B. Common Carriage of Goods: 3.
Duration of Extraordinary Responsibility - A common carrier has the legal duty to deliver goods to a consignee in the same
101 Phil 120 – Lu Do & Lu Ym Corp. vs. Binamira
Bautista Angelo
6 cases of films and photographic supplies were shipped from NY to Cebu. The carrier
unloaded the cargo in the port, and the same was placed in the custody of the arrastre
operator (Customs-appointed). When the consignee got hold of the goods, some supplies
were missing. The Court held that the Carrier was not responsible because it was no longer
in the possession of the goods when the loss occurred. More importantly, both the Carrier
and the Consignee have stipulated to limit the responsibility of the carrier for the loss or
damage that may be caused to the goods before they are actually delivered, as evidenced
by 3 of its paragraphs (See Other Notes).
DOCTRINE
While the goods are in the carrier’s possession, it is but fair that it exercise extraordinary
diligence in protecting them from damage, and if loss occurs, the law presumes that it was
due to its fault or negligence. This is necessary to protect the interest of the owner who is at
its mercy. BUT the situation changes AFTER the goods are delivered to the consignee.
A stipulation limiting liability until the goods are transferred to customs or some authority
is valid.
IMPORTANT PEOPLE
Agent of Carrier: Lu Do & Lu Ym Corp. (petitioner)
Consignee: I.V. Binamira (respondent)
Arrastre operator of Cebu port: Visayan Cebu Terminal Company (appointed by Customs)
Ship: M/S “Fernside”; Date of shipping: Aug. 10, 1951; Cargo: films, photographic supplies
FACTS
1. The Delta Photo Supply Company of New York shipped (6) cases of films and
photographic supplies from New York to Cebu. This was consigned to Binamira.
2. Bill of Lading No. 29 was issued covering the said shipment. Both the carrier and
the consignee stipulated in PAR. 1, 12, and 22, to limit the responsibility of the carrier
for any loss and damage before the goods are actually delivered. (See Other Notes)
3. The ship arrived in Cebu and discharged her cargo. The shipment was placed in
the possession and custody of the arrastre1 operator of the Cebu port (the Visayan
Cebu Terminal Company, w/c was appointed by the Bureau of Customs)
4. Lu Do & Lu Ym (petitioner), as agent of the carrier, hired Cebu Stevedoring
Company, Inc. to unload the cargo.
- The good order cargo was separated from the bad order cargo, and a separate list
for the bad order cargo was made by the checker of Cebu Stevedoring.
- The checker of the port also made a separate list.
- But the shipment in question (films and photographic supplies) was NOT included
in the Report of bad order cargo of BOTH checkers, indicating that it was
discharged from the ship in GOOD ORDER AND CONDITION.
Note: at this point, carrier no longer possessed the goods—it’s now with the arrastre.
5. 3 days later, Binamira took the 6 cases of films/photographic supplies from the arrastre
operator. He discovered that the cases showed signs of pilferage2, so he hired marine
surveyors to examine them. The findings showed that some films and photographic
supplies were missing (valued at P324.63).
6. The CA found the Carrier responsible: (Yes, the facts of the case skipped the lower court)
1 The operation of receiving, conveying, and loading or unloading merchandise on piers or wharves.
(Merriam)
condition in w/c it received them. There is a presumption of negligence overturned by
proof of exercise of extraordinary diligence in the care and handling of goods.
- Such presumption and liability of the carrier attach until the goods are delivered
actually or constructively to the consignee. (Art. 1736, NCC)
- “We believe delivery to the customs authorities is NOT the delivery contemplated by
Art. 1736.” This because the goods are, in effect, in the hands of the Gov’t, in w/c case
the owner can’t exercise dominion over them until the duties are paid.
ISSUE with HOLDING: Is the carrier responsible for the loss considering that the same
occurred after the shipment was discharged from the ship and placed in the possession and
custody of the customs authorities? NO.
1. CA IS WRONG. 1) Because it made a wrong interpretation of the law. 2) Because it
ignored the provisions of the bill of lading covering the shipment wherein it was
stipulated that the responsibility of the carrier is limited only to losses that may occur
while the cargo is still under its custody and control (Par. 1, See Other Notes)
2. It’s true that the Civil Code provides that:
a. A common carrier is responsible for the loss, destruction or deterioration of the
goods it assumes to carry from one place to another (Art. 1734)
b. Common carrier is presumed to have been at fault or acted negligently (Art. 1735)
c. That this extraordinary liability lasts from the time the goods are placed in the
possession of the carrier until they’re delivered to the consignee or “to the person
who has a right to receive them.” (Art. 1736)
Rationale for letter C: While the goods are in its possession, it is but fair that it exercise
extraordinary diligence in protecting them from damage, and if loss occurs, the law
presumes that it was due to its fault or negligence. This is necessary to protect the interest
of the owner who is at its mercy. BUT the situation changes AFTER the goods are
delivered to the consignee.
3. Although the CA is correct in that the delivery to the customs authority (i.e., the
arrastre operator appointed by the Bur. of Customs: Visayan Cebu Terminal Company ) is
NOT delivery to the consignee or “to the person who has a right to receive them” (per
Art. 1736), SC believes however that the parties may agree to limit the liability of
the carrier considering that the goods still have to go through the inspection of
the customs authorities before they are actually turned over to the consignee.
4. This is a situation where the carrier loses control of the goods because of a
custom regulation and it is unfair that it be made responsible for what may happen
during the interregnum.
5. These stipulations are clear, adopted precisely to mitigate the responsibility of the
carrier considering the present law on the matter, and the SC finds nothing therein
contrary to morals or public policy that may justify their nullification.
DISPOSITIVE PORTION
Decision is reversed. Petitioner won; carrier not responsible for the loss because it happened
after the shipment had been delivered to the custom authorities.
OTHER NOTES:
Par. 1: “The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or misdelivery, or
loss of or damage to the goods occurring while the goods are not in the actual custody of the Carrier.
2 The act of stealing things of small value. (Cambridge Dictionary)
1
Par. 12 “The responsibility of the Carrier in any capacity shall altogether cease and the good shall be considered
to be delivered and at their own risk and expensive in every respect when taken into the custody of customs or
other authorities. The Carrier shall not be required to give any notification of disposition of the goods.”

Par. 22: “Any provisions herein to the contrary notwithstanding, goods may be delivered by Carrier at ship’s
tackle and delivery beyond ship’s tackle shall be entirely at the option of the Carrier and solely at the expense
of the shipper or consignee.

DIGESTER: Viveka