2014 Case Digest: Eastern Shipping Lines v. BPI/MS Insurance Corp

EASTERN SHIPPING LINES INC., Petitioner,

vs.

BPI/MS INSURANCE CORP. and MITSUI SUM TOMO INSURANCE CO. LTD., Respondents.

G.R. No. 193986               January 15, 2014

PONENTE: Villarama Jr., J.

TOPIC: Negligence

FACTS:

                Sumitomo Corporation shipped through vessels of Eastern Shipping Lines various steel sheets in coil in favor of the consignee Calamba Steel. In each of the three shipments, several coils were observed to be in bad condition as evidenced by the Turn Over Survey of Bad Order Cargo.  The cargoes were then turned over to Asian Terminals, Inc. (ATI) for stevedoring, storage and safekeeping pending Calamba Steel’s withdrawal of the goods. When ATI delivered the cargo to Calamba Steel, the latter rejected its damaged portion for being unfit for its intended purpose.

                Calamba Steel filed an insurance claim with Mitsui through the latter’s settling agent, respondent BPI/MS Insurance Corporation (BPI/MS), and the former was paid the sums of US$7,677.12, US$14,782.05 and US$7,751.15 for the damage suffered by all three shipments. Correlatively, on August 31, 2004, as insurer and subrogee of Calamba Steel, Mitsui and BPI/MS filed a Complaint for Damages against petitioner and ATI.

ISSUE:

                Whether or not Eastern Shipping was solidarily liable with ATI on account of the damage incurred by the goods.

HELD:

                YES. The Court held that both Eastern Shipping  and ATI were negligent in handling and transporting the goods.

                Verily, it is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier. As hereinbefore found by the RTC and affirmed by the CA based on the evidence presented, the goods were damaged even before they were turned over to ATI. Such damage was even compounded by the negligent acts of petitioner and ATI which both mishandled the goods during the discharging operations. Thus, it bears stressing unto petitioner that common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them.

                Subject to certain exceptions enumerated under Article 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 until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them.

                Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such high level of diligence. In this case, petitioner failed to hurdle such burden.