Article 1174.

Except in cases expressly specified by the

law, or when it is otherwise declared by stipulation, or
when the nature of the obligation required the
assumption of risk, no person shall be responsible for
those events which could not be foreseen, or which,
through forseen, were inevitable
Art. 1733. 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.
Such extraordinary diligence in the vigilance over the
goods is further expressed in Articles 1734, 1735, and
1745, Nos, 5, 6, and 7, while the extraordinary diligence
for the safety of the passengers is further set forth in
Articles 1755 and 1756.
Art. 1734. Common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the
same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the packing
or in the container
(5) order or act of competent public authority.
Art. 1735. In all cases other than those mentioned in
Nos. 1, 2, 3, 4, and 5 of the preceding article, if the
goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed
extraordinary diligence as required in Art 1733.
Art. 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.
Art. 1737. The common carriers duty to observe
extraordinary diligence over the goods remains in full
force and effect even when they are temporarily
unloaded or stored in transit, unless the shipper or

owner has made use of the right of stoppage in

transitu.
Art. 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. 1739. In order that the common carrier may be
exempted from responsibility, the natural disaster
must have been the proximate and only cause of the
loss. However, the common carrier must exercise due
diligence to prevent or minimize loss before, during
and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may
be exempted from liability for the loss, destruction, or
deterioration of the goods. The same duty is
incumbent upon the common carrier in case of an act
of the public enemy referred to in Article 1734. No. 2.
Art. 1740. If the common carrier negligently incurs in
delay in transporting the goods, a natural disaster shall
not free such carrier from responsibility.
Art. 1741. If the shipper or owner merely contributed to
the loss, destruction or deterioration of the goods. The
proximate cause thereof being the negligence of the
common carrier, the latter shall be liable in damages,
which however, shall be equitably reduced.
Art. 1742. Even if the loss, destruction, or deterioration
of the goods should be caused by the character of the
goods, or the faulty nature of the packaging or of the
contianers, the common carrier must exercise due
diligence to forestall or lessen the loss.
Art. 1743. If through the order of public authority the
goods are seized or destroyed, the common carrier is
not responsible, provided said public authority had
power to issue the order.
Art. 2179. When the plaintiffs own negligence was the
immediate and proximate cause of his injury, he
cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of
the injury being the defendants lack of due care, the
plaintiff may recover damages, but the courts shall
mitigate the damages to be awarded.
Art. 349. A contract of transportation by land or water
ways of any kind shall be considered commercial:
1.

When it has for its object merchandise or any

article of commerce.

2.

When, whatever its object may be, the carrier is

a merchant or is habitually engaged in
transportation for the public.

Art. 350. The shipper as well as the carrier of

merchandise or goods may mutually demand that a
bill of lading be made, stating:
1.
2.
3.

4.

5.
6.
7.
8.
9.

The name, surname and residence of the

shipper
The name, surname and residence of the
carrier
The name, surname and residence of the
person to whom or to whose order the goods
are to be sent or whether they are to be
delivered to the bearer of said bill.
The description of the goods, with a statement
of their kind, of their weight, and of the
external marks or signs of the packages in
which they are contained.
The cost of transportation.
The date on which shipment is made
The place of delivery to the carrier
The place and the time at which delivery to the
consignee shall be made
The indemnity to be paid by the carrier in case
of delay, if there should be any agreement on
this matter.

Art. 351. In transportation made by railroads or other

enterprises subject to regulation rate and time
schedules, it shall be sufficient for the bills of lading
or the declaration of shipment furnished by the
shipper to refer, with respect to the cost, time and
special conditions of the carriage, to the schedules and
regulations the application of which he requests; and if
the shipper does not determine the schedule, the
carrier must apply the rate of those which appear to be
the lowest, with the conditions inherent thereto,
always including a statement or reference to in the bill
of lading which he delivers to the shipper.
Art. 352. The bills of lading, or tickets in cases of
transportation of passengers, may be diverse, some for
persons and others for baggage; but all of them shall
bear the name of the carrier, the date of shipment, the
points of departure and arrival, the cost, and, with
respect to the baggage, the number and weight of the
packages, with such other manifestations which may
be considered necessary for their easy identification.
Art. 353. The legal basis of the contract between the
shipper and the carrier shall be the bill of lading, by
the contents of which all disputes which may arise
with regard to their execution and fulfillment shall be
decided without admission of other exceptions than
forgery or material errors in the drafting thereof.

After the contract has been complied with, the bill of

lading issued by the carrier shall be returned to him
and by virtue of the exchange of this certificate for the
article transported, the respective obligations and
actions shall be considered cancelled, unless in the
same act the claims which the contracting parties
desire to reserve are reduced to writing, exception
being made of the provisions of Art 366.
If in case of loss or for any other reason whatsoever,
the consignee cannot return upon receiving the
merchandise the bill of lading subscribed by the
carrier, he shall give said carrier a receipt for the goods
delivered, this receipt producing the same effects as
the return of the bill of lading.
Art. 354. In the absence of a bill of lading, the
respective claims of the parties shall be decided by the
legal proofs that each one may submit in support of his
claims, in accordance with the general provisions
established in this Code for commercial contracts.
Art. 355. The liability of the carrier shall begin from
the moment he receives the merchandise, in person or
through a person entrusted thereto in the place
indicated for their reception.
Art. 356. Carriers may refuse to accept packages which
appear unfit for transportation; and if said
transportation is to be over a railroad, and the
shipment is insisted on, the company shall carry it,
being exempt from all liability of its objections are so
stated in the bill of lading
Art. 358. Should no period within which the goods are
to be delivered be previously fixed, the carrier shall be
under the obligation to forward them in the first
shipment of the same or similar merchandise which he
may make to the point of delivery; and should he not
do so, the damages occasioned by the delay shall be
suffered by him.
Art. 359. If there should be an agreement between the
shipper and the carrier with regard to the road over
which the transportation is to be made, the carrier
cannot change the route, unless obliged to do so by
force majeure; and should he do so without being
forced to, he shall be liable for any damage which may
be suffered by the goods transported for any other
cause whatsoever, besides being required to pay the
amount which may have been stipulated for such case.
When on account of the said force majeure the carrier
is obliged to take another route, causing an increase in
the transportation charges, he shall be reimbursed for
said increase after presenting the formal proof thereof.

Art. 360. The shipper may without changing the place

where the delivery is to be made, change the
consignment of the goods delivered to the carrier, and
the latter shall comply with his orders, provided that at
the time of making the change of the consignee the bill
of lading subscribed by the carrier be returned to him,
if one were issued, exchanging it for another
containing the novation of the contact. The expenses
arising from the change of consignment shall be
defrayed by the shipper.
Art. 361. Merchandise shall be transported at the risk
and venture of the shipper, if the contrary was not
expressly stipulated.
Therefore, all damages and impairment suffered by
the goods during the transportation, by reason of
accident, force majeure, or by virtue of the nature or
defect of the articles, shall be for the account and risk
of the shipper.
The proof of these accidents is incumbent on the
carrier.
Art. 362. The carrier, however, shall be liable for the
losses and damages arising from the causes mentioned
in the foregoing article if it is proved that they
occurred on account of his negligence or because he
did not take the precautions usually adopted by
careful persons, unless the shipper committed fraud in
the bill of lading, making him believe that the goods
were of a class or quality different from what they
really were.
If, notwithstanding the precaution referred to in this
article, the goods transported run the risk of being lost
on account of the nature or by reason of an
unavoidable accident, there being no time for the
owners to dispose of the same, the carrier shall proceed
to their sale, placing them for this purpose at the
disposal of the judicial authority of the officials
determined by special provisions.
Art. 363. With the exception of the cases prescribed in
the second paragraph of Art 361, 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, shall be
obliged to pay the value of the goods not delivered at
the point where they should have been at the time the
delivery should have taken place.
If part of the goods transported should be delivered,
the consignee may refuse to receive it when he proves
that he cannot make use thereof without the others.

The last paragraph above is an instance when the

consignee may abandon goods. The other instances are
set forth in Articles 365 and 371 of the Code of
Commerce
Art. 687. The charters and shippers cannot abandon
merchandise damaged on account of its own inherent
defect or fortuitous event for the payment of the
freightage and other expenses.
The abandonment shall be proper, however, if the
cargo should consist of liquids and they should have
leaked out, there remaining in the containers not more
than one-quarter of their content.
Art. 364. If the effect of the damage referred to in art.
361 should be only a reduction in the value of the
goods, the obligation of the carrier shall be reduced to
the payment of the amount of said reduction in value,
after appraisal by experts.
Art. 365. If, on account of the damage, the goods are
rendered useless for purposes of sale or consumption
in the use for which they are properly destined, the
consignee shall not be bound to receive them, and may
leave them in the hands of the carrier, demanding
payment therefor at current market prices.
If among the goods damaged there should be some in
good condition and without any defect whatsoever, the
foregoing provisions shall be applicable with regard to
the damaged ones, and the consignee shall receive
those which are sound, this separation being made by
distinct and separate articles, no object being divided
for the purpose, unless the consignee proves the
impossibility of conveniently making use thereof in
this form.
The same provision shall be applied to merchandise in
bales or packages, with distinction of the packages
which appear sound.
Art. 368. The carrier must deliver to the consignee
without any delay or difficulty the merchandise
received by him, by reason of the mere fact of being
designated in the bill of lading to receive it; and
should said carrier not do so, he shall be liable for the
damages which may arise therefrom
Art. 369. Should the consignee not be found at the
domicile indicated in the bill of lading, or should
refuse to pay the transportation charges and expenses,
or to receive the goods, the deposit of said goods shall
be ordered by the municipal judge, where there is no
judge of first instance, the be placed at the disposal of
the shipper or sender, without prejudice to a person
having better rights, this deposit having all the effects
of a delivery.

Art. 711. The legitimate holder of a bill of lading who

does not present it to the captain of the vessel before
her unloading, obliging the latter thereby to unload it
and place it in deposit, shall be liable for the cost of
warehousing and other expenses arising therefrom.
Art. 370. If a period has been fixed for the delivery of
the goods, it must be made within the same; otherwise
the carrier shall pay the indemnity agreed upon in the
bill of lading, neither the shipper nor consignee being
entitled to anything else.
Should no indemnity have been agreed upon and the
delay exceeds the time fixed in the bill of lading, the
carrier shall be liable for the damages which may have
been caused by the delay.
Art. 371. In cases of delay on account of the fault of the
carrier, referred to in the foregoing, the consignee may
leave the goods transported in the hands of the carrier,
informing him thereof in writing before the arrival of
the same at the point of destination.
When this abandonment occurs, the carrier shall
satisfy the total value of the goods, as if they had been
lost or mislaid.
Should the abandonment not occur, the indemnity for
losses and damages on account of the delays cannot
exceed the current price of the goods transported on
the day and at the place where the delivery was to have
been made. The same provisions shall be observed in
all cases where this indemnity is due.
Art. 372. The appraisement of the goods which the
carrier must pay in case of their being lost or mislaid
shall be fixed in accordance with what is stated in the
bill of lading, no proof being allowed on the part of
the shipper that there were among the goods declared
therein articles of greater value and money.
Horses, vehicles, vessels, equipment, and all other
principal and accessory means of transportation, shall
be especially obligated in favor of the shipper
although with relation to railroads said obligation
shall be subrogated to the provision of the laws on
concession with regard to property and to whose of
this Code with regard to the manner and form of
taking attachments and retentions against the said
companies.
CA65
TITLE I
Section 1. When used in this Act

(a) The term "carrier" includes the owner or the

charterer who enters into a contract of carriage with a
shipper.
(b) The term "contract of carriage" applies only to
contracts of carriage covered by a bill of lading or any
similar document of title, insofar as such document
relates to the carriage of goods by sea, including any
bill of lading or any similar document as aforesaid
issued under or pursuant to a charter party from the
moment at which such bill of lading or similar
document of title regulates the relations between a
carrier and a holder of the same.
(c) The term "goods" includes goods, wares,
merchandise, and articles of every kind whatsoever,
except live animals and cargo which by the contract of
carriage is stated as being carried on deck and is so
carried.

Section 2. Subject to the provisions of section 6, under

every contract of carriage of goods by sea, the carrier in
relation to the loading handling, stowage, carriage,
custody, care, and discharge of such goods, shall be
subject to the responsibilities and liabilities and
entitled to the rights and immunities hereinafter set
forth.
RESPONSIBILITIES AND LIABILITIES
Section 3. (1) The carrier shall be bound, before and at
the beginning of the voyage, to exercise due diligence
to
a) Make the ship seaworthy;
b) Properly man, equip, and supply the
ship;
c) Make the holds, refrigerating and
cooling chambers, and all other parts
of the ship in which goods are carried,
fit and safe for their reception carriage
and preservation.
(2) The carrier shall properly and carefully load,
handle, stow, carry, keep, care for, and discharge the
goods carried.
(3) After receiving the goods into his charge the carrier,
or the master or agent of the carrier, shall, on demand
of the shipper, issue to the shipper a bill of lading
showing among other things
a.

The leading marks necessary for

identification of the goods as the same
are furnished in writing by the shipper
before the loading of such goods starts,
provided such marks are stamped or

otherwise shown clearly upon the

goods if uncovered, or on the cases or
coverings in which such goods are
contained, in such a manner as should
ordinarily remain legible until the end
of the voyage.
b. Either the number of packages or
pieces, or the quantity or weight, as the
case may be, as furnished in writing by
the shipper.
c. The apparent order and condition of
the goods: Provided, That no carrier,
master, or agent of the carrier, shall be
bound to state or show in the bill of
lading any marks, number, quantity, or
weight which he has reasonable
ground for suspecting not accurately to
represent the goods actually received,
or which he has had no reasonable
means of checking.
(4) Such a bill of lading shall be prima facie evidence
of the receipt by the carrier of the goods as therein
described in accordance with paragraphs (3) (a), (b),
and (c) of this section: Provided, That nothing in this
Act shall be construed as repealing or limiting the
application of any part of the Act, as amended, entitled
"An Act relating to bills of lading in interstate and
foreign commerce," approved August 29, 1916 (U. S. C.
title 49, secs. 81-124), commonly known as the
"Pomerene Bills of Lading Act."
(5) The shipper shall be deemed to have guaranteed to
the carrier the accuracy at the time of shipment of the
marks, number, quantity, and weight, as furnished by
him; and the shipper shall indemnify the carrier
against all loss damages, and expenses arising or
resulting from inaccuracies in such particulars. The
right of the carrier to such indemnity shall in no way
limit his responsibility and liability under the contract
of carriage or to any person other than the shipper.
(6) Unless notice of loss or damage and the general
nature of such loss or damage be given in writing to
the carrier or his agent at the port of discharge before
or at the time of the removal of the goods into the
custody of the person entitled to delivery thereof
under the contract of carriage, such removal shall be
prima facie evidence of the delivery by the carrier of
the goods as described in the bill of lading. If the loss
or damage is not apparent, the notice must be given
within three days of the delivery.
Said notice of loss or damage maybe endorsed upon
the receipt for the goods given by the person taking
delivery thereof.

The notice in writing need not be given if the state of

the goods has at the time of their receipt been the
subject of joint survey or inspection.
In any event the carrier and the ship shall be
discharged from all liability in respect of loss or
damage unless suit is brought within one year after
delivery of the goods or the date when the goods
should have been delivered: Provided, That if a notice
of loss or damage, either apparent or concealed, is not
given as provided for in this section, that fact shall not
affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the
date when the goods should have been delivered
In the case of any actual or apprehended loss or
damage the carrier and the receiver shall give all
reasonable facilities to each other for inspecting and
tallying the goods.
(7) After the goods are loaded the bill of lading to be
issued by the carrier, master, or agent of the carrier to
the shipper shall, if the shipper so demands, be a
"shipped" bill of lading Provided, That if the shipper
shall have previously taken up any document of title to
such goods, he shall surrender the same as against the
issue of the "shipped" bill of lading, but at the option
of the carrier such document of title may be noted at
the port of shipment by the carrier, master, or agent
with name or name the names of the ship or ships
upon which the goods have been shipped and the date
or dates of shipment, and when so noted the same
shall for the purpose of this section be deemed to
constitute a "shipped" bill of lading.
(8) Any clause, covenant, or agreement in a contract of
carriage relieving the carrier of the ship form liability
for loss or damage to or in connection with the goods,
arising from negligence, fault, or failure in the duties
and obligations provide in this section or lessening
such liability otherwise than as provided in this Act,
shall be null and void and of no effect. A benefit of
insurance in favor of the carrier, or similar clause, shall
be deemed to be a clause relieving the carrier from
liability.
RIGHTS AND IMMUNITIES
Section 4. (1) Neither the carrier nor the ship shall be
liable for loss or damage arising or resulting from
unseaworthiness unless caused by want of due
diligence on the part of the carrier to make the ship
seaworthy, and to secure that the ship is properly
manned, equipped, and supplied, and to make to the
holds, refrigerating and cool chambers, and all other
parts of the ship in which goods are carried fit and safe
for their reception, carriage, and preservation in

accordance with the provisions of paragraph (1) of

section 3. Whenever loss or damage has resulted from
unseaworthiness, the burden of proving the exercise of
due diligence shall be on the carrier or other persons
claiming exemption under the section.
(2) Neither the carrier nor the ship shall be responsible
for loss or damage arising or resulting from
(a) Act, neglect, or default of the master, mariner, pilot,
or the servants of the carrier in the navigation or in the
management of the ship;
(b) Fire, unless caused by the actual fault or privity of
the carrier;
(c) Perils, dangers, and accidents of the sea or other
navigable waters;
(d) Act of God;
(e) Act of war,
(f) Act of public enemies;
(g) Arrest or restraint of princes, rulers, or people, or
seizure under legal process;
(h) Quarantine restrictions;
(i) Act or omission of the shipper or owner of the
goods, his agent or representative;
(j) Strikes or lockouts or stoppage or restraint of labor
from
whatever
cause,
whether
partial
or
general; Provided, That nothing herein contained shall
be construed to relieve a carrier from responsibility for
the carrier's own acts;
(k) Riots and civil commotions
(l) Saving or attempting to save life or property at sea;
(m) Wastage in bulk or weight or any other loss or
damage arising from inherent defect, quality, or vice of
the goods;
(n) Insufficiency of packing;
(o) Insufficiency of inadequacy of marks;
(p) Latent defects not discoverable by due diligence;
and
(q) Any other cause arising without the actual fault and
privity of the carrier and without the fault or neglect of
the agents or servants of the carrier, but the burden of
proof shall be on the person claiming the benefit of
this exception to show that neither the actual fault or
privity of the carrier nor the fault or neglect of the
agents or servants of the carrier contributed to the loss
or damage.

(3) The shipper shall not be responsible for loss or

damage sustained by the carrier or the ship arising
from any cause without the act, fault, or neglect of the
shipper, his agents, or servants.
(4) Any deviation in saving or attempting to save life
or property at sea, or any reasonable deviation shall
not be deemed to be an infringement or breach of this
Act or of the contract of carriage, and the carrier shall
not be liable for any loss or damage resulting
therefrom: Provided, however, That if the deviation is
for the purpose of loading cargo or unloading cargo or
passengers it shall, prima facie, be regarded as
unreasonable.
(6) Goods of an inflammable, explosive, or dangerous
nature to the shipment whereof the carrier, master or
agent of the carrier, has not consented with knowledge
of their nature and character, may at any time before
discharge be landed at any place or destroyed or
rendered innocuous by the carrier without
compensation, and the shipper of such goods shall be
liable for all damages and expenses directly or
indirectly arising out of or resulting from such
shipment. If any such goods shipped with such
knowledge and consent shall become a danger to the
ship or cargo, they may in like manner be landed at
any place, or destroyed or rendered innocuous by the
carrier without liability on the part of the carrier except
to general average, if any.
SURRENDER OF RIGHTS AND IMMUNITIES AND
INCREASE
OF
RESPONSIBILITIES
AND
LIABILITIES
Section 5. A carrier shall be at liberty to surrender in
whole or in part all or any of his rights and immunities
or to increase any of his responsibilities and liabilities
under this Act, provided such surrender or increase
shall be embodied in the bill of lading issued to the
shipper.
SPECIAL CONDITIONS
Section 6. Notwithstanding the provisions of the
preceding sections, a carrier, master or agent of the
carrier, and a shipper shall, in regard to any particular
goods be at liberty to enter into any agreement in any
terms as to the responsibility and liability of the carrier
for such goods, and as to the rights and immunities of
the carrier in respect of such goods, or his obligation as
to seaworthiness (so far as the stipulation regarding
seaworthiness is not contrary to public policy), or the
care or diligence of his servants or agents in regard to
the loading, handling stowage, carriage, custody, care,
and discharge of the goods carried by sea: Provided,
That in this case no bill of lading has been or shall be

issued and that the terms agreed shall be embodied in

a receipt which shall be a non-negotiable document
and shall be marked as such.
Any agreement so entered into shall have full legal
effect: Provided, That this section shall not apply to
ordinary commercial shipments made in the ordinary
course of trade but only to other shipments where the
character or condition of the property to be carried or
the circumstances, terms, and conditions under which
the carriage is to be performed are such as reasonably
to justify a special agreement.
Section 7. Nothing contained in this Act shall prevent a
carrier or a shipper from entering into any agreement,
stipulation, condition, reservation, or exemption as to
the responsibility and liability of the carrier or the ship
for the loss or damage to or in connection with the
custody and care and handling of goods prior to the
loading on and subsequent to the discharge from the
ship on which the goods are carried by sea.
54. Cia. Maritima v. Limson 141 SCRA 407
Facts: Compania filed a complaint against Limson for
collection of money which is the unpaid accounts for
passage and freight on shipment of hogs, cattle and
carabals aboard Comapnias vessel
Limson denied liability claiming that he was not the
shipper nor had he authorized sid shipments. He further
set up a counterclaim for the refunf od the rebate he was
entitled to pursuant to their agreement.
The court appointed a commissioner to examine the
accounts involved before proceeding with the hearing.
The report indicated that Companieas claim was based
among other on some several bills signed by one perry
with Limson as the shipper and consignee, and some for
others as shippers and consignee.
CFI: Ruled that Perry was not Limsons authorized
representative. Thus, he was not liable for the bills of
lading not signed by him or his authorized
representatices.
ISSUE: W/N the bills of lading signed by Perry should
be accepted.
HELD: YES.
A shipper may be held liable for freightage on bills of
lading signed by another person where the shipper
appears as shipper or consignee, bills of lading where
persons other than Limson appear as shipper, and bills
of lading not signed by the shipper where the

testimonial evidence shows that the goods shipped

actually belong to him as the shipper.
As regards the controverted bills of lading signed by
perry with Limson as shipper or consignee, a witness
testified that the signatures therein are those of Cipriano
Magtibay alias "Perry" who took delivery of the cargoes
stated therein after signing the delivery receipts. He was
known to be the regular representative of Limson.
With respect to the unsigned bills of lading, delivery
receipts were issued upon delivery of the shipments.
Witnesses testified that the ordinary procedure at
Compania's terminal office was to require the surrender
of the original bill of lading, but when the bill of lading
cannot be surrendered because it had not arrived or
received by the consignee or assignee, the delivery of the
cargo was authorized just the same, and the delivery
receipt was prepared based on the ship's cargo
manifestsor ship's copy of the bill of lading. This
accommodation was specially given Limson, because
defendant was a regular shipper and ship chandler of
plaintiff, and was a compadre of Cablin.
Regarding the controverted bills of lading in the name of
other persons as shippers or consignees and signed by
Perry, it was established that said bills of lading were for
cattle and hogs-purchased by the defendant from his
"viajeros" in Manila which were delivered to and
received by Limson.
55. US Lines v. Commissioner of Customs 151 SCRA
189
Sec. 24 of Customs Administration order was
promulgated in line with the government policy of
encouraging containerization, which results in the
laudible decongestion of ports of entry. Such
arrangement has been sanctioned worldwide by
international ports to cope up with ever increasing
volume of cargoes of the shipping industry. Hence, the
containerization system was designed to facilitate the
expeditious and economical loading, carriage, and
unloading of cargoes. Under this system, the shipper
loads his cargoes in a specifically designed container,
seals the container and delivers it to the carrier for
transportation. The carrier does not participate in the
counting of the merchandise for loading into the
container the actual loading thereof, nor the sealing of
the container. Having no actual knowledge of the kind,
quality or condition of the contents of the container, the
carrier issues the corresponding bill of lading asked on
the declaration of the shipper. The bill of lading
describes the cargo as a container simply and it states

the contents of the container either as advised by the

shipper or prefaced by the phrase said to contain.
Clearly then, the matter quantity, description and
conditions of the cargo is the sole responsibility of the
shipper.
An examination of said Customs Administration Order
in relation to Sec. 1005 and Sec. 2421 shows that
containerized cargoes on Shippers Load and Count
shipping arrangement are not required to be checked
before said carrier enters the port of unloading in the
Philippines since it is the shipper who has the sole
responsibility for the quantity, description, and
condition of the cargos shipped in container cans, each
container van considered as a unit of transport.
The American Venture faithfully complied with the
requirements of Sec. 1005 of the Tarrif and Customs
Code. Said vessel submitted a complete manifest of all
her cargoes. However there was a slight error thru no
fraudulent intent or negligence on the vessel. Said vessel
relied on the information in the bill of lading submitted
by the shipper in making the manifest. There was no
way for the vessel to discover until after the opening of
the containers and the inventory of their contents.
Considering the total number of cases of cotton denims
as declared by the shipper in the manifest is 78 as borne
on 2 containers and considering the undisputed fact that
the same total number of 78 cases of cotton denims were
found by the Bureau of Customs on board the vessel, it
is clear that the vessels Manifest reflects a complete and
substantially accurate statement of the cargoes contained
therein.
56. Phil. Charter Ins. v. Unknown Owner of Vessel
MA/
"National
Honor"
463
SCRA
202
57. Reyma Brokerage Inc. v. Phil. Home Assurance
Corp. 202 SCRA 564
The vessel MS Malmros Monsoon received onboard at
Fremantle, Brisbane Queensland, Australia from shipper
Craig Mostyn & Co., Pty. Ltd. a shipment of 2,680
cartons of hard frozen boneless beef contained in five (5)
containers complete and in good order and condition for
transport to Manila in favor of the eventual consignee
RFM Corp. under Bill of Lading No. 53149, dated 2
October 1979. On 13 October 1979, the MS Malmros
Monsoon arrived at Pier 3 of the Port of Manila and
discharged the shipment into the possession and
custody of the arrastre operator. From Pier 3, the
shipment was transferred to the Reefer Van Area of Pier
13 and on 22 October 1979, the arrastre contractor loaded
the containers in 2 trucks and delivered them to Grech

Food Industries Cold Storage in Pasig, Rizal arriving

there at 1:00 A.M., the following morning, 23 October
1979.
4 personnel of the Reyma Brokerage, a driver and a
helper in each truck made the delivery. On 23 October
1979 at 9:00 a.m., the containers were stripped and the
representative of Reyma Brokerage and consignee
counted the contents of 5 containers and after an
inventory of Container BROU-430656[1], it was
discovered that 203 cartons were found short out of the
loaded 2,680 cartons of hard frozen boneless beef which
according to the consignee was totally attributable to the
defendant as it occurred while the said container in
question was in the custody and responsibility of Reyma
Brokerage. Consignee filed claim for the recovery of the
missing 203 cartons but the same was denied and
consequently, consignee filed the claim with the insurer
under its Marine Cargo Insurance Policy. The consignee
was paid by plaintiff the amount of P88,658.22 The
payment of consignees claim by the insurer had
subrogated the latter to file this instant claim for the
recovery of the said amount.
The trial court (RTC, NCJR, Branch 31, Manila) ruled
against Reyma Brokerage, ordering the latter (1) to pay
the sum of P88,650.22 plus legal interest thereon from
the date of the filing of the Complaint.
The Court of Appeals affirmed the decision of the lower
court on 29 November 1988 (CA GR CV 14550) in toto.
Hence, the petition for review on certiorari.
The Supreme Court denied the petition, with costs
against Reyma Brokerage.
1. Express acknowledgment of carrier in present case
The carrier, by signifying in the bill of lading that it is a
receipt . . . for the number of packages shown above,
had explicitly admitted that the containerized shipments
had actually the number of packages declared by the
shipper in the bill of lading. This conclusion is bolstered
by the stipulation printed in the bill of lading, unless
expressly acknowledged and agreed to. Therefore, the
phrase said to contain also appearing in the bill of
lading must give way to this reality.
2. Express acknowledgment an exception to doctrine of
US Lines case
The express acknowledgment of the carrier makes the
case at bar an exception to the doctrine enunciated in
United States Lines. The rule enunciated by United
States Lines applies to a situation where the carrier of
the containerized cargo simply admits the information
furnished by the shipper with regard to the goods it

shipped as reflected in the bill of lading (said to

contain) but not where the carrier of the containerized
cargo makes an explicit admission as to the weight,
measurement marks, numbers, quality, contents, and
value, and more so, inscribed these admissions as
stipulations in the bill of lading itself, or made them an
addendum thereto, to which the carrier affixed its
express acknowledgment as what happened in this case.
In its stead, the dictum that the bill of lading shall be
prima facie evidence of the receipt by the carrier of the
goods as therein described governs.
3. Bill of lading both a receipt and a contract
A bill of lading operates both as a receipt and as a
contract. It is a receipt for the goods shipped and a
contract to transport and deliver the same as therein
stipulated. As a receipt, it recites the date and place of
shipment, describes the goods as to quantity, weight,
dimensions, identification marks and condition, quality,
and value. As a contract it names the contracting parties,
which include the consignee, fixes the route, destination,
and freight rates or charges, and stipulates the rights
and obligations assumed by the parties.
Facts alleged in a partys pleading are deemed
admissions of that party and binding upon it; Prima
facie evidence
Reyma Brokerage included allegations in its answer that
all the containerized shipments arrived in Manila with
the seals intact, and that it received the said sealed
containers of the shipments, particularly container
BROU-4306561 which sustained the loss of 203 cartons
from the arrastre operator, also with the seals intact. It
can therefore be concluded that Reyma Brokerage
received all the shipments as itemized in the bill of
lading. For the rule is well-established that the
5. Burden of proof to overturn prima facie evidence
As the arrastre operator prima facie received all the
shipments in the sealed containers, it has the burden to
rebut the conclusion that it received the same without
shortage. Prima facie evidence is of course, like all
evidence susceptible to rebuttal; but unrebutted it
remains sufficient, as a matter of law to establish the
ultimate proposition it purports to prove. It goes
without saying that such evidence can only be overcome
by contrary proof and not by mere surmises and
speculations. Reyma Brokerage had not overthrown this
presumption by contrary evidence, and thus the loss of
the 203 cartons is attributable to it.
6. Prescription defense waived or abandoned

The defense of prescription (citing sec. 2(6), paragraph 4

of the Carriage of Goods by Sea Act which provides that
the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is
brought within one year after delivery of the goods or
the date when the goods should have been delivered)
had been waived and/or abandoned by the petitioner.
Other than the allegation of prescription in the answer,
Reyma Brokerage never pursued this matter either in the
later proceedings of the trial court or in the Court of
Appeals. The petitioner cannot now be allowed to raise
this issue to the Supreme Court after such waiver or
abandonment. Granting arguendo that Reyma
Brokerage can still put up prescription as its defense,
nonetheless it will not prosper considering that it is not a
carrier or a vessel or a charterer or the legal holder of the
bill of lading. It is the broker and the private respondent
is the insurer. The prescriptive period of this cause of
action is 10 years. In the present case, 10 years have not
yet lapsed from the delivery of the shipment.
58. Keng Hua Paper Products Co. Inc. v. Court of
Appeals 286 SCRA 257
Facts: Sea-Land Service, a shipping company, is a
foreign corporation licensed to do business in the
Philippines. On 29 June 1982, SeaLand received at its
Hong Kong terminal a sealed container, Container
SEAU 67523, containing 76 bales of unsorted waste
paper for shipment to Keng Hua Paper Products, Co. in
Manila. A bill of lading to cover the shipment was
issued by Sea-Land. On 9 July 1982, the shipment was
discharged at the Manila International Container Port.
Notices of arrival were transmitted to Keng Hua but the
latter failed to discharge the shipment from the
container during the free time period or grace period.
The said shipment remained inside the Sea-Lands
container from the moment the free time period expired
on 29 July 1982 until the time when the shipment was
unloaded from the container on 22 November 1983, or a
total of 481 days. During the 481-day period, demurrage
charges accrued. Within the same period, letters
demanding payment were sent by Sea-Land to Keng
Hua who, however, refused to settle its obligation which
eventually amounted to P67,340.00. Numerous demands
were made on Keng Hua but the obligation remained
unpaid.
Sea Land thereafter commenced the civil action for
collection and damages. The RTC found Keng Hua liable
for demurrage, attorneys fees and expenses of litigation.
Keng Hua appealed to the Court of Appeals, which
denied the appeal and affirmed the lower courts

decision in toto. In a subsequent resolution, it also

denied Keng Huas motion for reconsideration. Hence,
the petition for review.
The Supreme Court affirmed the assailed Decision with
the modification that the legal interest of 6% per annum
shall be computed from 28 September 1990 until its full
payment before finality of judgment. The rate of interest
shall be adjusted to 12% per annum, computed from the
time said judgment became final and executory until full
satisfaction. The award of attorneys fees is deleted.
1. Nature of bill of lading
A bill of lading serves two functions. First, it is a receipt
for the goods shipped. Second, it is a contract by which
three parties, namely, the shipper, the carrier, and the
consignee undertake specific responsibilities and assume
stipulated obligations. A bill of lading delivered and
accepted constitutes the contract of carriage even though
not signed, because the (a)cceptance of a paper
containing the terms of a proposed contract generally
constitutes an acceptance of the contract and of all of its
terms and conditions of which the acceptor has actual or
constructive notice. In a nutshell, the acceptance of a
bill of lading by the shipper and the consignee, with full
knowledge of its contents, gives rise to the presumption
that the same was a perfected and binding contract.
2. Shipper and consignee were liable for payment of
demurrer charges; Section 17 of the bill of lading
Section 17 of the bill of lading provided that the shipper
and the consignee were liable for the payment of
demurrage charges for the failure to discharge the
containerized shipment beyond the grace period
allowed by tariff rules. Section 17 of the bill of lading
provided Cooperage Fines. The shipper and consignee
shall be liable for, indemnify the carrier and ship and
hold them harmless against, and the carrier shall have a
lien on the goods for, all expenses and charges for
mending cooperage, baling, repairing or reconditioning
the goods, or the van, trailers or containers, and all
expenses incurred in protecting, caring for or otherwise
made for the benefit of the goods, whether the goods be
damaged or not, and for any payment, expense, penalty
fine, dues, duty, tax or impost, loss, damage, detention,
demurrage, or liability of whatsoever nature, sustained
or incurred by or levied upon the carrier or the ship in
connection with the goods or by reason of the goods
being or having been on board, or because of shippers
failure to procure consular or other proper permits,
certificates or any papers that may be required at any
port or place or shippers failure to supply information
or otherwise to comply with all laws, regulations and

requirements of law in connection with the goods of

from any other act or omission of the shipper or
consignee. Keng Huas prolonged failure to receive and
discharge the cargo from the Sea-Lands vessel
constitutes a violation of the terms of the bill of lading. It
should thus be liable for demurrage to the former.
3. Keng Huas letter proved refusal to pick up cargo and
not rejection of bill of lading; Implied acceptance
Keng Hua received the bill of lading immediately after
the arrival of the shipment on 8 July 1982. Having been
afforded an opportunity to examine the said document,
it did not immediately object to or dissent from any term
or stipulation therein. It was only six months later, on 24
January 1983, that it sent a letter to private respondent
saying that it could not accept the shipment. Its inaction
for such a long period conveys the clear inference that it
accepted the terms and conditions of the bill of lading.
Moreover, said letter spoke only of petitioners inability
to use the delivery permit, i.e. to pick up the cargo, due
to the shippers failure to comply with the terms and
conditions of the letter of credit, for which reason the bill
of lading and other shipping documents were returned
by the banks to the shipper. The letter merely proved
its refusal to pick up the cargo, not its rejection of the bill
of lading.
4. Apprehension of violating laws cannot defeat
contractual obligation and liability Keng Huas attempt
to evade its obligation to receive the shipment on the
pretext that this may cause it to violate customs, tariff
and central bank laws must fail. Mere apprehension of
violating said laws, without a clear demonstration that
taking delivery of the shipment has become legally
impossible, cannot defeat the petitioners contractual
obligation and liability under the bill of lading.
5. Nature of demurrage
Demurrage is merely an allowance or compensation for
the delay or detention of a vessel. It is often a matter of
contract, but not necessarily so. The very circumstance
that in ordinary commercial voyages, a particular sum is
deemed by the parties a fair compensation for delays, is
the very reason why it is, and ought to be, adopted as a
measure of compensation, in cases ex delicto. What
fairer rule can be adopted than that which founds itself
upon mercantile usage as to indemnity, and fixes a
recompense upon the deliberate consideration of all the
circumstances attending the usual earnings and
expenditures in common voyages? It appears to us that
an allowance, by way of demurrage, is the true measure
of damages in all cases of mere detention, for that

allowance has reference to the ships expenses, wear and

tear, and common employment.
6. Amount of Demurrage Charges supported by extant
evidence
The amount of demurrage charges in the sum of P67,340
is a factual conclusion of the trial court that was affirmed
by the Court of Appeals and, thus, binding on the
Supreme Court. Besides, such factual finding is
supported by the extant evidence. The apparent
discrepancy was a result of the variance of the dates
when the two demands were made. Necessarily, the
longer the cargo remained unclaimed, the higher the
demurrage. Thus, while in his letter dated 24 April 1983,
Sea-Lands counsel demanded payment of only P37,800,
the additional demurrage incurred by Keng Hua due to
its continued refusal to receive delivery of the cargo
ballooned to P67,340 by 22 November 1983.
8. Three contracts in a letter of credit
In a letter of credit, there are three distinct and
independent contracts: (1) the contract of sale between
the buyer and the seller, (2) the contract of the buyer
with the issuing bank, and (3) the letter of credit proper
in which the bank promises to pay the seller pursuant to
the terms and conditions stated therein. Few things are
more clearly settled in law than that the three contracts
which make up the letter of credit arrangement are to be
maintained in a state of perpetual separation. A
transaction involving the purchase of goods may also
require, apart from a letter of credit, a contract of
transportation specially when the seller and the buyer
are not in the same locale or country, and the goods
purchased have to be transported to the latter.
9. Contract of carriage in bill of lading to be treated
independently of contract of sale and the contract for the
issuance of credit
The 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 for the issuance of a letter of credit between the
buyer and the issuing bank. Any discrepancy between
the amount of the 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 lading and to verify their accuracy vis-a-vis

the 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 Keng Huas obligation to private respondent
arising from the contract of transportation.
10. Remedy of alleged overshipment lies against the
shipper and not against the carrier
The contract of carriage was under the arrangement
known as Shippers Load And Count, and the shipper
was solely responsible for the loading of the container
while the carrier was oblivious to the contents of the
shipment. Keng Huas remedy in case of overshipment
lies against the seller/shipper, not against the carrier.

59. Ganzon v Court of Appeals 161 SCRA 646

By the said act of delivery, the scraps were
unconditionally placed in the possession and control of
the common carrier, and upon their receipt by the carrier
for transportation, the contract of carriage was deemed
perfected.
Consequently,
the
petitioner-carriers
extraordinary responsibility for the loss, destruction, or
deterioration of the goods commenced. Pursuant to Art.
1736, such extraordinary responsibility would cease only
upon the delivery, actual or onstructive, by the carrier to
the consignee, or to the person who has a right to receive
them. The fact that part of the shipment had not been
loaded on board the lighter did not impair the said
contract of transportation as the goods remained in the
custody and control of the carrier, albeit still unloaded.
In any case, the intervention of the municipal officials
was not of a character that would render impossible the
fulfillment by the carrier of its obligation. The petitioner
was not duty bound to obey the illegal order to dump
into the sea the scrap iron. Moreover, there is absence of
sufficinet proof that the issuance of the same order was
attended with such force or intimidation as to
completely overpower the will of petitioners
employees. The mere difficulty in the fillfilment of the
obligation is not considered force majeure. We agree
with the private reposndent that the scraps could have
been properly unloaded at the shore or at the ASSCO
compound. So that after the dispute with the local
officials concerned was settled, the scraps could then be
delivered in accordance with the contract of carriage.
60. Eastern Shipping Lines v. Court of Appeals 190
SCRA 564
The bill of lading was issued by the carrier but contained
articles furnished by the shipper, shows on its face that
the shipment is consigned to shippers order with
address arrival notice to Consolidated Mines, INc.

Nowhere did the bill od lading refer to HSBC as the

consigenee or the one to be notified.

vessel, M/V Kapitan Sakharov, bound for Port

Dammam, Saudi Arabia.

The foregoing information, without more, in effect

makes Consolidated Mining for all intents and purposes
the party named and ordered to receive the goods. The
carrier, not being privy to any transaction between
HSBC and CMI cannot be expected to look beyond what
is contained on the bill of lading and guess which of the
many banks could possibly be the consignee. To
consider otherwise would not be sound business
practice as carrier would be forced to wait for the real
owner of the goods to show up, perhaps in vain.

However, while in transit, the vessel and all its cargo

caught fire.

A bill of lading is ordinarily merely a convenient

commenrcial instrument designed to protect the
importer or consignee. In the absence of contrary
insttructions or at least knowledge of other facts, the
carrier is not ordinarily expected to deliver mining
equipment to unnamed or unknown party lurking for
several months.
But assuming that CMI may not be considered
consignee, the petitioner cannot be faulted for releasing
the goods to CMI under the circumstances, due to its
lack of knowlefe as to who was the real consignee in
view of CMIs strong representations and letter of
undertaking wherein it stated that the bill of lading
would be presented later. This is the situation covered
by the last par. Of art. 353 of the Corp Code: if in case
of loss or for any other reason whatsoever, the consignee
cannot return upon receiving the merchandise the bill of
lading subscribed by the carrier, he shall give said earner
a receipt of the goods delivered this receipt producing
the same effects as the return of the bill of lading.
61. DSR-Senator Lines v. Federal Phoenix Assurance
Co Inc. 413 SCRA 14
FACTS
Berde Plants delivered 632 units of artificial trees to C.F.
Sharp, the General Ship Agent of DSR-Senator Lines, a
foreign shipping corporation, for transportation and
delivery to the consignee, Al-Mohr International Group,
in Riyadh, Saudi Arabia.
C.F. Sharp issued International Bill of Lading for the
cargo the port of discharge for the cargo was at the
Khor Fakkan port and the port of delivery was Riyadh,
Saudi Arabia, via Port Dammam. The cargo was loaded
in M/S Arabian Senator.
Federal Phoenix Assurance insured the cargo against all
risks.
On June 7, 1993, M/S Arabian Senator left the Manila
South Harbor for Saudi Arabia with the cargo on
board. When the vessel arrived in Khor Fakkan Port, the
cargo was reloaded on board DSR-Senator Lines feeder

On July 5, 1993, DSR-Senator Lines informed Berde

Plants that M/V Kapitan Sakharov with its cargo was
gutted by fire and sank on or about July 4, 1993. On
December 16, 1993, C.F. Sharp issued a certification to
that effect
Consequently, Federal Phoenix Assurance paid Berde
Plants P941,429.61 corresponding to the amount of
insurance for the cargo. In turn Berde Plants executed in
its favor a Subrogation Receipt dated January 17, 1994.
On February 8, 1994, Federal Phoenix Assurance sent a
letter to C.F. Sharp demanding payment of P941,429.61
on the basis of the Subrogation Receipt. C.F. Sharp
denied any liability on the ground that such liability was
extinguished when the vessel carrying the cargo was
gutted by fire.
On March 11, 1994, Federal Phoenix Assurance filed
with the RTC, Branch 16, Manila a complaint for
damages against DSR-Senator Lines and C.F. Sharp,
praying that the latter be ordered to pay actual damages
of P941,429.61, compensatory damages of P100,000.00
and costs.
ISSUE
W/N DSR-Senator is liable YES
RULING
Under Article 1734, Fire is not one of those enumerated
under the above provision which exempts a carrier from
liability for loss or destruction of the cargo. Since the
peril of fire is not comprehended within the exceptions
in Article 1734, then 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 diligence required by law.
The natural disaster must have been the proximate and
only cause of the loss, and that the carrier has exercised
due diligence to prevent or minimize the loss before,
during or after the occurrence of the disaster.
When the goods shipped either are lost or arrive in
damaged condition, a presumption arises against the
carrier of its failure to observe that diligence, and there
need not be an express finding of negligence to hold it
liable.
Common carriers are obliged to observe extraordinary
diligence in the vigilance over the goods transported by
them. Accordingly, they are presumed to have been at

fault or to have acted negligently if the goods are lost,

destroyed or deteriorated.
Respondent Federal Phoenix Assurance raised the
presumption
of
negligence
against
petitioners. However, they failed to overcome it by
sufficient proof of extraordinary diligence.
62. Sea Land Service Inc. v. Intermediate Appellate
Court 153 SCRA 552
Facts: Sea-Land, a foreign shipping and forwarding
company licensed to do business in the Philippines,
received from Sea-borne Trading Company in
California, a shipment consigned to Sen Hiap Hing,
the business name used by Cue. The shipper not having
declared the value of the shipment , no value was
indicated in the bill of lading. The shipment was
discharged in Manila, and while awaiting transshipment
to Cebu, the cargo was stolen and never recovered.
The trial court sentenced Sea-Land to pay Cue P186,048
representing the Philippine currency value of the
lost cargo, P55, 814 for unrealized profit and P25,000 for
attorneys fees. CA affirmed the trial courts decision.
Issue: Whether or not Sea-Land is liable to pay Cue.
Held: There is no question of the right of a consignee in
a bill of lading to recover from the carrier or shipper for
loss of, or damage to, goods being transported under
said bill, although that document may have been drawn
up only by the consignor and the carrier without the
intervention of the consignee.
Since the liability of a common carrier for loss of or
damage to goods transported by it under a contract of
carriage os governed by the laws of the country of
destination and the goods in question were shipped
from the United States to the Philippines, the liability of
Sea-Land has Cue is governed primarily by the Civil
Code, and as ordained by the said Code, supplementary,
in all matters not cluttered thereby, by the Code
of Commerce and
special
laws.
One
of
these supplementary special laws is the Carriage
of goods by Sea Act (COGSA), made applicable to all
contracts for the carriage by sea to and from the
Philippines Ports in Foreign Trade by Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity
and binding effect of the liability limitation clause in the
bill of lading here are fully substantial on the basis alone
of Article 1749 and 1750 of the Civil Code. The justices of
such stipulation is implicit in its giving the owner or
shipper the option of avoiding accrual of liability
limitation by the simple expedient of declaring
the value of the shipment in the bill of lading.

The stipulation in the bill of lading limiting the liability

of Sea-Land for loss or damages to the shipment covered
by said rule to US$500 per package unless the shipper
declares the value of the shipment and pays additional
charges is valid and binding on Cue.
63. Maritime Co. of the Phils, v Court of Appeals 171
SCRA 61
Acmes rights are to be determined by the Civil Code,
not the Code of Commerce. This conclusion derives from
Article 1753 of the CC to the effect that it is the law of the
country to which the goods are to be transported which
shall govern the liability of the common carrier for their
loss, destruction or deterioration. It is only in matters
not regulated by the Civil Code, according to Art 1766,
that the rights and obligations of common carriers shall
be governed by the Code of Commerce and by Special
laws. Since there are indeed specific provisions
regulating the matter of such liability in the civil code,
these being embodied in Art 1734, as well as prescribing
the prescription of actions, it follows that the Code of
Commerce, or the Carriage of Goods by Sea Act, has no
relevancy in the determinations of the carriers liability in
the instant case. In view of the said Articles 1753 and
1756, the provisions of the Carriage of Goods by Sea Act
are merely suppletory to the Civil Code.
The evidence established that NDC had appointed
petitioner Maritime Co., as its agent to manage and
operate three vessels owned by it for and in its belaf and
account, and for a determinable periof. Under their
written agreement, Maritime Co. was bound to
provision and victual the SS Dona Nati and the other 2
vessels, and to render a complete report of the
operations of the vessels within 60 days after conclusion
of each voyage; it was also authorized to appoint subagents at any ports or places that it might deem
necessary, remaining however responsible to NDC for
the timely and satisfactory performance of said
subagents. These facts preponderantly demonstrate the
character of Maritime Co. as ship agent under the Code
of Commerce, being the person entrusted with
provisioning or representing the vessel in the port in
which it may be found.
64. Republic v. Lorenzo Shipping Corp. 450 SCRA 550
Facts: The Republic of the Philippines signed an
agreement through the Department of Health and the
Cooperative for American Relief Everywhere, Inc.
(CARE) wherein it would acquire from the US
government donations of Non-Fat Dried Milk and other
food products. In turn, the Philippines will transport
and distribute the donated to the intended beneficiaries
of the country. As a result, it entered into a contract of
carriage of goods with the herein respondent. The latter
shipped 4,868 bags of non-fat dried milk from Sept-Dec
1988. The consignee named in the bills was

Abdurahman Jama, petitioners branch supervisor in

Zamboanga City. Upon reaching the port of Zamboanga,
respondents agent, Efren Ruste Shipping Agency
unloaded the said milks. Before each delivery, Rogelio
Rizada and Ismael Zamora both delivery checkers of
Efren Ruste requested Abdurahman to surrender the
originals of the Bill of Lading. However, the petitioner
alleged that they did not receive anything and they filed
a claim against the herein respondent. The petitioner
contended that the respondents failed to exercise
extraordinary diligence.
Issue: Whether the respondents failed to exercise
extraordinary diligence required by law?
Held: The surrender of the Bill of Lading is not a
condition precedent for a common carrier to be
discharged of its contractual obligation. If the surrender
is not possible, acknowledgment of the delivery by
signing the receipt suffices. The herein respondent did
not even bother to prevent the resignation of
abdurhaman Jama to be utilized as a witness.
65. Cia Maritima v. Insurance Co. of North America 12
SCRA 213
October, 1952: Macleod and Company of the
Philippines
(Macleod)
contracted by
telephone
the services of the Compaia Maritima (CM), a shipping
corporation, for: shipment of 2,645 bales of hemp from
the Macleod's Sasa private pier at Davao City to
Manila and subsequent transhipment to Boston,
Massachusetts, U.S.A. on board the S.S. SteelNavigator.
This oral contract was later on confirmed by a formal
and written booking issued by Macleod's branch office
in Sasa and handcarried to CM's branch office in Davao
in compliance with which the CM sent to Macleod's
private wharf LCT Nos. 1023 and 1025 on which the
loading of the hemp was completed on October 29,
1952.
The 2 lighters were manned each by a patron and an
assistant patron. The patrons of both barges issued the
corresponding carrier's receipts and that issued by the
patron of Barge No. 1025 reads in part: Received in
behalf of S.S. Bowline Knot in good order and condition
from MACLEOD AND COMPANY OF PHILIPPINES,
Sasa Davao, for transhipment at Manila onto S.S.
SteelNavigator.
FINAL
DESTINATION:
Boston.

reconditioning, and redrying. total loss adds up to

P60,421.02
All abaca shipments of Macleod were insured with the
Insurance Company of North America against all losses
and damages. Macleod filed a claim for the loss it
suffered with the insurance company and was paid
P64,018.55. subrogation agreement between Macleod
and the insurance company wherein the Macleod
assigned its rights over the insured and damaged cargo
October 28, 1953.: failing to recover from the carrier
P60,421.02 (amount supported by receipts), the
insurance company instituted the present action. CA
affirmed RTC: ordering CM to pay the insurance co.
ISSUE: W/N there was a contract of carriage bet. CM
(carrier)
and
Macleod
(shipper)
HELD: YES. Affirmed
receipt of goods by the carrier has been said to lie at the
foundation of the contract to carry and deliver, and if
actually no goods are received there can be no such
contract
The liability and responsibility of the carrier under a
contract for the carriage of goods commence on
their actual delivery to, or receipt by, the carrier or an
authorized agent. ... and delivery to a lighter in charge of a
vessel for shipment on the vessel, where it is the custom
to deliver in that way
Whenever the control and possession of goods passes to
the carrier and nothing remains to be done by the
shipper, then it can be said with certainty that the
relation of shipper and carrier has been established
As regards the form of the contract of carriage it can be
said that provided that there is a meeting of the
minds and from such meeting arise rights and
obligations, there should be no limitations as to form
The bill of lading is not essential
Even where it is provided by statute that liability
commences with the issuance of the bill of lading, actual
delivery and acceptance are sufficient to bind the carrier.
marine surveyors, attributes the sinking of LCT No. 1025
to the 'non-water-tight conditions of various buoyancy
compartments
66. PAL v. Court of Appeals 255 SCRA 48

Early hours of October 30: LCT No. 1025 sank, resulting

in the damage or loss of 1,162 bales of hemp loaded
therein Macleod promptly notified the carrier's main
office in Manila and its branch in Davao advising it of its
liability. The damaged hemp was brought to Odell
Plantation in Madaum, Davao, for cleaning, washing,

FACTS
Isidro Co, accompanied by his wife and son, arrived at
the Manila International Airport aboard PAL airline's
Flight from San Francisco. Soon after his embarking, Co
proceeded to the baggage retrieval area to claim his

checks in his possession. He found 8 of his luggage, but

despite diligent search, he failed to locate his 9th luggage.

contents of his baggage nor pay traditional charges

before the flight.

Co then immediately notified PAL through its

employee, Willy Guevarra, who was then in charge of
the PAL claim counter at the airport. Willy filled up the
printed form known as a Property Irregularity Report,
acknowledging the luggage to be missing, and signed it.

We find no merit in that contention. In Samar Mining

Company, Inc. vs. Nordeutscher Lloyd, this Court ruled:

The incontestable evidence further shows that plaintiff

lost luggage was a Samsonite suitcase worth about
US$200 and containing various personal effects
purchased by plaintiff and his wife during their stay in
the US and similar other items sent by their friends
abroad to be given as presents to relatives in the
Philippines worth around $1,800.
Co on several occasions unrelentingly called PALs
office in order to pursue his complaint about his missing
luggage but no avail was given. Thus, Co wrote a
demand letter to PAL, through its manager of the
Central Baggage Services. PAL replied acknowledging
that they have been unable to locate the baggage despite
careful search and extended their sincere apologies for
the inconvenience. PAL never found the missing
luggage or paid its corresponding value. Co then filed
his present complaint against PAL for damages.
The RTC found PAL liable and ordered said company to
pay damages. The CA affirmed in toto the trial court's
award.
PAL Contends: The Lower Courts were in error in not
applying the limit of liability under the Warsaw
Convention which limits the liability of an air carrier of
loss, delay or damage to checked-in baggage to US$20.00
based on weight;
ISSUE
W/N the Lower Courts should apply the limit of
liability under the Warsaw Convention? NO
RULING
In Alitalia vs. IAC, the Warsaw Convention limiting the
carrier's liability was applied because of a simple loss of
baggage without any improper conduct on the part of
the officials or employees of the airline, or other special
injury sustained by the passengers. The petitioner
therein did not declare a higher value for his luggage,
much less did he pay an additional transportation
charge.
PAL contends that under the Warsaw Convention, its
liability, if any, cannot exceed US $20.00 based on
weight as private respondent Co did not declare the

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.
The provisions of the New Civil Code on common
carriers are Articles 1733, 1735 and 1753 which provide:
Art. 1733. Common carriers.. are bound to observe
extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them...
Art. 1735. ...if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed
extraordinary diligence..
Art. 1753. The law of the country to which the goods are to be
transported shall govern the liability of the common carrier for
their loss, destruction or deterioration.
Since the passenger's destination in this case was the
Philippines, Philippine law governs the liability of the
carrier for the loss of the passenger's luggage.
In this case, the PAL failed to overcome, not only the
presumption, but more importantly, the Cos evidence,
proving that the carrier's negligence was the proximate
cause of the loss of his baggage. Furthermore, petitioner
acted in bad faith in faking a retrieval receipt to bail
itself out of having to pay Co's claim. The CA therefore
did not err in disregarding the limits of liability under
the Warsaw Convention and applied the Civil Code
instead.
The stipulation in the Bill of lading limiting the common
carriers liability to the value of the goods appearing in
the bill, unless the shipper or owner declares a greater
value, is valid and binding. The limitation of the carriers
liability is sanctioned by the freedom of the contracting
parties to establish such stipulations, clauses, terms, or
conditions as they may deem convenient, provided that
they are not contrary to law, morals, good customs and
public policy.
There is no absolute obligation on the part of a carrier to
accept cargo. Where a common carrier accepts cargo for
shipment for valuable consideration, it takes the risk of
delivering it in good condition as when it was loaded.
And if the fact of improper packing is known to the

carrier or its personnel, or apparent upon observation

but it accepts the goods notwithstanding such condition,
it is not relived of liability for loss or injury resulting
therefrom.
67. Philamgen Insurance Co. Inc. v, Court of Appeals
222 SCRA 155
Art 1739 of the CC provides that in order that the
common carrier may be exempted from responsibility,
the natural disaster must have been the proximate and
only cause of the loss. However, the common carrier
must exercise due diligence to prevent or minimize loss
before, during and after the occurrence of flood, storm,
or other natural disaster in order that the common
carrier may be exempted from liability for the loss,
destruction, or deterioration of the goods.
While it is true that there was indeed delay in
discharging the cargo from the vessel, neither of the
parties herein could be faulted for such delay, for the
same was not due not to negligence, but to several
factors (fiesta, etc) The cargo having been lost due to a
typhoon and the delay incurred in its unloading not
being due to negligence, carrier is exempt from liability
for the loss of the cargo. Also, the captain was found to
have exercised due diligence in minimizing loss.
68. Phoenix Assurance Co., Ltd v US Lines Inc. 22
SCRA 674; 66 OG 2088
A bill of lading operates both as a receipt and as a
contract. It is a receipt for the goods shipped and a
contract to transport and deliver the same as therein
stipulated. As a receipt, it recited the date and the place
of shipment, describes the goods as to quantity, weight,
dimensions, identification marks and condition, quality,
and value. As a contract, it names the contracting
parties, which include the consignee, fixes the route,
destination, and freightage or charges, and stipulates the
rights and obligations assumed by the parties.
In this jurisdiction, it is a statutory and decisional rule of
law that a contract is the law between the contracting
parties, and where there is nothing in it which is
contrary to law, morals, good customs, public policy, or
public order, the validity of the contract must be
sustained.
It is admitted by both parties that the crates subject
matter of this action were lost while in the possession
and custody of the Manila Port Service. Since the long
form of Bill of Lading which provides that the carrier
shall not be liable in any capacity whatsoever for any
loss or damage to the foods while the goods are not in its
actual custody, appellee cannot be held responsible fo
the loss of said crates. For as correctly observed by the
lower court, it is hardly fair to make appellee

accountable for a loss not due to its acts or omissions or

over which it had no control.
Contrary to appellants stand, the appellee did not
undertake to carry and deliver safely the cargo to the
consignee in Davao City. The short form Bill of Lading
states in no uncertain terms that the pert of discharge of
the cargo is Manila, but that the same was transshipped
beyond the port of discharge to Davao City. Pursuant to
the terms f the long form Bill of Lading, appellees
responsibility as a common carrier ceased the moment
the goods were unloaded in Manila; and in the manner
of transshipment, appellee acted merely as an agent of
the shipper and consignee. Contrary likewise to
appellants contention the cargo was not transshipped
with the use of transportation used or operated by
appellee. It is true that the vessel used for transshipment
is owned and operated by appellees Davao agent, the
Columbian Rope Company, but there is no proof that
said vessel is owned or operated by appellee. The
vessels of appelles agent are being erroneously
presumed by appellant to be owned and operated by
appellee.
Through the short form Bill of Lading, incorporating by
reference the terms of the regular long form bill of
lading, the United States Lines acknowledged the receipt
of the cargo of truck spare parts that it carried and stated
the conditions under which it was to carry the cargo, the
place where it was to be transshipped, the entity to
which delivery is to be made, and the rate of
compensation for the carriage. This it delivered to Davao
Parts and Services, Inc. as evidence of a contract between
them. By receiving the bill of lading, Davao Parts and
Serivces, Inc. assented to the terms of consignment
contained therein, and became bound thereby, so far as
the consitions named are reasonable in the eyes of the
law. Since neither appellant nor appellee alleges that any
provision therein is contrary to law, morals, good
customs, public policy, or public order, - and indeed. We
found none- the validity of the Bill of Lading must be
sustained and the provisions therein properly applied to
resolve the conflict between the parties.
69. American Insurance Co., Inc. v. Macondray & Co.
39 SCRA 494
Importer/Consignee- Atlas Consolidated Mining and
Development Corporation
Shipper- Ansor Corp. of NY (S/S Toledo)
Insurer:
Apellee insurer: American Inusrance Co. Inc. insured the cargoes against damages until the
Port of Cebu for P5, 700 in favor of consignee

8.
Forwarding Agent of Ansor Corp: Macondray& Co., Incagent in the Philippines of the S/S "Toledo", a common carrier
in foreign trade between the United States and Philippine
Ports;

Transshipment:
Port of NY Manila (via S/S Toledo) Cebu (via M/S
Bohol)

FACTS:
1.

2.

3.
4.
5.

6.

7.

On or about September 12, 1962, certain cargoes

covered by the bill of lading were imported by
Atlas Consolidated Mining and Development
Corporation and were loaded by the shipper,
Ansor Corporation of New York on board the
S/S "Toledo" at the port of New York for
delivery to Atlas at Cebu City via Manila.
The freight up to Cebu City was paid in
advance. The American Insurance Company
insured the cargoes against damage up to Cebu
City for $5,700.00 in favor of the consignee.
The S/S "Toledo' discharged them at the port of
Manila on October 17, 1962.
For their transshipment to Cebu City they were
loaded on board the M/S "Bohol".
Upon the vessel's arrival in Cebu City on
November 12, 1962, the cargoes were discharged
and delivered to the congsignee minus one skid
of truck parts which was not loaded on the M/S
"Bohol". The missing cargo was valued at
$482.96 CIF Cebu, equivalent at that time to
P1,889.58.
The consignee filed the corresponding claim
with herein appellant (agent in the Philippines of
the S/S "Toledo", a common carrier in foreign trade
between the United States and Philippine Ports)
who disclaimed liability therefor alleging that
the cargoes had been discharged in full at the
port of Manila.
A claim for the insured value of the cargo
amounting to P2,087.20 plus the sum of P87.30
as expenses of survey was filed with appellee
under the covering insurance policy and the
same was duly paid, thereby acquiring by
subrogation the rights of the consignee.

9.

Thereafter the corresponding action was filed in

the lower court to recover from appellant what
appellee had paid to the consignee.
Trial Court ordered Appellant Macondray to
pay. Appellant appealed.

ISSUES:
1. Whether the lower court had jurisdiction
YES.
True the case invoked only the sum of P1,889.58,
but it is also true that appellee's action against
appellant
is
one
involving
admiralty
jurisdiction, the exercise of which pertains
originally and exclusively to Courts of First
Instance.

2. Whether American Insurance has cause of action

against Macondray
YES
Appellant relies on the provisions of
paragraph 22 of the bill of lading to the effort
that the carrying vessel, her owner and agent,
are not liable for loss or damage occurring after
the discharge of the goods. Appellant's
contention rests entirely upon the erroneous
assumption that the carrying vessel had
discharged all the goods covered by the bill of
lading in accordance with its obligation.
Under the Carriage Contract covering the
cargoes in question, it was the duty of the
carrying vessel to discharge them at the port of
Cebu City, via the port of Manila. It is clear
therefore, that the discharge effected at the latter
port did not terminate the carrying vessel's
responsibility which included the transshipment
of the cargoes from the port of Manila to the
port of Cebu City. While it complied with the
obligation with respect to most of the cargoes
covered, by the bill of lading, it failed to do so in
relation to the one skid of truck parts which,
according to the stipulation of facts, was not
loaded on board the M/S "Bohol". In truth and
in fact, the same has never been found.

3. Whether Appellant Macondray is the real party in

interest

YES

unless suit is brought within one year after

delivery of the goods or the date when the
goods should have been delivered.

Appellant Macondray contends that the action

shouldve been bought against the shipper,
Ansor Corp
Appellant is correct in saying that actions must
be prosecuted not only in the name of the real
party in interest but also against the real party in
interest. It is in error, however, in contending
that it is not liable for the loss of the skid of
truck parts.
If the fact were that said cargo was loaded and
thereafter lost on board the M/S "Bohol" or
upon its discharge at the port of Cebu City, We
would agree that appellant is not liable. It was
stipulated in this case, however, that the said
skid of truck parts was not loaded at all on
board the M/S "Bohol." In accepting the same on
board the S/S "Toledo" at the port of New York
for shipment to Cebu City, via the port of
Manila, it become precisely appellant's duty to
see to it that it was loaded in Manila on board
the M/S "Bohol" or any other vessel, for the port
of Cebu City. Not having complied with this
duty, its liability for the loss is unavoidable.
Ansor Corp. complied with its part of the transaction by
delivering the lost cargo to the S/S "Toledo" at the port
of New York; thereafter paragraph 11 of the bill of
lading operated to make appellant Macondray, the
shipper's forwarding agent whose duty precisely was to
have the cargo, upon arrival at the port of Manila,
transshipped to the port of Cebu City.

FACTS:

As a general rule under the provisions of the Code of

Commerce, the consignee of a cargo carried by a vessel
has a cause of action against the latter's agent for the
undelivered cargo or any portion thereof. This being
the case, it is its duty to compensate appellee for the loss
suffered.

70. Insurance Co. of North America v. Asian Terminals,

Inc. 666 SCRA 226
DOCTRINE: The term carriage of goods in the
Carriage of Goods by Sea Act (COGSA) covers the
period from the time the goods are loaded to the vessel
to the time they are discharged therefrom.

The carrier and the ship shall be discharged

from all liability in respect of loss or damage

On November 9, 2002, Macro-Lito Corporation,

through M/V DIMI P vessel, 185 packages of
electrolytic tin free steel, complete and in good
condition.
The goods are covered by a bill of lading, had a
declared value of $169,850.35 and was insured
with the Insuracne Company of North America
(Petitioner) against all risk.
The carrying vessel arrived at the port of Manila
on November 19, 2002, and when the shipment
was discharged therefrom, it was noted that 7 of
the packages were damaged and in bad
condition.
On Novermber 21, 2002, the shipment was then
turned over to the custody of Asian Terminals.
Inc. (Respondent) for storage and safekeeping
pending its withrawal by the consignee.
On November 29, 2002, prior to the withrawal of
the shipment, a joint inspection of the said cargo
was conducted. The examination report showed
that an additional 5 packages were found to be
damaged and in bad order.
On January 6, 2003, the consignee, San Miguel
Corporation filed separate claims against both
the Petioner and the Respondent for the damage
caused to the packages.
The Petitioner then paid San Miguel
Corporation the amound of PhP 431,592.14
which is based on a report of its independent
adjuster.
The Petitioner then formally demanded
reparation against the Respondent for the
amount it paid San Miguel Corporation.
For the failure of the Respondent to satisfy the
demand of the Petitioner, the Petitioner filed for
an action for damages with the RTC of Makati.
The trial court found that indeed, the shipment
suffered additional damage under the custody
of the Respondent prior to the turn over of the
said shipment to San Miguel.
As to the extent of liability, Respondent invoked
the Contract for Cargo Handling Services
executed between the Philippine Ports
Authority and the Respondent. Under the

contract, the Respondents liability for damage

to cargoes in its custody is limited to PhP5,000
for each package, unless the value of the cargo
shipment is otherwise specified or manifested in
writing together with the declared Bill of
Lading. The trial Court found that the shipper
and consignee with the said requirements.
However, the trial court dismissed the
complaint on the ground that the Petitioners
claim was barred by the statute of limitations. It
held that the Carriage of Goods by Sea Act
(COGSA), embodied in Commonwealth Act No.
65 is applicable. The trial court held that under
the said law, the shipper has the right to bring a
suit within one year after the delivery of the
goods or the date when the goods should have
been delivered, in respect of loss or damage
thereto.
Petitioner then filed before the Supreme Court a
petition for review on certiorari assailing the
trial courts order of dismissal.

ISSUE/S:
1.) Whether or not the trial court committed an
error in dismissing the complaint of the
petitioner based on the one-year prescriptive
period for filing a suit under the COGSA to an
arrastre operator? YES.
2.) Whether or not the Petitioner is entitled to
recover actual damages against the Respondent?
YES, but only PhP164,428.76
HELD:

The term carriage of goods covers the period

from the time when the goods are loaded to the
time when they are discharged from the ship.
Thus, it can be inferred that the period of time
when the goods have been discharged from the
ship and given to the custody of the arrastre
operator is not covered by the COGSA.
The Petitioner, who filed the present action for
the 5 packages that were damaged while in the
custody of the respondent was not fortright in
its claim, as it knew that the damages it sought,
based on the report of its adjuster covered 9
packages. Based on the report, only four of the
nine packages were damaged in the custody of

the Respondent. The Petitioner can be granted

only the amount of damages that is due to it.

70. A . Asian Terminal INc. v. Philam 702 SCRA 88

Facts: The case is a consolidation of three petitions for
certiorari assailing the Decision and Resolution of the
Court of Appeals where Nichimen Corporation shipped
to consignee Universal Motors Corporation packages of
automobiles, where upon delivery, said goods were
found to have sustained damages. However, being
insured with Philam against all risks, said insurance
agency compensated Universal Motors and a
subrogation receipt was issued thereafter to the
insurance company. Philam, now the subrogee of
Universal Motors went after Westwind and Asian
Terminal for reparation of compensated amount given
to Universal Motors.
Who is liable for the damages sustained by the cargo?

HELD:
The Court holds that petitioner Philam has
adequately established the basis of its claim against
petitioners ATI and Westwind. Philam, as insurer, was
subrogated to the rights of the consignee, Universal
Motors Corporation, pursuant to the Subrogation
Receipt executed by the latter in favor of the former. The
right of subrogation accrues simply upon payment by
the insurance company of the insurance claim.
We have held that payment by the insurer to the
insured operates as an equitable assignment to the
insurer of all the remedies that the insured may have
against the third party whose negligence or wrongful act
caused the loss. The right of subrogation is not
dependent upon, nor does it grow out of, any privity of
contract. It accrues simply upon payment by the
insurance company of the insurance claim. The doctrine
of subrogation has its roots in equity. It is designed to
promote and accomplish justice; and is the mode that
equity adopts to compel the ultimate payment of a debt
by one who, in justice, equity, and good conscience,
ought to pay.
Neither do we find support in petitioner
Westwinds contention that Philams right of action has
prescribed. The Carriage of Goods by Sea Act (COGSA)
or Public Act No. 521 of the 74th US Congress, was
accepted to be made applicable to all contracts for the

carriage of goods by sea to and from Philippine ports in

foreign trade by virtue of Commonwealth Act (C.A.) No.
65. The prescriptive period for filing an action for the
loss or damage of the goods under the COGSA is found
in paragraph (6), Section 3, thus:
(6) Unless notice of loss or damage and
the general nature of such loss or damage be
given in writing to the carrier or his agent at the
port of discharge before or at the time of the
removal of the goods into the custody of the
person entitled to delivery thereof under the
contract of carriage, such removal shall be prima
facie evidence of the delivery by the carrier of
the goods as described in the bill of lading. If the
loss or damage is not apparent, the notice must
be given within three days of the delivery.
Common carriers, from the nature of their
business and for reasons of public policy, are bound to
observe extraordinary diligence in the vigilance over the
goods transported by them. Subject to certain exceptions
enumerated under Article 1734 of the Civil Code,
common carriers are responsible for the loss,
destruction, or deterioration of the goods. 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.
The court a quo, however, found both
petitioners Westwind and ATI, jointly and severally,
liable for the damage to the cargo. It observed that while
the staff of ATI undertook the physical unloading of the
cargoes from the carrying vessel, Westwinds duty
officer exercised full supervision and control over the
entire process. The appellate court affirmed the solidary
liability of Westwind and ATI, but only for the damage
to one Frame Axle Sub without Lower.
It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain under
the custody of the carrier. The Damage Survey Report of
the survey conducted by Phil. Navtech Services, Inc.
from April 20-21, 1995 reveals that Case No. 03-24542K/1 was damaged by ATI stevedores due to
overtightening of a cable sling hold during discharge
from the vessels hatch to the pier. Since the damage to
the cargo was incurred during the discharge of the
shipment and while under the supervision of the carrier,
the latter is liable for the damage caused to the cargo.
This is not to say, however, that petitioner ATI is
without liability for the damaged cargo. The functions of
an arrastre operator involve the handling of cargo

deposited on the wharf or between the establishment of

the consignee or shipper and the ships tackle. Being the
custodian of the goods discharged from a vessel, an
arrastre operators duty is to take good care of the goods
and to turn them over to the party entitled to their
possession.
Handling cargo is mainly the arrastre operators
principal work so its drivers/operators or employees
should observe the standards and measures necessary to
prevent losses and damage to shipments under its
custody.
While it is true that an arrastre operator and a
carrier may not be held solidarily liable at all times, the
facts of these cases show that apart from ATIs
stevedores being directly in charge of the physical
unloading of the cargo, its foreman picked the cable
sling that was used to hoist the packages for transfer to
the dock. Moreover, the fact that 218 of the 219 packages
were unloaded with the same sling unharmed is telling
of the inadequate care with which ATIs stevedore
handled and discharged Case No. 03-245-42K/1.
With respect to petitioners ATI and Westwinds
liability, we agree with the CA that the same should be
confined to the value of the one piece Frame Axle Sub
without Lower.
However, there is nothing in the records to
show conclusively that the six Frame Assembly with
Bush were likewise contained in and damaged inside
Case No. 03-245-42K/1. In the Inspection Survey Report
of Chartered Adjusters, Inc., it mentioned six pieces of
chassis frame assembly with deformed body mounting
bracket. However, it merely noted the same as coming
from two bundles with no identifying marks.
Lastly, we agree with petitioner Westwind that
the CA erred in imposing an interest rate of 12% on the
award of damages. Under Article 2209 of the Civil Code,
when an obligation not constituting a loan or
forbearance of money is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum.

CLASS DISCUSSION:
What is transshipment? When the goods are transferred
from one ship to another.
What is the interesting situation which occurs in
transshipment which has to do with the liability of the
carrier?

Only upon the transfer to the next carrier, does the duty
of the first carrier cease?

71. Samar Mining Co., Inc. v. Norddeuscher Lloyd 132

SCRA 530
FACTS:
The case arose from an importation made by Samar
Mining Co. Inc. of 1 crate Optima welded wedge wire
sieves through the M/S Schwabenstein, a vessel owned
by Nordeutscher Lloyd, (represented in the Philippines
by its agent, C.F. Sharp & Co., Inc.), which shipment is
covered by Bill of Lading No. 18 duly issued to
consignee Samar Mining. Upon arrival of the vessel at
the port of Manila, the importation was unloaded and
delivered in good order and condition to the bonded
warehouse of AMCYL. The goods were however never
delivered to, nor received by, the consignee at the port of
destination Davao. When the letters of complaint sent
to Nordeutscher Lloyd failed to elicit the desired
response, Samar Mining filed a formal claim for
P1,691.93, the equivalent of $424.00 at the prevailing rate
of exchange at that time, against the former, but neither
paid.
Samar Mining filed a suit to enforce payment.
Nordeutscher Lloyd and CF Sharp & Co. brought in
AMCYL as third party defendant. The trial court
rendered judgment in favor of Samar Mining, ordering
Nordeutscher Lloyd, et. al. to pay the amount of
P1,691.93 plus attorneys fees and costs. However, the
Court stated that Nordeutscher Lloyd, et. al. may recoup
whatever they may pay Samar Mining by enforcing the
judgment against third party defendant AMCYL, which
had earlier been declared in default. Nordeutscher Lloyd
and C.F. Sharp & Co. appealed from said decision.
Notes
The following are the pertinent ports, as provided in the
bill of lading:
Port of Loading: Bremen, Germany
Port of discharge from ship: Manila
Port of destination/Port of discharge of the goods:
Davao
As plainly indicated on the face of the bill, the vessel
M/S Schwabenstein is to transport the goods only up to
Manila. Thereafter, the goods are to be transshipped by
the carrier to the port of destination.

ISSUE: Whether or not a stipulation in the bill of lading

exempting the carrier from liability for loss of goods not
in its actual custody (i.e., after their discharge from the
ship) is valid.
HELD:
It is clear 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 (meaning to transfer for further
transportation from one ship or conveyance to another)
the goods from Manila to their port of destinationDavao.
The extent of appellant carrier's responsibility and/or
liability in the transshipment of the goods in question
are spelled out and delineated under Section 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. Further,
in Section 11 of the same bill, it was provided that this
carrier, in making arrangements for any transshipping or
forwarding vessels or means of transportation not operated by
this carrier shall be considered solely the forwarding agent of
the shipper and without any other responsibility whatsoever
even though the freight for the whole transport has been
collected by him Pending or during forwarding or
transshipping the carrier may store the goods ashore or afloat
solely as agent of the shipper
We find merits in Nordeutschers contention that they
are not liable for the loss of the subject goods by
claiming that they have discharged the same in full and
good condition unto the custody of AMCYL at the port
of discharge from ship Manila, and therefore,
pursuant to the aforequoted stipulation (Sec. 11) in the
bill of lading, their responsibility for the cargo had
ceased.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 in PHOENIX ASSURANCE CO.,
LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968),
ruling that pursuant to the terms of the Bill of

Lading, appellee's responsibility as a common carrier ceased

the moment the goods were unloaded in Manila and in the
matter of transshipment, appellee acted merely as an agent
of the shipper and consignee
In the present case, by the authority of the above
pronouncements, and in conformity with the pertinent
provisions of the 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.
A careful perusal of the provisions of the New Civil
Code on common carriers directs our attention to Article
1736, which reads: 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. In relation to this, Article 1738 provides: 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 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. 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 the present case,
there was actual delivery to the consignee through its
duly authorized agent, the carrier.

Lastly, two undertakings are embodied in the bill of

lading: the transport of goods from Germany to Manila,
and the transshipment of the same goods from Manila to
Davao, with Samar Mining acting as the agent of the
consignee. The moment the subject goods are discharged
in Manila, Samar Minings personality changes from that
of carrier to that of agent of the consignee. 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.
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.

72. Central Shipping Co. v. Ins. Co. of North America

438 SCRA 511
Doctrine: Doctrine of Limited Liability does not apply to
situations in which the loss or the injury is due to the
concurrent negligence of the shipowner and the captain.
Facts:
On July 25, 1990 at Puerto Princesa, Palawan, the
petitioner received on board its vessel, the M/V Central
Bohol, 376 pieces of Philippine Apitong Round Logs
and undertook to transport said shipment to Manila for
delivery to Alaska Lumber Co., Inc.
During the voyage the degree of the position of the ship
would change due to the shifting of the logs inside.
Eventually at about 15 degrees the captain ordered for
everyone to abandon the ship.
Respondent alleged that the total loss of the shipment
was caused by the fault and negligence of the petitioner
and its captain. Petitioner while admitting the sinking of
the vessel, interposed the defense that the vessel was
fully manned, fully equipped and in all respects
seaworthy; that all the logs were properly loaded and

secured; that the vessels master exercised due diligence

to prevent or minimize the loss before, during and after
the occurrence of the storm.
It raised as its main defense that the proximate and
only cause of the sinking of its vessel and the loss of its
cargo was a natural disaster, a tropical storm which
neither [petitioner] nor the captain of its vessel could
have foreseen.
The RTC was unconvinced that the sinking of M/V
Central Bohol had been caused by the weather or any
other caso fortuito. It noted that monsoons, which were
common occurrences during the months of July to
December, could have been foreseen and provided for
by an ocean-going vessel. Applying the rule of
presumptive fault or negligence against the carrier, the
trial court held petitioner liable for the loss of the cargo.
The CA affirmed the trial courts finding that the
southwestern monsoon encountered by the vessel was
not unforeseeable. Given the season of rains and
monsoons, the ship captain and his crew should have
anticipated the perils of the sea. Citing Arada v. CA,7 it
said that findings of the BMI were limited to the
administrative liability of the owner/operator, officers
and crew of the vessel. However, the determination of
whether the carrier observed extraordinary diligence in
protecting the cargo it was transporting was a function
of the courts, not of the BMI.
Issue: WON the Doctrine of Limited Liability applies.
Held: No it does not.
Common carriers are bound to observe extraordinary
diligence over the goods they transport, according to all
the circumstances of each case; 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 prove that they observed
extraordinary diligence. From the nature of their
business and for reasons of public policy, common
carriers are bound to observe extraordinary diligence
over the goods they transport, according to all the
circumstances of each case. In the event of loss,
destruction or deterioration of the insured goods,
common carriers are responsible; that is, unless they can
prove that such loss, destruction or deterioration was
brought aboutamong othersby flood, storm,
earthquake, lightning or other natural disaster or
calamity. 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 prove that they observed extraordinary diligence.

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
ship-owner 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.
73. RCL of Singapore v. Netherlands Ins. Co. Inc. 598
SCRA 304
FACTS:
RCL is a foreign corporation based in Singapore. It does
business in the Philippines through its agent, EDSA
Shipping, a domestic corporation organized and existing
under Philippine laws. Respondent Netherlands
Insurance Company (Philippines), Inc. (Netherlands
Insurance) is likewise a domestic corporation engaged in
the marine underwriting business.
October 20, 1995, 405 cartons of Epoxy Molding
Compound were consigned to be shipped from
Singapore
to
Manila
for
Temic
Telefunken
Microelectronics
Philippines
(Temic).
U-Freight
Singapore PTE Ltd.3 (U-Freight Singapore), a
forwarding agent based in Singapore, contracted the
services of Pacific Eagle Lines PTE. Ltd. (Pacific Eagle) to
transport the subject cargo. The cargo was packed,
stored, and sealed by Pacific Eagle in its Refrigerated
Container No. 6105660 with Seal No. 13223. As the cargo
was highly perishable, the inside of the container had to
be kept at a temperature of 0 Celsius. Pacific Eagle then
loaded the refrigerated container on board the M/V Piya
Bhum, a vessel owned by RCL, with which Pacific Eagle
had a slot charter agreement. RCL duly issued its own
Bill of Lading in favor of Pacific Eagle.
To insure the cargo against loss and damage,
Netherlands Insurance issued a Marine Open Policy in
favor of Temic to cover all losses/damages to the
shipment.
On October 25, 1995, the M/V Piya Bhum docked in
Manila. After unloading the refrigerated container, it
was plugged to the power terminal of the pier to keep its
temperature constant. Fidel Rocha (Rocha), VicePresident for Operations of Marines Adjustment

Corporation, accompanied by two surveyors, conducted

a protective survey of the cargo. They found that based
on the temperature chart, the temperature reading was
constant from October 18, 1995 to October 25, 1995 at 0
Celsius. However, at midnight of October 25, 1995
when the cargo had already been unloaded from the
ship the temperature fluctuated with a reading of 33
Celsius. Rocha believed the fluctuation was caused by
the burnt condenser fan motor of the refrigerated
container.
November 9, 1995, Temic received the shipment. It
found the cargo completely damaged. Temic filed a
claim for cargo loss against Netherlands Insurance, with
supporting claims documents. The Netherlands
Insurance paid Temic the sum of P1,036,497.00 under the
terms of the Marine Open Policy. Temic then executed a
loss and subrogation receipt in favor of Netherlands
Insurance.
June 4, 1996, Netherlands Insurance filed a complaint for
subrogation of insurance settlement with the RTC
Manila, against "the unknown owner of M/V Piya
Bhum" and TMS Ship Agencies (TMS), the latter thought
to be the local agent of M/V Piya Bhums unknown
owner.
The trial court ruled that while there was valid
subrogation, the defendants could not be held liable for
the loss or damage, as their respective liabilities ended at
the time of the discharge of the cargo from the ship at
the Port of Manila.
ISSUE:
W/N the CA correctly held RCL and EDSA Shipping
liable as common carriers under the theory of
presumption of negligence.
HELD:
Yes. A common carrier is presumed to have been
negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported.
When the goods shipped are either lost or arrived in
damaged condition, a presumption arises against the
carrier of its failure to observe that diligence, and there
need not be an express finding of negligence to hold it
liable.
To overcome the presumption of negligence, the
common carrier must establish by adequate proof that it
exercised extraordinary diligence over the goods. It must
do more than merely show that some other party could
be responsible for the damage.

In the present case, RCL and EDSA Shipping failed to

prove that they did exercise that degree of diligence
required by law over the goods they transported.
Indeed, there is sufficient evidence showing that the
fluctuation of the temperature in the refrigerated
container van, as recorded in the temperature chart,
occurred after the cargo had been discharged from the
vessel and was already under the custody of the arrastre
operator, ICTSI. This evidence, however, does not
disprove that the condenser fan which caused the
fluctuation of the temperature in the refrigerated
container was not damaged while the cargo was being
unloaded from the ship. It is settled in maritime law
jurisprudence that cargoes while being unloaded
generally remain under the custody of the carrier; RCL
and EDSA Shipping failed to dispute this.
RCL and EDSA Shipping could have offered evidence
before the trial court to show that the damage to the
condenser fan did not occur: (1) while the cargo was in
transit; (2) while they were in the act of discharging it
from the vessel; or (3) while they were delivering it
actually or constructively to the consignee. They could
have presented proof to show that they exercised
extraordinary care and diligence in the handling of the
goods, but they opted to file a demurrer to evidence. As
the order granting their demurrer was reversed on
appeal, the CA correctly ruled that they are deemed to
have waived their right to present evidence, and the
presumption of negligence must stand.
It is for this reason as well that we find RCL and EDSA
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 is burdened to prove any of the causes
in Article 1734 of the Civil Code claimed by it by a
preponderance of evidence. If the carrier succeeds, the
burden of evidence is shifted to the shipper to prove that
the carrier is negligent. RCL and EDSA Shipping,
however, failed to satisfy this standard of evidence and
in fact offered no evidence at all on this point; a reversal
of a dismissal based on a demurrer to evidence bars the
defendant from presenting evidence supporting its
allegations.
74.Sealoader Shipping Corp. v. Grand Cement Mfg.
Corp. 638 SCRA 488
Doctrine: Contributory Negligence is conduct on the
part of the injured party, contributing as a legal cause
to the harm he has suffered, which falls below the

standard to which he is required to conform for his

own protection
Facts: Sealoader executed a Time Charter Party
Agreement with Joyce Launch for the chartering of MT
Viper in order to tow its unpropelled barges for a
minimum of 15 days.
Sealoder entered into a contract with Grand
Cement for the loading of cement clinkers and the
delivery thereof to Manila. On March 31, 1994,
Sealoders barge arrived at the wharf of Grand Cement
tugged by MT Viper. It was not immediately loaded as
the employees of Grand Cement were loaded another
vessel.
On April 4, typhoon Bising struck Cebu area.
The barge was still docked at the wharf of Grand
Cement. As it became stronger, MT Viper tried to tow
the barge away but it was unsuccessful because the
towing line connecting the vessels snapped since the
mooring lines were not cast off, which is the ultimate
cause. Hence, the barge rammed the wharf causing
significant damage.
Grand Cement filed a complaint for damages
(P2.4M) since Sealoader ignored its demands. They
allege that Sealoader was negligent when it ignored its
employees advice to move the vessels after it had
received weather updates. Sealoader filed a motion to
dismiss on the ground that Joyce Launch is the one liable
since it was the owner of MT Viper, whos employees
were manning the vessel. Sealoader filed a cross-claim
against Joyce Launch. Joyce maintains that the damages
were due to force majeure and faulted Grand Cements
employees for abandoning the wharf leaving them
helpless and for not warning them early on.
Upon testimonies, the RTC rendered judgment
in favor of Grand Cement holding the two companies
liable since there was complete disregard of the storm
signal, the captain of the vessel was not present and the
vessel was not equipped with a radio or any
navigational facility, which is mandatory. Joyce launch
did not appeal.
On appeal, the CA affirmed the decision but on
MR, it partly reversed its decision finding Grand
Cement to be guilty of contributory negligence since it
was found that it was still loading the other vessel at the
last minute just before the storm hit, hence Sealoders
vessel did not move. Damages were reduced to 50%.
Hence, petition for review to SC.
Issue: Who should be liable for damage sustained by the
wharf of Grand Cement?

Ruling: Sealoader is liable for its negligence. First

because it was not equipped with a radio or a
navigational facility and it failed to monitor the
prevailing weather conditions. Second, it cannot pass the
responsibility of casting off the mooring lines because
the people at the wharf could not just cast off the
mooring lines without any instructions from the crew of
the vessel. It should have taken the initiative to cast off
the mooring lines early on.
With regard to Grand Cements contributory
negligence, the court found that it was not guilty thereof.
It had timely informed the barge of the impending
typhoon and directed the vessels to move to a safer
place. Sealoader had the responsibility to inform itself of
the prevailing weather conditions in the areas where its
vessel was to sail. It cannot merely rely on other vessels
for weather updates and warnings on approaching
storms. For 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 causing
damage to property of third parties for which it would
necessarily be liable.
75. Kui Pai & Co. v. Dollar S/S Lines 52 Phil 863
Doctrine: It is the duty of the carrier to deliver the
transported articles in good order and condition as
when received, and for failure to do so, the carrier is
liable for the corresponding damage. However, it
devolves upon the plaintiff to both allege and prove
that the articles tendered were not the same as those,
which he delivered to the carrier.
Facts: On April 12, 1927 MeeHing Chan of Hongkong
shipped and delivered to Dollar Steamship Line (Dollar)
on board its ship President Taft, 6 cases of goods, wares
and merchandise in good order and condition,
consigned to KuiPai& Co. (KuiPai). The American
Consul at Hongkong then, could not and did not
examine the specific contents of the boxes, by the same
token and reason, Dollar did not make any examination
or have any personal knowledge of the contents of the
cases. These cases were however measured and
weighed, after which, the corresponding bills of lading
were issued for such acceptance and Dollar agreed to
deliver the same to KuiPai in Manila.
KuiPai now alleges that Dollar failed and neglected to
deliver such goods, despite its payment of all freight
charges due. To prove such failure, KuiPai presented
records of the Manila Terminal Company showing that
the 2 packages or cases lost were never landed in Manila
from the ship.

Dollar denies this allegation claiming that it tendered to

KuiPai 6 identical cases shipped by MeeHing Chan and
that KuiPai accepted and took delivery of only 4, and
refused to accept delivery of the other 2. As evidence,
Dollar presented the 2 cases, which were refused by
KuiPai although the marks on them were changed and
the testimony of the checker at the time the ship was
unloaded and that of Manila Terminal Company, that
the cargo of the ship exactly tallies with the bills of
lading which were issued by the defendant.
Issue: Whether or not the Dollar delivered to KuiPai in
Manila the 6 identical boxes, which were delivered on
board its ship?
Ruling: The court ruled in favor of Dollar. It is the duty
of the carrier to deliver the transported articles in good
order and condition as when received, and for failure to
do so, the carrier is liable for the corresponding damage.
However, it devolves upon the plaintiff to both allege
and prove that the articles tendered were not the same
as those, which he delivered to the carrier.
In the case at bar, Dollar was able to prove that the 2
alleged missing boxes were indeed tendered. By
presenting the actual cases in court, although the
markings of which may have changed, it was conceded
that these corresponded to the exact measurements of
the boxes as to their width, length and depth that were
taken at the time of delivery in Hongkong. Furthermore,
it was proved the upon delivery in Hongkong, the 6
cases were loaded in hold No. 9 of the ship and that the
same 6 cases were taken out of the same hold in Manila.
76. Uy Chaco Sons & Co. v. Admiral Line 46 Phil 418
Doctrine: Where property in the hands of a common
carrier is not delivered within a reasonable time after it
has reached 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.
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.
Facts:
Plaintiff Mariano Uy Chaco Sons & Co. alleges that upon
arrival of the S. S. Satsuma at the port of Manila, there
were short-delivered one case of varnish and paint
remover and fifty bales of oakum, for the conversion of
which, defendant is liable.

Defendant Admiral Line argues that the merchandise

had been delayed, had been found, and delivery thereof
had been tendered and rejected.
It appears that the interval which elapsed between the
date when the merchandise should have been delivered
and the presentation of the complaint was
approximately 11 months. The delay which ensued
between the date when the merchandise should have
been delivered and the date when it was finally tendered
was close to 2 years and 4 months. The time which
passed between the date when the merchandise should
have been delivered and the date when the defense of
tender was set up, was over 3 years.
Issue: Whether or not defendant is guilty of conversion?
Held: Yes. As a general rule, mere delay in the delivery
of goods by a common carrier, no matter how long
continued, is not a conversion 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 is compelled to receive them.
However, a demand and a refusal to deliver is
sometimes essential to show a conversion. Even after
demand, if the goods are tendered before a suit is brought,
the consignee cannot refuse to receive the goods and sue
for conversion, his sole remedy being an action for
damages resulting from the delay.
Though the carrier may delay ever so long, the owner
cannot charge him with a conversion, or for the value of
the goods, if they are safely kept, unless they have been
demanded of the carrier and their delivery refused.
Where property in the hands of a common carrier is
not delivered within a reasonable time after it has
reached 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 the title to the property and sue
for conversion, and after he has done so, a subsequent
tender by the carrier will not be available for it as a
defense.
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. In this case, the tender made was not until long after
the lapse of this period, and, not being accepted, is no

bar to plaintiffs right to recover.

A delay of more than 2 years in making delivery was
conclusively unreasonable. A delay in pressing a defense
predicated on tender, of more than 2 years counted from
the date when the complaint was filed, was likewise
unreasonable. Defendant was unable to turn the goods
over to plaintiff at any time before the complaint was
presented, and in fact, could not do so until a long time
thereafter. From the foregoing, defendant was in effect
guilty of conversion and must accordingly respond for
the value of the property at the time of conversion.
77 .Cu Bon Liong v. Java Pacific Line 9 CAR 425
F: A shipment of potatoes were being delivered to a Cu
Bon Liong(buyer), and upon arrival of the vessel at
Manila and upon their discharge from the carryingvessel, the potatoes were dumped into the sea by the
Bureau of Customs at the request of the Buyer, because
according to him, they were of no commercial value. He
then demanded the Carrier to pay for the potatoes on
the ground that it was their fault and negligence (Over
storage and delay)
H: Carrier is NOT liable. Right of Carrier to examine
goods damaged in transit- The party accused of
negligence in the contract of transportation of perishable
goods resulting in damage to said goods should be
given the opportunity to examine the goods and
determine the extent of the damage, and if possible, the
cause of such damage. Consideration of fairness would
require that if the defendant is accused of negligence in
the contract of transportation of plaintiff's potatoes
resulting in the total damage of the said shipment. By
petitioning the Collector to dump the shipment into the
bay upon its arrival, plaintiff-appellant deprived the
defendants of the opportunity to defend themselves.
78 Go Pun v. Fieldmen's Co. Inc. 8 CAR 931
Facts:
Sept 22, 1961: Go Pun purchased from Valderrama and
Sons at Negro Occidental lumber worth P21,258.14. The
lumber were insured with Fieldman's Insurance for
P29000- 14000 in the name of Go Pun under a Marine
Cargo Policy and 15000 under Graciano Aguillon under
another policy. One of the policies was secured in
Agullion's name, because those were the lumber that
Aguillon purchased from Go Pun. But it was Go Pun
who paid the premium. And at the time of loss, Aguillon
has not paid the purchase price.
Sept 23 1961: the lumber were loaded on the barge
despite the presence of tropical depression in the

loading area. When the ship and its tugboat reached the
mouth of the river, the patron decided to go back the
loading dock, however it hit a sunken object on its way
causing water to rush into the vessel. to lighten the load,
pieces of lumber we jettisoned into the sea, the lumber
left on the barge were damaged by seawater.
Go Pun demanded Fieldman to pay, but despite
Fieldman's adjuster's reports, it still refused to pay.
Hence Go Pun sued Fieldman and the Shipping
company.
Issue:
1. W/N The shipping company is negligent
2. W/N the shipping company is solidarily liable with
the insurance company
Held:
1. Yes. The uncontradicted evidence shoes that the vessel
of the shipping company put to sea despite rough seas
and increment weather. Defendant shipping company
cannot exempt itself from liability on claim of loss due to
Act of God. To be exempt from liability for loss because
of an act of god, the common carrier must be free from
any previous negligence or misconduct by which the
loss or damage must have been occasioned. Although
the immediate or proximate cause of a loss in any given
instance may have been an act of god, yet if the carrier
unnecessarily exposed the property to such accident by
any culpable act or omission of his own, he is not
excused.
2. Yes. They are alternatively but primarily liable. The
liability of the common carrier and the insurer of the
goods lost or damaged while in transit is solidary, not
joint, although it arises from the occurence of the same
accident. The carrier is liable by reason of the fault and
negligence of its skipper; the liability of the insurer
springs from the fact of loss of or damage to the goods.
79. Southern Lines Inc. v. Court of Appeals & City of
lloilo 4 SCRA 259
80. Eastern Shipping Lines Inc. v. IAC 150 SCRA 463
Doctrine:
When a carrier fails to establish any caso fortuito, the
presumption by law of fault or negligence on the part of
the carrier applies.
Facts:
13 coils of uncoated 7-wire stress relived wire strand for
prestressed concrete were shipped on board the vessel
Japri Venture (owned by Easter Shipping Lines) for

delivery to Stresstek Post-Tensioning Phils. in Manila.

The cargo was insured by First Nationwide Assurance
Corporation (FNAC).
The vessel arrived in Manila and discharged the cargo to
the custody of E.Razon Inc., from whom the consignees
customs broker received it for delivery to the
consignees warehouse.
It appears that while en route to Manila, the vessel
encountered very rough seas and stormy weather and
the cargo stored in the lower hatch of the vessel was
flooded with water about one foot deep. That upon
survey, it was found that several coils were rusty on one
side and that the wetting of the cargo was caused by
fresh water that entered the hatch when the vessel
encountered heavy weather.
FNAC paid Stresstek about Php 172K for damage and
loss to the insured cargo.
Being subrogated to the rights of Stresstek, FNAC now
seeks to recover from Eastern what it has indemnified
Stresstek less the salvage value of the goods, or the total
of about Php 124K.
The RTC ordered for the dismissal of the case.
Upon appeal, the CA held that Eastern is liable to
FNAC.
Issue: Whether Eastern should be held liable even if it
claims that the shipment was discharged and delivered
complete into the custody of the arrastre operator under
clean tally sheets.
Held:
YES. In arriving at the decision, the SC agreed with the
CA on its findings and conclusions.
The heavy seas and rains referred to in the masters
report were not caso fortuito, but normal occurrences that
an ocean going vessel, particularly in the month of
September which, in our area, is a month of rains and
heavy seas would encounter as a matter of routine. They
are not unforeseen nor unforeseeable. These are
conditions that ocean-going vessels would encounter
and provide for, in the ordinary course of voyage.
The rain water (not sea water) found its way into Japri
Venture is a clear indication that care and foresight did
not attend the closing of the ships hatches so that rain
water would not find its way into the cargo,
Since Easter has failed to establish any caso fortuito, the

presumption of fault or negligence on the part of the

carrier applies; and the carrier must present evidence
that it has observed the extraordinary diligence required
in Art. 1733 to escape liability.
The SC held that the presumption that the cargo was in
apparent good condition when it was delivered by the
vessel to the arrastre operation by the clean tally sheets
has been overturned. The evidence is clear to the effect
that the damage to the cargo was suffered while aboard
petitioners vessel.
81. Belgian Overseas Chartering & Shipping v. Phil. First
Ins. Co. Inc. 383 SCRA 23
Facts:
CMC Trading A.G. shipped on board the M/V Anangel
Sky at Hamburg, Germany 242 coils of various Prime
Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation.
On July 28, 1990, M/V Anangel Sky arrived at the port
of Manila and, within the subsequent days, discharged
the subject cargo. Four (4) coils were found to be in bad
order.
Finding the four (4) coils in their damaged state to be
unfit for the intended purpose, the consignee Philippine
Steel Trading Corporation declared the same as total
loss.
Philippine First Insurance paid the claim of Philippine
Steel and was thus subrogated.
Philippine First then instituted a complaint for recovery
of the amount paid to the consignee as insured.
Belgian claims that the damage and/or loss was due to
pre-shipment damage, to the inherent nature, vice or
defect of the goods, or to perils, danger and accidents of
the sea, or to insufficiency of packing thereof, or to the
act or omission of the shipper of the goods or their
representatives. Belgian further argued that their
liability, if there be any, should not exceed the
limitations of liability provided for in the bill of lading
and other pertinent laws. Finally, Belgian averred that,
in any event, they exercised due diligence and foresight
required by law to prevent any damage/loss to said
shipment.

The RTC dismissed the complaint.

The CA reversed and ruled that Belgian were liable for
the loss or the damage of the goods shipped, because
they had failed to overcome the presumption of
negligence imposed on common carriers. As to the
extent of Belgians liability, the CA held that the package
limitation under COGSA was not applicable, because the
words "L/C No. 90/02447" indicated that a higher
valuation of the cargo had been declared by the shipper
Issue:
Whether the notice of loss was timely filed. (Belgian
claims that pursuant to Section 3, paragraph 6 of
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.)
Whether the package limitation of liability under
COGSA is applicable. (Belgian contends that assuming
that they are liable their liability should be limited to
US$500 per package as provided in the Bill of Lading
and by Section 4(5)of COGS
Held:
NO. 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.
In this case, Belgian failed to rebut the prima facie
presumption of negligence. First, as stated in the Bill of
Lading, Belgian received the subject shipment in good
order and condition in Germany. Second, prior to the
unloading of the cargo, an Inspection Report prepared
and signed by representatives of both parties showed
the steel bands broken, the metal envelopes rust-stained
and heavily buckled, and the contents thereof exposed
and rusty. Third, Bad Order Tally Sheet issued by Jardine
Davies Transport Services stated that the four coils were
in bad order and condition. Normally, a request for a
bad order survey is made in case there is an apparent or
a presumed loss or damage. Fourth, the Certificate of
Analysis stated that, based on the sample submitted and
tested, the steel sheets found in bad order were wet with
fresh water. Fifth, Belgian -- in a letter addressed to the
Philippine Steel --admitted that they were aware of the
condition of the four coils found in bad order and
condition.

YES. First, the 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. Here, 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.
A claim is not barred by prescription as long as the oneyear period has not lapsed. In the present case, the cargo
was discharged on July 31, 1990, while the Complaint 51
was filed by respondent on July 25, 1991, within the oneyear prescriptive period.
YES. In this case, 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
Belgians 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.
Second, a bill of lading is separate from the Other Letter
of Credit arrangements. Thus, Belgians liability should
be computed based on US$500 per package and not on
the per metric ton price declared in the Letter of Credit.
82 Republic v. Hijos de F. Escano Inc. 8 CAR 850
FACTS:
RP is the beneficiary of 93 cases of dry skimmed milk
from
the
UNICEF
for
distribution
to
children. Defendant Luzon Brokerage has been
contracted by RP to handle the warehousing and
transshipment of the milk to feeding agencies in
different parts of the Philippines.
Luzon Brokerage shipped through the shipping broker
of defendant Hijos de Escano (Escano) the 93 cases of

milk on board a vessel owned and operated by Escano

for Southern Leyte. The shipment was consigned to
the Bontoc Rural Health Unit in Southern Leyte in the
care of Mrs. Tacardon. Bontoc is a municipality in
Southern Leyte which is about 24 kilometers from
Malitbog.
The shipment arrived in Malitbog on Jan 19. Mrs.
Tacardon received copies of the bill of lading on Jan 24
from Luzon Brokerage, with a letter telling her to take
delivery of the shipment. By failure of Mrs. Tacardon to
claim the shipment upon arrival, it was deposited in
a warehouse of Escano. On Jan. 28, the branch manager
of Escano met Mrs. Tacardon in front of the municipal
building and the former reiterated to the latter to take
delivery of the shipment. But before claim for the
delivery of the cargo could be made, the entire cargo
were burned on Jan 31 as a result of a fire which broke
out in a house near the said bodega.
As a result, RP instituted an action against Luzon
Brokerage, the shipping broker, and Escano for the
recovery of the value of the milk which was burned.
Lower court held that since the consignee has been
advised of the arrival and has had reasonable time to
remove
them
(from
Jan
28

Jan
31), defendant is relieved from extraordinary diligence
and the loss of the shipment was due to force majeure.
ISSUES:
1.
W/N the lower court erred in holding that Mrs.
Tacardon was negligent in failing to take delivery of the
cargo within reasonable time from arrival thereof at the
port of consignment NO
2.
W/N the lower court erred in holding that the loss
and destruction of the shipment was due to force
majeure by reason of which exempts it from liability.
NO
HELD:
1.
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 right to receive them, without
prejudice to Art. 1738. This article provides that the
extraordinary liability of the common carrier continues
to be operative even during the time the goods are
stored in a warehouse of the carrier at the place of
destination,
until the consignee has been advised of the arrival of the
goods and has had reasonable opportunity thereafter to
remove them or otherwise dispose of them.

In the instant case, Mrs. Tacardon admitted having

received notice of such arrival when she received copies
of the bill of lading on Jan. 24 with advice to take
delivery of the goods. On Jan. 28, she was personally
told by the manager of the carrier company to take
delivery
of the goods. It was incumbent upon Mrs. Tacardon to
take delivery of the shipment within a reasonable time
from Jan. 24. Notice by the carrier that the cargo had
already
arrived,
thereby
placing
the
same
at the disposal of the shipper or consignee, amounts to
a constructive delivery of the cargo which
automatically released the carrier of the extraordinary
responsibility. Thus, 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.
RP contends that there was no negligence on not being
able to take delivery on Jan. 24 because on that day, Mrs.
Tacardon had to attend to a difficult case of delivery of a
patient which required her present elsewhere up to Jan.
26, and then Jan. 27 was a Sunday. However, the Court
ruled that the shipper cannot defer taking the
goods away in order to attend to another 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.
2.
The rule is that the carrier may be absolved of
liability for the destruction of the cargo if it can show
that the goods were lost, destroyed, or deteriorated by
reason of any of the causes in art. 1734. Here, the cargo
was destroyed by a fortuitous event in the form
of a fire which broke out not in the warehouse but in a
nearby house which spread to the bodega because it was
windy and the municipality did not have fire-fighting
equipment
and
despite
efforts
exerted
to
put the fire out by the men of Escano. Thus, the carrier
is not liable.
We find no merit in the argument that fire is not among
the causes enumerated in Art. 1734. Said article makes
mention of other natural disaster or calamity and this
has reference to extraordinary fortuitous events which
according to para. 2 of Art. 1680 includes fire, the cause
of which, is not imputable to the fault of the
carrier, as in the instant case.
83 Ludo & Luym Corp. v. Binamira 101 Phil 120:53 OG
4820
84. Rosario Farmers Cooperative Marketing Corp v.
MRR 3 CAR 437
85..0psimav. Southern Islands Shipping Corp 8 CAR 696

86. Servando v. Phil. Steam Navigation Corp. 117 SCRA

832
Facts: Clara UyBico and Amparo Servando loaded on
board a vessel of Philippine Steam Navigation Co. for
carriage from Manila to Negros Occidental 1,528 cavans
of rice and 44 cartons of colored paper, toys and general
merchandise.
The contract of carriage of cargo was evidenced by a Bill
of Lading (B/L). There was a stipulation limiting the
responsibility of the carrier for loss or damage that may
be caused to the shipment
carrier shall not be responsible for loss or damage to
shipments billed owners risk unless such loss or
damage is due to the negligence of the carrier. Nor shall
the carrier be responsible for loss or damage caused by
force majeure, dangers or accidents of the sea, war,
public enemies, fire.
Upon arrival of the vessel at its destination, the cargoes
were discharged in good condition and placed inside the
warehouse of the Bureau of Customs.
UyBico was able to take delivery of 907 cavans of rice.
Unfortunately, the warehouse was razed by fire of
unknown origin later that same day destroying the
remaining cargoes.
UyBico and Servando filed a claim for the value of the
goods against the carrier.
The lower court ruled in their favor. It held that the
delivery of the shipment to the warehouse is not the
delivery contemplated by Art. 1736 of the CC. And since
the burning of the warehouse occurred prior to the
actual or constructive delivery of the goods, the loss is
chargeable against the vessel.
Issue: Whether or not the carrier is liable for the loss of
the goods.
Held:No.
Article 1736 of the CC 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 court a
quo held that the delivery of the shipment in question to

the warehouse of the Bureau of Customs is not the

delivery contemplated by Article 1736; and since the
burning of the warehouse occurred before actual or
constructive delivery of the goods to the appellees, the
loss is chargeable against the 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. The
stipulation is valid not being contrary to law, morals or
public policy.
The petitioners however, contend that the stipulation
does not bind them since it was printed at the back of
the B/L and that they did not sign the same. However,
as the Court held in OngYiu vs. CA, while it may be true
that a passenger had not signed the plane ticket, he is
nevertheless bound by the provisions thereof. Such
provisions have been held to be a part of the contract of
carriage, and valid and binding upon the passenger
regardless of the latter's lack of knowledge or assent to
the regulation.
Also, where fortuitous event is the immediate and
proximate cause of the loss, the obligor is exempt from
liability for non-performance. 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 the carrier
incurred in delay in the performance of its obligation. It
appears that it had not only notified UyBico and
Servando of the arrival of their shipment, but had
demanded that the same be withdrawn. In fact,
pursuant to such demand, UyBico had taken delivery of
907 cavans of rice before the burning of the warehouse.
Nor can the carrier or its employees be charged with
negligence. The storage of the goods in the Customs
warehouse pending withdrawal thereof by UyBico and
Servando 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 carrier, the latter having no
control whatsoever over the same.