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GR NO. 165647, March 26, 2009: Philippines First V Wallem

The document summarizes a court case regarding damages to a shipment of sodium sulphate transported by sea. It discusses: 1) Common carriers are responsible for safely transporting and discharging cargo based on civil codes and maritime law. This extends from loading until delivery. 2) The carrier (Wallem) was found liable for damages that occurred during discharge of the shipment supervised by the carrier's stevedores and arrastre operator. 3) Philippine law and the bill of lading specify the carrier is responsible for cargo from loading until discharge, so the carrier was liable for costs to repair the damaged shipment.

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63 views2 pages

GR NO. 165647, March 26, 2009: Philippines First V Wallem

The document summarizes a court case regarding damages to a shipment of sodium sulphate transported by sea. It discusses: 1) Common carriers are responsible for safely transporting and discharging cargo based on civil codes and maritime law. This extends from loading until delivery. 2) The carrier (Wallem) was found liable for damages that occurred during discharge of the shipment supervised by the carrier's stevedores and arrastre operator. 3) Philippine law and the bill of lading specify the carrier is responsible for cargo from loading until discharge, so the carrier was liable for costs to repair the damaged shipment.

Uploaded by

Elaizza Concepcion
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1

diligence in the vigilance over the goods transported by


PHILIPPINES FIRST V WALLEM them. Subject to certain exceptions enumerated under Article
GR NO. 165647, March 26, 2009 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
FACTS:
until the same are delivered, actually or constructively, by the
Anhui Chemicals Import & Export Corporation loaded on board
M/S Offshore Master a shipment consisting of 10,000 bags of carrier to the consignee, or to the person who has a right to
sodium sulphate anhydrous 99 PCT Min. (shipment), complete receive them.
and in good order for transportation to and delivery at the port
For marine vessels, Article 619 of the Code of Commerce
of Manila for consignee, L.G. Atkimson Import-Export, Inc.
(consignee). provides that the ship captain is liable for the cargo from the
time it is turned over to him at the dock or afloat alongside the
vessel at the port of loading, until he delivers it on the shore or
The Owner and/or Charterer of M/V Offshore Master is
on the discharging wharf at the port of unloading, unless
unknown while the shipper of the shipment is Shanghai
Fareast Ship Business Company. Both are foreign firms doing agreed otherwise.
business in the Philippines, thru its local ship agent, Lastly, Section 2 of the COGSA provides that under every
respondent Wallem Philippines Shipping, Inc. (Wallem).
contract of carriage of goods by sea, the carrier in relation to
16 October 1995 - the shipment arrived at the port of Manila on the loading, handling, stowage, carriage, custody, care, and
board the vessel M/S Offshore Master from which it was discharge of such goods, shall be subject to the responsibilities
subsequently discharged. It was disclosed during the and liabilities and entitled to the rights and immunities set forth
discharge of the shipment from the carrier that 2,426 poly bags in the Act.30 Section 3 (2) thereof then states that among the
(bags) were in bad order and condition, having sustained carriers' responsibilities are to properly and carefully load,
various degrees of spillages and losses. handle, stow, carry, keep, care for, and discharge the goods
carried.
29 April 1996 - the consignee filed a formal claim with Wallem
The above doctrines are in fact expressly incorporated in the
for the value of the damaged shipment, to no avail. Since the
bill of lading between the shipper Shanghai Fareast Business
shipment was insured with petitioner Philippines First
Co., and the consignee, to wit:
Insurance Co., Inc. against all risks in the amount
of P2,470,213.50,12 the consignee filed a formal claim with 4. PERIOD OF RESPONSIBILITY. The responsibility of the
petitioner for the damage and losses sustained by the carrier shall commence from the time when the goods are
shipment. After evaluating the invoices, the turn-over survey, loaded on board the vessel and shall cease when they are
the bad order certificate and other documents, petitioner found discharged from the vessel.
the claim to be in order and compensable under the marine
insurance policy. Consequently, petitioner paid the consignee The Carrier shall not be liable of loss of or damage to the
the sum of P397,879.69 and the latter signed a subrogation goods before loading and after discharging from the vessel,
receipt. howsoever such loss or damage arises

Petitioner, in the exercise of its right of subrogation, sent a FUNCTIONS OF AN ARRASTRE OPERATOR
demand letter to Wallem for the recovery of the amount paid by
petitioner to the consignee. However, despite receipt of the On the other hand, the functions of an arrastre operator involve
letter, Wallem did not settle nor even send a response to the handling of cargo deposited on the wharf or between the
petitioner's claim. establishment of the consignee or shipper and the ship's
tackle. Being the custodian of the goods discharged from a
Consequently, petitioner instituted an action before the RTC for vessel, an arrastre operator's duty is to take good care of the
damages against respondents for the recovery of P397,879.69 goods and to turn them over to the party entitled to their
representing the actual damages suffered by petitioner plus possession.
legal interest thereon.
Handling cargo is mainly the arrastre operator's principal work
ISSUE 1: so its drivers/operators or employees should observe the
Whether or not as a common carrier, the carrier’s duties standards and measures necessary to prevent losses and
extend to the obligation to safely discharge the cargo from the damage to shipments under its custody.34
vessel- YES
In Fireman's Fund Insurance Co. v. Metro Port Service,
RULING: Inc.35 the Court explained the relationship and responsibility of
an arrastre operator to a consignee of a cargo, to quote:
COMMON CARRIERS FROM THE NATURE OF THEIR
BUSINESS AND FOR REASONS OF PUBLIC POLICY, ARE The legal relationship between the consignee and the arrastre
BOUND TO OBSERVE EXTRAORDINARY DILIGENCE. operator is akin to that of a depositor and warehouseman. The
relationship between the consignee and the common carrier is
Common carriers, from the nature of their business and for similar to that of the consignee and the arrastre operator. Since
reasons of public policy, are bound to observe extraordinary it is the duty of the ARRASTRE to take good care of the goods
2

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.

The liability of the arrastre operator was reiterated in Eastern


Shipping Lines, Inc. v. Court of Appeals with the clarification
that the arrastre operator and the carrier are not always and
necessarily solidarily liable as the facts of a case may vary the
rule.

ISSUE 2:
Whether or not the carrier should be held liable for the cost of
the damaged shipment - YES

RULING:

THE DAMAGE OR LOSSES WERE INCURRED DURING


THE DISCHARGE OF THE SHIPMENT WHILE UNDER THE
SUPERVISION OF THE CARRIER

The aforementioned 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 a case decided by a U.S. Circuit Court, Nichimen Company


v. M./V. Farland,37 it was ruled that like the duty of
seaworthiness, the duty of care of the cargo is non-
delegable, and the carrier is accordingly responsible for
the acts of the master, the crew, the stevedore, and his
other agents. It has also been held that it is ordinarily the
duty of the master of a vessel to unload the cargo and
place it in readiness for delivery to the consignee, and
there is an implied obligation that this shall be
accomplished with sound machinery, competent hands,
and in such manner that no unnecessary injury shall be
done thereto. And the fact that a consignee is required to
furnish persons to assist in unloading a shipment may not
relieve the carrier of its duty as to such unloading.

The exercise of the carrier's custody and responsibility over the


subject shipment during the unloading actually transpired in the
instant case during the unloading of the shipment.

The records are replete with evidence which show that the
damage to the bags happened before and after their discharge
and it was caused by the stevedores of the arrastre operator
who were then under the supervision of Wallem.

It is settled in maritime law jurisprudence that cargoes while


being unloaded generally remain under the custody of the
carrier. In the instant case, 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. As the cost of
the actual damage to the subject shipment has long been
settled, the trial court's finding of actual damages in the amount
of P397,879.69 has to be sustained.

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