Breach of Contract of Carriage-vigilance over goods

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. v. PHILIPPINE FIRST INSURANCE CO., INC.
GR No. 143133, June 5, 2002
FACTS
June 13, 1990

Shipper: CMC Trading A.G.

Vessel: MN Anangel Sky at Hamburg, Germany

Goods: 242 coils of various Prime Cold Rolled Steel sheets

Destination: Manila

Consignee: Philippine Steel Trading Corporation

Arrival: July 28, 1990

Within the subsequent days, the goods were discharged and four (4) coils were found to be in bad
order (BO Tally Sheet 154974) which the consignee declared as total loss. Petitioners refused to submit to
Steel Tradings formal demand. Later, respondent paid Steel Trading and was subrogated.
Petitioners contend that that the damage and/or loss was due to pre-shipment damage, to the
inherent nature, vice or defect of the goods, or to perils, danger and accidents of the sea, or to insufficiency of
packing thereof, or to the act or omission of the shipper of the goods or their representatives. In addition
thereto, petitioners argued that their liability, if there be any, should not exceed the limitations of liability
provided for in the bill of lading and other pertinent laws. Finally, petitioners averred that, in any event, they
exercised due diligence and foresight required by law to prevent any damage/loss to said shipment.
Ruling of the trial court
Dismissed the complaint because of failure the prove its claim with the quantum of proof.
Ruling of the CA
Petitioners are liable because it failed to overcome the presumption of negligence. The CA further
held as inadequately proven petitioners claim that the loss or the deterioration of the goods was due to preshipment damage. It likewise opined that the notation metal envelopes rust stained and slightly dented placed
on the Bill of Lading had not been the proximate cause of the damage to the four (4) coils.
ISSUE
Is petitioner liable?
RULING
Yes. Well-settled is the rule that common carriers, from the nature of their business and for reasons
of public policy, are bound to observe extraordinary diligence and vigilance with respect to the safety of the
goods and the passengers they transport.
Thus, common carriers are required to render service with the greatest skill and foresight and to
use all reasonable means to ascertain the nature and characteristics of the goods tendered for shipment, and
to exercise due care in the handling and stowage, including such methods as their nature requires.

The extraordinary responsibility lasts from the time the goods are unconditionally placed in the
possession of and received for transportation by the carrier until they are delivered, actually or constructively,
to the consignee or to the person who has a right to receive them.
Owing to this high degree of diligence required of them, common carriers, as a general rule, are
presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed.
That is, unless they prove that they exercised extraordinary diligence in transporting the goods.[19] In order to
avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed
such diligence.
Petitioners claim that pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act[44]
(COGSA), respondent should have filed its Notice of Loss within three days from delivery. They assert that the
cargo was discharged on July 31, 1990, but that respondent filed its Notice of Claim only on September 18,
1990.
We are not persuaded. First, the above-cited provision of COGSA provides that the notice of claim
need not be given if the state of the goods, at the time of their receipt, has been the subject of a joint
inspection or survey.
A failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed
within one year. This one-year prescriptive period also applies to the shipper, the consignee, the insurer of the
goods or any legal holder of the bill of lading.
FGU INSURANCE v. CA
G.R. No. 137775, March 31, 2005
FACTS
Anco Enterprises Company (ANCO), a partnership between Ang Gui and Co To, was engaged in the
shipping business operating two common carriers
M/T ANCO tugboat
D/B Lucio barge - 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.
September 23 1979: San Miguel Corporation (SMC) shipped from Mandaue City, Cebu, on board the
D/B Lucio, for towage by M/T ANCO:
25,000 cases Pale Pilsen and 350 cases Cerveza Negra - consignee SMCs Beer Marketing Division
(BMD)-Estancia Beer Sales Office, Estancia, Iloilo
15,000 cases Pale Pilsen and 200 cases Cerveza Negra - consignee SMCs BMD-San Jose Beer Sales
Office, San Jose, Antique
September 30, 1979: D/B Lucio was towed by the M/T ANCO arrived and M/T ANCO left the barge
immediately
The clouds were dark and the waves were big so SMCs District Sales Supervisor, Fernando Macabuag,
requested ANCOs representative to transfer the barge to a safer place but it refused so around the
midnight, the barge sunk along with 29,210 cases of Pale Pilsen and 500 cases of Cerveza Negra
totalling to P1,346,197

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Breach of Contract of Carriage-vigilance over goods

When SMC claimed against ANCO it stated that they agreed that it would not be liable for any losses or
damages resulting to the cargoes by reason of fortuitous event and it was agreed to be insured with
FGU for 20,000 cases or P858,500
ANCO filed against FGU
FGU alleged that ANCO and SMC failed to exercise ordinary diligence or the diligence of a good father
of the family in the care and supervision of the cargoes
RTC: ANCO liable to SMC and FGU liable for 53% of the lost cargoes
CA affirmed

When evidence show that the insureds negligence or recklessness is so gross as to be sufficient to
constitute a willful act, the insurer must be exonerated.
ANCOs employees is of such gross character that it amounts to a wrongful act which must exonerate
FGU from liability under the insurance contract
both the D/B Lucio and the M/T ANCO were blatantly negligent

ISSUE
W/N FGU should be exempted from liability to ANCO for the lost cargoes because of a fortuitous event and
negligence of ANCO

SULPICIO LINES, INC. v. FIRST LEPANTO-TAISHOINSURANCE CORPORATION

GR No. 140349, June 29, 2005

HELD

Taiyo Yuden Philippines, Inc. (owner of the goods) and Delbros, Inc.(shipper) entered into a
contract, evidenced by Bill of Lading issued by the latter in favor of the owner of the goods, for Delbros, Inc. to
transport a shipment of goods consisting of 3 wooden crates containing 136 cartons of inductors and LC
compound on board the V Singapore V20 from Cebu City to Singapore in favor of the consignee, Taiyo Yuden
Singapore Pte, Ltd. For the carriage of said shipment from Cebu City to Manila, Delbros, Inc. engaged the
services of the vessel M/V Philippine Princess, owned and operated by petitioner Sulpicio Lines, Inc. (carrier).
During the unloading of the shipment, one crate containing 42 cartons dropped from the cargo hatch to the
pier apron.
The owner of the goods examined the dropped cargo, and upon an alleged finding that the
contents of the crate were no longer usable for their intended purpose, they were rejected as a total loss and
returned to Cebu City. The owner of the goods filed a claim with herein petitioner-carrier for the recovery of the
value of the rejected cargo which was refused by the latter. Thereafter, the owner of the goods sought
payment from respondent First Lepanto-Taisho Insurance Corporation (insurer) under a marine insurance
policy issued to the former. Respondent-insurer paid the claim less thirty-five percent (35%) salvage value or
P194, 220.31.
The payment of the insurance claim of the owner of the goods by the respondent-insurer
subrogated the latter to whatever right or legal action the owner of the goods may have against Delbros, Inc.
and petitioner-carrier, Sulpicio Lines, Inc. Thus, respondent-insurer then filed claims for reimbursement from
Delbros, Inc. and petitioner-carrier Sulpicio Lines, Inc. which were subsequently denied.
In 1992, respondent-insurer filed a suit for damages with the trial court against Delbros, Inc. and
herein petitioner-carrier.
Delbros, Inc. filed on 15 April 1993 its Answer with Counterclaim and Cross-claim, alleging that
assuming the contents of the crate in question were truly in bad order, fault is with herein petitioner-carrier
which was responsible for the unloading of the crates.
Petitioner-carrier filed its Answer to Delbros, Inc.s cross-claim asserting that it observed
extraordinary diligence in the handling, storage and general care of the shipment and that subsequent
inspection of the shipment by the Manila Adjusters and Surveyors Company showed that the contents of the
third crate that had fallen were found to be in apparent sound condition, except that 2 cello bags each of 50
pieces ferri inductors No. LC FL 112270K-60 were unaccounted for and missing as per packaging list.
After hearing the trial court dismissed the complaint for damages as well as the counterclaim filed
by therein defendant Sulpicio Lines, Inc. and the cross-claim filed by Delbros, Inc. on the grounds that plaintiff
has failed to prove its case.

YES. Affirmed with modification. Third-party complainant is dismissed.

Art. 1733. 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 and for the safety of the passengers
transported by them, according to all the circumstances of each case.

Such extraordinary diligence in vigilance over the goods is further expressed in Articles 1734, 1735, and 1745
Nos. 5, 6, and 7 . . .

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following causes only:
(1)

Flood, storm, earthquake, lightning, or other natural disaster or calamity;

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster
must have been the proximate and only cause of the loss. However, the common carrier must exercise
due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm, or other
natural disaster in order that the common carrier may be exempted from liability for the loss, destruction,
or deterioration of the goods . . .
Caso fortuito or force majeure
extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which though
foreseen, were inevitable
not enough that the event should not have been foreseen or anticipated, as is commonly believed but it
must be one impossible to foresee or to avoid - not in this case
other vessels in the port of San Jose, Antique, managed to transfer to another place
To be exempted from responsibility, the natural disaster should have been the proximate and only cause
of the loss. There must have been no contributory negligence on the part of the common carrier.
there was blatant negligence on the part of M/T ANCOs crewmembers, first in leaving the engine-less
barge D/B Lucio at the mercy of the storm without the assistance of the tugboat, and again in failing to
heed the request of SMCs representatives to have the barge transferred to a safer place

FACTS

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Breach of Contract of Carriage-vigilance over goods

The CA reversed the RTC decision and ordered Delbros and Sulpicio to pay jauntily and severally,
plaintiff-appellant representing actual damages, plus legal interest counted from the filing of the complaint until
fully paid.

W/N, based on the evidence presented during the trial, the owner of the goods, respondentinsurers predecessor in interest, did incur damages, and if so, w/n petitioner-carrier is liable for the same.
HELD

ISSUE

It cannot be denied (refer to scribd)

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