CASE DIGEST: Eastern Shipping vs. BPI/MS

G.R. No. 193986 : JANUARY 15, 2014




Sumitomo Corporation (Sumitomo) shipped through MV Eastern Challenger, a vessel owned by Eastern Shipping Lines, Inc. (petitioner), 31 various steel sheet in coil from Yokohama, Japan, on August 29, 2003; 28 steel sheets in coil on September 13, 2003 and; 117 various steel sheets in coil on September 29, 2003. All three of the shipments were insured against all risk by Sumitomo with respondent Mitsui Sumitomo Insurance Co., Ltd. (Mitsui) and all deliveries are in favor if the consignee Calamba Steel Center Inc. (Calamba Steel).

The August 29, 2003 shipment arrived at the port of Manila on September 6, 2003, 9 coils were observed to be in bad condition. The cargo was then turned over to Asian Terminals, Inc. (ATI) for stevedoring, storage and safekeeping pending Calamba Steels withdrawal of the goods. When the cargoes were delivered to Calamba Steel, it rejected the damaged portion valued at US$7,751.15, for being unfit for its intended purpose.

The September 13, 2003 shipment arrived at the port of Manila on September 23, 2009, 11 coils were found damaged. The possession of the cargo was then transferred to ATI and when it delivered the goods, Calamba Steel rejected the damaged portion valued at US$7,677.12, the same being unfit for its intended purpose.

Lastly, the September 29, 2003 shipment arrived at the port of Manila on October 11, 2003, 6 coils were observed to be in bad condition. Again, Calamba Steel rejected the damaged portion valued at US$14,782.05, upon ATIs delivery.

Calamba Steel filed an insurance claim with Mitsui through the latters agent, respondent BPI/MS Insurance Corporatin (BPI/MS). BPI/MS paid a total sum of US$30,210.32 for the damage suffered by all the three shipments. As insurer and subrogee of Calamba Steel, Mitsui and BPI/MS filed a complaint for Damages against petitioner and ATI.

RTC rendered a judgment in favor of the plaintiff and against defendants Eastern Shipping Lines and ATI, jointly and severally, ordering the latter to pay plaintiffs damages worth US$30,210.32, attorneys fees and cost of suit.

CA affirmed the decision of the RTC, ruling that both petitioner and ATI were very negligent in the handling of the subject cargoes. CA also denied the Motion for Reconsideration filed by petitioner.

Both petitioner and ATI filed their respective separate petitions for review on certiorari, however, ATIs petition was denied and the assailed CA decision had become final and executory. The court gave due course to petitioners petition and directed the parties to file their respective memoranda.

In petitioners Memorandum, he avers that the CA erred in affirming the RTC decision because the pieces of evidence show that the cause of the damage was the rough handling of the goods by ATI during the discharging operations. Petitioner prays to be absolved from any liability relative to the damage incurred by the goods. On the other hand, respondents counter, that as found by both the RTC and the CA, the goods suffered damage while still in the possession of petitioner as evidenced by various Turn Over Surveys of Bad Order Cargoes which were unqualifiedly executed by petitioners own surveyor. The respondents also aver that petitioner is required by law to observe extraordinary diligence in the vigilance over the goods it carries.

ISSUE: Whether or not petitioner is solidarily liable with ATI on account of the damage incurred by the goods?

HELD: Petitioner is solidarily liable with ATI.

MARITIME LAW: liability of common carriers

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. As herein before found by the RTC and affirmed by the CA based on the evidence presented, the goods were damaged even before they were turned over to ATI. Such damage was even compounded by the negligent acts of petitioner and ATI which both mishandled the goods during the discharging operations. Thus, it bears stressing unto petitioner that 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. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such high level of diligence. In this case, petitioner failed to hurdle such burden.

Petitioner also failed to show any reversible error on the part of the CA in affirming the ruling of the RTC as to warrant the modification, much less the reversal of its assailed decision.


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