Case Digest: Eastern Shipping vs. Court of Appeals, 190 SCRA 512, G.R. No. 80936

 

Eastern Shipping vs. Court of Appeals, 190 SCRA 512, G.R. No. 80936, October 17, 1990

Subject: Transportation Law

FACTS

Nanyo Corporation of Japan shipped five packages of supplies and materials to Manila via Eastern Shipping's vessel. The bill of lading was consigned to "Shipper's Order" with an "Address Arrival Notice" to Consolidated Mines Inc. (CMI).

Eastern Shipping released the shipment to CMI without requiring the surrender of the original bill of lading, based on CMI's undertaking to indemnify Eastern Shipping from any claims or liabilities.

Several months later, Hongkong & Shanghai Banking Corporation (HSBC), which financed the shipment, claimed that the cargo was misdelivered and demanded compensation from ESLI.

HSBC wrote another demand letter through counsel in contemplation of a legal action against ESLI should it not make good HSBC's claim.

On the other hand, CMI wrote a letter to HSBC admitting that they received the shipment in question due to a guarantee executed by them and requested HSBC that legal action be held off for at least thirty (30) days, promising to settle its account with HSBC from the funds it was expecting from Benguet Corporation.

CMI having failed to fulfill its promise, HSBC filed a complaint before the then CFI of Rizal against the petitioner praying for actual and compensatory damages, exemplary damage and attorney's fees plus expenses of litigation and judicial costs.

After two motions for extensions, the petitioner-carrier filed its answer with a counterclaim.

On August 15, 1981, the petitioner-carrier filed a third-party complaint against CMI seeking reimbursement from the latter of whatever pecuniary obligations the petitioner may be liable to HSBC, as well as moral damages.

During the trial, CMI filed a Motion to Stay Action given the pendency of involuntary insolvency proceedings commenced against it in the meantime by its creditors which included HSBC. This motion was denied by the trial court.

Based on the evidence presented by HSBC and the petitioner, as CMI failed to present its evidence, the court decided in favor of the plaintiff and against the defendant Eastern Shipping Lines, Inc., ordering the latter to pay.

Petitioner’s motion for reconsideration was denied, thus, they appealed to the CA. The CA AFFIRMED in toto CFI’s (now RTC) decision. Hence, this petition for review.

ISSUE

Whether or not the petitioner carrier "committed gross error and negligence when it released the cargo to CMI", whose name appear as notify party in the bill of lading.

RULING

No, the petitioner carrier did not commit gross error and negligence when it released the cargo to CMI.

Article 353 of the Corporation Code states that if in case of loss or for any other reason whatsoever, the consignee cannot return upon receiving the merchandise the bin of lading subscribed by the carrier, he shall give said carrier receipt of the goods delivered this receipt producing the same effects as the return of the bill of lading.

In this case, exceptional circumstances allow a deviation from the general rule regarding the surrender of the bill of lading. The rule cannot always be absolute. The petitioner cannot be faulted for releasing the goods to CMI under the circumstances, due to its lack of knowledge as to who was the real consignee, given CMI's strong representations and letter of undertaking wherein it stated that the bill of lading would be presented later; precisely the situation covered by the last paragraph of Art. 353 of the Corporation Code. Under the exceptional circumstances and applying especially strong considerations of equity, the petitioner did not commit any fault sufficient to render it liable to HSBC. On the contrary, it was HSBC and CMI who were obviously in bad faith in dealing with the petitioner-carrier.