SAMAR MINING COMPANY, INC.

, plaintiff-appellee, (consignee)
vs.
NORDEUTSCHER LLOYD and C.F. SHARP & COMPANY, INC., defendants-appellants. (vessel owner, agent respectively)
WHO WON? Defendant-appellants. Relieved from liability.
DOCTRINE: The carrier shall not be liable in any capacity whatsoever for any loss or damage to the goods while the goods are not in its actual
custody.
The stipulations in the Bill of Lading constitute the law between the parties provided that it is not contrary to law, morals, good customs, public
order or public policy.
FACTS:
1. An importation was made by SAMAR MINING COMPANY, INC., of 1 crate Optima welded wedge wire sieves through the M/S
SCHWABENSTEIN a vessel owned by NORDEUTSCHER LLOYD (PH agent: C.F. SHARP & CO., INC.), which shipment is
covered by Bill of Lading No. 18 duly issued to consignee SAMAR MINING COMPANY, INC.
2. Upon arrival of the vessel at the port of Manila, the aforementioned importation was unloaded and delivered in good order and
condition to the bonded warehouse of AMCYL.
3. The goods were however never delivered to, nor received by, the consignee at the port of destination Davao.
4. Samar sent a letter of complaint to defendants but it failed to elicit a favorable response. Thus consignee filed a formal claim, against the
former, but neither paid. Hence, the filing of the instant suit to enforce payment. Defendants-appellants brought in AMCYL as third
party defendant.
5. TC: finding defendants carrier and agent, liable for the value of goods never delivered to plaintiff consignee. 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. Only the defendants appealed from said decision.
ISSUE: W regard to the liability of the defendants, now appellants, under the bill of lading covering the subject shipment.
HELD: The SC reversed the decision of the TC and dismissed the complaint.
A close scrutiny of Bill of Lading No. 18 and its various clauses and stipulations should be examined.
This undertaking is not only proper but necessary as well because of the nature of the bill of lading which operates both as a receipt for the goods;
and more importantly, as a contract to transport and deliver the same as stipulated therein.
Being a contract, it is the law between the parties thereto who are bound by its terms and conditions provided that these are not contrary to law,
morals, good customs, public order and public policy.
Bill of Lading No. 18 sets forth in page 2 that 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 The
stipulation is plainly indicated on the face of the bill.
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.
The word "transship" means to transfer for further transportation from one ship or conveyance to another
The extent of appellant carrier's responsibility and/or liability in the transshipment of the goods in question is under Sec 1, paragraph 3 of Bill of
Lading No. 18, to wit:
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 ..
and in Sec11 of the same Bill, which provides:
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, ...
Defendants-appellants claim 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 Sec11 in the bill of lading, their responsibility for the cargo had ceased. WITH MERIT ACCDG
TO SC!
In conformity with the pertinent provisions of the NCC, Section 11 of Bill of Lading No. 18 and the third paragraph of Section 1 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.
Article 1736 (APPLICABLE IN THIS CASE.)
Article 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally
placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the
provisions of article 1738.
Article 1738 (NOT APPLICABLE IN THIS CASE.)
Article 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are
stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods
and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.
Art 1738: 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.
Art 1736: here, 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 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.
In this case, there was actual delivery to the consignee through its duly authorized agent, the carrier.
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 appellant's 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.










BENITO MACAM doing business under the name and style BEN-MAC ENTERPRISES, petitioner, vs.COURT OF APPEALS, CHINA
OCEAN SHIPPING CO., and/or WALLEM PHILIPPINES SHIPPING, INC., respondents.
(*Watermelons and mangoes case*)
WHO WON? Respondents. CARRIER.
DOCTRINE: 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.

FACTS:
1. Macam, doing business under the name and style Ben-Mac Enterprises, shipped on board the vessel Nen Jiang, owned and operated by
respondent China Ocean Shipping Co., through local agent respondent Wallem, 3,500 boxes of watermelons and 1,611 boxes of fresh
mangoes.
2. 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, Hongkong (GPC) as notify party.
3. As per letter of credit requirement, copies of the bills of lading and commercial invoices were submitted to petitioner's depository bank,
Consolidated Banking Corporation (SOLIDBANK), which paid petitioner in advance.
4. Upon arrival in Hongkong, the shipment was delivered by respondent WALLEM directly to GPC, not to PAKISTAN BANK, and
without the required bill of lading having been surrendered.
5. Subsequently, GPC failed to pay PAKISTAN BANK such that the latter, still in possession of the original bills of lading, refused to pay
petitioner through SOLIDBANK.
6. Since SOLIDBANK already pre-paid petitioner the value of the shipment, it demanded payment from respondent WALLEM through
5 letters but was refused. Petitioner was thus allegedly constrained to return the amount involved to SOLIDBANK, then demanded
payment from respondent WALLEM in writing but to no avail.
7. Petitioner sought collection of the value of the shipment from respondents before the RTC Manila based on delivery of the shipment to
GPC without presentation of the bills of lading and bank guarantee.
8. Respondents contended that the shipment was delivered to GPC without presentation of the bills of lading and bank guarantee per
request of petitioner himself because the shipment consisted of perishable goods. They 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.
9. Respondents presented proof that for the duration of their two-year business relationship with petitioner concerning similar shipments to
GPC deliveries were effected without presentation of the bills of lading. Respondents 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. Respondents counterclaimed for attorneys fees and costs of suit.
10. TC: Respondents to pay jointly and severally petitioner. It found that respondents 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. The trial court added that the shipment should not have been released to GPC at all since the instruction
contained in the telex was to arrange delivery to the respective consignees and not to any party. The trial court observed that the only
role of GPC in the transaction as notify party was precisely to be notified of the arrival of the cargoes in Hongkong so it could in turn
duly advise the consignee.
11. CA: Reversed TC. It dismissed the complaint of petitioner and the counterclaims of respondents China Ocean Shipping Co. and/or
Wallem. As established by previous similar transactions between the parties, shipped cargoes were sometimes actually delivered not to
the consignee but to notify party GPC without need of the bills of lading or bank guarantee.
ISSUE: Liability of Respondents concerning the shipped goods. Whether respondents are liable to petitioner for releasing the goods to GPC
without the bills of lading or bank guarantee. NO

HELD: CA decision was affirmed by the SC.
Petitioner submits that the fact that the shipment was not delivered to the consignee as stated in the bill of lading or to a party designated or
named by the consignee constitutes a misdelivery. Moreover, petitioner argues that from the text of the telex, assuming there was such an instruction,
the delivery of the shipment without the required bill of lading or bank guarantee should be made only to the designated consignee, referring to
PAKISTAN BANK.
is a deviation from his cause of action before the TC. 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 -
6. The goods arrived in Hongkong and were released by the defendant Wallem directly to the buyer/notify party, Great Prospect Company and not
to the consignee, the National Bank of Pakistan, Hongkong, without the required bills of lading and bank guarantee for the release of the shipment
issued by the consignee of the goods x x x x
[10]

Also when petitioner wrote respondent WALLEM demanding payment of the value of the cargoes, misdelivery of the cargoes did not come
into the picture.
Article 1736 of the Civil Code provides -
Art. 1736. The extraordinary responsibility of the common carriers 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.
[12]

The extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the consignee or to the
person who has a right to receive them.
PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC
was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint
before the trial court CONCLUSION: 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.
Respondents submitted in evidence a telex as basis for delivering the cargoes to GPC without the bills of lading and bank guarantee. The
telex instructed delivery of various shipments to the respective consignees without need of presenting the bill of lading and bank guarantee per the
respective shippers request since for prepaid shipt ofrt charges already fully paid. Petitioner was named as shipper and GPC as consignee with
respect to Bill of Lading Nos. HKG 99012 and HKG 99013.
SC concluded that petitioner has been transacting with GPC as buyer/importer for around 2-3 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 petitioner 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, petitioner dispenses with the bank guarantee because the goods are
already fully paid. In his several years of business relationship with GPC and respondents, there was not a single instance when the bill of lading was
first presented before the release of the cargoes.
Petitioner declared that it was his practice to ask the shipping lines to immediately release shipment of perishable goods through telephone
calls by himself or his people. He no longer required presentation of a bill of lading nor of a bank guarantee as a condition to releasing the goods
in case he was already fully paid. Thus, taking into account that 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 petitioner indeed requested the release of the goods to
GPC without presentation of the bills of lading and bank guarantee.















H. E. HEACOCK COMPANY, plaintiff-appellant,
vs.
MACONDRAY & COMPANY, INC., defendant-appellant.
WHO WON? No one. Kasi Heacock cannot claim yung market value tapos Macondray naman, tinaasan pa ng TC dapat nila ibayad kay plaintiff.
DOCTRINE: Where a contract of carriage, signed by the shipper, is fairly made with a railroad company, agreeing on a valuation of the property
carried, with the rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation, even in case of loss
or damage by the negligence of the carrier, the contract will be upheld as proper and lawful mode of securing a due proportion between the amount
for which the carrier may be responsible and the freight he receives, and protecting himself against extravagant and fanciful valuations.
Stated otherwise, A carrier may not, by a valuation agreement with a shipper, limit its liability in case of the loss by negligence of an interstate
shipment to less than the real value thereof, unless the shipper is given a choice of rates, based on valuation."
FACTS:
1. H.E. Heacock Company caused to be delivered on board of steamship Bolton Castle, then in the harbor of New York, 4 cases of
merchandise, one of which contained 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.
2. The said steampship arrived in the port of Manila, consigned to the defendant as agent and representative of said vessel in said port.
Neither the master of said vessel nor the defendant, as its agent, delivered to the plaintiff the aforesaid twelve 8-day Edmond clocks,
although demand was made upon them for their delivery.
3. The bill of lading issued and delivered to the plaintiff 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.
4. Defendant tendered to the plaintiff P76.36, the proportionate freight ton value of the twelve 8-day Edmond clocks, in payment of
plaintiff's claim, which tender plaintiff rejected. (Dapat daw market value)
5. TC: in accordance with clause 9 of the bill of lading, rendered judgment in favor of the plaintiff against the defendant for the sum of
P226.02, this being the invoice value of the clocks in question plus the freight and insurance, with legal interest from November 20,
1919, the date of the complaint, together with costs. BOTH PARTIES APPEALED.
6. HE Heacock insists that it is entitled to recover from the defendant the market value of the clocks in question, to wit: the sum of P420.
BASIS: the two clause in the bill of lading, limiting the liability of the carrier, are contrary to public order and, therefore, null and void.
7. Macondray, on the other hand, contends that, in accordance with clause 1 of the bill of lading, the plaintiff is entitled to recover only the
sum of P76.36, the proportionate freight ton value of the said clocks. BASIS: contends that both of said clauses are valid, and the clause
1 should have been applied instead of clause 9.
ISSUE: May a common carrier, by stipulations inserted in the bill of lading, limit its liability for the loss of or damage to the cargo to an agreed
valuation of the latter? YES
HELD:
Three kinds of stipulations have often been made in a bill of lading.
1. One exempting the carrier from any and all liability for loss or damage occasioned by its own negligence;
2. One providing for an unqualified limitation of such liability to an agreed valuation; and
3. One 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.
A reading of clauses 1 and 9 of the bill of lading here in question clearly shows that the present case falls within the third stipulation, 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.
In the case of Hart vs. Pennsylvania R. R. Co., it was held that "where a contract of carriage, signed by the shipper, is fairly made with a railroad
company, agreeing on a valuation of the property carried, with the rate of freight based on the condition that the carrier assumes liability only to the
extent of the agreed valuation, even in case of loss or damage by the negligence of the carrier, the contract will be upheld as proper and lawful mode
of securing a due proportion between the amount for which the carrier may be responsible and the freight he receives, and protecting himself against
extravagant and fanciful valuations."
** 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.**
BASIS: ESTOPPEL 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.
The syllabus of the same case reads as follows: "A carrier may not, by a valuation agreement with a shipper, limit its liability in case of the loss by
negligence of an interstate shipment to less than the real value thereof, unless the shipper is given a choice of rates, based on valuation."
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." Said clauses of the bill of lading are, therefore, valid and binding upon the parties
thereto.
It will be noted, however, that whereas 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.
There is an irreconcilable conflict between the two clauses with regard to the measure of defendant's liability. Thus, the bill of lading should be
interpreted against the defendant carrier, which drew said contract. "A written contract should, in case of doubt, be interpreted against the party who
has drawn the contract." It is a well-known principle of construction that ambiguity or uncertainty in an agreement must be construed most strongly
against the party causing it.
"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."














CITADEL LINES, INC., petitioner, (carrier)
vs.
COURT OF APPEALS * and MANILA WINE MERCHANTS, INC., respondents. (consignee)
**Dunhill cigarettes**
WHO WON? Manila Wine. Citadel failed to prove that the loss was occasioned by an excepted cause.
DOCTRINE:
1. 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.
2. , 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.
FACTS:
1. Petitioner Citadel Lines, Inc. (CARRIER) is the general agent of the vessel "Cardigan Bay/Strait Enterprise," while respondent Manila
Wine Merchants, Inc. (CONSIGNEE) is the importer of the subject shipment of Dunhill cigarettes from England.
2. 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".
3. The shipment arrived at the Port of Manila Pier 13 and was received by E. Razon, Inc. (later known as Metro Port Service, Inc. or the
ARRASTRE).
4. The container van, which contained two shipments was stripped.
5. One shipment was delivered and the other shipment consisting of the imported British manufactured cigarettes was palletized.
6. Due to lack of space at the Special Cargo Coral, the cigarettes were placed in two containers with two pallets, the original container, and
four pallets in another container BENU 201009-9, with both containers duly padlocked and sealed by the representative of the
CARRIER.
7. CARRIER'S headchecker discovered that one container van had a different padlock and the seal was tampered with. The matter was
reported to Jose G. Sibucao, Pier Superintendent, Pier 13, and upon verification, it was found that 90 cases of imported British
manufactured cigarettes were missing. 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.
8. CONSIGNEE a formal claim with the CARRIER, demanding the payment of P315,000.00 representing the market value of the missing
cargoes. The CARRIER admitted the loss but alleged that the same occurred at Pier 13, an area absolutely under the control of the
ARRASTRE.
9. TC: exonerated the ARRASTRE of any liability on the ground that the subject container van was not formally turned over to its custody,
and adjudging the CARRIER liable for the principal amount of P312,480.00 representing the market value of the lost shipment.
affirmed by the CA except as to award for damages.
ISSUES:
1. Whether the loss occurred while the cargo in question was in the custody of E. Razon, Inc. or of Citadel Lines, Inc; and
2. Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee.
HELD:
1. CA declared in no uncertain terms that, on the basis of the evidence presented, 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. The CARRIER is now estopped from claiming otherwise.
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.
In this case, subject shipment was lost while it was still in the custody of herein petitioner CARRIER, and considering further that it 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.
2. The award of damages for the value of the goods lost, based on the alleged market value thereof, is erroneous. It is clearly and expressly provided
under Clause 6 of the 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.
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.

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. Petitioner,
vs.
PHOENIX ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., INC., Respondent.
**green bananas and fresh pineapples**
WHO WON? Mindanao Terminal. Stevedores lang sila.
DOCTRINE:
Arrastre v Stevedore
Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf or between the establishment of the
consignee or shipper and the ship's tackle. The responsibility of the arrastre operator lasts until the delivery of the cargo to the consignee. The
service is usually performed by longshoremen. On the other hand, stevedoring refers to the handling of the cargo in the holds of the vessel or
between the ship's tackle and the holds of the vessel. The responsibility of the stevedore ends upon the loading and stowing of the cargo in the
vessel.
FACTS:
1. Del Monte contracted petitioner Mindanao Terminal, a stevedoring company, to load and stow a shipment of 146,288 cartons of fresh
green Philippine bananas and 15,202 cartons of fresh pineapples belonging to Del Monte Produce into the cargo hold of the vessel M/V
Mistrau.
2. The vessel was docked at the port of Davao City and the goods were to be transported by it to the port of Inchon, Korea in favor of
consignee Taegu Industries, Inc. Del Monte Produce insured the shipment under an "open cargo policy" with private respondent
Phoenix Assurance , a non-life insurance company, and private respondent McGee & Co., the underwriting manager/agent of Phoenix.
3. The vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea. It was then discovered upon discharge that
some of the cargo was in bad condition.
4. The Marine Cargo Damage Surveyor of Incok Loss and Average Adjuster of Kore surveyed the extent of the damage of the shipment.
In a survey report, it was stated that 16,069 cartons of the banana shipment and 2,185 cartons of the pineapple shipment were so
damaged that they no longer had commercial value.
5. Del Monte Produce filed a claim under the open cargo policy for the damages to its shipment. McGees Marine Claims Insurance
Adjuster evaluated the claim and recommended that payment be made. A check for the recommended amount was sent to Del Monte
Produce; the latter then issued a subrogation receipt

to Phoenix and McGee.
6. Respondents instituted an action for damages

against Mindanao Terminal in the RTC Davao.
7. RTC: dismissed the case and held that the only participation of Mindanao Terminal was to load the cargoes on board the M/V
Mistrau under the direction and supervision of the ships officers. Mindanao Terminal cannot be held liable for whatever happened to
the cargoes after it had loaded and stowed them. Moreover, citing the survey report, it was found that the cargoes were damaged on
account of a typhoon which the vessel had encountered during the voyage. Phoenix and McGee had no cause of action against
Mindanao Terminal because the latter, whose services were contracted by Del Monte.
8. CA: reversed and set aside RTC. It sustained Phoenixs and McGees argument that the damage in the cargoes was the result of
improper stowage by Mindanao Terminal. It imposed on Mindanao Terminal, as the stevedore of the cargo, the duty to exercise
extraordinary diligence in loading and stowing the cargoes. It further held that even with the absence of a contractual relationship
between Mindanao Terminal and Del Monte Produce, the cause of action of Phoenix and McGee could be based on quasi-delict under
Article 2176 of the CC. Mor denied!
ISSUES:
1. Whether it was careless and negligent in the loading and stowage of the cargoes onboard M/V Mistrau making it liable for damages; and NO
2. Whether Phoenix and McGee has a cause of action against Mindanao Terminal under Article 2176 of the Civil Code on quasi-delict.YES
HELD:
Article 1173 of the Civil Code is very clear that if the law or contract does not state the degree of diligence which is to be observed in the
performance of an obligation then that which is expected of a good father of a family or ordinary diligence shall be required. Mindanao Terminal, a
stevedoring company which was charged with the loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely as
a labor provider in the case at bar. There is no specific provision of law that imposes a higher degree of diligence than ordinary diligence for a
stevedoring company or one who is charged only with the loading and stowing of cargoes. It was neither alleged nor proven by Phoenix and McGee
that Mindanao Terminal was bound by contractual stipulation to observe a higher degree of diligence than that required of a good father of a family.
THUS, under Article 1173, Mindanao Terminal was required to observe ordinary diligence only in loading and stowing the cargoes of Del Monte
Produce aboard M/V Mistrau.
x x x The relationship therefore between the consignee and the arrastre operator must be examined. This relationship is much akin to that existing
between the consignee or owner of shipped goods and the common carrier, or that between a depositor and a warehouseman. In the performance
of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a warehouseman as
enunciated under Article 1733 of the Civil Code and Section 3(b) of the Warehouse Receipts Law, respectively. Being the custodian of the goods
discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to turn them over to the party entitled to their possession.
Mindanao Terminal was performing purely stevedoring. As such, it was charged with the loading and stowing of the cargoes from the pier to the
ships cargo hold; it was never the custodian of the shipment of Del Monte Produce. A stevedore is not a common carrier for it does not transport
goods or passengers; it is not akin to a warehouseman for it does not store goods for profit. The loading and stowing of cargoes would not have a far
reaching public ramification as that of a common carrier and a warehouseman; the public is adequately protected by our laws on contract and on
quasi-delict. The public policy considerations in legally imposing upon a common carrier or a warehouseman a higher degree of diligence is not
present in a stevedoring outfit which mainly provides labor in loading and stowing of cargoes for its clients.
Phoenix and McGee failed to prove by preponderance of evidence that Mindanao Terminal had acted negligently.
Mindanao Terminal loaded and stowed the cargoes of Del Monte Produce aboard theM/V Mistrau in accordance with the stowage plan, a guide for
the area assignments of the goods in the vessels hold, prepared by Del Monte Produce and the officers of M/V Mistrau. The loading and stowing
was done under the direction and supervision of the ship officers. The vessels officer would order the closing of the hatches only if the loading was
done correctly after a final inspection. The said ship officers would not have accepted the cargoes on board the vessel if they were not properly
arranged and tightly secured to withstand the voyage in open seas. They would order the stevedore to rectify any error in its loading and stowing. A
foremans report, as proof of work done on board the vessel, was prepared by the checkers of Mindanao Terminal and concurred in by the Chief
Officer of M/V Mistrau after they were satisfied that the cargoes were properly loaded.
The damage occurred aboard the carrying vessel during sea transit, being caused by ships heavy rolling and pitching under boisterous. As it is clear
that Mindanao Terminal had duly exercised the required degree of diligence in loading and stowing the cargoes, which is the ordinary diligence of a
good father of a family, it is thus relieved from liability.
NOTE: Phoenix and McGee are not suing for damages for injuries arising from the breach of the contract of service but from the alleged negligent
manner by which Mindanao Terminal handled the cargoes belonging to Del Monte Produce. Despite the absence of contractual relationship
between Del Monte Produce and Mindanao Terminal, the allegation of negligence on the part of the defendant should be sufficient to establish a
cause of action arising from quasi-delict.