Philippine Charter Insurance Corp. v. Unknown Owner
REITERATIONFacts
The Antecedents: On November 5, 1995, a shipment of four units of parts and accessories was loaded on board the vessel M/V "National Honor" in Pusan, Korea, for delivery to Manila, Philippines. The shipment was insured with Philippine Charter Insurance Corporation (PCIC). The vessel arrived at the Manila International Container Terminal (MICT) on November 14, 1995. While discharging Crate No. 1, its mid-portion flooring snapped, causing its contents to crash and sustain extensive damage. Procedural History: The ultimate consignee, Blue Mono International Company, Incorporated (BMICI), found the shipment unusable. PCIC paid the claim and was subrogated. PCIC, as subrogee, filed a Complaint for Damages against the "Unknown owner of the vessel M/V National Honor," National Shipping Corporation of the Philippines (NSCP), and International Container Terminal Services, Incorporated (ICTSI). The Regional Trial Court (RTC) dismissed the complaint, finding the loss due to the internal defect and weakness of the materials used in the fabrication of the crate. The Court of Appeals (CA) affirmed the RTC decision, holding that the loss was due to an excepted cause under Article 1734 of the Civil Code (defects in packing) and the shipper's failure to indicate signs for extra care. The Petition: PCIC filed a petition for review on certiorari, alleging that the CA erred in not holding the common carrier liable, in not applying the statutory presumption of fault and negligence, and in miscomprehending facts by attributing the damage to defective packing instead of the respondents' fault and negligence.
Issue(s)
Whether the Court of Appeals committed a serious error of law in not holding the respondent common carrier liable for the damage sustained by the shipment in the possession of the arrastre operator, and in not applying the statutory presumption of fault and negligence. Whether the Court of Appeals grossly miscomprehended the facts in finding that the damage sustained by the shipment was due to its defective packing and not to the fault and negligence of the respondents. Whether the arrastre operator (ICTSI) can be held liable for the loss of the machineries.
Ruling
The petition is DENIED for lack of merit. The Court affirmed the decision of the Court of Appeals, which upheld the Regional Trial Court's dismissal of the complaint. The loss was attributed to defective packing, an excepted cause under Article 1734 of the Civil Code, and not to the negligence of the common carrier or the arrastre operator.
Ratio Decidendi
On the issue of common carrier liability, the statutory presumption of fault and negligence, and the finding of defective packing: The Court reiterated that common carriers must observe extraordinary diligence. A presumption arises against the carrier when goods are damaged, but this doesn't apply to causes in Article 1734 of the Civil Code, including defects in packing. The carrier must prove the loss was due to an excepted cause. Here, the lower courts found the loss was due to the inherent defect and weakness of the crate's materials, specifically a knot hole, an excepted cause under Article 1734(4). The Court found no justification to overturn the factual findings of the RTC and CA, which were supported by substantial evidence. The trial court meticulously detailed the defect in the middle wooden batten of Crate No. 1, describing it as having a knot hole (bukong-bukong) that weakened its strength. This internal defect, not visible from the outside, caused the batten to give way under the weight of the machinery. The appellate court affirmed this finding, emphasizing that the shipper failed to use materials of stronger quality and to indicate signs for extra care. The Court noted that the Bill of Lading's statement of apparent good condition only creates a presumption as to the external condition, not to what is not open to inspection. On the finding of miscomprehension of facts regarding defective packing: The Court upheld the factual findings of the lower courts, supported by substantial evidence, that the damage was due to the defective packing. The trial court meticulously detailed the defect in the middle wooden batten of Crate No. 1, describing it as having a knot hole (bukong-bukong) that weakened its strength. This internal defect, not visible from the outside, caused the batten to give way under the weight of the machinery. The appellate court affirmed this finding, emphasizing that the shipper failed to use materials of stronger quality and to indicate signs for extra care. The Court noted that the Bill of Lading's statement of apparent good condition only creates a presumption as to the external condition, not to what is not open to inspection. On the role of the arrastre operator (ICTSI): The Court agreed with the RTC's finding that ICTSI could not be held liable for the loss of the machineries in Crate No. 1. The loss was solely due to the inherent defect and weakness of the crate's materials, which ICTSI had no role in choosing or fabricating. The testimony of ICTSI's safety inspector indicated that the wooden battens were of good material but not strong enough for the weight, and that stevedores rely on arrow signs for proper sling placement. Since no such signs were present in the mid-portion, ICTSI was not obliged to place additional slings there. The Court found no evidence that ICTSI had any knowledge of the internal defect of the crate.
Main Doctrine
A common carrier is not liable for loss or damage to goods if it falls under the exceptions enumerated in Article 1734 of the Civil Code, such as defects in the packing or in the containers, provided the carrier proves such exception by a preponderance of evidence. The presumption of negligence against the carrier is overcome if the loss is proven to be due to such excepted causes.