Facts: Uy Bico and Servando Loaded Goods

CASE TITLE Parties Keywords
Servando v Philippine Steam Navigation Consignees: Uy Bico and Servando Warehouse razed by fire;
Co. Common Carrier: Philipppine Steam
Facts: Uy Bico and Servando loaded goods Navigation Co. (PSN)
in the ship of Phil Steamship for Goods: Cavans of rice and colored paper, toys
transportation to Manila. Upon arrival of the and general merchandise
goods, they were stored in the customs Who won: PSN (CC)
warehouse. The consignees were notified
about the arrival of the shipment and
demanded them to remove the same. The
warehouse burned resulting to the
destruction of the goods.
Held: The SC absolved the CC of liability
because of the following:
a) The Bill of Lading (B/L) stipulation that
states that “goods are at the risk of the
owner unless the loss or destruction is due
to the shipowner’s negligence” is valid and
not contrary to public policy.
b) There is nothing in the record to show that
the CC,incurred in delay in the performance
of its obligation. The CC had not only
notified consignees of the arrival of their
shipment, but had demanded that the same
be withdrawn
c) The CC’s or its employees CANNOT be
charged with negligence. The storage of the
goods in the Customs warehouse pending
withdrawal thereof by the consignees was
undoubtedly made with their knowledge and
consent. Since the warehouse belonged to
and was maintained by the government, it
would be unfair to impute negligence to the
CC, the latter having no control whatsoever
over the same.
Short Summary:
On November 6, 1963, appellees (Consignees) Clara Uy Bico and Amparo Servando loaded on board the PSN's vessel (Carrier) for, carriage from
Manila to Pulupandan, Negros Occidental. The following (Cargoes), to wit (as evidenced by the corresponding bills of lading issued by the PSN):
o Clara Uy Bico - 1,528 cavans of rice valued at P40,907.50;
o Amparo Servando - 44 cartons of colored paper, toys and general merchandise valued at P1,070.50;
Upon arrival of the vessel at Pulupandan in the morning of November 18, 1963, the cargoes were discharged, complete and in good order, unto
the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin,
destroying appellees cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice. Appellees' claims for the
value of said goods were rejected by the PSN.
Lower court : PSN loses
Issue: WN PSN should be liable for the razed goods despite having discharged, complete and in good order onto the warehouse without
negligence and after giving notice and reasonable opportunity to withdraw goods of consignees which were soon thereafter destroyed. NO
 Article 1736 imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally
placed in their possession "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."
o The (lower) court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the
delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of
the goods to the appellees, the loss is chargeable against the PSN.
o It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the
responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation:
 "Clause 14.Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless such loss or
damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage caused by force majeure,
dangers or accidents of the sea or other waters; war; public enemies; . . . fire . . . "
o A stipulation by the parties in the bills of lading issued for the cargoes in question, limiting the responsibility of the carrier for the
lost or damage that may be caused to the shipment is valid where there is nothing therein that is contrary to law, moral or public
policy, and is binding upon the parties even if written on the back of the bill of lading and not signed by the parties.
o Besides, the agreement contained in the above quoted Clause 14 is a mere iteration of the basic principle of law written in Article
1174 of the Civil Code: "Article 1174.Except in cases expressly specified by the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events
which should not be foreseen, or which, though foreseen, were inevitable." Thus, where fortuitous event or force majeure is the
immediate and proximate cause of the loss, the obligor is exempt from liability for non-performance.
 There is nothing in the record to show that PSN carrier incurred in delay in the performance of its obligation. It appears that PSN had not
only notified appellees of the arrival of their shipment, they had demanded that the same be withdrawn. In fact, pursuant to such demand,
appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse.
 Nor can the PSN or its employees be charged with negligence. The storage of the goods in the Customs warehouse pending withdrawal
thereof by the appellees was undoubtedly made with their knowledge and consent. Since the warehouse belonged to and was maintained by
the government, it would be unfair to impute negligence to the PSN, the latter having no control whatsoever over the same. YU BIAO case
not applicable here. The lower court in its decision relied on the ruling laid down in Yu Biao Sontua vs. Ossorio, where this Court held the
defendant liable for damages arising from a fire caused by the negligence of the defendant's employees while loading cases of gasoline and
petroleum products. But unlike in the said case, there is not a shred of proof in the present case that the cause of the fire that broke out in the
Custom's warehouse was in any way attributable to the negligence of the PSN or its employees. Under the circumstances, the PSN is plainly
not responsible.
Separate Opinions
AQUINO, J., concurring:
Common carriers; extent of extraordinary liability. (this could actually be the point why this case was assigned )
Under Article 1738 of the Civil Code "the extraordinary liability of the common carrier continues to be operative even during the time the goods
are stored in the 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.''
Non-liability for loss of goods due to fortuitous event;

It would not be legal and just to hold the carrier liable to the consignee for the loss of the goods, where from the time the goods in question were
deposited in the Bureau of Customs' warehouse in the morning of their arrival up to two o'clock in the afternoon of the same day, when the
warehouse was burned, Servando and Uy Bico, the consignees, had reasonable opportunity to remove the goods. Clara had removed more than
one-half of the rice consigned to her. Moreover, the shipping company had no more control and responsibility over the goods after they were
deposited in the customs warehouse by the arrastre and stevedoring operator. No amount of extraordinary diligence on the part of the carrier could
have prevented the loss of the goods by fire which was of accidental origin. The consignee should bear the loss which was due to a fortuitous
event.
Other Codal Provisions/Doctrines:
 In a legal sense and, consequently, also in relation to contracts, a 'caso fortuito' presents the following essential characteristics
(1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent
of the human will;
(2) it must be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be foreseen, it must be impossible to avoid;
(3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and
(4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor." In the case at bar, the burning of
the customs warehouse was an extraordinary event which happened independently of the will of the PSN. The latter could not have foreseen
the event.

The Philippine American General Shipper/Consignee: SMC Vessel sank off;
Insurance Co. v MGG Marine Services Insurer: Philippine American General
and Doroteo Gaerlan insurance
Facts: When the CC left the dock, the Common Carrier: Dorotego Gaerlan (M/V
weather was still calm. However, a day after, Peatheray Patrick-G)
it sank due Agent of Carrier: MGG Marine Services
to strong winds and huge waves. Who won: MGG Marine Services and
Held: When the CC left the dock, the Doroteo Gaerlan (CC)
weather was still calm. However, a day after,
it sank due to strong winds and huge waves.
There was a fortuitous event that suffices to
relieve the CC from liability. Moreover,
emergency measures were taken by the crew
to save the vessel by bailing out the water.
Short Summary:
On March 1, 1987, San Miguel Corporation insured several beer bottle cases with an aggregate value of P5,836,222.80 with petitioner Philippine
American General Insurance Company. The vessel left the port of Mandaue for Bislig, Surigao del Sur. The cargo were loaded on board the M/V
Peatheray Patrick-G to be transported from Mandaue City to Bislig, Surigao del Sur. On March 3, the vessel sank off Cawit Point, Surigao. The
cargo belonging to SMC was lost. SMC claimed the amount of loss from Philamgen insurance. Philamgen requested a certain Mr. Sayo to survey
the circumstances of the loss of cargo. In his report, the vessel was structurally sound and that he did not see any damage or crack thereon. He
concluded that the proximate cause of the listing and subsequent sinking of the vessel was the shifting of ballast water from starboard to portside.
SMC was paid in full of the amount 5.8 Million php because of the insurance contract. Philamgen sued MGG Marine Services and Gaerlan as
subrogee of San Miguel at Makati RTC Branch 134. Meanwhile, the Board of Marine Inquiry made an investigation and declared that the cause of
sinking was a fortuitous event, and that the captain and the crew should not be liable administratively.
The RTC held in favour of PhilamGen. MGG and Gaerlan appealed to the CA, which reversed the decision of the RTC, because of the fortuitous
event which absolves them from any liability. PhilamGen appeals to the Supreme Court.
Issue: Whether or not MGG and Gaerlan are liable, despite the fortuitous event. (NO)
 Common carriers, from the nature of their business and for reasons of public policy, are mandated to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers transported by them. Owing to this high degree of
diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods
transported by them are lost, destroyed or if the same deteriorated
 In order that a common carrier may be absolved from liability where the loss, destruction or deterioration of the goods is due to a natural
disaster or calamity, it must further be shown that the such natural disaster or calamity was the proximate and only cause of the loss; there
must be “an entire exclusion of human agency from the cause of the injury of the loss.”
 The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk, said vessel encountered strong winds and huge waves ranging
from six to ten feet in height. The presence of a crack in the ill-fated vessel through which water seeped in was confirmed by the Greutzman
Divers who were commissioned by the private respondents to conduct an underwater survey and inspection of the vessel to determine the
cause and circumstances of its sinking. In its report, Greutzman Divers stated that “along the port side platings, a small hole and two separate
cracks were found at about midship.”
 The findings of the Board of Marine Inquiry indicate that the attendance of strong winds and huge waves while the M/V Peatheray Patrick-G
was sailing through Cortes, Surigao del Norte on March 3, 1987 was indeed fortuitous. A fortuitous event has been defined as one which
could not be foreseen, or which though foreseen, is inevitable. The vessel was also seaworthy. It had 3 diesel engines, 3 operational
propellers, and had a captain and the chief mates had been commanding the vessel for more than 3 years.
 Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur on March 3, 1987 was shown to be the proximate and
only cause of the sinking of the M/V Peatheray Patrick-G and the loss of the cargo belonging to San Miguel Corporation, private respondents
cannot be held liable for the said loss.

Philippine American General Insurance v Shipper: Davao Union Marketing Corporation Fiesta; typhoon “Saling”; storm signal number
CA Insurer: Phil-American General insured the 3
Facts: There was a delay in unloading the cement for the value of 3.4M
cargo because of the town fiesta and the Consignee: Bicol Union Center of Pasacao,
delay of issuance of permits. Thus, there was Camarines Sur
no unloading done for 40 days. While the Common Carrier: Transpacific Towage, Inc.
vessel was waiting, a typhoon arrived and it Goods: GI sheets and sacks of cement
caused the ship to sink. The villagers looted Who won: Transpacific (CC)
the goods that washed up ashore.
Held: The SC held that the delay in
unloading was due to a fortuitous event.
Several factors were
a) the natural conditions of the port
b) the customs of the place and the typhoon
Moreover, the CC also exercised due
diligence during and after the loss as the
coastguard and policemen were informed to
avoid the looting. However, they still did not
arrive. Therefore, the CC is not liable.
Short Summary:
On September 4, 1985 the Davao Union Marketing Corporation shipped on board the vessel M/V "Crazy Horse" operated by the Transpacific
Towage, Inc. cargo of GI sheets and sacks of cement.
o 9,750 sheets of union brand GI sheets with a declared value of P1,086,750.00
o 86,860 bags of union Pozzolan and union Portland Cement with a declared value of P4,300,000.00.
The cargo was consigned to the Bicol Union Center of Pasacao, Camarines Sur, with a certain Pedro Olivan as the "Notify-Party." Phil-American
General insured the cement for the value of 3.4M.
Upon arrival, on September 7, 1985, of M/V Crazy Horse in Pasacao port, it notified Bicol Union (consignee). However, the discharging cannot
be effected immediately and continuously because:
o First, the buoys were installed only on September 11;
o Second, the discharge permit was secured by the consignee only on September 13;
o Third a wooden catwalk had to be installed, which was completed only on September 26;
o Fourth, the discharging was not continuous because there were intermittent rains and the stevedores supplied by the consignee did not
work during the town fiesta
In October 16, super typhoon “Saling” was expected to hit the country (240/kph winds). In fact, Pasacao was placed under storm signal number 3.
The discharging of the cargos had to be suspended because of the strong winds and sea turbulence. They were able to discharge before suspension
a total of 59,625 bags of cement and 26 crates of GI sheets.
In preparation for the typhoon, the crew loaded it with 22 tons of water and 3,000 liters of fuel. The shipmaster further ordered that the ship be
moved 300 meters seaward to avoid hitting the catwalk and the rocks. At about 5:20 A.M. of October 18, when the shipmaster ordered the
maneuvering of the vessel but it could not be steered on account of the strong winds and rough seas.
o The vessel's lines snapped, causing her to be dragged against the rocks, and the anchor chain stopper gave way.
o The shipmaster ordered that the ship be abandoned and thereafter he sought the assistance of the local government to save the pilferage.
He was unable to get any assistance.
o When they returned, a lot of people were already looting its cargo.
o The ship kept on hitting the rocks which caused the vessel to break into two (2) parts and to sink partially
The total number of cement bags damaged and/or lost was 26,424 costing P1,056,960.00 while there were 4,000 pieces of the GI sheets
unrecovered, the cost of which was P454,250.00. Because the cargo was insured by it the Philippine American General Insurance it paid Davao
Union and thus, subrogated to its rights. Phil-Am General sent their demand to Transpacific, the latter however refused to pay. The lower court
ruled that Davao Union was partly liable, thus mitigating its claim to 3⁄4 of the value. CA reversed this and ordered that it was solely due to a
fortuitous event, hence the present petition.
W/N Transpacific is liable to the insured cargo. No.
Typhoon Saling caused the ship to sink. The following facts are not contested: (1) that the cargo-carrying vessel was wrecked and partially sank
on 18 October 1985 due to typhoon "Saling"; (2) that typhoon "Saling" was a fortuitous event; and (3) that at the time said vessel sank, the
remaining undischarged cargo, were still on board the vessel.
 At the time when Pasacao was placed under Signal No. 3, the unloading was still unfinished despite the lapse of 40 days from the time it
arrived or 34 days after it started unloading. The Lower Court ruled that the lapse of 34 days already constituted as an unreasonable delay.
Under 1740 of the CC, if the carrier incurs negligent delay, a natural disaster shall not excuse him from liability. CA, however, said that it
was not solely attributable to human factors. It ruled that the loss was due to the typhoon and that 1739 (due diligence before, during and
after) were exhibited Transpacific.
 Transpacific argues that it had already delivered the goods by notifying the consignee. Phil-Am General argues that Transpacific had the duty
to unload. The wharf where the vessel had to dock was shallow and rocky, hence it had to drop anchor some distance away. Buoys had to be
constructed in order that the vessel may properly moored. A catwalk and wooden stage had to be constructed, a crane was needed for this and
the crane was not immediately available. Apart from these preparations and constructions that had to be made, the weather was not
cooperative. Even before the typhoon struck there were intermittent rains, hence the unloading was not continuous. It was the fiesta of the
Virgin of Penafrancia and the stevedores refused to work during the celebration.
 Transpacific is exempt from liability for the loss of the cargo, pursuant to Article 1740 of the Civil Code. Transpacific through its shipmaster
exercised due negligence to prevent or minimize the loss of the cargo. shipmaster tried to maneuver the vessel amidst strong winds and rough
seas; when water started to enter and later the engine broke down, the shipmaster ordered the ship to be abandoned, but he sought police
assistance to prevent loss; the shipmaster reported the incident to the Philippine Coast Guard but nothing can be done.
Other
 Sub-issue on res judicata: the Board of Marine Inquiry rendered a decision dated 11 April 1988 holding that said shipmaster was not guilty of
"negligence as the proximate cause of the grounding and subsequent wreckage of M/S "Crazy Horse", hence, recommending that the captain,
his officers and crew be absolved from any administrative liability arising out of the subject incident. It is not res judicata since the requisites
are wanting (identity of parties, same cause of action, etc)

Chan Keep v. Chan Gioco Shipper: Chan Keep
Facts: CC was contracted to transport Common carrier: Leon Chan Gioco et al
cavans of rice. The ship sank allegedly due Goods: 120 cavanes of rice
to strong winds so CC put up the defense of Who won: Keep (Shipper)
fortuitous event.
Held: No fortuitous event. The wind was not
strong enough to sink a properly equipped
boat managed by a capable crew. In effect,
the court ruled that the blowing of strong
winds must be anticipated.
Short Summary:
Keep contracted Gioco to transport by boat 120 cavanes of rice from Luna to San Fernando, La Union in consideration of P0.25/cavan. On April
8, 1907, about 10pm, while entering the port of San Fernando, the boat sank. Keep instituted an action for recovery of sum of money for the value
of the lost rice in the CFI of La Union.
In the lower court, Gioco denied entering into a transportation contract. However, evidence was presented which upon evaluation showed the
existence of the contract.
Gioco et al also alleged that the sinking was due to a strong wind which was a result of an act of God (fuerza mayor) or an unavoidable accident
(caso fortuíto). They cited Article 1602 of the Civil Code which states:
"Carriers (by land or sea) are also responsible for losses and damages of the articles intrusted to them, unless they prove that the loss or damage
was the result of unavoidable accident (caso fortuíto) or an act of God (fuerza mayor)."
The CFI decided in favour of Keep. It found that the rice was lost through negligence, carelessness and lack of due precaution and ordered Gioco
et al to pay Keep.
All Gioco presented in support of his contention was the testimony of Captain Atregenio, a co-defendant, and one of the crew members. The
captain testified that while the boat was in front of the buoy just outside the harbour, the wind was strong and while changing the boat’s course,
the wind blew the boat over on one side so that so much water slipped onboard that the crew were compelled to strike sail, cast anchor, and escape
to shore by swimming with the aid of the oars, and that having been abandoned in that condition, the tide aided the wind in throwing the boat upon
one side and the sea swamped it completely.
ISSUE: W/ Gioco is liable for the value of the loss
Held: Yes. The loss was not due to caso fortuito or fuerza mayor.
The SC affirmed the decision of the CFI stating that the evidence supporting the defense of Gioco was insufficient and failed to satisfactorily
establish his claim. As appears in the code, the burden of proof rested upon the defendant Gioco. Both Gioco’s witness admitted that when the
boat sank there was no storm raging nor were the seas running dangerously high.
In contrast, an agent of the Weather Bureau of San Fernando said that that, while there may have been a strong wind blowing that night, there was
no such heavy wind or violent storm blowing as would unavoidably swamp a boat manned by a capable crew, commanded by a careful navigator,
and properly equipped for sailing the high seas.
The court noted that it not having been otherwise expressly stipulated, it is to be presumed that the owner of the boat, Leon Chan Gioco, when he
contracted to transport the rice in question over the high seas, obligated himself to furnish a boat suitable for the work which he undertook to
perform, and a capable crew to man her. The mere fact that a strong wind was blowing when the boat changed its course is not in itself sufficient
to excuse her owners for losses incurred. It cannot be justly said that the sinking of the boat was the result of an act of God or of an unavoidable
accident since the blowing of strong winds must always be anticipated by men who go down into the sea in ships.
In the absence of evidence of some unusual intervening cause, the court held that the exercise of due diligence in the performance of their duty by
the patron and the members of his crew, had they been reasonably expert as seafaring men, could have and would have avoided the accident which
actually occurred, provided the boat was suited to the work required of her.
Losses resulting from an accident caused by a sudden and unexpected gust of wind have under some circumstances been held to be
attributable to an act of God but it will be found that in all such cases the evidence introduced at the trial sustains a finding that the loss
was due to exceptional circumstances or conditions, beyond the control of those who would otherwise be responsible for the loss,
notwithstanding the exercise of due diligence, foresight, pains and care to avoid it; and, as has been said, mere proof that a strong wind is
blowing when a properly manned and equipped sailing boat tacks its course is not sufficient to sustain such a finding.

Arada v CA Shipper: San Miguel Corporation M/L Maya carrying san Miguel beer empties;
Facts; The CC was initially denied Common Carrier: South Negros Enterprises sunk due to storm
clearance, but was allowed to sail the next (Arada)
day. When it did sail, a typhoon developed Goods: 9,824 cases of beer empties valued at
and the ship ultimately sank. P176,824.80
Held: Even if typhoon caused the loss, the Who won: San Miguel (Shipper)
carrier was still remiss in its duty in
exercising due diligence in mitigating the
loss before, during and after the occurrence
of the typhoon. This is because the
shipmaster did not ascertain the direction of
the typhoon and did not consistently check
for weather reports. Hence, the CC cannot
use the complete defense of fortuitous event.
Short Summary:
Alejandro Arada, is the proprietor and operator of the firm South Negros Enterprises which has been organized and established for more than 10
years. It is engaged in the business of small scale shipping as a common carrier, servicing the hauling of cargoes of different corporations and
companies with the 5 vessels it was operating.
On March 24, 1982. Arada entered into a contract with San Miguel Corporation to safely transport as a common carrier, cargoes of the latter from
San Carlos City, Negros Occidental to Mandaue City using one of petitioner's vessels, M/L Maya. The cargoes consisted of 9,824 cases of beer
empties valued at P176,824.80, These were itemized.
On March 24, 1982, Arada thru its crew master, Mr. Vivencio Babao, applied for a clearance with the Philippine Coast Guard for M/L Maya to
leave the port of San Carlos City, but due to a typhoon, it was denied clearance by SNI Antonio Prestado PN who was then assigned at San Carlos
City Coast Guard Detachment.
On March 25, 1982 M/L Maya was given clearance as there was no storm and the sea was calm. Hence, said vessel left for Mandaue City. While
it was navigating towards Cebu, a typhoon developed and said vessel was buffeted on all its sides by big waves. Its rudder was destroyed and it
drifted for sixteen (16) hours although its engine was running.
On March 27, 1982 at about 4:00 a.m., the vessel sank with whatever was left of its cargoes. The crew was rescued by a passing pump boat and
was brought to Calanggaman Island. Later in the afternoon, they were brought to Palompon, Leyte, where Vivencio Babao filed a marine protest.
On the basis of such marine protest, the Board of Marine Inquiry conducted a hearing of the sinking of M/L Maya wherein San Miguel
Corporation was duly represented. Said Board made its findings and recommendation dated November 7, 1983 that the owner/operator, officers
and crew of M/L Maya be exonerated or absolved from any administrative liability on account of the incident.
The Board's report containing its findings and recommendation was then forwarded to the headquarters of the Philippine Coast Guard for
appropriate action. On the basis of such report, the Commandant of the Philippine Coast Guard rendered a decision dated December 21, 1984 in
SBMI Adm. Case No. 88-82 exonerating the owner/operator officers and crew of the ill-fated M/L Maya from any administrative liability on
account of said incident.
On March 25, 1983, San Miguel filed a complaint in the Regional Trial Court its first cause of action being for the recovery of the value of the
cargoes anchored on breach of contract of carriage.
RTC ruled in favor of Arada. CA reversed.
ISSUE: Whether or not Arada is liable as common carrier? YES.
In the case at bar, there is no doubt that petitioner Arada was exercising its function as a common carrier when it entered into a contract with
private respondent San Miguel to carry and transport the latter's cargoes. This fact is best supported by the admission of petitioner's son, Mr. Eric
Arada, who testified as the officer-in-charge for operations of South Negros Enterprises in Cebu City.
 A common carrier, both from the nature of its business and for insistent reasons of public policy is burdened by law with the duty of
exercising extraordinary diligence not only in ensuring the safety of passengers, but in caring for the goods transported by it. The loss or
destruction or deterioration of goods turned over to the common carrier for the conveyance to a designated destination raises instantly a
presumption of fault or negligence on the part of the carrier, save only where such loss, destruction or damage arises from extreme
circumstances such as a natural disaster or calamity.
 In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only
cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize the loss before, during and after
the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the
destruction or deterioration of the goods.
 In the instant case, the appellate court was correct in finding that petitioner failed to observe the extraordinary diligence over the cargo in
question and he or the master in his employ was negligent previous to the sinking of the carrying vessel. It will be noted that Vivencio Babao
knew of the impending typhoon on March 24, 1982 when the Philippine Coast Guard denied M/L Maya the issuance of a clearance to sail.
Less than 24 hours elapsed since the time of the denial of said clearance and the time a clearance to sail was finally issued on March 25,
1982. Records will show that Babao did not ascertain where the typhoon was headed by the use of his vessel's barometer and radio. Neither
did the captain of the vessel monitor and record the weather conditions everyday as required by Art, 612 of the Code of Commerce. Had he
done so while navigating for 31 hours, he could have anticipated the strong winds and big waves and taken shelter.
 A common carrier is obliged to observe extraordinary diligence and the failure of Babao to ascertain the direction of the storm and the
weather condition of the path they would be traversing, constitute lack of foresight and minimum vigilance over its cargoes taking into
account the surrounding circumstances of the case.
 While the goods are in the possession of the carrier, it is but fair that it exercises extraordinary diligence in protecting them from loss or
damage, and if loss occurs, the law presumes that it was due to the carrier's fault or negligence; that is necessary to protect the interest of the
shipper which is at the mercy of the carrier.
 Furthermore, the records show that the crew of M/L Maya did not have the required qualifications provided for in P.D. No. 97 or the
Philippine Merchant Marine Officers Law, all of whom were unlicensed. While it is true that they were given special permit to man the
vessel, such permit was issued at the risk and responsibility of the owner.
 Finally, petitioner claims that the factual findings of the Special Board of Marine Inquiry exonerating the owner/operator, crew officers of the
ill-fated vessel M/L Maya from any administrative liability is binding on the court. In rejecting petitioner's claim, respondent court was
correct in ruling that "such exoneration was but with respect to the administrative liability of the owner/operator, officers and crew of the ill-
fated" vessel. It could not have meant exoneration of appellee from liability as a common carrier for his failure to observe extraordinary
diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of his employees. Such is the function of
the Court, not the Special Board of Marine Inquiry."

Eastern Shipping Lines, Inc. v. CA Shipper: 13 coils rust
Facts: The lower hatch of the vessel was Insurer: First Nationwide Assurance
flooded with fresh water due to heavy rains. Corporation (FNAC)
It caused Consignee: E. Razon, Inc.
loss and damage to the cargo of the CC. Common Carrier: Eastern Shipping Lines,
Held: The heavy seas and rains referred to Inc. (EASTERN SHIPPING)
in the master’s report were not fortuitous Goods: 13 coils of uncoated 7-wire stress
events, but normal occurrences that an relieved wire strand for prestressed concrete
ocean going vessel, particularly in the month Who won: FNAC (Insurer)
of September which, in our area, is a month
of rains and heavy seas would encounter as
a matter of routine. They are not unforeseen
nor unforeseeable. These are conditions that
ocean-going vessels would encounter and
provide for, in the ordinary course of
voyage.
Short Summary:
13 coils of uncoated 7-wire stress relieved wire strand for prestressed concrete were shipped on board the vessel "Japri Venture," owned and
operated by Eastern Shipping Lines, Inc. (EASTERN SHIPPING). These were insured First Nationwide Assurance Corporation (FNAC). The
carrying vessel arrived in Manila and discharged the cargo to the custody of E. Razon, Inc. from whom the consignee's customs broker received it
for delivery to the consignee's warehouse. FNAC indemnified the consignee for damage and loss to the insured cargo, whereupon FNAC was
subrogated for the latter. FNAC now seeks to recover from EASTERN SHIPPING what it has indemnified the consignee, less, the salvage value
of the cargo. It appears that while enroute from Kobe to Manila, the carrying vessel "encountered very rough seas and stormy weather" for
three days, more or less, which caused it to roll and pound heavily, moving its master to execute a marine note of protest upon arrival at the
port of Manila. That the coils wrapped in burlap cloth and cardboard paper were stored in the lower hold of the hatch of the vessel which was
flooded with water about one foot deep; that the water entered the hatch when the vessel encountered heavy weather enroute to Manila. that upon
request, a survey of bad order cargo was conducted at the pier in the presence of the representatives of the consignee and E. Razon, Inc. and it was
found that seven coils were rusty on one side each; that upon survey conducted at the consignee's warehouse it was found that the "wetting (of the
cargo) was caused by fresh water" that entered the hatch when the vessel encountered heavy weather enroute to Manila ; and that all thirteen
coils were extremely rusty and totally unsuitable for the intended purpose.
The complaint that was filed by FNAC (Insurer) against Eastern Shipping and E. Razon Inc., in the RTC of Manila, was dismissed.
An appeal therefrom was interposed by the insurer to the CA: Eastern Shipper was ordered to pay FNAC.
Held: Eastern Shipper should be liable for the goods.
Eastern Shipping claims that it should not be held liable as the shipment was discharged and delivered completed into the custody of the arrastre
operator under clean tally sheets. While it is true the cargo was delivered to the arrastre operator in apparent good order condition, it is also
undisputed that while en route from Kobe to Manila, the vessel encountered "very rough seas and stormy weather", the coils wrapped in burlap
cloth and cardboard paper were stored in the lower hatch of the vessel which was flooded with water about one foot deep; that the water entered
the hatch; that a survey of bad order cargo which was conducted in the pier in the presence of representatives of the consignee and E. Razon, Inc.,
showed that seven coils were rusty on one side; that a survey conducted at the consignee's warehouse also showed that the "wetting (of the cargo)
was caused by fresh water" that entered the hatch when the vessel encountered heavy rain en route to Manila and that all thirteen coils were
extremely rusty and totally unsuitable for the intended purpose.
Consequently, based on these facts, the appellate court made the following findings and conclusions:
Plainly, the heavy seas and rains referred to in the master's report were not caso fortuito, but normal occurrences that an ocean-going vessel,
particularly in the month of September which, in our area, is a month of rains and heavy seas would encounter as a matter of routine. They are
not unforeseen nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a
voyage. That rain water (not sea water) found its way into the holds of the Jupri Venture is a clear indication that care and foresight did not attend
the closing of the ship's hatches so that rain water would not find its way into the cargo holds of the ship.
Moreover, under Article 1733 of the Civil Code, common carriers are bound to observe "extra-ordinary vigilance over goods . . . .according to all
circumstances of each case," and Article 1735 of the same Code states, to wit:
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
required in article 1733.
Since the carrier has failed to establish any caso fortuito, the presumption by law of fault or negligence on the part of the carrier applies;
and the carrier must present evidence that it has observed the extraordinary diligence required by Article 1733 of the Civil Code in order
to escape liability for damage or destruction to the goods that it had admittedly carried in this case. No such evidence exists of record.
Thus, the carrier cannot escape liability
The Court agrees with and is bound by the foregoing findings of fact made by the appellate court. The presumption, therefore, that the cargo was
in apparent good condition when it was delivered by the vessel to the arrastre operator by the clean tally sheets has been overturned and traversed.
The evidence is clear to the effect that the damage to the cargo was suffered while aboard EASTERN SHIPPING's vessel.

Compania Maritima v. CA Shipper: Vicente E. Concepcion, a civil Payloader damaged; declared as 2.5 tons
Facts: Conception contracted Compania engineer instead of 7.5 tons
Maritima to ship his construction equipment. Common Carrier: Compania
While Goods:
unloading, the payloader fell and it was Who won: Concepcion (Shipper) but liability
damaged. He sued CM. of Compania mitigated
Held: During unloading, the CC still had the
duty to exercise extraordinary diligence in
the care of the goods transported. It could’ve
used equipment with better capabilities (A
JUMBO) to unload the cargo and it also had
the duty to ascertain the capability of the
equipment it used. Therefore, it is liable for
the damage.
Short Summary:
Vicente E. Concepcion, a civil engineer doing business under the name and style of Consolidated Construction had a contract with the Civil
Aeronautics Administration (CAA) for the construction of the airport in Cagayan de Oro City (CDO). Being a Manila-based contractor, Vicente
E. Concepcion had to ship his construction equipment to CDO. Concepcion negotiated with Compania, thru its collector, Pacifico Fernandez for
the shipment to CDO of one (1) unit payloader, four (4) units 6x6 Reo trucks and two (2) pieces of water tanks. He was issued Bill of Lading 113
on the same date upon delivery of the equipment at the Manila North Harbor.
These equipment were loaded aboard the MV Cebu in its Voyage No. 316. The Reo trucks and water tanks were safely unloaded within a few
hours after arrival. The payloader was about two (2) meters above the pier in the course of unloading. The swivel pin of the heel block of the port
block of Hatch No. 2 gave way, causing the payloader to fall. The payloader was damaged and was thereafter taken to petitioner’s compound in
CDO.
Consolidated Construction wrote Compañia Maritima to demand a replacement of the payloader which it was considering as a complete loss
because of the extent of damage. Consolidated Construction likewise notified petitioner of its claim for damages. Meanwhile, Compania shipped
the payloader to Manila where it was weighed at the San Miguel Corporation. Finding that the payloader weighed 7.5 tons and not 2.5 tons as
declared in the Bill of Lading, Compania denied the claim for damages of Consolidated Construction contending that had Vicente E. Concepcion
declared the actual weight of the payloader, damage to their ship as well as to his payloader could have been prevented.
Consolidated Construction in the meantime bought a new payloader from Bormaheco, Inc. Vicente E. Concepcion filed an action for damages
against Compania with the CFI. CFI Manila dismissed the complaint stating that the proximate cause of the fall of the payloader was Vicente E.
Concepcion’s act or omission in having misrepresented the weight of the payloader which under declaration was intended to defraud Compañia
Maritima of the payment of the freight charges.The Court of Appeals reversed the trial court decision.
Issue: Whether or not the act of Concepcion in furnishing Compañia Maritima with an inaccurate weight was the proximate and only cause of the
damage when the payloader fell while being unloaded by Compania’s crew, as would absolutely exempt Compania from liability for damages
under paragraph 3 of Article 1734 of the Civil Code, which provides:
“Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following
causes only:
xxx xxx xxx
“(3) Act or omission of the shipper or owner of the goods.” – NO.
Held:
 The general rule under Articles 1735 and 1752 of the Civil Code is that common carriers are presumed to have been at fault or to have
acted negligently in case the goods transported by them are lost, destroyed or had deteriorated. To overcome the presumption of liability for
the loss, destruction or deterioration of the goods under Article 1735, the common carriers must prove that they observed extraordinary
diligence as required in Article 1733 of the Civil Code.
 It is incumbent upon the common carrier to prove that the loss, deterioration or destruction was due to accident or some other circumstances
inconsistent with its liability.
 In the instant case, Compania seems to have overlooked the extraordinary diligence required of common carriers in the vigilance over the
goods transported by them by virtue of the nature of their business, which is impressed with a special public duty.
o Article 1733 of the Civil Code provides: Common carriers, from the nature of their business and for reason of public policy, are
bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them
according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is futher expressed in Articles 1734, 1735 and 1745, Nos. 5, 6 and 7, x
xx
 Under Article 1736 of the Civil Code, the responsibility to observe extraordinary diligence commences and 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 the right to receive them without prejudice to the provisions of
Article 1738.
 Compania upon the testimonies of its own crew, failed to take the necessary and adequate precautions for avoiding damage to, or destruction
of, the payloader entrusted to it for safe carriage and delivery to Cagayan de Oro City. It cannot be reasonably concluded that the damage
caused to the payloader was due to the alleged misrepresentation of private respondent Concepcion as to the correct and accurate weight of
the payloader.
 It must be noted that the weight submitted by Concepcion was entered into the bill of lading by Compania thru its company collector, without
seeing the equipment to be shipped. The company never checked the information entered in the bill of lading. The weights stated in a bill of
lading are prima facie evidence of the amount received and the fact that the weighing was done by another will not relieve the common
carrier where it accepted such weight and entered it on the bill of lading.
 The damage caused to the machinery could have been avoided by the exercise of reasonable skill and attention on its part in overseeing the
unloading of such heavy equipment. Concepcion’s act of furnishing petitioner with an inaccurate weight of the payloader cannot be used by
said Compania as an excuse to avoid liability for the damage caused, as the same could have been avoided had Compania utilized the
“jumbo” lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes.
 While the act of Concepcion in furnishing Compania with an inaccurate weight of the payloader cannot successfully be used as an excuse by
petitioner to avoid liability to the damage thus caused, said act constitutes a contributory circumstance to the damage caused on the
payloader, which mitigates the liability for damages of petitioner in accordance with Article 1741 of the Civil Code, to wit:
o “Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause
thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably
reduced.”


Southern Lines, Inc. v. CA Shipper: National Rice and Corn Corporation Shortage of 41 socks of rice
Facts: Southern Lines, a CC, shipped sacks (NARIC)
of rice owned by NARIC. Upon arrival, there Insurer:
was a shortage. The CC argued that the Consignee: City of Iloilo
packaging was defective and this was the Common Carrier: Southern Lines, Inc.
cause of the damage. Goods: 1,726 sacks of rice
Held: CC is still liable because it accepted Who won: City of Iloilo (Consignee)
the goods with the knowledge of its improper
packaging. Moreover, it was also negligent
in not tying up the sacks properly.
Short Summary:
On August 24, 1948, the National Rice and Corn Corporation (NARIC) shipped 1,726 sacks of rice consigned to the City of Iloilo on board the SS
"General Wright" belonging to Southern Lines, Inc. Each sack of rice weighed 75 kilos and the entire shipment as indicated in the bill of lading
had a total weight of 129,450 kilos. According to the bill of lading, the cost of the shipment was P63,115.50 itemized
On September 3, 1948, the City of Iloilo received the shipment and paid the amount of P63,115.50. However, it was noted that the foot of the bill
of lading that the City of Iloilo 'Received the above mentioned merchandise apparently in same condition as when shipped, save as noted below:
actually received 1,685 sacks with a gross weight of 116,131 kilos upon actual weighing. Total shortage ascertained 13,319 kilos." The shortage
was equivalent to 41 sacks of rice, the proportionate value of which was P6,486.35.
On February 14, 1951 the City of Iloilo filed a complaint in the CFI of Iloilo against NARIC and Southern for the recovery of the amount of
P6,486.35 representing the value of the shortage of the shipment of rice. After trial, the lower court absolved NARIC from the complaint, but
sentenced Southern to pay the amount of P4,931.41 which is the difference between the sum of P6,486.35 and P1,554.94 representing the latter's
counterclaim for handling and freight. CA affirmed the judgment.
Issues: W/N Southern Lines is liable for the loss or shortage of the rice shipped – YES
Held:
 Article 361 of the Code of Commerce provides: ART. 361. — The merchandise shall be transported at the risk and venture of the shipper, if
the contrary has not been expressly stipulated. As a consequence, all the losses and deteriorations which the goods may suffer during the
transportation by reason of fortuitous event, force majeure, or the inherent nature and defect of the goods, shall be for the account and risk of
the shipper.
o Proof of these accidents is incumbent upon the carrier. Article 362 of the same Code provides:
 ART. 362. — Nevertheless, the carrier shall be liable for the losses and damages resulting from the causes mentioned in the preceding article
if it is proved, as against him, that they arose through his negligence or by reason of his having failed to take the precautions which usage his
established among careful persons, unless the shipper has committed fraud in the bill of lading, representing the goods to be of a kind or
quality different from what they really were.
If, notwithstanding the precautions referred to in this article, the goods transported run the risk of being lost, on account of their nature or by
reason of unavoidable accident, there being no time for their owners to dispose of them, the carrier may proceed to sell them, placing them
for this purpose at the disposal of the judicial authority or of the officials designated by special provisions.
 Under Art 361, in order to free itself from liability, defendant was only obliged to prove that the damages suffered by the goods were "by
virtue of the nature or defect of the articles." Under the provisions of Article 362, in order to hold the defendant liable, the plaintiff was
obliged to prove that the damages to the goods by virtue of their nature, occurred on account of defendant's negligence or because the it did
not take the precaution adopted by careful persons. (Government v. Ynchausti & Co., 40 Phil. 219, 223).
 Southern claims exemption from liability by saying that the shortage in the shipment of rice was due to such factors as the shrinkage, leakage
or spillage of the rice on account of the bad condition of the sacks at the time it received the same and the negligence of the agents of City of
Iloilo in receiving the shipment. 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 from such fact. (9 Am Jur.
869).
 The CA held that Southern admitted that the strings that tied the bags of rice were broken; some bags were with holes and plenty of rice were
spilled inside the hull of the boat, and that the personnel of the boat collected no less than 26 sacks of rice which they had distributed among
themselves This admission shows that the shortage resulted from the negligence of Southern Lines.
 Southern invokes Art. 366 of the Code of Commerce and the bill of lading to argue that 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. It also cites the cases of Government v.
Ynchausti & Co., 24 Phil. 315 and Triton Insurance Co. v. Jose, 33 Phil. 194, ruling to the effect that the requirement that the claim for
damages must be made within 24 hours from delivery is a condition precedent to the accrual of the right of action to recover damages. These
two cases are not applicable to the case at bar. In the first cited case, the plaintiff never presented any claim at all before filing the action. In
the second case, there was payment of the transportation charges which precludes the presentation of any claim against the carrier. (See
Article 366, Code of Commerce.)
 The record shows that Southern Lines failed to plead this defense in its answer to City of Iloilo's complaint and, therefore, the same is
deemed waived (Section 10, Rule 9, Rules of Court), and cannot be raised for the first time at the trial or on appeal. (Maxilom v. Tabotabo, 9
Phil. 390.) Moreover, as the CA observed that the records reveal that the City filed the present action, within a reasonable time after the short
delivery in the shipment of the rice was made. The present action is one for the refund of the amount paid in excess, and not for damages or
the recovery of the shortage; for admittedly the City had paid the entire value of the 1726 sacks of rice, subject to subsequent adjustment, as
to shortages or losses. The bill of lading does not at all limit the time for filing an action for the refund of money paid in excess.

Calvo v. UCPB General Insurance Shipper/Consignee: San Miguel Corp reels of semi-chemical fluting paper and reels
Insurer: UCPB General Insurance Co., Inc. of kraft.
Common Carrier: TCTSI (Calvo) 15 reels of the semi-chemical fluting paper
Goods: 114 reels of semi-chemical fluting were “wet/stained/torn” and 3 reels of kraft
paper and 124 reels of kraft liner board liner board were likewise torn
Who won: Calvo (CC)
Short Summary:
Virgines Calvo is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole proprietorship customs broker. Calvo entered into a
contract with San Miguel Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from
the Port Area in Manila to SMC’s warehouse at the Tabacalera Compound, Romualdez St., Ermita, Manila. The cargo was insured by respondent
UCPB General Insurance Co., Inc. The shipment in question, contained in 30 metal vans, arrived in Manila on board “M/V Hayakawa Maru” and,
after 24 hours, were unloaded from the vessel to the custody of the arrastre operator, Manila Port Services, Inc.
From July 23 to July 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and delivered it to
SMC’s warehous. On July 25, 1990, the goods were inspected by Marine Cargo Surveyors, who found that 15 reels of the semi-chemical fluting
paper were “wet/stained/torn” and 3 reels of kraft liner board were likewise torn. The damage was placed at P93,112.00. SMC collected payment
from respondent UCPB under its insurance contract for the aforementioned amount. In turn, respondent, as subrogee of SMC, brought suit against
Calvo. Regional Trial Court rendered judgment finding petitioner liable to respondent for the damage to the shipment. The decision was affirmed
by the Court of Appeals on appeal. Hence this petition for review on certiorari.
Held:
 De Guzman v. Court of Appeals - The Civil Code defines “common carriers” in the following terms: “Article 1732. Common carriers are
persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water,
or air for compensation, offering their services to the public.”
 Some ambiguities in Art 1732
o No distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity
o avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.
o fails to distinguish between a carrier offering its services to the “general public,” i.e., the general community or population, and one
who offers services or solicits business only from a narrow segment of the general population.
 Concept of “common carrier” under Article 1732 may be seen to coincide neatly with the notion of “public service,” under the Public Service
Act (Commonwealth Act No. 1416. Under Section 13, paragraph (b) of the Public Service Act, “public service” includes:
o “ x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with
general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common
carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship
line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop,
wharf or dock, ice plant, ice -refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and
power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other
similar public services. x x x” [8]
 There is greater reason for holding petitioner to be a common carrier because the transportation of goods is an integral part of her business.
 Now, as to petitioner’s liability, Art. 1733 of the Civil Code provides: Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case
 Compania Maritima v. Court of Appeals - the meaning of “extraordinary diligence in the vigilance over goods” was explained thus:
o vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for
avoiding damage to, or destruction of the goods entrusted to it for sale, carriage and delivery.
o render service with the greatest skill and foresight
o use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment, and to exercise due care in the
handling and stowage, including such methods as their nature requires.”
 In the case at bar, petitioner denies liability for the damage to the cargo. She claims that the “spoilage or wettage” took place while the goods
were in the custody of either the carrying vessel “M/V Hayakawa Maru,” which transported the cargo to Manila, or the arrastre operator, to
whom the goods were unloaded and who allegedly kept them in open air for nine days.
 Contrary to petitioner’s assertion, the Survey Report of the Marine Cargo Surveyors indicates that when the shipper transferred the cargo in
question to the arrastre operator, these were covered by clean Equipment Interchange Report (EIR) and, when petitioner’s employees
withdrew the cargo from the arrastre operator, they did so without exception or protest either with regard to the condition of container vans or
their contents.
 From the [Survey Report], it [is] clear that the shipment was discharged from the vessel to the arrastre, Marina Port Services Inc., in good
order and condition as evidenced by clean Equipment Interchange Reports (EIRs). Had there been any damage to the shipment, there would
have been a report to that effect made by the arrastre operator.
 to prove the exercise of extraordinary diligence, petitioner must do more than merely show the possibility that some other party could be
responsible for the damage. It must prove that it used “all reasonable means to ascertain the nature and characteristic of goods tendered for
[transport] and that [it] exercise[d] due care in the handling [thereof].” Petitioner failed to do this.
 Nor is there basis to exempt petitioner from liability under Art. 1734(4), which provides
o 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: (4) The character of the goods or defects in the packing or in the containers.
o For this provision to apply, the rule is that if the improper packing or, in this case, the defect/s in the container, is/are known to the
carrier or his employees or apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for damage resulting therefrom.

Ganzon v. CA Shipper/Consignee: Tumambing Mayor shot Tumambing
Facts: Tumambing contracted Ganzon to Common Carrier: Ganzon
haul scrap iron from Bataan to Manila. Goods: 305 tons of scrap iron
While the loading was underway, he acting Who won: Tumambing (Shipper)
mayor arrived with police and seized the
cargo. Some cargo was dumped and the
others were brought to a compound.
Held: Ganzon as CC was still held to be
liable for the following reasons:
a) The duty of extraordinary diligence
already began as Ganzon was already
placed in the possession of the iron
b) The acting mayor had NO AUTHORITY to
seize the goods
c) There was also no FORTUITOUS EVENT
as there was no force intimidation to render
it impossible for Ganzon to carry out his
obligation
Short Summary:
Tumambing executed in the CFI an action against Ganzon for damages based on culpa contractual. Antecedent facts are as follows.
Tumambing contracted the services of Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan to the port of Manila on board the lighter
LCT “Batman”. Ganzon sent Batman to Mariveles where it docked in 3ft. of water. Tumambing delivered the scrap iron to Filomeno Niza
(captain of the lighter) for loading, which was begun on the same date it was delivered. When half of the scrap iron was loaded, Mayor Jose
Advincula of Mariveles arrived and demanded 5k from Tumambing. The latter resisted and after a heated argument, Mayor Advincula shot at
Tumambing who was taken to the hospital in Balanga, Bataan for treatment
After a while, loading was resumed. However, Acting Mayor Basilio Rub, accompanied by 3 policemen, ordered Captain Niza and his crew to
dump the scrap iron. The rest was brought to the compound of NASSCO. Later on, Acting Mayor Rub issued a receipt stating that the
Municipality of Mariveles had taken custody of the scrap iron.
CA rendered a decision ordering Ganzon to pay Tumambing
ISSUE: W/N CA erred in finding Ganzon guilty of breach of contract of transportation because the scrap was placed in his custody and control.
NO!!!
W/N CA erred in condemning Ganzon for acts of employees dumping the scrap into the sea despite the fact that it was ordered by the local
government official. NO!!!
W/N CA failed to consider that the loss of the scrap was due to a fortuitous event. NO!!!
 As to the issue wherein Ganzon denies that the scrap had been placed unconditionally under his custody and control
o The scrap was, indeed, placed under his custody and control
o He agrees with the CA’s finding that Tumambing delivered the scraps to Captain Niza and that the scraps were freely admitted.
The scraps were also immediately loaded on the same day
o By the act of delivery, the scraps were unconditionally placed in the possession of control of the common carrier. Upon receipt, the
contract of carriage was deemed perfected.
o Consequently, Ganzon’s extraordinary responsibility commenced and pursuant to Art. 1736, the extraordinary responsibility would
cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive
them.
o Ganzon also failed to show that the loss of the scraps was due to any of the causes enumerated in Article 1734 of the Civil Code.
Hence, he is presumed to have acted negligently. Ganzon could have been exempted from liability had he been able to prove that
he observed extraordinary diligence
 As to the 2nd issue, which states that the loss of the scraps was due to an “order or act of competent public authority,” the SC disagrees
o It must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it was
issued under legal process of authority.
o Ganzon failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order was given in evidence.
Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles.
 As to the issue wherein Ganzon claims that the loss of the scraps was due mainly to the intervention of the municipal officials which
constitutes a caso fortuito, the SC finds that there was no caso fortuito
o The intervention of the municipal officials was not In any case, of a character that would render impossible the fulfillment by the
carrier of its obligation.
o The petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron.
o Moreover, there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation as to
completely overpower the will of the petitioner's employees. The mere difficulty in the fulfillment of the obligation is not
considered force majeure
MELENCIO-HERRERA, DISSENTING
Petitioner cannot be held liable in damages for the loss and destruction of the scrap iron. The loss of said cargo was due to an excepted cause an
“order or act of competent public authority.” The loading of the scap iron on the lighter had to be suspended because eof Municipal Mayor
Advincula’s intervention, who was a “competent public authority.” Ganzon had no control over the situation as, in fact, Tumambing himself, the
owner of the cargo, was impotent to stop the “act” of said official and even suffered gunshot wound on the occasion.
When loading was resumed, this time it was Acting Mayor Rub, accompanied by 3 policemen, who ordered the dumping of the scrap iron into the
sea right where the lighter was docked in 3 ft of water. Again, could the captain of the lighter and his crew defied said order?
Through the “order” or “act” of “competent public authority” therefore, the performance of a contractual obligation was rendered impossible.

Compania Maritima v. Insurance Shipper: Macleod and Company of the Loading of hemp; lighters
Company Philippines (Macleod)
Facts: The CC used its barges to transfer the Common Carrier: Compania Maritima
goods (hemp) of the shipper from the (Compania)
shipper’s warehouse to its own ship. En Goods: 2,645 bales of hemp
route to its ship, the barges sank and caused Who won: Compania (Carrier)
damage to the goods.
Held: The CC is liable because when it
loaded the goods into its barge, the duty to
exercise ED already commenced as it was
already placed in unconditional possession
of the goods.
Short Summary:
Sometime in October 1952, Macleod and Company of the Philippines (Macleod) contracted by telephone the services of Compania Maritima
(Compania), a shipping corporation, for the shipment of 2,645 bales of hemp from the former's Sasa private pier at Davao City to Manila and for
their subsequent transhipment to Boston, Massachusetts, USA, on board the S.S. Steel Navigator.
This oral contract was later on confirmed by a formal and written booking issued by Macleod's branch office in Sasa and handcarried to Compania
Maritima's branch office in Davao.
In compliance with the contract, Compania sent Macleod 2 lighters (with LCT Nos. 1023 and 1025) and the hemp was loaded there.
 The loading of the hemp was completed on October 29, 1952. The lighters were manned by a patron and an assistant.
 The patrons of both barges issued the corresponding carrier receipts.
o The 2 loaded barges proceeded to the government's marginal wharf in order to wait for S.S. Bowline Knot (belonging to
Compania) on which the hemp was to be loaded.
 On the night of October 29, or early October 30, LCT No. 1025 sank. This resulted in the damage or loss of 1,162 bales of hemp. Macleod
promptly notified Compania's main office in Manila and its Davao branch advising it of its liability.
o The damaged hemp was brought to Odell Plantation in Davao for cleaning, washing, reconditioning, and redrying.
o After reclassification, the reconditioned hemp's value was reduced from P116,835 to P84,887.27, or a loss of P31,947.72.
o Macleod also incurred other expenses on the course of reconditioning the hemp thus, the total loss added up to P60,421.02.
 All of Macleod's abaca shipments, including the bales of hemp loaded on Compania's LCT No. 1025 were insured with the Insurance
Company of North America against all losses and damages.
 Macleod filed a claim for loss with the insurance company which the latter paid the former for its losses.
 There was a subrogation agreement between them so as a result, Macleod assigned to the insurance company its rights over the insured and
damaged cargo.
o The insurance company sought Compania in order to recover but they failed in doing so thus, an action was filed in court.
The lower court ruled in favor of the insurance company and ordered the carrier to pay the insurance company the sum of P60,421.02,
representing the losses incured.
• This judgment was affirmed by the Court of Appeals.
ISSUES (related to transportation law):

1) W/N there was already an a contract of carriage even if the loss occurred when the hemp was loaded on a barge owned by the carrier, and no
bill of lading was issued (YES, there’s already a contract)
2) W/N the the sinking of the barge was due to fortuitous event, storm, or natural disaster (NO, not due to fortuitous event)
3) W/N refusal to check accounts is deemed as an implied admission on the part of the carrier that the shipper's documents are correct
RATIO:
 The fact that Compania sent its lighters free of charge to take the hemp from Macleod's wharf at Sasa preparatory to its loading onto the ship
Bowline Knot does not in any way impair the contract of carriage already entered into between the carrier and the shipper, for that
preparatory step is but part and parcel of said contract of carriage.
 The lighters were merely employed as the first step of the voyage, but once that step was taken and the hemp delivered to the carrier's
employees, the rights and obligations of the parties attached thereby subjecting them to the principles and usages of the maritime law.
 In other words, here we have a complete contract of carriage the consummation of which has already begun: the shipper delivering the cargo
to the carrier, and the latter taking possession thereof by placing it on a lighter manned by its authorized employees, under which Macleod
became entitled to the privilege secured to him by law for its safe transportation and delivery, and the carrier to the full payment of its freight
upon completion of the voyage.
 The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver, and if actually no goods are
received there can be no such contract. The liability and responsibility of the carrier under a contract for the carriage of goods commence on
their actual delivery to, or receipt by, the carrier or an authorized agent. ... and delivery to a lighter in charge of a vessel for shipment on the
vessel, where it is the custom to deliver in that way, is a good delivery and binds the vessel receiving the freight, the liability commencing at
the time of delivery to the lighter. ... and, similarly, where there is a contract to carry goods from one port to another, and they cannot be
loaded directly on the vessel and lighters are sent by the vessel to bring the goods to it, the lighters are for the time its substitutes, so that the
bill of landing is applicable to the goods as soon as they are placed on the lighters. (80 C.J.S., p. 901)
o ...Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper, then it can be
said with certainty that the relation of shipper and carrier has been established. On the other hand, the authorities are to the effect
that a bill of lading is not indispensable for the creation of a contract of carriage.
o Bill of lading not indispensable to contract of carriage. — As to the issuance of a bill of lading, although article 350 of the Code of
Commerce provides that "the shipper as well as the carrier of merchandise or goods may mutua-lly demand that a bill of lading is
not indispensable. As regards the form of the contract of carriage it can be said that provided that there is a meeting of the minds
and from such meeting arise rights and obligations, there should be no limitations as to form." The bill of lading is juridically a
documentary proof of the stipulations and conditions agreed upon by both parties. (Del Viso, pp. 314- 315; Robles vs. Santos, 44
O.G. 2268). In other words, the Code does not demand, as necessary requisite in the contract of transportation, the delivery of
the bill of lading to the shipper, but gives right to both the carrier and the shipper to mutually demand of each other the delivery
of said bill. (Sp. Sup. Ct. Decision, May 6, 1895). (Martin, Philippine Commercial Laws, Vol. II, Revised Edition, pp. 12-13)
o The liability of the carrier as common carrier begins with the actual delivery of the goods for transportation, and not merely
with the formal execution of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete delivery and
acceptance. Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual delivery
and acceptance are sufficient to bind the carrier. (13 C.J.S., p. 288)
 Compania disclaims responsibility for the damage of the cargo in question shielding itself behind the claim of force majeure or storm which
occurred on the night of October 29, 1952. But the evidence fails to bear this out.
Rather, it shows that the mishap that caused the damage or loss was due, not to force majeure, but to lack of adequate precautions or
measures taken by the carrier to prevent the loss as may be inferred from the following findings of the Court of Appeals:
o Aside from the fact that, as admitted by appellant's (Compania) own witness, the ill-fated barge had cracks on its bottom which
admitted sea water in the same manner as rain entered "thru tank man-holes", according to the patron of LCT No. 1023—
conclusively showing that the barge was not seaworthy — it should be noted that on the night of the nautical accident there was no
storm, flood, or other natural disaster or calamity.
o The marine surveyors’ report also confirmed this fact. Their report said that the sinking of the lighter was attributed to the 'non-
water-tight conditions of various buoyancy compartments’
o Certainly, winds of 11 miles per hour, although stronger than the average 4.6 miles per hour then prevailing in Davao on October
29, 1952, cannot be classified as storm.
 For according to Beaufort's wind scale, a storm has wind velocities of from 64 to 75 miles per hour;
 and by Philippine Weather Bureau standards winds should have a velocity of from 55 to 74 miles per hour in order to be
classified as storm
Others:
*SIDE ISSUE (just in case it will be asked): Has the Court of Appeals erred in regarding Exhibit NNN-1 (case did not mention what exactly this
was) as an implied admission by the carrier of the correctness and sufficiency of the shipper's statement of accounts contrary to the burden of
proof rule? It should be recalled in connection with this issue that during the trial of this case the carrier asked the lower court to order the
production of the books of accounts of the Odell Plantation containing the charges it made for the loss of the damaged hemp for verification of its
accountants, but later it desisted therefrom on the claim that it finds their production no longer necessary. This desistance notwithstanding, the
shipper however presented other documents to prove the damage it suffered in connection with the cargo and on the strength thereof the court a
quo ordered the carrier to pay the sum of P60,421.02. And after the Court of Appeals affirmed this award upon the theory that the desistance of
the carrier from producing the books of accounts of Odell Plantation implies an admission of the correctness of the statements of accounts
contained therein, petitioner now contends that the Court of Appeals erred in basing the affirmance of the award on such erroneous interpretation.
There is reason to believe that the act of petitioner in waiving its right to have the books of accounts of Odell Plantation presented in court is
tantamount to an admission that the statements contained therein are correct and their verification not necessary because its main defense here, as
well as below, was that it is not liable for the loss because there was no contract of carriage between it and the shipper and the loss caused, if any,
was due to a fortuitous event. Hence, under the carrier's theory, the correctness of the account representing the loss was not so material as would
necessitate the presentation of the books in question. At any rate, even if the books of accounts were not produced, the correctness of the accounts
cannot now be disputed for the same is supported by the original documents on which the entries in said books were based which were presented
by the shipper as part of its evidence. And according to the Court of Appeals, these documents alone sufficiently establish the award of
P60,412.02 made in favor of respondent.

Sarkies Tours Phils. v. CA Shipper: Fortades and siblings 3 pcs of luggage with optometry materials and
Facts: Fatima Fortades and her siblings Insurer: other important document were lost; Sarkies
boarded a Sarkies Tours bus from Manila to Consignee: Fortades offered 1k for each luggage but got declined
Legazpi and loaded 3 luggages, containing all Common Carrier: Sarkies Tours
of her optometry materials, her mother’s US Goods: 3pcs luggage with optometry materials
green card & other important documents. & other important doc.
The baggage compartment was not securely Who won: Fortades.
fastened, such that all but one bag remained
in the compartment. the Fortades’ filed a
damage suit for breach of contract of
carriage against Sarkies. Sarkies contends
that Fatima did not load any luggage on that
trip and even if she did, such was not
properly declared upon loading.
Held: CC is liable because that it did not
ensure that baggage compartment was not
properly locked, leading to the loss of several
luggages.
Short Summary:
Fatima boarded Sarkie’s De Luxe Bus No. 5 in Manila to Legazpi City. Brother Raul helped her load 3 pieces of luggage containing all of her
optometry review books, materials and equipment, trial lenses, trial contact lenses, passport and visa, as well as her mother Marisol’s US
immigration green card, among other important documents and personal belongings.
 Her belongings were kept in the baggage compartment of the bus, but during a stopover at Daet, it was discovered that all but one bag
remained in the open compartment. The others, including Fatima’s things, were missing and could have dropped along the way. Some
of the passengers suggested retracing the route to try to recover the lost items, but the driver ignored them and proceeded to Legazpi
City.
 Fatima immediately reported the loss to her mother who went to Sarkies’ office for recourse, but Sarkies Tours merely offered her 1K
for each piece of luggage lost, which she turned down. After returning to Bicol, they asked assistance from the radio stations and even
from Philtranco bus drivers who plied the same route on August 31st. The effort paid off when one of Fatima’s bags was recovered.
Marisol also reported the incident to the NBI’s field office in Legazpi City, and to the local police.
 In a letter, Sarkies apologized for the delay and said that a team has been sent out to Bicol for the purpose of recovering or at least
getting the full detail of the incident.
After more than 9 months of fruitless waiting, Fortades et al. decided to file a claim for damges to recover the value of the remaining lost items, as
well as moral and exemplary damages, attorney’s fees and expenses of litigation. They claimed that the loss was due to Sarkies’ failure to observe
extraordinary diligence in the care of Fatima’s luggage and that Sarkies dealt with them in bad faith from the start.
 Sarkies, on the other hand, disowned any liability for the loss on the ground that Fatima did not bring any piece of luggage with her and
even if she did, none was declared upon boarding its bus.
The RTC ruled in favor of Fortades et al. The CA affirmed the judgment, but deleted the award of moral and exemplary damages. The CA also
denied the motion for reconsideration filed by Sarkies, which prompted it to bring the case to the SC.
ISSUE: Whether or not Sarkies is liable for the loss of the goods as a common carrier? Yup.
RATIO:
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 the goods transported by them, and this liability 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 for
transportation until the same are delivered, actually or constructively, by the carrier to the person who has a right to receive them, unless the loss
is due to any of the excepted causes under Article 1734 thereof.
 Here, the cause of the loss was Sarkies’ negligence in not ensuring that the doors of the baggage compartment of its bus were securely
fastened. As a result of this lack of care, almost all the luggage was lost to the prejudice of the paying passengers.
Where the common carrier accepted its passenger’s baggage for transportation and even had it placed in the vehicle by its own employee, its
failure to collect the freight charge is the common carrier’s own lookout. It is responsible for the consequent loss of the baggage.
 Here, Sarkies’ employee even helped Fatima Minerva Fortades and her brother load the luggages in the bus’ baggage compartment,
without asking that they be weighed, declared, receipted or paid for. Neither was this required of the other passengers.
Here, based on the documentary and testimonial evidence presented at the trial, it was established that Fatima indeed boarded Sarkies’ bus and she
brought 3 pieces of luggage with her, as testified by her brother Raul, who helped her pack her things and load them on said bus. One of the bags
was even recovered with the help of a Philtranco bus driver. In its letter, Sarkies tacitly admitted its liability by apologizing to Fortades et al. and
assuring them that efforts were being made to recover the lost items.
Fatima was not the only one who lost her luggage. Other passengers suffered a similar fate. Dr. Lita Samarista testified that Sarkies offered her
1K for her lost baggage and she accepted it. Carleen Carullo-Magno also lost her chemical engineering review materials, while her brother lost
abaca products he was transporting to Bicol.



Lu Do v. Binamira Shipper: Delta Photo 6 cases of film and photo supplies were shipped
FACTS: Delta shipped 6 cases of film and Insurer: but showed signs of pilferage upon receipt of
photo supplies to consignee Binarmina. Consignee: Binarmina Binarmina; shipment was delivered to customs
Petioner Lu Do, agent of carrier, hired Cebu Common Carrier: Lu Do as agent of the exempting CC from liability
Stevedoring to unload. It was received by carrier
Visayan Cebu, arrastre operator. Both Goods: 6 cases of films and photographic
stevedoring and arrastre had checkers for bad supplies
cargo. Neither one made any record of bad Who won: Lu Do
cargo. When received by respondent
Binarmina, there were signs of pilferage.
HELD:
Is carrier liable? Nope. Although the
extraordinary diligence of a Common Carrier
extends up to the time the goods are
delivered to the consignee, such diligence
can be subject of stipulation that limits
liability during the time when goods are not
under the control of the carrier. Here, there
was such a stipulation in the Bill of Lading.
It stipulated that upon reaching customs
authorities, carrier shall not be liable.
Short Summary:
On August 10, 1951, the Delta Photo Supply Company of New York shipped on board the M/S "Fernside" at New York, U.S.A., six cases of
films and/or photographic supplies.
a. It was consigned to the order of respondent I. V. BINARMINA.
b. For this shipment, Bill of Lading No. 29 was issued.
c. The ship discharged her cargo on September 23, and 24, 1951, including the shipment in question, placing it in the possession and
custody of the arrastre operator of said port, the Visayan Cebu Terminal Company, Inc.
Petitioner, LU DO, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to unload its cargo.
d. It prepared a separate list of good order cargo and bar order cargo.
e. It had a designated checker to do this (Villamor)
All the cargo unloaded was received by Visayan Cebu Terminal Company, Inc., the arrastre operator.
a. This company also had it’s checker (Quijano)
b. It also prepared separate lists of good and bad cargo
This 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 unloading from the ship, respondent Binarmina took delivery of his six cases of photographic supplies
from the arrastre operator.
f. He discovered that the cases showed signs of pilferage and, consequently, he hired marine surveyors, R. J. del Pan & Company,
Inc., to examine them.
g. The surveyors examined the cases and made a physical count of their contents in the presence of representatives of petitioner Lu
Do, respondent Binarmina and the stevedoring company.
h. The finding of the surveyors showed that some films and photographic supplies were missing valued at P324.63.
ISSUE: W/N 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?
RATIO:
The Court of Appeals found for the affirmative, making on this point the following comment:
 We believe delivery to the customs authorities is not the delivery contemplated by Article 1736, supra, in connection with second paragraph
of Article 1498, supra, 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. In the case at bar, the presumption against the carrier, represented appellant as its
agent, has not been successfully rebutted.
It is now contended that the Court of Appeals erred in its finding not only because it made wrong interpretation of the law on the matter, but also
because it ignored the provisions of the bill of lading covering the shipment wherein it was stipulated that the responsibility of the carrier
is limited only to losses that may occur while the cargo is still under its custody and control.
We believe this contention is well taken. It is true that, 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 on the new Civil
Code, 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 (Article 1735, Idem.), 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” but these provisions only apply when the loss, destruction or deterioration takes place while
the goods are in the possession of the carrier, and not after it has lost control of them.
 The reason is obvious. 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 of the owner
who is at its mercy. The situation changes after the goods are delivered to the consignee.
We believe however that 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 we may say that 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. And this is precisely what was done by the parties herein. In the bill of lading that was issued covering the shipment in
question, 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 by inserting therein the following provisions:
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. . . . (Emphasis ours.)
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. . . . (Emphasis ours.)
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 entirely at the option of the Carrier and solely at the expense of the shipper or consignee.
It therefore appears clear that the carrier does not assume liability for any loss or damage to the goods once they have been "taken into the custody
of customs or other authorities", or when they have been delivered at ship's tackle. These stipulations are clear. They have been adopted precisely
to mitigate the responsibility of the carrier considering the present law on the matter, and we find nothing therein that is contrary to morals or
public policy that may justify their nullification. We are therefore persuaded to conclude that the carrier is not responsible for the loss in question,
it appearing that the same happened after the shipment had been delivered to the customs authorities.


Samar Mining Co., Inc. v. Nordeutscher Lloyd Shipper: Samar Mining 1 crate of optima wire sieves
FACTS: Samar Mining imported 1 crate Optima welded Insurer: never received by consisgnee
wedge wire sieves through a vessel by Norduetscher Lloyd Consignee: Samar Mining samar at port in Davao; Bill of
represented by CF Sharp and is covered by Bill of Lading 18 Common Carrier: Nordeutscher Lloyd Lading 18 limits liability of
issued to consignee Samar Mining. The crate was unloaded in represented by CF Sharp & Co CC only up to port of
Manila port and delivered in good condition to warehouse of Goods: Optime welded wedge wire sieves discharge – Davao.
AMCYL. The goods were however never delivered to, nor Who won: Nordeutscher Lloyd
received by, the consignee at the port of destination Davao.
HELD:
BILL OF LADING DETAILS: : There is an undertaking of
M/S SCHWABENSTEIN only up to the port of discharge
from ship in Manila. Section 11 of Bill of Lading No. 18 and
the third paragraph of Section 1 thereof are valid
stipulations between the parties insofar as they exempt the
carrier from liability for loss or damage to the goods while
the same are not in the latter's actual custody.The
responsibility as a common carrier ceased the moment the
goods were unloaded in Manila and in the matter of
transshipment, acted merely as an agent of the shipper and
consignee.
Short Summary:
SAMAR MINING COMPANY, INC., imported one (1) crate Optima welded wedge wire sieves through the M/S SCHWABENSTEIN a vessel
owned by defendant-appellant NORDEUTSCHER LLOYD, (represented in the Philippines by its agent, C.F. SHARP & CO., INC.), which
shipment is covered by Bill of Lading No. 18 duly issued to consignee SAMAR MINING COMPANY, INC.
 Upon arrival of the aforesaid vessel at the port of Manila, the aforementioned importation was unloaded and delivered in good order and
condition to the bonded warehouse of AMCYL.
 The goods were however never delivered to, nor received by, the consignee at the port of destination Davao.
SAMAR SENT letters of complaint sent to NORDUETSCHER however they failed to elicit the desired response, SAMAR then, filed a formal
claim for P1,691.93, the equivalent of $424.00 at the prevailing rate of exchange at that time, against the former, but neither paid. Hence, the
filing of the instant suit to enforce payment. NORDUETSCHER brought in AMCYL as third party defendant.
CFI : ordered NORDUETSCHER to pay the amount of P1,691.93 plus attorney's fees and costs. However, the Court stated that defendants may
recoup whatever they may pay plaintiff by enforcing the judgment against third party defendant AMCYL which had earlier been declared in
default. Nordeutscher Lloyd and C.F. Sharp & Co. appealed from said decision.
Bill of Lading No. 18 sets forth that one (1) crate of Optima welded wedge wire sieves was received by the carrier NORDEUTSCHER LLOYD at
the "port of loading" which is Bremen, Germany, while the freight had been prepaid up to the port of destination or the "port of discharge of goods
in this case, Davao, the carrier undertook to transport the goods in its vessel, M/S SCHWABENSTEIN only up to the "port of discharge
from ship-Manila. Thereafter, the goods were to be transshipped by the carrier to the port of destination or "port of discharge of goods”
 SECTION 1, PARA 3 The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage occurring before the
goods enter ship's tackle to be loaded or after the goods leave ship's tackle to be discharged, transshipped or forwarded ... (Emphasis
supplied)
 SECTION 11: Whenever the carrier or master may deem it advisable or in any case where the goods are placed at carrier's disposal at or
consigned to a point where the ship does not expect to load or discharge, the carrier or master may, without notice, forward the whole or
any part of the goods before or after loading at the original port of shipment, ... This carrier, in making arrangements for any
transshipping or forwarding vessels or means of transportation not operated by this carrier shall be considered solely the forwarding
agent of the shipper and without any other responsibility whatsoever even though the freight for the whole transport has been collected
by him. ... Pending or during forwarding or transshipping the carrier may store the goods ashore or afloat solely as agent of the shipper
and at risk and expense of the goods and the carrier shall not be liable for detention nor responsible for the acts, neglect, delay or failure
to act of anyone to whom the goods are entrusted or delivered for storage, handling or any service incidental thereto (Emphasis
supplied)
NORDEUTSCHER now shirk liability for the loss of the subject goods by claiming that they have discharged the same in full and good condition
unto the custody of AMCYL at the port of discharge from ship — Manila, and therefore, pursuant to the aforequoted stipulation (Sec. 11) in the
bill of lading, their responsibility for the cargo had ceased.
ISSUE: WON the Stipulations in the Bill of Lading exempting the carrier from liability arising from loss of goods not in its actual custody are
valid? YES
RATIO:
The validity of stipulations in bills of lading exempting the carrier from liability for loss or damage to the goods when the same are not in its
actual custody has been upheld in PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968).
 “The short form Bill of Lading states in no uncertain terms that the port of discharge of the cargo is Manila, but that the same was to be
transshipped beyond the port of discharge to Davao City. Pursuant to the terms of the long form Bill of Lading, appellee's responsibility
as a common carrier ceased the moment the goods were unloaded in Manila and in the matter of transshipment, appellee acted merely
as an agent of the shipper and consignee.
 Same facts as the present case – discharge in Manila, destination in Davao
It is clear, then, that in discharging the goods from the ship at the port of Manila, and delivering the same into the custody of AMCYL, the bonded
warehouse, appellants were acting in full accord with the contractual stipulations contained in Bill of Lading No. 18. The delivery of the goods to
AMCYL was part of appellants' duty to transship the goods from Manila to their port of destination-Davao.
Section 11 of Bill of Lading No. 18 and the third paragraph of Section 1 thereof are valid stipulations between the parties insofar as they
exempt the carrier from liability for loss or damage to the goods while the same are not in the latter's actual custody.
Article 1736 is applicable to the instant suit. There is actual delivery in contracts for the transport of goods when possession has been turned
over to the consignee or to his duly authorized agent and a reasonable time is given him to remove the goods. There was actual delivery to the
consignee through its duly authorized agent, the carrier.
Two undertakings appeared embodied and/or provided for in the Bill of Lading in question.
 The first is FOR THE TRANSPORT OF GOODS from Bremen, Germany to Manila as a carrier.
 The second, THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao, with appellant acting as agent of the consignee.
But even as agent of the consignee, NORDEUTSCHER cannot be made answerable for the value of the missing goods. It is true that the
transshipment of the goods, which was the object of the agency, was not fully performed. However, NORDEUTSCHER had commenced said
performance, the completion of which was aborted by circumstances beyond its control. An agent who carries out the orders and instructions of
the principal without being guilty of negligence, deceit or fraud, cannot be held responsible for the failure of the principal to accomplish the object
of the agency,
The records fail to reveal proof of negligence, deceit or fraud committed by appellant or by its representative in the Philippines. Neither is there
any showing of notorious incompetence or insolvency on the part of AMCYT, which acted as NORDEUTSCHER substitute in storing the goods
awaiting transshipment. The actions of appellant carrier and of its representative in the Philippines being in full faith with the lawful stipulations
of Bill of Lading No. 18 and in conformity with the provisions of the New Civil Code on common carriers, agency and contracts, they incur no
liability for the loss of the goods in question.



Bankers and Manufacturers Assurance Shipper: Ali Trading Cases of copper tubings were transported thru 3
Corp. v. CA Insurer: Bankers and Manufacturers Corp container vans, 2 of which were uninspected; 7
FACTS: Ali Trading imported to Manila Consignee: cases were missing
108 cases of copper tubings thru 3 container Common Carrier: F.E. Zuellig
vans, insured by Bankers and Manufacturers Goods: 108 cases of copper tubings
Corp. When the copper tubings arrived in Who won: F.E. Zuellig and E. Razon
Manila, 2 container vans were brought to the
consignee’s warehouse without undergoing
inspection in the pier yard. In the consignee’s
warehouse, the loss of 7 cases was found out.
The missing cases came from the
uninspected containers. Bankers and
Manufacturers paid Ali Trading. Subrogating
the rights of Ali Trading, Bankers and
Manufacturers was claiming for
reimbursement from F.E Zuellig, the
representative of the carrier.
RATIO: the two containers should have
been inspected in the pier where the carrier
still has custody over them. Without the
inspection, it is deemed that the consignee
accepted the containers in good condition.
Hence the burden of proof is on Bankers and
Manufacturers Corp.
Short Summary:
108 cases of copper tubings were imported by Ali Trading Company. The tubings were insured by petitioner BANKERS &
MANUFACTURERS ASSURANCE CORP (“Bankers”) and arrived in Manila on board and vessel S/S "Oriental Ambassador”. The 108 cases
were turned over to the private respondent E. Razon, the Manila arrastre operator upon discharge at the waterfront.
The carrying vessel is represented in the Philippines by its agent, the other private respondent, F. E. Zuellig and Co., Inc., Upon inspection by the
importer, the shipment was allegedly found to have sustained loses by way of theft and pilferage for which Bankers, as insurer, compensated the
importer in the amount of P31,014.00.
 Bankers in subrogation of the importer-consignee and on the basis of what it asserts had been already established — that a portion of that
shipment was lost through theft and pilferage — forthwith concludes that the burden of proof of proving a case of non-liability shifted to
private respondents, one of whom, the carrier, being obligated to exercise extraordinary diligence in the transport and care of the shipment.
The implication of Banker's statement is that private respondents have not shown why they are not liable. The premises of the argument of
petitioner may be well-taken but the conclusions are not borne out or supported by the record.
It must be underscored that the shipment involved in the case at bar was "containerized"..
 A shipment under this arrangement is not inspected or inventoried by the carrier whose duty is only to transport and deliver the containers in
the same condition as when the carrier received and accepted the containers for transport
Upon arrival in Manila on November 4, 1978, the shipment was discharged in apparent good order and condition and from the pier's docking
apron, the containers were shifted to the container yard of Pier 3 for safekeeping.
 3 weeks later, one of the container vans, said to contain 19 cases of the cargo, was "stripped" in the presence of petitioner's surveyors, and
three cases were found to be in bad order. The 19 cases of the van stripped were then kept inside Warehouse No. 3 of Pier 3 pending
delivery. It should be stressed at this point, that the three cases found in bad order are not the cases for which the claim below was presented,
for although the three cases appeared to be in bad order, the contents remained good and intact.
 The two other container vans were not moved from the container yard and they were not stripped. On December 8, 1978, the cargo was
released to the care of the consignee's authorized customs broker, the RGS Customs Brokerage. The broker, accepting the shipment without
exception as to bad order, caused the delivery of the vans to the consignee's warehouse in Makati. It was at that place, when the contents of
the two containers were removed and inspected, that petitioner's surveyors reported, that checked against the packing list, the shipment in
Container No. OOLU2552969 was short of seven cases.
ISSUE: W/N the burden of proof rests on Zuellig, the representative agent of the carrier who brought the goods. NO.
RATIO:
Under the prevailing circumstances, it is therefore, not surprising why the Court of Appeals in sustaining the trial court, simply quoted the latter,
thus:
 It must be also considered that the subject container was not stripped of its content at the pier zone. The two unstripped containers
(together with the 19 cases removed from the stripped third container) were delivered to, and received by, the customs broker for the
consignee without any exception or notation of bad order of shortlanding (Exhs. 1, 2 and 3 Vessel). If there was any suspicion or
indication of irregularity or theft or pilferage, plaintiff or consignee's representatives should have noted the same on the gate passes or
insisted that some form of protest form part of the documents concerning the shipment. Yet, no such step was taken. The shipment
appears to have been delivered to the customs broker in good order and condition and complete save for the three cases noted as being
apparently in bad order.
 Consider further that the stripping of the subject container was done at the consignee's warehouse where, according to plaintiff's
surveyor, the loss of the seven cases was discovered. The evidence is not settled as whether the defendants' representative (Zuellig) were
notified of, and were present at, the unsealing and opening of the container in the bodega. Nor is the evidence clear how much time
elapsed between the release of the shipment from the pier and the stripping of the containers at consignee bodega. All these fail to
discount the possibility that the loss in question could have taken place after the container had left the pier. (pp. 20-21, Rollo)
Verily, if any of the vans found in bad condition, or if any inspection of the goods was to be done in order to determine the condition thereof, the
same should have been done at the pierside, the pier warehouse, or at any time and place while the vans were under the care and custody of the
carrier or of the arrastre operator. Unfortunately for petitioner, even as one of the three vans was inspected and stripped, the two other vans and
the contents of the owner previously stripped were accepted without exception as to any supposed bad order or condition by petitioner's own
broker. To all appearances, therefore, the shipment was accepted by petitioner in good order.
It logically follows that the case at bar presents no occasion for the necessity of discussing the diligence required of a carrier or of the theory of
prima facie liability of the carrier, for from all indications, the shipment did not suffer loss or damage while it was under the care of the carrier, or
of the arrastre operator.
WHEREFORE, the petition is hereby DISMISSED



Regional Container v. Netherlands Insurance Shipper: Temic Epoxy molding compound
FACTS: 405 cartons of Epoxy Molding Compound (insured by Netherlands) Insurer: Netherlands shipped thru refrigerated
was transported by Pacific Eagle in Refrigerated Container from Singapore Consignee: container; when unloaded
to Manila for Temic. Pacific Eagle then loaded the refrigerated container on Common Carrier: RCL and from the ship, the
board M/V Piya Bhum, a vessel owned by RCL. The cargo was surveyed,and EDSA Shipping (as agent) temperature fluctuated
the temperature reading was constant when it was in the ship, but when the Goods: Epoxy molding because the condenser fan
cargo had already been unloaded from the ship – the temperature fluctuated compound was burnt.
with a reading of 33º Celsius. The surveyors believed the fluctuation was Who won:
caused by the burnt condenser fan motor of the refrigerated container. The
cargo was completely damaged.
HELD: RCL and EDSA are liable based on presumption of negligence. 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. RCL and EDSA Shipping failed to prove that they did
exercise that degree of diligence required by law over the goods they
transported. It is proven that the fluctuation of the temperature in the
refrigerated container van, as recorded in the temperature chart,
occurred after the cargo had been discharged from the vessel and was already
under the custody of the arrastre operator, ICTSI.
Short Summary:
RCL is a foreign corporation based in Singapore. It does business in the Philippines through its agent, EDSA Shipping, a domestic corporation
organized and existing under Philippine laws.
Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands Insurance) is likewise a domestic corporation engaged in the marine
underwriting business.
 405 cartons of Epoxy Molding Compound were consigned to be shipped from Singapore to Manila for Temic Telefunken
Microelectronics Philippines (Temic).
 U-Freight Singapore PTE Ltd. (U-Freight Singapore), a forwarding agent based in Singapore, contracted the services of Pacific Eagle Lines
PTE. Ltd. (Pacific Eagle) to transport the subject cargo. The cargo was packed, stored, and sealed by Pacific Eagle in its Refrigerated
Container.As the cargo was highly perishable, the inside of the container had to be kept at a temperature of 0º Celsius.
 Pacific Eagle then loaded the refrigerated container on board the M/V Piya Bhum, a vessel owned by RCL, with which Pacific Eagle had a
slot charter agreement. RCL duly issued its own Bill of Lading in favor of Pacific Eagle.
 To insure the cargo against loss and damage, NETHERLANDS INSURANCE issued a Marine Open Policy in favor of Temic, to cover all
losses/damages to the shipment.
 The M/V Piya Bhum docked in Manila. After unloading the refrigerated container, it was plugged to the power terminal of the pier to keep
its temperature constant. idel Rocha (Rocha), Vice-President for Operations of Marines Adjustment Corporation, accompanied by two
surveyors, conducted a protective survey of the cargo.
 They found that based on the temperature chart, the temperature reading was constant from October 18, 1995 to October 25, 1995 at 0º
Celsius. However, at midnight of October 25, 1995 – when the cargo had already been unloaded from the ship – the temperature fluctuated
with a reading of 33º Celsius. Rocha believed the fluctuation was caused by the burnt condenser fan motor of the refrigerated container.
 Temic received the shipment. It found the cargo completely damaged. Temic filed a claim for cargo loss against NETHERLANDS, with
supporting claims documents. The Netherlands Insurance paid Temic the sum of P1,036,497.00 under the terms of the Marine Open Policy.
Temic then executed a loss and subrogation receipt in favor of Netherlands Insurance.
 Seven months from delivery of the cargo or on June 4, 1996, NETHERLANDS INSURANCE filed a complaint for subrogation of insurance
settlement with the RTC, Branch 5, Manila, against “the unknown owner of M/V Piya Bhum” and TMS Ship Agencies (TMS), the latter
thought to be the local agent of M/V Piya Bhum’s unknown owner.
 Netherlands Insurance amended the complaint to implead EDSA Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight Singapore, and
U-Ocean (Phils.), Inc. (U-Ocean), as additional defendants.
 A third amended complaint was later made, impleading Pacific Eagle in substitution of Eagle Liner Shipping Agencies.
 RCL and EDSA Shipping denied negligence in the transport of the cargo; they attributed any negligence that may have caused the loss of the
shipment to their co-defendants.
o They likewise asserted that no valid subrogation exists, as the payment made by Netherlands Insurance to the consignee was
invalid.
o By way of affirmative defenses, RCL and EDSA Shipping averred that the NETHERLANDS has no cause of action, and is not the
real party-in-interest, and that the claim is barred by laches/prescription.
o RCL and EDSA Shipping insisted that Netherlands Insurance had (1) failed to prove any valid subrogation, and (2) failed to
establish that any negligence on their part or that the loss was sustained while the cargo was in their custody.
 RTC - handed down an Order dismissing Civil Case on demurrer to evidence. The trial court ruled that while there was valid subrogation, the
defendants could not be held liable for the loss or damage, as their respective liabilities ended at the time of the discharge of the cargo from
the ship at the Port of Manila.
 CA reversed, RCL and EDSA were made to pay. The others were not made liable.
 The CA dismissed Netherland Insurance’s complaint against the other defendants after finding that the claim had already been barred by
prescription.
 RCL and EDSA shipping appeals.
ISSUE: WON the CA correctly held RCL and EDSA Shipping liable as common carriers under the theory of presumption of negligence. – YES,
CA was correct
RATIO:
In Central Shipping Company, Inc. v. Insurance Company of North America, we reiterated the rules for the liability of a common carrier
for lost or damaged cargo as follows:
(1) Common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of
each case;
(2) In the event of loss, destruction, or deterioration of the insured goods, common carriers are responsible, unless they can prove that
such loss, destruction, or deterioration was brought about by, among others, “flood, storm, earthquake, lightning, or other natural
disaster or calamity”; and
(3) In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have
acted negligently, unless they observed extraordinary diligence.
RCL AND EDSA Shipping’s DEFENSE: RCL and EDSA Shipping disclaim any responsibility for the loss or damage to the goods in question.
They contend that the cause of the damage to the cargo was the “fluctuation of the temperature in the reefer van,” which fluctuation
occurred after the cargo had already been discharged from the vessel; no fluctuation, they point out, arose when the cargo was still on board M/V
Piya Bhum.
 As the cause of the damage to the cargo occurred after the same was already discharged from the vessel and was under the custody of the
arrastre operator (International Container Terminal Services, Inc. or ICTSI), RCL and EDSA Shipping posit that the presumption of
negligence provided in Article 1735 of the Civil Code should not apply.
 What applies in this case is Article 1734, particularly paragraphs 3 and 4 thereof, which exempts the carrier from liability for loss or
damage to the cargo when it is caused either by an act or omission of the shipper or by the character of the goods or defects in the packing
or in the containers. Thus, RCL and EDSA Shipping seek to lay the blame at the feet of other parties.
SC  RCL and EDSA Shipping are wrong.

 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, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods
they transported. Indeed, there is sufficient evidence showing that the fluctuation of the temperature in the refrigerated container van, as
recorded in the temperature chart, occurred after the cargo had been discharged from the vessel and was already under the custody of the
arrastre operator, ICTSI.
 This evidence, however, does not disprove that the condenser fan – which caused the fluctuation of the temperature in the refrigerated
container – was not damaged while the cargo was being unloaded from the ship. It is settled in maritime law jurisprudence that cargoes
while being unloaded generally remain under the custody of the carrier; RCL and EDSA Shipping failed to dispute this.
 RCL and EDSA Shipping could have offered evidence before the trial court to show that the damage to the condenser fan did not occur: (1)
while the cargo was in transit; (2) while they were in the act of discharging it from the vessel; or (3) while they were delivering it actually or
constructively to the consignee. They could have presented proof to show that they exercised extraordinary care and diligence in the
handling of the goods, but they opted to file a demurrer to evidence.
 As the order granting their demurrer was reversed on appeal, the CA correctly ruled that they are deemed to have waived their right to
present evidence, and the presumption of negligence must stand.
 It is for this reason as well that we find RCL and EDSA Shipping’s claim that the loss or damage to the cargo was caused by a defect in the
packing or in the containers. To exculpate itself from liability for the loss/damage to the cargo under any of the causes, the common carrier
is burdened to prove any of the causes in Article 1734 of the Civil Code claimed by it by a preponderance of evidence. If the carrier
succeeds, the burden of evidence is shifted to the shipper to prove that the carrier is negligent.
RCL and EDSA Shipping, however, failed to satisfy this standard of evidence and in fact offered no evidence at all on this point; a reversal of a
dismissal based on a demurrer to evidence bars the defendant from presenting evidence supporting its allegations.


Eastern Shipping v. CA Shipper: Nanyo Corporation of Mining supplies and
FACTS: Mining machines and supplies were transported by Eastern Japan materials were shipped by
Shipping (ESL). In the warehouse, it was claimed by Consolidated Insurer: ESL but ESL did not know
Mining (CMI) without presenting bill of lading. But it showed proof of Consignee: Consolodated Mining who the owner is; Bill of
ownership such as receipts of the purchase of the goods. Subsequent to Inc. Lading showed: “Shipper’s
the release of the goods, HSBC claimed ownership of the goods. They Common Carrier: Eastern Shipping Order” as name
sued ESL for releasing it to CMI without their consent. (It appears that Lines
HSBC was the financier of CMI and HSBC was not paid for the goods). Goods: 5 packages of mining
ESL denies liability by stating that they did not know who the owner is. supplies and materials
Bill of lading showed to “Shipper’s Order”. Hence, they are not required Who won:
to look beyond the bill of lading to determine who the real owner is.
Also, CMI made it appear that they were the consignees.
HELD: Nowhere did the Bill of Lading refer to respondent HSBC as the
consignee or the one to be notified. CMI was able to show receipts,
making it appear that they are persons who have the right to receive the
goods. HSBC is the more negligent party as against ESL. It allowed CMI
to be designed in the bills of lading as the party to be notified, it allowed
the latter to be designated as the consignee in the Consular, the original
of which was directly furnished to respondent Consolidated Mines, Inc.
by and as certified to by the shipper Nanyo Corporation.
Short Summary:
On February 24, 1980, the Nanyo Corporation of Kobe, Japan shipped a cargo consisting of five (5) packages of supplies and materials for "1200
W x 2500 LMM Apron Feeder and 200 W x 5850 LMM Apron Feeder," covered by a bill of lading.
The cargo was loaded on board the S/S Eastern Adventure destined for Manila. The vessel is operated by herein petitioner-carrier Eastern
Shipping Lines (ESL).
The bill of lading was consigned to "Shipper's Order", with "Address Arrival Notice to Consolidated Mines Inc. 6799 Ayala Avenue,Makati,
Metro Manila, Philippines". (it does not say if its CMI or HSBC). Consolidated Mines Inc. (CMI) is one of the private respondents herein.
The cargo arrived in Manila on March 4, 1980.
A few days later, on the basis of an Undertaking for Delivery of Cargo but without the surrender of the original bill of lading presented by CMI,
ESL released the shipment in question to CMI.
In said guaranty, CMI undertook to indemnify ESL "harmless from all demands, claiming liabilities, actions and expenses".
About five (5) and a half months later, or specifically on August 19, 1980, ESL received from Hongkong and Shanghai Bank (HSBC) co-
respondent of CMI in the case at bar, a letter stating thus:
o Basically they were claiming that the goods were theirs already. They wanted the bills of lading. Also, that after releasing it to
CMI, they cannot now find it.
Considering that there was no reply from ESL, HSBC wrote another demand letter through counsel dated October 29, 1980 in contemplation of a
legal action against ESL should it not make good HSBC's claim.
On December 23, 1980 CMI wrote a letter to HSBC admitting that they received the shipment in question due to a guarantee executed by them,
and requested HSBC that legal action be held off for at least thirty (30) days, promising to settle its account with HSBC from the funds it was
expecting from Benguet Corporation.
On January 14, 1981 ESL wrote a reply to HSBC as follows:
o ESL was saying sorry for releasing it without HSBC’s consent. However, they justified the release on the representation and
guarantee of CMI that they will be taking care of their obligation with HSBC.
CMI having failed to fulfill its promise, HSBC filed a complaint before the CFI Rizal against ESL praying for actual and compensatory damages
in the amount of $168,521.16 representing the value of the goods covered by the Bill of Lading, exemplary damage in the amount deemed just by
the court and P50,000 attorney's fees plus expenses of litigation and judicial costs.
After two motions for extensions, the ESL filed its answer with counterclaim:
o They admit releasing the goods without presentation of the bill of lading. However, they also allege that such presentation is not
necessary. CMI had proof of its ownership (receipts that they had purchased the goods). Hence, they were persons who had the
right to receive the goods.
o Plus they executed the guarantee
o They were not aware that HSBC is the consignee bank as the bill of lading only bears to "SHIPPER'S ORDER" and when the
shipment arrived Manila on March 4, 1980 or even before its arrival, HSBC did not notify ESL that they have a lien over the
shipment;
o That ESL only became aware of that fact that HSBC is the consignee bank sometime on August 19, 1980 thru their letter dated
August 11, 1980, to which such notice was received by the ESL several months after the shipment in question was released to the
consignee Consolidated Mines, Inc.;
On August 15, 1981, the ESL filed a third party complaint against CMI seeking reimbursement in case of a judgment against them.
During trial, CMI filed a Motion to Stay Action in view of the pendency of involuntary insolvency proceedings commenced against it in the
meantime by its creditors which included HSBC. This motion was denied by the trial court.
CFI Rizal rendered judgment:
o Ordered ESL to pay HSBC. ($168,521.16)
o Ordered CMI to reimburse ESL.
CA affirmed in toto.
Issue: Who is the consignee in the bill of lading? CMI
Ratio: (arranged according to importance)

 The Bill of Lading which was issued by the carrier but contained articles furnished by the Shipper, shows on its face that the Shipment is
consigned "TO SHIPPER'S ORDER" with "ADDRESS ARRIVAL NOTICE TO CONSOLIDATED MINES INC. 6799 AYALA AVE.
MAKATI, METRO MANILA PHILIPPINES.
 Nowhere did the Bill of Lading refer to respondent HSBC as the consignee or the one to be notified.
 The foregoing information, without more, in effect makes respondent CMI for all practical intents and purposes the party named and ordered
to receive the goods.
 ESL, not being privy to any transaction between HSBC and CMI, cannot be expected to look beyond what is contained on the face of the bill
of lading in question and guess which of the many banks in Metro Manila or some other unrevealed corporation could possibly be the
consignee. To consider otherwise would not be sound business practice as ESL would be forced to wait for the real owner of the goods to
show up, perhaps in vain.
 HSBC admits even in its memorandum filed with the trial court that Consolidated Mines, Inc. is the consignee, yet HSBC pinpoints liability
to the ESL by relying on the provisions of Article 1736 of the Civil Code of the Philippines which provides that:
 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.
 Respondent HSBC wittingly or unwittingly overlooked the fact that the same article uses the conjunction "or" in reference to whom the
goods may be delivered, that is, to the consignee, or to the person who has a right to receive them.
 That respondent HSBC is the more negligent party as against the petitioner-carrier becomes more evident when aside from having allowed
respondent Consolidated Mines, Inc. to be designed in the bills of lading as the party to be notified, it allowed the latter to be designated as
the consignee in the Consular, the original of which was directly furnished to respondent Consolidated Mines, Inc. by and as certified to by
the shipper Nanyo Corporation.
 With such vast powers, akin to an agent of respondent HSBC, respondent Consolidated Mines, Inc. acted within its authority, and even if it
acted on its own; consequently, respondent HSBC may not hold the petitioner came liable because Art. 1883 of the Civil Code provides that:
 If an agent acts in his own name, the principal has no right of action against the persons with whom the agent has contracted neither have
such persons against the principal.
 In such case the agent is the one directly bound in favor of the person with whom he has contracted, as if the transaction were his own, except
when the contract involves things belonging to the principal.
 The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent.
Other ISSUES
 In Macondray and Company Inc. v. Acting Commissioner of Customs, it was held that a bill of lading is ordinarily merely a convenient
commercial instrument designed to protect the importer or consignee.
 In Phoenix Assurance Co., Ltd. v. United States Lines , it was held that as a receipt, a bill of lading recites the place and date of shipment,
describes the goods as to quantity, weight, dimensions, Identification marks, condition, quality and value.
 It should likewise be noted that the shipment consisted of machinery materials and supplies for a mining company named in the bill of
lading. In the absence of contrary instructions or at least knowledge of other facts, the carrier is not ordinarily expected to deliver mining
equipment to an unnamed or unknown party lurking for several months.
 Other pieces of evidence found in the records indicate that the parties knew that respondent CMI was indeed the owner of the goods in
question, to wit:
 Firstly, even respondent HSBC expressly admitted in its complaint that "pursuant to the BILL OF LADING (Annex "A" hereof) the shipment
was issued 'To Shipper's Order.'" (p. 2, Original Records) It never alleged therein that it was the consignee of the shipment in question.
 Similarly, by respondent HSBC's own documentary evidence, respondent CMI is the buyer-owner of the shipment, to wit:
 "SOLD BY ORDER AND FOR ACCOUNT AND RISK OF MESSRS. CONSOLIDATED MINES INC. 6799 AYALA AVE. MAKATI,
METRO MANILA PHILIPPINES" (Exh. A-3, NANYO CORPORATION PACKING LIST; Exh. A-4 NANYO CORPORATION
INVOICE; Exh. A-8, NANYO CORPORATION INVOICE. (pp. 68, 71-77, Original Records)
 Secondly, the Buyer referred to in the Certificate (Exh. A-5) issued by the shipper NANYO CORPORATION should perforce refer to CMI
to wit:
 We hereby certify that Original Consular Invoice had been air-mailed directly to Buyer.
 We also certify that advance copies of Commercial Invoice Packing List and Bill of Lading were airmailed directly to Buyer. (p. 73, Original
Records)
 Thirdly, respondent HSBC has established by its own documentary evidence, more particularly, the CONSULAR INVOICE (Exh. A-6 dated
February 25, 1980, issued in Tokyo, Japan by the Foreign Service of the Republic of the Philippines, that the consignee of the shipment in
question is respondent CONSOLIDATED MINES, INC. as shown therein thus:
 Consignee CONSOLIDATED MINES, INC.
 Address 6799 AYALA AVENUE MAKATI
 METRO MANILA PHILIPPINES
 But assuming that CMI may not be considered consignee, the ESL cannot be faulted for releasing the goods to CMI under the circumstances,
due to its lack of knowledge as to who was the real consignee in view of CMI's strong representations and letter of undertaking wherein it
stated that the bill of lading would be presented later.
 This is precisely the situation covered by the last paragraph of Art. 353 of the Corporation Code to wit:
 If in case of loss or for any other reason whatsoever, the consignee cannot return upon receiving the merchandise the bill of lading subscribed
by the carrier, he shall give said carrier receipt of the goods delivered, this receipt producing the same effects as the return of the bill of
lading.
 In State Bonding and Ins. Co. Inc. v. Manila Port Service, it was held that the arrival of shipment is deemed admitted by an allegation of
delivery to the consignee.
 Under the special circumstances of this case, equity favors the ESL which proved that it was in good faith while both respondents HSBC and
CMI cannot claim the same.
 While the goods in question were released on March 4, 1980 the records show that HSBC received the original bill of lading, as per
testimony of its witness Ederlina Crisostomo (TSN, p. 29, July 13, 1982), only on April 1980 or long after the goods had been released. This
circumstance goes against the claims of HSBC.
 Thus HSBC in its original demand letter stated, "We are unable to locate the cargo and it would appear that it has been released by you to
Consolidated Mines, Inc." (Annex B of Complaint, p. 8, Original Records). This proves that it had foreknowledge of the prior release to
CMI.
 And to make things worse, HSBC, despite CMI's admission that it received the goods, sued only the ESL while at the same time claiming for
the value of the goods in the involuntary insolvency proceedings of CMI which the Bank itself, together with others, initiated. Only later
developments led to this case.

Macam v. CA Shipper: Macam Watermelons and mangoes
FACTS: Macam shipped watermelons and mangoes thru Wallem (agent Insurer: as perishable goods were
of China Ocean Shipping) thru letter. Of credit issued by Pakistan Bank Consignee: GPC released without
and covered by bill of lading which says: one of the bills of lading must Common Carrier: China Ocean surrendering the required
be surrendered duly endorsed in exhange for the goods or delivery order. Shipping (with agent – Wallem PH bills of lading; GPC was the
Upon arrival in HK, the shipment was delivered by Wallem directly to Shipping) consignee and not Pakistan
GPC, not to Pakistan Bank and without the required bill of lading having Goods: watermelons and mangoes
been surrendered. GPC failed to pay Pakistan, such that the latter also Who won: China Ocean and Wallen
refused to pay Solid bank. Solid bank then demanded payment from
Wallem but to no avail. So Macam was constrained to return the amount
involved to Solid bank. Macam sought the value of the shipment from
Wallem, based on delivery of the shipment to GPC withough
presentation of the bills of lading and bank guarantee. Wallem contended
that the shipment was delivered without presentation of the bills of lading
and bank guarantee as per request thru telex by Macam because the
shipment consisted of perishable goods.
HELD: WON there was misdelivery? None. WON China Ocean and
Wallem are liable for the value of the shipment? NO.There was no
misdelivery. It is clear from the allegation in his complaint that it does
not deal with misdelivery of the cargoes but of delivery to GPC without
the required bills of lading and bank guarantee. Since the subject
shipment consisted of perishable goods and Solidbank pre-paid the full
amount of the value thereof, it is not hard to believe the claim of
respondent Wallem that Macam indeed requested the release of the goods
to GPC without presentation of the bills of lading and bank guarantee.
Respondent Court analyzed the telex of Macam in its entirety and
correctly arrived at the conclusion that the consignee referred to was not
Pakistan Bank but GPC.
Short Summary:
 Benito Macam, doing business under the name and style Ben-Mac Enterprises
o Shipped on board the vessel Nen Jiang, owned and operated by respondent China Ocean Shipping Co., through local agent
respondent Wallem Philippines Shipping, Inc. (hereinafter WALLEM), 3,500 boxes of watermelons valued at US$5,950.00
covered by a Bill of Lading issued by National Bank of Pakistan, Hongkong (Pakistan Bank).
o also shipped 1,611 boxes of fresh mangoes valued at US$14,273.00 and covered by a Letter of Credit issued by the same Pakistan
Bank
 The Bills of Lading contained the following pertinent provision: "One of the Bills of Lading must be surrendered duly endorsed in exchange
for the goods or delivery order."
 The shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of Kowloon (GPC) as notify
party.
 Letter of credit requirement: copies of the bills of lading and commercial invoices were submitted to Macam's depository bank, Consolidated
Banking Corporation (now SOLIDBANK), which paid Macam in advance the total value of the shipment of US$20,223.46.
 Upon arrival in Hongkong, the shipment was delivered by 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 the original bills of lading, refused to pay
Macam through SOLIDBANK. Since SOLIDBANK already pre-paid Macam the value of the shipment, it demanded payment from
WALLEM through 5 letters but was refused. Macam was thus allegedly constrained to return the amount involved to SOLIDBANK, then
demanded payment from WALLEM in writing but to no avail.
 Macam sought collection of the value of the shipment from China Ocean and Wallem before RTC Manila, based on delivery of the shipment
to GPC without presentation of the bills of lading and bank guarantee.
 China Ocean and Wallem contended that the shipment was delivered to GPC without the presentation of bills of lading and bank guarantee as
a request by Macam because of the perishable nature of the goods.
 China Ocean and Wallem explained that it is a standard maritime practice, when immediate delivery is of the essence, for the shipper to
request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of destination without requiring presentation of the bill
of lading as that usually takes time.
 As proof thereof, China Ocean and Wallem apprised the trial court that for the duration of their two-year business relationship with Macam
concerning similar shipments to GPC, deliveries were effected without presentation of the bills of lading. China Ocean Wallem advanced
next that the refusal of PAKISTAN BANK to pay the letters of credit to SOLIDBANK was due to the latter's failure to submit a Certificate
of Quantity and Quality.
 RTC: China Ocean and Wallem to pay Macam approx. Php 500,000 with interest and atty’s fees.
o China Ocean and Wallem breached the provision in the bill of lading requiring that "one of the Bills of Lading must be surrendered
duly endorsed in exchange for the goods or delivery order," when they released the shipment to GPC without presentation of the
bills of lading and the bank guarantee that should have been issued by PAKISTAN BANK in lieu of the bills of lading.
 On appeal to the CA, CA set aside the RTC order and dismissed the complaint
ISSUE:
 WON there was misdelivery? None
 WON Wallem is liable for the shipment? No
RATIO:
 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.
o However, in the export invoices GPC was clearly named as buyer/importer. Macam 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.
 From the testimony of Macam, we gather that he has been transacting with GPC as buyer/importer for around 2 or 3 years
already. When mangoes and watermelons are in season, his shipment to GPC using the facilities of respondents is twice or thrice a
week. The goods are released to GPC. It has been the practice of Macam to request the shipping lines to immediately release perishable
cargoes such as watermelons and fresh mangoes through telephone calls by himself or his “people.” In transactions covered by a letter
of credit, bank guarantee is normally required by the shipping lines prior to releasing the goods. But for buyers using telegraphic
transfers, Macam dispenses with the bank guarantee because the goods are already fully paid. In his several years of business
relationship with GPC and China Ocean and Wallem, there was not a single instance when the bill of lading was first presented before
the release of the cargoes. He admitted the existence of the telex of 3 July 1989 containing his request to deliver the shipment to the
consignee without presentation of the bill of lading[14] but not the telex of 5 April 1989 because he could not remember having made
such request.
Court of Appeals was correct in referring to GPC as consignee and not Pakistani Bank
 There is no mistake that the originals of the two (2) subject Bills of Lading are still in the possession of the Pakistani Bank. The
appealed decision affirms this fact. Conformably, 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 to the buyer/importer is essentially a
factor to reckon with. Besides, GPC is listed as one among the several consignees in the telex (Exhibit 5-B) and the instruction in the
telex was to arrange delivery of A/M shipment (not any party) to respective consignees without presentation of OB/L and bank
guarantee
 Apart from the foregoing obstacles to the success of Macam’s cause, Macam failed to substantiate his claim that he returned to
SOLIDBANK the full amount of the value of the cargoes. It is not far-fetched to entertain the notion, as did respondent court, that he
merely accommodated SOLIDBANK in order to recover the cost of the shipped cargoes from respondents. We note that it was
SOLIDBANK which initially demanded payment from respondents through five (5) letters. SOLIDBANK must have realized the
absence of privity of contract between itself and respondents. That is why Macam conveniently took the cudgels for the bank.



H.E. Heacock Co. v. Macondray & Co. Shipper: Heacock 12 clocks were transported
FACTS: Heacock delivered through the steamship Bolton Castle 4 cases Insurer: to manila; Bill of Lading
of merchandise, 1 case of which contained 12 clocks to be transported to Consignee: Heacock? stipulation limiting the
Manila. Upon arriving in Manila, the clocks were consigned to Common Carrier: Macondray as agent liability of carrier
Macondray, which is an agent of the vessel. Neither the master of the Goods: 4 cases of merchandise, 1 Macondray valid
vessel nor Macondray delivered the clocks to Heacock. contained 12 clocks
In the bill of lading, there were stipulations limiting the liability of the Who won:
carrier, to wit:
1. It is mutually agreed that the value of the goods receipted for
above does not exceed $500 per freight ton, or, in proportion
for any part of a ton, unless the value be expressly stated herein
and ad valorem freight paid thereon.
9. Also, that in the event of claims for short delivery of, or
damage to, cargo being made, the carrier shall not be liable for
more than the net invoice price plus freight and insurance less
all charges saved, and any loss or damage for which the carrier
may be liable shall be adjusted pro rata on the said basis.
HELD: The SC held that there are three types of stipulations usually
included in a bill of lading:
1. exempting the carrier from any and all liability for loss or
damage occasioned by its own negligence.
2. providing for an unqualified limitation of such liability to an
agreed valuation.
3. limiting the liability of the carrier to an agreed valuation unless
the shipper declares a higher value and pays a higher rate of
freight.
The third type, where both clauses fall under, is the only valid and
enforceable type of stipulation.
Clause 9 applies because it is an express provision (Clause 1 is implied),
and the contract was drawn by Macondray, hence it shall also be
construed against him in case of confusion.
Short Summary:
 Heacock caused to be delivered on board of steamship Bolton Castle, then in the harbor of New York, four cases of merchandise one of
which contained twelve (12) 8-day Edmond clocks properly boxed and marked for transportation to Manila, and paid freight on said clocks
from New York to Manila in advance.
 The said steampship arrived in the port of Manila, consigned the goods to Macondray as agent and representative of said vessel in said port.
Neither the master of said vessel nor Macondray, as its agent, delivered to Heacock the twelve 8-day Edmond clocks, although demand was
made upon them for their delivery.
 The invoice value of the said twelve 8-day Edmond clocks in the city of New York was P22 and the market value of the same in the City of
Manila at the time when they should have been delivered to the Heacock was P420.
 The bill of lading issued and delivered to the Heacock by the master of the said steamship Bolton Castle contained, among others, the
following clauses:
1. It is mutually agreed that the value of the goods receipted for above does not exceed $500 per freight ton, or, in proportion for any
part of a ton, unless the value be expressly stated herein and ad valorem freight paid thereon.
9. Also, that in the event of claims for short delivery of, or damage to, cargo being made, the carrier shall not be liable for more than
the net invoice price plus freight and insurance less all charges saved, and any loss or damage for which the carrier may be liable shall
be adjusted pro rata on the said basis.
 The case containing the aforesaid twelve 8-day Edmond clocks measured 3 cubic feet, and the freight ton value thereof was $1,480, U. S.
currency.
 No greater value than $500, U. S. currency, per freight ton was declared by the Heacock on the aforesaid clocks, and no ad valorem freight
was paid thereon.
 Macondray tendered to Heacock P76.36, the proportionate freight ton value of the aforesaid twelve 8-day Edmond clocks, in payment of
Heacock's claim, which tender Heacock rejected.
Lower court- In favor of Heacock. Based on clause 9 of the bill of lading, ordered Macondray to pay P226.02 as the invoice value of the clocks in
question plus the freight and insurance thereon, with legal interest.
ISSUE: Whether the clause limiting liability to the agreed value by the carrier is valid? – YES!
HELD:
It follows from all of the foregoing that the judgment appealed from should be affirmed, without any finding as to costs. So ordered.
RATIO:
 Three kinds of stipulations have often been made in a bill of lading.
1. exempting the carrier from any and all liability for loss or damage occasioned by its own negligence.
2. providing for an unqualified limitation of such liability to an agreed valuation.
3. limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pays a higher rate of freight.
 According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid as being contrary to public policy,
but the third is valid and enforceable.
 Clauses 1 and 9 fall under the third type, to wit: That a clause in a bill of lading limiting the liability of the carrier to a certain amount unless
the shipper declares a higher value and pays a higher rate of freight, is valid and enforceable.
 If a common carrier gives to a shipper the choice of two rates, the lower of the conditioned upon his agreeing to a stipulated valuation of his
property in case of loss, even by the carrier's negligence, if the shipper makes such a choice, understandingly and freely, and names his
valuation, he cannot thereafter recover more than the value which he thus places upon his property. As a matter of legal distinction, estoppel
is made the basis of this ruling, — that, having accepted the benefit of the lower rate, in common honesty, the shipper may not repudiate the
conditions on which it was obtained, — but the rule and the effect of it are clearly established.
 It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of lading here in question are not contrary to public order.
 Article 1255 of the Civil Code provides that "the contracting parties may establish any agreements, terms and conditions they may deem
advisable, provided they are not contrary to law, morals or public order."
As regards which clause will be applied- Clause 9

 Clause 1 contains only an implied undertaking to settle in case of loss on the basis of not exceeding $500 per freight ton, clause 9 contains an
express undertaking to settle on the basis of the net invoice price plus freight and insurance less all charges saved. “Any loss or damage for
which the carrier may be liable shall be adjusted pro rata on the said basis," clause 9 expressly provides.
 It seems to us that there is an irreconcilable conflict between the two clauses with regard to the measure of Macondray's liability. It is
difficult to reconcile them without doing violence to the language used and reading exceptions and conditions into the undertaking contained
in clause 9 that are not there. This being the case, the bill of lading in question should be interpreted against the Macondray carrier, which
drew said contract.
 "In construing a bill of lading given by the carrier for the safe transportation and delivery of goods shipped by a consignor, the contract will
be construed most strongly against the carrier, and favorably to the consignor, in case of doubt in any matter of construction."



Sea Land Service, Inc. v. IAC Shipper: Seaborne Trading SeaLand invoked
FACTS: SeaLand received goods from Seaborne to be shipped to Cue in Insurer: maximum liability for loss
Cebu. Shipper did not declare shipment value. Shipment arrived in Manila, Consignee: Sen Hian Hing or under limitation clause -
but was stolen in the harbor. Cue, consignee, demanded that SeaLand pay for Paulino Cue VALID
the lost shipment (180k). SeaLand offered to settle for $4k, asserting that Common Carrier: Sea-Land
said amount represented its maximum liability for the loss of the shipment Service
under the package limitation clause in the covering bill of lading. Goods: 8 CTNS on 2 SKIDS-
HELD: It seems clear that even if said section 4(5) of the Carriage of Goods FILES
by Sea Act did not exist, the validity and binding effect of the liability Who won: Sea-Land
limitation clause in the bill of lading here are nevertheless fully sustainable
on the basis alone of the cited Civil Code provisions. There can, therefore, be
no doubt about the validity and enforceability of freely-agreed-upon
stipulations in a contract of carriage or bill of lading limiting the liability of
the carrier to an agreed valuation unless the shipper declares a higher value
and inserts it into said contract or bill.
Short Summary:
 Sea-Land Service, Inc. (Sea-Land for brevity), a foreign shipping and forwarding company, received from Seaborne Trading Company in
Oakland, California a shipment consigned to Sen Hiap Hing—the business name used by Paulino Cue—in the wholesale and retail trade
which he operated out of an establishment located in Cebu City.
 The shipper not having declared the value of the shipment, no value was indicated in the bill of lading.
o Based on volume measurements Sea-land charged the shipper the total amount of US$209.28 for freight age and other charges.
o The shipment was loaded on board the MS Patriot, a vessel owned and operated by Sea-Land, for discharge at the Port Of Cebu.
 The shipment arrived in Manila and there discharged into the custody of the arrastre contractor and the customs and port authorities.
 After the shipment had been transferred to Pier 3 in South Harbor, Manila, awaiting trans-shipment to Cebu, it was stolen by pilferers and has
never been recovered.
 Paulino Cue, the consignee, made formal claim upon Sea-Land for the value of the lost shipment allegedly amounting to P179,643.48.
 Sea-Land offered to settle for US$4,000.00, or its then Philippine peso equivalent of P30,600.00.
o asserting that said amount represented its maximum liability for the loss of the shipment under the package limitation clause in the
covering bill of lading.
o Cue rejected the offer.
Trial Court
 Ruled in favor of Cue, sentencing Sea-Land to pay him P186,048.00 representing the Philippine currency value of the lost cargo, P55,814.00
for unrealized profit with one (1%) percent monthly interest from the filing of the complaint.
CA affirmed TC decision.
ISSUE: Whether or not the consignee of seaborne freight is bound by stipulations in the covering bill of lading limiting to a fixed amount the
liability of the carrier for loss or damage to the cargo where its value is not declared in the bill? Yes he is bound.
SC quotes the Mendoza vs. PAL case

 But appellant now contends that he is not suing on a breach of contract but on a tort as provided for in Art. 1902 of the Civil Code.
 We are a little perplexed as to this new theory of the appellant.
 First, he insists that the articles of the Code of Commerce should be applied:
o That he invokes the provisions of said Code governing the obligations of a common carrier to make prompt delivery of goods given
to it under a contract of transportation.
o He says that he was never a party to the contract of transportation and was a complete stranger to it, and that he is now suing on a
tort or a violation of his rights as a stranger (culpa aquiliana).
o If he does not invoke the contract of carriage entered into with the defendant company, then he would hardly have any leg to stand
on.
o His right to prompt delivery of the can of film at the Phil. Air Port stems and is derived from the contract of carriage under which
contract, the PAL undertook to carry the can of film safely and to deliver it to him promptly. Take away or ignore that contract and
the obligation to carry and to deliver and right to prompt delivery disappear.
 Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage is governed by the laws of
the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of petitioner Sea-
Land to the respondent consignee is governed primarily by the Civil Code, and as ordained by the said Code, suppletorily, in all matters not
determined thereby, by the Code of Commerce and special laws.
 One of these suppletory special laws is the Carriage of Goods by Sea Act, U.S. Public Act No. 521 which was made applicable to all
contracts for the carriage of goods by sea to and from Philippine ports in foreign trade by Commonwealth Act No. 65. Sec. 4(5) of said Act in
part reads:
o (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 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.
 Clause 22, first paragraph, of the long form bill of lading customarily issued by Sea-Land to its shipping clients is a virtual
reproduction of the first paragraph of the foregoing provision. It says:
o 22. VALUATION. In the event of any loss, damage or delay to or in connection with goods exceeding in actual value $500 per
package, lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, the value of
the goods shall be deemed to be $500 per package or per customary freight unit, as the case may be, and the carrier's liability, if
any, shall be determined on the basis of a value of $500 per package or customary freight unit, unless the nature and a higher
value shall be declared by the shipper in writing before shipment and inserted in this Bill of Lading.
 And in its second paragraph, the bill states:
o If a value higher than $500 shall have been declared in writing by the shipper upon delivery to the carrier and inserted in this bill
of lading and extra freight paid, if required and in such case if the actual value of the goods per package or per customary freight
unit shall exceed such declared value, the value shall nevertheless be deemed to be declared value and the carrier's liability, if any,
shall not exceed the declared value and any partial loss or damage shall be adjusted pro rata on the basis of such declared value.
 The Court fails to fathom the reason or justification for the Appellate Court's pronouncement in its appealed Decision that the Carriage of
Goods by Sea Act " ... has no application whatsoever in this case.
 Not only is there nothing in the Civil Code which absolutely prohibits agreements between shipper and carrier limiting the latter's liability for
loss of or damage to cargo shipped under contracts of carriage; it is also quite clear that said Code in fact has agreements of such character in
contemplation in providing, in its Articles 1749 and 1750, that:
o 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.
o 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.
 Nothing contained in section 4(5) of the Carriage of Goods by Sea Act already quoted is repugnant to or inconsistent with any of the the Civil
Code.
 Said section merely gives greater specificity to the rather general terms of Article 1749 and of Article 1750, to give effect to just agreements
limiting carriers' liability for loss or damage which are freely and fairly entered into.
 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.
 That said stipulation is just and reasonable is arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if a
greater value is not declared for the shipment in the bill of lading.
o It gives shipper or owner the option of avoiding acrrual of liability limitation by the simple and surely far from onerous expedient
of declaring the nature and value of the shipment in the bill of lading.
 As pointed out in Mendoza vs. PAL, the right of a party in the same situation as respondent here, to recover for loss of a shipment consigned
to him under a bill of lading drawn up only by and between the shipper and the carrier,
o springs from either a relation of agency that may exist between him and the shipper or consignor, or his status as a stranger in
whose favor some stipulation is made in said contract, and who becomes a party thereto when he demands fulfillment of that
stipulation, in this case the delivery of the goods or cargo shipped.
o In neither capacity can he assert personally, in bar to any provision of the bill of lading, the alleged circumstance that fair and free
agreement to such provision was vitiated by its being in such fine print as to be hardly readable.
 There can, therefore, be no doubt about the validity and enforceability of freely-agreed-upon stipulations in a contract of carriage or
bill of lading limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and inserts it into said
contract or bill.
 The issue of alleged deviation is also settled by Clause 13 of the bill of lading which expressly authorizes trans-shipment of the goods at
any point in the voyage in these terms:
o 13. THROUGH CARGO AND TRANSSHIPMENT. The carrier or master, in the exercise of its or his discretion and although
transshipment or forwarding of the goods may not have been contemplated or provided for herein, may at port of discharge or any
other place whatsoever transship or forward the goods or any part thereof by any means at the risk and expense of the goods and
at any time, whether before or after loading on the ship named herein and by any route, whether within or outside the scope of the
voyage or beyond the port of discharge or destination of the goods and without notice to the shipper or consignee. The carrier or
master may delay such transshipping or forwarding for any reason, including but not limited to awaiting a vessel or other means
of transportation whether by the carrier or others.
 Said provision removes the necessity to offer any other justification for offloading the shipment in question in Manila for transshipment to
Cebu City, the port of destination stipulated in the bill of lading.
o Nonetheless, the Court takes note of Sea-Land's explanation that it only directly serves the Port of Manila from abroad in the usual
course of voyage of its carriers, hence its maintenance of arrangements with a local forwarder for delivery of its imported cargo to
the agreed final point of destination within the Philippines, such arrangements not being prohibited, but in fact recognized, by law.
 Furthermore, this Court has also ruled that the Carriage of Goods by Sea Act is applicable up to the final port of destination and that the fact
that transshipment was made on an interisland vessel did not remove the contract of carriage of goods from the operation of said Act.
 Private respondent also contends that the aforecited Clauses 22 and 13 of the bill of lading relied upon by petitioner Sea Land form no part of
the short-form bill of lading attached to his complaint before the Trial Court and appear only in the long form of that document which, he
claims SeaLand offered as an unused blank form with no entries or signatures therein.
 He, however, admitted in the Trial Court that several times in the past shipments had been delivered to him through Sea-Land, from which
the assumption may fairly follow that by the time of the consignment now in question, he was already reasonably apprised of the usual terms
covering contracts of carriage with said petitioner.
 At any rate, as observed earlier, it has already been held that the provisions of the Carriage of Goods by Sea Act on package limitation
[sec 4(5) of the Act hereinabove referred to] are as much a part of a bill of lading as though actually placed therein by agreement of
the parties.
 By making claim for loss on the basis of the bill of lading, to all intents and purposes accepted said bill. Having done so, he becomes bound
by all stipulations contained therein whether on the front or the back thereof.
o Respondent cannot elude its provisions simply because they prejudice him and take advantage of those that are beneficial.
 Secondly, the fact that respondent shipped his goods on board the ship of petitioner and paid the corresponding freight thereon shows that he
impliedly accepted the bill of lading.

Citadel Lines, Inc. v. CA Shipper: Cigarrettes were placed in
FACTS: Citadel shipped dunhill cigs for Manila Wine Merchants. Upon arrival in Insurer: containers padlocked and
Manila, it loaded the cargo into their trucks to give it to the arrastre, E. Razon. One Consignee: Manila Wine sealed by carrier; 90 cases
of the trucks, which was never handed over to the arrastre, was tampered with and Merchants were missing; stipulation
the cigs were lost forever. Manila Wine filed demands from both the Citadel and E. Common Carrier: Citadel limiting liability -
Razon but was denied by both. Lower court ruled in favor of Manila Wine against Lines Inc BINDING
Citadel. The CA affirmed. Goods:
HELD: Who won:
The subject cargo which was placed in a container van, padlocked and sealed by
the representative of the CARRIER was still in its possession and control when the
loss occurred, there having been no formal turnover of the cargo to the
ARRASTRE Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence in the vigilance over the
goods
Its extraordinary responsibility 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.
CARRIER failed to prove that the loss was occasioned by an excepted cause, the
inescapable conclusion is that the CARRIER was negligent and should be held
liable therefor.
Short Summary:
 The vessel "Cardigan Bay/Strait Enterprise" loaded on board at Southampton, England, for carriage to Manila, 180 Filbrite cartons of mixed
British manufactured cigarettes called "Dunhill International Filter" and "Dunhill International Menthol,"
 The shipment arrived and was received by E. Razon, Inc.
 Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were placed in two containers with two pallets in container No.
BENU 204850-9, the original container, and four pallets in container No. BENU 201009-9, with both containers duly padlocked and sealed
by the representative of the CARRIER.
 The CARRIER'S headchecker discovered that container van No. BENU 201009-9 had a different padlock and the seal was tampered with.
Per investigation conducted by the ARRASTRE, it was revealed that the cargo in question was not formally turned over to it by the
CARRIER but was kept inside container van No. BENU 201009-9 which was padlocked and sealed by the representatives of the CARRIER
without any participation of the ARRASTRE.
 When the CONSIGNEE learned that 90 cases were missing, it filed a formal claim dated May 21, 1979, with the CARRIER, demanding the
payment of P315,000.00 representing the market value of the missing cargoes. The CARRIER, in its reply letter dated May 23, 1979,
admitted the loss but alleged that the same occurred at Pier 13, an area absolutely under the control of the ARRASTRE. In view thereof, the
CONSIGNEE filed a formal claim, dated June 4, 1979, with the ARRASTRE, demanding payment of the value of the goods but said claim
was denied.
 Lower court rendered a decision on August 30, 1985, exonerating the ARRASTRE and adjudging the CARRIER liable for the principal
amount of P312,480.00 representing the market value of the lost shipment, and the sum of P30,000.00 as and for attorney's fees and the costs
of suit.
 CA affirmed but deleted attorney’s fees.
ISSUES:
1. Whether the loss occurred while the cargo in question was in the custody of E. Razon, Inc. or of Citadel Lines, Inc. (CITADEL)
2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee. (YES)
RATIO:
Issue 1
 The subject cargo which was placed in a container van, padlocked and sealed by the representative of the CARRIER was still in its
possession and control when the loss occurred, there having been no formal turnover of the cargo to the ARRASTRE. Besides, there is
the categorical admission made by two witnesses, namely, Atty. Lope M. Velasco and Ruben Ignacio, Claims Manager and Head
Checker, respectively, of the CARRIER, that for lack of space the containers were not turned over to and as the responsibility of E.
Razon Inc.
 Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. If the
goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they
prove that they observed extra ordinary diligence as required in Article 1733 of the Civil Code.
 The duty of the consignee is to prove merely that the goods were lost. Thereafter, the burden is shifted to the carrier to prove that it has
exercised the extraordinary diligence required by law. And, its extraordinary responsibility 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 the right to receive them.
o CARRIER failed to prove that the loss was occasioned by an excepted cause, the inescapable conclusion is that the CARRIER
was negligent and should be held liable therefor.
Issue 2
 We, however, find the award of damages in the amount of P312,800.00 for the value of the goods lost, based on the alleged market value
thereof, to be erroneous. It is clearly and expressly provided under Clause 6 of the aforementioned bills of lading issued by the CARRIER
that its liability is limited to $2.00 per kilo. Basic is the rule, long since enshrined as a statutory provision, that a stipulation limiting the
liability of the carrier to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.
Further, 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.
 The CONSIGNEE itself admits in its memorandum that the value of the goods shipped does not appear in the bills of lading. Hence, the
stipulation on the carrier's limited liability applies. There is no question that the stipulation is just and reasonable under the circumstances and
have been fairly and freely agreed upon. In Sea- land Service, Inc. vs. Intermediate Appellate Court, et al. we there explained what is a just
and reasonable, and a fair and free, stipulation, in this wise:
o “…said stipulation is just and reasonable arguable from the fact that it echoes Art. 1750 itself in providing a limit to liability only if
a greater value is not declared for the shipment in the bill of lading. To hold otherwise would amount to questioning the justice and
fairness of that law itself, and this the private respondent does not pretend to do.”
 The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton. Since 90 cartons were lost and the weight of said
cartons is 2,233.80 kilos, at $2.00 per kilo the CARRIER's liability amounts to only US$4,467.60.
GPT – Random note about the case: Counsel for Citadel = Del Rosario & Del Rosario Law Offices


Everett Steamship Corp. v. CA Shipper: Maruman Trading 3 creates of bus spares
FACTS: Hernandez imported three crates of bus spare parts from its supplier, Maruman. Co. Ltd. (Maruman) were imported; 1 crate
Maruman shipped the items from Japan to Manila on board the vessel owned by the Insurer: was missing; validity
principal of Everett. The shipment was covered by a bill of lading. Consignee: Hernandez of limited liability
Trading Co. Inc. upheld since shipper
Upon arrival in Manila, it was discovered that one of the crates was missing. Everett (Hernandez) did not declare greater
confirmed the loss and admitted responsibility for the loss. Hernandez then made a Common Carrier: Everett value for cargo
formal claim upon Everett for the value of the lost cargo amounting to about 1Million Steamship Corp. (Everett)
Yen, as shown in the invoice. However, Everett offered to pay only the maximum Goods: bus spare parts
amount of 100,000 Yen as stipulated in the bill of lading which limits the liability of marked as MARCO C/No.
shipper. 12, MARCO C/No. 13 an
MARCO C/No. 14
Hernandez rejected the offer and then instituted a suit for collection against Everett Who won: Everrett
before the RTC of Caloocan. Both RTC and CA adjudged Everett liable for the higher Steamship
amount claimed by Hernandez and did not give credit to the limited liability clause in the
bill of lading. It held that Hernandez was not privy to the contract of carriage and that
under Art. 1750, Everett was not able to justify the limited liability as just and
reasonable.
HELD:
The Supreme Court reversed the lower courts’ rulings, and upheld the validity of the
limited liability clause as indicated in the bill lading, after proof that the shipper never
declared a greater value for the cargo.
Short Summary:
 Hernandez imported three crates of bus spare parts marked as MARCO C/No. 12, MARCO C/No. 13 and MARCO C/No. 14, from its
supplier, Maruman Trading Company, Ltd. (Maruman Trading), a foreign corporation based in Inazawa, Aichi, Japan.
 The crates were shipped from Nagoya, Japan to Manila on board “ADELFAEVERETTE,” a vessel owned by Everett’s principal, Everett
Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN.
 Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing. This was confirmed and
admitted by Everett in its letter of January 13, 1992 addressed to Hernandez, which thereafter made a formal claim upon Everett for the value
of the lost cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred (Y1,552,500.00) Yen, the amount shown in an
Invoice No. MTM-941, dated November 14, 1991. However, Everett offered to pay only One Hundred Thousand (Y100,000.00) Yen, the
maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of Everett.
 Hernandez rejected the offer and thereafter instituted a suit for collection docketed as Civil Case No. C-15532, against Everett before the
Regional Trial Court of Caloocan City, Branch 126.
 On July 16, 1993, the trial court rendered judgment in favor of Hernandez, ordering Everett to pay: (a) Y1,552,500.00; (b) Y20,000.00 or its
peso equivalent representing the actual value of the lost cargo and the material and packaging cost; (c) 10% of the total amount as an award
for and as contingent attorney’s fees; and (d) to pay the cost of the suit
 CA affirmed ruling but deleted attorney’s fees.
 Thus, Everett appealed to SC.
ISSUE: Whether or not the limited liability clause stipulated in the bill of lading valid and binding upon the consignee, notwithstanding the latter
not being a privy to the contract? YES
RATIO:
 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 by law, particularly Articles 1749 and 1750 of the Civil Code which provide:
“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 freely and fairly agreed upon.”
 Such limited-liability clause has also been consistently upheld by this Court in a number of cases.
 Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common carrier’s liability for loss must be
“reasonable and just under the circumstances, and has been freely and fairly agreed upon.”
The bill of lading subject of the present controversy specifically provides, among others:
“18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of the shipper’s net invoice cost plus freight and
insurance premiums, if paid, and in no event shall the carrier be liable for any loss of possible profits or any consequential loss.
“The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount exceeding One Hundred
Thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in any other currency per package or customary freight unit (whichever is
least) unless the value of the goods higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier and
inserted in the Bill of Lading and extra freight is paid as required.” (Emphasis supplied)
The above stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier made it clear that its liability would only be up to
One Hundred Thousand (Y100,000.00) Yen. However, the shipper, Maruman Trading, had the option to declare a higher valuation if the
value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it
had itself to blame for not complying with the stipulations.
 The shipper, Maruman Trading, we assume, has been extensively engaged in the trading business. It cannot be said to be ignorant of the
business transactions it entered into involving the shipment of its goods to its customers. The shipper could not have known, or should
know the stipulations in the bill of lading and there it should have declared a higher valuation of the goods shipped. Moreover,
Maruman Trading has not been heard to complain that it has been deceived or rushed into agreeing to ship the cargo in Everett’s
vessel. In fact, it was not even impleaded in this case.
 When Hernandez formally claimed reimbursement for the missing goods from Everett and subsequently filed a case against the latter based
on the very same bill of lading, it (Hernandez) accepted the provisions of the contract and thereby made itself a party thereto, or at least has
come to court to enforce it. Thus, Hernandez cannot now reject or disregard the carrier’s limited liability stipulation in the bill of lading. In
other words, Hernandez is bound by the whole stipulations in the bill of lading and must respect the same.
 The bill of lading in question confirms Everett’s contention. To defeat the carrier’s limited liability, the aforecited Clause 18 of the bill of
lading requires that the shipper should have declared in writing a higher valuation of its goods before receipt thereof by the carrier and insert
the said declaration in the bill of lading, with the extra freight paid. These requirements in the bill of lading were never complied with by the
shipper, hence, the liability of the carrier under the limited liability clause stands. The commercial Invoice No. MTM-941 does not in itself
sufficiently and convincingly show that Everett has knowledge of the value of the cargo as contended by Hernandez. No other evidence was
proffered by Hernandez to support is contention.



Facts: Uy Bico and Servando Loaded Goods

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Non-liability for loss of goods due to fortuitous event;

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ISSUES (related to transportation law):

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WHEREFORE, the petition is hereby DISMISSED

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SC  RCL and EDSA Shipping are wrong.

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Issue: Who is the consignee in the bill of lading? CMI

Ratio: (arranged according to importance)

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As regards which clause will be applied- Clause 9

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SC quotes the Mendoza vs. PAL case

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