COMMON CARRIER OF GOODS (Degree of Diligence Required)

AMANDO MIRASOL, Plaintiff-Appellant, vs. THE ROBERT DOLLAR CO., Defendant-Appellant.

Vicente Hilado for plaintiff-appellant.J.A. Wolfson for defendant-appellant.

STATEMENTchanrobles virtual law library

After the promulgation of the decision rendered by the Second Division of February 13, 1929, 1 the defendant filed a motion to have the case heard and decided in banc, and inasmuch as the legal questions involved are important to the shipping interests, the court thought it best to do so.chanroblesvirtualawlibrary chanrobles virtual law library

After the formal pleas, plaintiff alleges that he is the owner and consignee of two cases of books, shipped in good order and condition at New York, U.S.A., on board the defendant's steamshipPresident Garfield, for transport and delivery to the plaintiff in the City of Manila, all freight charges paid. That the two cases arrived in Manila on September 1, 1927, in bad order and damaged condition, resulting in the total loss of one case and a partial loss of the other. That the loss in one case is P1,630, and the other P700, for which he filed his claims, and defendant has refused and neglected to pay, giving as its reason that the damage in question "was caused by sea water." That plaintiff never entered into any contract with the defendant limiting defendant's liability as a common carrier, and when he wrote the letter of September 3, 1927, he had not then ascertained the contents of the damaged case, and could not determine their value. That he never intended to ratify or confirm any agreement to limit the liability of the defendant. That on September 9, 1927, when the other case was found, plaintiff filed a claim for the real damage of the books therein named in the sum of $375.chanroblesvirtualawlibrary chanrobles virtual law library

Plaintiff prays for corresponding judgment, with legal interest from the filing of the complaint and costs.chanroblesvirtualawlibrary chanrobles virtual law library

For answer the defendant made a general and specific denial, and as a separate and special defense alleges that the steamship President Garfield at all the times alleged was in all respects seaworthy and properly manned, equipped and supplied, and fit for the voyage. That the damage to plaintiff's merchandise, if any, was not caused through the negligence of the vessel, its master, agent, officers, crew, tackle or appurtenances, nor by reason of the vessel being unseaworthy or improperly manned, "but that such damage, if any, resulted from faults or errors in navigation or in the management of said vessel." As a second separate and special defense, defendant alleges that in the bill of lading issued by the defendant to plaintiff, it was agreed in writing that defendant should not be "held liable for any loss of, or damage to, any of said merchandise resulting from any of the following causes, to wit: Acts of God, perils of the sea or other waters," and that plaintiff's damage, if any, was caused by "Acts of God" or "perils of the sea." As a third special defense, defendant quoted clause 13 of the bill of lading, in which it is stated that in no case shall it be held liable "for or in respect to said merchandise or property beyond the sum of two hundred and fifty dollars for any piece, package or any article not enclosed in a package, unless a higher value is stated herein and ad valorem freight paid or assessed thereon," and that there was no other agreement. That no September 3, 1927 the plaintiff wrote the defendant a letter as follows:

Therefore, I wish to file claim of damage to the meager maximum value that your bills of lading will indemnify me, that is $250 as per condition 13.

As a fourth special defense, defendant alleges that the damage, if any, was caused by "sea water," and that the bill of lading exempts defendant from liability for that cause. That damage by "sea water" is a shipper's risk, and that defendant is not liable.chanroblesvirtualawlibrary chanrobles virtual law library

As a result of the trial upon such issues, the lower court rendered judgment for the plaintiff for P2,080, with legal interest thereon from the date of the final judgment, with costs, from which both parties appealed, and the plaintiff assigns the following errors:

I. The lower court erred in holding that plaintiff's damage on account of the loss of the damaged books in the partially damaged case can be compensated with an indemnity of P450 instead of P750 as claimed by plaintiff.chanroblesvirtualawlibrary chanrobles virtual law library

II. The lower court, consequently, also erred in giving judgment for plaintiff for only P2,080 instead of P2,380.chanroblesvirtualawlibrary chanrobles virtual law library

III. The lower court erred in not sentencing defendant to pay legal interest on the amount of the judgment, at least, from the date of the rendition of said judgment, namely, January 30, 1928.

The defendant assigns the following errors:

I. The lower court erred in failing to recognize the validity of the limited liability clause of the bill of lading, Exhibit 2.chanroblesvirtualawlibrary chanrobles virtual law library

II. The lower court erred in holding defendant liable in any amount and in failing to hold, after its finding as a fact that the damage was caused by sea water, that the defendant is not liable for such damage by sea water.chanroblesvirtualawlibrary chanrobles virtual law library

III. The lower court erred in awarding damages in favor of plaintiff and against defendant for P2,080 or in any other amount, and in admitting, over objection, Exhibits G, H, I and J.

JOHNS, J.:

Plaintiff's contention that he is entitled to P700 for his Encyclopedia Britannica is not tenable. The evidence shows that the P400 that the court allowed, he could buy a new set which could contain all of the material and the subject matter of the one which he lost. Plaintiff's third assignment of error is well taken, as under all of the authorities, he is entitled to legal interest from the date of his judgement rendered in the lower court and not the date when it becomes final. The lower court found that plaintiff's damage was P2,080, and that finding is sustained by that evidence. There was a total loss of one case and a partial loss of the other, and in the very nature of the things, plaintiff could not prove his loss in any other way or manner that he did prove it, and the trial court who heard him testify must have been convinced of the truth of his testimony.chanroblesvirtualawlibrary chanrobles virtual law library

There is no claim or pretense that the plaintiff signed the bill of lading or that he knew of his contents at the time that it was issued. In that situation he was not legally bound by the clause which purports to limit defendant's liability. That question was squarely met and decided by this court in banc in Juan Ysmael and Co., vs. Gabino Baretto and Co., (51 Phil., 90; see numerous authorities there cited).chanroblesvirtualawlibrary chanrobles virtual law library

Among such authorities in the case of The Kengsington decided by the Supreme Court of the U.S. January 6, 1902 (46 Law. Ed., 190), in which the opinion was written by the late Chief Justice White, the syllabus of which is as follows:

1. Restrictions of the liability of a steamship company for its own negligence or failure of duty toward the passenger, being against the public policy enforced by the courts of the United States, will not to be upheld, though the ticket was issued and accepted in a foreign country and contained a condition making it subject to the law thereof, which sustained such stipulation.chanroblesvirtualawlibrary chanrobles virtual law library

2. The stipulation in a steamship passenger's ticket, which compels him to value his baggage, at a certain sum, far less than it is worth, or, in order to have a higher value put upon it, to subject it to the provisions of the Harter Act, by which the carrier would be exempted from all the liability therefore from errors in navigation or management of the vessel of other negligence is unreasonable and in conflict with public policy.chanroblesvirtualawlibrary chanrobles virtual law library

3. An arbitrary limitation of 250 francs for the baggage of any steamship passenger unaccompanied by any right to increase the amount of adequate and reasonable proportional payment, is void as against public policy.

Both the facts upon which it is based and the legal principles involved are square in point in this case.chanroblesvirtualawlibrary chanrobles virtual law library

The defendant having received the two boxes in good condition, its legal duty was to deliver them to the plaintiff in the same condition in which it received them. From the time of their delivery to the defendant in New York until they are delivered to the plaintiff in Manila, the boxes were under the control and supervision of the defendant and beyond the control of the plaintiff. The defendant having admitted that the boxes were damaged while in transit and in its possession, the burden of proof then shifted, and it devolved upon the defendant to both allege and prove that the damage was caused by reason of some fact which exempted it from liability. As to how the boxes were damaged, when or where, was a matter peculiarly and exclusively within the knowledge of the defendant and in the very nature of things could not be in the knowledge of the plaintiff. To require the plaintiff to prove as to when and how the damage was caused would force him to call and rely upon the employees of the defendant's ship, which in legal effect would be to say that he could not recover any damage for any reason. That is not the law.chanroblesvirtualawlibrary chanrobles virtual law library

Shippers who are forced to ship goods on an ocean liner or any other ship have some legal rights, and when goods are delivered on board ship in good order and condition, and the shipowner delivers them to the shipper in bad order and condition, it then devolves upon the shipowner to both allege and prove that the goods were damaged by the reason of some fact which legally exempts him from liability; otherwise, the shipper would be left without any redress, no matter what may have caused the damage.chanroblesvirtualawlibrary chanrobles virtual law library

The lower court in its opinion says:

The defendant has not even attempted to prove that the two cases were wet with sea water by fictitious event, force majeure or nature and defect of the things themselves. Consequently, it must be presumed that it was by causes entirely distinct and in no manner imputable to the plaintiff, and of which the steamer President Garfield or any of its crew could not have been entirely unaware.

And the evidence for the defendant shows that the damage was largely caused by "sea water," from which it contends that it is exempt under the provisions of its bill of lading and the provisions of the article 361 of the Code of Commerce, which is as follows:

Merchandise shall be transported at the risk and venture of the shipper, if the contrary was not expressly stipulated.chanroblesvirtualawlibrary chanrobles virtual law library

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.chanroblesvirtualawlibrary chanrobles virtual law library

The proof of these accidents is incumbent on the carrier.

In the final analysis, the cases were received by the defendant in New York in good order and condition, and when they arrived in Manila, they were in bad condition, and one was a total loss. The fact that the cases were damaged by "sea water," standing alone and within itself, is not evidence that they were damaged by force majeure or for a cause beyond the defendant's control. The words "perils of the sea," as stated in defendant's brief apply to "all kinds of marine casualties, such as shipwreck, foundering, stranding," and among other things, it is said: "Tempest, rocks, shoals, icebergs and other obstacles are within the expression," and "where the peril is the proximate cause of the loss, the shipowner is excused." "Something fortuitous and out of the ordinary course is involved in both words 'peril' or 'accident'."chanrobles virtual law library

Defendant also cites and relies on the case of Government of the Philippine Islands vs. Ynchausti & Company (40 Phil., 219), but it appears from a reading of that case that the facts are very different and, hence, it is not in point. In the instant case, there is no claim or pretense that the two cases were not in good order when received on board the ship, and it is admitted that they were in bad order on their arrival at Manila. Hence, they must have been damaged in transit. In the very nature of things, if they were damaged by reason of a tempest, rocks, icebergs, foundering, stranding or the perils of the sea, that would be a matter exclusively within the knowledge of the officers of defendant's ship, and in the very nature of things would not be within plaintiff's knowledge, and upon all of such questions, there is a failure of proof.chanroblesvirtualawlibrary chanrobles virtual law library

The judgment of the lower court will be modified, so as to give the plaintiff legal interest on the amount of his judgment from the date of its rendition in the lower court, and in all respects affirmed, with costs. So ordered.

FIREMAN'S FUND INSURANCE CO., petitioner, vs.METRO PORT SERVICE, INC., (Formerly E. Razon, Inc.), respondent.

Dollete, Blanco, Ejercito & Associates for petitioner.

Cruz, Durian, Agabin, Atienza, Alday & Tuason for respondent.

 

GUTIERREZ, JR., J.:

This is a petition for review of the decision and resolution denying reconsideration of the Court of Appeals in CA-G.R. CV No. 00673 entitled "Fireman's Fund Insurance Co. v. Maersk Line, Compañia General de Tabacos de Filipinas and E. Razon, Inc."

The facts are as follows:

Vulcan Industrial and Mining Corporation imported from the United States several machineries and equipment which were loaded on board the SIS Albert Maersk at the port of Philadelphia, U.S.A., and transhipped for Manila through the vessel S/S Maersk Tempo.

The cargo which was covered by a clean bill of lading issued by Maersk Line and Compania General de Tabacos de Filipinas (referred to as the CARRIER) consisted of the following:

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1 piece truck mounted core drill

1 piece trailer mounted core drill

1 (40') container of 321 pieces steel tubings

1 (40') container of 170 pieces steel tubings

1 (40') container of 13 cases, 3 crates, 2 pallets and 26 mining machinery parts. (Rollo, p. 4)

The shipment arrived at the port of Manila on June 3, 1979 and was turned over complete and in good order condition to the arrastre operator E. Razon Inc. (now Metro Port Service Inc. and referred to as the ARRASTRE).

At about 10:20 in the morning of June 8, 1979, a tractor operator, named Danilo Librando and employed by the ARRASTRE, was ordered to transfer the shipment to the Equipment Yard at Pier 3. While Librando was maneuvering the tractor (owned and provided by Maersk Line) to the left, the cargo fell from the chassis and hit one of the container vans of American President Lines. It was discovered that there were no twist lock at the rear end of the chassis where the cargo was loaded.

There was heavy damage to the cargo as the parts of the machineries were broken, denied, cracked and no longer useful for their purposes.

The value of the damage was estimated at P187,500.00 which amount was paid by the petitioner insurance company to the consignee, Vulcan Industrial and Mining Corporation.

The petitioner, under its subrogation rights, then filed a suit against Maersk Line, Compania General de Tabacos (as agent) and E. Razon, Inc., for the recovery of the amount it paid the assured under the covering insurance policy. On October 26, 1980, the trial court rendered judgment, the decretal portion of which reads as follows:

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WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants by ordering the latter to pay, jointly and severally, the plaintiff the sum of P187,500.00, with legal interest thereon from August 29, 1980 until full payment thereof.

Defendants are also ordered to pay, in solidum, the sum of P10,000.00 as attorney's fees to the plaintiff, and to pay the costs of this suit.

There shall be no award for exemplary damages in favor of the plaintiff, for the reason that defendants are probably acting in good faith in resisting the complaint. (Rollo, pp. 45-46)

All the defendants appealed to the Court of Appeals. Eventually, Maersk Line and Compania General de Tabacos negotiated with the petitioner for the settlement of the latter's claim and no longer pursued their appeal.

On the appeal of the ARRASTRE, the Court of Appeals rendered a decision with the following dispositive portion:

WHEREFORE, foregoing premises considered, the decision of the court a quo insofar as herein defendant-appellant is concerned is REVERSED It is hereby ordered that the complaint against herein defendant-appellant be dismissed. No costs. (Rollo, p. 50)

Reconsideration of the decision was denied in a resolution dated May 23, 1988.

Hence, the present recourse.

The petitioner raises this lone assignment of error:

THE HONORABLE COURT OF APPEALS ERRED IN LIMITING LIABILITY SOLELY ON CO-DEFENDANT MAERSK LINES, CONTRARY TO THE FINDINGS OF FACTS OF THE TRIAL COURT A QUO AND OTHER FACTORS SHOWING CLEAR JOINT LIABILITY OF DEFENDANTS IN SOLIDUM.

There is merit in this petition.

This Court has held in a number of cases that findings of fact of the Court of Appeals are, in general, conclusive on the Supreme Court when supported by the evidence on record. The rule is not absolute, however, and allows exceptions, which we find present in the case at bar. The respondent court's findings of facts are contrary to those of the trial court and appear to be contradicted by the evidence on record thus calling for our review. (Metro Port Service, Inc. v. Court of Appeals, 131 SCRA 365 [1984]).

In absolving the ARRASTRE, the respondent Court ruled that although Librando was an employee of the ARRASTRE, since he was included in its payroll, he was technically and strictly an employee of Maersk Line in this particular instance when he drove the tractor admittedly owned by the foreign shipping line. The Court ruled that he received instructions not from Metro Port but from Maersk Line relative to this job. He was performing a duty that properly pertained to Maersk Line which, for lack of a tractor operator, had to get or hire from the ARRASTRE as per their management contract. Nevertheless, Librando was not remiss in his duty as tractor-driver considering that the proximate and direct cause of the damage was the absence of twist locks in the rear end of the chassis which Maersk Line failed to provide. The respondent court thereby placed the entire burden of liability on the owner of the Chassis which in this case was the foreign shipping company, Maersk Line.

The foregoing conclusion disregarded the pertinent findings of facts made by the lower court which are supported by the evidence on record, to wit:

1. The accident occurred while the cargoes were in the custody of the arrastre operator.

2. The tractor operator was an employee of the arrastre operator.

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4. By the management contract inasmuch as the foreign shipping company has no tractor operator in its employ, the arrastre provided the operator.

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8. It was likewise the responsibility of the tractor operator, an employee of the arrastre operator to inspect the chassis and tractor before driving the same, but which obligation the operator failed to do.

9. It was also the responsibility of the supervisor in the employ of the arrastre operator to see that their men complied with their respective tasks, which included the examination if the chassis has twist lock. (Rollo, pp. 44-45)

The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]). The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such

responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with and obligated to deliver the goods in good condition to the consignee.

In general, the nature of the work of an arrastre operator covers the handling of cargoes at piers and wharves (Visayan Cebu Terminal Co., Inc. v. Commissioner of Internal Revenue, 13 SCRA 357 [1965]). This is embodied in the Management Contract drawn between the Bureau of Customs and E. Razon Inc., as the Arrastre Operator. The latter agreed to bind itself, to wit:

CLAIMS AND LIABILITY FOR LOSSES AND DAMAGES

1. Responsibility and Liability for Losses and Damages;

Claims. — The CONTRACTOR shall, at its own expense handle all merchandise in the piers and other designated places and at its own expense perform all work undertaken by it hereunder diligently and in skillful workmanlike and efficient manner; That the CONTRACTOR shall be solely responsible as an independent CONTRACTOR, and hereby agrees to accept liability and to promptly pay to the s hip company, consignee, consignor or other interested party or parties for the loss, damage, or non-delivery of cargoes to the extent of the actual invoice value of each package which in no case shall be more than Three Thousand Five Hundred Pesos (P3,500.00) for each package unless the value of the importation is otherwise specified or manifested or communicated in writing together with the invoice value and supported by a certified packing list to the CONTRACTOR by the interested party or parties before the discharge of the goods, as well as all damage that may be suffered on account of loss, damage, or destruction of any merchandise while in custody or under the control of the CONTRACTOR in any pier, shed, warehouse, facility; or other designated place under the supervision of the BUREAU, but said CONTRACTOR shall not be responsible for the condition of the contents of any package received nor for the weight, nor for any loss, injury or damage to the said cargo before or while the goods are being received or remained on the piers, sheds, warehouse or facility if the loss, injury or damage is caused by force majeure, or other cause beyond the CONTRACTORS control or capacity to prevent or remedy; ...

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The CONTRACTOR shall be solely responsible for any and all injury or damage that may arise on account of the negligence or carelessness of the CONTRACTOR, its agent or employees in the performance of the undertaking by it to be performed under the terms of the contract, and the CONTRACTOR hereby agree to and hold the BUREAU at all times harmless therefrom and whole or any part thereof. (Original Records, pp. 110-112; Emphasis supplied)

To carry out its duties, the ARRASTRE is required to provide cargo handling equipment which includes among others trailers, chassis for containers. In some cases, however, the shipping line has its own cargo handling equipment.

In this particular instance, the records reveal that Maersk Line provided the chassis and the tractor which carried the carried the subject shipment. It merely requested the ARRASTRE to dispatch a tractor operator to drive the tractor inasmuch as the foreign shipping line did not have any truck operator in its employ. Such arrangement is allowed between the ARRASTRE and the CARRIER pursuant to the Management Contract. It was clearly one of the services offered by the ARRASTRE. We agree with the petitioner that it is the ARRASTRE which had the sole discretion and prerogative to hire and assign Librando to operate the tractor. It was also the ARRASTRE's sole decision to detail and deploy Librando for the particular task from among its pool of tractor operators or drivers. It is, therefore, inacurrate to state that Librando should be considered an employee of Maersk Line on that specific occasion.

Handling cargo is mainly the s principal work so its driver/operators, "cargadors", or employees should observe the stand" and indispensable measures necessary to prevent losses and damage to shipments under its custody. Since the ARRASTRE offered its drivers for the operation of tractors in the handling of cargo and equipment, then the ARRASTRE should see to it that the drivers under its employ must exercise due diligence in the performance of their work. From the testimonies of witnesses presented, we gather that driver/operator Librando was remiss in his duty. Benildez Cepeda, an arrastre-investigator of Metro Port admitted that Librando as tractor-operator should first have inspected the chassis and made sure that the cargo was securely loaded on the chassis. He testified:

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Q My question is in your investigation report including enclosures, the principal reason was that the chassis has no rear twist lock?

A Yes, sir.

Q Did you investigate whether the driver Librando inspected the the truck before he operated the same whether there was rear twist lock or not?

A I have asked him about that question whether he had inspected the has any rear twist lock and the answer he did not inspect, sir.

Q As a operator, do you agree with me that it is the duty also of Librando to see to it that the truck is in good condition and fit to travel, is that correct?

A Yes, sir.

Q And as a tractor operator it is his duty to see to it that the van mounted on top of the tractor was properly is that correct?

A Yes, sir. (At pp. 18-20, T.S.N., February 17, 1982)

Again Danilo Librando also admitted that it was usually his practice to inspect not only the tractor but the chassis as well but failed to do so in this particular instance.

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Q You mentioned of the absence of a twist lock. Will you tell us where is this twist lock supposed to be located?

A At the rear end of the chassis.

Q Before you operated the tractor which carried the mounted cord drill truck and trailer did you examine if the chasiss had any twist locks?

A No, sir, because I presumed that it had twist locks and I was confident that it had twist locks.

Q As a matter of procedure and according to you, you examined the tractor, do you not make it a practice to examine whether the chassis had any twist locks?

A I used to do that but in that particular instance I thought it had already its twist locks. (p. 8, T.S.N., October 5, 1981)

It is true that Maersk Line is also at fault for not providing twist locks on the chassis. However, we find the testimony of Manuel Heraldez who is the Motor Pool General Superintendent of Metro Port rather significant. On cross-examination, he stated that:

Q In your experience, Mr. witness, do you know which is ahead of the placing of the container van or the placing of the twist lock on the chassis?

A The twist lock is already permanently attached on the chassis, sir.

Q Earlier, you mentioned that you cannot see the twist lock if the chassis is loaded, correct?

A Yes, sir.

Q Do you what to impress upon the Honorable Court that, by mere looking at a loaded chassis, the twist lock cannot be seen by the naked eye? Because the van contained a hole in which the twist lock thus entered inside the hold and locked itself. It is already loaded. So. you cannot no longer see it.

Q But if you closely examine this chassis which has a load of container van. You can see whether a twist lock is present or not?

A Yes, sir. A twist lock is present.

Q In other words, if the driver of this tractor closely examined this van, he could have detected whether or not a twist lock is present?

A Yes, sir. (pp. 33-35, T.S.N., March 23, 1982; Emphasis supplied)

Whether or not the twist lock can be seen by the naked eye when the cargo has been loaded on the chassis, an efficient and diligent tractor operator must nevertheless check if the cargo is securely loaded on the chassis.

We, therefore, find Metro Port Service Inc., solidarily liable in the instant case for the negligence of its employee. With respect to the limited liability of the ARRASTRE, the records disclose that the value of the importation was relayed to the arrastre operator and in fact processed by its chief claims examiner based on the documents submitted.

WHEREFORE, the appealed judgment of respondent Court of Appeals is hereby REVERSED and SET ASIDE and that of the Court of First Instance of Manila, 6th Judicial District, Branch II is REINSTATED. No costs.

SO ORDERED.