Carriage of Goods a. Articles 1733 to 1753 of the Civil Code b. Obligations of the carrier c. Extraordinary diligence i. Eastern Shipping vs. CA (VELASCO) Shipper – Eastern Shipping Lines Buyer – Stresstek PostTensioning Phils, Inc. Consignee – E. Razon, Inc. Insurer – First Nationwide Assurance Corporation Goods: 13 coils of uncoated 7wire stress relieved wire strand Vessel: Japri Venture Facts
While en route from Kobe, Japan to Manila, the vessel encountered rough seas and stormy weather. Water entered the hatch where the goods were stored, and was flooded with water about one foot deep. A survey of bad order cargo was conducted at the pier. Upon survey, it was found the 7 coils were rusty on one side, which cause was attributed to the water (fresh water from rain) in the hatch. And all 13 coils were extremely rusty and unsuitable for their purpose. First Nationwide instituted the complaint against Eastern Shipping and E.Razon. RTC: Dismissed the case CA: Reversed TC decision
Eastern Shipping and E. Razon were ordered to pay 8/13 and 5/13 of the amount, respectively.
Issue
What is the extent of liability of the common carrier and its insurer for damage upon delivery of the goods to the arrastre operator?
SC:
Petitioner claims it should not be held liable as the shipment was discharged and delivered complete into the custody of the arrastre operator under clean tally sheets.
While it is true the cargo was delivered to the arrastre operator in apparent good order condition, based on the facts, the appellate court made the following conclusions:
The heavy seas and rains were not caso fortuito, but normal occurrences that an oceangoing vessel, particularly in the month of September which, in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These are conditions that is present in the ordinary course of a voyage. That rain water (not sea water) found its way into the holds of the Jupri Venture is a clear indication that care and foresight did not attend the closing of the ship's hatches so that rain water would not find its way into the cargo holds of the ship.
(EXTRAORDINARY DILIGENCE ISSUE)
Under Article 1733 of the Civil Code, common carriers are bound to observe "extraordinary vigilance over goods . . . .according to all circumstances of each case," and Article 1735 of the same Code states, to wit:
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required in article 1733.
Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the part of the carrier applies; and the carrier must present evidence that it has observed the extraordinary diligence required by Article 1733 of the Civil Code in order to escape liability for damage or destruction to the goods that it had admittedly carried in this case. No such evidence exists of record. Thus, the carrier cannot escape liability.
ii. Philippine CHarter vs. Chemoil (BUENAVENTURA)
DOCTRINE: The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementioned requirement is a reasonable condition precedent; it does not constitute a limitation of action.
FACTS: Petitioner Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of nonlife insurance. Respondent Chemoil Lighterage Corporation is also a domestic corporation engaged in the transport of goods.
On 24 January 1991, Samkyung Chemical Company, Ltd., based in South Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT “TACHIBANA” which was valued at US$90,201.57 and another
436.70 metric tons of DOP valued at US$634,724.89 to the Philippines. The consignee was Plastic Group Phils., Inc. in Manila. PGP insured the cargo with Philippine Charter Insurance Corporation against all risks. The ocean tanker MT “TACHIBANA” unloaded the cargo to the tanker barge, which shall transport the same to Del Pan Bridge in Pasig River and haul it by land to PGP’s storage tanks in Calamba, Laguna. Upon inspection by PGP, the samples taken from the shipment showed discoloration demonstrating that it was damaged. PGP then sent a letter where it formally made an insurance claim for the loss it sustained.
Petitioner requested the GIT Insurance Adjusters, Inc. (GIT), to conduct a Quantity and Condition Survey of the shipment which issued a report stating that DOP samples taken were discolored. Inspection of cargo tanks showed manhole covers of ballast tanks’ ceilings loosely secured and that the rubber gaskets of the manhole covers of the ballast tanks reacted to the chemical causing shrinkage thus, loosening the covers and cargo ingress. Petitioner paid PGP the full and final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid the respondent the as full payment for the latter’s services.
On 15 July 1991, an action for damages was instituted by the petitionerinsurer against respondentcarrier before the RTC. Respondent filed an answer which admitted that it undertook to transport the shipment, but alleged that before the DOP was loaded into its barge, the representative of PGP, Adjustment Standard Corporation, inspected it and found the same clean, dry, and fit for loading, thus accepted the cargo without any protest or notice. As carrier, no fault and negligence can be attributed against respondent as it exercised extraordinary diligence in handling the cargo. TC rendered a decision in favour of Plaintiff CA reversed ISSUES:
1. WON the Notice of Claim was filed within the required period; and if in the affirmative
2. WON the damage to the cargo was due to the fault or negligence of the respondent.
HELD: Article 366 of the Code of Commerce has profound application in the case at bar, which provides that; “Within twentyfour hours following the receipt of the merchandise a claim may be made against the carrier on account of damage or average found upon opening the packages, provided that the indications of the damage or average giving rise to the claim cannot be ascertained from the exterior of said packages, in which case said claim shall only be admitted at the time of the receipt of the packages.” After the periods mentioned have elapsed, or
after the transportation charges have been paid, no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.
As to the first issue, the petitioner contends that the notice of contamination was given by PGP employee, to Ms. Abastillas, at the time of the delivery of the cargo, and therefore, within the required period. The respondent, however, claims that the supposed notice given by PGP over the telephone was denied by Ms. Abastillas. The Court of Appeals declared that a telephone call made to defendantcompany could constitute substantial compliance with the requirement of notice. However, it must be pointed out that compliance with the period for filing notice is an essential part of the requirement, i.e. immediately if the damage is apparent, or otherwise within twentyfour hours from receipt of the goods, the clear import being that prompt examination of the goods must be made to ascertain damage if this is not immediately apparent. We have examined the evidence, and We are unable to find any proof of compliance with the required period, which is fatal to the accrual of the right of action against the carrier.
Nothing in the trial court’s decision stated that the notice of claim was relayed or filed with the respondentcarrier immediately or within a period of twentyfour hours from the time the goods were received. The Court of Appeals made the same finding. Having examined the entire records of the case, we cannot find a shred of evidence that will precisely and ultimately point to the conclusion that the notice of claim was timely relayed or filed.
The requirement that a notice of claim should be filed within the period stated by Article 366 of the Code of Commerce is not an empty or worthless proviso.
The object sought to be attained by the requirement of the submission of claims in pursuance of this article is to compel the consignee of goods entrusted to a carrier to make prompt demand for settlement of alleged damages suffered by the goods while in transport, so that the carrier will be enabled to verify all such claims at the time of delivery or within twentyfour hours thereafter, and if necessary fix responsibility and secure evidence as to the nature and extent of the alleged damages to the goods while the matter is still fresh in the minds of the parties.
The filing of a claim with the carrier within the time limitation therefore actually constitutes a condition precedent to the accrual of a right of action against a carrier for loss of, or damage to, the goods. The shipper or consignee must allege and prove the fulfillment of the condition. If it fails to do so, no right of action against the carrier can accrue in favor of the former. The aforementioned
requirement is a reasonable condition precedent; it does not constitute a limitation of action.
As discussed at length above, there is no evidence to confirm that the notice of claim was filed within the period provided for under Article 366 of the Code of Commerce. Petitioner’s contention proceeds from a false presupposition that the notice of claim was timely filed.
Considering that we have resolved the first issue in the negative, it is therefore unnecessary to make a resolution on the second issue. (Meaning, since no notice of claim was filed in time, there can be no cause of action against the carrier for the loss or damage to the goods)
iii. Saludo vs. CA (DORIA) DOCTRINE:
Extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. PARTIES: Saludo Siblings (Petitioners) – Consignee Pomierski – Shipper TWA & PAL – Carrier
CMAS – a national service used by undertakers to throughout the USA, they furnish the air pouch which the casket is enclosed in, make all the necessary arrangements such as flights, transfers, etc., and they see that the remains are taken to the proper air freight terminal
FACTS:
● Pomierski and Son Funeral Home of Chicago brought the remains of Petitioners’ mother to Continental Mortuary Air Services (CMAS) after the former made the necessary preparations and arrangements and secured a permit for the disposition of dead human body.
● CMAS booked the shipment of the remains from Chicago to San Francisco by Trans World Airways (TWA), and from San Francisco to Manila with Philippine Airlines (PAL) through PAL’s agent, Air Care International.
● Before boarding the plane to San Francisco, Petitioners checked with the TWA counter if their mother’s remains have been loaded, they were told there was no body on that flight.
○ Upon arrival, they checked with TWA about their mother’s remains but were told that they did not know anything about it.
● Petitioners called Pomierski, Pomierski immediately called CMAS. ○ CMAS said that the remains were on a plane to Mexico City. ○ It turned out that there were 2 bodies in the terminal and somehow
the 2 bodies were switched.
● The shipment was immediately loaded on an American Airlines (AA) flight from Mexico to San Francisco, then loaded to a PAL flight for Manila.
○ The casket bearing the remains arrived in Manila a day after its expected arrival.
● Petitioners informed TWA of the misshipment and eventual delay in the delivery of the cargo and of the discourtesy of its employees. In a separate letter to PAL, Petitioners stated that they were holding PAL liable for the delay in delivery and would commence judicial action should no favorable explanation be given. ○ Both carriers denied liability. ○ A damage suit was filed before the CFI. ● CFI: absolved both airline companies of liability. ● CA: affirmed in toto. ISSUE: WON the airline carriers should be held liable. – NO HELD:
The facts as found by the CFI and CA proves that the switching happened while the cargo was still with CMAS, well before the same was placed in the custody of the airlines. Hence, they cannot be held liable.
● October 26, 1976: cargo containing the casketed remains was booked for PAL Flight PR107, San Francisco for Manila on October 27; PAL Airway Bill was issued, not as evidence of receipt of delivery of the cargo but merely as a confirmation of the booking for the San FranciscoManila flight ● October 28, 1976: it was only on this day that PAL received physical delivery of the body (It is from this date that PAL became responsible for the cargo covered by the PAL Airway Bill.)
● When the cargo was received from CMAS at the Chicago airport terminal for shipment, Air Care International (PAL’s agent) and/or TWA, had no way of determining its actual contents, since the casket was hermetically sealed by the Philippine ViceConsul in Chicago and in an air pouch of C.M.A.S.
○ Air Care International and/or TWA had to rely on the information furnished by the shipper regarding the cargo's content.
○ Neither could Air Care International and/or TWA open the casket for further verification, since they were not only without authority to do so, but even prohibited.
● No fault and/or negligence can be attributed to PAL and/or TWA, the entire fault or negligence being exclusively with CMAS
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier and terminates only after the lapse of a reasonable time for the acceptance of the goods by the consignee or such other person entitled to receive them.
● This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of stoppage in transitu.
● There is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them.
● Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti.
Extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage.
● Only when such fact of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked.
iv. Lorenzo Shipping vs. BJ Marthel (FRANCISCO)
Note: Under this case, I found no ‘extraordinary diligence’ issue, the case is all about contracts. I guess, Atty. Ang misplaced this case. :))
“Diligence of a party is required in entering into a contract in order to minimize his/its own damages.” Parties: 1. Lorenzo Shipping Corporation (Lorenzo), petitioner ○ a domestic corporation engaged in coastwise shipping ○ buyer
2. BJ Marthel International, Inc. (Marthel), respondent
○ engaged in trading, marketing, and selling of various industrial commodities.
○ An importer/seller and distributor of different brands of engines and spare parts.
Facts:
● Lorenzo used to own the cargo vessel M/V Dadiangas Express.
● From 1987 onwards, Marthel supplied Lorenzo with spare parts for the latter's marine engines.
● In 1989, Lorenzo asked Marthel for a quotation for various machine parts. ○ Acceding to this request, Marthel furnished Lorenzo with a formal
quotation.
○ It was stipulated in the contract that DELIVERY is within 2 months after receipt of firm order. The TERMS is 25% upon delivery, balance payable in 5 bimonthly equal and Installment[s] not to exceed 90 days.
● On 02 November 1989, Lorenzo issued to Marthel Purchase Order. ○ For the procurement of one set of cylinder liner to be used for M/V
Dadiangas Express repair.
○ Instead of paying the 25% down payment for the first cylinder liner, petitioner issued in favor of respondent ten postdated checks to be drawn against the former's account with Allied Banking Corporation.
● On 15 January 1990, Lorenzo again issued Purchase Order for yet another unit of cylinder liner.
○ This purchase order stated the term of payment to be "25% upon delivery, balance payable in 5 bimonthly equal installment[s]. ○ On 26 January 1990, respondent deposited petitioner's check that
was postdated 18 January 1990, however, the same was dishonored by the drawee bank due to insufficiency of funds. (This check was supposedly the payment for the first ordered cylinder liner and not for the subsequent one.)
○ The remaining nine postdated checks were eventually returned by respondent to petitioner.
● However, the parties presented disparate accounts of what happened to the check which was previously dishonored.
○ Petitioner claimed that it replaced said check with a good one, the proceeds of which were applied to its other obligation to respondent. For its part, respondent insisted that it returned said postdated check to petitioner.
● On 20 April 1990, Pajarillo delivered the two cylinder liners at petitioner's warehouse in North Harbor, Manila.
● Due to the failure of the parties to settle the matter, Marthel filed an action for sum of money and damages before the RTC Makati City.
○ Alleging that despite its repeated oral and written demands, Lorenzo obstinately refused to settle its obligations.
● RTC: granted Marthel’s prayer for issuance of preliminary attachment and ordered lifting the levy on Lorenzo's properties and the garnishment of its bank accounts.
● Lorenzo, in its Answer alleging therein that time was of the essence in the delivery of the cylinder liners and that the delivery on 20 April 1990 of said items was late as respondent committed to deliver said items "within two (2) months after receipt of firm order" from petitioner. ● Prior to the commencement of trial, Lorenzo filed a Motion for Leave to
Sell Cylinder Lines alleging that with the passage of time, the cylinder liners run at risk of obsolescence and deterioration to prejudice of the parties in the case and place the proceeds in escrow.
○ TC: granted the motion
● After the trial, TC dismissed the action and help Marthel bound to the quotation,
● Marthel appealed with CA
○ CA: reversed TC’s decision, Marthel could not have incurred delay in the delivery of cylinder lines as no demand, judicial, or extrajudicial was made by Lorenzo.
● Hence, the petition for review filed by Lorenzo.
Issue:
1. W/N Marthel incurred delay in performing its obligation under the contract of sale.
2. W/N the said contract was validly rescinded by Lorenzo.
Held: 1. No.
○ The SC [affirmed Court of Appeals] held that Marthel could not have incurred delay in the delivery of cylinder liners as no demand, judicial or extrajudicial, was made by respondent upon petitioner in contravention of the express provision of Article 1169 of the Civil Code which provides:
i. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation.SC held that in the subject contracts, time was not of the essence.
○ The delivery of the cylinder liners on 20 April 1990 was made within a reasonable period of time considering that respondent had to
place the order for the cylinder liners with its principal in Japan and that the latter was, at that time, beset by heavy volume of work 2. No.
○ There having been no failure on the part of the Marthel to perform its obligation, the power to rescind the contract is unavailing to Lorenzo. Article 1191 of the New Civil Code runs as follows:
i. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.
○ The law explicitly gives either party the right to rescind the contract only upon the failure of the other to perform the obligation assumed thereunder.
○ There is no showing that Lorenzo notified Marthel to rescind the contract of sale between them.
SC: Petiton denied, affirmed CA’s decision.
v. Sealoader Shipping vs. Grand Cement Manufacturing (GATCHALIAN) (no specific extraordinary diligence discussed here also. The case focused on negligence)
DOCTRINES:
Negligence "the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do
Contributory negligence conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection
PARTIES:
1. Sealoader Shipping Corporation (Sealoader) engaged in the business of shipping and hauling cargo from one point to another using seagoing interisland barges. Owner of D/B Toploader
2. Grand Cement Manufacturing Corporation (now Taiheiyo Cement Philippines, Inc.) engaged in the business of manufacturing and selling cement through its authorized distributors and, for which purposes, it maintains its own private wharf in San Fernando, Cebu, Philippines.
3. Joyce Launch and Tug Co., Inc. (Joyce Launch) owned and operated the motor tugboat M/T Viper
FACTS:
● SEALOADER executed a Time Charter Party Agreement with JOYCE LAUNCH. Sealoader chartered the M/T Viper in order to tow the its unpropelled barges for a minimum period of fifteen days from the date of acceptance, period can be renewed upon agreement.
● SEALOADER entered into a contract with GRAND CEMENT for the loading of cement clinkers and the delivery thereof to Manila
● D/B Toploader (a barge owned by Sealoader), arrived at the wharf of Grand Cement tugged by the M/T Viper. The D/B Toploader, however, was not immediately loaded with its intended cargo as the employees of Grand Cement were still loading another vessel, the Cargo Lift Tres.
● On April 4, 1994 Typhoon Bising struck the Visayas area. Public storm signal number 3 was raised over the province of Cebu.
● The D/B Toploader was, at that time, still docked at the wharf of Grand Cement. As the winds blew stronger and the waves grew higher, the M/T Viper tried to tow the D/B Toploader away from the wharf. The efforts of the tugboat were foiled, however, as the towing line connecting the two vessels snapped. This occurred as the mooring lines securing the D/B Toploader to the wharf were not cast off. ● The following day, the employees of Grand Cement discovered the D/B Toploader
situated on top of the wharf, apparently having rammed the same and causing significant damage thereto.
● Grand Cement filed a complaint for Damages against (1) Sealoader; (2) Romulo Diantan, the captain of M/T Viper; and (3) Johnny Ponce, the barge patron of the d/B Toploader. Later on it filed an Amended Complaint and impleaded (4) Joyce Launch
○ Grand Cement’s contention: After receiving the weather updates, Grand Cement advised Diantan and Ponce to move their respective vessels away from its wharf but the men refused to do so.
○ Sealoader’s Answer to the Complaint: Brought up the delay of the loading due to the loading of another vessel. In addition, it pointed out that the damage was due to a typhoon, a force majeure hence, beyond its control ○ Joyce Launch’s Answer to the Amended Complaint: damage was caused
by the typhoon. If the loading was done on schedule, the incident would have been avoided
● Sealoader filed a Crossclaim against (1) Joyce Launch and (2) Romulo Diantan. M/T Viper was under the complete control of Joyce Launch thru Diantan. Sealoader contends that Joyce Launch has the sole duty to secure the 2 vessels in order to avoid any damages that may cause.
○ Joyce Launch’s Answer: Damage was due to the typhoon. Contended that Grand Cement allegedly abandoned the wharf, thus, leaving the crew of the M/T Viper helpless in preventing the D/B Toploader from ramming the wharf. Joyce Launch likewise faulted Grand Cement’s employees for not warning the crew of the M/T Viper early on to seek refuge from the typhoon.
● Trial ensued. Several persons were presented as witnesses to prove their respective claims.
RTC: In favor of Grand Cement. Sealoader, Joyce Launch and Ponce e solidarily liable. (NOTE: Diantan was dropped as a defendant because summons cannot be served since he’s working in abroad)
● The defendants’ negligence can be shown from their acts or omissions, thus: they did not take any precautionary measure as demanded or required of them in complete disregard of the public storm signal or warning; the master or captain or the responsible crew member of the vessel was not in the vessel, hence, nobody could make any move or action for the safety of the vessel at such time of emergency or catastrophe; and the vessel was not equipped with a radio or any navigational communication facility, which is a mandatory requirement for all navigational vessels. *Sealoader appealed. Joyce Lauch and Ponce no longer questioned the court’s decision CA: Still in favor of Grand Cement
MR was filed by Sealoader. CA issued an Amended Decision: Grand Cement was guilty of contributory negligence
● Grand Cement did not take any precaution to avoid the damages wrought by the storm. Grand Cement waited until the last possible moment before informing Sealoader and Joyce about the impending storm. In fact, it continued loading on another vessel. It is no wonder that Sealoader did not immediately move away from the pier since the owner of the pier, Grand Cement, was continuing to load another vessel despite the fast approaching storm. In totality, we find that Grand Cement also did not exercise due diligence in this case and that its conduct contributed to the damages that it suffered.
ISSUE:
Who, among the parties in this case, should be held liable for the damage sustained by the wharf of Grand Cement? SEALOADER ALONE.
HELD:
The Court finds that Sealoader was indeed guilty of negligence in the conduct of its affairs during the incident in question.
● Grand Cement that there was either no radio on board the D/B Toploader, the radio was not fully functional, or the head office of Sealoader was negligent in failing to attempt to contact the D/B Toploader through radio. Either way, this negligence cannot be ascribed to anyone else but Sealoader.
● Manifest laxity of the crew of D/B Toploader in monitoring the weather. Despite the apparent difficulty in receiving weather bulletins from the head office of
Sealoader, the evidence on record suggests that the crew of the D/B Toploader failed to keep a watchful eye on the prevailing weather conditions.
● Acosta, the clearing officer of Sealoader relied on the assurances of the M/T Beejay crew and the opinion of Romulo Diantan regarding the weather condition. ● Sealoader cannot pass to Grand Cement the responsibility of casting off the
mooring lines connecting the D/B Toploader to the wharf. The Court agrees with the ruling of the Court of Appeals in the Decision that the people at the wharf could not just cast off the mooring lines without any instructions from the crew of the D/B Toploader and the M/T Viper
Grand Cement was NOT guilty of negligent acts, which contributed to the damage that was incurred on its wharf.
● The Court holds that Sealoader had the responsibility to inform itself of the prevailing weather conditions in the areas where its vessel was set to sail. Sealoader cannot merely rely on other vessels for weather updates and warnings on approaching storms, as what apparently happened in this case. Common sense and reason dictates this. To do so would be to gamble with the safety of its own vessel, putting the lives of its crew under the mercy of the sea, as well as running the risk of causing damage to the property of third parties for which it would necessarily be liable.
d. Duration of responsibility (Delivery of goods to common carrier; Actual or constructive delivery; Temporary unloading or storage)
i. Lu Do & Lu Ym Corporation vs. Binamira (HAUTEA)
Doctrine:
The carrier does not assume liability for any loss or damage to the goods once they have been "taken into the custody of customs or other authorities", or when they have been delivered at ship's tackle.
Facts:
Delta Photo (New York based company) shipped on board M/S FERNSIDE (6) cases of films and photographic supplies consigned to BINAMIRA. When the ship arrived at the port of Cebu, the shipment was placed in the custody of Visayan Cebu Terminal Company (Arrastre).
LU DO CORPORATION (Agent of the Carrier) hired Cebu Stevedoring to unload cargo. Both the stevedoring and arrastre company made a list of bad cargo on board. The shipment in question, was not included in the report of bad order cargo of both checkers, indicating that it was discharged from the, ship in good order and condition.
When BINAMIRA got hold of the cargo, the cases showed signs of pilferage. It was later found out that films and photographic supplies were missing valued at P324.63
The ruled that the carrier was liable stating that;
In this jurisdiction, a common carrier has the legal duty to deliver goods to a consignee in the same condition in which it received them. Except where the loss, destruction or deterioration of the merchandise was due to any of the cases enumerated in Article 1734 of the new Civil Code, a carrier is presumed to have been at fault and to have acted negligently, unless it could prove that it observed extraordinary diligence in the care and handling of the goods (Article 1735, supra). Such presumption and the liability of the carrier attach until the goods are delivered actually or constructively, to the consignee, or to the person who has a right to receive them (Article 1736, supra), and we believe delivery to the customs authorities is not the delivery contemplated by Article 1736, supra, in connection with second paragraph of Article 1498, 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, represented appellant as its agent, has not been successfully rebutted.
Issue & Held:
1. Whether the CA erred in its decision?
YES. The provisions cited by the Court of Appeals only apply when the loss, destruction or deterioration takes place while the goods are in the possession of the carrier, and not after it has lost control of them. 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 presumes that it was due to its fault or negligence. This is necessary to protect the interest the interest of the owner who is at its mercy. The situation changes after the goods are delivered to the consignee.
While we agree with the Court of Appeals that while delivery of the cargo to the consignee, or to the person who has a right to receive them", contemplated in Article 1736, because in such case the goods are still in the hands of the Government and the owner cannot exercise dominion over them, we believe however that the parties may agree to limit the liability of the carrier 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 situation where we may say that the carrier losses control of the goods because of a custom regulation and it is unfair that it be made responsible for what may happen during the interregnum. And this is precisely what was done by the parties herein. In the bill of lading that was issued covering the shipment in question, both the carrier and the consignee have stipulated to limit the responsibility of the carrier for the loss or damage
the carrier does not assume liability for any loss or damage to the goods once they have been "taken into the custody of customs or other authorities", or when they have been delivered at ship's tackle.
ii. Servando, et al., vs. Philippine Steam Navigation (LESAVA) Doctrine:
● A 'caso fortuito' presents the following essential characteristics:
(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 will;
(2) it must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be foreseen, it must be impossible to avoid;
(3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and
(4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor.
● Where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is exempt from liability for nonperformance. Synopsis: There was a fire in the Bureau of Customs’ warehouse. Parties: Bureau of Customs Appellant (Carrier): Philippine Steam Navigation Appellees: Clara Uy Bico and Amparo Servando Facts:
● Appellees loaded on board appellant’s vessel (FS176) carriage from Manila to Negros Occidental.
○ Bico → 1,528 cavans of rice
○ Servando → cartons of colored paper, toys and general merchandise
● Upon arrival of the vessel at Negros Occidental, the cargoes were discharged complete and in good order.
● That afternoon of the same day, said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes.
● Before the fire, Clara Uy Bico was able to take delivery of 907 cavans of rice (which claim for value of said goods was rejected by Appellant).
● The court a quo held that the delivery of the shipment in question to 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 against the appellant. Issue: WON carrier should be responsible? Held:
YES. Since the burning of the customs warehouse was an extraordinary event which happened independently of the will of the appellant and the latter could not have foreseen the event, Appellant is discharged from any liability. Furthermore, there is a stipulation in the contract absolving carrier from responsibility for fortuitous events which the law allows as long as the parties insert stipulations not contrary to law, morals or public policy.
In the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation:
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 damage caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ...
The agreement contained in the above quoted Clause 14 is a mere iteration of the basic principle of law written in Article 1 1 7 4 of the Civil Code:
Article 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.
Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is exempt from liability for nonperformance. The Partidas, the antecedent of Article 1174 of the Civil Code, defines 'caso fortuito' as 'an event that takes place by accident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers.'
There is nothing in the record to show that appellant carrier ,incurred in delay in the performance of its obligation. It appears that appellant had not only notified appellees of the arrival of their shipment, but had demanded that the same be withdrawn. In fact, pursuant to such demand, appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse.
Nor can the appellant or its employees be charged with negligence. The storage of the goods in the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly made with their knowledge and consent. Since the warehouse belonged to and was maintained by the government, it would be unfair to impute negligence to the appellant, the latter having no control whatsoever over the same. iii. Mitsui Lines vs. CA (LIM) DOCTRINE:
"Loss", within the ambit of S3(6) of the COGSA refers to the deterioration or disappearance of goods. As defined in the Civil Code and as applied to S3(6), P4 of the
COGSA, "loss" contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or
disappeared in such a way that their existence is unknown or they cannot be recovered. The deterioration of goods due to delay in their transportation constitutes
"loss" or "damage" within the meaning of S3.
FACTS:
Petitioner Mitsui O.S.K. Lines Ltd. is a foreign corporation represented in the Philippines by its agent, Magsaysay Agencies. It entered into a contract of carriage through Meister Transport, Inc., an international freight forwarder, with private respondent Lavine Loungewear Manufacturing Corporation to transport goods of the latter from Manila to Le Havre, France. Petitioner undertook to deliver the goods to France 28 days from initial loading. On July 24, 1991, petitioner’s vessel loaded private respondent’s container van for carriage at the said port of origin.
However, in Kaoshiung, Taiwan the goods were not transshipped immediately, with the result that the shipment arrived in Le Havre only on November 14, 1991. The consignee allegedly paid only half the value of the said goods on the ground that they did not arrive in France until the “off season” in that country. The remaining half was allegedly charged to the account of private respondent which in turn demanded payment from petitioner through its agent.
Petitioner denied private respondent’s claim. The latter filed a case in the RTC in April 1992. In the original complaint, private respondent impleaded as defendants Meister Transport, Inc. and Magsaysay Agencies, Inc., the latter as agent of petitioner Mitsui O.S.K. Lines Ltd. In May 1993, it amended its complaint by impleading petitioner as defendant in lieu of its agent. The parties to the case thus became private respondent as plaintiff, on one side, and Meister Transport Inc. and petitioner Mitsui O.S.K. Lines Ltd. as represented by Magsaysay Agencies, Inc., as defendants on the other.
Petitioner filed a motion to dismiss alleging that the claim against it had prescribed under the Carriage of Goods by Sea Act.
RTC denied petitioner’s motion as well as its subsequent motion for reconsideration. On petition for certiorari, the Court of Appeals sustained the trial court’s orders. Hence this petition.
ISSUE:
W/N private respondent’s action is for “loss or damage” to goods shipped, within the meaning of S3(6) of the Carriage of Goods by Sea Act (COGSA).
HELD:
"Loss", within the ambit of S3(6) of the COGSA refers to the deterioration or disappearance of goods. As defined in the Civil Code and as applied to S3(6), P4 of the COGSA, "loss" contemplates merely a situation where no delivery at all was made by the shipper of the goods because the same had perished, gone out of commerce, or disappeared in such a way that their existence is unknown or they cannot be recovered. The deterioration of goods due to delay in their transportation constitutes "loss" or "damage" within the meaning of S3.
Whatever damage or injury is suffered by the goods while in transit would result in loss or damage to either the shipper or the consignee. As long as it is claimed that the losses or damages suffered by the shipper or consignee were due to the arrival of the goods in damaged or deteriorated condition, the action is still basically one for damage to the goods. The damages suffered by him as a result of the delay in the shipment of his cargo are not covered by the prescriptive provision of the COGSA above referred to, if such damages were due, not to the deterioration and decay of the goods while in transit, but to other causes independent of the condition of the cargo upon arrival, like a drop in their market value, for example.
In the case at bar, there is neither deterioration nor disappearance nor destruction of goods caused by the carrier's breach of contract. Whatever reduction there may have been in the value of the goods is not due to their deterioration or disappearance because they had been damaged in transit.
Precisely, the question before the trial court is not the particular sense of "damages" as it refers to the physical loss or damage of a shipper's goods as specifically covered by §3(6) of COGSA but Mitsui's potential liability for the damages it has caused in the general sense and, as such, the matter is governed by the Civil Code, the Code of Commerce and COGSA, for the breach of its contract of carriage with Lavine.
iv. Philippine First Insurance vs. Wallem First Shipping (MORA)
The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the 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 person who has a right to receive them.
FACTS:
Anhui Chemicals Import & Export Corporation loaded on board M/S Offshore Master a shipment consisting of 10,000 bags of sodium sulphate anhydrous, complete and in good order for transportation to and delivery at the port of Manila for consignee, L.G. Atkimson ImportExport, Inc. covered by a Clean Bill of Lading. The Owner and/or Charterer of M/V Offshore Master is unknown while the shipper of the shipment is Shanghai Fareast Ship Business Company. Both are foreign firms doing business in the Philippines, thru its local ship agent, respondent Wallem Philippines Shipping, Inc.
The shipment arrived at the port of Manila. It was disclosed during the discharge of the shipment from the carrier that 2,426 poly bags were in bad order and condition, having sustained various degrees of spillages and losses. This is evidenced by the Turn Over Survey of Bad Order Cargoes of the arrastre operator, Asian Terminals, Inc. The bad state of the bags is also evinced by the arrastre operator’s Request for Bad Order Survey.
Asia Star Freight Services undertook the delivery from the pier to the consignee’s warehouse where it was found and noted that the bags had been discharged in damaged and bad order condition.
Herein petitioner is the insurer of the goods. It filed an action for damages after its formal demand for payment of lost goods to Wallem remain unanswered and unsettled.
RTC ordered respondents to pay petitioner. It attributed the damage and losses sustained by the shipment to the arrastre operator’s mishandling the discharge of the shipment. Since both of the the arrastre operator and common carrier are charged with and obligated to deliver the goods in good order condition to the consignee, it ruled that they are solidarily liable for the payment of damages.
CA reversed the ruling. There is no solidary liability because the damage to the goods are attributed to the mishandling by the arrastre operator in the discharge of the shipment.
In their petition for review to the SC, It is undisputed that the damage or losses were incurred by the shipment during the unloading. What is disputed is who should be liable for the damage incurred at that point of transport.
ISSUE:
Whether the carrier should be held solidarily liable for the cost of the damaged shipment?
HELD:
YES. In resolving the issue the court cited the following laws and doctrines:
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 goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the 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 person who has a right to receive them.
For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New York v. Lopez Castelo, the Court interpreted the ship captain’s liability as ultimately that of the shipowner by regarding the captain as the representative of the ship owner.
Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among the carriers’ responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
The above doctrines are in fact expressly incorporated in the bill of lading between the shipper Shanghai Fareast Business Co., and the consignee, to wit:
4. PERIOD OF RESPONSIBILITY. The responsibility of the carrier shall commence from the time when the goods are loaded on board the vessel and shall cease when they are discharged from the vessel.
The Carrier shall not be liable of loss of or damage to the goods before loading and after discharging from the vessel, howsoever such loss or damage arises.
The Court also discussed that the functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship's tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.
Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or employees should observe the standards and measures necessary to prevent losses and damage to shipments under its custody.
In Fireman’s Fund Insurance Co. v. Metro Port Service, Inc. the Court explained the relationship and responsibility of an arrastre operator to a consignee of a cargo, to quote:
The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator. Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the CARRIER.
Both the ARRASTRE and the CARRIER are therefore charged with and obligated to deliver the goods in good condition to the consignee.
Thus, the Court agrees to CA’s holding that an arrastre operator and carrier may not be held solidarily liable at all times.
To answer the question” who had custody of the shipment during the unloading from the vessel, the court discussed:
The aforementioned Section 3(2) of the COGSA states that among the carriers’ responsibilities are to properly and carefully load, care for and discharge the goods carried. The bill of lading covering the subject shipment likewise stipulates that the carrier’s liability for loss or damage to the goods ceases after its discharge from the vessel. Article 619 of the Code of Commerce holds a ship captain liable for the cargo from the time it is turned over to him until its delivery at the port of unloading.
In a case decided by a U.S. Circuit Court, Nichimen Company v. M./V. Farland, it was ruled that like the duty of seaworthiness, the duty of care of the cargo is nondelegable, and the carrier is accordingly responsible for the acts of the master, the crew, the stevedore, and his other agents. It has also been held that it is ordinarily the duty of the master of a vessel to unload the cargo and place it in readiness for delivery to the consignee, and there is an implied obligation that this shall be accomplished with sound machinery, competent hands, and in such manner that no unnecessary injury shall be done thereto. And the fact that a consignee is required to furnish persons to assist in unloading a shipment may not relieve the carrier of its duty as to such unloading
The exercise of the carrier’s custody and responsibility over the goods during the unloading actually transpired in teh instant case during the unloading of teh shipment as testified by Mr. Talens, the cargo surveyor. He testified that checker of the vessel of Wallem Philippines hired the services of the stevedores and that the master of the vessel was observing and supervising the discharging operation of the cargo. The checker is an employee of Wallem. He also testified that he noted in the Bad Order Inspection that “the bad order torn bags, was due to
stevedores utilizing steel hooks/spikes in piling the cargo to the pallet board at the vessel’s cargo holds and at the pier designated area before and after discharged that causes the bags to be torn.”
The records are replete with evidence which show that the damage to the bags happened before and after their discharge and it was caused by the stevedores of the arrastre operator who were then under the supervision of Wallem.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. In the instant case, the damage or losses were incurred during the discharge of the shipment while under the supervision of the carrier. Consequently, the carrier is liable for the damage or losses caused to the shipment. As the cost of the actual damage to the subject shipment has long been settled, the trial court’s finding of actual damages in the amount has to be sustained. e. Presumption of negligence
i. Loadmasters Customs Services, Inc., vs. Glodel Brokerage Corporation, et al (SUPAPO) (Trucking Service provider v. Customs broker and Insurance Company) PARTIES: Trucking Service Provider – Loadmasters (Common Carrier) Customs Broker – Glodel (Common Carrier) Insurance – R&B Insurance Corporation
Extra (not a party in the case): Owner of the cargoes – Columbia Wire and Cable Corp.
CAUSES OF ACTION: Quasidelict between Loadmasters and R&B Culpa Contractual between Loadmasters and Glodel
DOCTRINES:
COMMON CARRIER; QUASIDELICT; Whenever an employee’s negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi patris family in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees.
SAME; SAME; Where several causes producing an injury are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons although under the circumstances of the case, it may appear that one of them was more culpable, and that the duty owed by them to the injured person was not the same.
FACTS:
1. 132 bundles of electric copper cathodes owned by Columbia were shipped from Leyte and arrived at Pier 10, North Harbor, Mla on the same day.
2. The cargoes were insured by R&B against all risks.
3. Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the subsequent delivery to its warehouses/plants.
4. Glodel, in turn, subcontracted Loadmasters (contract of affreightment) to transport the cargoes to Columbia’s warehouse/plants in Bulacan and Valenzuela City.
5. The goods were loaded on board 12 trucks owned by Loadmasters, driven by its employed drivers and accompanied by its employed truck helpers.
6. 6 truckloads were to be delivered to Bulacan and 6 truckloads for Valenzuela City.
7. However, one of the truckloads en route to Bulacan never reached its destination as it was hijacked or robbed and was later on recovered without the copper cathodes.
8. Accordingly, Columbia claimed for insurance indemnity against R&B, which the latter paid.
9. Thereafter, R&B filed a complaint for damages against Loadmasters and Glodel.
RTC: Only Glodel was liable to R&B. Loadmasters’ counterclaim against R&B was dismissed
CA: (Glodel and R&B appealed) Loadmasters was held as an agent of Glodel. As such, solidarily liable with R&B.
Loadmasters’ contention:
It should not be held liable for damages, as it was never privy to the contract between Glodel and Columbia or R&B as subrogee
ISSUE:
HELD: YES!
The court held that although Loadmasters may not have direct contractual relation with Columbia, it is still liable for tort under Article 2176 NCC on quasidelicts. As enunciated in Mindanao Terminal and Brokerage Service Inc. v. Phoenix Assurance Company of New York, a tort may arise despite the absence of a contractual relationship.
In connection therewith, Article 2180 provides:
ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible.
x x x x
Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.
It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees (truck driver and helper) were instrumental in the hijacking or robbery of the shipment. As employer, Loadmasters should be made answerable for the damages caused by its employees who acted within the scope of their assigned task of delivering the goods safely to the warehouse.
Whenever an employee’s negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees. To avoid liability for a quasidelict committed by its employee, an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. In this regard, Loadmasters failed.
Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that Loadmasters would fully comply with the undertaking to safely transport the subject cargo to the designated destination. It should have been more prudent in entrusting the goods to Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks in delivering the cargoes. Glodel should, therefore, be held liable with Loadmasters. Its defense of force majeure is unavailing.
Indeed, Glodel and Loadmasters are solidarily liable to R&B. ii. FGU Insurance vs. CA (VELASCO) Shipper – Anco Enterprise Company Consignee – SMC Insurer – FGU Insurance Corporation Facts
Anco Enterprises Company (ANCO) was engaged in the shipping business. It owned the M/T ANCO tugboat and the D/B Lucio barge which were operated as common carriers. Since the D/B Lucio had no engine of its own, it could not maneuver by itself and had to be towed by a tugboat for it to move from one place to another.
San Miguel Corporation (SMC) shipped beers from Mandaue City, Cebu, on board the D/B Lucio, for towage by M/T ANCO. Upon arrival at San Jose, Antique, the tugboat M/T ANCO left the barge immediately.
When the barge and tugboat arrived at San Jose, Antique, the clouds over the area were dark and the waves were already big. The arrastre workers unloading the cargoes of SMC on board the D/B Lucio began to complain about their difficulty in unloading the cargoes. SMC’s District Sales Supervisor, Fernando Macabuag, requested ANCO’s representative to transfer the barge to a safer place because the vessel might not be able to withstand the big waves.
ANCO’s representative did not heed the request because he was confident that the barge could withstand the waves. Only part of the cargo was unloaded because of the big waves.
During the evening, the barge’s rope, which was attached to the wharf, got cut off by the waves and the barge sunk. The remaining cargoes of beer were swept into the ocean.
SMC filed a complaint for Breach of Contract of Carriage and Damages against ANCO.
ANCO claimed that it had an agreement with SMC that ANCO would not be liable for any losses or damages resulting to the cargoes by reason of fortuitous event. Since the cases of beer were lost by reason of a storm, a fortuitous event which battered and sunk the vessel in which they were loaded, they should not be held liable. ANCO further asserted that there was an agreement between them and SMC to insure the cargoes in order to recover indemnity in case of loss.
