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Asian Terminals, Inc. v.

First Lepanto-Taisho Insurance Corporation

G.R. No. 185964 | 16 June 2014

Shipowner COSCO
Consignee GASI
Arrastre Operator ATI
Customs Broker GASI
Insurance Company LEPANTO

COSCO loaded and received 100 jumbo bags of sodium tripolyphosphate in good
condition on board M/V Da Feng in favor of consignee, GASI. The shipment was
insured with LEPANTO.

ATI received the shipment as the arrastre operator on 18 July 1996. On 8-9 August
1996, PROVEN withdrew the shipment as the broker for GASI. Upon receipt of goods,
GASI found out that the goods incurred shortages and spillage valued at

GASI sought payment from COSCO, thru its agent SMITH BELL, ATI, and PROVEN but
they all denied it. So, it claimed from LEPANTO the insurer thereby making LEPANTO
its subrogee.

LEPANTO thereafter claimed from COSCO, SMITH BELL, ATI, and PROVEN but was
also denied. Hence, it filed complaint for collection of sum of money against them.

ATI denied liability for the loss claiming exercise of due diligence. According to it,
upon arrival of the shipment in its possession, it was discovered by SMITH BELL that
one jumbo bug thereof was already damaged while in the custody of COSCO as
evidenced by Turn Over Survey of Bad Order Cargo dated 6 August 1996. During the
withdrawal of the shipment by PROVEN from ATIs warehouse, the entire shipment
was re-examined and it was found to be exactly in the same condition as when it
was turned over to ATI such that one jumbo bag was damaged.

In the alternative, ATI asserted that even if found liable, its liability is limited to not
more than P5,000.00 per package pursuant to its contract for cargo handling

The RTC denied ATIs contentions due to the unreasonable delay in the Request for
Bad Order Survey and Turn Over Survey of Bad Order Cargo (9 Aug 1996 and 6 Aug
1996) in relation to the date of receipt (18 July 1996). Further, it rejected ATIs
contention of limited liability since its contract with the Philippine Ports Authority
(PPA) cannot bind FIRST LEPANTO or GASI since they were not parties thereto. The
CA affirmed. Hence, this petition.


Was ATI liable?


Yes. ATI failed to prove exercise of due diligence as arrastre operator in handling the

The relationship between the consignee and the arrastre operator is akin to that
existing between the consignee and/or the owner of the shipped goods and the
common carrier, or that between a depositor and a warehouseman. Hence, in the
performance of its obligations, an arrastre operator should observe the same
degree of diligence as that required of a common carrier and a warehouseman.
Being the custodian of the goods discharged from a vessel, an arrastre operators
duty is to take good care of the goods and to turn them over to the party entitled to
their possession. Thus, the burden of proof lies with the arrastre operator.

ATI failed to discharge its burden of proof. As ruled by the RTC and the CA, the dates
of the Request for Bad Order Survey and Turn Over Survey of Bad Order Cargo were
too distant from the date of receipt. What the document established is that when
the damage was discovered, the shipment has been in ATIs possession for at two
weeks. Further, PROVENs witness declared that the shipment was left in an open
area exposed to elements, thieves, and vandals.

To prove the exercise of diligence in handling the subject cargoes, an arrastre

operator must do more than merely show the possibility that some other party
could be responsible for the loss or the damage.37 It must prove that it used all
reasonable means to handle and store the shipment with due care and diligence
including safeguarding it from weather elements, thieves or vandals.

Therefore, ATI is liable.