plaintiff filed its complaint against
defendant on April 21, 1976 which was docketed as Civil Case No. 23317,
Paragraph 12 of said NANYOZAI Charter Party also provides that "(o)wners CFI, Rizal.
shall not be responsible for split, chafing and/or any damage unless caused
by the negligence or default of the master and crew."
(6) In its complaint, plaintiff claimed that it sustained losses in the aforesaid
amount of P941,145.18 as a result of the act, neglect and default of the
(2) On August 6, 7 and 8, 1974, in accordance with the Contract of Voyage master and crew in the management of the vessel as well as the want of due
Charter Hire, the MV "VLASONS I" loaded at plaintiffs pier at Iligan City, the diligence on the part of the defendant to make the vessel seaworthy and to
NSC's shipment of 1,677 skids of tinplates and 92 packages of hot rolled make the holds and all other parts of the vessel in which the cargo was
sheets or a total of 1,769 packages with a total weight of about 2,481.19 carried, fit and safe for its reception, carriage and preservation — all in
metric tons for carriage to Manila. The shipment was placed in the three (3) violation of defendant's undertaking under their Contract of Voyage Charter
hatches of the ship. Chief Mate Gonzalo Sabando, acting as agent of the Hire.
vessel[,] acknowledged receipt of the cargo on board and signed the
corresponding bill of lading, B.L.P.P. No. 0233 (Exhibit "D") on August 8, 1974.
(7) In its answer, defendant denied liability for the alleged damage claiming
that the MV "VLASONS I" was seaworthy in all respects for the carriage of
(3) The vessel arrived with the cargo at Pier 12, North Harbor, Manila, on plaintiff's cargo; that said vessel was not a "common carrier" inasmuch as she
August 12, 1974. The following day, August 13, 1974, when the vessel's three
was under voyage charter contract with the plaintiff as charterer under the (a) The MV "VLASONS I" is a vessel of Philippine registry engaged in
charter party; that in the course of the voyage from Iligan City to Manila, the the tramping service and is available for hire only under special
MV "VLASONS I" encountered very rough seas, strong winds and adverse contracts of charter party as in this particular case.
weather condition, causing strong winds and big waves to continuously pound
against the vessel and seawater to overflow on its deck and hatch covers, (b) That for purposes of the voyage covered by the Contract of
that under the Contract of Voyage Charter Hire, defendant shall not be Voyage Charter Hire (Exh. "1"), the MV VLASONS I" was covered by
responsible for losses/damages except on proven willful negligence of the the required seaworthiness certificates including the Certification of
officers of the vessel, that the officers of said MV "VLASONS I" exercised due Classification issued by an international classification society, the
diligence and proper seamanship and were not willfully negligent; that NIPPON KAIJI KYOKAI (Exh. "4"); Coastwise License from the Board
furthermore the Voyage Charter Party provides that loading and discharging of Transportation (Exh. "5"); International Loadline Certificate from
of the cargo was on FIOST terms which means that the vessel was free of risk the Philippine Coast Guard (Exh. "6"); Cargo Ship Safety Equipment
and expense in connection with the loading and discharging of the cargo; that Certificate also from the Philippine Coast Guard (Exh. "7"); Ship
the damage, if any, was due to the inherent defect, quality or vice of the cargo Radio Station License (Exh. "8"); Certificate of Inspection by the
or to the insufficient packing thereof or to latent defect of the cargo not Philippine Coast Guard (Exh. "12"); and Certificate of Approval for
discoverable by due diligence or to any other cause arising without the actual Conversion issued by the Bureau of Customs (Exh. "9"). That being a
fault or privity of defendant and without the fault of the agents or servants of vessel engaged in both overseas and coastwise trade, the MV
defendant; consequently, defendant is not liable; that the stevedores of "VLASONS I" has a higher degree of seaworthiness and safety.
plaintiff who discharged the cargo in Manila were negligent and did not
exercise due care in the discharge of the cargo; land that the cargo was
exposed to rain and seawater spray while on the pier or in transit from the pier (c) Before it proceeded to Iligan City to perform the voyage called for
to plaintiff's warehouse after discharge from the vessel; and that plaintiff's by the Contract of Voyage Charter Hire, the MV "VLASONS I"
claim was highly speculative and grossly exaggerated and that the small stain underwent drydocking in Cebu and was thoroughly inspected by the
marks or sweat marks on the edges of the tinplates were magnified and Philippine Coast Guard. In fact, subject voyage was the vessel's first
considered total loss of the cargo. Finally, defendant claimed that it had voyage after the drydocking. The evidence shows that the MV
complied with all its duties and obligations under the Voyage Charter Hire "VLASONS I" was seaworthy and properly manned, equipped and
Contract and had no responsibility whatsoever to plaintiff. In turn, it alleged supplied when it undertook the voyage. It has all the required
the following counterclaim: certificates of seaworthiness.

(a) That despite the full and proper performance by defendant of its (d) The cargo/shipment was securely stowed in three (3) hatches of
obligations under the Voyage Charter Hire Contract, plaintiff failed the ship. The hatch openings were covered by hatchboards which
and refused to pay the agreed charter hire of P75,000.00 despite were in turn covered by two or double tarpaulins. The hatch covers
demands made by defendant; were water tight. Furthermore, under the hatchboards were steel
beams to give support.
(b) That under their Voyage Charter Hire Contract, plaintiff had
agreed to pay defendant the sum of P8,000.00 per day for (e) The claim of the plaintiff that defendant violated the contract of
demurrage. The vessel was on demurrage for eleven (11) days in carriage is not supported by evidence. The provisions of the Civil
Manila waiting for plaintiff to discharge its cargo from the vessel. Code on common carriers pursuant to which there exists a
Thus, plaintiff was liable to pay defendant demurrage in the total presumption of negligence in case of loss or damage to the cargo are
amount of P88,000.00. not applicable. As to the damage to the tinplates which was allegedly
due to the wetting and rusting thereof, there is unrebutted testimony
of witness Vicente Angliongto that tinplates "sweat" by themselves
(c) For filing a clearly unfounded civil action against defendant, when packed even without being in contract (sic) with water from
plaintiff should be ordered to pay defendant attorney's fees and all outside especially when the weather is bad or raining. The trust
expenses of litigation in the amount of not less than P100,000.00. caused by sweat or moisture on the tinplates may be considered as a
loss or damage but then, defendant cannot be held liable for it
(8) From the evidence presented by both parties, the trial court came out with pursuant to Article 1734 of the Civil Case which exempts the carrier
the following findings which were set forth in its decision: from responsibility for loss or damage arising from the "character of
the goods . . ." All the 1,769 skids of the tinplates could not have Voyage Charter Hire contract to pay demurrage of P8,000.00 per day
been damaged by water as claimed by plaintiff. It was shown as of delay in the unloading of the cargoes. The delay amounted to
claimed by plaintiff that the tinplates themselves were wrapped in eleven (11) days thereby making plaintiff liable to pay defendant for
kraft paper lining and corrugated cardboards could not be affected by demurrage in the amount of P88,000.00.
water from outside.
Appealing the RTC decision to the Court of Appeals, NSC alleged six errors:
(f) The stevedores hired by the plaintiff to discharge the cargo of
tinplates were negligent in not closing the hatch openings of the MV I
"VLASONS I" when rains occurred during the discharging of the
cargo thus allowing rainwater to enter the hatches. It was proven that
the stevedores merely set up temporary tents to cover the hatch The trial court erred in finding that the MV "VLASONS I" was seaworthy,
openings in case of rain so that it would be easy for them to resume properly manned, equipped and supplied, and that there is no proof of willful
work when the rains stopped by just removing the tent or canvas. negligence of the vessel's officers.
Because of this improper covering of the hatches by the stevedores
during the discharging and unloading operations which were II
interrupted by rains, rainwater drifted into the cargo through the hatch
openings. Pursuant to paragraph 5 of the NANYOSAI [sic] Charter The trial court erred in finding that the rusting of NSC's tinplates was due to
Party which was expressly made part of the Contract of Voyage the inherent nature or character of the goods and not due to contact with
Charter Hire, the loading, stowing and discharging of the cargo is the seawater.
sole responsibility of the plaintiff charterer and defendant carrier has
no liability for whatever damage may occur or maybe [sic] caused to III
the cargo in the process.
The trial court erred in finding that the stevedores hired by NSC were
(g) It was also established that the vessel encountered rough seas negligent in the unloading of NSC's shipment.
and bad weather while en route from Iligan City to Manila causing
sea water to splash on the ship's deck on account of which the
master of the vessel (Mr. Antonio C. Dumlao) filed a "Marine Protest" IV
on August 13, 1974 (Exh. "15"); which can be invoked by defendant
as a force majeure that would exempt the defendant from liability. The trial court erred in exempting VSI from liability on the ground of force
majeure.
(h) Plaintiff did not comply with the requirement prescribed in
paragraph 9 of the Voyage Charter Hire contract that it was to insure V
the cargo because it did not. Had plaintiff complied with the
requirement, then it could have recovered its loss or damage from The trial court erred in finding that NSC violated the contract of voyage charter
the insurer. Plaintiff also violated the charter party contract when it hire.
loaded not only "steel products", i.e. steel bars, angular bars and the
like but also tinplates and hot rolled sheets which are high grade
VI
cargo commanding a higher freight. Thus plaintiff was able to ship
grade cargo at a lower freight rate.
The trial court erred in ordering NSC to pay freight, demurrage and attorney's
fees, to VSI.4
(i) As regards defendant's counterclaim, the contract of voyage
charter hire under Paragraph 4 thereof, fixed the freight at P30.00 per
metric ton payable to defendant carrier upon presentation of the bill As earlier stated, the Court of Appeals modified the decision of the trial court by
of lading within fifteen (15) days. Plaintiff has not paid the total freight reducing the demurrage from P88,000.00 to P44,000.00 and deleting the award of
due of P75,000.00 despite demands. The evidence also showed that attorneys fees and expenses of litigation. NSC and VSI filed separate motions for
the plaintiff was required and bound under paragraph 7 of the same reconsideration. In a Resolution5 dated October 20, 1993, the appellate court denied
both motions. Undaunted, NSC and VSI filed their respective petitions for review
before this Court. On motion of VSI, the Court ordered on February 14, 1994 the
consolidation of these petitions.6
The Issues I. Whether or not the provisions of the Civil Code of the Philippines on
common carriers pursuant to which there exist[s] a presumption of negligence
In its petition7 and memorandum,8 NSC raises the following questions of law and fact: against the common carrier in case of loss or damage to the cargo are
applicable to a private carrier.
Questions of Law
II. Whether or not the terms and conditions of the Contract of Voyage Charter
Hire, including the Nanyozai Charter, are valid and binding on both contracting
1. Whether or not a charterer of a vessel is liable for demurrage due to cargo parties.
unloading delays caused by weather interruption;
The foregoing issues raised by the parties will be discussed under the following
2. Whether or not the alleged "seaworthiness certificates" (Exhibits "3", "4", headings:
"5", "6", "7", "8", "9", "11" and "12") were admissible in evidence and
constituted evidence of the vessel's seaworthiness at the beginning of the
voyages; and 1. Questions of Fact

3. Whether or not a charterer's failure to insure its cargo exempts the 2. Effect of NSC's Failure to Insure the Cargo
shipowner from liability for cargo damage.
3. Admissibility of Certificates Proving Seaworthiness
Questions of Fact
4. Demurrage and Attorney's Fees.
1. Whether or not the vessel was seaworthy and cargo-worthy;
The Court's Ruling
2. Whether or not vessel's officers and crew were negligent in handling and
caring for NSC's cargo; The Court affirms the assailed Decision of the Court of Appeals, except in respect of
the demurrage.
3. Whether or not NSC's cargo of tinplates did sweat during the voyage and,
hence, rusted on their own; and Preliminary Matter: Common Carrier or Private Carrier?

4. Whether or not NSC's stevedores were negligent and caused the At the outset, it is essential to establish whether VSI contracted with NSC as a
wetting[/]rusting of NSC's tinplates. common carrier or as a private carrier. The resolution of this preliminary question
determines the law, standard of diligence and burden of proof applicable to the present
In its separate petition,9 VSI submits for the consideration of this Court the following case.
alleged errors of the CA:
Article 1732 of the Civil Code defines a common carrier as "persons, corporations,
A. The respondent Court of Appeals committed an error of law in reducing the firms or associations engaged in the business of carrying or transporting passengers
award of demurrage from P88,000.00 to P44,000.00. or goods or both, by land, water, or air, for compensation, offering their services to the
public." It has been held that the true test of a common carrier is the carriage of
passengers or goods, provided it has space, for all who opt to avail themselves of its
B. The respondent Court of Appeals committed an error of law in deleting the transportation service for a fee. 11 A carrier which does not qualify under the above test
award of P100,000 for attorney's fees and expenses of litigation. is deemed a private carrier. "Generally, private carriage is undertaken by special
agreement and the carrier does not hold himself out to carry goods for the general
Amplifying the foregoing, VSI raises the following issues in its memorandum: 10 public. The most typical, although not the only form of private carriage, is the charter
party, a maritime contract by which the charterer, a party other than the shipowner,
obtains the use and service of all or some part of a ship for a period of time or a This view finds further support in the Code of Commerce which pertinently provides:
voyage or voyages."12
Art. 361. Merchandise shall be transported at the risk and venture of the
In the instant case, it is undisputed that VSI did not offer its services to the general shipper, if the contrary has not been expressly stipulated.
public. As found by the Regional Trial Court, it carried passengers or goods only for
those it chose under a "special contract of charter party." 13 As correctly concluded by Therefore, the damage and impairment suffered by the goods during the
the Court of Appeals, the MV Vlasons I "was not a common but a private transportation, due to fortuitous event, force majeure, or the nature and
carrier."14Consequently, the rights and obligations of VSI and NSC, including their inherent defect of the things, shall be for the account and risk of the shipper.
respective liability for damage to the cargo, are determined primarily by stipulations in
their contract of private carriage or charter party. 15 Recently, in Valenzuela Hardwood
and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping The burden of proof of these accidents is on the carrier.
Corporation,16 the Court ruled:
Art. 362. The carrier, however, shall be liable for damages arising from the
. . . in a contract of private carriage, the parties may freely stipulate their cause mentioned in the preceding article if proofs against him show that they
duties and obligations which perforce would be binding on them. Unlike in a occurred on account of his negligence or his omission to take the precautions
contract involving a common carrier, private carriage does not involve the usually adopted by careful persons, unless the shipper committed fraud in the
general public. Hence, the stringent provisions of the Civil Code on common bill of lading, making him to believe that the goods were of a class or quality
carriers protecting the general public cannot justifiably be applied to a ship different from what they really were.
transporting commercial goods as a private carrier. Consequently, the public
policy embodied therein is not contravened by stipulations in a charter party Because the MV Vlasons I was a private carrier, the shipowner's obligations are
that lessen or remove the protection given by law in contracts involving governed by the foregoing provisions of the Code of Commerce and not by the Civil
common carriers.17 Code which, as a general rule, places the prima faciepresumption of negligence on a
common carrier. It is a hornbook doctrine that:
Extent of VSI's Responsibility and
Liability Over NSC's Cargo In an action against a private carrier for loss of, or injury to, cargo, the burden
is on the plaintiff to prove that the carrier was negligent or unseaworthy, and
It is clear from the parties' Contract of Voyage Charter Hire, dated July 17, 1974, that the fact that the goods were lost or damaged while in the carrier's custody
VSI "shall not be responsible for losses except on proven willful negligence of the does not put the burden of proof on the carrier.
officers of the vessel." The NANYOZAI Charter Party, which was incorporated in the
parties' contract of transportation further provided that the shipowner shall not be liable Since . . . a private carrier is not an insurer but undertakes only to exercise
for loss of or a damage to the cargo arising or resulting from unseaworthiness, unless due care in the protection of the goods committed to its care, the burden of
the same was caused by its lack of due diligence to make the vessel seaworthy or to proving negligence or a breach of that duty rests on plaintiff and proof of loss
ensure that the same was "properly manned, equipped and supplied," and to "make of, or damage to, cargo while in the carrier's possession does not cast on it
the holds and all other parts of the vessel in which cargo [was] carried, fit and safe for the burden of proving proper care and diligence on its part or that the loss
its reception, carriage and preservation." 18 The NANYOZAI Charter Party also occurred from an excepted cause in the contract or bill of lading. However, in
provided that "[o]wners shall not be responsible for split, chafing and/or any damage discharging the burden of proof, plaintiff is entitled to the benefit of the
unless caused by the negligence or default of the master or crew." 19 presumptions and inferences by which the law aids the bailor in an action
against a bailee, and since the carrier is in a better position to know the cause
Burden of Proof of the loss and that it was not one involving its liability, the law requires that it
come forward with the information available to it, and its failure to do so
warrants an inference or presumption of its liability. However, such inferences
In view of the aforementioned contractual stipulations, NSC must prove that the and presumptions, while they may affect the burden of coming forward with
damage to its shipment was caused by VSI's willful negligence or failure to exercise evidence, do not alter the burden of proof which remains on plaintiff, and,
due diligence in making MV Vlasons I seaworthy and fit for holding, carrying and where the carrier comes forward with evidence explaining the loss or damage,
safekeeping the cargo. Ineluctably, the burden of proof was placed on NSC by the the burden of going forward with the evidence is again on plaintiff.
parties' agreement.
 Where the action is based on the shipowner's warranty of seaworthiness, the and equipped; it met all requirements for trading as cargo vessel.25 The Court of
burden of proving a breach thereof and that such breach was the proximate Appeals itself sustained the conclusion of the trial court that MV Vlasons I was
cause of the damage rests on plaintiff, and proof that the goods were lost or seaworthy. We find no reason to modify or reverse this finding of both the trial and the
damaged while in the carrier's possession does not cast on it the burden of appellate courts.
proving seaworthiness. . . . Where the contract of carriage exempts the carrier
from liability for unseaworthiness not discoverable by due diligence, the Who Were Negligent:
carrier has the preliminary burden of proving the exercise of due diligence to Seamen or Stevedores?
make the vessel seaworthy.20
As noted earlier, the NSC had the burden of proving that the damage to the cargo was
In the instant case, the Court of Appeals correctly found the NSC "has not taken the caused by the negligence of the officers and the crew of MV Vlasons I in making their
correct position in relation to the question of who has the burden of proof. Thus, in its vessel seaworthy and fit for the carriage of tinplates. NSC failed to discharge this
brief (pp. 10-11), after citing Clause 10 and Clause 12 of the NANYOZAI Charter Party burden.
(incidentally plaintiff-appellant's [NSC's] interpretation of Clause 12 is not even
correct), it argues that 'a careful examination of the evidence will show that VSI
miserably failed to comply with any of these obligation's as if defendant-appellee [VSI] Before us, NSC relies heavily on its claim that MV Vlasons I had used an old and torn
had the burden of tarpaulin or canvas to cover the hatches through which the cargo was loaded into the
proof."21 cargo hold of the ship. It faults the Court of Appeals for failing to consider such claim
as an "uncontroverted fact" 26 and denies that MV Vlasons I "was equipped with new
canvas covers in tandem with the old ones as indicated in the Marine
First Issue: Questions of Fact Protest . . ."27 We disagree.

Based on the foregoing, the determination of the following factual questions is The records sufficiently support VSI's contention that the ship used the old tarpaulin,
manifestly relevant: (1) whether VSI exercised due diligence in making MV Vlasons only in addition to the new one used primarily to make the ship's hatches watertight.
I seaworthy for the intended purpose under the charter party; (2) whether the damage The foregoing are clear from the marine protest of the master of the MV Vlasons I,
to the cargo should be attributed to the willful negligence of the officers and crew of the Antonio C. Dumlao, and the deposition of the ship's boatswain, Jose Pascua. The
vessel or of the stevedores hired by NSC; and (3) whether the rusting of the tinplates salient portions of said marine protest read:
was caused by its own "sweat" or by contact with seawater.
. . . That the M/V "VLASONS I" departed Iligan City or about 0730 hours of
These questions of fact were threshed out and decided by the trial court, which had August 8, 1974, loaded with approximately 2,487.9 tons of steel plates and tin
the firsthand opportunity to hear the parties' conflicting claims and to carefully weigh plates consigned to National Steel Corporation; that before departure, the
their respective evidence. The findings of the trial court were subsequently affirmed by vessel was rigged, fully equipped and cleared by the authorities; that on or
the Court of Appeals. Where the factual findings of both the trial court and the Court of about August 9, 1974, while in the vicinity of the western part of Negros and
Appeals coincide, the same are binding on this Court. 22 We stress that, subject to Panay, we encountered very rough seas and strong winds and Manila office
some exceptional instances,23only questions of law — not questions of fact — may be was advised by telegram of the adverse weather conditions encountered; that
raised before this Court in a petition for review under Rule 45 of the Rules of Court. in the morning of August 10, 1974, the weather condition changed to worse
After a thorough review of the case at bar, we find no reason to disturb the lower and strong winds and big waves continued pounding the vessel at her port
court's factual findings, as indeed NSC has not successfully proven the application of side causing sea water to overflow on deck andhatch (sic) covers and which
any of the aforecited exceptions. caused the first layer of the canvass covering to give way while the new
canvass covering still holding on;
Was MV Vlasons I Seaworthy?
That the weather condition improved when we reached Dumali Point
In any event, the records reveal that VSI exercised due diligence to make the ship protected by Mindoro; that we re-secured the canvass covering back to
seaworthy and fit for the carriage of NSC's cargo of steel and tinplates. This is shown position; that in the afternoon of August 10, 1974, while entering Maricaban
by the fact that it was drylocked and inspected by the Philippine Coast Guard before it Passage, we were again exposed to moderate seas and heavy rains; that
proceeded to Iligan City for its voyage to Manila under the contract of voyage charter while approaching Fortune Island, we encountered again rough seas, strong
hire.24The vessel's voyage from Iligan to Manila was the vessel's first voyage after winds and big waves which caused the same canvass to give way and leaving
drydocking. The Philippine Coast Guard Station in Cebu cleared it as seaworthy, fitted the new canvass holding on;
 xxx xxx xxx 28 q What is this beam made of?

And the relevant portions of Jose Pascua's deposition are as follows: a It is made of steel, sir.

q What is the purpose of the canvas cover? q Is the beam that was placed in the hatch opening covering the
whole hatch opening?
a So that the cargo would not be soaked with water.
a No, sir.
q And will you describe how the canvas cover was secured on the
hatch opening? q How many hatch beams were there placed across the opening?

WITNESS a There are five beams in one hatch opening.

a It was placed flat on top of the hatch cover, with a little canvas ATTY DEL ROSARIO
flowing over the sides and we place[d] a flat bar over the canvas on
the side of the hatches and then we place[d] a stopper so that the q And on top of the beams you said there is a hatch board. How
canvas could not be removed. many pieces of wood are put on top?

ATTY DEL ROSARIO a Plenty, sir, because there are several pieces on top of the hatch
beam.
q And will you tell us the size of the hatch opening? The length and
the width of the hatch opening. q And is there a space between the hatch boards?

a Forty-five feet by thirty-five feet, sir. a There is none, sir.

xxx xxx xxx q They are tight together?

q How was the canvas supported in the middle of the hatch opening? a Yes, sir.

a There is a hatch board. q How tight?

ATTY DEL ROSARIO a Very tight, sir.

q What is the hatch board made of? q Now, on top of the hatch boards, according to you, is the canvass
cover. How many canvas covers?
a It is made of wood, with a handle.
a Two, sir.29
q And aside from the hatch board, is there any other material there to
cover the hatch? That due diligence was exercised by the officers and the crew of the MV Vlasons I was
further demonstrated by the fact that, despite encountering rough weather twice, the
a There is a beam supporting the hatch board. new tarpaulin did not give way and the ship's hatches and cargo holds remained
waterproof. As aptly stated by the Court of Appeals, ". . . we find no reason not to
sustain the conclusion of the lower court based on overwhelming evidence, that
the MV 'VLASONS I' was seaworthy when it undertook the voyage on August 8, 1974 COURT:
carrying on board thereof plaintiff-appellant's shipment of 1,677 skids of tinplates and
92 packages of hot rolled sheets or a total of 1,769 packages from NSC's pier in Iligan All right, witness may answer.
City arriving safely at North Harbor, Port Area, Manila, on August 12, 1974; . . . 30
ATTY LOPEZ:
Indeed, NSC failed to discharge its burden to show negligence on the part of the
officers and the crew of MV Vlasons I. On the contrary, the records reveal that it was
the stevedores of NSC who were negligent in unloading the cargo from the ship. Q What was used in order to protect the cargo from the weather?

The stevedores employed only a tent-like material to cover the hatches when strong A A base of canvas was used as cover on top of the tin plates, and tents were
rains occasioned by a passing typhoon disrupted the unloading of the cargo. This tent- built at the opening of the hatches.
like covering, however, was clearly inadequate for keeping rain and seawater away
from the hatches of the ship. Vicente Angliongto, an officer of VSI, testified thus: Q You also stated that the hatches were already opened and that there were
tents constructed at the opening of the hatches to protect the cargo from the
ATTY ZAMORA: rain. Now, will you describe [to] the Court the tents constructed.

Q Now, during your testimony on November 5, 1979, you stated on August 14 A The tents are just a base of canvas which look like a tent of an Indian camp
you went on board the vessel upon notice from the National Steel Corporation raise[d] high at the middle with the whole side separated down to the hatch,
in order to conduct the inspection of the cargo. During the course of the the size of the hatch and it is soaks [sic] at the middle because of those
investigation, did you chance to see the discharging operation? weather and this can be used only to temporarily protect the cargo from
getting wet by rains.
WITNESS:
Q Now, is this procedure adopted by the stevedores of covering tents proper?
A Yes, sir, upon my arrival at the vessel, I saw some of the tinplates already
discharged on the pier but majority of the tinplates were inside the hall, all the A No, sir, at the time they were discharging the cargo, there was a typhoon
hatches were opened. passing by and the hatch tent was not good enough to hold all of it to prevent
the water soaking through the canvass and enter the cargo.
Q In connection with these cargoes which were unloaded, where is the place.
Q In the course of your inspection, Mr. Anglingto [sic], did you see in fact the
water enter and soak into the canvass and tinplates.
A At the Pier.
A Yes, sir, the second time I went there, I saw it.
Q What was used to protect the same from weather?
Q As owner of the vessel, did you not advise the National Steel Corporation
ATTY LOPEZ: [of] the procedure adopted by its stevedores in discharging the cargo
particularly in this tent covering of the hatches?
We object, your Honor, this question was already asked. This particular matter
. . . the transcript of stenographic notes shows the same was covered in the A Yes, sir, I did the first time I saw it, I called the attention of the stevedores
direct examination. but the stevedores did not mind at all, so, called the attention of the
representative of the National Steel but nothing was done, just the same.
ATTY ZAMORA: Finally, I wrote a letter to them.31

Precisely, your Honor, we would like to go on detail, this is the serious part of NSC attempts to discredit the testimony of Angliongto by questioning his failure to
the testimony. complain immediately about the stevedores' negligence on the first day of unloading,
pointing out that he wrote his letter to petitioner only seven days later. 32 The Court is
not persuaded. Angliongto's candid answer in his aforequoted testimony satisfactorily Do Tinplates "Sweat"?
explained the delay. Seven days lapsed because he first called the attention of the
stevedores, then the NSC's representative, about the negligent and defective The trial court relied on the testimony of Vicente Angliongto in finding that ". . . tinplates
procedure adopted in unloading the cargo. This series of actions constitutes a 'sweat' by themselves when packed even without being in contact with water from
reasonable response in accord with common sense and ordinary human experience. outside especially when the weather is bad or
Vicente Angliongto could not be blamed for calling the stevedores' attention first and raining . . ."35 The Court of Appeals affirmed the trial court's finding.
then the NSC's representative on location before formally informing NSC of the
negligence he had observed, because he was not responsible for the stevedores or
the unloading operations. In fact, he was merely expressing concern for NSC which A discussion of this issue appears inconsequential and unnecessary. As previously
was ultimately responsible for the stevedores it had hired and the performance of their discussed, the damage to the tinplates was occasioned not by airborne moisture but
task to unload the cargo. by contact with rain and seawater which the stevedores negligently allowed to seep in
during the unloading.
We see no reason to reverse the trial and the appellate courts' findings and
conclusions on this point, viz: Second Issue: Effect of NSC's Failure to
Insure the Cargo
In the THIRD assigned error, [NSC] claims that the trial court erred in finding
that the stevedores hired by NSC were negligent in the unloading of NSC's The obligation of NSC to insure the cargo stipulated in the Contract of Voyage Charter
shipment. We do not think so. Such negligence according to the trial court is Hire is totally separate and distinct from the contractual or statutory responsibility that
evident in the stevedores hired by [NSC], not closing the hatch of MV may be incurred by VSI for damage to the cargo caused by the willful negligence of
'VLASONS I' when rains occurred during the discharging of the cargo thus the officers and the crew of MV Vlasons I. Clearly, therefore, NSC's failure to insure
allowing rain water and seawater spray to enter the hatches and to drift to and the cargo will not affect its right, as owner and real party in interest, to file an action
fall on the cargo. It was proven that the stevedores merely set up temporary against VSI for damages caused by the latter's willful negligence. We do not find
tents or canvas to cover the hatch openings when it rained during the anything in the charter party that would make the liability of VSI for damage to the
unloading operations so that it would be easier for them to resume work after cargo contingent on or affected in any manner by NSC's obtaining an insurance over
the rains stopped by just removing said tents or canvass. It has also been the cargo.
shown that on August 20, 1974, VSI President Vicente Angliongto wrote
[NSC] calling attention to the manner the stevedores hired by [NSC] were Third Issue: Admissibility of Certificates
discharging the cargo on rainy days and the improper closing of the hatches Proving Seaworthiness
which allowed continuous heavy rain water to leak through and drip to the
tinplates' covers and [Vicente Angliongto] also suggesting that due to four (4) NSC's contention that MV Vlasons I was not seaworthy is anchored on the alleged
days continuos rains with strong winds that the hatches be totally closed down inadmissibility of the certificates of seaworthiness offered in evidence by VSI. The said
and covered with canvas and the hatch tents lowered. (Exh. "13"). This letter certificates include the following:
was received by [NSC] on 22 August 1974 while discharging operations were
still going on (Exhibit "13-A").33 1. Certificate of Inspection of the Philippines Coast Guard at Cebu

The fact that NSC actually accepted and proceeded to remove the cargo from the ship 2. Certificate of Inspection from the Philippine Coast Guard
during unfavorable weather will not make VSI liable for any damage caused thereby. In
passing, it may be noted that the NSC may seek indemnification, subject to the laws
on prescription, from the stevedoring company at fault in the discharge operations. "A 3. International Load Line Certificate from the Philippine Coast Guard
stevedore company engaged in discharging cargo . . . has the duty to load the cargo . .
. in a prudent manner, and it is liable for injury to, or loss of, cargo caused by its 4. Coastwise License from the Board of Transportation
negligence . . . and where the officers and members and crew of the vessel do nothing
and have no responsibility in the discharge of cargo by stevedores . . . the vessel is 5. Certificate of Approval for Conversion issued by the Bureau of Customs 36
not liable for loss of, or damage to, the cargo caused by the negligence of the
stevedores . . ."34 as in the instant case.
NSC argues that the certificates are hearsay for not having been presented in
accordance with the Rules of Court. It points out that Exhibits 3, 4 and 11 allegedly are
"not written records or acts of public officers"; while Exhibits 5, 6, 7, 8, 9, 11 and 12 are 7. Demurrage/Dispatch: P8,000.00/P4,000.00 per day.39
not "evidenced by official publications or certified true copies" as required by Sections
25 and 26, Rule 132, of the Rules of Court. 37 The Court defined demurrage in its strict sense as the compensation provided for in
the contract of affreightment for the detention of the vessel beyond the laytime or that
After a careful examination of these exhibits, the Court rules that Exhibits 3, 4, 5, 6, 7, period of time agreed on for loading and unloading of cargo. 40It is given to compensate
8, 9 and 12 are inadmissible, for they have not been properly offered as evidence. the shipowner for the nonuse of the vessel. On the other hand, the following is well-
Exhibits 3 and 4 are certificates issued by private parties, but they have not been settled:
proven by one who saw the writing executed, or by evidence of the genuineness of the
handwriting of the maker, or by a subscribing witness. Exhibits, 5, 6, 7, 8, 9, and 12 Laytime runs according to the particular clause of the charter party. . . . If
are photocopies, but their admission under the best evidence rule have not been laytime is expressed in "running days," this means days when the ship would
demonstrated. be run continuously, and holidays are not excepted. A qualification of "weather
permitting" excepts only those days when bad weather reasonably prevents
We find, however, that Exhibit 11 is admissible under a well-settled exception to the the work contemplated.41
hearsay rule per Section 44 of Rule 130 of the Rules of Court, which provides that
"(e)ntries in official records made in the performance of a duty by a public officer of the In this case, the contract of voyage charter hire provided for a four-day laytime; it also
Philippines, or by a person in the performance of a duty specially enjoined by law, qualified laytime as WWDSHINC or weather working days Sundays and holidays
are prima facie evidence of the facts therein stated." 38 Exhibit 11 is an original included.42 The running of laytime was thus made subject to the weather, and would
certificate of the Philippine Coast Guard in Cebu issued by Lieutenant Junior Grade cease to run in the event unfavorable weather interfered with the unloading of
Noli C. Flores to the effect that "the vessel 'VLASONS I' was drydocked . . . and PCG cargo.43 Consequently, NSC may not be held liable for demurrage as the four-day
Inspectors were sent on board for inspection . . . After completion of drydocking and laytime allowed it did not lapse, having been tolled by unfavorable weather condition in
duly inspected by PCG Inspectors, the vessel 'VLASONS I', a cargo vessel, is in view of the WWDSHINC qualification agreed upon by the parties. Clearly, it was error
seaworthy condition, meets all requirements, fitted and equipped for trading as a cargo for the trial court and the Court of Appeals to have found and affirmed respectively that
vessel was cleared by the Philippine Coast Guard and sailed for Cebu Port on July 10, NSC incurred eleven days of delay in unloading the cargo. The trial court arrived at
1974." (sic) NSC's claim, therefore, is obviously misleading and erroneous. this erroneous finding by subtracting from the twelve days, specifically August 13,
1974 to August 24, 1974, the only day of unloading unhampered by unfavorable
At any rate, it should be stressed that NSC has the burden of proving that MV Vlasons weather or rain, which was August 22, 1974. Based on our previous discussion, such
I was not seaworthy. As observed earlier, the vessel was a private carrier and, as finding is a reversible error. As mentioned, the respondent appellate court also erred in
such, it did not have the obligation of a common carrier to show that it was seaworthy. ruling that NSC was liable to VSI for demurrage, even if it reduced the amount by half.
Indeed, NSC glaringly failed to discharge its duty of proving the willful negligence of
VSI in making the ship seaworthy resulting in damage to its cargo. Assailing the Attorney's Fees
genuineness of the certificate of seaworthiness is not sufficient proof that the vessel
was not seaworthy.
VSI assigns as error of law the Court of Appeals' deletion of the award of attorney's
fees. We disagree. While VSI was compelled to litigate to protect its rights, such fact
Fourth Issue: Demurrage and Attorney's Fees by itself will not justify an award of attorney's fees under Article 2208 of the Civil Code
when ". . . no sufficient showing of bad faith would be reflected in a party's persistence
The contract of voyage charter hire provides inter alia: in a case other than an erroneous conviction of the righteousness of his
cause . . ."44 Moreover, attorney's fees may not be awarded to a party for the reason
xxx xxx xxx alone that the judgment rendered was favorable to the latter, as this is tantamount to
imposing a premium on one's right to litigate or seek judicial redress of legitimate
grievances.45
2. Cargo: Full cargo of steel products of not less than 2,500 MT, 10% more or
less at Master's option.
Epilogue
xxx xxx xxx
At bottom, this appeal really hinges on a factual issue: when, how and who caused the
damage to the cargo? Ranged against NSC are two formidable truths. First, both lower
6. Loading/Discharging Rate: 750 tons per WWDSHINC. courts found that such damage was brought about during the unloading process when
rain and seawater seeped through the cargo due to the fault or negligence of the
stevedores employed by it. Basic is the rule that factual findings of the trial court, when
affirmed by the Court of Appeals, are binding on the Supreme Court. Although there
are settled exceptions, NSC has not satisfactorily shown that this case is one of them.
Second, the agreement between the parties — the Contract of Voyage Charter Hire —
placed the burden of proof for such loss or damage upon the shipper, not upon the
shipowner. Such stipulation, while disadvantageous to NSC, is valid because the
parties entered into a contract of private charter, not one of common carriage. Basic
too is the doctrine that courts cannot relieve a parry from the effects of a private
contract freely entered into, on the ground that it is allegedly one-sided or unfair to the
plaintiff. The charter party is a normal commercial contract and its stipulations are
agreed upon in consideration of many factors, not the least of which is the transport
price which is determined not only by the actual costs but also by the risks and
burdens assumed by the shipper in regard to possible loss or damage to the cargo. In
recognition of such factors, the parties even stipulated that the shipper should insure
the cargo to protect itself from the risks it undertook under the charter party. That NSC
failed or neglected to protect itself with such insurance should not adversely affect VSI,
which had nothing to do with such failure or neglect.

WHEREFORE, premises considered, the instant consolidated petitions are hereby

DENIED. The questioned Decision of the Court of Appeals is AFFIRMED with the
MODIFICATION that the demurrage awarded to VSI is deleted. No pronouncement as
to costs.

SO ORDERED.