Eastern Shipping Lines, Inc. v. The Court of Appeals and The First Nationwide Assurance Corporation
REITERATIONFacts
The Antecedents: Thirteen coils of uncoated 7-wire stress relieved wire strand were shipped from Kobe, Japan, on board the vessel "Japri Venture" owned by Eastern Shipping Lines, Inc. (petitioner), for delivery to Stresstek Post-Tensioning Phils., Inc. in Manila, insured by First Nationwide Assurance Corporation (respondent). The vessel encountered very rough seas and stormy weather en route, causing the coils stored in the lower hold to be flooded with about one foot of water. Upon arrival, the cargo was discharged to the custody of the arrastre operator, E. Razon, Inc., under clean tally sheets. Subsequently, a survey revealed that seven coils were rusty, and a further survey at the consignee's warehouse indicated the wetting was caused by fresh water that entered the hatch due to the heavy weather. All thirteen coils were found to be extremely rusty and unsuitable for their intended purpose. The insurer indemnified the consignee for the damage and loss, and was subrogated to the latter's rights. Procedural History: The insurer filed a complaint against Eastern Shipping Lines, Inc. and E. Razon, Inc. The Regional Trial Court dismissed the complaint. On appeal, the Court of Appeals reversed the RTC decision, ordering the appellees to pay the appellant P123,629.30, with Eastern Shipping Lines, Inc. liable for 8/13 and E. Razon, Inc. for 5/13 thereof. The Petition: Eastern Shipping Lines, Inc. filed a petition for review by certiorari, assailing the Court of Appeals' decision for refusing to consider its counter-assignment of errors, arbitrarily concluding petitioner as liable despite clean tally sheets, failing to relieve petitioner of liability, and awarding interest from the date of the complaint.
Issue(s)
Whether the Court of Appeals erred in not considering petitioner's counter-assignment of errors. Whether petitioner should be held liable for the damage to the cargo despite the cargo being discharged and delivered to the arrastre operator under clean tally sheets. Whether the Court of Appeals erred in awarding interest from the date of the complaint.
Ruling
The petition is DISMISSED. The Court of Appeals' decision is affirmed.
Ratio Decidendi
On the issue of counter-assignment of errors: The Court held that while the appellate court did not err in not considering the counter-assignments of error as the petitioner did not appeal the trial court's decision, it should have considered them if they were intended to sustain the judgment appealed from on other grounds. However, this did not grant affirmative relief beyond what was obtained from the lower court. The Court found the petitioner's contention on this aspect to be well-taken but ultimately did not alter the outcome. On the liability for cargo damage: The Court affirmed the appellate court's findings that the "very rough seas and stormy weather" encountered by the vessel were not caso fortuito but normal occurrences for an ocean-going vessel, especially in September. The fact that rainwater entered the cargo holds indicated a lack of care in securing the hatches. Under Article 1733 of the Civil Code, common carriers are bound to observe extraordinary vigilance. Article 1735 creates a presumption of fault or negligence if goods are lost, destroyed, or deteriorated, unless the carrier proves extraordinary diligence. Since the carrier failed to establish caso fortuito or prove extraordinary diligence, the presumption of negligence applies, and the carrier cannot escape liability. The clean tally sheets were overturned by evidence of damage sustained aboard the vessel. On the award of interest: The Court found the last assigned error untenable, stating that interest due on the amount of the judgment should commence from the date of judicial demand, citing Articles 2212 and 2213 of the Civil Code.
Main Doctrine
A common carrier is presumed negligent if cargo is damaged, and can only escape liability by proving it exercised extraordinary diligence, even if cargo was delivered to the arrastre operator under clean tally sheets, especially when the damage occurred while en route due to weather conditions that should have been anticipated and guarded against.