Eastern Shipping Lines v. N.V. Netherlands Insurance
REITERATIONFacts
The Antecedents: Sunglobe International Corporation shipped five cases of pre-sensitized printing plates from Yokohama, Japan, on board petitioner Eastern Shipping Lines, Inc.'s vessel M/S Eastern Venus, bound for Manila. The shipment was insured by respondent N.V. Netherlands Insurance Company. Upon arrival in Manila, three cases (Nos. 1, 2, and 4) were accepted by arrastre operator Metro Port Services, Inc. (Metro Port) in good order. However, Cases Nos. 3 and 5 were found to be in bad order, with corresponding Bad Order Cargo Receipts issued. A surveyor engaged by petitioner, R & R Industrial Surveyors, Co., Inc., inspected Cases Nos. 3 and 5 prior to their formal turnover to Metro Port, noting that their wooden cases were broken but the packages inside were "ok." Subsequently, the consignee, Liwayway Publishing, Inc., claimed damages for Case No. 4, alleging total loss due to damage discovered after withdrawal from the pier and delivery to its warehouse. The consignee's surveyor, Audemus Adjustment Corporation, reported that two wooden cases arrived in bad order, and from Case No. 4, fourteen packages were torn and their contents unusable. Procedural History: Petitioner denied the consignee's claim, stating its records showed Case No. 4 was discharged in good condition. Respondent, having settled the claim with the consignee and obtained a Letter of Subrogation, filed a complaint for sum of money against petitioner. The Regional Trial Court (RTC) dismissed respondent's complaint, finding no proof that Case No. 4 sustained damage while under petitioner's custody and control. On appeal, the Court of Appeals (CA) reversed the RTC's decision, holding that the damage occurred while the cases were under the carrier's responsibility, citing the bad order reports from R & R Surveyors and Metro Port. The CA ordered petitioner to pay respondent the settled amount plus attorney's fees. Petitioner's motion for reconsideration was denied, leading to the present petition. The Petition: Petitioner argues that the trial court's decision had sound factual and legal bases and that the Court of Appeals incorrectly applied the statutory presumption of negligence. Petitioner highlights that the consignee's demand letter and survey report referred to Cases Nos. 3 and 5, not Case No. 4, and that the survey by Audemus Adjustment Corporation was conducted at the consignee's warehouse after delivery.
Issue(s)
Whether Case No. 4 sustained damage while under the custody and control of petitioner. Whether petitioner is liable for the payment of the amount claimed by respondent.
Ruling
The petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The Decision of the Regional Trial Court is REINSTATED.
Ratio Decidendi
On the issue of whether Case No. 4 sustained damage while under the custody and control of petitioner: The Supreme Court reinstated the trial court's decision, finding that Case No. 4 was not damaged while under the custody and control of petitioner. The Court emphasized that petitioner issued a Good Order Cargo Receipt No. 152999 for Case No. 4, which was signed by both petitioner's representative and Metro Port's representative. The signature of Metro Port's representative under the statement "Above described goods checked and received as to quantity, quality and description upon discharge" indicated that Case No. 4 was received in good order. The Court reasoned that Metro Port's representative would have refused to sign the receipt if Case No. 4 or its contents were damaged. Furthermore, the Court noted that the survey reports cited by the Court of Appeals (Exhibits "9" and "10") pertained to Cases Nos. 3 and 5, not Case No. 4. The absence of any bad order notation on the receipt for Case No. 4, coupled with the fact that R & R Surveyors did not issue any bad order report for it, supported the conclusion that it was in good condition upon discharge. The Court also gave weight to the ruling in Summa Insurance Corporation v. CA, where good order cargo receipts signed by both the ship owner's checker and the arrastre operator's representative were given more credence than a shortlanded certificate issued solely by the arrastre operator. Similarly, in Hartford Fire Insurance Co. v. E. Razon, Inc., the Court considered the information in the Request for Bad Order Survey, which did not reflect damage, as crucial. In the present case, the July 26, 1985 Request for Bad Order Survey issued by Metro Port did not cover or refer to Case No. 4, further bolstering the claim that it was not damaged while in the custody of the arrastre operator. The Court concluded that Case No. 4 was not in a damaged state when petitioner discharged it to Metro Port, and therefore, petitioner could not be held liable for any damages discovered thereafter. As the court found that Case No. 4 was not damaged while under the custody and control of the petitioner, the petitioner is not liable for the payment of the amount claimed by the respondent.
Main Doctrine
A carrier is presumed to have exercised the foresight required by law in handling cargo. However, this presumption can be overcome by evidence showing that the damage occurred while the cargo was under the carrier's responsibility, as indicated by bad order receipts issued at the time of discharge and survey reports conducted prior to or immediately after leaving ship's tackle.