Case Digest: Philippine First Insurance v. Wallem First Shipping, 582 SCRA 457, G.R. No. 165647

 

Philippine First Insurance v. Wallem First Shipping, 582 SCRA 457, G.R. No. 165647, March 26, 2009

Subject: Transportation Law

FACTS

In October 1995, Anhui Chemicals Import & Export Corporation loaded on board M/S Offshore Master a shipment consisting of 10,000 bags of sodium sulphate anhydrous 99 PCT Min. (shipment), complete and in good order for transportation to and delivery at the port of Manila for consignee, L.G. Atkimson Import-Export, Inc. (consignee), covered by a Clean Bill of Lading. The Owner and/or Charterer of M/V Offshore Master is unknown while the shipper of the shipment is Shanghai Fareast Ship Business Company. Both are foreign firms doing business in the Philippines, thru its local ship agent, respondent Wallem Philippines Shipping, Inc. (Wallem).

The shipment arrived at the port of Manila and was subsequently discharged. It was disclosed that during the discharge of shipment, 2,426 poly bags (bags) were in bad order and condition, having sustained various degrees of spillages and loss.

Asia Star Freight Services, Inc. undertook the delivery of the subject shipment from the pier to the consignee’s warehouse in Quezon City, where final inspection was conducted jointly by the consignee’s representative and the cargo surveyor. Upon inspection, it was discovered that 63,065.00 kilograms of the shipment had sustained unrecovered spillages, while 58,235.00 kilograms had been exposed and contaminated, resulting in losses due to depreciation and downgrading.

In April 1996, the consignee filed a formal claim with Wallem for the value of the damaged shipment, to no avail. Thus, consignee filed a formal claim with petitioner Philippines First Insurance Co., Inc., insurer of goods, for the damage and losses sustained by the shipment and the latter signed a subrogation receipt. In the exercise of its right of subrogation, petitioner sent a demand letter to Wallem for the recovery of the amount paid by petitioner to the consignee. However, despite receipt of the letter, Wallem did not settle nor even send a response to petitioner’s claim.

Consequently, petitioner instituted an action before the RTC for damages against respondents. RTC held the shipping company and the arrastre operator solidarily liable since both the arrastre operator and the carrier are charged with and obligated to deliver the goods in good order condition to the consignee. In an appeal, CA reversed and set aside the RTC’s decision holding that there is no solidary liability between the carrier and the arrastre operator because it was clearly established by the court a quo that the damage and losses of the shipment were attributed to the mishandling by the arrastre operator in the discharge of the shipment. Hence this petition.

ISSUE

Whether or not the common carrier’s duties extend to the obligation to safely discharge the cargo from the vessel; Whether or not the carrier should be held liable for the cost of the damaged shipment.

RULING                                   

Yes.

Section 3(2) of the COGSA states that among the carriers’ responsibilities are to properly and carefully load, care for and discharge the goods carried. The bill of lading covering the subject shipment likewise stipulates that the carrier’s liability for loss or damage to the goods ceases after its discharge from the vessel. Article 619 of the Code of Commerce holds a ship captain liable for the cargo from the time it is turned over to him until its delivery at the port of unloading.

In this case, the bad order torn bags, was due to stevedores[‘] utilizing steel hooks/spikes in piling the cargo to [the] pallet board at the vessel’s cargo holds and at the pier designated area before and after discharged that cause the bags to torn while under the supervision of Wallem. It is undisputed that the damage or losses were incurred during the discharge of the shipment while under the supervision of the carrier. Consequently, the carrier is liable for the damage or losses caused to the shipment.