WHEN CONTRACT OF CARRIAGE END

Samar Mining Co. vs Nordeutscher Lloyd Case Digest

Samar Mining Co., Inc. vs. Nordeutscher Lloyd
(132 SCRA 529)

Facts: Samar Mining imported 1 crate optima welded wire (amounting to around USD 424 or PhP 1,700) from Germany,
which was shipped on a vessel owned by Nordeutscher Lloyd (M/S Schwabenstein). The shipment was unloaded in Manila
into a barge for transshipment to Davao and temporarily stored in a bonded warehouse owned by AMCYL. The goods never
reached Davao and were never delivered to or received by the consignee, Samar Mining Co.

CFI ruled in favor of Samar Mining holding Nordeutscher Lloyd liable. However, defendants may recoup whatever they may
pay Samar Mining by enforcing the judgment against third party defendant AMCYL.

Issue: Whether Nordeustscher Lloyd is liable for the loss of the goods as common carrier?

Held: No. At the time of the loss of the goods, the character of possession of Nordeutscher Lloyd shifted from common
carrier to agent of Samar Mining Co.

The Bill of Lading is serves both as a receipt of goods and is likewise the contract to transport and deliver the same as
stipulated. It is a contract and is therefore the law between the parties. The Bill of Lading in question stipulated that
Nordeutscher Lloyd only undertook to transport the goods in its vessel only up to the port of discharge from ship, which is
Manila. The Bill of Lading further stipulated that the goods were to be transshipped by the carrier from Manila to the port of
destination – Davao. By unloading the shipment in Manila and delivering the goods to the warehouse of AMCYL, the
appellant was acting within the contractual stipulations contained in the Bill of Lading.

Article 1736 of the Civil Code relives the carrier of responsibility over the shipment as soon as the carrier makes actual or
constructive delivery of the goods to the consignee or to the person who has a right to receive them.

Under the Civil Code provisions governing Agency, an agent can only be held liable in cases where his acts are attended
by fraud, negligence, deceit or if there is a conflict of interest between him and the principal. Under the same law an agent
is likewise liable if he appoints a substitute when he was not given the power to appoint one or otherwise appoints one that
is notoriously incompetent or insolvent. These facts were not proven in the record.
MACAM VS. CA
Facts:

Benito Macam, doing business under name Ben-MacEnterprises, shipped on board vessel Nen-Jiang, owned and
operated by respondent China Ocean Shipping Co. through local agent Wallem Philippines Shipping Inc., 3,500 boxes of
watermelon covered by Bill of Lading No. HKG 99012, and 1,611 boxes of fresh mangoes covered by Billof Lading No.
HKG 99013. The shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great Prospect Company
of Rowloon (GPC) as notify party.

Upon arrival in Hongkong, shipment was delivered by respondent WALLEM directly to GPC, not to PAKISTAN BANK and
without the required bill of lading having been surrendered. Subsequently, GPC failed to pay PAKISTAN BANK, such that
the latter, still in possession of original bill of lading, refused to pay petitioner thru SOLIDBANK. Since SOLIDBANK
already pre-paid the value of shipment, it demanded payment from respondent WALLEM but was refused. MACAM
constrained to return the amount paid by SOLIDBANK and demanded payment from WALLEM but to no avail.

WALLEM submitted in evidence a telex dated 5 April 1989 as basis for delivering the cargoes to GPC without the bills of
lading and bank guarantee. The telex instructed delivery of various shipments to the respective consignees without need
of presenting the bill of lading and bank guarantee per the respective shipper’s request since “for prepaid shipt
ofrt charges already fully paid.” MACAM, however, argued that, assuming there was such an instruction, the consignee
referred to was PAKISTAN BANK and not GPC.

The RTC ruled for MACAM and ordered value of shipment. CA reversed RTC’s decision.

Issue: Are the respondents liable to the petitioner for releasing thegoods to GPC without the bills of lading or bank
guarantee?

Held: It is a standard maritime practice when immediate delivery is of the essence, for shipper to request or instruct the
carrier to deliver thegoods to the buyer upon arrival at the port of destination without requiring presentation of bill of lading
as that usually takes time. Thus, taking into account that subject shipment consisted of perishable goods and
SOLIDBANK pre-paid the full amount of value thereof, it is not hard to believe the claim of respondent WALLEM that
petitioner indeed requested the release of the goods to GPC without presentation of the bills of lading and bank
guarantee.

To implement the said telex instruction, the delivery of the shipment must be to GPC, the notify party or real
importer/buyer of the goods and not the PAKISTANI BANK since the latter can very well present the original Bills of
Lading in its possession. Likewise, if it were the PAKISTANI BANK to whom the cargoes were to be strictly delivered, it
will no longer be proper to require a bank guarantee as a substitute for the Bill of Lading. To construe otherwise will
render meaningless the telex instruction. After all, the cargoes consist of perishable fresh fruits and immediate delivery
thereof the buyer/importer is essentially a factor to reckon with.

We emphasize that the extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the
cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of
lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint
before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as buyer/importer which,
conformably with Art. 1736 had, other than the consignee, the right to receive them was proper.
LU DO AND LU YM CORP. VS BINAMIRA
Facts:

Seller - Delta Photo Supply Company of New York

Agent of carrier - Lu do & Lu Yu Corp

Buyer - I. V. Binamira

Arrastre - Visayan Cebu Terminal Company, Inc

Stevedoring - Cebu Stevedoring Company, Inc.

Marine surveyors - R. J. del Pan & Company, Inc

 Delta Photo Supply Company of New York shipped on board the M/S FERNSIDE at New York, 6 cases of films and photographic
supplies consigned to the order of I. V. Binamira. For this shipment, Bill of Lading was issued.
 The ship arrived at the port of Cebu and cargo was discharged including the shipment in question, placing it in the possession and
custody of the arrastre operator.
 Petitioner hired a stevedoring company to unload its cargo. During the discharge, good order cargo was separated from the bad
order cargo on board the ship, and a separate list of bad order cargo was prepared by the checker of the stevedoring company. All
the cargo unloaded was received at the pier by the arrastre operator of the port. The terminal company had also its own checker who
also recorded and noted down the good cargo from the bad one.
 The shipment in question, was not included in the report of bad order cargo of both checkers, indicating that it was discharged from
the, ship in good order and condition.
 3 days after the goods were unloaded from the ship, respondent took delivery of his 6 cases of photographic supplies from the
arrastre operator. He discovered that the cases showed signs of pilferage.
 Respondent hired marine surveyors, to examine them. The surveyors examined the cases and made a physical count of their
contents in the presence of representatives of petitioner, respondent and the stevedoring company. The finding of the surveyors
showed that some films and photographic supplies were missing valued at P324.63.
TC: Liable to pay CA: affirmed

> Delivery to the customs authorities is not the delivery contemplated by Article 1736 because, in such a case, the goods are then still
in the hands of the Government and their owner could not exercise dominion whatever over them until the duties are paid.

Issue: WON 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?

Held: NOT LIABLE

Ratio:

1. 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 to any of the causes mentioned in Article 1734 and that, if the goods are lost, destroyed or
deteriorated, for causes other that 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 and that 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"
2. These provisions, however, 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.
3. The reason is that while the goods are in its possession, it is but fair that it exercise extraordinary diligence in protecting them from
damage, and if loss occurs, the law presumes that it was due to its fault or negligence. This is necessary to protect the interest the
interest of the owner who is at its mercy. The situation changes after the goods are delivered to the consignee.
4. The parties may agree to limit the liability of the carrier considering that the goods have still to through the inspection of the
customs authorities before they are actually turned over to the consignee. This is a situation where the carrier losses control of
the goods because of a custom regulation and it is unfair that it be made responsible for what may happen during the interregnum.
5. In the bill of lading that was issued covering the shipment, both the carrier and the consignee have stipulated to limit the
responsibility of the carrier for the loss or damage that may because to the goods before they are actually delivered. 1
6. The stipulations are clear. They have been adopted precisely to mitigate the responsibility of the carrier nothing therein that
is contrary to morals or public policy that may justify their nullification.

1
Stipulations:
1. . . . The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or misdelivery, or loss of or damage to the goods occurring while the goods
are not in the actual custody of the Carrier. . . .
2. . . . The responsibility of the Carrier in any capacity shall altogether cease and the goods shall be considered to be delivered and at their own risk and expense in
every respect when taken into the custody of customs or other authorities. The Carrier shall not be required to give any notification of disposition of the goods. . .
.
3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at ship's tackle . . . and delivery beyond ship's tackle shall been tirely at the option
of the Carrier and solely at the expense of the shipper or consignee.