Transpo Dec 2 (Tesoro)

8/10/2019 Transpo Dec 2 (Tesoro)

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Samar Mining v. Nordeutscher Lloyed (1984) 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 by Us inPHOENIX ASSURANCE CO., LTD. vs. UNITEDSTATES LINES, 22 SCRA 674 (1968). Said case matches the present

controversy not only as to the material facts but more importantly, as to

the stipulations contained in the bill of lading concerned. As if to

underline their awesome likeness, the goods in question in both cases

were destined for Davao, but were discharged from ship in Manila, in

accordance with their respective bills of lading.

The stipulations in the bill of lading in the PHOENIX case which are

substantially the same as the subject stipulations before Us, provides

thatappellee's responsibility as a common carrier ceased the moment thegoods were unloaded in Manila and in the matter of

transshipment,appellee acted merely as an agent of the shipper and

consignee.

Coming now to the case before Us, We hold, that by the authority of the

above pronouncements, and in conformity with the pertinent provisions

of the New Civil Code, Section 11 of Bill of Lading No. 18 and the third

paragraph of Section 1 thereof are valid stipulations between the parties

insofar as they exempt the carrier from liability for loss or damage to the

goods while the same are not in the latter's actual custody.

The liability of the common carrier for the loss, destruction or

deterioration of goods transported from a foreign country to the

Philippines is governed primarily by the New Civil Code. In all matters

not regulated by said Code, the rights and obligations of common carriers

shall be governed by the Code of Commerce and by special laws. A careful

perusal of the provisions of the New Civil Code on common carriers

(Section 4, Title VIII, Book IV) directs our attention to Article 1736

thereof, which reads:

Article 1736. The extraordinary responsibility of the commoncarrier lasts from the time the goods are unconditionally placed

in the possession of, and received by the carrier for

transportation until the same are delivered, actually or

constructively, by the carrier to the consignee, or to the person

who has a right to receive them, without prejudice to the

provisions of article 1738.

Article 1738 referred to in the foregoing provision runs thus:

Article 1738. The extraordinary liability of the common carriercontinues to be operative even during the time the goods are

stored in a warehouse of the carrier at the place of destination,

until the consignee has been advised of the arrival of the goods

and has had reasonable opportunity thereafter to remove them

or otherwise dispose of them.

There is no doubt that Art. 1738 finds no applicability to the instant case.

The said article contemplates a situation where the goods had already

reached their place of destination and are stored in the warehouse of the

carrier. The subject goods were still awaiting transshipment to their port

of destination, and were stored in the warehouse of a third party when

last seen and/or heard of. However, Article 1736 is applicable to the

instant suit. Under said article, the carrier may be relieved of the

responsibility for loss or damage to the goods upon actual or constructive

delivery of the same by the carrier to the consignee, or to the person who

has a right to receive them. In sales, actual delivery has been defined as

the ceding of corporeal possession by the seller, and the actual

apprehension of corporeal possession by the buyer or by some person


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authorized by him to receive the goods as his representative for the

purpose of custody or disposal.By the same token, there is actual

delivery in contracts for the transport of goods when possession has been

turned over to the consignee or to his duly authorized agent and a

reasonable time is given him to remove the goods.The courta quofoundthat there was actual delivery to the consignee through its duly

authorized agent, the carrier.

It becomes necessary at this point to dissect the complex relationship

that had developed between appellant and appellee in the course of the

transactions that gave birth to the present suit. Two undertakings

appeared embodied and/or provided for in the Bill of Lading19in

question. The first is FOR THE TRANSPORT OF GOODS from Bremen,

Germany to Manila. The second, THE TRANSSHIPMENT OF THE

SAME GOODS from Manila to Davao, with appellant acting as agent of

the consignee. At the hiatus between these two undertakings of appellant

which is the moment when the subject goods are discharged in Manila,

its personality changes from that of carrier to that of agent of the

consignee. Thus, the character of appellant's possession also changes,

from possession in its own name as carrier, into possession in the name

of consignee as the latter's agent. Such being the case, there was, in

effect, actual delivery of the goods from appellant as carrier to the same

appellant as agent of the consignee. Upon such delivery, the appellant, as

erstwhile carrier, ceases to be responsible for any loss or damage that

may befall the goods from that point onwards. This is the full import of

Article 1736, as applied to the case before Us.

But even as agent of the consignee, the appellant cannot be made

answerable for the value of the missing goods, It is true that the

transshipment of the goods, which was the object of the agency, was not

fully performed. However, appellant had commenced said performance,

the completion of which was aborted by circumstances beyond its control.

An agent who carries out the orders and instructions of the principal

without being guilty of negligence, deceit or fraud, cannot be held

responsible for the failure of the principal to accomplish the object of the

agency.

Central Shipping Co. inc. v. Insurance Company of North

America (2004) Even if the weather encountered by the ship is to be

deemed a natural disaster under Article 1739 of the Civil Code,

petitioner failed to show that such natural disaster or calamity was the

proximate and only cause of the loss. Human agency must be entirely

excluded from the cause of injury or loss. In other words, the damaging

effects blamed on the event or phenomenon must not have been caused,

contributed to, or worsened by the presence of human participation. The

defense of fortuitous event or natural disaster cannot be successfully

made when the injury could have been avoided by human precaution.

Hence, if a common carrier fails to exercise due diligence -- or that

ordinary care that the circumstances of the particular case demand -- to

prevent or minimize the loss before, during and after the occurrence of

the natural disaster, the carrier shall be deemed to have been negligent.

The loss or injury is not, in a legal sense, due to a natural disaster under

Article 1734(1).

The doctrine of limited liability under Article 587 of the Code of

Commerce is not applicable to the present case. This rule does not apply

to situations in which the loss or the injury is due to the concurrent

negligence of the shipowner and the captain. It has already been

established that the sinking of M/V Central Bohol had been caused by

the fault or negligence of the ship captain and the crew, as shown by the

improper stowage of the cargo of logs. "Closer supervision on the part of

the shipowner could have prevented this fatal miscalculation." As such,

the shipowner was equally negligent. It cannot escape liability by virtue

of the limited liability rule.


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RCL of Singapore v. The Netherlands Insurance Co. (2009) 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.

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.1avvphi1

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 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 presentedproof 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 Shippings 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 isburdened 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.

Sealoader shipping Corp. v. Grand Ceent Manufacturing Corp.

(2010) The Court holds that Sealoader had the responsibility to inform

itself of the prevailing weather conditions in the areas where its vessel

was set to sail. Sealoader cannot merely rely on other vessels for weather

updates and warnings on approaching storms, as what apparently

happened in this case. Common sense and reason dictates this. To do so

would be to gamble with the safety of its own vessel, putting the lives of

its crew under the mercy of the sea, as well as running the risk of


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causing damage to the property of third parties for which it would

necessarily be liable.

Kui Pai & Co. v. Dollar Steamship Line (1929) The liability of the

carrier shall begin from the moment he receives the merchandise, inperson or through a person entrusted thereto in the place indicated for

the reception. (Art. 355, Code of Commerce.)

. . . the carrier shall be obliged to deliver the goods transported

in the same condition in which, according to the bill of lading,

they were at the time of their receipt, without any detriment or

impairment, and should he not do so, he shall be obliged to pay

the value of the goods not delivered at the point where they

should have been and at the time the delivery should have taken

place.

. . . (Art. 363, Code of Commerce).

. . . Consequently the law, proceeding on the moral principle of

prudent prevention, cut off from the carrier all temptation of

pecuniary gain and made him absolutely liable with the

exception of causes for which he could not be supposed to be

responsible namely the act of God or the public enemy.

The relation of carrier endures from the shipment of the goods

until their arrival at their destination and continues after the

arrival of the goods at their destination until they are ready to

be delivered at the usual place of delivery, and the owner or

consignee has a reasonable opportunity, during the hours when

such goods are usually delivered there, of examining them

sufficiently to judge from their outward appearance of their

identity, and whether they are in proper condition, and to take

them away. (4 R. C. L., 548.)

ART. 1602, CIVIL CODE. Carrier are also liable for the loss of

the damage to the things which they receive, unless they provethat the loss or damages arose from a fortuitous event orforce

majeure.

That is a correct statement of defendant's liability as a carrier. But

assuming that to be the law, the question here is one of fact as to what

the defendant did receive in Hongkong, and what it should deliver to the

plaintiff in Manila.

It is a matter of common knowledge that there is no port of call between

Hongkong and Manila, and it appears from the records, which areconfirmed by the testimony of the checker at the time the ship was

unloaded and that of the Manila Terminal Company, that the cargo of the

ship exactly tallies with the bills of lading which were issued by the

defendant, as to the number of pieces, boxes or cases in the cargo. That is

to say, that the number of pieces of cargo on board the ship, which were

to be delivered at Manila, including the two boxes in question, correspond

exactly with the number of pieces or cargo found on the ship at the time

it was unloaded in Manila. The evidence for the plaintiff shows that the

six boxes were placed in hold No. 9 of the ship in Hongkong, and that

upon its arrival in Manila, six boxes of the same cubical contents were

taken out of the same hold. Hence, it must follow that, in the very nature

of things, the contents of two of those boxes could not be taken out and

replaced with Chinese cigarette papers after the defendant's ship left

Hongkong and while in transmit to Manila, and that the short change

artist must have appeared on the scene in Hongkong. Much more could

be said, but suffice it to say that the findings of the lower court are well

sustained by the evidence, and that we are clearly of the opinion that the


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six cases placed on board the defendant's ship in Hongkong, considered to

plaintiff, were actually tendered and delivered to the plaintiff in Manila

in the same condition as when received, and with the identical contents

which they had in them when placed in Hold No. 9 abroad the

defendant's ship in Hongkong.

Uy Chaco Sons & Co. v. Admiral Line (1924) It is defendant's

contention on appeal that plaintiff was in duty bound to have accepted

the goods when tendered, as the plaintiff, not the defendant, was the

owner of the goods and as there was no conversion by defendant. To this,

plaintiff replies that it was justified, following such a long delay in

delivery, in refusing the tender of the merchandise so tardily made.

Defendant relies on the general rule that mere delay in the delivery of

goods by a common carrier, no matter how long continued, is not aconversion thereof, but is only a breach of the contract of carriage.

Therefore, where a carrier fails to deliver goods within a reasonable time,

although he thereby makes himself liable for the damages incurred by

reason of the delay, the consignee cannot refuse to accept the goods from

him and recover their value, but it compelled to receive them. The most

usual element of damages for a carrier's negligent delay in delivering the

goods of the consignee is the difference between the market value of the

goods at the time when they were delivered, to which may be added

reasonable expenses caused by the delay; but if there has been a

conversion of the goods by the carrier, and the consignee has not

thereafter accepted them, he is entitle to recover the value of the goods at

the time they should have been delivered to him.

That is sound doctrine. It should be applied to the multiform

transactions coming before the courts. But our heads should not be so

lost in the clouds of abstract theory, even in charmingly advanced by

learned counsel, as to cause us to lose sight of the necessity of keeping

out feet firmly planted on the mundane earth of actual fact.

A demand and a refusal to deliver is sometimes essential to show a

conversion. Even after demand,if the goods are tendered before suitbrought, the consignee cannot refuse to receive the good and sue for

conversion, his sole remedy being an action for damages resulting from

the delay." Hutchinson's Treatise on the Law of Carriers (third edition,

vol. 2, p. 717) contains this: "Though the carrier may delay ever so long,

the owner cannot charge him with a conversion, or for value of the goods,

if they are safely kept, unless they have been demanded of the carrier and

their delivery refused, . . ." replying on Hamilton vs. Chicago, Milwaukee

& St. Paul Railway Company ([1897], 103 Iowa, 325). Following the lines

of the note to the text, we find this: "Where property in the hands of a

common carrier is not delivered within a reasonable time after it hasreached its destination, the carrier, in the absence of any legal exemption

and after demand has been made and delivery refused, is liable for a

conversion of the property. The consignee, under such circumstances,

may elect to waive all title to the property and sue for the conversion, and

after he has done so,a subsequent tender by the carrier will not be

available for it as a defense. . . ." Consulting the body of the decision, to

confirm the foregoing, we discover this statement: ". . . A tender of the

property, to be effectual, must have been made within the time in which

the defendant was entitled to deliver it and the plaintiff bound to receive

it. The tender made was not until long after the lapse of this period, and,

not being accepted, is no bar to plaintiff's right to recover. . . ." The

subsequent case of Clark vs. American Express Co. ([1906], 130 Iowa,

254), after distinguishing Hamilton vs. Chicago, Milwaukee & St. Paul

Railway Company,supra, continues: ". . . Under the conceded facts

defendant tendered the goods to plaintiffbefore this action was

commenced, and plaintiff refused to receive them. His action, then, was

not for conversion, but for damages. . . ."


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A delay of more than two years in making delivery was conclusively

unreasonable. A delay in pressing a defense predicated on tender, of more

than two years counted from the date when the complaint was filed, was

likewise defendant was sufficiently complete since it was unable to turn

the goods over to the plaintiff at any time before the complaint waspresented, and in fact, could not do so until a long time thereafter. And

these facts together, and the reasons why the plaintiff can be permitted

to recover on its action are self-evident.

We would not be understood as laying down the absolute rule that tender

not made until after the action is commenced is unavailable as a defense.

Suit might conceivably be instituted with disconcerting haste. In this

jurisdiction we have a remedial code susceptible to extremely elastic

construction. What we do mean is that on the facts at bar, defendant was

in effect guilty of conversion and must accordingly respond for the valueof the property at the time of conversion.

Cu Bon Liong v. Java Pacific Line (1966) We do not agree in the

claim of the appellant that it was the duty of the vessel to sail directly

from Vancouver to Manila implying that the fact that the vessel touched

Tacoma constituted an unjustifiable deviation. It was the supplier of the

plaintiff who represented that the carrier would sail directly from

Vancouver to Manila. The carier is not bound by such representation.

Moreover, we are not convinced that a delay of one day in the arrival; of

the vessel would cause the entire shipment of the potatoes belonging to

the plaintiff to rot. In fact, there were other shipments of potatoes carried

in the same vessel and it was only the shipment assigned to plaintiff

which was damaged. It is strange that the plaintiff decided to have the

shipment dumped in the bay without first notifying the vessel that the

carrier and without having it first examined by a post surveyor or an

expert. Considerations of fairness require that if the defendant is accused

of negligence in the contract of transportation of plaintiffs potatoes

resulting in the total damage suffered and determine, if possible, the

cause of such damage. By petitioning the Collector of Customs to dump

the shipment into the bay upon arrival, plaintiff deprived the defendants

of the opportunity to defend themselves.

Go Pun v. Fieldmens Ins. Co. (1965) The uncontradicted evidence

shows that the vessel of the defendant company put to sea despite rough

seas and inclement weather. This is a clear case of negligence. Defendant

shipping company cannot exempt itself of liability on the claim that the

loss occurred because of an act of God. To be exempt from liability for loss

because of an act of God, the common carrier must be free from

negligence or misconduct by which that loss or damage may have even

occasioned. For, although the immediate or proximate cause of a loss in a

given instance may have been what is termed an act of God, yet if the

carrier unnecessarily exposed the property to such accident by anyculpable act or omission of his own, he is not excused.

Southern Lines Inc. v. CA (1962) The only question to be determined

in this petition is whether or not the defendant-carrier, the herein

petitioner, is liable for the loss or shortage of the rice shipped.

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.


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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 thelosses 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 establisbed 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 oftheir 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 the provisions of Article 361, the defendant-carrier in order to free

itself from liability, was only obliged to prove that the damages suffered

by the goods were "by virtue of the nature or defect of the articles." Under

the provisions of Article 362, the plaintiff, in order to hold the defendant

liable, was obliged to prove that the damages to the goods by virtue of

their nature, occurred on account of its negligence or because the

defendant did not take the precaution adopted by careful persons.

Petitioner claims exemption from liability by contending 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

respondent City of Iloilo in receiving the shipment. The contention is

untenable, for, 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 thereform. (9 Am Jur. 869.) Furthermore, according tothe Court of Appeals, "appellant (petitioner) itself frankly 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 finding, which is binding

upon this Court, shows that the shortage resulted from the negligence of

petitioner.

Invoking the provisions of Article 366 of the Code of Commerce and those

of the bill of lading, petitioner further contends that respondent isprecluded 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 ofGovernment v. Ynchausti & Co.,24 Phil. 315 andTriton

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 above-cited 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.) It is significant

to note that in the American case ofHoye v. Pennsylvania Railroad

Co.,13 Ann. Case. 414, it has been said: .

... "It has been held that a stipulation in the contract of

shipment requiring the owner of the goods to present a notice of

his claim to the carrier within a specified time after the goods


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have arrived at their destination is in the nature of a condition

precedent to the owner's right to enforce a recovery, that he must

show in the first instance that be has complied with the

condition, or that the circumstances were such that to have

complied with it would have required him to do an unreasonablething. The weight of authority, however, sustains the view that

such a stipulation is more in the nature of a limitation upon the

owner's right to recovery, and that the burden of proof is

accordingly on the carrier to show that the limitation was

reasonable and in proper form or within the time stated."

(Hutchinson on Carrier, 3d ed., par. 44) Emphasis supplied.

In the case at bar, the record shows that petitioner failed to plead this

defense in its answer to respondent's complaint and, therefore, the same

is deemed waived (Section 10, Rule 9, Rules of Court), and cannot beraised for the first time at the trial or on appeal. Moreover, as the Court

of Appeals has said: .

... the records reveal that the appellee (respondent) filed the

present action, within a reasonable time after the short delivery

in the shipment of the rice was made. It should be recalled that

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 appellee (respondent) 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.

Eastern Shipping Lines v. IAC (1987)

On the Law Applicable

The law of the country to which the goods are to be transported governs

the liability of the common carrier in case of their loss, destruction or

deterioration. As the cargoes in question were transported from Japan to

the Philippines, the liability of Petitioner Carrier is governed primarily

by the Civil Code. However, in all matters not regulated by said Code,the rights and obligations of common carrier shall be governed by the

Code of Commerce and by special laws.Thus, the Carriage of Goods by

Sea Act, a special law, is suppletory to the provisions of the Civil Code.

On the Burden of Proof

Article 1680 of the Civil Code, which considers fire as an extraordinary

fortuitous event refers to leases of rural lands where a reduction of the

rent is allowed when more than one-half of the fruits have been lost due

to such event, considering that the law adopts a protection policy towardsagriculture.

As the peril of the fire is not comprehended within the exception in

Article 1734,supra,Article 1735 of the Civil Code provides that all cases

than those mention in Article 1734, the common carrier shall be

presumed to have been at fault or to have acted negligently, unless it

proves that it has observed the extraordinary deligence required by law.

In this case, the respective Insurers. As subrogees of the cargo shippers,

have proven that the transported goods have been lost. Petitioner Carrier

has also proved that the loss was caused by fire. The burden then is upon

Petitioner Carrier to proved that it has exercised the extraordinary

diligence required by law.

Having failed to discharge the burden of proving that it had exercised the

extraordinary diligence required by law, Petitioner Carrier cannot escape

liability for the loss of the cargo.


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And even if fire were to be considered a "natural disaster" within the

meaning of Article 1734 of the Civil Code, it is required under Article

1739 of the same Code that the "natural disaster" must have been the

"proximate and only cause of the loss," and that the carrier has "exercised

due diligence to prevent or minimize the loss before, during or after theoccurrence of the disaster. " This Petitioner Carrier has also failed to

establish satisfactorily.

On the US $500 Per Package Limitation:

The 128 cartons and not the two (2) containers should be considered as

the shipping unit.

InMitsui & Co., Ltd. vs. American Export Lines, Inc.636 F 2d 807

(1981), the consignees of tin ingots and the shipper of floor coveringbrought action against the vessel owner and operator to recover for loss of

ingots and floor covering, which had been shipped in vessel supplied

containers. The U.S. District Court for the Southern District of New York

rendered judgment for the plaintiffs, and the defendant appealed. The

United States Court of Appeals, Second Division, modified and affirmed

holding that:

When what would ordinarily be considered packages are shipped

in a container supplied by the carrier and the number of such

units is disclosed in the shipping documents, each of those units

and not the container constitutes the "package" referred to in

liability limitation provision of Carriage of Goods by Sea Act.

Carriage of Goods by Sea Act, 4(5), 46 U.S.C.A.& 1304(5).

Even if language and purposes of Carriage of Goods by Sea Act

left doubt as to whether carrier-furnished containers whose

contents are disclosed should be treated as packages, the

interest in securing international uniformity would suggest that

they should not be so treated. Carriage of Goods by Sea Act, 4(5),

46 U.S.C.A. 1304(5).

... After quoting the statement in Leather's Best, supra, 451 F 2d

at 815, that treating a container as a package is inconsistentwith the congressional purpose of establishing a reasonable

minimum level of liability, Judge Beeks wrote, 414 F. Supp. at

907 (footnotes omitted):

Although this approach has not completely escaped

criticism, there is, nonetheless, much to commend it. It

gives needed recognition to the responsibility of the

courts to construe and apply the statute as enacted,

however great might be the temptation to "modernize"

or reconstitute it by artful judicial gloss. If COGSA'spackage limitation scheme suffers from internal illness,

Congress alone must undertake the surgery. There is,

in this regard, obvious wisdom in the Ninth Circuit's

conclusion in Hartford that technological

advancements, whether or not forseeable by the COGSA

promulgators, do not warrant a distortion or artificial

construction of the statutory term "package." A ruling

that these large reusable metal pieces of transport

equipment qualify as COGSA packages at least

where, as here, they were carrier owned and supplied

would amount to just such a distortion.

Certainly, if the individual crates or cartons prepared

by the shipper and containing his goods can rightly be

considered "packages" standing by themselves, they do

not suddenly lose that character upon being stowed in a

carrier's container. I would liken these containers to


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Bill of Lading, it is a cardinal principle in the construction of contracts

that the interpretation of obscure words or stipulations in a contract

shall not favor the party who caused the obscurity.20This applies with

even greater force in a contract of adhesion where a contract is already

prepared and the other party merely adheres to it, like the Bill of Ladingin this case, which is drawn up by the carrier.

Belgian Overseas Chartering and Shiping v. Phil. First Insurance

Co., Inc. (2002)

Proof of Negligence

Well-settled is the rule that common carriers, from the nature of their

business and for reasons of public policy, are bound to

observeextraordinary diligenceand vigilance with respect to the safety ofthe goods and the passengers they transport. Thus, common carriers are

required to render service with the greatest skill and foresight and "to

use all reason[a]ble means to ascertain the nature and characteristics of

the goods tendered for shipment, and to exercise due care in the handling

and stowage, including such methods as their nature requires." The

extraordinary responsibility lasts from the time the goods are

unconditionally placed in the possession of and received for

transportation by the carrier until they are delivered, actually or

constructively, to the consignee or to the person who has a right to

receive them.

This strict requirement is justified by the fact that, without a hand or a

voice in the preparation of such contract, the riding public enters into a

contract of transportation with common carriers. Even if it wants to, it

cannot submit its own stipulations for their approval. Hence, it merely

adheres to the agreement prepared 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 they transported deteriorated or got lost or

destroyed. That is, unless they prove that they exercised extraordinary

diligence in transporting the goods. In order to avoid responsibility forany loss or damage, therefore, they have the burden of proving that they

observed such diligence.

Corollary to the foregoing, mere proof of delivery of the goods in good

order to a common carrier and of their arrival in bad order at their

destination constitutes a prima facie case of fault or negligence against

the carrier. If no adequate explanation is given as to how the

deterioration, the loss or the destruction of the goods happened, the

transporter shall be held responsible.

In their attempt to escape liability, petitioners further contend that they

are exempted from liability under Article 1734(4) of the Civil Code. They

cite the notation "metal envelopes rust stained and slightly dented"

printed on the Bill of Lading as evidence that the character of the goods

or defect in the packing or the containers was the proximate cause of the

damage. We are not convinced.

From the evidence on record, it cannot be reasonably concluded that the

damage to the four coils was due to the condition noted on the Bill of

Lading. The aforecited exception refers to cases when goods are lost or

damaged while in transit as a result of the natural decay of perishable

goods or the fermentation or evaporation of substances liable therefor,

the necessary and natural wear of goods in transport, defects in packages

in which they are shipped, or the natural propensities of animals. None

of these is present in the instant case.


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Further, even if the fact of improper packing was known to the carrier or

its crew or was apparent upon ordinary observation, it is not relieved of

liability for loss or injury resulting therefrom, once it accepts the goods

notwithstanding such condition. Thus, petitioners have not successfully

proven the application of any of the aforecited exceptions in the presentcase.

Notice of Loss

Petitioners claim that pursuant to Section 3, paragraph 6 of the Carriage

of Goods by Sea Act (COGSA), respondent should have filed its Notice of

Loss within three days from delivery. They assert that the cargo was

discharged on July 31, 1990, but that respondent filed its Notice of Claim

only on September 18, 1990.

We are not persuaded.First, the above-cited provision of COGSA provides

that the notice of claim need not be given if the state of the goods, at the

time of their receipt, has been the subject of a joint inspection or survey.

As stated earlier, prior to unloading the cargo, an Inspection Report as to

the condition of the goods was prepared and signed by representatives of

both parties.

Second, as stated in the same provision, a failure to file a notice of claim

within three days will not bar recovery if it is nonetheless filed within one

year. This one-year prescriptive period also applies to the shipper, the

consignee, the insurer of the goods or any legal holder of the bill of

lading.

InLoadstar Shipping Co., Inc, v. Court of Appeals, we ruled that a claim

is not barred by prescription as long as the one-year period has not

lapsed.

Further, a stipulation in the bill of lading limiting to a certain sum the

common carrier's liability for loss or destruction of a cargo -- unless the

shipper or owner declares a greater value -- is sanctioned by law. There

are, however, two conditions to be satisfied: (1) the contract is reasonable

and just under the circumstances, and (2) it has been fairly and freelyagreed upon by the parties. The rationale for this rule is to bind the

shippers by their agreement to the value (maximum valuation) of their

goods.

It is to be noted, however, that the Civil Code does not limit the liability

of the common carrier to a fixed amount per package. In all matters not

regulated by the Civil Code, the right and the obligations of common

carriers shall be governed by the Code of Commerce and special laws.

Thus, the COGSA, which is suppletory to the provisions of the Civil

Code, supplements the latter by establishing a statutory provisionlimiting the carrier's liability in the absence of a shipper's declaration of

a higher value in the bill of lading. The provisions on limited liability are

as much a part of the bill of lading as though physically in it and as

though placed there by agreement of the parties.

In the case before us, there was no stipulation in the Bill of

Lading limiting the carrier's liability. Neither did the shipper declare a

higher valuation of the goods to be shipped. This fact notwithstanding,

the insertion of the words "L/C No. 90/02447 cannot be the basis for

petitioners' liability.

First, a notation in the Bill of Lading which indicated the amount of the

Letter of Credit obtained by the shipper for the importation of steel

sheets did not effect a declaration of the value of the goods as required by

the bill. That notation was made only for the convenience of the shipper

and the bank processing the Letter of Credit.


13/16

Second,inKeng Hua Paper Products v. Court of Appeals, we held that a

bill of lading was separate from the Other Letter of Credit arrangements.

We ruled thus:

"(T)he contract of carriage, as stipulated in the bill of lading in

the present case, must be treated independently of the contract

of sale between the seller and the buyer, and the contract of

issuance of a letter of credit between the amount of goods

described in the commercial invoice in the contract of sale and

the amount allowed in the letter of credit will not affect the

validity and enforceability of the contract of carriage as

embodied in the bill of lading. As the bank cannot be expected to

look beyond the documents presented to it by the seller pursuant

to the letter of credit, neither can the carrier be expected to go

beyond the representations of the shipper in the bill of ladingand to verify their accuracyvis--visthe commercial invoice and

the letter of credit. Thus, the discrepancy between the amount of

goods indicated in the invoice and the amount in the bill of

lading cannot negate petitioner's obligation to private

respondent arising from the contract of transportation."

In the light of the foregoing, petitioners' liability should be computed

based on US$500 per package and not on the per metric ton price

declared in the Letter of Credit.In Eastern Shipping Lines, Inc. v.

Intermediate Appellate Court, we explained the meaning ofpackages:

"When what would ordinarily be considered packages are

shipped in a container supplied by the carrier and the number of

such units is disclosed in the shipping documents, each of those

units and not the container constitutes the 'package' referred to

in the liability limitation provision of Carriage of Goods by Sea

Act."

Considering, therefore, the ruling inEastern Shipping Linesand the fact

that the Bill of Lading clearly disclosed the contents of the containers,

the number of units, as well as the nature of the steel sheets, the four

damaged coils should be considered as the shipping unit subject to the

US$500 limitation.1wp

Rep. v. Hijos de Escao (1965) According to Art. 1736 of the Civil

Code, the extraordinary responsibility of the 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

better right to receive them, without prejudice to the provisions of Art.

1738 which provides that the extraordinary liability of the common

carrier continues to be operative even during the time the goods are

stored in a warehouise of the carrier at the place of destination, until theconsignee has been advised of the arrival of the goods and has had

reasonable opportunity thereafter to remove them or otherwise dispose of

them.

Notice by the carrier that the cargo had already arrived, thereby placing

the same at the disposal of the shipper, or consignee, amounts to

constructive delivery of the cargo which automatically released the

carrier of the extraordinary responsibility for the cargo, in pursuance of

Art. 1736 of the Civil Code so that when the goods were destroyed by fire,

the duty to exercise extraordinary diligence on the part of the carrier for

vigilance of the goods had already ceased.

The shipper cannot defer taking the goods away in order to attend to

other matters of its own, no matter how important they may be.

Otherwise, the continuance of the extraordinary liability of the carrier

would be dependent upon causes of which it has no intervention and not

of its own making. In other words, the shipper can unnecessarily prolong


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the extraordinary diligence required of carriers in taking care of the

shipment by attending to other matters instead of taking delivery of the

shipment.

Lu Do & Lu Ym Corp. v. Binamira (1957) It is true that, as a rule, acommon 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" (Article1736,Idem.), 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 the interest of the owner who is at its

mercy. The situation changes after the goods are delivered to the

consignee.

While we agree with the Court of Appeals that while delivery of the cargo

to the consignee, or to the person who has a right to receive them",

contemplated in Article 1736, because in such case the goods are still in

the hands of the Government and the owner cannot exercise dominion

over them, 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 insert in 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

respectwhen 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 tirely at the option of the Carrier andsolely 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


15/16

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.

Rosario Farmers Coop Marketing v. MRR (1963) When the

plaintiffs representative was notified that the cargo had already arrived,

thereby placing the same at his disposal, that amounted to constructive

delivery of the cargo which automatically released the defendants

(carrier) of the extraordinary responsibility for the cargo, in pursuance of

Art. 1736. It then became the duty of the plaintiff to unload forthwith the

cargo to ascertain the condition thereof, because of the presumption that

the defendant common carriers are at fault or acted negligently in case

the cargo be found to have suffered loss, destruction or deterioration (Art.1735), and to take the cargo away. Thus, the liability of the carrier ceased

from the moment notice was given of the arrival of the cargo to be

received and removed by the plaintiff.

Opsima v. Southern Islands Shipping (1965) The extraordinary

responsibility of the carrier remains from the time the goods are

unconditionally placed in the possession of, or received by the common

carrier for transportation, and continues to be operative even during the

time the goods are stored in a warehouse of the carrier at the place of

destination, until the consignee has been advised of the arrival thereof

and has had reasonable opportunity thereafter to remove them or

otherwise dispose of them.

The plaintiff is under no legal obligation to inform the carrier of the

urgency of the goods shipped; it is the obligation of the carrier to

transport the merchandise received by them to the port of destination

with minimum necessary delay or without unnecessary delay.

It is true that the consignee was advised of the arrival of the goods. But

this is not sufficient to release the defendants from their extraordinary

obligation. The law further requires them to give said consignee

reasonable opportunity to remove or dispose of the goods.

Servando v. Phil Steam Navigation Co. (1982) Article 1736 of the

Civil Code 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.

"

The courta quoheld that the delivery of the shipment in question to the

warehouse of the Bureau of Customs is not the delivery contemplated byArticle 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 appellant.

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 . ...


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We sustain the validity of the above stipulation; there is nothing therein

that is contrary to law, morals or public policy.

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

appellant. The latter could not have foreseen the event.

There is nothing in the record to show that appellant carrier incurred in

delay in the performance of its obligation. It appears that appellant had

not only notified appellees of the arrival of their shipment, but 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 appellant 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 appellant, the

latter having no control whatsoever over the same.

Transpo Dec 2 (Tesoro)

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