Heacock v.

Macondray
G.R. No. L-16598
October 3, 1921

FACTS:
On or about the 5th day of June, 1919, the plaintiff (Heacock) caused to be delivered on board of
steamship Bolton Castle ,then in the harbor of New York, four cases of merchandise one of which
contained twelve (12) 8-day Edmond clocks properly boxed and marked for transportation to Manila, and
paid freight on said clocks from New York to Manila in advance. The said steamship arrived in the port of
Manila on or about the 10th day of September, 1919, consigned to the defendant (Macondray) as agent
and representative of said vessel in said port. Neither the master of said vessel nor the defendant herein,
as its agent, delivered to the plaintiff the afore said twelve 8-day Edmond clocks, although demand was
made upon them for their delivery.

The invoice value of the said twelve 8-day Edmond clocks in the city of New York was P22 and the
market value of the same in the City of Manila at the time when they should have been delivered to the
plaintiff was [Link] bill of lading issued and delivered to the plaintiff by the master of the said
steamship Bolton Castle contained, among others, the following clauses:
1. It is mutually agreed that the value of the goods receipt for above does not exceed
$500 per freight ton, or, in proportion for any part of a ton, unless the value be
expressly stated herein and advalorem freight paid thereon.

9. Also, that in the event of claims for short delivery of, or damage to, cargo being made,
the carrier shall not be liable for more than the net invoice price plus freight and
insurance less all charges saved, and any loss or damage for which the carrier may be
liable shall be adjusted pro rata on the said basis

No greater value than $500, U. S. currency, per freight ton was declared by the plaintiff on the
aforesaid clocks, and no advalorem freight was paid thereon. On or about October 9, 1919, the defendant
tendered to the plaintiff P76.36, the proportionate freight ton value of the aforesaid twelve 8-day Edmond
clocks, in payment of plaintiff's claim, which tender plaintiff rejected.

The lower court, in accordance with clause 9 of the bill of lading above quoted, rendered judgment
in favor of the plaintiff against the defendant for the sum of P226.02, this being the invoice value of the
clocks in question plus the freight and insurance thereon, with legal interest thereon from November 20,
1919, the date of the complaint, together with costs. From that judgment both parties appealed to this
court.
The plaintiff-appellant (Heacock) insists that it is entitled to recover from the defendant the
market value of the clocks in question, to wit: the sum of P420. The defendant-appellant (Macondray), on
the other hand, contends that, in accordance with clause 1 of the bill of lading, the plaintiff is entitled to
recover only the sum of P76.36, the proportion at freight ton value of the said clocks. The claim of the
plaintiff is based upon the argument that the two clauses in the bill of lading above quoted, limiting the
liability of the carrier, are contrary to public order and, therefore, null and void. The defendant, on the
other hand, contends that both of said clauses are valid, and the clause 1 should have been applied by the
lower court instead of clause 9.
ISSUES:
1. May a common carrier, by stipulations inserted in the bill of lading, limit its liability for the loss of or
damage to the cargo to an agreed valuation of the latter?
2. Whether clause 1 or clause 9 of the bill of lading is to be adopted as the measure of defendant's liability.

HELD:
1. Yes, it may do so. Three kinds of stipulations have often been made in a bill of lading. The
First is one exempting the carrier from any and all liability for loss or damage occasioned by its own
negligence. The second is one providing for an unqualified limitation of such liability to an agreed
valuation. And the third is one limiting the liability of the carrier to an agreed valuation unless the shipper
declares a higher value and pays a higher rate of freight.

According to an almost uniform weight of authority, the first and second kinds of stipulations are invalid
as being contrary to public policy, but the third is valid and enforceable. The authorities relied upon by
the plaintiff-appellant (Heacock) support the proposition that the first and second stipulations in a bill of
lading are invalid which either exempt the carrier from liability for loss or damage occasioned by its
negligence, or provide for an unqualified limitation of such liability to an agreed valuation.

A reading of clauses 1 and 9 of the bill of lading, however, clearly shows that the present case falls within
the third stipulation, to wit: That a clause in a bill of lading limiting the liability of the carrier to a certain
amount unless the shipper declares a higher value and pays a higher rate of freight, is valid and
enforceable. A limitation of liability based upon an agreed value to obtain a lower rate does not conflict
with any sound principle of public policy; and it is not conformable to plain principles of justice that a
shipper may understate value in order to reduce the rate and then recover a larger value in case of loss.

It seems clear from the foregoing authorities that the clauses (1 and 9) of the bill of lading here in question
are not contrary to public order. Article 1 2 5 of the Civil Code provides that "the contracting parties may
establish any agreements, terms and conditions they may deem advisable, provided they are not contrary
to law, morals or public order." Said clauses of the bill of lading are, therefore, valid and binding upon the
parties thereto.

2. It will be noted, however, that whereas clause 1 contains only an implied undertaking to settle in case
of loss on the basis of not exceeding $500 per freight ton, clause 9 contains an express undertaking to
settle on the basis of the net invoice price plus freight and insurance less all charges saved. "Any loss or
damage for which the carrier may be liable shall be adjusted pro rata on the said basis," clause 9 expressly
provides. It seems to the Court that there is an irreconcilable conflict between the two clauses with regard
to the measure of defendant's liability. It is difficult to reconcile them without doing violence to the
language used and reading exceptions and conditions into the undertaking contained in clause 9 that are
not there. This being the case, the bill of lading in question should be interpreted against the defendant
carrier, which drew said contract. " A written contract should, in case of doubt, be interpreted against the
party who has drawn the contract. It is a well-known principle of construction that ambiguity or
uncertainty in an agreement must be construed most strongly against the party causing it. These rules as
applicable to contracts contained in bills of lading. " In construing a bill of lading given by the carrier for
the safe transportation and delivery of goods shipped by a consignor, the contract will be construed most
strongly against the carrier, and favorably to the consignor, in case of doubt in any matter of construction."
It follows from all of the foregoing that the judgment appealed from should be affirmed
 Everett Steamship Corporation vs. CA
G.R. No.122494, October 8, 1998
FACTS:
Private respondent imported 3 crates of bus spare parts marked as MARCO C/No. 12, MARCO
C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd. (Maruman Trading), a
foreign corporation based in Inazawa, Aichi, Japan. The crates were shipped from Nagoya, Japan to Manila
on board "ADELFAEVERETTE," a vessel owned by petitioner's principal, Everett Orient Lines. Upon arrival
at the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing. Private
respondent claim upon petitioner for the value of the lost cargo amounting to One Million Five Hundred
Fifty-Two Thousand Five Hundred (Y1, 552,500.00) Yen, the amount shown in an Invoice No. MTM-941,
dated November 14, 1991. However, petitioner offered to pay only One Hundred Thousand (Y100,000.00)
Yen, the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability
of petitioner. Private respondent rejected the offer and thereafter instituted a suit for collection. The trial
court rendered a decision in favor of the private respondents and this was affirmed by the Court of
Appeals. Thus, this instant petition.

ISSUES:
1. Is the petitioner liable for the actual value and not the maximum value recoverable under the bill of
lading?
2. Is private respondent, as consignee, who is not a signatory to the bill of lading bound by the
stipulations thereof?

ARGUMENTS:
1. The Petitioner is only liable for the maximum value recoverable under the bill of lading.
Clause 18 of the covering bill of lading:
18. All claims for which the carrier may be liable shall be adjusted and settled on the basis
of the shipper's net invoice cost plus freight and insurance premiums, if paid, and in no event shall
the carrier be liable for any loss of possible profits or any consequential loss.

The carrier shall not be liable for any loss of or any damage to or in any connection with,
goods in an amount exceeding One Hundred thousand Yen in Japanese Currency
(Y100,000.00) or its equivalent in any other currency per package or customary freight unit
(whichever is least) unless the value of the goods higher than this amount is declared in writing
by the shipper before receipt of the goods by the carrier and inserted in the Bill of Lading and
extra freight is paid as required. (Emphasis supplied)

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing
in the
bill of lading, unless the shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been freely
and
fairly agreed upon.
Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common
carrier's
liability for loss must be "reasonable and just under the circumstances, and has been freely and fairly
agreed
upon."
The above stipulations are reasonable and just. In the bill of lading, the carrier made it clear that
its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper,
Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than
the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had
itself to blame for not complying with the stipulations

2. Private Respondents are still bound by the stipulations of the bill of lading

In Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra), it was held that even if the
consignee was not a signatory to the contract of carriage between the shipper and the carrier, the
consignee can still be bound by the contract.

RULING:
The decision of the Court of Appeals is hereby REVERSED and SET ASIDE. In fine, the liability of petitioner
for the loss of the cargo is limited to One Hundred Thousand (Y100,000.00) Yen, pursuant to Clause 18 of
the bill of lading.
 Shewaram vs, Philippine Airlines
(17 SCRA 606, (1966)

Facts:
A PAL ticket, on the reverse side, stated in fine print that if the value of baggage is not stated, and
the baggage is lost, the maximum liability of PAL is P100.00 if value in excess of P100.00 is stated, PAL will
charge extra because PAL is being held liable for an amount exceeding P100.00. Shewaram, a Hindu from
Davao, boarded a PAL plane for Manila. Among his baggage was a camera with P800.00 and it was lost.
PAL offered to pay P100.00. Shewaram wanted full payment of P800.00.

Issue: Whether the limited liability rule shall apply in the case at bar?

Held:
The limited liability rule shall not apply. Since this is a stipulation on qualified liability, which
operates to reduce the liability of the carrier, the carrier and the shipper must agree thereupon.
Otherwise, the carrier will be liable for full. PAL is fully liable (for full) because Shewaran did not agree to
the stipulation on the ticket, as manifested by the fact that Shewaram did not sign the ticket. Ticket should
have been signed.
 Ong Yui vs. Court of Appeals
(91 SCRA 223)

Facts: On august 26, 1967, Ong Yiu was a fare paying passenger of respondent PAL from Mactan, Cebu to
Butuan City wherein he was scheduled to attend a trial. As a passenger, he checked in one piece of luggae,
blue malklm veta for which he was issued a claim ticket. Upon arrival at Butuan City, petitioner claimed
his luggage but it could not be found. PAL Butuan sent a message to PAL Cebu which in turn sent a message
to PAL Manila that same afternoon. PAL Manila advised PAL Cebu that the luggage has been overcarried
to Manila and that it would be forwarded to PAL Cebu that same day. PAL Cebu then advised PAL Butuan
that the luggage will be forwarded the following day, on scheduled morning flight. This message was not
received by PAL Butuan as all the personnel had already gone for the day. Meanwhile, Ong Yiu was worried
about the missing luggage because it contained vital documents needed for the trial the next day so he
wired PAL Cebu demanding delivery of his luggage before noon that next day or he would hold PAL liable
for damages based on gross negligence. Early morning, petitioner went to the Butuan Airport to inquire
about the luggage but did not wait for the arrival of the morning flight at 10:00am. which carried his
luggage. A certain Dagorro, a driver of a colorum car, who also used to drive the petitioner volunteered
to take the luggage to the petitioner. He revelaed that the documents were lost. Ong Yiu demanded from
PAL Cebu actual and compensatory damages as an incident of breach of contract of carriage.

Issue:
1. Whether or not PAL is guilty of only simple negligence and not gross negligence?
2. Whether the doctrine of limited liability doctrine applies in the instant case?

Held: PAL had not acted in bad faith. It exercised due diligence in looking for petitioner’s luggage which
had been miscarried. Had petitioner waited or caused someone to wait at the airport for the arrival of the
morning flight which carried his luggage, he would have been able to retrieve his luggage sooner. In the
absence of a wrongful act or omission or fraud, the petitioner is not entitled to moral damages. Neither
is he entitled to exemplary damages absent any proof that the defendant acted in a wanton, fraudulent,
reckless manner.

The limited liability applies in this case. On the presumed negligence of PAL, its liability for the loss
however, is limited on the stipulation written on the back of the plane

Ticket which is P100 per baggage. The petitioner not having declared a greater value and not having called
the attention of PAL on its true value and paid the tariff therefore. The stipulation is printed in reasonably
and fairly big letters and is easily readable. Moreso, petitioner had been a frequent passenger of PAL from
Cebu to Butuan City and back and he being a lawyer and a businessman, must be fully aware of these
conditions.
 KLM Royal Dutch Airlines vs Court of Appeals
(65 SCRA 237)

Facts: Spouses Mendoza approached Mr. Reyes, the branch manager of Philippine Travel Bureau, for
consultation about a world tour which they were intending to make with their daughter and niece. Three
segments of the trip, the longest, was via KLM. Respondents decided that one of the routes they will take
was a Barcelona-Lourdes route with knowledge that only one airline, Aer Lingus, served it. Reyes made
the necessary reservations. To this, KLM secured seat reservations for the Mendoza’s and their
companions from the carriers which would ferry them throughout their trip, which the exception of Aer
Lingus. When the Mendoza’s left the Philippines, they were issued KLM tickets for the entire trip.
However, their coupon for Aer Lingus was marked “on request”.

When they were in Germany, they went to the KLM office and obtained a confirmation from Aer Lingus.
At the airport in Barcelona, the Mendozas and their companions checked in for their flight to Lourdes.
However, although their daughter and niece were allowed to take the flight, the spouses Mendozas were
off loaded on orders of the Aer Lingus manager, who brusquely shoved them aside and shouted at them.
So the spouses Mendozas took a train ride to Lourdes instead.

Thus, they filed a complaint for damages against KLM for breach of contract of carriage. The trial court
decided in favor of the Mendozas. On appeal, the CA affirmed the decision. Hence, KLM brings this petition
to the Supreme Court. KLM cites Art 30 of the Warsaw Convention, which states: the passenger or his
representatives can take action only against the carrier who performed the transportation during which
the accident or delay occurred. Also, KLM avers that the front cover of each ticket reads: that liability of
the carrier for damages shall be limited to occurrences on its own line.

Issue: Whether or not KLM is liable for breach of contract of carriage?

Held: The applicability of Art. 30 of the Warsaw Convention cannot be sustained. The article presupposes
the occurrence of delay or accident. What is manifest here is that the Aer Lingus refused to transport the
spouses Mendozas to their planned and contracted destination.

As the airline which issued the tickets, KLM was chargeable with the duty and responsibility of specifically
informing the spouses of the conditions prescribed in their tickets or to ascertain that the spouses read
them before they accepted their passage tickets.

The Supreme Court held that KLM cannot be merely assumed as a ticket-issuing agent for other airlines
and limit its liability to untoward occurrences on its own line.

The court found, that the passage tickets provide that the carriage to be performed therein by several
successive carriers is to be regarded as a “single operation”.
 G.R. No. L-23222 June 10, 1971
AMERICAN INSURANCE CO., INC.,
plaintiff-appellee,vs.
MACONDRAY & CO., INC.,
FACTS:

On or about September 12, 1962, certain cargoes were imported by Atlas Consolidated Mining and Development
Corporation and were loaded by the shipper, Ansor Corporation of New York on board the S/S"Toledo" at the port of New
York for delivery to Atlas at Cebu City via Manila. American Insurance Company insured the cargoes against
damage up to Cebu City for $5,700.00 in favor of the consignee The S/S "Toledo' discharged them at the port of Manila
on October 17, 1962. For their transshipment to Cebu City they were loaded on board the M/S "Bohol".

Upon the vessel's arrival in Cebu City on November 12, 1962, the cargoes were discharged and delivered to the consignee
minus one skid of truck parts which was not loaded on the M/S "Bohol".

The missing cargo was valued at $482.96 CIF Cebu, equivalent at that time to P1,889.58

In view of its loss the consignee filed the corresponding claim with herein appellant who disclaimed liability therefor alleging
that the cargoes had been discharged in full at the port of Manila. Appellant, at all times material to this case, was the agent in
the Philippines of the S/S "Toledo", a common carrier in foreign trade between the United States and Philippine Ports.

A claim for the insured value of the cargo amounting to P2,087.20 plus the sum of P87.30 as expenses of survey was filed with
appellee under the covering insurance policy and the same was duly paid, there by acquiring by subrogation the rights of the
consignee

Thereafter the corresponding action was filed in the lower court to recover from appellant what appellee had paid to the
consignee.

CFI
: The lower court rendered the appealed judgment sentencing appellant to pay appellee the amount ofP1,889.,58, with
interest

ISSUES:
1. Whether or not the lower court erred in not holding that American Insurance has no cause of action against Macondray

HELD:
1. No. Under the Carriage Contract covering the cargoes in question, it was the duty of the carrying vessel to discharge
them at the port of Cebu City, via the port of Manila. It is clear therefore, that the discharge effected at the latter port
did not terminate the carrying vessel's responsibility which included the transshipment of the cargoes from the port
of Manila to the port of Cebu City. While it complied with the obligation with respect to most of the cargoes covered,
by the bill of lading Exhibit "A", if failed to do so in relation to the one skid of truck parts which, according to the
stipulation of facts, was not loaded on board the M/S "Bohol". In truth and in fact, the same has never been found.
 Magellan Mfg. Marketing Corp. V. CA Supra (1991)

FACTS:

 Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp. (MMMC) 136,000 anahaw
fans for $23,220
 MMMC contracted with F.E. Zuellig, a shipping agent of Orient Overseas Container Lines, Inc.,
(OOCL) specifying that he needed an on-board bill of lading and that transhipment is not allowed
under the letter of credit
 MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was
presented to Allied Bank. The bank then credited the amount of US$23,220 covered by the letter of
credit to MMMC
 When MMMC's President James Cu, went back to the bank later, he was informed that the payment
was refused by the buying for lack of bill of lading and there was a transhipment of goods
 The anahaw fans were shipped back to Manila through OOCL who are demanding from
MMMC P246,043.43 (freight charges from Japan to Manila, demurrage incurred in Japan and Manila
from October 22, 1980 up to May 20, 1981 and charges for stripping the container van of the
Anahaw fans on May 20, 1981)
 MMMC abandoned the whole cargo and asked OOCL for damages
 OOCL: bill of lading clearly shows that there will be a transhipment and that petitioner was well
aware that MV (Pacific) Despatcher was only up to Hongkong where the subject cargo will be
transferred to another vessel for Japan
 RTC: favored OOCL:
 consented because the bill of lading where it is clearly indicated that there will be transhipment
 MMMC was the one who ordered the reshipment of the cargo from Japan to Manila
 CA: Affirmed with modification of excluding demurrage in Manila
ISSUE: W/N the bill of lading which reflected the transhipment against the letter of credit is consented
by MMMC

HELD: YES. CA Affirmed with modification

 Transhipment
 act of taking cargo out of one ship and loading it in another
 the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel
before the place of destination named in the contract has been reached
 transfer for further transportation from one ship or conveyance to another
 the fact of transhipment is not dependent upon the ownership of the transporting ships or
conveyances or in the change of carriers, as the petitioner seems to suggest, but rather on the fact
of actual physical transfer of cargo from one vessel to another
 appears on the face of the bill of lading the entry "Hong Kong" in the blank space labeled
"Transhipment," which can only mean that transhipment actually took place
 bill of lading
 operates both as a receipt and as a contract
 receipt for the goods shipped
 contract to transport and deliver the same as therein stipulated
 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
 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
 GR: acceptance of the bill without dissent raises the presumption that all the terms therein were
brought to the knowledge of the shipper and agreed to by him and, in the absence of fraud or
mistake, he is estopped from thereafter denying that he assented to such term
 There clearly appears on the face of the bill of lading under column "PORT OF TRANSHIPMENT" an
entry "HONGKONG'
 On board bill of lading vs. received for shipment bill of lading:
 on board bill of lading
 stated that the goods have been received on board the vessel which is to carry the goods
 received for shipment bill of lading
 stated that the goods have been received for shipment with or without specifying the vessel by
which the goods are to be shipped
 issued whenever conditions are not normal and there is insufficiency of shipping space
 certification of F.E. Zuellig, Inc. cannot qualify the bill of lading, as originally issued, into an on board
bill of lading as required by the terms of the letter of credit issued in favor of petitioner - it is
a received for shipment bill of lading
 issued only on July 19, 1980, way beyond the expiry date of June 30, 1980 specified in the letter of
credit for the presentation of an on board bill of lading
 Demurrage
 compensation provided for in the contract of affreightment for the detention of the vessel beyond
the time agreed on for loading and unloading
 claim for damages for failure to accept delivery
 before it could be charged for demurrage charges it should have been notified of the arrival of the
goods first
 Since abandon option was communicated, the same is binding upon the parties on legal and
equitable considerations of estoppel

G.R. No. 165647, March 26, 2009

 Philippines First Insurance Co., Inc.
vs Wallem Phils. Shipping, Inc.

Facts:
October 1995, Anhui Chemicals Import and Export Corp. loaded on board M/S Offshore Master a shipment
consisting of sodium sulphate anhydrous, complete and in good order for transportation to and delivery
at the port of Manila for consignee, covered by a clean bill of lading.

On October 16, 1995, the shipment arrived in port of manila and was discharged which caused various
degrees of spillage and losses as evidence by the turn over survey of the arrastre operator. Asia Star
Freight delivered the shipments from pier to the consignees in Quezon City, during the unloading, it was
found by the consignee that the shipment was damaged and in bad condition.

April 29, 1996, the consignee filed a claim with Wallem for the value of the damaged shipment, to no avail.
Since the shipment was insured with Phil. First Insurance against all risks in the amount of P2,470,213.50.
The consignee filed a claim against the First Insurance. First insurance after examining the turn-over
survey, the bad order certificate and other documents paid the consignee but later on sent a demand
letter to Wallem for the recovery of the amount paid to the consignee (in exercise of its right of
subrogation). Wallem did not respond to the claim.

First Insurance then instituted an action before RTC for damages against Wallem. RTC held the shipping
company and the arrastre operator solidarily liable since both are charged with the obligation to deliver
the goods in good order condition.

The CA reversed and set aside the RTC's decision. CA says that there is no solidary liability between the
carrier and the arrastre because it was clearly established that the damage and losses of the shipment
were attributed to the mishandling by the arrastre operator in the discharge of the shipment.

Issues:
1. Whether or not the Court of Appeals erred in not holding that as a common carrier, the carriers duties
extend to the obligation to safely discharge the cargo from the vessel;
2. Whether or not the carrier should be held liable for the cost of the damaged shipment;
3. Whether or not Wallems failure to answer the extra judicial demand by petitioner for the cost of the
lost/damaged shipment is an implied admission of the formers liability for said goods;
4. Whether or not the courts below erred in giving credence to the testimony of Mr. Talens.

Ruling:
(1) Yes, the vessel is a common carrier, and thus the determination of the existence or absence of liability
will be gauged on the degree of diligence required of a common carrier. (2) The first and second issue will
be resolved concurrently.

(3) The damage of the shipment was documented by the turn0over survey and request for bad order
survey, with these documents, petitioner insist that the shipment incurred damages while still in the care
and responsibility of Wallem before it was turned over to the arrastre operator. However, RTC found the
testimony of Mr. Talens (cargo surveyor) that the loss was caused by the mishandling of the arrastre
operator. This mishandling was affirmed by the CA which was the basis for declaring the arrastre operator
solely liable for the damage.
It is established that damage or losses were incurred by the shipment during the unloading. As common
carrier, they 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.

For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the
cargo from the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading,
until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed
otherwise.

COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the
loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the
responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2)
thereof then states that among the carriers responsibilities are to properly and carefully load, handle,
stow, carry, keep, care for, and discharge the goods carried.

On the other hand, the functions of an arrastre operator involve the handling of cargo deposited on the
wharf or between the establishment of the consignee or shipper and the ship's tackle. Being the custodian
of the goods discharged from a vessel, an arrastre operator's duty is to take good care of the goods and
to turn them over to the party entitled to their possession.

Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or employees
should observe the standards and measures necessary to prevent losses and damage to shipments under
its custody. Thus, in this case the appellate court is correct insofar as it ruled that an arrastre operator and
a carrier may not be held solidarily liable at all times. But the precise question is which entity had custody
of the shipment during its unloading from the vessel?

The records are replete with evidence which show that the damage to the bags happened before and
after their discharge and it was caused by the stevedores of the arrastre operator who were then under
the supervision of Wallem.

It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the
custody of the carrier. In the instant case, the damage or losses were incurred during the discharge of the
shipment while under the supervision of the carrier. Consequently, the carrier is liable for the damage or
losses caused to the shipment. As the cost of the actual damage to the subject shipment has long been
settled, the trial courts finding of actual damages in the amount of P397,879.69 has to be sustained.

(4) Mr Talens credibility must be respected.

CA's decision is set aside. Wallem is liable.

 Eastern Shipping vs CA
GR No. 97412, 12 July 1994
234 SCRA 78

FACTS
Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as insured
with a marine policy. Upon arrival in Manila unto the custody of metro Port Service, which excepted to
one drum, said to be in bad order and which damage was unknown the Mercantile Insurance Company.
Allied Brokerage Corporation received the shipment from Metro, one drum opened and without seal.
Allied delivered the shipment to the consignee’s warehouse. The latter excepted to one drum which
contained spillages while the rest of the contents was adulterated/fake. As consequence of the loss, the
insurance company paid the consignee, so that it became subrogated to all the rights of action of
consignee against the defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance
company filed before the trial court. The trial court ruled in favor of plaintiff an ordered defendants to
pay the former with present legal interest of 12% per annum from the date of the filing of the complaint.
On appeal by defendants, the appellate court denied the same and affirmed in toto the decision of the
trial court.

ISSUE
(1) Whether the applicable rate of legal interest is 12% or 6%.

(2) Whether the payment of legal interest on the award for loss or damage is to be computed from the time
the complaint is filed from the date the decision appealed from is rendered.

HELD
(1) The Court held that the legal interest is 6% computed from the decision of the court a
quo. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damaes awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest shall be adjudged on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty.

When the judgment of the court awarding a sum of money becomes final and executor, the
rate of legal interest shall be 12% per annum from such finality until satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of money.

The interest due shall be 12% PA to be computed fro default, J or EJD.

(2) From the date the judgment is made. Where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or EJ but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shll begin to
run only from the date of judgment of the court is made.

(3) The Court held that it should be computed from the decision rendered by the court a quo.
INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. vs. PRUDENTIAL GUARANTEE & ASSURANCE CO.,
INC. G.R. No. 134514, December 8, 1999

Facts: Mother vessel Tao He loaded and received on board in San Francisco, California, a shipment of five
lots of canned foodstuff complete and in good order and condition for transport to Manila in favor of Duel
Food Enterprises (consignee) under “shipper’s load and count”.

The shipment arrived at the port of Manila and discharged by the vessel MS Wei He in favor of ICTSI for
safekeeping. The brokerage withdrew the shipment and delivered the same to the consignee. An
inspection there revealed that 161 cartoons were missing valued at P85,984.40. Consignee learned of
such shortage on June 4, 1990. It filed claim for loss on October 2, 1990. Claim for indemnification of the
loss having been denied by ICTSI and the brokerage, consignee sought payment from Prudential (insurer)
under the marine cargo policy.

The appellate court found ICTSI negligent in its duty to exercise due diligence over the shipment. It also
ruled that the filing of a claim depended on the issuance of a certificate of loss by ICTSI based on the
liability clause printed on the back of the arrastre and wharfage receipt. Since ICTSI did not issue such a
certificate despite being informed of the shortage, the 15-day period given to the consignee for filing a
formal claim never began. Prudential, therefore can hold the ICTSI liable for the shortage.

Issues:
1) Was ICTSI negligent in its duty to exercise due diligence over the shipment?
2) Did the consignee fail to file a formal claim within the period stated on the dorsal side of the arrastre
and wharfage receipt?

Held: 1) No. The consigned goods were shipped under “shipper’s load and count”. This means that the
shipper was solely responsible for the loading of the container, while the carrier was oblivious to the
contents of the shipment. Protection against pilferage of the shipment was the consignee’s lookout. The
arrastre operator was not required to verify the contents of the container received and to compare them
with thosedeclared by the shipper because as earlier stated, the cargo was at the shipper’s load and count.
The arrastre operator was expected to deliver to the consignee only the container received from
the carrier.

The legal relationship between the arrastre and consignee is akin to that between a warehouseman and
a depositor. As to both the nature of the functions and the place of their performance, arrastre operator’s
services are clearly not maritime in character.

2) Yes. In order to hold the arrastre operator liable for lost or damaged goods, the claimant
should file with the operator a claim for the value of said goods “within the 15-day period from the date
of discharge of the last package from the carrying vessel.” The filing within the period is in the nature of a
prescriptive period for bringing an action and is a condition precedent to holding the
arrastre operator liable. In an endeavor to promote fairness, equity and justness, however, a long line of
cases has held that the 15-day period for filing claims should be counted from the date the consignee
learns of the loss, damage or misdelivery of goods.

In the case at bar, the consignee had all the time to make a formal claim from the day it discovered the
shortage in the shipment, which was June 4, 1990, as shown by the records. By the time the claim for the
loss was filed on October 2, 1990, four months had already elapsed from the date of delivery. In any event,
within 15 days from the time the loss was discovered, the consignee could have filed a provisional claim,
which would have constituted substantial compliance with the rule. Its failure to do so relieved the
arrastre operator of any liability for the non-delivery of the goods. The rationale between the time limit
is that, without it, a consignee could too easily concoct or fabricate claims and deprive the
arrastre operator of the best opportunity to prove immediately their veracity.
 R Transport Ccorp vs. Eduardo Pante 599 SCRA 747 (2009)

FACTS:
 R Transport operates a bus line which transports passengers from Cubao, Quezon City to
Gapan, Nueva Ecija.
 27 January 1995: Pante rode a bus from Cubao (P48 fare). Along a highway in Bulacan,
the bus hit a tree and a hose due to the reckless driving of Johnny Mediquia
 Pante sustained a “laceration frontal area, with fracture of the right humerous”.
o His operation, confinement and medications caused him P30k. He
became unemployed as Goldilocks refused to re-employ him due to his
condition.
o He had to undergo a second operation after four years. He spent
another 15k
o The only assistance petitioner gave was the amount pf P7k to reimburse
him for the stainless steel plate places in his arm. Other than that, the
petitioner refused to assist Pante

 14 March 1995: Pante sued for damages

 Petitioner in its answer denied fault for claiming that it exercised the diligence of a good
father of the family in the selection and supervision of employees, and that accident
was force majeure.
 The case went for 7 years. The delays were due to the multiple postponements and
unexplained absence of petitioner’s counsel. Its rights to cross-examine and present
evidence were eventually forfeited as a consequence
 RTC ruled in favor of Pante. CA affirmed RTC’s decision

ISSUE:
W/N petitioner is liable for damages despite Pante not presenting substantial evidence to support his
claim.

HELD:
Yes. Petitioner is liable for damages