EXTRAORDINARY DILIGENCE 3.
Proper storage
B. Effect of Stipulation
Art. 1744. A stipulation between the common carrier and the
shipper or owner limiting the liability of the former for the loss,
destruction, or deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the
service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1757. The responsibility of a common carrier for the safety
of passengers as required in Articles 1733 and 1755 cannot be
dispensed with or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise.
Art. 1758. When a passenger is carried gratuitously, a
stipulation limiting the common carrier’s liability for negligence
is valid, but not for willful acts or gross negligence.
The reduction of fare does not justify any limitation of the
common carrier’s liability.
Art. 1760. The common carrier’s responsibility prescribed in the
preceding article cannot be eliminated or limited by stipulation,
by the posting of notices, by statements on the tickets or
otherwise.
C. Extraordinary diligence in carriage by sea
1. Seaworthiness of the vessel
For a vessel to be seaworthy, it must be adequately equipped
for the voyage and manned with a sufficient number of
competent officers and crew.
COGSA
Sec. 3. (1) The carrier shall be bound before and at the
beginning of the voyage to exercise due diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers, and all
other parts of the ship in which goods are carried, fit and safe
for their reception, carriage, and preservation.
(2) The carrier shall properly and carefully load, handle, stow,
carry, keep, care for, and discharge the goods carried.
INSURANCE CODE
SEC. 116. A ship is seaworthy when reasonably fit to perform
the service and to encounter the ordinary perils of the voyage
contemplated by the parties to the policy.
SEC. 118. A warranty of seaworthiness extends not only to the
condition of the structure of the ship itself, but requires that it
be properly laden, and provided with a competent master, a
sufficient number of competent officers and seamen, and the
requisite appurtenances and equipment, such as ballasts,
cables and anchors, cordage and sails, food, water, fuel and
lights, and other necessary or proper stores and implements for
the voyage.
SEC. 119. Where different portions of the voyage contemplated
by a policy differ in respect to the things requisite to make the
ship seaworthy therefor, a warranty of seaworthiness is
complied with if, at the commencement of each portion, the
ship is seaworthy with reference to that portion.
2. Overloading
Duty to take passengers or cargoes that are within the carrying
capacity of the vessel.
Generally, the duty of the carrier is to stow cargo in the hold
and not to place it in an exposed position on the open deck.
However, it is also valid to stipulate that the cargo is to be
carried on deck at the shipper’s risk. In other words, the
shipper may consent to have his goods carried on deck, in
which case, he takes the risks of any damage or loss sustained
as a consequence of their being so carried.
Extraordinary diligence must include the safeguarding the
shipment from damage coming from natural elements like
rainfall.
4. Obligation of captain and crew
Limited Liability Rule – Under this rule, the liability of the
shipowner may be limited to the value of the vessel. On the
other hand, if the negligence of the captain crew can be traced
to the fact that they are really incompetent, the Limited
Liability Rule cannot be invoked because the ship owner may be
deemed to be negligent.
5. Rule on deviation and transshipment
The carrier is obligated to follow the usual reasonable
commercial or customary route. This may be modified in many
cases for navigational or other reasons.
Transshipment - the act of taking the cargo out of one ship
and loading it in another or the transfer for further
transportation from one ship or conveyance to another.
Transshipment of freight without legal excuse, however
competent and safe the vessel into which transfer is made, is a
violation of the contract and an infringement of the right of the
shipper, and subjects the carrier to liability if the freight is lost
even by a cause otherwise expected.
D. Extraordinary diligence in carriage by land
1. Vehicle’s condition
 Required to make sure that the vehicles that they are
using are in good order and condition
 Thus the carrier will not be excused from liability on
the ground that the tire blowout was due to fortuitous
event when it was shown that the passengers were
injured because the floor of the bus gave way.
2. Traffic Rules
 Involving contract of carriage, proof of violation of
traffic rules confirms that the carrier failed to exercise
extraordinary diligence.
3. Obligation to Inspect
 The duty of the carrier to conduct and inspection
depends on the circumstances.
4. Anti-Drunk and Drugged Driving Law (RA 10586)
5. Anti-Distracted Driving Act (RA 10913)
 State takes cognizance of the inimical consequences of
the unrestrained use of electronic mobile devices on
road safety and to cause its regulation.
Sec. 4. Distracted Driving - Subject to the qualifications in
Sections 5 and 6 of this Act, distracted driving refers to the
performance by a motorist of any of the following acts in a
motor vehicle in motion or temporarily stopped at a red
light, whether diplomatic, public or private, which are hereby
declared unlawful;
(a) Using a mobile communications device to write,
send, or read a text-based communication or to make or
receive calls, and other similar acts; and
(b) Using an electronic entertainment or computing
device to play games, watch movies, surf the internet, compose
messages, read e-books, perform calculations, and other
similar acts.
Sec. 5. Extent of Coverage. — (a) The operation of a mobile
communications device is not considered to be distracted
driving if done using the aid of a hands-free function or
similar device such as, but not limited to, a speaker phone,
earphones and microphones or other similar devices which
allow a person to make and receive calls without having to
hold the mobile communications device: Provided, That the
placement of the mobile communications device or the
hands-free device does not interfere with the line of
sight of the driver.
(b) Wheeled agricultural machineries such as tractors and
construction equipment such as graders, rollers, backhoes, pay
loaders, cranes, bulldozers, mobile concrete mixers and the
like, and other forms of conveyances such as bicycles,
pedicabs, habal-habal , trolleys, “kuligligs”, wagons, carriages,
carts, sledges, chariots or the like, whether animal or human-
powered, are covered by the provisions of this Act as long
as the same are operated or driven in public
thoroughfares, highways or streets or under circumstances
where public safety is under consideration.
(c) The provisions of this Act shall not apply to motorists of
motor vehicles which are not in motion, except those which
are stopped momentarily at a red light, or are pulled over to
the side of the road in compliance with a traffic regulation.
Sec. 6. Exemptions. - The provisions of this Act shall not apply
to the following:
(a) A motorist using a mobile phone for emergency
purposes, including, but not limited to, an emergency call to a
law enforcement agency, health care provider, fire department,
or other emergency services, agency or entity; and
(b) A motorist using a mobile phone while operating an
emergency vehicle such as an ambulance, a fire truck, and
other vehicles providing emergency assistance, in the course
and scope of his or her duties.
Sec. 8. Penalties. - Any person who shall violate any provision
of this Act shall be penalized with:
(a) A fine of five thousand pesos (P5.000.00) for the first
offense;
(b) A fine of ten thousand pesos (PIO.OOO.OO) for the second
offense;
(c) A fine of fifteen thousand pesos (PI5,000.00) and
suspension of driver’s license for three (3) months for the third
offense; and
(d) A fine of twenty thousand pesos (P20,000.00) and
revocation of driver’s license: Provided, That the implementing
agency may increase the amount of fine herein imposed once
every five (5) years in the amount not exceeding ten percent
(10%) of the existing rates sought to be increased which shall
take effect only upon publication in at least two (2) newspapers
of general circulation: Provided, further. That a driver of a
public utility vehicle, a school bus, a school service
vehicle, a common carrier hauling volatile, flammable or
toxic material, or a driver who commits an act classified
herein as distracted driving within a fifty (50)-meter
radius from the school premises shall be subject to a
penalty of thirty thousand pesos (P30,000.00) and
suspension of one’s driver’s license for three (3) months.
The foregoing penalties shall be imposed without prejudice to
other liabilities under the Revised Penal Code or any special
law, arising out or on occasion of the herein prohibited acts.
Sec. 9. Liability of Owner and/or Operator of the Vehicle Driven
by the Offender. — The owner and/or operator of the vehicle
driven by the offender shall be directly and principally held
liable together with the offender for the fine unless he or she is
able to convincingly prove that he or she has exercised
extraordinary diligence in the selection and supervision of his or
her drivers in general and the offending driver in particular.
This section shall principally apply to the owners and/or
operators of public utility vehicles and commercial vehicles such
as delivery vans, cargo trucks, container trucks, school and
company buses, hotel transports, cars or vans for rent, taxi
cabs, and the like.
BILLS OF LADING
The term 'bill of lading' is frequently defined,
especially by the older authorities as a writing signed by the
master of a vessel acknowledging the receipts of goods on
board to be transported to a certain port and there delivered
to a designated person or on his order. This definition was
formulated at a time when goods were principally transported
by sea and, while adequate in view of the conditions existing
at that early day, is too narrow to suit present conditions. As
comprehending all methods of transportation, a bill of lading
may be defined as a written acknowledgment of the receipt of
goods and an agreement to transport and to deliver them at a
specified place to a person named or on his order. Such
instruments are sometimes called 'shipping receipts,'
'forwarders' receipts,' and 'receipts for transportation." The
designation, however, is not material, and neither is the form
of the instrument. If it contains an acknowledgment by the
carrier of the receipt of goods for transportation, it is, in legal
effect, a bill of lading." (9 Am. Jur. 662,)
A bill of lading is not indispensable for the creation of
a contract of carriage.
a. Three Fold Character of a Bill of Lading
A Bill of Lading operates both as: (1) A receipt for the goods
shipped; (2) A Contract by which three parties namely the
shipper, the carrier and the consignee undertake specific
responsibilities and assume stipulated obligations; (3) A
document of title which makes it a symbol of the goods.
In case however of charter of the entire vessel, the bill of
lading issued by the master to the charterer, as shipper, is in
fact and in legal contemplation merely a receipt and a
document of title, not a contract for the contract is the charter
party. The bill of lading is the evidence of the contract between
the parties since its contents shall decide all disputes which
may arise in regard to their execution and fulfillment. (Art.
353 Code of Commerce)
Nature of a Bill of Lading
COGSA
Sec. 3 (4) Such a bill of lading shall be prima facie evidence of
the receipt by the carrier of the goods as therein described in
accordance with paragraphs (3) (a), (b), and (c), of this
section: (The rest of the provision is not applicable to the
Philippines).
(5) The shipper shall be deemed to have guaranteed to the
carrier the accuracy at the time of shipment of the marks,
number, quantity, and weight, as furnished by him; and the
shipper shall indemnify the carrier against all loss, damages,
and expenses arising or resulting from inaccuracies in such
particulars. The right of the carrier to such indemnity shall in
no way limit his responsibility and liability under the contract of
carriage to any person other than the shipper
I. As a contract
i. Basic stipulations
Sec. 4. (5) Neither the carrier nor the ship shall in any event
be or become liable for any loss or damage to or in
connection with the transportation of goods in an amount
exceeding $500 per package of lawful money of the United
States, or in case of goods not shipped in packages, per
customary freight unit, or the equivalent of that sum in other
currency, unless the nature and value of such goods have
been declared by the shipper before shipment and inserted in
the bill of lading. This declaration, if embodied in the bill of
lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
By agreement between the carrier, master or agent of the
carrier, and the shipper another maximum amount than that
mentioned in this paragraph may be fixed: Provided, that
such maximum shall not be less than the figure above
named. In no event shall the carrier be liable for more than
the amount of damage actually sustained.
ii. Prohibited stipulations
Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public
policy:
(1) That the goods are transported at the risk of the owner or
shipper;
(2) That the common carrier will not be liable for any loss,
destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence
in the custody of the goods;
(4) That the common carrier shall exercise a degree of
diligence less than that of a good father of a family, or of a
man of ordinary prudence in the vigilance over the movables
transported;
(5) That the common carrier shall not be responsible for the
acts or omissions of his or its employees;
(6) That the common carrier’s liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss,
destruction, or deterioration of goods on account of the
defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
II. As a document of title
Art. 1508. A negotiable document of title may be negotiated
by delivery:
(1) Where by the terms of the document the carrier,
warehouseman or other bailee issuing the same undertakes
to deliver the goods to the bearer; or
(2) Where by the terms of the document the carrier,
warehouseman or other bailee issuing the same undertakes
to deliver the goods to the order of a specified person and
such person or a subsequent indorsee of the document has
indorsed it in blank or to the bearer.
Where by the terms of a negotiable document of title the
goods are deliverable to bearer or where a negotiable
document of title has been indorsed in blank or to bearer, any
holder may indorse the same to himself or to any specified
person, and in such case the document shall thereafter be
negotiated only by the endorsement of such indorsee.
Art. 1509. A negotiable document of title may be negotiated
by the indorsement of the person to whose order the goods
are by the terms of the document deliverable. Such
indorsement may be in blank, to bearer or to a specified
person. If indorsed to a specified person, it may be again
negotiated by the indorsement of such person in blank, to
bearer or to another specified person. Subsequent
negotiations may be made in like manner.
Art. 1510. If a document of title which contains an
undertaking by a carrier, warehouseman or other bailee to
deliver the goods to bearer, to a specified person or order of
a specified person or which contains words of like import, has
placed upon it the words “not negotiable,” “non-negotiable” or
the like, such document may nevertheless be negotiated by
the holder and is a negotiable document of title within the
meaning of this Title. But nothing in this Title contained shall
be construed as limiting or defining the effect upon the
obligations of the carrier, warehouse man, or other bailee
issuing a document of title or placing thereon the words “not
negotiable,” “non-negotiable,” or the like.
Art. 1513. A person to whom a negotiable document of title
has been duly negotiated acquires thereby:
(1) Such title to the goods as the person negotiating the
document to him had or had ability to convey to a purchaser
in good faith for value and also such title to the goods as the
person to whose order the goods were to be delivered by the
terms of the document had or had ability to convey to a
purchaser in good faith for value; and
(2) The direct obligation of the bailee issuing the document to
hold possession of the goods for him according to the terms
of the document as fully as if such bailee had contracted
directly with him.
Art. 1515. Where a negotiable document of title is transferred
for value by delivery, and the indorsement of the transferor is
essential for negotiation, the transferee acquires a right
against the transferor to compel him to indorse the document
unless a contrary intention appears. The negotiation shall
take effect as of the time when the indorsement is actually
made.
III. As a receipt
The issuance of a bill of lading carries the presumption that
the goods were delivered to the carrier issuing the bill, for
immediate shipment, and it is nowhere questioned that a bill
of lading is prima facie evidence of the receipt of the goods by
the carrier. In the absence of convincing testimony
establishing mistake, recitals in the bill of lading showing that
the carrier received the goods for shipment on a specified
date control.
IV. Relevant provisions of the Warsaw Convention
Article 17. The carrier is liable for damage sustained in the
event of the death or wounding of a passenger or any other
bodily injury suffered by a passenger, if the accident which
caused the damage so sustained took place on board the
aircraft or in the course of any of the operations of embarking
or disembarking.
Article 18
1. The carrier is liable for damage sustained in the event of
the destruction or loss of, or of damage to, any registered
luggage or any goods, if the occurrence which caused the
damage so sustained took place during the carriage by air.
2. The carriage by air within the meaning of the preceding
paragraph comprises the period during which the luggage or
goods are in charge of the carrier, whether in an aerodrome
or on board an aircraft, or, in the case of a landing outside an
aerodrome, in any place whatsoever.
3. The period of the carriage by air does not extend to any
carriage by land, by sea or by river performed outside an
aerodrome. If, however, such a carriage takes place in the
performance of a contract for carriage by air, for the purpose
of loading, delivery or transshipment, any damage is
presumed, subject to proof to the contrary, to have been the
result of an event which took place during the carriage by air.
Article 19. The carrier is liable for damage occasioned by
delay in the carriage by air of passengers, luggage or goods.
b. When effective
A bill of lading becomes effective upon its delivery to
and acceptance by the shipper. It is presumed that the
stipulations of the bill are, 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.
Acceptance of the bill of lading without dissent raises
the presumption that all the terms therein were brought to
the knowledge of the shipper and agreed to by him and, in
the absence of fraud or mistake; he is stopped from
thereafter denying that he assented to such terms.
b. Parties
The parties in a bill of lading are the shipper and the
carrier. However, a consignee, although not a signatory to the
contract of carriage becomes a party to the contract by
reason of: (a) the relationship of agency between the
consignee and the shipper; (b) the unequivocal acceptance of
the bill of lading delivered to the consignee; or (c) availment
of the stipulation pour au trui, i.e., when the consignee, a
third person, demands before the carrier the fulfillment of a
stipulation in the bill of lading in his favor.
The consignee, although the instrument is oftentimes
drawn up only by the consignor and carrier, becomes bound
by all the stipulations contained therein by making a claim for
loss on the basis of said bill of lading.
The right of a party to recover for loss of shipment
consigned to him under a bill of lading drawn up only by and
between the shipper and the carrier, springs from either
relation of agency between him and the shipper or his status
as stranger in whose favor some stipulation is made in said
contract (stipulation pour autrui), and who become a party
thereto when he demands fulfillment of that stipulation.
c. As a Contact of Adhesion
Bills of lading, as well as tickets, constitute a class of
contracts of adhesion. Hence, they are normally construed in
favor of the passenger or shipper who adhered to such bill of
lading or ticket. However, the parties cannot escape liability
by adverting to the bill of lading as a contract of adhesion, if
the bill of lading is clear on its face.
By the peculiar circumstances under which contracts
of adhesion are entered into — namely, that it is drafted only
by one party, usually the corporation, and is sought to be
accepted or adhered to by the other party, in this instance
the passengers, private respondents, who cannot change the
same and who are thus made to adhere thereto on the "take
it or leave it" basis — certain guidelines in the determination
of their validity and/or enforceability have been formulated in
order to that justice and fan play characterize the relationship
of the contracting parties. Any ambiguity is construed against
the carrier, the contract being one of adhesion.
d. As Evidence
A bill of lading is a contract and as such it expresses the
terms and conditions of the agreement between the parties; it
names the parties, which includes the consignee; fixes the
route; destination; freight rates; and the rights and
obligations assumed by the parties. The bill of lading is the
best evidence of the contract and all matters indicated
therein. The terms of the contract are deemed conclusive on
the parties who are bound thereby, and parol evidence is not
admissible to vary or contradict the complete and enforceable
agreement embodied in the instrument.
e. Kinds of Bill Lading:
1. On board – issued when the goods have been actually
placed aboard the ship with very reasonable expectation
that the shipment is as good as on its way.
2. Received for shipment – states that the goods have been
received for shipment with or without specifying the
vessel by which the goods are to be shipped.
3. Negotiable – stated that the goods referred to therein
will be delivered to the bearer or to the order of any
person named therein.
4. Non-negotiable – stated that the goods referred to
therein will be delivered to a specified person.
5. Clean - does not indicate any defects in the goods
received.
6. Foul- contained a notation thereon indicating that the
goods covered by it are in bad condition.
7. Spent – Covers goods that already have been delivered
by the carrier without a surrender of a signed copy of the
bill.
8. Through – Issued by the carrier who is obliged to use the
facilities of other carriers as well as his own facilities for
the purpose of transporting the goods from the city of the
seller to the city of the buyer, which bill of lading is
honored by the second and other interested carriers who
do not issue their own bills.
9. Custody – One where the goods are already received by
the carrier but the vessel indicated therein has not yet
arrived in the port.
10. Port – issued by the carrier to whom the goods have
been delivered and the vessel indicated in the bill of
lading by which the goods are to be shipped is already in
the port where the goods are held for shipment.
CASES
Philippine Charter Insurance v. Neptune Orient
Line/Overseas Agency Service, Inc.
554 SCRA 335 (2008)
FACTS:
L.T. Garments Manufacturing Corp. Ltd. shipped from Hong
Kong 3 sets of warp yarn on returnable beams aboard
respondent Neptune Orient Lines' vessel, M/V Baltimar Orion,
for transport and delivery to Fukuyama Manufacturing
Corporation (Fukuyama) in Manila.
The said cargoes were loaded in a container under a bill of
lading. Fukuyama insured the shipment against all risks with
petitioner Philippine Charter Insurance Corporation (PCIC)
under Marine Cargo Policy. During the course of the voyage,
the container with the cargoes fell overboard and was lost.
Thus, Fukuyama wrote a letter to respondent Overseas Agency
Services, Inc, the agent of Neptune Orient, and claimed for the
value of the lost cargoes. However, Overseas Agency ignored
the claim. Hence, Fukuyama sought payment from its insurer,
PCIC, for the insured value which claim was fully satisfied by
PCIC. PCIC then demanded from respondents reimbursement of
the entire amount it paid to Fukuyama, but respondents
refused payment. Hence, PCIC filed a complaint for damages
against respondents.
Respondents denied liability and alleged that during the
voyage, the vessel encountered strong winds and heavy seas
making the vessel pitch and roll, which caused the subject
container with the cargoes to fall overboard. They claim that
the occurrence was a fortuitous event which exempted them
from any liability, and that their liability, if any, should not
exceed US$500 or the limit of liability in the bill of lading,
whichever is lower.
The RTC held that respondents, as common carrier, failed to
prove that they observed the required extraordinary diligence
to prevent loss of the subject cargoes and ordered them to pay
the plaintiff the amount claimed. The CA on the other hand
found respondent’s liability to be only US$1,500 or US$500 per
package under the limited liability provision of the Carriage of
Goods by Sea Act (COGSA). Hence, the instant appeal.
Petitioner’s Contention: The vessel committed a "quasi
deviation" which is a breach of the contract of carriage when it
intentionally threw overboard the container for its own benefit.
Such breach of contract resulted in the abrogation of
respondents' rights under the contract and COGSA including the
US$500 per package limitation.
ISSUE:
W/N the liability of the respondents is only US$1,500 or
US$500 per package as provided in the COGSA - Yes
RULING:
The facts as found by the RTC do not support the new
allegation regarding the intentional throwing overboard of the
subject cargoes and quasi deviation. The Court notes that the
petitioner's Complaint and the survey report provide that the
shipment “were lost/fell overboard”. The records show that the
subject cargoes fell overboard the ship and petitioner should
not vary the facts of the case on appeal.
Since the subject cargoes were lost while being transported by
respondent common carrier from Hong Kong to the RP -
Philippine law applies pursuant to the Civil Code. The rights and
obligations of respondent common carrier are thus governed by
the provisions of the Civil Code, and the COGSA, which is a
special law applying suppletorily.
The pertinent provisions of the Civil Code applicable to this case
are as follows:
Art. 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
has been fairly and freely agreed upon.
In addition, Sec. 4, paragraph (5) of the COGSA, which is
applicable to all contracts for the carriage of goods by sea to
and from Philippine ports in foreign trade, provides: Neither the
carrier nor the ship shall in any event be or become liable for
any loss or damage to or in connection with the transportation
of goods in an amount exceeding $500 per package lawful
money of the United States, or in case of goods not shipped in
packages, per customary freight unit, or the equivalent of that
sum in other currency, unless the nature and value of such
goods have been declared by the shipper before shipment and
inserted in the bill of lading. This declaration, if embodied in the
bill of lading shall be prima facie evidence, but shall be
conclusive on the carrier.
In this case, Bill of Lading stipulates: Neither the Carrier nor
the vessel shall in any event become liable for any loss of or
damage to or in connection with the transportation of Goods in
an amount exceeding US$500 (which is the package or
shipping unit limitation under U.S. COGSA) unless the nature
and value of such Goods have been declared by the Shipper
before shipment and inserted in this Bill of Lading and the
Shipper has paid additional charges on such declared value. . . .
The bill of lading submitted in evidence by petitioner did not
show that the shipper in Hong Kong declared the actual value
of the goods as insured by Fukuyama before shipment and that
the said value was inserted in the Bill of Lading, and so no
additional charges were paid. Hence, the stipulation in the bill
of lading that the carrier's liability shall not exceed US$500 per
package applies.
A stipulation in the bill of lading limiting the common carrier's
liability for loss or destruction of a cargo to a certain sum,
unless the shipper or owner declares a greater value, is
sanctioned and allowed by law. It seems clear that even if said
section 4 (5) of the Carriage of Goods by Sea Act did not exist,
the validity and binding effect of the liability limitation clause in
the bill of lading here are nevertheless fully sustainable on the
basis alone of the cited Civil Code Provisions.
EASTERN SHIPPING LINES, INC., petitioner, vs.
INTERMEDIATE APPELLATE COURT and DEVELOPMENT
INSURANCE & SURETY CORPORATION, respondents.
G.R. No. L-69044 May 29, 1987
MELENCIO-HERRERA, J.:
FACTS:
G.R. No. 69044- sometime in or prior to June, 1977, the M/S
ASIATICA, a vessel operated by petitioner Eastern Shipping
Lines, Inc., (referred to hereinafter as Petitioner Carrier) loaded
at Kobe, Japan for transportation to Manila, 5,000 pieces of
calorized lance pipes in 28 packages valued at P256,039.00
consigned to Philippine Blooming Mills Co., Inc., and 7 cases of
spare parts valued at P92,361.75, consigned to Central Textile
Mills, Inc. Both sets of goods were insured against marine risk
for their stated value with respondent Development Insurance
and Surety Corporation.
G.R. No. 71478- during the same period, the same vessel took
on board 128 cartons of garment fabrics and accessories, in
two (2) containers, consigned to Mariveles Apparel Corporation,
and two cases of surveying instruments consigned to Aman
Enterprises and General Merchandise. The 128 cartons were
insured for their stated value by respondent Nisshin Fire &
Marine Insurance Co., for US $46,583.00, and the 2 cases by
respondent Dowa Fire & Marine Insurance Co., Ltd., for US
$11,385.00.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and
sank, resulting in the total loss of ship and cargo. The
respective respondent Insurers paid the corresponding marine
insurance values to the consignees concerned and were thus
subrogated unto the rights of the latter as the insured.
G.R. NO. 69044
On May 11, 1978, respondent Development Insurance & Surety
Corporation (Development Insurance, for short), having been
subrogated unto the rights of the two insured companies, filed
suit against petitioner Carrier for the recovery of the amounts it
had paid to the insured before the then Court of First instance
of Manila, Branch XXX (Civil Case No. 6087).
Petitioner-Carrier denied liability mainly on the ground that the
loss was due to an extraordinary fortuitous event, hence, it is
not liable under the law.
 CFI: August 31, 1979, the Trial Court rendered
judgment in favor of Development Insurance in the
amounts of P256,039.00 and P92,361.75, respectively,
 with legal interest, plus P35,000.00 as attorney's fees
and costs. Petitioner Carrier took an appeal to the CA
 CA: August 14, 1984, affirmed. Petitioner Carrier is
now before us on a Petition for Review on Certiorari.
G.R. NO. 71478
On June 16, 1978, respondents Nisshin Fire & Marine Insurance
Co. NISSHIN for short), and Dowa Fire & Marine Insurance Co.,
Ltd. (DOWA, for brevity), as subrogees of the insured, filed suit
against Petitioner Carrier for the recovery of the insured value
of the cargo lost with the then Court of First Instance of Manila,
Branch 11, imputing unseaworthiness of the ship and non-
observance of extraordinary diligence by petitioner Carrier.
Petitioner Carrier denied liability on the principal grounds that
the fire which caused the sinking of the ship is an exempting
circumstance under Section 4(2) (b) of the Carriage of Goods
by Sea Act (COGSA); and that when the loss of fire is
established, the burden of proving negligence of the vessel is
shifted to the cargo shipper.
 CFI: September 15, 1980, the Trial Court rendered
judgment in favor of NISSHIN and DOWA in the
amounts of US $46,583.00 and US $11,385.00,
respectively, with legal interest, plus attorney's fees of
P5,000.00 and costs.
 CA: September 10, 1984, affirmed with modification
the Trial Court's judgment by decreasing the amount
recoverable by DOWA to US $1,000.00 because of
$500 per package limitation of liability under the
COGSA.
ISSUE: 1. WON the law that should govern is the Civil Code
the Civil Code provisions on Common carriers or the Carriage of
Goods by Sea Act. – Civil Code
2. WON carrier proved that they had exercised
extraordinary diligence NO
3. What is the extent of carrier’s liability.
HELD:
On the Law Applicable
The law of the country to which the goods are to be transported
governs the liability of the common carrier in case of their loss,
destruction or deterioration. As the cargoes in question were
transported from Japan to the Philippines, the liability of
Petitioner Carrier is governed primarily by the Civil Code.
However, in all matters not regulated by said Code, the rights
and obligations of common carrier shall be governed by the
Code of Commerce and by special laws. Thus, the Carriage of
Goods by Sea Act, a special law, is suppletory to the provisions
of the Civil Code.
On the Burden of Proof
Under the Civil Code, common carriers, from the nature of their
business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over goods, according to
all the circumstances of each case. Common carriers are
responsible for the loss, destruction, or deterioration of the
goods unless the same is due to any of the following causes
only:
(1) Flood, storm, earthquake, lightning or
other natural disaster or calamity; xxx xxx
xxx
Petitioner Carrier claims that the loss of the vessel by fire
exempts it from liability under the phrase "natural disaster or
calamity. " However, we are of the opinion that fire may not be
considered a natural disaster or calamity. This must be so as it
arises almost invariably from some act of man or by human
means. It does not fall within the category of an act of God
unless caused by lightning or by other natural disaster or
calamity. It may even be caused by the actual fault or privity of
the carrier.
Article 1680 of the Civil Code, which considers fire as an
extraordinary fortuitous event refers to leases of rural lands
where a reduction of the rent is allowed when more than one-
half of the fruits have been lost due to such event, considering
that the law adopts a protection policy towards agriculture.
As the peril of the fire is not comprehended within the
exception in Article 1734, supra, Article 1735 of the Civil
Code provides that all cases than those mention in Article
1734, the common carrier shall be presumed to have been at
fault or to have acted negligently, unless it proves that it has
observed the extraordinary deligence required by law.
In this case, the respective Insurers as subrogees of the cargo
shippers, have proven that the transported goods have been
lost. Petitioner Carrier has also proved that the loss was caused
by fire. The burden then is upon Petitioner Carrier to proved
that it has exercised the extraordinary diligence required by
law. In this regard, the Trial Court, concurred in by the
Appellate Court, made the following Finding of fact:
The cargoes in question were, according to the
witnesses defendant placed in hatches No, 2 and 3 cf
the vessel, Boatswain Ernesto Pastrana noticed that
smoke was coming out from hatch No. 2 and hatch
No. 3; that where the smoke was noticed, the fire
was already big; that the fire must have started
twenty-four 24) our the same was noticed; that
carbon dioxide was ordered released and the crew
was ordered to open the hatch covers of No, 2 tor
commencement of fire fighting by sea water: that all
of these effort were not enough to control the fire.
Pursuant to Article 1733, common carriers are
bound to extraordinary diligence in the vigilance over
the goods. The evidence of the defendant did not
show that extraordinary vigilance was observed by
the vessel to prevent the occurrence of fire at
hatches numbers 2 and 3. Defendant's evidence did
not likewise show he amount of diligence made by
the crew, on orders, in the care of the cargoes. What
appears is that after the cargoes were stored in the
hatches, no regular inspection was made as to their
condition during the voyage. Consequently, the crew
could not have even explain what could have caused
the fire. The defendant, in the Court's mind, failed to
satisfactorily show that extraordinary vigilance and
care had been made by the crew to prevent the
occurrence of the fire. The defendant, as a common
carrier, is liable to the consignees for said lack of
deligence required of it under Article 1733 of the Civil
Code.
Having failed to discharge the burden of proving that it had
exercised the extraordinary diligence required by law, Petitioner
Carrier cannot escape liability for the loss of the cargo.
And even if fire were to be considered a "natural disaster"
within the meaning of Article 1734 of the Civil Code, it is
required under Article 1739 of the same Code that the "natural
disaster" must have been the "proximate and only cause of the
loss," and that the carrier has "exercised due diligence to
prevent or minimize the loss before, during or after the
occurrence of the disaster. "
This Petitioner Carrier has also failed to establish satisfactorily.
Nor may Petitioner Carrier seek refuge from liability under the
Carriage of Goods by Sea Act, It is provided therein that:
 Sec. 4(2). Neither the carrier nor the ship
shall be responsible for loss or damage arising
or resulting from
(b) Fire, unless caused by the actual fault or
privity of the carrier. xxx xxx xxx
In this case, both the Trial Court and the Appellate Court, in
effect, found, as a fact, that there was "actual fault" of the
carrier shown by "lack of diligence" in that "when the smoke
was noticed, the fire was already big; that the fire must have
started twenty-four (24) hours before the same was noticed; "
and that "after the cargoes were stored in the hatches, no
regular inspection was made as to their condition during the
voyage." The foregoing suffices to show that the circumstances
under which the fire originated and spread are such as to show
that Petitioner Carrier or its servants were negligent in
connection therewith. Consequently, the complete defense
afforded by the COGSA when loss results from fire is unavailing
to Petitioner Carrier.
On the US $500 Per Package Limitation:
Petitioner Carrier avers that its liability if any, should not
exceed US $500 per package as provided in section 4(5) of the
COGSA, which reads:
(5) Neither the carrier nor the ship shall in
any event be or become liable for any loss or
damage to or in connection with the
transportation of goods in an amount
exceeding $500 per package lawful money of
the United States, or in case of goods not
shipped in packages, per customary freight
unit, or the equivalent of that sum in other
currency, unless the nature and value of such
goods have been declared by the shipper
before shipment and inserted in bill of lading.
This declaration if embodied in the bill of
lading shall be prima facie evidence, but all
be conclusive on the carrier.
By agreement between the carrier, master or
agent of the carrier, and the shipper another
maximum amount than that mentioned in this
paragraph may be fixed: Provided, That such
maximum shall not be less than the figure
above named. In no event shall the carrier be
Liable for more than the amount of damage
actually sustained.
xxx xxx xxx
Article 1749 of the New Civil Code also allows the limitations of
liability in this wise:
Art. 1749. A stipulation that the common
carrier's liability as limited to the value of the
goods appearing in the bill of lading, unless
the shipper or owner declares a greater value,
is binding.
It is to be noted that the Civil Code does not of itself limit the
liability of the common carrier to a fixed amount per package
although the Code expressly permits a stipulation limiting such
liability. Thus, the COGSA which is suppletory to the provisions
of the Civil Code, steps in and supplements the Code by
establishing a statutory provision limiting the carrier's liability in
the absence of a declaration of a higher value of the goods by
the shipper in the bill of lading. The provisions of the Carriage
of Goods by.Sea Act on limited liability are as much a part of a
bill of lading as though physically in it and as much a part
thereof as though placed therein by agreement of the parties.
16
In G.R. No. 69044, there is no stipulation in the respective Bills
of Lading (Exhibits "C-2" and "I-3") 1 7 limiting the carrier's
liability for the loss or destruction of the goods. Nor is there a
declaration of a higher value of the goods. Hence, Petitioner
Carrier's liability should not exceed US $500 per
package, or its peso equivalent, at the time of payment of the
value of the goods lost, but in no case "more than the amount
of damage actually sustained."
WHEREFORE, 1) in G.R. No. 69044, the judgment is modified in
that petitioner Eastern Shipping Lines shall pay the
Development Insurance and Surety Corporation the amount of
P256,039 for the twenty-eight (28) packages of calorized lance
pipes, and P71,540 for the seven (7) cases of spare parts, with
interest at the legal rate from the date of the filing of the
complaint on June 13, 1978, plus P5,000 as attorney's fees,
and the costs.
2) In G.R.No.71478,the judgment is hereby affirmed.
ALFREDO MANAY, JR., FIDELINO SAN LUIS, ADRIAN SAN
LUIS, ANNALEE SAN LUIS, MARK ANDREW JOSE,
MELISSA JOSE, CHARLOTTE JOSE, DAN JOHN DE
GUZMAN, PAUL MARK BALUYOT, AND CARLOS S. JOSE,
v.
CEBU AIR,INC,
G.R. No. 210621, April 04, 2016
The Air Passenger Bill of Rights [1] mandates that the airline
must inform the passenger in writing of all the conditions and
restrictions in the contract of carriage. ] Purchase of the
contract of carriage binds the passenger and imposes reciprocal
obligations on both the airline and the passenger. The airline
must exercise extraordinary diligence in the fulfillment of the
terms and conditions of the contract of carriage. The
passenger, however, has the correlative obligation to exercise
ordinary diligence in the conduct of his or her affairs.
FACTS:
Petitioner, Jose (Jose), purchased 20 Cebu Pacific
round-trip tickets from Manila to Palawan for himself and on
behalf of his relatives and friends. Jose alleged that he specified
to "Alou," the Cebu Pacific ticketing agent, that his preferred
date and time of departure from Manila to Palawan should be
on July 20, 2008 at 0820 (or 8:20 a.m.) and flight back to
Manila should be on July 22, 2008 at 1615 (or 4:15 p.m.). Alou
printed the tickets,[12] which consisted of three (3) pages, and
recapped only the first page to him. [13] Since the first page
contained the details he specified to Alou, he no longer read the
other pages of the flight information.
On the said date, petitioners boarded Cebu Pacific
flight to Palawan and had an enjoyable stay .During the
processing of their boarding passes for their flight back to
Manila, they were informed by Cebu Pacific personnel that nine
(9)[17] of them could not be admitted because their tickets were
for the 1005 (or 10:05 a.m.) [18] flight earlier that day. Upon
checking the tickets, they learned that only the first two (2)
pages had the schedule Jose specified. [21] They were left with no
other option but to rebook their tickets. However, the
petitioners had not enough cash for the rebooking they offered
to pay the amount by credit card but were informed by the
ground personnel that they only accepted cash. Eventually,
they pooled enough cash to be able to buy tickets for five (5) of
their companions.[27] The other four (4) were left behind in
Palawan and had to spend the night at an inn, incurring
additional expenses.[28] Upon his arrival in Manila, Jose
immediately purchased four (4) tickets for the companions they
left behind.
Jose and his companions were frustrated and annoyed
by Cebu Pacific's handling of the incident so they sent the
airline demand letters dated September 3, 2008 [32] and January
20, 2009[33] asking for a reimbursement of P42,955.00,
representing the additional amounts spent to purchase the nine
(9) tickets, the accommodation, and meals of the four (4) that
were left behind. Cebu Pacific argued that ticketing agents, like
Alou, recap [the] flight details to the purchaser to avoid
erroneous booking[s] and according to its records, Jose was
given a full recap. Jose and his companions were unsatisfied
with Cebu Pacific's response so they filed a Complaint [42] for
Damages against Cebu Pacific before Branch 59 of the
Metropolitan Trial Court of Mandaluyong.
MTC:
MTC rendered its Decision ordering Cebu Pacific to
pay, Cebu Pacific should have exercised extraordinary diligence
in performing its contractual obligations should have placed
markings or underlined the time of the departure of the nine
passengers"[51] who were not in the afternoon flight since it was
only logical for Jose to expect that all of them would be on the
same flight. Cebu Pacific appealed to RTC
RTC:
The Regional Trial Court affirmed, Cebu Pacific
appealed CA
CA:
CA rendered the Decision granting the appeal and
reversing the order of payment. According to the CA, the
extraordinary diligence expected of common carriers only
applies to the carriage of passengers and not to the act of
encoding the requested flight schedule. [59] It was incumbent
upon the passenger to exercise ordinary care in reviewing flight
details and checking schedules.
ISSUES:
1. Whether or not the degree of diligence of a common
carrier covers the encoding of the request of flight schedule?
2. Whether or not Cebu Pacific is liable for damage?
HELD:
1.Yes, the degree of diligence covers the encoding of
the request of flight schedule.
Common carriers are required to exercise
extraordinary diligence in the performance of its obligations
under the contract of carriage. This extraordinary diligence
must be observed not only in the transportation of goods and
services but also in the issuance of the contract of carriage,
including its ticketing operations. A contract of carriage is
defined as "one whereby a certain person or association of
persons obligate themselves to transport persons, things, or
news from one place to another for a fixed price."
When a common carrier, through its ticketing agent,
has not yet issued a ticket to the prospective passenger, the
transaction between them is still that of a seller and a buyer.
The obligation of the airline to exercise extraordinary diligence
commences upon the issuance of the contract of carriage.
[92]
Ticketing, as the act of issuing the contract of carriage, is
necessarily included in the exercise of extraordinary diligence.
Once a plane ticket is issued, the common carrier binds itself to
deliver the passenger safely on the date and time stated in the
ticket.
2.No, Cebu Pacific is not liable of damage.
The Air Passenger Bill of Rights [1] mandates that the
airline must inform the passenger in writing of all the conditions
and restrictions in the contract of carriage. ] Purchase of the
contract of carriage binds the passenger and imposes reciprocal
obligations on both the airline and the passenger. The airline
must exercise extraordinary diligence in the fulfillment of the
terms and conditions of the contract of carriage. The
passenger, however, has the correlative obligation to exercise
ordinary diligence in the conduct of his or her affairs.
Even assuming that the ticketing agent encoded the
incorrect flight information, it is incumbent upon the purchaser
of the tickets to at least check if all the information is correct
before making the purchase. Once the ticket is paid for and
printed, the purchaser is presumed to have agreed to all its
terms and conditions.
Since the tickets were for 20 passengers, he was
expected to have checked each name on each page of the
tickets in order to see if all the passengers' names were
encoded and correctly spelled. Had he done this, he would have
noticed that there was a different flight schedule. Petitioners'
flight information was not written in fine print. It was clearly
stated on the left portion of the ticket above the passengers'
names. If petitioners had exercised even the slightest bit of
prudence, they would have been able to remedy any erroneous
booking.
Petitioners, in failing to exercise the necessary care in
the conduct of their affairs, were without a doubt negligent.
Thus, they are not entitled to damages.
G.R. No. 194121 July 11, 2016
TORRES-MADRID BROKERAGE, INC., Petitioner, vs. FEB
MITSUI MARINE INSURANCE CO., INC. and BENJAMIN P.
MANALAST AS, doing business under the name of BMT
TRUCKING SERVICES, Respondents
Facts:
A shipment of various electronic goods from Thailand
and Malaysia arrived at the Port of Manila for Sony Philippines,
Inc. (Sony) on October 7, 2000. Before the arrival, Sony had
engaged the services of TMBI to facilitate, process, withdraw,
and deliver the shipment from the port to its warehouse in
Binan, Laguna.
TMBI - who did not own any delivery trucks -
subcontracted the services of Benjamin Manalastas' company,
BMT Trucking Services (BMT), to transport the shipment from
the port to the Binan warehouse. Sony was notified of such
arrangement and had no objections.
Four BMT trucks picked up the shipment on October 7,
2000. However, the scheduled delivery was moved to October
9.In the early morning of October 9, 2000, the four trucks left
BMT's garage for Laguna. However, only three trucks arrived at
Sony's Binan warehouse.
12:00 noon on the same day, the truck driven by
Lapesura (NSF-391) was found abandoned along the Diversion
Road in Filinvest, Alabang, Muntinlupa City.Both the driver and
the shipment were missing.
Later that evening, BMT's Operations Manager Melchor
Manalastas informed Victor Torres, TMBI's General Manager, of
the development. They went to Muntinlupa together to inspect
the truck and to report the matter to the police.
TMBI notified Sony of the loss through a letter dated October
10, 2000.] It also sent BMT a letter dated March 29, 2001,
demanding payment for the lost shipment. BMT refused to pay,
insisting that the goods were "hijacked”, a fortuitous event.
In the meantime, Sony filed an insurance claim with
the Mitsui, the insurer of the goods. After evaluating the merits
of the claim, Mitsui paid Sony PHP7,293,386.23
corresponding to the value of the lost goods.
After being subrogated to Sony's rights, Mitsui sent
TMBI a demand letter dated August 30, 2001 for payment of
the lost goods. TMBI refused to pay Mitsui's claim. As a result,
Mitsui filed a complaint against TMBI on November 6, 2001,
TMBI, in turn, impleaded Benjamin Manalastas, the proprietor
of BMT, as a third-party defendant.
On August 5, 2008, the RTC found TMBI and Benjamin
Manalastas jointly and solidarity liable to pay Mitsui PHP
7,293,386.23 as actual damages, attorney's fees equivalent to
25% of the amount claimed, and the costs of the suit. The RTC
held that TMBI and Manalastas were common carriers and had
acted negligently.
Contention:
TMBI denied that it was a common carrier required to exercise
extraordinary diligence. It does not own a single truck to
transport its shipment and it does not offer transport services
to the public for compensation. The services it rendered were
limited only in processing the paperwork. In fact, it had to sub-
contract BMT since they have no trucks of their own. It
maintains that it exercised the diligence of a good father of a
family and should be absolved of liability because the truck
was "hijacked" and this was a fortuitous event.
BMT claimed that it had exercised extraordinary diligence over
the lost shipment, and argued as well that the loss resulted
from a fortuitous event - hijacking.
ISSUE:
Whether or not TMBI can be considered a common carrier in
this case
Whether or not TMBI is liable for the loss of the goods
RULING:
Yes, A brokerage may be considered a common carrier if it also
undertakes to deliver the goods for its customers. The delivery
of the goods is an integral, albeit ancillary, part of its brokerage
services of TMBI. TMBI admitted that it was contracted to
facilitate, process, and clear the shipments from the customs
authorities, withdraw them from the pier, then transport and
deliver them to Sony's warehouse in Laguna.
Common carriers are persons, corporations, firms or
associations engaged in the business of transporting
passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public. By the
nature of their business and for reasons of public policy, they
are bound to observe extraordinary diligence in the vigilance
over the goods and in the safety of their passengers.
The fact that TMBI does not own trucks and has to subcontract
the delivery of its clients' goods, is immaterial. As long as an
entity holds itself to the public for the transport of goods as a
business, it is considered a common carrier regardless of
whether it owns the vehicle used or has to actually hire one.
TMBI's customs brokerage services - including the
transport/delivery of the cargo - are available to anyone willing
to pay its fees. Given these circumstances, we find it
undeniable that TMBI is a common carrier.
Being a common carrier, TMBI is liable to the loss, destruction,
or deterioration of the goods it transports except when the
damage was caused by:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act of omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers;
(5) Order or act of competent public authority.
For all other cases - such as theft or robbery - a common
carrier is presumed to have been at fault or to have acted
negligently, unless it can prove that it observed extraordinary
diligence.
Theft or the robbery of the goods is not considered a fortuitous
event or a force majeure. Nevertheless, a common carrier may
absolve itself of liability for a resulting loss: (1) if it proves that
it exercised extraordinary diligence in transporting and
safekeeping the goods; or (2) if it stipulated with the
shipper/owner of the goods to limit its liability for the loss,
destruction, or deterioration of the goods to a degree less than
extraordinary diligence.
NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST
ASIATIC CO., LTD., Petitioners, vs. GLOW LAKS
ENTERPRISES, LTD., Respondent. (2014)
FACTS:
Petitioner Nedlloyd Lijnen B.V. Rotterdam (Nedlloyd) is a
foreign corporation engaged in the business of carrying goods
by sea, whose vessels regularly call at the port of Manila. It is
doing business in the Philippines through its local ship agent,
co-petitioner East Asiatic Co., Ltd. Respondent Glow Laks
Enterprises, Ltd. is likewise a foreign corporation organized and
existing under the laws of Hong Kong. It is not licensed to do,
and it is not doing business in the Philippines.
Respondent loaded on board M/S Scandutch at the Port of
Manila a total 343 cartoons of garments, complete and in good
order for pre-carriage to the Port of Hong Kong. The goods
covered by Bills of Lading arrived in good condition in Hong
Kong and were transferred to M/S Amethyst for final carriage to
Colon, Panama. Both vessels, M/S Scandutch and M/S
Amethyst, are owned by Nedlloyd represented in the Philippines
by its agent, East Asiatic.
The goods was agreed to be released to the consignee, Pierre
Kasem, International, S.A., upon presentation of the original
copies of the covering bills of lading. Upon arrival of the vessel
at the Port of Colon, petitioners purportedly notified the
consignee of the arrival of the shipments. The custody of the
goods was turned over to the National Ports Authority in
accordance the laws and practice of trade in Panama. However,
unauthorized persons managed to forge the covering bills of
lading on the basis of the falsified documents. The ports
authority released the goods.
Respondent Glow Laks Enterprises, Ltd. filed a formal claim
with Nedlloyd but to no avail. Respondent filed a complaint
against petitioners Nedlloyd and East Asiatic Co. before the RTC
Manila seeking the recovery of the amount of US$53,640.00
representing the invoice value of the shipment, on the ground
that Nedlloyd is liable for the misdelivery of the goods.
RTC ordered the dismissal of the complaint and ruled that
Panama law was duly proven during the trial and pursuant to
the said statute, carriers of goods destined to any Panama port
of entry have to discharge their loads into the custody of
Panama Ports Authority to make effective government
collection of port dues, customs duties and taxes. The
subsequent withdrawal effected by unauthorized persons on the
strength of falsified bills of lading does not constitute
misdelivery arising from the fault of the common carrier.
CA reversed the lower court’s decision and held that foreign
laws were not proven in the manner provided by Section 24,
Rule 132 of the Revised Rules of Court, and therefore cannot be
given full faith and credit. For failure to prove the foreign law
and custom, it is presumed that foreign laws are the same as
our local or domestic or internal law under the doctrine of
processual presumption. Under the New Civil Code, the
discharge of the goods into the custody of the ports authority
therefore does not relieve the common carrier from liability
because 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 the right to receive them.
Absent any proof that the notify party or the consignee was
informed of the arrival of the goods, the appellate court held
that the extraordinary responsibility of common carriers
remains
ISSUE:
Whether or not petitioners are liable for the misdelivery of
goods.
RULING:
Yes, because the Panamanian laws were not duly proven which
could have exculpated the petitioners from liability. Petitioners
are therefore liable for the misdelivery of goods under
Philippine laws.
Panamanian laws not duly proven
The Panamanian laws, particularly Law 42 and its Implementing
Order No. 7, were not duly proven in accordance with Rules of
Evidence and as such, it cannot govern the rights and
obligations of the parties in the case at bar. While a photocopy
of the Gaceta Official of the Republica de Panama No. 17.596,
the Spanish text of Law 42 which is the foreign statute relied
upon by the court a quo to relieve the common carrier from
liability, was presented as evidence during the trial of the case
below, the same however was not accompanied by the required
attestation and certification.
It is explicitly required by Section 24, Rule 132 of the Revised
Rules of Court that a copy of the statute must be accompanied
by a certificate of the officer who has legal custody of the
records and a certificate made by the secretary of the embassy
or legation, consul general, consul, vice-consular or by any
officer in the foreign service of the Philippines stationed in the
foreign country, and authenticated by the seal of his office. The
latter requirement is not merely a technicality but is intended to
justify the giving of full faith and credit to the genuineness of
the document in a foreign country.
Certainly, the deposition of Mr. Enrique Cajigas, a maritime law
practitioner in the Republic of Panama, before the Philippine
Consulate in Panama, is not the certificate contemplated by
law. At best, the deposition can be considered as an opinion of
an expert witness who possess the required special knowledge
on the Panamanian laws but could not be recognized as proof of
a foreign law, the deponent not being the custodian of the
statute who can guarantee the genuineness of the document
from a foreign country.
A foreign law must be properly pleaded and proved as a fact. In
the absence of pleading and proof, the laws of the foreign
country or state will be presumed to be the same as our local
or domestic law. This is known as processual presumption.
While the foreign law was properly pleaded in the case at bar, it
was, however, proven not in the manner provided by Section
24, Rule 132 of the Revised Rules of Court.
Petitioners are liable under the New Civil Code
Article 1736 and Article 1738 of the New Civil Code define the
period when the common carrier is required to exercise
diligence lasts:
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. 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.
In this case, there is no dispute that the custody of the goods
was never turned over to the consignee or his agents but was
lost into the hands of unauthorized persons who secured
possession thereof on the strength of falsified documents. The
loss or the misdelivery of the goods in the instant case gave
rise to the presumption that the common carrier is at fault or
negligent.
A common carrier is presumed to have been negligent if it fails
to prove that it exercised extraordinary vigilance over the
goods it transported. When the goods shipped are either lost or
arrived in damaged condition, a presumption arises against the
carrier of its failure to observe that diligence, and there need
not be an express finding of negligence to hold it liable. To
overcome the presumption of negligence, the common carrier
must establish by adequate proof that it exercised
extraordinary diligence over the goods. It must do more than
merely show that some other party could be responsible for the
damage.
In the present case, petitioners failed to prove that they did
exercise the degree of diligence required by law over the goods
they transported. Indeed, aside from their persistent disavowal
of liability by conveniently posing an excuse that their
extraordinary responsibility is terminated upon release of the
goods to the Panamanian Ports Authority, petitioners failed to
adduce sufficient evidence they exercised extraordinary care to
prevent unauthorized withdrawal of the shipments. Nothing in
the New Civil Code, however, suggests, even remotely, that the
common carriers’ responsibility over the goods ceased upon
delivery thereof to the custom authorities.
To the mind of this Court, the contract of carriage remains in
full force and effect even after the delivery of the goods to the
port authorities; the only delivery that releases it from their
obligation to observe extraordinary care is the delivery to the
consignee or his agents. Even more telling of petitioners’
continuing liability for the goods transported to the fact that the
original bills of lading up to this time, remains in the possession
of the notify party or consignee.
While surrender of the original bill of lading is not a condition
precedent for the common carrier to be discharged from its
contractual obligation, there must be, at the very least, an
acknowledgement of the delivery by signing the delivery
receipt, if surrender of the original of the bill of lading is not
possible. There was neither surrender of the original copies of
the bills of lading nor was there acknowledgment of the delivery
in the present case. This leads to the conclusion that the
contract of carriage still subsists and petitioners could be held
liable for the breach thereof.
G.R. No. 97412 July 12, 1994
EASTERN SHIPPING LINES, INC., petitioner, vs. HON.
COURT OF APPEALS AND MERCANTILE INSURANCE
COMPANY, INC., respondents.
VITUG, J.:
FACTS:
This is an action against defendants shipping company, arrastre
operator and broker-forwarder for damages sustained by a
shipment while in defendants' custody, filed by the insurer-
subrogee who paid the consignee the value of such
losses/damages.
The losses/damages were sustained while in the respective
and/or successive custody and possession of defendants carrier
(Eastern), arrastre operator (Metro Port) and broker (Allied
Brokerage).
As a consequence of the losses sustained, plaintiff was
compelled to pay the consignee P19,032.95 under the
aforestated marine insurance policy, so that it became
subrogated to all the rights of action of said consignee against
defendants.
DECISION OF LOWER COURTS: * trial court: ordered payment
of damages, jointly and severally * CA: affirmed trial court.
ISSUES AND RULING:
(a) Whether or not a claim for damage sustained on a shipment
of goods can be a solidary liability of the common carrier, the
arrastre operator and the customs broker;
YES, it is solidary. Since it is the duty of the ARRASTRE to take
good care of the goods that are in its custody and to deliver
them in good condition to the consignee, such responsibility
also devolves upon the CARRIER. Both the ARRASTRE and the
CARRIER are therefore charged with the obligation to deliver
the goods in good condition to the consignee.
The common carrier's duty to observe the requisite diligence in
the shipment of goods lasts from the time the articles are
surrendered to or unconditionally placed in the possession of,
and received by, the carrier for transportation until delivered
to, or until the lapse of a reasonable time for their acceptance
by, the person entitled to receive them (Arts. 1736-1738, Civil
Code; Ganzon vs. Court of Appeals, 161 SCRA 646; Kui Bai vs.
Dollar Steamship Lines, 52 Phil. 863). When the goods shipped
either are lost or arrive in damaged condition, a presumption
arises against the carrier of its failure to observe that diligence,
and there need not be an express finding of negligence to hold
it liable.
report further states that when defendant Allied Brokerage
withdrew the shipment from defendant arrastre operator's
custody on January 7, 1982, one drum was found opened
without seal, cello bag partly torn but contents intact. Net
unrecovered spillages was 15 kgs. The report went on to state
that when the drums reached the consignee, one drum was
found with adulterated/faked contents. It is obvious, therefore,
that these losses/damages occurred before the shipment
reached the consignee while under the successive custodies of
defendants. Under Art. 1737 of the New Civil Code, the
common carrier's duty to observe extraordinary diligence in the
vigilance of goods remains in full force and effect even if the
goods are temporarily unloaded and stored in transit in the
warehouse of the carrier at the place of destination, until the
consignee has been advised and has had reasonable
opportunity to remove or dispose of the goods (Art. 1738,
NCC). Defendant Eastern Shipping's own exhibit, the "Turn-
Over Survey of Bad Order Cargoes" (Exhs. 3-Eastern) states
that on December 12, 1981 one drum was found "open".
and thus held:
WHEREFORE, PREMISES CONSIDERED, judgment is
hereby rendered:
A. Ordering defendants to pay plaintiff, jointly and severally:
1. The amount of P19,032.95, with the present legal
interest of 12% per annum from October 1, 1982, the
date of filing of this complaints, until fully paid (the
liability of defendant Eastern Shipping, Inc. shall not
exceed US$500 per case or the CIF value of the loss,
whichever is lesser, while the liability of defendant
Metro Port Service, Inc. shall be to the extent of the
actual invoice value of each package, crate box or
container in no case to exceed P5,000.00 each,
pursuant to Section 6.01 of the Management
Contract);
2. P3,000.00 as attorney's fees, and
3. Costs.
B. Dismissing the counterclaims and crossclaim of
defendant/cross-claimant Allied Brokerage Corporation.
Defendants appealed but the CA affirmed in toto the judgment
of the court.

ISSUES IN THE LOWER COURT:

1. Whether or not the shipment sustained losses/damages;

2. Whether or not these losses/damages were sustained while
in the custody of defendants (in whose respective custody, if
determinable);
3. Whether or not defendant(s) should be held liable for the
losses/damages (see plaintiff's pre-Trial Brief, Records, p. 34;
Allied's pre-Trial Brief, adopting plaintiff's Records, p. 38).

As to the first issue, there can be no doubt that the shipment

sustained losses/damages. The two drums were shipped in
good order and condition, as clearly shown by the Bill of Lading
and Commercial Invoice which do not indicate any damages
drum that was shipped (Exhs. B and C). But when on December
12, 1981 the shipment was delivered to defendant Metro Port
Service, Inc., it excepted to one drum in bad order.

Correspondingly, as to the second issue, it follows that the

losses/damages were sustained while in the respective and/or
successive custody and possession of defendants carrier
(Eastern), arrastre operator (Metro Port) and broker (Allied
Brokerage). This becomes evident when the Marine Cargo
Survey Report (Exh. G), with its "Additional Survey Notes", are
considered. In the latter notes, it is stated that when the
shipment was "landed on vessel" to dock of Pier # 15, South
Harbor, Manila on December 12, 1981, it was observed that
"one (1) fiber drum (was) in damaged condition, covered by
the vessel's Agent's Bad Order Tally Sheet No. 86427." The