02 Transpo Compiled Digests. 3C. Atty. Ampil 1
21 Regional Container v. Netherlands Insurance, 598 SCRA 304 – CONTENTS Santos ...... 38 22 Mindanao Terminal v. Phoenix Assurance, 587 SCRA 429 – III. 3RD WEEK (COMMON CARRIERS; CARRIAGE OF GOODS) ...... 2 Superable ...... 40 1 Keep v. Chan Gioco, 14 Phil 5 –Puno ...... 2 END OF ASSIGNMENT FOR FRIDAY, 29 NOV 2013 ...... 42 2 Phil American Gen Insurance v. MCG Marine Services , 378 SCRA 650 –Sanchez ...... 3
3 Phil American Gen Insurance v. CA, 222 SCRA 155 -Nathan Oducado ...... 4 4 Maersk Line v. CA, 222 SCRA 108 –Bascara ...... 5 5 Compania Maritima v. CA, 164 SCRA 658 –Aquino ...... 7 6 Southern Lines, Inc. v. CA, 4 SCRA 258 –Benedicto ...... 8 7 Ganzon v. CA, 161 SCRA 646 (read dissent) –Chan ...... 10 8 Compania Maritima v. Insurance Company, 12 SCRA 213 –Cortez.. 11 9 Servando v. Phil Steam Navigation Co., 117 SCRA 832 -Cruz Nenzo ...... 14 10 Samar Mining Co., v. Nordeutscher Lloyd, 132 SCRA 529 -Dela Paz ...... 17 11 Lu Do v. Binamira, 101 Phil 120 –Geraldez ...... 19 12 Eastern Shipping v. CA, 190 SCRA 512 –King ...... 20 13 Macam v. CA, 313 SCRA 77 –Lagos ...... 23 14 Metro Port Service, Inc. v. CA, 131 SCRA 365 –Lopa ...... 25 15 Firemen's Fund Insurance Co. v. Metro Port Service, Inc., 182 SCRA 455 –Lucenario ...... 26 16 H.E. Heacock Co. v. Macondray & Co., 42 Phil 205 –Magtagnob ...... 29 17 St. Paul Fire & Marine Insurance v. Macondray, 70 SCRA 122 –Muti ...... 30 18 Sea Land Service, Inc. v. IAC, 153 SCRA 552 –Narvasa...... 32 19 Citadel Lines, Inc. v. CA, 184 SCRA 544 -Perez de Tagle ...... 34 20 Everett Steamship Corp. v. CA, 297 SCRA 496 –Razon ...... 36 02 Transpo Compiled Digests. 3C. Atty. Ampil 2
III. 3 RD WEEK (COMMON CARRIER S; CARRIAGE OF GOODS ) All Gioco presented in support of his contention was the testimony of Captain Atregenio, a co-defendant, and one of the crew members. The captain testified that while the boat was in front of the buoy just outside the harbour, the wind was strong and while 1 KEEP V. CHAN GIOCO, 14 PHIL 5 –PUNO changing the boat’s course, the wind blew the boat over on one side so that so much water slipped onboard that the crew were compelled to strike sail, cast anchor, and CHAN KEEP et al v. LEON CHAN GIOCO, ANASTASIO ATREGENIO (Patron/Captain) et al. escape to shore by swimming with the aid of the oars, and that having been abandoned G.R. No. L-No. 4378 August 18, 1909 Carson, J. in that condition, the tide aided the wind in throwing the boat upon one side and the sea swamped it completely. SHIPPER: Chan Keep COMMON CARRIER: Leon Chan Gioco et al DESCRIPTION OF GOODS: 120 cavanes of rice ISSUE: W/ Gioco is liable for the value of the loss WHO WON? Keep, shipper Held: Yes. The loss was not due to caso fortuito or fuerza mayor. EMERGENCY RECIT Keep contracted Gioco to transport by boat rice from Luna to San Fernando, La Union at Ratio: The SC affirmed the decision of the CFI stating that the evidence supporting the the rate of P0.25/cavan. The boat sank and Keep instituted an action to recover the defense of Gioco was insufficient and failed to satisfactorily establish his claim. As value of the rice. CFI La Union found Gioco liable. Gioco appealed to the SC alleging that appears in the code, the burden of proof rested upon the defendant Gioco. Both Gioco’s the sinking was due to a strong wind which is an unavoidable accident (Caso Fortuito) or witness admitted that when the boat sank there was no storm raging nor were the seas an Act of God (Fuerza Mayor). The SC held that the testimony of the agent from the running dangerously high. Weather Bureau that there was no heavy wind or violent storm had more weight than the testimony of Captain Atregenio (a co-defendant) and one member of the crew. The In contrast, an agent of the Weather Bureau of San Fernando said that that, while there burden of proof lies with the common carrier to establish the defense of caso fortuito or may have been a strong wind blowing that night, there was no such heavy wind or fuerza mayor. Failing to establish this defense, Gioco et al liable to Keep for the payment violent storm blowing as would unavoidably swamp a boat manned by a capable crew, of the value of the goods. commanded by a careful navigator, and properly equipped for sailing the high seas.
CASE SUMMARY The court noted that it not having been otherwise expressly stipulated, it is to be FACTS presumed that the owner of the boat, Leon Chan Gioco, when he contracted to transport Keep contracted Gioco to transport by boat 120 cavanes of rice from Luna to San the rice in question over the high seas, obligated himself to furnish a boat suitable for Fernando, La Union in consideration of P0.25/cavan. On April 8, 1907, about 10pm, the work which he undertook to perform, and a capable crew to man her. The mere fact while entering the port of San Fernando, the boat sank. Keep instituted an action for that a strong wind was blowing when the boat changed its course is not in itself recovery of sum of money for the value of the lost rice in the CFI of La Union. sufficient to excuse her owners for losses incurred. It cannot be justly said that the sinking of the boat was the result of an act of God or of an unavoidable accident since the In the lower court, Gioco denied entering into a transportation contract. However, blowing of strong winds must always be anticipated by men who go down into the sea in evidence was presented which upon evaluation showed the existence of the contract. ships.
Gioco et al also alleged that the sinking was due to a strong wind which was a result of In the absence of evidence of some unusual intervening cause, the court held that the an act of God (fuerza mayor) or an unavoidable accident (caso fortuíto). They cited exercise of due diligence in the performance of their duty by the patron and the Article 1602 of the Civil Code which states: members of his crew, had they been reasonably expert as seafaring men, could have and would have avoided the accident which actually occurred, provided the boat was suited "Carriers (by land or sea) are also responsible for looses and damages to the work required of her. of the articles intrusted to them, unless they prove that the loss or damage was the result of unavoidable accident (caso fortuíto) or an Losses resulting from an accident caused by a sudden and unexpected gust of wind have act of God (fuerza mayor)." under some circumstances been held to be attributable to an act of God but it will be found that in all such cases the evidence introduced at the trial sustains a finding that The CFI decided in favour of Keep. It found that the rice was lost through negligence, the loss was due to exceptional circumstances or conditions, beyond the control of those carelessness and lack of due precaution and ordered Gioco et al to pay Keep. who would otherwise be responsible for the loss, notwithstanding the exercise of due diligence, foresight, pains and care to avoid it; and, as has been said, mere proof that a 02 Transpo Compiled Digests. 3C. Atty. Ampil 3 strong wind is blowing when a properly manned and equipped sailing boat tacks its subsequent sinking of the vessel was the shifting of ballast water from starboard to course is not sufficient to sustain such a finding. portside. - SMC was paid in full of the amount 5.8 Million php because of the insurance contract. - Philamgen sued MGG Marine Services and Gaerlan as subrogee of San Miguel at 2 PHIL AMERICAN GEN INSURANCE V. MCG MARINE SERVICES , 378 SCRA Makati RTC Branch 134. 650 –SANCHEZ - Meanwhile, the Board of Marine Inquiry made an investigation and declared that the cause of sinking was a fortuitous event, and that the captain and the crew THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC., petitioner, vs. MGG should not be liable administratively. MARINE SERVICES, INC. and DOROTEO GAERLAN, respondents. - The RTC held in favour of PhilamGen. Shipper - San Miguel Corporation - MGG and Gaerlan appealed to the CA, which reversed the decision of the RTC, Carrier – Dorotego Gaerlan because of the fortuitous event which absolves them from any liability. Ship’s name - M/V Peatheray Patrick-G - PhilamGen appeals to the Supreme Court. Agent of Carrier – MGG Marine Services Insurer – Philippine American General insurance Issue: Whether or not MGG and Gaerlan are liable, despite the fortuitous event. (NO) Who won – MGG Marine Services and Doroteo Gaerlan Held: WHEREFORE, the assailed Decision of the Court of Appeals is hereby AFFIRMED and the petition is hereby DENIED. ER: San Miguel Corporation insured several beer bottle cases with an amount of around 5.8 Million with PhilamGen. The vessel left the port of Mandaue for Bislig, Surigao. Ratio: However, the weather was terrible which caused the ship to sink at Cawit Point, Surigao. After investigation, Philamgen paid SMC the 5.8 Million. Philamgen now sues MGG - Common carriers, from the nature of their business and for reasons of public policy, Marine Services and Gaerlan as subrogee of SMC. The Board of Marine Inquiry made an are mandated to observe extraordinary diligence in the vigilance over the goods investigation, which concluded that there was a fortuitous instance. RTC: Philamgen and for the safety of the passengers transported by them.[7] Owing to this high wins, it ordered MGG and Gaerlan to pay it 5.8 Million. MGG and Gaerlan appealed to the degree of diligence required of them, common carriers, as a general rule, are CA, which reversed the decision. Philamgen now appeals to the Supreme Court. Issue: presumed to have been at fault or negligent if the goods transported by them are WON there was a fortuitous event which was the cause of the loss, therefore lost, destroyed or if the same deteriorated absolving the common carrier from liability? (YES). The SC held that there was a - In order that a common carrier may be absolved from liability where the loss, fortuitous event that was the only cause of the loss. The results of the Board’s destruction or deterioration of the goods is due to a natural disaster or calamity, it investigation as embodied in its decision on the administrative case clearly indicate that must further be shown that the such natural disaster or calamity was the proximate the loss of the cargo was due solely to the attendance of strong winds and huge waves and only cause of the loss;[9] there must be “an entire exclusion of human agency which caused the vessel accumulate water, tilt to the port side and to eventually keel from the cause of the injury of the loss.” over. - The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk, said vessel encountered strong winds and huge waves ranging from six to ten feet in Facts: height. - The presence of a crack in the ill-fated vessel through which water seeped in was - On March 1, 1987, San Miguel Corporation insured several beer bottle cases with an confirmed by the Greutzman Divers who were commissioned by the private aggregate value of P5,836,222.80 with petitioner Philippine American General respondents to conduct an underwater survey and inspection of the vessel to Insurance Company. The vessel left the port of Mandaue for Bislig, Surigao del Sur. determine the cause and circumstances of its sinking. In its report, Greutzman o The cargo were loaded on board the M/V Peatheray Patrick-G to be Divers stated that “along the port side platings, a small hole and two separate transported from Mandaue City to Bislig, Surigao del Sur. cracks were found at about midship.”[14] - On March 3, the vessel sank off Cawit Point, Surigao. The cargo belonging to SMC was lost. - The findings of the Board of Marine Inquiry indicate that the attendance of strong - SMC claimed the amount of loss from Philamgen insurance. winds and huge waves while the M/V Peatheray Patrick-G was sailing through - Philamgen requested a certain Mr. Sayo to survey the circumstances of the loss of Cortes, Surigao del Norte on March 3, 1987 was indeed fortuitous. A fortuitous cargo. In his report, the vessel was structurally sound and that he did not see any event has been defined as one which could not be foreseen, or which though damage or crack thereon. He concluded that the proximate cause of the listing and foreseen, is inevitable. 02 Transpo Compiled Digests. 3C. Atty. Ampil 4
- The vessel was also seaworthy. It had 3 diesel engines, 3 operational propellers, minimize the loss of the cargo under (1740) by moving the vessel to avoid further and had a captain and the chief mates had been commanding the vessel for more damage; asking for assistance after abandoning the ship. than 3 years. Facts: Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur on 1. On September 4, 1985 the Davao Union Marketing Corporation shipped on board the March 3, 1987 was shown to be the proximate and only cause of the sinking of the M/V vessel M/V "Crazy Horse" operated by the Transpacific Towage, Inc. cargo of GI sheets Peatheray Patrick-G and the loss of the cargo belonging to San Miguel Corporation, and sacks of cement. private respondents cannot be held liable for the said loss. 9,750 sheets of union brand GI sheets with a declared value of P1,086,750.00 86,860 bags of union Pozzolan and union Portland Cement with a declared value of P4,300,000.00. 3 PHIL AMERICAN GEN INSURANCE V. CA, 222 SCRA 155 -NATHAN
ODUCADO 2. The cargo was consigned to the Bicol Union Center of Pasacao, Camarines Sur, with a certain Pedro Olivan as the "Notify-Party." Phil-American General insured the cement Phil. American General Insurance v. Court of Appeals and Transpacific Towage for the value of 3.4M. Inc. 3. Upon arrival, on September 7, 1985, of M/V Crazy Horse in Pasacao port, it notified Shipper: Bicol Union (consignee). However, the discharging cannot be effected immediately and Insurer: continuously because: Consignee: First, the buoys were installed only on September 11; Common Carrier: Second, the discharge permit was secured by the consignee only on September Goods: 13;
Doctrine: The appellate court ruled that the lost of cargo in the present case was due Third a wooden catwalk had to be installed, which was completed only on September 26; solely to typhoon "Saling" and that private respondent had shown that it had observed due diligence before, during and after the occurrence of "Saling"; hence, it should not be liable Fourth, the discharging was not continuous because there were intermittent under Article 1739. rains and the stevedores supplied by the consignee did not work during the town fiesta Emergency Recit: Davao Union contracted Transpacific Towage for the shipment of 9,750 GI sheets and 4. On October 16, super typhoon “Saling” was expected to hit the country (240/kph 86,860 bags of cement to CamSur. The cargo was loaded to M/V Crazy Horse and winds). In fact, Pasacao was placed under storm signal number 3. The discharging of the consigned to Bicol Union. The ship arrived on September 7, however, the cargo cannot cargos had to be suspended because of the strong winds and sea turbulence. They were be unloaded immediately due to: 1) Buoys had to be installed because the port was able to discharge before suspension: shallow and rocky; 2) The discharge permit was secured by the consignee on September a total of 59,625 bags of cement and 26 crates of GI sheets. 13; 3) A catwalk had to be installed, and completed only on September 26; 4) Rains and the fiesta of the Virgin of Penafrancia hampered the continuous discharging of the 5. In preparation for the typhoon, the crew loaded it with 22 tons of water and 3,000 goods. 59,625 bags and 26 crates of sheets were discharged. Typhoon Saling entered the liters of fuel. The shipmaster further ordered that the ship be moved 300 meters country and Paasco Port (where the ship was) was placed under Storm Signal No. 3. The seaward to avoid hitting the catwalk and the rocks. shipmaster tried to avoid the damage to the ship by moving it seaward, but the winds were strong. He also asked for help from the police when the engine broke down to 6. At about 5:20 A.M. of October 18, when the shipmaster ordered the maneuvering of prevent pilferage. Phil-Am General paid Davao Union, as its insurer, and commenced the the vessel but it could not be steered on account of the strong winds and rough seas. present suit. The lower court ordered a mitigated award in favor of Phil-Am General but The vessel's lines snapped, causing her to be dragged against the rocks, and the this was completely reversed by the CA. The issue in this case is whether or not anchor chain stopper gave way. Transpicific is liable, because there was negligent delay on its part, to Phil-Am General. The shipmaster ordered that the ship be abandoned and thereafter he sought No. the assistance of the local government to save the pilferage. He was unable to get any assistance. Neither party committed negligent delay, as cited in the preceding paragraph.Moreover, When they returned, a lot of people were already looting its cargo. private respondent through its shipmaster exercised due negligence to prevent or The ship kept on hitting the rocks which caused the vessel to break into two (2) parts and to sink partially
02 Transpo Compiled Digests. 3C. Atty. Ampil 5
7. The total number of cement bags damaged and/or lost was 26,424 costing . It was the fiesta of the Virgin of Penafrancia and the stevedores P1,056,960.00 while there were 4,000 pieces of the GI sheets unrecovered, the cost of refused to work during the celebration. which was P454,250.00. Because the cargo was insured by it the Philippine American Transpacific is exempt from liability for the loss of the cargo, pursuant to General Insurance it paid Davao Union and thus, subrogated to its rights. Article 1740 of the Civil Code. . Transpacific through its shipmaster exercised due negligence to 8. Phil-Am General sent their demand to Transpacific, the latter however refused to pay. prevent or minimize the loss of the cargo. The lower court ruled that Davao Union was partly liable, thus mitigating its claim to ¾ shipmaster tried to maneuver the vessel amidst strong of the value. CA reversed this and ordered that it was solely due to a fortuitous event, winds and rough seas; hence the present petition. when water started to enter and later the engine broke down, the shipmaster ordered the ship to be abandoned, but Issue: he sought police assistance to prevent loss; W/N Transpacific is liable to the insured cargo. No. the shipmaster reported the incident to the Philippine Coast Guard but nothing can be done. Held: Sub-issue on res judicata WHEREFORE, the petition is DENIED. The appealed decision of the Court of Appeals, the Board of Marine Inquiry rendered a decision dated 11 April 1988 holding dated 31 July 1991, rendered in CA-G.R. CV No. 21252, is hereby AFFIRMED that said shipmaster was not guilty of "negligence as the proximate cause of the grounding and subsequent wreckage of M/S "Crazy Horse", hence, Ratio: recommending that the captain, his officers and crew be absolved from any Typhoon Saling caused the ship to sink administrative liability arising out of the subject incident. . The following facts are not contested: (1) that the cargo-carrying It is not res judicata since the requisites are wanting (identity of parties, same vessel was wrecked and partially sank on 18 October 1985 due to cause of action, etc). typhoon "Saling"; (2) that typhoon "Saling" was a fortuitous event; and (3) that at the time said vessel sank, the remaining undischarged cargo, were still on board the vessel. Differing opinions of the lower courts 4 MAERSK LINE V. CA, 222 SCRA 108 –BASCARA . At the time when Pasacao was placed under Signal No. 3, the unloading was still unfinished despite the lapse of 40 days from the MAERSK LINE VS CA time it arrived or 34 days after it started unloading. . The Lower Court ruled that the lapse of 34 days already constituted as an unreasonable delay. Under 1740 of the CC, if the carrier incurs Shipper: Eli Lilly Inc. negligent delay, a natural disaster shall not excuse him from liability. Insurer: - . CA, however, said that it was not solely attributable to human factors. Common Carrier: Maersk Line It ruled that the loss was due to the typhoon and that 1739 (due Consignee: Efren Castillo diligence before, during and after) were exhibited Transpacific. Description of goods (if applicable): 600,000 empty gelatin capsules Delay not due to negligence of either party . Transpacific argues that it had already delivered the goods by EMERGENCY RECIT notifying the consignee. Phil-Am General argues that Transpacific had the duty to unload. Efren ordered from Eli Lilly 600,000 empty gelatin capsules for the . The wharf where the vessel had to dock was shallow and rocky, manufacture of his pharmaceutical products. Maersk Line undertook to ship the goods hence it had to drop anchor some distance away. Buoys had to be to the Philippines via Oakland, California. Through a Memorandum of Shipment, Eli Lilly, constructed in order that the vessel may properly moored. Inc. advised Efren that the empty gelatin capsules were already shipped on board MV . A catwalk and wooden stage had to be constructed, a crane was "Anders Maerskline”. The specified date of arrival in the memorandum was April 3, needed for this and the crane was not immediately available. 1977. The goods were misshipped and finally arrived on June 10, 1977 (2 months from . Apart from these preparations and constructions that had to be date stated in memorandum). Efren filed an action for rescission of contract with made, the weather was not cooperative. Even before the typhoon damages alleging gross negligence and undue delay. Maersk maintains that it cannot be struck there were intermittent rains, hence the unloading was not held for damages since it acted in good faith and there was no special contract under continuous. which the carrier undertook to deliver the shipment on or before a specific date 02 Transpo Compiled Digests. 3C. Atty. Ampil 6
ISSUE: Whether or not Maersk should be held liable for damages for the delay in the Efren moved for the dismissal of the complaint against Eli Lilly, Inc.on the ground delivery of goods- YES! that the evidence on record shows that the delay in the delivery of the shipment was attributable solely to Maersk While it is true that common carriers are not obligated by law to carry and to The TC dismissed the complaint against Eli Lilly, Inc. Correspondingly, Eli Lilly deliver merchandise, and persons are not vested with the right to prompt delivery, withdrew its cross-claim against Maersk. unless such common carriers previously assume the obligation to deliver at a given date The TC ruled in favor of Efren and ordered Maersk to pay P369,000 as unrealized or time, delivery of shipment or cargo should at least be made within a reasonable time. profits plus other damages and cost of suit On appeal, the CA1 modified the TC decision and ordered Maersk to pay Efren compensatory damages of P11, 680.97 plus other damages An examination of the subject bill of lading shows that the subject shipment was estimated to arrive in Manila on April 3, 1977. While there was no special contract entered into by the parties indicating the date of arrival of the subject shipment, Maersk, Issue: Whether or not Maersk should be held liable for damages for the delay in the nevertheless, was very well aware of the specific date when the goods were expected to delivery of goods- YES! arrive as indicated in the bill of lading itself. In this regard, there arises no need to execute another contract for the purpose as it would be a mere superfluity. In the case Maersk maintains that it cannot be held for damages for the alleged delay in the before us, we find that a delay in the delivery of the goods spanning a period of two (2) delivery of the goods since it acted in good faith and there was no special contract months and seven (7) days falls was beyond the realm of reasonableness. under which the carrier undertook to deliver the shipment on or before a specific date Petitioner Maersk Line is a common carrier. Its general agent is Compania General de On the other hand, Efren claims that during the period before the specified date of Tabacos de Filipinas. arrival of the goods, he had made several commitments and contract of adhesion. Private respondent Efren Castillo is the proprietor of Ethegal Laboratories, a firm Therefore, Maersk can be held liable for the damages suffered by Efren for the that manufactures pharmaceutical products. cancellation of the contracts he entered into. Efren ordered from Eli Lilly. Inc. of Puerto Rico through the latter’s agent in the Philippines, Elanco Products, 600,000 empty gelatin capsules for the manufacture It is not disputed that the aforequoted provision2 at the back of the bill of lading, in of his pharmaceutical products. The capsules were placed in six (6) drums of fine print, is a contract of adhesion. Generally, contracts of adhesion are considered 100,000 capsules each valued at US $1,668.71. void since almost all the provisions of these types of contracts are prepared and Through a Memorandum of Shipment, Eli Lilly, Inc. advised Efren that the empty drafted only by one party, usually the carrier. The only participation left of the other gelatin capsules were already shipped on board MV "Anders Maerskline" for party in such a contract is the affixing of his signature thereto, hence the term shipment to the Philippines via Oakland, California. "Adhesion" . Eli Lilly, Inc. specified the date of arrival to be April 3, 1977. Nonetheless, settled is the rule that bills of lading are contracts not entirely For reasons unknown, goods were mishipped and diverted to Richmond, Virginia, prohibited. One who adheres to the contract is in reality free to reject it in its USA and then transported back Oakland, California. The goods finally arrived in the entirety; if he adheres, he gives his consent. Philippines on June 10, 1977 or after two (2) months from the date specified in the It is presumed that the stipulations of the bill of lading were, in the absence of fraud, memorandum. concealment or improper conduct, known to the shipper, and he is generally bound by Efren refused to take delivery of the goods on account of its failure to arrive on time. his acceptance whether he reads the bill or not. . Alleging gross negligence and undue delay in the delivery of the goods, he filed an action before the court for rescission of contract with damages against Maersk Line and Eli Lilly, Inc. 1 Judgment is hereby rendered ordering defendant-appellant Maersk Line to pay plaintiff-appellee (1) compensatory damages of P11,680.97 at 6% annual interest from filing of the complaint until fully paid, (2) moral Denying that it committed breach of contract, Maersk alleged in its that answer that damages of P50,000.00, (3) exemplary damages of P20,000,00, (3) attorney's fees, per appearance fees, and the subject shipment was transported in accordance with the provisions of the litigation expenses of P30,000.00, (4) 30% of the total damages awarded except item (3) above, and the costs of covering bill of lading and that its liability under the law on transportation of good suit. attaches only in case of loss, destruction or deterioration of the goods as provided for in Article 1734 of Civil Code 2 (1) The Carrier does not undertake that the goods shall arive at the port of discharge or the place of delivery at Eli Lilly, Inc., on the other hand, filed its answer with compulsory and cross-claim. In any particular time or to meet any particular market or use and save as is provided in clause 4 the Carrier shall in no circumstances be liable for any direct, indirect or consequential loss or damage caused by delay. If the Carrier its cross-claim, it alleged that the delay in the arrival of the goods was due solely to should nevertheless be held legally liable for any such direct or indirect or consequential loss or damage caused the gross negligence of petitioner Maersk Line. by delay, such liability shall in no event exceed the freight paid for the transport covered by this Bill of Lading. 02 Transpo Compiled Digests. 3C. Atty. Ampil 7
. However, the aforequoted ruling applies only if such the latter denied the claim because Concepcion misstated the weight of the payloader in contracts will not create an absurd situation as in the case at the Bill of Lading. The payloader was 5 tons heavier than what was agreed upon. RTC bar. The questioned provision in the subject bill of lading ruled in favor of Compania. CA reversed. The SC held that generally, common carriers has the effect of practically leaving the date of arrival of the are presumed to have been at fault or to have acted negligently in case the goods subject shipment on the sole determination and will of the transported by them are lost, destroyed or had deteriorated. To overcome the carrier. presumption of liability for the loss, destruction or deterioration of the goods, common While it is true that common carriers are not obligated by law to carry and to deliver carriers must prove that they observed extraordinary diligence as required in Article merchandise, and persons are not vested with the right to prompt delivery, unless 1733 of the Civil Code. Compania was not able to prove extraordinary diligence. Also, such common carriers previously assume the obligation to deliver at a given date or while the act of Concepcion in furnishing Compania with an inaccurate weight of the time, delivery of shipment or cargo should at least be made within a reasonable time. payloader cannot successfully be used as an excuse by latter to avoid liability to the An examination of the subject bill of lading shows that the subject shipment was damage thus caused, said act constitutes a contributory circumstance to the damage estimated to arrive in Manila on April 3, 1977. While there was no special contract caused on the payloader, which mitigates the damages that may be awarded to entered into by the parties indicating the date of arrival of the subject shipment, Concepcion. Maersk, nevertheless, was very well aware of the specific date when the goods were expected to arrive as indicated in the bill of lading itself. In this regard, there arises Facts: no need to execute another contract for the purpose as it would be a mere superfluity. Vicente E. Concepcion, a civil engineer doing business under the name and style of In the case before us, we find that a delay in the delivery of the goods spanning a Consolidated Construction had a contract with the Civil Aeronautics Administration period of two (2) months and seven (7) days falls was beyond the realm of (CAA) for the construction of the airport in Cagayan de Oro City (CDO). reasonableness. Described as gelatin capsules for use in pharmaceutical products, Being a Manila-based contractor, Vicente E. Concepcion had to ship his construction subject shipment was delivered to, and left in, the possession and custody of Maersk equipment to CDO. for transport to Manila via Oakland, California. But through Maersk's negligence was mishipped to Richmond, Virginia. Maersk's insistence that it cannot be held liable for Concepcion negotiated with Compania, thru its collector, Pacifico Fernandez for the shipment to CDO of one (1) unit payloader4, four (4) units 6x6 Reo trucks and two the delay finds no merit. (2) pieces of water tanks. He was issued Bill of Lading 113 on the same date upon delivery of the equipment at the Manila North Harbor. WHEREFORE, with the modification regarding the deletion of item 43 of respondent These equipment were loaded aboard the MV Cebu in its Voyage No. 316. The Reo court`s decision, the appealed decision is is hereby AFFIRMED in all respects. trucks and water tanks were safely unloaded within a few hours after arrival. The payloader was about two (2) meters above the pier in the course of unloading. The swivel pin of the heel block of the port block of Hatch No. 2 gave way, causing 5 COMPANIA MARITIMA V. CA, 164 SCRA 658 –AQUINO the payloader to fall. The payloader was damaged and was thereafter taken to petitioner’s compound in CDO. COMPANIA MARITIMA, petitioner, vs. COURT OF APPEALS and VICENTE CONCEPCION, Consolidated Construction wrote Compañia Maritima to demand a replacement of respondents. the payloader which it was considering as a complete loss because of the extent of Shipper: Insurer: Consignee: Common Carrier: Goods:
Emergency Recit: Concepcion had to ship construction equipment to Cagayan de Oro. Compania shipped the equipment. While unloading the equipment, the payloader fell, causing extensive damage to it. Concepcion demanded replacement from Compania but
3 However, we find item 4 in the dispositive portion of respondent court`s decision which awarded thirty (30) percent of the total damages awarded except item 3 regarding attorney`s fees and litigation expenses in favor of private respondent, to be unconscionable, the same should be deleted.
4 02 Transpo Compiled Digests. 3C. Atty. Ampil 8
damage. Consolidated Construction likewise notified petitioner of its claim for required of common carriers in the vigilance over the goods transported by them damages. by virtue of the nature of their business, which is impressed with a special public Meanwhile, Compania shipped the payloader to Manila where it was weighed at the duty. San Miguel Corporation. Finding that the payloader weighed 7.5 tons and not 2.5 Article 1733 of the Civil Code provides: tons as declared in the Bill of Lading, Compania denied the claim for damages of o “Art. 1733. Common carriers, from the nature of their business and for Consolidated Construction contending that had Vicente E. Concepcion declared the reason of public policy, are bound to observe extraordinary diligence in actual weight of the payloader, damage to their ship as well as to his payloader the vigilance over the goods and for the safety of the passengers could have been prevented. transported by them according to all the circumstances of each case. Consolidated Construction in the meantime bought a new payloader from o “Such extraordinary diligence in the vigilance over the goods is futher Bormaheco, Inc. Vicente E. Concepcion filed an action for damages against expressed in Articles 1734, 1735 and 1745, Nos. 5, 6 and 7, x x x” Compania with the CFI. Under Article 1736 of the Civil Code, the responsibility to observe extraordinary CFI Manila dismissed the complaint stating that the proximate cause of the fall of diligence commences and lasts from the time the goods are unconditionally placed the payloader was Vicente E. Concepcion’s act or omission in having in the possession of, and received by the carrier for transportation until the same misrepresented the weight of the payloader which underdeclaration was intended are delivered, actually or constructively, by the carrier to the consignee, or to the to defraud Compañia Maritima of the payment of the freight charges. person who has the right to receive them without prejudice to the provisions of The Court of Appeals reversed the trial court decision. Article 1738. Compania upon the testimonies of its own crew, failed to take the necessary and adequate precautions for avoiding damage to, or destruction of, the payloader Issue: Whether or not the act of Concepcion in furnishing Compañia Maritima with an entrusted to it for safe carriage and delivery to Cagayan de Oro City. It cannot be inaccurate weight was the proximate and only cause of the damage when the payloader reasonably concluded that the damage caused to the payloader was due to the fell while being unloaded by Compania’s crew, as would absolutely exempt Compania alleged misrepresentation of private respondent Concepcion as to the correct and from liability for damages under paragraph 3 of Article 1734 of the Civil Code, which accurate weight of the payloader. provides: It must be noted that the weight submitted by Concepcion was entered into the bill of lading by “Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of Compania thru its company collector, without seeing the equipment to be shipped. the goods, unless the same is due to any of the following causes only: The company never checked the information entered in the bill of lading. The weights stated in a bill of lading are prima facie evidence of the amount x x x x x x x x x received and the fact that the weighing was done by another will not relieve the common carrier where it accepted such weight and entered it on the bill of lading. “(3) Act or omission of the shipper or owner of the goods.” – NO. The damage caused to the machinery could have been avoided by the exercise of reasonable skill and attention on its part in overseeing the unloading of such heavy equipment. Concepcion’s act of furnishing petitioner with an inaccurate weight of the payloader Held: WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the cannot be used by said Compania as an excuse to avoid liability for the damage Court of Appeals is hereby AFFIRMED. caused, as the same could have been avoided had Compania utilized the “jumbo” lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes. Ratio: While the act of Concepcion in furnishing Compania with an inaccurate weight of the payloader cannot successfully be used as an excuse by petitioner to avoid The general rule under Articles 1735 and 1752 of the Civil Code is that common liability to the damage thus caused, said act constitutes a contributory circumstance carriers are presumed to have been at fault or to have acted negligently in case the to the damage caused on the payloader, which mitigates the liability for damages of goods transported by them are lost, destroyed or had deteriorated. To overcome petitioner in accordance with Article 1741 of the Civil Code, to wit: the presumption of liability for the loss, destruction or deterioration of the goods “Art. 1741. If the shipper or owner merely contributed to the loss, destruction or under Article 1735, the common carriers must prove that they observed deterioration of the goods, the proximate cause thereof being the negligence of the extraordinary diligence as required in Article 1733 of the Civil Code. common carrier, the latter shall be liable in damages, which however, shall be equitably It is incumbent upon the common carrier to prove that the loss, deterioration or reduced.” destruction was due to accident or some other circumstances inconsistent with its liability. In the instant case, Compania seems to have overlooked the extraordinary diligence 6 SOUTHERN LINES, INC. V. CA, 4 SCRA 258 –BENEDICTO 02 Transpo Compiled Digests. 3C. Atty. Ampil 9
SOUTHERN LINES, INC., petitioner, vs. COURT OF APPEALS and CITY OF ILOILO, value of the shortage of the shipment of rice. After trial, the lower court absolved respondents. NARIC from the complaint, but sentenced Southern to pay the amount of P4,931.41 G.R. No. L-16629 January 31, 1962 Ponente: J. De Leon which is the difference between the sum of P6,486.35 and P1,554.94 representing the latter's counterclaim for handling and freight. CA affirmed the judgment.
EMERGENCY DIGEST: Shipper - NARIC; Carrier - Southern Lines, Inc.; Consignee - City Issues: of Iloilo W/N Southern Lines is liable for the loss or shortage of the rice shipped - YES City of Iloilo requisitioned for rice from NARIC. On Aug 24, 1948, NARIC shipped
1726 sacks of rice consigned to the City of Iloilo on board SS "General Wright" Held: Judgment affirmed and petition for certiorari denied. belonging to Southern Lines. Each sack weighed 75 kilos and the entire weight
based on the bill of lading weighed 129,450 kilos. The total cost of shipment was P63115.50. When the City received the shipment on Sept. 3, there was a total Article 361 of the Code of Commerce provides: ART. 361. — The merchandise shall be transported at the risk and venture of the shortage of 13,319 kilos equivalent to 41 sacks with a value of P6486.35. The City shipper, if the contrary has not been expressly stipulated. filed a complaint in the CFI of Iloilo to recover the amount of money from NARIC and
Southern. CFI ruled in favor of the City but absolving NARIC. CA affirmed. Issue: Is As a consequence, all the losses and deteriorations which the goods may suffer during Southern liable for loss of the rice shipped? SC held that Southern is liable. SC the transportation by reason of fortuitous event, force majeure, or the inherent nature affirmed the findings of the CA that Southern admitted that the strings that tied the and defect of the goods, shall be for the account and risk of the shipper. bags of rice were broken; some bags were with holes and plenty of rice were spilled
inside the hull of the boat, and that the personnel of the boat collected no less than Proof of these accidents is incumbent upon the carrier. 26 sacks of rice which they had distributed among themselves This admission shows
that the shortage resulted from the negligence of Southern Lines. Using Art 361, and Art 362 of the Code of Commerce, SC held that Southern Lines is liable because given Article 362 of the same Code provides: the fact that there was defect in the packing of goods, and such was apparent to the ART. 362. — Nevertheless, the carrier shall be liable for the losses and damages carrier, Southern failed to take the precaution adopted by careful persons. resulting from the causes mentioned in the preceding article if it is proved, as against him, that they arose through his negligence or by reason of his having failed to take the COMPLETE DIGEST precautions which usage his established among careful persons, unless the shipper has On August 24, 1948, the National Rice and Corn Corporation (NARIC) shipped 1,726 committed fraud in the bill of lading, representing the goods to be of a kind or quality sacks of rice consigned to the City of Iloilo on board the SS "General Wright" belonging different from what they really were. to Southern Lines, Inc. Each sack of rice weighed 75 kilos and the entire shipment as indicated in the bill of lading had a total weight of 129,450 kilos. According to the bill of If, notwithstanding the precautions referred to in this article, the goods transported run lading, the cost of the shipment was P63,115.50 itemized and computed as follows: . the risk of being lost, on account of their nature or by reason of unavoidable accident, there being no time for their owners to dispose of them, the carrier may proceed to sell them, placing them for this purpose at the disposal of the judicial authority or of the Unit Price per bag P36.25 P62,567.50 officials designated by special provisions. Handling at P0.13 per bag 224.38 Trucking at P2.50 per bag 323.62 Under Art 361, in order to free itself from liability, defendant was only obliged to prove that the damages suffered by the goods were "by virtue of the nature or defect T o t a l ...... 63,115.50 of the articles." Under the provisions of Article 362, in order to hold the defendant liable, the plaintiff was obliged to prove that the damages to the goods by virtue of On September 3, 1948, the City of Iloilo received the shipment and paid the amount their nature, occurred on account of defendant's negligence or because the it did not of P63,115.50. However, it was noted that the foot of the bill of lading that the City of take the precaution adopted by careful persons. (Government v. Ynchausti & Co., 40 Iloilo 'Received the above mentioned merchandise apparently in same condition as Phil. 219, 223). when shipped, save as noted below: actually received 1685 sacks with a gross weight of 116,131 kilos upon actual weighing. Total shortage ascertained 13,319 Southern claims exemption from liability by saying that the shortage in the shipment kilos." The shortage was equivalent to 41 sacks of rice, the proportionate value of of rice was due to such factors as the shrinkage, leakage or spillage of the rice on which was P6,486.35. account of the bad condition of the sacks at the time it received the same and the negligence of the agents of City of Iloilo in receiving the shipment. If the fact of On February 14, 1951 the City of Iloilo filed a complaint in the CFI of Iloilo against improper packing is known to the carrier or his servants, or apparent upon ordinary NARIC and Southern for the recovery of the amount of P6,486.35 representing the observation, but it accepts the goods notwithstanding such condition, it is not 02 Transpo Compiled Digests. 3C. Atty. Ampil 10
relieved of liability for loss or injury resulting from such fact. (9 Am Jur. 869). Batman. The scraps were loaded on the same day. While loading, Mayor Advincula arrived and demanded payment of 5k from Tumambing. After a heated argument, Mayor The CA held that Southern admitted that the strings that tied the bags of rice were Advincula shot Tumambing, who still lived but was treated in a hospital. After a while, broken; some bags were with holes and plenty of rice were spilled inside the hull of the scraps were continued to be loaded. However, Acting Mayor Rub went, along with 3 the boat, and that the personnel of the boat collected no less than 26 sacks of rice policemen, to order that dumping of the scrap iron. The rest was brought to the which they had distributed among themselves This admission shows that the compound of NASSCO. CA rendered a decision ordering Ganzon to pay Tumambing. shortage resulted from the negligence of Southern Lines. Ganzon appealed to the SC. ISSUE: W/N CA erred in finding Ganzon guilty of breach of contract because the scraps were already in his custordy. Also, W/N CA erred in Southern invokes Art. 366 of the Code of Commerce and the bill of lading to argue condemning Ganzon for acts of employees who dumped the scrap iron upon order of that City of Iloilo is precluded from filing an action for damages on account of its Acting Mayor Rub. Answer: CA did not err. failure to present a claim within 24 hours from receipt of the shipment. It also cites the cases of Government v. Ynchausti & Co., 24 Phil. 315 and Triton Insurance Co. v. The fact that the scraps were delivered to, and accepted by, Captain Niza shows that the Jose, 33 Phil. 194, ruling to the effect that the requirement that the claim for damages scraps were already place under the custody of Ganzon. Therefore, the duty of observing must be made within 24 hours from delivery is a condition precedent to the accrual extraordinary diligence commenced and under Art. 1736, the extraordinary of the right of action to recover damages. These two cases are not applicable to the responsibility would cease only upon the delivery, actual or constructive, by the carrier case at bar. In the first cited case, the plaintiff never presented any claim at all before to the consignee, or to the person who has a right to receive them. filing the action. In the second case, there was payment of the transportation charges which precludes the presentation of any claim against the carrier. (See Article 366, As to the 2nd issue, it must be shown that Acting Mayor Basilio Rub had the power to Code of Commerce.) issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. Ganzon failed to establish this. Indeed, no authority or power of the acting The record shows that Southern Lines failed to plead this defense in its answer to City of mayor to issue such an order was given in evidence. Neither has it been shown that the Iloilo's complaint and, therefore, the same is deemed waived (Section 10, Rule 9, Rules cargo of scrap iron belonged to the Municipality of Mariveles. of Court), and cannot be raised for the first time at the trial or on appeal. (Maxilom v. Tabotabo, 9 Phil. 390.) Moreover, as the CA observed that the records reveal that the DETAILED DIGEST City filed the present action, within a reasonable time after the short delivery in the FACTS shipment of the rice was made. The present action is one for the refund of the amount - Tumambing executed in the CFI an action against Ganzon for damages based on paid in excess, and not for damages or the recovery of the shortage; for admittedly the culpa contractual. Antecedent facts are as follows. Tumambing contracted the services of Ganzon to haul 305 tons of scrap iron from City had paid the entire value of the 1726 sacks of rice, subject to subsequent - Mariveles, Bataan to the port of Manila on board the lighter LCT “Batman” adjustment, as to shortages or losses. The bill of lading does not at all limit the time for - Ganzon sent Batman to Mariveles where it docked in 3ft. of water filing an action for the refund of money paid in excess. - Tumambing delivered the scrap iron to Filomeno Niza (captain of the lighter) for loading, which was begun on the same date it was delivered When half of the scrap iron was loaded, Mayor Jose Advincula of Mariveles arrived 7 GANZON V. CA, 161 SCRA 646 (READ DISSENT) –CHAN - and demanded 5k from Tumambing. The latter resisted and after a heated argument, Mayor Advincula shot at Tumambing who was taken to the hospital in Ganzon vs CA Balanga, Bataan for treatment G.R. No. L-48757 - After a while, loading was resumed. However, Acting Mayor Basilio Rub, May 30, 1988 accompanied by 3 policemen, ordered Captain Niza and his crew to dump the scrap
iron. The rest was brought to the compound of NASSCO Shipper: Gelacio Tumambing - Later on, Acting Mayor Rub issued a receipt stating that the Municipality of Common Carrier: Mauro B. Ganzon (ship name: BATMAN) Mariveles had taken custody of the scrap iron. Goods transported: 305 tons of scrap iron - CA rendered a decision ordering Ganzon to pay Tumambing
EMERGENCY RECIT (Please take note of Justice Melencio-Herrera’s dissent at the end of ISSUE this digest.) - W/N CA erred in finding Ganzon guilty of breach of contract of transportation
because the scrap was placed in his custody and control. NO!!! Tumambing contracted the services of Ganzon, who owned the lighter LCT Batman. The - W/N CA erred in condemning Ganzon for acts of employees dumping the scrap into contract was that Ganzon should haul 305 tons of scrap iron from Mariveles, Bataan to the sea despite the fact that it was ordered by the local government official. NO!!! the port of Manila. Tumambing delivered the scrap iron to Filomena Niza, captain of 02 Transpo Compiled Digests. 3C. Atty. Ampil 11
- W/N CA failed to consider that the loss of the scrap was due to a fortuitous event. MELENCIO-HERRERA, J., dissenting: NO!!! Petitioner can not be held liable in damages for the loss and destruction of the scrap HELD - WHEREFORE, the petition is DENIED; the assailed decision of the Court of iron. The loss of said cargo was due to an excepted cause an “order or act of competent Appeals is hereby AFFIRMED. Costs against the petitioner. public authority.” The loading of the scrap iron on the lighter had to be suspended because of Municipal Mayor Jose Advincula's intervention, who was a "competent public RATIO authority." Ganzon had no control over the situation as, in fact, Tumambing himself, the - As to the issue wherein Ganzon denies that the scrap had been placed owner of the cargo, was impotent to stop the "act' of said official and even suffered a unconditionally under his custody and control gunshot wound on the occasion. o The scrap was, indeed, placed under his custody and control o He agrees with the CA’s finding that Tumambing delivered the scraps to Captain Niza and that the scraps were freely admitted. The scraps were When loading was resumed, this time it was Acting Mayor Basilio Rub, accompanied by also immediately loaded on the same day three policemen, who ordered the dumping of the scrap iron into the sea right where the o By the act of delivery, the scraps were unconditionally placed in the lighter was docked in three feet of water. Again, could the captain of the lighter and his possession of control of the common carrier. Upon receipt, the contract of crew have defied said order? carriage was deemed perfected. o Consequently, Ganzon’s extraordinary responsibility commenced and Through the "order" or "act" of "competent public authority," therefore, the pursuant to Art. 1736, the extraordinary responsibility would cease only performance of a contractual obligation was rendered impossible. upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive them. o Ganzon also failed to show that the loss of the scraps was due to any of the 8 COMPANIA MARITIMA V. INSURANCE COMPANY, 12 SCRA 213 –CORTEZ causes enumerated in Article 1734 of the Civil Code. Hence, he is presumed to have acted negligently. Ganzon could have been exempted Compania Maritima vs Insurance Company of North America (G.R. No. L-18965, October from liability had he been able to prove that he observed extraordinary 20, 1964) diligence - As to the 2nd issue, which states that the loss of the scraps was due to an “order or SHIPPER: Macleod and Company of the Philippines (Macleod) act of competent public authority,” the SC disagrees COMMON CARRIER: Compania Maritima (Compania) o It must be shown that Acting Mayor Basilio Rub had the power to issue the INSURER: Insurance Company of North America disputed order, or that it was lawful, or that it was issued under legal GOODS: Bales of Hemp process of authority. ROUTE: Davao to Manila; then Manila to Boston, USA. o Ganzon failed to establish this. Indeed, no authority or power of the acting * NOTE: a “Lighter” is a large usually flat-bottomed barge used especially in unloading or mayor to issue such an order was given in evidence. Neither has it been loading ships (in this case, it seemed that “lighter” and “barge” were used shown that the cargo of scrap iron belonged to the Municipality of interchangeably) Mariveles. - As to the issue wherein Ganzon claims that the loss of the scraps was due mainly to the intervention of the municipal officials which constitutes a caso fortuito, the SC EMERGENCY DIGEST: Sometime in October 1952, Macleod contracted, by telephone, finds that there was no caso fortuito Compania, a shipping corporation, for the shipment of 2,645 bales of hemp. The course o The intervention of the municipal officials was not In any case, of a of the travel would be from Macleod’s pier at Davao to Manila, then for transhipment to character that would render impossible the fulfillment by the carrier of its Boston. Compania sent 2 lighters (with LCT Nos. 1023 and 1025) and the hemp was obligation. loaded there which later on will be transferred to the carrier’s ship for shipment. o The petitioner was not duty bound to obey the illegal order to dump into However, on October 29, LCT No. 1025 sank which resulted to the damage or loss of the sea the scrap iron. 1,162 bales of hemp. The damaged hemp was brought to a plantation in Davao in order o Moreover, there is absence of sufficient proof that the issuance of the to save what was left of it; and due to this, Macleod incurred a loss totalling to same order was attended with such force or intimidation as to completely P60,421.02. The cargo on the barge was insured so Macleod collected from the overpower the will of the petitioner's employees. The mere difficulty in insurance company. The insurance company paid Macleod and was subrogated to the the fulfillment of the obligation is not considered force majeure latter’s rights. It then went after the carrier in order to collect what they have paid Macleod. Compaia refused. Thus, this case. ______02 Transpo Compiled Digests. 3C. Atty. Ampil 12
ISSUE: W/N there’s a contract of carriage even though there’s no bill of lading (YES) and This resulted in the damage or loss of 1,162 bales of hemp. Macleod promptly W/N the sinking of the barge was due to fortuitous event (NO) notified Compania's main office in Manila and its Davao branch advising it of its liability. HELD & RATIO: CA decision AFFIRMED. The liability and responsibility of the carrier The damaged hemp was brought to Odell Plantation in Davao for cleaning, under a contract for the carriage of goods commence on their actual delivery to, or washing, reconditioning, and redrying. receipt by, the carrier or an authorized agent. ... and delivery to a lighter in charge of a o After reclassification, the reconditioned hemp's value was reduced vessel for shipment on the vessel, where it is the custom to deliver in that way, is a good from P116,835 to P84,887.27, or a loss of P31,947.72. delivery and binds the vessel receiving the freight, the liability commencing at the time . Macleod also incurred other expenses on the course of of delivery to the lighter The liability of the carrier as common carrier begins with the reconditioning the hemp thus, the total loss added up to actual delivery of the goods for transportation, and not merely with the formal execution P60,421.02. of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete delivery and acceptance. Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance are sufficient to All of Macleod's abaca shipments, icluding the bales of hemp loaded on Compania's LCT bind the carrier. The mishap that caused the damage or loss was due, not to force No. 1025 were insured with the Insurance Company of North America against all losses majeure, but to lack of adequate precautions or measures taken by the carrier to prevent and damages. the loss. The fact that, as admitted by appellant's (Compania) own witness, the ill-fated barge had cracks on its bottom which admitted sea water in the same manner as rain Macleod filed a claim for loss with the insurance company which the latter paid entered "thru tank man-holes", according to the patron of LCT No. 1023— conclusively the former for its losses. showing that the barge was not seaworthy — it should be noted that on the night of the There was a subrogation agreement between them so as a result, Macleod nautical accident there was no storm, flood, or other natural disaster or calamity. assigned to the insurance company its rights over the insured and damaged cargo. FACTS: o The insurance company sought Compania in order to recover but they failed in doing so thus, an action was filed in court. Sometime in October 1952, Macleod and Company of the Philippines (Macleod) contracted by telephone the services of Compania Maritima (Compania), a shipping corporation, for the shipment of 2,645 bales of hemp from the former's Sasa private pier The lower court ruled in favor of the insurance company and ordered the carrier to pay at Davao City to Manila and for their subsequent transhipment to Boston, the insurance company the sum of P60,421.02, representing the losses incured. Massachusetts, USA, on board the S.S. Steel Navigator. This judgment was affirmed by the Court of Appeals. This oral contract was later on confirmed by a formal and written booking issued by Macleod's branch office in Sasa and handcarried to Compania Maritima's branch office in Davao. ISSUES (related to transportation law):
1) W/N there was already an a contract of carriage even if the loss occurred when the In compliance with the contract, Compania sent Macleod 2 lighters (with LCT Nos. 1023 hemp was loaded on a barge owned by the carrier, and no bill of lading was issued (YES, and 1025) and the hemp was loaded there. there’s already a contract)
The loading of the hemp was completed on October 29, 1952. The lighters were manned by a patron and an assistant. The patrons of both barges issued the corresponding carrier receipts. 2) W/N the the sinking of the barge was due to fortuitous event, storm, or natural o The 2 loaded barges proceeded to the government's marginal wharf disaster (NO, not due to fortuitous event) in order to wait for S.S. Bowline Knot (belonging to Compania) on which the hemp was to be loaded.
3) W/N refusal to check accounts is deemed as an implied admission on the part of the On the night of October 29, or early October 30, LCT No. 1025 sank. carrier that the shipper's documents are correct
02 Transpo Compiled Digests. 3C. Atty. Ampil 13
HELD: CA judgment is AFFIRMED. that a bill of lading is not indispensable. As regards the form of the contract of carriage it can be said that provided that there is a meeting of the minds and from such meeting arise rights and obligations, there should be no limitations as to form." The bill of lading is juridically a documentary proof of the RATIO: stipulations and conditions agreed upon by both parties. (Del Viso, pp. 314- 315; Robles vs. Santos, 44 O.G. 2268). In other words, the Code does not The fact that Compania sent its lighters free of charge to take the hemp from Macleod's demand, as necessary requisite in the contract of transportation, the wharf at Sasa preparatory to its loading onto the ship Bowline Knot does not in any way delivery of the bill of lading to the shipper, but gives right to both the impair the contract of carriage already entered into between the carrier and the shipper, carrier and the shipper to mutually demand of each other the delivery of for that preparatory step is but part and parcel of said contract of carriage. said bill. (Sp. Sup. Ct. Decision, May 6, 1895). (Martin, Philippine Commercial Laws, Vol. II, Revised Edition, pp. 12-13) The lighters were merely employed as the first step of the voyage, but once that step was taken and the hemp delivered to the carrier's employees, the The liability of the carrier as common carrier begins with the actual rights and obligations of the parties attached thereby subjecting them to the delivery of the goods for transportation, and not merely with the formal principles and usages of the maritime law. execution of a receipt or bill of lading; the issuance of a bill of lading is not In other words, here we have a complete contract of carriage the necessary to complete delivery and acceptance. Even where it is provided consummation of which has already begun: the shipper delivering the cargo to by statute that liability commences with the issuance of the bill of lading, the carrier, and the latter taking possession thereof by placing it on a lighter actual delivery and acceptance are sufficient to bind the carrier. (13 C.J.S., p. manned by its authorized employees, under which Macleod became entitled to 288) the privilege secured to him by law for its safe transportation and delivery, and the carrier to the full payment of its freight upon completion of the voyage.
Compania disclaims responsibility for the damage of the cargo in question shielding The receipt of goods by the carrier has been said to lie at the foundation of the itself behind the claim of force majeure or storm which occurred on the night of October contract to carry and deliver, and if actually no goods are received there can be 29, 1952. But the evidence fails to bear this out. no such contract. The liability and responsibility of the carrier under a Rather, it shows that the mishap that caused the damage or loss was due, not to force contract for the carriage of goods commence on their actual delivery to, or majeure, but to lack of adequate precautions or measures taken by the carrier to prevent receipt by, the carrier or an authorized agent. ... and delivery to a lighter in the loss as may be inferred from the following findings of the Court of Appeals: charge of a vessel for shipment on the vessel, where it is the custom to deliver in that way, is a good delivery and binds the vessel receiving the Aside from the fact that, as admitted by appellant's (Compania) own witness, freight, the liability commencing at the time of delivery to the lighter. ... and, the ill-fated barge had cracks on its bottom which admitted sea water in the similarly, where there is a contract to carry goods from one port to another, and same manner as rain entered "thru tank man-holes", according to the patron of they cannot be loaded directly on the vessel and lighters are sent by the vessel to LCT No. 1023— conclusively showing that the barge was not seaworthy — it bring the goods to it, the lighters are for the time its substitutes, so that the bill of should be noted that on the night of the nautical accident there was no storm, landing is applicable to the goods as soon as they are placed on the lighters. (80 flood, or other natural disaster or calamity. C.J.S., p. 901) The marine surveyors’ report also confirmed this fact. Their report said that the sinking of the lighter was attributed to the 'non-water-tight conditions of ...Whenever the control and possession of goods passes to the carrier and various buoyancy compartments’ nothing remains to be done by the shipper, then it can be said with Certainly, winds of 11 miles per hour, although stronger than the average 4.6 certainty that the relation of shipper and carrier has been established. On miles per hour then prevailing in Davao on October 29, 1952, cannot be the other hand, the authorities are to the effect that a bill of lading is not classified as storm. indispensable for the creation of a contract of carriage. o For according to Beaufort's wind scale, a storm has wind velocities of from 64 to 75 miles per hour; o and by Philippine Weather Bureau standards winds should have a velocity of from 55 to 74 miles per hour in order to be classified as Bill of lading not indispensable to contract of carriage. — As to the issuance of a storm bill of lading, although article 350 of the Code of Commerce provides that "the shipper as well as the carrier of merchandise or goods may mutua-lly demand 02 Transpo Compiled Digests. 3C. Atty. Ampil 14
*SIDE ISSUE (just in case it will be asked): Has the Court of Appeals erred in regarding Shipper: Exhibit NNN-1 (case did not mention what exactly this was) as an implied admission by Insurer: the carrier of the correctness and sufficiency of the shipper's statement of accounts Consignee: contrary to the burden of proof rule? Common Carrier: Goods:
SYNOPSIS / Emergency Digest It should be recalled in connection with this issue that during the trial of this case the (Appellees) Clara Uy Bico and Amparo Servando loaded their respective cargoes on carrier asked the lower court to order the production of the books of accounts of the board (appellant’s) Philippine Steam Navigation’s (PSN) vessel for carriage from Manila Odell Plantation containing the charges it made for the loss of the damaged hemp for to Negros Occidental. Upon arrival of the vessel at the place of destination, the cargoes verification of its accountants, but later it desisted therefrom on the claim that it finds were discharged, complete and in good order, into the warehouse of the Bureau of their production no longer necessary. This desistance notwithstanding, the shipper Customs. however pre-sented other documents to prove the damage it suffered in connection with the cargo and on the strength thereof the court a quo ordered the carrier to pay the After appellee Uy Bico had taken delivery of a portion of her cargoes, the warehouse was sum of P60,421.02. And after the Court of Appeals affirmed this award upon the theory that the desistance of the carrier from producing the books of accounts of Odell rated by fire of unknown origin, destroying the rest of the two appellees' (Uy Bico and Plantation implies an admission of the correctness of the statements of accounts Servando) cargoes. Uy Bico and Servando filed their claims from PSN for the recovery of contained therein, petitioner now contends that the Court of Appeals erred in basing the the value of the goods destroyed by fire. affirmance of the award on such erroneous interpretation. PSN rejected the claims but the trial court ruled in favor of Uy Bico and Servando and There is reason to believe that the act of petitioner in waiving its right to have the books ordered payment of their claims, stating that since the burning of the warehouse of accounts of Odell Plantation presented in court is tantamount to an admission that the occurred before actual or constructive delivery of the goods to the appellees, the loss is statements contained therein are correct and their verification not necessary because its chargeable against the PSN. main defense here, as well as below, was that it is not liable for the loss because there was no contract of carriage between it and the shipper and the loss caused, if any, was On review, the Supreme Court held that PSN, as obligor, is exempt from liability for non- due to a fortuitous event. Hence, under the carrier's theory, the correctness of the performance because the burning of the warehouse containing appellees' goods, which account representing the loss was not so material as would necessitate the presentation is the immediate and proximate cause of the loss, is a fortuitous event or force majeure of the books in question. At any rate, even if the books of accounts were not produced, which could not have been foreseen by PSN. the correctness of the accounts cannot now be disputed for the same is supported by the original documents on which the entries in said books were based which were Additional arguments used by the SC to buttress their decision: presented by the shipper as part of its evidence. And according to the Court of Appeals, these documents alone sufficiently establish the award of P60,412.02 made in favor of respondent. Parties agreed to limit responsibility “ …nor shall carrier be responsible for loss or damage caused by force majeure… “ PSN did not delay in performing their obligation, nor were they negligent 9 SERVANDO V. PHIL STEAM NAVIGATION CO., 117 SCRA 832 -CRUZ NENZO Judgment appealed from, set aside
Separate Opinion: Concurring ( Actually might be the point why assigned ) Servando v Phil Steamship Art 1738 : extraordinary liability of the common carrier continues to be operative even [G.R. Nos. L-36481-2. October 23, 1982.] during the time the goods are stored in the warehouse of the carrier at the place of destination, until Consignees AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees, vs. the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise Common Carrier dispose of them.' PHILIPPINE STEAM NAVIGATION CO., defendant-PSN. 02 Transpo Compiled Digests. 3C. Atty. Ampil 15
plaintiff Amparo C. Servando the aggregate sum of P1,070.50 with legal interest thereon from the date of the filing of the complaint until Consignees had already been advised had reasonable opportunity to remove the goods. fully paid, and to pay the costs. In fact they already removed half. Clara Uy Bico the aggregate sum of P16,625.00 with legal interest thereon from the date of the filing of the complaint until fully paid, Moreover PSN no longer had control of and responsibility of the goods having been and to pay the costs." deposited already
Issue FACTS WON PSN should be liable for the razed goods : Consignee v CC On November 6, 1963, appellees (Consignees) despite having discharged, complete and in good order onto the warehouse without negligence and after giving notice and reasonable opportunity to Clara Uy Bico and withdraw goods of consignees which were soon thereafter destroyed. NO Amparo Servando loaded on board the PSN's vessel (Carrier) , FS-176, for, carriage from Manila to RATIO Pulupandan, Negros Occidental, Extraordinary Diligence required of CCs / Art. 1736 The following (Cargoes), to wit (as evidenced by the corresponding bills of lading Article 1736 of the Civil Code imposes upon common carriers the duty to observe issued by the PSN): extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the Clara Uy Bico consignee or to the person who has a right to receive them, without prejudice to the o 1,528 cavans of rice valued at P40,907.50; provisions of Article 1738." Amparo Servando o 44 cartons of colored paper, toys and general The (lower) court a quo held that the delivery of the shipment in question to merchandise valued at P1,070.50; the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable Delivered , partially withdrawn , warehouse razed against the PSN. Upon arrival of the vessel at Pulupandan HOWEVER Parties agreed to limit responsibility against FORCE MAJEURE (In Bills of Lading) in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs. It should be pointed out, however, that in the bills of lading issued for the cargoes in At about 2:00 in the afternoon of the same day, said warehouse was razed by a question, the parties agreed to limit the responsibility of the carrier for the loss or fire of unknown origin, destroying appellees cargoes. damage that may be caused to the shipment by inserting therein the following stipulation: Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice. Appellees' claims for the value of said goods were rejected by the PSN. "Clause 14.Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or Lower court : PSN loses damage caused by force majeure, dangers or accidents of the sea or On the bases of the foregoing facts, the lower court PSN to pay. other waters; war; public enemies; . . . fire . . . " 02 Transpo Compiled Digests. 3C. Atty. Ampil 16
Stipulation valid A stipulation by the parties in the bills of lading issued for the cargoes in question, No negligence by CC either : warehouse not owned by them limiting the responsibility of the carrier for the lost or damage that may be caused Nor can the PSN or its employees be charged with negligence. The storage of the goods to the shipment is valid where there is nothing therein that is contrary to law, in the Customs warehouse pending withdrawal thereof by the appellees was moral or public policy, and is binding upon the parties even if written on the back of undoubtedly made with their knowledge and consent. Since the warehouse belonged to the bill of lading and not signed by the parties. and was maintained by the government, it would be unfair to impute negligence to the PSN, the latter having no control whatsoever over the same. Which is a basic principle of law anyway (Art 1174)
Besides, the agreement contained in the above quoted Clause 14 is a mere iteration of YU BIAO case not applicable here the basic principle of law written in Article 1174 of the Civil Code: The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio 6 , where this Court held the defendant liable for damages arising from a fire caused by the negligence of the defendant's employees while "Article 1174.Except in cases expressly specified by the law, or when loading cases of gasoline and petroleum products. But unlike in the said case, it is otherwise declared by stipulation, or when the nature of the there is not a shred of proof in the present case that the cause of the fire that obligation requires the assumption of risk, no person shall be broke out in the Custom's warehouse was in any way attributable to the responsible for those events which should not be foreseen, or which, though foreseen, were inevitable." negligence of the PSN or its employees. Under the circumstances, the PSN is plainly not responsible.
Thus, where fortuitous event or force majeure is the immediate and proximate cause of WHEREFORE, the judgment appealed from is hereby set aside. No costs. the loss, the obligor is exempt from liability for non-performance. SO ORDERED.
Makasiar, Concepcion Jr., Guerrero, Abad Santos and De Castro, JJ., concur. In a legal sense and, consequently, also in relation to contracts, a 'caso fortuito' presents the following essential characteristics Separate Opinions AQUINO, J., concurring: (1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human Common carriers; extent of extraordinary liability. (this could actually be the point will; why this case was assigned ) (2) it must be impossible to foresee the event which constitutes the 'caso Under Article 1738 of the Civil Code "the extraordinary liability of the common carrier fortuito', or if it can be foreseen, it must be impossible to avoid; continues to be operative even during the time the goods are stored in the warehouse of (3) the occurrence must be such as to render it impossible for the debtor to fulfill the carrier at the place of destination, until the consignee has been advised of the arrival his obligation in a normal manner; and of the goods and has had reasonable opportunity thereafter to remove them or (4) the obligor must be free from any participation in the aggravation of the otherwise dispose of them.'' injury resulting to the creditor." In the case at bar, the burning of the customs
warehouse was an extraordinary event which happened independently of the will of the PSN. The latter could not have foreseen the event. Non-liability for loss of goods due to fortuitous event; It would not be legal and just to hold the carrier liable to the consignee for the loss of the goods, where from the time the goods in question were deposited in the Bureau of Nor did the CC delay performance : on time and partially withdrawn already Customs' warehouse in the morning of their arrival up to two o'clock in the afternoon of
the same day, when the warehouse was burned, Amparo C. Servando and Clara Uy Bico, There is nothing in the record to show that PSN carrier incurred in delay in the the consignees, had reasonable opportunity to remove the goods. Clara had removed performance of its obligation. It appears that PSN had not only notified appellees of the more than one-half of the rice consigned to her. Moreover, the shipping company had no arrival of their shipment, they had demanded that the same be withdrawn. more control and responsibility over the goods after they were deposited in the customs warehouse by the arrastre and stevedoring operator. No amount of extraordinary In fact, pursuant to such demand, appellee Uy Bico had taken delivery of 907 diligence on the part of the carrier could have prevented the loss of the goods by fire cavans of rice before the burning of the warehouse. which was of accidental origin. The consignee should bear the loss which was due to a fortuitous event. 02 Transpo Compiled Digests. 3C. Atty. Ampil 17
Furthermore, NORDEUTSCHER cannot be made answerable for the value of the missing goods. It is true that the transshipment of the goods, which was the object of the agency, was not fully performed. However, NORDEUTSCHER had commenced said performance, 10 SAMAR MINING CO., V. NORDEUTSCHER LLOYD, 132 SCRA 529 -DELA the completion of which was aborted by circumstances beyond its control. An agent who PAZ carries out the orders and instructions of the principal without being guilty of negligence, deceit or fraud, cannot be held responsible for the failure of the principal to SAMAR MINING COMPANY, INC., plaintiff-appellee, vs. NORDEUTSCHER LLOYD and accomplish the object of the agency, C.F. SHARP & COMPANY, INC., defendants-appellants. DECISION: NORDUETSCHER NOT LIABLE. STIPULATIONS IN THE BILL OF LADING Shipper: VALID. Insurer: Consignee: Complete Digest: Common Carrier: Goods: Facts
Emergency Digest: SAMAR MINING COMPANY, INC., imported one (1) crate Optima welded wedge wire sieves through the M/S SCHWABENSTEIN a vessel owned by defendant-appellant Samar Mining imported one (1) crate Optima welded wedge wire sieves through the NORDEUTSCHER LLOYD, (represented in the Philippines by its agent, C.F. SHARP & CO., M/S SCHWABENSTEIN a vessel owned by NORDEUTSCHER LLOYD, (represented in the INC.), which shipment is covered by Bill of Lading No. 18 duly issued to consignee Philippines by its agent, C.F. SHARP & CO., INC.), which shipment is covered by Bill of SAMAR MINING COMPANY, INC. Upon arrival of the aforesaid vessel at the port of Lading No. 18 duly issued to consignee SAMAR MINING COMPANY, INC. Upon arrival of Manila, the aforementioned importation was unloaded and delivered in good order the aforesaid vessel at the port of Manila, the aforementioned importation was unloaded and condition to the bonded warehouse of AMCYL. The goods were however never and delivered in good order and condition to the bonded warehouse of AMCYL. delivered to, nor received by, the consignee at the port of destination Davao. The goods were however never delivered to, nor received by, the consignee at the port of destination Davao. SAMAR SENT letters of complaint sent to NORDUETSCHER however they failed to elicit the desired response, SAMAR then, filed a formal claim for P1,691.93, the equivalent of Upon failure of the letters of complaint, Samar filed a claim against Norduetscher. The $424.00 at the prevailing rate of exchange at that time, against the former, but neither CFI ordered Norduetscher to pay the claim. Norduetscher and CF Sharp appealed the paid. Hence, the filing of the instant suit to enforce payment. NORDUETSCHER brought decision of the RTC through certiorari before this court. in AMCYL as third party defendant.
Bill of Lading Details: CFI : ordered NORDUETSCHER to pay the amount of P1,691.93 plus attorney's fees and Port of loading : Bremen, Germany costs. However, the Court stated that defendants may recoup whatever they may pay Port of discharge: Manila plaintiff by enforcing the judgment against third party defendant AMCYL which had Destination of the goods – Davao : There is an undertaking of M/S SCHWABENSTEIN earlier been declared in default. Nordeutscher Lloyd and C.F. Sharp & Co. appealed from only up to the port of discharge from ship in Manila. The goods were to be said decision. transshipped5 by the carrier to the port of discharge of the goods in Davao. Bill of Lading No. 18 sets forth that one (1) crate of Optima welded wedge wire sieves Section 11 of Bill of Lading No. 18 and the third paragraph of Section 1 thereof are was received by the carrier NORDEUTSCHER LLOYD at the "port of loading" which is valid stipulations between the parties insofar as they exempt the carrier from Bremen, Germany, while the freight had been prepaid up to the port of destination or liability for loss or damage to the goods while the same are not in the latter's the "port of discharge of goods in this case, Davao, the carrier undertook to transport the actual custody.The responsibility as a common carrier ceased the moment the goods were goods in its vessel, M/S SCHWABENSTEIN only up to the "port of discharge from ship- unloaded in Manila and in the matter of transshipment, acted merely as an agent of the Manila. Thereafter, the goods were to be transshipped by the carrier to the port of shipper and consignee. destination or "port of discharge of goods”
Bill of Lading No. 18 limiting the carrier’s liability in the transshipment of the goods are contained in the following provisions:
5 to transfer for further transportation from one ship or conveyance to another 02 Transpo Compiled Digests. 3C. Atty. Ampil 18
SECTION 1, PARA 3 The carrier shall not be liable in any capacity whatsoever for any delivering the same into the custody of AMCYL, the bonded warehouse, appellants were delay, loss or damage occurring before the goods enter ship's tackle to be loaded or after acting in full accord with the contractual stipulations contained in Bill of Lading No. 18. the goods leave ship's tackle to be discharged, transshipped or forwarded ... (Emphasis The delivery of the goods to AMCYL was part of appellants' duty to transship the goods supplied) from Manila to their port of destination-Davao.
SECTION 11: Whenever the carrier or master may deem it advisable or in any case - Section 11 of Bill of Lading No. 18 and the third paragraph of Section 1 thereof where the goods are placed at carrier's disposal at or consigned to a point where the ship are valid stipulations between the parties insofar as they exempt the carrier from does not expect to load or discharge, the carrier or master may, without notice, forward liability for loss or damage to the goods while the same are not in the latter's the whole or any part of the goods before or after loading at the original port of actual custody. shipment, ... This carrier, in making arrangements for any transshipping or forwarding vessels or means of transportation not operated by this carrier shall be considered The liability of the common carrier for the loss, destruction or deterioration of goods solely the forwarding agent of the shipper and without any other responsibility transported from a foreign country to the Philippines is governed primarily by the New whatsoever even though the freight for the whole transport has been collected by him. ... Civil Code. 6 Pending or during forwarding or transshipping the carrier may store the goods ashore or afloat solely as agent of the shipper and at risk and expense of the goods and the carrier shall not be liable for detention nor responsible for the acts, neglect, delay or However, Article 1736 is applicable to the instant suit. There is actual delivery in failure to act of anyone to whom the goods are entrusted or delivered for storage, contracts for the transport of goods when possession has been turned over to the handling or any service incidental thereto (Emphasis supplied) consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. There was actual delivery to the consignee through its duly authorized agent, the carrier. NORDEUTSCHER now shirk liability for the loss of the subject goods by claiming that they have discharged the same in full and good condition unto the custody of AMCYL at the port of discharge from ship — Manila, and therefore, pursuant to the aforequoted Two undertakings appeared embodied and/or provided for in the Bill of Lading in stipulation (Sec. 11) in the bill of lading, their responsibility for the cargo had ceased. question. The first is FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila as a carrier. The second, THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao, with appellant acting as agent of the consignee. Issue: WON the Stipulations in the Bill of Lading exempting the carrier from liability arising from loss of goods not in its actual custody are valid? At the hiatus between these two undertakings of appellant which is the Held: WHEREFORE, the appealed decision is hereby REVERSED. Plaintiff-appellee's moment when the subject goods are discharged in Manila, its personality complaint is hereby DISMISSED. changes from that of carrier to that of agent of the consignee. Thus, the character of appellant's possession also changes, from possession in its own RATIO: name as carrier, into possession in the name of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such - The validity of stipulations in bills of lading exempting the carrier from liability for loss delivery, the appellant, as erstwhile carrier, ceases to be responsible for any or damage to the goods when the same are not in its actual custody has been upheld in loss or damage that may befall the goods from that point onwards.
PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968). “The short form Bill of Lading ( ) states in no uncertain terms that the port of discharge of the cargo is Manila, but that the same was to be 6 Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are transshipped beyond the port of discharge to Davao City. Pursuant to the terms unconditionally placed in the possession of, and received by the carrier for transportation until the same are of the long form Bill of Lading ( ), appellee's responsibility as a common carrier delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of article 1738. ceased the moment the goods were unloaded in Manila and in the matter of transshipment, appellee acted merely as an agent of the shipper and consignee. ... (Emphasis supplied) “ [CD: Same facts as the present case – discharge in Article 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of Manila, destination in Davao] the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. - It is clear, then, that in discharging the goods from the ship at the port of Manila, and
02 Transpo Compiled Digests. 3C. Atty. Ampil 19
But even as agent of the consignee, NORDEUTSCHER cannot be made answerable for the 1. On August 10, 1951, the Delta Photo Supply Company of New York shipped on value of the missing goods. It is true that the transshipment of the goods, which was the board the M/S "Fernside" at New York, U.S.A., six cases of films and/or object of the agency, was not fully performed. However, NORDEUTSCHER had photographic supplies. commenced said performance, the completion of which was aborted by circumstances a. It was consigned to the order of respondent I. V. BINARMINA. beyond its control. An agent who carries out the orders and instructions of the principal b. For this shipment, Bill of Lading No. 29 was issued. without being guilty of negligence, deceit or fraud, cannot be held responsible for the c. The ship discharged her cargo on September 23, and 24, 1951, including failure of the principal to accomplish the object of the agency, the shipment in question, placing it in the possession and custody of the arrastre operator of said port, the Visayan Cebu Terminal Company, Inc. The records fail to reveal proof of negligence, deceit or fraud committed by appellant or 2. Petitioner, LU DO, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. by its representative in the Philippines. Neither is there any showing of notorious to unload its cargo. incompetence or insolvency on the part of AMCYT, which acted as NORDEUTSCHER a. It prepared a separate list of good order cargo and bar order cargo. substitute in storing the goods awaiting transshipment. b. It had a designated checker to do this (Villamor) 3. All the cargo unloaded was received by Visayan Cebu Terminal Company, Inc., the arrastre operator. The actions of appellant carrier and of its representative in the Philippines being a. This company also had it’s checker (Quijano) in full faith with the lawful stipulations of Bill of Lading No. 18 and in conformity b. It also prepared separate lists of good and bad cargo. with the provisions of the New Civil Code on common carriers, agency and 4. This shipment in question was not included in the report of bad order cargo of both contracts, they incur no liability for the loss of the goods in question. checkers, indicating that it was discharged from the ship in good order and condition. 5. Three days after the unloading from the ship, respondent Binarmina took delivery of his six cases of photographic supplies from the arrastre operator. a. He discovered that the cases showed signs of pilferage and, consequently, 11 LU DO V. BINAMIRA, 101 PHIL 120 –GERALDEZ he hired marine surveyors, R. J. del Pan & Company, Inc., to examine them. b. The surveyors examined the cases and made a physical count of their LU DO & LU YM CORPORATION vs. I. V. BINAMIRA (1957) - Geraldez contents in the presence of representatives of petitioner Lu Do, respondent Binarmina and the stevedoring company. Shipper: c. The finding of the surveyors showed that some films and photographic Insurer: supplies were missing valued at P324.63. Consignee: Common Carrier: Issue: W/N the carrier is responsible for the loss considering that the same occurred Goods: after the shipment was discharged from the ship and placed in the possession and custody of the customs authorities? ER: Delta shipped 6 cases of film and photo supplies to consignee Binarmina. Petioner Lu Do, agent of carrier, hired Cebu Stevedoring to unload. It was received by Visayan Ratio: Cebu, arrastre operator. Both stevedoring and arrastre had checkers for bad cargo. Neither one made any record of bad cargo. When received by respondent Binarmina, The Court of Appeals found for the affirmative, making on this point the following there were signs of pilferage. Is carrier liable? Nope. Although the extraordinary comment: diligence of a Common Carrier extends up to the time the goods are delivered to the consignee, such diligence can be subject of stipulation that limits liability during the time when goods are not under the control of the carrier. Here, there was such a we believe delivery to the customs authorities is not the delivery contemplated stipulation in the Bill of Lading. It stipulated that upon reaching customs authorities, by Article 1736, supra, in connection with second paragraph of Article 1498, carrier shall not be liable. supra, because, in such a case, the goods are then still in the hands of the Government and their owner could not exercise dominion whatever over them until the duties are paid. In the case at bar, the presumption against the carrier, Shipper: Delta Photo, Agent of Carrier: Lu Do (Petitioner), Consignee: Binarmina, represented appellant as its agent, has not been successfully rebutted. Who won: Lu Do. It is now contended that the Court of Appeals erred in its finding not only because it Facts: made wrong interpretation of the law on the matter, but also because it ignored the 02 Transpo Compiled Digests. 3C. Atty. Ampil 20 provisions of the bill of lading covering the shipment wherein it was stipulated at the option of the Carrier and solely at the expense of the shipper or that the responsibility of the carrier is limited only to losses that may occur while consignee. the cargo is still under its custody and control. It therefore appears clear that the carrier does not assume liability for any loss or We believe this contention is well taken. It is true that, as a rule, a common carrier is damage to the goods once they have been "taken into the custody of customs or other responsible for the loss, destruction or deterioration of the goods it assumes to carry authorities", or when they have been delivered at ship's tackle. These stipulations are from one place to another unless the same is due to any to any of the causes mentioned clear. They have been adopted precisely to mitigate the responsibility of the carrier in Article 1734 on the new Civil Code, and that, if the goods are lost, destroyed or considering the present law on the matter, and we find nothing therein that is contrary deteriorated, for causes other that those mentioned, the common carrier is presumed to to morals or public policy that may justify their nullification. We are therefore have been at fault or to have acted negligently, unless it proves that it has observed persuaded to conclude that the carrier is not responsible for the loss in question, it extraordinary diligence in their care (Article 1735, Idem.), and that this extraordinary appearing that the same happened after the shipment had been delivered to the customs liability lasts from the time the goods are placed in the possession of the carrier until authorities. they are delivered to the consignee, or "to the person who has the right to receive them" (Article 1736, Idem.), but these provisions only apply when the loss, destruction or deterioration takes place while the goods are in the possession of the carrier, and 12 EASTERN SHIPPING V. CA, 190 SCRA 512 –KING not after it has lost control of them. G.R. No. 80936 October 17, 1990 The reason is obvious. While the goods are in its possession, it is but fair that it exercise extraordinary diligence in protecting them from damage, and if loss occurs, the law EASTERN SHIPPING LINES, INC., petitioner, vs. COURT OF APPEALS, HONGKONG & presumes that it was due to its fault or negligence. This is necessary to protect the SHANGHAI BANKING CORPORATION, AND CONSOLIDATED MINES, INC., respondents. interest of the owner who is at its mercy. The situation changes after the goods are delivered to the consignee. Quisumbing, Torres & Evangelista for petitioner.
We believe however that the parties may agree to limit the liability of the carrier Belo, Abiera & Associates for respondent HSBC. considering that the goods have still to through the inspection of the customs authorities before they are actually turned over to the consignee. This is a Shipper: Nanyo Corporation situation where we may say that the carrier losses control of the goods because of Common Carrier: Eastern Shipping Lines, Inc. a custom regulation and it is unfair that it be made responsible for what may Consignee: Battle between Consolidated Mines, Inc. and HSBC (HSBC was in truth the happen during the interregnum. And this is precisely what was done by the parties financier) herein. In the bill of lading that was issued covering the shipment in question, both the Description of goods: five (5) packages of supplies and materials for "1200 W x 2500 carrier and the consignee have stipulated to limit the responsibility of the carrier for the LMM Apron Feeder and 200 W x 5850 LMM Apron Feeder," (machinery materials and loss or damage that may because to the goods before they are actually delivered by supplies for a mining) inserting therein the following provisions:
Emergency Recit: 1. . . . The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or misdelivery, or loss of or damage to the goods occurring while Mining machines and supplies were transported by Eastern Shipping (ESL). In the the goods are not in the actual custody of the Carrier. . . . (Emphasis ours.) warehouse, it was claimed by Consolidated Mining (CMI) without presenting bill of lading. But it showed proof of ownership such as receipts of the purchase of the goods. 2. . . . The responsibility of the Carrier in any capacity shall altogether cease and Subsequent to the release of the goods, HSBC claimed ownership of the goods. They the goods shall be considered to be delivered and at their own risk and sued ESL for releasing it to CMI without their consent. (It appears that HSBC was the expense in every respect when taken into the custody of customs or other financier of CMI and HSBC was not paid for the goods). ESL denies liability by stating authorities. The Carrier shall not be required to give any notification of that they did not know who the owner is. Bill of lading showed to “Shipper’s Order”. disposition of the goods. . . . (Emphasis ours.) Hence, they are not required to look beyond the bill of lading to determine who the real owner is. Also, CMI made it appear that they were the consignees. 3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at ship's tackle . . . and delivery beyond ship's tackle shall been entirely Issue: Who is the consignee? CMI 02 Transpo Compiled Digests. 3C. Atty. Ampil 21
Ratio: Considering that there was no reply from ESL, HSBC wrote another demand letter through counsel dated October 29, 1980 in contemplation of a legal action against Nowhere did the Bill of Lading refer to respondent HSBC as the consignee or the one to ESL should it not make good HSBC's claim. be notified. CMI was able to show receipts, making it appear that they are persons who On December 23, 1980 CMI wrote a letter to HSBC admitting that they received the have the right to receive the goods. shipment in question due to a guarantee executed by them, and requested HSBC that legal action be held off for at least thirty (30) days, promising to settle its HSBC pinpoints liability to the ESL by relying on the provisions of Article 17367 (time to account with HSBC from the funds it was expecting from Benguet Corporation. exercise extraordinary diligence) of the Civil Code of the Philippines. On January 14, 1981 ESL wrote a reply to HSBC as follows: o ESL was saying sorry for releasing it without HSBC’s consent. However, Respondent HSBC wittingly or unwittingly overlooked the fact that the same article uses they justified the release on the representation and guarantee of CMI that the conjunction "or" in reference to whom the goods may be delivered, that is, to the they will be taking care of their obligation with HSBC. consignee, or to the person who has a right to receive them. CMI having failed to fulfill its promise, HSBC filed a complaint before the CFI Rizal against ESL praying for actual and compensatory damages in the amount of HSBC is the more negligent party as against ESL. It allowed CMI to be designed in the $168,521.16 representing the value of the goods covered by the Bill of Lading, bills of lading as the party to be notified, it allowed the latter to be designated as the exemplary damage in the amount deemed just by the court and P50,000 attorney's consignee in the Consular, the original of which was directly furnished to respondent fees plus expenses of litigation and judicial costs. Consolidated Mines, Inc. by and as certified to by the shipper Nanyo Corporation. After two motions for extensions, the ESL filed its answer with counterclaim: o They admit releasing the goods without presentation of the bill of lading. Facts: However, they also allege that such presentation is not necessary. CMI had proof of its ownership (receipts that they had purchased the goods). On February 24, 1980, the Nanyo Corporation of Kobe, Japan shipped a cargo Hence, they were persons who had the right to receive the goods. consisting of five (5) packages of supplies and materials for "1200 W x 2500 LMM o Plus they executed the guarantee Apron Feeder and 200 W x 5850 LMM Apron Feeder," covered by a bill of lading. o They were not aware that HSBC is the consignee bank as the bill of lading The cargo was loaded on board the S/S Eastern Adventure destined for Manila. The only bears to "SHIPPER'S ORDER" and when the shipment arrived Manila vessel is operated by herein petitioner-carrier Eastern Shipping Lines (ESL). on March 4, 1980 or even before its arrival, HSBC did not notify ESL that The bill of lading was consigned to "Shipper's Order", with "Address Arrival they have a lien over the shipment; Notice to Consolidated Mines Inc. 6799 Ayala Avenue, Makati, Metro Manila, o That ESL only became aware of that fact that HSBC is the consignee bank Philippines". (it does not say if its CMI or HSBC) sometime on August 19, 1980 thru their letter dated August 11, 1980, to Consolidated Mines Inc. (CMI) is one of the private respondents herein. which such notice was received by the ESL several months after the The cargo arrived in Manila on March 4, 1980. shipment in question was released to the consignee Consolidated Mines, Inc.; A few days later, on the basis of an Undertaking for Delivery of Cargo but without o That answering defendant released the shipment in question to the surrender of the original bill of lading presented by CMI, ESL released the Consolidated Mines, Inc. pursuant to the provision of the last paragraph of shipment in question to CMI. Article 353 of the Code of Commerce which provide as follows: In said guaranty, CMI undertook to indemnify ESL "harmless from all demands, . In case the consignee, upon receiving the goods, cannot return claiming liabilities, actions and expenses". the bill of lading subscribed by the carrier because of its loss or About five (5) and a half months later, or specifically on August 19, 1980, ESL any other cause, he must give the latter a receipt for the goods received from Hongkong and Shanghai Bank (HSBC) co-respondent of CMI in the delivered, this receipt producing the same effects as the return of case at bar, a letter stating thus: the bill of lading. (Emphasis supplied.) o Basically they were claiming that the goods were theirs already. They o They allege negligence on the part of HSBC because it was they who had wanted the bills of lading. Also, that after releasing it to CMI, they cannot control of the situation knowing the true nature of the transaction now find it. regarding the goods. HSBC did notify even once, before the goods were released, that they were the consignees. 7 The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally o HSBC is in bad faith because they filed a case against us without placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or impleading CMI. constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice On August 15, 1981, the ESL filed a third party complaint against CMI seeking to the provisions of Article 1738. reimbursement in case of a judgment against them.
02 Transpo Compiled Digests. 3C. Atty. Ampil 22
During trial, CMI filed a Motion to Stay Action in view of the pendency of That respondent HSBC is the more negligent party as against the petitioner-carrier involuntary insolvency proceedings commenced against it in the meantime by its becomes more evident when aside from having allowed respondent Consolidated Mines, creditors which included HSBC. This motion was denied by the trial court. Inc. to be designed in the bills of lading as the party to be notified, it allowed the latter to CFI Rizal rendered judgment: be designated as the consignee in the Consular, the original of which was directly o Ordered ESL to pay HSBC. ($168,521.16) furnished to respondent Consolidated Mines, Inc. by and as certified to by the shipper o Ordered CMI to reimburse ESL. Nanyo Corporation. CA affirmed in toto. With such vast powers, akin to an agent of respondent HSBC, respondent Consolidated Mines, Inc. acted within its authority, and even if it acted on its own; consequently, Issue: Who is the consignee in the bill of lading? CMI respondent HSBC may not hold the petitioner came liable because Art. 1883 of the Civil Code provides that: Ratio: (arranged according to importance) If an agent acts in his own name, the principal has no right of action against the persons Transportation Issue: with whom the agent has contracted neither have such persons against the principal.
The Bill of Lading which was issued by the carrier but contained articles furnished by In such case the agent is the one directly bound in favor of the person with whom he has the Shipper, shows on its face that the Shipment is consigned "TO SHIPPER'S ORDER" contracted, as if the transaction were his own, except when the contract involves things with "ADDRESS ARRIVAL NOTICE TO CONSOLIDATED MINES INC. 6799 AYALA AVE. belonging to the principal. MAKATI, METRO MANILA PHILIPPINES. The provisions of this article shall be understood to be without prejudice to the actions Nowhere did the Bill of Lading refer to respondent HSBC as the consignee or the one to between the principal and agent. be notified. Other issues: The foregoing information, without more, in effect makes respondent CMI for all practical intents and purposes the party named and ordered to receive the goods. In Macondray and Company Inc. v. Acting Commissioner of Customs, it was held that a bill of lading is ordinarily merely a convenient commercial instrument designed to ESL, not being privy to any transaction between HSBC and CMI, cannot be expected to protect the importer or consignee. look beyond what is contained on the face of the bill of lading in question and guess which of the many banks in Metro Manila or some other unrevealed corporation could In Phoenix Assurance Co., Ltd. v. United States Lines , it was held that as a receipt, a bill possibly be the consignee. To consider otherwise would not be sound business practice of lading recites the place and date of shipment, describes the goods as to quantity, as ESL would be forced to wait for the real owner of the goods to show up, perhaps in weight, dimensions, Identification marks, condition, quality and value. vain. It should likewise be noted that the shipment consisted of machinery materials and HSBC admits even in its memorandum filed with the trial court that Consolidated Mines, supplies for a mining company named in the bill of lading. In the absence of contrary Inc. is the consignee, yet HSBC pinpoints liability to the ESL by relying on the provisions instructions or at least knowledge of other facts, the carrier is not ordinarily expected to of Article 1736 of the Civil Code of the Philippines which provides that: deliver mining equipment to an unnamed or unknown party lurking for several months.
The extraordinary responsibility of the common carrier lasts from the time the goods Other pieces of evidence found in the records indicate that the parties knew that are unconditionally placed in the possession of, and received by the carrier for respondent CMI was indeed the owner of the goods in question, to wit: transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the Firstly, even respondent HSBC expressly admitted in its complaint that "pursuant to the provisions of Article 1738. BILL OF LADING (Annex "A" hereof) the shipment was issued 'To Shipper's Order.'" (p. 2, Original Records) It never alleged therein that it was the consignee of the shipment in Respondent HSBC wittingly or unwittingly overlooked the fact that the same article uses question. the conjunction "or" in reference to whom the goods may be delivered, that is, to the consignee, or to the person who has a right to receive them. 02 Transpo Compiled Digests. 3C. Atty. Ampil 23
Similarly, by respondent HSBC's own documentary evidence, respondent CMI is the Under the special circumstances of this case, equity favors the ESL which proved that it buyer-owner of the shipment, to wit: was in good faith while both respondents HSBC and CMI cannot claim the same.
"SOLD BY ORDER AND FOR ACCOUNT AND RISK OF MESSRS. CONSOLIDATED MINES While the goods in question were released on March 4, 1980 the records show that INC. 6799 AYALA AVE. MAKATI, METRO MANILA PHILIPPINES" (Exh. A-3, NANYO HSBC received the original bill of lading, as per testimony of its witness Ederlina CORPORATION PACKING LIST; Exh. A-4 NANYO CORPORATION INVOICE; Exh. A-8, Crisostomo (TSN, p. 29, July 13, 1982), only on April 1980 or long after the goods had NANYO CORPORATION INVOICE. (pp. 68, 71-77, Original Records) been released. This circumstance goes against the claims of HSBC.
Secondly, the Buyer referred to in the Certificate (Exh. A-5) issued by the shipper Thus HSBC in its original demand letter stated, "We are unable to locate the cargo and it NANYO CORPORATION should perforce refer to CMI to wit: would appear that it has been released by you to Consolidated Mines, Inc." (Annex B of Complaint, p. 8, Original Records). This proves that it had foreknowledge of the prior We hereby certify that Original Consular Invoice had been air-mailed directly to Buyer. release to CMI.
We also certify that advance copies of Commercial Invoice Packing List and Bill of Lading And to make things worse, HSBC, despite CMI's admission that it received the goods, were airmailed directly to Buyer. (p. 73, Original Records) sued only the ESL while at the same time claiming for the value of the goods in the involuntary insolvency proceedings of CMI which the Bank itself, together with others, Thirdly, respondent HSBC has established by its own documentary evidence, more initiated. Only later developments led to this case. particularly, the CONSULAR INVOICE (Exh. A-6 dated February 25, 1980, issued in Tokyo, Japan by the Foreign Service of the Republic of the Philippines, that the consignee of the shipment in question is respondent CONSOLIDATED MINES, INC. as 13 MACAM V. CA, 313 SCRA 77 –LAGOS shown therein thus: BENITO MACAM doing business under the name and style BEN-MAC Consignee CONSOLIDATED MINES, INC. ENTERPRISES, petitioner, vs. Address 6799 AYALA AVENUE MAKATI COURT OF APPEALS, CHINA OCEAN SHIPPING CO., and/or WALLEM PHILIPPINES SHIPPING, INC.,respondents. METRO MANILA PHILIPPINES Shipper: Macam But assuming that CMI may not be considered consignee, the ESL cannot be faulted for Insurer: releasing the goods to CMI under the circumstances, due to its lack of knowledge as to Common Carrier: China Ocean Shipping with Agent: Wallem Philippines Shipping who was the real consignee in view of CMI's strong representations and letter of Consignee: National Bank of Pakistan undertaking wherein it stated that the bill of lading would be presented later. Buyer/Notify Party: Great Prospect Company of Kowloon Description of goods (if applicable): watermelons and fresh mangoes This is precisely the situation covered by the last paragraph of Art. 353 of the Corporation Code to wit: ER: Benito Macam, shipped watermelons and mangoes on board the vessel Nen Jiang, If in case of loss or for any other reason whatsoever, the consignee cannot return upon owned by China Ocean Shippipng Co., thorugh its local agent Wallem exported receiving the merchandise the bill of lading subscribed by the carrier, he shall give said through letter of Credit issued by Pakistan Bank and covered by a bill of lading carrier receipt of the goods delivered, this receipt producing the same effects as the which contained the provision: one of the bills of lading must be surrendered duly return of the bill of lading. endorsed in exhange for the goods or delivery order. Pakistan Bank was designated consignee and GPC was the notify party. In State Bonding and Ins. Co. Inc. v. Manila Port Service, it was held that the arrival of The copies of the bills of lading and commercial invoices were submitted to shipment is deemed admitted by an allegation of delivery to the consignee. Macam’s depository bank (Solid bank), which paid Macam the advance total value of the shipment. Upon arrival in HK, the shipment was delivered by Wallem directly to GPC, not to Pakistan Bank and without the required bill of lading having been surrendered. GPC failed to pay Pakistan, such that the latter also refused to pay Solid bank. Solid 02 Transpo Compiled Digests. 3C. Atty. Ampil 24
bank then demanded payment from Wallem but to no avail. So Macam was Subsequently, GPC failed to pay PAKISTAN BANK such that the latter, still in constrained to return the amount involved to Solid bank. possession of the original bills of lading, refused to pay Macam through Macam sought the value of the shipment from Wallem, based on delivery of the SOLIDBANK. Since SOLIDBANK already pre-paid Macam the value of the shipment, shipment to GPC withough presentation of the bills of lading and bank guarantee. it demanded payment from WALLEM through 5 letters but was refused. Macam Wallem contended that the shipment was delivered without presentation of the was thus allegedly constrained to return the amount involved to SOLIDBANK, then bills of lading and bank guarantee as per request thru telex by Macam because the demanded payment from WALLEM in writing but to no avail. shipment consisted of perishable goods. Macam sought collection of the value of the shipment from China Ocean and Issue: WON there was misdelivery? None. WON China Ocean and Wallem are liable Wallem before RTC Manila, based on delivery of the shipment to GPC without for the value of the shipment? NO presentation of the bills of lading and bank guarantee. There was no misdelivery. The submission of Macam that the fact that the shipment China Ocean and Wallem contended that the shipment was delivered to GPC was not delivered to the consignee constitutes a misdelivery thereof is a deviation without the presentation of bills of lading and bank guarantee as a request by from his cause of action before the trial court. It is clear from the allegation in his Macam because of the perishable nature of the goods. complaint that it does not deal with misdelivery of the cargoes but of delivery to China Ocean and Wallem explained that it is a standard maritime practice, when GPC without the required bills of lading and bank guarantee. immediate delivery is of the essence, for the shipper to request or instruct the According to the Supreme Court, since the subject shipment consisted of perishable carrier to deliver the goods to the buyer upon arrival at the port of destination goods and Solidbank pre-paid the full amount of the value thereof, it is not hard to without requiring presentation of the bill of lading as that usually takes time. believe the claim of respondent Wallem that Macam indeed requested the release of As proof thereof, China Ocean and Wallem apprised the trial court that for the the goods to GPC without presentation of the bills of lading and bank guarantee. duration of their two-year business relationship with Macam concerning similar Respondent Court analyzed the telex of Macam in its entirety and correctly arrived shipments to GPC, deliveries were effected without presentation of the bills of at the conclusion that the consignee referred to was not Pakistan Bank but GPC. lading. China Ocean Wallem advanced next that the refusal of PAKISTAN BANK to Macam also failed to substantiate his claim that he returned to Solidbank the full pay the letters of credit to SOLIDBANK was due to the latter's failure to submit a amount of the value of the cargoes. In view of Macam’s utter failure to establish the Certificate of Quantity and Quality. liability of Wallems over the cargoes, no reversible error was committed by Wallem RTC: China Ocean and Wallem to pay Macam approx. Php 500,000 with interest and court in ruling against him. The petition was denied. atty’s fees. o China Ocean and Wallem breached the provision in the bill of lading requiring that "one of the Bills of Lading must be surrendered duly Facts: endorsed in exchange for the goods or delivery order," when they Benito Macam, doing business under the name and style Ben-Mac Enterprises released the shipment to GPC without presentation of the bills of lading o Shipped on board the vessel Nen Jiang, owned and operated by and the bank guarantee that should have been issued by PAKISTAN BANK respondent China Ocean Shipping Co., through local agent respondent in lieu of the bills of lading. Wallem Philippines Shipping, Inc. (hereinafter WALLEM), 3,500 boxes of On appeal to the CA, CA set aside the RTC order and dismissed the complaint watermelons valued at US$5,950.00 covered by a Bill of Lading issued by National Bank of Pakistan, Hongkong (Pakistan Bank). Issue: o also shipped 1,611 boxes of fresh mangoes valued at US$14,273.00 and WON there was misdelivery? None covered by a Letter of Credit issued by the same Pakistan Bank WON Wallem is liable for the shipment? No The Bills of Lading contained the following pertinent provision: "One of the Bills of Lading must be surrendered duly endorsed in exchange for the goods or delivery Held: Petition is denied. CA decision Affirmed. order." The shipment was bound for Hongkong with PAKISTAN BANK as consignee and Ratio: Great Prospect Company of Kowloon (GPC) as notify party. We emphasize that the extraordinary responsibility of the common carriers Letter of credit requirement: copies of the bills of lading and commercial invoices lasts until actual or constructive delivery of the cargoes to the consignee or to were submitted to Macam's depository bank, Consolidated Banking Corporation the person who has a right to receive them. PAKISTAN BANK was indicated in (now SOLIDBANK), which paid Macam in advance the total value of the shipment of the bills of lading as consignee whereas GPC was the notify party. US$20,223.46. o However, in the export invoices GPC was clearly named as Upon arrival in Hongkong, the shipment was delivered by WALLEM directly to GPC, buyer/importer. Macam also referred to GPC as such in his demand not to PAKISTAN BANK, and without the required bill of lading having been letter to respondent WALLEM and in his complaint before the trial surrendered. court. This premise draws us to conclude that the delivery of the 02 Transpo Compiled Digests. 3C. Atty. Ampil 25
cargoes to GPC as buyer/importer which, conformably with Art. 1736 14 METRO PORT SERVICE, INC. V. CA, 131 SCRA 365 –LOPA had, other than the consignee, the right to receive them was proper. G.R. No. L-57582 August 24, 1984 From the testimony of Macam, we gather that he has been transacting with GPC as buyer/importer for around 2 or 3 years already. When mangoes and METRO PORT SERVICE, INC., (Formerly E. Razon, Inc.), petitioner-appellant, vs. watermelons are in season, his shipment to GPC using the facilities of COURT OF APPEALS and CHARTER INSURANCE CO., INC., respondents-appellees. respondents is twice or thrice a week. The goods are released to GPC. It has been the practice of Macam to request the shipping lines to immediately MELENCIO-HERRERA, J.: release perishable cargoes such as watermelons and fresh mangoes through telephone calls by himself or his “people.” In transactions covered by a letter of Shipper: Union Carbide of Antwerp Belgium credit, bank guarantee is normally required by the shipping lines prior to Insurer: Charter Insurance Co. releasing the goods. But for buyers using telegraphic transfers, Macam Common Carrier: Universal Shipping Lines, Inc (S/S Dingalan Bay” dispenses with the bank guarantee because the goods are already fully paid. In Consignee: Union Sales Marketing Corporation his several years of business relationship with GPC and China Ocean and Arrastre Services: E. Razon, Inc. Wallem, there was not a single instance when the bill of lading was first Description of goods (if applicable): 99,540 kilograms of Low Density Polyethylene presented before the release of the cargoes. He admitted the existence of the telex of 3 July 1989 containing his request to deliver the shipment to the consignee without presentation of the bill of lading[14] but not the telex of 5 Emergency Digest: This is basically an argument between the common carrier and the April 1989 because he could not remember having made such request. arrastre service operator. 1,050 bags out of 4,000 bags were delivered to the consignee in bad condition. Insurer paid the Consignee the amount of P35,709 for the damage and Court of Appeals was correct in referring to GPC as consignee and not Pakistani loss. Insurer is now subrogated to the rights of the consignee. Insurer sues both the Bank common carrier and the arrastre. TC said they were both responsible. CA said only the There is no mistake that the originals of the two (2) subject Bills of Lading are arrastre operator was liable. still in the possession of the Pakistani Bank. The appealed decision affirms this fact. Conformably, to implement the said telex instruction, the delivery of the SC held: 619 bags were discharged by the common carrier to the arrastre in bad order shipment must be to GPC, the notify party or real importer/buyer of the goods condition as evidenced by the original and duplicate copies of the Cargo Receipts issued and not the Pakistani Bank since the latter can very well present the original by the carrier to the arrastre and signed by their respective representatives. Since the Bills of Lading in its possession. Likewise, if it were the Pakistani Bank to 619 bags were discharged in bad order condition, it follows that the remaining 431 bags whom the cargoes were to be strictly delivered, it will no longer be proper to were damaged while in the arrastre’s custody for which they should be held liable. require a bank guarantee as a substitute for the Bill of Lading. To construe otherwise will render meaningless the telex instruction. After all, the cargoes Facts: consist of perishable fresh fruits and immediate delivery thereof to the buyer/importer is essentially a factor to reckon with. Besides, GPC is listed as Transpo Facts: one among the several consignees in the telex (Exhibit 5-B) and the instruction in the telex was to arrange delivery of A/M shipment (not any party) to April 1973 - Union Sales Marketing Corporation (UNION) ordered from Union respective consignees without presentation of OB/L and bank guarantee Carbide of Antwerp Belgium, 99,540 kilograms of Low Density Polyethylene, valued at US $.245 per kilogram (total purchase price of US $24,417.30) Apart from the foregoing obstacles to the success of Macam’s cause, Macam failed to substantiate his claim that he returned to SOLIDBANK the full amount The shipment was packed in 4,000 bags of 25 net kilograms, more or less, for each bag, and was loaded at Antwerp Belgium, in good order condition on board the S/S of the value of the cargoes. It is not far-fetched to entertain the notion, as did respondent court, that he merely accommodated SOLIDBANK in order to Dingalan Bay", owned and operated by Universal Shipping Lines, Inc. (CARRIER) recover the cost of the shipped cargoes from respondents. We note that it was and consigned to UNION in Manila. SOLIDBANK which initially demanded payment from respondents through five The shipment was covered by a Marine Risk Note issued by Charter Insurance Co. (5) letters. SOLIDBANK must have realized the absence of privity of contract (INSURER) for P212,738.17 against all risks. between itself and respondents. That is why Macam conveniently took the The CARRIER arrived in Manila on June 22, 1073 and arrastre services were cudgels for the bank. handled by E. Razon, Inc. (ARRASTRE), now called Metro Port Service, Inc. 1,050 bags were received by the consignee UNION in bad order condition
02 Transpo Compiled Digests. 3C. Atty. Ampil 26
As a consequence of the damage and loss, the INSURER paid UNION the sum of order condition, as evidenced by the original and duplicate copies of the P35,709.11 in full settlement of the claim. INSURER became the subrogee of all of Cargo Receipts issued by the CARRIER to the ARRASTRE and signed by UNION's rights to recover from the parties concerned. their respective representatives o The condition of the 619 bags before the turnover to the ARRASTRE from the CARRIER was loss or spoilage of up to 50%, as reflected in the Survey Procedural Facts: of Bad Order Cargoes, signed by the CARRIER and ARRASTRE representatives July 1, 1974 - INSURER sued for damages with the then Court of First Instance of Since 619 bags were discharged from the CARRIER already in bad order condition, Manila against the CARRIER and the ARRASTRE in the amount of P35,709.1 1, in it follows that the remaining 431 bags were damaged while in the ARRASTRE's addition to exemplary damages and attorney's fees. custody for which it should be held liable. Both defendants disclaimed liability, each one attributing the loss to the other. Since the Trial Court computed the liability of the ARRASTRE at 351 bags, Decision of the TC: notwithstanding the ARRASTRE's admission that "80 bags were not included in the o Universal Shipping Lines, Inc - P12,285.94 plus 12% interest per annum bad order cargo certificate, and the INSURER did not appeal said award by the Trial from July 1, 1974 until full payment thereof. Court in its desire to have the case terminated soonest, the INSURER may not, in o E. Razon, Inc - P9,763.94 plus 12% interest per annum from July 1, 1974 this appeal, have the judgment modified. until full payment thereof. The liability of the ARRASTRE for P9,763.94 fixed by the Trial Court is thus in order. o jointly and severally liable to pay plaintiff P2,000.00 as attorney's fees. Court of Appeals - absolved the CARRIER of any and all liability and held the ARRASTRE solely liable.Reconsideration filed by the ARRASTRE was denied by the Appellate Court. 15 FIREMEN'S FUND INSURANCE CO. V. METRO PORT SERVICE, INC., 182 Issues: SCRA 455 –LUCENARIO
1. W/N CA erred in not giving credence and belief to the Arrastre’s Bad Order Firemen’s Fund Insurance Co. v. Metro Port Services, Inc. Certificates 2. W/N CA erred in holding the Arrastre liable Shipper: Insurer: Consignee: Held: WHEREFORE, the appealed judgment of respondent Court of Appeals is hereby Common Carrier: REVERSED and SET ASIDE, and that of the Court of First Instance of Manila, Branch XI, is Goods: hereby reinstated. No costs. Emergency Recitation:
Ratio: VULCAN Mining imported some drilling equipment from USA and contracted with common carrier MAERSK and COMPANIA to ship them to Manila. The goods arrived Ordinarily, in a Petition for Review on Certiorari, only questions of law may be in good condition and were received by arrastre operator METRO PORT. However, raised. The rule is not absolute, however, and allows of exceptions, which we find in the next days when they were transferring the machines to a different location at present in the case at bar in that respondent Court's findings of facts are contrary to the pier, there was an accident and they were destroyed. those of the Trial Court and are contradicted by the evidence on record. o How accident happened: LIBRANDO, a truck operator of METRO PORT, CA found: When the shipment was discharged from the carrying vessel, there were was borrowed by MAERSK to drive its truck in order to transfer the 443 bags of shipment which were broken at the ends. in other words, only the end- properties. However, LIBRANDO negligently forgot to check the chassis portions of the 443 bags were torn or broken, without any showing that any containing the machines it was transferring if it had twist locks fastened portion of the contents of these 443 bags was spilled or spoiled. ... and no loss or before he lifted it. Hence, when he lifted it, the chassis broke and the spoilage of the shipment having been proved or shown to have occurred when the machines fell and got broken. It turns out that the chassis had no twist shipment was under the care and custody of the vessel, then the vessel can and locks fastened (although take note it was MAERSK’s duty to have these should not be held liable to answer for the loss of any part of it that was found upon twist locks on chasses it transports) the discharge of the shipment from the Arrastre Operator's care and custody into FIREMEN’S INSURANCE paid VULCAN Php187,500 for the damage and as subrogee the consignee's Broker. now sues MAERSK, COMPANIA, and METRO PORT for reimbursement. o completely disregards the evidence of the CARRIER and the ARRASTRE RTC held all solidarily liable. All appealed to CA. that 619 bags were discharged by the CARRIER to the ARRASTRE in bad 02 Transpo Compiled Digests. 3C. Atty. Ampil 27
Subsequently, MAERSK and COMPANIA extrajudicially settled with FIREMEN’s and There was heavy damage to the cargo as the parts of the machineries were hence did not pursue the appeal anymore. Only METRO PORT continued with the broken, denied, cracked and no longer useful for their purposes. – damage appeal. amounted to Php187,500. CA reversed RTC and absolved METRO PORT. It ruled that only MAERSK was the Firemen’s Insurance paid VULCAN and as subrogee now sues MAERSK, only responsible party since it was its truck and the proximate cause was the COMPANIA, and METRO PORT for reimbursement in RTC. absence of the twist locks it had the duty to supply. In this case, LIBRANDO is RTC ruled held solidarily liable. considered an employee of MAERSK. All defendants appeal to CA Hence, FIREMEN’S appealed. o However, MAERSK and COMPANIA negotiated a settlement for their ISSUE: W/N CA erred and METRO PORT is liable YES. Liable. liability and no longer pursued appeal. METRO PORT cannot be absolved because LIBRANDO was clearly its employee o Only METRO PORT continued appeal. (appears in its payroll). And the act of borrowing a truck operator by MAERSK was CA Ruling: RTC reversed. METROP PORT not liable based on the ground that valid because their agreement permitted such. MAERSK was the only defendant liable. The legal relationship between the consignee and the arrastre operator is akin to CA ratio: that of a depositor and warehouseman. The relationship between the consignee and o Although Librando was an employee of the METRO PORT, since he the common carrier is similar to that of the consignee and the arrastre operator. was included in its payroll, he was technically and strictly an Since it is the duty of the ARRASTRE to take good care of the goods that are in its employee of MAERSK in this particular instance because: custody and to deliver them in good condition to the consignee, such responsibility (1) He drove the tractor admittedly owned by MAERSK. also devolves upon the CARRIER. (2) He received instructions not from METRO PORT but from MAERSK Both the ARRASTRE and the CARRIER are therefore charged with and obligated to relative to this job. deliver the goods in good condition to the consignee. (3) He was performing a duty that properly pertained to MAERSK which, for In this case, there was a finding that LIBRANDO was negligent in performing his lack of a tractor operator, had to get or hire from the METRO PORT as per duties as he forgot to follow standard procedure in checking the chassis first (to see their management contract. if there are twist locks) before lifting and transferring them. He admitted that this o Nevertheless, Librando was not remiss in his duty as tractor-driver was usually done but in this instance he merely forgot. Hence, METRO PORT must considering that the proximate and direct cause of the damage was be solidarily liable for the negligent acts of its employees. the absence of twist locks in the rear end of the chassis which MAERSK failed to provide. o The respondent court thereby placed the entire burden of liability on FACTS: the owner of the Chassis which in this case was the foreign shipping company, MAERSK. Vulcan Industrial and Mining Co. imported machines from the Philadelphia Hence present petition. USA to be brought to Manila. VULCAN contracted with common carrier was Maersk Lines (MAERSK) and Compania General de Tabacos (COMPANIA) which shipped them on SS Maersk Tempo. ISSUE: W/N METRO PORT is solidarily liable with MAERSK and COMPANIA YES o Machines: 1 truck mounted core drill, 1 trailer mounted core drill, 1 container of 321 pieces steel tubings, 1 container 170 steel tubings, 1 container of 13 cases, 3 crates, 2 pallets and 26 mining machinery parts. HELD: CA decision reversed. METRO PORT liable. June 3, 1979 – goods arrived in Manila in complete and good condition and was received by Arrastre operator E. Razon Inc. (now METRO PORT Service Inc., probably changed name) 10:20am of June 8 – Danilo LIBRANDO, truck operator employed by METRO RATIO: PORT, was borrowed by MAERSK since it did not have an available truck operator, and was ordered to transfer the shipment to the Equipment Yard at Pier 3 However, while LIBRANDO was maneuvering the tractor (owned and provided The legal relationship between the consignee and the arrastre operator is akin to that of by Maersk Line) to the left, the cargo fell from the chassis and hit one of the a depositor and warehouseman. The relationship between the consignee and the container vans of American President Lines. It was discovered that there were common carrier is similar to that of the consignee and the arrastre operator. no twist lock at the rear end of the chassis where the cargo was loaded. 02 Transpo Compiled Digests. 3C. Atty. Ampil 28
Since it is the duty of the ARRASTRE to take good care of the goods that are in its We agree with the petitioner that it is the ARRASTRE which had the sole discretion and custody and to deliver them in good condition to the consignee, such responsibility also prerogative to hire and assign Librando to operate the tractor. It was also the devolves upon the CARRIER. ARRASTRE's sole decision to detail and deploy Librando for the particular task from among its pool of tractor operators or drivers. It is, therefore, inacurrate to state that Both the ARRASTRE and the CARRIER are therefore charged with and obligated to Librando should be considered an employee of Maersk Line on that specific occasion. deliver the goods in good condition to the consignee.
Handling cargo is mainly the s principal work so its driver/operators, "cargadors", or In general, the nature of the work of an arrastre operator covers the handling of cargoes employees should observe the stand" and indispensable measures necessary to prevent at piers and wharves. This is embodied in the Management Contract drawn between the losses and damage to shipments under its custody. Since the ARRASTRE offered its Bureau of Customs and E. Razon Inc., as the Arrastre Operator. The latter agreed to bind drivers for the operation of tractors in the handling of cargo and equipment, then the itself, to wit: ARRASTRE should see to it that the drivers under its employ must exercise due diligence in the performance of their work. From the testimonies of witnesses presented, we CLAIMS AND LIABILITY FOR LOSSES AND DAMAGES gather that driver/operator Librando was remiss in his duty. Benildez Cepeda, an arrastre-investigator of Metro Port admitted that Librando as tractor-operator should first have inspected the chassis and made sure that the cargo was securely loaded on the 1. Responsibility and Liability for Losses and Damages; chassis.
Claims. — The CONTRACTOR shall, at its own expense handle all merchandise in the Again Danilo Librando also admitted that it was usually his practice to inspect not only piers and other designated places and at its own expense perform all work undertaken the tractor but the chassis as well but failed to do so in this particular instance. by it hereunder diligently and in skillful workmanlike and efficient manner; That the CONTRACTOR shall be solely responsible as an independent CONTRACTOR, and hereby It is true that Maersk Line is also at fault for not providing twist locks on the chassis. agrees to accept liability and to promptly pay to the s hip company, consignee, consignor However, we find the testimony of Manuel Heraldez who is the Motor Pool General or other interested party or parties for the loss, damage, or non-delivery of cargoes to Superintendent of Metro Port rather significant. – testimony provided that although it is the extent of the actual invoice value of each package… hard to see the twist lock if the cargo is full, it may still be seen if you take a closer look. xxx
The CONTRACTOR shall be solely responsible for any and all injury or damage that may Whether or not the twist lock can be seen by the naked eye when the cargo has been arise on account of the negligence or carelessness of the CONTRACTOR, its agent or loaded on the chassis, an efficient and diligent tractor operator must nevertheless check employees in the performance of the undertaking by it to be performed under the terms if the cargo is securely loaded on the chassis. of the contract, and the CONTRACTOR hereby agree to and hold the BUREAU at all times harmless therefrom and whole or any part thereof. We, therefore, find Metro Port Service Inc., solidarily liable in the instant case for the negligence of its employee. With respect to the limited liability of the ARRASTRE, the records disclose that the value of the importation was relayed to the arrastre operator and in fact processed by its chief claims examiner based on the documents submitted. To carry out its duties, the ARRASTRE is required to provide cargo handling equipment which includes among others trailers, chassis for containers.
In this particular instance, the records reveal that MAERSK provided the chassis and the tractor which carried the carried the subject shipment. It merely requested MERO PORT to dispatch a tractor operator to drive the tractor inasmuch as the foreign shipping line did not have any truck operator in its employ. Such arrangement is allowed between the ARRASTRE and the CARRIER pursuant to the Management Contract. It was clearly one of the services offered by the ARRASTRE. 02 Transpo Compiled Digests. 3C. Atty. Ampil 29
16 H.E. HEACOCK CO. V. MACONDRAY & CO., 42 PHIL 205 –MAGTAGNOB Macondray as agent and representative of said vessel in said port. Neither the master of said vessel nor Macondray, as its agent, delivered to Heacock the twelve H.E. Heacock v Macondray 8-day Edmond clocks, although demand was made upon them for their delivery. Keyword: The invoice value of the said twelve 8-day Edmond clocks in the city of New York Topic: agreement limiting liability was P22 and the market value of the same in the City of Manila at the time when Date: they should have been delivered to the Heacock was P420. The bill of lading issued and delivered to the Heacock by the master of the said Shipper- Heacock steamship Bolton Castle contained, among others, the following clauses: Consignee- 1. It is mutually agreed that the value of the goods receipted for above does not Carrier- Macondray, as agent exceed $500 per freight ton, or, in proportion for any part of a ton, unless the value be expressly stated herein and ad valorem freight paid thereon. EMERGENCY DIGEST: 9. Also, that in the event of claims for short delivery of, or damage to, cargo being Heacock delivered through the steamship Bolton Castle 4 cases of merchandise, 1 case of made, the carrier shall not be liable for more than the net invoice price plus freight which contained 12 clocks to be transported to Manila. Upon arriving in Manila, the and insurance less all charges saved, and any loss or damage for which the carrier clocks were consigned to Macondray, which is an agent of the vessel. Neither the master may be liable shall be adjusted pro rata on the said basis. of the vessel nor Macondray delivered the clocks to Heacock. The case containing the aforesaid twelve 8-day Edmond clocks measured 3 cubic In the bill of lading, there were stipulations limiting the liability of the carrier, to wit: feet, and the freight ton value thereof was $1,480, U. S. currency. 1. It is mutually agreed that the value of the goods receipted for above does not No greater value than $500, U. S. currency, per freight ton was declared by the exceed $500 per freight ton, or, in proportion for any part of a ton, unless the Heacock on the aforesaid clocks, and no ad valorem freight was paid thereon. value be expressly stated herein and ad valorem freight paid thereon. Macondray tendered to Heacock P76.36, the proportionate freight ton value of the 9. Also, that in the event of claims for short delivery of, or damage to, cargo being aforesaid twelve 8-day Edmond clocks, in payment of Heacock's claim, which made, the carrier shall not be liable for more than the net invoice price plus tender Heacock rejected. freight and insurance less all charges saved, and any loss or damage for which Lower court- In favor of Heacock. Based on clause 9 of the bill of lading, ordered the carrier may be liable shall be adjusted pro rata on the said basis. Macondray to pay P226.02 as the invoice value of the clocks in question plus the Lower Court- ruled in favor of Heacock, ordering Macondray to pay based on Clause 9. freight and insurance thereon, with legal interest. On appeal, Heacock questioned the validity of the stipulation limiting the liability of the carrier, while Macondray questioned the application of Clause 9 (because clause 9 ISSUE: Whether the clause limiting liability to the agreed value by the carrier is valid? – makes it liable for a bigger amount). YES! The SC held that there are three types of stipulations usually included in a bill of lading: 1. exempting the carrier from any and all liability for loss or damage occasioned HELD: by its own negligence. It follows from all of the foregoing that the judgment appealed from should be affirmed, 2. providing for an unqualified limitation of such liability to an agreed valuation. without any finding as to costs. So ordered. 3. limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight. RATIO: The third type, where both clauses fall under, is the only valid and enforceable type of Three kinds of stipulations have often been made in a bill of lading. stipulation. Article 1255 of the Civil Code provides that "the contracting parties may o exempting the carrier from any and all liability for loss or damage occasioned establish any agreements, terms and conditions they may deem advisable, provided they by its own negligence. are not contrary to law, morals or public order." o providing for an unqualified limitation of such liability to an agreed valuation. Clause 9 applies because it is an express provision (Clause 1 is implied), and the contract o limiting the liability of the carrier to an agreed valuation unless the shipper was drawn by Macondray, hence it shall also be construed against him in case of declares a higher value and pays a higher rate of freight. confusion. According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy, but the third is valid and COMPLETE DIGEST enforceable. Heacock caused to be delivered on board of steamship Bolton Castle, then in the Clauses 1-9 fall under the third type, to wit: That a clause in a bill of lading limiting harbor of New York, four cases of merchandise one of which contained twelve (12) the liability of the carrier to a certain amount unless the shipper declares a higher 8-day Edmond clocks properly boxed and marked for transportation to Manila, and value and pays a higher rate of freight, is valid and enforceable. paid freight on said clocks from New York to Manila in advance. If a common carrier gives to a shipper the choice of two rates, the lower of the The said steampship arrived in the port of Manila, consigned the goods to conditioned upon his agreeing to a stipulated valuation of his property in case of 02 Transpo Compiled Digests. 3C. Atty. Ampil 30
loss, even by the carrier's negligence, if the shipper makes such a choice, exception of one drum and several cartons which were in bad order condition. understandingly and freely, and names his valuation, he cannot thereafter recover Consignee filed a claim against carrier, its agents, and arrastre contractor (defendants in more than the value which he thus places upon his property. As a matter of legal this case), which were denied. Hence, insurer reimbursed the consignee and was distinction, estoppel is made the basis of this ruling, — that, having accepted the subrogated to its claims. The lower court ordered payment to insurer but insurer benefit of the lower rate, in common honesty, the shipper may not repudiate the demands a higher amount. Basically, insurer claims amount which it actually paid to the conditions on which it was obtained, — but the rule and the effect of it are clearly consignee (NOT the CIF value) and that the exchange rate should be on the date of the established. judgment (NOT the date of discharge of shipment). It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of HELD: A stipulation fixing or limiting the sum that may be recovered from the carrier on lading here in question are not contrary to public order. the loss or deterioration of the goods is valid, provided it is (a) reasonable and just Article 1255 of the Civil Code provides that "the contracting parties may establish under the circumstances, and (b) has been fairly and freely agreed upon. In the case at any agreements, terms and conditions they may deem advisable, provided they are bar, the liabilities of the defendants with respect to the lost or damaged shipments are not contrary to law, morals or public order." expressly limited to the C.I.F. value of the goods as per contract of sea carriage embodied in the bill of lading. The bill of lading is valid and binding upon the parties. The insurer is As regards which clause will be applied- Clause 9 subrogated merely to the rights of the insured and therefore can necessarily recover Clause 1 contains only an implied undertaking to settle in case of loss on the basis of only that to what was recoverable by the insured (carrier). Further, the obligation of the not exceeding $500 per freight ton, clause 9 contains an express undertaking to carrier to pay for the damage commenced on the date it failed to deliver the shipment in settle on the basis of the net invoice price plus freight and insurance less all charges good condition to the consignee. Hence, the exchange rate on that date should be saved. “Any loss or damage for which the carrier may be liable shall be adjusted pro applied. rata on the said basis," clause 9 expressly provides. It seems to us that there is an irreconcilable conflict between the two clauses with regard to the measure of Macondray's liability. It is difficult to reconcile them Facts: without doing violence to the language used and reading exceptions and conditions into the undertaking contained in clause 9 that are not there. This being the case, Winthrop NY shipped aboard the SS "Tai Ping", owned and operated by Wilhelm the bill of lading in question should be interpreted against the Macondray carrier, 218 cartons and drums of drugs and medicine, with the freight prepaid, which were which drew said contract. consigned to Winthrop Manila. Barber Steamship Lines, Inc., agent of Wilhelm "In construing a bill of lading given by the carrier for the safe transportation and issued Bill of Lading No. 34. The shipment was insured by the shipper against loss delivery of goods shipped by a consignor, the contract will be construed most and/or damage with the St. Paul. strongly against the carrier, and favorably to the consignor, in case of doubt in any The said shipment was discharged complete and in good order with the exception matter of construction." of one (1) drum and several cartons which were in bad order condition. Because consignee failed to receive the whole shipment and as several cartons of medicine were received in bad order condition, the consignee filed the corresponding claim in the amount representing the C.I.F. value of the damaged drum and cartons of 17 ST. PAUL FIRE & MARINE INSURANCE V. MACONDRAY, 70 SCRA 122 – medicine with the carrier and the Manila Port Service. MUTI The insurance company, on the basis of such claim, paid to the consignee the ST. PAUL FIRE & MARINE INSURANCE CO., vs. MACONDRAY & CO., INC., BARBER insured value of the lost and damaged goods, including other expenses in STEAMSHIP LINES, INC., WILHELM WILHELMSEN MANILA PORT SERVICE and/or connection therewith, in U.S. currency. The insurance company instituted with the CFI of Manila the present action for the recovery of said amount. MANILA RAILROAD COMPANY, G.R. No. L-27796 March 25, 1976 The defendants Manila Port Service and Manila Railroad Company resisted the Shipper: Winthrop Products, Inc., of New York (“Winthrop NY”) action, contending, among others, that Insurer: St. Paul Fire and Marine Insurance (“St. Paul”) o the whole cargo was delivered to the consignee in the same condition in Common Carrier: Wilhelm Wilhelmsen (“Wilhelm”) which it was received from the carrying vessel Consignee: Winthrop-Stearns Inc., Manila (“Winthrop Manila”) Goods: 218 cartons and drums of drugs and medicine o their rights, duties and obligations as arrastre contractor at the Port of Manila are governed by and subject to the terms, conditions and limitations contained in the Management Contract between the Bureau of ER: There’s a shipment from NY to Manila (refer to fast details above to avoid Customs and Manila Port Service reiteration). The shipment was discharged complete and in good order with the 02 Transpo Compiled Digests. 3C. Atty. Ampil 31
o they are not the agents of the carrying vessel in the receipt and delivery of limiting the common carrier's liability to the value of the goods appearing in the cargoes in the Port of Manila bill, unless the shipper or owner declares a greater value, is valid and binding. This limitation of the carrier's liability is sanctioned by the freedom of the contracting The defendants Macondray & Co., Inc., Barber Steamship Lines, Inc. and Wilhelm parties to establish such stipulations, clauses, terms, or conditions as they may Wilhelmsen also contested the claim alleging, among others, that deem convenient, provided they are not contrary to law, morals, good customs and o the carrier's liability for the shipment ceased upon discharge thereof from public policy. the ship's tackle A stipulation fixing or limiting the sum that may be recovered from the carrier on o if any damage was sustained by the shipment while it was under the the loss or deterioration of the goods is valid, provided it is (a) reasonable and just control of the vessel, such damage was caused by insufficiency of packing, under the circumstances, and (b) has been fairly and freely agreed upon. In the case force majeure and/or perils of the sea at bar, the liabilities of the defendants with respect to the lost or damaged shipments are expressly limited to the C.I.F. value of the goods as per contract of o they, in good faith and for the purpose only of avoiding litigation without sea carriage embodied in the bill of lading8. admitting liability to the consignee, offered to settle the latter's claim in full by paying the C.I.F. value but their offer was declined by the consignee It is not pretended that those conditions are unreasonable or were not freely and and/or the plaintiff. fairly agreed upon. The shipper and consignee are, therefore, bound by such stipulations since it is expressly stated in the bill of lading. It is obviously for this The lower court rendered judgment in favor of St. Paul. HOWEVER, St. Paul filed an MR praying for a higher amount. reason that the consignee filed its claim against the defendants on the basis of the C.I.F. value of the lost or damaged goods. St. Paul’s arguments in MR: The insurer after paying the claim of the insured for damages under the insurance o As subrogee of the consignee, it should be entitled to recover from the is subrogated merely to the rights of the insured and therefore can necessarily amount which it actually paid to the consignee and that the exchange rate recover only that to what was recoverable by the insured. on the date of the judgment should have been applied by the lower court. Upon payment for a total loss of goods insured, the insurance is only subrogated to Macondray, et. al. answers: such rights of action as the assured has against 3rd persons who caused or are o Their liability is limited to the C.I.F. value of the goods, pursuant to responsible for the loss. The right of action against another person, the equitable contract of sea carriage embodied in the bill of lading interest in which passes to the insurer, being only that which the assured has, it follows that if the assured has no such right of action, none passes to the insurer, o They are not insurers of the goods and as such they should not be made to and if the assured's right of action is limited or restricted by lawful contract between pay the insured value therefor him and the person sought to be made responsible for the loss, a suit by the insurer is o Their obligation was established as of the date of discharge, hence the rate subject to like limitations or restrictions. of exchange should be based on the rate existing on that date and not the Equally untenable is the contention of the insurer that because of extraordinary value of the currency at the time the lower court rendered its decision inflation, it should be reimbursed for its dollar payments at the rate of — exchange Issues: on the date of the judgment and not on the date of the loss or damage. The obligation of the carrier to pay for the damage commenced on the date it failed to 1. WoN, in case of loss or damage, the liability of the carrier to the consignee is limited deliver the shipment in good condition to the consignee. to the C.I.F. value of the goods which were lost or damaged. YES, if stated in the bill of lading as in this case. 2. WoN the insurer who has paid the claim in dollars to the consignee should be reimbursed in its peso equivalent on the date of discharge of the cargo or on the date of the decision. Date of discharge.
8 Whenever the value of the goods is less than $500 per package or other freight unit, their value in the calculation and adjustment of claims for which the Carrier may be liable shall for the purpose of avoiding Ratio: uncertainties and difficulties in fixing value be deemed to be the invoice value, plus frieght and insurance if paid, irrespective of whether any other value is greater or less. The appeal is without merit. The limitation of liability and other provisions herein shall inure not only to the benefit of the carrier, its agents, The purpose of the bill of lading is to provide for the rights and liabilities of the servants and employees, but also to the benefit of any independent contractor performing services including parties in reference to the contract to carry. The stipulation in the bill of lading stevedoring in connection with the goods covered hereunder. (Paragraph 17, emphasis supplied.)
02 Transpo Compiled Digests. 3C. Atty. Ampil 32
18 SEA LAND SERVICE, INC. V. IAC, 153 SCRA 552 –NARVASA o Based on volume measurements Sea-land charged the shipper the total amount of US$209.28 for freight age and other charges. SEA-LAND SERVICE, INC., vs. IAC and CUE, doing business under the name and style of o The shipment was loaded on board the MS Patriot, a vessel owned and "SEN HIAP HING," respondents. - Narvasa operated by Sea-Land, for discharge at the Port Of Cebu. The shipment arrived in Manila and there discharged into the custody of the Shipper: Seaborne Trading arrastre contractor and the customs and port authorities. Common Carrier: Sea-Land After the shipment had been transferred to Pier 3 in South Harbor, Manila, awaiting Consignee: Sen Hiap Hing or Paulino Cue trans-shipment to Cebu, it was stolen by pilferers and has never been recovered. Description of goods: 8 CTNS on 2 SKIDS-FILES Paulino Cue, the consignee, made formal claim upon Sea-Land for the value of the lost shipment allegedly amounting to P179,643.48. Sea-Land offered to settle for US$4,000.00, or its then Philippine peso equivalent of ER: SeaLand received goods from Seaborne to be shipped to Cue in Cebu. Shipper did P30,600.00. not declare shipment value. Shipment arrived in Manila, but was stolen in the harbor. o asserting that said amount represented its maximum liability for the loss Cue, consignee, demanded that SeaLand pay for the lost shipment (180k). SeaLand of the shipment under the package limitation clause in the covering bill of offered to settle for $4k, asserting that said amount represented its maximum liability lading. for the loss of the shipment under the package limitation clause in the covering bill of o Cue rejected the offer. lading. Trial Court
Issue: Whether or not the consignee of seaborne freight is bound by stipulations Ruled in favor of Cue, sentencing Sea-Land to pay him P186,048.00 representing in the covering bill of lading limiting to a fixed amount the liability of the carrier the Philippine currency value of the lost cargo, P55,814.00 for unrealized profit for loss or damage to the cargo where its value is not declared in the bill? Yes he is with one (1%) percent monthly interest from the filing of the complaint. bound. CA affirmed TC decision.
Not only is there nothing in the Civil Code which absolutely prohibits agreements between shipper and carrier limiting the latter's liability for loss of or damage to cargo shipped under contracts of carriage; it is also quite clear that said Code in fact has Whether or not the consignee of seaborne freight is bound by stipulations in the agreements of such character in contemplation in providing, in its Articles 1749 and covering bill of lading limiting to a fixed amount the liability of the carrier for loss 1750. or damage to the cargo where its value is not declared in the bill? Yes he is bound.
It seems clear that even if said section 4(5) of the Carriage of Goods by Sea Act did It seems clear that even if said section 4(5) of the Carriage of Goods by Sea not exist, the validity and binding effect of the liability limitation clause in the bill Act did not exist, the validity and binding effect of the liability limitation of lading here are nevertheless fully sustainable on the basis alone of the cited clause in the bill of lading here are nevertheless fully sustainable on the basis alone of the cited Civil Code provisions. Civil Code provisions. There can, therefore, be no doubt about the validity and enforceability of freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and inserts it into said contract or bill. To begin with, there is no question of the right, in principle, of a consignee in a bill of lading to recover from the carrier or shipper for loss of, or damage to, goods NARVASA, J.: being transported under said bill, although that document may have been — as in practice it oftentimes is — drawn up only by the consignor and the carrier without Sea-Land Service, Inc. (Sea-Land for brevity), a foreign shipping and forwarding the intervention of the consignee. company, received from Seaborne Trading Company in Oakland, California a SC quotes the Mendoza vs. PAL case shipment consigned to Sen Hiap Hing—the business name used by Paulino Cue—in the wholesale and retail trade which he operated out of an establishment located in But appellant now contends that he is not suing on a breach of contract but on a Cebu City. tort as provided for in Art. 1902 of the Civil Code. The shipper not having declared the value of the shipment, no value was indicated We are a little perplexed as to this new theory of the appellant. in the bill of lading. First, he insists that the articles of the Code of Commerce should be applied: 02 Transpo Compiled Digests. 3C. Atty. Ampil 33
o That he invokes the provisions of said Code governing the obligations of a the carrier's liability, if any, shall be determined on the basis of a value of common carrier to make prompt delivery of goods given to it under a $500 per package or customary freight unit, unless the nature and a contract of transportation. higher value shall be declared by the shipper in writing before shipment o He says that he was never a party to the contract of transportation and and inserted in this Bill of Lading. was a complete stranger to it, and that he is now suing on a tort or a violation of his rights as a stranger (culpa aquiliana). o If he does not invoke the contract of carriage entered into with the And in its second paragraph, the bill states: defendant company, then he would hardly have any leg to stand on. o His right to prompt delivery of the can of film at the Phil. Air Port stems and is derived from the contract of carriage under which contract, the PAL o If a value higher than $500 shall have been declared in writing by the undertook to carry the can of film safely and to deliver it to him promptly. shipper upon delivery to the carrier and inserted in this bill of lading and Take away or ignore that contract and the obligation to carry and to extra freight paid, if required and in such case if the actual value of the deliver and right to prompt delivery disappear. goods per package or per customary freight unit shall exceed such Since the liability of a common carrier for loss of or damage to goods transported declared value, the value shall nevertheless be deemed to be declared by it under a contract of carriage is governed by the laws of the country of value and the carrier's liability, if any, shall not exceed the declared value destination and the goods in question were shipped from the United States to the and any partial loss or damage shall be adjusted pro rata on the basis of Philippines, the liability of petitioner Sea-Land to the respondent consignee is such declared value. governed primarily by the Civil Code, and as ordained by the said Code, The Court fails to fathom the reason or justification for the Appellate Court's suppletorily, in all matters not determined thereby, by the Code of Commerce and pronouncement in its appealed Decision that the Carriage of Goods by Sea Act " ... special laws. has no application whatsoever in this case. One of these suppletory special laws is the Carriage of Goods by Sea Act, U.S. Not only is there nothing in the Civil Code which absolutely prohibits agreements Public Act No. 521 which was made applicable to all contracts for the carriage of between shipper and carrier limiting the latter's liability for loss of or damage to goods by sea to and from Philippine ports in foreign trade by Commonwealth Act cargo shipped under contracts of carriage; it is also quite clear that said Code in fact No. 65. Sec. 4(5) of said Act in part reads: has agreements of such character in contemplation in providing, in its Articles 1749 o (5)Neither the carrier nor the ship shall in any event be or become liable and 1750, that: for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary o ART. 1749 A stipulation that the common carrier's liability is freight unit, or the equivalent of that sum in other currency, unless the limited to the value of the goods appearing in the bill of lading, unless nature and value of such goods have been declared by the shipper before the shipper or owner declares a greater value, is binding. shipment and inserted in the bill of lading. This declaration, if embodied in o ART. 1750. A contract fixing the sum that may be recovered by the the bill of lading, shall be prima facie evidence, but shall not be conclusive owner or shipper for the loss, destruction, or deterioration of the goods is on the carrier. valid, if it is reasonable and just under the circumstances, and has been By agreement between the carrier, master, or agent of the carrier, and the shipper fairly and freely agreed upon. another maximum amount than that mentioned in this paragraph may be fixed: Nothing contained in section 4(5) of the Carriage of Goods by Sea Act already Provided, That such maximum shall not be less than the figure above named. In quoted is repugnant to or inconsistent with any of the the Civil Code. no event shall the carrier be liable for more than the amount of damage Said section merely gives greater specificity to the rather general terms of Article actually sustained. 1749 and of Article 1750, to give effect to just agreements limiting carriers' liability Clause 22, first paragraph, of the long form bill of lading customarily issued by Sea- for loss or damage which are freely and fairly entered into. Land to its shipping clients is a virtual reproduction of the first paragraph of the It seems clear that even if said section 4(5) of the Carriage of Goods by Sea Act foregoing provision. It says: did not exist, the validity and binding effect of the liability limitation clause in the bill of lading here are nevertheless fully sustainable on the basis alone of the cited Civil Code provisions. o 22. VALUATION. In the event of any loss, damage or delay to or in That said stipulation is just and reasonable is arguable from the fact that it echoes connection with goods exceeding in actual value $500 per package, lawful Art. 1750 itself in providing a limit to liability only if a greater value is not declared money of the United States, or in case of goods not shipped in packages, for the shipment in the bill of lading. per customary freight unit, the value of the goods shall be deemed to be $500 per package or per customary freight unit, as the case may be, and 02 Transpo Compiled Digests. 3C. Atty. Ampil 34
o It gives shipper or owner the option of avoiding acrrual of liability Private respondent also contends that the aforecited Clauses 22 and 13 of the bill of limitation by the simple and surely far from onerous expedient of lading relied upon by petitioner Sea Land form no part of the short-form bill of declaring the nature and value of the shipment in the bill of lading. lading attached to his complaint before the Trial Court and appear only in the long As pointed out in Mendoza vs. PAL, the right of a party in the same situation as form of that document which, he claims SeaLand offered as an unused blank form respondent here, to recover for loss of a shipment consigned to him under a bill of with no entries or signatures therein. lading drawn up only by and between the shipper and the carrier, He, however, admitted in the Trial Court that several times in the past shipments o springs from either a relation of agency that may exist between him and had been delivered to him through Sea-Land, from which the assumption may fairly the shipper or consignor, or his status as a stranger in whose favor some follow that by the time of the consignment now in question, he was already stipulation is made in said contract, and who becomes a party thereto reasonably apprised of the usual terms covering contracts of carriage with said when he demands fulfillment of that stipulation, in this case the delivery petitioner. of the goods or cargo shipped. At any rate, as observed earlier, it has already been held that the provisions of the o In neither capacity can he assert personally, in bar to any provision of the Carriage of Goods by Sea Act on package limitation [sec 4(5) of the Act bill of lading, the alleged circumstance that fair and free agreement to hereinabove referred to] are as much a part of a bill of lading as though such provision was vitiated by its being in such fine print as to be hardly actually placed therein by agreement of the parties. readable. There can, therefore, be no doubt about the validity and enforceability of freely-agreed-upon stipulations in a contract of carriage or bill of lading By making claim for loss on the basis of the bill of lading, to all intents and purposes limiting the liability of the carrier to an agreed valuation unless the shipper accepted said bill. Having done so, he becomes bound by all stipulations contained declares a higher value and inserts it into said contract or bill. therein whether on the front or the back thereof. The issue of alleged deviation is also settled by Clause 13 of the bill of lading which o Respondent cannot elude its provisions simply because they prejudice expressly authorizes trans-shipment of the goods at any point in the voyage in him and take advantage of those that are beneficial. these terms: Secondly, the fact that respondent shipped his goods on board the ship of petitioner o 13. THROUGH CARGO AND TRANSSHIPMENT. The carrier or master, in and paid the corresponding freight thereon shows that he impliedly accepted the the exercise of its or his discretion and although transshipment or bill of lading. forwarding of the goods may not have been contemplated or provided for Not part of today’s lesson: herein, may at port of discharge or any other place whatsoever transship or forward the goods or any part thereof by any means at the risk and There is one final consideration. The private respondent admits that Sea-Land had expense of the goods and at any time, whether before or after loading on offered to settle his claim for US$4,000.00, the limit of said carrier's liability for loss the ship named herein and by any route, whether within or outside the of the shipment under the bill of lading. scope of the voyage or beyond the port of discharge or destination of the o This Court rules that the conversion should be at 8 pesos per 1 $, what it goods and without notice to the shipper or consignee. The carrier or was during the decision of the Trial Court. master may delay such transshipping or forwarding for any reason, including but not limited to awaiting a vessel or other means of transportation whether by the carrier or others. Said provision removes the necessity to offer any other justification for offloading 19 CITADEL LINES, INC. V. CA, 184 SCRA 544 -PEREZ DE TAGLE the shipment in question in Manila for transshipment to Cebu City, the port of destination stipulated in the bill of lading. CITADEL LINES, INC., petitioner, vs. COURT OF APPEALS * and MANILA WINE o Nonetheless, the Court takes note of Sea-Land's explanation that it only MERCHANTS, INC., respondents. directly serves the Port of Manila from abroad in the usual course of voyage of its carriers, hence its maintenance of arrangements with a local April 25, 1990 J. Regalado forwarder for delivery of its imported cargo to the agreed final point of Parties: CarrierCitadel Lines, Inc.; ConsigneeManila Wine Merchants; ArrastreE. destination within the Philippines, such arrangements not being Razon, Inc. prohibited, but in fact recognized, by law. Furthermore, this Court has also ruled that the Carriage of Goods by Sea Act is EMERGENCY RECIT: applicable up to the final port of destination and that the fact that transshipment Citadel shipped dunhill cigs for Manila Wine Merchants. Upon arrival in Manila, it loaded was made on an interisland vessel did not remove the contract of carriage of goods the cargo into their trucks to give it to the arrastre, E. Razon. One of the trucks, which from the operation of said Act. was never handed over to the arrastre, was tampered with and the cigs were lost forever. Manila Wine filed demands from both the Citadel and E. Razon but was denied 02 Transpo Compiled Digests. 3C. Atty. Ampil 35 by both. Lower court ruled in favor of Manila Wine against Citadel. The CA affirmed. The CARRIER'S headchecker discovered that container van No. BENU 201009-9 had Upon appeal, the SC ruled that: a different padlock and the seal was tampered with Per investigation conducted by the ARRASTRE, it was revealed that the cargo in Issue 1 question was not formally turned over to it by the CARRIER but was kept inside container van No. BENU 201009-9 which was padlocked and sealed by the The subject cargo which was placed in a container van, padlocked and sealed by the representatives of the CARRIER without any participation of the ARRASTRE. representative of the CARRIER was still in its possession and control when the loss When the CONSIGNEE learned that 90 cases were missing, it filed a formal claim occurred, there having been no formal turnover of the cargo to the ARRASTRE dated May 21, 1979, with the CARRIER, demanding the payment of P315,000.00 Common carriers, from the nature of their business and for reasons of public policy, representing the market value of the missing cargoes. The CARRIER, in its reply are bound to observe extraordinary diligence in the vigilance over the goods letter dated May 23, 1979, admitted the loss but alleged that the same occurred at Its extraordinary responsibility lasts from the time the goods are unconditionally Pier 13, an area absolutely under the control of the ARRASTRE. In view thereof, the placed in the possession of, and received by the carrier for transportation until the CONSIGNEE filed a formal claim, dated June 4, 1979, with the ARRASTRE, same are delivered, actually or constructively, by the carrier to the consignee demanding payment of the value of the goods but said claim was denied. o CARRIER failed to prove that the loss was occasioned by an excepted Lower court rendered a decision on August 30, 1985, exonerating the ARRASTRE cause, the inescapable conclusion is that the CARRIER was negligent and and adjudging the CARRIER liable for the principal amount of P312,480.00 should be held liable therefor. representing the market value of the lost shipment, and the sum of P30,000.00 as and for attorney's fees and the costs of suit. Issue 2 CA affirmed but deleted attorney’s fees.
It is clearly and expressly provided under Clause 6 of the aforementioned bills of Issues: lading issued by the CARRIER that its liability is limited to $2.00 per kilo. Basic is the rule, long since enshrined as a statutory provision, that a stipulation limiting the 1. Whether the loss occurred while the cargo in question was in the custody of E. liability of the carrier to the value of the goods appearing in the bill of lading, unless Razon, Inc. or of Citadel Lines, Inc; and the shipper or owner declares a greater value, is binding. 2. Whether the stipulation limiting the liability of the carrier contained in the bill The CONSIGNEE itself admits in its memorandum that the value of the goods of lading is binding on the consignee. shipped does not appear in the bills of lading. Hence, the stipulation on the carrier's limited liability applies Held: COMPLETE DIGEST WHEREFORE, the judgment of respondent court is hereby MODIFIED and petitioner Citadel Lines, Inc. is ordered to pay private respondent Manila Wine Merchants, Inc. the Parties: sum of US$4,465.60. or its equivalent in Philippine currency at the exchange rate obtaining at the time of payment thereof. In all other respects, said judgment of Carrier: Citadel Lines, Inc. respondent Court is AFFIRMED. Consignee: Manila Wine Merchants Arrastre: E. Razon, Inc. Ratio:
Issue 1 Facts:
The vessel "Cardigan Bay/Strait Enterprise" loaded on board at Southampton, The subject cargo which was placed in a container van, padlocked and sealed England, for carriage to Manila, 180 Filbrite cartons of mixed British manufactured by the representative of the CARRIER was still in its possession and control cigarettes called "Dunhill International Filter" and "Dunhill International Menthol," when the loss occurred, there having been no formal turnover of the cargo to The shipment arrived and was received by E. Razon, Inc. the ARRASTRE. Besides, there is the categorical admission made by two Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were placed witnesses, namely, Atty. Lope M. Velasco and Ruben Ignacio, Claims Manager in two containers with two pallets in container No. BENU 204850-9, the original and Head Checker, respectively, of the CARRIER, that for lack of space the container, and four pallets in container No. BENU 201009-9, with both containers containers were not turned over to and as the responsibility of E. Razon Inc. duly padlocked and sealed by the representative of the CARRIER. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the 02 Transpo Compiled Digests. 3C. Atty. Ampil 36
goods and for the safety of the passengers transported by them, according to 20 EVERETT STEAMSHIP CORP. V. CA, 297 SCRA 496 –RAZON all the circumstances of each case. If the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have EVERETT STEAMSHIP CORPORATION, petitioner, vs. COURT OF APPEALS and acted negligently, unless they prove that they observed extra ordinary HERNANDEZ TRADING CO. INC., respondents diligence as required in Article 1733 of the Civil Code. The duty of the consignee is to prove merely that the goods were lost. Keyword: limited liability in the bill of lading Thereafter, the burden is shifted to the carrier to prove that it has exercised Topic: limited liability the extraordinary diligence required by law. And, its extraordinary Date: October 8, 1998 responsibility lasts from the time the goods are unconditionally placed in the Ponente: Martinez possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee or to the Carrier: Everett Steamship Corp. (Everett) person who has the right to receive them. Shipper: Maruman Trading Co. Ltd. (Maruman) o CARRIER failed to prove that the loss was occasioned by an excepted Consignee: Hernandez Trading Co. Inc. (Hernandez) cause, the inescapable conclusion is that the CARRIER was negligent Products: bus spare parts marked as MARCO C/No. 12, MARCO C/No. 13 an MARCO and should be held liable therefor. C/No. 14
Issue 2 EMERGENCY DIGEST: Hernandez imported three crates of bus spare parts from its supplier, Maruman. Maruman shipped the items from Japan to Manila on board the We, however, find the award of damages in the amount of P312,800.00 for the value vessel owned by the principal of Everett. The shipment was covered by a bill of lading. of the goods lost, based on the alleged market value thereof, to be erroneous. It is clearly and expressly provided under Clause 6 of the aforementioned bills of lading Upon arrival in Manila, it was discovered that one of the crates was missing. Everett issued by the CARRIER that its liability is limited to $2.00 per kilo. Basic is the rule, confirmed the loss and admitted responsibility for the loss. Hernandez then made a long since enshrined as a statutory provision, that a stipulation limiting the liability formal claim upon Everett for the value of the lost cargo amounting to about 1Million of the carrier to the value of the goods appearing in the bill of lading, unless the Yen, as shown in the invoice. However, Everett offered to pay only the maximum amount shipper or owner declares a greater value, is binding. Further, a contract fixing the of 100,000 Yen as stipulated in the bill of lading which limits the liability of shipper. sum that may be recovered by the owner or shipper for the loss, destruction or deterioration of the goods is valid, if it is reasonable and just under the Hernandez rejected the offer and then instituted a suit for collection against Everett circumstances, and has been fairly and freely agreed upon. before the RTC of Caloocan. Both RTC and CA adjudged Everett liable for the higher The CONSIGNEE itself admits in its memorandum that the value of the goods amount claimed by Hernandez and did not give credit to the limited liability clause in shipped does not appear in the bills of lading. Hence, the stipulation on the carrier's the bill of lading. It held that Hernandez was not privy to the contract of carriage and limited liability applies. There is no question that the stipulation is just and that under Art. 1750, Everett was not able to justify the limited liability as just and reasonable. The Supreme Court reversed the lower courts’ rulings, and upheld the reasonable under the circumstances and have been fairly and freely agreed upon. In Sea- land Service, Inc. vs. Intermediate Appellate Court, et al. we there explained validity of the limited liability clause as indicated in the bill lading, after proof that the what is a just and reasonable, and a fair and free, stipulation, in this wise: shipper never declared a greater value for the cargo. o “…said stipulation is just and reasonable arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading. To hold COMPLETE DIGEST: otherwise would amount to questioning the justice and fairness of that Hernandez imported three crates of bus spare parts marked as MARCO C/No. 12, law itself, and this the private respondent does not pretend to do.” MARCO C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per Company, Ltd. (Maruman Trading), a foreign corporation based in Inazawa, Aichi, carton. Since 90 cartons were lost and the weight of said cartons is 2,233.80 kilos, Japan. at $2.00 per kilo the CARRIER's liability amounts to only US$4,467.60. The crates were shipped from Nagoya, Japan to Manila on board “ADELFAEVERETTE,” a vessel owned by Everett’s principal, Everett Orient Lines. GPT – Random note about the case: Counsel for Citadel = Del Rosario & Del The said crates were covered by Bill of Lading No. NGO53MN. Rosario Law Offices Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing. This was confirmed and admitted by Everett in its letter of January 13, 1992 addressed to Hernandez, which thereafter made a formal claim
upon Everett for the value of the lost cargo amounting to One Million Five Hundred 02 Transpo Compiled Digests. 3C. Atty. Ampil 37
Fifty Two Thousand Five Hundred (Y1,552,500.00) Yen, the amount shown in an “The carrier shall not be liable for any loss of or any damage to or in any Invoice No. MTM-941, dated November 14, 1991. However, Everett offered to pay connection with, goods in an amount exceeding One Hundred Thousand Yen in only One Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated Japanese Currency (Y100,000.00) or its equivalent in any other currency per under Clause 18 of the covering bill of lading which limits the liability of Everett. package or customary freight unit (whichever is least) unless the value of the Hernandez rejected the offer and thereafter instituted a suit for collection docketed goods higher than this amount is declared in writing by the shipper before as Civil Case No. C-15532, against Everett before the Regional Trial Court of receipt of the goods by the carrier and inserted in the Bill of Lading and extra Caloocan City, Branch 126. freight is paid as required.” (Emphasis supplied) On July 16, 1993, the trial court rendered judgment in favor of Hernandez, ordering Everett to pay: (a) Y1,552,500.00; (b) Y20,000.00 or its peso equivalent The above stipulations are, to our mind, reasonable and just. In the bill of representing the actual value of the lost cargo and the material and packaging cost; lading, the carrier made it clear that its liability would only be up to One (c) 10% of the total amount as an award for and as contingent attorney’s fees; and Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman (d) to pay the cost of the suit Trading, had the option to declare a higher valuation if the value of its CA affirmed ruling but deleted attorney’s fees. cargo was higher than the limited liability of the carrier. Considering Thus, Everett appealed to SC. that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. ISSUE: Whether or not the limited liability clause stipulated in the bill of lading valid and The shipper, Maruman Trading, we assume, has been extensively engaged in the binding upon the consignee, notwithstanding the latter not being a privy to the contract? trading business. It cannot be said to be ignorant of the business transactions it YES entered into involving the shipment of its goods to its customers. The shipper could not have known, or should know the stipulations in the bill of lading HELD: Petition granted. CA decision reversed and set aside. and there it should have declared a higher valuation of the goods shipped. Moreover, Maruman Trading has not been heard to complain that it has been RATIO: deceived or rushed into agreeing to ship the cargo in Everett’s vessel. In fact, A stipulation in the bill of lading limiting the common carrier’s liability for loss or it was not even impleaded in this case. destruction of a cargo to a certain sum, unless the shipper or owner declares a When Hernandez formally claimed reimbursement for the missing goods from greater value, is sanctioned by law, particularly Articles 1749 and 1750 of the Civil Everett and subsequently filed a case against the latter based on the very same bill Code which provide: of lading, it (Hernandez) accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Thus, Hernandez “ART. 1749. A stipulation that the common carrier’s liability is limited to the cannot now reject or disregard the carrier’s limited liability stipulation in the bill of value of the goods appearing in the bill of lading, unless the shipper or owner lading. In other words, Hernandez is bound by the whole stipulations in the bill of declares a greater value, is binding.” lading and must respect the same. The bill of lading in question confirms Everett’s contention. To defeat the carrier’s “ART. 1750. A contract fixing the sum that may be recovered by the owner or limited liability, the aforecited Clause 18 of the bill of lading requires that the shipper for the loss, destruction, or deterioration of the goods is valid, if it is shipper should have declared in writing a higher valuation of its goods before reasonable and just under the circumstances, and has been freely and fairly receipt thereof by the carrier and insert the said declaration in the bill of lading, agreed upon.” with the extra freight paid. These requirements in the bill of lading were never Such limited-liability clause has also been consistently upheld by this Court in a complied with by the shipper, hence, the liability of the carrier under the limited number of cases. liability clause stands. The commercial Invoice No. MTM-941 does not in itself Pursuant to the afore-quoted provisions of law, it is required that the stipulation sufficiently and convincingly show that Everett has knowledge of the value of the limiting the common carrier’s liability for loss must be “reasonable and just under cargo as contended by Hernandez. No other evidence was proffered by Hernandez the circumstances, and has been freely and fairly agreed upon.” to support is contention.
The bill of lading subject of the present controversy specifically provides, among others:
“18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the shipper’s net invoice cost plus freight and insurance premiums, if paid, and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. 02 Transpo Compiled Digests. 3C. Atty. Ampil 38
21 REGIONAL CONTAINER V. NETHERLANDS INSURANCE, 598 SCRA 304 – damaged while the cargo was being unloaded from the ship. It is settled in SANTOS maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier; RCL and EDSA Shipping failed to Regional Container Lines v. Netherlands Insurance (2009) dispute this.
Goods: Epoxy Molding Compound Carrier: RCL and EDSA Shipping (as agent) COMPLETE Shipper: Temic Facts: Insurance company: Netherlands This is the petition for review on certiorari filed by petitioners Regional Container ER: Lines of Singapore (RCL) and EDSA Shipping Agency (EDSA Shipping) to annul and 1. 405 cartons of Epoxy Molding Compound was to be shipped from Singapore to set aside the decision and resolution of the CA. Manila for Temic. RCL is a foreign corporation based in Singapore. It does business in 2. Pacific Eagle was contracted to transport the subject cargo. the Philippines through its agent, EDSA Shipping, a domestic corporation organized 3. The cargo was packed, stored, and sealed by pacific Eagle in its Refrigerated and existing under Philippine laws. Container (the goods were highly perishable, thus the inside of the container had to Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands be kept at 0 degrees celcius all the time) Insurance) is likewise a domestic corporation engaged in the marine underwriting 4. Pacific Eagle then loaded the refrigerated container on board M/V Piya Bhum, a business. vessel owned by RCL (Pacific Eagle had a slot charter agreement) 5. Netherlands insured the goods. 6. The M/V Piya Bhum docked in Manila. After unloading the refrigerated container, it FACTUAL ANTECEDENTS was plugged to the power terminal of the pier to keep its temperature constant. 7. The cargo was surveyed, they found that based on the temperature chart, the 405 cartons of Epoxy Molding Compound were consigned to be shipped temperature reading was constant when it was in the ship, However, when the from Singapore to Manila for Temic Telefunken cargo had already been unloaded from the ship – the temperature fluctuated with a Microelectronics Philippines (Temic). reading of 33º Celsius. U-Freight Singapore PTE Ltd. (U-Freight Singapore), a forwarding agent based 8. The surveyors believed the fluctuation was caused by the burnt condenser fan in Singapore, contracted the services of Pacific Eagle Lines PTE. Ltd. (Pacific Eagle) motor of the refrigerated container. to transport the subject cargo. 9. Temic received the shipment. It found the cargo completely damaged. The cargo was packed, stored, and sealed by Pacific Eagle in its Refrigerated 10. Temic filed a claim for cargo loss against NETHERLANDS, which NETHERLANDS Container. paid. As the cargo was highly perishable, the inside of the container had to be kept at a 11. NETHERLANDS now claims from the shipper and other parties involved in the temperature of 0º Celsius. transport of their goods. Pacific Eagle then loaded the refrigerated container on board the M/V Piya Bhum, a 12. RTC dismissed the complaint. CA made RCL and Edsa Shipping Liable, but the other vessel owned by RCL, with which Pacific Eagle had a slot charter agreement. parties were released due to prescription. RCL duly issued its own Bill of Lading in favor of Pacific Eagle. 13. Issue: is WON the CA erred in declaring RCL and EDSA liable on the theory of To insure the cargo against loss and damage, NETHERLANDS INSURANCE issued a presumption of negligence. Marine Open Policy in favor of Temic, to cover all losses/damages to the shipment. 14. SC: CA was correct. RCL and EDSA shipping are liable. The M/V Piya Bhum docked in Manila. After unloading the refrigerated container, it 15. To overcome the presumption of negligence, the common carrier must was plugged to the power terminal of the pier to keep its temperature constant. establish by adequate proof that it exercised extraordinary diligence over the Fidel Rocha (Rocha), Vice-President for Operations of Marines Adjustment goods. It must do more than merely show that some other party could be Corporation, accompanied by two surveyors, conducted a protective survey of the responsible for the damage. cargo. 16. RCL and EDSA Shipping failed to prove that they did exercise that degree of They found that based on the temperature chart, the temperature reading was diligence required by law over the goods they transported. It is proven that the constant from October 18, 1995 to October 25, 1995 at 0º Celsius. However, fluctuation of the temperature in the refrigerated container van, as recorded in the at midnight of October 25, 1995 – when the cargo had already been unloaded from temperature chart, occurred after the cargo had been discharged from the vessel the ship – the temperature fluctuated with a reading of 33º Celsius. Rocha believed and was already under the custody of the arrastre operator, ICTSI. the fluctuation was caused by the burnt condenser fan motor of the refrigerated 17. HOWVER, it does not disprove that the condenser fan – which caused the container. fluctuation of the temperature in the refrigerated container – was not Temic received the shipment. It found the cargo completely damaged. 02 Transpo Compiled Digests. 3C. Atty. Ampil 39
Temic filed a claim for cargo loss against NETHERLANDS, with supporting claims In Central Shipping Company, Inc. v. Insurance Company of North America, we documents. reiterated the rules for the liability of a common carrier for lost or damaged cargo The Netherlands Insurance paid Temic the sum of P1,036,497.00 under the terms as follows: of the Marine Open Policy. Temic then executed a loss and subrogation receipt in favor of Netherlands Insurance. (1) Common carriers are bound to observe extraordinary diligence over Seven months from delivery of the cargo or on June 4, 1996, NETHERLANDS the goods they transport, according to all the circumstances of each INSURANCE filed a complaint for subrogation of insurance settlement with the RTC, case; Branch 5, Manila, against “the unknown owner of M/V Piya Bhum” and TMS Ship Agencies (TMS), the latter thought to be the local agent of M/V Piya Bhum’s (2) In the event of loss, destruction, or deterioration of the insured unknown owner. goods, common carriers are responsible, unless they can prove that Netherlands Insurance amended the complaint to implead EDSA Shipping, RCL, such loss, destruction, or deterioration was brought about by, among Eagle Liner Shipping Agencies, U-Freight Singapore, and U-Ocean (Phils.), Inc. (U- others, “flood, storm, earthquake, lightning, or other natural disaster Ocean), as additional defendants. or calamity”; and A third amended complaint was later made, impleading Pacific Eagle in substitution of Eagle Liner Shipping Agencies. (3) In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted The defendants all disclaimed liability for the damage caused to the cargo, citing negligently, unless they observed extraordinary diligence. several reasons why NETHERLAND’s claims must be rejected. Specifically, RCL and EDSA Shipping denied negligence in the transport of the cargo; RCL AND EDSA Shipping’s DEFENSE: RCL and EDSA Shipping disclaim any they attributed any negligence that may have caused the loss of the shipment to responsibility for the loss or damage to the goods in question. They contend that their co-defendants. the cause of the damage to the cargo was the “fluctuation of the temperature in the o They likewise asserted that no valid subrogation exists, as the payment reefer van,” which fluctuation occurred after the cargo had already been discharged made by Netherlands Insurance to the consignee was invalid. from the vessel; no fluctuation, they point out, arose when the cargo was still on o By way of affirmative defenses, RCL and EDSA Shipping averred that the board M/V Piya Bhum. NETHERLANDS has no cause of action, and is not the real party-in- o As the cause of the damage to the cargo occurred after the same was interest, and that the claim is barred by laches/prescription. already discharged from the vessel and was under the custody of the RCL and EDSA Shipping insisted that Netherlands Insurance had (1) failed to prove arrastre operator (International Container Terminal Services, Inc. any valid subrogation, and (2) failed to establish that any negligence on their part or ICTSI), RCL and EDSA Shipping posit that the presumption of or that the loss was sustained while the cargo was in their custody. negligence provided in Article 1735 of the Civil Code should not apply. RTC - handed down an Order dismissing Civil Case on demurrer to evidence. The o What applies in this case is Article 1734, particularly paragraphs 3 and 4 trial court ruled that while there was valid subrogation, the defendants could not be thereof, which exempts the carrier from liability for loss or damage to the held liable for the loss or damage, as their respective liabilities ended at the time of cargo when it is caused either by an act or omission of the shipper or by the discharge of the cargo from the ship at the Port of Manila. the character of the goods or defects in the packing or in the containers. NETHERLANDS appealed. Thus, RCL and EDSA Shipping seek to lay the blame at the feet of other CA reversed, RCL and EDSA were made to pay. The others were not made liable. parties. The CA dismissed Netherland Insurance’s complaint against the other defendants SC RCL and EDSA Shipping are wrong. after finding that the claim had already been barred by prescription. A common carrier is presumed to have been negligent if it fails to prove that it RCL and EDSA shipping appeals. exercised extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged condition, a presumption arises ISSUE: WON the CA correctly held RCL and EDSA Shipping liable as common carriers against the carrier of its failure to observe that diligence, and there need not be an under the theory of presumption of negligence. – YES, CA was correct express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must HELD: DISMISSED. RCL and EDSA LIABLE establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be RATIO: responsible for the damage. In the present case, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods they transported. Indeed, 02 Transpo Compiled Digests. 3C. Atty. Ampil 40
there is sufficient evidence showing that the fluctuation of the temperature in the Description of goods: 146, 288 cartons of fresh green Phil. bananas and 15,202 cartons refrigerated container van, as recorded in the temperature chart, occurred after the of fresh pineapples belonging to Del Monte Fresh Produce International, Inc. cargo had been discharged from the vessel and was already under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the condenser fan – which ER: (based only on the second issue which is the transpo related part) caused the fluctuation of the temperature in the refrigerated container – was Del Monte Inc. contracted with Mindanao Terminal, a stevedoring company, to load not damaged while the cargo was being unloaded from the ship. It is settled and stow bananas and pineapples from Del Monte Produce. The goods were bound in maritime law jurisprudence that cargoes while being unloaded generally for Inchon, Korea, to Taegu Industries. The goods were insured with Phoenix and remain under the custody of the carrier; RCL and EDSA Shipping failed to McGee. dispute this. The loading and stowing was done by Mindanao Terminal pursuant to the stowage RCL and EDSA Shipping could have offered evidence before the trial court to show plan made by Del Monte Produce and the officers of M/V Mistrau. that the damage to the condenser fan did not occur: (1) while the cargo was in When the ship and goods arrived in Korea, it was discovered that 18,000 cartons of transit; (2) while they were in the act of discharging it from the vessel; or (3) while bananas and pineapples were damaged and have no commercial value. The they were delivering it actually or constructively to the consignee. They could have insurers paid the damage claim and were subrogated to the rights of the insured. presented proof to show that they exercised extraordinary care and diligence in the Phoenix and McGee initiated an action for damages against Mindanao Terminal handling of the goods, but they opted to file a demurrer to evidence. based on its improper loading and stowing of the vehicles. The RTC ruled against As the order granting their demurrer was reversed on appeal, the CA Phoenix and McGee and found that the loading and stowing were done under the correctly ruled that they are deemed to have waived their right to present direction and supervision of the officers of the ship. The foreman’s report also evidence, and the presumption of negligence must stand. showed that the loading was done properly. It is for this reason as well that we find RCL and EDSA Shipping’s claim that the loss The CA reversed the RTC decision on appeal. It found that Mindanao Terminal as a or damage to the cargo was caused by a defect in the packing or in the stevedoring company was obliged to exercise extraordinary diligence, like a containers. To exculpate itself from liability for the loss/damage to the cargo under common carrier and an arrastre operator, in the loading and stowing of the ship. any of the causes, the common carrier is burdened to prove any of the causes in Since it failed to do so, it is liable for damages. Article 1734 of the Civil Code claimed by it by a preponderance of evidence. If the ISSUE: Whether Mindanao Terminal is obliged to exercise extraordinary diligence. carrier succeeds, the burden of evidence is shifted to the shipper to prove that the HELD: NO! It is only required to exercise ordinary diligence required of good father carrier is negligent. of a family. RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and in fact No law or contractual stipulation between the parties require a stevedoring offered no evidence at all on this point; a reversal of a dismissal based on a demurrer to company to exercise extraordinary diligence. What the law requires, in the absence evidence bars the defendant from presenting evidence supporting its allegations. of stipulation, is that Mindanao exercise ordinary diligence. The case cited by the CA, Summa Insurance v CA (where the SC stated that arrastre operators are required to exercise extraordinary diligence), is inapplicable. 22 MINDANAO TERMINAL V. PHOENIX ASSURANCE, 587 SCRA 429 – An arrastre operator is not the same as a stevedoring company. Arrastre SUPERABLE On one hand, the responsibility of the arrastre operator lasts until the delivery of the cargo to the consignee. On the other hand, responsibility of the stevedore ends MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. v PHOENIX ASSURANCE upon the loading and stowing of the cargo in the vessel. COMPANY OF NEW YORK/MCGEE & CO. INC.; May 8, 2009 (NONS) Mindanao Terminal as the stevedore, was only charged with the loading and KEYWORD: bananas and pineapples from Davao to Korea stowing of the cargoes from the pier to the ship’s cargo hold; it was never the DIVISION: Second Division custodian of the shipment of Del Monte Produce. A stevedore is not a common PONENTE: Tinga carrier for it does not transport goods or passengers; it is not akin to a warehouseman for it does not store goods for profit. BASIC FACTS: The public policy considerations in legally imposing upon a common carrier or a Shipper: Del Monte Philippines, Inc. warehouseman a higher degree of diligence is not present in a stevedoring outfit Insurer: Phoenix Assurance Company of New York, McGee & Co., Inc (agent of Phoenix) which mainly provides labor in loading and stowing of cargoes for its clients. Common Carrier: not relevant/stated but ship was M/V Mistrau
Stevedore: Mindanao Terminal and Brokerage Service
Consignee: Taegu Industries, Inc. FACTS: Route: Davao City port to Inchon, Korea port Del Monte Phils., Inc (Del Monte) contracted Mindanao Terminal, a stevedoring company, to load and stow the bananas and pineapples from Del Monte Produce in 02 Transpo Compiled Digests. 3C. Atty. Ampil 41
the cargo hold of M/V Mistrau. The goods coming from Davao City port are destined WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals in CA-G.R. for Korea, and the consignee Taegu, Industries. CV No. 66121 is SET ASIDE and the decision of the Regional Trial Court of Davao City, The goods were insured under an “open cargo policy” with Phoenix Assurance and Branch 12 in Civil Case No. 25,311.97 is hereby REINSTATED MINUS the awards of McGee & Co. as the underwriting manager/agent of Phoenix by Del Monte Produce. P100,000.00 as attorney’s fees and P83,945.80 as actual damages. Mindanao Terminal stowed the goods under the control and supervision of the officers of M/V Mistrau. RATIO: When the ship arrived in Korea, the goods were discharged the Marine Cargo 1. The cause of action was based on torts and not breach of contract. Damage Surveyor of Incok Loss and Average Adjuster of Korea, through its The insurance carriers may have a cause of action in light of the Court’s representative Byeong Yong Ahn (Byeong), surveyed the extent of the damage of consistent ruling that the act that breaks the contract may be also a tort. A the shipment. In a survey report, it was stated that 16,069 cartons of the banana liability for tort may arise even under a contract, where tort is that which shipment and 2,185 cartons of the pineapple shipment were so damaged that they breaches the contract. no longer had commercial value. Here the cause of action of the insurers is the alleged negligent manner by Del Monte filed a claim under the open cargo policy and the damages totaled which Mindanao Terminal handled the cargoes belonging to Del Monte $210,266.43. A check was issued by McGee and Del Monte issued a subrogation Produce receipt to Phoenix and McGee. An action for damages was initiated by Phoenix and McGee against Mindanao 2. Mindanao Terminal is not required to exercise extraordinary diligence in the Terminal in the Davao RTC, Branch 12. The RTC ruled in favor of Mindanao loading/stowing of the goods. Terminal. It found that: Article 1173 of the Civil Code is very clear that if the law or contract does not o Mindanao Terminal cannot be held liable as its only responsibility state the degree of diligence which is to be observed in the performance of an was to load the cargoes. obligation then that which is expected of a good father of a family or ordinary o The loading and placement of the cargo was under the direction and diligence shall be required. supervision of the ship’s officers. Mindanao Terminal, a stevedoring company which was charged with the o The ship’s officers would not have signed the foreman’s report unless loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, they were properly arranged and tightly secured to withstand voyage had acted merely as a labor provider in the case at bar. There is no specific across the open seas. provision of law that imposes a higher degree of diligence than ordinary o There is no cause of action between Del Monte Produce (the insured) diligence for a stevedoring company or one who is charged only with the and the insurers as the Mindanao Terminal was hired by Del Monte, loading and stowing of cargoes. Inc. There is also no contractual stipulation that required Mindanao Terminal to o The damage could have been caused by the typhoon which the ship exercise a higher degree of diligence. encountered during the voyage. The case cited by the CA, Summa Insurance v CA, is inapplicable. The issue of The RTC awarded Mindanao Terminal attorney’s fees on account of the travel that whether an arrastre operator is legally liable for the loss of a shipment in its the lawyers of Mindanao Terminal had to do to attend the trial. custody and the extent of its liability, is inapplicable as the party in this case is On appeal, the CA reversed the RTC ruling. The CA found that stevedoring company and not an arrastre operator. o The damage was actually caused by the improper stowage by o The SC held there that the arrastre operator is like a warehouseman Mindanao Terminal. as it is the custodian of the goods discharged from the vessel. In the o As the stevedore, Mindanao Terminal should have exercised performance of its obligations, an arrastre operator should extraordinary diligence in loading and stowing the cargoes, like an observe the same degree of diligence as that required of a arrastre operator as held in Summa Insurance v CA. common carrier and a warehouseman . o The cause of action was quasi-delict and not breach of contract. A stevedore is not the same as an arrastre operator. The MR with the CA was denied, hence this petition. o Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf or between the ISSUES: (1) Whether the insurers have a cause of action against Mindanao Terminal; establishment of the consignee or shipper and the ship's tackle. The (2) Whether Mindanao Terminal was obliged to exercise extraordinary diligence responsibility of the arrastre operator lasts until the delivery of the required of common carriers and arrastre operators in stowing the goods; and cargo to the consignee. The service is usually performed by (3) Whether Mindanao Terminal exercised the required diligence, and thus not liable longshoremen. o Steveodring refers to the handling of the cargo in the holds of the HELD: (1) Yes, the cause of action is quasi-delict. (2) No. (3) Yes, it exercised the vessel or between the ship's tackle and the holds of the vessel. The diligence of a good father of a family. 02 Transpo Compiled Digests. 3C. Atty. Ampil 42
responsibility of the stevedore ends upon the loading and stowing of the cargo in the vessel. Mindanao Terminal as the stevedore, was only charged with the loading and stowing of the cargoes from the pier to the ship’s cargo hold; it was never the custodian of the shipment of Del Monte Produce. A stevedore is not a common carrier for it does not transport goods or passengers; it is not akin to a warehouseman for it does not store goods for profit. The public policy considerations in legally imposing upon a common carrier or a warehouseman a higher degree of diligence is not present in a stevedoring outfit which mainly provides labor in loading and stowing of cargoes for its clients.
3. Mindanao Terminal exercised the diligence required of it: the ordinary diligence of a good father of the family. Mindanao Terminal loaded and stowed the cargoes of Del Monte Produce aboard the M/V Mistrau in accordance with the stowage plan, a guide for the area assignments of the goods in the vessel’s hold, prepared by Del Monte Produce and the officers of M/V Mistrau. The loading and stowing was done under the direction and supervision of the ship officers. The said ship officers would not have accepted the cargoes on board the vessel if they were not properly arranged and tightly secured to withstand the voyage in open seas. If there’s anything wrong with the loading of the goods, the officers would have ordered the stevedore to correct the mistake. But the foreman’s report to which the Chief Officer of the ship concurred with showed that goods were stowed properly. According to the report Byeong Yong Ahn and the survey report done on the cargo, the of the damage was improper stowage3 due to the manner the cargoes were arranged such that there were no spaces between cartons, the use of cardboards as support system, and the use of small rope to tie the cartons together but not by the negligent conduct of Mindanao Terminal in loading and stowing the cargoes. Again, the loading was done by Mindanao Terminal pursuant to the stowage plan made by Del Monte Produce and officers of M/V Mistrau. In other words, the work of the stevedore was under the supervision of the shipper and officers of the vessel. Even the materials used for stowage, such as ropes, pallets, and cardboards, are provided for by the vessel. Even the survey report found that it was because of the boisterous stormy weather due to the typhoon Seth, as encountered by M/V Mistrau during its voyage, which caused the shipments in the cargo hold to collapse, shift and bruise in extensive extent. As it is clear that Mindanao Terminal had duly exercised the required degree of diligence in loading and stowing the cargoes, which is the ordinary diligence of a good father of a family, the grant of the petition is in order.
END OF ASSIGNMENT FO R FRIDAY, 29 NOV 2013