41 Phil.

294

STREET, J.:

This is a petition for a writ of mandamus filed in this court by the Ynchausti Steamship Company to
compel the Purchasing Agent of the Philippine Islands and the Insular Auditor to sign, countersign,
and deliver to the petitioner a warrant upon the Treasurer of the Philippine Islands for the sum of
P82.79 in satisfaction of a claim for that amount, which is alleged to be due the petitioner as a
common carrier for freight earned in transporting for the Government two distinct consignments of
mineral oil from Manila to two other ports in the Philippine Islands. After the defendants had duly
answered, denying all the allegations of the petition except such as relate to the character and
places of residence of the parties to the petition (which are admitted) the controversy was
submitted for determination by this court upon an agreed statement of facts as follows:

"On July 23, 1918, the Government of the Philippine Islands, acting by and through the respondent
Insular Purchasing Agent, employed the services of the petitioner, Ynchausti Steamship Co., a
common carrier, for the transportation, on board the steamship Venus, from the port of Manila to
the port of Aparri, Cagayan, of a consignment of merchandise, consisting of thirty (30) cases of
'White Rose' mineral oil of two five-gallon cans to the case; and on September 18, 1918, the said
Government likewise employed the services of petitioner for the transportation on board the
steamship Venus, from Manila to Aparri, Cagayan, of ninety-six cases of 'Cock' brand mineral oil, ten
gallons to the case. The goods were delivered by the shipper to the carrier, which accordingly
received them, and to evidence the contract of transportation, the parties duly executed and
delivered what is popularly called the Government bill of lading (General Form 9-A), hereto attached,
marked Exhibit A and made a part hereof, wherein and whereby it was stipulated that the carrier,
the petitioner Ynchausti & Co., received the above-mentioned supplies in apparent good condition,
obligating itself to carry said supplies to the place agreed upon, in accordance with the authorized
and prescribed rates and classifications, and subject to the law of common carriers in force on the
date of the shipment, and to the conditions prescribed by the Insular Collector of Customs in
Philippine Marine Regulations at page 16 under the heading of 'Bill of Lading Conditions,' hereto
attached, marked Exhibit B and made a part hereof.

"Upon the delivery of the said shipment of 'Cock' brand oil the consignee claimed that one case was
delivered empty, and noted such claim upon the bill of lading; and upon the delivery of the said
shipment of 'White Rose,' brand oil the consignee claimed that one case was delivered empty, and
noted said claim upon the bill of lading.

"Thereafter, notwithstanding the protestations of the petitioner, Ynchausti Steamship Co., that said
shortages were due to causes entirely unknown to it, and were not due to any fault or negligence on
its part, or on the part of its agents or servants, the Acting Insular Purchasing Agent of the Philippine
Islands notified the petitioners herein that after due investigation the Insular Auditor found and
decided that the leakages of the two whole cases were due to its negligence and that the deduction
of the sum of P22.53, the invoice value of the goods lost, and held by the Auditor to be the true
value thereof had been authorized by the said Insular Auditor.
"Petitioner thereupon protested against the threatened deduction, and demanded that it be paid
the full amount due for the transportation of the two said shipments of merchandise, to wit, the
sum of P82.79, as shown by its transportation voucher presented in this cause, hereto attached,
marked Exhibit C and made a part hereof.

"Thereafter, notwithstanding the protest and demand of the petitioner as aforesaid, the Insular
Auditor, in conformity with his ruling, declined and still declines to issue to the petitioner a warrant
for the full sum of P82.79,and has tendered to it a warrant for the sum of P60.26, which the
petitioner has refused to accept.

"The sum of P22.53 authorized to be deducted by the Insular Auditor, as appears herein, has not at
any time been liquidated by consent, agreement, or by the judgment of any court of competent
jurisdiction."

Upon a perusal of the foregoing agreed statement it will be seen that the present litigation had its
origin in a situation practically identical with that considered by this court in Compaiiia General de
Tabacos vs. French and Unson (39 Phil., 34). It will be noted, however, that the case mentioned was
decided upon demurrer, while the one now before us is to be heard and determined upon the
petition, answer, and the admitted facts.

We note that in this case, as in the case of Compania General de Tabacos vs. French and Unson
(supra), the petition alleges that the leakage of the lost gasoline was due to causes unknown to the
petitioner and was not due to any fault or negligence of petitioner, its agents, or servants. The
respondents, by demurring to the petition in the earlier case, admitted that allegation. In the case
now before us that allegation is put in issue, and we find nothing in the admitted statement of facts
to support it. It results that if that allegation is material to the relief here sought, the petition must
fail.

We are of the opinion that the allegation in question is material and that the relief sought in this
case cannot be granted.

In section 646 of the Administrative Code it is provided that when Government property is
transmitted from one place to another by carrier, it shall be upon proper bill of lading, or receipt,
from such carrier; and it shall be the duty of the consignee, or his representative, to make full
notation of any evidence of loss, shortage, or damage, upon the bill of lading, or receipt, before
accomplishing it. It is admitted by the petitioner in the agreed statement of facts that the consignee,
at the, time the oil was delivered, noted the loss in the present case upon the two respective bills of
lading. The notation of these losses by the consignee, in obedience to the precept of section 646 of
the Administrative Code, is competent evidence to show that the shortage in fact existed. As the
petitioner admits that the oil was received by it for carriage and inasmuch as the fact of loss is
proved in the manner just stated, it results that there is a presumption that the petitioner was to
blame for the loss; and it was incumbent upon the petitioner in order to entitle it to relief in this case
to rebut that presumption by proving, as is alleged in the petition, that the loss was not due to any
fault or negligence of the petitioner.

The mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of
destination in bad order, makes out a prima facie case against the carrier, so that if no explanation is
given as to how the injury occurred, the carrier must be held responsible. (4 R. C. L., p. 917.) It is
incumbent upon the carrier to prove that the loss was due to accident or some other circumstance
inconsistent with its" liability. (Articles 361-363, Code of Commerce.) Indeed, if the Government of
the Philippine Islands had instituted an action in a court of law against the petitioner to recover the
value of the oil lost while these consignments, were in the course of transportation, it would, upon
the facts appearing before us, have been entitled to judgment.

From this it is apparent that the mandamus prayed for cannot be granted. It is a rule of universal
application that a petition for extraordinary relief of the character here sought must show merit.
That is, the petitioner's right to relief must be clear. Such cannot be said to be the case where, as
here, a presumption of responsibility on the part of the petitioner stands unrefuted upon the record.

We are of the opinion that, in the absence of proof showing that the carrier was not at fault in
respect to the matter under discussion, the Insular Auditor was entitled to withhold, from the
amount admittedly due to the petitioner for the freight charges, a sum sufficient to cover the value
of the oil lost in transit.

The petition will be dismissed, with costs against the petitioner. So ordered.

Mapa, C. J., Araullo, Avanceña and Villamor, JJ., concur.

Malcolm, J., concurs in the result.

SOUTHERN LINES INC VS CA AND CITY OF ILOILO

DOCTRINE: If the fact of improper packing is known to the carrier or his servants, or apparent upon
ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of
liability for loss or injury resulting therefrom.

FACTS:

The City of Iloilo requisitioned for rice from the National Rice and Corn Corporation (NARIC).

NARIC shipped 1,726 sacks of rice consigned to the City of Iloilo on board of SS General Wright
belong to Southern Lines.
The City of Iloilo received the shipment and paid the amount stated in the bill of lading (around Php
63K).

However, at the bottom of the bill of lading, it was noted that City of Iloilo received the merchandise
in the same condition as when shipped, except that it received only 1,685 sacks.

Upon actual weighing, it was discovered that the shortage was equal to 41 sacks of rice.

Thus, the City of Iloilo filed a complaint against NARIC and Southern Lines for the recovery of the
value of the shortage of the shipment of rice (Php 6,486.35).

The lower court absolved NARIC but sentenced Southern Lines to pay the amount.

CA affirmed.

Hence, this petition for review.

Southern Lines claims exemption from liability by contending that the shortage in the shipment of
rice was due to such factors as shrinkage, leakage or spillage of the rice on account of the bad
condition of the sacks at the time it received the same and negligence of the agents of City of Iloilo in
receiving the shipment.

ISSUES:

Whether Southern Lines is liable for the loss or shortage of the rice shipped. YES

Whether the City of Iloilo is precluded from filing an action for damages on account of its failure to
present a claim within 24 hours from receipt of the shipment as stated in the bill of lading. NO

HELD:

YES. The SC held that the contention of Southern Lines with respect to the improper packing is
untenable. Under Art. 361 of the Code of Commerce, the carrier, in order to free itself from liability,
was only obliged to prove that the damages suffered by the goods were “by virtue of the nature or
defect of the articles.” Under Art. 362, the plaintiff, in order to hold the defendant liable, was
obliged to prove that the damages to the goods is by virtue of their nature, occurred on account of
its negligence or because the defendant did not take the precaution adopted by careful persons. It
held that if the fact of improper packing is known to the carrier or his servants, or apparent upon
ordinary observation, but it accepts the goods notwithstanding such condition, it is not relieved of
liability for loss or injury resulting therefrom.

NO. The SC noted that Southern Lines failed to plead this defense in its answer to City of Iloilo’s
complaint and, therefore, the same is deemed waived and cannot be raised for the first time. The SC
also cited the finding of the CA that City of Iloilo filed the action within a reasonable time; that the
action is one for the refund of the amount paid in excess, and not for damages or the recovery of
shortage; the bill of lading does not at all limit the time for the filing of action for the refund of
money paid in excess.
DELSAN TRANSPORT LINES INC. v. AMERICAN HOME ASSURANCE CORPORATION

GR NO. 149019, August 15, 2006

Garcia, J.

Facts of the Case:

Petitioner, Delsan Transport Lines Inc. (DELSAN) is a domestic corporation which owns and operates
the vessel MT Larusan. On the other hand, defendant American Home Assurance Corporation
(AHAC) is a foreign insurance company licensed to do business in the Philippines thru its agent,
American-International Underwriters, Inc. it is engaged in insuring cargoes for transportation within
the PH. On August 4, 1984 Delsan received on board MT Larusan a shipment of automotive diesel at
the Bataan Refinery Corp. for transportation and delivery to the bulk depot of Bacolod City of Caltex
Phils. Inc. (Caltex) pursuant to a contract of afreightment. The shipment was insured by AHAC. On
August 7, 1984, the shipment arrived at Bacolod and unloading operations commenced at 1:30pm.
At about 10:30pm the discharging had to be stopped because the port bow mooring of the vessel
was intentionally cut or stolen by unknown persons. Because of such, the vessel drifted westward
dragged and severed the rubber hose, causing the diesel oil to spill into the sea.

To avoid further spillage, the vessel’s crew

tried water flushing but to no avail. The shore tender, who was waiting for the completion of the
water flushing was surprised when the tanker signaled a red light which meant stop pumping.
Unaware of what happened, the shore tender did not shut the tank gate valve. Because the gates
remained open, the diesel previously discharged from the vessel into the shore tank backflowed. The
vessel crew was not able to inform the people at the depot about the incident due to the non-
availability of a pump boat. After almost an hour, the gauger and an assistant surveyor from Caltex
depot boarded the vessel and it was only then that they found out about what happened. Caltex
then sought recovery of the loss but Delsan refused to pay. As insurer, AHAC paid Caltex. AHAC, as
the subrogee of Caltex instituted civil cases against Delsan for the loss. The trial court rendered
decision in favor of AHAC. Delsan appealed the decision to the CA. The latter affirmed the findings of
the lower court ruling that Delsan failed to exercise the extraordinary diligence of a good father of a
family in the handling of its cargo and applied Article 1736 that since the discharging of the diesel
was not completed, there was actual delivery of the Cargo to Caltex. Delsan contends that there was
contributory negligence on the part of Caltex and that the loss due to backflow occurred when the
diesel oil was already completely delivered to Caltex. Hence, this petition.

Issues:

a. Whether or not the spillage was due to the contributory negligence of Caltex;

b. Whether or not the loss through backflow should not be borne by Delsan because it was already
delivered to Caltex shore tank;

Ruling:

a. There is no contributory negligence on the part of Caltex. Common carriers are bound to observe
extraordinary diligence in the vigilance over the goods transported by them. They are presumed to
have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. To
overcome the presumption of negligence in case of loss, destruction or deterioration of the goods,
the common carrier must prove that it exercised extraordinary diligence. the proximate cause of the
spillage and backflow of the diesel oil was due to the severance of the port bow mooring line of the
vessel and the failure of the shore tender to close the storage tank gate valve. Upon boarding on the
vessel by the two personnel of Caltex, they immediately reported the same. The crew of the vessel
should have exerted its most effort to inform the shoe tender about the port bow mooring line was
severed.

b. No, Delsan should bear the loss. The cargo was still in the custody of Delsan because the
discharging has not yet been finished when the backflow occurred. Article 1736 provides that the
extraordinary responsibility of common carrier last 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 a person who has the right
to receive them. Since the discharging has not yet been finished the carrier still has the responsibility
to guard and preserve the goods.