Maerskline vs.

CA

A bill of lading acts as both receipt and contract to transport and deliver. Petitioner, being the
one who drafted such bill of lading, should be held liable for the delay in the delivery of the
goods which was a breach of the provisions of such bill.

FACTS:

Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business in the
Philippines through its general agent, Compania de Tabacos de Filipinas, while private
respondent Efren Castillo is the proprietor of Ethegal Laboratories, a firm engaged in the
manufacture of pharmaceutical products.

On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico 600,000 empty gelatin
capsules for the manufacture of his pharmaceutical products. The capsules were placed in 6
drums of 100,000 capsules each valued at US$1,668.71. Shipper Eli Lilly, Inc. advised Castillo
through a Memorandum of Shipment that the products were already shipped on board MV
“Anders Maersk Line” for shipment to the Philippines via Oakland, California. In said
Memorandum, shipper Eli Lilly, Inc. specified the date of arrival to be April 3, 1977.However, for
unknown reasons, said cargoes of capsules were miss-shipped and diverted to Richmond,
Virginia, USA and then transported back to Oakland, California, USA and with the goods finally
arriving in the Philippines on June 10, 1977 or after two (2) months from the date specified in
the memorandum. Consignee Castillo refused to take delivery of the goods on account of its
failure to arrive on time, and filed an action for rescission of contract with damages against
Maersk Line and Eli Lilly alleging gross negligence and undue delay. Denying that it committed
breach of contract, petitioner alleged in its answer that the subject shipment was transported in
accordance with the provisions of the NCC covering bill of lading and that its liability under the
law on transportation of good attaches only in case of loss, destruction or deterioration of the
goods as provided for in Article 1734 of Civil Code.

For its part, Eli Lilly in its cross claim argued that the delay was due solely to the negligence of
Maersk Line. The Trial Court dismissed the complaint against Eli Lilly and the latter withdrew
cross claim but TC still held Maersk liable and CA affirmed with modifications.

ISSUE:

1) W/N a cause of action exists against Maersk Line given that there was a dismissal of the
complaint against Eli Lilly? Yes, but not under the cross claim rather because Maersk was an
original party.

2) W/N Castillo is entitled to damages resulting from delaying the delivery of the shipment? Yes.

RULING:

The complaint was filed originally against Eli Lilly, Inc.as shipper-supplier and petitioner as
carrier. Petitioner Maersk Line being an original party defendant upon whom the delayed
shipment is imputed cannot claim that the dismissal of the complaint against Eli Lilly inured to its
benefit. It is not disputed that the aforequoted provision at the back of the bill of lading, in fine
print, is a contract of adhesion. Generally, contracts of adhesion are considered void since
almost all the provisions of these types of contracts are prepared and drafted only by one party,
usually the carrier. The only participation left of the other party in such a contract is the affixing
of his signature thereto, hence the term "Adhesion".

Nonetheless, settled is the rule that bills of lading are contracts not entirely prohibited? One who
adheres to the contract is in reality free to reject it in its entirety; if he adheres, he gives his
consent (Magellan Manufacturing Marketing Corporation v. Court of Appeals, et al., 201 SCRA
102 [1991]). In Magellan, (supra), we ruled: “It is a long standing jurisprudential rule that a bill of
lading operates both as a receipt and as contract to transport and deliver the same a therein
stipulated. As contract, it names the parties, which includes the consignee, fixes the route,
destination, and freight rates or charges, and stipulates the rights and obligations assumed by
the parties. Being a contract, it is the law between the parties who are bound by its terms and
conditions provided that these are not contrary to law, morals, good customs, public order and
public policy. A bill of lading usually becomes effective upon its delivery to and acceptance by
the shipper.

It is presumed that the stipulations of the bill were, in the absence of fraud, concealment or
improper conduct, known to the shipper, and he is generally bound by his acceptance whether
he reads the bill or not. However, the aforequoted ruling applies only if such contracts will not
create an absurd situation as in the case at bar. The questioned provision in the subject bill of
lading has the effect of practically leaving the date of arrival of the subject shipment on the sole
determination and will of the carrier. Petitioner contends as well that it cannot be held liable
because there was no special contract under which the carrier undertook to deliver the shipment
on or before a specific date and that the Bill of Lading provides

That “The Carrier does not undertake that the Goods shall arrive at port of discharge or the
place of delivery at any particular time…”

While it is true that common carriers are not obligated by law to carry and to deliver
merchandise, and persons are not vested with the right to prompt delivery, unless such common
carriers previously assume the obligation to deliver at a given date or time, delivery of shipment
or cargo should at least be made within a reasonable time. While there was no special contract
entered into by the parties indicating the date of arrival of the subject shipment, petitioner
nevertheless, was very well aware of the specific date when the goods were expected to arrive
as indicated in the bill of lading itself. In this regard, there arises no need to execute another
contract for the purpose as it would be a mere superfluity. In the case before us, we find that a
delay in the delivery of the goods spanning a period of two months and seven days falls was
beyond the realm of reasonableness. This Court held Maersk Line liable for delay in the delivery
of goods. An examination of the subject bill of lading that the subject shipment was estimated to
arrive in Manila on April 3, 1977. While there was no special contract entered into by the parties
indicating the date of arrival, petitioner nevertheless, was very well aware of the specific date
when the goods expected to arrives as indicated in the bill lading. There was delay in the
delivery of the goods, spanning a period of 2 months and 7 days falls way beyond the realm of
reasonableness. Petitioner never even bothered to explain the cause for delay of more than 2
months in the delivery of the goods.

Therefore, Maersk Line is liable for breach of contract carriage amounting to bad faith.