BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V.

and JARDINE exercised the extraordinary diligence required by law, petitioners cannot escape liability
DAVIES TRANSPORT SERVICES, INC. vs. PHILIPPINE FIRST INSURANCE for the damage to the four coils.
CO., INC. | G.R. No. 143133 | June 5, 2002
2. Pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act (COGSA), a
failure to file a notice of claim within three days will not bar recovery if it is nonetheless
DOCTRINE: Proof of the delivery of goods in good order to a common carrier and of their
filed within one year. This one-year prescriptive period also applies to the shipper, the
arrival in bad order at their destination constitutes prima facie fault or negligence on the part
consignee, the insurer of the goods or any legal holder of the bill of lading.
of the carrier. If no adequate explanation is given as to how the loss, the destruction or the
In the present case, the cargo was discharged on July 31, 1990, while the
deterioration of the goods happened, the carrier shall be held liable therefor.
Complaint was filed by respondent on July 25, 1991, within the one-year prescriptive
period.
FACTS: CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg,
Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila
3. In the case before us, there was no stipulation in the Bill of Lading limiting the carrier's
consigned to the Philippine Steel Trading Corporation. M/V Anangel Sky arrived at the port
liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This
of Manila and, within the subsequent days, discharged the subject cargo. Four (4) coils were
fact notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for
found to be in bad order. Finding the four (4) coils in their damaged state to be unfit for the
petitioners' liability.
intended purpose, the consignee Philippine Steel Trading Corporation declared the same as
A notation in the Bill of Lading which indicated the amount of the Letter of
total loss.
Credit obtained by the shipper for the importation of steel sheets did not effect a declaration
Petitioners refused to submit to the consignee's claim. Consequently, respondent
of the value of the goods as required by the bill. In the light of the foregoing, petitioners'
paid the consignee and was subrogated to the latter's rights. Subsequently, respondent
liability should be computed based on US$500 per package and not on the per metric ton
instituted this complaint for recovery of the amount paid by them, to the consignee as
price declared in the Letter of Credit.
insured.
Petitioners imputed that the damage and/or loss was due to pre-shipment damage.
In addition thereto, they 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,
they averred that, in any event, they exercised due diligence and foresight required by law
to prevent any damage/loss to said shipment.
RTC: dismissed the Complaint because respondent had failed to prove its claims.
CA: reversed the RTC; ruled that petitioners were liable for the loss or the
damage of the goods shipped, because they had failed to overcome the presumption of
negligence imposed on common carriers.

ISSUES:
1. W/N a notation in the bill of lading at the time of loading is sufficient to show pre-
shipment damage and to exempt herein defendants from liability. NO.
2. W/N the consignee/plaintiff filed the required notice of loss within the time required by
law. YES.
3. W/N the package limitation of liability under Section 4 (5) of COGSA is applicable.
YES.

HELD:
1. Mere proof of delivery of the goods in good order to a common carrier and of their
arrival in bad order at their destination constitutes a prima facie case of fault or
negligence against the carrier. If no adequate explanation is given as to how the
deterioration, the loss or the destruction of the goods happened, the transporter shall be held
responsible.
Petitioners failed to rebut the prima facie presumption of negligence in the case at
bar. True, the words "metal envelopes rust stained and slightly dented" were noted on the
Bill of Lading; however, there is no showing that petitioners exercised due diligence to
forestall or lessen the loss. Having failed to discharge the burden of proving that they have
MOF Company v. Shin Yang knowledge of its contents or c) availment of the stipulation pour autrui, i.e., when
the consignee, a third person, demands before the carrier the fulfillment of the
Facts: stipulation made by the consignor/shipper in the consignees favor, specifically the
delivery of the goods/cargoes shipped.

Halla shipped to Manila secondhand cars and other articles on board the
vessel Hanjin Busan.
The bill of lading was prepared by the carrier Hanjin where Shin Yang was
named as the consignee and indicated that payment was on a "Freight
Collect" basis (meaning the consignee/receiver of the goods would be the
one to pay for the freight and other charges).
When the shipment arrived in Manila MOF, Hanjins exclusive general
agent in the Philippines, demanded the payment from Shin Yang.
Shin Yang refused to pay the freight and other charges. Shin Yang is
saying that it is not the ultimate consignee but merely the
consolidator/forwarder.
Shin Yang contends that the fact that its name was mentioned as the
consignee of the cargoes did not make it automatically liable for the
freightage because it never benefited from the shipment.
It never claimed or accepted the goods, it was not the shippers agent, it
was not aware of its designation as consignee and the original bill of
lading was never endorsed to it.
Issue:
Whether a consignee, who is not a signatory to the bill of lading, is bound by
the stipulations thereof? - Yes
In the instant case, Shin Yang consistently denied in all of its pleadings that it
authorized Halla Trading, Co. to ship the goods on its behalf; or that it got hold of
the bill of lading covering the shipment or that it demanded the release of the cargo.
Basic is the rule in evidence that the burden of proof lies upon him who asserts it,
not upon him who denies, since, by the nature of things, he who denies a fact
cannot produce any proof of it. Thus, MOF has the burden to controvert all these
denials, it being insistent that Shin Yang asserted itself as the consignee and the
one that caused the shipment of the goods to the Philippines.
In civil cases, the party having the burden of proof must establish his case by
preponderance of evidence, which means evidence which is of greater weight, or
more convincing than that which is offered in opposition to it. Here, MOF failed to
meet the required quantum of proof. Other than presenting the bill of lading, which,
at most, proves that the carrier acknowledged receipt of the subject cargo from the
shipper and that the consignee named is to shoulder the freightage, MOF has not
adduced any other credible evidence to strengthen its cause of action. It did not
even present any witness in support of its allegation that it was Shin Yang which
furnished all the details indicated in the bill of lading and that Shin Yang consented
to shoulder the shipment costs. There is also nothing in the records which would
indicate that Shin Yang was an agent of Halla Trading Co. or that it exercised any
act that would bind it as a named consignee. Thus, the CA correctly dismissed the
suit for failure of petitioner to establish its cause against respondent

Whether Shin Yang, who was not an agent of the shipper and who did not
make any demand for the fulfillment of the stipulations of the bill of lading
drawn in its favor, is liable to pay the corresponding freight and handling
charges? - No

Held: While it is true that a bill of lading serves two (2) functions: first, it is a receipt
for the goods shipped; second, it is a contract by which three parties, namely, the
shipper, the carrier and the consignee who undertake specific responsibilities and
assume stipulated obligations.

The bill of lading is oftentimes drawn up by the shipper/consignor and the carrier
without the intervention of the consignee. However, the latter can be bound by the
stipulations of the bill of lading when a) there is a relation of agency between the
shipper or consignor and the consignee or b) when the consignee demands
fulfillment of the stipulation of the bill of lading which was drawn up in its favor.

In sum, a consignee, although not a signatory to the contract of carriage between

the shipper and the carrier, becomes a party to the contract by reason of either a)
the relationship of agency between the consignee and the shipper/ consignor; b)
the unequivocal acceptance of the bill of lading delivered to the consignee, with full
102 Compaia Maritima v. Insurance Company of North America, G.R. No. L-18965 loaned free of charge and was not actually loaded on the S.S. Bowline Knot which
(October 30, 1964) would carry the hemp to Manila and no bill of lading was issued therefor?; YES

Topic: Contract of Carriage of Cargo (Objects/aspects) (2) Was the damage caused to the cargo or the sinking of the barge where it was
loaded due to a fortuitous event, storm or natural disaster that would exempt the
Facts: carrier from liability?; NO

1. October, 1952: Macleod and Company of the Philippines (Macleod) (3) Can respondent insurance company sue the carrier under its insurance contract as
contracted by telephone the services of the Compaia Maritima (CM), a assignee of Macleod in spite of the fact that the liability of the carrier as insurer is not
shipping corporation, for: recognized in this jurisdiction? YES
shipment of 2,645 bales of hemp from the Macleod's Sasa private pier at Davao
City to Manila 1. YES. Macleod and Company contracted by telephone the services of
2. Subsequent transshipment to Boston, Massachusetts, U.S.A. on board the S.S. petitioner to ship the hemp in question from the former's private pier at
Steel Navigator. Sasa, Davao City, to Manila, to be subsequently transhipped to Boston,
3. This oral contract was later on confirmed by a formal and written booking
Massachusettes, U.S.A., which oral contract was later confirmed by a formal
issued by Macleod's branch office in Sasa and handcarried to CM's branch
office in Davao in compliance with which the CM sent to Macleod's private and written booking issued by the shipper's branch office, Davao City, in
wharf LCT Nos. 1023 and 1025 on which the loading of the hemp was virtue of which the carrier sent two of its lighters to undertake the service. It
completed on October 29, 1952. also appears that the patrons of said lighters were employees of the carrier
4. The 2 lighters were manned each by a patron and an assistant patron. with due authority to undertake the transportation and to sign the
5. The patrons of both barges issued the corresponding carrier's receipts and documents that may be necessary therefor so much so that the patron of LCT
that issued by the patron of Barge No. 1025 reads in part: No. 1025 signed the receipt covering the cargo of hemp loaded therein
Received in behalf of S.S. Bowline Knot in good order and condition from
MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment at
The fact that the carrier sent its lighters free of charge to take the hemp from
Manila onto S.S. Steel Navigator.
Macleod's wharf at Sasa preparatory to its loading unto the ship Bowline Knot does
FINAL DESTINATION: Boston.
not in any way impair the contract of carriage already entered into between the
6. Early hours of October 30: LCT No. 1025 sank, resulting in the damage or loss
carrier and the shipper, for that preparatory steps is but a part and parcel of said
of 1,162 bales of hemp loaded therein
contract of carriage.
7. Macleod promptly notified the carrier's main office in Manila and its branch
in Davao advising it of its liability
In other words, here we have a complete contract of carriage the consummation of
8. The damaged hemp was brought to Odell Plantation in Madaum, Davao, for
which has already begun: the shipper delivering the cargo to the carrier, and the latter
cleaning, washing, reconditioning, and redrying.
taking possession thereof by placing it on a lighter manned by its authorized
9. total loss adds up to P60,421.02
employees, under which Macleod became entitled to the privilege secured to him by
10. All abaca shipments of Macleod were insured with the Insurance Company of
law for its safe transportation and delivery, and the carrier to the full payment of its
North America against all losses and damages
freight upon completion of the voyage.
11. Macleod filed a claim for the loss it suffered with the insurance company and
was paid P64,018.55
Where there is a contract to carry goods from one port to another, and they cannot be
12. Subrogation agreement between Macleod and the insurance company
loaded directly on the vessel, and lighters are sent by the vessel to bring the goods to it,
wherein the Macleod assigned its rights over the insured and damaged cargo
the lighters are for the time its substitutes, so that the bill of lading is applicable to the
13. October 28, 1953.: failing to recover from the carrier P60,421.02 (amount
goods as soon as they are placed on the lighters.
supported by receipts), the insurance company instituted the present action
14. CA affirmed RTC: ordering CM to pay the insurance co.
2. The mishap that caused the damage or loss was due, not to force majeure, but
to lack of adequate precaution or measures taken by the carrier to prevent
the loss as may be inferred.
Issues:
The ill-fated barge had cracks on its bottom which admitted sea water in the same
(1) Was there a contract of carriage between the carrier and the shipper even if the
manner as rain entered 'thru tank manholes,' according to the patron of LCT No. 1023
loss occurred when the hemp was loaded on a barge owned by the carrier which was
conclusively showing that the barge was not seaworthy it should be noted that on the
night of the nautical accident there was no storm, flood, or other natural disaster or
calamity. Certainly, winds of 11 miles per hour, although stronger than the average 4.6
miles per hour then prevailing in Davao on October 29, 1952 , cannot be classified as
storm.

3. This is so because since the cargo that was damaged was insured with
respondent company and the latter paid the amount represented by the loss,
it is but fair that it be given the right to recover from the party responsible
for the loss. The instant case, therefore, is not one between the insured and
the insurer, but one between the shipper and the carrier, because the
insurance company merely stepped into the shoes of the shipper. Nor can the
carrier set up as a defense any defect in the insurance policy not only because
it is not a privy to it but also because it cannot avoid its liability to the
shipper under the contract of carriage which binds it to pay any loss that may
be caused to the cargo involved therein. Anyway whatever defect the policy
contained, if any, is deemed to have been waived by the subsequent payment
of Macleod's claim by appellee. Besides, appellant is herein sued in its
capacity as a common carrier, and appellee is suing as the assignee of the
shipper
GR No. 150403, Jan 25, 2007 (Zosa) was simply signed by the supercargo of ALS. This is consistent with the fact that MCCII did
PETITIONER: Cebu Salvage Corporation not contract directly with ALS. While it is true that a bill of lading may serve as the
RESPONDENT: Philippine Home Assurance Corporation contract of carriage between the parties, it cannot prevail over the express provision of
TOPIC: Contract of Carriage of Cargo, Object/Aspects the voyage charter that MCCII and petitioner executed

FACTS: Finally, petitioner asserts that MCCII should be held liable for its own loss since the
PARTIES TO THE CONTRACT: voyage charter stipulated that cargo insurance was for the charterer's account. This
1) Cebu Salvage Corporation (CSC), as carrier deserves scant consideration. This simply meant that the charterer would take care of
2) Maria Cristina Chemicals Industries, Inc. (MCCII), as charterer having the goods insured. It could not exculpate the carrier from liability for the breach of
Respondent: Philippine Home Assurance Corporation (PHAC) is its insurer. its contract of carriage. The law, in fact, prohibits it and condemns it as unjust and
contrary to public policy.
STIPULATION OF THE CONTRACT:
a. a voyage charter To permit a common carrier to escape its responsibility for the goods it agreed to
b. carrier was to load 800 to 1100 metric tons of silica quartz transport (by the expedient of alleging non-ownership of the vessel it employed) would
c. M/T Espiritu Santo radically derogate from the carrier's duty of extraordinary diligence. It would also open
d. From Ayungon, Negros Occidental to Tagoloan, Misamis Oriental the door to collusion between the carrier and the supposed owner and to the possible
e. consignee in Tagoloan: Ferrochrom Phils, Inc. shifting of liability from the carrier to one without any financial capability to answer for
the resulting damages.
Shipment never reached its destination because M/T Espiritu sank. PHAC paid MCCII.
Thereafter, PHAC sued CSC. RTC and CA consistently ruled in favor of PHAC. Thus, this
WHEREFORE, the petition is hereby DENIED.
case.

ISSUE: May a carrier be held liable for the loss of cargo resulting from the sinking of a ship Costs against petitioner.
it does not own?

RULING:
Based on the agreement signed by the parties and the testimony of CSC's operations
manager, it is clear that it was a contract of carriage CSC signed with MCCII. It actively
negotiated and solicited MCCII's account, offered its services to ship the silica quartz and
proposed to utilize the M/T Espiritu Santo in lieu of the M/T Seebees or the M/T Shirley
(as previously agreed upon in the voyage charter) since these vessels had broken down.

Petitioner was the one which contracted with MCCII for the transport of the cargo. It had
control over what vessel it would use. All throughout its dealings with MCCII, it
represented itself as a common carrier. The fact that it did not own the vessel it decided
to use to consummate the contract of carriage did not negate its character and duties as a
common carrier.

The MCCII could not be reasonably expected to inquire about the ownership of
the vessels which petitioner carrier offered to utilize. As a practical matter, it is
very difficult and often impossible for the general public to enforce its rights of
action under a contract of carriage if it should be required to know who the
actual owner of the vessel is. In fact, in this case, the voyage charter itself
denominated petitioner as the "owner/operator" of the vessel.

The bill of lading was merely a receipt issued by ALS (shipowner) to evidence the fact that
the goods had been received for transportation. It was not signed by MCCII, as in fact it
 Designer Baskets, Inc. vs. Air Sea Transport, Inc.
Topic: Contract of Carriage of Cargo - Objects/Aspects
FACTS:
Parties:
DBI: producer of housewares
Ambiante: ordered items from DBI
ACCLI: forwarding agent to deliver item from PH to US
ASTI: ACCLIs principal
---
DBI is engaged in the production of housewares and handicraft items for export. Ambiente,
a foreign-based company, ordered from DBI cartons of assorted wooden items (the
"shipment", in this case).
AMBIENTE designated ACCLI as the forwarding agent that will ship out its order from the
Philippines to the United States (US). ACCLI is a domestic corporation acting as agent of
ASTI, a US-based corporation engaged in carrier transport business, in the Philippines.
DBI delivered the shipment to ACCLI for sea transport from Manila and delivery to
AMBIENTE at Beverly Hills, California. To acknowledge receipt and to serve as the
contract of sea carriage, ACCLI issued to DBI triplicate copies of ASTI Bill of Lading No.
AC/MLLA601317. DBI retained possession of the originals of the bills of lading pending
the payment of the goods by AMBIENTE.
January 23, 1996: AMBIENTE and ASTI entered into an Indemnity Agreement. Under the
Agreement, AMBIENTE obligated ASTI to deliver the shipment to it or to its order
without the surrender of the relevant bill(s) of lading due to the non-arrival or loss
thereof. In exchange, AMBIENTE undertook to indemnify and hold ASTI and its agent
free from any liability as a result of the release of the shipment.13 Thereafter, ASTI
released the shipment to AMBIENTE without the knowledge of DBI, and without it
receiving payment for the total cost of the shipment.
DBI then made several demands to AMBIENTE for the payment of the shipment, but to no
avail. Thus, on October 7, 1996, DBI filed the Original Complaint against ASTI, ACCLI
and ACCLIs incorporators-stockholders for the payment of the value of the shipment.
ISSUE: WON ASTI and ACCLI may be held solidarily liable to DBI for the value of the
shipment.
HELD: ASTI and ACCLI are not liable to DBI. A BILL OF LADING is defined as a
written acknowledgment of the receipt of goods and an agree ment to transport and to
deliver them at a specified place to a person named or on his order. It may also be defined
as an instrument in writing, signed by a carrier or his agent, describing the freight so as to
identify it, stating the name of the consignor, the terms of the contract of carriage, and
agreeing or directing that the freight be delivered to bearer, to order or to a specified person
at a specified place.
Under Article 350 of the Code of Commerce, the shipper as well as the carrier of the
merchandise or goods may mutually demand that a bill of lading be made. A bill of lading,
when issued by the carrier to the shipper, is the legal evidence of the contract of carriage
between the former and the latter. It defines the rights and liabilities of the parties in
reference to the contract of carriage. The stipulations in the bill of lading are valid and
binding unless they are contrary to law, morals, customs, public order or public policy.
A carrier is allowed by law to release the goods to the consignee even without the latters
surrender of the bill of lading. The third paragraph of Article 353 of the Code of Commerce
is enlightening: Article 353. The legal evidence of the contract between the shipper and the
carrier shall be the bills of lading, by the contents of which the disputes which may arise
regarding their execution and performance shall be decided, no exceptions being admissible
other than those of falsity and material error in the drafting. After the contract has been
complied with, the bill of lading which the carrier has issued shall be returned to him, and
by virtue of the exchange of this title with the thing transported, the respective obligations
and actions shall be considered cancelled, unless in the same act the claim which the parties
may wish to reserve be reduced to writing, with the exception of that provided for in Article
366. In case the consignee, upon receiving the goods, cannot return the bill of lading
subscribed by the carrier, because of its loss or any other cause, he must give the latter a
RECEIPT FOR THE GOODS DELIVERED, this receipt producing the same effects as
the return of the bill of lading.
The general rule is that upon receipt of the goods, the consignee surrenders the bill of lading
to the carrier and their respective obligations are considered canceled. The law, however,
provides 2 exceptions where the goods may be released without the surrender of the bill of
lading because the consignee can no longer return it. These exceptions are: (1) when the bill
of lading gets lost or (2) for other cause. In either case, the consignee must issue a receipt to
the carrier upon the release of the goods. Such receipt shall produce the same effect as the
surrender of the bill of lading.
We have already ruled that the non-surrender of the original bill of lading does not violate
the carriers duty of extraordinary diligence over the goods. In Republic v. Lorenzo
Shipping Corporation, 450 SCRA 550 (2005), we found that the carrier exercised
extraordinary diligence when it released the shipment to the consignee, not upon the
surrender of the original bill of lading, but upon signing the delivery receipts and surrender
of the certified true copies of the bills of lading. Thus, we held that the surrender of the
original bill of lading is not a condition precedent for a common carrier to be discharged
of its contractual obligation.
Clearly, law and jurisprudence is settled that the surrender of the original bill of lading is
not absolute; that in case of loss or any other cause, a common carrier may release the goods
to the consignee even without it. Here, Ambiente could not produce the bill of lading
covering the shipment not because it was lost, but for another cause: the bill of lading was
retained by DBI pending Ambientes full payment of the shipment. Ambiente and ASTI
then entered into an Indemnity Agreement, wherein the former asked the latter to release the
shipment even without the surrender of the bill of lading. The execution of this Agreement,
and the undisputed fact that the shipment was released to Ambiente pursuant to it, to our
mind, perates as a receipt in substantial compliance with the last paragraph of Article 353 of
the Code of Commerce.
IRON BULK SHIPPING PHILIPPINES CO. v. REMINGTON INDUSTRIAL
SALES CORP

FACTS
Remington Industrial ordered 194 hot rolled steel sheets from Wangs. Wangs
forwarded the order to its supplier Burwill. The sheets were loaded on MV Indian
Reliance in Poland and shipped to the Philippines under a Bill of Lading. Iron
Bulk Shipping represented the charterer in the Philippines.
Upon discharge of the cargo, the sheets were found to be wet and with rust
extending to 50 to 60% of each sheet. Remington filed an action for collection.
Both lower and appellate courts ruled in favor of Remington.
The Iron Bulks defense was that the sheets were already rusty when they were
loaded on the ship. However, the Bill of Lading it issued was found to be a clean
bill of lading (i.e. it does not indicate any defect on the goods covered by it). The
sheets were found to be in a fair, usually accepted condition.
The Wangs defense was that Iron Bulk did not exercise extraordinary diligence
in shipping the sheets.
The appellate court dismissed the case against Wangs and now, only Iron Bulk
raised the case on certiorari.

ISSUE:
1. Whether the CA erred in relying on the pro forma Bill of Lading? No.
2. Whether Iron Bulk exercised extraordinary diligence? No.

HELD
No.
A bill of lading operates as both a receipt and contract, as the receipt for the goods
shipped and Contract to transport and deliver such goods. Since Iron Bulk shipping failed to
annotate in the bill of lading the alleged damaged condition of the cargo when it was
loaded, they are bound by the description contained therein and they are now estopped from
denying the contents of the bill of lading.

Even if the cargo was already in a damaged condition at the time it was accepted
for transportation, the carrier is not relieved from its responsibility to exercise due care in
handling the merchandise and in employing the necessary precautions to prevent the cargo
from further deteriorating. Extraordinary diligence requires the common carrier to know
and to follow the required precaution for avoiding damage to, or destruction of the goods
entrusted to it for safe carriage and delivery. The common carrier must exercise due
diligence to forestall or lessen the loss by applying additional safety measures to make sure
that the cargo is protected from corrosion.

Except in the cases mentioned under Art. 1734, 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.
ACE NAVIGATION CO., INC., petitioner, vs. FGU INSURANCE CORPORATION and
PIONEER INSURANCE AND SURETY CORPORATION, respondents.
G.R. No. 171591. June 25, 2012
TOPIC: Commencement / Termination
FACTS:
1. (CARDIA) shipped on board the vessel M/V Pakarti Tiga at Shanghai Port China,
8,260 metric tons or 165,200 bags of Grey Portland Cement to be discharged at the
Port of Manila and delivered to its consignee, Heindrich Trading Corp.
(HEINDRICH).
The subject vessel is owned by P.T. Pakarti Tata (PAKARTI) which it
chartered to Shinwa Kaiun Kaisha Ltd. (SHINWA).
2. The subject shipment was insured with respondents, FGU Insurance Corp. (FGU)
and Pioneer Insurance and Surety Corp. (PIONEER), against all risks under Marine
Open Policy No. 062890275 for the amount of P18,048,421.00.
3. SHINWA entered into a charter party contract with Sky International, Inc. (SKY), an
agent of Kee Yeh Maritime Co. (KEE YEH), which further chartered it to Regency
Express Lines S.A. (REGENCY). Thus, it was REGENCY that directly dealt with
consignee HEINDRICH, and accordingly, issued Clean Bill of Lading No. SM-1.
4. The vessel arrived at the Port of Manila and the shipment was discharged.
5. Upon inspection of HEINDRICH and petitioner Ace Navigation Co., Inc. (ACENAV),
agent of CARDIA, it was found that out of the 165,200 bags of cement, 43,905 bags
were in bad order and condition.
6. Unable to collect the sustained damages in the amount of P1,423,454.60 from the
shipper, CARDIA, and the charterer, REGENCY, the respondents, as co-insurers of
the cargo, each paid the consignee, HEINDRICH, the amounts of P427,036.40 and
P284,690.94, respectively, and consequently became subrogated to all the rights
and causes of action accruing to HEINDRICH.
7. Respondents filed a complaint for damages against the following defendants:
REGENCY EXPRESS LINES, S.A./ UNKNOWN CHARTERER OF THE VESSEL
PAKARTI TIGA/ UNKNOWN OWNER and/or DEMIFE (sic) CHARTERER OF THE
VESSEL PAKARTI TIGA, SKY INTERNATIONAL, INC. and/or ACE NAVIGATION
COMPANY, INC.
Allegations:
PAKARTI and SHINWA alleged that the suits against them cannot prosper because
they were not named as parties in the bill of lading
ACENAV claimed that, not being privy to the bill of lading, it was not a real
party-in-interest from whom the respondents can demand compensation. It further
denied being the local ship agent of the vessel or REGENCY and claimed to be the
agent of the shipper, CARDIA
SKY denied having acted as agent of the charterer, KEE YEH, which chartered the
vessel from SHINWA, which originally chartered the vessel from PAKARTI. SKY
also averred that it cannot be sued as an agent without impleading its alleged
principal, KEE YEH.
8. RTC dismissed the complaint
9. CA found PAKARTI, SHINWA, KEE YEH and its agent, SKY, solidarity liable for
70% of the respondents claim, with the remaining 30% to be shouldered solidarity
by CARDIA and its agent, ACENAV
Only ACENAV filed a petition (Others withdrew their petition).
ISSUE: whether or not it may be held liable to the respondents for 30% of their claim.
HELD: NO.
The Court finds that the CA erred in ordering ACENAV jointly and severally liable with
CARDIA to pay 30% of the respondents claim.
RATIO:
A bill of lading is defined as an instrument in writing, signed by a carrier or his agent,
describing the freight so as to identify it, stating the name of the consignor, the terms of the
contract for carriage, and agreeing or directing that the freight to be delivered to the order or
assigns of a specified person at a specified place. It operates both as a receipt and as a
contract.
As a receipt, it recites the date and place of shipment, describes the goods as to quantity,
weight, dimensions, identification marks and condition, quality, and value.
As a contract, it names the contracting parties, which include the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and obligations assumed by
the parties. As such, it shall only be binding upon the parties who make them, their assigns
and heirs.
In this case, the original parties to the bill of lading are: (a) the shipper CARDIA; (b) the carrier
PAKARTI; and (c) the consignee HEINDRICH. However, by virtue of their relationship with
PAKARTI under separate charter arrangements, SHINWA, KEE YEH and its agent SKY
likewise became parties to the bill of lading. In the same vein, ACENAV, as admitted agent
of CARDIA, also became a party to the said contract of carriage.
Records show that the obligation of ACENAV was limited to informing the consignee
HEINDRICH of the arrival of the vessel in order for the latter to immediately take possession
of the goods. No evidence was offered to establish that ACENAV had a hand in the
provisioning of the vessel or that it represented the carrier, its charterers, or the vessel at any
time during the unloading of the goods. Clearly, ACENAVs participation was simply to
assume responsibility over the cargo when they were unloaded from the vessel. ACENAV is
NOT a ship agent1; only a mere agent of CARDIA.
Also, Article 1897 of the same Code provides that an agent is not personally liable to the party
with whom he contracts, unless he expressly binds himself or exceeds the limits of his
authority without giving such party sufficient notice of his powers.
1Ship agent is understood the person entrusted with the provisioning of a vessel,
or who represents her in the port in which she may be found.
Asian Terminals Inc vs. Philam Insurance ARGUMENTS:
G.R. No. 181163. July 24, 2013 ATI It shifts the blame to Westwind, whom it
charges with negligence in the supervision
FACTS: of the stevedores who unloaded the
1. Nichimen Corporation shipped to Universal Motors Corporation (Universal cargoes. ATI admits that the damage could
Motors) 219 packages containing 120 units of brand new Nissan Pickup Truck have been averted had Westwind observed
Double Cab 4x2 model, without engine, tires and batteries, on board the vessel extraordinary diligence in handling the
S/S "Calayan Iris" from Japan to Manila. The shipment, which had a declared goods.
value of US$81,368 or P29,400,000, was insured with Philam against all risks
under Marine Policy No. 708-8006717-4. ATI maintains that it was not properly
2. The carrying vessel arrived at the port of Manila on April 20, 1995, and when the notified of the actual value of the cargoes
shipment was unloaded by the staff of ATI, it was found that the package marked prior to their discharge from the vessel.
as 03-245-42K/1 was in bad order. WESTWIND Westwind argues that the evidence shows
3. The shipment was withdrawn by R.F. Revilla Customs Brokerage, Inc., the that ATI was already in actual custody of
authorized broker of Universal Motors, and delivered to the latter's warehouse said case when the Frame Axle Sub without
in Mandaluyong City. It was found that one Frame Axle Sub without LWR was Lower inside it was misaligned from being
deeply dented on the buffle plate while six Frame Assembly with Bush were compressed by the tight cable used to
deformed and misaligned. Owing to the extent of the damage to said cargoes, unload it. Accordingly, Westwind ceased to
Universal Motors declared them a total loss. have responsibility over the cargoes as
4. Universal Motors filed a formal claim for damages in the amount of P643,963.84 provided in paragraph 4 of the Bill of Lading
against Westwind, ATI and R.F. Revilla Customs Brokerage, Inc. When Universal which provides that the responsibility of
Motors' demands remained unheeded, it sought reparation from and was the carrier shall cease when the goods are
compensated in the sum of P633,957.15 by Philam. taken into the custody of the arrastre.
5. Philam, as subrogee of Universal Motors, filed a Complaint for damages against
Westwind, ATI and R.F. Revilla Customs Brokerage, Inc.
6. RTC: judgment in favor of Philam and ordered Westwind and ATI to pay ISSUE: Who between ATI and Westwind is liable for the damage suffered by the subject
Philam, jointly and severally, the sum of P633,957.15 with interest at the rate cargo and to what extent.
of 12% per annum, P158,989.28 by way of attorney's fees and expenses of
litigation. RULING:
a. There was sufficient evidence to establish the respective participation Court holds that petitioner Philam has adequately established the basis of its claim against
of Westwind and ATI in the discharge of and consequent damage to petitioners ATI and Westwind.
the shipment. It found that the subject cargoes were compressed while
being hoisted using a cable that was too short and taut. The trial court The damage to said container was noted in the Bad Order Cargo Receipt dated April 20,
observed that while the staff of ATI undertook the physical unloading 1995 and Turn Over Survey of Bad Order Cargoes dated April 21, 1995. The Turn Over
of the cargoes from the carrying vessel, Westwind's duty officer Survey of Bad Order Cargoes indicates that said steel case was not opened at the time of
exercised full supervision and control throughout the process. It held survey and was accepted by the arrastre in good order. Meanwhile, the Bad Order Cargo
Westwind vicariously liable for failing to prove that it exercised Receipt bore a notation "B.O. not yet t/over to ATI." On the basis of these documents,
extraordinary diligence in the supervision of the ATI stevedores who petitioner ATI claims, and the Court agrees, that the contents of Steel Case No. 03- 245-
unloaded the cargoes from the vessel. However, the court absolved 42K/1 were damaged while in the custody of petitioner Westwind.
R.F. Revilla Customs Brokerage, Inc. from liability in light of its finding
that the cargoes had been damaged before delivery to the consignee. Court finds no reason to deviate from the finding that petitioners Westwind and ATI are
7. CA affirmed with modification, directed Westwind and ATI to pay Philam, concurrently accountable for the damage to the content of Steel Case No. 03-245-42K/1.
jointly and severally, the amount of P190,684.48 (for only 1 piece of Frame
Assembly which was damaged instead of 6 as ruled in the RTC). CA also pointed Section 2 of the COGSA provides that under every contract of carriage of goods by the sea,
out that Westwind's duty to observe extraordinary diligence in the care of the the carrier in relation to the loading, handling, stowage, goods by the sea, the carrier in
cargoes subsisted during unloading thereof by ATI's personnel since the former relation to the loading, handling, stowage, carriage, custody, care and discharge of such
exercised full control and supervision over the discharging operation. 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 carrier's
responsibilities are to properly load, handle, stow, carry, keep, care for and discharge the
goods carried.

It is settled in maritime law jurisprudence that cargoes while being unloaded generally
remain under the custody of the carrier. The Damage Survey Report of the survey
conducted by Phil. Navtech Services, Inc. from April 20-21, 1995 reveals that Case No. 03-
245-42K/1 was damaged by ATI stevedores due to overtightening of a cable sling hold
during discharge from the vessel's hatch to the pier. Since the damage to the cargo was
incurred during the discharge of the shipment and while under the supervision of the
carrier, the latter is liable for the damage caused to the cargo.

This is not to say, however, that petitioner ATI is without liability for the damaged cargo.
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.

While it is true that an arrastre operator and a carrier may not be held solidarily liable at
all times, the facts of these cases show that apart from ATI's stevedores being directly in
charge of the physical unloading of the cargo, its foreman picked the cable sling that was
used to hoist the packages for transfer to the dock. Moreover, the fact that 218 of the 219
packages were unloaded with the same sling unharmed is telling of the inadequate care
with which ATI's stevedore handled and discharged Case No. 03-245-42K/1.

With respect to petitioners ATI and Westwind's liability, we agree with the CA that the
same should be confined to the value of the one piece Frame Axle Sub without Lower.

NOTE: On the issue of Prescription

Paragraph (6), Section 3 of the COGSA clearly states that failure to comply with the notice
requirement shall not affect or prejudice the right of the shipper to bring suit within one
year after delivery of the goods. Petitioner Philam, as subrogee of Universal Motors, filed
the Complaint for damages on January 18, 1996, just eight months after all the packages
were delivered to its possession on May 17, 1995. Evidently, petitioner Philam's action
against petitioners Westwind and ATI was seasonably filed.

Paragraph (6), Section 3 of the COGSA:

xxx
In any event the carrier and the ship shall be discharged from all liability in respect of loss
or damage unless suit is brought within one year after delivery of the goods or the date
when the goods should have been delivered: Provided, That if a notice of loss or damage,
either apparent or concealed, is not given as provided for in this section, that fact shall not
affect or prejudice the right of the shipper to bring suit within one year after the delivery of
the goods or the date when the goods should have been delivered.
PHILIPPINES FIRST INSURANCE CO., INC., Petitioner, v. WALLEM
PHILS. SHIPPING, INC., UNKNOWN OWNER AND/OR UNKNOWN
CHARTERER OF THE VESSEL M/S "OFFSHORE MASTER" AND
"SHANGHAI FAREAST SHIP BUSINESS COMPANY," Respondents.
Topic: Contract of Carriage of Cargo Commencement/Termination
FACTS:
Anhui Chemicals Corp loaded on board M/S Offshore Master a shipment
consisting of 10,000 bags of sodium sulphate anhydrous 99 PCT Min. (Shipment)
complete and in good order for transportation at the port of MNL for LG Atkimson
(consignee) covered by a Bill of Lading which stated the gross weight to be
500,200kg.
The shipment arrived at MNL on board the vessel M/S Offshore Master. It was
disclosed during the discharge of the shipment from the carrier that 2,426
poly bags were in bad order and condition.
Asia Star Freight Services undertook the delivery of the subject shipment from
the pier to the consignees warehouse in QC where it was found that bags had
been discharged in damaged and bad order condition.
Consignee filed a formal claim with Wallem for the value of the damaged
shipment, to no avail. Since shipment was insured w/ petitioner, the consignee
filed a formal claim. -> was paid almost 400K
Petitioner, in the exercise of its right of subrogation, sent a demand letter to
Wallem for recovery of almost 400K.
RTC found that the losses and damage to the cargo were caused by the
mishandling of the arrastre operator. Specifically, that the torn cargo bags
resulted from the use of steel hooks/spikes in piling the cargo bags to the pallet
board and in pushing the bags by the stevedores of the arrastre operator to the
tug boats then to the ports.
ordered respondents to pay. Shipping company and arrastre operator solidarily
liable since both the arrastre operator and the carrier are charged with and
obligated to deliver the goods in good order condition to the consignee. It also
ruled that the ship functioned as a common carrier and was obliged to observe
the degree of care required of a common carrier in handling cargoes. Further, it
held that a notice of loss or damage in writing is not required in this case because
said goods already underwent a joint inspection or survey at the time of receipt
thereof by the consignee, which dispensed with the notice requirement.
CA reversed. No solidary liability between the carrier and the arrastre operator
because it was clearly established by the court a quo that the damage and losses
of the shipment were attributed to the mishandling by the arrastre operator in
the discharge of the shipment.
With these documents, petitioner insists that the shipment incurred damage or losses while
still in the care and responsibility of Wallem and before it was turned over and delivered to
the arrastre operator.
While it is established that damage or losses were incurred by the shipment during the
unloading, it is disputed who should be liable for the damage incurred at that point of
transport. To address this issue, the pertinent laws and jurisprudence are examined.
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.
Bill of Lading bet Shanghai Fareast Business Co and consignee states that:
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 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.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 22 June
2004 and its Resolution dated 11 October 2004 are REVERSED and SET ASIDE. Wallem is
ordered to pay petitioner the sum of P397,879.69

ISSUE
W/N carrier should be held liable for the cost of the damaged shipment? YES.

HELD

It is undisputed that the shipment was damaged prior to its receipt by the insured
consignee. The damage to the shipment was documented by the turn-over survey and
Request for Bad Order Survey. The turn-over survey, in particular, expressly stipulates that
2,426 bags of the shipment were received by the arrastre operator in damaged condition.

109) G.R. No. 95536 March 23, 1992
ANICETO G. SALUDO, JR., MARIA SALVACION SALUDO, LEOPOLDO G.
SALUDO and SATURNINO G. SALUDO, petitioners,
vs.
HON. COURT OF APPEALS, TRANS WORLD AIRLINES, INC., and PHILIPPINE
AIRLINES, INC., respondents.
Topic: Commencement/Termination
Facts:
1. After the death of plaintiffs' mother, Crispina Galdo Saludo, in Chicago Illinois, on
October 23, 1976, Pomierski and Son Funeral Home of Chicago, made the
necessary preparations and arrangements for the shipment of the remains from
Chicago to the Philippines.
Oct 25: secured a permit for the disposition of dead human body
Oct. 26: Philippine Vice Consul sealed the shipping case containing a
hermetically sealed casket that is airtight and waterproof wherein was
contained the remains.
Same date, Pomierski brought the remains to C.M.A.S. (Continental
Mortuary Air Services) at the airport (Chicago) which made the
necessary arrangements such as flights, transfers, etc.
C.M.A.S. booked the shipment with PAL thru the carrier's agent
Air Care International, with Pomierski F.H. as the shipper and
Mario (Maria) Saludo as the consignee. PAL Airway Bill No. 079-
01180454 Ordinary was issued wherein the requested routing
was from Chicago to San Francisco on board TWA Flight 131 of
October 27, 1976 and from San Francisco to Manila on board
PAL Flight No. 107 of the same date, and from Manila to Cebu
on board PAL Flight 149 of October 29, 1976 (NOTE: 3 flights
with PAL!)
2. In the meantime, plaintiffs Maria Salvacion Saludo and Saturnino Saludo, thru a
travel agent, were booked with United Airlines from Chicago to California, and
with PAL from California to Manila.
3. Director told her that the remains were booked with TWA (Trans World Airlines)
flight to California. This upset her, and she and her brother had to change
reservations from UA to the TWA flight after she confirmed by phone that her
mother's remains should be on that TWA flight. She was told there was no body
on that flight. Reluctantly, they took the TWA flight upon assurance of her cousin.
4. Upon arrival at San Francisco at about 5:00 p.m., she went to the TWA counter
there to inquire about her mother's remains. She was told they did not know
anything about it.
5. C.M.A.S informed him that the remains were on a plane to Mexico City, that
there were two bodies at the terminal, and somehow they were switched; he
relayed this information to Miss Saludo in California; later C.M.A.S. called and told
him they were sending the remains back to California via Texas
6. It-turned out that TWA had carried a shipment under PAL Airway Bill No. 079-
ORD-01180454 on TWA Flight 603 of October 27, 1976, a flight earlier than TWA
Flight 131 of the same date. TWA delivered or transferred the said shipment said to
contain human remains to PAL at 1400H or 2:00 p.m. of the same date, October
27, 1976 (Bee Exh. 1- TWA). "Due to a switch(ing) in Chicago", this shipment
was withdrawn from PAL by CMAS at 1805H (or 6:05 p.m.) of the same date,
October 27 (Exh. 3-PAL, see Exh. 3-a-PAL).
7. The following day October 28, 1976, the shipment or remains of Crispina Saludo
arrived (in) San Francisco from Mexico on board American Airlines. This shipment
was transferred to or received by PAL at 1945H or 7:45 p.m. (Exh. 2-PAL, Exh. 2-a-
PAL). This casket bearing the remains of Crispina Saludo, which was mistakenly
sent to Mexico and was opened (there), was resealed by Crispin F. Patagas for
shipment to the Philippines (See Exh. B-1). The shipment was immediately loaded
on PAL flight for Manila that same evening and arrived (in) Manila on October 30,
1976, a day after its expected arrival on October 29, 1976.
8. PAL denied liability. Thus, a damage suit was filed by petitioners before the then
CFI.
Issues: WON (1) the delay in the delivery of the casketed remains of petitioners'
mother was due to the fault of respondent airline companies, (2) the one-day delay
in the delivery of the same constitutes contractual breach as would entitle
petitioners to damages
Held:
1. NO. NOT LIABLE.
[In other words,] on October 26, 1976 the cargo containing the casketed remains of
Crispina Saludo was booked for PAL Flight Number PR-107 leaving San Francisco
for Manila on October 27, 1976, PAL Airway Bill No. 079-01180454 was issued,
not as evidence of receipt of delivery of the cargo on October 26, 1976, but
merely as a confirmation of the booking thus made for the San Francisco-Manila
flight scheduled on October 27, 1976. Actually, it was not until October 28, 1976
that PAL received physical delivery of the body at San Francisco, as duly
evidenced by the Interline Freight Transfer Manifest of the American Airline Freight
System and signed for by Virgilio Rosales at 1945H, or 7:45 P.M. on said date.
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. 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, 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. And, 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.
Hence, while we agree with petitioners that the 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.
The facts in the case at bar belie the averment that there was delivery of the cargo
to the carrier on October 26, 1976. Rather, as earlier explained, the body intended
to be shipped as agreed upon was really placed in the possession and control
of PAL on October 28, 1976 and it was from that date that private
respondents became responsible for the agreed cargo under their undertakings
in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets
prior thereto which was not caused by them, and subsequent events caused
thereby, private respondents cannot be held liable.
------------------------------------------
***additional info:
when the cargo was received from C.M.A.S. at the Chicago airport terminal for
shipment, which was supposed to contain the remains of Crispina Saludo, Air Care
International and/or TWA, had no way of determining its actual contents, since the
casket was hermetically sealed by the Philippine Vice-Consul in Chicago and in an
air pouch of C.M.A.S., to the effect that 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.
Thus, under said circumstances, no fault and/or negligence can be attributed to
PAL (even if Air Care International should be considered as an agent of PAL)
and/or TWA, the entire fault or negligence being exclusively with C.M.A.S.
It was not (to) TWA, but to C.M.A.S. that the Pomierski & Son Funeral Home
delivered the casket containing the remains of Crispina Saludo. TWA would have
no knowledge therefore that the remains of Crispina Saludo were not the ones
inside the casket that was being presented to it for shipment.
private respondents had no authority to unseal and open the same nor did
they have any reason or justification to resort thereto.
It is the right of the carrier to require good faith on the part of those persons who
deliver goods to be carried, or enter into contracts with it, and inasmuch as the
freight may depend on the value of the article to be carried, the carrier ordinarily
has the right to inquire as to its value. Ordinarily, too, it is the duty of the carrier to
make inquiry as to the general nature of the articles shipped and of their value
before it consents to carry them; and its failure to do so cannot defeat the shipper's
right to recovery of the full value of the package if lost, in the absence of showing of
fraud or deceit on the part of the shipper. In the absence of more definite
information, the carrier has a the right to accept shipper's marks as to the contents
of the package offered for transportation and is not bound to inquire particularly
about them in order to take advantage of a false classification and where a shipper
expressly represents the contents of a package to be of a designated character, it
is not the duty of the carrier to ask for a repetition of the statement nor disbelieve it
and open the box and see for itself. However, where a common carrier has
reasonable ground to suspect that the offered goods are of a dangerous or illegal
character, the carrier has the right to know the character of such goods and to insist
on an inspection, if reasonable and practical under the circumstances, as a
condition of receiving and transporting such goods.
In the case at bar, private respondents had no reason whatsoever to doubt the truth
of the shipper's representations. The airway bill expressly providing that "carrier
certifies goods received below were received for carriage," and that the cargo
contained "casketed human remains of Crispina Saludo," was issued on the basis
of such representations. The reliance thereon by private respondents was
reasonable and, for so doing, they cannot be said to have acted negligently.
Likewise, no evidence was adduced to suggest even an iota of suspicion that the
cargo presented for transportation was anything other than what it was declared to
be, as would require more than routine inspection or call for the carrier to insist that
the same be opened for scrutiny of its contents per declaration.
the present controversy was not due to the fault or negligence of private
respondents. Rather, the facts of the case would point to CMAS as the culprit.
=================================
2. NO DAMAGES.
A common carrier undertaking to transport property has the implicit duty to carry
and deliver it within reasonable time, absent any particular stipulation regarding
time of delivery, and to guard against delay. In case of any unreasonable delay, the
carrier shall be liable for damages immediately and proximately resulting from such
neglect of duty. As found by the trial court, the delay in the delivery of the remains
of Crispina Saludo, undeniable and regrettable as it was, cannot be attributed to
the fault, negligence or malice of private respondents,a conclusion concurred
in by respondent court and which we are not inclined to disturb.
WHEREFORE, with the modification that an award of P40,000.00 as and by way of
nominal damages is hereby granted in favor of petitioners to be paid by respondent
Trans World Airlines, the appealed decision is AFFIRMED in all other respects.
LU DO & LU YM CORP. v. BINAMIRA carrier considering that the goods have still to go through the inspection of the customs
G.R. No. L-9840 April 22, 1957 J. Bautista Angelo Topic: Termination of Contract of authorities before they are actually turned over to the consignee.
Carriage of Cargo In the case, the bill of lading covering the subject shipment, provides that both the
Facts: carrier and the consignee have stipulated to limit the responsibility of the carrier for the loss
Delta Photo Supply Co. shipped on board at New York, 6 cases of films and/or or damage that may be caused to the goods before they are actually delivered. It is therefore
photographic supplies consigned to the order of respondent I. V. Binamira. This clear that the carrier does not assume liability for any loss or damage to the goods once they
shipment was accompanied by Bill of Lading No. 29, which provides that the have been "taken into the custody of customs or other authorities", or when they have been
responsibility of the carrier is limited only to losses that may occur while the cargo is delivered at ship's tackle. These stipulations have been adopted to mitigate the responsibility
still under its custody and control. of the carrier. Therefore, the carrier is not responsible for the loss in question, it appearing
Upon the ships arrival at the port Cebu, the shipment was discharged by petitioner Lu that the same happened after the shipment had been delivered to the customs authorities.
Do & Lu Ym Corp., as agent of the shipper. It hired Cebu Stevedoring Company, Inc.
to unload its cargo. Dispositive: CA decision reversed.
Upon unloading, the shipment was checked by Cebu Stevedoring, which found it in
good order and condition. Then, the shipment was placed in the custody and
possession of Visayan Cebu Terminal Co., Inc. (arrastre operator appointed by the
Bureau of Customs), which also found the shipment to be in good order and condition.
3 days thereafter, the shipment was delivered to Binamira, who discovered signs of
pilferage. The hired marine surveyors found that some films and photographic supplies
were missing valued at P324.63. Hence, Binamira filed an action against Lu Do & Lu
Ym Corp. to recover the value of the missing shipment and damages.
CFI Cebu ordered Lu Do & Lu Ym to pay Binamira.
CA affirmed and held that, in case of loss, destruction, or deterioration of merchandise,
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.
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; and delivery to the customs authorities is not the delivery contemplated by law
because, in such a case, the goods are 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 by Lu Do & Lu Ym as its
agent, has not been successfully rebutted. Hence, appeal to SC.
Issue and Held:
Whether the carrier is responsible for the loss considering that the same occurred after
the shipment was discharged from the ship and placed in the possession and custody of
the customs authorities. NO.
As a rule, a common carrier is responsible for the loss, destruction or deterioration
of the goods it assumes to carry from one place to another unless the same is due to any of
the causes in Art. 1734, NCC; and that, if the goods are lost, destroyed or deteriorated, for
causes other than those mentioned, the common carrier is presumed to have been at fault or
to have acted negligently, unless it proves that it has observed extraordinary diligence in
their care (Art.1735). This extraordinary liability lasts from the time the goods are placed in
the possession of the carrier until they are delivered to the consignee, or "to the person who
has the right to receive them" (Art. 1736), but these provisions 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 delivery of the cargo to the customs authorities is not delivery to the
consignee, or "to the person who has a right to receive them", contemplated in Arti. 1736,
because in such case the goods are still in the hands of the Government and the owner
cannot exercise dominion over them, the parties may agree to limit the liability of the
111 SAMAR MINING COMPANY INC. VS. NORDEUTSCHER LLOYD AND C.F.
SHARP & COMPANY, INC.
G.R. No. L-28673 | October 23, 1984| Cuevas, J.
EMERGENCY RECIT:
Samar Mining Company imported one crate of Optima welded wedge wire sieves
through Nordeutscher Lloyd. Upon the arrival of the vessel in manila, goods were
unloaded and delivered to the warehouse of AMCYL but were never received by
Samar Mining. Samar Mining sent letter of complaint to the defendants and filed for
a claim on the amount of goods. RTC ruled in favor of Samar Mining. Defendant
appealed saying their liability over the cargo already ceased. SC held that
defendants are not liable for the cargoes since they already did their job diligently.
FACTS:
Samar Mining Company, Inc. (petitioner) imported one crate of Optima
welded wedge wire sieves through the M/S Schwabenstein vessel owned
by Nordeutscher Lloyd (respondent), covered by Bill of Lading No. 18
issued to the petitioner, as consignee.
o Upon arrival of the vessel in Manila, the said goods were
unloaded and delivered in good order and condition to the
warehouse of AMCYL.
o Goods were however never delivered nor received by petitioner
at the port of Davao.
Letters of complaint were sent to defendants but they failed to respond.
Petitioner filed a claim for P1,691.93 against the respondent but was left
unheeded.
Respondents filed a third party complaint against AMCYL.
RTC: Ordered the defendants to pay petitioner the amount claimed plus
attorneys fees and costs. Defendants may also recoup whatever they
may pay Samar Mining by enforcing the judgment against third party
defendant AMCYL.
Only the respondents appealed.
Bill of Lading No. 18 page 2 | The crate was received by the carrier
Nordeutscher Lloyd at the port of loading in Bremen, Germany, while the
freight had been prepaid up to the port of destination or the port of
discharge of good, which is Davao. The carrier undertook to transport the
goods in its vessel only up to the port of discharge from Manila. The goods
were then to be shipped to the port of destination.
Defendants contention: Based on the Bill of Lading, it can be seen that
they have discharged the goods in full and in good condition to the
custody of AMCYL at the port of discharge from ship Manila, and
therefore, pursuant to the stipulations in paragraph 3 of Sec. 12 and Sec.
113 of the bill of lading, their liability over the cargo had ceased.
2 The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring
before the goods enter ship's tackle to be loaded or after the goods leave ship's tackle to be
discharged, transshipped or forwarded ... (Emphasis supplied)
3 Whenever the carrier or m aster may deem it advisable or in any case where the goods are placed
at carrier's disposal at or consigned to a point where the ship does not expect to load or discharge,
the carrier or master may, without notice, forward the whole or any part of the goods before or after
ISSUE/S:
1. Whether or not the stipulations in the bill of lading which exempts the
carrier from liability for loss or damage to the goods when the same are
not in its actual custody valid. YES.
HELD:
We hold, that by the authority of the above pronouncements, and in conformity with
the pertinent provisions of the New Civil Code, Section 11 of Bill of Lading No. 18
and the third paragraph of Section 1 thereof are valid stipulations between
the parties insofar as they exempt the carrier from liability for loss or damage
to the goods while the same are not in the latter's actual custody.
The liability of the common carrier for the loss, destruction or deterioration of goods
transported from a foreign country to the Philippines is governed primarily by the
New Civil Code. In all matters not regulated by said Code, the rights and
obligations of common carriers shall be governed by the Code of Commerce and
by special laws. A careful perusal of the provisions of the New Civil Code on
common carriers (Section 4, Title VIII, Book IV) directs our attention to Article 1736
thereof, which reads:
Article 1736. 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, without prejudice to the provisions of article 1738.
Article 1738 referred to in the foregoing provision runs thus:
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 the arrival of the goods
and has had reasonable opportunity thereafter to remove them or
otherwise dispose of them.
There is no doubt that Art. 1738 finds no applicability to the instant case. The said
article contemplates a situation where the goods had already reached their place of
destination and are stored in the warehouse of the carrier. The subject goods were
still awaiting transshipment to their port of destination, and were stored in the
warehouse of a third party when last seen and/or heard of. However, Article 1736 is
applicable to the instant suit. Under said article, the carrier may be relieved of the
responsibility for loss or damage to the goods upon actual or constructive
loading at the original port of shipment, ... This carrier, in making arrangements for any
transshipping or forwarding vessels or means of transportation not operated by this carrier shall be
considered solely the forwarding agent of the shipper and without any other responsibility
whatsoever even though the freight for the whole transport has been collected by him. ... 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 failure to act of anyone to whom the goods are
entrusted or delivered for storage, handling or any service incidental thereto (Emphasis supplied)
delivery of the same by the carrier to the consignee, or to the person who has
a right to receive them. In sales, actual delivery has been defined as the ceding of
corporeal possession by the seller, and the actual apprehension of corporeal
possession by the buyer or by some person authorized by him to receive the goods
as his representative for the purpose of custody or disposal. By the same token,
there is actual delivery in contracts for the transport of goods when possession has
been turned over to the consignee or to his duly authorized agent and a reasonable
time is given him to remove the goods. The court a quo found that there was actual
delivery to the consignee through its duly authorized agent, the carrier.

But even as agent of the consignee, the appellant 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, appellant had
commenced said performance, the completion of which was aborted by
circumstances beyond its control. An agent who 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 accomplish the object of
the agency.

The actions of appellant carrier and of its representative in the Philippines

being in full faith with the lawful stipulations of Bill of Lading No. 18 and in
conformity with the provisions of the New Civil Code on common carriers,
agency and contracts, they incur no liability for the loss of the goods in
question.

WHEREFORE, the appealed decision is hereby REVERSED. Plaintiff-appellee's

complaint is hereby DISMISSED. No costs. SO ORDERED.
113. EASTERN SHIPPING LINES, INC., Petitioner, v. BPI/MS INSURANCE CORP., and
MITSUI SUMITOMO INSURANCE CO., LTD., Respondents.
G.R. No. 193986, January 15, 2014
FACTS:
Sumitomo Corporation (Sumitomo) shipped through MV Eastern Challenger, a vessel
owned by Eastern Shipping Lines, Inc. (petitioner), 31 various steel sheet in coil from
Yokohama, Japan, on August 29, 2003; 28 steel sheets in coil on September 13, 2003 and;
117 various steel sheets in coil on September 29, 2003. All three of the shipments were
insured against all risk by Sumitomo with respondent Mitsui Sumitomo Insurance Co., Ltd.
(Mitsui) and all deliveries are in favor if the consignee Calamba Steel Center Inc. (Calamba
Steel).
The August 29, 2003 shipment arrived at the port of Manila on September 6, 2003, 9 coils
were observed to be in bad condition. The cargo was then turned over to Asian Terminals,
Inc. (ATI) for stevedoring, storage and safekeeping pending Calamba Steels withdrawal of
the goods. When the cargoes were delivered to Calamba Steel, it rejected the damaged
portion valued at US$7,751.15, for being unfit for its intended purpose.
The September 13, 2003 shipment arrived at the port of Manila on September 23, 2009,
11 coils were found damaged. The possession of the cargo was then transferred to ATI and
when it delivered the goods, Calamba Steel rejected the damaged portion valued at
US$7,677.12, the same being unfit for its intended purpose.
Lastly, the September 29, 2003 shipment arrived at the port of Manila on October 11,
2003, 6 coils were observed to be in bad condition. Again, Calamba Steel rejected the
damaged portion valued at US$14,782.05, upon ATIs delivery.
Calamba Steel filed an insurance claim with Mitsui through the latters agent, respondent
BPI/MS Insurance Corporatin (BPI/MS). BPI/MS paid a total sum of US$30,210.32 for the
damage suffered by all the three shipments. As insurer and subrogee of Calamba Steel,
Mitsui and BPI/MS filed a complaint for Damages against petitioner and ATI.
RTC rendered a judgment in favor of the plaintiff and against defendants Eastern Shipping
Lines and ATI, jointly and severally, ordering the latter to pay plaintiffs damages worth
US$30,210.32, attorneys fees and cost of suit.
CA affirmed the decision of the RTC, ruling that both petitioner and ATI were very
negligent in the handling of the subject cargoes. CA also denied the Motion for
Reconsideration filed by petitioner.
Both petitioner and ATI filed their respective separate petitions for review on certiorari,
however, ATIs petition was denied and the assailed CA decision had become final and
executory. The court gave due course to petitioners petition and directed the parties to
file their respective memoranda.
In petitioners Memorandum, he avers that the CA erred in affirming the RTC decision
because the pieces of evidence show that the cause of the damage was the rough handling
of the goods by ATI during the discharging operations. Petitioner prays to be absolved
from any liability relative to the damage incurred by the goods. On the other hand,
respondents counter, that as found by both the RTC and the CA, the goods suffered
damage while still in the possession of petitioner as evidenced by various Turn Over
Surveys of Bad Order Cargoes which were unqualifiedly executed by petitioners own
surveyor. The respondents also aver that petitioner is required by law to observe
extraordinary diligence in the vigilance over the goods it carries.
ISSUE: Whether or not petitioner is solidarily liable with ATI on account of the damage
incurred by the goods?
HELD: Petitioner is solidarily liable with ATI.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally
remain under the custody of the carrier. As herein before found by the RTC and affirmed
by the CA based on the evidence presented, the goods were damaged even before they
were turned over to ATI. Such damage was even compounded by the negligent acts of
petitioner and ATI which both mishandled the goods during the discharging operations.
Thus, it bears stressing unto petitioner that 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. 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. In order to avoid responsibility for any
loss or damage, therefore, they have the burden of proving that they observed such high
level of diligence. In this case, petitioner failed to hurdle such burden.
Petitioner also failed to show any reversible error on the part of the CA in affirming the
ruling of the RTC as to warrant the modification, much less the reversal of its assailed
decision. PETITION DENIED.
 Schmitz Transport and Brokerage Corp v Transort Venture Inc., GR 150255 April 22,2005
Facts:
On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V Alexander Saveliev 545
hot rolled steel sheets in coil weighing 6,992,450 metric tons. The cargoes, which were to be discharged at the port of Manila in favor of
the consignee, Little Giant Steel Pipe Corporation (Little Giant), were insured against all risks with Industrial Insurance Company Ltd.
(Industrial Insurance) under Marine Policy No. M-91-3747-TIS. The vessel arrived at the port of Manila and the Philippine Ports
Authority (PPA) assigned it a place of berth at the outside breakwater at the Manila South Harbor.
Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying
only as an ancillary activity. The contention, therefore, of petitioner that it is not a common carrier but a customs broker whose principal
function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that
petitioner undertakes to deliver the goods for pecuniary consideration.
And in Calvo v. UCPB General Insurance Co. Inc.,[46] this Court held that as the transportation of goods is an
integral part of a customs broker, the customs broker is also a common carrier. For to declare otherwise would be to deprive those
with whom [it] contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for [its]
customers, is part and parcel of petitioners business.

Schmitz Transport, whose services the consignee engaged to secure the requisite clearances, to receive the cargoes from the shipside, and
to deliver them to its (the consignees) warehouse at Cainta, Rizal, in turn engaged the services of TVI to send a barge and tugboat at
shipside. TVIs tugboat Lailani towed the barge Erika V to shipside. The tugboat, after positioning the barge alongside the vessel,
left and returned to the port terminal. Arrastre operator Ocean Terminal Services Inc. commenced to unload 37 of the 545 coils from the
vessel unto the barge. By 12:30 a.m. of October 27, 1991 during which the weather condition had become inclement due to an
approaching storm, the unloading unto the barge of the 37 coils was accomplished. No tugboat pulled the barge back to the pier, however.
At around 5:30 a.m. of October 27, 1991, due to strong waves, the crew of the barge abandoned it and transferred to the vessel. The barge
pitched and rolled with the waves and eventually capsized, washing the 37 coils into the sea.

Little Giant thus filed a formal claim against Industrial Insurance which paid it the amount of P5,246,113.11. Little Giant thereupon
executed a subrogation receipt in favor of Industrial Insurance. Industrial Insurance later filed a complaint against Schmitz
Transport, TVI, and Black Sea through its representative Inchcape (the defendants) before the RTC of Manila, they faulted the
defendants for undertaking the unloading of the cargoes while typhoon signal No. 1 was raised. The RTC held all the defendants
negligent. Defendants Schmitz Transport and TVI filed a joint motion for reconsideration assailing the finding that they are common
carriers. RTC denied the motion for reconsideration. CA affirmed the RTC decision in toto, finding that all the defendants were
common carriers Black Sea and TVI for engaging in the transport of goods and cargoes over the seas as a regular business and not as
an isolated transaction, and Schmitz Transport for entering into a contract with Little Giant to transport the cargoes from ship to port for a
fee.

Issue:

Whether or not Black Sea and TVI are common carriers

Held :

Contrary to petitioners insistence, this Court, as did the appellate court, finds that petitioner is a common carrier. For it undertook to
transport the cargoes from the shipside of M/V Alexander Saveliev to the consignees warehouse at Cainta, Rizal. As the appellate
court put it, as long as a person or corporation holds [itself] to the public for the purpose of transporting goods as [a] business, [it] is
already considered a common carrier regardless if [it] owns the vehicle to be used or has to hire one. That petitioner is a common
carrier, the testimony of its own Vice-President and General Manager Noel Aro that part of the services it offers to its clients as a
brokerage firm includes the transportation of cargoes reflects so.

It is settled that under a given set of facts, a customs broker may be regarded as a common carrier. Thus, this Court, in A.F.
Sanchez Brokerage, Inc. v. The Honorable Court of Appeals,[44] held:
The appellate court did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article
1732 of the Civil Code, to wit,
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the
public.
xxx
Phoenix Assurance Co., Ltd. v. United States Lines, rate or charges, and stipulates the rights and obligations assumed by the
G.R. No. L-24033, [February 22, 1968], 130 PHIL 698-707) parties.

Nature and Functions
Facts: On June 29, 1962, General Motors shipped from New York to Davao
City 25 cases and 4 crates of motor spare parts. The vessel was owned by
United States Lines. The 25 cases and 4 crates were written in the bill of
lading issued by USL. Such spares parts were insured with Phoenix Assurance.
The said bill of lading indicated Manila as the port of discharge and Davao
City as the place where the goods were to be transhipped.
Where by the terms of the bill of lading, the carrier shall not be liable for any
loss or damage to the goods while the goods are not in its custody and
there is no question that the crates subject matter of this action were lost
while in the possession and custody of the Manila Port Service, the carrier
cannot be held responsible for the loss of said crates.

The bill of lading stated that "The carrier shall not be liable in any capacity
whatsoever for any loss or damage to the goods while the goods are not in
its actual custody.

However, 2 crates were lost when it was discharged in Manila. The

consignee then sent a demand letter to USL for the payment of 2 lost crates.
But USL refused to pay because the crates were lost while in custody of
Manila Port Service.

Since the crates were insured by Phoenix, the latter paid the consignee. By
virtue of subrogation, Phoenix sought payment to USL. Still the latter refused.
This prompted Phoenix to file a complaint against USL. The RTC dismissed the
complaint because it is hardly fair to make USL accountable for a loss not
due to its acts or omissions or over which it had no control.

Issue: WON RTC is correct in dismissing the complaint.

Ruling: Yes. The carrier's responsibility ceased the moment the goods were
unloaded in Manila. It is admitted by both parties that the crates were lost
while in the possession and custody of the Manila Port Service.

Since the long form of Bill of Lading provides that "The carrier shall not be
liable in any capacity whatsoever for any loss or damage to the goods
while the goods are not in its actual custody", USL cannot be held
responsible for the loss of said crates. For as correctly observed by the lower
court, it is hardly fair to make USL accountable for a loss not due to its acts
or omissions or over which it had no control.

A bill of lading operates both as a receipt and as a contract. It is a receipt

for the goods shipped and a contract to transport and deliver the same as
therein stipulated. As a receipt, it recites the date and place of shipment,
describes the goods as to quantity, weight, dimensions, identification marks
and condition, quality and value. As a contract, it names the contracting
parties, which include the consignee, fixes the route, destination, and freight
LORENZO SHIPPING CORP vs. CHUBB AND SONS, INC. ET AL. | G.R. No.
147724 | June 8, 2004 2. Lorenzo Shipping was negligent in its care and custody of the consignees goods.
Lorenzo Shipping issued clean bills of lading covering the subject shipment. A bill of
FACTS: Mayer Steel Pipe Corp. loaded 581 bundles of ERW black steel pipes on board the lading, aside from being a contract and a receipt, is also a symbol of the goods covered by
vessel M/V Lorcon IV, owned by Lorenzo Shipping, for shipment to Davao City. Lorenzo it. A bill of lading which has no notation of any defect or damage in the goods is called a
Shipping issued a clean bill of lading designated as Bill of Lading No. T-3 for the account clean bill of lading. A clean bill of lading constitutes prima facie evidence of the receipt
of the consignee, Sumitomo Corp. of San Francisco, California, USA, which in turn, by the carrier of the goods as therein described.
insured the goods with Chubb and Sons, Inc. Mere proof of delivery of goods in good order to a carrier and the subsequent arrival
M/V Lorcon IV arrived at the Sasa Wharf in Davao City. Transmarine Carriers in damaged condition at the place of destination raises a prima facie case against the
received the subject shipment. It discovered seawater in the hatch of M/V Lorcon IV, and carrier M/V Lorcon IV of Lorenzo Shipping received the steel pipes in good order and
found the steel pipes submerged in it. Sumitomo then hired the services of a surveyor to condition, evidenced by the clean bills of lading it issued. When the cargo was unloaded
inspect the shipment prior to and subsequent to discharge. The report showed that the from Lorenzo Shippings vessel at the Sasa Wharf in Davao City, the steel pipes were
subject shipment was no longer in good condition, as in fact, the pipes were found with rust rusted all over. M/V San Mateo Victory of Gearbulk, Ltd, which received the cargo, issued
formation on top and/or at the sides. Bills of Lading, all of which were marked ALL UNITS HEAVILY RUSTED. R.J. Del
After the survey, Gearbulk loaded the shipment on board its vessel M/V San Mateo Pan Surveyors found that the cargo hold of the M/V Lorcon IV was flooded with seawater,
Victory, for carriage to the US. All bills of lading it issued were marked ALL UNITS and the tank top was rusty, thinning and perforated, thereby exposing the cargo to sea
HEAVILY RUSTED. M/V San Mateo Victory arrived at the U.S.A., where it unloaded the water. There can be no other conclusion than that the cargo was damaged while on board
subject steel pipes. The steel pipes were surveyed, and it was discovered that they are the vessel of petitioner Lorenzo Shipping, and that the damage was due to the latters
heavily rusted. negligence.
Due to its condition, Sumitomo rejected the damaged steel pipes and declared them
unfit for the purpose they were intended. It then filed a marine insurance claim with
respondent Chubb and Sons, Inc. which the latter settled in the amount of US$104,151.00.
Chubb and Sons, Inc. filed a complaint for collection of a sum of money, against Notes:
Lorenzo Shipping, Gearbulk, and Transmarine. Lorenzo Shipping denied its liability. Petitioner Lorenzo Shipping Corporation shipper; owner of M/V Lorcon IV
The RTC ruled in favor of Chubb and Sons, Inc. It appealed to the CA, but was Respondent Gearbulk, Ltd., - common carrier; foreign corporation doing business
denied. in the Philippines
Respondent Philippine Transmarine Carriers, Inc. Domestic corporation; agent
ISSUES: of Respondent Gearbulk Inc.; owner of M/V San Mateo
1. W/N respondent Chubb and Sons has capacity to sue before the Philippine courts. YES. Sumitomo Corporation Consignee
2. W/N petitioner Lorenzo Shipping is negligent in carrying the subject cargo. YES. Respondent Chubb and Sons Inc. - Insurer of Sumitomo Corporation
HELD:
1. Lorenzo Shipping failed to raise the defense that Sumitomo is a foreign corporation doing
business in the Philippines without a license. It is therefore estopped from litigating the
issue on appeal... Secondly, assuming arguendo that Sumitomo cannot sue in
the Philippines, it does not follow that Chubb and Sons, as subrogee, has also no capacity to
sue in our jurisdiction.
The rights to which the subrogee succeeds are the same as, but not greater than, those
of the person for whom he is substituted he cannot acquire any claim, security, or remedy
the subrogor did not have. In other words, a subrogee cannot succeed to a right not
possessed by the subrogor. A subrogee in effect steps into the shoes of the insured and can
recover only if insured likewise could have recovered.
However, when the insurer succeeds to the rights of the insured, he does so only in
relation to the debt.
The law does not prohibit foreign corporations from performing single acts of
business. A foreign corporation needs no license to sue before Philippine courts on an
isolated transaction
Where an insurance company as subrogee pays the insured of the entire loss it
suffered, the insurer-subrogee is the only real party in interest and must sue in its own name
to enforce its right of subrogation against the third party which caused the loss.
Home Insurance Company vs. American Steamship Agencies, Inc and Luzon
Stevedoring Corporation
Facts:
Consorcio Pesquero del Peru of South America shipped freight pre-paid
jute bags of Peruvian fish meal through SS Crowborough; cargo,
consigned to San Miguel Brewery, Inc. and insured by Home Insurance
Co. arrived in Manila and was discharged into the lighters of Luzon
Stevedoring Co.; when the cargo was delivered to consignee San Miguel,
there were shortages amounting to P12K, causing the latter to lay claims
against Luzon Stevedoring, Home Insurance and the American Steamship
Agencies, owner and operator of SS Crowborough.
Home Insurance paid the consignee; it filed against American Steamship
Agencies, Inc. and Luzon Stevedoring Corp a complaint for recovery of a
sum of money with legal interest
Section 2, paragraph 2 of the charter party, provides that the owner is
liable for loss or damage to the goods caused by personal want of due
diligence on its part or its manager to make the vessel in all respects
seaworthy and to secure that she be properly manned, equipped and
supplied or by the personal act or default of the owner or its manager.
Said paragraph, however, exempts the owner of the vessel from any loss
or damage or delay arising from any other source, even from the neglect
or fault of the captain or crew or some other person employed by the
owner on board, for whose acts the owner would ordinarily be liable
except for said paragraph.
ISSUE: W/N the stipulation in the charter party of the owners non-liability
valid so as to absolve the American Steamship Agencies from liabilities for
loss? - YES
Held:
The bills of lading, covering the shipment of Peruvian fish meal provide at the back
thereof that the bills of lading shall be governed by and subject to the terms and
conditions of the charter party, if any, otherwise, the bills of lading prevail over all
the agreements.
A perusal of the charter party referred to shows that while the possession and
control of the ship were not entirely transferred to the charterer, the vessel was
chartered to its full and complete capacity. Furthermore, the, charter had the option
to go north or south or vice-versa, loading, stowing and discharging at its risk and
expense. Accordingly, the charter party contract is one of affreightment over the
whole vessel rather than a demise. As such, the liability of the shipowner for acts or
negligence of its captain and crew, would remain in the absence of stipulation.
Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss
or damage to the goods caused by personal want of due diligence on its part or its
manager to make the vessel in all respects seaworthy and to secure that she be
properly manned, equipped and supplied or by the personal act or default of the
owner or its manager.
Said paragraph, however, exempts the owner of the vessel from any loss or
damage or delay arising from any other source, even from the neglect or fault of the
captain or crew or some other person employed by the owner on board, for whose
acts the owner would ordinarily be liable except for said paragraph.
Regarding the stipulation, the CFI declared the contract as contrary to Article 587 of
the Code of Commerce making the ship agent civilly liable for indemnities suffered
by third persons arising from acts or omissions of the captain in the care of the
goods and Article 1744 of the Civil Code under which a stipulation between the
common carrier and the shipper or owner limiting the liability of the former for loss
or destruction of the goods to a degree less than extraordinary diligence is valid
provided it be reasonable, just and not contrary to public policy. The release from
liability in this case was held unreasonable and contrary to the public policy on
common carriers.
The provisions of our Civil Code on common carriers were taken from Anglo-
American law. Under American jurisprudence, a common carrier undertaking to
carry a special cargo or chartered to a special person only, becomes a private
carrier. As a private carrier, a stipulation exempting the owner from liability for the
negligence of its agent is not against public policy, and is deemed valid.
The Civil Code provisions on common carriers should not be applied where the
carrier is not acting as such but as a private carrier.
The stipulation in the charter party absolving the owner from liability for loss due to
the negligence of its agent would be void only if the strict public policy governing
common carriers is applied. Such policy has no force where the public at large is
not involved, as in the case of a ship totally chartered for the use of a single party.
And furthermore, in a charter of the entire vessel, the bill of lading issued by the
master to the charterer, as shipper, is in fact and legal contemplation merely a
receipt and a document of title not a contract, for the contract is the charter party.
The consignee may not claim ignorance of said charter party because the bills of
lading expressly referred to the same. Accordingly, the consignees under the bills
of lading must likewise abide by the terms of the charter party.
Recovery cannot be had thereunder, for loss or damage to the cargo, against the
shipowners, unless the same is due to personal acts or negligence of said owner or
its manager, as distinguished from its other agents or employees. In this case, no
such personal act or negligence has been proved.
WHEREFORE, the judgment appealed from is hereby reversed and appellant is
absolved from liability to plaintiff. No costs. So ordered.
119 Maersk Line v. Court of Appeals, G.R. No. 94761 (May 17, 1993)
Topic: Formal Requirement ( Nature and Function)
FACTS: Petitioner Maersk Line is engaged in the transportation of goods by sea, doing
business in the Philippines through its general agent, Compania de Tabacos de
Filipinas, while private respondent Efren Castillo is the proprietor of Ethegal
Laboratories, a firm engaged in the manufacture of pharmaceutical products.
On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico
600,000 empty gelatin capsules for the manufacture of his pharmaceutical
products. The capsules were placed in 6 drums of 100,000 capsules each valued at
US$1,668.71. Shipper Eli Lilly,Inc. advised Castillo through a Memorandum of
Shipment that the products were already shipped on board MV Anders Maerskline
for shipment to the Philippines via Oakland, California. In said Memorandum,
shipper Eli Lilly, Inc. specified the date of arrival to be April 3, 1977.
However, for unknown reasons, said cargoes of capsules were mis-
shipped and diverted to Richmond, Virginia, USA and then transported back to
Oakland, California, USA and with the goods finally arriving in the Philippines on
June 10, 1977 or after two (2) months from the date specified in the
memorandum. Consignee Castillo refused to take delivery of the goods on account of
its failure to arrive on time, and filed an action for rescission of contract with damages
against Maersk Line and Eli Lilly alleging gross negligence and undue delay.
Denying that it committed breach of contract, petitioner alleged in its answer
that the subject shipment was transported in accordance with the provisions of the
NCC covering bill of lading and that its liability under the law on transportation of
good attaches only in case of loss, destruction or deterioration of the goods as
provided for in Article 1734 of Civil Code. For its part, Eli Lilly in its cross claim argued
that the delay was due solely to the negligence of Maersk Line.
The Trial Court dismissed the complaint against Eli Lilly and the latter
withdrew cross claim but TC still held Maersk liable and CA affirmed with
modifications.
ISSUES:
1. W/N a cause of action exists against Maersk Line given that there was a
dismissal of the complaint against Eli Lilly? Yes, but not under the cross
claim rather because Maersk was an original party.
2. W/N Castillo is entitled to damages resulting from delay in the delivery
of the shipment? Yes.
HELD:
1. The complaint was filed originally against Eli Lilly, Inc. as shipper-supplier
and petitioner as carrier. Petitioner Maersk Line being an original party
defendant upon whom the delayed shipment is imputed cannot claim that
the dismissal of the complaint against Eli Liily inured to its benefit.
It is not disputed that the aforequoted provision at the back of the bill of
lading, in fine print, is a contract of adhesion. Generally, contracts of adhesion are
considered void since almost all the provisions of these types of contracts are
prepared and drafted only by one party, usually the carrier. The only participation left
of the other party in such a contract is the affixing of his signature thereto, hence the
term "Adhesion".
Nonetheless, settled is the rule that bills of lading are contracts not entirely
prohibited. One who adheres to the contract is in reality free to reject it in its entirety;
if he adheres, he gives his consent (Magellan Manufacturing Marketing Corporation v.
Court of Appeals, et al., 201 SCRA 102 [1991]).
In Magellan, (supra), we ruled: It is a long standing jurisprudential rule that
a bill of lading operates both as a receipt and as contract to transport and deliver the
same a therein stipulated. As a contract, it names the parties, which includes the
consignee, fixes the route, destination, and freight rates or charges, and stipulates the
rights and obligations assumed by the parties. Being a contract, it is the law between
the parties who are bound by its terms and conditions provided that these are not
contrary to law, morals, good customs, public order and public policy. A bill of lading
usually becomes effective upon its delivery to and acceptance by the shipper. It is
presumed that the stipulations of the bill were, in the absence of fraud, concealment or
improper conduct, known to the shipper, and he is generally bound by his acceptance
whether he reads the bill or not.
However, the aforequoted ruling applies only if such contracts will not create
an absurd situation as in the case at bar. The questioned provision in the subject bill of
lading has the effect of practically leaving the date of arrival of the subject shipment on
the sole determination and will of the carrier.
2. Petitioner contends as well that it cannot be held liable because there was no
special contract under which the carrier undertook to deliver the shipment
on or before a specific date and that the Bill of Lading provides that The
Carrier does not undertake that the Goods shall arrive at port of discharge or
the place of delivery at any particular time.
While it is true that common carriers are not obligated by law to carry
and to deliver merchandise, and persons are not vested with the right to prompt
delivery, unless such common carriers previously assume the obligation to
deliver at a given date or time, delivery of shipment or cargo should at least be
made within a reasonable time.
In Saludo, Jr. v. Court of Appeals this Court held:
The oft-repeated rule regarding a carrier's liability for delay is that in the absence of a
special contract, a carrier is not an insurer against delay in transportation of
goods. When a common carrier undertakes to convey goods, the law implies a
contract that they shall be delivered at destination within a reasonable time, in
the absence, of any agreement as to the time of delivery. But where a carrier has
made an express contract to transport and deliver properly within a specified time, it
is bound to fulfill its contract and is liable for any delay, no matter from what cause it
may have arisen.

While there was no special contract entered into by the parties indicating the
date of arrival of the subject shipment, petitioner 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 no need to execute another contract for the
purpose as it would be a mere superfluity. In the case before us, we find that a delay in
the delivery of the goods spanning a period of two months and seven days falls was
beyond the realm of reasonableness.

This Court held Maersk Line liable for delay in the delivery of goods. An
examination of the subject bill of lading 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, petitioner nevertheless, was very well aware
of the specific date when the goods expected to arrives as indicated in the bill lading.

There was delay in the delivery of the goods, spanning a period of 2 months
and 7 days falls way beyond the realm of reasonableness. Petitioner never even
bothered to explain the cause for delay of more than 2 months in the delivery of the
goods. Therefore, Maersk Line is liable for breach of contract carriage amounting
to bad faith.
GR 181300, September 18, 2009 (Zosa) Malayan argues that the appellate court erred in failing to consider the bill of lading as a
PETITIONER: Malayan Insurance Co. Inc binding contract between the carrier and shipper or consignee insofar as the
RESPONDENT: Jardine Davies Transport Services, Inc. and Asian Terminals, Inc. accuracy of the weight of the cargo is concerned.
TOPIC: Contract of Carriage of Cargo, Formal Requirements, Nature and Functions The presumption that the bill of lading which Malayan relied upon to support its claim for
restitution was correctly deemed by the CA to have been rebutted in light of
FACTS: abundant evidence casting doubts on its veracity.
Sent: July 23, 1994 The bill of lading carried an added clause "the shipment's weight, measure, quantity,
Shipper: Petrosul International quality, condition, contents and value unknown". Evidently, the weight of the cargo
Alleged Shipagent: Jardine Davies Transport Services could not be gauged from the bill of lading.
Vessel: MV Hoegh Merchant As observed by the Court of Appeals, there were also significant differences in shipment
Points: Vancouver, Canada to Pasig, Manila quantity at various stages of transit. These disparities in the quantity at various
Content: Yellow Crude Sulphur, weighing 6,599.23 metric tons (MT) stages of the cargo's transfer after its arrival to its final destinations in Manila are
Arrival: Sept. 5, 1994 reflected in the Comparison of Outturns embodied in SMS's Report of Survey.
Stevedore: Asian Terminals, Inc. (ATI) The resultant variations may be due to: variants in moisture content, unrecovered
Broker: Creed Customs Brokerage, Inc (CCBI) spillages during unloading of the subject shipment from vessel to barges, probable
Consignee: LMG Chemicals Corp error/oversight aboard vessel and barges due rough sea condition prevailing at the
Insurer: Malayan Insurance Co. Inc. time of initial and final draft surveys, Variance due to inaccuracies or errors in
manner, procedure, method, and/or equipments used or applied in determining
Weight of cargoes (as reported by SMS Average Surveyors and Adjusters) the outturn quantity/weight of the subject shipment per stage of transit from port
1. from ex vessel to CCBIs barge: 6,247.199 MT of loading/origin to final port of destination at consignee's designated receiving
2. On board the barge: 6,122.023 MT terminal.
3. at LMGs storage: 6,206.748 MT Petitioner's main cause of action under the complaint was based on both the Marine Risk
Reflecting a shortage of 392.482 MT, LMG claimed for the value of such shortage from Note and the Open Policy, however:
Malayan Insurance at Php1,144,108.43. Malayan then filed a complaint against MARINE RISK NOTE MARINE OPEN POLICY
ATI, Jardine Davies, CCBI, and the unknown owner and unknown shipagent of
MV Hoegh. As the addresses and identities of the latter two cannot be Not an insurance policy. It merely The blanket insurance to be undertaken by
ascertained, only ATI and Jardine were served with summons. constitutes an acknowledgment or the insurer on all goods to be shipped by
declaration of the shipper about the the consignee during the existence of the
ATI denied any liability holding that its participation was limited to supplying the specific shipment covered by the marine contract.
stevedores who undertook the discharging operations from the vessel to the insurance policy, the evaluation of the
barges. cargo and the chargeable premium.
Jardine Davies likewise denied liability, claiming that it was not the shipagent of the MV
Hoegh but a mere commercial agent; that any loss sustained by the cargo was
BOTH ARE NOT legal source of subrogation in this case
due to the inherent vice or defect of the goods and unrecovered spillages,
among others
invalid for, as earlier stated, it was issued marine insurance policy explicitly states
RTC ruled in favor of Malayan Insurance. However, the Court of Appeals ruled that it only on July 20, 1994 or after the main under its effectivity clause that it shall
failed to establish the fact of shortage in the cargo as there were discrepancies insurance contract had already lapsed (by cover "all shipments effective January 10,
between the Bill of Lading (6, 559.23) and the Shipment Invoice (6, 477.81 MT). the end of December 1993), and the 1993 sailings and all shipments made
insurance premium on this risk note was thereafter until December 31, 1993
ISSUE: Whether Malayan Insurance discharged its burden of proving by clear, competent paid only on October 6, 1994 or a month sailings". Coverage had, therefore, expired
and convincing evidence that there was shortage in the shipment. after the shipment had already arrived in almost seven (7) months prior to the
Manila, a peculiarity that none of loading of the shipment on July 23, 1994.
RULING: Malayan Insurance fails. petitioner's witnesses has endeavored to
explain.

It bears stressing that there is nothing in the records showing that ATI was negligent in its
handling of the cargo when its stevedores discharged the same from the vessel directly
onto the steel barges of CCBI.

Contrary to the trial court's findings, ATI was never in custody or possession of the
shipment, its participation having been limited to where "the stevedores of Asian
Terminals, Inc. (ATI) undertook the discharging operations of the shipment ex vessel to
barges thru the use of vessel's cargo gears, and clamshell/grab", a fact confirmed by
petitioner's own witness Eutiquiano Patiag.

More importantly, representatives of SMS, the consignee's assigned surveyors, were

present throughout the entire discharging operations from the time the cargo was
unloaded from the MV Hoegh until its discharge at LMG's chemical terminal and never
reported any mishap or incidence of mishandling on the part of ATI.

WHEREFORE, the assailed Court of Appeals January 14, 2008 Decision in connection with
CA-G.R. CV No. 84139 is AFFIRMED.

Costs against petitioner. SO, ORDERED.