Myline Cordial

Tabacalera Insurance Co., Prudential Guarantee & Assurance, Inc., and New Zealand Insurance Co., Ltd. vs. North Front Shipping Services, Inc. and Court of Appeals
G.R. No. 119197. May 16, 1997

FACTS: On 2 August 1990, 20,234 sacks of corn grains were shipped on board a vessel owned by the carrier. The vessel was inspected prior to actual loading by representatives of the shipper and was found fit to carry the merchandise.

The unloading operations took twenty (20) days after the arrival of the barge at the wharf of the consignee in Manila. There was also a shortage of 26.333 metric tons and the remaining cargo were deteriorating.

The corn grains were examined and the laboratory analysis certificate revealed that the corn grains were contaminated with salt water but the mold growth could be stopped by drying and would still fit for consumption. However, the consignee rejected the entire cargo and demanded for payment for damages which were settled by the insurers.

The insurance companies hired Marine Cargo Adjusters to conduct a survey and the latter found cracks in the bodega of the barge and heavy concentration of molds on the tarpaulins and wooden boards. The tarpaulins were not brand new as there were patches on them, contrary to the claim of North Front Shipping Services, Inc., thus making it possible for water to seep in. They also discovered that the bulkhead of the barge was rusty and no seals in the hatches.

Parties
Respondent Carrier – North Front Shipping Services, Inc.
Consignee – Republic Flour Mills Corporation
Petitioner Insurers – Tabacalera Insurance Co., Prudential Guarantee & Assurance, Inc., and New Zealand Insurance Co., Ltd.

ISSUES:
1. Whether or not the carrier observed extraordinary diligence in their vigilance over the cargo they transported.
2. Whether or not the carrier was the sole responsible for the loss destruction, loss or deterioration of the cargo.

RULING:
1. No. The carrier failed to observe the required extraordinary diligence in the vigilance over the goods placed in its care. The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for safe carriage and delivery. It requires common carriers to render service with the greatest skill and foresight and ‘to use all reasonable means to ascertain the nature and characteristics of goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.’

In this case the master of the vessel and his crew failed to undertake precautionary measures to avoid or lessen the cargo’s possible deterioration as they were presumed knowledgeable about the nature of the cargo having been in the service for almost three decades.

2. No. The Court also found that the consignee was guilty of contributory negligence. No explanation was given by the the consignee why there was a delay of six (6) days in unloading the cargo. The loss could have been avoided or minimized if they commenced the unloading immediately. The consignee should share at least 40% of the loss for its contributory negligence.

NOTES:
Mere proof of delivery of the goods in good order to a common carrier, and of their arrival at the place of destination in bad order, makes out prima facie case against the common carrier, so that if no explanation is given as to how the loss, deterioration or destruction of the goods occurred, the common carrier must be held responsible. Otherwise stated, it is incumbent upon the common carrier to prove that the loss, deterioration or destruction was due to accident or some other circumstances inconsistent with its liability. (Compania Maritima v. Court of Appeals)

Full text: Tabacalera Insurance Co. vs. North Front Shipping, Inc. G.R. No. 119197. May 16, 1997